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Report and
Accounts
2016
Contents
Strategic report
02 Savills at a glance
04 Our business explained
08 Key performance indicators
10 Chairman’s statement
14 Group Chief Executive’s review
22 Group Chief Financial Officer’s report
25 Risks and uncertainties facing the business
32 Corporate responsibility
Governance
40 Corporate Governance report
40 Chairman’s introduction
41 Leadership
44 Board of Directors
46 Group Executive Board
47 Effectiveness
51 Accountability
60 Directors’ remuneration report
81 Directors’ report
84 Directors’ responsibilities
Financial statements
86 Independent auditors’ report to the members of Savills plc
93 Consolidated income statement
94 Consolidated statement of comprehensive income
95 Consolidated and Company statements of financial position
96 Consolidated statement of changes in equity
97 Company statement of changes in equity
98 Consolidated and Company statements of cash flow
99 Notes to the financial statements
155 Shareholder information
P.10
Chairman’s statement
Group Chief Executive's review
P.14
P.22
Group Chief Financial Officer’s report
Strategic report
Governance
Financial statements
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
£1,445.9m
(2015: £1,283.5m)
Breadth of service
(% non-transactional)
54%
(2015: 52%)
Underlying profit*
£135.8m
(2015: £121.4m)
Underlying profit
margin
9.4%
(2015: 9.5%)
Underlying earnings
per share
72.5p
(2015: 63.2p)
Property under management
(sq ft)
1.8bn
(2015: 2.0bn)
Assets under
management
€16.2bn
(2015: €17.1bn)
Geographical spread
(% non-UK)
60%
(2015: 56%)
Operating cash
generation
£93.3m
(2015: £122.0m)
Statutory profit
after tax
£67.7m
(2015: £64.9m)
* Underlying profit is calculated by adjusting reported pre-tax profit for profit/loss on
disposals, share-based payment adjustment, impairments, amortisation of acquired
intangible assets (excluding software), restructuring costs and acquisition-related costs
(refer to note 2.2 to the financial statements for further explanation).
Savills plc
Report and Accounts 2016
01
Savills at a glance
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 32,000 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.
UK
Revenue
£578.3m
(2015: £560.1m)
Offices
130
(2015: 129)
Employees
5,136
(2015: 4,588)
See pages 20–21
North America
Revenue
£211.1m
(2015: £192.5m)
Offices
30
(2015: 27)
Employees
676
(2015: 580)
Continental Europe
Revenue
£170.6m
(2015: £129.8m)
Offices
35
(2015: 34)
Employees
1,103
(2015: 931)
See pages 06–07
See pages 12–13
02
Savills plc Report and Accounts 2016 Our services
Transaction Advisory
The Transaction Advisory
business stream comprises
commercial, residential,
leisure and agricultural
leasing, tenant representation
and investment advice on
purchases and sales.
See page 16
Consultancy
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 18
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 18
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 19
Asia Pacific
Revenue
£485.9m
(2015: £401.1m)
Offices
60
(2015: 59)
Employees
25,446
(2015: 24,597)
See pages 30–31
03
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Our business explained
Our business model 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.
Our resources
and relationships
Outstanding people
Outstanding people
Local knowledge
Entrepreneurial approach
Long-term client relationships
Long-term client 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 40 to 59.
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 advisor 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 32,000 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.
04
Client care programmes
High quality servicer
Intellectual property
Intellectual property
Market intelligence
Brand and reputation
Financial
Prudent capital structure
Strong cash generation
Savills plc Report and Accounts 2016 Our business
model
Our value
creation
Revenue by business
54%
46%
Cyclical
high-margin
businesses
Commercial
Transactions
35%
Residential
Transactions
11%
Defensive,
scale
business
Property
Management
33%
Consultancy
16%
Investment
Management
5%
Our values
Our values
Underpinned by
Pride in everything we do
Take an entrepreneurial approach
to business
Help our people fulfil their
true potential
Always act with integrity
Governance
Governance
Board oversight
High standards
of governance
Disciplined
Disciplined
approach
approach
to risk
to risk
Risk mitigation to limit exposure
to any one market or economy
Business and geography
diversification
Shareholders
Dividends
29.0p
Underlying
profit
Underlying
earnings
per share
72.5p
£135.8m
People
Training and development
Restructured training programme
Employee engagement
Achieved One Star status
Diversity
UK Diversity Group
Clients
High quality service
Client Advocates
Client care
Client relationship
management team
Community
Reducing environmental
impact
Carbon emission reduction
Community investment
Community engagement
programmes
05
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Institutional investors and REITS invested selectively. They
backed away slightly from some, but not all, of the top gateway
markets. Office sales in Manhattan declined from $28.5 billion
to $22.8 billion, but Los Angeles captured some of the shifting
geographical focus – rising from $6.9 billion to $11.4 billion.
Secondary markets with integral links to tech and strong
long-term demographic trends were clear winners in 2016.
These included Austin, Texas (up by 14.2% with $2.5 billion)
and Charlotte, North Carolina (+64.6%, $1.7 billion).
Additionally, other investors priced out of the core gateway
markets invested in alternative locations just outside San
Francisco (East Bay +49.5%, $2.6 billion) or Manhattan
(Northern New Jersey +32.8%, $3.7 billion).
Sp tlight on
North
America
US economy and real estate
provides welcome stability
in 2016.
The core drivers of demand for office space – payroll growth
and business investment – continued to register positive trends
in most markets during 2016. The private sector has increased
employment for 76 consecutive months. New office
development is rising, but remains below historical norms.
In turn, the expansion cycle for the US office sector (as well
as the industrial and housing sectors) continued on its upward
trend over the last 12 months. We expect that 2017 will bring
another year of steady demand in most office markets.
Leasing activity cooled from its intense pace in some of the
most active markets, such as Dallas/Fort Worth and Atlanta,
but is not expected to reduce significantly in 2017. Demand for
office space in most tech markets (Silicon Valley, Boston and
Seattle) and low-cost markets (Dallas/Fort Worth and Tampa)
remained steady but returned to a pace that is on par with
long-term trends. Atlanta and Chicago’s CBD registered
sustained leasing in 2014 and 2015, but slowed in 2016, in part
due to price resistance among some tenants. Leasing is
sporadic in markets that still depend primarily on traditional
space users such as Midtown Manhattan and Washington, DC.
Several markets – Boston, Los Angeles, the Bay Area in
Northern California and Seattle – ended the year with a
concentration of leasing activity.
06
Savills plc
Report and Accounts 2016
Strategic report
Governance
Financial statements
Case study
ABN AMRO Chicago
acquisition
ABN AMRO, an Amsterdam-
based bank, secured a
45,000 sq ft acquisition in
Chicago. Savills Amsterdam
engaged with the bank’s HQ
real estate team to revitalise
the opportunity and Savills
Studley Chicago completed
the acquisition.
Savills plc
Report and Accounts 2016
07
Key performance indicators
Financial KPIs
Revenue
(£m)
2016
2015
2014
2013
2012
Cash generation
(£m)
1,445.9
1,283.5
1,078.2
904.8
806.4
2016
2015
2014
2013
2012
93.3
96.1
122.0
70.8
59.7
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 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.
Non-financial KPIs
Property under management
(million sq ft)
Breadth of service offering
(% non-transactional income)
2016
2015
2014
2013
2012
1,757.8
2,043.1
2,090
2,031.7
1,754.5
2016
2015
2014
2013
2012
54.3
51.9
60.4
61.6
61.8
The measure
Total sq ft property under management.
The measure
Revenue by type of business.
The target
To progressively increase the global square
footage under management.
The target
To maintain a healthy balance of
transactional and less or non-transactional
business revenues.
08
Savills plc Report and Accounts 2016
Underlying profit
(£m)
Underlying profit margin
Underlying earnings per share
(p)
2016
2015
2014
2013
2012
135.8
121.4
100.5
75.2
58.6
2016
2015
2014
2013
2012
9.4
9.5
9.3
8.3
7.3
2016
2015
2014
2013
2012
72.5
63.2
55.2
43.1
33.9
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
Profitability after all operating costs but
before the impact of exceptional costs and
taxation.
The target
To deliver growth in operating margin by
improving the efficiency with which services
are offered.
The measure
Earnings per share (‘EPS’) is the measure
of profit generation. Underlying EPS is
calculated by dividing underlying profit by
the weighted average number of shares
in issue.
The target
To deliver growth in underlying EPS to
enhance shareholder value.
Geographical spread
(% non-UK)
Assets under management
(€bn)
2016
2015
2014
2013
2012
60.0
56.3
53.5
48.9
51.0
2016
2015
2014
2013
2012
7.2
5.1
4.4
16.2
17.1
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.
09
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Chairman’s statement
Market share growth in key markets
and the resilience afforded by the
breadth of our operations, resulted in
record revenue and profits in 2016.
“2016 again demonstrated the
importance of Savills strengths in the
prime markets of many of the world’s
key cities where we increased our
share of market activity.”
Nicholas Ferguson CBE Chairman
Total dividend 2016
29.0p
£135.8m
Underlying profit 2016
10
Savills plc Report and Accounts 2016 Results
The Group’s underlying profit for the year
increased by 12% to £135.8m (2015:
£121.4m), on revenue which improved by
13% to £1,445.9m (2015: £1,283.5m). The
Group’s statutory profit before tax
increased by 1% to £99.8m (2015: £98.6m).
Overview
2016 was a year of geopolitical changes
in many parts of the world. In addition,
while investors globally have continued to
increase their allocation to real estate in the
search for secure income in a low interest
rate environment, they have experienced a
number of headwinds including material
rises in property taxes in a number of
markets. Under these circumstances, it was
understandable that Savills saw an increase
in the volatility of transactional activity in
many of our markets. Furthermore,
sterling’s weakness against most major
currencies boosted overseas investor
interest in the UK. 2016 again demonstrated
the importance of Savills strengths in the
prime markets of many of the world’s key
cities, where we increased our share of
market activity. Savills Investment
Management substantially increased
revenue and profits both organically and
through the performance of the former SEB
Asset Management AG (‘SEB’), which was
acquired in August 2015. Finally, currency
movements had a meaningfully positive
effect on the Group, contributing
approximately £9.0m in underlying profit
on translation.
Our Transaction Advisory revenue grew by
7%, our Consultancy business revenue by
4% and our Property Management revenue
by 21%, including the full year effect of the
2015 acquisition of Smiths Gore and the
2016 acquisition of GBR Phoenix Beard,
both in the UK. Against the uncertain
backdrop to world markets Savills
commercial transaction business grew
revenue by over 8% with strong
performances in many markets including
significant growth in Continental Europe.
Our Residential businesses withstood
changeable conditions and the imposition
of tax increases in a number of the world’s
prime markets, with revenue growth of 3%.
Finally, Savills Investment Management
Assets Under Management (‘AUM’) reduced
to €16.2bn (2015: €17.1bn) as a result of the
distribution of sales proceeds to fund
holders in advance of the anticipated
liquidation of certain SEB mutual funds.
Savills Investment Management revenue
grew by over 60% year-on-year.
The Group’s underlying profit margin was
stable at 9.4% (2015: 9.5%) with the
increased weighting of Investment
Management and improved profitability in
UK Residential Transaction business and
Continental Europe largely offsetting a
reduction in margins in the US and in
Property Management, which both included
significant levels of expenditure on business
development.
Business development
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 2016, we continued to build our US
presence with a number of team hires and
the acquisition of a commercial brokerage
business in North Carolina. In Asia Pacific,
we made some significant hires in Australia
and Mainland China in particular. In
Continental Europe, we benefited from
uncertainties facing some of our peer
group to attract a number of seasoned
professionals and teams across our network.
In the UK, the acquisition of GBR Phoenix
Beard substantially increased our presence
in the Midlands and enhanced our property
management and transactional capabilities
there and in London. In addition, the
acquisition of Chainbow Limited, a London
based residential block management
company, further enhanced our ability to
serve the growing Private Rental Sector
(‘PRS’) market.
Technology has become a focal area in the
real estate industry over the last few years
and we constantly review emerging
opportunities to improve or grow through its
application in our business. Having
maintained a watching brief for some time,
in June 2016, we made our first external
investment in this arena with the acquisition
of a minority stake in YOPA, a digital hybrid
residential estate agency focused on the
mass market in the UK.
Board
On 11 May, I became Chairman on the
retirement of Peter Smith, and Tim
Freshwater became Senior Independent
Director on the retirement of Martin Angle.
Under their watch Savills business showed
commendable growth and I would like to
thank both Peter and Martin for their
enormous contributions to the business.
Dividends
An initial interim dividend of 4.4p per share
(2015: 4.0p) amounting to £5.9m was paid
on 5 October 2016, and a final ordinary
dividend of 10.1p (2015: 8.0p) is
recommended, making the ordinary
dividend 14.5p for the year (2015: 12.0p).
This increase reflects the continued growth
of Savills less transactional profits, which
underpin the ordinary dividend. In addition, a
supplemental interim dividend of 14.5p
(2015: 14.0p) was 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 29.0p per share, representing an
increase of 12% on the 2015 aggregate
dividend of 26.0p. The final ordinary dividend
of 10.1p per ordinary share will, subject to
shareholders’ approval at the Annual
General Meeting on 9 May 2017, be paid
alongside the supplemental interim dividend
of 14.5p per share on 15 May 2017 to
shareholders on the register at 18 April 2017.
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 2016.
Outlook
We have made a solid start to 2017 with a
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 expect some
improvement in the US as corporate
occupiers become acclimatised to the new
administration, but we retain a more
cautious view in relation to the effect of the
Brexit negotiation period, particularly on
sentiment in the UK residential and
commercial markets. However, the strength
of our international operations and our
strong balance sheet, position us well to
take advantage of variable market
conditions, and the Board’s expectations
for the year as a whole remain unchanged.
Nicholas Ferguson CBE
Chairman
11
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Sp tlight on
Continental
Europe
Investor appetite for European real
estate remains high.
According to the first estimates by the European Commission,
real GDP grew by 1.7% year-on-year, unemployment dropped to
8.5% and private consumption remained the engine of recovery.
As a result, the property market also performed well; office
take-up increased significantly (year-on-year) in the major
European cities (Paris, Amsterdam, Brussels, Frankfurt, Milan,
Stockholm) and there was high demand and low supply of high
quality space across all sectors (average office vacancy rate
dropped further to 8.1%).
Demand for prime retail units in the best high streets and
shopping centres was also high, as effective omnichannel retail
strategies demanded investment in both online and physical
stores. At the same time, the expansion of ecommerce was
fuelling demand for modern logistics facilities close to major
urban centres and transport nodes across Europe.
Investment in the European property markets dropped by 15%
to €207bn but was still the third highest on record. This was
mainly a symptom of high competition for a limited supply of
prime product, which left some investor requirements unsatisfied.
Overall, offices maintained their position as the preferred asset
type and increased their share from 42.1% in 2015 to 45.4% last
year. On the other hand, the share of retail dropped slightly from
25.7% to 23.1%, mainly due to less availability of product on the
market. The share of industrial investments increased from 8.7%
in 2015 to 10.8% in 2016.
In search of less competitive, higher-yielding, market segments,
some investors were shifting their attention to alternative sectors;
hotels, student housing, senior housing, apartments and other
more niche segments which represented a growing share in
investment activity.
The peripheral and Nordic markets experienced stronger yield
compression as they were impacted somewhat earlier by the
investment cycle. Nevertheless, across the markets, the spread
with the risk-free rate remained historically high, due to record low
interest rates.
12
Savills plc
Report and Accounts 2016
Strategic report
Governance
Financial statements
Case study
France
Savills advised insurance company
Groupama on the consolidation of
several business units in Paris into
one ‘campus’ comprising 46,000
sq m in Nanterre Prefecture, Paris.
Case study
Netherlands
Savills advised Deka on a
2,167 sq m lease to Tribes in
Amsterdam's Adam Smith
building and Savills advised
Union Investment on the leasing
of 2,400 sq m to Tribes in the SOM
building in Amsterdam South Axis.
Savills plc
Report and Accounts 2016
13
Group Chief Executive’s review
“The strength of our key
commercial market positions,
and the resilience of our
residential businesses drove
an improved performance for
Savills in 2016.”
Jeremy Helsby Group Chief Executive
Our strategy
Our strategy is to deliver value as a leading advisor 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.
2.
3.
4.
5.
Business
diversification
Geographical
diversification
Maintain financial
strength
Strength in both
prime residential
and commercial
property
Commitment to
clients – we aim to
deliver the highest
standards of client
service through
motivated and high
calibre people
14
Savills plc Report and Accounts 2016 Key operating highlights
Profit growth in Continental Europe and
Investment Management, the resilience
of our UK business and sustained
development of our business around the
world together with our core strengths in
Asia and the US, enabled Savills to deliver
record results in 2016.
• Transaction Advisory revenues up 7%
driven by market share gains in Asia
Pacific, particularly China, and strong
growth in Continental European markets
• 52% growth in profits in Continental
Europe following improved market
conditions, improved Investment
Management performance and the
benefit of business development activity
in recent years
• Further consistent growth from less
transactional services – Property
Management revenue up 21%;
Consultancy revenue up 4%
• Savills Investment Management
revenues and profits up over 60% in
first full year of ownership of the former
SEB Asset Management business
• Continued acquisitions of
complementary businesses and teams
across all regions to enhance service
offering to clients
As anticipated, we experienced quieter
market conditions in certain markets
worldwide including the UK, Japan and a
number of US cities, but saw improved
trading in Continental Europe, Investment
Management in both Europe and Asia,
and a number of markets in the Asia
Pacific region.
Savills geographic and business diversity were key to achieving the year’s result. Our
performance analysed by region was as follows:
UK
Asia Pacific
Continental Europe
North America
Unallocated cost
Total
Revenue £m
Underlying profit/(loss) £m
2016
2015 % growth
2016
2015 % growth
578.3
485.9
170.6
211.1
n/a
560.1
401.1
129.8
192.5
n/a
1,445.9 1,283.5
3
21
31
10
n/a
13
72.1
42.6
13.5
18.9
(11.3)
71.7
34.2
8.9
18.8
(12.2)
135.8
121.4
1
25
52
1
7
12
On a constant currency* basis, Group revenue grew by 6% to £1,355.3m and underlying
profit grew by 4% to £126.8m. Our Asia Pacific business represented 34% of Group
revenue (2015: 31%) and our overseas businesses as a whole represented 60% of Group
revenue (2015: 56%). Our performance by service line is set out below:
Revenue £m
Underlying profit/(loss) £m
2016
2015 % growth
2016
2015 % growth
Transaction Advisory
660.8
Property and Facilities Management 472.8
Consultancy
240.3
Investment Management
72.0
Unallocated cost
n/a
618.0
390.7
230.3
44.5
n/a
Total
1,445.9 1,283.5
7
21
4
62
n/a
13
80.0
23.6
25.9
17.6
(11.3)
76.9
21.1
24.7
10.9
(12.2)
135.8
121.4
4
12
5
61
7
12
Overall, our Commercial and Residential Transaction Advisory business revenues together
represented 46% of Group revenue (2015: 48%). Of this, the Residential Transaction
Advisory business represented 11% of Group revenue (2015: 12%). Our Property and
Facilities Management businesses continued to perform well, growing overall revenue by
21% and represented 33% of Group revenue (2015: 30%). Our Consultancy businesses
represented 16% of revenue (2015: 18%) where improved international performances were
counter-balanced by a reduction, in particular, in development advisory work in the UK.
The Investment Management business, in the first full year of our ownership of SEB Asset
Management, achieved substantial growth in revenue and profit, to represent 5% of
revenue (2015: 3.5%).
People
I am delighted that the UK business won the Residential Adviser of the Year award. Savills
was named the Property Industry Superbrand of the Year for the ninth consecutive year
and we were awarded the Times Graduate Employer of Choice in the property industry for
the tenth year running and secured the only property company ranking in the Times Top
100 Graduate Employers list in the UK. In Asia, we won a number of accolades including
Best Real Estate Agency China. These awards are a testament to the strength of our
people and I thank them for their continued commitment, loyalty and hard work.
See page 33
* Revenue and underlying profit for the year are translated at the prior year exchange rates to provide a constant
currency comparison.
15
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Group Chief Executive’s review 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:
Transaction Advisory
Revenue
(£m)
2016
2015
2014
2013
2012
358.2
310.0
660.8
618.0
YOY %
change
+7%
494.6
2016 clearly demonstrated both the
importance of having a breadth of
transactional business around the
world, and having resilience in the
UK derived from our strong market
position in all main real estate
transactional markets/sectors.
This enabled us largely to withstand the
effect of the significant reductions in UK
market activity associated with Brexit and
derive our growth from the performance of
our international transaction teams across
the rest of the globe. Of particular note was
the resurgence in our Continental European
business and a very strong performance in
China. The Savills Residential business also
proved highly resilient in changeable markets.
This, together with the effect of sterling
weakness, resulted in the increase in revenue
and profit delivered by our Transaction
Advisory business as a whole. Revenue grew
by 7% to £660.8m (2015: £618.0m) and
underlying profit increased by 4% to £80.0m
(2015: £76.9m).
The effect of lower commercial transactional
volumes in the UK market and business
development costs in the US slightly
reduced the underlying profit margin of the
Transaction Advisory business as a whole to
12.1% (2015: 12.4%).
UK Residential
Revenue in our UK Residential business
declined by 3% to £124.4m (2015: £127.9m).
In the second hand estate agency business,
a very strong first quarter, as buyers rushed
to beat the increased stamp duty on second
homes, was followed by low trading volumes
in advance of the Brexit Referendum at the
end of June. Then a relatively quiet but
encouraging summer gave rise to a strong
autumn selling season albeit with a slowing of
transactions in December. Our strength in the
top end of the market, benefiting from the
weaker sterling and share gains in the 'Core'
London market (prices in the range £0.75m
– £1.5m) helped to protect the volume of our
exchanges in London, which declined by 5%
against larger declines in the volume of
market activity overall. Outside London, we
experienced a 7% increase in exchanges
year-on-year. Our average selling price in
London increased slightly to £2.9m (2015:
Underlying profit
(£m)
2016
2015
2014
2013
2012
47.2
31.8
80.0
76.9
67.8
YOY %
change
+4%
Contribution to Group revenue
(%)
54%
46%
■ Transaction Advisory
■ Rest of Group
16
£2.8m) primarily as a result of the weighting
effect of an increase in sales of properties
over £20m year-on-year. Meanwhile, outside
London our average selling price remained
unchanged at £1.1m.
Revenue from sales of new developments
continued to increase during the year, ending
up 7% on 2015, buoyed by continued strong
interest in high quality developments in both
the London and Country markets and good
levels of stock availability. In our other
residential transaction businesses, there was
a reduction in traded volumes of UK farms
and estates as the potential impact of Brexit
weighed on expectations of agricultural
subsidies. In addition, our Institutional
residential transactions team saw a 30%
decrease in activity compared with the
record 2015 performance, largely due to lack
of suitable sites for PRS investors.
During the year we opened new residential
offices in Maida Vale and Primrose Hill,
focusing on the core London market.
Overall, the UK Residential Transaction
Advisory business showed significant
resilience, recording a 2% decrease in
underlying profits to £17.5m (2015: £17.8m).
Asia Pacific Residential
The Residential Transaction Advisory
business in Asia is focused primarily on new
development, secondary sales and leasing of
prime properties in selected markets. It
excludes mixed use developments, which are
accounted for within the Commercial
Transaction Advisory business. Overall, the
Asia Pacific Residential business recorded a
25% increase in revenue to £38.1m (2015:
£30.5m), up 13% in constant currency. This
growth was principally driven by the
performance of our operations in Mainland
China, Vietnam and Hong Kong which,
together with improved profits in Singapore,
outweighed flat activity in Australia and
Taiwan and continued weakness in the
mid-market segment in Singapore. In
Australia, the effect of some non-recurring
reorganisation costs took the business there
into loss for 2016. The net effect of all these
factors resulted in a 6% increase in
underlying profit to £3.3m (2015: £3.1m), in
line with prior year in constant currency.
Savills plc Report and Accounts 2016
Transaction Advisory
Asia Pacific Commercial
The Asia Pacific Commercial business
performed strongly in 2016, driven by
improved revenue and profits in Mainland
China, Australia and Singapore, which largely
offset the impact of market volume related
declines in Korea and Japan. In Mainland
China the significant recruitment activity of
our Investment sales team over the previous
18 months resulted in substantial revenue
growth of over 50% from transactions
concluded mainly in Southern China. In
Australia, the twin effects of historic
recruitment and restructuring under new
leadership resulted in a significant increase in
transactional revenue through increased
market share, particularly in Sydney, despite
overall market trading volumes declining by
over 15% year-on-year. In Singapore, the
recruitment of a leading tenant representation
team in 2015 and improved investment
activity, helped to double our commercial
transaction revenues year-on-year. Our
investment market share in Hong Kong
remained strong at over 50%. In Japan, our
transactional revenues declined by 12% (29%
in constant currency) against a backdrop of a
37% fall in overall market volumes.
Reported revenue rose by 16% to £129.7m
(2015: £111.9m) which represented a 4%
increase in constant currency.
The positive effect of sterling weakness offset
business development and service expansion
costs in the region, leading the Asia Pacific
Commercial Transaction Advisory business
to record a 26% increase in underlying profit
to £20.6m (2015: £16.3m). This represented a
12% increase in constant currency.
UK Commercial
Revenue from UK commercial transactions
decreased 13% to £86.0m (2015: £98.8m),
reflecting a much stronger performance in
the second half of the year. Overall, this was
a resilient performance in the context of a
significant reduction in the volume of
investment transactions in the UK market,
which declined 28% year-on-year. The
weakness of sterling after the Brexit
Referendum began to catalyse international
investor interest over the summer, although
there being little distress among owners,
there was a significant mismatch between
demand and supply of stock. Since then, a
large majority of the stock traded, particularly
in central London has been acquired by
overseas investors, particularly from Asia
Pacific and the Middle East. These dynamics
strongly favoured Savills, with our direct
representation in both those markets and
across the regional markets of the UK,
consequently we picked up significant
market share to lead the ranking of UK
commercial acquisition advisers for 2016. In
addition, the leasing markets were generally
characterised by lower levels of occupier
demand as corporates took stock of the
effect of the Brexit Referendum, the potential
impacts of the Brexit negotiation, limited
supply and rising rents.
The central London leasing market saw a
21% reduction in take-up of City offices
year-on-year as occupiers elected to extend
current leases pending greater certainty. The
vacancy rate in the City rose somewhat to
5.7% against a backdrop of average rental
increases of between 8% and 11% on the
year. Take-up in the West End of London was
down 9% on the total for 2015 at 3.9m sq ft,
with new supply taking the vacancy rate up
to 3.7% from below 3% a year earlier and
average prime rents increased by circa 3%.
With less exposure to financial services
tenants, our regional office businesses saw
more resilient levels of take-up over the year
with overall take-up circa 8% lower than
2015. The retail and logistics sectors, of
which the latter showed record take-up in
2016, provided greater resilience to our
regional transactional businesses during
the year.
Against the backdrop of substantially
declining market volumes the strength of
Savills position in the domestic market and
our international reach ensured that the
underlying profit of the UK Commercial
Transaction Advisory business only
decreased by 13% to £14.7m (2015: £16.9m)
with the margin stable at 17.1% (2015: 17.1%).
North America
During the year, we continued to build on our
North American tenant representation
platform, Savills Studley, through both
recruitment and bolt-on acquisition. Our
North American revenue grew by 10% to
£211.1m (2015: £192.5m). In constant
currency this equated to a year-on-year
decline of 3% as corporate occupiers
tended to hold-off substantial or complex
space decisions in advance of the US
Presidential Election. The pipeline of activity
for 2017 shows a number of sizeable
transactions deferred from 2016 which
are expected to close in the current year.
We continued to grow our occupier
services platform with the North American
business contributing significantly to
our global occupier services business,
referring significant client projects to
many parts of the Savills Asia Pacific,
UK and European network.
In addition to occupier services, a number
of cities such as New York, Chicago and
Washington enjoyed strong performances
during the year and offset the continued
reduction in oil industry-related activity in
our Texas offices.
Our North American business posted a 1%
increase in underlying profit for the year to
£18.9m (2015: £18.8m), an 11% decline in
constant currency, primarily due to
recruitment and business development
costs incurred during the year.
Continental Europe
The Continental European Commercial
Transaction Advisory business saw
revenue increase by 27% to £71.5m (2015:
£56.4m). In constant currency the increase
was 14%. As the strength of transaction
markets in Ireland over the last three years
dissipated, Germany, France and the
Netherlands all saw substantial increases
in revenue from both investment and
leasing/tenant representation. Newer
teams in Italy and Poland also contributed
significant performances.
During the year we continued to build on
our Continental European platform with
recruitment into investment, leasing and
tenant representation services in Italy, the
Netherlands, Poland and Belgium.
Despite these additional costs, the
Continental European Transaction Advisory
business recorded an increase in
underlying profit of 25% to £5.0m (2015:
£4.0m), up 3% in constant currency.
17
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Group Chief Executive’s review continued
Segmental reviews
Property and Facilities Management
Revenue
(£m)
2016
2015
2014
2013
2012
472.8
YOY %
change
390.7
+21%
338.6
329.0
300.6
Underlying profit
(£m)
2016
2015
2014
2013
2012
23.6
21.1
YOY %
change
+12%
18.6
17.6
17.9
Contribution to Group revenue
(%)
33%
67%
■ Property and Facilities
Management
■ Rest of Group
Our Property and Facilities
Management businesses continued
to perform well, growing revenue by
21% (13% in constant currency) to
£472.8m (2015: £390.7m). Underlying
profit increased by 12% to £23.6m
(2015: £21.1m), up 5% in constant
currency.
Asia Pacific
The Asia Pacific region grew revenue by
20% (8% in constant currency) to
£273.8m (2015: £227.7m). The Property
and Facilities Management business is a
significant strength in the region,
representing 57% of Savills Asia Pacific
revenue and complementing our
Transaction Advisory businesses in the
region. The total square footage under
management in the region was down
20% to approximately 1.4bn sq ft (2015:
18
approximately 1.8bn sq ft), primarily due to
developers taking the management of
stalled development sites in-house.
Revenue growth in Hong Kong, Japan
and Korea offset marginal declines in
Australia, Singapore, Thailand and
Vietnam. In Hong Kong, which
represented approximately 55% of Asia
Pacific Property and Facilities
Management revenue, the business grew
revenue by 8% in local currency. Overall,
the underlying profit of the Asia Pacific
Property Management business grew
15% (4% in constant currency) to £14.5m
(2015: £12.6m).
UK
Overall, our UK Property Management
teams, comprising Commercial,
Residential and Rural, grew revenue by
19% to £158.9m (9% excluding
acquisitions) (2015: £133.9m) as a result of
the full year effect of the acquisition of
Smiths Gore in May 2015 and the
acquisition of GBR Phoenix Beard in
August 2016, a leading firm in the
Midlands. In addition, the Property
Management business won some
significant new contracts across the
country. The Residential management
business and the UK Commercial
business together grew area under
management by 32% to approximately
289m sq ft (2015: 218m sq ft). Our
Residential Property Management
businesses, including Lettings, increased
revenue by 6%. The effect of expansion in
our Rural and Energy Projects business
and the costs of integrating the two
acquisitions temporarily affected
underlying profit, which grew 4% to
£11.3m (2015: £10.9m).
Continental Europe
In Continental Europe, revenue grew by
38% (23% in constant currency) to £40.1m
(2015: £29.1m) with growth particularly in
France, the Netherlands, Spain and
Sweden. By the year end the total area
under management had increased by
16% to 55.2m sq ft. Improvements in
profitability in most locations were largely
offset by expansion costs of Project
Management in France and the
Netherlands and business development
costs in France and Poland. The net
effect of these factors was a marginal
improvement in the underlying loss for
the year to £2.2m (2015: loss £2.4m).
Consultancy
Revenue
(£m)
2016
2015
2014
2013
2012
240.3
230.3
217.0
191.6
172.2
YOY %
change
+4%
Underlying profit
(£m)
2016
2015
2014
2013
2012
25.9
24.7
23.4
YOY %
change
+5%
17.6
14.0
Contribution to Group revenue
(%)
16%
84%
■ Consultancy
■ Rest of Group
Global Consultancy revenue
increased by 4% to £240.3m (2015:
£230.3m), 2% in constant currency
and underlying profit grew by 5%
to £25.9m (2015: £24.7m), 3% in
constant currency.
UK
Consultancy revenue in the UK was
broadly flat at £183.1m (2015: £182.8m).
Strong performances in Hospitality and
Leisure, Building and Project Consultancy,
Planning and Professional and Financial
Services were offset by reduced activity in
Development, Rural and Energy
Consultancy, each of which were affected
by the uncertainty before and after the
Brexit Referendum. Overall, underlying
profit from the UK Consultancy business
increased by 2% to £22.2m (2015: £21.8m).
Savills plc Report and Accounts 2016
Consultancy
Investment Management
Asia Pacific
Revenue in the Asia Pacific Consultancy
business increased by 22% to £37.9m
(2015: £31.0m), 11% in constant currency.
Singapore and Australia both grew
valuation consultancy revenue significantly
as a result of team recruitment in late 2015,
with Vietnam, Korea and Taiwan
contributing further growth. In Mainland
China and Hong Kong, consultancy
revenues were stable year-on-year.
Underlying profit increased by 9% to £2.4m
(2015: £2.2m) as the cost of recruitment
increased and additional professional
indemnity costs were incurred in Australia.
Continental Europe
Our Continental European Consultancy
business, which principally comprises
valuation and underwriting advisory
services, saw revenue increase by 17%
(5% in constant currency) to £19.3m (2015:
£16.5m). There were stronger performances
in Germany, France, Spain, Poland and the
Netherlands in particular. Profitability was
improved in all locations as the effect of
uncovered recruitment costs from last year
diminished. This led to an increase in
underlying profit for the year of 86% (46% in
constant currency) to £1.3m (2015: £0.7m).
2016 was a record year for Savills
Investment Management which increased
revenue by 62% (51% in constant currency)
to £72.0m (2015: £44.5m). Assets Under
Management (‘AUM’) decreased to
€16.2bn (2015: €17.1bn), as the effect of
liquidation distributions to unit holders in
the former SEB German Open Ended
Funds outweighed the €1.7bn of new
capital raised in the year. During the year,
transactions of approximately €5.1bn were
executed on behalf of fund investors,
equally divided between acquisitions and
disposals. The SEB Asset Management
business, which was acquired in August
2015, was renamed Savills Fund
Management during the year and
substantially integrated with our existing
business, but largely remained focused on
the orderly dissolution of four German
Open Ended Funds, which were in
regulatory controlled wind-down at the
time of the acquisition. These funds
achieved a larger volume of disposals of
European, Asian and US assets during the
year than we originally anticipated. This, in
turn, contributed to the 61% improvement
in underlying profit to £17.6m (2015:
£10.9m), 47% in constant currency.
