Interim Results
Savills PLC
11 September 2007
Excellent performance in the first half
Savills plc, the international property consultants, today announces interim
results for the six months ended 30 June 2007.
• Group revenue for the six months was up 35% at £284.2m (2006: £211.1m).
• Group profit before tax increased 7% to £33.2m (2006: £31.0m).
• Underlying Group profit before tax* increased 27% to £32.5m (2006: £25.6m).
• Basic earnings per share increased 3% to 17.8p (2006: 17.2p).
• Adjusted underlying basic earnings per share* increased 25% to 17.4p
(2006: 13.9p).
• Interim dividend increased 20% to 6.0p (2006: 5.0p).
* After adjusting for share based payments, amortisation of intangibles and
impairment of goodwill and profit on disposals
Peter Smith, Chairman of Savills plc, comments:
'Savills has performed strongly in the first six months to 30 June 2007 and
continues to trade well. However, tightening credit markets are affecting
transactional volumes in the commercial investment markets, primarily in the UK.
We believe prime UK residential markets should, however, remain resilient.
Overall, given the broad spread of our business, we are cautiously confident of
producing a good result for the year as a whole, in line with our expectations.'
*** Chairman's Statement and Interim Results follow ***
Savills plc. Registered in England No. 2122174.
Registered Office 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ.
For further information, contact:
Savills 020 7409 9923
Aubrey Adams, Group Chief Executive
Citigate Dewe Rogerson 020 7638 9571
Sarah Gestetner
George Cazenove
There will be an analyst presentation today at 9.30 am at 25 Finsbury Circus,
London EC2M 7EE.
CHAIRMAN'S STATEMENT
RESULTS AND HIGHLIGHTS
We reported in our Trading Update, released on 4 July 2007, that the Group had
made a good start to the year. We noted that possible further increases in UK
interest rates would continue to affect commercial property values and the
resultant uncertainty could, in the short term, affect the volume of commercial
transactions but should have little effect on prime residential markets; this
still remains the case. We also noted that the European and Asian markets were
less likely to be influenced by the increasing cost of money.
I am, therefore, delighted to announce that revenue increased by 35% to £284.2m
for the six months to 30 June 2007 (2006: £211.1m). Profit before tax increased
to £33.2m for the six months to 30 June 2007 (2006: £31.0m including £5.0m
profit on disposals). Underlying profit before tax increased by 27% to £32.5m
from £25.6m. Basic earnings per share for the six months to 30 June 2007
increased to 17.8p (2006: 17.2p). Adjusted underlying earnings per share
increased by 25% to 17.4p (2006: 13.9p). The Directors have decided to increase
the interim dividend to 6.0p (2006: 5.0p) to be paid on 29 October 2007 to
shareholders on the register as at 28 September 2007. The increase reflects our
continued confidence in the performance of the business.
Following the placing of Savills shares on 11 January 2007 by CBRE upon its
acquisition of Trammell Crow Company we repurchased shares to the value of
£21.8m for cancellation. In addition, we purchased shares to the value of
£12.9m for the Employee Benefit Trust (2006: £5.0m).
On 31 July 2007, in line with our strategy to invest directly in operations in
the US, we acquired Granite Partners LLC, a US real estate investment banking
firm, for an initial consideration of US$54.0m, of which 75% was payable on
completion.
As announced in August, Mark Dearsley joined the Board of Savills as Group
Finance Director on 3 September 2007. Mark was previously Finance Director for
the division of Aviva which is responsible for their operations outside the UK,
and before that he was Aviva's Group Mergers & Acquisitions Director. We
believe Mark will greatly strengthen our senior management team and will help to
ensure the continuing expansion of the business in the UK and overseas.
MARKETPLACE OVERVIEW
UK
In the first half, domestic and international investors remained active across
all sectors in the UK, with their focus primarily on rental growth
opportunities. The commercial office market showed tenant demand improving and
levels of availability falling. In many locations this led to strong upward
growth in rents and an increase in speculative development activity. Investor
and tenant demand for retail property in the UK was varied with concerns about
consumer confidence in the light of rising interest rates making both retailers
and investors more selective about location. In the industrial and distribution
markets, tenant demand was stable although distributors' margins were under
pressure. There continued to be an increased level of tenant selectivity on
locations for new facilities. Recent tightening of credit markets is affecting
transactional volumes in commercial investment markets.
