RNS Number:1863O
Savills PLC
29 June 2005

                                                                    29 June 2005

                                  SAVILLS PLC
                            (Savills or 'The Group')



From 1 January 2005, the Group is required to prepare its consolidated financial
statements in accordance with International Financial Reporting Standards 
("IFRS"), as adopted by the European Union ("EU") and applicable to all listed
companies for financial reporting periods beginning on or after 1 January 2005.

The Group's first results to be published under IFRS will be for the six months
to 30 June 2005. The Comparative information in those financial statements must
be restated to IFRS. This report is to inform shareholders of the impact on the
Group's financial position and results for 2004 due to the change from reporting
under UK General Accepted Accounting Principles (UK GAAP) to IFRS.

The information presented in this document sets out the adjustments between the
audited UK GAAP prepared financial statements for 2004 and unaudited restated
IFRS results for the same period.

The IFRS standards that principally affect adjustments between UK GAAP and IFRS

  * IAS 19 Employee Benefits
  * IFRS 2 Share Based Payment
  * IAS 38 Intangible Assets
  * IAS 12 Income Taxes
  * IAS 10 Events After the Balance Sheet Date - covering dividends

Highlights, unaudited restated IFRS results and net assets

  * 2004 Group turnover unchanged
  * 2004 Group profit before tax #58.3m (UK GAAP - #50.2m)
  * Basic earnings per share 74.0p (UK GAAP - 62.2p)
  * Adjusted basic earnings per share* 57.4p (UK GAAP - 55.7p)
  * Net assets of the Group #94.7m (UK GAAP - #102.9m)

* After excluding sale of trading & investment properties, impairments and
amortisation of goodwill and the one-off impact of the IFRS adjustment relating
to share based payments (see section 5 (b))


1.     Basis of Preparation
2      Transition Explanations
3.1    Effect of the change to IFRS on the Income Statement for the year ended 
       31 December 2004
3.2    Effect of the change to IFRS on the Balance Sheet as at  31 December 2004
3.3    Explanation of Adjustments for the year ended December 2004
4.     Adoption of IAS 32 and 39 financial assets and liabilities
5.     Earnings Per Share
6.     Accounting Policies to be Adopted from 1 January 2005

1. Basis of Preparation

The numbers set out under IFRS in this document have been prepared on the basis
of current interpretation and application of IFRS Standards as at May 2005,
subject to the exemptions set out below. However if the International Accounting
Standards Board makes changes to the standards and interpretations before 31
December 2005, the figures may be amended in the first full IFRS accounts to be
published in March 2006.

IFRS 1, First Time Adoption of International Financial Reporting Standards,
outlines how to apply IFRS to the consolidated financial statements for the
first time. The Group's transition date is 1 January 2004 and the standard
permits certain exemptions from the full requirements of IFRS as at that date.

The Group has taken the following key exemptions or options as at transition:

a)       Business combinations

IFRS 3, Business Combinations: The Group has taken the option not to restate any
business combinations that were recorded by the Group before the date of

b)       Employee benefits

IAS 19, Employee Benefits: From the date of transition, the Group has opted to
recognise all cumulative actuarial gains and losses in full.

c)       Cumulative translation differences

IAS 21, The Effects of Changes in Foreign Exchange Rates: The exemption taken by
the Group allows these cumulative translation differences to be set to zero at
the date of transition.

d)       Financial instruments

IAS 32, Financial Instruments: Disclosure and Presentation and IAS 39, Financial
Instruments: Recognition and Measurement will be applied prospectively from 1
January 2005 and consequently the restated figures for 2004 do not reflect the
impact of these standards.

e)       Share-based payments

In accordance with IFRS 2, Share-based Payments the Group has applied the
standard only to equity instruments that were granted after 7 November 2002 that
had not vested before 1 January 2005.

f)       Fair value or revaluation at deemed cost

The Group has decided that property, plant and equipment are to remain recorded
at their historical cost and has not restated these items at their fair value.

g)       Joint Ventures

The Group has chosen to equity account for all investments in Joint Ventures.

