RNS Number:6858U
Halladale Group PLC
28 January 2004


28 January 2004

               Halladale Group plc ("Halladale" or "the Company")
            Interim Results for the six months ended 31 October 2003


Highlights

   *Profit before tax increased by seven per cent to #1,022,000 (2002:
    #952,000) after strong start to the financial year

   *Purchase and sale transactions in period in excess of #28 million (2002:
    #64 million), with large number of transactions now falling into second half

   *Interim dividend increased by 25 per cent to 0.7p per ordinary share
    (2002: 0.56p)

   *Total portfolio under management on a proforma basis at period end
    increased by 7.5 per cent to #143 million (2002: #133 million)

   *Total of 85 per cent of portfolio invested in retail property - again the
    best performing sector of the UK commercial property market

   *Company committed to expanding joint venture partnerships and exploring
    options for longer term fund management opportunities

   *Earnings per share of 3.80p (2002: 4.03p) reflecting the higher average
    number of shares in issue during the period

David Lockhart, Chief Executive of Halladale Group plc, said: "The first six
months of the financial year has been a period of further progress for the
Company. As a trading business I am particularly pleased to report a further
increase in both profitability and a rise in the level of interim dividend
payment.

"We continue to have a significant weighting in the retail sector - once again
the best performing UK property sector - but in the period have made
acquisitions in the south east office market where we see opportunities to
employ our policy of active asset management and risk-controlled development.

"We continuously see new revenue opportunities and considering the success of
our joint venture operations are currently exploring options for longer term
fund management opportunities where our asset management skills can be deployed
for longer term projects."

                                    - ends -

For further information, please contact:

David Lockhart, Halladale Group plc                 0141 204 4633
David Rydell/ Charles Reynolds
Bell Pottinger Financial                            020 7861 3232
Stuart Lane, Collins Stewart                        020 7523 8000


Chairman's statement

I am pleased to report that the six month period to 31 October 2003 has been one
of sustained progress with profit before tax advancing to #1,022,000, an
increase of 7% over the comparable period last year. This performance continues
to demonstrate the value of Halladale's policy of active asset management and
risk-controlled development of property assets.

Progress

At 31 October 2003 the total portfolio under management, including joint
ventures totalling #107m (2002: #93m), increased to #143m on a proforma basis
(2002: #133m) of which 85% was in the retail sector, which once again has been
the best performing sector in the UK commercial property market.

The aggregate value of acquisitions and disposals in the period amounted to
#28.7m, a reduction on last year's comparable figure of #64m. The reduction is a
reflection of timing in a market place where transactions take months to
complete rather than a slow down in our activity. It also reflects your
Company's unwillingness to pay prices for stock which would not deliver
satisfactory returns to shareholders. However, we have taken the opportunity to
sell into this strong investment market - achieving attractive exit prices for
assets where we have completed our strategy for adding value. Since the period
end, the level of transactions has accelerated, reflecting positive
opportunities that have presented themselves.

The Company has made great strides in its direct development activities in the
last six months. Notably, we have secured planning permission for the
redevelopment and extension of The Bay Tree Shopping Centre, in Brentwood,
including the conversion of the office block located above the Centre into
residential accommodation. We are already making good progress in securing
advance lettings of the larger retail units and are reviewing our options on how
best to realise value from the residential element.

In Newport on the Isle of Wight, a detailed planning application has been
submitted for the development of a new retail centre incorporating a new
transport interchange and office space. It is expected that construction will
commence in the early part of 2004. In Glasgow's Merchant City, we have recently
received planning and listed building consent for the development, behind a
128-year-old facade, of a new mixed-use landmark building at Cochrane Square.
Construction work will commence in early 2004 to provide retail space at ground
floor and 84 apartments above.

While we are heavily weighted in the retail sector, Halladale is not a cyclical
investor and is constantly seeking value opportunities in sectors that are
likely to benefit from recovery in the medium term. In this regard we have
sought opportunities in the south east office market which has suffered decline
over recent years. We believe there are important buying opportunities in this
sector and have, in recent months, acquired two such projects - in Swindon and
in Weybridge, Surrey - where we believe our asset enhancement skills will
deliver shareholder returns.

