11th Sep 2007 07:01
Savills PLC11 September 2007 Excellent performance in the first half Savills plc, the international property consultants, today announces interimresults for the six months ended 30 June 2007. • Group revenue for the six months was up 35% at £284.2m (2006: £211.1m).• Group profit before tax increased 7% to £33.2m (2006: £31.0m).• Underlying Group profit before tax* increased 27% to £32.5m (2006: £25.6m).• Basic earnings per share increased 3% to 17.8p (2006: 17.2p).• Adjusted underlying basic earnings per share* increased 25% to 17.4p (2006: 13.9p).• Interim dividend increased 20% to 6.0p (2006: 5.0p). * After adjusting for share based payments, amortisation of intangibles andimpairment of goodwill and profit on disposals Peter Smith, Chairman of Savills plc, comments: 'Savills has performed strongly in the first six months to 30 June 2007 andcontinues to trade well. However, tightening credit markets are affectingtransactional volumes in the commercial investment markets, primarily in the UK.We believe prime UK residential markets should, however, remain resilient.Overall, given the broad spread of our business, we are cautiously confident ofproducing a good result for the year as a whole, in line with our expectations.' *** 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 7409 9923Aubrey Adams, Group Chief Executive Citigate Dewe Rogerson 020 7638 9571Sarah GestetnerGeorge Cazenove There will be an analyst presentation today at 9.30 am at 25 Finsbury Circus,London EC2M 7EE. CHAIRMAN'S STATEMENT RESULTS AND HIGHLIGHTS We reported in our Trading Update, released on 4 July 2007, that the Group hadmade a good start to the year. We noted that possible further increases in UKinterest rates would continue to affect commercial property values and theresultant uncertainty could, in the short term, affect the volume of commercialtransactions but should have little effect on prime residential markets; thisstill remains the case. We also noted that the European and Asian markets wereless likely to be influenced by the increasing cost of money. I am, therefore, delighted to announce that revenue increased by 35% to £284.2mfor the six months to 30 June 2007 (2006: £211.1m). Profit before tax increasedto £33.2m for the six months to 30 June 2007 (2006: £31.0m including £5.0mprofit on disposals). Underlying profit before tax increased by 27% to £32.5mfrom £25.6m. Basic earnings per share for the six months to 30 June 2007increased to 17.8p (2006: 17.2p). Adjusted underlying earnings per shareincreased by 25% to 17.4p (2006: 13.9p). The Directors have decided to increasethe interim dividend to 6.0p (2006: 5.0p) to be paid on 29 October 2007 toshareholders on the register as at 28 September 2007. The increase reflects ourcontinued confidence in the performance of the business. Following the placing of Savills shares on 11 January 2007 by CBRE upon itsacquisition of Trammell Crow Company we repurchased shares to the value of£21.8m for cancellation. In addition, we purchased shares to the value of£12.9m for the Employee Benefit Trust (2006: £5.0m). On 31 July 2007, in line with our strategy to invest directly in operations inthe US, we acquired Granite Partners LLC, a US real estate investment bankingfirm, for an initial consideration of US$54.0m, of which 75% was payable oncompletion. As announced in August, Mark Dearsley joined the Board of Savills as GroupFinance Director on 3 September 2007. Mark was previously Finance Director forthe division of Aviva which is responsible for their operations outside the UK,and before that he was Aviva's Group Mergers & Acquisitions Director. Webelieve Mark will greatly strengthen our senior management team and will help toensure the continuing expansion of the business in the UK and overseas. MARKETPLACE OVERVIEW UK In the first half, domestic and international investors remained active acrossall sectors in the UK, with their focus primarily on rental growthopportunities. The commercial office market showed tenant demand improving andlevels of availability falling. In many locations this led to strong upwardgrowth in rents and an increase in speculative development activity. Investorand tenant demand for retail property in the UK was varied with concerns aboutconsumer confidence in the light of rising interest rates making both retailersand investors more selective about location. In the industrial and distributionmarkets, tenant demand was stable although distributors' margins were underpressure. There continued to be an increased level of tenant selectivity onlocations for new facilities. Recent tightening of credit markets is affectingtransactional volumes in commercial