Savills Regulatory News (SVS)

Savills plc

("Savills" or "the Group")

RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2015

Savills plc, the international real estate advisor, today announces its unaudited results for the six months ended 30 June 2015.

Key Financial Information

• Group revenue up 27% (25% in constant currency) to £547.0m (H1 2014: £430.8m)

• Group underlying profit before tax up 28% (24% in constant currency) to £38.4m (H1 2014:

£30.1m)

• Group profit before tax up 7% to £26.4m* (H1 2014: £24.7m)

• Underlying basic earnings per share up 16% to 20.0p (H1 2014: 17.2p)

• Basic earnings per share down 17% to 11.7p* (H1 2014: 14.1p)

• Interim dividend increased 7% to 4.0p per share (H1 2014: 3.75p)

*Includes the impact of provision for deferred consideration on acquisitions which is disallowable for income tax purposes

Highlights

• Transaction Advisory revenue growth of 55% as strong performances in US, UK Commercial and Asia Pacific offset weaker UK Residential activity

• US revenues up substantially given significant contribution from Savills Studley combined with good underlying growth. Several bolt-on acquisitions completed in the period

• Global Property Management revenue increased by 13%

• Consultancy revenue up 3% with good level of work in progress for H2

• Savills Investment Management revenue growth of 10% (14% in constant currency), assets under management increased 25% to €7.9bn (H1 2014: €6.3bn) and SEB acquisition expected to close shortly

Commenting on the results, Jeremy Helsby, Group Chief Executive of Savills plc, said:

"Savills has delivered a strong first half performance as a result of the contribution from Savills Studley in the US and the strength of our existing businesses in key transactional markets of the UK and Asia. Our performance in these markets mitigated the effect of the pre-election slowdown in the UK Residential market, where, lately, we have seen activity levels starting to improve.

In line with our US growth strategy, we have continued to build on the Savills Studley platform in the US with three bolt-on acquisitions and recruitment across the country. In addition we have bolstered our rural business in the UK through the acquisition of Smiths Gore and look forward to the near term completion of the acquisition of SEB Asset Management AG.

Looking to the second half, we currently see no significant change in the overall outlook for our business. Our core markets continue to be highly demand-driven as a result of the continued substantial capital allocation to real estate around the world. Furthermore, in many markets we are now seeing rental growth and increased occupier confidence. Savills is well placed to act on the opportunities arising from occupier and investor demand globally.

The Board remains confident in its expectations for the full year."

Business review

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

*A reconciliation between statutory and underlying profit before tax is set out in Note 7.

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

*A reconciliation between statutory and underlying profit before tax is set out in Note 7.

Overview

The first half benefited from continued strength in UK commercial markets, following a strong finish to last year, the full period benefit of Savills Studley in the US and an improvement in parts of the Asia Pacific region. These performances, together with an improved profit from Savills Investment Management business, more than offset the expected weakness in the UK Residential market and the short term impact of transaction timing on the first half performance in Continental Europe to underpin a strong first half performance for the Group.

The Group's results for the six months to 30 June 2015 show revenue up 27% (25% in constant currency) to £547.0m (H1 2014: £430.8m). Excluding the full period effect of the 2014 acquisition of Studley Inc., revenue growth was just over 10%. Underlying profit before tax ("UPBT") was £38.4m, 28% higher than the first half of 2014 (H1 2014: £30.1m). Currency had a positive impact on reported Group performance increasing revenue by £10.5m (2%) and UPBT by £1.0m (3%). Constant currency growth in UPBT was 24%. Statutory profit before tax, including acquisition and restructuring costs was £26.4m, 7% higher than the first half of 2014 (H1 2014: £24.7m).

It was also an active period of business development for the Group. During the period we made a number of bolt-on acquisitions to the Savills Studley platform in the US, acquired the rural management business, Smiths Gore in the UK and an initial 45% interest in a commercial property services firm in Malaysia. We also made small project/property management acquisitions in New Zealand and London alongside the opening of a number of offices across the business and the recruitment of teams and individuals into various service lines around the world. The Group's UPBT margin was affected by expenditure on a number of these activities but, remained constant at 7.0% (H1 2014: 7.0%).

