2018
Annual Report
& Accounts
Contents
Overview
01 Group highlights
02 Savills at a glance
Strategic Report
04 Chairman’s statement
06 Our business explained
08 Market insights
14 Key performance indicators
16 Chief Executive's review
22 Chief Financial Officer’s review
24 Risks and uncertainties facing
the business
29 Viability statement
30 Non financial information
Governance
40 Corporate Governance Statement
40 Chairman’s introduction
42 Board of Directors
46 Group Executive Board
48 Compliance with the 2016 UK
Corporate Governance Code
49 Leadership
53 Effectiveness
56 Accountability
57 Audit Committee report
63 Compliance with the UK Corporate
Governance Code
66 Directors’ Remuneration report
85 Directors’ report
88 Directors’ responsibilities
Financial statements
90 Independent auditor’s report
97 Consolidated income statement
98 Consolidated statement of
comprehensive income
99 Consolidated and Company
statements of financial position
100 Consolidated statement of
changes in equity
101 Company statement of
changes in equity
102 Consolidated and Company
statements of cash flows
103 Notes to the financial statements
172 Shareholder information
Group highlights
£1,761m 54%
Revenue
Breadth of service
(non-transactional)
(2017: £1,600m)
(2017: 53%)
£77.2m 56.2p
Statutory profit
after tax
Statutory earnings
per share
(2017: £81.1m)
(2017: 58.8p)
Savills plc Report and Accounts 2018
Overview
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.
£143.7m 8.2%
77.8p
6.2%
Underlying profit*
Underlying
profit margin*
Underlying earnings
per share*
Statutory pre-tax
profit margin
(2017: £140.5m)
(2017: 8.8%)
(2017: 75.8p)
(2017: 7.0%)
£112.3m 2.0bn
Operating cash
generation
Property under
management
(sq. ft.)
€18.2bn
Assets under
management
62%
Geographical
spread
(% non-UK)
(2017: £111.7m)
(2017: 1.9bn)
(2017: €16.5bn)
(2017: 61%)
*
Underlying profit is calculated by adjusting reported pre-tax profit for profit/loss on disposals, share-based payment adjustments, impairments,
amortisation of acquired intangible assets (excluding software), restructuring costs and acquisition-related costs. Refer to Note 2.2 to the financial
statements for futher explanation of underlying profit measures.
01
01
Savills plc
Report and Accounts 2018
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 650 offices and associates and circa 37,000 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.
NORTH
AMERICA
Revenue
£264.5m
(2017: £224.8m)
Offices
31
(2017: 30)
Employees
788
(2017: 775)
02
UNITED
KINGDOM
Revenue
£662.4m
(2017: £627.1m)
Offices
135
(2017: 124)
Employees
5,955
(2017: 5,554)
EUROPE & THE
MIDDLE EAST
Revenue
£247.0m
(2017: £182.4m)
Offices
52
(2017: 45)
Employees
1,752
(2017: 1,206)
Overview
Strategic report
Governance
Financial statements
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 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 20
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 20
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 21
03
ASIA
PACIFIC
Revenue
£587.5m
(2017: £565.7m)
Offices
67
(2017: 67)
Employees
28,486
(2017: 26,894)
Chairman’s
statement
Nicholas Ferguson CBE, Chairman
“ Savills delivered a
resilient performance
in the face of some
challenging market
conditions, reflecting
our geographic
diversity, breadth of
operations and recent
business investment
activity”
Results
The Group’s revenue improved by 10% to £1.76bn
(2017: £1.6bn) and underlying profit for the year
increased by 2% to £143.7m (2017: £140.5m). The
Group’s statutory profit before tax decreased by 3%
to £109.4m (2017: £112.4m).
Overview
As a result of a robust second half of the year, Savills
delivered both revenue and underlying profit
growth in 2018. In addition to maintaining or
growing our share of transactional markets, the
performance of our less transactional business lines
was key to this performance. This was achieved
against a backdrop of heightened uncertainty as
Brexit, US trade policy and higher long-term
treasury yields, particularly in the benchmark US 10
year Treasury Bond, began to have a discernible
impact on investor sentiment in a number of our key
markets. Currency movements had a negative
impact on the Group, decreasing revenue by
£20.7m, underlying profit by £1.3m and statutory
profit before tax by £0.5m.
Our Transaction Advisory revenue grew by 9%, our Consultancy business
revenue by 8% and our Property Management revenue by 14%. The UK
delivered a resilient performance in the Commercial Transaction businesses in
an environment of relatively robust occupier demand and continued strong
investment interest, particularly from the Asia Pacific region, albeit in a softer
market in terms of volume traded compared with 2017. Our Residential business
continued to perform well in challenging conditions. Our Asia Pacific and
Europe & Middle Eastern transactional businesses performed as anticipated,
with particularly strong results from Hong Kong, Singapore, South Korea,
Ireland and Germany. In addition we benefited from an encouraging maiden
year performance from Savills Aguirre Newman in Spain. In the US, we
delivered significant growth in the Occupier Service business (including tenant
representation brokerage). This led to an improved US performance overall for
the year, even after the continued costs of investment in the business, including
significant investment in our central office platform and the net costs of the
capital markets team in New York. Finally, Savills Investment Management
successfully mitigated the expected significant decline in activity relating to
disposals from liquidating the SEB German Open-Ended Funds. The business
launched a number of new products, raising significant new capital, increasing
its Assets Under Management (‘AUM’) to £16.4bn (2017: £14.6bn) and achieving
a result in line with our expectations for the year.
The reduction in transaction fees in the Investment Management business and
growth in our lower margin but stable Property Management business,
together with our investment activities in a number of markets restricted the
underlying profit margin to 8.2% (2017: 8.8%).
In addition to the aforementioned factors impacting the underlying profit
margin, higher acquisition-related charges, lower profits on disposal of
investments and a one-off charge in relation to the impact of equalising
Guaranteed Minimum Pension (‘GMP’) on the UK defined benefit pension plan
also affected the statutory pre-tax profit margin during the year, which declined
to 6.2% (2017: 7.0%).
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 services 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.
In May 2018, we expanded our platform into a new region through the
acquisition of Cluttons Middle East, which is being integrated in to the Europe &
Middle East business. In addition, the integration of Aguirre Newman in Spain,
acquired in December 2017, continues to proceed as planned alongside the
continued investment in our new business in the Czech Republic, which now
provides a full service offering to commercial clients.
04
Savills plc Report and Accounts 2018 Strategic report
Financial statements
In the UK, we acquired Broadgate Estates’
third party property management portfolio
from British Land and made a number of
incremental acquisitions to complement our
existing UK business. These acquisitions
included a property agency in Guernsey
creating Savills first residential presence in
this region (Martel Maides), a property
services company in East London (Currell),
and a planning and development
consultancy business based in London
(Porta Planning).
In Asia Pacific, we made some significant
hires into our valuation teams in Thailand
and Singapore. We continued to expand
throughout Australia and in China, where
we opened three new offices and recruited
circa 50 professionals to facilitate our
continued long-term expansion in this
market. During the year we commenced
a long-term commitment to the start-up
of Savills India, which opened for business
in October with offices in Delhi, Mumbai
and Bangalore focusing on project
management, commercial leasing, occupier
services, capital markets brokerage and
valuation services.
In North America, we continued to expand
our occupier-focused business lines
through both recruitment and investment
in technology.
Finally, the Savills Investment Management
business acquired a 25% interest in DRC
Capital LLP (‘DRC’), a leading European
manager of real estate debt funds, with the
option to purchase the remaining 75% of
DRC in 2021; this transaction provided an
exciting opportunity to add real estate
debt to our portfolio of real estate
investment products.
Emerging technology continues to be a
focal area in the real estate industry and
also for our business. We have continued to
invest in our own technology platform in
order both to deliver innovative solutions to
our clients through data analysis and
insight and to drive internal efficiencies.
Examples of this include our award winning
Knowledge Cubed platform, deployed to
our occupier services clients across all
regions which has been recognised for its
innovation by both the Financial Times and
CoreNet (the occupier Services industry
body in the US). We continued the roll out
of Workthere.com, our advisory service to
corporates seeking flexible office or
co-working space. With New York going
live in January 2019, we have now launched
Workthere in eight countries and seen
significant uptake from both tenants and
the serviced office providers.
In addition, we continue to review and
support a number of investment
opportunities in the field of emerging
technology and our proprietary investment
arm, Grosvenor Hill Ventures (‘GHV’), has
made further investments in these
promising technology opportunities during
the year. Our largest investment to date is
in YOPA, the digital hybrid residential UK
estate agent, which has grown to become
the sixth largest UK estate agent. During
the year GHV made a small additional
investment in YOPA to support this growth
and also in VuCity, which is a digital city
modelling platform, initially focused on
optimising development and planning
applications for developers, architects,
planners and Local Authorities.
Board
Jeremy Helsby retired as Group Chief
Executive at the end of 2018 after a 39 year
career at Savills, 11 of them as Group Chief
Executive. Under Jeremy’s leadership
Savills has become a leading global real
estate advisor and successfully both
internationalised and diversified the
business. On behalf of the Group as a
whole, I thank Jeremy for all that he has
done for Savills over many years and we
are delighted that he continues to consult
for us in respect of the development of the
US business in 2019.
Mark Ridley succeeded Jeremy as Chief
Executive on 1 January 2019, having joined
the Board as Deputy Group Chief Executive
in May 2018. Mark has been with Savills for
22 years, latterly in the role of CEO UK,
Europe and the Middle East. The Board and
I very much look forward to working with
him through the next phase of the
development of the Savills business
worldwide.
The Board announced in September 2018
that Charles McVeigh, who has served on
the Board since 2000, will retire at the
conclusion on the Company’s AGM in
May 2019. I thank him for his enormous
contribution to the Board over so many
years. Liz Hewitt, who has been on the
Board since 2014, will also retire at the
conclusion of the Company’s AGM in
May 2019. I would like to thank Liz for her
contribution to the Group and, in particular
in Chairing the Audit Committee.
During the year, we reviewed the
composition of the Board. Following this
review, Stacey Cartwright and Florence
Tondu-Mélique were appointed as
additional independent Non-Executive
Directors in October 2018. Stacey
Cartwright will succeed Liz Hewitt as
Chairman of the Audit Committee at
the conclusion of the 2019 AGM.
Dividends
An initial interim dividend of 4.8p per
share (2017: 4.65p) amounting to £6.6m
was paid on 3 October 2018, and a final
ordinary dividend of 10.8p (2017: 10.45p)
is recommended, making the ordinary
dividend 15.6p for the year (2017: 15.1p). In
addition, a supplemental interim dividend
of 15.6p (2017: 15.1p) is declared, based
upon the underlying performance of our
Transaction Advisory business. Taken
together, the ordinary and supplemental
interim dividends comprise an aggregate
distribution for the year of 31.2p per share,
representing an increase of 3% on the 2017
aggregate dividend of 30.2p. The final
ordinary dividend of 10.8p per ordinary
share will, subject to shareholders’
approval at the AGM on 8 May 2019,
be paid alongside the supplemental
interim dividend of 15.6p per share on
13 May 2019 to shareholders on the
register at 12 April 2019.
People
I would like to express my thanks to all our
staff worldwide for their hard work,
commitment and continued focus on client
service, which enable the Group to deliver
these results.
Outlook
We have made a solid start to 2019
however, the year ahead is overshadowed
by macro-economic and political
uncertainties across the world. It is difficult
accurately to predict the impact of these
issues on corporate expansionary activity
and investor demand for real estate. At
this stage, we expect to see declines
in transaction volumes in a number
of markets and growth in our less
transactional business lines; accordingly
we retain our expectations for the
Group's performance in 2019.
Nicholas Ferguson CBE
Chairman
31.2p
Total dividend
£143.7m
Underlying profit
(2017: 30.2p)
(2017: £140.5m)
£109.4m
Statutory profit
before tax
(2017: £112.4m)
05
Governance Overview 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
Our business
model
Outstanding
people
Local knowledge
Entrepreneurial
approach
Long-term client
relationships
Client care
programmes
High quality servicer
Intellectual
property
Market intelligence
Brand and reputation
Defensive, scale business
Investment
management
4%
Consultancy
17%
Property
and facilities
management
33%
Revenue
by business
Financial
Prudent capital structure
Strong cash generation
Commercial
transactions
36%
Residential
transactions
10%
Cyclical high-margin businesses
06
Savills plc Report and Accounts 2018 Strategic report
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 88.
We are committed to delivering a high
quality service and creating long-term
relationships with our clients. Because of
our personal approach to business, our
people are fundamental to our business
and we encourage an open and supportive
culture in which every individual is
respected. We strive to provide an
environment in which our people can
flourish and succeed. This allows us to
recruit, motivate and retain talented
people and build on our status as an
employer of choice.
