Final Results - Year Ended 31 December 1999

Derwent Valley Holdings PLC
14 March 2000



                               
                  DERWENT VALLEY HOLDINGS PLC
                               
              Preliminary announcement of results
                 Year ended 31st December 1999
                               
                               
-    Derwent Valley, the specialist investor/refurbisher of
     Central London properties, announces a 19.4% increase in
     net asset value, together with increased profits and
     dividend for the year ended 31st December 1999.
                              1999       1998   Increase
   NAV
   Per
   share (p)                   720       603        19.4%
   
   Net
   rental
   income (£m)                  27.1      26.1       3.8%
   
   Adjusted
   profit
   before
   tax (£m)                     11.5      10.3      11.7%
   
   FRS3
   profit
   before
   tax (£m)                     16.6      10.6      56.6%
   
   Adjusted
   earnings
   per
   share (p)                    18.89     15.65     20.7%
   
   Dividend
   per
   share (p)                     7.70      7.20      6.9%

-    Investment portfolio valued at £604 million, of which 97%
     by value is in Central London.
-    Acquisitions totalled £97 million in 1999, including a
     portfolio of nine properties costing £70 million.
-    Property disposals realised £45 million in 1999 and
     contracts have been exchanged on a further £15 million to
     date in 2000.
-    Capital expenditure is planned to nearly double to £60
     million over 2000 and 2001 compared with the previous two
     years.
-    Schemes ongoing in 2000 include Broadwick Street, Soho,
     W1 (3,020 m2), Oliver's Yard, EC2 (16,400 m2) and Panton
     House, SW1 (2,630 m2).
-    Both major schemes completed in 1999 have been fully let
     - Hythe House, Hammersmith, W6 (5,330 m2) and Holden
     House, Rathbone Place, W1 (3,720 m2).
-    John Ivey, Chairman, commented:
   'This performance has been driven by the group's ongoing
   strategy of investing in, and vigorous management of,
   property in one defined area, the metropolis - Central
   London.  I remain confident that our investment in Central
   London, supported by enterprising management and
   innovative refurbishment projects, will deliver the strong
   growth that your board strives to achieve.'


Enquiries:
Derwent Valley Holdings plc
John Burns, Managing Director                  020 7486 4848
Citigate Dewe Rogerson
John Rudofsky                                  020 7638 9571

CHAIRMAN'S STATEMENT

The final year of the century saw continued growth for Derwent
Valley with net asset value per share rising 19.4% from 603p to
720p.  Over the last five years, the net asset value per share
has risen by 137%, equating to a compound growth rate of 18.8%
per annum.  This performance, which ranks as one of the highest
in the sector, has been driven by the group's ongoing strategy of
investing in, and vigorous management of, property in one defined
area, the metropolis - Central London.

Profit before taxation for the year, after adjusting for the
surplus on the disposal of investment properties, rose £1.2
million to £11.5 million.  Earnings per share, calculated on the
same basis, rose from 15.65p per share to 18.89p, an increase of
over 20%.  The disposal of investment properties raised £45
million and realised a profit of £5.3 million compared with £0.6
million in 1998.  Consequently, FRS3 profit before taxation
increased 56% from £10.6 million to £16.6 million.

Net rental income rose £1.0 million in 1999.  Lettings and rent
reviews added £2.5 million to the rent roll but this was offset
by £1.2 million of income foregone due to the continuing level of
refurbishment and redevelopment activity.  Acquisitions and
disposals had a broadly neutral net effect on rent received and
property outgoings showed only a marginal increase on the
previous year.

Administrative costs included two items which had no comparables
in 1998.  The first of these was the result of the company's
forthcoming move to new premises, which led to the accelerated
amortisation of £0.3 million of capitalised costs associated with
the existing head office.  Secondly, a provision of £0.3 million
has been made in respect of the estimated payments due under the
performance related bonus scheme introduced in 1999.  However,
profits did benefit from lower interest rates during the year and
also a small contribution from trading.

A final dividend of 5.35p per share is recommended by the
directors.  This, when taken with the interim dividend of 2.35p,
brings the total for the year to 7.7p, an increase on the
previous year of nearly 7%.  The final dividend will be paid on
5th June 2000 to those shareholders on the register on 19th May
2000.

