Interim Results-Part 1

Berkeley Group Holdings (The) PLC
08 December 2006


                        The Berkeley Group Holdings plc

PRESS RELEASE 

                          INTERIM RESULTS ANNOUNCEMENT


2006 B SHARE OF £2 PER SHARE APPROVED FOR PAYMENT ON 8TH JANUARY 2007 AT A COST
                                OF £242 MILLION

      ACQUIRED REMAINING 50% OF ST JAMES FOR £97.5 MILLION ON 7TH NOVEMBER

       ESTABLISHED ST EDWARD HOMES, A 50:50 JOINT VENTURE WITH PRUDENTIAL

The Berkeley Group Holdings plc ('Berkeley' or the 'Group') - the urban
regenerator and residential property developer - announces its unaudited interim
results for the six months ended 31st October 2006. Highlights of the results
include:

  • Return of Capital 2006 B share of £2 per share approved for payment on
    8th January 2007. Further payments scheduled for January 2009 (£2 per share)
    and January 2011 (£3 per share)

  • Net Cash £322.0 million net cash up from £220.6 million at the year -end
    (30th April 2006) - an increase of £101.4 million

  • Net Asset Value Per Share Up 8.0% from 697 pence at the year-end to 753
    pence

  • Land Holdings 26,633 plots in the Group - up from 23,819 at the year-end

  • Forward Order Book £568.5 million compared to £581.9 million for the
    Group at the year-end

                               October 2006     October 2005
                                  £'million        £'million
                                (unaudited)      (unaudited)
                                 __________       __________
Continuing Operations
Group Revenue                         381.2            503.1       -24.2%
                                 __________       __________
Operating Profit                       70.4             89.2       -21.1%
Net Finance Income / (Costs)            5.0            (5.8)
Joint Ventures (after tax)              6.1              2.6      +134.6%
                                 __________       __________
Profit Before Tax                      81.5             86.0        -5.2%
Tax                                  (21.6)           (24.4)
                                 __________       __________
Profit After Tax                       59.9             61.6        -2.8%
Profit from Discontinued                  
Operations                                -             80.8
                                 __________       __________
Profit for the Financial               
Period                                 59.9            142.4
                                 ==========       ==========

EPS - Basic                           49.8p           118.7p       -58.0%
EPS - Continuing                      49.8p            51.4p        -3.1%
ROCE (excluding profit on             
disposal)                             26.3%            24.0%


Commenting on the results, Managing Director, A. W. Pidgley said:

'I am delighted to report another set of strong results which are a consequence
of Berkeley's continuing and determined drive to ensure that its product and
talent are focused correctly to take advantage of the prevailing market
conditions.

In the first half we have undoubtedly enjoyed a strong sales market. Berkeley
has thrived in an environment where relentless attention to detail and quality
in every aspect of its business, from design, through the development process,
to sales and marketing, is the key to unlocking real value. Our unique operating
model allows us to not only seize the short term opportunities presented by the
market, but also recognises that we operate in a cyclical industry and so gives
us the flexibility to drive the business forward under a long-term strategy.

This strategy aligns the interests of our people, our customers and our
shareholders and I am delighted that the 2006 B share payment of £2 per share
has been approved for payment at the beginning of January 2006. This is the
second payment under the Scheme of Arrangement that was put in place as part of
the Group's strategy in 2004.

I am also delighted that we received shareholder approval to acquire the
remaining 50% in St James from RWE Thames Water plc on 7th November. Established
10 years ago, St James represented a visionary approach to land development and
whilst I am sad that the relationship with Thames has ended, it is pleasing that
Prudential has chosen Berkeley as its residential development partner to create
St Edward Homes, along similar lines. Prudential's financial strength and
commercial development expertise, working in combination with Berkeley's passion
and talent for creating sustainable new communities, is an inspiring prospect.

This has all contributed to Berkeley strengthening its unrivalled land bank
which has been built up over the last 10 years to 26,633 plots, an increase of
over 2,500 plots in the period, with the capacity to strengthen further in the
future.

