Interim Results

Savills PLC 07 September 2005 WEDNESDAY 7 SEPTEMBER 2005 Strong performance in the first half Savills plc, the international property adviser, today announces interim results prepared under IFRS for the six months ended 30 June 2005. â€¢ Group revenue for the six months was up 12.7% at Â£158.2m (2004 - Â£140.3m). â€¢ Group profit before tax increased to Â£19.9m (2004 - Â£19.1m). â€¢ Adjusted Group profit before tax* increased by 15.0% to Â£19.9m (2004 - Â£17.3m). â€¢ Basic earnings per share increased to 23.9p (2004 - 23.5p). â€¢ Adjusted basic earnings per share* increased by 12.7% to 23.9p (2004 - 21.2p). â€¢ Interim dividend increased to 8.0p (2004 - 6.0p). * After adjusting for the one-off impact of the IFRS credit relating to share based payments (see Note 12(i) and (j)). Peter Smith, Chairman of Savills plc, comments: 'I am delighted to report a strong set of half year results with particularly good performance in the commercial markets both in the UK and overseas. The UK prime residential markets had a slower start to the year but the market improved in the second quarter especially in London. Asia had a very strong first half. The growing spread of Savills' business both on a geographical and product basis gives us confidence that we are well placed to achieve a good result for the full year.' *** Chairman's Statement and Interim Results follow *** Savills plc. Registered in England No. 2122174. Registered Office 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ. For further information, contact: Savills 020 7499 8644 Aubrey Adams, Group Chief Executive Citigate Dewe Rogerson 020 7638 9571 Simon Rigby/Sarah Gestetner/George Cazenove There will be an analyst presentation at 9.30a.m. at Savills, 25 Finsbury Circus, London EC2M 7EE CHAIRMAN'S STATEMENT RESULTS AND DIVIDEND We reported in our Trading Update, released on 29 June 2005, that overall Savills had performed in line with expectation and ahead of the same period last year. Strong investment markets in the UK, Europe and Asia would ensure that Commercial activity levels remain high in 2005. I am very pleased to announce that turnover increased by 12.7% to Â£158.2m (2004 - Â£140.3m). Profit before tax increased to Â£19.9m (2004 - Â£19.1m) representing an increase of 15% compared to 2004 adjusted profit of Â£17.3m, adjusted for the one-off impact in 2004 of the IFRS credit relating to share based payments. Basic earnings per share for the six months to 30 June 2005 increased to 23.9p (2004 - 23.5p). Adjusted basic earnings per share increased by 12.7% to 23.9p (2004 - 21.2p). This increase was due to increased profit during the period. As previously announced on 25 April 2005, in accordance with the terms of an Option Deed (the Deed), Trammell Crow Company (TCC) subscribed for an aggregate of 5,243,229 Ordinary Shares at an exercise price of 701.28 pence per share which resulted in aggregate purchase consideration of Â£36.77m being paid to the Company. This took TCC's holding in total to 19.60%; under the terms of the Deed TCC were permitted to acquire in total up to 20% in the Company. No option to TCC remains outstanding. The additional Â£36.77m in subscription monies further strengthened the already strong balance sheet which has cash (net of debt) of Â£74.9m (2004 - Â£29.4m). The Directors have decided to increase the interim dividend to 8.0p (2004 - 6.0p) to be paid on 1 November 2005; this increase reflects our confidence in the business and an element of re-balancing of the interim with the final dividend. TRADING REVIEW Transactional Advice During the half year, turnover for the Transactional business was Â£68.2m (2004 - Â£64.7m) and operating profit was Â£10.7m (2004 - Â£10.3m). Transactional income in the UK commercial markets, Europe and Asia was ahead of the same period last year, though there was a down-turn in the UK regional residential markets. Leasing markets in London and the South East have started to recover with demand increasing as a result of a more optimistic outlook from corporate tenants. Regional markets remain resilient and there has been increasing demand for accommodation outside London, particularly in the Thames Valley. The retail economy softened generally over the first six months forcing many retailers to monitor very closely their ongoing property cost plans; we have, however, experienced a good level of demand for well located out of town sites with flexible planning consents. Demand in the investment market remains strong with continuing interest from institutional investors as well as overseas buyers, although available stock remains limited. The retail warehouse investment market, where Savills is a market leader, remains buoyant with investors particularly attracted by quality of income and growth prospects. The European investment market is active and our European Investment teams had a very successful start to the year, with several major transactions completed in the first half and a strong second half anticipated. The investment markets in Asia for commercial and residential stock have seen significant increases in activity over 2004 levels, especially in Hong Kong and mainland China. Savills' dominant position in the Hong Kong Investment Advisory business has enabled it to transact