Interim Results

Peel Hotels PLC
4 October 2000

                                                                            
Interim Results                                                             
                               
For the 28 week period ended 3 September 2000                                 
                                                                              
Turnover up 36.5% to £4,398,000 (1999 - £3,221,000)                           
                                                                              
Operating profit up 21.4% to £1,004,000 (1999 - £827,000)                     
                                                                              
Profits before tax £512,887 (1999 - £641,000)                                 
Earnings per share:                                                           
Basic        4.1p                                                             
Diluted      3.8p                                                             
Significant reinvestment in owned hotels of  £1,082,000 including the 15
luxury bedroom extension at the Bull Hotel, Peterborough                      
          

CHAIRMAN'S STATEMENT

Results
In  the twenty eight weeks to 3 September 2000 turnover grew  by
36.5%  to  £4,398,126  and operating profit  grew  by  21.4%  to
£1,004,028.  These  increases reflected the acquisition  in  the
second  half  of  last year of the Golden Lion,  Leeds  and  the
Caledonian,   Newcastle.  Earnings before interest, depreciation
and amortisation grew by 31.1%.
The pre-tax result however showed a decline of 20.0% to £512,887
and after 30% tax provision, earnings per share were 4.1p on the
8,666,666  shares in issue throughout the period, compared  with
6.9p on 6,500,000 shares in 1999.
Whilst the first time contributions from the two new hotels were
in  line  with  expectations and comfortably exceeded  financing
costs, the contribution from the management contract with  Grace
Hotels Limited fell significantly by  £208,639 compared with the
previous year; this reflected both the smaller number of  hotels
under  management (currently 21 compared with 28 last year)  and
the  absence  in  the  first half of  this  year  of  any  sales
commissions.
The Bull Hotel in Peterborough achieved sales and profit growth,
while  the Midland Hotel in Bradford had a difficult first half,
in  spite  of  an  increased room occupancy.  In particular  the
Night  Club  at the Midland moved from profit to  loss  and  its
future  is  currently under review.  We expect  to  improve  the
Midland's  performance on the previous year by the  end  of  the
financial  year;  a new General Manager has been  appointed  and
substantial costs have been taken out of the operation.
Our  new bar, Hakuna Matata, on the ground floor of Aire  House,
Leeds  lost  £38,190 in the first half of this year,  reflecting
heavy  start  up costs and the fact that our application  for  a
late  entertainment licence was only granted on 14  April  2000,
substantially  handicapped the profitability of  the  operation.
Sales  are  growing  consistently and  we  fully  expect  to  be
profitable in the second half of this year.
As  in  previous  years  the Board is not declaring  an  interim
dividend, but expect to recommend an increased dividend when the
full year results are announced.
Occupancy  in the Company's owned hotels increased by  6.4%  but
average  room rate declined by 1.3%; revenue per available  room
('RevPar') increased by 5.0%.

Taxation
As  in  previous  years  the tax provision  of  30%  contains  a
significant component for deferred tax.  The Board would expect,
however, the full year tax charge to be less than 30%.

Capital Expenditure
A sum of £1,233,153 (including £151,209 of stamp duty) was spent
in  the  period.  The 15 luxury bedroom extension to  the  Bull,
Peterborough was completed on 11 September 2000.  This expansion
will enable us to develop our residential conference business in
tandem with the Bradfield House convention centre.
A new bar, the Billabong, was built within a disused area at the
Caledonian, Newcastle and has been extremely successful since it
opened  in June 2000.  The capital cost was £240,000 and  liquor
sales since opening are trending at £442,000 per annum.
The  Board has not yet approved the 27 bedroom extension to  the
Golden  Lion,  Leeds.  While full planning  consents  have  been
obtained,  we are currently reassessing the potential impact  on
Leeds  of  a  number  of  new hotels under  construction.   This
project  would cost in the region of £1,450,000; a decision  not
to  go  ahead  would also release the proceeds of sale  of  Aire
House and provide the resources for a further hotel acquisition.
Apart from this there are no other material projects planned  in
the current financial year.

Grace Hotels Management Contract
We  have exercised our option to extend the contract with  Grace
Hotels Limited by a further six months from 4 September 2000 and
expect to extend once again, for another period of six months.