Conditions have been strongest at the top end of the London residential market,
where wealthy international purchasers have added to the demand from City
buyers. Successive interest rate increases have led to a slowing of the
mainstream UK residential markets, most notably in the north of England, the
Midlands and Wales. Buyer caution has been evident largely in lower levels of
price growth rather than lower volumes of transactions. Markets have been more
robust in Scotland and the south of England, led by London where high demand
from employment growth and in-migration is running up against a scarcity of
stock. The Government's strategy to build more houses, in order to ease
affordability pressures, and the development of sustainable new communities has
increased the complexity and risks of developing new homes and workplaces,
leading to higher demand for professional services in valuation, planning,
development and building consultancy.
Europe
Tenant demand in Europe's major office markets was strong in the first half of
2007, with some markets showing signs that leasing activity levels could exceed
the highs of 2006. In general, vacancy rates fell in most major cities which
impacted positively upon rental growth. Office rental growth in Europe's major
cities strengthened in the second quarter of 2007. Tenant demand was less
strong in the retail markets, driven by tenant concerns about the prospects for
local retail economies. Although retailers continued to open new stores, they
were more selective on location. Upward rental growth on prime distribution
property across Europe accelerated over the first six months of the year.
In mainland Europe investor demand remained strong. Generally, investors were
increasingly focused on rental growth prospects such as city centre offices;
however, yields continued to harden on both office and distribution properties.
Asia Pacific
The investment market was particularly active over the first half of the year.
Market participants included overseas investment funds, local investors and
developers. In the office market, local demand remained relatively subdued
while competition for en bloc investments was intense among the funds.
Opportunities in the retail market were scarce and values, especially in core
locations, continued to rise. In the industrial sector, higher yields continued
to attract interest from funds while local developers and landlords were more
focused on change of use to residential or hotels. In the office rental market,
after three years of rapid rises, rents stabilised prior to substantial new
supply which is expected to enter the market in 2008. Growth in the financial
services sector has fuelled demand for luxury housing and rents are expected to
rise further.
In the residential market, prices of luxury apartments and townhouses have been
appreciating strongly while more lacklustre growth has been noted in the
mainstream market.
US
In the first half of the year the commercial real estate markets continued to
grow with certain sectors experiencing tighter vacancy rates and higher rents.
During the second quarter, concerns over sub-prime lending led to tightening in
the credit markets. This tightening in credit has begun to affect transaction
volumes.
SEGMENTAL REVIEWS
Transactional Advice
2007 2006
Six months to 30 June £m £m Change
Revenue 134.7 94.9 +42%
Underlying profit before tax 20.9 15.3 +37%
Our Transactional teams across the UK had a strong first half with some notable
investment deals being completed, the largest to date being the acquisition in
the City of London of CityPoint for Beacon Capital for £660m.
Our London Agency teams benefited from the strong demand for offices in the West
End, City and the South East.
The period saw large development and residential portfolio sales. In, London,
in particular, we benefited from a buoyant market which has extended into the
Home Counties. Interest rate increases had little impact on the top end of the
market; however, there have been some signs that these rises are feeding into
lower priced stock particularly outside of London.
Our New Homes business benefited from a strong London market but, following UK
interest rate rises, there has been increased price sensitivity elsewhere in the
country.
The transactional teams across Europe have benefited from the strong demand from
investors for European commercial property. In particular, our German teams
were very active as investors continued to focus on extensive opportunities in
the German market where we have been expanding our teams to meet demand.
In Asia, our transactional business has been strong particularly in Hong Kong
and Singapore. The strength of the Hang Seng stock market and the general
enthusiasm for real estate continued to push investor demand for commercial and
retail property assets. The Singapore luxury residential market experienced
significant growth. Elsewhere in Asia Pacific there has been increased deal
flow in Australia, Japan, and Taipei, where we opened an office in April 2007.
Consultancy
2007 2006
Six months to 30 June £m £m Change
Revenue 57.1 37.7 +51%
Underlying profit before tax 6.9 5.8 +19%
Our Valuation teams both in the UK and Europe have increased their market share
and we are seeing increased fee levels due to the recent expansion of our teams.
Our newly formed Pan-European Valuation team has performed above expectation.
Our other Consultancy teams, in particular our Housing, Building Consultancy and
Rent Review teams, have all enjoyed a very strong first half year and have a
healthy pipeline. The Residential Consultancy business experienced a strong
first half, especially the Planning and Valuation departments which also enjoy a
strong pipeline. The integration of Hepher Dixon has gone well, with the
combined Planning business outperforming expectations.
The Consultancy business in Asia continued to grow steadily. We are seeking to
export our leading market position in Hong Kong to mainland China where we have
a strong presence in property management and agency. In Australia, our
Valuation business continued to increase its scope of operations and we now have
a leading valuation team in Melbourne.