Revenue
(£m)
2016
2015
2014
2013
2012
44.5
28.0
26.0
23.5
72.0
YOY %
change
+62%
Underlying profit
(£m)
10.9
17.6
YOY %
change
+61%
2016
2015
2014
2013
2012
4.4
2.9
3.6
Contribution to Group revenue
(%)
5%
95%
■ Investment Management
■ Rest of Group
Summary
Overall, Savills delivered another record
performance in 2016 despite the geopolitical
distractions in some of our markets.
We benefited from the scale of our
operations across the globe, which have
grown substantially over recent years,
as well as a highly resilient performance
in the UK.
Our less transactional businesses,
particularly Property Management and
Investment Management, grew strongly
while our global Transaction Advisory
business produced a solid performance
despite variable conditions in many markets.
We entered 2017 with a continuation of
global macro-economic concerns, rising
bond yields, uncertainty over the impact of
Brexit negotiations in the UK and Continental
Europe and a new administration in the US.
Savills is a strong and diverse global firm
and we continue to look at opportunities to
develop our business. We have started the
year well and our expectations for the full
year remain unchanged.
Jeremy Helsby
Group Chief Executive
19
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Sp tlight on
United
Kingdom
The UK commercial investment markets faltered briefly in the
third quarter of 2016 due to the referendum on the UK’s
membership of the EU.
However, the final quarter saw a sharp uptick in activity, with
particularly strong demand from non-domestic investors for
secure investments.
Central London remained the world’s most popular destination
for cross-border investors in 2016, with 30% of the purchasers
coming from the Asia Pacific region.
Occupational markets held up well across all commercial sectors
in 2016, with low levels of supply and development continuing to
push up rents in the office and industrial markets.
Market conditions remained challenging for the UK’s prime
residential markets in 2016. Transactions were given a boost in
the first three months of the year as investment and second
home buyers brought forward purchases in order to avoid the
additional 3% stamp duty land tax introduced on 1 April.
However, underlying costs of stamp duty and uncertainty
surrounding the decision to leave the EU weighed heavily on the
market over the summer. Market activity gradually improved over
the course of the Autumn, in part because of the weakness of
sterling but primarily because sellers began to adjust their sale
expectations to reflect these factors.
Over the course of the year, prices in the prime London markets
fell by an average of 5%, though beyond the capital they fared
much better, showing low single digit price growth.
By contrast, mainstream house prices showed a stronger
performance. Together with ongoing government support, this
helped to support the wider residential development markets.
20
Savills plc
Report and Accounts 2016
Case study
30 Crown Place, EC2
Savills acquired 30 Crown Place,
EC2, home of Pinsent Masons LLP,
on behalf of Beijing Capital
Development Holdings for
£204 million (£1,031 per sq ft) from
Samsung SRA. The acquisition
provided another example of the
strong appetite, particularly from
overseas investors, for high quality
City of London office buildings
since the UK’s vote to leave the EU.
Strategic report
Governance
Financial statements
Case study
St James's Park, SW1
Client: MRB Residential Holdings Limited
A Grade II listed development of eight apartments and
one townhouse comprising 38,120 sq ft (3,542 sq m).
A landmark development situated directly opposite
Buckingham Palace, The Buckingham enjoys a centrality
of location that few others possess – alongside London’s
most distinguished address. The apartments feature interior
design by some of the design industry’s most celebrated
names including Rose Uniacke, Veere Greeney and
David Collins Studio.
Savills plc
Report and Accounts 2016
21
Group Chief Financial Officer’s report
Financial review
“ Strong revenue and profit growth
led to the Group’s robust £187.8m
net cash position at year end and
supports a 12% increase in the
annual dividend.”
Simon Shaw Group Chief Financial Officer
22
Financial highlights
Group revenue up 13% to £1,445.9m
(£1,355.3m in constant currency, 2015: £1,283.5m)
Underlying profit up 12% to £135.8m
(£126.8m in constant currency, 2015: £121.4m)
Group profit before tax up 1% to £99.8m
(2015: £98.6m)
Underlying profit margin stable at 9.4%
(2015: 9.5%)
Underlying basic EPS up 15% to 72.5p
(2015: 63.2p)
Total dividends for the year up 12% to
29.0p per share (2015: 26.0p)
Total ordinary dividend up 21% to 14.5p and
supplementary dividend up 3.6% to 14.5p
Savills plc Report and Accounts 2016 Underlying profit margin
Underlying profit margin was stable at 9.4%
(2015: 9.5%) with marginal reductions in the
UK and North America, the latter due
primarily to the effect of recruitment costs in
advance of the delivery of revenue. These
were largely offset by improvement in
Continental Europe and Asia Pacific.
Taxation
The tax charge for the year reduced to
£32.1m (2015: £33.7m) reflecting an
effective tax rate on reported profits of
32.2% (2015: 34.2%). The improvement on
the 2015 reported effective rate reflects a
prior year tax credit adjustment. In both
years, the Group's effective reported tax
rate is higher than the UK effective rate of
tax of 20.0% (2015: 20.25%), reflecting the
geographic mix of profits and 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 at 26.1%
(2015: 28.3%), was lower, primarily because
of the prior year tax credit adjustment.
Restructuring and acquisition-
related costs
During the year the Group recognised
a total of £34.5m in restructuring
and acquisition-related costs
(2015: £24.9m). These comprised an
aggregate restructuring charge of
£5.8m (2015: £1.6m), primarily in relation
to the integration of the Smiths Gore
and SEB acquisitions and acquisition-
related costs of £28.7m (2015: £23.3m).
These costs consist of £1.5m (2015:
£2.8m) of transaction-related costs
and £3.9m for payments in respect of
Savills Investment Management’s 2014
acquisition of Merchant Capital (Japan).
In addition, there was a £23.3m (2015:
£20.5m) charge for future consideration
payments which are contingent on the
continuity of recipients’ employment in
the future. This charge primarily relates
to the 2014 acquisition of Studley.
These charges have been excluded from
the calculation of underlying profit in line
with Group policy.
Earnings per share
As a result of the restructuring and
acquisition costs referred to above, basic
earnings per share increased 4% to 48.8p
(2015: 47.0p). Adjusted on a consistent basis
for restructuring, acquisition-related costs,
impairment charges, profits and losses on
disposals, certain share-based payment
adjustments and amortisation of acquired
intangible assets (excluding software),
underlying basic earnings per share
increased by 15% to 72.5p (2015: 63.2p).
Fully diluted earnings per share increased
by 3% to 47.7p (2015: 46.4p). The
underlying fully diluted earnings per share
increased by 14% to 71.0p (2015: 62.3p).
Cash resources, borrowings
and liquidity
Year end gross cash and cash equivalents
increased 23% to £223.6m (2015:
£182.4m). This principally reflected
improved profits during the period
and currency gains on cash balances
held in non-sterling currencies.
Gross borrowings at year end increased
to £35.8m (2015: £31.4m). These
principally include £34.0m drawn
under the Group’s multi-currency
revolving credit facility (‘RCF’).
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 to meet future
growth requirements where to remit it
would result in the Group suffering
withholding taxes.
The Group’s net inflow of cash is greater in
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 £93.3m (2015:
£122.0m). 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.
The Group has a RCF of £250m, with an
accordion facility of a further £50m, which
expires on 15 December 2020.
Capital and shareholders’ interests
During the year no (2015: 0.7m) new shares
were issued to participants under the
Performance Share Plan. 1.9m (2015: 1.9m)
new shares were issued in the second of
three instalments of deferred consideration
for the acquisition of Studley. 1.9m shares
remain to be issued on 30 May 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
2016 was 139.8m (2015: 137.9m).
Savills Pension Scheme
The funding level of the Savills Pension
Scheme, which is closed to future service-
based accrual, deteriorated during the year
as a result of a reduction in long-term
interest rates on the rate at which liabilities
are discounted. The plan deficit at the year
end amounted to £40.8m (2015: £15.8m).
Net assets
Net assets as at 31 December 2016 were
£407.0m (2015: £365.0m). This movement
reflected increased tangible assets,
receivables and cash balances derived from
the Group’s trading performance, the effect
of acquisitions and the impact of sterling
weakness against all major currencies.
Key performance indicators
(‘KPIs’)
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 pages 8
to 9. The Group continues to review the mix
of KPIs to ensure that these best measure
its performance against its strategic
objectives, in both financial and non-
financial areas.
23
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Group Chief Financial Officer’s report continued
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. In a period
when sterling weakened against all major
currencies, the net impact of foreign
exchange rate movements was material,
representing a £90.6m increase in revenue
(2015: £12.5m increase) and an increase of
£9.0m in underlying profit (2015: £1.3m
increase). Refer to Note 3.2 to the financial
statements for further information on foreign
exchange risk.
Simon Shaw
Group Chief Financial Officer
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. Refer to Note 3 to the financial
statements for further information on
financial risk management.
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.
24
Savills plc Report and Accounts 2016 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 and
evaluation 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.
plc BOARD
plc AUDIT COMMITTEE
GROUP EXECUTIVE BOARD
GROUP RISK COMMITTEE
EXECUTIVE COMMITTEES
GROUP RISK
HEADS OF GROUP
FUNCTIONS
HEADS OF OPERATING
COMPANIES
Key risks:
Key risks:
Heads of Group functions
identify the key risks and
develop mitigation actions
Heads of operating
companies create a register
of their top risks and
mitigation actions
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 & Assurance consolidates the
operating companies’ functional and Group risks to
compile the Group’s key risks
25
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Risks and uncertainties facing the business continued
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.
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.
1. Board
Responsibilities
• Approve the Group’s strategy
• Determine Group appetite for risk in achieving its strategic
Actions
• Review key risks and mitigation plans
• Review results of assurance activities
• Escalate key risks to Group management and Group Executive
objectives
or plc Boards
• 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 internal controls, including systems
to identify, assess, manage and monitor risks.
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
• Receive regular reports on Internal and External Audit and
Actions
• Regularly review operational, project, functional and strategic
other assurance activities
risks
• 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 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
• Approve Group Policies
• Monthly/quarterly finance and performance reviews
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
• 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.
Principal risks
The Directors have carried out a robust assessment of the principal
risks facing the Company – including 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 52 to 56.
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
26
Savills plc Report and Accounts 2016 Risk
1
Economic/country risks,
particularly the impact of a
global economic downturn
Change from 2015
Increase
Strategic objective:
Geographic diversification / Financial strength
Description
Mitigation
Global market conditions are currently volatile, with
economic uncertainty in some sectors and markets,
particularly the UK after Brexit. Group earnings and/
or our financial condition could be adversely affected
by these and other macro-economic 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.
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. The actual impacts of
Brexit are still unclear, but we are monitoring
developments closely.
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.
2
Achieving the right market
positioning in response to
the needs of our clients
Change from 2015
No change
Strategic objective:
Business diversification / Strength in Residential and
Commercial markets / Geographical diversification /
Commitment to clients
3
Recruitment and retention
of high-calibre staff
Change from 2015
No change
Strategic objective:
Financial strength / Commitment to clients
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.
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/
digital technology to support our client service
offering.
We recognise that the future success of
our business is dependent on attracting,
developing, motivating and retaining people
of the highest quality.
We continue to invest in the development of our
people and 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.
27
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Risks and uncertainties facing the business continued
Description
Mitigation
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.
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.
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.
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.
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.
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.
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.
Our data centres are accredited to international
information security standards.
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.
We operate in international markets that may present
business conduct-related risks involving, for
example, fraud, bribery or corruption.
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.
Risk
4
Reputational and brand risk
Change from 2015
No change
Strategic objective:
Strength in Residential and Commercial markets /
Commitment to clients
5
Legal risk
Change from 2015
No change
Strategic objective:
Financial strength / Commitment to clients
6
Failure or significant
interruption to our
IT systems causing
disruption to client service
Change from 2015
Increase
Strategic objective:
Financial strength / Commitment to clients
7
Business conduct
Change from 2015
No change
Strategic objective:
Business diversification / Geographical
diversification / Commitment to clients
28
Savills plc Report and Accounts 2016 Description
Mitigation
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.
The structuring and integration of acquisitions is
critical to realising the benefits sought. People,
systems and processes are key components
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.
We apply the Group acquisitions policy and
procedures and use professional advisers in the
due diligence process, and allocate responsibility
and accountability to individuals for integration.
Post-acquisition reporting keeps the Board aware
of progress against plan.
Risk
8
Changes in the
regulatory environment
Change from 2015
No change
Strategic objective:
Commitment to clients
9
Acquisition/integration risk
Change
NEW
Strategic objective:
Business diversification / Geographical
diversification / Strength in Residential and
Commercial markets / Financial strength
Viability Statement
As set out in last year’s Annual Report and Accounts, the UK Corporate Governance Code (the ‘Code’) requires the Company to issue a viability
statement stating whether the Board believes that the Group is able to continue to operate and meet its liabilities, taking into account its current
position and principal risks. In accordance with provision C2.2 of the Code, the Directors have assessed the viability of the Group over a
three-year period to 31 December 2019, taking account of the Group’s current position and the potential impact of the principal risks documented
in the Strategic Report on pages 2 to 39.
The Directors have concluded that the three-year period is appropriate for this assessment being consistent with the period covered by the
Group’s strategic plan and the inherent volatility of property markets. In making this viability statement the Directors have considered the
resilience of the Group, taking account of its current position and prospects, the Group’s strategic plan, the principal risks and uncertainties
facing the business and the Board’s risk appetite as detailed in the Strategic Report on pages 2 to 39. The strategy and associated principal risks
which underpin the Group’s three-year plan, are reviewed by the Directors at least annually.
Sensitivity analysis was undertaken on the three year plan, including financing projections, to flex the financial forecasts under a variety of
scenarios, which involve applying different assumptions to the underlying forecast both individually and in aggregate, including assessing the
potential impact of a severe economic downturn analogous to that experienced during the Global Financial Crisis in 2008/09. The results of this
sensitivity analysis showed that the Group would be able to withstand the impact of such scenarios over the period of the financial forecast.
Performance against the three year plan is monitored on an ongoing basis, including regular Board briefings provided by the Heads of the
Principal Businesses on the progress made by those businesses. These reviews consider both the market opportunity and the associated risks.
These risks are considered within the Board’s risk appetite framework. Based on the results of their analysis, the Directors confirm that 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 three-year period
ending 31 December 2019. 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.
29
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Sp tlight on
Asia
Pacific
China proved to be the most
active investment market in Asia in
2016, overtaking Japan for the first
time in a clear sign of the maturity
and depth which the Mainland
market has achieved. Intra-Asian
capital flows continued to account
for a greater share of capital
within the region in 2016, a trend
which we expect to see continuing
into 2017.
2016 Asia Pacific investment volumes fell 14% year-on-year.
Despite this, yields in core markets continued to compress and
we noted a rise in the volume of large-scale deals (above US$1
billion), particularly for development sites, as well as far higher
levels of cross-border activity across the region. China was the
most active market in the region in 2016 (overtaking Japan for
the first time) and the foremost destination of cross-border
capital in APAC.
Net flows of real estate capital are now firmly outbound from
Asia Pacific. During 2016 around US$57 billion left the region,
fully two-thirds of it heading for the Americas while the rest
went to EMEA. Mainland and Hong Kong capital accounted for
over half (US$29.4 billion) of the US$57 billion as Chinese firms
continued to source business opportunities overseas, looking
for the benefits of portfolio diversification and respite from a
weakening RMB.
Most active Asia Pacific markets 2016
Sales volume ($m)
Metro
Tokyo
Shanghai
Hong Kong
Seoul
Sydney
Singapore
Beijing
Melbourne
Brisbane
Osaka
Shenzhen
Nanjing
Mumbai
Fukuoka
Taipei
Chongqing
Perth
Chiba
Chengdu
Hangzhou
Nagoya
Auckland
Tianjin
Kawasaki
Adelaide
16,334
14,675
13,497
9,922
9,036
7,964
6,226
5,483
2,918
2,913
2,591
1,987
1,687
1,314
1,264
1,139
1,124
957
911
849
849
814
813
778
773
30
Savills plc
Report and Accounts 2016
Strategic report
Governance
Financial statements
Case study
Suntec City Tower One
Savills represents this large global
corporate as exclusive advisor in the
disposal of five floors at Suntec City Tower
One, which amounts to approx 55,000 sq ft
of office space at circa S$130 million. This
represents the largest transaction of
strata-titled office space in Suntec City
Office Towers and in Singapore.
World office Asian CBD grade A effective yield
change (%) Jun-16 to Dec-16
1.0
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Case study
Hong Kong –
One HarbourGate
A new Wheelock development
comprising two office towers and a
retail villa, was sold to two PRC firms
for HK$10.35 billion in a landmark
deal by Savills. Totalling 675,000 sq
ft, the flagship HQs for China Life
Insurance and Cheung Kei Group
now take pride of place on the Hung
Hom promenade.
Savills plc
Report and Accounts 2016
31
Corporate responsibility
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.
Our business philosophy
Pride in
Everything
We Do
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.
Take an
Entrepreneurial
Approach to
Business
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.
Help our People
Fulfil Their True
Potential
We
• Encourage an open and supportive culture in which every
individual is respected.
• Help our people to excel 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.
Always Act
With Integrity
We
• Behave responsibly.
• Act with honesty and respect for other people.
• Adhere to the highest standards of professional ethics.
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.
32
Key highlights in 2016
People
• We expanded our leadership
programme to our European and
Asia Pacific businesses.
• We launched the Savills Studley
Academy, a multi-year business
mentorship programme aimed at
harnessing the talent of the rising
stars in the US business.
Clients
• Maintained our long-term
partnerships with our clients
though delivering high quality
service.
Environment
• We continued to expand the
scope of our data collection for
our global greenhouse gas
emissions. We now report from
our UK, Europe, US, Australia,
New Zealand, Hong Kong, Japan,
Singapore and key Chinese
operations.
Community
• Retained our membership of
FTSE4Good, evidencing our
commitment to meeting globally
recognised corporate
responsibility standards.
Savills plc Report and Accounts 2016 Corporate responsibility at Savills
Overall responsibility for our CR programme
sits with the Group Chief Executive and the
Board. CR strategy is co-ordinated 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. Through a
localised approach and 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 localised approach 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.
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 advisor
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 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 whistleblowing procedure.
The Modern Slavery Act 2015 came into
force in the UK in October 2015. We are
publishing a statement required under the
Modern Slavery Act setting out the steps
we have taken to ensure that no slavery or
human trafficking is taking place within the
organisation or its supply chains. This will be
published on the Group’s website in April.
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 section highlights 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 continued to focus on developing
our approach in those areas highlighted for
improvement and we intend to repeat the
Best Companies Survey in 2017.
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 London office and
achieved external recognition of our flagship
course, Savills Raising the Bar. During the
year, we also expanded our leadership
programme to our European and Asia
Pacific businesses, and launched the Savills
Studley Academy.
We 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’).
33
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Corporate responsibility continued
For example, in the UK, 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.
In Asia, we are progressively extending our
CPD programme, tailoring it as appropriate
to best meet local requirements.
We will also be extending our CPD
programme across the US.
Savills passionately believes that our
graduates are the future leaders. Our
graduates are given responsibility from the
day they join the business, in teams which
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 and diverse skills.
In the UK, Savills were proud to be named
The Times Graduate Employer of choice for
Property for the tenth 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.
In 2016 Savills was also ranked 94 in the
Times Top 100 Graduate Employers. 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.
In the US, we are committed to
implementing a Young Leaders Programme,
and launched the Savills Studley Academy
a multi-year business mentorship
programme aimed at harnessing the
talent of the rising stars.
In 2017, in Asia Pacific, we are launching the
Inspire Programme, which is a two-year
course for emerging leaders of the business
who will be assigned a lifetime mentor and
schooled in the art of business leadership.
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.
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
2016 our total global workforce of 32,548
colleagues comprised 17,245 males and
15,303 females. Of these, 175 were senior
executives (160 males, 15 females)
comprising members of the Group
Executive Board and Board members
of the corporate entities whose financial
information is incorporated in the Group’s
2016 consolidated accounts in this Annual
Report. The Company’s Board of Directors
comprised seven members – six males and
one female.
Gender diversity
(%)
53%
47%
■ Female
■ Male
34
Historically, ours has been a sector 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.
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.
One of our initiatives was to launch a
Diversity Group in the UK which is now in its
second year. 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
been involved during the year include:
1. 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.
2. 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.
3. Apprenticeships
We launched a Surveying
Apprenticeship in 2015. In 2016 we took
on five Apprentices into teams across
the UK to work in different teams. After
six years in the business they will gain
their BSc in Real Estate and their full
MRICS status.
4. 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 2016 we attended
Skills London as well as a number of
career fairs, and supported the
Trailblazer Apprenticeship scheme with
RICS. We also ran a number of internal
diversity events for our Gender and
LGBT groups. For the first time, we also
participated in the London Pride March
with the rest of the CTFOP companies.
Savills plc Report and Accounts 2016
“ Across our global business
Savills is committed to
reducing the impact that
our operations have on the
natural environment.”
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.
We are keen to improve diversity further, in
its broadest sense. As an example of our
commitment, in the UK we are committed to
increasing the diversity of our business in
order to reflect the needs of our clients and
have achieved the RICS Equality Mark. We
have a diversity programme 'Changing the
Face of Property' which focuses on
improving diversity across social and
economic background, disability, LBGT, age
and gender. We have also improved our
maternity policy, introduced mentoring and
coaching for women and held a number of
events with clients and keynote speakers. In
addition, we proactively review our
promotions to ensure that the numbers
going forward for promotion, by gender, are
in line with the make-up of the division. For
the LBGT network, we have held a number
of events, participated in the London Pride
March and are now listed on the Stonewall
Diversity Index.
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.
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 will progressively extend this approach
globally, tailored to meet local requirements.
Environment
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.
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 2016, a principal achievement was the
successful introduction by the UK business
of a system that tracks the identification of
each individual health and safety risk item
posing a potential risk to certain key teams.
During the current year we will continue to
promote our positive safety culture.
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.
Clients
Client care
Excellent client service is at the core of our
business, and we are committed to creating
long-term partnerships with all of our clients.
To do this, we place great importance on
delivering exce ptional client service over the
longer term through building sustained
relationships and ensuring that the Savills
client experience is second to none.
Gaining a deep understanding of our clients
business through regular communications is
fundamental to delivering a service which
matches the needs of our clients. 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.
We have developed our approach in the UK,
for example, 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.
35
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Corporate responsibility continued
Environmental impact
Across our global business Savills is
committed to reducing the impact that 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.
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
2016, compared against our baseline year
to 31 December 2013.
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 range
activities in a quantifiable common factor.
As evident in the table below, our total
emissions increased by approximately 3%
in 2016. This increase, however, reflects the
aforementioned expansion of our reporting
boundary in 2016, particularly with the
addition of the Chinese offices. Importantly,
we were able to reduce our Scope 2
emissions by more than 350 tonnes,
which is close to a 5% reduction.
The corresponding figures for our per
capita intensity ratio show a 10% reduction
compared to the previous year, which is
particularly pleasing given our global FTE
numbers increased by more than 13%
during the reporting period. When
measured against our base year of 2013,
this now represents an improvement of
more than 20%.
This substantial reduction has been
achieved through progressive initiatives to
reduce lighting, thermal comfort and
computer energy in our offices. These
measures are complemented by broader
sustainability strategies at the corporate
level and include the application of green
building principles during the selection/
refurbishment of our occupied spaces,
the shift to low-emission vehicles and the
continued focus on improving energy
metering/monitoring. Through these and
other supporting measures, Savills is
confident of making even greater reductions
to our corporate environmental footprint in
the coming years.
Scope
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
2016, compared against our baseline year
to 31 December 2013. For comparative
purposes, data is also shown for 2015.
For 2016, 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, Singapore and key
Chinese operations. In subsequent years,
we will seek to further expand this reporting.
Methodology
A network of Environmental Reporting
Nominees has been established, reporting
to the Group Legal Director & Company
Secretary, to coordinate more efficient
data collection worldwide. Specialist third
party-verified environmental reporting
software has been adopted by this
network to ease data collection, ensure
conformity and complete the subsequent
emission calculations.
The calculations use a GHG Protocol
Corporate Accounting and Reporting
Standard methodology. In a few cases
complete or wholly reliable data was not
available. We have therefore determined the
relevant emissions by using a range of
Greenhouse gas emissions data
Total Global Emissions for Carbon Reporting
2016
2015
2014
GHG Emissions Scope 1 (Direct)
GHG Emissions Scope 2 (Energy Indirect)
Total Gross Emissions (Scopes 1+2)
Total Employees (FTE av.)
GHG Intensity Ratio
2,518
TCO2e/yr
1,898
TCO2e/yr
1,292
TCO2e/yr
6,450
8,968
7,998
1.12
6,808
8,706
7,039
1.24
5,132
6,424
4,508
1.42
Notes:
1 Emissions factors based on Defra/DECC Guidelines 2011 and other globally recognised methodologies.
2 Total global emissions for Carbon Reporting 2014: UK, Rest of Europe, Australia/New Zealand and Hong Kong.
3 Total gross emissions, divided by total full-time equivalent employees (FTE) year average.
As one of the leading property advisors,
Savills acknowledges the importance of
demonstrating leadership in this area.
This includes measuring, and being
accountable for, our global environmental
impact. For example, in Australia, we
engage proactively with several key
industry and not-for-profit environmental
groups, including Property Council
Australia, The Green Building Council,
and Sydney’s Better Building Partnership.
As one of the first companies to achieve
national signatory status, Savills is
particularly pleased to partner with
CitySwitch – Australia’s flagship tenant
energy efficiency programme. In 2016
Savills claimed the CitySwitch South
Australia signatory of the year award for
significant reduction in office-based
emissions. This followed the recent
refurbishment of our Adelaide premises,
which not only resulted in reduced energy
costs, but also improved work place
productivity and employee satisfaction.
Similarly, in the UK, Savills, acting on behalf
of client Deka, achieved a BREEAM in-use
rating of Outstanding for Management
status, the highest ever achieved in the UK.
The property is one of only two UK
buildings to achieve this status, and
one of only 56 globally.
As part of this continuing drive to mitigate
our impacts, and as a hallmark of quality,
our offices continue to work to secure
ISO14001 2004 status: the international
standard for environmental management
systems. 104 Savills offices in the UK have
now achieved this accreditation.
In Hong Kong, Savills conducted an
extensive campaign to drive higher rates of
paper, metals and plastics recycling in the
buildings we manage. Broadening this
measure to enable a more human-
orientated approach, Savills actively
promoted awareness of the benefits of
‘green diets’, along with smoke-free
buildings. This latter initiative resulted in 13
of our managed buildings, as well as our
Property Management Headquarters, being
awarded the ‘Certificate of Merit’ in the HK
Smoke-Free Leading Company Awards.
36
Savills plc Report and Accounts 2016 During 2016 Savills Studley in the US actively
participated and contributed to not-for-profit
organisations both nationally and on a local
level. We participated in Innovations for
Learning, an initiative we have been involved
with since 2013. Innovations for Learning is a
non-profit organisation focused on improving
literacy instruction for children in the primary
grades, and through their Tutormate
programme, As Tutormates, we work with
the students every week to practice word
exercises and help them learn to read. To
date, 44 Savills Studley employees have
participated and mentored students on a
weekly basis. We also participated in the Lee
National Denim Day, which Savills Studley
have been involved with since 2005. Across
all offices nationwide, we encourage strong
employee participation in the fundraiser
and our local branches hold their own
fundraising activities.
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%.
In Asia, Savills Corporate Sevens Charity
Tournament is a December fixture in Hong
Kong’s social calendar. The tournament
attracts many of the city’s major companies
for a day of competitive rugby and fund
raising. This year we updated the format to
tag rugby, a new and more inclusive format
allowing mixed teams to get involved and, in
doing so, significantly broadened the appeal
of the event. With the tournament in its 32nd
year, over the past four years alone we have
raised over HK$3.5 million for various
children’s rugby charities including Po Leung
Kuk (Pitch Perfect and Tackling Life projects)
and the Hong Kong Society for the Protection
of Children. We are enormously proud of this
event and staff willingly give their time and
energy to participate in the games and help
with the considerable amount of organisation
involved. 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.
In Australia, we have partnered with The
Salvation Army to create the Savills Housing
Project. Based in western Sydney, this
project has been a great success in
providing safe and stable housing for a family
looking to recover from a history of domestic
violence and homelessness. In 2016 the
children were able to attend regular
schooling and the mother undertook training
that will assist her in gaining employment.
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 case studies below represent
only a few examples from across the globe
of the wide variety of activities undertaken
by Savills and its employees during 2016.
The UK business continues to sponsor
events including a number of graduate-led
initiatives. These include Harry Wentworth-
Stanley’s recent Atlantic Challenge in aid of
the James Wentworth-Stanley Memorial
Fund, a fund which was established to
create greater awareness of the causes of
suicide and the prevalence of suicide
amongst young persons. The funds raised
by the Atlantic Challenge, which involved 39
days of rowing across the Atlantic, will help
establish a non-clinical crisis centre where
people experiencing emotional or suicidal
crises can go for help.
Savills are delighted to have been partnered
with Dreams Come True for the last three
years and we are proud that our graduates
have been successful in raising in excess
of £200k for the charity. 2016 saw Savills
graduates participate in a number of events
including 24 staff cycling 100km around
Surrey, 11 staff participating in the 2016
London Marathon and an auction at the
Savills annual cricket match. In March 2017,
21 staff will be trekking 100km across the
Arctic Circle.
37
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Sp tlight on
Investment
Management
Total available capital reaches
record highs reflecting sustained
institutional appetite for real estate.
183 private equity real estate funds raised total capital of
$108.5bn in 2016, a drop from the $123.5bn raised in 2015. The
average amount raised in final closings by private closed-ended
funds also fell, from the record high in 2015 of $624m to $499m
in 2016. The number of funds closing saw a similar decrease,
representing the fourth annual drop from a post-GFC peak in
2012 of 211 and the lowest number of funds since 2009.
However, this fall in the number of funds closing is not matched
by a fall in total funds raising at present, with Preqin reporting that
there are a record 533 closed-ended funds in the market (up
from 489 at the start of the year). This record number of funds in
the market is matched by a record level of capital available, which
has now reached a record high of $237bn. This available capital
heading into 2017 ensures property will remain a key asset class
for investors worldwide.
This status is reinforced by the cumulative total of capital raised
in the last four years outstripping figures from 2005-2008,
reflecting the sustained institutional appetite for real estate. The
weight of money and continued improvement of occupier market
fundamentals has continued to see capital values increase while
yields decrease. The increase in asset capital values has led to
an increase in investor capital moving up the risk curve, with
debt, value-added and opportunistic funds taking a greater
share of investor capital in 2016, while fundraising for Core and
Core Plus strategies fell.
Deal flow dropped from $241bn in 2015 to $202bn in 2016 owing
to financial market volatility and political concerns in the UK and
US, as well as a crowded market, but this still represented a
significant increase on the $169bn transacted in 2014. Savills
IM’s sale of Potsdamer Platz registered as the tenth largest deal
in the year.
38
Savills plc
Report and Accounts 2016
Case study
Launch of
Mercury Fund
2016 saw the launch of the Mercury Fund, managed
on behalf of CONAD (the largest consortium of
independent retailers in Italy) and Gruppo Cattolica
Assicurazioni (a leading Italian insurance company).
The Fund enabled CONAD to sell and lease back 66 of
its retail properties in Italy, worth approximately €300m,
allowing the firm to focus on its core retail activities. It
was financed by two leading Italian banks and the Fund
will have a 20-year lifespan.
The Mercury Fund, along with other initiatives launched
in 2016, saw our AuM in Italy pass the €2bn mark. We
also transacted over €1.1bn of deals in the country last
year, representing c.15% of the total market.
Strategic report
Governance
Financial statements
Number of real estate
funds closed in 2016:
183
(down from 244 in 2015)
Average amount of capital
raised by private equity
real estate funds in 2016:
$499m
(down from record high
of $624m in 2015)
Total capital raised in 2016:
$108.5bn
(down from $123.5bn in 2015)
Total capital available
to fund managers:
$237bn
(up from $229bn in 2015)
Savills plc
Report and Accounts 2016
39
Chairman’s introduction
I am pleased to introduce this year’s Corporate Governance Report.
With this Report we describe the Group’s compliance with the UK
Corporate Governance Code (the ‘Code’) and explain how the Board
and its Committees have operated in 2016. The Main Principles of
the Code provide the framework for the reporting model which we
have used for the last three years. Our approach to: Leadership and
Effectiveness is described on pages 41 to 50; Relations with
Shareholders and Other Stakeholders is described on page 51; and
Accountability is described on pages 51 to 56.
On 11 May, at the conclusion of the 2016 Annual General Meeting
(‘AGM’), I became Chairman following the retirement of Peter Smith,
and Tim Freshwater became Senior Independent Director on the
retirement of Martin Angle. Under their watch, Savills businesses
showed commendable growth and I would like to thank both Peter
and Martin for their enormous contributions to the Group.
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 4, 5 and 14.
We fully recognise that at the core of every successful organisation
is a strong and healthy culture supported by a robust governance
structure. As 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. The Board’s behaviour and the values it
demonstrates set the tone to guide our people’s behaviour and
ensure that we live by and demonstrate the right values. This in turn
enables entrepreneurial and prudent management to deliver
long-term success for the Group and its stakeholders.
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, Europe and the US. At least half of the Board members
throughout the year were Independent Non-Executive Directors
(excluding me, as Chairman). The details of their skills and experience
are, along with those of the other Board Members, set out on pages
44 to 46. In accordance with the Code, each Director will stand for
40
re-election at the 2017 AGM on 9 May 2017. The Board also reviews
Non-Executive Director independence on an annual basis and takes
into account the individual’s experience, 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.
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 particular, in a sector which
historically has struggled to retain a high percentage of female
leaders, we are striving to redress the gender 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 Group 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 Corporate
Responsibility (‘CR’) section on pages 32 to 37.
The Board is collectively responsible for the long-term success of the
Group and how it is directed and controlled, so we test the Board
effectiveness and performance annually through a formal evaluation.
This year’s evaluation was facilitated by an independent external
consultant, JCA. The process and key conclusions are explained on
page 48. 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. Following this
review, I am satisfied that the Board is performing effectively.
As a responsible organisation, we believe that engaging with
Shareholders and encouraging an open, meaningful dialogue
between Shareholders and the Company is vital to ensuring mutual
understanding. We are in regular contact with our major
Shareholders and potential shareholders through a regular,
scheduled programme of meetings as part of our continuing
commitment to this open and transparent dialogue. This programme
included updating Shareholders on the Group’s performance and
future strategy and, in particular this year, consulting major
Shareholders about the renewal of approval for the Company’s
Directors’ Remuneration Policy. You can read more about
Shareholder engagement on page 51. My fellow Directors and I look
forward to continued dialogue and meeting with Shareholders at our
AGM in May where I will be happy to answer any further questions.