We work hard to ensure that our people
enjoy working at Savills, promoting their
personal and professional development.
We encourage them to develop their
careers within the Group, nurturing the
entrepreneurs and leaders of the future
to share in the success of the business.
We firmly believe that our people are key
to delivering excellent service to our clients
and achieving our objectives; they give us
a unique perspective of the markets in
which we operate and connect our clients
with real estate opportunities and market
intelligence. To be the real estate adviser of
choice in our markets, and deliver superior
financial performance, we aim to employ
people of the highest quality supporting
the delivery of the highest standards of
client service. By choosing Savills, our
clients have access to over 37,000 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.
Our value
creation
Our values
Shareholders
Pride in everything we do
Take an entrepreneurial
approach to business
Help our people fulfil
their true potential
Always act with integrity
Governance
Board oversight
High standards
of governance
y
b
d
e
n
n
p
r
e
d
n
U
i
Disciplined
approach to risk
Risk mitigation to limit
exposure to any one market
or economy
Business and geography
diversification
Dividends
31.2p
Underlying profit
£143.7m
Underlying earnings
per share
77.8p
People
Developing talent
Employee engagement
Inclusion and diversity
Clients
High quality service
Client relationship
Client care
Client relationship
management team
Community
Reducing
environmental impact
Carbon emission reduction
Community investment
Community engagement
programmes
07
Financial statementsGovernance Overview
Market insights
UK Commercial
Investment turnover in the UK commercial property
market in 2018 was 5.3% down on 2017. However, the
turnover of £62.1bn last year is still 1% above the five year
average, and means that 2018 was the fourth strongest
year since 2000.
43% of last year’s acquisitions were by non-domestic
investors, with this proportion rising to 73% in the central
London market. The single most active source of capital was
once again the Asia Pacific region, whose investors put
£10.7bn into the UK market last year, much of which went to
London. 2018 also saw a rise in domestic investor activity,
both in the Core and Value-add segments of the market.
All of the three main commercial property sectors saw a
year-on-year decline in investment activity, with the most
significant fall being in the retail sector where activity fell
30%. The only sectors that saw a year-on-year rise in 2018
were leisure and alternatives, which were up 9.7% and 8.7%
respectively. These sectors were boosted by a continuing
demand for longer term secure income streams.
Occupational demand improved year on year in the office
markets both inside and outside London, with take-up across
the UK 0.4% up on 2017, reaching its second highest ever level
of 22.7m sq. ft. Take-up also remained strong in the logistics
sector, with 34.7m sq. ft. leased last year, a 34% rise on 2017.
Case Study
Office Leasing
Savills is the long standing office leasing agents at King’s
Cross, where leasing activity in 2018 included the 611,000
pre-letting of three buildings to Facebook. This was the
largest office letting in the UK in 2018. Savills also advised
the King’s Cross Central Limited Partnership in the
pre-letting of Nike of approximately 65,000 sq. ft. for
their new London office.
08
Savills plc Report and Accounts 2018 Overview
Strategic report
Governance
Financial statements
Spotlight on UK residential
UK house buyers remained cautious in 2018, given
uncertainty over the impact of Brexit upon future
household finances. Consequently mainstream house
price growth remained weak, particularly in London
and the South East.
By contrast, the Government’s continued focus on
increasing housing delivery, meant welcome support for
an increasing range of players in the housing industry.
Among other things that included additional funding to
unlock development sites, an extension of Help to Buy
until 2023 and a series of strategic partnerships with
various Housing Associations. That resulted in an active,
if increasingly price sensitive, development land market.
Conditions in the prime housing markets remained
challenging, though there was a noticeable narrowing
in relative price expectations of buyers and sellers over
the course of the year. Consequently transaction levels
remained steady even though prices fell by -3.0% on
average in the prime markets of London and by -0.9%
beyond the capital.
Case Study
Transaction Advisory
Hexton Manor
The Hexton Manor Estate is an exceptional residential,
agricultural and sporting estate within the Chilterns
Area of Outstanding Natural Beauty and was sold
by Savills in the autumn 2018, with a guide price
of £19m.
09
Market insights continued
US
The US economy continued to expand at a robust pace, with real GDP rising
by 2.9% in 2018 versus 2.2% in 2017. Fiscal stimulus from the Tax Cut and Jobs
Act of 2017 underpinned growth in the corporate sector, with the labour
market continuing to show positive momentum.
Consistent with the strength in hiring, office leasing volumes increased in
2017. Particularly strong markets included Dallas/Ft. Worth, New York, San
Francisco and Washington D.C., each of which saw net absorption of Class A
space in excess of 4 thousand square foot. Nationally, growth in asking rents
softened from 2017’s pace, although markets including Atlanta and Charlotte
each saw asking rents for Class A space rise by more
than 5%.
Investment sales activity also increased, reversing a string of declining
volumes in 2016 and 2017. Activity was fuelled by strong cross-border
investment. Despite four increases in the central bank policy rate, yields on
10-year interest rates ended the year lower than they began, which supported
broad-based gains in investment sales volume. Sales activity in office, hotel
and the multi-family sectors all increased, with notable strength in both the
industrial and retail segments. New York City continued to attract the bulk of
investment, followed by Los Angeles and Dallas.
Case Study
The first major law firm to relocate out of NW DC, Williams & Connolly moved
into its current primary location at 725 12th Street in 1992. The building sits on
top of Metro Center and the business core of the city has filled in around it
over the last three decades. W&C is currently in two locations: 725 12th Street,
NW and 1120 G Street, NW. W&C leadership was open to considering
non-traditional locations – and not just consider “fringe” locations for
negotiating leverage purposes. The real estate committee reflected that the
firm had been an East End pioneer in 1992 and, given its national practice (as
opposed to DC-centric) it was willing to be pioneering again, provided the
location addressed two priorities: Access to National Airport and the ability to
consolidate their entire staff into one location.
In order for Williams & Connolly to consider the Wharf, the developer agreed
to redesign the building from scratch around the firm’s ideal floorplate in
order to maximize efficiency. Getting comfortable with the location meant
commissioning a complete and independent traffic study, comparing the
Wharf with 725 12th Street and a more traditional NW relocation options,
taking into account attorney and staff residences and various commuting
methods. In addition, a parking consultant was added to the team to devise a
parking scheme that works for both the law firm and the mixed use, high
traffic shared nature of the project garage. New Space Highlights:
Consolidation of entire firm into one building; dedicated parking “nest” within
the project garage; exclusive use of entire tower with expansion rights in
adjacent tower; exclusive lobby; penthouse multipurpose room with
360-degree views of Washington, DC that can accommodate the entire firm.
10
Savills plc Report and Accounts 2018 Overview
Governance
Financial statements
European overview
After a strong start to last year, the Eurozone’s economy lost
momentum in the second half of 2018. GDP was expected to have
expanded a seasonally-adjusted 0.3% quarter-on-quarter during Q4,
a slight improvement from Q3’s 0.2% increase but notably below the
0.7% growth seen throughout 2017.
Annual office take-up across the 24 European markets that Savills
monitor was in the region of 13m sq m, 3.3% down compared to 2017,
but still 14% above the past six year average. The most dynamic
markets were Dublin (25% yoy), Lisbon (20.3%) and Bucharest (12%),
followed closely by Milan (11.8%) and Barcelona (11.3%). Employment
creation and demand for well-designed and well-located offices have
been driving the activity. The average vacancy rate was at 5.7% in Q4
2018, down from 6.7% at the end of 2017. Paris CBD (1.4%) and Berlin
(1.5%) have almost no available office space, Munich follows with 2.4%
vacancy rate and Cologne and Stockholm are also amongst five cities
with the lowest availability at 3.9% and 4.0% respectively.
E-commerce is growing up at a faster pace than overall retail sales,
hence becoming a major driver in the retail sector. Over the past five
years, the overall online retail sales increased by 21% pa on average.
At the same time overall retail sales increased by 2.5% pa on average.
Rising trade volumes and expanding e-commerce are driving demand
for logistics space. Globalised supply chains and rapidly changing retail
patterns force logistics occupiers to adapt their property requirements
in order to serve customers across different geographies and this
explains why most development activity remains focused on build-to-
suit logistics facilities. The lack of suitable supply readily available on
the market is putting upward pressure on rents. Prime warehousing
rents are on average 1.7% higher in Q4 2018 compared to 12 months
ago. The highest rises occurred in Brussels (9.1%), London M4
Heathrow (6.5%) and Krakow (5%).
During 2018, European commercial investment transactions reached
€241bn, as geopolitical concerns were brushed aside to leave volumes
3% above the five year average. Resilient demand for offices (47%
of total) and the growth of the alternatives sector (21%) fuelled
investment volumes during 2018. Industrial investment volumes
reached €32bn last year, accounting for 14% of the total investment
volume. This was the second highest level of investment on record,
after 2017.
Case Study
Spain
Savills Aguirre Newman advised client, Thor Equities, on the acquisition
of Gran Via 30 in Madrid. The asset comprises a flagship retail store
alongside residential provision and was purchased for €75m.
11
Financial statementsGovernance Strategic reportOverview Market insights continued
Investment Management
147 private equity real estate funds raised total capital of $104bn in 2017,
a drop from the $127bn raised in 2017. However, the average amount
raised in final closings by private closed ended funds rose from $533m
in 2017 to $711m. The fall in number of closed ended private funds is the
sixth straight year of declines, from a high of 339 funds closing in 2013.
However, this fall in number of closed funds is not matched by a fall in
private equity dry powder, with Preqin reporting that there is $295bn
dry powder available versus $249bn 12 months prior. 45% of funds
closed above target, the largest proportion recorded by Preqin in five
years. There are 674 real estate funds currently in the market seeking a
total of $250bn, up from 12 months ago.
22% of the sector-specific funds that closed in 2018 were focused
on industrial, and these funds accounted for 43% of capital raised
for sector-specific funds. Asia-Pacific was also popular with investors,
as fundraising for APAC funds totalled $17bn, the highest mark since
2014 and significantly up from the $10.5bn in 2017. North America
remained the favourite region for investors, accounting for over 40%
of all investment.
Value-added and Opportunistic funds accounted for the majority of
capital raised, totalling $79bn, with Core and Core-plus accounting
for just $6.1bn, a sharp drop from 2017. Debt funds, meanwhile,
raised $26bn.
Case Study
SIM McArthurGlen Designer
Outlet, France
Investors increasingly seek the ability to invest in real estate in different
ways, including through direct and indirect means as well as through
funds or purpose-built vehicles. The off-market acquisition of two French
McArthurGlen designer outlet centres in Troyes and Roubaix for a price
approaching c. €300m exemplified this trend. The properties were
acquired on behalf of a club of investors managed by a leading German
Multi Manager, and were additionally funded with commitments from
existing Savills IM funds. The assets were acquired from real estate funds
managed by Ares Management Corporation and McArthurGlen and the
deal was a testament to the strength and breadth of Savills IM’s
operational platform. It necessitated the creation of co-investment
acquisition structures (in the form of a new Spezialfonds and OPPCI)
under challenging timescales, as well the placement of significant debt
and ongoing fund management through teams across the UK, France and
Germany. The manner of the structuring and acquisition also afforded the
two in-house vehicles the ability to gain exposure to significant assets
that would otherwise have been out of reach.
12
Savills plc Report and Accounts 2018 Overview
Governance
Financial statements
Asia Pacific
Commercial property volumes in 2018 registered just 2% below 2017’s
record high according to Real Capital Analytics data, with outperforming
markets including South Korea and Hong Kong where both domestic
and cross-border deal flows helped to boost demand. Hong Kong’s stellar
performance was once again due to inflows of PRC funds which were
most marked in the first half of the year. Of the major real estate asset
classes, the industrial market had a red-letter year in 2018 with volumes up
by 15% year-on-year and yields hardening to new lows. Demand for offices
and prime retail malls held up well despite the challenges which began to
weigh more heavily in the second half of the year.
In contrast to the region overall, China recorded its slowest year since
2014 as headwinds gained strength. A highly leveraged corporate sector
facing tighter credit regulation, slower economic growth and trade
tensions with the US all contributed to more muted activity levels. Japan
also posted a disappointing year with volumes hit by record pricing and
a pull back in domestic interest. Generally, even active Asia-Pacific
investment markets ended the year on a subdued note as rising interest
rates, trade tensions and volatile stock markets challenged historically
high valuations and record low commercial cap rates.
APAC transactions volume by type, 2007–2018
1,000
900
800
700
600
500
400
300
200
100
0
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
3
1
0
2
2
1
0
2
1
1
0
2
0
1
0
2
9
0
0
2
Dev Site
Income-producing Assets
Source: Real Capital Analytics.
