Final Results - Year Ended 20 February 2000

Peel Hotels PLC
12 April 2000

                               PEEL HOTELS PLC                                
                              

                              AUDITED RESULTS
                  FINANCIAL YEAR ENDING 20 FEBRUARY 2000

    Turnover up 121% to £7,364,987 (1999: £3,332,727)
    Operating Profit up 101% to £2,012,379 (1999: £1,001,743)
    Profits before tax up 93% to £1,452,755 (1999: £754,264)
    Earnings per share:
         Basic 13.6p (1999: 10.0p)
         Diluted 12.2p (1999: 8.0p)
    Purchase of two hotels at a cost of £8,750,000
    Significant reinvestment in owned hotels of £1,931,968 
    (1999:  £535,947)
    Dividend 2p per share (1999: l p)

Solid progress has been achieved in the second year of the company's
trading history and Peel Hotels has a good platform for further
growth in the forthcoming year.

Robert Peel
Chairman

Press enquiries to Robert Peel - 020 7266 1100

                   PEEL HOTELS PLC

                  CHAIRMAN'S STATEMENT

Results
I am pleased to report solid progress for the year ended 20 February 2000.
Pre-tax profits increased 92.6% to £1,452,755 from £754,264. After a full
tax provision of 30%, earnings per share were 13.6p basic and 12.2p on a
diluted basis, an uplift of 36% and 53% respectively on the previous year.
This has been achieved against a relatively flat U.K. hotel trading
environment during the year.

As at 20 February 2000, net debt stood at £10,982,242 representing ten year
loans totalling £10,406,111 and an overdraft of £658,651, less £82,520 cash
at bank. Gearing on shareholders' funds was 133% with interest covered 3.6
times.

Profit before interest and tax increased 101% to £2,012,379 from
£1,001,743.

The board has recommended doubling the dividend from lp to 2p per share,
amounting to £173,333 which will be paid on 16 June 2000 to shareholders on
the register at 19 May 2000.

For the year as a whole, our 'Revpar' (accommodation revenue per available
room) increased by 9.5% on the previous year and further progress was made
in terms of cost and margin improvement. We incurred significant capital
expenditure improving the quality of our portfolio, with a view to bringing
each hotel up to the standards expected from four-star hotels.

Events 

On 6 September 1999, the company raised £3.9 million through a
placing and open offer by its broker, Peel Hunt plc., of 2,166,666 new
ordinary shares at £1.80 per share, to purchase the Golden Lion Hotel,
Leeds; Aire House, an office block adjacent to the Golden Lion, and the
Caledonian Hotel, Newcastle. The balance of the overall consideration of
£9.65 million was financed by a £7 million ten-year secured loan facility
from the Royal Bank of Scotland Plc, which included finance to fund the
development of Aire House. This development will constitute a 27-bedroom
extension to the 89-bedroom Golden Lion. On 20 December 1999, we opened a
new 2,079 square foot bar on the ground floor of Aire House called Hakuna
Matata, which is currently operating as a 'Sportsbar' from 4.00 pm to 11.00
pm. Application has been made for a late music and dancing licence at the
weekends and if successful will enable us to benefit from the demand for
late night entertainment in Leeds. We will shortly open from 10.00 am to
4.00 pm providing food and drink. Planning permission has been granted and
building has commenced to construct a 15-room extension to the Bull Hotel,
Peterborough. Work is expected to be completed in July 2000.

                   


Since the year-end, planning permission has been granted for the 27-bedroom
extension to the Golden Lion Hotel, Leeds in Aire House. The company now
owns four city centre hotels with a total of 371 bedrooms and the
additional 42 rooms will give us an average of over 100 rooms per hotel,
whilst increasing our room stock by over 11%.

Capital Expenditure
Excluding the purchase of the two hotels and Aire House, a sum of
£1,931,968 was spent in the year, primarily at the Midland Hotel, Bradford,
where all the public areas have been totally renovated, four 'state of the
art' conference rooms have been created and three new training rooms have
been added. The hotel's night club and two ballrooms have also been
refurbished. The renovation of the public areas at the Bull in Peterborough
has been completed and as stated previously, a start has been made on the
hotel's 15-bedroom extension. 56 bedrooms have been refurbished at the
Golden Lion in Leeds, which now means that all 89 bedrooms in the hotel
have been refurbished within the past two years, enabling us to offer a
high standard product in a city currently enjoying a buoyant market.Our
capital expenditure is targeted to expand the potential of our well located
hotels and equally to bring all our hotels up to the requirements of a
quality four star product. This will enable us to increase Revpar and
consequently profit, whilst improving the value and desirability of our
assets.