Nicholas Ferguson CBE
Chairman of Savills plc
21 March 2017
UK Corporate Governance Code
The Company is reporting its corporate governance compliance
against the 2014 UK Corporate Governance Code (the ‘Code’).
In April 2016, the Financial Reporting Council issued an update to
the Code. The Company will report its governance compliance
against the revised Code in its 2017 Annual Report. The Board
confirms that during 2016 it has applied the Main Principles set
out in the 2014 Code and was compliant with all relevant
provisions. Further information about how the Board complies
with the Main Principles is set out on pages 57 to 59 of this
Annual Report.
Savills plc Report and Accounts 2016
Leadership
The Group’s current corporate governance structure is set out below.
Board (Chairman, two Executive Directors and four Non-Executive Directors)
•
•
•
•
•
has primary responsibility for providing entrepreneurial leadership
oversees the overall strategic development of the Group
sets the Group’s values and standards
ensures that the Group’s businesses act ethically and that obligations to Shareholders are understood and met
delegates the management of the day-to-day operation of the business to the Group Chief Executive, supported by the Group Executive
Board 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
Audit Committee
Remuneration Committee
Nomination Committee
Group Chief Executive
•
responsible for the broad policy
governing senior staff pay and
remuneration
• sets the actual levels of all
elements of the remuneration of
the Executive Directors
reviews the remuneration of
Group Executive Board
members.
Chair: Rupert Robson
Number of meetings
in the year: 5
•
responsible for assisting the
Board in fulfilling its financial
and risk responsibilities, and in
particular for ensuring that the
financial statements are fair,
balanced and understandable
• oversees financial reporting,
•
internal control, risk
management and reviews the
work of the Internal and
External Auditors
• advises the Board on the
appointment of the External
Auditors.
Chair: Liz Hewitt
Number of meetings
in the year: 4
•
•
•
responsible for size, structure
and composition of the Board
reviewing and progressing
appointments to the Board
responsible 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
• makes recommendations to the
Board on the membership of
the principal Committees of the
Board.
Chair: Nicholas Ferguson
Number of meetings
in the year: 2
See pages 52–56
See pages 60–80
See pages 49–50
•
responsible for the day-to-day
management of the Group
Group Executive Board
Key management committee
of the Group:
•
responsible for the day-to-day
management of the Group
• oversees the development and
implementation of strategy,
capital expenditure, and
investment budgets, for the
ongoing review and control of
Group risks reporting on these
areas to the Board for approval
implements Group policy
•
• monitors financial and
operational performance of
the Group and other specific
matters delegated to it by
the Board.
Chair: Group Chief Executive
Composition: Group Chief
Financial Officer, the Heads of
the Principal Businesses and
the Group Legal Director &
Company Secretary
CR Steering Group
Executive Committees
Group Risk Committee
• coordinate CR activity to deliver Savills’ agreed goals
• oversee Savills’ CR Strategy for the Group globally and recommending
changes to it when appropriate
• monitor Group-wide CR progress and performance and identifying to
the GEB areas where action needs to be taken
• ensure that key CR responsibilities and achievements are
communicated to all staff globally and externally to interested parties
• gather and record information about all existing CR programmes and
initiatives taking place within the Group
• help to identify indicators and measures that will be used to ascertain
performance against prioritised CR impact areas
• help to identify on any external indices, initiatives, codes and
•
standards for Savills to use or adopt to help validate CR performance
responsible for overseeing preparation of the CR section of the Annual
Report and Accounts.
Lead each Principal Business
•
responsible for the day-to-day
management of the relevant
Principal Business
• oversees the development and
implementation of strategy,
capital expenditure, and
investment budgets, for the
ongoing review and control of
Group risks reporting on these
areas to the Group Executive
Board and, as necessary, the
Board for approval
implements Group policy
•
• monitors financial and operational
performance of the relevant
Principal Business and other
specific matters delegated to it by
the Group Executive Board.
•
identify and evaluate Group
level risks
review and challenge risks
reported by subsidiaries
• champion the ongoing
•
Group-wide development of
risk management and the
internal controls framework
• monitor internal audit and other
sources of assurance on the
effectiveness of internal
controls.
41
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Leadership continued
Attendance at Board and Committee meetings
The Board met formally nine times during the year. Attendance at all Board and Committee meetings by Directors is as shown in the
table below.
Non-Executive Directors
Nicholas Ferguson1
Tim Freshwater
Liz Hewitt
Rupert Robson
Charles McVeigh
Peter Smith (retired 11 May 2016)
Martin Angle (retired 11 May 2016)
Executive Directors
Jeremy Helsby2
Simon Shaw2
Board
meetings
attended
Meetings
eligible to
attend
Audit
Committee
meetings
attended
Meetings
eligible to
attend
Nomination
Committee
meetings
attended
Meetings
eligible to
attend
Remuneration
meetings
attended
Meetings
eligible to
attend
7
9
8
8
9
4
3
9
9
8
9
9
9
9
4
4
9
9
–
4
4
4
–
1
1
–
4
4
4
–
1
1
2
2
2
1
–
1
1
2
2
2
2
2
–
1
1
2
–3
5
5
5
–
3
3
–3
5
5
5
–
3
3
1 Was appointed to the Board on 26 January 2016
2 Members of the Group Executive Board
3 The Chairman attended two remuneration meetings by invitation
The Board
The principal matters reserved for the Board are set out below:
Strategy and objectives
• Review and approve the Group’s strategy, objectives, business plans and budgets with a view to
maintaining the Group’s established entrepreneurially driven business culture.
Financial performance
• 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.
• Consider, test and approve significant capital investment projects in line with strategy and taking a
measured approach with the aim of maintaining Savills position as a market leader.
• Strengthening the Group’s presence in existing markets or establish the Savills brand in new markets
through targeted recruitment or acquisitions, strategic alliances, associations with well-established
high-calibre local businesses with a market and client service focus consistent with those of the
Group and with an offering which complements existing capabilities in whichever market.
• Where necessary, reviewing and approving disposal initiatives.
• Review business growth and profit and cash management performance, and in each case, assess
against the Group’s strategy, objectives, business plans and budgets to ensure that the financial
resources generated by the Group’s businesses work to create additional value, costs are controlled
and that resources can be made available at the appropriate time to exploit business opportunities.
• Review 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.
• Approve 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.
• Approve the dividend policy and interim and supplemental dividends and recommend final dividends
which are appropriate to the Group’s financial position and reflect the performance and prospects of
the Group and give the Group the ability to continue to attract inward investment.
Risk management
• Establish, monitor and regulate 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 analyse 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 materially negative
impact on the Group’s reputation or finances.
•
In response to actual outcomes and/or changes in the internal and external environments, regulate
acceptable risk levels to reflect the evolution of strategy.
42
Savills plc Report and Accounts 2016 Governance
• Oversee 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.
• Plan 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
policies in relation to business practice, health, safety, environment, social and community
responsibilities to ensure that the Group companies continue to do the ‘right thing’ and remain
compliant with regulatory and legal requirements in each of the jurisdictions in which they operate.
Board meetings
The Board and Committee meetings are structured to allow open
discussion. To enable the Board to discharge its duties, each
Director receives 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.
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 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 activity in 2016
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 Group’s businesses and we
endeavour to develop our processes in order to support growth
and to achieve continuous improvement across the Group. The
following chart shows in simple terms those areas on which your
Board has been focused during 2016 and which will remain key in
the coming year.
Leadership and risk
Strategy
– Entrepreneurial support
– Succession planning
– Oversight of operational
– Strategy setting
– Target delivery
– Achievement of goals
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 2016, the Board additionally undertook evaluations of the
acquisitions completed in 2015, including the acquisitions of SEB
Asset Management GmbH, Savills Malaysia Sdn. Bhd. and that of
the business of Smiths Gore, as well as a review of regulatory and
compliance matters globally.
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 continues 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.
43
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Leadership continued
Board of Directors
Nicholas Ferguson CBE
Chairman of Savills plc and Chairman
of the Nomination Committee
Appointment to the Board
Nicholas was appointed to the Board as a Non-Executive Director on
26 January 2016 and became Chairman in May 2016.
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. Nicholas was chairman of Sky Plc from April 2012 to
May 2016, 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.
Other appointments
He is also currently chairman of Alta Advisers Limited, an
investment advisory firm; chairman of African Logistical
Properties; and chairman and founder of The Kilfinan Group,
which provides mentoring by chairmen and CEOs to heads
of charities.
Committee Membership
Nomination Committees.
Jeremy Helsby
Group Chief Executive
Appointment to the Board
Jeremy joined Savills in 1980 and was appointed to the Board in 1999.
Committee Membership
Nomination Committee.
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.
Simon Shaw
Group Chief Financial Officer
Appointment to the Board
Simon joined Savills as Group Chief Financial Officer in March 2009.
Other appointments
Non-executive chairman of Synairgen plc.
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.
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.
Other appointments
Charles has recently become chairman of Rubicon Fund
Management, a successful London based hedge fund. He is
vice chairman of Citigroup’s European Advisory Board as well
as senior advisor to the Private Bank. He is also a non-
executive director of EFG–Hermes. He is a trustee of the
Landmark Trust and serves on the board of governors of
Sandroyd School.
44
Savills plc Report and Accounts 2016
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 Swire Pacific Limited, Corney &
Barrow Group Limited, Chelsfield Asia Limited (former name:
Dymon Asia Real Estate Limited) and Hong Kong Exchanges
and Clearing Limited.
Committee Membership
Audit, Remuneration and Nomination Committees.
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.
Background and relevant experience
Liz previously held senior executive roles at Smith & Nephew plc and 3i
Group plc having spent her early career with Gartmore, CVC and 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. External member of the House of
Lords Commission.
Committee Membership
Audit, Remuneration and Nomination Committees.
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.
Other appointments
Chairman of TP ICAP plc, Sanne Group plc, EMF Capital
Partners and governor of Sherborne School
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.
Committee Membership
Audit, Remuneration and Nomination Committees.
45
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Leadership continued
Group Executive Board
Michael Colacino
(alternate member with Mitch Steir)
President – Savills Studley
Simon Hope
Global Head of Capital Markets
Chris Lee
Group Legal Director & Company Secretary
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.
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
Chairman of Tilstone LLP.
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.
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.
Mitch Steir
(alternate member with Michael Colacino)
Chairman & CEO – Savills Studley
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 Member of the Hong Kong
Institute of Directors and holds an Honorary
Fellowship at the Quangxi Academy of
Social Science. Raymond is also an
Honorary Doctor of Management at Lincoln
University and holds a Fellowship at the
Asian College of Knowledge Management
(ACKM). He became a Fellow Member of
the Royal Institute of Chartered Surveyors
(RICS) in 2016.
46
Christian Mancini
Chief Executive – Asia Pacific
(ex-Greater China)
Appointment to the Group
Executive Board
Christian was appointed to the Group
Executive Board on 1 July 2016.
Background and relevant
experience
Christian was made CEO of Savills Japan
in 2007 and appointed CEO of Savills
Northeast Asia in 2012.
Other appointments
Christian also serves as non-executive
director in Savills Asset Advisory, the
wholly-owned asset management
subsidiary of Savills Japan Co, Ltd created
in May 2012.
Justin O’Connor
Chief Executive Officer – Savills Investment
Management
Appointment to the Group
Executive Board
Justin was appointed to the Group
Executive Board in September 2010.
Mark Ridley
Chief Executive – Savills UK and Europe
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.
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.
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, The Mount Sinai Hospital
Surgery advisory board and the Citizens
Budget Commission.
Savills plc Report and Accounts 2016 Effectiveness
Board composition and balance
Balance of Non-Executive Directors and Executive Directors
Non-Executive Chairman – 1
Non-Executive Directors – 4
Executive Directors – 2
Length of tenure of Non-Executive Directors
0–4 years – 3
5–9 years – 1
10+ years – 1
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 roles of Chairman and Group Chief Executive are distinct and
separate and their roles and responsibilities are clearly established.
The Chairman leads the Board and has particular responsibility for
the effectiveness of the Group’s governance. In promoting a culture
of openness he ensures the effective engagement and contribution
of all Executive and Non-Executive Directors. To help ensure a
proper dialogue with all Directors, the Chairman meets with the
Directors individually. 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 Non-Executive Directors
The Board reviews the independence of its Non-Executive
Directors, particularly those with long service. The Non-Executive
Directors are responsible for bringing independent and objective
judgement and scrutiny to matters before the Board and its
Committees. The Board considers that all of the Non-Executive
Directors bring considerable management expertise and are an
Independent Non-Executive Directors, 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
Tim Freshwater 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 commitment 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.
The Companies Act 2006 places a duty on each Director to avoid a
situation in which he or she has or can have a direct or indirect
interest which conflicts or 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. The
Nomination Committee review authorised conflicts at least annually
or if and when a new potential conflict situation was identified or a
potential conflict situation materialised. During 2016, 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.
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, 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. The Group
Legal Director & Company Secretary is responsible for ensuring that
the Directors receive regular updates on developments in legal and
regulatory matters. 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.
47
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Effectiveness continued
Board evaluation
The Board undertakes a rigorous and formal evaluation of its
performance and that of its Committees and its Directors annually.
In accordance with the Code requirements, the Board believes that
an external independent evaluation of Board effectiveness and
performance and that of its principal Committees at least every
three years brings further insight into its performance. As well as
looking to continually improve the Board’s processes, the
evaluation process is used to reflect on areas that the Board would
like to see more focus on. The last externally-facilitated external
evaluation of its performance took place in the year ended
31 December 2013 and therefore this year its annual review was
externally facilitated by Alice Perkins of JCA.
The evaluation covered the performance of the Board as a whole
as well as that of its Committees. This year’s review took the form
of confidential one to one meetings with each Director and the
Group Legal Director & Company Secretary conducted by Alice
Perkins of JCA and covering areas including board effectiveness;
the mix of skills and experience on the Board: the development of
the Company’s strategy; the effectiveness of Board procedures
and processes; the connectivity between the Board and the
Group’s businesses; the performance of Board Committees;
relations with Shareholders and other stakeholders; and the
individual performance of Board members. The facilitator
consolidated the responses and the output was initially reviewed
by the Chairman and then by the Board.
The key outcomes from the evaluation related to:
• ensuring that the Board had the mix of skills and experience
required for the next stages of the Group’s development, in
particular ensuring that Board membership was appropriately
diverse, in the widest sense; and
increasing focus on reviewing the progress and development of
the Group’s Principal Businesses and ensuring greater
awareness of key individuals in each business below Executive
Committee level.
•
As a result of the evaluation, 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 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 pages 44
and 45.
48
Savills plc Report and Accounts 2016 Nomination Committee Report
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.
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 the
Board’s progressive refreshing, with regard to balance and structure.
•
Composition
As at 31 December 2016 and up to the date of this Report, the
Committee comprised Tim Freshwater, Liz Hewitt and Rupert
Robson, together with the Chairman and the Group Chief
Executive. Biographical details relating to each of the Committee
members is shown on pages 44 and 45. I became the Committee
Chairman when Peter Smith retired from the Board at the close of
the 2016 AGM on 11 May 2016. I chair the Committee save in
circumstances where the Chairman’s succession is considered.
Any other Director, the Group Legal Director & Company Secretary
or an external advisor 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
two times during 2016. The attendance at meetings by members,
is 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.
Activity during the year
The Committee’s activities during the year included:
• reviewing leadership needs of the organisation and succession
plans with a view to ensuring the Company has executive
leadership of the highest quality to ensure that it continues to
be able to compete effectively in the various markets in which
Group companies operate;
focusing on succession planning including the tenure, mix and
diversity of skills and experience of the existing Board in the
context of the Group’s strategy;
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).
In addition, and specifically during the year, the Committee
reviewed the Group’s senior level succession plans to ensure
that these remained appropriate.
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.
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.
• Considering the proposed reappointment of the Non-Executive
Directors, before making a recommendation to the Board
regarding their re-election; and
• considering and approving the Directors’ potential conflict
of interests.
New Directors receive a tailored induction as detailed on page 47.
Succession planning and diversity
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. The Committee
continues to keep the Board’s composition under review and
considers how the composition may be enhanced to ensure that
the Board continues to reflect the needs of the Company and
its Shareholders.
49
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Effectiveness continued
The Committee has sought to maintain a balance of skills and
experience on the Board and its Committees. 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.
The Committee 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. 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 biographies of the Board members appear on pages 44
and 45.
Nicholas Ferguson CBE
Chairman of the Nomination Committee
21 March 2017
50
Savills plc Report and Accounts 2016 Accountability
Internal control and risk management
The principal risks and uncertainties faced by the Group and the
associated mitigating actions for these are set out on pages 25
to 29.
The Board has overall responsibility for the Group’s systems of risk
management and internal control 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. 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 2 to 39. The
financial position of the Group, its cash flows, liquidity position and
borrowing facilities are described on page 23. 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.
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 at least
12 months from the date of this report. Accordingly, they continue
to adopt the going concern basis in preparing the Report
and Accounts.
Dialogue with Shareholders
The Group recognises the importance of an ongoing relationship
with its Shareholders and fully supports the principles encouraging
dialogue between companies and their Shareholders in the Code.
The Group Chief Executive and Group Chief Financial Officer have
primary responsibility for investor relations and lead a regular
programme of meetings and presentations with analysts and
investors. This includes 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 had
in recent years in relation to the Group’s remuneration policy and
continues to welcome Shareholder views with regard to the
Group’s Remuneration Policy. Details of the Company’s response
to any Shareholder views raised would be included in the relevant
year’s Remuneration Report.
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 notice of
the AGM is sent out at least 20 working days before the meeting
and at least 14 working days notice is given before other general
meetings in accordance with the UK Corporate Governance Code.
Details of the resolutions to be proposed at the 2017 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 Group’s website includes a specific investor relations section
containing all RNS announcements, share price information and
annual reports available for download. 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 155.
51
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Accountability continued
Audit Committee Report
As Chair of the Audit Committee, I am pleased to present the Audit
Committee’s report for the financial year ended 31 December
2016. This report is intended to explain how the Committee has
met its responsibilities throughout the year and what it has done to
address continued regulatory change. The key matters considered
in the year are set out on pages 53 and 54. The report provides an
overview of the significant issues that the Audit Committee
assessed and details the Committee’s major considerations and
activities during the 2016 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 the 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.
During the year, the Committee continued to focus on the
effectiveness of the Group’s internal controls and reviewed the
principal risks, 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 Auditor and ensured the
quality of the Company’s financial reporting by reviewing the 2015
Report and Accounts and the 2016 Half Year Financial Statements,
and subsequently, in 2017, the Company’s 2016 Report and
Accounts. The Committee also considered the processes
supporting the assessment of the Group’s longer-term solvency
and liquidity in support of the viability statement. Looking ahead,
the Committee will continue to monitor changes in regulation and
continue to focus on the audit, assurance and risk processes
within the Principal Businesses.
At the request of the Board, the Audit Committee has reviewed the
content of this year’s Annual Report and Accounts and has advised
the Board that in its opinion the Report taken as a whole is fair,
balanced and understandable and 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
Auditor on the 2016 Annual Report.
Liz Hewitt
Chair of the Audit Committee
52
Role of the Committee
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’s role is to assist the Board in discharging its duties
and responsibilities for financial reporting, internal control, the
effectiveness of the risk management process and in making
recommendations to the Board on the appointment of the External
Auditor. The Committee is responsible for the scope and results of
the External Audit work, its cost effectiveness and for ensuring the
independence and objectivity of the External Auditor. The
Committee is also responsible for reviewing the Group’s whistle-
blowing arrangements as they relate to matters of financial integrity,
including ensuring that appropriate arrangements are in place for
employees to be able to raise in confidence matters of alleged
financial improprieties and for ensuring that appropriate follow-up
actions are taken.
Composition
The Committee is a fundamental element of the Company’s
governance framework. The Committee is chaired by Liz Hewitt.
Three Independent Non-Executive Directors, Liz Hewitt, 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. As at 31 December 2016
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 pages 44 and 45.
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.
Engagement
The Chair of the Committee meets informally, and is in regular
contact with the Group Chief Financial Officer, Group Director of
Risk Assurance and the Group Legal Director & Company
Secretary and prior to each Committee meeting, meets with each
of them and the External Auditor individually.
A standing invitation has been extended by the Committee to the
Non-Executive Chairman and Group Chief Executive to attend the
Committee’s meetings. The Group Chief Financial Officer, Group
Financial Controller, Group Director of Risk & Assurance, Group
Legal Director & Company Secretary and the External Auditor
attend each of the Committee’s meetings . Other senior executives
from across the Group are invited to present reports to assist the
Audit Committee in discharging its duties. During each year, the
Committee meets privately with the External Auditor and the Group
Director of Risk & Assurance.
Savills plc Report and Accounts 2016 The Chair of the Committee also attends the AGM to respond to shareholder questions on its activities.
The Committee met four times during the year and reports to the Board after each Committee meeting. Attendance at meetings during
2016 is shown in the table below:
Committee member
Liz Hewitt
Tim Freshwater
Martin Angle (until 8 March 2016)
Rupert Robson
Member since
June 2014
January 2012
January 2007
June 2015
Meetings
attended
Meetings
eligible to
attend
% of eligible
meetings
attended
4
4
1
4
4
4
1
4
100%
100%
100%
100%
Martin Angle retired as a member of the Committee at the Committee’s March 2016 meeting.
During the year, in addition to its established review processes, the Committee considered and reviewed a number of other areas. These
included reviews of the effectiveness of risk management and internal control in the Group’s Asia, Europe and Investment Management
businesses. In addition, the Committee examined the EMEA IT systems strategy including the approach to cyber security. The Committee
also considered the processes supporting the assessment of the Group’s longer-term solvency and liquidity which support the 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 financial models supporting the viability analysis.
Financial Reporting
Activities of the Committee
To enable the Committee to carry out its duties and responsibilities effectively it works to a structured programme of activity focused on
key events in the annual financial reporting cycle. This work includes items that the Committee considers regularly in accordance with its
Terms of Reference. In addition to its core work, the Committee undertakes additional work in response to the evolving audit and external
reporting landscape. 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, Internal Audit and the External Auditor, which it challenges
as appropriate, and reports its findings to the Board.
The principal activities of the Committee during the year are set out below:
Responsibilities
How the Committee discharged its responsibilities
Mar
July
Aug
Dec
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 and considered the processes
supporting the assessment of the longer-term solvency and liquidity
External Audit
Agreed the external audit strategy and scope
Considered and, where appropriate, approved the instruction of the
Group’s External Auditor on non-audit assignments
Reviewed and considered the External Auditor Report, including
the External Auditor observations on the Group’s internal control
environment
Discussed the External Auditor performance
Met with the External Auditor without management present to discuss
their remit and any concerns
Discussed and agreed the External Auditor remuneration in respect of
audit services provided
Assessed the External Auditors’ independence and recommended
their reappointment to the Board
Compliance,
Whistleblowing
and Fraud
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 also considers
any reports made under these arrangements
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
53
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Accountability continued
Responsibilities
How the Committee discharged its responsibilities
Mar
July
Aug
Dec
Internal Audit
Considered and approved the remit of the Internal Audit function and
the 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 privately to
discuss his 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
Reviewed risk management arrangements for the Group’s regional
businesses by receiving presentations from the Chief Operating /
Financial Officers of the Principal Businesses
Reviewed the Committee’s own performance, composition and
Terms of Reference, and recommended any changes the Committee
considers necessary for Board approval
X
X
X
X
Internal Controls
and Risk
Management
Systems
X
X
X
X
X
X
X
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 Auditor in these areas. After discussions with management and the External
Auditor, the Committee determined that the significant issues and other accounting judgements relating to the 2016 financial
statements were:
Matter considered
Action
Impairment of goodwill
Focus on European businesses
Risk of fraud in revenue recognition
in relation to cut-off for transaction
income in the Investment
Management and Transactional
Advisory businesses
Provisions for litigation
The Committee considered the presumed risk of fraud as defined by the auditing statements
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 2016 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
Recoverability of trade receivables
The Committee considered the recoverability of trade receivables and was satisfied that there
were no issues arising
Regulatory compliance obligations
During the year the Committee reviewed the Group’s policies and procedures around regulatory
risks including but not limited to:
Whistleblowing reports;
Anti-bribery and corruption procedures; and
The Group’s Client Acceptance procedures
The Committee was satisfied that no significant issues had been identified in these areas
54
Savills plc Report and Accounts 2016 Internal Audit
The provision of Internal Audit services during 2016 was delivered
by the Group’s Internal Audit team with support from EY where
country and/or subject matter expertise was required, or where
local language reviews were required or internal resources were
not available. The Board’s responsibility for internal control and
risk is detailed on page 42 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 the External Auditor. 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 Auditor on
any issues identified during the course of their work.
Internal Control and Risk Management
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 2016;
• 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 Auditor 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 failings or weaknesses identified.
External Audit
The Committee holds private meetings with the External Auditor at
the March and August Committee meetings to provide additional
opportunity for open dialogue and feedback to/from the
Committee and the External Auditor without management being
present. The Committee chair also meets with the external lead
audit partner outside the formal Committee process throughout
the year.
The Committee monitored the performance of the External Auditor
during the year and 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 covers a broad range of matters including
amongst other matters, the quality of staff, its expertise, resources
and the independence of the audit. The Committee considered the
External Audit plan for the year and assessed how the External
Auditor 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.
The Committee formally concluded the assessment of the
performance of the External Auditor at the December Committee
meeting and made a corresponding recommendation on the
appointment of PwC for the forthcoming financial year to the
Board. Shareholders formally appoint the External Auditor at the
AGM in May. 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
considered the appropriateness of the reappointment of PwC as
the Group’s External Auditor and it was satisfied that it should
recommend to the Board their reappointment as the Group’s
External Auditor.
In light of the assessment and review undertaken during the year, the
Board endorsed the Committee’s recommendation that PwC be
re-appointed as the External Auditor for a further year and that their
re-appointment would be put to the shareholders at the 2017 AGM.
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 at the close of the 2015 audit. The
Committee continues to review the auditor appointment and the
need to tender the audit, ensuring compliance with the UK
Corporate Governance Code. The Committee has considered the
timing of a potential External Audit tender timetable and processes
and concluded that the tender process should take place at the
end of the next lead audit partner term in 2020. The Committee is
satisfied that the proposed retender of audit services in 2020 was
in the best interests of the shareholders of the Company.
The Committee recognises the importance of External Auditor
objectivity and monitors their independence. The Committee
reviews the External Auditor’s own policies and procedures for
safeguarding its objectivity and independence. The Committee’s
assessment of PwC’s independence is underpinned by the
Group’s policy on the use of PwC for the provision of non-audit
services. In accordance with the Group’s policy in place to
31 December 2016, the following non-audit services were not
provided by the External Auditor:
• bookkeeping or other services related to the accounting records
or financial statements;
Internal Audit outsourcing services;
• financial information systems design and implementation;
•
• management functions or human resources advice; or
• advising on senior executive (including Executive Director)
remuneration.
55
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Accountability continued
To further safeguard the independence of the Company’s
External Auditor and the integrity of the audit process, recruitment
of senior employees from the External Auditor is not allowed
for an appropriate period after they cease to provide services
to the Company.
During the year, PwC was paid £1.6m for audit services and £0.6m
for non-audit services, principally for advice on taxation and
transaction-related matters. Details of the fees paid to the External
Auditor can be found in Note 7.2 on page 115. During the financial
year ending 31 December 2016, 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 was 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 had
not been impaired by reason of this further work. In line with the
Company’s policy for the financial year ending 31 December 2016
on the provision of non-audit work, the Committee reviewed the
provision of non-audit work provided by the External Auditor on a
case-by-case basis. The Committee was satisfied that the overall
levels of audit related and non-audit fees were not material relative
to the income of the External Auditor firm as a whole.
The Committee has assessed the FRC’s Revised Ethical Standard
for Auditors June 2016 which will implement new restrictions on the
supply of non-audit services that the External Auditor can provide,
including the cap on the amount of non-audit fees that can be
billed and a list of prohibited services. The restrictions are effective
for the Group from 1 January 2017 and the Group’s policy on using
the External Auditor for non-audit engagements has been reviewed
and subsequently amended to reflect these additional restrictions.
The External Auditor will no longer provide taxation services. As
part of the Group’s monitoring system, all non-audit instructions
with the External Auditor must be approved by either the Group
Chief Financial Officer or the Group Financial Controller and
management must seek approval from the Committee for all
non-audit contracts in excess of £0.1m. The Group’s policy also
requires that non-audit fees must not exceed 70% of the average
External Audit fees billed over the previous three years.
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.
56
Savills plc Report and Accounts 2016 Compliance with the UK Corporate Governance Code
The governance rules applicable to all UK companies admitted to the Official List of the UK Listing Authority with a Premium listing and
with accounting periods ended before 17 June 2016 are set out in the UK Corporate Governance Code 2014 (the ‘Code’) published by
the Financial Reporting Council and publicly available at www.frc.org.uk. Throughout the financial year ended 31 December 2016 the
Code remained the standard against which we measured ourselves and the Board fully supports the principles set out in the Code. The
Main Principles have been applied as follows:
A. Leadership
B. Effectiveness
B5 Provision of information and support
To enable the Board to discharge its duties,
each Director received appropriate and
timely information, including detailed
papers in advance of Board meetings.
Each Director has access to the advice and
services of the Group Legal Director &
Company Secretary and through him have
access to independent professional advice
in respect of their duties at the Company’s
expense.
B6 Board and Committee performance
evaluation
In 2016, the Board’s annual evaluation was
facilitated by Alice Perkins of JCA, an
independent consultancy. The process and
key findings are explained on page 48 of
the Annual Report.
B7 Re-election of the Directors
All Directors are subject to election by
Shareholders at the AGM. All Directors will
stand for (re-)election by Shareholders at
the AGM on 9 May 2017. Directors’
biographies are given on pages 44 and 45
of the Annual Report, enabling
Shareholders to take an informed decision
when determining their re-election.
A1 The Board’s Role
The Board met formally eight times
during the year with specific focus on
strategy, performance, leadership and
risk, governance and finance. There is a
schedule of matters reserved for the Board.
A2 Clear Division of Responsibilities
The roles of the Chairman and Group Chief
Executive are clearly defined. The
Chairman, Nicholas Ferguson, is
responsible for the leadership and
effectiveness of the Board, and the Group
Chief Executive, Jeremy Helsby is
responsible for leading the day-to-day
management of the Group within the
strategy set by the Board.
A3 Role of the Chairman
The Chairman sets the Board’s agenda,
manages the meeting timetable (in
conjunction with the Group Legal Director
& Company Secretary) and promotes a
culture of open and constructive dialogue
during meetings.
The Chairman on appointment met and
continues to meet the independence
criteria set out in B.1.1 of the Code.
A4 Role of the Non-Executive Directors
The Chairman promotes an open and
constructive environment in the boardroom
and actively invites the Non-Executive
Directors’ views. The Non-Executive
Directors provide objective, constructive
and rigorous challenge to management
and meet regularly in the absence of the
Executive Directors.
B1 The Board’s Composition.
The Board is made up of a majority of
Independent Non-Executive Directors,
excluding the Chairman.
The Board has determined that each
Non-Executive Director is independent in
character and judgement, commits
sufficient time and energy to the role, and
continues to make a valuable contribution
to the Board and its Committees, including
Charles McVeigh, notwithstanding his
long service.
The Nomination Committee’s primary
objective is to review the composition of
the Board. In making appointments to the
Board, the Nomination Committee
assesses the balance of skills, knowledge,
independence, experience and diversity
required in order to maintain an effective
Board.
B2 Board appointments
The Nomination Committee leads the
appointment of new Directors to the Board.
B3 Time commitments
On appointment, Directors are notified of
the time commitment expected of them.
The Non-Executive Directors have ensured
that they have sufficient time to carry out
their duties.
B4 Development
To ensure a full understanding of Savills
and its businesses, on appointment each
new Director undergoes a comprehensive
and tailored induction programme which
introduces the Director to the Group’s
businesses, its operations, strategic plans,
key risks and its governance policies. The
induction also includes one to one
meetings with the Heads of the Principal
Businesses and an introduction to each
Group business’ development strategy.
57
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Compliance with the UK Corporate Governance Code continued
D. Remuneration
D1 Levels and components of
remuneration
The Remuneration Committee is principally
responsible for determining Company
policy on senior executive remuneration
and for setting the remuneration
arrangements of the Executive Directors
and reviewing 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.
The Committee is advised by FIT
Remuneration Consultants LLP, who
provide an 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.
C3 Roles and Responsibilities of the
Audit Committee
The main roles and responsibilities of the
Audit Committee are set out in written
Terms of Reference which are available on
our website. The Committee is authorised
to investigate any matter within its Terms of
Reference 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 in the
fulfilment of its duties.
The Audit Committee’s role is to assist the
Board in discharging its duties and
responsibilities for financial reporting,
internal control and in making
recommendations to the Board on the
appointment of the independent External
Auditors. The Committee is responsible for
the scope and results of the audit work, its
cost effectiveness and the independence
and objectivity of the External Auditors.
The Committee has responsibility for
reviewing the Group’s whistleblowing
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.
C. Accountability
C1 Financial and business reporting
The strategic report is set out on pages 2
to 39 of the Annual Report and provides
information about the performance of the
Group, the business model, strategy and
the principal risks and uncertainties.
The Directors’ going concern statement is
given on page 51 of the Annual Report.
C2 Risk management and internal
control systems
The Board sets out the Group’s risk
appetite and, through the Audit Committee,
annually reviews the effectiveness of the
Group’s risk management and internal
control systems.
The Directors carried out a robust
assessment of the principal risks including
those that would threaten the business
model, future performance, solvency or
liquidity. Those risks and how they are
being managed or mitigated is set out in
the Annual Report at pages 25 to 29.
Taking account of the Company’s current
position and principal risks, the Directors
assessed the viability of the Group over a
three-year period. The Directors have a
reasonable expectation that the Group will
be able to continue in operation and meet
its liabilities as they fall due over the
three-year period. The viability statement is
set out on page 29 of the Annual Report.
The Board monitors the Group’s risk
management and internal control systems
and, at least annually, carries out a review
of the effectiveness of the Group’s systems
of internal control, covering all material
controls, including financial, operational
and compliance. The activities of the Audit
Committee are summarised on pages 53
and 54 of the Annual Report.
