Interim Results

Terrace Hill Group PLC
05 July 2004



For embargoed release at 7am                                      5 July 2004

                      Terrace Hill Group PLC ('the Group')

             Half Yearly Report for the six months to 30 April 2004



CHAIRMAN'S STATEMENT

I am pleased to present the Group's Unaudited Accounts for the six months to 30
April 2004 and my Report on that half year.

Results

The results show substantial progress in our target of growing Net Asset Value
per share, which was up from 30.22p at 31 October 2003 to 35.07p at 30 April
2004, an increase of 16%.

The balance sheet shows that since 31 October 2003 the Group's Net Asset Value,
after allowing for minority interests, has risen from £46.532 million to £65.518
million, an increase of £18.986 million or 40.80%.

Of the increase in value, the two major factors were revaluation of investment
properties (£9.737 million) and a placing with institutional shareholders
(£8.128 million net of costs).  This placing was effected on 29 April 2004, at
the end of the half year, with payment for the shares due on 5 May 2004, so that
of the debtors shown in the balance sheet £8.128 million was converted to cash
shortly after the date of the balance sheet.  The other factors contributing to
growth of net asset value were issues of shares upon corporate acquisitions, and
profit.

At 30 April 2004 bank debt net of cash and the proceeds of the recent placing
stood at 45.00% of gross assets net as aforesaid (31 October 2003: 49.19%). As a
result we now have substantial financial resources and flexibility available to
pursue growth.

Pre tax (and post tax) profit for the half year of £776,000 included only modest
sales of investment and development properties.  Operational profit, at £2.082
million, well exceeded the six monthly rates of the comparative periods shown
for the 18 months to 31 October 2003 and the year to 30 April 2003.

Corporate Acquisitions

During the half year we made formal offers for the outstanding share capital not
held by us or others with whom we were acting, of Grosvenor Land Holdings plc 
('Grosvenor'), another AiM traded property group, and SERAH Properties plc 
('SERAH').  In both cases we believe we have acquired at a substantial discount
to net asset value.  By 30 April 2004, the acquisition of Grosvenor had advanced
to the point where the Accounts reflect our ownership of 70.66% of its capital,
the outstanding balance being reflected in minority interests in the amount of
£2.522 million.  In the case of SERAH our Offer closed with us holding 83.13% of
its share capital.

Additional Directors

Of the institutions taking shares in the placing referred to above, the largest,
which has a notifiable interest of 7.48% in the Group, is Caledonia Investments
plc.  The directors were delighted on 22 June 2004 to welcome to our Board
Caledonia's Associate Director Will Wyatt as a Non-executive Director, along
with Douglas Blausten, the former Chief Executive of Grosvenor, Chris Phillips
of Colliers CRE and Guy Brennan who was for many years a Managing Director,
Corporate Finance, of ABN Amro Bank.

Activities in the six months to 30 April 2004

We continued to progress the development of new properties, and to manage the
letting and improvement in value of properties completed.  We sold the Health
and Fitness Centre, Foodstore and Nursery School (at an aggregate price of £7.5
million) developed in Joint Venture with HSBC for occupation by Esporta, Budgens
and Academy respectively at Queen Elizabeth Park in Guildford.  Routine
residential property sales amounted to £8.583 million, primarily in England.  We
acquired 36 flats in Manchester at a price of £4 million. The number of
residential units in our portfolio has fallen from 585 at 31 October 2003 to 535
at 30 April 2004.  We continue to focus the portfolio on affordable housing in
Scotland, with a heavy emphasis on Glasgow, and the North of England, which we
believe is best sheltered from the current round of interest rate rises.

Current Trading

In the North East of England we are progressing new developments at Gallowgate,
Newcastle, at Baltic Business Park on Gateshead Quays and at Westminster House,
our latest office development in the highly successful Teesdale Business Park.
In London's West End we have seen increasing tenant interest in our developments
at 11 Berkeley Street, 16 Berkeley Street and 22 King Street, a location where
good rental growth is anticipated.