Such a strong performance is only possible through the exceptional contribution
of Berkeley's people who continue to produce outstanding results in an
increasingly complex business and I would like to take this opportunity to
acknowledge this and thank each and every one of them.'

Roger Lewis, Chairman said:

'The housing market has been favourable in the period with Berkeley experiencing
sales price increases across our sites, which are focused in London and the
South-East. This is as a result of London's standing as a World City and
financial centre, along with the continuation of limited supply, strong
employment, forecast economic growth and historically low interest rates.

It has been a busy period for Berkeley with planning applications submitted on
existing sites, and a number of new acquisitions flowing from partnerships with
local authorities and our joint ventures with Thames Water and Prudential.

Berkeley has secured a number of new or additional consents in the period,
notably at The Warren in Woolwich, St George Wharf in Vauxhall, Queen Mary's
Hospital in Roehampton and Fleet in Hampshire.

Planning consents are invariably taking over a year to achieve and, in many
cases, over two years. This is despite the good intentions of central
Government, the Greater London Authority and those local authorities with the
vision to see the community benefits of regeneration. There are two principal
reasons for this: the steadily increasing number of parties with whom
consultation is required or necessary; and the need to adapt to evolving
regulations, be they related to planning, subsidised housing or energy
efficiency. We accept this situation, but it does slow the planning process and,
in a number of cases, consents are secured only at appeal.'

Results

Berkeley is delighted to announce a pre-tax profit of £81.5 million for the six
months ended 31st October 2006 from its continuing operations. This is £4.5
million less than the £86.0 million reported for the same period last year, a
reduction of 5.2%. For the full year ended 30th April 2006, Berkeley reported
52% of its pre-tax profits in the first half of the year. In 2006/07 we expect
this profile to reverse as the second half of the year will include the results
of 100% of St James, following the acquisition of the 50% not already owned by
Berkeley on 7th November 2006.

Profit from discontinued operations of £80.8 million in the first half of 2005/
06 related to Crosby which was sold to Lend Lease on 8th July 2005.

Basic earnings per share from continuing operations totals 49.8 pence, a
decrease of 3.1% on the 51.4 pence reported for the same period last year. If
discontinued operations are included, the basic earnings per share figure of
49.8 pence compares to 118.7 pence last time, a fall of 58.0%.

Since the year-end, total equity has increased by £70.0 million to £907.2million
(April 2006 - £837.2 million) and net assets per share by 8.0% from 697 pence to
753 pence.

Return on Capital Employed for the period was 26.3% compared to 24.0% last time,
excluding the profit on disposal of Crosby.

At 31st October 2006, Berkeley had net cash balances of £322.0 million (April
2005 - £220.6 million) after generating £101.4 million of cash flow in the six
months.

Berkeley held forward sales of £568.5 million at 31st October 2006. This is a
similar level to the year-end position of £581.9 million and is at a level
commensurate with the ongoing business profile and in line with the Group's
strategy in which forward sales remain a key component. Selling homes at an
early stage in the development cycle, often at the off-plan stage, secures
customers' commitment and ensures the quality and certainty of future revenue.

Scheme of Arrangement and 2006 B Share Payment

The Scheme of Arrangement and The Berkeley Group Holdings plc reduction of
capital were approved by shareholders on 17th September 2004 and by the Court at
the end of October 2004. The Scheme of Arrangement created a Berkeley Unit
comprising one ordinary share and four redeemable B shares, facilitating the
proposed payment to shareholders of £12 per share by January 2011. The 2004 B
shares were redeemed on 3rd December 2004 for £5 a share at a cost to Berkeley
of £604.1 million.

The Board of Berkeley is delighted to confirm that it has approved the
redemption of the 2006 B shares to take place on 8th January 2007 for £2 a
share, five business days after the record date of 29th December 2006. The cost
to Berkeley of this redemption will be £242 million, bringing the total value of
B shares redeemed (including the 2004 B shares) to £846 million. Since 1st May
2004, the time of the strategic review that led to the Scheme of Arrangement,
Berkeley has generated some £819 million of cash before payments to
shareholders, so demonstrating the underlying strength of the Group and its
ability to generate cash and meet its strategic objectives.