58
E. Relations with Shareholders
D2 Development of remuneration
E1 Shareholder engagement
policy and packages
and dialogue
The Group’s focus and business policy is
The Group Chief Executive and Group Chief
founded on the premise that staff in the
Financial Officer lead a regular programme
real estate advisory sector are motivated
of meetings and presentations with analysts
through highly incentive-based (and
and investors, including presentations
therefore variable) remuneration consistent
following the publication of the Company’s
with the Group’s partnership style culture,
full and half year results. This programme
which also ensures that the Group’s reward
maintains a continuous two-way dialogue
arrangements are consistent with – and
between the Company and Shareholders,
sensitive to – the cyclical nature of real
and helps to ensure that the Board is aware
estate markets.
of Shareholders’ views on a timely basis.
The Board also normally receives feedback
The Group’s Remuneration Policy is
twice each year from the Company’s
designed to deliver these objectives and to
corporate brokers on investors’ and the
provide the reward potential necessary for
market’s perceptions of the Company.
the Company to attract, retain and motivate
the high-calibre individuals on whom its
The Chairman and the Senior Independent
continued growth and development
Director are also available to meet with
depend. Reflecting this philosophy, the
Shareholders if so required.
salaries for the Executive Directors, Group
Executive Board members and senior
E2 Constructive use of the AGM
fee-earners are set significantly below
The AGM provides the Board with a
market medians for similar businesses,
valuable opportunity to communicate with
with a greater emphasis on the
private Shareholders and is generally
performance-related elements of profit
attended by all of the Directors.
share and/or, outside of the UK,
commission in the total reward package.
The Notice of Meeting and related papers
for the AGM are sent to Shareholders at
least 20 working days before the meeting.
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.
The established policy has been reviewed
during the year and is proposed for
re-approval by Shareholders at the 2017
AGM (as required by the Directors
Remuneration Regulations 2013). The
policy proposed for re-approval at the 2017
AGM is substantially the same as the
expiring established policy, with some
refinements to ensure its consistency with
emerging governance best practice. Full
details of the proposed policy are on pages
64 to 73 of the Annual Report.
Savills plc Report and Accounts 2016 C. Accountability
D. Remuneration
C1 Financial and business reporting
C3 Roles and Responsibilities of the
D1 Levels and components of
The strategic report is set out on pages 2
Audit Committee
remuneration
to 39 of the Annual Report and provides
The main roles and responsibilities of the
The Remuneration Committee is principally
information about the performance of the
Audit Committee are set out in written
responsible for determining Company
Group, the business model, strategy and
Terms of Reference which are available on
policy on senior executive remuneration
the principal risks and uncertainties.
our website. The Committee is authorised
and for setting the remuneration
to investigate any matter within its Terms of
arrangements of the Executive Directors
The Directors’ going concern statement is
Reference and has access to the services
and reviewing those of the members of the
given on page 51 of the Annual Report.
of the Group Legal Director & Company
Group Executive Board. The Committee
Secretary and, where necessary, the
(excluding the Non-Executive Chairman)
C2 Risk management and internal
authority to obtain external legal or other
also determines the level of fees payable to
control systems
independent professional advice in the
the Non-Executive Chairman.
The Board sets out the Group’s risk
fulfilment of its duties.
appetite and, through the Audit Committee,
The Committee is advised by FIT
annually reviews the effectiveness of the
The Audit Committee’s role is to assist the
Remuneration Consultants LLP, who
Group’s risk management and internal
Board in discharging its duties and
provide an independent commentary on
control systems.
responsibilities for financial reporting,
internal control and in making
matters under consideration by the
Committee and updates on market
The Directors carried out a robust
recommendations to the Board on the
developments, legislative requirements and
assessment of the principal risks including
appointment of the independent External
best practice, and internally by the Group
those that would threaten the business
Auditors. The Committee is responsible for
Legal Director & Company Secretary.
model, future performance, solvency or
the scope and results of the audit work, its
liquidity. Those risks and how they are
cost effectiveness and the independence
being managed or mitigated is set out in
and objectivity of the External Auditors.
the Annual Report at pages 25 to 29.
The Committee has responsibility for
Taking account of the Company’s current
reviewing the Group’s whistleblowing
position and principal risks, the Directors
arrangements, including ensuring that
assessed the viability of the Group over a
appropriate arrangements are in place for
three-year period. The Directors have a
employees to be able to raise, in
reasonable expectation that the Group will
confidence, matters of alleged impropriety,
be able to continue in operation and meet
and for ensuring that appropriate follow-up
its liabilities as they fall due over the
actions are taken.
three-year period. The viability statement is
set out on page 29 of the Annual Report.
The Board monitors the Group’s risk
management and internal control systems
and, at least annually, carries out a review
of the effectiveness of the Group’s systems
of internal control, covering all material
controls, including financial, operational
and compliance. The activities of the Audit
Committee are summarised on pages 53
and 54 of the Annual Report.
E. Relations with Shareholders
E1 Shareholder engagement
and dialogue
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 the Company’s
corporate brokers on investors’ and the
market’s perceptions of the Company.
The Chairman and the Senior Independent
Director are also available to meet with
Shareholders if so required.
E2 Constructive use of the AGM
The AGM provides the Board with a
valuable opportunity to communicate with
private Shareholders and is generally
attended by all of the Directors.
The Notice of Meeting and related papers
for the AGM are sent to Shareholders at
least 20 working days before the meeting.
D2 Development of remuneration
policy and packages
The Group’s focus and business policy is
founded on the premise that staff in the
real estate advisory sector are motivated
through highly incentive-based (and
therefore variable) remuneration consistent
with the Group’s partnership style culture,
which also ensures that the Group’s reward
arrangements are consistent with – and
sensitive to – the cyclical nature of real
estate markets.
The Group’s 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 of 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.
The established policy has been reviewed
during the year and is proposed for
re-approval by Shareholders at the 2017
AGM (as required by the Directors
Remuneration Regulations 2013). The
policy proposed for re-approval at the 2017
AGM is substantially the same as the
expiring established policy, with some
refinements to ensure its consistency with
emerging governance best practice. Full
details of the proposed policy are on pages
64 to 73 of the Annual Report.
59
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ remuneration report
Annual statement
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 86
to 92 as specified by the UK Listing Authority and the Regulations.
2012–2016 Overview
Underlying Profit
+123%
Dividend Payments to Shareholders*
+94%
Executive Director Remuneration**
+58%
Total Shareholder Return
+69%
*
The dividend cost for 2016 comprises the cost of the final dividend recommended
by the Board (amounting to £13.5m), payment of which is subject to shareholder
approval at the Company’s Annual General Meeting (‘AGM’) scheduled to be held
on 9 May 2017, the cost of the supplemental dividend (£19.5m) declared by the
Board on 21 March 2017 (payable to shareholders on the Register of Members as
at 18 April 2017) and the interim dividend (£5.9m) paid on 5 October 2016.
** Executive Director remuneration comprises the remuneration paid to the Group
Chief Executive Officer and Group Chief Financial Officer job-holders between
1 January 2012 and 31 December 2016. Since 1 July 2010 the Executive Director
representation on the Board has comprised these job holders.
60
Dear Shareholder
On behalf of the Board, I am pleased to introduce our 2016
Directors’ Remuneration Report (the ‘Report’). Included within this
Report is the Directors’ Remuneration Policy (the ‘Policy’), which
subject to Shareholder approval at the 2017 Annual General
Meeting (‘AGM’) will apply from that date, 9 May 2017, replacing the
Policy which was approved by Shareholders at the AGM in 2014.
The Policy, together with our Annual Report on Directors
Remuneration, will be presented to Shareholders for approval at
the AGM on 9 May 2017.
Our remuneration philosophy
As previously reported, our long-standing focus and business policy
is founded on the premise that staff in our sector are motivated
through highly incentive and performance-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 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. As such, it places great emphasis
on the calibration of Executive Director remuneration and structure
against internal relativities, whilst also rigorously assessing
competitive positioning in setting remuneration. Finally, it determines
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
continue to expect employment costs over the cycle to be in the
range of 65%–70% of revenues.
2016 performance and remuneration
Annual performance-related profit share
Savills delivered excellent performance in 2016, against a tough
background that included increased stamp duty rate in UK
residential, the Brexit vote and the slowdown in the market leading
up to the US presidential election. Key financial highlights for the
year included:
• Revenue of £1,445.9m, representing growth of 13% on 2015
• Underlying profit before tax of £135.8m, which represented 12%
growth on 2015
• Transaction Advisory revenues up 7% driven by market share
gains in Asia Pacific, particularly China, and strong growth in
Continental European markets
• 52% growth in profits in Continental Europe following improved
market conditions, improved Investment Management
performance and the benefit of business development activity in
recent years
• Further consistent growth from less transactional services –
Property Management revenue up 21%; Consultancy revenue
up 4%
Savills plc Report and Accounts 2016
In addition to this, 2016 also saw further strong progress in the
delivery of the Group’s longer-term strategic objectives, in particular:
• the ongoing development of our US platform, in particular by
extending geographic coverage to Atlanta, the Carolinas and
Denver, and ensuring the full integration of the Silicon Valley and
Toronto businesses acquired in 2015;
• the successful completion of the full integration of the former
SEB Asset Management business acquired in September 2015
into Savills Investment Management, which saw overall revenues
up more than 60% in the first full year of the combined business;
• the further strengthening of our service offering in Asia Pacific,
particularly in Australia and China, through targeted recruitment;
and
• the further improvement in the connectivity between our
businesses globally, enhancing the client offering.
At the beginning of 2016, the Committee set stretching financial
targets for the 70% of the performance-related profit share relating
to the delivery of underlying profit before tax (‘UPBT’). The Group
delivered a very strong financial performance in 2016,
notwithstanding the market uncertainties noted above, and
financial performance exceeded the maximum target. As such, the
Executive Directors received the maximum potential award in
relation to financial performance. In relation to the objectives-based
element which accounts for up to 30% of annual award, the
Executive Directors were deemed to have performed towards the
top end of their personal strategic and operational objectives. Full
details of the annual performance-related profit share awards
approved by the Committee for the Executive Directors are
included along with the other elements of remuneration in the
total remuneration table on page 74 of this Report.
Policy for 2017–19
In my letter introducing our Directors’ Remuneration Report for
2015, I advised that during the course of 2016 the Committee
intended to undertake a review of the Directors’ Remuneration
Policy approved by Shareholders in 2014 in anticipation of seeking
Shareholder approval at the 2017 AGM for the Policy which will
apply for the next three years. This review has been completed and
the Committee has concluded that the Group’s long-standing
approach to Executive Director (and senior management) reward
should be maintained and that accordingly we should leave the
expiring policy essentially unchanged save for some amendments
to ensure consistency with emerging governance best practice.
The Committee therefore recommends that the Directors’
Remuneration Policy is renewed on the following basis:
• Base salaries: no change to the established approach of
offering low base salaries, relative to market medians (which
approach applies to the Executive Directors, Group Executive
Board Members and other senior fee-earners) is proposed.
Salaries will continue to be reviewed each year (although not
necessarily increased). For 2017, the Committee approved in
principle a 2.5% increase in the Executive Directors’ base
salaries, which will be used as the reference salary in future
years when considering subsequent salary increases, but no
actual increase will be applied in 2017
• Benefits & pension: again no changes are proposed, so these
will continue to be set below market rates
• Annual performance-related profit share: maximum opportunity
to be increased in line with increases in RPI annually (or if no
increase in RPI to remain unchanged), to incentivise and reward
the Executive Directors for delivering further significant
improvements in performance. For 2017, the cap on the profit
share opportunity will, for Group Chief Executive Officer,
therefore be £2.05m and for the Group Chief Financial Officer,
therefore be £1.5375m, being 2.5% higher than the cap applying
in 2016, reflecting year-on-year growth in RPI (2016 caps: Group
CEO £2m; Group CFO £1.5m). Annual awards will be
determined as follows:
– 75% based on a Group UPBT performance (previously 70%
of opportunity)
– 25% on the achievement of pre-set personal strategic and
operational objectives (previously 30% of opportunity)
The Group UPBT payment scale will be adjusted for any
acquisitions/disposals in the year which impact Group UPBT by
more than 7.5% (on an annualised basis). In such cases the scale
will be adjusted to neutralise the benefit of any overage above the
7.5% level.
• As now, the first element of any award (equal to up to 100% of
base salary) will be paid as cash. Above the level of this first
element,50% of any award (previously progressively up to 33%)
will be deferred in the form of shares for three years, receipt of
which will be contingent on continued employment (subject to
normal good leaver protections). The minimum cash threshold
reflects Savills’ highly unusual approach of a low base salary,
which with regard to bonus deferral unfairly penalises Executive
Directors relative both to internal and external comparators. For
completeness, the 50% bonus deferral will also operate after
taking account of any charitable donations made out of awards
(i.e. if an Executive Director elects to waive part of a bonus to
gift it to charity, deferral will not apply to that element)
• Performance Share Plan: annual grants to be made at the
existing award levels of up to 2x base salary for the Group Chief
Executive Officer and the Group Chief Financial Officer. The EPS
growth and relative Total Shareholder Return targets will initially
remain unchanged from those applying in 2016, but will be
subject to ongoing review to ensure that these continue to
provide meaningful targets in the light of market developments.
A two year post-vesting holding period will be introduced
• Share Ownership Guidelines will be increased to 500% (from c.
400%) of salary, which can be achieved through purchase or the
retention of any after-tax shares which vest until the guideline is
met. This moves the Company’s approach to a position which is
ahead of the latest best practice guidance (even when taking
into account the lower than market base salaries).
Governance developments
On behalf of the Committee, I wanted to take the opportunity to
thank Peter Smith and Martin Angle, who served as members of
the Committee until their retirement from the Board at the
conclusion of the 2016 AGM.
As a Committee, we continue to monitor best practice
developments in executive remuneration and have incorporated a
number of these features in the proposed refined Directors’
Remuneration Policy. We have consulted with our major
shareholders in relation to the proposed Policy who, I am pleased
to report, were broadly supportive. The Committee is appreciative
of the significant shareholder support that it has enjoyed in recent
years and welcomed shareholders’ endorsement of the 2015
Annual Remuneration Report at the 2016 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 resolutions at this year’s AGM on 9 May 2017.
Rupert Robson
Chairman of the Remuneration Committee
61
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ remuneration report continued
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 while promoting
the long-term interests of the Company. The Committee also
considers the broader implications of the policy to mitigate any
potential environmental, social or governance implications. 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:
Committee member
Position
Status
Rupert Robson
Chair of the Committee
Independent
Meetings
Attendance table
Committee member
Rupert Robson
Tim Freshwater
Liz Hewitt
Peter Smith (retired 11 May 2016)
Martin Angle (retired 11 May 2016)
Meetings
attended
Meetings
eligible to
attend
5
5
5
3
3
5
5
5
3
3
As at 31 December 2016 and up to the date of this Report, the
Committee comprises the Independent Non-Executive Directors.
Biographical details relating to each of the Committee members
are shown on pages 44 and 45.
The Committee met five times during the year. The principal
agenda items considered by the Committee during the year were
as follows:
• reviewing the Group’s remuneration policy;
• agreeing performance targets for both the annual performance-
related profit share and Performance Share Plan awards;
Tim Freshwater
Member of the Committee
Independent
• preparing an Annual Remuneration Report consistent with the
Liz Hewitt
Peter Smith
Martin Angle
Member of the Committee
Independent
Member of the Committee
(to 11 May 2016)
Non-Executive
Chairman
Member of the Committee
(to 11 May 2016)
Independent
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.
Advisors 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
advisor. To ensure that the Committee continued to receive
appropriate external advice, particularly in the context of renewing
the remuneration policy, it reviewed its ongoing external advice
requirements. Following a formal review process, FIT Remuneration
Consultants were appointed by the Committee to be its external
independent advisor. FIT Remuneration Consultants are members of
the Remuneration Consultants Group, and adhere to the voluntary
code of conduct in relation to executive remuneration consulting in
the UK. FIT Remuneration Consultants’ fees are based on a time and
material basis, within the parameters of an overall annual budget. In
2016, FIT Remuneration Consultants received fees of £61,069 plus
VAT and the outgoing adviser, Deloitte, received fees of £23,300 plus
VAT in relation to advice provided to the Committee. Neither FIT
Remuneration Consultants nor Deloitte provided any other services
to the Group during the year.
Committee attendee
Position
Status
Nicholas Ferguson Non-Executive Chairman
Jeremy Helsby
Group Chief Executive Officer Attends by
Chris Lee
Group Legal &
Company Secretary
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 Chief Financial Officer, may be invited to
attend meetings to provide an overview of market conditions and
the Group’s prospective financial performance.
62
Savills plc Report and Accounts 2016 The Committee is satisfied that the advice received from FIT
Remuneration Consultants and 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.
The Committee is also advised internally by the Group Legal Director
& Company Secretary (save in relation to matters concerning his
own remuneration).
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 package
of the Group Chief Financial Officer.
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).
63
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ remuneration report continued
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
provide an appropriate balance between being achievable and stretching.
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, the arrangements applying across the wider employee group and
internal pay relativities. 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 Policy
A summary of the proposed policy for Executive Directors and how it will be applied for 2017 is set out below.
Element
Base salary
Summary of approach
Change from previous policy
Application of policy for 2017
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.
Maximum salary introduced,
the cap being introduced to
comply with regulatory
guidance and not
representing any form of
aspiration.
The Committee has approved in
principle an increase in the base salaries
of the Executive Directors of 2.5% for
2017 (‘Reference Salary’), however
these increases have not actually been
implemented
Pension
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.
The CEO receives a pension from the
legacy defined benefit pension plan but no
longer accrues benefits under the plan.
Benefits
Benefits include:
• Medical insurance benefits;
• Annual car/car allowance (up to
£10,000);
• Permanent Health Insurance;
• Life insurance; and
• Relocation expenses
Annual performance-
related profit share
Reflects the Group’s annual profit
performance and personal performance
against pre-set objectives and overall
contribution.
In line with the Group’s philosophy that
there is greater emphasis (than under
listed company norms) on variable
performance-related pay.
50% of any award payable above
100% of base salary is deferred into
shares for three years.
Malus and clawback provisions apply.
Salaries in 2017 will therefore be as
follows:
• Group Chief Executive Officer: £275,000
• Group Chief Financial Officer: £210,000
No material changes.
Pension contributions / salary
supplements for 2017 are:
• Group Chief Executive Officer: 14% of
salary
• Group Chief Financial Officer: 18% of
salary.
Maximum value of car
allowance and relocation
expenses introduced.
Benefits in line with policy.
Maximum potential award
increased from £2m to
£2.05m and to increase
annually thereafter in line
with increases in RPI over the
previous 12 months.
Deferral simplified and
increased to apply to 50% of
all payments above 100% of
base salary.
The maximum potential annual profit
share awards for 2017 are:
• Group Chief Executive Officer:
£2.05m
• Group Chief Financial Officer:
£1.5375m.
For 2017 profit share awards, 75% will be
based on the Group’s annual profit
performance and 25% will be based on the
delivery of strategic and operational
performance goals. The Committee
reserves its ability to vary these proportions
or apply different / additional measures in
future years.
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Savills plc Report and Accounts 2016 Element
Summary of approach
Change from previous policy
Application of policy for 2017
Performance
Share Plan
Share Ownership
Guidelines
Awards of shares are made subject to
a three-year performance period. Any
vested awards will then be subject to an
additional two-year holding period.
The maximum award potential remains at
200% of base salary, subject to an overall
annual maximum of shares with a value
of £1m on award per participant.
Malus and clawback provisions apply.
Achieved through share purchase and/
or retention of any after-tax shares which
vest pursuant to the Group’s share plans
until the guideline is met.
Two-year holding period
introduced.
The awards for 2017 will be up to 200%
of base salary.
For 2017 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).
Increased to 500% of
base salary.
500% of base salary for the Group Chief
Executive Officer and Group Chief Financial
Officer.
Directors’ Remuneration Policy
This part of the Report sets out the policy which will be put forward for shareholder approval at the 2017 AGM in accordance with section
439A of the Companies Act 2006 (the ‘Policy’). The Policy will apply from the 2017 AGM, subject to shareholder approval.
Policy table
The following table sets out the Policy for each component of Executive Directors’ remuneration.
Purpose and link to strategy Operation
Potential
Performance measures
Base salary
• A core component
of the total reward
package, which
package overall is
designed to
attract, motivate
and retain
individuals of the
highest quality.
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.
n/a
Set significantly below market
median levels with greater
emphasis on the performance-
related elements of reward. For
2017, the Committee in principle
approved an increase in base
salaries of 2.5%; however, these
increases were not implemented.
The Committee will consider the
higher Reference Salary when
considering subsequent
increases:
• Group Chief Executive Officer:
£275,000 (Reference Salary
£282,000)
• Group Chief Financial Officer:
£210,000 (Reference Salary
£215,000).
Although base salaries are
reviewed annually, in line with the
Group’s philosophy, the
Committee does not intend to
make annual incremental base
salary increases for Executive
Directors. However, the
Committee retains the flexibility to
award base salary increases
taking into consideration the
factors considered as part of the
annual review.
• The annual base salary for any
existing Executive Director shall
not exceed £500,000.
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Purpose and link to strategy Operation
Potential
Performance measures
Defined contribution pension
arrangements are provided.
For 2017 the pension
contributions/supplements are:
n/a
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.
• Group Chief Executive Officer:
14% of annual base salary
• Group Chief Financial Officer:
18% of annual base salary.
As part of the funding
arrangements agreed when Savills
Defined Benefit Pension Plan (‘the
Plan’) was closed to future accrual
in 2010, the Group Chief Executive
Officer receives a minimum
contribution of 14%. The
maximum contribution will be no
more than the maximum
contribution for all other 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 that set out
above although a contribution limit
of 20% of annual base salary per
Executive Director has been set
for the duration of this policy. For
international appointments, the
Committee may determine that
alternative pension provisions will
operate, and when determining
arrangements, the Committee will
have regard to the cost of the
arrangements, market practice in
the relevant international
jurisdiction and the pension
arrangements received elsewhere
in the Group.
Pension
• Provides
appropriate
retirement
benefits.
• Rewards
sustained
contribution.
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Savills plc Report and Accounts 2016 Purpose and link to strategy Operation
Potential
Performance measures
Benefits
• To provide market
Benefits currently comprise:
competitive
benefits.
• Medical insurance benefits
• Car/car allowance
• Permanent Health Insurance
• Life 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.
Car allowance (currently 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
but the provision of taxable
benefits will normally operate
within an annual limit of 30% of an
Executive Director’s annual base
salary.
The Committee will monitor the
costs in practice and ensure that
the overall costs do not increase
by more than the Committee
considers to be reasonable in all
the circumstances.
Relocation expenses are subject
to a maximum limit of £200,000
(£300,000 in the case of an
international relocation) plus, if
relevant, the cost of 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
significant amount
of any award into
shares.
Annual profit share awards reflect
the Group’s annual profit performance
and personal performance and
contribution.
Awards are delivered part in cash and
part in shares subject to a minimum
cash threshold of 100% of annual
salary. Thereafter, 50% of any award
is delivered in shares.
The share element of any award is
normally deferred for a period of
three years.
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.
The maximum potential annual
profit share awards for 2017 are:
• £2.05m for the Group Chief
Executive Officer
• £1.5375m for the Group Chief
Financial Officer.
The number of shares in that part of
the award deferred for three years is
increased at the time of vesting to
reflect the value of dividends declared
over the deferral period. Alternatively
the cash equivalent is paid.
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 £2.05m p.a.
The Committee may exercise its
judgement to adjust (on a downwards
only basis) individual annual bonus
payouts should they not reflect overall
business performance or individual
contribution.
Each of these caps will increase in
line with the rate of any increase in
RPI for the preceding financial
year (if there is no increase in RPI,
the cap will remain unchanged).
Malus/clawback provisions apply,
allowing for the reduction of awards as
explained in the notes to this table.
For 2017, the weighting will be 75% in
relation to the Group’s annual profit
performance defined as underlying
profit before tax performance and 25%
in relation to delivery against a mix of
personal, strategic and operational
objectives. The Committee reserves
the right to vary these proportions in
subsequent years and/or to add
additional or substitute measures to
ensure that incentive remains
appropriate to business strategy.
The scale for the profit share element
of any award will be disclosed annually
in arrears.
Unless the Committee determines
otherwise, this scale will normally be
adjusted for any acquisitions/disposals
in a single year which impact (on an
annualised basis) UPBT by more than
7.5%. In such cases the scale will be
adjusted to neutralise the benefit of any
overage above the 7.5% level.
If there is significant transaction that
results in the scale becoming
inappropriate then Shareholders will
be consulted about any adjustment to
the scale.
The award potential at threshold is
25%. As the arrangement is an annual
profit share there is no pre-set award
level for on-target performance.
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Purpose and link to strategy Operation
Potential
Performance measures
Performance Share Plan (‘PSP’)
• 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. A holding
period will apply so that Executive
Directors may not normally exercise
vested PSP awards until the fifth
anniversary of the award date.
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 paid over the
vesting or any subsequent holding
period.
Malus/clawback provisions apply,
allowing for the reduction of awards as
explained in the notes to this table.
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 proposed to make an
upward adjustment the Committee
would consult with major shareholders
in advance. The Committee may adjust
or amend awards in accordance with
the PSP rules.
Maximum annual award potential
of 200% of salary (plan rules limit).
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 base
salary p.a. (or if lower, £1m p.a.).
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
• Earnings per share.
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 PSP.
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.
Maximum Partnership Shares in
accordance with statutory limits.
The Company does not presently
offer Free Shares, Matching
Shares or Dividend Shares.
n/a
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Savills plc Report and Accounts 2016 Purpose and link to strategy Operation
Shareholding Guidelines
• To encourage
share ownership
by the Executive
Directors and
ensure interests
are aligned.
Executive Directors are expected to
purchase and/or retain all shares (net of
tax) which vest under the Group’s share
plans (or any other discretionary
long-term incentive arrangement
introduced in the future) until such time
as they hold a specified value of shares.
Potential
Performance measures
500% of salary for all Executive
Directors.
n/a
Only beneficially-owned shares and
vested share awards (including PSP
vested awards subject to a holding period
discounted for anticipated tax liabilities)
may be counted for the purposes of the
guidelines. Share awards do not count
towards this requirement prior to vesting.
Once shareholding guidelines have been
met, individuals are expected to retain
these levels as a minimum. The
Committee will review shareholdings
annually in the context of this policy.
When satisfying awards made under its Sharesave Scheme and the PSP (under which some options remain available for exercise), the
Company may use newly-issued shares, subject to compliance with institutional guidelines. For all other share schemes, including the
Deferred Share Plan and Deferred Share Bonus Plan, awards are satisfied via employee benefit trusts (EBTs) following purchase in the
market. Currently, the Company makes use of two EBTs, a US ‘Rabbi Trust’ for US tax residents and a Guernsey-based EBT for all other
share scheme participants. As previously agreed with shareholders, up to 15% of the Group’s issued share capital can be held in
aggregate in the EBTs at any time. There are no powers to issue new shares (or to reissue its existing treasury shares) under either the
Deferred Share Bonus Plan, Deferred Share Plan or the EBTs and, therefore, there is no further dilution of existing shareholdings.
Malus and clawback
Malus (being the forfeiture of unvested awards) and clawback (being the ability of the Company to reclaim paid amounts as a debt)
provisions apply to the annual performance-related profit share and the PSP. These provisions may be applied where the Committee
considers it appropriate to do so following: a material misstatement of the Group’s financial results; serious misconduct by the individual;
a factual error in calculating an award or vesting; and 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 inquiry being ongoing at that
point, the clawback period will be extended to a six-month period post the conclusion of such an inquiry.
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 will generally be increased annually in
line with increases in RPI over the previous
12 months.
All fees for membership of the Board are
subject to the maximum payable to
Non-Executive Directors as stated in the
Company’s Articles of Association (currently
£500,000 for the Chairman and NED base
fees) and within an additional limit
determined by the Non-Executive Chairman
and the Executive Directors on behalf of the
Board of £200,000 for any additional
responsibility or other special fees.
Fees payable to the Non-Executive Directors are
determined by the Non-Executive Chairman and the
Executive Directors on behalf of the Board.
Fees payable to the Chairman are determined by
the Committee.
The Non-Executive Director fee policy is to pay:
• a basic fee for membership of the Board
• 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.
Non-Executive Directors are not entitled
to participate in any of the Group’s
incentive arrangements or share
schemes.
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.
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Directors’ remuneration report continued
The Committee may make minor amendments to the Policy (for example for regulatory, exchange control, tax or administrative purposes
or to take account of a change in legislation) without obtaining shareholder approval for that amendment.
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising any
discretions available to it in connection with such payments) notwithstanding that they are not in line with the policy set out above where
the terms of the payment were agreed before the policy came into effect or at a time when the relevant individual was not a Director of the
Company and, in the opinion of the Committee, the payment was not in consideration for the individual becoming a Director of the
Company. For these purposes, ‘payments’ includes pension payments under legacy defined benefit pension plans and the satisfaction of
awards of variable remuneration and, in relation to an award over shares, the terms of the payment were ‘agreed’ at the time the award
was granted.
Clawback or malus may apply where stated in the above table. Other elements of remuneration are not subject to clawback or malus.
The Committee may increase the proportion of annual performance-related profit share deferred into shares.
The PSP will be operated in accordance with the rules of that plan as approved by shareholders. In accordance with those rules the
Committee has discretion in the following areas (as well as general administrative discretion):
• the Committee may adjust the number of shares under award if there is a capitalisation, rights issue, subdivision, reduction or any
other variation in the share capital, a demerger or special dividend;
• a performance condition for an existing award may be amended if an event occurs which causes the Committee to consider that an
amended performance condition would be a fairer measure of performance and would be no less difficult to satisfy;
• on a change of control or winding up the number of shares will be subject to any relevant performance conditions and time pro-rated.
The Committee has discretion not to apply this reduction or to apply an alternative or no performance condition. Additionally,
participants may have the opportunity to exchange their awards for equivalent awards in the new holding Company; and
• the Committee has the discretion to treat a demerger as an early vesting event on the same basis as a change of control.
Performance measures and target setting
Annual Performance-Related Profit Share
Performance measures for the annual performance-related profit share are intended to provide a balance between incentivising
executives to meet near-term profit objectives and the creation of longer-term shareholder value through an appropriate mix of strategic,
operational and personal performance goals.
Consistent with the Group’s partnership style culture, annual profit performance is the primary performance measure. Targets are set to
be appropriately stretching, by reference to the Group’s internal business plans and to align with returns to shareholders over the cycle.
A portion of the award relates to strategic, operational and personal objectives. These objectives are determined annually by the
Committee and incentivise sustainable improvements in the underlying drivers of performance and the continued development and
further growth of the Group.
Performance Share Plan
For the PSP, the use of a mix of relative Total Shareholder Return and earnings measures ensures that the Group’s Executive Directors are
focused on delivering both absolute bottom line growth and strong returns to shareholders relative to an appropriate comparator group.
In the event the Committee considered it appropriate to change the performance measures for the PSP, any new measure would be
selected to be in line with the Group’s long-term business strategy and to support long-term shareholder value creation. The Committee
would consult with major shareholders in advance of a change in a performance measure used for the PSP.
The performance targets for the PSP are reviewed periodically and set taking into account market conditions, external market
forecasts, internal business forecasts and market practice. The Committee may also adjust the targets in the light of corporate activity
(e.g. merger and acquisition activity), capital events or changes to accounting rules to ensure that targets remain appropriate.
Remuneration arrangements throughout the Group
The remuneration policy for Executive Directors follows the same key principles as that for senior and fee-earning employees generally in
the Group – that salaries are below the market median with a greater emphasis placed on variable, performance-related remuneration.
Any differences in the specific policies generally reflect differences in market practice for differences in seniority. For support staff,
salaries are set around market median levels to ensure the Group is able to recruit and retain high quality individuals.
Other than Executive Directors, only Group Executive Board members are currently eligible to receive awards under the PSP on an
annual basis. Other senior staff may be granted share awards under the Company’s Deferred Share Plan if there are particular business
reasons for applying a retention element to remuneration.
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Savills plc Report and Accounts 2016 Illustrations of application of the Policy
The charts below illustrate how much the current Executive Directors could earn under three different performance scenarios for 2017:
‘Minimum’, ‘On-target performance’ and ‘Maximum’ – based on the assumptions below.
Group Chief Executive Officer
Group Chief Financial Officer
Maximum
11%
70%
19%
£2.92m
Maximum
12%
69%
19% £2.22m
On-target performance
22%
69%
9%
£1.49m
On-target performance
23%
68%
9% £1.13m
Minimum
100%
£0.32m
Minimum
100%
£0.26m
Fixed pay
Annual reward
Long-term reward
Fixed pay
Annual reward
Long-term reward
Element in the above chart
Component
‘Minimum’
‘On-target’
‘Maximum’
Fixed Pay
Base salary
Pension
Benefits
Annual reward
Annual performance-
related profit share
2017 annual base salary
14% of salary for the Group Chief Executive,
18% of salary for the Group Chief Financial Officer
Annual taxable value of benefits provided in 2016
0% of maximum award
50% of maximum award Group Chief Executive
Officer – £2,050,000
Group Chief Financial
Officer – £1,537,500
Long-term reward
PSP
0% of maximum award
25% of maximum award Group Chief Executive
Officer – £550,000
Group Chief Financial
Officer – £420,000
Other assumptions
• A constant share price has been used
• Excludes additional shares representing the value of dividends declared during the vesting period which
may attach to the deferred element of any annual performance-related profit share award or PSP award
at vesting
• Assumes that no awards are made under tax-advantaged all-employee share plans
• The proposed new Policy does not include an on-target level for the annual performance-related profit
share so the on-target in line with the previous policy has been used as the overall intent of the changes
was not to change payouts for target performance levels
Approach to remuneration on recruitment
In the event that the Board appoints a new Executive Director, in determining his or her new remuneration package the Committee would
take into consideration all relevant factors including the calibre, skills and experience of the individual and the market from which they are
recruited. In determining the remuneration package the Committee remains mindful of the need to avoid paying more than is necessary
on recruitment.
‘Buy-outs’
To facilitate the recruitment of a new Executive Director, the Committee may make awards to ‘buy-out’ remuneration forfeited on leaving
the previous employer. In doing so, the Committee would take into account all relevant factors including the form of awards, the vesting
conditions attached to the awards and any performance conditions. The overriding principle will be that any replacement ‘buy-out’
awards will be of up to a comparable commercial value of the awards that have been forfeited. The Committee may make use of LR9.4.2
of the Listing Rules for the purpose of buy-outs only.
Fixed remuneration
The remuneration policy for current Executive Directors reflects the Group’s overall philosophy of paying base salaries which are
significantly below market medians and greater emphasis on performance-related elements of reward. However, the Committee is
mindful of the need to retain flexibility for the purpose of recruitment, taking into account the range of potential circumstances which
might give rise to the need to recruit a new Executive Director. Against that background, the policy for the fixed element of reward for a
new Executive Director allows:
• the base salary for a new appointee to be set in line with market levels rather than below market levels; or
• provision of a salary supplement for a period of time as an Executive Director transitions to a lower fixed pay over time.
