Interim Results

· Sales decreased 6.4% to £8,096,128 (2017: £8,648,145)

· Operating Profit decreased 63.4% to £221,498 (2017: £604,556)

· Revpar decreased 3.1%. Occupancy down 6.4%, average room rate up 3.5%

· Profit before tax decreased to £8,972 (2017: £319,293)

· Net Debt increased by £406,048 (timing difference)

· Earnings per share

Basic 0.1p (2017: 1.8p)

Diluted 0.1p (2017: 1.8P)

Chairman Robert Peel said 'The comparative shortfall in EBITDA in the first three periods will be difficult to make up by the end of the financial year however sales have now stabilised and for the first time in many periods increased in the current period, ended 07 October 2018. EBITDA is broadly neutral from a comparative point of view over the last three periods to 07 October 2018.

If we can consistently achieve increases in sales, our profits will quickly return to growth. We have recently signed up a marketing agreement with Best Western Hotels and hope to derive additional sales benefit from this partnership going forward.'

Press enquiries: 0207 266 1100

Nominated advisor and Broker: 0207 418 8900

Peel Hunt LLP

Capel Irwin

CHAIRMAN'S STATEMENT

Results

In the 28 weeks to 12 August 2018 hotel revenues decreased 6.4% to £8,096,128 (2017: £8,648,145). Hotel gross profit before depreciation and Group administration decreased 33.9% to £994,067 (2017: £1,503,402). Over the same period EBITDA (earnings before interest, tax and depreciation) decreased 42.0% to £649,534 (2017: £1,119,749) and operating profit decreased 63.4% to £221,498 (2017: £604,556).

Revpar (accommodation revenue per available room) decreased 3.1% with occupancy down 6.4% and average room rate up 3.5%.

Administration expenses decreased 10.2% to £344,533 and depreciation decreased 16.9% to £428,036.

Financial charges decreased by 25.5% to £212,526.

Profit before tax was £8,972 compared to a profit of £319,293 last year.

Corporation tax has been provided at an effective rate of 19%. Basic earnings per share were 0.1p compared with 1.8p in the comparative period on a weighted average of 14,012,123 (14,012,123) shares in issue.

We referred in the Annual Report to the continuing slowdown in demand in the majority of Provincial areas of the United Kingdom and that, together with upward pressure from increases in living wages, business rates and energy has created challenges to the profitability of the Group. 64% of the £470,215 shortfall in EBITDA occurred in the first three Periods of the current financial year clearly illustrating the operational gearing of our business.

We decreased our overall wage costs and Group overheads and benefited from a £72,737 reduction in finance costs in the period.

Finance

On 12 August 2018 net debt stood at £8,859,610 representing loans totalling £9,514,534 less £654,924 cash at bank. Gearing on Shareholders' funds was 38.4% with interest covered 1.04 times. Net debt increased by £406,048 compared with the previous year end, due to timing differences.

As previously reported in our Annual Report, on 22 April 2018 the Company breached its financial covenants, which breach resulted in the Company's Bank issuing a "Reservation of Rights" letter, reserving the Bank's position in relation to the breach of covenant, whilst also confirming the Bank's current intention not to exercise any of its rights in relation to the breach. As a result of the breach the borrowings of the Group are presented on the Group balance sheet as current liabilities.

Whilst your Directors recognise that the breach of covenant, combined with a challenging trading outlook, results in material uncertainty for the Company, and increases the possibility that the Company may be unable to continue realizing its assets and discharging its liabilities in the normal course of business which might impact upon the Company's ability to continue as a going concern, they are confident that the Company has adequate resources to meet its commitments.

Capital expenditure

We spent £151,885 in the period (2017: £369,516). We plan to spend a total of £500,000 in this financial year on our strategy of continually improving the standards offered in our portfolio of hotels and maintaining the fabric of our buildings. This sum is in addition to a significant sum expensed to the Income Statement on repairs and renewals.