Since 30 April 2004 we have sold profitably, for £11.7 million, to Royal London
Asset Management a building known as Colston 33 in Bristol City Centre developed
in Joint Venture with Northridge Capital.  At Queen Elizabeth Park, Guildford we
have now sold the first four units of the first phase of 13 units of our
development of office suites aimed at the owner occupier market.

We have purchased an industrial property at Edmonton, North London for £5
million for future redevelopment, leasing it back to the vendors for a short
period while we consider planning alternatives.  Near Glasgow City Centre we
have purchased, at a price of £2.6 million, an excellent residential site
fronting onto Glasgow Green, which we intend to develop out as 64 units, mainly
2 bedroom flats with a few townhouses.  We have also acquired, at a cost of £3
million, a 10.5 acre site at Tunbridge Wells where, with planning permission in
place, we plan to develop a 170,000 sq. ft. industrial park and are about to
start on the first phase.

Since 30 April 2004 we have also acquired, at a price of £1.825 million, the
outstanding 29.34% of the share capital of Grosvenor, which was reflected at the
Balance Sheet date in the minority interests as above at £2.522 million.

Dividend

The Directors have decided to pay an interim dividend in respect of the half
year under review of 0.3p per share.  This dividend is at double the rate of the
final dividend paid for the preceding period and demonstrates our confidence in
our future growth prospects. We intend to maintain a progressive dividend policy
in future.  This dividend will be paid on 25 August 2004 to shareholders on the
register at 13 August 2004.

Repurchase of Shares

We also propose a repurchase by the Group announced today of up to 2,000,000
shares at a price of 28p each.  Again, we are providing an opportunity for small
shareholders to realise their shareholdings without costs.

The Future

I believe that we have an exciting future ahead with a business and an asset
base which should deliver good growth in shareholder value over the coming
years.  Our development programme now amounts to around £500 million, of which
approaching £200 million is underway and £300 million is at planning stage.



Robert F M Adair
Chairman

5 July 2004



                                               6 months to    18 months to      Year to
                                                 30-Apr-04       31-Oct-03    30-Apr-03
                                                      £000            £000         £000
                                               (unaudited)       (audited)  (unaudited)
TURNOVER
Continuing operations                                7,519          39,646       13,961
Acquisitions                                         1,771               -            -
                                                     -----           -----        -----
                                                     9,290          39,646       13,961
                                                     -----           -----        -----
GROUP OPERATING PROFIT
Continuing operations                                1,570           3,295        2,545
Acquisitions                                           512             -            -
                                                     -----           -----        -----
TOTAL OPERATING PROFIT                               2,082           3,295        2,545
Continuing operations:
Amounts written off unlisted investments                 4           (202)        (202)
Gain/(loss) on disposal of fixed asset investment        -              23          (2)
Net gain on disposal of investment property            456           7,123        3,202
Permanent diminution in value of an investment property  -           (300)            -
Discontinued operations:
Gain/(loss) on liquidation of former subsidiary        143             (4)          (4)

Net interest payable                               (1,909)         (4,842)      (3,319)
                                                    -----           -----        -----
PROFIT ON ORDINARY
ACTIVITIES BEFORE TAX                                  776           5,093        2,220
Taxation charge                                          -           (872)        (144)
                                                     -----          -----        -----
PROFIT ON ORDINARY
ACTIVITIES AFTER TAX                                   776           4,221        2,076
Minority interest                                     (71)           (150)         (93)
                                                     -----           -----       -----
PROFIT ATTRIBUTABLE TO
MEMBERS OF PARENT COMPANY                              705           4,071        1,983
Dividends                                            (561)           (625)        (193)
                                                     -----           -----       -----

                                                       144           3,446        1,790
                                                     -----           -----       -----

Earnings per share - basic and diluted              0.453p          3.033p       1.599p
                                                     -----           -----       -----




