Interim Results
Savills PLC
05 September 2006
Strong performance in the first half
Savills plc, the international property adviser, today announces interim results
for the six months ended 30 June 2006.
• Group revenue for the six months was up 33% at £211.1m (2005 -
£158.2m).
• Group profit before tax increased 56% to £31.0m (2005 - £19.9m).
• Underlying Group profit before tax* increased 27% to £25.6m (2005
- £20.2m).
• Basic earnings per share increased 45% to 17.2p (2005 - 11.9p).
• Adjusted underlying basic earnings per share* increased 15% to
13.9p (2005 - 12.1p).
• Interim dividend increased 25% to 5.0p (2005 - 4.0p).
* After adjusting for share based payments, amortisation of intangibles and
impairment of goodwill and profit on disposals.
Peter Smith, Chairman of Savills plc, comments:
'We believe that recent volatility in stock markets continues to highlight the
value of property as an asset class. Despite rising global interest rates, the
general economic outlook remains positive which should provide general support
for property markets.
On this basis we are confident of achieving a good result for the full year in
line with our expectations.'
*** Chairman's Statement and Interim Results follow ***
Savills plc. Registered in England No. 2122174.
Registered Office 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ.
For further information, contact:
Savills 020 7499 8644
Aubrey Adams, Group Chief Executive
Citigate Dewe Rogerson 020 7638 9571
Simon Rigby/Sarah Gestetner/George Cazenove
CHAIRMAN'S STATEMENT
RESULTS AND DIVIDEND
We reported in our Trading Update, released on 3 July 2006, that the first half
had seen strong investment markets especially in the UK and in key European
markets and this should ensure that commercial activity levels remained high in
2006. Residential markets had been buoyant in the first half of 2006.
I am delighted to announce that revenue increased by 33% to £211.1m (2005 -
£158.2m). Profit before tax increased to £31.0m for the first six months to 30
June 2006 (2005 - £19.9m) representing an increase of 56%, with underlying
profit increasing 27% to £25.6m from £20.2m. Basic earnings per share for the
six months to 30 June 2006 increased to 17.2p (2005 - 11.9p). Adjusted
underlying earnings per share increased by 15% to 13.9p (2005 - 12.1p). The
Directors have decided to increase the interim dividend to 5.0p (2005 - 4.0p) to
be paid on 27 October 2006.
During the first half of the year, Savills continued to expand its international
operations with the acquisition of an initial 50% stake in Korean Asset Advisors
(KAA) and BHP Korea (BHPK) for consideration of £8.4m and the acquisition of
Hamilton Osborne King in Ireland for consideration of £39.6m. We also made a
number of smaller acquisitions in the UK. Our continued growth strategy and our
search to recruit and retain the best people may give rise to some pressure on
margins in the short term.
At our AGM on 10 May 2006, the shareholders passed a resolution that the
existing ordinary share capital of the Company be split; each existing 5 pence
ordinary share was divided into two new ordinary shares of 21/2 pence. The
share split became effective on 11 May 2006. Relevant figures in the interim
statements have been adjusted to reflect this.
Transactional Advice
During the half year, revenue for the Transactional Advice businesses was £95.0m
(2005 - £68.2m) and operating profit was £19.4m (2005 - £10.7m).
Transactional income in the UK Commercial and Asian markets was ahead of the
same period last year with Europe carrying a strong pipeline.
Leasing markets in London showed signs of recovery, particularly in the West End
where a shortage of space drove rents for prime space to record levels. In the
City, rents also rose, driven by increasing demand from the financial sector.
Leasing markets outside of London remained stable.
Tenant demand in the office and industrial sectors improved during the first six
months of 2006, reverting to long term average levels in many cases. Some key
city and prime markets have seen requirements rise to near record levels.
Vacancy rates continued to fall in these markets and consequently rents on the
best quality space have started to rise, as has been seen in the recovery of the
South East office markets. This in turn has spurred office developers to start
schemes speculatively in anticipation of further strong upward rental growth.
In the retail property market, tenant demand was still restrained in the face of
continuing low levels of consumer demand. However, retailers were still opening
new stores in well located shopping centres as there remained continuing retail/
tenant demand.
