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Report and
Accounts
2015
Our vision
To advise private, institutional
and corporate clients seeking to
acquire, manage, lease, develop or
realise the value of prime residential
and commercial property in the
world’s key locations.
Group highlights
Revenue
£1,283.5m
(2014: £1,078.2m)
Statutory profit
after tax
£64.9m
(2014: £62.7m)
Geographical spread
(% non-uk)
56%
(2014: 53%)
Breadth of service
(% non-transactional
income)
52%
(2014: 54%)
Underlying profit*
£121.4m
(2014: £100.5m)
Operating cash
generation
£122.0m
(2014: £96.1m)
Underlying profit margin
Underlying earnings
per share
*
9.5%
(2014: 9.3%)
63.2p
(2014: 55.2p)
Property under
management (sq ft)
2.0bn
(2014: 2.1bn)
Assets under
management
€17.1bn
(2014: €7.2bn)
Underlying profit is calculated
by adjusting reported pre-tax
profit for profit/loss on
disposals, share-based
payment adjustment,
impairment and amortisation
of goodwill and intangible
assets (excluding software),
other impairments,
restructuring costs and
acquisition-related costs
(refer to Note 2 to the
financial statements).
Contents
Overview
Group overview
1
Strategic Report
Strategy
Chairman’s statement
Group Chief Executive’s review
Business model
Market overview
10
12
14
15
21 Resources and relationships
27
31 Viability Statement
32
Key performance indicators
Risks and uncertainties facing the business
Performance
Segmental reviews
Group Chief Financial Officer’s report
33
36
39
55
70
72
73
80
81
82
83
84
85
Governance
Corporate Governance Statement
Directors’ Remuneration report
Directors’ report
Directors’ responsibilities
Independent auditors’ report
Financial statements
Consolidated income statement
Consolidated statement of comprehensive income
Consolidated and Company statements of
financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated and Company statements of
cash flows
86 Notes to the financial statements
140 Shareholder information
Group overview
What we do
Savills is a global real estate services
provider listed on the London Stock
Exchange. We have an international
network of over 700 offices and
associates and over 30,000 staff
throughout the Americas, the UK,
Continental Europe, Asia Pacific,
Africa and the Middle East, offering
a broad range of specialist advisory,
management and transactional
services to clients all over the world.
Our services
Transactional
Advisory
Consultancy
The Transaction Advisory
business stream comprises
commercial, residential,
leisure and agricultural
leasing, tenant representation
and investment advice on
purchases and sales.
See page 33
Provision of a wide range of
professional property services
including valuation, building
and housing consultancy,
environmental consultancy,
landlord and tenant, rating,
development, planning,
strategic projects, corporate
services and research.
See page 34
Investment
Management
Investment management of
commercial and residential
property portfolios for
institutional, corporate or
private investors, on a pooled
or segregated account basis.
See page 35
Property and
Facilities
Management
Management of commercial,
residential, leisure and
agricultural property for
owners. Provision of a
comprehensive range of
services to occupiers of
property, ranging from
strategic advice through
project management to all
services relating to a property.
See page 35
Pages 2-9 are
examples of the
services we
provided to our
clients in 2015.
SAVILLS PLC REPORT AND ACCOUNTS 2015
1
Overview / Strategy / Performance / Governance / Financial statements
2
SAVILLS PLC REPORT AND ACCOUNTS 2015
How do you regenerate
one of London’s oldest
business areas into a
new residential and
cultural centre?
TELEVISION CENTRE
WOOD LANE, LONDON W12
Savills is marketing the residential scheme Television
Centre on behalf of developers, Stanhope and Mitsui
Fudosan. The scheme, part of the wider White City
regeneration, provides circa 950 homes in two
phases. It will also include 500,000 sq ft of office
space, operational December 2017, and three
television studies which will be live by early 2017.
and will be a combination of studios, one, two
and three bedroom apartments and penthouses.
Amenities include underground parking, residents’
lounge and private screening room, 24/7 concierge
service, fully equipped gym and pool. The
redevelopment will also include a new branch of
members’ club, Soho House, along with rooftop
pool, terrace and hotel.
Savills provided residential consultancy together
with sales and marketing expertise throughout the
planning process for this mixed use scheme. The
residential scheme has a GDV of circa £500 million
SAVILLS PLC REPORT AND ACCOUNTS 2015
3
Overview / Strategy / Performance / Governance / Financial statements How do you sell an
office property in
central Paris?
HERMÈS HEADQUARTERS
CENTRAL PARIS
Savills acted as the exclusive agent for the sale of
Hermès International’s headquarters in Paris, France,
on behalf of a private investor. The sale price was in
excess of €100m. The property is let entirely to
Hermès International under a nine-year lease. It was
restructured in 2006 and offers a total area of
5,848 sq m, distributed over a ground floor and
nine upper floors, with good natural light and
high-end finishes.
4
SAVILLS PLC REPORT AND ACCOUNTS 2015
SAVILLS PLC REPORT AND ACCOUNTS 2015
5
Overview / Strategy / Performance / Governance / Financial statements Where is the right
place to locate
my business?
CHINA LIFE INSURANCE
KOWLOON, HONG KONG
Savills secured the headquarters for China
Life Insurance – One HarbourGate, the whole
395,000 sq ft development, for the sale price
of HK$5.8bn, achieving the biggest en bloc
commercial transaction in Kowloon.
6
SAVILLS PLC REPORT AND ACCOUNTS 2015
SAVILLS PLC REPORT AND ACCOUNTS 2015
7
Overview / Strategy / Performance / Governance / Financial statements How do I procure
project management
services across the
Americas, EMEA and
Asia Pacific?
GLOBAL MANAGEMENT INFORMATION
SYSTEMS COMPANY
Leading global MIS company, providing healthcare
clients with end-to-end technology and information
solutions to measure and improve their performance.
Employing over 15,000 people across 100 countries.
Savills Studley was formally appointed in August 2015
as one of two Global Real Estate partners. We perform
the following services across the Americas, EMEA and
Asia Pacific:
– Global Project Management Office (‘PMO’) services
over Savills project assignments
– Local Project Management assignments as a
preferred provider
– Workplace Consulting (and Tenant Rep Brokerage
services on an opportunistic basis)
8
SAVILLS PLC REPORT AND ACCOUNTS 2015
The PMO services consists of a fully dedicated leader,
responsible for sourcing, on-boarding and supporting
local Savills project managers in the delivery of projects,
from real estate transaction feasibility analysis to
occupation. The PMO tracks project progress and
assists with issue resolution, reporting directly to the
Global Head of Real Estate.
Projects are typically commercial office fit-outs, moves
and changes and relocation, ranging from 5,000 to
100,000 sq ft. Annual project volume of approximately
80 projects with annual managed spend of c.US$80m.
Upon completion of the year 1 transition, Savills Studley
expects to manage 50-75% of that volume.
SAVILLS PLC REPORT AND ACCOUNTS 2015
9
Overview / Strategy / Performance / Governance / Financial statements Chairman’s statement
Successful implementation
of our US growth strategy,
the acquisitions of SEB Asset
Management in Europe and
Smiths Gore in the UK, and
improved business activity in
many of our key markets,
resulted in record revenue
and profits in 2015.
Peter Smith
Chairman
10
SAVILLS PLC REPORT AND ACCOUNTS 2015
Results
The Group’s underlying profit for the year increased by 21% to £121.4m
(2014: £100.5m), on revenue which improved by 19% to £1,283.5m
(2014: £1,078.2m). The Group’s statutory profit before tax increased
by 16% to £98.6m (2014: £84.7m).
Overview
With investors globally seeking secure income in a historically low interest
rate environment, the allocation to Real Estate in investment portfolios
has continued to grow. 2015 again demonstrated the importance of
Savills strengths in the prime markets of many of the world’s key cities.
Furthermore, the continued development of our US business, where
a number of complementary acquisitions were completed by Savills
Studley during the year, enhanced our position further in that market.
On 31 August, Savills Investment Management (formerly ‘Cordea Savills’)
completed the acquisition of SEB Asset Management AG, and as
a result of the acquired business completing a substantial one-off
transaction at the end of the year, our profits from Investment
Management activities increased substantially over the previous year.
Our Transaction Advisory revenue grew by 25%, our Consultancy revenue
by 6% and our Property Management revenue by 15%, boosted by
the acquisition of Smiths Gore in the UK. We enjoyed a strong year in
most of the commercial markets in which we operate including record
performances in the UK, US and Asia and a further improvement in profits
from our businesses in Continental Europe. Our Residential businesses
weathered changeable conditions in a number of the world’s prime
markets with UK revenue down by only 1% year on year. In Asia, the size
and stability of our Property Management business, strong performances
in China, Australia and Korea and significant market share gains in the
commercial capital markets business in Hong Kong, collectively helped
to mitigate the effect of subdued investment volumes in Hong Kong,
Singapore and mainland China.
In Continental Europe, improved market conditions benefited our
predominantly transaction orientated businesses with revenue increasing
by 10% (22% in constant currency) and profitability further improved.
Savills Investment Management, enhanced through the acquisition of
SEB Asset Management delivered a substantially improved performance
across its European platform increasing Assets Under Management
(‘AUM’) by 138% (to €17.1bn), revenue by 59% and profits by 148%.
The Group’s underlying profit margin increased to 9.5% from 9.3% in
2014, despite the negative effects of the slowdown in UK Residential
markets and the effect of business development expenditure in the US.
Considerable performance improvement in the broader UK market, the
substantial increase in profits from Investment Management together
with the profit improvement in Continental Europe were the principal
contributors to that increase.
Business development
Over the last 10 years the global real estate market has been
characterised by significant cross-border flows of capital and multi-
national occupier requirements. The property services industry has seen
a degree of consolidation as organisations have sought to rebalance
their portfolio of services, grow into new markets or take advantage
of weakness in the competition. During this period we have built the
business around our core strategy of servicing investor and occupier
requirements in the world’s key locations and maintaining a differentiated
position from the competition, based around the quality of our property
intelligence and the capability of our organisation to add value in both
the commercial and residential markets.
Savills strategy is to be a leading advisor in the key markets in which we
operate. Our global strategy is delivered locally by our experts on the
ground with flexibility to adapt quickly to changes in circumstances and
opportunities. They are supported by our regional and cross-border
investment and occupier service specialists. Over the last few years we
have acquired a number of complementary businesses and added
teams and individual hires to our strong core business. During 2015,
we continued to build on the 2014 acquisition of Savills Studley with a
number of transactions in the US and the acquisition of our first operation
in Canada. In Asia Pacific, we acquired a significant interest in our
first operation in Malaysia, a Residential business in Sydney and
established our first occupier focused business in India.
We also focused on building our longer term management businesses
with the acquisition of Smiths Gore, a long-established leading firm in
rural and estate management in the UK, property management
businesses in London and Singapore, and the SEB investment
management business based in Frankfurt and Singapore.
Board
On 26 January we announced that I would retire as Chairman at the
forthcoming Annual General Meeting in May and that Nicholas Ferguson
would succeed me. During this year we have reviewed the composition
of the Board and, in addition to Nicholas’ appointment, we have also
appointed Rupert Robson as non-executive Director and Chair of the
Remuneration Committee and, in succession to Martin Angle, Liz Hewitt
as Chair of the Audit Committee. Having served on the Board for 10
years, latterly as Senior Independent Director, Martin will also retire at the
conclusion of the AGM. I thank him for his enormous contribution over
the years and his particular support last year in respect of the Board
review process and Chairman succession.
Tim Freshwater will become Senior Independent Director on
Martin’s retirement.
Dividends
An initial interim dividend of 4.0p per share (2014: 3.75p) amounting to
£5.3m was paid on 12 October 2015, and a final ordinary dividend of
8.0p (2014: 7.25p) is recommended, making the ordinary dividend 12.0p
for the year (2014: 11.0p). In addition, a supplemental interim dividend of
14.0p (2014: 12p) is declared, based upon the underlying performance
of our Transaction Advisory business. Taken together, the ordinary and
supplemental dividends comprise an aggregate distribution for the
year of 26.0p per share, representing an increase of 13% on the 2014
aggregate dividend of 23.0p. The final ordinary dividend of 8.0p per
ordinary share will, subject to shareholders’ approval at the Annual
General Meeting on 11 May 2016, be paid alongside the supplemental
interim dividend of 14.0p per share on 16 May 2016 to shareholders
on the register at 15 April 2016.
People
I would like to express my thanks to all our staff worldwide for their hard
work, commitment and continued focus on client service, enabling the
Group to deliver this record performance in 2015. I retire knowing that
Savills is in very capable hands.
Outlook
We have made a good start to 2016 with a solid pipeline of business
carried over from last year in many markets, although the impact of global
macro-economic and political concerns on real estate markets worldwide is
uncertain. At this stage, we retain a cautious view on some Asian markets,
particularly the Tier 2 Chinese cities, and we expect the UK residential and
commercial investment markets to be subdued, for the former, as Stamp
Duty reforms take effect, and more generally in the run-up to the EU
referendum in June. However, the strength of our enlarged US operation,
the increased size of our Investment Management, Property Management
and Consultancy businesses and the breadth of our UK business together
with further improvement in Continental Europe, all bode well for the future
of your Company. Accordingly, the Board’s expectations for the year as a
whole remain unchanged.
Peter Smith
Chairman
SAVILLS PLC REPORT AND ACCOUNTS 2015
11
Overview / Strategy / Performance / Governance / Financial statements Group Chief Executive’s review
Profit growth in Continental
Europe, the further
development of our US
platform and the acquisitions
of Smiths Gore and SEB Asset
Management, continued
investment in quality
recruitment, together with our
core strengths in the UK and
Asia, enabled the power of the
Savills network and brand to
deliver record results in 2015.
Jeremy Helsby
Group Chief Executive
12
SAVILLS PLC REPORT AND ACCOUNTS 2015
Our strategy
Our strategy is to deliver value as a leading adviser to private,
institutional and corporate clients seeking to occupy, acquire,
manage, lease, develop or realise the value of prime residential
and commercial property in the world’s key locations. The key
components of our business strategy are as follows:
1. Commitment to clients – we aim to deliver the highest standards
of client service through motivated and high calibre people
2. Business diversification
3. Geographical diversification
4. Maintain financial strength
5. Strength in both prime residential and commercial property
Key operating highlights
The strength of our key commercial market positions and the
resilience of our residential businesses underpinned an improved
performance for Savills in 2015.
– Transaction Advisory revenues up 25% driven by the contribution
from Savills Studley in the US, continued recovery in Continental
European markets, market share gains in Asia and a strong
performance in the UK
– Record revenue in the UK on the back of continued strength of
commercial markets despite weaker Residential performance
– Growth in profits in Continental Europe following improved
market conditions and the benefit of management actions
taken in recent years
– Further growth from non-transactional services with Consultancy
revenue up 6% and Property Management revenue up 15%, with
the UK acquisition of Smiths Gore contributing to this increase
– Savills Investment Management more than doubled profits and
AUM with the acquisition of SEB Asset Management
As anticipated, we experienced quieter market conditions in certain
markets worldwide including Singapore, Taiwan, Japan and Tier 2
cities in China, but improved trading conditions in markets elsewhere
including Australia, Tier 1 Chinese cities, Vietnam and Korea which
together with the effect of increased market share in Hong Kong,
counter-balanced the shortfall.
The US business, enhanced by a number of bolt-on acquisitions
by Savills Studley, delivered good growth. Savills Investment
Management (formerly ‘Cordea Savills’) achieved a significant
change in scale with the acquisition in Germany of SEB Asset
Management in August 2015. This was reflected in underlying profit
growth of over 145% and AUM growing to €17.1bn (2014: €7.2bn).
Continued recovery in Continental Europe saw the business increase
profits substantially.
Overall the Group increased underlying profit by 21% to £121.4m
(2014: £100.5m).
On a statutory basis, profit before tax increased 16% to £98.6m
(2014: £84.7m).
Savills geographic and business diversity were key to achieving the
year’s result. Our performance analysed by region was as follows:
Revenue £m
2015
560.1
401.1
2014
502.4
355.0
%
growth
11
13
Underlying profit/(loss) £m
%
growth
10
(1)
2015
71.7
34.2
2014
65.1
34.7
129.8
192.5
n/a
108.5
112.3
n/a
1,283.5 1,078.2
20
71
n/a
19
2.0
8.9
12.4
18.8
(13.7)
(12.2)
121.4 100.5
345
52
11
21
UK
Asia Pacific
Continental
Europe
United States
Unallocated cost
Total
Excluding the acquisitions of Smiths Gore and SEB Asset
Management and assuming a full year comparative for Studley in the
US, Group revenue grew by 10% year on year. Our Asia Pacific
business represented 31% of Group revenue (2014: 33%) and our
overseas businesses as a whole represented 56% of Group revenue
(2014: 53%). Our US business represented 15% of Group Revenue
(2014: 10%). Our performance by service line is set out below:
Revenue £m
2015
2014
%
growth
Underlying profit/(loss) £m
%
growth
2015
2014
Transaction
Advisory
Property
Management
Consultancy
Investment
Management
Unallocated cost
Total
618.0
494.6
390.7
230.3
338.6
217.0
44.5
n/a
28.0
n/a
1,283.5 1,078.2
25
15
6
59
n/a
19
76.9
67.8
21.1
24.7
18.6
23.4
4.4
10.9
(13.7)
(12.2)
121.4 100.5
13
13
6
148
11
21
Overall our Commercial and Residential Transaction business
revenues together represented 48% of Group revenue (2014: 46%).
Of this, the Residential Transaction Advisory business represented 12%
of Group revenue for the year (2014: 14%). Our Property and Facilities
Management businesses continued to perform well, growing overall
revenue by 15% driven by the acquisition of Smiths Gore in the UK and
strengthened performances in Asia Pacific and Continental Europe.
The business remained essentially constant as a proportion of Group
revenue at 30% (2014: 31%). Our Consultancy businesses represented
18% of revenue (2014: 20%) where a strong UK performance was
counter-balanced by a reduction in activity in Continental Europe. The
Investment Management business, strengthened by the acquisition
of SEB Asset Management in August 2015, achieved substantial
growth in revenue and profit, to represent 3.5% of revenue (2014: 2.6%).
People
I am delighted that the UK business won the Industrial Agency of the
Year award. Savills was named the Property Industry Superbrand of the
Year for the eighth consecutive year and we were awarded the Times
Graduate Employer of Choice in the property industry for the ninth
year running. Also in the UK our Residential business was awarded
UK Sales Agency and Residential Consultancy Practice of the year.
Savills Ireland was named ‘Commercial Property Agency of the Year’
at the Irish inaugural Property Industry Excellence Awards, and in
Asia, we won Best Real Estate Agency in China and Vietnam. These
awards are a testament to the strength of our people and as always I
thank them for their continued commitment, loyalty and hard work.
I would also like to pay particular tribute to Peter Smith, who will retire as
Chairman at the forthcoming AGM. I thank him for his tireless service
to the development of Savills over the course of his chairmanship and
for his wise counsel and support to me as CEO over the last eight years.
SAVILLS PLC REPORT AND ACCOUNTS 2015
13
Overview / Strategy / Performance / Governance / Financial statements
Group Chief Executive’s review
continued
BUSINESS MODEL
A global network
of connected people
Market intelligence and
local knowledge
Brand
Our people, our clients
and relationships
Reputation
A diverse and
coherent offer
Advisory, management
and transactional
services
Strong cash
generation
Financial discipline,
risk mitigation and
strong governance
Sustainable growth and
shareholder value
Our business model above illustrates in simple terms how we
create shareholder value through improving the strength of our
premium brand, and through the delivery of profits and dividends
to shareholders. We treat every client as an individual and take time
to understand what they need and how we can best service them.
We do this by:
Delivering value
We aim to deliver consistently high quality, client-focused real estate
advisory services, offering a broad range of specialist advisory,
management and transactional services in the key global markets in
which we operate. We deliver these services through the continuous
improvement in our capabilities, which creates opportunity and
progressively enhances our service offering in our chosen markets.
Approximately 48% of our revenue is generated by Transaction
advisory fees; the remainder comes from non-transactional business
by way of fees for Property and Facilities Management and
Consultancy services and the remainder from Investment
Management fees.
A diverse, coherent offer
We actively diversify from a business and geographic perspective
with the aim of mitigating the risk of exposure to any one economy
or market. We have cultivated a diverse client base drawn from
local businesses, private individuals, global blue-chip investors and
occupiers, national and local government and health authorities.
We have built and maintained our position as a leading player in
both the prime residential and prime commercial real estate markets
in the world’s leading cities, aligning with the global trend amongst
private and institutional investors to recognise both types of real
estate as an investment asset class.
This also supports our ability to advise on all aspects of multi-use
development schemes worldwide. We recognise that real estate
transaction markets are cyclical, so we seek to provide a combination
of services, in part to mitigate transactional volatility with less cyclical
offerings. This is combined with our ongoing drive for operational
efficiency and margin improvement and the maintenance of a
prudent capital structure to enable us better to withstand the overall
cyclicality of our core transactional markets.
Our culture, people and relationships
We have built our brand and reputation on the quality of our people,
relationships, resources and processes. Savills has a strong and well
embedded culture, founded on an entrepreneurial approach and
underpinned by our values and operational standards. All that we do
is underpinned by strong governance, a disciplined approach to risk
management and high standards of responsibility, which supports
the sustainable development of our business. More detail of our
governance structure, policies and practices can be found later
in this Annual Report on pages 39 to 54.
We are committed to delivering a high quality service and creating
long-term relationships with our clients. Because of our personal
approach to business, our people are fundamental to our business
and we encourage an open and supportive culture in which every
individual is respected. We strive to provide an environment in which
our people can flourish and succeed. This allows us to recruit,
motivate and retain talented people and build on our status as
an employer of choice. We work hard to ensure that our people
enjoy working at Savills promoting their personal and professional
development. We encourage them to develop their careers within
the Group, nurturing the entrepreneurs and leaders of the future
to share in the success of the business.
We firmly believe that our people are key to delivering excellent
service to our clients and achieving our objectives, they give us a
unique perspective of the markets in which we operate and connect
our clients with real estate opportunities and market intelligence.
To be the real estate adviser of choice in our markets, and deliver
superior financial performance, we aim to employ people of the
highest quality supporting the delivery of the highest standards
of client service. By choosing Savills, our clients have access to
over 30,000 staff with a broad range of experience, skills and local
knowledge, based in offices in key real estate locations across the
globe and benefit from our extensive market research material.
14
SAVILLS PLC REPORT AND ACCOUNTS 2015
Market overview
Our markets
United Kingdom
Revenue
£560.1m
(2014: £502.4m)
Total staff
4,588
(2014: 3,962)
Offices
129
(2014: 104)
Asia Pacific
Revenue
£401.1m
(2014: £355.0m)
Total staff
24,597
(2014: 22,669)
Offices
59
(2014: 47)
Europe
Revenue
£129.8m
(2014: £108.5m)
United States
Revenue
£192.5m
(2014: £112.3m)
Total staff
931
(2014: 831)
Offices
34
(2014: 30)
Total staff
580
(2014: 364)
Offices
27
(2014: 26)
We estimate that the value of
all developed real estate in the
world amounts to approximately
US$217tn. This covers retail
property, offices, industrial, hotels,
residential, other commercial
uses, and agricultural land. Some
US$72.5tn of global commercial
and residential real estate is
readily investible at scale.
Global property value in 2015
amounted to 2.7 times the world’s
GDP and represents an important
store of national, corporate and
individual wealth. The value of
global real estate exceeds, by
almost a third, the total value of
all globally traded equities and
securitised debt instruments
combined. This highlights the
important role it plays in
economies worldwide.
The dominance of real estate
in Western economies is most
noticeable in commercial markets,
where nearly half of the total asset
value resides in North America
and over a quarter in Europe. Asia
and Australasia contain 22% of
commercial asset value, with the
remaining 5% in South America,
the Middle East and Africa.
Highlights from key markets in which we operate, chosen to
give context to our business model and corporate strategy are
on pages 16 to 20.
SAVILLS PLC REPORT AND ACCOUNTS 2015
15
Overview / Strategy / Performance / Governance / Financial statements Market overview
continued
The Leadenhall Building
Savills has advised MS Amlin, Fidelis and Brit
on leasing a collective total of 170,000 sq ft at
The Leadenhall Building in the City of London,
which represents approximately 30% of the
entire building.
UK
Total investment in UK commercial
property in 2015
£70bn
– a record total
Non-domestic investment in
commercial property outside London
£15.5bn
– the highest ever level
16
SAVILLS PLC REPORT AND ACCOUNTS 2015
2015 was another strong year for the
UK commercial property markets, with
improving levels of leasing and investment
activity across all sectors in the UK.
Central London continued to perform well,
with leasing volumes in the City and West
End ahead of long-term average levels,
though not quite at the record levels seen
earlier in the recovery period of this cycle.
The volume of investment into central
London offices in 2015 was also well above
average at just under £19bn, though this
was down on the record high levels of
activity seen in 2013 and 2014.
The notable change in the UK commercial
markets in 2015 was the rise in occupational
activity and investor demand for markets
outside London. Recovering local economies
drove a 16% increase in office leasing activity
in the key regional office markets. This,
combined with falling vacancies and rising
rents, lead to an increase in investor interest
in markets outside London, and we
estimate that 45% of the £70bn invested in
commercial real estate in 2015 was outside
Greater London. Of particular note is the
rise in non-domestic investor interest in
the markets outside London, which
reached its highest ever level in 2015.
Following a prolonged period of strong
performance the prime residential markets
faced a number of headwinds in 2015. While
the threat of a mansion tax was removed,
the uncertainty surrounding it prior to the
General Election in May suppressed market
activity in the first half of the year. This was
compounded by the higher rates of stamp
duty introduced for high value properties in
the 2014 Autumn Statement, which caused
the market to remain price sensitive even in
the post election period. This particularly
affected the higher value residential markets
of prime central London, where values fell by
3.4% over the course of the year. By contrast
prices across the remainder of the prime
London market rose by 2.3%, supported in
particular by growth in the lower tiers of the
prime market. Outside of London values
also increased by a modest 2.4%, with
prime property in high value town and
city locations performing the most
strongly, supported by demand coming
out of the capital.
Cannon Hall, Hampstead
This magnificent Grade II* listed house is one of
the finest homes in Hampstead Village. Arranged
over three floors and dating back to 1730, it enjoys
a generous garden setting and is of architectural
and historical interest. It was the childhood home
of celebrated writer Daphne du Maurier and used
as a key location for the 1965 thriller, Bunny Lake
is Missing, starring Laurence Olivier. Sold in mid
2015, Cannon Hall was guided at £28 million.
Despite turbulence in the global
economy, the US has maintained its
moderate growth in 2015.
Harman
2015 was a great year for the ever expanding
relationship between Savills and Harman.
Six separate transactions were concluded across
the EMEA and APAC regions through the Savills
Studley global relationship manager, Steve
Walbridge, from Hungary to Singapore and Tel
Aviv to the Netherlands. 2016 looks set to continue
to build on this fantastic track record with three
opportunities already secured in France and
Mexico with more on the horizon, which further
demonstrates that a tenant rep relationship built
on a track record of success and trust leads to
referral business within the wider Savills network.
Open Table
Following an introduction from Savills Studley,
the London tenant rep team pitched and were
successful in securing an instruction to source a
15,000 sq ft loft style space with high technical
infrastructures for Open Table. The team
subsequently delivered by securing a pre-let
option in the only building meeting the technical
criteria required with advantageous commercial
terms agreed against significant competition for
the space.
United States
Hiring activity accelerated in the last several
months, supporting steady leasing activity
in many ‘late recovery’ markets such as
Atlanta, Chicago and Los Angeles. Demand
for the highest-quality space has been
strong. Landlords are breaching rent
thresholds that were previously considered
unthinkable in Atlanta, Denver and Raleigh/
Durham’s highest-calibre properties.
US office sales volume rose for the sixth
consecutive year, totalling $145.8bn. Volatility
in global equity markets, China’s hard landing
and improving fundamentals have enhanced
the appeal of assets in the US Foreign
institutional investors continue to focus much
of their attention on prime properties in
Manhattan, Boston and San Francisco, but
some domestic investors feel that pricing has
peaked in these gateway markets. A few have
cashed out in these metros and re-deployed
some of their gains in Atlanta, Chicago and
Denver. Investors seeking higher yields will
have to take a chance on more peripheral
locations, buy and improve lower-grade
assets or undertake lengthy development/
conversion projects.
US Office Sales Volume
National Overall Rental Rate
Regions
$145.8bn
$32.37
5
1
8
2
7
4
6
3
Manhattan Office Sales Volume
National Overall Availability Rate
$26.9bn
17.0% 1 New York
2 Chicago
3 Houston
4 Los Angeles
5 New Jersey
6 Orange County
7 San Francisco
8 Washington
SAVILLS PLC REPORT AND ACCOUNTS 2015
17
Overview / Strategy / Performance / Governance / Financial statements Market overview
continued
Shanghai Landmark Centre, Shanghai
Savills provided joint sole leasing agent for
Shanghai Landmark Centre with total GFA of
110,000 sq m. It is the highest office building
in Shanghai North Bund.
Asian real estate has enjoyed a strong run
over recent years, fuelled by cheap debt and
ample liquidity flooding out of local markets,
China in particular.
While value from core assets in first tier cities
appears to have been mined as cap rates
have ground lower, opportunistic plays
remain in some sectors and geographies for
investors prepared to push further up the risk
curve. In the last quarter of 2015, we were
finally able to put US interest rate concerns
behind us as the Fed increased the base rate
with little immediate fall out. Uncertainties
surrounding China’s economy have come
to dominate concerns, however, not just for
the impact this may have on the domestic
situation, but also on trading partners.
The dangers of rising rates have not
disappeared, and we expect to see further
(though modest) rises later in 2016 with
implications for debt of all kinds. For now,
with the exception of Japan and Australia
where volumes remain robust, capital
outflows from Asia are the new norm and
China’s outbound real estate capital (both
to Asia and the West) hit new highs in 2015.
In an uncertain world, the US has assumed
a primacy in terms of global destination of
choice for Asian investors, especially safe
haven gateway cities such as New York,
Los Angeles, San Francisco and Chicago.
2015 Top 5 Cross-border Capital Inflow to Asia Pacific*
2015 Top 5 Cross-border Capital Outflow from Asia Pacific*
Country
Japan
Australia
China
India
Hong Kong
US$ million
Country
US$ million
5,117
Singapore
4,578
China
1,781
South Korea
1,432
Hong Kong
1,303
Taiwan
19,618
17,217
5,407
4,866
2,319
Asia Pacific
Regions
*
Based on independent reports of properties and
portfolios, $2.5m or greater.
1 China
2 Japan
3 South Korea
4 Taiwan
5 Thailand
6 Vietnam
India
7
8
Indonesia
9 Malaysia
10 Myanmar
11 Philippines
3
2
1
4
11
10
7
5
9
6
8
18
SAVILLS PLC REPORT AND ACCOUNTS 2015
In 2015 office demand strengthened slowly
fuelled by business expansion. In most
European countries development activity
remained subdued, hence the average
vacancy rate has been falling consistently
since 2010 and reached a low last year.
This means that in many European CBD
locations high quality office space remained
under supply pulling rents upwards and
pushing incentives down. Since good quality
space is becoming more expensive in many
European cities occupiers are looking
beyond the CBD, where rents are lower but
are increasing faster than in CBD locations.
Commercial real estate remains one of
the best places for investors to earn decent
yield. In 2015 the total volume invested in
commercial properties totalled nearly
€245bn which is 22% higher than the
previous year.
The UK, France and Germany remained
the dominant destinations for real estate
investment although their collective share of
investment volume decreased slightly from
71% in 2014 to 65% in 2015. More than half
of the turnover originated from overseas, up
from 42% last year, of which 70% is directed
into two countries: the UK and Germany.
The share of regional investment continues
to expand in most cases thanks to portfolio
deals. Some retailers are looking to unload
real estate to invest back into their core
business. Thus, 2015 has witnessed the
sale of numerous retail portfolios, some
pan-European. Demand for logistics space
strengthened, backed by increasing retail
needs. Since capital values are above their
long-term average and quality assets are
becoming rare some investors look beyond
the traditional commercial sectors to achieve
the desired returns. Last year investments
outside the traditional commercial sectors
were about a quarter of the total activity.
The average prime office CBD yield moved
in by 52 basis points year on year and
currently stands at 4.36%. Yield gaps are
slowly closing, between core and peripheral
countries, between capital and regional
cities, between A and B locations and
between assets classes.
Ellipse building, Belgium
Savills acted on the acquisition of the Ellipse office
building in Brussels for €215m on behalf of the
Taiwanese insurer, Fubon. Based in Espace Nord
in Belgium’s capital city, the 21-storey building
(comprising 53,209 sq m) was developed by
AG Insurance in 2006 and is currently 99% let
to two public tenants.
Europe
Regions
10
8
7
3
1
2
4
6
5
9
1 Brussels
2 Paris
3 Frankfurt
4 Munich
5 Dublin
6 Milan
7 Amsterdam
8 Warsaw
9 Madrid
10 Stockholm
SAVILLS PLC REPORT AND ACCOUNTS 2015
19
Overview / Strategy / Performance / Governance / Financial statements
Market overview
continued
According to preliminary data from
Real Capital Analytics, global real
estate investment volumes rose to
around £580bn (€790bn/US$889bn)
in 2015 – a record high.
Global cross-border acquisition activity
surged more than 30% to account for nearly
a third of the total; London remained the top
market destination.
According to Preqin, 175 private equity
real estate funds raised total capital of
US$105.4bn in 2015. While this was the
lowest number of funds since 2004, they
raised significant amounts of capital, with the
average amount of capital raised the highest
in Preqin’s 16 years of history. Preqin reports
that 489 private equity real estate funds are
currently in the market. The most prevalent
type of fund in the market is value-added
(186 funds), followed by opportunistic
(140 funds) and, at some distance, debt
(57 funds). The US accounts for 282 of the
private equity real estate funds currently in
the market, compared to 99 in Europe and
108 in Asia and the Rest of the World.
Weight of money and improving occupier
market fundamentals continued to drive yields
further down, and capital values upwards.
Although many investors were still focused
on prime assets, they increasingly moved up
the risk curve into second-tier locations and,
in some markets, more opportunistic stock.
This was partly due to intense competition
for assets and yield compression in prime
markets, but also due to broadening and
strengthening property market fundamentals.
Global investment activity
£575bn
up 13% (in GBP terms)
The Charities Property Fund passed the £1bn
milestone in 2015, strengthening its position as
the largest charity specific property fund in the
UK. The Fund has outperformed the IPD/AREF All
Balanced Property Funds Index for eight years in a
row, with a total return of 16.1%, and has delivered
5.6% net income over the past five years – distributing
£45m in the last 12 months alone. The ninth largest
UK Charity fund by assets, it has 1,795 investors
and has added over £500m of equity since 2013.
Investment
Management
Number of private equity real estate
funds raising capital in 2015
Average amount of capital raised by
private equity real estate funds in 2015
Global cross-border activity
175
$624m
31%
– lowest number since 2004
– highest amount in Preqin’s 16 years
increase (in GBP terms)
of history
20
SAVILLS PLC REPORT AND ACCOUNTS 2015
Resources and relationships
KEY HIGHLIGHTS IN 2015
PEOPLE
CLIENTS
ENVIRONMENT
COMMUNITY
We:
– Rebranded and further
developed our training
programme, and launched
our Future Leaders
programme in the US.
– Participated in the UK
Best Companies to Work
for Employment
Engagement survey.
– Launched the Diversity
Group in the UK,
supporting Changing the
Face of Property group
and investing in the Savills
in Schools initiative.
We:
– Maintained our commitment
to delivering the high quality
services expected by our
clients and demanded by our
business by building on the
strength of our existing
cross-border and intra-
regional service capacity, by
sharing best practice and
experiences and by listening
to client feedback.
– Continuously improved our
client service by promoting
our client advocate roles and
expanding our client care
programme.
We:
– Established the Savills Global
Sustainability Group.
– Trained 600 staff in
sustainability issues
across the business.
– Further expanded the number
of our offices within the scope
of our global greenhouse gas
emissions reporting into our
environmental processes.
– Introduced third party
verification as part of our global
greenhouse gas emission
reporting.
We:
– Retained our membership of
FTSE4Good, evidencing our
commitment to meeting
globally recognised
corporate responsibility
standards.
OUR BUSINESS PHILOSOPHY
PRIDE IN EVERYTHING
WE DO
TAKE AN ENTREPRENEURIAL
APPROACH TO BUSINESS
HELP OUR PEOPLE FULFIL
THEIR TRUE POTENTIAL
ALWAYS ACT WITH
INTEGRITY
We:
– Take great pride in
delivering the highest
quality service.
– Go the extra mile.
– Seek to employ only
the best people.
– Enjoy what we do.
We:
– Seek out new markets and
opportunities for clients.
– Take a creative and
entrepreneurial approach
to delivering value.
– Are forward thinking, and
always aim to build long-term
client relationships.
– Aim to be a leader in every
market we enter.
We:
– Encourage an open and
supportive culture in which
every individual is respected.
We:
– Behave responsibly.
– Act with honesty and
respect for other people.
– Help our people to excel
– Adhere to the highest
standards of professional
ethics.
through appropriate training
and development.
– Share success and reward
achievement.
– Recognise that our people’s
diverse strengths combined
with good teamwork produce
the best results.
– Believe that a rewarding
workplace inspires and
motivates.
– Strive to provide an
environment in which our
people can flourish and
succeed – this allows us to
recruit, motivate and retain
talented people and build on our
status as an employer of choice.
– Engage with our people to
communicate our vision and
strategy through well
established internal channels.
SAVILLS PLC REPORT AND ACCOUNTS 2015
21
Overview / Strategy / Performance / Governance / Financial statements People
Throughout this Report we refer to the importance of our people. They
are key to our continued success. It is our vision to be the real estate
adviser of choice in our selected markets and deliver superior financial
performance and this can only be achieved through the dedication,
commitment and excellence of our people.
Savills is committed to providing employment on an equal basis
irrespective of gender, sexual orientation, marital or civil partner status,
gender reassignment, race, nationality, ethnic or national origin, religion
or belief, disability or age. We support the Core Conventions of the
International Labour Organization.
Our people strategy remains focused on supporting delivery of the
highest standards of client service through motivated and engaged
people. We believe that a positive culture is essential to high quality client
service. This positive culture is encapsulated in our business philosophy
and our values. Our reputation has been built on our people and we
believe that staff whose behaviours reflect in our business philosophy
deliver the excellent client service that we strive to provide. Our business
philosophy also captures our commitment to ethical, professional and
responsible conduct and our entrepreneurial value-enhancing approach.
The following sections highlight our progress in the key areas behind our
people strategy.
Increasing employee engagement
In 2015 we asked our employees in the UK to participate in the Best
Companies to Work for Employee Engagement survey, a people survey
which allows us to measure and compare ourselves against other large
organisations and helps to identify ways to improve how we do things.
Over 400 companies and 540,000 employees participated. We have
been recognised as reaching ‘One Star Status’, demonstrating our
commitment to progressive and engaging employment practices.
This year, we have focused on the areas highlighted for improvement
and we intend to repeat the Best Companies Survey in 2016.
Developing our people for the long term
We want people to grow their careers at Savills and develop the skills
and talent needed to grow our business. We firmly believe in the value
of developing future talent from within the Group and the wider business
community and we are working hard to help nurture the entrepreneurs
and leaders of the future.
We continue to invest significantly in the development of all our people,
for whom we recognise that career development and progression is
very important. In the UK, we rebranded and restructured our training
programme. We invested in a dedicated Training Suite at our City office
and achieved our first award for our flagship course, Savills Raising the
Bar. During the year, we also expanded our leadership programme to
our European businesses.
Resources and relationships
continued
The FTSE Group confirms that Savills plc has been
independently assessed according to the FTSE4Good
criteria, and has satisfied the requirements to remain
a constituent of the FTSE4Good Index Series.
Created by the global index company FTSE Group,
FTSE4Good is an equity index series that is designed
to facilitate investment in companies that meet
globally recognised corporate responsibility
standards. Companies in the FTSE4Good Index
Series have met stringent environmental, social and
governance criteria, and are positioned to capitalise
on the benefits of responsible business practice.
BREEAM is a registered trademark of BRE (the
Building Research Establishment Ltd. Community
Trade Mark E5778551). The BREEAM marks,
logos and symbols are the Copyright of BRE
and are reproduced by permission.
Corporate responsibility at Savills
Corporate responsibility (‘CR’) is our commitment to the positive impact
that our business can make, through our people, to our stakeholders
and the communities in which we live and work.
Overall responsibility for our CR programme sits with the Group
Chief Executive and the Board. CR strategy is overseen by our CR
Steering Group, comprising senior representatives from a range
of businesses and central teams. CR strategy is implemented and
delivered at country level across the four areas of CR which we
believe are key to the success of our business and where we believe
we can make the most difference: People, Clients, Environment and
Community. By focusing on these key areas we give our businesses
the freedom to adapt quickly and to respond at local level to new
opportunities in the markets in which they operate. The Board receives
annual and ad hoc updates on CR activities and progress. To ensure
that we can readily identify emerging issues and respond to them on
a timely basis, we continue to include the consideration of CR-related
issues in our Key Risk Registers.
Policy
Savills is committed to being a good corporate citizen in all aspects
of its operations and activities. The Company, therefore, holds itself
accountable for its social, environmental and economic impacts on the
people and places where it does business. We endeavour to manage
these impacts in a responsible and sustainable manner. To fulfil this
aim the Group actively embraces a range of policies and practices
that aim to foster a positive approach towards corporate responsibility
as an integral part of our day to day activities.
Our CR policy focuses on those key areas where we believe we
can make a difference. All of our businesses are expected to
comply with local legal standards as an absolute minimum, while
our established global framework provides the flexibility required to
have meaning and impact at local level. At Savills, we learn through
experience and we actively encourage our businesses to share their
experiences and develop best practice to ensure that we continue
to improve as an organisation.
22
SAVILLS PLC REPORT AND ACCOUNTS 2015
We now deliver training and development in all areas including
management and leadership, client and business skills and professional
and technical skills. We recognise that personal development occurs
in many ways and we encourage all our staff to attend conferences,
internal events, and participate in projects to supplement their
Continuous Professional Development (‘CPD’). The format of our training
varies from one-hour masterclasses, webinars, video content, to two-day
pitching courses and management and leadership workshops. We
encourage and support all our staff to complete their CPD and all our
internal courses/programmes have CPD points associated with them.
All of this is supported by a dedicated training team, who offer individual
career development advice and a dedicated page on the Company
intranet which pulls together all the information our people need to plan
their personal development. We are progressively extending this
programme across our regional businesses in Asia and the US, tailoring
it as appropriate to best meet local requirements. In the US, we are
committed to implementing a Young Leaders Programme, adopting a
similar format to that of the UK.
We believe that creating an inclusive and diverse culture supports
the attraction and retention of talented people and supports effective
performance. We respect our people for who they are, their knowledge,
skills and experience as individuals and as valued members of the Savills
team. We work together to bring out the best in each other and to sustain
the strong working relationship ethic that has nurtured our ‘can do’
attitude. As at 31 December 2015 our total global workforce of 30,692
colleagues comprised 16,262 males and 14,430 females. Of these, 179
were senior executives (166 males, 13 females) comprising members of
the Group Executive Board and Board members of the corporate entities
whose financial information is incorporated in the Group’s 2015
consolidated accounts in this Annual Report. The Company’s Board
of Directors comprised seven members, six males and one female.
Historically ours has been an industry which has struggled to recruit a
high percentage of female graduates and we are encouraged that our
graduate recruitment programme is helping to redress the balance at
Savills where we have a 50/50 male to female ratio of graduates at entry.
Savills passionately believe that its graduates are the future leaders.
Our graduates are given responsibility from the day they join the
business, in teams who highly value their contribution, allowing them to
be involved in some of the world’s most high-profile property deals and
developments. Graduates are surrounded by experienced professionals
and team members from whom they can seek advice and learn.
Individual achievement is rewarded and Savills look for graduates
with entrepreneurial flair. In the UK Savills were proud to be named
The Times Graduate Employer of choice for Property for the 9th year
in a row and we continue to see a record number of applicants for this,
and our student summer scheme and work placement programmes.
Our summer scheme also ranked number 11 in the UK in the Rate
My Placement awards up from 32nd place in 2014.
We continue to work with some of our UK industry peers, the
Changing the Face of Property (‘CTFOP’ group), on initiatives such
as an apprenticeship programme to offer jobs to school leavers
and other junior candidates without a university education.
Valuing diversity
Savills is a global company and across all parts of our business we
look to create an inclusive culture in which difference is accepted
and valued. We believe that our ‘inclusive’ approach gives us a
competitive advantage and underpins the success of our business
by giving us the ability to select our employees from the highest
quality individuals in the widest available pool of talent.
Our employees come from a wide range of backgrounds and have
a diverse range of skills and experience. We have created a culture
in which those skills, experience and perspectives are nurtured
and encouraged.
At Savills, we have long realised that our reputation as a quality
global real estate provider of choice is built on our people and
that they are fundamental to the success of the business.
Prior to any new appointment consideration is given to diversity in its
broadest sense, with a view to appointing the best placed candidate
for the role.
This year we launched a Diversity Group in the UK. The objective is
to highlight the diversity of our business and ensure that we are
communicating clearly and effectively about our people and our clients.
Initiatives which the Diversity Group have launched this year include:
Savills with Schools
Our current graduates attend
a local state secondary school
to deliver presentations about
careers in property. This
highlights the variety of roles
in Real Estate as well as
opportunities for students to
engage on an individual basis.
Apprenticeships
We launched a Surveying
Apprenticeship in 2015.
Five apprentices joined in 2015
and will work in Surveying
teams in technician roles whilst
they study one day a week via
distance learning. After six
years in the business they will
gain their BSc in Real Estate
and their full MRICS status.
2016 will see us hire 15 more
apprentices for the programme.
Careers in Property
Savills Graduate team collate
a guide to the Real Estate
industry, looking at careers in
the industry from governing
bodies, educational institutions
and employers to provide
candidates with a
comprehensive guide to joining
the industry. This is currently
shared with all UK university
careers services in the UK.
Changing the Face of
Property (CTFOP)
We continue to be a member of
the CTFOP group, a collaboration
of employers, governing bodies
and education providers who
work together to raise awareness
of the industry, and drive equality.
During 2015 we attended Skills
London as well a number of
career fairs, and supported the
Trailblazer Apprenticeship
scheme with RICS.
SAVILLS PLC REPORT AND ACCOUNTS 2015
23
Overview / Strategy / Performance / Governance / Financial statements Resources and relationships
continued
Building a diverse and inclusive culture
Our aim is to have a workforce that is representative of the countries
and the communities in which we live and work and we will continue
to endeavour to improve the representation of women at Board and
senior levels within the organisation and to sustain an inclusive
culture in which all talent can thrive.
As an organisation committed to diversity in its workforce, we will
continue to strengthen our policies, processes and practices to
develop our diversity and inclusion plans within the Group’s markets
and geographies, in alignment with our corporate goals.
Ethical commitment
Savills is committed to doing business legally and ethically wherever
it operates. Savills Ethical Trading Policy is detailed in our Group
Code of Conduct which is readily accessible in local languages to
all staff to support their day to day decision making. We continue
to maintain our focus on ensuring that our people worldwide work
within our specified financial, operational and compliance framework
and that these standards are consistently applied. We demand the
highest professional standards from all of our people all of the time
and have a zero tolerance to breaches. However, given the breadth
of activities and the number of people we employ there may be
occasions when we do not meet the high standards we aspire to.
Where we fail to reach these high standards, we treat any breach
with the utmost seriousness.
Human Rights
At Savills we recognise our responsibility as a global corporate
citizen and we consider the concerns of the wider communities
where we conduct our business.
We are committed to doing the right thing in the right way and this is
reflected in the Savills Code of Conduct. The Code, which underpins
our social, ethical and environmental commitments, clearly sets out
the standards of behaviour that we expect our employees to
demonstrate and adhere to in their day to day working life at Savills.
As an absolute minimum, our employee policies comply with local
legislation in the jurisdictions in which we operate. We fully support the
principles of UN Global Compact, the UN Declaration of Human Rights
and the International Labour Organization’s (ILO) Core Conventions.
Any breaches of our Code of Conduct may be reported in
accordance with the Company’s whistle-blowing procedure.
Clients
Client care
We are committed to delivering a high quality service and creating
long-term partnerships with all our clients. To do this we place great
importance on delivering exceptional client service over the longer
term through building sustained relationships and ensuring that the
Savills client experience is second to none.
Client review meetings are a vital part of our approach to client care
and we invest in an independent client review programme to focus on
how well we are doing in the way we plan and execute the services we
provide, how well we communicate and what additional value we give
our clients. This provides an important independent rating of the
standard of our client service which is reviewed regularly and used to
refine service delivery. Savills top clients have a dedicated client
relationship lead (Client Advocate) whose core responsibility is to act
as a focal point for client servicing enquiries, and in particular to allow
any service issues on current instructions to be quickly identified and
addressed. These client advocates also play a key role in reviewing our
performance with the client in tandem with the client research
programme to ensure that we understand where we have met or
exceeded expectations and those areas in which we can do better.
Ultimately this ensures that we have awareness of our clients’ real
estate plans so that we can make the appropriate resources available.
Our client advocates are supported by a client management system
which consolidates client data into readily accessible client intelligence
reports. To complement this initiative we recognise that there are
clients that benefit from a full Savills service offering and to meet
these demands, we have a full client management programme in place
with a dedicated Client Relationship Management (‘CRM’) team.
Each of these clients has a client care plan which includes a review
of the current year, meeting schedule for key contacts, financials for
the year to date and future years, a client communication plan and
a list of agreed actions and responsibilities. We have a CRM board
in place whose responsibility it is to oversee the client management
programme. This board meets bimonthly and reports into the UK Board.
Environment
A healthy safe and secure workplace
Savills is committed at the highest level to providing a safe and
healthy working environment for all staff and others who are affected
by our businesses so as to minimise the risk of injury and ill health.
Safe working practices form an integral part of our day to day
business and we aim to find practical solutions to health and safety
risks. To this end, our safety strategy is focused on priorities such as
reducing occupational exposure to workplace hazards, maintaining
regulatory compliance and seeking to continuously develop and
strengthen our health and safety arrangements.
In 2015 we focused upon a number of training initiatives and
awareness programmes using a variety of communication channels
in order to ensure Health & Safety (‘H&S’) remained a key focus for all
staff. We also introduced a dedicated online H&S forum to further
enhance interaction amongst our global network of H&S Champions.
During the current year we will continue to promote our positive
safety culture with further localised training and country specific
safety campaigns. We also aim to enhance our current audit
coverage in order to demonstrate our commitment to continuous
improvement of safe working practices.
24
SAVILLS PLC REPORT AND ACCOUNTS 2015
Environmental impact
Across our global business, with more than 30,000 employees
operating in over 700 offices worldwide, Savills is committed to
reducing the impact our operations have on the natural environment.
By actively seeking to reduce our environmental impact, we are
able to achieve increased operational efficiencies and savings,
both internally and for our clients.
As one of the world’s leading property advisers, Savills
acknowledges the importance of demonstrating leadership in this
area. This includes measuring, disclosing and being accountable
for our environmental impacts. Accordingly, Savills participates in
the international Carbon Disclosure Project (‘CDP’). Some 4,000
organisations around the globe measure and disclose their
greenhouse gas emissions and climate change strategies as part
of the CDP. This data is collected annually on behalf of institutional
investors, purchasing organisations and various government
bodies. In 2015, Savills achieved a disclosure score of 84 out
of a possible 100.
In acknowledgement of this environmental leadership, in the UK,
Savills UK won a Gold Award from the Mayor of London as part of
his Business Energy Challenge. This was awarded in recognition of
reducing average annual carbon intensity in our London offices by
41% compared to 2010/11.
As part of this continuing drive to mitigate our environmental
impacts, and as a hallmark of quality, our offices continue to
work to secure ISO14001 2004: the international standard for
environmental management systems. 85 offices in the UK alone
(as at 31 December 2015) have achieved ISO14001 accreditation
(with offices previously part of Smiths Gore to be accredited in 2016).
Our Australian business had a year of achievements for sustainability
efforts, notably for the work produced for the Sydney’s Better
Building Partnership on cooling tower water usage.
In Asia Pacific, Savills Guardian was again awarded the Class
of Excellence Wastewi$e label in Hong Kong’s Awards for
Environmental Excellence. It has actively participated and been
recognised since 2004. We have also participated in a number of
other initiatives including Earth Hour (the ‘Lights Off’ event to save
energy), the Energy Saving Charter on Indoor Temperature which
actively promotes energy savings in buildings, and the Quality
Water Recognition Scheme for Buildings.
Greenhouse gas emissions
Our Greenhouse Gas Emissions Statement includes all emission
sources required under the Companies Act 2006 (Strategic Report
and Directors’ Reports) Regulations 2013 for the financial year
to 31 December 2015, compared against our baseline year to
31 December 2013.
Scope
This Greenhouse Gas Emissions Statement includes all emission
sources required under the Companies Act 2006 (Strategic Report
and Directors’ Reports) Regulations 2013 for the financial year to
31 December 2015, compared against our baseline year of 2013. Data
is also shown for 2014. For 2015, we continued to expand the scope
of our data collection for our global greenhouse gas (‘GHG’) emissions.
We are now reporting on GHG emissions from our UK, Europe, USA,
Australia, New Zealand, Hong Kong, Japan and Singapore operations.
In subsequent years, we will seek to further expand this reporting
boundary. A network of Environmental Reporting Nominees has also
been established, reporting to the Group Legal Director & Company
Secretary, to co-ordinate more efficient data collection worldwide.