Property and Facilities Management
2007 2006
Six months to 30 June £m £m Change
Revenue 71.8 63.2 +14%
Underlying profit before tax 3.6 4.5 (20%)
In the UK, we won a number of new instructions from both existing and new
clients. One notable instruction was from Resolution Asset Management for the
management of three of their funds.
In Europe, we continued to expand our Property Management business, in
particular in Amsterdam where we now have 14 people in our Management
department. Our strategy is to continue to grow and build a profitable European
Property Management business in other key European centres, notably Madrid,
Paris, Berlin, Frankfurt and Hamburg.
In Asia Pacific, the Property Management and Facility Management businesses have
been successful in increasing their portfolio of properties under management.
The businesses have also diversified into new areas including the management of
retirement homes which is seen as a growth business in Hong Kong. During the
first half of the year an operating business was acquired to manage a portfolio
of retirement homes. In addition, we have entered into a joint venture to
manage Hong Kong's only 'Eco-park', where waste and pollution issues which are
increasingly relevant in Hong Kong's congested society.
Financial Services
2007 2006
Six months to 30 June £m £m Change
Revenue 13.3 12.1 +10%
Underlying profit before tax 1.7 1.5 +13%
Despite the recent rises in UK interest rates, Savills Private Finance continued
to trade well, especially in the south of England. New offices have been opened
in Cardiff and Windsor with further expansion planned in the second half of the
year.
Fund Management
2007 2006
Six months to 30 June £m £m Change
Revenue 7.3 2.7 +170%
Underlying profit before tax 2.1 0.1 N/A
2007 2006
As at 30 June £bn £bn Growth
Funds under management 2.8 1.8 +56%
In the first six months of 2007, Cordea Savills closed Serviced Land No.2 LP and
launched two new funds, a German Retail Fund for international institutional
investors and a pan-European Fund aimed at Italian institutional investors, as
well as offering a syndication opportunity for private investors. Additional
funds are planned to be launched in the second half of the year including a
second Italian Opportunities vehicle and a UK Property Ventures Fund.
During the first six months, Cordea Savills invested in £575m of property
located in Italy, Germany, the Netherlands and the UK on behalf of funds
including Italian Opportunities No.1, Europa Immobiliare No.1, the German Retail
Fund, the Charities Property Fund and Serviced Land No.2 LP.
In line with the growth in the range and diversity of its funds, Cordea Savills
has continued to develop its resources and infrastructure with the addition of
staff in the UK, Italy and Germany and with new offices opening in Dublin and
Luxembourg.
We continue to look at ways of accessing third party capital to facilitate the
launch of new funds. This capital is more likely to come in the form of bank
finance.
OUTLOOK
Savills has performed strongly in the first six months to 30 June 2007 and
continues to trade well. However, tightening credit markets are affecting
transactional volumes in the commercial investment markets, primarily in the UK.
We believe prime UK residential markets should, however, remain resilient.
Overall, given the board spread of our business, we are cautiously confident of
producing a good result for the year as a whole, in line with our expectations.
Independent review report to Savills plc
Introduction
We have been instructed by the Company to review the financial information for
the six months ended 30 June 2007 which comprises the consolidated income
statement, the consolidated balance sheet as at 30 June 2007, 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 2007.