UNAUDITED SUMMARISED CONSOLIDATED BALANCE SHEET

                                                 30-Apr-04       31-Oct-03    30-Apr-03
                                                      £000            £000         £000
FIXED ASSETS                                   (unaudited)      (restated)   (restated)
Intangible assets
Positive goodwill                                    2,586           2,583        2,691
Negative goodwill                                  (2,857)         (1,307)      (1,509)
                                                     -----           -----       -----
                                                     (271)           1,276        1,182
Tangible assets
Investment properties                              103,306          83,524       83,732
Other                                                  206              22          180
                                                     -----           -----       -----
                                                   103,512          83,546       83,912
Investments
Investments in associates                              528           1,053            -

Other fixed asset investments                          101              85        1,245
                                                     -----           -----       -----
                                                       629           1,138        1,245
                                                     -----           -----       -----
                                                   103,870          85,960       86,339
CURRENT ASSETS
Work in progress                                    21,972          18,046       38,934
Debtors                                             24,491           7,297       15,776
Cash at bank and in hand                             5,696          14,013        2,994
                                                     -----           -----       -----
                                                    52,159          39,356       57,704
CREDITORS: amounts falling due within one year
Borrowings                                        (27,260)        (26,428)     (30,733)
Other creditors                                    (8,263)         (8,791)     (15,171)
                                                     -----           -----       -----
                                                  (35,523)        (35,219)     (45,904)
                                                     -----           -----       -----

NET CURRENt ASSETS                                  16,636           4,137       11,800
                                                     -----           -----       -----
TOTAL ASSETS LESS CURRENT LIABILITIES              120,506          90,097       98,139
CREDITORS: amounts falling due after more 
than one year                                     (51,482)        (42,986)     (54,971)
PROVISIONS FOR LIABILITIES AND CHARGES               (477)           (477)            -
                                                     -----           -----       -----
NET ASSETS                                          68,547          46,634       43,168
                                                     -----           -----       -----
CAPITAL AND RESERVES
Called up share capital                              3,737           3,079        3,094
Shares to be issued                                      -             193          193
Share premium account                               19,369          11,823       11,807
Revaluation reserve - investment properties         21,153          13,397       12,951
                    - other                             17               6            3
Capital redemption reserve                             821             821          807
Merger reserve                                       8,686           8,228       15,801
Profit and loss account                             11,735           8,985      (1,533)
                                                     -----           -----       -----
EQUITY SHAREHOLDERS FUNDS                           65,518          46,532       43,123
MINORITY INTERESTS                                   3,029             102           45
                                                     -----           -----       -----
                                                    68,547          46,634       43,168
                                                     -----           -----       -----



STATEMENT OF TOTAL RECOGNISED GAINS AND LOSSES


                                               6 months to    18 months to      Year to
                                                 30-Apr-04       31-Oct-03    30-Apr-03
                                                      £000            £000         £000
                                               (unaudited)       (audited)  (unaudited)
Profit attributable to members of the 
parent company                                         705           4,071        1,983
Unrealised surplus on revaluation of properties      9,737           8,145        6,258
Unrealised surplus/(deficit) on revaluation 
of unlisted investments                                 11               2          (1)
                                                     -----           -----       -----
Total recognised gains and losses relating 
to period                                           10,453          12,218        8,240
                                                     -----           -----       -----

GROUP STATEMENT OF CASH FLOWS
                                               6 months to    18 months to      Year to
                                                 30-Apr-04       31-Oct-03    30-Apr-03
                                                      £000            £000         £000
                                               (unaudited)      (restated)   (restated)

Cash (outflow)/inflow from operating activities    (7,042)          14,993     (10,493)
Returns on investments and servicing of finance    (1,965)         (5,036)      (4,269)
Taxation                                                 -            (98)         (36)
Capital expenditure and financial investment         8,162          50,476       40,465
Acquisitions and disposals                         (8,002)             276          310
Equity dividends paid                                (231)           (393)            -
                                                     -----           -----       -----
Cash (outflow)/inflow before liquid resources 
and financing                                      (9,078)          60,218       25,977
Financing                                            2,231        (49,010)     (25,121)
                                                     -----           -----       -----
(Decrease)increase in cash                         (6,847)          11,208          856
                                                     -----           -----       -----


