20-F

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 20-F

(Mark One)
o	REGISTRATION STATEMENT PURSUANT TO SECTION 12(b) OR (g) OF THE SECURITIES EXCHANGE ACT OF 1934
or
þ	ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
	For the fiscal year ended December 31, 2009
or
o	TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number: 1-10409

InterContinental Hotels Group PLC

(Exact name of registrant as specified in its charter)

England and Wales

(Jurisdiction of incorporation or organization)

Broadwater Park,

Denham, Buckinghamshire UB9 5HR

(Address of principal executive offices)

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

Title of each class	Name of each exchange on which registered
American Depositary Shares	New York Stock Exchange
Ordinary Shares of 1329/47 pence each	New York Stock Exchange*

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

Securities registered or to be registered pursuant to Section 12(g) of the Act:
None

Securities for which there is a reporting obligation pursuant to Section 15(d) of the Act:
None

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

Ordinary Shares of 1329/47 pence each 286,976,067

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act:  Yes þ     No o

If this report is an annual or transition report, indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934:  Yes o     No þ

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the Registrant was required to file such reports) and (2) has been subject to such filing requirements for the past 90 days:  Yes þ     No o

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§ 232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes o     No o

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, or a non-accelerated filer. See definition of “accelerated filer and large accelerated filer” in Rule 12b-2 of the Exchange Act. (Check one):

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

Indicate by check mark which financial statement item the registrant has elected to follow:

Item 17 o     Item 18  þ

If this is an annual report, indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act):

Yes          o                No          þ

Indicate by check mark which basis of accounting the registrant has used to prepare the financial statements included in this filing:

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

TABLE OF CONTENTS

			Page
Introduction				4
Cautionary note regarding forward-looking statements				5
PART I
	Item 1.	Identity of Directors, senior management and advisors		7
	Item 2.	Offer statistics and expected timetable		7
	Item 3.	Key information		7
		Selected Consolidated financial information		7
		Risk factors		11
	Item 4.	Information on the Company		14
		Summary		14
		Segmental information		18
		Hotels		20
		Soft Drinks		38
		Trademarks		38
		Organizational structure		39
		Property, plant and equipment		40
		Environment		40
	Item 4A.	Unresolved staff comments		41
	Item 5.	Operating and financial review and prospects		41
		Critical accounting policies		42
		Operating results		44
		Liquidity and capital resources		53
	Item 6.	Directors, senior management and employees		55
		Directors and senior management		55
		Compensation		58
		Board practices		59
		Employees		62
		Share ownership		63
	Item 7.	Major shareholders and related party transactions		64
		Major shareholders		64
		Related party transactions		64
	Item 8.	Financial information		64
		Consolidated Statements and other financial information		64
		Significant changes		65
	Item 9.	The Offer and Listing		65
		Plan of distribution		66
		Selling shareholders		66
		Dilution		66
		Expenses of the issue		66

2

			Page
	Item 10.	Additional information		66
		Articles of Association		66
		Material contracts		68
		Exchange controls		71
		Taxation		72
		Documents on display		75
	Item 11.	Quantitative and qualitative disclosures about market risk		75
	Item 12.	Description of securities other than equity securities		78
PART II
	Item 13.	Defaults, dividend arrearages and delinquencies		80
	Item 14.	Material modifications to the rights of security holders and use of proceeds		80
	Item 15.	Controls and procedures		80
	Item 16.	[Reserved]		80
	Item 16A.	Audit Committee financial expert		80
	Item 16B.	Code of ethics		80
	Item 16C.	Principal accountant fees and services		81
	Item 16D.	Exemptions from the Listing Standards for Audit Committees		81
	Item 16E.	Purchases of equity securities by the issuer and affiliated purchasers		81
	Item 16F.	Change in Registrant’s certifying accountant		82
	Item 16G.	Summary of significant Corporate Governance differences from NYSE Listing Standards		82
PART III
	Item 17.	Financial Statements		83
	Item 18.	Financial Statements		84
	Item 19.	Exhibits		84
Exhibit 1
EX-4.A.I
EX-8
EX-12.A
EX-12.B
EX-13.A

3

INTRODUCTION

As used in this document, except as the context otherwise requires, the terms:

•  “ADR” refers to an American Depositary Receipt, being a receipt evidencing title to an ADS;

•  “ADS” refers to an American Depositary Share, being a registered negotiable security, listed on the New York Stock Exchange, representing one InterContinental Hotels Group PLC ordinary share of 1329/47 pence each;

•  “Board” refers to the Board of directors of InterContinental Hotels Group PLC or, where appropriate, the Board of InterContinental Hotels Limited or Six Continents Limited;

•  “Britvic” refers to Britannia Soft Drinks Limited for the period up to November 18, 2005, and thereafter, Britannia SD Holdings Limited (renamed Britvic plc on November 21, 2005) which became the holding company of the Britvic Group on November 18, 2005;

•  “Britvic Group” refers to Britvic and its subsidiaries;

•  “Company” refers to InterContinental Hotels Group PLC, InterContinental Hotels Limited or Six Continents Limited or their respective Board of directors as the context requires;

•  “EMEA” refers to Europe, the Middle East and Africa;

•  “Group” refers to InterContinental Hotels Group PLC and its subsidiaries or, where appropriate, InterContinental Hotels Limited or Six Continents Limited and their subsidiaries as the context requires;

•  “Hotels” or “IHG Hotels” refers to the hotels business of the Group;

•  “IHG” refers to InterContinental Hotels Group PLC or, where appropriate, its Board of directors;

•  “IHL” refers to InterContinental Hotels Limited, previously InterContinental Hotels Group PLC, former parent company of the Group and re-registered as a private limited company on June 27, 2005;

•  “ordinary share” or “share” refers, before April 14, 2003, to the ordinary shares of 28 pence each in Six Continents Limited; following that date and until December 10, 2004 to the ordinary shares of £1 each in IHL; following that date and until June 27, 2005 to the ordinary shares of 112 pence each in IHL; following that date and until June 12, 2006 to the ordinary shares of 10 pence each in IHG; following that date until June 4, 2007 to the ordinary shares of 113/7 pence each in IHG; and following June 4, 2007 to the ordinary shares of 1329/47 pence each in IHG;

•  “Six Continents” refers to Six Continents Limited; previously Six Continents PLC and re-registered as a private limited company on June 6, 2005;

•  “Soft Drinks” refers to the soft drinks business of InterContinental Hotels Group PLC, which the Company had through its controlling interest in Britvic and which the Company disposed of by way of an initial public offering effective December 14, 2005; and

•  “VAT” refers to UK value added tax levied by HM Revenue and Customs on certain goods and services.

References in this document to the “Companies Act” mean the Companies Act 1985 (as amended) or, where appropriate, the Companies Act 2006, in each case of Great Britain; references to the “EU” mean the European Union; references in this document to “UK” refer to the United Kingdom of Great Britain and Northern Ireland; references to “US” refer to the United States of America.

The Company publishes its Consolidated Financial Statements expressed in US dollars following a management decision to change the reporting currency from sterling during 2008. The change was made to reflect the profile of the Group’s revenue and operating profit, which are primarily generated in US dollars or US dollar-linked currencies.

4

In this document, references to “US dollars”, “US$”, “$” or “¢” are to United States currency, references to “euro” or “€” are to the euro, the currency of the European Economic and Monetary Union, references to “pounds sterling”, “sterling”, “£”, “pence” or “p” are to UK currency. Solely for convenience, this Annual Report on Form 20-F contains translations of certain pound sterling amounts into US dollars at specified rates. These translations should not be construed as representations that the pound sterling amounts actually represent such US dollar amounts or could be converted into US dollars at the rates indicated. The noon buying rate in The City of New York for cable transfers in pounds sterling as certified for customs purposes by the Federal Reserve Bank of New York on March 19, 2010 was £1.00 = $1.50. For further information on exchange rates please refer to page F-20.

The Company’s fiscal year ends on December 31. The December 31 fiscal year end is in line with the calendar accounting year ends of the majority of comparable US and European hotel companies. IHG will continue to report on a December 31 fiscal year-end basis, as the Group believes this facilitates more meaningful comparisons with other key participants in the industry. References in this document to a particular year are to the fiscal year unless otherwise indicated. For example, references to the year ended December 31, 2009 are shown as 2009 and references to the year ended December 31, 2008 are shown as 2008, unless otherwise specified, and references to other fiscal years are shown in a similar manner.

The Company’s Consolidated Financial Statements are prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”). IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Group’s Consolidated Financial Statements for the years presented.

IHG believes that the reporting of profit and earnings measures before exceptional items provides additional meaningful information on underlying returns and trends to shareholders. The Group’s key performance indicators used in budgets, monthly reporting, forecasts, long-term planning and incentive plans for internal financial reporting focus primarily on profit and earnings measures before exceptional items. Throughout this document earnings per ordinary share is also calculated excluding the effect of all exceptional operating items, exceptional interest, exceptional tax and gain on disposal of assets and is referred to as adjusted earnings per ordinary share.

The Company furnishes JP Morgan Chase Bank, N.A., as Depositary, with annual reports containing Consolidated Financial Statements and an independent auditor’s opinion thereon. These Financial Statements are prepared on the basis of IFRS. The Company also furnishes to the Depositary all notices of shareholders’ meetings and other reports and communications that are made generally available to shareholders of the Company. The Depositary makes such notices, reports and communications available for inspection by registered holders of ADRs and mails to all registered holders of ADRs notices of shareholders’ meetings received by the Depositary. During 2009, the Company reported interim financial information at June 30, 2009 in accordance with the Listing Rules of the UK Listing Authority. In addition, it provided quarterly financial information at March 31, 2009 and at September 30, 2009 and intends to continue to provide quarterly financial information during fiscal 2010. The Financial Statements may be found on the Company’s website at www.ihgplc.com.

CAUTIONARY NOTE REGARDING FORWARD-LOOKING STATEMENTS

This Form 20-F contains certain forward-looking statements as defined in Section 21E of the Securities Exchange Act of 1934 with respect to the financial condition, results of operations and business of InterContinental Hotels Group and certain plans and objectives of the Board of Directors of InterContinental Hotels Group PLC with respect thereto. These forward-looking statements can be identified by the fact that they do not relate only to historical or current facts. Forward-looking statements often use words such as “anticipate”, “target”, “expect”, “estimate”, “intend”, “plan”, “goal”, “believe”, or other words of similar meaning. These statements are based on assumptions and assessments made by InterContinental Hotels Group’s management in light of their experience and their perception of historical trends, current conditions, expected future developments and other factors they believe to be appropriate.

5

Such statements in the Form 20-F include, but are not limited to, statements under the following headings; (i) “Item 4. Information on the Company”; (ii) Item 5. Operating and financial review and prospects”; (iii) “Item 8. Financial information”; and (iv) “Item 11. Quantitative and qualitative disclosures about market risk”. Specific risks faced by the Company are described under “Item 3. Key information — Risk factors” commencing on page 11.

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

6

PART I

ITEM 1.   IDENTITY OF DIRECTORS, SENIOR MANAGEMENT AND ADVISORS

Not applicable.

ITEM 2.   OFFER STATISTICS AND EXPECTED TIMETABLE

Not applicable.

ITEM 3.   KEY INFORMATION

SELECTED CONSOLIDATED FINANCIAL INFORMATION

Summary

The selected consolidated financial data set forth below for the years ended December 31, 2009, 2008, 2007, 2006 and 2005 has been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”), and is derived from the Consolidated Financial Statements of the Group which have been audited by its independent registered public accounting firm, Ernst & Young LLP.

IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Group’s Consolidated Financial Statements for the years presented. The selected consolidated financial data set forth below should be read in conjunction with, and is qualified in its entirety by reference to, the Consolidated Financial Statements and Notes thereto included elsewhere in this Annual Report.

7

Consolidated income statement data

	Year ended December 31,
	2009			2008			2007			2006			2005
	($ million, except earnings per ordinary share)
Revenue:
Continuing operations		1,538			1,897			1,817			1,487			1,309
Discontinued operations		—			—			33			278			2,177
		1,538			1,897			1,850			1,765			3,486
Total operating profit before exceptional operating items:
Continuing operations		363			549			488			374			325
Discontinued operations		—			—			3			50			294
		363			549			491			424			619
Exceptional operating items:
Continuing operations		(373	)		(132	)		60			48			(27	)
Discontinued operations		—			—			—			—			(13	)
		(373	)		(132	)		60			48			(40	)
Total operating (loss)/profit:
Continuing operations		(10	)		417			548			422			298
Discontinued operations		—			—			3			50			281
		(10	)		417			551			472			579
Financial income		3			12			18			48			54
Financial expenses		(57	)		(113	)		(108	)		(68	)		(115	)
(Loss)/profit before tax		(64	)		316			461			452			518
Tax:
On profit before exceptional items		(15	)		(101	)		(90	)		(97	)		(161	)
On exceptional operating items		112			17			—			(11	)		—
Exceptional tax credit		175			25			60			184			15
		272			(59	)		(30	)		76			(146	)
Profit after tax		208			257			431			528			372
Gain on disposal of assets, net of tax*		6			5			32			226			605
Profit for the year		214			262			463			754			977
Attributable to:
Equity holders of the parent		213			262			463			754			942
Non-controlling interest		1			—			—			—			35
Profit for the year		214			262			463			754			977
Earnings per ordinary share:
Continuing operations:
Basic		72.6¢			89.5¢			134.1¢			127.5¢			41.1¢
Diluted		70.2¢			86.8¢			130.4¢			124.3¢			40.2¢
Total operations:
Basic		74.7¢			91.3¢			144.7¢			193.8¢			180.8¢
Diluted		72.2¢			88.5¢			140.7¢			189.0¢			176.7¢

* Relates to discontinued operations.

8

Consolidated statement of financial position data

	December 31,
	2009		2008			2007		2006		2005
	($ million, except number of shares)
Goodwill and intangible assets		356		445			556		516		411
Property, plant and equipment		1,836		1,684			1,934		1,956		2,340
Investments and other financial assets		175		195			253		251		267
Retirement benefit assets		12		40			49		—		—
Deferred tax receivable		95		—			—		—		—
Current assets		419		544			710		892		1,220
Non-current assets classified as held for sale		—		210			115		98		481
Total assets		2,893		3,118			3,617		3,713		4,719
Current liabilities		1,053		1,141			1,226		1,261		1,370
Long-term debt		1,016		1,334			1,748		594		707
Net assets		156		1			98		1,346		1,905
Equity share capital		142		118			163		129		84
IHG shareholders’ equity		149		(6	)		92		1,330		1,870
Number of shares in issue at period end (millions)		287		286			295		356		433

Dividends

InterContinental Hotels Group PLC paid an interim dividend of 7.3 pence per share (equivalent to 12.2 cents per ADS at the closing exchange rate of August 7, 2009) on October 2, 2009. The IHG Board has proposed a final dividend of 18.7 pence per share (equivalent to 29.2 cents per ADS at the closing exchange rate on February 12, 2010), payable on June 4, 2010, if approved by shareholders at the Annual General Meeting to be held on May 28, 2010, bringing the total IHG dividend for the year ended December 31, 2009 to 26.0 pence per share (equivalent to 41.4 cents per ADS).

The table below sets forth the amounts of interim, final and total dividends on each ordinary share in respect of each fiscal year indicated. Comparative dividends per share have been restated using the aggregate of the weighted average number of shares of InterContinental Hotels Group PLC (as IHL then was) and Six Continents PLC (as Six Continents then was), adjusted to equivalent shares of InterContinental Hotels Group PLC. For the purposes of showing the dollar amount per ADS in respect of the interim and final dividends for each of 2005, 2006 and 2007, such amount is translated into US dollars per ADS at the Noon Buying Rate on the UK payment date. In respect of the interim and final dividends for each of 2008 and 2009 such amounts are translated from US dollars into GBP at the prevailing exchange rate immediately prior to their announcement.

Ordinary dividend

	Pence per ordinary share						$ per ADS
	Interim		Final		Total		Interim		Final		Total
Year ended December 31,
2005		4.60		10.70		15.30		0.081		0.187		0.268
2006		5.10		13.30		18.40		0.096		0.259		0.355
2007		5.70		14.90		20.60		0.115		0.292		0.407
2008		6.40		20.20		26.60		0.122		0.292		0.414
2009		7.30		18.70		26.00		0.122		0.292		0.414

9

Special dividend

	Pence per
	ordinary share		$ per ADS
June 2006		118.00		2.17
June 2007		200.00		4.00

Return of capital

	Pence per
	ordinary share		$ per ADS
June 2005		165.00		2.86

10

RISK FACTORS

This section describes some of the risks that could materially affect the Group’s business. The factors below should be considered in connection with any financial and forward-looking information in this Form 20-F and the cautionary note regarding forward-looking statements contained on pages 5 and 6.

The wider economic climate currently creates trading uncertainty for the hotel industry and the Group. In particular, over the relatively short-term, the main risks are falling consumer demand, restrictions on the availability of finance for hotel owners, and a fall in the pace of new room openings. The Group refinanced its debt in May 2008 and issued a £250 million seven-year bond in December 2009 which was used to replace most of the $500 million bank facility that expires in November 2010. At the end of 2009 the Group was trading significantly within its banking covenants and debt facility.

The risks below are not the only ones that the Group faces. Some risks are not yet known to IHG and some that IHG does not currently believe to be material could later turn out to be material.

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

Any event that materially damages the reputation of one or more of the Group’s brands and/or failure to sustain the appeal of the Group’s brands to its customers could have an adverse impact on the value of that brand and subsequent revenues from that brand or business. In addition, the value of the Group’s brands is influenced by a number of other factors, some of which may be outside the Group’s control, including commoditization (whereby price and/or quality becomes relatively more important than brand identifications due, in part, to the increased prevalence of third-party intermediaries), consumer preference and perception, failure by the Group or its franchisees to ensure compliance with the significant regulations applicable to hotel operations (including fire and life safety requirements), or other factors affecting consumers’ willingness to purchase goods and services, including any factor which adversely affects the reputation of those brands.

In particular, where the Group is unable to enforce adherence to its operating and quality standards, or the significant regulations applicable to hotel operations, pursuant to its management and franchise contracts, there may be further adverse impact upon brand reputation or customer perception and therefore the value of the hotel brands.

Given the importance of brand recognition to the Group’s business, the Group has invested considerable effort in protecting its intellectual property, including registration of trademarks and domain names. However, the controls and laws are variable and subject to change. Any widespread infringement, misappropriation or weakening of the control environment could materially harm the value of the Group’s brands and its ability to develop the business.

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

The Group’s growth strategy depends on its success in identifying, securing and retaining franchise and management agreements. This is an inherent risk for the hotel industry and franchise business model. Competition with other hotel companies may generally reduce the number of suitable franchise, management and investment opportunities offered to the Group and increase the bargaining power of property owners seeking to become a franchisee, or engage a manager. The terms of new franchise or management agreements may not be as favorable as current arrangements and the Group may not be able to renew existing arrangements on the same terms.

There can also be no assurance that the Group will be able to identify, retain or add franchisees to the Group system or to secure management contracts. For example, the availability of suitable sites, planning and other local regulations or the availability and affordability of finance may all restrict the supply of suitable hotel development opportunities under franchise or management agreements. In connection with entering into franchise or management agreements, the Group may be required to make investments in, or guarantee the obligations of, third parties or guarantee minimum income to third parties. There are also risks that significant franchisees or groups of franchisees may have interests that conflict, or are not aligned, with those of the Group including, for example, the unwillingness of franchisees to support brand improvement initiatives.

11

Changes in legislation or regulatory changes may be implemented that have the effect of favoring franchisees relative to brand owners.

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

The Group is exposed to the inherent risks of global and regional adverse political, economic and financial market developments, including recession, inflation, availability of affordable credit and currency fluctuations that could lower revenues and reduce income. A recession reduces leisure and business travel to and from affected countries and adversely affects room rates and/or occupancy levels and other income-generating activities. This may result in deterioration of results of operations and potentially reducing the value of properties in affected economies. The owners or potential owners of hotels franchised or managed by one group face similar risks which could adversely impact IHG’s ability to retain and secure franchise or management agreements. More specifically, the Group is highly exposed to the US market and, accordingly, is particularly susceptible to adverse changes in the US economy.

Further political or economic factors or regulatory action could effectively prevent the Group from receiving profits from, or selling its investments in, certain countries, or otherwise adversely affect operations. For example, changes to tax rates or legislation in the jurisdictions in which the Group operates could decrease the proportion of profits the Group is entitled to retain, or the Group’s interpretation of various tax laws and regulations may prove to be incorrect, resulting in higher than expected tax charges.

The Group requires organizational capability to manage changes in key personnel and senior management

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

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

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

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

The value of the Group’s brands is partly derived from the ability to drive reservations through its proprietary HolidexPlus reservations system, a central repository of all hotel room inventories linked electronically to multiple sales channels including IHG owned Internet websites, third-party Internet intermediaries and travel agents, call centers and hotels.

Lack of resilience in operational availability could lead to prolonged service disruption and may result in significant business interruption and subsequent impact on revenues. Lack of investment in these systems may also result in reduced ability to compete. Additionally, failure to maintain an appropriate e-commerce strategy and select the right partners could erode the Group’s market share.

12

The Group is exposed to inherent risks in relation to technology and systems

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

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

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

The Group may experience a lack of selected development opportunities

While the strategy of the Group is to extend the hotel network through activities that do not involve significant amounts of its own capital, if the availability of suitable development sites becomes limited for IHG and its prospective hotel owners, this could adversely affect its results of operations.

The Group is exposed to risks related to corporate responsibility

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

The Group is exposed to the risk of litigation

The Group could be at risk of litigation from many parties, including guests, customers, joint venture partners, suppliers, employees, regulatory authorities, franchisees and/or the owners of hotels managed by it. Claims filed in the United States may include requests for punitive damages as well as compensatory damages. Exposure to litigation or fines imposed by regulatory authorities may also affect the reputation of the Group.

The Group may face difficulties insuring its business

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

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

The Group is reliant on having access to borrowing facilities to meet its expected capital requirements. The majority of the Group’s borrowing facilities are only available if the financial covenants in the facilities are

13

complied with. If the Group is not in compliance with the covenants, the lenders may demand the repayment of the funds advanced. If the Group’s financial performance does not meet market expectations, it may not be able to refinance its existing facilities on terms it considers favorable. The availability of funds for future financing is, in part, dependent on conditions and liquidity in the capital markets.

The Group is required to comply with data privacy regulations

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

The Group is exposed to the risks related to information security

The Group is increasingly dependent upon the availability, integrity and confidentiality of information and the ability to report appropriate and accurate business performance, including financial reporting, to investors and markets.

The reputation and performance of the Group may be adversely affected if it fails to maintain appropriate confidentiality of information and ensure relevant controls are in place to enable the release of information only through the appropriate channels in a timely and accurate manner.

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

The Group is required by law to maintain a minimum funding level in relation to its ongoing obligation to provide current and future pensions for members of its UK pension plans who are entitled to defined benefits. In addition, if certain pension plans of the Group are wound-up, the Group could become statutorily liable to make an immediate payment to the trustees to bring the funding of defined benefits to a level which is higher than this minimum. The contributions payable by the Group must be set with a view to making prudent provision for the benefits accruing under the plans of the Group.

In particular, the trustees of IHG’s UK defined benefit plan may demand increases to the contribution rates relating to the funding of this plan, which would oblige relevant employers of the Group to contribute extra amounts. The trustees must consult the plan’s actuary and principal employer before exercising this power. In practice, contribution rates are agreed between the Group and the trustees on actuarial advice, and are set for three-year terms. The last such completed review was as at March 31, 2006, and the formal review as at March 31, 2009 is required to be completed by June 30, 2010.

ITEM 4.   INFORMATION ON THE COMPANY

SUMMARY

Group overview

The Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental Hotels & Resorts (“InterContinental”), Crowne Plaza Hotels & Resorts (“Crowne Plaza”), Holiday Inn Hotels & Resorts (including Holiday Inn Club Vacations) (“Holiday Inn”), Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo. As at December 31, 2009, the Group had 4,438 franchised, managed, owned and leased hotels and 646,679 guest rooms in over 100 countries and territories around the world. The Group also manages the hotel loyalty program, Priority Club Rewards.

With the disposal of the Group’s interests in Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, by way of an initial public offering (“IPO”) in December 2005, the Group is now focused solely on hotel franchising, management and ownership.

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The Group’s revenue and earnings are derived from (i) hotel operations, which include franchise and other fees paid under franchise agreements, management and other fees paid under management contracts, where the Group operates third-parties’ hotels, and operation of the Group’s owned and leased hotels and (ii) until December 14, 2005, the manufacture and distribution of soft drinks.

On March 19, 2010, InterContinental Hotels Group PLC had a market capitalization of approximately £2.9 billion, and was included in the list of FTSE 100 companies, a list of the 100 largest companies by market capitalization on the London Stock Exchange.

Following a capital restructuring in June 2005, InterContinental Hotels Group PLC became the holding company for the Group. Six Continents Limited (formerly Six Continents PLC), which was formed in 1967, is the principal subsidiary company. The Company’s corporate headquarters are in the United Kingdom, and the registered address is:

InterContinental Hotels Group PLC
Broadwater Park
Denham
Buckinghamshire UB9 5HR
Tel: +44 (0) 1895 512000
Internet address: www.ihgplc.com

InterContinental Hotels Group PLC was incorporated in Great Britain on May 21, 2004 and registered in, and operates under, the laws of England and Wales. Operations undertaken in countries other than England and Wales are subject to the laws of those countries in which they reside.

Group history and recent developments

The Group, formerly known as Bass and, more recently, Six Continents, was historically a conglomerate operating as, among other things, a brewer, soft drinks manufacturer, hotelier, leisure operator, and restaurant, pub and bar owner. In the last several years, the Group has undergone a major transformation in its operations and organization, as a result of the Separation (as discussed below) and a number of significant disposals during this period, which has narrowed the scope of its business.

On April 15, 2003, following shareholder and regulatory approval, Six Continents PLC (as it then was) separated into two new listed groups, InterContinental Hotels Group PLC (as it then was) comprising the Hotels and Soft Drinks businesses and Mitchells & Butlers plc comprising the Retail and Standard Commercial Property Developments businesses (the “Separation”).

The Group disposed of its interests in the soft drinks business by way of an initial public offering (“IPO”) of Britvic, a manufacturer and distributor of soft drinks in the United Kingdom, in December 2005.

Acquisitions and dispositions

From Separation to December 31, 2009, 183 hotels with a net book value of $5.2 billion have been sold, generating aggregate proceeds of $5.5 billion. Of these 183 hotels, 162 hotels have remained in the IHG global system (the number of hotels and rooms franchised, managed, owned and leased by the Group) through either franchise or management agreements. At December 31, 2009 the Group owned 17 hotels.

During 2009, the Group disposed of the InterContinental Sao Paulo for $22 million. During 2008, the Group disposed of the Holiday Inn Jamaica for $30 million. During 2007, the Group disposed of (i) the Crowne Plaza Santiago for $21 million; (ii) its 74.11% share of the InterContinental Montreal for $34 million; and (iii) the Holiday Inn Disney Paris for $27 million.

Subsequent to the year end, the Holiday Inn Lexington was sold for $5.5 million on March 25, 2010.

The Group also divested a number of equity interests for total proceeds of $15 million, $61 million and $114 million in 2009, 2008 and 2007 respectively. The most significant interests sold were a 31.25% interest in the

15

Crowne Plaza Christchurch and a 17% interest in the Crowne Plaza Amsterdam in 2008 and, in 2007 a 15% interest in the InterContinental Chicago and a 33.3% interest in the Crowne Plaza London The City.

The asset disposal program which commenced in 2003 has significantly reduced the capital requirements of the Group whilst largely retaining the hotels in the IHG system through management and franchise agreements.

Capital expenditure in 2009 totaled $148 million, including the $65 million cost of the Hotel Indigo San Diego, compared with $108 million in 2008 and $186 million in 2007.

At December 31, 2009 capital committed, being contracts placed for expenditure on property, plant and equipment and intangible assets not provided for in the Consolidated Financial Statements, totaled $9 million.

On October 24, 2007 the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, IHG will make a non-recurring revenue investment of $60 million which will be charged to the Consolidated income statement as an exceptional item. During the year, $19 million (2008 $35 million) was charged.

Asset disposal program detail	Number of hotels		Proceeds		Net book value
	($ billion)
Disposed since April 2003		183		5.5		5.2
Remaining owned and leased hotels as of December 31, 2009		17		—		1.7

Return of funds

Since March 2004, the Group has announced the return of £3.6 billion of funds to shareholders by way of special dividends, share repurchase programs and capital returns. As of March 19, 2010 IHG had returned over £3.5 billion to shareholders (see table below).

A third £250 million share repurchase program was completed in 2007 and the £150 million share repurchase program announced on February 20, 2007 was commenced. At December 31, 2009 £30 million of this share repurchase program was outstanding. During 2009 no shares were repurchased. By March 19, 2010, a total of 14.4 million shares had been repurchased under the £150 million repurchase program at an average price per share of 831 pence per share (approximately £120 million). Purchases are made under the existing authority from shareholders which will be renewed at the Company’s Annual General Meeting. Any shares repurchased under these programs will be canceled.

Since November 2008, the Company has deferred the remaining £30 million of its £150 million share repurchase program in order to preserve cash and maintain the strength of the Group’s financial position.

Information relating to the purchases of equity securities can be found in Item 16E.

Return of funds program	Timing		Total return		Returned to date(i)		Still to be returned
£501 million special dividend		Paid in December 2004		£501m		£501m		Nil
First £250 million share buyback		Completed in 2004		£250m		£250m		Nil
£996 million capital return		Paid in July 2005		£996m		£996m		Nil
Second £250 million share buyback		Completed in 2006		£250m		£250m		Nil
£497 million special dividend		Paid in June 2006		£497m		£497m		Nil
Third £250 million share buyback		Completed in 2007		£250m		£250m		Nil
£709 million special dividend		Paid in June 2007		£709m		£709m		Nil
£150 million share buyback		Deferred		£150m		£120m		£30m
Total				£3,603m		£3,573		£30m

(i) As of March 19, 2010.

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Hotels

The Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites Candlewood Suites and Hotel Indigo. As at December 31, 2009, the Group had 4,438 franchised, managed, owned and leased hotels and 646,679 guest rooms in over 100 countries and territories around the world. The Group also manages the hotel loyalty program, Priority Club Rewards.

Soft Drinks

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

17

SEGMENTAL INFORMATION

Geographic segmentation

The following table show the Group’s revenue and operating profit before exceptional operating items and the percentage by geographical area, for the years ended December 31, 2009, 2008 and 2007.

	Year ended December 31,
	2009			2008			2007
	($ million)
Revenue(1)
Americas		772			963			948
EMEA		397			518			492
Asia Pacific		245			290			260
Central(2)		124			126			117
Continuing operations		1,538			1,897			1,817
Americas		—			—			16
EMEA		—			—			17
Discontinued operations(3)		—			—			33
Total		1,538			1,897			1,850
Operating profit before exceptional operating items(1)(4)
Americas		288			465			454
EMEA		127			171			134
Asia Pacific		52			68			63
Central(2)		(104	)		(155	)		(163	)
Continuing operations		363			549			488
Americas		—			—			2
EMEA		—			—			1
Discontinued operations(3)		—			—			3
Total		363			549			491

Footnotes on page 19.

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	Year ended December 31,
	2009			2008			2007
	(%)
Revenue
Americas		50.2			50.8			51.2
EMEA		25.8			27.3			26.6
Asia Pacific		15.9			15.3			14.1
Central		8.1			6.6			6.3
Continuing operations		100.0			100.0			98.2
Americas		—			—			0.9
EMEA		—			—			0.9
Discontinued operations		—			—			1.8
Total		100.0			100.0			100.0
Operating profit before exceptional operating items
Americas		79.3			84.7			92.5
EMEA		35.0			31.1			27.3
Asia Pacific		14.3			12.4			12.8
Central		(28.6	)		(28.2	)		(33.2	)
Continuing operations		100.0			100.0			99.4
Americas		—			—			0.4
EMEA		—			—			0.2
Discontinued operations		—			—			0.6
Total		100.0			100.0			100.0

(1)	The results of operations have been translated into US dollars at the average rates of exchange for the period. In the case of sterling, the translation rate is $1 = £0.64 (2008 $1 = £0.55, 2007 $1 = £0.50). In the case of the euro, the translation rate is $1 = €0.72 (2008 $1 = €0.68, 2007 $1 = €0.73).
(2)	Central revenue primarily relates to Holidex (IHG’s proprietary reservation system) fee income. Central operating profit includes central revenue less costs related to global functions.
(3)	Discontinued operations were all owned and leased hotels.
(4)	Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (charge unless otherwise noted) by region are the Americas $301 million (2008 $99 million, 2007 credit of $17 million); EMEA $22 million (2008 $21 million, 2007 credit of $21 million); Asia Pacific $7 million (2008 $2 million, 2007 credit of $17 million); and Central $43 million (2008 $10 million, 2007 credit of $5 million).

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HOTELS

Business overview — market and competitive environment

The Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites Candlewood Suites and Hotel Indigo. As at December 31, 2009, the Group had 4,438 franchised, managed, owned and leased hotels and 646,679 guest rooms in over 100 countries and territories around the world. The Group also manages the hotel loyalty program, Priority Club Rewards.

Global economic events and industry cycle

The economic conditions of the last year have had a significant impact on IHG and the wider hotel industry. IHG continues to monitor key trends and business fundamentals, such as revenue per available room (“RevPAR”) to ensure its strategy remains well suited to the developing environment and its capabilities and IHG believes its business is resilient. Accordingly, its strategy remains unchanged. However, IHG sees short-term risks in the pace of future openings and the recovery in consumer demands, particularly business travel.

The downturn continued to be severe in 2009, with a sharp decline in global industry RevPAR and bookings. The hotel industry has always been cyclical and there are signs that business and consumer confidence is returning and RevPAR is beginning a slow recovery. Historically, as an industry, in previous economic cycles, IHG has experienced periods of five to eight years of RevPAR growth followed by up to two years of declines in RevPAR. Demand has rarely fallen for sustained periods and it is the interplay between hotel supply and demand in the industry that drives longer-term fluctuations in RevPAR. The difference in the recovery this time is likely to be slower increases in supply due to the ongoing finance environment remaining at more ‘normal’ levels compared with 2005 to 2008, and muted demand recovery as discretionary income growth and corporate profit growth are held back by, amongst other issues, tax increases and reduced access to credit. The Group’s fee-based profit is partly protected from changes in hotel supply or demand due to its model of third-party ownership of hotels under the Group’s franchise and management contracts. IHG profit varies more with hotel revenue (demand) than it does with hotel profit performance. Accordingly, IHG’s share price saw some recovery and stabilization since the lows of Spring 2009, increasing by 59% in the 12 months to December 31, 2009 and those of its listed company competitors increased by an average 56% over the same period. IHG believes it is well placed over the coming year compared with competitors who own hotels, rather than simply operate them, as IHG does.

Market size

The global hotel market has an estimated room capacity of 18 million rooms. This has grown at approximately 2% per annum over the last five years. Competitors in the market include other hotel companies, both large and small, and independently owned hotels.

The market remains fragmented, with an estimated 8 million branded hotel rooms (approximately 45% of the total market). IHG has an estimated 8% share of the branded market (approximately 3% of the total market). The top six major companies, including IHG, together control approximately 41% of the branded rooms, only 18% of total hotel rooms.

Geographically, the market is more concentrated with the top 20 countries accounting for more than 80% of global hotel rooms. Within this, the United States is dominant (approximately 25% of global hotel rooms) with China, Spain and Italy being the next largest markets. The Group’s brands have more leadership positions (top three by room numbers) in the six largest geographic markets than any other major hotel company.

Drivers of growth

US market data historically indicates a steady increase in hotel industry revenues, broadly in line with Gross Domestic Product, with growth of approximately 1.5% per annum in real terms since 1967.

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Globally, IHG believes demand is driven by a number of underlying trends:

•  change in demographics — as the population ages and becomes wealthier, increased leisure time and income encourages more travel and hotel visits; younger generations are increasingly seeking work/life balance, with positive implications for increased leisure travel;

•  increase in travel volumes as airline capacity grows and affordability improves, accentuated in some regions by the strength of the market positions of low-cost airlines;

•  globalization of trade and tourism;

•  increase in affluence and freedom to travel within emerging markets, such as China and Brazil; and

•  increase in the preference for branded hotels amongst consumers.

Branded and unbranded markets

2009 branded hotel rooms by region as a percentage of the total market
United States	69	%
EMEA	34	%
Asia Pacific	29	%

Source: IHG Analysis, Smith Travel Research (STR).

Within the global market, just under half of hotel rooms are branded; however, there has been an increasing trend towards branded rooms. Over the last three years, the branded market (as represented by the nine major global branded hotel companies) has grown at a 3.8% compound annual growth rate (“CAGR”), twice as quickly as the overall market, implying an increased preference towards branded hotels. Branded companies are therefore gaining market share at the expense of unbranded companies. IHG is well positioned to benefit from this trend. Hotel owners are increasingly recognizing the benefits of franchising or managing with IHG which can offer a portfolio of brands to suit the different real estate opportunities an owner may have, together with effective revenue delivery through global reservations channels. Furthermore, hotel ownership is increasingly being separated from hotel operations, encouraging hotel owners to use third parties such as IHG Hotels to manage their hotels.

Other factors

Potential negative trends impacting hotel industry growth include the possibility of increased terrorism and increased security measures, environmental considerations and economic factors such as the longevity of the downturn.

IHG’s business model

IHG’s future growth will be achieved predominantly through franchising and managing rather than owning hotels. Approximately 641,000 rooms operating under Group brands were franchised or managed and 5,800 rooms were owned and leased as of December 31, 2009.

The franchised and managed fee-based model is attractive because it enables the Group to achieve its goals with limited capital investment at an accelerated pace. A further advantage is the reduced volatility of the fee-based income stream, compared with ownership of assets.

A key characteristic of the franchised and managed business is that it generates more cash than is required for investment in the business, with a high return on capital employed. During the year ended December 31, 2009, 87% of continuing earnings before regional and central overheads, exceptional items, interest and tax was derived from franchised and managed operations.

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Operations

The Group currently operates a fee-based, asset-light business model having moved away from predominantly owning hotel properties and now focuses on its hotel franchise and management business. Through three distinct business models, which offer different growth, return, risk and reward opportunities, the Group aims to achieve growth through its contractual arrangements with third-party hotel owners who provide capital investment in hotel assets in exchange for, among other things, the Group’s expertise and brand value. The models are summarized as follows:

Franchised:  where Group companies neither own nor manage a hotel, but license the use of a Group brand and provide access to reservations systems, loyalty schemes and know-how. The Group derives revenues from a brand royalty or licensing fee, based on a percentage of room revenue. As at December 31, 2009, 75% of the Group’s rooms were franchised. The franchising business model reduces the Group’s dependence on the profitability of its franchised hotels and allows for a more predictable revenue stream. The stable income stream that results, combined with organic growth in the number of hotels operating under the Group’s brands, allows the Group to steadily increase its scale, to drive market share, and importantly, to drive efficiency throughout the business.

Managed:  where in addition to licensing the use of a Group brand, a Group company manages a hotel for third party owners. The Group derives revenues from base and incentive management fees and provides the system infrastructure necessary for the hotel to operate. Base management fees are generally a percentage of hotel revenue and incentive management fees are generally a percentage of a hotel’s gross operating profit. The terms of these agreements vary, but are often long-term (on average, 10 years or more). In certain limited circumstances the Group may provide performance guarantees to third party owners to secure management contracts. The performance guarantee may be in respect of a hotel’s gross operating profit or an “owner’s priority return”. The Group may be required to defer its incentive management fees or fund shortfalls under such guarantee arrangements.

The Group’s responsibilities under the management agreement typically include hiring, training and supervising the managers and employees that operate the hotels under the relevant brand standards. As at December 31, 2009, approximately 24% of the Group’s rooms were operated under management contracts.

Owned and leased:  where a Group company both operates and either owns or leases a hotel and, therefore, takes all the benefits and risks associated with ownership of the asset. Since 2003, the Group has sold the majority of its owned and leased portfolio. The Group now owns or leases 17 hotels representing around 1% of the Group’s rooms. The owned and leased hotels had a book value as at December 31, 2009 of $1.7 billion. The majority of this value resides in the Group’s four flagship InterContinental hotels in London, Paris, New York and Hong Kong.

In addition to the three models described, the Group may, in certain circumstances, make an equity investment in a strategic hotel development project. Such an investment is generally a minority investment and the Group will participate in a share of the benefits and risks of ownership and will enter into the associated hotel management agreement.

The following table shows the number of hotels and rooms franchised, managed, owned and leased by the Group as at December 31, 2009, 2008 and 2007.

					Management
					contracts and joint
	Franchised				ventures				Owned and leased				Total
	No. of		No. of		No. of		No. of		No. of		No. of		No. of		No. of
	hotels		rooms		hotels		rooms		hotels		rooms		hotels		rooms
2009		3,799		483,541		622		157,287		17		5,851		4,438		646,679
2008		3,585		465,967		585		148,240		16		5,644		4,186		619,851
2007		3,392		443,815		539		134,883		18		6,396		3,949		585,094

The Group sets quality and service standards for all of its hotel brands and operates a customer satisfaction and hotel quality evaluation system to ensure those standards are met or exceeded in all hotels operating under the Group’s brands. The quality evaluation system includes an assessment of both physical property and customer service standards.

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Strategy

IHG is focused on its core purpose of creating ‘Great Hotels Guests Love.’ IHG seeks to deliver, among other key performance indicators (“KPIs”), enduring top quartile shareholder returns, when measured against a broad global hotel peer group.

For the three-year period of 2007 to 2009, IHG was fourth among its peers on total shareholder returns.

IHG has also developed and will measure itself against a collection of specific KPIs aimed at delivering the Group’s core purpose, cascaded to the hotel level.

Successful performance against various combinations of these metrics drives a significant percentage of senior management discretionary remuneration.

IHG’s strategy has seen significant development through 2009 as the Group moved to make its core purpose a reality, despite challenging economic circumstances. In 2009, IHG took a hard look at its operations and capabilities to focus on what really matters most to deliver ‘Great Hotels Guests Love’. IHG has backed this up with a major effort to align its people and measure the most important drivers, resulting in a clear, target-based program within its hotels to motivate teams and guide behaviours.

IHG’s strategy encompasses two key aspects:

•  where IHG chooses to compete; and

•  how the Group will win when it competes.

The Group’s underlying ‘Where’ strategy is that IHG will grow a portfolio of differentiated hospitality brands in select strategic countries and global key cities to maximize its scale advantage. The ‘How’ aspect of the Group’s strategy flows from the Group’s core purpose and its research at the hotel level as to what really makes a difference for guests.

In support of the Group’s overall strategy there are now five key priorities — one ‘Where we compete’ and four ‘How we win’.

To help the Group’s hotels and corporate staff measure their efforts in achieving ‘Great Hotels Guests Love’, IHG provides clear metrics aligned with the four ‘How we win’ priorities against which progress is gauged.

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Where we compete

Strategic priorities	2009 status and developments
To accelerate profitable growth of our core business in the largest markets where scale really counts and also in key global gateway cities. Seek opportunities to leverage our scale in new business areas.	• 90% of deals signed in scale markets and key gateway cities; •   10 signings of Hotel Indigo and Staybridge Suites outside of North America; and •   439 hotels opened globally.
How we win
Strategic priorities	2009 status and developments
Financial returns
To generate higher returns for owners and IHG through revenue delivery and improved operating efficiency.	•   Increased by four percentage points the proportion of revenue delivery through IHG global reservations channels and Priority Club Rewards (“PCR”) direct sales. These channels accounted for an average 68% of global hotel rooms revenue in 2009; •   Significant procurement savings made; •   Increased use of offshore transaction processing; and •   Technology infrastructure developed to support owner management and loyalty marketing.
Our people
To create a more efficient organisation with strong core capabilities.	•   Continued cascading of ‘Great Hotels Guests Love’ in hotels and corporate offices; •   Meeting ongoing resourcing requirements to match hotel growth in scale markets; •   Managing employee engagement; and •   Continued focus on attracting and retaining talent.
Guest experience
To operate a portfolio of brands attractive to both owners and guests that have clear market positions and differentiation in the eyes of the guest.	• 1,697 relaunched Holiday Inn and Holiday Inn Express hotels open around the world; and •   Industry-leading PCR loyalty program with 48 million members, contributing $5.6 billion of global system room revenue.
Responsible business
To take an active stance on environment and community issues in order to drive increased value for IHG, owners and guests.	•   Green Engage energy management system developed (patent pending); rolled out to over 900 hotels by December 31, 2009; •   Extensive consumer research undertaken to quantify ‘green’ opportunity with consumers; and •   Corporate Responsibility approach defined and agreed.

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Segmental results by activity

The following table shows the Group’s continuing revenue and operating profit before exceptional operating items by activity and the percentage contribution of each activity, for the years ended December 31, 2009, 2008 and 2007.

	Year ended December 31,
	2009			2008			2007
	($ million)
Revenue(1)
Americas
Franchised		437			495			489
Managed		110			168			156
Owned and leased		225			300			303
		772			963			948
EMEA
Franchised		83			110			81
Managed		119			168			167
Owned and leased		195			240			244
		397			518			492
Asia Pacific
Franchised		11			18			16
Managed		105			113			99
Owned and leased		129			159			145
		245			290			260
Central(2)		124			126			117
Total		1,538			1,897			1,817
Operating profit before exceptional operating items(1)(3)
Americas
Franchised		364			426			425
Managed		(40	)		51			41
Owned and leased		11			55			54
Regional overheads		(47	)		(67	)		(66	)
		288			465			454
EMEA
Franchised		60			75			58
Managed		65			95			87
Owned and leased		33			45			33
Regional overheads		(31	)		(44	)		(44	)
		127			171			134
Asia Pacific
Franchised		5			8			6
Managed		44			55			46
Owned and leased		30			43			36
Regional overheads		(27	)		(38	)		(25	)
		52			68			63
Central(2)		(104	)		(155	)		(163	)
Total		363			549			488

Footnotes on page 26.

25

	Year ended December 31,
	2009			2008			2007
	(%)
Revenue
Americas
Franchised		28.4			26.1			26.9
Managed		7.2			8.9			8.6
Owned and leased		14.6			15.8			16.7
		50.2			50.8			52.2
EMEA
Franchised		5.4			5.8			4.5
Managed		7.7			8.9			9.2
Owned and leased		12.7			12.6			13.4
		25.8			27.3			27.1
Asia Pacific
Franchised		0.7			0.9			0.9
Managed		6.8			6.0			5.4
Owned and leased		8.4			8.4			8.0
		15.9			15.3			14.3
Central		8.1			6.6			6.4
Total		100.0			100.0			100.0
Operating profit before exceptional operating items
Americas
Franchised		100.2			77.6			87.1
Managed		(11.0	)		9.3			8.4
Owned and leased		3.0			10.0			11.0
Regional overheads		(12.9	)		(12.2	)		(13.5	)
		79.3			84.7			93.0
EMEA
Franchised		16.5			13.6			11.9
Managed		17.9			17.3			17.8
Owned and leased		9.1			8.2			6.8
Regional overheads		(8.5	)		(8.0	)		(9.0	)
		35.0			31.1			27.5
Asia Pacific
Franchised		1.4			1.5			1.2
Managed		12.1			10.0			9.4
Owned and leased		8.2			7.8			7.4
Regional overheads		(7.4	)		(6.9	)		(5.1	)
		14.3			12.4			12.9
Central		(28.6	)		(28.2	)		(33.4	)
Total		100.0			100.0			100.0

(1)	The results of operations have been translated into US dollars at the average rates of exchange for the period. In the case of sterling, the translation rate is $1 = £0.64 (2008 $1 = £0.55, 2007 $1 = £0.50). In the case of the euro, the translation rate is $1 = €0.72 (2008 $1 = €0.68, 2007 $1 = €0.73).
(2)	Central revenue primarily relates to Holidex (IHG’s proprietary reservation system) fee income. Central operating profit includes central revenue less costs related to global functions.
(3)	Operating profit before exceptional operating items does not include exceptional operating items for all periods presented. Exceptional operating items (charge unless otherwise noted) by region are the Americas $301 million (2008 $99 million, 2007 credit of $17 million); EMEA $22 million (2008 $21 million, 2007 credit of $21 million); Asia Pacific $7 million (2008 $2 million, 2007 credit of $17 million); and Central $43 million (2008 $10 million, 2007 credit of $5 million).

26

Global system

Hotels operated under IHG brands are, pursuant to terms within their contracts, subject to cash assessments for the provision of brand marketing, reservations systems and the Priority Club Rewards loyalty program. These assessments, typically based upon room revenue, are pooled for the collective benefit of all hotels by brand or geography into the System Funds.

Priority Club Rewards:  The Group’s worldwide loyalty scheme, Priority Club Rewards, is the largest of its kind in the hotel industry. Members enjoy a variety of privileges and rewards as they stay at the Group’s hotels around the world. The global system room revenue generated from Priority Club Rewards members during 2009 was $5.6 billion. Priority Club Rewards membership reached 48 million customers as at December 31, 2009, compared to 42 million as at December 31, 2008.

Central reservation system technology:  The Group operates the HolidexPlus reservations system. The HolidexPlus system receives reservation requests entered on terminals located at most of its reservation centers, as well as from global distribution systems operated by a number of major corporations and travel agents. Where local hotel systems allow, the HolidexPlus system immediately confirms reservations or indicates alternative accommodation available within the Group’s network. Confirmations are transmitted electronically to the hotel for which the reservation is made.

Reservations call centers:  The Group operates 10 reservations call centers around the world which enable it to sell in local languages in many countries and offer a high quality service to customers.

Internet:  The Group introduced electronic hotel reservations in 1995. The Internet is an important communications, branding and distribution channel for hotel sales. During 2009, the Internet channels continued to show strong growth, with 24%, (20% in 2008) of global system room revenue booked via the Internet through various branded websites, such as www.intercontinental.com and www.holidayinn.com, as well as certified third parties.

IHG has established standards for working with third party intermediaries — on-line travel distributors — who sell or re-sell the Group’s branded hotel rooms via their Internet sites. Under the standards, certified distributors are required to respect the Group’s trademarks, ensure reservations are guaranteed through an automated and common confirmation process, and clearly present fees to customers.

The Group estimates that, during 2009, global system room revenue booked through IHG’s global systems (which includes Priority Club Reward members, central reservation and call centers, global distribution systems and the Internet) increased by four percentage points to 68%.

Sales and marketing

IHG targets its sales and marketing expenditure in each region on driving revenue and brand awareness or, in the case of sales investments, targeting segments such as corporate accounts, travel agencies and meeting organizers. The majority of IHG’s sales and marketing expenditure is funded by contractual fees paid by most hotels in the system.

27

Global brands

Brands overview

The Group’s portfolio includes seven established and diverse brands. These brands cover several market segments ranging from upscale to midscale (limited service) and all brands except for Candlewood Suites operate internationally. Candlewood Suites operates exclusively in the Americas.

	At December 31, 2009
Brands	Room numbers		Hotels
InterContinental		56,121		166
Crowne Plaza		100,994		366
Holiday Inn		243,460		1,325
Holiday Inn Express		188,007		2,069
Staybridge Suites		19,885		182
Candlewood Suites		25,283		254
Hotel Indigo		4,030		33
Other		8,899		43
Total		646,679		4,438

InterContinental

	Americas		EMEA		Asia Pacific
	total		total		total
Average room rate $(1)		152.72		213.57		163.27
Room numbers(2)		18,499		20,586		17,036

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable InterContinental hotels.
(2)	As at December 31, 2009.

InterContinental is the Group’s upper-upscale brand. InterContinental branded hotels are located in major cities and leisure destinations in over 60 countries. Each hotel offers high-class facilities and services aimed at the discerning business and leisure traveler. The brand strives to provide guests with memorable experiences which also give a sense of each hotel’s location. These hotels blend luxury with a celebration of local culture and heritage which is reflected in everything from décor to dining.

InterContinental hotels are principally managed by the Group. As at December 31, 2009, there were 166 InterContinental hotels which represented 9% of the Group’s total hotel rooms. During 2009, 12 InterContinental hotels were added to the portfolio, while five hotels were removed.

Crowne Plaza

	Americas		EMEA		Asia Pacific
	total		total		total
Average room rate $(1)		100.92		141.32		98.56
Room numbers(2)		55,690		22,157		23,147

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable Crowne Plaza hotels.
(2)	As at December 31, 2009.

Crowne Plaza is located in more than 55 countries. Mainly sited in principal cities, these hotels offer high quality accommodation for leisure and business travelers who appreciate style, a sociable environment, excellent meeting facilities and state-of-the-art business technology.

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The majority of Crowne Plaza hotels are operated under franchise agreements. As at December 31, 2009, there were 366 Crowne Plaza hotels which represented 16% of the Group’s total hotel rooms. During 2009, 32 Crowne Plaza hotels were added to the portfolio, while eight hotels were removed.

Holiday Inn

	Americas		EMEA		Asia Pacific
	total		total		total
Average room rate $(1)		92.41		105.86		79.04
Room numbers(2)(3)		161,093		53,372		28,995

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable Holiday Inn hotels.
(2)	As at December 31, 2009.
(3)	The Americas total includes Holiday Inn Club Vacations (2,892 rooms).

Holiday Inn is the Group’s midscale full service brand. One of the world’s most recognised brands, it is aimed at both business travellers and families.

In 2008, the Group launched Holiday Inn Club Vacations, which gave the Group its first presence in the timeshare market. The first Holiday Inn Club Vacations opened in Florida, in December 2008. Holiday Inn Club Vacations is operated on a franchise basis with no capital investment from the Group.

In 2007, the Group announced a worldwide relaunch of the Holiday Inn and Holiday Inn Express brands. The relaunch program has been designed to give the Holiday Inn brand a refreshed and contemporary brand image by upgrading certain hotel facilities and amenities. All Holiday Inn hotels open or under development are expected to have implemented the relaunch program by the end of 2010. As at December 31, 2009, 1,697 hotels operating under the Holiday Inn or the Holiday Inn Express brands had completed the implementation of the relaunch program.

Holiday Inn hotels are predominantly operated under franchise agreements. As at December 31, 2009, there were 1,325 Holiday Inn hotels which represented 38% of the Group’s total hotel rooms, of which 66% were located in the Americas. During 2009, 66 Holiday Inn hotels were added to the portfolio, while 95 hotels were removed.

Holiday Inn Express

	Americas		EMEA		Asia Pacific
	total		total		total
Average room rate $(1)		94.56		86.43		49.35
Room numbers(2)		158,284		23,259		6,464

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable Holiday Inn Express hotels.
(2)	As at December 31, 2009.

Holiday Inn Express is the Group’s midscale limited service brand. Convenience, comfort and value make Holiday Inn Express a popular choice with guests and hotel owners. Contemporary guest rooms and bathrooms, a complimentary breakfast and easily accessible locations make Holiday Inn Express an ideal choice for people on the road. Holiday Inn Express was also relaunched in 2007.

Holiday Inn Express hotels are almost entirely operated under franchise agreements. As at December 31, 2009, there were 2,069 Holiday Inn Express hotels worldwide which represented 29% of the Group’s total hotel rooms, of which 84% were located in the Americas. During 2009, 213 new Holiday Inn Express hotels were added to the portfolio, while 76 hotels were removed.

29

Staybridge Suites

	Americas		EMEA
	total		total
Average room rate $(1)		97.24		—
Room numbers(2)		19,320		565

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable Staybridge Suites hotels.
(2)	As at December 31, 2009.

Staybridge Suites is an upscale hotel brand offering services and amenities designed specifically for those on extended travel. Residential in style, Staybridge Suites branded hotels provide studios and suites, kitchens, living rooms and work areas, and high-speed internet access for business and leisure guests.

The Staybridge Suites brand is principally operated under management contracts and franchise agreements. As at December 31, 2009 there were 182 Staybridge Suites hotels, which represented 3% of the Group’s total hotel rooms, of which 97% (178 hotels) were located in the Americas. During 2009, 30 hotels were added to the portfolio, and no hotels were removed.

Candlewood Suites

	Americas
	total
Average room rate $(1)		65.68
Room numbers(2)		25,283

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable Candlewood Suites hotels.
(2)	As at December 31, 2009.

Designed for guest stays of a week or longer, Candlewood Suites branded hotels offer studios and one bedroom suites with well equipped kitchens, spacious work areas and an array of convenient amenities. This extended stay brand continues to grow rapidly in the Americas.

The Candlewood Suites brand is operated under management contracts and franchise agreements. Hospitality Properties Trust (“HPT”) is a major owner of Candlewood Suites properties and the Group manages all 76 of HPT’s Candlewood Suites properties under a 20 year agreement. As at December 31, 2009, there were 254 Candlewood Suites hotels, which represented 4% of the Group’s total rooms, all of which were located in the Americas. During 2009, 50 hotels were added to the portfolio, and no hotels were removed.

Hotel Indigo

	Americas		EMEA
	total		total
Average room rate $(1)		105.89		—
Room numbers(2)		3,966		64

(1)	For the year ended December 31, 2009; quoted at constant US$ exchange rate. Average room rate is for comparable Hotel Indigo hotels.
(2)	As at December 31, 2009.

Hotel Indigo is the industry’s first branded boutique hotel. The brand is aimed at style-conscious guests who want peaceful and affordable luxury combined with all the knowledge, experience and operating systems that an international hotel company can offer. Inspired by lifestyle retailing, it features seasonal changes, inviting service, inspiring artwork, casual dining, airy guest rooms and 24-hour business amenities.

30

As at December 31, 2009, there were 33 Hotel Indigo hotels, 32 located in the Americas. During 2009, 12 hotels were added to the portfolio, and one hotel was removed.

Geographical analysis

Although it has worldwide hotel operations, the Group is most dependent on the Americas for operating profit, reflecting the structure of the branded global hotel market. The Americas region generated 62% of the Group’s operating profit before central overheads and exceptional operating items during 2009.

The geographical analysis, split by number of rooms and operating profit, is set out in the table below.

	Americas		EMEA		Asia Pacific
	(% of total)
Room numbers(1)		69		19		12
Regional operating profit (before central overheads and exceptional operating items)(2)		62		27		11

(1)	As at December 31, 2009.
(2)	For the year ended December 31, 2009.

Americas

In the Americas, the largest proportion of rooms is operated under the franchise business model (approximately 89% of rooms in the Americas operate under this model) primarily in the midscale segment (Holiday Inn and Holiday Inn Express). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised, whereas the majority of the InterContinental branded hotels are operated under franchise and management agreements. With 3,479 hotels, the Americas represented 78% of the Group’s hotels and 62% of the Group’s operating profit before central costs and exceptional operating items during the year ended December 31, 2009. The key profit producing region is the United States, although the Group is also represented in each of Latin America, Canada, Mexico and the Caribbean.

EMEA

In EMEA, the largest proportion of rooms is operated under the franchise business model primarily in the midscale segment (Holiday Inn and Holiday Inn Express). Similarly, in the upscale segment, Crowne Plaza is predominantly franchised whereas the majority of the InterContinental branded hotels are operated under management agreements. Comprising 695 hotels at the end of 2009, EMEA represented approximately 27% of the Group’s operating profit before central costs and exceptional operating items during the year ended December 31, 2009. Profits are primarily generated from hotels in the United Kingdom, Continental European gateway cities and the Middle East portfolio.

Asia Pacific

In Asia Pacific, the largest proportion of rooms are operated under the managed business model. The majority of hotels are in the midscale and upscale segments. Comprising 264 hotels as at December 31, 2009, Asia Pacific represents approximately 11% of the Group’s operating profit before central costs and exceptional operating items during the year ended December 31, 2009. The Chinese tourism market continues to grow, with the country due to become one of the world’s biggest tourist destinations within 10 years. As at December 31, 2009 the Group had 125 hotels in Greater China and a further 138 hotels in development.

31

The following table shows information concerning the geographical locations and ownership of the Group’s hotels as at December 31, 2009.

	Franchised				Managed				Owned and leased				Total
	Hotels		Rooms		Hotels		Rooms		Hotels		Rooms		Hotels		Rooms
Americas
InterContinental		26		7,439		25		9,149		4		1,911		55		18,499
Crowne Plaza		183		49,130		19		6,560		—		—		202		55,690
Holiday Inn(1)		856		150,697		30		9,038		4		1,358		890		161,093
Holiday Inn Express		1,845		158,032		1		252		—		—		1,846		158,284
Staybridge Suites		131		13,513		45		5,574		2		233		178		19,320
Candlewood Suites		176		15,842		78		9,441		—		—		254		25,283
Hotel Indigo		28		3,351		3		405		1		210		32		3,966
Other		—		—		22		3,219		—		—		22		3,219
Total		3,245		398,004		223		43,638		11		3,712		3,479		445,354
EMEA
InterContinental		10		2,277		52		17,016		3		1,293		65		20,586
Crowne Plaza		69		15,731		24		6,426		—		—		93		22,157
Holiday Inn		246		37,270		87		16,102		—		—		333		53,372
Holiday Inn Express		194		22,874		2		232		1		153		197		23,259
Staybridge Suites		—		—		4		565		—		—		4		565
Hotel Indigo		1		64		—		—		—		—		1		64
Other		—		—		2		293		—		—		2		293
Total		520		78,216		171		40,634		4		1,446		695		120,296
Asia Pacific
InterContinental		6		1,798		39		14,743		1		495		46		17,036
Crowne Plaza		3		454		68		22,693		—		—		71		23,147
Holiday Inn		11		1,974		90		26,823		1		198		102		28,995
Holiday Inn Express		2		275		24		6,189		—		—		26		6,464
Other		12		2,820		7		2,567		—		—		19		5,387
Total		34		7,321		228		73,015		2		693		264		81,029
Total
InterContinental		42		11,514		116		40,908		8		3,699		166		56,121
Crowne Plaza		255		65,315		111		35,679		—		—		366		100,994
Holiday Inn(1)		1,113		189,941		207		51,963		5		1,556		1,325		243,460
Holiday Inn Express		2,041		181,181		27		6,673		1		153		2,069		188,007
Staybridge Suites		131		13,513		49		6,139		2		233		182		19,885
Candlewood Suites		176		15,842		78		9,441		—		—		254		25,283
Hotel Indigo		29		3,415		3		405		1		210		33		4,030
Other		12		2,820		31		6,079		—		—		43		8,899
Total		3,799		483,541		622		157,287		17		5,851		4,438		646,679

(1) Includes Holiday Inn Club Vacations (6 hotels, 2,892 rooms).

32

Room count and pipeline

During 2009, the IHG global system (the number of hotels and rooms which are franchised, managed, owned and leased by the Group) increased by 252 hotels (26,828 rooms; 4.3%) to 4,438 hotels (646,679 rooms). Openings of 439 hotels (55,345 rooms) were focused, in particular, on continued expansion in the US and China.

System growth was driven by brands in the midscale limited service and extended stay segments. Holiday Inn Express represented over 50% of total net growth (137 hotels, 14,213 rooms), whilst Staybridge Suites and Candlewood Suites combined represented approximately 30% (80 hotels, 7,883 rooms). IHG’s lifestyle brand, Hotel Indigo, achieved net growth of approximately 50%, with 11 hotels (1,328 rooms) added during the year.

Significant progress has been achieved on the Holiday Inn brand family relaunch with 1,697 hotels open under the updated signage and brand standards as at December 31, 2009. The relaunch aims to refresh the brand and to deliver consistent best in class service and enhanced physical quality in all Holiday Inn and Holiday Inn Express hotels.

Non-brand conforming hotels continued to be removed from the system; global removals totaled 187 hotels (28,517 rooms) during 2009, predominately Holiday Inn and Holiday Inn Express hotels.

At the end of 2009, the IHG pipeline totaled 1,438 hotels (210,363 rooms). The IHG pipeline represents hotels and rooms where a contract has been signed and the appropriate fees paid.

IHG maintained a strong level of new signings despite the impact of the global economic downturn, demonstrating continued demand for IHG brands and represents a key driver of future profitability.

In the year, signings across all regions of 52,891 rooms were added to the pipeline. Overall, the opening of 55,345 rooms, combined with an increase in pipeline terminations, resulted in a net pipeline decline of 34,722 rooms.

There are no assurances that all of the hotels in the pipeline will open. The construction, conversion and development of hotels is dependent upon a number of factors, including meeting brand standards, obtaining the necessary permits relating to construction and operation, the cost of constructing, converting and equipping such hotels and the ability to obtain suitable financing at acceptable interest rates. The supply of capital for hotel development in the United States and major economies may not continue at previous levels and consequently the pipeline could decrease.

Americas

During 2009, the Americas hotel and room count increased by 219 hotels (18,864 rooms) to 3,479 hotels (445,354 rooms). The growth included openings of 375 hotels (40,584 rooms), predominantly under the franchised business model. By brand, Holiday Inn Express generated openings of 198 hotels (17,491 rooms) whilst the extended stay brands, Staybridge Suites and Candlewood Suites, achieved openings of 78 hotels (7,548 rooms) in 2009. Net growth also included removals of 156 hotels (21,720 rooms), predominantly Holiday Inn and Holiday Inn Express hotels removed as part of the Group’s roll-out of the Holiday Inn brand family relaunch which entails the removal of lower quality, non-brand conforming hotels.

The Americas pipeline totaled 1,073 hotels (113,728 rooms) as at December 31, 2009. During the year, 29,353 room signings were completed, compared with 60,402 room signings in 2008. Signings levels declined as a result of lower real estate and construction activity amid the economic downturn and an associated tightening of credit availability. Demand in the key midscale segment remained positive, representing 66% of hotel signings.

EMEA

During 2009, EMEA hotel and room count increased by 20 hotels (3,589 rooms) to 695 hotels (120,296 rooms). The net room growth included openings of 37 hotels (6,427 rooms) and removals of 17 hotels (2,838 rooms). System growth by brand was driven by Holiday Inn and Holiday Inn Express, which together accounted for 65% of the region’s hotel openings, and by Crowne Plaza, which achieved net rooms growth of 7% over 2008. By

33

ownership type, net movement during the year included the conversion of 13 managed hotels in Spain to franchise contracts.

The pipeline in EMEA decreased by 21 hotels (2,403 rooms) to 152 hotels (31,461 rooms). The movement in the year included 8,442 room signings, with continued demand for IHG brands in the UK, Middle East and Germany. Demand was particularly strong in the midscale sector which represented 66% of room signings. IHG’s lifestyle brand, Hotel Indigo, continued its expansion with four hotels in the closing pipeline, including two in London.

Asia Pacific

During 2009, Asia Pacific hotel and room count increased by 13 hotels (4,375 rooms) to 264 hotels (81,029 rooms), including the opening of 27 hotels (8,334 rooms) offset by the removal of 14 hotels (3,959 rooms). The growth was predominantly driven by the opening of 17 hotels (5,776 rooms) in Greater China, reflecting continued expansion in one of IHG’s strategic markets.

The pipeline in Asia Pacific increased by 14 hotels (710 rooms) to 213 hotels (65,174 rooms). Pipeline growth was fuelled by the Greater China market which generated 75% of the region’s room signings, followed by India, which contributed a further 16%. From a brand perspective, Crowne Plaza experienced the highest demand with 45% of the region’s room signings, followed by Holiday Inn, which contributed a further 32%. During the year, the first Hotel Indigo was signed in Hong Kong.

34

	Hotels							Rooms
					Change							Change
Global hotel and room count at December 31,	2009		2008		over 2008			2009		2008		over 2008
Analyzed by brand
InterContinental		166		159		7			56,121		54,736		1,385
Crowne Plaza		366		342		24			100,994		93,382		7,612
Holiday Inn(1)		1,325		1,354		(29	)		243,460		252,103		(8,643	)
Holiday Inn Express		2,069		1,932		137			188,007		173,794		14,213
Staybridge Suites		182		152		30			19,885		16,644		3,241
Candlewood Suites		254		204		50			25,283		20,641		4,642
Hotel Indigo		33		22		11			4,030		2,702		1,328
Other		43		21		22			8,899		5,849		3,050
Total		4,438		4,186		252			646,679		619,851		26,828
Analyzed by ownership type
Franchised		3,799		3,585		214			483,541		465,967		17,574
Managed(1)		622		585		37			157,287		148,240		9,047
Owned and leased		17		16		1			5,851		5,644		207
Total		4,438		4,186		252			646,679		619,851		26,828

(1) Includes Holiday Inn Club Vacations.

	Hotels							Rooms
					Change							Change
Global pipeline at December 31,	2009		2008		over 2008			2009		2008		over 2008
Analyzed by brand
InterContinental		63		71		(8	)		20,173		21,884		(1,711	)
Crowne Plaza		129		133		(4	)		38,555		41,469		(2,914	)
Holiday Inn		338		387		(49	)		59,008		64,261		(5,253	)
Holiday Inn Express		563		719		(156	)		57,756		70,270		(12,514	)
Staybridge Suites		123		166		(43	)		13,360		18,109		(4,749	)
Candlewood Suites		169		242		(73	)		14,851		21,790		(6,939	)
Hotel Indigo		53		56		(3	)		6,660		7,212		(552	)
Other		—		1		(1	)		—		90		(90	)
Total		1,438		1,775		(337	)		210,363		245,085		(34,722	)
Analyzed by ownership type
Franchised		1,158		1,474		(316	)		126,386		156,959		(30,573	)
Managed		280		300		(20	)		83,977		87,941		(3,964	)
Owned and leased		—		1		(1	)		—		185		(185	)
Total		1,438		1,775		(337	)		210,363		245,085		(34,722	)

35

Seasonality

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

Competition

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

Key relationships

IHG maintains effective relationships across all aspects of its operations. The Group’s operations are not dependent upon any single customer, supplier or hotel owner due to the extent of its brands, market segments and geographical coverage. For example, IHG’s largest third-party hotel owner controls only 3% of the Group’s total room count.

Emphasis on revised procurement processes during 2009 continues to improve IHG’s relationships with suppliers. The Group continues to see opportunities for improving effectiveness and efficiency of its buying and sourcing arrangements and is working with suppliers to realize and consolidate these benefits for both IHG and its hotel owners.

To promote effective owner relationships, the Group’s management meets with owners on a regular basis. In addition, IHG has an important relationship with the IAHI — the Owners’ Association (“IAHI”). The IAHI is an independent worldwide association for owners of the InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Hotel Indigo, Staybridge Suites and Candlewood Suites brands. IHG and the IAHI work together to support and facilitate the continued development of IHG’s brands and systems, with specific emphasis during 2009 and into 2010 on the relaunch of the Holiday Inn and Holiday Inn Express brands and the Group’s continued response to the economic downturn. Additionally, IHG and the IAHI continue to work together to develop and facilitate key Corporate Responsibility (“CR”) and operational initiatives within the Group’s brands.

Many jurisdictions and countries regulate the offering of franchise agreements and recent trends indicate an increase in the number of countries adopting franchise legislation. As a significant percentage of the Group’s revenue is derived from franchise fees, the Group’s continued compliance with franchise legislation is important to the successful deployment of the Group’s strategy.

RevPAR

The following tables present RevPAR statistics for the years ended December 31, 2009 and 2008. RevPAR is a meaningfull indicator of performance because it measures period-over-period change in rooms revenue for comparable hotels. RevPAR is calculated by dividing rooms revenue for comparable hotels by room nights available to guests for the period.

Franchised, managed, owned and leased statistics are for comparable hotels, and include only those hotels in the IHG system as of December 31, 2009 and franchised, managed, owned or leased by the Group since January 1, 2008.

36

The comparison with 2008 is at constant US$ exchange rates.

	Franchised									Managed									Owned and leased
							Change vs									Change vs									Change vs
	2009			2008			2008			2009			2008			2008			2009			2008			2008
Americas
InterContinental
Occupancy		56.6	%		63.5	%		(6.9	)%pts		63.0	%		69.0	%		(6.0	)%pts		76.5	%		80.8	%		(4.3	)%pts
Average daily rate	$	118.30		$	127.10			(6.93	)%	$	163.03		$	177.48			(8.15	)%	$	196.52		$	259.21			(24.19	)%
RevPAR	$	66.95		$	80.69			(17.02	)%	$	102.66		$	122.45			(16.16	)%	$	150.28		$	209.35			(28.22	)%
Crowne Plaza
Occupancy		55.1	%		60.0	%		(4.9	)%pts		65.0	%		71.1	%		(6.1	)%pts		—			—			—
Average daily rate	$	99.93		$	109.06			(8.37	)%	$	107.19		$	121.28			(11.62	)%		—			—			—
RevPAR	$	55.01		$	65.39			(15.87	)%	$	69.68		$	86.29			(19.25	)%		—			—			—
Holiday Inn
Occupancy		54.6	%		60.5	%		(5.9	)%pts		64.8	%		70.3	%		(5.5	)%pts		65.7	%		70.0	%		(4.3	)%pts
Average daily rate	$	91.61		$	97.72			(6.26	)%	$	101.31		$	112.48			(9.93	)%	$	103.78		$	111.00			(6.50	)%
RevPAR	$	49.98		$	59.11			(15.46	)%	$	65.67		$	79.11			(16.98	)%	$	68.15		$	77.71			(12.30	)%
Holiday Inn Express
Occupancy		59.3	%		64.7	%		(5.4	)%pts		75.1	%		77.8	%		(2.7	)%pts		—			—			—
Average daily rate	$	94.47		$	99.40			(4.96	)%	$	130.79		$	156.37			(16.36	)%		—			—			—
RevPAR	$	56.07		$	64.38			(12.91	)%	$	98.25		$	121.71			(19.27	)%		—			—			—
Staybridge Suites
Occupancy		66.1	%		69.7	%		(3.6	)%pts		69.0	%		73.5	%		(4.5	)%pts		68.2	%		72.5	%		(4.3	)%pts
Average daily rate	$	95.06		$	101.67			(6.50	)%	$	100.66		$	110.96			(9.28	)%	$	94.63		$	103.24			(8.34	)%
RevPAR	$	62.85		$	70.83			(11.26	)%	$	69.48		$	81.58			(14.83	)%	$	64.56		$	74.83			(13.72	)%
Candlewood Suites
Occupancy		65.9	%		67.3	%		(1.4	)%pts		63.2	%		71.3	%		(8.1	)%pts		—			—			—
Average daily rate	$	69.46		$	74.33			(6.55	)%	$	62.59		$	71.79			(12.80	)%		—			—			—
RevPAR	$	45.79		$	50.05			(8.51	)%	$	39.53		$	51.18			(22.75	)%		—			—			—
Hotel Indigo
Occupancy		53.7	%		54.8	%		(1.1	)%pts		60.9	%		67.4	%		(6.5	)%pts		—			—			—
Average daily rate	$	104.40		$	116.21			(10.16	)%	$	111.86		$	141.66			(21.04	)%		—			—			—
RevPAR	$	56.03		$	63.68			(12.01	)%	$	68.14		$	95.56			(28.69	)%		—			—			—

	Franchised									Managed									Owned and leased
							Change vs									Change vs									Change vs
	2009			2008			2008			2009			2008			2008			2009			2008			2008
EMEA
InterContinental
Occupancy		57.7	%		64.1	%		(6.4	)%pts		60.9	%		66.1	%		(5.2	)%pts		76.0	%		74.5	%		1.6	%pts
Average daily rate	$	275.70		$	305.24			(9.68	)%	$	186.66		$	198.41			(5.92	)%	$	371.80		$	425.28			(12.58	)%
RevPAR	$	159.05		$	195.71			(18.73	)%	$	113.73		$	131.13			(13.27	)%	$	282.63		$	316.69			(10.76	)%
Crown Plaza
Occupancy		62.2	%		64.9	%		(2.7	)%pts		71.1	%		77.1	%		(5.9	)%pts		—			—			—
Average daily rate	$	136.33		$	155.13			(12.11	)%	$	156.54		$	184.06			(14.95	)%		—			—			—
RevPAR	$	84.78		$	100.65			(15.77	)%	$	111.36		$	141.88			(21.51	)%		—			—			—
Holiday Inn
Occupancy		60.5	%		64.8	%		(4.4	)%pts		68.7	%		72.0	%		(3.3	)%pts		—			—			—
Average daily rate	$	108.92		$	119.93			(9.18	)%	$	99.55		$	109.92			(9.44	)%		—			—			—
RevPAR	$	65.89		$	77.76			(15.27	)%	$	68.38		$	79.11			(13.56	)%		—			—			—
Holiday Inn Express
Occupancy		66.8	%		70.7	%		(3.9	)%pts		46.7	%		65.6	%		(18.9	)%pts		60.6	%		68.4	%		(7.8	)%pts
Average daily rate	$	86.43		$	92.54			(6.60	)%	$	79.76		$	121.76			(34.49	)%	$	94.24		$	103.37			(8.83	)%
RevPAR	$	57.72		$	65.40			(11.75	)%	$	37.27		$	79.86			(53.34	)%	$	57.11		$	70.70			(19.23	)%

37

	Franchised									Managed									Owned and leased
							Change vs									Change vs									Change vs
	2009			2008			2008			2009			2008			2008			2009			2008			2008
Asia Pacific
InterContinental
Occupancy		68.4	%		69.8	%		(1.4	)%pts		63.4	%		61.9	%		1.5	%pts		65.2	%		69.0	%		(3.8	)%pts
Average daily rate	$	164.64		$	213.47			(22.87	)%	$	154.49		$	172.84			(10.61	)%	$	339.45		$	412.15			(17.64	)%
RevPAR	$	112.68		$	149.03			(24.39	)%	$	97.97		$	106.96			(8.40	)%	$	221.28		$	284.26			(22.16	)%
Crowne Plaza
Occupancy		69.8	%		73.3	%		(3.5	)%pts		65.9	%		67.5	%		(1.6	)%pts		—			—			—
Average daily rate	$	109.58		$	144.26			(24.04	)%	$	98.27		$	110.78			(11.30	)%		—			—			—
RevPAR	$	76.45		$	105.68			(27.65	)%	$	64.79		$	74.81			(13.39	)%		—			—			—
Holiday Inn
Occupancy		69.4	%		71.4	%		(2.1	)%pts		63.3	%		65.6	%		(2.3	)%pts		84.7	%		84.3	%		0.4	%pts
Average daily rate	$	80.88		$	87.02			(7.06	)%	$	78.60		$	89.81			(12.48	)%	$	99.23		$	109.90			(9.71	)%
RevPAR	$	56.13		$	62.18			(9.73	)%	$	49.75		$	58.91			(15.55	)%	$	84.04		$	92.61			(9.25	)%
Holiday Inn Express
Occupancy		54.4	%		60.8	%		(6.4	)%pts		61.7	%		60.1	%		1.6	%pts		—			—			—
Average daily rate	$	76.52		$	75.11			1.88	%	$	48.00		$	55.86			(14.08	)%		—			—			—
RevPAR	$	41.65		$	45.68			(8.82	)%	$	29.61		$	33.56			(11.79	)%		—			—			—
Other
Occupancy		66.6	%		71.7	%		(5.1	)%pts		74.5	%		79.2	%		(4.7	)%pts		—			—			—
Average daily rate	$	119.77		$	124.7			(3.95	)%	$	99.17		$	105.40			(5.91	)%		—			—			—
RevPAR	$	79.83		$	89.39			(10.70	)%	$	73.88		$	83.48			(11.50	)%		—			—			—

Regulation

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

SOFT DRINKS

The Group disposed of its interest in Britvic by way of an IPO in December 2005. The Group received aggregate proceeds of approximately £371 million (including two additional dividends, one of £47 million received in November 2005, and another of £89 million, received in May 2005, before any commissions or expenses).

The Group results for fiscal 2005 include the results of Soft Drinks for the period up until the IPO of Britvic on December 14, 2005.

Britvic generated operating profits before other operating income and expenses of £70 million on revenues of £671 million in the period up to December 14, 2005.

TRADEMARKS

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

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ORGANIZATIONAL STRUCTURE

Principal operating subsidiary undertakings

InterContinental Hotels Group PLC was the beneficial owner of all of the equity share capital, either itself or through subsidiary undertakings, of the following companies during the year. The companies listed below include those which principally affect the amount of profit and assets of the Group.

Six Continents Limited^a

Hotel Inter-Continental London Limited^a

Six Continents Hotels, Inc.^b

Inter-Continental Hotels Corporation^b

Barclay Operating Corp.^b

InterContinental Hotels Group Resources, Inc.^b

InterContinental Hong Kong Limited^c

Société Nouvelle du Grand Hotel SA^d

(a)	Incorporated in Great Britain and registered in England and Wales.
(b)	Incorporated in the United States.
(c)	Incorporated in Hong Kong.
(d)	Incorporated in France.

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PROPERTY, PLANT AND EQUIPMENT

Group companies own and lease properties throughout the world, principally hotels but also offices. The table below analyzes the net book value of the Group’s property, plant and equipment at December 31, 2009. Approximately 50% of the hotel properties by value were directly owned, with 55% held under leases having a term of 50 years or longer.

Net book value as at December 31, 2009	Americas		EMEA		Asia Pacific		Total
	($ million)
Land and buildings		533		556		321		1,410
Fixtures, fittings and equipment		165		167		94		426
		698		723		415		1,836

Approximately 80% of the net book value relates to the top five owned and leased hotels (in terms of value) of a total of 17 hotels, including $187 million relating to assets held under finance leases.

At December 31, 2008, five hotels were classified as held for sale. During the year, one of these was sold and the remaining four were reclassified as property, plant and equipment as sales were no longer considered highly probable within the next 12 months. On reclassification, valuation adjustments of $45 million were recognized, comprising $14 million of depreciation not charged whilst held for sale and $31 million of impairments relating to two North American hotels. Further impairment charges of $28 million were also recognized during the year, $20 million in respect of a North American hotel and $8 million relating to a European hotel. The impairment charges have arisen as a result of the current economic downturn and a re-assessment of the recoverable amount of the properties, based on value in use.

Contracts placed for expenditure on property, plant and equipment not included in the Consolidated Financial Statements at December 31, 2009 amounted to $7 million.

Subsequent to the year end, a North American hotel was sold for $5.5 million on March 25, 2010.

ENVIRONMENT

IHG understands its responsibility to respect the environment and manage its impacts for the benefit of the communities in which it operates.

