Chairman's Statement

Despite turmoil in the financial markets and the consequent effects on property investment markets, Savills had an excellent 2007, producing a record result. This outstanding achievement reflects the significant efforts over the last few years to broaden our geographical spread and diversify our business lines.

Results

The Group’s underlying profit before tax was £85.5m, a 14% increase on 2006. Revenue increased by 26% to £650.5m. Reported profit before tax was £85.9m (2006: £84.4m).

Dividends

The Board has recommended an increase in the final dividend for 2007 of 9% to 12p per share to those shareholders on the register on 11 April 2008, payable on 14 May 2008. This gives a total ordinary dividend for the year ended 31 December 2007 of 18p (2006: 16p). In the five years to 31 December 2007 underlying earnings have increased by an average of 24% per annum and dividends by an average of 29% per annum.

Major acquisitions

In 2007, as part of our continuing strategy both to grow geographically and add greater diversity to the Group, we acquired Granite Partners LLC in the US for an initial consideration of US$54m to form Savills Granite. This means that we can now offer clients commercial investment sales, debt and equity placement and advisory services in the US and gives us a platform from which to grow progressively the range of services we can offer to both US clients and for those with an interest in the US.

Our acquisition of Hepher Dixon Limited at the beginning of the year for £5.1m enabled our planning business to become a major force in London and across the regions.

We continued to build our UK residential network with a number of acquisitions including that of Christopher Rowland Limited.

Share buyback programme

At the last Annual General Meeting shareholders gave authority for a limited purchase of Savills shares for cancellation of up to 10% of the issued share capital. During the year ended 31 December 2007, 3.5m shares, representing 2.6% of issued share capital were repurchased for cancellation under this programme. The Company may make further purchases of shares under this authority up to the Annual General Meeting (AGM) to be held on 7 May 2008. As in previous years, shareholders will again be asked to consider a resolution to approve the repurchase of shares at this year’s AGM.

Board and staff

I am delighted to welcome Mark Dearsley, who was appointed as Group Finance Director with effect from 3 September 2007. Details of the Board, its Committees and their composition are outlined in the Board of Directors and in the Corporate Governance Report.

On 18 October 2007, we announced the retirement after 18 years of Aubrey Adams, Group Chief Executive, which will take effect from the AGM on 7 May 2008. Aubrey joined Savills in 1990 and was appointed Managing Director in 1991. Under Aubrey’s leadership Savills has become a leading global property advisory business with revenues growing from £24m in 1992 to over £650m in 2007. A loss of some £2.3m in 1992 has been transformed into a profit of £86m this year and the Company is now a constituent of the FTSE 250. I would like to thank Aubrey on behalf of all our staff, clients and shareholders for the significant role that he has played in expanding our business.

We engaged outside advisers to assist us in the appointment of Aubrey’s successor and a number of candidates were interviewed. I was pleased to announce that Jeremy Helsby will succeed Aubrey as Group Chief Executive. Jeremy joined Savills in 1980 and has successfully developed the UK Commercial business from revenue of £47m in 2001 to over £142m in 2007. Jeremy has also led the growth of our Continental European business, establishing 13 Savills offices and associations in eight countries over the past seven years. I look forward to working with Jeremy in his new role.

After Aubrey Adams’ retirement, the Board will comprise a Non-Executive Chairman, four Independent Non-Executive Directors and five Executive Directors, which the Board considers is an appropriate balance and meets the present needs of the Group. The Non-Executive Directors have a wide range of business experience and expertise and provide a strong independent element to the Board. However, the Board will keep under review the need for any changes in the structure of the Board.

Our people

Savills’ continued growth is a result of the committed and dedicated efforts of our people whose continued ability to provide a professional service to our clients is the basis for the excellent results achieved; I thank them all for their dedication and hard work. Our reward system, which is essentially based on team profit performance, is an important mechanismin providing a balance between the interests of staff and shareholders and is more fully described in the Remuneration Report.

Strategy

Our strategy remains unchanged and Jeremy Helsby outlines his priorities in his Group Chief Executive (Designate’s) message.

Outlook

2008 will be a challenging year for the property industry worldwide. However, not all segments and geographies will be affected equally. With its broad range of services, its high quality staff and its geographic spread Savills is well placed to seize the opportunities.

The outlook for our UK and US Commercial Capital Markets businesses and our UK Residential and Mortgage Broking businesses, continues to depend on how quickly confidence returns to financial markets. Our Transactional businesses in Europe and Asia continue to be more resilient. Demand for our Consulting, Property Management and Fund Management services remains strong in all our markets across the world.

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