investment markets. Conditions have been strongest at the top end of the London residential market,where wealthy international purchasers have added to the demand from Citybuyers. Successive interest rate increases have led to a slowing of themainstream UK residential markets, most notably in the north of England, theMidlands and Wales. Buyer caution has been evident largely in lower levels ofprice growth rather than lower volumes of transactions. Markets have been morerobust in Scotland and the south of England, led by London where high demandfrom employment growth and in-migration is running up against a scarcity ofstock. The Government's strategy to build more houses, in order to easeaffordability pressures, and the development of sustainable new communities hasincreased the complexity and risks of developing new homes and workplaces,leading to higher demand for professional services in valuation, planning,development and building consultancy. Europe Tenant demand in Europe's major office markets was strong in the first half of2007, with some markets showing signs that leasing activity levels could exceedthe highs of 2006. In general, vacancy rates fell in most major cities whichimpacted positively upon rental growth. Office rental growth in Europe's majorcities strengthened in the second quarter of 2007. Tenant demand was lessstrong in the retail markets, driven by tenant concerns about the prospects forlocal retail economies. Although retailers continued to open new stores, theywere more selective on location. Upward rental growth on prime distributionproperty across Europe accelerated over the first six months of the year. In mainland Europe investor demand remained strong. Generally, investors wereincreasingly focused on rental growth prospects such as city centre offices;however, yields continued to harden on both office and distribution properties. Asia Pacific The investment market was particularly active over the first half of the year.Market participants included overseas investment funds, local investors anddevelopers. In the office market, local demand remained relatively subduedwhile competition for en bloc investments was intense among the funds.Opportunities in the retail market were scarce and values, especially in corelocations, continued to rise. In the industrial sector, higher yields continuedto attract interest from funds while local developers and landlords were morefocused on change of use to residential or hotels. In the office rental market,after three years of rapid rises, rents stabilised prior to substantial newsupply which is expected to enter the market in 2008. Growth in the financialservices sector has fuelled demand for luxury housing and rents are expected torise further. In the residential market, prices of luxury apartments and townhouses have beenappreciating strongly while more lacklustre growth has been noted in themainstream market. US In the first half of the year the commercial real estate markets continued togrow with certain sectors experiencing tighter vacancy rates and higher rents.During the second quarter, concerns over sub-prime lending led to tightening inthe credit markets. This tightening in credit has begun to affect transactionvolumes. SEGMENTAL REVIEWS Transactional Advice 2007 2006Six months to 30 June £m £m Change Revenue 134.7 94.9 +42%Underlying profit before tax 20.9 15.3 +37% Our Transactional teams across the UK had a strong first half with some notableinvestment deals being completed, the largest to date being the acquisition inthe City of London of CityPoint for Beacon Capital for £660m. Our London Agency teams benefited from the strong demand for offices in the WestEnd, City and the South East. The period saw large development and residential portfolio sales. In, London,in particular, we benefited from a buoyant market which has extended into theHome Counties. Interest rate increases had little impact on the top end of themarket; however, there have been some signs that these rises are feeding intolower priced stock particularly outside of London. Our New Homes business benefited from a strong London market but, following UKinterest rate rises, there has been increased price sensitivity elsewhere in thecountry. The transactional teams across Europe have benefited from the strong demand frominvestors for European commercial property. In particular, our German teamswere very active as investors continued to focus on extensive opportunities inthe German market where we have been expanding our teams to meet demand. In Asia, our transactional business has been strong particularly in Hong Kongand Singapore. The strength of the Hang Seng stock market and the generalenthusiasm