AGM Statement

RNS Number:1939M
C.H.E. Group PLC
11 June 2003


                                C.H.E. GROUP PLC


                             ANNUAL GENERAL MEETING


                                  11 JUNE 2003


At today's Annual General Meeting of C.H.E. Group PLC, the pan-European hotel
operator, Peter Catesby, the non-Executive Chairman and Michael Finkleman, the
Chief Executive, took the opportunity of providing shareholders with a summary
of the events of the last two years, as set out in detail in the Annual Report
and Accounts for the year ending 31st December 2002.


A considerable improvement in results for the year was noted, during what had
been and, in fact, still is a difficult time for the hotel industry. The cost of
restructuring the Group and associated other matters, which commenced in January
2001, had resulted in a slimmed down organisation and reduced debt burden, but
has deprived the Group of #6.4 million paid out in costs, which came straight
out of working capital.


The strengthening of the Group's management structure, particularly in sales and
marketing, both in hotel operations and its franchise business, as well as the
introduction of two new non-Executive Directors, provides additional support to
enable the Group to continue its recovery.


Trading in the first 5 months of the year, following on from a weakened market
in the latter part of 2002, made worse by the Iraq crisis, its aftermath and
SARS, resulted in revenues, on a like for like basis, being a little down on the
corresponding period last year, whilst at the same time, some of the costs in
the restructured Group have increased, predominantly rent, insurance, agents'
commissions and statutory costs such as property taxes and employer's National
Insurance. Since the cessation of hostilities in Iraq, as well as effects on
business from the SARS outbreak, there has been some improvement in business
levels, however this is not now expected to be material until the autumn.

The focus over the past two years has, of necessity, been to stabilize the Group
financially to provide a base upon which to grow. This has undoubtedly been
hampered by the world events that commenced in September 2001, but continue
today. As we move forward we must strengthen that base to initially protect and
thereafter to grow and create shareholder value. With the strengthened Board and
management team and having met the conditions imposed by the banking group,
followed by the refinancing package we completed in January, we believe that
this can be achieved primarily by a strategy that moves us further from being an
owner of real estate to a manager and operator of hotels. This will involve
disposing of some assets, where appropriate leasing back the property, to
release funds to further strengthen the Group. The continuance of difficult
trading conditions means that in the absence of following this strategy working
capital remains restricted.


The Board firmly believes that this strategy is the best and most secure way of
preserving, building and delivering value to shareholders, both by way of net
asset value and share price. It will enable the Group to maintain the modest
momentum of the development of Sleep Inns and the limited refurbishment
programme for the existing estate, whilst ensuring that funding remains
available whilst business levels remain difficult. This initiative will be
complimented by the ongoing concentration on gaining new Management contracts
and franchises. The Board remain sensitive to the wishes and needs of
shareholders and as appropriate will seek their approval.


Enquiries to:


C.H.E.  :            Michael Finkleman - Chief Executive / David Cook - Finance
Director             Tel: [phone]         Fax: [phone]







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