Investment in the UK and key European markets continued to remain strong despite
yields having fallen over the last six months in all asset classes. Despite
concerns about rising interest rates there were no signs of any slowdown in
these investment markets and there was strong demand by both institutional and
private investors for investment products with investors looking outside of the
main cities due to lack of supply. All our investment teams across the UK and
Europe have had a good six months with a number of transactions in the pipeline
due to complete within the second half of the year.
In March, we acquired Blair Kirkman, a 26-strong team offering a full breadth of
retail and shopping centre services including agency, investment, development
and professional/rent review consultancy, which enabled us to become a leading
force in the UK property retail markets. The integration of Blair Kirkman with
our existing Retail teams across the UK has gone well and since their arrival we
have already received some notable new instructions and are pitching for several
others.
Residential markets in the UK experienced a strong start to the year, in
contrast to the much slower start in 2005. London in particular has benefited
from a buoyant market, which since the spring has spread through the southern
part of the country. However, markets in the Midlands and the North remain
patchy. The main constraint in the strong London market was the lack of supply
to meet demand.
The new homes market has seen further improvement in 2006, following
strengthening take-up throughout 2005. Having stabilised at the end of 2005,
housing output has now slightly increased in England, with the South East seeing
the highest levels. This is unsurprising given the huge demand for housing in
this region. Large development sites are growing in importance, delivering new
housing supply to London and other cities.
Despite the US interest rate hikes that have prevailed over the last year, the
demand for commercial real estate in Asia remains strong. However, there has
been some cooling in investor sentiment, especially in Hong Kong. Tenant demand
for space in Hong Kong and China was very strong and we continued to negotiate
ever-increasing rents for prime space. In Japan, the resurgent economy has
pushed rents ahead of last year's levels giving rise to increased activity for
our Tokyo office.
Consultancy
During the half year revenue for the Consultancy businesses was £37.7m (2005 -
£30.1m) and operating profit was £6.0m (2005 - £4.9m).
Our professional businesses continued to grow, in particular our Commercial
Valuation businesses across UK and Europe where income increased substantially
over the first six months. Our UK Commercial Valuation business has experienced
significant growth on the back of increased lending in the investment markets.
Residential Consultancy income increased in areas such as development
valuations, affordable housing and social housing, reflecting increased market
share and growing activity in the housing market. Our Planning, Building and
Housing Consultancy divisions have also experienced strong markets and we are
continuing to recruit in all these areas.
In Asia, following the recruitment of a valuation team last year, we have been
successful in capturing the majority of the REIT listing valuation and
consultancy services that have come to the Hang Seng market. Last year our
valuation team were advisers on the Construction Bank of China listing, the
largest global IPO for 2005; and in 2006 they continue to be heavily involved in
many of the IPO listings that originated in China which require property
valuation and consultancy services. In Australia, our valuation team were
successful in securing many of the retail valuation portfolio annual
appointments which are required by the Australian listed property trusts.
Property and Facilities Management
During the half year, revenue for the combined Property and Facilities
Management businesses was £63.1m (2005 - £47.1m) and operating profit was £3.8m
(2005 - £3.4m).
In Asia, property management revenues increased substantially over the 2005
levels. We have continued our commitment to increase our market share in this
area of real estate advice. New contracts were secured in Hong Kong and China.
The addition of our Korean business has significantly increased our size and
scope of services offered in this growing economy.
In the UK, the Property Management business continued to win new contracts and
we are continuing to expand this business particularly in the regions.
In Europe, we acquired a small Property Management business in Berlin which has
experienced rapid growth due to the strong investment markets in Germany. Our
recently acquired Property Management business in Paris has performed in line
with expectations, as has our team in Madrid.
Fund Management
During the half year, revenue for the Fund Management business was £2.6m (2005 -
£2.3m) which resulted in a profit of £0.1m at the half year (2005 - £0.3m).
Cordea Savills continued to develop its resources with the addition of staff in
the UK and Italy and a new office was opened in Germany to support our
investment and business development activities. During the first half, Cordea
Savills closed Serviced Land No.1 LP, a vehicle involved in 'enabling' land for
development and had the first closing of the Cordea Savills Student Hall Fund.