over HK$5.6bn worth of commercial real estate in the first six months of 2005. Prime residential markets were undoubtedly slower at the beginning of the year, and buyers showed some hesitancy. However, after a slow start, the market strengthened in the late spring and early summer, with London being particularly strong. In marked contrast to the mainstream markets, the number of completed transactions on a like for like basis was very similar to last year. The new homes markets became gradually more difficult throughout the first half of the year and it remains to be seen whether the 0.25 percent interest rate cut improves activity. Discounted bulk sales are still available to specialist purchasers, but the individual investor is now slower at making buying commitments with current low rates of return. Consultancy During the half year turnover for the Consultancy businesses was Â£30.1m (2004 - Â£24.3m) and operating profit was Â£4.9m (2004 - Â£3.5m). Our professional businesses have been extremely busy with our expertise in valuations, affordable housing and social housing increasingly in demand especially on larger scale projects. Our planning, building and housing consultancy divisions have been strengthened and we are now able to provide a strong presence and service both in London and the regions. The demand for valuation services to satisfy the rise in IPOs and commercial property purchases in mainland China has pushed revenues ahead of last year's equivalent. Australia has also seen considerable uplift in the need for property valuation services partly on the back of international accounting reporting requirements. Property and Facilities Management During the half year, turnover for the combined Property and Facilities Management businesses was Â£47.1m (2004 - Â£40.0m) and operating profit was Â£3.4m (2004 - Â£2.0m). In Asia, Property Management revenues have increased markedly due to the addition of the Japanese Property Management business towards the end of 2004 and the increased success we have had in Greater China; winning new contracts at satisfactory margins. The UK Property Management business has expanded by both strategic acquisition and organic growth. The profit from this business stream was ahead of 2004 and the business is now well positioned to improve profitability. Following the successful integration of a specialist Shopping Centre Management team within the London office and recruitment of new experienced staff into Birmingham and Leeds the overall position for Commercial Management is encouraging. We also continue to expand our commercial property management capabilities throughout the rest of Europe and have recently acquired a large property management business in France. Property Trading and Investment During the half year, no turnover was generated from the Property Trading businesses (2004 - Â£1.2m) and a small operating loss of Â£0.1m was made (2004 - Â£1.1m profit). As previously noted in Savills' 2004 Report and Accounts, the Group currently holds no assets for property trading. Fund Management During the half year, turnover for the Fund Management business was Â£2.3m (2004 - Â£1.7m) and a profit of Â£0.3m was made (2004 - Â£0.3m loss). Cordea Savills continues to develop its resources with the addition of staff in the UK and Italy. During the first half, Cordea Savills' Wealth Management team launched its Diversified Residential Opportunities Fund, a vehicle that will invest in a portfolio of residential accommodation, typically let on long leases. Fund management is a growing part of our business and we now have a range of funds available for charities, institutions and individual investors. Financial Services During the half year, turnover for the Financial Services businesses was Â£10.4m (2004 - Â£8.5m) and operating profit was Â£1.3m (2004 - Â£1.6m). Savills Private Finance continues to trade well, specifically in the high net worth mortgage broking market. Its Commercial Debt broking, Wealth Management and Property Insurance divisions are also making significant contributions. New offices have been opened in Leeds, Sevenoaks and York bringing the total number of offices to twenty. The slight decrease in profit was as a result of an increase in fixed costs associated with the investment in and growth of the business. The business is now well placed to ensure further profit growth. OUTLOOK The continued underlying confidence in property as an asset class is expected to underpin the market. This, together with the growing spread of Savills' business both on a geographical and product basis, gives us confidence that we are well placed to achieve a good result for the full year. Independent review report to Savills plc Introduction We have been instructed by the Company to review the financial information for the six months ended 30 June 2005 which comprises the consolidated interim income statement, the consolidated interim balance sheet, the consolidated interim statement of cash flows, the consolidated statement of recognised income and expense and related notes. 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. 