Specialist third-party verified environmental reporting software has
also been adopted by this network to ease data collection, ensure
conformity and complete the subsequent emission calculations.
Methodology
These calculations use a GHG Protocol Corporate Accounting and
Reporting Standard methodology. In a few cases complete or wholly
reliable data was not available. So, we have determined the relevant
emissions by using a range of standard carbon accounting measures,
including extrapolating data from other parts of the reporting period.
To allow easier year on year comparison, a per capita intensity ratio
(based on our number of full-time equivalent employee numbers) has
been chosen. We consider that this is the best means of reflecting
our wide-ranging activities in a quantifiable common factor.
As can be seen from the results in the table on page 26, our Total
Gross Emissions increased by approximately 18% from 2014 to 2015,
but this overall increase reflects the aforementioned expansion of our
reporting boundary in 2015. The corresponding figures for our per-
capita intensity ratio, however, show an overall reduction of
approximately 2.4%, despite our global FTE numbers increasing by
around 21% during the reporting period. Against our base year, of
2013, this is now an improvement of over 12.5%. This significant
decrease has been driven by targeted operational upgrades (e.g. of
lighting, heating/cooling and computer management). At the corporate
level, enhancements have also been achieved by the continued roll-out
of environmental efficiency strategies, such as improved metering/
monitoring, higher occupancy density levels and the application of
green building principles during the selection/refurbishment of many of
our occupied spaces. Savills is encouraged by the steady progress of
our mitigation approach to date. We are confident of further reductions
in our environmental footprint in the coming years.
SAVILLS PLC REPORT AND ACCOUNTS 2015
25
Overview / Strategy / Performance / Governance / Financial statements Resources and relationships
continued
Greenhouse gas emissions data
Total global emissions for carbon reporting (2015)
GHG Emissions (Scopes 1–2) 8,706 TCO2e/yr
GHG emissions Scope 1 (direct) – 1,898 TCO2e/yr
GHG emissions Scope 2 (energy indirect) – 6,808 TCO2e/yr
Total gross emissions (Scopes 1–2) – 8,706
Total employees (FTE av.) – 7,039
GHG intensity ratio – 1.24
Total global emissions for carbon reporting (2014)
GHG emissions (Scopes 1+2) 7,374 TCO2e/yr1
GHG emissions Scope 1 (direct) – 1,638 TCO2e/yr
GHG emissions Scope 2 (energy indirect) – 5,735
Total gross emissions2 – 7,374
Total employees (FTE av.) – 5,800
GHG intensity ratio3 – 1.27
Total global emissions for carbon reporting (2013)
GHG emissions (Scopes 1+2) 6,424 TCO2e/yr1
GHG emissions Scope 1 (direct) – 1,292 TCO2e/yr1
GHG emissions Scope 2 (energy indirect) – 5,132
Total gross emissions2 – 6,424
Total employees (FTE av.) – 4,508
GHG intensity ratio3 – 1.425
Notes:
1
Emissions factors based on Defra/DECC Guidelines 2011 and other globally
recognised methodologies.
Total global emissions for carbon reporting 2015: UK, Rest of Europe,
Australia/New Zealand and Hong Kong.
Total gross emissions, divided by total full time equivalent employees (FTE)
year average.
Retrospective adjustments have been made to the reported 2013 data figures
to enable accurate year on year comparison.
2
3
4
Community
Social and community investment
Supporting communities in which we operate remains an integral
part of our operations.
Our offices and our people are actively involved in their communities
through our support of charitable causes and other social and
business organisations, including making financial, in kind and
time contributions. At a local level, we have developed a series of
community engagement programmes which have a positive impact on
the areas where our people live and work to ensure that Savills is firmly
engaged with the communities we serve. The stories below represent
only a few examples from across the globe of the wide variety of
activities undertaken by Savills and its employees during 2015.
The UK business has continued to sponsor events in support of
LandAid, the property industry charity that helps disadvantaged
children in the UK; such as debates and the 2015 TowerAthlon, in
which 250 property professionals, including 15 Savills representatives,
used their strength, speed and nerves to run up 39 storeys of stairs
of the Broadgate Tower, abseil down its 539ft length and finish with
a 10-minute cycle-sprint at the bottom. As well as delivering social
benefits, we believe greater community engagement increases staff
26
SAVILLS PLC REPORT AND ACCOUNTS 2015
commitment and provides real-life development opportunities. The UK
Graduate Charity Committee have organised their most ambitious
challenge to date in aid of Dreams Come True, in which 28 Savills
employees will be trekking 100km across the Arctic Circle in 2017.
Savills also supported the charity in a variety of ways including
organising various fundraisers including the Three Peaks Challenge
and participants in the London Marathon. The UK business also
embarked upon an ambitious fundraising challenge for Countryside
Learning, a charity that aims to educate, inform and inspire children,
parents and teachers so that they can enjoy and appreciate the
countryside whilst gaining a greater understanding of the range of
issues surrounding it. The team covered 5,000 miles by non-motorised
means, and highlights include three flights in a glider at an altitude
of 1,000 feet, a boat trip across the Thames and a tandem ride into
central London on the opening day of the Rugby World Cup. We have
also created the ‘100 Club’, set up to incentivise staff to participate in
100 CSR initiatives and raise funds via charitable fundraising.
In Asia, in recognition of Savills Guardian’s efforts in support of charitable
causes, Savills Guardian was awarded a number of corporate volunteer
awards. This includes an acknowledgement of Savills Guardian’s
participation in the Caring Company Scheme with it now holding the
‘Caring Company 10 consecutive years’ logo. Savills Guardian has
also been granted the use of the Social Caring Pledge logo. The six
principles of the pledge are:
8,706
7,374
6,424
1. Promote environmental protection
2. Eliminate the discrimination of employment
3. Ensure that there is no form of forced and compulsory labour
4. Promote community involvement and development
5. Avoid corruption including extortion and bribery
6. Provide quality, healthy and safe products and/or services
to customers
During 2015 Savills Studley in the US actively participated and
contributed to not-for-profit organisations both nationally and
regionally. During 2015 our community involvement included
fundraising for the All Star Foundation, an organisation dedicated
to transforming the lives of youth and poor communities using the
developmental power or performance, in partnership with caring
adults and Back on My Feet, a national non-profit organisation that
supports those experiencing homelessness make improvements
to their lives that result in employment and independent living.
One national example is the Lee National Denim Day, the world’s
largest single-day fundraiser in support of breast cancer research
with which Savills Studley have been involved since 2005.
The UK operates a Give As You Earn scheme which allows staff
to donate a portion of their monthly salary to a registered charity.
We also operate a profit share waiver scheme whereby staff can
elect to waive an element of any annual profit share in favour of
registered charities of their choice upon which the Group
augments the donation to the chosen charity by 10%.
Future plans
It has been another year of development and progress and this
is reflected in this year’s CR report and throughout this document.
Going forward, we will seek to further develop and strengthen our
CR approach by continuing to focus on those activities where we
are best placed to make a significant contribution.
Risks and uncertainties facing the business
Identifying and managing our risks
The Board is responsible for the Group’s system of risk management
and internal control. Risk management is recognised as an integral
part of the Group’s activities. The Board determines the Group’s
appetite for risk in pursuit of strategic objectives, and the level of risk
that can be taken by the Group and its operating companies. Savills
businesses worldwide are responsible for executing their activities in
accordance with the risk appetite set by the Board, complemented
by the Code of Conduct, Group policies and delegated authority limits.
Risk is assessed across the Group using a systematic risk
management model covering both external and internal factors and
the potential impact and likelihood of those risks occurring. Risk
assessments are incorporated into risk registers at Group and
business level, which evolve to reflect the reduction/increase in
identified risks and the emergence of new risks. Where it is
considered that a risk can be mitigated further to the benefit of the
business, responsibilities are assigned and action plans are agreed.
The Group’s Risk team facilitates the risk assessment process with
Group and business unit management on behalf of the Board and
challenges risk findings and the internal control framework to ensure
that these are effective. Group policies and delegated authority levels
set by the Board provide the means by which risks are reviewed and
escalated to the appropriate level within the Group, up to and
including the Board, for review and confirmation.
We have a clear framework for identifying and managing risk, both at
an operational and strategic level. Our risk identification and
mitigation processes have been designed to be appropriate to the
ever-changing environments in which we operate.
The following chart summarises our business risk management structure.
BUSINESS RISK MANAGEMENT STRUCTURE
Review and confirmation
Review and confirmation
by the Board
Process
Risks and mitigation reviewed by
Audit Committee after validation
by the Group Risk Committee
and Executive Boards
Ongoing review and control
There is ongoing review of the risks
and the controls in place to mitigate
these risks
Review and assessment
Group Director of Risk & Internal
Audit consolidates the operating
companies’, functional and
Group risks to compile the
Group’s key risks
plc BOARD
plc AUDIT COMMITTEE
GROUP EXECUTIVE BOARD
GROUP RISK COMMITTEE
EXECUTIVE COMMITTEES
GROUP RISK
HEADS OF
GROUP
FUNCTIONS
Key risks:
Heads of Group
functions identify
the key risks
and develop
mitigation actions
HEADS OF
OPERATING
COMPANIES
Key risks:
Heads of operating
companies create
a register of their
top risks and
mitigation actions
Roles and responsibilities
The Board regularly reviews the Group’s key risks and is supported
in the discharge of this responsibility by various committees,
specifically the Audit Committee and the Group Risk Committee.
The risk management roles and responsibilities of the Board, its
Committees, and business management are set out below, and all
of these responsibilities have been met during the year.
1. Board
Responsibilities
– Approve the Group’s strategy
– Determine Group appetite for risk in achieving its strategic objectives
– Establish the Group’s systems of risk management and internal control
The Audit Committee supports the Board by monitoring risk and
reviewing the effectiveness of Group internal controls, including
systems to identify, assess, manage and monitor risks
Actions
– Receive regular reports on internal and external audit and other
assurance activities
– Receive regular risk updates from the businesses
– Determine the nature and extent of the principal Group risks and
assess the effectiveness of mitigating actions
– Annually review the effectiveness of risk management and internal
control systems
– Approve Group Policies including the Group risk management policy
2. Group Executive Board
Responsibilities
– Strategic leadership of the Group’s operations
– Ensure that the Group’s risk management and other policies
are implemented and embedded
– Monitor that appropriate actions are taken to manage strategic
risks and key risks arising within the risk appetite of the Board
– Consider emerging risks in the context of the Group’s strategic
objectives
Group Risk Committee
– Monitor the application of risk appetite and the effectiveness of
risk management processes. The Group Risk Committee and
Board also considers the Group’s overall risk appetite in the
context of the negative impact that the Group can sustain
before it risks the Group’s continued ability to trade
Actions
– Review of risk management and assurance activities and processes
– Monthly/quarterly finance and performance reviews
3. Subsidiary Executive Committees
Responsibilities
– Responsible for risk management and internal control systems
within their regions/businesses
– Monitoring the discharge of their responsibilities by operating
companies
Actions
– Review key risks and mitigation plans
– Review results of assurance activities
– Escalate key risks to Group management and Group Executive
or plc Boards
4. Heads of the Group functions and operating companies
Responsibilities
– Maintain an effective system of risk management and internal
control within their function/operating company
Actions
– Regularly review operational, project, functional and strategic risks
– Review mitigation plans
– Plan, execute and report on assurance activities as required by
region or Group
Savills regularly reviews and enhances its risk management process
and seeks advice from independent advisers where applicable.
SAVILLS PLC REPORT AND ACCOUNTS 2015
27
Overview / Strategy / Performance / Governance / Financial statements
Risks and uncertainties facing the business
continued
Principal risks
The Directors have carried out a robust assessment of the principal
risks facing the Company – including in particular in 2015 those that
would threaten its business model, future performance, solvency or
liquidity. Our consideration of the key risks and uncertainties relating
to the Group’s operations, along with their potential impact and the
mitigations in place, is set out below. There may be other risks and
uncertainties besides those listed below which may also adversely
affect the Group and its performance. More detail can be found in
the Audit Committee Report on pages 49 to 54.
In summary, our principal risks are:
1. Economic/country risks, particularly the
impact of a global economic downturn
2. Achieving the right market positioning in
response to the needs of our clients
3. Recruitment and retention of high-calibre staff
4. Reputational and brand risk
5. Legal risk
6. Failure or significant interruption to IT systems
causing disruption to client service
7. Business conduct
8. Changes in the regulatory environment
9. Acquisition/integration risk
KEY RISK 1:
ECONOMIC/COUNTRY RISKS, PARTICULARLY THE IMPACT OF A GLOBAL ECONOMIC DOWNTURN
Change from 2014
Strategic objective: Geographic diversification / Financial strength
Description
Global market conditions are currently volatile, with economic
uncertainty in some sectors and markets. Group earnings and/or
our financial condition could be adversely affected by these and
other macroeconomic uncertainties. Savills operates in a number
of countries where the transactional business is the largest
component and thereby increases the level of economic risk.
There is a currency risk from operating in a large number of countries.
Mitigation
The strength of Savills business and brand and the focus on
client service.
Our strategy of diversifying our service offering and geographic
spread mitigates the impact on the business of economic downturns
and weak market conditions in specific geographies, but these
factors cannot entirely mitigate the overall risk to earnings. To manage
these risks, we continually focus on our cost base and seek to
improve operational efficiencies.
Contingency plans are in place to enable us to respond quickly to
market information and economic trends. Continual monitoring of
market conditions and market changes against our Group strategy,
supported by the reforecasting and reporting in all of our businesses,
are key to our ability to respond rapidly to changes in our operating
environment.
Our exposure to countries with economies which are currently
weak is balanced by our business in more stable markets. When
considering new market entry we undertake due diligence including
the impact assessment of political and economic issues in that
particular country.
We manage currency risk in local operations through natural hedging
and matching revenue and costs in the same currency.
KEY RISK 2:
ACHIEVING THE RIGHT MARKET POSITIONING IN RESPONSE TO THE NEEDS OF OUR CLIENTS
Change from 2014
Strategic objective: Business diversification / Strength in residential and commercial markets / Geographical diversification / Commitment to clients
Description
The markets in which we operate are highly competitive. Competition
could lead to a reduction in market share and/or a decline in revenue.
Our focus is on retaining existing clients as well as engaging with
new clients. Our service offering continuously evolves and improves
to meet the changing needs of our clients.
Mitigation
To remain competitive in all markets, we continue to promote and
differentiate our strengths whilst focusing on providing the quality
of service that our clients require.
We continue to invest in the development of client relationships
globally and associated systems to support our client service offering.
28
SAVILLS PLC REPORT AND ACCOUNTS 2015
KEY RISK 3:
RECRUITMENT AND RETENTION OF HIGH-CALIBRE STAFF
Strategic objective: Financial strength / Commitment to clients
Description
We recognise that the future success of our business is dependent
on attracting, developing, motivating and retaining people of the
highest quality.
Change from 2014
Mitigation
We continue to invest in the development of our people and invest in
our training and development programmes across the businesses.
Our partnership style culture and profit sharing approach to
remuneration is combined with selective use of share-based
and other rewards to incentivise and retain our best people for the
long-term benefit of the Group.
KEY RISK 4:
REPUTATIONAL AND BRAND RISK
Strategic objective: Strength in residential and commercial markets / Commitment to clients
Change from 2014
Description
Savills is a strong brand with an excellent reputation in the markets in
which we operate. The Group’s reputation could be damaged as a
result of negative media coverage. We recognise the need to
maintain this reputation by ensuring the quality of the service we
provide.
KEY RISK 5:
LEGAL RISK
Mitigation
We recognise that our brand strength is vital to maintaining market
share in established and new markets. A brand management
programme is in place to ensure the brand’s positioning and identity
is clearly and consistently promoted. Our social media policy is
supported by guidance and training as well as ongoing monitoring.
All external statements have to be appropriately approved.
We recognise that the quality of the service we offer is vital to
maintaining the brand and we have in place policies, controls and
processes to monitor the quality of our client service to support our
programme of continuous improvement.
The Group has established corporate social responsibility programmes.
Change from 2014
Strategic objective: Financial strength / Commitment to clients
Description
Failure to fulfil our legal or contractual obligations to clients could
subject the Group to action and/or claims from clients. The adverse
outcome of such actions/claims could negatively impact our
reputation, financial condition and/or the results of our businesses.
For example:
– in accepting client engagements, Group companies may
be subject to duty of care obligations. Failure to satisfy these
obligations could result in claims being made against the
relevant operating company;
– in our Property Management business, we may be responsible for
appointing third-party contractors that provide construction and
engineering services. Failure to discharge these responsibilities in
accordance with our obligations could result in claims being
made against the operating companies;
– in our Valuation Consultancy businesses, we can be subject
to claims alleging the over-valuation of properties.
Mitigation
The Group has a range of policies in place including client
acceptance, legal and regulatory compliance, procurement,
contractor management and valuation.
We have Best Practice groups policies, procedures and training
which are designed to mitigate against the risk of such actions/
claims being made and where such claims occur, to limit liability,
particularly in relation to consultancy services such as Valuations.
Such policies are regularly reviewed.
The Group maintains professional indemnity insurance to respond
to and mitigate the Group’s financial exposure to such claims.
As described below, our strong emphasis on appropriate business
conduct by all our employees, contractors and associates further
mitigates this risk.
SAVILLS PLC REPORT AND ACCOUNTS 2015
29
Overview / Strategy / Performance / Governance / Financial statements
Risks and uncertainties facing the business
continued
KEY RISK 6:
FAILURE OR SIGNIFICANT INTERRUPTION TO OUR IT SYSTEMS CAUSING DISRUPTION TO CLIENT SERVICE
Change from 2014
Strategic objective: Financial strength / Commitment to clients
Description
Major failures in our IT systems may result in client service being
interrupted or data being lost/corrupted causing damage to our
reputation and consequential client and/or revenue loss.
Mitigation
Specific back-up and resilience requirements are built into our
systems. Our critical infrastructure is set up so far as is reasonably
practical to prevent unauthorised access and reduce the likelihood
and impact of a successful attack.
There is a risk that an attack on our infrastructure by a malicious
individual or group could be successful and impact the availability
of critical systems.
Our data centres are accredited to international information
security standards.
KEY RISK 7:
BUSINESS CONDUCT
Business continuity and disaster recovery plans are in place to cover
the residual risks that cannot be mitigated.
We are constantly reviewing our resilience to cyber security attacks
due to the increasing threat.
Change from 2014
Strategic objective: Business diversification / Geographical diversification / Commitment to clients
Description
We operate in international markets that may present business conduct
related risks involving, for example, fraud, bribery or corruption.
Mitigation
We have programmes to promote compliance with our Code of
Conduct, particularly in areas of higher risk such as procurement.
Failure by the Group and its employees to observe the highest
standards of integrity and conduct in dealing with clients, suppliers
and other stakeholders could result in civil and/or criminal penalties,
regulatory sanction, debarring and/or reputational damage.
We have a zero tolerance approach to breaches of our
Code of Conduct.
Change from 2014
Mitigation
Our Group Policy Framework, which sets out our standards for
professional, regulatory, statutory compliance and business conduct,
is reviewed regularly.
To support this Framework each business has its own regulatory
and statutory compliance resources (who monitor regulatory
developments and maintain the internal processes and controls
required to fulfil our compliance obligations).
Our compliance environment, at all levels, is subject to regular review
by internal audit and external assurance providers.
KEY RISK 8:
CHANGES IN THE REGULATORY ENVIRONMENT
Strategic objective: Commitment to clients
Description
We are required to meet a broad range of regulatory compliance
requirements in each of the markets in which we operate. For example:
– some of our operations have regulatory licences;
– in the UK, the Financial Conduct Authority (‘FCA’) regulates the
conduct of Savills Capital Advisors and, both generally and in
relation to the Alternative Investment Fund Managers Directive,
Savills Investment Management, and the insurance intermediary
services provided to clients by Savills UK; our businesses are
regulated by The Royal Institution of Chartered Surveyors (‘RICS’);
– Savills Investment Management entities are variously regulated
by the Bank of Italy, FCA in Japan, BaFin in Germany and CSSF
in Luxembourg;
– various countries, corporate entities and individuals are subject
to financial sanctions, which require continuous monitoring in
response to global events.
Failure to satisfy regulatory compliance requirements may result in
fines being imposed, adverse publicity, brand/reputation damage
and ultimately the withdrawal of regulatory approvals.
We also have a number of key statutory obligations including the protection
of the health, safety and welfare of our staff and others affected by our
activities. Environmental reporting requirements place data gathering
responsibilities on our business in common with other listed companies.
30
SAVILLS PLC REPORT AND ACCOUNTS 2015
KEY RISK 9:
ACQUISITION/INTEGRATION RISK
NEW
Strategic objective: Business diversification / Geographical diversification / Strength in residential and commercial markets / Financial strength
Description
The structuring and integration of acquisitions is critical to realising
the benefits sought. People, systems and processes are key
components
Mitigation
The application of the Group acquisitions policy and procedures
and the use of professional advisers in the due diligence process,
together with clear allocation of responsibility and accountability
to individuals for integration. Post-acquisition reporting keeps the
Board aware of progress against plan.
Viability Statement
In accordance with C2.2. of the 2014 revision of the Corporate
Governance Code, the Directors have assessed the viability of the
Group. The Directors assessment was over a three-year period,
taking account of the Group’s current position and the potential
impact of the principal risks documented in the Strategic Report
on pages 27 to 31.
The Directors have determined that the three-year period is an
appropriate period over which to provide its viability statement,
being consistent with the period covered by the Group’s strategic
planning process and with the cyclical nature of property markets.
In making this statement the Directors have considered the
resilience of the Group, taking account of its current position, the
principal risks facing the business, the potential impact on market
conditions of a severe economic downturn analogous to that
experienced during the Global Financial Crisis in 2008/2009,
and the effectiveness of any mitigating actions. The assessment
considered the potential impacts of these risks on the business
model, future performance, solvency and liquidity over the period.
The Board’s assessment has been made with reference to the
Group’s current position and prospects, the Group’s strategic plan,
the Board’s risk appetite and the Group’s principal risks and how
these are managed, as detailed in the Strategic Report on pages
10 to 32. The strategy and associated principal risks underpin
the Group’s three-year plan, which the Directors review at least
annually. The three-year plan, including financing projections, is
subject to sensitivity analysis which involves applying different
assumptions to the underlying forecast both individually and
in aggregate.
Based on this assessment, the Directors have a reasonable
expectation that the Company will be able to continue in operation
and meet its liabilities as they fall due over the three-year period.
The Directors also considered it appropriate to prepare the financial
statements on the going concern basis as explained in Note 2.1 to
the accounts.
SAVILLS PLC REPORT AND ACCOUNTS 2015
31
Overview / Strategy / Performance / Governance / Financial statements Key performance indicators
FINANCIAL KPIs
NON-FINANCIAL KPIs
Revenue
(£m)
2015
2014
2013
2012
2011
Cash generation
(£m)
2015
2014
2013
2012
2011
1,283.5
1,078.2
904.8
806.4
721.5
Property under management
(million sq ft)
2015
2014
2013
2012
2011
2,043.1
2,090.0
2,031.7
1,754.5
1,359.6
Breadth of service offering
(% non-Transactional income)
2015
2014
2013
2012
2011
51.9
54.1
60.4
61.6
61.8
122.0
96.1
70.8
59.7
35.7
The measure:
Revenue growth is the increase/
decrease in revenue year on year.
The measure:
The amount of cash the business has
generated from operating activities.
The measure:
Total sq ft property under
management.
The target:
To deliver growth in revenue from
expansion both geographically and
by business segment.
The target:
To maintain strong cash generation
to fund working capital requirements,
shareholder dividends and strategic
initiatives of the Group.
The target:
To progressively increase the global
square footage under management.
The measure:
Revenue by type of business.
The target:
To maintain a healthy balance of
Transactional and less or non-
Transactional business revenues.
Underlying profit
(£m)
2015
2014
2013
2012
2011
Underlying earnings per share
(p)
2015
2014
2013
2012
2011
63.2
55.2
43.1
33.9
29.0
Geographical spread
(% non-UK)
2015
2014
2013
2012
2011
121.4
100.5
75.2
58.6
50.4
Assets under management
(€bn)
2015
2014
2013
2012
2011
17.1
7.2
5.1
4.4
3.4
56.3
53.5
48.9
51.0
51.2
The measure:
Underlying profit growth is the
increase/decrease in underlying profit
year on year.
The target:
To deliver sustainable growth in
underlying profit.
The measure:
Earnings per share (‘EPS’) is the
measure of profit generation. EPS
is calculated by dividing underlying
profit by the weighted average
number of shares in issue.
The target:
To deliver growth in EPS to enhance
shareholder value.
The measure:
Geographical diversity is measured by
the spread of revenues by region.
The target:
To progressively balance the Group’s
geographical exposure through
expansion in our chosen geographic
markets.
The measure:
Growth in assets under management
of our Investment Management
business Savills Investment
Management.
The target:
To increase the value of investment
portfolios through portfolio
management, new mandates and
the launch of new funds.
Underlying profit is calculated by
adjusting reported pre-tax profit
for profit/loss on disposals,
share-based payment adjustment,
impairment and amortisation of
goodwill and intangible assets
(excluding software), other
impairments, restructuring costs
and acquisition-related costs
(refer to Note 2 to the financial
statements).
Underlying profit margin
(%)*
2015
2014
2013
2012
2011
*
9.5
9.3
8.3
7.3
7.0
The measure:
Profitability after all operating costs
but before the impact of exceptional
costs, financing, taxation, and
the results of associates and
joint ventures.
The target:
To deliver growth in operating margin
by improving the efficiency with which
services are offered.
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SAVILLS PLC REPORT AND ACCOUNTS 2015
Page_HeadingPage_Heading_Level_2 continued Segmental reviews
The Savills Group advises on commercial, rural, residential and
leisure property. We also provide corporate finance advice,
investment management and a range of property-related financial
services. Operations are conducted internationally through four
business streams:
During the year we opened new residential offices in Earls Court,
Shoreditch and Ealing, all of which are focused on the Core London
market. In addition, outside London we took on a number of mixed
service offices, such as Petworth, Taunton and Lichfield with the
acquisition of Smiths Gore.
Transaction Advisory
Revenue
£618.0m +25%
2015
2014
2013
2012
2011
Underlying profit
£76.9m +13%
2015
2014
2013
2012
2011
618.0
494.6
358.2
310.0
275.3
Contribution to Group revenue
a. Transaction Advisory – 48%
b. Rest of Group – 52%
a.
b.
Services
Acquisitions
Divestments
Leasing and rentals
Sales and leaseback
Capital raising
2015 clearly demonstrated the strength of our geographic spread
of businesses as improved performances in a number of countries
outweighed the anticipated reduction in activity in mainland China,
and Singapore. This, in conjunction with the performance of our
US business and further recovery in certain Continental European
markets together with a strong performance in the UK commercial
market, successfully offset the reduction in activity in the UK
residential market and resulted in the increase in revenue, profit and
margin delivered by our Transactional Advisory business as a whole.
Revenue grew by 25% to £618.0m (2014: £494.6m) and underlying
profit increased by 13% to £76.9m (2014: £67.8m).
The effect of a weak Singapore Market and expansion costs in Asia
Pacific Residential, together with the reduction in volumes in the UK
Residential business reduced the underlying profit margin of the
Transaction Advisory business as a whole to 12.4% (2014: 13.7%).
UK Residential
Our UK Residential business revenue declined by 1% to £127.9m
(2014: £129.2m). This performance was driven by slightly weaker resale
volumes, as anticipated, largely offset by stronger sales of development
projects and a significant increase in the growing Private Rental Sector
(PRS) and Housing and Residential Healthcare transaction revenues.
The prime residential market, where Savills is a market leader, was
adversely affected by the fiscal changes of the 2014 Autumn Statement
and the impact of the General Election on our overall volume of UK
transactions, which decreased by 1% year on year.
In the resales market, the focus on growing our share in the core
London market, with average selling prices in the range
£0.8m–£1.5m, largely mitigated the reduction in market volumes in
the Prime and Super Prime end of the market, so that our overall
volume of resale transactions in London decreased by approximately
4.5% year on year with a 15% reduction in Savills average sales value
to £2.8m. In the Country market both the volume of exchanges and
the Savills average value, at £1.1m, were unchanged year on year.
These trends were reflected in the reduction in the overall value of UK
residential property (excluding new developments) sold by Savills
during the year to £5.9bn (2014: £6.6bn).
In the new development market we saw a significant increase in
transactions with the value of property exchanged increasing by
7% to £3.0bn, buoyed by continued strong interest in high quality
developments in both the London and Country markets and good
levels of stock availability.
The 2015 Autumn Statement heralded some significant further
changes to the taxation of Residential Property in the UK, which take
effect from April 2016. In the intervening period we have experienced
a noticeable increase in transaction volumes.
76.9
67.8
47.2
31.8
24.2
Against this backdrop, the UK Residential Transaction Advisory
business recorded a 10% decrease in underlying profits to £17.8m
(2014: £19.7m).
Asia Pacific Residential
The Residential Transaction Advisory business in Asia is focused
primarily on new developments and secondary sales and leasing
of prime properties in selected markets. It excludes mixed use
developments, which represent a significant proportion of the
region’s activity and are accounted for within the Commercial
Transaction Advisory business. Overall, the Asia Pacific Residential
business recorded a 41% increase in revenue to £30.5m
(2014: £21.6m). Growth in our existing Australian business, together
with the acquisition of the business of Cordeau Marshall in Sydney,
were the principal drivers of growth in addition to strong
performances from the Prime markets of Shanghai and Hong Kong.
Singapore markets experienced continuing decline in volumes as
the impact of controls, particularly on overseas buyers, and excess
supply negatively affected demand. This not only affected our
principal Singapore business but also materially reduced the
contribution from our minority stake in Huttons, our mid-market
associate company in that market, and led directly to the region
reporting a 16% decrease in underlying profit to £3.1m (2014: £3.7m).
Asia Pacific Commercial
The Asia Pacific Commercial business enjoyed a somewhat stronger
year than we originally expected, driven by substantially improved
earnings in Hong Kong, Mainland China, Singapore and Korea,
which largely offset the impact of revenue shortfalls in Japan, Taiwan
and Australia. Our market share in a relatively quiet Hong Kong
investment market grew significantly to circa 50%. The policy of
strengthening connections between the financial markets of
Shanghai and Hong Kong led to us advising many Chinese financial
services businesses on the lease or acquisition of office space in
Hong Kong. The underlying markets of Mainland China and Hong
Kong remained relatively subdued, particularly in the retail sector.
Revenue rose by 16% to £111.9m (2014: £96.3m).
In mainland China, where we have 15 offices, the investment
market remained weak but greater activity in leasing and tenant
representation transactions, including office and mid-tier retail
brands, resulted in a 21% increase in Transaction Advisory revenues
year on year. It is clear that in recent months activity has focused
strongly on the Tier 1 Cities of Beijing and Shanghai. Our Hong Kong
and Korean Commercial transaction revenues increased by 58% and
19% respectively, helping to offset reductions in revenue in Japan,
Australia and Taiwan. The relative difference in profitability between
Japan and Hong Kong, together with business development and
service expansion costs in the region led to the Asia Pacific
Commercial Transaction Advisory business recording a 2%
decrease in underlying profit to £16.3m (2014: £16.7m).
UK Commercial
Revenue from UK commercial transactions increased 17% to
£98.8m (2014: £84.1m). This performance reflected another strong
year for the UK investment market as a whole, with high activity
SAVILLS PLC REPORT AND ACCOUNTS 2015
33
Overview / Strategy / Performance / Governance / Financial statements
Segmental reviews
continued
levels in both London and the regional markets and continued strong
interest from overseas investors. In addition the leasing and occupier
markets were characterised by high levels of occupier demand,
limited supply and rising rental values. These factors, alongside
expectations of continued low interest rates, combined to create
benign conditions in the UK as a whole.
During the year we continued to build on our Continental European
platform with recruitment into investment, leasing and tenant
representation services and the opening of a new office in Barcelona.
Despite these additional costs, the Continental European Transaction
Advisory business recorded an increase in underlying profit of over
200% to £4.0m (2014: £1.3m).
The Central London occupier market saw continued strong tenant
demand in 2015, albeit not at the record levels achieved in 2014.
Professional services, Insurance and the TMT sectors contributed
to this rise in activity. The vacancy rate in the City continued to fall
to 4.5% which contributed to a 10% increase in City rents Take-up
in the West End of London was up 4% on the total for 2014 at
4.4m sq ft, and the vacancy rate dropped below 3%.
Our regional businesses benefited from the recovery in tenant
demand for office space with take-up inside the M25 and the top
eight regional city office markets rising by 4% to reach 10.5m sq ft.
As economic conditions improved in regional markets, we saw
a significant recovery in investment volumes as investors sought
improved returns outside London. All asset classes benefited,
with logistics and retail being particularly strong.
The continuation of a robust market in both London and the regions
resulted in the UK Commercial Transaction Advisory business
increasing underlying profit by 21% to £16.9m (2014: £14.0m)
with margin improvement to 17.1% (2014: 16.6%).
US
During the year, we continued to build on our US platform Savills
Studley, through both recruitment and three bolt-on acquisitions.
Our US revenue grew by 71% to £192.5m (2014: £112.3m), which
equated to 12% assuming a full 2014 comparable period for Studley.
In addition, the US business contributed significantly to our global
occupier services business, referring significant client projects to
many parts of Savills Asia Pacific, UK and European network.
The acquisitions we completed during the year both enhanced our
tenant representation platform (e.g. the Cooper Brady Partnership
in Silicon Valley) and extended our service offering (e.g. KLG in
New York and Vertical Integration in Tampa Florida, both occupier
consultancy practices). In December we completed the acquisition
of Real Facilities Inc. of Toronto which established Savills first
owned office in Canada.
A number of cities such as New York, Chicago, Los Angeles and
Washington enjoyed a very strong performance during the year.
In the investment markets we concluded some substantial
transactions across the US.
Our US business posted a 52% increase in underlying profit for
the year to £18.8m (2014: £12.4m). This equated to 17% on a full
2014 comparable.
Continental Europe
The Continental European Commercial Transaction Advisory
business saw revenue increase by 10% to £56.4m (2014: £51.1m).
In constant currency the underlying increase was 22%. There was
a substantial improvement in Germany, where Savills benefited
from strong performances in Frankfurt and Munich and from the
opening of an office in Stuttgart. Transactional Advisory revenues
also improved significantly in France, Spain, Sweden, Belgium
and Poland, and Ireland maintained its market leading position.
34
SAVILLS PLC REPORT AND ACCOUNTS 2015
Consultancy
Revenue
£230.3m +6%
2015
2014
2013
2012
2011
Underlying profit
£24.7m +6%
2015
2014
2013
2012
2011
230.3
217.0
191.6
172.2
143.4
24.7
23.4
17.6
14.0
12.6
Contribution to Group revenue
a. Consultancy – 18%
b. Rest of Group – 82%
a.
b.
Services
Affordable Housing and
Student Accommodation
Building Consultancy
Capital Allowances and
Rating Development
Environmental Consultancy
Housing Consultancy
Lease Consultancy
Planning
Public Sector
Research
Strategic Projects
Global Consultancy revenue increased by 6% to £230.3m
(2014: £217.0m) and underlying profit grew by 6% to £24.7m
(2014: £23.4m).
UK
Consultancy service revenue in the UK increased by 9% to
£182.8m (2014: £168.2m). Strong performances from Energy and
Rural Projects, Building and Project Consultancy, Development and
Housing Consultancy offset a flat performance in valuation. Overall
underlying profit from the UK Consultancy business increased by
12% to £21.8m (2014: £19.4m).
Asia Pacific
Revenue in the Asia Pacific Consultancy business increased by
3% to £31.0m (2014: £30.0m) with increased valuation assignments
in Hong Kong, Japan, Vietnam and Singapore being offset by a
reduction in development feasibility work in Mainland China. This,
together with the costs of service line expansion, particularly in our
Valuation business in Singapore and Australia, reduced underlying
profit by 15% to £2.2m (2014: £2.6m).
Continental Europe
Our Continental European Consultancy business, which principally
comprises valuation and underwriting advisory services, saw
revenue decrease by 12% (2% in constant currency) to £16.5m
(2014: £18.8m). There were stronger performances in Ireland, France
and Spain, which partially offset a decline in underwriting revenue in
Germany. Profitability was adversely impacted by recruitment costs
in a number of markets and underlying profit for the year declined
to £0.7m (2014: £1.4m).
Property and Facilities Management
Revenue
£390.7m +15%
2015
2014
2013
2012
2011
Underlying profit
£21.1m +13%
2015
2014
2013
2012
2011
390.7
338.6
329.0
300.6
278.6
Contribution to Group revenue
a. Property and Facilities
Management – 31%
b. Rest of Group – 69%
a.
b.
Services
Asset Management
Facilities Management
Commercial Management
Rural Management
Project Management
Our Property and Facilities Management businesses continued
to perform well, growing revenue by 15% overall to £390.7m
(2014: £338.6m). Underlying profit increased by 13% to £21.1m
(2014: £18.6m).
Asia Pacific
The Asia Pacific region grew revenue by 10% to £227.7m
(2014: £207.1m). The Property and Facilities Management business is
a significant strength for Savills in Asia, representing 57% of total Asia
Revenue and complementing our Transaction Advisory businesses in
the region. The total square footage under management in the region
was down 5% to approximately 1.8bn sq ft (2014: approx. 1.9bn
sq ft). In mainland China, revenue increased by 10% and profits grew
by 11%. In Hong Kong, Property and Facilities Management revenue
grew by 13% and profits by 11% reflecting continued pricing pressure
in the market, In Singapore, revenue grew 38%, boosted by the
acquisition of Ace Body Corporate Management Pte Limited.
Overall the underlying profit of the Asia Pacific Property
Management business grew 8% to £12.6m (2014: £11.7m).
UK
Overall, our UK Property Management teams, comprising
Commercial, Residential and Rural, grew revenue by 28% (10%
excluding acquisitions) to £133.9m (2014: £104.9m) thanks in part to
the acquisition of the business of Smiths Gore on 31 May 2015 and
Collier & Madge on 19 May 2015, together with some significant
contract wins in both London and the regions. These acquisitions
significantly enhanced our positions in rural land management
and London office management respectively. The Residential
management business and the UK Commercial business together
grew area under management by 26% to approximately 218m sq ft
(2014: 174m sq ft). The core UK Commercial Property Management
business performed well with revenue growth of 34% and a 26%
improvement in underlying profit (including the Smiths Gore and
Collier & Madge acquisitions). Our Residential Property Management
businesses, including lettings, increased revenue by 7%. Underlying
profit was affected by the costs of expanding the lettings teams and
the full year effect of the cost of the centralised letting administration
service in London. Overall the net effect of revenue growth and
investment in the combined UK businesses improved underlying
profit by 15% to £10.9m (2014: £9.5m).
Continental Europe
In Continental Europe revenue grew by 9% to £29.1m (2014: £26.6m)
with growth generally across the region offset by revenue reductions
in France and Spain, due to some management portfolios being sold.
In the Netherlands, revenue was boosted by the acquisition effective
5 August 2015 of Tagis B.V., a project and property management
business with which we had worked closely for a number of years.
By the year end the total area under management had increased by
5% to 47.6m sq ft. Improvements in profitability in most locations
were largely offset by increased losses in France, Spain and Sweden.
The net effect of these factors was a marginal improvement
in the underlying loss for the year to £2.4m (2014: loss £2.6m).
Investment Management
21.1
18.6
17.6
17.9
16.7
Revenue
£44.5m +59%
2015
2014
2013
2012
2011
Underlying profit
£10.9m +148%
2015
2014
2013
2012
2011
44.5
28.0
26.0
23.5
20.8
10.9
4.4
2.9
3.6
4.7
Contribution to Group revenue
a. Investment Management – 3%
b. Rest of Group – 97%
b.a.
Services
Pooled Funds
Portfolio Management
Segregated Accounts
Investment Mandates
2015 was a transformational year for our Investment Management
business as it was rebranded to Savills Investment Management
effective 1 July, from ‘Cordea Savills’ in anticipation of the acquisition
of SEB Asset Management AG, a well established European
investment manager based in Frankfurt, with an Asia Pacific platform
based in Singapore. The transaction completed on 31 August 2015.
Overall, Savills Investment Management revenue increased by 59%
to £44.5m (2014: £28.0m). Assets Under Management (‘AUM’)
increased by 138% to €17.1bn (2014: €7.2bn), although it should be
noted that approximately one third of the AUM is in funds to be
liquidated or otherwise wound up by mid 2017. During the year,
transactions of approximately €4.1bn were executed on behalf of fund
investors, including the significant disposal of the Potsdamer Platz
portfolio on 31 December 2015. In addition, €1.7bn of new capital was
raised through the launch of seven new products, including new
funds, new separate accounts and investment mandates, and inflows
into existing open-ended funds. Much of the period since September
has been spent on integrating the acquisition, and repositioning it to
enhance the focus on institutional business. Overall the investment
management business improved the underlying profit margin to 24%
(2014: 16%) and increased underlying profits by 148% to £10.9m
(2014: £4.4m).
Summary
Overall in 2015, Savills delivered a record performance across the
Group. Our US expansion programme continued well and our Asia
Pacific business showed resilience in the face of changeable markets.
In the UK the strength of our position in the commercial market offset
market weakness in the residential sector. The Continental European
business continued to build profitability and Savills Investment
Management substantially enhanced its position with the acquisition
of SEB Asset Management AG.
Jeremy Helsby
Group Chief Executive
SAVILLS PLC REPORT AND ACCOUNTS 2015
35
Overview / Strategy / Performance / Governance / Financial statements
Group Chief Financial Officer’s report
Financial review
Strong revenue and profit
growth including margin
improvement led to the
Group’s robust £151m net
cash position at year end
and supports a 13% increase
in the annual dividend.
Simon Shaw
Group Chief Financial Officer
36
SAVILLS PLC REPORT AND ACCOUNTS 2015
Financial highlights
– Group revenue up 19% to £1,283.5m (£1,271.0m in constant
currency, 2014: £1,078.2m)
– Underlying profit up 21% to £121.4m (£120.1m in constant
currency, 2014: £100.5m)
– Group profit before tax up 16% to £98.6m (2014: £84.7m)
Earnings per share
As a result of the restructuring and acquisition costs referred to
above, basic earnings per share increased marginally to 47.0p
(2014: 46.8p). Adjusted on a consistent basis for restructuring,
acquisition-related costs and impairment charges, profits and losses
on disposals, certain share-based payment adjustments and
amortisation of intangible assets (excluding software), underlying
basic earnings per share increased by 14% to 63.2p (2014: 55.2p).
– Underlying profit margin increased to 9.5% (2014: 9.3%)
– Underlying basic EPS grew 14% to 63.2p (2014: 55.2p)
Fully diluted earnings per share increased by 2% to 46.4p
(2014: 45.3p). The underlying fully diluted earnings per share
increased by 17% to 62.3p (2014: 53.4p).
– Final ordinary and supplementary interim dividends total
22.0p per share (2014: 19.25p) taking the total dividend for
the year up 13% to 26.0p per share (2014: 23.0p)
Underlying profit margin
Underlying profit margin increased to 9.5% (2014: 9.3%) reflecting the
effect of improved margins in the UK Commercial business, Continental
Europe and Investment Management, which offset reduced margins in
the Asia Pacific, UK Residential and US businesses, much of the latter
being associated with business development expenditure.
Taxation
The tax charge for the year increased to £33.7m (2014: £22.0m).
The effective tax rate on reported profits increased to 34.2%
(2014: 26.0%) reflecting the effect of non-deductible acquisition
costs. Of these the most significant is the charge for employment-
linked deferred consideration in respect of the 2014 acquisition of
Studley Inc.
The underlying effective tax rate remained consistent at 28.3%
(2014: 26.6%), the slight rise reflecting increased profits in higher
tax regions such as the US and Continental Europe.
Restructuring and acquisition-related costs
During the period the Group incurred an aggregate restructuring
charge of £1.6m (2014: £0.9m) and acquisition-related costs of
£23.3m (2014: £16.6m). These costs included £2.8m of transaction
and integration costs associated primarily with the acquisitions of
Smiths Gore in the UK and SEB Asset Management in Germany.
In addition, there was a £20.5m (2014: £9.9m) charge for future
consideration payments which are contingent on the continuity of
recipients’ employment in the future. This charge primarily relates
to the acquisition of Studley, Inc.
These charges have been excluded from the calculation of
underlying profit in line with Group policy.
Cash resources, borrowings and liquidity
Year end gross cash and cash equivalents increased 15% to £182.4m
(2014: £158.1m). This principally reflected improved profits during the
period, and the realisation of the cash benefit of deductions for tax
losses utilised in the US.
Gross borrowings at year end increased to £31.4m (2014: £3.9m).
These included £1.2m in respect of a working capital loan in Australia
and £30.0m drawn under the Group’s multi-currency revolving credit
facility (‘RCF’). Net cash at the year end was therefore £151.0m
(2014: £154.2m).
Cash is typically retained in a number of subsidiaries in order to meet
the requirements of commercial contracts or capital adequacy. In
addition, cash in certain territories is retained principally to meet
future growth requirements.
The Group’s cash flow profile is biased towards the second half of
the year. This is as a result of seasonality in trading and the major
cash outflows associated with dividends, profit-related remuneration
payments and related payroll taxes in the first half. The Group cash
inflow for the year from operating activities was £122.0m (2014: £96.1m),
primarily as a result of improved trading in the Transaction Advisory
business. As much of the Group’s revenue is transactional in nature,
the Board’s strategy is to maintain low levels of gearing, but retain
sufficient credit facilities to enable it to meet cash requirements
during the year and finance the majority of business development
opportunities as they arise. In December 2015, the Group entered
into a new five year RCF of £250m with an accordion facility of a
further £50m. The new RCF expires on 15 December 2020.
Capital and shareholders’ interests
During the year, 0.7m (2014: 0.6m) new shares were allotted to
participants under the Performance Share Plan. 1.9m new shares
were issued in the first of three instalments of deferred consideration
for the acquisition of Studley. 3.9m shares remain to be issued in
equal instalments on 30 May 2016 and 2017. In accordance with
IFRS, all EPS measures for the year include the dilutive effect of this
future obligation. The total number of ordinary shares in issue at
31 December 2015 was 137.9m (2014: 134.9m).
SAVILLS PLC REPORT AND ACCOUNTS 2015
37
Overview / Strategy / Performance / Governance / Financial statements
Liquidity risk
The Group prepares an annual funding plan which is approved by
the Board and sets out the Group’s expected financing requirements
for the next 12 months. These requirements are ordinarily expected
to be met through existing cash balances, loan facilities and
expected cash flows for the year.
Foreign currency
The Group operates internationally and is exposed to foreign
exchange risks. As both revenue and costs in each location are
generally denominated in the same currency, transaction-related
risks are relatively low and generally associated with intra Group
activities. Consequently, the overriding foreign currency risk relates
to the translation of overseas profits and losses into Sterling on
consolidation. The Group does not actively seek to hedge risks
arising from foreign currency translations due to their non-cash
nature. As a result of the weakening of Sterling against the US Dollar,
and currencies highly correlated thereto, the net impact of foreign
exchange rate movements in 2015 was a £12.5m increase in
revenue and an increase of £1.3m in underlying profit.
Simon Shaw
Group Chief Financial Officer
Group Chief Financial Officer’s report
continued
Savills Pension Scheme
The funding level of the Savills Pension Scheme, which is closed to
future service-based accrual, improved during the year as a result
of a minor increase in long-term interest rates on the rate at which
liabilities are discounted and the effect of planned contributions
by the Company on asset values. The plan deficit at the year end
amounted to £15.8m (2014: £19.4m).
Net assets
Net assets as at 31 December 2015 were £365.0m (2014: £330.3m).
This movement reflected increased tangible assets, receivables
and cash balances derived from the Group’s trading performance
and acquisitions.
Key performance indicators
The Group uses a number of KPIs to measure its performance
and review the impact of management strategies. These KPIs are
detailed under the Key Performance Indicators section on page 32.
The Group continues to review the mix of KPIs to ensure that these
best measure our performance against our strategic objectives, in
both financial and non-financial areas.
Financial policies and risk management
The Group has financial risk management policies which cover
financial risks considered material to the Group’s operations and
results. These policies are subject to continuous review in light
of developing regulation, accounting standards and practice.
Compliance with these policies is mandatory for all Group
companies and is reviewed regularly by the Board.
Treasury policies and objectives
The Group Treasury policy is designed to reduce the financial risks
faced by the Group, which primarily relate to funding and liquidity,
interest rate exposure and currency rate exposures. The Group does
not engage in trades of a speculative nature and only uses derivative
financial instruments to hedge certain risk exposures. The Group’s
financial instruments comprise borrowings, cash and liquid
resources and various other items such as trade receivables and
trade payables that arise directly from its operations. Surplus cash
balances are generally held with A rated banks.
Interest rate risk
The Group finances its operations through a mixture of retained
profits and bank borrowings, at both fixed and floating interest rates.
Borrowings issued at variable rates expose the Group cash flow
to interest rate risk, which is partially offset by cash held at variable
rates. Borrowings issued at fixed rates expose the Group to fair
value interest rate risk. Group policy is to maintain at least 70%
of its borrowings in fixed rate instruments.
38
SAVILLS PLC REPORT AND ACCOUNTS 2015
Corporate Governance Statement
Chairman’s introduction
Peter Smith
Chairman of Savills plc
Responsibility for good governance lies with the Board. As a Board
we are committed to maintaining the highest standards of corporate
governance and understand that an effective, challenging and diverse
Board is essential to enable the Group to deliver its strategy and
long-term shareholder value. Further information on our strategy
and business model can be found on pages 10 to 32.
We continue to work hard to maintain a culture where ‘doing the right
thing’ is at the core of how we do business. The Board recognises
the importance of setting the right tone at the top in order to guide
our people’s behaviour and ensure that we live by and demonstrate
the right values which in turn enable entrepreneurial and prudent
management to deliver long-term success for the Group and its
stakeholders. We fully recognise that at the heart of every successful
organisation is a strong and healthy culture supported by a robust
governance structure. As the custodian of Savills culture, the Board
demands openness and transparency to maintain an environment
in which honesty, integrity and fairness are valued and practised by
our people every day. Our Code of Conduct is readily accessible in
all local languages to all staff to support their day to day decision
making. We demand the highest professional standards from all of
our people all of the time and we have a zero tolerance approach
to breaches of the Code of Conduct.
In September 2014, the Financial Reporting Council (‘FRC’)
published the latest addition of the Corporate Governance Code
(the ‘Code’) which included a number of changes relating to risk
management, internal controls and the longer term viability of
companies. A viability statement is therefore included in this Annual
Report and can be found within the Strategic Report on page 31.
The Main Principles of the Code provide the framework for the
reporting model which we have used for the last two years. Our
approach to: Leadership and Effectiveness is described on pages
40 to 48; relations with shareholders is described on page 49; and
Accountability is described on pages 48 to 54.
Board and Committee composition
Ensuring that we do the right thing in the right way requires the right
leadership and it is important in my role as Chairman to ensure that the
Board has the right blend of skills and experience. As an international
business, we benefit from our Non-Executive Directors’ knowledge
of and involvement with businesses in Hong Kong and China, the
Middle East, Europe, and the US. The Board is collectively responsible
for the long-term success of the Company and how it is directed
and controlled, so our performance is thoroughly tested through
an annual Board evaluation. This is facilitated by an independent
external consultant at least once every three years. The last externally
facilitated review was in respect of 2013, so this year’s evaluation was
again conducted in-house, led by the Chairman and facilitated by the
Group Legal Director & Company Secretary. The process and key
conclusions are explained on page 46. Following this review, I am
satisfied that the Board is performing effectively.
The Board also reviews Non-Executive Director independence on
an annual basis and takes into account the individual’s professional
characteristics, their behaviour at Board meetings and their contribution
to unbiased and independent debate. All of the Non-Executive
Directors are considered by the Board to be independent, including
Charles McVeigh, notwithstanding his long service. We are pleased
that, as confirmed by this year’s Board evaluation, good progress
has been made against the actions that the Board set itself for 2015
and we are confident that your Board has the right balance of skills,
experience and diversity of personality to continue to encourage
open, transparent debate and challenge.
Appointments and succession
We recognise the importance of planning for the future and with the
support of the Nomination Committee we have continued to develop
the Board this year. Our corporate strategy and business model are
underpinned by a succession planning policy designed to progressively
bring new skills and different perspectives to the Board and to
complement the experience of our longer serving Directors so as
to achieve an appropriate balance and position us to continue to
challenge and debate corporate strategy.
During the year, the Nomination Committee and the Board agreed that it
would be appropriate to appoint an additional Non-Executive Director to
further expand the range of skills, experience and knowledge available
to the Board. I am pleased to report that, following an extensive search
process supported by an independent specialist search firm (as set
out in detail in the Nomination Committee Report on pages 47 and 48),
on 23 June 2015 Rupert Robson was appointed as a Non-Executive
Director. Rupert has extensive experience which will complement and
further enhance the wide-ranging skills and experience of the Board and
its Committees and Rupert succeeded Tim Freshwater as Chairman of
the Remuneration Committee on 1 October 2015.
In addition, during the year, the Nomination Committee, under
the leadership of Martin Angle as Senior Independent Director,
commenced the search for a further independent Non-Executive
Director who would succeed me as Chairman when I retire from
the Board at the conclusion of the AGM in May. This search, which
concluded in January 2016 with the appointment of Nicholas
Ferguson to the Board, was also supported by an independent,
specialist search firm. I am very much looking forward to working
with Nicholas to ensure a smooth handover. I have served as Chairman
for over ten years which has been a period of considerable growth at
Savills. I have no doubt that under Nicholas’ leadership I am leaving
the Company in good hands. I would like to give my personal thanks
to everyone I have worked with over the years as Chairman. The
process for selecting Nicholas as the new Chairman is set out in
detail in the Nomination Committee Report on pages 47 and 48.