Other initiatives included the creation of a vehicle investing in opportunistic
property situations in Italy and a second fund for charity investors, the
Accommodation Investment Fund, which was the first charity common investment
fund focusing on property used for residential purposes.
A proposed fund to invest in German property did not proceed because of a weak
stock market. However, we are investigating other opportunities in the German
market. £0.4m of abortive costs have been expensed in the period.
Financial Services
During the half year, revenue for the Financial Services businesses was £12.1m
(2005 - £10.4m) and operating profit was £1.3m (2005 - £1.3m).
SPF continued to trade well specifically in the high net worth mortgage broking
market. The Commercial Debt Broking division also made a significant
contribution. New offices have been opened in Chelmsford and Guernsey with
further expansion planned in the second half of the year.
OUTLOOK
We believe that recent volatility in stock markets continues to highlight the
value of property as an asset class. Despite rising global interest rates, the
general economic outlook remains positive which should provide general support
for property markets.
On this basis we are confident of achieving a good result for the full year in
line with our expectations.
Independent review report to Savills plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2006 which comprises the consolidated income
statement, the consolidated balance sheet as at 30 June 2006, the consolidated
statement of cash flows and the consolidated statement of recognised income and
expense and related notes. We have read the other information contained in the
interim report and considered whether it contains any apparent misstatements or
material inconsistencies with the financial information.
Directors' responsibilities
The interim report, including the financial information contained therein, is
the responsibility of, and has been approved by the Directors. The Listing Rules
of the Financial Services Authority 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.
This interim report has been prepared in accordance with the basis set out in
Note 1.
Review work performed
We conducted our review in accordance with guidance contained in Bulletin 1999/4
issued by the Auditing Practices Board for use in the United Kingdom. A review
consists principally of making enquiries of group management and applying
analytical procedures to the financial information and underlying financial data
and, based thereon, assessing whether the disclosed accounting policies have
been applied. A review excludes audit procedures such as tests of controls and
verification of assets, liabilities and transactions. It is substantially less
in scope than an audit and therefore provides a lower level of assurance.
Accordingly we do not express an audit opinion on the financial information.
This report, including the conclusion, has been prepared for and only for the
Company for the purpose of the Listing Rules of the Financial Services Authority
and for no other purpose. We do not, in producing this report, accept or assume
responsibility for any other purpose or to any other person to whom this report
is shown or into whose hands it may come save where expressly agreed by our
prior consent in writing.
Review conclusion
On the basis of our review we are not aware of any material modifications that
should be made to the financial information as presented for the six months
ended 30 June 2006.
PricewaterhouseCoopers LLP
Chartered Accountants
London
4 September 2006
SAVILLS plc
CONSOLIDATED INCOME STATEMENT (unaudited)
for the period ended 30 June 2006
Six months Six months Year ended
to 30.06.06 to 30.06.05 31.12.05
Notes £'000 £'000 £'000
Continuing operations
Revenue 2 211,077 158,154 373,866
Employee benefits expense (125,180) (95,010) (227,510)
Depreciation expense (2,669) (2,109) (4,573)
Amortisation of intangibles & impairment of goodwill (711) (588) (1,465)
Other operating expenses (58,693) (41,885) (85,914)
Profit on disposal of subsidiary & available for sale 4,459 - 455
investments
Operating profit 2 28,283 18,562 54,859