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 responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority. As disclosed in Note 1, the next annual financial statements of the Group will be prepared in accordance with accounting standards adopted for use in the European Union. This interim report has been prepared in accordance with the basis set out in Note 1. The accounting policies are consistent with those that the Directors intend to use in the next annual financial statements. As explained in Note 1, there is, however, a possibility that the Directors may determine that some changes are necessary when preparing the full annual financial statements for the first time in accordance with accounting standards adopted for use in the European Union. The IFRS standards and IFRIC interpretations that will be applicable and adopted for use in the European Union at 31 December 2005 are not known with certainty at the time of preparing this interim financial information. Review work performed We conducted our review in accordance with 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 disclosed accounting policies have been applied. 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 and therefore provides a lower level of assurance. Accordingly we do not express an audit opinion on the financial information. This report, including the conclusion, has been prepared for and only for the Company for the purpose of the Listing Rules of the Financial Services Authority and for no other purpose. We do not, in producing this report, accept or assume responsibility for any other purpose or to any other person to whom this report is shown or into whose hands it may come save where expressly agreed by our prior consent in writing. 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 30 June 2005. PricewaterhouseCoopers LLP Chartered Accountants 1 Embankment Place London WC2N 6RH 7 September 2005 SAVILLS plc CONSOLIDATED INTERIM INCOME STATEMENT (unaudited) six months ended 30 June 2005 Six months Six months Year to 30.06.05 to 30.06.04 to 31.12.04 Notes Â£'000 Â£'000 Â£'000 Revenue Revenue 158,154 140,348 316,619 Other revenue - sale of trading properties - - 11,356 Total Group revenue 3 158,154 140,348 327,975 Less: Employee benefits expense (95,010) (78,010) (190,922) Depreciation expense (2,109) (1,950) (4,051) Amortisation of intangibles (588) (337) (663) Impairment of goodwill - - (639) Changes in trading property stock - - (9,177) Other operating expenses (41,885) (41,639) (75,363) Profit on disposal of subsidiary undertakings - - 763 Profit on disposal of associated undertakings - 155 154 Profit on disposal of investment property - - 8,094 Operating profit 3 18,562 18,567 56,171 Finance costs (202) (610) (584) Finance income 1,607 1,003 2,361 Net finance income 1,405 393 1,777 Share of post tax (loss)/profit from associates and joint ventures (18) 137 364 Profit before tax 19,949 19,097 58,312 Taxation 4 (6,222) (5,742) (17,340) Profit for the period 13,727 13,355 40,972 Attributable to: Equity shareholders of the parent 13,700 13,162 40,690 Minority interest 27 193 282 13,727 13,355 40,972 Basic earnings per share 6 23.9p 23.5p 72.7p Diluted earnings per share 6 22.1p 21.5p 66.1p CONSOLIDATED INTERIM BALANCE SHEET (unaudited) at 30 June 2005 30.06.05 30.06.04 31.12.04 Notes Â£'000 Â£'000 Â£'000 ASSETS Non-current assets Property, plant and equipment 12,827 18,968 11,922 Goodwill 51,937 39,078 46,095 Intangible assets 3,605 1,128 2,549 Investment property - 6,965 - Investments in associates and joint ventures 3,045 3,431 2,831 Other investments - 1,427 3,834 Available for sale investments 9 5,580 - - Deferred tax assets 18,240 15,508 17,333 95,234 86,505 84,564 Current assets Property held for sale - 8,604 - Work in progress 3,127 3,191 2,666 Trade and other receivables 89,097 75,060 87,241 Cash and cash equivalents 77,254 51,233 89,919 169,478 138,088 179,826 LIABILITIES Current Liabilities Interest bearing loans and borrowings 1,092 1,318 3,823 Trade and other payables 80,485 65,602 113,367 Current income tax liabilities 3,064 3,959 8,405 Employee benefits 1,614 1,526 1,499 Provisions 372 802 665 86,627 73,207 127,759 Net current assets 82,851 64,881 52,067 Total assets less current liabilities 178,085 151,386 136,631 Non-current Liabilities Interest bearing loans and borrowings 1,243 20,467 1,115 Trade and other payables 2,169 430 2,269 Retirement and employee benefits 29,420 38,619 27,490 Provisions 2,454 2,068 1,999 Deferred tax liabilities 914 66 62 36,200 61,650 32,935 Net assets 141,885 89,736 103,696 EQUITY Capital and reserves attributable to equity holders of the parent Share capital 8 3,315 3,072 3,026 Share premium 80,665 42,569 43,114 Other reserves 1,025 (172) (1,243) Retained earnings 56,597 43,749 58,609 141,602 89,218 103,506 Minority interest 283 518 190 Total equity 141,885 89,736 103,696 CONSOLIDATED INTERIM STATEMENT OF CASH FLOWS (unaudited) six months ended 30 June 2005 Six months Six months Year to 30.06.05 to 30.06.04 to 31.12.04 Notes Â£'000 Â£'000 Â£'000 CASH FLOWS FROM OPERATING ACTIVITIES Cash (used in)/generated from operations 7 (14,650) 4,538 58,004 Interest received 1,607 1,003 2,454 Interest paid (202) (610) (584) Income tax paid (8,360) (7,073) (15,303) Net cash (used in)/generated from operating activities (21,605) (2,142) 44,571 CASH FLOWS FROM INVESTING ACTIVITIES Proceeds from sale of subsidiary, net of cash