The year end valuation of the investment portfolio was £604
million, an uplift of £53 million.  Driven by the strong rental
growth seen throughout Central London, the underlying increase in
value of those properties held for the full year was 10.4%
compared with the Investment Property Databank Capital Growth
Annual Index of 7.4%.  This result was achieved in spite of the
fact that the value of the investment portfolio included £32
million of properties undergoing development, which are not
revalued at the year end, compared with £7 million the previous
year.


Despite a strong and competitive Central London investment
market, the group was able to add £97 million of property to its
portfolio, all of which was located in its core operating area.
The principal purchase, completed in October, was a £70 million
portfolio of nine properties, which introduced new opportunities
for refurbishment and active lease management.  During the year,
10 properties, including four in the provinces, were sold.

Refurbishment from within the portfolio is one of the driving
forces of the group's business and last year the ongoing
programme of works incurred capital expenditure of £18 million,
making a total of £34 million over the last two years.  During
2000 and 2001, capital expenditure is planned to nearly double to
£60 million, of which £28 million is anticipated to be spent this
current year.  Projects include Broadwick House, Soho, W1 where
the 3,020m2 redevelopment is due for completion in autumn 2000,
Oliver's Yard, EC2 (formerly known as Companies House) where work
has commenced on a 16,400 m2 scheme with the first phase being
available in mid-2001 and Panton House, Haymarket, SW1, acquired
in the October portfolio transaction, where a 2,630 m2 scheme is
due for completion in autumn 2001.  The group's recent major
refurbishment schemes at Hythe House, Hammersmith, W6 and Holden
House, Rathbone Place, W1, have been fully let.  The strength of
tenant demand was confirmed at Holden House, where the entire
3,720m2 of refurbished offices was pre-let to five tenants.

The investment market in the metropolis remains strong, with
rental levels continuing to move forward.  The group has a number
of exciting, current and future, refurbishment projects, and has
sufficient resources for further acquisitions when opportunities
arise.

I remain confident that our investment in Central London,
supported by enterprising management and innovative
refurbishment projects, will deliver the strong growth that
your board strives to achieve.




14th March 2000                                J. C. Ivey


PROPERTY REVIEW

Since its formation in 1984, Derwent Valley has maintained its
strategy of creating a Central London property portfolio.  This
will continue.  Central London is seeing a transformation, as it
moves to a 24 hour 7 day city, with the arrival of new types of
occupiers and a resurgence for living in the capital.  As a result,
locations which were considered unfashionable a few years ago, but
had the potential to offer exciting space and the amenities to
support it, are now the new vibrant areas.  Acquisitions are made
not only in the established locations such as Soho, Covent Garden
and Victoria but also in these new and emerging 'villages', for
example the areas in and around Clerkenwell and that north of
Oxford Street, now known as Noho.  The group has significant
holdings in these locations, having identified their potential
early on.

Derwent Valley is a disciplined purchaser, in terms of price and in
seeking the right opportunity.  We buy investment properties with
certain key characteristics - multi-tenanted, varied lease
profiles, for instance - and with the potential for refurbishment
or redevelopment.  A recent example of this is Panton House, SW1,
purchased in October 1999, and where a refurbishment scheme is
scheduled to commence later this year to provide 2,630 m2 of office
and retail/restaurant space.  For the medium term, we are reviewing
the development opportunities provided by the unutilised courtyard
within the centre of the five Covent Garden properties, which were
also acquired in October 1999.  In the meantime, these have good
rental growth prospects.

The on-going process of portfolio realignment is equally as
important as acquisitions.  The aim is to focus the portfolio not
only on larger buildings, which have more potential, but also to
dispose of those non-core properties where further growth is
limited, following either completion of a refurbishment or lease
management opportunities having been exploited.  During the year,
we took the opportunity to dispose of 10 properties which raised
£45 million.  These included four properties from the provincial
portfolio, which was the poor performer in 1999, but which now
represents only 3% of the portfolio against 7% last year.  The
average lot size within the portfolio at the year end was just over
£11 million.  This was more than double the figure five years ago.
Approximately 60% of the portfolio is now contained within 15
buildings, each valued in excess of £15 million.