NB: Sales of income-producing assets worth US$2.5 million and above.
Case Study
Centropolis
Savills advised CTCORE on the forward disposition of South Korea’s
largest ever single office transaction following an extensive international
marketing campaign. This flagship CBD development, comprises two
26-storey towers of premium office space and extending to 141,475 sq m
(GFA), was transacted for in excess of USD 1 billion.
13
Financial statementsGovernance Strategic reportOverview Key Performance Indicators
Financial KPIs
m
4
.
1
6
7
,
1
£
.
m
0
0
0
6
,
1
£
.
m
9
5
4
4
,
1
£
8
1
0
2
7
1
0
2
6
1
0
2
%
4
9
.
%
8
8
.
%
2
.
8
8
1
0
2
7
1
0
2
6
1
0
2
m
3
.
2
1
1
£
m
7
.
1
1
1
£
.
m
3
3
9
£
8
1
0
2
7
1
0
2
6
1
0
2
p
8
7
7
.
p
8
5
7
.
p
5
2
7
.
8
1
0
2
7
1
0
2
6
1
0
2
£1,761.4m
Revenue
The measure
Revenue growth
is the increase/
decrease in revenue
year-on-year.
The target
To deliver growth
in revenue from
expansion both
geographically
and by business
segment.
8.2%
Underlying
profit margin
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.
£112.3m
Cash generation
.
m
7
3
4
1
£
.
m
5
0
4
1
£
.
m
8
5
3
1
£
8
1
0
2
7
1
0
2
6
1
0
2
The measure
The amount of cash
the business has
generated from
operating activities.
The target
To maintain
strong cash
generation
to fund working
capital
requirements,
shareholder
dividends and
strategic initiatives
of the Group.
£143.7m
Underlying
profit
The measure
Underlying profit
growth is the
increase/decrease
in underlying profit
year-on-year.
The target
To deliver
sustainable growth
in underlying profit.
77.8p
Underlying
earnings per share
m
1
.
1
8
£
.
m
2
7
7
£
.
m
7
7
6
£
£77.2m
Statutory profit
after tax
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.
8
1
0
2
7
1
0
2
6
1
0
2
The measure
Statutory profit
after tax growth
is the increase/
decrease in
statutory profit
after tax year-on-
year and over a
longer term.
The target
To deliver
sustainable
long-term growth
in statutory profit
after tax.
14
Savills plc Report and Accounts 2018 Strategic report
Non-Financial KPIs
%
8
3
5
.
%
3
3
5
.
%
3
4
5
.
8
1
0
2
7
1
0
2
6
1
0
2
53.8%
Breadth of
service offering
(% non-transactional
income)
The measure
Revenue by type
of business.
The target
To maintain a
healthy balance
of transactional
and less or
non-transactional
business revenues.
p
8
8
5
.
p
2
6
5
.
.
p
8
8
4
8
1
0
2
7
1
0
2
6
1
0
2
56.2p
Statutory earnings
per share
The measure
Statutory EPS is
the measure of
statutory profit
generation and is
calculated by
dividing statutory
profit after tax by
the weighted
average number of
shares in issue.
The target
To deliver long-
term growth
in statutory EPS
to enhance
shareholder value.
.
t
f
.
q
s
m
6
5
2
0
2
,
.
.
t
f
.
q
s
m
2
5
4
9
,
1
.
.
t
f
.
q
s
m
8
7
5
7
,
1
.
8
1
0
2
7
1
0
2
6
1
0
2
2,025.6
Property under
management
(million sq. ft.)
The measure
Total square footage
property under
management.
The target
To progressively
increase the global
square footage
under management.
%
4
2
6
.
%
0
.
1
6
%
0
0
6
.
8
1
0
2
7
1
0
2
6
1
0
2
n
b
2
.
8
1
€
n
b
5
6
1
.
€
n
b
2
6
1
.
€
8
1
0
2
7
1
0
2
6
1
0
2
62.4%
Geographical
spread
(% non-UK)
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.
€18.2bn
Assets under
management
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.
15
Financial statementsGovernance Overview
Chief
Executive’s
review
Mark Ridley
Group Chief Executive
“ Continued growth in
our less transactional
businesses and strong
market shares in many
of our most important
transactional markets
contributed to a robust
performance for the
Group in 2018.”
16
Key operating highlights
The diversity of the Group, both geographically and in our
service offering, the resilience of our residential businesses and
the integration of recent acquisitions delivered growth in both
revenue and underlying profits in 2018.
Transaction Advisory revenues up 9%. Further growth from our
less-transactional services with Property and Facilities Management
revenue up 14% and Consultancy revenue up 8%
Strong growth from Europe & the Middle East, both organic and
through the integration of Aguirre Newman in Spain and the
acquisition of Cluttons Middle East in May 2018
North America delivered significant growth in the occupier-focused
business with revenue up 18% and underlying profit up 64%
Savills Investment Management successfully mitigated the expected
significant decline in activity relating to disposals from liquidating
the SEB Open-Ended Funds, raising £2.4bn in new funds, with AUM
up 12% to £16.4bn.
Overall the Group increased underlying profit by 2% to £143.7m
(2017: £140.5m).
On a statutory basis, profit before tax decreased 3% to £109.4m
(2017: £112.4m).
Savills plc Report and Accounts 2018 Strategic report
Our Strategy
Our strategy is to deliver value as a leading real estate 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:
Commitment
to clients by
delivering
the highest
standards of
client service
Business
diversification
Maintenance
of our
financial
strength
Geographical
diversification
Strength in
both residential
and commercial
property
Savills geographic and business diversity were key to achieving the year’s result.
Our performance analysed by region was as follows:
Revenue £m
Underlying profit/(loss) £m
2017 % growth
2018
2017 % growth
UK
Asia Pacific
Europe & the
Middle East
North America
Unallocated
662.4
587.5
626.0
565.7
247.0
264.5
–
182.4
224.8
1.1
Total
1,761.4 1,600.0
6
4
35
18
n/a
10
2018
76.8
54.9
12.9
12.8
76.5
55.6
11.2
7.8
(13.7)
(10.6)
143.7
140.5
–
(1)
15
64
n/a
2
On a constant currency* basis Group revenue grew by 11% to £1,782.1m,
underlying profit grew by 3% to £145.0m and statutory profit before tax
declined by 3% to £108.9m. Our Asia Pacific business represented 33% of Group
revenue (2017: 35%) and our overseas businesses as a whole represented 62%
of Group revenue (2017: 61%). Our performance by service line is set out below:
Revenue £m
Underlying profit/(loss) £m
2018
2017 % growth
2018
2017 % growth
813.5
746.2
9
81.1
81.5
–
586.8
294.4
513.1
273.1
66.7
–
66.5
1.1
14
8
–
n/a
10
32.2
33.1
25.3
31.0
11.0
13.3
(13.7)
(10.6)
143.7
140.5
27
7
(17)
n/a
2
Total
1,761.4 1,600.0
Overall, our Commercial and Residential Transaction Advisory business
revenues together represented 46% of Group revenue (2017: 47%). Of this,
the Residential Transaction Advisory business represented 10% of Group
revenue (2017: 11%). Our Property and Facilities Management businesses
continued to perform well, growing overall revenue by 14% and represented
33% of Group revenue (2017: 32%). Our Consultancy businesses represented
17% of revenue (2017: 17%) where improved performances within the UK were
bolstered by recent acquisitions in the Europe & Middle East business.
Revenues were flat in the Investment Management business, reflecting the
anticipated decline in activity relating to disposals from the liquidating SEB
German Open Ended funds, which was mitigated by the effect of new funds
raised and invested during the period. Investment Management revenue
represented 4% of Group revenue in the year (2017: 4%).
Transaction
Advisory
Property
and Facilities
Management
Consultancy
Investment
Management
Unallocated
People
The Savills Group won a number of awards
during the year throughout all our regions
including Global Real Estate Adviser of the
Year at the 2018 Estates Gazette Awards.
The UK business won a number of national
awards including Residential Real Estate
Adviser of the Year at the 2018 Estates
Gazette Awards, Agent of the Year Award
at the Property Week Student
Accommodation Awards, Residential
Consultancy Practice of the Year at the
2018 Property Week RESI Awards,
Industrial Agency Team of the Year at the
Property Week Awards 2018 for the
second year running, we were the Times
Graduate Employer of Choice in property
for the 12th consecutive year and No.1 UK
Real Estate Super brand, also for the 12th
consecutive year. Savills was also awarded
European Broker of the Year at the
Property Investor Europe (PIE) awards for
the second year in a row. In Hong Kong,
Savills again won Best Deal of the Year for
the en bloc sale of 8 Bay East at the RICS
Hong Kong Awards (joint with Wheelock
Properties and Cushman & Wakefield);
Savills also won Residential Team of the
Year and the Certificate of Excellence for
Property Team of the Year at the RICS
Hong Kong Awards. Savills China was
awarded Best Real Estate Agency (5–20
Offices) and Property Consultancy in China
at the Asia Pacific Property Awards
2018–2019. These awards are a testament
to the strength of our people and I thank
them all for their continued commitment,
loyalty and unfailing client focus.
*
Revenue and underlying profit for the year are
translated at the prior year exchange rates to
provide a constant currency comparison.
17
Financial statementsGovernance Overview Chief Executive’s review continued
The Savills Group advises on commercial, residential,
rural 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
Overall, our Transaction Advisory revenues
grew 9% (11% in constant currency) to
£813.5m (2017: £746.2m), this was achieved
against a backdrop of heightened
uncertainty in a number of our key markets
and demonstrated both the importance of
having a breadth of transactional business
around the world, and our strong market
position in many real estate transactional
markets and sectors.
Excluding the benefit of recent acquisition
activity in the Europe & Middle East
business, organic revenue growth year-on-
year in the business was 6%. Of particular
note was the very strong performance of
our team in the US with significant growth
in the Occupier Service business (including
tenant representation brokerage).
Underlying profits however were down
marginally at £81.1m (2017: £81.5m), with
a reduced underlying profit margin of 10%
(2017: 10.9%), impacted by both the mix
of activity across the globe and ongoing
business development costs throughout
Europe and the US.
Asia Pacific Commercial
Revenue of the Asia Pacific Commercial
Transaction business decreased by 5% to
£160.1m (2017: £168.4m), a 2% decrease in
constant currency. In a year when many
markets saw a reduction in the volume of
real estate traded, Savills Asia Pacific
showed the strength of its market position,
advising on six of the ten largest
intermediated transactions in the region
(source: Real Capital Analytics).There was
strong revenue growth in Hong Kong (up
21%) and South Korea (up 70%); however
this was offset by reduced revenue in
Japan, Australia and Mainland China. In
Japan, there was a significant slowdown in
investment activity alongside reduced
leasing revenues. In Australia, capital
market revenues declined as a result of a
slowdown in the second half of the year
with fewer Asian buyers and tighter lending
controls, which led to lower volumes and
longer transactional timescales. In Mainland
China, investment volumes were down as
the Government tightened restrictions on
land usage, particularly in respect of
city-centre redevelopment.
The impact of the geographical mix of
revenues alongside investment costs in
new offices and teams in Mainland China
and Japan, is reflected in a 21% decrease in
underlying profit to £21.2m (2017: £26.9m).
This represented a 19% decrease in
constant currency.
UK Commercial
Revenue from UK commercial transactions
decreased 3% to £98.4m (2017: £101.6m).
This reflected a significant improvement
during the second half of the year.
Most commercial leasing and investment
sub-markets continued to perform better
than anticipated in 2018, as both occupiers
and investors continued to transact, the
latter supported by the relative value
obtainable in the UK compared with a
number of European real estate markets.
The weakest commercial property sector in
2018 was the retail sector, where a
combination of structural and Brexit-
related impacts continued to affect retailer
performance and investor confidence.
Sharp falls in investment turnover in the
retail sector contributed to a 5% year-on-
year fall in commercial property investment
activity across the UK last year, with the
overall volume falling to £62bn. Non-
domestic investors remained important
to the UK commercial property market
in 2018, accounting for 43% of all of the
purchases of commercial property
investments last year, and 73% of London
office investments. In both cases this
proportion was slightly down from its
peak as domestic investors were more
acquisitive in 2018 than they had been
since the Brexit referendum.
Generally, investors remained heavily
biased towards asset classes that offer
comparative income security, and this
meant that offices, logistics and alternative
asset classes remained the most popular
segments of the market in 2018.
Similar sectoral trends were prevalent in
the occupational markets, with office
leasing activity in central London 1% up
year-on-year and 25% up in the wider
South East market. Take-up in the national
logistics market was up 45% year-on year,
reaching 34.1m sq. ft. in 2018. Several
regions including Yorkshire and
Humberside, the North West, the East
Midlands and the South East saw a record
level of logistics leasing activity last year.