FRS 15
The Board has adopted FRS 15 in these interim statements for the
first  time.  Previously freehold and long leasehold properties,
where  the  lease  has  more than 50  years  to  run,  were  not
depreciated.   The directors are now depreciating  the  historic
cost   of  freehold  and  long  leasehold  properties  to  their
estimated residual values over periods up to 50 years.
Owning  a portfolio of city centre hotels, where the land  value
forms  a  significant part of the total value, the  depreciation
charge  is  relatively  small at this  stage  of  the  Company's
development.

Shareholders
To  encourage  shareholders to visit the Company's owned  hotels
and  those  it  manages, the Company continues to  offer  a  20%
discount  on  the  enclosed  listed  tariff,  using  a   special
reservations number - 020 7266 1100.

The Future
This  short  term setback in the Company's earnings  is  clearly
disappointing, and it is too soon to be able to predict to  what
extent  the shortfall will be made up in the second  half.   The
Board  is  confident however that the investment decisions  that
have  been  taken  will  be  to the  benefit  of  the  Company's
earnings.
The  four owned hotels will continue to benefit from the  recent
capital  expenditure  that  has  been  invested  in  them.   The
expected  gradual  diminution  of  income  from  the  management
contract   with  Grace Hotels Limited will need  to  be  managed
carefully in terms of an equivalent diminution in overheads.
We continually evaluate expansion opportunities patiently with a
view  to  finding  the  right opportunity to  assist  growth  in
shareholder value.


Chairman
PROFIT AND LOSS ACCOUNT                        28      28        Year
For the period ended 3                      weeks   weeks       ended
September 2000                              ended   ended    20/2/2000
                             Note        3/9/2000 5/9/1999      
                                                             
                                        Unaudited Unaudited      Audited   
                                               
                                                £        £            £
                                                            
Turnover                                 4,398,126   3,221,220    7,364,987
                                         
Cost of sales                           (2,975,389)  (2,045,621) (4,662,616)
                                         
                                                            
Gross profit                             1,422,737   1,175,599     2,702,371
                                          
                                                            
Administrative expenses                  (418,709)  (348,404)      (689,992)
                                          
                                                           
Operating profit                        1,004,028   827,19579     2,012,379
                                          
Interest payable and                    (491,141)   (186,260)      (559,624)
similar charges                           
                                                            
Profit on ordinary                                         
activities before taxation               512,887     640,935      1,452,755
                                                          
                                                           
Tax on profit on ordinary       2      (153,866)   (192,280)       (435,826)
activities                               
                                                           
Profit on ordinary                                         
activities after taxation               359,021    448,655        1,016,929
                                                          
                                                           
Dividend                                   -       -               (173,333)
                                                          
                                                           
Profit retained                       359,021      448,655          843,596
                                                           
                                                           
                                                           
Earnings per share              3                          
Basic                                   4.1p          6.9p          13.6p
Diluted                                 3.8p          6.1p          12.2p
                                                           
                                                           

The results for the year ended 20 February 2000 include acquired
operations.
There  are no recognised gains and losses other than the  profit
for the current financial period.  Accordingly, no statement  of
total recognised gains and losses is given.


BALANCE SHEET                                                    
3 September 2000                                                 
                                         3/9/2000   5/9/1999      20/2/2000
                                                
                                       Unaudited   Unaudited        Audited
                                                    
                                               £           £              £
                                                            
Fixed assets                                               
Tangible assets                        21,317,000    9,432,77    20,278,051
                                          
                                                          
Current assets                                             
Stocks                                     74,977      56,418        69,481
Debtors                                   761,565     639,160       751,649
Cash at bank and in hand                   78,360      45,229        82,520
                                                            
                                          914,902     740,807       903,650
                                                           
Creditors (due within one              (3,487,325) (1,445,047)   (2,735,484)
year)                                     
                                                            
Net current liabilities                (2,572,423)   (704,240)   (1,831,834)
                                          
                                                            
Total assets less current              18,744,577   8,728,533    18,446,217
liabilities                               
                                                            
Creditors (due after one               (9,676,106) (4,468,875)   (9,812,361)
year)                                     
                                                           
Provision for liabilities                (472,172)   (187,484)    (396,578)
and charges                               
                                                            
