Interim Results

Savills PLC 5 September 2001 Page 1 FOR IMMEDIATE RELEASE WEDNESDAY 5 SEPTEMBER 2001 Savills plc, the international property advisers, today announced interim results for the six months ended 30 June 2001. * Group turnover for the six months was up 21.4% at £111.2m (2000 - £91.6m). * Group pre-tax profit was maintained at £10.1m (2000 - £10.3m). * Earnings per share before interest, taxation, depreciation and amortisation of goodwill were 24.5p (2000 - 24.1p). * Basic earnings per share were 11.0p (2000 - 14.4p). Richard Jewson, Chairman of Savills plc, comments: 'As we reported in our trading review in June, uncertainty in the financial markets has affected confidence in the UK commercial sector and in Asia-Pacific. Today, your board is able to report the Group has maintained profits in the first half, despite these market difficulties, and we continue to trade strongly. 'We expect that our results for the full year will, as in previous years, be weighted towards the second half. The current economic climate should provide us with a good opportunity to achieve our strategy of building an international property services business through acquisition and partnerships, which will deliver secure, long-term returns for shareholders.' *** Chairman's Statement and Interim Results follow *** Savills plc. Registered in England No. 2122174. Registered Office 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ For further information, contact: Savills 020 7499 8644 Richard Jewson, Chairman Aubrey Adams, Group Chief Executive Grandfield 020 7417 4170 Harry Hunt Page 2 CHAIRMAN'S STATEMENT RESULTS AND DIVIDEND As we reported in our trading review in June, uncertainty in the financial markets has affected confidence in the UK commercial sector and in Asia-Pacific. Today, your board is able to report the Group has maintained profits in the first half, despite these market difficulties, and we continue to trade strongly. I am pleased to announce that profit before tax for the six months ended 30 June 2001 has been maintained at £10.1m (2000 - £10.3m). Basic earnings per share were 11.0p (2000 - 14.4p). Earnings per share before interest, taxation, depreciation and amortisation of goodwill were 24.5p (2000 - 24.1p). Turnover was up 21.4% at £111.2m (2000 - £91.6m). The balance sheet remains strong. Following the change of year-end there was no interim dividend for the eight months to 31 December 2000; a final dividend of 6.0p per share was paid on 4 May 2001. The Directors have declared an interim dividend for the current year of 3.25p (2000 - nil) to be paid on 26 October 2001. TRADING REVIEW Transactional The UK commercial investment market has been affected by general caution in the financial sector. In some cases falling equity values have constrained institutional investors who have pre-set asset allocations. However debt financed, private and corporate investors continue to be active both in the UK and in Continental Europe, where there continues to be significant activity in the sector. The leasing markets have seen a decline in the demand for offices in particular from technology companies. However demand from traditional occupiers is maintained particularly in the areas in which FPDSavills operates and so vacancy rates remain low. In Asia the commercial leasing markets have been adversely affected, particularly by US based multi-nationals reviewing space requirements. After a quiet start to the year, the strength and activity of the UK residential market has exceeded expectations. This is due to an increased level of instructions coming forward to take advantage of the strong market. Particular strength has been shown in the New Homes market in London, where demand has outstripped supply by a large factor for any development of quality. Whilst concerns in the stock market and general economy must sound a note of caution, there is as yet no sign that the residential markets are being adversely affected. Indeed our book of properties exchanged or under offer at the half year is higher than this time last year. Consulting The result of our Consulting business tends to be weighted towards the second half of the year and has therefore been adversely affected by the change in year-end and also the initial revenue cost of investing in new teams, together with the non-recoverability of certain insurance claims, particularly in Australia. Property Management The Property Management business has continued to perform strongly, particularly in Asia and has performed in line with budget. Facilities Management Our main Facilities Management subsidiary is the Guardian business based in Hong Kong. We continue to win new instructions and the full year outcome is likely to be in accordance with expectations. Our associate company, Trammell Crow Savills, is