Refurbishment and redevelopment are a key factor in unlocking and
adding value to the portfolio, but with this goes increased risk.
The board manages this by phasing its projects so that key ratios,
such as interest cover, remain at acceptable levels.  During Phase
I of the scheme at Holden House, W1, we were able to retain the
retail and some office income, while the complicated office
reconfiguration and the retail extension were undertaken.  This
approach also means we can benefit from evidence of recent rental
levels within the building as each phase is completed.  However,
rolling refurbishments do not always maximise value and,
consequently, at Broadwick House, W1 in the heart of Soho, the
group decided to develop a landmark office building, as a
refurbishment would have only produced mediocre space at best.

A major factor in letting space in our buildings is our attention
to good, contemporary design and our knowledge of tenants'
requirements.  Our reputation for providing quality space is now
well established and often facilitates the pre-letting of a scheme,
thus reducing void costs.  This was the case at Holden House, W1,
which was completed last year and pre-let to five tenants while at
Morelands Buildings, EC1, and Greencoat House, SW1, new rental
levels for each property were established following completion of
further phases of their refurbishment schemes.

This success has encouraged the group to progress further schemes,
such as Oliver's Yard, EC2, a 16,400 m2 air-conditioned office
refurbishment which commenced early this year.  This is our largest
scheme to date.  The existing eight storey building has the scope
to provide exciting modern space, without redevelopment.  There are
excellent floor plates and natural light, but the building lacks
identity and needs regenerating.  It is in an improving location,
where demand is coming from businesses that need access to the City
core, such as telecommunication companies.

Our refurbishment activity has increased vacancy levels within the
portfolio and, consequently, slowed the growth in rental income.
At the year end, 34,600 m2 of vacant space represented 17% of our
total floor area, against 12% last year and current levels of 5% in
Central London.  However, only 5,600 m2 or 3% of floor area was
available for letting, with the balance of 29,000 m2 under
refurbishment or redevelopment.  Since the year end, 2,850 m2 of
the available space has been let which will produce rental income
of £0.8 million per annum.  The portfolio has considerable
reversionary income from a combination of vacant space, current
schemes and reversions from core properties.  At the year end, the
available space had a rental value of £1.8 million per annum and
current schemes will add a further £7.8 million per annum.
Additionally, the core portfolio has further reversionary potential
of £11 million per annum.

                                                                 
FINANCIAL REVIEW

Borrowings

Group borrowings at the year-end were £209.3 million (1998 :
£143.3 million), an increase of £66 million.  Average borrowings
during the year were £145 million, the rise at the year-end being
due to the £70 million portfolio acquisition in October.  The
group's operational cash inflow of £13.1 million after interest
was small in relation to its activities, and compared with a
total outflow on acquisitions and capital expenditure of over
£119 million which was funded from property disposals and
additional bank borrowings.  The company prefers flexibility in
its financing and, with the exception of the £35 million quoted
debenture repayable in 2019, uses secured medium term, floating
rate, revolving credit facilities.  At 31st December 1999,
committed but unutilised facilities amounted to approximately £70
million, against which capital expenditure planned for 2000
amounts to £28 million.

In managing the company's borrowings, close attention is paid to
three ratios.  The first is profit and loss gearing, defined as
net rental income less administrative costs divided by net
interest payable.  At the year-end, this ratio was 1.97 compared
with 1.83 in 1998.  The second measure is balance sheet gearing
which, at the year-end, was 54.8% compared with 44.9% the
previous year.  Finally, property gearing, which identifies the
group's capacity to borrow against the value of its investment
properties, is monitored.  In simple terms, this was 34.6%
compared with 30.4% in 1998.

Interest rate hedging

Adverse interest rate movements rank highly when assessing
business risk.  The board's policy is to vary the total of fixed
rate debt and that fixed using derivatives within a range of
approximately 40% to 75% of borrowings, depending on the view of
the economy and the perceived risk to the company.  The board has
set various parameters which enable interest rate hedging to be
undertaken quickly when advantageous situations occur in the
market but which keep control over the group's treasury
operations.  Currently, 45% of debt is either fixed or hedged and
the weighted annualised interest rate is 7.83%.  Under FRS13,
Financial Instruments, the company is required to disclose the
effect of revaluing fixed rate debt and interest rate hedging
instruments based on today's economic conditions as against those
which prevailed at the point of commitment.  The fair value
adjustment arising as a result of this revaluation was a negative
£13.3 million (31st December 1998 : negative £17.8 million)
equivalent to a reduction in the group's net asset value per
share of 25p (31st December 1998 : 34p).