Net assets                              8,596,299   4,072,174    8,237,278
                                          
                                                            
                                                           
Capital and reserves                                       
Called up share capital                   866,667     650,000       866,667
Share premium account                   6,064,030   2,510,534     6,064,030
                                          
Profit and loss account                 1,665,602     911,640     1,306,581
                                                     
                                                            
Equity shareholders' funds              8,596,299   4,072,174     8,237,278
                                         


CASH FLOW STATEMENT                 28             28            Year
For the period ended 3           weeks          weeks           ended
September 2000                   ended          ended         20/2/2000
                               3/9/2000       5/9/1999   
                              Unaudited       Unaudited         Audited
                  Note      £         £     £          £    £           £
                                              
                     4                           
                                     
Net cash inflow from                                             
operating                      1,278,046         809,426         2,246,027
activities                 

                                                                 
Returns on investments                                           
and servicing
of finance
Interest paid        (428,363)         (172,539)         (605,590) 
                      
                                                               
Net cash outflow from                                            
returns on investments                                         
and servicing of               (428,363)        (172,539)        (605,590)
finance                       
                                                                 
Taxation                                                         
UK corporation tax paid-    -             -               (25,559) 
                                                  
                                                               
Tax paid                        -                -                (25,559)
                                                              
                                                                 
Capital expenditure                                              
Purchase of tangible   (1,233,153)       (680,175)       (2,897,121) 
fixed assets                                     
                                                               
Net cash outflow from                                            
capital expenditure            (1,233,153)       (680,175)        (2,897,121)
                              
                                                                 
Acquisitions and          -                     -          (8,750,000) 
disposals                                             
                                                               
Net cash outflow from                                            
acquisitions and               -               -                  (8,750,000)
disposals                                                     
                                                                 
Equity dividend paid          (173,333)          (65,000)           (65,000)
                             
                                                                 
Net cash outflow before       (556,803)          (108,288)       (10,097,243)
financing                     
                                                                 
Financing                                                        
Issue of ordinary share-                   -               3,770,163 
capital                                               
New long term loans      150,000           -               5,590,000 
                                                      
New short term loan      -                   -              350,000 
Loan repayments        (296,875)           (121,875)       (243,750) 
                      
                                                               
Net cash (outflow)                                               
inflow from financing        (146,875)        (121,875)      9,466,413
                              
                                                                 
Decrease in cash  5          (703,678)       (230,163)       (630,830)
                            
                                                                 
Reconciliation of net                                                
debt
                                                                 
Decrease in cash in the      (703,678)         (230,163)      (630,830)
period                         
                                                                 
Cash outflow (inflow)                                           
from decrease                136,255           121,875        (5,574,236)
(increase) in debt                                            
                                                                
Change in net debt                                              
resulting from cash         (567,423)         (108,288)       (6,205,066)
flows                          
                                                                 
Amortisation of finance         -                (2,625)         -
costs
                                                                 
Net debt at beginning      (10,982,242)        (4,777,176)     (4,777,176)
of period                     
                                                                 
Net debt at end of         (11,549,655)        (4,888,089)     (10,982,242)
period                5        
                                                                 

NOTES TO THE INTERIM ACCOUNTS
For the period ended 3 September 2000

1. Basis of accounting
   The  interim financial information has been prepared  on  the
   basis  of  the  accounting policies set  out  in  the  Annual
   Report.
   The  Company's profit and loss account for the year ended  20
   February  2000  and  balance sheet as at  that  date  are  an
   abridged  version of the statutory accounts for  that  period
   which,  together with an unqualified audit report, have  been
   filed with the Registrar of Companies.

2. Taxation
   The tax charge for the 28 weeks ended 3 September 2000 is  at
   a  higher  rate than the prevailing effective rate  of  27.6%
   largely because deferred tax has been provided in full at the
   rate   of  30%.   This  is  the  rate  at  which  the  timing
   differences are expected to reverse.

3. Earning per share
   Earning per share are based on the profit after taxation, and
   on the average number of shares in issue during the period.