As such IHG is committed to:

•  Implementing sound environmental practices in the design, development and operation of its hotels;

•  Encouraging the development and integration of sustainable technologies;

•  Endeavouring to reduce its use of energy, water and re-use and recycle the resources consumed by its business wherever practical;

•  Engaging its customers, colleagues, hotel owners, suppliers and contractors in its efforts to protect the environment;

•  Providing the training and resources required to meet its objectives;

•  Monitoring, recording and benchmarking its environmental performance on a regular basis;

•  Making business decisions taking into account these commitments; and

•  Communicating its policies, practices and program to all its stakeholders.

IHG’s overall approach is based on its environmental policy in which it commits to measure, manage and innovate across the Group. In March 2009, IHG launched its online sustainability tool called Green Engage, which defines its vision of a sustainable hotel.

Green Engage enables the Group to measure, manage and report on the environmental and other corporate responsibility impacts of its hotels. Green Engage provides recommendations for both new and existing hotels in four different climatic regions. Its recommendations cover design, operations, and technologies aimed at reducing

40

energy, water and waste, cutting carbon emissions, improving guest health and comfort, reducing operating and maintenance costs, and raising guest and staff awareness of sustainability issues.

The Group also believes that there is a real competitive advantage in reducing its impacts and providing ‘green’ choices for its guests and corporate clients. The Group is dedicated to enhancing the quality of its guests’ stay, at the same time as having a positive impact on local communities and the global environment.

Climate change is already having a major impact on the travel and hospitality industry. IHG understands that the potential climate change costs to its business are sizable. If the Group wants to continue to grow responsibly, it must rise to the challenge and reduce its energy, carbon and resource impacts. The Group is committed to doing this through developing innovative technology, partnerships and process improvements, and not just through carbon offsetting.

IHG chooses not simply to mitigate its greenhouse gas emissions through the purchase of voluntary carbon offsets. The Group believes that as a global organization with operations in many markets, its biggest contribution towards cutting greenhouse gas emissions will come from delivering real emission cuts — through innovating new and better ways to design, build and run its hotels — not through offsetting.

ITEM 4A.   UNRESOLVED STAFF COMMENTS

None.

ITEM 5.   OPERATING AND FINANCIAL REVIEW AND PROSPECTS

INTRODUCTION

Business and overview

The Group is an international hotel business which owns a portfolio of established and diverse hotel brands, including InterContinental, Crowne Plaza, Holiday Inn, Holiday Inn Express, Staybridge Suites, Candlewood Suites and Hotel Indigo. As at December 31, 2009, the Group had 4,438 franchised, managed, owned and leased hotels and 646,679 guest rooms in over 100 countries and territories around the world. The Group also manages the hotel loyalty program, Priority Club Rewards.

The Group’s revenue and earnings are derived from hotel operations, which include franchise and other fees paid under franchise agreements, management and other fees paid under management contracts, where the Group operates third-parties’ hotels, and operation of the Group’s owned hotels.

Operational performance

Revenue decreased by 18.9% to $1,538 million and operating profit before exceptional items decreased by 33.9% to $363 million during the year ended December 31, 2009. The results reflect the challenging global economic environment faced by the Group throughout 2009. Group RevPAR fell 14.7% during the year, with declines in both occupancy and rate. However, stabilising occupancy levels in the fourth quarter indicated a slight rebound in trading conditions which resulted in a RevPAR decline of 10.9% compared to the fourth quarter in 2008. Furthermore, IHG continued to achieve organic growth during the year, increasing its net room count by 4.3% or 26,828 rooms. The Group also made significant progress in the roll-out of the Holiday Inn brand family relaunch, with 1,697 hotels converted globally as at December 31, 2009.

The performance of the Group is evaluated primarily on a regional basis. The regional operations are split by business model: franchise agreement, management contract, and owned and leased operations. All three income types are affected by occupancy and room rates achieved by hotels, the ability to manage costs and the change in the number of available rooms through acquisition, development and disposition. Results are also impacted by economic conditions and capacity. The Group’s segmental results are shown before exceptional operating items, interest expense, interest income and income taxes.

41

CRITICAL ACCOUNTING POLICIES

The preparation of the financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and costs and expense during the reporting period. On an ongoing basis, management evaluates its estimates and judgments, including those relating to revenue recognition, bad debts, investments, property, plant and equipment, goodwill and intangible assets, income taxes, guest program liability, self insurance claims payable, restructuring costs, retirement benefits and contingencies and litigation.

Management bases its estimates and judgments on historical experience and on other factors that are believed to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily available from other sources. Actual results may differ from these estimates under different assumptions and conditions.

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

Revenue recognition

Revenue is the gross inflow of economic benefits received and receivable by the Group on its own account where those inflows result in increases in equity.

Revenue is derived from the following sources: franchise fees; management fees; owned and leased properties and other revenues which are ancillary to the Group’s operations, including technology fee income.

Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Group.

Franchise fees — received in connection with the license of the Group’s brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned and realized or realizable under the terms of the agreement.

Management fees — earned from hotels managed by the Group, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract.

Owned and leased — primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned and leased hotels operated under the Group’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold.

In addition to management or franchise fees, hotels within the IHG system pay cash assessments which are collected by IHG for specific use within the System Funds (the “Funds”). Under the governance of the IAHI, the Owners’ Association, IHG operates the Funds on behalf of hotel owners with the objective of driving revenues for their hotels. The Funds are used to pay for marketing, the Priority Club loyalty program and the global reservation system. The Funds are planned to operate at breakeven with any short-term timing surplus or deficit carried in IHG’s statement of financial position within working capital. As all Fund assessments are designated for specific purposes and do not result in a profit or loss for the Group, the revenue recognition criteria as outlined above are not met and therefore the revenue and expenses of the Funds are not included in the Consolidated income statement. Financial information relating to the Funds is included in Note 31 of Notes to the Consolidated Financial Statements.

Goodwill, intangible assets, and property, plant and equipment

Goodwill arising on acquisitions prior to October 1, 1998 was eliminated against equity. From October 1, 1998 to December 31, 2003, acquired goodwill was capitalized and amortized over a period not exceeding 20 years. Since January 1, 2004, goodwill continued to be capitalized but amortization ceased as at that date, replaced by an

42

impairment review on an annual basis or more frequently if there are indicators of impairment. Goodwill is allocated to cash-generating units for impairment testing purposes.

Intangible assets and property, plant and equipment are capitalized and amortized over their expected useful lives, and reviewed for impairment when events or circumstances indicate that the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units.

The impairment testing of individual assets or cash-generating units requires an assessment of the recoverable amount of the asset or cash-generating unit. If the carrying value of the asset or cash-generating unit exceeds its estimated recoverable amount, the asset or cash-generating unit is written down to its recoverable amount. Recoverable amount is the greater of fair value less cost to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that is based on the Group’s weighted average cost of capital adjusted to reflect the risks specific to the business model and territory of the cash-generating unit or asset being tested. The outcome of such an assessment is subjective, and the result sensitive to the assumed future cashflows to be generated by the cash-generating units or assets and discount rates applied in calculating the value in use. Any impairment arising is charged to the income statement.

During 2009, as a consequence of the global economic downturn, the Group recognized total impairment charges of $197 million across five asset categories as follows:

•  Property, plant and equipment — $28 million, comprising $20 million in respect of a North American hotel and $8 million relating to a European hotel;

•  Assets held for sale — $45 million, comprising $14 million of depreciation not charged whilst held for sale and $31 million of impairments relating to two North American hotels;

•  Goodwill — $78 million relating to the Americas managed operations cash-generating unit;

•  Intangible assets — $32 million in respect of a US management contract; and

•  Other financial assets — $14 million relating to an investment in an entity that owns a North American hotel that the Group manages.

The impairment charges have been measured by reference to value in use calculations using pre-tax discount rates in the range of 12.5% to 14.0%.

Income taxes

The Group provides for deferred tax in accordance with IAS 12 “Income Taxes” in respect of temporary differences between the tax base and carrying value of assets and liabilities including accelerated capital allowances, unrelieved tax losses, unremitted profits from overseas where the Group does not control remittance, gains rolled over into replacement assets, gains on previously revalued properties and other short-term temporary differences. Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be realized. The Group estimates deferred tax assets and liabilities based on current tax laws and rates, and in certain cases, business plans, including management’s expectations regarding the manner and timing of recovery of the related assets. Changes in these estimates may affect the amount of deferred tax liabilities or the valuation of deferred tax assets.

Provisions for tax contingencies require judgments on the expected outcome of tax exposures which may be subject to significant uncertainty, and therefore the actual results may vary from expectations resulting in adjustments to contingencies and cash tax settlements. During 2009, exceptional provision releases of $175 million were made in relation to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired.

Loyalty program

The hotel loyalty program, Priority Club Rewards enables members to earn points, funded through hotel assessments, during each qualifying stay at an IHG branded hotel and redeem the points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables and is

43

estimated using eventual redemption rates determined by actuarial methods and points values. The future redemption liability amounted to $470 million at December 31, 2009.

Pensions and other post-employment benefit plans

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

OPERATING RESULTS

Accounting principles

The following discussion and analysis is based on the Consolidated Financial Statements of the Group, which are prepared in accordance with IFRS.

For the year ended December 31, 2009 the results include exceptional items totaling a net charge of $80 million (2008 net charge of $85 million, 2007 net credit of $152 million). For comparability of the periods presented, some performance indicators in this Operating and financial review and prospects discussion have been calculated after eliminating these exceptional items. Such indicators are prefixed with “adjusted”. An analysis of exceptional items is included in Note 5 of Notes to the Consolidated Financial Statements.

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2009			2008			2007
	($ million)
Revenue
Continuing operations		1,538			1,897			1,817
Discontinued operations		—			—			33
Total revenue		1,538			1,897			1,850
Operating profit before exceptional operating items
Continuing operations		363			549			488
Discontinued operations		—			—			3
Total operating profit before exceptional operating items		363			549			491
Exceptional operating items		(373	)		(132	)		60
Operating (loss)/profit		(10	)		417			551
Net financial expenses		(54	)		(101	)		(90	)
(Loss)/profit before tax		(64	)		316			461
Tax		272			(59	)		(30	)
Profit after tax		208			257			431
Gain on disposal of assets, net of tax		6			5			32
Profit for the year		214			262			463
Earnings per ordinary share:
Basic		74.7¢			91.3¢			144.7¢
Adjusted		102.8¢			120.9¢			97.2¢

Year ended December 2009 compared with year ended December 2008

Revenue decreased by 18.9% to $1,538 million and operating profit before exceptional items decreased by 33.9% to $363 million during the year ended December 31, 2009. Included in these results are $3 million of significant liquidated damages received by IHG in 2009 in respect of the settlement of a franchise contract in the

44

EMEA region. During 2008, significant liquidated damages totaling $33 million were received across the Group. Excluding these, revenue and operating profit before exceptional items decreased by 17.7% and 30.2% respectively.

As a result of the declining real estate market, the InterContinental Atlanta and Staybridge Suites Denver Cherry Creek no longer meet the criteria for designation as held for sale assets. Consequently, these hotels are no longer categorised as discontinued operations and comparative figures have been re-presented accordingly.

The average US dollar exchange rate strengthened against sterling during 2009 (2009 $1=£0.64, 2008 $1=£0.55). Translated at constant currency, applying 2008 exchange rates, revenue decreased by 17.0% and operating profit decreased by 35.9%.

Exceptional operating items

Exceptional operating items of $373 million consisted of:

•  $91 million charge, comprising an onerous contract provision of $65 million for the future net unavoidable costs under a performance guarantee related to certain management contracts with one US hotel owner, and a deposit of $26 million written off as it is no longer considered recoverable under the terms of the same management contracts;

•  $19 million in relation to the Holiday Inn brand family relaunch;

•  $21 million enhanced pension transfers to deferred members of the InterContinental Hotels UK Pension Plan who accepted an offer to receive the enhancement as either a cash lump sum or an additional transfer value to an alternative pension plan provider;

•  $197 million of non-cash impairment charges reflecting the weaker trading environment in 2009, including $45 million relating to hotels reclassified from held for sale assets;

•  $43 million which primarily related to the closure of certain corporate offices together with severance costs arising from a review of the Group’s cost base; and

•  $2 million loss on disposal of hotels.

Exceptional operating items are treated as exceptional by reason of their size or nature and are excluded from the calculation of adjusted earnings per ordinary share in order to provide a more meaningful comparison of performance.

Net financial expenses

Net financial expenses decreased from $101 million in 2008 to $54 million in 2009, due to lower net debt levels and lower interest rates. Average net debt levels in 2009 were lower than 2008 primarily as a result of cost reduction programs and an increased focus on cash management.

Financing costs included $2 million (2008 $12 million) of interest costs associated with Priority Club Rewards where interest is charged on the accumulated balance of cash received in advance of the redemption points awarded. Financing costs in 2009 also included $18 million (2008 $18 million) in respect of the InterContinental Boston finance lease.

Taxation

The effective rate of tax on the combined profit from continuing and discontinued operations, excluding the impact of exceptional items, was 5% (2008 23%). The rate is particularly low in 2009 due to the impact of prior year items relative to a lower level of profit than in 2008. By excluding the impact of prior year items, which are included wholly within continuing operations, the equivalent tax rate would be 42% (2008 39%). This rate is higher than the UK statutory rate of 28% due mainly to certain overseas profits (particularly in the US) being subject to statutory rates higher than the UK statutory rate, unrelieved foreign taxes and disallowable expenses.

Taxation within exceptional items totaled a credit of $287 million (2008 $42 million) in respect of continuing operations. This represented the release of exceptional provisions relating to tax matters which were settled during

45

the year, or in respect of which the statutory limitation period had expired, together with tax relief on exceptional costs.

Net tax paid in 2009 totaled $2 million (2008 $2 million) including $1 million (2008 $3 million) in respect of disposals. Tax paid is lower than the current period income tax charge, primarily due to the receipt of refunds in respect of prior years, together with provisions for tax for which no payment of tax has currently been made.

Earnings per ordinary share

Basic earnings per ordinary share in 2009 was 74.7 cents, compared with 91.3 cents in 2008. Adjusted earnings per ordinary share was 102.8 cents, against 120.9 cents in 2008.

Highlights for the year ended December 31, 2009

The following is a discussion of the year ended December 31, 2009 compared with the year ended December 31, 2008.

	Year ended			Year ended
	December 31,			December 31,
	2009			2008			Change
	($ million)						%
Revenue
Americas		772			963			(19.8	)
EMEA		397			518			(23.4	)
Asia Pacific		245			290			(15.5	)
Central		124			126			(1.6	)
Total		1,538			1,897			(18.9	)
Operating profit before exceptional operating items
Americas		288			465			(38.1	)
EMEA		127			171			(25.7	)
Asia Pacific		52			68			(23.5	)
Central		(104	)		(155	)		32.9
Total		363			549			(33.9	)

Revenue decreased by 18.9% to $1,538 million and operating profit before exceptional items decreased by 33.9% to $363 million during the year ended December 31, 2009. The results reflect the challenging global economic environment faced by the Group throughout 2009. Group RevPAR fell 14.7% during the year, with declines in both occupancy and rate. However, stabilising occupancy levels in the fourth quarter indicated a slight rebound in trading conditions which resulted in a RevPAR decline of 10.9% compared to the fourth quarter in 2008. Furthermore, IHG continued to achieve organic growth during the year, increasing its net room count by 4.3% or 26,828 rooms. The Group also made significant progress in the roll-out of the Holiday Inn brand family relaunch, with 1,697 hotels converted globally as at December 31, 2009.

In the year, the Group took a number of actions to improve efficiency and reduce costs which led to a reduction in regional and central overheads of $95 million, from $304 million in 2008 to $209 million in 2009, including a $23 million favorable movement in foreign exchange.

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Americas

Americas results

	Year ended			Year ended
	December 31,			December 31,
	2009			2008			Change
	($ million)						%
Revenue
Franchised		437			495			(11.7	)
Managed		110			168			(34.5	)
Owned and leased		225			300			(25.0	)
Total		772			963			(19.8	)
Operating profit before exceptional operating items
Franchised		364			426			(14.6	)
Managed		(40	)		51			(178.4	)
Owned and leased		11			55			(80.0	)
		335			532			(37.0	)
Regional overheads		(47	)		(67	)		29.9
Total		288			465			(38.1	)

Revenue and operating profit before exceptional items decreased by 19.8% to $772 million and 38.1% to $288 million respectively. Excluding the receipt of significant liquidated damages of $13 million in 2008, revenue and operating profit declined by 18.7% and 36.3% respectively.

The region experienced challenging trading conditions throughout the year leading to RevPAR, revenue and profit declines across all ownership types. Despite RevPAR declines, the region’s US comparable hotels demonstrated outperformance relative to the US market.

Franchised revenue and operating profit decreased by 11.7% to $437 million and 14.6% to $364 million respectively, compared to 2008. This decrease was predominantly driven by a fall in royalty revenues as a consequence of a RevPAR decline of 14.3%. Revenues also included the impact of a decline in real estate activity leading to lower fees associated with activities such as the signing of new hotels and conversions. An increase in overall room supply partially offset the decline in revenue and profit.

Managed revenues decreased by 34.5% to $110 million during the year or, by 29.0% excluding the impact of $13 million in liquidated damages received in 2008. All brands were impacted by the economic downturn which resulted in RevPAR declines of 17.8%. Operating profit declined by $91 million ($78 million excluding liquidated damages) resulting in a loss of $40 million. The loss was due to the RevPAR driven revenues declines, IHG funding owner’s priority return shortfalls on a number of hotels managed by one owner and certain guarantee payments. At the year end, an exceptional charge of $91 million was recognized comprising the write off of a deposit related to the priority return contracts and the total estimated net cash outflows to this owner under the guarantee. Therefore, future payments to this owner will be charged against the provision and will not impact operating results. The managed results also included the impact of provisions recognized following the devaluation of the Venezuelan currency and the potential impact of asset nationalisation.

Results from managed operations include revenues of $71 million (2008 $88 million) and operating profit of $nil (2008 $6 million) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts.

Owned and leased revenue declined by 25.0% to $225 million and operating profit decreased by 80.0% to $11 million. Underlying trading was driven by RevPAR declines, including the InterContinental brand with a decline of 28.2%. Trading at the InterContinental New York, in particular, was severely impacted by the collapse of the financial markets. Results also included the impact of the sale of the Holiday Inn Jamaica, sold in August 2008,

47

which led to a reduction in revenue and operating profit of $16 million and $2 million respectively when compared to 2008.

As a result of the declining real estate market the InterContinental Atlanta and Staybridge Suites Denver Cherry Creek no longer meet the criteria for designation as held for sale assets and consequently the results of these hotels are no longer categorised as discontinued operations and comparative figures have been re-presented accordingly.

Regional overheads declined 29.9% during the year, from $67 million to $47 million. The favorable movement was driven by increased efficiencies and the impact of an organizational restructuring undertaken to further align the regional structure with the requirements of IHG’s owners and hotels.

EMEA

EMEA results

	Year ended			Year ended
	December 31,			December 31,
	2009			2008			Change
	($ million)						%
Revenue
Franchised		83			110			(24.5	)
Managed		119			168			(29.2	)
Owned and leased		195			240			(18.8	)
Total		397			518			(23.4	)
Operating profit before exceptional operating items
Franchised		60			75			(20.0	)
Managed		65			95			(31.6	)
Owned and leased		33			45			(26.7	)
		158			215			(26.5	)
Regional overheads		(31	)		(44	)		29.5
Total		127			171			(25.7	)

Revenue and operating profit before exceptional items decreased by 23.4% to $397 million and 25.7% to $127 million respectively. At constant currency, revenue and operating profit before exceptional items decreased by 16.8% and 22.8% respectively. The region received significant liquidated damages totaling $16 million in 2008 and $3 million in 2009. Excluding these receipts, revenue declined by 21.5% and operating profit before exceptional items declined by 20.0%, and at constant currency by 14.7% and 16.8% respectively.

During the year, RevPAR declines were experienced across the region, with declines in key markets ranging from 9.8% in the UK to 17.8% in Continental Europe.

Franchised revenue and operating profit decreased by 24.5% to $83 million and 20.0% to $60 million respectively, or at constant currency by 18.2% and 13.3% respectively. Excluding the impact of $3 million in liquidated damages received in 2009 and $7 million received in 2008, revenue and operating profit declined by 22.3% and 16.2% respectively, or at constant currency by 15.5% and 8.8% respectively. The decline was principally driven by RevPAR declines across Continental Europe and the UK, partly offset by a 6% increase in room count.

EMEA managed revenue and operating profit decreased by 29.2% to $119 million and by 31.6% to $65 million respectively, or at constant currency by 25.0% and 29.5% respectively. Excluding the impact of $9 million in liquidated damages received in 2008, revenue and operating profit declined by 25.2% and 24.4% respectively, or at constant currency by 20.8% and 22.1% respectively. The results were driven by managed RevPAR declines of 14.9%.

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Owned and leased revenue decreased by 18.8% to $195 million and operating profit decreased by 26.7% to $33 million, or at constant currency by 10.4% and 17.8% respectively. The InterContinental Paris Le Grand, in particular, was adversely impacted by the economic downturn as both business and leisure travel declined in Paris. However, trading at the InterContinental Park Lane, London was more resilient, with RevPAR down just 1.7% during the year.

Regional overheads decreased by 29.5% to $31 million due to improved efficiencies and cost savings, as well as a favorable movement in foreign exchange of $6 million.

Asia Pacific

Asia Pacific results

	Year ended			Year ended
	December 31,			December 31,
	2009			2008			Change
	($ million)						%
Revenue
Franchised		11			18			(38.9	)
Managed		105			113			(7.1	)
Owned and leased		129			159			(18.9	)
Total		245			290			(15.5	)
Operating profit before exceptional operating items
Franchised		5			8			(37.5	)
Managed		44			55			(20.0	)
Owned and leased		30			43			(30.2	)
		79			106			(25.5	)
Regional overheads		(27	)		(38	)		28.9
Total		52			68			(23.5	)

Asia Pacific revenue and operating profit before exceptional items decreased by 15.5% to $245 million and 23.5% to $52 million respectively. Excluding the receipt of $4 million in significant liquidated damages in 2008, revenue and operating profit declined by 14.3% and 18.8% respectively. Despite RevPAR declines of 13.5%, the region’s brands demonstrated outperformance relative to the market.

Franchised revenues and operating profit decreased by 38.9% to $11 million and by 37.5% to $5 million respectively. Excluding the impact of $4 million liquidated damages received in 2008, revenue decreased by 21.4% and profit increased by $1 million or 25.0%. The decline in revenue was driven by lower RevPARs and the loss of royalties following the removal of six hotels (1,067 rooms) which did not meet IHG’s brand and quality standards.

Managed revenue decreased by 7.1% to $105 million and operating profit decreased by 20.0% to $44 million. RevPAR across the Greater China managed estate declined 15.6%, primarily due to room oversupply in key Chinese cities, such as Beijing and trading upside in 2008 from the Olympic Games.

Owned and leased revenue decreased by 18.9% to $129 million and operating profit decreased by 30.2% to $30 million. These results were driven by the InterContinental Hong Kong, where RevPAR declined 22.2% during the year.

Regional overheads decreased by 28.9% to $27 million, due to the impact of regional restructuring and lower marketing costs associated with the ANA joint venture in Japan.

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Central

	Year ended			Year ended
	December 31,			December 31,
	2009			2008			Change
	($ million)						%
Revenue		124			126			(1.6	)
Gross central costs		(228	)		(281	)		18.9
Net central costs		(104	)		(155	)		32.9

During 2009, net central costs decreased by 32.9% from $155 million to $104 million. The significant reduction was driven by management actions to increase efficiencies and implement cost-saving measures across the Group. Relative to 2008, the 2009 net central costs also benefited from a $16 million favorable movement in foreign exchange whilst the 2008 results included the receipt of a favorable $3 million insurance settlement.

System Funds

	Year ended		Year ended
	December 31,		December 31,
	2009		2008		Change
	($ million)				%
Assessments		1,008		990		1.8

In the year to December 31, 2009, assessments increased by 1.8% to $1.01 billion primarily as a result of the growth in system size and marketing programs.

Hotels operated under IHG brands are, pursuant to terms within their contracts, subject to cash assessments for the provision of brand marketing, reservations systems and the Priority Club Rewards loyalty program. These assessments, typically based upon room revenue, are pooled for the collective benefit of all hotels by brand or geography into the System Funds (“the Funds”). The Group acts on behalf of hotel owners with regard to the Funds, and the Owners’ Association, the IAHI, provides a governance overview of the operation of the Funds. The operation of the Funds does not result in a profit or loss for the Group and consequently the revenues and expenses of the Funds are not included in the Consolidated income statement.

Highlights for the year ended December 31, 2008

The following is a discussion of the year ended December 31, 2008 compared with the year ended December 31, 2007.

Group results

Revenue from continuing operations increased by 4.4% to $1,897 million and continuing operating profit before exceptional items increased by 12.5% to $549 million during the year ended 31 December 2008. The growth in revenues was driven by RevPAR gains in EMEA and Asia Pacific, continued expansion in China and the Middle East and the first full year of trading at the re-opened InterContinental Park Lane, London. Growth was achieved in all regions in the first three quarters of the year however, the worldwide financial crisis had a significant impact on results in the final quarter. In the fourth quarter, RevPAR declined sharply across the Group falling by 6.5% globally, although the Group’s brands continued to outperform their segments in all key markets. Strong revenue conversion led to a 2.0 percentage point increase in the continuing operating profit margin to 28.9%.

Included in these results is $33 million of liquidated damages received by the Group in 2008 in respect of the settlement of two management contracts and two franchise contracts, including one portfolio franchise contract. Excluding these, revenue and operating profit before exceptional items from continuing operations increased by 2.6% and 5.7% respectively.

Including discontinued operations, total revenue increased by 2.5% to $1,897 million whilst operating profit before exceptional items increased by 11.8% to $549 million. Discontinued operations included the results of

50

owned and leased hotels that have been disposed of since 1 January 2007, or those classified as held for sale as part of the asset disposal program that commenced in 2003.

Americas

Revenue and operating profit before exceptional items from continuing operations increased by 1.6% to $963 million and 2.4% to $465 million respectively. Including discontinued operations, revenue decreased by 0.1% while operating profit before exceptional items increased by 2.0%. Included in these results is the receipt of $13 million liquidated damages for one management contract.

As a result of sharp falls in occupancy, RevPAR declined across all ownership types in the fourth quarter. In the full year, the region achieved RevPAR growth across the owned and managed estates, however RevPAR declined marginally across the franchised portfolio. In the United States, for comparable hotels, all brands achieved premiums in RevPAR growth relative to their applicable market segment.

Franchised revenue and operating profit increased by 1.2% to $495 million and 0.2% to $426 million respectively, compared to 2007. The increase was driven by increased royalty fees as a result of net room count growth of 4.6%. Fees associated with signings and conversions declined as a result of lower real estate activity, due to the adverse impact of the global financial crisis, and lower liquidated damages collected on hotels exiting the system.

Managed revenues increased by 7.7% to $168 million during the year, boosted by the receipt of $13 million in liquidated damages for one hotel that had not commenced trading. Excluding these liquidated damages, managed revenues decreased by 0.6% to $155 million. Growth remained strong in the Latin America region, where rate-led RevPAR growth exceeded 15%. Offsetting this was a fall in revenues from hotels in the US, driven by RevPAR declines in the fourth quarter.

Managed operating profit increased by 24.4% to $51 million. The $10 million increase in profit principally reflects the $13 million receipt of liquidated damages. Excluding this receipt, the managed estate experienced a $3 million fall in operating profit. While the performance in Latin America resulted in growth in operating profit, this was more than offset by a decline in operating profit in the United States due to a fall in occupancy rates, and a small guarantee payment for a newly opened hotel. Additional revenue investment was made to support operational standards in the region. Total operating profit margin in the managed estate increased by 4.1 percentage points to 30.4%.

Results from managed operations include revenues of $88 million (2007 $86 million) and operating profit of $6 million (2007 $6 million) from properties that are structured, for legal reasons, as operating leases but with the same characteristics as management contracts. Excluding the results from these hotels and the $13 million liquidated damages, operating profit margin in the managed estate decreased by 2.2 percentage points to 47.8%.

Continuing owned and leased revenue decreased by $3 million to $300 million. Operating profit increased by 1.9% to $55 million. Underlying trading was driven by RevPAR growth of 0.8%, with RevPAR growth in the InterContinental brand of 0.4%. The results were positively impacted by trading at the InterContinental Mark Hopkins, San Francisco, driven by robust RevPAR growth. The InterContinental New York was affected by a downturn in the market as a result of the global financial crisis, adversely impacting revenue and operating profit at the hotel.

Regional overheads were relatively flat on 2007.

EMEA

Revenue and operating profit before exceptional items from continuing operations increased by 5.3% to $518 million and 27.6% to $171 million respectively. Including discontinued operations, revenue increased by 1.8% while operating profit before exceptional items increased by 26.7%. Included in these results were liquidated damages of $9 million relating to one management contract and $7 million for a portfolio of franchised hotels settled during the year.

During the year, the region achieved RevPAR growth of 3.6% driven by gains across all brands operated under managed and franchise contracts. From a regional perspective, RevPAR growth in the Middle East was extremely

51

strong at 20.2%, while smaller growth was experienced in Continental Europe. The region’s continuing operating profit margin increased by 5.8 percentage points to 33.0%. Excluding the two liquidated damages settlements, the margin on continuing operations grew 3.7 percentage points reflecting economies of scale in the managed business and strong revenue conversion at the InterContinental Park Lane, London.

Franchised revenue and operating profit increased by 35.8% to $110 million and 29.3% to $75 million respectively. The growth was principally driven by room count expansion and RevPAR growth in Continental Europe, with Germany and Russia showing RevPAR growth of 3.9% and 8.6% respectively. The region further benefited from the receipt of $7 million of liquidated damages relating to the removal of a portfolio of Holiday Inn Express hotels in the United Kingdom.

EMEA managed revenue increased by 0.6% to $168 million and operating profit increased by 9.2% to $95 million, driven by the receipt of $9 million in liquidated damages relating to the renegotiation of a management contract, which remains in the system. Excluding these liquidated damages, revenue and operating profit declined 4.8% and 1.1% respectively in 2008, as a result of mixed trading conditions in the region. Growth in the Middle East continued through the addition of new rooms and strong RevPAR growth of 20.2%. Offsetting this was a reduced contribution from a portfolio of managed hotels in the United Kingdom. A reduction in the fees associated with signing hotels to the pipeline further impacted the operating profit in the region.

In the owned and leased estate, continuing revenue decreased by 1.6% to $240 million as a result of the expiry of a hotel lease in Continental Europe. The InterContinental Park Lane, London which had its first full year of trading since re-opening after refurbishment in 2007, grew strongly in revenues to a market leading position (source: STR). The InterContinental Paris Le Grand experienced tougher trading conditions leading to a RevPAR decline at the hotel. Strong revenue conversion at the InterContinental Park Lane, London contributed to the continuing owned and leased operating profit increase of $12 million to $45 million.

Regional overheads were in line with 2007, with a $2 million increase in costs associated with the new head office offset through further efficiencies in sales and marketing activities.

Asia Pacific

Asia Pacific revenue and operating profit before exceptional items increased by 11.5% to $290 million and 7.9% to $68 million respectively.

The region achieved strong RevPAR growth across all brands, with the strongest growth in the owned and leased portfolio, and continued its strategic expansion in China. Good profit growth was achieved, although the continuing operating profit margin declined by 0.8 percentage points to 23.4% as a result of further investment to support expansion.

Franchised revenues increased from $16 million to $18 million driven by the receipt of $4 million of liquidated damages relating to the settlement of one franchise contract in the region. Excluding this receipt, operating profit declined by $2 million, primarily as a result of reduced fee income in India due to the removal of non-brand compliant hotels.

Managed revenue increased by 14.1% to $113 million as a result of the increased room count in Greater China and comparable RevPAR growth of 10.7% in Beijing boosted by the Olympic period. Further strong growth occurred in South East Asia with RevPAR growth of 9.9% in the region, and the joint venture with All Nippon Airways (“ANA”) further increased revenues. Operating profit increased by 19.6% to $55 million as revenue gains were partially offset by continued infrastructure investment in China and Southern Asia.

In the owned and leased estate, continuing revenue increased by 9.7% to $159 million as RevPAR growth continued at the InterContinental Hong Kong despite a slowdown during the fourth quarter. The hotel’s revenue growth combined with profit margin gains drove the estate’s operating profit growth of 19.4% to $43 million.

After a further $5 million of the previously announced $10 million investment to support the launch of the ANA Crowne Plaza brand in Japan and the non-recurrence of a $2 million favourable legal settlement in 2007, Asia Pacific regional overheads increased by $6 million to support the rapid growth in the region.

52

Central

During 2008, net central costs reduced by 4.9% from $163 million to $155 million due to the receipt of a favorable $3 million insurance settlement and the impact of weaker sterling.

LIQUIDITY AND CAPITAL RESOURCES

Sources of liquidity

The Group is primarily financed by a $1,685 million syndicated bank facility and £250 million of public bonds. The bank facility consists of two tranches: a $1.6 billion revolving credit facility which expires in May 2013 and a $85 million term loan which expires in November 2010. The £250 million public bonds are repayable in December 2016. Short-term borrowing requirements are met from drawings under bilateral bank facilities. Additional funding is provided by the 99-year finance lease on the InterContinental Boston.

The £250 million public bonds were issued in December 2009 at a coupon of 6% and were initially priced at 99.465% of face value. The £250 million was immediately swapped into US dollar debt using currency swaps and the proceeds of $415 million were used to reduce the term loan that expires in November 2010 from $500 million to $85 million. The reasons for issuing the bonds were to diversify the Group’s funding sources and extend the duration of a portion of its borrowings.

At December 31, 2009, gross debt was $1,122 million, including the finance lease creditor of $204  million. The currency denomination of gross debt was $451 million of US dollar denominated borrowings, $402 million of sterling denominated borrowings, $216 million of euro denominated borrowings and $53 million of borrowings denominated in other currencies, mainly Hong Kong dollars. The impact of currency swaps traded in December 2009 is to convert the sterling denominated borrowings into US dollar denominated borrowings.

At December 31, 2009, total committed bank facilities amounted to $1,693 million of which $1,174 million were unutilized. Uncommitted facilities totaled $25 million. In the Group’s opinion, the available facilities are sufficient for the Group’s present requirements.

The Group held cash and short-term deposits at December 31, 2009 amounting to $40 million. Credit risk on treasury transactions is minimized by operating a policy on investment of surplus cash that generally restricts counterparties to those with an A credit rating or better or those providing adequate security. Limits are also set on the amounts invested with individual counterparties. Notwithstanding that counterparties must have an A credit rating or better, during periods of significant financial market turmoil, counterparty exposure limits are significantly reduced and counterparty credit exposure reviews are broadened to include the relative placing of credit default swap pricings. Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

The Syndicated Facility contains two financial covenants: interest cover and net debt divided by earnings before interest, tax, depreciation and amortization (“EBITDA”). Net debt is calculated as total borrowings less cash and cash equivalents. The Group is in compliance with all of the financial covenants in its loan documents, none of which is expected to present a material restriction on funding in the near future.

Further details of exchange and interest rate risk and financial instruments are disclosed in “Item 11. Quantitative and qualitative disclosures about market risk”.

Cash from operating activities

Net cash from operating activities totaled $432 million for the year ended December 31, 2009 (2008 $641 million). The decrease over 2008 was largely a result of the impact of the global economic downturn on hotels in the IHG system.

Cash flow from operating activities is the principal source of cash used to fund the ongoing operating expenses, interest payments, maintenance capital expenditure and dividend payments of the Group. The Group believes that the requirements of its existing business and future investment can be met from cash generated internally, disposition of assets and businesses and external finance expected to be available to it.

53

Cash from investing activities

Net cash outflows from investing activities totaled $114 million (2008 $25 million) comprising proceeds (net of tax paid) from the disposal of hotels and investments of $34 million (2008 $83 million) and capital expenditure of $148 million (2008 $108 million), including the $65 million cost of the Hotel Indigo San Diego.

Cash used in financing activities

Net cash used in financing activities totaled $362 million (2008 $591 million), including a reduction in gross borrowings of $249 million (2008 $316 million). Returns to shareholders totaled $118 million (2008 $257 million) comprising dividend payments of $118 million (2008 $118 million). In 2008, the Group also returned $139 million by way of share repurchases. The share repurchase program was suspended in 2008 in order to preserve cash and maintain the strength of the Group’s financial position in the current trading climate.

Overall net debt decreased during the year by $191 million to $1,082 million at December 31, 2009.

The Group had committed contractual capital expenditure of $9 million at December 31, 2009 (2008 $40 million). As the Group has moved to a predominantly franchised and managed fee-based model, capital expenditure requirements have reduced.

Off-balance sheet arrangements

As at December 31, 2009, the Group had no off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on the Group’s financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Contractual obligations

The Group had the following contractual obligations outstanding as of December 31, 2009:

	Total amounts		Less than						After
	committed		1 year		1-3 Years		3-5 years		5 years
	($ million)
Long-term debt(i) (ii)		934		88		5		426		415
Interest payable(ii)		209		38		67		52		52
Finance lease obligations(iii)		3,444		16		32		32		3,364
Operating lease obligations		509		51		82		67		309
Agreed pension scheme contributions		13		13		—		—		—
Capital contracts placed		9		9		—		—		—
		5,118		215		186		577		4,140

(i)	Repayment period classified according to the related facility maturity date.
(ii)	Including the impact of derivatives.
(iii)	Represents the minimum lease payments related to the 99-year lease on the InterContinental Boston. Payments under the lease step up at regular intervals over the lease term.

In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. Forecast payments of $65 million have been provided for in the financial statements and the maximum exposure under other such guarantees was $106 million at December 31, 2009.

As of December 31, 2009, the Group had outstanding letters of credit of $54 million mainly relating to self insurance programs.

The Group may guarantee loans made to facilitate third-party ownership of hotels in which the Group has an equity interest and also a management contract. As of December 31, 2009, the Group was a guarantor of loans which could amount to a maximum exposure of $54 million.

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The Group has given warranties in respect of the disposal of certain of its former subsidiaries and hotels. It is the view of the Directors that, other than to the extent that liabilities have been provided for in the Consolidated Financial Statements, such warranties are not expected to result in material financial loss to the Group.

Pension plan commitments

The Group operates the following material defined benefits plans: the InterContinental Hotels UK Pension Plan and, in the United States, the InterContinental Hotels Pension Plan and the InterContinental Hotels non-qualified plans.

On an IAS 19 “Employee Benefits” basis, the InterContinental Hotels UK Pension Plan had a surplus of $8 million at December 31, 2009. The defined benefits section of this Plan is closed to new members. In addition, there are unfunded UK pension arrangements for certain members affected by the lifetime allowance; at December 31, 2009, these arrangements had an IAS 19 deficit of $47 million. In 2010, the Group expects to make regular contributions to the UK pension plan of £5 million.

The US-based plans are closed to new members and pensionable service no longer accrues for current employee members. On an IAS 19 basis, at December 31, 2009 the plans had a combined deficit of $74 million. In 2010, the Group expects to make regular contributions to these plans of $5 million.

The Group is exposed to the funding risks in relation to the defined benefit sections of the InterContinental Hotels UK Pension Plan and the US-based InterContinental Hotels Pension Plan, as explained in “Item 3. Key information — Risk factors”.

ITEM 6.   DIRECTORS, SENIOR MANAGEMENT AND EMPLOYEES

DIRECTORS AND SENIOR MANAGEMENT

Overall strategic direction of the Group is provided by the Board of directors, comprising executive and non-executive directors, and by members of the executive committee.

The directors and officers of InterContinental Hotels Group PLC as at March 19, 2010 are:

Directors

		Initially		Date of next
		appointed to		reappointment
Name	Title	the Board		by shareholders
Graham Allan(1)(2)	Director		2010		2010
Andrew Cosslett	Director and Chief Executive		2005		2011
David Kappler(1)	Director and Senior Independent Director		2004		2011
Ralph Kugler(1)(3)	Director		2003		2010
Jennifer Laing(1)	Director		2005		2012
Jonathan Linen(1)	Director		2005		2012
Richard Solomons	Director and Chief Financial Officer		2003		2012
David Webster(3)	Director and Chairman		2003		2010
Ying Yeh(1)	Director		2007		2011

(1)	Non-executive independent director.
(2)	Required, under the Company’s Articles of Association, to stand for election at the 2010 Annual General Meeting.
(3)	Required, under the Company’s Articles of Association, to stand for re-election at the 2010 Annual General Meeting.

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Officers

		Initially appointed
Name	Title	to position
Jim Abrahamson	President, The Americas		2009
Tom Conophy	Executive Vice President and Chief		2006
	Information Officer
Kirk Kinsell	President, EMEA		2007
Tracy Robbins	Executive Vice President, Global Human		2005
	Resources
Tom Seddon	Executive Vice President and Chief		2007
	Marketing Officer
George Turner	Executive Vice President, General		2009
	Counsel and Company Secretary

Former Directors and Officers

Peter Gowers, a senior employee of the Company, served as President, Asia Pacific from 2007 until July 2009.

Directors and Officers

David Webster, Non-Executive Chairman

Appointed Deputy Chairman and Senior Independent Director of InterContinental Hotels Group PLC on the separation of Six Continents PLC in April 2003. Appointed Non-Executive Chairman on January 1, 2004. Also Non-Executive Chairman of Makinson Cowell Limited, a capital markets advisory firm, a member of the Appeals Committee of the Panel on Takeovers and Mergers and a Director of Temple Bar Investment Trust PLC. Formerly Chairman of Safeway plc and a Non-Executive Director of Reed Elsevier PLC. Chairman of the Nomination Committee. Age 65.

Andrew Cosslett, Chief Executive

Appointed Chief Executive in February 2005, joining the Group from Cadbury Schweppes plc where he was most recently President, Europe, Middle East & Africa. During his career at Cadbury Schweppes he held a variety of senior regional management and marketing roles in the UK and Asia Pacific. Also has over 11 years’ experience in brand marketing with Unilever. A member of the Executive Committee of the World Travel & Tourism Council and a member of the President’s Committee of the CBI. Age 54.

Richard Solomons, Chief Financial Officer and Head of Commercial Development

Qualified as a chartered accountant in 1985, followed by seven years in investment banking, based in London and New York. Joined the Group in 1992 and held a variety of senior finance and operational roles. Appointed Finance Director of the Hotels business in October 2002 in anticipation of the separation of Six Continents PLC in April 2003. Responsible for corporate and regional finance, Group financial control, strategy, investor relations, tax, treasury, commercial development and procurement. Age 48.

Graham Allan, Non-Executive Director

Appointed a Director in January 2010. President of Yum! Restaurants International, a subsidiary of Yum! Brands, Inc since 2003. Previously Executive Vice President and Chief Operating Officer of Yum! Restaurants International. Has over 18 years’ experience in brand management, marketing, franchising and retail development. Age 54.

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David Kappler, Senior Independent Non-Executive Director

Appointed a Director and Senior Independent Director in June 2004. Non-Executive Chairman of Premier Foods plc and a Non-Executive Director of Shire plc. A qualified accountant and formerly Chief Financial Officer of Cadbury Schweppes plc. Also served as a Non-Executive Director of Camelot Group plc and of HMV Group plc. A member of the President’s Committee of the CBI and a member of the Trilantic Europe Advisory Council. Chairman of the Audit Committee. Age 62.

Ralph Kugler, Non-Executive Director

Appointed a Director in April 2003. Chairman of Byotrol plc, Chairman of Gorkana Limited and Senior Advisor to 3i PLC. Previously President, Unilever Home and Personal Care, and served on the boards of Unilever PLC and Unilever NV until May 2008. Chairman of the Remuneration Committee. Age 54.

Jennifer Laing, Non-Executive Director

Appointed a Director in August 2005. Was Associate Dean, External Relations at London Business School, until 2007. A Fellow of the Marketing Society and of the Institute of Practitioners in Advertising, she has over 30 years’ experience in advertising including 16 years with Saatchi & Saatchi. Also serves as a Non-Executive Director of Hudson Highland Group Inc., a US human resources company. Chairman of the Corporate Responsibility Committee. Age 63.

Jonathan Linen, Non-Executive Director

Appointed a Director in December 2005. Formerly Vice Chairman of the American Express Company, having held a range of senior positions throughout his career of over 35 years with American Express. A Non-Executive Director of Yum! Brands, Inc. and of Modern Bank N.A., a US private banking company. He also serves on a number of US Councils and advisory boards. Age 66.

Ying Yeh, Non-Executive Director

Appointed a Director in December 2007. Vice President and Chairman, Greater China Region, Nalco Company. Previously Chairman and President, North Asia Region, President, Business Development, Asia Pacific Region and Vice President, Eastman Kodak Company. Also a Non-Executive Director of AB Volvo. She was, for 15 years, a diplomat with the US Foreign Service in Hong Kong and Beijing until 1997. Age 61.

Other members of the Executive Committee

Jim Abrahamson, President, The Americas

Has over 31 years’ experience in hotel operations, branding, development and franchise relations. Joined the Group in January 2009 from Global Hyatt Corporation, where he served as Head of Development, the Americas, with responsibility for development of all the Hyatt brands in the region, and playing a key part in Global Hyatt’s entry into new markets and segments. Previously Senior Vice President, Hilton Hotels Corporation for 12 years. Responsible for the business development and performance of all the hotel brands and properties in the Americas’ region. Age 54.

Tom Conophy, Executive Vice President and Chief Information Officer

Has over 29 years’ experience in the IT industry, including management and development of new technology solutions within the travel and hospitality business. Joined the Group in February 2006 from Starwood Hotels & Resorts International where he held the position of Executive Vice President & Chief Technology Officer. Responsible for global technology, including IT systems and information management throughout the Group. Age 49.

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Kirk Kinsell, President, EMEA

Has over 27 years’ experience in the hospitality industry, including senior franchise positions with Holiday Inn Corporation and ITT Sheraton, prior to joining the Group in 2002 as Senior Vice President, Chief Development Officer for the Americas region. Became President, EMEA in September 2007. Responsible for the business development and performance of all the hotel brands and properties in the EMEA region. Age 55.

Tracy Robbins, Executive Vice President, Global Human Resources

Has over 24 years’ experience in line and HR roles in service industries. Joined the Group in December 2005 from Compass Group PLC, a world leading food service company, where she was Group Human Resources Leadership & Development Director. Previously Group HR Director for Forte Hotels Group. Responsible for global talent management and leadership development, reward strategy and implementation. Age 46.

Tom Seddon, Executive Vice President and Chief Marketing Officer

Has over 17 years’ experience in sales and marketing in the hospitality industry, including with IHG’s predecessor parent companies from 1994 to 2004. Rejoined the Group in November 2007, from restaurant business SUBWAY^® where he was responsible for worldwide sales and marketing activities. Has responsibility for worldwide brand management, reservations, e-commerce, global sales, relationship and distribution marketing, loyalty programs and corporate responsibility. Age 41.

George Turner, Executive Vice President, General Counsel and Company Secretary

Solicitor, qualified to private practice in 1995. After 12 years’ with Imperial Chemical Industries PLC, where he was most recently Deputy Company Secretary, he joined the Group in September 2008. Appointed Executive Vice President, General Counsel and Company Secretary in January 2009. Responsible for corporate governance, risk management, insurance, data privacy, internal audit, company secretariat and legal. Age 39.

There are no family relationships between any of the persons named above.

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

COMPENSATION

In fiscal 2009, the aggregate compensation (including pension contributions, bonus and awards under the long term incentive plans) of the directors and officers of the Company was $20.7 million. The aggregate amount set aside or accrued by the Company in fiscal 2009 to provide pension retirement or similar benefits for those individuals was $0.6 million. An amount of $9.5 million was charged in fiscal 2009 in respect of bonuses payable to them under performance related cash bonus schemes and long term incentive plans.

Note 3 of Notes to the Financial Statements sets out the individual compensation of the directors. The following are details of the Company’s principal share schemes, in which the directors of the Company participated during the period.

Share plans

Under the terms of the Separation, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents options for equivalent value new options over IHG PLC shares. At December 31, 2009 there were 2,001,060 such options outstanding.

Annual Bonus Plan

The IHG Annual Bonus Plan (ABP), enables eligible employees, including Executive Directors, to receive all or part of their bonus in the form of shares together with, in certain cases, a matching award of free shares up to half the deferred amount. The bonus and matching shares in the 2006 plan were released and for the 2007 plan are due for release, on the third anniversary of the award date. Under the 2006 and 2007 plans a percentage of the award (Board members — 100% (2006 80%); other eligible employees — 50%) had to be taken in shares and deferred.

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Participants may defer the remaining amount on the same terms or take it immediately in cash in which case it is not accounted for as a share-based payment. Under the terms of the 2008 and 2009 plans a fixed percentage of the bonus is awarded in the form of shares with no voluntary deferral and no matching shares.

The awards in all of the plans are conditional on the participants remaining in the employment of a participating company. Participation in the ABP is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 1,058,734 shares were awarded to participants. This number includes 228,000 shares awarded on part of recruitment terms and/or for one-off individual performance related awards.

Long Term Incentive Plan

The Long Term Incentive Plan (LTIP) allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of a performance condition, set by the Remuneration Committee, which is normally measured over a three year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times salary for Executive Directors and four times salary in the case of other eligible employees. During the year, conditional rights over 5,754,548 shares were awarded to employees under the plan. The plan provides for the grant of ‘nil cost options’ to participate as an alternative to conditional share awards.

Executive Share Option Plan

For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee. The plan was not operated during 2009 and no options were granted in the year under the plan. The latest date that any options may be exercised is April 2015.

Sharesave Plan

The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a savings institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including Executive Directors) employed by participating Group companies provided that they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately preceding the invitation date. The plan was not operated during 2009 and no options were granted in the year under the plan. All options granted under this plan have now been exercised.

Options and ordinary shares held by Directors

Details of the directors’ interests in the Company’s shares are set out on page 63 and pages F-40 to F-42.

BOARD PRACTICES

Contracts of service

The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months.

Andrew Cosslett and Richard Solomons have service agreements with a notice period of 12 months. All new appointments are intended to have 12-month notice periods. All new appointments are intended to have 12-month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial notice period reducing to 12 months may be used.

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David Webster’s appointment as non-executive Chairman, effective from January 1, 2004, is subject to six months’ notice.

Non-executive director, Ralph Kugler signed a letter of appointment effective from the listing of IHG in April 2003. This was renewed, effective from completion of the capital reorganization of the Company and the listing of new IHG shares on June 27, 2005. David Kappler signed a letter of appointment effective from his date of original appointment to the Board on June 21, 2004. This was also renewed, effective from June 27, 2005. Jennifer Laing and Jonathan Linen signed letters of appointment effective from their appointment dates, respectively August 25, 2005 and December 1, 2005. Ying Yeh signed a letter of appointment effective from her appointment date of December 1, 2007. Graham Allan signed a letter of appointment effective from his appointment date of January 1, 2010.

Directors’ contracts

	Contract		Unexpired term/
Directors	date		notice period
Andrew Cosslett		2.3.05		12 months
Richard Solomons		4.15.03		12 months

Each of the Executive Directors signed a letter of appointment, effective from completion of the capital reorganization of the Company and the listing of new IHG shares on June 27, 2005. The terms of each appointment were as set out in each executive director’s original service agreement.

See Note 3 of the Notes to the Consolidated Financial Statements for details of directors’ service contracts.

Payments on termination

No provisions for compensation for termination following change of control, or for liquidated damages of any kind, are included in the current directors’ contracts. In the event of any early termination of an executive director’s contract the policy is to seek to minimize any liability.

Upon retirement, and under certain other specified circumstances on termination of his employment, a director will become eligible to receive benefit from his participation in a Company pension plan. See Note 3 of Notes to the Financial Statements for details of directors’ pension entitlements at December 31, 2009.

Committees

Each Committee of the Board has written terms of reference which have been approved by the Board and which are subject to review each year.

Executive Committee

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

Audit Committee

The Audit Committee is chaired by David Kappler who has significant recent and relevant financial experience and is the Committee’s financial expert. During 2009, the other Committee members were Ralph Kugler and Jennifer Laing. Graham Allan has been a member of the Committee since January 1, 2010. All Audit Committee members are independent.

The Audit Committee’s principal responsibilities are to:

•  review the Group’s public statements on internal control and corporate governance compliance prior to their consideration by the Board;

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•  review the Group’s processes for detecting and addressing fraud, misconduct and control weaknesses and to consider the response to any such occurrence, including overseeing the process enabling the anonymous submission of concerns;

•  review reports from management, internal audit and external audit concerning the effectiveness of internal control, financial reporting and risk management processes;

•  review with management and the external auditor any financial statements required under UK or US legislation before submission to the Board;

•  establish, review and maintain the role and effectiveness of the internal audit function, including overseeing the appointment of the Head of Global Internal Audit;

•  assume responsibility for the appointment, compensation, resignation, dismissal and the overseeing of the external auditor, including review of the external audit, its cost and effectiveness;

•  pre-approve non-audit work to be carried out by the external auditor and the fees to be paid for that work, along with the monitoring of the external auditor’s independence; and

•  oversee the Group’s Code of Ethics and Business Conduct and associated procedures for monitoring adherence.

The Audit Committee discharges its responsibilities through a series of Committee meetings during the year at which detailed reports are presented for review. The Audit Committee commissions reports, either from external advisers, the Head of Global Internal Audit, or Group management, after consideration of the major risks to the Group or in response to developing issues. The Chief Financial Officer attends its meetings as do the external auditor and the Head of Global Internal Audit, both of whom have the opportunity to meet privately with the Audit Committee, in the absence of Group management, at the conclusion of each meeting.

All proposals for the provision of non-audit services by the external auditor are pre-approved by the Audit Committee or its delegated member, the overriding consideration being to ensure that the provision of non-audit services does not impact the external auditor’s independence and objectivity.

Remuneration Committee

The Remuneration Committee, chaired by Ralph Kugler, also comprises the following Non-Executive, directors: David Kappler, Jonathan Linen and Ying Yeh. The Remuneration Committee agrees, on behalf of the Board, all aspects of the remuneration of the Executive Directors and the Executive Committee members, and agrees the strategy, direction and policy for the remuneration of other senior executives who have a significant influence over the Group’s ability to meets its strategic objectives.

Nomination Committee

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

Corporate Responsibility Committee

In February 2009 the Corporate Responsibility Committee was established. It is chaired by Jennifer Laing. During 2009 the other Corporate Responsibility Committee member was Ralph Kugler.

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Disclosure Committee

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

General Purposes Committee

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

A description of the significant ways in which the Company’s actual corporate governance practices differ from the New York Stock Exchange corporate governance requirements followed by US companies can be found on page 82.

EMPLOYEES

The Group directly employed an average of 7,556 people worldwide in the year ended December 31, 2009. Of these, approximately 95% were employed on a full-time basis and 5% were employed on a part-time basis.

The table below analyzes the distribution of the average number of employees for the last three fiscal periods by division and by geographic region.

	Americas		EMEA		Asia Pacific		Central		Total
2009		3,229		1,712		1,410		1,205		7,556
2008		3,384		1,824		1,470		1,271		7,949
2007		3,602		2,100		1,514		1,150		8,366

The costs of the above employees are borne by the Group. In addition, the Group employs 4,561 (2008 4,353, 2007 4,003) people who work in managed hotels or directly on behalf of the System Funds and whose costs of $267 million (2008 $272 million, 2007 $247 million) are borne by those hotels or by the Funds.

Under EU law, many employees of Group companies are now covered by the Working Time Regulations which came into force in the United Kingdom on October 1, 1998. These regulations implemented the European Working Time Directive and parts of the Young Workers Directive, and lay down rights and protections for employees in areas such as maximum working hours, minimum rest time, minimum days off and paid leave.

In the United Kingdom there is in place a national minimum wage under the National Minimum Wage Act. At December 31, 2009, the minimum wage for individuals between 18 and under the age of 22 was £4.83 per hour and £5.80 per hour for individuals age 22 and above. This particularly impacts businesses in the hospitality and retailing sectors. Compliance with the National Minimum Wage Act is being monitored by the Low Pay Commission, an independent statutory body established by the UK Government.

Less than 5% of the Group’s UK employees are covered by collective bargaining agreements with trade unions.

Continual attention is paid to the external market in order to ensure that terms of employment are appropriate. The Group believes the Group companies will be able to conduct their relationships with trade unions and employees in a satisfactory manner.

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SHARE OWNERSHIP

The interests of the directors and officers of the Group at March 19, 2010 were as follows:

	Ordinary shares			% of shares
	of 1329/47 pence			outstanding
Directors
Graham Allan		Nil			N/A
Andrew Cosslett		496,133			0.17
David Kappler		1,400			N/A
Ralph Kugler		1,169			N/A
Jennifer Laing		3,373			N/A
Jonathan Linen		7,343	(1)		N/A
Richard Solomons		371,522			0.13
David Webster		34,117			0.01
Ying Yeh		Nil			N/A
Officers
Jim Abrahamson		52,203			0.02
Tom Conophy		111,087			0.04
Kirk Kinsell		63,136	(2)		0.02
Tracy Robbins		96,902			0.03
Tom Seddon		54,678	(3)		0.02
George Turner		13,000			N/A

(1)	Held as American Depositary Shares (ADSs).
(2)	637 of which are held as ADSs.
(3)	24,000 of which are held as ADSs.

The above shareholdings are all beneficial interests. The percentage of ordinary share capital owned by each of the directors is negligible.

The directors’ interests as at December 31, 2009 in options to subscribe for shares in InterContinental Hotels Group PLC are set out on page F-42.

The directors do not have different voting rights from other shareholders of the Company.

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ITEM 7.   MAJOR SHAREHOLDERS AND RELATED PARTY TRANSACTIONS

MAJOR SHAREHOLDERS

As far as is known to management, IHG is not directly or indirectly owned or controlled by another corporation or by any government. As at the dates shown, and under the provisions of the UK Disclosure Rules and Transparency Rules, the Company has been advised of the following interests in its shares, being greater than 3% of its issued share capital:

	March 19, 2010					March 23, 2009					March 14, 2008
	Number of		Percent			Number of		Percent			Number of		Percent
Identity of person or group	shares/ADSs		of class			shares/ADSs		of class			shares/ADSs		of class
Ellerman Corporation Limited		29,921,742		10.00	%		29,921,742		10.00	%		29,921,742		10.00	%
Southeastern Asset Management, Inc.		14,860,671		5.17	%		N/A etc.
FIL Limited (Fidelity International)		14,687,743		5.14	%		N/A		N/A			N/A		N/A
Cedar Rock Capital Limited		14,923,417		5.07	%		14,923,417		5.07	%		14,923,417		5.07	%
Blackrock, Inc.		14,434,598		5.02	%		N/A etc.
Morgan Stanley Institutional Securities Group & Global Wealth Management		N/A		N/A			N/A		N/A			13,551,634		4.60	%
Legal & General Group Plc		11,336,113		3.96	%		11,416,590		3.99	%		12,179,257		4.09	%
Lloyds Banking Group plc		13,619,563		3.84	%		13,619,563		3.84	%		13,619,563		3.84	%

The Company’s major shareholders do not have different voting rights from other shareholders of the Company. The Company does not know of any arrangements the operation of which may result in a change in its control.

As of March 19, 2010, 9,610,149 ADSs equivalent to 9,610,149 ordinary shares, or approximately 3.3% of the total ordinary shares in issue, were outstanding and were held by 1,027 holders. Since certain ordinary shares are registered in the names of nominees, the number of shareholders of record may not be representative of the number of beneficial owners.

As of March 19, 2010, there were a total of 57,406 record holders of ordinary shares, of whom 360 had registered addresses in the United States and held a total of 1,197,812 ordinary shares (0.42% of the total issued).

RELATED PARTY TRANSACTIONS

The Company has not entered into any related party transactions or loans for the period beginning January 1, 2009 up to March 19, 2010.

ITEM 8.   FINANCIAL INFORMATION

CONSOLIDATED STATEMENTS AND OTHER FINANCIAL INFORMATION

Financial Statements

See “Item 18. Financial Statements”.

Legal proceedings

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

Dividends

See “Item 3. Key information — Dividends”.

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SIGNIFICANT CHANGES

None.

ITEM 9.   THE OFFER AND LISTING

The principal trading market for the Company’s ordinary shares is the London Stock Exchange on which InterContinental Hotels Group PLC shares are traded. The ordinary shares are also listed on the New York Stock Exchange trading in the form of ADSs evidenced by ADRs. Each ADS represents one ordinary share. InterContinental Hotels Group PLC has a sponsored ADR facility with JP Morgan Chase Bank, N.A. as Depositary.

The following tables show, for the fiscal periods indicated, the reported high and low middle market quotations (which represent an average of closing bid and ask prices) for the ordinary shares on the London Stock Exchange, as derived from the Daily Official List of the UK Listing Authority, and the highest and lowest sales prices of the ADSs as reported on the New York Stock Exchange composite tape.

	£ per
	ordinary share				$ per ADS
Year ended December 31,	High		Low		High		Low
2005		8.42		6.12		14.53		11.49
2006		12.65		8.07		26.27		14.40
2007		14.20		8.73		32.59		17.37
2008		8.84		4.48		17.40		6.52
2009		9.04		4.46		14.67		6.04

	£ per
	ordinary share				$ per ADS
Year ended December 31,	High		Low		High		Low
2008
First quarter		8.84		6.44		17.40		13.26
Second quarter		8.65		6.68		16.80		13.15
Third quarter		7.87		6.16		14.76		11.53
Fourth quarter		6.75		4.48		12.08		6.52
2009
First quarter		6.22		4.46		9.33		6.04
Second quarter		6.90		5.59		11.19		8.20
Third quarter		8.27		5.92		13.74		9.57
Fourth quarter		9.04		7.64		14.67		12.26
2010
First quarter (through March 19, 2010)		10.19		8.87		15.41		13.84

	£ per
	ordinary share				$ per ADS
Month ended	High		Low		High		Low
September 2009		8.27		7.31		13.74		11.82
October 2009		8.57		7.64		13.95		12.26
November 2009		8.57		7.85		14.45		12.71
December 2009		9.04		8.55		14.67		14.02
January 2010		9.37		8.99		15.41		14.27
February 2010		9.20		8.87		14.59		13.84
March 2010 (through to March 19, 2010)		10.19		9.46		15.35		14.28

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Fluctuations in the exchange rates between pounds sterling and the US dollar will affect the dollar equivalent of the pounds sterling price of the ordinary shares on the London Stock Exchange and, as a result, are likely to affect the market price of ADSs.

PLAN OF DISTRIBUTION

Not applicable.

SELLING SHAREHOLDERS

Not applicable.

DILUTION

Not applicable.

EXPENSES OF THE ISSUE

Not applicable.

ITEM 10.   ADDITIONAL INFORMATION

ARTICLES OF ASSOCIATION

The following summarizes material rights of holders of the Company’s ordinary shares under the material provisions of the Company’s articles of association and English law. This summary is qualified in its entirety by reference to the Companies Act and the Company’s articles of association. The Company’s articles of association are filed as an exhibit to this 20-F.

The Company’s shares may be held in certificated or uncertificated form. No holder of the Company’s shares will be required to make additional contributions of capital in respect of the Company’s shares in the future.

In the following description, a “shareholder” is the person registered in the Company’s register of members as the holder of the relevant share.

Principal objects

The Company is incorporated under the name InterContinental Hotels Group PLC and is registered in England and Wales with registered number 5134420. The Company’s articles of association do not restrict its objects.

Directors

Under the Company’s articles of association, a director may not vote in respect of any proposal in which he, or any person connected with him, has any material interest other than by virtue of his interests in securities of, or otherwise in or through, the Company. This is subject to certain exceptions relating to proposals (a) indemnifying him in respect of obligations incurred on behalf of the Company, (b) indemnifying a third party in respect of obligations of the Company for which the director has assumed responsibility under an indemnity or guarantee, (c) relating to an offer of securities in which he will be interested as an underwriter, (d) concerning another body corporate in which the director is beneficially interested in less than one percent of the issued shares of any class of shares of such a body corporate, (e) relating to an employee benefit in which the director will share equally with other employees and (f) relating to liability insurance that the Company is empowered to purchase for the benefit of directors of the Company in respect of actions undertaken as directors (or officers) of the Company.

The directors are empowered to exercise all the powers of the Company to borrow money, subject to the limitation that the aggregate amount of all moneys borrowed by the Company and its subsidiaries shall not exceed an amount equal to three times the Company’s share capital and consolidated reserves, unless sanctioned by an ordinary resolution of the Company.

Directors are not required to hold any shares of the Company by way of qualification.

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Rights attaching to shares

Under English law, dividends are payable on the Company’s ordinary shares only out of profits available for distribution, as determined in accordance with accounting principles generally accepted in the United Kingdom and by the Companies Act. Holders of the Company’s ordinary shares are entitled to receive such dividends as may be declared by the shareholders in general meeting, rateably according to the amounts paid up on such shares, provided that the dividend cannot exceed the amount recommended by the directors.

The Company’s Board of directors may pay shareholders such interim dividends as appear to them to be justified by the Company’s financial position. If authorized by an ordinary resolution of the shareholders, the Board of directors may also direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid up shares or debentures of any other company).

Any dividend unclaimed after six years from the date the dividend was declared, or became due for payment, will be forfeited and will revert to the Company.

Voting rights

Voting at any general meeting of shareholders is by a show of hands unless a poll, which is a written vote, is duly demanded. On a show of hands, every shareholder who is present in person or by proxy at a general meeting has one vote regardless of the number of shares held. On a poll, every shareholder who is present in person or by proxy has one vote for every 1329/47 pence in nominal amount of the shares held by that shareholder. A poll may be demanded by any of the following:

•  the chairman of the meeting;

•  at least five shareholders present in person or by proxy and entitled to vote at the meeting;

•  any shareholder or shareholders representing in the aggregate not less than one-tenth of the total voting rights of all shareholders entitled to vote at the meeting; or

•  any shareholder or shareholders holding shares conferring a right to vote at the meeting on which there have been paid-up sums in the aggregate equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

A proxy form will be treated as giving the proxy the authority to demand a poll, or to join others in demanding one.

The necessary quorum for a general meeting is three persons carrying a right to vote upon the business to be transacted, whether present in person or by proxy.

Matters are transacted at general meetings of the Company by the proposing and passing of resolutions, of which there are two kinds:

•  an ordinary resolution, which includes resolutions for the election of directors, the approval of financial statements, the cumulative annual payment of dividends, the appointment of auditors, the increase of authorized share capital or the grant of authority to allot shares; and

•  a special resolution, which includes resolutions amending the Company’s memorandum and articles of association, disapplying statutory pre-emption rights, modifying the rights of any class of the Company’s shares at a meeting of the holders of such class or relating to certain matters concerning the Company’s winding up or changing the Company’s name.

An ordinary resolution requires the affirmative vote of a majority of the votes of those persons voting at a meeting at which there is a quorum.

Special resolutions require the affirmative vote of not less than three-fourths of the persons voting at a meeting at which there is a quorum.

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting is entitled to cast the deciding vote in addition to any other vote he may have.

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Annual General Meetings must be convened upon advance written notice of 21 days. Other meetings must be convened upon advance written notice of 14 days. The days of delivery or receipt of the notice are not included. The notice must specify the nature of the business to be transacted. The Board of directors may if they choose make arrangements for shareholders who are unable to attend the place of the meeting to participate at other places.

Each Director shall retire every three years at the Annual General Meeting and unless otherwise decided by the Directors, shall be eligible for re-election.

Variation of rights

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

Rights in a winding-up

Except as the Company’s shareholders have agreed or may otherwise agree, upon the Company’s winding up, the balance of assets available for distribution:

•  after the payment of all creditors including certain preferential creditors, whether statutorily preferred creditors or normal creditors; and

•  subject to any special rights attaching to any class of shares;

is to be distributed among the holders of ordinary shares according to the amounts paid-up on the shares held by them. This distribution is generally to be made in cash. A liquidator may, however, upon the adoption of an extraordinary resolution of the shareholders, divide among the shareholders the whole or any part of the Company’s assets in kind.

Limitations on voting and shareholding

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

MATERIAL CONTRACTS

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

£750,000,000 Euro Medium Term Note Program

1. On November 27, 2009, a trust deed (the “Trust Deed”) was executed by InterContinental Hotels Group PLC as issuer (the “Issuer”), Six Continents Limited and InterContinental Hotels Limited as guarantors (the “Guarantors”) and HSBC Corporate Trustee Company (UK) Limited as trustee (the “Trustee”), in accordance with which the Issuer established a Euro medium term note program (the “Program”) pursuant to which the Issuer may issue notes (“Notes”) unconditionally and irrevocably guaranteed by the Guarantors, up to a maximum nominal amount from time to time outstanding of £750,000,000 (or its equivalent in other currencies).

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Notes are to be issued in series (each a “Series”) in bearer form. Each Series may comprise one or more tranches (each a “Tranche”) issued on different issue dates. Notes may be issued either (1) pursuant to the Base Prospectus dated November 27, 2009 (the “Base Prospectus”) as amended and/or supplemented by a document setting out the final terms (the “Final Terms”) of the Notes or (2) pursuant to a separate prospectus specific to such Tranche (the “Drawdown Prospectus”). The terms and conditions applicable to any particular Tranche of Notes will be the Terms and Conditions of the Notes as supplemented, amended and/or replaced to the extent described in the relevant Final Terms or, as the case may be, the relevant Drawdown Prospectus.

Under the Trust Deed, each of the Issuer and the Guarantors has given certain customary covenants in favor of the Trustee.

Final Terms were issued on December 9, 2009 in respect of the issue of a Tranche of £250,000,000 6 per cent Notes due December 9, 2016. These Final Terms stipulate that the holders of the Notes have the right to repayment if the Notes (a) become non-investment grade within the period commencing on the date of announcement of a change of control and ending 90 days after the change of control (the “Change of Control Period”) and are not subsequently, within the Change of Control Period, reinstated to investment grade; (b) are downgraded from a non-investment grade and are not reinstated to its earlier credit rating or better within the Change of Control Period; or (c) are not credit rated and do not become investment-grade credit rated by the end of the Change of Control Period. Further details of the Program and the Notes are set out in the Base Prospectus, a copy of which is available (as is a copy of Final Terms dated December 7, 2009) on the Company’s website at www.ihgplc.com. These Notes are referred to as “£250 million 6% bonds” in the Consolidated Financial Statements.

2. On November 27, 2009, the Issuer and the Guarantors entered into an agency agreement (the “Agency Agreement”) with HSBC Bank PLC as principal paying agent and the Trustee, pursuant to which the Issuer and the Guarantors appointed paying agents and calculation agents in connection with the Program and the Notes.

Under the Agency Agreement, each of the Issuer and the Guarantors has given a customary indemnity in favor of the paying agents and the calculation agents.

3. On November 27, 2009, the Issuer and the Guarantors entered into a dealer agreement (the “Dealer Agreement”) with Barclays Bank PLC, HSBC Bank PLC and The Royal Bank of Scotland PLC as arrangers (the “Arrangers”) and Barclays Bank PLC, HSBC Bank PLC, Lloyds TSB Bank PLC, Merrill Lynch International, Société Générale and The Royal Bank of Scotland PLC as dealers (the “Dealers”), pursuant to which the Dealers were appointed in connection with the Program and the Notes.

Under the Dealer Agreement, each of the Issuer and the Guarantors has given customary warranties and indemnities in favor of the Dealers.

IHG Facility Agreement

On May 2, 2008, InterContinental Hotels Group PLC signed a five year $2,100 million bank facility agreement (the “IHG Facility Agreement”) with Bank of America N.A., The Bank of Tokyo-Mitsubishi UFJ, Ltd., Barclays Capital, HSBC Bank plc, Lloyds TSB Bank plc, The Royal Bank of Scotland plc, Société Générale Corporate & Investment Banking and WestLB AG, London Branch, all acting as mandated lead arrangers and underwriters and HSBC Bank plc as agent bank.

The facility was split into a $1.6 billion five year revolving credit facility and a $500 million 30 month term loan facility. The term loan reduced to $85 million in December 2009 following repayment of $415 million.

The interest margin payable on borrowings under the IHG Facility Agreement is linked to IHG’s consolidated net debt to consolidated EBITDA ratio. The margin can vary between LIBOR + 0.475% and LIBOR + 1.05% depending on the level of the ratio.

Disposal to Hospitality Properties Trust

On December 17, 2004, BHR Texas L.P., InterContinental Hotels Group Resources, Inc., Crowne Plaza LAX, LLC, Crowne Plaza Hilton Head Holding Company, Holiday Pacific Partners Limited Partnership, 220 Bloor Street Hotel Inc. and Staybridge Markham, Inc. (together, the “Vendors”) entered into a Purchase and Sale Agreement (as amended and

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restated on February 9, 2005) with HPT IHG — 2 Properties Trust (“HPT IHG-2”), pursuant to which HPT IHG-2 purchased from the Vendors 12 hotels situated in the United States and Canada. On the same date, Six Continents International Holdings B.V. (“SIH”), entered into a Stock Purchase Agreement (as amended and restated on February 9, 2005) with HPT IHG-2, pursuant to which HPT IHG-2 purchased from SIH all of the shares in Crowne Plaza (Puerto Rico) Inc., which is the owner of a hotel in Puerto Rico. The total consideration payable by HPT IHG-2 for the sales amounted to US$425 million, before transaction costs, equivalent to net book value (of which US$395 million was received upon the main completion of the sale on February 16, 2005, with the remaining US$30 million received upon the completion of the sale of the InterContinental Hotel in Austin, on June 1, 2005). The Group continues to manage the hotels.

Under the Purchase and Sale Agreement and Stock Purchase Agreement, the Vendors have given certain customary warranties and indemnities to HPT IHG-2.

In connection with the disposals referred to above, IHG has agreed to guarantee certain amounts payable to HPT IHG and HPT IHG-2 in relation to the managed hotels sold by the Group to HPT IHG and HPT IHG-2. The guarantee is for a maximum amount of $125 million, of which $60 million had been utilized at December 31, 2009 and requires amounts to be paid by IHG to HPT IHG and/or HPT IHG-2 (and/or their designated affiliate) irrespective of the revenue generated by the relevant hotels. The guarantee may be terminated if certain financial tests are met.

UK Hotels Disposal

A Share Purchase Agreement (the “SPA”) was entered into on March 10, 2005 between Six Continents, IHC London (Holdings) Limited (“IHC Holdings”) and LRG. Pursuant to the SPA, Six Continents and IHC Holdings (the “Sellers”) agreed to sell all of the issued ordinary share capital of Six Continents Hotels & Holidays Limited, Holiday Inn Limited, NAS Cobalt No. 2 Limited and London Forum Hotel Limited respectively (together, the “LRG Shares”) to LRG and to transfer to LRG certain contractual rights to the extent they related to the hotels LRG indirectly acquired under the SPA (the “LRG Hotels”) and which remained to be completed or performed, or remained in force, after completion of the sale of the LRG Shares to LRG.

The agreed sale price for the LRG Shares was £1 billion. Proceeds of £40 million were deferred and were contingent upon certain pre-agreed performance targets being reached. Following completion, the Group continues to manage the LRG Hotels.

Under the SPA, the Sellers gave certain warranties in relation to the assets disposed of and LRG gave certain warranties in relation to its authority to enter into the SPA and its capacity to perform its obligations under the SPA. Certain indemnities were also given by the Sellers.

Australasian Hotels Disposals

On September 1, 2005, Holiday Inn Holdings (Australia) Pty Limited, SPHC Group Pty Limited and HIA(T) Pty Limited (for the Australian assets) and Hale International Limited (for the New Zealand asset), all three of which are members of the Group, (“IHG”) entered into two sale and purchase agreements with HANZ (Australia) Pty Limited (for the Australian assets) and HANZ Holdings (New Zealand) Limited (for the New Zealand asset), both companies being subsidiaries of the Hotel Alternative (Australia and New Zealand) Private Syndicate managed by Eureka Funds Management Limited (“Eureka”) pursuant to which Eureka purchased from IHG nine hotels situated in Australia and New Zealand for AUS$390 million in cash (before transaction costs) which is AUS$75 million above the net book value of AUS$315 million. IHG gave to Eureka normal warranties in relation to the hotels and an indemnity for pre-completion tax liabilities. The transaction completed on October 31, 2005.

The Group continues to manage the hotels for Eureka under ten year management contracts entered into at the time of the transaction, with an option to extend for ten further years at the Group’s discretion.

Disposal to Dabicam SAS

On September 8, 2005, a sale and purchase agreement (“SPA”) was entered into between BHR Holdings BV, a wholly owned subsidiary of IHG, and Dabicam SAS, an affiliate of GIC Real Estate Pte. Ltd. Under the SPA the seller agreed to sell the InterContinental Hotel Paris. The agreed sale price for the hotel was €315 million. The hotel is no longer operated under an IHG Hotels brand. Under the SPA the sellers gave certain customary warranties and

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indemnities to the purchaser. Following receipt of shareholder approval, in connection with the sale, at an Extraordinary General Meeting of IHG on October 26, 2005 the sale was completed on November 1, 2005.

Britvic Underwriting Agreement

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

Disposal to Westbridge

On March 10, 2006 a Sale and Purchase Agreement (“SPA”) was entered into between BHR Luxembourg S.a.r.l. and other wholly owned subsidiaries of IHG as sellers (BHR Luxembourg S.a.r.l. being the principal seller) and Cooperatie Westbridge Europe I U.A. as purchaser and Westbridge Hospitality Fund L.P. as the purchaser’s guarantor. Under the SPA the sellers agreed to sell 23 hotels situated across Europe in France, Germany, Belgium, the Netherlands, Austria, Italy and Spain.

The agreed sale price was €352 million. IHG’s share of the proceeds was €345.2 million (before transaction costs), in cash and the assumption of debt, and the balance of €6.8 million relates to third-party minority interests.

The hotels continue to be operated by the purchaser under the same IHG Hotels brands under 15 year franchise agreements.

Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

Disposal to Morgan Stanley Real Estate Funds

On July 13, 2006 a sale and purchase agreement (“SPA”) was entered into between BHR Holdings BV and other wholly owned subsidiaries of IHG as sellers (BHR Holdings BV being the principal seller) and a subsidiary of Morgan Stanley Real Estate Funds MSREF VI Danube BV. Under the SPA the sellers agreed to sell seven InterContinental branded hotels situated across Europe in France, Germany, the Netherlands, Austria, Hungary, Italy and Spain.

The agreed sale price for the seven hotels was €634 million. IHG Hotels retained 30 year management contracts on the hotels, with two ten year renewals at IHG Hotels’ discretion, giving a total potential contract length of 50 years.

Under the SPA the sellers gave certain customary warranties and indemnities to the purchaser.

EXCHANGE CONTROLS

There are no restrictions on dividend payments to US citizens.

Although there are currently no UK foreign exchange control restrictions on the export or import of the capital or the payment of dividends on the ordinary shares or the ADSs, from time to time English law imposes restrictions on the payment of dividends to persons resident (or treated as so resident) in or governments of (or persons exercising public functions in) certain countries (each of the foregoing, a “Prohibited Person”).

There are no restrictions under the articles of association or under English law that limit the right of non-resident or foreign owners to hold or vote the ordinary shares. However, under current English law, ordinary shares or ADSs may not be owned by a Prohibited Person. In addition, the Company’s articles of association contain certain limitations on the voting and other rights of any holder of ordinary shares, whose holding may, in the opinion

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of the directors, result in the loss or failure to secure the reinstatement of any license or franchise from any US governmental agency held by Six Continents Hotels Inc or any subsidiary thereof.

TAXATION

This section provides a summary of the material US federal income tax and UK tax consequences to US holders, as defined below, of owning and disposing of ordinary shares or ADSs of the Company. This section addresses only the tax position of a US holder who holds ordinary shares or ADSs as capital assets. This section does not, however, discuss the tax consequences of members of special classes of holders subject to special rules, such as

•  certain financial institutions;

•  insurance companies;

•  dealers and traders in securities or foreign currencies;

•  persons holding ordinary shares or ADSs as part of a hedge, straddle, conversion transaction, integrated transaction or similar transaction;

•  persons whose functional currency for US federal income tax purposes is not the US dollar;

•  partnerships or other entities classified as partnerships for US federal income tax purposes;

•  persons liable for the alternative minimum tax;

•  tax-exempt organizations;

•  persons who acquired our ADSs or ordinary shares pursuant to the exercise of any employee stock option or otherwise as compensation;

•  holders that, directly or indirectly, hold 10% or more of the Company’s voting stock.

This section does not generally deal with the position of a US holder who is resident or ordinarily resident in the United Kingdom for UK tax purposes or who is subject to UK taxation on capital gains or income by virtue of carrying on a trade, profession or vocation in the United Kingdom through a branch, agency or permanent establishment and such ADSs or ordinary shares are or have been used, held or acquired for the purposes of such trade, profession or vocation.

A US holder is a beneficial owner of ordinary shares or ADSs who is for US federal income tax purposes (i) a citizen or resident of the US, (ii) a US domestic corporation, or other entity taxable as a corporation, created or organized in or under the laws of the United States or any political subdivision thereof; (iii) an estate whose income is subject to US federal income tax regardless of its source, or (iv) a trust if a US court can exercise primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial decisions of the trust.

This section is based on the Internal Revenue Code of 1986, as amended, its legislative history, existing and proposed regulations, published rulings and court decisions, and on UK tax laws and published practice of the UK HM Revenue and Customs, all as of the date hereof. These laws are subject to change, possibly on a retroactive basis.

This section is further based in part upon the representations of the Depositary and assumes that each obligation in the deposit agreement and any related agreement will be performed in accordance with its terms. For US federal income tax purposes, an owner of ADRs evidencing ADSs will generally be treated as the owner of the underlying shares represented by those ADSs. Generally, exchanges of ordinary shares for ADRs, and ADRs for ordinary shares, will not be subject to US federal income tax or UK taxation on capital gains.

The US Treasury has expressed concerns that parties to whom ADRs are pre-released may be taking actions that are inconsistent with the claiming of foreign tax credits for US holders of ADRs. Such actions would also be inconsistent with the claiming of the reduced rate of tax, described below, for qualified dividend income. Accordingly, the analysis of the availability of the reduced rate of tax for qualified dividend income described below could be affected by actions taken by parties to whom the ADRs are pre-released.

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Investors should consult their own tax advisors regarding the US federal, state and local, the UK and other tax consequences of owning and disposing of shares and ADSs in their particular circumstances.