The retail sector remains highly polarised,
with strong markets such as central
London continuing to out-perform the rest.
Indeed, 2018 saw a 66% increase in the
number of new openings by international
retailers/brands in London.
Overall this reduced market activity led
to a 9% decrease in underlying profit to
£15.7m (2017: £17.2m), with underlying
profit margin falling slightly to 16%
(2017: 16.9%).
North America
During the year, we delivered significant
growth in the US Occupier Service business
(including tenant representation brokerage).
Our North American revenue grew by 18%
to £264.5m (2017: £224.8m). In constant
currency this equated to a year-on-year
increase of 21%. Savills Studley transaction
volume was 11% higher than the previous
year, alongside an increase in larger more
complex transactions, for which this
business is noted. The pipeline for activity
in 2019 is robust.
18
Savills plc Report and Accounts 2018 Strong performances were evident
throughout the majority of cities and
regions in the business, in particular
Washington D.C., Southern California, New
York, Atlanta and Denver. The investment
in the Capital Markets team in New York in
2017 began to deliver fee income with a
stronger pipeline for the coming year,
however the ongoing cost of investment
in this team continued adversely to affect
underlying profits.
In the second-hand estate agency
business, our exchanges were up 1%,
offsetting a 2% fall in average sales value.
Our Prime Central London residential
business performed well with the number
of properties exchanged growing by
4% despite average values transacted
declining by 4%. Of particular note was
the substantial increase in transactions
with capital values in excess of £15m,
which increased by 43% year-on-year.
North American underlying profit increased
by 64% to £12.9m (2017: £7.8m), a 69%
increase in constant currency. With
underlying profit margin improving to 4.8%
(2017: 3.5%), even after the continued costs
of investment in the business including
significant investment in management and
in our central office platform.
Europe & the Middle East
In Europe & the Middle East Commercial
Transaction fee income grew by 45% (43%
in constant currency) to £113.1m (2017:
£78.2m). The December 2017 acquisition of
Aguirre Newman in Spain, alongside the
Cluttons Middle East acquisition in May
2018, contributed significantly to this
performance. On an organic basis, revenue
grew by 20%, with particularly strong
results from investment teams in Ireland
and Germany alongside significant
contributions from Belgium, Sweden and
the Czech Republic.
The significant revenue growth delivered
underlying profit of £5.4m (2017: £4.5m)
for the Europe & Middle Eastern
transactional business and an underlying
profit margin of 4.8% (2017: 5.8%).
Underlying profit margins continue to be
affected by ongoing investment in the
business, including in Sweden, where a
new, class-leading investment team was
recruited, the Netherlands, where an office
was opened in Utrecht, and Poland, where
further investment was made in our
Logistics capabilities to cover both
investment and leasing.
UK Residential
Our UK Residential business continued
to perform well, growing market share in
challenging conditions. This was reflected
in revenue growth of 2% to £131.5m
(2017: £128.9m).
Singapore and Taipei. These performances
reflect a slowing down in the Australian
residential property market, which was
exacerbated by government restrictions
over foreign ownership of assets,
government cooling measures in Taipei
and the introduction of a new stamp duty
on residential properties in Singapore,
which was imposed in Q3 2018.
The net effect of all these factors, alongside
an improved profit share from our
Singaporean associate Huttons, resulted in a
30% increase in underlying profit to £8.3m
(2017: £6.4m), 31% in constant currency.
Revenue
£813.5m
.
m
5
3
1
8
£
.
m
2
6
4
7
£
.
m
8
0
6
6
£
.
m
0
8
1
6
£
.
m
6
6
9
4
£
Underlying profit
£81.1m
m
1
.
1
8
£
m
5
.
1
8
£
.
m
0
0
8
£
.
m
9
6
7
£
.
m
8
7
6
£
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
+9%
+0%
Outside the capital, which represents 54%
of Savills second hand agency residential
revenue, the number of exchanges and
capital values transacted were both flat
year-on-year, with strong performances
in the North, Scotland and the Cotswolds
offset by weaker markets elsewhere.
In the new homes business, revenue was
consistent with 2017, which represented
a robust performance in the prevailing
market conditions. Average transaction
values and the number of exchanges in
2018 both increased by 2%.
The Residential Capital Markets business
had a strong year, supported by continued
investor interest in the Private Rented
Sector (PRS), growing revenue and profits
by 15% and 22% respectively.
Overall, the UK Residential Transaction
Advisory business showed resilience in
challenging markets recording a 6%
decrease in underlying profits to £17.6m
(2017: £18.7m), with underlying profit
margin down to 13.4% (2017: 14.5%).
Asia Pacific Residential
YOY change
YOY change
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 increased
revenues by 4% to £45.9m (2017: £44.3m)
which represented a 6% increase in constant
currency. This was principally driven by a
large residential project in Hong Kong and
good performances in Mainland China,
Thailand and Vietnam. These were partially
offset by lower revenues in Australia,
Contribution to Group revenue
(%)
54%
46%
Transaction
Advisory
Rest of Group
19
Financial statementsGovernance Strategic reportOverview Chief Executive’s review continued
Property and Facilities Management
Consultancy
Our Property and Facilities Management
businesses continued to perform well,
growing revenue by 14% (16% in constant
currency) to £586.6m (2017: £513.1m).
Savills total area under management
increased by 4% to 2.03bn sq. ft. (2017:
1.95bn sq. ft.), driven by the Cluttons
Middle East acquisition and the UK
'Broadgate Estates' contracts acquired
during the year alongside organic growth.
Underlying profit increased by 27% to
£32.2m (2017: £25.3m), 29% in constant
currency.
Asia Pacific
The Asia Pacific region grew revenue by
9% (12% in constant currency) to £327.0m
(2017: £300.9m). The Property and
Facilities Management business is a
significant strength in the region,
representing 56% of Savills Asia Pacific
revenue and complementing our
Transaction Advisory businesses. The total
square footage under management in the
region was up 2% to approximately 1.51bn
sq. ft. (2017: approximately 1.49bn sq. ft.),
The Asia Pacific result was driven by
improved performances across the region
including significant contract wins in Hong
Kong/Macau (eg Macau Zhuhai Bridge),
Mainland China (eg Guangzhou Airport)
and Vietnam (eg Sunview Town). In
Australia, profits improved on lower
revenues through the termination of certain
historical loss-making contracts. Overall
the business grew revenue by 12% in local
currency and the underlying profit of the
Asia Pacific Property Management
business grew 25% (27% in constant
currency) to £19.2m (2017: £15.4m).
UK
Our UK Property Management teams,
comprising Commercial, Residential and
Rural, grew revenue by 15% to £190.9m
(2017: £165.8m). This includes the impact of
the Broadgate Estates’ third party property
management portfolio acquired from
British Land during the year, contributing
£6.0m of revenue growth. This acquisition
brought Savills an acknowledged leader in
the ‘High Rise’ sector focused on trophy
office buildings. Organic growth was 11%,
reflecting a 9% increase in area under
management in the UK to approximately
384m sq. ft. (2017: 353m sq. ft.). Underlying
profit for the UK Property Management
business grew 11% to £13.0m (2017: £11.7m).
Underlying profit margin decreased to
6.8% (2017: 7.1%), reflecting the impact of
investment in the platform.
Europe & the Middle East
In Europe & the Middle East revenue grew
by 48% (48% in constant currency) to
£68.9m (2017: £46.4m), with recent
acquisition activity contributing to this
significant growth (full year impact of
Aguirre Newman and Larry Smith and the
acquisition of Cluttons Middle East in May
2018). Organic revenue growth in this
business was 6%, reflecting a full year of
the new team in the Czech Republic and
stronger performances in Sweden and
France. By the year end the total area
under management had increased by
73% to 131.9m sq. ft. (2017: 106.9m sq. ft.),
with Cluttons Middle East contributing
18.6m sq. ft. The net effect of these factors
resulted in a break-even position for the
business (2017: loss £1.8m).
Revenue
Underlying profit
£586.8m
£32.2m
.
m
8
6
8
5
£
m
1
.
3
1
5
£
.
m
8
2
7
4
£
.
m
7
0
9
3
£
.
m
6
8
3
3
£
m
2
.
2
3
£
.
m
3
5
2
£
.
m
6
3
2
£
m
1
.
1
2
£
.
m
6
8
1
£
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
+14%
+27%
YOY change
YOY change
Contribution to Group revenue
(%)
67%
33%
Property and
Facilities
Management
Rest of Group
Global Consultancy revenue increased
by 8% to £294.4m (2017: £273.1m) and
underlying profit grew by 7% to £33.1m
(2017: £31.0m). Currency movements
had a negligible impact on results in
the Consultancy business.
UK
Consultancy service revenue in the UK
was up 5% at £215.9m (2017: £204.9m),
reflecting strong performances in the
planning, development, building
consultancy and housing teams. In the
Planning business, the effect of recent
team recruitment in London, Heritage,
Newcastle and the broad education sector
contributed significant growth. In addition
the National Hotels, Leisure and Trading
Consultancy significantly increased
revenue and profits during the year. This
growth was partially offset by a decline in
activities in Rural and Energy Consultancy
in challenging pre-Brexit markets. Overall
underlying profit from the UK Consultancy
business increased by 8% to £25.8m (2017:
£23.9m), reflecting revenue growth and
some efficiency gains which helped to
increase the underlying profit margin of
12% (2017: 11.7%).
Asia Pacific
Revenue in the Asia Pacific Consultancy
business decreased by 1% to £45.1m (2017:
£45.7m), 2% increase in constant currency.
A strong revenue performance in China
alongside steady growth in the majority
of the region was offset by reduced
revenues in Hong Kong, which are
primarily valuation related and had
benefited from a significant assignment
in the previous year. In addition the
impact of team recruitment in mainland
China, Thailand and Singapore affected
underlying profit which decreased by 16%
to £4.3m (2017: £5.1m), 14% on constant
currency basis.
Europe & the Middle East
Our Europe & Middle Eastern Consultancy
business, which principally comprises
valuation and underwriting advisory
services, increased revenue by 48% (47%
in constant currency) to £33.4m (2017:
£22.5m). Acquisition activity has
contributed significantly to this alongside
organic revenue growth of 10%, with strong
performances throughout the region, in
particular Germany and Spain, the latter
growing significantly as a result of the
breadth of consultancy services acquired
with the 2017 acquisition of Aguirre
Newman. Underlying profit increased by
50% to £3.0m (2017: £2.0m), reflecting
revenue growth and a consistent underlying
profit margin of 9% (2017: 8.9%).
20
Savills plc Report and Accounts 2018 Revenue
£294.4m
Underlying profit
£33.1m
.
m
4
4
9
2
£
m
1
.
3
7
2
£
.
m
3
0
4
2
£
.
m
3
0
3
2
£
.
m
0
7
1
2
£
m
1
.
3
3
£
m
0
.
1
3
£
.
m
9
5
2
£
.
m
7
4
2
£
.
m
4
3
2
£
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
+8%
+7%
YOY change
YOY change
Contribution to Group revenue
(%)
83%
17%
Investment Management
Savills Investment Management
successfully navigated the expected
decline in activity relating to disposals from
the liquidating SEB German Open Ended
Funds, with revenue in line with the prior
year at £66.7m (2017: £66.5m). The
business generated an underlying profit of
£11.0m (2017: £13.3m). £2.4bn (2017:
£1.9bn) of new capital was raised in the
year and transactions of approximately
£3.8bn (2017: £4.8bn) were executed on
behalf of investors, with acquisitions
exceeding disposals (£2.8bn versus £1.0bn)
for the first time in three years. These
factors, together with strong fund
performance and the full integration of
Zaphir in Spain (the investment
management business acquired through
the Savills acquisition of Aguirre Newman
at the end of 2017), led to an increase in
Assets under Management (‘AUM’) to
£16.4bn (2017: £14.6bn).
Investment performance continued
strongly with the majority of our Fund
products continuing to exceed their
benchmarks over a five year term.
Savills Investment Management also
entered the real estate debt market with
the acquisition of an initial 25% stake in
DRC Capital LLP, a leading European real
estate debt investment manager, with an
option to buy the remaining 75% in 2021.
Consultancy
Rest of Group
Mark Ridley
Group Chief Executive
Revenue
£66.7m
.
m
0
2
7
£
.
m
7
6
6
£
.
m
5
6
6
£
.
m
5
4
4
£
.
m
0
8
2
£
Underlying profit
£11.0m
m
6
7
1
£
.
.
m
3
3
1
£
m
0
.
1
1
£
.
m
9
0
1
£
m
4
4
£
.