Where an Executive Director is located in a different international jurisdiction, benefits may reflect market practice in that jurisdiction.
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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 set out above. This might arise, for
example, where a newly appointed Executive Director is recruited on a significantly lower salary than in his or her previous position taking
into account the structure of remuneration at Savills. 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.
Consistent with the Regulations, the formal caps on fixed pay in the Policy do not apply on recruitment although the Committee would
seek to apply such caps in any element to the extent it considers it to be feasible to do so.
Variable remuneration
The variable remuneration (annual performance-related profit share and PSP awards) for a new recruit would be consistent with the policy
in the table on pages 64 and 65 (excluding buy-outs).
In the case of an employee who is promoted to the position of Executive Director (including if an Executive Director is appointed following
an acquisition or merger), it is the Company’s policy to honour pre-existing awards and contractual commitments.
Non-Executive Directors
In the event of the appointment of a new Non-Executive Director, remuneration arrangements will normally be in line with those detailed in
the relevant table above.
Interim appointments
In the event that an interim appointment is made to fill an Executive Director role on a short-term basis or a Non-Executive Director taking
on an executive function on a short-term basis, then an additional fee or salary supplement (and/or participation in the variable pay
arrangements) may be provided.
Director service contracts and termination policy
When determining the leaving arrangements for an Executive Director, the Committee takes into account any pre-established agreements
including the provision of any incentive plans, typical market practice, the performance and conduct of the individual and the commercial
justification for any payments.
The following summarises our policy in relation to Executive Director service contracts and payments in the event of a loss of office:
Notice periods
12 months’ notice by either the Company or the Executive Director.
For new appointees, the Committee reserves the right to increase the period of notice required from the
Company in the first year of employment to up to 24 months, decreasing on a monthly basis to 12 months on the
first anniversary of employment.
Contract dates
Jeremy Helsby – 1 May 1999
Simon Shaw – 16 March 2009
Expiry dates
Elements of
remuneration
Termination
payments and
treatment of
the annual
performance-
related profit
share
72
Contracts are rolling service contracts with no expiry date.
Executive Directors’ service contracts contain provisions relating to base salary, pension, private medical
insurance, car allowance (or the provision of a Company car) and confirm their eligibility to participate (although
not necessarily receive any award) in the Company’s annual performance-related profit share arrangements, the
PSP and other employee share schemes.
If an Executive Director’s employment is to be terminated, the Committee’s policy in respect of the service
contract, in the absence of a breach by the Director, is to agree a termination payment based on the value of
base salary and contractual benefits and pension entitlements in their notice period. In addition, if they are
classified as ‘good leavers’ as defined in their service agreements (which expression does not include dismissal
due to poor performance or voluntary resignation unless the Committee so determines), they may also receive a
pro-rata annual performance-related profit share and retain outstanding incentive awards. The policy is that, as is
considered appropriate at the time, the departing Executive Director may work, or be placed on garden leave, for
all or part of his/ her notice period, or receive a payment in lieu of notice in accordance with the service
agreement. The Committee will consider mitigation to reduce the termination payment to a leaving Director when
appropriate to do so, having regard to the circumstances. No performance-related profit share element would be
paid in respect of notice periods not worked.
In addition, where the Director may be entitled to pursue a claim against the Company in respect of his/ her
statutory employment rights or any other claim arising from the employment or its termination, the Company will
be entitled to negotiate settlement terms (financial or otherwise) with the Director that the Committee considers to
be reasonable in the circumstances and in the best interests of the Company and to enter into a settlement
agreement with the Director to effect both the terms agreed under the service agreement and any additional
statutory or other claims, and to record any agreement in relation to any annual performance-related profit share
award, in line with the policies described above and/ or, as below, share awards.
Savills plc Report and Accounts 2016 Treatment of
share incentives
Deferred share awards
Deferred share awards made (or to be made) under the annual performance-related profit share scheme are
subject to forfeiture if the award-holder leaves service prior to the vesting date other than in defined ‘good
leaver’ situations. Good leaver circumstances are death, ill-health, injury or disability, redundancy, retirement,
the employing Company being sold or transferred outside of the Group, or any other reason at the discretion of
the Committee.
For ‘good leavers’, any outstanding deferred share award will normally vest on the normal maturity date (although
the Committee has discretion to accelerate to the date of cessation). Where a good leaver circumstance is at the
Committee’s discretion rather than a prescribed circumstance, vesting may be on such date and such terms as it
may determine.
PSP
In the event that a participant is a ‘good leaver’, any outstanding unvested PSP awards will normally be pro-rated
for time in service during the relevant performance period with performance measured to the end of the
performance period and vesting occurring at the normal vesting date. Any applicable holding period will also
normally apply although the Committee may choose to release such shares earlier. In particular circumstances
(e.g. death), the Committee has the power to vary these provisions, including to allow for early vesting. For all
other leavers, outstanding unvested awards lapse. Good leaver circumstances are leaving due to death, injury,
ill-health, disability, redundancy, or any other reason at the discretion of the Committee (for example, retirement).
If an award has been granted as an option and a participant ceases to work for the Group after the option has
become exercisable, he/she will normally be permitted to exercise outstanding options within a period of six
months following the end of the performance period or cessation of employment where this is after the end of the
performance period (as appropriate). In the event of the death of a participant the personal representatives will be
able to exercise an option in accordance with the PSP rules.
All-employee share plans
Sharesave: Awards vest in accordance with their terms, under which ‘good leavers’ are entitled to receive shares
on or shortly after cessation, but other leavers normally forfeit any awards.
Share Incentive Plan (’SIP’): shares which have been held in the SIP for at least five years are released to leavers
free from income tax and social security charges. Some tax and social security charges will be payable on shares
taken out of the SIP within five years of purchase unless the participant is a ‘good leaver’.
Other awards
Other
information
Where an award is made for the purpose of recruitment (for example a buy-out award under LR 9.4.2) then the
leaver provisions would be determined at the time of award having regard to the circumstances of the
recruitment, the terms of awards being bought out and the principles for leavers in the current policy.
Executive Directors are subject to post-employment restrictive covenants for a period of six months post-cessation.
The Company may also meet ancillary costs, such as outplacement consultancy and/or reasonable legal costs, if
the Company terminates an Executive Director’s service contract.
Consideration of conditions elsewhere in the Group
In making remuneration decisions, the Committee considers the pay and employment conditions elsewhere in the Group. As part of
decisions being made on the annual pay review, the Committee is informed about the approach to salary increase and the outcome of
annual performance-related profit share (and other incentive arrangements such as fee-earner commission schemes) across the Group.
The Committee is also provided with comparative metrics on total employment costs across the Group as a percentage of revenue.
The Company operates a consistent remuneration philosophy across the Group. In this context, the Committee does not consider it
necessary to consult with employees in the Group on the specific remuneration policy for Executive Directors.
Consideration of shareholder views
The Committee takes into account the views of the Group’s shareholders and investor bodies. The Board and the Committee (through
the Committee Chairman) has open and regular dialogue with our major shareholders on remuneration matters, including consulting with
major shareholders where the Committee is considering making material changes to the remuneration policy.
73
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ remuneration report continued
Annual Report on Remuneration
Total remuneration for 2016
Set out below are details of Executive Director remuneration for 2016.
Executive Directors’ ‘single figure’ for the financial year ended 31 December 2016 and as a comparison for the financial year ended
31 December 2015 (audited).
Jeremy Helsby
Simon Shaw
2016
£
2015
£
2016
£
2015
£
Salary(1)
Benefits(2)
Pension: contribution
Pension: defined benefit deferred pension(4)
Annual profit share – cash(3)
Annual profit share – deferred shares(3)
Near-term remuneration
11,055
38,500
−
275,000 266,667
10,885
40,958
29,213
204,167
11,216
36,750
−
1,314,800 1,340,000 1,040,000 1,040,000
435,000 425,000
210,000
11,216
37,800
−
598,200 610,000
2,237,555 2,297,723 1,734,016 1,717,133
The aggregate near-term remuneration paid to the Executive Directors in the year ended 31 December 2016 was £3.97m (2015: £4.01m).
Notes:
1. No increases in base salary were awarded to the Executive Directors in 2016 (in respect of 2015, base salaries were increased effective 1 March 2015)
2. Benefits comprise private medical insurance and car allowance.
3. The 2016 and 2015 figures exclude any charity/ pension waiver. For 2016, Jeremy Helsby waived £45,000 (2015: £50,000) and Simon Shaw waived £25,000 (2015: £35,000)
in favour of contributions to registered charities.
4. Jeremy Helsby took his pension from the defined benefit pension plan on 9 July 2015 and no benefits/costs accrued in this regard in 2016.
5.
(see the table below) For 2016, the notional value of the PSP award with a performance period which ended on 31 December 2016 (i.e. where the award will vest in August
2017) has been valued based on the number of shares that will vest and the three month average share price for the period to 31 December 2016 (692.44p per share). The
actual value has been split between the relevant value on the date of the original award of the relevant shares (the PSP – performance element) and subsequent increase in
value (PSP – share price appreciation). The Company did not grant PSP awards in 2013 and accordingly no PSP award vested in respect of performance achieved in the
three-year period ended 31 December 2015.
Gain on long-term share-based awards
Performance Share Plan – performance element(5) (for 2016: notional)
Performance Share Plan – share appreciation element(5) (for 2016: notional)
Long-term share-based reward (non cash(5) for 2016: notional)
Jeremy Helsby
Simon Shaw
2016
£
Notional
2015
£
Actual
2016
£
Notional
2015
£
Actual
225,000
34,665
259,665
–
–
–
125,000
19,256
144,256
–
–
–
Total i.e. ‘Single Figure’ (for 2016: part notional)
2,497,220 2,297,723 1,878,272 1,717,133
The information in this table has been audited by the Auditor, PricewaterhouseCoopers LLP.
Performance-related remuneration for 2016
Annual performance-related profit share
UPBT performance-related element
The following near-term performance measures applied to the 2016 annual performance-related profit share arrangements:
70% of the award was based on profit performance, defined as UPBT 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:
Minimum
(0% of element)
£80m
Target
(50% of element)
£117m
Maximum target
(100% of element)
£134m
Savills UPBT
performance
£135.8m
Bonus award
(% of element)
100%
There were pre-defined hurdles between minimum, target and maximum rather than straight-line vesting.
Reflecting the Group’s very strong performance in 2016, awards at 100% of the maximum potential were earned by the Executive
Directors in respect of the UPBT performance-related element (2015: 100%).
The remaining 30% of annual performance-related profit share awards was based on individual performance against key strategic and
operational objectives. The Executive Directors were respectively awarded (CEO) 93% and (CFO) 100% of this 30%.
The Committee set strategic and operational objectives for the Executive Directors which were aligned with value-creation for Savills.
74
Savills plc Report and Accounts 2016
Details of Jeremy Helsby’s achievement against the key objectives set included the following:
• driving the continued development of the Group’s US business, in particular by further building-out the tenant rep and corporate
services platforms and progressing the strengthening of the capital markets offering (with the new capital markets team having joined
Savills Studley effective 3 January 2017);
• ensuring that appropriate resource and management was in place to facilitate and improve the cross-border servicing of business/
clients across the Group’s geographies;
• ensuring that appropriate senior management succession plans were in place for each of the Group’s Principal Businesses; and
• sponsoring the launch of the Group’s new Asia Pacific and US ‘future leaders’ development programmes (building on the established
UK model) to ensure that the Group has ready access to the talent required to drive its next stages of growth.
Details of Simon Shaw’s achievement against the key objectives set are as follows:
• overseeing the successful integration of the former SEB Asset Management business into the Savills Investment Management
platform, with the newly-combined business delivering a 62% increase in revenues in its first full year;
• continuing to drive the development of the Group’s technology offering and upgrade the systems operating platform to complement
the Group’s global business strategies, in particular overseeing the Group’s investment in YOPA, a leading UK ‘hybrid’ residential
agency and the launch of ‘Work There’ (a digital office space locator); and
• driving the Group’s Profit/ROCE improvement initiatives, which initiatives in particular contributed to the maintenance of the Group’s
2016 UPBT margin at 9.4% (2015: 9.5%)
For Jeremy Helsby, 33% of the overall award was deferred for a further three-year period in the form of shares, of which Jeremy Helsby
elected to waive £45,000 to charity. For Simon Shaw, 30% of the award was deferred for a further three years in the form of shares, of
which Simon Shaw elected to waive £25,000 to charity.
Long-term incentives
The PSP award granted in 2014 will vest in August 2017, subject to performance in the three years to 31 December 2016. Following an
assessment of Savills’ performance against targets set at grant, the Committee determined that 50% of the award should vest. The
targets and Savills’ performance were as follows:
Relative TSR versus FTSE Mid 250 index
(excluding investment trusts)
% EPS growth
Weighting
Threshold target
(25% vesting)
Maximum target
(100% vesting)
Savills
performance
Vesting
(% of maximum)
50% Equal to index
50% RPI plus 3% p.a.
compounded
Outperform index
by 8% p.a.
RPI plus 10% p.a.
compounded
Below
index
61.5%
0%
100%
Non-Executive Directors fees (audited)
The Non-Executive Director fees for 2016 were as follows:
Basic fee
Additional fees
Senior Independent Director
Remuneration Committee Chairman
Audit Committee Chairman
2016 Total
2015 Total
Nicholas
Ferguson
(Chairman)
Martin Angle
(resigned
11 May 2016)
Tim
Freshwater
Liz
Hewitt
Charles
McVeigh
Rupert
Robson
Peter Smith
(resigned
11 May 2016)
£149,406
£18,200
£50,000
£50,000
£50,000
£50,000
£60,000
£1,800
£3,200
£10,000
£7,500
£149,406
£20,000
£53,200
£60,000
£50,000
£57,500
£60,000
-
£59,167
£55,625
£55,833
£50,000
£30,303
£165,000
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 as Chairman is £190,000 p.a.. Nicholas received a fee of £95,000 p.a. (pro-rata) for the period from
his appointment on 26 January 2016 to him being appointed as Chairman on 11 May 2016.
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.
75
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Directors’ remuneration report continued
Operation of Policy in 2017
Base salary
The Committee approved a 2.5% salary increase for the Executive Directors for 2017, but this will not be actually implemented.
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.
The Committee will use the Reference Salary (being the base salaries above increased by 2.5%) when considering future salary increases.
In line with our Policy, the base salaries for the Executive Directors continue to be positioned significantly below market median against
the FTSE 250.
Variable remuneration
Annual performance-related profit share
The maximum annual performance-related profit share opportunity for 2017 will be:
• £2.05m for the Group Chief Executive Officer
• £1.5375m for the Group Chief Financial Officer
For the 2017 performance-related profit share, 75% of award potential will reflect the Group’s UPBT performance and 25% of award
potential will reflect delivery against a mix of personal, strategic and operational objectives.
The Committee considers prospective disclosure of individual objectives to be commercially sensitive and disclosure will, therefore be on
a retrospective basis.
The Committee will retain a general discretion to reduce (but not, as previously, increase) the payout level to reflect exceptional events
over the performance period.
Performance Share Plan
The remuneration policy is for maximum awards of 200% of base salary. The PSP awards for 2017 will be up to 2x each Executive Director’s
base salary.
Awards will vest subject to the satisfaction of 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. compounded;
• 100% (i.e. the maximum) of the element to vest if the Company’s EPS growth is RPI plus 8% p.a. compounded or more; and
• with straight-line vesting between the two points.
The Committee considers that if EPS growth of RPI plus 8% p.a. were achieved from the strong 2016 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.; and
• with straight-line vesting between the two points.
The awards made to Executive Directors will also be subject to a holding period so that any PSP awards for which the performance
vesting conditions are satisfied will not normally be released for a further two years from the third anniversary of the original award date.
Dividend accrual for PSP awards will continue until the end of the holding period.
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 2016 and 2015.
76
Savills plc Report and Accounts 2016
Employment costs
Underlying profit before tax
Dividend payment to Shareholders
Executive Director remuneration
Tax
2016
£m
948.6
135.8
38.9
4.9
99.9
2015
£m
853.2
121.4
34.7
4.9
99.1
%
increase
11
12
12
0
1
• 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, employers’ social security and business rates and equivalent payments.
• The dividend cost for 2016 comprises the cost of the final dividend recommended by the Board (amounting to £13.5m), payment of
which is subject to shareholder approval at the Company’s AGM scheduled to be held on 9 May 2017, the cost of the supplemental
dividend (£19.5m) declared by the Board on 21 March 2017 (payable to shareholders on the Register of Members as at 18 April 2017)
and the interim dividend (£5.9m) paid on 5 October 2016 and is based on the number of shares in issue as at 31 December 2016.
• Executive Director remuneration is the remuneration paid to the Group Chief Executive Officer and Group Chief Financial Officer
role-holders and comprises basic salaries, profit share, pension costs and share-based payments, and the Company’s social security
costs in relation to their remuneration.
Total Shareholder Return and Group Chief Executive Officer remuneration
The Total Shareholder Return delivered by the Company over the last eight years is shown in the chart below. Over this period the
Company has delivered Total Shareholder Return of 19% per annum (FTSE 250 (excluding investment trusts): 18% per annum; FTSE 350
Super Sector Real Estate: 10% per annum). Savills was ranked 72nd 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 eight years to 31 December 2016.
Total Shareholder Return (‘TSR’) (rebased)
8 years to 31 December 2016
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
6
1
-
n
a
J
6
1
-
r
p
A
6
1
-
l
u
J
6
1
-
t
c
O
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.
FTSE 250 (excluding investment trusts)
FTSE 350 Super Sector Real Estate
Savills
Pay for performance
Year
2016
2015
2014
2013
2012
2011
Total
single figure
Remuneration
£’000
2,497
2,298
3,279
2,630
1,786
1,268
Annual variable element:
performance-related profit
share – annual award against
maximum potential
%
Long-term
incentive fully-vested
(maximum potential of award)
100%
UPBT annual
% change
+12
+21
+34
+28
+16
+7
98
100
100
86
65
49
50
N/A
100
100
100
0
UPBT
£m
135.8
121.4
100.5
75.2
58.6
50.4
Total remuneration in 2012, 2013, 2014 and 2015 includes, as required, the notional value of PSP awards and executive share options
which vested (but were not exercised) in those years (note that no PSP awards were made in 2013 with the consequent effect on Total
Single Figure Remuneration in 2015 compared to the 2013, 2014 and 2016 years). The awards granted in 2008 lapsed in 2011.
77
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ remuneration report continued
Group Chief Executive Officer pay increase in relation to all UK employees
Group Chief Executive Officer
All UK employees
Percentage change in remuneration from 31/12/2015 to 31/12/2016
Percentage change
in base salary
Percentage change
in benefits
Percentage change
in profit share award
%
0%
+1.8%
%
+1.6%
-1.7%
%
-2.1%
-13.7%
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. The base salary for the Group Chief Executive Officer continues to be positioned significantly below the market median against the FTSE 250.
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 Defined Benefit Pension Plan (the ‘Plan’). The
value of the legacy benefit is shown below.
Executive Director
Jeremy Helsby
Defined
benefit
pension
accrued at
31 December
2016
Defined
benefit
pension
accrued at
31 December
2015
Defined
benefit
pensions
value for 2016
remuneration
table
Defined
benefit
pensions
value for 2015
remuneration
table
51,112
49,935
−
29,213
Notes
1. Jeremy Helsby reached Plan retirement age on 9 July 2015 since which date his pension increases in line with the standard provisions of the Plan applicable to all pensioners.
2. 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. At
31 December 2015, this was based on the pension immediately before retiring of £61,113 p.a.. Under this methodology, no further cost is expected to be reported now that
Jeremy Helsby is in receipt of his pension from the Plan.
Share interests
Details of shares in the Company which the Directors beneficially held or had a beneficial interest in as at 31 December 2016 are shown
below. Where any vested PSP awards in the future are subject to a holding period requirement, the vested PSP award shares (discounted
for anticipated tax liabilities) will count towards the shareholding requirements:
Executive Directors
Jeremy Helsby
Simon Shaw
Number
of shares
(including
beneficially
held under
the SIP)
Unvested
shares
subject to
performance
conditions
(PSP)
Deferred
share bonus
plan awards
(vesting not
subject to
performance
conditions)
(DSBP)
Extent
to which
shareholding
guideline met
637,303
179,226
219,157
119,386
230,400
167,434
424%
170%
The Company currently applies shareholding requirements of 150,000 shares for the Group Chief Executive Officer and 105,000 shares
for the Group Chief Financial Officer. On the approval of the new Policy by Shareholders, the shareholding requirement will change to a
requirement that the Group Chief Executive Officer and Group Chief Financial Officer hold shares to the value of five times their respective
base salaries. New Executive Directors will be expected to build holdings to this level over time, principally through the retention of shares
released to them (after settling any tax due) following the vesting of share awards.
Non-Executive Directors
Nicholas Ferguson
Tim Freshwater
Liz Hewitt
Charles McVeigh
Rupert Robson
78
At 31
December
2016
29,286
–
3,400
–
7,981
Savills plc Report and Accounts 2016 As at 21 March 2017, no Director had bought or sold shares since 31 December 2016, with the exception of Simon Shaw who, as a
participant in the Savills Share Incentive Plan (SIP), has acquired 47 shares through the SIP since 31 December 2016. As at 21 March
2017 Simon Shaw holds 179,273 shares.
The Sharesave Scheme
No Directors hold outstanding options under the Sharesave Scheme and no options were exercised during the year.
Scheme interests granted in 2016
The following table sets out details of awards made under the PSP in 2016.
Type of award
Basis of award
(face value)
Performance period
% vesting
for threshold
performance
% vesting for
maximum
performance
Jeremy Helsby
Nil-cost options
£550,000
Simon Shaw
Nil-cost options
£250,000
1 January 2016 to
31 December 2018
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 below.
The Performance Share Plan (‘PSP’)
Number of shares
Directors
Jeremy Helsby
Simon Shaw
At
31 December
2015
Awarded
during year
Vested
during year
At
31 December
2016
75,000
67,073
–
41,666
42,682
–
–
–
77,084
–
–
35,038
–
–
–
–
–
–
75,000
67,073
77,084
41,666
42,682
35,038
Closing
mid-market
price of a
share the
day before
grant
600.0p
820.0p
713.5p
600.0p
820.0p
713.5p
Market value
at date of
vesting
–
–
–
–
–
–
First
vesting date
12.08.17
23.04.18
27.04.19
12.08.17
23.04.18
27.04.19
No shares vested under the PSP to Executive Directors during the year.
The Deferred Share Bonus Plan (‘DSBP’)
Number of shares
Directors
Jeremy Helsby
Simon Shaw
At
31 December
2015
54,828
70,767
73,170
Awarded
during year
Vested
during year
At
31 December
2016
Closing
mid-market
price of a
share the day
before grant
–
–
–
54,828
–
–
–
70,767
73,170
549.5p
653.0p
820.0p
–
86,463
–
86,463
705.5p
Market value
at date of
exercising
612.2p
–
–
Normal
vesting date
26.06.16
13.05.17
24.04.18
39,571
53,048
54,146
–
–
–
–
60,240
39,571
–
–
–
–
53,048
54,146
60,240
549.5p
653.0p
820.0p
705.5p
612.2p
–
–
26.06.16
13.05.17
24.04.18
14.03.19
Under the DSBP awards over 94,399 shares and 11,265 shares in lieu of dividends vested to Executive Directors during the year.
The total pre-tax gain on awards vested during the year was £646,833. No DSBP awards lapsed.
During the year, the aggregate gain on the exercise of share options and shares vested was £646,833. The mid-market closing price
of the shares at 30 December 2016, the last business day of the year, was 700.5p and the range during the year was 548.5p to 886p.
79
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ remuneration report continued
Exit payments
No Executive Director left the Company during the year ended 31 December 2016. 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 which 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 2016, 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 (as this appointment is not linked to his role within the Company).
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, 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
Nicholas Ferguson
Tim Freshwater
Liz Hewitt
Charles McVeigh
Rupert Robson
Date appointed to Board
End date of current letter of appointment
26 January 2016
1 January 2012
25 June 2014
1 August 2000
23 June 2015
25 January 2019
31 December 2017
24 June 2017
1 August 2017
22 June 2018
Shareholder votes on remuneration matters
The table below shows the voting outcomes for the 2015 Annual Remuneration Report at the AGM held on 11 May 2016 and on 12 May
2014 in respect of the Directors’ remuneration policy.
2015 Annual Directors’ Remuneration Report (2016 AGM)
102,054,526
99.07% 960,356
0.93% 103,014,882
233,227
Directors’ Remuneration Policy (2014 AGM)
91,230,892
99.68% 290,799
0.32%
91,521,691 3,672,289
Number of
votes ‘For’ and
discretionary
% of votes
cast
Number
of votes
‘Against’
% of votes
Total number of
cast
votes cast
Number
of votes
‘Withheld’*
* A vote withheld is not a vote in law.
80
Savills plc Report and Accounts 2016
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.
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.
Results for the year
The results for the Group are set out in the consolidated income
statement on page 93 which shows a reported profit for the financial
year attributable to the shareholders of the Company of £66.9m
(2015: £64.3m).
Dividend
An interim dividend of 4.4p per ordinary share amounting to £5.9m
(2015: £5.33m) was paid on 5 October 2016. It is recommended that a
final dividend of 10.1p per ordinary share (amounting to £13.5m) is paid,
together with a supplemental interim dividend of 14.5p per ordinary
share (amounting to £19.5m) to be declared by the Board on 21 March
2017, on 15 May 2017 to shareholders on the register at 18 April 2017.
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 2 to 32 and incorporated into this Report by reference.
The principal risks and uncertainties are detailed on pages 27 to 29
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 Nicholas Ferguson who was appointed as an Independent
Non-Executive Director with effect from 26 January 2016 and Martin
Angle and Peter Smith who resigned as Non-Executive Directors with
effect from 11 May 2016. As at 31 December 2016 the Board
comprised the Non-Executive Chairman, two Executive Directors
and five Independent Non-Executive Directors.
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 pages 78 and 79 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 page 79. It is the Board’s policy that the GEB
Members should retain at least 105,000 shares (value at 31 December
2016: £735,525) in the Company and that the Group Chief Executive
retains at least 150,000 shares (value at 31 December 2016: £1.05m)
(based on the mid-market share price of 700.5p per share on
30 December 2016) at all times. On approval of the new Remuneration
Policy by Shareholders, the shareholding requirement will change to a
requirement that the Group Chief Executive Officer and Group Chief
Financial Officer hold shares to the value of five times their
respective salaries.
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 Guidance and
Transparency Rules (‘DTR’) DTR4, the Directors’ Responsibilities
Statement is set out on page 84 and is incorporated into this Report
by reference.
Corporate Governance Statement
In accordance with the Code and DTR 7.2.9R, the Corporate
Governance Statement on page 40 is incorporated into this Report
by reference.
Management Report
This Directors’ Report, on pages 81 to 83, together with the Strategic
Report on pages 2 to 32, form the Management Report for the
purposes of DTR 4.1.5R.
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 2016
comprised 139,809,677 2.5p ordinary shares, details of which may be
found on pages 138 and 139.
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.
81
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Directors’ report continued
As at 31 December 2016 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 11,986,846
11,977,937
Old Mutual plc
5,404,296
Norges Bank
%
8.57
8.57
3.87
Note: On 3 January 2017, Old Mutual plc disclosed a shareholding of 9.15% and on
13 January 2017, Standard Life Investments (Holdings) Limited disclosed a
shareholding of 4.81%. No other changes to the above have been disclosed to the
Company in accordance with DTR 5, between 31 December 2016 and 21 March 2017.
As at 31 December 2016, the Savills plc 1992 Employee Benefit
Trust (the ‘EBT’) held 5,706,307 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 2.21
to the financial statements.
Purchase of own shares
In accordance with the Listing Rules, at the AGM on 11 May 2016,
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.
The Board proposes to seek shareholder approval at the AGM on
9 May 2017 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.
82
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 78,
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 9 May 2017; 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.
Political contributions
There were no political contributions during the year (2015: £nil).
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 33 and 34 for more information.
The Group provides regular updates covering performance,
developments and progress to employees through regular
newsletters, video addresses, the Group’s intranet, social media
and through formal and informal briefings. These arrangements
also 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.
Employees are able to share in the Group’s success through
performance-related profit share schemes (see page 70 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.
Savills plc Report and Accounts 2016 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.
Whistleblowing
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 page 36 and are
incorporated into this Report by reference.
By order of the Board
Chris Lee
Group Legal Director & Company Secretary
21 March 2017
Savills plc
Registered in England No. 2122174
83
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report 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:
• 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.
21 March 2017
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:
• 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.
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.
Each of the Directors, whose names and functions are listed on
pages 44 and 45, 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 2 to 39 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.
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Savills plc Report and Accounts 2016 Strategic report
Governance
Financial statements
Financial
statements
86
Independent auditors’ report to the members
of Savills plc
93 Consolidated income statement
94 Consolidated statement of comprehensive income
95 Consolidated and Company statements
of financial position
96 Consolidated statement of changes in equity
97 Company statement of changes in equity
98 Consolidated and Company statements of cash flow
99 Notes to the financial statements
155 Shareholder information
Savills plc
Report and Accounts 2016
85
Independent auditors’ report to the members of Savills plc
Overview
Materiality
• Overall Group materiality: £6.8 million, 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, Germany, US and Asia
Pacific, and across all four of the Group’s business lines.
• Audits of the complete financial information were performed on
the businesses in the UK, US, Hong Kong, Shanghai (China
Central) and Australia, as well as the German Investment
Management business acquired in 2015.
• We carried out procedures on parts of the business which
accounted for 83% (2015: 83%) of Group revenues and 92%
(2015: 86%) of Group underlying profit before tax.
Areas of focus
• Goodwill impairment assessment – particularly for the Group’s
European businesses.
• Risk of fraud in revenue recognition in relation to cut-off for
transaction income in the investment management and
transactional advisory businesses.
• Provisions for litigation on valuations.
• Recoverability of trade receivables.
• 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.
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 2016 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.
What we have audited
The financial statements, included within the Report and Accounts
(the 'Annual Report'), comprise:
• the Consolidated and Company statements of financial position
as at 31 December 2016;
• 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 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, and applicable law.
Our audit approach
Context
Savills plc is listed on the London Stock Exchange and is structured
across four business lines: 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.
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Savills plc Report and Accounts 2016
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 52 (Audit Committee Report), pages 102 and 112
(Significant Accounting Policies) and pages 124 to 125 (notes).
The Group carried £309.8m of goodwill at 31 December 2016
(2015: £269.7m) of which £4.4m related to new acquisitions made
during 2016.
The carrying value of goodwill is 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 goodwill will be impaired.
No impairment charge was recognised in the year ended
31 December 2016.
Given their materiality, we did not regard the acquisitions in the
year as warranting particular focus in relation to impairment of
goodwill.
We focused our assessment on the CGUs in Europe with material
amounts of goodwill. The Group’s performance in Europe
improved during 2016, but there is continued political and
economic uncertainty across European markets.
Risk of fraud in revenue recognition in relation to cut-off for
transaction income in the investment management and
transactional advisory businesses
Refer to page 52 (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 transactional advisory 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.
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
with the latest Board-approved budget and found them to be
consistent.
We challenged:
• the key assumptions for short and long-term growth rates in the
forecasts by comparing them with 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 Group and comparable organisations, and
assessed the specific risk premium applied to each 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 and improved business performance
in Savills Europe for 2016, we were satisfied that the carrying value
of goodwill in Europe had been appropriately assessed.
For material transactions, we evaluated the commercial rationale
and the revenue recognition process adopted and determined that
the related revenue had been recorded 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.
87
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Independent auditors’ report to the members of Savills plc continued
Area of focus
How our audit addressed the area of focus
Provisions for litigation on valuations
Refer to page 52 (Audit Committee Report), pages 105 and 112
(Significant Accounting Policies) and page 138 (notes).
In order to assess the accuracy and completeness of the
provisions held at the balance sheet date we performed the
following procedures;
The Group is subject to a number of legal claims in the normal
course of business on valuations performed, which are
judgemental in nature and therefore susceptible to challenge.
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.
There is also the risk that legal exposures may arise for which
adequate provisions are not held.
Recoverability of trade receivables
Refer to page 52 (Audit Committee Report), page 103 (Significant
Accounting Policies) and page 134 (notes).
There is a heightened risk of customers defaulting on payments,
given the current global economic environment.
The Group is therefore exposed to a heightened risk of default in
respect of trade receivables, and this increased risk is factored into
our audit approach with respect to the provision against trade
receivables.
• 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 counsels 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 supporting documentation.
• Reviewed the legal cases settled during the year and, where
relevant, traced the related cash payments to bank statements.
• 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 for
determining the level of provision held.
Our procedures did not identify any further legal cases other than
those identified by management.
In order to test the recoverability of trade receivables, we
performed the following procedures;
• Requested confirmations for a sample of client debtor balances
in certain locations.
• 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, and
assessed the ageing profile on trade receivables, focusing on older
debts.
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 are satisfied that management had
taken reasonable judgements that were supported by the available
evidence in respect of the relevant receivables.
88
Savills plc Report and Accounts 2016 Area of focus
How our audit addressed the area of focus
Regulatory compliance obligations
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.
The Directors did not identify any material instances of non-
compliance in the year.
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 was 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.
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.
Based upon Group materiality, we did not carry out detailed audit
procedures on Savills Europe. 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.
Taken together, our audit procedures accounted for 83% (2015:
83%) of Group revenues and 92% (2015: 86%) of Group underlying
profit before tax.
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 regional 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.
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,
Hong Kong, Shanghai (China Central) and Australia within the Asia
Pacific region, and the German Investment Management business
acquired in 2015, 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.
Specific risk-based audit procedures were performed by local teams
in Beijing, Shenzhen, Japan and Singapore, focusing on revenue
and receivables based on the audit risks we had identified in
these areas.
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, the
US head office in New York and the regional office in Shanghai. 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.
89
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Independent auditors’ report to the members of Savills plc continued
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:
Overall Group
materiality
How we
determined it
Rationale for
benchmark
applied
£6.8 million (2015: £6.0 million).
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 £0.3 million (2015:
£0.3 million) 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 84, 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.
90
Savills plc Report and Accounts 2016 Other required reporting
Consistency of other information and compliance with applicable requirements
Companies Act 2006 reporting
In our opinion, based on the work undertaken in the course of the audit:
• 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; and
• the Strategic Report and the Directors’ Report have been prepared in accordance with applicable legal requirements.
In addition, in light of the knowledge and understanding of the Company and its environment obtained in the course of the audit, we are
required to report if we have identified any material misstatements in the Strategic Report and the Directors’ Report. We have nothing to
report in this respect.
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 84, 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 pages 53-56, as required by provision C.3.8 of the Code,
We have no exceptions to report.
describing the work of the Audit Committee does not appropriately address matters
communicated by us to the Audit Committee.