Taxation of dividends

United Kingdom taxation

Under current UK tax law, the Company will not be required to withhold tax at source from dividend payments it makes.

A US holder who is not resident or ordinarily resident for United Kingdom tax purposes in the United Kingdom will generally not be liable for UK taxation on dividends received in respect of the ADSs or ordinary shares.

United States federal income taxation

Subject to the passive foreign investment company (“PFIC”) rules discussed below, a US holder is subject to US federal income taxation on the gross amount of any dividend paid by the Company out of its current or accumulated earnings and profits (as determined for US federal income tax purposes). Distributions in excess of the Company’s current and accumulated earnings and profits, as determined for US federal income tax purposes, will be treated as a return of capital to the extent of the US holder’s basis in the shares or ADSs and thereafter as capital gain. Because the Company has not historically maintained, and does not currently maintain, books in accordance with US tax principles, the Company does not expect to be in a position to determine whether any distribution will be in excess of the Company’s current and accumulated earnings and profits as computed for US federal income tax purposes. As a result, the Company expects that amounts distributed will be reported to the Internal Revenue Service as dividends.

Subject to applicable limitations and the discussion above regarding concerns expressed by the US Treasury, dividends paid to a non-corporate US holder in taxable years beginning before January 1, 2011 that constitute qualified dividend income will be taxable to the holder at a maximum tax rate of 15%. The Company expects that dividends paid by the Company with respect to the shares or ADSs will constitute qualified dividend income. U.S. Holders should consult their own tax advisors to determine whether they are subject to any special rules that limit their ability to be taxed at this favorable rate.

Dividends must be included in income when the US holder, in the case of shares, or the Depositary, in the case of ADSs, actually or constructively receives the dividend, and will not be eligible for the dividends-received deduction generally allowed to US corporations in respect of dividends received from other US corporations. For foreign tax credit limitation purposes, dividends will generally be income from sources outside the United States.

The amount of any dividend paid in pounds will be the US dollar value of the pound sterling payments made, determined at the spot pound sterling/US dollar rate on the date the dividend distribution is includible in income, regardless of whether the payment is in fact converted into US dollars. If the dividend is converted into US dollars on the date of receipt, a US holder should not be required to recognize foreign currency gain or loss in respect of the dividend income. Generally, any gain or loss resulting from currency exchange fluctuations during the period from the date the dividend payment is includible in income to the date the payment is converted into US dollars will be treated as ordinary income or loss and, for foreign tax credit limitation purposes, from sources within the United States.

Taxation of capital gains

United Kingdom taxation

A US holder who is not resident or ordinarily resident for UK tax purposes in the United Kingdom will not generally be liable for UK taxation on capital gains realized or accrued on the sale or other disposal of ADSs or ordinary shares.

A US holder of ADSs or ordinary shares who is an individual and who, broadly, has temporarily ceased to be resident or ordinarily resident in the UK or has become temporarily treated as non-resident for UK tax purposes for a period of less than five years of assessment and who disposes of ordinary shares or ADSs during that period may, for

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the year of assessment when that individual becomes resident again in the UK, also be liable to UK tax on capital gains (subject to any available exemption or relief), notwithstanding the fact that such US holder was not resident or ordinarily resident in the United Kingdom at the time of the sale or other disposal.

United States federal income taxation

Subject to the PFIC rules discussed below, a US holder that sells or otherwise disposes of ordinary shares or ADSs will recognize a capital gain or loss for US federal income tax purposes equal to the difference between the US dollar value of the amount realized and its tax basis, determined in US dollars, in the ordinary shares or ADSs. Such capital gain or loss will be long-term capital gain or loss where the holder has a holding period greater than one year. The gain or loss will generally be income or loss from sources within the United States for foreign tax credit limitation purposes. The deductibility of losses is subject to limitations.

PFIC rules

The Company believes that it was not a PFIC for US federal income tax purposes for its 2009 taxable year. However, this conclusion is an annual factual determination and thus may be subject to change. If the Company were to be treated as a PFIC, gain realized on the sale or other disposition of ordinary shares or ADSs would in general not be treated as capital gain. Instead, gain would be treated as if the US holder had realized such gain ratably over the holding period for the ordinary shares or ADSs and, to the extent allocated to the taxable year of the sale or other exchange and to any year before the Company became a PFIC, would be taxed as ordinary income. The amount allocated to each other taxable year would be taxed at the highest tax rate in effect for each such year to which the gain was allocated, together with an interest charge in respect of the tax attributable to each such year. In addition, similar rules would apply to any “excess distribution” received on the ordinary shares or ADSs (generally, the excess of any distribution received on the ordinary shares or ADSs during the taxable year over 125% of the average amount of distributions received during a specified prior period), and the preferential rate for “qualified dividend income” received by certain non-corporate US holders would not apply. Certain elections may be available (including a market-to-market election) to US holders that would result in alternative treatments of the ordinary shares or ADSs.

Additional tax considerations

United States backup withholding and information reporting

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

United Kingdom inheritance tax

An individual who is neither domiciled nor deemed domiciled in the UK (under certain UK rules relating to previous domicile or long residence) is only chargeable to UK inheritance tax to the extent the individual owns assets situated in the UK. As a matter of UK law, it is not clear whether the situs of an ADS for UK inheritance tax purposes is determined by the place where the depositary is established and records the entitlements of the depositholders, or by the situs of the underlying share which the ADS represents.

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

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was not a UK national. Where ADSs are subject to both UK inheritance tax and to US federal gift or estate tax, the Estate and Gift Tax Convention generally provides for either a credit against US federal tax liabilities for UK inheritance tax paid or for a credit against UK inheritance tax liabilities for US federal tax paid, as the case may be.

United Kingdom Stamp Duty and Stamp Duty Reserve Tax (“SDRT”)

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

No stamp duty or SDRT will generally arise on a transfer of ordinary shares into CREST, unless such transfer is made for a consideration in money or money’s worth, in which case a liability to SDRT will arise, usually at the rate of 0.5% of the value of the consideration.

A transfer of ordinary shares effected on a paperless basis within CREST will generally be subject to SDRT at the rate of 0.5% of the value of the consideration.

Stamp duty, or SDRT, may be payable upon the transfer or issue of ordinary shares to, or to a nominee or, in some cases, agent of, a person whose business is or includes issuing depositary receipts or the provision of clearance services. For these purposes, the current rate of stamp duty and SDRT is usually 1.5% (rounded up, in the case of stamp duty, to the nearest £5). The rate is applied, in each case, to the amount or value of the consideration or, in some circumstances, to the value or the issue price of the ordinary shares. In accordance with the terms of the deposit agreement, any tax or duty payable on deposits of ordinary shares by the depositary or by the custodian of the depositary will be charged to the party to whom ADSs are delivered against such deposits.

Provided that the instrument of transfer is not executed in the United Kingdom and remains at all subsequent times outside the United Kingdom, no stamp duty should be payable on the transfer of ADSs. An agreement to transfer ADSs in the form of depositary receipts will not give rise to a liability to SDRT.

DOCUMENTS ON DISPLAY

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

ITEM 11.   QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Exchange and interest rate risk, and financial instruments

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

Treasury risk management

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

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Credit risk

Credit risk on treasury transactions is minimized by operating a policy on the investment of surplus cash that generally restricts counterparties to those with an A credit rating or better or those providing adequate security.

Notwithstanding that counterparties must have an A credit rating or better, during periods of significant financial market turmoil, counterparty exposure limits are significantly reduced and counterparty credit exposure reviews are broadened to include the relative placing of credit default swap pricings.

The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In respect of credit risk arising from financial assets, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

Interest rate risk

Interest rate exposure is managed within parameters that stipulate that fixed rate borrowings should normally account for no less than 25% and no more than 75% of net borrowings for each major currency. This is achieved through the use of interest rate swaps and options and forward rate agreements.

At December 31, 2009, the Group held interest rate swaps (swapping floating for fixed) with notional principals of $250 million and €75 million (2008 $250 million, £75 million and €75 million). The Group did not hold any forward-starting interest rate swaps at December 31, 2009 (2008 interest rate swaps with notional principals of $100 million, £75 million and €75 million).

Based on the year-end net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates would increase the annual net interest charge by approximately $0.8 million (2008 $4.7 million, 2007 $5.8 million). A similar rise in euro and sterling interest rates would increase the annual net interest charge by approximately $1.1 million (2008 $1.2 million, 2007 $1.2 million) and $nil (2008 $0.9 million, 2007 $3.2 million) respectively.

Currency risk

The US dollar is the predominant currency of the Group’s revenue and cash flows. Movements in foreign exchange rates can affect the Group’s reported profits, net assets and interest cover. To hedge translation exposure, wherever possible, the Group matches the currency of its debt (either directly or via derivatives) to match the currency of its net assets, whilst maximizing the amount of US dollars borrowed to reflect the predominant trading currency. At December 31, 2009, the Group held currency swaps designated as net investment hedges with a principal of $415 million (2008 $nil) and a fair value of $13 million liability (2008 $nil).

The Group is exposed to foreign currency risk on income streams denominated in foreign currencies. When appropriate, the Group hedges a portion of forecast foreign currency income by taking out forward exchange contracts. The designated risk is the spot foreign exchange risk. Forward contracts are held at fair value in the Consolidated statement of financial position as other financial assets and other payables.

A general strengthening of the US dollar (specifically a five cent fall in the sterling: US dollar rate) would increase the Group’s profit before tax by an estimated $1.6 million (2008 $4.0 million, 2007 $2.9 million) and increase net assets by an estimated $4.1 million (2008 decrease of $1.1 million, 2007 increase of $6.1 million). Similarly, a five cent fall in the euro: US dollar rate would reduce the Group’s profit before tax by an estimated $0.7 million (2008 $2.0 million, 2007 $1.6 million) and decrease net assets by an estimated $4.5 million (2008 $4.3 million, 2007 $5.9 million).

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Quantitative information about market risk

Interest rate sensitivity

The tables below provide information about the Group’s derivative and other financial instruments that are sensitive to changes in interest rates, including interest rate swaps, currency swaps and debt obligations. For long-term debt obligations, the table presents principal cash flows and related weighted average interest rates by expected maturity dates. For interest rate swaps and currency swaps, the table presents notional amounts and weighted average interest rates by expected maturity dates. Weighted average variable rates are based on rates set on the last day of the period. The actual currencies of the instruments are indicated in parentheses.

At December 31, 2009

	Expected to mature before December 31,
	2010			2011			2012			2013			Thereafter			Total			Fair value(i)
	($ million, except percentages)
Long-term debt:
Fixed rate public bonds (sterling)		—			—			—			—			402			402			402
Fixed rate payable														6.0	%		6.0	%
Fixed rate lease debt (US dollar)		—			—			—			—			204			204			206
Fixed rate payable														9.7	%		9.7	%
Variable rate bank debt (various currencies)		90			—			5			421			—			516			516
Average interest rate payable		0.8	%					5.3	%		1.0	%					1.0	%
	(local currency million, except percentages)
Interest rate swaps:
Principal (US dollar)		150			—			100			—			—			250			(1	)
Fixed rate payable		0.7	%					2.0	%								1.2	%
Variable rate receivable		0.2	%					0.3	%								0.2	%
Principal (euro)		—			75			—			—			—			75			(6	)
Fixed rate payable					5.3	%											5.3	%
Variable rate receivable					0.7	%											0.7	%
	(local currency million, except percentages)
Currency swaps:
Principal receivable (sterling)		—			—			—			—			250			250			(13	)
Fixed rate receivable														6.0	%		6.0	%
Principal payable (US dollar)		—			—			—			—			415			415
Fixed rate payable														6.2	%		6.2	%

(i) Represents the net present value of the expected cash flows discounted at current market rates of interest, except for the public bonds which are shown at market value.

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ITEM 12.   DESCRIPTION OF SECURITIES OTHER THAN EQUITY SECURITIES

Fees and charges payable to a depositary

Category (as defined by SEC)	Depositary actions	Associated fee
(a) Depositing or substituting the underlying shares	Each person to whom ADRs are issued against deposits of Shares, including deposits and issuances in respect of: •   share distributions, stock split, rights, merger •   Exchange of securities or any other transactions or event or other distribution affecting the ADSs or the Deposited Securities	$5 for each 100 ADSs (or portion thereof)
(b) Receiving or distributing dividends	•   Distribution of stock dividends	$5 for each 100 ADSs (or portion thereof)
	•   Distribution of cash	$0.02 or less per ADS (or portion thereof)*
(c) Selling or exercising rights	Distribution or sale of securities, the fee being in an amount equal to the fee for the execution and delivery of ADSs which would have been charged as a result of the deposit of such securities	$5.00 for each 100 ADSs (or portion thereof)
(d) Withdrawing an underlying security	Acceptance of ADRs surrendered for withdrawal of deposited securities	$5.00 for each 100 ADSs (or portion thereof)
(e) Transferring, splitting or grouping receipts	Transfers, combining or grouping of depositary receipts	$1.50 per ADS
(f) General depositary services, particularly those charged on an annual basis	•   Other services performed by the depositary in administering the ADRs	$0.02 per ADS (or portion thereof)* not more than once each calendar year and payable at the sole discretion of the depositary by billing Holders or by deducting such charge from one or more cash dividends or other cash distributions
(g) Expenses of the depositary	Expenses incurred on behalf of Holders in connection with: •   Compliance with foreign exchange control regulations or any law or regulation relating to foreign investment •   The depositary’s or its custodian’s compliance with applicable law, rule or regulation •   Stock transfer or other taxes and other governmental charges •   Cable, telex, facsimile transmission/delivery •   transfer or registration fees in connection with the deposit and withdrawal of Deposited Securities •   Expenses of the depositary in connection with the conversion of foreign currency into US dollars (which are paid out of such foreign currency) •   Any other charge payable by depositary or its agents	Expenses payable at the sole discretion of the depositary by billing Holders or by deducting charges from one or more cash dividends or other cash distributions $20 per transaction

* These fees are not currently being charged by the depositary.

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Fees and charges payable by a depositary

Direct payments

JP Morgan Chase Bank, N.A. is the depositary for IHG’s ADS program. The depositary’s principal executive office is at: Four New York Plaza, New York 10004, United States of America. The depositary, has agreed to reimburse certain reasonable Company expenses related to the Company’s ADR Program and incurred by the Company in connection with the ADR Program. In the year ended 2009, the depositary reimbursed $270,000. The amounts the depositary reimbursed are not perforce related to the fees collected by the depositary from ADR holders. The table below sets forth the types of expenses that J.P. Morgan has agreed to reimburse and the amounts reimbursed in the year ended December 31, 2009.

Category of expenses	Amount reimbursed for fiscal year ended December 31, 2009 $000
Legal, accounting and other fees incurred in connection with preparation of Form 20-F and ongoing SEC compliance and listing requirements	178
Investor relations	37
Advertising and public relations	55

Indirect payments

As part of its service to the Company, J.P. Morgan has agreed to waive fees for the standard costs associated with the administration of the ADR Program, associated operating expenses and investor relations advice estimated to total $20,000. The table below sets forth the fees that J.P. Morgan has agreed to waive and/or expenses that J.P. Morgan has agreed to pay in the year ended December 31, 2009.

Category of expenses	Amount waived or paid for fiscal year ended December 31, 2009
	$000
Fees waived	20

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PART II

ITEM 13.   DEFAULTS, DIVIDEND ARREARAGES AND DELINQUENCIES

None.

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

None.

ITEM 15.   CONTROLS AND PROCEDURES

Disclosure controls and procedures

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

Management’s report on internal control over financial reporting

Management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934.

Management has issued a report on the effectiveness of the Group’s Internal Control over Financial reporting as at December 31, 2009. This report appears on page F-1 of the Group’s Consolidated Financial Statements contained in this Annual Report.

Ernst & Young LLP, an independent registered public accounting firm, has issued an attestation report on the Company’s internal control over financial reporting. This report appears on page F-2 of the Group’s Consolidated Financial Statements contained in this Annual Report.

Changes in internal control over financial reporting

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

ITEM 16.   [RESERVED]

ITEM 16A.   AUDIT COMMITTEE FINANCIAL EXPERT

The Senior Independent Director David Kappler, who has significant recent and relevant financial experience is the “Audit Committee Financial Expert” as defined under the regulations of the US Securities and Exchange Commission. David Kappler is independent as that term is defined under the listing standards of the NYSE.

ITEM 16B.   CODE OF ETHICS

The Board has adopted a global Code of Ethics and Business Conduct that applies to all directors, officers and employees of the Group, including the Chief Executive and Chief Financial Officer. This Code of Ethics has been signed by the Chief Executive and the Chief Financial Officer of the Company and by the Group Financial Controller and regional financial heads. The Company has published its Code of Ethics and Business Conduct on its website www.ihgplc.com.

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ITEM 16C.   PRINCIPAL ACCOUNTANT FEES AND SERVICES

Fees for professional services provided by Ernst & Young LLP, the Group’s independent auditors in each of the last two fiscal periods in each of the following categories are:

	Year ended December 31,
	2009		2008
	($ million)
Audit fees		4.2		3.3
Audit related fees		1.8		3.2
Tax fees		1.7		1.0
Total		7.7		7.5

Further detail is provided in Note 4 “Auditor’s remuneration paid to Ernst & Young LLP” of “Item 18 — Financial Statements”.

Audit fees in respect of the pension scheme were not material.

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

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

Not applicable.

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

	Period of fiscal year
							(d) Maximum
					(c) Total number		number (or
					of shares (or		approximate dollar
			(b) Average		units) purchased		value) of shares (or
	(a) Total number		price paid		as part of publicly		units) that may yet be
	of shares (or		per share		announced plans		purchased under the
	units) purchased		(or unit		or programs		plans or programs
Month 1 (no purchases in this month)		0		0.00		0.		38,694,043
Month 2 (no purchases in this month)		0		0.00		0		38,694,043
Month 3 (no purchases in this month)		0		0.00		0		38,694,043
Month 4 (no purchases in this month)		0		0.00		0		38,694,043
Month 5 (no purchases in this month)		0		0.00		0		38,694,043
Month 6 (no purchases in this month)		0		0.00		0		28,557,390	*
Month 7 (no purchases in this month)		0		0.00		0		28,557,390
Month 8 (no purchases in this month)		0		0.00		0		28,557,390
Month 9 (no purchases in this month)		0		0.00		0		28,557,390
Month 10 (no purchases in this month)		0		0.00		0		28,557,390
Month 11 (no purchases in this month)		0		0.00		0		28,557,390
Month 12 (no purchases in this month)		0		0.00		0		28,557,390

* Reflects the resolution passed at the company’s Annual General Meeting held on May 29, 2009.

The first share repurchase program was announced on March 11, 2004 with the intention to repurchase £250 million worth of shares. A second £250 million share repurchase program followed, announced September 9, 2004. A third £250 million share repurchase program was announced on September 8, 2005. These programs were completed on December 20, 2004, April 11, 2006, and June 28, 2007 respectively.

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On February 20, 2007, the Company announced a fourth, £150 million share repurchase program. The Company deferred the remaining £30 million of its £150 million share repurchasing program in November 2008 in order to preserve cash and maintain the strength of the Group’s financial position. No shares were repurchased in 2009. By March 19, 2010, 14,446,554 shares had been repurchased at an average price of 831 pence per share (approximately £120 million).

During fiscal 2009, 521,000 ordinary shares were purchased by the Company’s Employee Share Ownership Trust at prices ranging from 599 pence to 820 pence per share, for the purpose of satisfying future share awards to employees.

ITEM 16F.   CHANGE IN REGISTRANT’S CERTIFYING ACCOUNTANT

Not applicable.

ITEM 16G.   SUMMARY OF SIGNIFICANT CORPORATE GOVERNANCE DIFFERENCES FROM NYSE LISTING STANDARDS

The Group is committed to compliance with the principles of corporate governance and aims to follow the corporate governance practices specified in the Combined Code on Corporate Governance, the “Combined Code” issued by the Financial Services Authority in the United Kingdom.

IHG has also adopted the corporate governance requirements of the US Sarbanes-Oxley Act and related rules and of the NYSE, to the extent that they are applicable to it as a foreign private issuer. As a foreign private issuer IHG is required to disclose any significant ways in which its corporate governance practices differ from those followed by US companies. These are as follows:

Basis of regulation

The Combined Code contains a series of principles and provisions. It is not, however, mandatory for companies to follow these principles. Instead, companies must disclose how they have applied them and disclose, if applicable, any areas of non-compliance along with an explanation for the non-compliance. In contrast, US companies listed on the NYSE are required to adopt and disclose corporate governance guidelines adopted by the NYSE. IHG’s statement of compliance with the UK Combined Code’s requirements for 2009 is contained in the Company’s Annual Report and Financial Statements for the year ended December 31, 2009.

Independent Directors

The Combined Code’s principles recommend that at least half the Board, excluding the Chairman, should consist of independent Non-Executive Directors. As at March 19, 2010 the Board consisted of the Chairman, independent at the time of his appointment, two Executive Directors and six independent Non-Executive Directors. NYSE listing rules applicable to US companies state that companies must have a majority of independent directors. The NYSE set out five bright line tests for director independence. The Board’s judgement is that all of its Non-Executive Directors are independent. However it did not explicitly take into consideration the NYSE’s tests in reaching this determination.

Chairman and Chief Executive

The Combined Code recommends that the Chairman and Chief Executive should not be the same individual to ensure that there is a clear division of responsibility for the running of the Company’s business. There is no corresponding requirement for US companies. The roles of Chairman and Chief Executive were, as at March 19, 2010 and throughout 2009 fulfilled by separate individuals.

Committees

The Company has a number of Board Committees which are similar in purpose and constitution to those required for domestic companies under NYSE rules. The Remuneration, Audit and Nomination Committees consist only of Non-Executive Directors. The NYSE requires US companies to have a nominating/corporate governance

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committee composed entirely of independent directors. The committee is responsible for identifying individuals qualified to become Board members and to recommend to the Board a set of corporate governance principles. As the Company is subject to the Combined Code, the Company’s Nomination Committee is only responsible for nominating, for approval of the Board, candidates for appointment to the Board, though it also assists in developing the role of the Senior Independent Director. The Company’s Nomination Committee consists of the Company Chairman and all the independent Non-Executive Directors. The Chairman of the Company is not a member of either of the Remuneration or the Audit Committees. The Audit Committee is chaired by an independent Non-Executive Director who, in the Board’s view, has the experience and qualifications to satisfy the criteria under US rules for an “audit committee financial expert”.

Non-Executive Director meetings

Non-management directors of US companies must meet on a regular basis without management present, and independent directors must meet separately at least once per year. The Company’s Non-Executive Directors have met without Executive Directors being present, and intend to continue this practice, before every Board meeting if possible.

Shareholder approval of equity compensation plans

The NYSE rules require that shareholders must be given the opportunity to vote on all equity compensation plans and material revisions to those plans. The Company complies with UK requirements which are similar to the NYSE rules. The Board does not, however, explicitly take into consideration the NYSE’s detailed definition of “material revisions”.

Compliance Certification

Each Chief Executive of a US company must certify to the NYSE each year that he or she is not aware of any violation by the Company of any NYSE corporate governance listing standard. As the Company is a foreign private issuer, the Company’s Chief Executive is not required to make this certification. However he is required to notify the NYSE promptly in writing after any of the Company’s Executive Officers become aware of any material non-compliance with those NYSE corporate governance rules applicable to the Company.

PART III

ITEM 17.   FINANCIAL STATEMENTS

Not applicable.

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ITEM 18.   FINANCIAL STATEMENTS

The following Consolidated Financial Statements and related schedule, together with the report thereon of Ernst & Young LLP, are filed as part of this Annual Report:

	Page
Management’s Report on Internal Control over Financial Reporting		F-1
Report of Independent Registered Public Accounting Firm on Internal Control over Financial Reporting		F-2
Report and Consent of Independent Registered Public Accounting Firm		F-4
Financial Statements
Consolidated income statement for the years ended December 31, 2009, 2008 and 2007		F-5
Consolidated statement of comprehensive income for the years ended December 31, 2009, 2008 and 2007		F-6
Consolidated statement of changes in equity for the years ended December 31, 2009, 2008 and 2007		F-7
Consolidated statement of financial position for the years ended December 31, 2009 and 2008		F-9
Consolidated statement of cash flows for the years ended December 31, 2009, 2008 and 2007		F-10
Notes to the Financial Statements		F-11
Schedule for the years ended December 31, 2009, 2008, 2007, 2006 and 2005
Schedule II — Valuation and Qualifying Accounts		S-1

ITEM 19.   EXHIBITS

The following exhibits are filed as part of this Annual Report:

Exhibit 1	Articles of Association of IHG
Exhibit 4(a)(i)	Trust Deed dated November 27, 2009 relating to a £750 million Euro Medium Term Note Program, among InterContinental Hotels Group PLC, Six Continents Limited, InterContinental Hotels Limited and HSBC Corporate Trustee Company (UK) Limited.
Exhibit 4(a)(ii)	$2,100 million Facility Agreement dated May 2, 2008 among Bank of America N.A., Bank of Tokyo-Mitsubishi UFJ Ltd., Barclays Capital, HSBC Bank plc, Lloyds TSB Bank plc, The Royal Bank of Scotland plc, Société Générale Corporate & Investment Banking and West LB AG (incorporated by reference to Exhibit 4(a)(i) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 7, 2009)
Exhibit 4(b)(i)	Sale and Purchase Agreement dated March 10, 2006 among BHR Luxembourg S.à.r.l., Others, Cooperatie Westbridge Europe I.U.A., Others and Westbridge Hospitality Fund L.P. relating to a portfolio of certain companies and businesses in continental Europe (incorporated by reference to Exhibit 4(b)(viii) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 31, 2006)
Exhibit 4(b)(ii)	Sale and Purchase Agreement dated July 13, 2006 between BHR Holdings BV and MSREF VI Danube BV relating to the sale of certain companies and businesses in continental Europe and Side Letter dated September 5, 2006 (incorporated by reference to Exhibit 4(b)(ix) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 30, 2007)
Exhibit 4(c)(i)	Richard Solomons’ service contract dated February 12, 2003 (incorporated by reference to Exhibit 4(c)(iv) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated April 8, 2004)
Exhibit 4(c)(ii)	Richard Solomons’ letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group (incorporated by reference to Exhibit 4(c)(vi) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 31, 2006)
Exhibit 4(c)(iii)	Andrew Cosslett’s service contract dated December 13, 2004 (incorporated by reference to Exhibit 4(c)(v) of InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated May 3, 2005)

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Exhibit 4(c)(iv)	Andrew Cosslett’s letter of appointment dated April 2005, effective from June 27, 2005 on completion of the Scheme of Arrangement and the introduction of the new parent company to the Group (incorporated by reference to Exhibit 4(c)(viii) of the InterContinental Hotels Group PLC Annual Report on Form 20-F (File No. 1-10409) dated March 31, 2006)
Exhibit 8	List of Subsidiaries
Exhibit 12(a)	Certification of Andrew Cosslett filed pursuant to 17 CFR 240.13a-14(a)
Exhibit 12(b)	Certification of Richard Solomons filed pursuant to 17 CFR 240.13a-14(a)
Exhibit 13(a)	Certification of Andrew Cosslett and Richard Solomons furnished pursuant to 17 CFR 240.13a-14(b) and 18 U.S.C.1350
Exhibit 15(a)	Consent of Ernst & Young LLP (included on page F-4)

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MANAGEMENT’S REPORT ON
INTERNAL CONTROL OVER FINANCIAL REPORTING

Management of InterContinental Hotels Group PLC (“Company” and together with its subsidiaries the “Group”) is responsible for establishing and maintaining adequate internal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) or 15d-15(f) promulgated under the Securities Exchange Act of 1934 as a process designed by, or under the supervision of, the Group’s principal executive and principal financial officers and effected by the Company’s Board of Directors, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of the Consolidated Financial Statements for external purposes in accordance with generally accepted accounting principles.

The Group’s internal control over financial reporting includes those policies and procedures that: (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the Group’s transactions and dispositions of the Group’s assets; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of the Consolidated Financial Statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Group are being made only in accordance with authorizations of the Group’s management and directors; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Group’s assets that could have a material effect on the Consolidated Financial Statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In connection with the preparation of the Group’s annual Consolidated Financial Statements, management has undertaken an assessment of the effectiveness of the Group’s internal control over financial reporting as of December 31, 2009 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO”).

Based on this assessment, management has concluded that as of December 31, 2009, the Group’s internal control over financial reporting is effective based on those criteria.

Ernst & Young LLP, the independent registered public accounting firm that audited the Group’s Consolidated Financial Statements, has issued an attestation report on the Group’s internal control over financial reporting, a copy of which appears on the next page of this Annual Report.

F-1

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

To the Board of Directors and Shareholders of InterContinental Hotels Group PLC:

We have audited InterContinental Hotels Group PLC’s internal control over financial reporting as of December 31, 2009 based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (the “COSO criteria”). InterContinental Hotels Group PLC’s management is responsible for maintaining effective internal control over financial reporting, and for its assessment of the effectiveness of internal control over financial reporting included in the accompanying Form 20-F. Our responsibility is to express an opinion on the Group’s internal control over financial reporting based on our audit.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether effective internal control over financial reporting was maintained in all material respects. Our audit included obtaining an understanding of internal control over financial reporting, assessing the risk that a material weakness exists, testing and evaluating the design and operating effectiveness of internal control based on the assessed risk, and performing such other procedures as we considered necessary in the circumstances. We believe that our audit provides a reasonable basis for our opinion.

A group’s internal control over financial reporting is a process designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles. A group’s internal control over financial reporting includes those policies and procedures that (1) pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the group; (2) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the group are being made only in accordance with authorizations of management and directors of the group; and (3) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the group’s assets that could have a material effect on the financial statements.

Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.

In our opinion, InterContinental Hotels Group PLC maintained, in all material aspects, effective internal control over financial reporting as of December 31, 2009, based on the COSO criteria.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the accompanying Consolidated statements of financial position of InterContinental Hotels Group PLC as of December 31, 2009 and 2008, and the related Consolidated income statements, Consolidated statements of comprehensive income, Consolidated statements of changes in equity and Consolidated statements of cash flows for each of the three years in the period ended December 31, 2009, and the financial statement schedule listed in the Index at Item 18. Financial Statements, and our report dated April 1, 2010 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

London, England

April 1, 2010

F-2

INTERCONTINENTAL HOTELS GROUP PLC

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Shareholders of InterContinental Hotels Group PLC

We have audited the accompanying Consolidated statements of financial position of InterContinental Hotels Group PLC as of December 31, 2009 and 2008, and the related Consolidated income statements, Consolidated statements of comprehensive income, Consolidated statements of changes in equity and Consolidated statements of cash flows for each of the three years in the period ended December 31, 2009. Our audits also included the financial statements schedule listed in the Index at Item 18. These financial statements are the responsibility of the Group’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the consolidated financial position of InterContinental Hotels Group PLC at December 31, 2009 and 2008, and the consolidated results of its operations and its consolidated cash flows for each of the three years in the period ended December 31, 2009, in accordance with International Financial Reporting Standards as adopted by the European Union and International Financial Reporting Standards as issued by the International Accounting Standards Board. Also, in our opinion, the related financial statement schedule, when considered in relation to the basic financial statements taken as a whole, presents fairly in all material respects the information set forth therein.

We also have audited, in accordance with the standards of the Public Company Accounting Oversight Board (United States), the effectiveness of InterContinental Hotels Group PLC’s internal control over financial reporting as of December 31, 2009, based on criteria established in Internal Control-Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission and our report dated April 1, 2010 expressed an unqualified opinion thereon.

ERNST & YOUNG LLP

London, England

April 1, 2010

F-3

CONSENT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We consent to the incorporation by reference in the Registration Statements (Form F-3 No. 333-108084 and Form S-8 Nos. 333-01572, 333-08336, 333-99785, 333-104691 and 333-126139) of InterContinental Hotels Group PLC of the reference to our name in “Item 3. Key information” and our reports dated April 1, 2010, with respect to the Consolidated Financial Statements and Schedule of InterContinental Hotels Group PLC, and the effectiveness of internal control over financial reporting of InterContinental Hotels Group PLC, included in this Annual Report (Form 20-F) for the year ended December 31, 2009.

ERNST & YOUNG LLP

London, England

April 1, 2010

F-4

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED INCOME STATEMENT

	Year ended December 31,									Year ended December 31,									Year ended December 31,
	2009									2008									2007
	Before			Exceptional						Before			Exceptional						Before			Exceptional
	exceptional			items						exceptional			items						exceptional			items
	items			(Note 5)			Total			items			(Note 5)			Total			items			(Note 5)			Total
	($ million)
Revenue (Note 2)		1,538			—			1,538			1,897			—			1,897			1,817			—			1,817
Cost of sales		(769	)		(91	)		(860	)		(852	)		—			(852	)		(856	)		—			(856	)
Administrative expenses		(303	)		(83	)		(386	)		(400	)		(59	)		(459	)		(377	)		(14	)		(391	)
Other operating income and expenses		6			(2	)		4			14			25			39			16			70			86
		472			(176	)		296			659			(34	)		625			600			56			656
Depreciation and amortization (Note 2)		(109	)		—			(109	)		(110	)		(2	)		(112	)		(112	)		(2	)		(114	)
Impairment (Note 2)		—			(197	)		(197	)		—			(96	)		(96	)		—			6			6
Operating (loss)/profit (Note 2)		363			(373	)		(10	)		549			(132	)		417			488			60			548
Financial income (Note 6)		3			—			3			12			—			12			18			—			18
Financial expenses (Note 6)		(57	)		—			(57	)		(113	)		—			(113	)		(108	)		—			(108	)
(Loss)/profit before tax		309			(373	)		(64	)		448			(132	)		316			398			60			458
Tax (Note 7)		(15	)		287			272			(101	)		42			(59	)		(89	)		60			(29	)
Profit for the year from continuing operations		294			(86	)		208			347			(90	)		257			309			120			429
Profit for the year from discontinued operations (Note 11)		—			6			6			—			5			5			2			32			34
Profit for the year		294			(80	)		214			347			(85	)		262			311			152			463
Attributable to:
Equity holders of the parent		293			(80	)		213			347			(85	)		262			311			152			463
Non-controlling interest		1			—			1			—			—			—			—			—			—
Earnings per ordinary share (Note 9)
Continuing operations:
Basic								72.6¢									89.5¢									134.1¢
Diluted								70.2¢									86.8¢									130.4¢
Total operations:
Basic								74.7¢									91.3¢									144.7¢
Diluted								72.2¢									88.5¢									140.7¢

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

F-5

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2009			2008			2007
	($ million)
Profit for the year		214			262			463
Other comprehensive income
Available-for-sale financial assets:
Gains/(losses) on valuation		11			(4	)		8
Losses/(gains) reclassified to income on impairment/disposal		4			(17	)		(20	)
Cash flow hedges:
Losses arising during the year		(7	)		(14	)		(2	)
Reclassified to financial expenses		11			2			(2	)
Defined benefit pension plans:
Actuarial (losses)/gains, net of related tax credit of $1m (2008 $13m, 2007 $nil)		(57	)		(23	)		25
Decrease/(increase) in asset restriction on plans in surplus		21			(14	)		(17	)
Exchange differences on retranslation of foreign operations, including related tax credit of $4m (2008 $1m, 2007 $nil)		43			(56	)		25
Tax related to pension contributions		—			8			11
Other comprehensive income/(loss) for the year		26			(118	)		28
Total comprehensive income for the year		240			144			491
Attributable to:
Equity holders of the parent		240			144			489
Non-controlling interest		—			—			2

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

F-6

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

	Share capital						Retained earnings and other reserves
													Shares
													held by						Unrealized
	Number									Capital			employee						gains and			Currency						IHG			Non-
	of			Nominal			Share			redemption			share			Other			losses			translation			Retained			shareholders’			controlling			Total
	shares(i)			value(i)			premium(ii)			reserve(ii)			trusts(iii)			reserves(iv)			reserve(v)			reserve(vi)			earnings			equity			interest			equity
	($ million, number of shares — millions)
At January 1, 2007		356			80			49			8			(33	)		(2,914	)		53			209			3,878			1,330			16			1,346
Total comprehensive income for the year		—			—			—			—			—			—			(16	)		24			481			489			2			491
Issue of ordinary shares		4			1			31			—			—			—			—			—			—			32			—			32
Repurchase of shares		(8	)		(2	)		—			—			—			—			—			—			(160	)		(162	)		—			(162	)
Share capital consolidation		(57	)		—			—			—			—			—			—			—			—			—			—			—
Transfer to capital redemption reserve		—			—			—			2			—			—			—			—			(2	)		—			—			—
Purchase of own shares by employee share trusts		—			—			—			—			(138	)		—			—			—			—			(138	)		—			(138	)
Release of own shares by employee share trusts		—			—			—			—			89			—			—			—			(80	)		9			—			9
Equity-settled share-based cost		—			—			—			—			—			—			—			—			60			60			—			60
Tax related to share schemes		—			—			—			—			—			—			—			—			(4	)		(4	)		—			(4	)
Disposals		—			—			—			—			—			—			—			—			—			—			(12	)		(12	)
Equity dividends paid		—			—			—			—			—			—			—			—			(1,524	)		(1,524	)		—			(1,524	)
Exchange and other adjustments		—			2			2			—			(1	)		(4	)		1			—			—			—			—			—
At December 31, 2007		295			81			82			10			(83	)		(2,918	)		38			233			2,649			92			6			98
Total comprehensive income for the year		—			—			—			—			—			—			(29	)		(61	)		234			144			—			144
Issue of ordinary shares		—			—			2			—			—			—			—			—			—			2			—			2
Repurchase of shares		(9	)		(3	)		—			—			—			—			—			—			(136	)		(139	)		—			(139	)
Transfer to capital redemption reserve		—			—			—			3			—			—			—			—			(3	)		—			—			—
Purchase of own shares by employee share trusts		—			—			—			—			(24	)		—			—			—			—			(24	)		—			(24	)
Release of own shares by employee share trusts		—			—			—			—			39			—			—			—			(53	)		(14	)		—			(14	)
Equity-settled share-based cost		—			—			—			—			—			—			—			—			49			49			—			49
Tax related to share schemes		—			—			—			—			—			—			—			—			2			2			—			2
Equity dividends paid		—			—			—			—			—			—			—			—			(118	)		(118	)		—			(118	)
Exchange and other adjustments		—			(21	)		(23	)		(3	)		19			28			—			—			—			—			1			1
At December 31, 2008		286			57			61			10			(49	)		(2,890	)		9			172			2,624			(6	)		7			1
Total comprehensive income for the year		—			—			—			—			—			—			20			43			177			240			—			240
Issue of ordinary shares		1			—			11			—			—			—			—			—			—			11			—			11
Purchase of own shares by employee share trusts		—			—			—			—			(6	)		—			—			—			—			(6	)		—			(6	)
Release of own shares by employee share trusts		—			—			—			—			55			—			—			—			(61	)		(6	)		—			(6	)
Equity-settled share-based cost		—			—			—			—			—			—			—			—			24			24			—			24
Tax related to share schemes		—			—			—			—			—			—			—			—			10			10			—			10
Equity dividends paid		—			—			—			—			—			—			—			—			(118	)		(118	)		—			(118	)
Exchange and other adjustments		—			6			7			1			(4	)		(10	)		—			—			—			—			—			—
At December 31, 2009		287			63			79			11			(4	)		(2,900	)		29			215			2,656			149			7			156

At December 31, 2006 the authorized share capital was £160,050,000 comprising 1,400,000,000 ordinary shares of 113/7 pence each and one redeemable preference share of £50,000.

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

F-7

(i)	The Company was incorporated and registered in England and Wales with registered number 5134420 on May 21, 2004 as a limited company under the Companies Act 1985 with the name Hackremco (No. 2154) Limited. On March 24, 2005 Hackremco (No. 2154) Limited changed its name to New InterContinental Hotels Group Limited. On April 27, 2005 New InterContinental Hotels Group Limited re-registered as a public limited company and changed its name to New InterContinental Hotels Group PLC. On June 27, 2005 New InterContinental Hotels Group PLC changed its name to InterContinental Hotels Group PLC.
	On June 1, 2006, shareholders approved a share capital consolidation on the basis of seven new ordinary shares for every eight existing ordinary shares. This provided for all the authorized ordinary shares of 10 pence each (whether issued or unissued) to be consolidated into new ordinary shares of 113/7 pence each. The share capital consolidation became effective on June 12, 2006.
	On June 1, 2007, shareholders approved a share capital consolidation on the basis of 47 new ordinary shares for every 56 existing ordinary shares. This provided for all the authorized ordinary shares of 113/7 pence each (whether issued or unissued) to be consolidated into new ordinary shares of 1329/47 pence each. The share capital consolidation became effective on June 4, 2007.
	At September 30, 2009, the authorized share capital was £160,050,000, comprising 1,175,000,000 ordinary shares of 1329/47 pence each and one redeemable preference share of £50,000. As a result of the resolution passed at the Annual General Meeting on May 29, 2009 amending the Articles in line with the Companies Act 2006, from October 1, 2009 the Company no longer has authorized share capital.
	During 2004 and 2005, the Company undertook to return funds of up to £750 million to shareholders by way of three consecutive £250 million share repurchase programs, the third of which was completed in the first half of 2007. In June 2007, a further £150 million share repurchase program commenced.
	During 2008, 9,219,325 (2007 7,724,844) ordinary shares were repurchased and canceled under the authorities granted by shareholders at the Extraordinary General Meeting held on June 1, 2007 and at the Annual General Meeting held on May 30, 2008. The Company deferred its £150 million share repurchase program in November 2008 in order to preserve cash and maintain the strength of the Group’s financial position. No shares were repurchased in 2009.
	The authority given to the Company at the Annual General Meeting on May 29, 2009 to purchase its own shares was still valid at December 31, 2009. A resolution to renew the authority will be put to shareholders at the Annual General Meeting on May 28, 2010.
(ii)	The share premium reserve and capital redemption reserve are not distributable. The share premium reserve has a balance of $79 million (2008 $61 million, 2007 $82 million) representing the amount of proceeds received for shares in excess of their nominal value. The capital redemption reserve maintains the nominal value of the equity share capital of the Company when shares are repurchased or canceled.
(iii)	The shares held by employee share trusts comprises $3.8 million (2008 $49.2 million, 2007 $82.6 million) in respect of 0.3 million (2008 3.0 million, 2007 3.4 million) InterContinental Hotels Group PLC ordinary shares held by employee share trusts, with a market value at December 31, 2009 of $4 million (2008 $25 million, 2007 $60 million).
(iv)	Other reserves comprises the merger and revaluation reserves previously recognized under UK GAAP, together with the reserve arising as a consequence of the Group’s capital reorganization in June 2005. Following the change in presentational currency to the US dollar in 2008, this reserve also includes exchange differences arising on the retranslation to period-end exchange rates of equity share capital, the capital redemption reserve and shares held by employee share trusts.
(v)	The unrealized gains and losses reserve records movements to fair value of available-for-sale financial assets and the effective portion of the cumulative net change in the fair value of the cash flow hedging instruments related to hedged transactions that have not yet occurred.
	The fair value of cash flow hedging instruments outstanding at December 31, 2009 was a $7 million liability (2008 $10 million liability, 2007 $3 million liability).
(vi)	The currency translation reserve records the movement in exchange differences arising from the translation of the financial statements of foreign operations and exchange differences on foreign currency borrowings and derivative instruments that provide a hedge against net investments in foreign operations. On adoption of IFRS, cumulative exchange differences were deemed to be $nil as permitted by IFRS 1.
	During the year ended December 31, 2009, the impact of hedging net investments in foreign operations was to increase the amount recorded in the currency translation reserve by $8 million (2008 reduce by $96 million, 2007 reduce by $14 million). The fair value of derivative instruments designated as hedges of net investments in foreign operations outstanding at December 31, 2009 was a $13 million liability (2008 $nil, 2007 $nil).

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

F-8

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF

FINANCIAL POSITION

	December 31,			December 31,
	2009			2008
	($ million)
ASSETS
Property, plant and equipment — (Note 10)		1,836			1,684
Goodwill — (Note 12)		82			143
Intangible assets — (Note 13)		274			302
Investment in associates — (Note 14)		45			43
Retirement benefit assets — (Note 3)		12			40
Other financial assets — (Note 15)		130			152
Deferred tax receivable — (Note 25)		95			—
Total non-current assets		2,474			2,364
Inventories — (Note 16)		4			4
Trade and other receivables — (Note 17)		335			412
Current tax receivable		35			36
Cash and cash equivalents — (Note 18)		40			82
Other financial assets — (Note 15)		5			10
Total current assets		419			544
Non-current assets classified as held for sale — (Note 11)		—			210
Total assets (Note 2)		2,893			3,118
LIABILITIES
Loans and other borrowings — (Note 21)		(106	)		(21	)
Trade and other payables — (Note 19)		(688	)		(746	)
Provisions — (Note 20)		(65	)		—
Current tax payable		(194	)		(374	)
Total current liabilities		(1,053	)		(1,141	)
Loans and other borrowings — (Note 21)		(1,016	)		(1,334	)
Retirement benefit obligations — (Note 3)		(142	)		(129	)
Trade and other payables — (Note 19)		(408	)		(392	)
Deferred tax payable — (Note 25)		(118	)		(117	)
Total non-current liabilities		(1,684	)		(1,972	)
Liabilities classified as held for sale — (Note 11)		—			(4	)
Total liabilities (Note 2)		(2,737	)		(3,117	)
Net assets		156			1
EQUITY
Equity share capital		142			118
Capital redemption reserve		11			10
Shares held by employee share trusts		(4	)		(49	)
Other reserves		(2,900	)		(2,890	)
Unrealized gains and losses reserve		29			9
Currency translation reserve		215			172
Retained earnings		2,656			2,624
IHG shareholders’ equity		149			(6	)
Non-controlling interest		7			7
Total equity		156			1

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

F-9

INTERCONTINENTAL HOTELS GROUP PLC

CONSOLIDATED STATEMENT OF CASH FLOWS

	Year ended			Year ended			Year ended
	December 31,			December 31,			December 31,
	2009			2008			2007
	($ million)
Profit for the year		214			262			463
Adjustments for:
Net financial expenses		54			101			90
Income tax (credit)/charge		(272	)		59			30
Depreciation and amortization		109			112			116
Impairment		197			96			(6	)
Other exceptional operating items		176			34			(56	)
Gain on disposal of assets, net of tax		(6	)		(5	)		(32	)
Equity-settled share-based cost, net of payments		14			31			48
Other items		1			3			(4	)
Operating cash flow before movements in working capital		487			693			649
Decrease/(increase) in trade and other receivables		58			42			(30	)
Increase in trade and other payables		1			81			52
Retirement benefit contributions, net of cost		(2	)		(27	)		(66	)
Cash flows relating to exceptional operating items		(60	)		(49	)		—
Cash flow from operations		484			740			605
Interest paid		(53	)		(112	)		(84	)
Interest received		2			12			18
Tax (paid)/received on operating activities		(1	)		1			(74	)
Net cash from operating activities		432			641			465
Cash flow from investing activities
Purchases of property, plant and equipment		(100	)		(53	)		(114	)
Purchases of intangible assets		(33	)		(49	)		(40	)
Investment in associates and other financial assets		(15	)		(6	)		(32	)
Disposal of assets, net of costs and cash disposed of		20			25			97
Proceeds from associates and other financial assets		15			61			114
Tax paid on disposals		(1	)		(3	)		(64	)
Net cash from investing activities		(114	)		(25	)		(39	)
Cash flow from financing activities
Proceeds from the issue of share capital		11			2			32
Purchase of own shares		—			(139	)		(162	)
Purchase of own shares by employee share trusts		(8	)		(22	)		(138	)
Proceeds on release of own shares by employee share trusts		2			2			21
Dividends paid to shareholders		(118	)		(118	)		(1,524	)
Issue of £250m 6% bonds		411			—			—
(Decrease)/increase in other borrowings		(660	)		(316	)		1,108
Net cash from financing activities		(362	)		(591	)		(663	)
Net movement in cash and cash equivalents in the year		(44	)		25			(237	)
Cash and cash equivalents at beginning of the year		82			105			351
Exchange rate effects		2			(48	)		(9	)
Cash and cash equivalents at end of the year		40			82			105

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

F-10

Note 1 — Accounting policies

General information

The Consolidated Financial Statements of InterContinental Hotels Group PLC (the “Group” or “IHG”) for the year ended December 31, 2009 were authorized for issue in accordance with a resolution of the Directors on February 15, 2010. InterContinental Hotels Group PLC (the “Company”) is incorporated in Great Britain and registered in England and Wales.

Summary of significant accounting policies

Basis of preparation

The Consolidated Financial Statements of IHG have been prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board (“IASB”) and in accordance with IFRS as adopted by the European Union (“EU”), and in accordance with the provisions of the Companies Act 2006. IFRS as adopted by the EU differs in certain respects from IFRS as issued by the IASB, however, the differences have no impact on the Group’s Consolidated Financial Statements for the years presented.

Changes in accounting policies

With effect from January 1, 2009, the Group has implemented International Accounting Standard (“IAS”) 1 (Revised) — “Presentation of Financial Statements”, IAS 23 (Revised) — “Borrowing Costs”, Amendment to IFRS 2 — “Share-based Payment: Vesting Conditions and Cancellations”, Amendment to IFRS 7 “Financial Instruments: Disclosures”, IFRS 8 — “Operating Segments”, International Financial Reporting Interpretations Committee Interpretation (“IFRIC”) 13 — “Customer Loyalty Programmes” and IFRIC 16 — “Hedges of a Net Investment in a Foreign Operation”.

IAS 1 (Revised) — “Presentation of Financial Statements” has resulted in the introduction of the “Statement of changes in equity” as a primary financial statement. The revised standard also introduces the “Statement of comprehensive income”, presented either in a single statement or two linked statements. The Group has adopted the two statement approach.

IAS 23 (Revised) — “Borrowing Costs” requires capitalization of borrowing costs that are directly attributable to the acquisition, construction or production of a qualifying asset from January 1, 2009. The Group’s previous policy was to expense all borrowing costs as incurred. In accordance with the transitional provisions of IAS 23, the revised standard has been adopted on a prospective basis and applied to projects commencing after January 1, 2009. No borrowing costs have been capitalized in the year.

Amendment to IFRS 2 — “Share-based Payment: Vesting Conditions and Cancellations” clarifies the definitions of vesting conditions and prescribes the treatment for canceled awards. The amendment has not impacted the Group’s financial performance or position.

Amendment to IFRS 7 “Financial Instruments: Disclosures” requires additional disclosures about fair value measurement and liquidity risk. The additional and revised disclosures are presented in Note 23.

IFRS 8 “Operating Segments” replaces IAS 14 “Segment Reporting”. The Group has concluded that the reportable segments determined in accordance with IFRS 8 are the same as the business segments previously reported under IAS 14. On adoption of IFRS 8, certain liabilities have been reclassified to Central functions as explained in Note 2.

IFRIC 13 “Customer Loyalty Programmes” requires customer loyalty credits to be accounted for as a separate component of a sales transaction. The adoption of IFRIC 13 has not had a material impact on the financial statements.

IFRIC 16 “Hedges of a Net Investment in a Foreign Operation” is applied prospectively from January 1, 2009 and has not impacted the effectiveness of the Group’s net investment hedging arrangements.

There has been no requirement to restate prior year comparatives as a result of adopting any of the above.

F-11

Presentational currency

The Consolidated Financial Statements are presented in millions of US dollars following a management decision to change the reporting currency from sterling during 2008. The change was made to reflect the profile of the Group’s revenue and operating profit which are primarily generated in US dollars or US dollar-linked currencies.

The currency translation reserve was set to nil at January 1, 2004 on transition to IFRS and this reserve has been re-presented on the basis that the Group has reported in US dollars since this date. Equity share capital, the capital redemption reserve and shares held by employee share trusts are translated into US dollars at the rates of exchange on the last day of the period; the resultant exchange differences are recorded in other reserves.

The functional currency of the parent company remains sterling since this is a non-trading holding company located in the United Kingdom that has sterling denominated share capital and whose primary activity is the payment and receipt of interest on sterling denominated external borrowings and inter-company balances.

Basis of consolidation

The Consolidated Financial Statements comprise the financial statements of the parent company and entities controlled by the Company. All intra-group balances and transactions have been eliminated.

The results of those businesses acquired or disposed of are consolidated for the period during which they were under the Group’s control.

Foreign currencies

Transactions in foreign currencies are translated to the functional currency at the exchange rates ruling on the dates of the transactions. Monetary assets and liabilities denominated in foreign currencies are retranslated to the functional currency at the relevant rates of exchange ruling on the last day of the period. All foreign exchange differences arising on translation are recognized in the income statement except on foreign currency borrowings that provide a hedge against a net investment in a foreign operation. These are taken directly to the currency translation reserve until the disposal of the net investment, at which time they are recycled against the gain or loss on disposal.

The assets and liabilities of foreign operations, including goodwill, are translated into US dollars at the relevant rates of exchange ruling on the last day of the period. The revenues and expenses of foreign operations are translated into US dollars at average rates of exchange for the period. The exchange differences arising on the retranslation are taken directly to the currency translation reserve. On disposal of a foreign operation, the cumulative amount recognized in the currency translation reserve relating to that particular foreign operation is recycled against the gain or loss on disposal.

Property, plant and equipment

Property, plant and equipment are stated at cost less depreciation and any impairment.

Borrowing costs attributable to the acquisition or construction of an asset that necessarily takes a substantial period of time to prepare for its intended use or sale are capitalized as part of the asset cost. All other borrowing costs are expensed as incurred. Borrowing costs consist of interest and other costs that an entity incurs in connection with the borrowing of funds.

Borrowing costs relating to assets where construction commenced on or after January 1, 2009 are capitalized. Borrowing costs relating to projects commencing before this date are expensed.

Repairs and maintenance costs are expensed as incurred.

F-12

Land is not depreciated. All other property, plant and equipment are depreciated to a residual value over their estimated useful lives, namely:

Buildings	lesser of 50 years and unexpired term of lease; and
Fixtures, fittings and equipment	three to 25 years.

All depreciation is charged on a straight-line basis. Residual value is reassessed annually.

Property, plant and equipment are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable. Assets that do not generate independent cash flows are combined into cash-generating units. If carrying values exceed estimated recoverable amount, the assets or cash-generating units are written down to their recoverable amount. Recoverable amount is the greater of fair value less costs to sell and value in use. Value in use is assessed based on estimated future cash flows discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset.

On adoption of IFRS, the Group retained previous revaluations of property, plant and equipment at deemed cost as permitted by IFRS 1 “First-time Adoption of International Financial Reporting Standards.”

Goodwill

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

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

Intangible assets

Software

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

Internally generated development costs are expensed unless forecast revenues exceed attributable forecast development costs, at which time they are capitalized and amortized over the life of the asset.

Management contracts

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

Other intangible assets

Amounts paid to hotel owners to secure management contracts and franchise agreements are capitalized and amortized over the shorter of the contracted period and 10 years on a straight-line basis.

Intangible assets are reviewed for impairment when events or changes in circumstances indicate that the carrying value may not be recoverable.

Associates

An associate is an entity over which the Group has the ability to exercise significant influence, but not control, through participation in the financial and operating policy decisions of the entity.

F-13

Associates are accounted for using the equity method unless the associate is classified as held for sale. Under the equity method, the Group’s investment is recorded at cost adjusted by the Group’s share of post-acquisition profits and losses. When the Group’s share of losses exceeds its interest in an associate, the Group’s carrying amount is reduced to $nil and recognition of further losses is discontinued except to the extent that the Group has incurred legal or constructive obligations or made payments on behalf of an associate.

Financial assets

The Group classifies its financial assets into one of the two following categories: loans and receivables or available-for-sale financial assets. Management determines the classification of financial assets on initial recognition and they are subsequently held at amortized cost (loans and receivables) or fair value (available-for-sale financial assets). Interest on loans and receivables is calculated using the effective interest rate method and is recognized in the income statement as interest income.

Changes in fair values of available-for-sale financial assets are recorded directly in equity within the unrealized gains and losses reserve. On disposal, the accumulated fair value adjustments recognized in equity are recycled to the income statement. Dividends from available-for-sale financial assets are recognized in the income statement as other operating income and expenses.

Financial assets are tested for impairment at each period-end date. If an available-for-sale financial asset is impaired, the difference between original cost and fair value is transferred from equity to the income statement to the extent of any cumulative loss recorded in equity, with any excess charged directly to the income statement.

Financial liabilities

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

Inventories

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

Trade receivables

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

Cash and cash equivalents

Cash comprises cash in hand and demand deposits.

Cash equivalents are short-term highly liquid investments with an original maturity of three months or less that are readily convertible to known amounts of cash and subject to insignificant risk of changes in value.

In the statement of cash flows, cash and cash equivalents are shown net of short-term overdrafts which are repayable on demand and form an integral part of the Group’s cash management.

Assets held for sale

Non-current assets and associated liabilities are classified as held for sale when their carrying amount will be recovered principally through a sale transaction rather than continuing use and a sale is highly probable.

Assets designated as held for sale are held at the lower of carrying amount at designation and fair value less costs to sell.

F-14

Depreciation is not charged against property, plant and equipment classified as held for sale.

Trade payables

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

Self insurance

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

Provisions

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

An onerous contract provision is recognized when the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received under it.

Bank and other borrowings

Bank and other borrowings are initially recognized at the fair value of the consideration received less directly attributable transaction costs. They are subsequently measured at amortized cost. Finance charges, including the transaction costs and any discount or premium on issue, are charged to the income statement using the effective interest rate method.

Borrowings are classified as non-current when the repayment date is more than 12 months from the period-end date or where they are drawn on a facility with more than 12 months to expiry.

Derivative financial instruments and hedging

Derivatives designated as hedging instruments are accounted for in line with the nature of the hedging arrangement. The Group’s detailed accounting policies with respect to hedging instruments are set out in Note 22. Documentation outlining the measurement and effectiveness of the hedging arrangement is maintained throughout the life of the hedge relationship. Any ineffective element of a hedge arrangement is recognized in financial income or expenses.

Interest arising from currency derivatives and interest rate swaps is taken to financial income or expenses on a net basis over the term of the agreement, unless the accounting treatment for the hedging relationship requires the interest to be taken to reserves.

Foreign exchange gains and losses on currency derivatives are recognized in financial income and expenses unless they form part of effective hedge relationships.

The fair value of derivatives is calculated by discounting the expected future cash flows at prevailing interest rates.

Taxes

Current tax

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

F-15

Deferred tax

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

Deferred tax assets are recognized to the extent that it is regarded as probable that the deductible temporary differences can be realized. The recoverability of all deferred tax assets is reassessed at the end of each reporting period.

Deferred tax is calculated at the tax rates that are expected to apply in the periods in which the asset or liability will be settled, based on rates enacted or substantively enacted at the end of the reporting period.

Retirement benefits

Defined contribution plans

Payments to defined contribution schemes are charged to the income statement as they fall due.

Defined benefit plans

Plan assets are measured at fair value and plan liabilities are measured on an actuarial basis, using the projected unit credit method and discounting at an interest rate equivalent to the current rate of return on a high quality corporate bond of equivalent currency and term to the plan liabilities. The difference between the value of plan assets and liabilities at the period-end date is the amount of surplus or deficit recorded in the statement of financial position as an asset or liability. An asset is recognized when the employer has an unconditional right to use the surplus at some point during the life of the plan or on its wind up. If a refund would be subject to a tax other than income tax, as is the case in the United Kingdom, the asset is recorded at the amount net of tax.

The service cost of providing pension benefits to employees for the year is charged to the income statement. The cost of making improvements to pensions is recognized in the income statement on a straight-line basis over the period during which any increase in benefits vests. To the extent that improvements in benefits vest immediately, the cost is recognized immediately as an expense.

Actuarial gains and losses may result from: differences between the expected return and the actual return on plan assets; differences between the actuarial assumptions underlying the plan liabilities and actual experience during the year; or changes in the actuarial assumptions used in the valuation of the plan liabilities. Actuarial gains and losses, and taxation thereon, are recognized in the Consolidated statement of comprehensive income.

Actuarial valuations are normally carried out every three years and are updated for material transactions and other material changes in circumstances (including changes in market prices and interest rates) up to the end of the reporting period.

Revenue recognition

Revenue is the gross inflow of economic benefits received and receivable by the Group on its own account where those inflows result in increases in equity.

Revenue is derived from the following sources: franchise fees; management fees; owned and leased properties and other revenues which are ancillary to the Group’s operations, including technology fee income.

Generally, revenue represents sales (excluding VAT and similar taxes) of goods and services, net of discounts, provided in the normal course of business and recognized when services have been rendered. The following is a description of the composition of revenues of the Group.

Franchise fees — received in connection with the license of the Group’s brand names, usually under long-term contracts with the hotel owner. The Group charges franchise royalty fees as a percentage of room revenue. Revenue is recognized when earned and realized or realizable under the terms of the agreement.

F-16

Management fees — earned from hotels managed by the Group, usually under long-term contracts with the hotel owner. Management fees include a base fee, which is generally a percentage of hotel revenue, and an incentive fee, which is generally based on the hotel’s profitability or cash flows. Revenue is recognized when earned and realized or realizable under the terms of the contract.

Owned and leased — primarily derived from hotel operations, including the rental of rooms and food and beverage sales from owned and leased hotels operated under the Group’s brand names. Revenue is recognized when rooms are occupied and food and beverages are sold.

Share-based payments

The cost of equity-settled transactions with employees is measured by reference to fair value at the date at which the right to the shares is granted. Fair value is determined by an external valuer using option pricing models.

The cost of equity-settled transactions is recognized, together with a corresponding increase in equity, over the period in which any performance or service conditions are fulfilled, ending on the date on which the relevant employees become fully entitled to the award (vesting date).

The income statement charge for a period represents the movement in cumulative expense recognized at the beginning and end of that period. No expense is recognized for awards that do not ultimately vest, except for awards where vesting is conditional upon a market or non-vesting condition, which are treated as vesting irrespective of whether or not the market or non-vesting condition is satisfied, provided that all other performance and/or service conditions are satisfied.

The Group has taken advantage of the transitional provisions of IFRS 2 “Share-based Payments” in respect of equity-settled awards and has applied IFRS 2 only to equity-settled awards granted after November 7, 2002 that had not vested before January 1, 2005.

Leases

Operating lease rentals are charged to the income statement on a straight-line basis over the term of the lease.

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

Disposal of non-current assets

The Group recognizes sales proceeds and any related gain or loss on disposal on completion of the sales process. In determining whether the gain or loss should be recorded, the Group considers whether it:

•  has a continuing managerial involvement to the degree associated with asset ownership;

•  has transferred the significant risks and rewards associated with asset ownership; and

•  can reliably measure and will actually receive the proceeds.

Discontinued operations

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

F-17

Exceptional items

The Group discloses certain financial information both including and excluding exceptional items. The presentation of information excluding exceptional items allows a better understanding of the underlying trading performance of the Group and provides consistency with the Group’s internal management reporting. Exceptional items are identified by virtue of either their size or nature so as to facilitate comparison with prior periods and to assess underlying trends in financial performance. Exceptional items can include, but are not restricted to, gains and losses on the disposal of assets, impairment charges and reversals, restructuring costs and the release of tax provisions.

Use of accounting estimates and judgments

The preparation of financial statements requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results may differ from these estimates under different assumptions and conditions.

The estimates and assumptions that have the most significant effect on the amounts recognized in the financial statements are:

•  Trade receivables — a provision for impairment of trade receivables is made on the basis of historical experience and other factors considered relevant by management.

•  Impairment — the Group determines whether goodwill is impaired on an annual basis or more frequently if there are indicators of impairment. Other non-current assets, including property, plant and equipment, are tested for impairment if there are indicators of impairment. Impairment testing requires an estimate of future cash flows and the choice of a suitable discount rate and, in the case of hotels, an assessment of recoverable amount based on comparable market transactions.

•  System Funds — In addition to management or franchise fees, hotels within the IHG system pay cash assessments which are collected by IHG for specific use within the System Funds (the “Funds”). Under the governance of the IAHI, the Owners’ Association, IHG operates the Funds on behalf of hotel owners with the objective of driving revenues for their hotels. The Funds are used to pay for marketing, the Priority Club loyalty program and the global reservation system. The Funds are planned to operate at breakeven with any short-term timing surplus or deficit carried in IHG’s statement of financial position within working capital.

As all Fund assessments are designated for specific purposes and do not result in a profit or loss for the Group, the revenue recognition criteria as outlined in the accounting policy above are not met and therefore the revenue and expenses of the Funds are not included in the Consolidated income statement.

The assets and liabilities relating to the Funds are included in the appropriate headings in the Consolidated statement of financial position because the related legal, but not beneficial, rights and obligations rest with the Group. These assets and liabilities include the Priority Club Rewards liability, short-term timing surpluses and deficits and any receivables and payables related to the Funds.

Further information on the Funds is included in Note 31.

•  Loyalty program — The hotel loyalty program, Priority Club Rewards, enables members to earn points, funded through hotel assessments, during each qualifying stay at an IHG branded hotel and redeem points at a later date for free accommodation or other benefits. The future redemption liability is included in trade and other payables and is estimated using eventual redemption rates determined by actuarial methods and points values. Actuarial gains and losses on the future redemption liability are borne by the System Funds and any resulting changes in the liability would correspondingly adjust the amount of short-term timing differences held in the Consolidated statement of financial position.

•  Retirement and other post-employment benefits — the cost of defined benefit pension plans and other post-employment benefits is determined using actuarial valuations. The actuarial valuation involves making

F-18

assumptions about discount rates, expected rates of return on assets, future salary increases, mortality rates and future pension increases.

•  Tax — provisions for tax accruals require judgments on the interpretation of tax legislation, developments in tax case law and the potential outcomes of tax audits and appeals. In addition, deferred tax assets are recognized for unused tax attributes to the extent that it is probable that taxable profit will be available against which they can be utilized. Judgment is required as to the amount that can be recognized based on the likely amount and timing of future taxable profits, taking into account expected tax planning. Deferred tax balances are dependent on management’s expectations regarding the manner and timing of recovery of the related assets.

•  Other — the Group also makes estimates and judgments in the valuation of management and franchise agreements acquired on asset disposals, the valuation of financial assets classified as available-for-sale, the outcome of legal proceedings and claims and in the valuation of share-based payment costs.

New standards and interpretations

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

IFRS 2	Share-based Payment (Amendment) Effective from January 1, 2010
IFRS 3R	Business Combinations Effective from July 1, 2009
IFRS 5	Non-current Assets Held for Sale and Discontinued Operations (Amendment) Effective from July 1, 2009
IAS 27R	Consolidated and Separate Financial Statements Effective from July 1, 2009
IAS 39	Financial Instruments: Recognition and Measurement (Amendment) Effective from July 1, 2009
IFRIC 17	Distribution of Non-cash Assets to Owners Effective from July 1, 2009

Note: the effective dates are in respect of accounting periods beginning on or after the date shown and so will be effective for the Group from January 1, 2010.

F-19

Note 2 — Exchange rates and Segmental information

Exchange rates

The results of operations have been translated into US dollars at the average rates of exchange for the year. In the case of sterling, the translation rate is $1 = £0.64 (2008 $1 = £0.55, 2007 $1 = £0.50). In the case of the euro, the translation rate is $1 = €0.72 (2008 $1 = €0.68, 2007 $1 = €0.73).

Assets and liabilities have been translated into US dollars at the rates of exchange on the last day of the period. In the case of sterling, the translation rate is $1 = £0.62 (2008 $1 = £0.69, 2007 $1 = £0.50). In the case of the euro, the translation rate is $1 = €0.69 (2008 $1 = €0.71, 2007 $1 = €0.68).

Segmental information

The management of the Group’s operations excluding Central functions is organized within three geographical regions:

Americas;

Europe, the Middle East and Africa (“EMEA”); and

Asia Pacific.

These, together with Central functions, comprise the Group’s four reportable segments.

The Asia Pacific reportable segment comprises the aggregation of two operating segments, Greater China and Asia Australasia. Central functions include costs of global functions, including technology, sales and marketing, finance, human resources and corporate services; revenue arises principally from technology fee income. Central liabilities include the loyalty program liability and the cumulative short-term System Fund surplus which were allocated to the geographical segments prior to the adoption of IFRS 8.

Each of the geographical regions derives its revenues from either franchising, managing or owning hotels and additional segmental disclosures are provided accordingly.

Management monitors the operating results of the geographical regions and Central functions separately for the purpose of making decisions about resource allocation and performance assessment. Segmental performance is evaluated based on operating profit or loss and is measured consistently with operating profit or loss in the Consolidated Financial Statements, excluding exceptional items. Group financing and income taxes are managed on a group basis and are not allocated to reportable segments.

F-20

Segmental information

Year ended December 31, 2009

Revenue

					Asia
	Americas		EMEA		Pacific		Central		Group
	($ million)
Franchised		437		83		11		—		531
Managed		110		119		105		—		334
Owned and leased		225		195		129		—		549
Central		—		—		—		124		124
Total revenue*		772		397		245		124		1,538

Segmental result

							Asia
	Americas			EMEA			Pacific			Central			Group
	($ million)
Franchised		364			60			5			—			429
Managed		(40	)		65			44			—			69
Owned and leased		11			33			30			—			74
Regional and central		(47	)		(31	)		(27	)		(104	)		(209	)
Reportable segments’ operating profit		288			127			52			(104	)		363
Exceptional operating items — (Note 5)		(301	)		(22	)		(7	)		(43	)		(373	)
Operating loss*		(13	)		105			45			(147	)		(10	)

	Continuing			Discontinued		Group
	($ million)
Reportable segments’ operating profit		363			—		363
Exceptional operating items		(373	)		—		(373	)
Operating loss		(10	)		—		(10	)
Net finance costs		(54	)		—		(54	)
Loss before tax		(64	)		—		(64	)
Tax		272			—		272
Profit after tax		208			—		208
Gain on disposal of assets, net of tax		—			6		6
Profit for the year		208			6		214

* Relates to continuing operations.

F-21

Year ended December 31, 2009

Assets and liabilities

							Asia
	Americas			EMEA			Pacific			Central			Group
	($ million)
Segment assets		970			926			631			196			2,723
Unallocated assets:
Deferred tax receivable														95
Current tax receivable														35
Cash and cash equivalents														40
Total assets														2,893
Segment liabilities		(417	)		(236	)		(63	)		(567	)		(1,283	)
Unallocated liabilities:
Current tax payable														(194	)
Deferred tax payable														(118	)
Loans and other borrowings														(1,122	)
Derivatives														(20	)
Total liabilities														(2,737	)

Other segmental information

					Asia
	Americas		EMEA		Pacific		Central		Group
	($ million)
Capital expenditure(see below)		80		5		14		37		136
Non-cash items:
Onerous management contracts		91		—		—		—		91
Depreciation and amortization(i)		33		29		28		19		109
Impairment losses		189		8		—		—		197

(i) Included in the $109 million of depreciation and amortization is $29 million relating to administrative expenses and $80 million relating to cost of sales.

Reconciliation of capital expenditure

						Asia
	Americas			EMEA		Pacific		Central		Group
	($ million)
Capital expenditure per management reporting		80			5		14		37		136
Timing differences		(45	)		1		1		—		(43	)
Capital expenditure per the financial statements		35			6		15		37		93
Comprising additions to:
Property, plant and equipment		29			6		9		13		57
Intangible assets		6			—		3		24		33
Investment in associates		—			—		3		—		3
		35			6		15		37		93

F-22

Segmental information

Year ended December 31, 2008

Revenue

					Asia
	Americas		EMEA		Pacific		Central		Group
	($ million)
Franchised		495		110		18		—		623
Managed		168		168		113		—		449
Owned and leased		300		240		159		—		699
Central		—		—		—		126		126
Total revenue*		963		518		290		126		1,897

Segmental result

							Asia
	Americas			EMEA			Pacific			Central			Group
	($ million)
Franchised		426			75			8			—			509
Managed		51			95			55			—			201
Owned and leased		55			45			43			—			143
Regional and central		(67	)		(44	)		(38	)		(155	)		(304	)
Reportable segments’ operating profit		465			171			68			(155	)		549
Exceptional operating items — (Note 5)		(99	)		(21	)		(2	)		(10	)		(132	)
Operating profit*		366			150			66			(165	)		417

	Continuing			Discontinued		Group
				($ million)
Reportable segments’ operating profit		549			—		549
Exceptional operating items		(132	)		—		(132	)
Operating profit		417			—		417
Net finance costs		(101	)		—		(101	)
Profit before tax		316			—		316
Tax		(59	)		—		(59	)
Profit after tax		257			—		257
Gain on disposal of assets, net of tax		—			5		5
Profit for the year		257			5		262

* Relates to continuing operations.

F-23

Year ended December 31, 2008

Assets and liabilities

							Asia
	Americas			EMEA			Pacific			Central			Group
	($ million)
Segment assets		1,031			957			613			189			2,790
Non-current assets classified as held for sale		209			1			—			—			210
		1,240			958			613			189			3,000
Unallocated assets:
Current tax receivable														36
Cash and cash equivalents														82
Total assets														3,118
Segment liabilities		(429	)		(257	)		(63	)		(508	)		(1,257	)
Liabilities classified as held for sale		(4	)		—			—			—			(4	)
		(433	)		(257	)		(63	)		(508	)		(1,261	)
Unallocated liabilities:
Current tax payable														(374	)
Deferred tax payable														(117	)
Loans and other borrowings														(1,355	)
Derivatives														(10	)
Total liabilities														(3,117	)

Other segmental information

					Asia
	Americas		EMEA		Pacific		Central		Group
	($ million)
Capital expenditure(see below)		51		5		13		74		143
Non-cash items:
Depreciation and amortization(i)		31		35		26		20		112
Impairment losses		75		21		—		—		96

(i) Included in the $112 million of depreciation and amortization is $32 million relating to administrative expenses and $80 million relating to cost of sales.

Central liabilities include the loyalty program liability and the cumulative short-term System Fund surplus which were allocated to the geographical segments prior to the adoption of IFRS 8.

Reconciliation of capital expenditure

							Asia
	Americas			EMEA			Pacific			Central		Group
	($ million)
Capital expenditure per management reporting		51			5			13			74		143
Timing differences		—			—			4			—		4
Exchange and other adjustments		(1	)		(3	)		(2	)		2		(4	)
Capital expenditure per the financial statements		50			2			15			76		143
Comprising additions to:
Property, plant and equipment		43			2			10			36		91
Intangible assets		7			—			2			40		49
Investment in associates		—			—			3			—		3
		50			2			15			76		143

F-24

Segmental information

Year ended December 31, 2007

Revenue

					Asia
	Americas		EMEA		Pacific		Central		Group
	($ million)
Franchised		489		81		16		—		586
Managed		156		167		99		—		422
Owned and leased		303		244		145		—		692
Central		—		—		—		117		117
Continuing operations		948		492		260		117		1,817
Discontinued operations — owned and leased		16		17		—		—		33
		964		509		260		117		1,850

Segmental result

							Asia
	Americas			EMEA			Pacific			Central			Group
	($ million)
Franchised		425			58			6			—			489
Managed		41			87			46			—			174
Owned and leased		54			33			36			—			123
Regional and central		(66	)		(44	)		(25	)		(163	)		(298	)
Continuing operations		454			134			63			(163	)		488
Exceptional operating items		17			21			17			5			60
Operating profit		471			155			80			(158	)		548
Discontinued operations — owned and leased		2			1			—			—			3
		473			156			80			(158	)		551

	Continuing			Discontinued			Group
	($ million)
Operating profit before exceptional items		488			3			491
Exceptional operating items		60			—			60
Operating profit		548			3			551
Net finance costs		(90	)		—			(90	)
Profit before tax		458			3			461
Tax		(29	)		(1	)		(30	)
Profit after tax		429			2			431
Gain on disposal of assets, net of tax		—			32			32
Profit for the year		429			34			463

F-25

Year ended December 31, 2007

Other segmental information

					Asia
	Americas		EMEA		Pacific		Central		Group
	($ million)
Continuing operations:
Capital expenditure		52		36		45		46		179
Non-cash items:
Depreciation and amortization(i)		34		35		22		23		114
Reversal of previously recorded impairment		—		—		6		—		6
Discontinued operations:
Capital expenditure		—		1		—		—		1
Non-cash items:
Depreciation and amortization(i)		—		2		—		—		2

(i) Included in the $116 million of depreciation and amortization is $35 million relating to administrative expenses and $81 million relating to cost of sales.

Geographical information

	Year ended December 31,
	2009		2008		2007
	($ million)
Revenue:
United Kingdom		125		173		164
United States		678		819		808
Rest of World		735		905		878
Total revenue per Consolidated income statement		1,538		1,897		1,850

For the purposes of the above table, hotel revenue is determined according to the location of the hotel and other revenue is attributed to the country of origin. In addition to the United Kingdom, revenue relating to an individual country is separately disclosed when it represents 10% or more of total revenue.

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Non-current assets
United Kingdom		389		363
United States		805		758
France		376		368
People’s Republic of China		354		357
Rest of World		313		326
Total		2,237		2,172

For the purposes of the above table, non-current assets comprise property, plant and equipment, goodwill, intangible assets and investments in associates. Non-current assets relating to an individual country are separately disclosed when they represent 10% or more of total non-current assets, as defined above.

F-26

Note 3 — Staff costs and Directors’ emoluments

Staff

	Year ended December 31,
	2009		2008		2007
	($ million)
Costs:
Wages and salaries		441		549		551
Social security costs		45		55		61
Pension and other post-retirement benefits:
Defined benefit plans		12		8		8
Defined contribution plans		26		30		25
		524		642		645

Average number of employees, including part-time employees:

	Year ended December 31,
	2009		2008		2007
	(Number)
Americas		3,229		3,384		3,602
EMEA		1,712		1,824		2,100
Asia Pacific		1,410		1,470		1,514
Central		1,205		1,271		1,150
		7,556		7,949		8,366

The costs of the above employees are borne by IHG. In addition, the Group employs 4,561 (2008 4,353, 2007 4,003) people who work in managed hotels or directly on behalf of the System Funds and whose costs of $267 million (2008 $272 million, 2007 $247 million) are borne by those hotels or by the Funds.

Retirement benefits

Retirement and death in service benefits are provided for eligible Group employees in the United Kingdom principally by the InterContinental Hotels UK Pension Plan. The plan, which is funded and HM Revenue & Customs registered, covers approximately 460 (2008 460, 2007 440) employees, of which 150 (2008 170, 2007 200) are in the defined benefit section which provides pensions based on final salaries and 310 (2008 290, 2007 240) are in the defined contribution section. The defined benefit section of the plan closed to new entrants during 2002 with new members provided with defined contribution arrangements. The assets of the plan are held in self-administered trust funds separate from the Group’s assets. In addition, there are unfunded UK pension arrangements for certain members affected by the lifetime allowance. The Group also maintains the following US-based defined benefit plans; the funded InterContinental Hotels Pension Plan, unfunded InterContinental Hotels non-qualified pension plans and post-employment benefits schemes. These plans are now closed to new members. The Group also operates a number of minor pension schemes outside the United Kingdom, the most significant of which is a defined contribution scheme in the United States; there is no material difference between the pension costs of, and contributions to, these schemes.

F-27

In respect of the defined benefit plans, the amounts recognized in the Consolidated income statement, in administrative expenses, are:

	Pension plans																		Post- employment
	UK									US and other									benefits						Total
	2009			2008			2007			2009			2008			2007			2009		2008		2007		2009			2008			2007
	($ million)
Current service costs		7			9			10			1			1			—			—		—		—		8			10			10
Interest cost on benefit obligation		22			30			30			10			10			10			1		1		1		33			41			41
Expected return on plan assets		(21	)		(32	)		(34	)		(8	)		(11	)		(9	)		—		—		—		(29	)		(43	)		(43	)
Operating profit before exceptional items		8			7			6			3			—			1			1		1		1		12			8			8
Exceptional items		11			—			—			—			—			—			—		—		—		11			—			—
		19			7			6			3			—			1			1		1		1		23			8			8

On January 23, 2009, approval was given for the payment of enhanced pension transfers to those deferred members of the InterContinental Hotels UK Pension Plan who had accepted an offer to receive the enhancement either as a cash lump sum or as an additional transfer value to an alternative pension provider. The payments, comprising lump sum amounts of £5.9 million and additional contributions of £4.3 million, were made by the Group on January 23, 2009. The transfer values subsequently paid by the plan were £45 million and the corresponding IAS19 liability extinguished was £38 million. The settlement loss arising of £7 million (being the $11 million exceptional item above), together with the lump sum payment and costs of arrangement, has been charged to the Consolidated income statement as an exceptional item (see Note 5).

The amounts recognized in the Consolidated statement of comprehensive income are:

	Pension plans																		Post-employment
	UK									US and other									benefits							Total
	2009			2008			2007			2009			2008			2007			2009			2008		2007		2009			2008			2007
	($ million)
Actual return on plan assets		7			(25	)		28			22			(27	)		9			—			—		—		29			(52	)		37
Less: expected return on plan assets		(21	)		(32	)		(34	)		(8	)		(11	)		(9	)		—			—		—		(29	)		(43	)		(43	)
		(14	)		(57	)		(6	)		14			(38	)		—			—			—		—		—			(95	)		(6	)
Other actuarial (losses)/gains		(44	)		55			31			(13	)		3			—			(1	)		1		—		(58	)		59			31
Total actuarial (losses)/gains		(58	)		(2	)		25			1			(35	)		—			(1	)		1		—		(58	)		(36	)		25
Movement in asset restriction*		21			(14	)		(17	)		—			—			—			—			—		—		21			(14	)		(17	)
		(37	)		(16	)		8			1			(35	)		—			(1	)		1		—		(37	)		(50	)		8

* Relates to tax that would be deducted at source in respect of a refund of the surplus.