for real estate continued to push investor demand for commercial andretail property assets. The Singapore luxury residential market experiencedsignificant growth. Elsewhere in Asia Pacific there has been increased dealflow in Australia, Japan, and Taipei, where we opened an office in April 2007. Consultancy 2007 2006 Six months to 30 June £m £m ChangeRevenue 57.1 37.7 +51%Underlying profit before tax 6.9 5.8 +19% Our Valuation teams both in the UK and Europe have increased their market shareand we are seeing increased fee levels due to the recent expansion of our teams. Our newly formed Pan-European Valuation team has performed above expectation. Our other Consultancy teams, in particular our Housing, Building Consultancy andRent Review teams, have all enjoyed a very strong first half year and have ahealthy pipeline. The Residential Consultancy business experienced a strongfirst half, especially the Planning and Valuation departments which also enjoy astrong pipeline. The integration of Hepher Dixon has gone well, with thecombined Planning business outperforming expectations. The Consultancy business in Asia continued to grow steadily. We are seeking toexport our leading market position in Hong Kong to mainland China where we havea strong presence in property management and agency. In Australia, ourValuation business continued to increase its scope of operations and we now havea leading valuation team in Melbourne. Property and Facilities Management 2007 2006 Six months to 30 June £m £m ChangeRevenue 71.8 63.2 +14%Underlying profit before tax 3.6 4.5 (20%) In the UK, we won a number of new instructions from both existing and newclients. One notable instruction was from Resolution Asset Management for themanagement of three of their funds. In Europe, we continued to expand our Property Management business, inparticular in Amsterdam where we now have 14 people in our Managementdepartment. Our strategy is to continue to grow and build a profitable EuropeanProperty Management business in other key European centres, notably Madrid,Paris, Berlin, Frankfurt and Hamburg. In Asia Pacific, the Property Management and Facility Management businesses havebeen successful in increasing their portfolio of properties under management.The businesses have also diversified into new areas including the management ofretirement homes which is seen as a growth business in Hong Kong. During thefirst half of the year an operating business was acquired to manage a portfolioof retirement homes. In addition, we have entered into a joint venture tomanage Hong Kong's only 'Eco-park', where waste and pollution issues which areincreasingly relevant in Hong Kong's congested society. Financial Services 2007 2006Six months to 30 June £m £m Change Revenue 13.3 12.1 +10%Underlying profit before tax 1.7 1.5 +13% Despite the recent rises in UK interest rates, Savills Private Finance continuedto trade well, especially in the south of England. New offices have been openedin Cardiff and Windsor with further expansion planned in the second half of theyear. Fund Management 2007 2006Six months to 30 June £m £m Change Revenue 7.3 2.7 +170%Underlying profit before tax 2.1 0.1 N/A 2007 2006As at 30 June £bn £bn Growth Funds under management 2.8 1.8 +56% In the first six months of 2007, Cordea Savills closed Serviced Land No.2 LP andlaunched two new funds, a German Retail Fund for international institutionalinvestors and a pan-European Fund aimed at Italian institutional investors, aswell as offering a syndication opportunity for private investors. Additionalfunds are planned to be launched in the second half of the year including asecond Italian Opportunities vehicle and a UK Property Ventures Fund. During the first six months, Cordea Savills invested in £575m of propertylocated in Italy, Germany, the Netherlands and the UK on behalf of fundsincluding Italian Opportunities No.1, Europa Immobiliare No.1, the German RetailFund, the Charities Property Fund and Serviced Land No.2 LP. In line with the growth in the range and diversity of its funds, Cordea Savillshas continued to develop its resources and infrastructure with the addition ofstaff in the UK, Italy and Germany and with new offices opening in Dublin andLuxembourg. We continue to look at ways of accessing third party capital to facilitate thelaunch of new funds. This capital is more likely to come in the form of bankfinance. OUTLOOK Savills has performed strongly in the first six months to 30 June 2007 andcontinues to trade well. However, tightening credit markets are affectingtransactional volumes in the commercial investment markets, primarily in the UK.We believe prime UK residential markets should, however, remain