Preliminary Results

PEEL HOTELS PLC

PRELIMINARY ANNOUNCEMENT

Derived from audited results for Financial Year Ended 5 February 2012.

Highlights

·; Turnover down 4% to £14,647,126 (2011: £15,263,682)

·; Profit before interest down 54% to £598,396 (2011: £1,298,676)

·; EBITDA down 29.4% to £1,557,655 (2011: £2,334,892)

·; Net debt decreased £600,163

·; Loss before tax of £227,802

·; Earnings per share basic and diluted 0.01p (2011: 3.6p)

2011/2012 was the toughest encountered in the Company's history with sales down, margins under pressure and energy costs rising rapidly. In spite of the weak results net debt decreased £600,163. In the first quarter of 2012/2013 we have been encouraged by sales growth of 5.1% but continue the struggle of containing costs against inflationary pressure.

Robert Peel

Chairman

0207 286 6823

Press Enquiries

Peel Hunt Ltd / Capel Irwin

0207 418 8907

CHAIRMAN'S STATEMENT

RESULTS

2011/2012 Financial Year was the toughest encountered thus far in the Group's history. We were never going to be able to claw back the additional 2.5% Value Added Tax and this together with severe discounting in the provinces, cut backs in Government spending, increased energy costs and the disproportionate costs in relation to a Rent Review at the Crown and Mitre Hotel in Carlisle, have resulted in reporting a pre-tax Loss of £227,802.

Like for like hotel revenues fell by 4% to £14,647,126 (2011: £15,263,682) and like for like hotel profits after depreciation and before Group administration costs decreased by 24.5% to £2,258,536 (2011: £2,992,613). REVPAR (accommodation revenue per available bedroom) decreased by 1.8% in the year with occupancy down 1.9% and average room rate up 0.1%.

The pre-tax result before profit on disposal of a staff house in Wallingford, and the fair value movement on the swap was a Loss of £586,375 (2011: Profit £61,699).Tax has been provided at a rate of 26%, less the discount on deferred tax liabilities, giving an effective rate of 25% less allowances and producing a credit of £229,590. Earnings per share on basic and diluted basis were 0.01p (2011: 3.6p).

In view of the very high operational gearing of hotels a comparatively modest decline in turnover translates into a substantial decline in profitability. This was compounded in the year through our inability to achieve the normal margins of profit on our food and liquor sales, in simple terms we were unable to pass on the substantial increases in the cost of food and liquor products.

FINANCE

As at 5 February 2012 net debt stood at £12,843,559 representing loans totalling £11,973,659 and an overdraft of £912,429 less £42,529 cash at bank. Gearing on Shareholders' funds was 58.8% with interest covered 0.4 times. Net debt decreased by £600,163 compared with the previous year. Shareholders should note that in spite of disappointing trading results and an onerous fixed interest swap at 5.83% plus margin of 2.5% on the majority of our debt we have managed to decrease our overall debt level over the last two years by £1,916,010.

We sold 21/23 The High Street, the staff house for the George Hotel in Wallingford, for a consideration of £470,000 giving rise to a profit of £232,766 and the proceeds from this disposal were used to make additional payments of part of the Group's bank loan over and above the semi-annual repayment instalments of £223,000.

The cost of buying out our swap at the year-end was £806,441 and the Board's view is still that it would make little economic sense. However they continue to monitor the situation closely. In any event the cost of buying out the swap will lessen as we approach the maturity of the swap on 11 April 2014.

CAPITAL EXPENDITURE

£568,441 was spent in the year and, as has been mentioned in previous Reports, expenditure has been slowed down but not to a point that would jeopardise our strategy of improving Automobile Association Product and Service Percentages on each Property each year.

Apart from the total renovation of the swimming pool and leisure facilities at the Crown and Mitre Hotel in Carlisle the majority of the capital expenditure was spent on upgrading bedrooms at the Bull Hotel in Peterborough, the Midland Hotel in Bradford, the Crown and Mitre in Carlisle and the King Malcolm in Dunfermline.

In addition to such capital expenditure a further £541,381 (2011: £570,154) was expensed in the year on repairs and renewals which clearly demonstrates our commitment to maintaining and improving the quality of our Estate.

SHAREHOLDERS

Regrettably we are still unable to recommend a dividend for the year ended 5 February 2012.

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

THE FUTURE

The first quarter of the new financial year has been encouraging with sales growth of 5.1% and we believe there is a degree of optimism, that in provincial terms, the 'bottom of the cycle' has been reached. However we need to contain our costs against inflationary pressures in order to improve our profits in the current year and thereby gradually getting into a position that will enable us to return to paying dividends to our Shareholders.

The fact that we have maintained the quality of our product and not been tempted to slash staff costs throughout the recession, we believe, will stand us in good stead going forward to increase market share and drive our sales growth.

Robert Peel

Chairman

8 June 2012

Group Statement of Comprehensive Income

for the year ended 5 February 2012

Group statement of changes in equity

for the years ended 5 February 2012

Group Balance Sheet

at 5 February 2012

Group Cash Flow Statement

for the year ended 5 February 2012

Notes

(forming part of the financial statements)

 1 Basis of preparation

 The financial statements, from which this preliminary announcement has been extracted, have been prepared and approved by the Directors in accordance with International Financial Reporting Standards as adopted by the EU ("Adopted IFRSs"). The financial statements have been prepared under the historical cost convention, except for derivative financial instruments which are included at their fair value.The IFRS accounting policies have been applied consistently to all periods presented in these financial statements. The financial statements are presented in sterling. 2 Publication of non-statutory financial statements

 The financial information set out in this preliminary announcement does not constitute statutory accounts as defined in Section 434 of the Companies Act 2006.The group statement of comprehensive income, the group statement of changes in equity, the group balance sheet and the group cash flow statement have been extracted from the Group's financial statements for the year ended 5 February 2012 upon which the auditors' opinion is unqualified and does not include any statement under section 498(2) or 498(3) of the Companies Act 2006. Those financial statements have not yet been delivered to the Registrar.

3 Earnings per share

Basic earnings per share

The calculation of basic earnings per share at 5 February 2012 was based on the profit attributable to ordinary shareholders of £1,788 (2011: £499,978) and a weighted average number of ordinary shares outstanding of 14,012,123 (2011: 14,012,123). No shares were issued in 2012 or 2011.

Diluted earnings per share

There were no potentially dilutive options in issue in 2012 and 2011 and consequently there is no difference between basic and diluted earnings per share.