Interim Results - Balance Sheet Improvements

GRESHAM HOUSE PLC
21 October 1999

                                GRESHAM HOUSE plc

                         36 Elder Street, London E1 6BT
                            Telephone: [phone]
                            Facsimile: 020-7377 2946

                          CHAIRMAN'S INTERIM STATEMENT

Dear Shareholder,

The results for the half year ended 30th June, 1999, as set out in the
Unaudited Statement of Total Return, show a Revenue return on ordinary
activities before taxation of £304,000 against £194,000 for the comparable
period last year. This was achieved partly through an increase in dividend
income received but also due to savings in interest and expenses. After
adjusting for taxation and provisions against investments held, the combined
result shows a return of £214,000 against £276,000 last year. This result
represents a basic return per ordinary share of 5.0p against 6.5p for 1998.

The Balance Sheet again shows an improvement for the half-year with a 5p
increase in basic net asset value per ordinary share to 100.5p per share.

As indicated in my statement at the year-end we have been able to replace
previous loan facilities with new longer term funding arrangements at lower
rates of interest. As a result the Group's net current assets since the
previous year-end have risen by £5.8 million with a concomitant increase in
long-term borrowings.

I can report that within the last few days the Group's property portfolio has
been enlarged by the acquisition of an industrial estate at Knowsley, Lancashire
which will substantially increase the Group's rental income. Whilst this will
incur a commensurate interest cost together with considerable capital repayments
in the short to medium term, your Board anticipates that significant benefit
will be gained in the longer term.

21st October, 1999                                A.P. Stirling
                                                  Chairman
    
                       GRESHAM HOUSE plc

                    UNAUDITED CONSOLIDATED STATEMENT OF TOTAL RETURN

                            for the Half Year ended 30 June, 1999

                     6 months to          6 months to        12 months to
                     30th June, 1999      30th June, 1998    31st December,1998
                     Unaudited            Unaudited          Audited
              Revenue Capital Total Revenue  Capital Total Revenue Capital Total
              £'000   £'000   £'000 £'000    £'000   £'000 £'000   £'000   £'000
 
(Losses)/gains
on Investments   -      (93)    (93)   -       83      83     -      500    500
Income:
Dividend and 
Interest Income  86      -       86    30      -       30    206            206
Rental Income   705      -      705   709      -      709  2,014          2,014
Other operating 
income           70      -       70    64      -       64      8              8
Other Expenses (341)     -     (341) (317)     -     (317)  (587)          (587)

Net return before finance costs
and taxation    520     (93)    427   486      83     569  1,641     500  2,141

Interest payable
and similar 
charges        (216)     -     (216) (292)     -     (292)  (579)          (579)

Return on ordinary activities 
before taxation 304     (93)    211   194      83     277  1,062     500  1,562

Taxation          3               3    (1)             (1)   (88)           (88)

Return on ordinary activities after
taxation attributable to equity
shareholders    307     (93)    214   193      83     276    974     500  1,474

Interim dividend - 
Equity shares    -        -      -     -       -       -     (21)          (21)

Transfer to 
reserves        307     (93)    214   193      83     276    953     500  1,453

Basic return per 
Ordinary Share   7.2p  (2.2p)   5.0p  4.5p    2.0p    6.5p  23.0p   11.8p  34.8p

Diluted return per 
Ordinary Share   7.1p  (2.1p)   5.0p  4.5p    2.0p    6.5p  22.8p   11.7p  34.5p

All revenue and capital items in the above statement derive from continuing
operations.

                         Gresham House plc
                    UNAUDITED CONSOLIDATED BALANCE SHEET

                            as at 30th June 1999

                       30th June, 1999 30th June, 1998 31st December, 1998
                       (Unaudited)     (Unaudited)     (Audited)
                           £'000           £'000       £'000

Investments
      Securities           2,122            2,503      2,168
      Properties          10,520           11,240     10,520
      Other                    -                -          -
Tangible assets              391              358        396
                          13,033           14,101     13,084

Current assets             6,578            1,333      2,016

Creditors - amounts failing due
within one year            1,781            2,837      3,059

Net current assets/
(liabilities)              4,797           (1,504)    (1,043)

Total assets less current 
liabilities               17,830           12,597     12,041

Creditors - amounts failing due
after more than one year  13,570            9,728      7,995

Provisions for liabilities
 and charges                  -                -          -
                           4,260            2,869      4,046

Capital and reserves
Called up share capital    1,060            1,060      1,060
Share premium account        242              242        242
Other reserves
      Revaluation reserve  3,989            3,989      3,969
      Capital reserve 
      - realised          17,527           17,245     17,610
      Capital reserve 
      - unrealised           134               91        143
Revenue reserves         (18,691)         (19,758)   (18,998)

Equity shareholders' funds 4,260            2,869      4,046

Net asset value per ordinary share

Basic                     100.5p           67.7p       95.5p
Diluted                    99.8p           67.3p       94.8p



