Half-year Report

RNS Number : 6235V

Savills PLC

11 August 2022

 

11 August 2022

Savills plc

('Savills' or 'the Group')

RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2022

STRONG PERFORMANCE COMFORTABLY AHEAD OF PRE-PANDEMIC LEVELS

Savills plc, the international real estate advisor, today announces its unaudited results for the six months ended 30 June 2022.

Key Financial Information

· Group revenue £1,037.4m, up 11% (9% in constant currency*) (H1 2021: £932.6m)

· Group underlying profit** before tax £59.2m (H1 2021: £66.1m)

· Group profit before tax £50.4m (H1 2021: £63.3m)

· Underlying basic earnings per share** 32.4p (H1 2021: 35.8p)

· Basic earnings per share 26.8p (H1 2021: 34.2p)

· Interim dividend of 6.6p (H1 2021: 6.0p)

· Net cash***  149.0m (H1 2021: Net cash £106.7m) 

* Revenue and underlying profit for the period are translated at the prior period exchange rates to provide a constant currency comparative.

** Underlying profit before tax ('underlying profit') and underlying basic earnings per share ('underlying EPS') are calculated on a consistently reported basis in accordance with Note 3, Note 8 and Note 11(b) to the Interim Financial Statements.

*** Net cash reflects cash and cash equivalents net of borrowings and overdrafts in the notional pooling arrangement (see Note 13 and 18).

Trading performance - Key highlights

· Transaction Advisory revenues up 14%

· Commercial Transaction revenue increased 26% overall with growth across all regions

· Residential Transaction Advisory revenue down 11%; UK residential markets performed well albeit with anticipated reduction in activity levels

· Less transactional businesses, performed well in aggregate with revenue up 9%

· Property and Facilities Management revenue up 8%, Consultancy revenue up 6%

· Savills Investment Management revenue significantly ahead with Assets under Management ('AUM') up 9% to €26.5bn (£22.8bn)

Commenting on the results, Mark Ridley, Group Chief Executive of Savills plc, said:

"2022 has presented a number of heightened macro-economic, geopolitical, and, in some locations, continued Covid-related risks to investors, corporates and to many people's personal lives. I am delighted with the responses of our people and our clients to doing business in challenging circumstances and specifically in respect of their support for  Ukraine.  

"Despite staff cost inflation and the anticipated increase in discretionary costs, we have performed well so far this year, in line with the Board's expectations. With our strong balance sheet, we are continuing to undertake a variety of business development activities across the Group to enhance our service to clients worldwide.

"With inflation driving interest rates up globally, a new experience for many market participants, real estate markets began to adjust in the second quarter. We expect that process to continue through the second half of the year. However, there remains significant investor interest in the secure income characteristics of real estate and occupiers are progressively focussing on improving the sustainability characteristics of their portfolios as well as creating environments in which staff can thrive.

"At this stage it is too early to predict with any accuracy the potential impact of the political and economic environment on real estate transaction volumes globally, although clearly the risk is towards a short term reduction in activity as markets adjust to, inter alia, rising debt cost. Notwithstanding this risk, given our performance to date and having previously taken a cautious view of likely transactional performance in 2022, at this stage the Board's expectations for the year as a whole remain unchanged."

For further information, contact:

Savills	020 7409 8030
Mark Ridley, Group Chief Executive
Simon Shaw, Group Chief Financial Officer
Tulchan Communications	020 7353 4200
Mark Burgess Elizabeth Snow

The analyst presentation will be held at 9.30am today by webinar . For joining instructions please contact [e-mail]. A recording of the presentation will be available from noon at  www.ir.savills.com .

Overview

The Group has traded well so far in 2022 against a backdrop of geopolitical, economic, practical (supply chain) and, in some cases, Covid-related challenges.

In the six months to 30 June 2022, Savills delivered revenue of £1,037.4m, an increase of 11% (9% in constant currency) on the comparable period (H1 2021: £932.6m). Underlying profit was £59.2m, 10% lower than the first half of 2021 (H1 2021: £66.1m) (11% lower in constant currency) in line with our expectations. The Group's underlying profit margin was 5.7% (H1 2021: 7.1%). This reflects staff cost inflation and the anticipated progressive return to higher levels of marketing, travel and entertainment/events related expenditure compared with abnormally low levels in 2021.

Strong underlying growth compared with the Group's pre-pandemic performance is illustrated by the fact that H1 2022 revenue and underlying profit were 22% and 54% respectively ahead of the equivalent performance for H1 2019 (H1 2019 revenue: £847.0m, H1 2019 underlying profit: £38.4m and H1 2019 underlying profit margin: 4.5%).

The Group continues to maintain a strong liquidity position with net cash of £149.0m at period end (H1 2021: £106.7m). 

Reported profit before tax, including employment-linked deferred consideration provisions and transaction-related and restructuring costs was £50.4m (H1 2021: £63.3m).

Market conditions

Q1 2022 started strongly in virtually all "non-Covid affected" markets. The war in  Ukraine , inflation and the rising interest rate cycle began to affect transaction markets in Q2, initially in the smaller lot sizes, both capital and lease transactions, as investors and corporates started to factor inflation and rising debt cost into their decisions. As is customary, this has manifested itself in significant bid/offer spreads in the market across most real estate sub sectors.

The transaction volume of commercial properties in Asia Pacific fell by 30% year-on-year in H1 2022. The Omicron variant has undermined the ongoing recovery of the regional economy, with lockdown restrictions across the region, which were especially severe in the major cities in China. It is expected that economic growth in the region will gather momentum in H2 2022, as lockdown restrictions ease.

In Europe, the investment market had a strong start to the year but volumes in Q2 declined on the same period last year given the geopolitical and economic backdrop. This has been particularly marked in Germany.

The US is seeing both pockets of strength and some headwinds across the commercial real estate markets. Most pandemic-related concerns have subsided with all business and economic restrictions lifted. The office market recovery remains slow, but there is positive momentum and ample opportunity for occupiers given current dynamics. H1 2022 office leasing volumes were 35% higher than that seen at H1 2021, with a stronger performance in Q1 versus Q2, again as a result of growing economic concern for the remainder of the year.

Residential markets, particularly in the UK, have remained relatively buoyant in the first half of 2022 despite increasing economic headwinds. Activity in the prime housing markets remained particularly robust, despite constrained levels of publicly available stock. However, price growth has begun to moderate in response to the rising cost of debt in particular.

Business development during the period

The Group has continued to focus on the strategic development of the business, enabled by the Group's strong balance sheet. In the first half of this year, we completed the acquisition of several businesses and continue to undertake significant organic growth initiatives across the platform. In May, the Group acquired workplace specialist BrickByte in Germany, enhancing Savills ability to respond to increasing client demand for workplace consulting in this market. In Indonesia, the Group acquired a full service property business to bolster our service offering in the region (see Note 14). 

Technology continues to be an important focus for the Group, and we continue to benefit from the investment we have made both internally and externally, through Grosvenor Hill Ventures, across the globe and from our own digital transformation programmes. In February, we completed the acquisition of UK-based workplace experience platform Cureoscity (see Note 14). This provides a digital platform which connects and enhances smart building capabilities and access control with modules that improve occupier experience and engagement. Since this acquisition, the platform is being rolled out across our property management portfolio.

Through Grosvenor Hill Ventures, our technology investment subsidiary, we have continued to support our portfolio business and we also participated in the Series A funding round of ThirdFort, a platform which improves the customer experience by digitising many aspects of the core compliance tasks for the industry.

Business review

The following table sets out Group revenue and underlying profit by operating segment:

Revenue	H1 2022 £m	H1 2021 £m	Change
Transaction Advisory	413.2	362.0	14%
Consultancy	184.3	173.4	6%
Property and Facilities Management	386.1	359.0	8%
Investment Management	53.8	38.2	41%
Group revenue	1,037.4	932.6	11%

Underlying profit	H1 2022 £m	H1 2021 £m	Change
Transaction Advisory	22.7	29.1	(22%)
Consultancy	14.6	18.8	(22%)
Property and Facilities Management	18.6	19.2	(3%)
Investment Management	10.3	7.1	45%
Unallocated cost	(7.0)	(8.1)	n/a
Group underlying profit	59.2	66.1	(10%)

The following table sets out Group revenue and underlying profit by geographical area:

Revenue	H1 2022 £m	H1 2021 £m	Change
UK	439.2	417.4	5%
Asia Pacific	311.7	287.2	9%
CEME	138.1	114.0	21%
North America	148.4	114.0	30%
Group revenue	1,037.4	932.6	11%

Underlying profit	H1 2022 £m	H1 2021 £m	Change
UK	48.1	53.1	(9%)
Asia Pacific	18.0	24.0	(25%)
CEME	(1.7)	(4.1)	n/a
North America	1.8	1.2	50%
Unallocated cost	(7.0)	(8.1)	n/a
Group underlying profit	59.2	66.1	(10%)

Revenue growth of 11% was driven by a combination of normal growth (9%) in the less transactional service lines, a 26% improvement in commercial transaction revenues and the anticipated reduction in activity in residential markets.

As anticipated, this shift in revenue from residential to commercial transactions affected UK profits period-on-period. More generally, profits were impacted globally by significant growth in staff costs after two years of effective stasis. Furthermore, as anticipated, other expense lines including marketing, events, travel and entertainment increased by between 50% and 115% period-on-period as these activities, which were extremely limited in H1 2021, had largely normalised by H1 2022, albeit in some cases at lower than pre-Covid levels.

Transaction Advisory

Revenue	H1 2022 £m	H1 2021 £m	Change
UK	151.4	142.7	6%
Asia Pacific	80.4	74.3	8%
CEME	49.1	39.9	23%
North America	132.3	105.1	26%
Total	413.2	362.0	14%

Our Transaction Advisory revenues increased by 14% over H1 2021 (12% in constant currency), with strong revenue growth in North America and CEME. Underlying profit decreased to £22.7m as a result of both the mix of revenues and the inflationary cost increases referenced above (H1 2021: £29.1m).

UK Commercial

UK Commercial Transaction fee income increased 44% to £55.6m (H1 2021: £38.5m), with significant growth in both investment and leasing activity. 

The first six months of 2022 saw an initial strong recovery in commercial property investment activity, followed by the beginnings of a slowdown as geo-political and economic events affected investor confidence. Occupational market trends were more resilient, with office leasing volumes in both central London and the key regional cities increasing over the comparable period, albeit activity was still focused on larger lot sizes with good sustainability characteristics.

Logistics markets remained strong with a record level of take-up through the first half of 2022.

Increased revenue resulted in an improved underlying profit margin of 17.8% (H1 2021: 13.5%)  and underlying profit of £9.9m (H1 2021: £5.2m).

UK Residential

In line with our expectations, after the abnormally positive market conditions of 2021, revenue from Savills UK residential business declined by 8% to £95.8m (H1 2021: £104.2m), which was a resilient performance against the backdrop of much reduced stock availability and rising interest rates.

In the second hand agency business, Savills overall transaction volumes exchanged were down 22% in London and 39% in the regional markets following a record performance in H1 2021. The average value of London and regional residential property sold by Savills in the period was higher at £2.2m (H1 2021: £1.9m) and £1.4m (H1 2021: £1.2m) respectively.

Revenue from the sale of New Homes improved 7% on H1 2021. This reflected  significant growth in the average lot size transacted as a result of increased exposure to London transactions largely offsetting a reduction in activity in markets outside the capital.

Finally, our Operational Capital Markets business, which advises on the Private Rented Sector ('PRS'), Student and other institutional residential markets, delivered 38% revenue growth period-on-period as a consequence of some individually large transactions in this sector of high investment demand.

Underlying profits in the UK residential transaction business decreased to £13.6m (H1 2021: £20.5m).