at an early stage of its development and we are making a substantial investment in building it to be a major player in the facilities management market. We are pursuing a number of major new contracts, inevitably involving significant costs which have been written off. Property Trading Our main property trading asset is Yorkshire Mill Village, which is taking longer to come on-stream than anticipated. The scheme is fully let but management are actively reconfiguring some tenancies which, together with initial launch costs, will result in a higher than expected loss for the year of approximately £1.6m. Page 3 Financial Services Our Private Client Financial Services business has continued to expand its geographic base and is performing strongly. We are now looking at ways to extend the Financial Planning division and see this as an expansion area for the business. Results are ahead of plans and overall growth prospects remain excellent. We have now sold our remaining 10% interest in Killik & Co. to the other partners. OUTLOOK We expect that our results for the full year will, as in previous years, be weighted towards the second half. The current economic climate should provide us with a good opportunity to achieve our strategy of building an international property services business through acquisition and partnerships, which will deliver secure, long-term returns for shareholders. Richard Jewson Chairman 5 September 2001 Page 4 INDEPENDENT REVIEW REPORT TO SAVILLS plc Introduction We have been instructed by the Company to review the financial information set out on pages 5 to 12- and we have read the other information contained in the interim report and considered whether it contains any apparent misstatements or material inconsistencies with the financial information. Directors' responsibilities The interim report, including the financial information contained therein, is the responsibility of, and has been approved by the Directors. The Directors are responsible for preparing the interim report in accordance with the Listing Rules of the Financial Services Authority which require that the accounting policies and presentation applied to the interim figures should be consistent with those applied in preparing the preceding annual accounts except where any changes, and the reasons for them, are disclosed. Review work performed We conducted our review in accordance with guidance contained in Bulletin 1999 /4 issued by the Auditing Practices Board for use in the United Kingdom. A review consists principally of making enquiries of Group management and applying analytical procedures to the financial information and underlying financial data and, based thereon, assessing whether the accounting policies and presentation have been consistently applied unless otherwise disclosed. A review excludes audit procedures such as tests of controls and verification of assets, liabilities and transactions. It is substantially less in scope than an audit performed in accordance with United Kingdom Auditing Standards and therefore provides a lower level of assurance than an audit. Accordingly we do not express an audit opinion on the financial information. Review conclusion On the basis of our review we are not aware of any material modifications that should be made to the financial information as presented for the six months ended 30 June 2001. PricewaterhouseCoopers Chartered Accountants 1 Embankment Place London WC2N 6RH 5 September 2001 Page 5 Interim Results (Unaudited) Six Six Year months months to to to 31.12.00 30.06.01 30.06.00 £'000 £'000 £'000 Turnover Group & share of joint ventures 115,603 93,550 219,480 Less share of joint ventures (4,362) (1,925) (5,971) Total Group turnover 111,241 91,625 213,509 Operating profit Group - existing operations 8,048 8,880 19,441 - acquisitions - 678 2,067 Total operating profit 8,048 9,558 21,508 Share of operating profit of joint ventures 690 204 887 Share of operating (loss)/profit of associated undertakings (729) 412 711 Total operating profit including share of joint ventures & associated undertakings 8,009 10,174 23,106 Profit on disposal of interest in subsidiary undertaking - 208 793 Profit on disposal of interest in 2,387 - 1,350 associated undertaking Profit on ordinary activities before interest 10,396 10,382 25,249 Net interest Group (376) (157) 557 Joint ventures 30 19 65 Associated undertakings 4 7 (3) Total net interest (342) (131) 619 Profit on ordinary activities before taxation 10,054 10,251 25,868 Taxation on profit on ordinary activities (3,535) (2,651) (8,053) Profit on ordinary activities after taxation 6,519 7,600 17,815 Minority interests (374) (42) (939) Profit for the financial period 6,145 7,558 16,876 Dividends paid & proposed (1,820) Profit for the period transferred to reserves 4,325 Basic