resilient.Overall, given the board spread of our business, we are cautiously confident ofproducing a good result for the year as a whole, in line with our expectations. Independent review report to Savills plc Introduction We have been instructed by the Company to review the financial information forthe six months ended 30 June 2007 which comprises the consolidated incomestatement, the consolidated balance sheet as at 30 June 2007, the consolidatedstatement of cash flows and the consolidated statement of recognised income andexpense and related notes. We have read the other information contained in theinterim report and considered whether it contains any apparent misstatements ormaterial inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, isthe responsibility of, and has been approved by the Directors. The Listing Rulesof the Financial Services Authority require that the accounting policies andpresentation applied to the interim figures should be consistent with thoseapplied in preparing the preceding annual accounts except where any changes, andthe reasons for them, are disclosed. This interim report has been prepared in accordance with the basis set out inNote 1. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999/4issued by the Auditing Practices Board for use in the United Kingdom. A reviewconsists principally of making enquiries of Group management and applyinganalytical procedures to the financial information and underlying financial dataand, based thereon, assessing whether the disclosed accounting policies havebeen applied. A review excludes audit procedures such as tests of controls andverification of assets, liabilities and transactions. It is substantially lessin 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 thecompany for the purpose of the Listing Rules of the Financial Services Authorityand for no other purpose. We do not, in producing this report, accept or assumeresponsibility for any other purpose or to any other person to whom this reportis shown or into whose hands it may come save where expressly agreed by ourprior consent in writing. Review conclusion On the basis of our review we are not aware of any material modifications thatshould be made to the financial information as presented for the six monthsended 30 June 2007. PricewaterhouseCoopers LLPChartered AccountantsLondon10 September 2007 SAVILLS plc CONSOLIDATED INCOME STATEMENT (unaudited) for the period ended 30 June 2007 Six months Six months Year ended to 30.06.07 to 30.06.06 31.12.06 Notes £m £m £m Continuing operationsRevenue 2 284.2 211.1 517.6Less:Employee benefits expense (166.1) (125.2) (306.1)Depreciation (2.8) (2.7) (5.6)Amortisation of intangibles & impairment of goodwill (1.5) (0.7) (2.4)Other operating expenses (82.1) (58.7) (129.2)Other income - - 0.8Profit on disposal of subsidiary, associate, joint ventures & available-for-sale investments - 5.0 5.1 Operating profit 2 31.7 28.8 80.2 Finance income 2.0 2.2 4.8Finance costs (0.7) - (1.1) 1.3 2.2 3.7Share of post tax profit from associates & joint ventures 0.2 - 0.5 Profit before income tax 33.2 31.0 84.4Income tax expense (including foreign tax of £1.5m, June 2006 - £1.3m and December 2006 - £4.4m) 4 (10.3) (9.7) (25.6)Profit for the period from continuing operations 22.9 21.3 58.8 Discontinued operationsProfit for the period from discontinued operations 3 - 0.3 0.3Profit after income tax 22.9 21.6 59.1 Attributable to:Equity shareholders of the Company 21.6 21.3 57.7Minority interest 1.3 0.3 1.4 22.9 21.6 59.1 Earnings per shareFrom continuing and discontinued operations Basic earnings per share 7 17.8p 17.2p 46.3pDiluted earnings per share 7 17.1p 16.2p 44.2p From continuing operations Basic earnings per share 7 17.8p 16.9p 46.0pDiluted earnings per share 7 17.1p 15.9p 44.0p From discontinued operations Basic earnings per share 7 - 0.3p 0.3pDiluted earnings per share 7 - 0.3p 0.2p Dividends per share Interim dividend proposed 5 6.0p 5.0p -Dividends paid 5 11.0p 8.0p 13.0p SAVILLS plc CONSOLIDATED BALANCE SHEET (unaudited) at 30 June 2007 30.06.07 30.06.06 31.12.06 Notes £m £m £mASSETSNon-current assetsProperty, plant and equipment 16.4 15.7 16.5Goodwill 111.5 99.8 99.9Intangible assets 18.1 10.8 19.1Investments in associates and joint ventures 8.2 4.7 5.6Deferred income tax assets 14.1 21.4 20.6Available-for-sale investments 11.3 10.1 8.8Financial assets at fair value through profit or loss 1.5 - 1.5 181.1 162.5 172.0Current assetsAssets classified as held for sale 26.0 - -Work in progress 3.4 3.4 3.2Trade and other receivables 167.1 116.6 163.9Cash and cash equivalents 40.9 63.1 124.1 237.4 183.1 291.2 LIABILITIESCurrent LiabilitiesBorrowings 21.7 7.1 