Asia Pacific Commercial

Commercial Transaction fee income in Asia Pacific increased by 18% (same in constant currency) to £71.2m (H1 2021: £60.5m). Strong performances in Japan, Singapore, South Korea and Vietnam more than offset significantly reduced revenue in mainland China, which was largely due to continued Covid-related restrictions there for much of the period. Indeed, collectively mainland China and Hong Kong represented 28% of the Asia Pacific region's commercial transaction revenue during the period, which contrasts significantly with our position a decade ago when they represented in excess of 65%. 

Overall the Asia Pacific commercial transaction business delivered a stable underlying profit for the period of £7.4m (H1 2021: £7.4m).

Asia Pacific Residential

Residential Transaction fee income in Asia Pacific decreased by 33% to £9.2m (H1 2021: £13.8m) (-37% in constant currency). This was driven in particular by COVID-related travel restrictions affecting the high value markets in Hong Kong and mainland China for much of the period.

The reduction in revenues decreased underlying profit to a break-even position for the first half of the year (H1 2021: £3.7m profit).

CEME

In CEME, transactional advisory revenue improved 23% to £49.1m (H1 2021: £39.9m) with a particularly strong first quarter. The war in Ukraine, supply chain disruption (including energy) and the consequent inflation and rising interest rates began to dampen investor and occupier sentiment in Q2 particularly in the key German markets where revenue declined significantly period-on-period. This was offset by growth in Spain, Netherlands, Sweden, France and Czech Republic. Overall, cost inflation and the impact of reduced trading activity in Germany together with recruitment costs across the region led to a marginal increase in underlying loss for the period of £8.8m (H1 2021: £8.5m loss)

North America

In North America, where the Group is substantially dependent upon leasing activity by corporate occupiers, revenue improved significantly over the prior comparative period, with growth of 26% to £132.3m (H1 2021: £105.1m). This was driven by strong performances in the Northeast and Southern markets of the United States, particularly the three principal Texan markets.

The North American business delivered underlying profit of £0.6m which was marginally below the prior period (H1 2021: £0.8m underlying profit), reflecting inflationary pressures on employment costs and a return to more normal levels of expenditure on travel, marketing and other discretionary spend.

Consultancy

Revenue	H1 2022 £m	H1 2021 £m	Change
UK	109.6	109.9	n/a
Asia Pacific	39.5	36.2	9%
CEME	19.1	18.4	4%
North America	16.1	8.9	81%
Total	184.3	173.4	6%

The Consultancy business delivered robust growth in the period. The 6% increase in revenue (5% in constant currency) to £184.3m (H1 2021: £173.4m) included a full period of ownership of T3 Advisors ('T3'), a leading US real estate advisor and consultant to the life sciences and technology sectors, acquired in June 2021. 

In the UK, revenue was broadly in line with the prior period with growth in the Building and Project Consultancy, Housing and Planning divisions offset by a decline in Development Consultancy revenue. During the period, the Group acquired the trade and assets of Cureoscity, an expanding technology platform to support the interactions between landlord, occupier and building manager in commercial real estate. This, together with staff cost inflation resulted in a lower profit contribution from the UK period-on-period. 

The Asia Pacific business delivered revenue growth of 9% (6% on a constant currency basis), driven by project management consultancy growth in South Korea and Singapore, benefitting from the acquisition of Merx Holdings (SG) Pte Ltd at the end of 2021. This offset declines in consultancy activity in Hong Kong and Japan.

Underlying profit for the region declined period-on-period reflecting further investment in the platform in China, Hong Kong and the regional project management team.

In the CEME business a stable revenue performance comprised growth in Ireland, Italy, Czech Republic and the Middle East, principally in valuation business, offset by reductions in other areas. Underlying profit remained stable after accounting for staff cost inflation generally and specific expansion costs in Germany.

The significant growth in North America Consultancy revenue reflected a full period of ownership of Savills T3, which was acquired mid-June 2021, and a strong growth performance from Savills Macro, our project management business in the region.

Underlying profit of the Consultancy business decreased by 22% to £14.6m (H1 2021: £18.8m), reflecting inflationary staff cost pressures, further investment in the platform across the Asia Pacific region and the impact of development stage operating losses of the Cureoscity platform in the UK.

Property and Facilities Management

Revenue	H1 2022 £m	H1 2021 £m	Change
Asia Pacific	188.4	173.7	8%
UK	149.6	145.2	3%
CEME	48.1	40.1	20%
Total	386.1	359.0	8%

Our Property and Facilities Management business increased global revenues by 8% (5% in constant currency) to £386.1m (H1 2021: £359.0m). Savills total area under management increased 1% to 2.42bn sq ft (H1 2021: 2.40bn sq ft).

In Asia Pacific, revenues increased by 8% (3% in constant currency), driven by Hong Kong, mainland China, Vietnam and Singapore. However, the absence of Employment Support subsidies, which had benefited H1 2021, together with staff cost inflation meant that underlying profit declined by approximately 10% period on period.

UK Property and Facilities Management revenues grew 3%. This comprised 2% commercial and rural management growth and 9% residential management growth (primarily lettings). Underlying profit reduced by 7% period-on-period reflecting inflationary pressure on salaries and expansion of the treasury and client accounting team. 

The CEME business delivered strong revenue growth of 20% (23% in constant currency) driven by Germany, Ireland, Spain and the Middle East. This growth ensured that the business returned to an underlying profit, from the underlying loss position of H1 2021, despite the continued investment in scaling the German business.

Overall, underlying profit for the Property and Facilities Management business decreased by 3% to £18.6m (H1 2021: £19.2m).

Investment Management

Revenue from Investment Management increased by 41% to £53.8m (H1 2021: £38.2m), including a full period of revenue from DRC Savills Investment Management (acquired at the end of May 2021). Base management fees represented approximately 77% (HY 2021: 78%) of Investment Management gross revenues.

The impact of geopolitical and economic events has clearly affected investor sentiment and price transparency in a number of real estate sectors. However, 78% of SIM funds (by AUM) continued to exceed their benchmark returns on a five year rolling basis.

AUM increased by 9% to €26.5bn (H1 2021: €24.3bn) as a result of organic growth across the business (H1 2022: £22.8bn, H1 2021: £20.9bn). The relationship with Samsung Life progressed well during the period, with investment commitments confirmed for three recently launched fund products and one new strategy to be launched imminently. Deployment of some of these commitments is expected through H2 2022.

The full period effect of DRC Savills Investment Management together with relatively strong performance fee income drove an increase of 45% in underlying profit to £10.3m (H1 2021: £7.1m), which represented a 19.1% underlying profit margin (H1 2021: 18.6%).

Unallocated/central revenue and cost

The unallocated cost segment represents other costs, expenses and net interest not directly allocated to the operating activities of the Group's business segments. The H1 decrease in unallocated net costs of 14% to £7.0m (H1 2021: £8.1m) primarily reflects decreases in the profit-related bonus provision.

Transaction-related and restructuring costs

During the period the Group incurred an aggregate restructuring charge of £0.1m (H1 2021: £0.1m) and transaction-related costs of £5.9m (H1 2021: £5.6m). The restructuring charge reflects the IFRS 2: "Share-based Payment" charge of deferred shares with a 5 year vesting period, issued in relation to the restructuring upon acquisition of Aguirre Newman at the end of 2017. Transaction-related costs in the period primarily represent provisions for future consideration payments which are contingent on the continuity of recipients' employment at the time of payment together with professional advisory fees in relation to significant transactions in the period. The majority of the charge relates to the most recent acquisitions in the Investment Management, US and CEME businesses (see Note 8).

Earnings and financial position

The Group's underlying profit margin in the period was 5.7% (H1 2021: 7.1%). This reflects a return to higher levels of marketing, travel and entertainment/events related expenses, with such expenditure at abnormally low levels in 2021 due to the impact of Covid, alongside the impact of higher staff cost inflation than for some years.

Basic earnings per share for the six months to 30 June 2022 decreased to 26.8p (H1 2021: 34.2p). Underlying basic earnings per share decreased to 32.4p (H1 2021: 35.8p).

Cash and cash equivalents, net of overdrafts in notional pooling arrangements and bank overdrafts (see note 18), at the period end stood at £303.2m (30 June 2021: £293.6m, 31 December 2021: £490.0m). The Group typically has a net outflow of cash in the first half of the year. This is as a result of seasonality in trading and the major cash outflows associated with dividends, profit related remuneration payments and related payroll taxes in the first half of the year.

The Group had borrowings at 30 June 2022 of £156.8m (30 June 2021: £187.1m, 31 December 2021: £150.5m). These principally comprise £150.0m (30 June 2021 and 31 December 2021: £150.0m) of 7, 10 and 12 year fixed rate notes (carrying a weighted average interest rate of 3.19%) which were issued in June 2018. At 30 June 2021, borrowings also included £14.1m drawn under a revolving credit facility in North America (30 June 2021 and 31 December 2021: none). At 30 June 2022, £5.0m of the Group's UK revolving credit facility ('RCF') was drawn (30 June 2021: £24.0m, 31 December 2021: none), with a total of £420.0m of undrawn borrowing facilities available to the Group (30 June 2021: £373.1m, 31 December 2021: £422.2m).

Cash and cash equivalents net of borrowings and overdrafts in notional pooling arrangements was £149.0m (30 June 2021: £106.7m, 31 December 2021: £340.7m).

The funding level of the defined benefit Savills Pension Scheme in the UK, which is closed to future service based accrual, improved during the period primarily as a result of a higher discount rate reducing the value of the Scheme's liabilities. The Scheme was in a surplus position of £33.3m at 30 June 2022 (30 June 2021: £4.5m surplus, 31 December 2021: £17.4m surplus).

 

Impact of foreign exchange

The Group generates revenues and profits in various territories and currencies because of its international footprint. Those results are translated on consolidation at the foreign exchange rates prevailing at the time. These exchange rates vary from period to period, so the Group presents some of its results on a constant currency basis. This means that the current period results are retranslated using the prior period exchange rates. This eliminates the effect of exchange from the period-on-period comparison of results.

The constant currency effect on revenue, profit and underlying profit is summarised below:

	Six months to 30 June 2022	Constant currency effect	Six months to 30 June 2022 at constant currency
	£m	£m	£m
Revenue	1,037.4	16.4	1,021.0
Profit before tax	50.4	0.1	50.3
Underlying profit before tax	59.2	0.2	59.0

Interim Dividend

In view of the overall performance of the Group the Board has declared an interim dividend of 6.6p (H1 2021: 6.0p). The dividend, which is designed to provide sustainable real income growth and be supported by the less transactional business earnings, will be payable on 5 October 2022 to shareholders on the register at 2 September 2022.

Principal and emerging risks

The key principal and emerging risks relating to the Group's operations for the next six months were considered to remain consistent with those disclosed in the Group's Annual Report and Accounts 2021. These are listed below, please refer to pages 31 to 38 thereof or to our investors' page on www.savills.com .

· Business conditions, general economy and geopolitical issues

· Achieving the right market positioning in response to the needs of our clients

· Recruitment and retention of high-calibre staff

· Reputational and brand risk

· Legal risk

· Failure or significant interruption to IT systems causing disruption to client service

· Operational resilience/Business Continuity (including pandemics)

· Business conduct

· Changes in the regulatory environment/regulatory breaches

· Acquisition/integration risk

· Environment and sustainability

Summary and outlook

2022 has presented a number of heightened macro-economic, geopolitical, and, in some locations, continued Covid-related risks to investors, corporates and to many people's personal lives. I am delighted with the responses of our people and our clients to doing business in challenging circumstances and specifically in respect of their support for Ukraine.  

We have performed well so far this year, in line with the Board's expectations, and, with our strong balance sheet, we are continuing to undertake a variety of business development activities across the Group to enhance our service to clients worldwide.

With inflation driving interest rates up globally, a new experience for many market participants, real estate markets began to adjust in the second quarter. We expect that process to continue through the second half of the year. However, there remains significant investor interest in the secure income characteristics of real estate and occupiers are progressively focussing on improving the sustainability characteristics of their portfolios as well as creating environments in which staff can thrive.

