Interim Results:Part I of II

Berkeley Group Holdings (The) PLC
09 December 2004





                        The Berkeley Group Holdings plc


PRESS RELEASE                                                 9th DECEMBER 2004

                         INTERIM RESULTS ANNOUNCEMENT

                    BERKELEY GENERATES £104 MILLION OF CASH

               REPAYMENT OF £5 PER UNIT MADE ON 3RD DECEMBER 2004

                         FORWARD SALES AT £878 MILLION

The Berkeley Group Holdings plc ('Berkeley' or the 'Group'), the urban
regenerator and residential property developer announces its interim results for
the six months ended 31st October 2004. Highlights of these results include:

   • Pre-tax Profits               5.0% reduction to £110.5 million 
                                   (2003 restated: £116.3 million)

   • Operating Margins             Group housebuilding operating margins, 
                                   excluding land sales and merger expenses, up 
                                   to 20.2% from 17.6% at the full year

   • Earnings Per Share            Increased by 1.4% to 65.4 pence 
                                   (2003 restated: 64.5 pence)

   • Net Asset Value Per Share     Up 6.5% to 1,005 pence from the year-end
                                   (April 2004 restated: 944 pence)

   • Net Cash                      Up £104.0 million to £249.2 million in the 
                                   period

   • ROCE                          Increased to 22.5% from 20.7% (October 2003 
                                   restated)

   • Land Holdings                 Remain strong at 26,627 plots, compared to 
                                   year-end level of 26,654

   • Forward Order Book            Remains solid at £877.7 million

   • Share Buy-Back                2.1 million (2%) shares bought back for 
                                   £20.7 million


   • Strategic Review              First tranche (£5) of four B share payments 
                                   paid on 3rd December 2004 with next tranche 
                                   (£2) expected in December 2006

                        October 2004          October 2003       % Difference
                                                  Restated

Turnover                     £518.7m              £575.8m              -10.0%
Operating Profit             £100.8m              £109.6m               -8.0%
Joint Ventures                £10.6m               £10.6m                   -
Merger Expenses              (£1.5m)                   -                    -
Interest                       £0.6m              (£3.9m)                   -
Profit before Tax            £110.5m              £116.3m                -5.0%
EPS                            65.4p                64.5p                +1.4%
DPS                               -                  5.8p                   -
NAVPS                         1,005p                 888p               +13.2%

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

'In our full year statement I set out Berkeley's proposal to return £12.00 a
share in cash to shareholders over a six year period. I also spoke of our
strategy to concentrate on highly-complex inner city, large-scale urban
regeneration schemes following our move away from traditional housebuilding and
discussed the resulting natural size for the business and the state of the land
and housing market. I am delighted this plan received such overwhelming support
from our shareholders and am grateful for the backing given to the executive
directors to deliver this strategy for Berkeley.

I am pleased to announce today results which accord with our expectations,
having also recently completed on time and as promised the first stage of the
cash return to shareholders (£5 per Unit), on 3rd December 2004.

As I explained in our full year statement, Berkeley's focus is on protecting the
value of our assets and on generating cash flow - as opposed to concentrating
primarily on the profit and loss account. Today's results show the success of
this approach in the current more normal and resilient market conditions, for
which we began planning some time ago. Having made the first return we are now
focused on working towards the next £2 return in December 2006.

In the last six months, Berkeley has achieved a pre-tax profit of £110.5
million, increased its operating margin to 20.2% and has generated £104.0
million of cash flow to produce cash balances of £249.2 million at 31st October.
At the same time we maintain a strong forward sales position at £877.7 million,
have improved the Group's operating efficiency and have maintained our
unrivalled land holdings.

In becoming one of Britain's leading urban regenerators and residential property
developers, Berkeley promotes a challenging and entrepreneurial approach that
has kept it at the forefront of its sector and in tune with the market. Berkeley
is placed in a uniquely strong position to lead the continuing revival of
Britain's cities and the retrieval for housing of derelict land in urban areas.