Finance
As reported in our interim statement in October, following the acquisition
of the Golden Lion, Leeds, Aire House and the Caledonian, Newcastle, the
board decided it would be prudent to cap the exposure of the company's
borrowings to rising interest rates. This has been achieved in such a way
that £7 million of the borrowings have effectively become, at worst, a
ten-year fixed rate loan at approximately 8.5% including margin, while in
certain circumstances, such as those currently prevailing, the rate will be
less than this.

Grace Hotels Management Contract
The Company now manages 22 hotels on behalf of Grace Hotels Ltd, five of
the original 29 have been sold to third parties during the year and two,
the Golden Lion, Leeds and the Caledonian, Newcastle were bought by Peel
Hotels PLC.

The contract signed on 5 October 1998 is for a minimum of two years with
various options to extend.

                   


Shareholders
The financial welfare of our shareholders is of paramount importance and
the prime objective of the company is to maximise shareholder value by
focusing on earnings per share growth, consistently applying a full tax
charge. This measurement overwhelmingly dictates the scope for any
potential expansionary moves. The company is fortunate in having organic
growth opportunities with its existing portfolio to afford further progress
in the forthcoming year and at the same time opportunities for further
acquisitions are being regularly reviewed in order to seek out good value,
with growth potential, that fall within the board's overall strategy. We
also aim to benefit shareholders through our Shareholder Discount Scheme.
All Shareholders are entitled to a 20% 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 our management and staff for a job well
done and the commitment and enthusiasm they have shown to the progress of
the company during the year. It is very gratifying to see that happy,
motivated staff translate into satisfied guests who seek out and appreciate
those hotels that can offer real care, friendliness and value.

The Future The capital spent in 1999 and new bedroom stock coming on line
later in 2000, will give us a good platform for growth in the forthcoming
year. We are continually looking for opportunities where we can add value
and thereby achieve superior returns for our shareholders whilst
concentrating on extracting every ounce of value from our existing hotels.

                                Robert Peel
                                 Chairman
                                     
                                                       
PROFIT & LOSS ACCOUNT                                  
For the financial year ended 20 February 2000

                      Continuing   Acquired                      
                      operations operations                      
                Note  20/02/2000 20/02/2000 20/02/2000  21/02/1999
                                                                 
Turnover               5,992,435  1,372,552  7,364,987   3,332,727
Cost of sales         (3,838,904) (823,712) (4,662,616) (2,034,249)
                                          
Gross profit            2,153,531    548,840 2,702,371   1,298,478
Administrative          (689,992)          - (689,992)   (296,735)
expenses
                                                                  
Operating profit        1,463,539    548,840 2,012,379   1,001,743
Interest payable                                                  
&
similar charges                              (559,624)   (247,479)
Profit on                                                         
ordinary
activities before                            1,452,755     754,264
taxation
Taxation                                     (435,826)   (226,279)
Profit on                                                         
ordinary
activities after                             1,016,929     527,985
taxation
Dividend          1                          (173,333)    (65,000)
Profit retained                                843,596     462,985
Earnings Per      2                                               
Share
Basic                                            13.6p       10.0p
Diluted                                          12.2p        8.0p
There are no recognised gains and losses    
other than as stated above.
Accordingly, no statement of total
recognised gains and losses is given.
The comparative period was from 12 March
1998, when trading commenced to
21 February 1999.                                      
                                                       
                                                                  
BALANCE SHEET                                         
As at 20 February 2000                                
                                           20/02/2000  21/02/1999
                                                      
Fixed assets                                          
Tangible assets                            20,278,051   8,839,363
Current assets                                        
Stocks                                         69,481      70,329
Debtors                                       751,649     450,905
Cash at bank and in hand                       82,520     182,463
                                              903,650     703,697
Creditors (due within one year)           (2,735,484) (1,230,458)
Net current liabilities                   (1,831,834)   (526,761)
Total assets less current                  18,446,217   8,312,602
liabilities
Creditors (due after one year)            (9,812,361) (4,588,125)
Provision for liabilities &                 (396,578)   (100,958)
charges
Net assets                                  8,237,278   3,623,519
Capital and reserves                                  
Called up share capital                       866,667     650,000
Share premium account                       6,064,030   2,510,534
Profit and loss account                     1,306,581     462,985
Equity shareholders' funds                  8,237,278   3,623,519
Approved by the board on 11 April                     
2000
Robert Peel, Director                                 
John Perkins, Director                                
                                     
