Final Results

Peel Hotels PLC 12 April 2007 PEEL HOTELS PLC PRELIMINARY ANNOUNCEMENT Derived from the audited results for financial year ended 11 February 2007 PEEL HOTELS PLC HIGHLIGHTS • Turnover up by 6.5% to £15,919,976 (2006 - £14,947,091) • Pre-Tax profits £1,563,120 (2006 - £1,162,973 as restated for the implementation of FRS 20) • Earnings per share Basic 9.8p (2006: 6.9p as restated) Diluted 9.3p (2006: 6.6p as restated) • Dividend increased by 5.3% to 5.0p per share (2006 - 4.75p per share) The Board believes there is considerable scope to improve the overall performance of the portfolio whilst continuing to pay down debt and maintaining a progressive dividend policy for its shareholders. Press enquiries:- Peel Hotels Plc Robert Peel Tel: 020 7266 1100 KBC Peel Hunt Tel: 0207 418 8900 David Davies Nicholas Marren CHAIRMAN'S STATEMENT Results Total turnover grew by 6.5% to £15,919,976. Operating profit was £1,993,833 (2006: £2,418,732, as restated for implementation of FRS 20) a decrease of 17.6% with £404,855 of the £424,899 operating profit shortfall occurring in the first half of the year. In line with the strategy to dispose of non-core assets, the sale of the freehold of Aire House, a building adjacent to the Golden Lion Hotel, was completed in December 2006 at the asking price of £2,050,000 and has resulted in an exceptional profit on disposal of £850,000 in the year. This enabled the Company to accelerate its loan repayments. After taking into account this profit on disposal, the pre-tax result was £1,563,120 (2006:£1,162,973 as restated for the implementation of FRS 20) an increase of 32.2%. After a full tax provision less discounting, earnings per share were 9.8p basic and 9.3p on a diluted basis (2006: 6.9p basic and 6.6p diluted, both as restated). At 11 February 2007, net debt stood at £15,269,183 representing loans totalling £15,041,812 and an overdraft of £385,901 less £158,530 cash at bank. Gearing on shareholders' funds was 102.9% with interest covered 2.2 times. Net debt decreased by £1,795,604 compared with the previous year. A new loan of £400,000 was arranged on 8 August 2006 to fund the redevelopment of the Princes ballroom at the Midland Hotel. Like for like hotel sales increased 1.6% and hotel profits after depreciation and before Company administration costs declined 10.8%. Severe cost pressure, in particular energy costs, affected the operational gearing of the Company and contributed to what in the final analysis was a disappointing hotel trading result, reflecting the competitive nature of the industry. The Strathdon in Nottingham had a very poor year with REVPAR (accommodation revenue per available bedroom) decreasing by a massive 30.3%. This had a consequential impact on the overall Company result where REVPAR slipped for the first time in the Company's history, by 0.6% in the year with occupancy down by 2.2% and average room rate up by 1.6%. Results from other hotels, were mixed, with excellent results at the Golden Lion in Leeds, the Caledonian in Newcastle and the Crown & Mitre in Carlisle. There were considerable non recurring costs incurred at the Avon Gorge Hotel in terms of setting up and launching the new Bridge Cafe which were written off to profits. The Strathdon in Nottingham, lost £156,734 and currently every effort is being made to stabilise the position and eliminate the losses going forward. The Company continues to keep our properties well maintained and in good repair and it has achieved Automobile Association quality percentage increases in all but one of the hotels. Finance At 11 February 2007 net debt was £15,269,183 including the additional £400,000 loan drawn down to finance the redevelopment of the Princes ballroom at the Midland Hotel. £2,108,000 was repaid during the period under review. The Board has recommended increasing the dividend from 4.75p to 5.00p per share, amounting to £642,856, which, if approved by shareholders, will be paid on 23 May 2007 to shareholders on the register at 11 May 2007. Capital Expenditure During the period capital expenditure amounted to £1,469,168 of which £538,745 was spent at the Avon Gorge, Bristol, in the construction of the Bridge Cafe, the refurbishment of the front of the building and the continuing fees being paid in pursuit of our planning objectives. Currently we have successfully obtained planning approval for nine new bedrooms, a brand new spa, pool and gym complex and for the refurbishment of the dilapidated ballroom. Approvals are still awaited for a new glass house (to be used in conjunction with the ballroom and for private parties) located on the Terrace overlooking the Clifton Suspension Bridge, for a new greenhouse restaurant and for the rebuilding of two dilapidated houses. These two houses once refurbished would release the current 14 bedroom staff house in the highly desirable Caledonia Place in Clifton for sale. The process is complex but we believe that good progress is being made and the Company is working closely with local residents and the planning authorities. The Princes ballroom at the Midland Hotel in Bradford has been totally refurbished