F-28

The assets and liabilities of the schemes and the amounts recognized in the Consolidated statement of financial position are:

													Post-
	Pension plans												employment
	UK						US and other						benefits						Total
	2009			2008			2009			2008			2009			2008			2009			2008
	($ million)
Schemes in surplus
Fair value of plan assets		426			437			16			16			—			—			442			453
Present value of benefit obligations		(414	)		(377	)		(12	)		(13	)		—			—			(426	)		(390	)
Surplus in schemes		12			60			4			3			—			—			16			63
Asset restriction*		(4	)		(23	)		—			—			—			—			(4	)		(23	)
Retirement benefit assets		8			37			4			3			—			—			12			40
Schemes in deficit
Fair value of plan assets		—			—			110			96			—			—			110			96
Present value of benefit obligations		(47	)		(34	)		(185	)		(172	)		(20	)		(19	)		(252	)		(225	)
Retirement benefit obligations		(47	)		(34	)		(75	)		(76	)		(20	)		(19	)		(142	)		(129	)
Total fair value of plan assets		426			437			126			112			—			—			552			549
Total present value of benefit obligations		(461	)		(411	)		(197	)		(185	)		(20	)		(19	)		(678	)		(615	)

* Relates to tax that would be deducted at source in respect of a refund of the surplus.

The “US and other” surplus of $4 million (2008 $3 million) relates to a defined benefit pension scheme in Hong Kong. Included within the “US and other” deficit is $1 million (2008 $1 million) relating to a defined benefit pension plan in the Netherlands.

Assumptions

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

	Pension plans												Post-employment
	UK						US						benefits
	2009		2008		2007		2009		2008		2007		2009		2008		2007
	(%)
Wages and salaries increases		5.1		4.5		4.9		—		—		—		4.0		4.0		4.0
Pensions increases		3.6		3.0		3.4		—		—		—		—		—		—
Discount rate		5.7		5.6		5.5		5.7		6.2		5.8		5.7		6.2		5.8
Inflation rate		3.6		3.0		3.4		—		—		—		—		—		—
Healthcare cost trend rate assumed for next year														9.0		9.5		10.0
Ultimate rate that the cost trend rate trends to														5.0		5.0		5.0

Mortality is the most significant demographic assumption. In respect of the UK plans, the specific mortality rates used are in line with the PA92 medium cohort tables, with age rated down by one year, implying the following life expectancies at retirement. In the US, life expectancy is determined by reference to the RP-2000 healthy tables.

	Pension plans
	UK						US
	2009		2008		2007		2009		2008		2007
	(Years)
Current pensioners at 65 — male(i)		23		23		23		18		18		18
Current pensioners at 65 — female(i)		26		26		26		21		20		20
Future pensioners at 65 — male(ii)		24		24		24		18		18		18
Future pensioners at 65 — female(ii)		27		27		27		21		20		20

(i)	Relates to assumptions based on longevity (in years) following retirement at the end of the reporting period.
(ii)	Relates to assumptions based on longevity (in years) relating to an employee retiring in 2029.

F-29

The assumptions allow for expected increases in longevity.

Sensitivities

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

	UK						US
	Higher/			Increase/			Higher/		Increase/
	(lower)			(decrease)			(lower)		(decrease)
	pension cost			in liabilities			pension cost		in liabilities
	($ million)
Discount rate — 0.25% decrease		0.6			23.3			—		5.2
Discount rate — 0.25% increase		(0.5	)		(22.2	)		—		(5.0	)
Inflation rate — 0.25% increase		1.6			20.7			—		—
Inflation rate — 0.25% decrease		(1.3	)		(19.8	)		—		—
Mortality rate — one year increase		0.8			9.2			—		6.6

In 2018, the healthcare cost trend rate reaches the assumed ultimate rate. A one percentage point increase/(decrease) in assumed healthcare costs trend rate would increase/(decrease) the accumulated post-employment benefit obligations as of December 31, 2009, by approximately $1.6 million (2008 $1.7 million, 2007 $1.9 million) and would increase/(decrease) the total of the service and interest cost components of net post-employment healthcare cost for the period then ended by approximately $0.1 million (2008 $0.1 million, 2007 $0.1 million).

													Post-
	Pension plans												employment
	UK						US and other						benefits						Total
	2009			2008			2009			2008			2009			2008			2009			2008
										($ million)
Movement in benefit obligation
Benefit obligation at beginning of year		411			597			185			184			19			20			615			801
Current service cost		7			9			1			1			—			—			8			10
Members’ contributions		1			1			—			—			—			—			1			1
Interest expense		22			30			10			10			1			1			33			41
Benefits paid		(12	)		(12	)		(13	)		(12	)		(1	)		(1	)		(26	)		(25	)
Enhanced pension transfer		(59	)		—			—			—			—			—			(59	)		—
Reclassification*		—			—			—			5			—			—			—			5
Actuarial loss/(gain) arising in the year		44			(55	)		13			(3	)		1			(1	)		58			(59	)
Exchange adjustments		47			(159	)		1			—			—			—			48			(159	)
Benefit obligation at end of year		461			411			197			185			20			19			678			615
Comprising:
Funded plans		414			377			151			141			—			—			565			518
Unfunded plans		47			34			46			44			20			19			113			97
		461			411			197			185			20			19			678			615

* Relates to the recognition of the gross assets and obligations of the Netherlands pension scheme.

F-30

													Post-
	Pension plans												employment
	UK						US and other						benefits						Total
	2009			2008			2009			2008			2009			2008			2009			2008
	($ million)
Movement in plan assets
Fair value of plan assets at beginning of year		437			611			112			144			—			—			549			755
Company contributions		16			30			4			3			1			1			21			34
Members’ contributions		1			1			—			—			—			—			1			1
Benefits paid		(12	)		(12	)		(13	)		(12	)		(1	)		(1	)		(26	)		(25	)
Enhanced pension transfer		(70	)		—			—			—			—			—			(70	)		—
Reclassification*		—			—			—			4			—			—			—			4
Expected return on plan assets		21			32			8			11			—			—			29			43
Actuarial (loss)/gain arising in the year		(14	)		(57	)		14			(38	)		—			—			—			(95	)
Exchange adjustments		47			(168	)		1			—			—			—			48			(168	)
Fair value of plan assets at end of year		426			437			126			112			—			—			552			549

* Relates to the recognition of the gross assets and obligations of the Netherlands pension scheme.

The most recent actuarial valuation of the InterContinental Hotels UK Pension Plan was carried out as at March 31, 2006 and showed a deficit of £81 million on a funding basis. Under the recovery plan agreed with the trustees at that time, the Group aims to eliminate this deficit by March 2014 through additional Company contributions and projected investment returns. Of the agreed contributions of £40 million, three payments of £10 million were made in prior years and the final commitment of £10 million is being met through the funding of the enhanced pension transfer arrangements detailed above. The next actuarial valuation due as at March 31, 2009 is currently in progress.

Company contributions are expected to be $13 million in 2010.

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

	2009				2008				2007
	Long-term				Long-term				Long-term
	rate of				rate of				rate of
	return				return				return
	expected		Value		expected		Value		expected		Value
	(%)		($ million)		(%)		($ million)		(%)		($ million)
UK pension plans
Liability matching investment funds		4.8		196		3.9		192		—		—
Equities		9.2		77		7.9		87		7.9		219
Bonds		4.8		64		3.9		140		4.8		360
Cash		4.8		55		3.9		4		—		—
Other		9.2		34		7.9		14		7.9		32
Total market value of assets				426				437				611
US pension plans
Equities		9.5		63		9.5		55		9.5		77
Fixed income		5.5		42		5.5		37		5.5		52
Total market value of assets				105				92				129

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

F-31

History of experience gains and losses

	2009			2008			2007			2006			2005
	($ million)
UK pension plans
Fair value of plan assets		426			437			611			527			431
Present value of benefit obligations		(461	)		(411	)		(597	)		(585	)		(473	)
(Deficit)/surplus in the plans		(35	)		26			14			(58	)		(42	)
Experience adjustments arising on plan liabilities		(44	)		55			31			(22	)		(122	)
Experience adjustments arising on plan assets		(14	)		(57	)		(6	)		13			86

	2009			2008			2007			2006			2005
	($ million)
US and other pension plans
Fair value of plan assets		126			112			144			111			106
Present value of benefit obligations		(197	)		(185	)		(184	)		(175	)		(176	)
Deficit in the plans		(71	)		(73	)		(40	)		(64	)		(70	)
Experience adjustments arising on plan liabilities		(13	)		3			—			—			(5	)
Experience adjustments arising on plan assets		14			(38	)		—			4			(2	)

	2009			2008			2007			2006			2005
	($ million)
US post-employment benefits
Present value of benefit obligations		(20	)		(19	)		(20	)		(19	)		(20	)
Experience adjustments arising on plan liabilities		(1	)		1			—			1			1

The cumulative amount of net actuarial losses recognized since January 1, 2004 in the Consolidated statement of comprehensive income is $208 million (2008 $150 million, 2007 $114 million). The Group is unable to determine how much of the pension scheme deficit recognized on transition to IFRS of $298 million and taken directly to total equity is attributable to actuarial gains and losses since inception of the schemes. Therefore, the Group is unable to determine the amount of actuarial gains and losses that would have been recognized in the Consolidated statement of comprehensive income before January 1, 2004.

Policy on remuneration of Executive Directors and senior executives

Remuneration policy and structure

IHG’s overall remuneration is intended to:

•  attract and retain high-quality executives in an environment where compensation levels are based on global market practice;

•  drive aligned focus of the senior executive team and reward the achievement of business targets and key strategic objectives;

•  align rewards of executives with returns to shareholders;

•  support equitable treatment between members of the same executive team; and

•  facilitate global assignments and relocation.

The Remuneration Committee believes that it is important to reward management, including the Executive Directors, for targets achieved, provided those targets are stretching and aligned with shareholders’ interests.

F-32

IHG’s remuneration structure for senior executives places a strong emphasis on performance-related reward. The individual elements are designed to provide the appropriate balance between fixed remuneration and variable ‘risk’ reward, linked to both the performance of the Group and the achievements of the individual. Approximately two-thirds of variable reward is delivered in the form of shares, to enhance alignment with shareholders.

In reaching its decisions, the Remuneration Committee takes into account a number of factors, including the relationship between remuneration and risk, strategic direction and affordability. Performance-related measures are chosen carefully to ensure a strong link between reward and underlying financial performance, and emphasis is placed on achievement of key strategic priorities.

The normal policy for all Executive Directors and Executive Committee members is that, using ‘target’ or ‘expected value’ calculations, their performance-related incentives will equate to approximately 70% of total annual remuneration (excluding pensions and benefits).

The Company recognizes that its Executive Directors may be invited to become Non-Executive Directors of other companies and that such duties can broaden experience and knowledge, and benefit the Company. Executive Directors are, therefore, permitted to accept one non-executive appointment (in addition to any positions where the Director is appointed as the Group’s representative), subject to Board approval, as long as this is not, in the reasonable opinion of the Board, likely to lead to a conflict of interest. Executive Directors are generally authorized to retain the fees received. Current Executive Directors hold no Non-Executive Directorships of other companies.

Summarized below are the individual elements of remuneration provided to Executive Directors and other Executive Committee members and the purpose of each element.

Element	Maximum value	Purpose and alignment with strategy
Base Salary (cash)	n/a	To recognize market value of role and the individual’s skill, performance and experience
Annual Bonus (cash)	100% of base salary(1)	To drive and reward annual performance of individuals and teams on both financial and non-financial metrics, and to align employee objectives with those of the Group
Deferred Annual Bonus (shares)	100% of base salary(1)	To align short-term and long-term reward with returns to shareholders
Long Term Incentive Plan (shares)	205% of base salary(2)	To drive and reward delivery of sustained long-term earnings per share (“EPS”) and total shareholder return (“TSR”) performance, aligned with the interests of shareholders
Pension and benefits (varied)	n/a	To provide a competitive level of benefits, providing short-term protection and long-term savings opportunities

(1)	Combined Annual Bonus award (cash and shares) is subject to a maximum cap of 175% of base salary in 2010.
(2)	Until 2009, maximum awards were normally granted at 270% of salary. In 2009 and 2010, maximum awards were reduced to 205% of base salary.

The Remuneration Committee also reviews the balance of fixed and variable remuneration provided to the wider management population, to ensure these ratios are appropriate, given the relativities to the Executive Directors and to market practice.

Base salary and benefits

The salary for each Executive Director is reviewed annually and is based on both individual performance and on relevant competitive market data. Internal relativities and salary levels in the wider employment market are also

F-33

taken into account. Base salary is the only element of remuneration which is pensionable. In addition, benefits are provided to Executive Directors in accordance with local market practice.

In assessing levels of pay and benefits, IHG analyzes those offered by different groups of comparator companies. These groups are chosen having regard to participants’:

•  size — market capitalization, turnover, profits and the number of people employed;

•  diversity and complexity of business;

•  geographical spread of business; and

•  relevance to the hotel industry.

In reaching its decisions, the Remuneration Committee also considers the remuneration levels and approaches provided to the wider IHG workforce.

Executive Directors’ salaries are shown in the table below:

	2010 salary		2009 salary
Andrew Cosslett		£826,000		£802,000
Richard Solomons		£523,000		£510,000

Annual Bonus Plan (“ABP”)

Structure in 2009

Awards under the ABP require the achievement of challenging performance goals before target bonus is payable.

The maximum bonus an Executive Director or Executive Committee member can receive in any one year is 200% of salary. Achievement of target performance results in a bonus of 115% of salary. Half of any bonus earned is compulsorily deferred in the form of shares for three years. No matching shares are awarded by the Company.

For 2009, awards under the ABP were linked to individual performance (30% of total award) and earnings before interest and tax (“EBIT”) (70% of total award). In order to increase focus on cost savings and margins, net annual rooms additions was removed as an ABP performance measure for 2009 as outlined in last year’s Form 20-F. Individual performance was measured by the achievement of specific key performance objectives (“KPO”) that are linked directly to the Group’s strategic priorities, and an assessment of performance against leadership competencies and behaviors.

The individual performance measures comprise several factors linked to strategic objectives, a selection of which is set out in the table below:

Individual performance measures	Example KPOs
Financial returns	•   Total gross revenue and system contribution revenue
Our people	•   Annual employee engagement scores
Guest experience	•   Relaunch of Holiday Inn
	•   Global RevPAR growth and RevPAR growth ahead of market
Responsible business	•   Tracking of reduced water, waste and energy consumption

Each year, specific quantitative targets against individual performance measures are set for each Executive Director and Executive Committee member, as relevant to their role. Performance against these measures is reviewed at the end of each year to determine bonus outcomes.

In 2009, under the financial measure (EBIT), threshold payout was 90% of target performance, with maximum payout at 110% or more of target. Payout for individual performance would be reduced by half if EBIT performance was below threshold. In addition, no annual bonus would be payable on any measure if EBIT performance was lower than 85% of target.

F-34

Outcomes in 2009

The following table shows the performance in 2009 against KPOs.

		Payout as % of salary
Measure	Key performance indicator	Target		Max(2)		Actual
Financial (70%)	EBIT		80.5		161		Zero
Individual (30%)	OPR(1) - Andrew Cosslett		34.5		69		Zero
Individual (30%)	OPR(1) - Richard Solomons		34.5		69		Zero

(1)	Overall Performance Rating for individual performance.
(2)	Combined EBIT and OPR payout, subject to a maximum of 200% of base salary.

Structure in 2010

The Annual Bonus structure remains largely unchanged in 2010 with awards under the ABP continuing to require the achievement of challenging performance goals before target bonus is payable.

However, reflecting the increased focus on cost control and the continued challenging market conditions, the maximum bonus opportunity for the Executive Directors will be capped at 175% of salary (previously 200%) for 2010 only. In addition, the stretch EBIT target for maximum bonus payment will be increased to 120% of budget for 2010, from 110% in previous years.

As with previous years, the achievement of target performance will result in a bonus of 115% of salary. Half of any bonus earned will be deferred in the form of shares for three years.

Long Term Incentive Plan (“LTIP”)

The LTIP allows Executive Directors and eligible management employees to receive share awards, subject to the achievement of performance conditions set by the Remuneration Committee, normally measured over a three-year period. Awards are made annually and, other than in exceptional circumstances, will not exceed three times annual salary for Executive Directors.

Structure for 2009/2011 cycle

Prior to 2009, awards to Executive Directors were normally made at the level of 270% of salary. In light of the cost-constrained environment in which IHG currently operates, awards for 2009 were made at 205% of salary.

The performance conditions for the cycle are:

•  IHG’s TSR relative to the Dow Jones World Hotels index (two-thirds of the award); and

•  growth in adjusted EPS over the period (one-third of the award).

Awards under the LTIP lapse if performance conditions are not met — there is no re-testing.

Performance conditions for all outstanding awards are shown in the table on page F-36.

Structure for 2010/2012 cycle

The LTIP structure remains relatively consistent for the 2010/2012 cycle, with the reduced award level for 2009 maintained. Performance conditions will remain TSR relative to the Dow Jones World Hotels index and growth in adjusted EPS over the period. However, these two measures will be equally weighted for this cycle.

F-35

In setting the performance targets, the Remuneration Committee has taken into account a range of factors, including IHG’s strategic plans, analysts’ expectations for IHG’s performance and for the industry as a whole, the historical performance of the industry and FTSE 100 market practice. The targets selected are shown in the table below.

			Required TSR
	Percentage of award		relative to Dow Jones
Performance	vesting	Required EPS growth	World Hotels index
Threshold	20%	5% per annum	Match index
Maximum	100%	15% per annum	Index + 8% per annum

EPS performance henceforth will be measured on a constant tax rate across the cycle due to the impact that short-term fluctuations in tax rates have on vesting outcomes. Optimization of tax rates remains a key area of focus for relevant management.

Outcomes in 2009 and progress on all current LTIP cycles

The specific vesting arrangements for all conditional LTIP awards made between 2007 and 2009 are set out in the following table:

					Outcome/
	Threshold	Maximum	Threshold(1)	Maximum(1)	current
Performance measure	performance	performance	vesting	vesting	position
2007/2009 LTIP cycle
TSR	5th place in relative comparator group	1st place in relative comparator group	20%	100%	4th place in relative comparator group
EPS	Growth of 10% per annum	Growth of 20% per annum or more	20%	100%	Growth of 15.2% per annum
Total Vesting					46% of maximum award
2008/2010 LTIP cycle(2)
TSR	Growth equal to the index	Growth exceeds the index by 8% or more	20%	100%	Growth outperformance of 12.4%
EPS	Growth of 6% per annum	Growth of 16% per annum or more	20%	100%	Growth of 16.4% per annum
2009/2011 LTIP cycle(3)
TSR	Growth equal to the index	Growth exceeds the index by 8% or more	20%	100%	Growth outperformance of 17.2%
EPS	Growth of 0% per annum	Growth of 10% per annum or more	0%	100%	Growth of -1.4% per annum

(1)	Vesting between threshold and maximum occurs on a straight-line basis.
(2)	Two years of cycle completed.
(3)	One year of cycle completed.

F-36

Shareholding policy

Share ownership

The Remuneration Committee believes that share ownership by Executive Directors and senior executives strengthens the link between the individual’s personal interests and those of the shareholders. Executive Directors are expected to hold twice their base salary in shares, or three times in the case of the Chief Executive. Executives are expected to hold all shares earned (net of any share sales required to meet personal tax liabilities) until their shareholding requirement is achieved.

Executive share options

Since 2006, executive share options have not formed part of the Company’s remuneration structure. Details of prior share option grants are given in the table on page F-42.

Share capital

No awards or grants over shares were made during 2009 that would be dilutive of the Company’s ordinary share capital. Current policy is to settle the majority of awards or grants under the Company’s share plans with shares purchased in the market. A number of options granted up to 2005 are yet to be exercised and will be settled with the issue of new shares.

The following table shows the guideline and actual shareholdings of the Executive Directors.

	Guideline		Actual shareholding
	shareholding		at Dec 31, 2009
Executive	as % of salary		as % of salary(1)
Andrew Cosslett		300		468
Richard Solomons		200		565

(1) Based on share price of 893 pence per share as at December 31, 2009.

Policy regarding pensions

Andrew Cosslett, Richard Solomons and other senior UK-based employees participate on the same basis in the executive section of the registered defined benefit InterContinental Hotels UK Pension Plan and, if appropriate, the InterContinental Executive Top-Up Scheme. The latter is an unfunded arrangement, but with appropriate security provided via a fixed charge on a hotel asset. As an alternative to these unfunded arrangements, a cash allowance may be taken. This Plan is now closed to new entrants.

Senior US-based executives participate in US retirement benefits plans. Executives outside the UK and US participate in the InterContinental Hotels Group International Savings and Retirement Plan or other local plans.

F-37

Non-Executive Directors’ pay policy and structure

Non-Executive Directors are paid a fee which is approved by the Board, having taken account of the fees paid in other companies of a similar complexity. Higher fees are payable to the Senior Independent Director who chairs the Audit Committee and to the Chairman of the Remuneration Committee, reflecting the additional responsibilities of these roles. In February 2009, a Corporate Responsibility Committee was established. Jennifer Laing was appointed Chairman of this Committee on March 1, 2009. Her fee was consequently increased pro rata by £10,000 per annum in recognition of these additional duties.

In light of the challenging external environment and consistent with the Executive salary freeze in 2009, the scheduled review of Non-Executive Directors’ fees was postponed by an additional year. Thus, Non-Executive Directors’ fees were reviewed in the final quarter of 2009 and an increase of 2% for the Chairman and 5% for the Non-Executive Directors was agreed by the Board to be effective from January 1, 2010. Non-Executive Directors’ fees were last increased in 2007.

Non-Executive Directors’ fee levels have been typically reviewed every two years. In view of prevailing market practice, this has been moved to an annual review in 2010.

The following table sets out the change in annual fee rates from 2009 to 2010 for the Non-Executive Directors.

		Fees at		Fees at
	Role	Jan 1, 2010		Dec 31, 2009
David Webster	Chairman		£398,000	£390,000
David Kappler	Senior Independent Director & Chairman of Audit Committee		£99,750	£95,000
Ralph Kugler	Chairman of Remuneration Committee		£84,000	£80,000
Jennifer Laing	Chairman of Corporate Responsibility Committee (from March 1, 2009)		£73,500	£70,000
Others	Non-Executive Directors		£63,000	£60,000

Service contracts

Policy

The Remuneration Committee’s policy is for Executive Directors to have rolling contracts with a notice period of 12 months. Andrew Cosslett and Richard Solomons have service agreements with a notice period of 12 months. All new appointments are intended to have 12-month notice periods. However, on occasion, to complete an external recruitment successfully, a longer initial notice period reducing to 12 months may be used, in accordance with the Combined Code.

No provisions for compensation for termination following change of control, nor for liquidated damages of any kind, are included in the current Directors’ contracts. In the event of any early termination of an Executive Director’s contract, the policy is to seek to minimize any liability.

Non-Executive Directors have letters of appointment. David Webster’s appointment as Non-Executive Chairman, effective from January 1, 2004, is subject to six months’ notice. The dates of appointment of the other Non-Executive Directors are set out on page 55. All Directors’ appointments and subsequent reappointments are subject to election and re-election by shareholders.

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Biographies of each of the Directors and their main responsibilities can be found on page 56.

Directors’ contracts

	Contract
	effective date		Notice period
Andrew Cosslett		02.03.05		12 months
Richard Solomons		04.15.03		12 months

Both of the Executive Directors signed a letter of appointment, effective from completion of the June 2005 capital reorganization of the Group, incorporating the same terms as their original service agreements.

Audited information on Directors’ emoluments

Directors’ remuneration in 2009

The following table sets out the remuneration paid or payable to the Directors in respect of the year to December 31, 2009:

	Base salaries												Total emoluments
	and fees				Performance payments(1)				Benefits(2)				excluding pensions
	2009		2008		2009		2008		2009		2008		2009		2008
	(£ thousand)
Executive Directors
Andrew Cosslett(3)		802		787		—		495		25		25		827		1,307
Stevan Porter(4)		—		503		—		593		—		5		—		1,101
Richard Solomons(3)		512		561		—		401		19		18		531		980
Non-Executive Directors
David Webster		390		390		—		—		—		2		390		392
David Kappler		95		95		—		—		—		—		95		95
Ralph Kugler(5)		80		72		—		—		—		—		80		72
Jennifer Laing(6)		68		60		—		—		—		—		68		60
Robert C Larson(7)		—		60		—		—		—		—		—		60
Jonathan Linen		60		60		—		—		—		—		60		60
Sir David Prosser(8)		—		33		—		—		—		—		—		33
Ying Yeh		60		60		—		—		—		—		60		60
Former Directors(9)		—		—		—		—		1		1		1		1
Total		2,067		2,681		—		1,489		45		51		2,112		4,221

(1)	Performance payments comprise cash payments in respect of participation in the ABP but exclude bonus payments in deferred shares, details of which are set out in the ABP table on page F-40.
(2)	Benefits incorporate all tax assessable benefits arising from the individual’s employment. For Messrs Cosslett and Solomons, this relates in the main to the provision of a fully expensed company car and private healthcare cover.
(3)	2008 salaries for Andrew Cosslett and Richard Solomons reflect a salary increase effective April 1, 2008. They did not receive an increase in 2009. Richard Solomons also received a pro rata salary supplement of £10,000 per month from July 1, 2008 to January 7, 2009 reflecting his additional duties as interim President of the Americas region.
(4)	Stevan Porter passed away on August 7, 2008.
(5)	Ralph Kugler’s fee was increased, pro rata, from June 1, 2008 when he became Chairman of the Remuneration Committee.
(6)	Jennifer Laing’s fee was increased, pro rata, from March 1, 2009 when she became Chairman of the Corporate Responsibility Committee.
(7)	Robert Larson retired as a Director on December 31, 2008.
(8)	Sir David Prosser retired as a Director and Chairman of the Remuneration Committee on May 31, 2008.
(9)	Sir Ian Prosser retired as a Director on December 31, 2003. However, he had an ongoing healthcare benefit of £1,150 during the year.

F-39

Directors’ pension benefits

The following information relates to the pension arrangements provided for Messrs Cosslett and Solomons under the executive section of the InterContinental Hotels UK Pension Plan (“IC Plan”) and the unfunded InterContinental Executive Top-Up Scheme (“ICETUS”).

The executive section of the IC Plan is a funded, registered, final salary, occupational pension scheme. The main features applicable to the Executive Directors are: a normal pension age of 60; pension accrual of 1/30th of final pensionable salary for each year of pensionable service; life assurance cover of four times pensionable salary; pensions payable in the event of ill health; and spouses’, partners’ and dependants’ pensions on death. When benefits would otherwise exceed a member’s lifetime allowance under the post-April 2006 pensions regime, these benefits are limited in the IC Plan, but the balance is provided instead by ICETUS.

The following table sets out the pension benefits of the Executive Directors.

									Increase in
									transfer value		Absolute				Accrued
			Directors’		Transfer value of				over the year,		increase in		Increase		pension at
			contributions		accrued benefits				less Directors’		accrued		in accrued		Dec 31,
	Age at		in the year(1)		Jan 1, 2009		Dec 31, 2009		contributions		pension(2)		pension(3)		2009(4)
Directors	Dec 31, 2009		(£)		(£)		(£)		(£)		(£ pa)		(£ pa)		(£ pa)
Andrew Cosslett		54		39,400		2,028,600		2,574,100		506,100		28,600		28,600		131,200
Richard Solomons		48		25,100		3,430,800		3,934,700		478,800		20,400		20,400		217,700

(1)	Contributions paid in the year by the Directors under the terms of the plans. Contributions were 5% of full pensionable salary.
(2)	The absolute increase in accrued pension during the year.
(3)	The increase in accrued pension during the year, excluding any increase for inflation.
(4)	Accrued pension is that which would be paid annually on retirement at 60, based on service to December 31, 2009.

Annual Bonus Plan deferred share awards

Messrs Cosslett and Solomons participated in the ABP during the year ended December 31, 2009. However, no annual bonus is payable for this period. No matching shares are provided on awards. Directors’ pre-tax interests during the year were as follows:

													ABP shares												Value
													vested												based on
													during												share
	Financial year					ABP awards					Market		the year				Market				ABP				price of
	on which					during					price		Jan 1, 2009				price				awards				893 pence
	performance		ABP awards			the year					per share		to				per share		Value		held at		Planned		at Dec 31,
	is based for		held at			Jan 1, 2009			Award		at award		Dec 31,		Vesting		at vesting		at vesting		Dec 31,		vesting		2009
Directors	award		Jan 1, 2009			to Dec 31, 2009			date		(pence)		2009		date		(pence)		(£)		2009		date		(£)
Andrew Cosslett		2005		28,878	(1)					3.8.06		853.67		28,878		3.9.09		443.93		128,198
		2006		55,870	(2)					2.26.07		1235										55,870		2.26.10		498,919
		2007		71,287	(3)					2.25.08		819.67										71,287		2.25.11		636,593
		2008					104,652	(4)		2.23.09		472.67										104,652		2.23.12		934,542
Total				156,035			104,652															231,809				2,070,054
Richard Solomons		2005		18,459	(1)					3.8.06		853.67		18,459		3.9.09		443.93		81,945
		2006		35,757	(2)					2.26.07		1235										35,757		2.26.10		319,310
		2007		45,634	(3)					2.25.08		819.67										45,634		2.25.11		407,512
		2008					66,549	(4)		2.23.09		472.67										66,549		2.23.12		594,283
Total				99,850			66,549															147,940				1,321,105

(1)	This award was based on EPS, EBIT and individual performance measures. Total shares held include matching shares.
(2)	This award was based on EPS and EBIT measures. Total shares held include matching shares.
(3)	This award was based on Group EBIT and net annual rooms additions measures. Total shares held include matching shares.
(4)	This award was based on Group EBIT, net annual rooms additions and individual performance measures. The bonus target was 57.5% of base salary. Both Executive Directors were awarded 20.52% for Group EBIT performance, 10.97% for net annual rooms additions and 30.19% for individual performance, resulting in a total deferred shares bonus of 61.68% of base salary. No matching shares were awarded.

F-40

Long Term Incentive Plan awards

The awards made in respect of cycles ending on December 31, 2008, 2009, 2010 and 2011 and the maximum pre-tax number of ordinary shares due if performance targets are achieved in full are set out in the table below. In respect of the cycle ending December 31, 2008, 86.7% of the award vested on February 18, 2009. In respect of the cycle ending on December 31, 2009, the Company finished in fourth place in the TSR group and achieved 15.2% per annum adjusted EPS growth. Accordingly, 46% of the award vested on February 17, 2010.

																							Maximum
						Maximum																	value
						LTIP shares						LTIP shares											based on
	End of year					awarded						vested											share
	to which					during				Market		during			Market						Maximum		price of
	performance			Maximum		the year				price		the year			price				Actual/		LTIP awards		893 pence
	is based			LTIP awards		Jan 1, 2009				per share		Jan 1, 2009 to			per share		Value		planned		held at		at Dec 31,
	for award			held at		to Dec 31,		Award		at award		Dec 31,			at vesting		at vesting		vesting		Dec 31,		2009
Directors	(Dec 31,)			Jan 1, 2009		2009		date		(pence)		2009			(pence)		(£)		date		2009		(£)
Andrew Cosslett		2008			200,740				4.3.06		941.5		174,041	(1)		481.25		837,572		2.18.09
		2009	(2)		159,506				4.2.07		1256									2.17.10		159,506		1,424,389
		2010	(2)		253,559				5.19.08		854									2.16.11		253,559		2,264,282
		2011	(2)				272,201		4.3.09		604									2.15.12		272,201		2,430,755
Total					613,805		272,201															685,266		6,119,426
Richard Solomons		2008			128,470				4.3.06		941.5		111,383	(1)		481.25		536,031		2.18.09
		2009	(2)		102,109				4.2.07		1256									2.17.10		102,109		911,833
		2010	(2)		161,241				5.19.08		854									2.16.11		161,241		1,439,882
		2011	(2)				173,096		4.3.09		604									2.15.12		173,096		1,545,747
Total					391,820		173,096															436,446		3,897,462

(1)

This award was based on performance to December 31, 2008 where the performance measure related to both the Company’s TSR against a group of eight other comparator companies and cumulative annual growth rate (“CAGR”) of rooms in the IHG system relative to a group of eight other comparator companies. The number of shares released was graded, according to a) where the Company finished in the TSR comparator group, with 50% of the award being released for first or second position and 10% of the award being released for median position; and b) relative CAGR of rooms, with 50% of the award being released for 3.9% (upper quartile) CAGR and 10% of the award being released for 3.3% (median) CAGR. The Company finished in third place in the TSR group and achieved a relative CAGR of 4.9%. Accordingly, 86.7% of the award vested on February 18, 2009.

(2)

All details of performance conditions in relation to these awards are provided on page F-35 and F-36.

F-41

Share options

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

	Ordinary shares under option												Weighted
								Share					average
	Options held			Lapsed		Exercised		price on		Options			option		Option
	at Jan 1,			during		during		date of		held at			price		price
Directors	2009			the year		the year		exercise (pence)		Dec 31, 2009			(pence)		(pence)
Andrew Cosslett		157,300	(1)				157,300		901.89							619.83
Total		157,300			—		157,300				—			—
Richard Solomons		230,320	(2)								230,320	(2)				494.17
		100,550	(1)								100,550	(1)				619.83
		3,769	(3)				3,769		466.75							420.50
Total		334,639			—		3,769				330,870			532.36

(1)	Executive share options granted in 2005 became exercisable in April 2008 up to April 2015.
(2)	Executive share options granted in 2004 became exercisable in April 2007 up to April 2014.
(3)	Sharesave options granted in 2003. These were exercisable between March and August 2009.

Option prices during the year ranged from 420.50 pence to 619.83 pence per IHG share. The closing market value share price on December 31, 2009 was 893.00 pence and the range during the year was 446.00 pence to 903.50 pence per share.

The gain made by Directors in aggregate on the exercise of options during the year was £437,732 (2008 £nil).

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

	Year ended December 31,
	2009		2008		2007
	($ million)
Group audit fees		1.8		1.7		2.8
Audit fees in respect of subsidiaries		2.1		1.5		2.6
Tax fees		1.7		1.0		0.8
Interim review fees		0.3		0.4		0.4
Other services pursuant to legislation		0.3		0.1		0.2
Other		1.5		2.8		2.4
		7.7		7.5		9.2

Audit fees in respect of the pension scheme were not material.

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

F-42

Note 5 — Exceptional items

	Year ended December 31,
	2009			2008			2007
	($ million)
Continuing operations
Exceptional operating items:
Cost of sales:
Onerous management contracts(i)		(91	)		—			—
Administrative expenses:
Holiday Inn brand relaunch(ii)		(19	)		(35	)		—
Reorganization and related costs(iii)		(43	)		(24	)		(14	)
Enhanced pension transfer(iv)		(21	)		—			—
		(83	)		(59	)		(14	)
Other operating income and expenses:
Gain on sale of associate investments		—			13			22
Gain on sale of other financial assets		—			14			36
Loss on disposal of hotels (Note 11)*		(2	)		(2	)		—
Reorganization and related costs(iii)		—			—			12
		(2	)		25			70
Depreciation and amortization:
Reorganization and related costs(iii)		—			(2	)		(2	)
Impairment:
Property, plant and equipment (Note 10)		(28	)		(12	)		6
Assets held for sale (Note 11)		(45	)		—			—
Goodwill (Note 12)		(78	)		(63	)		—
Intangible assets (Note 13)		(32	)		(21	)		—
Other financial assets (Note 15)		(14	)		—			—
		(197	)		(96	)		6
		(373	)		(132	)		60
Tax:
Tax on exceptional operating items		112			17			—
Exceptional tax credit(v)		175			25			60
		287			42			60
Discontinued operations
Gain on disposal of assets (Note 11):
Gain on disposal of hotels**		2			—			40
Tax credit/(charge)		4			5			(8	)
		6			5			32
		(80	)		(85	)		152

*	Relates to hotels classified as continuing operations.
**	Relates to hotels classified as discontinued operations.

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

(i)	An onerous contract provision of $65 million has been recognized for the future net unavoidable costs under the performance guarantee related to certain management contracts with one US hotel owner. In addition to the provision, a deposit of $26 million has been written off as it is no longer considered recoverable under the terms of the same management contracts.
(ii)	Relates to costs incurred in support of the worldwide relaunch of the Holiday Inn brand family that was announced on October 24, 2007.
(iii)	Primarily relates to the closure of certain corporate offices together with severance costs arising from a review of the Group’s cost base.
(iv)	Relates to the payment of enhanced pension transfers to those deferred members of the InterContinental Hotels UK Pension Plan who had accepted an offer to receive the enhancement either as a cash lump sum or as an additional transfer value to an alternative pension plan provider. The exceptional item comprises the lump sum payments ($9 million), the IAS 19 settlement loss arising on the pension transfers ($11 million) and the costs of the arrangement ($1 million). The payments and transfers were made in January 2009.
(v)	Relates to the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired (see Note 7).

F-43

Note 6 — Finance costs

	Year ended December 31,
	2009		2008		2007
	($ million)
Financial income
Interest income		2		11		15
Fair value gains		1		1		3
		3		12		18
Financial expenses
Interest expense		39		95		90
Finance charge payable under finance leases		18		18		18
		57		113		108

Interest income and expense relate to financial assets and liabilities held at amortized cost, calculated using the effective interest rate method.

Included within interest expense is $2 million (2008 $12 million, 2007 $21 million) payable to the Priority Club Rewards loyalty program relating to interest on the accumulated balance of cash received in advance of the redemption of points awarded.

F-44

Note 7 — Tax

	Year ended December 31,
	2009			2008			2007
	($ million)
Income tax
UK corporation tax at 28% (2008 28.5%, 2007 30.0%):
Current period		26			13			45
Benefit of tax reliefs on which no deferred tax previously recognized		—			—			(1	)
Adjustments in respect of prior periods		(33	)		(28	)		(33	)
		(7	)		(15	)		11
Foreign tax(i):
Current period		79			130			200
Benefit of tax reliefs on which no deferred tax previously recognized		(6	)		(6	)		(15	)
Adjustments in respect of prior periods(ii)		(246	)		(63	)		(100	)
		(173	)		61			85
Total current tax		(180	)		46			96
Deferred tax:
Origination and reversal of temporary differences		(73	)		26			(67	)
Changes in tax rates		1			(1	)		(4	)
Adjustments to estimated recoverable deferred tax assets		1			(4	)		5
Adjustments in respect of prior periods		(25	)		(13	)		8
Total deferred tax		(96	)		8			(58	)
Total income tax (credit)/charge		(276	)		54			38
Further analyzed as tax relating to:
Profit before exceptional items		15			101			90
Exceptional items (Note 5):
Exceptional operating items		(112	)		(17	)		—
Exceptional tax credit(iii)		(175	)		(25	)		(60	)
Gain on disposal of assets		(4	)		(5	)		8
		(276	)		54			38
The total tax (credit)/charge can be further analyzed as relating to:
Continuing operations		(272	)		59			29
Profit on discontinued operations		—			—			1
Gain on disposal of assets		(4	)		(5	)		8
		(276	)		54			38

(i)	Represents corporate income taxes on profit taxable in foreign jurisdictions, a significant proportion of which relates to the Group’s US subsidiaries.
(ii)	In 2009, includes $165 million of exceptional releases included at (iii) below together with other releases relating to tax matters which have been settled or in respect of which the statutory limitation period has expired.
(iii)	Represents the release of provisions which are exceptional by reason of their size or nature relating to tax matters which have been settled or in respect of which the relevant statutory limitation period has expired.

F-45

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

										Before
										exceptional
	Total(i)									items(ii)
	Year ended December 31,
	2009			2008			2007			2009			2008			2007
	(%)
UK corporation tax at standard rate		28.0			28.5			30.0			28.0			28.5			30.0
Non-deductible expenditure and non-taxable income		(36.5	)		8.7			5.6			7.4			6.1			6.9
Net effect of different rates of tax in overseas businesses		(43.0	)		10.1			1.8			8.7			7.1			2.2
Effect of changes in tax rates		(0.3	)		(0.2	)		(1.0	)		0.1			(0.1	)		(1.2	)
Benefit of tax reliefs on which no deferred tax previously recognized		7.2			(1.7	)		(3.3	)		(1.5	)		(1.2	)		(4.1	)
Effect of adjustments to estimated recoverable deferred tax assets		5.9			(1.1	)		1.3			(1.2	)		(0.8	)		1.6
Adjustment to tax charge in respect of prior periods		185.5			(23.5	)		(11.0	)		(37.6	)		(16.6	)		(13.8	)
Other		(3.8	)		(0.8	)		0.4			0.8			(0.6	)		0.7
Exceptional items and gain on disposal of assets		298.3			(2.9	)		(16.3	)		—			—			—
		441.3			17.1			7.5			4.7			22.4			22.3

(i)	Calculated in relation to total losses/profits including exceptional items.
(ii)	Calculated in relation to profits excluding exceptional items.

Tax paid

Total net tax paid during the year of $2 million (2008 $2 million, 2007 $138 million) comprises $1 million paid (2008 $1 million received, 2007 $74 million paid) in respect of operating activities and $1 million paid (2008 $3 million paid, 2007 $64 million) in respect of investing activities.

Tax paid is lower than the current period income tax charge primarily due to the receipt of refunds in respect of prior years together with provisions for tax for which no payment of tax has currently been made.

Tax risks, policies and governance

It is the Group’s objective to comply fully with its worldwide corporate income tax filing, payment and reporting obligations, whilst managing its tax affairs within acceptable risk parameters in order to minimize its worldwide liabilities in the best interests of its shareholders. The Group adopts a policy of open co-operation with tax authorities, with full disclosure of relevant issues.

The Group’s tax objectives and policies, and any changes thereto, are reviewed and approved by the Audit Committee. Regular tax reports are made to the Chief Financial Officer in addition to an annual presentation to the Audit Committee covering the Group’s tax position, strategy and major risks. Tax is also encompassed within the Group’s formal risk management procedures and any material tax disputes, litigation or tax planning activities are subject to internal risk review and management approval procedures.

F-46

Note 8 — Dividends paid and proposed

	Year ended December 31,
	2009		2008		2007		2009		2008		2007
	(cents per share)						($ million)
Paid during the year:
Final (declared in previous year)		29.2		29.2		25.9		83		86		92
Interim		12.2		12.2		11.5		35		32		35
Special interim		—		—		400.0		—		—		1,397
		41.4		41.4		437.4		118		118		1,524
Proposed (not recognized as a liability at December 31):
Final		29.2		29.2		29.2		84		83		86

The final dividend of 18.7 pence (29.2 cents converted at the closing exchange rate on February 12, 2010) is proposed for approval at the Annual General Meeting on May 28, 2010 and is payable on the shares in issue at March 26, 2010.

Note 9 — Earnings per ordinary share

Basic earnings per ordinary share is calculated by dividing the profit for the year available for IHG equity holders by the weighted average number of ordinary shares, excluding investment in own shares, in issue during the year.

Diluted earnings per ordinary share is calculated by adjusting basic earnings per ordinary share to reflect the notional exercise of the weighted average number of dilutive ordinary share options outstanding during the year.

Adjusted earnings per ordinary share is disclosed in order to show performance undistorted by exceptional items, to give a more meaningful comparison of the Group’s performance.

	Year ended December 31,
	2009				2008				2007
	Continuing				Continuing				Continuing
	operations		Total		operations		Total		operations		Total
Basic earnings per ordinary share
Profit available for equity holders ($ million)		207		213		257		262		429		463
Basic weighted average number of ordinary shares (millions)		285		285		287		287		320		320
Basic earnings per ordinary share (cents)		72.6		74.7		89.5		91.3		134.1		144.7
Diluted earnings per ordinary share
Profit available for equity holders ($ million)		207		213		257		262		429		463
Diluted weighted average number of ordinary shares (millions)		295		295		296		296		329		329
Diluted earnings per ordinary share (cents)		70.2		72.2		86.8		88.5		130.4		140.7

	2009		2008		2007
	(millions)
Diluted weighted average of ordinary shares is calculated as:
Basic weighted average number of ordinary shares		285		287		320
Dilutive potential ordinary shares — employee share options		10		9		9
		295		296		329

F-47

	Year ended December 31,
	2009						2008						2007
	Continuing						Continuing						Continuing
	operations			Total			operations			Total			operations			Total
Adjusted earnings per ordinary share
Profit available for equity holders ($ million)		207			213			257			262			429			463
Adjusting items (Note 5):
Exceptional operating items ($ million)		373			373			132			132			(60	)		(60	)
Tax on exceptional operating items ($ million)		(112	)		(112	)		(17	)		(17	)		—			—
Exceptional tax credit ($ million)		(175	)		(175	)		(25	)		(25	)		(60	)		(60	)
Gain on disposal of assets, net of tax ($ million)		—			(6	)		—			(5	)		—			(32	)
Adjusted earnings ($ million)		293			293			347			347			309			311
Basic weighted average number of ordinary shares (millions)		285			285			287			287			320			320
Adjusted earnings per ordinary share (cents)		102.8			102.8			120.9			120.9			96.6			97.2
Adjusted earnings ($ million)		293			293			347			347			309			311
Diluted weighted average number of ordinary shares (millions)		295			295			296			296			329			329
Adjusted diluted earnings per ordinary share (cents)		99.3			99.3			117.2			117.2			93.9			94.5

F-48

Note 10 — Property, plant and equipment

	Land			Fixtures,
	and			fittings and
	buildings			equipment			Total
	($ million)
Year ended December 31, 2008
Cost:
At January 1, 2008		1,606			955			2,561
Additions		6			85			91
Net transfers to non-current assets classified as held for sale		(119	)		(60	)		(179	)
Disposals		(15	)		(24	)		(39	)
Exchange and other adjustments		(112	)		(56	)		(168	)
At December 31, 2008		1,366			900			2,266
Depreciation and impairment:
At January 1, 2008		(129	)		(498	)		(627	)
Provided		(11	)		(61	)		(72	)
Net transfers to non-current assets classified as held for sale		37			37			74
Impairment charge(i)		(12	)		—			(12	)
On disposals		15			25			40
Exchange and other adjustments		—			15			15
At December 31, 2008		(100	)		(482	)		(582	)
Year ended December 31, 2009
Cost:
At January 1, 2009		1,366			900			2,266
Additions		22			35			57
Net transfers from non-current assets classified as held for sale		176			104			280
Reclassification		14			(14	)		—
Disposals		—			(3	)		(3	)
Exchange and other adjustments		44			24			68
At December 31, 2009		1,622			1,046			2,668
Depreciation and impairment:
At January 1, 2009		(100	)		(482	)		(582	)
Provided		(11	)		(60	)		(71	)
Net transfers from non-current assets classified as held for sale		(44	)		(45	)		(89	)
Impairment charge(ii)		(28	)		—			(28	)
Valuation adjustments arising on reclassification from held for sale (Note 11)		(28	)		(17	)		(45	)
On disposals		—			2			2
Exchange and other adjustments		(1	)		(18	)		(19	)
At December 31, 2009		(212	)		(620	)		(832	)
Net book value at December 31, 2009		1,410			426			1,836
Net book value at December 31, 2008		1,266			418			1,684
Net book value at January 1, 2008		1,477			457			1,934

F-49

The impairment charges have arisen as a result of the current economic downturn and a re-assessment of the recoverable amount of certain properties, based on value in use, as follows:

(i) Recognized at December 31, 2008 in respect of a North American hotel. Estimated future cash flows were discounted at a pre-tax rate of 13.5%.

(ii) Recognized at June 30, 2009, comprising $20 million in respect of a North American hotel and $8 million relating to a European hotel. Estimated future cash flows were discounted at pre-tax rates of 14.0% and 12.5% respectively.

The charges are included within impairment on the face of the Consolidated income statement.

The carrying value of land and buildings held under finance leases at December 31, 2009 was $187 million (2008 $192 million).

The carrying value of assets in the course of construction was $nil (2008 $41 million).

No borrowing costs were capitalized during the year (2008 $nil, 2007 $nil).

Note 11 — Assets sold, held for sale and discontinued operations

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Assets and liabilities held for sale
Non-current assets classified as held for sale:
Property, plant and equipment		—		210
Liabilities classified as held for sale:
Deferred tax (Note 25)		—		(4	)

At December 31, 2008, five hotels (2007 three) were classified as held for sale. During the year ended December 31, 2009, one (2008 one, 2007 three) hotel was sold. The remaining four were reclassified as property, plant and equipment at June 30, 2009 when they no longer met the “held for sale” criteria of IFRS 5 -“Non-current Assets Held for Sale and Discontinued Operations” as sales are no longer considered highly probable within the next 12 months. On reclassification, valuation adjustments of $45 million were recognized, comprising $14 million of depreciation not charged whilst held for sale and $31 million of further write-downs to recoverable amounts, as required by IFRS 5. Recoverable amounts were assessed by reference to value in use with the expected future cash flows for the North American hotels comprising substantially all of the write-downs discounted at a pre-tax rate of 12.5%. The valuation adjustments are included within impairment on the face of the Consolidated income statement.

The results of two of these reclassified hotels, which, prior to June 30, 2009, were presented as discontinued operations, are now reported as continuing operations and prior period results have been re-presented on a consistent basis. The impact has been to increase revenue from continuing operations for the year by $34 million (2008 $43 million, 2007 $47 million) and to increase operating profit from continuing operations, before exceptional items, for the year by $8m (2008 $14 million, 2007 $14 million).

There were no disposals of associates in 2009. During the year ended December 31, 2008, the Group sold two associates (2007 two).

Subsequent to the year end, a North American hotel was sold for $5.5 million on March 25, 2010.

F-50

	Year ended December 31,
	2009			2008			2007
	($ million)
Net assets of hotels sold
Property, plant and equipment		22			28			70
Net working capital		—			—			2
Cash and cash equivalents		—			8			—
Non-controlling interest		—			—			(12	)
Group’s share of net assets disposed of		22			36			60
Consideration
Current year disposals:
Cash consideration, net of costs paid		20			34			94
Management contract value		—			—			6
		20			34			100
Net assets disposed of		(22	)		(36	)		(60	)
Prior year disposals:
Provision release		2			—			—
Tax		4			5			(8	)
Gain on disposal of assets, net of tax		4			3			32
Analyzed as:
Loss on disposal of hotel assets from continuing operations (Note 5)		(2	)		(2	)		—
Profit for the year from discontinued operations (Note 5)		6			5			32
		4			3			32
Net cash inflow
Current year disposals:
Cash consideration, net of costs paid		20			34			94
Cash disposed of		—			(8	)		—
Prior year disposals		—			(1	)		3
		20			25			97

	Year ended December 31,
	2009		2008		2007
	($ million)
Results of discontinued operations
Revenue		—		—		33
Cost of sales		—		—		(28	)
		—		—		5
Depreciation and amortization		—		—		(2	)
Operating profit		—		—		3
Tax		—		—		(1	)
Profit after tax		—		—		2
Gain on disposal of assets, net of tax (Note 5)		6		5		32
Profit for the year from discontinued operations		6		5		34

F-51

	Year ended December 31,
	2009		2008		2007
	(cents per ordinary share)
Earnings per ordinary share from discontinued operations
Basic		2.1		1.8		10.6
Diluted		2.0		1.7		10.3

	Year ended December 31,
	2009		2008		2007
	($ million)
Cash flows attributable to discontinued operations
Operating profit before interest, depreciation and amortization		—		—		5
Investing activities		—		—		(1	)

The effect of discontinued operations on segmental results is shown in Note 2.

Note 12 — Goodwill

	Year ended December 31,
	2009			2008
	($ million)
Cost
At January 1,		206			221
Exchange and other adjustments		17			(15	)
At December 31,		223			206
Impairment
At January 1,		(63	)		—
Impairment charge		(78	)		(63	)
At December 31,		(141	)		(63	)
Net book value at December 31,		82			143
Net book value at January 1,		143			221

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

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

	Cost				Net book value
	At December 31,
	2009		2008		2009		2008
	($ million)
Americas managed operations		141		141		—		78
Asia Pacific:
Asia Pacific managed and franchised operations		n/a		65		n/a		65
Asia Australasia managed and franchised operations		82		n/a		82		n/a
		223		206		82		143

F-52

All cumulative impairment losses relate to the Americas managed CGU.

The Group tests goodwill for impairment annually, or more frequently if there are any indications that an impairment may have arisen. The recoverable amounts of the CGUs are determined from value in use calculations. These calculations use pre-tax cash flow forecasts derived from the most recent financial budgets and strategic plans approved by management covering a five-year period or, in absence of up-to-date strategic plans, the financial budget for the next year with an extrapolation of the cash flows for the following four years, using growth rates based on management’s past experience and industry growth forecasts. After the five-year planning period, the terminal value of the future cash flows is calculated based on perpetual growth rates that do not exceed the average long-term growth rates for the relevant markets. Pre-tax discount rates are used to discount the cash flows based on the Group’s weighted average cost of capital adjusted to reflect the risks specific to the business model and territory of the CGU being tested.

Americas goodwill

Americas managed operations, which is both the CGU to which the goodwill is allocated and a segment reported by the Group, have incurred significant operating losses during the year. These have arisen as a result of the global economic downturn and, in particular, IHG’s funding obligations under certain management contracts with one US hotel owner. As a consequence, goodwill has been tested on a quarterly basis during the year using updated five-year projections prepared by management, a perpetual growth rate of 2.7% and a discount rate of 12.5%. Due to the expectation of continuing losses, the recoverable value of the CGU has declined resulting in the impairment of the remaining goodwill balance. Total impairment charges of $78 million have been recognized; $57 million at June 30, 2009 and $21 million at September 30, 2009.

The above impairment charges follow a charge of $63 million that was recognized at December 31, 2008 as a result of the onset of the global economic downturn and a revision to expected fee income. The value in use calculations were based on the cash flows included in the approved budget for 2009 with an extrapolation over the following four years at growth rates increasing from 1% to 4%, a perpetual growth rate of 2.7% and a discount rate of 12.5%. Actual performance during 2009 was significantly worse than budgeted and future cash flow expectations continued to deteriorate throughout the course of the year.

The impairment charges for both years are included within the impairment line on the face of the Consolidated income statement. As the goodwill has now been impaired in full, there is no sensitivity around any assumptions that could lead to a further impairment charge.

Asia Pacific goodwill

Following an internal reorganization during the year, the regional managed and franchised operations now comprise two separate CGUs, Greater China and Asia Australasia. Goodwill, which was previously tested for impairment at the Asia Pacific regional CGU level, is now allocated to the smaller Asia Australasia CGU.

At December 31, 2009, the recoverable amount of the CGU has been assessed based on the approved budget for 2010 and strategic plans covering a five-year period, a perpetual growth rate of 3.5% (2008 4%) and a discount rate of 14.2% (2008 16%).

Impairment was not required at either year end and management believe that the carrying values of the CGUs would only have exceeded their recoverable amounts in the event of highly unlikely changes in the key assumptions.

F-53

Note 13 — Intangible assets

				Management			Other
	Software			contracts			intangibles			Total
	($ million)
Year ended December 31, 2008
Cost:
At January 1, 2008		120			249			86			455
Additions		40			—			9			49
Disposals		(2	)		—			—			(2	)
Exchange and other adjustments		—			(29	)		(2	)		(31	)
At December 31, 2008		158			220			93			471
Amortization and impairment:
At January 1, 2008		(63	)		(26	)		(31	)		(120	)
Provided		(20	)		(12	)		(8	)		(40	)
Impairment charge (i)		—			(21	)		—			(21	)
Disposals		2			—			—			2
Exchange and other adjustments		—			9			1			10
At December 31, 2008		(81	)		(50	)		(38	)		(169	)
Year ended December 31, 2009
Cost:
At January 1, 2009		158			220			93			471
Additions		24			—			9			33
Disposals		—			—			(7	)		(7	)
Exchange and other adjustments		3			11			3			17
At December 31, 2009		185			231			98			514
Amortization and impairment:
At January 1, 2009		(81	)		(50	)		(38	)		(169	)
Provided		(19	)		(10	)		(9	)		(38	)
Impairment charge (ii)		—			(32	)		—			(32	)
Disposals		—			—			5			5
Exchange and other adjustments		—			(4	)		(2	)		(6	)
At December 31, 2009		(100	)		(96	)		(44	)		(240	)
Net book value at December 31, 2009		85			135			54			274
Net book value at December 31, 2008		77			170			55			302
Net book value at January 1, 2008		57			223			55			335

The impairment charges have arisen as a result of the current economic downturn and a revision to expected fee income, as follows:

(i) Recognized at September 30, 2008 in respect of a European management contract. Estimated future cash flows were discounted at a pre-tax rate of 12.5% (previous valuation 10.0%).

(ii) Recognized at June 30, 2009 in respect of a US management contract. Estimated future cash flows were discounted at a pre-tax rate of 12.5% (previous valuation 12.5%).

The charges are included within impairment on the face of the Consolidated income statement.

The weighted average remaining amortization period for management contracts is 22 years (2008 23 years).

F-54

Note 14 — Investment in associates

The Group holds five investments (2008 five) accounted for as associates. The following table summarizes the financial information of the associates:

	At			At
	December 31,			December 31,
	2009			2008
	($ million)
Share of associates’ statement of financial position
Current assets		5			5
Non-current assets		65			65
Current liabilities		(9	)		(20	)
Non-current liabilities		(16	)		(7	)
Net assets		45			43
Share of associates’ revenue and profit
Revenue		31			30
Net loss		(1	)		—
Related party transactions
Revenue from related parties		4			5
Amounts owed by related parties		2			2

Note 15 — Other financial assets

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Non-current
Equity securities available-for-sale		66		64
Other		64		88
		130		152
Current
Equity securities available-for-sale		5		6
Other		—		4
		5		10

Available-for-sale financial assets, which are included in the Consolidated statement of financial position at fair value, consist of equity investments in listed and unlisted shares. Of the total amount of equity investments at December 31, 2009, $2 million (2008 $2 million) were listed securities and $69 million (2008 $68 million) unlisted; $39 million (2008 $44 million) were denominated in US dollars, $14 million (2008 $13 million) in Hong Kong dollars and $18 million (2008 $13 million) in other currencies. Unlisted equity shares are mainly investments in entities that own hotels which the Group manages. The fair value of unlisted equity shares has been estimated using valuation guidelines issued by the British Venture Capital Association and is based on assumptions regarding expected future earnings. Listed equity share valuation is based on observable market prices. Dividend income from available-for-sale equity securities of $7 million (2008 $11 million, 2007 $16 million) is reported as other operating income and expenses in the Consolidated income statement.

Other financial assets consist of trade deposits, restricted cash and deferred consideration on asset disposals. These amounts have been designated as “loans and receivables” and are held at amortized cost. Restricted cash of $47 million (2008 $55 million) relates to cash held in bank accounts which is pledged as collateral to insurance companies for risks retained by the Group.

F-55

The movement in the provision for impairment of other financial assets during the year is as follows:

	Year ended			Year ended
	December 31,			December 31,
	2009			2008
	($ million)
At January 1,		(11	)		(9	)
Provided:
Operating profit before exceptional items		—			(2	)
Exceptional items		(14	)		—
At December 31,		(25	)		(11	)

The amount provided as an exceptional item relates to an available-for-sale investment and arises as a result of a significant and prolonged decline in its fair value below its cost. In addition, a deposit of $26 million has been written off directly to the income statement as an exceptional item (see Note 5) as it is no longer considered recoverable under the terms of the related management contracts which are deemed onerous.

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

Note 16 — Inventories

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Finished goods		2		2
Consumable stores		2		2
		4		4

Note 17 — Trade and other receivables

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Trade receivables		268		318
Other receivables		27		49
Prepayments		40		45
		335		412

Trade and other receivables are designated as “loans and receivables” and are held at amortized cost.

Trade receivables are non-interest-bearing and are generally on payment terms of up to 30 days. The fair value of trade and other receivables approximates their carrying value.

F-56

The maximum exposure to credit risk for trade and other receivables, excluding prepayments, at the end of the reporting period by geographic region is:

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Americas		158		208
Europe, the Middle East and Africa		90		109
Asia Pacific		47		50
		295		367

The aging of trade and other receivables, excluding prepayments, at the end of the reporting period is:

	At December 31, 2009							At December 31, 2008
	Gross		Provision			Net		Gross		Provision			Net
						($ million)
Not past due		173		(2	)		171		254		(13	)		241
Past due 1 to 30 days		70		(9	)		61		61		(1	)		60
Past due 31 to 180 days		80		(19	)		61		63		(5	)		58
Past due more than 180 days		57		(55	)		2		99		(91	)		8
		380		(85	)		295		477		(110	)		367

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

	At			At
	December 31,			December 31,
	2009			2008
	($ million)
At January 1,		(110	)		(96	)
Provided		(34	)		(28	)
Amounts written off		59			14
At December 31,		(85	)		(110	)

Note 18 — Cash and cash equivalents

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Cash at bank and in hand		23		32
Short-term deposits		17		50
		40		82

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

F-57

Note 19 — Trade and other payables

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Current
Trade payables		99		111
Other tax and social security payable		29		31
Other payables		278		322
Accruals		262		272
Derivatives		20		10
		688		746
Non-current
Other payables		408		392

Trade payables are non-interest-bearing and are normally settled within an average of 45 days.

Other payables includes $470 million (2008 $471 million) relating to the future redemption liability of the Group’s loyalty program, of which $86 million (2008 $96 million) is classified as current and $384 million (2008 $375 million) as non-current.

Derivatives are held in the Consolidated statement of financial position at fair value. Fair value is estimated using discounted future cash flows taking into consideration interest and exchange rates prevailing on the last day of the reporting period.

Note 20 — Provisions

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Onerous management contracts		65		—

The onerous management contracts provision relates to the unavoidable net cash outflows that are expected to be incurred under the performance guarantee associated with certain management contracts with one US hotel owner (see Note 5). As the provision was first recognized in the income statement at December 31, 2009, there are no other movements to disclose. The provision is expected to be utilized within 12 months.

F-58

Note 21 — Loans and other borrowings

	At December 31, 2009						At December 31, 2008
	Current		Non-current		Total		Current		Non-current		Total
					($ million)
Secured bank loans		3		5		8		5		2		7
Finance leases		16		188		204		16		186		202
£250 million 6% bonds		—		402		402		—		—		—
Unsecured bank loans		87		421		508		—		1,146		1,146
Total borrowings		106		1,016		1,122		21		1,334		1,355
Denominated in the following currencies:
Sterling		—		402		402		—		152		152
US dollars		103		348		451		16		873		889
Euro		—		216		216		—		224		224
Other		3		50		53		5		85		90
		106		1,016		1,122		21		1,334		1,355

Secured bank loans

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

Non-current amounts include $5 million (2008 $nil) repayable by instalments.

Finance leases

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

	At December 31, 2009					At December 31, 2008
	Minimum			Present		Minimum			Present
	lease			value of		lease			value of
	payments			payments		payments			payments
				($ million)
Less than one year		16			16		16			16
Between one and five years		64			48		64			48
More than five years		3,364			140		3,380			138
		3,444			204		3,460			202
Less: amount representing finance charges		(3,240	)		—		(3,258	)		—
		204			204		202			202

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

£250 million 6% bonds

The 6% fixed interest sterling bonds were issued on December 9, 2009 and are repayable in full on December 9, 2016. Interest is payable annually on December 9, in each year commencing December 9, 2010 to the maturity date. The bonds are unsecured. Currency swaps were transacted at the same time the bonds were issued in order to swap its proceeds and interest flows into US dollars. Under the terms of the swaps, $415 million was borrowed and £250 million deposited for seven years at a fixed exchange rate of 1.66.

F-59

Unsecured bank loans

Unsecured bank loans are borrowings under the Group’s Syndicated Facility and its short-term bilateral loan facilities. Amounts are classified as non-current when the facilities have more than 12 months to expiry. These facilities contain financial covenants and, as at the end of the reporting period, the Group was not in breach of these covenants, nor had any breaches or defaults occurred during the year. In the second quarter of 2008, the Group successfully refinanced $2.1 billion of long-term debt facilities. At December 31, 2009, this syndicated bank facility consists of two tranches; a $1.6 billion five-year revolving credit facility and a $85 million term loan with a 30-month maturity. In December 2009, the Group repaid $415 million of the term loan with proceeds from the bond issue.

Facilities provided by banks

	At December 31, 2009						At December 31, 2008
	Utilized		Unutilized		Total		Utilized		Unutilized		Total
					($ million)
Committed		519		1,174		1,693		1,161		946		2,107
Uncommitted		3		22		25		—		25		25
		522		1,196		1,718		1,161		971		2,132

	At December 31,
	2009		2008
	($ million)
Unutilized facilities expire:
Within one year		22		25
After two but before five years		1,174		946
		1,196		971

Utilized facilities are calculated based on actual drawings and may not agree to the carrying value of loans held at amortized cost.

Note 22 — Financial risk management policies

Overview

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

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

Market risk exposure

The US dollar is the predominant currency of the Group’s revenue and cash flows. Movements in foreign exchange rates can affect the Group’s reported profit, net assets and interest cover. To hedge translation exposure, wherever possible, the Group matches the currency of its debt (either directly or via derivatives) to the currency of its net assets, whilst maximizing the amount of US dollars borrowed to reflect the predominant trading currency.

Foreign exchange transaction exposure is managed by the forward purchase or sale of foreign currencies or the use of currency options. Most significant exposures of the Group are in currencies that are freely convertible.

F-60

A general strengthening of the US dollar (specifically a five cent fall in the sterling : US dollar rate) would increase the Group’s profit before tax by an estimated $1.6 million (2008 $4.0 million, 2007 $2.9 million) and increase net assets by an estimated $4.1 million (2008 decrease of $1.1 million, 2007 increase of $6.1 million). Similarly, a five cent fall in the euro: US dollar rate would reduce the Group’s profit before tax by an estimated $0.7 million (2008 $2.0 million, 2007 $1.6 million) and decrease net assets by an estimated $4.5 million (2008 $4.3 million, 2007 $5.9 million).

Interest rate exposure is managed within parameters that stipulate that fixed rate borrowings should normally account for no less than 25% and no more than 75% of net borrowings for each major currency. This is achieved through the use of interest rate swaps and options and forward rate agreements.

Based on the year-end net debt position and given the underlying maturity profile of investments, borrowings and hedging instruments at that date, a one percentage point rise in US dollar interest rates would increase the annual net interest charge by approximately $0.8 million (2008 $4.7 million, 2007 $5.8 million). A similar rise in euro and sterling interest rates would increase the annual net interest charge by approximately $1.1 million (2008 $1.2 million, 2007 $1.2 million) and $nil (2008 $0.9 million, 2007 $3.2 million) respectively.

Liquidity risk exposure

The treasury function ensures that the Group has access to sufficient funds to allow the implementation of the strategy set by the Board. At the year end, the Group had access to $1,174 million of undrawn committed facilities. Medium and long-term borrowing requirements are met through the $1,685 million Syndicated Facility of which $85 million expires in November 2010 and $1.6 billion expires in May 2013 and through the £250 million 6% bonds that are repayable on December 9, 2016. Short-term borrowing requirements are met from drawings under bilateral bank facilities.

The Syndicated Facility contains two financial covenants: interest cover and net debt divided by earnings before interest, tax, depreciation and amortization (“EBITDA”). Net debt is calculated as total borrowings less cash and cash equivalents. The Group is in compliance with all of the financial covenants in its loan documents, none of which is expected to present a material restriction on funding in the near future.

At the year end, the Group had surplus cash of $40 million which is held in short-term deposits and cash funds which allow daily withdrawals of cash. Most of the Group’s surplus funds are held in the United Kingdom or United States and there are no material funds where repatriation is restricted as a result of foreign exchange regulations.

Credit risk exposure

Credit risk on treasury transactions is minimized by operating a policy on the investment of surplus cash that generally restricts counterparties to those with an A credit rating or better or those providing adequate security.

Notwithstanding that counterparties must have an A credit rating or better, during periods of significant financial market turmoil, counterparty exposure limits are significantly reduced and counterparty credit exposure reviews are broadened to include the relative placing of credit default swap pricings.

The Group trades only with recognized, creditworthy third parties. It is the Group’s policy that all customers who wish to trade on credit terms are subject to credit verification procedures.

In respect of credit risk arising from financial assets, the Group’s exposure to credit risk arises from default of the counterparty, with a maximum exposure equal to the carrying amount of these instruments.

Capital risk management

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

F-61

Hedging

Interest rate risk

The Group hedges its interest rate risk by taking out interest rate swaps to fix the interest flows on between 25% and 75% of its net borrowings in major currencies. At December 31, 2009, the Group held interest rate swaps (swapping floating for fixed) with notional principals of $250 million and €75 million (2008 $250 million, £75 million and €75 million). The Group did not hold any forward-starting interest rate swaps at December 31, 2009 (2008 interest rate swaps with notional principals of $100 million, £75 million and €75 million). The interest rate swaps are designated as cash flow hedges of borrowings under the Syndicated Facility and they are held in the Consolidated statement of financial position at fair value in other financial assets and other payables.

Changes in the fair value of cash flow hedges are recognized in the unrealized gains and losses reserve to the extent that the hedges are effective. When the hedged item is recognized, the cumulative gains and losses on the hedging instrument are recycled to the income statement. No ineffectiveness was recognized during the current or prior year.

Foreign currency risk

The Group is exposed to foreign currency risk on income streams denominated in foreign currencies. When appropriate, the Group hedges a portion of forecast foreign currency income by taking out forward exchange contracts. The designated risk is the spot foreign exchange risk. Forward contracts are held at fair value in the Consolidated statement of financial position as other financial assets and other payables.

Hedge of net investment in foreign operations

The Group designates its foreign currency bank borrowings and currency derivatives as net investment hedges of foreign operations. The designated risk is the spot foreign exchange risk for loans and short-dated derivatives and the forward risk for the seven-year currency swaps. The interest on these financial instruments is taken through financial income or expense except for the seven-year currency swaps where interest is taken to the currency translation reserve. The derivatives are held in the Consolidated statement of financial position at fair value in other financial assets and other payables.

Hedge effectiveness is measured at calendar quarter ends. Variations in fair value due to changes in the underlying exchange rates are taken to the currency translation reserve until an operation is sold, at which point the cumulative currency gains and losses are recycled against the gain or loss on sale. No ineffectiveness was recognized on net investment hedges during the current or prior year.

At December 31, 2009, the Group held currency swaps with a principal of $415 million (2008 $nil) and a fair value of $13 million liability (2008 $nil). The maximum amount of foreign exchange derivatives held during the year as net investment hedges and measured at calendar quarter ends had a principal of $415 million (2008 $70 million) and a fair value of $13 million liability (2008 $4 million liability).

F-62

Note 23 — Financial instruments

Liquidity risk

The following are the undiscounted contractual cash flows of financial liabilities, including interest payments:

				Between 1			Between 2
	Less than			and			and			More than
At December 31, 2009	1 year			2 years			5 years			5 years			Total
	($ million)
Non-derivative financial liabilities:
Secured bank loans		3			1			5			—			9
£250m 6% bonds		24			24			73			453			574
Finance lease obligations		16			16			48			3,364			3,444
Unsecured bank loans		512			—			—			—			512
Trade and other payables		668			102			120			302			1,192
Provisions		65			—			—			—			65
Derivative financial liabilities:
Interest rate swaps		7			4			1			—			12
Currency swaps-outflows		26			26			77			467			596
Currency swaps-inflows		(24	)		(24	)		(73	)		(453	)		(574	)
	Less than			Between 1 and			Between 2 and			More than
At December 31, 2008	1 year			2 years			5 years			5 years			Total
	($ million)
Non-derivative financial liabilities:
Secured bank loans		2			8			—			—			10
Finance lease obligations		16			16			48			3,380			3,460
Unsecured bank loans		1,156			—			—			—			1,156
Trade and other payables		737			101			113			277			1,228
Derivative financial liabilities:
Interest rate swaps		6			4			3			—			13

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

Interest rate swaps are expected to affect profit or loss in the same periods that the cash flows are expected to occur.

Fair values

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

F-63

	At December 31, 2009						At December 31, 2008
	Carrying						Carrying
	value			Fair value			value			Fair value
	($ million)
Financial assets
Equity securities available-for-sale* (Note 15)		71			71			70			70
Loans and receivables:
Cash and cash equivalents (Note 18)		40			40			82			82
Other financial assets (Note 15)		64			64			92			92
Trade and other receivables, excluding prepayments (Note 17)		295			295			367			367
Financial liabilities
£250 million 6% bonds (Note 21)		(402	)		(402	)		—			—
Finance lease obligations (Note 21)		(204	)		(206	)		(202	)		(168	)
Other borrowings (Note 21)		(516	)		(516	)		(1,153	)		(1,153	)
Trade and other payables, excluding derivatives (Note 19)		(1,076	)		(1,076	)		(1,128	)		(1,128	)
Derivatives* (Note 19)		(20	)		(20	)		(10	)		(10	)
Provisions (Note 20)		(65	)		(65	)		—			—

* Financial assets and liabilities which are measured at fair value.

The fair value of cash and cash equivalents approximates book value due to the short maturity of the investments and deposits. Equity securities available-for-sale and derivatives are held in the Consolidated statement of financial position at fair value as set out in Note 15. The fair value of other financial assets approximates book value based on prevailing market rates. The fair value of borrowings, excluding finance lease obligations and the fixed rate $250 million 6% bonds, approximates book value as interest rates reset to market rates on a frequent basis. The fair value of the £250 million 6% bonds is based on the quoted market price. The fair value of the finance lease obligation is calculated by discounting future cash flows at prevailing interest rates. The fair value of trade and other receivables, trade and other payables and current provisions approximates to their carrying value, including the future redemption liability of the Group’s loyalty program.

Fair value hierarchy

The Group uses the following valuation hierarchy to determine the carrying value of financial instruments that are measured at fair value:

Level 1: quoted (unadjusted) prices in active markets for identical assets or liabilities.

Level 2: other techniques for which all inputs which have a significant effect on the recorded fair value are observable, either directly or indirectly.

Level 3: techniques which use inputs which have a significant effect on the recorded fair value that are not based on observable market data.

	At December 31, 2009										At December 31, 2008
	Level 1		Level 2			Level 3		Total			Level 1		Level 2			Level 3		Total
	($ million)
Assets
Equity securities available-for-sale		2		—			69		71			2		—			68		70
Liabilities
Derivatives		—		(20	)		—		(20	)		—		(10	)		—		(10	)

F-64

There were no transfers between Level 1 and Level 2 fair value measurements during the year and no transfers into and out of Level 3.

The following table reconciles movements in instruments classified as Level 3 during the year:

	At
	December 31,
	2009
	($ million)
Balance at January 1, 2009		68
Valuation gains recognized in other comprehensive income		11
Impairment*		(10	)
Balance at December 31, 2009		69

* The impairment charge recognized in the income statement (see Note 5) also includes $4 million of losses reclassified from equity.

The Level 3 equity securities relate to investments in unlisted shares which are valued by applying an average price-earnings (P/E) ratio for a competitor group to the earnings generated by the investment. A 10% increase in the average P/E ratio would result in a $5 million increase in the fair value of the investments and a 10% decrease in the average P/E ratio would result in a $5 million decrease in the fair value of the investments.

Credit risk

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

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Equity securities available-for-sale		71		70
Loans and receivables:
Cash and cash equivalents		40		82
Other financial assets		64		92
Trade and other receivables, excluding prepayments		295		367
		470		611

Note 24 — Net debt

	At			At
	December 31,			December 31,
	2009			2008
	($ million)
Cash and cash equivalents		40			82
Loans and other borrowings — current		(106	)		(21	)
Loans and other borrowings — non-current		(1,016	)		(1,334	)
Net debt		(1,082	)		(1,273	)

F-65

	Year ended			Year ended
	December 31,			December 31,
	2009			2008
	($ million)
Movement in net debt
Net (decrease)/increase in cash and cash equivalents		(44	)		25
Add back cash flows in respect of other components of net debt:
Issue of £250m 6% bonds		(411	)		—
Decrease in other borrowings		660			316
Decrease in net debt arising from cash flows		205			341
Non-cash movements:
Finance lease liability		(2	)		(2	)
Exchange and other adjustments		(12	)		47
Decrease in net debt		191			386
Net debt at beginning of the year		(1,273	)		(1,659	)
Net debt at end of the year		(1,082	)		(1,273	)

Note 25 — Deferred tax

																Other
	Property,			Deferred												short-term
	plant and			gains on						Employee			Intangible			temporary
	equipment			loan notes			Losses			benefits			assets			differences			Total
	($ million)
At January 1, 2008		248			175			(190	)		(32	)		42			(89	)		154
Income statement		(7	)		—			13			18			(8	)		(8	)		8
Statement of comprehensive income		—			—			—			(21	)		—			—			(21	)
Statement of changes in equity		—			—			—			—			—			2			2
Exchange and other adjustments		(15	)		(33	)		36			2			(6	)		(6	)		(22	)
At December 31, 2008		226			142			(141	)		(33	)		28			(101	)		121
Income statement		(43	)		—			6			(1	)		1			(59	)		(96	)
Statement of comprehensive income		—			—			—			(1	)		—			—			(1	)
Statement of changes in equity		—			—			—			—			—			(6	)		(6	)
Exchange and other adjustments		6			9			(11	)		—			2			(1	)		5
At December 31, 2009		189			151			(146	)		(35	)		31			(167	)		23

	At			At
	December 31,			December 31,
	2009			2008
	($ million)
Analyzed as:
Deferred tax receivable		(95	)		—
Deferred tax payable		118			117
Liabilities classified as held for sale		—			4
		23			121

Deferred gains on loan notes includes $55 million (2008 $55 million) which is expected to fall due for payment in 2011.

F-66

The deferred tax asset of $146 million (2008 $141 million) recognized in respect of losses includes $97 million (2008 $87 million) in respect of capital losses available to be utilized against the realization of capital gains which are recognized as a deferred tax liability and $49 million (2008 $54 million) in respect of revenue tax losses.

Tax losses with a net tax value of $517 million (2008 $553 million), including capital losses with a value of $196 million (2008 $160 million), have not been recognized. These losses may be carried forward indefinitely with the exception of $1 million which expires after 15 years, $1 million which expires after nine years and $14 million which expires after seven years (2008 $1 million which expires after three years). Deferred tax assets with a net tax value of $9 million (2008 $4 million) in respect of share-based payments, $13 million (2008 $13 million) in respect of employee benefits and $7 million (2008 $8 million) in respect of other items have not been recognized. These losses and other deferred tax assets have not been recognized as the Group does not anticipate being able to offset these against future profits or gains in order to realize any economic benefit in the foreseeable future. However, future benefits may arise depending on future profits arising or on the outcome of EU case law and legislative developments.

At December 31, 2009 the Group has not provided deferred tax in relation to temporary differences associated with post-acquisition undistributed earnings of subsidiaries as the Group is in a position to control the timing of reversal of these temporary differences and it is probable that they will not reverse in the foreseeable future. Following the introduction of a UK dividend exemption regime, the tax which would arise upon reversal of the temporary differences is not expected to exceed $20 million.

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

Note 26 — Share-based payments

Annual Bonus Plan

The IHG Annual Bonus Plan enables eligible employees, including Executive Directors, to receive all or part of their bonus in the form of shares together with, in certain cases, a matching award of free shares of up to half the deferred amount. The bonus and any matching shares awarded are released on the third anniversary of the award date. The bonuses in 2006 and 2007 were eligible for matching shares, all of which will be released on the third anniversary of the award date. In 2006 and 2007, participants could defer up to 100% of the total annual bonus, in which case it is accounted for as a share-based payment. Under the terms of the 2008 and 2009 plans, a fixed percentage of the bonus is awarded in the form of shares with no voluntary deferral and no matching shares. The awards in all of the plans are conditional on the participants remaining in the employment of a participating company or leaving for a qualifying reason as per the plan rules. Participation in the Annual Bonus Plan is at the discretion of the Remuneration Committee. The number of shares is calculated by dividing a specific percentage of the participant’s annual performance-related bonus by the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A number of executives participated in the plan during the year and conditional rights over 1,058,734 (2008 661,657, 2007 675,515) shares were awarded to participants. This number includes 228,000 shares awarded as part of recruitment terms or for one-off individual performance-related awards.

Long Term Incentive Plan

The Long Term Incentive Plan allows Executive Directors and eligible employees to receive share awards, subject to the satisfaction of performance conditions, set by the Remuneration Committee, which are normally measured over a three-year period. Awards are normally made annually and, except in exceptional circumstances, will not exceed three times salary for Executive Directors and four times salary in the case of other eligible employees. During the year, conditional rights over 5,754,548 (2008 5,060,509, 2007 3,538,535) shares were awarded to employees under the plan. The plan provides for the grant of “nil cost options” to participants as an alternative to conditional share awards.

F-67

Executive Share Option Plan

For options granted, the option price is not less than the market value of an ordinary share, or the nominal value if higher. The market value is the quoted price on the business day preceding the date of grant, or the average of the middle market quoted prices on the three consecutive dealing days immediately preceding the date of grant. A performance condition has to be met before options can be exercised. The performance condition is set by the Remuneration Committee. The plan was not operated during 2009 and no options were granted in the year under the plan. The latest date that any options may be exercised is April 4, 2015.

Sharesave Plan

The Sharesave Plan is a savings plan whereby employees contract to save a fixed amount each month with a savings institution for three or five years. At the end of the savings term, employees are given the option to purchase shares at a price set before savings began. The Sharesave Plan is available to all UK employees (including Executive Directors) employed by participating Group companies provided that they have been employed for at least one year. The plan provides for the grant of options to subscribe for ordinary shares at the higher of nominal value and not less than 80% of the middle market quotations of the ordinary shares on the three dealing days immediately preceding the invitation date. The plan was not operated during 2009 and no options were granted in the year under the plan. All options outstanding at December 31, 2008 were either exercised or lapsed in 2009.

US Employee Stock Purchase Plan

The US Employee Stock Purchase Plan will allow eligible employees resident in the United States an opportunity to acquire Company American Depositary Shares (“ADS”s) on advantageous terms. The option to purchase ADSs may be offered only to employees of designated subsidiary companies. The option price may not be less than the lesser of either 85% of the fair market value of an ADS on the date of grant or 85% of the fair market value of an ADS on the date of exercise. Options granted under the plan must generally be exercised within 27 months from the date of grant. The plan was not operated during 2009 and at December 31, 2009 no options had been granted under the plan.

Former Six Continents Share Schemes

Under the terms of the separation of Six Continents PLC in 2003, holders of options under the Six Continents Executive Share Option Schemes were given the opportunity to exchange their Six Continents PLC options for equivalent value new options over IHG shares. As a result of this exchange, 23,195,482 shares were put under option at prices ranging from 308.5 pence to 593.3 pence. The exchanged options were immediately exercisable and are not subject to performance conditions. During 2009, 380,457 (2008, 159,254, 2007 1,358,791) such options were exercised and 43,088 shares lapsed (2008 113,024, 2007 nil), leaving a total of 2,001,060 (2008 2,424,605, 2007 2,696,883) such options outstanding at prices ranging from 308.5 pence to 434.2 pence. The latest date that any options may be exercised is October 3, 2012.