disposed - - 4,666 Proceeds from sale of property, plant and equipment 49 82 99 Proceeds from sale of associates, joint ventures and investment property - 321 15,628 Dividends received 143 242 3,144 Net loans (to)/repayments received from related parties (290) 146 96 Acquisition of subsidiaries, net of cash acquired (4,694) (3,690) (10,418) Purchases of property, plant and equipment (2,772) (2,338) (6,458) Purchases of intangible assets (440) (330) (944) Purchase of investment in associates, joint ventures and other investments (41) (180) (2,715) Net cash (used in)/generated from investing activities (8,045) (5,747) 3,098 CASH FLOWS FROM FINANCING ACTIVITIES Proceeds from issue of share capital 37,845 338 903 Proceeds from borrowings 110 86 1,605 Repurchase of own shares (520) (327) (5,751) Purchase of own shares for Employee Benefit Trust - (2,125) (4,238) Repayments of borrowings (3,790) (331) (7,598) Dividends paid (18,092) (5,697) (9,309) Net cash generated from/(used in) financing activities 15,553 (8,056) (24,388) Net (decrease)/increase in cash and cash equivalents (14,097) (15,945) 23,281 Cash and cash equivalents at beginning of the period 89,919 67,625 67,625 Effect of exchange rate fluctuations on cash held 1,432 (447) (987) Cash and cash equivalents at end of period 77,254 51,233 89,919 CONSOLIDATED INTERIM STATEMENT OF RECOGNISED INCOME & EXPENSE (unaudited) six months ended 30 June 2005 Six months Six months Year to 30.06.05 to 30.06.04 to 31.12.04 Â£'000 Â£'000 Â£'000 Revaluation of available for sale investments 778 - - Actuarial loss on defined benefit pension scheme (1,783) (6,485) (9,495) Deferred tax on items directly taken to reserves 3,770 3,937 4,652 Foreign exchange translation differences 1,016 (308) (1,401) Net income/(expense) recognised directly in equity 3,781 (2,856) (6,244) Profit for the period 13,727 13,355 40,972 Less minority interest share of results of joint ventures 13 - - Total recognised income and expense for the period 17,521 10,499 34,728 Attributable to: Equity shareholders of the parent 17,512 10,330 34,427 Minority interest 9 169 301 17,521 10,499 34,728 NOTES 1. Basis of preparation The financial information comprises the unaudited results for the six months to 30 June 2005 and 30 June 2004, together with the unaudited results for the twelve months ended 31 December 2004. Prior to 2005, the Group prepared its audited annual financial statements and unaudited half yearly results under UK Generally Accepted Accounting Principles (UK GAAP). The audited UK GAAP annual financial statements for 2004, which represent the statutory accounts for that year, and on which the auditors gave an unqualified opinion, have been filed with the Registrar of Companies. From 1 January 2005, the Group is required to prepare its annual consolidated financial statements in accordance with International Financial Reporting Standards (IFRS), as adopted by the European Union (EU) and implemented in the UK. As the annual 2005 financial statements will include comparatives for 2004, the Group's date of transition to IFRS under IFRS1 (First time adoption of IFRS) is 1 January 2004. However, in preparing the comparative figures for 2004, the Group has chosen to utilise the IFRS1 exemption from the requirement to restate comparative information for IAS32 and IAS39 on financial instruments. To explain how the Group's reported performance and financial position are affected by this change, a press release was published on the 'Adoption of International Financial Reporting Standards' and issued on 29 June 2005. This is available on the company's investor relations website at www.ir.savills.com. The press release outlines the comparison of key figures under UK GAAP for 2004, with unaudited restated IFRS results and an explanation of the principal differences between UK GAAP and IFRS, together with the accounting policies which are to be used under IFRS. As detailed in Note 13 the Group has made further IFRS adjustments relating to deferred tax on share based payments and employee benefits. These unaudited Group results for the six months to 30 June 2005 have been prepared on a basis consistent with the IFRS accounting policies as set out in the press release, except with amendments in Note 13. These interim financial statements have been prepared under the historical cost convention, except in respect of certain available for sale investments. Under UK GAAP, operating profit, net finance costs, taxation and minority interests included the Group's share of joint venture's and associates' results, whereas the income statement under IFRS only includes the Group's share of the post tax and minority results of the joint ventures and associates on one line before the Group's pre-tax profit. IFRS require a different format for the cash flow statements but the main change is that the statement explains the change in cash and cash equivalents, rather than just cash as under UK GAAP. Cash and cash equivalents under IFRS comprise not only cash but also short term highly liquid investments that are readily convertible to known amounts of cash and which are subject to an insignificant risk in changes in value. These investments comprise all of the amounts previously disclosed as short term deposits under UK GAAP. As with cash under UK GAAP, the IFRS cash flow statement deals with cash and cash equivalents net of overdrafts. These results are based on the IFRS expected to be applicable as at 31 December 2005 and the interpretation of those standards. IFRS are subject to possible amendment by and interpretative guidance from the International Accounting Standards Board, as well as the ongoing review and endorsement by the EU, and are therefore still subject to change. These figures may therefore require amendment, to change the basis of accounting and/or presentation of certain financial information, before their inclusion in the IFRS financial statements for the year to 31 December 2005, when the Group prepares its first complete set of audited IFRS financial statements. 