Market outlook

Despite the recent small rise in UK interest rates and the prospect of further
rises over the next 12 months investor demand for secure property income streams
has remained strong, particularly in the retail sector. Against a backdrop of
continuing weakness in occupational markets generally, the IPD UK Monthly Index
nonetheless showed a total return from property of 10% in the year to 31 October
2003.

On a UK wide-basis, weak tenant demand has dampened rental levels overall but as
always the average figures mask significant regional and sectoral variations
which Halladale seeks to exploit. The top-performing retail sector has delivered
moderate rental growth. By contrast rents for central London and south-east
offices have now fallen for eight consecutive quarters.

In any period of economic recovery property tends to lag behind other sectors.
We anticipate that there is unlikely to be any significant rental growth until
2005 with only nominal growth levels being achieved in 2004.

Dividend

The Board intends to pay an interim dividend of 0.7p per share on 13 February
2004 to shareholders on the register as at 6 February 2004. This represents a
25% increase on last year's interim dividend, confirming the Board's clear
policy of maintaining a progressive dividend policy. Earnings per share for the
period were 3.8p (2002: 4.03p). This modest reduction reflects the new share
issue in the period and the increased provision for tax at 30% (2002: 23%).

Prospects

There are encouraging signs that global economic recovery is broadening and
strengthening. Growth in the UK was above expectation at around 2% for 2003 and
a further modest acceleration from that figure is expected in 2004.

Whilst we believe that returns from the retail sector will continue to
out-perform average returns from commercial property over the next twelve months
we are watching closely to see the first signs of recovery in other sectors,
particularly London and south-east offices. As always timing is everything and
Halladale's flexible management style gives it the ability to react swiftly to
changing market conditions.

We are committed to expanding our joint venture activities, where we benefit
from equity returns and also from incentivised management fees. We are also
exploring longer-term fund management opportunities where our asset management
skills could be deployed for longer-term projects.

We have made a strong start to the new financial year. I continue to have great
confidence in Halladale's prospects.

Fred Shedden
Chairman
27 January 2004



CONSOLIDATED PROFIT AND LOSS ACCOUNT
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003

                                    6 Months Ended          Year Ended
                                 Unaudited                     Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000

Turnover

Group and share of joint            
ventures                            11,279         17,045       34,141

Less share of joint ventures'       
turnover                            (4,369)          (765)      (3,786)                       
                                  ----------       --------     --------
                                     6,910         16,280       30,355


Cost of Sales                       (4,125)       (13,071)     (23,994)
                                  ----------       --------     --------

Gross Profit                         2,785          3,209        6,361
                                  ----------       --------     --------


Administrative Expenses             (1,269)        (1,170)      (2,949)
                                  ----------       --------     --------


Operating Profit                     1,516          2,039        3,412

Share of operating profit in         
joint venture companies              1,060            396        1,058

Share of operating profit in           
associated companies                   306            327          604            
                                  ----------       --------     --------
                                     2,882          2,762        5,074


Interest receivable and
similar income

Group                                   84             33          180

Joint venture companies                  5              5           10

Associated companies                     5              0           10



Interest payable and similar
charges

Group                                 (902)        (1,229)      (2,134)

Joint venture companies               (822)          (433)      (1,003)

Associate companies                   (230)          (186)        (446)
                                  ----------       --------     --------

Profit on Ordinary Activities        
before Taxation                      1,022            952        1,691

Tax on profit on ordinary             
activities                            (306)          (222)        (376)                    
                                  ----------       --------     --------
Profit on Ordinary Activities          
after Taxation                         716            730        1,315


Dividends                             (134)          (101)        (295)
                                  ----------       --------     --------

Retained Profit for the                
Period                                 582            629        1,020                      
                                  ==========       ========     ========

                                         p              p            p

Earnings per Ordinary Share           3.80           4.03         7.21


Turnover and operating profit in all periods relate wholly to continuing
activities.

There are no recognised gains or losses in the current or prior period other
than the profits disclosed above.