On behalf of my fellow Directors I would like to welcome Rupert and
Nicholas to the Board. Martin Angle will be retiring from the Board
at the conclusion of the AGM in May and Tim Freshwater will be
replacing him as Senior Independent Director. I would like to offer my
thanks to Martin Angle for his contribution to the Group and the Audit
Committee over the last nine years.
At least half of the Board members throughout the year were
independent Non-Executive Directors (excluding the Chairman).
Details of all the current Directors, their skills and experience are
set out on page 44. In accordance with the Code, all Directors will
stand for re-election or re-appointment (as applicable) at the Annual
General Meeting (‘AGM’) on 11 May 2016 with the exception of
myself and Martin Angle who are retiring from the Board. It being
their first AGM, Rupert Robson and Nicholas Ferguson will be
subject to re-appointment by the shareholders at the AGM.
Diversity
We believe that a diverse culture is an essential factor to the success
of the business, and we fully support the Davies Report’s aspiration
to promote greater female representation on listed company boards.
During the year, the Board had one female Non-Executive Director,
representing 20% of Non-Executive Board membership (excluding
SAVILLS PLC REPORT AND ACCOUNTS 2015
39
Overview / Strategy / Performance / Governance / Financial statements Corporate Governance Statement
continued
the Chairman). We also had one other Non-Executive Director who
is based in Hong Kong. Our focus remains on attracting the right
talent and skills irrespective of gender or ethnicity. As and when
Board appointments arise, we will look to follow the procedures
recommended by the Davies Report and by the Code to maintain
a balanced Board. Our policy on page 47 summarises our approach
to diversity and what this means for our business and our people.
Monitoring risk
Risk management is and will remain a fundamental element of the
Board and Audit Committee’s agendas and our governance efforts
across the Group as a whole. The changes introduced in 2014 by
the Code and the FRC guidance on risk management and internal
controls are welcomed. During the year, the Audit Committee reviewed
the Group’s risk management framework and risk appetite. This
process included a robust assessment of the Group’s principal risks.
To meet the Code’s new requirement in relation to viability, the Audit
Committee reviewed the process undertaken by management to
support and allow the Directors to make the Group’s viability statement.
The Audit Committee also considered and provided input into the
determination of which of the Group’s principal risks might have an
impact on the Group’s liquidity and solvency and reviewed the results
of management’s scenario modelling, including severe downside
modelling, and stress testing of those models. The Group’s viability
statement can be found on page 31. The other updates to the Code
were also considered by the Board and its respective Committees and
the Board was satisfied that the Company’s established policies and
procedures were wholly consistent with the Code’s requirements.
The Audit Committee’s Report on pages 49 to 54 sets out in more
detail the systems of risk management and internal control which
help us to safeguard the Company’s assets and our shareholders’
investments. Details of our principal risks can be found on pages
27 to 31.
Shareholder engagement
As a responsible organisation, we believe that engaging with
shareholders and encouraging open, meaningful dialogue with
the Company is vital to ensuring mutual understanding. You can
read more about shareholder engagement in this section and in
Leadership
Governance structure
The Group’s current corporate governance is set out below.
the meantime, my fellow Directors and I look forward to continued
dialogue and meeting with shareholders at our AGM in May.
It has been another year of significant progress and I remain happy
with the Board’s activity across our governance agenda. However,
we will continue to challenge ourselves and the business and to
consider and to learn from our decisions to ensure that we build
upon the existing strength of our governance structure.
Peter Smith
Chairman of Savills plc
9 March 2016
UK Corporate Governance Code
The latest revision of the Code was published by the FRC in
September 2014, together with Guidance on Risk Management,
Internal Control and Related Financial and Business Reporting. The
Code applies to reporting periods beginning on or after 1 October
2014. Throughout the financial year to 31 December 2015 the Code
is the standard against which we measured ourselves and the
Board fully supports the principles set out in the Code. We confirm
that we have applied the Main Principles of the Code and complied
with the Main Principles set out in sections A to E of the Code, as
amended in September 2014. Specifically, the 2014 amendments
include the requirement for additional statements by the Directors
in respect of the longer term viability of the Company and that
a robust assessment of the principal risks facing the Company has
been undertaken. These new requirements are addressed in the
new viability statement on page 31 and the disclosures of Principal
Risks and Uncertainties on pages 27 to 31.
For ease of reference, we prepare a separate annual compliance
report by reference to the Main Principles of the Code. This report
is available on the Group’s website www.savills.com/en/company-
information/corporate-governance.aspx
Our approach to Leadership, Effectiveness and Accountability
is set out in more detail on pages 40 to 54.
Board
(Chairman, two Executive Directors and six Non-Executive Directors*)
Audit
Committee
Remuneration
Committee
Nomination
Committee
Group Chief
Executive
Group Executive
Board
Group Risk
Committee
CR Steering
Group
Executive
Committees
* with effect from 26 January 2016
40
SAVILLS PLC REPORT AND ACCOUNTS 2015
The Board
Role of the Board
The primary responsibility of the Board is to provide entrepreneurial
leadership and to oversee the overall strategic development of the
Group. In addition, the Board sets the Group’s values and standards
and ensures that the Group’s businesses act ethically and that its
obligations to its shareholders are understood and met. The Board
delegates the management of the day to day operation of the business
to the Group Chief Executive, supported by the Group Executive Board
referred to on page 42, subject to appropriate risk parameters.
Matters reserved to the Board
The Board has adopted a formal schedule of matters specifically
reserved to it for decision making. A full schedule of matters reserved
for the Board’s decision along with the Terms of Reference of the
Board’s principal Committees can be found on the Company’s
website at www.savills.com/en/company-information/corporate-
governance.aspx.
The principal matters reserved for the Board are set out below:
Strategy and objectives
Risk management
Reviewing and approving the Group’s strategy, objectives, business
plans and budgets with a view to maintaining the Group’s established
entrepreneurial driven business culture. Following implementation,
the Board continuously monitors and analyses actual performance
against desired outcomes and, where necessary, agrees adjustments
or changes to the strategic plan to ensure the Group achieves its
short, medium and long-term objectives.
Considering, testing and approving significant capital investment
projects in line with strategy and taking a measured approach with the
aim of: maintaining our position as a market leader; strengthening our
presence in an existing market; or establishing the Savills brand in new
markets through acquisitions or partnerships with well established high
calibre local businesses with the skills to complement our existing
capabilities and the ability to sit comfortably within the Savills business
model. Where necessary, reviewing and approving divesting initiatives.
Establishing, monitoring and regulating the levels of risk which
the Group is willing to accept in return for economic success and
implementing systems of internal control, governance and approval
authorities to safeguard shareholder investments.
Regularly analysing the impact of the Group’s adopted risk appetite
against expected outcomes to ensure that the level of risk adopted by
the Board is appropriate such that it can be effectively managed by the
Group’s businesses and neither constrains growth nor has a negative
impact on the Group’s reputation or finances. In response to actual
outcomes and/or changes in the internal and external environments,
regulating acceptable risk levels to reflect the evolution of strategy.
Governance
Finance performance
Overseeing the performance of the Board and its principal Committees
and that of individual Directors to ensure that they continue to be effective
in support of Group strategy, policy and practice.
Planning to refresh or replace retiring or outgoing Directors so as
to ensure that the different skills, experience and knowledge of the
Directors is such that the Group remains capable of adapting to the
changing environment as a consequence of it being directed by a set
of competent, well rounded individuals who have the ability to formulate
sensible and practical ideas capable of being translated into strategies
which deliver results.
In line with the Board’s commitment to operate the Group’s businesses
on an ethically, morally and legally sound basis from the top down,
overseeing the development and approval of the Group’s governance
structure and policies such as the Group’s Code of Conduct, standards
of ethics and policy in relation to business practice, health, safety,
environment, social and community responsibilities to ensure that the
Group continues to do the ‘right thing’ and remains compliant with
regulatory and legal requirements in each of the jurisdictions in which
it operates.
Reviewing the performance of the Group’s businesses’ profits and
cash management initiatives, assessed against the Group’s strategy,
objectives, business plans and budgets to ensure that the financial
resources generated by the businesses work to create additional value,
costs are controlled and/or eliminated and that resource can be made
available at the appropriate time to exploit business opportunities.
Reviewing changes to the Group’s capital structure and the issue of any
securities in the context of achieving efficiencies or reducing the cost of
capital to the Group.
Approving annual and half year results and trading updates, and
accounting policies so as to ensure that communication with the
Group’s shareholders is fair, balanced and understandable; and,
subject to shareholder approval, the appointment and the
remuneration of the External Auditors.
Approving the dividend policy and interim and supplemental dividends
and recommending final dividends which are appropriate to the Group’s
strategy, reflect the performance of the Group and give the Group the
ability to continue to attract inward investment.
SAVILLS PLC REPORT AND ACCOUNTS 2015
41
Overview / Strategy / Performance / Governance / Financial statements Corporate Governance Statement
continued
Board Committees
The Board has established three principal Committees to which it
has delegated certain of its responsibilities, which are set out below.
The roles, membership and activities of these Committees can be
found in the pages which follow.
Nomination Committee
Chaired by Peter Smith (save when Chairman succession was
considered, when the Committee was chaired by Martin Angle,
the Senior Independent Director)
Number of meetings in the year: 4
Role of the Committee
The Nomination Committee is responsible for the size, structure
and composition of the Board, for reviewing and progressing
appointments and for succession planning to ensure that the
Board is refreshed progressively such that the balance of skills and
experience available to the Board remains appropriate to the needs
of the business. The Committee also makes recommendations
to the Board on the membership of the principal Committees of
the Board. The Nomination Committee Report can be found on
pages 47 and 48.
Audit Committee
Chaired by Liz Hewitt from 13 May (previously chaired by Martin
Angle until 13 May).
Number of meetings in the year: 4
Role of the Committee
The Audit Committee is responsible for assisting the Board
in fulfilling its financial and risk responsibilities, in particular for
ensuring that the financial statements are fair, balanced and
understandable. It oversees financial reporting, internal control,
risk management and reviews the work of the Internal and
External Auditors and advises the Board on the appointment of
the External Auditors. The Audit Committee Report can be found
on pages 49 to 54.
Remuneration Committee
Chaired by Rupert Robson from 1 October 2015 (and by
Tim Freshwater up to 30 September 2015)
Number of meetings in the year: 3
Role of the Committee
The Remuneration Committee is responsible for determining the
remuneration of the Chairman and the Executive Directors and for
reviewing that of the members of the Group Executive Board. The
Directors’ Remuneration Report can be found on pages 55 to 69.
Group Executive Board (‘GEB’)
As mentioned above, the Group Chief Executive is supported by
the GEB. The GEB is the key management committee of the Group.
It is chaired by the Group Chief Executive and comprises the Group
Chief Financial Officer, the Heads of the Principal Businesses and
the Group Legal Director & Company Secretary. The GEB meets
regularly and under the leadership of the Group Chief Executive,
the GEB is responsible for the day to day management of the
Group including overseeing the development and implementation
of strategy, capital expenditure, and investment budgets, for the
ongoing review and control of Group risks as detailed on pages
27 to 31 and reporting on these areas to the Board for approval,
implementing Group policy, monitoring financial and operational
performance of the Group and other specific matters delegated
to it by the Board.
An explanation of how the Group creates and preserves value,
and the strategy for delivering its objectives is included in the
Group Chief Executive’s review on pages 12 to 14.
Membership of the GEB is detailed on page 45.
Board meetings
Attendance table
Non-Executive Directors
Peter Smith
Martin Angle
Tim Freshwater
Liz Hewitt
Rupert Robson*
Charles McVeigh
Executive Directors
Jeremy Helsby**
Simon Shaw**
Meetings
attended
Meetings
eligible to
attend
8
8
8
8
4
8
8
8
8
8
8
8
4
8
8
8
* Was appointed to the Board on 23 June 2015.
Members of the Group Executive Board.
**
The Board met formally eight times during the year and there was full
attendance at all meetings by Directors, as shown in the table above.
42
SAVILLS PLC REPORT AND ACCOUNTS 2015
Board activity
As detailed above, although the Board has a schedule of matters
reserved to it for formal decision, there has to be a level of flexibility
to meet the evolving needs of the business and we endeavour to
develop our processes in order to support growth and to achieve
continuous improvement across the Group.
Below is a chart which shows in simple terms those areas on which
your Board has been focused during 2015 and which will remain key
in the coming year.
Strategy
– Strategy setting
–
– Achievement of goals
Target delivery
Leadership and risk
– Entrepreneurial support
– Succession planning
– Oversight of operational
management
– Determination of principal
risks and risk appetite
Governance
– Assurance and
compliance
– Board management
and effectiveness
– Remuneration policy in
support of strategy
Finance
–
Optimising our internal
control framework
– Capital allocation,
financing and funding
– Overview and preparation
of financial statements
In 2015, the Board’s focus has been on the specific growth initiatives
across the Group. In particular, the Board focused on the acquisition
of the business of Smiths Gore in the UK in May; the acquisition in
August of SEB Asset Management AG and through it SEB Investment
Management GmbH, as part of the strategic objective of expanding
the business of Savills Investment Management (formerly Cordea
Savills), the Group’s investment management platform; and the
acquisition of an initial 45% interest in a Malaysian full service agency
business, now known as Savills Malaysia.
Information flow
At its meetings during the year, the Board discharged the duties
above and received updates on the Group’s financial performance,
key management changes, material new projects, financial plans,
and legal and regulatory updates.
The Chairman, together with the Group Legal Director & Company
Secretary, ensures that the Directors receive management
information, including financial, operating and strategic reports,
in advance of Board meetings.
The Board receives presentations from the Heads of the Principal
Businesses and Functions on matters of significance and periodically
meetings are held in regional centres to give the Board greater insight
into the business in that region. The Group Legal Director & Company
Secretary provides the Board with updates and reports covering legal
developments and regulatory changes.
Board meetings
One of the Board’s meetings during the year was specifically devoted
to the review and reconfirmation of the Group’s strategy. This meeting,
benefited from presentations and discussions with a number of the
Heads of the Principal Businesses. The delivery of strategic plans will
continue to be monitored and reviewed by the Board and periodic
updates on progress and market developments will be presented by
the Heads of the Principal Businesses. A further Board meeting was
held at the offices of the Group’s French business, which provided
Board members with the opportunity to meet with senior individuals
from the French business and more widely from across the Group’s
European business.
The Board and Committee meetings are structured to allow open
discussion. To enable the Board to discharge its duties, all Directors
receive appropriate and timely information, including detailed papers
in advance of Board meetings. When unable to be present in person,
Directors may attend by audio or video conference. When Directors
are unable to attend a Board or Committee meeting, their views on
the key items of business to be considered at that meeting are relayed
in advance to the Chairman of that meeting in order that these can be
presented at the meeting and influence the debate.
The Non-Executive Directors meet separately at least once each year
without the presence of the Executive Directors and also meet at
least once a year without the Chairman, at which time the Chairman’s
performance is appraised.
Access to advice
The Group Legal Director & Company Secretary, whose appointment
is a matter reserved for the Board, is responsible for advising and
supporting the Chairman and the Board on company law and corporate
governance matters and for ensuring that Board procedures are
followed, as well as ensuring that there is a smooth flow of information
to enable effective decision making.
All the Directors have access to the advice and services of the
Group Legal Director & Company Secretary and through him have
access, if required, to independent professional advice in respect
of their duties at the Company’s expense.
Indemnification of Directors
In accordance with the Company’s Articles of Association, and
to the extent permitted by law, the Directors and the Group Legal
Director & Company Secretary are granted an indemnity, in respect
of any liabilities incurred as a result of their holding office. Such
indemnities were in force during the financial year to 31 December
2015 and up to the date of this Report. The Company also maintains
appropriate insurance cover in respect of legal action against its
Directors and Officers.
SAVILLS PLC REPORT AND ACCOUNTS 2015
43
Overview / Strategy / Performance / Governance / Financial statements
Corporate Governance Statement
continued
1
2
3
4
5
6
7
8
9
Board of Directors
1. Peter Smith
Chairman of Savills plc and Chairman of the
Nomination Committee
Appointment to the Board: Peter was appointed to the Board
as a Non-Executive Director on 24 May 2004 and was elected
Chairman with effect from 1 November 2004.
Background and relevant experience: Formerly UK Senior
Partner of PricewaterhouseCoopers (PwC), Peter served for
two years as Chairman of Coopers & Lybrand International and
as a member of the global leadership team of PwC. He served
as Chairman of RAC plc and Templeton Emerging Markets
Investment Trust plc, and was a Non-Executive Director of
Safeway plc and the Equitable Life Assurance Society.
Other appointments: Non-Executive Director of Associated
British Foods plc and Rothschild & Co SCA.
Committee membership: Remuneration and
Nomination Committees.
2. Jeremy Helsby
Group Chief Executive
Appointment to the Board: Jeremy joined Savills in 1980
and was appointed to the Board in 1999.
Background and relevant experience: He was Chairman
and Chief Executive Officer of Savills Commercial and Savills
Europe for seven years until he was appointed as Group Chief
Executive on 7 May 2008.
Committee membership: Nomination Committee.
3. Simon Shaw
Group Chief Financial Officer
Appointment to the Board: Simon joined Savills as
Group Chief Financial Officer in March 2009.
Background and relevant experience: Simon is a Chartered
Accountant. He was formerly Chief Financial Officer of Gyrus
Group PLC, a position he held for five years until its sale to the
Olympus Corporation. Simon was Chief Operating Officer of
Profile Therapeutics plc for five years and also worked as
a corporate financier, latterly at Hambros Bank Limited.
Other appointments: Non-Executive Chairman of
Synairgen plc.
Other appointments: Non-Executive Director of Pennon
Group plc, OAO Severstal, Shuaa Capital psc (Dubai),
Chairman of The National Exhibition Group, and Vice
Chairman and Treasurer of FIA Foundation.
Committee membership: Audit, Remuneration
and Nomination Committees.
5. Charles McVeigh
Independent Non-Executive Director
Appointment to the Board: Charles was appointed to the
Board as a Non-Executive Director on 1 August 2000.
Background and relevant experience: Formerly, he was
Co-Chairman of Citigroup’s European Investment Bank and
served on the Boards of Witan Investment Company plc,
Clearstream, the London Stock Exchange, LIFFE, British
American Business Inc and was a member of both the
Development Board and Advisory Council of the Prince’s
Trust, he was also a Non-Executive Director of Petropavlovsk
plc until mid 2015. He was appointed by the Bank of England
to serve on the City Capital Markets Committee and the Legal
Risk Review Committee and was a member of the Fulbright
Commission. Charles has recently become Chairman of
Rubicon Fund Management, a successful London based
hedge fund.
Other appointments: A Senior Adviser at Citigroup, Charles
also serves on the Board of EFG-Hermes and is a Trustee of
the Landmark Trust and the Natural History Museum
Development Board.
6. Tim Freshwater
Independent Non-Executive Director
Appointment to the Board: Tim was appointed to the Board
as a Non-Executive Director on 1 January 2012.
Background and relevant experience: Tim is Chairman
of Goldman Sachs Asia Bank Limited and was formerly
Chairman of Corporate Finance for Goldman Sachs (Asia).
He was also Chairman of Grosvenor Asia Pacific Limited until
2013. Before joining Goldman Sachs, Tim worked at Jardine
Fleming, becoming Group Chairman in 1999, and was
a partner at Slaughter and May from 1975 to 1996.
Other appointments: Non-Executive Director of Aquarius
Platinum Limited, Swire Pacific Limited and Hong Kong
Exchanges and Clearing Limited.
4. Martin Angle
Senior Independent Non-Executive Director
Committee membership: Audit, Remuneration and
Nomination Committees.
and latterly 3i as a private equity investor. She qualified as
a Chartered Accountant with Arthur Andersen.
Other appointments: Non-Executive Director of Melrose
Industries Plc and Novo Nordisk A/S. Senior Independent
member of the House of Lords Audit Committee.
Committee membership: Audit, Remuneration and
Nomination Committees.
8. Rupert Robson
Independent Non-Executive Director and Chair of the
Remuneration Committee
Appointment to the Board: Rupert was appointed to the
Board as a Non-Executive Director on 23 June 2015.
Background and relevant experience: Rupert has held
a number of senior roles in financial institutions, most recently
Chairman of Charles Taylor plc and Non-Executive Director
of London Metal Exchange Holdings Limited, Tenet Group
Limited and OJSC Nomos Bank. Prior to that he was Global
Head, Financial Institutions Group, Corporate Investment
Banking and Markets at HSBC and Head of European
Insurance, Investment Banking at Citigroup Global Markets.
Other appointments: Chairman of Tullett Prebon plc,
Chairman of Charles Taylor plc, Sanne Group plc and EMF
Capital Partners
Committee membership: Audit, Remuneration and
Nomination Committees.
9. Nicholas Ferguson
Independent Non-Executive Director and
Chairman Designate
Appointment to the Board: Nicholas was appointed to the
Board as a Non-Executive Director on 26 January 2016 and
will become Chairman when Peter Smith retires from the
Board in May 2016 at the conclusion of the Company’s AGM.
Background and relevant experience: Nicholas has held a
number of leadership roles in the private equity and investment
sectors. He was co-founder of Schroder Ventures (the private
equity group which later became Permira) of which he served
as Chairman from 1984 to 2001. He later served as Chairman
of SVG Capital plc, a publicly quoted private equity group,
from April 2005 to November 2012.
Other appointments: Nicholas has been Chairman of Sky Plc
since April 2012, having been appointed to the board as a
Non-Executive Director in June 2004 and having previously
served as Deputy Chairman and Senior Independent
Non-Executive Director. He is also currently Chairman of Alta
Advisers Limited, an investment advisory firm and Chairman
and founder of Kilfinan Group, which provides mentoring by
Chairman and CEOs to heads of charities.
Appointment to the Board: Martin was appointed to the
Board on 2 January 2007 and replaced Timothy Ingram as the
Senior Independent Non-Executive Director from 9 May 2012.
Background and relevant experience: Formerly, he was
Group Finance Director of TI Group plc and held various
executive roles with Terra Firma Capital Partners and its
portfolio companies, including The Waste Recycling Group
(Executive Chairman) and Le Meridien Hotel Group (Deputy
Chairman). Prior to that he held a number of senior positions
in investment banking with S G Warburg & Co., Morgan
Stanley and Dresdner Kleinwort.
44
SAVILLS PLC REPORT AND ACCOUNTS 2015
7. Liz Hewitt
Independent Non-Executive Director and Chair of the
Audit Committee
Appointment to the Board: Liz was appointed to the Board
as a Non-Executive Director on 24 June 2014.
Committee membership: Audit, Remuneration and
Nomination Committees.
Background and relevant experience: Liz was previously
Group Director, Corporate Affairs of Smith & Nephew plc
between 2004 and 2011, and prior to 2004, was a director
of 3i plc having spent her early career with Gartmore, CVC
10
11
12
13
14
15
16
17
13. Raymond Lee
Chief Executive – Hong Kong, Macau and Greater China
Appointment to the Group Executive Board: Raymond was
appointed to the Group Executive Board in January 2011.
Background and relevant experience: He joined Savills in
1989. In 2003, Raymond became the Managing Director in
Hong Kong and Macau and in 2010 was appointed CEO of
Greater China. Raymond is a Fellow of the Hong Kong Institute
of Directors and is a Guangdong Province Zhuhai Municipal
Committee Member, CPPCC.
14. Simon Hope
Global Head of Capital Markets
Appointment to the Group Executive Board: Simon
was appointed to the Group Executive Board when it was
formed in February 2008.
Background and relevant experience: He joined Savills
in September 1986 and he is Head of our Global Capital
Markets business. He is also a member of the Board of the
Charities Property Fund and Tilstone LLP.
15. Justin O’Connor
Chief Executive – Savills Investment Management
Appointment to the Group Executive Board: Justin
was appointed to the Group Executive Board in
September 2010.
Background and relevant experience: He joined
Cordea Savills in January 2004 as Head of Business
Development. He was subsequently appointed Chief
Executive of Savills Investment Management (formerly Cordea
Savills) in January 2006. Justin previously held a number of
senior positions at Henderson Global Investors, Lend Lease
and the AMP Society.
16. Mitch Steir
(alternate member with Michael Colacino)
Chairman & CEO – Savills Studley
Appointment to the Group Executive Board: Mitch was
appointed to the Group Executive Board when Studley, Inc.
joined Savills in May 2014.
Background and relevant experience: He joined Studley, Inc.
in 1988 after beginning his commercial real estate career at
Huberth & Peters in New York.
Other appointments: Mitch serves on the boards of
The Museum of the City of New York, the Film Society
of Lincoln Center, The Realty Foundation of New York, The
Avenue of Americas Association and the Citizens Budget
Commission.
17. Michael Colacino
(alternate member with Mitch Steir)
President – Savills Studley
Appointment to the Group Executive Board: Michael was
appointed to the Group Executive Board when Studley, Inc.
joined Savills in May 2014.
Background and relevant experience: He joined Studley, Inc.
in October 1991 and became president in 2002.
Other appointments: Michael serves on the Real
Estate Board of New York’s Board of Governors and
the Advisory Board of the Zell-Lurie Real Estate Center
at Wharton.
Group Executive Board
2. Jeremy Helsby
Group Chief Executive
For photograph and full biography see opposite page.
3. Simon Shaw
Group Chief Financial Officer
For photograph and full biography see opposite page.
10. Chris Lee
Group Legal Director & Company Secretary
Appointment to the Group Executive Board: Chris joined
Savills in June 2008 and was appointed to the Group
Executive Board in August 2008. He has responsibility for legal
and compliance issues globally.
Background and relevant experience: He held equivalent
roles with Alfred McAlpine plc, Courts plc and Scholl plc
between 1997 and 2008, prior to which he was Deputy Group
Secretary of Delta plc from 1990 to 1997.
11. Mark Ridley
Chief Executive – Savills UK and Europe
Appointment to the Group Executive Board: Mark was
appointed to the Group Executive Board when it was formed
in February 2008.
Background and relevant experience: He became
Chief Executive of Savills UK and Europe in October 2014,
previously holding the position of Chief Executive for Savills UK
following the merger of the Commercial and L&P businesses
in January 2013. He previously served as Chairman and Chief
Executive of Savills Commercial Limited from January 2008
and prior to this was Head of the Manchester office which he
opened for Savills from the time he joined in July 1996.
12. Rob McKellar
Chief Executive – Asia Pacific
Appointment to the Group Executive Board: Rob was
appointed to the Group Executive Board when it was formed
in February 2008.
Background and relevant experience: He was appointed
Chief Executive of Asia Pacific on 31 March 2005 having
served as the Group Finance Director since June 2000 and
prior to this since December 1994 was Finance Director of
Savills Commercial Limited.
SAVILLS PLC REPORT AND ACCOUNTS 2015
45
Overview / Strategy / Performance / Governance / Financial statements Corporate Governance Statement
continued
Effectiveness
Board composition and balance
Balance of Non-Executive Directors and Executive Directors
Non-Executive Chairman – 1
Non-Executive Directors – 5
Executive Directors – 2
Length of Tenure of Non-Executive Directors
0-4 years – 3
5-9 years – 1
10+ years – 2
At all times during the year at least half of the Board members,
excluding the Chairman, were Independent Non-Executive Directors.
Chairman and Chief Executive
The posts of Chairman and Group Chief Executive are distinct
and separate and their roles and responsibilities are clearly
established. The Chairman leads the Board and ensures the
effective engagement and contribution of all Executive and Non-
Executive Directors. The Group Chief Executive has responsibility
for all Group businesses and acts in accordance with the authority
delegated by the Board. There are a number of areas where the
Board has delegated specific responsibility to management,
including responsibility for the operational management of the
Group’s businesses as well as reviewing strategic issues and risk
matters in advance of these being considered by the Board and/or
its Committees. The Board considers that throughout the year the
Company was in full compliance with the Code.
Independence of the Non-Executive Directors
The Non-Executive Directors are responsible for bringing
independent and objective judgement and scrutiny to matters
before the Board and its Committees. The Board monitors the
independence of its Non-Executive Directors, particularly those who
have given long service. It is the view of the Board that each of the
Non-Executive Directors brings considerable management expertise
and is an Independent Non-Executive Director, being independent
of management and having no business or other relationship which
could interfere materially with the exercise of their judgement.
In particular, notwithstanding his long service on the Board, the
Board continues to consider that Charles McVeigh remains entirely
independent in character and judgement. His experience provides
valuable insight, knowledge and continuity.
Senior Independent Director
Martin Angle is the Senior Independent Director and is available to
shareholders if they have concerns which have not been addressed
by contact with the Chairman and/or Group Chief Executive.
Time commitments and conflicts
The Board is satisfied that the Chairman and each of the
Non-Executive Directors committed sufficient time during the year
to enable them to fulfil their duties as Directors of the Company.
None of the Non-Executive Directors has any conflict of interest
which has not been disclosed to the Board in accordance with
the Company’s Articles of Association (‘Articles’).
Board evaluation
In accordance with the provisions of the Code it is our intention to
conduct an external independent evaluation of Board effectiveness
and performance and that of its principal Committees at least
every three years.
This year the annual Board evaluation was led by the Chairman
and supported by the Group Legal Director & Company Secretary.
Next year the Board will engage an independent external facilitator
to undertake the evaluation. The 2015 internal evaluation covered
the performance of the Board as a whole as well as that of its
Committees and involved each Board member completing
a questionnaire and then using this as the background for
a confidential interview. The evaluation covered six core themes:
Board effectiveness, Board structure, working practices, succession
planning, relationships with shareholders and future priorities in
relation to Board performance. The feedback obtained was collated
into a report which was presented to the Board.
The evaluation showed that the Board and its Committees
continued to operate effectively without any significant areas
of concern. In an effort to continue to improve, however,
recommendations arising from the evaluation included: the need
to further enhance succession plans in place covering both the
executive and Non-Executive Directors, the need to maintain the
culture of the Board and maintain continuity through a period of
significant change in the membership of the Board, the need to have
both updated and tested crisis management plans in place to allow
the Board to respond to serious unexpected events and the need to
keep the Group’s strategy and development plans under constant
review to ensure that these remain appropriate in the light of the
current market uncertainty.
Overall, the Board considers the performance of each Director to
be effective and concluded that both the Board and its Committees
continue to provide effective leadership and exert the required
levels of governance and control. The shareholders should therefore
support their re-election or re-appointment (as applicable) to the
Board at the AGM in May. The Board will continue to review its
procedures, effectiveness and development.
The skills and experience of the Directors are set out on page 44.
46
SAVILLS PLC REPORT AND ACCOUNTS 2015
Nomination Committee Report
Peter Smith
Chairman of the
Nomination Committee
The Nomination Committee has an important role to play in
ensuring that the Board and its principal Committees have the right
mix of skills, experience and diversity to deliver Group strategy and
to create value. The Committee keeps under review and evaluates
the composition of the Board and its Committees to maintain the
appropriate balance of skills, knowledge and independence to
be able to function effectively.
In consultation with the Chairmen of the principal Committees, the
Nomination Committee will continue to monitor the needs of the
Board and its Committees in the context of Group strategy, with
the aim of ensuring that the Group’s succession planning policy
evolves such that there is an identifiable supply of talent and
experience available to the Board and its Committees from which
to select successors.
Meetings
Attendance table
Committee member
Peter Smith
Martin Angle
Tim Freshwater
Liz Hewitt
Rupert Robson*
Jeremy Helsby
Meetings
attended
Meetings
eligible to
attend
4
4
4
4
2
4
4
4
4
4
2
4
* Rupert Robson was appointed to the Board on 23 June 2015.
As at 31 December 2015 and up to the date of this Report, the Nomination
Committee was primarily composed of Independent Non-Executive Directors.
Biographical details relating to each of the Committee members is shown on
page 44.
Diversity
The Board is aware that the number of women on boards remains
a topic for debate for companies and regulators. We fully agree
with the spirit and aspirations of the Davies Report to increase the
number of women on company boards. However, all appointments
to the Board are made on merit and within this context, whilst
having regard to the recommendations of the Davies Report, the
Board continues to view diversity in the widest sense, with a view
to appointing the best-placed individual for the role. Appointing the
best people to the Board is critical to the success of the Company
and our focus remains on attracting the right talent and skills
irrespective of gender or diversity.
The Board is committed to a culture that attracts and retains talented
people to deliver outstanding performance and further enhance the
success of the Group. The Board recognises the benefits of having
diversity across all areas of the Group. In a sector which historically
has struggled to retain a high percentage of female leaders, we
are striving to redress the balance with our successful graduate
recruitment programme which aims to have a balanced intake of
males and females and should help to ensure that there continues
to be a diversity of talent within the Company from which we can
draw the future leaders of our Company. The Company’s policy on
diversity applies across all levels of the Group and further details of
the policy can be found in the Resources and Relationships section
on pages 22 to 26.
The biographies of the Board members appear on page 44.
Board induction, training and support
To ensure a full understanding of Savills and its businesses,
following their appointment to the Board, each Director undergoes
a comprehensive and tailored induction programme which
introduces the Director to the Group’s businesses, its operations,
strategic plans and key risks. New Directors are also provided with
information on relevant share dealing policies, Directors’ duties,
Company policies and governance. The induction also includes one
to one briefings from the Heads of the Principal Businesses and an
introduction to each Group business’s development strategy.
The Group Legal Director & Company Secretary is responsible
for ensuring that the Directors receive regular updates on
developments in legal and regulatory matters.
Directors’ conflicts of interest
The Directors are subject to a statutory duty under the Companies
Act 2006 to avoid situations in which they have, or could have, an
interest that conflicts or possibly may conflict with the interests
of the Company. A Director will not be in breach of that duty if
the relevant matter has been authorised by the other Directors
in accordance with the Articles. The Board has adopted a set of
guiding principles on managing conflicts and approved a process
for identifying current and future actual and potential conflicts of
interest. It was also agreed that the Nomination Committee would
review authorised conflicts at least annually or if and when a new
potential conflict situation was identified or a potential conflict
situation materialised. During 2015, actual and potential conflicts
of interest that were identified by each Director were subsequently
authorised by the Nomination Committee, subject to appropriate
conditions in accordance with the guiding principles. Procedures
adopted to deal with conflicts of interest continue to operate
effectively and the Board’s authorisation powers continue to be
exercised properly in accordance with the Company’s Articles
of Association.
SAVILLS PLC REPORT AND ACCOUNTS 2015
47
Overview / Strategy / Performance / Governance / Financial statements Corporate Governance Statement
continued
During the year, the Committee comprised the Independent Non-
Executive Directors, together with the Chairman and the Group
Chief Executive. The Committee Chairman is Group Chairman, Peter
Smith (save in circumstances where the Chairman’s succession
is considered). Any other Director, the Group Legal Director &
Company Secretary or an external adviser may be invited by the
Committee to attend the meetings from time to time, as appropriate.
The Committee meets at least twice a year, or as required, and met
four times during 2015. There was full attendance at all meetings by
members, as shown in the table on page 42. Members of the
Committee also attend the Company’s AGM at which there is an
opportunity to meet with shareholders. The Committee Chairman is on
hand to answer questions in the event that shareholders ask specific
questions related to the Nomination Committee and its activities.
Committee objective and activities
The primary objective of the Committee is to review the size and
composition of the Board and its key Committees and to plan for
its progressive refreshing, with regard to balance and structure.
The Committee has standing items that it considers regularly under
its Terms of Reference; for example, the Committee considered and
approved Directors’ potential conflicts of interest and reviewed its
own Terms of Reference (which are reviewed at least annually or as
required, e.g. to reflect changes to the UK Corporate Governance
Code or as a result of changes in regulations or best practice).
More detailed information on the role and responsibilities of the
Committee can be found in the Committee’s Terms of Reference which
can be accessed on the Company’s website at www.savills.com.
Succession planning and diversity
The Company adopts a formal, rigorous and transparent procedure
for the appointment of new Directors and key Senior Executives with
consideration to gender and diversity in its widest sense. Before
making an appointment, the Committee assesses the balance of skills,
knowledge, independence, experience and diversity of the Board and,
in view of this assessment, will draw up a description of the role and
competencies needed, with a view to appointing the best placed
individual for the role. In making a recommendation to the Board on
a Non-Executive Director appointment, the Nomination Committee
specifically considers the expected time commitment of the proposed
Non-Executive Director and other commitments they may already have.
The Company uses recruitment consultants to assist the Committee
in delivering its objectives and responsibilities; and the search firms are
required to present a mix of suitable male and female candidates. No
Director is involved in decisions regarding his or her own succession.
Activity during the year
During the year, the Committee focused on succession planning and in
doing so, it considered the tenure, mix and diversity of skills and experience
of existing Board members and those of prospective Board members in
the context of the Group’s strategy. The Committee agreed that it would
be appropriate to appoint an additional Non-Executive Director to ensure
that the Board, as a whole, had an appropriate range of skills, experience
and knowledge to support the future development of the business. In the
search for prospective Non-Executive Directors, the Nomination Committee
retained independent executive search firm Spencer Stuart as recruitment
consultants. The Committee agreed the process, mandate and timetable
with Spencer Stuart and oversaw the selection process. Spencer Stuart
were asked to compile a long list of potential candidates which was
reduced to a final shortlist of four candidates by the Committee. The four
candidates were then interviewed by Peter Smith and the Group Chief
Executive. Rupert Robson was identified as the preferred candidate and
then met with the other Committee members. In considering the
appointment, the Nomination Committee considered Rupert’s ability to
make the appropriate time available to the Company in the light of his other
48
SAVILLS PLC REPORT AND ACCOUNTS 2015
commitments, as noted in his biography on page 44 and was satisfied
that he would be able to meet fully his obligations to the Company, which
remains the view of the Committee. The unanimous recommendation of
the Committee to the Board was that Rupert Robson be appointed
as a Non-Executive Director with effect from 23 June 2015.
In anticipation of the succession of the Chairman, Odgers Berndtson
were appointed during the year (from a shortlist of three executive
search firms) to search for a new Non-Executive Director who would
succeed Peter Smith on his retirement as Chairman at the close of
the AGM in May 2016. Prior to external recruitment consultants being
appointed, the qualities and skill set sought for the role as Chairman
were agreed by the Board. The recruitment process was overseen by
the Senior Independent Director. Following a detailed external search
Odgers Berndtson compiled a long list of potential candidates which
was reduced to a final shortlist by the Committee. Interviews were
held with individuals on the short list by the Directors of the Board
before Nicholas Ferguson was selected as the preferred candidate by
the Committee. The unanimous recommendation of the Committee
to the Board was that Nicholas Ferguson be appointed as a Non-
Executive Director, which occurred with effect from 26 January 2016.
New Directors receive a tailored induction as detailed on page 47.
Coming year
The Committee recognises the importance of planning for the future
and of having a succession planning policy designed to bring in new
skills and perspectives to the Board which complement the experience
of the existing Board members. In the coming year the Committee will
continue to keep the Board’s composition under review and consider
how the composition may be enhanced to ensure that the Board
continues to reflect the needs of the Company and its shareholders.
Accountability
Internal control and risk management
The Board has overall responsibility for risk management and internal
controls across the Group. This responsibility includes the determination
of the nature and extent of the principal risks the Board is willing to take
to achieve its strategic objectives and for ensuring that an appropriate
culture has been embedded throughout the organisation. Risk
management is implemented from the top down. The Board is
supported by the Audit Committee in discharging its oversight
duties with regard to internal control and risk management.
Whilst the Board is responsible for ensuring that an appropriate culture
has been embedded throughout the organisation and establishing
and maintaining the Group’s system of risk management and internal
control to safeguard shareholders’ investments and the Group’s assets
(and for reviewing the effectiveness of this system), such a system is
designed to manage rather than eliminate the risk of failure to achieve
business objectives and can provide only reasonable and not absolute
assurance against material misstatement or loss. Further details of the
risk management process, the principal risks and uncertainties faced
by the Group and the associated mitigating actions are set out on
pages 27 to 31.
The Board’s attitude and appetite to risk is communicated to the
Group’s businesses through the strategy planning processes. The Audit
Committee monitors the ongoing status and progress of action plans
against key risks on a regular basis and reports its findings to the Board.
Going concern
The Group’s business activities, together with the factors considered
likely to affect its future development, performance and position
are set out in the Strategic Report on pages 10 to 32. The financial
position of the Group, its cash flows, liquidity position and borrowing
facilities are described on pages 37 and 38. In addition, Note 3 to
the financial statements includes the Group’s objectives, policies and
processes for managing its capital, its financial risk management
objectives, details of its financial instruments and hedging activities,
and its exposures to credit risk and liquidity risk.
Audit Committee Report
The Group has considerable financial resources, including a £250m
committed revolving credit facility (augmented by a £50m ‘accordion’
option which can be activated to increase the facility) that runs to
December 2020. The Group has a broad geographic presence,
service offering and extensive client spread ensuring that the Group
is not over-dependent on one geography, service line or client. As
a consequence, the Directors believe that the Group is well placed to
manage its business risks successfully.
After making appropriate enquiries, the Directors have a reasonable
expectation that the Company and the Group have adequate
resources to continue as a going concern for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Report and Accounts.
Relations with shareholders
Dialogue with shareholders
The Group recognises the importance of maintaining regular
dialogue with its shareholders. The Group Chief Executive and Group
Chief Financial Officer lead a regular programme of meetings and
presentations with analysts and investors, including presentations
following the publication of the Company’s full and half year results.
This programme maintains a continuous two-way dialogue between
the Company and shareholders, and helps to ensure that the Board
is aware of shareholders’ views on a timely basis. The Board also
normally receives feedback twice each year from its corporate brokers
on investors’ and the market’s perceptions of the Company. The
Chairman and the Senior Independent Director are also available to
meet shareholders if so required. The Company has enjoyed and is
appreciative of the significant shareholder support that it has enjoyed
in recent years in relation to the Group’s remuneration policy, The
Company continues to welcome shareholder views with regard to
the Group’s Remuneration Policy and the Remuneration Committee
gives due consideration to such views when raised. Details of the
Company’s response to any shareholder views raised would be
included in the relevant year’s Remuneration Report.
Constructive use of the Annual General Meeting
The AGM provides the Board with a valuable opportunity to
communicate with private shareholders and is generally attended
by all of the Directors. Shareholders are given the opportunity to ask
questions before and during the meeting and to meet Directors following
the conclusion of the formal part of the meeting. In accordance with
the Code, the level and manner of voting of proxies lodged on each
resolution at the AGM is declared at the meeting and published on the
Company’s website. The outcome of the votes cast at the 2015 AGM
in respect of the 2014 Directors’ Remuneration Report can be found
on page 66. The Directors aim to give as much notice of the AGM and
other general meetings as possible, which is at least 20 working days
before the AGM and at least 14 working days before other general
meetings in accordance with the UK Corporate Governance Code.
Details of the resolutions to be proposed at the 2016 AGM can be found
in the AGM Notice which accompanies this Report and Accounts.
In accordance with the Articles of Association, electronic and paper
proxy appointments and voting instructions must be received not
later than 48 hours before a general meeting.
The Company has taken advantage of the provisions within the
Companies Act 2006 (‘CA 2006’) which allow communications with
shareholders to be made electronically where shareholders have not
requested hard copy documentation. Details of the information available
to shareholders can be found on page 140. Information about the
Company is also available on the Company’s website (www.savills.com).
Liz Hewitt
Chair of the
Audit Committee
This report details the Committee’s major considerations and
activities during the 2015 financial year in ensuring that the
Company’s governance processes remain appropriate, robust,
of a high standard and are rigorously applied.
The Audit Committee has a key role in ensuring the integrity of the
Group’s financial statements, internal controls and effectiveness
of its risk management processes. The Audit Committee also has
a role in representing the interests of shareholders by monitoring
the activities and conduct of management and the auditors. The
principal changes to the 2014 UK Corporate Governance Code
extended the Board’s responsibilities to undertake a robust
assessment of the principal risks associated with the Company’s
business model, future performance, solvency and liquidity; and
requires a statement of the longer-term prospects and viability
of the Company, as well as monitoring the Company’s risk
management and internal controls systems.
During the year, the Committee reviewed the principal risks and
risk appetite, to ensure the alignment of these with the Company’s
strategic objectives. It monitored the effectiveness of the control
environment through the review of reports from Internal Audit,
management and the External Auditors and ensured the quality of
the Company’s financial reporting by reviewing the 2014 Report and
Accounts and the Half Year Financial Statements, and subsequently
in 2016 the Company’s 2015 Report and Accounts. The Committee
considered the processes supporting the assessment of the
Group’s longer-term solvency and liquidity in support of the viability
statement. The Committee agreed that three years was the
appropriate period for the assessment of the viability statement
as this is the timescale of the Group’s strategic planning process.
The Committee will continue to monitor its own activities in the
light of regulatory and best practice developments.
The key matters considered in the year are set out on
pages 51 and 52.
The Audit Committee has reviewed the content of this year’s
Annual Report and Accounts and has advised the Board that
in its view the Report taken as a whole is in its opinion fair,
balanced and understandable and that it provides the information
necessary for shareholders to assess the Group’s position,
performance, business model and strategy.
The Committee noted the unqualified opinion from the External
Auditors on the 2015 Annual Report.
On behalf the Audit Committee, I would like to take the
opportunity to thank Martin Angle, who served as Chair of the
Audit Committee until May 2015, for his work for, and guidance of
the Committee.
SAVILLS PLC REPORT AND ACCOUNTS 2015
49
Overview / Strategy / Performance / Governance / Financial statements
Corporate Governance Statement
continued
Meetings
Attendance table
The Committee met four times during the year and the
attendance at the meetings is shown in the table below:
Committee member
Liz Hewitt (Chair from 13 May 2015)
Tim Freshwater
Martin Angle (Chair until 13 May 2015)
Rupert Robson*
Meetings
attended
Meetings
eligible to
attend
4
4
4
2
4
4
4
3
*
Rupert Robson was appointed as a Director of the Company and member
of the Committee on 23 June 2015.
As at 31 December 2015 and up to the date of this Report, the Audit
Committee was comprised entirely of Independent Non-Executive Directors.
The Board considers the Committee members to have recent and relevant
financial experience as per the UK Corporate Governance Code. Biographical
details of the Committee members are shown on page 44.
Martin Angle retires as a member of the Committee at the Committee’s March
2016 meeting.
The Chair of the Committee meets informally, and is in regular
contact with the Group Chief Financial Officer, Group Director of Risk
& Internal Audit and the Group Legal Director & Company Secretary.
This Group develops the Committee’s proposed annual work plan
for consideration by the Committee and generally meets ahead of
each full Committee meeting to prepare and identify key areas for
consideration by the Committee. The Committee meets separately
with the Group Chief Financial Officer, the External Auditors and
the Group Director of Risk & Internal Audit without management
being present.
The Non-Executive Chairman, Group Chief Executive, Group Chief
Financial Officer, Group Financial Controller, Group Director of Risk
& Internal Audit and Group Legal Director & Company Secretary
attend each meeting, as does the lead audit partner from the
Group’s External Auditors. Other senior executives from across the
Group are invited to present reports to assist the Audit Committee
in discharging its duties.
The Chair of the Committee also attends the AGM to respond to
shareholder questions on its activities.
Composition
The Committee is a core element of the Company’s governance
framework. The Audit Committee is chaired by Liz Hewitt. Liz Hewitt
became Committee Chairman when Martin Angle stood down as
Committee Chairman at the conclusion of the 2015 AGM. Three
independent Non-Executive Directors, Liz Hewitt (and previously
Martin Angle), Tim Freshwater and Rupert Robson are members of
the Committee. Members of the Committee are appointed by the
Board following recommendations by the Nomination Committee
and membership is reviewed annually by the Nomination Committee
as part of the annual Board performance evaluation.
All members of the Committee receive induction including an
overview of the business, its financial dynamics and risks, and
meetings with senior management. Committee members are
expected to have an understanding of the principles of, and
recent developments in, financial reporting and internal controls,
risk management, and internal and external audit roles and
responsibilities.
Role, main objectives and responsibilities
The Committee’s role is to assist the Board in discharging its duties
and responsibilities for financial reporting, internal control, the risk
management process and in making recommendations to the
Board on the appointment of the External Auditors. The Committee
is responsible for the scope and results of the external audit work,
its cost effectiveness and the independence and objectivity of the
External Auditors.
The Committee is authorised to investigate any matter within its
Terms of Reference (a copy of which can be found in the governance
section of the Company’s website at www.savills.com/en/company-
information/corporate-governance.aspx) and has access to the
services of the Group Legal Director & Company Secretary and,
where necessary, the authority to obtain external legal or other
independent professional advice to fulfil its duties.
The Committee is responsible for reviewing the Group’s whistle-
blowing arrangements, including ensuring that appropriate
arrangements are in place for employees to be able to raise in
confidence matters of alleged impropriety and for ensuring
that appropriate follow-up actions are taken.
Activities of the Committee
To enable the Committee to carry out its duties and responsibilities
effectively it works to a planned programme of activities focused
on key events in the annual financial reporting cycle. This work
includes items that the Committee considers regularly under its
Terms of Reference. The Committee relies on information and
support from management across the business, receiving reports
and presentations from, business management, the heads of
key Group functions, the Internal and External Auditors, which it
challenges as appropriate, and reports its findings to the Board.
50
SAVILLS PLC REPORT AND ACCOUNTS 2015
The principal activities of the Committee during the year are
set out below:
How the Committee discharged its
responsibilities
Mar Jun Aug Dec
Responsibilities
Financial
Reporting
Reviewed and discussed the key
accounting considerations and
judgements reflected in the Group’s
results for the half year
Reviewed and discussed the
key accounting considerations
and judgements reflected in the
Group’s results
Reviewed going concern status
and considered whether any asset
impairments were required
Reviewed the viability statement
External
Audit
Agreed the external audit strategy
and scope
Considered and where appropriate
approved the instruction of the
Group’s External Auditors on
non-audit assignments
Reviewed and considered the
External Auditors’ Report, including
the External Auditors’ observations
on the Group’s Internal Control
environment
Discussed the External Auditors’
performance and fee during the year
Met with the External Auditors
without management present
to discuss their remit and
any concerns
Assessed the External Auditors’
independence and recommended
their re-appointment by the Board
Reviewed the Group’s arrangements
by which staff can, in confidence,
raise concerns about possible
improprieties in matters of financial
reporting or other matters.
The Committee would also consider
any reports made under these
arrangements, but none were
made during the year
Compliance,
Whistle‑
blowing
and Fraud
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
✓
Responsibilities
How the Committee discharged its
responsibilities
Mar Jun Aug Dec
Internal
Audit
Considered and approved the remit
of the internal audit function and the
2015 internal audit plan
✓
Received and considered reports
from the Group’s Internal Audit
team covering various aspects of
the Group’s operations, controls
and processes and monitored the
progress made by management
in addressing recommendations
arising out of these reports
Monitored and reviewed the
effectiveness of the Group’s internal
audit function in the context of the
Group’s overall risk management
arrangements
Met with the Group Director of
Risk and Assurance without
management present to discuss
their remit and any concerns
Reviewed the effectiveness of the
Group’s risk management system
and internal controls in place to
manage the Group’s principal risks
Reviewed and considered the
Group’s risk register and advised
the Board on risk appetite
Reviewed the work and
effectiveness of the Group
Risk Committee
Reviewed risk management
arrangements for the Group’s
regional businesses by inviting
presentations from the Heads and
Chief Financial Officers of the
Principal Businesses
✓
✓
✓
✓
✓
✓
✓
✓
✓
Internal
Controls
and Risk
Management
Systems
Other
Reviewed the Committee’s own
performance, constitution and terms
of reference, and recommended any
changes the Committee considers
necessary for Board approval
✓
SAVILLS PLC REPORT AND ACCOUNTS 2015
51
Overview / Strategy / Performance / Governance / Financial statements Corporate Governance Statement
continued
Audit Committee agenda in 2015
During the year, in addition to its established review processes, the
Committee’s work included the reconfirmation of the Group’s risk
appetite and consideration of the risk management policies applied
to the Group’s Valuation Practices. The Committee also considered
the processes supporting the assessment of the Group’s longer-term
solvency and liquidity which support the new viability statement,
and considered and provided input into the determination of which
of the Group’s principal risks might have an impact on the Group’s
longer-term solvency and liquidity. It also reviewed the results of
management’s scenario modelling, including severe downside
modelling, and the stress testing of those models.
At the June meeting, the Committee reviewed the Group’s continuing
compliance with the AIFM control environment (in the context of the
Group’s investment management business) to ensure continuing
compliance with the legislation.
Financial reporting and significant accounting issues
As part of its monitoring of the integrity of the financial statements,
the Committee considers the appropriateness of the accounting
policies proposed for adoption and whether management
has made appropriate estimates and judgements. To support
its decision making, the Committee seeks support from the
External Auditors in these areas.
The significant accounting issues considered by the Committee
and discussed with the External Auditors during the year were:
Matter considered Action
Management
override of
internal
controls
Impairment
of goodwill
Presumed
risk of fraud
in revenue
recognition
Provisions
for litigation
Accounting
for
acquisitions
The Committee considered the presumed risk of
management override of internal controls as defined
by the Auditing Standards. In so doing, the Committee
reviewed the robustness and effectiveness of the
overall control environment of the Group, including
consideration of the Group’s whistle-blowing
arrangements and the reviews conducted by the
Internal and External Auditors, and was satisfied
that there were no issues arising.