Transaction Advisory

Savills Transaction Advisory businesses performed strongly during the period driven by revenue increases in many of our markets and the benefit of Savills Studley in the US. On a pro-forma basis (assuming the Savills Studley acquisition had been completed on 1 January 2014), the Transaction Advisory business produced overall organic revenue growth of 15%. The underlying profits of our Transaction Advisory business as a whole increased by 49% (45% in constant currency) to £24.3m during the period (H1 2014: £16.3m). This performance was driven primarily by growth in the US and UK Commercial businesses and an emerging recovery in the Asia Pacific region, particularly in Hong Kong.

UK Commercial

UK Commercial Transaction fee income grew 38% to £41.9m (H1 2014: £30.3m). Central London investment and leasing markets remained strong with period on period revenue growth of 18%, while continued strength in UK regional investment and leasing markets resulted in revenue growth of 55% in our regional Transaction Advisory business. Significant transactions were concluded across the real estate sector including office, logistics and retail. In the City of London leasing market, take up increased by 15% over the previous period, and with relatively little new supply, the vacancy rate dropped to 6% with a consequent increase in rents. In the West End, continued high levels of take up, 8% up on H1 2014, reduced the vacancy rate to under 3%. Outside London, continued tenant expansionary demand is apparent across the principal markets and the positive outlook for rents, against the backdrop of limited new development, has further supported regional investment markets.

UK Residential

UK Residential Transaction fee income decreased by 13% to £51.8m (H1 2014: £59.6m). As anticipated, the market slowdown in the run up to the May General Election was the principal cause. In addition, prime markets, particularly in the high value areas of central London, have been progressively adjusting to the significant rise in stamp duty imposed in December 2014. Savills overall transaction volumes were down by 15% in London and 4% in the Country market. The average value of London residential property sold by Savills in the period was £3.0m (H1 2014: £3.2m), £1.0m (H1 2014: £1.1m) in the country. We made further progress in implementing our strategy to expand in London markets with values below £2m ("Core London"), where transactions fell by less than half the rate of the high end market, with new offices opened in Shoreditch and Earls Court in addition to the four offices opened in 2014.

Since May, there has been evidence of improvement in activity levels, particularly in Core London with significant increases in new buyers registering, viewings and new sales instructions. In the country market, there was a significant increase in the number of properties going under offer in June, compared with last year.

The costs of new offices, together with the full period effect of openings in the second half of 2014, represented an additional net cost of approximately £1.0m period on period.

Asia Pacific Commercial

Commercial Transaction fee income in Asia Pacific increased by 29% (25% in constant currency) to £46.1m (H1 2014: £35.7m). The principal driver of growth was Hong Kong, where Savills market share increased substantially at the top end of the market and signs of a recovery in volumes began to emerge. There were stronger revenue performances in China, Korea, Taiwan and Australia. In Japan, volumes traded in the first half were down period on period; however, there is a good pipeline of transactions for the second half.

In Singapore, the recruitment of a significant tenant representation team, together with the opening of an office in Christchurch, New Zealand, resulted in additional net business development costs for the Commercial Transaction business of £1m in the period.

Asia Pacific Residential

Residential Transaction fee income in Asia Pacific increased by 43% to £12.7m (H1 2014: £8.9m) (40% in constant currency). In Australia, residential revenue increased by over 300% as the development sales team in Sydney built upon 2014's foundation. This, together with improved trading in China, Taiwan, Thailand and Vietnam, helped to offset continued weakness in the Singapore market.

Continental Europe

In Continental Europe, transaction fee income decreased by 7% to £19.0m (H1 2014: £20.5m) (4% increase in constant currency). In Germany, greater levels of market activity and the impact of recent recruitment, led to a 33% improvement in Transaction Advisory revenues. In Ireland, revenues grew marginally on a strong comparative period. In France, Spain and the Netherlands revenues decreased period on period, and profits were affected by recruitment, particularly in the leasing markets in Spain, Poland and the Netherlands, and the costs of reorganisation in France and Germany and the opening of an office in Barcelona. The European business as a whole finished the period with an improved pipeline of transactions expected to close in the second half of the year.