At this stage it is too early to predict with any accuracy the potential impact of the political and economic environment on real estate transaction volumes globally, although clearly the risk is towards a short term reduction in activity as markets adjust to, inter alia, rising debt cost. Notwithstanding this risk, given our performance to date and having previously taken a cautious view of likely transactional performance in 2022, at this stage the Board's expectations for the year as a whole remain unchanged.

Mark Ridley   
Group Chief Executive   

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that this condensed consolidated interim financial statements have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as contained in UK-adopted international accounting standards and that the interim management report includes a fair review of the information required by DTR 4.2.7R and DTR 4.2.8R, namely:

●	an indication of important events that have occurred during the first six months and their impact on the condensed consolidated interim financial statements and a description of the principal risks and uncertainties for the remaining six months of the financial year; and
●	material related party transactions in the first six months of the financial year and any material changes in the related party transactions described in the last Annual Report.

The Directors are responsible for the maintenance and integrity of the Company's website. Legislation in the United Kingdom governing the preparation and dissemination of financial statements may differ from legislation in other jurisdictions.

The Directors of Savills plc are listed in the Company's Report and Accounts for the year ended 31 December 2021. A list of current Directors is maintained on the Savills plc website: www.savills.com.

By order of the Board

Mark Ridley, Group Chief Executive

Simon Shaw, Group Chief Financial Officer

10 August 2022

Forward-Looking Statements

The financial information contained in this announcement has not been audited. Certain statements made in this announcement are forward-looking statements. Undue reliance should not be placed on such statements, which are based on current expectations and are subject to a number of risks and uncertainties that could cause actual results to differ materially from any expected future results in forward-looking statements.

The Company accepts no obligation to publicly revise or update these forward-looking statements or adjust them to future events or developments, whether as a result of new information, future events or otherwise, except to the extent legally required.

Independent review report to Savills plc

Conclusion

We have been engaged by Savills Plc to review the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 which comprises the condensed interim consolidated income statement, the condensed interim consolidated statement of comprehensive income, the condensed interim consolidated statement of financial position, the condensed interim consolidated statement of changes in equity, the condensed interim consolidated statement of cash flows and the related explanatory notes 1 to 21.

We have read the other information contained in the half yearly financial report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed set of financial statements.

Based on our review, nothing has come to our attention that causes us to believe that the condensed set of financial statements in the half-yearly financial report for the six months ended 30 June 2022 is not prepared, in all material respects, in accordance with UK adopted International Accounting Standard 34 and the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Basis for Conclusion

We conducted our review in accordance with International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures. A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK) and consequently does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

As disclosed in note 2, the annual financial statements of the group are prepared in accordance with UK adopted international accounting standards. The condensed consolidated interim set of financial statements included in this half-yearly financial report has been prepared in accordance with UK adopted International Accounting Standard 34, "Interim Financial Reporting".

Conclusions Relating to Going Concern

Based on our review procedures, which are less extensive than those performed in an audit as described in the Basis of Conclusion section of this report, nothing has come to our attention to suggest that management have inappropriately adopted the going concern basis of accounting or that management have identified material uncertainties relating to going concern that are not appropriately disclosed.

This conclusion is based on the review procedures performed in accordance with this ISRE, however future events or conditions may cause the entity to cease to continue as a going concern.

Responsibilities of the directors

The directors are responsible for preparing the half-yearly financial report in accordance with the Disclosure Guidance and Transparency Rules of the United Kingdom's Financial Conduct Authority.

In preparing the half-yearly financial report, the directors are responsible for assessing the company's ability to continue as a going concern, disclosing, as applicable, matters related to going concern and using the going concern basis of accounting unless the directors either intend to liquidate the company or to cease operations, or have no realistic alternative but to do so.

Auditor's Responsibilities for the review of the financial information

In reviewing the half-yearly report, we are responsible for expressing to the Company a conclusion on the condensed set of financial statements in the half-yearly financial report. Our conclusion, including our Conclusions Relating to Going Concern, are based on procedures that are less extensive than audit procedures, as described in the Basis for Conclusion paragraph of this report.

Use of our report

This report is made solely to the company in accordance with guidance contained in International Standard on Review Engagements 2410 (UK) "Review of Interim Financial Information Performed by the Independent Auditor of the Entity" issued by the Financial Reporting Council. To the fullest extent permitted by law, we do not accept or assume responsibility to anyone other than the company, for our work, for this report, or for the conclusions we have formed.

Ernst & Young LLP

London

10 August 2022

Savills plc

Condensed interim consolidated income statement

for the period ended 30 June 2022

		Six months to 30 June 2022	Six months to 30 June 2021 restated*	Year ended 31 December 2021
		(unaudited)	(unaudited)	(audited)
	Note	£m	£m	£m
Revenue	7	1,037.4	932.6	2,147.0
Less:
Employee benefits expense		(688.2)	(621.0)	(1,413.1)
Depreciation		(32.0)	(32.0)	(63.4)
Amortisation of intangible assets		(8.0)	(5.0)	(14.2)
Impairment of intangible assets arising from business combinations and goodwill		-	-	(5.2)
Other operating expenses		(260.6)	(211.7)	(465.2)
Net impairment reversals/(losses) of financial assets		2.4	(0.3)	(4.0)
Other net gains		0.1	3.0	2.0
Share of post-tax profit from joint ventures and associates		4.7	4.6	12.6
Operating profit		55.8	70.2	196.5
Finance income		2.3	0.8	1.9
Finance costs		(7.7)	(7.7)	(15.3)
Net finance cost		(5.4)	(6.9)	(13.4)
Profit before income tax		50.4	63.3	183.1
Income tax expense	9	(12.7)	(15.4)	(36.4)
Profit for the period		37.7	47.9	146.7
Attributable to:
Owners of the parent		37.0	47.7	146.2
Non-controlling interests		0.7	0.2	0.5
		37.7	47.9	146.7
Earnings per share
Basic earnings per share	11(a)	26.8p	34.2p	104.9p
Diluted earnings per share	11(a)	25.2p	33.4p	99.8p
* See Notes 4 and 14 for details on the prior period restatement.
Supplementary income statement information
Reconciliation to underlying profit before income tax
Profit before income tax		50.4	63.3	183.1
- restructuring and transaction-related costs	8	6.0	5.7	17.3
- other underlying adjustments	8	2.8	(2.9)	(0.1)
Underlying profit before income tax	8	59.2	66.1	200.3

Notes 1 to 22 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of comprehensive income

for the period ended 30 June 2022

	Six months to 30 June 2022 (unaudited)	Six months to 30 June 2021 restated* (unaudited)	Year ended 31 December 2021 (audited)
	£m	£m	£m
Profit for the period	37.7	47.9	146.7
Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss:
Re-measurement of defined benefit pension scheme obligations	17.4	8.2	21.3
Changes in fair value of equity investments at FVOCI	(5.2)	(0.1)	(4.4)
Tax on other items that will not be reclassified	(3.9)	(1.7)	(5.3)
Total items that will not be reclassified to profit or loss	8.3	6.4	11.6
Items that may be reclassified subsequently to profit or loss:
Currency translation differences	37.7	(12.6)	(8.9)
Tax on items that may be reclassified	0.4	2.4	(0.1)
Total items that may be reclassified subsequently to profit or loss	38.1	(10.2)	(9.0)
Other comprehensive income/(loss) for the period	46.4	(3.8)	2.6
Total comprehensive income for the period	84.1	44.1	149.3
Total comprehensive income attributable to:
Owners of the parent	83.0	43.9	148.8
Non-controlling interests	1.1	0.2	0.5
	84.1	44.1	149.3

* See Note 14 for details on the prior period restatement.

Notes 1 to 22 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of financial position

at 30 June 2022

		30 June 2022 (unaudited)	30 June 2021 restated** (unaudited)	31 December 2021 (audited)
	Note	£m	£m	£m
Assets: Non-current assets
Property, plant and equipment		68.9	64.0	66.3
Right of use assets		235.7	230.0	232.6
Goodwill		436.3	407.3	411.3
Intangible assets		69.5	78.7	72.6
Investments in joint ventures and associates		35.8	34.0	32.8
Deferred income tax assets		37.4	44.3	36.1
Financial assets at fair value through other comprehensive income ('FVOCI')	6	28.3	32.5	30.4
Retirement benefit surplus	15	36.0	4.5	18.1
Contract related assets		3.0	3.2	3.4
Trade and other receivables		53.0	33.4	41.2
		1,003.9	931.9	944.8
Assets: Current assets
Contract assets		12.0	12.4	9.3
Trade and other receivables		533.0	444.6	602.6
Income tax receivable		6.0	3.7	0.9
Derivative financial instruments	6	-	0.2	0.1
Cash and cash equivalents*	18	474.7	481.4	689.7
		1,025.7	942.3	1,302.6
Liabilities: Current liabilities
Borrowings	17	8.4	39.0	2.1
Overdrafts in notional pooling arrangement*	18	168.9	187.7	198.5
Lease liabilities		51.9	44.7	48.0
Derivative financial instruments	6	1.0	0.6	0.9
Contract liabilities		24.9	18.7	14.5
Trade and other payables		536.2	486.7	738.5
Income tax liabilities		16.0	15.0	15.9
Employee benefit obligations	15	25.8	21.6	16.9
Provisions		6.7	11.1	9.2
		839.8	825.1	1,044.5
Net current assets		185.9	117.2	258.1
Total assets less current liabilities		1,189.8	1,049.1	1,202.9
Liabilities: Non-current liabilities
Borrowings	17	148.4	148.1	148.4
Lease liabilities		239.3	238.1	237.0
Derivative financial instruments	6	2.5	0.6	2.6
Other payables		17.5	14.0	20.0
Retirement and employee benefit obligations	15	23.0	13.5	20.3
Provisions		20.9	18.1	20.0
Deferred income tax liabilities		2.2	11.9	1.2
		453.8	444.3	449.5
Net assets		736.0	604.8	753.4

Equity:
Share capital		3.6	3.6	3.6
Share premium		104.8	97.3	104.4
Other reserves		107.7	76.9	76.2
Retained earnings		489.6	426.3	540.0
Equity attributable to owners of the parent		705.7	604.1	724.2
Non-controlling interests		30.3	0.7	29.2
Total equity		736.0	604.8	753.4

Notes 1 to 22 are an integral part of these condensed interim financial statements.

* Included within cash and cash equivalents are cash balances of £169.3m (30 June 2021: £193.3m, 31 December 2021: £201.5m) that are operated within a notional cash pooling arrangement together with overdraft balances of £168.9m (30 June 2021: £187.7m, 31 December 2021: £198.5m) presented above in current liabilities. See Note 18 for further details.