PricewaterhouseCoopers LLP
Chartered Accountants
London
10 September 2007
SAVILLS plc
CONSOLIDATED INCOME STATEMENT (unaudited)
for the period ended 30 June 2007
Six months Six months Year ended
to 30.06.07 to 30.06.06 31.12.06
Notes £m £m £m
Continuing operations
Revenue 2 284.2 211.1 517.6
Less:
Employee benefits expense (166.1) (125.2) (306.1)
Depreciation (2.8) (2.7) (5.6)
Amortisation of intangibles & impairment of goodwill (1.5) (0.7) (2.4)
Other operating expenses (82.1) (58.7) (129.2)
Other income - - 0.8
Profit on disposal of subsidiary, associate, joint
ventures & available-for-sale investments - 5.0 5.1
Operating profit 2 31.7 28.8 80.2
Finance income 2.0 2.2 4.8
Finance costs (0.7) - (1.1)
1.3 2.2 3.7
Share of post tax profit from associates & joint ventures 0.2 - 0.5
Profit before income tax 33.2 31.0 84.4
Income tax expense (including foreign tax of £1.5m, June
2006 - £1.3m and December 2006 - £4.4m) 4 (10.3) (9.7) (25.6)
Profit for the period from continuing operations 22.9 21.3 58.8
Discontinued operations
Profit for the period from discontinued operations 3 - 0.3 0.3
Profit after income tax 22.9 21.6 59.1
Attributable to:
Equity shareholders of the Company 21.6 21.3 57.7
Minority interest 1.3 0.3 1.4
22.9 21.6 59.1
Earnings per share
From continuing and discontinued operations
Basic earnings per share 7 17.8p 17.2p 46.3p
Diluted earnings per share 7 17.1p 16.2p 44.2p
From continuing operations
Basic earnings per share 7 17.8p 16.9p 46.0p
Diluted earnings per share 7 17.1p 15.9p 44.0p
From discontinued operations
Basic earnings per share 7 - 0.3p 0.3p
Diluted earnings per share 7 - 0.3p 0.2p
Dividends per share
Interim dividend proposed 5 6.0p 5.0p -
Dividends paid 5 11.0p 8.0p 13.0p
SAVILLS plc
CONSOLIDATED BALANCE SHEET (unaudited)
at 30 June 2007
30.06.07 30.06.06 31.12.06
Notes £m £m £m
ASSETS
Non-current assets
Property, plant and equipment 16.4 15.7 16.5
Goodwill 111.5 99.8 99.9
Intangible assets 18.1 10.8 19.1
Investments in associates and joint ventures 8.2 4.7 5.6
Deferred income tax assets 14.1 21.4 20.6
Available-for-sale investments 11.3 10.1 8.8
Financial assets at fair value through profit or loss 1.5 - 1.5
181.1 162.5 172.0
Current assets
Assets classified as held for sale 26.0 - -
Work in progress 3.4 3.4 3.2
Trade and other receivables 167.1 116.6 163.9
Cash and cash equivalents 40.9 63.1 124.1
237.4 183.1 291.2
LIABILITIES
Current Liabilities
Borrowings 21.7 7.1 7.3
Derivative financial instruments 0.3 - 0.2
Liabilities directly related to assets 23.0 - -
classified as held for sale
Trade and other payables 135.9 111.8 191.8
Current income tax liabilities 7.3 7.4 10.3
Employee benefit obligations 4.1 2.6 3.0
Provisions for other liabilities and charges 1.5 0.7 1.5
193.8 129.6 214.1
Net current assets 43.6 53.5 77.1
Total assets less current liabilities 224.7 216.0 249.1
Non-current Liabilities
Borrowings 6.8 11.8 12.0
Derivative financial instruments 0.1 - 0.3
Trade and other payables 7.9 1.0 2.0
Retirement and employee benefit obligations 7.3 17.4 19.0
Provisions for other liabilities and charges 2.2 2.5 1.6
Deferred income tax liabilities 1.4 1.7 1.4
25.7 34.4 36.3
Net assets 199.0 181.6 212.8
EQUITY
Capital and reserves attributable to equity holders of the Company
Share capital 10 3.3 3.3 3.4
Share premium 10 82.9 81.4 82.4
Other reserves 10 (2.6) 0.9 (1.8)
Retained earnings 10 110.5 92.3 124.5
194.1 177.9 208.5
Minority interest 10 4.9 3.7 4.3
Total equity 199.0 181.6 212.8
SAVILLS plc
CONSOLIDATED STATEMENT OF CASH FLOWS (unaudited)
for the period ended 30 June 2007
Six months Six months Year ended
to 30.06.07 to 30.06.06 31.12.06
Notes £m £m £m
Cash flows from operating activities
Cash (used in)/generated from continuing operations 8 (14.6) 0.1 87.4
Interest received 2.0 2.2 4.7
Interest paid (0.7) - (0.9)
Income tax paid (11.1) (6.5) (15.1)
Net cash (used in)/generated from operating activities (24.4) (4.2) 76.1
Cash flows from investing activities
Outflow from sale of subsidiary, net of cash disposed - - (0.2)
Proceeds from sale of property, plant and equipment 0.1 - 0.2
Proceeds from sale of associates, joint ventures and - 6.3 7.9
available-for-sale investments
Dividends received 0.2 0.2 0.5
Net loans to associates and joint ventures (1.0) (1.8) (2.0)
Acquisition of subsidiaries, net of cash acquired 9 (7.4) (26.6) (37.8)
(Purchase)/sale of assets held for resale (3.0) 16.3 16.3
Purchases of property, plant and equipment (2.4) (3.4) (7.3)
Purchases of intangible assets (0.5) (0.6) (1.1)
Purchase of investment in associates, joint ventures and