7.3Derivative financial instruments 0.3 - 0.2Liabilities directly related to assets 23.0 - -classified as held for saleTrade and other payables 135.9 111.8 191.8Current income tax liabilities 7.3 7.4 10.3Employee benefit obligations 4.1 2.6 3.0Provisions for other liabilities and charges 1.5 0.7 1.5 193.8 129.6 214.1 Net current assets 43.6 53.5 77.1 Total assets less current liabilities 224.7 216.0 249.1 Non-current LiabilitiesBorrowings 6.8 11.8 12.0Derivative financial instruments 0.1 - 0.3Trade and other payables 7.9 1.0 2.0Retirement and employee benefit obligations 7.3 17.4 19.0Provisions for other liabilities and charges 2.2 2.5 1.6Deferred income tax liabilities 1.4 1.7 1.4 25.7 34.4 36.3 Net assets 199.0 181.6 212.8 EQUITYCapital and reserves attributable to equity holders of the Company Share capital 10 3.3 3.3 3.4Share premium 10 82.9 81.4 82.4Other reserves 10 (2.6) 0.9 (1.8)Retained earnings 10 110.5 92.3 124.5 194.1 177.9 208.5 Minority interest 10 4.9 3.7 4.3 Total equity 199.0 181.6 212.8 SAVILLS plc CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited) for the period ended 30 June 2007 Six months Six months Year ended to 30.06.07 to 30.06.06 31.12.06 Notes £m £m £m Cash flows from operating activitiesCash (used in)/generated from continuing operations 8 (14.6) 0.1 87.4Interest received 2.0 2.2 4.7Interest paid (0.7) - (0.9)Income tax paid (11.1) (6.5) (15.1) Net cash (used in)/generated from operating activities (24.4) (4.2) 76.1 Cash flows from investing activitiesOutflow from sale of subsidiary, net of cash disposed - - (0.2)Proceeds from sale of property, plant and equipment 0.1 - 0.2Proceeds from sale of associates, joint ventures and - 6.3 7.9available-for-sale investmentsDividends received 0.2 0.2 0.5Net loans to associates and joint ventures (1.0) (1.8) (2.0)Acquisition of subsidiaries, net of cash acquired 9 (7.4) (26.6) (37.8)(Purchase)/sale of assets held for resale (3.0) 16.3 16.3Purchases of property, plant and equipment (2.4) (3.4) (7.3)Purchases of intangible assets (0.5) (0.6) (1.1)Purchase of investment in associates, joint ventures and available-for-sale investments (4.0) (5.5) (2.2)Purchase of financial assets at fair value through profit or loss - - (1.5) Net cash used in investing activities (18.0) (15.1) (27.2) Cash flows from financing activitiesProceeds from issue of share capital 0.3 0.5 1.2Proceeds from borrowings 15.1 0.3 0.2Repurchase of own shares (21.8) - -Purchase of own shares for Employee Benefit Trust (12.9) (5.0) (5.0)Repayments of borrowings (6.6) (1.0) (1.1)Dividends paid (14.0) (10.0) (16.4) Net cash used in financing activities (39.9) (15.2) (21.1) Net (decrease)/increase in cash, cash equivalents and bank overdrafts (82.3) (34.5) 27.8Cash and cash equivalents at beginning of the period 123.7 99.9 99.9Effect of exchange rate fluctuations on cash held (0.5) (2.2) (4.0) Cash, cash equivalents and bank overdrafts at end of period 40.9 63.2 123.7 SAVILLS plc CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE (unaudited) for the period ended 30 June 2007 Six months Six months Year ended to 30.06.07 to 30.06.06 31.12.06 Notes £m £m £mProfit for the period 22.9 21.6 59.1 Revaluation of available-for-sale investments 0.2 0.4 0.4Actuarial gain on defined benefit pension scheme 12.1 6.4 2.5Tax on items directly taken to reserves (3.8) 0.5 3.5Foreign exchange translation differences (1.0) (2.1) (4.3) Net income recognised directly in equity 7.5 5.2 2.1 Total recognised income and expense for the period 30.4 26.8 61.2 Attributable to:Equity shareholders of the Company 29.2 26.5 59.6Minority interest 1.2 0.3 1.6 30.4 26.8 61.2 NOTES 1. Basis of preparation The financial information comprises the unaudited consolidated income statement,consolidated balance sheet, consolidated statement of cashflows, consolidatedstatement of recognised income and expense and related notes as at 30 June 2007and 30 June 2006, together with the audited consolidated balance sheet andconsolidated income statement for the year ended 31 December 2006. This financial information has been prepared in accordance with the ListingRules of the Financial Services Authority. In preparing this financialinformation management has used the principal accounting policies as set out inthe Group's annual financial statements for the year ended 31 December 2006 onpages 84 to 89. As permitted, the Group has chosen not to adopt IAS 34, 'Interim financialstatements' in preparing its 2007 interim statements, and therefore this interimfinancial information is not considered to be in full compliance with IFRS. The 2006 Annual Report and Accounts, which are the Group's statutory accounts,have been filed with the Registrar of Companies. The auditors' report on theseaccounts was unqualified and did not contain a statement under Section 237(2) orSection 237(3) of the Companies Act 1985. 