** See Notes 4 and 14 for details on the prior period restatement.

Savills plc

Condensed interim consolidated statement of changes in equity

for the period ended 30 June 2022

	Attributable to owners of the parent
	Share capital	Share premium	Other reserves	Retained earnings	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2022 (audited)	3.6	104.4	76.2	540.0	724.2	29.2	753.4
Profit for the period	-	-	-	37.0	37.0	0.7	37.7
Other comprehensive income/(loss):
Re-measurement of defined benefit pension scheme and employee benefit obligations	-	-	-	17.4	17.4	-	17.4
Changes in fair value of financial assets at FVOCI	-	-	(5.2)	-	(5.2)	-	(5.2)
Currency translation differences	-	-	37.3	-	37.3	0.4	37.7
Tax on other items directly taken to other comprehensive income	-	-	-	(3.5)	(3.5)	-	(3.5)
Total comprehensive income for the period	-	-	32.1	50.9	83.0	1.1	84.1
Employee share option scheme:
- Value of services provided	-	-	-	15.1	15.1	-	15.1
- Tax on employee share option schemes	-	-	-	(2.1)	(2.1)	-	(2.1)
Purchase of treasury shares	-	-	-	(37.6)	(37.6)	-	(37.6)
Shares issued	-	0.4	-	-	0.4	-	0.4
Tax on other items taken to reserves	-	-	-	(0.1)	(0.1)	-	(0.1)
Disposal of financial assets at FVOCI	-	-	(0.2)	-	(0.2)	-	(0.2)
Transfer between equity accounts	-	-	(0.4)	-	(0.4)	0.4	-
Dividends (Note 10)	-	-	-	(76.6)	(76.6)	(0.4)	(77.0)
Balance at 30 June 2022 (unaudited)	3.6	104.8	107.7	489.6	705.7	30.3	736.0

	Attributable to owners of the parent
	Share capital	Share premium	Other reserves	Retained earnings restated*	Total restated*	Non-controlling interests	Total equity restated*
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2021 (audited)	3.6	97.2	90.0	390.1	580.9	0.7	581.6
Profit for the period	-	-	-	47.7	47.7	0.2	47.9
Other comprehensive (loss)/income:
Changes in fair value of financial assets at FVOCI	-	-	(0.1)	-	(0.1)	-	(0.1)
Re-measurement of defined benefit pension scheme and employee benefit obligations	-	-	-	8.2	8.2	-	8.2
Tax on other items directly taken to other comprehensive income	-	-	-	0.7	0.7	-	0.7
Currency translation differences	-	-	(12.6)	-	(12.6)	-	(12.6)
Total comprehensive (loss)/income for the period	-	-	(12.7)	56.6	43.9	0.2	44.1
Employee share option scheme:
- Value of services provided	-	-	-	11.1	11.1	-	11.1
Purchase of treasury shares	-	-	-	(8.3)	(8.3)	-	(8.3)
Shares issued	-	0.1	-	-	0.1	-	0.1
Disposal of financial assets at FVOCI	-	-	(0.2)	0.2	-	-	-
Transfer between equity accounts	-	-	(0.2)	0.2	-	-	-
Dividends (Note 10)	-	-	-	(23.6)	(23.6)	(0.2)	(23.8)
Balance at 30 June 2021 (unaudited)	3.6	97.3	76.9	426.3	604.1	0.7	604.8

* See Note 14 for details on the prior period restatement.

	Attributable to owners of the parent
	Share capital	Share premium	Other reserves	Retained earnings	Total	Non-controlling interests	Total equity
	£m	£m	£m	£m	£m	£m	£m
Balance at 1 January 2021 (audited)	3.6	97.2	90.0	390.1	580.9	0.7	581.6
Profit for the year	-	-	-	146.2	146.2	0.5	146.7
Other comprehensive income/(loss):
Re-measurement of defined benefit pension scheme and employee benefit obligations	-	-	-	21.3	21.3	-	21.3
Changes in fair value of financial assets at FVOCI	-	-	(4.4)	-	(4.4)	-	(4.4)
Tax on items directly taken to other comprehensive income/(loss)	-	-	-	(5.4)	(5.4)	-	(5.4)
Currency translation differences	-	-	(8.9)	-	(8.9)	-	(8.9)
Total comprehensive (loss)/income for the year	-	-	(13.3)	162.1	148.8	0.5	149.3
Employee share option scheme:
- Value of services provided	-	-	-	23.7	23.7	-	23.7
- Tax on employee share option schemes	-	-	-	4.7	4.7	-	4.7
Issue of share capital	-	7.2	-	-	7.2	-	7.2
Tax on other items taken to reserves	-	-	-	0.6	0.6	-	0.6
Purchase of treasury shares	-	-	-	(49.0)	(49.0)	-	(49.0)
Disposal of financial assets at FVOCI	-	-	(0.3)	0.2	(0.1)	-	(0.1)
Dividends	-	-	-	(31.9)	(31.9)	(0.4)	(32.3)
Transactions with non-controlling interest	-	-	-	39.3	39.3	28.2	67.5
Transfer between reserves	-	-	(0.2)	0.2	-	-	-
Additions through business combinations	-	-	-	-	-	0.2	0.2
Balance at 31 December 2021 (audited)	3.6	104.4	76.2	540.0	724.2	29.2	753.4

Notes 1 to 22 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of cash flows

for the period ended 30 June 2022

		Six months to 30 June 2022 (unaudited)	Six months to 30 June 2021 (unaudited)	Year ended 31 December 2021 (audited)
	Note	£m	£m	£m
Cash flows from operating activities
Cash (used in)/generated from operations	12	(34.7)	63.3	348.3
Interest received		2.3	0.7	1.8
Interest paid		(7.4)	(7.1)	(14.0)
Income tax paid		(22.1)	(13.7)	(33.4)
Net cash (used in)/generated from operating activities		(61.9)	43.2	302.7
Cash flows from investing activities
Proceeds from sale of property, plant and equipment		0.1	0.6	1.0
Proceeds from sale of equity investments		0.7	0.3	1.7
Proceeds from sale of interests in joint ventures		0.1	-	0.7
Dividends received from joint ventures		2.3	1.5	6.6
Dividends received from associates		2.3	4.6	6.0
Repayment of loans by joint ventures		-	-	0.1
Loans to joint ventures		-	(0.8)	(0.6)
Loans to other parties		(0.5)	(0.2)	(7.4)
Acquisition of subsidiaries, net of cash and overdrafts acquired		(2.8)	(41.0)	(40.5)
Deferred consideration paid in relation to prior year acquisitions		(1.5)	(4.1)	(5.9)
Purchase of property, plant and equipment		(7.7)	(7.9)	(18.6)
Purchase of intangible assets		(3.9)	(2.1)	(5.9)
Purchase of equity investments		(4.3)	(5.8)	(9.8)
Purchase of investment in joint ventures		(0.1)	-	(0.4)
Purchase of investment in associates		-	-	(0.3)
Net cash used in investing activities		(15.3)	(54.9)	(73.3)
Cash flows from financing activities
Proceeds from issues of share capital		0.4	0.1	7.2
Proceeds from transaction with non-controlling interest		7.9	-	63.7
Transaction costs incurred on transaction with non-controlling interest		(0.2)	-	(0.9)
Proceeds from borrowings		9.1	26.9	26.9
Repayments of borrowings		(4.3)	(0.1)	(38.2)
Financing fees paid		(0.4)	(0.4)	(0.5)
Principal elements of lease payments		(24.3)	(21.8)	(47.2)
Purchase of treasury shares		(37.6)	(8.3)	(49.0)
Dividends paid		(77.0)	(23.8)	(32.3)
Net cash used in financing activities		(126.4)	(27.4)	(70.3)
Net (decrease)/increase in cash, cash equivalents and bank overdrafts		(203.6)	(39.1)	159.1
Cash, cash equivalents and bank overdrafts at beginning of period		490.0	338.2	338.2
Effect of exchange rate fluctuations on cash held		16.8	(5.5)	(7.3)
Cash, cash equivalents and bank overdrafts at end of period	18	303.2	293.6	490.0

Notes 1 to 22 are an integral part of these condensed interim financial statements.

NOTES

1. General information

Savills plc ('the Company') is a public limited company incorporated and domiciled in England, United Kingdom. The address of its registered office is 33 Margaret Street, London W1G 0JD. Savills plc and its subsidiaries (together the 'Group') is a global real estate services group. The Group operates through a network of offices in the UK, Europe, Asia Pacific, North America, Africa and the Middle East.

This condensed consolidated interim financial report was approved for issue by the Board of Directors on 10 August 2022.

This condensed consolidated interim financial report does not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. The financial information presented for the year ended 31 December 2021 is derived from the statutory accounts for that year. Statutory financial statements for the year ended 31 December 2021 were approved by the Board of Directors on 11 March 2022 and delivered to the Registrar of Companies.  The auditor's report on these accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under section 498(2) or (3) of the Companies Act 2006.

This condensed consolidated interim financial report has been reviewed, not audited.

2. Basis of preparation

The annual financial statements of Savills plc will be prepared in accordance with UK-adopted international accounting standards ('UK-adopted IFRSs' or 'IFRS'). This condensed consolidated interim financial report for the half-year reporting period ended 30 June 2022 has been prepared in accordance with the Disclosure Guidance and Transparency Rules of the Financial Conduct Authority and in accordance with IAS 34 'Interim Financial Reporting' as contained in UK-adopted IFRSs.

The interim report does not include all the notes of the type normally included in an annual financial report. Accordingly, this report is to be read in conjunction with the annual financial statements for the year ended 31 December 2021, which has been prepared in accordance with UK-adopted IFRSs.

Consistent with our approach to preparing the annual financial statements for the year ended 31 December 2021, management has considered the impact of climate change in preparing the interim financial report for half-year reporting at 30 June 2022. Consistent with the 2021 year end, we concluded that climate change did not have a material impact on the financial reporting judgements and estimates and is not expected to have a significant impact on the Group's going concern.

Going concern

Management has performed a detailed going concern assessment to test the Group's liquidity and banking covenant compliance up until the end of 2023 based on latest financial forecasts. These forecasts are taking into account the Group's performance over the period and positive prospects (see 'Summary and outlook' section for more information) as well as the principal risks and uncertainties facing the business (see 'Principal risks and uncertainties' section). In addition, sensitivity analysis has been performed to assess liquidity availability and covenant compliance over the period until December 2023, looking at the level of decline in the base case forecast that could be withstood before the leverage ratio covenant would be breached. The results of this sensitivity analysis showed that the Group has sufficient headroom to withstand the impact of a severe global economic downturn. Based on the Group's net cash position of £149.0m at the period end and the level of undrawn facilities available (see Note 17 for information on the current level of undrawn facilities), alongside the assessment noted above, the Directors consider that the Group has adequate resources in place until at least the end of 2023 and have therefore adopted the going concern basis of accounting in preparing the interim financial report. 

3. Accounting policies

Except as described below, the accounting policies applied and methods of computation used are consistent with those of the annual financial statements for the year ended 31 December 2021, as described in those financial statements.

-  Taxes on income in the interim periods are accrued using the tax rate that would be applicable to expected total annual profit or loss.

Adoption of standards, amendments and interpretations to standards

Standards, amendments and interpretations adopted for use in the United Kingdom and mandatorily effective for the first time for the financial year beginning 1 January 2022 that are not relevant or considered to have a significant impact on the Group and its financial statements include the following:

Amendments to IAS 37: Provisions, Contingent Liabilities and Contingent Assets	Onerous contracts - Cost of fulfilling a contract
Amendments to IFRS 3: Business Combinations	Reference to the Conceptual Framework
Amendments to IFRS 1: First-time Adoption of International Financial Reporting Standards	Subsidiary as a first-time adopter
Amendments to IFRS 9: Financial Instruments	Fees in the '10 per cent' test for derecognition of financial liabilities
Amendments to IAS 41: Agriculture	Taxation in fair value measurements
Amendments to IAS 16: Property, Plant and Equipment	Proceeds before intended use

There are no standards, amendments and interpretations to standards that are not yet effective that would be expected to have a material impact on the entity in the current or future reporting periods and on foreseeable future transactions.

Use of non-GAAP measures

The Group believes that the consistent presentation of underlying profit before tax, underlying effective tax rate, underlying basic earnings per share and underlying diluted earnings per share provides additional useful information to Shareholders on the underlying trends and comparable performance of the Group over time by excluding significant non-operational costs/income from the GAAP measures. The 'underlying' measures are also used by the Group for internal performance analysis and incentive compensation arrangements for employees.

These terms are not defined terms under IFRS and may therefore not be comparable with similarly-titled profit measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures. The non-GAAP measures may be materially higher or lower than GAAP measures and should not be regarded as a complete picture of the Group's financial performance. In particular, underlying profit before tax may be materially higher or lower than reported profit before tax as a result of the adjustments. Notably, if there have been significant impairments, restructuring costs excluded and significant recent business acquisitions the underlying profit before tax will be higher than reported profit before tax.

The term 'underlying' refers to the relevant measure of profit, earnings or taxation being reported mainly excluding the impact (pre and post-tax where applicable) of the following items:

· the difference between IFRS 2 charges related to outstanding bonus-related deferred share awards and the estimated value of the current period bonus pool expected to be allocated to deferred share awards;

· amortisation of intangible assets arising from business combinations (this excludes software or other pre-existing intangible assets of the acquiree);

· items that are considered significant in size and non-operational in nature including restructuring costs associated with business acquisitions, impairments of goodwill and intangible assets arising from business combinations and profits or losses arising on disposals of subsidiaries and other investments; and

· significant transaction-related costs associated with business combinations.