                                                                              
        
CASH FLOW STATEMENT                                
For the financial year   
ended 20 February 2000
                                       20/02/2000           21/02/1999
                        Note                                          
Net cash inflow from                                               
operating activities       3            2,246,027             1,154,894
Returns on investments                                             
& servicing of finance                                             
Interest paid                (605,590)              (232,176)
Net cash outflow from                                              
returns on investments                                             
and servicing of finance                (605,590)             (232,176)
Taxation                                                           
UK corporation tax paid       (25,559)                               
Tax paid                                 (25,559)                 
Capital expenditure                                                
Purchase of tangible                                               
fixed assets                (2,897,121)            (8,903,553)
                                  
Net cash outflow from                                              
capital expenditure                   (2,897,121)              (8,903,553)
Acquisitions and                      (8,750,000)                 
disposals
Equity dividend paid                     (65,000)                 
Net cash outflow                                                   
before financing                     (10,097,243)               (7,980,835)
Financing                                                          
Issue of ordinary share   3,770,163                   3,160,534
capital
New long term loans        5,590,000                   4,631,250
New short term loans         350,000                     243,750
Loan repayments             (243,750)                          -
Net cash inflow from                    9,466,413                8,035,534
financing
(Decrease)/ increase in                 (630,830)                  54,699
cash                      4
Reconciliation of net                                              
debt
(Decrease)/Increase in                  (630,830)                  54,699
cash
Increase in debt                      (5,574,236)              (4,831,875)
Movement in net debt in               (6,205,066)              (4,777,176)
the year
Net debt at beginning of              (4,777,176)                 
year
Net debt at end of year   4          (10,982,242)               (4,777,176)
                        
                                                                   
                                                   
NOTES                                              
For the financial year ended 20                    
February 2000
                                             2000            1999
                                                   
1.Dividend proposed                                  
  Final proposed dividend of 2p per         173,333          65,000
  share (1999 1p)
2.Earnings per share                                 
  Basic                                              
 Calculated on average number of shares  7,494,047       5,262,428
 in issue
 during the year and on the profit       £1,016,929        £527,985
 after taxation
 Diluted                                            
 Calculated on average of maximum        8,347,311       6,562,138
 number of shares
 available during the year and on the    £1,016,929        £527,985
 profit after taxation

 In calculating the diluted earnings per share, the weighted
 average number
 of shares is adjusted for the dilutive effect of the share
 options by 701,230
 (1999 1,052,600) and the warrants by 152,034 (1999 247,110)
 giving an adjusted
 number of shares of 8,347,311.                     
                                                   
3.Reconciliation of operating profit to              
 net
 cash inflow from operating activities              
 Operating profit                        2,012,379       1,001,743
 Depreciation                              208,433          64,190
 Decrease (increase) in stocks                 848        (70,329)
 Increase in debtors                     (287,427)       (444,482)
 Increase in creditors                     311,794         603,772
 Net cash inflow from operating          2,246,027       1,154,894
 activities
                   At beginning of year Cash flow  At end of year
                                                   
4.Analysis of net                                    
 debt
 Cash at bank and in             182,463  (99,943)          82,520
 hand
 Bank overdrafts               (127,764) (530,887)       (658,651)
                                 54,699 (630,830)       (576,131)
Debt due within one           (243,750) (350,000)       (593,750)
year
Debt due after one          (4,588,125) (5,224,236)     (9,812,361)
year                                            
Tota1                       (4,777,176) (6,205,066)    (10,982,242)
                                                
                                                   
                                     
                                     
 5.Accounting Policies

  This announcement is prepared on the basis of accounting policies as        
  stated in the financial statements for the year ended 20 February 2000.     
 
                                                                              
6.The financial information set out above does not constitute the company's   
 statutory accounts for the year ended 20 February 2000 but is derived from   
 those accounts.Statutory accounts for the year ended20 February 2000 will be 
 delivered to the Registrar of Companies following the company's Annual     G 
 General Meeting. The auditors have reported on the accounts; their report was
 unqualified and did not contain statements under section 237 (2) or (3) of   
 the Companies Act 1985.           
                      
                                                                              
7.The annual report for the year ended 20 February 2000 will be posted to     
 shareholders no later than 20 April 2000.