GROUP PROFIT AND LOSS ACCOUNT

                                         1999      1998
                                           £m        £m
                              Notes

Gross
Rental
income:
Group
and
share
of joint
ventures                                 30.0      29.0

Less:
Share of
joint ventures                          (0.2)     (0.3)
                                        -----       ---

Group
gross
rental
income                                   29.8      28.7

Property
outgoings
net of
recoveries                        2     (2.7)     (2.6)
                                        -----     -----

Net
revenue
from
properties                               27.1      26.1

Profit
from
property
trading                           3       0.2         -

Administrative
costs                                   (4.3)     (3.3)
                                        -----     -----

Operating
profit
from
continuing
operations                               23.0      22.8

Share of
operating
results of
joint
ventures                                  0.3       0.3

Profit on
disposal
of investment
properties                        4       5.1       0.3
                                        -----     -----
                                         28.4      23.4
Interest
receivable                                0.1       0.1

Interest
payable                           5    (11.9)    (12.9)
                                        -----     -----

Profit
before
taxation                                 16.6      10.6

Taxation                          6     (2.3)     (2.1)
                                        -----     -----

Profit
attributable
to ordinary
shareholders                             14.3       8.5

Dividend                          7     (4.1)     (3.8)
                                        -----     -----

Retained profit                  10      10.2       4.7
                                        -----     -----

Adjusted
earnings
per share                         8    18.89p    15.65p

Adjustment
for disposal
of investment
properties                              8.00p     0.60p
                                      -------   -------

Basic
earnings
per share                         8    26.89p    16.25p

Adjustment
for
dilutive
share
options                               (0.05)p   (0.05)p
                                      -------   -------

Diluted
earnings
per share                         8    26.84p    16.20p
                                      -------   -------

Dividend
per share                         7     7.70p     7.20p


GROUP BALANCE SHEET
                                         1999      1998
                                           £m        £m
                              Notes
Fixed assets:
Tangible assets                   9     604.3     472.3
                                      -------    ------

Investments in
Joint
ventures:
Share of
gross assets                              2.8       2.8

Share of
gross
liabilities                             (3.0)     (3.0)
                                       ------    ------
                                        (0.2)     (0.2)
                                       ------    ------
                                        604.1     472.1
                                       ------    ------

Current assets:
Properties
held for
resale                                    2.2       2.6
Debtors                                   8.5       6.7
                                       ------    ------
                                         10.7       9.3

Creditors:
Amounts
falling due
within
one year
Bank loans
and
overdrafts                              (2.0)     (0.5)

Other
current
liabilities                            (23.3)    (19.2)
                                       ------    ------
Net current
liabilities                            (14.6)    (10.4)
                                       ------    ------

Total assets
less current
liabilities                             589.5     461.7

Creditors:
Amounts
falling
due after
more than
one year
 Bank loans                           (173.0)   (108.5)

10 1/8% First
Mortgage
Debenture
Stock 2019                             (34.3)    (34.3)
                                       ------    ------
                                        382.2     318.9
                                       ------    ------

Capital and
reserves - equity                10

Called up
share capital                             2.6       2.6

Share premium
account                                 153.6     153.2

Revaluation
reserve                                 186.4     138.1

Capital reserve
arising on
consolidation                             0.7       0.7

Profit and
loss account                             38.9      24.3
                                       ------    ------
                                        382.2     318.9
                                       ------    ------

Net assets
per share                        13      720p      603p

Gearing                                 54.8%     44.9%

GROUP CASH FLOW STATEMENT

                                         1999      1998
                                           £m        £m
                              Notes

Net cash
inflow from
operating
activities                       11      23.1      24.0

Net cash
outflow from
return on
investments and
servicing of
finance                                (10.0)    (12.0)

Tax paid                                (2.2)     (2.0)