available-for-sale investments (4.0) (5.5) (2.2)
Purchase of financial assets at fair value through profit or
loss - - (1.5)
Net cash used in investing activities (18.0) (15.1) (27.2)
Cash flows from financing activities
Proceeds from issue of share capital 0.3 0.5 1.2
Proceeds from borrowings 15.1 0.3 0.2
Repurchase of own shares (21.8) - -
Purchase of own shares for Employee Benefit Trust (12.9) (5.0) (5.0)
Repayments of borrowings (6.6) (1.0) (1.1)
Dividends paid (14.0) (10.0) (16.4)
Net cash used in financing activities (39.9) (15.2) (21.1)
Net (decrease)/increase in cash, cash equivalents and bank
overdrafts (82.3) (34.5) 27.8
Cash and cash equivalents at beginning of the period 123.7 99.9 99.9
Effect of exchange rate fluctuations on cash held (0.5) (2.2) (4.0)
Cash, cash equivalents and bank overdrafts at end of period 40.9 63.2 123.7
SAVILLS plc
CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE (unaudited)
for the period ended 30 June 2007
Six months Six months Year ended
to 30.06.07 to 30.06.06 31.12.06
Notes £m £m £m
Profit for the period 22.9 21.6 59.1
Revaluation of available-for-sale investments 0.2 0.4 0.4
Actuarial gain on defined benefit pension scheme 12.1 6.4 2.5
Tax on items directly taken to reserves (3.8) 0.5 3.5
Foreign exchange translation differences (1.0) (2.1) (4.3)
Net income recognised directly in equity 7.5 5.2 2.1
Total recognised income and expense for the period 30.4 26.8 61.2
Attributable to:
Equity shareholders of the Company 29.2 26.5 59.6
Minority interest 1.2 0.3 1.6
30.4 26.8 61.2
NOTES
1. Basis of preparation
The financial information comprises the unaudited consolidated income statement,
consolidated balance sheet, consolidated statement of cashflows, consolidated
statement of recognised income and expense and related notes as at 30 June 2007
and 30 June 2006, together with the audited consolidated balance sheet and
consolidated income statement for the year ended 31 December 2006.
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 Group's annual financial statements for the year ended 31 December 2006 on
pages 84 to 89.
As permitted, the Group has chosen not to adopt IAS 34, 'Interim financial
statements' in preparing its 2007 interim statements, and therefore this interim
financial information is not considered to be in full compliance with IFRS.
The 2006 Annual Report and Accounts, which are the Group's statutory accounts,
have been filed with the Registrar of Companies. The auditors' report on 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 Transactional Consultancy Property & Fund Financial Unallocated* Total
30 June 2007 Advice Facilities Management Services
Management
£m £m £m £m £m £m £m
Revenue
United Kingdom
- Commercial 36.5 35.1 16.3 7.3 0.7 - 95.9
- Residential 56.7 12.1 5.5 - 12.6 - 86.9
93.2 47.2 21.8 7.3 13.3 - 182.8
Rest of Europe 18.2 3.4 8.1 - - - 29.7
Asia Pacific 23.3 6.5 41.9 - - - 71.7
Total revenue 134.7 57.1 71.8 7.3 13.3 - 284.2
Operating profit
United Kingdom
- Commercial 7.3 4.5 0.6 2.1 0.1 (1.7) 12.9
- Residential 9.8 1.6 0.2 - 1.3 - 12.9
17.1 6.1 0.8 2.1 1.4 (1.7) 25.8
Rest of Europe 0.5 0.3 (0.4) - - - 0.4
Asia Pacific 2.8 0.5 2.2 - - - 5.5
Operating profit/(loss) 20.4 6.9 2.6 2.1 1.4 (1.7) 31.7
Net finance 1.3
income
Share of post tax profit from associates & joint ventures 0.2
Profit before income tax 33.2
Income tax expense (10.3)
Profit for the period from continuing operations 22.9
Six months to Transactional Consultancy Property & Fund Financial Unallocated* Total
30 June 2006 Advice Facilities Management Services
Manage-ment
£m £m £m £m £m £m £m
Revenue
United Kingdom
- Commercial 30.5 21.9 15.9 2.7 1.5 0.2 72.7
- Residential 40.3 9.5 3.9 - 10.6 0.3 64.6
70.8 31.4 19.8 2.7 12.1 0.5 137.3
Rest of Europe 6.8 1.1 2.5 - - - 10.4
Asia Pacific 17.3 5.2 40.9 - - - 63.4
Total revenue 94.9 37.7 63.2 2.7 12.1 0.5 211.1
Operating profit
United Kingdom
- Commercial 5.9 3.6 1.6 0.1 0.3 (1.7) 9.8
- Residential 11.4 1.8 0.3 - 1.0 - 14.5
17.3 5.4 1.9 0.1 1.3 (1.7) 24.3
Rest of Europe 0.4 - (0.2) - - - 0.2
Asia Pacific 1.4 0.5 2.4 - - - 4.3
Operating profit/(loss) 19.1 5.9 4.1 0.1 1.3 (1.7) 28.8
Net finance income 2.2
Share of post tax profit from associates & joint ventures -
Profit before income tax 31.0
Income tax (9.7)
expense
Profit for the period from continuing operations 21.3
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. The June 2006 segmental analysis has
been adjusted to allocate European central costs against the relevant business
streams. These costs were previously shown as part of the unallocated United
Kingdom - commercial segment.