and a substantial uplift in advance reservations is already evident. Bedroom and Conference room improvements were undertaken during the year at the Crown & Mitre Hotel Carlisle, the Golden Lion Hotel Leeds, the Midland Hotel Bradford and the Bull Hotel Peterborough. The administrative offices were transferred from Aire House to the basement of the Golden Lion Hotel. CHAIRMAN'S STATEMENT Non-Core Assets Aire House was successfully sold in December 2006 for £2,050,000. Following the receipt of planning permission for 99 new apartments, office space and associated car parking on our Salem Street site, in Bradford, the marketing process has commenced and the Company expects to exchange contracts and complete the sale of this site in the current financial year. The successful completion of this transaction would enable the Company to prepay further debt during the year. The Company owns a large house in Jesmond in Newcastle and is currently in the process of seeking planning approval for five apartments with a view to eventually marketing it for sale. Shareholders Shareholders are actively encouraged to visit the Company's hotels and experience the progress that is continually been made in terms of product and services whilst enjoying a beneficial discount. All shareholders are entitled to a 30% discount, using the special reservations number, 0207 266 1100 or e-mail info@peelhotel.com. Shareholders can identify the hotels by using the directory at the back of the Annual Report. The new website www.peelhotels.co.uk has recently been launched and I hope that you will use it to keep in touch with our progress and the various promotional initiatives that are on offer. Staff The Board would like to thank all the management and staff for their contribution to the business of Peel Hotels and for the safety and welfare of its guests. In the final analysis it is their friendliness and care for the guests that will build the Company's reputation and grow the business. John Perkins, the Finance Director, unfortunately fell ill during the year under review and was unable to work for the majority of the year. We wish him a speedy recovery. Nick Parrish, who has been with Peel Hotels since 1998, has deputised in his absence. Future I mentioned at the half year how flat growth had not enabled the significant increase in costs to be absorbed and to a major extent the year end outcome reflects the damage done in the first half year. Profit before tax improved 6% (excluding the exceptional profit on disposal of Aire House) in the second half of the year compared to the same period in the previous year. The current year has started well, our energy costs are dramatically down on the previous winter and the Company will have the benefit of non recurring items such as comparisons on management contract income and restaurant opening costs at the Avon Gorge. It will enjoy the benefits of less debt and the current benefit of the Cap on £7 million of our debt which will substantially decrease interest payable in the year. The Board believes there is considerable scope to improve the overall performance of the portfolio whilst continuing to pay down debt and maintaining a progressive dividend policy for its shareholders. Robert Peel Chairman 11 April 2007 PROFIT & LOSS ACCOUNT For the 52 weeks ended 11 February 2007 Note 11 February 12 February 2007 2006 as restated £ £ £ £ ----------- --------- --------- --------- Turnover Original group 12,816,393 12,400,841 3 Hotels acquired 16 May 2005 3,103,583 2,482,642 ----------- --------- --------- --------- Continuing operations 15,919,976 14,883,483 Discontinued business - 63,608 Total turnover 15,919,976 14,947,091 ----------- --------- --------- --------- Cost of Sales (12,049,329) (10,806,273) ----------- --------- --------- --------- Gross Profit Original group 3,618,177 3,709,512 3 Hotels acquired 16 May 2005 252,470 367,698 ----------- --------- --------- --------- Continuing operations 3,870,647 4,077,210 Discontinued business - 63,608 Total Gross Profit 3,870,647 4,140,818 ----------- --------- --------- --------- Administrative expenses Depreciation (1,133,957) (1,010,509) Other (742,857) (711,577) (1,876,814) (1,722,086) ----------- --------- --------- --------- Operating profit Original group 2,058,751 2,200,760 3 Hotels acquired 16 May 2005 (64,918) 154,364 ----------- --------- --------- --------- Continuing operations 1,993,833 2,355,124 Discontinued business - 63,608 Total operating profit 1,993,833 2,418,732 Profit on disposal of property 850,000 - Interest payable & similar charges (1,280,713) (1,255,759) ----------- --------- --------- --------- Profit on ordinary activities before taxation 1,563,120 1,162,973 Taxation (299,000) (293,288) ----------- --------- --------- --------- Profit on ordinary activities after taxation 1,264,120 869,685 ----------- --------- --------- --------- Earnings per share 1 Basic 9.8p 6.9p Diluted 9.3p 6.6p ----------- --------- --------- --------- There are no recognised gains and losses for the current financial year and preceding financial year other than the profit shown above. BALANCE