United States

Our US revenue increased substantially to £86.7m (H1 2014: £11.1m) as a result of the consolidation of Savills Studley results for the whole period. US revenues, taking into account Savills Studley on a pro-forma basis, improved by 24% with good organic growth from both the pre-existing Savills business and Savills Studley. A number of high profile transactions were completed across the office network. During the period, three acquisitions were completed: the assets of the Cooper Brady Partnership in Silicon Valley, Vertical Integration, Inc. in Tampa Florida and KLG Advisors, Inc. in New York. These businesses had negligible financial effect in the period, but will improve our position in tenant representation, occupier services and strategic and work place consulting respectively and their impact will come through in the second half of the year. In the capital markets business there were some notable transactions concluded in the office, hospitality, logistics and retail sectors.

The cross border pipeline of business, in both capital markets and tenant representation services, continued to strengthen through the period and a significant number of new cross border advisory leads and income have been generated by the combined operation since the acquisition in May 2014.

Consultancy

Consultancy fee income increased in the period by 3% (4% in constant currency) to £96.4m (H1 2014: £93.5m). In the UK, strong performances in building, planning and housing and healthcare consultancy offset short term fluctuations in areas such as development and valuations, primarily due to timing differences on some large projects. In both cases there is significant work in progress for the second half of the year. In the Asia Pacific region, a strong performance in Hong Kong and growth in Vietnam and Japan largely offset substantially weaker consultancy demand from developers in China and the impact of a team upgrade in Australia.

In Continental Europe adverse currency movements significantly reduced revenue and profits. In constant currency, revenue increased by 6% with strong performances in Germany and Ireland.

Overall, the Consultancy business showed a 7% decline (7% in constant currency) in UPBT to £7.8m (H1 2014: £8.4m).

Property and Facilities Management

The Property and Facilities Management business increased global revenues by 13% (9% in constant currency) to £178.4m (H1 2014: £158.5m). Savills total area under management increased by 3% to 2.03bn sq.ft (H1 2014: 1.97bn sq.ft) driven primarily by growth in the UK, Hong Kong and Singapore. In the Asia Pacific region profitability was affected by rising wage costs, particularly in China, limiting UPBT growth to 9%.

In the UK revenue grew by 14% as a result of new commercial management contracts and growth in rural management (including one month's contribution from the Smiths Gore acquisition). Profits during the period were affected by a pre-election slowdown in residential lettings, although at 30 June, the pipeline was up 15% period on period. In addition, office growth in the residential lettings business and the full period effect of the new centralised support centre, which will support future growth in the business, reduced profits during the period. Post-election improvement in the market indicates that year-on-year growth will return in the second half of 2015.

In Continental Europe, revenue increased by 12% (27% in constant currency) with improved performances in Ireland, Netherlands, Sweden and Poland. The overall loss from European Property Management increased slightly as a result of restructuring costs in Sweden and operational reorganisation costs in Ireland.

UPBT in the Property and Facilities Management business improved marginally to £7.7m (H1 2014: £7.6m).

Investment Management

Fee income from Investment Management increased by 10% (14% in constant currency) to £14.0m (H1 2014: £12.7m), with UPBT up 56% period on period. During the period assets under management increased by 25% to €7.9bn (H1 2014: €6.3bn) as a result of growth in existing funds and new fund inflows. Management fees represented approximately 89% of revenue (H1 2014: 83%). The business, formerly known as Cordea Savills, has been re-branded Savills Investment Management in advance of the acquisition of SEB Asset Management AG, which is expected to complete shortly.

Other costs, acquisition and restructuring costs

The "other costs" segment represents other costs, expenses and net interest not directly allocated to the operating activities of the Group's business segments. The H1 increase in unallocated costs of 3% to £3.9m (H1 2014: £3.8m) reflects the general level of cost increase during the period.