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 26 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 29 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.
91
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Independent auditors’ report to the members of Savills plc continued
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
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:
• 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
• whether the accounting policies are appropriate to the Group’s
and the Company’s circumstances and have been consistently
applied and adequately disclosed;
• the Company financial statements and the part of the Directors’
• 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. With
respect to the Strategic Report and Directors’ Report, we consider
whether those reports include the disclosures required by applicable
legal requirements.
John Waters (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
21 March 2017
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 ten 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
set out on page 84, 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.
92
Savills plc Report and Accounts 2016 Consolidated income statement
for the year ended 31 December 2016
Revenue
Less:
Employee benefits expense
Depreciation
Amortisation of intangible assets
Other operating expenses
Other operating income
Profit on disposal of joint ventures and associates
Loss on disposal of available-for-sale investments
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
Notes
2016
£m
2015
£m
6
1,445.9
1,283.5
9.1
16
15
7.1
7.1
8
8
11
11
17.1
8
8
8
12
14.1
14.1
14.2
14.2
(953.5)
(12.7)
(6.9)
(382.7)
2.5
0.5
(0.4)
92.7
1.6
(2.4)
(0.8)
7.9
99.8
135.8
(34.5)
(1.5)
99.8
(32.1)
67.7
66.9
0.8
67.7
(858.1)
(11.2)
(5.7)
(321.3)
1.1
2.9
–
91.2
1.8
(1.3)
0.5
6.9
98.6
121.4
(24.9)
2.1
98.6
(33.7)
64.9
64.3
0.6
64.9
48.8p
47.7p
47.0p
46.4p
72.5p
71.0p
63.2p
62.3p
93
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Consolidated statement of comprehensive income
for the year ended 31 December 2016
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 (loss)/gain on available-for-sale investments
Currency translation differences
Tax on items that may be reclassified
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income 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
2016
£m
67.7
2015
£m
64.9
10.2
12
17.2
12
(35.2)
7.2
(28.0)
(0.6)
52.6
(0.7)
51.3
23.3
(3.5)
0.7
(2.8)
0.4
4.2
2.5
7.1
4.3
91.0
69.2
90.0
1.0
91.0
68.6
0.6
69.2
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 £80.9m (2015: £47.5m).
94
Savills plc Report and Accounts 2016 Consolidated and Company statements of financial position
as at 31 December 2016
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
Derivative financial instruments
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
24
19
24
20
23
24
21
25.2
25.1
22
10.2 and 25.2
25.1
18
26
28
28
Group
2016
£m
Company
2015
£m
2016
£m
2015
£m
59.7
309.8
29.2
–
28.9
36.5
20.8
–
0.1
9.6
494.6
5.3
419.4
4.3
0.2
223.6
652.8
35.8
0.3
550.2
17.5
9.2
10.2
623.2
29.6
524.2
44.9
57.0
11.7
3.6
117.2
407.0
3.5
91.1
11.3
103.9
195.8
405.6
1.4
407.0
57.0
269.9
25.4
–
26.7
33.4
13.2
1.3
–
4.6
431.5
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
1.9
–
1.4
118.7
–
2.5
–
–
–
–
124.5
–
16.5
1.3
–
88.3
2.8
–
0.5
109.7
–
1.8
–
–
–
–
114.8
–
20.9
3.5
–
82.2
106.1
106.6
–
–
21.3
–
0.1
–
21.4
–
–
26.0
–
0.1
–
26.1
84.7
209.2
80.5
195.3
–
2.3
1.9
–
4.2
–
0.9
1.3
–
2.2
205.0
193.1
3.5
91.1
11.3
26.9
72.2
205.0
–
205.0
3.4
91.1
22.9
15.3
60.4
193.1
–
193.1
The consolidated and Company financial statements on pages 93 to 154 were authorised for issue by the Board of Directors on 21 March
2017 and were signed on its behalf by:
J C Helsby
S J B Shaw
Savills plc
Registered in England and Wales
No. 2122174
95
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Consolidated statement of changes in equity
for the year ended 31 December 2016
Attributable to owners of the parent
Share
capital
£m
Share
premium
£m
Shares to
be issued
£m
Other
reserves*
Retained
earnings**
£m
£m
Total
£m
Notes
Non-
controlling
interests
£m
Balance at 1 January 2016
3.4
91.1
22.9
39.1
207.8
364.3
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension scheme
obligation
Fair value loss 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
Transfer between reserves
Transactions with non-controlling interests
Balance at 31 December 2016
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
–
–
–
–
–
–
–
–
0.1
–
–
–
3.5
Share
capital
£m
3.4
–
–
–
–
–
–
–
–
–
–
–
10.2
17.2
12
13
17.4
Notes
10.2
17.2
12
13
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
66.9
66.9
–
(0.6)
–
52.4
(35.2)
–
6.5
–
(35.2)
(0.6)
6.5
52.4
51.8
38.2
90.0
–
–
(11.6)
–
–
–
–
–
11.6
–
1.4
–
13.4
(23.2)
–
(35.4)
(1.4)
(3.6)
13.4
(23.2)
0.1
(35.4)
–
(3.6)
91.1
11.3
103.9
195.8
405.6
Attributable to owners of the parent
Share
premium
£m
Shares to
be issued
£m
Other
reserves*
£m
Retained
earnings**
£m
Total
£m
90.1
34.9
22.5
178.6
329.5
–
64.3
64.3
Total
equity
£m
365.0
67.7
(35.2)
(0.6)
6.5
52.6
91.0
13.4
(23.2)
0.1
(36.3)
–
(3.0)
407.0
0.7
0.8
–
–
–
0.2
1.0
–
–
–
(0.9)
–
0.6
1.4
Non-
controlling
interests
£m
Total
equity
£m
0.8
0.6
330.3
64.9
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.0
–
–
–
0.4
–
4.2
4.6
(3.5)
–
3.2
–
(3.5)
0.4
3.2
4.2
–
–
–
–
(3.5)
0.4
3.2
4.2
64.0
68.6
0.6
69.2
–
–
(12.0)
–
–
22.9
–
–
12.0
–
–
11.1
(14.9)
–
(30.3)
(0.7)
11.1
(14.9)
1.0
(30.3)
(0.7)
–
–
–
(0.4)
(0.3)
11.1
(14.9)
1.0
(30.7)
(1.0)
39.1
207.8
364.3
0.7
365.0
Balance at 31 December 2015
3.4
91.1
*
**
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.
96
Savills plc Report and Accounts 2016 Company statement of changes in equity
for the year ended 31 December 2016
Share
capital
£m
Share
premium
£m
Shares to
be issued
£m
Notes
Attributable to owners of the Company
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Share-
based
payments
reserve**
£m
Balance at 1 January 2016
3.4
91.1
22.9
0.3
12.0
3.0
3.5
–
–
–
–
–
–
–
0.1
–
3.5
10.2
12
13
Notes
Share
capital
£m
3.4
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
Balance at 31 December 2016
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
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(11.6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.6
–
–
–
–
–
–
–
–
–
–
91.1
11.3
0.3
23.6
3.0
Attributable to owners of the Company
Share
premium
£m
Shares to
be issued
£m
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Share-
based
payments
reserve**
£m
90.1
34.9
0.3
3.0
4.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
1.0
–
10.2
12
13
–
–
–
–
–
–
–
(12.0)
–
22.9
–
–
–
–
–
–
–
–
–
0.3
–
–
–
–
–
–
–
–
12.0
–
12.0
–
–
–
–
–
–
–
–
–
3.0
–
–
–
–
–
–
–
–
Total
share-
holders’
equity
£m
193.1
80.9
Retained
earnings**
£m
56.9
80.9
(1.9)
0.2
(1.9)
0.2
79.2
79.2
2.4
(0.9)
–
–
–
5.0
–
(10.3)
(23.2)
–
(35.4)
2.4
(11.2)
(23.2)
0.1
(35.4)
67.2
205.0
Total
share-
holders’
equity
£m
188.6
47.5
Retained
earnings**
£m
52.6
47.5
(0.2)
(0.4)
(0.2)
(0.4)
46.9
46.9
1.9
(2.7)
–
–
–
3.5
–
(10.7)
(1.6)
–
(30.3)
1.9
(13.4)
(1.6)
1.0
(30.3)
56.9
193.1
Balance at 31 December 2015
3.4
91.1
*
**
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.
97
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Consolidated and Company statements of cash flows
for the year ended 31 December 2016
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
Dividends received from joint ventures and associates
Loans to joint ventures, associates and subsidiaries
Repayment of loans by joint ventures, associates and subsidiaries
Acquisition of subsidiaries, net of net borrowings 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
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from borrowings
Repayments of borrowings
Contribution to Employee Benefit Trust
Purchase of own shares for Employee Benefit Trust
Purchase of non-controlling interests
Proceeds from disposal of non-controlling interests
Dividends paid
Notes
31
16
15
17.1 and 17.2
26
28
17.4
17.4
13
Net cash used in financing activities
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 and 23
Group
2016
£m
Company
2015
£m
2016
£m
2015
£m
117.8
1.6
(1.3)
(24.8)
93.3
0.2
5.1
2.0
7.5
–
1.2
(4.4)
(6.8)
(12.8)
(4.7)
(12.6)
(25.3)
0.1
144.6
(141.2)
–
(23.2)
(3.3)
0.3
(36.3)
(59.0)
9.0
182.2
32.2
223.4
140.5
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
70.3
1.0
–
3.9
75.2
–
–
–
–
(9.0)
–
–
–
(0.5)
(1.1)
–
(10.6)
0.1
–
–
(23.2)
–
–
(35.4)
(58.5)
6.1
82.2
–
88.3
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
98
Savills plc Report and Accounts 2016 Notes to the financial statements
Year ended 31 December 2016
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, North America, Africa and the Middle East. Savills is listed on the London
Stock Exchange and employs 32,361 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 21 March 2017.
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. The ‘underlying’ measures are also used by Savills for internal performance analysis and
incentive compensation arrangements for employees. All the adjustments made to the GAAP measures are considered exceptional and/or
non-operational in nature. 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 impact (pre and post-tax
where applicable) of the following items:
• amortisation of acquired intangible assets (excluding software);
• the difference between IFRS 2 charges related to outstanding bonus-related deferred share awards and the estimated value of the
•
current year bonus pool expected to be allocated to deferred share awards (refer to Note 8 for further explanation);
items that are considered exceptional by size or 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 underlying effective tax rate represents the underlying income tax expense expressed as a percentage of underlying profit before tax.
The underlying income tax expense is the income tax expense excluding the tax effect of the adjustments made to arrive at underlying profit
before tax and other tax effects related to these adjustments.
Underlying basic earnings per share and underlying diluted earnings per share both utilise the underlying profit after tax measure instead of
GAAP earnings. The weighted average number of shares remain the same as the GAAP measure.
A reconciliation between GAAP and underlying measures are set out in Note 8 (underlying profit before tax) and Note 14.2 (underlying basic
earnings per share and underlying diluted earnings per share).
The Group also refers to revenue and underlying profit on a constant currency basis which are both non-GAAP measures. Constant
currency results are calculated by translating the current year revenue and underlying profit using the prior year exchange rates.
This measure allows the Group to assess the results of the current year compared to the prior year, excluding the impact of foreign
currency movements.
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.
99
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
2. Accounting policies continued
(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.
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, 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. Dividends received or receivable from associates are recognised as a reduction in 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.
The carrying amount of associates is tested for impairment in accordance with the policy described in Note 2.9.
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Savills plc Report and Accounts 2016 2. Accounting policies continued
(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. Dividends received or receivable
from joint ventures are recognised as a reduction in the carrying amount of the investment. 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.
The carrying amount of joint ventures is tested for impairment in accordance with the policy described in Note 2.9.
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 format 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.
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.
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.
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Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Notes to the financial statements continued
Year ended 31 December 2016
2. Accounting policies continued
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
Residual values and useful lives are reviewed and adjusted if appropriate, at each reporting date.
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 programmes are recognised as an expense as incurred.
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:
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;
•
• 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.
it can be demonstrated how the software product will generate probable future economic benefits;
Measurement subsequent to initial recognition is at cost less accumulated amortisation and impairment.
Amortisation charges are spread on a straight-line basis over the period of the assets’ estimated useful lives as follows:
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.
102
Savills plc Report and Accounts 2016 2. Accounting policies continued
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.
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.
103
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
2. Accounting policies continued
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.
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.
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.
104
Savills plc Report and Accounts 2016 2. Accounting policies continued
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.
All equity-settled share-based payments are measured at fair value at the date of grant. Fair value is predominantly measured by use of the
Actuarial Binomial option pricing model. 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. Non-market vesting conditions are included in assumptions about the number of options that
are expected to vest. 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.
Any 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.
2.21 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.
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.
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Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
2. Accounting policies continued
(b) Commercial transactional fees
Generally, revenue is recognised on the date of completion or when unconditional contracts have been exchanged.
(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.
(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.
2.25 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.
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Savills plc Report and Accounts 2016 2. Accounting policies continued
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 2016 that are
not relevant or considered significant to the Group include the following:
Amendments to IFRS 10, IFRS 12 and IAS 28
Investment Entities – Applying the Consolidation Exception
Amendments to IAS 27
Amendments to IAS 1
Amendments to IFRSs
Amendments to IAS 16 and IAS 38
Amendments to IFRS 11
Equity Method in Separate Financial Statements
Disclosure Initiative
Annual Improvements to IFRSs 2012–2014 Cycle
Clarification of Acceptable Methods of Depreciation and Amortisation
Accounting for Acquisitions of Interests in Joint Operations
The following standards and amendments to published standards are mandatory for accounting periods beginning on or after 1 January
2017, 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’, including amendments, effective for accounting periods beginning on or after
1 January 2018. 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.
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. When there is a material committed foreign currency exposure the foreign exchange risk will be hedged. 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.
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.
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Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
3. Financial risk management continued
For the year ended 31 December 2016, 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
2016
Estimated impact on post-tax profit
Euro
Hong Kong dollar
US dollar
Estimated impact on components of equity
Euro
Hong Kong dollar
US dollar
2015
Estimated impact on post-tax profit
Euro
Hong Kong dollar
US dollar
Estimated impact on components of equity
Euro
Hong Kong dollar
US dollar
Movement of currency against sterling
-10.0%
-5.0%
+5.0%
+10.0%
(1.3)
(0.5)
0.8
1.1
(13.7)
(11.4)
(0.5)
(0.5)
0.7
2.1
(11.8)
(10.2)
(0.7)
(0.3)
0.4
0.5
(7.2)
(6.0)
(0.3)
(0.3)
0.4
1.1
(6.2)
(5.4)
0.7
0.3
(0.4)
(0.6)
7.9
6.6
0.3
0.3
(0.4)
(1.2)
6.9
5.9
1.5
0.6
(0.9)
(1.3)
16.7
13.9
0.6
0.6
(0.8)
(2.5)
14.5
12.5
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 2016, 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:
Increase in interest rates
£m
2016
Estimated impact on post-tax profit and equity
2015
Estimated impact on post-tax profit and equity
£m
2016
Estimated impact on post-tax profit and equity
2015
Estimated impact on post-tax profit and equity
+0.5%
+1.0%
+1.5%
+2.0%
0.4
0.1
0.8
0.4
1.2
0.7
1.6
1.0
Decrease in interest rates
-0.5%
-1.0%
-1.5%
-2.0%
(0.5)
(0.5)
(0.2)
(0.2)
(0.5)
(0.7)
(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.
108
Savills plc Report and Accounts 2016 3. Financial risk management continued
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 2016. 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
2016
£m
23.1
65.1
101.7
13.7
20.0
2015
£m
15.5
60.0
63.8
22.8
20.3
223.6
182.4
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
2016
Borrowings
Derivative financial instruments
Trade and other payables
2015
Borrowings
Derivative financial instruments
Trade and other payables
Less than
a year
35.8
0.3
497.8
533.9
31.4
0.2
409.0
440.6
Between
1 and 2
years
Between
2 and 5
years
–
–
18.6
18.6
–
–
44.1
44.1
–
–
24.2
24.2
–
–
23.3
23.3
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 2015.
Savills plc is not subject to any externally-imposed capital requirements, with the exception of its regulated entities within the Savills
Investment Management group and its FCA (Financial Conduct Authority) regulated entity, Savills Capital Advisors Ltd, in the UK. All
regulated entities complied with the relevant capital requirements during the year ended 31 December 2016. The Savills Investment
Management group has regulated entities in the UK, Jersey, Luxembourg, Germany, Italy and Japan. For more information on Savills
Investment Management group’s regulated entities and regulatory 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.
Over 5
years
–
–
2.1
2.1
–
–
1.6
1.6
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Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
3. Financial risk management continued
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
Cash and cash equivalents
Bank overdrafts
Borrowings
Net cash
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
Group
Company
2016
2015
2016
407.0
365.0
205.0
223.6
(0.2)
(35.6)
187.8
182.4
(0.2)
(31.2)
151.0
88.3
–
–
88.3
2015
193.1
82.2
–
–
82.2
Financial
asset at
fair value
2016
£m
Available-
for-sale
financial
assets
2016
£m
Loans and
receivables
2016
£m
Total carrying
amount
2016
£m
Financial
asset at
fair value
2015
£m
Available-
for-sale
financial assets
2015
£m
Loans and
receivables
2015
£m
Total carrying
amount
2015
£m
–
–
0.2
–
0.2
20.8
–
–
–
20.8
–
363.0
–
223.6
586.6
20.8
363.0
0.2
223.6
607.6
–
–
0.1
–
0.1
13.2
–
–
–
13.2
–
321.7
–
182.4
504.1
Financial
liabilities
at fair value
2016
£m
Financial
liabilities
at amortised
cost
2016
£m
Total
carrying
amount
2016
£m
Financial
liabilities
at fair value
2015
£m
Financial
liabilities at
amortised cost
2015
£m
–
–
0.3
0.3
35.8
542.7
–
578.5
35.8
542.7
0.3
578.8
–
–
0.2
0.2
31.4
478.0
–
509.4
13.2
321.7
0.1
182.4
517.4
Total
carrying
amount
2015
£m
31.4
478.0
0.2
509.6
110
Savills plc Report and Accounts 2016 3. Financial risk management continued
3.8 Fair value estimation
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2016:
£m
2016
Assets
Available-for-sale investments
– Unlisted
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Total liabilities
Level 1
Level 2
Level 3
Total
–
–
–
–
–
20.8
0.2
21.0
0.3
0.3
–
–
–
–
–
20.8
0.2
21.0
0.3
0.3
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
Level 1
Level 2
Level 3
Total
–
–
–
–
–
13.2
0.1
13.3
0.2
0.2
–
–
–
–
–
13.2
0.1
13.3
0.2
0.2
Level 1 instruments are those whose fair values are based on quoted market prices. The Group has no Level 1 instruments.
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.
If one or more of the significant inputs is not based on observable market data, the instrument is included in Level 3.
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 2016
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
As at 31 December 2015
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
Gross
financial
assets/
(liabilities)
Amounts
offset in
the balance
sheet
Net amount in
the balance
sheet
375.7
(152.1)
223.6
(152.3)
152.1
(0.2)
350.0
(167.6)
182.4
(167.8)
167.6
(0.2)
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Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
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 10.2.
(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.
(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 27.5. The alteration of these assumptions may
impact charges to the income statement over the vesting period of the award.
112
Savills plc Report and Accounts 2016 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 3 and the segmental reviews on pages 16 to 19 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. North America segment operations are based in a number of states throughout the the US and
in Canada. 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, significant restructuring costs, acquisition-related costs,
amortisation of acquired intangible assets (excluding software) and impairments. Segmental assets and liabilities are not measured or
reported to the GEB, but non-current assets are disclosed geographically on page 114.
The segment information provided to the GEB for revenue and profits for the year ended 31 December 2016 is as follows:
2016
Revenue
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific
– commercial
– residential
Total Asia Pacific*
North America
Revenue
Underlying profit/(loss) before tax
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific
– commercial
– residential
Total Asia Pacific
North America
Underlying profit/(loss) before tax**
Transaction
Advisory
£m
Consultancy
£m
Property and
Facilities
Management
£m
Investment
Management
£m
Other
£m
Total
£m
86.0
124.4
210.4
71.5
129.7
38.1
167.8
211.1
145.3
37.8
183.1
19.3
37.9
–
37.9
–
660.8
240.3
14.7
17.5
32.2
5.0
20.6
3.3
23.9
18.9
80.0
16.3
5.9
22.2
1.3
2.4
–
2.4
–
25.9
130.4
28.5
158.9
40.1
273.8
–
273.8
–
472.8
8.7
2.6
11.3
(2.2)
14.5
–
14.5
–
23.6
25.9
–
25.9
39.7
6.4
–
6.4
–
72.0
6.4
–
6.4
9.4
1.8
–
1.8
–
–
–
–
–
–
–
–
–
–
387.6
190.7
578.3
170.6
447.8
38.1
485.9
211.1
1,445.9
(11.3)
–
(11.3)
–
–
–
–
–
34.8
26.0
60.8
13.5
39.3
3.3
42.6
18.9
17.6
(11.3)
135.8
113
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
6. Segment analysis continued
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*
North America
Revenue
Underlying profit/(loss) before tax
United Kingdom – commercial
– residential
Total United Kingdom
Continental Europe
Asia Pacific
– commercial
– residential
Total Asia Pacific
North America
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
* Revenues of £204.7m (2015: £178.6m) are attributable to the Hong Kong and Macau region.
** Transaction Advisory underlying profit before tax includes depreciation of £5.7m (2015: £5.4m), software amortisation of £0.8m (2015: £0.6m) and share of post-tax profit from joint ventures
and associates of £2.3m (2015: £1.6m). Consultancy underlying profit before tax includes depreciation of £2.0m (2015: £1.7m), software amortisation of £0.5m (2015: £0.2m) and share of
post-tax loss from joint ventures and associates of £0.1m (2015: £0.2m profit). Property and Facilities Management underlying profit before tax includes depreciation of £3.4m (2015: £2.7m),
software amortisation of £0.7m (2015: £0.5m) and share of post-tax profit from joint ventures and associates of £6.3m (2015: £5.1m). Investment Management underlying profit before tax
includes depreciation of £0.4m (2015: £0.2m) and software amortisation of £0.5m (2015: £0.3m). Included in Other underlying profit is depreciation of £1.2m (2015: £1.2m), software
amortisation of £0.4m (2015: £0.4m) and share of post-tax loss from joint ventures and associates of £0.1m (2015: £nil).
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 2016 and 2015.
Non-current assets by geography are set out below:
Non-current assets
United Kingdom
Continental Europe
Asia Pacific
North America
Total non-current assets
2016
£m
2015
£m
125.3
45.1
87.4
169.7
427.5
121.9
42.6
75.8
140.0
380.3
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.
114
Savills plc Report and Accounts 2016 7. Operating profit
7.1 Operating profit
Operating profit is stated after charging/(crediting):
– Net foreign exchange (gains)/losses (excluding net losses on forward foreign exchange contracts)
– Net loss on forward foreign exchange contracts
– Provision for receivables impairment
– Restructuring costs*
– Acquisition-related costs**
– Operating lease costs
– Other income – dividend and investment income
* Restructuring costs include staff related costs of £3.7m (2015: £0.9m).
** Refer to Note 8 for a further breakdown of acquisition-related costs.
7.2 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
8. Underlying profit before tax
Reported profit before tax
Adjustments:
Amortisation of acquired intangible assets (excluding software)
Share-based payment adjustment
Net profit on disposal of available-for-sale investments, joint ventures and associates
Restructuring costs
Acquisition-related costs
Group
2016
£m
(1.4)
–
7.2
5.8
28.7
48.9
(2.5)
Group
2016
£m
0.2
1.4
1.6
0.2
0.3
0.1
0.6
2.2
2016
£m
99.8
4.0
(2.4)
(0.1)
5.8
28.7
2015
£m
0.4
0.1
6.0
1.6
23.3
42.8
(1.1)
2015
£m
0.2
1.2
1.4
0.4
0.6
0.2
1.2
2.6
2015
£m
98.6
3.6
(2.8)
(2.9)
1.6
23.3
Underlying profit before tax
135.8
121.4
The adjustment for share-based payments 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 in relation to outstanding bonus-
related share awards and the estimated value of the current year bonus pool to be awarded in deferred shares. This adjustment is made in
order to better match the underlying staff cost in the year with the revenue recognised in the same period.
Net profit on disposal includes £0.5m recognised in relation to the disposal of the Group’s joint venture interest in Savills Solar Ltd and a loss
on disposal of £0.4m in relation to the disposal of the Group’s available-for-sale investment, Cordea Savills Italian Opportunities Fund 2.
Acquisition-related costs include £18.4m 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 include £3.9m for payments in relation to Savills Investment Management’s acquisition of
Merchant Capital (Japan) in May 2014, and £1.5m of transaction related costs and £4.9m of provisions for future payments relating to
acquisitions in the United Kingdom (primarily GBR Phoenix Beard and Smiths Gore), North America and Continental Europe.
Restructuring costs includes costs of integration activities in relation to significant business acquisitions (primarily Smiths Gore in the United
Kingdom and Savills Investment Management’s acquisition of SEB).
115
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
9. Employees
9.1 Employee benefits expense
Basic salaries and wages
Profit share and commissions
Wages and salaries
Social security costs
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
North America
Group
2016
£m
497.6
360.8
858.4
58.5
23.2
13.4
953.5
2015
£m
424.9
345.3
770.2
56.4
20.4
11.1
858.1
Company
2016
£m
7.7
5.9
13.6
1.9
0.4
2.4
18.3
2015
£m
6.8
7.2
14.0
2.1
0.4
1.9
18.4
Group
Company
2016
2015
2016
2015
5,136
1,103
25,446
676
4,588
931
24,597
580
32,361
30,696
122
–
–
–
122
113
–
–
–
113
The average number of UK employees (including Directors) during the year included 139 employed under fixed-term and temporary
contracts (2015: 192).
9.3 Key management compensation
Key management
– Short-term employee benefits
– Post-employment benefits
– Share-based payments
Group
2016
£m
20.1
0.2
3.3
23.6
2015
£m
20.3
0.3
2.7
23.3
The key management of the Group for the year ended 31 December 2016 comprised Executive Directors and the GEB members. Details of
Directors’ remuneration is contained in the Remuneration report on pages 60 to 80.
During the year five (2015: eight) GEB members made aggregate gains totalling £1.2m (2015: £9.0m) on the exercise of options under DSBP
schemes (2015: PSP, ESOS and DSBP schemes).
Retirement benefits under the defined benefit scheme are accruing for three (2015: three) GEB members and benefits are accruing under a
defined contribution scheme in Hong Kong for two (2015: two) GEB members.
116
Savills plc Report and Accounts 2016 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 £23.0m (2015: £20.3m). The amount outstanding as at 31 December 2016 in relation to defined contribution schemes is £1.5m
(2015: £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.
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 is currently being carried out as at 31 March 2016 and has been updated to 31 December 2016 by a
qualified independent actuary.
The Savills Fund Management GMBH Plan (the ‘SFM Plan’) is a Germany-based plan which provides final salary benefits to 23 active
employees and 95 former employees. The plan is closed to future service-based benefit accrual.
The SFM Plan is administered by an external Trust that is legally separated from the Company. The Trust Agreement requires the trustee to
maintain the plan assets in the interest of the beneficiaries of the plan and to fulfil their pension entitlements in the event of insolvency to the
extent of the plan assets held. The Investment Committee of the fund, advised by expert investment managers, is responsible for the
investment policy with regards to the assets of the fund. The contributions are determined based on the annual valuations of an independent
qualified actuary.
A full actuarial valuation of the SFM Plan was carried out as at 31 December 2016 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
Net interest cost included in finance costs
Actuarial losses included in other comprehensive income
Group
Company
2016
£m
40.8
0.4
33.6
2015
£m
15.8
0.6
3.8
2016
£m
2.3
–
1.9
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
Company
2016
£m
298.4
(257.6)
40.8
2015
£m
225.7
(209.9)
15.8
2016
£m
16.5
(14.2)
2.3
2015
£m
0.9
–
0.2
2015
£m
12.5
(11.6)
0.9
117
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
10. Pension schemes continued
The movement in the defined benefit obligation for the UK Plan over the year is as follows:
At 1 January 2016
Interest expense/(income)
Remeasurements:
– Return on plan assets, excluding amounts included in interest
income
– Loss from change in financial assumptions
– Gain from change in demographic assumptions
– Experience losses
Employer contributions
Benefit payments
At 31 December 2016
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
Group
Company
Present value
of obligation
£m
Fair value of
plan assets
£m
225.7
(209.9)
8.3
(7.9)
–
65.7
(0.8)
3.7
–
(4.2)
(35.0)
–
–
–
(9.0)
4.2
298.4
(257.6)
Present value
of obligation
£m
Group
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
Total
£m
15.8
0.4
(35.0)
65.7
(0.8)
3.7
(9.0)
–
40.8
Total
£m
19.4
0.6
8.1
(2.6)
(1.7)
(8.0)
–
Present value
of obligation
£m
Fair value of
plan assets
£m
12.5
0.4
(11.6)
(0.4)
–
3.6
–
0.2
–
(0.2)
(1.9)
–
–
–
(0.5)
0.2
16.5
(14.2)
Company
Present value
of obligation
£m
Fair value of
plan assets £m
12.5
0.4
–
(0.2)
–
–
(0.2)
(11.4)
(0.4)
0.4
–
–
(0.4)
0.2
At 31 December 2015
225.7
(209.9)
15.8
12.5
(11.6)
The table below outlines the Group’s defined benefit pension amounts in relation to the SFM Plan:
Liability/(asset) in the statement of financial position
Current service cost included in employee benefits expense
Actuarial loss/(gain) included in other comprehensive income
The amounts recognised in the statement of financial position in relation to the SFM Plan are as follows:
Present value of funded obligations
Fair value of plan assets
Liability/(asset) recognised in the statement of financial position
The movement in the defined benefit liability/(asset) for the SFM Plan over the year is as follows:
At 1 January 2016
Current service cost
Interest expense/(income)
Remeasurements:
– Loss on plan assets, excluding amounts included in interest income
– Loss from change in financial assumptions
– Experience gains
Benefit payments
Exchange movement
At 31 December 2016
118
SFM Plan
2016
£m
0.4
0.2
1.6
SFM Plan
2016
£m
14.4
(14.0)
0.4
SFM Plan
Present value
of obligation
£m
Fair value of
plan assets
£m
10.9
0.2
0.3
–
1.6
(0.2)
(0.3)
1.9
(12.2)
–
(0.3)
0.2
–
–
0.3
(2.0)
14.4
(14.0)
Total
£m
0.9
–
(1.9)
3.6
–
0.2
(0.5)
–
2.3
Total
£m
1.1
–
0.4
(0.2)
–
(0.4)
–
0.9
2015
£m
(1.3)
0.1
(0.3)
2015
£m
10.9
(12.2)
(1.3)
Total
£m
(1.3)
0.2
–
0.2
1.6
(0.2)
–
(0.1)
0.4
Savills plc Report and Accounts 2016 10. Pension schemes continued
At 1 January 2015
Addition through business combination
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)
–
(12.1)
–
(0.1)
–
–
–
–
–
10.9
(12.2)
Total
£m
–
(0.9)
0.1
–
–
(0.1)
(0.2)
–
(0.2)
(1.3)
SFM Plan
UK Plan
2016
2015
2016
2015
2.50%
2.25%
2.25%
1.75%
–
–
–
–
–
–
1.84%
1.75%
2.50%
2.25%
2.25%
1.75%
–
–
–
–
–
–
2.60%
1.75%
3.25%
–
–
–
3.00%
3.40%
2.30%
5.00%
2.40%
2.40%
2.70%
3.50%
3.85%
–
–
–
3.00%
3.20%
2.20%
5.00%
2.20%
2.20%
3.70%
3.30%
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
2016
2015
2016
2015
84.1
88.2
86.5
90.8
83.6
88.1
86.4
90.7
88.7
90.3
90.9
92.7
88.8
90.3
90.7
92.3
SFM Plan
UK Plan
Impact on present value of
scheme obligations £m
Impact on present value of
scheme obligations £m
(0.3)
0.2
–
0.6
(7.3)
4.2
0.7
11.2
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.
119
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
10. Pension schemes continued
Plan assets are comprised as follows:
Equity instruments
Investment funds
Liability-driven investment (LDI)
Bonds
Cash and cash equivalents
Total
SFM Plan
UK Plan
2016
2015
2016
2015
£m
–
14.0
–
–
–
14.0
%
–
100%
–
–
–
100%
£m
3.7
–
–
–
8.5
%
31%
–
–
–
69%
£m
98.1
67.8
15.8
74.9
1.0
%
38%
26%
6%
29%
1%
£m
76.3
62.9
11.2
58.8
0.7
%
37%
30%
5%
28%
–
12.2
100%
257.6
100%
209.9
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 plans, 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 investment 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 the Plan's 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 2017 are £9.0m. The Company expects to
contribute £0.5m.
The weighted average duration of the defined benefit obligation is 22 years for the UK Plan and 18 years for the SFM Plan.
Expected maturity analysis of the undiscounted pension benefits:
At 31 December 2016
Pension benefit payments
– UK Plan
– SFM Plan
11. Finance income and costs
Bank interest receivable
Fair value gain
Finance income
Bank interest payable
Unwinding of discounts on liabilities
Net interest on defined benefit pension obligation
Fair value loss
Finance costs
Net finance (cost)/income
120
Less than
a year
£m
Between
1–2 years
£m
Between
2–5 years
£m
Over
5 years
£m
Total
£m
2.8
0.4
3.5
0.4
13.0
1.3
614.9
19.7
634.2
21.8
Group
2016
£m
1.4
0.2
1.6
(1.3)
(0.6)
(0.4)
(0.1)
(2.4)
(0.8)
2015
£m
1.8
–
1.8
(0.4)
(0.2)
(0.6)
(0.1)
(1.3)
0.5
Savills plc Report and Accounts 2016 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
2016
£m
2015
£m
13.0
1.1
14.1
17.5
(1.4)
30.2
(1.2)
(0.2)
5.2
(1.9)
1.9
32.1
12.5
0.7
13.2
14.6
0.1
27.9
(1.0)
0.2
7.5
(0.9)
5.8
33.7
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 20.0%
(2015: 20.25%) applicable to profits of the consolidated entities as follows:
Group
Profit before tax
Tax on profit at 20.0% (2015: 20.25%)
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
2016
£m
99.8
2015
£m
98.6
20.0
20.0
(2.2)
2.8
(0.7)
14.1
(1.7)
(0.2)
32.1
(0.1)
2.2
(0.1)
12.8
(1.3)
0.2
33.7
The effective tax rate of the Group for the year ended 31 December 2016 is 32.1% (2015: 34.2%), which is higher (2015: higher) than the UK
weighted average applicable rate.