The Group recognized a cost of $22 million (2008 $47 million, 2007 $60 million) in operating profit and $2 million (2008 $2 million, 2007 $nil) within exceptional administrative expenses related to equity-settled share-based payment transactions during the year.

The aggregate consideration in respect of ordinary shares issued under option schemes during the year was $11 million (2008 $2 million, 2007 $32 million).

The following table sets forth awards and options granted during 2009. No awards were granted under the Executive Share Option Plan, Sharesave Plan or US Employee Stock Purchase Plan during the year.

	Annual Bonus		Long Term
	Plan		Incentive Plan
Number of shares awarded in 2009		1,058,734		5,754,548

F-68

In 2009, 2008 and 2007, the Group used separate option pricing models and assumptions for each plan. The following tables set forth information about how the fair value of each option grant is calculated:

	Annual			Long Term
2009	Bonus Plan			Incentive Plan
Valuation model	Binomial			Monte Carlo
				Simulation and
				Binomial
Weighted average share price (pence)		454.0			612.0
Expected dividend yield		4.89	%		5.26	%
Risk-free interest rate					2.11	%
Volatility*					43	%
Term (years)		3.0			3.0
	Annual			Long Term
2008	Bonus Plan			Incentive Plan
Valuation model	Binomial			Monte Carlo
				Simulation and
				Binomial
Weighted average share price (pence)		836.0			865.0
Expected dividend yield		3.33	%		2.76	%
Risk-free interest rate					4.78	%
Volatility*					30	%
Term (years)		3.0			3.0
	Annual			Long Term
2007	Bonus Plan			Incentive Plan
Valuation model	Binomial			Monte Carlo
				Simulation and
				Binomial
Weighted average share price (pence)		1,252.0			1,262.0
Expected dividend yield		2.13	%		2.13	%
Risk-free interest rate					5.40	%
Volatility*					19	%
Term (years)		3.0			3.0

* The expected volatility was determined by calculating the historical volatility of the Company’s share price corresponding to the expected life of the share award.

F-69

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

	Annual			Long Term
	Bonus Plan			Incentive Plan
	Number of shares			Number of shares
	(thousands)
Outstanding at January 1, 2007		1,001			11,325
Granted		675			3,539
Vested		(418	)		(1,694	)
Share capital consolidation		(68	)		—
Lapsed or canceled		(86	)		(1,707	)
Outstanding at December 31, 2007		1,104			11,463
Granted		662			5,061
Vested		(472	)		(2,752	)
Lapsed or canceled		(5	)		(2,619	)
Outstanding at December 31, 2008		1,289			11,153
Granted		1,059			5,755
Vested		(434	)		(3,124	)
Lapsed or canceled		(60	)		(1,518	)
Outstanding at December 31, 2009		1,854			12,266
Fair value of awards granted during the year (cents)
At December 31, 2009		735.6			414.1
At December 31, 2008		1,436.0			870.4
At December 31, 2007		2,387.4			910.0
Weighted average remaining contract life (years)
At December 31, 2009		1.3			1.3
At December 31, 2008		1.6			1.2
At December 31, 2007		1.5			1.1

The above awards do not vest until the performance and service conditions have been met.

F-70

	Sharesave Plan							Executive Share Option Plan
						Weighted							Weighted
	Number of			Range of		average		Number of			Range of		average
	shares			option prices		option price		shares			option prices		option price
	(thousands)			(pence)		(pence)		(thousands)			(pence)		(pence)
Outstanding at January 1, 2007		165			420.5		420.5		14,079			308.5-619.8		482.2
Exercised		(101	)		420.5		420.5		(5,568	)		308.5-619.8		471.9
Lapsed or canceled		(7	)		420.5		420.5		(317	)		438.0-619.8		526.8
Outstanding at December 31, 2007		57			420.5		420.5		8,194			308.5-619.8		487.4
Exercised		(3	)		420.5		420.5		(353	)		434.2-619.8		543.6
Lapsed or canceled		(5	)		420.5		420.5		(206	)		349.1-593.2		431.3
Outstanding at December 31, 2008		49			420.5		420.5		7,635			308.5-619.8		486.3
Exercised		(48	)		420.5		420.5		(1,518	)		308.5-619.8		496.2
Lapsed or canceled		(1	)		420.5		420.5		(247	)		438.0-619.8		509.9
Outstanding at December 31, 2009		—			—		—		5,870			308.5-619.8		482.8
Options exercisable
At December 31, 2009		—			—		—		5,870			308.5-619.8		482.8
At December 31, 2008		—			—		—		7,635			308.5-619.8		486.3
At December 31, 2007		—			—		—		6,583			308.5-619.8		455.0

Included within the options outstanding under the Executive Share Option Plan are options over 2,001,060 (2008 2,424,605, 2007 2,696,883) shares that have not been recognized in accordance with IFRS 2 as the options were granted on or before November 7, 2002. These options, relating to former Six Continents share schemes, have not been subsequently modified and therefore do not need to be accounted for in accordance with IFRS 2.

The weighted average share price at the date of exercise for share options vested during the year was 571.0 pence. The closing share price on December 31, 2009 was 893.0 pence and the range during the year was 446.0 pence to 903.5 pence per share.

Summarized information about options outstanding at December 31, 2009 under the share option schemes is as follows:

	Options outstanding and exercisable
			Weighted
			average		Weighted
	Number		remaining		average
	outstanding		contract life		option price
Range of exercise prices (pence)	(thousands)		(years)		(pence)
Executive Share Option Plan
308.5 to 349.1		268		0.3		347.3
422.8 to 494.2		4,574		3.3		459.9
619.8		1,028		5.3		619.8
		5,870		3.5		482.8

F-71

Note 27 — Operating leases

During the year ended December 31, 2009, $51 million (2008 $61 million, 2007 $64 million) was recognized as an expense in the Consolidated income statement in respect of operating leases, net of amounts borne by the System Funds.

Total commitments under non-cancelable operating leases are as follows:

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Due within one year		51		56
One to two years		44		50
Two to three years		38		47
Three to four years		37		40
Four to five years		30		33
More than five years		309		322
		509		548

Included above are commitments of $8 million (2008 $11 million) which will be borne by the System Funds.

The average remaining term of these leases, which generally contain renewal options, is approximately 19 years (2008 18 years). No material restrictions or guarantees exist in the Group’s lease obligations.

Note 28 — Capital and other commitments

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Contracts placed for expenditure on property, plant and equipment and intangible assets not provided for in the Consolidated Financial Statements		9		40

On October 24, 2007, the Group announced a worldwide relaunch of its Holiday Inn brand family. In support of this relaunch, IHG will make a non-recurring revenue investment of $60 million which will be charged to the Consolidated income statement as an exceptional item. During the year, $19 million (2008 $35 million) was charged.

Note 29 — Contingencies

	At		At
	December 31,		December 31,
	2009		2008
	($ million)
Contingent liabilities not provided for in the Consolidated Financial Statements		16		12

In limited cases, the Group may provide performance guarantees to third-party owners to secure management contracts. The maximum exposure under such guarantees was $106 million at December 31, 2009 (2008 $249 million). Payments under any such guarantees are charged to the income statement as incurred.

As of December 31, 2009, the Group had outstanding letters of credit of $54 million (2008 $42 million) mainly relating to self insurance programs.

The Group may guarantee loans made to facilitate third-party ownership of hotels in which the Group has an equity interest and also a management contract. As of December 31, 2009, the Group was a guarantor of loans which could amount to a maximum of $54 million (2008 $46 million).

F-72

From time to time, the Group is subject to legal proceedings the ultimate outcome of each being always subject to many uncertainties inherent in litigation. The Group has also given warranties in respect of the disposal of certain of its former subsidiaries and hotels. It is the view of the Directors that, other than to the extent that liabilities have been provided for in these financial statements, such legal proceedings and warranties are not expected to result in material financial loss to the Group.

Note 30 — Related party disclosures

Key management personnel comprises the Board and Executive Committee.

	Year ended December 31,
	2009		2008		2007
	($ million)
Total compensation of key management personnel
Short-term employment benefits		9.8		18.4		18.9
Post-employment benefits		0.6		0.7		0.9
Termination benefits		0.8		—		—
Equity compensation benefits		9.5		12.8		18.2
		20.7		31.9		38.0

There were no transactions with key management personnel during the years ended December 31, 2009, 2008 or 2007.

Note 31 — System Funds

The Group operates funds to collect and administer assessments from hotel owners for specific use in marketing, the Priority Club loyalty program and the global reservation system. The Funds and loyalty program are accounted for in accordance with the accounting policies set out on page F-18.

The following information is relevant to the operation of the Funds:

	Year ended December 31,
	2009		2008		2007
	($ million)
Assessment fees received from hotels*		1,008		990		930
Key elements of Funds’ expenditure:*
Marketing		165		211		215
Priority Club		210		212		238
Payroll costs		152		155		144
Net surplus/(deficit) for the year		43		10		(34)
Cumulative short-term net surplus		71		28		18
Loyalty program liability		470		471		426
Interest payable to the Funds		2		12		21

* Not included in the Consolidated income statement in accordance with the Group’s accounting policies.

The payroll costs above relate to 4,019 (2008 3,853, 2007 3,539) employees of the Group whose costs are borne by the Funds.

F-73

INTERCONTINENTAL HOTELS GROUP PLC

SCHEDULE II

VALUATION AND QUALIFYING ACCOUNTS

			Additions
	Balance at		charged to								Balance at
	beginning		costs and		Exchange						end of
	of period		expenses		differences			Deductions			period
	($ million)
Year ended December 31, 2009
Provisions for bad and doubtful debts		110		34		—			(59	)		85
Year ended December 31, 2008
Provisions for bad and doubtful debts		96		28		—			(14	)		110
Year ended December 31, 2007
Provisions for bad and doubtful debts		85		23		—			(12	)		96
Year ended December 31, 2006
Provisions for bad and doubtful debts		81		29		2			(27	)		85
Year ended December 31, 2005
Provisions for bad and doubtful debts		83		25		(2	)		(25	)		81

S-1

SIGNATURES

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

INTERCONTINENTAL HOTELS GROUP PLC

(Registrant)

By:  /s/  Richard Solomons

Name:     Richard Solomons

Title:  Chief Financial Officer

Date: April 1, 2010

EX-1

Exhibit 1

No. 5134420

The Companies Act 2006

Company Limited by Shares

INTERCONTINENTAL HOTELS GROUP PLC

ARTICLES OF ASSOCIATION

Linklaters

One Silk Street

London EC2Y 8HQ

Telephone (44-20) 7456 2000

Facsimile (44-20) 7456 2222

Ref Matthew Bland/Daniel Simons

Adopted with effect from 27 June 2005 pursuant to a Special Resolution of the Company passed on 15 June 2005. By Special Resolutions of the Company passed on 1 June 2007 and 30 May 2008 with effect from 1 October 2008, and on 29 May 2009 with effect from 1 October 2009, the Articles of Association were further amended.

Contents

	Article No.		Page No.
Preliminary		1-2		1-6
Ordinary and Redeemable Shares		3-4		6-7
Variation of Rights		5-6		8
Shares		12-16		10-12
Evidence of Title to Securities		17		12
Share Certificates		18-22		12-13
Calls on Shares		23-28		13-14
Forfeiture and Lien		29-36		15-16
Transfer of Shares		37-43		16-19
Transmission of Shares		44-46		19-20
Untraced Shareholders		47-48		20-21
General Meetings		49-50		21
Notice of General Meetings		51-52		21-22
Overflow of General Meetings		53-55		22
Proceedings at General Meetings		56-66		23-25
Votes of Members		67-72		25-28
Proxies		73-78		28-30
Corporations Acting by Representatives		79		30
Directors		80-88		30-32
Appointment and Retirement of Directors		89-97		32-34
Alternate Directors		98-101		34-35
Meetings and Proceedings of Directors		102-111		35-42
Borrowing Powers		112-113		42
General Powers of Directors		114-118A		42-44
President		119		44
Departmental, Division or Local Directors		120		44
Secretary		121		44
The Seal		122-124		44-45
Record Date		125		45
Authentication of Documents		126		45

i

	Article No.		Page No.
Reserves		127		45-46
Dividends		128-140		46-48
Capitalisation of Profits and Shares		141-142		49-50
Minutes		143		50-51
Accounts		144-145		51
Auditors		146-147		51-52
Communications with Members		148-155		52-54
Winding up		156-157		54
Directors’ liabilities		158-158B		55-57
Overriding Provisions		159		57-60

ii

The Companies Act 2006

COMPANY LIMITED BY SHARES

Articles of Association

Adopted by Special Resolution passed on 15 June 2005

Further amended by Special Resolutions passed on 1 June 2007
and 30 May 2008 with effect from 1 October 2008 and 29 May 2009 with effect from 1 October 2009

of

INTERCONTINENTAL HOTELS GROUP PLC¹

(the “Company”)

Preliminary

1 The regulations in Table A in The Companies (Tables A to F) Regulations 1985 and in any Table A applicable to the Company under any former enactment relating to companies shall not apply to the Company.

2 In these Articles (if not inconsistent with the subject or context) the words and expressions set out below shall have the following meanings:

“Auditors” means the auditors for the time being of the Company.

“Company Communications Provisions” shall have the same meaning as in the Companies Acts.

“in writing” means written or produced by any substitute for writing (including anything in electronic form) or partly one and partly another.

“London Stock Exchange” means London Stock Exchange plc.

“month” means calendar month.

“Office” means the registered office of the Company for the time being.

“Operator” means CRESTCo Limited or such other person as may for the time being be approved by H.M. Treasury as Operator under the Regulations.

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

1

“Operator-instruction” means a properly authenticated dematerialised instruction attributable to the Operator.

“paid” means paid or credited as paid.

“participating security” means a security, title to units of which is permitted by the Operator to be transferred by means of a relevant system.

“Register” means the register of members of the Company.

“Regulations” means the Uncertificated Securities Regulations 2001.

“relevant system” means a computer-based system, and procedures, which enable title to units of a security to be evidenced and transferred without a written instrument pursuant to the Regulations.

“Seal” means the Common Seal of the Company.

“Securities Seal” means the official seal kept by the Company for sealing securities issued by the Company, or for sealing documents creating or evidencing securities so issued, as permitted by the Companies Acts.

“Statutes” means the Companies Acts, the Regulations and every other enactment (to the extent the same is in force) concerning companies and affecting the Company.

“these Articles” means these Articles of Association as from time to time altered.

“Transfer Office” means the place where the Register is situated for the time being.

“United Kingdom” means the United Kingdom of Great Britain and Northern Ireland.

“UK Listing Authority” means the Financial Services Authority in its capacity as competent authority for official listing under Part VI of the Financial Services and Markets Act 2000.

“year” means calendar year.

The expression “address” includes any number or address (including in the use of any Uncertificated Proxy Instruction permitted under Article 75, an identification number of a participant in the relevant system) used for the purposes of sending or receiving notices, documents or information by electronic means and/or by means of a website.

The expression “Companies Acts” shall have the meaning given thereto by Section 2 of the Companies Act 2006 but shall only extend to provisions which are in force at the relevant date.

The expressions “hard copy form”, “electronic form” and “electronic means” shall have the same respective meanings as in the Company Communications Provisions.

The expressions “debenture” and “debenture holder” shall respectively include “debenture stock” and “debenture stockholder”.

The expression “Director” shall include all the directors of the Company.

The expression “Group” in relation to moneys borrowed means the Company and its subsidiary undertakings for the time being.

The expression “moneys borrowed” shall be deemed to include (to the extent that the same would not otherwise fall to be taken into account):

2

(i) the principal amount of any debentures, as defined in Section 738 of the Companies Act 1985 and any fixed premium payable on final repayment thereof save to the extent that such amounts otherwise fall to be included as moneys borrowed;

(ii) the principal amount raised by the acceptance of bills by the Company or any subsidiary (not being acceptance of trade bills for the purchase of goods in the ordinary course of business) or by any bank or accepting house under any acceptance credit opened on behalf of the Company or any subsidiary;

(iii) the nominal amount of any share capital and the principal amount of any other debentures or other borrowed moneys (together with any fixed premium payable on final redemption or repayment) the redemption or repayment of which is guaranteed (or is the subject of an indemnity granted) by the Company or a subsidiary, save to the extent that the amount guaranteed otherwise falls to be included as moneys borrowed;

(iv) the nominal amount of any paid-up share capital, except ordinary share capital, of a subsidiary which is not for the time being beneficially owned by the Company or a subsidiary;

(v) the aggregate amount owing by any member of the Group under finance leases (as determined in accordance with any then current International Financial Reporting Standard or otherwise in accordance with United Kingdom generally accepted accounting principles but excluding leaseholds of immovable property);

(vi) the principal amount of any book debts of any member of the Group which have been sold or agreed to be sold, to the extent that any member of the Group is for the time being liable to indemnify or reimburse the purchaser in respect of any non-payment in respect of such book debts; and

(vii) any part of the purchase price of any movable or immovable assets acquired by any member of the Group, the payment of which is deferred beyond the date of completion of the conveyance, assignment or transfer of the legal estate to such assets or, if no such conveyance, assignment or transfer is to take place within six months after the date on which the contract for such purchase is entered into or (if later) becomes unconditional, beyond that date;

but shall be deemed not to include:

(viii) a proportion of the moneys borrowed by any partly-owned subsidiary otherwise than from the Company or a subsidiary equal to the proportion of its ordinary share capital not directly or indirectly attributable to the Company;

(ix) amounts borrowed and falling to be taken into account as moneys borrowed pending their application for the purpose of repaying the whole or any part of the other moneys borrowed provided that they are so applied within six months of being so borrowed;

(x) amounts borrowed by the Company or any subsidiary to finance any contract for the sale of goods in respect of which any part of the price receivable is guaranteed by the Export Credit Guarantee Department of the Board of Trade or any institution carrying on similar business to the extent of that part of the contract price guaranteed notwithstanding that such amount is secured by a pledge or charge on

3

the interest in such contract or the underlying goods or bills of exchange or the negotiable instruments drawn or made in connection therewith or the interest in any letters of credit issued or guarantee or indemnity or security held in relation thereto;

(xi) all sums (whether or not carrying interest) deposited with the Company or with any subsidiary by tenants or managers of premises owned by any such company by way of earnest or security for the performance by such tenants or managers of their obligations or by loan clubs or by similar associations;

and so that:

(xii) no amount shall be taken into account more than once in the same calculation but subject thereto (i) to (xii) above shall be read cumulatively;

(xiii) moneys borrowed shall be offset by cash and cash equivalence as determined in accordance with any then current International Financial Reporting Standards or otherwise in accordance with United Kingdom generally accepted accounting principles; and

(xiv) in determining the amount of any debentures or other moneys borrowed or of any share capital for the purpose of this paragraph there shall be taken into account the nominal or principal amount thereof (or, in the case of partly-paid debentures or shares, the amount for the time being paid up thereon) together with any fixed or minimum premium payable on final redemption or repayment provided that if moneys are borrowed or shares are issued on terms that they may be repayable or redeemable (or that any member of the Group may be required to purchase them) earlier than their final maturity date (whether by exercise of an option on the part of the issuer or the creditor (or a trustee for the creditor) or the shareholder, by reason of a default or for any other reason) at a premium or discount to their nominal or principal amount then there shall be taken into account the amount (or the greater or greatest of two or more alternative amounts) which would, if those circumstances occurred, be payable on such repayment, redemption or purchase at the date as at which the calculation is being made.

The expression “officer” shall include a Director, manager and the Secretary, but shall not include an auditor.

The expressions “recognised clearing house” and “recognised investment exchange” shall mean any clearing house or investment exchange (as the case may be) granted recognition under the Financial Services and Markets Act 2000.

The expression “Secretary” shall include any person appointed by the Directors to perform any of the duties of the Secretary including, but not limited to, a joint, assistant or deputy Secretary.

The expression “share capital and consolidated reserves” shall mean at any time a sum equal to the aggregate, as shown by the relevant balance sheet, of the amount paid up on the issued or allotted share capital of the Company and the amount standing to the credit of the reserves (including the profit and loss account and any share premium account or capital redemption reserve) of the Company and its subsidiary undertakings included in the consolidation in the relevant balance sheet but after:

(i) adding back any debit balance on profit and loss account or on any other reserve;

(ii) excluding any amount taken directly to reserves for taxation;

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(iii) making such adjustments as may be appropriate in respect of any variation in the amount of such paid up share capital and/or any such reserves (other than profit and loss account) subsequent to the date of the relevant balance sheet and so that for this purpose if any issue or proposed issue of shares by the Company for cash has been underwritten then such shares shall be deemed to have been issued and the amount (including any premium) of the subscription moneys payable in respect thereof (not being moneys payable later than six months after the date of allotment) shall to the extent so underwritten be deemed to have been paid up on the date when the issue of such shares was underwritten (or, if such underwriting was conditional, on the date when it became unconditional);

(iv) making such adjustments as may be appropriate in respect of any distribution declared, recommended or made by the Company or its subsidiary undertakings (to the extent not attributable directly or indirectly to the Company) out of profits earned up to and including the date of the relevant balance sheet to the extent that such distribution is not provided for in such balance sheet;

(v) making such adjustments as may be appropriate in respect of any variation in the interests of the Company in its subsidiary undertakings (including a variation whereby an undertaking becomes or ceases to be a subsidiary undertaking) since the date of the relevant balance sheet;

(vi) if the calculation is required for the purposes of or in connection with a transaction under or in connection with which any undertaking is to become or cease to be a subsidiary undertaking of the Company, making all such adjustments as would be appropriate if such transaction had been carried into effect; and

(vii) excluding minority interests in subsidiary undertakings to the extent not already excluded.

For the purpose of this definition, the “relevant balance sheet” means, at any time, the latest audited consolidated balance sheet dealing with the state of affairs of the Company and (with or without exceptions) its subsidiary undertakings.

For the purposes of this definition:

(i) capital allotted shall be treated as issued and any capital already called up or payable at any fixed future date shall be treated as already paid up, and

(ii) any company which it is proposed shall become a subsidiary shall be treated as if it had already become a subsidiary.

The expression “shareholders’ meeting” shall include both a General Meeting and a meeting of the holders of any class of shares of the Company. The expression “General Meeting” shall include any general meeting of the Company, including any general meeting held as the Company’s annual general meeting in accordance with Section 336 of the Companies Act 2006 (“Annual General Meeting”).

All such provisions of these Articles as are applicable to paid-up shares shall apply to stock, and the words “share” and “shareholder” shall be construed accordingly.

Except where the context otherwise requires, any reference to issued shares of any class (whether of the Company or of any other company) shall not include any shares of that class held as treasury shares.

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Words denoting the singular shall include the plural and vice versa. Words denoting the masculine shall include the feminine. Words denoting persons shall include bodies corporate and unincorporated associations.

References to any statute or statutory provision shall be construed as relating to any statutory modification or re-enactment thereof for the time being in force (whether coming into force before or after the adoption of these Articles).

Except as provided above any words or expressions defined in the Companies Acts or the Regulations shall (if not inconsistent with the subject or context) bear the same meanings in these Articles.

A Special Resolution shall be effective for any purpose for which an Ordinary Resolution is expressed to be required under any provision of these Articles.

References herein to a share (or to a holding of shares) being in uncertificated form or in certificated form are references, respectively, to that share being an uncertificated unit of a security or a certificated unit of a security for the purposes of the Regulations.

Ordinary and Redeemable Shares

3   Ordinary Shares

.The Ordinary Shares will have attached thereto the rights and privileges and be subject to the limitations and restrictions specified in this Article 3.

3.1   Income

Subject to the rights attached to any other share or class of share, the holders of Ordinary Shares shall be entitled to be paid any profits of the Company available for distribution and determined to be paid by the Directors rateably according to the amounts paid up on such shares.

3.2   Capital

On a return of capital on winding up or otherwise (except on redemption in accordance with the terms of issue of any share, or purchase by the Company of any share or on a capitalisation issue and subject to the rights of any other class of shares that may be issued) after paying such sums as may be due in priority to holders of any other class of shares in the capital of the Company, any further such amount shall be paid to the holders of the Ordinary Shares rateably according to the amounts paid up or credited as paid up in respect of each Ordinary Share.

3.3   Voting at General Meetings

The holders of Ordinary Shares shall be entitled, in respect of their holdings of such shares, to receive notice of General Meetings and to attend, speak and vote at such meetings in accordance with these Articles.

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4   Redeemable Shares

The Company may issue shares which are to be redeemed, or liable to be redeemed at the option of the Company or the holder, and the directors may determine the terms, conditions and manner of redemption of any such shares.

Variation of Rights

5   Manner of variation of rights

5.1 Whenever the share capital of the Company is divided into different classes of shares, the special rights attached to any class may, subject to the provisions of the Statutes and Article 4.6.2, be varied or abrogated either with the consent in writing of the holders of three-quarters in nominal value of the issued shares of the class or with the sanction of a Special Resolution passed at a separate General Meeting of the holders of the shares of the class (but not otherwise) and may be so varied or abrogated either whilst the Company is a going concern or during or in contemplation of a winding up.

5.2 To every such separate General Meeting all the provisions of these Articles relating to General Meetings of the Company and to the proceedings thereat shall mutatis mutandis apply, except that the necessary quorum shall be two persons at least holding or representing by proxy at least one-third in nominal value of the issued shares of the class (but so that at any adjourned meeting any holder of shares of the class present in person or by proxy shall be a quorum) and that any holder of shares of the class present in person or by proxy may demand a poll and that every such holder shall on a poll have one vote for every share of the class held by him but not otherwise.

5.3 The foregoing provisions of this Article shall apply to the variation or abrogation of the special rights attached to some only of the shares of any class as if each group of shares of the class differently treated formed a separate class the special rights whereof are to be varied.

6   Matters not constituting variation of rights

The special rights attached to any class of shares having preferential rights shall not unless otherwise expressly provided by the terms of issue thereof be deemed to be varied by the creation or issue of further shares ranking as regards participation in the profits or assets of the Company in some or all respects pari passu therewith but in no respect in priority thereto or by the purchase or redemption by the Company of any of its own shares.

7   Article deleted by Special Resolution passed on 29 May 2009 with effect from 1 October 2009

8   Article deleted by Special Resolution passed on 29 May 2009 with effect from 1 October 2009

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9   Proceeds of consolidation and subdivision

Whenever as a result of a consolidation or subdivision of shares any members would become entitled to fractions of a share, the Directors may, on behalf of those members, sell the shares representing the fractions for the best price reasonably obtainable to any person (including, subject to the provisions of the Statutes, the Company) and distribute the net proceeds of sale in due proportion among those members, and the Directors may authorise some person to transfer the shares to, or in accordance with the directions of, the purchaser. The transferee shall not be bound to see to the application of the purchase money nor shall his title to the shares be affected by any irregularity in or invalidity of the proceedings in reference to the sale. So far as the Statutes allow, the Directors may treat shares of a member in certificated form and in uncertificated form as separate holdings in giving effect to subdivisions and/or consolidations and may cause any shares arising on consolidation or subdivision and representing fractional entitlements to be entered in the Register as shares in certificated form where this is desirable to facilitate the sale thereof.

10   Article deleted by Special Resolution passed on 29 May 2009 with effect from 1 October 2009

11   Reduction of capital

11.1 Holders of shares of the Company allotted and issued pursuant to the scheme of arrangement (the “Scheme”) under section 425 of the Companies Act 1985 dated 3 May 2005 between the company formerly known as “InterContinental Hotels Group PLC” (with registered number 4551528) and the holders of its Scheme Shares (as defined in the Scheme) shall be bound by any Special Resolution to reduce or approve the reduction of the capital of the Company in any way duly passed at any Extraordinary General Meeting prior to the Scheme becoming effective.

Shares

12   Shares and special rights

Without prejudice to any special rights previously conferred on the holders of any shares or class of shares for the time being issued, any share in the Company may be issued with such preferred, deferred or other special rights, or subject to such restrictions, whether as regards dividend, return of capital, voting or otherwise, as the Company may from time to time by Ordinary Resolution determine (or, in the absence of any such determination, as the Directors may determine) and subject to the provisions of the Statutes the Company may issue any shares which are, or at the option of the Company or the holder are liable, to be redeemed. All new shares shall be subject to the provisions of the Statutes and of these Articles with reference to allotment, payment of calls, lien, transfer, transmission, forfeiture and otherwise.

13   Directors’ power to allot securities and to sell treasury shares

13.1 Subject to the provisions of the Statutes relating to authority, pre-emption rights and otherwise and of any resolution of the Company in General Meeting passed pursuant thereto, all shares shall be at the disposal of the

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Directors and they may allot (with or without conferring a right of renunciation), grant options over or otherwise dispose of them to such persons, at such times and on such terms as they think proper.

13.2 The Directors shall be generally and unconditionally authorised pursuant to, and in accordance with, Section 80 of the Companies Act 1985 to exercise for each Allotment Period all the powers of the Company to allot relevant securities up to a maximum aggregate nominal amount equal to the Section 80 Amount.

13.3 During each Allotment Period the Directors shall be empowered to allot equity securities wholly for cash pursuant to and within the terms of any authority in Article 13.2 above and to sell treasury shares wholly for cash:

13.3.1 in connection with a rights issue; and

13.3.2 otherwise than in connection with a rights issue, up to an aggregate nominal amount equal to the Section 89 Amount,

as if Section 89(1) of the Companies Act 1985 did not apply to any such allotment or sale.

13.4 By such authority and power the Directors may, during the Allotment Period, make offers or agreements which would or might require securities to be allotted or sold after the expiry of such period.

13.5 For the purposes of this Article 13:

13.5.1 “Allotment Period” means the period ending on the date of the next Annual General Meeting of the Company or on 1 September 2006, whichever is the earlier, or any other period (not exceeding five years on any occasion) for which the authority conferred by this Article 13 is renewed by Resolution of the Company in General Meeting stating the Section 80 Amount for such period;

13.5.2 “rights issue” means an offer of equity securities open for acceptance for a period fixed by the Directors to (i) holders (other than the Company) of Ordinary Shares on the Register on a record date fixed by the Directors in proportion to their respective holdings (for which purpose holdings in certificated and uncertificated form may be treated as separate holdings) and (ii) other persons so entitled by virtue of the rights attaching to any other equity securities held by them, but subject in both cases to such exclusions or other arrangements as the Directors may deem necessary or expedient in relation to fractional entitlements or legal or practical problems under the laws of, or the requirements of any recognised regulatory body or any stock exchange in, any territory;

13.5.3 “Section 80 Amount” shall, without prejudice to any other authority given to the Directors, for the first Allotment Period be £922,013,888 (provided that if the nominal value of the Ordinary Shares (being relevant securities for the purposes of Section 80 of the Companies Act 1985) has been reduced to ten pence by way of a Court approved reduction of capital, then the Section 80 Amount shall be £14,752,222) or any increased amount fixed by Resolution of the Company in General Meeting; for any other Allotment Period the Section 80 Amount shall be stated in the relevant Resolution renewing the authority conferred by Article 13.2 above for such period or any increased amount fixed by Resolution of the Company in General Meeting;

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13.5.4 “Section 89 Amount” shall for the first Allotment Period be £138,302,083 (provided that if the nominal value of the Ordinary Shares (being equity securities for the purposes of Section 89 of the Companies Act 1985) has been reduced to ten pence by way of a Court approved reduction of capital, then the Section 89 Amount shall be £2,212,833) or any increased amount fixed by Special Resolution; for any other Allotment Period the Section 89 Amount shall be that stated in the relevant Special Resolution renewing the power conferred by Article 13.3 above for such period or any increased amount fixed by Special Resolution; and

13.5.5 the nominal amount of any securities shall be taken to be, in the case of rights to subscribe for or to convert any securities into shares of the Company, the nominal amount of such shares which may be allotted pursuant to such rights.

14   Commission on issue of shares

The Company may exercise the powers of paying commissions conferred by the Statutes to the full extent thereby permitted. The Company may also on any issue of shares pay such brokerage as may be lawful.

15   Renunciation of allotment

The Directors may at any time after the allotment of any share but before any person has been entered in the Register as the holder:

15.1 recognise a renunciation thereof by the allottee in favour of some other person and may accord to any allottee of a share a right to effect such renunciation; and/or

15.2 allow the rights represented thereby to be one or more participating securities,

in each case upon and subject to such terms and conditions as the Directors may think fit to impose.

16   Trust etc. interests not recognised

Except as required by law, no person shall be recognised by the Company as holding any share upon any trust, and the Company shall not be bound by or compelled in any way to recognise any equitable, contingent, future or partial interest in any share, any interest in any fractional part of a share or (except only as by these Articles or by law otherwise provided) any other right in respect of any share, except an absolute right to the entirety thereof in the registered holder.

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Evidence of Title to Securities

17 Nothing in these Articles shall require title to any securities of the Company to be evidenced or transferred by a written instrument, the regulations from time to time made under the Statutes so permitting. The Directors shall have power to implement any arrangements which they may think fit for such evidencing and transfer which accord with those regulations.

Share Certificates

18   Issue of share certificate

Every share certificate shall be executed by the Company in such manner as the Directors may decide (which may include use of the Seal or the Securities Seal (or, in the case of shares on a branch register, an official seal for use in the relevant territory) and/or manual or facsimile signatures by one or more Directors) and shall specify the number and class of shares to which it relates and the amount paid up thereon. No certificate shall be issued representing shares of more than one class. No certificate shall normally be issued in respect of shares held by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange.

19   Joint holder

In the case of a share held jointly by several persons in certificated form the Company shall not be bound to issue more than one certificate therefor and delivery of a certificate to one of the joint holders shall be sufficient delivery to all.

20   Timing of issue of share certificate

Any person (except a person to whom the Company is not required by law to issue a certificate) whose name is entered in the Register in respect of any shares in certificated form of any one class upon the issue or transfer to him thereof shall be entitled without payment to a certificate therefor (in the case of issue) within one month (or such longer period as the terms of issue shall provide) after allotment or (in the case of a transfer of fully-paid shares) within 14 days after lodgment of a transfer or (in the case of a transfer of partly-paid shares) within two months after lodgment of a transfer.

21   Balance certificate

Where some only of the shares comprised in a share certificate are transferred, the old certificate shall be cancelled and, to the extent that the balance is to be held in certificated form, a new certificate for the balance of such shares issued in lieu without charge.

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22   Replacement of share certificates

22.1 Any two or more certificates representing shares of any one class held by any member may at his request be cancelled and a single new certificate for such shares issued in lieu without charge.

22.2 If any member shall surrender for cancellation a share certificate representing shares held by him and request the Company to issue in lieu two or more share certificates representing such shares in such proportions as he may specify, the Directors may, if they think fit, comply with such request.

22.3 If a share certificate shall be damaged or defaced or alleged to have been lost, stolen or destroyed, a new certificate representing the same shares may be issued to the holder upon request subject to delivery up of the old certificate or (if alleged to have been lost, stolen or destroyed) compliance with such conditions as to evidence and indemnity and the payment of any exceptional out-of-pocket expenses of the Company in connection with the request as the Directors may think fit.

22.4 In the case of shares held jointly by several persons any such request may be made by any one of the joint holders.

Calls on Shares

23   Power to make calls

The Directors may from time to time make calls upon the members in respect of any moneys unpaid on their shares (whether on account of the nominal value of the shares or, when permitted, by way of premium) but subject always to the terms of allotment of such shares. A call shall be deemed to have been made at the time when the resolution of the Directors authorising the call was passed and may be made payable by instalments.

24   Liability for calls

Each member shall (subject to being given at least 14 days’ notice specifying the time or times and place of payment) pay to the Company at the time or times and place so specified, the amount called on his shares. The joint holders of a share shall be jointly and severally liable to pay all calls in respect thereof. A call may be wholly or partly revoked or postponed as the Directors may determine. The liability of members of the Company is limited to the amount, if any, unpaid on the shares in the Company held by them.

25   Interest on overdue amounts

If a sum called in respect of a share is not paid before or on the day appointed for payment thereof, the person from whom the sum is due shall pay interest on the sum from the day appointed for payment thereof to the time of actual payment at such rate (not exceeding 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company) as the Directors determine but the Directors shall be at liberty in any case or cases to waive payment of such interest wholly or in part.

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26   Other sums due on shares

Any sum (whether on account of the nominal value of the share or by way of premium) which by the terms of allotment of a share becomes payable upon allotment or at any fixed date shall for all the purposes of these Articles be deemed to be a call duly made and payable on the date on which by the terms of allotment the same becomes payable. In case of non-payment all the relevant provisions of these Articles as to payment of interest and expenses, forfeiture or otherwise shall apply as if such sum had become payable by virtue of a call duly made and notified.

27   Power to differentiate between holders

The Directors may on the allotment of shares differentiate between the holders as to the amount of calls to be paid and the times of payment.

28   Payment of calls in advance

The Directors may if they think fit receive from any member willing to advance the same all or any part of the moneys (whether on account of the nominal value of the shares or by way of premium) uncalled and unpaid upon the shares held by him and such payment in advance of calls shall extinguish pro tanto the liability upon the shares in respect of which it is made and upon the money so received (until and to the extent that the same would but for such advance become payable) the Company may pay interest at such rate (not exceeding 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company) as the member paying such sum and the Directors may agree.

Forfeiture and Lien

29   Notice on failure to pay a call

29.1 If a member fails to pay in full any call or instalment of a call on or before the due date for payment thereof, the Directors may at any time thereafter serve a notice on him requiring payment of so much of the call or instalment as is unpaid together with any interest which may have accrued thereon and any expenses incurred by the Company by reason of such non-payment.

29.2 The notice shall name a further day (not being less than seven days from the date of service of the notice) on or before which and the place where the payment required by the notice is to be made, and shall state that in the event of non-payment in accordance therewith the shares on which the call has been made will be liable to be forfeited.

30   Forfeiture for non-compliance

If the requirements of any such notice as aforesaid are not complied with, any share in respect of which such notice has been given may at any time thereafter, before payment of all calls and interest and expenses due in respect thereof has been made, be forfeited by a resolution of the Directors to that effect. Such forfeiture shall include all

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dividends declared in respect of the forfeited share and not actually paid before forfeiture. The Directors may accept a surrender of any share liable to be forfeited hereunder.

31   Disposal of forfeited share

A share so forfeited or surrendered shall become the property of the Company and may be sold, re-allotted or otherwise disposed of either to the person who was before such forfeiture or surrender the holder thereof or entitled thereto or to any other person upon such terms and in such manner as the Directors shall think fit and at any time before a sale, re-allotment or disposal the forfeiture or surrender may be cancelled on such terms as the Directors think fit. The Directors may, if necessary, authorise some person to transfer a forfeited or surrendered share to any such other person as aforesaid.

32   Holder to remain liable despite forfeiture

A person whose shares have been forfeited or surrendered shall cease to be a member in respect of the shares and shall, in the case of shares held in certificated form, surrender to the Company for cancellation the certificate for such shares. Such person shall nevertheless remain liable to pay to the Company all moneys which at the date of forfeiture or surrender were presently payable by him to the Company in respect of the shares with interest thereon at 3 per cent per annum above the base rate for the time being of Barclays Bank PLC on the date on which payments are made to the Company (or such lower rate as the Directors may determine) from the date of forfeiture or surrender until payment. The Directors may at their absolute discretion enforce payment without any allowance for the value of the shares at the time of forfeiture or surrender or for any consideration received on their disposal. They may also waive payment in whole or in part.

33   Lien on partly-paid shares

The Company shall have a first and paramount lien on every share (not being a fully-paid share) for all moneys (whether presently payable or not) called or payable at a fixed time in respect of such share and the Directors may waive any lien which has arisen and may resolve that any share shall for some limited period be exempt wholly or partially from the provisions of this Article.

34   Sale of shares subject to lien

The Company may sell in such manner as the Directors think fit any share on which the Company has a lien, but no sale shall be made unless some sum in respect of which the lien exists is presently payable nor until the expiration of 14 days after a notice in writing demanding payment of the sum presently payable and giving notice of intention to sell the share in default of payment shall have been given to the holder for the time being of the share or the person entitled thereto by reason of his death or bankruptcy or otherwise by operation of law.

35   Proceeds of sale of shares subject to lien

The net proceeds of such sale after payment of the costs of such sale shall be applied in or towards payment or satisfaction of the amount in respect whereof the lien exists so far as the same is then payable and any residue shall,

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upon surrender (in the case of shares held in certificated form) to the Company for cancellation of the certificate for the shares sold and subject to a like lien for sums not presently payable as existed upon the shares prior to the sale, be paid to the person entitled to the shares at the time of the sale. For the purpose of giving effect to any such sale the Directors may authorise some person to transfer the shares sold to, or in accordance with the directions of, the purchaser.

36   Evidence of forfeiture

A statutory declaration that the declarant is a Director or the Secretary and that a share has been duly forfeited or surrendered or sold to satisfy a lien of the Company on a date stated in the declaration shall be conclusive evidence of the facts therein stated as against all persons claiming to be entitled to the share. Such declaration shall (subject to the relevant share transfer being made, if the same be required) constitute a good title to the share. The person to whom the share is sold, re-allotted or disposed of shall not be bound to see to the application of the consideration (if any). The title of such person to the share shall not be affected by any irregularity or invalidity in the proceedings relating to the forfeiture, surrender, sale, re-allotment or disposal of the share.

Transfer of Shares

37   Form of transfer

37.1 Subject to the provisions of Article 17, all transfers of shares which are in certificated form may be effected by transfer in writing in any usual or common form or in any other form acceptable to the Directors and may be under hand only. The instrument of transfer shall be signed by or on behalf of the transferor and (except in the case of fully-paid shares) by or on behalf of the transferee. The transferor shall remain the holder of the shares concerned until the name of the transferee is entered in the Register in respect thereof.

37.2 All transfers of shares which are in uncertificated form may, unless the Regulations otherwise provide, be effected by means of a relevant system.

38   Article deleted by Special Resolution passed on 29 May 2009 with effect from 1 October 2009

39   Right to refuse registration

39.1 The Directors may decline to recognise any instrument of transfer relating to shares in certificated form unless:

39.1.1 the instrument of transfer is in respect of only one class of share;

39.1.2 is lodged (duly stamped if required) at the Transfer Office accompanied by the relevant share certificate(s); and

39.1.3 when lodged it is accompanied by such other evidence as the Directors may reasonably require to show the right of the transferor to make the transfer or, if the instrument of transfer is executed by some other

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person on his behalf, the authority of that person to do so. Provided that, where any such shares are admitted to the official list maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis. In the case of a transfer of shares in certificated form by a recognised clearing house or a nominee of a recognised clearing house or of a recognised investment exchange the lodgment of share certificates will only be necessary if and to the extent that certificates have been issued in respect of the shares in question.

39.2 The Directors may, in the case of shares in certificated form, in their absolute discretion refuse to register any transfer of shares (not being fully-paid shares) provided that, where any such shares are admitted to the official list maintained by the UK Listing Authority, such discretion may not be exercised in such a way as to prevent dealings in the shares of that class from taking place on an open and proper basis.

39.3 The Directors may also refuse to register an allotment or transfer of shares (whether fully-paid or not) in favour of more than four persons jointly.

39.4 If the Directors refuse to register an allotment or transfer of shares they shall as soon as is practicable and in any event within two months after the date on which:

39.4.1 the letter of allotment or instrument of transfer was lodged with the Company (in the case of shares held in certificated form); or

39.4.2 the Operator-instruction was received by the Company (in the case of shares held in uncertificated form),

send to the allottee or transferee notice of the refusal giving reasons for the refusal.

40   Instruments of transfer

All instruments of transfer which are registered may be retained by the Company.

41   No fee on registration

No fee will be charged by the Company in respect of the registration of any transfer or any document relating to or affecting the title to any shares or otherwise for making any entry in the Register affecting the title to any shares.

42   Destruction of documents

42.1 Subject to compliance with the rules (as defined in the Regulations) applicable to shares of the Company in uncertificated form, the Company shall be entitled to destroy:

42.1.1 all instruments of transfer or other documents (whether in hard copy or electronic form) which have been registered or on the basis of which registration was made at any time after the expiration of six years from the date of registration thereof;

42.1.2 all dividend mandates and notifications of change of address at any time after the expiration of two years from the date of recording thereof;

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42.1.3 all share certificates which have been cancelled at any time after the expiration of one year from the date of the cancellation thereof.

42.2 It shall conclusively be presumed in favour of the Company that:

42.2.1 every entry in the Register purporting to have been made on the basis of an instrument of transfer or other document so destroyed or deleted was duly and properly made;

42.2.2 every instrument of transfer so destroyed or deleted was a valid and effective instrument duly and properly registered;

42.2.3 every share certificate so destroyed was a valid and effective certificate duly and properly cancelled; and

42.2.4 every other document hereinbefore mentioned so destroyed or deleted was a valid and effective document in accordance with the recorded particulars thereof in the books or records of the Company.

42.3 For the purposes of this Article:

42.3.1 the foregoing provisions shall apply only to the destruction or deletion of a document in good faith and without notice of any claim (regardless of the parties thereto) to which the document might be relevant;

42.3.2 nothing herein contained shall be construed as imposing upon the Company any liability in respect of the destruction or deletion of any such document earlier than as aforesaid or in any other circumstances which would not attach to the Company in the absence of this Article;

42.3.3 any document referred to above may, subject to the Statutes, be destroyed before the end of the relevant period so long as a copy of such document (whether made electronically, by microfilm, by digital imaging or by any other means) has been made and is retained until the end of the relevant period; and

42.3.4 references herein to the destruction or deletion of any document include references to the disposal thereof in any manner.

43   Further provisions on shares in uncertificated form

43.1 Subject to the Statutes and the rules (as defined in the Regulations), and apart from any class of wholly dematerialised security, the Directors may determine that any class of shares may be held in uncertificated form and that title to such shares may be transferred by means of a relevant system or that shares of any class should cease to be held and transferred as aforesaid.

43.2 The provisions of these Articles shall not apply to shares of any class which are in uncertificated form to the extent that such Articles are inconsistent with:

43.2.1 the holding of shares of that class in uncertificated form;

43.2.2 the transfer of title to shares of that class by means of a relevant system; or

43.2.3 any provision of the Regulations.

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Transmission of Shares

44   Persons entitled on death

In case of the death of a member, the survivors or survivor where the deceased was a joint holder, and the executors or administrators of the deceased where he was a sole or only surviving holder, shall be the only persons recognised by the Company as having any title to his interest in the shares, but nothing in this Article shall release the estate of a deceased member (whether sole or joint) from any liability in respect of any share held by him.

45   Election by persons entitled by transmission

Any person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law may (subject as hereinafter provided) upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share either be registered himself as holder of the share upon giving to the Company notice in writing to that effect or transfer such share to some other person. All the limitations, restrictions and provisions of these Articles relating to the right to transfer and the registration of transfers of shares shall be applicable to any such notice or transfer as aforesaid as if the notice or transfer were a transfer made by the member registered as the holder of any such share.

46   Rights of persons entitled by transmission

Save as otherwise provided by or in accordance with these Articles, a person becoming entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law (upon supplying to the Company such evidence as the Directors may reasonably require to show his title to the share) shall be entitled to the same dividends and other advantages as those to which he would be entitled if he were the registered holder of the share except that he shall not be entitled in respect thereof (except with the authority of the Directors) to exercise any right conferred by membership in relation to shareholders’ meetings until he shall have been registered as a member in respect of the share.

Untraced Shareholders

47   Untraced shareholders

The Company shall be entitled to sell at the best price reasonably obtainable at the time of sale the shares of a member or the shares to which a person is entitled by virtue of transmission on death or bankruptcy or otherwise by operation of law if and provided that:

47.1 during the period of six years prior to the date of the publication of the advertisements referred to in Article 47.2 below (or, if published on different dates, the first thereof) no communication has been received by the Company from the member or the person entitled by transmission and no cheque or warrant sent by the Company through the post in a pre-paid letter addressed to the member or to the person entitled by transmission

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to the shares at his address on the Register or the last known address given by the member or the person entitled by transmission to which cheques and warrants are to be sent has been cashed and at least three dividends in respect of the shares in question have become payable and no dividend in respect of those shares has been claimed;

47.2  the Company shall on expiry of the said period of six years have inserted advertisements in both a leading national daily newspaper and in a newspaper circulating in the area in which the address referred to in Article 47.1 above is located giving notice of its intention to sell the said shares; and

47.3 during the said period of six years and the period of three months following the publication of the said advertisements the Company shall have received no communication from such member or person.

48   Executor and proceeds

To give effect to any such sale the Company may appoint any person to transfer, as transferor, the said shares and such transfer shall be as effective as if it had been carried out by the registered holder of or person entitled by transmission to such shares and the title of the transferee shall not be affected by any irregularity or invalidity in the proceedings relating thereto. The net proceeds of sale shall belong to the Company which shall be obliged to account to the former member or other person previously entitled as aforesaid for an amount equal to such proceeds and shall enter the name of such former member or other person in the books of the Company as a creditor for such amount which shall be a permanent debt of the Company. No trust shall be created in respect of the debt, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit.

General Meetings

49   Annual General Meetings

An Annual General Meeting shall be held in each period of 6 months beginning with the day following the Company’s accounting reference date, at such place, date and time as may be determined by the Directors.

50   Convening of General Meetings

The Directors may whenever they think fit, and shall on requisition in accordance with the Statutes, proceed to convene a General Meeting.

Notice of General Meetings

51   Notice of General Meetings

51.1 An Annual General Meeting shall be called by notice of at least 21 days.

51.2  Any other General Meeting shall be called by notice of at least 14 days.

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51.3 The period of notice shall in either case be exclusive of the day on which it is served or deemed to be served and of the day on which the meeting is to be held.

51.4 Notice shall be given to all members other than such as are not under the provisions of these Articles entitled to receive such notices from the Company. The Company may determine that only those persons entered on the Register at the close of business on a day determined by the Company, such day being no more than 21 days before the day that notice of the meeting is sent, shall be entitled to receive such a notice.

51.5 A General Meeting, notwithstanding that it has been called by a shorter notice than that specified above, shall be deemed to have been duly called if it is so agreed:

51.5.1 in the case of an Annual General Meeting by all the members entitled to attend and vote thereat; and

51.5.2 in the case of any other General Meeting by a majority in number of the members having a right to attend and vote thereat, being a majority together holding not less than 95 per cent in nominal value of the shares giving that right.

52   Contents of notice of General Meetings

52.1 Every notice calling a General Meeting shall specify the place, date and time of the meeting.

52.2 There shall appear with reasonable prominence in every such notice a statement that:

52.2.1 a member is entitled to appoint another person as his proxy to exercise all or any of his rights to attend and to speak and vote; and

52.2.2 that a proxy need not be a member of the Company.

52.3 In the case of an Annual General Meeting, the notice shall also specify the meeting as such.

52.4 The notice shall specify the general nature of the business to be transacted at the meeting and if any resolution is to be proposed as a Special Resolution, the notice shall contain a statement to that effect.

52.5 For the purposes of determining which persons are entitled to attend or vote at a meeting and how many votes such persons may cast, the Company may specify in the notice of the meeting a time, not more than 48 hours before the time fixed for the meeting, by which a person must be entered on the Register in order to have the right to attend or vote at the meeting.

Overflow of General Meetings

53 The Board may, notwithstanding that the notice of any General Meeting may specify the place of the meeting (the “Principal Place”), at which the chairman of the meeting shall preside, make arrangements for simultaneous attendance and participation at other places by members and proxies entitled to attend the General Meeting but unable to do so at the Principal Place.

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54 Such arrangements for simultaneous attendance at the meeting may include arrangements regarding the level of attendance as aforesaid at the other places provided that they shall operate so that any members and proxies excluded from attendance at the Principal Place are able to attend at one or more of the other places. For the purpose of all other provisions of these Articles any such meeting shall be treated as being held and taking place at the Principal Place.

55 The Board may, for the purpose of facilitating the organisation and administration of any General Meeting to which such arrangements apply, from time to time make arrangements, whether involving the issue of tickets (on a basis intended to afford all members and proxies entitled to attend the meeting an equal opportunity of being admitted to the Principal Place) or the imposition of some random means of selection or otherwise as it shall in its absolute discretion consider to be appropriate, and may from time to time vary any such arrangements or make new arrangements in their place and the entitlement of any member or proxy to attend a General Meeting at the Principal Place shall be subject to the arrangements as may be for the time being in force whether stated in the notice of meeting to apply to that meeting or notified to the members concerned subsequent to the provision of the notice of the meeting.

Proceedings at General Meetings

56   Chairman

The Chairman of the Directors, failing whom a Deputy Chairman, failing whom any Director present and willing to act and, if more than one, chosen by the Directors present at the meetings shall preside as chairman at a General Meeting. If no Director is present within five minutes after the time appointed for holding the meeting and willing to act as chairman, the Directors present shall choose one of their number or, if no Director be present or if all the Directors present decline to take the chair, a member may be elected to be the chairman by a resolution of the Company passed at the meeting.

57   Quorum

No business other than the appointment of a chairman shall be transacted at any General Meeting unless a quorum is present at the time when the meeting proceeds to business. Three members present in person or by proxy and entitled to vote shall be a quorum for all purposes.

58   Lack of quorum

If within five minutes from the time appointed for a General Meeting (or such longer interval as the chairman of the meeting may think fit to allow) a quorum is not present, or if during the meeting a quorum ceases to be present, the meeting, if convened on the requisition of members, shall be dissolved. In any other case it shall stand adjourned to such other day and such time and place as may have been specified for the purpose in the notice convening the meeting or (if not so specified) as the chairman of the meeting may determine.

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59   Adjournment

The chairman of any General Meeting at which a quorum is present may with the consent of the meeting (and shall if so directed by the meeting) adjourn the meeting from time to time (or sine die) and from place to place, but no business shall be transacted at any adjourned meeting except business which might lawfully have been transacted at the meeting from which the adjournment took place. Where a meeting is adjourned sine die, the time and place for the adjourned meeting shall be fixed by the Directors. When a meeting is adjourned for 30 days or more or sine die, not less than seven days’ notice of the adjourned meeting shall be given in like manner as in the case of the original meeting.

60   Notice of adjourned meeting

Save as hereinbefore expressly provided, it shall not be necessary to give any notice of an adjournment or of the business to be transacted at an adjourned meeting.

61   Amendments to resolutions

If an amendment shall be proposed to any resolution under consideration but shall in good faith be ruled out of order by the chairman of the meeting the proceedings on the substantive resolution shall not be invalidated by any error in such ruling. In the case of a resolution duly proposed as a Special Resolution, no amendment thereto (other than a mere clerical amendment to correct a patent error) may in any event be considered or voted upon.

62   Polls

At any General Meeting a resolution put to the vote of the meeting shall be decided on a show of hands unless a poll is (before, or on the declaration of the result of, the show of hands) demanded by:

62.1 the chairman of the meeting;

62.2 not less than five members present in person or by proxy and entitled to vote;

62.3 a member or members present in person or by proxy and representing not less than one-tenth of the total voting rights of all the members having the right to vote at the meeting; or

62.4 a member or members present in person or by proxy and holding shares in the Company conferring a right to vote at the meeting being shares on which an aggregate sum has been paid up equal to not less than one-tenth of the total sum paid up on all the shares conferring that right.

63   Demand for poll

A demand for a poll may, before the poll is taken, be withdrawn only with the approval of the chairman of the meeting. A demand so withdrawn shall not be taken to have invalidated the result of a show of hands declared before the demand was made. Unless a poll is taken a declaration by the chairman that a resolution has been carried, or carried unanimously, or by a particular majority, or lost, and an entry to that effect in the minute book, shall be conclusive evidence of that fact without proof of the number or proportion of the votes recorded for or against such resolution. If a poll is demanded, it shall be taken in such manner (including by use of ballot, voting papers, tickets,

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electronic means, or any combination thereof) as the chairman of the meeting may direct, and the result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded. The chairman of the meeting may (and if so directed by the meeting shall) appoint scrutineers (who need not be members) and may adjourn the meeting to some place and time fixed by him for the purpose of declaring the result of the poll. The result of the poll shall be deemed to be the resolution of the meeting at which the poll was demanded.

64   Voting on a poll

On a poll votes may be given either personally or by proxy and a person entitled to more than one vote need not use all his votes or cast all the votes he uses in the same way.

65   Chairman’s casting vote

In the case of an equality of votes, whether on a show of hands or on a poll, the chairman of the meeting at which the show of hands takes place or at which the poll is demanded shall be entitled to a casting vote in addition to any other vote he may have.

66   Timing of poll

A poll demanded on the choice of a chairman or on a question of adjournment shall be taken forthwith. A poll demanded on any other question shall be taken either immediately or at such subsequent time (not being more than 30 days from the date of the meeting) and place as the chairman may direct. No notice need be given of a poll not taken immediately. The demand for a poll shall not prevent the continuance of the meeting for the transaction of any business other than the question on which the poll has been demanded.

Votes of Members

67   Votes attaching to shares

Subject to Articles 52.5 and 71 and to any special rights or restrictions as to voting attached by or in accordance with these Articles to any class of shares:

67.1 on a show of hands every member who is present in person and every proxy present who has been duly appointed by a member entitled to vote on the resolution shall have one vote; and

67.2 on a poll every member who is present in person or by proxy shall have one vote for every share of which he is the holder.

68   Votes of joint holders

In the case of joint holders of a share the vote of the senior who tenders a vote, whether in person or by proxy, shall be accepted to the exclusion of the votes of the other joint holders and for this purpose seniority shall be determined by the order in which the names stand in the Register in respect of the share.

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69   Voting by guardian

Where in England or elsewhere a guardian, receiver or other person (by whatever name called) has been appointed by any Court claiming jurisdiction in that behalf to exercise powers with respect to the property or affairs of any member on the ground (however formulated) of mental disorder, the Directors may in their absolute discretion, upon or subject to production of such evidence of the appointment as the Directors may require, permit such guardian, receiver or other person on behalf of such member to vote in person or by proxy at any shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings.

70   Restrictions on voting if holding unpaid shares

No member shall, unless the Directors otherwise determine, be entitled in respect of any share held by him to vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings if any call or other sum presently payable by him to the Company in respect of that share remains unpaid.

71   Restrictions on voting in particular circumstances

71.1 If any member, or any other person appearing to be interested in shares (within the meaning of Part 22 of the Companies Act 2006) held by such member, has been duly served with a notice under Section 793 of the Companies Act 2006 and is in default for a period of 14 days from the date of service in supplying to the Company the information thereby required, then (unless the Directors otherwise determine) in respect of:

71.1.1 the shares comprising the shareholding account in the Register which comprises or includes the shares in relation to which the default occurred (all or the relevant number as appropriate of such shares being the “default shares”, which expression shall include any further shares which are issued in respect of such shares after the date of the notice under Section 793 of the Companies Act 2006); and

71.1.2 any other shares held by the member,

the member shall (for so long as the default continues) not, nor shall any transferee to whom any of such shares are transferred (other than pursuant to an approved transfer or pursuant to paragraph 71.2.2 below) be entitled to attend or vote either personally or by proxy at a shareholders’ meeting or to exercise any other right conferred by membership in relation to shareholders’ meetings.

71.2 Where the default shares represent at least 0.25 per cent of the issued shares of the class in question, the Directors may in their absolute discretion by notice (a “direction notice”) to such member direct that:

71.2.1 any dividend or part thereof or other money which would otherwise be payable in respect of the default shares shall be retained by the Company without any liability to pay interest thereon when such dividend or other money is finally paid to the member and the member shall not be entitled to elect to receive shares in lieu of dividend; and/or

71.2.2 no transfer of any of the shares held by such member shall be registered unless the transfer is an approved transfer or:

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(i) the member is not himself in default as regards supplying the information required; and

(ii) the transfer is of part only of the member’s holding and, when presented for registration, is accompanied by a certificate by the member in a form satisfactory to the Directors to the effect that after due and careful enquiry the member is satisfied that none of the shares the subject of the transfer are default shares,

provided that, in the case of shares in uncertificated form, the Directors may only exercise their discretion not to register a transfer if permitted to do so by the Regulations.

Any direction notice may treat shares of a member in certificated and uncertificated form as separate holdings and either apply only to the former or to the latter or make different provision for the former and the latter.

Upon the giving of a direction notice its terms shall apply accordingly.

71.3 The Company shall send to each other person appearing to be interested in the shares which are the subject of any direction notice a copy of the notice, but the failure or omission by the Company to do so shall not invalidate such notice.

71.4

71.4.1 Save as herein provided any direction notice shall have effect in accordance with its terms for so long as the default in respect of which the direction notice was issued continues and shall cease to have effect thereafter upon the Directors so determining (such determination to be made within a period of one week of the default being duly remedied, with written notice thereof being given forthwith to the member).

71.4.2 Any direction notice shall cease to have effect in relation to any shares which are transferred by such member by means of an approved transfer or in accordance with paragraph 71.2.2 above.

71.5 For the purposes of this Article:

71.5.1 a person shall be treated as appearing to be interested in any shares if the member holding such shares has been served with a notice under the said Section 793 and either (a) the member has named such person as being so interested or (b) (after taking into account the response of the member to the said notice and any other relevant information) the Company knows or has reasonable cause to believe that the person in question is or may be interested in the shares; and

71.5.2 a transfer of shares is an approved transfer if:

(i) it is a transfer of shares to an offeror by way or in pursuance of acceptance of a takeover offer (as defined in Section 974 of the Companies Act 2006); or

(ii) the Directors are satisfied that the transfer is made pursuant to a bona fide sale of the whole of the beneficial ownership of the shares to a party unconnected with the member or with any person appearing to be interested in such shares including any such sale made through a recognised investment exchange or through a stock exchange outside the United Kingdom on which the Company’s shares are normally traded.

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For the purposes of this sub-paragraph any associate (as that term is defined in Section 435 of the Insolvency Act 1986) shall be included amongst the persons who are connected with the member or any person appearing to be interested in such shares.

71.6 The provisions of this Article are in addition and without prejudice to the provisions of the Companies Acts.

72   Validity and result of vote

72.1 No objection shall be raised as to the qualification of any voter or the admissibility of any vote except at the meeting or adjourned meeting at which the vote is tendered. Every vote not disallowed at such meeting shall be valid for all purposes. Any such objection shall be referred to the chairman of the meeting, whose decision shall be final and conclusive.

72.2 On a vote on a resolution at a meeting on a show of hands, a declaration by the Chairman that the resolution:

72.2.1 has or has not been passed; or

72.2.2 has been passed with a particular majority,

is conclusive evidence of that fact without proof of the number or proportion of the votes recorded in favour of or against the resolution. An entry in respect of such a declaration in the minutes of the meeting recorded in accordance with the Companies Acts is also conclusive evidence of that fact without such proof. This Article does not have effect if a poll is demanded in respect of the resolution (and the demand is not subsequently withdrawn).

Proxies

73   Appointment of proxies

73.1  A member is entitled to appoint a proxy or (subject to Article 73A) proxies to exercise all or any of his rights to attend and to speak and vote at a meeting of the Company.

73.2  A proxy need not be a member of the Company.

73A Multiple proxies

A member may appoint more than one proxy in relation to a meeting provided that each proxy is appointed to exercise the rights attached to a different share or shares held by him.

74   Form of proxy

The appointment of a proxy must be in writing in any usual or common form or in any other form which the Directors may approve and:

74.1 in the case of an individual must either be signed by the appointor or his attorney or authenticated in accordance with Article 154; and

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74.2 in the case of a corporation must be either given under its common seal or be signed on its behalf by an attorney or a duly authorised officer of the corporation or authenticated in accordance with Article 154.

Any signature on or authentication of such appointment need not be witnessed. Where an appointment of a proxy is signed or authenticated in accordance with Article 154 on behalf of the appointor by an attorney, the power of attorney or a copy thereof certified notarially or in some other way approved by the Directors must (failing previous registration with the Company) be submitted to the Company, failing which the appointment may be treated as invalid.

75   Deposit of form of proxy

75.1 The appointment of a proxy (together with any supporting documentation required under Article 74) must be received at the address or one of the addresses (if any) specified for that purpose in, or by way of note to, or in any document accompanying, the notice convening the meeting (or if no address is so specified, at the Transfer Office):

75.1.1 in the case of a meeting or adjourned meeting, not less than 48 hours before the commencement of the meeting or adjourned meeting to which it relates;

75.1.2 in the case of a poll taken following the conclusion of a meeting or adjourned meeting, but not more than 48 hours after the poll was demanded, not less than 48 hours before the commencement of the meeting or adjourned meeting at which the poll was demanded; and

75.1.3 in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll;

and in default shall not be treated as valid.

75.2 The Directors may at their discretion determine that, in calculating the periods mentioned in Article 75.1, no account shall be taken of any part of any day that is not a working day (within the meaning of Section 1173 of the Companies Act 2006).

75.3 Without limiting the foregoing, in relation to any shares in uncertificated form the Directors may permit a proxy to be appointed by electronic means and/or by means of a website in the form of an Uncertificated Proxy Instruction (that is, a properly authenticated dematerialised instruction, and/or other instruction or notification, sent by means of a relevant system to such participant in that system acting on behalf of the Company as the Directors may prescribe, in such form and subject to such terms and conditions as may from time to time be prescribed by the Directors (subject always to the facilities and requirements of the relevant system)); and may permit any supplement to, or amendment or revocation of, any such Uncertificated Proxy Instruction to be made by a further Uncertificated Proxy Instruction. The Directors may in addition prescribe the method of determining the time at which any such instruction or notification is to be treated as received by the Company. The Directors may treat any such instruction or notification purporting or expressed to be sent on behalf of a holder of a share as sufficient evidence of the authority of the person sending the instruction to send it on behalf of that holder.

75.4 The appointment of a proxy shall, unless the contrary is stated thereon, be as valid for any adjournment of a meeting as it is for the meeting to which it relates. An appointment relating to more than one meeting (including any

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adjournment of any such meeting) having once been delivered in accordance with this Article 75 for the purposes of any such meeting does not need to be delivered again for the purposes of any subsequent meeting to which it relates.

76 Differing proxy appointments

When two or more valid but differing proxy appointments are delivered in respect of the same share for use at the same meeting, the one which is last delivered (regardless of its date or the date of its execution (if relevant)) shall be treated as replacing and revoking the others as regards that share and if the Company is unable to determine which was last delivered none of them shall be treated as valid in respect of that share.

77   Rights of proxy

77.1 A proxy shall have the right to exercise all or any of the rights of his appointor, or (where more than one proxy is appointed) all or any of the rights attached to the shares in respect of which he is appointed the proxy to attend, and to speak and vote, at a meeting of the Company.

77.2 Unless his appointment provides otherwise, a proxy may vote or abstain at his discretion on any matter coming before the meeting on which proxies are entitled to vote.

78   Termination of proxy’s authority

78.1 Neither the death or insanity of a member who has appointed a proxy, nor the revocation or termination by a member of the appointment of a proxy (or of the authority under which the appointment was made), shall invalidate the proxy or the exercise of any of the rights of the proxy thereunder, unless notice of such death, insanity, revocation or termination shall have been received by the Company in accordance with Article 78.2.

78.2 Any such notice of death, insanity, revocation or termination must be received at the address or one of the addresses (if any) specified for receipt of proxies in, or by way of note to, or in any document accompanying, the notice convening the meeting to which the appointment of the proxy relates (or if no address is so specified, at the Transfer Office):

78.2.1 in the case of a meeting or adjourned meeting, not less than 24 hours before the commencement of the meeting or adjourned meeting to which the proxy appointment relates;

78.2.2 in the case of a poll taken following the conclusion of a meeting or adjourned meeting, but not more than 48 hours after it was demanded, not less than 24 hours before the commencement of the meeting or adjourned meeting at which the poll was demanded; or

78.2.3 in the case of a poll taken more than 48 hours after it was demanded, not less than 24 hours before the time appointed for the taking of the poll.

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Corporations Acting by Representatives

79 Subject to the Statutes, any corporation which is a member of the Company may by resolution of its directors or other governing body authorise a person or persons to act as its representative or representatives at any shareholders’ meeting.

Directors

80   Number of Directors

Subject as hereinafter provided the Directors shall not be less than five nor more than 18 in number. The Company may by Ordinary Resolution from time to time vary the minimum number and/or maximum number of Directors.

81   Share qualification

A Director shall not be required to hold any shares of the Company by way of qualification. A Director who is not a member of the Company shall nevertheless be entitled to receive notice of, attend and speak at shareholders’ meetings.

82   Directors’ fees

Each of the Directors, other than those who hold executive office or are employees of the Company or any subsidiary, shall be paid a fee (which shall accrue from day to day) at such rate as may from time to time be determined by the Directors, provided that the aggregate of all such fees shall not in respect of any year exceed £1,000,000 or such other sum as shall be determined by Ordinary Resolution of the Company.

83   Other remuneration of Directors

Any Director who holds any executive office (including for this purpose the office of Chairman, Deputy Chairman or Vice Chairman whether or not such office is held in an executive capacity), or who serves on any committee of the Directors, or who otherwise performs services which in the opinion of the Directors are outside the scope of the ordinary duties of a Director, may be paid such extra remuneration by way of salary, commission or otherwise or may receive such other benefits as the Directors may determine.

84   Directors’ expenses

The Directors may repay to any Director all such reasonable expenses as he may incur in attending and returning from meetings of the Directors or of any committee of the Directors or shareholders’ meetings or otherwise in connection with the business of the Company.

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85   Directors’ pensions and other benefits

The Directors shall have power to pay and agree to pay gratuities, pensions or other retirement, superannuation, death or disability benefits to (or to any person in respect of) any Director or ex-Director of the Company or any of its subsidiaries and for the purpose of providing any such gratuities, pensions or other benefits to contribute to any scheme or fund or to pay premiums.

86   Article deleted by Special Resolution passed on 30 May 2007 with effect from 1 October 2008

87   Appointment of executive Directors

87.1 The Directors may from time to time appoint one or more of their body to be the holder of any executive office (including, where considered appropriate, the office of Chairman, Deputy Chairman, Vice Chairman or Group Chief Executive) on such terms and for such period as they may (subject to the provisions of the Statutes) determine and, without prejudice to the terms of any contract entered into in any particular case, may at any time revoke or vary the terms of any such appointment.

87.2 The appointment of any Director to the office of Chairman, Deputy Chairman, Vice Chairman or Group Chief Executive or Managing or Joint Managing or Deputy or Assistant Managing Director shall automatically determine if he ceases to be a Director but without prejudice to any claim for damages for breach of any contract of service between him and the Company.

87.3 The appointment of any Director to any other executive office shall not automatically determine if he ceases from any cause to be a Director, unless the contract or resolution under which he holds office shall expressly state otherwise, in which event such determination shall be without prejudice to any claim for damages for breach of any contract of service between him and the Company.

88   Powers of executive Directors

The Directors may entrust to and confer upon any Director holding any executive office any of the powers exercisable by them as Directors upon such terms and conditions and with such restrictions as they think fit, and either collaterally with or to the exclusion of their own powers, and may from time to time revoke, withdraw, alter or vary all or any of such powers.

Appointment and Retirement of Directors

89   Election or appointment of additional director

The Company may by Ordinary Resolution elect any person to be a Director either to fill a casual vacancy or as an additional Director. Without prejudice thereto the Directors shall have power at any time so to do, but so that the total number of Directors shall not thereby exceed the maximum number (if any) fixed by or in accordance with

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these Articles. Any person so appointed by the Directors shall retire at the next Annual General Meeting and shall then be eligible for election.

90   Vacation of office

The office of a Director shall be vacated in any of the following events, namely:

90.1 if he shall become prohibited by law from acting as a Director;

90.2 if he shall resign by writing under his hand left at the Office or if he shall in writing offer to resign and the Directors shall resolve to accept such offer;

90.3 if he shall have a bankruptcy order made against him or shall compound with his creditors generally or shall apply to the Court for an interim order under Section 253 of the Insolvency Act 1986 in connection with a voluntary arrangement under that act;

90.4  if in England or elsewhere an order shall be made by any Court claiming jurisdiction in that behalf on the ground (however formulated) of mental disorder for his detention or for the appointment of a guardian or for the appointment of a receiver or other person (by whatever name called) to exercise powers with respect to his property or affairs;

90.5 if he shall be absent from meetings of the Directors for six months without leave and the Directors shall resolve that his office be vacated; or

90.6 if a notice in writing is served upon him, signed by at least 75 per cent of his co-Directors for the time being, to the effect that his office as Director shall on receipt (or deemed receipt) of such notice ipso facto be vacated, but so that if he holds an appointment to an executive office which thereby automatically determines such removal shall be deemed an act of the Company and shall have effect without prejudice to any claim for damages for breach of any contract of service between him and the Company.

91   Retirement by rotation at Annual General Meetings

91.1 Each Director shall retire at the Annual General Meeting held in the third calendar year following the year in which he was elected or last re-elected but, unless he falls within Article 91.2 below, he shall be eligible for re-election.

91.2 A Director shall also retire at any Annual General Meeting if he has agreed to do so (whether in accordance with the terms of his appointment or otherwise) and, unless the Directors have agreed otherwise, he shall not be eligible for re-election.

92   Re-election of retiring Director

The Company at the meeting at which a Director retires under any provision of these Articles may by Ordinary Resolution fill the office being vacated by electing thereto the retiring Director (if eligible for re-election) or some other person eligible for election. In the absence of such a resolution the retiring Director shall nevertheless be deemed to have been re-elected except in any of the following cases:

92.1  where at such meeting it is expressly resolved not to fill such office or a resolution for the re-election of such Director is put to the meeting and lost;

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92.2 where such Director is ineligible for re-election or has given notice in writing to the Company that he is unwilling to be re-elected; or

92.3 where a resolution to elect such Director is void by reason of contravention of the next following Article.

The retirement shall not have effect until the conclusion of the meeting except where a resolution is passed to elect some other person in the place of the retiring Director or a resolution for his re-election is put to the meeting and lost and accordingly a retiring Director who is re-elected or deemed to have been re-elected will continue in office without a break.

93   Election of two or more Directors

A resolution for the election of two or more persons as Directors by a single resolution shall not be moved at any General Meeting unless a resolution that it shall be so moved has first been agreed to by the meeting without any vote being given against it. Any resolution moved in contravention of this provision shall be void.

94   Nomination of Directors for election

No person other than a Director retiring at the meeting shall, unless recommended by the Directors for election, be eligible for election as a Director at any General Meeting unless not less than seven nor more than 42 days (inclusive of the date on which the notice is given) before the date appointed for the meeting there shall have been lodged at the Office:

94.1 notice in writing signed or authenticated in accordance with Article 154 by some member (other than the person to be proposed) duly qualified to attend and vote at the meeting for which such notice is given of his intention to propose such person for election; and

94.2 notice in writing signed or authenticated in accordance with Article 154 by the person to be proposed of his willingness to be elected.

95   Power to remove a Director

The Company may, in accordance with and subject to the provisions of the Statutes, by Ordinary Resolution of which special notice has been given remove any Director from office (notwithstanding any provision of these Articles or of any agreement between the Company and such Director, but without prejudice to any claim he may have for damages for breach of any such agreement) and elect another person in place of a Director so removed from office.

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96   Article deleted by Special Resolution passed on 30 May 2008

97   Article deleted by Special Resolution passed on 1 June 2007

Alternate Directors

98 Any Director may at any time by writing under his hand and deposited at the Office, or delivered at a meeting of the Directors, appoint any person (including another Director) to be his alternate Director and may in like manner at any time terminate such appointment. Such appointment, unless previously approved by the Directors or unless the appointee is another Director, shall have effect only upon and subject to being so approved.

99 The appointment of an alternate Director shall determine on the happening of any event which if he were a Director would cause him to vacate such office or if his appointor ceases to be a Director, otherwise than by retirement at a General Meeting at which he is re-elected.

100 An alternate Director shall be entitled to receive notices of meetings of the Directors and shall be entitled to attend and vote as a Director at any such meeting at which the Director appointing him is not personally present and generally at such meeting to perform all functions of his appointor as a Director and for the purposes of the proceedings at such meeting the provisions of these Articles shall apply as if he (instead of his appointor) were a Director. If he shall be himself a Director or shall attend any such meeting as an alternate for more than one Director, his voting rights shall be cumulative but he shall not be counted more than once for the purposes of the quorum. If his appointor is for the time being absent from the United Kingdom or temporarily unable to act through ill health or disability his signature to any resolution in writing of the Directors shall be as effective as the signature of his appointor. To such extent as the Directors may from time to time determine in relation to any committees of the Directors the foregoing provisions of this Article shall also apply mutatis mutandis to any meeting of any such committee of which his appointor is a member. An alternate Director shall not (save as aforesaid) have power to act as a Director, nor shall he be deemed to be the agent of his appointor.

101 An alternate Director shall be entitled to contract and be interested in and benefit from contracts or arrangements or transactions and to be repaid expenses and to be indemnified to the same extent mutatis mutandis as if he were a Director but he shall not be entitled to receive from the Company in respect of his appointment as alternate Director any remuneration except only such part (if any) of the remuneration otherwise payable to his appointor as such appointor may by notice in writing to the Company from time to time direct.

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Meetings and Proceedings of Directors

102   Governing of meetings of Directors

102.1 Subject to the provisions of these Articles the Directors may meet together for the despatch of business, adjourn and otherwise regulate their proceedings as they think fit. At any time any Director may, and the Secretary at the request of a Director shall, call a meeting of the Directors. Any Director may waive notice of any meeting and any such waiver may be retroactive.

102.2 A notice of a meeting of directors convened in accordance with Article 102.1, or a copy of the text of any written resolution proposed to be passed in accordance with Article 110, (each a “Communication”) shall be provided to each Director personally, by word of mouth, by notice in writing or by electronic means (in the case of a written notice or a notice sent by electronic means, sent to him at his last known address or such other address as may be notified to the Secretary from time to time), and each Director shall, on appointment, be taken to have agreed to the giving of notices in any such manner. Any such Communication may be delivered by hand or sent by courier, fax, electronic mail or pre-paid first class post. If sent by fax or electronic mail such Communication shall conclusively be deemed to have been given or served at the time of despatch. If sent by post or courier such Communication shall conclusively be deemed to have been received 24 hours from the time of posting or despatch, in the case of inland mail and couriers in the United Kingdom, or 48 hours from the time of posting or despatch in the case of international mail and couriers.

102.3 A Communication shall be deemed duly served under Article 102.2 if sent to the address, fax number or electronic mail address last provided by each Director to the Secretary. The non-receipt by any Director of any Communication served in accordance with the provisions of this Article 102 shall not invalidate any meeting of directors, or any written resolution signed in accordance with Article 110, to which the Communication relates if such meeting or resolution is otherwise held or signed in accordance with the provisions of these Articles.

103   Quorum

The quorum necessary for the transaction of business of the Directors may be fixed from time to time by the Directors and unless so fixed at any other number shall be three. A meeting of the Directors at which a quorum is present shall be competent to exercise all powers and discretions for the time being exercisable by the Directors. For the purposes of these Articles any Director who is able (directly or by telephonic or other communication equipment) to speak and be heard by each of the other Directors present or deemed to be present at any meeting of the Directors, shall be deemed to be present in person at such meeting and shall be entitled to vote or be counted in the quorum accordingly. Such meeting shall be deemed to take place where the largest group of those participating is assembled, or, if there is no such group, where the chairman of the meeting then is, and the word “meeting” shall be construed accordingly.

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104   Casting vote

Questions arising at any meeting of the Directors shall be determined by a majority of votes. In the case of an equality of votes, the chairman of the meeting shall have a second or casting vote.

105   Authorisation of Directors’ interests

105.1 For the purposes of Section 175 of the Companies Act 2006, the Directors shall have the power to authorise any matter which would or might otherwise constitute or give rise to a breach of the duty of a Director under that Section to avoid a situation in which he has, or can have, a direct or indirect interest² that conflicts, or possibly may conflict, with the interests of the Company.

105.2 Authorisation of a matter under this Article shall be effective only if:

105.2.1 the matter in question shall have been proposed in writing for consideration by the Directors, or in such other manner as the Directors may determine;

105.2.2 any requirement as to the quorum at the meeting of the Directors at which the matter is considered is met without counting the Director in question and any other interested Director (together the “Interested Directors”); and

105.2.3 the matter was agreed to without the Interested Directors voting or would have been agreed to if the votes of the Interested Directors had not been counted.

105.3 Any authorisation of a matter under this Article shall extend to any actual or potential conflict of interest which may reasonably be expected to arise out of the matter so authorised.

105.4 Any authorisation of a matter under this Article shall be subject to such conditions or limitations as the Directors may determine, whether at the time such authorisation is given or subsequently. and may be terminated by the Directors at any time. A Director shall comply with any obligations imposed on him by the Directors pursuant to any such authorisation.

105.5 A Director shall not, save as otherwise agreed by him, be accountable to the Company for any benefit which he (or a person connected with him) derives from any matter authorised by the Directors under this Article and any contract, transaction or arrangement relating thereto shall not be liable to be avoided on the grounds of any such benefit.

105A   Directors’ Permitted Interests

105A.1 Subject to compliance with Article 105A.2, a Director, notwithstanding his office, may have an interest of the following kind:

105A.1.1 where a Director (or a person connected with him) is a director or other officer of, or employed by, or otherwise interested (including by the holding of shares) in any Relevant Company;

² Neither the duty in S.175(1), nor the authorisation procedure under S.175(5), applies to a conflict of interest arising in relation to a transaction or arrangement with the Company. The disclosure and approval provisions of Articles 105A and 106 are intended to deal with such conflicts.

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105A.1.2 where a Director (or a person connected with him) is a party to, or otherwise interested in, any contract, transaction or arrangement with a Relevant Company, or in which the Company is otherwise interested;

105A.1.3 where the Director (or a person connected with him) acts (or any firm of which he is a partner, employee or member acts) in a professional capacity for any Relevant Company (other than as Auditor) whether or not he or it is remunerated therefore;

105A.1.4 an interest which cannot reasonably be regarded as likely to give rise to a conflict of interest;

105A.1.5 an interest, or a transaction or arrangement giving rise to an interest, of which the Director is not aware; or

105A.1.6 any other interest authorised by Ordinary Resolution.

No authorisation under Article 105 shall be necessary in respect of any such interest.