Cash outflow
from capital
expenditure and
financial
investment                             (73.3)   (112.9)

Equity
dividends paid                          (4.0)     (3.5)
                                       ------    ------

Cash outflow
before
management
of liquid
resources
and financing                          (66.4)   (106.4)
                                       ------    ------
Financing
Net proceeds
of share
issue                                     0.4      53.4

Movement in
bank loans                               64.5      54.0
                                       ------    ------
Net cash
inflow from
financing                                64.9     107.4
                                       ------    ------

(Decrease)
/increase
in cash
in the period                           (1.5)       1.0
                                       ------    ------

GROUP STATEMENT OF TOTAL RECOGNISED GAINS
AND LOSSES
                                         1999      1998
                                           £m        £m
                              Notes

Profit for
financial year                           14.3       8.5

Unrealised
surplus on
revaluation
of investment
properties                               53.5      47.0

Unrealised
surplus on
revaluation
of joint
ventures'
investment
properties                                  -       0.2

Taxation on
realisation of
property
revaluation
gains of
previous years                          (0.8)         -
                                       ------    ------
                                         67.0      55.7
                                       ------    ------

TOTAL RETURN                     14     20.7%     24.0%


Notes

1.   The results for the year ended 31st December 1999 include
   those for the holding company and all of its subsidiary
   undertakings, together with the group's share of the results
   of its joint ventures.  The results are prepared on the basis
   of the accounting policies set out in the 1998 financial
   statements.  Although it was intended to adopt FRS15, Tangible
   Fixed Assets, during 1999 and the interim results reflected
   this, the group has not adopted this standard.  The adoption
   of FRS15 had no material effect on the results for the six
   months to 30th June 1999.



2.
Property
outgoings
net of
recoveries                                     1999      1998
                                                 £m        £m
Ground rents                                     0.8       0.8

Other
property
outgoings
net of
recoveries                                       1.9       1.8
                                              -----     -----
                                                 2.7       2.6
                                              -----     -----

3.
Profit from property trading
                                              1999      1998
                                                 £m        £m
Sales                                            1.9       -
Cost of sales                                   (1.7)      -
                                              -----     -----
                                                 0.2       -
                                              -----     -----

4.
Profit on disposal of investment properties
                                               1999      1998
                                                 £m        £m

Disposals                                       45.4      18.2
Cost/valuation                                 (40.1)    (17.9)
                                              -----     -----
Group
profit on
disposal of
investment
properties                                       5.3       0.3

Permanent
Diminution
in value of
investment
properties                                      (0.2)    (0.3)
                                              -----     -----
                                                 5.1       -
Share of
joint ventures'
profit on
disposal
of investment
properties                                       -         0.3
                                              -----     -----
                                                5.1       0.3
                                              -----     -----

5.   Interest payable
                                               1999      1998
                                                 £m        £m

Group                                           11.6      12.5
Share of
joint ventures                                   0.3       0.4
                                              -----     -----
                                               11.9      12.9
                                              -----     -----

6.   Tax reconciliation
                                               1999      1998
                                                £m        £m
Profit adjusted
for the
surplus on
disposal of
investment
properties taxed
at 31%
(1998 - 31%)                                     3.5       3.2

Capital
allowances                                      (1.3)     (1.0)

Other
differences                                     (0.4)     (0.2)
                                              -----     -----
                                                1.8       2.0
Tax on
profit on
disposal of
investment
properties                                      0.9         -
                                              -----     -----

Tax charge
in respect of
current year
profits                                          2.7      2.0

Adjustments
in respect
of prior years                                  (0.4)     0.1
                                              -----     -----
                                                2.3       2.1
                                              -----     -----

Tax on
Recognised
gains & losses                                  0.8         -
                                              -----     -----

7.   Dividend
                                               1999      1998
                                                 £m        £m
Ordinary
shares of
5p each

Paid -
Interim
dividend of
2.35p per
share (1998 - 2.20p)                             1.3       1.1

Proposed -
final dividend
of 5.35p per
share (1998 - 5.00p)                             2.8       2.7
                                              -----     -----
                                                 4.1       3.8
                                              -----     -----

The final dividend will be payable on 5th June 2000 to those
shareholders on the register at the close of business on 19th
May 2000.