2. Transition Explanations

Adjustments to Shareholders Funds on transition to IFRS as at 1 January 2004

                                   UK      Based    Employee    Deferred                Unaudited
                                 GAAP    Payment    Benefits         Tax    Dividend         IFRS
                                #'000      #'000       #'000       #'000       #'000        #'000
Notes (see section 2 (a-d))                  (a)         (b)         (c)         (d)

As at 1 January 2004           96,277        142    (17,870)         (6)       5,563       84,106

a)      IFRS 2 Share Based Payment

This standard is applied by the Company to equity settled share based payments
that have not vested as at 1 January 2005 and that were granted after 7 November

Further information regarding the operation of the Group's employee share
schemes can be found on Page 33 of the 2004 Annual Report & Accounts.
Information regarding the calculation and allocation of the Group's bonus pool
can be found on pages 30 and 31. The Group policy under IFRS continues to be for
the DSBP accounting expense to be deducted from the total bonus pool before
arriving at cash bonus payments to be made to the employees concerned.

Under IFRS 2 the expense relating to an equity-based share based payment is
calculated with reference to the fair value of the option at the date of grant.
The expense is then spread equally over the period between the grant date or
date of commencement of services and the vesting date. As the options under the
Group's schemes are all equity settled, the fair value is not re-measured but
the yearly expense is adjusted for the estimated number of options expected to
vest. For any options that vest early, the remaining charge not expensed to date
is charged in full on the date the early vest occurs.

The following adjustments have been made on transition:

                                         UK GAAP       IFRS 2   Total adjustment

Deferred Share Bonus Plan                   (229)        (243)               14
Executive Share Option Scheme                  -          (30)               30
Sharesave Scheme                               -          (98)               98
Impact on Shareholders funds                (229)        (371)              142

Deferred Share Bonus Plan (DSBP)

Previously, awards granted under the DSBP Scheme were measured at the market
value at 31 December each year in determining the expense for awards granted.
This expense was recorded in full in the year the employee provided the services
to which the award related. For example the expense for the March 2005
allocation was recorded in 2004. Under IFRS, the expense is spread over the
period from the date of commencement of services to the date that the employees
take title to the shares.  This is typically six years and three months.

Executive Share Option Scheme (ESOS)

Under UK GAAP, no expense was recorded for the ESOS in accordance with UITF 17 '
Employee Share Schemes'.

Under IFRS 2, amounts charged to the profit and loss account for ESOS awards
begin on the date of grant and are spread over the vesting period of 3 years.
Under the ESOS if the performance criteria, which are based on internal
measures, are not met, the options do not vest. The total expense relating to
the grant is reversed if the Company expects that the performance criteria will
not be met.

Sharesave scheme

Under UK GAAP, no expense was recorded for the Sharesave scheme under the
exemption permitted by UITF 17 'Employee Share Schemes'. Under IFRS, the expense
of the Sharesave scheme is spread over 3 years. Under the terms of the Sharesave
scheme, employees have the option, at the vesting date, to take shares or have
their contributions refunded. The full charge remains regardless of which option
is taken.

While the share based payment expense does not impact shareholders funds, these
adjustments reflect the consequences of accounting for National Insurance
payable on exercise of the options and deferred tax.

A deferred tax liability arises on the IFRS adjustments due to the timing
difference between the recognition of the share based payment expense for tax
and accounting purposes. The accounting charge for share based payments are not
deductible for UK taxation. A deduction is given on the exercise date equal to
the market price less exercise price. Therefore deferred tax balances are
carried forward until the options are exercised.

b)      IAS 19 Employee Benefits

The approach under IFRS for Defined Benefit Pension Schemes is similar to the
requirements of FRS 17. As disclosed in the 2004 Report & Accounts, FRS 17 was
due to take effect from 1 January 2005. The liability at 1 January 2004 was
#25,528,000 with an offsetting deferred tax asset of #7,658,000. The actuary of
the scheme has confirmed there is no material difference in the net pension
liability under IAS 19 compared to FRS 17.

c)       IAS 12 Deferred Tax

Under IFRS deferred tax should be recognised on the basis of taxable temporary
differences (subject to certain exceptions), which represents the difference
between the carrying value of an asset or liability and the amount used for
taxation purposes.

