RNS Number:1079P
Berkeley Group PLC
28 August 2003

28 AUGUST 2003


                             THE BERKELEY GROUP PLC



              CROSBY EXECUTIVE TEAM ACQUIRE RIGHTS IN CROSBY HOMES

                                       &

                        RESIGNATION OF GEOFF HUTCHINSON

                            AS A MAIN BOARD DIRECTOR




Introduction


Following the completion of the strategic review reported on 26th June 2003 The
Berkeley Group plc ("Berkeley" or the "Group") has today entered into an
agreement whereby the Crosby Executive Team led by Geoff Hutchinson have
subscribed for new shares in The Crosby Group plc (Crosby). Broadly, these
shares are entitled to 50.01% of the economic and voting rights of Crosby after
the generation of #450 million of operating cashflow. Until this time, Berkeley
will remain in control of Crosby and therefore will continue to consolidate
Crosby as a subsidiary. Thereafter, Berkeley will retain 49.99% of the
shareholding.


As Geoff Hutchinson was a Main Board Director of Berkeley, until his resignation
yesterday, and the Executive Team being Directors of The Crosby Group plc, this
is a Related Party Transaction, but due to the transaction's size is exempt
under the Listing Rules from the need for shareholder approval.


The transaction has been approved unanimously by the Main Board, (other than
Geoff Hutchinson who has not participated in the Board's discussion in view of
his interest in the acquisition).


Background and Reason for the Transaction


Following the strategic review the Board set out to simplify the business and
concentrate increasingly on complex mixed-use urban regeneration projects in
London and Southern England.


Consequently, the Crosby Executive Team approached the Board with the suggestion
that an effective way of maximising the value of the assets within Crosby was to
allow them to acquire a shareholding in Crosby. Crosby is presently developing
some 80 sites.


Under the terms of the agreement, Berkeley remains able to develop major
regeneration sites in the Crosby operating area and will do this if suitable
opportunities arise.


Crosby contributed 21% of the Group's turnover in the year ended April 2003 and
is forecast to continue broadly at this level until 2007. After 2007, as the
assets are realised turnover will reduce.


The Board debated keeping within Berkeley the urban regeneration sites currently
in Crosby but decided that the best way to maximise shareholder value was to
incentivise the Executive Team to develop all their existing assets.


Crosby Executive Team


The Crosby Executive Team comprises Geoff Hutchinson (Chairman), Richard Starkey
(Finance Director), Andrew Brady (Regional Managing Director), Andrew Jinks
(Regional Managing Director) and Keith Pepperdine (Executive Director).


Information on the Crosby business


Crosby principally comprises Crosby Homes (North West) Limited, Crosby Homes
Special Projects (NW) Limited, Crosby Homes Limited, Crosby Midlands (Special
Projects) Limited, Crosby Homes (Yorkshire) Limited, Crosby Homes (East
Midlands) Limited, Crosby Homes (Lancashire) Limited, The Berkeley Clarence Dock
Company Limited, The Beaufort Homes Development Group plc, Crosby Homes (Special
Projects) Limited and St David Limited. These companies operate out of five
regional offices located in Birmingham, Manchester, Bristol, Cardiff and Leeds.


Crosby will also continue to benefit from its joint ventures. These are Ician
Developments Limited (with Amec Developments Limited), Crosby Seddon Limited,
Crosby Peel Limited, Crosby ASK Limited and Hungate (York) Regeneration Limited
(with Land Securities and Evans of Leeds).


The Crosby Group controls over five thousand plots across some eighty
development sites. The major sites are Redbank, Manchester (1,014 units),
Clarence Dock, Leeds (605 units and 310,000 sq ft of commercial), Southside in
Birmingham (443 units and 20,000 sq ft of commercial), Navigation Street in
Birmingham (305 units and 11,000 sq ft of commercial), Gosforth in Newcastle
(184 units), John Bright Street in Birmingham (146 units), and Combermere in
Nantwich (100 units). Its largest joint venture site is Hungate in York (700
units).


