Final Results

Peel Hotels PLC
16 April 2002

PEEL HOTELS PLC

PRELIMINARY ANNOUNCEMENT

Financial year ended 17 February 2002



HIGHLIGHTS

•    Turnover up by 2.8% to £8.9 million (2001 - £8.6 million)

•    Operating profit up by 3.2% to £2.3 million (2001 - £2.2 million)

•    Net cash flow from operating activities £3.1 million (2001 - £2.3 million)

•    Pre-tax profits grew by 15.3% to £1.5 million (2001 - £1.3 million)

•    Basic earnings per share 12.1p (2001 - 11.6p).  Diluted
     earnings per share 11.6p (2001 - 10.7p).  These are stated after full 
     provision for corporation tax and deferred tax

•    Net gearing on Shareholders funds 61.9% (2001 - 122.8%)

•    Dividend increased by 16.6% to 3 1/2p per share (2001 - 3p per share)



PRESS ENQUIRIES TO ROBERT PEEL 020 7266 1100




CHAIRMAN'S STATEMENT


RESULTS

Turnover grew 2.8% to £8,875,183 and operating profit grew 3.2% to £2,298,412.
This was achieved despite a 4.7% drop in management fee income to £719,780.
Pre-tax profits increased 15.3% to £1,515,958 from £1,314,521.  After a full tax
provision of 30% less allowances, earnings per share were 12.1p basic and 11.6p
on a diluted basis, an uplift of 4.3% and 8.4% respectively on the previous
year.  Shareholders will recollect that the company, by way of a placing and
open offer on 3 December 2001 of 3,453,791 shares at 87p per share, raised
£3,004,798.  This amount, less fees, still remains on deposit and unspent,
consequently earnings per share progress slowed in the year.

As at 17 February 2002, net debt stood at £7,818,023 representing 10 year loans
totalling £10,318,073 and an overdraft of £417,439 less £2,835,679 on deposit
and £81,810 cash at bank.  Gearing on Shareholders' funds was 61.9% with
interest covered 2.9 times.

For the year as a whole 'Revpar' (Accommodation revenue per available room) on
an increased number of rooms owned improved by 1.1%.  Room sales increased by
5.2% on the previous year.

The individual performance of the four owned hotels was varied in that the
Midland in Bradford had another 'difficult' year only making 8.1% cash return on
Book Value.  In spite of the difficulties we are confident that, with continuing
investment, this hotel will greatly improve its performance and return on
capital.  The Caledonian in Newcastle had a very successful year and its
revenues continue to grow strongly, whilst the Bull in Peterborough and the
Golden Lion in Leeds produced satisfactory performances.

It is perhaps worthwhile (with increased depreciation through FRS15)
demonstrating EBITDA of the four owned hotels which totalled £2,784,911 and
which was a respectable 7.1% up on the previous year.

The Management Contract of Grace Hotels Limited. was extended for a further six
months on 5 October 2001. We are pleased to report that Grace Hotels have agreed
to extend this contract for a further six months from 6 April 2002.  At the
year-end we were managing fourteen Grace Hotels.

A £46,735 saving was made on group overheads and going forward we will continue
to control these costs carefully in line with the sale of hotels within the
Grace Hotels portfolio.

We were fortunate that our four provincial city centre properties were not too
badly affected, in a year that the industry was first devastated by foot and
mouth and then by the appalling tragedies in the U.S.A. on September 11th.

The Board has recommended increasing the dividend from 3p to 3 1/2p per share,
amounting to £424,216, which, if approved by shareholders, will be paid on 14
June 2002 to shareholders on the register at 17 May 2002.




CAPITAL EXPENDITURE

A sum of £1,238,874 was spent in the year, the major proportion, £640,752, was
spent on the Caledonian Hotel, Newcastle where 29 of the 89 bedrooms were
refurbished and the public areas and restaurant were remodelled.

18 of the 90 bedrooms at the Midland in Bradford have been completely rebuilt
and the conference rooms, public areas and external elevations of the Golden
Lion in Leeds have been refurbished.