I feel very honoured that the passion we have for Berkeley has been given
independent validation by the sweep of industry awards bestowed upon us in
recent weeks. We have been recently named 'Best Housebuilder' and 'Best Volume
Housebuilder' at the Daily Telegraph What House? Magazine Awards; 'Urban
Regeneration Housebuilder of the Year' at the Building Magazine and Property
Week Regeneration Awards; and 'Private Housebuilder of the Year' and 'Best Land,
Planning and Regeneration Strategy' at the Building Homes Quality Awards. These
are just some of the many accolades the Group, its developments and its people
have received, and reflect the dynamic approach to housebuilding that we have
pioneered. The achievement of these awards is only possible through the
exceptional performance of our people. I would like to take this opportunity to
acknowledge the huge contribution they make to our business which is at the
heart of our success.'

Roger Lewis, Chairman, said:

'The housing market has moderated over the last six months against a back-drop
of uncertainty about interest rates after five recent rises and media comment
which has correctly explained that the boom of recent years was not sustainable.
The fundamentals, however, remain good with interest rates still relatively low,
employment strong and supply at historically low levels. The demand for housing
will continue if the macro-economic climate remains favourable. We welcome these
more normal market conditions which play well to our strengths in terms of
location, product and marketing flair and provide us with the opportunity to
demonstrate the strength of our land bank and the skills we promote to first
create and then sell an innovative product that is right for its market. In each
location, Berkeley produces a sales strategy to match supply with demand.

Despite various attempts to free up the planning regime, it does unfortunately
remain slow and bureaucratic, but we believe the current process, if operated
correctly, does work and we take great care to include local communities and
other stakeholders in formulating our regeneration proposals. I am therefore
delighted to report that we now have enhanced consents at Grosvenor Waterside in
London and an approval for over 1,000 units at Holborough Valley in Kent. We
continue to submit applications on the majority of our sites and I look forward
to updating you further at the full year.

Results

Berkeley is delighted to announce a pre-tax profit of £110.5 million for the six
months ended 31st October 2004. While this is 5.0% less than the restated figure
of £116.3 million for the same period last year, our earnings per share rose
1.4% from 64.5 pence to 65.4 pence.

Five factors have contributed to this result: reduced operating profit (-8.0%),
merger expenses (-1.2%), reduced interest charge (+4.3%), reduced tax charge
(+0.4%) and share buy-backs and other movements (+5.9%).

Berkeley is expecting a broadly similar trading profile between the first and
second halves of the year. Results at the pre-tax level in the second half will
be reduced by higher interest charges resulting from the £604.1 million payment
to shareholders made on 3rd December and costs associated with the Scheme of
Arrangement, which include the Long Term Incentive Plan ('LTIP') charge for the
share options granted to management in October. The accounting charge for the
LTIP is based on a number of factors, including the £11.86 share price at the
date of the award, and will be approximately £7 million per year until vesting
in January 2011.

Shareholders' funds increased by £60.8 million to £1,202.9 million (30th April
2004 - £1,142.1 million), an increase of 5.3%. The increase in shareholders'
funds is after taking account of share buy-backs of £20.7 million. Net assets
per share stand at 1,005 pence, an increase of 6.5% since the year-end (944
pence), and an increase of 13.2% since the last half-year (888 pence).

Return on Capital Employed was 22.5%, compared to 20.7% last half year. This
increase is due to Berkeley's retirement from the Gunwharf Quays Limited
Partnership in December 2003 and greater operational efficiencies.

At 31st October 2004 Berkeley had net cash balances of £249.2 million (April
2004 - £145.2 million) after generating £104.0 million of cash flow in the six
months.