Finance income 2,170 1,607 3,940
Finance costs (29) (202) (461)
Net finance income 2,141 1,405 3,479
Share of post tax profit from associates & joint 37 (18) 329
ventures
Profit/(loss) on disposal of associates & joint ventures 540 - (88)
Profit before tax 31,001 19,949 58,579
Income tax expense (including foreign tax of £1.6m, June 4 (9,727) (6,222) (17,799)
2005 - £2.0m and December 2005 - £4.0m)
Profit for the period from continuing operations 21,274 13,727 40,780
Discontinued operations
Profit/(loss) for the period from discontinued 3 360 - (504)
operations
Profit after income tax 21,634 13,727 40,276
Attributable to:
Equity shareholders of the parent 21,330 13,700 39,974
Minority interest 304 27 302
21,634 13,727 40,276
Earnings per share
From continuing and discontinued operations
Basic earnings per share 7 17.2p 11.9p 33.6p
Diluted earnings per share 7 16.2p 11.1p 31.3p
From continuing operations
Basic earnings per share 7 16.9p 11.9p 34.0p
Diluted earnings per share 7 15.9p 11.1p 31.7p
From discontinued operations
Basic earnings per share 7 0.3p - -0.4p
Diluted earnings per share 7 0.3p - -0.4p
Dividends per share
Interim dividend proposed 5 5.0p 4.0p -
Dividends paid 5 8.0p 16.3p 20.3p
SAVILLS plc
CONSOLIDATED BALANCE SHEET (unaudited)
at 30 June 2006
30.06.06 30.06.05 31.12.05
Notes £'000 £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment 15,712 12,827 14,679
Goodwill 99,780 51,937 54,255
Intangible assets 10,834 3,605 4,699
Financial assets - available for sale investments 10,140 5,580 10,486
Investments in associates and joint ventures 4,695 3,045 3,402
Deferred income tax assets 21,438 18,240 23,892
162,599 95,234 111,413
Current assets
Assets classified as held for sale - - 64,853
Work in progress 3,442 3,127 3,180
Trade and other receivables 116,559 89,097 115,336
Cash and cash equivalents 63,064 77,254 99,921
183,065 169,478 283,290
LIABILITIES
Current Liabilities
Borrowings 7,114 1,092 1,910
Liabilities directly related to assets classified as - - 48,867
held for sale
Trade and other payables 111,834 80,485 136,102
Current income tax liabilities 7,364 3,064 5,644
Employee benefit obligations 2,636 1,614 1,739
Provisions for other liabilities and charges 662 372 675
129,610 86,627 194,937
Net current assets 53,455 82,851 88,353
Total assets less current liabilities 216,054 178,085 199,766
Non-current Liabilities
Borrowings 11,777 1,243 1,516
Trade and other payables 1,035 2,169 989
Retirement and employee benefit obligations 17,415 29,420 24,926
Provisions for other liabilities and charges 2,450 2,454 1,708
Deferred income tax liabilities 1,723 914 2,313
34,400 36,200 31,452
Net assets 181,654 141,885 168,314
EQUITY
Capital and reserves attributable to equity
holders of the parent
Share capital 9,10 3,344 3,315 3,325
Share premium 10 81,358 80,665 80,885
Other reserves 10 939 1,025 6,528
Retained earnings 10 92,315 56,597 77,001
Total shareholders' equity 177,956 141,602 167,739
Minority interest 10 3,698 283 575
Total equity 181,654 141,885 168,314
SAVILLS plc
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
for the period ended 30 June 2006
Six months Six months Year ended
to
to 30.06.06 to 30.06.05 31.12.05
Notes £'000 £'000 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from/(used in) continuing operations 8 40 (14,650) 44,859
Interest received 2,167 1,607 3,829
Interest paid (29) (202) (461)
Income tax paid (6,535) (8,360) (15,564)
Net cash (used in)/generated from operating activities (4,357) (21,605) 32,663
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of subsidiary, net of cash disposed - - 120
Proceeds from sale of property, plant and equipment 39 49 38
Proceeds from sale of associates, joint ventures and 6,267 - 503
available for sale investments
Dividends received 228 143 324
Net loans to related parties (1,793) (290) (413)
Acquisition of subsidiaries, net of cash acquired 9 (26,561) (4,694) (7,528)
Sale/(acquisition) of assets held for resale 16,346 - (16,490)
Purchases of property, plant and equipment (3,440) (2,772) (7,268)
Purchases of intangible assets (646) (440) (872)
Purchase of investment in associates, joint ventures (5,496) (41) (176)