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
8
1
0
2
7
1
0
2
6
1
0
2
5
1
0
2
4
1
0
2
+0%
-17%
YOY change
YOY change
Contribution to Group revenue
(%)
96%
4%
Investment
Management
Rest of Group
21
Financial statementsGovernance Strategic reportOverview Chief Financial
Officer's review
Simon Shaw
Group Chief Financial Officer
“ A resilient performance
throughout the Group,
against a backdrop of
heightened uncertainty
across the Globe,
delivered revenue and
underlying profit
growth; which
supports 3% growth
in the annual dividend
to shareholders for
the year.”
Underlying profit margin
Underlying profit margin decreased to 8.2%
(2017: 8.8%), reflecting business mix, the expected
reduction in transaction fees in the Investment
Management business and the cost of business
development in a number of regions. In terms of
business mix, the reduction in activity in some of
higher margin commercial transaction markets was
mitigated by growth in the lower margin Property
Management business globally.
Taxation
The tax charge for the year increased
to £32.2m (2017: £31.3m), reflecting an effective tax
rate on statutory profit before tax of 29.4% (2017:
27.8%). The increased effective tax rate is primarily
due to the effect of higher foreign tax rates. In both
years, the Group’s effective reported tax rate is
higher than the UK effective rate of tax of 19% (2017:
19.25%), reflecting the effect of higher foreign rates
of tax and permanently disallowed charges,
including non-deductible acquisition costs.
The underlying effective tax rate at 25.7%
(2017: 25.8%) remains broadly in line with
the prior year.
Restructuring and acquisition-
related costs
During the year the Group recognised a
total of £29.1m in restructuring and
acquisition-related costs (2019: £27.0m).
These comprised an aggregate
restructuring charge of £8.4m primarily in
relation to the integration of Aguirre
Newman and Cluttons Middle East (2017:
£7.7m) and acquisition-related costs of
£20.7m (2017: £21.3m). These costs consist
of £3.3m (2017: £2.1m) of transaction
related costs and £2.2m in respect of
Savills Investment Management’s 2014
acquisition of Merchant Capital (2017:
£1.4m). In addition, there was a £14.2m
(2017: £17.2m) charge for future
consideration payments which are subject
to a future service condition. The largest
component of this charge relates to the
2018 acquisition of Aguirre Newman.
These charges have been excluded from
the calculation of underlying profit in line
with Group policy.
Earnings per share
Basic earnings per share decreased 4% to
56.2p (2017: 58.8p), reflecting a 5%
decrease in statutory profit after tax.
Adjusted on a consistent basis for
exceptional pension charges, 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 3%
to 77.8p (2017: 75.8p).
Fully diluted earnings per share decreased
by 5% to 54.6p (2017: 57.5p). The
underlying fully diluted earnings per share
increased by 2% to 75.6p (2017: 74.1p).
22
Savills plc Report and Accounts 2018 Interest rate risk
The Group finances its operations through
a mixture of retained profits and
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.
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.
The net impact of foreign exchange rate
movements represented a £20.7m
decrease in revenue (2017: £48.4m
increase) and a decrease of £1.3m in
underlying profit (2017: £3.9m increase).
Refer to Note 3.2 to the financial
statements for further information on
foreign exchange risk.
Simon Shaw
Group Chief Financial Officer
Cash resources, borrowings
and liquidity
Gross cash and cash equivalents at year end
increased 7% to £223.9m (2017: £208.8m).
This primarily reflected the profits made in
the period and currency gains on cash
balances held in non-sterling currencies,
partially off-set by cash out-flows
associated with investment activities.
Gross borrowings at year end increased to
£150.0m (2017: £110.2m). These principally
comprise £150.0m of 7, 10 and 12 year
private placement fixed rate notes which
were issued in June 2018. The
implementation of IFRS 16 (‘Leases’) will
have an impact on the Group Statement of
Financial Position and Income Statement
from 2019. An analysis of the impact is set
out in Note 2.26 to the financial statements.
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.
The Group’s net inflow of cash is typically
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 £112.3m
(2017: £111.7m) reflecting the Group’s 2%
increase in underlying profits. With a large
proportion of the Group’s revenue being
transactional in nature, the Board’s strategy
is to maintain low levels of gearing, but
retain sufficient credit facilities to enable
it to meet cash requirements during the
year and finance the majority of business
development opportunities as they arise.
In addition to the £150.0m of private
placement fixed rate notes, the Group has
a £360.0m multi-currency revolving credit
facility (‘RCF’), which expires on 15
December 2020, and was undrawn at the
year end. At the year end, net cash was
£73.9m (2017: £98.6m).
Capital and shareholders’ interests
During the year 0.2m shares (2017: 0.2m)
were issued to participants under the
Performance Share Plan and 0.8m (2017:
nil) new shares were issued to participants
on exercise of options under the UK SAYE
Scheme. In the prior year, 1.9m new shares
were also issued in the final instalment of
deferred consideration for the acquisition
of Studley. The total number of ordinary
shares in issue at 31 December 2018 was
142.9m (2017: 141.9m).
Savills Pension Scheme
The funding level of the defined benefit
Savills Pension Scheme in the UK, which is
closed to future service-based accrual,
improved during the year primarily as a
result of an increase in the yield on
AA-rated corporate bonds, reducing the
value of the liabilities, together with the
Company’s contributions made during the
year. During the year the Group incurred an
additional exceptional charge of £3.1m
(2017: £nil) in respect of the equalisation of
the Guaranteed Minimum Pension (‘GMP’)
on the UK defined benefit pension plan.
This plan was in a surplus position of £2.8m
at the year-end (2017: £19.5m liability).
Net assets
Net assets as at 31 December 2018 were
£505.0m (2017: £441.7m). This movement
reflects the Group’s profitable trading
performance and the effect of acquisitions,
alongside actuarial gains on the UK defined
benefit pension plan.
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
14 and 15. 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.
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 or better.
23
Financial statementsGovernance Strategic reportOverview Risks and uncertainties
facing the business
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.
Identifying and managing our risks
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 Director of Risk & Assurance
facilitates the risk assessment and
evaluation process with Group and
regional /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 basis against
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
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/Committees.
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. Any significant
programme/project risks are also considered.
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
24
Savills plc Report and Accounts 2018 Roles and responsibilities
The Board continuously reviews the
Group’s key risks and is supported in the
discharge of this responsibility by various
committees, specifically the Audit
Committee and the Group Risk Committee.
The risk management roles and
responsibilities of the Board, its
Committees, and business management
are set out below, and all of these
responsibilities have been met during
the year.
1. Board
Responsibilities
Approve the Group’s strategy
Determine Group appetite for risk in
achieving its strategic objectives
Establish the Group’s systems of risk
management and internal control
The Audit Committee supports the Board
by monitoring risk and reviewing the
effectiveness of internal controls, including
systems to identify, assess, manage and
monitor risks.
Actions
Receive regular reports on Internal and
External Audit and other assurance
activities
Receive regular risk updates from
the businesses
Determine the nature and extent of the
principal Group risks and assess the
effectiveness of mitigating actions
Annually review the effectiveness
of risk management and internal
control systems
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 consider 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
3. Subsidiary Executive Committees’
Responsibilities
Responsibilities
Responsible for risk management and
internal control systems within their
regions/businesses
Monitoring the discharge of their
responsibilities by operating companies
Actions
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 57 to 62.
In summary, our principal risks are:
1. Country/macro-economic risks,
particularly the impacts of Brexit in the
UK and/or 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
Review key risks and mitigation plans
4. Reputational and brand risk
Review results of assurance activities
Escalate key risks to Group
management and Group Executive or
plc Boards
4. Heads of the Group functions and
operating companies
Responsibilities
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/
Maintain an effective system of risk
regulatory breaches
management and internal control within
their function/operating company
9. Acquisition/integration risk
Approve the Group risk management
Actions
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
Regularly review operational, project,
functional and strategic risks
Review mitigation plans
Plan, execute and report on assurance
activities as required by region or Group
The Group’s overall risk management
framework is further enhanced by the
contributions of specialist committees, for
example, IT security. Where appropriate,
certain businesses also have their own
risk committees.
Savills continuously reviews and enhances
its risk management process and seeks
advice from independent advisers
where applicable.
25
Financial statementsGovernance Strategic reportOverview Risks and uncertainties facing the business continued
Risk
Description
Mitigation
1 Country/macro-
economic risks,
particularly the
impacts of Brexit
in the UK and/or a
global economic
downturn
Change from 2017
Increase
Strategic objective:
Geographic diversification/
Financial strength
Global market conditions are
currently volatile, with economic
uncertainty in some sectors and
markets, particularly the UK pending
the outcomes of Brexit and Asia
in the light of US/China tariffs.
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 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.
2 Achieving the right
market positioning
in response to the
needs of our clients
Change from 2017
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
We recognise that the future success
of our business is dependent on
attracting, developing, motivating
and retaining people of the highest
quality.
Change from 2017
No change
Strategic objective:
Financial strength/Commitment
to clients
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 remain unclear, but
we are monitoring developments closely; Impact
assessments covering a range of risks such as
HR matters, purchases of goods from the EU, the
imposition of withholding taxes by EU countries and
VAT changes have been carried out and appropriate
plans put in place where required. Certain changes
may present business opportunities for Savills.
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.
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 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.
26
Savills plc Report and Accounts 2018 Risk
Description
Mitigation
4 Reputational
and brand risk
Change from 2017
No change
Strategic objective:
Strength in Residential and
Commercial markets/Commitment
to clients
5 Legal risk
Change from 2017
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 2017
No change
Strategic objective:
Financial strength/Commitment
to clients
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.
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. 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 well 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 deliver the relevant
contractual obligations and thereby 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 continuously reviewing our resilience to cyber
security attacks due to the constant threat.
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.
27
Financial statementsGovernance Strategic reportOverview Risks and uncertainties facing the business continued
Risk
Description
Mitigation
7 Business conduct
We operate in international markets that may
present business conduct-related risks involving,
for example, fraud, bribery or corruption.
Change from 2017
No change
Strategic objective:
Business diversification/
Geographical diversification/
Commitment to clients
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 programmes to promote
compliance with our Code of Conduct,
particularly in areas of higher risk such as
procurement.
We have a zero tolerance approach to
breaches of our Code of Conduct.
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.
8 Changes in the
regulatory
environment
Change from 2017
Increase
Strategic objective:
Commitment to clients
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.
Our current priorities are on achieving readiness
for the Senior Managers and Certification Regime.
9 Acquisition/
integration risk
The structuring and integration of acquisitions is
critical to realising the benefits sought. People,
systems and processes are key components.
Change from 2017
No change
Strategic objective:
Business diversification/
Geographical diversification/
Strength in Residential
and Commercial markets/
Financial strength
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.
28
Savills plc Report and Accounts 2018 Viability Statement
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 the Code, the Directors have assessed the viability of the Company over a three year period to 31 December 2021,
taking account of the Group’s current position and prospects, the Group's strategic plan, and the Group's principal risks and the
management of those risks, as detailed in the Strategic Report on pages 4 to 39. This longer-term assessment supports the
Board’s statements on both viability. Additionally the Directors are satisfied that the adoption on going concern is appropriate as
set out on page 56.
Period for Assessment
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 cyclical nature of property markets.
In assessing viability the Directors considered a number of factors including 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 4 to 39. The strategy and associated principal risks which underpin the Group’s three-year
plan, are reviewed by the Directors at least annually. The Directors also satisfied themselves that they have the evidence necessary to
support the statement in terms of the effectiveness of the internal control environment in place to mitigate risk.
The assessment process and key assumptions
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. These
scenarios assess the potential impact from several macro-economic risks, including Brexit in the UK and a severe global 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.
Confirmation of longer-term viability
Based on the assessment explained above and in accordance with the provisions of the UK Corporate Governance Code, the Directors
confirm that they have a reasonable expectation that the Group will be able to continue to operate and meet its liabilities as they fall
due, over the three-year period ending 31 December 2021.
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
Financial statementsGovernance Strategic reportOverview Non financial information
The table below, and the information it
refers to, is intended to help stakeholders
understand our position on key non-
financial matters.
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. All of our businesses
are required to comply with local legal
standards as an absolute minimum.
We focus on those key areas where we
believe we can make a difference and our
localised approach provides the flexibility
required to have meaning and impact at
a 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.
We endeavour to manage our impact 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.
The Non-Financial Reporting requirements
are contained in sections 414CA and 414CB
of the Companies Act 2006. The non-
financial information provided in our
Strategic Report summarises the material
issues Savills has identified in line with the
new requirements.
Developing
Our People
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.
Page
32
Reinforcing
Culture
We are committed to
doing the right thing in
the right way and this is
reflected in the Savills
Code of Conduct.