The majority of adjustments made to the GAAP measures to arrive at "underlying" measures relate to charges arising as a result of business combinations. The nature of the Group's business and the businesses that the Group acquires (being "asset light" people businesses) requires the Group to structure business acquisitions such that often payment of deferred consideration is linked to recipients' continuing and active engagement in the business at the date of the deferred payment, with these payments required to be expensed to the income statement under IFRS 3. For internal performance analysis and incentive compensation arrangements, these charges are considered part of the initial cost of acquiring a business, instead of an ongoing operational cost, and are therefore excluded from the Group's "underlying" measures. The same rationale is applied to the exclusion of amortisation of intangible assets arising from business combinations (excluding software or other pre-existing intangible assets of the acquiree), any impairments of goodwill and the aforementioned intangible assets, significant transaction-related costs associated with business combinations and significant restructuring costs that are related to the acquisition of a business. These items are not considered to reflect the business's trading performance and so are adjusted to ensure consistency between periods.

The adjustment for share-based payments relates to the impact of the accounting standard for share-based compensation. The annual bonus is paid in a mixture of cash and deferred shares and the proportions can vary from one period to another. Under IFRS, the deferred share element is amortised to the income statement over the vesting period whilst the cash element is expensed in the period. The adjustment above addresses this by adding to or deducting from profit the difference between the IFRS 2 charge in relation to outstanding bonus-related share awards and the estimated value of the current period bonus pool to be awarded in deferred shares. This adjustment is made to align the underlying staff cost in the period with the revenue recognised in the same period, providing additional information on the Group's performance over time with respect to profitability.

The underlying effective tax rate represents the underlying income tax expense expressed as a percentage of underlying profit before tax. The underlying income tax expense is the income tax expense excluding the tax effect of the adjustments made to arrive at underlying profit before tax and other tax effects related to these adjustments.

Underlying basic earnings per share and underlying diluted earnings per share both utilise the underlying profit after tax measure instead of GAAP earnings. The weighted average number of shares remain the same as the GAAP measure.

The Group also refers to revenue and underlying profit on a constant currency basis which are both non-GAAP measures. Constant currency results are calculated by translating the current period revenue and underlying profit using the prior period exchange rates. This measure allows the Group to assess the results of the current period compared to the prior period, excluding the impact of foreign currency movements.

A reconciliation between GAAP and underlying measures are set out in Note 8 (underlying profit before tax) and Note 11(b) (underlying basic earnings per share and underlying diluted earnings per share).

4. Prior period restatement

Presentation of share of post-tax profit from joint ventures and associates within the Income Statement

Following a review of the Group's share of post-tax profit from joint ventures and associates and the presentation of this in the Group's Income Statement in H2 2021, management determined that the Group's joint ventures and associates are an integral part of the business and the share of post-tax profit from joint ventures and associates should be included within operating profit, consistent with IASB's view in IAS 1.BC56. This position was reflected in the Group's 2021 Report and Accounts and has been reflected in the current period's Interim Statement. The prior interim period comparative has been restated in accordance with IAS 8.

The table below shows the impact of the prior period restatement on the Group's Income Statement:

	30 June 2021 reported £m	Restatement £m	Acquisition accounting restatement (Note 14) £m	30 June 2021 restated £m
Income Statement
Operating profit	66.1	4.6	(0.5)	70.2

This prior period restatement does not have an impact on reported comparative interim profit after tax, earnings per share, the Statement of Financial Position or the Statement of Cash Flows.

Presentation of deferred consideration linked to continuing employment within the Statement of Cash Flows

In the Annual Report and Accounts for year ended 31 December 2021, the cash flow impact of deferred consideration was corrected to reflect the nature of the cash flow from investing to operating activities for the year ended 31 December 2021 and the comparative for 31 December 2020 was restated. Management have performed an exercise to confirm that the impact of this re-classification of cash flows from investing activities to operating activities for the comparative period ending 30 June 2021 is immaterial and have accordingly not restated the comparative period.

Gross recognition of deferred and accrued income

During the period, it was identified that certain contract assets in one business of the Group had been incorrectly presented net against contract liabilities. Accordingly, the presentation has been amended to show these balances on a gross basis separately on the Group's Statement of Financial Position as at 30 June 2022 in accordance with IAS 32. The prior interim period comparatives have been restated in accordance with IAS 8. The impact on the prior year comparative as at 31 December 2021 was not material.

The table below shows the impact of the prior period restatement on the Group's Statement of Financial Position:

	30 June 2021 reported £m	Restatement £m	Acquisition accounting restatement (Note 14) £m	30 June 2021 restated £m
Statement of Financial Position
Contract assets	8.8	3.6	-	12.4
Assets: Current assets	937.7	3.6	1.0	942.3
Contract liabilities	15.1	3.6	-	18.7
Liabilities: Current liabilities	821.2	3.6	0.3	825.1

This prior period restatement does not have an impact on net current assets, net assets, profit after tax, earnings per share, the Income Statement or the Statement of Cash Flows.

5. Estimates

The preparation of interim financial statements requires management to make judgements, estimates and assumptions that affect the application of accounting policies and the reported amounts of assets and liabilities, income and expense. Actual results may differ from these estimates.

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2021. Refer to Note 16 for information on the expected credit loss provision in relation to trade receivables and Note 6 for information on fair value estimates.

6. Financial risk management

Financial risk factors

The Group's activities expose it to a variety of financial risks including foreign exchange risk, interest rate risk, credit risk and liquidity risk. The condensed interim financial statements do not include all financial risk management information and disclosures as required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2021. There have been no changes in any risk management policies since the year end.

Fair value estimation

The table below analyses financial instruments carried at fair value, by valuation method. The different levels have been defined as follows:

- Quoted prices (unadjusted) in active markets for identical assets and liabilities (Level 1).

- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability, either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable inputs) (Level 3).

The following table presents the Group's assets and liabilities that are measured at fair value at 30 June 2022:

£m	Level 1	Level 2	Level 3		Total
2022
Assets
Financial assets held at FVOCI
- Listed	1.0	-	-		1.0
- Unlisted	-	17.1	10.2		27.3
Trade and other receivables held at FVPL	-	-	16.9		16.9
Total assets	1.0	17.1	27.1		45.2
Liabilities
Derivative financial instruments	-	1.0	2.5		3.5
Total liabilities	-	1.0	2.5		3.5

The following table presents the Group's assets and liabilities that are measured at fair value at 31 December 2021:

£m	Level 1	Level 2	Level 3		Total
2021
Assets
Financial assets held at FVOCI
- Listed	1.5	-	-		1.5
- Unlisted	-	14.0	14.9		28.9
Trade and other receivables held at FVPL	-	-	15.8		15.8
Derivative financial instruments	-	0.1	-		0.1
Total assets	1.5	14.1	30.7		46.3
Liabilities
Contingent deferred consideration	-	-	1.4		1.4
Derivative financial instruments	-	0.9	2.6		3.5
Total liabilities	-	0.9	4.0		4.9

The following table presents the Group's assets and liabilities that are measured at fair value at 30 June 2021:

£m	Level 1	Level 2	Level 3		Total
2021
Assets
Financial assets held at FVOCI
- Listed	1.1	-	-		1.1
- Unlisted	-	12.0	19.4		31.4
Trade and other receivables held at FVPL	-	-	10.3		10.3
Derivative financial instruments	-	0.2	-		0.2
Total assets	1.1	12.2	29.7		43.0
Liabilities
Contingent deferred consideration	-	-	1.4		1.4
Derivative financial instruments	-	0.6	0.6		1.2
Total liabilities	-	0.6	2.0		2.6

There were no transfers between levels of the fair value hierarchy in the period.

There were no changes in valuation techniques during the period.

The fair value of all other financial assets and liabilities approximate their carrying amount, with the exception of the Group's long term fixed rate private note placements detailed in Note 17.

Valuation techniques

Level 1

Level 1 instruments are those whose fair values are based on quoted market prices.

Level 2

The fair value of Level 2 unlisted financial assets at FVOCI is determined using valuation techniques using observable market data where available and rely as little as possible on entity estimates. The fair value of investment funds is based on underlying asset values determined by the Fund Manager's quarterly financial statements. These instruments are included in Level 2.

The fair value of derivative financial instruments relating to forward foreign exchange contracts and interest rate caps are determined by using valuation techniques using observable market data. The fair value of derivative financial instruments is based on the market value of similar instruments with similar maturities. These instruments are included in Level 2.

Level 3

If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.

Unlisted equity securities included in Level 3 fall under two categories. The first, where cost has been determined as the best approximation of fair value. Cost is considered the best approximation of fair value in these instances either due to insufficient more recent information being available and/or there being a wide range of possible fair value measurements due to the nature of the investments and cost is considered the best estimate of fair value within the range. The second, where management have determined the fair value of the unlisted equity security based upon the latest trading performance of the investments, cash flow forecasts of the investments and applying these to a discounted cash flow valuation and/or considering evidence from recent fundraising initiatives undertaken.

Trade and other receivables classified as Level 3 relates to loans held at FVPL. Management have determined the fair value of these loans based upon the latest trading performance of the equity investments, cash flow forecasts of the investments and applying these to a discounted cash flow valuation.

The derivative financial liabilities classified as Level 3 relates to put and call options, the fair value of which is derived from management's best estimate of the average EBITDA forecast of the relevant businesses.

Deferred consideration held at fair value relates to contingent deferred consideration. The fair value of contingent deferred consideration classified as Level 3 is derived from management's best estimate of future revenue / profits of the relevant acquired business, in accordance with the contractually agreed earn-out targets.

The following table presents changes in Level 3 items for the period ended 30 June 2022:

	Contingent deferred consideration £m	Derivative financial instruments £m	Unlisted equity securities £m	Trade and other receivables £m
Opening balance 1 January 2022	(1.4)	(2.6)	14.9	15.8
Additions	-	-	0.9	-
Disposals	-	-	(0.2)	-
Transfer	-	-	(0.2)	0.2
Exchange movement	(0.2)	0.1	(0.1)	0.9
Re-measurements	1.6	-	(5.1)	-
Closing balance 30 June 2022	-	(2.5)	10.2	16.9

The re-measurement of unlisted equity securities in the period of £5.1m reflects changing market conditions coupled with variation in instrument terms.