2. Adoption of new accounting standards As noted above IAS32 and IAS39 on financial instruments are being applied from 1 January 2005 and the changes to the balance sheet as at 1 January 2005 principally reflect the measurement of available-for-sale investments at fair value. At 1 January 2005, these changes resulted in an increase in the value of the Group's investments of Â£960,000 reflecting the valuation of certain of the Group's listed equity investments to market value. A related deferred tax liability arises on this adjustment in accordance with IAS 12 'Income taxes'. Effect of changes on summarised balance sheet as at 1 January 2005 Effect of adoption of IAS 32 and 39 31.12.04 Adoption of 01.01.05 IAS 32 and IAS 39 Note Â£'000 Â£'000 Â£'000 ASSETS Other Investments 3,834 (3,834) - Available for sale investments 9 - 4,794 4,794 Other assets 260,556 - 260,556 Total Assets 264,390 960 265,350 Deferred tax liabilities 62 288 350 Other liabilities 160,632 - 160,632 Total liabilities 160,694 288 160,982 Net assets 103,696 672 104,368 EQUITY 103,696 672 104,368 3. Segment analysis Trans- Consult- Six months to 30 actional ancy Property & Fund Property, Financial Unallocated Total June 2005 Advice Facilities Manage- Trading & Services Management ment Investment Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue United Kingdom 45,833 25,765 17,728 2,292 - 10,409 60 102,087 Rest of Europe 7,867 719 2,209 - - - - 10,795 Asia Pacific 14,528 3,576 27,168 - - - - 45,272 Total revenue 68,228 30,060 47,105 2,292 - 10,409 60 158,154 Operating profit United Kingdom 6,582 4,331 1,114 319 (106) 1,304 (1,982) 11,562 Rest of Europe 1,717 40 254 - - - - 2,011 Asia Pacific 2,421 509 2,059 - - - - 4,989 Operating profit 10,720 4,880 3,427 319 (106) 1,304 (1,982) 18,562 Net Finance income 1,405 Share of results of associates and joint ventures (18) Profit before income tax 19,949 Taxation (6,222) Profit for the period 13,727 Trans- Six months actional Consult- Property & Fund Property, Financial Unallocated* Total to 30 June Advice ancy Facilities Manage- Trading & Services 2004 Management ment Investment Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Revenue United Kingdom 48,457 21,273 13,255 1,676 1,226 8,478 - 94,365 Rest of Europe 4,602 313 947 - - - - 5,862 Asia Pacific 11,610 2,680 25,831 - - - - 40,121 Total revenue 64,669 24,266 40,033 1,676 1,226 8,478 - 140,348 Operating profit United Kingdom 7,304 3,313 504 (262) 1,086 1,636 373 13,954 Rest of Europe 1,031 55 54 - - - - 1,140 Asia Pacific 1,951 102 1,420 - - - - 3,473 Operating profit 10,286 3,470 1,978 (262) 1,086 1,636 373 18,567 Net Finance income 393 Share of results of associates and joint ventures 137 Profit before income tax 19,097 Taxation (5,742) Profit for the period 13,355 The unallocated segment includes holding company costs, group bonuses and other expenses not directly attributable to the operating activities of the Group's business segments. * In 2004, the benefit of the one-off share based compensation credit as explained in note 12 (j) has not been allocated to individual segments so as to show a comparable figure to 2005. 4. Taxation The taxation charge has been calculated on the basis of the underlying rate in each jurisdiction adjusted for any disallowable charges. Six months Six months Year to to 30.06.05 to 30.06.04 31.12.04 Â£'000 Â£'000 Â£'000 United Kingdom corporation tax (2,339) (3,988) (15,026) Foreign tax (1,971) (1,267) (2,363) Deferred tax (1,912) (487) 49 (6,222) (5,742) (17,340) 5. Dividends Six months Six months Year to to 30.06.05 to 30.06.04 31.12.04 Â£'000 Â£'000 Â£'000 Amounts recognised as distribution to equity holders in the period: Interim dividend for the six months ended 30 June 2004 of 6.0p - - 3,394 Ordinary final dividend of 12.5p per share (2004 - 10.0p) 6,942 5,563 5,563 Special dividend of 20.0p per share (2004 - nil) 11,107 - - 18,049 5,563 8,957 Proposed interim dividend for the six months ended 30 June 2005 of 8.0p per share 4,898 - - The Directors have recommended an interim dividend for the six months ended 30 June 2005 of 8.0 pence per ordinary share. The interim dividend will be paid on 1 November 2005 to shareholders on the register as at 30 September 2005. 