105A.2 The Director shall declare the nature and extent of any interest permitted under Article 105A.1, and not falling with Article 105A.3, at a meeting of the Directors or in the manner set out in Section 184 or 185 of the Companies Act 2006.

105A.3 No declaration of an interest shall be required by a Director in relation to an interest:

105A.3.1 falling within paragraph 105A.1.4 or 105A.1.5;

105A.3.2 if, or to the extent that, the other Directors are already aware of such interest (and for this purpose the other Directors are treated as aware of anything of which they ought reasonably to be aware); or

105A.3.3 if, or to the extent that, it concerns the terms of his service contract (as defined in Section 227 of the Companies Act 2006) that have been or are to be considered by a meeting of the Directors, or by a committee of Directors appointed for the purpose under these Articles.

105A.4 A Director shall not, save as otherwise agreed by him, be accountable to the Company for any benefit which he (or a person connected with him) derives from any such contract, transaction or arrangement or from any such office or employment or from any interest in any Relevant Company or for such remuneration, each as referred to in Article 105A.1, and no such contract, transaction or arrangement shall be liable to be avoided on the grounds of any such interest or benefit.

105A.5 For the purposes of this Article, “Relevant Company” shall mean:

(a) the Company;

(b) a subsidiary undertaking of the Company;

(c) any holding company of the Company or a subsidiary undertaking of any such holding company;

(d) any body corporate promoted by the Company; or

(e) any body corporate in which the Company is otherwise interested.

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106   Restrictions on quorum and voting

106.1 Save as provided in this Article, and whether or not the interest is one which is authorised pursuant to Article 105 or permitted under Article 105A, a Director shall not be entitled to vote on any resolution in respect of any contract, transaction or arrangement, or any other proposal, in which he (or a person connected with him) is interested. Any vote of a Director in respect of a matter where he is not entitled to vote shall be disregarded.

106.2 A Director shall not be counted in the quorum for a meeting of the Directors in relation to any resolution on which he is not entitled to vote.

106.3 Subject to the provisions of the Statutes, a Director shall (in the absence of some other interest than is set out below) be entitled to vote, and be counted in the quorum, in respect of any resolution concerning any contract, transaction or arrangement, or any other proposal:

106.3.1 in which he has an interest of which he is not aware;

106.3.2 in which he has an interest which cannot reasonably be regarded as likely to give rise to a conflict of interest;

106.3.3 in which he has an interest only by virtue of interests in shares, debentures or other securities of the Company, or by reason of any other interest in or through the Company;

106.3.4 which involves the giving of any security, guarantee or indemnity to the Director or any other person in respect of (i) money lent or obligations incurred by him or by any other person at the request of or for the benefit of the Company or any of its subsidiary undertakings; or (ii) a debt or other obligation of the Company or any of its subsidiary undertakings for which he himself has assumed responsibility in whole or in part under a guarantee or indemnity or by the giving of security;

106.3.5 concerning an offer of shares or debentures or other securities of or by the Company or any of its subsidiary undertakings (i) in which offer he is or may be entitled to participate as a holder of securities; or (ii) in the underwriting or sub-underwriting of which he is to participate;

106.3.6 concerning any other body corporate in which he is interested, directly or indirectly and whether as an officer, shareholder, creditor, employee or otherwise, provided that he (together with persons connected with him) is not the holder of, or beneficially interested in, one per cent or more of the issued equity share capital of any class of such body corporate or of the voting rights available to members of the relevant body corporate;

106.3.7 relating to an arrangement for the benefit of the employees or former employees of the Company or any of its subsidiary undertakings which does not award him any privilege or benefit not generally awarded to the employees or former employees to whom such arrangement relates;

106.3.8 concerning the purchase or maintenance by the Company of insurance for any liability for the benefit of Directors or for the benefit of persons who include Directors;

106.3.9 concerning the giving of indemnities in favour of Directors;

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106.3.10 concerning the funding of expenditure by any Director or Directors on (i) defending criminal, civil or regulatory proceedings or actions against him or them; (ii) in connection with an application to the court for relief; or (iii) defending him or them in any regulatory investigations;

106.3.11 concerning the doing of anything to enable any Director or Directors to avoid incurring expenditure as described in paragraph 106.3.10; and

106.3.12 in respect of which his interest, or the interest of Directors generally, has been authorised by Ordinary Resolution.

106.4 Where proposals are under consideration concerning the appointment (including fixing or varying the terms of appointment) of two or more Directors to offices or employments with the Company (or any body corporate in which the Company is interested), the proposals may be divided and considered in relation to each Director separately. In such case, each of the Directors concerned (if not debarred from voting under paragraph 106.3.6) shall be entitled to vote, and be counted in the quorum, in respect of each resolution except that concerning his own appointment or the fixing or variation of the terms thereof.

106.5 If a question arises at any time as to whether any interest of a Director prevents him from voting, or being counted in the quorum, under this Article, and such question is not resolved by his voluntarily agreeing to abstain from voting, such question shall be referred to the chairman of the meeting and his ruling in relation to any Director other than himself shall be final and conclusive, except in a case where the nature or extent of the interest of such Director has not been fairly disclosed. If any such question shall arise in respect of the chairman of the meeting, the question shall be decided by resolution of the Directors and the resolution shall be conclusive except in a case where the nature or extent of the interest of the chairman of the meeting (so far as it is known to him) has not been fairly disclosed to the Directors.

106A   Confidential information

106A.1 Subject to Article 106A.2, if a Director, otherwise than by virtue of his position as Director, receives information in respect of which he owes a duty of confidentiality to a person other than the Company, he shall not be required:

106A.1.1 to disclose such information to the Company or to the Directors, or to any Director, officer or employee of the Company; or

106A.1.2 otherwise use or apply such confidential information for the purpose of or in connection with the performance of his duties as a Director.

106A.2 Where such duty of confidentiality arises out of a situation in which the Director has, or can have, a direct or indirect interest that conflicts, or possibly may conflict, with the interests of the Company, Article 106A.1 shall apply only if the conflict arises out of a matter which has been authorised under Article 105 above or falls within Article 105A above.

106A.3 This Article is without prejudice to any equitable principle or rule of law which may excuse or release the Director from disclosing information, in circumstances where disclosure may otherwise be required under this Article.

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107   Directors’ interests — general

107.1 For the purposes of Articles 105 to 107:

107.1.1 an interest of a person who is connected with a Director shall be treated as an interest of the Director; and

107.1.2 Section 252 of the Companies Act 2006 shall determine whether a person is connected with a Director.

107.2 Where a Director has an interest which can reasonably be regarded as likely to give rise to a conflict of interest, the Director shall if so requested by the Directors take such additional steps as may be necessary or desirable for the purpose of managing such conflict of interest, including compliance with any procedures laid down from time to time by the Directors for the purpose of managing conflicts of interest generally and/or any specific procedures approved by the Directors for the purpose of or in connection with the situation or matter in question, including without limitation:

107.2.1 absenting himself from any meetings of the Directors at which the relevant situation or matter falls to be considered; and

107.2.2 not reviewing documents or information made available to the Directors generally in relation to such situation or matter and/or arranging for such documents or information to be reviewed by a professional adviser to ascertain the extent to which it might be appropriate for him to have access to such documents or information.

107.3 The Company may by Ordinary Resolution ratify any contract, transaction or arrangement, or other proposal, not properly authorised by reason of a contravention of any provisions of Articles 105 to 107.

108   Number of Directors below minimum

The continuing Directors may act notwithstanding any vacancies, but if and so long as the number of Directors is reduced below the minimum number fixed by or in accordance with these Articles the continuing Directors or Director may act for the purpose of filling such vacancies or of summoning General Meetings, but not for any other purpose. If there be no Directors or Director able or willing to act, then any two members may summon a General Meeting for the purpose of appointing Directors.

109   Chairman

109.1 The Directors may elect from their number a Chairman, a Deputy Chairman and/or a Vice Chairman (or two or more Deputy Chairmen and/or Vice Chairmen) and determine the period for which each is to hold office. If no Chairman, Deputy Chairman or Vice Chairman shall have been appointed or if at any meeting of the Directors no Chairman, Deputy Chairman or Vice Chairman shall be present within five minutes after the time appointed for holding the meeting, the Directors present may choose one of their number to be chairman of the meeting.

109.2 If at any time there is more than one Deputy Chairman and/or Vice Chairman the right in the absence of the Chairman to preside at a meeting of the Directors or of the Company shall be determined as between the Deputy Chairmen and/or Vice Chairmen present (if more than one) by seniority in length of appointment or otherwise as resolved by the Directors.

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110   Directors’ written resolutions

110.1 A Directors’ written resolution is adopted when 70 per cent of the Directors entitled to vote on such resolution have:

110.1.1 signed one or more copies of it, or

110.1.2 otherwise indicated their agreement to it in writing.

110.2 A Directors’ written resolution is not adopted if the number of Directors who have signed it is less than the quorum for Directors’ meetings.

110.3 Once a Directors’ written resolution has been adopted, it must be treated as if it had been a resolution passed at a Directors’ meeting in accordance with the Articles.

111   Appointment and constitution of committees

111.1 The Directors may delegate any of their powers or discretions (including without prejudice to the generality of the foregoing all powers and discretions whose exercise involves or may involve the payment of remuneration to or the conferring of any other benefit on all or any of the Directors) to committees. Any such committee shall, unless the Directors otherwise resolve, have power to sub-delegate to sub-committees any of the powers or discretions delegated to it. Any such committee or sub-committee shall consist of one or more Directors and (if thought fit) one or more other named person or persons to be co-opted as hereinafter provided. Insofar as any such power or discretion is delegated to a committee or sub-committee, any reference in these Articles to the exercise by the Directors of the power or discretion so delegated shall be read and construed as if it were a reference to the exercise hereof by such committee or sub-committee. Any committee or sub-committee so formed shall in the exercise of the powers so delegated conform to any regulations which may from time to time be imposed by the Directors. Any such regulations may provide for or authorise the co-option to the committee or sub-committee of persons other than Directors and may provide for members who are not Directors to have voting rights as members of the committee or sub-committee.

111.2 The meetings and proceedings of any such committee or sub-committee consisting of two or more persons shall be governed mutatis mutandis by the provisions of these Articles regulating the meetings and proceedings of the Directors, so far as the same are not superseded by any regulations made by the Directors under the last preceding Article.

111.3 All acts done by any meeting of Directors, or of any such committee or sub-committee, or by any person acting as a member of any such committee or sub-committee, shall as regards all persons dealing in good faith with the Company, notwithstanding that there was some defect in the appointment of any Director or any of the persons acting as aforesaid, or that any such persons were disqualified or had vacated office, or were not entitled to vote, be as valid as if every such person had been duly appointed and was qualified and had continued to be a Director or member of the committee or sub-committee and had been entitled to vote.

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Borrowing Powers

112   Borrowing powers

Subject as hereinafter provided and to the provisions of the Statutes, the Directors may exercise all the powers of the Company to borrow money, and to mortgage or charge its undertaking, property (present and future) and uncalled capital or any part or parts thereof and to issue debentures and other securities, whether outright or as collateral security for any debt, liability or obligation of the Company or of any third party.

113   Borrowing restrictions

113.1 The Directors shall restrict the borrowings of the Company and exercise all voting and other rights or powers of control exercisable by the Company in relation to its subsidiary companies (if any) so as to secure (so far, as regards subsidiaries, as by such exercise they can secure) that the aggregate amount for the time being remaining outstanding of all moneys borrowed by the Group and for the time being owing to persons outside the Group shall not at any time without the previous sanction of an Ordinary Resolution of the Company exceed an amount equal to three times the share capital and consolidated reserves.

113.2 No person dealing with the Company or any of its subsidiaries shall by reason of the foregoing provision be concerned to see or enquire whether the said limit is observed and no debt incurred or security given in excess of such limit shall be invalid or ineffectual unless the lender or the recipient of the security had, at the time when the debt was incurred or security given, express notice that the said limit had been or would thereby be exceeded.

General Powers of Directors

114   General powers

The business and affairs of the Company shall be managed by the Directors, who may exercise all such powers of the Company as are not by the Statutes or by these Articles required to be exercised by the Company in General Meeting subject nevertheless to any regulations of these Articles, to the provisions of the Statutes and to such regulations, whether or not consistent with these Articles, as may be prescribed by Special Resolution of the Company, but no regulation so made by the Company shall invalidate any prior act of the Directors which would have been valid if such regulation had not been made. The general powers given by this Article shall not be limited or restricted by any special authority or power given to the Directors by any other Article.

114A   Name

The Company may change its name by resolution of the board.

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115   Local boards

The Directors may establish any local boards or agencies for managing any of the affairs of the Company, either in the United Kingdom or elsewhere, and may appoint any persons to be members of such local boards, or any managers or agents, and may fix their remuneration, and may delegate to any local board, manager or agent any of the powers, authorities and discretions vested in the Directors, with power to sub-delegate, and may authorise the members of any local boards, or any of them, to fill any vacancies therein, and to act notwithstanding vacancies, and any such appointment or delegation may be made upon such terms and subject to such conditions as the Directors may think fit, and the Directors may remove any person so appointed, and may annul or vary any such delegation, but no person dealing in good faith and without notice of any such annulment or variation shall be affected thereby.

116   Appointment of attorney

The Directors may from time to time and at any time by power of attorney or otherwise appoint any company, firm or person or any fluctuating body of persons, whether nominated directly or indirectly by the Directors, to be the attorney or attorneys of the Company for such purposes and with such powers, authorities and discretions (not exceeding those vested in or exercisable by the Directors under these Articles) and for such period and subject to such conditions as they may think fit, and any such appointment may contain such provisions for the protection and convenience of persons dealing with any such attorney as the Directors may think fit, and may also authorise any such attorney to sub-delegate all or any of the powers, authorities and discretions vested in him.

117   Register of members in territories

Subject to and to the extent permitted by the Statutes, the Company, or the Directors on behalf of the Company, may cause to be kept in any territory a branch register of members resident in such territory, and the Directors may make and vary such regulations as they may think fit respecting the keeping of any such register.

118   Signature on cheques etc.

All cheques, promissory notes, drafts, bills of exchange, and other negotiable or transferable instruments, and all receipts for moneys paid to the Company, shall be signed, drawn, accepted, endorsed, or otherwise executed, as the case may be, in such manner as the Directors shall from time to time by resolution determine.

118A   Provision for employees on cessation of business

The Directors may decide to make provision for the benefit of persons employed or formerly employed by the Company or any of its subsidiaries (other than a Director or former director or shadow director) in connection with the cessation or transfer to any person of the whole or part of the undertaking of the Company or that subsidiary.

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President

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

Departmental, Divisional or Local Directors

120 The Directors may from time to time appoint any person to be a Departmental, Divisional or Local Director and define, limit or restrict his powers and duties and determine his remuneration and the designation of his office and may at any time remove any such person from such office. A Departmental, Divisional or Local Director (notwithstanding that the designation of his office may include the word “Director”) shall not by virtue of such office be or have power in any respect to act as a Director of the Company nor be entitled to receive notice of or attend or vote at meetings of the Directors nor be deemed to be a Director for any of the purposes of these presents.

Secretary

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

The Seal

122 The Directors shall provide for the safe custody of the Seal and any Securities Seal and neither shall be used without the authority of the Directors or of a committee authorised by the Directors in that behalf. The Securities Seal shall be used only for sealing securities issued by the Company and documents creating or evidencing securities so issued. Every instrument to which the Seal or the Securities Seal shall be affixed (other than a certificate for or evidencing shares, debentures or other securities (including options) issued by the Company) shall be signed autographically by one Director and the Secretary or Deputy or Assistant Secretary or by two Directors, or by a Director or other person authorised for the purpose by the Directors in the presence of the witness.

123 Where the Statutes so permit, any instrument signed by one Director and the Secretary or by two Directors or by a Director in the presence of a witness who attests the signature and expressed to be executed by the Company

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shall have the same effect as if executed under the Seal, provided that no instrument shall be so signed which makes it clear on its face that it is intended to have effect as a deed without the authority of the Directors or of a committee authorised by the Directors in that behalf.

124 The Company may exercise the powers conferred by the Statutes with regard to having an official seal for use abroad and such powers shall be vested in the Directors.

Record Date

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

Authentication of Documents

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

Reserves

127 The Directors may from time to time set aside out of the profits of the Company and carry to reserve such sums as they think proper which, at the discretion of the Directors, shall be applicable for any purpose to which the profits of the Company may properly be applied and pending such application may either be employed in the business of the Company or be invested. The Directors may divide the reserve into such special funds as they think

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fit and may consolidate into one fund any special funds or any parts of any special funds into which the reserve may have been divided. The Directors may also without placing the same to reserve carry forward any profits. In carrying sums to reserve and in applying the same the Directors shall comply with the provisions of the Statutes.

Dividends

128   Final dividends

The Company may by Ordinary Resolution declare dividends but no such dividend shall exceed the amount recommended by the Directors.

129   Fixed and interim dividends

If and so far as in the opinion of the Directors the profits of the Company justify such payments, the Directors may pay the fixed dividends on any class of shares carrying a fixed dividend expressed to be payable on fixed dates on the half-yearly or other dates prescribed for the payment thereof and may also from time to time pay interim dividends on shares of any class of such amounts and on such dates and in respect of such periods as they think fit. Provided the Directors act in good faith they shall not incur any liability to the holders of any shares for any loss they may suffer by the lawful payment, on any other class of shares having rights ranking after or pari passu with those shares, of any such fixed or interim dividend as aforesaid.

130   Ranking of shares for dividends

Unless and to the extent that the rights attached to any shares or the terms of issue thereof otherwise provide, all dividends shall (as regards any shares not fully paid throughout the period in respect of which the dividend is paid) be apportioned and paid pro rata according to the amounts paid on the shares during any portion or portions of the period in respect of which the dividend is paid. For the purposes of this Article no amount paid on a share in advance of calls shall be treated as paid on the share.

131   No dividend except out of profits

No dividend shall be paid otherwise than out of profits available for distribution under the provisions of the Statutes.

132   Treatment of dividend

Subject to the provisions of the Statutes, where any asset, business or property is bought by the Company as from a past date the profits and losses thereof as from such date may at the discretion of the Directors in whole or in part be carried to revenue account and treated for all purposes as profits or losses of the Company. Subject as aforesaid, if any shares or securities are purchased cum dividend or interest, such dividend or interest may at the discretion of the Directors be treated as revenue, and it shall not be obligatory to capitalise the same or any part thereof.

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133   No interest on dividends

No dividend or other moneys payable on or in respect of a share shall bear interest as against the Company.

134   Retention of dividends

134.1 The Directors may retain any dividend or other moneys payable on or in respect of a share on which the Company has a Iien and may apply the same in or towards satisfaction of the moneys payable to the Company in respect of that share.

134.2 The Directors may retain the dividends payable upon shares:

134.2.1 in respect of which any person is entitled to become a member under the provisions as to the transmission of shares contained in these Articles, until such person shall become a member in respect of such shares; or

134.2.2 which any person is under those provisions entitled to transfer, until such person shall transfer the same.

135   Waiver of dividends

The waiver in whole or in part of any dividend on any share by any document (whether or not executed as a Deed) shall be effective only if such waiver is in writing (whether or not executed as a deed), signed or authenticated in accordance with Article 154 by the shareholder (or the person entitled to the share in consequence of the death or bankruptcy of the holder or otherwise by operation of law) and delivered to the Company and if or to the extent that the same is accepted as such or acted upon by the Company.

136   Unclaimed dividends

The payment by the Directors of any unclaimed dividend or other moneys payable on or in respect of a share into a separate account shall not constitute the Company a trustee in respect thereof, no interest shall be payable in respect of the same and the Company shall not be required to account for any money earned on the net proceeds, which may be employed in the business of the Company or invested in such investments (other than shares of the Company or its holding company if any) as the Directors may from time to time think fit. Any dividend unclaimed after a period of six years from the date of declaration of such dividend shall be forfeited and shall revert to the Company.

137   Distribution in specie

The Company may upon the recommendation of the Directors by Ordinary Resolution direct payment of a dividend in whole or in part by the distribution of specific assets (and in particular of paid-up shares or debentures of any other company) and the Directors shall give effect to such resolution. Where any difficulty arises in regard to such distribution, the Directors may settle the same as they think expedient and in particular may issue fractional certificates, may fix the value for distribution of such specific assets or any part thereof, may determine that cash payments shall be made to any members upon the footing of the value so fixed in order to adjust the rights of members and may vest any assets in trustees.

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138   Manner of payment of dividends

138.1 Any dividend or other moneys payable on or in respect of a share shall be paid to the member or to such other person as the member (or, in the case of joint holders of a share, all of them) may in writing direct. Such dividend or other moneys may be paid (i) by cheque sent by post to the payee or, where there is more than one payee, to any one of them, or (ii) by inter-bank transfer to such account as the payee or payees shall in writing direct, or (iii) (if so authorised by the holder of shares in uncertificated form) using the facilities of a relevant system (subject to the facilities and requirements of the relevant system), or (iv) by such other method of payment as the member (or, in the case of joint holders of a share, all of them) may agree to. Every such payment shall be sent at the risk of the person or persons entitled to the money represented thereby, and payment of a cheque by the banker upon whom it is drawn, and any transfer or payment within (ii), (iii) or (iv) above, shall be a good discharge to the Company.

138.2 Subject to the provisions of these Articles and to the rights attaching to any shares, any dividend or other moneys payable on or in respect of a share may be paid in such currency as the Directors may determine, using such exchange rate for currency conversions as the Directors may select.

138.3 The Company may cease to send any cheque, warrant or order by post for any dividend on any shares which is normally paid in that manner if in respect of at least two consecutive dividends payable on those shares the cheque, warrant or order has been returned undelivered or remains uncashed but, subject to the provisions of these Articles, shall recommence sending cheques, warrants or orders in respect of the dividends payable on those shares if the holder or person entitled by transmission claims the arrears of dividend and does not instruct the Company to pay future dividends in some other way.

139   Joint holders

If two or more persons are registered as joint holders of any share, or are entitled jointly to a share in consequence of the death or bankruptcy of the holder or otherwise by operation of law, any one of them may give effectual receipts for any dividend or other moneys payable or property distributable on or in respect of the share.

140   Record date for dividends

Any resolution for the declaration or payment of a dividend on shares of any class, whether a resolution of the Company in General Meeting or a resolution of the Directors, may specify that the same shall be payable to the persons registered as the holders of such shares at the close of business on a particular date, notwithstanding that it may be a date prior to that on which the resolution is passed, and thereupon the dividend shall be payable to them in accordance with their respective holdings so registered, but without prejudice to the rights inter se in respect of such dividend of transferors and transferees of any such shares.

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Capitalisation of Profits and Shares

141 The Directors may, with the sanction of an Ordinary Resolution of the Company, capitalise any sum standing to the credit of any of the Company’s reserve accounts (including any share premium account, capital redemption reserve or other undistributable reserve) or any sum standing to the credit of profit and loss account by appropriating such sum to the holders of Ordinary Shares on the Register at the close of business on the date of the Resolution (or such other date as may be specified therein or determined as therein provided) in proportion to their then holdings of Ordinary Shares and applying such sum on their behalf in paying up in full Ordinary Shares (or, subject to any special rights previously conferred on any shares or class of shares for the time being issued,) for allotment and distribution credited as fully paid up to and amongst them as bonus shares in the proportion aforesaid. The Directors may do all acts and things considered necessary or expedient to give effect to any such capitalisation with full power to the Directors to make such provisions as they think fit for any fractional entitlements which would arise on the basis aforesaid (including provisions whereby fractional entitlements are disregarded or the benefit thereof accrues to the Company rather than to the members concerned). The Directors may authorise any person to enter on behalf of all the members interested into an agreement with the Company providing for any such capitalisation and matters incidental thereto and any agreement made under such authority shall be effective and binding on all concerned.

142   Scrip dividends

142.1 Subject as hereinafter provided, the Directors may offer to ordinary shareholders the right to receive, in lieu of dividend (or part thereof), an allotment of new Ordinary Shares credited as fully paid.

142.2 The Directors shall not make such an offer unless so authorised by an Ordinary Resolution passed at any General Meeting, which authority may extend to dividends declared or paid prior to the Annual General Meeting of the Company occurring thereafter, but no further provided that this Article shall, without the need for any further Ordinary Resolution, authorise the Directors to offer rights of election in respect of any dividend declared or proposed after the date of the adoption of these Articles and at or prior to the Annual General Meeting which is held in the fifth year after the Ordinary Resolution is passed.

142.3 The Directors may either offer such rights of election in respect of the next dividend (or part thereof) proposed to be paid; or may offer such rights of election in respect of that dividend and all subsequent dividends, until such time as the election is revoked; or may allow shareholders to make an election in either form.

142.4 The basis of allotment on each occasion shall be determined by the Directors so that, as nearly as may be considered convenient, the value of the Ordinary Shares to be allotted in lieu of any amount of dividend shall equal such amount. For such purpose the value of an Ordinary Share shall be either (i) the average of the closing price of an Ordinary Share on the London Stock Exchange, as derived from the Daily Official List, on each of the first five business days on which the Ordinary Shares are quoted “ex” the relevant dividend; or (ii) established in such other manner as may be determined by the Directors.

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142.5 If the Directors determine to offer such right of election on any occasion they shall give notice in writing to the ordinary shareholders of such right and shall issue forms of election and shall specify the procedures to be followed in order to exercise such right provided that they need not give such notice to a shareholder who has previously made, and has not revoked, an earlier election to receive Ordinary Shares in lieu of all future dividends, but instead shall send him a reminder that he has made such an election, indicating how that election may be revoked in time for the next dividend proposed to be paid.

142.6 On each occasion the dividend (or that part of the dividend in respect of which a right of election has been accorded) shall not be payable on Ordinary Shares in respect whereof the share election has been duly exercised and has not been revoked (the “elected Ordinary Shares”), and in lieu thereof additional shares (but not any fraction of a share) shall be allotted to the holders of the elected Ordinary Shares on the basis of allotment determined as aforesaid. For such purpose the Directors shall capitalise, out of such of the sums standing to the credit of reserves (including any share premium account or capital redemption reserve) or profit and loss account as the Directors may determine, a sum equal to the aggregate nominal amount of the additional Ordinary Shares to be allotted on that occasion on such basis and shall apply the same in paying up in full the appropriate number of Ordinary Shares for allotment and distribution to and amongst the holders of the elected Ordinary Shares on such basis.

142.7 The additional Ordinary Shares so allotted on any occasion shall rank pari passu in all respects with the fully-paid Ordinary Shares then in issue save only as regards participation in the relevant dividend.

142.8 Article 141 shall apply (mutatis mutandis) to any capitalisation made pursuant to this Article.

142.9 No fraction of an Ordinary Share shall be allotted. The Directors may make such provision as they think fit for any fractional entitlements including, without limitation, provision whereby, in whole or in part, the benefit thereof accrues to the Company and/or fractional entitlements are accrued and/or retained and in either case accumulated on behalf of any ordinary shareholder.

142.10 The Directors may on any occasion determine that rights of election shall not be made available to any ordinary shareholders with registered addresses in any territory where in the absence of a registration statement or other special formalities the circulation of an offer of rights of election would or might be unlawful, and in such event the provisions aforesaid shall be read and construed subject to such determination.

142.11 In relation to any particular proposed dividend the Directors may in their absolute discretion decide (i) that shareholders shall not be entitled to make any election in respect thereof and that any election previously made shall not extend to such dividend or (ii) at any time prior to the allotment of the Ordinary Shares which would otherwise be allotted in lieu thereof, that all elections to take shares in lieu of such dividend shall be treated as not applying to that dividend, and if so the dividend shall be paid in cash as if no elections had been made in respect of it.

Minutes

143 The Directors shall cause Minutes to be made in books to be provided for the purpose:

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143.1 of all appointments of officers made by the Directors;

143.2 of the names of the Directors present at each meeting of Directors and of any committee of Directors; and

143.3 of all resolutions and proceedings at all meetings of the Company and of any class of members of the Company and of the Directors and of committees of Directors.

Accounts

144   Accounting records

Accounting records sufficient to show and explain the Company’s transactions and otherwise complying with the Statutes shall be kept at the Office, or at such other place as the Directors think fit, and shall always be open to inspection by the officers of the Company. Subject as aforesaid no member of the Company or other person shall have any right of inspecting any account or book or document of the Company except as conferred by statute or ordered by a Court of competent jurisdiction or authorised by the Directors.

145   Copies of accounts for members

145.1 Subject as provided in Article 145.2, a copy of the Company’s annual accounts and reports which are to be laid before a General Meeting of the Company (including every document required by law to be comprised therein or attached or annexed thereto) shall not less than 21 days before the date of the meeting be sent to every member of, and every holder of debentures of, the Company and to every other person who is entitled to receive notices of General Meetings from the Company under the provisions of the Statutes or of these Articles.

145.2 Article 145.1 shall not require a copy of these documents to be sent to any member to whom a summary financial statement is sent in accordance with the Statutes and provided further that this Article shall not require a copy of these documents to be sent to more than one of joint holders nor to any person of whose postal address the Company is not aware, but any member or holder of debentures to whom a copy of these documents has not been sent shall be entitled to receive a copy free of charge on application at the Office.

Auditors

146   Validity of Auditor’s acts

Subject to the provisions of the Statutes, all acts done by any person acting as an Auditor shall, as regards all persons dealing in good faith with the Company, be valid, notwithstanding that there was some defect in his appointment or that he was at the time of his appointment not qualified for appointment or subsequently became disqualified.

147   Auditor’s rights to attend General Meetings

An Auditor shall be entitled to attend any General Meeting and to receive all notices of and other communications relating to any General Meeting which any member is entitled to receive and to be heard at any

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General Meeting on any part of the business of the meeting which concerns him as Auditor.

Communications with Members

148   Service of notices etc.

148.1 Any notice to be given to or by any person pursuant to these Articles shall be in writing, except that notice calling a meeting of the Directors may be given as provided for in Article 102.

148.2 The Company may, subject to and in accordance with the Companies Acts and these Articles, send or supply all types of notices, documents or information to members by electronic means, including by making such notices, documents or information available on a website.

148.3 The Company Communications Provisions have effect for the purposes of any provision of the Companies Acts or these Articles that authorises or requires notices, documents or information to be sent or supplied by or to the Company.

148.4 Any notice, document or information (including a share certificate) which is sent or supplied by the Company in hard copy form or in electronic form but to be delivered other than by electronic means and/or by means of a website and which is sent by pre-paid post and properly addressed shall be deemed to have been received by the intended recipient at the expiration of 24 hours (or, where second class mail is employed, 48 hours) after the time it was posted, and in proving such receipt it shall be sufficient to show that such notice, document or information was properly addressed, pre-paid and posted.

148.5 Any notice, document or information which is sent or supplied by the Company by electronic means and/or by means of a website shall be deemed to have been received by the intended recipient at 9 a.m. on the day following that on which it was transmitted, and in proving such receipt it shall be sufficient to show that such notice, document or information was properly addressed.

148.6 Any notice, document or information which is sent or supplied by the Company by means of a website shall be deemed to have been received when the material was first made available on the website or, if later, when the recipient received (or is deemed to have received) notice of the fact that the material was available on the website.

148.7 The accidental failure to send, or the non-receipt by any person entitled to, any notice of, or other document or information relating to, any meeting or other proceeding shall not invalidate the relevant meeting or proceeding.

148.8 The provisions of this Article shall have effect in place of the Company Communications Provisions relating to deemed delivery of notices, documents or information.

149   Joint holders

149.1 Anything which needs to be agreed or specified by the joint holders of a share shall for all purposes be taken to be agreed or specified by all the joint holders where it has been agreed or specified by the joint holder whose name stands first in the Register in respect of the share.

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149.2 Any notice, document or information which is authorised or required to be sent or supplied to joint holders of a share may be sent or supplied to the joint holder whose name stands first in the Register in respect of the share, to the exclusion of the other joint holders.

149.3 The provisions of this Article shall have effect in place of the Company Communications Provisions regarding joint holders of shares.

150   Deceased and bankrupt members

150.1 A person who claims to be entitled to a share in consequence of the death or bankruptcy of a member or otherwise by operation of law shall supply to the Company:

150.1.1 such evidence as the Directors may reasonably require to show his title to the share; and

150.1.2 an address to which notices may be sent or supplied to such person,

whereupon he shall be entitled to have sent or supplied to him at such address any notice, document or information to which the said member would have been entitled, and in so sending or supplying the relevant notice, document or information such notice, document or information shall for all purposes be deemed as sufficiently sent or supplied to all persons interested (whether jointly with or as claiming through or under him) in the share.

150.2 Save as provided by Article 150.1, any notice, document or information sent or supplied to the address of any member pursuant to these Articles shall, notwithstanding that such member be then dead or bankrupt or in liquidation, and whether or not the Company has notice of his death or bankruptcy or liquidation, be deemed to have been duly sent or supplied in respect of any share registered in the name of such member as sole or first-named joint holder.

150.3 The provisions of this Article shall have effect in place of the Company Communications Provisions regarding the death or bankruptcy or a holder of shares in the Company.

151   Overseas members

Subject to the Statutes, the Company shall not be required to send notices, documents or information to a member who (having no registered address within the United Kingdom) has not supplied to the Company an address within the United Kingdom for the service of notices. If on three consecutive occasions notices have been sent through the post to any member at his registered address or his address for the service of notices but have been returned undelivered, such member shall not thereafter be entitled to receive notices from the Company until he shall have communicated with the Company and supplied in writing to the Transfer Office a new registered address within the United Kingdom for the service of notices.

152   Suspension of postal services

If at any time by reason of the suspension or curtailment of postal services within the United Kingdom the Company is unable to give notice by post in hard copy form of a shareholders’ meeting, such notice shall be deemed to have been given to all members entitled to receive such notice in hard copy form if such notice is advertised on the

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same date in at least two national daily newspapers with appropriate circulation and such notice shall be deemed to have been given on the day when the advertisement appears (or first appears). In any such case, the Company shall (i) make such notice available on its website from the date of such advertisement until the conclusion of the meeting or any adjournment thereof and (ii) send confirmatory copies of the notice by post to such members if at least seven days prior to the meeting the posting of notices again becomes practicable.

153   Statutory provisions as to notices

Nothing in any of Articles 148-155 inclusive shall affect any provision of the Statutes that requires or permits any particular notice, document or information be sent or supplied in any particular manner.

154   Signature or authentication of documents sent by electronic means

Where these Articles require a notice or other document to be signed or authenticated by a member or other person then any notice or other document sent or supplied in electronic form is sufficiently authenticated in any manner authorised by the Company Communications Provisions or in such other manner approved by the Directors. The Directors may designate mechanisms for validating any such notice or other document, and any such notice or other document not so validated by use of such mechanisms shall be deemed not to have been received by the Company.

155   Article deleted by Special Resolution passed on 1 June 2007

Winding up

156   Directors’ powers to petition

The Directors shall have power in the name and on behalf of the Company to present a petition to the Court for the Company to be wound up.

157   Distribution of assets in specie

If the Company shall be wound up (whether the liquidation is voluntary, under supervision, or by the Court) the Liquidator may, with the authority of a Special Resolution, divide among the members in specie or kind the whole or any part of the assets of the Company and whether or not the assets shall consist of property of one kind or shall consist of properties of different kinds, and may for such purpose set such value as he deems fair upon any one or more class or classes of property and may determine how such division shall be carried out as between the members or different classes of members. The Liquidator may, with the like authority, vest any part of the assets in trustees upon such trusts for the benefit of members as the Liquidator with the like authority shall think fit, and the liquidation of the Company may be closed and the Company dissolved but so that no contributory shall be compelled to accept any shares or other property in respect of which there is a liability.

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Directors’ liabilities

158   Indemnity

158.1 Subject to the provisions of, and so far as may be permitted by and consistent with, the Statutes and rules made by the UK Listing Authority, every Director and officer of the Company and of each of the Associated Companies of the Company shall be indemnified by the Company out of its own funds against:

158.1.1 any liability incurred by or attaching to him in connection with any negligence, default, breach of duty or breach of trust by him in relation to the Company or any Associated Company of the Company in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers other than:

(i) any liability to the Company or any Associated Company; and

(ii) any liability of the kind referred to in Section 234(3) of the Companies Act 2006; and

158.1.2 any other liability incurred by or attaching to him in the actual or purported execution and/or discharge of his duties and/or the exercise or purported exercise of his powers and/or otherwise in relation to or in connection with his duties, powers or office.

Such indemnity shall extend to liabilities arising after a person ceases to be a Director or an officer of the Company in respect of acts or omissions while he was a Director or an officer if such acts or omissions would have been indemnified had the relevant person remained a Director or officer, as the case may be.

158.2 Subject to the Companies Acts and rules made by the UK Listing Authority the Company may indemnify a Director of the Company and any Associated Company of the Company if it is the trustee of an occupational pension scheme (within the meaning of Section 235(6) of the Companies Act 2006).

158.3 Where a Director or officer is indemnified against any liability in accordance with this Article 158, such indemnity shall extend to all costs, charges, losses, expenses and liabilities incurred by him in relation thereto.

158.4 In this Article 158 “Associated Company” shall have the meaning given thereto by Section 256 of the Companies Act 2006.

158A   Insurance

158A.1 Without prejudice to Article 158 above, the Directors shall have power to purchase and maintain insurance for or for the benefit of:

158A.1.1 any person who is or was at any time a Director or officer of any Relevant Company (as defined in Article 158A.2 below); or

158A.1.2 any person who is or was at any time a trustee of any pension fund or employees’ share scheme in which employees of any Relevant Company are interested,

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including (without prejudice to the generality of the foregoing) insurance against any liability incurred by or attaching to him in respect of any act or omission in the actual or purported execution and/or discharge of his duties and/or in the exercise or purported exercise of his powers and/or otherwise in relation to his duties, powers or offices in relation to any Relevant Company, or any such pension fund or employees’ share scheme (and all costs, charges, losses, expenses and liabilities incurred by him in relation thereto).

158A.2 For the purpose of Article 158A.1 above, “Relevant Company” shall mean:

158A.2.1 the Company;

158A.2.2 any holding company of the Company;

158A.2.3 any other body, whether or not incorporated, in which the Company or such holding company or any of the predecessors of the Company or of such holding company has or had any interest whether direct or indirect or which is in any way allied to or associated with the Company;

158A.2.4 any subsidiary undertaking of the Company or of such other body.

158B   Defence expenditure

158B.1 Subject to the provisions of and so far as may be permitted by the Statutes and rules made by the UK Listing Authority, the Company:

158B.1.1 may provide any current or former Director or officer of the Company or any Associated Company of the Company with funds to meet expenditure incurred or to be incurred by him in:

(i) defending any criminal or civil proceedings in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the Company or an Associated Company of the Company; or

(ii) in connection with any application for relief under the provisions mentioned in Section 205(5) of the Companies Act 2006; and

158B.1.2 may do anything to enable any such Director or officer to avoid incurring such expenditure.

158B.2 The terms set out in Section 205(2) of the Companies Act 2006 shall apply to any provision of funds or other things done under Article 158B.1 provided that, for the purpose of this Article 158B.2, references to “director” in Section 205(2) of the Companies Act 2006 shall be deemed to include references to a former Director or a current or former officer of the Company or an Associated Company of the Company.

158B.3 Subject to the provisions of and so far as may be permitted by the Statutes and rules made by the UK Listing Authority, the Company:

(a) may provide a Director or officer of the Company or any Associated Company of the Company with funds to meet expenditure incurred or to be incurred by him in defending himself in an investigation by a regulatory authority or against action proposed to be taken by a regulatory authority in connection with any alleged negligence, default, breach of duty or breach of trust by him in relation to the Company or any Associated Company of the Company; and

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(b) may do anything to enable any such Director or officer to avoid incurring such expenditure.

158B.4 In this Article 158B “Associated Company” shall have the meaning given thereto by Section 256 of the Companies Act 2006.

Overriding Provisions

159   Overriding provisions

159.1 If and for so long as the Company shall hold any class of security of Six Continents Hotels Inc. the provisions of this Article shall apply and to the extent of any inconsistency shall have overriding effect as against all other provisions of these Articles.

159.2 For the purposes of this Article the words and expressions set out below shall bear the meanings set opposite them respectively:

“Disqualified Person” means any holder of any class of shares of the Company whose holding of such shares, either individually or when taken together with the holding of any class of shares of the Company by any other holders, may result, in the opinion of the Directors, in the loss, or the failure to secure the reinstatement, of any licence or franchise from any United States’ governmental agency held by Six Continents Hotels Inc. or any subsidiary thereof to conduct any portion of the business of Six Continents Hotels Inc. or any subsidiary thereof.

“Relevant Shares” means shares of the Company comprised in the interest or holding of a Disqualified Person.

“Required Disposal” means the sale and transfer of Relevant Shares or of interests therein in such manner as may be required to cause such shares to cease to be Relevant Shares.

159.3

159.3.1 The Directors may at any time serve a notice upon any member requiring him to furnish the Directors with information (in the case of (ii) below, to the extent that such paragraph applies to any person other than the member so far as such information lies within the knowledge of such member), supported by a declaration and by such other evidence (if any) in support as the Directors may require, for the purpose of determining:

(i) whether such member is a party to an agreement or arrangement (whether legalIy enforceable or not) whereby any of the shares held by him are to be voted in accordance with some other person’s instructions (whether given by that other person directly or through any other person); or

(ii) whether such member and/or any other person who has an interest in any shares held by such member is a Disqualified Person.

If such information and evidence is not furnished within a reasonable period (not being less than 14 days) from the date of service of such notice or the information and evidence provided is, in the opinion of the Directors, unsatisfactory for the purposes of so determining, the Directors may serve upon such member a further notice calling

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upon him, within 14 days after the service of such further notice, to furnish the Directors with such information and evidence or further information and evidence as shall (in their opinion) enable them so to determine.

159.3.2 Any person holding any share of the Company shall notify the Directors forthwith in writing if he, or to his knowledge any person controlling or beneficially owning or otherwise having an interest in such share, is likely to be or become a Disqualified Person.

159.3.3 The Directors may assume without enquiry that a person is not or will not become a Disqualified Person unless the information obtained by them above or a notification under this Article 159.3 indicates to the contrary or the Directors have reason to believe otherwise; in these circumstances the Directors shall use all reasonable endeavours to discover whether the person concerned is a Disqualified Person.

159.4

159.4.1 If any person becomes or is determined in accordance with paragraph 159.3.3 above to be a Disqualified Person the Directors shall serve a written notice (a “Disposal Notice”) on all those who (to the knowledge of the Directors) have interests in, and, if different, on the holder or holders of, the Relevant Shares. The Disposal Notice shall refer to the voting restrictions as set out in Article 159.6 below and shall call for a Required Disposal to be made and for reasonable evidence that such Required Disposal shall have been effected to be supplied to the Company within 21 days from the date of such notice or such other period as the Directors may consider reasonable and which they may extend. The Directors may withdraw a Disposal Notice (whether before or after the expiration of the period referred to) if it appears to them that there is no Disqualified Person in relation to the shares concerned.

159.4.2 If a Disposal Notice served under paragraph 159.4.1 above is not complied with to the satisfaction of the Directors and has not been withdrawn, the Directors shall, so far as they are able, sell the shares comprised in such Disposal Notice, at the best price reasonably obtainable in all the circumstances and shall give written notice of such disposal to those persons on whom the Disposal Notice was served. Except as hereinafter provided such a sale shall be completed as soon as reasonably practicable after expiry of the Disposal Notice as may in the opinion of the Directors be consistent with obtaining the best price reasonably obtainable and in any event within 30 days of expiry of such notice provided that such a sale shall be postponed during the period when dealings by the Directors in the Company’s shares are not permitted either by law or by Regulations of the London Stock Exchange but any sale postponed as aforesaid shall be completed within 30 days after expiry of the period of such suspension and provided further that neither the Company nor the Director shall be liable to any holder or any person having an interest in any share or other person for failing to obtain the best price so long as the Directors act in good faith within the period specified above.

159.4.3 For the purpose of effecting any Required Disposal, the Directors may authorise in writing an officer or employee of the Company to execute any necessary transfer on behalf of any holder and may issue a new certificate to the purchaser. The net proceeds of such disposal shall be received by the Company, whose receipt shall be a good

57

discharge for the purchase money, and shall be paid (without any interest being payable thereon) to the former holder upon surrender by him of the certificate in respect of the shares sold and formerly held by him.

159.5

159.5.1 The Directors shall not be obliged to serve any notice under the foregoing provisions of this Article upon any person if they do not know his identity or his address and the absence of service of such a notice in such circumstances as aforesaid and any accidental error in, or failure to give any notice to any person upon whom notice is required to be served under the foregoing provisions shall not prevent the implementation of or invalidate any procedure thereunder.

159.5.2 Any notice to be served under this Article upon a person who is not a member shall be deemed validly served if sent through the post to that person at the address, if any, at which the Directors believe him to be resident or carrying on business. Any such notice shall be deemed served on the day following any day on which it was put in the post and, in proving service, it shall be sufficient to prove that the notice was properly addressed, stamped and put in the post.

159.5.3 Any determination of the Directors under the foregoing provision of this Article shall be final and conclusive, but without prejudice to the power of the Directors subsequently to vary or revoke such determination.

159.6

159.6.1 If in accordance with Article 159.3 above the Directors shall have assumed that any person is not a Disqualified Person, the exercise by that person and/or, if shares owned or controlled by such person are held by another person or by other persons, by such other person or persons shall not be challenged or invalidated by any subsequent determination by the Directors that such person is a Disqualified Person.

159.6.2 If any person becomes or is determined by the Directors to be a Disqualified Person the Directors shall serve written notice on such person and, if different, on the holder or holders of the shares owned or controlled by such person to the effect that he has been determined to be a Disqualified Person.

159.6.3 With effect from the expiration of such period as the Directors shall specify in the notice under paragraph 159.6.2 above (not being longer than 30 days from the date of service of such notice) the said person and, if different, the holder or holders of the shares owned or controlled by such person (to the extent that such holder or holders is/are not able to prove to the satisfaction of the Directors that shares registered in his/their name(s) are not owned or controlled by such person) shall not be entitled to receive notice of, or to attend or vote at, any General Meeting of the Company or any meeting of the holders of any class of shares.

159.6.4 Any member who has pursuant to paragraph 159.3.1 above been served with a further notice by the Directors requiring him to furnish the Directors with information and evidence or further information or evidence within 14 days after the service of such further notice shall not, with effect from the expiration of such period and until information or evidence is furnished to the satisfaction of the Directors, be entitled to receive notice of, or to

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attend or vote at, any General Meeting of the Company or meeting of the holders of any class of shares other than in respect of such of the shares held by such member as are shares in respect of which it shall have been established to the satisfaction of the Directors that they are not shares in which a Disqualified Person has an interest or shares in respect of which the Directors may require a disposal pursuant to the provisions of Article 159.4 above.

159.7 No person shall be capable of being appointed or continuing as a Director if, in the opinion of the Directors, his directorship of the Company may result in the loss, or the failure to secure the reinstatement, of any licence or franchise from any United States governmental agency held by Six Continents Hotels Inc. or any subsidiary thereof to conduct any portion of the business of Six Continents Hotels Inc. or any subsidiary thereof.

Index

	Article No.	Page No.
Accounts	144-145	51
Auditors	146-147	51-52
Authentication of Documents	126	45
Borrowing Powers	112-113	42
Capitalisation of Profits and Shares	141-142	49-50
Communications with Members	148-155	52-54
Corporations Acting by Representatives	79	30
Directors	80-88	30-32
Alternate	98-101	34-35
Appointment and Retirement of	89-97	32-34
Departmental, Divisional or Local	120	44
General Powers of	114-118A	42-44
Meetings and Proceedings of	102-111	35-42
Dividends	128-140	46-48
Evidence of Title to Securities	17	12
Forfeiture and Lien	29-36	15-16
General Meetings	49-50	21
Notice of	51-52	21-22
Overflow of	53-55	22
Proceedings at	56-66	23-25
Directors’ liabilities	158-158B	55-57
Minutes	143	50-51
Ordinary and Redeemable Shares	3-4	6-7
Overriding Provisions	159	57-60
Preliminary	1-2	1-6
President	119	44
Proceeds of consolidation and subdivision	9	9
Proxies	73-78	28-30
Record Date	125	45
Reduction of Capital	11	10
Reserves	127	45-46

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	Article No.	Page No.
The Seal	122-124	44-45
Secretary	121	44
Share Certificates	18-22	12-13
Shares	12-16	10-12
Calls on	23-28	13-14
Transfer of	37-43	16-19
Transmission of	44-46	19-20
Untraced Shareholders	47-48	20-21
Variation of Rights	5-6	8
Votes of Members	67-72	25-28
Winding Up	156-157	54

60

EX-4.A.I

Exhibit 4.(a)(i)

TRUST DEED is made on 27 November 2009

Between

(1) INTERCONTINENTAL HOTELS GROUP PLC (the Issuer);

(2) SIX CONTINENTS LIMITED (Six Continents);

(3) INTERCONTINENTAL HOTELS LIMITED (InterContinental, and together with Six Continents, the Guarantors); and

(4) HSBC CORPORATE TRUSTEE COMPANY (UK) LIMITED (the Trustee, which expression includes, where the context admits, all persons for the time being the trustee or trustees of this Trust Deed).

Whereas

(A) The Issuer has established a Euro Medium Term Note Programme pursuant to which the Issuer may issue from time to time Notes as set out herein (the Programme). Notes up to a maximum nominal amount from time to time outstanding of £750,000,000 (subject to increase as provided in the Dealer Agreement (as defined below)) (the Authorised Amount) may be issued pursuant to the said Programme.

(B) The Guarantors have agreed to guarantee Notes issued under the Programme and to enter into certain covenants set out in this Trust Deed.

(C) The Trustee has agreed to act as trustee of this Trust Deed on the following terms and conditions.

NOW THIS TRUST DEED WITNESSES AND IT IS HEREBY DECLARED as follows:

1.  Definitions and Interpretation

1.1  Definitions

In this Trust Deed the following expressions have the following meanings:

Additional Rating Agency means Moody’s and Fitch;

Agency Agreement means, in relation to the Notes of any Series, the agency agreement dated 27 November 2009 (as amended, modified and restated from time to time) between the Issuer, the Guarantors, the Trustee and HSBC Bank plc as Principal Paying Agent appointing the initial Paying Agent and the Calculation Agent in relation to such Series and any other agreement for the time being in force appointing Successor paying agents or a Successor calculation agent in relation to such Series, together with any agreement for the time being in force amending or modifying with the prior written approval of the Trustee any of the aforesaid agreements in relation to such Series;

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Agents means, in relation to the Notes of any Series, the Principal Paying Agent, the other Paying Agents, the Calculation Agent or any of them;

Appointee means any attorney, manager, agent, delegate, nominee, custodian, receiver or other person appointed by the Trustee under this Trust Deed;

Auditors means the auditors for the time being of the Issuer or, as the case may be, a Guarantor and, in the event of any of them being unable or unwilling to carry out any action requested of them pursuant to this Trust Deed, means such other firm of chartered accountants in England as may be nominated in writing by the Trustee for the purpose;

Authorised Signatory means any person who (a) is a Director of the Issuer or, as the case may be, the relevant Guarantor or (b) has been notified to the Trustee by any such Director as being an Authorised Signatory pursuant to sub-clause 8(p) (Authorised Signatories);

Calculation Agent means, in relation to the Notes of any Series, the institution at its Specified Office initially appointed as calculation agent in relation to such Notes pursuant to the Agency Agreement and/or, if applicable, Successor calculation agent in relation to such Notes at its Specified office;

CGN Permanent Global Note means a Permanent Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is not applicable;

CGN Temporary Global Note means a Temporary Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is not applicable;

Change of Control has the meaning given to such term in Condition 2(a);

Clearstream, Luxembourg means Clearstream Banking, société anonyme;

Common Safekeeper means an ICSD in its capacity as common safekeeper or a person nominated by the ICSDs to perform the role of common safekeeper;

Conditions means the terms and conditions to be endorsed on, or incorporated by reference in, the Notes of any Series, in the form set out in Schedule 1 or in such other form, having regard to the terms of the Notes of the relevant Series, as may be agreed between the issuer, the Principal Paying Agent, the Trustee and the relevant Dealer(s) as modified and supplemented by the Final Terms(s) applicable to such Series, as any of the same may from time to time be modified in accordance with this Trust Deed and any reference in this Trust Deed to a particular numbered Condition shall be construed in relation to the Notes of such Series accordingly;

Contractual Currency means, in relation to any payment obligation of any Note, the currency in which that payment obligation is expressed and, in relation to Clause 14.1 (Remuneration), pounds sterling or such other currency as may be agreed between the issuer and the Trustee from time to time;

2

Couponholder means the holder of a Coupon;

Coupons means any bearer interest coupons in or substantially in the form set out in Part E of Schedule 2 appertaining to the Notes of any Series and for the time being outstanding or, as the context may require, a specific number thereof and includes any replacement Coupons issued pursuant to Condition 15 and, where the context so permits, the Talons appertaining to the Notes of such Series;

Dealer Agreement means the agreement between the Issuer and the Dealers named therein concerning the purchase of Notes to be issued pursuant to the Programme as amended from time to time or any restatement thereof for the time being in force;

Dealers means any person appointed as a Dealer by the Dealer Agreement and any other person which the Issuer may appoint as a Dealer and notice of whose appointment has been given to the Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Dealer Agreement but excluding any entity whose appointment has been terminated in accordance with the terms of the Dealer Agreement and notice of whose termination has been given to the Principal Paying Agent and the Trustee by the Issuer in accordance with the provisions of the Dealer Agreement and references to the relevant Dealer(s) mean, in relation to any Note, the Dealer(s) with whom the Issuer has agreed the issue and purchase of such Note;

Director means any Director of the Issuer or, as the case may be, a Guarantor, from time to time;

Drawdown Prospectus means a prospectus specific to a Tranche of Notes which may be constituted either (a) by a single document or (b) by a registration document, a securities note and, if applicable, a summary;

Euroclear means Euroclear Bank SA/NV;

Event of Default means any one of the circumstances described in Condition 13;

Extraordinary Resolution has the meaning set out in Schedule 6;

Final Terms has the meaning ascribed to it in the Dealer Agreement;

Fitch means Fitch Ratings Ltd or any successor;

Fixed Rate Note means a Note on which interest is calculated at a fixed rate payable in arrear on a fixed date or dates in each year and on redemption or on such other dates as may be agreed between the Issuer, the Guarantors and the relevant Dealer(s) (as indicated in the relevant Final Terms);

Floating Rate Note means a Note on which interest is calculated at a floating rate payable at intervals of one, two, three, six or twelve months or at such other intervals as may be agreed between the Issuer, the Guarantors and the relevant Dealer(s) (as indicated in the relevant Final Terms);

3

FSMA means the Financial Services and Markets Act 2000;

Global Note means a CGN Temporary Global Note, a CGN Permanent Global Note, an NGN Temporary Global Note or an NGN Permanent Global Note;

ICSDs means Clearstream, Luxembourg and Euroclear;

Index Linked Interest Notes has the meaning given to such term in the relevant Final Terms;

Issue Date means, in relation to any Note, the date of issue of such Note pursuant to the Dealer Agreement or any other relevant agreement between the Issuer and the relevant Dealer(s);

Interest Commencement Date means, in relation to any interest-bearing Note, the date specified in the relevant Final Terms from which such Note bears interest or, if no such date is specified therein, the Issue Date;

Liabilities or Liability means any loss, damage, cost, charge, claim, demand, expense, judgment, action, proceeding or other liability whatsoever (including, without limitation, in respect of taxes, duties, levies, imposts and other charges) and including any value added tax or similar tax charged or chargeable in respect thereof and legal fees and expenses on a full indemnity basis;

London Stock Exchange means the London Stock Exchange plc;

Material Subsidiary has the meaning set out in Condition 2(a);

Moody’s means Moody’s Investors Service, Inc. or any successor;

NGN Permanent Global Note means a Permanent Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is applicable;

NGN Temporary Global Note means a Temporary Global Note representing Notes for which the relevant Final Terms specify that the New Global Note form is applicable;

Noteholder and (in relation to a Note) holder means the bearer of a Note;

Notes means the bearer notes of each Series constituted in relation to or by this Trust Deed which shall be in or substantially in the form set out in Schedule 2 and, for the time being outstanding or, as the case may be, a specific number thereof and includes any replacement Notes of such Series issued pursuant to Condition 15 and (except for the purposes of Clause 5.1 (Global Notes) and 5.3 (Signature)) each Global Note in respect of such Series for so long as it has not been exchanged in accordance with the terms thereof;

outstanding means, in relation to the Notes of any Series, all the Notes of such Series other than:

(a) those which have been redeemed in accordance with this Trust Deed;

4

(b) those in respect of which the date for redemption in accordance with the provisions of the Conditions has occurred and for which the redemption moneys (including all interest accrued thereon to the date for such redemption) have been duly paid to the Trustee or the Principal Paying Agent in the manner provided for in the Agency Agreement (and, where appropriate, notice to that effect has been given to the Noteholders in accordance with Condition 19) and remain available for payment in accordance with the Conditions;

(c) those which have been purchased and surrendered for cancellation as provided in Condition 10(j) and notice of the cancellation of which has been given to the Trustee;

(d) those which have become void under Condition 14;

(e) those mutilated or defaced Notes which have been surrendered or cancelled and in respect of which replacement Notes have been issued pursuant to Condition 15; or

(f) (for the purpose only of ascertaining the aggregate nominal amount of Notes outstanding and without prejudice to the status for any other purpose of the relevant Notes) those Notes which are alleged to have been lost, stolen or destroyed and in respect of which replacements have been issued pursuant to Condition 15;

provided that for each of the following purposes, namely:

(i) the right to attend and vote at any meeting of the holders of Notes of any Series;

(ii) the determination of how many and which Notes of any Series are for the time being outstanding for the purposes of Clauses 11.1 (Legal Proceedings) and 9.1 (Waiver), Conditions 13 and 17 and Schedule 6;

(iii) any discretion, power or authority, whether contained in this Trust Deed or provided by law, which the Trustee is required to exercise in or by reference to the interests of the holders of the Notes of any Series or any of them; and

(iv) the determination by the Trustee whether any event, circumstance, matter or timing is, in its opinion, materially prejudicial to the interests of the holders of the Notes of any Series;

those Notes (if any) of the relevant Series which are for the time being held by any person (including but not limited to the Issuer, any Guarantor or any Subsidiary) for the benefit of the Issuer, any Guarantor or any Subsidiary shall (unless and until ceasing to be so held) be deemed not to remain outstanding;

Paying Agents means, in relation to the Notes of any Series, the several institutions (including, where the context permits, the Principal Paying Agent) at their respective Specified Offices appointed pursuant to the relative Agency

5

Agreement and/or, if applicable, any additional and/or Successor paying agents in relation to such Series at their respective Specified Offices;

Permanent Global Note means, in relation to any Series, a Global Note to be issued pursuant to Clause 5.1 in the form or substantially in the form set out in Part B of Schedule 2;

Potential Event of Default means an event or circumstance which could, with the giving of notice, lapse of time, the issuing of a certificate and/or fulfilment of any other requirement provided for in Condition 13, become an Event of Default;

Principal Paying Agent means, in relation to the Notes of any Series, the institution at its Specified Office initially appointed as issuing and principal paying agent in relation to such Series pursuant to the relative Agency Agreement or, if applicable, any Successor principal paying agent in relation to such Series at its Specified Office;

Put Option has the meaning given to such term in Condition 10(e);

Rating Agency means S&P or any of its respective successors or any Substitute Rating Agency and, for the purposes of Condition 10(f), includes any Additional Rating Agency;

Receiptholder means the holder of a Receipt;

Receipts means any bearer principal receipts appertaining to the Notes of any Series or, as the context may require, a specific number thereof and includes any replacement Receipts issued pursuant to Condition 15;

Relevant Date has the meaning ascribed to it in Condition 2(a);

Reserved Matter has the meaning set out in paragraph 1 of Schedule 6;

repay includes redeem and vice versa and repaid, repayable, repayment, redeemed, redeemable and redemption shall be construed accordingly;

Series means a Tranche of Notes together with any further Tranche or Tranches of Notes expressed to be consolidated and form a single series with the Notes of the original Tranche and the terms of which are identical (save for the issue Date and/or the Interest Commencement Date but including as to whether or not the Notes are listed);

Specified Office means, in relation to any Agent in respect of any Series, either the office identified with its name in Condition 2(a) of such Series or any other office notified to any relevant parties pursuant to the Agency Agreement;

Subsidiary has the meaning set out in Condition 2(a);

Substitute Rating Agency means any rating agency of international standing substituted for the Rating Agency by the Issuer from time to time with the prior written approval of the Trustee, such approval not to be unreasonably withheld or delayed;

6

Successor means, in relation to the Paying Agents, such other or further person as may from time to time be appointed pursuant to the Agency Agreement as a Paying Agent;

Successor in Business means in respect of a company (the Original Company):

(i) a company or other entity to whom the Original Company validly and effectually, in accordance with all enactments, orders and regulations in force for the time being and from time to time, transfers the whole or substantially the whole of its business, undertaking and assets for the purpose of assuming and conducting the business of the Original Company in its place; or

(ii) any other entity which acquires in any other manner the whole or substantially the whole of the undertaking, property and assets of the Original Company and carries on as a successor to the Original Company the whole or substantially the whole of the business carried on by the Original Company prior thereto;

S&P means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies Inc. or any successor;

Talonholder means the holder of a Talon;

Talons means any bearer talons appertaining to the Notes of any Series or, as the context may require, a specific number thereof and includes any replacement Talons issued pursuant to Condition 15;

Temporary Global Note means, in relation to any Series, a Global Note to be issued pursuant to Clause 5.1 in the form or substantially in the form set out in of Schedule 2;

this Trust Deed means this Trust Deed and the Schedules (as from time to time modified in accordance with the provisions contained herein) and (unless the context requires otherwise) includes any deed or other document executed in accordance with the provisions hereof (as from time to time modified as aforesaid) and expressed to be supplemental hereto;

Tranche means all Notes of the same Series with the same Issue Date and Interest Commencement Date;

Trustee Acts means both the Trustee Act 1925 and the Trustee Act 2000 of England and Wales;

Written Resolution means, in relation to any Series, a resolution in writing signed by or on behalf of the holders of 75 per cent. of the aggregate principal amount of the Notes of such Series for the time being outstanding, whether contained in one document or several documents in like form, each signed by or on behalf of one or more such Noteholders;

7

Zero Coupon Note means a Note on which no interest is payable.

1.2   Principles of interpretation

In this Trust Deed:

(a) Statutory modification:  a provision of any statute shall be deemed also to refer to any statutory modification or re-enactment thereof or any statutory instrument, order or regulation made thereunder or under such modification or re-enactment;

(b) Additional amounts:  principal and/or interest in respect of the Notes of any Series shall be deemed also to include references to any additional amounts, any redemption amounts and any premium which may be payable under the Conditions;

(c) Relevant Currency:  relevant currency shall be construed as a reference to the currency in which payments in respect of the Notes and/or Receipts and/or Coupons of the relevant Series are to be made as indicated in the relevant Final Terms;

(d) Tax:  costs, charges or expenses shall include any value added tax or similar tax charged or chargeable in respect thereof;

(e) Enforcement of rights:  an action, remedy or method of judicial proceedings for the enforcement of rights of creditors shall include, in respect of any jurisdiction other than England, references to such action, remedy or method of judicial proceedings for the enforcement of rights of creditors available or appropriate in such jurisdictions as shall most nearly approximate thereto;

(f) Clauses and Schedules:  a Schedule or a Clause, sub-clause, paragraph or sub-paragraph is, unless otherwise stated, to a schedule hereto or a clause, sub-clause, paragraph or sub-paragraph hereof respectively;

(g) Clearing systems:  Euroclear and/or Clearstream, Luxembourg shall, wherever the context so admits (but not in the case of any Notes in NGN form), be deemed to include references to any additional or alternative clearing system approved by the Issuer and the Trustee;

(h) Trust corporation:  a trust corporation denotes a corporation entitled by rules made under the Public Trustee Act 1906 to act as a custodian trustee or entitled pursuant to any other legislation applicable to a trustee in any jurisdiction other than England to act as trustee and carry on trust business under the laws of the country of its incorporation;

(i) Gender:  words denoting the masculine gender shall include the feminine gender also, words denoting individuals shall include companies, corporations and partnerships, words importing the singular number shall include the plural and, in each case, vice versa;

8

(j) Records:  any reference to the records of an ICSD shall be to the records that each of the ICSDs holds for its customers which reflect the amount of such customers’ interests in the Notes (but excluding any interest in any Notes of one ICSD shown in the records of another ICSD);

(k) Drawdown Prospectus:  each reference to Final Terms shall, in the case of a Series of Notes which is the subject of a Drawdown Prospectus be read and construed as a reference to the final terms of the Notes set out in such Drawdown Prospectus;

(l) Guarantees:  all references in this Trust Deed to guarantees or to an obligation being guaranteed shall be deemed to include respectively references to indemnities or to an indemnity being given in respect thereof; and

(m) Proceedings:  all references in these presents to taking proceedings against the Issuer and/or the Guarantors shall be deemed to include references to proving in the winding up of the Issuer and/or any Guarantor (as the case may be).

1.3  The Conditions

In this Trust Deed, unless the context requires or the same are otherwise defined, words and expressions defined in the Conditions and not otherwise defined herein shall have the same meaning in this Trust Deed.

1.4  Headings

The headings and sub-headings are for ease of reference only and shall not affect the construction of this Trust Deed.

1.5  The Schedules

The schedules are part of this Trust Deed and shall have effect accordingly.

1.6 Written Notices/Approvals

Any reference to a written notice or approval being given by the Trustee shall, for the avoidance of doubt, be deemed to include such notice being given by email.

2.  Amount and Issue of the Notes

2.1  Amount of the Notes

The Notes will be issued in Series in an aggregate nominal amount from time to time outstanding not exceeding the Authorised Amount and, for the purpose of determining such aggregate nominal amount, Clause 14 of the Dealer Agreement shall apply.

2.2  Prior to each Issue Date

By not later than 3.00 p.m. (London time) on the fourth business day in London (which for this purpose shall be a day on which commercial banks are open for business in London) preceding each proposed Issue Date, the Issuer shall:

9

(a) deliver or cause to be delivered to the Trustee a draft of the relevant Final Terms and, if applicable, notify the Trustee of any proposed changes to the draft Final Terms delivered to the Trustee; and

(b) notify the Trustee in writing without delay of the Issue Date and the nominal amount of the Notes of the relevant Tranche.

For the avoidance of doubt, the Trustee shall not be required in any case to approve such Final Terms.

2.3  Constitution of Notes

Upon the issue of the Temporary Global Note, initially representing the Notes of any Tranche, such Notes shall become constituted by this Trust Deed without further formality.

2.4  Further legal opinions

After each anniversary of this Trust Deed and prior to the first issue of any Notes, on each occasion when a legal opinion is delivered to a Dealer pursuant to Clause 5.10 of the Dealer Agreement and on such other occasions as the Trustee so requests, the Issuer will procure, at no cost to the Trustee, that further legal opinions in such form and with such content as the Trustee may require from the legal advisers specified in the Dealer Agreement or in the relevant jurisdiction approved by the Trustee are delivered to the Trustee, provided that the Trustee shall not be required to approve the applicable legal opinions. In each such case, receipt by the Trustee of the relevant opinion shall be a condition precedent to the issue of Notes pursuant to this Trust Deed.

3.  Covenant to Repay

3.1  Covenant to repay

The Issuer covenants with the Trustee that it shall, as and when the Notes of any Series or any of them become due to be redeemed or any principal on the Notes of any Series or any of them becomes due to be repaid in accordance with the Conditions, unconditionally pay or procure to be paid to or to the order of the Trustee in immediately available freely transferable funds in the relevant currency the principal amount of the Notes of such Series or any of them becoming due for payment on that date and shall (subject to the provisions of the Conditions and except in the case of Zero Coupon Notes), until all such payments (both before and after judgment or other order of a court of competent jurisdiction) are duly made, unconditionally pay or procure to be paid to or to the order of the Trustee as aforesaid on the dates provided for in the Conditions interest (which shall accrue from day to day) on the principal amount (or such other amount as may be specified in the Final Terms) of the Notes or any of them of such Series outstanding from time to time as set out in the Conditions (subject to Clause 3.3 (Interest on Floating Rate Notes following Event of Default)) provided that:

10

(a) every payment of principal, interest or other sum due in respect of such Notes or any of them made to the Principal Paying Agent in the manner provided in the Agency Agreement shall satisfy pro tanto, to the extent of such payment, the relevant covenant by the Issuer contained in this Clause except to the extent that there is default in the subsequent payment thereof to the relevant Noteholders, Receiptholders or Couponholders (as the case may be) in accordance with the Conditions;

(b) if any payment of principal or interest in respect of such Notes or any of them is made after the due date, payment shall be deemed not to have been made until either the full amount is paid to the relevant Noteholders, Receiptholders or Couponholders (as the case may be) or, if earlier, the seventh day after notice has been given to the relevant Noteholders in accordance with the Conditions that the full amount has been received by the Principal Paying Agent or the Trustee except, in the case of payment to the Principal Paying Agent, to the extent that there is failure in the subsequent payment to the Noteholders, Receiptholders, or Couponholders (as the case may be) under the Conditions; and

(c) in any case where payment of the whole or any part of the principal amount due in respect of any Note is improperly withheld or refused upon due presentation of the relevant Note or Receipt (as the case may be) interest shall accrue on the whole or such part of such principal amount (except in the case of Zero Coupon Notes, to which the provision of Condition 8 shall apply) from the date of such withholding or refusal until the date either on which such principal amount due is paid to the relevant Noteholders or Receiptholders (as the case may be) or, if earlier, the seventh day after which notice is given to the relevant Noteholders in accordance with the Conditions that the full amount payable in respect of the said principal amount is available for collection by the relevant Noteholders or Receiptholders (as the case may be) provided that on further due presentation of the relevant Note or Receipt (as the case may be) such payment is in fact made.

The Trustee will hold the benefit of this covenant and the other covenants in this Trust Deed on trust for the Noteholders in accordance with their respective interests.

3.2  Following an Event of Default

At any time after any Event of Default or Potential Event of Default shall have occurred or the Notes of all or any Series shall otherwise have become due and repayable or the Trustee shall have received any money which it proposes to pay under Clause 12 to the relevant Noteholders, Receiptholders and/or Couponholders, the Trustee may:

(a) by notice in writing to the Issuer, the Guarantors, the Principal Paying Agent and the other Agents require the Principal Paying Agent and the other Agents or any of them:

(i) to act thereafter, until otherwise instructed by the Trustee, as Agents of the Trustee under the provisions of this Trust Deed on the terms provided in the Agency Agreement (with consequential

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amendments as necessary and save that the Trustee’s liability under any provisions thereof for the indemnification, remuneration and payment of out-of-pocket expenses of the Agents shall be limited to amounts for the time being held by the Trustee on the trusts of this Trust Deed in relation to the Notes on the terms of this Trust Deed and available to the Trustee for such purpose) and thereafter to hold all Notes, Receipts and Coupons and all sums, documents and records held by them in respect of Notes, Receipts and Coupons on behalf of the Trustee; and/or

(ii) to deliver up all Notes, Receipts and Coupons and all sums, documents and records held by them in respect of Notes, Receipts and Coupons to the Trustee or as the Trustee shall direct in such notice provided that such notice shall be deemed not to apply to any document or record which the relevant Agent is obliged not to release by any law or regulation; and

(b) by notice in writing to the Issuer and the Guarantors require each of them to make all subsequent payments in respect of Notes, Receipts and Coupons to or to the order of the Trustee and, with effect from the issue of any such notice until such notice is withdrawn, proviso 3.1(a) to Clause 3.1 (Covenant to repay) and (so far as it concerns payments by the Issuer and the Guarantors) Clause 12.4 (Payments to Noteholders, Receiptholders and Couponholders) shall cease to have effect.

3.3  Interest on Floating Rate Notes and Index Linked Interest Notes following Event of Default

If Floating Rate Notes or Index Linked Interest Notes become immediately due and repayable under Condition 13 the rate and/or amount of interest payable in respect of them will be calculated at the same intervals as if such Notes had not become due and repayable, the first of which will commence on the expiry of the Interest Period (as defined in the Conditions) during which the Notes of the relevant Series become so due and repayable in accordance with Condition 13 (with consequential amendments as necessary) except that the rates of interest need not be published.

3.4  Currency of payments

All payments in respect of, under and in connection with this Trust Deed and the Notes to the relevant Noteholders, Receiptholders and Couponholders shall be made in the relevant currency as required by the Conditions.

3.5  Separate Series

The Notes of each Series shall form a separate Series of Notes and accordingly, unless for any purpose the Trustee in its absolute discretion shall otherwise determine, all the provisions of this Trust Deed shall apply mutatis mutandis separately and independently to the Notes of each Series and in such Clauses and Schedule the expressions “Notes”, “Noteholders”, “Receipts”, “Receiptholders”, “Coupons”, “Couponholders”, “Talons” and “Talonholders” shall be construed accordingly.

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4.  Guarantee

4.1 The Guarantors hereby irrevocably and unconditionally and on a joint and several basis, and notwithstanding the release of any other guarantor or any other person under the terms of any composition or arrangement with any creditors of the Issuer, guarantee to the Trustee:

(a) the due and punctual payment in accordance with the provisions of this Trust Deed of the principal of and premium (if any) and interest on the Notes and of any other amounts payable by the Issuer under this Trust Deed; and

(b) the due and punctual performance and observance by the Issuer of each of the other provisions of this Trust Deed on the Issuer’s part to be performed or observed.

4.2 If the Issuer fails for any reason whatsoever punctually to pay any such principal, premium, interest or other amount, the Guarantors shall cause each and every such payment to be made as if the Guarantors instead of the Issuer were expressed to be the primary obligor under this Trust Deed and not merely as surety (but without affecting the nature of the Issuer’s obligations) to the intent that the holder of the relevant Note, Receipt or Coupon or the Trustee (as the case may be) shall receive the same amounts in respect of principal, premium, interest or such other amount as would have been receivable had such payments been made by the Issuer.

4.3 If any payment received by the Trustee or any Noteholder or Couponholder under the provisions of this Trust Deed shall (whether on the subsequent bankruptcy, insolvency or corporate reorganisation of the Issuer or, without limitation, on any other event) be avoided or set aside for any reason, such payment shall not be considered as discharging or diminishing the liability of the Guarantors and this guarantee shall continue to apply as if such payment had at all times remained owing by the Issuer and the Guarantors shall indemnify the Trustee and the Noteholders and/or Receiptholders and/or Couponholders (as the case may be) in respect thereof PROVIDED THAT the obligations of the Issuer and/or the Guarantors under this sub-clause shall, as regards each payment made to the Trustee or any Noteholder or Couponholder which is avoided or set aside, be contingent upon such payment being reimbursed to the Issuer or other persons entitled through the Issuer.

4.4 Each of the Guarantors hereby agrees that its obligations under this Clause shall be unconditional and that it shall be fully liable irrespective of the validity, regularity, legality or enforceability against the Issuer of, or of any defence or counter-claim whatsoever available to the Issuer in relation to, its obligations under this Trust Deed, whether or not any action has been taken to enforce the same or any judgment obtained against the Issuer, whether or not any of the other provisions of this Trust Deed have been modified, whether or not any time, indulgence, wavier, authorisation or consent has been granted to the Issuer by or on behalf of the Noteholders, Receiptholders or the Couponholders or the Trustee, whether or not any determination has been made by the Trustee pursuant to Clause 9 whether or not there have been any dealings or transactions between the Issuer, any of the Noteholders or Couponholders or the Trustee, whether or not the Issuer has been dissolved, liquidated, merged, consolidated,

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bankrupted or has changed its status, functions, control or ownership, whether or not the Issuer has been prevented from making payment by foreign exchange provisions applicable at its place of registration or incorporation and whether or not any other circumstances have occurred which might otherwise constitute a legal or equitable discharge of or defence to any guarantor. Accordingly, the validity of this guarantee shall not be affected by reason of any invalidity, irregularity, illegality or unenforceability of all or any of the obligations of the Issuer under this Trust Deed and this guarantee shall not be discharged nor shall the liability of a Guarantor under this Trust Deed be affected by any act, thing or omission or means whatever whereby its liability would not have been discharged if it had been the principal debtor.

4.5 Without prejudice to the provisions of Clause 11 the Trustee may determine from time to time whether or not it will enforce this guarantee which it may do without making any demand of or taking any proceedings against the Issuer and may from time to time make any arrangement or compromise with the Guarantors in relation to this guarantee which the Trustee may consider expedient in the interests of the Noteholders.

4.6 The Guarantors waive diligence, presentment, demand of payment, filing of claims with a court in the event of dissolution, liquidation, merger or bankruptcy of the Issuer, any right to require a proceeding first against the Issuer, protest or notice with respect to this Trust Deed or the indebtedness evidenced thereby and all demands whatsoever and covenants that this guarantee shall be a continuing guarantee, shall extend to the ultimate balance of all sums payable and obligations owed by the Issuer under this Trust Deed, shall not be discharged except by complete performance of the obligations in this Trust Deed and is additional to, and not instead of, any security or other guarantee or indemnity at any time existing in favour of any person, whether from the Guarantors or otherwise.

4.7 If any moneys shall become payable by the Guarantors under this guarantee the Guarantors shall not, so long as the same remain unpaid, without the prior written consent of the Trustee:

(a) in respect of any amounts paid by it under these guarantees, exercise any rights of subrogation or contribution or, without limitation, any other right or remedy which may accrue to it in respect of or as a result of any such payment; or

(b) in respect of any other moneys for the time being due to the Guarantors by the Issuer, claim payment thereof or exercise any other right or remedy.

(including in either case claiming the benefit of any security or right of set-off or, on the liquidation of the Issuer, proving in competition with the Trustee). If, notwithstanding the foregoing, upon the bankruptcy, insolvency or liquidation of the Issuer, any payment or distribution of assets of the Issuer of any kind or character, whether in cash, property or securities, shall be received by the Guarantors before payment in full of all amounts payable under this Trust Deed shall have been made to the Noteholders, the Couponholders and the Trustee, such payment or distribution shall be received by the Guarantors on trust to pay the same over immediately to the Trustee for application in or towards the payment of all sums due and unpaid under this Trust Deed in accordance with Clause 7.

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4.8 Until all amounts which may be or become payable by the Issuer under this Trust Deed have been irrevocably paid in full, the Trustee may:

(a) refrain from applying or enforcing any other moneys, security or rights held or received by the Trustee in respect of those amounts, or apply and enforce the same in such manner and order as it sees fit (whether against those amounts or otherwise), and the Guarantors shall not be entitled to the benefit of the same; and

(b) hold in a suspense account any moneys received from the Guarantors or an account of the Guarantors’ liability under this guarantee, without liability to pay interest on those moneys.

5.  The Notes

5.1  Global Notes

(a) The Notes of each Tranche will initially be together represented by a Temporary Global Note. Each Temporary Global Note shall (save as may be specified in the relevant Final Terms) be exchangeable, in accordance with its terms, for interests in a Permanent Global Note or Notes in definitive form together with, where applicable, Receipts and (except in the case of Zero Coupon Notes) Coupons, and where applicable Talons attached.

(b) Each Permanent Global Note shall be exchangeable, in accordance with its terms, for Notes in definitive form.

All Global Notes shall be prepared, completed and delivered to a common depositary (in the case of a CGN) or common safekeeper (in the case of a NGN) for Euroclear and Clearstream, Luxembourg in accordance with the provisions of the Dealer Agreement or to another appropriate depositary in accordance with any other agreement between the Issuer and the relevant Dealer(s) and, in each case, the Agency Agreement.

5.2  Notes in definitive form

Notes in definitive form will be security printed in accordance with applicable legal and stock exchange requirements substantially in the form set out in Part C of Schedule 2. Any Coupons, Receipts and Talons will also be security printed in accordance with the same requirements and will be attached to the Notes in definitive form at the time of issue. Notes in definitive form will be endorsed with the Conditions and shall have endorsed thereon or attached thereto a copy of the applicable Final Terms (or the relevant provisions thereof).

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5.3  Signature

The Global Notes and the Notes in definitive form will be signed manually or in facsimile by a duly authorised person designated by the Issuer and will be authenticated manually by or on behalf of the Principal Paying Agent and if applicable, will be effectuated manually by or on behalf of the Common Safekeeper. The Issuer may use the facsimile signature of a person who at the date such signature was originally produced was such a duly authorised person even if at the time of issue of any Global Note or Note in definitive form he is no longer so authorised. Global Notes and Notes in definitive form so executed, duly authenticated and, if applicable, duly effectuated will be binding and valid obligations of the Issuer and title thereto shall pass by delivery.

5.4  Entitlement to treat holder as owner

The Issuer, the Guarantors, the Trustee and any Paying Agent may deem and treat the holder of any Note and the holder of any Receipt or Coupon as the absolute owner of such Note, Receipt or Coupon, as the case may be, free of any equity, set-off or counterclaim on the part of the Issuer or any Guarantor against the original or any intermediate holder of such Note, Receipt or Coupon (whether or not such Note, Receipt or Coupon shall be overdue and notwithstanding any notation of ownership or other writing thereon or any notice of previous loss or theft of such Note, Receipt or Coupon) for all purposes and, except as ordered by a court of competent jurisdiction or as required by applicable law, the Issuer, the Guarantors, the Trustee and any Paying Agent shall not be affected by any notice to the contrary. All payments made to any such holder shall be valid and, to the extent of the sums so paid, effective to satisfy and discharge the liability for the moneys payable upon the Notes.

5.5  Further Notes

The Issuer shall be at liberty from time to time (but subject always to the provisions of this Trust Deed) without the consent of the Noteholders, Receiptholders or Couponholders to create and issue further Notes having terms and conditions the same as the Notes of any Series (or the same in all respects save for the amount and date of the first payment of interest thereon) and so that the same shall be consolidated and form a single series with the outstanding Notes of a particular Series.

