Interim Results

Peel Hotels PLC
11 October 2001


                               Peel Hotels Plc.


                               Interim Results


                For the 28 week period ended 2 September 2001



*   Turnover up 5.4% to £4,635,347 (2000 - £4,398,126)


*   Operating profit up 16.0% to £1,164,484 (2000 - £1,004,028)


*   Profits before tax up 43.1% to £734,028 (2000 - £512,887)


*   Earnings per share:-


          Basic         5.9p (2000 - 4.1p)
          Diluted       5.7p (2000 - 3.8p)



Further information
Robert Peel      020 7266 1100



CHAIRMAN'S STATEMENT



RESULTS



In the twenty-eight weeks to 2 September 2001, turnover grew by 5.4% to 
£4,635,347 and operating profit grew by 16.0% to £1,164,486.  Earnings before
interest, depreciation and amortisation grew by 20.1%.



The pre-tax result increased 43.1% to £734,028 and tax has been provided for
at 30%. Earnings per share were 5.9p compared with 4.1p for the period.



Progress has been encouraging in our owned hotels with turnover up 7.9% and
costs under control.  Occupancy increased 1.7% and average room rate by 2.6%,
whilst revenue per available room (REVPAR) increased 4.3% on a larger
inventory of bedrooms than the previous year.



As expected, income from the management contract lessened in line with the
ongoing sale of hotels in the Grace Hotels portfolio.  At the time of writing
we continue to manage eighteen Grace Hotels.  Shareholders may recollect from
my statement in the Annual Report that the Management Contract ended on 5th
October 2001.  I am pleased to report that the contract to manage Grace Hotels
has been extended for a further six months from that date.



CAPITAL EXPENDITURE



A sum of £793,415 was spent in the period, mainly on the Caledonian Hotel in
Newcastle.  The entire ground floor has been restyled including reception,
restaurant, rest rooms and the successful Billabong Bar expanded.  Twenty
seven bedrooms have been refurbished to a high standard.



The Board is in the process of applying for planning permission to knock down
Aire House adjacent to the Golden Lion, Leeds and build a fifty- bedroom
extension together with leisure complex.  Currently, there is a planning
permission in place for a twenty-seven bedroom expansion within the existing
building.



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 reservation number - 020 7266 1100.



THE FUTURE



There is still plenty of scope to improve performance within our four owned
hotels, even though there is concern in regard to the impact of current events
on provincial cities of the United Kingdom.



We continue to actively research expansion opportunities that can assist in
the growth of shareholder value.





PROFIT AND LOSS ACCOUNT

For the period ended 2 September 2001


                                     28 weeks ended  28 weeks ended        Year
                                           2/9/2001        3/9/2000 ended 18/2/
                                                                           2001
                                          Unaudited       Unaudited     Audited
                               Note               £               £           £

Turnover                                  4,635,347       4,398,126   8,630,804
Cost of sales                           (3,079,700)     (2,975,389) (5,631,709)

Gross profit                              1,555,647       1,422,737   2,999,095
Administrative expenses                   (391,163)       (418,709)   (772,226)

Operating profit                          1,164,484       1,004,028   2,226,869
Interest payable & similar                (430,456)       (491,141)   (912,348)
charges

Profit on ordinary activities               734,028         512,887   1,314,521
before taxation
Tax on profit on ordinary       2         (220,208)       (153,866)   (311,063)
activities

Profit on ordinary activities               513,820         359,021   1,003,458
after taxation
Dividend                                          -               -   (260,000)

Profit retained                             513,820         359,021     743,458

Earnings per share              3
Basic                                          5.9p            4.1p       11.6p
Diluted                                        5.7p            3.8p       10.7p




All transactions derive from continuing operations.





Statement of total recognised gains and losses


                                      28 weeks ended  28 weeks ended       Year
                                            2/9/2001        3/9/2000 ended 18/2
                                                                          /2001
                                           Unaudited       Unaudited    Audited
                                                   £               £          £

Total recognised gains and losses            513,820         359,021    743,458
related to the year

Prior period adjustments as                        -               -    102,767
explained in Note 6

Total gains and losses since last            513,820         359,021    846,225
annual report




BALANCE SHEET
As at 2 September 2001


                                            2/9/2001     3/9/2000     18/2/2001
                                           Unaudited    Unaudited       Audited
                                                   £            £             £
Fixed assets

Tangible assets                           21,805,843   21,317,000    21,286,744

Current assets

Stocks                                        51,462       74,977        60,952
Debtors                                      804,669      761,565       848,724
Cash at bank and in hand                      85,128       78,360       119,065
                                             941,259      914,902     1,028,741

Creditors (due within one year)          (2,604,580)  (3,487,325)   (2,360,528)
Net current liabilities                  (1,663,321)  (2,572,423)   (1,331,787)
Total assets less current liabilities     20,142,522   18,744,577    19,954,957

Creditors (due after one year)           (9,972,090)  (9,676,106)  (10,298,345)

Provision for liabilities and charges      (573,109)    (472,172)     (573,109)

Net assets                                 9,597,323    8,596,299     9,083,503

Capital and reserves

Called up share capital                      866,667      866,667       866,667
Share premium account                      6,064,030    6,064,030     6,064,030
Profit and loss account                    2,666,626    1,665,602     2,152,806