The Committee received reports from management on
the carrying value of the Group’s businesses, including
goodwill. The Committee reviewed management’s
recommendations, which were also considered by
the External Auditors, including evaluation of the
appropriateness of the assumptions applied in
determining asset carrying values. After review, the
Committee was satisfied with the assumptions and
judgements applied by management and, with the
support of the External Auditors, concluded that
no impairments were required.
The Committee considered the presumed risk of
fraud as defined by the Auditing Standards and
was satisfied that there were no issues arising.
The Committee reviewed the provisions held in relation
to each significant legal case and assessed the
appropriateness of these as at 31 December 2015
taking into account the Group’s insurance cover and
the advice received from external counsel to ensure that
appropriate provision had been made. The Committee
agreed with the position taken by management in
respect of these matters.
The Committee considered the accounting treatment
of the acquisition of the business of Smiths Gore by
the Group on 31 May 2015 for a total payment of up
to £37.3m. The Committee also considered the
accounting treatment of the acquisition of SEB Asset
Management AG by Savills Investment Management
on 31 August 2015 for a total payment of up to €21.5m.
Regulatory
compliance
obligations
During the year the Committee reviewed the Group’s
policies and procedures around regulatory risks,
including but not limited to:
– whistle-blower reports;
– anti-bribery and corruption procedures; and
– the Group’s Client Acceptance procedures, with
particular reference to the Group’s Anti-Money
Laundering procedures.
The Committee was satisfied that no significant issues
had been identified in this area.
52
SAVILLS PLC REPORT AND ACCOUNTS 2015
Internal Audit
The provision of Internal Audit services during 2015 was delivered
by the Group’s Internal Audit team with support from a third-party
service provider. The Board’s responsibility for internal control
and risk is detailed on page 40 and is incorporated into this
Report by reference.
During the year, the Committee reviewed and approved the Internal
Audit plan, having regard to the complementary roles of the Internal
Audit function and External Auditors. The Committee ensured
that the Internal Audit team had the necessary resources and
information made available to it to enable it to fulfil its mandate to
the appropriate professional standards. The Committee reviewed
Internal Audit reports on a regular basis and the Group Director
of Risk & Assurance attended meetings and presented to the
Committee. In assessing the performance of the Internal Audit
function, the Committee considered and monitored its effectiveness
in the context of the Company’s risk management system and took
into account management’s assessment of and responsiveness to
the Internal Auditor’s findings and recommendations and reports
from the External Auditors on any issues identified during the course
of their work.
Assessment of Risk Management and Internal Control
The Audit Committee, on behalf of the Board undertook a robust
review of the effectiveness of the system of risk management
and internal control. In performing its review of effectiveness,
the Committee reviewed and assessed the following reports
and activities:
–
internal audit reports on the review of the controls across the
Group and the monitoring of management actions arising from
these reviews;
–
– management’s own assessment of risk and the performance of
the system of risk management and internal control during 2015;
reports from the Group Director of Risk & Assurance including
reports on Group-wide risk assessment activity and annual
self-assessment findings; and
reports from the External Auditors on any issues identified
during the course of their work.
–
Having reviewed the effectiveness of the system of internal
control, the Committee was satisfied that necessary actions have
been, or are being taken to remedy any significant failings or
weaknesses identified.
The integrity of the Group’s relationship with the External
Auditor and the effectiveness of the External Audit process
The Committee carried out a review of the effectiveness of the
external audit process and considered the reappointment of
PricewaterhouseCoopers LLP (‘PwC’) and the appropriateness
of its fees. The review covered a broad range of matters including
amongst other matters, the quality of PwC staff, its expertise,
resources and the independence of the PwC audit.
The Committee considered the audit plan for the year and assessed
how the External Auditors had performed. In deciding whether to
recommend the reappointment of PwC the Committee considered
the robustness of their challenge and findings on areas which require
judgement, the strength and depth of the lead partners and
feedback from the Group’s management.
There were no significant findings arising from the evaluation this
year and the Committee concluded that both the audit and the audit
process were effective. The Committee recommended to the Board
that PwC be reappointed as External Auditors for a further year
and a resolution recommending their reappointment will be put to
shareholders at the 2016 AGM.
The Financial Reporting Council (‘FRC’) has amended the UK
Corporate Governance Code to require audit tendering every
10 years on a comply or explain basis for FTSE 350 companies.
On 26 September 2014, the Competition Commission (‘CC’), now
the Competition Markets Authority (‘CMA’), published its final Order
on mandatory audit tendering for FTSE 350 companies such as
Savills. This Order came into effect on 1 January 2015 and applies
to financial years beginning on or after 1 January 2015 and therefore
applies to the year which is subject to this Annual Report. The
Order confirms that FTSE 350 companies will need to undertake
a tendering process in respect of their statutory audit services at
least every 10 years. Furthermore, if a company has not completed
a tendering appointment process of statutory auditors for five
consecutive financial years, the Order requires the Audit Committee
of such company to state in its annual report when the company
intends to conduct the tender and why such proposed date is in the
best interests of the company (and such statement must be repeated
in each subsequent report until a competitive tender is conducted).
The requirement for conducting mandatory audit tenders every
10 years is subject to transitional arrangements set out in the
Order and, accordingly, this requirement does not apply to PwC’s
proposed reappointment as External Auditors which will be
proposed to the shareholders at the 2016 AGM.
SAVILLS PLC REPORT AND ACCOUNTS 2015
53
Overview / Strategy / Performance / Governance / Financial statements Corporate Governance Statement
continued
The Committee will be reviewing the Company’s audit tender
timetable and processes as part of a wider review of the Order and in
preparation for the audit tender which will be carried out at the end of
the next lead audit partner term in 2020. The Committee concluded,
following its review of the external audit process in 2015, that PwC
remained objective and independent whilst at the same time having
considerable knowledge and experience of the Group and providing
expert services. Accordingly, the Committee is satisfied that the
proposed retender of audit services in 2020 is in the best interests
of the shareholders of the Company.
In accordance with the Group’s policy, the following non-audit
services may not be provided by the External Auditors:
–
bookkeeping or other services related to the accounting records
or financial statements;
financial information systems design and implementation;
Internal Audit outsourcing services;
–
–
– management functions or human resources advice; or
–
advising on senior executive (including Executive Director)
remuneration.
The EU has approved new EU-wide audit legislation for audit
firm tendering requirements. The FRC is now considering
the implementation of these changes, including transitional
arrangements. The FRC is also proposing changes to its Ethical
Standards for Auditors and to its Auditing Standards.
To further safeguard the independence of the Company’s External
Auditors and the integrity of the audit process, recruitment of
senior employees from the External Auditors is not allowed
for an appropriate period after they cease to provide services
to the Company.
PwC has been the Company’s Auditor since 2001 following a tender
for the external audit. The senior partner responsible is rotated every
five years to ensure objectivity and the last lead partner change took
place in 2011. At the close of the 2015 audit a new audit partner will
have lead responsibility for the external audit. The transition to the
new audit partner has already started.
Disclosure of relevant audit information
The Directors confirm that, insofar as they are each aware, there is
no relevant audit information of which PwC is unaware and each
Director has taken the steps that ought to have been taken as
a Director to be aware of any relevant audit information and
to establish that PwC is aware of that information.
Auditor Independence
The Committee recognises the importance of external auditor
objectivity and monitors their independence. The Committee has
established policies to consider the appropriateness of appointing
the External Auditors to perform non-audit services, and whether the
External Auditors are the most suitable supplier.
During the year, PwC was paid £1.4m for audit services and
£1.2m for non-audit services, principally for advice on taxation and
transaction-related matters. Details of the fees paid to the External
Auditors can be found in Note 7.3 on page 99. Contracts for non-
audit services in excess of £0.1m require Committee approval and
the Chair of the Audit Committee is notified of new instructions for
the delivery of non-audit services below this level.
The Committee is satisfied that in view of their knowledge and
experience of the Company, PwC was best placed to provide such
non-audit services and that their objectivity and independence has
not been impaired by reason of this further work. In line with the
Company’s policy on the provision of non-audit work, the Committee
will review the provision of non-audit work provided by the External
Auditors on a case-by-case basis.
54
SAVILLS PLC REPORT AND ACCOUNTS 2015
Directors’ Remuneration Report
Annual statement
Dear Shareholder
Rupert Robson
Chairman of the
Remuneration Committee
(appointed 1 October 2015)
Governance
This Report has been prepared on behalf of the Board by the
Remuneration Committee (the ‘Committee’) in accordance with
the requirements of the Companies Act 2006 and the Large
and Medium-sized Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013 (‘Regulations’) and the
auditable disclosures referred to in the External Auditor’s Report
on pages 73 to 79 as specified by the UK Listing Authority and
the Regulations.
2011–2015 Overview
Underlying Profit
Dividend Payments to Shareholders*
Executive Director Remuneration**
Total Shareholder Return
141%
108%
86%
170%
*
**
The dividend cost for 2015 comprises the cost of the final dividend
recommended by the Board (amounting to £10.7m), payment of which is
subject to shareholder approval at the Company’s Annual General Meeting
(‘AGM’) scheduled to be held on 11 May 2016, the cost of the supplemental
dividend (£18.7m) declared by the Board on 9 March 2016 (payable to
shareholders on the Register of Members as at 15 April 2016) and the
interim dividend (£5.3m) paid on 12 October 2015.
Executive Director remuneration comprises the remuneration paid to the
Group Chief Executive Officer and Group Chief Financial Officer job holders
between 1 January 2011 and 31 December 2015. Since 1 July 2010 the
Executive Director representation on the Board has comprised these
job holders.
On behalf of the Board, having been appointed as the Chairman of
the Remuneration Committee with effect from 1 October 2015, I am
pleased to introduce our 2015 Directors’ Remuneration Report (the
‘Report’) which sets out Savills remuneration philosophy and policy
in relation to Directors’ remuneration and how this was implemented
in the year ended 31 December 2015. In the interests of succinct
reporting we have not reproduced the Remuneration Policy report
in full. We have provided the approved policy table at the end
of this report for ease of reference. The full report can be found
on our website.
Our remuneration philosophy
Our focus and business policy is founded on the premise that staff
in our sector are motivated through highly incentive-based (and
therefore variable) remuneration consistent with our partnership style
culture. We firmly believe that this approach best aligns shareholders’
and management’s interests and incentivises superior performance
and the creation of long-term shareholder value. This approach
also ensures that our reward arrangements are consistent with
and sensitive to the cyclical nature of real estate markets.
Our Remuneration Policy is designed to deliver these objectives
and to provide the reward potential necessary for the Company to
attract, retain and motivate the high-calibre individuals on whom
its continued growth and development depend. Reflecting this
philosophy, the salaries for the Executive Directors, Group Executive
Board members and senior fee-earners are set significantly below
market medians for similar businesses, with a greater emphasis on
the performance-related elements of profit share and/or, outside
the UK, commission in the total reward package.
The Committee is mindful of its responsibility to reward appropriately,
but not excessively, and rigorously assesses competitive positioning
in setting remuneration and determining targets to ensure that
reward properly reflects performance, that it supports the delivery
of our strategic and operational objectives and that it is fair to
management and shareholders alike. Overall, we expect employment
costs over the cycle to be in the range of 65%–70% of revenues.
2015 performance and remuneration
Annual performance-related profit share
Savills delivered another excellent performance in 2015, delivering
results significantly above expectations. Key highlights for the
year included:
– Underlying profit of £121.4m which represented 21% growth
on 2014;
– Revenue growth of 19% on 2014; and
–
Further improvement in the Group’s underlying profit margin
to 9.5% (2014: 9.3%).
SAVILLS PLC REPORT AND ACCOUNTS 2015
55
Overview / Strategy / Performance / Governance / Financial statements Governance developments
On behalf of the Remuneration Committee, I wanted to take the
opportunity to thank Tim Freshwater, who served as Chairman of
the Remuneration Committee until September 2015.
Last year we strengthened the malus and clawback provisions
in our incentive programmes. As a Committee, we continue to
monitor best practice developments in executive remuneration,
and will particularly consider these as we undertake a review
of our approach during the course of 2016, prior to submitting
our Remuneration Policy to shareholders for approval in 2017.
We would consult with shareholders prior to any substantive
changes to our policy.
The Committee is appreciative of the significant shareholder support
that it has enjoyed in recent years and welcomed shareholders’
endorsement of the 2014 Annual Remuneration Report at the
2015 AGM. We hope that you find this year’s Annual Remuneration
Report equally clear and informative and that you will continue to
support us by voting in favour of the resolution at this year’s AGM
on 11 May 2016.
Rupert Robson
Chairman of the Remuneration Committee
Directors’ Remuneration Report
continued
In addition to this, 2015 also saw further strong progress in the
delivery of the Group’s longer-term strategic objectives, in particular:
–
–
–
the acquisition, by Savills Investment Management, of SEB
Asset Management, which achieves a step-change in the
scale of the Group’s Investment Management platform;
the continued successful integration of Savills Studley, in
particular delivering the growth targeted for the year to
expand the business geographic spread and broaden/further
strengthen its service offering; and
implementing a succession plan for the Group’s Asia Pacific
business, including strengthening the Asia Pacific central
management team through the recruitment of a Chief Operating/
Financial Officer (to support the Asia Pacific Chief Executive)
for the region.
Reflecting the very strong overall performance in 2015, the
Committee considered it appropriate to approve annual
performance-related profit share awards at the maximum potential
in relation to the financial performance of the Group and in relation
to delivery of strategic and operational objectives for the Executive
Directors. We have provided transparent retrospective disclosure of
the threshold, target and maximum financial targets which were set
for the year, which can be found on page 59.
2016 remuneration
An overview of the key decisions for 2016 is as follows:
–
–
–
–
In line with our policy of not making annual incremental
changes to base salary, there are no increases to base salary
from last year.
The variable remuneration structure will continue to operate
in line with the current philosophy with the annual profit share
based 70% on underlying profit before tax and 30% on the
delivery for strategic objectives.
The PSP award for the CEO will be an award of £550,000 which
is the same as last year (200% of salary). The CFO award will be
£250,000 (c.111% of salary) which is in line with 2014, and is
lower than 2015.
Following a review of the PSP performance targets and taking
into consideration a number of factors including current global
macro-economic and political concerns, the Committee decided
to set the threshold EPS target at RPI +3% and the maximum
target at RPI +8%. The Committee considers that this approach
will most appropriately align the interests of management and
shareholders. The relative total shareholder return target will
remain in line with the previous years.
56
SAVILLS PLC REPORT AND ACCOUNTS 2015
Annual Report on Remuneration
Role of the Committee
The principal role of the Committee is to support the Group to
achieve its strategic objectives by designing a remuneration policy
consistent with the Group’s business model such that we have
the ability to attract, recruit, retain and motivate the high-calibre
individuals needed to deliver the Group’s strategy. The Committee
is responsible for the broad policy governing senior staff pay
and remuneration. It sets the actual levels of all elements of the
remuneration of the Executive Directors and reviews that of Group
Executive Board members. The Policy remains under periodic review
to ensure that it remains consistent with the Company’s scale and
scope of operations, supports business strategy and growth plans
and helps drive the creation of shareholder value. The Committee
also oversees the operation of Savills’ employee share schemes.
Committee members and attendees
As shown in the table below, the Committee comprises the
Independent Non-Executive Directors and the Non-Executive Chairman:
Committee member
Position
Status
Rupert Robson
(appointed 23 June
2015)
Chair of the
Committee (from
1 October 2015)
Tim Freshwater
Martin Angle
Liz Hewitt
Peter Smith
Chair of the
Committee (to
30 September 2015)
Member of the
Committee (from
1 October 2015)
Member of the
Committee
Member of the
Committee
Member of the
Committee
Independent
Independent
Independent
Independent
Non-Executive Chairman
Nicholas Ferguson, who joined the Board as an additional
Independent Non-Executive Director on 26 January 2016, became
a member of the Committee on the same date.
Committee attendee
Position
Status
Jeremy Helsby
Group Chief
Executive Officer
Chris Lee
Group Legal
Director &
Company
Secretary
Attends by invitation
(except when his own
remuneration is
discussed)
Provides advice and
support (except when
his own remuneration
is discussed) as well
as acting as Secretary
to the Committee
Simon Shaw, Group CFO, may be invited to attend meetings
to provide an overview of market conditions and the Group’s
financial performance.
Meetings
Attendance table
Committee member
Rupert Robson (appointed 23 June 2015)
Tim Freshwater
Martin Angle
Liz Hewitt
Peter Smith
Meetings
attended
Meetings
eligible to
attend
1
4
4
4
4
1
4
4
4
4
As at 31 December 2015 and up to the date of this Report, the
Committee comprises Independent Non-Executive Directors and the
Non-Executive Chairman. Biographical details relating to each of the
Committee members are shown on page 44.
The Committee met four times during the year. The principal agenda
items considered by the Committee during the year were as follows:
–
–
–
–
–
–
reconfirming the Group’s remuneration policy in the context of
the proposed new legislation relating to executive remuneration;
agreeing performance targets for both the annual performance-
related profit share and PSP awards;
preparing an Annual Remuneration Report consistent with the
legislation relating to executive remuneration;
agreeing the remuneration packages of the Executive Directors
and reviewing those of Group Executive Board members;
approving the grant of Performance Share Plan awards; and
approving the grant of share awards to fee-earners and senior
managers across the Group.
Responsibilities of the Committee
The Committee’s principal responsibilities are to determine Company
policy on senior executive remuneration and to set the remuneration
arrangements of the Executive Directors and to review those of the
members of the Group Executive Board. The Committee (excluding
the Non-Executive Chairman) also determines the level of fees
payable to the Non-Executive Chairman. In these respects, the
Committee is advised by Deloitte LLP, who provide independent
commentary on matters under consideration by the Committee
and updates on market developments, legislative requirements
and best practice, and internally by the Group Legal Director &
Company Secretary.
Given the fundamental role that remuneration plays in the success
of the Group, in terms of the recruitment, motivation and retention of
high-quality staff, the Group Chief Executive Officer attends meetings
by invitation and is consulted on the remuneration packages of the
Group Chief Financial Officer and Group Executive Board members.
Advisers to the Committee
In determining Executive Director remuneration, the Committee
has access to detailed external information and research on market
trends and peer practice provided by its independent external
adviser Deloitte LLP. Deloitte is a member of the Remuneration
Consultants Group, and adheres to the voluntary code of conduct
in relation to executive remuneration consulting in the UK. Deloitte’s
fees are based on a time and material basis, within the parameters
of an overall annual budget. In 2015, Deloitte received fees of
£32,700 in relation to advice provided to the Committee. Deloitte
provided no other services to the Group during the year.
SAVILLS PLC REPORT AND ACCOUNTS 2015
57
Overview / Strategy / Performance / Governance / Financial statements Directors’ Remuneration Report
continued
The Committee is satisfied that the advice received from
Deloitte during the year was entirely objective and independent.
The Committee will continue to keep these arrangements under
review to ensure that they remain appropriate to the needs of
the Committee in developing remuneration policy to support
the delivery of Group strategy.
Terms of reference
The Committee’s terms of reference, which are reviewed annually,
or by exception to take account of regulatory changes or best
practice, are available from the Group Legal Director & Company
Secretary upon request or can be viewed on the Company’s
website (www.savills.com).
Remuneration Policy
The Group’s remuneration arrangements for the Executive Directors,
Group Executive Board members and senior fee-earners are
structured to provide a competitive mix of variable performance-
related (i.e. annual performance profit share and longer-term
incentives) and fixed remuneration (principally base salary) to reflect
individual and corporate performance. The objective is to set targets
which are both achievable and stretching.
employee group. It also considers sector and broader market practice
in the context of the prevailing economic conditions and corporate
performance on environmental, social and governance issues.
Overview of the Remuneration Policy
A summary of the Remuneration Policy for Executive Directors
and how it will be applied for 2016 is set out below.
In determining the remuneration of the Executive Directors and
reviewing that of the Group Executive Board members, the
Committee reviews the role and responsibility of the individual,
their performance and the arrangements applying across the wider
The policy report, approved at the 2014 AGM, rather than the
summary provided below, continues to be the policy under which
the Company is bound. The policy table from the approved policy
report is provided at the end of this report for ease of reference.
Element
Base salary
Pension
Summary of approach
Base salaries are set significantly below market median
levels, in line with the Group’s philosophy to place greater
emphasis on variable, performance-related remuneration.
Application of policy for 2016
Salaries for 2016 are:
– Group Chief Executive Officer: £275,000
– Group Chief Financial Officer: £210,000
Pension benefits are provided through a Group personal
pension plan, as a non-pensionable salary supplement
or as a contribution to a personal pension arrangement.
Pension contributions for 2016 are:
– Group Chief Executive Officer: 14% of salary
– Group Chief Financial Officer: 18% of salary
The CEO remains a member of the legacy defined
benefit pension plan but no longer accrues benefits
under the plan.
Benefits
Benefits include:
Benefits in line with policy.
– Medical insurance benefits;
– Car/car allowance (up to £9,000)
– Permanent Health Insurance;
– Life Insurance; and
– Directors’ and Officers’ liability insurance
Annual performance-
related profit share
Reflects the Group’s annual profit performance and
personal performance and contribution.
In line with the Group’s philosophy that there is greater
emphasis on variable performance-related pay.
A portion of any award (on a progressive scale of up to
a third) is deferred into Savills shares for three years.
Malus and clawback provisions apply.
Performance
Share Plan
Awards of shares are made subject to a three-year
performance period.
The maximum award potential is 200% of salary,
subject to an overall maximum of £1m per participant.
Malus and clawback provisions apply.
58
SAVILLS PLC REPORT AND ACCOUNTS 2015
The maximum annual profit share awards are:
– Group Chief Executive Officer: £2m
– Group Chief Financial Officer: £1.5m.
For 2016 profit share awards, 70% will be based on
the Group’s annual profit performance and 30% will
be based on strategic performance goals.
The awards for 2016 will be:
– Group Chief Executive Officer: £550k
– Group Chief Financial Officer: £250k.
For 2016 Performance Share Plan awards, 50% of
the award will vest subject to Earnings Per Share
performance and 50% will vest subject to relative
TSR performance against the FTSE Mid 250 Index
(excluding investment trusts).
Annual Report on Remuneration
Total remuneration for 2015
Set out below are details of Executive Director remuneration for 2015.
Executive Directors’ ‘single figure’ for the financial year ended 31 December 2015 and as a comparison for the financial year ended
31 December 2014 (audited).
Salary
Benefits(1)
Pension: contribution
Pension: defined benefit deferred pension(3)
Annual profit share – cash(2)
Annual profit share – deferred shares(2)
Near term remuneration
Jeremy Helsby
Simon Shaw
2015
£
2014
£
2015
£
2014
£
266,667
225,000
204,167
175,000
10,885
40,958
29,213
11,066
45,000
15,603
11,216
36,750
−
11,216
31,500
−
1,340,000
1,340,000
1,040,000
1,016,000
610,000
600,000
425,000
444,000
2,297,723
2,236,669
1,717,133
1,677,716
The aggregate near term remuneration paid to the Executive Directors in the year ended 31 December 2015 was £4.0m (2014: £3.9m).
Notes:
1.
2. The 2015 and 2014 figures exclude any charity/pension waiver. For 2015, Jeremy Helsby waived £50,000 (2014: £60,000) and Simon Shaw waived £35,000
Benefits comprise private medical insurance and car allowance.
(2014: £40,000) in favour of contributions to registered charities.
3. The cost reflects the annual uplift in the defined benefit pension, which applies to all deferred pensions under the defined benefit pension plan.
4. The Company did not grant Performance Share Plan awards in 2013, accordingly no Performance Share Plan award vested in respect of performance achieved in
the three-year period ending on 31 December 2015. For 2014 the value shown has been updated to reflect the actual market sale price at the date of vesting which
was 822p per share. This value was unknown at the date of the 2014 Annual Report and Accounts. The estimates provided for long-term share-based reward in last
year’s report in respect of 2014 were: Jeremy Helsby £799,068 and Simon Shaw £443,925. The actual value has been split between the relevant value on the date of
the original award of the relevant shares (the Performance Share Plan – performance element) and subsequent increase in value (Performance Share Plan – share
price appreciation).
Gain on long-term share-based awards
Performance Share Plan – performance element(4)
Performance Share Plan – share appreciation element(4)
Long-term share-based reward (non cash)(4)
Total i.e. ‘Single Figure’
Jeremy Helsby
Simon Shaw
2015
£
Actual
2014
£
Actual
2015
£
Actual
2014
£
Actual
–
–
–
450,000
592,263
1,042,263
–
–
–
250,000
329,033
579,033
2,297,723
3,278,932
1,717,133
2,256,749
The information in this table has been audited by the Auditor, PricewaterhouseCoopers LLP.
Performance-related remuneration for 2015
Annual performance-related profit share
Reflecting the Group’s excellent performance in 2015, profit share awards of 100% of maximum potential were earned by the Executive
Directors (2014: 100%). For Jeremy Helsby, one third of the award was deferred for a further three-year period in the form of Savills shares,
of which Jeremy Helsby elected to waive £50,000 to charity. For Simon Shaw, 30% of the award was deferred for a further three years in
the form of Savills shares, of which Simon Shaw elected to waive £35,000 to charity.
The following near-term performance measures applied to the 2015 annual performance-related profit share arrangements:
70% of the award was based on profit performance, defined as underlying profit before tax performance. The Committee set targets at
a level which were significantly higher than the previous year. The target range and Savills performance were as follows:
First hurdle
(20% of element)
£90m
Target
(40% of element)
£105m
Maximum target
(100% of element)
£117m
Savills performance
£121.4m
Bonus award
(% of element)
100%
SAVILLS PLC REPORT AND ACCOUNTS 2015
59
Overview / Strategy / Performance / Governance / Financial statements
Directors’ Remuneration Report
continued
There are pre-defined hurdles between the first hurdle, target and maximum rather than straight-line vesting.
The remaining 30% of performance profit share awards was based on individual performance against key strategic and operational objectives.
The Executive Directors were each awarded 100% of this 30%.
The Committee set strategic and operational objectives for the Executive Directors which were aligned with value creation for Savills.
Details of Jeremy Helsby’s achievement against the key objectives set are as follows:
– Delivering targeted further improvement in the Group’s overall margin, and within this the targeted further improvement in the
–
–
–
performance of the Group’s European business;
The continued successful integration of Savills Studley, in particular delivering the growth targeted for the year to expand the business’
geographic spread and broaden/further strengthen its service offering through targeted acquisitions and people hires;
Further strengthening the framework and teams facilitating the inter-regional servicing of clients and instructions; and
Implementing a succession plan for the Group’s Asia Pacific business, including strengthening the Asia Pacific central management
team through the recruitment of a Chief Operating/Financial Officer (to support the Asia Pacific Chief Executive) for the region.
Details of Simon Shaw’s achievement against the key objectives set are as follows:
–
Leading on the acquisition of SEB Asset Management, and overseeing its integration into the Savills Investment Management platform
to deliver the targeted step-change in AUM;
– Negotiating and arranging, on enhanced terms, medium-term funding facilities to meet the Group’s anticipated requirements and, which
–
would additionally provide the Group with access to appropriate funding in the event of a significant deterioration in market conditions; and
Further developing the Group’s risk management and control environments, in particular ensuring that the Group’s tax processes and
controls were able to satisfy the new country-by-country reporting requirements introduced with the wider roll-out of the OECD ‘Base
Erosion Profit Shifting’ rules.
Long-term incentives
No performance share plan award was made in respect of the three-year performance period ending on 31 December 2015.
Non-Executive Directors fees (audited)
The Non-Executive Director fees for 2015 were as follows:
Basic fee
Additional fees
Senior Independent Director
Remuneration Committee Chairman
Audit Committee Chairman
2015 Total
2014 Total
Peter Smith
(Chairman)
Martin Angle
Tim
Freshwater
Liz Hewitt
Charles
McVeigh
Rupert Robson
(appointed
23 June 2015)
£165,000
£50,000
£50,000
£50,000
£50,000
£26,350
£5,000
£4,167
£59,167
£62,500
£165,000
£157,500
£5,625
£55,625
£52,273
£5,833
£55,833
£25,000
£3,953
£50,000
£47,500
£30,303
–
The fees payable to the Non-Executive Directors are determined by the Non-Executive Chairman and the Executive Directors after
considering external market research and individual roles and responsibilities. The fees for the Non-Executive Chairman are determined
by the Remuneration Committee (excluding the Non-Executive Chairman).
The fee payable to Nicholas Ferguson when he becomes Chairman, scheduled to be at the conclusion of the AGM on 11 May, will be
£190,000 p.a. Nicholas will receive a fee of £95,000 p.a. (pro-rata) for the period from his appointment to him being appointed as Chairman.
The Non-Executive Directors do not participate in incentive arrangements or share schemes.
The information in this table has been audited by the Auditor, PricewaterhouseCoopers LLP.
Operation of policy in 2016
Base salary
The Committee does not intend to make an annual incremental salary increase for the Executive Directors for 2016. The base salaries for the
Executive Directors will therefore remain as follows:
– Group Chief Executive Officer: £275,000 p.a.; and
– Group Chief Financial Officer: £210,000 p.a.
In line with our policy, the base salaries for the Executive Directors continue to be positioned significantly below market median against
the FTSE 250.
60
SAVILLS PLC REPORT AND ACCOUNTS 2015
Variable remuneration
Annual performance-related profit share
For the profit share, in line with previous years, the target weighting will be 70% in relation to the Group’s annual profit performance and
30% in relation to delivery against a mix of strategic and operational objectives. The Committee considers prospective disclosure of profit
share targets and individual objectives to be commercially sensitive and disclosure will therefore be on a retrospective basis.
Performance Share Plan
The remuneration policy is for maximum awards of 200% of salary. The PSP awards for 2016 will be:
–
–
£550,000 for the Group Chief Executive Officer; and
£250,000 for the Group Financial Officer.
As set out in the annual statement from the Committee Chairman, following a review of the PSP performance targets taking into consideration
a number of factors including current global macro-economic and political concerns, the Committee set EPS targets for 50% of the
award as follows:
–
–
–
25% (i.e. threshold) of the element to vest if the Company’s EPS growth is RPI plus 3% p.a. compound;
100% (i.e. the maximum) of the element to vest if the Company’s EPS growth is RPI plus 8% p.a. compound or more;
straight-line vesting between the two points.
The Committee considers that if EPS growth of RPI+8% p.a. were achieved from the excellent 2015 EPS base starting position, this would
represent outstanding performance for shareholders.
The other 50% of the award will vest subject to the satisfaction of relative TSR performance versus the FTSE Mid 250 Index (excluding
investment trusts) (the Index) as follows:
–
–
–
25% (i.e. threshold) of the element to vest if the Group’s TSR performance equals that of the index;
100% (i.e. the maximum) of the element to vest if the Group’s TSR performance outperforms the Index by 8% p.a.;
straight-line vesting between the two points.
Relative spend on pay
To provide context and outline how remuneration for Executive Directors compares with other disbursements, such as dividends and
general employment costs the table below illustrates general employment costs, Executive Director reward, tax charges and dividend
payments to shareholders in 2015 and 2014.
Employment costs
Underlying profit before tax
Dividend payment to shareholders
Executive Director remuneration
Tax
2015
£m
854.1
121.4
34.7
4.0
99.1
2014
£m
695.3
100.5
29.8
3.9
80.8
%
increase
23%
21%
16%
3%
23%
– Employment costs (excluding arrangements for Executive Directors) comprise basic salaries, profit share and commissions, social
–
–
security costs, other pension costs and share-based payments.
Tax comprises corporation tax, social security and business rates and equivalent payments.
The dividend cost stated for 2015 comprises the cost of the final dividend recommended by the Board (amounting to £10.7m), payment
of which is subject to shareholder approval at the Company’s AGM scheduled to be held on 11 May 2016, and the cost of the
supplemental dividend (£18.7m) declared by the Board on 9 March 2016 (payable to shareholders on the Register of Members
as at 15 April 2016) and the interim dividend (£5.3m) paid on 12 October 2015 and is based on the number of shares in issue
as at 31 December 2015.
– Executive Director remuneration comprises the remuneration paid to the Group Chief Executive Officer and Group Chief Financial Officer
role holders.
SAVILLS PLC REPORT AND ACCOUNTS 2015
61
Overview / Strategy / Performance / Governance / Financial statements Directors’ Remuneration Report
continued
Total shareholder return and Group Chief Executive Officer remuneration
The total shareholder return delivered by the Company over the last seven years is shown in the chart below. Over this period the Company
has delivered total shareholder return of 25% per annum (FTSE 250 (excluding investment trusts): 20% per annum; FTSE 350 Super Sector
Real Estate: 13% per annum). Savills was ranked 51st by TSR performance in the FTSE 250 (excluding investment trusts) and ranked sixth
by performance in the FTSE 350 Super Sector Real Estate over the seven years to 31 December 2015.
Total Shareholder Return (‘TSR’) (rebased)
6 years to 31 December 2015
600
500
400
300
200
100
0
9
0
-
n
a
J
9
0
-
r
p
A
9
0
-
l
u
J
9
0
-
t
c
O
0
1
-
n
a
J
0
1
-
r
p
A
0
1
-
l
u
J
0
1
-
t
c
O
1
1
-
n
a
J
1
1
-
r
p
A
1
1
-
l
u
J
1
1
-
t
c
O
2
1
-
n
a
J
2
1
-
r
p
A
2
1
-
l
u
J
2
1
-
t
c
O
3
1
-
n
a
J
3
1
-
r
p
A
3
1
-
l
u
J
3
1
-
t
c
O
4
1
-
n
a
J
4
1
-
r
p
A
4
1
-
l
u
J
4
1
-
t
c
O
5
1
-
n
a
J
5
1
-
r
p
A
5
1
-
l
u
J
5
1
-
t
c
O
5
1
-
c
e
D
Savills
FTSE 250 (excluding investment trusts)
FTSE 350 Super Sector Real Estate
The Board believes that the FTSE 250 Index (excluding investment trusts) remains the most appropriate index against which to compare
TSR over the medium term as it is an index of companies of similar size to Savills. Savills TSR relative to that of the FTSE 350 Super Sector
Real Estate Index is also shown, as this index better reflects conditions in real estate markets over recent years.
Pay for performance
Year
2015
2014
2013
2012
2011
Total
Single Figure
Remuneration
£’000
2,298
3,279
2,630
1,786
1,268
Underlying
Profit Before
Tax
£m
121.4
100.5
75.2
58.6
50.4
Underlying
Profit Before
Tax
% change
Annual Variable element:
Performance Profit Share – award
against maximum potential
%
Long-term
Incentive fully vested
(maximum potential of award)
100%
+21
+34
+28
+16
+7
100
100
86
65
49
N/A
100
100
100
0
Total remuneration in 2012, 2013, 2014 and 2015 includes, as required, the notional value of Performance Share Plan awards and executive
share options which vested (but were not exercised) in those years (note that no Performance Share Plan awards were granted in 2013
with the consequent effect on Total Single Figure Remuneration in 2015 compared to the 2013 and 2014 years). The awards granted in 2008
lapsed in 2011.
Group Chief Executive Officer pay increase in relation to all UK employees
Group Chief Executive Officer
All UK employees
Percentage change in remuneration
from 31/12/2014 to 31/12/2015
Percentage
change in
base salary %
Percentage
change in
benefits %
+18.5%
+0.2%
-1.6%
-6.11%*
Percentage
change in
profit share
award %
0%
-3.5%
*
the reduction in the cost of all UK employee benefits from 2014 principally reflects the reduction in pension costs following (a) the scheduled reduction of employer
pension contributions in relation to former members of the closed Savills Pension Plan (in relation to which employers contributions reduced from 20% to 14% of
salary effective April 2015) and (b) the enrolment, pursuant to Auto-Enrolment, of employees joining Savills UK as a result of the acquisition of the business of Smiths
Gore into the introductory section of the Savills UK Group Personal Pension Scheme, with the result that pension costs per head reduced in 2015.
Notes:
1.
Salary, benefits and bonus is compared against full-time equivalent UK employees. The UK workforce was chosen as a suitable comparator group as Jeremy Helsby
is based in the UK (notwithstanding his global role and responsibilities) and is in line with policy benefits which vary across the Group by reference to local market
conditions and practice. Audited information.
2. As set out in the 2014 Directors’ Remuneration Report, given that the base salary for the Group Chief Executive Officer had not been increased for five years and
given the significant increase in the size and complexity of the Group, the Group Chief Executive Officer’s salary was increased from £225,000 p.a. to £275,000 p.a.
effective 1 March 2015. The base salary for the Group Chief Executive Officer continues to be positioned significantly below market median against the FTSE 250.
62
SAVILLS PLC REPORT AND ACCOUNTS 2015
Pensions disclosure
From March 2015 the Group Chief Executive Officer received a non-pensionable salary supplement equal to 14% of pensionable earnings.
This had reduced from 20% per annum in 2014. For the Group Chief Financial Officer, the Company contributes 18% per annum of
pensionable earnings to his personal pension plan.
The Group Chief Executive Officer no longer accrues a pension benefit under the Savills Pension Plan (the ‘Plan’). The value of the legacy
benefit is shown below.
Executive Director
Jeremy Helsby
Defined
benefit pension
accrued at
31 December
2015
Defined
benefit pension
accrued at
31 December
2014
Defined benefit
pensions value
for 2015
remuneration
table
Defined benefit
pensions value
for 2014
remuneration
table
61,113
58,945
29,213
15,603
Notes
1.
The accrued pension entitlement shown is the maximum pension (before the commutation of any amount of the accrued entitlement to cash as permitted by Plan
and HMRC rules) which would have been paid annually by the Plan, from the Plan’s Normal Retirement Age of 60 based on pensionable service in the Plan. In line
with the standard terms available to all members, upon passing the retirement age for the purpose of the plan, Jeremy Helsby elected to draw down his pension
and is in receipt of a pension of £49,935 per annum which will be increased annually in line with the Plan’s provisions.
2. Pensionable service ceased at 31 March 2010 for all members of the Plan. Jeremy Helsby became a deferred pensioner at 30 April 2010 and benefits now
increase in the period to payment in line with the revaluation rules that apply to all members of the Plan. There are no additional benefits payable on early retirement.
3. These figures do not allow for benefits and contributions in respect of the defined contribution scheme.
4. The valuation of the increase in the defined benefit pension over the year has been determined in accordance with the prescribed methodology for remuneration reporting.
Share interests
Details of shares in the Company which the Directors beneficially held or had a beneficial interest in as at 31 December 2015 are shown below:
Executive Directors
Jeremy Helsby
Simon Shaw
Number of
shares (including
beneficially held
under the SIP)
604,849
155,594
Unvested
shares
subject to
performance
conditions
(PSP)
142,073
84,348
Deferred share
bonus plan
awards (vesting
not subject to
performance
conditions)
(DSBP)
198,765
148,716
Extent to
which
shareholding
guideline met
403%
148%
The Company applies shareholding requirements of 150,000 shares for the Group Chief Executive Officer and 105,000 shares for the Group
Chief Financial Officer. New Executive Directors are expected to build holdings to these levels over time, principally through the retention
of shares released to them (after settling any tax due) following the vesting of share awards. As required by the UK Corporate Governance
Code 2014, the Committee has given consideration as to whether the Executive Directors should be required to hold a minimum number
of shares and to hold shares for a further period after the vesting or exercise of awards, including for a period after leaving the Company.
The Company has a long-established shareholding requirement for the Executive Directors and Group Executive Board members which
the Committee considers remains appropriate; at the current time, particularly taking into account that the Executive Directors and Group
Executive Board Members have very significant shareholdings in the Company.
Non-Executive Directors
Peter Smith
Martin Angle
Tim Freshwater
Liz Hewitt
Charles McVeigh
Rupert Robson
At 31
December
2015
20,000
–
–
3,400
–
–
As at 9 March 2016, no Director had bought or sold shares since 31 December 2015, with the exception of Simon Shaw who, as a
participant in the Savills Share Incentive Plan (SIP), has acquired 32 shares through the SIP since 31 December 2015. As at 9 March 2016
Simon Shaw holds 155,626 shares.
The Sharesave Scheme
No Directors hold outstanding options under the Sharesave Scheme and no options were exercised during the year.
SAVILLS PLC REPORT AND ACCOUNTS 2015
63
Overview / Strategy / Performance / Governance / Financial statements Directors’ Remuneration Report
continued
Scheme interests granted in 2015
The following table sets out details of awards made under the Performance Share Plan in 2015.
Jeremy Helsby
Nil-cost options
£550,000
Type of award
Basis of award
(face value)
Performance
period
% vesting for
threshold
performance
% vesting for
maximum
performance
Simon Shaw
Nil-cost options
£350,000
1 January 2015 to
31 December 2017
25%
100%
Performance
criteria
– 50% of award
Earnings per share growth
– 50% of award
Relative total
shareholder return
against the FTSE 250
(excluding investment trusts)
Awards were also made during the year under the Deferred Share Bonus Plan. Details of awards under this plan are set out on page 65.
The Performance Share Plan (‘PSP’)
Number of shares
Directors
Jeremy Helsby
Simon Shaw
Awarded
during year
Vested
during
year
At 31
December
2015
Closing
mid-market
price of a
share the
day before
grant
Market value
at date of
vesting
First
vesting
date
126,796
–
354.9p
820.0p
17.04.15
–
70,442
–
–
–
–
75,000
67,073
–
41,666
42,682
600.0p
820.0p
354.9p
600.0p
820.0p
–
–
12.08.17
23.04.18
820.0p
17.04.15
–
–
12.08.17
23.04.18
At 31
December
2014
126,796
75,000
70,442
41,666
–
–
–
67,073
–
42,682
Awards over 197,238 shares, together with a further 20,004 shares in lieu of dividends, vested under the PSP to Executive Directors during
the year. A subscription cost of 2.5p nominal value per share is payable on actual receipt of shares. The total pre-tax gain on awards vested
during the year was £1,775,953.
The Executive Share Option Scheme (2001) (‘ESOS’)
The ESOS reached the end of its 10-year agreed life span in May 2011, although options granted up to and including May 2011 continued
to be exercisable in the normal fashion during 2015, having satisfied performance criteria attaching to them. There are no outstanding
options as at 31 December 2015 and no further options can be granted under the ESOS.
Number of shares
Directors
Jeremy Helsby
Simon Shaw
At 31
December
2014
114,386
10,389
114,286
61,592
Granted
during year
HMRC
Approved/
Unapproved
Exercised
during year
Lapsed
during year
At 31
December
2015
Market price
on date of
exercise
Exercise
price
per share
Date
normally first
exercisable
Expiry date
– Unapproved
114,386
–
Approved
10,389
– Unapproved
114,286
– Unapproved
61,592
–
–
–
–
–
–
–
–
820p
340.95p
19.04.13 19.04.20
652p
652p
652p
288.75p
17.04.12
17.04.19
288.75p
17.04.12
17.04.19
340.95p
19.04.13 19.04.20
Options over 300,653 shares were exercised by Executive Directors during the year. A subscription cost is payable on receipt of the shares
as detailed above. The total pre-tax gain on options exercised during the year was £1,192,423.
64
SAVILLS PLC REPORT AND ACCOUNTS 2015
The Deferred Share Bonus Plan (‘DSBP’)
Number of shares
Directors
Jeremy Helsby
Simon Shaw
At
At
31 December
2014
Awarded
during year
Vested
during year
31 December
2015
48,100
54,828
70,767
–
–
–
–
73,170
32,676
39,571
53,048
–
–
–
–
54,146
48,100
–
–
–
32,676
–
–
–
–
54,828
70,767
73,170
–
39,571
53,048
54,146
Closing
mid-market
price of a
Savills plc
share the day
before grant
350.6p
549.5p
653.0p
820.0p
350.6p
549.5p
653.0p
820.0p
Market value
at date of
exercising
Normal
vesting date
820p
19.04.15
–
–
–
26.06.16
13.05.17
24.04.18
820p
19.04.15
–
–
–
26.06.16
13.05.17
24.04.18
Under the DSBP awards over 80,776 shares and 5,762 shares in lieu of dividends vested to Executive Directors during the year. The total
pre-tax gain on awards vested during the year was £709,612. No DSBP awards lapsed.
During the year, the aggregate gain on the exercise of share options and shares vested was £3,667,995. The mid-market closing price
of the shares at 31 December 2015 was 886p and the range during the year was 648p to 986.5p.
Exit payments
No Executive Directors left the Company during the year ended 31 December 2015. No payments for compensation for loss of office were
paid to, or receivable by, any Director for that or any earlier year.
External directorships
Savills recognises that its Executive Directors may be invited to become non-executive directors of other companies. Such non-executive duties
can broaden experience and knowledge which can benefit Savills. Subject to approval by the Board and any conditions that it might impose,
the Executive Directors and Group Executive Board members are allowed to accept external non-executive directorships and retain the fees
received, provided that these appointments are not likely to lead to conflicts of interest. For non-executive directorships which are considered
to arise by virtue of an Executive Director’s or Group Executive Board member’s position within Savills, the fees are paid directly to Savills.
During 2015, Simon Shaw received a fee of £30,000 in relation to his continuing appointment as Non-Executive Chairman of Synairgen plc
which he was permitted to keep.
Service contracts
The Executive Directors have rolling service contracts which are terminable on 12 months’ notice by either the Company or the
Executive Director.
Directors
Jeremy Helsby
Simon Shaw
Contract date
1 May 1999
16 March 2009
The Non-Executive Directors and the Chairman have letters of appointment. In line with the UK Corporate Governance Code 2014,
all Directors are subject to annual re-election at the AGM. The Chairman’s letter of engagement allows for six months’ notice.
Appointment of other Non-Executive Directors may be terminated by either party with three months’ notice.
Director
Peter Smith
Martin Angle
Tim Freshwater
Liz Hewitt
Charles McVeigh
Rupert Robson
Date appointed to Board
End date of current letter of appointment
25 May 2004
2 January 2007
1 January 2012
25 June 2014
1 August 2000
23 June 2015
25 May 2016
11 May 2016
31 December 2017
24 June 2017
1 August 2016
22 June 2017
SAVILLS PLC REPORT AND ACCOUNTS 2015
65
Overview / Strategy / Performance / Governance / Financial statements Directors’ Remuneration Report
continued
Shareholder votes on remuneration matters
The table below shows the voting outcome for the 2014 Annual Remuneration Report at the AGM held on 13 May 2015. The Directors’
remuneration policy, which describes the Company’s policy relating to Directors’ remuneration, was approved at the 2014 AGM and remains
unchanged. It was therefore not required to be put to shareholders for approval at the 2015 AGM.
Number
of votes
‘For’ and
discretionary
% of
votes
cast
Number
of votes
‘Against’
% of
votes
cast
Total
number of
votes cast
Number
of votes
‘Withheld’*
2014 Annual Directors’ Remuneration Report
106,531,013
97.17% 3,104,703
2.83% 109,635,716
16,116
* A vote withheld is not a vote in law.
Policy table extract from the Directors’ Remuneration Policy approved by shareholders at the 2014 AGM
The following sets out the table of remuneration elements from the Remuneration Policy, which was approved by shareholders at the 2014
AGM. To provide consistency with the remainder of the Report, salaries shown are 2016 salaries and Performance Share Plan awards have
been updated for the operation of the policy in 2016. A summary of the updated malus and clawback policy implemented by the Committee
in 2015 is provided below the table.
Purpose and link to strategy
Operation
Potential
Performance measures
Base salary
– A core component
of the total reward
package, which
overall is designed to
attract, motivate and
retain individuals of
the highest quality.
Pension
– Provides
appropriate
retirement benefits.
– Rewards sustained
contribution.
The Committee considers base
salary levels annually taking into
consideration:
– The Group’s philosophy to place
greater emphasis on variable,
performance-related remuneration.
– The individual’s experience.
– The size and scope of the role.
– The general level of salary
reviews across the Group.
– Appropriate external market
competitive data.
Set significantly below market median levels with
greater emphasis on the performance-related
elements of reward. For 2016 salaries are:
– Group Chief Executive Officer: £275,000.
– Group Chief Financial Officer: £210,000.
n/a
Although salaries are reviewed annually, in line with
the Group’s philosophy, the Committee does not
intend to make annual incremental salary increases
for Executive Directors. However, the Committee
retains the discretion to award salary increases
taking into consideration the factors considered
as part of the annual review. There is no overall
maximum salary or increase.
Defined contribution pension
arrangements are provided.
HMRC approved salary and profit
share sacrifice arrangements are in
place. Pension benefits are provided
either through a Group personal
pension plan, as a non-pensionable
salary supplement, contribution to
a personal pension arrangement,
or equivalent arrangement for
overseas jurisdictions.
For 2016 the pension contribution arrangements are:
– Group Chief Executive Officer:
14% of annual base salary.
– Group Chief Financial Officer:
18% of annual base salary.
n/a
As part of the funding arrangements agreed
when the Plan was closed to future accrual in
2010, the Group Chief Executive Officer will receive
a minimum contribution from 2015 of 14%. The
maximum contribution will be no more than the
maximum contribution for all former members of
the Plan. The maximum annual pension contribution
for the current Chief Financial Officer is 18%.
The Plan is closed to future accruals. However,
legacy arrangements will be honoured.
New recruits would normally participate in
defined contribution arrangements or take
a non-pensionable salary supplement.
The level of contribution would be determined
at the time of appointment and may be set at a
higher level than the current policy. For international
appointments, the Committee may determine
that alternative pension provisions will operate, and
when determining arrangements the Committee will
give regard to the cost of the arrangements, market
practice in the relevant international jurisdiction and
the pension arrangements received elsewhere in
the Group.
66
SAVILLS PLC REPORT AND ACCOUNTS 2015
Purpose and link to strategy
Operation
Potential
Performance measures
Car allowance up to a maximum of £9,000 p.a.
n/a
There is no overall maximum as the cost
of insurance benefits depends on the
individual’s circumstances and the costs
of relocation and international benefits will
also depend on the jurisdiction.
Benefits
– To provide market
competitive benefits.
Benefits currently comprise:
– Medical insurance benefits;
– Car/car allowance;
– Permanent Health Insurance;
– Life insurance; and
– Directors’ and Officers’
liability insurance.
Other benefits may be provided if the
Committee considers it appropriate.
Where an Executive Director is
located in a different international
jurisdiction benefits may reflect
market practice in that jurisdiction.
In the event that an existing Executive
Director or new Executive Director
is required by the Group to relocate,
other benefits may be provided
including (but not limited to)
a relocation allowance, housing
allowance and tax equalisation.
Annual performance-related profit share
– To encourage the
achievement of
challenging financial,
strategic and/or
operational targets.
– Further alignment
with shareholders’
interests through
deferral of a portion
into shares.
Annual profit share awards reflect
the Group’s annual profit performance
and personal performance and
contribution.
In line with the Group’s philosophy, there is greater
emphasis on variable performance-related pay,
while base salaries are set significantly below
market median levels.
Maximum annual profit share awards are:
– £2m p.a. for the Group Chief Executive Officer.
– £1.5m p.a. for the Group Chief
Financial Officer.
For a new Executive Director the Committee
would determine the appropriate normal maximum
taking into account the role and responsibility,
subject to a maximum of £2m p.a.
Awards are delivered part in cash
and part in shares (subject to
a minimum cash threshold). The
proportion delivered in shares is
determined on a progressively
increasing scale, up to one third.
Shares are normally deferred for
a period of at least three years.
The Committee awards dividend
equivalents in respect of dividends
declared over the deferral period.
The Committee may exercise its
judgement to adjust individual annual
bonus payouts should they not reflect
overall business performance or
individual contribution.
Clawback provisions apply in
exceptional circumstances such
as a material misstatement of the
Group’s financial results or
gross misconduct.
Performance is primarily
measured based on the
Group’s annual profit
performance with at least
70% of awards subject
to profit performance.
The remainder of the
award is based on an
appropriate mix of
strategic, operational
and/or personal
performance goals.
The award potential
at threshold is £0. For
on-target performance
currently around 50%
of the profit share award
is awarded.
SAVILLS PLC REPORT AND ACCOUNTS 2015
67
Overview / Strategy / Performance / Governance / Financial statements Directors’ Remuneration Report
continued
Purpose and link to strategy
Performance Share Plan (‘PSP’)
Operation
Potential
Performance measures
Maximum annual award potential of 200% of
salary (plan rules limit).
Award policy for 2016 is:
– Up to £550k for the Group Chief Executive
Officer.
– Up to £250k for the Group Chief Financial
Officer.
Subject to an overall maximum of £1m per annum
per participant.
For a new Executive Director the Committee
would determine the appropriate normal maximum
taking into account the role and responsibility,
subject to a maximum of 200% of salary p.a.
(or if lower £1m p.a.).
– To drive and reward
the delivery of
longer-term
sustainable
shareholder value,
aid retention and
ensure alignment of
senior management
and shareholder
interests.
Awards of shares subject to
a performance period of normally
no less than three years.
PSP awards may be in the form
of nil cost options or conditional
awards over shares. Awards
may incorporate an award of
tax-advantaged Company
Share Option Plan options.
The Committee awards dividend
equivalents on a reinvested basis
in respect of dividends over the
vesting or exercise period.
Malus provisions apply, allowing
for the reduction of awards in
exceptional circumstances of
material misstatement or gross
misconduct.
The Committee may adjust vesting
of awards if it considers that the
outcome of the measurement of
the performance conditions does
not accurately reflect the underlying
performance or financial health of
the Company. In the event the
Committee proposes to make an
upward adjustment the Committee
will consult with major shareholders
in advance. The Committee may
adjust or amend awards in
accordance with the PSP rules.
Performance conditions
for future awards are
reviewed annually to
ensure that the measures
and their targets remain
appropriate to business
strategy and are sufficiently
challenging, and that the
relative balance of the
performance measures
remains appropriate for
properly incentivising and
rewarding the creation of
longer-term sustainable
shareholder value.