6.  Cancellation of Notes and Records

6.1 The Issuer shall procure that all Notes issued by it which are (a) redeemed or (b) purchased by or on behalf of the Issuer, a Guarantor or any Subsidiary and surrendered for cancellation or (c) which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 15 (Replacement of Notes, Receipts, Coupons and Talons) (together in each case, in the case of Definitive Notes, with all unmatured Receipts and Coupons attached thereto or delivered therewith), and all Receipts and Coupons paid in accordance with the relevant Conditions or which, being mutilated or defaced, have been surrendered and replaced pursuant to Condition 15 (Replacement of Notes, Receipts, Coupons and Talons), shall forthwith be cancelled by or on behalf of the Issuer and a certificate stating:

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(i) the aggregate nominal amount of Notes which have been redeemed and the aggregate amounts in respect of Receipts and Coupons which have been paid;

(ii) the serial numbers of such Notes in definitive form and Receipts;

(iii) the total numbers (where applicable, of each denomination) by maturity date of such Receipts and Coupons;

(iv) the aggregate amount of interest paid (and the due dates of such payments) on Global Notes;

(v) the aggregate nominal amount of Notes (if any) which have been purchased by or on behalf of the Issuer, any Guarantor or any Subsidiary and cancelled and the serial numbers of such Notes in definitive form and, in the case of Notes in definitive form, the total number (where applicable, of each denomination) by maturity date of the Receipts, Coupons and Talons attached thereto or surrendered therewith;

(vi) the aggregate nominal amounts of Notes and Receipts and the aggregate amounts in respect of Coupons which have been so surrendered and replaced and the serial numbers of such Notes in definitive form and the total number (where applicable, of each denomination) by maturity date of such Coupons and Talons;

(vii) the total number (where applicable, of each denomination) by maturity date of the unmatured Coupons missing from Notes in definitive form bearing interest at a fixed rate which have been redeemed or surrendered and replaced and the serial numbers of the Notes in definitive form to which such missing unmatured Coupons appertained; and

(viii) the total number (where applicable, of each denomination) by maturity date of Talons which have been exchanged for further Coupons,

shall be given to the Trustee by or on behalf of the Issuer as soon as possible and in any event within one month after the end of each calendar quarter during which any such redemption, purchase, payment, exchange or replacement (as the case may be) takes place. The Trustee may accept such certificate as conclusive evidence of redemption, purchase, payment, exchange or replacement pro tanto of the Notes or payment of interest thereon or exchange of the relative Talons respectively and of cancellation of the relative Notes and Coupons.

6.2 The Issuer shall procure (a) that the Principal Paying Agent shall keep a full and complete record of all Notes, Receipts, Coupons and Talons issued by it (other than serial numbers of Receipts and Coupons) and of their redemption, any cancellation or any payment (as the case may be) and of all replacement notes, receipts, coupons or talons issued in substitution for lost, stolen, mutilated, defaced or destroyed Notes, Receipts, Coupons or Talons,

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(b) that the Principal Paying Agent shall in respect of the Coupons of each maturity retain (in the case of Coupons other than Talons) until the expiry of ten years from the Relevant Date in respect of such Coupons and (in the case of Talons indefinitely) either all paid or exchanged Coupons of that maturity or a list of the serial numbers of Coupons of that maturity still remaining unpaid or unexchanged and (c) that such records and Coupons (if any) shall be made available to the Trustee at all reasonable times.

7.  Covenant to Comply with the Trust Deed

7.1  Covenant to comply with the Trust Deed

Each of the Issuer and each Guarantor severally covenants with the Trustee to comply with those provisions of this Trust Deed and the Conditions which are expressed to be binding on it and to perform and observe the same. The Notes, the Receipts and the Coupons are subject to the provisions contained in this Trust Deed, all of which shall be binding upon the Issuer, the Guarantors, the Noteholders, the Receiptholders, the Couponholders and all persons claiming through or under them respectively. The Trustee shall hold the benefit of this covenant upon trust for itself and the Noteholders, the Receiptholders and the Couponholders according to its and their respective interests.

7.2  Trustee may enforce Conditions

The Trustee shall itself be entitled to enforce the obligations of the Issuer and each Guarantor under the Notes and the Conditions as if the same were set out and contained in this Trust Deed which shall be read and construed as one document with the Notes.

8.  Covenants by the Issuer and the Guarantors

So long as any of the Notes remains outstanding, the Issuer and the Guarantors will each:

(a) Books of account:  at all times keep and procure that all its Subsidiaries keep such books of account as may be necessary to comply with all applicable laws and so as to enable the financial statements of the Issuer or, as the case may be, the relevant Guarantor to be prepared and, if the Trustee, in its sole opinion, determines that it is necessary to request access to such books of account, allow the Trustee and any person appointed by it, to whom the Issuer, the relevant Guarantor or the relevant Subsidiary (as the case may be) shall have no reasonable objection, free access to the same at all reasonable times during normal business hours and to discuss the same with responsible officers of the Issuer;

(b) Event of Default:  give notice in writing to the Trustee forthwith of the coming into existence of any security interest which would require any security to be given to the Notes pursuant to Condition 5 (Negative Pledge) or of the occurrence of any Event of Default, Potential Event of Default, Change of Control or Change of Control Put Event and without waiting for the Trustee to take any further action;

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(c) Certificate of Compliance:  provide to the Trustee within seven days of any request by the Trustee and at the time of the despatch to the Trustee of its annual balance sheet and profit and loss account, and in any event not later than 180 days after the end of its financial year, a certificate, signed by two Authorised Signatories of the Issuer or, as the case may be, the relevant Guarantor certifying that up to a specified date not earlier than seven days prior to the date of such certificate (the “Certified Date”) the Issuer or, as the case may be, the relevant Guarantor has complied with its obligations under this Trust Deed and the Notes (or, if such is not the case, giving details of the circumstances of such non-compliance) and that as at such date there did not exist nor had there existed at any time prior thereto since the Certified Date in respect of the previous such certificate (or, in the case of the first such certificate, since the date of this Trust Deed) any Event of Default, Potential Event of Default, Change of Control Put Event, Change of Control or other matter which could affect the ability of the Issuer or, as the case may be, the relevant Guarantor to perform its obligations under this Trust Deed or (if such is not the case) specifying the same;

(d) Financial statements:  send to the Trustee and to the Principal Paying Agent (if the same are produced) as soon as practicable after their date of publication and in the case of annual financial statements in any event not more than 180 days after the end of each financial year, two copies of the Issuer’s or, as the case may be, the relevant Guarantor’s consolidated annual balance sheet and profit and loss account and of every balance sheet, profit and loss account, report or other notice, statement or circular issued (or which under any legal or contractual obligation should be issued) to the members or holders of debentures or creditors (or any class of them) of the Issuer or, as the case may be, the relevant Guarantor in their capacity as such at the time of the actual (or legally or contractually required) issue or publication thereof and procure that the same are made available for inspection by Noteholders, Receiptholders and Couponholders at the Specified Offices of the Paying Agents as soon as practicable thereafter;

(e) Information:  so far as permitted by applicable law, at all times give to the Trustee such information, opinions, certificates and other evidence as it shall require in accordance with its fiduciary duties and obligations to the Noteholders and in such form as it shall require (including, without limitation, the certificates called for by the Trustee pursuant to Clause 8(c) (Certificate of Compliance) for the exercise of its duties, trusts, powers, authorities and discretions vested in it under this Trust Deed or by operation of law;

(f) Notes held by Issuer and the Guarantors:  send to the Trustee forthwith upon being so requested in writing by the Trustee a certificate of the Issuer or, as the case may be, the relevant Guarantor (signed on its behalf by two Authorised Signatories) setting out the total number of Notes of each Series which at the date of such certificate are held by or for the benefit of the Issuer, the relevant Guarantor or any Subsidiary;

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(g) Execution of further Documents:  so far as permitted by applicable law, at all times execute all such further documents and do all such further acts and things as may be necessary at any time or times in the opinion of the Trustee to give effect to the provisions of this Trust Deed;

(h) Notices to Noteholders:  send or procure to be sent to the Trustee not less than three business days in London prior to the date of publication, for the Trustee’s approval, one copy of each notice to be given to the Noteholders in accordance with Condition 19 (Notices) and not publish such notice without such approval (such approval not to be unreasonably withheld or delayed) and, upon publication, send to the Trustee two copies of such notice (such approval, unless so expressed, not to constitute approval of such notice for the purpose of Section 21 of the Financial Services and Markets Act 2000);

(i) Notification of non-payment:  use its reasonable endeavours to procure that the Principal Paying Agent notifies the Trustee forthwith in the event that it does not, on or before the due date for payment in respect of the Notes, Receipts or Coupons of any Series or any of them receive unconditionally the full amount in the relevant currency of the moneys payable on such due date on all such Notes, Receipts or Coupons;

(j) Notification of late payment:  in the event of the unconditional payment to the Principal Paying Agent or the Trustee of any sum due in respect of any of the Notes, the Receipts or the Coupons or any of them being made after the due date for payment thereof, forthwith give notice to the Noteholders that such payment has been made in accordance with Condition 19 (Notices);

(k) Notification of redemption or payment:  not less than the number of days specified in the relevant Condition prior to the redemption or payment date in respect of any Note, Receipt or Coupon give to the Trustee notice in writing of the amount of such redemption or payment pursuant to the Conditions and duly proceed to redeem or pay such Notes, Receipts or Coupons accordingly;

(l) Tax or optional redemption:  if the Issuer gives notice to the Trustee that it intends to redeem the Notes pursuant to Conditions 10(b) and 10(c) and prior to the Issuer giving such notice to the Noteholders, provide such information to the Trustee as the Trustee requires in order to satisfy itself of the matters referred to in such Condition;

(m) Obligations of Agents:  observe and comply with its obligations and use all reasonable endeavours to procure that the Agents observe and comply with all their obligations under the Agency Agreement and notify the Trustee immediately it becomes aware of any material breach or failure by an Agent in relation to the Notes, Receipts or Coupons and at all times maintain Paying Agents and a Calculation Agent in accordance with the Conditions;

(n) Change of taxing jurisdiction:  if before the Relevant Date for any Note, Receipt or Coupon the Issuer or any Guarantor shall become subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority therein or thereof having power to tax other than or in addition to the

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United Kingdom, immediately upon becoming aware thereof notify the Trustee of such event and (unless the Trustee otherwise agrees) enter forthwith into a trust deed supplemental hereto, giving to the Trustee an undertaking or covenant in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 12 with the substitution for (or, as the case may be, the addition to) the references therein to the United Kingdom of references to that other or additional territory to whose taxing jurisdiction, or that of a political subdivision thereof or an authority therein or thereof, the Issuer or, as the case may be, the relevant Guarantor shall have become subject as aforesaid, such trust deed also to modify Condition 12 so that such Condition shall make reference to that other or additional territory;

(o) Listing:  at all times use reasonable endeavours to maintain the admission to listing, trading and/or quotation of the Notes of each Series by the relevant competent authority, stock exchange and/or quotation system on which they are admitted to listing, trading and/or quotation on issue as indicated in the relevant Final Terms or, if it is unable to do so having used all reasonable endeavours or, if the Trustee considers that the maintenance of such admission to listing, trading and/or quotation is agreed by the Trustee to be unduly burdensome or impractical and the Trustee is of the opinion that to do so would not be materially prejudicial to the interests of the Noteholders, use reasonable endeavours to obtain and maintain admission to listing, trading and/or quotation of the Notes on such other competent authority, stock exchange and/or quotation system as the Issuer and the Guarantors may (with the approval of the Trustee decide and give notice of the identity of such other competent authority, stock exchange or quotation system to the Noteholders;

(p) Authorised Signatories:  upon the execution hereof and thereafter forthwith upon any change of the same, deliver to the Trustee (with a copy to the Principal Paying Agent) a list of the Authorised Signatories of the Issuer and each Guarantor, together with certified specimen signatures of the same;

(q) Payments:  pay moneys payable by it to the Trustee hereunder without set off, counterclaim, deduction or withholding, unless otherwise compelled by law and in the event of any deduction or withholding compelled by law pay such additional amount as will result in the payment to the Trustee of the amount which would otherwise have been payable by it to the Trustee hereunder; and

(r) Notification of amendment to Dealer Agreement:  notify the Trustee of any amendment to the Dealer Agreement.

(s) Auditor’s certificates:  cause to be prepared and certified by the Auditors in respect of each financial accounting period accounts in such form as will comply with all relevant legal and accounting requirements and all requirements for the time being of the relevant stock exchange;

(t) Further documents:  at all times execute and do all such further documents, acts and things as may be necessary at any time or times in the reasonable opinion of the Trustee to give effect to this Trust Deed;

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(u) Appointment and removal of Agents:  give notice to the Noteholders in accordance with Condition 19 (Notices) of any appointment, resignation or removal of any Paying Agent or Calculation Agent (other than the appointment of the initial Agents and Calculation Agent) after having obtained the prior written approval of the Trustee thereto or any change of any Paying Agent’s specified office and (except as provided by the Agency Agreement or the Conditions) at least 30 days prior to such event taking effect; PROVIDED ALWAYS THAT so long as any of the Notes remains outstanding in the case of the termination of the appointment of the Calculation Agent or so long as any of the Notes, Receipts or Coupons remains liable to prescription in the case of the termination of the appointment of the Principal Paying Agent no such termination shall take effect until a new Calculation Agent or Principal Paying Agent (as the case may be) has been appointed on terms previously approved in writing by the Trustee;

(v) Subsidiaries:  procure its Subsidiaries to comply with all applicable provisions of Condition 10 (Redemption and Purchases);

(w) Documents available for inspection:  use reasonable endeavours to procure that each Paying Agent makes available for inspection by Noteholders, Receiptholders and Couponholders at its specified office copies of this Trust Deed, the Agency Agreement and the then latest audited balance sheet and profit and loss account (consolidated if applicable) of the Issuer and the Guarantors;

(x) U.S. Paying Agent:  if, in accordance with the provisions of the Conditions, interest in respect of the Notes becomes payable at the specified office of any Paying Agent in the United States of America promptly give notice thereof to the relative Noteholders in accordance with Condition 19 (Notices);

(y) Dealer Agreement:  promptly provide the Trustee with copies of all supplements and/or amendments and/or restatements of the Dealer Agreement;

(z) List of Material Subsidiaries:  give to the Trustee (i) on the date hereof and (ii) at the same time as sending to it the certificates referred to in paragraph (c) above, a certificate signed by two Authorised Signatories of the Issuer addressed to the Trustee (with a form and content satisfactory to the Trustee) listing those Subsidiaries of the Issuer which as at the date hereof, as at the Certified Date (as defined in paragraph (c) above) of the relevant certificate given under paragraph (c) above or, as the case may be, as at the first day on which the then latest audited consolidated accounts of the Issuer became available were Material Subsidiaries for the purposes of Condition 13 (Events of Default);

(aa) Change in Material Subsidiaries:  give to the Trustee, as soon as reasonably practicable after the acquisition or disposal of any company which thereby becomes or ceases to be a Material Subsidiary or after any transfer is made to any Subsidiary of the Issuer which thereby becomes a Material Subsidiary, a certificate by two Authorised Signatories of the Issuer addressed to the Trustee (with a form and content satisfactory to the Trustee) to such effect;

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(bb) Coupons:  upon due surrender in accordance with the Conditions, pay the face value of all Coupons (including Coupons issued in exchange for Talons) appertaining to all Notes purchased by the Issuer, the Guarantors or any other Subsidiary of the Issuer;

(cc) Legal Opinions:  prior to making any modification or amendment or supplement to this Trust Deed, procure the delivery of (a) legal opinion(s) as to English and any other relevant law, addressed to the Trustee, dated the date of such modification or amendment or supplement, as the case may be, and in a form acceptable to the Trustee from legal advisers acceptable to the Trustee;

(dd) Euroclear and Clearstream:  use all reasonable endeavours to procure that Euroclear and/or Clearstream, Luxembourg (as the case may be) issue(s) any record, certificate or other document requested by the Trustee as soon as practicable after such request; and

(ee) Notice of rating downgrade:  promptly notify the Trustee upon becoming aware that any of the ratings assigned to the Notes has been downgraded or withdrawn.

9.  Amendments and Substitution

9.1  Waiver

Without prejudice to Clause 9.4, the Trustee may, without any consent or sanction of the Noteholders, Receiptholders or Couponholders and without prejudice to its rights in respect of any subsequent breach, Event of Default or Potential Event of Default, from time to time and at any time, but only if and in so far as in its opinion the interests of the Noteholders shall not be materially prejudiced thereby, authorise or waive, on such terms and conditions (if any) as shall seem expedient to it, any breach or proposed breach by the Issuer or any Guarantor of any of the covenants or provisions contained in this Trust Deed or the Notes, Receipts or Coupons (other than a proposed breach or breach relating to the subject of a Reserved Matter) or determine that any Event of Default or Potential Event of Default shall not be treated as such for the purposes of this Trust Deed; any such authorisation, waiver or determination shall be binding on the Noteholders, the Receiptholders and the Couponholders and, if, but only if, the Trustee shall so require, the Issuer shall cause such authorisation, waiver or determination to be notified to the Noteholders as soon as practicable thereafter in accordance with the Conditions; provided that the Trustee shall not exercise any powers conferred upon it by this Clause in contravention of any express direction by an Extraordinary Resolution or of a request in writing made by the holders of not less than 20 per cent. in aggregate principal amount of the Notes then outstanding (but so that no such direction or request shall affect any authorisation, waiver or determination previously given or made) or so as to authorise or waive any such breach or proposed breach relating to any of the matters the subject of the Reserved Matters as specified and defined in Schedule 6.

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9.2  Modifications

Without prejudice to Clause 9.4, the Trustee may from time to time and at any time without any consent or sanction of the Noteholders, Receiptholders or Couponholders concur with the Issuer and the Guarantors in making (a) any modification to this Trust Deed (other than in respect of Reserved Matters as specified and defined in Schedule 6 or any provision of this Trust Deed referred to in that specification) or the Notes which in the opinion of the Trustee it may be proper to make provided the Trustee is of the opinion that such modification will not be materially prejudicial to the interests of the Noteholders or (b) any modification to this Trust Deed or the Notes if in the opinion of the Trustee such modification is of a formal, minor or technical nature or made to correct a manifest error or an error which is, in the opinion of the Trustee, proven. Any such modification shall be binding on the Noteholders, the Receiptholders and the Couponholders and, unless the Trustee otherwise agrees, the Issuer shall cause such modification to be notified to the Noteholders as soon as practicable thereafter in accordance with Condition 19 (Notices).

9.3  Substitution

(a) Procedure:  Without prejudice to Clause 9.4, the Trustee may (1) without the consent of the Noteholders, the Receiptholders or the Couponholders, agree to the substitution, in place of the Issuer (or of any previous substitute under this Clause) of a Guarantor or its successor in business or any Subsidiary of the Issuer (hereinafter called the Substituted Obligor) as the principal debtor under this Trust Deed in relation to the Notes, Receipts, and Coupons of any Series and under the Notes, Receipts and Coupons of that Series and (2) without the consent of the Noteholders, the Receiptholders or the Couponholders, agree to the substitution of any Subsidiary of any Guarantor (also a Substituted Obligor) in place of a Guarantor (or any previous substitute under this Clause) as the guarantor under this Trust Deed in relation to the Notes, Receipts and Coupons of any Series and under the Notes, Receipts and Coupons of that Series, in each case provided that:

(i) a trust deed is executed or some other written form of undertaking is given by the Substituted Obligor to the Trustee, in form and manner satisfactory to the Trustee, agreeing to be bound by the terms of this Trust Deed, the Notes, the Receipts and the Coupons (with any consequential amendments which the Trustee may deem appropriate) as fully as if the Substituted Obligor had been named in this Trust Deed and on the Notes, the Receipts and the Coupons as the principal debtor in place of the Issuer or, as the case may be, as the guarantor in place of the relevant Guarantor (or of any previous substitute under this Clause);

(ii) the Issuer, the Guarantors and the Substituted Obligor execute such other deeds, documents and instruments (if any) as the Trustee may require in order that the substitution is fully effective and comply with such other requirements as the Trustee may direct in the interests of the Noteholders, the Receiptholders and the Couponholders;

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(iii) an unconditional and irrevocable guarantee in form and substance satisfactory to the Trustee shall have been given (x) in the case of the substitution of the Issuer as provided in (1) above, by the Issuer and each of the Guarantors or, if one of the Guarantors or its successor in business has become the Substituted Obligor, by the Issuer and the remaining Guarantor or (y) in the case of the substitution of a Guarantor as provided in (2) above, by each of the Guarantors, of the obligations of the Substituted Obligor under this Trust Deed and the Notes;

(iv) the Trustee is satisfied that (i) the Substituted Obligor has obtained all governmental and regulatory approvals and consents necessary for its assumption of liability as principal debtor or, as the case may be, as a guarantor in respect of this Trust Deed and the Notes, the Receipts and the Coupons in place of the Issuer and/or, as the case may be, the Guarantors or the relevant Guarantor (or such previous substitute as aforesaid) and (ii) the Issuer and/or, as the case may be, the Guarantors or the relevant Guarantor has obtained all governmental and regulatory approvals and consents necessary for the guarantee to be fully effective as referred to in sub-clause (c) and (iii) such approvals and consents are at the time of substitution in full force and effect;

(v) (without prejudice to the generality of the preceding sub-clauses of this sub-clause 9.3(a)) where the Substituted Obligor is incorporated, domiciled or resident in or is otherwise subject generally to the taxing jurisdiction of any territory or any political sub-division thereof or any authority of or in such territory having power to tax (the Substituted Territory) other than or in addition to the territory, the taxing jurisdiction of which (or to any such authority of or in which) the Issuer or, as the case may be, the relevant Guarantor is subject generally (the Issuer’s Territory), the Substituted Obligor will (unless the Trustee otherwise agrees) give to the Trustee an undertaking in form and manner satisfactory to the Trustee in terms corresponding to the terms of Condition 12 (Taxation) with the substitution for the reference in that Condition to the Issuer’s Territory of references to the Substituted Territory and in such event the Trust Deed and Notes, Receipts and Coupons will be interpreted accordingly;

(vi) without prejudice to the rights of reliance of the Trustee under sub-clause 9.3(d) (Directors’ certification) the Trustee is satisfied that the said substitution is not materially prejudicial to the interests of the Noteholders;

(vii) the Rating Agency has confirmed in writing to the Trustee that the substitution of the Substituted Obligor will not result in:

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(A) in respect of any Series of Notes which is not specifically rated by any rating agency, a downgrading of the then current credit rating of any rating agency applicable to the class of debt represented by the Notes; or

(B) in respect of any Series of Notes which is specifically rated by any rating agency, a downgrading of the then current credit rating applicable to such Series of Notes by such rating agency;

(b) Change of law:  in connection with any proposed substitution of the Issuer or any Guarantor or any previous substitute, the Trustee may, in its absolute discretion and without the consent of the Noteholders or the Couponholders agree to a change of the law from time to time governing the Notes and the Coupons and this Trust Deed provided that such change of law, in the opinion of the Trustee, would not be materially prejudicial to the interests of the Noteholders;

(c) Extra duties:  the Trustee shall be entitled to refuse to approve any Substituted Obligor if, pursuant to the law of the country of incorporation of the Substituted Obligor, the assumption by the Substituted Obligor of its obligations hereunder imposes responsibilities on the Trustee over and above those which have been assumed under this Trust Deed;

(d) Directors’ certification:  if any two directors of the Substituted Obligor certify that immediately prior to the assumption of its obligations as Substituted Obligor under this Trust Deed the Substituted Obligor is solvent after taking account of all prospective and contingent liabilities resulting from its becoming the Substituted Obligor, the Trustee need not have regard to the financial condition, profits or prospects of the Substituted Obligor or compare the same with those of the Issuer or, as the case may be, the relevant Guarantor (or of any previous substitute under this Clause);

(e) Interests of Noteholders:  in connection with any proposed substitution, the Trustee shall not have regard to, or be in any way liable for, the consequences of such substitution for individual Noteholders or the Couponholders resulting from their being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory and no Noteholder or Couponholder shall, in connection with any such substitution, be entitled to claim from the Issuer or, as the case may be, the relevant Guarantor any indemnification or payment in respect of any tax consequence of any such substitution upon individual Noteholders or Couponholders;

(f) Release of Issuer or, as the case may be, the relevant Guarantor:  any agreement by the Trustee pursuant to sub-clause 9.3(a) (Procedure) shall, if so expressed, operate to release the Issuer or, as the case may be, the relevant Guarantor (or such previous substitute as aforesaid) from any or all of its obligations as principal debtor or, as the case may be, as guarantor, in respect of the Notes, Receipts and Coupons and this Trust Deed (but without prejudice

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to its liabilities under any guarantee given pursuant to sub-clause 9.3(c)). Not later than fourteen days after the execution of any such documents as aforesaid and after compliance with the said requirements of the Trustee, the Substituted Obligor shall cause notice thereof to be given to the Noteholders; and

(g) Completion of substitution:  upon the execution of such documents and compliance with the said requirements, the Substituted Obligor shall be deemed to be named in this Trust Deed and the Notes, Receipts and Coupons as the principal debtor in place of the Issuer or, as the case may be, the guarantor in place of the relevant Guarantor (or in each case of any previous substitute under this Clause) and this Trust Deed, the Notes, the Receipts and the Coupons shall thereupon be deemed to be amended in such manner as shall be necessary to give effect to the substitution and without prejudice to the generality of the foregoing any references in this Trust Deed, in the Notes, Receipts and Coupons to the Issuer or, as the case may be, the relevant Guarantor shall be deemed to be references to the Substituted Obligor.

9.4  Rating Confirmations

For the purposes of determining whether or not the exercise by the Trustee of any of its trusts, powers, authorities, duties and discretions under this Trust Deed (including, without limitation, any modification, waiver, authorisation, determination or substitution), is materially prejudicial to the interests of the Noteholders of any Series of Notes, the Trustee shall be entitled to rely on (but is not bound by) any S&P or any Substituted Rating Agency confirmation received in respect thereof.

10.  Breach

Any breach of or failure to comply by the Issuer or the Guarantors with any such terms and conditions as are referred to in Clauses 8 and 9 shall constitute a default by the Issuer or the Guarantors (as the case may be) in the performance or observance of a covenant or provision binding on it under or pursuant to this Trust Deed.

11.  Enforcement

11.1  Legal proceedings

The Trustee may at any time, at its discretion and without further notice, institute such proceedings against the Issuer and the Guarantors as it may think fit to recover any amounts due in respect of the Notes which are unpaid or to enforce any of its rights under this Trust Deed or the Conditions but it shall not be bound to take any such proceedings or any other action under this Trust Deed or the Notes unless (a) it shall have been so directed by an Extraordinary Resolution or so requested in writing by the holders of at least one-fifth in principal amount of the outstanding Notes and (b) it shall have been indemnified and/or secured and/or prefunded to its satisfaction against all Liabilities to which it may thereby become liable and all Liabilities incurred by it in connection therewith and provided that the Trustee shall not be held liable for the consequence of taking any such action and may take such action without having regard to the effect of such action on individual Noteholders, Receiptholders, or Couponholders. Only the Trustee may enforce the provisions of the this Trust Deed and the Notes, Receipts and Coupons and no Noteholder, Receiptholder or Couponholder shall be entitled to proceed directly against the Issuer

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and/or any Guarantor unless the Trustee, having become bound so to proceed, fails to do so within a reasonable time and such failure is continuing.

11.2  Evidence of default

Proof that:

(a) as regards any specified Note the Issuer has made default in paying any principal due in respect of such Note shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Notes in respect of which a corresponding payment is then due;

(b) as regards any specified Coupon the Issuer has made default in paying any interest due in respect of such Coupon shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Coupons in respect of which a corresponding payment is then due; and

(c) as regards any Talon, the Issuer has made default in exchanging such Talon for further Coupons and a further Talon as provided by its terms shall (unless the contrary be proved) be sufficient evidence that the Issuer has made the like default as regards all other Talons which are then available for exchange,

and for the purposes of Subclauses 11.2(a) and 11.2(b) a payment shall be a “corresponding” payment notwithstanding that it is due in respect of a Note of a different denomination from that in respect of the above specified Note.

12.  Application of Moneys

12.1   Application of moneys

All moneys received by the Trustee in respect of the Notes of any Series or amounts payable under this Trust Deed will despite any appropriation of all or part of them by the Issuer (including any moneys which represent principal or interest in respect of Notes, Receipts or Coupons which have become void under the Conditions shall, unless and to the extent attributable, in the opinion of the Trustee, to a particular Series of the Notes, be apportioned pari passu and rateably between each Series of the Notes, and all moneys received by the Trustee under this Trust Deed from the Issuer or, as the case may be, the Guarantors to the extent attributable in the opinion of the Trustee to a particular Series of the Notes or which are apportioned to such Series as aforesaid, be held by the Trustee on trust to apply them (subject to Clause 12.2 (Investment of moneys):

(a) first, in payment or satisfaction of those Liabilities incurred by the Trustee or any Appointee in the preparation, maintenance and execution of the trusts of this Trust Deed (including remuneration and any additional remuneration of the Trustee);

(b) secondly, in or towards payment pari passu and rateably of all interest remaining unpaid in respect of the Notes of the relevant Series and all principal moneys due on or in respect of the Notes of that Series provided that where the Notes of more than one Series become so due and payable, such monies shall be

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applied as between the amounts outstanding in respect of the different Series pari passu and rateably (except where, in the opinion of the Trustee, such monies are paid in respect of a specific Series or several specific Series, in which event such monies shall be applied solely to the amounts outstanding in respect of that Series or those Series respectively); and

(c) thirdly, the balance (if any) in payment to the Issuer (without prejudice to, or liability in respect of, any question as to how such payments shall be dealt with as between the Issuer and the Guarantors and any other person).

Without prejudice to this Clause 10, if the Trustee holds any moneys which represent principal or interest in respect of Notes which have become void or in respect of which claims have been prescribed under Condition 14 (Prescription), the Trustee will hold such moneys on the above trusts.

12.2   Investment of moneys

If the amount of the moneys at any time available for payment of principal and interest in respect of the Notes of any Series under Clause 12.1 (Application of moneys) shall be less than a sum sufficient to pay at least one-tenth of the principal amount of the Notes of such Series then outstanding, the Trustee may, at its discretion, invest such moneys upon some or one of the investments hereinafter authorised with power from time to time, with like discretion, to vary such investments; and such investment with the resulting income thereof may be accumulated until the accumulations together with any other funds for the time being under the control of the Trustee and available for the purpose shall amount to a sum sufficient to pay at least one-tenth of the principal amount of the Notes of such Series then outstanding and such accumulation and funds (after deduction of any taxes and any other deductibles applicable thereto) shall then be applied in the manner aforesaid.

12.3   Authorised Investments

Any moneys which under this Trust Deed may be invested by the Trustee may be invested in the name or under the control of the Trustee in any of the investments for the time being authorised by English law for the investment by trustees of trust moneys or in any other investments, whether similar to those aforesaid or not, which may be selected by the Trustee or by placing the same on deposit in the name or under the control of the Trustee with such bank or other financial institution as the Trustee may think fit and in such currency as the Trustee in its absolute discretion may determine and the Trustee may at any time vary or transfer any of such investments for or into other such investments or convert any moneys so deposited into any other currency and shall not be responsible for any Liability occasioned by reason of any such investments or such deposit whether by depreciation in value, fluctuation in exchange rates or otherwise. If that bank or institution is the Trustee or a subsidiary, holding company or associated company of the Trustee, it need only account for an amount of interest equal to the amount of interest that would be payable by it on such deposit to an independent customer.

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12.4  Payment to Noteholders, Receiptholders and Couponholders

The Trustee shall give notice to the Noteholders in accordance with Condition 19 (Notices) of the date fixed for any payment under Clause 12.1 (Application of Moneys). Any payment to be made in respect of the Notes, Receipts or Coupons of any Series by the Issuer, any Guarantor or the Trustee may be made in the manner provided in Condition 11 (Payments), the Agency Agreement and this Trust Deed and any payment so made shall be a good discharge of such payment to the extent of such payment by the Issuer, the relevant Guarantor or the Trustee (as the case may be).

12.5  Production of Notes, Receipts and Coupons

Upon any payment under Clause 12.4 (Payment to Noteholders, Receiptholders and Couponholders) of principal or interest, the Note, Receipt or Coupon in respect of which such payment is made shall, if the Trustee so requires, be produced to the Trustee or the Paying Agent by or through whom such payment is made and the Trustee shall in respect of a Note, Receipt or Coupon (a) in the case of part payment, enface or cause such Paying Agent to enface a memorandum of the amount and date of payment thereon (or, in the case of part payment of an NGN Temporary Global Note or an NGN Permanent Global Note cause the Principal Paying Agent to procure that the ICSDs make appropriate entries in their records to reflect such payment) or (b) in the case of payment in full, cause such Note, Receipt or Coupon to be surrendered or shall cancel or procure the same to be cancelled and shall certify or procure the certification of such cancellation.

12.6  Noteholders to be treated as holding all Receipts and Coupons

Wherever in this Trust Deed the Trustee is required or entitled to exercise a power, trust, authority or discretion under this Trust Deed, the Trustee shall, notwithstanding that it may have express notice to the contrary assume that each Noteholder is the holder of all Receipts, Coupons and Talons appertaining to each Note of which he is the holder.

12.7  Regulated Activities

Notwithstanding anything in this Trust Deed to the contrary, the Trustee shall not be required to do anything which might constitute a regulated activity for the purpose of the FSMA, unless it is authorised under the FSMA to do so.

The Trustee shall have the discretion at any time (i) to delegate any of the functions which fall to be performed by an authorised person under the FSMA to any agent or person which has the necessary authorisations and licences and (ii) to apply for authorisation under the FSMA and perform any or all such functions itself if, in its absolute discretion, it considers it necessary, desirable or appropriate to do so.

13.   Terms of Appointment

By way of supplement to the Trustee Acts, it is expressly declared as follows:

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13.1   Reliance on Information

(a) Advice:  the Trustee may in relation to this Trust Deed act on the opinion or advice of or a certificate or any information obtained from any lawyer, banker, valuer, surveyor, broker, auctioneer, accountant or other expert (whether obtained by the Trustee, the Issuer, any Guarantor, any Subsidiary or any Agent) and shall not be responsible for any Liability occasioned by so acting; any such opinion, advice, certificate or information may be sent or obtained by letter, telegram, telex, email or facsimile transmission and the Trustee shall not be liable for acting on any opinion, advice, certificate or information purporting to be so conveyed although the same shall contain some error or shall not be authentic;

(b) Certificate of Directors or Authorised Signatories:  the Trustee may call for and shall be at liberty to accept a certificate signed by two Directors and/or two Authorised Signatories of the Issuer or any Guarantor, as the case may be, or other person duly authorised on its behalf as to any fact or matter prima facie within the knowledge of the Issuer or the relevant Guarantor, as the case may be, as sufficient evidence thereof and a like certificate to the effect that any particular dealing, transaction or step or thing is, in the opinion of the person so certifying expedient, as sufficient evidence that it is expedient and the Trustee shall not be bound in any such case to call for further evidence or be responsible for any Liability that may be occasioned by its failing so to do;

(c) Certificate of Auditors:  a certificate of the Auditors of the Issuer that in their opinion a Subsidiary is or is not or was or was not at any particular time or during any particular period a Material Subsidiary shall, in the absence of manifest error, be conclusive and binding on the Issuer, the Guarantors, the Trustee, the Noteholders, the Receiptholders and the Couponholders;

(d) Resolution or direction of Noteholders:  the Trustee shall not be responsible for acting upon any resolution purporting to be a Written Resolution or to have been passed at any meeting of the Noteholders in respect whereof minutes have been made and signed or a direction of a specified percentage of Noteholders, even though it may subsequently be found that there was some defect in the constitution of the meeting or the passing of the resolution or the making of the directions or in the case of a Written Resolution in writing or a direction or a request it was not signed by the requisite number of Noteholders or that for any reason the resolution purporting to be a Written Resolution or to have been passed at any Meeting or the making of the directions was not valid or binding upon the Noteholders, the Receiptholders and the Couponholders;

(e) Reliance on certification of clearing system:  the Trustee may call for any certificate or other document issued by Euroclear, Clearstream, Luxembourg or any other relevant clearing system in relation to any matter. Any such certificate or other document shall, in the absence of manifest error, be conclusive and binding for all purposes. Any such certificate or other document may comprise any form of statement or print out of electronic records

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provided by the relevant clearing system (including Euroclear’s EUCLID or Clearstream, Luxembourg’s Cedcom system) in accordance with its usual procedures and in which the holder of a particular principal or nominal amount of the Notes is clearly identified together with the amount of such holding. The Trustee shall not be liable to any person by reason of having accepted as valid or not having rejected any certificate or other document to such effect purporting to be issued by Euroclear or Clearstream, Luxembourg or any other relevant clearing system and subsequently found to be forged or not authentic;

(f) Noteholders as a class:  whenever in this Trust Deed the Trustee is required in connection with any exercise of its powers, trusts, authorities or discretions to have regard to the interests of the Noteholders, it shall have regard to the interests of the Noteholders as a class and in particular, but without prejudice to the generality of the foregoing, shall not be obliged to have regard to the consequences of such exercise for any individual Noteholder resulting from his or its being for any purpose domiciled or resident in, or otherwise connected with, or subject to the jurisdiction of, any particular territory or any political sub-division thereof and the Trustee shall not be entitled to require, nor shall any Noteholder, Receiptholder or Couponholder be entitled to claim, from the Issuer, the Guarantors, the Trustee or any other person any indemnification or payment in respect of any tax consequence of any such exercise upon individual Noteholders, Receiptholders or Couponholders except to the extent already provided for in Condition 12 (Taxation) and/or any undertaking given in addition thereto or in substitution therefor under this Trust Deed;

(g) Trustee not responsible for investigations:  the Trustee shall not be responsible for, or for investigating any matter which is the subject of, any recital, statement, representation, warranty or covenant of any person contained in this Trust Deed, the Notes or any other agreement or document relating to the transactions herein or therein contemplated or for the execution, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence thereof;

(h) No obligation to monitor:  the Trustee shall be under no obligation to monitor or supervise the functions of any other person under the Notes or any other agreement or document relating to the transactions herein or therein contemplated and shall be entitled, in the absence of actual knowledge of a breach of obligation, to assume that each such person is properly performing and complying with its obligations;

(i) Notes held by the Issuer:  in the absence of knowledge or express notice to the contrary, the Trustee may assume without enquiry (other than requesting a certificate of the Issuer or any Guarantor under sub-clause 8(f) (Notes held by Issuer and the Guarantors), that no Notes are for the time being held by or for the benefit of the Issuer, any Guarantor or any Subsidiary;

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(j) Forged Notes:  the Trustee shall not be liable to the Issuer, any Guarantor or any Noteholder, Receiptholder or Couponholder by reason of having accepted as valid or not having rejected any Note, Receipt or Coupon as such and subsequently found to be forged or not authentic;

(k) Events of Default:  the Trustee shall not be bound to give notice to any person of the execution of this Trust Deed or to take any steps to ascertain whether any Event of Default, Potential Event of Default, Change of Control or Change of Control Put Event has happened and, until it shall have actual knowledge or express notice to the contrary, the Trustee shall be entitled to assume that no such Event of Default, or Potential Event of Default, Change of Control or Change of Control Put Event has happened and that the Issuer and each Guarantor is observing and performing all the obligations on its part contained in the Notes, Receipts and Coupons and under this Trust Deed and no event has happened as a consequence of which any of the Notes may become repayable;

(l) Legal Opinions:  the Trustee shall not be responsible to any person for failing to request, require or receive any legal opinion relating to any Notes or for checking or commenting upon the content of any such legal opinion and shall not be responsible for any Liability incurred thereby;

(m) Authorised Amount:  the Trustee shall not be concerned, and need not enquire, as to whether or not any Notes are issued in breach of the Authorised Amount;

(n) Trustee not Responsible:  the Trustee shall not be responsible for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, enforceability or admissibility in evidence of this Trust Deed or any other document relating thereto and shall not be liable for any failure to obtain any rating of Notes (where required), any licence, consent or other authority for the execution, delivery, legality, effectiveness, adequacy, genuineness, validity, performance, enforceability or admissibility in evidence of this Trust Deed or any other document relating thereto. In addition the Trustee shall not be responsible for the effect of the exercise of any of its powers, duties and discretions hereunder;

(o) Freedom to Refrain:  notwithstanding anything else herein contained, the Trustee may refrain from doing anything which would or might in its opinion be contrary to any law of any jurisdiction or any directive or regulation of any agency or any state of which would or might otherwise render it liable to any person and may do anything which is, in its opinion, necessary to comply with any such law, directive or regulation;

(p) Right to Deduct or Withhold:  notwithstanding anything contained in this Trust Deed, to the extent required by any applicable law, if the Trustee is or will be required to make any deduction or withholding from any distribution or payment made by it hereunder or if the Trustee is or will be otherwise charged to, or is or may become liable to, tax as a consequence of performing its duties hereunder whether as principal, agent or otherwise, and whether by reason of any assessment, prospective assessment or other imposition of liability to taxation of

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whatsoever nature and whensoever made upon the Trustee, and whether in connection with or arising from any sums received or distributed by it or to which it may be entitled under this Trust Deed (other than in connection with its remuneration as provided for herein) or any investments or deposits from time to time representing the same, including any income or gains arising therefrom or any action of the Trustee in connection with the trusts of this Trust Deed (other than the remuneration herein specified) or otherwise, then the Trustee shall be entitled to make such deduction or withholding or, as the case may be, to retain out of sums received by it an amount sufficient to discharge any liability to tax which relates to sums so received or distributed or to discharge any such other liability of the Trustee to tax from the funds held by the Trustee upon the trusts of this Trust Deed; and

(q) Reliance by Trustee:  any certificate or report of the Auditors or any other person called for by or provided to the Trustee (whether or not addressed to the Trustee) in accordance with or for the purposes of this Trust Deed may be relied upon by the Trustee as sufficient evidence of the facts stated therein notwithstanding that such certificate or report and/or any engagement letter or other document entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the Auditors or such other person in respect thereof and notwithstanding that the scope and/or basis of such certificate or report may be limited by any engagement or similar letter or by the terms of the certificate or report itself.

13.2   Trustee’s powers and duties

(a) Trustee’s determination:  The Trustee may determine whether or not a default in the performance or observance by the Issuer or any Guarantor of any obligation under the provisions of this Trust Deed or contained in the Notes, Receipts or Coupons is capable of remedy and if the Trustee shall certify that any such default is, in its opinion, not capable of remedy such certificate shall be conclusive and binding upon the Issuer, the Guarantors, the Noteholders, the Receiptholders and the Couponholders;

(b) Determination of questions:  the Trustee as between itself and the Noteholders, the Receiptholders and the Couponholders shall have full power to determine all questions and doubts arising in relation to any of the provisions of this Trust Deed and every such determination, whether made upon a question actually raised or implied in the acts or proceedings of the Trustee, shall be conclusive and shall bind the Trustee, the Noteholders, the Receiptholders and the Couponholders;

(c) Trustee’s discretion:  the Trustee shall (save as expressly otherwise provided herein) as regards all the trusts, powers, authorities and discretions vested in it by this Trust Deed or by operation of law have absolute and uncontrolled discretion as to the exercise or non-exercise thereof and the Trustee shall not be responsible for any Liability that may result from the exercise or non-exercise thereof but, whenever the Trustee is under the provisions of this Trust Deed bound to act at the request or direction of the Noteholders, the Trustee shall nevertheless not be so

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bound unless first indemnified and/or provided with security and/or prefunded to its satisfaction against all actions, proceedings, claims and demands to which it may render itself liable and all Liabilities which it may incur by so doing;

(d) Trustee’s consent:  any consent or approval given by the Trustee for the purposes of this Trust Deed may be given on such terms and subject to such conditions (if any) as the Trustee may require. The Trustee may give any consent or approval, exercise any power, authority or discretion or take any similar action (whether or not such consent, approval, power, authority, discretion or action is specifically referred to in this Trust Deed) if it is satisfied that the interests of the Noteholders will not be materially prejudiced thereby. For any avoidance of doubt, the Trustee shall not have any duty to the Noteholders in relation to such matters other than that which is contained in the preceding sentence;

(e) Conversion of currency:  where it is necessary or desirable for any purpose in connection with this Trust Deed to convert any sum from one currency to another it shall (unless otherwise provided by this Trust Deed or required by law) be converted at such rate(s) of exchange, in accordance with such method and as at such date for the determination of such rate(s) of exchange as may be specified by the Trustee in its absolute discretion as relevant and any rate of exchange, method and date so specified shall be binding on the Issuer, the Guarantors, the Noteholders, the Receiptholders and the Couponholders;

(f) Application of proceeds:  the Trustee shall not be responsible for the receipt or application by the Issuer of the proceeds of the issue of the Notes, the exchange of any Temporary Global Note for any Permanent Global Note or Notes in definitive form, the exchange of any Permanent Global Note for Notes in definitive form or the delivery of any Note, Receipt or Coupon to the persons entitled to them;

(g) Error of judgment:  the Trustee shall not be liable for any error of judgment made in good faith by any officer or employee of the Trustee assigned by the Trustee to administer its corporate trust matters;

(h) Agents:  the Trustee may, in the conduct of the trusts of this Trust Deed instead of acting personally, employ and pay an agent on any terms, whether or not a lawyer or other professional person, to transact or conduct, or concur in transacting or conducting, any business and to do or concur in doing all acts required to be done by the Trustee (including the receipt and payment of money) and the Trustee shall not be responsible for any Liability incurred by reason of the misconduct, omission or default on the part of any person appointed by it hereunder or be bound to supervise the proceedings or acts of any such person;

(i) Delegation:  the Trustee may, in the execution and exercise of all or any of the trusts, powers, authorities and discretions vested in it by this Trust Deed, act by responsible officer(s) for the time being of the Trustee and the Trustee may also whenever it thinks fit, whether by power of attorney or otherwise, delegate to any person(s) or fluctuating body of persons (whether being a joint trustee of this Trust Deed or not) all or any of the trusts, powers,

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authorities and discretions vested in it by this Trust Deed and any such delegation may be made upon such terms and conditions and subject to such regulations (including power to sub-delegate with the consent of the Trustee) as the Trustee may think fit in the interests of the Noteholders and the Trustee shall not be bound to supervise the proceedings or acts of and shall not in any way or to any extent be responsible for any Liability incurred by reason of the misconduct, omission or default on the part of such delegate or sub-delegate;

(j) Custodians and nominees:  the Trustee may appoint and pay any person to act as a custodian or nominee on any terms in relation to such assets of the trust as the Trustee may determine, including for the purpose of depositing with a custodian this Trust Deed or any document relating to the trust created hereunder and the Trustee shall not be responsible for any loss, liability, expense, demand, cost, claim or proceedings incurred by reason of the misconduct, omission or default on the part of any person appointed by it hereunder or be bound to supervise the proceedings or acts of any such person; the Trustee is not obliged to appoint a custodian if the Trustee invests in securities payable to bearer;

(k) Maintenance of ratings:  the Trustee shall have no responsibility whatsoever to the Issuer, the Guarantors, any Noteholder, Receiptholder or Couponholder or any other person for the maintenance of or failure to maintain any rating of any of the Notes by any rating agency;

(l) Confidential information:  the Trustee shall not (unless required by law or ordered so to do by a court of competent jurisdiction) be required to disclose to any Noteholder, Receiptholder or Couponholder confidential information or other information made available to the Trustee by the Issuer or any Guarantor in connection with this Trust Deed and no Noteholder, Receiptholder or Couponholder shall be entitled to take any action to obtain from the Trustee any such information; and

(m) Responsibility for loss:  the Trustee shall not be liable or responsible for any Liabilities or inconvenience which may result from anything properly done or properly omitted to be done by it in accordance with the provisions of this Trust Deed.

13.3   Financial matters

(a) Professional charges:  Any trustee being a banker, lawyer, broker or other person engaged in any profession or business shall be entitled to charge and be paid all usual professional and other charges for business transacted and acts done by him or his partner or firm on matters arising in connection with the trusts of this Trust Deed and also his properly incurred charges in addition to disbursements for all other work and business done and all time spent by him or his partner or firm on matters arising in connection with this Trust Deed, including matters which might or should have been attended to in person by a trustee not being a banker, lawyer, broker or other professional person;

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(b) Expenditure by the Trustee:  nothing contained in this Trust Deed shall require the Trustee to expend or risk its own funds or otherwise incur any financial liability in the performance of its duties or the exercise of any right, power, authority or discretion hereunder if it has grounds for believing the repayment of such funds or adequate indemnity against, or security for, such risk or liability is not assured to it; and

(c) Trustee may enter into financial transactions with the Issuer and Guarantors:  no Trustee and no director or officer of any corporation being a Trustee hereof shall by reason of the fiduciary position of such Trustee be in any way precluded from making any contracts or entering into any transactions in the ordinary course of business with the Issuer, any Guarantor or any Subsidiary, or any person or body corporate directly or indirectly associated with the Issuer, any Guarantor, or any Subsidiary, or from accepting the trusteeship of any other debenture stock, debentures or securities of the Issuer or any Subsidiary, any Guarantor or any person or body corporate directly or indirectly associated with the Issuer or any Subsidiary, and neither the Trustee nor any such director or officer shall be accountable to the Noteholders, the Receiptholders, the Couponholders, the Issuer, any Guarantor or any Subsidiary, or any person or body corporate directly or indirectly associated with the Issuer, any Guarantor or any Subsidiary, for any profit, fees, commissions, interest, discounts or share of brokerage earned, arising or resulting from any such contracts or transactions and the Trustee and any such director or officer shall also be at liberty to retain the same for its or his own benefit.

13.4   Disapplication

Section 1 of the Trustee Act 2000 shall not apply to the duties of the Trustee in relation to the trusts constituted by this Trust Deed. Where there are any inconsistencies between the Trustee Acts and the provisions of this Trust Deed, the provisions of this Trust Deed shall, to the extent allowed by law, prevail and, in the case of any such inconsistency with the Trustee Act 2000, the provisions of this Trust Deed shall constitute a restriction or exclusion for the purposes of that Act.

13.5   Trustee Liability

(a) Nothing in this Trust Deed shall in any case in which the Trustee has failed to show the degree of care and diligence required of it as trustee having regard to the provisions of this Trust Deed conferring on it any trusts, powers, authorities or discretions exempt the Trustee from or indemnify it against any liability for breach of trust of which it may be guilty in relation to its duties under this Trust Deed.

(b) Notwithstanding any provision of this Trust Deed to the contrary, the Trustee shall not in any event be liable for special, indirect, punitive or consequential loss or damage of any kind whatsoever (including but not limited to lost profits, goodwill, reputation, business opportunity or anticipated saving), whether or not foreseeable, even if the Trustee has been advised of the likelihood of such loss or damage and regardless of whether the claim for loss or

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damage is made in negligence, for breach of contract, breach of trust or otherwise; provided however, that this clause shall not be deemed to apply in the event of a determination of fraud on the part of the Trustee in a judgement by a court having jurisdiction.

14.   Costs and Expenses

14.1   Remuneration

(a) Normal remuneration:  The Issuer shall pay to the Trustee remuneration for its services as trustee as from the date of this Trust Deed, such remuneration to be at such rate as may from time to time be agreed between the Issuer and the Trustee. Such remuneration shall be payable in advance on the anniversary of the date hereof in each year and the first payment shall be made on the date hereof. Such remuneration shall accrue from day to day and be payable (in priority to payments to the Noteholders, Receiptholders or Couponholders up to and including the date when, all the Notes having become due for redemption, the redemption moneys and interest thereon to the date of redemption have been paid to the Principal Paying Agent or the Trustee, provided that if upon due presentation (if required pursuant to the Conditions) of any Note, Receipt or Coupon or any cheque, payment of the moneys due in respect thereof is improperly withheld or refused, remuneration will be deemed not to have ceased to accrue and will commence again to accrue until payment to such Noteholder, Receiptholder or Couponholder is made).

(b) Extra remuneration:  In the event of the occurrence of an Event of Default, a Potential Event of Default, a Change of Control or a Change of Control Put Event or the Trustee considering it expedient or necessary or being requested by the Issuer or any Guarantor to undertake duties which the Trustee and the Issuer or such Guarantor agree to be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, the Issuer shall pay to the Trustee such additional remuneration as shall be agreed between them.

(c) Value added tax:  The Issuer shall in addition pay to the Trustee an amount equal to the amount of any value added tax or similar tax chargeable in respect of its remuneration under this Trust Deed.

(d) Failure to agree:  In the event of the Trustee and the Issuer failing to agree:

(i) (in a case to which sub-clause 14.1(a) applies) upon the amount of the remuneration; or

(ii) (in a case to which sub-clause 14.1(b) applies) upon whether such duties shall be of an exceptional nature or otherwise outside the scope of the normal duties of the Trustee under this Trust Deed, or upon such additional remuneration,

such matters shall be determined by a merchant bank (acting as an expert and not as an arbitrator) selected by the Trustee and approved by the Issuer or, failing such approval, nominated (on the application of the Trustee) by the

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President for the time being of The Law Society of England and Wales (the expenses involved in such nomination and the fees of such merchant bank being payable by the Issuer) and the determination of any such merchant bank shall be final and binding upon the Trustee and the Issuer.

(e) Expenses:  The Issuer shall also pay or discharge all costs, charges and expenses properly incurred by the Trustee in relation to the preparation and execution of, the exercise of its powers and the performance of its duties under, and in any other manner in relation to, this Trust Deed, including but not limited to legal and travelling expenses and any stamp, issue, registration, documentary and other taxes or duties paid or payable by the Trustee in connection with any action taken or contemplated by or on behalf of the Trustee for enforcing, or resolving any doubt concerning, or for any other purpose in relation to, this Trust Deed.

(f) Indemnity:  Without prejudice to the right of indemnity by law given to trustees, the Issuer shall indemnify the Trustee and every Appointee and keep it or him indemnified against all Liabilities to which it or he may be or become subject or which may be properly incurred by it or him in the preparation or execution or purported execution of any of its or his trusts, powers authorities and discretions under this Trust Deed or its or his functions under any such appointment or in respect of any other matter or thing done or omitted in any way relating to the Trust Deed or any such appointment (including all Liabilities incurred in disputing or defending the foregoing). The Trustee may use reasonable endeavours to provide to the Issuer written evidence of any Liabilities referred to in this Clause.

(g) Payment of amounts due:  All amounts due and payable pursuant to sub clauses 14.1(e) (Expenses) and 14.1(f) (Indemnity) shall be payable by the Issuer on the date specified in a demand by the Trustee; the rate of interest applicable to such payments shall be one per cent. per annum above the base rate from time to time of HSBC Bank plc and interest shall accrue:

(i) in the case of payments made by the Trustee prior to the date of the demand, from the date on which the payment was made or such later date as specified in such demand;

(ii) in the case of payments made by the Trustee on or after the date of the demand, from the date specified in such demand, which date shall not be a date earlier than the date such payments are made.

All remuneration payable to the Trustee shall carry interest at the rate specified in this Clause 14.1(g) (Payment of amounts due) from the due date thereof.

(h) Apportionment of expenses:  The Trustee shall apportion the costs, charges, expenses and liabilities incurred by the Trustee in the preparation and execution of the trusts of this Trust Deed (including remuneration of the

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Trustee) between the several Series of Notes in such manner and in such amounts as it shall, in its absolute discretion, consider appropriate.

(i) Discharges:  Unless otherwise specifically stated in any discharge of this Trust Deed the provisions of this Clause 13.5(a) (Costs and Expenses) shall continue in full force and effect notwithstanding such discharge.

(j) Payments:  All payments to be made by the Issuer to the Trustee under this Trust Deed shall be made free and clear of, and without withholding or deduction for, any taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or within any relevant jurisdiction or any authority therein or thereof having power to tax, unless such withholding or deduction is required by law. In that event, the Issuer shall pay such additional amount as will, after such deduction or withholding has been made, leave the Trustee with the full amount which would have been received by it had no such withholding or deduction been required.

14.2   Stamp duties

The Issuer will pay all stamp duties, registration taxes, capital duties and other similar fees, duties or taxes (if any), including interest and penalties, payable on or in connection with (a) the constitution and issue of the Notes, Receipts and Coupons, (b) the initial delivery of the Notes, (c) any action taken by the Trustee (or any Noteholder, Receiptholder or Couponholder where permitted or required under this Trust Deed so to do) to enforce the provisions of the Notes or this Trust Deed and (d) the execution and delivery of this Trust Deed. If the Trustee (or any Noteholder, Receiptholder, or Couponholder where permitted under this Trust Deed so to do) shall take any proceedings against the Issuer in any other jurisdiction and if for the purpose of any such proceedings this Trust Deed or any Note is taken into any such jurisdiction and any stamp duties or other duties or taxes become payable thereon in any such jurisdiction, the Issuer will pay (or reimburse the person making payment of) such stamp duties or other duties or taxes (including penalties).

14.3   Exchange rate indemnity

(a) Currency of Account and Payment:  The Contractual Currency is the sole currency of account and payment for all sums payable by the Issuer and the Guarantors under or in connection with this Trust Deed, the Notes, the Receipts and the Coupons including damages;

(b) Extent of Discharge:  an amount received or recovered in a currency other than the Contractual Currency (whether as a result of, or of the enforcement of, a judgment or order of a court of any jurisdiction, in the winding up or dissolution of the Issuer or any Guarantor or otherwise) by the Trustee or any Noteholder, Receiptholder or Couponholder in respect of any sum expressed to be due to it from the Issuer or any Guarantor will only discharge the Issuer or any Guarantor to the extent of the Contractual Currency amount which the recipient is able to purchase

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with the amount so received or recovered in that other currency on the date of that receipt or recovery (or, if it is not practicable to make that purchase on that date, on the first date on which it is practicable to do so);

(c) Indemnity:  if that Contractual Currency amount is less than the Contractual Currency amount expressed to be due to the recipient under this Trust Deed or the Notes, the Receipts or the Coupons, the Issuer and the Guarantor will indemnify the Trustee or any Noteholder, Receiptholder or Couponholder against any Liability sustained by it as a result. In any event, the Issuer and the Guarantor will indemnify the recipient against the cost of making any such purchase; and

(d) any deficiency arising or resulting from any variation in rates of exchange between (i) the date as of which the local currency equivalent of the amounts due or contingently due under this Trust Deed (other than this Clause) is calculated for the purposes of any bankruptcy, insolvency or liquidation of the Issuer or, as the case may be, the Guarantor and (ii) the final date for ascertaining the amount of claims in such bankruptcy, insolvency or liquidation. The amount of such deficiency shall be deemed not to be reduced by any variation in rates of exchange occurring between the said final date and the date of any distribution of assets in connection with any such bankruptcy, insolvency or liquidation.

14.4   Indemnities separate

The indemnities in this Clause 13.5(a) constitute separate and independent obligations from the other obligations in this Trust Deed, will give rise to separate and independent causes of action, will apply irrespective of any indulgence granted by the Trustee and/or any Noteholder, Receiptholder or Couponholder and will continue in full force and effect despite any judgment, order, claim or proof for a liquidated amount in respect of any sum due under this Trust Deed or the Notes, the Receipts or the Coupons or any other judgment or order. Any such Liability as referred to in sub-clause 14.3(c) (Indemnity) shall be deemed to constitute a Liability suffered by the Trustee, the Noteholders, the Receiptholders and the Couponholders and no proof or evidence of any actual Liability shall be required by the Issuer or any Guarantor or its liquidator or liquidators.

15.   Appointment and Retirement

15.1   Appointment of Trustees

The power of appointing new trustees of this Trust Deed shall be vested in the Issuer but no person shall be appointed who shall not previously have been approved by an Extraordinary Resolution of the Noteholders. A trust corporation may be appointed sole trustee hereof but subject thereto there shall be at least two trustees hereof one at least of which shall be a trust corporation. Any appointment of a new trustee hereof shall as soon as practicable thereafter be notified by the Issuer to the Agents and the Noteholders. The Noteholders shall together have the power, exercisable by Extraordinary Resolution, to remove any trustee or trustees for the time being hereof. The removal of any trustee shall not become effective unless there remains a trustee hereof (being a trust corporation) in office after such removal. If, in such circumstances, no appointment of such a new trustee has become effective within 60 days of the date of such Extraordinary Resolution, the Trustee shall be entitled to appoint a

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Trust Corporation as trustee of this Trust Deed, but no such appointment shall take effect unless previously approved by an Extraordinary Resolution.

15.2   Co-trustees

Notwithstanding the provisions of Clause 15.1 (Appointment of Trustees), the Trustee may, upon giving prior notice to the Issuer and the Guarantors but without the consent of the Issuer or the Guarantors or the Noteholders, the Receiptholders or the Couponholders, appoint any person established or resident in any jurisdiction (whether a trust corporation or not) to act either as a separate trustee or as a co-trustee jointly with the Trustee:

(a) if the Trustee considers such appointment to be in the interests of the Noteholders, the Receiptholders or the Couponholders; or for the purposes of conforming to any legal requirements, restrictions or conditions in any jurisdiction in which any particular act or acts are to be performed; or

(b) for the purposes of obtaining a judgment in any jurisdiction or the enforcement in any jurisdiction either of a judgment already obtained or of this Trust Deed.

15.3   Attorneys

The Issuer and each Guarantor hereby irrevocably appoints the Trustee to be its attorney in its name and on its behalf to execute any such instrument of appointment. Such a person shall (subject always to the provisions of this Trust Deed) have such trusts, powers, authorities and discretions (not exceeding those conferred on the Trustee by this Trust Deed) and such duties and obligations as shall be conferred on such person or imposed by the instrument of appointment. The Trustee shall have power in like manner to remove any such person. Such remuneration as the Trustee may pay to any such person, together with any attributable Liabilities incurred by it in performing its function as such separate trustee or co-trustee, shall for the purposes of this Trust Deed be treated as Liabilities incurred by the Trustee.

15.4   Retirement of Trustees

Any Trustee for the time being of this Trust Deed may retire at any time upon giving not less than 60 days’ notice in writing to the Issuer without assigning any reason thereof and without being responsible for any Liabilities occasioned by such retirement. The retirement of any Trustee shall not become effective unless there remains a trustee hereof (being a trust corporation) in office after such retirement. The Issuer hereby covenants that in the event of the only trustee hereof which is a trust corporation giving notice under this Clause it shall use its reasonable endeavours to procure a new trustee, being a trust corporation, to be appointed and if the Issuer has not procured the appointment of a new trustee within 30 days of the expiry of the Trustee notice referred to in this Clause 15.4, the Trustee shall be entitled to procure forthwith a new trustee.

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15.5   Competence of a majority of Trustees

Whenever there shall be more than two trustees hereof the majority of such trustees shall (provided such majority includes a trust corporation) be competent to execute and exercise all the trusts, powers, authorities and discretions vested by this Trust Deed in the Trustee generally.

15.6   Powers additional

The powers conferred by this Trust Deed upon the Trustee shall be in addition to any powers which may from time to time be vested in it by general law or as the holder of any of the Notes, the Receipts or the Coupons.

15.7   Merger

Any corporation into which the Trustee may be merged or converted or with which it may be consolidated, or any corporation resulting from any merger, conversion or consolidation to which the Trustee shall be a party, or any corporation succeeding to all or substantially all the corporate trust business of the Trustee, shall be the successor of the Trustee hereunder, provided such corporation shall be otherwise qualified and eligible under this Clause, without the execution or filing of any paper or any further act on the part of any of the parties hereto.

16.   Notices

16.1   Addresses for notices

All notices and other communications hereunder shall be made in writing and in English (by letter, telex or fax) and shall be sent as follows:

(a) Issuer: if to the Issuer, to it at:

InterContinental Hotels Group PLC
Broadwater Park
Denham
Buckinghamshire UB9 5HR
Fax: 01895 512 101
Attention: The General Counsel and Company Secretary

(b) Guarantors: if to the Guarantors, to them c/o the Issuer

(c) Trustee: if to the Trustee, to it at:

HSBC Corporate Trustee Company (UK) Limited
8 Canada Square
London E14 5HQ
Fax: +44 20 7991 4350

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Attention: CTLA Trustee Service Administration

16.2   Effectiveness

Every notice or other communication sent in accordance with Clause 15.1 shall be effective as follows:

(a) Letter or fax:  if sent by letter, it shall be deemed to have been delivered 7 days after the time of despatch and if sent by fax it shall be deemed to have been delivered at the time of despatch; and

(b) Telex:  if sent by telex, upon receipt by the sender of the addressee’s answerback at the end of transmission;

provided that any such notice or other communication which would otherwise take effect after 4.00 p.m. on any particular day shall not take effect until 10.00 a.m. on the immediately succeeding business day in the place of the addressee.

16.3   No Notice to Couponholders or Receiptholders

Neither the Trustee nor the Issuer nor any Guarantor shall be required to give any notice to the Couponholders or Receiptholders for anypurpose under this Trust Deed and the Couponholders and Receiptholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders in accordance with Condition 19.

17.   Law and Jurisdiction

17.1   Governing law

This Trust Deed and the Notes, and any non-contractual obligations arising out of or in connection with this Trust Deed and the Notes, are governed by English law.

17.2   English courts

The courts of England have exclusive jurisdiction to settle any dispute (a Dispute), arising out of or in connection with this Trust Deed or the Notes (including a dispute regarding the existence, validity or termination of this Trust Deed or the Notes or any non-contractual obligation arising out of or in connection with them) or the consequences of their nullity.

17.3   Appropriate forum

The parties agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.

18.   Severability

In case any provision in or obligation under this Trust Deed shall be invalid, illegal or unenforceable in any jurisdiction, the validity, legality and enforceability of the remaining provisions or obligations, or of such provision

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or obligation in any other jurisdiction, shall not in any way be affected or impaired thereby.

19.   Contracts (Rights of Third Parties) Act 1999

No person shall have any right to enforce any provision of this Trust Deed under the Contracts (Rights of Third Parties) Act 1999, but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

20.   Counterparts

This Trust Deed may be executed in any number of counterparts, each of which shall be deemed an original.

IN WITNESS WHEREOF this Trust Deed has been executed as a deed by the parties hereto and is intended to be and is hereby delivered on the date first before written.

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SCHEDULE 1

TERMS AND CONDITIONS OF THE NOTES

The following is the text of the terms and conditions which, as supplemented, amended and/or replaced by the relevant Final Terms, will be endorsed on each Note in definitive form issued under the Programme. The terms and conditions applicable to any Note in global form will differ from those terms and conditions which would apply to the Note were it in definitive form to the extent described under “Summary of Provisions Relating to the Notes while in Global Form” below.

1.   Introduction

(a) Programme

InterContinental Hotels Group PLC (the “Issuer”) has established a Euro Medium Term Note Programme (the “Programme”) for the issuance of up to £750,000,000 in aggregate principal amount of notes (the “Notes”) unconditionally and irrevocably guaranteed by Six Continents Limited (“Six Continents”) and by InterContinental Hotels Limited (“InterContinental” and, together with Six Continents, each a “Guarantor” and together, the “Guarantors”).

(b) Final Terms

Notes issued under the Programme are issued in series (each a “Series”) and each Series may comprise one or more tranches (each a “Tranche”) of Notes. Each Tranche is the subject of final terms (the “Final Terms”) which supplements these terms and conditions (the “Conditions”). The terms and conditions applicable to any particular Tranche of Notes are these Conditions as supplemented, amended and/or replaced by the relevant Final Terms. In the event of any inconsistency between these Conditions and the relevant Final Terms, the relevant Final Terms shall prevail.

(c) Trust Deed

The Notes are constituted by, have the benefit of and are in all respects subject to a trust deed dated 27 November 2009 (the “Trust Deed”) between the Issuer, the Guarantors and HSBC Corporate Trustee Company (UK) Limited (the “Trustee”, which expression shall include all persons for the time being the trustee or trustees under the Trust Deed) as trustee for the Noteholders (as defined below).

(d) Agency Agreement

The Notes are the subject of an issue and paying agency agreement dated 27 November 2009 (the “Agency Agreement”) between the Issuer, the Guarantors, HSBC Bank plc as principal paying agent (the “Principal Paying Agent”, which expression includes any successor principal paying agent appointed from time to time in connection with the Notes) and the Trustee.

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(e) Guarantees

Each of the Guarantors has in the Trust Deed given an unconditional and irrevocable guarantee (each a “Guarantee” and together, the “Guarantees”) on a joint and several basis for the due payment of all sums expressed to be payable by the Issuer under the Trust Deed, the Notes and the Coupons.

(f) The Notes

All subsequent references in these Conditions to “Notes” are to the Notes which are the subject of the relevant Final Terms. Copies of the relevant Final Terms are available for viewing during normal business hours and copies may be obtained from the Specified Office(s) of the Paying Agent(s), the initial Specified Office of the Principal Paying Agent being set out at the end of these Conditions.

(g) Summaries

Certain provisions of these Conditions are summaries of the Trust Deed and the Agency Agreement and are subject to their detailed provisions. The holders of the Notes (the “Noteholders”) and the holders of the related interest coupons, if any, (the “Couponholders” and the “Coupons”, respectively) are entitled to the benefit of, are bound by, and are deemed to have notice of, all the provisions of the Trust Deed and the Agency Agreement applicable to them. Copies of the Trust Deed and the Agency Agreement are available for inspection by Noteholders during normal business hours at the Specified Office(s) of the Paying Agent(s).

2.   Interpretation

(a) Definitions

In these Conditions the following expressions have the following meanings:

“Accrual Yield” has the meaning given in the relevant Final Terms;

“Additional Business Centre(s)” means the city or cities specified as such in the relevant Final Terms;

“Additional Financial Centre(s)” means the city or cities specified as such in the relevant Final Terms;

“Additional Rating Agency” means Moody’s and Fitch;

“Borrowings” means, as at any particular time, the aggregate outstanding principal, capital or nominal amount (and any fixed or minimum premium payable on redemption) of the Financial Indebtedness of members of the Group, other than:

(a) any indebtedness referred to in paragraph (g) of the definition of Financial Indebtedness;

(b) any Project Finance Indebtedness; and

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(c) any indebtedness referred to in paragraphs (f)(ii), (i) and (j) of the definition of Financial Indebtedness except, in the case of paragraphs (i) and (j), to the extent any such obligation or liability specified in such paragraphs has been provided for in the annual audited consolidated financial statements or interim unaudited consolidated financial statements of the Group or is disclosed as a contingency in the notes thereto and is quantified,

and deducting, to the extent included, amounts attributable to interests of third parties in members of the Group.

For this purpose, any amount outstanding or repayable in a currency other than U.S.$ shall on that day be taken into account in its U.S.$ equivalent at the rate of exchange that would have been used had an audited consolidated balance sheet of the Group been prepared as at that day in accordance with IFRS as applicable to the Original Financial Statements;

“Business Day” means:

(a) in relation to any sum payable in euro, a TARGET Settlement Day and a day on which commercial banks and foreign exchange markets settle payments generally in each (if any) Additional Business Centre; and

(b) in relation to any sum payable in a currency other than euro, a day on which commercial banks and foreign exchange markets settle payments generally in London, in the Principal Financial Centre of the relevant currency and in each (if any) Additional Business Centre;

“Business Day Convention”, in relation to any particular date, has the meaning given in the relevant Final Terms and, if so specified in the relevant Final Terms, may have different meanings in relation to different dates and, in this context, the following expressions shall have the following meanings:

(a) “Following Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day;

(b) “Modified Following Business Day Convention” or “Modified Business Day Convention” means that the relevant date shall be postponed to the first following day that is a Business Day unless that day falls in the next calendar month in which case that date will be the first preceding day that is a Business Day;

(c) “Preceding Business Day Convention” means that the relevant date shall be brought forward to the first preceding day that is a Business Day;

(d) “FRN Convention”, “Floating Rate Convention” or “Eurodollar Convention” means that each relevant date shall be the date which numerically corresponds to the preceding such date in the calendar month which is

48

the number of months specified in the relevant Final Terms as the Specified Period after the calendar month in which the preceding such date occurred, provided, however, that:

(i) if there is no such numerically corresponding day in the calendar month in which any such date should occur, then such date will be the last day which is a Business Day in that calendar month;

(ii) if any such date would otherwise fall on a day which is not a Business Day, then such date will be the first following day which is a Business Day unless that day falls in the next calendar month, in which case it will be the first preceding day which is a Business Day; and

(iii) if the preceding such date occurred on the last day in a calendar month which was a Business Day, then all subsequent such dates will be the last day which is a Business Day in the calendar month which is the specified number of months after the calendar month in which the preceding such date occurred; and

(e) “No Adjustment” means that the relevant date shall not be adjusted in accordance with any Business Day Convention;

“Calculation Agent” means the Principal Paying Agent or such other Person specified in the relevant Final Terms as the party responsible for calculating the Rate(s) of Interest and Interest Amount(s) and/or such other amount(s) as may be specified in the relevant Final Terms;

“Calculation Amount” has the meaning given in the relevant Final Terms;

a “Change of Control” will be deemed to have occurred if:

(a) any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006) whose shareholders are or are to be substantially similar to the pre-existing shareholders of the Issuer, shall become interested (within the meaning of Part 22 of the Companies Act 2006) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of the Issuer or (B) shares in the capital of the Issuer carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the Issuer; or

(b) any person or any persons acting in concert (as defined in the City Code on Takeovers and Mergers), other than a holding company (as defined in Section 1159 of the Companies Act 2006) whose shareholders are or are to be substantially similar to the pre-existing shareholders of any direct or indirect holding company of the Issuer, shall become interested (within the meaning of Part 22 of the Companies Act 2006) in (A) more than 50 per cent. of the issued or allotted ordinary share capital of any direct or indirect holding company of the Issuer or (B) shares in the capital of any direct or indirect holding company of the Issuer carrying more than 50 per cent. of the voting rights normally exercisable at a general meeting of the any such direct or indirect holding company of the Issuer;

49

“Change of Control Optional Redemption Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Change of Control Optional Redemption Date” has the meaning given in the relevant Final Terms;

“Change of Control Period” means the period commencing on the Relevant Announcement Date and ending 90 days after the Change of Control (or such longer period for which the Notes are under consideration (such consideration having been announced publicly within the period ending 90 days after the Change of Control) for rating review or, as the case may be, rating by a Rating Agency, such period not to exceed 60 days after the public announcement of such consideration);

a “Change of Control Put Event” will be deemed to occur if a Change of Control has occurred and:

(a) on the Relevant Announcement Date, the Notes carry from any Rating Agency:

(i) an investment grade credit rating (Baa3/BBB-, or equivalent, or better), and such rating from any Rating Agency is, within the Change of Control Period, either downgraded to a Non-Investment Grade Rating or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to an investment grade credit rating by such Rating Agency; or

(ii) a Non-Investment Grade Rating and such rating from any Rating Agency is, within the Change of Control Period, either downgraded by one or more notches (by way of example, Bal to Ba2 being one notch) or withdrawn and is not, within the Change of Control Period, subsequently (in the case of a downgrade) upgraded or (in the case of a withdrawal) reinstated to its earlier credit rating or better by such Rating Agency; or

(iii) no credit rating and a Negative Rating Event also occurs within the Change of Control Period, provided that if, at the time of the occurrence of the Change of Control, the Notes carry a credit rating from more than one Rating Agency, at least one of which is investment grade, then subparagraph (i) will apply; and

50

(b) in making any decision to downgrade or withdraw a credit rating pursuant to paragraphs (i) and (ii) above or not to award a credit rating of at least investment grade as described in paragraph (ii) of the definition of “Negative Rating Event”, the relevant Rating Agency announces publicly or confirms in writing to the Issuer or the Trustee that such decision(s) resulted, in whole or in part, from the occurrence of the Change of Control or the Relevant Potential Change of Control Announcement;

“Change of Control Put Event Notice” means the notice to be given pursuant to Condition 10(f) (Change of Control redemption) by the Issuer or, as the case may be, the Trustee to the Noteholders in accordance with Condition 19 (Notices) specifying the nature of the Change of Control Put Event and the procedure for exercising the Change of Control Put Option;

“Change of Control Put Option” means the option of the Noteholders exercisable pursuant to Condition 10(f) (Change of Control redemption);

“Change of Control Put Period” means the period of 45 days after a Change of Control Put Event Notice is given;

“Consolidated Gross Assets” means the consolidated current assets plus consolidated non-current assets of the Group;

“Coupon Sheet” means, in respect of a Note, a coupon sheet relating to the Note;

“Day Count Fraction” means, in respect of the calculation of an amount for any period of time (the “Calculation Period”), such day count fraction as may be specified in these Conditions or the relevant Final Terms and:

(a) if “Actual/Actual (ICMA)” is so specified, means:

(i) where the Calculation Period is equal to or shorter than the Regular Period during which it falls, the actual number of days in the Calculation Period divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and

(ii) where the Calculation Period is longer than one Regular Period, the sum of: (A) the actual number of days in such Calculation Period falling in the Regular Period in which it begins divided by the product of (1) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year; and (B) the actual number of days in such Calculation Period falling in the next Regular Period divided by the product of (a) the actual number of days in such Regular Period and (2) the number of Regular Periods in any year;

(b) if “Actual/Actual (ISDA)” is so specified, means the actual number of days in the Calculation Period divided by 365 (or, if any portion of the Calculation Period falls in a leap year, the sum of (A) the actual number

51

of days in that portion of the Calculation Period falling in a leap year divided by 366 and (B) the actual number of days in that portion of the Calculation Period falling in a non-leap year divided by 365);

(c) if “Actual/365 (Fixed)” is so specified, means the actual number of days in the Calculation Period divided by 365;

(d) if “Actual/360” is so specified, means the actual number of days in the Calculation Period divided by 360;

(e) if “30/360” is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

	[360×(Y2−Y1)+[30×(M2−M1)]+(D2−D1)
Day Count Fraction =
	360

where:

“Y₁” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y₂” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M₁” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M₂” is the calendar month, expressed as number, in which the day immediately following the last day included in the Calculation Period falls;

“D₁” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D will be 30; and

“D₂” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31 and D₁ is greater than 29, in which case D₂ will be 30”;

(f) if “30E/360” or “Eurobond Basis” is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

	[360×(Y2−Y1)+[30×(M2−M1)]+(D2−D1)
Day Count Fraction =
	360

where:

“Y₁” is the year, expressed as a number, in which the first day of the Calculation Period falls; “Y₂” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

52

“Y₂” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M₁” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M₂” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“D₁” is the first calendar day, expressed as a number, of the Calculation Period, unless such number would be 31, in which case D₁ will be 30; and

“D₂” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless such number would be 31, in which case D will be 30; and

(g) if “30E/360 (ISDA)” is so specified, the number of days in the Calculation Period divided by 360, calculated on a formula basis as follows:

	[360×(Y2−Y1)+[30×(M2−M1)]+(D2−D1)
Day Count Fraction =
	360

where:

“Y₁” is the year, expressed as a number, in which the first day of the Calculation Period falls;

“Y₂” is the year, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“M₁” is the calendar month, expressed as a number, in which the first day of the Calculation Period falls;

“M₂” is the calendar month, expressed as a number, in which the day immediately following the last day included in the Calculation Period falls;

“D₁” is the first calendar day, expressed as a number, of the Calculation Period, unless (i) that day is the last day of February or (ii) such number would be 31, in which case D₁ will be 30; and

“D₂” is the calendar day, expressed as a number, immediately following the last day included in the Calculation Period, unless (i) that day is the last day of February but not the Maturity Date or (ii) such number would be 31, in which case D₂ will be 30,

PROVIDED, HOWEVER, THAT in each such case the number of days in the Calculation Period is calculated from and including the first day of the Calculation Period to but excluding the last day of the Calculation Period;

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“Early Redemption Amount (Tax)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Early Termination Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, these Conditions or the relevant Final Terms;

“EBITDA” means, in relation to any Relevant Period, the total consolidated operating profit of the Group for that Relevant Period:

(a) before taking into account:

(i) Net Interest Payable;

(ii) Tax; and

(iii) all exceptional items; and

(b) after adding back all amounts provided for depreciation and amortisation; and

(c) deducting, to the extent included, amounts attributable to interests of third parties in members of the Group;

“Extraordinary Resolution” has the meaning given in the Trust Deed;

“Final Redemption Amount” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Financial Indebtedness” means any indebtedness (without double counting) for or in respect of:

(a) moneys borrowed;

(b) any amount raised by acceptance under any acceptance credit facility or dematerialised equivalent;

(c) any amount raised pursuant to any note purchase facility or the issue of bonds, notes, debentures, loan stock, commercial paper or any similar instrument (entered into or issued primarily as a method of raising finance);

(d) the amount of any liability in respect of any lease or hire purchase contract which would, in accordance with IFRS, be treated as a finance or capital lease;

(e) receivables sold or discounted (other than any receivables to the extent they are sold or discounted on a non-recourse basis);

(f) any amount:

54

(i) raised under any other transaction (including any forward sale or purchase agreement) required by IFRS to be shown as a borrowing in the audited consolidated balance sheet of the Group; or

(ii) raised under any other transaction entered into primarily as a method of raising finance not required by IFRS to be shown as a borrowing in the audited consolidated balance sheet of the Group;

(g) any derivative transaction entered into in connection with protection against or benefit from fluctuation in any rate or price (and, when calculating the value of any derivative transaction, only the marked to market value shall be taken into account);

(h) shares which are expressed to be redeemable prior to 2 May 2013;

(i) any counter-indemnity obligation in respect of a guarantee, indemnity, bond, letter of credit or any other instrument issued by a bank or financial institution; and

(j) the amount of any liability in respect of any guarantee or indemnity for any of the items referred to in paragraphs (a) to (i) above,

but excluding indebtedness owing by a member of the Group to another member of the Group;

“First Interest Payment Date” means the date specified in the relevant Final Terms;

“Fitch” means Fitch Ratings Ltd. or any successor;

“Fixed Coupon Amount” has the meaning given in the relevant Final Terms;

“Group” means the Issuer and its Subsidiaries for the time being;

“Guarantee” and “Guarantees” have the meaning stated in Condition 1(e);

“Guarantor” and “Guarantors” have the meaning stated in Condition 1(a);

“IFRS” means international accounting standards within the meaning of IAS Regulation 1606/2002 to the extent applicable to the relevant financial statements;

“Indebtedness” means any indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities or any borrowed money or any liability under or in respect of any acceptance or acceptance credit;

“Interest Amount” means, in relation to a Note and an Interest Period, the amount of interest payable in respect of that Note for that Interest Period;

55

“Interest Commencement Date” means the Issue Date of the Notes or such other date as may be specified as the Interest Commencement Date in the relevant Final Terms;

“Interest Determination Date” has the meaning given in the relevant Final Terms;

“Interest Payment Date” means the First Interest Payment Date and any date or dates specified as such in, or determined in accordance with the provisions of, the relevant Final Terms and, if a Business Day Convention is specified in the relevant Final Terms:

(a) as the same may be adjusted in accordance with the relevant Business Day Convention; or

(b) if the Business Day Convention is the FRN Convention, Floating Rate Convention or Eurodollar Convention and an interval of a number of calendar months is specified in the relevant Final Terms as being the Specified Period, each of such dates as may occur in accordance with the FRN Convention, Floating Rate Convention or Eurodollar Convention at such Specified Period of calendar months following the Interest Commencement Date (in the case of the first Interest Payment Date) or the previous Interest Payment Date (in any other case);

“Interest Period” means each period beginning on (and including) the Interest Commencement Date or any Interest Payment Date and ending on (but excluding) the next Interest Payment Date;

“ISDA Definitions” means the 2006 ISDA Definitions (as amended and updated as at the date of issue of the first Tranche of the Notes of the relevant Series (as specified in the relevant Final Terms) as published by the International Swaps and Derivatives Association, Inc.);

“Issue Date” has the meaning given in the relevant Final Terms;

“Margin” has the meaning given in the relevant Final Terms;

“Material Subsidiary” means, at any time, any Subsidiary of the Issuer:

(a) whose gross assets represent 10 per cent. or more of Consolidated Gross Assets or whose EBITDA represents 5 per cent. or more of consolidated EBITDA of the Group, in each case, as calculated by reference to the latest financial statements of such Subsidiary (which shall be audited if such statements are prepared by that Subsidiary) and the latest audited consolidated financial statements of the Group adjusted in such manner as the auditors of the Issuer may determine (which determination shall be conclusive in the absence of manifest error) (i) to reflect the gross assets and EBITDA of any person which has become or ceased to be a member of the Group since the end of the financial year to which the latest audited consolidated financial statements of the Group relate where such adjustment is requested by the Issuer and (ii) so that for the purposes of this definition,

56

the gross assets of the relevant Subsidiary shall be calculated on the same basis as Consolidated Gross Assets are calculated and/or, as the case may be, EBITDA of the relevant Subsidiary shall be calculated on the same basis as consolidated EBITDA for the Group (but, in each case, relating only to the relevant Subsidiary) and making such adjustments and eliminations as are required to show the same as the contribution of the relevant Subsidiary to Consolidated Gross Assets and/or, as the case may be, consolidated EBITDA of the Group; or

(b) to which is transferred all or substantially all of the business, undertaking or assets of a Subsidiary which immediately prior to such transfer is a Material Subsidiary, whereupon the transferor Subsidiary shall cease to be a Material Subsidiary and the transferee Subsidiary shall become a Material Subsidiary under this sub-paragraph (b) upon the completion of such transfer;

Any determination made by the auditors of the Issuer as to whether a Subsidiary of the Issuer is or is not a Material Subsidiary at any time shall be conclusive in the absence of manifest error. The Trustee may rely on a report of the auditors of the Issuer, whether or not addressed to the Trustee, that, in their opinion, a Subsidiary is a Material Subsidiary, without liability to any person and without further enquiry or evidence, notwithstanding that such report and/or any engagement letter or other document entered into by the Trustee in connection therewith contains a monetary or other limit on the liability of the auditors of the Issuer and notwithstanding that the scope and/or basis of such a report may be limited by any engagement or similar letter or by the terms of the report itself.