2. Segment analysis Six months to Transactional Consultancy Property & Fund Financial Unallocated* Total30 June 2007 Advice Facilities Management Services Management £m £m £m £m £m £m £mRevenueUnited Kingdom - Commercial 36.5 35.1 16.3 7.3 0.7 - 95.9 - Residential 56.7 12.1 5.5 - 12.6 - 86.9 93.2 47.2 21.8 7.3 13.3 - 182.8Rest of Europe 18.2 3.4 8.1 - - - 29.7Asia Pacific 23.3 6.5 41.9 - - - 71.7 Total revenue 134.7 57.1 71.8 7.3 13.3 - 284.2 Operating profitUnited Kingdom - Commercial 7.3 4.5 0.6 2.1 0.1 (1.7) 12.9 - Residential 9.8 1.6 0.2 - 1.3 - 12.9 17.1 6.1 0.8 2.1 1.4 (1.7) 25.8Rest of Europe 0.5 0.3 (0.4) - - - 0.4Asia Pacific 2.8 0.5 2.2 - - - 5.5 Operating profit/(loss) 20.4 6.9 2.6 2.1 1.4 (1.7) 31.7 Net finance 1.3incomeShare of post tax profit from associates & joint ventures 0.2 Profit before income tax 33.2Income tax expense (10.3) Profit for the period from continuing operations 22.9 Six months to Transactional Consultancy Property & Fund Financial Unallocated* Total30 June 2006 Advice Facilities Management Services Manage-ment £m £m £m £m £m £m £mRevenueUnited Kingdom - Commercial 30.5 21.9 15.9 2.7 1.5 0.2 72.7 - Residential 40.3 9.5 3.9 - 10.6 0.3 64.6 70.8 31.4 19.8 2.7 12.1 0.5 137.3Rest of Europe 6.8 1.1 2.5 - - - 10.4Asia Pacific 17.3 5.2 40.9 - - - 63.4 Total revenue 94.9 37.7 63.2 2.7 12.1 0.5 211.1 Operating profitUnited Kingdom - Commercial 5.9 3.6 1.6 0.1 0.3 (1.7) 9.8 - Residential 11.4 1.8 0.3 - 1.0 - 14.5 17.3 5.4 1.9 0.1 1.3 (1.7) 24.3Rest of Europe 0.4 - (0.2) - - - 0.2Asia Pacific 1.4 0.5 2.4 - - - 4.3 Operating profit/(loss) 19.1 5.9 4.1 0.1 1.3 (1.7) 28.8 Net finance income 2.2Share of post tax profit from associates & joint ventures - Profit before income tax 31.0Income tax (9.7)expense Profit for the period from continuing operations 21.3 The unallocated segment includes holding company costs, Group bonuses and otherexpenses not directly attributable to the operating activities of the Group'sbusiness segments. *For the purpose of the segmental information above, and to assist in thecomparison of segmental information, the benefit arising from the amortisationof the share based payment charge as discussed in more detail in Note 6, isretained within the unallocated segment. The June 2006 segmental analysis hasbeen adjusted to allocate European central costs against the relevant businessstreams. These costs were previously shown as part of the unallocated UnitedKingdom - commercial segment. 3. Non-current assets held for sale and discontinued operations Six months Six months Year ended to 30.06.07 to 30.06.06 31.12.06 £m £m £m Revenue - 1.1 1.1Expenses - (0.4) (0.4)(Loss)/profit before income tax - 0.7 0.7Income tax expense - (0.4) (0.4)(Loss)/profit before income tax - 0.3 0.3 The Cordea Savills Nordic Retail No 1 Group of companies were established in the period to provideseed assets for a proposed fund to be launched by Cordea Savills later in the year. As at 30 June2007, the Group held 100% of the share capital of these companies and the associated assets andliabilities have been classified as held for sale as it is expected that they will be disposed of inthe second half of the year on the launch of the fund to investors. There was no impact on the incomestatement in the period. The 2006 results relate to the assets and liabilities of the Student Halls Long Lease 1 Unit Trust(the 'Fund') which were disposed during the year ended 31 December 2006. 4. Income tax on profit from continuing operations The income tax expense has been calculated on the basis of the underlying rate in each jurisdictionadjusted for any disallowable charges. Six months Six months Year ended to 30.06.07 to 30.06.06 31.12.06 £m £m £m United Kingdom corporation tax (9.3) (7.6) (18.7)Foreign tax (1.8) (1.4) (4.7)Deferred tax 0.8 (0.7) (2.2) (10.3) (9.7) (25.6) Six months Six months Year ended5. Dividends to 30.06.07 to 30.06.06 31.12.06 £m £m £m Amounts recognised as distribution to equity holders:Interim dividend of 5.0p per share - - 6.2Ordinary final dividend of 11.0p per share (2006 - 8.0p) 13.4 10.0 10.0 13.4 10.0 16.2 Proposed interim dividend for the six months ended 30 June 2007 7.3 - - The Directors have recommended an interim dividend for the six months to 30 June 2007 of 6.0p perordinary share (2006 - 5.0p). The interim dividend will be paid on 29 October 2007 to shareholders onthe register as at 28 September 2007. 