Performance conditions
are currently based on
two measures:
– Relative TSR against
the FTSE 250
(excluding investment
trusts) or other
appropriate
comparator group;
– a selected earnings
based measure.
The Committee may
review the performance
measures for the PSP to
ensure they remain aligned
to the strategy. The
Committee would consult
with major shareholders in
advance of a change in
performance measures
used for the Performance
Share Plan.
No more than 25% of an
award vests for threshold
performance.
UK tax advantaged all-employee share plans
– Share plans available
to all UK employees
in the Group who
satisfy the statutory
requirements.
Executive Directors are eligible to
participate in any of the Group’s
all-employee share plans on the
same terms as other UK employees.
Legacy plans
Maximum in accordance with statutory limits.
n/a
The Executive Share Option Scheme (‘ESOS’) expired in 2011. Options granted under this plan were subject to performance criteria.
All outstanding options granted up to and including May 2011 were exercised during the year, having satisfied the performance criteria
attaching to them.
68
SAVILLS PLC REPORT AND ACCOUNTS 2015
Malus and clawback
Following the publication of the 2014 UK Corporate Governance Code, the Committee determined that clawback and malus
provisions should be extended across the cash and the share elements of the annual performance-related profit share and also to the
Performance Share Plan.
The Committee also reviewed the circumstances in which malus and clawback could apply and determined that it would be appropriate
to extend the established malus and clawback provisions so that they encompass the following: a material misstatement of the Group’s
financial results; serious misconduct by the individual; and a factual error in calculating an award or vesting. The malus provision has
also been extended to include other exceptional developments which have an actual or potential material adverse effect on the value or
reputation of the Group as determined by the Committee.
Clawback will apply for a two-year period post the vesting of awards. In the event of a regulatory or criminal enquiry ongoing at that point,
the clawback period will be extended to a six-month period post the conclusion of such an event.
Remuneration policy for Non-Executive Directors
Approach to fees
Operation
Other items
Fees for the Chairman and other Non-
Executive Directors are set at an appropriate
level taking into consideration individual roles
and responsibilities, the time commitment
required and external market practice.
Fees are reviewed annually.
Basic fees for membership of the Board are
subject to the maximum payable to Non-
Executive Directors (excluding the Non-
Executive Chairman) as stated in the
Company’s Articles of Association.
Fees payable to the Non-Executive Directors
are determined by the Non-Executive
Chairman and the Executive Directors.
Non-Executive Directors are not entitled
to participate in any of the Group’s incentive
arrangements or share schemes.
Fees payable to the Chairman are determined
by the Remuneration Committee (excluding the
Non-Executive Chairman).
The Non-Executive Director fee policy is to pay:
Non-Executive Directors do not currently
receive any taxable benefits (however, they
are covered by Directors’ and Officers’
liability insurance).
Expenses incurred in the performance of
Non-Executive duties for the Company may
be reimbursed or paid for directly by
the Company, including any tax due on
the benefits.
Additional benefits may be provided in the
future if the Board considered this appropriate.
– a basic fee for membership of the Board;
and
– Committee chairmanship and Senior
Independent Director fees to reflect the
additional responsibilities and time
commitment of the roles.
The Chairman receives an all-inclusive fee
for the role.
Additional fees for membership of a Committee
or chairmanship or membership of subsidiary
boards or other fixed fees may be introduced
if considered appropriate.
SAVILLS PLC REPORT AND ACCOUNTS 2015
69
Overview / Strategy / Performance / Governance / Financial statements Directors’ report
In accordance with the UK Financial Conduct Authority’s Listing
Rules (LR 9.8.4C), the information to be included in the Annual
Report and Accounts, where applicable, under LR 9.8.4, is set
out in this Directors’ Report.
Corporate Governance Statement
In accordance with the Code and DTR 7.2.9R, the Corporate
Governance Statement on pages 39 to 54 is incorporated into
this report by reference.
Operations
The Company and its subsidiaries (together the ‘Group’) operate
through a network of offices and associates throughout the Americas,
the UK, Continental Europe, Asia Pacific, Africa and the Middle East.
Management Report
This Directors’ Report, on pages 70 and 71, together with the
Strategic Report on pages 10 to 32, form the Management Report
for the purposes of DTR 4.1.5R.
Results for the year
The results for the Group are set out in the consolidated income
statement on page 80 which shows a reported profit for the financial
year attributable to the shareholders of the Company of £64.3m
(2014: £62.1m).
Dividend
An interim dividend of 4p per ordinary share amounting to £5.33m
(2014: £4.89m) was paid on 12 October 2015. It is recommended that a
final dividend of 8.0p per ordinary share (amounting to £10.68m) is paid,
together with a supplemental interim dividend of 14.0p per ordinary
share (amounting to £18.69m) to be declared by the Board on 9 March
2016, on 16 May 2016 to shareholders on the register at 15 April 2016.
More details of the proposed dividend and the Company’s performance
can be found in the Chairman’s statement on pages 10 and 11.
Principal developments
The principal developments of the business are detailed in the Strategic
Report on pages 10 to 32 and incorporated into this report by reference.
The principal risks and uncertainties are detailed on pages 27 to 31
and incorporated into this report by reference.
Directors
Short biographical details of the current Directors are shown on
pages 44 and 45. All the Board members served throughout the year
save for Rupert Robson and Nicholas Ferguson who were appointed
as stated below. As at 31 December 2015 the Board comprised
the Non-Executive Chairman, two Executive Directors and five
Independent Non-Executive Directors.
Rupert Robson was appointed as an Independent Non-Executive
Director with effect from 23 June 2015.
Nicholas Ferguson was appointed as an Independent Non-Executive
Director with effect from 26 January 2016.
Interests in the issued share capital of the Company held at the
end of the period under review and up to the date of this Report
by the Directors or their families are set out on page 63 of the
Remuneration Report. Details of share options held by the Directors
pursuant to the Company’s share option schemes are provided
in the Remuneration Report on pages 64 and 65. It is the Board’s
policy that the GEB Members should retain at least 105,000 shares
(value at 31 December 2015: £930,300) in the Company and that the
Group Chief Executive retains at least 150,000 shares (value at
31 December 2015: £1.33m) (based on the mid-market share
price of 886p per share on 31 December 2015) at all times.
Directors’ interests in significant contracts
No Directors were materially interested in any contract of significance.
Statement of Directors’ responsibilities
In accordance with the Code and the Disclosure and Transparency
Rules (‘DTR’) DTR4, the Directors’ Responsibilities Statement is set
out on page 72 and is incorporated into this report by reference.
Additional Information Disclosure
Pursuant to regulations made under the CA2006 the Company is
required to disclose certain additional information. Those disclosures
not covered elsewhere within this Annual Report are as follows:
Share capital and major shareholdings
The issued share capital of the Company as at 31 December 2015
comprised 137,861,283 2.5p ordinary shares, details of which may
be found on page 124.
The Company has only one class of share capital formed of ordinary
shares. All shares forming part of the ordinary share capital have the
same rights and each carries one vote.
Votes may be exercised in person, by proxy or by corporate
representatives (in relation to corporate members). The Articles
provide a deadline for the submission of proxy forms (electronically or
by paper) of not less than 48 hours before the time appointed for the
holding of the meeting or the adjourned meeting.
There are no unusual restrictions on the transfer of ordinary shares.
The Directors may refuse to register a transfer of a certificated
share unless the instrument of transfer is: (i) lodged at the registered
office of the Company or any other place as the Board may decide
accompanied by the certificate for the shares to be transferred and
such other evidence as the Directors may reasonably require to
show the right of the transferor to make the transfer; or (ii) in respect
of only one class of shares.
The Directors may also refuse to register a transfer of a share
(whether certificated or uncertificated), whether fully paid or not,
in favour of more than four persons jointly.
As at 31 December 2015 the Company had been notified of the
following interests in the Company’s ordinary share capital in
accordance with DTR 5:
Shareholders
Number of shares
%
Standard Life Investments (Holdings) Limited
13,942,453
10.11
Old Mutual plc
BlackRock, Inc
Artisan Partners Limited
Heronbridge Investment Management LLP
12,481,157
6,905,345
6,530,863
5,404,296
9.05
5.01
4.74
3.92
Note: On 26 February 2016, Norges Bank disclosed a shareholding of 3.01%. No
other changes to the above have been disclosed to the Company in accordance
with DTR 5, between 31 December 2015 and 9 March 2016.
As at 31 December 2015, the Savills plc 1992 Employee Benefit Trust
(the ‘EBT’) held 4,377,358 shares. Any voting or other similar decisions
relating to these shares are taken by the trustees of the EBT, who
may take account of any recommendation of the Company. The EBT
waives all but 0.01p per share of its dividend entitlement. For further
details of the EBT please refer to Note 2 to the financial statements.
70
SAVILLS PLC REPORT AND ACCOUNTS 2015
Purchase of own shares
In accordance with the Listing Rules, at the AGM on 13 May 2015,
shareholders gave authority for a limited purchase of Savills shares
of up to 10% of the issued share capital. During the year, no shares
were purchased under the authority.
aim at ensuring that all of our staff understand our strategy and to
build knowledge on the part of employees of matters affecting the
performance of the Group. The Group also consults with employees
so as to ascertain their views in relation to decisions which are likely
to affect their interests.
The Board proposes to seek shareholder approval at the AGM on
11 May 2016 to renew the Company’s authority to make market
purchases of its own ordinary shares of 2.5p each for cancellation or
to be held in treasury. Details of the proposed resolution are included
in the Notice of AGM circulated to shareholders with this Annual
Report (the ‘AGM Notice’).
Change of control
There are no significant agreements which take effect, alter or
terminate in the event of change of control of the Company except
that under its banking arrangements, a change of control may trigger
an early repayment obligation.
Articles of Association
The Company’s Articles are governed by relevant statutes and
may be amended by special resolution of the shareholders in a
general meeting.
The Company’s rules about the appointment and replacement
of Directors are contained in the Articles. The powers of the
Directors are determined by UK legislation and the Articles in force
from time to time.
Unless determined by ordinary resolution of the Company, the
number of Directors shall be not less than three and not more than
18. A Director is not required to hold any shares in the Company by
way of qualification. However, as more fully described on page 63,
in accordance with Board policy, the members of the GEB (which
includes the Executive Directors) are expected to build up and
maintain a shareholding in the Company. The Board may appoint any
person to be a Director and such Director shall hold office only until
the next AGM when he or she shall then be eligible for reappointment
by the shareholders. The Articles provide that each Director shall
retire from office at the third AGM after the AGM at which he or she
was last elected. A retiring Director shall be eligible for re-election.
However, in accordance with the Code, all Directors of the Company
are subject to annual re-election.
Annual General Meeting
The AGM is to be held at 33 Margaret Street, London W1G 0JD at
12 noon on 11 May 2016; details are contained in the AGM Notice
circulated to shareholders with this Report.
Half Year Report
Like many other listed public companies, we no longer circulate
printed Half Year reports to shareholders. Rather, Half Year results’
statements are published on the Company’s website. This is
consistent with our target of saving printing and distribution costs.
Employees are able to share in the Group’s success through
performance-related profit share schemes (see page 68 for more
details) and for UK employees (including Executive Directors), share
plans which include a Sharesave Scheme and a Share Incentive Plan
(‘SIP’). The Sharesave Scheme is an HMRC approved save-as-you-
earn share option scheme which allows participants to purchase
shares out of the proceeds of a linked savings contract at a price set
at the time of option grant. Participants may elect to save up to £500
per month and options may normally be exercised in the six months
following the maturity of the linked three-year savings contract. The
potential for extending the Sharesave Scheme internationally remains
under consideration. The SIP is also HMRC approved and through
which participants may make regular purchases of shares (up to
£150 per month which is the current statutory limit) from pre-tax
income. Shares under the SIP normally vest after five years free from
income tax and national insurance contributions.
Human Rights and equal opportunities
We support the principles of the UN Universal Declaration
of Human Rights and the Core Principles of the International
Labour Organization.
It is Group policy to provide employment on an equal basis
irrespective of gender, sexual orientation, marital or civil partner
status, gender reassignment, race, colour, nationality, ethnic or
national origin, religion or belief, disability or age. In particular, the
Group gives full consideration to applications for employment from
disabled persons. Where existing employees become disabled, it
is the Group’s policy wherever practicable to provide continuing
employment and to provide training and career development and
promotion to disabled employees.
Independent Auditors
In accordance with Section 489 of the CA2006, a resolution for the
reappointment of PricewaterhouseCoopers LLP as Auditors of the
Company will be proposed at the forthcoming AGM.
Whistle-blowing
The Group encourages staff to report any concerns which they feel
need to be brought to the attention of management. Whistle-blowing
procedures, which are published on the Group’s intranet site, are
available to staff who are concerned about possible impropriety,
financial or otherwise, and who may wish to ensure that action is
taken without fear or victimisation or reprisal.
Greenhouse Gas Emissions
Details of the Group’s global greenhouse gas emissions for the
financial year under review can be found on pages 25 and 26 and is
incorporated into this report by reference.
Political contributions
There were no political contributions during the year (2014: £nil).
By order of the Board
Employees’ policies and involvement
The Directors recognise that the quality, commitment and motivation
of Savills staff is a key element in the success of the Group; see
pages 22 and 23 for more information.
Chris Lee
Group Legal Director & Company Secretary
9 March 2016
The Group provides regular updates covering performance,
developments and progress to employees through regular
newsletters, video addresses, the Group’s intranet, and social media
and through formal and informal briefings. These arrangements also
Savills plc
Registered in England No. 2122174
SAVILLS PLC REPORT AND ACCOUNTS 2015
71
Overview / Strategy / Performance / Governance / Financial statements Directors’ responsibilities
Directors’ responsibility statement
The Directors are responsible for preparing the Annual Report, the
Directors’ Remuneration Report and the financial statements in
accordance with applicable law and regulations.
Company law requires the Directors to prepare financial statements
for each financial year. Under that law the Directors have prepared
the Company and Group financial statements in accordance with
International Financial Reporting Standards (‘IFRSs’) as adopted by
the European Union. Under company law the Directors must not
approve the financial statements unless they are satisfied that they
give a true and fair view of the state of affairs of the Company and
the Group and of the profit or loss of the Company and Group for
that period. In preparing these financial statements, the Directors
are required to:
Each of the Directors, whose names and functions are listed on
page 44, confirms that to the best of his or her knowledge:
–
–
the Group financial statements, which have been prepared in
accordance with IFRSs as adopted by the EU, give a true and fair
view of the assets, liabilities, financial position and profit of the
Group; and
the Strategic Report set out on pages 10 to 32 includes a fair
review of the development and performance of the business and
the position of the Group, together with a description of the
principal risks and uncertainties that it faces.
For the purposes of Section 418 of the Companies Act 2006, each of
the Directors as at the date of the approval of the Annual Report and
Accounts confirms that:
–
select suitable accounting policies and then apply them
consistently;
– make judgements and accounting estimates that are reasonable
–
–
and prudent;
state whether applicable IFRSs as adopted by the European
Union have been followed, subject to any material departures
disclosed and explained in the financial statements; and
prepare the financial statements on the going concern basis
unless it is inappropriate to presume that the Company will
continue in business.
The Directors are responsible for keeping adequate accounting
records that are sufficient to show and explain the Company’s
transactions and disclose with reasonable accuracy at any time the
financial position of the Company and the Group and enable them to
ensure that the financial statements and the Directors’ Remuneration
report comply with the Companies Act 2006 and, as regards the
Group financial statements, Article 4 of the IAS Regulation. They are
also responsible for safeguarding the assets of the Company and the
Group and hence for taking reasonable steps for the prevention and
detection of fraud and other irregularities.
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.
–
–
so far as the Director is aware, there is no relevant audit
information of which the External Auditors are unaware; and
the Director has taken all the steps that he/she ought to have
taken as a Director in order to make himself/herself aware of
any relevant audit information and to establish that the External
Auditors are aware of that information.
After making enquiries, the Directors have a reasonable expectation
that the Company and the Group have adequate resources
to continue in operational existence for the foreseeable future.
Accordingly, they continue to adopt the going concern basis in
preparing the Annual Report and Accounts.
On behalf of the Board
Jeremy Helsby
Group Chief Executive
Chris Lee
Group Legal Director & Company Secretary
Forward-looking statements
Forward-looking statements have been made by the Directors in
good faith using information up until the date on which they approved
the Annual Report and Accounts. Forward-looking statements
should be regarded with caution due to uncertainties in economic
trends and business risks.
The Directors consider that the Annual Report and Accounts, taken
as a whole, is fair, balanced and understandable and provides the
information necessary for shareholders to assess the Company’s
position and performance, business model and strategy.
9 March 2016
72
SAVILLS PLC REPORT AND ACCOUNTS 2015
Independent auditors’ report
to the members of Savills plc
Report on the financial statements
Our opinion
In our opinion:
–
– Savills plc’s Group financial statements and Company financial
statements (the ‘financial statements’) give a true and fair view
of the state of the Group’s and of the Company’s affairs as at
31 December 2015 and of the Group’s profit and the Group’s
and the Company’s cash flows for the year then ended;
the Group financial statements have been properly prepared in
accordance with International Financial Reporting Standards
(‘IFRSs’) as adopted by the European Union;
the Company financial statements have been properly prepared
in accordance with IFRSs as adopted by the European Union
and as applied in accordance with the provisions of the
Companies Act 2006; and
the financial statements have been prepared in accordance with
the requirements of the Companies Act 2006 and, as regards
the Group financial statements, Article 4 of the IAS Regulation.
–
–
The Group has continued to expand through acquisition across
its business lines. On grounds of materiality, we considered the
acquisition of Smiths Gore, a UK-based rural property management
business and the acquisition of SEB Asset Management, a European
fund manager, to be an area of focus for the 2015 audit.
The Group is also subject to a number of legal claims in the normal
course of business, often dating back to the height of the property
market in 2007. The number of claims, particularly in respect of UK
valuations, has continued to decline in 2015.
Overview
Materiality
– Overall Group materiality: £6.0m (2014: £5.0m) which represents
5% of Group underlying profit before tax as defined in Note 2.2 to
the financial statements.
Audit scope
– We conducted audit work in the UK, the US and Asia Pacific,
and across all four of the Group’s business lines.
What we have audited
The financial statements, included within the Report and Accounts
(the ‘Annual Report’), comprise:
– Audits of the complete financial information were performed on
the businesses in the UK, US, Hong Kong, and Australia.
– We carried out procedures on parts of the business which
–
–
–
–
–
the Consolidated and Company statements of financial position
as at 31 December 2015;
the Consolidated income statement and Consolidated statement
of comprehensive income for the year then ended;
the Consolidated and Company statements of cash flows for the
year then ended;
the Consolidated statement of changes in equity and the
Company statement of changes in equity for the year then
ended; and
the Notes to the financial statements, which include a summary
of significant accounting policies and other explanatory
information.
The financial reporting framework that has been applied in the
preparation of the financial statements is applicable law and IFRSs
as adopted by the European Union and, as regards the Company
financial statements, as applied in accordance with the provisions
of the Companies Act 2006.
Our audit approach
Context
Savills plc is listed on the London Stock Exchange and is structured
across four business lines, being Transactional Advisory, Property
Consultancy, Property and Facilities Management, and Investment
Management Services. The Group financial statements are a
consolidation of reporting units that make up the four business
lines, spread across four geographical regions, UK, US, Europe
and Asia Pacific.
accounted for 83% (2014: 80.5%) of Group revenues and 86%
(2014: 82.5%) of Group underlying profit before tax. We paid
particular attention to the acquisition during the year of Smiths
Gore in the UK Property and facilities management business,
and of SEB in the Investment Management Services business.
Areas of focus
– Goodwill impairment assessment – particularly for European
businesses.
– Risk of fraud in revenue recognition in relation to cut-off of
transaction fees in the advisory and investment management
businesses.
– Accounting for the acquisitions of Smiths Gore and SEB.
– Provisions for litigation on valuations.
– Recoverability of trade receivables in Asia.
– Regulatory compliance obligations.
The scope of our audit and our areas of focus
We conducted our audit in accordance with International Standards
on Auditing (UK and Ireland) (‘ISAs (UK & Ireland)’).
We designed our audit by determining materiality and assessing the
risks of material misstatement in the financial statements. In particular,
we looked at where the Directors made subjective judgements, for
example in respect of significant accounting estimates that involved
making assumptions and considering future events that are inherently
uncertain. As in all of our audits we also addressed the risk of
management override of internal controls, including evaluating
whether there was evidence of bias by the Directors that
represented a risk of material misstatement due to fraud.
SAVILLS PLC REPORT AND ACCOUNTS 2015
73
Overview / Strategy / Performance / Governance / Financial statements
Independent auditors’ report
to the members of Savills plc continued
The risks of material misstatement that had the greatest effect on our audit, including the allocation of our resources and effort, are identified
as ‘areas of focus’ in the table below. We have also set out how we tailored our audit to address these specific areas in order to provide an
opinion on the financial statements as a whole, and any comments we make on the results of our procedures should be read in this context.
This is not a complete list of all risks identified by our audit.
Area of focus
How our audit addressed the area of focus
Goodwill impairment assessment – particularly for
European businesses
Refer to page 49 (Audit Committee Report), pages 88 and 96
(Significant Accounting Policies) and pages 108 to 110 (notes).
The Group carried £269.9m of goodwill at 31 December 2015 (2014:
£228.0m) of which £41.9m related to new acquisitions and £228.0m to
existing businesses.
£18.5m of the goodwill balance related to the acquisition of Smiths Gore
and £1.8m related to the acquisition of SEB. The fair value exercises
performed by management, which gave rise to the goodwill, are
provisional under accounting standards (refer to the area of focus below
on Accounting for the acquisitions of Smiths Gore and SEB), and both
businesses are currently trading in line with the investment decision
forecasts.
The carrying values of goodwill are contingent on future cash flows of
the underlying cash-generating units (‘CGUs’) and there is a risk that if
these cash flows do not meet the Directors’ expectations, the assets will
be impaired.
No impairment charge was recognised in the year ended 31 December
2015.
We did not regard the acquisitions in the year as warranting particular
focus in relation to impairment of goodwill and focused our assessment
on the other CGUs in Europe with material amounts of goodwill. The
Group’s performance in Europe continued to improve during 2015, but
there is continued economic uncertainty and European property
markets remain unsettled.
Focusing on the European businesses, we evaluated and challenged
the Directors’ future cash flow forecasts and the process by which they
were drawn up, and tested the underlying value in use calculations. We
compared management’s forecast to the latest Board approved budget
and found them to be consistent.
We challenged:
–
–
the key assumptions for long-term growth rates in the forecasts
by comparing them to historical results, as well as economic and
industry forecasts for the relevant international property markets;
and
the discount rate used in the calculations by assessing the
cost of capital for the Company and comparable organisations,
and assessed the specific risk premium applied to the CGU
in question.
We performed sensitivity analysis on the key assumptions within the
cash flow forecasts. This included sensitising the discount rate applied
to the future cash flows, and the short and longer-term growth rates and
profit margins in Europe due to continued uncertainty in the macro-
economic environment for a number of countries in the region. We
ascertained the extent to which a reduction in these assumptions both
individually or in aggregate would result in goodwill impairment, and
considered the likelihood of such events occurring. We did not regard
this to be reasonably possible.
Given the level of headroom, improved business performance in Savills
Europe for 2015 and the continued uplift of property markets in Savills’
key European locations, we were satisfied that the carrying value of
goodwill in Europe had been appropriately assessed.
Risk of fraud in revenue recognition in relation to cut-off
of transaction fees in the advisory and investment
management businesses
Refer to page 49 (Audit Committee Report) and Note 2 to the financial
statements for the Directors’ disclosures of the related accounting
policies, judgements and estimates.
Our specific audit focus was on the risk that revenue may be recorded
in the incorrect period in respect of transaction fees in the agency and
investment management businesses, in light of the incentive schemes
for management in those businesses designed to reward performance.
For more complex contracts, the recognition of revenue is largely
dependent on the date the underlying transaction is deemed to be
completed.
For material transactions, we evaluated the commercial rationale and the
revenue recognition process adopted and determined that the related
revenue had been booked on a consistent basis across the Group in
accordance with Group policies and applicable IFRSs.
We tested a sample of revenue transactions to underlying contracts and
third-party completion documentation, for example, property sales
completion statements, or asset or property management contracts,
determining that these sales had taken place and were recorded in the
correct period. We additionally tested a sample of revenue to supporting
documentation, cash receipts and related contracts, in order to verify
that the income was correctly calculated.
There were no material issues identified by our testing of revenue
recognition in the period.
74
SAVILLS PLC REPORT AND ACCOUNTS 2015
Area of focus
Accounting for the acquisition of Smiths Gore and SEB
Refer to page 49 (Audit Committee Report), page 86 (Significant
Accounting Policies) and pages 115 and 116 (Notes).
During the year, the Group made a number of acquisitions including
Smiths Gore in the UK, SEB Asset Management in Germany and
Cooper Brady Partners in the US.
On grounds of materiality, we considered the acquisition of Smiths Gore,
a UK-based rural property management business, for total consideration
of up to £33.1m, and the acquisition of SEB, a European fund manager,
for total consideration of £11.3m, to be the most significant.
The goodwill arising on the acquisitions of Smiths Gore and SEB is
considered under the goodwill area of focus.
Accounting for the acquisitions required a provisional fair value exercise,
including identifying and valuing separately identifiable intangible assets.
The process of valuing the intangible assets can be a particularly
subjective process.
Fair value adjustments
Management did not identify any additional exposures during either due
diligence process that had not already been recorded at the balance
sheet date and management recorded all the other assets and liabilities
acquired at their fair values in the completion balance sheets.
Under IFRSs, the fair values of the acquired assets and liabilities are
provisional and can be revised within the measurement period of one
year from the date of acquisition.
Valuation of identifiable intangibles
Management identified customer relationships as the only separately
identifiable intangible asset on acquisition of Smiths Gore, with a
carrying value of £7.0m at 31 December 2015. Management considered
customer relationships to have an expected economic life of 15 years,
based on the typical longevity of customer relationships within
the business.
Management identified institutional customer relationships as the
separately identifiable intangible asset on acquisition of SEB, with a
carrying value of £0.9m at 31 December 2015.
How our audit addressed the area of focus
In testing the acquisitions of Smiths Gore and SEB, we performed
the following;
We verified the fair value of consideration paid of acquisitions, including
any deferred or contingent element, to cash transactions and the sales
and purchase agreements (‘SPAs’).
Fair value adjustments
We assessed the completeness of the fair value assessment made by
management against our own expectations, formed from reading the
due diligence reports prepared during the acquisition and our audit
work on the completion balance sheet with respect to the fair value of
assets acquired.
Based on our understanding of the respective businesses, reading the
SPA and our knowledge and experience of the industries in which they
operate, we determined that management’s analysis appropriately
reflected the fair value exercises and that the relevant intangible assets
had been identified.
Valuation of identifiable intangible assets
We looked in detail at the work performed on the purchase price
allocations by management’s external experts, to test the valuation
placed on the separately identifiable intangibles.
We evaluated the professional competence and objectivity of
those experts and challenged the key assumptions by sensitising
the following:
–
–
–
The growth rates used and expected economic life of customer
relationships in the valuation of customer relationships in
Smiths Gore;
The revenue projections and forecast margin assumptions
underpinning the valuation of institutional customer relationships
in SEB, and the expected remaining useful life; and
The relevant discount rates applied to the valuation of the
identified intangible assets in both Smiths Gore and SEB.
In doing so, we ascertained the extent of change that would be required
for the fair value to be materially misstated and determined that the
evidence was that such changes were not sufficiently possible.
SAVILLS PLC REPORT AND ACCOUNTS 2015
75
Overview / Strategy / Performance / Governance / Financial statements
Independent auditors’ report
to the members of Savills plc continued
Area of focus
How our audit addressed the area of focus
Provision for litigation on valuations
Refer to page 49 (Audit Committee Report), pages 90 and 96
(Significant Accounting Policies) and page 123 (notes).
The Group is subject to a number of legal claims in the normal course of
business, particularly with respect to valuations performed in the height
of the property market in 2007. Experience has shown that valuations
performed around this time were more subject to challenge than in other
periods. The number of new claims has continued to decline in recent
years, particularly in respect of UK valuations.
Our audit procedures took into account both the potential exposure and
the extent to which liabilities are likely to crystallise, as well as the
adequacy of the insurance cover held by the Group.
In order to assess the accuracy and completeness of the provisions
held at the balance sheet date we performed the following procedures;
– Obtained and read the legal claim letters and accompanying
third-party documentation received by the Group;
– Obtained and read the legal insurance contract, and verified that
the terms were appropriately accounted for;
– Met with the Group’s internal and external counsel to consider in
detail a number of the cases, including the potential exposure
after taking into account the Group’s insurance cover;
– Checked the amounts and other details in respect of each new
claim to the relevant third-party supporting documentation;
– Reviewed the legal cases settled during the year and traced the
related cash payments to bank statements; and
There is also the risk that legal exposures may arise for which adequate
provisions are not held.
– Examined Board minutes, legal expenses incurred during the
year and any litigation-related matters arising after the year-end.
We determined ‘based on these procedures’ that management had
made reasonable judgements in their assessment process, taking into
account developments since the height of the property market.
Our procedures did not identify any further legal cases other than those
identified by management.
In order to test the recoverability of trade receivables in China, we
performed the following procedures;
– Requested confirmations for a sample of client debtor balances.
– Where a response to our request was not received, we sought to
agree the relevant trade receivables balances to post year end
cash receipts.
– Where both a response and cash had not been received post
year-end, we performed alternative procedures, by agreeing
amounts recorded to underlying sales contracts and completion
documentation.
– Discussed and assessed the reasons that the amounts were not
yet paid with Savills’ local management teams.
We did not encounter any issues through these audit procedures that
indicated further provisioning against trade receivables was required.
We also evaluated the Group’s credit control procedures in Asia, and
assessed the aging profile on trade receivables, focusing on older debts
for which no provision had been made. We challenged management as
to the recoverability of the older, unprovided amounts, corroborating
management explanations with underlying documentation and
correspondence with the customer.
Based upon the above, we were satisfied that management had taken
reasonable judgements that were supported by the available evidence
in respect of the relevant receivables.
We updated our understanding of the legal and regulatory framework
within which the Group operates, discussed the Group’s approach to
regulatory compliance with management internationally and with internal
legal counsel, and evaluated management’s internal control procedures.
We considered that appropriate procedures are in place to identify any
instances of non-compliance that would have a material impact on the
results and reputation of the business.
We read relevant correspondence with regulators to support
management’s assertions, as well as Board minutes and internal audit
reports. We examined legal expense accounts and considered the
results of our audit work in other areas to determine whether there
appeared to be any evidence of non-compliance with applicable laws
and regulations.
We identified no evidence of such instances of non-compliance with
applicable laws and regulations.
Recoverability of trade receivables in Asia
Refer to page 49 (Audit Committee Report) and page 89 (Significant
Accounting Policies).
It is customary for clients to demand lengthy payment terms in parts of
Asia (and particularly China). Agreed payment terms are also sometimes
extended particularly when unforeseen delays occur in property
transactions. The Group is therefore exposed to a heightened risk of
default in respect of trade receivables in the Asia Pacific region, and this
increased risk is factored into our audit approach with respect to the
provision against trade receivables.
Regulatory compliance obligations
The Directors did not record any material instances of non-compliance
in the year, but the Group is subject to Financial Services, Chartered
Surveyor, tax, anti-bribery and anti-money laundering laws and
regulations across a number of international jurisdictions.
Failure to comply with any of these applicable laws and regulations
could have a material impact on the results of the business and the
reputation for integrity on which it relies.
76
SAVILLS PLC REPORT AND ACCOUNTS 2015
How we tailored the audit scope
We tailored the scope of our audit to ensure that we performed
enough work to be able to give an opinion on the financial
statements as a whole, taking into account the geographic structure
of the Group, the accounting processes and controls, and the
industry in which the Group operates.
Taken together, our audit procedures accounted for 83% (2014:
80.5%) of Group revenues and 86% (2014: 82.5%) of Group
underlying profit before tax.
Materiality
The scope of our audit was influenced by our application of
materiality. We set certain quantitative thresholds for materiality.
These, together with qualitative considerations, helped us to
determine the scope of our audit and the nature, timing and extent of
our audit procedures on the individual financial statement line items
and disclosures and in evaluating the effect of misstatements, both
individually and on the financial statements as a whole.
Based on our professional judgement, we determined materiality for
the financial statements as a whole as follows:
The Group’s accounting process is structured around a local finance
function in each of the territories in which the Group operates. In
Europe, these functions maintain their own accounting records and
controls and report to a Head Office finance team in the UK through
submission of management reporting packs. In Asia Pacific, these
functions similarly report to a head office finance team in Hong Kong,
and in the US the local functions report to the US finance team in
New York. At a Group level, a separate finance team consolidates
the reporting packs of Europe, Asia Pacific, UK, US and the
central functions.
Overall Group
materiality
How we
determined it
Rationale for
benchmark
applied
In our view, due to their significance and/or risk characteristics, as
defined in our areas of focus, those businesses in the UK and US,
as well as Hong Kong, and Australia within the Asia Pacific region,
required an audit of their complete financial information. We used
component auditors from PwC network firms who are familiar with
the local laws and regulations in each of the identified territories
outside the UK to perform this audit work. The Group engagement
team audited the acquisition accounting for Smiths Gore, as well as
the post-acquisition results of Smiths Gore that were integrated into
the UK operations. The Group engagement team also audited the
acquisition accounting for SEB.
Specific risk-based audit procedures were performed by local teams
in China, Japan and Singapore, focusing on revenue and receivables
based on the audit risks we had identified in these areas.
Based upon Group materiality, we were not required to carry out
detailed audit procedures on Savills Europe. However, local audit
teams perform statutory audits of subsidiary companies in Europe
where required by local legislation. These audits were carried out to
the same timetable as the Group audit and, accordingly, we were able
to incorporate the results of their work into our overall risk assessment.
In order to direct and supervise the Group audit, the Group
engagement team sent detailed instructions to significant
component audit teams. This included communication of the areas
of focus above and other required communications. The Group
engagement team held regular meetings throughout the year, and
visited the audit teams located at the Savills’ Asia Pacific head office
in Hong Kong, given the significance of this region to the Group, and
the US head office in New York. This ensured that we had a
comprehensive understanding of the results of their work –
particularly insofar as it related to the identified areas of focus.
The Group consolidation, financial statement disclosures and a
number of complex items were audited by the Group engagement
team at the head office. These included pensions, tax and
share-based payments.
Taken together, these procedures gave us the evidence we needed
for our opinion on the financial statements as a whole.
£6.0m (2014: £5.0m).
5% (2014: 5%) of Group underlying profit
before tax as defined in Note 2.2 to the
financial statements.
Based on our professional judgement, we
determined materiality by applying a
benchmark of 5% of underlying profit before
tax. We believe that underlying profit before
tax is the most appropriate measure as it
eliminates any disproportionate effect of
exceptional charges and provides a
consistent year on year basis for our work.
We agreed with the Audit Committee that we would report to them
misstatements identified during our audit above £0.3m (2014: £0.2m)
as well as misstatements below that amount that, in our view,
warranted reporting for qualitative reasons.
Going concern
Under the Listing Rules we are required to review the Directors’
statement, set out on page 72, in relation to going concern. We have
nothing to report having performed our review.
Under ISAs (UK & Ireland) we are required to report to you if we have
anything material to add or to draw attention to in relation to the
Directors’ statement about whether they considered it appropriate to
adopt the going concern basis in preparing the financial statements.
We have nothing material to add or to draw attention to.
As noted in the Directors’ statement, the Directors have concluded
that it is appropriate to adopt the going concern basis in preparing
the financial statements. The going concern basis presumes that the
Group and Company have adequate resources to remain in operation,
and that the Directors intend them to do so, for at least one year from
the date the financial statements were signed. As part of our audit we
have concluded that the Directors’ use of the going concern basis is
appropriate. However, because not all future events or conditions
can be predicted, these statements are not a guarantee as to the
Group’s and Company’s ability to continue as a going concern.
SAVILLS PLC REPORT AND ACCOUNTS 2015
77
Overview / Strategy / Performance / Governance / Financial statements
Independent auditors’ report
to the members of Savills plc continued
Other required reporting
Consistency of other information
Companies Act 2006 opinion
In our opinion, the information given in the Strategic Report and the Directors’ Report for the financial year for which the financial statements
are prepared is consistent with the financial statements.
ISAs (UK & Ireland) reporting
Under ISAs (UK & Ireland) we are required to report to you if, in our opinion:
–
–
information in the Annual Report is:
– materially inconsistent with the information in the audited financial statements; or
–
apparently materially incorrect based on, or materially inconsistent with, our knowledge of the
Group and Company acquired in the course of performing our audit; or
otherwise misleading.
–
the statement given by the Directors on page 72, in accordance with provision C.1.1 of the UK
Corporate Governance Code (the ‘Code’), that they consider the Annual Report taken as a whole to
be fair, balanced and understandable and provides the information necessary for members to
assess the Group’s and Company’s position and performance, business model and strategy is
materially inconsistent with our knowledge of the Group and Company acquired in the course of
performing our audit.
We have no exceptions to report.
We have no exceptions to report.
–
the section of the Annual Report on page 54, as required by provision C.3.8 of the Code, describing
the work of the Audit Committee does not appropriately address matters communicated by us to the
Audit Committee.
We have no exceptions to report.
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or liquidity of the
Group Under ISAs (UK & Ireland) we are required to report to you if we have anything material to add or to draw attention to in relation to:
–
–
–
the Directors’ confirmation on page 72 of the Annual Report, in accordance with provision C.2.1 of
the Code, that they have carried out a robust assessment of the principal risks facing the Group,
including those that would threaten its business model, future performance, solvency or liquidity.
We have nothing material to add
or to draw attention to.
the disclosures in the Annual Report that describe those risks and explain how they are being
managed or mitigated.
the Directors’ explanation on page 31 of the Annual Report, in accordance with provision C.2.2 of the
Code, as to how they have assessed the prospects of the Group, over what period they have done
so and why they consider that period to be appropriate, and their statement as to whether they have
a reasonable expectation that the Group will be able to continue in operation and meet its liabilities
as they fall due over the period of their assessment, including any related disclosures drawing
attention to any necessary qualifications or assumptions.
We have nothing material to add
or to draw attention to.
We have nothing material to add
or to draw attention to.
Under the Listing Rules we are required to review the Directors’ statement that they have carried out a robust assessment of the principal
risks facing the Group and the Directors’ statement in relation to the longer-term viability of the Group. Our review was substantially less in
scope than an audit and only consisted of making inquiries and considering the Directors’ process supporting their statements; checking
that the statements are in alignment with the relevant provisions of the Code; and considering whether the statements are consistent with the
knowledge acquired by us in the course of performing our audit. We have nothing to report having performed our review.
78
SAVILLS PLC REPORT AND ACCOUNTS 2015
Adequacy of accounting records and information and
explanations received
Under the Companies Act 2006 we are required to report to you if,
in our opinion:
– we have not received all the information and explanations we
–
–
require for our audit; or
adequate accounting records have not been kept by the
Company, or returns adequate for our audit have not been
received from branches not visited by us; or
the Company financial statements and the part of the Directors’
Remuneration report to be audited are not in agreement with the
accounting records and returns.
We have no exceptions to report arising from this responsibility.
Directors’ remuneration
Directors’ remuneration report – Companies Act 2006 opinion
In our opinion, the part of the Directors’ Remuneration report to be
audited has been properly prepared in accordance with the
Companies Act 2006.
Other Companies Act 2006 reporting
Under the Companies Act 2006 we are required to report to you if, in
our opinion, certain disclosures of Directors’ remuneration specified
by law are not made. We have no exceptions to report arising from
this responsibility.
Corporate governance statement
Under the Listing Rules we are required to review the part of the
Corporate Governance Statement relating to 10 further provisions of
the Code. We have nothing to report having performed our review.
Responsibilities for the financial statements and the audit
Our responsibilities and those of the Directors
As explained more fully in the Statement of Directors’ responsibilities,
the Directors are responsible for the preparation of the financial
statements and for being satisfied that they give a true and fair view.
Our responsibility is to audit and express an opinion on the financial
statements in accordance with applicable law and ISAs (UK &
Ireland). Those standards require us to comply with the Auditing
Practices Board’s Ethical Standards for Auditors.
This report, including the opinions, has been prepared for and only
for the Company’s members as a body in accordance with Chapter
3 of Part 16 of the Companies Act 2006 and for no other purpose.
We do not, in giving these opinions, 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.
What an audit of financial statements involves
An audit involves obtaining evidence about the amounts and
disclosures in the financial statements sufficient to give reasonable
assurance that the financial statements are free from material
misstatement, whether caused by fraud or error. This includes an
assessment of:
– whether the accounting policies are appropriate to the Group’s
and the Company’s circumstances and have been consistently
applied and adequately disclosed;
the reasonableness of significant accounting estimates made by
the Directors; and
the overall presentation of the financial statements.
–
–
We primarily focus our work in these areas by assessing the Directors’
judgements against available evidence, forming our own judgements,
and evaluating the disclosures in the financial statements.
We test and examine information, using sampling and other auditing
techniques, to the extent we consider necessary to provide a
reasonable basis for us to draw conclusions. We obtain audit
evidence through testing the effectiveness of controls, substantive
procedures or a combination of both.
In addition, we read all the financial and non-financial information
in the Annual Report to identify material inconsistencies with the
audited financial statements and to identify any information that is
apparently materially incorrect based on, or materially inconsistent
with, the knowledge acquired by us in the course of performing the
audit. If we become aware of any apparent material misstatements
or inconsistencies we consider the implications for our report.
David A Snell (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
9 March 2016
SAVILLS PLC REPORT AND ACCOUNTS 2015
79
Overview / Strategy / Performance / Governance / Financial statements
Notes
2015
£m
2014
£m
6
1,283.5
1,078.2
9.1
16
15
7.1
7.1
8
11
11
17.1
8
8
8
(858.1)
(699.3)
(11.2)
(5.7)
(8.4)
(4.6)
(321.3)
(290.1)
1.1
2.9
91.2
1.8
(1.3)
0.5
6.9
98.6
0.7
2.0
78.5
1.5
(2.3)
(0.8)
7.0
84.7
121.4
(24.9)
2.1
98.6
100.5
(17.5)
1.7
84.7
12
(33.7)
(22.0)
64.9
62.7
64.3
0.6
64.9
62.1
0.6
62.7
14.1
14.1
47.0p
46.4p
46.8p
45.3p
14.2
14.2
63.2p
62.3p
55.2p
53.4p
Consolidated income statement
for the year ended 31 December 2015
Revenue
Less:
Employee benefits expense
Depreciation
Amortisation of intangible assets
Other operating expenses
Other operating income
Profit on disposal of available-for-sale investments, joint ventures and associates
Operating profit
Finance income
Finance costs
Share of post-tax profit from joint ventures and associates
Profit before income tax
Comprising:
– underlying profit before tax
– restructuring and acquisition-related costs
– other underlying adjustments
Income tax expense
Profit for the year
Attributable to:
Owners of the parent
Non-controlling interests
Earnings per share
Basic earnings per share
Diluted earnings per share
Underlying earnings per share
Basic earnings per share
Diluted earnings per share
80
SAVILLS PLC REPORT AND ACCOUNTS 2015
Consolidated statement of comprehensive income
for the year ended 31 December 2015
Profit for the year
Other comprehensive (loss)/income
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension scheme obligation
Tax on items that will not be reclassified
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss:
Fair value gain on available-for-sale investments
Fair value loss on available-for-sale investment released to income statement
Currency translation differences
Tax on items that may be reclassified
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
Notes
10.2
12
17.2
17.2
12
2015
£m
64.9
2014
£m
62.7
(3.5)
0.7
(2.8)
(15.9)
3.3
(12.6)
0.4
–
4.2
2.5
7.1
4.3
0.3
0.3
6.1
1.4
8.1
(4.5)
69.2
58.2
68.6
0.6
69.2
57.6
0.6
58.2
SAVILLS PLC REPORT AND ACCOUNTS 2015
81
Overview / Strategy / Performance / Governance / Financial statements Consolidated and Company statements of financial position
as at 31 December 2015
Assets: Non-current assets
Property, plant and equipment
Goodwill
Intangible assets
Investments in subsidiaries
Investments in joint ventures and associates
Deferred income tax assets
Available-for-sale investments
Retirement benefits
Non-current receivables
Assets: Current assets
Work in progress
Trade and other receivables
Current income tax receivable
Derivative financial instruments
Cash and cash equivalents
Liabilities: Current liabilities
Borrowings
Derivative financial instruments
Trade and other payables
Current income tax liabilities
Employee benefit obligations
Provisions for other liabilities and charges
Net current assets
Total assets less current liabilities
Liabilities: Non-current liabilities
Trade and other payables
Retirement and employee benefit obligations
Provisions for other liabilities and charges
Deferred income tax liabilities
Net assets
Equity: Capital and reserves attributable to owners of the parent
Share capital
Share premium
Shares to be issued
Other reserves
Retained earnings
Non-controlling interests
Total equity
Notes
16
15
15
17.3
17.1
18
17.2
10.2
19
24
20
23
24
21
25.2
25.1
22
10.2 and 25.2
25.1
18
26
28
28
Group
2015
£m
2014
£m
Company
2015
£m
2014
£m
57.0
269.9
25.4
–
26.7
33.4
13.2
1.3
4.6
43.2
228.0
17.5
–
22.2
42.0
11.7
–
3.9
2.8
–
0.5
2.4
–
0.6
109.7
109.5
–
1.8
–
–
–
–
2.7
–
–
–
431.5
368.5
114.8
115.2
5.7
374.2
1.2
0.1
182.4
563.6
31.4
0.2
455.7
12.0
7.3
8.8
515.4
48.2
479.7
69.0
27.3
15.7
2.7
114.7
365.0
3.4
91.1
22.9
39.1
207.8
364.3
0.7
365.0
3.2
307.9
4.3
–
158.1
473.5
3.9
–
406.0
14.7
6.6
9.3
440.5
33.0
401.5
21.5
29.2
17.3
3.2
71.2
–
20.9
3.5
–
82.2
106.6
–
–
–
17.2
3.0
–
78.1
98.3
–
–
26.0
22.5
–
0.1
–
26.1
80.5
195.3
–
0.9
1.3
–
2.2
–
0.1
–
22.6
75.7
190.9
–
1.1
1.2
–
2.3
330.3
193.1
188.6
3.4
90.1
34.9
22.5
178.6
329.5
0.8
330.3
3.4
91.1
22.9
15.3
60.4
3.4
90.1
34.9
3.3
56.9
193.1
188.6
–
–
193.1
188.6
The consolidated and Company financial statements on pages 80 to 139 were authorised for issue by the Board of Directors on 9 March 2016
and were signed on its behalf by:
J C Helsby
S J B Shaw
82
SAVILLS PLC REPORT AND ACCOUNTS 2015
Savills plc
Registered in England and Wales
No. 2122174
Consolidated statement of changes in equity
for the year ended 31 December 2015
Balance at 1 January 2015
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension
scheme obligation
Fair value gain on available-for-sale investments
Tax on items directly taken to reserves
Currency translation differences
Total comprehensive income for the year
Transactions with owners:
Employee share option scheme:
– Value of services provided
Purchase of treasury shares
Shares issued
Dividends
Transactions with non-controlling interests
Share
capital
£m
3.4
–
–
–
–
–
–
–
–
–
–
–
Notes
10.2
17.2
12
28
28
13
17.4
Attributable to owners of the parent
Share
premium
£m
Shares to
be issued
£m
Other
reserves*
Retained
earnings**
£m
£m
Non-
controlling
interests
£m
Total
£m
90.1
34.9
22.5
178.6
329.5
Total
equity
£m
330.3
64.9
(3.5)
0.4
3.2
4.2
0.8
0.6
–
–
–
–
64.3
64.3
(3.5)
(3.5)
–
3.2
–
0.4
3.2
4.2
–
–
0.4
–
4.2
4.6
64.0
68.6
0.6
69.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.1
11.1
(14.9)
(14.9)
1.0
(12.0)
12.0
–
1.0
–
–
–
–
–
(30.3)
(30.3)
(0.7)
(0.7)
–
–
–
(0.4)
(0.3)
11.1
(14.9)
1.0
(30.7)
(1.0)
Balance at 31 December 2015
3.4
91.1
22.9
39.1
207.8
364.3
0.7
365.0
Attributable to owners of the parent
Balance at 1 January 2014
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension
scheme obligation
Fair value gain on available-for-sale investments
Fair value loss on available-for-sale investments
released to income statement
Tax on items directly taken to reserves
Currency translation differences
Total comprehensive income for the year
Transactions with owners:
Employee share option scheme:
– Value of services provided
Purchase of treasury shares
Share-based payment settlement
Shares to be issued
Disposal of available-for-sale investments
(net of tax)
Dividends
Transactions with non-controlling interests
Balance at 31 December 2014
Other
reserves*
Retained
earnings**
£m
Non-
controlling
interests
£m
Total
£m
159.4
270.0
62.1
62.1
0.8
0.6
Share
capital
£m
3.4
Share
premium
£m
90.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Shares to
be issued
£m
–
–
–
–
–
–
–
–
–
–
–
34.9
–
–
–
Notes
10.2
17.2
17.2
12
28
28
28
17.2
13
17.4
£m
17.1
–
–
0.3
0.3
–
6.1
6.7
–
–
–
–
(1.3)
–
–
(15.9)
(15.9)
–
–
4.7
–
50.9
10.5
(12.1)
(3.6)
–
–
(24.9)
(1.6)
0.3
0.3
4.7
6.1
10.5
(12.1)
(3.6)
34.9
(1.3)
(24.9)
(1.6)
Total
equity
£m
270.8
62.7
(15.9)
0.3
0.3
4.7
6.1
–
–
–
–
–
–
–
–
–
–
(0.3)
(0.3)
0.8
10.5
(12.1)
(3.6)
34.9
(1.3)
(25.2)
(1.9)
330.3
57.6
0.6
58.2
3.4
90.1
34.9
22.5
178.6
329.5
*
**
Included within other reserves on the face of the statement of financial position are the capital redemption reserve, merger relief reserve, foreign exchange reserve
and revaluation reserve as disclosed in Note 28.
Included within retained earnings on the face of the statement of financial position are treasury shares, share-based payments reserve and the profit and loss
account as disclosed in Note 28.
SAVILLS PLC REPORT AND ACCOUNTS 2015
83
Overview / Strategy / Performance / Governance / Financial statements Company statement of changes in equity
for the year ended 31 December 2015
Attributable to owners of the Company
Balance at 1 January 2015
Profit for the year
Other comprehensive income:
Remeasurement of defined benefit
pension scheme obligation
Tax on items directly taken
to reserves
Total comprehensive income
for the year
Employee share option scheme:
– Value of services provided
– Exercise of share options
Distribution for Employee
Benefit Trust
Shares issued
Dividends
Notes
7.2
10.2
12
13
Balance at 31 December 2015
3.4
Balance at 1 January 2014
Profit for the year
Other comprehensive income:
Remeasurement of defined benefit
pension scheme obligation
Tax on items directly taken
to reserves
Total comprehensive income
for the year
Employee share option scheme:
– Value of services provided
– Exercise of share options
Distribution for Employee
Benefit Trust
Share-based payment settlement
Shares to be issued
Dividends
Share
capital
£m
3.4
–
–
–
–
–
–
–
–
–
–
Notes
7.2
10.2
12
13
£m
90.1
–
–
–
–
–
–
–
–
–
–
Balance at 31 December 2014
3.4
90.1
Share
capital
Share
premium
Shares to
be issued
£m
3.4
£m
90.1
£m
34.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.0
–
91.1
(12.0)
–
22.9
Share
premium
Shares to
be issued
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
0.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12.0
–
3.0
–
–
–
–
–
–
–
–
–
Share-
based
payments
reserve**
£m
4.3
–
–
–
–
Retained
earnings**
Total
shareholders’
equity
£m
52.6
47.5
(0.2)
(0.4)
£m
188.6
47.5
(0.2)
(0.4)
46.9
46.9
1.9
(2.7)
–
(10.7)
–
–
–
(1.6)
–
(30.3)
56.9
1.9
(13.4)
(1.6)
1.0
(30.3)
193.1
0.3
12.0
3.0
3.5
Attributable to owners of the Company
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Share-
based
payments
reserve**
£m
0.3
–
–
–
–
–
–
–
–
–
–
0.3
–
–
–
–
–
–
–
–
–
–
–
–
3.0
4.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.9
(2.4)
–
–
–
–
3.0
4.3
£m
–
–
–
–
–
–
–
–
–
34.9
–
34.9
Retained
earnings**
£m
46.5
37.0
Total
shareholders’
equity
£m
148.1
37.0
(0.9)
0.3
(0.9)
0.3
36.4
36.4
–
(4.3)
(0.9)
(0.2)
–
(24.9)
52.6
1.9
(6.7)
(0.9)
(0.2)
34.9
(24.9)
188.6
*
**
Included within other reserves on the face of the statement of financial position are the capital redemption reserve, the merger relief reserve and other reserves as
disclosed above.
Included within retained earnings on the face of the statement of financial position are share-based payments reserve and retained earnings as disclosed above.