and available for sale investments
Net cash used in investing activities (15,056) (8,045) (31,762)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 492 37,845 38,075
Proceeds from new borrowings 330 110 706
Repurchase of own shares - (520) (520)
Purchase of own shares for Employee Benefit Trust (4,987) - (4,158)
Repayments of borrowings (1,031) (3,790) (4,322)
Dividends paid (10,045) (18,092) (23,133)
Net cash (used in)/generated from financing activities (15,241) 15,553 6,648
Net (decrease)/increase in cash and cash equivalents (34,654) (14,097) 7,549
Cash and cash equivalents at beginning of the year 99,921 89,919 89,919
Effect of exchange rate fluctuations on cash held (2,203) 1,432 2,453
Cash and cash equivalents at end of period 63,064 77,254 99,921
SAVILLS plc
CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE (unaudited)
for the period ended 30 June 2006
Six months Six months Year ended
to 30.06.06 to 30.06.05 31.12.05
£'000 £'000 £'000
Profit for the period 21,634 13,727 40,276
Revaluation of available for sale investments 373 778 6,582
Actuarial gain/(loss) on defined benefit pension 6,440 (1,783) (7,301)
scheme
Tax on items directly taken to reserves 482 3,482 9,574
Foreign exchange translation differences (2,128) 1,016 2,702
Net income recognised directly in equity 5,167 3,493 11,557
Total recognised income and expense for the period 26,801 17,220 51,833
Attributable to:
Equity shareholders of the parent 26,497 17,211 51,621
Minority interest 304 9 212
26,801 17,220 51,833
Effects of changes in accounting policies
Attributable to equity shareholders
- increase in retained earnings due to revaluation
of
on adoption of IAS 32 & 39 - 960 960
Attributable to minority interest - - -
- 960 960
NOTES
1. Basis of preparation
The financial information comprises the unaudited consolidated income statement, consolidated balance sheet,
consolidated statement of cashflows, consolidated statement of recognised income and expense and related notes as
at 30 June 2006 and 30 June 2005, together with the audited consolidated balance sheet and consolidated income
statement for the year ended 31 December 2005.
This financial information has been prepared in accordance with the Listing Rules of the Financial Services
Authority. In preparing this financial information management has used the principal accounting policies as set
out in the 2005 Annual Report and Accounts on pages 67 to 76.
As permitted, the Group has chosen not to adopt IAS 34, 'Interim financial statements' in preparing its 2006
interim statements, and therefore this interim financial information is not considered to be in compliance with
IFRS.
The 2005 Annual Report and Accounts, which are the Group's statutory accounts, have been filed with the Registrar
of Companies. The auditors' report on these accounts was unqualified and did not contain a statement under
Section 237(2) or Section 237(3) of the Companies Act 1985.
2. Segment analysis
Six months to Trans-actional Consult-ancy Property & Fund Financial Unalloc-ated* Total
30 June 2006 Advice Facilities Manage-ment Services
Manage-ment
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
United Kingdom
- Commercial 30,538 21,851 15,864 2,656 1,506 164 72,579
- Residential 40,320 9,539 3,870 - 10,612 296 64,637
70,858 31,390 19,734 2,656 12,118 460 137,216
Rest of Europe 6,833 1,132 2,516 - - - 10,481
Asia Pacific 17,277 5,205 40,898 - - - 63,380
Total revenue 94,968 37,727 63,148 2,656 12,118 460 211,077
Operating profit
United Kingdom
- Commercial 5,927 3,617 1,020 127 304 (2,308) 8,687
- Residential 11,395 1,758 303 - 1,033 - 14,489
17,322 5,375 1,323 127 1,337 (2,308) 23,176
Rest of Europe 711 94 60 - - (40) 825
Asia Pacific 1,376 517 2,389 - - - 4,282
Operating profit/ 19,409 5,986 3,772 127 1,337 (2,348) 28,283
(loss)
Net finance income 2,141
Share of post tax profit from associates & joint ventures 37
Profit/(loss) on disposal of associates & joint ventures 540
Profit before income tax 31,001
Taxation (9,727)
Profit for the period from continuing operations 21,274
Six months to Trans-actional Consult-ancy Property & Fund Financial Unalloc-ated* Total