The UK corporate tax rate is to reduce to 19% on 1 April 2017 and to 18% on 1 April 2020. Deferred tax has been determined using the
applicable effective future tax rate that will apply in the expected period of utilisation of the deferred tax asset or liability.
121
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
12. Income tax expense continued
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 credit/(charge) on revaluations of available-for-sale investments
Deferred tax (charge)/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 2015 of 8.0p per share (2014: 7.25p)
Supplemental interim dividend for 2015 of 14.0p per share (2014: 12.0p)
Interim dividend of 4.4p per share (2015: 4.0p)
Group
Company
2016
£m
7.2
7.2
2.5
0.1
1.8
(1.8)
(0.3)
(2.9)
0.2
(0.3)
(0.7)
6.5
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
2016
£m
0.4
0.4
(0.1)
–
0.1
(0.1)
–
(0.3)
–
–
(0.2)
0.2
2015
£m
–
–
0.8
–
0.1
(0.1)
–
(1.2)
–
–
(0.4)
(0.4)
2016
£m
2015
£m
10.7
18.8
5.9
35.4
9.4
15.6
5.3
30.3
In addition, the Group paid £0.9m (2015: £0.4m) of dividends to non-controlling interests.
The Board recommends a final dividend of 10.1p (net) per ordinary share (amounting to £13.5m) is paid, alongside the supplemental interim
dividend of 14.5p per ordinary share (amounting to £19.5m), to be paid on 15 May 2017 to shareholders on the register at 18 April 2017.
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 2016 financial year comprises an aggregate distribution of
29.0p per ordinary share (2015: 26.0p per ordinary share).
122
Savills plc Report and Accounts 2016 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, 5,706,307 shares (2015: 4,377,358 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
2016
Earnings
£m
66.9
–
66.9
2016
Shares
million
137.2
3.0
140.2
2016
EPS
pence
48.8
(1.1)
47.7
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
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 acquired intangible assets (excluding software) after tax
Share-based payment adjustment after tax
Net profit on disposal of available-for-sale investments, joint ventures
and associates after tax
Restructuring costs after tax
Acquisition-related costs after tax
Underlying basic earnings per share
Effect of additional shares issuable under option
Underlying diluted earnings per share
2016
Earnings
£m
66.9
2.2
(1.8)
–
4.7
27.5
99.5
–
99.5
2016
Shares
million
137.2
–
–
–
–
–
137.2
3.0
140.2
2016
EPS
pence
48.8
1.6
(1.3)
–
3.4
20.0
72.5
(1.5)
71.0
2015
Earnings
£m
64.3
2.0
(2.2)
(1.9)
1.5
22.7
86.4
–
86.4
2015
Shares
million
136.8
–
–
–
–
–
136.8
1.9
138.7
2015
EPS
pence
47.0
1.5
(1.6)
(1.4)
1.1
16.6
63.2
(0.9)
62.3
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 acquired intangible assets (excluding software) £4.0m (2015:
£3.6m), share-based payment adjustment £2.4m credit (2015: £2.8m credit), restructuring costs of £5.8m (2015: £1.6m), net profit on
disposals of £0.1m (2015: £2.9m) and acquisition-related costs of £28.7m (2015: £23.3m).
123
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
15. Goodwill and intangible assets
Group
Company
Cost
At 1 January 2016
Additions through business combinations (Note 17.5)
Other additions
Disposals
Reclassification from property, plant and equipment
(Note 16)
Exchange movement
At 31 December 2016
Accumulated amortisation and impairment
At 1 January 2016
Amortisation charge for the year
Disposals
Exchange movement
At 31 December 2016
Net book value
At 31 December 2016
Customer/
business
relationships
£m
Investment
and property
management
contracts
£m
Goodwill
£m
Order
backlog
£m
Computer
software
£m
311.6
5.3
–
–
–
41.2
358.1
41.7
–
–
6.6
48.3
20.7
–
–
–
–
1.9
22.6
17.3
0.9
–
1.7
19.9
21.2
3.3
–
–
–
1.8
26.3
7.2
1.8
–
1.3
10.3
5.5
0.1
–
–
–
1.2
6.8
2.1
1.3
–
0.5
3.9
Total
£m
375.6
8.7
4.7
(4.7)
0.7
47.6
16.6
–
4.7
(4.7)
0.7
1.5
18.8
432.6
12.0
2.9
(4.7)
1.0
11.2
80.3
6.9
(4.7)
11.1
93.6
Total
£m
3.9
–
1.1
(0.8)
0.2
–
4.4
3.4
0.4
(0.8)
–
3.0
309.8
2.7
16.0
2.9
7.6
339.0
1.4
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.
Group
Company
Cost
At 1 January 2015
Additions through business combinations
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
Order
backlog
£m
Computer
software
£m
Total
£m
Total
£m
Goodwill
£m
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
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:
Transaction
Advisory
£m
Consultancy
£m
Property and
Facilities
Management
£m
26.0
32.6
15.8
152.2
226.6
9.3
–
5.0
–
14.3
26.2
6.0
30.6
–
62.8
Investment
Management
£m
2.0
5.1
2.4
–
9.5
Total
£m
63.5
43.7
53.8
152.2
313.2
2016
United Kingdom
Continental Europe
Asia Pacific
North America
Total goodwill and indefinite life intangible assets
124
Savills plc Report and Accounts 2016 15. Goodwill and intangible assets continued
2015
United Kingdom
Continental Europe
Asia Pacific
North America
Total goodwill and indefinite life intangible assets
Transaction
Advisory
£m
Consultancy
£m
Property
and Facilities
Management
£m
Investment
Management
£m
26.0
29.5
14.2
124.7
194.2
9.3
–
4.2
–
13.7
23.7
5.3
28.0
–
57.0
2.0
3.8
2.2
–
8.0
Total
£m
61.0
38.6
48.6
124.7
272.9
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 (2015: £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:
2016
Discount rate range
2015
Discount rate range
United Kingdom
Continental Europe
Asia Pacific
North America
10.0%
10.0%
11.6%–18.1%
10.0%
10.0%
10.0%
11.6%–18.1%
10.0%
(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:
2016
Long-term growth rate range
2015
Long-term growth rate range
United Kingdom
Continental Europe
Asia Pacific
North America
1.5%
1.5%
0.8%–5.7%
2.3%
2.0%
1.5%
1.5%–5.0%
1.9%
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 2016’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.
125
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
16. Property, plant and equipment
Group
Cost
At 1 January 2016
Additions through business combinations (Note 17.5)
Additions
Disposals
Reclassification to intangible assets (Note 15)
Exchange movement
At 31 December 2016
Accumulated depreciation and impairment
At 1 January 2016
Charge for the year
Disposals
Exchange movement
At 31 December 2016
Net book value
At 31 December 2016
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
–
–
–
0.1
–
–
–
–
–
50.0
–
4.4
(0.4)
(0.5)
1.9
55.4
13.5
4.8
(0.4)
0.6
18.5
54.9
0.1
8.4
(8.8)
(0.2)
6.4
60.8
34.5
7.9
(8.6)
4.3
38.1
Total
£m
105.0
0.1
12.8
(9.2)
(0.7)
8.3
116.3
48.0
12.7
(9.0)
4.9
56.6
0.1
36.9
22.7
59.7
The Directors consider that the fair value of property, plant and equipment approximates carrying value.
Group
Cost
At 1 January 2015
Additions through business combinations
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
Company
Cost
At 1 January 2016
Additions
Disposals
Reclassification to intangible assets (Note 15)
At 31 December 2016
Accumulated depreciation and impairment
At 1 January 2016
Charge for the year
Disposals
At 31 December 2016
Net book value
At 31 December 2016
126
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
Freehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
–
0.1
–
–
–
–
8.1
0.5
(1.8)
(0.2)
6.6
5.4
1.2
(1.8)
4.8
Total
£m
8.2
0.5
(1.8)
(0.2)
6.7
5.4
1.2
(1.8)
4.8
0.1
1.8
1.9
Savills plc Report and Accounts 2016 16. Property, plant and equipment continued
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
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
17. Investments and transactions
17.1 Group – Investments in joint ventures and associates
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Goodwill
£m
Total
£m
6.9
1.6
(0.3)
8.2
4.5
1.1
(0.2)
5.4
2.8
Total
£m
2.7
0.2
(0.8)
–
0.3
2.4
5.7
2.0
(1.9)
1.0
6.8
10.1
–
(0.7)
(1.2)
1.1
9.3
8.2
5.9
(5.6)
1.9
10.4
2.4
0.2
(0.8)
–
0.3
2.1
5.7
2.0
(1.9)
1.0
6.8
0.3
–
–
–
–
0.3
–
–
–
–
–
8.9
–
(0.7)
–
1.1
9.3
8.2
5.9
(5.6)
1.9
10.4
19.7
1.2
–
–
(1.2)
–
–
–
–
–
–
–
–
19.7
8.9
0.3
9.2
Joint ventures
Investment
£m
Loans
£m
Total
£m Investment £m
Associates
Goodwill
£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
–
–
–
–
–
–
Total
£m
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
127
Cost or valuation
At 1 January 2016
Additions
Disposals
Loans repaid
Exchange movement
At 31 December 2016
Share of profit
At 1 January 2016
Group’s share of profit from continuing operations
Dividends received
Exchange movement
At 31 December 2016
Total
At 31 December 2016
Cost or valuation
At 1 January 2015
Additions
Disposals
Transfer to subsidiary
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
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
17. Investments and transactions continued
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.
17.2 Group – Available-for-sale investments
At 1 January
Additions
Disposals
Net fair value (loss)/gain transferred to other comprehensive income
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
2016
£m
13.2
12.4
(5.5)
(0.6)
1.3
20.8
Group
2016
£m
10.0
3.0
–
2.4
0.4
5.0
20.8
Group
2016
£m
13.0
2.4
5.4
20.8
2015
£m
11.7
1.6
–
0.4
(0.5)
13.2
2015
£m
1.1
2.9
0.1
7.1
0.3
1.7
13.2
2015
£m
4.0
7.2
2.0
13.2
At 31 December 2016, the Group held the following principal available-for-sale investments:
Investment
YOPA Property Ltd (registered in England and Wales)*
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)**
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)
Prime London Residential Development Fund II (registered in England and Wales)
Aomi Project TMK (registered in Japan)
Greater Tokyo Office Fund (registered in Jersey)
Pegaxis Pte Ltd (registered in Singapore)
Holding
30.28%
19.99%
3.70%
2.81%
1.97%
1.94%
11.33%
4.17%
0.86%
1.57%
3.50%
3.25%
15.00%
Principal activity
Digital hybrid agency
General insurance, mortgage broking and
personal financial planning services
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
London residential development fund
Real estate investment
Investment property fund
Digital property management services
*
The Group holds more than 20% of the equity interest in YOPA Property Ltd, however does not have the power to participate in the financial and operational decisions of the entity, does not
have representation on the Board of Directors of the entity and does not participate in major policy-making processes of the entity. As a result, the Group’s investment in YOPA Property Ltd is
treated as an available-for-sale investment.
** 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 recognised a £0.4m loss on disposal in the income statement in relation to the disposal of its 1.34% shareholding in Cordea
Savills Italian Opportunities Fund 2. Disposals in the year also included capital distributions from the Group’s investments in the Cordea
Savills German Retail Fund and the Cordea Savills Nordic Retail Fund, with £nil profit on disposal recognised in the income statement in
relation to these distributions.
128
Savills plc Report and Accounts 2016 17. Investments and transactions continued
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.
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 2016 the Group held conditional commitments to co-invest £0.7m (2015: £2.1m) in the Greater Tokyo Office Fund, £0.2m
(2015: £0.2m) in the Cordea Savills UK Property Ventures Fund No. 1 LP, £nil (2015: £0.1m) in the Cordea Savills Italian Opportunities Fund 2,
£nil (2015: £0.1m) in the Prime London Residential Development Fund and £0.2m in the Prime London Residential Development Fund II
(2015: £nil).
17.3 Company – Investments in subsidiaries
Cost
At 1 January 2015
Additions
At 31 December 2015
Additions
At 31 December 2016
Shares
in Group
undertaking
£m
Loans to
Group
undertakings
£m
57.2
–
57.2
–
57.2
52.3
0.2
52.5
9.0
61.5
Total
£m
109.5
0.2
109.7
9.0
118.7
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
Savills Property Management Pte Ltd (Singapore)
Savills (Vietnam) Ltd
Savills Investment Management SGR S.p.A
Holding
acquired/
(disposed)
Total holding at
31 December
2016
Date
August 2016
September 2016
September 2016
45%
2%
(15%)
100%
100%
75%
(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 August 2016, the Group acquired the remaining 45% of the shares in Savills Property Management Pte Ltd (Singapore), for consideration
of £2.8m. This takes the Group’s shareholding to 100%. The carrying amount of the subsidiary’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 £2.6m.
In September 2016, the Group acquired the remaining 2% of the shares in Savills (Vietnam) Ltd for consideration of £0.5m. This takes the
Group’s shareholding to 100%. The carrying amount of the subsidiary’s net assets on the date of acquisition was £1.3m. The Group
recognised a decrease in non-controlling interest of £nil. The amount charged to retained earnings in respect of the transaction was £0.5m.
(b) Disposal of interests in subsidiaries
In September 2016, the Group disposed of 15% of the shares in Savills Investment Management SGR S.p.A for cash consideration of £0.3m.
The carrying amount of the subsidiary’s net assets on the date of disposal was £3.6m. The Group recognised an increase in non-controlling
interest of £0.5m. The amount charged to retained earnings in respect of this transaction was £0.2m.
(c) Other transactions with non-controlling interests
The Group acquired the remaining 0.72% of the shares in Savills (Aust) Holdings Pty Ltd taking the Group’s shareholding to 100%, £0.3m
has been charged to retained earnings with a corresponding increase in non-controlling interest to reflect the 100% shareholding.
129
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
17. Investments and transactions continued
Net carrying amount of non-controlling interests acquired/(disposed)
Net consideration (paid)/received to/from non-controlling interests
Net excess of consideration (paid)/received recognised in parent’s equity
Other transactions with non-controlling interests
Total charge to parent’s equity in relation to transactions with non-controlling interests in the year
2016
£m
(0.3)
(3.0)
(3.3)
(0.3)
(3.6)
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
Current assets:
Trade and other receivables
Cash and cash equivalents
Total assets
Current liabilities: Trade and other payables
Current income tax liability
Borrowings
Deferred income tax liabilities
Net assets acquired
Goodwill
Purchase consideration
Consideration satisfied by:
Net cash paid*
Deferred consideration owing at the reporting date
GBR
Phoenix
Beard
£m
Other
£m
Total
£m
0.1
3.2
1.2
0.4
4.9
2.2
0.1
0.7
0.6
1.3
2.5
3.8
3.8
–
3.8
–
0.4
–
–
0.4
0.1
–
–
–
0.3
1.9
2.2
0.3
1.9
2.2
0.1
3.6
1.2
0.4
5.3
2.3
0.1
0.7
0.6
1.6
4.4
6.0
4.1
1.9
6.0
*
Purchase consideration settled in cash is net of working capital adjustments.
(a) GBR Phoenix Beard Holdings Ltd (‘GBR Phoenix Beard’)
On 11 August 2016 the Group acquired 100% of the equity of GBR Phoenix Beard, a leading West Midlands property agent with offices in
Birmingham, London and Leeds. The business provides commercial management and consultancy services and will strengthen the Group’s
presence in the Midlands region and contribute to the growth of the UK consultancy business.
Total acquisition consideration is provisionally determined at £3.8m and was settled in cash on completion.
The selling shareholders will also receive £1.0m payable in instalments by the fifth anniversary of completion, subject to remaining actively
engaged in the business at the payment date. Additionally, earn-out consideration of up to £5.2m is also payable in instalments by the fourth
anniversary of completion and is subject to achievement of certain income targets, as well as remaining actively engaged with the business
at the payment date. Further to this, £0.2m was paid to key employees on completion with a further £0.3m payable on the third anniversary
of completion. As required by IFRS 3 (revised) these payments are charged to the income statement over the relevant period of active
engagement (2016: £1.1m).
Transaction costs of £0.3m were also expensed as incurred to the income statement.
Goodwill of £2.5m and intangible assets of £3.2m relating to existing management contracts 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 £4.6m and underlying operating profit of £0.3m to the Group for the period from acquisition to
31 December 2016. Had the acquisition been made at the beginning of the financial year, revenue would have been £14.8m and underlying
operating profit would have been £0.9m.
The fair value of current trade and other receivables is £1.2m and includes trade receivables with a fair value of £0.8m. The gross contractual
amount for trade receivables is £0.9m, of which £0.1m is expected to be uncollectible.
130
Savills plc Report and Accounts 2016
17. Investments and transactions continued
(b) Other acquisitions
During the year, the Group also acquired the trade and assets of Cresa Partners Charlotte, Inc., a US-based commercial brokerage firm in
the North Carolina region and the trade and assets of Chainbow Ltd, a residential management business based in London specialising in
both management and consultancy services to the block management and private rented sector.
Cash consideration for these transactions amounted to £0.3m. The remainder of the acquisition consideration relates to the discounted
value of deferred consideration of up to £1.9m, subject to achievement of certain income targets.
A further £4.2m is payable to certain key staff and is subject to service conditions; £2.8m was paid at closing and £1.4m is payable in June
2017. As required by IFRS 3 (revised) these payments are expensed to the income statement over the relevant period of employment.
Transaction costs of £0.2m were also expensed as incurred to the income statement.
Goodwill of £1.9m and intangible assets of £0.4m relating to management and 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 £1.8m and underlying operating losses of £0.2m to the Group for the period from
acquisition to 31 December 2016. Had the acquisitions been made at the beginning of the financial year, revenue would have been £2.9m
and underlying operating losses would have been £0.5m.
(c) 2015 acquisitions
On 31 August 2015 the Group acquired 100% of the equity of SEB Asset Management (‘SEB’), an international real estate investment
manager. Total acquisition consideration was provisionally determined at £11.3m, with £1.8m of goodwill and an intangible asset of £0.9m
relating to client relationships recognised as a result. The fair value exercise conducted during the period identified an adjustment to the fair
value of provisions recognised, reducing the carrying value of acquired net assets by £0.7m, with a corresponding increase in goodwill. In
addition, the fair value of the customer relationship intangible asset was also reduced by £0.2m, with a corresponding increase in goodwill.
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
2016
£m
29.9
6.6
36.5
(3.1)
(0.5)
(3.6)
2015
£m
22.1
11.3
33.4
(2.2)
(0.5)
(2.7)
Company
2016
£m
1.6
0.9
2.5
–
–
–
2015
£m
1.2
0.6
1.8
–
–
–
Deferred tax asset – net
32.9
30.7
2.5
1.8
131
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
18. Deferred income tax continued
Group
Company
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 credited/(charged) to other comprehensive income
– Pension asset on actuarial loss
– 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
2016
£m
30.7
(2.1)
0.2
7.2
(1.8)
(0.3)
(2.9)
0.2
(0.3)
(0.6)
–
2.6
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
At 31 December – asset
32.9
30.7
2016
£m
1.8
0.7
–
0.4
(0.1)
–
(0.3)
–
–
–
–
–
2.5
2015
£m
2.7
0.4
–
–
(0.1)
–
(1.2)
–
–
–
–
–
1.8
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 (2015: £0.4m) in respect of losses amounting
to £1.2m (2015: £1.7m) that can be carried forward indefinitely against future taxable income.
Deferred tax assets – Group
At 1 January 2015
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
Exchange movement
At 31 December 2015
Amount credited/(charged) to the income statement (Note 12)
Effect of UK tax rate change within 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)
Transfer (from)/to deferred tax assets
Exchange movement
At 31 December 2016
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Tax losses
£m
Retirement
benefits
£m
Employee
benefits
£m
0.3
0.2
–
–
–
–
–
0.5
0.8
0.1
–
–
–
–
1.4
10.4
1.3
(0.2)
–
–
1.8
0.1
13.4
2.6
0.1
–
–
(1.7)
1.6
16.0
19.1
(9.4)
–
–
–
–
–
9.7
(7.2)
–
–
–
–
1.0
3.5
3.9
0.1
–
(0.9)
(0.1)
–
–
3.0
0.1
–
5.4
(0.3)
1.7
0.3
10.2
8.3
1.7
–
(3.2)
–
–
–
6.8
1.5
–
(2.9)
–
–
–
5.4
Total
£m
42.0
(6.1)
(0.2)
(4.1)
(0.1)
1.8
0.1
33.4
(2.2)
0.2
2.5
(0.3)
–
2.9
36.5
132
Savills plc Report and Accounts 2016 18. Deferred income tax continued
Deferred tax liabilities – Group
At 1 January 2015
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
Amount credited/(charged) to the income statement (Note 12)
Tax (charged)/credited to other comprehensive income (Note 12)
Additions through business combinations (Note 17.5)
Exchange movement
At 31 December 2016
Net deferred tax asset
At 31 December 2016
At 31 December 2015
Deferred tax assets – Company
At 1 January 2015
Amount (charged)/credited to the income statement
Tax charged to other comprehensive income (Note 12)
At 31 December 2015
Amount credited to the income statement
Tax credited/(charged) to other comprehensive income (Note 12)
At 31 December 2016
Net deferred tax asset
At 31 December 2016
At 31 December 2015
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
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Revaluations
£m
Intangible
assets
£m
(0.2)
–
–
–
–
(0.2)
0.1
–
–
–
(0.1)
(0.1)
(0.2)
0.2
(0.5)
–
(0.6)
(0.6)
(0.3)
–
(0.1)
(1.6)
(0.2)
–
(0.1)
–
–
(0.3)
–
0.2
–
–
(0.1)
(2.7)
0.7
–
0.5
(0.1)
(1.6)
0.6
–
(0.6)
(0.2)
(1.8)
Accelerated
capital
allowances £m
Other including
provisions
£m
Retirement
benefits
£m
Employee
benefits
£m
0.2
(0.1)
–
0.1
0.2
–
0.3
0.5
–
–
0.5
0.2
–
0.7
0.2
–
(0.1)
0.1
–
0.3
0.4
1.8
0.5
(1.2)
1.1
0.3
(0.3)
1.1
Group
Company
2016
£m
333.2
(19.3)
313.9
–
39.5
66.0
419.4
2015
£m
294.6
(15.4)
279.2
–
37.9
57.1
374.2
2016
£m
–
–
–
13.1
0.7
2.7
16.5
Total
£m
(3.2)
0.5
0.1
–
(0.1)
(2.7)
0.1
(0.1)
(0.6)
(0.3)
(3.6)
32.9
30.7
Total
£m
2.7
0.4
(1.3)
1.8
0.7
–
2.5
2.5
1.8
2015
£m
–
–
–
13.3
5.3
2.3
20.9
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 2016, trade receivables of £232.0m (2015: £207.9m) were neither past due nor impaired and fully performing.
As at 31 December 2016, trade receivables of £19.3m (2015: £15.4m) 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.
133
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
19. Trade and other receivables continued
The ageing of these receivables is as follows:
Up to 3 months
3 to 6 months
Over 6 months
Group
2016
£m
3.4
1.9
14.0
19.3
2015
£m
0.6
1.9
12.9
15.4
As at 31 December 2016, trade receivables of £81.9m (2015: £71.3m) 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
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*
Group
2016
£m
59.1
16.9
5.9
81.9
Group
2016
£m
178.4
65.8
50.9
35.3
39.8
49.2
419.4
2015
£m
53.1
13.2
5.0
71.3
2015
£m
178.2
50.4
28.0
27.5
34.2
55.9
374.2
* Other currencies include Chinese renminbi, South Korean won, Singapore dollar, Japanese yen, New Zealand dollar, Indonesian rupiah, Philippine peso, Malaysian ringgit, Macau pataca,
New Taiwan dollar, Thailand baht, Polish zloty, Swedish krona and Canadian dollar.
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
2016
£m
(15.4)
(7.2)
2.4
2.7
(1.8)
(19.3)
2015
£m
(14.0)
(6.0)
2.0
2.7
(0.1)
(15.4)
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.
134
Savills plc Report and Accounts 2016 20. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Group
Company
2016
£m
210.1
13.5
223.6
2015
£m
172.3
10.1
182.4
2016
£m
88.3
–
88.3
2015
£m
82.2
–
82.2
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 2016 was 1.21% (2015: 1.64%); these deposits have an average
maturity of 49 days (2015: 33 days).
Cash subject to restrictions in Asia Pacific amounts to £50.6m (2015: £27.2m) which is cash pledged to banks in relation to property
management contracts and cash remittance restrictions in certain countries. These amounts are consolidated.
Cash and cash equivalents are denominated in the following currencies:
Group
Company
Sterling
Hong Kong dollar
US dollar
Euro
Chinese renminbi
Australian dollar
Japanese yen
Singapore dollar
South Korean won
Other currencies*
2016
£m
(6.3)
55.8
38.8
49.2
48.6
9.3
6.2
7.1
6.3
8.6
2015
£m
(5.5)
55.5
41.1
27.6
30.1
7.3
7.9
5.1
5.0
8.3
223.6
182.4
2016
£m
88.2
–
0.1
–
–
–
–
–
–
–
88.3
* Other currencies include New Taiwan dollar, Macau pataca, Thai baht, Vietnamese dong, New Zealand dollar, Indonesian rupiah, Philippine peso, Polish zloty and Swedish krona.
21. Trade and other payables – current
Group
Company
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.
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.
2016
£m
59.1
80.9
–
44.8
30.9
334.5
550.2
2015
£m
3.8
81.7
–
40.6
25.2
304.4
455.7
2015
£m
82.2
–
–
–
–
–
–
–
–
–
82.2
2015
£m
–
6.2
2.1
8.3
–
9.4
2016
£m
–
2.9
2.3
7.2
–
8.9
21.3
26.0
135
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
22. Trade and other payables – non-current
Group
Company
Deferred consideration
Other payables
23. Borrowings
Current
Bank overdrafts
Unsecured bank loans due within one year or on demand
2016
£m
23.5
21.4
44.9
Group
2016
£m
0.2
35.6
35.8
2015
£m
53.0
16.0
69.0
2015
£m
0.2
31.2
31.4
2016
£m
–
–
–
2015
£m
–
–
–
Company
2016
£m
2015
£m
–
–
–
–
–
–
The Group maintains a £250.0m revolving credit facility (‘RCF’), which expires on 15 December 2020 and can be increased by an additional
£50.0m Accordion facility. As at 31 December 2016 £34.0m (2015: £30.0m) of the £250.0m RCF was drawn.
In December 2016 Savills (Aust) Pty Ltd borrowed £1.4m 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 September 2017. At 31 December 2016, at
the year end exchange rate, £1.4m was outstanding and is due within one year. A similar loan entered into in November 2015, of which
£1.2m was outstanding at 31 December 2015, was fully repaid during the year.
In December 2016 Savills (Thailand) Ltd borrowed £0.2m as a working capital loan, which is payable on demand. The borrowings are
denominated in Thailand baht and have an effective interest rate of 4.3%. At 31 December 2016, at the year end exchange rate, £0.2m was
outstanding and is due within one 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.
Group
Company
2016
£m
35.8
35.8
2015
£m
31.4
31.4
2016
£m
–
–
2015
£m
–
–
Group
2016
%
1.27
2015
%
1.59
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
Group
Company
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
136
2016
£m
2015
£m
2016
£m
34.0
1.4
0.4
35.8
2015
£m
30.0
1.2
0.2
31.4
–
–
–
–
Group
Company
2016
£m
23.2
216.0
239.2
2015
£m
19.8
220.0
239.8
2016
£m
–
–
–
–
–
–
–
2015
£m
–
–
–
Savills plc Report and Accounts 2016 24. Derivative financial instruments
2016
Forward foreign exchange contracts – at fair value
Interest rate cap contract – at fair value
2015
Forward foreign exchange contracts – at fair value
Group
Company
Assets
£m
Liabilities
£m
Assets
£m
Liabilities
£m
0.2
0.1
0.3
0.3
–
0.3
–
–
–
–
–
–
Group
Company
Assets
£m
0.1
Liabilities
£m
0.2
Assets
£m
–
Liabilities
£m
–
Forward foreign exchange contracts
The gross notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2016 were £52.3m (2015:
£39.8m). 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.
Interest rate cap contract
The interest rate cap contract matures in December 2020 and is classed as non-current.
Gains and losses on the interest rate cap are recognised in net finance costs in the income statement.
25. Provisions
25.1 Provisions for other liabilities and charges
At 1 January 2016
Provided during the year
Utilised during the year
Released during the year
Exchange movements
Total
Less non-current portion
Current portion
2015
Current
Non-current
Total
Professional
indemnity
claims
£m
Dilapidation
provisions
£m
Onerous
leases
£m
Restructuring
provision
£m
16.7
5.8
(4.8)
(4.4)
–
13.3
7.1
6.2
Professional
indemnity
claims
£m
5.3
11.4
16.7
5.8
0.5
–
(0.5)
0.3
6.1
4.4
1.7
1.3
–
(0.5)
(0.2)
–
0.6
0.2
0.4
0.7
1.5
(0.3)
(0.1)
0.1
1.9
–
1.9
Dilapidation
provisions
£m
Onerous leases
£m
Restructuring
provision
£m
2.1
3.7
5.8
0.7
0.6
1.3
0.7
–
0.7
Group
total
£m
24.5
7.8
(5.6)
(5.2)
0.4
21.9
11.7
10.2
Group
total
£m
8.8
15.7
24.5
Company
£m
1.3
0.6
–
–
–
1.9
1.9
–
Company
£m
–
1.3
1.3
137
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
25. Provisions continued
(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.
25.2 Employee benefit obligations
In addition to the defined benefit obligation pension scheme disclosed in Note 10.2, the following are included in employee benefit
obligations:
Group
At 1 January 2016
Provided during the year
Utilised during the year
Exchange movements
At 31 December 2016
Total
£m
18.8
8.7
(6.2)
3.7
25.0
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 2016 or 31 December 2015.
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
2016
Number of shares
2015
Number of shares
202,000,000
139,809,677
202,000,000
137,861,283
Group
2016
£m
9.2
15.8
25.0
2016
£m
5.1
3.5
2015
£m
7.3
11.5
18.8
2015
£m
5.1
3.4
138
Savills plc Report and Accounts 2016
26. Share capital – Group and Company continued
Movement in issued, called up and fully paid share capital:
At 1 January
Issued to direct participants on exercise of options under the
Sharesave Scheme
Issued to satisfy second instalment of shares due to former Studley,
Inc. stockholders in relation to the acquisition in 2014
Issued to satisfy first instalment of shares due to former Studley, Inc.
stockholders in relation to the acquisition in 2014
Issued to direct participants under the Performance Share Plan
Issued to direct participants on exercise of options under the
Executive Share Option Scheme (2001)
2016
Number of shares
137,861,283
702
1,947,692
–
–
–
£m
3.4
–
0.1
–
–
–
2015
Number of shares
134,891,171
222
–
1,947,692
721,545
300,653
£m
3.4
–
–
–
–
–
At 31 December
139,809,677
3.5
137,861,283
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 2016, the Savills plc 1992 Employee Benefit Trust (the ‘EBT’) held 5,706,307 shares (2015: 4,377,358 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 11 May 2016, the shareholders gave the Company authority, subject to stated conditions, to
purchase for cancellation up to 13,786,130 of its own ordinary shares (AGM held on 13 May 2015: 13,507,743). Such authority remains valid
until the conclusion of the next AGM or 11 November 2017, whichever is the earlier.
27. Share-based payment
Details of the terms of the following schemes are contained in the Remuneration report on pages 60 to 80.
27.1 Sharesave Scheme
The following share options have been granted under the Sharesave Scheme and were outstanding at 31 December:
Date of grant
13 May 2015
18 May 2016
Exercise period
Exercise price
01.07.18 – 01.01.19
01.06.19 – 01.01.20
673.0p
566.0p
2016
Number
of shares
’000
993
73
1,066
A reconciliation of option movements over the year to 31 December is shown below:
Outstanding at 1 January
Granted
Exercised/cancelled
Lapsed
Outstanding at 31 December
Exercisable at 31 December
2016
2015
Number of
shares
’000
1,110
80
(73)
(51)
Weighted
average
exercise
price
673.0p
567.0p
665.7p
665.7p
Number of
shares
’000
–
1,139
(23)
(6)
1,066
665.7p
1,110
673.0p
–
–
–
–
The weighted average remaining contractual life of share options outstanding at 31 December 2016 is 1.4 years (2015: 2.5 years).
139
2015
Number
of shares
’000
1,110
–
1,110
Weighted
average
exercise
price
–
673.0p
673.0p
673.0p
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
Notes to the financial statements continued
Year ended 31 December 2016
27. Share-based payment continued
27.2 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
30 March 2011
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
14 March 2016
14 March 2016
Deferred period
Vesting date
2016
Number
of shares
’000
2015
Number
of shares
’000
5 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
3 years
4 years
30 March 2016
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
14 March 2019
14 March 2020
–
275
–
254
4
–
79
528
18
331
50
318
639
2
466
1,028
527
298
181
266
8
325
90
551
18
331
50
330
656
2
–
–
3,992
3,633
As at 31 December 2016, 607 (2015: 503) 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:
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2016
2015
Number of
shares
’000
3,633
1,521
(100)
(1,062)
3,992
–
Weighted
average
share price
at date of
exercise
–
–
–
722.0p
–
–
Number of
shares
’000
3,158
997
(63)
(459)
3,633
–
Weighted
average
share price
at date of
exercise
–
–
–
822.5p
–
–
The weighted average exercise price for awards granted under this scheme is £nil (2015: £nil). No awards were exercisable under this
scheme as at 31 December 2016 (31 December 2015: nil).
The weighted average remaining contractual life of share options outstanding at 31 December 2016 is 1.8 years (2015: 1.7 years).
140
Savills plc Report and Accounts 2016 27. Share-based payment continued
27.3 Deferred Share Plan
The following awards of deferred shares, without exercise price, have been granted under the Deferred Share Plan (the ‘DSP’) and were
outstanding at 31 December:
Date of grant
30 March 2011
27 September 2011
19 April 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
14 March 2016
14 March 2016
20 June 2016
12 September 2016
12 September 2016
8 December 2016
Deferred period
5 years
5 years
5 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
3 years
5 years
2.75 years
3 years
4 years
3.75 years
Vesting date
30 March 2016
27 September 2016
19 April 2017
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
14 March 2019
14 March 2021
31 March 2019
12 September 2019
12 September 2020
8 September 2020
2016
Number
of shares
’000
2015
Number
of shares
’000
–
–
22
12
–
532
27
–
33
–
13
2
245
6
13
58
150
186
15
–
2
15
40
224
148
44
388
19
129
10
348
43
22
12
64
581
33
10
33
78
13
2
251
6
29
80
154
186
15
2
2
15
40
232
–
–
–
–
–
–
2,333
2,251
As at 31 December 2016, 208 individuals (2015: 184) 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:
Outstanding at 1 January
Granted
Forfeited
Exercised
Outstanding at 31 December
Exercisable at 31 December
2016
2015
Number of
shares
’000
2,251
763
(90)
(591)
2,333
–
Weighted
average
share price
at date of
exercise
–
–
–
670.6p
–
–
Number of
shares
’000
4,133
493
(46)
(2,329)
2,251
–
Weighted
average
share price
at date of
exercise
–
–
–
821.9p
–
–
The weighted average exercise price for awards granted under this scheme is £nil (2015: £nil). No awards were exercisable under this
scheme as at 31 December 2016 (31 December 2015: nil).