84
SAVILLS PLC REPORT AND ACCOUNTS 2015
Consolidated and Company statements of cash flows
for the year ended 31 December 2015
Group
2015
£m
2014
£m
Company
2015
£m
2014
£m
Notes
31
140.5
113.6
Cash flows from operating activities
Cash generated from operations
Interest received
Interest paid
Income tax (paid)/received
Net cash generated from operating activities
Cash flows from investing activities
Proceeds from sale of property, plant and equipment
Proceeds from sale of available-for-sale investments
Proceeds from sale of interests in joint ventures and associates
Proceeds from sale of assets held for sale
Deferred consideration received in relation to prior year disposals
Dividends received from joint ventures and associates
Loans to joint ventures, associates and subsidiaries
Repayment of loans by joint ventures, associates and subsidiaries
Repayment of loans to subsidiaries
Acquisition of subsidiaries, net of cash acquired
Deferred consideration paid in relation to current and prior year acquisitions
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment in joint ventures, associates and
available-for-sale investments
16
15
17.1 and 17.2
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from borrowings
Repayments of borrowings
Share-based payment settlement
Contribution to Employee Benefit Trust
Purchase of own shares for Employee Benefit Trust
Purchase of non-controlling interests
Dividends paid
Net cash used in financing activities
26
28
28
17.4
13
Net increase in cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts at beginning of year
Effect of exchange rate fluctuations on cash held
Cash, cash equivalents and bank overdrafts at end of year
20
2.0
(0.6)
(19.9)
122.0
0.2
–
5.3
–
–
4.8
–
–
–
(24.4)
(40.3)
(20.0)
(1.7)
(6.0)
(82.1)
1.0
139.3
(112.0)
–
–
(14.9)
(1.0)
(30.7)
(18.3)
21.6
158.1
2.5
182.2
1.6
(2.0)
(17.1)
96.1
0.1
4.0
–
8.5
1.4
5.4
–
0.8
–
(18.1)
–
(12.7)
(1.5)
(2.5)
(14.6)
–
99.9
(105.8)
(3.6)
–
(12.1)
(1.9)
(25.2)
(48.7)
32.8
122.2
3.1
158.1
33.2
1.1
–
2.8
37.1
–
–
–
–
–
–
(0.2)
–
–
–
–
(1.6)
(0.3)
–
(2.1)
1.0
–
–
–
(1.6)
–
–
(30.3)
(30.9)
4.1
78.1
–
82.2
32.1
1.0
–
3.2
36.3
0.3
–
–
–
–
–
–
4.9
(6.8)
–
–
(1.3)
(0.2)
–
(3.1)
–
–
–
(0.2)
(0.9)
–
–
(24.9)
(26.0)
7.2
70.9
–
78.1
SAVILLS PLC REPORT AND ACCOUNTS 2015
85
Overview / Strategy / Performance / Governance / Financial statements Notes to the financial statements
Year ended 31 December 2015
1. General information
Savills plc (the ‘Company’) and its subsidiaries (together the ‘Group’)
is a global real estate services Group. The Group operates through
a network of offices in the UK, Continental Europe, Asia Pacific, US,
Africa and the Middle East. Savills is listed on the London Stock
Exchange and employs 30,696 staff worldwide.
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.
These consolidated financial statements were approved for issue by
the Board of Directors on 9 March 2016.
2.3 Consolidation
The consolidated financial statements include those of the Company
and its subsidiary undertakings, together with the Group’s share of
results of its associates and joint ventures.
(a) Subsidiaries
Subsidiaries are all entities over which the Group has control.
The Group controls an entity when the Group is exposed to, or has
rights to, variable returns from its involvement with the entity and has
the ability to affect those returns through its power over the entity.
Subsidiaries are fully consolidated from the date on which control is
transferred to the Group. They are deconsolidated from the date that
control ceases.
2. Accounting policies
The principal accounting policies applied in the preparation of these
consolidated financial statements are set out below. These policies have
been consistently applied to all the years presented, unless otherwise
stated, and are also applicable to the parent Company.
2.1 Basis of preparation
These financial statements have been prepared in accordance with
International Financial Reporting Standards (IFRS) and IFRS
Interpretations Committee interpretations as adopted by the
European Union and with those parts of the Companies Act 2006
applicable to companies reporting under IFRS.
The financial statements are prepared on a going concern basis and
under the historical cost convention as modified by the revaluation of
available-for-sale investments and derivative financial instruments.
The preparation of financial statements in conformity with IFRS
requires the use of certain critical accounting estimates and for
management to exercise judgement in the process of applying the
Group’s accounting policies. The areas involving a higher degree of
judgement or complexity, or areas where assumptions and estimates
are significant to the financial statements, are disclosed in Note 5.
2.2 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 8
and Note 14.2 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.
The Group applies the acquisition method of accounting to account
for business combinations. The consideration transferred for the
acquisition of a subsidiary is the fair value of the assets transferred,
the liabilities incurred and the equity interests issued by the Group.
The consideration transferred includes the fair value of any asset or
liability resulting from a contingent consideration arrangement.
Identifiable assets acquired and liabilities and contingent liabilities
assumed in a business combination are measured initially at their fair
values at the acquisition date. The Group recognises any non-
controlling interest in the acquiree on an acquisition-by-acquisition
basis, either at fair value or at the non-controlling interest’s
proportionate share of the recognised amounts of the acquiree’s
identifiable net assets.
Acquisition-related costs are expensed as incurred.
Any contingent consideration to be transferred by the Group is
recognised at fair value at the acquisition date. Subsequent changes
to the fair value of the contingent consideration that is deemed to be
an asset or liability is recognised in accordance with IAS 39 in profit
or loss. Contingent consideration that is classified as equity is not
remeasured, and its subsequent settlement is accounted for
within equity.
Inter-company transactions, balances and unrealised gains and
losses on transactions between Group companies are eliminated.
Profits and losses resulting from inter-company transactions that are
recognised in assets are also eliminated. Accounting policies of
subsidiaries have been changed where necessary to ensure
consistency with the policies adopted by the Group.
Investments in subsidiaries held by the Company are held at cost,
less any provision for impairment.
(b) Changes in ownership interests in subsidiaries without change
of control
Transactions with non-controlling interests that do not result in loss
of control are accounted for as equity transactions – that is, as
transactions with the owners in their capacity as owners. The
difference between fair value of any consideration paid and the
relevant share acquired of the carrying value of net assets of the
subsidiary is recorded in equity. Gains or losses on disposals to
non-controlling interests are also recorded in equity.
(c) Disposal of subsidiaries
When the Group ceases to have control any retained interest in the
entity is remeasured to its fair value at the date when control is lost,
with the change in carrying amount recognised in profit or loss.
The fair value is the initial carrying amount for the purposes of
subsequently accounting for the retained interest as an associate,
86
SAVILLS PLC REPORT AND ACCOUNTS 2015
joint venture or financial asset. In addition, any amounts previously
recognised in other comprehensive income in respect of that entity
are accounted for as if the Group had directly disposed of the related
assets or liabilities. This may mean that amounts previously recognised
in other comprehensive income are reclassified to profit or loss.
(d) Associates
Associates are all entities over which the Group has significant
influence but not control, generally accompanying a shareholding
of between 20% and 50% of the voting rights. Investments in
associates are accounted for using the equity method of accounting.
Under the equity method, the investment is initially recognised at
cost, and the carrying amount is increased or decreased to
recognise the investor’s share of the profit or loss of the investee after
the date of acquisition. The Group’s investment in associates
includes goodwill (net of any accumulated impairment loss) identified
on acquisition (see Note 17.1).
If the ownership interest in an associate is reduced but significant
influence is retained, only a proportionate share of the amounts
previously recognised in other comprehensive income is reclassified
to profit or loss where appropriate.
The Group’s share of its associates’ post-acquisition profits or losses is
recognised in the income statement and its share of post-acquisition
movements in other comprehensive income is recognised in other
comprehensive income with a corresponding adjustment to the
carrying amount of the investment. When the Group’s share of
losses in an associate equals or exceeds its interest in the associate,
including any other unsecured receivables, the Group does not
recognise further losses unless it has incurred legal or constructive
obligations or made payments on behalf of the associate.
Unrealised gains on transactions between the Group and its
associates are eliminated to the extent of the Group’s interest in the
associates. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of associates have been changed
where necessary to ensure consistency with the policies adopted
by the Group.
Dilution gains and losses arising in investments in associates are
recognised in the income statement.
(e) Joint arrangements
The Group applies IFRS 11 to all joint arrangements. Under IFRS 11
investments in joint arrangements are classified as either joint
operations or joint ventures depending on the contractual rights and
obligations of each investor. The Group has assessed the nature of
its joint arrangements and determined them to be joint ventures.
Joint ventures are accounted for using the equity method.
Under the equity method of accounting, interests in joint ventures
are initially recognised at cost and adjusted thereafter to recognise
the Group’s share of the post-acquisition profits or losses and
movements in other comprehensive income. When the Group’s
share of losses in a joint venture equals or exceeds its interests in
the joint ventures (which includes any long-term interests that, in
substance, form part of the Group’s net investment in the joint
ventures), the Group does not recognise further losses, unless
it has incurred obligations or made payments on behalf of the
joint ventures.
Unrealised gains on transactions between the Group and its joint
ventures are eliminated to the extent of the Group’s interest in the
joint ventures. Unrealised losses are also eliminated unless the
transaction provides evidence of an impairment of the asset
transferred. Accounting policies of the joint ventures have been
changed where necessary to ensure consistency with the policies
adopted by the Group.
2.4 Segment reporting
Operating segments are reported in a manner consistent with the
internal reporting provided to the chief operating decision maker.
The chief operating decision maker, who is responsible for allocating
resources and assessing performance of the operating segments,
has been identified as the Group Executive Board.
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.
As the Group is strongly affected by both differences in the types of
services it provides and the geographical areas in which it operates,
the matrix approach of disclosing both the business and
geographical segments formats is used.
Revenues and expenses are allocated to segments on the basis that
they are directly attributable or the relevant portion can be allocated
on a reasonable basis.
2.5 Foreign currency translation
(a) Functional and presentation currency
Items included in the financial statements of each of the Group’s
entities are measured using the currency of the primary economic
environment in which the entity operates (‘the functional currency’).
The consolidated financial statements are presented in Sterling,
which is also the Company’s functional and presentation currency.
(b) Transactions and balances
Foreign currency transactions are translated into the functional
currency using the exchange rates prevailing at the dates of the
transactions. Foreign exchange gains and losses resulting from the
settlement of such transactions and from the translation at year end
exchange rates of monetary assets and liabilities denominated in
foreign currencies are recognised in the income statement, except
when deferred in other comprehensive income as qualifying cash
flow hedges.
Translation differences on non-monetary financial assets and
liabilities are reported as part of the fair value gain or loss and are
recognised in the income statement, except for available-for-sale
equity investments, which are recognised in other comprehensive
income. Non-monetary items carried at historical cost are reported
using the exchange rate at the date of the transaction.
(c) Group entities
The assets and liabilities of foreign operations, including goodwill and
fair value adjustments arising on consolidation, are translated to the
Group’s presentational currency at foreign exchange rates ruling at
the reporting date. The income and expenses of foreign operations
are translated at an average rate for the year where this rate
approximates to the foreign exchange rates ruling at the dates
of the transactions.
Exchange differences arising from this translation of foreign
operations are taken directly to the foreign exchange reserve. When
a foreign operation is disposed of, in part or in full, the relevant
amount in the foreign exchange reserve is transferred to the
income statement.
SAVILLS PLC REPORT AND ACCOUNTS 2015
87
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less
accumulated depreciation and impairment. Historical cost includes
expenditure directly attributable to acquisition.
Development costs that are directly attributable to the design and
testing of identifiable and unique software products controlled by the
Group are recognised as intangible assets when the following criteria
are met:
Subsequent costs are included in the asset’s carrying amount or
recognised as a separate asset, as appropriate, only when it is
probable that the future economic benefits associated with the
item will flow to the Group and the cost of the item can be
measured reliably.
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
Short leasehold property (less than 50 years)
Equipment and motor vehicles
50 years
Over unexpired
term of lease
3–10 years
–
it is technically feasible to complete the software product so that
it will be available for use;
– management intends to complete the software product and use
–
–
–
–
or sell it;
there is an ability to use or sell the software product;
it can be demonstrated how the software product will generate
probable future economic benefits;
adequate technical, financial and other resources to complete
the development and to use or sell the software product are
available; and
the expenditure attributable to the software product during its
development can be reliably measured.
Measurement subsequent to initial recognition is at cost less
accumulated amortisation and impairment.
Residual values and useful lives are reviewed and adjusted if
appropriate, at each reporting date.
Amortisation charges are spread on a straight-line basis over the
period of the assets’ estimated useful lives as follows:
An asset’s carrying amount is written down immediately to its
recoverable amount if the asset’s carrying amount is greater
than its estimated recoverable amount.
2.7 Goodwill
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.
In respect of associates, goodwill is included in the carrying value of
the investment.
Goodwill is carried at cost less accumulated impairment losses.
Separately recognised goodwill is tested annually for impairment,
or more frequently if events or changes in circumstances indicate
potential impairment. An impairment loss is recognised for the
amount by which the carrying value exceeds the recoverable
amount. The recoverable amount is the higher of value in use and
fair value less costs of disposal. Impairment losses on goodwill are
not reversed.
Goodwill is allocated to cash-generating units for the purpose of
impairment testing. The allocation is made to those cash-generating
units or groups of cash-generating units that are expected to benefit
from the business combination in which the goodwill arose. The
Group allocates goodwill to each business segment in the
geographical region in which it operates (Note 15).
Gains and losses on the disposal of an entity include the carrying
amount of goodwill relating to the entity sold.
2.8 Intangible assets other than goodwill
Intangible assets acquired as part of business combinations and
incremental contract costs are valued at fair value on acquisition and
amortised over the useful life. Fair value on acquisition is determined
by third-party valuation where the acquisition is significant.
Acquired computer software licences are capitalised on the basis of
the costs incurred to acquire and bring to use the specific software.
Costs associated with maintaining computer software programs are
recognised as an expense as incurred.
Customer relationships
Order back-log
Contracts – Investment, property management and
other existing business contracts
Computer software
3–15 years
5 years
2–20 years
3–5 years
Acquired investment management contracts relating to open-ended
funds have been attributed indefinite useful lives.
2.9 Impairment of other non-financial assets
Assets that have indefinite useful lives are not subject to amortisation
or depreciation and are tested annually for impairment or whenever an
indicator of impairment exists. Assets that are subject to amortisation
or depreciation are reviewed for impairment whenever an indicator of
impairment exists. An impairment 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. Prior impairments of non-financial assets
(other than goodwill) are reviewed for possible reversal at each
reporting date.
Value-in-use is determined using the discounted cash flow method,
with an appropriate discount rate to reflect market rates and specific
risks associated with the asset.
For the purposes of assessing impairment, assets are grouped at the
lowest levels for which there are separately identifiable cash flows
(cash-generating units). Where it is not possible to estimate the
recoverable amount of an individual asset, the Group estimates
the recoverable amount of the cash-generating unit to which the
asset belongs.
2.10 Financial instruments
Financial assets and liabilities are recognised on the Group’s
statement of financial position at fair value when the Group becomes
party to the contractual provisions of the instrument. Subsequent
measurement depends on the classification and is discussed in
paragraphs 2.11–2.16.
Financial assets and liabilities are offset and the net amount reported
in the balance sheet where there is a legally enforceable right to
offset the recognised amounts and there is an intention to settle on
a net basis or realise the asset and settle the liability simultaneously.
88
SAVILLS PLC REPORT AND ACCOUNTS 2015
The Group derecognises a financial asset when the contractual
rights to the cash flows from the asset expire, or when it transfers
the financial asset and substantially all the risks and rewards of
ownership of the asset to another party. On derecognition of
a financial asset in its entirety, the difference between the asset’s
carrying amount and the sum of consideration received is
recognised in profit or loss.
The Group derecognises financial liabilities when, and only when,
the Group’s obligations are discharged, cancelled or have expired.
The difference between the carrying amount of the financial liability
derecognised and the consideration paid is recognised in profit or loss.
2.11 Available-for-sale investments
Available-for-sale investments are stated at fair value, with changes
in fair value being recognised in other comprehensive income.
When such investments are disposed or become impaired, the
accumulated gains and losses, previously recognised in other
comprehensive income, are recognised in the income statement.
2.12 Trade receivables
Trade receivables are recognised initially at fair value and
subsequently measured at amortised cost less provision for
impairment. Receivables are discounted where the time value of
money is material.
A provision for impairment of trade receivables is established when
there is objective evidence that the Group will not be able to collect
all amounts due according to the original terms of the receivables.
Significant financial difficulties of the debtor, probability that the
debtor will enter bankruptcy or financial reorganisation, and default
or delinquency in payments are considered indicators that the trade
receivable is impaired. The amount of the provision is the difference
between the asset’s carrying amount and the present value of
estimated future cash flows, discounted at the original effective
interest rate.
The carrying amount of the asset is reduced through the use of an
allowance account, and the amount of the loss is recognised in the
income statement within ‘other operating expenses’. When a trade
receivable is uncollected, it is written off against the allowance
account for trade receivables. Subsequent recoveries of amounts
previously written off are credited against ‘other operating expenses’
in the income statement.
2.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held
on call with banks, together with other short-term highly liquid
investments with original maturities of three months or less and
working capital overdrafts, which are subject to an insignificant risk
of changes in value. Bank overdrafts are included under borrowings
in the statement of financial position.
2.14 Bank borrowings
Interest-bearing bank loans and overdrafts are initially measured at
fair value, net of transaction costs incurred, and subsequently
measured at amortised cost using the effective interest rate method.
2.15 Trade payables
Trade payables are initially measured at fair value and subsequently
measured at amortised cost, using the effective interest rate method.
Trade payables are classified as current liabilities if payment is
due within one year or less. If not, they are presented as
non-current liabilities.
2.16 Derivative financial instruments and hedging
Derivatives are initially recognised at fair value on the date a derivative
contract is entered into and are subsequently remeasured at fair value.
The method of recognising the resulting gain or loss depends on
whether the derivative is designated as a hedging instrument and if so,
the nature of the item being hedged.
Certain derivatives do not qualify for hedge accounting. In these
cases, changes in the fair value of all derivative instruments are
recognised immediately in the income statement.
2.17 Share capital
Ordinary shares are classified as equity. Incremental costs directly
attributable to the issue of new shares or options are shown in equity
as a deduction, net of tax, from the proceeds. 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
Benefit Trust, are classified as treasury shares and presented as
a deduction from total equity.
2.18 Taxation
The tax expense for the period comprises current and deferred tax.
Tax is recognised in the income statement, except to the extent that
it relates to items recognised in other comprehensive income or
directly in equity. In this case, the tax is also recognised in other
comprehensive income or directly in equity.
The current income tax charge is calculated on the basis of the tax
laws enacted or substantively enacted at the balance sheet date in
the countries where the Company and its subsidiaries operate and
generate taxable income. Management periodically evaluates
positions taken in tax returns with respect to situations in which
applicable tax regulation is subject to interpretation. It establishes
provisions where appropriate on the basis of amounts expected to
be paid to the tax authorities.
Deferred income tax is recognised, using the liability method, on
temporary differences arising between the tax bases of assets and
liabilities and their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not recognised if
they arise from the initial recognition of goodwill; deferred income tax
is not accounted for if it arises from the initial recognition of an asset
or liability in a transaction other than a business combination that at
the time of the transaction affects neither accounting nor taxable
profit or loss. Deferred income tax is determined using tax rates (and
laws) that have been enacted or substantially enacted by the balance
sheet date and are expected to apply when the related deferred
income tax asset is realised or the deferred income tax liability
is settled.
Deferred income tax assets are recognised only to the extent that it
is probable that future taxable profit will be available against which
the temporary differences can be utilised.
Deferred income tax is provided on temporary differences arising on
investments in subsidiaries and associates except for deferred income
tax liability where the timing of the reversal of the temporary difference
is controlled by the Group and it is probable that the temporary
difference will not reverse in the foreseeable future.
Deferred income tax assets and liabilities are offset when there is
a legally enforceable right to offset current tax assets against current
tax liabilities and when the deferred income tax assets and liabilities
relate to income tax levied by the same taxation authority on either the
same taxable entity or different taxable entities where there is an
intention to settle the balances on a net basis.
SAVILLS PLC REPORT AND ACCOUNTS 2015
89
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
2.19 Pension obligations
The Group operates both defined benefit and defined contribution
plans. A defined contribution plan is a pension plan under which the
Group pays fixed contributions into a separate entity. The Group has
no legal or constructive obligations to pay further contributions if the
fund does not hold sufficient assets to pay all employees the benefits
relating to employee service in the current and prior periods. A defined
benefit plan is a pension plan that defines an amount of pension benefit
that an employee will receive on retirement, usually dependent on one
or more factors, such as age, years of service and compensation.
2.21 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
Deferred Share Bonus Plan and the Savills Deferred Share Plan and to
hold shares in the Company for subsequent transfer to employees on
the vesting of the awards granted under the schemes. The assets and
liabilities of the EBT are included in the Group statement of financial
position. Investments in the Group’s own shares are shown as
a deduction from equity.
The liability recognised in the statement of financial position in
respect of defined benefit pension plans is the present value of the
defined benefit obligation at the reporting date less the fair value of
plan assets. The defined benefit obligation is calculated annually by
independent actuaries using the projected unit credit method. The
present value of the defined benefit obligation is determined by
discounting the estimated future cash outflows.
The defined benefit scheme charge consists of net interest costs,
past service costs and the impact of any settlements or curtailments
and is charged as an expense as they fall due.
All actuarial gains and losses are recognised immediately in other
comprehensive income in the period in which 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. The Group has no further payment obligations
once the contributions have been paid. Prepaid contributions are
recognised as an asset to the extent that a cash refund or a reduction
in the future payments is available.
The net defined benefit cost is allocated amongst participating
Group subsidiaries on the basis of pensionable salaries.
2.20 Share-based payments
The Group operates equity-settled share-based compensation plans.
The fair value of the employee services received in exchange for the
grant of the options is recognised as an expense.
Non-market vesting conditions are included in assumptions about
the number of options that are expected to vest. The total expense is
recognised over the vesting period, which is the period over which all
of the specified vesting conditions are to be satisfied. At the end of
each reporting period, the Group revises its estimate of the number
of options that are expected to vest based on the non-market vesting
conditions. It recognises the impact of the revision to original
estimates, if any, in the income statement, with a corresponding
adjustment to equity.
All equity-settled share-based payments 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.
The fair value of equity-settled share-based payments is measured by
the use of the Actuarial Binomial option pricing model. At each reporting
date, the Group revises its estimates of the number of options that are
expected to become exercisable. It recognises the impact of the
revision of original estimates, if any, in the income statement, and
a corresponding adjustment to equity over the remaining vesting
period. The cash proceeds received net of any directly attributable
transaction costs are credited to share capital (nominal value) and
share premium when the options are exercised.
2.22 Provisions
Provisions are recognised when the Group has a present legal
or constructive obligation as a result of a past event, it is probable
that the Group will be required to settle that obligation and the
amount has been reliably estimated. Provisions are measured at
the Directors’ best estimate of the expenditure required to settle
the obligation at the reporting date and are discounted to present
value where the effect is material.
(a) Professional indemnity claims
Provisions on professional indemnity claims are recognised when it
is probable that the Group will be required to settle claims against it
as a result of a past event and the amount of the obligation can be
reliably estimated.
(b) Dilapidation provisions
The Group is required to perform dilapidation repairs and restore
properties to agreed specifications on leased properties prior
to the properties being vacated at the end of their lease term.
Provision for such cost is made where a legal obligation is
identified and the liability can be reasonably quantified.
(c) Onerous leases
A provision is recognised where the costs of meeting the obligations
under a lease contract exceed the economic benefits expected
to be received and is measured as the net least cost of exiting
the contract, being the lower of the cost of fulfilling it and any
compensation or penalties arising from the failure to fulfil it.
(d) Restructuring provision
A provision is recognised when there is a present constructive
obligation to meet the costs of restructure. This arises when there
is a detailed formal plan for the restructuring, identifying at least
the business or part of the business concerned, principal locations
affected and the location, function and approximate number of
employees to be compensated for terminating their services and
when the plan has been communicated to those affected by it,
raising an expectation that the plan will be carried out.
2.23 Revenue
Revenue comprises the fair value of the consideration received or
receivable for the provision of services in the ordinary course of the
Group’s activities. Revenue is shown net of value-added tax and
amounts due to third parties and after elimination of revenue within
the Group.
(a) Residential transactional fees
Generally, where contracts are unconditional, revenue is recognised
on exchange of contracts. However, on more complex contracts,
revenue will be recognised on the date of completion. On multi-unit
developments, revenue is recognised on a staged basis, based
on each contract, commencing when the underlying contracts
are exchanged.
(b) Commercial transactional fees
Generally, revenue is recognised on the date of completion or when
unconditional contracts have been exchanged.
90
SAVILLS PLC REPORT AND ACCOUNTS 2015
(c) Property consultancy
Revenue in respect of property consultancy represents commissions
and fees recognised on a time basis, fixed fee or percentage of
completion. Percentage of completion is principally measured by the
proportion of actual costs incurred in relation to the best estimate of
total costs expected for completion of the contract.
2.25 Dividends
Dividend distributions are recognised as a liability in the Group’s
financial statements in the period in which they are approved by
the Company’s shareholders.
Interim dividends are recognised when paid.
(d) Property and facilities management
Revenue represents fees earned for managing properties and
providing facilities and is generally recognised in the period the
services are provided using a straight-line basis over the term
of the contract.
(e) Investment management
Revenue represents commissions and fees receivable, net of
marketing costs in accordance with the relevant fee agreements.
Annual management fees are recognised, gross of costs, in the
period to which the service has been provided, in accordance with
the contracted fee agreements. Transaction fees are recognised on
the date of completion of a purchase or sale transaction. Distribution
fees are recognised on the completion of a signed subscription
agreement and performance fees are recognised as earned and
when approved by the fund.
(f) Work in progress
Work in progress generally relates to consultancy revenue and is
stated at the lower of cost and net realisable value. Cost includes an
appropriate proportion of overheads.
(g) Interest income
Interest income is recognised on a time-proportion basis using the
effective interest method.
(h) Dividend income
Dividend income is recognised when the right to receive payment
is established.
(i) Other income
Other income includes interest and dividend income on available-for-
sale investments plus fair value gains and losses on assets at fair
value through profit or loss.
2.24 Leases
Leases of property, plant and equipment where the Group has
substantially all the risks and rewards of ownership are classified as
finance leases.
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. The assets are then
depreciated over the lower of the lease terms or the estimated useful
lives of the assets.
–
The capital elements of future obligations under finance leases are
included as liabilities in the statement of financial position. 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 (operating
leases) are charged to the income statement on a straight-line basis
over the lease term. Benefits received and receivable as an incentive
to enter into the operating lease are also spread on a straight-line
basis over the lease term.
A lease is classified as onerous where the unavoidable costs of
meeting the obligations under the contract exceed the economic
benefits expected to be received under it.
2.26 Adoption of standards, amendments and interpretations
to standards
Standards, amendments and interpretations mandatorily effective
for the first time for the financial year beginning 1 January 2015 that
are not relevant or considered significant to the Group include
the following:
Amendments to IAS 19
Amendments to IFRSs
Amendments to IFRSs
Clarification on accounting for
employee contributions to defined
benefit plans
Annual Improvements to IFRSs
2011–2013 Cycle
Annual Improvements to IFRSs
2010–2012 Cycle
The following standards and amendments to published standards
are mandatory for accounting periods beginning on or after
1 January 2016, and have not been early adopted:
–
–
IFRS 16, ‘Leases’, effective for the accounting periods beginning on
or after 1 January 2019 (subject to EU endorsement). The standard
addresses the classification, measurement and recognition of
leases with the objective of ensuring that lessees and lessors
provide relevant information that faithfully represents those
transactions. The standard supersedes IAS 17 ‘Leases’. The
impact of the standard is currently being assessed.
IFRS 15, ‘Revenue from contracts with customers’, effective for
accounting periods beginning on or after 1 January 2018 (subject
to EU endorsement). The standard establishes principles for
reporting useful information to users of financial statements
about the nature, amount, timing and uncertainty of revenue and
cash flows arising from an entity’s contracts with customers.
Revenue is recognised when a customer obtains control of
a good or service and thus has the ability to direct the use and
obtain the benefits from the good or service. The standard
replaces IAS 18 ‘Revenue’ and IAS 11 ‘Construction contracts’
and related interpretations. The application of IFRS is not
expected to have a material impact on the amounts recognised
in the Group’s consolidated financial statements however, it may
have a material impact on the disclosures. The impact of the
standard is currently being assessed.
IFRS 9, ‘Financial instruments’, including amendments, effective for
accounting periods beginning on or after 1 January 2018. This
standard addresses the classification, measurement and
recognition of financial assets and financial liabilities. It replaces the
guidance in IAS 39 that relates to the classification and
measurement of financial instruments. IFRS 9 retains but simplifies
the mixed measurement model and establishes three primary
measurement categories for financial assets: amortised cost, fair
value through other comprehensive income and fair value through
profit and loss. The basis of classification depends on the entity’s
business model and the contractual cash flow characteristics of the
financial asset. There is now a new expected credit losses model
that replaces the incurred loss impairment model used in IAS 39.
For financial liabilities there were no changes to classification and
measurement except for the recognition of changes in own credit
risk in other comprehensive income, for liabilities designated at fair
value through profit or loss. The application of IFRS 9 is not expected
to have a material impact on the amounts reported in the Group’s
consolidated financial statements.
SAVILLS PLC REPORT AND ACCOUNTS 2015
91
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
Other standards, amendments and interpretations not yet effective
and not discussed above are not relevant or considered significant to
the Group.
3. Financial risk management
3.1 Financial risk factors
The Group’s activities expose it to a variety of financial risks. The
Group has in place a risk management programme that seeks to
limit the adverse effects on the financial performance of the Group.
The Group uses financial instruments to manage material foreign
currency and interest rate risk.
The treasury function is responsible for implementing risk
management policies applied by the Group and has a policy and
procedures manual that sets out specific guidelines on financial risks
and the use of financial instruments to manage these.
3.2 Foreign exchange risk
The Group operates internationally and is exposed to foreign
exchange risks primarily with respect to the Euro, Hong Kong dollar
and US dollar. Foreign exchange risk arises from future commercial
transactions, recognised assets and liabilities and net investments in
foreign operations. The Group may finance some overseas
investments through the use of foreign currency borrowings. The
Group does not actively seek to hedge risks arising from foreign
currency translations due to their non-cash nature and the high costs
associated with such hedging; however when there is a material
committed foreign currency exposure the foreign exchange risk will
be hedged.
The sensitivity analysis has been prepared for the major currencies
to which the Group is exposed. Recent historical movements in
these currencies has been considered and it has been concluded
that a 5–10% movement in rates is a reasonable benchmark.
For the year ended 31 December 2015, if the average currency
conversion rates against Sterling for the year had changed with
all other variables held constant, the Group post-tax profit for the
year would have increased or decreased as shown below:
£m
2015
Movement of currency against Sterling
-10.0%
-5.0%
+5.0%
+10.0%
Estimated impact on post-tax profit
Euro
Hong Kong dollar
US dollar
(0.5)
(0.5)
0.7
Estimated impact on components of equity
Euro
Hong Kong dollar
US dollar
2014
2.1
(11.8)
(10.2)
Estimated impact on post-tax profit
Euro
Hong Kong dollar
US dollar
(0.3)
(0.2)
(0.1)
Estimated impact on components of equity
Euro
Hong Kong dollar
US dollar
2.3
(10.8)
(9.3)
(0.3)
(0.3)
0.4
1.1
(6.2)
(5.4)
(0.2)
(0.1)
–
1.2
(5.7)
(4.9)
0.3
0.3
0.6
0.6
(0.4)
(0.8)
(1.2)
6.9
5.9
(2.5)
14.5
12.5
0.2
0.1
–
(1.3)
6.3
5.4
0.4
0.3
0.1
(2.8)
13.3
11.3
92
SAVILLS PLC REPORT AND ACCOUNTS 2015
3.3 Interest rate risk
The Group has both interest-bearing assets and liabilities. The Group
finances its operations through a mixture of retained profits and bank
borrowings, at both fixed and floating interest rates. Borrowings
issued at variable rates expose the Group cash flow to interest rate
risk, which is partially offset by cash held at variable rates.
Borrowings issued at fixed rates expose the Group to fair value
interest rate risk. Group policy is to maintain at least 70% of its
borrowings in fixed rate instruments.
For the year ended 31 December 2015, if the average interest rate
for the year had changed with all other variables held constant, the
Group’s post-tax profit for the year and equity would have increased
or decreased as shown below:
£m
2015
Estimated impact on
post-tax profit and equity
2014
Estimated impact on
post-tax profit and equity
£m
2015
Estimated impact on
post-tax profit and equity
2014
Estimated impact on
post-tax profit and equity
Increase in interest rates
+0.5%
+1.0%
+1.5%
+2.0%
0.1
0.4
0.7
1.0
0.1
0.4
0.7
0.9
Decrease in interest rates
-0.5%
-1.0%
-1.5%
-2.0%
(0.5)
(0.7)
(0.9)
(0.9)
(0.5)
(0.8)
(0.9)
(0.9)
The rationale behind the 2.0% sensitivity analysis is based upon
historic trends in interest rate movements and the short-term
expectation that any increase or decrease greater than 2.0% is unlikely
to occur.
3.4 Credit risk
Credit risk arises from cash and cash equivalents, available-for-sale
investments, derivative financial instruments and deposits with banks
and financial institutions, as well as credit exposures to clients,
including outstanding receivables and committed transactions. The
Group has policies that require appropriate credit checks on potential
customers before engaging with them. A risk control framework is
used to assess the credit quality of clients, taking into account financial
position, past experience and other factors.
Individual risk limits for banks and financial institutions are set based
on external ratings and in accordance with limits set by the Board.
The utilisation of credit limits is regularly monitored.
As at the reporting date, no significant credit risk existed in relation to
banking counterparties. No credit limits were exceeded during the
reporting year, and management does not expect any losses from
non-performance by these counterparties. There were no other
significant receivables or individual trade receivable balances as at
31 December 2015. Refer to Note 19 for information on the credit
quality of trade receivables and the maximum exposure to credit risk
arising on outstanding receivables from clients.
The table below shows Group cash balances split by counterparty
ratings at the reporting date:
Counterparty rating (provided by S&P)
AA-
A+
A
A-
BBB+ or below
Total
2015
£m
15.5
60.0
63.8
22.8
20.3
2014
£m
11.3
37.5
88.1
3.5
17.7
182.4
158.1
3.5 Liquidity risk
The Group maintains appropriate committed facilities to ensure the
Group has sufficient funds available for operations and expansion.
The Group prepares an annual funding plan approved by the Board
which sets out the Group’s expected financing requirements for the
next 12 months.
Management monitors rolling forecasts of the Group’s liquidity
reserve (comprising undrawn borrowing facilities (Note 23) and cash
and cash equivalents (Note 20)) on the basis of expected cash flow.
This is carried out at local level in the operating companies of the
Group in accordance with Group practice as well as on a Group
consolidated basis.
The table below analyses the Group’s financial liabilities and
net-settled derivative financial liabilities into relevant maturity
groupings based on the remaining period from the reporting date to
the contractual maturity date. The amounts disclosed in the table are
the contractual undiscounted cash flows. Amounts due within
12 months and non-current amounts both equal their carrying
balances, as the impact of discounting is not significant.
£m
2015
Borrowings
Derivative financial
instruments
Trade and other payables
2014
Borrowings
Trade and other payables
Less than
a year
Between
1 and 2
years
Between
2 and 5
years
Over 5
years
31.4
0.2
409.0
440.6
3.9
355.0
358.9
–
–
–
–
44.1
44.1
23.3
23.3
–
16.0
16.0
–
3.3
3.3
–
–
1.6
1.6
–
2.2
2.2
3.6 Capital risk management
The Group’s objectives when managing capital are:
–
–
to safeguard the Group’s ability to provide returns for
shareholders and benefits for other stakeholders; and
to maintain an optimal capital structure to reduce the cost
of capital.
The Group’s overall strategy remains unchanged from 2014.
Savills plc is not subject to any externally imposed capital
requirements, with the exception of its FCA (Financial Conduct
Authority) regulated entities, which complied with all capital
requirements during the year ended 31 December 2015. For more
information on FCA capital adequacy requirements, please visit
www.savillsim.com.
In order to maintain an optimal capital structure, the Group may
adjust the amount of dividends paid to shareholders, return capital to
shareholders, issue new shares or sell assets to reduce debt.
The Board has put in place a distribution policy which takes into
account the degree of maintainability of the Group’s different profit
streams and the Group’s overall exposure to cyclical Transaction
Advisory profits, as well as the requirement to maintain a certain level
of cash resources for working capital and corporate development
purposes. The Board will recommend an ordinary dividend broadly
reflecting the profits derived from the Group’s less volatile
businesses. In addition, when profits from the cyclical Transaction
Advisory business are strong, the Board will consider and, if
appropriate, recommend the payment of a supplemental dividend
alongside the final ordinary dividend. The value of any such
supplemental dividend will vary depending on the performance of
the Group’s Transaction Advisory business and the Group’s
anticipated working capital and corporate development requirements
through the cycle. It is intended that, in normal circumstances, the
combined value of the ordinary and supplemental dividends
declared in respect of any year are covered at least 1.5 times by
statutory retained earnings and/or at least 2.0 times by underlying
profits after taxation. The Group complied with this policy throughout
the year.
The Group’s policy is to borrow centrally if required to meet
anticipated funding requirements. These borrowings, together with
cash generated from operations, are then on-lent or contributed as
equity to certain subsidiaries. The Board of Directors monitors
a number of debt measures on a rolling forward 12-month basis
including gross cash by location; gross debt by location; cash
subject to restrictions; total debt servicing cost to operating profit;
gross borrowings as a percentage of EBITDA (earnings before
interest, tax, depreciation and amortisation); and forecast headroom
against available facilities. These internal measures indicate the levels
of debt that the Group has and are closely monitored to ensure
compliance with banking covenants and to confirm that the Group
has sufficient unused facilities. The Group complied with all banking
covenants throughout the year and met all internal counterparty
exposure limits set by the Board.
The capital structure is as follows:
£m
Equity
Group
Company
2015
2014
2015
2014
365.0
330.3
193.1
188.6
Cash and cash equivalents
182.4
158.1
82.2
Borrowings
Net cash
(31.4)
151.0
(3.9)
–
154.2
82.2
78.1
–
78.1
SAVILLS PLC REPORT AND ACCOUNTS 2015
93
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
3.7 Categories of financial instruments
Financial assets:
Available-for-sale investments
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total financial assets
Financial liabilities:
Borrowings
Trade and other payables
Derivative financial instruments
Total financial liabilities
Financial
asset at
fair value
2015
£m
Available-
for-sale
financial
assets
2015
£m
Loans and
receivables
2015
£m
Total
carrying
amount
2015
£m
Available-
for-sale
financial
assets
2014
£m
Loans and
receivables
2014
£m
–
–
0.1
–
0.1
13.2
–
–
–
13.2
–
321.7
–
182.4
504.1
13.2
321.7
0.1
182.4
517.4
11.7
–
–
–
11.7
–
269.2
–
158.1
427.3
Financial
liabilities at
fair value
2015
£m
Financial
liabilities at
amortised
cost
2015
£m
Total
carrying
amount
2015
£m
Financial
liabilities at
amortised
cost
2014
£m
–
–
0.2
0.2
31.4
478.0
–
509.4
31.4
478.0
0.2
509.6
3.9
376.5
–
380.4
380.4
Total
carrying
amount
2014
£m
11.7
269.2
–
158.1
439.0
Total
carrying
amount
2014
£m
3.9
376.5
–
3.8 Fair value estimation
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2015:
£m
2015
Assets
Available-for-sale investments
– Unlisted
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Total liabilities
Equity
Shares to be issued
Total equity
Level 1
Level 2
Level 3
Total
–
–
–
–
–
–
–
13.2
0.1
13.3
0.2
0.2
22.9
22.9
–
–
–
–
–
–
–
13.2
0.1
13.3
0.2
0.2
22.9
22.9
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2014:
£m
2014
Assets
Available-for-sale investments
– Unlisted
Total assets
Equity
Shares to be issued
Total equity
94
SAVILLS PLC REPORT AND ACCOUNTS 2015
Level 1
Level 2
Level 3
Total
–
–
–
–
11.7
11.7
34.9
34.9
–
–
–
–
11.7
11.7
34.9
34.9
The fair value of unlisted available-for-sale investments is determined using valuation techniques using observable market data where
available and rely as little as possible on entity estimates. 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.
These instruments are included in Level 2.
The fair value of derivative financial instruments is determined by using valuation techniques using observable market data. The fair value of
derivative financial instruments is based on the market value of similar instruments with similar maturities. These instruments are included in
Level 2.
Shares to be issued were fair valued using the Actuarial Binomial model of actuaries Lane Clark & Peacock LLP. These instruments are
included in Level 2.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
Level 1 instruments are those whose fair values are based on quoted market prices. The Group has no Level 1 instruments.
4. Offsetting financial assets and financial liabilities
The table below shows the amounts of financial assets and financial liabilities before and after offsetting. The amounts offset in the balance
sheet were established in accordance with IAS 32. The assets and liabilities offset stem from the multi-currency cash pooling implemented
within the Group.
£m
As at 31 December 2015
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
As at 31 December 2014
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
Gross financial
assets/(liabilities)
Amounts offset in
the balance sheet
Net amount in the
balance sheet
350.0
(167.6)
182.4
(167.8)
167.6
(0.2)
292.0
(133.9)
158.1
(133.9)
133.9
–
SAVILLS PLC REPORT AND ACCOUNTS 2015
95
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
5. Critical accounting estimates and management
judgements
Estimates are continually evaluated and are based on historical
experience, current market conditions and other factors including
expectations of future events that are believed to be reasonable
under the circumstances. Actual results may differ from these
estimates. Changes in accounting estimates may be necessary if
there are changes in circumstances on which the estimate was
based, or as a result of new information or more experience. The
estimates and management judgements that have a significant risk
of causing a material adjustment to the carrying amounts of assets
and liabilities within the next financial year are discussed below.
(a) Pension benefits
The present value of the defined benefit pension obligations depends
on a number of factors that are determined on an actuarial basis
using a number of assumptions including the discount rate. Any
changes in these assumptions will impact the carrying amount of
pension obligations. The Group determines the appropriate discount
rate at the end of each year. In determining the appropriate discount
rate, the Group considers the interest rates of high-quality corporate
bonds that are denominated in the currency in which the benefits will
be paid and that have terms to maturity approximating the terms of
the related pension liability. Other key assumptions for pension
obligations are based in part on current market conditions. Additional
information is disclosed in Note 10.
(b) Income taxes
The Group is subject to income taxes in numerous jurisdictions.
Judgement is required in determining the provision for income taxes.
There are transactions and calculations for which the ultimate tax
determination is uncertain. Where the final tax outcome of these
matters is different from the amounts that were initially recorded,
such differences will impact the income tax and deferred tax
provisions in the period in which such determination is made.
(c) Deferred taxes
The recognition of deferred tax assets is based upon whether it is
probable that sufficient and suitable taxable profits will be available in
the future, against which the reversal of temporary differences can
be deducted. Recognition, therefore, involves judgement regarding
the future financial performance of the particular legal entity or tax
group in which the deferred tax asset has been recognised,
especially with regard to the extent that future taxable profits will be
available against which losses can be utilised. Additional information
is disclosed in Note 18.
(d) Estimated impairment of assets
The Group tests annually whether goodwill has suffered any
impairment. All other assets are tested for impairment where there
are indicators of impairment.
The recoverable amounts of cash-generating units have been
determined based on value-in-use calculations. The use of this
method requires the estimate of future cash flows expected to arise
from the continuing operation of the cash-generating unit and the
choice of a suitable discount rate in order to calculate the present
value. Actual outcomes could vary significantly from these estimates.
The estimates used in these financial statements are contained in
Note 15.2.
(e) Valuation of intangible assets and useful life
The Group has made assumptions in relation to the potential future
cash flows to be determined from separable intangible assets
acquired as part of business combinations. This assessment
involves assumptions relating to potential future revenues,
appropriate discount rates and the useful life of such assets. These
assumptions impact the income statement over the useful life of the
intangible asset.
(f) Provisions
The Group and its subsidiaries are party to various legal claims.
Provisions made within these financial statements and further details
are contained in Note 25.1. Additional claims could be made which
might not be covered by existing provisions or by insurance as
detailed in Note 29.
(g) Fair value of options granted to employees
The Group uses the Binomial Model in determining the fair value of
options granted to employees under the Group’s various schemes as
detailed in the Remuneration report. Information on such assumptions
is contained in Note 27.6. The alteration of these assumptions may
impact charges to the income statement over the vesting period of
the award.
(h) Award of options and deferred shares to employees
The Group applies judgement in deciding the proportion of the
available bonus pool to be awarded to employees under its long-term
share-based incentive scheme. The Group’s current policy is to
deduct from the bonus pool an amount equal to the market value of
the share price on the date of award. Under IFRS, the value of award is
spread over the vesting period and charged to the income statement.
96
SAVILLS PLC REPORT AND ACCOUNTS 2015
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 operating segments are determined based on differences in the nature of their services. Geographical location also strongly
affects the Group and both are therefore disclosed. The reportable operating segments derive their revenue primarily from property-related
services. Refer to the Group overview on page 1 and the Segmental reviews on pages 33 to 35 for further information on revenue sources.
Operations are based in four main geographical areas. The UK is the home of the parent Company with segment operations throughout the
region. Asia Pacific segment operations are based in Hong Kong, Macau, China, South Korea, Japan, Taiwan, Thailand, Singapore, Vietnam,
Australia, Indonesia, Malaysia and Myanmar. Continental Europe segment operations are based in Germany, France, Spain, Netherlands,
Belgium, Sweden, Italy, Ireland and Poland. United States segment operations are based in a number of states throughout the region. The
sales location of the client is not materially different from the location where fees are received and where the segment assets are located.
Within the UK, both commercial and residential services are provided. Other geographical areas, although largely commercial based, also
provide residential services, in particular Hong Kong, China, Vietnam, Singapore, Australia, Taiwan and Thailand.
The GEB assesses the performance of operating segments based on a measure of underlying profit before tax which adjusts reported
pre-tax profit by profit/(loss) on disposals, share-based payment adjustment, restructuring costs, acquisition-related costs, amortisation and
impairment of goodwill and intangible assets (excluding software) and impairment of available-for-sale investments, joint ventures or
associates. Segmental assets and liabilities are not measured or reported to the GEB, but non-current assets are disclosed geographically
on page 98.
The segment information provided to the GEB for revenue and profits for the year ended 31 December 2015 is as follows:
2015
Revenue
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific – commercial
– residential
Total Asia Pacific*
United States
Total revenue
Underlying profit/(loss) before tax
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific – commercial
– residential
Total Asia Pacific
United States
Underlying profit/(loss) before tax**
Transaction
Advisory
£m
Consultancy
£m
Property and
Facilities
Management
£m
Investment
Management
£m
Other
£m
Total
£m
98.8
127.9
226.7
56.4
111.9
30.5
142.4
192.5
618.0
16.9
17.8
34.7
4.0
16.3
3.1
19.4
18.8
76.9
138.3
44.5
182.8
16.5
31.0
–
31.0
–
230.3
15.4
6.4
21.8
0.7
2.2
–
2.2
–
24.7
107.1
26.8
133.9
29.1
227.7
–
227.7
–
390.7
9.2
1.7
10.9
(2.4)
12.6
–
12.6
–
21.1
16.7
–
16.7
27.8
–
–
–
–
44.5
4.3
–
4.3
6.6
–
–
–
–
–
–
–
–
–
–
–
–
–
(12.2)
–
(12.2)
–
–
–
–
–
360.9
199.2
560.1
129.8
370.6
30.5
401.1
192.5
1,283.5
33.6
25.9
59.5
8.9
31.1
3.1
34.2
18.8
10.9
(12.2)
121.4
SAVILLS PLC REPORT AND ACCOUNTS 2015
97
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The segment information provided to the GEB for revenue and profits for the year ended 31 December 2014 is as follows:
2014***
Revenue
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific – commercial
– residential
Total Asia Pacific*
United States
Total revenue
Underlying profit/(loss) before tax
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific – commercial
– residential
Total Asia Pacific
United States
Underlying profit/(loss) before tax**
Transaction
Advisory
£m
Consultancy
£m
Property and
Facilities
Management
£m
Investment
Management
£m
Other
£m
Total
£m
84.1
129.2
213.3
51.1
96.3
21.6
117.9
112.3
494.6
14.0
19.7
33.7
1.3
16.7
3.7
20.4
12.4
67.8
126.9
41.3
168.2
18.8
30.0
–
30.0
–
217.0
13.1
6.3
19.4
1.4
2.6
–
2.6
–
23.4
79.8
25.1
104.9
26.6
207.1
–
207.1
–
338.6
7.3
2.2
9.5
(2.6)
11.7
–
11.7
–
18.6
16.0
–
16.0
12.0
–
–
–
–
28.0
2.5
–
2.5
1.9
–
–
–
–
–
–
–
–
–
–
–
–
–
(13.7)
–
(13.7)
–
–
–
–
–
306.8
195.6
502.4
108.5
333.4
21.6
355.0
112.3
1,078.2
23.2
28.2
51.4
2.0
31.0
3.7
34.7
12.4
4.4
(13.7)
100.5
*
**
Revenues of £178.6m (2014: £147.5m) are attributable to the Hong Kong and Macau region.
Transaction Advisory underlying profit before tax includes depreciation of £5.4m (2014: £3.7m), software amortisation of £0.6m (2014: £0.4m) and share of post-tax
profit from joint ventures and associates of £1.6m (2014: £3.0m). Consultancy underlying profit before tax includes depreciation of £1.7m (2014: £1.5m), software
amortisation of £0.2m (2014: £0.3m) and share of post-tax profit from joint ventures and associates of £0.2m (2014: £0.2m). Property and Facilities Management
underlying profit before tax includes depreciation of £2.7m (2014: £2.1m), software amortisation of £0.5m (2014: £0.6m) and share of post-tax profit from joint ventures
and associates of £5.1m (2014: £3.7m). Investment management underlying profit before tax includes depreciation of £0.2m (2014: £0.1m), software amortisation of
£0.3m (2014: £0.2m) and share of post-tax profit from joint ventures and associates of £nil (2014: £nil). Included in Other underlying profit is depreciation of £1.2m
(2014: £1.0m), software amortisation of £0.4m (2014: £0.5m) and share of post-tax profit from joint ventures and associates of £nil (2014: £0.1m).
*** Following the acquisition of SEB Asset Management AG in August 2015 the investment management segment has been split between the United Kingdom and
Continental Europe.
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 profit before tax is provided in Note 8.
Inter-segmental revenue is not material. No single customer contributed 10% or more to the Group’s revenue for both 2015 and 2014.
Non-current assets by geography are set out below:
Non-current assets
United Kingdom
Continental Europe
Asia Pacific
United States
Total non-current assets
2015
£m
2014
£m
121.9
42.6
75.8
140.0
380.3
83.1
41.5
66.0
120.3
310.9
Non-current assets include goodwill and intangible assets, plant, property and equipment, investments in joint ventures and associates and
retirement benefits. Available-for-sale investments, non-current receivables and deferred tax assets are not included.
98
SAVILLS PLC REPORT AND ACCOUNTS 2015
7. Operating profit
7.1 Other operating expenses and income
Operating profit is stated after charging/(crediting):
Other operating expenses include:
– Net foreign exchange losses (excluding net losses on forward foreign exchange contracts)
– Net loss on forward foreign exchange contracts
– Impairment of available-for-sale investment
– Provision for receivables impairment
– Restructuring costs*
– Acquisition-related costs**
– Loss on sale of property, plant and equipment
– Operating lease costs
Group
2015
£m
0.4
0.1
–
6.0
1.6
23.3
–
42.8
2014
£m
0.3
–
0.6
9.0
0.9
16.6
0.2
36.4
Other income – dividend and investment income
(1.1)
(0.7)
*
**
Restructuring costs include staff costs of £0.9m (2014: £0.9m).
Acquisition-related costs include £nil transaction fees (2014: £6.7m) and £18.0m of provisions for the future payments (2014: £9.9m) in relation to the acquisition of
Studley, Inc. in May 2014. Acquisition-related costs also include £2.5m of provisions for future payments and £2.8m of transaction fees in relation to the acquisitions
in the United Kingdom, United States and Continental Europe during 2015.
7.2 Income statement of the Company
As permitted by Section 408 of the Companies Act 2006, the income statement and statement of comprehensive income of the Company
are not presented as part of these financial statements. The Company has produced its own income statement and statement of
comprehensive income for approval by its Board. The Company receives dividends from subsidiaries and charges subsidiaries for the
provision of Group-related services. The profit after income tax of the Company for the year was £47.5m (2014: £37.0m).
7.3 Fees payable to the Company’s auditors, PricewaterhouseCoopers LLP, and its associates
Audit services
Fees payable to the Company’s auditors for the audit of parent Company
Fees payable to the Company’s auditors for the audit of the Company’s subsidiaries
Tax advisory services
Services relating to acquisition of new businesses
Other services
Total
Group
2015
£m
2014
£m
0.2
1.2
1.4
0.4
0.6
0.2
1.2
2.6
0.2
1.0
1.2
0.2
1.3
0.1
1.6
2.8
SAVILLS PLC REPORT AND ACCOUNTS 2015
99
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
8. Underlying profit before tax
Reported profit before tax
Adjustments:
Amortisation of intangible assets (excluding software) (Note 15)
Impairment of available-for-sale investment (Note 17.2)
Share-based payment adjustment
Profit on disposal of available-for-sale investments, joint ventures and associates
Restructuring costs
Acquisition-related costs
Underlying profit before tax
2015
£m
98.6
3.6
–
(2.8)
(2.9)
1.6
23.3
121.4
2014
£m
84.7
2.6
0.6
(2.9)
(2.0)
0.9
16.6
100.5
The Directors regard the above adjustments necessary to give a fair picture of the underlying results of the Group for the year.
