Final Results

Peel Hotels PLC
14 April 2005


                                PEEL HOTELS PLC

                            PRELIMINARY ANNOUNCEMENT

   Derived from the audited results for financial year ended 13 February 2005


HIGHLIGHTS

   • Owned hotels turnover up by 5.3% to £12,268,058 (2004 - £11,651,849)

   • Hotel profit, excluding income from Management Contract, flat at
     £2,845,707 (2004 - £2,848,079)

   • Pre-Tax profits down 16% to £1,181,107 (2004 - £1,406,636)

   • Revpar (Accommodation revenue per available room) improved by 4.4%

   • Earnings per share
     Basic 7.5p (2004 : 8.7p)
     Diluted 7.3p (2004 : 8.5p)

   • Dividend increased by 7.1% to 4.5p per share (2004 - 4.2p per share)


POST BALANCE SHEET EXPANSION

On Wednesday 13 April 2005 the company exchanged contracts to purchase the three
remaining leasehold hotels within Grace Hotels Ltd., together with the freehold
of the Golden Lion in Leeds, hitherto held on a 99 year lease at a peppercorn,
for a consideration of £2.75 million. To fund this acquisition the company is
arranging to place £600,000 worth of shares at 90p per share and has secured a
loan of £2.5 million repayable over 10 years. The lease of the Strathdon Hotel
in Nottingham will be transferred, subject to a deed of variation, still to be
entered into, by the freeholder of the land, which has been recently sold by the
city of Nottingham.

The leaseholds are for the 94 bedroom Crown & Mitre in Carlisle, the 68 bedroom
Strathdon in Nottingham and the 48 bedroom King Malcolm in Dunfermline.

Application will be made for the 666,666 new ordinary shares to be admitted to
AIM. It is expected that admission will take place on 13 May 2005.

Chairman Robert Peel said 'Our owned hotels, apart from the Golden Lion,
performed well in the year with like for like sales growth of 5.3% and Revpar up
4.4%, even including the Golden Lion's disappointing performance. The completion
of the Management Contract, by way of acquiring the remaining three leaseholds
and the freehold of the Golden Lion in Leeds, will give us the income going
forward to compensate for loss of earnings from the Management Contract'.

PRESS ENQUIRIES TO ROBERT PEEL 020 7266 1100






                              CHAIRMAN'S STATEMENT

RESULTS

Total turnover grew by 4% to £12,552,759 and our six owned hotels' turnover grew
by 5.3% to £12,268,058 (2004: £11,651,849). Operating profit was £2,482,999
(2004: £2,671,658) a decrease of 7.1%; there was £133,894 less Management
Contract income and depreciation was £119,002 more than the previous year.

Earnings before interest, tax and depreciation were £69,657 less than the
previous year at £3,385,654 (2004: £3,455,311). A rebate on rates at the Midland
Hotel, Bradford, of £60,000 in the previous year accounted for the differential
in group overheads.

The pre-tax result decreased 16% to £1,181,107 from £1,406,636. After a full tax
provision less discounting, earnings per share were 7.5p basic and 7.3p on a
diluted basis (2004: 8.7p basic and 8.5p diluted).

At 13 February 2005 net debt stood at £15,936,694 representing loans totalling
£15,331,684 and an overdraft of £752,147 less £147,137 cash at bank. Gearing on
shareholders' funds was 111% with interest covered 1.9 times. Net debt decreased
£647,731 compared with the previous year.

Sales in our six owned hotels, on a like for like basis, grew by 5.3%, and I am
pleased to report that Revpar (accommodation revenue per available room) grew
for the seventh successive year. This growth was 4.4% in the year, with
occupancy up by 0.4% and average room rate up by 4.1%, justifying our continuing
reinvestment in our properties.

The performance of our six owned hotels, apart from the Golden Lion in Leeds,
was satisfactory with the Bull in Peterborough having an exceptional year. We
feel confident that, with the change of manager and a clear tariff strategy
going forward, the decline in profitability at the hotel in Leeds will be
arrested and we can look forward to steady growth of profitability in the
current year. Shareholders should be interested to note that in addition to a
rigorous policy of depreciation of capital expenditure in our hotels, we are
passionate about keeping our properties well maintained and in good repair.
Expenditure on repairs and renewals in our hotels increased 14.3% from £440,996
to £504,158.

Our policy of high standards of maintenance and generous staffing levels has
given us excellent feedback on client satisfaction and will give us the
consequential benefits of increasing custom.

FINANCIAL CHARGES

Net debt in the period decreased by £647,731 to a total of £15,936,694.
Unfortunately the libor rate on our 'Cap and Collar' on £7 million of our debt
was marginally under 4.99% at the fixing date on 11 October 2004. Happily on 11
April 2005 the rate was above this figure and consequently this gives us the
benefit of reducing interest charges going forward by up to an annualised
£140,000. The balance of our loan debt excluding overdraft is fixed at 5.83% +
1.25% margin and this, together with our 'Cap and Collar' gives us an effective
hedge against any interest charge rises in the immediate future.