Reconciliation of group operating profit to net cash (outflow)/inflow from
operating activities

                                                      £000            £000         £000

Operating profit                                     2,082           3,295        2,545
Depreciation                                            17              75           50
Loss on sale of other tangible fixed assets              -             133            -
Positive goodwill amortisation and impairment losses    81             308          185
(Increase)/decrease in stock                       (3,136)           7,425      (7,776)
(Increase)/decrease in operating debtors           (4,306)           7,974      (1,914)
Decrease in operating creditors                    (1,780)         (4,217)      (3,583)
                                                     -----           -----       -----
Net cash (outflow)/inflow from operating 
activities                                         (7,042)          14,993     (10,493)
                                                     -----           -----       -----

GROUP RECONCILIATION OF SHAREHOLDERS' FUNDS

                                               6 months to    18 months to      Year to
                                                 30-Apr-04       31-Oct-03    30-Apr-03
                                                      £000            £000         £000
                                               (unaudited)       (audited)  (unaudited)
Total recognised gains and losses                   10,453          12,218        8,240
New shares issued                                      657           1,622        1,658
Shares to be issued, settled for cash                (193)               -            -
Share premium arising on new shares issued           7,546           2,111        2,111
Merger reserve arising on new shares issued          1,084           6,519        6,519
Purchase of ordinary shares                              -           (472)        (371)
Ordinary dividends                                   (561)           (625)        (193)
                                                     -----           -----       -----
Total movements during the period                   18,986          21,373       17,964
Opening shareholders' funds                         46,532          25,159       25,159
                                                     -----           -----       -----
Closing shareholders' funds                         65,518          46,532       43,123
                                                     -----           -----       -----

NOTES

BASIS OF PREPARATION

These interim accounts are unaudited but have been reviewed by the auditors
whose review report is set out in the half-yearly report. The abridged financial
information relating to the 18 months ended 31 October 2003 is based on an
extract from the latest financial statements, which have been filed with the
Registrar of Companies. The report of the auditors on these financial statements
was unqualified and did not contain a statement under section 237(2) or (3) of
the Companies Act 1985. Certain balance sheet figures as at 31 October 2003 and
30 April 2003 and cash flow information for the periods then ended have been
restated to reflect a change in accounting for a joint arrangement. There is no
change to net assets as previously reported. The financial information
summarised above does not constitute statutory accounts within the meaning of
section 240 of the Companies Act 1985.

EARNINGS PER ORDINARY SHARE

The calculation of basic and diluted earnings per ordinary share is based on the
following:

                                               6 months to    18 months to      Year to
                                                 30-Apr-04       31-Oct-03    30-Apr-03
                                                      £000            £000         £000

Profit                                                 705           4,071        1,983
                                                     -----           -----       -----
The weighted average number of ordinary shares
in issue during the period:
Basic and diluted                              155,704,845     134,207,985  124,015,370
                                                     -----           -----       -----

DIVIDEND

The company intends to pay an interim dividend of 0.30p per share.

HALF-YEARLY REPORT

The half-yearly report will be posted to shareholders shortly and copies will be
available, free of charge for one month, from the Company Secretary, Terrace
Hill Group PLC, James Sellars House, 144 West George Street, Glasgow, G2 2HG.




For further information please contact:



Robert Adair, Chairman, Terrace Hill Group PLC    01845 537 037
                                                  (Monday 5 July- 07732 784 208)

Ross Macdonald, Joint Managing Director, 
Terrace Hill Group PLC                            0141 332 2014
                                                  (Monday 5/Tuesday 6 July- 07710 459 649)

Alasdair Robinson, Noble & Company Limited        0131 225 9677







                      This information is provided by RNS
            The company news service from the London Stock Exchange