Page
36
Environment
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.
Page
36
30
Savills plc Report and Accounts 2018 Our Clients
Our clients expect us to consistently deliver
the highest standards of client care
through professional, motivated and high
calibre people. Therefore, encouraging our
people to create and nurture strong
long-term relationships with our clients is
fundamental to our client care strategy and
we are committed to ensuring that our
people have the right tools, training and
motivation to deliver an exceptional and
personal client experience which is tailored
to our clients’ requirements and needs. We
do this by ensuring we have specialist
teams who can deliver the best quality and
timely advice throughout the property
life-cycle, and who can at the same time
work collaboratively within a client
relationship team to ensure our clients also
receive a joined up and consistent service.
To support greater collaboration among
client relationship teams, we launched a
new internal collaboration platform in 2018,
allowing and encouraging Savills client
teams to share information in an efficient
manner across teams and borders. We are
also continuing the implementation of our
CRM platform in Europe. Our goal is to
ensure greater visibility of client intelligence
and increased collaboration among client
relationship teams across the UK and
EMEA regions.
This enables us to understand where we
have met or exceeded expectations as well
as areas in which we can do better. Ultimately
this approach provides a complete insight
into our clients’ priorities so we can refine the
Savills client experience through our
approaches and make the appropriate skills,
expertise and resources available. It also
means we can better service our clients’
needs and be more proactive in offering
solutions which may involve other specialist
teams in the business.
As part of the client relationship
management (CRM) programme, it is
the responsibility of our dedicated
client relationship leads to gain a deep
understanding of our clients’ businesses
through regular dialogue and to share
this knowledge with the wider client
relationship teams. We also commission
independent client reviews to better
understand client satisfaction.
As we build upon our client relationship
management programme we are
committed to continually evolving and
improving. A key area for 2018 and going
forward is the focus on the next generation
of client relationship leads, encouraging
engagement with the fundamentals of
CRM and the importance of developing
their own long-term relationships.
Social Matters
We believe that the
community engagement
programmes that we
have developed have a
positive impact on the
areas where our people
live and ensure that
Savills is firmly engaged
with the communities
we serve.
Page
38
Our Corporate Responsibility
structure
Our Business
Principles
Group Chief Executive
and the Board
Responsibility for Our Corporate
Responsibility programme sits
with the Group Chief Executive
and the Board
Pride in Everything
We Do
Corporate Responsibility
Steering Group
Take an
Entrepreneurial
Approach
to Business
Our CR Steering Group, comprising
senior representatives from our
businesses and central teams,
co-ordinate Our Corporate
Responsibility strategy
Corporate Responsibility
Strategy
The strategy is implemented and
delivered at country level focusing
on the key aspects of corporate
resonsibility which we believe are
key to the success of our business
and where we believe we can make
the most difference
Help our People
Fulfil Their
True Potential
Always Act
With Integrity
31
Financial statementsGovernance Strategic reportOverview Non financial information continued
OUR PEOPLE
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.
Employee engagement
We continue to focus on employee
engagement through a number of areas
of focus. For example, in the UK we are
improving the capability of our leaders and
managers through our key programmes
Empower, Engage and Inspire. We have
improved the clarity of our reward and
benefits through the use of for example
in the UK of a new Total Reward Statement,
so that all our employees clearly see the
full reward package. We take employee
wellbeing seriously and have an established
wellbeing programme, and we are
committed to the Time to Change pledge.
Our People Strategy
Our people strategy highlights are set out below.
Inclusion and Diversity
Encourage an open and supportive culture in which every individual is respected
Employee Engagement
Engage with our people to communicate our vision and strategy
Developing Talent
Strive to provide an environment in which our people can flourish and succeed
Developing talent
We firmly believe in the value of developing future talent from within the Group and
we want people to grow their careers at Savills. We work 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.
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’).
For example, in the UK, the format of our training varies from one-hour masterclasses,
webinars, and 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 order to manage individual
development and ongoing learning, we have launched a Learning Management System
(LMS) in the UK. The LMS is mobile compatible, allows individuals to track and manage
their development, watch video podcasts and download course materials.
In Asia, we are progressively extending our CPD programme, tailoring it as appropriate to
best meet local requirements.
We have also extended our CPD programme across the US.
32
Savills plc Report and Accounts 2018 “ The Times Graduate
Employer of choice
for Property for the
12th year in a row”
Our graduates are our future leaders.
Graduates are surrounded by experienced professionals
and team members from whom they can seek advice and
learn. With responsibility from the day they join the business,
in teams which highly value their contribution, our graduates
are involved in some of the world’s most high-profile
transactions and developments.
We look for graduates with entrepreneurial flair and
diverse skills.
In the UK
In 2018 ranked 83 in the Times Top 100
Graduate Employers
Ranked No.1 in Rate my Placement for our
summer scheme programme.
In the US, we are continuing to run our Young Leaders
Programme, now in its second year. Savills Studley
Academy, a multi-year business mentorship programme
aimed at harnessing the talent of the rising stars, is now
in its fourth year.
In 2018, in Asia Pacific, we ran our first Inspire course, a
two-year course for our next generation leaders of the
business. The programme is split into four, three day
workshops spread over the two year period. A key part of
the programme is for the candidate spending time with the
Asia Pacific Executive Committee to discuss strategic intent
and present ideas for growth. Each candidate is assigned
a lifetime mentor from within the business to help guide and
support them through the programme and beyond.
33
Financial statementsGovernance Strategic reportOverview Non financial information continued
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 2018 our
total global workforce of 38,367 colleagues
comprised 20,982 males and 17,385
females.Of these, 213 were senior
executives (186 males, 27 females)
comprising members of the Group
Executive Board and Board members of
the corporate entities whose financial
information is incorporated in the Group’s
2017 consolidated accounts in this Annual
Report. During the year, the Company’s
Board of Directors comprised nine
members – six males and three female.
The UK Government has introduced
legislation that will require employers
with 250 or more UK employees to
disclose information on their gender
pay gap. The gender pay picture for
Savills UK, calculated in accordance
with the published requirements has
been published on the Savills UK’s
website. We are pleased to see that in
2018 our gender pay gap has reduced.
INCLUSION AND DIVERSITY
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 people
from the highest quality individuals in the
widest available pool of talent.
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. 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 believe that we have created a culture
in which those skills, experience and
perspectives are nurtured and encouraged.
As an example of our commitment to
diversity, in the UK we are focused on
increasing the diversity of our business in
order to reflect the needs of our clients and
have achieved the RICS Equality Mark. We
are fully engaged in a diversity programme
‘Changing the Face of Property’ which
focuses on improving diversity across social
and economic background, disability, LGBT,
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 we are now
listed on the Stonewall Diversity Index.
UK – Savills Diversity Group
Our Diversity Group in the UK is now in its fourth 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. We are continuing with a number of significant activities for
our Diversity group including the ‘unconscious bias’ training led by
the UK Executive Committee, which is now part of all development
programmes including Company induction. Wellbeing and mental
health also continue to be key areas of focus.
34
Savills plc Report and Accounts 2018 Other established initiatives we continue to be involved
in include:
Savills with schools
Our current graduates attend a local state secondary
school to deliver presentations about careers in property.
This highlights the variety of roles in real estate as well
as opportunities for students to engage on an individual
basis. We also launched a programme for our main city
offices to partner with a local state school to provide a
long-term partnership and offer work experience. We
hope that this will lead to an increased awareness of
property as a career and a potential source of future
apprenticeship applicants.
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. We attend the 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. We also participated in the London
Pride March with the rest of the CTFOP companies.
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. We also support the Property
Needs You and Urban Plan campaigns in schools.
Apprenticeships
Savills Surveying Apprentices join teams across the UK.
After six years in the business they will gain their BSc in
Real Estate and their full MRICS status.
35
Financial statementsGovernance Strategic reportOverview Non financial information continued
CULTURE
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.
We recognise our responsibility as a global
corporate citizen and 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 people
policies comply with local legislation in
the jurisdictions in which we operate. We
fully support the principles of UN Global
Compact, the UN Declaration of Human
Rights and the International Labour
Organization’s (ILO) Core Conventions.
Any breaches of our Code of Conduct
may be reported in accordance with the
Company’s whistle-blowing procedure.
“ 255 Savills
teams in the
UK have now
achieved this
ISO14001 2004
accreditation.”
The Modern Slavery Act came into force
in 2015. We believe the risk of slavery or
human trafficking in the recruitment and
engagement of our employees is low. To
ensure it remains low, we have provided
training on modern slavery for our HR
team and taken steps to make sure our
staff and supply chain partners are aware
of the Act and its requirements. Our
current Modern Slavery and Human
Trafficking Statement is available on the
Savills website.
Savills has a zero tolerance approach to
bribery and other forms of corruption.
Our Code of Conduct sets out our
commitment to operate responsibly
wherever we work in the world, to work
professionally, fairly and with integrity
and to engage with our stakeholders to
manage the social, environmental and
ethical impact of our activities in the
different markets in which we operate.
We empower and support our employees
to always make the right decisions
consistent with this policy. Our corporate
conduct is based on our commitment to
act responsibly at all times. We will uphold
laws relevant to countering bribery and
corruption in all the jurisdictions in which
we operate.
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. 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.
Across our global business Savills is
committed to reducing the impact that our
operations have on the natural environment
and to minimising the risk of injury and ill
health to staff and others who are affected
by our businesses by providing safe and
healthy working environments. This includes
measuring and being accountable for our
global environmental actions. By actively
seeking to reduce our environmental
impact, we are able to achieve increased
operational efficiencies and savings, both
internally and for our clients.
A practical example is our responsible
approach to energy efficiency initiatives .
Within the UK, we procure certified
renewable (green tariff) energy where
feasible and within our operational control.
In addition, Savills has piloted shortening IT
run times within some of our office space,
the positive results of which are now being
reviewed for possible roll-out as a wider
initiative. Savills have commissioned several
energy efficiency audits to be undertaken
during the year ahead to further this agenda
across selected properties which consume
significant energy. Globally we also have a
policy to consider the sustainability
credentials of the space we let and aim to
occupy energy efficient spaces, which
support the health and wellbeing of our
people where at all possible.
Our Hong Kong offices have undertaken
several initiatives this year regarding their
office waste and have been awarded the
Wastewise Certificate Excellence Level
Label; and received a bronze award from
the environmental protection department
for their recycling initiatives regarding
Electrical and Electronic Equipment.
The UK offices have also increased their
average recycling levels and have set a new
target of 70% recycling, for the offices
where they have control of waste.
Greenhouse gas emissions
Our Greenhouse Gas (GHG) 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 2018.
Methodology
We report our GHG Emissions using
the revised edition of the GHG Protocol
Corporate Accounting and Reporting
Standard. Our GHG emissions reporting
boundary is based on the operational
control approach. Reported Scope 1
emissions relate to emissions from business
travel by company owned or leased
vehicles and the combustion of fuels within
our occupied offices. Scope 2 emissions
are reported using both market-based and
location-based methodologies and relate
to electricity use in our occupied offices.
262
offices
(2017: 242)
36
Savills plc Report and Accounts 2018 To coordinate the global collection of GHG
emissions data, a network of Environmental
Reporting Nominees (ERN) has been
established, reporting to the Group Legal
Director & Company Secretary. Specialist
third party verified environmental reporting
software has been adopted to manage data
quality review and verification process.
This year we have continued our efforts
to track and reduce our carbon impact.
The 2018 data-set has benefited from an
increase in our reporting coverage from
our subsidiary offices by 8%, reporting for
the first time from Indonesia, Luxembourg,
Malaysia, Portugal, South Korea and our
offices in Middle East. The data thus now
covers 262 offices, compared to 242
locations in 2017.
During the last six years, our GHG
emissions data coverage has increased
significantly resulting in an increasingly
accurate reflection of the GHG emissions
associated with our operational activity.
We have therefore made a decision to
update our reporting baseline year from
2013 to 2016 to enable a more meaningful
year-on-year comparison and to track
our performance against a new 2016
companywide emissions target
(see below).
Through the ERN network, reported
greenhouse gas emissions have been
collated using actual activity data wherever
possible. In those instances where activity
data was not found to be wholly reliable or
readily available, we have calculated the
relevant emissions by using a range of
standard carbon accounting measures,
including extrapolating data and use of
comparator indicator based estimation
(floor area). To allow easier comparison
between reporting locations and year on
year results, a standardised per capita
intensity ratio has also been applied. This
emissions intensity ratio relates to Scope 1
and 2 location-based emissions per average
number of full-time equivalent office-based
employees. It is normalised to take into
account office moves during the year.