Scheme of Arrangement

The Scheme of Arrangement and The Berkeley Group Holdings plc reduction of
capital was 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. The 2004 B shares
were redeemed on 3rd December 2004 for £5 a share at a cost to Berkeley of
£604.1 million. The redemption of the three remaining B shares is expected in
December 2006, December 2008 and December 2010 for £2, £2 and £3 a share
respectively.

As part of the Scheme of Arrangement, the Group agreed new banking facilities
for £825 million. These comprise a £500 million term loan for seven years, a
£175 million revolving facility for three years and a £150 million 364 day
revolving facility with a 2 year term-out option. At the time of the December
payment, the Group had drawn £600 million of its new facilities to make the 2004
B share redemption and held over £200 million of cash balances. This can be used
for working capital, new land acquisitions or the 2006 B share payment and
supports the confidence the Group has in delivering its strategy.

The UK Housing Market

The housing market in London and the South-East continues to provide a stable
environment in which to operate with a continuing demand for houses and flats of
the right quality in the right location at the right price. That said the market
has moderated in the last six months. Reservation levels in Berkeley Homes and
St George in the first six months are 15% down compared to the same period last
year although the market is showing signs of resilience with this trend
reversing in November and reservations are now at similar levels for the seven
month period when compared to the same period last year. The overall Group
reservations (including joint ventures) for the six months are down by 28%. This
is largely due to Crosby which operates in cities in the north of England and
Midlands. The Crosby management team subscribed for 50.01% of the shares in the
business last year, which will not see control pass to them until £450 million
of operating cash flow has been generated. As a consequence, Crosby aggressively
sold forward in 2003/04 and has already sold more than 50% of the units required
to achieve their target. Reservations for the Group as a whole are above the
levels we predicted and which we require to achieve the return of capital to
shareholders over the six year period.

We believe that perceptions of the housing market have been affected by five
sequential rises in interest rates and the widely held belief that the boom of
the last few years was no longer sustainable. Nevertheless, confidence in the UK
housing market remains firm, despite opinions expressed by certain market
commentators, with a growing appreciation of the benefits of a more normal
market and the forecast economic growth in the UK. The fundamentals for housing
are still good with historically low interest rates, strong employment and
constraints in supply due to planning delays and the overall complexity of
delivering urban regeneration schemes.

Investors continue to account for over 50% of our reservations - a reassuring
sign of the continuing strength of the underlying investor market. Under the
Group's definition, investors can range from large institutions to customers
purchasing a second home.

Sales price increases achieved have been up to 5% above our business plan
forecast and are covering build cost increases which we continue to experience.
Operating margins are under pressure due to affordable housing requirements and
Section 106 planning gain payments. We currently estimate that these costs will
reduce the operating margin going forward by 0.3% to 0.4%.

In the land market, Berkeley has continued to find prices extremely competitive
and has been very selective. As a consequence, the Group has agreed only ten new
sites, totalling 1,129 units in the six month period.

For the Group to achieve its full year targets for 2004/05, 57% of the sales
required are of units with selling prices under £300,000 and 85% under £500,000.
This puts us in a strong position to achieve our full year forecast in these
market conditions.

Trading Analysis

Group turnover was £518.7 million (2003 - £575.8 million). This comprises £474.2
million (2003 - £555.8 million) of residential turnover and £44.5 million (2003
- £19.9 million) of commercial turnover.

During the period Berkeley sold 1,801 units at an average selling price of
£262,000. This compares to 2,015 units at an average selling price of £271,000
in the corresponding period in 2003. At the same time, the Group realised
turnover of £3.8 million from land sales (2003 - £9.4 million). The Group's
policy has always been to take advantage of suitable land sale opportunities,
though its performance does not depend on realising such opportunities. Group
commercial turnover increased by £24.6 million to £44.5 million, with Berkeley
taking commercial sales from ten sites, including the sale of 62,900 sq ft of
office space at St George Wharf in Vauxhall.