We are actively pursuing planning permission for the demolition of Aire House,
adjacent to the Golden Lion, Leeds and the construction of a 50 bedroom
extension.

Our programme of improvement to our owned hotels will continue in the current
year, with our continuing strategy of improving the quality of our portfolio to
the standards expected of four star hotels.



SHAREHOLDERS

We would encourage shareholders to take advantage of our shareholder discount
scheme.  All shareholders are entitled to a 25% discount on listed tariff, using
a special reservations number 020 7266 1100.  Shareholders can identify the
properties we own and manage using the directory at the back of the Annual
Report.  We do hope you will visit our hotels.



STAFF

The Board would like to thank all management and staff for a job well done in a
challenging year.  It is their ability and enthusiasm in taking care of our
guests that will enable us to continue to organically grow our sales.



THE FUTURE

There is still plenty of opportunity to grow the profits of our four hotels in
spite of the flat demand pattern of the last couple of years.  This is being
done and will continue to be done by increasing Revpar on the back of
reinvestment in the product and expanding and maximising facilities within our
properties with particular emphasis on growing food and beverage revenues.

The reason for the placing and open offer in December 2001, that raised £3
million less expenses, was for expansion.  We expect to make progress early in
the current year.


Robert Peel
Chairman



PROFIT AND LOSS ACCOUNT
For the financial year ended 17 February 2002


                                            Note

                                                                                   17 February   18 February
                                                                                   2002          2001
                                                                                                 restated
                                                                                   £             £                      
Turnover                                                                           8,875,183     8,630,804
Cost of sales                                                                      (5,341,380)   (5,246,136)

Gross profit                                                                       3,533,803     3,384,668
Administrative expenses:
Depreciation                                                                       (509,900)     (385,573)
Other                                                                              (725,491)     (772,226)
                                                                                   (1,235,391)   (1,157,799)
Operating profit                                                                   2,298,412     2,226,869
Interest payable and similar charges                                               (814,892)     (912,348)
Other interest receivable and similar                                              32,438
income

Profit on ordinary activities before                                               1,515,958     1,314,521
taxation

Taxation                                                                           (378,990)     (311,063)

Profit on ordinary activities after                                                1,136,968     1,003,458
taxation
Dividends                                   1                                      (424,216)     (260,000)

Profit retained                                                                    712,752       743,458


Earnings per share                          2
Basic                                                                              12.1p         11.6p
Diluted                                                                            11.6p         10.7p



All transactions derived from continuing activities.

Depreciation is no longer included within cost of sales, and is now shown
separately on the face of the profit and loss account, as the directors believe 
that this provides more meaningful information to the readers of financial 
statements.

Comparative figures have been restated for this change.

There are no recognised gains and losses for the current financial year and
preceding financial year other than the profit of £712,752 (2001 - £743,458) 
shown above.


BALANCE SHEET

As at 17 February 2002



                                                                                  17 February   18 February
                                                                                  2002          2001
                                                                                  £             £

Fixed assets
Tangible assets                                                                   22,015,718    21,286,744

Current assets
Stocks                                                                            56,211        60,952
Debtors                                                                           753,696       848,724
Cash at bank and in hand                                                          2,917,489     119,065

                                                                                  3,727,396     1,028,741
Creditors (due within one year)                                                   (2,778,516)   (2,360,528)



Net current liabilities                                                           948,880       (1,331,787)

Total assets less current liabilities                                             22,964,598    19,954,957

Creditors (due after one year)                                                    (9,644,323)   (10,298,345)
Provision for liabilities & charges                                               (687,871)     (573,109)

Total assets                                                                      12,632,404    9,083,503


Capital and reserves
Called up share capital                                                           1,212,046     866,667
Share premium account                                                             8,554,800     6,064,030
Profit and loss account                                                           2,865,558     2,152,806

Equity shareholders' funds                                                        12,632,404    9,083,503








CASH FLOW STATEMENT

For the financial year ended 17 February 2002






                                       Note                     17 February               18 February
                                                                2002                      2001