30 June 2005 Advice Facilities Manage-ment Services
Manage-ment
£'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
United Kingdom
- Commercial 20,268 18,383 14,531 2,292 685 60 56,219
- Residential 25,565 7,382 3,197 - 9,724 - 45,868
45,833 25,765 17,728 2,292 10,409 60 102,087
Rest of Europe 7,867 719 2,209 - - - 10,795
Asia Pacific 14,528 3,576 27,168 - - - 45,272
Total revenue 68,228 30,060 47,105 2,292 10,409 60 158,154
Operating profit
United Kingdom
- Commercial 3,510 3,328 971 319 (26) (2,088) 6,014
- Residential 3,072 1,003 143 - 1,330 - 5,548
6,582 4,331 1,114 319 1,304 (2,088) 11,562
Rest of Europe 1,717 40 254 - - - 2,011
Asia Pacific 2,421 509 2,059 - - - 4,989
Operating profit/ 10,720 4,880 3,427 319 1,304 (2,088) 18,562
(loss)
Net finance income 1,405
Share of post tax profit from associates & joint ventures (18)
Profit before income tax 19,949
Taxation (6,222)
Profit for the period from continuing operations 13,727
The unallocated segment includes holding company costs, Group bonuses and other expenses not directly
attributable to the operating activities of the Group's business segments.
*For the purpose of the segmental information above, and to assist in the comparison of segmental
information, the benefit arising from the amortisation of the share based payment charge as discussed in
more detail in note 6, is retained within the unallocated segment.
3. Discontinued operations
Six months Six months Year ended
to 30.06.06 to 30.06.05 31.12.05
£'000 £'000 £'000
Revenue 1,092 - 149
Expenses (391) - (869)
Profit before tax 701 - (720)
Income tax expense (341) - 216
Profit after tax 360 - (504)
The assets and liabilities of the Student Halls Long Lease 1 Unit Trust (the 'Fund') in which the
Group held a 100% interest at 31 December 2005 were disposed during the period. The Group's share of
the Fund was diluted to a small holding of £1.0m, which is classified as an available for sale
investment.
The profit for the period includes a fair value gain of £1.4m arising on the mark to market valuation
of two interest rate swaps taken out on loans secured on the properties within the Fund. All operating
results are classified under discontinued operations. The discontinued operations all relate to the
unallocated segment.
4. Income tax expense
The income tax expense has been calculated on the basis of the underlying rate in each jurisdiction
adjusted for any disallowable charges.
Six months Six months Year ended
to 30.06.06 to 30.06.05 31.12.05
£'000 £'000 £'000
United Kingdom corporation tax (7,364) (2,339) (13,009)
Foreign tax (1,635) (1,971) (3,964)
Deferred tax (728) (1,912) (826)
(9,727) (6,222) (17,799)
Six months Six months Year ended
5. Dividends to 30.06.06 to 30.06.05 31.12.05
£'000 £'000 £'000
Amounts recognised as distribution to equity holders:
Interim dividend of 4.0p per share - - 4,942
Ordinary final dividend of 8.0p per share (2005 - 6.3p) 9,969 6,942 6,990
Special dividend of nil per share (2005 - 10.0p) - 11,107 11,128
9,969 18,049 23,060
Proposed interim dividend for the six months ended 30 June 2006 6,208 - -
The Directors have recommended an interim dividend for the six months to 30 June 2006 of 5.0p per
ordinary share (2005 - 4.0p). The interim dividend will be paid on 27 October 2006 to shareholders on
the register as at 29 September 2006.
Following shareholder approval at the Annual General Meeting on 10 May 2006 a two for one share split
took place. The above quoted dividend per share figures have been adjusted to present comparable
figures following the split.
6. Underlying profit before tax
Six months Six months Year ended
From continuing operations to 30.06.06 to 30.06.05 31.12.05
£'000 £'000 £'000
Reported profit before tax 31,001 19,949 58,579
Adjustments:
Amortisation of intangibles (excluding software) & impairment of 455 297 913
goodwill
Share based payment adjustment (817) - (1,934)
Profit on disposal of associates, joint ventures & available for sale (4,999) - (367)
investments
Underlying profit before tax 25,640 20,246 57,191
The Directors regard the above adjustments necessary to give a fair picture of the underlying results of the
Group for the period.