Restructuring and acquisition related costs of £11.1m (H1 2014: £6.9m) include provision for deferred consideration on the acquisition of Studley and acquisition costs and provisions for deferred consideration in relation to the acquisition of Smiths Gore in the UK, the proposed acquisition of SEB Asset Management AG in Germany and three smaller acquisitions in the US which were completed during the period. Of the above, the provision for deferred consideration on the Studley transaction amounted to £9.2m (H1 2014: £1.4m), reflecting the full period effect of the Group's ownership of Savills Studley. Other transaction costs and integration expenses amounted to £0.9m (H1 2014: £5.0m).

Earnings, financial strength and dividends

The Group's underlying profit margin in the period remained stable at 7.0% (H1 2014: 7.0%) in line with our expectations. Basic earnings per share for the six months to 30 June 2015 decreased by 17% to 11.7p (H1 2014: 14.1p), primarily as a result of the effect of provisions for deferred consideration on the acquisition of Studley, Inc. in May 2014. Underlying earnings per share was up 16% to 20.0p (H1 2014: 17.2p).

The impact of foreign exchange movements on the translation of profits from our overseas businesses resulted in an increase in underlying profit of £1.0m (H1 2014: £1.3m decrease).

At 30 June 2015, net debt was £24.3m (30 June 2014: £2.5m net cash), reflecting expenditure on acquisitions (net of cash acquired) of £65.2m (H1 2014: £19.8m) during the period. At 30 June 2015 the Group had cash balances of £96.0m (30 June 2014: £86.6m) less borrowings of £120.3m (30 June 2014: £84.1m), with £79.2m of credit facilities remaining available for utilisation (30 June 2014: £91.6m). Provisional fair values of the assets and liabilities in respect of the acquisitions completed during the period are set out in note 13 to this interim statement.

The Board has declared an interim dividend of 4.0p per share (2014: 3.75p). The increase of 7% is higher than the growth in our non-transactional business profits, but generally supported by them. The performance of the Group's Transaction Advisory businesses will be taken into account in the consideration of any proposed final ordinary and supplemental interim dividends alongside the results for the full year.

The interim dividend of 4.0p per share will be payable on 12 October 2015 to shareholders on the register on 11 September 2015.

Board Changes

On 23 June 2015, Rupert Robson joined the Board as an additional independent non executive director.

Principal risks and uncertainties

The key risks and uncertainties relating to the Group's operations remain consistent with those disclosed in the Group's Annual Report and Accounts 2014. Please refer to pages 23 to 26 thereof or to our investors' page on www.savills.com. In addition, specific risks which might affect the outlook for the second half are disclosed in the Summary and outlook statement below.

Summary and outlook

Savills has delivered a strong first half performance as a result of the contribution from Savills Studley in the US and the strength of our existing businesses in key transactional markets of the UK and Asia. Our performance in these markets mitigated the effect of the pre-election slowdown in the UK Residential market, where, lately, we have seen activity levels starting to improve.

In line with our US growth strategy, we have continued to build on the Savills Studley platform in the US with three bolt-on acquisitions and recruitment across the country. In addition we have bolstered our rural business in the UK through the acquisition of Smiths Gore and look forward to the near term completion of the acquisition of SEB Asset Management AG.

Looking to the second half, we currently see no significant change in the overall outlook for our business. Our core markets continue to be highly demand-driven as a result of the continued substantial capital allocation to real estate around the world. Furthermore, in many markets we are now seeing rental growth and increased occupier confidence. Savills is well placed to act on the opportunities arising from occupier and investor demand globally.

The Board remains confident in its expectations for the full year.

Jeremy Helsby Peter SmithGroup Chief Executive Chairman

STATEMENT OF DIRECTORS' RESPONSIBILITIES

The Directors confirm that this condensed consolidated interim financial information has been prepared in accordance with IAS 34 as adopted by the European Union and gives a true and fair view of the assets, liabilities, financial position and profit as required by DTR 4.2.4 and that the interim management report includes a fair review of the information required by DTR 4.2.7 and DTR 4.2.8, namely:

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

The Directors of Savills plc are listed in the Company's Report and Accounts for the year ended 31 December 2014 save for Rupert Robson who was appointed to the Board on 23 June 2015. A list of current Directors is maintained on the Savills plc website: www.savills.com.