7. Segment analysis

Six months to 30 June 2022	Transaction Advisory	Consultancy	Property and Facilities Management	Investment Management	Unallocated	Total
(unaudited)	£m	£m	£m	£m	£m	£m
Revenue
United Kingdom
- commercial	55.6	87.6	129.7	28.6	-	301.5
- residential	95.8	22.0	19.9	-	-	137.7
Total United Kingdom	151.4	109.6	149.6	28.6	-	439.2
CEME	49.1	19.1	48.1	21.8	-	138.1
Asia Pacific
- commercial	71.2	39.5	188.4	3.4	-	302.5
- residential	9.2	-	-	-	-	9.2
Total Asia Pacific	80.4	39.5	188.4	3.4	-	311.7
North America	132.3	16.1	-	-	-	148.4
Total revenue	413.2	184.3	386.1	53.8	-	1,037.4
Underlying profit/(loss) before tax
United Kingdom
- commercial	9.9	7.7	8.0	5.7	(7.0)	24.3
- residential	13.6	2.5	0.7	-	-	16.8
Total United Kingdom	23.5	10.2	8.7	5.7	(7.0)	41.1
CEME	(8.8)	2.3	0.5	4.3	-	(1.7)
Asia Pacific
- commercial	7.4	0.9	9.4	0.3	-	18.0
- residential	-	-	-	-	-	-
Total Asia Pacific	7.4	0.9	9.4	0.3	-	18.0
North America	0.6	1.2	-	-	-	1.8
Underlying profit/(loss) before tax	22.7	14.6	18.6	10.3	(7.0)	59.2

Six months to 30 June 2021	Transaction Advisory	Consultancy	Property and Facilities Management	Investment Management	Unallocated	Total
(unaudited)	£m	£m	£m	£m	£m	£m
Revenue
United Kingdom
- commercial	38.5	85.6	127.0	19.6	-	270.7
- residential	104.2	24.3	18.2	-	-	146.7
Total United Kingdom	142.7	109.9	145.2	19.6	-	417.4
CEME	39.9	18.4	40.1	15.6	-	114.0
Asia Pacific
- commercial	60.5	36.2	173.7	3.0	-	273.4
- residential	13.8	-	-	-	-	13.8
Total Asia Pacific	74.3	36.2	173.7	3.0	-	287.2
North America	105.1	8.9	-	-	-	114.0
Total revenue	362.0	173.4	359.0	38.2	-	932.6
Underlying profit/(loss) before tax
United Kingdom
- commercial	5.2	10.2	8.5	3.9	(8.1)	19.7
- residential	20.5	3.9	0.9	-	-	25.3
Total United Kingdom	25.7	14.1	9.4	3.9	(8.1)	45.0
CEME	(8.5)	2.3	(0.6)	2.7	-	(4.1)
Asia Pacific
- commercial	7.4	1.9	10.4	0.6	-	20.3
- residential	3.7	-	-	-	-	3.7
Total Asia Pacific	11.1	1.9	10.4	0.6	-	24.0
North America	0.8	0.5	-	(0.1)	-	1.2
Underlying profit/(loss) before tax	29.1	18.8	19.2	7.1	(8.1)	66.1

Year ended 31 December 2021	Transaction Advisory	Consultancy	Property and Facilities Management	Investment Management	Unallocated	Total
(audited)	£m	£m	£m	£m	£m	£m
Revenue
United Kingdom
- commercial	115.2	193.6	256.4	55.1	-	620.3
- residential	210.7	50.4	44.2	-	-	305.3
Total United Kingdom	325.9	244.0	300.6	55.1	-	925.6
CEME	124.4	41.3	88.3	47.2	-	301.2
Asia Pacific
- commercial	153.0	81.3	356.7	9.5	-	600.5
- residential	26.0	-	-	-	-	26.0
Total Asia Pacific	179.0	81.3	356.7	9.5	-	626.5
North America	263.6	30.1	-	-	-	293.7
Total revenue	892.9	396.7	745.6	111.8	-	2,147.0
Underlying profit/(loss) before tax
United Kingdom
- commercial	21.5	24.6	17.9	14.0	(18.9)	59.1
- residential	38.9	8.5	4.1	-	-	51.5
Total United Kingdom	60.4	33.1	22.0	14.0	(18.9)	110.6
CEME	1.4	2.5	1.3	10.2	-	15.4
Asia Pacific
- commercial	20.6	6.6	25.8	1.3	-	54.3
- residential	4.9	-	-	-	-	4.9
Total Asia Pacific	25.5	6.6	25.8	1.3	-	59.2
North America	10.3	4.8	-	-	-	15.1
Underlying profit/(loss) before tax	97.6	47.0	49.1	25.5	(18.9)	200.3

Operating segments reflect internal management reporting to the Group's chief operating decision maker, defined as the Group Executive Board ('GEB'). The GEB primarily manages the business based on the geographic location in which the Group operates, with the Investment Management business being managed separately.

The operating segments are identified as the following regions: the UK, Continental Europe and the Middle East ('CEME'), Asia Pacific and North America. The Savills Investment Management business is also considered a separate operating segment. The reportable operating segments derive their revenue primarily from property related services. Within the UK and Asia Pacific, both commercial and residential services are provided. Other segments are largely commercial-based.

The GEB also reviews the business with reference to the nature of the services in each region. Therefore, the Group has presented its segment analysis above in a matrix with the primary operating segments based on regions in which the Group operates.

The GEB assesses the performance of operating segments based on a measure of underlying profit before tax which adjusts reported pre-tax profit by profit/(loss) on disposals, share-based payment adjustment, significant restructuring costs, significant transaction-related costs, amortisation and impairment of intangible assets arising from business combinations, impairment of goodwill and other items that are considered non-operational and material.

A reconciliation of underlying profit before tax to reported profit before tax is provided in Note 8.

The Unallocated segment includes costs and other expenses at holding company and subsidiary levels, which are not directly attributable to the operating activities of the Group's business segments.

8. Underlying profit before tax

	Six months to 30 June 2022 (unaudited)	Six months to 30 June 2021 restated* (unaudited)	Year ended 31 December 2021 (audited)
	£m	£m	£m
Reported profit before tax	50.4	63.3	183.1
Adjustments:
- Amortisation of acquired intangible assets arising from business acquisitions	5.1	2.7	8.1
- Impairment of goodwill and intangible assets arising from business combinations	-	-	5.2
- Share-based payment adjustment	(2.3)	(2.8)	(10.8)
- Profit on disposal of joint venture	-	-	(0.4)
- Restructuring costs	0.1	0.1	0.3
- Transaction-related costs	5.9	5.6	17.0
- Fair value gain on step acquisitions of subsidiaries previously classified as associates/joint ventures	-	(2.8)	(4.0)
- Fair value loss on transaction-related call option	-	-	1.8
Underlying profit before tax	59.2	66.1	200.3

*Reported profit before tax and the fair value gain on step acquisitions of subsidiaries previously classified as associates/joint ventures were restated by £0.5m (previously reported at £3.3m). See Note 14 for details on the prior period restatement.

For the year ended 31 December 2021, impairment of goodwill relates to the Indonesia and Sweden cash generating units. Impairment on intangible assets arising from business combinations relate to property management contracts in South Korea and Japanese investment management contracts relating to closed funds.

For the year ended 31 December 2021, profit on disposal recognised primarily in relation to the disposal of holdings in joint ventures in China.

Restructuring costs includes costs of integration activities in relation to significant business acquisitions. Restructuring costs in the period ended 30 June 2022, the period ended 30 June 2021 and the year ended 31 December 2021 relate primarily to the ongoing IFRS 2: "Share-based Payment" charge for deferred shares, with a five year vesting period, issued in relation to the restructuring upon acquisition of Aguirre Newman SA ('Aguirre Newman') in 2017.

Transaction-related costs includes a net £6.9m charge for future consideration payments which are contingent on the continuity of recipients' employment in the future (30 June 2021: £3.6m, 31 December 2021: £13.9m). For the period ended 30 June 2022, a significant portion of the charge related to the acquisition of DRC Capital LLP ('DRC') in 2021. For the period ended 30 June 2021, a significant portion of the charge related to acquisitions in the US (Macro Consultants LLC ('Macro') in 2020 and T3 in 2021), CEME (OMEGA Immobilien Management GmbH and OMEGA Immobilien Service GmbH ('Omega') in 2020 and Aguirre Newman in 2017) and Savills IM business (DRC in 2021). For the year ended 31 December 2021, the largest individual components of this charge related to the acquisition of DRC and the acquisition of Macro in 2020 . In the current period, transaction-related costs also consist of £0.2m of professional advisory transaction fees (30 June 2021: £1.6m, 31 December 2021: £1.1m) and £0.2m of interest on deferred consideration and non-current future payments in relation to business acquisitions that are linked to employment (30 June 2021: £0.4m, 31 December 2021: £0.6m). In the current period, transaction-related costs included a £0.2m (31 December 2021: £1.4m) charge relating to prepaid amounts issued as part of business acquisitions that are linked to continued active engagement in the business. Of these items, prepaid amounts that are linked to active engagement in the business are recorded as employee benefits expenses in the income statement, unwinding of interest is recorded as a finance cost in the income statement and all other charges/(credits) are recorded within other operating expenses. In the current period, transaction-related costs also consist of a £1.6m credit (30 June 2021 and 31 December 2021: £nil) for fair value changes to c ontingent deferred consideration. Refer to Note 6 for fair value estimations.

For the period ended 30 June 2021, a fair value gain was recognised on the re-measurement of the Group's holding in its associate, DRC, prior to the Group's acquisition of the remaining equity interest in this business. For the year ended 31 December 2021, a fair value gain was recognised on the re-measurement of the Group's holding in its associate, DRC, and a joint venture in Indonesia, prior to the Group's acquisition of the remaining equity interest in these businesses. In addition, a fair value loss was recognised on the fair value measurement of the Samsung Life call option, which gives Samsung Life the right to purchase up to an additional 10% shareholding in the Savills Investment Management group subject to the quantum of capital it has invested in Savills IM products during the initial 5 year term.

9. Income tax expense

The income tax expense has been calculated on the basis of the statutory rates in each jurisdiction adjusted for any disallowable charges.

	Six months to 30 June 2022 (unaudited)	Six months to 30 June 2021 (unaudited)	Year ended 31 December 2021 (audited)
	£m	£m	£m
UK
- Current tax	8.9	11.6	21.7
- Deferred tax	(3.3)	(3.2)	(6.8)
Foreign tax
- Current tax	8.6	7.8	23.8
- Deferred tax	(1.5)	(0.8)	(2.3)
Income tax expense	12.7	15.4	36.4

* Reported profit before tax was restated by £0.5m. See Note 14 for details on the prior period restatement.

The forecast Group effective tax rate is 25.2% (30 June 2021: 24.3%* and 31 December 2021 reported effective tax rate: 19.9%), which is higher (30 June 2021: higher, 31 December 2021: higher) than the UK standard effective annual rate of corporation tax of 19% (30 June 2021 and 31 December 2021: 19%). This reflects permanent disallowable expenses, including transaction-related costs and the effect of the annual rate adjustment to the full year forecast rate. The Group underlying effective tax rate was 23.3% (30 June 2021: 24.4% and 31 December 2021: 18.7%).

10. Dividends

	Six months to 30 June 2022 (unaudited)	Six months to 30 June 2021 (unaudited)	Year ended 31 December 2021 (audited)
	£m	£m	£m
Amounts recognised as distribution to equity holders in the period:
In respect of previous period
Ordinary final dividend of 12.75p per share (2020: 17.0p)	17.6	23.6	23.6
Supplemental interim dividend of 15.6p per share (2020: £nil)	21.6	-	-
Special dividend of 27.05p per share (2020: £nil)	37.4	-	-
In respect of current period
Interim dividend of £nil per share (2021: 6.0p)	-	-	8.3
	76.6	23.6	31.9
Proposed interim dividend for the six months ended 30 June 2022	£9.1m

The Board has declared an interim dividend for the six months ended 30 June 2022 of 6.6p per ordinary share (30 June 2021: 6.0p) to be paid on 5 October 2022 to shareholders on the register on 2 September 2022. The interim dividend has not been recognised in these interim financial statements. It will be recognised in equity in the year to 31 December 2022.

11(a). Basic and diluted earnings per share

	2022	2022	2022	2021	2021	2021
	Earnings	Shares	EPS	Earnings restated*	Shares	EPS restated*
Six months to 30 June (unaudited)	£m	million	Pence	£m	million	pence
Basic earnings per share	37.0	138.3	26.8	47.7	139.3	34.2
Effect of additional shares issuable under option	-	8.5	(1.6)	-	3.7	(0.8)
Diluted earnings per share	37.0	146.8	25.2	47.7	143.0	33.4
				2021	2021	2021
				Earnings	Shares	EPS
Year to 31 December (audited)				£m	million	Pence
Basic earnings per share				146.2	139.4	104.9
Effect of additional shares issuable under option				-	7.1	(5.1)
Diluted earnings per share				146.2	146.5	99.8

* Reported profit before tax was restated by £0.5m. See Note 14 for details on the prior period restatement.