“Maturity Date” has the meaning given in the relevant Final Terms;

“Maximum Redemption Amount” has the meaning given in the relevant Final Terms;

“Minimum Redemption Amount” has the meaning given in the relevant Final Terms;

“Moody’s” means Moody’s Investors Service, Inc. or any successor;

a “Negative Rating Event” shall be deemed to have occurred if at such time as there is no rating assigned to the Notes by a Rating Agency (i) the Issuer does not, either prior to, or not later than 21 days after, the occurrence of the Change of Control seek, and thereafter throughout the Change of Control Period use all reasonable endeavours to obtain, a rating of the Notes, or any other unsecured and unsubordinated debt of the Issuer or (ii) if the Issuer does so seek and use such endeavours, it is unable to obtain such a rating of at least investment grade by the end of the Change of Control Period;

“Net Interest Payable” means, in relation to any Relevant Period, the aggregate amount of interest and any other finance charges accrued by the Group in that Relevant Period in respect of Borrowings including:

(a) the interest element of leasing and hire purchase payments;

57

(b) commitment fees, commissions and guarantee fees; and

(c) amounts in the nature of interest payable in respect of any shares other than equity share capital,

adjusted (but without double counting) by:

(i) deducting interest income of the Group in respect of that Relevant Period;

(ii) adding back the net amount payable (or deducting the net amount receivable) by members of the Group in that Relevant Period as a result of close-out or termination of any interest or (so far as they relate to interest) currency hedging activities;

(iii) adding back the amount payable as a premium on any bond buy-back by members of the Group in that Relevant Period;

(iv) deducting, to the extent included, the amount payable by members of the Group in that Relevant Period for arrangement or related fees in respect of Borrowings (to include, for the avoidance of doubt, underwriting, syndication and fees of a similar nature); and

(v) deducting, to the extent included, the amount of interest and other finance charges attributable to interests of third parties in members of the Group and adjusting, as appropriate, the additions or deductions specified in paragraphs (i) to (iv) (inclusive) above as a consequence of interests of third parties in members of the Group,

but shall exclude in relation to the Relevant Period (A) net mark-to-market gains or losses on revaluation of financial instruments, and (B) for the avoidance of doubt, any amount of interest paid to the Group’s loyalty programme on the accumulated balance of cash received in advance of the redemption of loyalty points awarded;

“Non-Investment Grade Rating” means a non-investment grade credit rating (Ba1/BB+, or equivalent, or worse);

“Optional Redemption Amount (Call)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Optional Redemption Amount (Put)” means, in respect of any Note, its principal amount or such other amount as may be specified in, or determined in accordance with, the relevant Final Terms;

“Optional Redemption Date (Call)” has the meaning given in the relevant Final Terms;

“Optional Redemption Date (Put)” has the meaning given in the relevant Final Terms;

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“Original Financial Statements” means the audited consolidated financial statements of the Group for the financial period ended 31 December 2008;

“Participating Member State” means a Member State of the European Communities which adopts the euro as its lawful currency in accordance with the Treaty;

“Paying Agents” means the Principal Paying Agent and any substitute or additional paying agents appointed in accordance with the Agency Agreement and a “Paying Agent” means any of them;

“Payment Business Day” means:

(a) if the currency of payment is euro, any day which is:

(i) a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and

(ii) in the case of payment by transfer to an account, a TARGET Settlement Day and a day on which dealings in foreign currencies may be carried on in each (if any) Additional Financial Centre; or

(b) if the currency of payment is not euro, any day which is:

(i) a day on which banks in the relevant place of presentation are open for presentation and payment of bearer debt securities and for dealings in foreign currencies; and

(ii) in the case of payment by transfer to an account, a day on which dealings in foreign currencies may be carried on in London, the Principal Financial Centre of the currency of payment and in each (if any) Additional Financial Centre;

“Person” means any individual, company, corporation, firm, partnership, joint venture, association, organisation, state or agency of a state or other entity, whether or not having separate legal personality;

“Principal Financial Centre” means, in relation to any currency, the principal financial centre for that currency, PROVIDED, HOWEVER, THAT:

(a) in relation to euro, it means the principal financial centre of such Participating Member State of the European Communities as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent; and

(b) in relation to Australian dollars, it means either Sydney or Melbourne and, in relation to New Zealand dollars, it means either Wellington or Auckland; in each case as is selected (in the case of a payment) by the payee or (in the case of a calculation) by the Calculation Agent;

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“Project Finance Indebtedness” means Financial Indebtedness (in respect of which Security has been given) incurred by a member of the Group (a “Project Group Member”) for the purposes of financing the acquisition, construction, development and/or operation of an asset (a “Project Asset”) where the provider of the Financial Indebtedness has no recourse against any member of the Group, except for recourse to:

(a) the Project Asset of the Project Group Member or receivables arising from the Project Asset;

(b) a Project Group Member for the purpose of enforcing Security given by it so long as:

(i) the recourse is limited to recoveries in respect of the Project Asset; and

(ii) if the Project Asset does not comprise all or substantially all of the business of that Project Group Member, the provider of the Financial Indebtedness does not have the right to take any steps towards its winding up or dissolution or the appointment of a liquidator, administrator, receiver or similar officer or person, other than in respect of the Project Asset or receivables arising therefrom; or

(c) a member of the Group to the extent only of its shareholding in a Project Group Member;

“Project Group Member” has the meaning given to it in the definition of Project Finance Indebtedness provided that the principal assets and business of such member of the Group is constituted by Project Assets and it has no other Financial Indebtedness except Project Finance Indebtedness;

“Put Option Notice” means a notice which must be delivered to a Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder pursuant to Condition 10(e) (Redemption at the option of Noteholders);

“Put Option Receipt” means a receipt issued by a Paying Agent to a depositing Noteholder upon deposit of a Note with such Paying Agent by any Noteholder wanting to exercise a right to redeem a Note at the option of the Noteholder;

“Rate of Interest” means the rate or rates (expressed as a percentage per annum) of interest payable in respect of the Notes specified in the relevant Final Terms or calculated or determined in accordance with the provisions of these Conditions and/or the relevant Final Terms;

“Rating Agency” means S&P or any of its respective successors or any Substitute Rating Agency and, for the purposes of Condition 10(f), includes any Additional Rating Agency;

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“Redemption Amount” means, as appropriate, the Final Redemption Amount, the Early Redemption Amount (Tax), the Optional Redemption Amount (Call), the Optional Redemption Amount (Put), the Early Termination Amount or such other amount in the nature of a redemption amount as may be specified in, or determined in accordance with the provisions of, the relevant Final Terms;

“Reference Banks” has the meaning given in the relevant Final Terms or, if none, four major banks selected by the Calculation Agent in the market that is most closely connected with the Reference Rate;

“Reference Price” has the meaning given in the relevant Final Terms;

“Reference Rate” has the meaning given in the relevant Final Terms;

“Regular Period” means:

(a) in the case of Notes where interest is scheduled to be paid only by means of regular payments, each period from and including the Interest Commencement Date to but excluding the first Interest Payment Date and each successive period from and including one Interest Payment Date to but excluding the next Interest Payment Date;

(b) in the case of Notes where, apart from the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls; and

(c) in the case of Notes where, apart from one Interest Period other than the first Interest Period, interest is scheduled to be paid only by means of regular payments, each period from and including a Regular Date falling in any year to but excluding the next Regular Date, where “Regular Date” means the day and month (but not the year) on which any Interest Payment Date falls other than the Interest Payment Date falling at the end of the irregular Interest Period.

“Relevant Announcement Date” means the date that is the earlier of (a) the date of the first public announcement of the relevant Change of Control and (b) the date of the earliest Relevant Potential Change of Control Announcement (if any);

“Relevant Date” means, in relation to any payment, whichever is the later of (a) the date on which the payment in question first becomes due and (b) if the full amount payable has not been received in the Principal Financial Centre of the currency of payment by the Principal Paying Agent on or prior to such due date, the date on which (the full amount having been so received) notice to that effect has been given to the Noteholders;

“Relevant Financial Centre” has the meaning given in the relevant Final Terms;

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“Relevant Indebtedness” means (i) any present or future indebtedness (whether being principal, premium, interest or other amounts) for or in respect of any notes, bonds, debentures, debenture stock, loan stock or other securities which have an initial stated maturity of not less than one year and which are or are of a type which is customarily quoted, listed or ordinarily dealt in on any stock exchange, over-the-counter or other securities market, and (ii) any guarantee or indemnity in respect of any such indebtedness;

“Relevant Period” means:

(a) each financial year of the Issuer; and

(b) each period beginning on the first day of the second half of a financial year of the Issuer and ending on the last day of the first half of its next financial year;

“Relevant Potential Change of Control Announcement” means any public announcement or statement by or on behalf of the Issuer, any actual or potential bidder or any adviser acting on behalf of any actual or potential bidder relating to any potential Change of Control where within 180 days following the date of such announcement or statement, a Change of Control occurs;

“Relevant Screen Page” means the page, section or other part of a particular information service (including, without limitation, Reuters) specified as the Relevant Screen Page in the relevant Final Terms, or such other page, section or other part as may replace it on that information service or such other information service, in each case, as may be nominated by the Person providing or sponsoring the information appearing there for the purpose of displaying rates or prices comparable to the Reference Rate;

“Relevant Time” has the meaning given in the relevant Final Terms;

“Reserved Matter” means any proposal:

(a) to change any date fixed for payment of principal or interest in respect of the Notes, to reduce the amount of principal or interest payable on any date in respect of the Notes or to alter the method of calculating the amount of any payment in respect of the Notes on redemption or maturity;

(b) to effect the exchange or substitution of the Notes for, or the conversion of the Notes into, shares, bonds or other obligations or securities of the Issuer or any other person or body corporate formed or to be formed (other than as permitted under Clause 7.3 of the Trust Deed);

(c) to change the currency in which amounts due in respect of the Notes are payable;

(d) to change the quorum required at any meeting of Noteholders or the majority required to pass an Extraordinary Resolution; or

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(e) to amend this definition;

“S&P” means Standard & Poor’s Rating Services, a division of The McGraw-Hill Companies Inc. or any successor;

“Security” means a mortgage, pledge, lien, hypothecation, security interest or other charge or encumbrance entered into for the purpose of securing any obligation of any person;

“Security Interest” means any mortgage, charge, pledge, lien or other security interest including, without limitation, anything analogous to any of the foregoing under the laws of any jurisdiction;

“Specified Currency” has the meaning given in the relevant Final Terms;

“Specified Denomination(s)” has the meaning given in the relevant Final Terms;

“Specified Office” has the meaning given in the Agency Agreement;

“Specified Period” has the meaning given in the relevant Final Terms;

“Subsidiary” means any company where the Issuer:

(a) holds a majority of the voting rights in the company or

(b) is a member of the company and has the right to appoint or remove a majority of its board of directors, or

(c) is a member of the company and controls alone, pursuant to an agreement with other members, a majority of the voting rights in it,

or if the company is a subsidiary of a company that is itself a subsidiary of the Issuer;

“Substitute Rating Agency” means any rating agency of international standing substituted for the Rating Agency by the Issuer from time to time with the prior written approval of the Trustee, such approval not to be unreasonably withheld or delayed;

“Talon” means a talon for further Coupons;

“TARGET2” means the Trans-European Automated Real-Time Gross Settlement Express Transfer payment system which utilises a single shared platform and which was launched on 19 November 2007;

“TARGET Settlement Day” means any day on which TARGET2 is open for the settlement of payments in euro;

“Tax” means any tax, levy, impost, duty or other charge or withholding of a similar nature (including any penalty or interest payable in connection with any failure by the Issuer to pay or any delay in paying by the Issuer any of the same);

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“Treaty” means the Treaty establishing the European Communities, as amended;

“Wholly-Owned Subsidiary” means any Person in which the Issuer, and/or one or more of its Wholly-Owned Subsidiaries, controls, directly or indirectly, all of the stock with ordinary voting power to elect the board of directors of that Person; and

“Zero Coupon Note” means a Note specified as such in the relevant Final Terms.

(b) Interpretation

In these Conditions:

(i) if the Notes are Zero Coupon Notes, references to Coupons and Couponholders are not applicable;

(ii) if Talons are specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Coupons shall be deemed to include references to Talons;

(iii) if Talons are not specified in the relevant Final Terms as being attached to the Notes at the time of issue, references to Talons are not applicable;

(iv) any reference to principal shall be deemed to include the Redemption Amount, any additional amounts in respect of principal which may be payable under Condition 12 (Taxation), any premium payable in respect of a Note and any other amount in the nature of principal payable pursuant to these Conditions;

(v) any reference to interest shall be deemed to include any additional amounts in respect of interest which may be payable under Condition 12 (Taxation) and any other amount in the nature of interest payable pursuant to these Conditions;

(vi) references to Notes being “outstanding” shall be construed in accordance with the Trust Deed;

(vii) if an expression is stated in Condition 2(a) (Definitions) to have the meaning given in the relevant Final Terms, but the relevant Final Terms gives no such meaning or specifies that such expression is “not applicable” then such expression is not applicable to the Notes; and

(viii) any reference to the Agency Agreement or the Trust Deed shall be construed as a reference to the Agency Agreement or the Trust Deed, as the case may be, as amended and/or supplemented up to and including the Issue Date of the Notes.

3.   Form, Denomination and Title

The Notes are in bearer form in the Specified Denomination(s) with Coupons and, if specified in the relevant Final Terms, Talons attached at the time of issue. In the case of a Series of Notes with more than one Specified

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Denomination, Notes of one Specified Denomination will not be exchangeable for Notes of another Specified Denomination. Title to the Notes and the Coupons will pass by delivery. The holder of any Note or Coupon shall (except as otherwise required by law) be treated as its absolute owner for all purposes (whether or not it is overdue and regardless of any notice of ownership, trust or any other interest therein, any writing thereon or any notice of any previous loss or theft thereof) and no Person shall be liable for so treating such holder. No person shall have any right to enforce any term or condition of any Note or the Trust Deed under the Contracts (Rights of Third Parties) Act 1999 but this does not affect any right or remedy of a third party which exists or is available apart from that Act.

4.   Status of the Notes and Guarantees

The Notes and Coupons constitute direct, general, unsubordinated and unconditional obligations of the Issuer which will at all times rank pari passu among themselves and at least pari passu with all other present and future unsecured obligations of the Issuer, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

The payment obligations of the Guarantors rank pari passu with all other present and future unsecured obligations of the Guarantors, save for such obligations as may be preferred by provisions of law that are both mandatory and of general application.

5.   Negative Pledge

So long as any of the Notes remains outstanding neither the Issuer nor any Guarantor nor any Material Subsidiary will create or have outstanding any Security Interest upon, or with respect to, any of the present or future business, undertaking, assets or revenues (including any uncalled capital) of the Issuer or any Guarantor or any Material Subsidiary to secure any Relevant Indebtedness, unless the Issuer or, as the case may be, such Guarantor or such Material Subsidiary, in the case of the creation of a Security Interest, before or at the same time and, in any other case, promptly, takes any and all action necessary to ensure that:

(a) all amounts payable by it under the Notes, the Coupons and the Trust Deed are secured by the Security Interest equally and rateably with the Relevant Indebtedness to the satisfaction of the Trustee; or

(b) such other Security Interest or other arrangement (whether or not it includes the giving of a Security Interest) is provided either (A) as the Trustee in its absolute discretion deems not materially less beneficial to the interest of the Noteholders or (B) as is approved by an Extraordinary Resolution (which is defined in the Trust Deed as a resolution duly passed by a majority of not less than three-quarters of the votes cast thereon at a meeting of the Noteholders or by a resolution in writing signed by or on behalf of the holders of not less than three quarters of the nominal amount of the Notes) of the Noteholders.

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6.   Fixed Rate Note Provisions

(a) Application

This Condition 6 is applicable to the Notes only if the Fixed Rate Note provisions are specified in the relevant Final Terms as being applicable.

(b) Accrual of interest

The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 6 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment.

(c) Fixed Coupon Amount

The amount of interest payable in respect of each Note for any Interest Period shall be the relevant Fixed Coupon Amount and, if the Notes are in more than one Specified Denomination, shall be the relevant Fixed Coupon Amount in respect of the relevant Specified Denomination.

(d) Calculation of interest amount

The amount of interest payable in respect of each Note for any period for which a Fixed Coupon Amount is not specified shall be calculated by applying the Rate of Interest to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of such Note divided by the Calculation Amount. For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

7.   Floating Rate Note and Index-Linked Interest Note Provisions

(a) Application

This Condition 7 is applicable to the Notes only if the Floating Rate Note provisions or the Index-Linked Interest Note provisions are specified in the relevant Final Terms as being applicable.

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(b) Accrual of interest

The Notes bear interest from the Interest Commencement Date at the Rate of Interest payable in arrear on each Interest Payment Date, subject as provided in Condition 11 (Payments). Each Note will cease to bear interest from the due date for final redemption unless, upon due presentation, payment of the Redemption Amount is improperly withheld or refused, in which case it will continue to bear interest in accordance with this Condition 7 (as well after as before judgment) until whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment.

(c) Screen Rate Determination

If Screen Rate Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be determined by the Calculation Agent on the following basis:

(i) if the Reference Rate is a composite quotation or customarily supplied by one entity, the Calculation Agent will determine the Reference Rate which appears on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(ii) in any other case, the Calculation Agent will determine the arithmetic mean of the Reference Rates which appear on the Relevant Screen Page as of the Relevant Time on the relevant Interest Determination Date;

(iii) if, in the case of (i) above, such rate does not appear on that page or, in the case of (ii) above, fewer than two such rates appear on that page or if, in either case, the Relevant Screen Page is unavailable, the Calculation Agent will:

(A) request the principal Relevant Financial Centre office of each of the Reference Banks to provide a quotation of the Reference Rate at approximately the Relevant Time on the Interest Determination Date to prime banks in the Relevant Financial Centre interbank market in an amount that is representative for a single transaction in that market at that time; and

(B) determine the arithmetic mean of such quotations; and

(iv) if fewer than two such quotations are provided as requested, the Calculation Agent will determine the arithmetic mean of the rates (being the nearest to the Reference Rate, as determined by the Calculation Agent) quoted by major banks in the Principal Financial Centre of the Specified Currency, selected by the Calculation

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Agent, at approximately 11.00 a.m. (local time in the Principal Financial Centre of the Specified Currency) on the first day of the relevant Interest Period for loans in the Specified Currency to leading European banks for a period equal to the relevant Interest Period and in an amount that is representative for a single transaction in that market at that time,

and the Rate of Interest for such Interest Period shall be the sum of the Margin and the rate or (as the case may be) the arithmetic mean so determined; PROVIDED, HOWEVER, THAT if the Calculation Agent is unable to determine a rate or (as the case may be) an arithmetic mean in accordance with the above provisions in relation to any Interest Period, the Rate of Interest applicable to the Notes during such Interest Period will be the sum of the Margin and the rate or (as the case may be) the arithmetic mean last determined in relation to the Notes in respect of a preceding Interest Period.

(d) ISDA Determination

If ISDA Determination is specified in the relevant Final Terms as the manner in which the Rate(s) of Interest is/are to be determined, the Rate of Interest applicable to the Notes for each Interest Period will be the sum of the Margin and the relevant ISDA Rate where “ISDA Rate” in relation to any Interest Period means a rate equal to the Floating Rate (as defined in the ISDA Definitions) that would be determined by the Calculation Agent under an interest rate swap transaction if the Calculation Agent were acting as Calculation Agent for that interest rate swap transaction under the terms of an agreement incorporating the ISDA Definitions and under which:

(i) the Floating Rate Option (as defined in the ISDA Definitions) is as specified in the relevant Final Terms;

(ii) the Designated Maturity (as defined in the ISDA Definitions) is a period specified in the relevant Final Terms; and

(iii) the relevant Reset Date (as defined in the ISDA Definitions) is either (A) if the relevant Floating Rate Option is based on the London inter-bank offered rate (LIBOR) for a currency, the first day of that Interest Period or (B) in any other case, as specified in the relevant Final Terms.

(e) Index-Linked Interest

If the Index-Linked Interest Note provisions are specified in the relevant Final Terms as being applicable, the Rate(s) of Interest applicable to the Notes for each Interest Period will be determined in the manner specified in the relevant Final Terms.

(f) Maximum or Minimum Rate of Interest

If any Maximum Rate of Interest or Minimum Rate of Interest is specified in the relevant Final Terms, then the Rate of Interest shall in no event be greater than the maximum or be less than the minimum so specified.

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(g) Calculation of Interest Amount

The Calculation Agent will, as soon as practicable after the time at which the Rate of Interest is to be determined in relation to each Interest Period, calculate the Interest Amount payable in respect of each Note for such Interest Period. The Interest Amount will be calculated by applying the Rate of Interest for such Interest Period to the Calculation Amount, multiplying the product by the relevant Day Count Fraction, rounding the resulting figure to the nearest sub-unit of the Specified Currency (half a sub-unit being rounded upwards) and multiplying such rounded figure by a fraction equal to the Specified Denomination of the relevant Note divided by the Calculation Amount. For this purpose a “sub-unit” means, in the case of any currency other than euro, the lowest amount of such currency that is available as legal tender in the country of such currency and, in the case of euro, means one cent.

(h) Calculation of other amounts

If the relevant Final Terms specifies that any other amount is to be calculated by the Calculation Agent, the Calculation Agent will, as soon as practicable after the time or times at which any such amount is to be determined, calculate the relevant amount. The relevant amount will be calculated by the Calculation Agent in the manner specified in the relevant Final Terms.

(i) Publication

The Calculation Agent will cause each Rate of Interest and Interest Amount determined by it, together with the relevant Interest Payment Date, and any other amount(s) required to be determined by it together with any relevant payment date(s) to be notified to the Paying Agents and each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation as soon as practicable after such determination but (in the case of each Rate of Interest, Interest Amount and Interest Payment Date) in any event not later than the first day of the relevant Interest Period. Notice thereof shall also promptly be given to the Noteholders. The Calculation Agent will be entitled to recalculate any Interest Amount (on the basis of the foregoing provisions) without notice in the event of an extension or shortening of the relevant Interest Period. If the Calculation Amount is less than the minimum Specified Denomination the Calculation Agent shall not be obliged to publish each Interest Amount but instead may publish only the Calculation Amount and the Interest Amount in respect of a Note having the minimum Specified Denomination.

(j) Notifications etc.

All notifications, opinions, determinations, certificates, calculations, quotations and decisions given, expressed, made or obtained for the purposes of this Condition 7 by the Calculation Agent will (in the absence of manifest error) be binding on the Issuer, the Guarantors, the Trustee, the Paying Agents, the Noteholders and the Couponholders and

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(subject as aforesaid) no liability to any such Person will attach to the Calculation Agent in connection with the exercise or non-exercise by it of its powers, duties and discretions for such purposes.

(k) Determination or Calculation by Trustee

If the Calculation Agent fails at any time to determine a Rate of Interest or to calculate an Interest Amount, the Trustee or a person appointed by the Trustee for that purpose (but without any liability accruing to the Trustee as a result) will determine such Rate of Interest and make such determination or calculation which shall be deemed to have been made by the Calculation Agent. In doing so, the Trustee or a person appointed by the Trustee for that purpose (but without any liability accruing to the Trustee as a result) shall apply all of the provisions of these Conditions with any necessary consequential amendments to the extent that, in its sole opinion and with absolute discretion, it can do so and in all other respects it shall do so in such manner as it shall deem fair and reasonable in all the circumstances and will not be liable for any loss, liability, cost, charge or expense which may arise as a result thereof. Any such determination or calculation made by the Trustee shall be binding on the Issuer, the Guarantors, the Noteholders and the Couponholders.

8.   Zero Coupon Note Provisions

(a) Application

This Condition 8 is applicable to the Notes only if the Zero Coupon Note provisions are specified in the relevant Final Terms as being applicable.

(b) Late payment on Zero Coupon Notes

If the Redemption Amount payable in respect of any Zero Coupon Note is improperly withheld or refused, the Redemption Amount shall thereafter be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price on the basis of the relevant Day Count Fraction from (and including) the Issue Date to (but excluding) whichever is the earlier of (i) the day on which all sums due in respect of such Note up to that day are received by or on behalf of the relevant Noteholder and (ii) the day which is seven days after the Principal Paying Agent or, as the case may be, the Trustee has notified the Noteholders that it has received all sums due in respect of the Notes up to such seventh day (except to the extent that there is any subsequent default in payment).

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9.   Dual Currency Note Provisions

(a) Application

This Condition 9 is applicable to the Notes only if the Dual Currency Note provisions are specified in the relevant Final Terms as being applicable.

(b) Rate of Interest

If the rate or amount of interest fails to be determined by reference to an exchange rate, the rate or amount of interest payable shall be determined in the manner specified in the relevant Final Terms.

10.   Redemption and Purchase

(a) Scheduled redemption

Unless previously redeemed, or purchased and cancelled in accordance with Condition 10(j) (Cancellation), the Notes will be redeemed at their Final Redemption Amount on the Maturity Date, subject as provided in Condition 11 (Payments).

(b) Redemption for tax reasons

The Notes may be redeemed at the option of the Issuer in whole, but not in part:

(i) at any time (if neither the Floating Rate Note provisions or the Index-Linked Interest Note provisions are specified in the relevant Final Terms as being applicable); or

(ii) on any Interest Payment Date (if the Floating Rate Note provisions or the Index- Linked Interest Note provisions are specified in the relevant Final Terms as being applicable),

on giving not less than 30 nor more than 60 days’ notice to the Noteholders (which notice shall be irrevocable), at their Early Redemption Amount (Tax), together with interest accrued (if any) to the date fixed for redemption, if:

(A) as a result of any change in, or amendment to, the tax laws or regulations of the United Kingdom or any political subdivision or any authority thereof or therein having power to tax, or any change in the application or official interpretation of such laws or regulations (including a holding by a court of competent jurisdiction), which change or amendment becomes effective on or after the date of issue of the first Tranche of the Notes on the next Interest Payment Date either (i) the Issuer would be obliged to pay additional amounts as provided or referred to in Condition 12 (Taxation) or (ii) each Guarantor would be unable for reasons outside its control to procure payment by the Issuer and in making payment itself would be required to pay such additional amounts; and

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(B) such obligation cannot be avoided by the Issuer or, as the case may be, each of the Guarantors taking reasonable measures available to it,

PROVIDED, HOWEVER, THAT no such notice of redemption shall be given earlier than:

(I) where the Notes may be redeemed at any time, 90 days prior to the earliest date on which the Issuer or, as the case may be, the relevant Guarantor would be obliged to pay such additional amounts if a payment in respect of the Notes were then due; or

(II) where the Notes may be redeemed only on an Interest Payment Date, 60 days prior to the Interest Payment Date occurring immediately before the earliest date on which the Issuer or, as the case may be, the relevant Guarantor would be obliged to pay such additional amounts if a payment in respect of the Notes were then due.

Prior to the publication of any notice of redemption pursuant to this paragraph, the Issuer shall deliver to the Trustee (i), if the Trustee so requests, an opinion of independent legal advisers of recognised standing to the effect that the Issuer or, as the case may be, a Guarantor has or will become obliged to pay such additional amounts as a result of such change or amendment and (ii) a certificate signed by two authorised officers of the Issuer or, as the case may be, each of the Guarantors, as the case may be, stating that the obligation referred to in (A) above cannot be avoided by the Issuer or, as the case may be, each of the Guarantors taking reasonable measures available to it and the Trustee shall be entitled to accept such certificate as sufficient evidence of the satisfaction of the condition precedent set out in (B) above in which event it shall be conclusive and binding on the Noteholders and Couponholders. Upon the expiry of any such notice as is referred to in this Condition 10(b), the Issuer shall be bound to redeem the Notes in accordance with this Condition 10(b).

(c) Redemption at the option of the Issuer

If Call Option is specified in the relevant Final Terms as being applicable, the Notes may be redeemed at the option of the Issuer in whole or, if so specified in the relevant Final Terms, in part on any Optional Redemption Date (Call) at the relevant Optional Redemption Amount (Call) on the Issuer’s giving not less than 30 nor more than 60 days’ notice to the Noteholders and the Trustee (which notice shall be irrevocable and shall oblige the Issuer to redeem the Notes or, as the case may be, the Notes specified in such notice on the relevant Optional Redemption Date (Call) at the Optional Redemption Amount (Call) plus accrued interest (if any) to such date).

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(d) Partial redemption

If the Notes are to be redeemed in part only on any date in accordance with Condition 10(c) (Redemption at the option of the Issuer), the Notes to be redeemed shall be selected by the drawing of lots in such place and in such manner as the Trustee approves, subject to compliance with applicable law, the rules of each competent authority, stock exchange and/or quotation system (if any) by which the Notes have then been admitted to listing, trading and/or quotation and the notice to Noteholders referred to in Condition 10(c) (Redemption at the option of the Issuer) shall specify the serial numbers of the Notes so to be redeemed. If any Maximum Redemption Amount or Minimum Redemption Amount is specified in the relevant Final Terms, then the Optional Redemption Amount (Call) shall in no event be greater than the maximum or be less than the minimum so specified.

(e) Redemption at the option of Noteholders

If Put Option is specified in the relevant Final Terms as being applicable, the Issuer shall, at the option of the holder of any Note redeem such Note on the Optional Redemption Date (Put) specified in the relevant Put Option Notice at the relevant Optional Redemption Amount (Put) together with interest (if any) accrued to such date. In order to exercise the option contained in this Condition 10(e), the holder of a Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), deposit with any Paying Agent such Note together with all unmatured Coupons relating thereto and a duly completed Put Option Notice in the form obtainable from any Paying Agent. The Paying Agent with which such Note is so deposited shall deliver a duly completed Put Option Receipt to the depositing Noteholder. No Note, once deposited with a duly completed Put Option Notice in accordance with this Condition 10(e), may be withdrawn; PROVIDED, HOWEVER, THAT if, prior to the relevant Optional Redemption Date (Put), any such Note becomes immediately due and payable or, upon due presentation of any such Note on the relevant Optional Redemption Date (Put), payment of the redemption moneys is improperly withheld or refused, the relevant Paying Agent shall mail notification thereof to the depositing Noteholder at such address as may have been given by such Noteholder in the relevant Put Option Notice and shall hold such Note at its Specified Office for collection by the depositing Noteholder against surrender of the relevant Put Option Receipt. For so long as any outstanding Note is held by a Paying Agent in accordance with this Condition 10(e), the depositor of such Note and not such Paying Agent shall be deemed to be the holder of such Note for all purposes.

If the Note is in definitive form and held through Euroclear or Clearstream, Luxembourg, to exercise the right to require redemption or, as the case may be, purchase of a Note under this Condition 10(e) the holder of the Note must, not less than 30 nor more than 60 days before the relevant Optional Redemption Date (Put), give notice to the Principal Paying Agent of such exercise in accordance with the standard procedures of Euroclear and Clearstream, Luxembourg (which may include notice being given on his instruction by Euroclear or Clearstream, Luxembourg or

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any common depositary for them to the Principal Paying Agent by electronic means) in a form acceptable to Euroclear and Clearstream, Luxembourg from time to time.

(f) Change of Control redemption

If Change of Control Put Option is specified in the relevant Final Terms as being applicable and a Change of Control Put Event occurs, the holder of each Note will have the option (unless prior to the giving of the relevant Change of Control Put Event Notice the Issuer has given notice of redemption under Condition 10(b) (Redemption for tax reasons) or 10(c) (Redemption at the option of the Issuer), if applicable) to require the Issuer to redeem or, at the Issuer’s option, purchase (or procure the purchase of) that Note on the Change of Control Optional Redemption Date at its Change of Control Optional Redemption Amount together with interest accrued to (but excluding) the Change of Control Optional Redemption Date.

Promptly upon, and in any event within 14 days after, the Issuer becoming aware that a Change of Control Put Event has occurred the Issuer shall, and at any time upon the Trustee becoming similarly so aware the Trustee may, and if so requested by the holders of at least one-quarter in principal amount of the Notes then outstanding or if so directed by an Extraordinary Resolution of the Noteholders, shall, (subject in each case to the Trustee being indemnified and/or secured to its satisfaction) give the Change of Control Put Event Notice to the Noteholders.

To exercise the Change of Control Put Option, the holder of the Note must deliver such Note to the specified office of any Paying Agent at any time during normal business hours of such Paying Agent falling within the Change of Control Put Period, accompanied by a duly signed and completed notice of exercise in the form (for the time being current) obtainable from the specified office of any Paying Agent (an “Exercise Notice”). The Note should be delivered together with all Coupons appertaining thereto maturing after the Change of Control Optional Redemption Date, failing which the Paying Agent will require payment from or on behalf of the Noteholder of an amount equal to the face value of any such missing Coupon. Any amount so paid will be reimbursed by the Paying Agent to the Noteholder against presentation and surrender of the relevant missing Coupon (or any replacement issued therefor pursuant to Condition 15 (Replacement of Notes and Coupons)) at any time after such payment, but before the expiry of the period of ten years from the date on which such Coupon would have become due, but not thereafter. If the Note is in definitive form and held through Euroclear or Clearstream, Luxembourg, to exercise the right to require redemption or, as the case may be, purchase of a Note under this Condition 10(f) the holder of the Note must, within the Change of Control Put Period, give notice to the Principal Paying Agent of such exercise in accordance with the standard procedures of Euroclear and Clearstream, Luxembourg (which may include notice being given on his instruction by Euroclear or Clearstream, Luxembourg or any common depositary for them to the Principal Paying Agent by electronic means) in a form acceptable to Euroclear and Clearstream, Luxembourg from

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time to time. The Paying Agent to which such Note and Exercise Notice are delivered will issue to the Noteholder concerned a non-transferable receipt in respect of the Note so delivered or, in the case of a Note held through Euroclear and/or Clearstream, Luxembourg, notice received. Payment in respect of any Note so delivered will be made, if the holder duly specified a bank account in the Exercise Notice to which payment is to be made, on the Change of Control Optional Redemption Date by transfer to that bank account and, in every other case, on or after the Change of Control Optional Redemption Date against presentation and surrender or (as the case may be) endorsement of such receipt at the specified office of any Paying Agent. For the purposes of these Conditions, receipts issued pursuant to this Condition 10(f) shall be treated as if they were Notes. The Issuer shall redeem or purchase (or procure the purchase of) the Notes in respect of which the Change of Control Put Option has been validly exercised in accordance with the provisions of this Condition 10(f) on the Change of Control Optional Redemption Date unless previously redeemed (or purchased) and cancelled.

Any Exercise Notice, once given, shall be irrevocable except where prior to the Change of Control Optional Redemption Date an Event of Default shall have occurred and the Trustee shall have accelerated the Notes, in which event such holder, at its option, may elect by notice to the Issuer to withdraw the Exercise Notice and instead to treat its Notes as being forthwith due and payable pursuant to Condition 13.

If 80 per cent. or more in principal amount of the Notes then outstanding have been redeemed or purchased pursuant to this Condition 10(f), the Issuer may, on giving not less than 30 nor more than 60 days’ notice to the Noteholders (such notice being given within 30 days after the Change of Control Optional Redemption Date), redeem or purchase (or procure the purchase of), at its option, all but not some only of the remaining outstanding Notes at their principal amount, together with interest accrued to (but excluding) the date fixed for such redemption or purchase.

If the rating designations employed by any Rating Agency are changed from those which are described in paragraph (ii) of the definition of “Change of Control Put Event”, or if a rating is procured from a Substitute Rating Agency, the Issuer shall determine, with the agreement of the Trustee, the rating designations of such Rating Agency or such Substitute Rating Agency (as appropriate) as are most equivalent to the prior rating designations of the relevant Rating Agency and this Condition 10(f) shall be construed accordingly.

The Trustee is under no obligation to ascertain whether a Change of Control Put Event or Change of Control or any event which could lead to the occurrence of or could constitute a Change of Control Put Event or Change of Control has occurred, or to seek any confirmation from any Rating Agency pursuant to the definition of Negative Rating Event below, and, until it shall have actual knowledge or notice pursuant to the Trust Deed to the contrary, the Trustee may assume that no Change of Control Put Event or Change of Control or other such event has occurred.

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(g) No other redemption

The Issuer shall not be entitled to redeem the Notes otherwise than as provided in Conditions 10(a) (Scheduled redemption) to 10(f) (Change of control redemption) above.

(h) Early redemption of Zero Coupon Notes

Unless otherwise specified in the relevant Final Terms, the Redemption Amount payable on redemption of a Zero Coupon Note at any time before the Maturity Date shall be an amount equal to the sum of:

(i) the Reference Price; and

(ii) the product of the Accrual Yield (compounded annually) being applied to the Reference Price from (and including) the Issue Date to (but excluding) the date fixed for redemption or (as the case may be) the date upon which the Note becomes due and payable.

Where such calculation is to be made for a period which is not a whole number of years, the calculation in respect of the period of less than a full year shall be made on the basis of such Day Count Fraction as may be specified in the Final Terms for the purposes of this Condition 10(h) or, if none is so specified, a Day Count Fraction of 30E/360.

(i) Purchase

The Issuer or any of its Subsidiaries may at any time purchase Notes in the open market or otherwise and at any price, PROVIDED THAT all unmatured Coupons are purchased therewith.

(j) Cancellation

All Notes so redeemed or purchased by the Issuer or any of its Subsidiaries and any unmatured Coupons attached to or surrendered with them shall be cancelled and may not be reissued or resold.

11.   Payments

(a) Principal

Payments of principal shall be made only against presentation and (PROVIDED THAT payment is made in full) surrender of Notes at the Specified Office of any Paying Agent outside the United States by cheque drawn in the currency in which the payment is due on, or by transfer to an account denominated in that currency (or, if that currency is euro, any other account to which euro may be credited or transferred) and maintained by the payee with, a bank in the Principal Financial Centre of that currency (in the case of a sterling cheque, a town clearing branch of a bank in the City of London).

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(b) Interest

Payments of interest shall, subject to paragraph (h) below, be made only against presentation and (PROVIDED THAT payment is made in full) surrender of the appropriate Coupons at the Specified Office of any Paying Agent outside the United States in the manner described in paragraph (a) above.

(c) Payments in New York City

Payments of principal or interest may be made at the Specified Office of a Paying Agent in New York City if (i) the Issuer has appointed Paying Agents outside the United States with the reasonable expectation that such Paying Agents will be able to make payment of the full amount of the interest on the Notes in the currency in which the payment is due when due, (ii) payment of the full amount of such interest at the offices of all such Paying Agents is illegal or effectively precluded by exchange controls or other similar restrictions and (iii) payment is permitted by applicable United States law.

(d) Payments subject to fiscal laws

All payments in respect of the Notes are subject in all cases to any applicable fiscal or other laws and regulations in the place of payment, but without prejudice to the provisions of Condition 12 (Taxation). No commissions or expenses shall be charged to the Noteholders or Couponholders in respect of such payments.

(e) Deductions for unmatured Coupons

If the relevant Final Terms specifies that the Fixed Rate Note provisions are applicable and a Note is presented without all unmatured Coupons relating thereto:

(i) if the aggregate amount of the missing Coupons is less than or equal to the amount of principal due for payment, a sum equal to the aggregate amount of the missing Coupons will be deducted from the amount of principal due for payment; provided, however, that if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of such missing Coupons which the gross amount actually available for payment bears to the amount of principal due for payment;

(ii) if the aggregate amount of the missing Coupons is greater than the amount of principal due for payment:

(A) so many of such missing Coupons shall become void (in inverse order of maturity) as will result in the aggregate amount of the remainder of such missing Coupons (the “Relevant Coupons”) being equal to the amount of principal due for payment; provided, however, that where this sub-paragraph would otherwise require a fraction of a missing Coupon to become void, such missing Coupon shall become void in its entirety; and

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(B) a sum equal to the aggregate amount of the Relevant Coupons (or, if less, the amount of principal due for payment) will be deducted from the amount of principal due for payment; provided, however, that, if the gross amount available for payment is less than the amount of principal due for payment, the sum deducted will be that proportion of the aggregate amount of the Relevant Coupons (or, as the case may be, the amount of principal due for payment) which the gross amount actually available for payment bears to the amount of principal due for payment.

Each sum of principal so deducted shall be paid in the manner provided in paragraph (a) above against presentation and (PROVIDED THAT payment is made in full) surrender of the relevant missing Coupons.

(f) Unmatured Coupons void

If the relevant Final Terms specifies that this Condition 11(f) is applicable or that the Floating Rate Note provisions or the Index-Linked Interest Note provisions are applicable, on the due date for final redemption of any Note or early redemption in whole of such Note pursuant to Condition 10(b) (Redemption for tax reasons), Condition 10(e) (Redemption at the option of Noteholders), Condition 10(c) (Redemption at the option of the Issuer) or Condition 13 (Events of Default), all unmatured Coupons relating thereto (whether or not still attached) shall become void and no payment will be made in respect thereof.

(g) Payments on business days

If the due date for payment of any amount in respect of any Note or Coupon is not a Payment Business Day in the place of presentation, the holder shall not be entitled to payment in such place of the amount due until the next succeeding Payment Business Day in such place and shall not be entitled to any further interest or other payment in respect of any such delay.

(h) Payments other than in respect of matured Coupons

Payments of interest other than in respect of matured Coupons shall be made only against presentation of the relevant Notes at the Specified Office of any Paying Agent outside the United States (or in New York City if permitted by paragraph (c) above).

(i) Partial payments

If a Paying Agent makes a partial payment in respect of any Note or Coupon presented to it for payment, such Paying Agent will endorse thereon a statement indicating the amount and date of such payment.

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(j) Exchange of Talons

On or after the maturity date of the final Coupon which is (or was at the time of issue) part of a Coupon Sheet relating to the Notes, the Talon forming part of such Coupon Sheet may be exchanged at the Specified Office of the Principal Paying Agent for a further Coupon Sheet (including, if appropriate, a further Talon but excluding any Coupons in respect of which claims have already become void pursuant to Condition 14 (Prescription). Upon the due date for redemption of any Note, any unexchanged Talon relating to such Note shall become void and no Coupon will be delivered in respect of such Talon.

12.   Taxation

(a) Gross up

All payments of principal and interest in respect of the Notes and the Coupons by or on behalf of the Issuer or any Guarantor shall be made free and clear of, and without withholding or deduction for or on account of, any present or future taxes, duties, assessments or governmental charges of whatever nature imposed, levied, collected, withheld or assessed by or on behalf of the United Kingdom or any political subdivision therein or any authority therein or thereof having power to tax, unless the withholding or deduction of such taxes, duties, assessments, or governmental charges is required by law. In that event, the Issuer or, as the case may be, such Guarantor, shall pay such additional amounts as will result in receipt by the Noteholders and the Couponholders after such withholding or deduction of such amounts as would have been received by them had no such withholding or deduction been required, except that no such additional amounts shall be payable in respect of any Note or Coupon presented for payment:

(i) by or on behalf of a holder which is liable to such taxes, duties, assessments or governmental charges in respect of such Note or Coupon by reason of its having some connection with the jurisdiction by which such taxes, duties, assessments or charges have been imposed, levied, collected, withheld or assessed other than the mere holding of the Note or Coupon; or

(ii) where such withholding or deduction is imposed on a payment to or for an individual and is required to be made pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26 — 27 November 2000 on the taxation of savings income or any law of the EU or a non-Member State implementing or complying with, or introduced in order to conform to, such Directive; or

(iii) by or on behalf of a holder who would have been able to avoid such withholding or deduction by presenting the relevant Note or Coupon to another Paying Agent (if any); or

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(iv) more than 30 days after the Relevant Date except to the extent that the holder of such Note or Coupon would have been entitled to such additional amounts on presenting such Note or Coupon for payment on the last day of such period of 30 days.

(b) Taxing jurisdiction

If the Issuer or any Guarantor becomes subject at any time to any taxing jurisdiction other than the United Kingdom, references in these Conditions to the United Kingdom shall be construed as references to the United Kingdom and/or such other jurisdiction.

13.   Events of Default

If any of the following events occurs and is continuing then the Trustee may at its discretion and shall, if so requested in writing by the holders of at least one fifth of the aggregate principal amount of the outstanding Notes, or if so directed by an Extraordinary Resolution (subject to the Trustee having been indemnified and/or provided with security and/or prefunded by the Noteholders to its satisfaction) by written notice to the Issuer, declare the Notes to be immediately due and payable, whereupon they shall become immediately due and payable at their Early Termination Amount together with accrued interest (if any) without further action or formality:

(a) Non-payment

the Issuer fails to pay any amount of principal in respect of the Notes within ten days of the due date for payment thereof or any amount of interest in respect of the Notes within ten days of the due date for payment thereof; or

(b) Breach of other obligations

the Issuer or any Guarantor does not comply with any of their other obligations under or in respect of the Notes or the Trust Deed and (except in any case where, in the opinion of the Trustee, such failure is incapable of remedy in which case no continuation or notice as is hereinafter provided will be required) such failure to comply continues unremedied for 30 days (or such longer period as the Trustee may permit) after written notice thereof has been delivered by the Trustee to the Issuer or such Guarantor, as the case may be; or

(c) Cross Default

(i) any Indebtedness of the Issuer or any Guarantor or any Material Subsidiary becomes due and repayable prematurely by reason of an event of default (however described);

(ii) the Issuer or any Guarantor or any Material Subsidiary fails to make any payment in respect of any Indebtedness on the due date for payment or, as the case may be, within any applicable grace period as originally provided;

(iii) any security given by the Issuer or any Guarantor or any Material Subsidiary for any Indebtedness is enforced; or

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(iv) default is made by the Issuer or any Guarantor or any Material Subsidiary in making any payment due under any guarantee and/or indemnity given by it in relation to any Indebtedness of any other person,

provided that (i) no event described in this Condition 13(c) shall constitute an Event of Default where the Issuer or the relevant Guarantor or the relevant Material Subsidiary, as the case may be, satisfies the Trustee that it is contesting such Event of Default in good faith and by appropriate action and (ii) no event described in this Condition 13(c) shall constitute an Event of Default unless the Indebtedness or other relative liability, either alone or when aggregated with other Indebtedness and/or other liabilities relative to all (if any) other events described in this Condition 13(c) which have occurred and are continuing (excluding where the Issuer and/or the relevant Guarantor and/or the relevant Material Subsidiary, as the case may be, has satisfied the Trustee that it is contesting such event in good faith and by appropriate action), amounts to at least U.S.$50,000,000 (or its equivalent in any other currency); or

(d) Security enforced

a secured party takes possession, or a receiver, manager or other similar officer is appointed, of all or substantially all of the undertaking, assets and revenues of the Issuer, a Guarantor or any Material Subsidiary; or

(e) Creditor’s process

any expropriation, attachment, sequestration, distress or execution affects any asset or assets of the Issuer, any Guarantor or a Material Subsidiary having an aggregate value of and in respect of indebtedness aggregating at least U.S.$50,000,000 (or its equivalent in any other currency or currencies) and is not discharged within 30 days; or

(f) Insolvency etc.

(i) the Issuer, any Guarantor or any Material Subsidiary becomes insolvent or is unable to pay its debts as they fall due, (ii) an administrator or liquidator of the Issuer, any Guarantor or any Material Subsidiary of all or substantially all of the undertaking, assets and revenues of the Issuer, such Guarantor or such Material Subsidiary is appointed (otherwise than for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent on terms previously approved in writing by the Trustee or by an Extraordinary Resolution); or (iii) the Issuer, any Guarantor or any Material Subsidiary makes a general assignment or an arrangement or composition with or for the benefit of its creditors generally or declares a moratorium in respect of any of its Indebtedness given by it; or (iv) a person presents a petition for the winding up, liquidation, dissolution, administration or suspension of payments of the Issuer, any Guarantor or any Material Subsidiary (excluding where the Issuer, such Guarantor or such Material Subsidiary has satisfied the Trustee that it is contesting such petition in good faith and by appropriate action); or

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(g) Winding up etc.

an order is made or an effective resolution is passed for the winding up, liquidation or dissolution of the Issuer, any Guarantor or any Material Subsidiary (otherwise than for the purposes of or pursuant to an amalgamation, reorganisation or restructuring whilst solvent on terms previously approved in writing by the Trustee or by an Extraordinary Resolution); or

(h) Failure to take action etc.

any action, condition or thing at any time required to be taken, fulfilled or done in order (i) to enable the Issuer or the Guarantors lawfully to enter into, exercise their respective rights and perform and comply with their respective obligations under and in respect of the Notes, the Coupons and the Trust Deed, (ii) to ensure that those obligations are legal, valid, binding and enforceable and (iii) to make the Notes, the Coupons and the Trust Deed admissible in evidence in the courts of England is not taken, fulfilled or done; or

(i) Cessation of business etc.

the Issuer, any Guarantor or any Material Subsidiary ceases or threatens to cease to carry on all or substantially all of its business, save for (i) the purposes of or pursuant to an amalgamation, reorganisation or restructuring neither involving nor arising out of the insolvency of the Issuer or, as the case may be, such Guarantor or Material Subsidiary, (ii) any transfer of assets by the Issuer, any Guarantor or any Material Subsidiary to any other member of the Group, (iii) any transfer of assets by the Issuer, any Guarantor or any Material Subsidiary to a third party or parties (whether associated or not) on an arm’s length basis, (iv) any transfer of assets by the Issuer, any Guarantor or any Material Subsidiary whereby the transferee is or immediately upon such transfer becomes a Material Subsidiary, or (v) any transfer of assets by the Issuer, any Guarantor or any Material Subsidiary the terms of which have been previously approved by the Trustee or by an Extraordinary Resolution of the Noteholders; or

(j) Guarantee etc.

any Guarantee ceases to be, or is claimed by a Guarantor not to be, in full force and effect; or

(k) Guarantors etc.

any Guarantor ceases to be a Subsidiary controlled, directly or indirectly, by the Issuer,

provided that, in the case of Conditions 13(b), (d) and (f) to (i) inclusive, the Trustee shall have certified in writing that such event is in its opinion materially prejudicial to the interests of the Noteholders.

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14.   Prescription

Claims for principal shall become void unless the relevant Notes are presented for payment within ten years of the appropriate Relevant Date. Claims for interest shall become void unless the relevant Coupons are presented for payment within five years of the appropriate Relevant Date.

15.   Replacement of Notes and Coupons

If any Note or Coupon is lost, stolen, mutilated, defaced or destroyed, it may be replaced at the Specified Office of the Principal Paying Agent (and, if the Notes are then admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, a Paying Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system), subject to all applicable laws and competent authority, stock exchange and/or quotation system requirements, upon payment by the claimant of the expenses incurred in connection with such replacement and on such terms as to evidence, security, indemnity and otherwise as the Issuer and the Guarantors may reasonably require. Mutilated or defaced Notes or Coupons must be surrendered before replacements will be issued.

16.   Trustee and Agents

The Trust Deed contains provisions for the indemnification of the Trustee and for its relief from responsibility, including provisions relieving it from any obligation to take proceedings to enforce repayment unless indemnified and/or secured to its satisfaction and to be paid its costs and expenses in priority to the claims of Noteholders. The Trust Deed also contains provisions pursuant to which the Trustee is entitled, inter alia, (i) to enter into business transactions with the Issuer, the Guarantors and/or any other Subsidiary and/or any related entity thereof and to act as trustee for the holders of any other securities issued or guaranteed by or relating to the Issuer, the Guarantors or any other Subsidiary, (ii) to exercise and enforce its rights, comply with its obligations and perform its duties under or in relation to any such transactions or, as the case may be, any such trusteeship without regard to the interests of, or consequences for, the Noteholders or Couponholders, and (iii) to retain and not be liable to account for any profit made or any other amount or benefit received thereby or in connection therewith.

In the exercise of its powers and discretions under these Conditions and/or the Trust Deed, the Trustee will have regard to the interests of the Noteholders as a class and will not be responsible for any consequences for individual holders of Notes, Coupons or Talons as a result of such holders being connected in any way with a particular territory or taxing jurisdiction.

In acting under the Agency Agreement and in connection with the Notes and the Coupons, the Paying Agents and the Calculation Agent (if any) act solely as agents of the Issuer or, following the occurrence of an Event of Default, the Trustee and do not assume any obligations towards or relationship of agency or trust for or with any of the Noteholders or Couponholders.

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The Principal Paying Agent and its initial Specified Office is set out below. The initial Calculation Agent (if any) is specified in the relevant Final Terms. The Issuer reserves the right at any time, with the prior written consent of the Trustee, to vary or terminate the appointment of any Paying Agent or Calculation Agent and to appoint a successor principal paying agent or calculation agent and additional or successor paying agents; PROVIDED, HOWEVER, THAT:

(a) the Issuer shall at all times maintain a Principal Paying Agent; and

(b) the Issuer shall at all times maintain a paying agent in an EU member state that will not be obliged to withhold or deduct tax pursuant to European Council Directive 2003/48/EC or any other Directive implementing the conclusions of the ECOFIN Council meeting of 26-27 November 2000; and

(c) if a Calculation Agent is specified in the relevant Final Terms, the Issuer shall at all times maintain a Calculation Agent; and

(d) if and for so long as the Notes are admitted to listing, trading and/or quotation by any competent authority, stock exchange and/or quotation system which requires the appointment of a Paying Agent in any particular place, the Issuer shall maintain a Paying Agent having its Specified Office in the place required by such competent authority, stock exchange and/or quotation system.

Notice of any appointment of, or change in, any of the Paying Agents or in their Specified Offices shall promptly be given to the Noteholders in accordance with Condition 19 (Notices).

17.   Meetings of Noteholders; Modification and Waiver

(a) Meetings of Noteholders

The Trust Deed contains provisions for convening meetings of Noteholders to consider matters relating to the Notes, including the modification of any provision of these Conditions or the Trust Deed. Any such modification may be made if sanctioned by an Extraordinary Resolution. Such a meeting may be convened by the Issuer or the Trustee and shall be convened by the Trustee upon the request in writing of Noteholders holding not less than one-tenth of the aggregate principal amount of the outstanding Notes. The quorum at any meeting convened to vote on an Extraordinary Resolution will be two or more Persons holding or representing more than half of the aggregate principal amount of the outstanding Notes or, at any adjourned meeting, two or more Persons being or representing Noteholders whatever the principal amount of the Notes held or represented; PROVIDED, HOWEVER, THAT Reserved Matters may only be sanctioned by an Extraordinary Resolution passed at a meeting of Noteholders at which two or more Persons holding or representing not less than three-quarters or, at any adjourned meeting, not less than one quarter of the aggregate principal amount of the outstanding Notes form a quorum. Any Extraordinary Resolution duly passed at any such meeting shall be binding on all the Noteholders and Couponholders, whether present or not.

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In addition, a resolution in writing signed by or on behalf of at least 75 per cent. of the Noteholders who for the time being are entitled to receive notice of a meeting of Noteholders under the Trust Deed will take effect as if it were an Extraordinary Resolution. Such a resolution in writing may be contained in one document or several documents in the same form, each signed by or on behalf of one or more Noteholders.

(b) Modification and waiver

The Trustee may agree, without the consent of the Noteholders or Couponholders, to (i) any modification to or of these Conditions, the Notes or the Trust Deed (other than in respect of a Reserved Matter) which is, in the opinion of the Trustee, proper to make if, in the opinion of the Trustee, such modification will not be materially prejudicial to the interests of Noteholders, (ii) any modification of these Conditions, the Notes or the Trust Deed that is of a formal, minor or technical nature or is made to correct a manifest error or to correct an error which, in the opinion of the Trustee, is proven, and (iii) any waiver or authorisation of any breach or proposed breach, of any of the provisions of these Conditions, the Notes or the Trust Deed (other than a proposed breach or breach relating to the subject of a Reserved Matter) that is in the opinion of the Trustee not materially prejudicial to the interests of the Noteholders. Any such modification, authorisation or waiver shall be binding on the Noteholders and the Couponholders and, if the Trustee so requires, such modification, authorisation or waiver shall be notified to the Noteholders as soon as practicable in accordance with Condition 19 (Notices).

(c) Substitution

The Trust Deed contains provisions permitting the Trustee to agree, without the consent of the Noteholders, the Receiptholders or the Couponholders, to the substitution of certain other entities in place of the Issuer or any Guarantor (or in either case any previously substituted company) as principal debtor or, as the case may be, guarantor under the Trust Deed in relation to the Notes, Receipts and Coupons of any Series of Notes, subject to (i) the Notes being unconditionally and irrevocably guaranteed by the Issuer or, as the case may be, the relevant Guarantor, (ii) the Trustee being satisfied that such substitution is not materially prejudicial to the interests of Noteholders; and (iii) certain other conditions set out in the Trust Deed being complied with.

No Noteholder or Couponholder shall, in connection with any substitution, be entitled to claim any indemnification or payment in respect of any tax consequence thereof for such Noteholder or (as the case may be) Couponholder except to the extent provided for in Condition 12 (Taxation) (or any undertaking given in addition to or substitution for it pursuant to the provisions of the Trust Deed).

18.   Enforcement

The Trustee may, at any time, at its discretion and without further notice, institute such proceedings against the Issuer and/or the Guarantors as it thinks fit to enforce any obligation, condition or provision binding on the Issuer

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and/or the Guarantors under these Conditions, the Notes or the Trust Deed, but shall not be bound to do so unless:

(a) it has been so directed by an Extraordinary Resolution or it has been so requested in writing by the holders of at least one fifth of the nominal amount of the Notes outstanding; and

(b) it has been indemnified and/or secured and/or prefunded by the Noteholders to its satisfaction.

No Noteholder or Couponholder shall be entitled to institute proceedings directly against the Issuer or a Guarantor unless the Trustee, having become bound to proceed as aforesaid, fails to do so within a reasonable time and such failure is continuing.

19.   Notices

(a) Valid Notices

Notices to the Noteholders shall be valid if published in a leading English language daily newspaper published in London (which is expected to be the Financial Times) or, if such publication is not practicable, in a leading English language daily newspaper having general circulation in Europe. Any such notice shall be deemed to have been given on the date of first publication (or if required to be published in more than one newspaper, on the first date on which publication shall have been made in all the required newspapers).

(b) Other Methods

Notwithstanding paragraph (a) above, the Trustee may approve some other method of giving notice to the Noteholders if, in its opinion, that other method is reasonable having regard to market practice then prevailing and to the requirements of any stock exchange on which Notes are then listed and PROVIDED THAT notice of that other method is given to the Noteholders in the manner required by the Trustee.

(c) Couponholders

Couponholders shall be deemed for all purposes to have notice of the contents of any notice given to the Noteholders.

20.   Rounding

For the purposes of any calculations referred to in these Conditions (unless otherwise specified in these Conditions or the relevant Final Terms), (a) all percentages resulting from such calculations will be rounded, if necessary, to the nearest one hundred-thousandth of a percentage point (with 0.000005 per cent. being rounded up to 0.00001 per cent.), (b) all United States dollar amounts used in or resulting from such calculations will be rounded to the nearest cent (with one half cent being rounded up), (c) all Japanese Yen amounts used in or resulting from such calculations will be rounded downwards to the next lower whole Japanese Yen amount, and (d) all amounts

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denominated in any other currency used in or resulting from such calculations will be rounded to the nearest two decimal places in such currency, with 0.005 being rounded upwards.

21.   Further Issues

The Issuer may from time to time without the consent of the Noteholders or Couponholders create and issue further securities either having the same terms and conditions as the Notes in all respects (or in all respects except for the first payment of interest on them) and so that such further issue shall be consolidated and form a single series with the outstanding securities of any series (including the Notes) or upon such terms as the Issuer may determine at the time of their issue. References in these Conditions to the Notes include (unless the context requires otherwise) any other securities issued pursuant to this Condition and forming a single series with the Notes. The Trust Deed contains provisions for convening a single meeting of the Noteholders and the holders of securities of other series where the Trustee so decides.

22.   Governing Law and Jurisdiction

(a) Governing law

The Notes and the Trust Deed, and any non-contractual obligations arising out of or in connection with the Notes and the Trust Deed, are governed by, and construed in accordance with, English law.

(b) English courts

The courts of England have exclusive jurisdiction to settle any dispute (a “Dispute”) arising out of or in connection with the Notes and the Trust Deed (including a dispute relating to the existence, validity or cancellation of the Notes or any non-contractual obligation arising out of or in connection with the Notes or the Trust Deed) or the consequences of their nullity.

(c) Appropriate forum

The Issuer and each of the Guarantors agree that the courts of England are the most appropriate and convenient courts to settle any Dispute and, accordingly, that they will not argue to the contrary.

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The Issuer
EXECUTED and DELIVERED as a DEED by	) NICOLETTE HENFREY
	)
as attorney for	)
INTERCONTINENTAL HOTELS GROUP PLC	)

Witness:	Signature:	DAVID CONNOLLY
	Name:	DAVID CONNOLLY

The Guarantors
EXECUTED and DELIVERED as a DEED by	)
INTERCONTINENTAL HOTELS LIMITED	)
a company incorporated in England and Wales acting by	)
	)
, a director of the Company and	) RICHARD SOLOMONS
, a director of the company/	) GEORGE TURNER
EXECUTED and DELIVERED as a DEED by	)
SIX CONTINENTS LIMITED	)
a company incorporated in England and Wales acting by	)
	)
, a director of the Company and	) RICHARD SOLOMONS
, a director of the company/	) GEORGE TURNER

The Trustee
EXECUTED as a DEED by Leticia Acevedo	)
as attorney for	)
HSBC CORPORATE TRUSTEE	)
COMPANY (UK) LIMITED	) LETICIA ACEVEDO Attorney

Witness:	Signature:	SAMUEL WILSON
	Name:	SAMUEL WILSON

EX-8

Exhibit 8

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
American Commonwealth Assurance Co. Ltd.	Bermuda
Arabian Hotel Management Co. LLC	Oman
Asia Pacific Holdings Limited	England
Avendra LLC	Delaware, USA
Barclay Operating Corp.	New York, USA
BBJV Investments Limited	England
BHMC Canada Inc.	Canada
BHR Holdings B.V.	The Netherlands
BHR Luxembourg S.A.R.L.	Luxembourg
BHR Overseas (Finance) B.V.	The Netherlands
BHR Pacific Holdings, Inc.	Delaware, USA
BHR Services (France) SARL.	France
BHR US Holdings B.V.	The Netherlands
BHTC Canada Inc.	Canada
Bristol Oakbrook Tenant Company	Delaware, USA
Café Biarritz	Texas, USA
Canabolas Caravan Motel Pty Ltd.	Australia
CDC San Francisco LLC	Delaware & California
Centrum Finance (Guernsey) Ltd.	Channel Islands
China Hotel Investment Ltd	Barbados
Compania Inter-Continental de Hoteles El Salvador S.A.	Venezuela
Crowne Plaza (Asia Pacific) Ltd.	Hong Kong
Crowne Plaza Amsterdam (Management) BV	The Netherlands
Crowne Plaza LLC	Delaware, USA
Culross Finance Ltd.	Cayman
Edinburgh IC Limited	Scotland
Emerald Bay Hotel Co. Ltd	Thailand
EMERO BV	The Netherlands
General Innkeeping Acceptance Corporation	Tennessee, USA
Gestion Hotelera Gestel, C.A.	Venezuela
Grand Hotel du Congo SZARL	Rep of Congo, Zaire
Grand Hotel Inter-Continental Paris SNC	France
Graviss Hospitality Limited	India
Green Ties, LLC	Delaware, USA
Guangzhou SC Hotels Services Ltd.	China
H.I (Burswood) Pty Ltd.	Australia
H.I (Burswood) Trust	Australia
H.I. (Ireland) Limited	Ireland
H.I. Mexicana Servicios, SA de CV	Mexico
H.I. Soaltee Hotel Co. (P) Ltd.	Hong Kong
H.I. Soaltee Management Company Ltd	Hong Kong
H.I. Sugarloaf LLC	Georgia, USA

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
Hale International Ltd.	British Virgin Islands
HC International Holdings, Inc.	Delaware, USA
HH France Holdings SAS	France
HH Hotels (EMEA) BV	The Netherlands
HH Hotels (EMEA) BV — Egyptian Branch	Egypt
HH Hotels (EMEA) BV — Russian Branch	Russia
HH Hotels (Romania) SRL	Romania
HH Hotels Tunisia SARL	Tunisia
HI (Ireland) Ltd.	Eire
HIA (T) Pty Ltd.	Australia
HIM (Aruba) NV	Aruba
Holiday Hospitality Franchising, Inc.	Delaware, USA
Holiday Inn Cairns Pty Ltd.	Australia
Holiday Inn Mexicana S.A.	Mexico
Holiday Inns (Beijing) Ltd.	Hong Kong
Holiday Inns (China) Ltd.	Hong Kong
Holiday Inns (Chongqing), Inc.	Tennessee, USA
Holiday Inns (Courtalin) Holdings SAS	France
Holiday Inns (Courtalin) SAS	France
Holiday Inns (Downtown Beijing) Ltd.	Hong Kong
Holiday Inns (England) Ltd.	England
Holiday Inns (Germany) LLC	Tennessee, USA
Holiday Inns (Germany) LLC — German Branch	Germany
Holiday Inns (Guangzhou), Inc.	Tennessee, USA
Holiday Inns (Jamaica) Inc.	Tennessee, USA
Holiday Inns (Jamaica) Inc. — Jamaica Branch	Jamaica
Holiday Inns (Macau) Ltd.	Hong Kong
Holiday Inns (Malaysia) Ltd.	Hong Kong
Holiday Inns (Middle East) Ltd.	Hong Kong
Holiday Inns (Nepal) Ltd.	Hong Kong
Holiday Inns (Philippines), Inc.	Tennessee, USA
Holiday Inns (Philippines), Inc. — Philippines Branch	Philippines
Holiday Inns (Saudi Arabia), Inc.	Tennessee, USA
Holiday Inns (Shanghai) Ltd.	Hong Kong
Holiday Inns (South East Asia) Inc.	Tennessee, USA
Holiday Inns (South East Asia) Inc. — Singapore Branch	Singapore
Holiday Inns (Thailand) Ltd.	Hong Kong
Holiday Inns (UK), Inc.	Tennessee, USA
Holiday Inns (UK), Inc. — Malta Branch	Malta
Holiday Inns (UK), Inc. — UK Branch	England
Holiday Inns (Xiamen) Ltd.	Hong Kong
Holiday Inns Crowne Plaza (Hong Kong), Inc.	Tennessee, USA
Holiday Inns de Espana S.A.	Spain

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
Holiday Inns Holdings (Australia) Pty Ltd.	Australia
Holiday Inns Inc.	Delaware, USA
Holiday Inns Investment (Nepal) Ltd.	Hong Kong
Holiday Inns of America (UK) Ltd.	England
Holiday Inns of Belgium NV	Belgium
Holiday Inns of Belgium NV — Swedish Branch	Sweden
Holiday Pacific Equity Corporation	Delaware, USA
Holiday Pacific LLC	Delaware, USA
Holiday Pacific Partners, LP	Delaware, USA
Hospitality Network Corporation	Japan
Hotel Forum	England
Hotel Guayana C.A.	Venezuela
Hotel Inter-Continental London Ltd.	England
Hotel InterContinental London (Holdings) Limited	England
Hoteles Estelar de Colombia S.A.	Colombia
Hoteles Y Turismo HIH Srl	Venezuela
IC Hotelbetriebsfuhrungs GmbH	Austria
IC International Hotels Limited Liability Company	Russia
IC US (Holdings) LP	Delaware, USA
IHC (Thailand) Ltd.	Thailand
IHC Buckhead LLC	Georgia, USA
IHC Edinburgh (Holdings)	England
IHC Hopkins (Holdings) Corp.	Delaware, USA
IHC Hotel Ltd.	England
IHC Inter-Continental (Holdings) Corp.	Delaware, USA
IHC London (Holdings)	England
IHC May Fair (Holdings) Ltd.	England
IHC May Fair Hotel Ltd.	England
IHC M-H (Holdings) Corp.	Delaware, USA
IHC Overseas (U.K.) Ltd.	England
IHC UK (Holdings) Ltd	England
IHC United States (Holdings) Corp.	New York, USA
IHC Willard (Holdings) Corp.	Delaware, USA
IHG (Australasia) Limited	Singapore
IHG ANA Hotels Group Japan LLC	Japan
IHG ANA Hotels Holdings Co.	Japan
IHG Bangkok Limited	BVI
IHG Community Development, LLC	Georgia, USA
IHG Cyprus Limited	Cyprus
IHG ECS (Barbados) SRL	Barbados
IHG Franchising Brasil Ltda	Brazil
IHG Franchising DR Corporation	Delaware, USA
IHG Franchising DR Corporation — Dominican Republic Branch	Delaware, USA

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
IHG Franchising LLC	Delaware, USA
IHG Hotels (New Zealand) Limited	New Zealand
IHG Hotels Management (Australia) Pty Limited	Australia
IHG IT Services (India) Private Limited	India
IHG Japan (Management) LLC	Japan
“IHG Management” d.o.o. Beograd	Serbia
IHG Management (Maryland) LLC	Maryland, USA
IHG Management (Netherlands) B.V.	The Netherlands
IHG Management (Netherlands) B.V. — Indonesia Branch	Indonesia
IHG (Marseille) SAS	France
IHG PS Nominees Limited	England
IHG Queenstown Limited	New Zealand
IHG Systems Pty Ltd	Australia
IHG Szalloda Budapest Szolgaltato Kft	Hungary
IHG (Victoria Park) Pty Ltd	Australia
Illinois Hotels Corp.	Delaware, USA
IND East Village SD Holdings LLC	Delaware & California, USA
InterContinental (Branston) 1 Ltd	England
Inter-Continental D.C. Operating Corp.	Delaware, USA
Inter-Continental Florida Investment Corp.	Delaware, USA
Inter-Continental Florida Partner Corp.	Delaware, USA
InterContinental Gestion Hotelera S.L.	Spain
InterContinental Hong Kong Ltd.	Hong Kong
Inter-Continental Hospitality Corporation	Delaware, USA
Inter-Continental Hotel Investment (S) Pte. Ltd.	Singapore
Inter-Continental Hoteleira Limitada	Brazil
Inter-Continental Hotels (Montreal) Operating Corp.	Quebec, Canada
Inter-Continental Hotels (Montreal) Owning Corp.	Quebec, Canada
Inter-Continental Hotels (Overseas) Ltd.	England
InterContinental Hotels (Puerto Rico) Inc	Puerto Rico
Inter-Continental Hotels (Singapore) Pte. Ltd.	Singapore
Inter-Continental Hotels Corporation	Delaware, USA
Inter-Continental Hotels Corporation — Cairo Branch	Egypt
Inter-Continental Hotels Corporation — Jordan Branch	Jordan
Inter-Continental Hotels Corporation — Malta Branch	Malta
Inter-Continental Hotels Corporation — Philippines Branch	Philippines
Inter-Continental Hotels Corporation — Poland Branch	Poland
Inter-Continental Hotels Corporation — Tel Aviv Branch	Israel
Inter-Continental Hotels Corporation de Venezuela C.A.	Venezuela
Intercontinental Hotels Corporation Limited	Bermuda
Intercontinental Hotels Corporation Limited — Egypt Branch	Egypt
Intercontinental Hotels Corporation Limited — Kenya Branch	Kenya
Intercontinental Hotels Corporation Limited — Saudi Branch	Saudi

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
InterContinental Hotels Group (Asia Pacific) Pte Ltd	Singapore
InterContinental Hotels Group (Asia Pacific) Pte Ltd — Korean Branch	Korea
InterContinental Hotels Group (Australia) Pty Limited	Australia
InterContinental Hotels Group (Canada) Inc.	Canada
InterContinental Hotels Group (Espana) SA	Spain
InterContinental Hotels Group (Greater China) Limited	Hong Kong
InterContinental Hotels Group (Greater China) Limited — Maldives branch	Maldives
InterContinental Hotels Group (Japan) Inc.	Tennessee
InterContinental Hotels Group (Japan) Inc. — Japan Branch	Japan
InterContinental Hotels Group (Management Services) Ltd	England
InterContinental Hotels Group (New Zealand) Limited	New Zealand
InterContinental Hotels Group (Shanghai) Ltd	China
InterContinental Hotels Group Customer Services Ltd.	England
InterContinental Hotels Group do Brasil Limitada	Brazil
InterContinental Hotels Group Finance (CI)	Jersey
InterContinental Hotels Group Healthcare Trustee Ltd	England
InterContinental Hotels Group (India) Pvt. Ltd.	India
InterContinental Hotels Group Operating Corp.	USA
InterContinental Hotels Group PLC	England
InterContinental Hotels Group Resources Inc	Delaware, USA
InterContinental Hotels Group Resources Inc — Guam Branch	Guam
InterContinental Hotels Group Services Company	England
InterContinental Hotels Italia, SrL	Italy
InterContinental Hotels Limited	England
Intercontinental Hotels Management GmbH	Germany
InterContinental Hotels Nevada Corporation	Nevada
Inter-Continental Hotels of San Francisco Inc.	Delaware, USA
Inter-Continental Hotels Saudi Arabia Ltd.	Saudi Arabia
Inter-Continental Management (Australia) Pty Limited	Australia
InterContinental Overseas Holding Corporation	Delaware, USA
InterContinental Overseas Holding Corporation — Azerbaijan Branch	Azerbaijan
InterContinental Overseas Holding Corporation — Bermuda Branch	Bermuda
InterContinental Overseas Holding Corporation — Czech Republic Branch	Czech Republic
InterContinental Overseas Holding Corporation — Egyptian Branch	Egypt
InterContinental Overseas Holding Corporation — Jamaican Branch	Jamaica
InterContinental Overseas Holding Corporation — Kazakhstan Branch	Kazakhstan
InterContinental Overseas Holding Corporation — Slovakia Branch	Slovakia
InterContinental Overseas Holding Corporation — Ukraine Branch	Ukraine
InterContinental (PB) 1	England
InterContinental (PB) 2 Limited	England
InterContinental (PB) 3 Limited	England
Inthotel SA	Spain
Kenya Hotel Properties Ltd.	Kenya

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
Kumul Hotels Ltd.	Papua New Guinea
Lane Field South Hotel Management LLC	Delaware, USA
Louisiana Acquisitions Corp.	Delaware, USA
Maya Baiduri Sdn Bhd	Malaysia
Mifala Holdings (Vanuatu) Ltd.	Vanuatu
Nuevas Fronteras S.A.	Argentina
OSPR Pty Ltd.	Australia
Panacon	Louisiana, USA
Perseus Holding Corp.	Delaware, USA
Pershing Associates	District of Columbia
PML Services LLC	Maryland, USA
Pollstrong Limited	England
Powell Pine, Inc.	Delaware, USA
President Hotel & Tower Co Ltd.	Singapore
Priscilla Holiday of Texas, Inc.	Delaware, USA
P.T. Jakarta International Hotels & Development	Indonesia
PT SC Hotels & Resorts Indonesia	Indonesia
Resort Services International (Cayo Largo) L.P.	Georgia, USA
SC Cellars Ltd.	England
SC ESOP Trustee (Jersey) Ltd.	Jersey
SC Finance Investments Two Company	England
SC Hotels International Services, Inc.	Delaware, USA
SC Investments Number 2 Ltd.	England
SC Investments Number 3 Ltd.	England
SC Leisure Group Ltd.	England
SC Luxembourg Investments SARL	Luxembourg
SC NAS 2 Ltd.	England
SC NAS 3	England
SC QUEST Ltd	England
SC Racing Gibraltar	Gibraltar
SC Reservations (Philippines) Inc	Tennessee, USA
SC Reservations (Philippines) Inc — Philippines Branch	Phillippines
SC Wine Bars Ltd.	England
SCH Insurance Company	Vermont, USA
SCHIL Investment (Barbados) Ltd	Barbados
SCIH Branston 2	England
SCIH Branston 3	England
SFH Associates L.P.	California, USA
Six Continents Corporate Services	England
Six Continents Holdings Ltd.	England
Six Continents Hotels de Colombia SA	Colombia
Six Continents Hotels International Ltd.	England
Six Continents Hotels, Inc.	Delaware

INDEX OF COMPANIES
Updated from 30.06.09 to 31.12.09

Name of Company	Country of Incorporation
Six Continents International Holdings BV	The Netherlands
Six Continents Investments Ltd.	England
Six Continents Limited (formerly PLC)	England
Six Continents Overseas Holdings Ltd.	England
Six Continents Restaurants Ltd.	England
SixCo Financing 1	England
SixCo North America, Inc.	Delaware
Soaltee Hotel Ltd.	Nepal
Societe des Grands Hotels du Liban	Lebanon
Societe des Hotels InterContinental France SNC	France
Societe Immobiliere Kinoise SZARL	Rep of Congo, Zaire
Societe Nouvelle du Grand Hotel SA	France
Southern Pacific Hotel Corp. (BVI) Ltd.	British Virgin Islands
Southern Pacific Hotel Corporation Sdn Bhd	Malaysia
Southern Pacific Hotels Pty Ltd.	Australia
Southern Pacific Hotels Properties Limited	British Virgin Islands
SC Southwick UK Ltd.	Cayman
SPHC (IP) Pty Ltd.	Australia
SPHC Group Pty Ltd.	Australia
SPHC Management Ltd.	Papua New Guinea
SSABCO Ltd.	England
Tahiti Beachcomber SA	Tahiti
TAK How Investment Limited	Hong Kong
The Hotel Clearing Corp.	Delaware, USA
THISCO	Delaware, USA
Tian An Hotels International Limited	Hong Kong
TLCI Limited	New Zealand/Cook Islands
TotRusUs (Russian Branch of HH Hotels (EMEA) BV)	Russia
Trifaith Investments Ltd.	British Virgin Islands
Universal de Hoteles SA	Colombia
White Shield Insurance Company Ltd.	Gibraltar
Willard Associates	District of Columbia
World Trade Center Montreal Hotel Corp.	Quebec, Ontario
Yokohama Grand Intercontinental Hotel Co. Ltd.	Japan

EX-12.A

Exhibit 12(a)

I, Andrew Cosslett, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: April 1, 2010

[Signature]	/s/ Andrew Cosslett
[Title]	Chief Executive

EX-12.B

Exhibit 12(b)

I, Richard Solomons, certify that:

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

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

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

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

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

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

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

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

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

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

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

Date: April 1, 2010

[Signature]	/s/ Richard Solomons
[Title]	Chief Financial Officer

EX-13.A

Exhibit 13(a)

906 Certification

The certification set forth below is being submitted in connection with the Annual Report on Form 20-F for the year ended December 31, 2009 (the “Report”) for the purpose of complying with Rule 13a-14(b) or Rule 15d-14(b) of the Securities Exchange Act of 1934 (the “Exchange Act”) and Section 1350 of Chapter 63 of Title 18 of the United States Code.

Andrew Cosslett, the Chief Executive Officer and Richard Solomons, the Chief Financial Officer of InterContinental Hotels Group PLC, each certifies that, to the best of his knowledge:

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

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

Date: April 1, 2010

By:	/s/ Andrew Cosslett
	Name:	Andrew Cosslett
	Title:	Chief Executive
By:	/s/ Richard Solomons
	Name:	Richard Solomons
	Title:	Chief Financial Officer