3. Non-current assets held for sale and discontinued operations
Six months Six months Year ended
to 30.06.07 to 30.06.06 31.12.06
£m £m £m
Revenue - 1.1 1.1
Expenses - (0.4) (0.4)
(Loss)/profit before income tax - 0.7 0.7
Income tax expense - (0.4) (0.4)
(Loss)/profit before income tax - 0.3 0.3
The Cordea Savills Nordic Retail No 1 Group of companies were established in the period to provide
seed assets for a proposed fund to be launched by Cordea Savills later in the year. As at 30 June
2007, the Group held 100% of the share capital of these companies and the associated assets and
liabilities have been classified as held for sale as it is expected that they will be disposed of in
the second half of the year on the launch of the fund to investors. There was no impact on the income
statement in the period.
The 2006 results relate to the assets and liabilities of the Student Halls Long Lease 1 Unit Trust
(the 'Fund') which were disposed during the year ended 31 December 2006.
4. Income tax on profit from continuing operations
The income tax expense has been calculated on the basis of the underlying rate in each jurisdiction
adjusted for any disallowable charges.
Six months Six months Year ended
to 30.06.07 to 30.06.06 31.12.06
£m £m £m
United Kingdom corporation tax (9.3) (7.6) (18.7)
Foreign tax (1.8) (1.4) (4.7)
Deferred tax 0.8 (0.7) (2.2)
(10.3) (9.7) (25.6)
Six months Six months Year ended
5. Dividends to 30.06.07 to 30.06.06 31.12.06
£m £m £m
Amounts recognised as distribution to equity holders:
Interim dividend of 5.0p per share - - 6.2
Ordinary final dividend of 11.0p per share (2006 - 8.0p) 13.4 10.0 10.0
13.4 10.0 16.2
Proposed interim dividend for the six months ended 30 June 2007 7.3 - -
The Directors have recommended an interim dividend for the six months to 30 June 2007 of 6.0p per
ordinary share (2006 - 5.0p). The interim dividend will be paid on 29 October 2007 to shareholders on
the register as at 28 September 2007.
6. Underlying profit before tax
Six months Six months Year ended
(a) From continuing operations to 30.06.07 to 30.06.06 31.12.06
£m £m £m
Reported profit before income tax 33.2 31.0 84.4
Adjustments:
Amortisation of intangibles (excluding software) & impairment of
goodwill 1.2 0.4 1.8
Share based payment adjustment (1.9) (0.8) (6.1)
Sale of subsidiary, associate, joint ventures & available-for-sale
investments - (5.0) (5.1)
Underlying profit before tax 32.5 25.6 75.0
The Directors regard the above adjustments necessary to give a fair picture of the underlying results of
the Group for the period. The adjustment for share based payment relates to the transitional 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
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.