                       UNAUDITED GROUP CASH FLOW STATEMENT

                            for the Half Year to 30th June 1999

                             30th June, 1999   30th June, 1998  31st Dec, 1998
                               (Unaudited)       (Unaudited)      (Audited) 
                                 £'000              £'000           £'000

Cashfilow from operating activities
Investment income received          41                  9              35
Deposit interest recieved           36                 19             162
Rental income recieved             848                709           1,962
Other cash payments               (304)              (297)           (316)

Net cash inflow from operating 
  activities                       621                440           1,843
(Note 2)

Returns on investment and servicing of finance
Interest paid on 2.5% Secured
Redeemable Loan Stock, 2001        (77)               (89)          (179)
Interest paid on property loans   (139)              (203)          (400)

Net cash outflow from Investments
and servicing of finance          (216)              (292)          (579)

Capital expenditure and financial investment
Purchase of tangible assets          -                  -            (45)
Purchase of investments           (143)               (61)          (110)
Disposals of investments            99                 30            109
Net loans advanced                (213)               (57)          (145)
Sale of freehold property            -                  -            720

Net cash (outflow)/(inflow 
from capital expenditure and 
financial investment              (257)               (88)           529

Equity dividends paid              (21)                 -            (16)
Cash inflow before use of liquid 
resources and financing            127                 60          1,777

Management of liquid resources
(Acquisition)lsale of listed 
securities held for dealing        (17)               (15)             2

Financing
Acquisition of 2.5% Secured 
Redeemable Loan Stock
by group company                     -                  -           (625)

Increase/(reduction) in loans    5,554               (226)          (953)

Net cash inflow/(outflow) 
from financing                   5,554               (226)        (1,578)

Increas/(decrease) in cash       5,664               (181)           201
(Note 3)

                 STATEMENT OF MOVEMENT IN SHAREHOLDERS'FUNDS

                                  6 months to     6 months to     12 months to
                                 30th June,1999   30th June,1998  31st Dec,1998
                                    £'000            £'000           £'000

Retained profit for the period        307             193              953
Net movement on capital reserves      (93)             83              500
                                      214             276            1,453

Shareholders' funds at beginning
of period                           4,046           2,593            2,593

Shareholders' funds at 
end of period                       4,260           2,869            4,046



                        NOTES TO THE INTERIM STATEMENT

1   Basis of Preparation

(a)  The interim statement has been prepared in accordance with the accounting
policies set out in the Group's 1998 Annual Report and Accounts. 

(b) The interim statement is neither audited nor reviewed. The full year figures
for 1998 do not comprise statutory accounts for the purpose of Section 240 of
the Companies Act 1995 and have been extracted from the Group's full accounts
for that year, which received an unqualified Auditors' Report and did not
contain a statement under section 237(2) or (3) of the Companies Act 1985. 
The accounts have been filed with the Registrar of Companies. 

(b) Following the Company's normal accounting practice the figures do not take
into account the results of significant investments except for dividends
received which amounted to £2,146 (1998: £2,146) 

2 Reconciliation of operating profit to operating cash flows.

                                6 months to      6 months to     12 months to
                                30th June,1999   30th June,1998  31st Dec.1998
                                   £'000             £'000           £'000 
  Return on ordinary activities                               
  before taxation                    304               194           1,062
  Interest payable                   216               292             579
                                     520               486           1,641

  Depreciation                         5                 -               7
  Provision(writeback) against loan
  and guarantees                      18               (19)             50
  Taxation on franked
  investment income                  (17)               (1)             (9)    
  Decrease/(increase) in debtors     198              (155)           (195)
  (Decrease)/increase in creditors  (103)              129             349

  Net cash inflow from operating
  activities                         621               440           1,843   
   

3 Reconciliation of net cash flow to movement in net debt

  Increasel(decrease) in cash 
  for the period                   5,664              (181)            201
  Cash (inflow)/ outflow from
  (Increase)lreduction in debt    (5,554)              226           1,578
  Cash outflow/(inflow) from
  movement in liquid resources        17                15              (2)
 
  Change in net debt resulting from
   cash flows                        127                60           1,777
   Discount on acquisition of loan stock
   by group undertaking                -                 -             375

   Movement in net debt in 
   the period                        127                60           2,152

   Net debt at beginning 
   of period                      (8,755)          (10,907)        (10,907)

   Balance at end of period       (8,628)          (10,847)         (8,755)


4 Analysis of net debt
                              At 1st     Cash       Other      At 30th
                              January    flow       non-cash   June
                               1999                 changes    1999
                              £'000      £'000       £'000     £'000

  Cash at bank                  750      4,530                 5,280
  Overdrafts                 (1,158)     1,134                   (24)
                                         5,664

  Debt due within one year     (459)        21                  (438)
  Debt due after one year    (7,995)    (5,575)              (13,570)
                                           110

  Current asset investments     107         17           -        124

                             (8,755)       127           -     (8,628)