Berkeley acquired The Crosby Group plc for #10.9 million in April 1991 and
established The Beaufort Homes Development Group plc in July 1994.


Principal Terms and Conditions of the Transaction


The Executive Team are subscribing for B shares in Crosby for a consideration of
#500,000, funded by a loan from Berkeley. These shares carry dividend and voting
rights if Crosby makes agreed milestone payments to Berkeley every six months
and generates overall #450 million of operating cashflow within seven years.
Unless both these requirements are met the B shares will receive no dividends or
voting rights and, consequently, Berkeley will not cede control.


This #450 million will be realised from the capital employed in Crosby which at
30th April 2003 was #253.7 million and comprised an inter-company loan of #215.9
million and shareholders funds of #37.8 million. Until this time, Berkeley will
remain in control of Crosby and, therefore, it will continue to be consolidated.


Upon completion of the principal terms and conditions of the transaction control
will pass to the Executive Team and Crosby will then cease to be consolidated
and Berkeley will instead equity account for its shareholding.


It has also been agreed between the parties that, in addition to the conditions
above, economic or voting control will not pass unless the gross assets of
Crosby at the time control passes are less than #75 million and the net assets
are less than #50 million.


Board Changes


Geoff Hutchinson resigned yesterday as a Main Board Director of The Berkeley
Group. Geoff Hutchinson joined the Group in October 1993 and was appointed to
the Main Board with effect from 1st May 1996. Geoff Hutchinson has entered into
a new service agreement with Crosby and remains its Chairman. He has ceased to
benefit from Berkeley's Long Term Incentive Plan. Under this service agreement,
Geoff Hutchinson and the Executive Team will receive #2.3 million if Crosby is
acquired by a third party within 364 days from today's date. This payment is
contingent on Geoff Hutchinson not joining the acquiring company and therefore
leaving Berkeley and Crosby. If Crosby is not acquired within the 364 day period
these sums do not become payable.


The Berkeley Board would like to thank Geoff Hutchinson for his immense
contribution to The Berkeley Group. His experience will be missed from the Main
Board. The Board are pleased to be working with him on this transaction and wish
him every success in this venture.


Conclusion


Berkeley set out its forward strategy in its announcement on 26th June 2003 and
its 2003 Annual Report, and this transaction is another step in driving that
forward. The Group is focussed increasingly on regenerating major - often
complex - urban sites through mixed use developments. Its special experience in
this field enables Berkeley to participate in creating some of the most
innovative regeneration projects in the country.


Berkeley will continue to simplify the Group, withdrawing from its smaller scale
traditional business (developments of less than twenty units) and focus on
organic growth. At the same time it will generate cash, strengthen its financial
base and take advantage of further opportunities in the market - all benefits
inherent in this transaction.


Commenting on the agreement with the Crosby Executive Team, the Managing
Director of Berkeley, A W Pidgley, said "I am delighted about this transaction -
which significantly advances our transition from a traditional home-building
company and concentrates the Group on mixed-use urban regeneration. This deal is
true to the uniquely entrepreneurial spirit at the heart of Berkeley, which
remains central to our management approach and, I believe, is key to our
continuing success. This transaction gives security of cashflow and incentivises
an experienced management team to deliver. Crosby could generate over #500
million of operating cashflow in less than seven years."


"I am sorry that Geoff Hutchinson is no longer a Main Board Director but I look
forward to working with him closely on this venture. This transaction puts us in
the best position to exceed our expectations."


Geoff Hutchinson said "I am sad to leave the Board of Berkeley. I have enjoyed
working with the Main Board over the last ten years and I now look forward to
this new challenge with my experienced Executive Team. The unique way that this
transaction has been put together shows the vision Berkeley has to manage change
while maximising shareholder value. I am looking forward to working with my
Executive Team to achieve the aspirations of both Crosby and Berkeley in this
exciting new venture."


For Further Information


Please contact: Smithfield Financial - 0207 360 4900

                John Antcliffe


                Rupert Trefgarne






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