The weighted average remaining contractual life of share options outstanding at 31 December 2016 is 1.7 years (2015: 1.8 years).
141
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
27. Share-based payment continued
27.4 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
12 August 2014
12 August 2014
24 April 2015
27 April 2016
Vesting date
12 August 2017
12 August 2017
24 April 2018
27 April 2019
Approved/
unapproved
Approved
Unapproved
Unapproved
Unapproved
2016
Number
of shares
’000
2015
Number
of shares
’000
10
294
186
200
690
10
294
186
–
490
As at 31 December 2016, 7 individuals (2015: 7) 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
2016
2015
Number of
shares
’000
Weighted
average
share price
at date of
exercise
490
200
–
690
–
–
–
–
–
–
Number of
shares
’000
959
186
(655)
490
–
Weighted
average
share price
at date of
exercise
–
–
824.5p
–
–
The weighted average remaining contractual life of share options outstanding at 31 December 2016 is 1.3 years (2015: 1.9 years).
27.5 Fair value of options
Options and awards for the Sharesave and PSP schemes 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
0.6% p.a.–1.4% p.a. depending on grant date and expected life
Volatility of Company share price
22% p.a.–25% p.a. depending on grant date
Correlation
Employee turnover
Performance criteria
47%–53% correlation for Company share price against comparator index at grant date (PSP only)
Zero
All vest after three years
Allowance for pre-vesting cancellations
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.
142
Savills plc Report and Accounts 2016 27. Share-based payment continued
Fair value of options and awards at grant dates are:
Grant
DSBP 2011
DSBP 2012
DSBP 2013
DSBP 2013
DSBP 2014
DSBP 2014
DSBP 2015
DSBP 2016
DSP 2011
DSP 2011
DSP 2012
DSP 2012
DSP 2013
DSP 2013
DSP 2013
DSP 2014
DSP 2014
DSP 2014
DSP 2015
DSP 2015
DSP 2016
DSP 2016
DSP 2016
DSP 2016
PSP 2014
PSP 2015
PSP 2016
SHARESAVE 2015
SHARESAVE 2016
Grant date
Fair value
pence
30 March 2011
19 April 2012
11 April 2013
18 June 2013
10 April 2014
13 May 2014
24 April 2015
14 March 2016
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
14 March 2016
20 June 2016
12 September 2016
8 December 2016
12 August 2014
24 April 2015
27 April 2016
13 May 2015
18 May 2016
363.2
350.6
510.0
600.0
653.0
623.5
820.0
705.5
363.2
300.0
350.6
411.6
510.0
549.5
597.5
653.0
623.5
600.0
820.0
896.0
705.5
695.0
761.0
761.0
423.7
687.8
465.8
219.0
177.7
The total charge for the year relating to employee share-based payments plans was £13.4m (2015: £11.1m), all of which related to
equity-settled share-based payment transactions.
28. Retained earnings and other reserves
Balance at 1 January 2016
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
Transfer between reserves
Transactions with non-controlling
interests
Share-based
payments
reserve
£m
Treasury
shares
£m
Profit and
loss account*
£m
Total retained
earnings*
£m
Capital
redemption
and capital
reserve
£m
Merger relief
reserve
£m
23.0
(26.0)
210.8
207.8
0.3
12.0
–
–
13.4
(7.5)
–
–
–
–
–
–
–
11.3
(23.2)
–
–
–
66.9
(28.7)
–
(3.8)
–
(35.4)
–
(1.4)
66.9
(28.7)
13.4
–
(23.2)
(35.4)
–
(1.4)
–
–
(3.6)
(3.6)
–
–
–
–
–
–
–
1.4
–
1.7
–
–
–
–
–
–
11.6
–
–
23.6
Balance at 31 December 2016
28.9
(37.9)
204.8
195.8
Foreign
exchange
reserve
£m
25.2
–
52.4
–
–
–
–
–
–
–
Revaluation
reserve
£m
Total other
reserves
£m
1.6
–
(0.6)
–
–
–
–
–
–
–
39.1
–
51.8
–
–
–
–
11.6
1.4
–
77.6
1.0
103.9
143
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
28. Retained earnings and other reserves continued
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
Balance at 1 January 2015
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
Balance at 31 December 2015
24.8
(24.5)
178.3
178.6
0.3
–
–
11.1
(12.9)
–
–
–
–
23.0
–
–
–
13.4
(14.9)
–
–
64.3
(0.3)
–
(0.5)
–
(30.3)
–
64.3
(0.3)
11.1
–
(14.9)
(30.3)
–
–
(0.7)
(0.7)
–
–
–
–
–
–
–
–
(26.0)
210.8
207.8
0.3
–
–
–
–
–
–
–
12.0
–
12.0
*
Included within profit and loss account is tax on items taken directly to equity (Note 12) as disclosed above.
Foreign
exchange
reserve
£m
21.0
–
4.2
–
–
–
–
–
–
Revaluation
reserve
£m
1.2
–
0.4
–
–
–
–
–
–
25.2
1.6
Total other
reserves
£m
22.5
–
4.6
–
–
–
–
12.0
–
39.1
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
2016
£m
43.9
122.5
124.3
290.7
2015
£m
39.4
104.3
127.1
270.8
Company
2016
£m
7.8
31.4
86.2
2015
£m
7.8
31.4
94.1
125.4
133.3
Significant operating leases relate to the various property leases for Savills offices in the UK, Continental Europe, Asia Pacific and North
America. There are no significant non-cancellable sub-leases.
144
Savills plc Report and Accounts 2016 31. Cash generated from operations
Group
Company
Profit for the year
Adjustments for:
Income tax (Note 12)
Depreciation (Note 16)
Amortisation of intangible assets (Note 15)
Net profit on disposal of available-for-sale investments, joint ventures and associates
Net finance cost/(income) (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)/increase in provisions
Charge for share-based compensation (Note 27.5)
Exercise of share options
Operating cash flows before movements in working capital
Decrease/(increase) in work in progress
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
32. Analysis of cash net of debt
2016
Cash and cash equivalents
Bank overdrafts
Bank loans
Cash and cash equivalents net of debt
2015
Cash and cash equivalents
Bank overdrafts
Bank loans
Cash and cash equivalents net of debt
2016
£m
67.7
32.1
12.7
6.9
(0.1)
0.8
(7.9)
(6.3)
2.4
(3.0)
13.4
–
2015
£m
64.9
33.7
11.2
5.7
(2.9)
(0.5)
(6.9)
(5.5)
(0.8)
(2.8)
11.1
–
118.7
107.2
0.3
(17.1)
15.9
(0.9)
(47.3)
81.5
117.8
140.5
2016
£m
80.9
(2.2)
1.2
0.4
–
(1.0)
–
(0.5)
–
0.6
2.4
(11.2)
70.6
–
4.4
(4.7)
70.3
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
At
1 January
£m
Cash flows
£m
Exchange
movement
£m
At
31 December
£m
182.4
(0.2)
182.2
(31.2)
151.0
At
1 January
£m
158.1
–
158.1
(3.9)
154.2
9.0
–
9.0
(4.1)
4.9
32.2
–
32.2
(0.3)
31.9
223.6
(0.2)
223.4
(35.6)
187.8
Cash flows
£m
Exchange
movement
£m
At
31 December
£m
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
33. Related party transactions
There were no significant related party transactions during the year.
(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 £18.9m (2015: £15.8m).
Dividends of £80.0m were received from subsidiaries during the year (2015: £45.0m). Amounts outstanding to and from subsidiaries as at
31 December 2016 are disclosed in Notes 19, 21.
145
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
34. Group – Investments
In accordance with Section 409 of the Companies Act 2006 a full list of subsidiaries, partnerships, associates and joint ventures, the
registered office and the percentage of equity owned by the Group, as at 31 December 2016, are disclosed below. All subsidiary
undertakings are consolidated into the Group financial statements. Unless otherwise stated the share capital is wholly comprised of
ordinary shares which are indirectly held by the Company.
Country of
incorporation
Registered office
Australia
Australia
Australia
Australia
Australia
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
(ii) Australia
Level 7, 50 Bridge Street, Sydney, NSW 2000
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
Level 7, 50 Bridge Street, Sydney, NSW 2000
British
Virgin Islands
Palm Grove House, P.O. Box 3186, Wickhams Cay I,
Road Town, Tortola
Canada
Canada
Canada
181 Bay Street - Suite 200, Toronto, ON M5J 2T3
181 Bay Street - Suite 200, Toronto, ON M5J 2T3
181 Bay Street - Suite 200, Toronto, ON M5J 2T3
China
China
China
China
China
China
China
China
China
China
China
China
Room 220, Block 1, No.100 Jinyu Road, Pu Dong, Shanghai
2101 East Tower, Twin Towers, B-12 Jianguomenwai Avenue,
Chaoyang District, Beijing 100022
Room 2106, Yanlord Landmark, No.1 Section 2, Renmin South Road,
Chengdu 610016
Room 906, R&F Center, No.10 Hua Xia Road, Zhujiang New Town,
Guangzhou 510623
Unit 212, No.286 Dong Fang Road, Pu Dong, Shanghai
Room 2103-2104, 21/F Yuecai Building, No.188 Jingshan Road,
Jida, Zhuhai
Unit 01, 21/F, East Tower, Twin Towers, B-12 Jianguomenwai Avenue,
Chaoyang District, Beijing 100022
Room 2105, R&F Center, No.10 Hua Xia Road, Zhujiang New Town,
Guangzhou 510623
Unit 07, 21/F, East Tower, Twin Towers, B-12 Jianguomenwai Avenue,
Chaoyang District, Beijing 100022
Room 905C, R&F Centre, No.10 Hua Xia Road, Zhujiang New Town,
Guangzhou
Room 3, Unit A, 5/F, Anlian Plaza, No.4018 Jintian Road,
Futian District, Shenzhen 518026
2101 East Tower, Twin Towers, B-12 Jianguomenwai Avenue,
Chaoyang District, Beijing 100022
Fully-owned subsidiary
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 Investment Management (Australia) Pty Ltd
Savills (Vietnam) Ltd
Savills Canada Inc
Savills Studley Services Inc
Savills Studley Inc
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
Shenzhen Guardian Property Management Ltd
Swan Property Services (Beijing) Company Ltd
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
146
Savills plc Report and Accounts 2016 34. Group – Investments continued
Fully-owned subsidiary
Savills CZ s.r.o.
Savills Investment Management ApS
Savills Investment Management SAS
Savills Valuation SAS
Piccadilly General Partner GmbH
Savills Advisory Services Germany GmbH & Co. KG
Savills Advisory Services GmbH
Savills Immobilien Beratungs GmbH
Savills Immobilien Beteiligungs GmbH
Savills Fund Management Holding AG
Savills Immobilien Management GmbH
Savills Investment Management (Germany) GmbH
Country of
incorporation
Registered office
Czech Republic
V Celnici 1031/4, 110 00 Prague 1
Denmark
Østergade 13, 2/F, 1100, København K
France
France
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
54-56 Avenue Hoche, 75008 Paris
21 Boulevard Haussmann, 75009 Paris
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Taunusanlage 19, 60325 Frankfurt-am-Main
Taunusanlage 19, 60325 Frankfurt-am-Main
Taunusanlage 19, 60325 Frankfurt-am-Main
Taunusanlage 19, 60325 Frankfurt-am-Main
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Hardenbergstraße 27, 10623 Berlin
Sonnenstrasse 19, Munich
Asia Protection Security Associates Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Bridgewater Management Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Champion Insurance and Computer Services Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Dominion Office Centre Ltd
East Full Company Ltd
Eco-Guardian Ltd
Express Engineering Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Express Maintenance Services Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Gateway Contractors Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
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
Kenda Services Ltd
Kwik Park Ltd
Mount Link Services Ltd
Quartey Properties Ltd
Savills Guardian (Holdings) Ltd
Security and Safety Ltd
Swan Hygiene Services Ltd
Swan Pest Control Services Ltd
Tarrayon Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
The Peninsular Centre Retailers Association Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
BTHK Property Management Ltd
Savills Building Services Ltd
Savills Design Ltd
Savills Engineering Ltd
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
147
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
34. Group – Investments continued
Fully-owned subsidiary
Savills Project Consultancy Ltd
Country of
incorporation
Registered office
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Savills Property Management Holdings Ltd
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Savills Property Management Ltd
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Savills Residence Ltd
Savills (China) Ltd
Savills (Hong Kong) Ltd
Savills Asia Pacific Ltd
Savills India Holding Ltd
Savills Indonesia Holding Ltd
Savills Management Services Ltd
Savills Philippines Holding Ltd
Savills Realty Ltd
Savills Regional Services Ltd
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road, Taikoo Shing
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
(ii) Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Valuation and Professional Services Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Associates Ltd
Hong Kong
Whole Block, No.3 Norfolk Road, Kowloon Tong, Kowloon
Savills Investment Management (Hong Kong) Ltd
Hong Kong
Level 54, Hopewell Centre, 183 Queen's Road East
Savills Investment Management Asia Ltd
Hong Kong
Level 54, Hopewell Centre, 183 Queen's Road East
FPD Property Services (India) Private Ltd
Savills Realty (India) Private Ltd
Actium
Anateo Ltd
HOK Financial Services
Liffey Valley Management Ltd
Mahon Point Management Ltd
Savills Commercial (Ireland) Ltd
Savills Management Resource Ireland Ltd
Savills Residential (Ireland) Ltd
White Water (Newbridge) Ltd
White Water Management Ltd
White Water Residential DAC
Cordea Savills Advisors S.r.l.
Savills Italy S.r.l.
Savills Asset Advisory Company Ltd
Savills Japan Company Ltd
Greater Tokyo Office Fund (Jersey) GP Ltd
Prime London Residential Development Jersey GP Ltd
Prime London Residential Development Jersey II GP Ltd
Prime London Residential Development Jersey II LP
Savills Investment Management (Jersey) Ltd
Savills (Jersey) Ltd
SVJ One Ltd
(ii)
(ii)
India
India
Ireland
Ireland
Ireland
Ireland
Ireland
133/3 Brigade Road (Raheja Chancery Building) Richmond Town,
Bangalore, Karnataka 560025
No. 65/6, Sarjapur Ring Road, Agara, Bangalore, Karnataka 560102
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
(ii)
Ireland
33 Molesworth Street, Dublin 2
Ireland
Ireland
Ireland
Ireland
Ireland
Italy
Italy
Japan
Japan
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
33 Molesworth Street, Dublin 2
Via San Paolo 7, 20121 Milan
Via San Paolo 7, 20121 Milan
Yurakucho ITOCIA 15/F, 2-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006
Yurakucho ITOCIA 15/F, 2-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-0006
3/F Walker House, 28-34 Hill Street, St Helier, JE4 8PN
3/F Walker House, 28-34 Hill Street, St Helier, JE4 8PN
3/F Walker House, 28-34 Hill Street, St Helier, JE4 8PN
3/F Walker House, 28-34 Hill Street, St Helier, JE4 8PN
3/F Walker House, 28-34 Hill Street, St Helier, JE4 8PN
19 Halkett Place, St Helier, JE2 4WG
44 Esplanade, St Helier, JE4 9WG
Savills Investment Korea Company Ltd
South Korea
13F Seoul Finance Center, 136 Sejong-daero Jung-gu, Seoul
Savills Korea Company Ltd
South Korea
13F Seoul Finance Center, 136 Sejong-daero Jung-gu, Seoul
Savills Korea Advisors Realty Company Ltd
South Korea
15F Tower8, 7 Jongro5-gil Jongno-gu, Seoul
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
148
Savills plc Report and Accounts 2016 34. Group – Investments continued
Fully-owned subsidiary
Asia Property Fund S.a.r.l.
Country of
incorporation
Registered office
Luxembourg
10, rue C.M. Spoo
Cordea Savills Italian Opportunities No.2 S.a.r.l.
Luxembourg
10, rue C.M. Spoo
CS Italian Opportunities No.1 S.a.r.l.
Luxembourg
10, rue C.M. Spoo
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.
Savills Nederland B.V.
Savills Retail B.V.
Tagis B.V.
Macau
Macau
Macau
Myanmar
Avenida Amizade No.,555, Sala 1309-1310, Edif, Landmark 13 Andar
Suite 1309-1310, 13/F Macau Landmark, 555 Avenida da Amizade
Suite 1309-1310, 13/F Macau Landmark, 555 Avenida da Amizade
No. 8, Unit 8-A, Centerpoint Towers, No. 65, Corner of Sule Pagoda
Road & Merchant Street, Kyauktada Township, Yangon
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Tagis Property Management B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Savills Investment Management B.V.
Netherlands
Vida Building, Kabelweg 57, 1014 BA Amsterdam
Savills (NZ) Ltd
Savills (NI) Ltd
New Zealand
Level 8, 33 Shortland Street, Auckland Central, Auckland, 1010
Northern Ireland
1/F, Lesley Studios, 32-36 May Street, Belfast, BT1 4NZ
FPD Management Services Philippines Inc
Philippines
Savills Property Management Sp Zoo
Savills Sp Zoo
Savills (SEA) Pte Ltd
Savills (Singapore) Pte Ltd
Savills Residential Pte Ltd
Savills Valuation & Professional Services (S) Pte Ltd
Savills Asset Management Pte Ltd
Savills Property Management Pte Ltd
Savills Investment Management Pte Ltd
Savills Consultores Inmobiliarios SA
Savills Investment Management S.L
Loudden Bygg-och Fastighetsservice AB
Savills Förvaltning AB
Savills Sweden AB
Savills Investment Management AB
Savills (Taiwan) Ltd
Savills Residential Services (Taiwan) Ltd
Poland
Poland
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Spain
Spain
Sweden
Sweden
Sweden
Sweden
Taiwan
Taiwan
Suite A 3/F Echelon Tower, 2100 A. Mabini Street, BGY.
701 Zone 077 Malate, Manila 1004
ul. Złota 59, 00-120 Warszawa
ul. Złota 59, 00-120 Warszawa
30 Cecil Street #20-03 Prudential Tower, 049712
30 Cecil Street #20-03 Prudential Tower, 049712
30 Cecil Street #20-03 Prudential Tower, 049712
30 Cecil Street #20-03 Prudential Tower, 049712
20 Martin Road #03-01/02 Seng Kee Building, 239070
20 Martin Road #03-01/02 Seng Kee Building, 239070
80 Robinson Road, #02-00, 068898
José Abascal, 45 - 1ª planta, 28003 Madrid
Calle Velazquez 78 1, 28001 Madrid
Box 6317, 102 35 Stockholm
Sergels Torg 12, 111 57 Stockholm
Sergels Torg 12, 111 57 Stockholm
Kungsgatan 56, 111 22 Stockholm
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
Savills Valuation & Professional Services (Taiwan)
(iii) Taiwan
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
Savills (Thailand) Ltd
Savills Security and Safety Company Ltd
Thailand
Thailand
990 Abdulrahim Place Building, 26/F, Rama IV Road, Silom
Subdistrict, Bang Rak District, Bangkok
990 Abdulrahim Place Building, 26/F, Rama IV Road, Silom
Subdistrict, Bang Rak District, Bangkok
Blair Kirkman LLP
Buckleys Estate Agents Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
149
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
34. Group – Investments continued
Fully-owned subsidiary
Chesterfield & Co (Rentals) Ltd
Christopher Rowland Ltd
Collier & Madge Holdings Ltd
Collier & Madge plc
Cordea Savills Investments Ltd
GBR Phoenix Beard Ltd
GBR Phoenix Beard Group Ltd
GBR Phoenix Beard Holdings Ltd
Country of
incorporation
Registered office
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
GBR Phoenix Beard Residential Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
GBR Property Consultant Ltd
Grosvenor Hill Ventures Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Hanover Facilities Management Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Hepher Dixon Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Holden Matthews Estate Agents Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Humphriss & Ryde Ltd
Jago Dean PR Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
LIBRA Housing Advisory Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Mansfield Elstob Main Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Moor House Management Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Optic Asset Management Ltd
PCA Holdings Ltd
Phoenix Beard Landscaping Ltd
Phoenix Beard Manpower Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Phoenix Beard Project Management and Building Surveying Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Phoenix Beard Trustees Ltd
Portnalls Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Prime London Residential Development GP LLP
United Kingdom 33 Margaret Street, London, W1G 0JD
Prime London Residential Development II GP LLP
United Kingdom 33 Margaret Street, London, W1G 0JD
Prime Purchase Ltd
Rickitt Grant & Company Ltd
S F Securities Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Savillls IM UK Income and Growth General Partner LLP
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills (L&P) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills (Overseas Holdings) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills (UK) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Advisory Services (L&P) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Advisory Services Ltd
Savills Asset Warehouse 1 Ltd
Savills Asset Warehouse 2 Ltd
Savills Capital Advisors Ltd
Savills Commercial (Leeds) Ltd
Savills Commercial Ltd
Savills (Europe) Ltd
Savills Finance Holdings plc
Savills Financial Services Ltd
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
150
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills plc Report and Accounts 2016 34. Group – Investments continued
Fully-owned subsidiary
Savills Holding Company Ltd
Savills IM Dawn GP Ltd
Savills IM Holdings Ltd
Savills IM Investco Ltd
Savills IM UK One Ltd
Country of
incorporation
Registered office
(i) United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills IM UK Property Ventures No.1 GP Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills IM UK Two Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Investment Management (UK) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Investment Management LLP
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Investment Management Overseas Holdings Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Lending Solutions Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Management Resources Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Nominee Company Ltd
Savills Telecom Ltd
Serviced Land No.1 GP Ltd
Serviced Land No.2 GP Ltd
Serviced Land No.2 JV GP Ltd
Smith Woolley Ltd
Stratland Management Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
The London Planning Practice Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Wellington Holdings Ltd
Cordea Savillls SLP GP Ltd
Cordea Savillls SLP LP
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
Savills IM SLP General Partner LLP
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
Cordea Savillls SLP II LP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Prime London Residential Development Co-Investment GP LLP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Prime London Residential Development Co-Investment II GP LLP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Prime London Residential Development Co-Investment II LP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Prime London Residential Development Co-Investment LP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Savillls IM SLP II GP LLP
GTOF Co-Investment GP LLP
GTOF Co-Investment LP
Savills IM SLP III GP LLP
Savills IM SLP III LP
BTR Capital Advisors I LLC
BTR Capital Advisors II Inc
BTR Capital Advisors III Inc
BTR Capital Management
Gravitas Lease Audit Services LLC
Gravitas Real Estate Solutions LLC
Kelly, Legan & Gerard Inc
Savills America Ltd
Savills LLC
Savills Studley (GA) Inc
Savills Studley Inc
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
151
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
34. Group – Investments continued
Fully-owned subsidiary
Country of
incorporation
Registered office
Savills Studley Occupier Services Inc
United States
399 Park Avenue - 11/F, New York, NY 10022
Studley (Shanghai) Real Estate Brokerage Co Ltd
United States
399 Park Avenue - 11/F, New York, NY 10022
Studley (Singapore) Pte Ltd
Studley Asia Holdings
United States
399 Park Avenue - 11/F, New York, NY 10022
United States
399 Park Avenue - 11/F, New York, NY 10022
Studley Gravitas Real Estate Solutions LLC
United States
399 Park Avenue - 11/F, New York, NY 10022
The Great Studley Stamp Company
United States
399 Park Avenue - 11/F, New York, NY 10022
Savills Vietnam Co Ltd
Vietnam
6/F, Sentinel Place building, 41A Ly Thai To,
Hoan Kiem District, Hanoi City
Subsidiaries of which the Group owns less than 100%
% owned
Country of
incorporation
Registered office
Savills Belux Group SA
99.90
Belgium
Avenue Louise 81, 1050 Brussels
Savills Property Services (Shenzhen) Company Ltd
85.00
China
Unit A, 5/F Anlian Plaza, No.4018 Jintian Road, Futian District,
Shenzhen 518026
Savills SA
99.97
France
21 Boulevard Haussmann 75009, Paris
Savills Fund Management GmbH
94.00
Germany
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Savills Investment Management (KVG) GmbH
94.90
Germany
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Absolute Result Ltd
80.20
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Billion Property Management Ltd
80.00
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Savills Showcase Ltd
65.00
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
PT Savills Consultants Indonesia
80.40
Indonesia
Indonesia Stock Exchange Building, Tower I, Lt. 12, Jl. Jend.
Sudirman, Kav. 52-53, Senayan, Kebayoran Baru,
Jakarta Selatan
Savills Investment Management SGR S.p.A
75.00
Italy
Via San Paolo 7, 20121 Milan
Savills Investment Management (Luxembourg) S.à r.l.
94.90
Luxembourg
10, rue C.M. Spoo
Savills Nederland Holdings BV
90.25
Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
SGDN Ltd
Joint Ventures
51.00
United Kingdom Stuart House, City Road, Peterborough, PE1 1QF
% owned
Country of
incorporation
Registered office
Anlian Savills Property Management (Shenzhen) Ltd
30.00
China
Unit B02(b), 19/F,Anlian Plaza, No.4018, Jintian Road,
Futian District, Shenzhen
Beijing BHG Savills Retail & Property Management
Company Ltd
30.00
China
Room 107, Block 1, No 208, Lane 4, North Xiangyun Road,
Daxing District, Beijing
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
25.00
China
A6 West Da Wang Road, Chaoyang District, Beijing
49.00
China
Room 926, 15 Guang An Road, Feng Tai District, Beijing
30.00
China
B1/F, Tong Tai Building, 33 Financial Street, West District, Beijing
Beijing Jiaming Savills Property Management
Company Ltd
35.00
China
B2 Floor, No. 27 East 3rd Ring Rd North, Chaoyang District,
Beijing
Beijing Oriental Savills Asset Management Company Ltd
30.00
China
Beijing Tianhe Savills Property Management Company Ltd
40.00
China
Beijing Zhaotai Savills Property Services Company Ltd
30.00
China
Unit 303, 3/F No, 9 West Street Wangfujing, Dongcheng District,
Beijing
Room 0006, 1/F, 18 Zhong Guan Cun Avenue, Haidian District,
Beijing
B1 Floor, 11 Fenghui Yuan, Tai Ping Avenue, Xicheng District,
Beijing
Beijing Zhong Bao Savills Property Management Company
Ltd
10.00
China
603 China Life Tower, 16 Chao Wai Street, Chaoyang District,
Beijing
COSCO FPDSavills Property Development Company Ltd
25.00
China
East Kang Qiao Road No.1, Nanhui District, Shanghai
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
152
Savills plc Report and Accounts 2016 34. Group – Investments continued
Joint Ventures
% owned
Country of
incorporation
Registered office
DingTai & Savills Xiamen Property Management Ltd
40.00
China
Everbright Savills Property Management Company Ltd
45.00
China
FPD Raycom Property Management (Beijing) Company Ltd
30.00
China
Fuzhou Hengli & Savills Property Management Company Ltd
45.00
China
Unit D514, JinShan street, HouKeng XiPan club No.308, Huli
District, Xiamen
Room E-266, 3/F, Ru Shan Road No.227, Pilot Free Trade Zone,
Shanghai
B1-023 Raycom Center, 2 South Road, Ke Xue Yan, Haidian
District, Beijing
Unit B, 4/F Zhongliu City, No.171, Hu Dong Road, Gu Lou
District, Fuzhou
Gohigh Savills (Shanghai) Property Management
Company Ltd
49.00
China
Room 203D, 2/F, No. 21, Lane 596 Middle Yanan Road, Jingan
District, Shanghai
Savills BM Property Services Company Ltd
40.00
China
Room 115, No.53, Lane 749, Middle Tianmu Road, Zhabei
District, Shanghai
Shanghai No.1 and FPDSavills Property Management
Company Ltd
51.00
China
Room 308-C, No.727, Zhangjiang Rd, Zhangjiang Town,
Pudong District, Shanghai
Shanghai Poly Savills Property Management Company Ltd
30.00
China
N24/F, 528 South Pu Dong Road, Pu Dong, Shanghai
Shanxi Zhidi Savills Property Services Company Ltd
30.00
China
4/F, block 3, No.42 Xing Shan Temple, Xi’an City
Shenzhen Qianhai Savills Property Services
Company Ltd
Suzhou Industial Park Wanrun & FPD Savills Property
Management Company Ltd
40.00
China
45.00
China
Tianjin TEDA Savills Property Services Company Ltd
10.00
China
Wuhan Yuexiu Savills Property Services Company Ltd
40.00
China
Zhongzheng Savills Property Management (Beijing) Co Ltd
49.00
China
Unit 201, A Tower, No.1, Qian Wan Road, Qianhai Shengan
Cooperation District, Shenzhen
2/F, International Building, No.2 Suzhou Avenue West, Suzhou
industrial Park
8/F, B Building, No. 21 Hongda Street, Tianjin Economy &
Technology Development Zone
Room 5-2, No 198 Hanzheng Street,
Qiaokou District, Wuhan
Unit 16-04C, 16/F, Building 8, No, 91 Yard, Jianguo Road,
Chaoyang District, Beijing
Zhuhai Hengqin Savills Assets Operation Management
Company Ltd
51.00
China
Room 105-1460, No. 6 Baohua Road, Hengqin new area,
Zhuhai
Greenmile Ventures Ltd
50.00
Hong Kong
P.O. Box 957, Offshore Incorporations Centre, Road Town,
Tortola, British Virgin Islands
Greenwall Gateway Ltd
50.00
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Jiayi Savills Property Services Ltd
51.00
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
G.E.S. Holdings Ltd
G.E.S. Ltd
Savills Science Ltd
Associates
SAS Riveira Estates
Guardian Home Ltd
50.00 Macau
50.00 Macau
50.00
United
Kingdom
Alameda Dr. Carlos D'Assumpcao, No. 181 - 187,
Edf. Kong Fai Com. 7/F, K - P
Alameda Dr. Carlos D'Assumpcao, No. 181 - 187,
Edf. Kong Fai Com. 7/F, K - P
33 Margaret Street, London, W1G 0JD
% owned
Country of
incorporation
Registered office
44.80
France
11 Avenue Jean Medecin, 06000, Nice
40.00 Hong Kong
Flat G&H, 55/F, Block 3, Metro Town, Tseung Kwan O,
New Territories
KSH Guardian Property Management Ltd
50.00 Hong Kong
7th Floor, Cityplaza One, 1111 King’s Road, Taikoo Shing
Yuen Sang Property Management Company Ltd
50.00 Hong Kong
7th Floor, Cityplaza One, 1111 King’s Road, Taikoo Shing
Lippo-Savills Property Management Ltd
50.00 Hong Kong
Room 2301, 23/F, Tower One, Lippo Centre, 89 Queensway
Savills Taiping Property Management Ltd
45.00 Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Cordea Nichani India Advisers Private Ltd
25.00
India
Ground Floor Front, 19 Kumarakrupa Road, Bangalore 560001
Savills (Johor) Sdn Bhd
45.00 Malaysia
No. 2 Jalan Raja Abdullah, Off Jalan Sultan Ismail,
50300 Kuala Lumpur
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
153
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report Notes to the financial statements continued
Year ended 31 December 2016
34. Group – Investments continued
Associates
Savills (KL) Sdn Bhd
Savills (Malaysia) Sdn Bhd
Savills (Penang) Sdn Bhd
% owned
Country of
incorporation
45.00 Malaysia
45.00 Malaysia
45.00 Malaysia
Savills (Project Management) Sdn Bhd
45.00 Malaysia
Registered office
No. 2 Jalan Raja Abdullah, Off Jalan Sultan Ismail,
50300 Kuala Lumpur
No. 2 Jalan Raja Abdullah, Off Jalan Sultan Ismail,
50300 Kuala Lumpur
No. 2 Jalan Raja Abdullah, Off Jalan Sultan Ismail,
50300 Kuala Lumpur
No. 2 Jalan Raja Abdullah, Off Jalan Sultan Ismail,
50300 Kuala Lumpur
Rootcorp Ranganatha Ltd
Monaco Real Estates SARL
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
25.00 Mauritius
4/F, Raffles Tower, 19 Cybercity, Ebene
44.80 Monaco
10 Ter Boulevard Princesse Charlotte
48.00
Singapore
3 Bishan Place, #02-01 CPF Bishan Building, S 579838
(iii) 26.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
40.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
40.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
40.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
44.17
United States
399 Park Avenue - 11th FL, New York, NY 10022
(iii) 24.32 United States
399 Park Avenue - 11th FL, New York, NY 10022
(iii) 25.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
41.95
United States
399 Park Avenue - 11th FL, New York, NY 10022
25.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
Studley Georgetown Jefferson
45.00 United States
399 Park Avenue - 11th FL, New York, NY 10022
Studley Partners - Postal Square, LP
(iii) 32.81 United States
399 Park Avenue - 11th FL, New York, NY 10022
Studley Partners - Postal Square, LPII
(iii) 37.73
United States
399 Park Avenue - 11th FL, New York, NY 10022
The King Forum and Studley Associates
(iii) 42.50 United States
399 Park Avenue - 11th FL, New York, NY 10022
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
The total non-controlling interest at the end of the year is £1.4m (2015: £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.
35. Events after the balance sheet date
Cresa Partners Orange County, LP
On 7 February 2017, the Group acquired 100% of the equity interest in Cresa Partners Orange County, LP, for total consideration of
US$19.0m.
An exercise to determine total acquisition consideration and the fair value of the assets acquired and liabilities assumed is underway.
154
Savills plc Report and Accounts 2016 Shareholder information
Key dates for 2017
Annual General Meeting
Financial half year end
Announcement of half year results
9 May 2017
30 June 2017
10 August 2017
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 (see below). For general enquiries please call our Shareholder Services
helpline on: 0371 384 2018 (overseas holders need to ring +44 (0)121 415 7047. 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.
Professional advisers and service providers
Solicitors
CMS Cameron McKenna LLP
Cannon Place
78 Cannon Street
London EC4N 6AF
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
155
Savills plc Report and Accounts 2016Financial statementsGovernance Strategic report
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;
– The impact of competition, inflation;
– Changes to regulations, taxes;
– Changes to consumer saving and spending habits; and
– Our success in managing the above factors.
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.
156
Savills plc Report and Accounts 2016 Savills plc
33 Margaret Street
London W1G 0JD
T: +44 (0)20 7499 8644
www.savills.com
Registered in England
No. 2122174
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