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 adding to or deducting from profit the difference between the IFRS 2 charge and the effective value of the annual share
award in order to better match the underlying staff costs in the year with the revenue recognised in the same period.
Profit on disposal of associates includes a £2.3m profit from the disposal of the assets held in BTR Capital Fund III and BTR Miller Capital
Fund in July 2015. These were funds held in the US.
Profit on disposal of joint ventures includes £0.3m recognised in Asia, £0.1m is recognised in relation to Savills (Jersey) Ltd which became a
subsidiary undertaking and £0.2m recognised in respect of two joint ventures in Spain which also became subsidiary undertakings.
Acquisition-related costs include £18.0m of provisions for the future payments in relation to the acquisition of Studley, Inc. which are
expensed through the income statement to reflect the requirement for the recipients to remain actively engaged in the business at the
payment date. Acquisition-related costs also includes £2.5m of provisions for future payments and £2.8m of transaction and integration
costs in relation to the acquisitions in the United Kingdom, United States and Continental Europe during 2015.
9. Employees
9.1 Employee benefits expense
Basic salaries and wages
Profit share and commissions
Wages and salaries
Social security costs
Other pension costs
Share-based payments
9.2 Staff numbers
The monthly average number of employees (including Directors) for the year was:
United Kingdom
Continental Europe
Asia Pacific
United States
Group
2015
£m
424.9
345.3
770.2
56.4
20.4
11.1
2014
£m
360.3
260.1
620.4
49.4
19.0
10.5
858.1
699.3
Group
2015
2014
4,588
931
3,962
831
24,597
22,669
580
364
30,696
27,826
The average number of UK employees (including Directors) during the year included 192 employed under fixed-term and temporary
contracts (2014: 147).
100
SAVILLS PLC REPORT AND ACCOUNTS 2015
9.3 Key management compensation
Key management
– Short-term employee benefits
– Post-employment benefits
– Share-based payments
Group
2015
£m
20.3
0.3
2.7
23.3
2014
£m
17.1
0.2
2.6
19.9
The key management of the Group for the year ended 31 December 2015 comprised Executive Directors and the GEB members. Details of
Directors’ remuneration is contained in the Remuneration report on pages 55 to 69.
During the year eight (2014: nine) GEB members made aggregate gains totalling £9.0m (2014: £6.3m) on the exercise of options under the
PSP, ESOS and DSBP schemes (2014: PSP and DSBP schemes).
Retirement benefits under the defined benefit scheme are accruing for three (2014: three) GEB members and benefits are accruing under a
defined contribution scheme in Hong Kong for two (2014: two) GEB members.
10. Pension schemes
10.1 Defined contribution plans
The Group operates the Savills UK Group Personal Pension Plan, a defined contribution scheme, a number of defined contribution individual
pension plans and a Mandatory Provident Fund Scheme in Hong Kong, to which it contributes. The total pension charges in respect of these
plans were £20.4m (2014: £19.0m). The amount outstanding as at 31 December 2015 in relation to defined contribution schemes is £1.4m
(2014: £1.4m).
10.2 Defined benefit plan
The Group operates two defined benefit plans.
The Pension Plan of Savills (the ‘UK Plan’) is a UK-based plan which 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
employees of the UK Plan are provided through the Group’s defined contribution Personal Pension Plan.
As part of the acquisition of Savills Fund Management GMBH a further plan was acquired (the ‘SFM Plan’) which provides final salary
benefits to 28 active employees and 91 former employees. The plan is closed to future service-based benefit accrual.
The UK Plan is administered by a separate Trust that is legally separated from the Company. The board of the pension fund is composed of
six trustees. The board of the pension fund is required by law and by its Article of Association to act in the interest of the fund and of all
relevant stakeholders in the scheme. The board of the pension fund is responsible for the investment policy with regard to the assets of the
fund. The contributions are determined by an independent qualified actuary on the basis of triennial valuations.
A full actuarial valuation of the UK Plan was carried out as at 31 March 2013 and has been updated to 31 December 2015 by a qualified
independent actuary.
The table below outlines the Group’s and Company’s defined benefit pension amounts in relation to the UK Plan:
Liability in the statement of financial position
Income statement charge included in finance costs
Actuarial losses included in other comprehensive income
Group
Company
2015
£m
15.8
0.6
(3.8)
2014
£m
19.4
0.3
(15.9)
2015
£m
0.9
–
(0.2)
The amounts recognised in the statement of financial position in relation to the UK Plan are as follows:
Present value of funded obligations
Fair value of plan assets
Liability recognised in the statement of financial position
Group
2015
£m
225.7
(209.9)
15.8
2014
£m
225.9
(206.5)
19.4
Company
2015
£m
12.5
(11.6)
0.9
2014
£m
1.1
–
(0.9)
2014
£m
12.5
(11.4)
1.1
SAVILLS PLC REPORT AND ACCOUNTS 2015
101
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The movement in the defined benefit obligation for the UK Plan over the year is as follows:
At 1 January 2015
Interest expense/(income)
Remeasurements:
– Return on plan assets, excluding amounts included
in interest income
– Gain from change in financial assumptions
– Experience gains
Employer contributions
Benefit payments
At 31 December 2015
At 1 January 2014
Interest expense/(income)
Remeasurements:
– Return on plan assets, excluding amounts included
in interest income
– Loss from change in financial assumptions
– Experience gains
Employer contributions
Benefit payments
At 31 December 2014
Group
Present
value of
obligation
£m
Fair
value of
plan assets
£m
225.9
(206.5)
8.1
(7.5)
–
(2.6)
(1.7)
–
(4.0)
8.1
–
–
(8.0)
4.0
225.7
(209.9)
Present
value of
obligation
£m
189.0
8.4
Group
Fair
value of
plan assets
£m
(176.3)
(8.1)
–
33.3
(1.3)
–
(3.5)
(16.1)
–
–
(9.5)
3.5
225.9
(206.5)
Present
value of
obligation
£m
12.5
0.4
–
(0.2)
–
–
(0.2)
12.5
Company
Fair
value of
plan assets
£m
(11.4)
(0.4)
0.4
–
–
(0.4)
0.2
(11.6)
Company
Present
value of
obligation
Fair
value of
plan assets
£m
10.4
0.5
–
1.9
(0.1)
–
(0.2)
12.5
£m
(9.7)
(0.5)
(0.9)
–
–
(0.5)
0.2
(11.4)
Total
£m
19.4
0.6
8.1
(2.6)
(1.7)
(8.0)
–
15.8
Total
£m
12.7
0.3
(16.1)
33.3
(1.3)
(9.5)
–
19.4
A full actuarial valuation of the SFM Plan was carried out as at 31 December 2015 by a qualified independent actuary.
The table below outlines the Group’s defined benefit pension amounts in relation to the SFM Plan:
Asset in the statement of financial position
Income statement receivable included in finance income
Current service cost
Actuarial gain included in other comprehensive income
The amounts recognised in the statement of financial position are as follows:
Present value of funded obligations
Fair value of plan assets
Asset recognised in the statement of financial position
102
SAVILLS PLC REPORT AND ACCOUNTS 2015
SFM Plan
2015
£m
(1.3)
–
0.1
0.3
SFM Plan
2015
£m
10.9
(12.2)
(1.3)
Total
£m
1.1
–
0.4
(0.2)
–
(0.4)
–
0.9
Total
£m
0.7
–
(0.9)
1.9
(0.1)
(0.5)
–
1.1
2014
£m
–
–
–
–
2014
£m
–
–
–
The movement in the defined benefit asset for the SFM Plan since acquisition is as follows:
At 1 January 2015
Addition through business combination (Note 17.5)
Current service cost
Interest expense/(income)
Remeasurements:
– Return on plan assets, excluding amounts included in interest income
– Gain from change in financial assumptions
– Experience gains
Employer contributions
Benefit payments
At 31 December 2015
The significant actuarial assumptions were as follows:
As at 31 December
Expected rate of salary increases
Projection of social security contribution ceiling
Rate of increase to pensions in payment
– Pension promise before 1 January 1986
– Pension promise after 1 January 1986
– accrued before 6 April 1997
– accrued after 5 April 1997
– accrued after 5 April 2005
Rate of increase to pensions in deferment
– accrued before 6 April 2001
– accrued after 5 April 2001
– accrued after 5 April 2009
Discount rate
Inflation assumption
SFM Plan
Present
value of
obligation
£m
Fair
value of
plan assets
£m
–
11.2
0.1
0.1
–
(0.1)
(0.2)
–
(0.2)
10.9
–
(12.1)
–
(0.1)
–
–
–
–
–
(12.2)
Total
£m
–
(0.9)
0.1
–
–
(0.1)
(0.2)
–
(0.2)
(1.3)
SFM Plan
UK Plan
2015
2014
2015
2014
2.50%
2.25%
2.25%
1.75%
–
–
–
0%
0%
0%
2.60%
1.75%
–
–
–
–
–
–
–
–
–
–
–
–
3.85%
3.85%
–
–
–
3.00%
3.20%
2.20%
5.00%
2.20%
2.20%
3.70%
3.30%
–
–
–
3.00%
3.10%
2.10%
5.00%
2.10%
2.10%
3.60%
3.20%
Assumptions regarding future mortality are set based on actuarial advice in accordance with published statistics and experience.
These assumptions translate into an average life expectancy in years for a pensioner retiring at age 60:
Retiring at the end of the reporting year
– Male
– Female
Retiring 20 years after the end of the reporting year
– Male
– Female
The sensitivity of the defined benefit obligation to changes in the principal assumptions is:
0.1% increase in discount rates
0.1% increase in inflation rate
0.1% increase in salary increase rate
1 year increase in life expectancy
SFM Plan
UK Plan
2015
2014
2015
2014
83.6
88.1
86.4
90.7
–
–
–
–
88.8
90.3
90.7
92.3
88.7
90.2
90.6
92.2
SFM Plan
UK Plan
Impact on present value
of scheme benefit
£m
Impact on present value
of scheme obligations
£m
(0.2)
0.1
–
0.4
(4.9)
2.5
0.8
6.5
SAVILLS PLC REPORT AND ACCOUNTS 2015
103
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit obligation as it is unlikely that
the change in assumptions would occur in isolation of one another as some of the assumptions may be correlated.
Furthermore, in presenting the above sensitivity analysis, the present value of the defined benefit obligation has been calculated using the
projected unit credit method at the end of the reporting period, which is the same as that applied in calculating the defined benefit obligation
liability recognised in the statement of financial position.
Plan assets are comprised as follows:
Equity instruments
Diversified growth funds
Gilts
Bonds
Cash and cash equivalents
Total
SFM Plan
2015
£m
3.7
–
–
–
8.5
12.2
%
31%
–
–
–
69%
100%
2014
£m
–
–
–
–
–
–
UK Plan
2015
2014
£m
76.3
62.9
11.2
58.8
0.7
%
37%
30%
5%
28%
–
£m
75.6
59.7
11.8
58.8
0.6
%
37%
29%
6%
28%
–
209.9
100%
206.5
100%
%
–
–
–
–
–
–
No plan assets are the Group’s own financial instruments or property occupied or used by the Group. The fair values of the above equity
and debt instruments are determined based on quoted market prices in active markets. Although the UK Plan does not invest directly in the
Group’s financial instruments, it does invest in passive equity funds, so will have some exposure to FTSE All Share, hence indirectly to the
Savills share price.
Through the defined benefit plan, the Group is exposed to a number of risks, the most significant of which are detailed below:
(a) Asset volatility
The plan liabilities are calculated using a discount rate set with reference to corporate bond yields; if plan assets underperform this yield,
this will create a deficit. The Plan holds a significant proportion of equities and diversified growth funds, which are expected to outperform
corporate bonds in the long term while providing volatility and risk in the short term.
(b) Changes in bond yields
A decrease in corporate bond yields will increase plan liabilities, although this will be partially offset by an increase in the value of the Plan’s
bond holdings.
(c) Inflation risk
Higher inflation will lead to higher liabilities. The majority of the Plan’s assets are either unaffected by or are loosely correlated with inflation,
meaning that an increase in inflation will also increase the deficit.
(d) Life expectancy
The majority of the Plan’s obligations are to provide benefits for the life of the member, so increases in life expectancy will result in an
increase in the Plan’s liabilities.
Expected contributions to post-employment benefit plans for the year ending 31 December 2016 are £6.0m. The Company expects to
contribute £0.3m.
The weighted average duration of the defined benefit obligation is 23 years for the UK Plan and 17 years for the SFM Plan.
Expected maturity analysis of the undiscounted pension benefits:
At 31 December 2015
Pension benefit payments
– UK Plan
– SFM Plan
Less than
a year
Between
1–2 years
Between
2–5 years
£m
3.2
0.4
£m
3.6
0.4
£m
14.0
1.1
Over
5 years
£m
Total
£m
587.5
15.9
608.3
17.8
104
SAVILLS PLC REPORT AND ACCOUNTS 2015
11. Finance income and costs
Bank interest receivable
Finance income
Bank interest payable
Unwinding of discounts on liabilities
Fair value loss
Net interest on defined benefit pension obligation
Finance costs
Net finance income/(cost)
12. Income tax expense
Analysis of tax expense for the year
Current tax
United Kingdom:
Corporation tax on profits for the year
Adjustment in respect of prior years
Overseas tax
Adjustment in respect of prior years
Total current tax
Deferred tax
Representing:
United Kingdom
Effect of change in UK tax rate on deferred tax
Overseas tax
Adjustment in respect of prior years
Total deferred tax (Note 18)
Income tax expense
Group
2015
£m
1.8
1.8
(0.4)
(0.2)
(0.1)
(0.6)
(1.3)
0.5
2014
£m
1.5
1.5
(2.0)
–
–
(0.3)
(2.3)
(0.8)
Group
2015
£m
2014
£m
12.5
0.7
13.2
14.6
0.1
27.9
(1.0)
0.2
7.5
(0.9)
5.8
33.7
14.2
0.6
14.8
11.7
0.5
27.0
(1.4)
–
(3.3)
(0.3)
(5.0)
22.0
The tax on the Group’s profit before tax differs from the theoretical amount that would arise using the UK weighted average tax rate of 20.25%
(2014: 21.5%) applicable to profits of the consolidated entities as follows:
Profit before tax
Tax on profit at 20.25% (2014: 21.5%)
Effects of:
Adjustment in respect of prior years
Adjustments in respect of foreign tax rates
Utilisation of previously unprovided tax losses
Expenses and other charges not deductible for tax purposes
Tax on joint ventures and associates
Effect of change in tax rates on deferred tax
Income tax expense on profit
Group
2015
£m
98.6
2014
£m
84.7
20.0
18.2
(0.1)
2.2
(0.1)
12.8
(1.3)
0.2
33.7
0.8
0.4
(7.3)
11.1
(1.2)
–
22.0
SAVILLS PLC REPORT AND ACCOUNTS 2015
105
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The effective tax rate of the Group for the year ended 31 December 2015 is 34.2% (2014: 26.0%), which is higher (2014: higher) than the UK
weighted average applicable rate.
During the year, the UK corporation tax rate reduced from 21% to 20%. The UK corporate tax rate is to reduce further to 19% on 1 April 2017
and to 18% on 1 April 2020. Deferred tax has been remeasured using the applicable effective future tax rate that will apply in the expected
period of utilisation of the deferred tax asset or liability.
The tax (charged)/credited to other comprehensive income is as follows:
Tax on items that will not be reclassified to profit or loss
Deferred tax credit on pension actuarial losses
Tax on items that may subsequently be reclassified to profit or loss
Current tax credit on employee benefits
Current tax credit on foreign exchange reserves
Current tax credit on retirement benefits
Deferred tax on additional pension contributions
Deferred tax on pension – effect of tax rate change
Deferred tax on employee benefits
Deferred tax (charge)/credit on revaluations of available-for-sale investments
Deferred tax credit on foreign exchange reserves
Tax on items relating to components of other comprehensive income
13. Dividends – Group and Company
Amounts recognised as distribution to equity holders in the year:
Ordinary final dividend for 2014 of 7.25p per share (2013: 7.0p)
Supplemental interim dividend for 2014 of 12.0p per share (2013: 8.5p)
Interim dividend of 4.0p per share (2014: 3.75p)
Group
2015
£m
0.7
0.7
5.5
0.2
1.6
(1.6)
(0.1)
(3.2)
(0.1)
0.2
2.5
3.2
2014
£m
3.3
3.3
3.0
0.3
2.0
(2.0)
(0.2)
(1.9)
0.1
0.1
1.4
4.7
Company
2015
£m
–
–
0.8
–
0.1
(0.1)
–
(1.2)
–
–
(0.4)
(0.4)
2015
£m
9.4
15.6
5.3
30.3
2014
£m
0.2
0.2
0.7
–
0.1
(0.1)
–
(0.6)
–
–
0.1
0.3
2014
£m
9.0
11.0
4.9
24.9
The Board recommends a final dividend of 8.0p (net) per ordinary share (amounting to £10.7m) is paid, alongside the supplemental interim
dividend of 14.0p per ordinary share (amounting to £18.7m), to be paid on 16 May 2016 to shareholders on the register at 15 April 2016.
These financial statements do not reflect this dividend payable.
Under the terms of the Savills plc 1992 Employee Benefit Trust (the ‘EBT’), the Trustee has waived all but 0.01p of any dividend on each
share held by the Trust.
The total paid and recommended ordinary and supplemental dividends for the 2015 financial year comprises an aggregate distribution of
26.0p per ordinary share (2014: 23.0p per ordinary share).
106
SAVILLS PLC REPORT AND ACCOUNTS 2015
14. Earnings per share
14.1 Basic and diluted earnings per share
Basic earnings per share (‘EPS’) are based on the profit attributable to owners of the Company and the weighted average number of
ordinary shares in issue during the year, excluding the shares held by the EBT, 4,377,358 shares (2014: 5,562,242 shares).
For diluted earnings per share, the weighted average number of ordinary shares in issue is adjusted to assume conversion of dilutive
potential ordinary shares, being the share options granted to employees where the exercise price is less than the average market price of
the Company’s ordinary shares during the year and where performance conditions have been met.
The earnings and the shares used in the calculations are as follows:
Basic earnings per share
Effect of additional shares issuable under option
Diluted earnings per share
2015
Earnings
£m
64.3
–
64.3
2015
Shares
million
136.8
1.9
138.7
2015
EPS
pence
47.0
(0.6)
46.4
2014
Earnings
£m
62.1
–
62.1
2014
Shares
million
132.7
4.4
137.1
2014
EPS
pence
46.8
(1.5)
45.3
14.2 Underlying basic and diluted earnings per share
Excludes profit on disposals, share-based payment adjustment, impairment and amortisation of goodwill and intangible assets (excluding
software), impairment of available-for-sale investment and associate undertaking and restructuring costs.
Basic earnings per share
Amortisation of intangible assets (excluding software) after tax
Impairment of available-for-sale investment after tax
Share-based payment adjustment after tax
Restructuring costs after tax
Profit on disposal of available-for-sale investments, joint ventures
and associates after tax
Acquisition-related costs after tax
Net tax effect following acquisition
Underlying basic earnings per share
Effect of additional shares issuable under option
Underlying diluted earnings per share
2015
Earnings
£m
64.3
2.0
–
(2.2)
1.5
(1.9)
22.7
–
86.4
–
86.4
2015
Shares
million
136.8
–
–
–
–
–
–
–
136.8
1.9
138.7
2015
EPS
pence
2014
Earnings
£m
47.0
1.5
–
(1.6)
1.1
(1.4)
16.6
–
63.2
(0.9)
62.3
62.1
1.5
0.6
(2.2)
0.9
(2.0)
16.7
(4.4)
73.2
–
73.2
2014
Shares
million
132.7
–
–
–
–
–
–
–
132.7
4.4
137.1
2014
EPS
pence
46.8
1.1
0.5
(1.7)
0.7
(1.5)
12.6
(3.3)
55.2
(1.8)
53.4
The Directors regard the adjustments on the previous table necessary to give a fair picture of the underlying results of the Group for the year.
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 adding to or deducting from profit the difference between the IFRS 2 charge and the effective value of
the annual share award in order to better match the underlying staff costs in the year with the revenue recognised in the same period.
The gross amounts of the above adjustments (Note 8) are amortisation of intangible assets (excluding software) £3.6m (2014: £2.6m),
impairment of available-for-sale investment £nil (2014: £0.6m), share-based payment adjustment £2.8m credit (2014: £2.9m credit),
restructuring costs of £1.6m (2014: £0.9m), profit on disposals of £2.9m (2014: £2.0m) and acquisition-related costs of £23.3m
(2014: £16.6m).
SAVILLS PLC REPORT AND ACCOUNTS 2015
107
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
15. Goodwill and intangible assets
Cost
At 1 January 2015
Additions through business combinations (Note 17.5)
Other additions
Disposals
Exchange movement
At 31 December 2015
Accumulated amortisation and impairment
At 1 January 2015
Amortisation charge for the year
Disposals
Exchange movement
At 31 December 2015
Net book value
At 31 December 2015
Customer/
business
relationships
£m
Investment
and property
management
contracts
£m
Goodwill
£m
Order
backlog
£m
Computer
software
£m
Total
£m
Total
£m
Group
Company
270.0
37.5
–
–
4.1
311.6
42.0
–
–
(0.3)
41.7
20.7
–
–
–
–
20.7
17.1
0.2
–
–
17.3
11.2
10.2
–
–
(0.2)
21.2
5.5
1.9
–
(0.2)
7.2
269.9
3.4
14.0
4.4
0.9
–
–
0.2
5.5
0.5
1.5
–
0.1
2.1
3.4
15.2
0.7
1.7
(0.9)
(0.1)
16.6
10.9
2.1
(0.9)
(0.1)
12.0
321.5
49.3
1.7
(0.9)
4.0
375.6
76.0
5.7
(0.9)
(0.5)
80.3
4.6
295.3
3.6
–
0.3
–
–
3.9
3.0
0.4
–
–
3.4
0.5
All intangible amortisation charges in the year are disclosed on the face of the income statement. The Company’s intangible assets consist of
computer software only.
Cost
At 1 January 2014
Additions through business combinations
Other additions
Disposals
Exchange movement
At 31 December 2014
Accumulated amortisation and impairment
At 1 January 2014
Amortisation charge for the year
Disposals
Exchange movement
At 31 December 2014
Net book value
At 1 January 2014
At 31 December 2014
Customer/
business
relationships
£m
Investment
and property
management
contracts
£m
Goodwill
£m
Order
backlog
£m
Computer
software
£m
Total
£m
Total
£m
Group
Company
178.1
87.0
–
–
4.9
270.0
42.5
–
–
(0.5)
42.0
135.6
228.0
20.7
–
–
–
–
20.7
15.4
1.8
–
(0.1)
17.1
5.3
3.6
11.4
0.8
0.1
(0.8)
(0.3)
11.2
6.1
0.3
(0.8)
(0.1)
5.5
5.3
5.7
–
4.1
–
–
0.3
4.4
–
0.5
–
–
0.5
–
3.9
15.2
0.1
1.4
(1.5)
–
225.4
92.0
1.5
(2.3)
4.9
15.2
321.5
10.3
2.0
(1.5)
0.1
10.9
4.9
4.3
74.3
4.6
(2.3)
(0.6)
76.0
151.1
245.5
3.4
–
0.2
–
–
3.6
2.5
0.5
–
–
3.0
0.9
0.6
108
SAVILLS PLC REPORT AND ACCOUNTS 2015
During the year, goodwill and intangible assets were tested for impairment in accordance with IAS 36. Goodwill and intangible assets are
allocated to the Group’s cash-generating units (‘CGUs’) identified according to country of operation and business segment. In most cases,
the CGU is an individual subsidiary or operation and these have been separately assessed and tested. A segment-level summary of the
allocation of goodwill and indefinite useful life intangible assets is presented below:
2015
United Kingdom
Continental Europe
Asia Pacific
United States
Total goodwill and indefinite life intangible assets
2014
United Kingdom
Continental Europe
Asia Pacific
United States
Total goodwill and indefinite life intangible assets
Transaction
Advisory
£m
Consultancy
£m
25.8
29.5
14.2
124.7
194.2
9.5
–
4.2
–
13.7
Property and
Facilities
Management
£m
23.7
5.3
28.0
–
57.0
Investment
Management
£m
3.3
4.9
–
–
8.2
Transaction
Advisory
£m
Consultancy
£m
Property and
Facilities
Management
£m
25.7
30.4
10.8
107.1
174.0
9.3
–
4.1
–
13.4
4.9
4.7
27.8
–
37.4
Investment
Management
£m
3.3
2.1
–
–
5.4
Total
£m
62.3
39.7
46.4
124.7
273.1
Total
£m
43.2
37.2
42.7
107.1
230.2
15.1 Method of impairment testing
All recoverable amounts were determined based on value-in-use calculations. These calculations use discounted cash flow projections
based on financial budgets and strategic plans approved by management covering a five-year period. Cash flows beyond the five-year
period are extrapolated using a terminal value. There was no impairment charge for goodwill and intangible assets arising from the annual
impairment tests conducted (2014: £nil).
15.2 Assumptions
(a) Market conditions
In general, the models used assume that the property markets in which the Group operates (which drive its revenue growth) will remain stable.
(b) Discount rate
The discount rate applied to cash flows of each CGU is based on the Group’s Weighted Average Cost of Capital (‘WACC’). WACC is the
average cost of sources of financing (debt and equity), each of which is weighted by its respective use.
Key inputs to the WACC calculation are the risk-free rate, the equity market risk premium (the return that Savills shares provide over the
risk-free rate), beta (reflecting the risk of the Group relative to the market as a whole) and the Group’s borrowing rates.
Group WACC was adjusted for risk relative to the country in which the assets were located. The risk-adjusted discount range of rates used in
each region for impairment testing are as follows:
United Kingdom
Continental Europe
Asia Pacific
United States
2015
Discount rate range
2014
Discount rate range
10.0%
10.0%
9.8%
9.8%
11.6%–18.1%
9.5%–14.4%
10.0%
9.8%
(c) Long-term growth rate
To forecast beyond the five years covered by detailed forecasts, a terminal value was calculated, using average long-term growth rates. The
rates are based on the long-term growth rate in the countries in which the Group operates. The long-term growth rates used in each region for
impairment testing are as follows:
United Kingdom
Continental Europe
Asia Pacific
United States
2015
Long-term growth
rate range
2014
Long-term growth
rate range
2.0%
1.5%
1.5%–5.0%
1.9%
2.0%
1.0%–2.5%
1.5%–5.0%
1.9%
SAVILLS PLC REPORT AND ACCOUNTS 2015
109
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
15.3 Sensitivity to changes in assumptions
The level of impairment is a reflection of best estimates in arriving at value-in-use, future growth rates and the discount rate applied to cash
flow projections. Nonetheless, there are no CGUs for which management considers a reasonable possible change in a key assumption
would give rise to an impairment.
Future impairments on goodwill and intangible assets relating to any of the Group’s investments may be impacted by the following factors:
Market conditions – the expectations for future market conditions are key assumptions in the determination of the cash flow projections.
For the purposes of the impairment tests, management expects the markets to remain stable.
Cost base – the cost base assumptions reflect 2015’s costs with limited growth in the fixed cost base going forward. Commissions and profit
shares are correlated to the Group’s revenue and profits and the percentage payout. These are assumed to be consistent with existing rates.
16. Property, plant and equipment
Group
Cost
At 1 January 2015
Additions through business combinations (Note 17.5)
Additions
Disposals
Exchange movement
At 31 December 2015
Accumulated depreciation and impairment
At 1 January 2015
Charge for the year
Disposals
Exchange movement
At 31 December 2015
Net book value
At 31 December 2015
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
–
–
0.1
–
–
–
–
–
36.0
0.3
14.0
(0.5)
0.2
50.0
9.6
4.4
(0.5)
–
13.5
49.5
1.3
9.3
(5.5)
0.3
54.9
32.8
6.8
(5.3)
0.2
34.5
Total
£m
85.6
1.6
23.3
(6.0)
0.5
105.0
42.4
11.2
(5.8)
0.2
48.0
0.1
36.5
20.4
57.0
The Directors consider that the fair value of property, plant and equipment approximates carrying value.
Group
Cost
At 1 January 2014
Additions through business combinations
Additions
Disposals
Exchange movement
At 31 December 2014
Accumulated depreciation and impairment
At 1 January 2014
Charge for the year
Disposals
Exchange movement
At 31 December 2014
Net book value
At 1 January 2014
At 31 December 2014
110
SAVILLS PLC REPORT AND ACCOUNTS 2015
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
–
–
0.1
–
–
–
–
–
0.1
0.1
33.0
1.9
7.0
(6.0)
0.1
36.0
12.6
2.8
(5.8)
–
9.6
20.4
26.4
54.2
3.6
5.7
(14.5)
0.5
49.5
41.3
5.6
(14.4)
0.3
32.8
12.9
16.7
Total
£m
87.3
5.5
12.7
(20.5)
0.6
85.6
53.9
8.4
(20.2)
0.3
42.4
33.4
43.2
Company
Cost
At 1 January 2015
Additions
Disposals
At 31 December 2015
Accumulated depreciation and impairment
At 1 January 2015
Charge for the year
Disposals
At 31 December 2015
Net book value
At 31 December 2015
Company
Cost
At 1 January 2014
Additions
Disposals
At 31 December 2014
Accumulated depreciation and impairment
At 1 January 2014
Charge for the year
At 31 December 2014
Net book value
At 1 January 2014
At 31 December 2014
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
0.1
–
–
–
–
0.1
0.3
–
(0.3)
–
0.2
–
(0.2)
–
–
6.5
1.6
–
8.1
4.3
1.1
–
5.4
2.7
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
0.1
–
–
–
0.1
0.1
0.4
0.2
(0.3)
0.3
0.2
–
0.2
0.2
0.1
5.4
1.1
–
6.5
3.1
1.2
4.3
2.3
2.2
Total
£m
6.9
1.6
(0.3)
8.2
4.5
1.1
(0.2)
5.4
2.8
Total
£m
5.9
1.3
(0.3)
6.9
3.3
1.2
4.5
2.6
2.4
SAVILLS PLC REPORT AND ACCOUNTS 2015
111
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
17. Investments and transactions
17.1 Group – Investments in joint ventures and associates
Cost or valuation
At 1 January 2015
Additions*
Disposals
Transfer to subsidiary (Note 17.5)
Exchange movement
At 31 December 2015
Share of profit
At 1 January 2015
Group’s share of profit from continuing operations
Dividends received
Disposals
Exchange movement
At 31 December 2015
Total
At 31 December 2015
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Goodwill
£m
Total
£m
4.7
4.6
(0.5)
(0.3)
0.4
8.9
5.2
4.8
(2.5)
0.6
0.1
8.2
1.9
–
(0.7)
–
–
1.2
–
–
–
–
–
–
6.6
4.6
(1.2)
(0.3)
0.4
10.1
5.2
4.8
(2.5)
0.6
0.1
8.2
3.9
0.4
(2.0)
–
0.1
2.4
6.2
2.1
(2.3)
–
(0.3)
5.7
0.3
–
–
–
–
0.3
–
–
–
–
–
–
4.2
0.4
(2.0)
–
0.1
2.7
6.2
2.1
(2.3)
–
(0.3)
5.7
17.1
1.2
18.3
8.1
0.3
8.4
* Additions include £0.6m of deferred consideration which is unpaid as at the balance sheet date.
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Goodwill
£m
Cost or valuation
At 1 January 2014
Additions through business combinations
Additions
Loans repaid
Exchange movement
At 31 December 2014
Share of profit
At 1 January 2014
Group’s share of profit from continuing operations
Dividends received
Exchange movement
At 31 December 2014
Total
At 31 December 2014
2.6
–
1.9
–
0.2
4.7
4.3
3.7
(3.1)
0.3
5.2
9.9
2.5
–
–
(0.6)
–
1.9
–
–
–
–
–
5.1
–
1.9
(0.6)
0.2
6.6
4.3
3.7
(3.1)
0.3
5.2
1.8
2.0
0.2
(0.3)
0.2
3.9
5.2
3.3
(2.3)
–
6.2
0.3
–
–
–
–
0.3
–
–
–
–
–
1.9
11.8
10.1
0.3
10.4
Total
£m
2.1
2.0
0.2
(0.3)
0.2
4.2
5.2
3.3
(2.3)
–
6.2
The Group does not have any joint ventures or associates that are individually material.
The joint ventures and associates have no significant liabilities to which the Group is exposed, nor has the Group any significant contingent
liabilities or capital commitments in relation to its interests in the joint ventures and associates.
112
SAVILLS PLC REPORT AND ACCOUNTS 2015
17.2 Group – Available-for-sale investments
At 1 January
Additions
Disposals
Net fair value gain transferred to other comprehensive income
Impairment through the income statement
Exchange movement
At 31 December
Available-for-sale investments comprise the following:
Unlisted securities
UK – equity securities
UK – investment funds
European – limited partnerships
European – investment funds
Asia Pacific – equity securities
Asia Pacific – investment funds
Available-for-sale investments are denominated in the following currencies:
Sterling
Euro
Other
Group
2015
£m
11.7
1.6
–
0.4
–
(0.5)
13.2
Group
2015
£m
1.1
2.9
0.1
7.1
0.3
1.7
2014
£m
14.8
0.4
(3.0)
0.3
(0.3)
(0.5)
11.7
2014
£m
1.0
2.3
0.1
8.0
0.3
–
13.2
11.7
Group
2015
£m
4.0
7.2
2.0
13.2
2014
£m
3.3
8.1
0.3
11.7
At 31 December 2015, the Group held the following principal available-for-sale investments:
Investment
SPF Private Clients Limited (registered in England and Wales)
Cordea Savills Dawn Syndication LP (registered in England and Wales)
Cordea Savills Italian Opportunities Fund 1 (registered in Luxembourg)*
Cordea Savills Italian Opportunities Fund 2 (registered in Luxembourg)
Serviced Land No. 2 LP (registered in England and Wales)
Cordea Savills German Retail Fund (registered in Luxembourg)
Cordea Savills Nordic Retail Fund (registered in Luxembourg)
Cordea Savills UK Property Ventures No. 1 LP (registered in England and Wales)
Prime London Residential Development Fund (registered in England and Wales)
Aomi Project TMK (registered in Japan)
Greater Tokyo Office Fund (registered in Jersey)
Holding
Principal activity
19.99% General insurance, mortgage broking and
personal financial planning services
3.70%
2.81%
1.34%
1.97%
1.94%
11.33%
4.17%
0.59%
3.50%
5.00%
Investment property fund
Investment property fund
Investment property fund
UK land investment fund
Retail investment property fund
Retail investment property fund
UK land investment fund
London residential development fund
Real estate investment
Investment property fund
* This holding relates to Class C ordinary shares. The Group also holds 100% of Class A1 preference shares and 4.0% of Class B preference shares in this fund.
The Group transferred no losses (2014: £0.3m) from equity to the income statement relating to impairments of available-for-sale investments.
During the year there was no impairment charge recognised directly in the income statement (2014: £0.3m).
The Group does not exert significant influence over these investments, and therefore does not equity account for these investments.
These shareholdings are treated as trade investments and held at fair value.
SAVILLS PLC REPORT AND ACCOUNTS 2015
113
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The fair value of unlisted securities is based on underlying asset values and price earnings models. The fair value of investment funds is
determined by the Fund Manager’s annual audited financial statements.
At 31 December 2015 the Group held conditional commitments to co-invest £2.1m (2014: £nil) in the Greater Tokyo Office Fund, £0.2m
(2014: £0.2m) in the Cordea Savills UK Property Ventures Fund No. 1 LP, £0.1m (2014: £0.1m) in the Cordea Savills Italian Opportunities
Fund 2 and £0.1m (2014: £0.1m) in the Prime London Residential Development Fund.
17.3 Company – Investments in subsidiaries
Cost
At 1 January 2014
Additions
Loans repaid
At 31 December 2014
Additions
At 31 December 2015
Shares
in Group
undertaking
£m
Loans
to Group
undertakings
£m
22.3
34.9
–
57.2
–
57.2
57.2
–
(4.9)
52.3
0.2
52.5
Total
£m
79.5
34.9
(4.9)
109.5
0.2
109.7
Refer to Note 34 for a full list of the Group’s subsidiaries.
17.4 Transactions with non-controlling interests
During the year, the Group undertook the following transactions with non-controlling interests:
Name
Loudden Bygg-och Fastighetsservice AB
Savills (Aust) Holdings Pty Limited
Savills Property Management Pte. Ltd.
Date
April 2015
May 2015
July 2015
Holding
acquired
30.0%
0.72%
4.0%
Total holding at
31 December 2015
100.0%
100.0%
55.0%
(a) Acquisitions of additional interest in subsidiaries
Under IFRS 10, transactions with non-controlling interests must be accounted for as equity transactions, therefore no goodwill has been
recognised. Acquisition costs related to these transactions were not significant.
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.
In May 2015, the Group acquired an additional 0.72% of the shares in Savills (Aust) Holdings Pty Limited, for consideration of £0.1m. This
takes the Group’s shareholding to 100%. The carrying amount of Savills (Aust) Holdings Pty Limited net assets on the date of acquisition was
£16.8m. The Group recognised a decrease in non-controlling interest of £0.01m. The amount charged to retained earnings in respect of the
transaction was £0.1m.
In July 2015, the Group acquired an additional 4% of the shares in Savills Property Management Pte. Ltd. Singapore, for consideration of
£0.1m. This takes the Group’s shareholding to 55%. The carrying amount of Savills Property Management Pte. Ltd. net assets on the date of
acquisition was £1.7m. The Group recognised a decrease in non-controlling interest of £0.1m. The amount charged to retained earnings in
respect of the transaction was £nil.
Carrying amount of non-controlling interests acquired
Consideration paid to non-controlling interests
Excess of consideration paid recognised in parent’s equity
2015
£m
0.3
(1.0)
(0.7)
114
SAVILLS PLC REPORT AND ACCOUNTS 2015
17.5 Acquisitions of subsidiaries
The fair values of the assets acquired and liabilities assumed as part of the Group’s acquisitions in the year are provisional and will be
finalised within 12 months of the acquisition date. These are summarised below:
Provisional fair value to the Group
Property, plant and equipment
Intangible assets
Deferred tax assets
Retirement benefits
Current assets: Work in progress
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities: Trade and other payables
Provisions for other liabilities and charges
Non-current trade and other payables
Net assets acquired
Goodwill
Purchase consideration
Consideration satisfied by:
Net cash paid
Transfer from joint ventures (Note 17.1)
Deferred consideration owing at the reporting date
Smiths
Gore
£m
0.6
7.1
–
–
1.4
8.5
0.1
17.7
2.7
0.4
–
14.6
18.5
33.1
17.5
–
15.6
33.1
SEB
£m
0.7
1.5
1.8
0.9
–
7.3
13.6
25.8
16.0
0.3
–
9.5
1.8
11.3
7.4
–
3.9
11.3
US
acquisitions
£m
0.1
2.5
–
–
–
0.7
0.8
4.1
0.3
–
–
3.8
10.3
14.1
9.5
–
4.6
14.1
Other
£m
0.2
0.7
–
–
0.2
1.4
1.2
3.7
1.1
–
1.1
1.5
6.9
8.4
5.7
0.3
2.4
8.4
Total
£m
1.6
11.8
1.8
0.9
1.6
17.9
15.7
51.3
20.1
0.7
1.1
29.4
37.5
66.9
40.1
0.3
26.5
66.9
(a) Smiths Gore
On 31 May 2015 the Group acquired the trade and assets of partners of 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 complements 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 £33.1m, of which £17.5m was settled in cash on completion. The remainder of
the acquisition consideration relates to discounted deferred consideration of £15.6m, of which £12.1m is payable on the third anniversary of
completion and £2.7m payable on the fifth anniversary of completion. The deferred payments payable on the third and fifth 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. £0.8m has been paid prior to the year end.
Further to this, up to £4.2m is also payable to certain key staff, salaried partners and fixed share partners by the third 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 (2015: £1.6m).
Transaction costs of £0.7m were also expensed as incurred to the income statement.
Goodwill of £18.5m 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 £19.4m and underlying operating profit of £2.3m to the Group for the period from 1 June 2015
to 31 December 2015. Had the acquisition been made at the beginning of the financial year, revenue would have been £32.5m and
underlying operating profit would have been £2.9m.
The fair value of current trade and other receivables is £8.5m and includes trade receivables with a fair value of £6.0m. The gross contractual
amount for trade receivables is £6.1m, of which £0.1m is expected to be uncollectible.
SAVILLS PLC REPORT AND ACCOUNTS 2015
115
Overview / Strategy / Performance / Governance / Financial statements
The acquired businesses contributed revenue of £11.2m and
underlying operating profit of £0.5m to the Group for the period from
April 2015 to 31 December 2015. Had the acquisitions been made at
the beginning of the financial year, revenue would have been £13.7m
and underlying operating profit would have been £0.9m.
The fair value of current trade and other receivables is £0.7m and
includes trade receivables with a fair value of £0.7m. The gross
contractual amount for trade receivables is £0.7m, all of which is
expected to be collectible.
(d) Other acquisitions
During the year, the Group also acquired 100% of Colliers & Madge
plc, a London-based commercial property management business,
Savills (Jersey) Ltd, a residential agency in Jersey, Ace Body
Corporate Management Pte Ltd, a property management business
in Singapore, Real Facilities Inc. and related companies, a full service
commercial real estate firm committed exclusively to representing
tenants in Toronto, Tagis B.V. and Tagis Property Management B.V.,
a project and property management business in the Netherlands,
Savills Activos Adjudicados S.L., a property consultancy business in
Spain and Savills High Street Retail S.L., an occupier services
business in Spain.
The Group also acquired the trade and assets of Cordeau Marshall
Pty Ltd, a residential agency in Australia and ProDirections Ltd., a
project management consultancy in New Zealand.
Cash consideration for these transactions amounted to £5.7m. The
remainder of the acquisition consideration relates deferred consideration
of £2.4m, £1.5m of which is payable within one year of the reporting date.
A further £1.2m is subject to service conditions and will be expensed
to the income statement over the period of service.
Transaction costs of £0.2m were also expensed as incurred to the
income statement.
Goodwill of £6.9m and intangible assets of £0.7m relating to customer
contracts have been provisionally determined. Goodwill is attributable
to the experience and expertise of key staff and strong industry
reputation and is not expected to be deductible for tax purposes.
The acquired businesses contributed revenue of £5.9m and underlying
operating profit of £0.8m to the Group for the period from acquisition
to 31 December 2015. Had the acquisitions been made at the
beginning of the financial year, revenue would have been £11.1m
and underlying operating profit would have been £1.5m.
Notes to the financial statements
Year ended 31 December 2015 continued
(b) SEB Asset Management AG (‘SEB’)
On 31 August 2015 the Group acquired 100% of the equity of SEB,
an international real estate investment manager.
Total acquisition consideration is provisionally determined at £11.3m,
of which £7.4m was settled in cash on completion. The remainder
of the acquisition consideration relates to discounted deferred
consideration of £3.9m which is payable on the second anniversary
of completion.
Transaction and integration costs of £1.9m were also expensed as
incurred to the income statement.
Goodwill of £1.8m and intangible assets of £0.9m 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 £16.8m and underlying
operating profit of £6.5m to the Group for the period from 1 September
2015 to 31 December 2015. Had the acquisition been made at the
beginning of the financial year, revenue would have been £35.2m and
underlying operating profit would have been £8.7m.
The fair value of current trade and other receivables is £7.3m and
includes trade receivables with a fair value of £5.4m. The gross
contractual amount for trade receivables is £5.4m, all of which is
expected to be collectible.
(c) 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 £14.1m. Cash consideration payable on completion of
these transactions amounted to £9.5m. Deferred consideration of up to
£4.6m is payable in instalments by the third 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 fourth 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 ( 2015: £0.7m).
Transaction costs of £0.4m were also expensed to the income statement.
Goodwill of £10.3m and intangible assets of £2.5m relating to the
order backlog (£0.9m) and client contracts (£1.6m) 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.
116
SAVILLS PLC REPORT AND ACCOUNTS 2015
18. Deferred income tax
Deferred income tax assets and liabilities are only offset where there are legally enforceable rights to offset current tax assets against current
tax liabilities and when the deferred income tax relates to the same fiscal authority. The deferred tax assets and liabilities are offset when
realised through current tax. The deferred income tax assets and liabilities at 31 December, without taking into consideration the offsetting
balances within the same jurisdiction, are as follows:
The movement on the deferred tax account is shown below:
Deferred tax assets
– Deferred tax asset to be recovered after more than 12 months
– Deferred tax asset to be recovered within 12 months
Deferred tax liabilities
– Deferred tax liability to be recovered after more than 12 months
– Deferred tax liability to be recovered within 12 months
Group
2015
£m
22.1
11.3
33.4
(2.2)
(0.5)
(2.7)
2014
£m
34.3
7.7
42.0
(3.0)
(0.2)
(3.2)
Company
2015
£m
1.2
0.6
1.8
–
–
–
2014
£m
2.1
0.6
2.7
–
–
–
Deferred tax asset – net
30.7
38.8
1.8
2.7
At 1 January – asset
Amount (charged)/credited to the income statement (Note 12)
Effect of UK tax rate change within the income statement (Note 12)
Tax charged to other comprehensive income
– Pension asset on actuarial loss/(gain)
– Pension asset on additional contributions
– Pension asset – effect of UK tax rate change within other comprehensive income
– Employee benefits
– Revaluations of available-for-sale investments
– Movement on foreign exchange reserves
Additions through business combinations (Note 17.5)
Initial recognition of intangible assets
Exchange movement
At 31 December – asset
Group
Company
2015
£m
38.8
(5.6)
(0.2)
0.7
(1.6)
(0.1)
(3.2)
(0.1)
0.2
1.8
(0.1)
0.1
30.7
2014
£m
25.3
5.0
–
3.3
(2.0)
(0.2)
(1.9)
0.1
0.1
8.7
–
0.4
2015
£m
2.7
0.4
–
–
(0.1)
–
(1.2)
–
–
–
–
–
2014
£m
3.2
–
–
0.2
(0.1)
–
(0.6)
–
–
–
–
–
38.8
1.8
2.7
Deferred income tax assets have been recognised for tax loss carry-forwards and other temporary differences to the extent that the
realisation of the related tax benefit through future taxable profits is probable.
As at the reporting date the Group did not recognise deferred tax income tax assets of £0.4m (2014: £0.3m) in respect of losses amounting
to £1.7m (2014: £1.5m) that can be carried forward indefinitely against future taxable income.
SAVILLS PLC REPORT AND ACCOUNTS 2015
117
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
Deferred tax assets – Group
At 1 January 2014
Amount (charged)/credited to the income statement (Note 12)
Tax credited/(charged) to other comprehensive income (Note 12)
Effect of tax rate change charged to other comprehensive
income (Note 12)
Additions through business combinations
Exchange movement
At 31 December 2014
Amount credited/(charged) to the income statement (Note 12)
Effect of UK tax rate change within income statement (Note 12)
Tax charged to other comprehensive income (Note 12)
Effect of tax rate change charged to other comprehensive
income (Note 12)
Additions through business combinations (Note 17.5)
Exchange movement
At 31 December 2015
Accelerated
capital
allowances
£m
0.7
(0.4)
–
–
–
–
0.3
0.2
–
–
–
–
–
0.5
Other
including
provisions
Tax losses
£m
7.5
(0.5)
–
–
3.4
–
10.4
1.3
(0.2)
–
–
1.8
0.1
13.4
£m
7.5
4.2
–
–
7.0
0.4
19.1
(9.4)
–
–
–
–
–
9.7
Retirement
benefits
£m
Employee
benefits
£m
2.7
0.1
1.3
(0.2)
–
–
3.9
0.1
–
8.4
1.8
(1.9)
–
–
–
8.3
1.7
–
(0.9)
(3.2)
(0.1)
–
–
3.0
–
–
–
6.8
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Revaluations
£m
Intangible
assets
£m
(0.1)
(0.1)
–
–
(0.2)
–
–
–
–
(0.2)
(0.2)
–
0.1
–
(0.1)
(0.2)
0.2
(0.5)
–
(0.6)
(0.3)
–
0.1
–
(0.2)
–
(0.1)
–
–
(0.3)
(0.9)
(0.1)
–
(1.7)
(2.7)
0.7
–
0.5
(0.1)
(1.6)
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Retirement
benefits
£m
Employee
benefits
£m
0.3
(0.1)
–
0.2
(0.1)
–
0.1
0.7
(0.2)
–
0.5
–
–
0.5
0.1
–
0.1
0.2
–
(0.1)
0.1
2.1
0.3
(0.6)
1.8
0.5
(1.2)
1.1
Deferred tax liabilities – Group
At 1 January 2014
Amount charged to the income statement (Note 12)
Tax credited to other comprehensive income (Note 12)
Additions through business combinations
At 31 December 2014
Amount (charged)/credited to the income statement (Note 12)
Tax credited/(charged) to other comprehensive income (Note 12)
Transfers to/(from) deferred tax liabilities
Initial recognition of intangible assets
At 31 December 2015
Net deferred tax asset
At 31 December 2015
At 31 December 2014
Deferred tax assets – Company
At 1 January 2014
Amount (charged)/credited to the income statement
Tax credited/(charged) to other comprehensive income (Note 12)
As at 31 December 2014
Amount (charged)/credited to the income statement
Tax charged to other comprehensive income (Note 12)
At 31 December 2015
Net deferred tax asset
At 31 December 2015
At 31 December 2014
118
SAVILLS PLC REPORT AND ACCOUNTS 2015
Total
£m
26.8
5.2
(0.6)
(0.2)
10.4
0.4
42.0
(6.1)
(0.2)
(4.1)
(0.1)
1.8
0.1
33.4
Total
£m
(1.5)
(0.2)
0.2
(1.7)
(3.2)
0.5
0.1
–
(0.1)
(2.7)
30.7
38.8
Total
£m
3.2
–
(0.5)
2.7
0.4
(1.3)
1.8
1.8
2.7
19. Trade and other receivables
Trade receivables
Less: provision for impairment of receivables
Trade receivables – net
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
Group
2015
£m
294.6
(15.4)
279.2
–
37.9
57.1
374.2
2014
£m
257.0
(14.0)
243.0
–
22.3
42.6
307.9
Company
2015
£m
2014
£m
–
–
–
13.3
5.3
2.3
20.9
–
–
–
16.3
0.1
0.8
17.2
The carrying value of trade and other receivables is approximate to their fair value.
There is no concentration of credit risk with respect to trade and other receivables as the Group has a large number of clients internationally
dispersed with no individual client owing a significant amount. The credit quality of receivables is managed at a local subsidiary level with
uncollectable amounts being impaired where necessary.
Amounts owed by subsidiary undertakings are unsecured, interest free and generally cleared within the month.
As at 31 December 2015, trade receivables of £207.9m (2014: £176.9m) were neither past due nor impaired and fully performing.
As at 31 December 2015, trade receivables of £15.4m (2014: £14.0m) were impaired and provided for. The individually impaired receivables
mainly relate to receivables from clients that have been affected by the uncertain economic conditions where funding and completion have
been delayed and cash flow has become uncertain.
The ageing of these receivables is as follows:
Up to 3 months
3 to 6 months
Over 6 months
Group
2015
£m
0.6
1.9
12.9
15.4
2014
£m
0.4
2.2
11.4
14.0
As at 31 December 2015, trade receivables of £71.3m (2014: £66.1m) were past due but not impaired. These relate to trade receivables
which are past due at the reporting date but are not considered impaired as there has not been a significant change in credit quality and the
amounts are still considered recoverable.
The ageing of these receivables is as follows:
Up to 3 months
3 to 6 months
Over 6 months
Group
2015
£m
53.1
13.2
5.0
71.3
2014
£m
43.8
10.3
12.0
66.1
SAVILLS PLC REPORT AND ACCOUNTS 2015
119
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The carrying amounts of the Group’s trade and other receivables are denominated in the following currencies:
Sterling
Euro
Hong Kong dollar
US dollar
Australian dollar
Other*
* Other currencies include Chinese renminbi, South Korean won, Singapore dollar, Polish zloty and Swedish krona.
Movement on the provision for impairment of trade receivables is as follows:
At 1 January
Provisions for receivables impairment
Receivables written off during the year as uncollectible
Unused provisions released
Exchange movements
At 31 December
Group
2015
£m
178.2
50.4
28.0
27.5
34.2
55.9
2014
£m
147.9
35.0
34.3
28.2
26.0
36.5
374.2
307.9
Group
2015
£m
(14.0)
(6.0)
2.0
2.7
(0.1)
(15.4)
2014
£m
(13.0)
(9.0)
1.9
6.3
(0.2)
(14.0)
The creation and release of the provision for impaired receivables have been included in other operating expenses in the income statement.
The other classes within trade and other receivables do not contain impaired assets.
The maximum exposure to credit risk at the reporting date is the carrying value of each class of receivables mentioned above. The Group does not
hold any collateral as security.
20. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Group
Company
2015
£m
172.3
10.1
182.4
2014
£m
150.9
7.2
158.1
2015
£m
82.2
–
82.2
2014
£m
78.1
–
78.1
The carrying value of cash and cash equivalents approximates their fair value.
The effective interest rate on short-term bank deposits as at 31 December 2015 was 1.64% (2014: 1.64%); these deposits have an average
maturity of 33 days (2014: 59 days).