The redemptions of the two remaining tranches of B shares are scheduled for
January 2009 and January 2011 for amounts of £2 and £3 a share respectively,
subject to the necessary Board approvals and the terms set out in the Scheme of
Arrangement shareholder circular.

Housing Market

The housing market in Berkeley's core region of London and the South-East has
been favourable over the six months ended 31st October 2006, proving resilient
to the two recent quarter point increases in interest rates. This is a result of
London's continued standing as a World City and financial centre, along with
limited supply, strong employment, forecast economic growth and historically low
interest rates.

We are however conscious of the need for caution in looking ahead. There are
uncertainties over UK interest rates and inflation, concerns over the
affordability of housing and there remain threats to the stability of the
world's economic and political climate.

The Group's strategy of focusing on maximising value as opposed to concentrating
on volume and profit growth allows us to match supply and demand appropriately.
In this environment, Berkeley has secured sales reservations in the first six
months of the year with a value similar to the corresponding period last year
and this level is consistent with our business plan for achieving the Scheme of
Arrangement.

This strategy allows Berkeley to focus on getting the product right in terms of
design, quality, location and price. In a competitive market, this creates a key
commercial advantage and enables Berkeley to fully optimise returns.

Investors remain an important segment of Berkeley's purchaser profile and have
accounted for approximately 40% of reservations in the period. This is lower
than the 50% reported last time but remains very much in our range which
fluctuates due to market conditions and the mix of product and phasing of
launches on our sites. Investors are attracted by the fundamentals underpinning
the housing market in London and the South-East and the lack of alternative
investment opportunities. Under the Group's definition, investors range from a
large institution to a customer purchasing a second home.

The land market has remained very competitive, especially for sites with
planning permission or in prime locations. In accordance with our strategy we
have bought sites on a very selective basis and, in the period, agreed to
acquire 11 sites.

Trading Analysis

Revenue for the Group was £381.2 million (2005 - £503.1 million). This comprises
£375.3 million (2005 - £495.8 million) of residential revenue, of which £3.2
million was from land sales (2005 - £0.5 million), along with £5.9 million (2005
- £7.2 million) of commercial revenue.

During the period, the Group sold 1,296 units at an average selling price of
£284,000. This compares with 1,656 units at an average selling price of £292,000
in the same period last year.

At £5.9 million (2005 - £7.2 million), the Group's revenue from commercial
activities represents the disposal of commercial units on five mixed-use sites.

Excluding joint ventures and land sales, the house-building operating margin for
the Group was 18.2% compared to 17.5% for the full year ended 30th April 2006.
This remains within the 17.5% to 19.5% range (depending on mix) reported by the
Group over recent reporting periods and which we anticipate continuing, on the
basis that current market and planning conditions prevail.

Sales price increases have been ahead of build cost inflation which has resulted
in the increased operating margins in the period. Looking forward, our
expectation for new planning consents is that operating margins will continue to
come under pressure even allowing for the increases in sales prices that we have
seen recently. This is a result of the ever increasing cost of the cross-subsidy
required by affordable housing, planning gain obligations, increased regulation
and the costs associated with meeting today's high standards of environmental
and sustainable development practices.

Included within net operating expenses is a £1.5 million one-off charge in
respect of the Group's defined benefit pension scheme. During the period,
members were offered an enhanced transfer value to leave the scheme. In excess
of 70% of members accepted this offer with a resulting reduction in the pension
deficit of £9.1 million. The cash cost to the Group, including expenses, was
£10.6 million, of which £9.0 million remains to be paid in the second half of
the year. At the 31st October 2006, the retirement benefit obligation was £1.8
million, reduced from £10.4 million at the year-end.