(b) Segmental analysis
Six months to Transactional Consultancy Property & Fund Financial Unallocated Total
30 June 2007 Advice Facilities Management Services
Management
£m £m £m £m £m £m £m
United Kingdom
- Commercial 7.7 4.5 0.6 2.1 0.1 (2.7) 12.3
- Residential 10.1 1.6 0.5 - 1.6 - 13.8
17.8 6.1 1.1 2.1 1.7 (2.7) 26.1
Rest of Europe 0.2 0.3 (0.3) - - - 0.2
Asia Pacific 2.9 0.5 2.8 - - - 6.2
Underlying profit
before tax 20.9 6.9 3.6 2.1 1.7 (2.7) 32.5
Six months to Transactional Consultancy Property & Fund Financial Unallocated Total
30 June 2006 Advice Facilities Management Services
Manage-ment
£m £m £m £m £m £m £m
United Kingdom
- Commercial 6.3 3.5 1.3 0.1 0.3 (1.6) 9.9
- Residential 7.2 1.8 0.5 - 1.2 - 10.7
13.5 5.3 1.8 0.1 1.5 (1.6) 20.6
Rest of Europe 0.4 - (0.2) - - - 0.2
Asia Pacific 1.4 0.5 2.9 - - - 4.8
Underlying profit
before tax 15.3 5.8 4.5 0.1 1.5 (1.6) 25.6
Year to Transactional Consultancy Property & Fund Financial Unallocated Total
Advice Facilities Management Services
31 December Management
2006
£m £m £m £m £m £m £m
United Kingdom
- Commercial 20.5 10.6 2.8 0.7 1.0 (3.9) 31.7
- Residential 16.6 4.0 1.4 - 3.4 - 25.4
37.1 14.6 4.2 0.7 4.4 (3.9) 57.1
Rest of Europe 4.7 0.8 - - - - 5.5
Asia Pacific 4.4 0.7 7.3 - - - 12.4
Underlying profit
before tax 46.2 16.1 11.5 0.7 4.4 (3.9) 75.0
7. Basic and diluted earnings
per share
(a) Basic and diluted earnings per share
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June 2007 2007 2007 2006 2006 2006
£m m Pence £m m Pence
From continuing and discontinued operations
Basic earnings per share 21.6 121.4 17.8 21.3 124.0 17.2
Effect of additional shares
issuable under option - 4.9 (0.7) - 7.5 (1.0)
Diluted earnings per share 21.6 126.3 17.1 21.3 131.5 16.2
From continuing operations
Basic earnings per share 21.6 121.4 17.8 21.0 124.0 16.9
Effect of additional shares
issuable under option - 4.9 (0.7) - 7.5 (1.0)
Diluted earnings per share 21.6 126.3 17.1 21.0 131.5 15.9
From discontinued operations
Basic earnings per share - 121.4 - 0.3 124.0 0.3
Effect of additional shares
issuable under option - 4.9 - - 7.5 -
Diluted earnings per share - 126.3 - 0.3 131.5 0.3
Earnings Shares EPS
Year to 31 December 2006 2006 2006
£m m Pence
From continuing and discontinued operations
Basic earnings per share 57.7 124.7 46.3
Effect of additional shares issuable under option - 5.8 (2.1)
Diluted earnings per share 57.7 130.5 44.2
From continuing operations
Basic earnings per share 57.4 124.7 46.0
Effect of additional shares issuable under option - 5.8 (2.0)
Diluted earnings per share 57.4 130.5 44.0
From discontinued operations
Basic earnings per share 0.3 124.7 0.3
Effect of additional shares issuable under option - 5.8 (0.1)
Diluted earnings per share 0.3 130.5 0.2
(b) Adjusted underlying basic earnings per share
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June 2007 2007 2007 2006 2006 2006
£m m Pence £m m Pence
From continuing operations
Basic earnings from continuing operations 21.6 121.4 17.8 21.0 124.0 16.9
Amortisation of intangibles (excluding software) 0.8 - 0.7 0.3 - 0.3
& impairment of goodwill after tax
Share based payment adjustment after tax (1.3) - (1.1) (0.6) - (0.5)
Less sale of subsidiary, associate, joint venture
& available-for-sale investments after tax - - - (3.5) - (2.8)
Adjusted underlying basic earnings per share 21.1 121.4 17.4 17.2 124.0 13.9
Earnings Shares EPS
Year to 31 December 2006 2006 2006
£m m Pence
From continuing operations
Basic earnings from continuing operations 57.4 124.7 46.0
Amortisation of intangibles (excluding software) 1.3 - 1.0
& impairment of goodwill after tax
Share based payment adjustment after tax (4.3) - (3.4)
Less sale of subsidiary, associate, (3.5) - (2.8)
joint venture & available-for-sale investments after tax
Adjusted underlying basic earnings per share 50.9 124.7 40.8
Six months Six months
8. Cash generated from continuing operations to to Year ended
30.06.07 30.06.06 31.12.06
£m £m £m
Profit for the year from continuing operations 22.9 21.3 58.8
Adjustments for:
Income tax 10.3 9.7 25.6
Depreciation 2.8 2.7 5.6
Amortisation of intangibles 1.5 0.7 2.4
Net finance income (1.3) (2.2) (3.7)
Share of post tax profit from associates & joint ventures (0.2) - (0.5)
Profit on disposal of subsidiary, associate, joint venture &
available-for-sale investments - (5.0) (5.1)
Loss on sale of property, plant and equipment 0.5 0.6 0.4
Increase in provisions 0.3 1.0 0.5
Increase/(decrease) in employee and retirement obligations 1.6 (1.0) (2.2)
Charge for share based compensation 4.2 1.9 5.3
Operating cash flows before movements in working capital 42.6 29.7 87.1
(Increase)/decrease in work in progress - (0.3) 0.4
(Increase)/decrease in debtors (1.2) 12.0 (37.2)
(Decrease)/increase in creditors (56.0) (41.3) 37.1
Cash (used in)/generated from operations (14.6) 0.1 87.4
9. Acquisitions
On 7 January 2007, the Group acquired the share capital of Hepher Dixon Limited
for consideration of £5.1m. Goodwill on acquisition of £4.3m has been
provisionally determined, and is attributable to key staff and their industry
reputation. Cash consideration of £2.8m was paid on 5 January 2007 with £2.3m
deferred cash consideration due over the next five years.