Cash subject to restrictions in Asia Pacific amounts to £27.2m (2014: £18.7m) which is cash pledged to banks in relation to property
management contracts and cash remittance restrictions in certain countries. These amounts are consolidated.
120
SAVILLS PLC REPORT AND ACCOUNTS 2015
Cash and cash equivalents are denominated in the following currencies:
Sterling
Hong Kong dollar
US dollar
Euro
Chinese renminbi
Australian dollar
Japanese yen
Singapore dollar
South Korean won
Other currencies*
Group
Company
2015
£m
(5.5)
55.5
41.1
27.6
30.1
7.3
7.9
5.1
5.0
8.3
2014
£m
9.2
39.3
38.6
16.7
19.4
6.4
12.7
4.9
5.1
5.8
2015
£m
82.2
–
–
–
–
–
–
–
–
–
2014
£m
78.0
–
–
0.1
–
–
–
–
–
–
182.4
158.1
82.2
78.1
* Other currencies include New Taiwan dollar, Macau pataca, Thai baht, Vietnamese dong, New Zealand dollar, Polish zloty and Swedish krona.
21. Trade and other payables – current
Deferred consideration
Trade payables
Amounts owed to subsidiary undertakings
Other taxation and social security
Other payables
Accruals and deferred income*
*
Includes accruals for profit shares.
Group
2015
£m
3.8
81.7
–
40.6
25.2
304.4
455.7
2014
£m
38.5
63.9
–
38.7
17.7
247.2
406.0
Company
2015
£m
–
6.2
2.1
8.3
–
9.4
26.0
2014
£m
–
0.7
2.7
8.0
–
11.1
22.5
The carrying value of trade and other payables is approximate to their fair value.
Amounts due to subsidiary undertakings are unsecured, interest free and repayable on demand.
22. Trade and other payables – non-current
Deferred consideration
Other payables
23. Borrowings
Current
Bank overdrafts
Unsecured bank loans due within one year or on demand
Group
2015
£m
53.0
16.0
69.0
Group
2015
£m
0.2
31.2
31.4
2014
£m
14.2
7.3
21.5
2014
£m
–
3.9
3.9
Company
2015
£m
2014
£m
–
–
–
–
–
–
Company
2015
£m
2014
£m
–
–
–
–
–
–
In February 2013 the Group entered into a £12.0m amortising term loan to finance the fit out costs for the Group’s new head office. Interest
was fixed at 2.7% via an interest rate swap until maturity date. The loan was fully repaid in May 2015.
SAVILLS PLC REPORT AND ACCOUNTS 2015
121
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
On 26 May 2015 the Group exercised the remaining £30m Accordion facility, increasing the multi-currency revolving credit facility (‘RCF’)
to £180m from £150m. On 15 December 2015 the £180m RCF was cancelled and replaced with a new £250m RCF, which expires on
15 December 2020 and can be increased by an additional £50m Accordion facility. As at 31 December 2015 £30m of the £250m RCF
was drawn.
In November 2015 Savills (Aust) Pty Limited borrowed £1.2m as a working capital loan. The borrowings are denominated in Australian dollars
and have an effective interest rate of 4.1%. The loan is repaid in equal monthly instalments until August 2016. At 31 December 2015, at the
year end exchange rate, £1.2m was outstanding and is due within one year. A similar loan entered into in November 2014, of which £0.9m
was outstanding at 31 December 2014, was fully repaid during the year.
The exposure of the Group’s borrowings to interest rate changes and the contractual repricing dates at the reporting date are:
Less than 1 year
The effective interest rates at the reporting date were as follows:
Bank loans
The carrying amounts of borrowings are approximate to their fair value.
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
Sterling
Australian dollar
Other
The Group has the following undrawn borrowing facilities:
Floating rate – expiring within 1 year or on demand
Floating rate – expiring between 1 and 5 years
24. Derivative financial instruments
2015
Forward foreign exchange contracts – at fair value
2014
Forward foreign exchange contracts – at fair value
Group
Company
2015
£m
31.4
31.4
2014
£m
3.9
3.9
2015
£m
–
–
2014
£m
–
–
Group
2015
%
1.59
2014
%
3.25
Company
2015
£m
2014
£m
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Group
2015
£m
30.0
1.2
0.2
31.4
19.8
220.0
239.8
2014
£m
3.0
0.9
–
3.9
19.8
150.0
169.8
Group
Company
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
0.1
0.2
–
–
Group
Company
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
–
–
–
–
(a) Forward foreign exchange contracts
The gross notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2015 were £39.8m
(2014: £4.9m). All contracts mature within one year and are classed as current.
Gains and losses on forward foreign exchange contracts are recognised in net foreign exchange gains and losses in the income statement.
122
SAVILLS PLC REPORT AND ACCOUNTS 2015
25. Provisions
25.1 Provisions for other liabilities and charges
At 1 January 2015
Additions through business combinations (Note 17.5)
Provided during the year
Utilised during the year
Released during the year
Total
Less non-current portion
Current portion
2014
Current
Non-current
Total
Professional
indemnity
claims
£m
Dilapidation
provisions
£m
Onerous
leases
£m
Restructuring
provision
£m
19.8
–
5.7
(6.9)
(1.9)
16.7
11.4
5.3
4.9
0.4
1.3
(0.1)
(0.7)
5.8
3.7
2.1
1.7
–
0.3
(0.3)
(0.4)
1.3
0.6
0.7
0.2
0.3
0.6
(0.4)
–
0.7
–
0.7
Professional
indemnity
claims
£m
7.4
12.4
19.8
Dilapidation
provisions
£m
Onerous
leases
£m
Restructuring
provision
£m
1.2
3.7
4.9
0.5
1.2
1.7
0.2
–
0.2
Group
total
£m
26.6
0.7
7.9
(7.7)
(3.0)
24.5
15.7
8.8
Group
total
£m
9.3
17.3
26.6
Company
£m
1.3
–
–
–
–
1.3
1.3
–
Company
£m
–
1.2
1.2
(a) Professional indemnity claims
These arise from various legal actions, proceedings and other claims that are pending against the Group and are based on reasonable
estimates, taking into account the opinions of legal counsel. The nature of the amounts provided in respect of legal actions, proceedings and
other claims is such that the extent and timing of cash flows can be difficult to estimate and the ultimate liability may vary from the amounts
provided. The non-current portion of these provisions is expected to be utilised within the next two to five years. Included are provisions for
claims relating to subsidiaries prior to their disposal.
(b) Dilapidation provisions
The Group is required to perform dilapidation repairs and in certain instances restore properties to agreed specifications prior to the
properties being vacated at the end of their lease term. These amounts are based on estimates of repair and restoration costs at a future
date and therefore a degree of uncertainty exists over the future outflows given that these are subject to repair and restoration cost price
fluctuations and the extent of repairs to be completed. The majority of the non-current portion of these provisions is expected to be utilised
within the next two to six years.
(c) Onerous leases
A provision is recognised where the costs of meeting the obligations under a lease contract exceed the economic benefits expected to be
received and is measured as the net least cost of exiting the contract, being the lower of the cost of fulfilling it and any compensation or
penalties arising from the failure to fulfil it. The majority of the non-current portion of these provisions is expected to be utilised within the next
two to four years.
(d) Restructuring provision
This provision comprises termination payments to employees affected by restructuring and lease termination penalties.
SAVILLS PLC REPORT AND ACCOUNTS 2015
123
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
25.2 Employee benefit obligations
In addition to the defined benefit obligation pension scheme disclosed in Note 10, the following are included in employee benefit obligations:
Group
At 1 January 2015
Provided during the year
Utilised during the year
Exchange movements
At 31 December 2015
Total
£m
16.4
6.8
(4.4)
–
18.8
The above provisions relate to holiday pay and long service leave in the UK, Asia Pacific and Continental Europe. Profit shares are included
within accruals (Note 21).
The Company had no employee benefit obligations at 31 December 2015 or 31 December 2014.
The above employee benefit obligations have been analysed between current and non-current as follows:
Current
Non-current
26. Share capital – Group and Company
Authorised and allotted
Ordinary shares of 2.5p each:
Authorised
Issued, called up and fully paid
Movement in issued, called up and fully paid share capital:
Group
2015
£m
7.3
11.5
18.8
2015
Number of shares
2014
Number of shares
2015
£m
202,000,000
202,000,000
137,861,283
134,891,171
5.1
3.4
2014
2014
£m
6.6
9.8
16.4
2014
£m
5.1
3.4
£m
3.4
–
–
–
–
At 1 January
Issued to direct participants under the Performance Share Plan
Issued to direct participants on exercise of options under the Executive Share
Option Scheme (2001)
Issued to direct participants on exercise of options under the Sharesave Scheme
Issued to satisfy first instalment of shares due to former Studley, Inc.
stockholders in relation to the acquisition in 2014
2015
Number of shares
134,891,171
721,545
300,653
222
1,947,692
£m
3.4
Number of shares
134,280,732
–
–
–
–
610,439
–
–
–
At 31 December
137,861,283
3.4
134,891,171
3.4
Each issued, called up and fully paid ordinary share of 2.5p is a voting share in the capital of the Company, is entitled to participate in the
profits of the Company and on winding-up is entitled to participate in the assets of the Company.
As at 31 December 2015, the Savills plc 1992 Employee Benefit Trust (the ‘EBT’) held 4,377,358 shares (2014: 5,562,242 shares). These
shares are held as ‘treasury shares’. Any voting or other similar decisions relating to these shares are taken by the trustees of the EBT, who
may take account of any recommendation of the Company. The EBT waives all but 0.01p per share of its dividend entitlement. For further
details of the EBT refer to Note 2.21.
At the Annual General Meeting (AGM) held on 13 May 2015, the shareholders gave the Company authority, subject to stated conditions, to
purchase for cancellation up to 13,507,743 of its own ordinary shares (AGM held on 12 May 2014: 13,428,073). Such authority remains valid
until the conclusion of the next AGM or 12 November 2016, whichever is the earlier.
124
SAVILLS PLC REPORT AND ACCOUNTS 2015
27. Share-based payment
Details of the terms of the following schemes are contained in the Remuneration report on pages 55 to 69.
27.1 Executive Share Option Scheme (2001)
The following share options have been granted under the Executive Share Option Scheme (2001) and were outstanding at 31 December 2015:
Date of grant
17 April 2009
17 April 2009
19 April 2010
Exercise period
7 years from 17 April 2012
Approved/
unapproved
Approved
7 years from 17 April 2012
Unapproved
7 years from 19 April 2013
Unapproved
Exercise price
288.8p
288.8p
341.0p
2015
Number of
shares
’000
2014
Number of
shares
’000
–
–
–
–
10
114
176
300
A reconciliation of option movements over the year to 31 December is shown below:
Outstanding at 1 January
Exercised
Outstanding at 31 December
Exercisable at 31 December
2015
2014
Number of
shares
’000
300
(300)
–
–
Weighted
average
exercise
price
319.3p
319.3p
–
–
Number of
shares
’000
300
–
300
300
Weighted
average
exercise
price
319.3p
–
319.3p
319.3p
The weighted average share price on the date of exercise during the year was 714.1p (2014: £nil) and total consideration of £2.1m (2014: £nil)
was received.
The weighted average remaining contractual life of share options outstanding at 31 December 2015 is nil years (2014: 4.9 years).
27.2 Sharesave Scheme
The following share options have been granted under the Sharesave Scheme and were outstanding at 31 December 2015:
Date of grant
13 May 2015
Exercise period
Exercise price
01.07.18 – 01.01.19
673.0p
A reconciliation of option movements over the year to 31 December is shown below:
2015
Number of
shares
’000
2014
Number of
shares
’000
1,139
1,139
–
–
Outstanding at 1 January
Granted
Exercised/cancelled
Lapsed
Outstanding at 31 December
Exercisable at 31 December
2015
2014
Number of
shares
’000
Weighted
average
exercise
price
Number of
shares
’000
Weighted
average
exercise
price
–
1,139
(23)
(6)
1,110
–
–
673.0p
673.0p
673.0p
673.0p
–
–
–
–
–
–
–
–
–
–
–
–
–
The weighted average remaining contractual life of share options outstanding at 31 December 2015 is 2.5 years (2014: nil years).
SAVILLS PLC REPORT AND ACCOUNTS 2015
125
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
27.3 Deferred Share Bonus Plan
The following awards of deferred shares, without exercise price, have been granted under the Deferred Share Bonus Plan (the ‘DSBP’) and
were outstanding at 31 December:
Date of award
13 April 2010
30 March 2011
19 April 2012
19 April 2012
11 April 2013
11 April 2013
11 April 2013
18 June 2013
10 April 2014
10 April 2014
10 April 2014
13 May 2014
13 May 2014
24 April 2015
24 April 2015
24 April 2015
Deferred period
Vesting date
5 years
13 April 2015
5 years
30 March 2016
3 years
5 years
3 years
4 years
5 years
3 years
3 years
4 years
5 years
3 years
4 years
3 years
4 years
5 years
19 April 2015
19 April 2017
11 April 2016
11 April 2017
11 April 2018
18 June 2016
10 April 2017
10 April 2018
10 April 2019
13 May 2017
13 May 2018
24 April 2018
24 April 2019
24 April 2020
2015
Number of
shares
’000
2014
Number of
shares
’000
–
527
–
298
181
266
8
325
90
551
18
331
50
330
656
2
29
540
419
311
187
270
8
325
91
570
26
332
50
–
–
–
3,633
3,158
As at 31 December 2015, 503 (2014: 364) individuals held outstanding awards under the DSBP. Awards made under the DSBP are subject
to rolled-up dividends whereby the number of shares awarded will be increased on the vesting date to reflect dividends paid to shareholders
throughout the deferred period.
A reconciliation of award movements over the year to 31 December is shown below:
2015
2014
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
Number of
shares
’000
3,158
997
(63)
Weighted
average
share price
at date of
exercise
Number of
shares
’000
Weighted
average
share price
at date of
exercise
–
–
–
3,368
1,091
(84)
(1,217)
3,158
–
–
–
–
515.6p
–
–
(459)
822.5p
3,633
–
–
–
The weighted average exercise price for awards granted under this scheme is £nil (2014: £nil). No awards were exercisable under this
scheme as at 31 December 2015 (31 December 2014: nil).
The weighted average remaining contractual life of share options outstanding at 31 December 2015 is 1.7 years (2014: 1.9 years).
126
SAVILLS PLC REPORT AND ACCOUNTS 2015
27.4 Deferred Share Plan
The following awards of deferred shares, without exercise price, have been granted under the Deferred Share Plan (the ‘DSP’) and remained
outstanding at 31 December 2015:
Date of grant
13 April 2010
30 March 2011
30 March 2011
27 September 2011
19 April 2012
19 April 2012
19 April 2012
13 September 2012
13 September 2012
11 April 2013
11 April 2013
11 April 2013
26 June 2013
26 June 2013
19 September 2013
19 September 2013
19 September 2013
10 April 2014
13 May 2014
12 August 2014
12 August 2014
12 August 2014
24 April 2015
24 April 2015
17 September 2015
17 September 2015
17 September 2015
17 September 2015
17 September 2015
Deferred period
Vesting date
2015
Number of
shares
’000
5 years
4 years
5 years
5 years
3 years
4 years
5 years
3 years
5 years
3 years
4 years
5 years
3 years
4 years
3 years
4 years
5 years
3 years
3 years
3 years
4 years
5 years
3 years
4 years
1 year
2 years
3 years
4 years
5 years
13 April 2015
30 March 2015
30 March 2016
27 September 2016
19 April 2015
19 April 2016
19 April 2017
13 September 2015
13 September 2017
11 April 2016
11 April 2017
11 April 2018
26 June 2016
26 June 2017
19 September 2016
19 September 2017
19 September 2018
10 April 2017
13 May 2017
12 August 2017
12 August 2018
12 August 2019
24 April 2018
24 April 2019
17 September 2016
17 September 2017
17 September 2018
17 September 2019
17 September 2020
–
–
348
43
–
–
22
–
12
64
581
33
10
33
78
13
2
251
6
29
80
154
186
15
2
2
15
40
232
2,251
2014
Number of
shares
’000
1,352
362
348
43
494
6
21
112
12
69
595
52
10
33
78
13
2
255
6
29
87
154
–
–
–
–
–
–
–
4,133
As at 31 December 2015, 184 individuals (2014: 242) held outstanding awards under the DSP. Awards made under the DSP are subject to
rolled-up dividends whereby the number of shares awarded will be increased on the vesting date to reflect dividends paid to shareholders
during the deferred period.
A reconciliation of award movements over the year to 31 December is shown below:
2015
2014
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
Number of
shares
’000
4,133
493
(46)
Weighted
average
share price
at date of
exercise
Number of
shares
’000
Weighted
average
share price
at date of
exercise
–
–
–
4,809
531
(101)
(1,106)
4,133
–
–
–
–
624.2p
–
–
(2,329)
821.9p
2,251
–
–
–
SAVILLS PLC REPORT AND ACCOUNTS 2015
127
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
The weighted average exercise price for awards granted under this scheme is £nil (2014: £nil). No awards were exercisable under this
scheme as at 31 December 2015 (31 December 2014: nil).
The weighted average remaining contractual life of share options outstanding at 31 December 2015 is 1.8 years (2014: 1.2 years).
27.5 Performance Share Plan
The following awards of deferred shares, without exercise price, have been granted under the Performance Share Plan (the ‘PSP’) and were
outstanding at 31 December:
Date of grant
17 April 2012
17 April 2012
12 August 2014
12 August 2014
24 April 2015
Vesting date
17 April 2015
Approved/
unapproved
Approved
17 April 2015
Unapproved
12 August 2017
Approved
12 August 2017
Unapproved
24 April 2018
Unapproved
2015
Number of
shares
’000
2014
Number of
shares
’000
–
–
10
294
186
490
34
621
10
294
–
959
As at 31 December 2015, seven individuals (2014: nine) held outstanding awards under the PSP. Awards made under the PSP are subject to
rolled-up dividends whereby the number of shares awarded will be increased on the vesting date to reflect dividends paid to shareholders
during the deferred period.
A reconciliation of award movements over the year to 31 December is shown below:
Outstanding at 1 January
Granted
Exercised
Outstanding at 31 December
Exercisable at 31 December
2015
2014
Number of
shares
’000
959
186
Weighted
average
share price
at date of
exercise
–
–
(655)
824.5p
490
–
–
–
Number of
shares
’000
1,207
304
(552)
959
–
Weighted
average
share price
at date of
exercise
–
–
614.4p
–
–
The weighted average remaining contractual life of share options outstanding at 31 December 2015 is 1.9 years (2014: 1.0 years).
128
SAVILLS PLC REPORT AND ACCOUNTS 2015
27.6 Fair value of options
Options and awards for the Sharesave, PSP and ESOS were valued at fair value using the Actuarial Binomial model of actuaries Lane Clark
& Peacock LLP.
The key assumptions used in the calculation are as follows:
Risk-free rate
0.5% p.a.–4.9% p.a. depending on grant date and expected life
Volatility of Company share price
23% p.a.–51% p.a. depending on grant date
Correlation
Employee turnover
Early exercise
Performance criteria
Allowance for pre-vesting
cancellations
46%–57% correlation for Company share price against comparator index at grant date (PSP only)
Zero
50% of employees exercise early when options and awards are 20% in the money (ESOS only)
All vest after three years
5% over the vesting period (SAYE only)
The expected volatility is measured over the three years prior to the date of grant to match the vesting period of the award. The risk-free rate
is the yield on a zero coupon UK Government bond at each grant date, with term based on the expected life of the option or award.
Fair value of options and awards at grant dates are:
Grant
DSBP 2010
DSBP 2011
DSBP 2012
DSBP 2013
DSBP 2013
DSBP 2014
DSBP 2014
DSBP 2015
DSP 2010
DSP 2011
DSP 2011
DSP 2012
DSP 2012
DSP 2013
DSP 2013
DSP 2013
DSP 2014
DSP 2014
DSP 2014
DSP 2015
DSP 2015
ESOS 2009
ESOS 2010
PSP 2012
PSP 2014
PSP 2015
SHARESAVE 2015
Grant date
Fair value pence
13 April 2010
30 March 2011
19 April 2012
11 April 2013
18 June 2013
10 April 2014
13 May 2014
24 April 2015
13 April 2010
30 March 2011
27 September 2011
19 April 2012
13 September 2012
11 April 2013
26 June 2013
19 September 2013
10 April 2014
13 May 2014
12 August 2014
24 April 2015
17 September 2015
17 April 2009
17 April 2010
17 April 2012
12 August 2014
24 April 2015
13 May 2015
340.2
363.2
350.6
510.0
600.0
653.0
623.5
820.0
340.2
363.2
300.0
350.6
411.6
510.0
549.5
597.5
653.0
623.5
600.0
820.0
896.0
136.8
150.3
244.3
423.7
687.8
219.0
The total charge for the year relating to employee share-based payments plans was £11.1m (2014: £10.5m), all of which related to
equity-settled share-based payment transactions.
SAVILLS PLC REPORT AND ACCOUNTS 2015
129
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
28. Retained earnings and other reserves
Share-
based
payments
reserve
£m
Treasury
shares
£m
Profit
and loss
account*
£m
Total
retained
earnings*
£m
Capital
redemption
reserve
£m
Merger
relief
reserve
£m
Foreign
exchange
reserve
£m
Balance at 1 January 2015
24.8
(24.5)
178.3
178.6
0.3
Profit attributable to owners of the Company
Other comprehensive (loss)/income
Employee share option scheme:
– Value of services provided
– Exercise of options
Purchase of treasury shares
Dividends
Shares issued
Transactions with non-controlling interests
–
–
11.1
(12.9)
–
–
–
–
–
–
–
13.4
(14.9)
–
–
–
64.3
(0.3)
64.3
(0.3)
–
(0.5)
–
(30.3)
–
11.1
–
(14.9)
(30.3)
–
(0.7)
(0.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
12.0
–
21.0
–
4.2
–
–
–
–
–
–
Revaluation
reserve
Total
other
reserves
£m
1.2
–
0.4
–
–
–
–
–
–
£m
22.5
–
4.6
–
–
–
–
12.0
–
Balance at 31 December 2015
23.0
(26.0)
210.8
207.8
0.3
12.0
25.2
1.6
39.1
Balance at 1 January 2014
24.0
(19.2)
154.6
159.4
0.3
Profit attributable to owners of the Company
Other comprehensive (loss)/income
Employee share option scheme:
– Value of services provided
– Exercise of options
Purchase of treasury shares
Share-based payment settlement
Disposal of available-for-sale investments
(net of tax)
Dividends
Transactions with non-controlling interests
–
–
10.5
(9.7)
–
–
–
–
–
–
–
–
6.8
(12.1)
–
–
–
–
62.1
(11.2)
–
2.9
–
(3.6)
–
(24.9)
(1.6)
62.1
(11.2)
10.5
–
(12.1)
(3.6)
–
(24.9)
(1.6)
–
–
–
–
–
–
–
–
–
Balance at 31 December 2014
24.8
(24.5)
178.3
178.6
0.3
*
Included within Profit and loss account is tax on items taken directly to equity (Note 12) as disclosed above.
–
–
–
–
–
–
–
–
–
–
–
14.9
–
6.1
–
–
–
–
–
–
–
1.9
–
0.6
–
–
–
–
17.1
–
6.7
–
–
–
–
(1.3)
(1.3)
–
–
–
–
21.0
1.2
22.5
29. 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.
30. Operating lease commitments – minimum lease payments
The future aggregate minimum lease payments under non-cancellable operating leases are as follows:
Amounts due within:
Within 1 year
Between 1 to 5 years
After 5 years
Group
2015
£m
39.4
104.3
127.1
270.8
2014
£m
34.9
90.2
137.6
262.7
Company
2015
£m
2014
£m
7.8
31.4
94.1
133.3
7.8
31.4
101.9
141.1
Significant operating leases relate to the various property leases for Savills offices in the UK, Continental Europe, Asia Pacific and the US.
There are no significant non-cancellable subleases.
130
SAVILLS PLC REPORT AND ACCOUNTS 2015
31. Cash generated from operations
Profit for the year
Adjustments for:
Income tax (Note 12)
Depreciation (Note 16)
Amortisation of intangible assets (Note 15)
Loss on sale of property, plant and equipment
Profit on disposal of available-for-sale investments, joint ventures and associates
Net finance (income)/cost (Note 11)
Share of post-tax profit from joint ventures and associates (Note 17.1)
Decrease in employee and retirement obligations
Exchange movement on operating activities
Decrease in provisions
Impairment of available-for-sale investment included within other operating expenses
Charge for share-based compensation (Note 27.6)
Exercise of share options
Operating cash flows before movements in working capital
(Increase)/decrease in work in progress
Increase in trade and other receivables
Increase in trade and other payables
Cash generated from operations
32. Analysis of cash net of debt
2015
Cash and cash equivalents
Bank overdrafts
Bank loans
Cash and cash equivalents net of debt
2014
Cash and cash equivalents
Bank loans
Cash and cash equivalents net of debt
Group
Company
2015
£m
64.9
33.7
11.2
5.7
–
(2.9)
(0.5)
(6.9)
(5.5)
(0.8)
(2.8)
–
11.1
–
107.2
(0.9)
(47.3)
81.5
140.5
2014
£m
62.7
22.0
8.4
4.6
0.2
(2.0)
0.8
(7.0)
(7.4)
0.5
–
0.6
10.5
–
93.9
0.1
(44.1)
63.7
113.6
2015
£m
47.5
(2.7)
1.1
0.4
–
–
(1.1)
–
(0.3)
–
–
–
1.9
(13.4)
33.4
–
(3.7)
3.5
33.2
2014
£m
37.0
(2.4)
1.2
0.5
–
–
(1.0)
–
(0.5)
(0.2)
–
–
1.9
(6.7)
29.8
–
(1.2)
3.5
32.1
At
1 January
£m
Cash flows
£m
Exchange
movement
£m
At
31 December
£m
158.1
–
158.1
(3.9)
154.2
21.8
(0.2)
21.6
(27.3)
(5.7)
2.5
–
2.5
–
2.5
182.4
(0.2)
182.2
(31.2)
151.0
At
1 January
£m
Cash flows
£m
Exchange
movement
£m
At
31 December
£m
122.2
(9.8)
112.4
32.8
5.9
38.7
3.1
–
3.1
158.1
(3.9)
154.2
33. Related party transactions
There were no significant related party transactions during the year. All related party transactions take place on an arm’s-length basis under
the same terms as those available to other customers in the ordinary course of business.
(a) Loans to related parties
Loans to joint ventures are disclosed in Note 17.1.
(b) Company transactions
The Company provided corporate function services to its subsidiaries at an arm’s-length value of £15.8m (2014: £13.8m).
Dividends of £45.0m were received from subsidiaries during the year (2014: £40.0m). Amounts outstanding to and from subsidiaries as at
31 December 2015 are disclosed in Notes 19, 21 and 22.
SAVILLS PLC REPORT AND ACCOUNTS 2015
131
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
34. Group – Investments
Subsidiaries
The subsidiaries of the Group are shown below together with details of their main activities and place of business. Except where otherwise
noted, they are wholly-owned, have share capital wholly comprised of ordinary shares and are consolidated into the Group financial
statements. Holding interests are the same as voting interests. The shares/interests of the subsidiaries below are all held indirectly by the
Company, with the exception of Savills Holding Company Limited.
Country of incorporation/
Place of business
Effective
holding %
Subsidiary undertakings
Corporate Real Estate Services Pty Ltd
Incoll Group Pty Ltd
Incoll Management Pty Ltd
Moores Cost Consulting Pty Ltd
Savills (ACT) Pty Ltd
Savills (Aust) Holdings Pty Ltd
Savills (Aust) Pty Ltd
Savills (NSW) Pty Ltd
Savills (QLD) Pty Ltd
Savills (SA) Pty Ltd
Savills (TAS) Pty Ltd
Savills (VIC) Pty Ltd
Savills (WA) Pty Ltd
Savills Project Management Pty Ltd
Savills Project Services (SA) Pty Ltd
Savills Property Management (NSW) Pty Ltd
Savills Valuations Pty Ltd
Savills Belux Group SA
Savills (Vietnam) Ltd
Savills Canada Inc
Savills Studley Inc (Ontario)
Savills Studley Services, Inc
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Belgium
British Virgin Islands
Canada
Canada
Canada
Guardian Property Services (Shanghai) Company Ltd
Savills Property Services (Beijing) Company Ltd
Savills Property Services (Chengdu) Company Ltd
Savills Property Services (Guangzhou) Company Ltd
Savills Property Services (Shanghai) Company Ltd
Savills Property Services (Zhuhai) Company Ltd
Savills Real Estate Valuation (Beijing) Company Ltd
Savills Real Estate Valuation (Guangzhou) Company Ltd
Savills Valuation and Professional Services (BJ) Ltd
Savills Valuation and Professional Services (GZ) Ltd
Savills Property Services (Shenzhen) Company Ltd
Shanghai No.1 and FPDSavills Property Management
Company Ltd
Shenzhen Guardian Property Management Ltd
Studley (Shanghai) Real Estate Brokerage Co. Ltd
Swan Property Services (Beijing) Company Ltd
Zhuhai Hengqin Savills Assets Operation
Management Company Ltd
Savills Investment Management ApS
Savills Investment Management SAS
Savills SA
Piccadilly General Partner GmbH
Savills Advisory Services Germany GmbH & Co. KG
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
Denmark
France
France
Germany
Germany
132
SAVILLS PLC REPORT AND ACCOUNTS 2015
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
99.90
98.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
85.00
51.00
100.00
100.00
100.00
51.00
100.00
100.00
Main activities
Dormant
Dormant
Dormant
Dormant
Property agency
Holding company
Property management, agency and consultancy
Property agency
Property agency
Property agency
Property agency
Property agency
Property agency
Project management
Project management
Dormant
Valuations
Property management, agency and consultancy
Holding company
Holding company
Property agency and consultancy
Property agency and consultancy
Property management
Property agency and management
Property agency and management
Property agency and management
Property agency and management
Property agency and management
Valuations
Valuations
Dormant
Dormant
Property agency and management
Property consultancy
Property management
Property agency and consultancy
Property management
Property and asset management
Investment management
Investment management
99.97
Property agency, management and consultancy
100.00
100.00
Investment management – General Partner
Holding company
Country of incorporation/
Place of business
Effective
holding %
Subsidiary undertakings
Savills Advisory Services GmbH
Savills Fund Management AG
Savills Fund Management GmbH
Savills Immobilien Beratungs GmbH
Savills Immobilien Beteiligungs GmbH
Savills Immobilien Management GmbH
Savills Investment Management (Germany) GmbH
Savills Investment Management (KVG) GmbH
Absolute Result Ltd
Asia Protection Security Associates Ltd
Bridgewater Management Ltd
BTHK Property Management Ltd
Champion Insurance and Computer Services Ltd
Dominion Office Centre Ltd
East Full Company Ltd
Eco-Guardian Ltd
Express Engineering Ltd
Express Maintenance Services Ltd
Gateway Constructors Ltd
Greenscape Ltd
GRVM Ltd
Guard Able Ltd
Guardian Care Ltd
Guardian Management Services Ltd
Guardian Mandarin Management Ltd
Guardian Partners Ltd
Guardian Property Agencies Ltd
Guardian Property Management Ltd
Hip Kwan Property Management Ltd
Jiayi Savills Property Services Ltd
Kenda Services Ltd
Kwik Park Ltd
Mount Link Services Ltd
Quartey Properties Ltd
Savills (China) Ltd
Savills (Hong Kong) Ltd
Savills Asia Pacific Ltd
Savills Associates Ltd
Savills Billion Property Management Ltd
Savills Building Services Ltd
Savills Design Ltd
Savills Engineering Ltd
Savills Guardian (Holdings) Ltd
Savills India Holding Ltd
Savills Indonesia Holding Ltd
Savills Investment Management (Hong Kong) Ltd
Savills Management Services Ltd
Savills Philippines Holding Limited
Savills Project Consultancy Ltd
Savills Property Management Holdings Ltd
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
100.00
100.00
94.00
100.00
100.00
100.00
100.00
94.90
80.20
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Main activities
Property consultancy
Investment management
Investment management
Property agency and consultancy
Holding company
Property agency, management and consultancy
Investment management
Investment management
Dormant
Provision of property management services
Property management
Property management
Property insurance services
Property investment services
Provision of property management services
Dormant
Provision of property management services
Provision of property management services
Provision of property management services
Provision of property management services
Holding company
Provision of property management services
Provision of property management services
Property management
Property management
Consultancy
Property agency
Property management
Property management
51.00
Property agency, management and consultancy
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Property management
Property management
Property management
Property management
Holding company
Property agency
Holding company
Property agency
Property management
Property management
Provision of property management services
Provision of property management services
Holding company
Holding company
Dormant
Investment management
Group administrative services
Holding company
Property consultancy
Holding company
SAVILLS PLC REPORT AND ACCOUNTS 2015
133
Overview / Strategy / Performance / Governance / Financial statements
Country of incorporation/
Place of business
Effective
holding %
Notes to the financial statements
Year ended 31 December 2015 continued
Subsidiary undertakings
Savills Property Management Ltd
Savills Realty Ltd
Savills Regional Services Limited
Savills Residence Ltd
Savills Showcase Ltd
Savills Valuation and Professional Services Ltd
Security and Safety Ltd
Swan Hygiene Services Ltd
Swan Pest Control Services Ltd
Tarrayon Ltd
The Peninsular Centre Retailers Association Ltd
Savills Realty (India) Private Ltd
PT Savills Consultants Indonesia
Actium
Anateo Ltd
HOK Financial Services
Liffey Valley
Mahon Point
Savills Commercial (Ireland) Limited
Savills Residential Ireland
SMR Ireland
Cordea Savills Advisors S.r.l.
Savills Investment Management SGR Spa
Savills Italy SRL (EUR)
Savills Asset Advisory Company, Ltd
Savills Investment Management Asia Ltd
Savills Japan Company Ltd
Greater Tokyo Office Fund (Jersey) GP Ltd
Prime London Residential Development Jersey GP Ltd
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
India
Indonesia
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Italy
Italy
Italy
Japan
Japan
Japan
Jersey
Jersey
Prime London Residential Development Jersey II GP Ltd
Jersey
Prime London Residential Development Jersey II LP
Savills (Jersey) Ltd
Savills Investment Management (Jersey) Ltd
SVJ One Ltd
Savills Investment Korea Company Ltd
Savills Korea Advisors Realty Company Ltd
Savills Korea Company Ltd
Asia Property Fund Sarl
Cordea Savills Italian Opportunities No.2 S.a.r.l.
CS Italian Opportunities No.1 S.a.r.l.
Jersey
Jersey
Jersey
Jersey
Korea
Korea
Korea
Luxembourg
Luxembourg
Luxembourg
Savills Investment Management (Luxembourg) S.à r.l.
Luxembourg
Savills (Macau) Ltd
Savills Project Consultancy (Macau) Ltd
Savills Property Management (Macau) Ltd
Savills (Myanmar) Ltd
Savills Agency B.V.
Savills B.V.
Savills Consultancy B.V.
Savills Holdings B.V.
Savills Investments B.V.
134
SAVILLS PLC REPORT AND ACCOUNTS 2015
Macau
Macau
Macau
Myanmar
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
100.00
100.00
100.00
100.00
65.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
80.40
99.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
90.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
94.90
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Main activities
Property management
Property agency
Property management and consultancy
Property management
Property agency
Valuations and consultancy
Provision of property management services
Provision of property management services
Provision of property management services
Dormant
Dormant
Dormant
Property agency and consultancy
Property consultancy
Property consultancy
Dormant
Property management
Property management
Property agency, management and consultancy
Property consultancy
Property management
Investment management
Investment management
Property consultancy
Asset management
Investment management
Property agency, management and consultancy
Investment management – General Partner
Investment management – General Partner
Investment management – General Partner
Investment partnership
Property agency
Investment management
Dormant
Investment management
Property agency
Property agency, management and consultancy
Investment management – General Partner
Investment management – General Partner
Investment management – General Partner
Investment management
Property agency and consultancy
Property consultancy
Property management
Property agency
Property agency
Property agency, management and consultancy
Property consultancy
Holding company
Property consultancy
Subsidiary undertakings
Savills Nederland B.V.
Savills Nederland Holdings BV
Savills Retail B.V.
Tagis B.V.
Tagis Property Management B.V.
Savills (NZ) Ltd
Savills NI Limited
Savills Property Management Sp Zoo
Savills Sp z o o
Ace Body Corporate Management Pte Ltd
Savills (SEA) Pte Ltd
Savills (Singapore) Pte Ltd
Savills Asset Management Pte. Ltd. (formerly known
as Ace Body Corporate Management Pte Ltd)
Savills Investment Management Pte Ltd
Savills Property Management Pte Ltd
Savills Residential Pte Ltd
Savills Valuation & Professional Services (S) Pte Ltd
Studley (Singapore) Pte Ltd
Savills Activos Adjudicados S.L.
Savills Consultores Inmobiliarios SA
Savills High Street S.L.
Loudden Bygg-och Fastighetsservice AB
Savills Förvaltning AB
Savills Investment Management AB
Savills Sweden AB
Savills (Taiwan) Ltd
Savills Property Management (Taiwan) Ltd
Savills Residential Services (Taiwan) Ltd
Savills Valuation & Professional Services (Taiwan)
Savills (Thailand) Ltd
Savills Security and Safety Company Ltd
Blair Kirkman LLP
Buckleys Estate Agents Ltd
Chesterfield & Co (Rentals) Ltd
Christopher Rowland Ltd
Collier & Madge Holdings Ltd
Collier & Madge plc
Cordea Savills Investments Ltd
Cordea Savills SLP GP Limited
Cordea Savills SLP II LP
Cordea Savills SLP LP
Grosvenor Hill Ventures Ltd
Hepher Dixon Ltd
Holden Matthews Estate Agents Ltd
Humphriss & Ryde Ltd
Jago Dean PR Ltd
LIBRA Housing Advisory Services Ltd
Mansfield Elstob Main Ltd
Moor House Management Services Ltd
Country of incorporation/
Place of business
Effective
holding %
Netherlands
Netherlands
Netherlands
Netherlands
Netherlands
New Zealand
Northern Ireland
Poland
Poland
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Spain
Spain
Spain
Sweden
Sweden
Sweden
Sweden
Taiwan
Taiwan
Taiwan
Taiwan
Thailand
Thailand
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
100.00
90.25
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
55.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Main activities
Property management
Holding company
Property agency
Property management
Property management
Property agency and management
Property agency, management and consultancy
Property management
Property agency and consultancy
Property and asset management
Asset management
Property agency
Property and asset management
Investment management
Property and asset management
Property agency
Valuations and consultancy
Property agency and consultancy
Property consultancy
Property agency, management and consultancy
Property consultancy
Facilities management
Property management
Investment management
Property agency and consultancy
Property agency and consultancy
Property management
Property agency
Valuations
Property agency and management
Provision of property management services
Dormant
Dormant
Dormant
Dormant
Property consultancy and management
Holding company
Holding company
Investment management – General Partner
Investment partnership
Investment partnership
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Dormant
Property management
SAVILLS PLC REPORT AND ACCOUNTS 2015
135
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
Subsidiary undertakings
PCA Holdings Ltd
Portnalls Ltd
Prime London Residential Development
Co-Investment GP LLP
Prime London Residential Development
Co-Investment II GP LLP
Prime London Residential Development
Co-Investment II LP
Prime London Residential Development
Co-Investment LP
Prime London Residential Development GP LLP
Prime London Residential Development II GP LLP
Prime Purchase Ltd
Rickitt Grant & Company Ltd
S F Securities Ltd
Savills (Europe) Ltd
Savills (L&P) Ltd
Savills (Overseas Holdings) Ltd
Savills (UK) Ltd
Savills Advisory Services (L&P) Ltd
Savills Advisory Services Ltd
Savills Asset Warehouse 1 Ltd
Savills Asset Warehouse 2 Ltd
Savills Capital Advisors Ltd
Savills Commercial Ltd
Savills Commercial (Leeds) Ltd
Savills Finance Holdings plc
Savills Financial Services Ltd
Savills Holding Company Ltd
Savills IM Dawn GP Limited
Savills IM SLP General Partner LLP
Savills IM SLP II GP LLP
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Savills IM UK Income and Growth General Partner LLP
United Kingdom
Savills IM UK One Limited
Savills IM UK Property Ventures No.1 GP Limited
Savills IM UK Two Limited
Savills Investment Ltd
Savills Investment Management (UK) Ltd
Savills Investment Management LLP
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Savills Investment Management Overseas Holdings Ltd
United Kingdom
Savills Lending Solutions Ltd
Savills Management Resources Ltd
Savills Nominee Company Ltd
Savills Telecom Ltd
Serviced Land No.1 GP Limited
Serviced Land No.2 GP Limited
Serviced Land No.2 JV GP Limited
SIML New Co Limited
Smith Woolley Ltd
Stratland Management Ltd
The London Planning Practice Ltd
136
SAVILLS PLC REPORT AND ACCOUNTS 2015
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
United Kingdom
Country of incorporation/
Place of business
Effective
holding %
United Kingdom
United Kingdom
United Kingdom
100.00
100.00
100.00
Main activities
Dormant
Dormant
Investment management – General Partner
United Kingdom
100.00
Investment management – General Partner
United Kingdom
100.00
Investment partnership
United Kingdom
100.00
Investment partnership
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
Investment management – General Partner
Investment management – General Partner
Property buying services
Dormant
Dormant
Dormant
Dormant
Property agency, management and consultancy
Holding company
Commercial property consultancy
Dormant
Dormant
Dormant
Commercial property consultancy
Dormant
Dormant
Holding company
Holding company
Holding company
Investment management – General Partner
Investment management – General Partner
Investment management – General Partner
Investment management – General Partner
Investment management
Investment management – General Partner
Investment management
Holding company
Investment management
Investment management
Holding company
Dormant
Property management
Dormant
Commercial property consultancy
Investment management – General Partner
Investment management – General Partner
Investment management – General Partner
Holding company
Dormant
Investment management
Dormant
Subsidiary undertakings
UKIG Nominees 2 Ltd
Wellington Holdings Ltd
BTR Advisors II, Inc.
BTR Capital Advisors I, LLC
BTR Capital Advisors III, Inc.
BTR Capital Management
Gravitas Lease Audit Services LLC
Gravitas Real Estate Solutions
Kelly, Legan & Gerard Inc.
Savills America Ltd
Savills LLC
Savills Studley (GA) Inc.
Savills Studley Occupier Services, Inc.
Studley Asia Holdings
Studley Colorado, LLC
Studley Gravitas Real Estate Solutions LLC
The Great Studley Stamp Company
Savills Vietnam Ltd
Principal joint ventures and associates
Joint ventures*
Anlian Savills Property Management (Shenzhen) Ltd
Beijing BHG Savills Retail&Property Management
Company Ltd
Beijing CCP & Savills Property Services Management
Company Ltd
Beijing China Railway Savills Property Management
Services Company Ltd
Beijing Financial Street Savills Property Management
Company Ltd
Beijing Jiaming Savills Property Management
Company Ltd
Beijing Oriental Savills Asset Management
Company Ltd
Beijing Tianhe Savills Property Management
Company, Ltd
Beijing Zhaotai Savills Property Services
Company Ltd
Beijing Zhong Bao Savills Property Management
Company Ltd
COSCO FPDSavills Property Development
Company Ltd
DingTai & Savills Xiamen Property Management Limited
FPD Raycom Property Management (Beijing)
Company Ltd
Fuzhou Hengli & Savills Property Management
Company Ltd
Gohigh Savills (Shanghai) Property Management
Company Ltd
Guangkong Savills (Shanghai) Property Management
Company Limited
Savills BM Property Services Company Ltd
Country of incorporation/
Place of business
Effective
holding %
United Kingdom
United Kingdom
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
Vietnam
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
100.00
98.00
Country of incorporation/
Place of business
Effective
holding %
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
China
25.50
30.00
25.00
49.00
30.00
35.00
30.00
40.00
30.00
10.00
25.00
40.00
30.00
45.00
49.00
45.00
40.00
Investment management – General Partner
Main activities
Dormant
Property agency and management
Property agency and management
Property agency and management
Property agency and consultancy
Property agency and consultancy
Property agency and consultancy
Property agency and consultancy
Holding company
Property agency and consultancy
Property agency, management and consultancy
Property agency and consultancy
Property agency and consultancy
Property agency and consultancy
Property agency and consultancy
Property agency and management
Property management, agency,
valuations and consultancy
Main activities
Property management
Property agency and management
Property management
Property management
Property management
Property management
Property management
Property management
Property management
Property management
Property management
Property management
Property management
Property management
Property agency and management
Property management
Property agency and management
SAVILLS PLC REPORT AND ACCOUNTS 2015
137
Overview / Strategy / Performance / Governance / Financial statements
Notes to the financial statements
Year ended 31 December 2015 continued
Joint ventures*
Shanghai No.1 and FPDSavills Property Management
Company Ltd
Shanghai Poly Savills Property Management
Company Ltd
Shenzhen Qianhai Savills Property Services
Company Ltd
Suzhou Industrial Park Wanrun & FPD Savills Property
Management Company Ltd
Tianjin TEDA Savills Property Services Company Ltd
Wuhan Yuexiu Savills Property Services Company Ltd
Zhongzheng Savills Property Management
(Beijing) Co., Ltd.
G.E.S. Holdings Ltd
G.E.S. Ltd
Savills Science Ltd
Savills Solar Ltd
Associates*
SAS – Riviera Estates
Greenmile Ventures Ltd
Greenwall Gateway Ltd
Guardian Home Ltd
KSH Guardian Property Management Ltd
Lippo-Savills Property Management Ltd
Savills Taiping Property Management Ltd
Yuen Sang Property Management Company Ltd
Cordea Nichani India Advisers Private Ltd
Savills (Johor) Sdn Bhd
Savills (KL) Sdn Bhd
Savills (Malaysia) Sdn Bhd
Savills (Penang) Sdn Bhd
Savills (Project Management) Sdn Bhd
Rootcorp Ranganatha Ltd
Huttons Asia Pte Ltd
6th High Flying Associates
BTR Capital Fund I, LLC
BTR Capital Fund II, LLC
BTR Capital Fund III LLC
BTR Miller Capital Fund, LLC
BTR Sacramento
Slynorab Associates
SMFL, LLC
SMI 15th Street, LLC
Studley Georgetown Jefferson
Studley Partners, Postal Square
Studley Partners, Postal Square, LPI
The King Forum and Studley Associates
Country of incorporation/
Place of business
Effective
holding %
51.00
30.00
China
China
China
China
China
China
China
Macau
Macau
United Kingdom
United Kingdom
Main activities
Property consultancy
Property management
40.00
Property agency, consultancy and management
45.00
10.00
40.00
49.00
50.00
50.00
50.00
50.00
Property agency and management
Property management
Property agency and management
Property agency, consultancy and management
Holding company
Holding company
Commercial property consultancy
Solar energy services
Country of incorporation/
Place of business
Effective
holding %
France
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
Hong Kong
India
Malaysia
Malaysia
Malaysia
Malaysia
Malaysia
Mauritius
Singapore
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
United States
38.60
50.00
50.00
40.00
50.00
50.00
45.00
50.00
25.00
45.00
45.00
45.00
45.00
45.00
25.00
48.00
26.00
40.00
40.00
40.00
44.17
24.32
25.00
41.95
25.00
45.00
37.73
32.81
42.50
Main activities
Property agency
Provision of property management services
Provision of property management services
Holding company
Property management
Property management
Property management
Property management
Investment management
Property agency and valuation
Property agency and valuation
Property agency and valuation
Property agency and valuation
Project management
Holding company
Property agency
Dormant
Property agency and management
Property agency and management
Property agency and management
Property agency and management
Dormant
Dormant
Dormant
Property agency and management
Property agency and management
Property agency and management
Property agency and management
Dormant
*
Interests in joint ventures and associates above are held by subsidiary undertakings.
138
SAVILLS PLC REPORT AND ACCOUNTS 2015
The total non-controlling interest for the year is £0.7m. The non-controlling interests in respect of the above subsidiaries that the Group does
not own a holding of 100% are not considered to be individually material.
See Note 17.4 for transactions with non-controlling interests and Note 20 for details on restrictions on the Group’s ability to access cash in
the Group’s Asia Pacific operating subsidiaries.
SAVILLS PLC REPORT AND ACCOUNTS 2015
139
Overview / Strategy / Performance / Governance / Financial statements
Shareholder information
Key dates for 2016
Annual General Meeting
Financial half year end
Announcement of half year results
Date
11 May 2016
30 June 2016
9 August 2016
Professional advisers and service providers
Solicitors
CMS Cameron McKenna LLP
Mitre House
160 Aldersgate Street
London EC1A 4DD
Website
Visit our investor relations website www.savills.com for full up to
date investor relations information, including the latest share price,
recent Annual and Half Year Reports, results presentations and
financial news.
Shareholder enquiries
For shareholder enquiries please contact our Registrars,
Equiniti. For general enquiries please call our Shareholder Services
helpline on: 0871 384 2018 (overseas holders need to ring
+44 (0)121 415 7047). Calls to Equiniti’s 0871 numbers are charged
at 8p per minute plus network extras. Other network service
providers’ costs may vary. Lines are open from 8.30am to 5.30pm,
Monday to Friday, excluding bank holidays. For further administrative
queries in respect of your shareholding please access our Registrars’
website at www.shareview.co.uk
Electronic communications
If you would prefer to receive shareholder communications
electronically in future, including your annual and half-yearly reports
and notices of meetings, please visit our Registrars’ website,
www.shareview.co.uk and follow the link to ‘Register for
e-communications’ under the Shareholder Services section.
Half Year Report
Like many other listed public companies, we no longer circulate
printed Half Year Reports to shareholders. Rather, Half Year results’
statements are published on the Company’s website. We believe
that this is of benefit to those shareholders who do not wish to be
burdened with such paper documents, and to the Company, as it is
consistent with our target of saving printing and distribution costs.
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
Joint Stockbrokers
UBS Investment Bank
1 Finsbury Avenue
London EC2M 2PP
Numis Securities Ltd
The London Stock
Exchange Building
10 Paternoster Square
London EC4M 7LT
Principal Bankers
Barclays Bank PLC
1 Churchill Place
London E14 5HP
140
SAVILLS PLC REPORT AND ACCOUNTS 2015
Warning about unsolicited investment contacts
Share fraud includes scams where investors are contacted unexpectedly and
offered shares that often turn out to be worthless or non-existent or offered an
inflated price for shares they own. These calls come from fraudsters operating
in ‘boiler rooms’ that are mostly based abroad.
Shareholders who buy or sell their shares in this way usually lose their money.
The Financial Conduct Authority (‘FCA’) has found most share fraud victims are
experienced investors who lose an average of £20,000, with around £200m lost
in the UK each year.
Protect yourself – if you are offered discounted shares, unsolicited investment
advice, an inflated price for your shares or free company or research reports,
you should take precautionary measures before handing over your money.
1. Get the name of the person and organisation contacting you.
2. Check the Financial Services Register at www.fca.org.uk/register to ensure
that they are authorised.
3. Contact the firm using the details on the Financial Services Register. If there
are no details or you are told they are out of date, contact FCA Helpline on
0800 111 6768 or fill out a share fraud reporting form which can be found
on the FCA website.
Search the list of unauthorised firms and individuals to avoid at www.fca.org.uk
/scams and remember: if it sounds too good to be true, it probably is!
4.
If you have already paid money to share fraudsters you should inform the FCA by
calling its Helpline 0800 111 6768 or by calling Action Fraud on 0300 123 2040.
If you use an unauthorised firm to buy or sell shares or other investments, you
will not have access to the Financial Ombudsman Service or the Financial
Services Compensation Scheme if things go wrong.
Cautionary note regarding forward-looking statements
Certain statements included in this Annual Report are forward-looking and are
therefore subject to risks, assumptions and uncertainties that could cause
actual results to differ materially from those expressed or implied because they
relate to future events. These forward-looking statements include, but are not
limited to, statements relating to the Company’s expectations. Forward-looking
statements can be identified by the use of relevant terminology including the
words: ‘believes’, ‘estimates’, ‘anticipates’, ‘expects’, ‘intends’, ‘forecasts’,
‘plans’, ‘goal’, ‘target’, ‘aim’, ‘may’, ‘will’, ‘would’, ‘could’ or ‘should’ or, in each
case, their negative or other variations or comparable terminology and include
all matters that are not historical facts. They appear in a number of places
throughout this Annual Report and include statements regarding our intentions,
beliefs or current expectations and those of our Officers, Directors and
employees concerning, amongst other things, our results of operations,
financial condition, liquidity, prospects, growth, strategies and the businesses
we operate.
Other factors that could cause actual results to differ materially from those
estimated by the forward-looking statements include, but are not limited to:
– Global economic business conditions;
– Monetary and interest rate policies;
–
Foreign currency exchange rates;
– Equity and property prices;
–
– Changes to regulations, taxes;
– Changes to consumer saving and spending habits; and
– Our success in managing the above factors.
The impact of competition, inflation;
Consequently, our actual future financial condition, performance and results
could differ materially from the plans, goals and expectations set out in our
forward-looking statements. Accordingly, no assurance can be given that any
particular expectation will be met and readers are cautioned not to place
undue reliance on forward-looking statements which speak only at their
respective dates.
The Company undertakes no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or otherwise.
Designed and produced by Gather
www.gather.london
The paper used in this Report is derived
from sustainable sources
Savills plc
33 Margaret Street
London W1G 0JD
T: +44 (0)20 7499 8644
F: +44 (0)20 7495 3773
Registered in England
No. 2122174