By order of the Board

Jeremy Helsby, Group Chief Executive

Simon Shaw, Group Chief Financial Officer

5 August 2015

Forward-Looking Statements

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

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

Independent review report to Savills plc

REPORT ON THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS

Our conclusion

We have reviewed the condensed consolidated interim financial statements, defined below, in the Interim Report of Savills plc for the six months ended 30 June 2015. Based on our review, nothing has come to our attention that causes us to believe that the condensed consolidated interim financial statements are not prepared, in all material respects, in accordance with International Accounting Standard 34 as adopted by the European Union and the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

This conclusion is to be read in the context of what we say in the remainder of this report.

What we have reviewed

The condensed consolidated interim financial statements, which are prepared by Savills plc, comprise:

• the condensed interim consolidated statement of financial position as at 30 June 2015;

• the condensed interim consolidated income statement and condensed interim consolidated

statement of comprehensive income for the period then ended;

• the condensed interim consolidated statement of cash flows for the period then ended;

• the condensed interim consolidated statement of changes in equity for the period then ended;

and

• the explanatory notes to the condensed consolidated interim financial statements.

As disclosed in note 2, the financial reporting framework that has been applied in the preparation of the full annual financial statements of the group is applicable law and International Financial Reporting Standards (IFRSs) as adopted by the European Union.

The condensed consolidated interim financial statements included in the Interim Report have been prepared in accordance with International Accounting Standard 34, 'Interim Financial Reporting', as adopted by the European Union and as required by the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

What a review of condensed consolidated financial statements involves

We conducted our review in accordance with International Standard on Review Engagements (UK and Ireland) 2410, 'Review of Interim Financial Information Performed by the Independent Auditor of the Entity' issued by the Auditing Practices Board for use in the United Kingdom. A review of interim financial information consists of making enquiries, primarily of persons responsible for financial and accounting matters, and applying analytical and other review procedures.

A review is substantially less in scope than an audit conducted in accordance with International Standards on Auditing (UK and Ireland) and, consequently, does not enable us to obtain assurance that we would become aware of all significant matters that might be identified in an audit. Accordingly, we do not express an audit opinion.

We have read the other information contained in the Interim report and considered whether it contains any apparent misstatements or material inconsistencies with the information in the condensed consolidated interim financial statements.

RESPONSIBILITIES FOR THE CONDENSED CONSOLIDATED INTERIM FINANCIAL STATEMENTS AND THE REVIEW

Our responsibilities and those of the directors

The Interim Report, including the condensed consolidated interim financial statements, is the responsibility of, and has been approved by, the directors. The directors are responsible for preparing the Interim Report in accordance with the Disclosure and Transparency Rules of the United Kingdom's Financial Conduct Authority.

Our responsibility is to express to the company a conclusion on the condensed consolidated interim financial statements in the Interim Report based on our review. This report, including the conclusion, has been prepared for and only for the company for the purpose of complying with the Disclosure and Transparency Rules of the Financial Conduct Authority and for no other purpose. We do not, in giving this conclusion, 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.

PricewaterhouseCoopers LLP

Chartered Accountants

5 August 2015

London

Savills plc

Condensed interim consolidated income statement

for the period ended 30 June 2015

Notes 1 to 18 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of comprehensive income

for the period ended 30 June 2015

Notes 1 to 18 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of financial position

at 30 June 2015

Notes 1 to 18 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of changes in equity

for the period ended 30 June 2015

Notes 1 to 18 are an integral part of these condensed interim financial statements.

Savills plc

Condensed interim consolidated statement of cash flows

for the period ended 30 June 2015

Notes 1 to 18 are an integral part of these condensed interim financial statements.

NOTES

1. General information

The Company is a public limited company incorporated and domiciled in England and Wales. The address of its registered office is 33 Margaret Street, London W1G 0JD.