The Board has recommended increasing the dividend from 4.2p per share to 4.5p
per share, amounting to £545,421, which, if approved by shareholders, will be
paid on 24 May 2005 to shareholders on the register at 3 May 2005. The dividend
will not be paid to the holders of 666,666 shares to be admitted to AIM on 13
May 2005 in connection with the expansion referred to below.

CAPITAL EXPENDITURE

A total of £716,047 was spent in the period which was £186,608 less than the
depreciation charge for the period.

The Billabong Bar at the Caledonian in Newcastle has been doubled in size, a new
switchboard has been installed at the Midland in Bradford and new hot water
boilers installed at the Avon Gorge in Bristol.

Bedroom improvements have taken place at the Midland in Bradford, the Avon Gorge
in Bristol and the Bull in Peterborough.

We are currently preparing a comprehensive development brief for the Avon Gorge
and are working in consultation with the planners in Bristol, and the local
residents in Clifton, with a view to submitting a planning application that will
develop the potential of the site.

Planning permission to build 24 new bedrooms and a leisure complex at the
Caledonian in Newcastle was refused and we are considering whether to progress
with a public appeal or submit a scaled down application.

The city centre of Bradford is currently being rebuilt with massive car parking
facilities in prospect, thereby making our 0.8 acre site, some 500 yards from
the Midland Hotel in Bradford, superfluous to requirements. We are in the
process of seeking planning permission for residential use for this piece of
land with a view to selling it some time in the future. Currently the site is
used for hotel car parking and contract parking.

At the time of writing we have not sold Aire House, adjacent to the Golden Lion
in Leeds. During the year the profit contribution of Hakuna Matata, located
within the ground floor of the building, dramatically improved and consequently
this has increased our exit value expectation. Our administration offices are
currently located on a mezzanine floor leaving two 1400sq ft floors of currently
unused and dilapidated office space. Shareholders will be aware that we have
planning permission to demolish Aire House and build a forty-five room extension
to the Golden Lion Hotel should we choose that option.

EXPANSION

We announced the exchange of contracts on Wednesday 13 April 2005 for the
acquisition of the three remaining leasehold hotels within Grace Hotels Ltd,
together with the freehold of the Golden Lion Hotel in Leeds, hitherto held on a
99 year lease at a peppercorn, for a consideration of £2.75 million. To fund
this acquisition we have successfully placed £600,000 worth of shares at 90p per
share and arranged for a loan of £2.5 million repayable over 10 years. The lease
of the Strathdon in Nottingham will be transferred, subject to a deed of
variation, still to be entered into, with the freeholder of the land, which has
been recently sold by the city of Nottingham.
The leaseholds are for the 94 bedroom Crown & Mitre in Carlisle, the 68 bedroom
Strathdon in Nottingham and lastly the 48 bedroom King Malcolm in Dunfermline.

This transaction will neatly bring to an end the Management Contract of Grace
Hotels Ltd on behalf of Lehman Brothers Merchant Bank. The net contribution from
the three additional hotels should more than compensate for the loss of
Management Contract income.

SHAREHOLDERS

We would encourage shareholders to take advantage of our Shareholders' discount
scheme. All shareholders are entitled to a 25% discount off the listed tariff,
using the special reservations number, 020 7266 1100 or email [e-mail]
. Shareholders can identify our hotels using the directory at the back of the
Annual Report. We do hope you visit our hotels and enjoy them.

STAFF

The welfare and retention of our staff is a top priority in achieving our
objective of continually improving the guest experience at a Peel Hotel. The
Board would like to express their appreciation and thanks to all management and
staff who have contributed to a further year of progress in our owned hotels.

THE FUTURE

The completion of the Management Contract will enable us to concentrate on our
owned hotels where there is still considerable scope to improve performance. We
are confident that we can continue to grow Revpar on the back of an improving
overall product and our total commitment service.


13 April 2005 15:15





PROFIT AND LOSS ACCOUNT
For the 52 weeks ended 13 February 2005

                               Note              13 February           15 February
                                                        2005                  2004

                                              £           £          £           £

Turnover                                         12,552,759             12,070,444
Cost of sales                                   (8,519,697)            (8,020,119)
Gross profit                                      4,033,062              4,050,325
Administrative expenses
Depreciation                          (902,655)              (783,653)
Other                                 (647,408)              (595,014)
                                                (1,550,063)            (1,378,667)
Operating profit                                  2,482,999              2,671,658
Interest payable & similar                      (1,301,892)            (1,265,022)
charges
Profit on ordinary                                1,181,107              1,406,636
activities before taxation
Tax on profit on ordinary                         (272,094)              (351,659)
activities

Profit on ordinary activities                       909,013              1,054,977
after taxation
Dividends                           1             (545,421)              (509,059)

Profit retained                                     363,592                545,918

Earnings per share                  2
Basic                                                  7.5p                   8.7p
Diluted                                                7.3p                   8.5p


All activities derive from continuing operations.