Shareholders

We are always delighted to welcome Shareholders to our Hotels where they can see for themselves the progress we have made, whilst enjoying a beneficial discount of 50% of our rack rate tariff, using a special reservations number 0207 266 1100 or e-mail [email protected] Shareholders can keep in touch with progress in the company and various promotional activities by visiting our website www.peelhotels.co.uk

The Future

The comparative shortfall in EBITDA in the first three periods will be difficult to make up by the end of the financial year however sales have now stabilised and for the first time in many periods increased in the current period, ended 07 October 2018. EBITDA is broadly neutral from a comparative point of view over the last three periods to 07 October 2018.

We have recently signed up a marketing agreement with Best Western Hotels and hope to derive additional sales benefit from this partnership going forward. If we can consistently achieve sales growth our profits will quickly return to growth.

Robert Peel

Chairman

18 October 2018

DIRECTORS AND ADVISORS

Directors

Robert Edmund Guy Peel Executive Chairman

Nicholas David Lawton Parrish Financial Director

Norbert Paul Gottfried Petersen Non-executive Director

Haydn Herbert James Fentum Non-executive Director

Secretary

Thrings LLP

20 St Andrew Street, London EC4A 3AG

Registered Office

7th Floor, 20 St Andrew Street, London EC4A 3AG

Company registration number 3473990

Auditor

Grant Thornton UK LLP

No. 1 Whitehall Riverside, Leeds, LS1 4BN

Bankers

Allied Irish Bank Plc

Berkeley Square, Mayfair, London W1J 6AA

Registrars

Computershare Services Plc

The Pavilions, Bridgewater Road, Bristol BS13 8AE

Solicitors

Thrings LLP

20 St Andrew Street, London EC4A 3AG

Stockbroker

Peel Hunt LLP

Moor House, 120, London Wall, London EC2Y 5ET

GROUP STATEMENT OF COMPREHENSIVE INCOME

for the 28 weeks ended 12 August 2018

GROUP STATEMENT OF CHANGES IN EQUITY

for the 28 weeks ended 12 August 2018

GROUP BALANCE SHEET

at 12 August 2018

GROUP CASH FLOW STATEMENT

for the 28 weeks ended 12 August 2018

NOTES TO THE INTERIM RESULTS

for the period ended 12 August 2018

1. Basis of accounting

The interim financial information for the period ended 12 August 2018 has been prepared applying the accounting policies and presentation of the Group's published consolidated financial statements for the year ended 28 January 2018.

The financial information contained in the interim report does not constitute statutory accounts within the meaning of section 434 of the Companies Act 2006 and does not include all of the information and disclosures required for complete financial statements. The financial information in the interim report does not constitute statutory accounts as defined by section 434 of the Companies Act 2006 and has not been audited or reviewed.

The financial information relating to the year ended 28 January 2018 is an extract from the latest published financial statements on which the auditor gave an unmodified report that did not contain statements under section 498(2) or 498(3) of the Companies Act 2006 and which have been filed with the Registrar of Companies. The auditor's opinion, whilst unmodified, included an emphasis of matter in relation to going concern.

2. Accounting policies

The condensed, consolidated financial statements in this half-yearly financial report for the period ended 12 August 2018 have been prepared in accordance with the AIM Rules for Companies and on a basis consistent with the accounting policies and methods of computation consistent with those set out in the Annual Report and financial statements for the year ended 28 January 2018, except as described below. The Group has chosen not to adopt IAS 34 'Interim Financial Statements' in preparing these interim financial statements and therefore the Interim financial information is not in full compliance with International Financial Reporting Standards.

In preparing the condensed, consolidated financial statements, management are required to make accounting assumptions and estimates. The assumptions and estimation methods are consistent with those applied to the Annual Report and financial statements for the year ended 28 January 2018, except for the adoption of IFRS 15 "Revenue from Contracts with Customers" and IFRS 9 "Financial Instruments". The Directors have concluded that the adoption of these accounting standards has not had a material impact on the financial statements. The Group's accounting policies are based on the recognition and measurement principles of International Financial reporting Standards as adopted by the EU. Additionally the principal risks and uncertainties that may have a material impact on activities and results of the Group remain materially unchanged from those described in that Annual Report. 

3. Taxation

Tax has been provided at a rate of 19% which represents the expected effective rate for the full year.

4. Earnings per share

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