6. Basic & Diluted earnings per share Six months to Earnings Shares EPS Earnings Shares EPS 30 June 2005 2005 2005 2004 2004 2004 Â£'000 '000 Pence Â£'000 '000 Pence Basic earnings per share 13,700 57,334 23.9 13,162 56,189 23.5 Effect of additional shares issuable under option - 4,639 (1.8) - 5,328 (2.0) Diluted earnings per share 13,700 61,973 22.1 13,162 61,517 21.5 Year to Earnings Shares EPS 31 December 2004 2004 2004 Â£'000 '000 Pence Basic earnings per share 40,690 55,938 72.7 Effect of additional shares issuable under option - 5,647 (6.6) Diluted earnings per share 40,690 61,585 66.1 7. Cash generated from operations Six months Six months Year to to 30.06.05 to 30.06.04 31.12.04 Â£'000 Â£'000 Â£'000 Profit for the period 13,727 13,355 40,972 Adjustments for: Taxation 6,222 5,742 17,340 Depreciation expense 2,109 1,950 4,051 Amortisation of intangibles 588 337 663 Impairment of goodwill - - 639 Net finance income (1,405) (393) (1,777) Share of post tax loss/(profit) from associates and joint ventures 18 (137) (364) Profit on disposal of subsidiary undertakings - - (763) Profit on disposal of associated undertakings - (155) (154) Profit on disposal of investment property - - (8,094) Loss on sale of property, plant and equipment 5 41 193 (Increase)/decrease in property held for sale - (523) 2,052 (Decrease)/increase in provisions (214) 679 481 Increase/(decrease) in employee and retirement obligations 342 208 (13,964) Charge for share based compensation 636 587 1,144 Provision against investments in associates and joint ventures 8 9 16 Operating cash flows before movements in working capital 22,036 21,700 42,435 (Increase)/decrease in work in progress (437) (393) 126 (Increase)/decrease in debtors (804) 4,032 (14,671) (Decrease)/increase in creditors (35,445) (20,801) 30,114 Cash (used in)/generated from operations (14,650) 4,538 58,004 8. Share Capital On 25 April 2005 Trammell Crow Company (TCC) exercised an option to subscribe for 5,243,229 shares representing over 7% of the Group's share capital. This was in accordance with the terms of an agreed Option Deed dated 9 May 2000, entered into at the time of the Strategic Alliance. The shares were issued at a price of 701.28p, representing a 20% premium to the average closing mid-market price of the Ordinary Shares as taken over the preceding five days prior to exercise. 9. Available for sale investments Â£'000 At 31 December 2004 - Adoption of IAS 32 & 39 - reclassification from other investments Remeasure to fair value 3,834 960 At 1 January 2005 4,794 Additions 10 Revaluation 776 At 30 June 2005 5,580 Available-for-sale financial assets include the following: Listed securities UK - equity securities 874 Unlisted securities UK - equity securities 1,667 Rest of world - equity securities & investment loans 37 UK - limited partnership 3,002 5,580 10. Reconciliation of movements in equity Minority Total Attributable to equity holders of the Group interest equity Share Share Other Retained capital premium reserves earnings Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Balance at 31 December 2004 3,026 43,114 (1,243) 58,609 190 103,696 Adoption of IAS 32 and IAS 39 - - 672 - - 672 Balance at 1 January 2005 3,026 43,114 (571) 58,609 190 104,368 Total recognised income and expense for the period - - 1,591 15,921 9 17,521 Employee share option scheme: - Value of services provided - - - 636 - 636 Issue of share capital 294 37,551 - - - 37,845 Purchase of own shares (5) - (520) - (520) Dividends - - - (18,049) (43) (18,092) Business combinations - - - - 127 127 Balance at 30 June 2005 3,315 80,665 1,025 56,597 283 141,885 Balance at 1 January 2004 3,070 42,237 107 40,564 562 86,540 Total recognised income and expense for the period - - (283) 10,613 169 10,499 Employee share option scheme: - Value of services provided - - - 587 - 587 Issue of share capital 6 332 - - - 338 Purchase of own shares (4) - 4 (327) - (327) Purchase of treasury shares - - - (2,125) - (2,125) Dividends - - - (5,563) (134) (5,697) Business combinations - - - - (79) (79) Balance at 30 June 2004 3,072 42,569 (172) 43,749 518 89,736 Balance at 1 January 2004 3,070 42,237 107 40,564 562 86,540 Total recognised income and expense for the period - - (1,420) 35,847 301 34,728 Employee share option scheme: - Value of services provided - - - 1,144 - 1,144 Issue of share capital 26 877 - - - 903 Purchase of own shares (70) - 70 (5,751) - (5,751) Purchase of treasury shares - - - (4,238) - (4,238) Dividends - - - (8,957) (352) (9,309) Business combinations - - - - (321) (321) Balance at 31 December 2004 3,026 43,114 (1,243) 58,609 190 103,696 11. Effect of the change to IFRS on the Income Statement for the six months ended 30 June 2004 (unaudited) Impact of move to IFRS Share UK Based Employee Joint Assoc- Deferred Realloc- GAAP Intangibles Payment Benefits Ventures iates Tax ations IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Notes 12 (a) 12 (b) 12 (c) 12 (d) 12 (e) 12 (f) 12 (h) Total Group turnover 140,348 - - - - - - - 140,348 Operating profit 14,378 1,358 1,825 848 3 - - 155 18,567 Share of profit of joint ventures (13) - - - 70 - - - 57 Share of profit of associates 97 - - - - (17) - - 80 Disposals 155 - - - - - - (155) 0 Profit before interest 14,617 1,358 1,825 848 73 (17) - - 18,704 Net finance income 487 - - - (94) - - - 393 Profit before tax 15,104 1,358 1,825 848 (21) (17) - - 19,097 Income tax expense (4,967) (547) (254) 21 17 (12) (5,742) Profit for the period 10,137 1,358 1,278 594 - - (12) - 13,355 Attributable to: Equity holders of the parent 9,961 