CONSOLIDATED RECONCILIATION OF MOVEMENTS
IN SHAREHOLDERS' FUNDS
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003



                                    6 Months Ended          Year Ended
                                       Unaudited               Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000

Profit for the period                  
attributable to
shareholders                           716            730        1,315

Dividends                             (134)          (101)        (295)
                                   ---------      ---------    ---------
                                       582            629        1,020

Issue of share capital (net            
of expenses)                           255              0          255

Recovery of VAT on issue                
costs previously written-off
against share premium
account                                 34              0            0

Capital reserve created on               
sale of properties to joint        
venture company                          0            301          301
                                   ---------      ---------    ---------


Net movement to shareholders'          871            930        1,576
funds

Opening shareholders' funds          9,770          8,194        8,194
                                   ---------      ---------    ---------

                                    10,641          9,124        9,770
                                   =========      =========    =========


CONSOLIDATED BALANCE SHEET
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003

                                       Unaudited               Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000


Fixed Assets

Tangible assets                        327            133          118

Investments                          2,605          1,451        2,021
                                  ----------     ----------   ----------
                                     2,932          1,584        2,139
                                  ----------     ----------   ----------

Current Assets

Stocks                              33,520         35,275       31,628

Debtors                              3,154          4,961        3,071

Cash at bank and in hand               950              9        2,441
                                  ----------     ----------   ----------
                                    37,624         40,245       37,140

Creditors amounts falling due
within one year                     (4,563)        (2,619)      (7,081)       
                                  ----------     ----------   ----------                                               
                                  

Net Current Assets                  33,061         37,626       30,059
                                  ----------     ----------   ----------

Total Assets Less Current           
Liabilities                         35,993         39,210       32,198


Creditors amounts falling due 
after more than one year           (25,352)       (30,063)     (22,428)        
                                   


Provisions for Liabilities               
and Charges                              0            (23)           0                    
                                  ----------     ----------   ----------

                                    10,641          9,124        9,770
                                  ----------     ----------   ----------

Capital & Reserves

Called up share capital              4,777          4,527        4,652

Capital redemption reserve           1,772          1,772        1,772

Capital reserve                        201            301          226

Share premium account                2,405          2,111        2,241

Profit and loss account              1,486            413          879
                                  ----------     ----------   ----------

Total Shareholders' Funds           10,641          9,124        9,770
                                  ==========     ==========   ==========



The comparative figures for the financial year ended 30th April 2003 are an
extract of the company's statutory accounts for that financial year. Those
accounts have been reported upon by the company's auditors and delivered to the
Registrar of Companies. The report of the auditors was unqualified and did not
contain a statement under Section 237(2) or (3) of the Companies Act 1985.



CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003

                                    6 Months Ended          Year Ended
                                       Unaudited               Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                      Notes           #000           #000         #000


Net cash (outflow)/     
inflow from
operations              i           (1,040)        10,525       17,753

Returns on             
investments and
servicing of
finance                ii             (861)        (1,182)      (1,945)

Taxation                               (90)             0         (180)

Capital expenditure    
and financial
investment             ii             (222)           (31)         (37)

Acquisitions and       
disposals              ii             (241)           (67)        (467)

Equity dividends                      
paid                                  (194)          (136)        (237)                     
                                   ---------      ---------    ---------
Cash (outflow)/inflow               
before use of liquid
resources and
financing                           (2,648)         9,109       14,887

Financing              ii            1,157        (11,068)     (14,355)
                                   ---------      ---------    ---------

(Decrease)/increase                 
in cash                             (1,491)        (1,959)         532                      
                                   =========      =========    =========


Reconciliation of net
cash to movement in
net debt (Note iii)

(Decrease)/increase                 
in cash in the
period                              (1,491)        (1,959)         532

Cash flow from debt                   
and lease financing                   (829)        11,068       14,610              
                                   ---------      ---------    ---------
Change in net debt                  
resulting from cash
flows                               (2,320)         9,109       15,142

New hire purchase                      
agreements                             (39)             0            0                    
                                   ---------      ---------    ---------


Change in net debt                  (2,359)         9,109       15,142

Net debt at 1st May                
2003                               (24,080)       (39,222)     (39,222)                              
                                   ---------      ---------    ---------


Net debt at 31st       
October 2003           iii         (26,439)       (30,113)     (24,080)                 
                                   =========      =========    =========



NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003

i. RECONCILIATION OF OPERATING PROFIT TO NET CASH OUTFLOW
   FROM OPERATING ACTIVITIES

                                    6 Months Ended          Year Ended
                                       Unaudited               Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000


Operating profit                     1,516          2,039        3,412

Depreciation                            26             24           44

Amortisation of goodwill                 5             17           37

Profit not recognised on sale            
to joint venture                         0            301          226

Transfer to capital reserve              0            301          301

Gain on sale of tangible               
fixed assets                           (13)             0            0

(Increase)/decrease in              
stocks                              (1,892)         9,845       13,492

Decrease/(increase) in                  
debtors                                 19         (2,217)        (373)

(Decrease)/increase in                
creditors                             (701)           215          614                  
                                   ---------     ----------  -----------
Net cash (outflow)/inflow           
from operations                     (1,040)        10,525       17,753 
                                   =========     ==========  ===========


NOTES TO THE CONSOLIDATED CASH FLOW STATEMENT (continued)
FOR THE 6 MONTHS ENDED 31ST OCTOBER 2003

ii GROSS CASH FLOWS


                                    6 Months Ended          Year Ended
                               Unaudited                       Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000


Returns on investments and
servicing of finance

Interest received                       44             32          174

Interest paid                         (905)        (1,214)      (2,119)
                                    --------      ---------    ---------
                                      (861)        (1,182)      (1,945)
                                    ========      =========    =========



Capital expenditure and
financial investment

Purchase of fixtures,                 
equipment and motor
vehicles                              (235)           (31)         (37)

Sale of fixed assets                    13              0            0
                                    --------      ---------    ---------
                                      (222)           (31)         (37)
                                    ========      =========    =========

Acquisitions and disposals

Investment in associated              
companies                             (241)            (2)        (402)

Acquisition of minority                  
interest in subsidiary              
company                                  0            (65)         (65)
                                    --------      ---------    ---------
                                      (241)           (67)        (467)
                                    ========      =========    =========

Financing

Issue of ordinary shares               255              0          255

VAT recovered on issue costs            
previously written-off                  34              0            0

Hire purchase received                  39              0            0

Loans received                       5,449          1,393        7,641

Loans repaid                        (4,620)       (12,461)     (22,251)
                                    --------      ---------    ---------
                                     1,157        (11,068)     (14,355)
                                    ========      =========    =========



iii ANALYSIS OF CHANGES IN NET DEBT

                                  Audited                    Unaudited
                            At 30th April                At 31st October
                                     2003   Cash Flows            2003
                                     #000         #000            #000


Cash at bank and in hand            2,441       (1,491)            950


Debt due within 1 year             (4,093)       2,095          (1,998)

Debt due after 1 year             (22,428)      (2,924)        (25,352)

Hire purchase liabilities               0          (39)            (39)
                                 ----------   ----------      ----------
                                  (24,080)      (2,359)        (26,439)
                                 ==========   ==========      ==========


NOTES TO THE FINANCIAL INFORMATION
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003

1.  ACCOUNTING POLICES

The interim results have been prepared using accounting policies consistent with
those set out in the group financial statements for the year ended 30th April
2003.

The interim results were approved by the Board on 27th January 2004.

2.  TURNOVER

                                    6 Months Ended          Year Ended
                                       Unaudited               Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000


Property sales                       5,428         14,215       26,958

Rental income                        1,084          1,558        2,675

Management fees                        301            329          582

Other income from asset                 97            178          140
management                        ----------     ----------   ----------
                                     6,910         16,280       30,355
                                  ==========     ==========   ==========


3. PROPOSED DIVIDEND

                                    6 Months Ended          Year Ended
                                       Unaudited               Audited
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000


Proposed interim dividend on           
ordinary shares                        134            101          101

Proposed final dividend on               
ordinary shares                          0              0          194        
                                  ----------     ----------   ----------
                                       134            101          295
                                  ==========     ==========   ==========


4. EARNINGS PER SHARE

Basic and diluted earnings per share are calculated on the basis of the average
number of ordinary shares in issue for the relevant period. The average for the
6 months to 31st October 2003 was 18,857,500, with the comparative figures being
18,107,500 for the 6 months to 31st October 2002 and 18,232,500 for the year to
30th April 2003. At 31st October 2003 there were 19,107,500 ordinary shares in
issue.