Deferred tax arises on undistributed profits within non-UK equity accounted
investments, unless there is an agreement covering the distribution of reserves.
For such investments, the Group does not exercise control in determining the
timing of dividend payments and for this reason a deferred tax liability arises
on undistributed reserves. As at transition a liability of #6,000 is created.

d)      IAS 10 Events After the Balance Sheet Date

Under IFRS, dividends are included in the accounts in the period in which they
are approved whereas under UK GAAP dividends are included in the period to which
they relate. The final dividend and provision for 2003 of #5,563,000 are
therefore reversed.

3.1 Effect of the change to IFRS on the Income Statement for the year ended 31
December 2004 (unaudited)

                                                     Impact of move to IFRS
                            UK Intangibles   Share Employee    Joint Associates Deferred Realloc-       IFRS

                          GAAP               Based Benefits Ventures                 Tax   ations

                         #'000       #'000   #'000    #'000    #'000      #'000    #'000    #'000      #'000
Notes (see section 3.3)                (a)     (b)      (c)      (d)        (e)      (f)     (g)
Total Group           327,975                                                                       327,975
Group operating         38,951       3,385   3,901      926      (3)          0        0    9,011     56,171
Share of joint              55                                    41                                      96
Share of associates        274           6                                 (12)                          268
Disposals                9,011                                                            (9,011)          0
Profit before           48,291       3,391   3,901      926       38       (12)        0        0     56,535
Net finance income       1,902                                  (97)       (28)                        1,777
Profit before tax       50,193       3,391   3,901      926     (59)       (40)        0        0     58,312
Income tax expense    (15,168)       (143) (1,167)    (278)       59         40        6            (16,651)
Profit for the          35,025       3,248   2,734      648        0          0        6        0     41,661

Attributable to:
Equity holders of       34,775       3,216   2,734      648        0          0        6        0     41,379
the parent
Minority interests         250          32                                                               282
                        35,025       3,248   2,734      648        0          0        6        0     41,661

Basic earnings per       62.2p        5.7p    4.9p     1.2p     0.0p       0.0p     0.0p     0.0p      74.0p
Diluted earnings         56.5p        5.2p    4.4p     1.1p     0.0p       0.0p     0.0p     0.0p      67.2p
per share

3.2 Effect of the change to IFRS on the Balance Sheet as at  31 December 2004

                                                   Impact of move to IFRS
                          UK GAAP  Intangibles      Share   Employee      Joint   Dividend        IFRS
                                                    Based   Benefits   Ventures
                            #'000        #'000      #'000      #'000      #'000      #'000       #'000
Notes (see section 3.3)                     (a)        (b)        (c)        (d)        (h)
Assets                    261,797        3,248      (615)    (7,663)        (5)          0     256,762
Liabilities             (158,888)            0        457   (21,592)          5     17,995   (162,023)
NET ASSETS                102,909        3,248      (158)   (29,255)          0     17,995      94,739

Shareholder's funds       102,751        3,216      (158)   (29,255)          0     17,995      94,549
Minority interest             158           32          0          0          0          0         190
                          102,909        3,248      (158)   (29,255)          0     17,995      94,739

3.3 Explanation of Adjustments for the year ended December 2004

a)      IAS 38 Intangible Assets

An intangible asset is an identifiable non-monetary asset without physical
substance. Intangibles are contractual or legal rights or assets that are
separable from the business and can include brands, trade names, contacts and

IAS 38 requires an intangible asset with a finite useful life to be amortised
over its expected life and tested for impairment whenever there is an indication
that the intangible asset may be impaired (such as if losses are made). Goodwill
represents the remaining unidentifiable intangible assets of an acquisition
after deducting the identifiable intangibles. Goodwill is not amortised from
transition and is subject to annual impairment testing. Goodwill impairment of
#639,000 made in 2004 under UK GAAP, remains as an impairment under IFRS.

Goodwill amortisation under UK GAAP of #2,915,000 for the year has been
reversed. In accordance with the transitional provisions within IFRS 1, an
assessment was made regarding the fair value of identifiable intangible assets
acquired for all business combinations from 1 January 2004. A value of
#1,262,000 has been placed on these intangibles which were all purchased in the
final few months of 2004.

The adjustments further capitalise an intangible asset of #476,000 which is
associated with the set-up of Europa Immobiliare No. 1 fund by CordeaSavills.
This amount was expensed under UK GAAP. A deferred tax asset of #143,000 arising
under UK GAAP is not recognised under IFRS.