1,341 1,278 594 - - (12) - 13,162 Minority interests 176 17 - - - - - - 193 10,137 1,358 1,278 594 - - (12) - 13,355 Basic earnings per share 17.7p 2.4p 2.3p 1.1p 0.0p 0.0p 0.0p 0.0p 23.5p Diluted earnings per share 16.2p 2.2p 2.1p 1.0p 0.0p 0.0p 0.0p 0.0p 21.5p Effect of the change to IFRS on the Balance Sheet as at ended 30 June 2004 (unaudited) Impact of move to IFRS Share UK Based Employee Joint Deferred Present- GAAP Intangibles Payment Benefits Ventures Tax Dividend ation IFRS Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Â£'000 Notes 12 (a) 12 (b) 12 (c) 12 (d) 12 (f) 12 (g) Assets 207,651 1,358 (428) 9,649 2,483 4,046 - (166) 224,593 Liabilities (106,323) - 1,871 (31,464) (2,483) (18) 3,394 166 (134,857) Net assets 101,328 1,358 1,443 (21,815) - 4,028 3,394 - 89,736 EQUITY Shareholders' funds 100,827 1,341 1,443 (21,815) - 4,028 3,394 - 89,218 Minority interest 501 17 - - - - - - 518 101,328 1,358 1,443 (21,815) - 4,028 3,394 - 89,736 12. Explanation of adjustments for the six months ended 30 June 2004 a) IAS 38 Intangible assets The goodwill amortisation expense for the first half of 2004, amounting to Â£1,358,000 is reversed. For acquisitions in the first half of 2004 an assessment has been made regarding the fair value of intangible assets that were acquired. b) IFRS 2 Share Based Payments The following adjustments have been made at 30 June 2004: UK GAAP IFRS 2 Total adjustment Â£'000 Â£'000 Â£'000 Deferred Share Bonus Plan (DSBP) 2,573 (634) 1,939 Executive Share Option Scheme - (56) (56) Sharesave Scheme - (58) (58) Impact on profit before tax 2,573 (748) 1,825 Tax (772) 225 (547) Impact on profit after tax 1,801 (523) 1,278 This profit and loss adjustment results in an increase in profit before tax of Â£1,825,000 because the amount to be charged to the bonus pool at that stage was Â£2,573,000, which related to the accrual of the 2004 and 2005 DSBP grants. The reserves impact of this change is an increase of Â£1,443,000. c) IAS 19 Employee Benefits The pension deficit is updated for the valuation received from the actuaries as at 5 April 2004 plus an allowance for any significant movements between that date and 30 June 2004. The charge to the profit and loss account under IFRS is equal to the current service cost which represents the increase in the pension liability in the current period as a result of the employee's employment over that period. The UK GAAP charge of Â£2,510,000 is reversed and replaced by Â£1,355,000 plus a net interest charge calculated on the net deficit within the scheme of Â£307,000 for the first half. This adjustment increased interim pre-tax profit by Â£848,000. The movement in the deficit for the 6 months is as follows: Â£'000 Deficit as at 31 December 2003 25,528 Contributions (1,511) Current service cost 1,355 Net financing charge 307 Actuarial loss 6,485 Gross deficit 32,164 Less deferred tax (9,649) Net Deficit as at 30 June 2004 22,515 d) IAS 31 Joint Ventures The changes in the income statements are to record the Group's share of profit after tax from joint ventures as a single line and remove turnover. The results of the remaining property joint ventures are also moved to the single line. Share of post tax profit of joint ventures increases by Â£70,000 which is offset by an increase in operating profit of Â£3,000, reduction in net interest income of Â£94,000 and income tax expense of Â£21,000. e) IAS 28 Associates Now reported as a single line. The resulting change is to move Â£17,000 income tax expense up to share of post tax profit of associates. f) IAS 12 Deferred Tax A deferred tax asset on share based payment awards granted before 7 November 2002 is recognised under IAS 12 in the amount of Â£4.0m. See Note 13 for further explanation. Deferred tax on undistributed profits within equity accounted non- UK investments amounted to Â£18,000 as at 30 June 2004, with a charge of Â£12,000 for the period. g) IAS 10 Events after the balance sheet date The interim dividend, amounting to Â£3,394,000 is reversed under IFRS. h) IAS 1 Presentation of financial statements Under IAS 1, items of income and expense may not be presented as extraordinary items on the face of the income statement. Under UK GAAP profit on disposal of interest in associates of Â£155,000 were classified as exceptionals. This is reclassified as operating items under IFRS. i) Adjusted profit before tax Six months Six months to 30.06.05 to 30.06.04 Â£'000 Â£'000 Reported profit before tax 19,949 19,097 Less IFRS adjustment for: One-off share based payment credit - (1,825) Adjusted profit before tax 19,949 17,272 The IFRS share based payment charge is removed to present an indication of the impact of IFRS changes on the Group going forward. The method of bonus calculation means that the adjustment will not impact profit levels in the future. For further explanation see note (j) below. j) Earnings Per Share Basic and diluted earnings per share as at 30 June 2004: Diluted Diluted Earnings Shares EPS Shares EPS Â£'000 '000 Pence '000 Pence UK GAAP 9,961 56,189 17.7 61,517 16.2 IFRS adjustments: Intangibles 1,341 - 2.4 - 2.2 Share based payment 1,278 - 2.3 - 2.1 Employee benefits 594 - 1.1 - 1.0 Deferred tax (12) - 0.0 - 0.0 IFRS 13,162 56,189 23.5 61,517 21.5 Adjusted basic earnings per share as at 30 