Equity shareholders' funds                 9,597,323    8,596,299     9,083,503




CASH FLOW STATEMENT

For the period ended 2 September 2001


                  28 weeks ended    28 weeks ended 3/9/2000                 Year
                       2/9/2001                                  ended 18/2/2001
                      Unaudited                Unaudited                 Audited
             Note             £                        £                       £

Net cash      4             1,799,470               1,278,046         2,296,687
flow from
operating
activities

Returns on
investments
and
servicing of
finance
Interest        (415,514)               (428,363)            (882,406)
paid

Net cash                    (415,514)               (428,363)          (882,406)
flow from
returns on
investments
and
servicing of
finance

Taxation         (44,829)                     -                      -

UK                           (44,829)                    -                   -  
corporation
tax paid

Tax paid
Capital
expenditure

Purchase of     (793,661)             (1,233,153)           (1,394,266)
tangible
fixed assets

Net cash                    (793,661)            (1,233,153)         (1,394,266)
outflow from
capital
expenditure

Acquisitions              -                     -                       -
and
disposals

Net cash                            -                       -
Inflow/
(outflow)
from
acquisitions
and
disposals
Equity                      (260,000)              (173,333)           (173,333)
dividend
paid

Net cash                     285,466               (556,803)           (153,318)
inflow/
(outflow)
before
financing
Financing

Issue of
ordinary
share
capital

New long                                  150,000             1,060,000
term loans
New short
term loans

Loan              (296,875)              (296,875)             (593,750)
repayments

Net cash                    (296,875)               (146,875)            466,250
(outflow)/
inflow From
financing

(Decrease)/   5              (11,409)               (703,678)            312,932
increase in
cash



Reconciliation of net debt


                                  28 weeks ended  28 weeks ended           Year
                                        2/9/2001        3/9/2000    ended 18/2/
                                                                           2001
                                       Unaudited       Unaudited        Audited
                             Note              £               £              £

(Decrease)/increase in cash             (11,409)       (703,678)        312,932
in the period
Cash outflow/(inflow) from               296,875         136,255      (466,250)
decrease/(increase) in debt
Change in net debt resulting             285,466       (567,423)      (153,318)
from cashflows
Non Cash changes                        (10,620)               -       (19,734)
Net debt at beginning of            (11,155,294)   (10,982,242)    (10,982,242)
period
Net debt at end of period     5     (10,880,448)   (11,549,665)    (11,155,294)





NOTES TO THE INTERIM ACCOUNTS
For the period ended 2 September 2001





1.    Basis of accounting

The interim financial information has been prepared on the basis of the
accounting policies consistent with those applied in the last Annual Report
except that FRS18 'Accounting Policies' has now come into force.
Implementation of FRS18 has had no effect on reported profits and has not
given rise to any restatement of figures reported for the prior period.



The company's profit and loss account for the year ended 18 February 2001 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

Tax has been provided at a rate of 30% which represents the expected effective
rate for the full year. This charge has been calculated in accordance with
FRS19 'Deferred Tax' which is consistent with the accounting treatment adopted
for the year ended 18 February 2001. The prior year tax figures for the 28
weeks ended 3 September 2000 have not been restated in accordance with FRS19
on the grounds that any adjustment would be immaterial.



3.    Earnings per share

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


                             28 weeks ended          28 weeks ended       Year  
                                   2/9/2001                3/9/2000      Ended
                                                                     18/2/2001
                                  Unaudited               Unaudited    Audited
Average No. shares
Basic                             8,666,666               8,666,666  8,666,666
Diluted                           9,081,405               9,482,701  9,381,731



4.   Reconciliation of operating profit to net cash flow from operating 
activities


                                    28 weeks ended     28 weeks ended      Year
                                          2/9/2001           3/9/2000     Ended
                                                                      18/2/2001
                                         Unaudited          Unaudited   Audited
                                                 £                  £         £

Operating profit                         1,164,486          1,004,028 2,226,869
Depreciation and amortisation              274,562            194,204   385,573
(Decrease)/increase in stocks                9,490            (5,496)     8,529
(Decrease)/increase in debtors              44,049            (9,922)  (97,075)
Increase/(decrease) in                     306,885             95,232 (227,209)
creditors

Net cash inflow from operating           1,799,470          1,278,046 2,296,687
activities



5.   Analysis of net debt


                           At beginning               non  At end of period 2/9/
                        Of period 18/2/              cash                  2001 
                                   2001     cash  changes
                                            flow
                                      £        £        £                     £

Cash at bank and in             119,065 (33,937)        -                85,128
hand
Bank overdraft                (382,264)   22,528        -             (359,736)
                              (263,199) (11,409)        -             (274,608)

Debt due within one           (593,750) (40,000)                      (633,750)
year
Debt due after one         (10,298,345)  336,875 (10,620)           (9,972,090)
year
Total                      (11,155,294)  285,466 (10,620)          (10,880,448)




6.  Prior period adjustment

In the year ended 18 February 2001, the directors adopted Financial Reporting
Standard 19 'Deferred Tax'.  As stated in our last Annual Report, the prior
period adjustment represents the impact of the implementation of the standard
on the company's shareholders' funds at 20 February 2000.