Under IAS 38, software that is not an integral part of the operating hardware is
treated as an intangible asset and is amortised over its useful life. Software
with a book value of #810,000 has been reclassified to intangibles and
depreciation expense of #663,000 has been reclassified as amortisation.

b)      IFRS 2 Share Based Payment

The following adjustments have been made for the year to 31 December 2004:

                                         UK GAAP      IFRS 2   Total adjustment

Deferred Share Bonus Plan                  5,390      (1,241)             4,149
Executive Share Option Scheme                  -        (140)              (140)
Sharesave Scheme                               -        (108)              (108)
Impact on profit before tax                5,390      (1,489)             3,901
Tax                                       (1,617)        450             (1,167)
Impact on profit after tax                 3,773      (1,039)             2,734

This profit and loss adjustment increases profit before tax by #3,901,000 is
mainly due to the impact of the deferred share bonus plan.  The share based
payment charge for the DSBP during 2004 was #5,390,000, which represented the
market value of the deferred share bonus plan grants made in 2004 and 2005.
These grants related to the performance periods of 2003 and 2004. There are two
reasons for this adjustment; firstly the change in the basis of valuation of the
option, and secondly the change to spreading the charge over the vesting period.
For the DSBP, the charge is amortised over the period between the first date
services were provided by employees relating to the grant and the date that the
employees take ownership of the shares.

For example, the grant made in March 2005 related to services provided from the
beginning of the 2004 financial year, with employees taking ownership of the
shares five years after the date of grant provided that they are still employed
by the Group.  Under UK GAAP the market value of the options awarded would have
been expensed during 2004 as they were considered to relate to past service.
Under IFRS, the fair value of the shares awarded would be expensed over the 6
year and 3 month period from January 2004 to the date that the shares vest in
March 2010.

Under the transitional provisions of IFRS 2, share based payment, companies are
only required to restate their results for equity instruments granted after 7
November 2002.  Only three grants relating to the DSBP are restated under IFRS.
As these grants vest over a 6 year and three month period, the expense under
IFRS is less than that under UK GAAP.

The method of bonus calculations for the Group means that this adjustment is
purely a transitional difference and will not impact the levels of profit in the
future. This is explained further in section 5 (a).

The only impact on equity is that relating to National Insurance payable on
exercise of the options, and deferred tax.

c)       IAS 19 Employee Benefits

Under IFRS, the charge to the profit and loss account includes:

*         the current service cost which represents the increase in the pension
          liability in the current period as a result of the employee's 
          employment over that period.
*         interest cost on the schemes liabilities.
*         expected return on plan assets.
*         past service cost and
*         the impact of any settlements or curtailments.

The UK GAAP charge of #4,194,000 has been reversed and replaced by a charge for
current service cost of #2,673,000 plus an interest charge of #3,565,000 less
#2,970,000 expected income from the return on plan assets. A deferred tax
liability arises on this adjustment.

The Group has opted to recognise immediately, in full, all actuarial gains or
losses directly in equity as they arise, in accordance with the amendment to IAS
19 issued by the IASB on 16 December 2004.

The pension deficit as at 31 December 2004 was #20,334,000 (2003 - #25,528,000)
with an offsetting deferred tax asset of #6,100,000 (2003 - #7,658,000). The
movement in the pre-tax deficit is represented by increases due to charges to
the income statement of #3,268,000 and an actuarial loss of #9,494,000. This was
reduced by cash contributions in 2004 of #17,956,000.

d)      IAS 31 Joint Ventures

IFRS allows the option for joint ventures to be accounted for on a proportional
consolidation or equity accounted basis. The Group has chosen to equity account
all joint ventures.

The equity method requires an interest in a jointly controlled entity to be
initially recorded at cost and adjusted thereafter for the post-acquisition
change in the Group's share of net assets of the entity. The Group is required
to include its share of the profit or loss in the income statement as a single
line and disclose the value of the investment separately on the balance sheet.

Under UK GAAP, various property joint ventures were required to be
proportionally consolidated and these have been restated to equity accounted
investments under IFRS. The balance sheets of these entities substantially
consist of cash, intercompany loans and outstanding corporation tax liabilities.