8. Earnings per share

   Earnings per share have been computed on the basis of
   profit after taxation of £14,251,000 (1998 - £8,507,000)
   and 53,005,000 (1998 - 52,345,000) ordinary shares being
   the weighted average number of ordinary shares in issue
   during the year.  The adjusted earnings per share figure
   has been calculated using a profit after taxation of
   £10,015,000 (1998 - £8,191,000) which excludes the profit
   after tax arising from the disposal of investment
   properties in order to show the recurring element of the
   group's profit.  The diluted earnings per share figure has
   been calculated using 53,087,000 (1998 - 52,496,000)
   ordinary shares which includes the number of dilutive
   share options outstanding at the year end.

9. Tangible assets

   The freehold land and buildings and leasehold property
   were revalued by Keith Cardale Groves (Commercial) Limited
   and CB Hillier Parker Limited, chartered surveyors, at
   open market value on 31st December 1999.  Investment
   property in the course of development with a carrying
   value of £32.3 million (1998 - £7.1 million) is included
   within the amount of £604.3 million.  In accordance with
   the group's accounting policy in respect of properties in
   the course of development, these properties are carried at
   their value at the time they were so designated plus
   subsequent development costs less any permanent diminution
   in value.

10.Capital and reserves

                             Share
                              prem  Revalu          Profit
                     Share    -ium  -ation   Other  & loss
                   capital     a/c reserve reserves    a/c
                        £m      £m      £m      £m      £m
    
At 1st
January 1999            2.6   153.2   138.1     0.7    24.3

Premium on
issue of
shares                    -     0.4       -       -       -

Surplus on
property
revaluation               -       -    53.5       -       -

Profit realised
on disposal
of investment
properties                -       -   (5.2)       -     5.2

Tax
attributable
to revaluation
surplus
realised
on disposal
of investment
properties                -       -       -       -   (0.8)

Retained profit
for year                  -       -       -       -    10.2
                       ---  ------  ------    ----   -----

At 31/12/99             2.6   153.6   186.4     0.7    38.9
                       ---  ------  ------   ----    -----

11.Reconciliation of operating profit to net cash inflow from
   operating activities

                                                    1999   1998
                                                      £m     £m

Operating
profit                                              23.0    22.8

Depreciation
charge                                                0.5    0.1

Increase
in debtors                                           (1.8)  (0.8)

Increase
in creditors                                          3.1    2.9

Decrease in
Properties
held for
resale                                                0.4    -

Effect of
other deferrals
and accruals
on operating
activity
cash flow                                            (2.1)  (1.0)
                                                     -----  -----
Net cash
inflow from
operating
activities                                           23.1    24.0
                                                     -----  -----

12.  Reconciliation of net cash flow to movement in net debt
                                                    1999   1998
                                                      £m     £m

Decrease/
(increase) in
cash in
the year                                              1.5   (1.0)

Cash inflow
from movement
in debt
financing                                            64.5   54.0

Amortisation
of discount
and costs
on issue
of debenture                                          -      0.1
                                                     -----  -----
Movement in
net debt
in the year                                          66.0   53.1

Net debt
at 1/1/99                                           143.3   90.2
                                                     -----  -----
Net debt
at 31/12 1999                                       209.3  143.3
                                                    -----  -----

13.Net assets per share

   Net assets per share have been calculated on the basis of
   net assets as at 31st December 1999 of £382,201,000 (1998
   - £318,914,000) and the number of ordinary shares in issue
   at the year end of 53,072,000 (1998 - 52,919,000).

14.Total return

   Total return is the increase in net asset value per share
   plus dividend per share expressed as a percentage of the
   net asset value per share at the beginning of the year.

15.The announcement set out above, which was approved by the
   board on 13th March 2000, does not constitute a full
   financial statement of the group's affairs for the year
   ended 31st December 1999.  The auditors have reported on
   the full accounts for the said year and have accompanied
   them with an unqualified report.  The accounts have yet to
   be delivered to the Registrar of Companies.  The annual
   report and accounts will be posted to shareholders on 12th
   April 2000, and the annual general meeting of the company
   will be held on 18th May 2000.