Preliminary Results

Peel Hotels PLC 16 April 2008 PEEL HOTELS PLC HIGHLIGHTS # Pre-Tax profits £9,589,533 (2007: £1,563,120) # Excluding exceptional profits Pre-Tax profits £1,447,012 (2007: £713,120) # Exceptional profits £8,142,531 (2007: £850,000) # Effectively no net debt £40,417 (2007 £15,269,183) # Earnings per share Basic 63.4p (2007: 9.8p) Diluted 62.8p (2007: 9.3p) # One off bonus dividend 15p per share # Final dividend 3.5p making 6.0p for the year (2007: 5.5p) We are in an excellent position, with effectively no net debt to take advantage of any weakness in the property market should that occur. Robert Peel Chairman 15 April 2008 Press enquiries:- 020 7266 1100 David Davies Nicholas Marren KBC Peel Hunt Ltd. CHAIRMAN'S STATEMENT RESULTS Total turnover decreased by 4.8% to £15,150,339. Operating profit for the full year increased 10% to £2,192,541 (2007: £1,993,833) and increased 8.6% in the second half of the year from £749,140 to £813,693. On 3 September 2007 the Company sold the Avon Gorge Hotel together with the associated staff house at 10, Caledonia Place for an aggregate consideration of £15,500,000 in cash paid on 3 September 2007. On 14 December 2007 the Company sold the freehold of its Salem Street site in Bradford with planning permission for 99 apartments, office space and associated car parking for a consideration of £2,000,000. These two disposals have resulted in an exceptional profit on disposal of £8,142,521 in the year and have left the Company with minimal net debt having also taken into account the purchase of the head lease and two small freeholds of the Bull Hotel in Peterborough for £2,350,000 on 4 September 2007. After taking into account this significant profit on asset disposals of £8,142,521, the pre-tax result was £9,589,533 (2007: £1,563,120). Excluding exceptional profits the comparative pre-tax profits were £1,447,012 (2007: £713,120). After a full tax provision, earnings per share were 63.4p basic and 62.8p on a diluted basis (2007: 9.8p basic and 9.3p diluted). At 10 February 2008, net debt stood at £40,417 representing loans totalling £3,970,783 and an overdraft of £177,757 less £4,108,123 cash at bank. Gearing on Shareholders' funds was 0.2% with interest covered 13.9 times. Net debt decreased by £15,228,766 compared with the previous year. Like for like Hotel revenues, excluding the Avon Gorge Hotel, increased 3.7% and Hotel profits after depreciation and before Company administration costs increased 19.2%. REVPAR(accommodation revenue per available bedroom), calculated without the Avon Gorge Hotel, increased 4.4% in the year with occupancy up by 1.5% and average room rate up by 3%. Individual Hotel results were in the main encouraging with stellar performances from the George Hotel in Wallingford and the Bull Hotel in Peterborough. The Strathdon Hotel in Nottingham continued to lose money, although its Revpar increased by 1.9% which is an encouraging sign in our attempt to turn this particular business around. On 5 September 2007 a fire started in the kitchens of the Golden Lion in Leeds causing damage to kitchen, restaurant and 11 bedrooms. Remedial work is still ongoing and, whilst the costs of the work are fully covered by insurance, it is pleasing to report that, notwithstanding the losses of profit caused by the fire (which are fully insured), the Hotel still managed to increase its profits after depreciation by 12% in the year. FINANCE The disposals in the year effectively left the Company with no net debt. On 11 February 2008 net debt was £40,417. We repaid the £400,000 loan taken out for the refurbishment of the Ballroom of the Midland Hotel, and £7,000,000 of the loan that was due for repayment in 2014, leaving a balance of £4,009,240 to be repaid in instalments from 2009 to 2014. At the year end the Company had £1,500,000 and £2,500,000 on deposit carrying interest rates of 6.30% and 6.31% respectively. The disposals in 2007 give rise to a capital gains liability of £2,400,000 to be paid in November 2008. However should we decide to expand in the current year the liability would be largely mitigated and in any event would in all probability be clawed back through capital expenditure over the next three years. The Board has considered the financial position of the Company in the light of the disposals and have decided to distribute a one off bonus dividend of 15p per share amounting to £2,101,818. This will be paid out on 28 April 2008 to all Shareholders