This change does not impact group profit but reclassifies operating profit,
interest and tax to the line share of results of Joint Ventures.

e)      IAS 28 Associates

Associated undertakings are equity accounted under IAS 28. The only difference
between the treatment of associates under IFRS compared to UK GAAP relate to
disclosures in the income statement. The Group's share of post-tax results of
associates under IAS 1 must be shown on a single line in the income statement.
The UK GAAP numbers therefore are adjusted to reduce interest income by #28,000
and income tax expense is reduced by #40,000.

f)      IAS 12 Deferred Tax

The deferred tax liability on undistributed reserves in non-UK equity accounted
investments has reversed at year end as these investments were liquidated in the

g)      IAS 1 Presentation of financial statements

Under IAS 1, items of income and expense may not be presented as extraordinary
items on the face of the income statement.  Under UK GAAP, profit on disposal of
investment property of #8,094,000, profit of disposal of interests in subsidiary
undertakings of #763,000 and profit on disposal of interest in associates of
#154,000 were classified as exceptionals. These have been reclassified as
operating items under IFRS.

h)      IAS 10 Events After the Balance Sheet Date

The final and special dividends in respect of 2004 of #17,995,000 is not
recognised at the balance sheet date under IFRS.

4. Adoption of IAS 32 and 39 financial assets and liabilities

The Group's policy is for each business to borrow in local currencies where
possible. The Group does not actively seek to hedge risks arising from foreign
currency transactions due to the high cost associated with such hedging.
Therefore this standard is not expected to have a significant impact on the

This standard will be adopted prospectively in 2005.

5. Earnings Per Share

a)       Basic and diluted earnings per share as at 31 December 2004:

                                                                                        Diluted     Diluted
                                                   Earnings      Shares         EPS      Shares         EPS
                                                      #'000        '000       Pence        '000       Pence
UK GAAP                                              34,775      55,938        62.2      61,585        56.5
IFRS adjustments:
Intangibles                                           3,216           -         5.7           -         5.2
Share based payment                                   2,734           -         4.9           -         4.4
Employee benefits                                       648           -         1.2           -         1.1
Deferred tax                                              6           -           -           -           -
IFRS                                                 41,379      55,938        74.0      61,585        67.2

b)       Adjusted basic earnings per share as at 31 December 2004 :

                                                             UK GAAP     UK GAAP         IFRS        IFRS
                                                 Shares     Earnings         EPS     Earnings         EPS
                                                   '000        #'000       Pence         '000       Pence
Basic earnings per share                         55,938       34,775        62.2       41,373        74.0
Amortisation of                                       -        2,915         5.2            -           -
Impairment of goodwill                                -          639         1.1          639         1.1
Less IFRS Share based payment charge                  -            -           -      (2,734)       (4.9)
Less sale of trading properties after tax             -      (1,525)       (2.7)      (1,525)       (2.7)
Less sale of investment property after tax            -      (5,666)      (10.1)      (5,666)      (10.1)

Adjusted basic earnings per                           -       31,138        55.7       32,087        57.4

The Directors consider the disclosure of the supplementary earnings per share
necessary in order for the impact of, impairment of goodwill and amortisation of
goodwill to be fully appreciated, as well as eliminating the sale of trading and
investment property results which are not always of a comparable nature.

The IFRS share based payment charge is removed to present an indication of the
impact of IFRS changes on the Group going forward. The method of bonus
calculation means that the adjustment will not impact profit levels in the

The Group operates a number of deferred share bonus and options schemes, the
largest of which is the Deferred Share Bonus Plan (DSBP). Under this
non-pensionable annual bonus scheme for Directors and senior executives, a part
of the annual bonus, at the discretion of the Remuneration Committee, may be
awarded in the form of deferred conditional rights to ordinary shares in the
Company, with the additional part of the bonus being paid out in cash. Annual
bonuses are subject to the attainment of challenging performance targets which
are specific to each individual and either relate to Group thresholds,
subsidiary company targets or a combination of both for a period not exceeding
the relevant financial year of the Company.  The annual bonus pool for the Group
is fixed, based on pre-bonus profit based calculations.  The element of the
bonus pool which is paid out in cash is determined by deducting share based
payment charges made against income in the performance period from the bonus

During 2004, the amount which was charged against the bonus pool for share based
payments was the UK GAAP charge, and the balance of the bonus pool was paid out
as cash bonus. The latter amount is not impacted in 2004 by the restatement of
the share based payment charge to IFRS, but in the future it will be.  The
adjusted EPS takes account of this one-off adjustment in 2004.