11(b). Underlying basic and diluted earnings per share

	2022	2022	2022	2021	2021	2021
	Earnings	Shares	EPS	Earnings*	Shares	EPS*
Six months to 30 June (unaudited)	£m	million	pence	£m	million	Pence
Basic earnings per share	37.0	138.3	26.8	47.7	139.3	34.2
- Amortisation of intangible assets arising from business combinations after tax	3.9	-	2.8	1.7	-	1.2
- Share-based payment adjustment after tax	(2.0)	-	(1.4)	(2.0)	-	(1.4)
- Restructuring costs after tax	0.1	-	0.1	0.1	-	0.1
- Transaction-related costs after tax	5.7	-	4.1	5.2	-	3.7
- Fair value gain on step acquisition of subsidiary previously classified as associate after tax	-	-	-	(2.8)	-	(2.0)
Underlying basic earnings per share	44.7	138.3	32.4	49.9	139.3	35.8
Effect of additional shares issuable under option	-	8.5	(2.0)	-	3.7	(0.9)
Underlying diluted earnings per share	44.7	146.8	30.4	49.9	143.0	34.9
*Reported profit before tax and the fair value gain on step acquisitions of subsidiaries previously classified as associates/joint ventures were restated by £0.5m. See Note 14 for details on the prior period restatement.
				2021	2021	2021
				Earnings	Shares	EPS
Year to 31 December (audited)				£m	Million	Pence
Basic earnings per share				146.2	139.4	104.9
- Amortisation of intangible assets arising from business combinations after tax				6.5	-	4.7
- Impairment of goodwill and intangible assets arising from business combinations after tax				5.4	-	3.9
- Share-based payment adjustment after tax				(9.0)	-	(6.5)
- Profit on disposal of joint venture after tax				(0.4)	-	(0.3)
- Restructuring costs after tax				0.4	-	0.3
- Transaction-related costs after tax				15.5	-	11.1
- Fair value gain on step acquisition of subsidiaries previously classified as joint ventures/associates after tax				(4.0)	-	(2.9)
- Fair value loss on transaction-related call option after tax				1.8	-	1.3
Underlying basic earnings per share				162.4	139.4	116.5
Effect of additional shares issuable under option				-	7.1	(5.6)
Underlying diluted earnings per share				162.4	146.5	110.9

Refer to Note 8 for the gross amounts of the above adjustments and a reconciliation between reported profit before tax and underlying profit before tax, alongside further details on each of the adjustments.

12. Cash generated from operations

	Six months to 30 June 2022 (unaudited)	Six months to 30 June 2021 restated* (unaudited)	Year ended 31 December 2021 (audited)
	m	m	m
Profit for the period	37.7	47.9	146.7
Adjustments for:
Income tax (Note 9)	12.7	15.4	36.4
Depreciation	32.0	32.0	63.4
Amortisation of intangible assets	8.0	5.0	14.2
Impairment of goodwill and intangible assets arising from business combinations	-	-	5.2
Fair value gain on joint ventures and associates	-	(2.8)	(4.0)
Fair value loss on derivative financial instrument	-	-	1.8
Loss/(gain) on disposal of property, plant and equipment and intangible assets	0.1	(0.3)	0.9
Gain on disposal of joint ventures	-	-	(0.4)
Net finance cost	5.4	6.9	13.4
Share of post-tax profit from joint ventures and associates	(4.7)	(4.6)	(12.6)
Increase in employee and retirement obligations	9.2	5.5	6.7
Exchange movement and fair value movements on financial instruments in operating activities	(1.0)	(1.0)	(2.5)
(Decrease)/increase in provisions	(2.0)	5.4	5.4
Charge for share-based compensation	15.1	11.1	23.7
Operating cash flows before movements in working capital	112.5	120.5	298.3
Decrease/(increase) in trade and other receivables and contract assets	82.1	44.0	(90.1)
(Decrease)/increase in trade and other payables and contract liabilities	(229.3)	(101.2)	140.1
Cash (used in)/generated from operations	(34.7)	63.3	348.3

*Reported profit before tax and the fair value gain on step acquisitions of subsidiaries previously classified as associates/joint ventures were restated by £0.5m. See Note 14 for further details. Furthermore, movements in trade and other receivables and contracts assets and trade and other payables and contract liabilities have been restated following the grossing up of contract assets and contract liabilities. See Note 4 for further details on this prior year restatement.

Foreign exchange movements resulted in a £34.8m increase in current and non-current trade and other receivables (30 June 2021: £6.5m decrease and 31 December 2021: £0.3m decrease) and a £37.2m increase in current and non-current trade and other payables (30 June 2021: £7.4m decrease and 31 December 2021: £5.9m decrease).

13. Analysis of liabilities arising from financing activities and cash net of debt

Six months to 30 June 2022	At 1 January	Cash flows	Non-cash movements recognised in income statement	Other non- cash movements	Movements through business combinations	Exchange movements	At 30 June
(unaudited)	£m	£m	£m	£m	£m	£m	£m
Bank loans	(0.9)	(4.8)	-	-	-	(0.2)	(5.9)
Loan notes	(150.0)	-	-	-	-	-	(150.0)
Transaction costs	1.6	0.4	(0.3)	-	-	-	1.7
Lease liabilities*	(285.0)	28.8	(4.5)	(17.6)	-	(12.9)	(291.2)
Liabilities arising from financing activities	(434.3)	24.4	(4.8)	(17.6)	-	(13.1)	(445.4)
Cash and cash equivalents, net of overdrafts in notional pooling arrangement	491.2	(202.8)	-	-	0.6	16.8	305.8
Bank overdrafts	(1.2)	(1.4)	-	-	-	-	(2.6)
Cash, cash equivalents and bank overdrafts presented in the Cash Flow Statement	490.0	(204.2)	-	-	0.6	16.8	303.2
Cash and cash equivalents net of debt	55.7	(179.8)	(4.8)	(17.6)	0.6	3.7	(142.2)
Add back lease liabilities	285.0	(28.8)	4.5	17.6	-	12.9	291.2
Cash and cash equivalents net of borrowings	340.7	(208.6)	(0.3)	-	0.6	16.6	149.0
Six months to 30 June 2021	At 1 January	Cash flows	Non-cash movements recognised in income statement	Other non- cash movements	Movements through business combinations	Exchange movements	At 30 June
(unaudited)	£m	£m	£m	£m	£m	£m	£m
Bank loans	(12.1)	(26.8)	-	-	-	0.1	(38.8)
Loan notes	(150.0)	-	-	-	-	-	(150.0)
Transaction costs	1.6	0.4	(0.1)	-	-	-	1.9
Lease liabilities*	(304.2)	26.3	(4.4)	(4.4)	-	4.4	(282.3)
Liabilities arising from financing activities	(464.7)	(0.1)	(4.5)	(4.4)	-	4.4	(469.2)
Cash and cash equivalents, net of overdrafts in notional pooling arrangement	338.3	(41.8)	-	-	2.9	(5.6)	293.8
Bank overdrafts	(0.1)	(0.1)	-	-	-	-	(0.2)
Cash, cash equivalents and bank overdrafts presented in the Cash Flow Statement	338.2	(41.9)	-	-	2.9	(5.6)	293.6
Cash and cash equivalents net of debt	(126.5)	(42.0)	(4.5)	(4.4)	2.9	(1.1)	(175.6)
Add back lease liabilities	304.2	(26.3)	4.4	4.4	-	(4.4)	282.3
Cash and cash equivalents net of borrowings	177.7	(68.3)	(0.1)	-	2.9	(5.5)	106.7

Year to 31 December 2021	At 1 January	Cash flows	Non-cash movements recognised in income statement	Other non- cash movements	Movements through business combinations and disposals	Exchange movements	At 31 December
(audited)	£m	£m	£m	£m	£m	£m	£m
Bank loans	(12.1)	11.3	-	-	(0.4)	0.3	(0.9)
Loan notes	(150.0)	-	-	-	-	-	(150.0)
Transaction costs	1.6	0.5	(0.5)	-	-	-	1.6
Lease liabilities*	(304.2)	56.1	(8.9)	(30.4)	(0.7)	3.1	(285.0)
Liabilities arising from financing activities	(464.7)	67.9	(9.4)	(30.4)	(1.1)	3.4	(434.3)
Cash and cash equivalents, net of overdrafts in notional pooling arrangement	338.3	154.3	-	-	5.9	(7.3)	491.2
Bank overdrafts	(0.1)	0.1	-	-	(1.2)	-	(1.2)
Cash, cash equivalents and bank overdrafts presented in the Cash Flow Statement	338.2	154.4	-	-	4.7	(7.3)	490.0
Cash and cash equivalents net of debt	(126.5)	222.3	(9.4)	(30.4)	3.6	(3.9)	55.7
Add back lease liabilities	304.2	(56.1)	8.9	30.4	0.7	(3.1)	285.0
Cash and cash equivalents net of borrowings	177.7	166.2	0.5	-	4.3	(7.0)	340.7

* The part of the lease payment that represents cash payments for the principal portion of the lease liability is presented as a cash flow resulting from financing activities (period to 30 June 2022: £24.3m, period to 30 June 2021: £21.9m, year to 31 December 2021: £47.2m). The part of the lease payment that represents interest portion of the lease liability is presented as an operating cash flow, consistent with the presentation of the Group's loan and bank interest payments (period to 30 June 2022: £4.5m, period to 30 June 2021: £4.4m, year to 31 December 2021: £8.9m).

Non-cash movements recognised in the income statement represent amortisation of transaction costs and unwinding of discount on lease liabilities. Other non-cash movements to lease liabilities represent new leases and disposal of leases.

Cash subject to restrictions in Asia Pacific amounts to £21.9m (30 June 2021: £28.7m and 31 December 2021: £43.2m) which is cash pledged to banks in relation to property management contracts and cash remittance restrictions in certain countries. These amounts are consolidated within the Group's cash and cash equivalents.

14. Acquisition of subsidiaries

On 1 June 2022, the Group acquired 100% of the equity interest in BrickByte GmbH, a workplace services and consulting start up in Germany to further enhance our existing offering and complementary areas of client service in Germany.  In addition, on 22 April 2022 the Group acquired 60% of the equity interest in PT CB Advisory, 70% of the equity interest in PT Cakrawala Baswara Cemerlang and 60% of the equity interest in PT Cakrawala Baswara Indonesia, a full service property business in Indonesia, complementing our existing services and supporting further Indonesia expansion. On 2 February 2022, the Group also acquired the trade and assets of Cureoscity Limited, a UK web-based management portal to enhance our property management business.

Cash consideration for these transactions amounted to £3.4m. The remainder of the acquisition consideration relates to deferred consideration of £0.2m, payable within one year of the reporting date, and £0.3m of loan novation.

Goodwill of £3.2m has been provisionally determined. Goodwill is attributable to the experience and expertise of key staff and strong industry reputation and is not expected to be deductible for tax purposes.

Acquisition-related costs of £0.1m have been expensed as incurred to the income statement and classified within other operating expenses.

The acquired businesses contributed revenue of £0.2m and a loss of £0.6m to the Group for the period from acquisition to 30 June 2022. Had the acquisitions been made at the beginning of the financial year, revenue would have been £1.1m and the loss would have been £0.6m. The impact on the Group's overall revenue and profits is not material.

Due to the timing of the acquisitions, the fair values of the assets acquired and liabilities assumed are provisional and will be finalised within 12 months of the acquisition date. These are summarised below:

	Provisional fair value to the Group
	£m
Non-current assets: Property, plant and equipment	0.1
Intangible assets	0.3
Current assets: Trade and other receivables	0.3
Cash and cash equivalents	0.6
Total assets	1.3
Current liabilities: Trade and other payables	(0.4)
Current tax payable	(0.1)
Non-current liabilities: Employment benefit provision	(0.1)
Net assets acquired	0.7
Goodwill	3.2
Purchase consideration	3.9
Consideration satisfied by:
Cash paid	3.4
Deferred consideration < 1 year	0.2
Loan novation	0.3
	3.9

Update to provisional fair value of prior period acquisition

During the period, provisional fair values relating to the acquisition of the remaining 51% of Cluttons Saudi Arabia Company Limited (previous 49% ownership equity accounted for as a joint venture) were finalised, with a £0.4m increase to goodwill. This adjustment is considered a measurement period adjustment in accordance with IFRS 3 and as a result goodwill increased by £0.4m, with a corresponding decrease in trade receivables.