earnings per share 11.0p 14.4p 31.1p Diluted earnings per share 9.9p 13.2p 28.0p Basic earnings per share before interest, taxation, depreciation & amortisation of goodwill (EBITDA) 24.5p 24.1p 56.2p Page 6 SUMMARY GROUP BALANCE SHEET At 30 June 2001 30.06.01 30.06.00 31.12.00 £'000 £'000 £'000 Fixed Assets Intangible assets 29,559 30,508 29,883 Tangible assets 29,605 23,950 29,248 Investments Investments in joint ventures Share of gross assets 3,674 2,761 3,729 Share of gross liabilities (1,748) (913) (2,028) 1,926 1,848 1,701 Investments in associates 6,347 5,656 6,994 Other investments 4,364 5,855 5,586 Total investments 12,637 13,359 14,281 Total Fixed Assets 71,801 67,817 73,412 Current assets Property held for resale 19,468 17,408 15,801 Work in progress 2,853 1,981 2,815 Debtors 65,387 49,457 62,309 Cash at bank & in hand 17,661 29,716 29,696 105,369 98,562 110,621 Creditors - amounts falling due within one year (64,547) (72,227) (82,661) Net current assets 40,822 26,335 27,960 Total assets less current liabilities 112,623 94,152 101,372 Creditors - amounts falling due after more than one year (27,075) (20,837) (21,759) Provisions for liabilities & charges (2,350) (1,904) (1,959) Net assets 83,198 71,411 77,654 Capital & Reserves Called up equity share capital 3,130 3,127 3,129 Share premium account 40,885 40,845 40,867 Profit & loss account 38,485 27,022 33,069 Equity shareholders' funds 82,500 70,994 77,065 Minority interests 698 417 589 83,198 71,411 77,654 Page 7 CONSOLIDATED CASH FLOW STATEMENT Six months Six months to 30.06.01 to 30.06.00 £'000 £'000 Net cash (outflow)/inflow from operating activities (7,123) 27,067 Dividends received from associated undertakings 851 307 Net cash outflow from returns on investments & servicing of finance (1,117) (157) Tax paid (5,146) (6,034) Net cash outflow from capital expenditure & financial investment (3,049) (7,756) Net cash inflow/(outflow) from acquisitions 1,423 (9,622) & disposals Equity dividends paid (3,369) (1,459) Cash (outflow)/inflow before use of liquid resources & financing (17,530) 2,346 Management of liquid resources 8,241 (10,063) Financing 6,106 2,230 Decrease in cash for the period (3,183) (5,487) Page 8 STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES Six months Six months Year to to 30.06.01 to 30.06.00 31.12.00 £'000 £'000 £'000 Profit for the financial period 6,145 7,558 16,876 Currency translation differences on foreign currency net investments 1,091 89 176 Total recognised gains & losses relating to the period 7,236 7,647 17,052 RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS FUNDS Six months Six months Year to to 30.06.01 to 30.06.00 31.12.00 £'000 £'000 £'000 Profit for the financial period 6,145 7,558 16,876 Dividends (1,820) (2,549) (5,908) Retained profit for the period 4,325 5,009 10,968 Issue of share capital 19 16,222 16,247 Currency translation differences 1,091 89 176 Shares issued to QUEST - (1,726) (1,726) Net increase in shareholders' funds 5,435 19,594 25,665 Shareholders' funds at beginning of 77,065 51,400 51,400 period Shareholders' funds at end of period 82,500 70,994 77,065 Page 9 NOTES 1. Basis of preparation The unaudited accounts for the six month period ended 30 June 2001 have been prepared under the historical cost convention, modified to include the revaluation of investment properties and in accordance with applicable United Kingdom accounting standards on a consistent basis with prior periods. The statement has been prepared applying the accounting policies described on pages 35 and 36 of the Report and Accounts of Savills plc for the period ended 31 December 2000 and should be read in conjunction with the Report and Accounts. The financial information in this statement does not constitute statutory accounts within the meaning of s240 of the Companies Act 1985. The statutory accounts for the eight month period ended 31 December 2000, on which the auditors have given an unqualified audit report, have been filed with the Registrar of Companies. There was a change in the companies accounting reference date to December in the last financial period. To assist with the understanding of these financial statements, unaudited comparative figures for the 12 months to 31 December 2000 and 6 months to 30 June 2000 have been disclosed, instead of using the statutory figures for 8 months to 31 December 2000 and interim figures for 6 months to 31 October 2000. 