6. Accounting Policies to be adopted from 1 January 2005

Basis of Accounting

The Group accounts have been prepared in accordance with International Financial
Reporting Standards (IFRS) as adopted by the European Union and with those parts
of the Companies Act 1985 applicable to companies reporting under IFRS.

The 2005 financial statements will be the Group's first consolidated financial
statements prepared under IFRS, with a transition date of 1 January 2004.
Consequently, the comparative figures for 2004 and the Group's balance sheet as
at 1 January 2004 have been restated to comply with IFRS, with the exception of
IAS32 and IAS39 on financial instruments, which have been applied prospectively
from 1 January 2005. In addition, IFRS1, First time adoption of International
Financial Reporting Standards allows certain exemptions from retrospective
application of IFRS in the opening balance sheet for 2004 and where these have
been used they are explained in the accounting policies below.

The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.

The financial statements have been prepared under the historical cost
convention, as modified to include the revaluation of investment properties and
financial assets.


The consolidated Accounts include the Accounts of the Company and its subsidiary
undertakings, together with the Group's share of results of its associates and
joint ventures.

A subsidiary is an entity controlled by the Group, where control is the power to
govern the financial and operating policies of the entity, so as to obtain
benefit from its activities.

The results of subsidiary undertakings acquired during the period are included
from the date of acquisition of a controlling interest at which date, for the
purpose of consolidation, the purchase consideration is allocated between the
underlying net assets acquired, including intangible assets other than goodwill,
on the basis of their fair value.

The results of the subsidiary undertakings that have been sold during the year
are included up to date of disposal. The profit or loss is calculated by
reference to the net asset value at the date of disposal, adjusted for purchased
goodwill previously included on the balance sheet.

Inter company balances and transactions, and any unrealised gains arising from
inter company transactions, are eliminated in preparing the consolidated
financial statements.


Associates comprise investments in undertakings, which are not subsidiary
undertakings, where the Group's interest in the equity capital is long term and
over whose operating and financial policies the Group exercises a significant
influence. They are accounted using the equity method.

Joint Ventures

A joint venture is a contractual arrangement whereby two or more parties
undertake an economic activity that is subject to joint control, which exists
only when the strategic financial and operating decisions relating to the
activity require the unanimous consent of the venturer's. The Group's joint
ventures are accounted for using the equity method.


Goodwill arising on acquisition is capitalised and subject to annual impairment
reviews. Goodwill represents the excess of the cost of acquisition of a
subsidiary or associate over the Group's share of the fair value of identifiable
net assets acquired. Goodwill is stated at cost less accumulated impairment

The Group's policy up to and including the year ended 30 April 1998 was to
eliminate goodwill against reserves. Goodwill acquired from 1 May 1998 to 31
December 2003 was capitalised and amortised over its useful economic life. As
permitted under IFRS1, in respect of acquisitions prior to 1 January 2004, the
classification and accounting treatment of business combinations has not been
amended on transition to IFRS. Goodwill previously written off direct to
reserves under UK GAAP is not recycled to the income statement on the disposal
of the subsidiary or associate to which it relates.

Goodwill in respect of subsidiaries is included in intangible assets. In respect
of associates, goodwill is included in the carrying value of the investment in
the associated company.


Turnover in respect of property consultancy represents commissions and fees
receivable excluding VAT. On traditional agency work in progress, no value is
attributable until contracts on the underlying transactions have been exchanged.
On complex multi-unit developments, revenue is recognised on a staged basis,
commencing when the underlying contracts are exchanged. No value is generally
attributed to commercial agency work in progress until completion. However, if
exchange of contracts on the underlying transaction is unconditional, income is
recognised on a phased basis in accordance with the contractual terms.

Sales of properties held by the Group as trading assets are included in

Share-Based Payments

Equity-settled share-based payments granted after 7 November 2002 that had not
vested as of 1 January 2005 are measured at fair value at the date of grant. The
fair value determined at the grant date of the equity-settled share-based
payments is expensed on a straight-line basis over the vesting period, based on
the Group's estimate of shares that will eventually vest. For cash-settled
share-based payments, which have not vested at 1 January 2005, a liability equal
to the portion of the service received is recognised at the current fair value
determined at each balance sheet date.