The adjustment for share based payment relates to the transitional impact of IFRS 2. The annual bonus is
paid in a mixture of cash and deferred shares and the proportions can vary from one year 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 year. The adjustment above addresses this by deducting from profit the difference
between the IFRS 2 charge and the value of the annual share award.
7. Basic and diluted earnings per share
The following earnings per share calculations have been made as if the share split (see Note 5) had taken
place at 1 January 2005 so as to present comparable information.
a. Basic and diluted earnings per share
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June 2006 2006 2006 2005 2005 2005
£'000 '000 Pence £'000 '000 Pence
From continuing and discontinued operations
Basic earnings per share 21,330 123,973 17.2 13,700 114,668 11.9
Effect of additional shares
issuable under option - 7,526 (1.0) - 9,278 (0.8)
Diluted earnings per share 21,330 131,499 16.2 13,700 123,946 11.1
From continuing operations
Basic earnings per share 20,970 123,973 16.9 13,700 114,668 11.9
Effect of additional shares
issuable under option - 7,526 (1.0) - 9,278 (0.8)
Diluted earnings per share 20,970 131,499 15.9 13,700 123,946 11.1
From discontinued operations
Basic earnings per share 360 123,973 0.3 - - -
Effect of additional shares
issuable under option - 7,526 - - - -
Diluted earnings per share 360 131,499 0.3 - - -
Earnings Shares EPS
Year to 31 December 2005 2005 2005
£'000 '000 Pence
From continuing and discontinued operations
Basic earnings per share 39,974 118,900 33.6
Effect of additional shares issuable under option - 8,836 (2.3)
Diluted earnings per share 39,974 127,736 31.3
From continuing operations
Basic earnings per share 40,478 118,900 34.0
Effect of additional shares issuable under option - 8,836 (2.3)
Diluted earnings per share 40,478 127,736 31.7
From discontinued operations
Basic earnings per share (504) 118,900 (0.4)
Effect of additional shares issuable under option - 8,836 -
Diluted earnings per share (504) 127,736 (0.4)
b. Adjusted underlying basic earnings per share
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June 2006 2006 2006 2005 2005 2005
£'000 000 Pence £'000 000 Pence
From continuing operations
Basic earnings from continuing operations 20,970 123,973 16.9 13,700 114,668 11.9
Amortisation of intangibles (excluding 318 - 0.3 208 - 0.2
software) and impairment of goodwill after
tax
Share based payment adjustment after tax (572) - (0.5) - - -
Profit on disposal of associates, joint ( 3,530) - (2.8) - - -
ventures & available for sale investments
after tax
Adjusted underlying basic earnings per 17,186 123,973 13.9 13,908 114,668 12.1
share
Earnings Shares EPS
Year to 31 December 2005 2005 2005
£'000 000 Pence
From continuing operations
Basic earnings from continuing operations 40,478 118,900 34.0
Amortisation of intangibles (excluding software) and impairment 639 - 0.5
of goodwill after tax
Share based payment adjustment after tax (1,354) - (1.1)
Profit on disposal of subsidiary, associates, joint ventures & ( 257) - (0.2)
available for sale investments after tax
Adjusted underlying basic earnings per 39,506 118,900 33.2
share
Six months Six months Year ended
8. Cash generated from continuing operations to 30.06.06 to 30.06.05 31.12.05
£'000 £'000 £'000
Profit for the year from continuing operations 21,274 13,727 40,780
Adjustments for:
Taxation 9,727 6,222 17,799
Depreciation expense 2,669 2,109 4,573
Amortisation of intangibles & impairment of goodwill 711 588 1,465
Net finance income (2,141) (1,405) (3,479)
Share of post tax (profit)/loss from associates & joint (37) 18 (329)
ventures
(Profit)/loss on disposal of associates & joint (540) - 88
ventures
Profit on disposal of subsidiary & available for sale (4,459) - (455)
investments
Loss on sale of property, plant and equipment 576 5 364
Increase/(decrease) in provisions 973 (227) (833)
(Decrease)/increase in employee and retirement obligations (1,042) 342 (9,574)
Charge for share based compensation 1,906 649 1,913
Provision against investments in associates and joint 14 8 18
ventures
Operating cash flows before movements in working capital 29,631 22,036 52,330
(Increase) in work in progress (307) (437) (431)
Decrease/(increase) in debtors 12,028 (804) (23,471)
(Decrease)/increase in creditors (41,312) (35,445) 16,431
Cash generated from/(used in) operations 40 (14,650) 44,859
9. Acquisitions
On 13 June 2006, the Group acquired the businesses of Hamilton Osborne King (HOK) in Ireland for
consideration of £39.6m. Provisional goodwill on acquisition of £31.4m has been capitalised, subject
to the completion of the fair value exercise. Loan notes repayable over 3 years to the value of
£11.8m were issued as part consideration for this acquisition.