June 2004 : UK GAAP UK GAAP IFRS IFRS Earnings Shares EPS Earnings EPS Â£'000 '000 Pence Â£'000 Pence Basic earnings per share 9,961 56,189 17.7 13,162 23.5 Amortisation of goodwill 1,341 - 2.4 - - Less IFRS share based payment charge - - - (1,278) (2.3) Adjusted basic earnings per share 11,302 56,189 20.1 11,884 21.2 The Directors consider the disclosure of the supplementary earnings per share necessary in order for the impact of the amortisation of goodwill under UK GAAP to be fully appreciated. The IFRS share based payment charge is removed to present an indication of the impact of IFRS changes on the Group going forward. The method of bonus calculation means that the adjustment will not impact profit levels in the future. The Group operates a number of deferred share bonus and option schemes, the largest of which is the Deferred Share Bonus Plan (DSBP). Under this non- pensionable annual bonus scheme for Directors and senior executives, a part of the annual bonus, at the discretion of the Remuneration Committee, may be awarded in the form of deferred conditional rights to ordinary shares in the Company, with the additional part of the bonus being paid out in cash. Annual bonuses are subject to the attainment of challenging performance targets which are specific to each individual and either relate to Group thresholds, subsidiary company targets or a combination of both for a period not exceeding the relevant financial year of the Company. The annual bonus pool for the Group is fixed, based on pre-bonus profit based calculations. The element of the bonus pool which is paid out in cash is determined by deducting share based payment charges made against income in the performance period from the bonus pool. During 2004, the amount which was charged against the bonus pool for share based payments was the UK GAAP charge, and the balance of the bonus pool was paid out as cash bonus. The latter amount is not impacted in 2004 by the restatement of the share based payment charge to IFRS, but in the future it will be. The adjusted profit and EPS takes account of this one-off adjustment in 2004. 13. Adjustment to IFRS Income Statement and Balance Sheet for the year ended 31 December 2004. The Group announced the impact of the adoption of International Financial Reporting Standards (IFRS) on the year to 31 December 2004 in a press release on 29 June 2005. That document was based on interpretion of 'IAS 12 Income Taxes' at the time of publication, in relation to share based payments. Subsequent to this date, the Group has booked further deferred tax assets in line with the latest interpretations on IAS 12. In addition a further deferred tax asset was booked for contributions to the Group's defined benefit pension scheme. The impact of these adjustments is explained below. (a) Deferred tax on share options awarded before 7 November 2002 A deferred tax asset is recognised on transition relating to the future tax deduction expected to be received by the Group in relation to share options awarded before 7 November 2002. Under the IFRS 1 exemption taken by the Group, such awards are not subject to the application of IFRS 2 'Share based payment', but are subject to the application of IAS 12 'Income taxes'. Any subsequent increase or decrease in the value of this deferred tax asset, due to movements in the Group's share price is adjusted against equity each period end. The value of the asset is also increased according to the service period which has elapsed for each series of options awarded. Upon the exercise of such options the Group becomes entitled to a tax deduction for the intrinsic value of the share awarded. At this time a similar amount is released from the deferred tax asset to offset the current tax credit, received in the period of exercise, in the income statement. As such the exercise of options awarded pre 7 November 2002 will have no impact on the Group's total tax charge going forward. The taxation charge for the year ended 2004 is therefore increased by Â£0.7m to reflect this. (b) Defined benefit pension plan A deferred tax asset of Â£5.4m is recognised during 2004 relating to lump sum and ongoing contributions made by the Group to its Defined Benefit Pension Scheme, which will only attract current tax deductions in future years. (c) Net Assets at transition and for the year ended 31 December 2004 31.12.04 1.1.04 Â£'000 Â£'000 Net assets under IFRS as previously reported 94,739 84,106 IAS 12: Deferred tax on share based payments awarded pre 7 November 2002 3,570 2,434 IAS 12: Deferred tax on retirement benefit obligations 5,387 - Net assets under IFRS 103,696 86,540 Copies of this statement are being sent to shareholders and are available from: Savills plc, 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ Telephone: 020 7409 9928 Fax: 020 7491 0505 Email: vgrady@savills.com Contact: Victoria Grady In addition, with prior notice, copies in alternative formats i.e. large print, audio tape, braille are available if required from: Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA This information is also available on the Company's website at: www.savills.com This information is provided by RNS The company news service from the London Stock Exchange

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