The fair value of equity-settled share based payments is measured by the use of
Actuarial Binomial option pricing model. The fair value of cash-settled share
based payments is measured using the method considered to be most appropriate.

Employee Benefit Trust

The Company has established The Savills plc 1992 Employee Benefit Trust (the
EBT), the purposes of which are to grant awards to employees to acquire shares
in the Company pursuant to the Savills plc 1992 Executive Share Option Schemes
and the Deferred Share Bonus Plan and to hold shares in the company subsequent
to transfer to employees on exercise or vesting of the awards granted under the
schemes. The assets and liabilities of the EBT are included in the balance
sheets of the Group and the Company. Investments in the Group's own shares are
shown as a deduction from shareholders funds.

Qualifying Employee Share Trust

The Company has established a Qualifying Employee Share Trust (QUEST), which
acquires shares of the Company. These are transferred to employees on the
exercise of options granted under the Savills Sharesave Scheme.

Property, Plant and Equipment

Property, plant and equipment is stated at historical cost less accumulated
depreciation and impairment. Provision for depreciation is made at rates
calculated on a straight-line basis to write-off the assets over their estimated
useful lives as follows:

Freehold property                                   50
Leasehold property (less than 50 years)             over unexpired term of lease
Furniture & office equipment                        6
Motor vehicles                                      5
Computer equipment                                  Between 3 & 5

Intangible Assets other than Goodwill

Intangible assets acquired as part of business combinations are valued at fair
value on acquisition and amortised over the useful life. The useful lives of
these assets are determined on a case by case basis. The useful life of such
intangible assets  currently ranges from 2 to 5 years. Amortisation charges are
spread over the period of the assets useful life.

Computer software is carried at cost less accumulated amortisation and is
amortised on a straight-line basis over a period ranging from three to five

Accounting for Leases

Assets financed by leasing agreements which give rights approximating to
ownership (finance leases) are capitalised in property, plant and equipment.
Finance lease assets are initially recognised at an amount equal to the lower of
their fair value and the present value of the minimum lease payments at
inception of the lease, then depreciated over their estimated useful lives. The
capital elements of future obligations under finance leases are included as
liabilities in the balance sheet. Leasing payments comprise capital and finance
elements and the finance element is charged to the income statement.

The annual payments under all other lease agreements, known as operating leases,
are charged to the income statement on a straight line basis over the lease

Investment Properties

An investment property is a property held to earn rentals and for capital
appreciation and is initially measured at cost, including direct transaction
costs. Subsequent to initial recognition, investment properties are measured at
fair value annually. Fair value is considered to be the open market value with
no allowance for disposal costs. Valuations are undertaken by independent
qualified valuer's in accordance with Guidance Notes on the valuation of assets
issued by the Royal Institution of Chartered Surveyors.

Gains or losses arising from the changes in the fair value of investment
properties are included in profit or loss for the period in which they arise.
Investment properties are not depreciated.

Work in Progress

Work in progress is stated at the lower of cost and net realisable value. Cost
includes an appropriate proportion of overheads. Long-term work in progress is
assessed on a contract by contract basis; turnover and related costs are
included in the income statement as contract activity progresses. Where the
outcome of a long-term contract can be assessed with reasonable certainty,
attributable profit is recognised. Long-term contracts are stated at cost net of
amounts transferred to cost of sales, foreseeable losses and applicable payments
on account.


Taxation is that chargeable on the profits for the period, together with
deferred taxation.

Deferred taxation is provided in full on temporary differences between the
carrying amount of assets and liabilities for financial reporting purposes and
the amount used for taxation purposes. Deferred tax is provided on temporary
differences arising on investments in subsidiaries and associates, except where
the timing of the reversal of the temporary difference is controlled by the
Group and it is probable that it will not reverse in the foreseeable future. A
deferred tax asset is recognised only to the extent that is probable that future
taxable profits will be available against which the asset can be utilised.
Deferred tax assets and liabilities are not discounted.

Deferred tax is determined using the tax rates that have been enacted or
substantially enacted by the balance sheet date and are expected to apply when
the related deferred tax asset is realised or deferred tax liability is settled.