This condensed consolidated interim financial information was approved for issue by the Board of Directors on 5 August 2015.

This condensed consolidated interim financial information does not comprise statutory financial statements within the meaning of section 434 of the Companies Act 2006. Statutory financial statements for the year ended 31 December 2014 were approved by the Board of Directors on 18 March 2015 and delivered to the Registrar of Companies. The auditors' report on these accounts was unqualified, did not contain an emphasis of matter paragraph and did not contain a statement under section 498 of the Companies Act 2006.

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

2. Basis of preparation

This condensed consolidated interim financial information for the half-year ended 30 June 2015 has been prepared in accordance with the Disclosure and Transparency Rules of the Financial Conduct Authority and with IAS 34, 'Interim financial reporting' as adopted by the European Union. The condensed consolidated interim financial information should be read in conjunction with the annual financial statements for the year ended 31 December 2014, which have been prepared in accordance with IFRSs as adopted by the European Union.

Going concern

The Group's forecasts and projections, taking account of reasonably possible changes in trading performance, show that the Group should be able to operate within the level of its agreed facilities. Having reassessed the principal risks, the Directors considered it appropriate to adopt the going concern basis of accounting in preparing the interim financial information.

3. Accounting policies

Except as described below, the accounting policies applied are consistent with those of the annual financial statements for the year ended 31 December 2014, as described in those financial statements.

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

Standards, amendments and interpretations effective for the first time for the financial year beginning 1 January 2015 are not relevant to the Group.

Use of non-GAAP measures

The Group believes that the consistent presentation of underlying profit before tax, underlying effective tax rate, underlying basic earnings per share and underlying diluted earnings per share provides additional useful information to shareholders on the underlying trends and comparable performance of the Group over time. They are used by Savills for internal performance analysis and incentive compensation arrangements for employees. These terms are not defined terms under IFRS and may therefore not be comparable with similarly titled profit measures reported by other companies. They are not intended to be a substitute for, or superior to, GAAP measures.

The term 'underlying' refers to the relevant measure of profit, earnings or taxation being reported excluding the following items:

- amortisation of acquired intangible assets (excluding software);

- the difference between IFRS 2 charges related to in year profit related performance compensation

subject to deferral and the opportunity cash cost of such compensation (refer to Note 7 for further

explanation);

- items that are considered non-operational in nature including restructuring costs, impairments of

goodwill, intangible assets and investments and profits or losses arising on disposals of

subsidiaries and other investments; and

- significant acquisition costs related to business combinations.

A reconciliation between GAAP items and underlying results are set out in Note 7.

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

4. Estimates

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

In preparing these condensed interim financial statements, the significant judgements made by management in applying the Group's accounting policies and the key sources of estimation uncertainty were the same as those that applied to the consolidated financial statements for the year ended 31 December 2014, with the exception of changes in estimates that are required in determining the provision for income taxes.

5. Financial risk management

Financial risk factors

The Group's activities expose it to a variety of financial risks including foreign exchange risk, interest rate risk, credit risk and liquidity risk. The condensed interim financial statements do not include all financial risk management information and disclosures as required in the annual financial statements; they should be read in conjunction with the Group's annual financial statements as at 31 December 2014. There have been no changes in any risk management policies since the year end.

Fair value estimation

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

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

- Inputs other than quoted prices included within Level 1 that are observable for the asset or liability,

either directly (that is, as prices) or indirectly (that is, derived from prices) (Level 2).

- Inputs for the asset or liability that are not based on observable market data (that is, unobservable

inputs) (Level 3).

The following table presents the Group's assets, liabilities and equity items that are measured at fair value at 30 June 2015:

The following table presents the Group's assets, liabilities and equity items that are measured at fair value at 31 December 2014:

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

There were no changes in valuation techniques during the period.

The fair value of all other financial assets and liabilities approximate their carrying amount.

Valuation techniques used to derive Level 2 fair values

The fair value of investment funds is based on underlying asset values determined by the Fund Manager's audited annual financial statements. The fair value of other unlisted investments is based on price earnings models.

Shares to be issued were fair valued using the Actuarial Binomial model of actuaries Lane Clark & Peacock LLP.