                                               28      28      Year
                                            weeks   weeks     ended
                                            ended   ended    20/2/2000
                                          3/9/2000 5/9/1999     
                                                             
                                         Unaudited  Unaudited    Audited   
                                                    
                                                 £          £          £
                                                            
Average number of shares                                    
     Basic                               8,666,666   6,500,000 7,494,047
                                          
     Diluted                             9,482,701   7,378,221  8,347,311
                                         
                                                            

4.  Reconciliation of operating profit to net cash flow from
   operating activities
                                               28      28      Year
                                            weeks   weeks      ended
                                            ended   ended     20/2/2000
                                          3/9/2000 5/9/1999     
                                                               
                                        Unaudited  Unaudited    Audited   
                                              
                                                £          £          £
                                                            
Operating profit                         1,004,028   827,195  2,012,379
                                         
Depreciation                              194,204     86,765    208,433
(Increase) decrease in                      (5,496)   13,911        848
stocks
Increase in debtors                         (9,922)( 189,599)  (287,427)
                                                 
Increase in creditors                       95,232    71,154    311,794
                                                            
Net cash inflow from                                        
operating activities                      1,278,046  809,426  2,246,027
                                        


5. Analysis of net debt
                                          At                        At
                                          beginning                 end of 
                                          of period      Cash       period 
                                          21/2/2000      flow     3/9/2000
                                               
                                                 £          £            £
                                                              
Cash at bank and in hand                    82,520     (4,160)      78,360
Bank overdrafts                           (658,651)  (699,518)  (1,358,169)
                                        
                                                            
                                         (576,131)  (703,678)    (1,279,809)
                                         
                                                            
Debt due within one year                 (593,750       -          (593,750)
                                          
Debt due after one year                (9,812,361)   136,255     (9,676,106)
                                          
                                                            
                                      (10,982,242)  (567,423)   (11,549,655)
                                          
                                                            

6. Other non-cash changes
   Other  non-cash changes consisted of £2,625 of finance  costs
   in  the  period to 5 September 1999 which have been amortised
   in accordance with FRS4.

7. FRS 15
   The  interim  accounts  reflect  the  adoption  of  Financial
   Reporting  Standard  15, 'Tangible fixed  assets'  (FRS  15).
   The effect of this policy change is that the historic cost of
   freehold  and  long leasehold properties are  depreciated  to
   their  estimated residual values over periods up to 50 years.
   During  this interim period to 3 September 2000  there  is  a
   depreciation charge of £9,957 for the first time.  This is in
   accordance  with  FRS  15  which  states  that  revisions  to
   economic  lives recognised on adoption of FRS 15  are  not  a
   change  in  accounting  policy  (para  106)  and  should   be
   accounted for prospectively (para 95).
   
   

 INDEPENDENT REVIEW REPORT TO
 
 PEEL HOTELS PLC
 
 Introduction
 We  have been instructed by the company to review the financial
 information set out on pages 3 to 7 and we have read the  other
 information  contained  in the interim  report  and  considered
 whether  it  contains  any apparent misstatements  or  material
 inconsistencies with the financial information.
 Directors' responsibilities
 The   interim   report,  including  the  financial  information
 contained  therein,  is the responsibility  of,  and  has  been
 approved  by  the directors.  It is required of  the  directors
 that  the accounting policies and presentation applied  to  the
 interim  figures  should be consistent with  those  applied  in
 preparing  the  preceding  annual  accounts  except  where  any
 changes, and the reasons for them, are disclosed.
 Review work performed
 We  conducted our review in accordance with guidance  contained
 in  bulletin 1999/4 issued by the Auditing Practices Board.   A
 review  consists principally of making enquiries of  management
 and applying analytical procedures to the financial information
 and  underlying  financial  data and based  thereon,  assessing
 whether  the  accounting  policies and presentation  have  been
 consistently  applied  unless otherwise  disclosed.   A  review
 excludes  audit  procedures  such  as  tests  of  controls  and
 verification  of assets, liabilities and transactions.   It  is
 substantially  less  in  scope  than  an  audit  performed   in
 accordance  with  Auditing Standards and therefore  provides  a
 lower level of assurance than an audit.  Accordingly, we do not
 express an audit opinion on the financial information.
 Review conclusion
 On  the  basis  of our review we are not aware of any  material
 modifications that should be made to the financial  information
 as presented for the 28 weeks ended 3 September 2000.
 
  
 Deloitte & Touche
 Chartered Accountants
 Leda House
 Station Road
 Cambridge
 CB1 2RN