INDEPENDENT REVIEW REPORT TO HALLADALE GROUP PLC
FOR THE SIX MONTHS ENDED 31ST OCTOBER 2003

INTRODUCTION

We have been instructed by the company to review the financial information for
the six months ended 31st October 2003 which comprises the consolidated profit
and loss account, the consolidated balance sheet, the related notes 1 to 4, the
consolidated cash flow statement, the consolidated reconciliation of movements
in shareholders' funds, and the notes to the consolidated cash flow statement
and excludes the unaudited consolidated proforma balance sheet. We have read the
other information contained in the interim report and considered whether it
contains any apparent misstatements or material inconsistencies with the
financial information.

This report is made solely to the company, in accordance with Bulletin 1999/4
issued by the Auditing Practices Board. Our work has been undertaken so that we
might state to the company those matters we are required to state to them in an
independent review report and for no other purpose. To the fullest extent
permitted by law, we do not accept or assume responsibility to anyone other than
the company, for our review work, for this report, or for the conclusions we
have formed.

DIRECTORS' RESPONSIBILITIES

The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the directors. The directors are
also responsible for ensuring that the accounting policies and presentation
applied to the interim figures are consistent with those applied in preparing
the preceding annual accounts except where any changes, and the reasons for
them, are disclosed.

REVIEW WORK PERFORMED

We conducted our review in accordance with the guidance contained in Bulletin
1999/4 issued by the Auditing Practices Board for use in the United Kingdom. A
review consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and based thereon, assessing whether the accounting policies and presentation
have been consistently applied unless otherwise disclosed. A review excludes
audit procedures such as tests of controls and verification of assets,
liabilities and transactions. It is substantially less in scope than an audit
performed in accordance with United Kingdom Auditing Standards and therefore
provides a lower level of assurance than an audit. Accordingly, we do not
express an audit opinion on the financial information.

REVIEW CONCLUSION

On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 31st October 2003.

Deloitte & Touche LLP
Chartered Accountants
Glasgow
27th January 2004


UNAUDITED CONSOLIDATED PROFORMA BALANCE SHEET
FOR THE 6 MONTHS ENDED 31st OCTOBER 2003

                                    6 Months Ended          Year Ended
                              31st October   31st October   30th April
                                      2003           2002         2003
                                      #000           #000         #000


Fixed Assets

Tangible assets                        327            133          118

Investments                          4,084          2,252        3,512
                                   ---------     ----------   ----------

                                     4,411          2,385        3,630
                                   ---------     ----------   ----------

Current Assets

Stocks                              36,341         39,502       35,657

Debtors                              3,154          4,961        3,071

Cash at bank and in hand               950              9        2,441
                                   ---------     ----------   ----------

                                    40,445         44,472       41,169

Creditors

amounts falling due within          
one year                            (4,563)        (2,619)      (7,081)                
                                   ---------     ----------   ----------


Net Current Assets                  35,882         41,853       34,088
                                   ---------     ----------   ----------


Total Assets Less Current           
Liabilities                         40,293         44,238       37,718


Creditors

amounts falling due after          
more than one year                 (25,352)       (30,063)     (22,428)


Provisions for Liabilities               
and Charges                              0            (23)           0 
                                   ---------     ----------   ----------

                                    14,941         14,152       15,290
                                   =========     ==========   ==========

Capital and Reserves

Called up share capital              4,777          4,527        4,652

Capital redemption reserve           1,772          1,772        1,772

Capital reserve                        201            301          226

Share premium account                2,405          2,111        2,241

Revaluation reserve                  4,300          5,028        5,520

Profit and loss account              1,486            413          879
                                   ---------     ----------   ----------

Total Shareholders' Funds           14,941         14,152       15,290
                                   =========     ==========   ==========



The unaudited proforma balance sheet was prepared using the applicable
accounting standards and contains such adjustments as the directors consider
appropriate to increase investments by #1.48m and to increase stocks by #2.82m,
to reflect the impact of open market valuations arising from a review of
properties held for resale and those held in joint ventures undertaken by DTZ
Debenham Tie Leung as at 30th April 2003.

This is the only amendment to net assets.









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IR ILFFSLIIDFIS