Tax is recognised in the income statement except to the extent that it relates
to items recognised directly in equity, in which case it is recognised in

Impairment of Assets

Assets that have indefinite useful lives are tested annually for impairment,
while assets that are subject to amortisation are reviewed for impairment
whenever events indicate that the carrying amount may not be recoverable. An
impairments loss is recognised to the extent that the carrying value exceeds the
higher of the asset's fair value less cost to sell and its value in use.

Pension Costs

Retirement benefits for employees are provided by a defined benefit scheme which
is funded by contributions from the Group and its employees. The Group
contributions are determined by an independent qualified actuary.

The net deficit for the Group defined benefit pension scheme is calculated in
accordance with IAS 19, based on the present value of the defined benefit
obligation at the balance sheet date less the fair value of the plan assets. As
permitted under IFRS1, all cumulative actuarial gains and losses at the date of
transition were fully recognised.

The defined benefit scheme charge consists of current service costs, interest
cost, expected return on plan assets, past service cost and the impact of any
settlements or curtailments. All actuarial gains and losses are recognised
immediately in the 'Statement of changes in equity' as they arise.

The Group also operates a defined contribution group personal pension plan for
new entrants and a number of defined contribution individual pension plans.
Contributions in respect of defined contribution pension schemes are charged to
the income statement when they are payable.

Foreign Currency Translation

The income and cash flow statements of Group undertakings expressed in
currencies other than sterling are translated to sterling at average rates of
exchange in each year. Where the average rate is not a reasonable approximation
the actual rate is used. Assets and liabilities of these undertakings are
translated at rates of exchange at the end of each year.

The differences between retained profits of overseas subsidiary and associated
undertakings translated at average and closing rates of exchange are taken to
reserves, as are differences arising on the retranslation to sterling (using
closing rates of exchange) of overseas net assets at the beginning of the year.
Any differences that have arisen since 1 January 2004 are presented as a
separate component of equity. As permitted under IFRS1, any differences prior to
that date are not included in this separate component of equity.

Foreign currency transactions are initially recorded at the exchange rate ruling
at the date of the transaction. Foreign exchange gains and losses resulting from
the settlement of such transactions and from the translation at year-end rates
of exchange are recognised in the income statement.


Final dividend distributions to the Company's shareholders are recognised as a
liability in the Group's financial statements in the period in which the
dividends are approved by the Company's shareholders, while interim dividend
distributions are recognised in the period in which the dividends are declared.

Financial Instruments

Non-derivative financial assets are classified as either available-for-sale
investments, accounts receivable or cash and cash equivalents.

Available-for-sale investments are stated at fair value, with changes in fair
value being recognised directly in equity. When such investments are
derecognised (e.g. through disposal) or become impaired, the accumulated gains
and losses, previously recognised in equity, are recognised in the income

Accounts receivable are valued at cost less estimated non-recoverable amounts.
Accounts receivable are discounted where the time value of money is material.

Cash and cash equivalents include cash in hand and deposits held on call,
together with other short term highly liquid investments and working capital

Application of IAS32 and IAS39

As noted above, the Group has adopted IFRS for the first time in 2005. It has
applied the financial instruments' standards IAS32 and IAS39 prospectively from
1 January 2005, as permitted by these two standards. The principal impact of the
application of these standards reflects the change in the measurement and
classification of other investments. These are measured at cost less permanent
diminution in value under UK GAAP and are re-classified as available-for-sale
financial assets, measured at fair value.

Segmental Analysis

A business segment is a group of assets and operations engaged in providing
products or services that are subject to risks and returns that are different
from those of other business segments. A geographical segment is engaged in
providing products or services within a particular economic environment that is
subject to risks and returns that are different from those of segments operating
in other economic environments.

Repurchase of Share Capital

When share capital is repurchased, the amount of consideration paid, including
directly attributable costs, is recognised as a charge to equity. Repurchased
shares which are not cancelled, or shares purchased for the Employee Share
Ownership Trusts, are classified as treasury shares and presented as a deduction
from total equity.


For further information, please contact:


Aubrey Adams                                                 020 7409 9923

Citigate Dewe Rogerson

Simon Rigby/Sarah Gestetner/George Cazenove                  020 7638 9571

                      This information is provided by RNS
            The company news service from the London Stock Exchange


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