SHEET As at 11 February 2007 11 February 12 February 2006 2007 as restated £ £ ---------- --------- Fixed assets Tangible assets 34,747,844 35,520,467 ---------- --------- Current assets Stocks 116,581 116,997 Debtors 1,052,859 965,574 Cash at bank and in hand 158,530 159,622 ---------- --------- 1,327,970 1,242,193 Creditors (due within one year) (3,206,767) (3,336,634) ---------- --------- Net current liabilities (1,878,797) (2,094,441) ---------- --------- Total assets less current 32,869,047 33,426,026 liabilities Creditors (due after one year) (14,670,677) (15,981,828) Provision for liabilities (1,664,102) (1,630,492) ---------- --------- Total assets 16,534,268 15,813,706 ---------- --------- Capital and reserves Called up share capital 1,285,713 1,281,213 Share premium account 9,068,950 9,033,145 Profit and loss account 6,179,605 5,499,348 ---------- --------- Equity shareholders' funds 16,534,268 15,813,706 ---------- --------- The accompanying accounting policies and notes form an integral part of these financial statements. Approved by the board on 11 April 2007 Robert Peel, Director Norbert Petersen, Director CASH FLOW STATEMENT For the 52 weeks ended 11 February 2007 Note £ 52 weeks to £ 52 weeks to 11 February 12 February 2007 2006 £ £ Net cash inflow from 2 3,239,888 3,957,772 operating activities Returns on investments & servicing of finance Interest paid (1,319,704) (1,195,137) Net cash outflow from (1,319,704) (1,195,137) returns on investments and servicing of finance Taxation UK corporation tax paid (107,482) (24,140) -------- --------- -------- --------- Tax paid (107,482) (24,140) Capital expenditure Purchase of tangible fixed assets (1,469,168) (3,873,183) Sale of tangible fixed assets 2,050,000 - Net cash inflow/(outflow) from 580,832 (3,873,183) capital expenditure Equity dividend paid (608,576) (545,421) Net cash inflow/(outflow) 1,784,958 (1,680,109) before financing Financing 40,305 621,873 Issue of ordinary share capital - (39,038) Less share issue costs New long term loan 400,000 2,500,000 Less loan arrangement fees (4,000) (25,000) Loan repayments (2,107,945) (1,113,405) -------- --------- -------- --------- Net cash (outflow)/inflow from financing (1,671,640) 1,944,430 -------- --------- -------- --------- Increase in cash 3 113,318 264,321 -------- --------- -------- --------- Reconciliation of net debt Increase in cash 113,318 264,321 Decrease/(increase) in debt 1,707,945 (1,361,595) Reduction in net debt 1,821,263 (1,097,274) resulting from cash flows Non cash changes (25,659) (30,819) Decrease/(increase) in net debt in the 1,795,604 (1,128,093) year Net debt at beginning of year (17,064,787) (15,936,694) -------- --------- Net debt at end of year 3 (15,269,183) (17,064,787) -------- --------- NOTES TO THE PRELIMINARY ANNOUNCEMENT Financial year ended 11 February 2007 1. Earnings per share Basic 12,831,222 12,625,196 Calculated on average number of share issue £1,264,120 £869,685 during the year and on profit after taxation (2006: as restated) Diluted 13,512,236 13,109,618 --------- --------- Calculated on average of number of shares available £1,264,120 £869,685 during year and on the profit after taxation (2006: as restated) --------- --------- In calculating the diluted earnings per share, the weighted average number of shares is adjusted for the dilutive effect of the share options by 681,014 (2006 - 484,422), giving an adjusted number of shares of 13,512,236 (2006 - 13,109,618). 2. Reconciliation of operating profit to net cash inflow from operating activities Operating profit 1,993,833 2,418,732 Depreciation 1,133,957 1,010,509 Recognition of equity-settled 24,713 19,018 share-based payments Decrease/(increase) in stocks 416 (23,268) (Increase)/ decrease in debtors (86,795) 82,169 Increase in creditors 173,764 450,612 -------- --------- Net cash inflow from operating 3,239,888 3,957,772 activities -------- --------- 3. Analysis of net debt At beginning Cash Non At end of of year flow cash year £ £ changes £ £ --------- --------- ---------- --------- Cash at bank and in hand 159,622 (1,092) - 158,530 Bank overdrafts (500,311) 114,410 - (385,901) --------- --------- ---------- --------- (340,689) 113,318 - (227,371) Debt due within one year (742,270) 371,135 - (371,135) Debt due after one year (15,981,828) 1,336,810 (25,659) (14,670,677) --------- --------- ---------- --------- Total (17,064,787) 1,821,263 (25,659) (15,269,183) --------- --------- ---------- --------- NOTES TO THE PRELIMINARY ANNOUNCEMENT Financial year ended 11 February 2007 4. The financial information set out above does not constitute the company's statutory accounts for periods ended 11 February 2007 and 12 February 2006 but is derived from those accounts. Statutory accounts for 2006 have been delivered to the Registrar of Companies and those for 2007 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. 5. The annual report for the period ended 11 February 2007 will be posted to shareholders by 27 April 2007. This information is provided by RNS The company news service from the London Stock Exchange

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