6. Underlying profit before tax Six months Six months Year ended(a) From continuing operations to 30.06.07 to 30.06.06 31.12.06 £m £m £m Reported profit before income tax 33.2 31.0 84.4Adjustments:Amortisation of intangibles (excluding software) & impairment of goodwill 1.2 0.4 1.8Share based payment adjustment (1.9) (0.8) (6.1)Sale of subsidiary, associate, joint ventures & available-for-sale investments - (5.0) (5.1) Underlying profit before tax 32.5 25.6 75.0 The Directors regard the above adjustments necessary to give a fair picture of the underlying results ofthe Group for the period. The adjustment for share based payment relates to the transitional impact of theaccounting standard for share based compensation. The annual bonus is paid in a mixture of cash and deferred shares and the proportions can vary from oneyear to another. Under IFRS the deferred share element is amortised to the income statement over thevesting period whilst the cash element is expensed in the year. The adjustment above addresses this bydeducting from profit the difference between the IFRS 2 charge and the value of the annual share award. (b) Segmental analysis Six months to Transactional Consultancy Property & Fund Financial Unallocated Total30 June 2007 Advice Facilities Management Services Management £m £m £m £m £m £m £mUnited Kingdom - Commercial 7.7 4.5 0.6 2.1 0.1 (2.7) 12.3 - Residential 10.1 1.6 0.5 - 1.6 - 13.8 17.8 6.1 1.1 2.1 1.7 (2.7) 26.1 Rest of Europe 0.2 0.3 (0.3) - - - 0.2Asia Pacific 2.9 0.5 2.8 - - - 6.2 Underlying profit before tax 20.9 6.9 3.6 2.1 1.7 (2.7) 32.5 Six months to Transactional Consultancy Property & Fund Financial Unallocated Total30 June 2006 Advice Facilities Management Services Manage-ment £m £m £m £m £m £m £mUnited Kingdom - Commercial 6.3 3.5 1.3 0.1 0.3 (1.6) 9.9 - Residential 7.2 1.8 0.5 - 1.2 - 10.7 13.5 5.3 1.8 0.1 1.5 (1.6) 20.6Rest of Europe 0.4 - (0.2) - - - 0.2Asia Pacific 1.4 0.5 2.9 - - - 4.8 Underlying profit before tax 15.3 5.8 4.5 0.1 1.5 (1.6) 25.6 Year to Transactional Consultancy Property & Fund Financial Unallocated Total Advice Facilities Management Services31 December Management2006 £m £m £m £m £m £m £m United Kingdom - Commercial 20.5 10.6 2.8 0.7 1.0 (3.9) 31.7 - Residential 16.6 4.0 1.4 - 3.4 - 25.4 37.1 14.6 4.2 0.7 4.4 (3.9) 57.1Rest of Europe 4.7 0.8 - - - - 5.5Asia Pacific 4.4 0.7 7.3 - - - 12.4 Underlying profit before tax 46.2 16.1 11.5 0.7 4.4 (3.9) 75.0 7. Basic and diluted earningsper share (a) Basic and diluted earnings per share Earnings Shares EPS Earnings Shares EPSSix months to 30 June 2007 2007 2007 2006 2006 2006 £m m Pence £m m PenceFrom continuing and discontinued operationsBasic earnings per share 21.6 121.4 17.8 21.3 124.0 17.2Effect of additional sharesissuable under option - 4.9 (0.7) - 7.5 (1.0) Diluted earnings per share 21.6 126.3 17.1 21.3 131.5 16.2 From continuing operationsBasic earnings per share 21.6 121.4 17.8 21.0 124.0 16.9Effect of additional sharesissuable under option - 4.9 (0.7) - 7.5 (1.0) Diluted earnings per share 21.6 126.3 17.1 21.0 131.5 15.9 From discontinued operationsBasic earnings per share - 121.4 - 0.3 124.0 0.3Effect of additional sharesissuable under option - 4.9 - - 7.5 - Diluted earnings per share - 126.3 - 0.3 131.5 0.3 Earnings Shares EPSYear to 31 December 2006 2006 2006 £m m PenceFrom continuing and discontinued operationsBasic earnings per share 57.7 124.7 46.3Effect of additional shares issuable under option - 5.8 (2.1) Diluted earnings per share 57.7 130.5 44.2 From continuing operationsBasic earnings per share 57.4 124.7 46.0Effect of additional shares issuable under option - 5.8 (2.0) Diluted earnings per share 57.4 130.5 44.0 From discontinued operationsBasic earnings per share 0.3 124.7 0.3Effect of additional shares issuable under option - 5.8 (0.1) Diluted earnings per share 0.3 130.5 0.2 (b) Adjusted underlying basic earnings per share Earnings Shares EPS Earnings Shares EPSSix months to 30 June 2007 2007 2007 2006 2006 2006 £m m Pence £m m PenceFrom continuing operationsBasic earnings from continuing operations 21.6 121.4 17.8 21.0 124.0 16.9Amortisation of intangibles (excluding software) 0.8 - 0.7 0.3 - 0.3 & impairment of goodwill after taxShare based payment adjustment after tax (1.3) - (1.1) (0.6) - (0.5)Less sale of subsidiary, associate, joint venture & available-for-sale investments after tax - - - (3.5) - (2.8) Adjusted underlying basic earnings per share 21.1 121.4 17.4 17.2 124.0 13.9 Earnings Shares EPSYear to 31 December 2006 2006 2006 £m m PenceFrom continuing operationsBasic earnings from continuing operations 57.4 124.7 46.0Amortisation of intangibles (excluding software) 1.3 - 1.0& impairment of goodwill after taxShare based payment adjustment after tax (4.3) - (3.4) Less sale of subsidiary, associate, (3.5) - (2.8)joint venture & available-for-sale investments after tax Adjusted underlying basic earnings per share 50.9 124.7 40.8 Six months Six months 8. Cash generated from continuing operations to to Year ended 30.06.07 30.06.06 31.12.06 £m £m £m Profit for the year from continuing operations 22.9 21.3 58.8Adjustments for:Income tax 10.3 9.7 25.6Depreciation 2.8 2.7 5.6Amortisation of intangibles 1.5 0.7 2.4Net finance income (1.3) (2.2) (3.7)Share of post tax profit from associates & joint ventures (0.2) - (0.5)Profit on disposal of subsidiary, associate, joint venture & available-for-sale investments - (5.0) (5.1)Loss on sale of property, plant and equipment 0.5 0.6 0.4Increase in provisions 0.3 1.0 0.5Increase/(decrease) in employee and retirement obligations 1.6 (1.0) (2.2)Charge for share based compensation 4.2 1.9 5.3 Operating cash flows before movements in working capital 42.6 29.7 87.1 (Increase)/decrease in work in progress - (0.3) 0.4(Increase)/decrease in debtors (1.2) 12.0 (37.2)(Decrease)/increase in creditors (56.0) (41.3) 37.1 Cash (used in)/generated from operations (14.6) 0.1 87.4 9. Acquisitions On 7 January 2007, the Group acquired the share capital of Hepher Dixon Limitedfor consideration of £5.1m. Goodwill on acquisition of £4.3m has beenprovisionally determined, and is attributable to key staff and their industryreputation. Cash consideration of £2.8m was paid on 5 January 2007 with £2.3mdeferred cash consideration due over the next five years. On 3 May 2007, the Group acquired the share capital of Christopher RowlandLimited for consideration of £4.3m. Provisional goodwill on acquisition of £4.2mhas been determined, and is attributable to key staff and their industryreputation. Cash consideration of £2.1m was paid on 3 May 2007 with £2.2mdeferred cash consideration due over the next five years. 10. Statement of changes in equity Attributable to equity holders of the Group Share Share Other Retained Minority Total capital premium reserves earnings interest equity £m £m £m £m £m £m Balance at 1 January 2007 3.4 82.4 (1.8) 124.5 4.3 212.8Total recognised income and expense for the periodEmployee share option scheme: - - (0.9) 30.1 1.2 30.4- Value of services provided - - - 4.2 - 4.2- Exercise options - 0.2 - (0.2) - -Issue of share capital - 0.3 - - - 0.3Purchase of own shares (0.1) - 0.1 (21.8) (21.8)Purchase of treasury shares - - - (12.9) - (12.9)Dividends - - - (13.4) (0.6) (14.0) Balance at 30 June 2007 3.3 82.9 (2.6) 110.5 4.9 199.0 Attributable to equity holders of the Group Share Share Other Retained Minority Total capital premium reserves earnings interest equity £m £m £m £m £m £m Balance at 1 January 2006 3.3 80.9 6.5 77.0 0.6 168.3Total recognised income and - - (1.9) 28.4 0.3 26.8expense for the periodEmployee share option scheme:- Value of services provided - - - 1.9 - 1.9Issue of share capital - 0.5 - - - 0.5Purchase of treasury shares - - - (5.0) - (5.0)Dividends - - - (10.0) (0.1) (10.1)Disposals (net of tax) - - (3.7) - - (3.7)Acquisitions - - - - 2.9 2.9 Balance at 30 June 2006 3.3 81.4 0.9 92.3 3.7 181.6 Attributable to equity holders of the Group Share Share Other Retained Minority Total capital premium reserves earnings interest equity £m £m £m £m £m £m Balance at 1 January 2006 3.3 80.9 6.5 77.0 0.6 168.3Total recognised income and expense for the periodEmployee share option scheme: - - (4.2) 63.8 1.6 61.2- Value of services provided - - - 5.3 - 5.3- Exercise options - 0.4 - (0.4) - -Issue of share capital 0.1 1.1 - - - 1.2Purchase of treasury shares - - - (5.0) - (5.0)Dividends - - - (16.2) (0.2) (16.4)Disposals (net of tax) - - (4.1) - - (4.1)Acquisitions - - - - 2.3 2.3 Balance at 31 December 2006 3.4 82.4 (1.8) 124.5 4.3 212.8 11. Events after Balance Sheet date On 31 July 2007, in line with our strategy to invest directly in operations in the US, we acquiredGranite Partners LLC, a US real estate investment banking firm, for an initial consideration ofUS$54.0m, of which 75% was payable on completion. As at the date of this announcement the triennial valuation of the Group's defined benefit pensionscheme was still being undertaken. This valuation will be incorporated into the financial statementsfor the year ended 31 December 2007. Copies of this statement are available from the Company website at: www.savills.com and also from: Savills plc, 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ Telephone: 020 7409 9928 Fax: 020 7491 0505 Email: [email protected] Contact: Kathryn Charmley 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 End This information is provided by RNS The company news service from the London Stock ExchangeRelated Shares:
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