6. Segment analysis

Operating segments reflect internal management reporting to the Group's chief operating decision maker, defined as the Group Executive Board ('GEB'). The GEB assess the performance of operating segments based on a measure of underlying profit before tax which adjusts reported pre-tax profit by amortisation of intangibles (excluding software), share-based payment adjustments, exceptional items that are considered non-operational in nature and significant acquisition costs related to business combinations. Segmental assets and liabilities are not measured or reported to the GEB.

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

A reconciliation of underlying profit before tax to reported profit before tax is provided in Note 7.

7. Underlying profit before tax

The Directors seek to present a measure of underlying performance which is not impacted by exceptional items or items considered non-operational in nature. This measure of profit is described as 'underlying' and is used by management to measure and monitor performance.

The adjustment for share-based payment relates to the impact of the accounting standard for share-based compensation. The annual bonus is paid in a mixture of cash and deferred shares and the proportions can vary from one 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 effective value of the annual share award in order better to match the underlying staff costs in the year with the revenue recognised in the same period.

Acquisition related costs include £9.7m of provisions for future payments in relation to acquisitions in the US and the UK, £9.2m of which relates to the Studley, Inc. acquisition in May 2014. These are expensed through the income statement to reflect the requirement for the recipients to remain actively engaged in the business at the payment date. The remaining £0.9m relates to transaction costs on acquisitions during the year.

8. 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.

The Group effective tax rate is 39.0% (30 June 2014: 24.7% and 31 December 2014: 26.0%), which is higher (30 June 2014 and 31 December 2014: higher) than the UK standard effective annual rate of corporation tax of 20.25% (30 June 2014 and 31 December 2014: 21.5%). This reflects permanent disallowable expenses, including acquisition costs. The Group underlying effective tax rate was 28.6% (30 June 2014: 24.9% and 31 December 2014: 26.6%).

9. Dividends

The Board has declared an interim dividend for the six months ended 30 June 2015 of 4.0p per ordinary share (30 June 2014: 3.75p) to be paid on 12 October 2015 to shareholders on the register on 11 September 2015. The interim dividend has not been recognised in these interim financial statements. It will be recognised in equity in the year to 31 December 2015.

10(a). Basic and diluted earnings per share

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

11. Cash (used in)/generated from operations

12. Transactions with non-controlling interests

In April 2015, the Group acquired an additional 30% of the shares in its Swedish facilities management business, Loudden Bygg-och Fastighetsservice AB ('Loudden'), for consideration of £0.7m. This takes the Group's shareholding to 100%. The carrying amount of Loudden's net assets on the date of acquisition was £0.4m. The Group recognised a decrease in non-controlling interest of £0.2m. The amount charged to retained earnings in respect of the transaction was £0.6m.

13. Acquisition of subsidiaries

Smiths Gore

On 31 May 2015 the Group acquired the trade and assets of partners of Smiths Gore ('Smiths Gore'), a market leader in the provision of rural property management services for private clients, institutions and the public sector throughout the United Kingdom. The acquisition will complement the Group's existing rural business in the United Kingdom, providing a more balanced business with an enhanced focus on management services and expanding the geographical reach of the rural business in the United Kingdom.

Total acquisition consideration is provisionally determined at £34.2m, of which £16.0m was settled in cash on completion. The remainder of the acquisition consideration relates to discounted deferred consideration of £18.2m, £3.3m of which is payable within one year of the reporting date, £12.2m payable on the 3rd anniversary of completion and £2.7m payable on the 5th anniversary of completion. The deferred payments payable on the 3rd and 5th anniversary of completion are contingent and subject to achievement of certain performance targets, as at the reporting date it is expected that these targets will be achieved.

Further to this, up to £4.2m is also payable to certain key staff, salaried partners and fixed share partners by the 3rd anniversary of completion subject to them being actively engaged in the business at the time of payment. As required by IFRS 3 (revised) these payments are expensed to the income statement over the relevant period of active engagement (H1 2015: £0.3m).