The Group's share of joint venture turnover totalled £68.6 million (2003 - £59.5
million). This comprises £67.5 million (2003 - £56.9 million) from residential
projects and £1.1 million (2003 - £2.6 million) from commercial schemes. The
number of units sold was 486 at an average price of £301,000, compared to 493
units at an average selling price of £231,000 in the corresponding period last
year.

Excluding joint ventures and land sales, the housebuilding operating margin
stands at 20.2% compared to 17.6% in the last full year. This is above both the
range achieved for recent reporting periods and our expectations going forward.
Over recent reporting periods the Group has achieved operating margins in a
range of 17.5% to 19.5% (depending on mix). We expect to be broadly in this
range for the full year if current market conditions prevail. Joint venture
operating margins are 15.2% compared to 17.8% last year.

Joint Ventures

Berkeley currently has £70.8 million of capital employed in joint ventures, an
increase of £2.9 million on last year's figure of £67.9 million. Our share of
joint venture bank borrowings has fallen by £25.7 million to £52.9 million.

Berkeley's largest joint venture company is St James, which is jointly owned
with Thames Water. St James is currently developing 2,597 homes within the
business, with a similar number being worked up with Thames Water on potential
future sites.

Forward Sales

Berkeley's strategy continues to be to sell houses at an early stage in the
development cycle as this secures customers' commitment and therefore the
quality of future revenue. It is encouraging to note that, at 31st October 2004,
the Group held forward sales of £877.7 million. This is a drop of £67.6 million
from 30th April 2004, although at a similar level to this time last year (2003:
£875.4 million). Of this total, £96.6 million (April 2004 - £156.4 million) was
included in the results for the six months to October 2004. The balance of
£781.1 million (April 2004 - £788.9 million) will benefit the second six months
of the current financial year as well as future years.

Land Holdings

At 31st October 2004 the Group controlled some 26,627 plots compared to 26,654
plots at 30th April 2004. Of these holdings, 22,513 (April 2004 - 21,449 plots)
are owned and included on the balance sheet. In addition, 3,896 (April 2004 -
4,315) are contracted and a further 218 (April 2004 - 890) have terms agreed and
solicitors instructed. At the 31st October 2004 the estimated gross margin is
£1,857 million compared to £1,926 million at 30th April 2004, a reduction of £69
million.

Berkeley is concentrating on maximising the returns from our land holdings and
we have submitted planning applications on the majority of our regeneration
sites. Significant new consents achieved include: Holborough Valley in Kent for
1,000 units; Paragon Works in Brentford for 221 Key Worker units, 839 student
units, 103,000 sq ft of academic teaching space and 2,700 sq ft of retail space;
and Sandleford Hospital in Newbury for 116 units. In addition we achieved
further consents at Grosvenor Waterside, Westminster and New River Village,
Hornsey, both St James sites in London.

Prospects

Berkeley is well placed for the future. We target ourselves as being an added
value urban regenerator and property developer rather than a volume housebuilder
- the model we believe to be best suited to the particular challenges of a
cyclical business. Our concentration on mixed-use, complex, inner city
developments has allowed us to build up an unrivalled land bank from which we
will continue to operate over the medium to long-term. Our strategy is to
maximise these holdings while returning cash to our shareholders and selectively
acquiring further opportunities.

Our primary goal is to maximise our returns to shareholders as opposed to mainly
concentrating on the profit and loss account and this alignment allows the
business to continue maximising short-term opportunities under an unambiguous
long-term operating model. We look forward to the future with a great deal of
confidence - supported by a business model that is cash generative, efficient in
terms of scale and which allows the skills of our people to converge on adding
value throughout the development process. We remain on target to achieve the
2006 B share payment and the £12 return by January 2011, and to create a
sustainable and meaningful ongoing business.'

For further information:

The Berkeley Group                           Smithfield

Roger Lewis, Chairman                        John Antcliffe
01932 868555                                 Rupert Trefgarne
                                             020 7360 4900




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