On 3 January 2006, the Group acquired an initial 50% share in each of Korean Asset Advisors and BHP
Korea for a consideration of £8.4m. Goodwill and intangible assets totalling £8.4m have been
capitalised on acquisition.
On 22 March 2006, the Group acquired Blair Kirkman LLP for £9.4m. Goodwill and intangible assets
totalling £9.4m have been capitalised on acquisition. Loan notes repayable over 4 years to the value
of £4.3m were issued as part consideration for this acquisition.
10. Statement of changes in equity
Attributable to equity holders of the Group Minority Total
interest equity
Share Share Other Retained
capital premium reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2006 3,325 80,885 6,528 77,001 575 168,314
Total recognised income and - - (1,867) 28,364 304 26,801
expense for the period
Employee share option scheme:
- Value of services provided - - - 1,906 - 1,906
Issue of share capital 19 473 - 492
Purchase of treasury shares - - - (4,987) - (4,987)
Dividends - - - (9,969) (76) (10,045)
Disposal of available for sale - - (3,722) - - (3,722)
investments
Minority interest share on - - - - 2,895 2,895
acquisitions
Balance at 30 June 2006 3,344 81,358 939 92,315 3,698 181,654
Attributable to equity holders of the Group Minority Total
interest equity
Share Share Other Retained
capital premium reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2004 3,026 43,114 (1,243) 58,609 190 103,696
Adoption of IAS 32 and IAS 39 - - 672 288 - 960
Balance at 1 January 2005 3,026 43,114 (571) 58,897 190 104,656
Total recognised income and - - 1,591 15,620 9 17,220
expense for the period
Employee share option scheme:
- Value of services provided - - - 649 - 649
Issue of share capital 294 37,551 - - - 37,845
Purchase of own shares (5) - 5 (520) - (520)
Dividends - - - (18,049) (43) (18,092)
Minority interest share on - - - - 127 127
acquisitions
Balance at 30 June 2005 3,315 80,665 1,025 56,597 283 141,885
Attributable to equity holders of the Group Minority Total
interest equity
Share Share Other Retained
capital premium reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2004 3,026 43,114 (1,243) 58,609 190 103,696
Adoption of IAS 32 and IAS 39 - - 672 288 - 960
Balance at 1 January 2005 3,026 43,114 (571) 58,897 190 104,656
Total recognised income and expense - - 7,692 43,929 212 51,833
for the period
Employee share option scheme:
- Value of services provided - - - 1,913 - 1,913
Issue of share capital 304 37,771 - - - 38,075
Purchase of own shares (5) - 5 (520) - (520)
Purchase of treasury shares - - - (4,158) - (4,158)
Dividends - - - (23,060) (73) (23,133)
Disposal of available for sale - - (598) - - (598)
investments
Minority interest share on - - - - 246 246
acquisitions
Balance at 31 December 2005 3,325 80,885 6,528 77,001 575 168,314
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 8844 Fax: 020 7491 0505 Email: mwatts@savills.com
Contact: Mandy Watts
In addition, with prior notice, copies in alternative formats i.e. large print, audio tape,
braille are available if required from:
Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA
This information is also available on the Company's website at: www.savills.com
End
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