There are no recognised gains and losses for the current financial year and
preceding financial year other than the profits shown above.




BALANCE SHEET
As at 13 February 2005

                                                   13 February      15 February
                                                          2005             2004
                                                             £                £

Fixed assets
Tangible assets                                     32,657,793       32,844,401

Current assets
Stocks                                                  93,729           81,519
Debtors                                              1,045,243          991,809
Cash at bank and in hand                               147,137          135,739

                                                     1,286,109        1,209,067
Creditors (due within one year)                    (3,665,542)      (4,080,962)

Net current liabilities                            (2,379,433)      (2,871,895)

Total assets less current liabilities               30,278,360       29,972,506

Creditors (due after one year)                    (14,589,414)     (14,809,146)
Provision for liabilities & charges                (1,346,778)      (1,184,784)

Total assets                                        14,342,168       13,978,576

Capital and reserves
Called up share capital                              1,212,046        1,212,046
Share premium account                                8,519,477        8,519,477
Profit and loss account                              4,610,645        4,247,053

Equity shareholders' funds                          14,342,168       13,978,576


Approved by the board on 13 April 2005

Robert Peel, Director

John Perkins, Director




CASH FLOW STATEMENT
For the 52 weeks ended 13 February 2005

                                               52 weeks to             52 weeks to
                                               13 February             15 February
                              Note                    2005                    2004
                                             £           £           £           £

Net cash inflow from             3              3,314,153               3,264,814
operating activities
Returns on investments
& servicing of finance
Interest paid                      (1,294,185)             (1,136,284)

Net cash outflow from                          (1,294,185)             (1,136,284)
returns on investments
and servicing of finance
Taxation
UK corporation tax paid              (120,728)               (191,922)

Tax paid                                         (120,728)               (191,922)

Capital expenditure
Purchase of tangible fixed           (716,047)             (1,263,003)
assets

Net cash outflow from                            (716,047)             (1,263,003)
capital expenditure

Equity dividend paid                             (509,059)               (484,818)

Net cash inflow                                    674,134                 188,787
before financing

Financing
Loan received                        1,000,000                       -
Loan repayments                    (1,488,405)               (984,540)

Net cash (outflow) from                          (488,405)               (984,540)
financing

Increase / (decrease) in                           185,729               (795,753)
cash


Reconciliation of net debt
Increase / (decrease) in cash                      185,729             (795,753)
Decrease in debt                                   488,405               984,540

Reduction in net debt                              674,134               188,787
resulting from cash flows
Non cash changes                                  (26,403)              (26,403)

Reduction in net debt in the year                  647,731               162,384

Net debt at beginning of year                 (16,584,425)          (16,746,809)

Net debt at end of year                 4     (15,936,694)          (16,584,425)




NOTES TO THE ACCOUNTS

Financial year ended 13 February 2005

1. Dividends
                                                        13 February 15 February
                                                               2005        2004

Final proposed dividend of 4.5p per share (2004 - 4.2p)     545,421     509,059


2. Earnings per share
Basic
Calculated on the average number of shares in issue      12,120,457  12,120,457
during the year and on profit after taxation               £909,013  £1,054,977

Diluted
Calculated on average of number of shares                12,451,151  12,445,067
available during year and on the profit after taxation     £909,013  £1,054,977


In calculating the diluted earnings per share, the weighted average number of
shares is adjusted for the dilutive effect of the share options by 330,694 (2004
- 324,610), giving an adjusted number of shares of 12,451,151 (2004 -
12,445,067).


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

Operating profit                                         2,482,999     2,671,658
Depreciation                                               902,655       783,653
Increase in stocks                                        (12,210)       (4,847)
Increase in debtors                                       (53,434)     (150,106)
Decrease in creditors                                      (5,857)      (35,544)

Net cash inflow from operating activities                3,314,153     3,264,814


4. Analysis of net debt
                         At beginning of       Cash    Non cash        At end of
                                    year       flow     changes             year
                                       £          £           £                £

Cash at bank and in hand         135,739     11,398           -          147,137
Bank overdrafts                (926,478)    174,331           -        (752,147)

                               (790,739)    185,729           -        (605,010)
Debt due within one year       (984,540)    242,270           -        (742,270)
Debt due after one year     (14,809,146)    246,135    (26,403)     (14,589,414)

Total                       (16,584,425)    674,134    (26,403)     (15,936,694)


5. The financial information set out above does not constitute the company's
statutory accounts for periods ended 13 February 2005 and 15 February 2004 but
is derived from those accounts. Statutory accounts for 2004 have been delivered
to the Registrar of Companies and those for 2005 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 13 February 2005 will be posted to
shareholders by 29 April 2005.



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