Update to provisional fair value of prior period acquisition at 31 December 2021

On 28 May 2021 the Group acquired the remaining 75% interest in DRC Capital LLP ('DRC'), a commercial real estate debt investment manager. On 11 June 2021, the Group acquired 100% of the equity interest in T3 Advisors ('T3'), a real estate advisor and consultant for life sciences and technology sectors in the US. Provisional fair values relating to the acquisitions as at 30 June 2021 were finalised at 31 December 2021, with adjustments recognised as at 31 December 2021. This adjustment is considered a measurement period adjustment in accordance with IFRS 3 and as a result the prior period comparatives have been restated.

The material changes to the Statement of Financial Position as at 30 June 2022 were an increase of £32.5m to the value of intangible assets, an increase to deferred tax liabilities of £6.4m, a decrease to goodwill of £27.2m and an increase to net current assets of £0.7m. In addition, the Group's profit after tax decreased £0.5m resulting in a restatement to the Income Statement and Statement of Comprehensive Income, this reflects an update to the fair value gain recognised in relation to the step acquisition of DRC, which was previously classified as an associate. 

15. Retirement and employee benefit obligations

Defined benefit plans

The Group operates two defined benefit plans.

The Pension Plan of Savills (the 'UK Plan') is a UK-based plan which provided final salary pension benefits to some employees, but was closed with regard to future service-based benefit accrual with effect from 31 March 2010. From 1 April 2010, pension benefits for former members of the UK Plan are provided through the Group's defined contribution Personal Pension Plan.

The Savills Fund Management GMBH Plan (the 'SFM Plan') is a Germany-based plan which provides final salary benefits to 6 active employees and 108 former employees. The plan is closed to future service-based benefit accrual.

Significant actuarial pension assumptions are detailed in the Group's Annual Report and Accounts 2021 and as follows:

	UK Plan			SFM Plan
	Six months to 30 June 2022	Six months to 30 June 2021	Year ended 31 December 2021	Six  months to 30 June 2022	Six months to 30 June 2021	Year ended 31 December 2021
Expected rate of salary increases	3.25%	3.25%	3.25%	2.50%	2.50%	2.50%
Projection of social security contribution ceiling	-	-	-	2.25%	2.25%	2.25%
Discount rate	3.80%	1.90%	2.00%	3.36%	1.45%	1.35%
Inflation assumption	3.00%	3.10%	3.20%	1.75%	1.75%	1.75%
Rate of increase to pensions in payment
- accrued before 6 April 1997	3.00%	3.00%	3.00%	-	-	-
- accrued after 5 April 1997	2.90%	3.00%	3.10%	-	-	-
- accrued after 5 April 2005	2.00%	2.10%	2.20%	-	-	-
- pension promise before 1 January 1986	-	-	-	2.25%	2.25%	2.25%
- pension promise after 1 January 1986	-	-	-	1.75%	1.75%	1.75%
Rate of increase to pensions in deferment
- accrued before 6 April 2001	5.00%	5.00%	5.00%	-	-	-
- accrued after 5 April 2001	2.30%	2.30%	2.50%	-	-	-
- accrued after 5 April 2009	2.30%	2.30%	2.50%	-	-	-

The amounts recognised in the statement of financial position are as follows:

UK Plan	30 June 2022 £m	30 June 2021 £m	31 December 2021 £m
Present value of funded obligations	205.3	305.4	301.7
Fair value of plan assets	(238.6)	(309.9)	(319.1)
Surplus recognised in the statement of financial position (included in retirement benefit surplus)	(33.3)	(4.5)	(17.4)

SFM Plan	30 June 2022 £m	30 June 2021 £m	31 December 2021 £m
Present value of funded obligations	10.0	14.5	13.5
Fair value of plan assets	(12.7)	(14.4)	(14.2)
(Surplus)/liability recognised in the statement of financial position (included in retirement and employee benefit obligations/retirement benefit surplus)	(2.7)	0.1	(0.7)

The amount recognised within the income statement in relation to the UK Plan for the period ended 30 June 2022 is a net interest income of £0.2m (30 June 2021: net interest cost of £nil, 31 December 2021: net interest cost of £nil).

The amount recognised within the income statement in relation to the SFM Plan for the period ended 30 June 2022 is a current service cost of £nil (30 June 2021: £nil, 31 December 2021: £nil).

Included in retirement and employee benefit obligations is £48.8m relating to holiday pay and long service leave (30 June 2021: £35.0m, 31 December 2021: £37.2m).

16. Trade receivables - Loss allowance

The Group has no significant concentrations of credit risk. The trade receivables balance is spread across a large number of different customers and geographic regions.

Local management have assessed the expected credit losses for trade receivables in the current geopolitical and economic environment and the expected loss rates have been reviewed based on their judgement as to the impact on their trade receivables portfolio. Overall, the expected loss rate on trade receivables has increased to 6.6% (31 December 2021: 6.4%) primarily due to a higher proportion of balances being greater than 90 days past due.

A summary of trade receivables and the loss provision has been provided below:

30 June 2022	Current	More than 30 days past due	More than 60 days past due	More than 90 days past due	More than 180 days past due	Total
Expected loss rate	0.2%	0.5%	1.2%	6.7%	47.5%	6.6%
Gross carrying amount (£m)	260.3	41.3	25.9	34.3	50.5	412.3
Loss allowance provision (£m)	(0.5)	(0.2)	(0.3)	(2.3)	(24.0)	(27.3)

30 June 2021	Current	More than 30 days past due	More than 60 days past due	More than 90 days past due	More than 180 days past due	Total
Expected loss rate	0.9%	1.4%	2.2%	14.3%	56.2%	8.1%
Gross carrying amount (£m)	226.8	35.8	18.5	25.8	38.1	345.0
Loss allowance provision (£m)	(2.0)	(0.5)	(0.4)	(3.7)	(21.4)	(28.0)

31 December 2021	Current	More than 30 days past due	More than 60 days past due	More than 90 days past due	More than 180 days past due	Total
Expected loss rate	0.6%	3.5%	2.3%	11.6%	60.2%	6.4%
Gross carrying amount (£m)	349.2	42.5	21.5	24.2	38.7	476.1
Loss allowance provision (£m)	(2.2)	(1.5)	(0.5)	(2.8)	(23.3)	(30.3)

17. Borrowings

Movements in borrowings are analysed as follows:

	6 months ended 30 June 2022	6 months ended 30 June 2021	12 months ended 31 December 2021
	£m	£m	£m
Opening amount as at 1 January	150.5	160.6	160.6
Additional borrowings, net of transaction costs paid (including additional overdraft)	10.1	26.6	26.4
Repayments of borrowings (including overdraft repayment)	(4.3)	(0.1)	(38.3)
Addition through business combination	-	-	1.6
Amortisation of transaction costs	0.3	0.2	0.5
Foreign exchange movement	0.2	(0.2)	(0.3)
Closing amount	156.8	187.1	150.5

	30 June 2022	30 June 2021	31 December 2021
	£m	£m	£m
Current
Bank overdrafts	2.6	0.2	1.2
Unsecured bank loans	5.8	38.8	0.9
Non-current
Unsecured bank loans	0.1	-	-
Loan notes	150.0	150.0	150.0
Transaction costs	(1.7)	(1.9)	(1.6)
	156.8	187.1	150.5

The Group has the following undrawn borrowing facilities:

	30 June 2022	30 June 2021	31 December 2021
	£m	£m	£m
Floating rate - expiring within 1 year or on demand	64.0	36.1	61.2
Floating rate - expiring between 1 and 5 years	356.0	337.0	361.0
	420.0	373.1	422.2

The Group holds a £360m multi-currency revolving credit facility ('RCF'), which includes a £90m accordion facility. In June 2022 the Group extended the maturity date of the RCF by a further year to June 2026. As at 30 June 2022 £5.0m (30 June 2021: £24.0m, 31 December 2021: none) of the RCF was drawn . The remaining unsecured bank loans reflects a £0.8m working capital loan in Thailand, which is repayable on demand and denominated in Thailand baht (30 June 2021: £0.7m, 31 December 2021: £0.7m) and £0.1m of bank loans in Singapore, repayable in November 2024 and April 2025 and denominated in Singapore dollars (30 June 2021: none, 31 December 2021: none). The balance as at 31 December 2021 also included a £0.2m working capital loan in Indonesia, which is repayable on demand and denominated in Indonesian Rupiah. The balance as at 30 June 2021 also included £14.1m utilisation of a revolving credit facility in North America for working capital purposes (31 December 2021: none).

The Group holds £150.0m of long term debt through the issuance of 7, 10 and 12 year fixed rate private note placements in the US institutional market, which were issued in June 2018.

The carrying amounts of borrowings are approximate to their fair value, with the exception of the Group's long-term fixed rate private note placements. The fair value of these loan notes as at 30 June 2022 is £139.1m (31 December 2021: £155.6m), the difference between the fair value and the book value is not recognised in the reported results for the period. The fair value has been calculated based upon a discounted cash flow valuation utilising observable market rates of borrowing that are comparable to the remaining length of the loan notes. The valuation technique falls within Level 2 of the fair value hierarchy in IFRS 13.

18. Notional pooling arrangement

For internal cash management purposes, the Group maintains a notional cash pooling arrangement with Barclays Bank PLC, whereby credit cash balances (cash) and debit cash balances (overdrafts) for the participating bank accounts are notionally offset. There is no overdraft cost or charge associated with any pooled overdraft that is fully offset by pooled credit cash balances. As at 30 June 2022, the notional cash pooling arrangement included cash balances of £169.3m presented in cash and cash equivalents (30 June 2021: £193.3m, 31 December 2021: £201.5m) and overdrafts of £168.9m (30 June 2021: £187.7m, 31 December 2021: £198.5m) presented in current liabilities. This represents as at 30 June 2022 surplus pooled credit cash balances of £0.4m (30 June 2021: surplus pooled credit cash balances of £5.6m, 31 December 2021: surplus pooled credit cash balances of £3.0m). 

For the purpose of the statement of cash flows, cash and cash equivalents net of overdrafts comprise the following:

	30 June 2022	30 June 2021	31 December 2021
	£m	£m	£m
Cash and cash equivalents	474.7	481.5	689.7
Overdrafts in notional pooling arrangement	(168.9)	(187.7)	(198.5)
Bank overdrafts (see Note 17)	(2.6)	(0.2)	(1.2)
	303.2	293.6	490.0

19. Related party transactions

As at 30 June 2022, there were £0.2m of loans outstanding to joint ventures and £1.4m of loans outstanding to associates (30 June 2021: £2.9m of loans outstanding to joint ventures and £0.7m of loans outstanding to associates, 31 December 2021: £0.2m of loans outstanding to joint ventures and £1.5m of loans outstanding to associates).

There were no other material related party transactions during the period. All related party transactions take place on an arm's-length basis under the same terms as those available to other customers in the ordinary course of business.

20. Contingent liabilities

The Group is involved in a number of disputes in the ordinary course of business. Provision is made in the financial statements for all claims where costs can be estimated reliably and settlement is probable.

21. Events after the balance sheet date

There have been no material events that require adjustment to the Financial Statements or are considered to have a material impact on the understanding of the Group's current financial position.

22. Seasonality

Traditionally, a significant percentage of revenue is seasonal which has historically caused revenue, profits and cash flow from operating activities to be lower in the first half and higher in the second half of each year. The concentration of revenue and cash flow in the fourth quarter is due to an industry-wide focus on completing transactions toward the calendar year end.

SHAREHOLDER INFORMATION

Like many other listed public companies, Savills no longer issues a hard copy of the Interim Statement to shareholders.

This announcement together with the attached financial statements and notes may be downloaded from the investor relations section of the Company website at www.savills.com.

 

END

 

 

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