on the register on 18 April 2008. CHAIRMAN'S STATEMENT In addition to the one off bonus dividend and as promised at the half year, the Board has recommended paying a final dividend of 3.5p amounting to £490,424, which, if approved by Shareholders, will be paid on 22 May 2008 to Shareholders on the register at 25 April 2008 making a total of 5.5p for the year (2007: 5p) CAPITAL EXPENDITURE During the period capital expenditure amounted to £3,956,499 of which £2,462,108 was to purchase the head lease and two small freeholds of the Bull Hotel in Peterborough. The balance of £1,494,391 was spent on upgrading the Company's Hotels of which £272,324 was spent on the Avon Gorge Hotel prior to its disposal. 16 of the 68 bedrooms at the Strathdon Hotel in Nottingham were refurbished. Improvements were made to the bedrooms at the Crown and Mitre Hotel in Carlisle and the Golden Lion Hotel in Leeds. Ballrooms were completely renovated at the King Malcolm Hotel in Dunfermline and the George Hotel in Wallingford. Disabled bedrooms were built at the Caledonian Hotel in Newcastle and the Golden Lion Hotel in Leeds. The outside elevations of the Midland Hotel in Bradford continue to be restored and we have invested heavily in two luxury bedroom suites that complement our growing conference and banqueting business. We expect to accelerate our capital expenditure in the current year with a view to further improving our product and thereby the ability to increase average room rates. NON-CORE ASSETS As mentioned above we successfully completed the sale of the Salem Street site in Bradford for £2,000,000 on 14 December 2007. We are reviewing the merits of a sale or conversion to five flats of 31 Grosvenor Place in Newcastle, currently used as staff accommodation. SHAREHOLDERS Shareholders are actively encouraged to visit the Company's Hotels and experience the progress that is continually being 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 using the directory at the back of the annual report. Shareholders can keep in touch with progress in the Company and various promotional initiatives by visiting our website www.peelhotels.co.uk STAFF The Board would like to thank 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. Last year I mentioned that our Finance Director, John Perkins retired due to ill health on the 16 April 2007. I am sad to report that John died on the 24 January 2008 and our thoughts and sympathy are with his family. THE FUTURE We are in an excellent position, with effectively no net debt to take advantage of any weakness in the property market should that occur and we continually review Hotels that are on the market. There is still plenty to do in regard to adding value to our existing portfolio and growing profits organically which in turn will self fund capital improvements and deliver to Shareholders a progressive dividend policy. ROBERT PEEL CHAIRMAN 15 April 2008 PROFIT & LOSS ACCOUN For the 52 weeks ended 10 February 2008 Note 10 February 11 February 2008 2007 £ £ £ £ --------- -------- -------- Turnover 15,150,339 15,919,976 --------- -------- Cost of sales (11,010,153) (12,049,329) --------- -------- Gross profit 4,140,186 3,870,647 --------- -------- Administrative expenses Depreciation (1,092,642) (1,133,957) Other (855,003) (742,857) (1,947,645) (1,876,814) --------- -------- Operating profit 2,192,541 1,993,833 Profit on disposal of 8,142,521 850,000 property --------- -------- Interest payable & similar (745,529) (1,280,713) charges --------- -------- Profit on ordinary activities before 9,589,533 1,563,120 taxation --------- -------- Tax on profit on ordinary (1,215,554) (299,000) activities --------- -------- Profit on ordinary activities after 8,373,979 1,264,120 taxation Earnings per share 2 Basic 63.4p 9.8p --------- -------- Diluted 62.8p 9.3p --------- -------- BALANCE SHEET As at 10 February 2008 10 February 11 February 2008 2007 £ £ --------- -------- Fixed assets Tangible assets 28,724,660 34,747,844 --------- -------- Current assets Stocks 86,786 116,581 Debtors 1,342,973 1,052,859 Cash at bank and in hand 4,108,123 158,530 --------- -------- 5,537,882 1,327,970 Creditors (due within one year) (4,784,341) (3,206,767) Net current assets 753,541 (1,878,797) --------- -------- Total assets less current liabilities 29,478,201 32,869,047 Creditors (due after one year) (3,970,783) (14,670,677) Provision for liabilities (707,000) (1,664,102) Total assets 24,800,418 16,534,268 --------- -------- Capital and reserves Called up share capital 1,401,213 1,285,713 Share premium account 9,743,495 9,068,950 Profit and loss account 13,655,710 6,179,605 Equity shareholders' funds 24,800,418 16,534,268 --------- -------- CASH FLOW STATEMENT For the 52 weeks ended 10 February 2008 Note 52 weeks to 52 weeks to 10 February 11 February 2008 2007 £ £ £ £ -------- --------- -------- -------- Net cash inflow 3 3,272,305 3,239,888 from operating activities Returns on investments & servicing of finance Interest paid (1,000,074) (1,319,704) -------- -------- Net cash outflow (1,000,074) (1,319,704) from returns on investments and servicing of finance Taxation UK corporation tax (30,656) (107,482) paid -------- --------- -------- -------- Tax paid (30,656) (107,482) Capital expenditure Purchase of (3,978,456) (1,469,168) tangible fixed assets Sale of tangible 17,148,617 2,050,000 fixed assets -------- --------- -------- -------- Net cash inflow 13,170,161 580,832 from capital expenditure Equity dividends (921,099) (608,576) paid -------- --------- -------- -------- Net cash inflow 14,490,637 1,784,958 before financing Financing Issue of ordinary 790,045 40,305 share capital New long term loan - 400,000 Less loan - (4,000) arrangement fees Loan repayments (11,122,945) (2,107,945) -------- --------- -------- -------- Net cash outflow (10,332,900) (1,671,640) from financing -------- --------- -------- -------- Increase in cash 4,157,737 113,318 -------- --------- -------- -------- Reconciliation of net debt Increase in cash 4,157,737 113,318 Decrease in debt 11,122,945 1,707,945 -------- -------- Reduction in net debt 15,280,682 1,821,263 resulting from cash flows Non cash changes (51,916) (25,659) -------- -------- Decrease in net debt in the 15,228,766 1,795,604 year Net debt at beginning of year (15,269,183) (17,064,787) Net debt at end of year 4 (40,417) (15,269,183) -------- -------- NOTES TO THE ACCOUNTS Financial year ended 10 February 2008 1. Dividends 2008 2007 £ £ Equity dividends on ordinary shares Paid during the year 921,099 608,576 Proposed after the year end (not recognised as a liability) 490,424 642,856 Bonus dividend proposed after the year end (not recognised 2,101,819 - as a liability) 2. Earnings per share Basic Calculated on average number of shares in issue 13,214,179 12,831,222 during the year and on profit after taxation £8,373,979 £1,264,120 Diluted Calculated on average of number of shares available 13,344,490 13,512,236 during year and on the profit after taxation £8,373,979 £1,264,120 In calculating the diluted earnings per share, the weighted average number of shares is adjusted for the dilutive effect of the share options by 130,311 (2007 - 681,014) shares, giving an adjusted number of shares of 13,344,490 (2007 - 13,512,236). 3. Reconciliation of operating profit to net cash inflow from operating activities Operating profit 2,192,541 1,993,833 Depreciation 1,092,642 1,133,957 Recognition of equity-settled 23,225 24,713 share-based payments Decrease in stocks 29,795 416 Increase in debtors (257,867) (86,795) Increase in 191,969 173,764 creditors ------- ---------------- Net cash inflow from operating 3,272,305 3,239,888 activities ------- ---------------- 4. Analysis of net debt -------- -------- --------- -------- At beginning of Cash Non Cash At end of year Flow changes year £ £ £ £ -------- -------- --------- -------- Cash at bank and in hand 158,530 3,949,593 - 4,108,123 Bank overdrafts (385,901) 208,144 - (177,757) -------- -------- --------- -------- (227,371) 4,157,737 - 3,930,366 Debt due within one year (371,135) 371,135 - - Debt due after one year (14,670,677) 10,751,810 (51,916) (3,970,783) -------- -------- --------- -------- Total (15,269,183) 15,280,082 (51,916) (40,417) -------- -------- --------- -------- 5. The financial information set out above does not constitute the Company's statutory accounts for period ended 10 February 2008 but is derived from those accounts. Statutory accounts for 2007 have been delivered to the Registrar of Companies and those for 2008 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 10 February 2008 will be posted to shareholders by 28 April 2008. The annual general meeting will be held at KBC Peel Hunt, 4th Floor, 111 Old Broad Street, London EC2N 1PH on Wednesday 21 May 2008 at noon. This information is provided by RNS The company news service from the London Stock Exchange

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