                                                   £            £            £            £



Net cash inflow from operating         3                        3,072,919                 2,296,687
activities
Returns on investments and servicing of finance
Interest paid                                      (811,908)                 (882,406)

Net cash outflow from returns on                                (811,908)                 (882,406)
investments and servicing of finance
Taxation
UK corporation tax paid                            (241,287)                 -

Tax paid                                                        (241,287)                 -

Capital expenditure
Purchase of tangible fixed assets                  (1,238,874)               (1,394,266)

Net cash outflow from capital                                   (1,238,874)               (1,394,266)
expenditure


Equity dividend paid                                            (260,000)                 (173,333)

Net cash inflow/(outflow) before                                520,850                   (153,318)
financing

Financing
Issue of ordinary share capital                    3,004,798                 -
Less: share issue cost                             (168,649)                 -

New long term loans                                -                         1,060,000
Loan repayments                                    (593,750)                 (593,750)

Net cash inflow from financing                                  2,242,399                 466,250

Increase  in cash                      3                        2,763,249                 312,932




Reconciliation of net debt

Increase in cash                                                   2,763,249                   312,932
Decrease/(increase) in debt                                        593,750                     (466,250)

Reduction/(increase) in net debt resulting from cash               3,356,999                   (153,318)
flows

Non cash changes                                                   (19,728)                    (19,734)


Reduction/(increase) in net debt in the year                       3,337,271                   (173,052)

Net debt at beginning of year                                      (11,155,294)                (10,982,242)

Net debt at end of year                   4                        (7,818,023)                 (11,155,294)









NOTES TO THE ACCOUNTS



Financial year ended 17 February 2002



1.        Dividends
                                                                                 2002         2001
                                                                                 £            £

Final proposed dividend of 3.5p per share (2001 - 3p)                            424,216      260,000


2.         Earnings per share


Basic
Calculated on the average number of shares in issue                               9,397,276    8,666,666
during the year and on profit after taxation                                      £1,136,968   £1,003,458


Diluted
Calculated on average of number of shares                                         9,768,016    9,381,731
available during year and on the profit after taxation                            £1,136,968   £1,003,458


In calculating the diluted earnings per share, the weighted average number of
shares is adjusted for the dilutive effect of the share options by 370,740 (2001
- 627,153), and the warrants by nil (2001-87,912) giving an adjusted number of
shares of 9,768,016.



3.      Reconciliation of operating profit to net cash inflow from operating
activities
                                                                                 2002         2001

                                                                                 £            £


Operating profit                                                                 2,298,412    2,226,869
Depreciation charges                                                             509,900      385,573
Decrease in stocks                                                               4,741        8,529
Decrease/(increase) in debtors                                                   123,385      (97,075)
Increase/(decrease) in creditors                                                 136,481      (227,209)

Net cash inflow from operating activities                                        3,072,919    2,296,687




4.         Analysis of net debt


                                  At                     Non
                                  Beginning    Cash      cash     At end of
                                  of year      flow      changes  year
                                  £            £         £        £



Cash at bank and in hand          119,065      2,798,424          2,917,489
Bank overdrafts                   (382,264)    (35,175)           (417,439)

                                  (263,199)    2,763,249          2,500,050
Debt due within one year          (593,750)    (80,000)           (673,750)
Debt due after one year           (10,298,345) 673,750   (19,728) (9,644,323)

Total                             (11,155,294) 3,356,999 (19,728) (7,818,023)








5.       The financial information set out above does not constitute the
company's statutory accounts for periods ended 17 February 2002 and February
2001 but is derived from those accounts.  Statutory accounts for 2001 have been
delivered to the Registrar of Companies and those for 2002 will be delivered
following the company's annual general meeting.



The auditors reported on those accounts; their reports were unqualified and did
not contain statements under section 237 (2) or (3) of the Companies Act 1985.





6.       The annual report for the period ended 17 February 2002 will be posted
to shareholders by 19 April 2002.








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