Net finance income of £5.0 million reflects the positive cash position of the
Group and cash generative nature of operating activities in the period which has
seen net cash increase from £220.6 million to £322.0 million. In the same period
last year the Group had net finance costs of £5.8 million, reflecting an opening
net debt position of £255.1 million at 1st May 2005 and closing net cash
position of £71.3 million at the end of the period which included the disposal
of Crosby.

The Group's share of post-tax results from joint ventures was £6.1 million
compared to £2.6 million last year. This arises from the sale of 441 residential
units (2005 - 254 units) at an average selling price of £329,000 (2005 -
£520,000) by St James, our joint venture with Thames Water. The result in 2005
included 5 units at Wycombe Square in London with an average sales price of £5.5
million. This scheme was fully sold by 30th April 2006.

Joint venture operating margins are 14.2% which is similar to the 14.1% achieved
for the year ended 30th April 2006 and reflect the profit share arrangements
with Thames Water.

Joint Ventures

At 31st October 2006, Berkeley's share of its joint ventures' net assets was
£61.5 million, a reduction of £7.5 million from the year-end figure of £69.0
million. £18.1 million of this was represented by net cash (April 2006 - net
debt of £5.3 million), principally due to the level of cash generation in St
James during the period.

On 7th November 2006, after the end of the first half of the year, Berkeley
acquired from RWE Thames Water plc the 50% of St James not already owned for
£97.5 million. Following completion of the acquisition, St James paid Thames a
further £93.5 million to accelerate the settlement of outstanding land creditors
and to acquire six previously identified and negotiated sites. Including the six
new sites, which contain approximately 700 plots, St James' land bank at
acquisition totalled some 5,000 plots on 23 sites.

Completing some 5,000 unit sales since it was established, St James has proved a
highly successful joint venture for its shareholders and Berkeley is delighted
to have been able to take this opportunity to acquire 100% control of a business
to which it has always been fully committed and in which it has historically
invested significant management time and expertise. As a joint venture partner,
Berkeley had an intimate knowledge of St James' business and, in particular, its
land bank which includes an increasing proportion of third party land. St James
is now an established business in its own right with its own distinct management
team, a number of whom transferred from Berkeley, guided by the same philosophy
and operating procedures as Berkeley's wholly owned divisions.

In what was widely regarded as a visionary approach to land development, St
James was established as a 50:50 joint venture company by Thames and Berkeley in
May 1996 to develop residential Thames sites and sites acquired on the open
market. While sad that this relationship with Thames has ended, Berkeley was
delighted to announce, on 23rd October, that it had finalised the arrangements
for the creation of St Edward Homes, its new joint venture with Prudential. St
Edward has now agreed to purchase its first three sites - Green Park in Reading
and an office building in Kensington from Prudential, and a site in Stanmore
from Berkeley - comprising approximately 2,500 plots in total.

In addition, it is pleasing to report that Saad Berkeley Limited has secured
planning on a site for 300 units at Fleet in Hampshire and we continue to work
with the Saad Group to identify further development and investment
opportunities.

Land Holdings

At 31st October 2006, the Group (including joint ventures) controlled some
26,633 plots with an estimated gross margin of £1,878 million. This compares
with 23,819 plots and an estimated gross margin of £1,672 million at 30th April
2006. Of these holdings, 19,837 plots (April 2006 - 19,860) are owned and
included on the balance sheet. In addition, 6,713 plots (April 2006 - 3,264) are
contracted and a further 83 plots (April 2006 - 695) have terms agreed and
solicitors instructed. Over 95% of our holdings are on brownfield or recycled
land.

Berkeley has sourced land from four main areas in the period. These are: open
market opportunities (including within St James), St Edward, local authorities
and from maximising our existing land holdings on many of which new applications
have been submitted.

In the first half of the year, Berkeley has agreed 11 new sites, including the
two Prudential sites in St Edward, and Woodberry Down in the London Borough of
Hackney where we are working in partnership with the local authority on a site
of over 1,200 units.