Performance
Savills is confident in making continued steady reductions to our corporate environmental
footprint in the coming years. To that end, the Group Executive Board, in October 2017,
resolved to adopt a global objective of a 5% total global reduction target over a three
year period, calculated against 2016 reported GHG emissions figures, normalised by
utilising the Full Time Equivalent (FTE) year average employee numbers. Applying this
performance indicator, the emissions intensity for 2018 is 17% lower than the equivalent
during the baseline year. The year on year reduction between 2018 and 2017 was 10%.
Our total quantity of reported aggregate Scope 1 and 2 emissions increased by 4% in
2018, reflecting the greater overall data coverage and an increase in the number of
office-based staff overall. Looked at separately, when comparing to 2017 our Scope 1
emissions for 2018 decreased by 13%, predominately due to changes in the management
of our business operations and reduction in business travel by company owner or leased
vehicles. However, Scope 2 emissions increased by 11%, mostly due to more offices
reporting data during 2018. Our decision to switch all UK direct electricity supplies to
certified renewable energy has resulted in a decrease in the UK market-based Scope 2
emissions figure by 876 tonnes CO2e, yet this decrease has been outweighed to some
extent as the residual emissions for other global regions, which were higher. The full
impact of the UK switch to procure energy on a certified renewable tariff will be
accounted for in 2019.
tCO2e
Global GHG Emissions 1
Scope 1 (Direct)
Scope 2 (Indirect, location-based)
Total Scope 1 and 23
Scope 2 (Indirect, market-based)
Office-based employees
(FTE yr. av. adjusted)
GHG Intensity Ratio234
MWh
Global Energy Use
Total energy use
Notes
2018
2,162
6,697
8,858
6,299
9,970
0.89
% change
vs 2016
-14%
+4%
-1%
–
+20%
-17%
2017
2,479
6,050
8,530
nr
2016
baseline
2,518
6,450
8,968
nr
8,621
8,342
0.99
1.08
2018
27,079
% change
vs 2016
–
2017
nr
2016
baseline
nr
1
2
3
Emissions factors based on Defra/DECC Guidelines 2018 and other globally recognised
methodologies.
Total Scope 1 and 2 emissions, divide by total full-time equivalent office-based employees
year average.
Total Scope 1 and 2 emissions and GHG Intensity ratio calculated using location-based Scope
2 emissions.
4 The office-based employee year average calculation has been restated for 2016 and 2017.
-17%
Emissons intensity for 2018.
Lower than the equivallent baseline year
(2017: 140.5)
10%
year-on-year
reduction between
2018 and 2017
37
Financial statementsGovernance Strategic reportOverview Non financial information continued
Social Matters
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.
We are a membership of FTSE4Good*,
evidencing our commitment to meeting
globally recognised corporate
responsibility standards.
*
The FTSE Group confirms that Savills plc has
been independently assessed according to
the FTSE4 Good 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.
Caring Company
10 consecutive years
In recognition of Savills Guardian’s
efforts in support of charitable
causes, Savills Guardian continues
to hold the ‘Caring Company 10
consecutive years’ logo as
acknowledgement of Savills
Guardian’s participation in the
Caring Company Scheme.
Savills Corporate Sevens Charity
Tournament – Hong Kong
The tournament attracts many of the city’s major
companies for a day of competitive rugby and
fundraising in support of various children’s rugby
charities. 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.
38
Savills plc Report and Accounts 2018 US
Savills Studley is dedicated to promoting
leadership, volunteerism and support of
charitable organisations. The Company
contributes to not-for-profit
organisations nationally and on
a local level, with employee-led
initiatives that focus on children’s health,
wellness and education; cancer research
and community-based projects that
better local environment. The firm has
been a philanthropic partner for JDRF
since 1983. Savills Studley’s Adam Singer
founded the Games in 1990. The Games
is a day-long Olympics-style event in
which commercial real estate firms in the
Washington, DC region compete to raise
funds for T1D diabetes research. Since
the Games began, the continuing
partnership between the firm and JDRF
has raised more than $9m. The event
has grown to become our industry’s
premier fundraiser. 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.
Graduates UK
Supporting the charity YoungMinds
Savills Graduate Charity Committee have been supporting the charity
YoungMinds which works to improve the wellbeing and mental health
of children and young people. The charity helps young people, their
parents, the professionals who work with them and the policy makers
in the Government to improve mental health for children and young
people in the UK. As part of its commitment to the charity, Savills held
fundraising events as part of YoungMinds #HelloYellow week,
championing the wellbeing and mental health of young people.
39
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Chairman’s
introduction
Nicholas Ferguson CBE, Chairman
“ The Board is
committed to
maintaining the
highest standards
of corporate
governance, which
are fundamental
to discharging our
responsibilities.”
The Main Principles of the Code provide the framework for the reporting
model which we have continued to use this year (our reporting format will
change next year, when we will report in accordance with the 2018 UK
Corporate Governance Code).
Our approach to:
Leadership is set out on pages
49 to 52
Effectiveness is described on pages
53 to 55
Relations with shareholders are
described on page 56
Accountability is described on pages
56 to 62.
The Board is committed to maintaining
the highest standards of corporate
governance, which are fundamental to
discharging our responsibilities. As
Chairman, it is my role to ensure the
highest standards of governance are
promoted by the Board and to ensure
that the Group is governed and
managed in the best interests of
shareholders and our broader
stakeholder group. This includes
encouraging open discussion and
constructive challenge. We set out our
governance framework in this report
and explain how robust and effective
corporate governance practices enable
the Group to deliver its strategy and
create long-term shareholder value.
Further information on our strategy and
business model can be found on pages
4 to 39.
40
Officer effective 1 January 2019 after a 39
year career at Savills, 11 of them as Group
Chief Executive. I would like to thank
Jeremy for his enormous contribution to
Savills over many years.
Risk management remains a fundamental
element of the Board and Audit
Committee’s agendas and our governance
efforts across the Group as a whole. The
Audit Committee’s Report on pages 57
to 62 sets out in more detail the systems
of risk management and internal control.
Details of our principal risks and
uncertainties can be found on pages
24 to 28.
The 2018 Remuneration Report (pages 66
to 84) provides a summary of the Policy
approved by shareholders at the 2017 AGM
and a detailed review of the Remuneration
Committee’s activities, and bonus and
share scheme performance, in 2018.
We believe that engaging with our
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. You can read
more about shareholder engagement on
page 56 and in the meantime, my fellow
Directors and I look forward to continued
dialogue and meeting with shareholders at
our AGM in May when I will be happy to
answer any further questions.
Overall I remain happy with the Board’s
activity across our governance agenda.
However, we will continue to challenge
ourselves and the business and to consider
and to learn from our decisions to ensure
that we build upon the existing strength of
our governance structure.
Nicholas Ferguson CBE
Chairman of Savills plc
13 March 2019
We recognise fully that at the heart 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
approach and ensure that we live by and
demonstrate the right values which in turn
enable our entrepreneurial approach
coupled with prudent management to
deliver long-term success for the Group
and its stakeholders. Our Code of Conduct
is readily accessible in all local languages to
all staff to support their day to day decision
making. We demand the highest
professional standards from all of our
people all of the time and we have a zero
tolerance approach to breaches of the
Code of Conduct.
Ensuring that we do the right thing in the
right way requires the right leadership and
it is a fundamental part of 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 other businesses in
Hong Kong and China, Europe and the US.
All of the Non-Executive Directors are
considered by the Board to be
independent, including Charles McVeigh,
notwithstanding his long service, meaning
that 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
42 and 45.
In accordance with the Code, all of the
Directors, with the exception of Liz Hewitt
and Charles McVeigh who have announced
their intentions to retire from the Board at
the conclusion of the 2019 AGM, will stand
for re-election at the 2019 AGM on 8 May
2019. 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. The
Board considers that all of the Non-
Executive Directors bring considerable
management expertise and strong
independent oversight.
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. We aim to be truly representative
of all sections of society and for each
employee to feel respected and able to
give their best. The Company’s policy on
diversity applies across all levels of the
Group and further details of the policy can
be found in the Strategic Report on pages
4 to 39.
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 conducted in-house,
led by the Senior Independent Director and
facilitated by the Group Legal Director &
Company Secretary. The process, key
conclusions and areas of focus for 2019 are
set out on page 55. Following this review, I
am satisfied that the Board continues to
perform effectively and in particular I am
confident that the Board has the right
balance of skills, experience and diversity
of personality to continue to encourage
open, transparent debate and challenge.
During the year, the Nomination &
Governance Committee and the Board
agreed that it would be appropriate to
appoint additional Non-Executive Directors
to further expand the range of skills,
experience and knowledge available to
the Board. I am pleased to report that,
following an extensive search process
supported by an independent specialist
search firm (as set out in detail in the
Nomination & Governance Committee
Report on pages 53 to 55), on 1 October
2018 Stacey Cartwright and Florence
Tondu-Mélique were appointed as
additional independent Non-Executive
Directors. Both Stacey and Florence have
extensive experience which will
complement and further enhance the
wide-ranging skills and experience of the
Board and its Committees. Stacey will
succeed Liz Hewitt as Chairman of the
Audit Committee from the conclusion of
the 2019 AGM.
The Board announced in September 2018
that Charles McVeigh, who has served on
the Board since 2000, would retire at the
conclusion on the Company’s AGM in May
2019. I thank him for his enormous
contribution to the Board over many years.
Liz Hewitt, who has been on the Board since
2014, will also retire at the conclusion of the
Company’s AGM in May 2019. I would like to
thank Liz for her considerable contribution
to the Group and, in particular in Chairing
the Audit Committee since 2015.
As announced in January 2018, Mark
Ridley, formerly CEO of Savills UK and
Europe, became an Executive Director on
1 May 2018 joining the Board initially as
Deputy Group Chief Executive and then
succeeding Jeremy Helsby upon the
latter’s retirement as Group Chief Executive
41
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Board of
Directors
Key to
Committees
Audit Committee
Remuneration
Committee
Nomination
& Governance
Committee
42
NICHOLAS
FERGUSON CBE
MARK
RIDLEY
Chairman of Savills plc and
Chairman of the Nomination
& Governance Committee
Group Chief Executive
(with effect from 1 January 2019)
Deputy Group Chief Executive
(from 1 May 2018 to 31 December 2018)
Appointment to the Board
Mark joined Savills in 1996
and was appointed to the
Board on 1 May 2018.
Background and
relevant experience
He was Chairman of Savills
Commercial from May 2008,
then Chief Executive Officer
of Savills UK from 2013 and
additionally of Savills Europe
from 2014 until he was
appointed as Deputy Group
Chief Executive on 1 May
2018. As of 1 January 2019,
when Jeremy Helsby retired
from the Board, Mark was
appointed as Group Chief
Executive Officer.
Other appointments
None.
Committee Membership
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 was
Chairman from 1984 to 2001.
He later served as Chairman
of SVG Capital plc, a publicly
quoted private equity group,
from April 2005 to
November 2012.
Other appointments
Nicholas 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. He is 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
MARK
RIDLEY
SIMON
SHAW
CHARLES
MCVEIGH
Group Chief Financial Officer
Independent
Non-Executive Director
Group Chief Executive
(with effect from 1 January 2019)
Deputy Group Chief Executive
(from 1 May 2018 to 31 December 2018)
Appointment to the Board
Simon joined Savills as
Group Chief Financial
Officer in March 2009.
Background and
relevant experience
Simon is a Chartered
Accountant. He was
formerly Chief Financial
Officer of Gyrus Group PLC,
a position he held for five
years until its sale to the
Olympus Corporation.
Simon was Chief Operating
Officer of Profile
Therapeutics plc for five
years and also worked as a
corporate financier, latterly
at Hambros Bank Limited.
Other appointments
Non-Executive Chairman of
Synairgen plc.
Committee Membership
None.
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 Rubicon Fund
Management 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 and is a former Board
member of EFG-Hermes. 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
A Senior Advisor to the
private bank of Citigroup,
Charles is also a Trustee of
the Landmark Trust.
Committee Membership
None.
JEREMY
HELSBY
Group Chief Executive
(to 31 December 2018)
43
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Board of Directors continued
Key to
Committees
Audit Committee
Remuneration
Committee
Nomination
& Governance
Committee
44
TIM
FRESHWATER
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
Independent
Non-Executive Director
Senior Independent 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 a Director of Goldman
Sachs Asia Bank Limited and
was formerly Chairman of
Corporate Finance for
Goldman Sachs (Asia).
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.
Tim has been resident in
Hong Kong for over 30 of
the last 40 years.
Other appointments
Non-Executive Director of
Swire Pacific Limited, Corney
& Barrow Group Limited and
Chelsfield Asia Limited. Tim is
a former Director of Hong
Kong Exchanges and
Clearing Limited and a
former member of the Hong
Kong Trade Development
Council and the Financial
Services Development
Council.