2. Segmental analysis Transactional Property Facilities Consultancy Advice Management Management £'000 £'000 £'000 £'000 Six months to 30 June 2001 Total Group 17,363 47,478 23,556 15,922 turnover Operating profit/ 2,309 4,619 1,574 850 (loss) Profit/ (loss) before 2,369 4,734 2,050 761 taxation Six months to 30 June 2000 Total Group turnover 14,858 41,491 16,034 10,142 Profit/ (loss) before taxation 3,247 5,039 1,440 591 2. Segmental analysis Financial Property Holding Total Services Trading Company £'000 £'000 £'000 £'000 Six months to 30 June 2001 Total Group turnover 5,165 1,757 - 111,241 Operating profit /(loss) (99) (59) (1,146) 8,048 Profit/(loss) before taxation 2,124 (1,086) (898) 10,054 Six months to 30 June 2000 Total Group turnover 2,216 6,884 - 91,625 Profit/(loss) before taxation (340) 610 (336) 10,251 Page 10 NOTES 3. Geographical analysis of turnover, profit before interest & tax (PBIT) Turnover PBIT Turnover PBIT 30.06.01 30.06.01 30.06.00 30.06.00 £'000 £'000 £'000 £'000 United Kingdom 67,538 8,944 67,849 9,560 Europe 3,519 232 1,997 (482) Asia 40,184 1,220 21,779 1,304 111,241 10,396 91,625 10,382 Profits before interest and tax for the six months ended 30 June 2001 for Asia are shown after charging amortisation of £597,000 (six months ended 30 June 2000 - £297,000). The profits before interest and tax for the six months ended 30 June 2001 for Europe are shown after charging amortisation of £89,000 (six months ended 30 June 2000 - £91,000). The figures reported for Asia for the six months to 30 June 2000 reflect three months' post-acquisition results for FPDSavills Asia Pacific Limited. 4. Taxation The tax charge has been calculated on the basis of the underlying rate in each jurisdiction adjusted for any disallowable charges. 5. Dividends The Directors have declared an interim dividend for the 6 months ended 30 June 2001 of 3.25 pence per ordinary share (2000 - nil). The interim dividend will be paid on 26 October 2001 to the shareholders on the register as at 28 September 2001. The current number of shares in issue is 62,620,857. Following the change of year-end there was no interim dividend for the eight months to 31 December 2000; a final dividend of 6.0p per share was paid on 4 May 2001. The interim dividend for the six months to 31 October 1999 was 3.0p per share. 6. Earnings per share The calculation of earnings per share is based on the following weighted average number of shares: Six months Six months Year to 30.06.01 to 30.06.00 to 31.12.00 '000 '000 '000 Basic Earnings per share 56,103 52,316 54,292 Diluted earnings per share 62,363 57,150 60,327 For the six months to 30 June 2001, earnings are adjusted by £7.6m (six months to 30 June 2000 - £5.0m, 12 months to 31 December 2000 - £13.7m) representing interest, taxation, depreciation and amortisation of goodwill in order to calculate the adjusted basic earnings per share. Page 11 NOTES 7. Notes to consolidated cash flow statement (a) Reconciliation of operating profit to net cash inflow from operating activities Six months Six months to 30.06.01 to 30.06.00 £'000 £'000 Operating profit 8,048 9,558 Depreciation charges 2,852 1,774 Amortisation of goodwill 852 490 Loss on the sale of fixed assets 13 - (Increase)/decrease in property held for sale (3,667) 792 (Increase)/decrease in work in progress (66) 506 Increase in debtors (4,303) (5,466) (Decrease)/increase in creditors (12,414) 16,896 Increase in provisions 136 1,718 Movement in provision for ESOP share options granted 1,426 799 Net cash (outflow)/inflow from operating activities (7,123) 27,067 (b) Reconciliation of net cash flows to net funds Six months Six months to 30.06.01 to 30.06.00 £'000 £'000 Decrease in cash (3,183) (5,487) Cash inflow from increase in debt (6,145) (2,156) Capital element of finance leases repaid 54 25 Increase in monies held by the EBT 236 1,076 Finance leases & loans assumed on acquisition of subsidiaries - (4,339) (Decrease)/increase in funds held on short-term deposit (8,477) 8,983 New finance leases - (31) Net funds at beginning of period 249 7,717 Net funds at end of period (17,266) 5,788 Page 12 NOTES 7. Notes to consolidated cash flow statement (continued) (c) Analysis of changes in net funds At 01.01.01 Cash flows At 30.06.01 £'000 £'000 £'000 Cash at bank 11,822 (3,794) 8,028 Overdraft (2,848) 611 (2,237) (3,183) Liquid funds on one month deposit 1,051 236 1,287 Liquid funds on short-term deposits 16,823 (8,477) 8,346 26,848 (11,424) 15,424 Debt - due within one year (5,166) (285) (5,451) - due after one year (21,159) (5,860) (27,019) Finance leases (274) 54 (220) Net funds 249 (17,515) (17,266) Copies of this statement are being sent to shareholders and are available from: Savills plc, 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ Telephone: 020 7409 9920 Fax: 020 7491 0505 Email: meast@fpdsavills.co.uk Contact: Michaela East In addition, with prior notice, copies in alternative formats i.e. large print, audio tape, braille are available if required from Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA. This information is also available on the Company's website at: www.fpdsavills.co.uk End

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