The Group's land holdings include approximately 1.75 million ft2 of commercial
space within our mixed-use schemes. The Group is not undertaking any standalone
commercial schemes.

Sustainability

Berkeley has long recognised the importance of embedding policies for
sustainable development within its operating culture, believing that what we
create inherently benefits the wider community. Whilst these policies inevitably
carry with them associated costs that may place operating margins under
pressure, any such cost risk must be balanced by the importance of demonstrating
sustainable development practices when pursuing planning consents that would
otherwise be withheld and without which our ability to add value to our sites
and to continue matching the expectations of our customers would be restricted.

A sensitivity to energy efficiency and, in particular a commitment to the
reduction of CO2 emissions, is a key feature of the lifestyles to which our
customers aspire and Berkeley is proud to be operating in the vanguard of the
industry in this respect. It is therefore particularly gratifying that Berkeley
Homes was named Sustainable Housebuilder of the Year and its development at
Ropetackle in Shoreham-by-Sea (a site developed in partnership with SEEDA)
awarded Sustainable Development of the Year at November's Building Magazine
Sustainability Awards 2006.

The Board

At the Company's Annual General Meeting on 1st September 2006, the Board was
delighted to announce the appointment of  Alan Coppin as a Non-Executive
Director. Currently a non-executive director of Capital and Regional plc and 
non-executive Chairman of Redstone plc, Alan previously held a non-executive
directorship at Carillion plc and served  on the board of Wembley plc as CEO in
addition to being the Chairman of The Prince of Wales's Foundation for the Built
Environment. He therefore brings with him a wealth of relevant experience and
will be a valuable addition to the Board.

The appointment will also ensure that the Main Board of Berkeley (which now
comprises a Chairman, four executive  directors and five non-executive
directors) retains the right proportion of independent directors to meet the
Combined  Code's recommendations regarding the balance of the Board. This is
important for the future given that Tony Palmer, the  current Senior Independent
Director, intends to retire from the Board next year.

Prospects

With the second B share payment approved and scheduled for the beginning of
January 2007, it is an appropriate time to reflect on the success of Berkeley's
strategy since announcing the strategic review and Scheme of Arrangement in 2004
as we look to the future.

At the time, Berkeley identified its own place within the market from where it
could operate with strength as an added value developer at a size that maximised
the impact of its uniquely experienced and talented management team. The aim was
to fully optimise the value in Berkeley's land bank, delivering immediate value
to shareholders through the B share payments, whilst not detracting from the
value of the ongoing business. It has allowed us to focus on attention to
detail, taking time to create innovative development solutions and develop the
sustainable communities demanded by our customers and stakeholders and, indeed,
our own high standards.

The strategy is proving a success at every level as demonstrated by the Berkeley
Group being named Regeneration Housebuilder of the Year at the Regeneration
Awards hosted by Building Magazine, Property Week and Building Design in
December.

By focusing on London and the South-East, Berkeley operates in a market about
which experience and knowledge is embedded throughout its management. In spite
of the two recent rises in interest rates, the economic fundamentals of the
Capital region remain strong, with the effect of London's standing as a World
City continuing to have a major impact on its vitality and economic success.

Nevertheless, our strategy is a measured one. It has enabled Berkeley to
generate cash to meet the B share payments to shareholders but this focus on
cash generation also stands the Group in good stead should the market change
direction. This is always a possibility in a cyclical industry where
macro-economic and global events can have a significant impact. This balanced
and prudent approach has served Berkeley well in the past and it is one we
intend to continue.

Berkeley is looking forward to the future with confidence underpinned by the
strength of our current developments, which places us at the forefront of the
renaissance of our cities, and our unrivalled land bank which provides
considerable opportunity to add further value for our shareholders and other
stakeholders.

                                      END

For further information please contact:

The Berkeley Group Holdings plc                Cardew Group
A W Pidgley                                    Tim Robertson
R C Perrins                                    Sofia Rehman
T: 01932 868555                                T: 0207 930 0777



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