On 3 May 2007, the Group acquired the share capital of Christopher Rowland
Limited for consideration of £4.3m. Provisional goodwill on acquisition of £4.2m
has been determined, and is attributable to key staff and their industry
reputation. Cash consideration of £2.1m was paid on 3 May 2007 with £2.2m
deferred cash consideration due over the next five years.
10. Statement of changes in equity
Attributable to equity holders of the Group
Share Share Other Retained Minority Total
capital premium reserves earnings interest equity
£m £m £m £m £m £m
Balance at 1 January 2007 3.4 82.4 (1.8) 124.5 4.3 212.8
Total recognised income and
expense for the period
Employee share option scheme: - - (0.9) 30.1 1.2 30.4
- Value of services provided - - - 4.2 - 4.2
- Exercise options - 0.2 - (0.2) - -
Issue of share capital - 0.3 - - - 0.3
Purchase of own shares (0.1) - 0.1 (21.8) (21.8)
Purchase of treasury shares - - - (12.9) - (12.9)
Dividends - - - (13.4) (0.6) (14.0)
Balance at 30 June 2007 3.3 82.9 (2.6) 110.5 4.9 199.0
Attributable to equity holders of the Group
Share Share Other Retained Minority Total
capital premium reserves earnings interest equity
£m £m £m £m £m £m
Balance at 1 January 2006 3.3 80.9 6.5 77.0 0.6 168.3
Total recognised income and - - (1.9) 28.4 0.3 26.8
expense for the period
Employee share option scheme:
- Value of services provided - - - 1.9 - 1.9
Issue of share capital - 0.5 - - - 0.5
Purchase of treasury shares - - - (5.0) - (5.0)
Dividends - - - (10.0) (0.1) (10.1)
Disposals (net of tax) - - (3.7) - - (3.7)
Acquisitions - - - - 2.9 2.9
Balance at 30 June 2006 3.3 81.4 0.9 92.3 3.7 181.6
Attributable to equity holders of the Group
Share Share Other Retained Minority Total
capital premium reserves earnings interest equity
£m £m £m £m £m £m
Balance at 1 January 2006 3.3 80.9 6.5 77.0 0.6 168.3
Total recognised income and
expense for the period
Employee share option scheme: - - (4.2) 63.8 1.6 61.2
- Value of services provided - - - 5.3 - 5.3
- Exercise options - 0.4 - (0.4) - -
Issue of share capital 0.1 1.1 - - - 1.2
Purchase of treasury shares - - - (5.0) - (5.0)
Dividends - - - (16.2) (0.2) (16.4)
Disposals (net of tax) - - (4.1) - - (4.1)
Acquisitions - - - - 2.3 2.3
Balance at 31 December 2006 3.4 82.4 (1.8) 124.5 4.3 212.8
11. Events after Balance Sheet date
On 31 July 2007, in line with our strategy to invest directly in operations in the US, we acquired
Granite Partners LLC, a US real estate investment banking firm, for an initial consideration of
US$54.0m, of which 75% was payable on completion.
As at the date of this announcement the triennial valuation of the Group's defined benefit pension
scheme was still being undertaken. This valuation will be incorporated into the financial statements
for the year ended 31 December 2007.
Copies of this statement are available from the Company website at: www.savills.com and also from:
Savills plc, 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ
Telephone: 020 7409 9928 Fax: 020 7491 0505 Email: kcharmley@savills.com
Contact: Kathryn Charmley
In addition, with prior notice, copies in alternative formats i.e. large print, audio tape,
braille are available if required from:
Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA
End
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