Transaction costs of £0.5m were also expensed as incurred to the income statement.

Goodwill of £19.2m and intangible assets of £7.0m relating to client relationships have been provisionally determined. Goodwill is attributed to the experience, reputation and expertise of the fee earners and is not expected to be deductible for tax purposes.

The acquired business contributed revenue of £2.5m and underlying operating profit of £0.2m to the Group for the period from 1 June 2015 to 30 June 2015. Had the acquisition been made at the beginning of the financial year, revenue would have been £15.6m and underlying operating profit would have been £0.7m.

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

US acquisitions

In April 2015, the Group acquired 100% of the assets of the Cooper Brady Partnership, a leading commercial real estate services firm specialising in tenant representation in the Silicon Valley, California. The Group also acquired 100% of the equity of Vertical Integration, Inc. and KLG Advisors (Kelly Legan & Gerard, Inc.). Vertical Integration, Inc. provides full-service real estate solutions for corporate and government entities and KLG Advisors provides corporate real estate advisory services. These acquisitions significantly strengthen the Group's Occupier Services offerings in the US.

Total acquisition consideration for these transactions is provisionally determined at £14.0m. Cash consideration payable on completion of these transactions amounted to £9.5m. Deferred consideration of up to £4.5m is payable in instalments by the 3rd anniversary of completion, of which £0.8m is subject to achievement of certain revenue targets. As at the reporting date it is expected that these targets will be achieved.

Further to this, £2.7m is payable in instalments by the 4th anniversary of completion and is subject to certain employment conditions. As required by IFRS 3 (revised) these payments are expensed to the income statement over the relevant period of employment (H1 2015: £0.2m). 

Goodwill of £10.6m and intangible assets of £2.1m relating to the order backlog (£0.9m) and client contracts (£1.2m) has been provisionally determined. Goodwill is attributable to the experience, reputation and expertise of key staff and is not expected to be deductible for tax purposes.

The acquired businesses contributed revenue of £2.4m and underlying operating profit of £0.4m to the Group for the period from April 2015 to 30 June 2015. Had the acquisitions been made at the beginning of the financial year, revenue would have been £4.8m and underlying operating profit would have been £0.6m.

Other acquisitions

During the period, the Group also acquired 100% of Colliers & Madge plc, a London based commercial property management business, and ProDirections, a project management consultancy in New Zealand. Cash consideration for these transactions amounted to £1.3m. A further £0.9m is subject to service conditions and will be expensed to the income statement over the period of service. Goodwill of £0.8m and intangible assets of £0.3m relating to customer contracts have been provisionally determined. Goodwill is attributable to the experience and expertise of key staff and strong industry reputation.

14. Retirement and employee benefit obligations

Defined benefit plan

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

Significant actuarial pension assumptions are detailed in the Group's Annual Report and Accounts 2014 and are the same as at 31 December 2014 except for the following:

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

The amount recognised within the income statement for the period ended 30 June 2015 is a net interest cost of £0.3m (30 June 2014: £0.2m, 31 December 2014: £0.3m).

Included in retirement and employee benefit obligations is £18.1m relating to holiday pay and long service leave (30 June 2014: £14.5m, 31 December 2014: £16.4m).

15. Borrowings

Movements in borrowings are analysed as follows:

The Group has the following undrawn borrowing facilities:

Unsecured bank loans includes a £180.0m multi-currency revolving credit facility, which expires in June 2017, of which £120.0m was drawn down as at 30 June 2015.

16. Related party transactions

As at 30 June 2015, loans outstanding to associates and joint ventures amounted to £1.9m (30 June 2014: £2.2m, 31 December 2014: £1.9m).

17. Contingent liabilities

In common with comparable professional services businesses, the Group is involved in a number of disputes in the ordinary course of business. Provision is made in the financial statements for all claims where costs are likely to be incurred and represents the cost of defending and concluding claims. The Group carries professional indemnity insurance and no separate disclosure is made of the cost of claims covered by insurance as to do so could seriously prejudice the position of the Group.

18. Seasonality

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

SHAREHOLDER INFORMATION

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

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