Committee Membership
RUPERT
ROBSON
STACEY
CARTWRIGHT
© Sylvie Humbert
FLORENCE
TONDU-MÉLIQUE
Independent
Non-Executive Director
and Chair of the
Remuneration Committee
Appointment to the Board
Rupert was appointed to the
Board as a Non-Executive
Director on 23 June 2015.
Background and
relevant experience
Rupert has held a number of
senior roles in financial
institutions, most recently
Chairman of Charles Taylor
plc and EMF Capital Partners
and Non-Executive Director
of London Metal Exchange
Holdings Limited, Tenet
Group Limited and OJSC
Nomos Bank. Prior to that he
was Global Head, Financial
Institutions Group, Corporate
Investment Banking and
Markets at HSBC and Head
of European Insurance,
Investment Banking at
Citigroup Global Markets.
Other appointments
Chairman of TP ICAP plc and
Sanne Group plc.
Committee Membership
Independent
Non-Executive Director
Independent
Non-Executive Director
Appointment to the Board
Stacey was appointed to the
Board as a Non-Executive
Director on 1 October 2018.
Background and
relevant experience
Stacey most recently served
as Chief Executive and then
Deputy Chairman of Harvey
Nichols Group until 2018, and
prior to that was Executive
Vice President and CFO of
Burberry Group plc. She
previously served as CFO of
Egg plc and spent her early
career in a number of finance
roles at Granada Group PLC.
She was a Non-Executive
Director at GlaxoSmithKline
PLC from 2011 to 2016. She
qualified as a Chartered
Accountant with Price
Waterhouse.
Other appointments
Senior Independent Non-
Executive Director of the
English Football Association.
Committee Membership
Appointment to the Board
Florence was appointed to
the Board as a Non-
Executive Director on
1 October 2018.
Background and
relevant experience
Florence is currently Chief
Executive Officer of Zurich
France, and a member of
Zurich’s EMEA and Global
Commercial Insurance
Leadership Teams. She was
previously Chief Operating
Officer of Hiscox Europe,
prior to which she held senior
executive roles at AXA Real
Estate and AXA Investment
Managers. She spent her
early career at McKinsey
& Company.
Other appointments
Non-Executive Director of
the French-American
Foundation.
Committee Membership
45
Financial statementsGovernance Strategic reportOverview
Savills plc
Report and Accounts 2018
Group
Executive
Board
MARK
RIDLEY
Group Chief Executive
(effective 1 January 2019)
Deputy Group Chief Executive
(from 1 May 2018 to 31 December 2018)
(See Board of Directors on pages
42 and 45 for full biography).
SIMON
SHAW
Group Chief Financial Officer
(See Board of Directors on pages
42 and 45 for full biography).
46
JAMES
SPARROW
Chief Executive Officer
UK & EMEA
Appointment to the
Group Executive Board
James was appointed to the Group
Executive Board on 1 May 2018.
Background and
relevant experience
He became Chief Executive of Savills UK
& EMEA in September 2018, having
previously been Chief Executive of Savills
UK since 1 May 2018. Prior to this James
held the position of Head of Professional
Services, Savills UK and was a member
of the Savills UK Executive Board since
2013 when it was established. Before that
James was a member of the Executive
Board of Savills Commercial, having
joined Savills in 1988.
RAYMOND
LEE
Chief Executive
Hong Kong, Macau
and Greater China
Appointment to the
Group Executive Board
Raymond was appointed to the Group
Executive Board in January 2011.
Background and
relevant experience
He joined Savills in 1989. In 2003,
Raymond became the Managing
Director in Hong Kong and Macau and
in 2010 was appointed CEO of Greater
China. Raymond is a Fellow 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.
Other appointments
None.
CHRIS
LEE
Group Legal Director
and Company Secretary
Appointment to the
Group Executive Board
Chris joined Savills in June 2008 and
was appointed to the Group Executive
Board in August 2008. He has ultimate
responsibility for legal, regulatory 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.
Other appointments
None.
SIMON
HOPE
Global Head of
Capital Markets
Appointment to the
Group Executive Board
Simon was appointed to the Group
Executive Board when it was formed
in February 2008.
Background and
relevant experience
He joined Savills in September 1986 and
he is Head of our Global Capital Markets
business. He is also a member of the
Board of the Charities Property Fund,
Chairman of Tilstone LLP, co-founder
and non-executive of the Warehouse
REIT, Chair of Racing Homes and
Trustee of Racing Welfare.
MITCHELL
STEIR
MITCHELL
RUDIN
Chairman and
CEO – Savills North America
Appointment to the
Group Executive Board
Mitch was appointed to the Group
Executive Board when Studley, Inc.
joined Savills in May 2014.
(alternate to Mitchell Steir)
President – Savills North America
Appointment to the
Group Executive Board
Mitch was appointed as an alternate to
Mitch Steir on the Group Executive
Board with effect from 1 January 2019.
Background and
relevant experience
Background and
relevant experience
He joined Studley, Inc. in 1988 after
beginning his commercial real estate
career at Huberth & Peters in New York.
He joined Savills Studley, Inc. in
October 2018 and became president
with effect from 1 January 2019.
Other appointments
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.
Mitch is on the boards of the NYC
Police Foundation, NYU Schack
Institute, Police Athletic League and St.
Francis Friends of the Poor. He is also a
Governor of the Urban Land Institute.
CHRISTIAN
MANCINI
Chief Executive Officer
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
None.
47
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Compliance
with the 2016
UK Corporate
Governance
Code
The UK Corporate Governance Code 2016 (the ‘Code’ is
the standard against which we measured ourselves in
2018. A copy of the Code is available from the Financial
Reporting Council’s website at www.frc.org.uk. We are
pleased to confirm that we complied with all of the
provisions set out in the Code for the period under review
Further information about how the Board complies with
the Main Principles can be found below and is also set out
on pages 63 to 65 of this Annual Report.
48
Leadership
Explains the governance framework and the
roles of the Board and its Directors.
The Group’s current corporate governance structure
The role of the Board and its Committees
How the Board operates
Board activities during the year
See pages 49 to 52
Effectiveness
Sets out the key processes which ensure that the
Board and its Committees can operate effectively.
The Board’s composition and independence
Board induction and development
Board and Committee performance evaluation
Nomination & Governance Committee report
See pages 53 to 55
Accountability
Explains the role of the Board and the Audit
Committee in ensuring the integrity of the
financial statements and maintaining effective
systems of internal controls.
Internal controls and risk management
Going concern
Dialogue with Shareholders
Audit Committee report
See pages 56 to 62
Relations with Shareholders
Provides an overview of activities undertaken to
maintain an open dialogue with shareholders.
See page 56
Remuneration
Describes the Company’s remuneration
arrangements in respect of its Directors, and
how these have been implemented in 2018.
Statement by Remuneration Committee Chair
Remuneration Committee report
See pages 66 to 84
Leadership
Our governance framework
Board (Chairman, two Executive Directors and (with effect from 1 October 2018) six Non-Executive Directors). Mark Ridley was a third Executive
Director from 1 May 2018.
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
Audit Committee
Remuneration Committee
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
See pages 57 to 62
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, and with
effect from 1 January 2019,
Group Executive Board
members
Chair: Rupert Robson
Number of meeting
in the year: 4
See pages 66 to 84
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
http://ir.savills.com/company-information/corporate-governance
Nomination & Governance
Committee
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
Monitoring of the Company’s
compliance with applicable
codes and other
requirements of Corporate
Governance
Chair: Nicholas Ferguson
Number of meetings
in the year: 2
See pages 53 to 55
Group Chief Executive
Responsible for the
day-to-day management of
the Group
Group Executive Board
Key executive 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,
the Global Head of Capital
Markets and the Group Legal
Director & Company Secretary
CR Steering Group
Executive Committees
Group Risk Committee
Co-ordinates Corporate Responsibility (‘CR’) activity to deliver
Savills agreed goals
Oversees Savills CR Strategy for the Group globally and
recommending changes to it when appropriate
Monitors Group-wide CR progress and performance and identifying
to the Group Executive Board areas where action needs to be taken
Ensures that key CR responsibilities and achievements are
communicated to all staff globally and externally to
interested parties
Gathers and records information about all existing CR programmes
and initiatives taking place within the Group
Helps to determine indicators and measures that will be used to
ascertain performance against prioritised CR impact areas
Helps 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 non financial
information section of the Annual Report
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
Identifies and evaluates
Group level risks
Reviews and challenges risks
reported by subsidiaries
Champions the ongoing
Group-wide development of
risk management and the
internal controls framework
Monitors internal audit and
other sources of assurance
on the effectiveness of
internal controls
49
Financial statementsGovernance Strategic reportOverview
Savills plc
Report and Accounts 2018
Leadership continued
Attendance at Board and Committee meetings
The Board met formally eight times during the year. Attendance at all Board and Committee meetings by Directors is as shown in the
table below.
Board
meetings
attended
Meetings
eligible to
attend
Audit
Committee
meetings
attended
Meetings
eligible to
attend
Nomination &
Governance
Committee
meetings
attended
Meetings
eligible to
attend
Remuneration
Committee
meetings
attended
Meetings
eligible to
attend
Non-Executive Directors
Nicholas Ferguson1
Stacey Cartwright (appointed
1 October 2018)
Tim Freshwater
Liz Hewitt
Rupert Robson
Charles McVeigh
Florence Tondu-Mélique
(appointed 1 October 2018)
Executive Directors
Jeremy Helsby4
(retired 31 December 2018)
Simon Shaw4
Mark Ridley4 (appointed Deputy
Group Chief Executive 1 May 2018)
71
3
8
7
8
7
3
7
8
6
8
3
8
8
8
8
3
8
8
6
– 2
– 2
1
4
4
4
–
1
– 5
– 6
– 7
1
4
4
4
–
1
– 5
– 6
– 7
1 For one Board meeting, the Chairman was absent attending a close family funeral.
2 The Chairman attended two Audit Committee meetings by invitation.
3 The Chairman attended three Remuneration Committee meetings by invitation.
4 Members of the Group Executive Board.
5 The Group Chief Executive attended three Audit Committee meetings by invitation.
6 The Group Chief Financial Officer attended four Audit Committee meetings by invitation.
7 The Deputy Group Chief Executive attended one Audit Committee meetings by invitation.
– 3
– 3
1
4
3
4
–
1
1
4
4
4
–
1
2
0
2
2
2
–
0
2
2
0
2
2
2
–
0
2
Division of Responsibilities
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 periodically with the Directors individually and the Non-Executive Directors as a
group (and without the Executive Directors).
The Group Chief Executive has responsibility for all Group businesses and acts in accordance with the authority delegated by the Board.
There are a number of areas where the Board has delegated specific responsibility to management, including responsibility for the
operational management of the Group’s businesses as well as reviewing strategic issues and risk matters in advance of these being
considered by the Board and/or its Committees.
The Senior Independent Director, Tim Freshwater acts as intermediary for other Directors, if needed, and is available to respond to
shareholder concerns when contact through the normal channels is inappropriate.
The Board considers that throughout the year the Company was in full compliance with the Code.
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 Company’s Articles of Association. 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 Board, or the Nomination & Governance Committee on its behalf, reviews actual and situational conflicts of interest at
least annually and as necessary if and when a new potential situational conflict is identified or a potential conflict situation materialises.
During 2018, the actual and situational conflicts of interest that were identified by each Director were subsequently authorised by the
Board, 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.
50
Indemnification of Directors
In accordance with the Company’s Articles of Association, and to the extent permitted by law, the Directors and the Group Legal
Director & Company Secretary are granted an indemnity, in respect of any liabilities incurred as a result of their holding office. Such
indemnities were in force during the financial year to 31 December 2018 and up to the date of this Report. The Company also maintains
appropriate insurance cover in respect of legal action against its Directors and Officers.
BOARD ACTIVITY
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. Board papers are circulated electronically via a secure portal, giving Directors sufficient
time to consider and digest their contents. 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 be considered
in the debate.
Regular attendance at Board meetings by the Heads of Principal Businesses on matters of significance ensure that the Board has the
opportunity to discuss business risks and opportunities with leaders from across the Group. The Group Legal Director & Company
Secretary provides the Board with updates and reports covering legal developments and regulatory changes. 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.
At its meetings during the year, the Board discharged its responsibilities and received updates on the Group’s financial performance, key
management changes, material new projects, investment proposals, financial plans, and legal and regulatory updates.
What the Board did this year
The Board has formally adopted a schedule of matters reserved to it for decision. 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 http://ir.savills.com/company-information/corporate-governance
In 2018, the Board additionally undertook evaluations of a number of acquisitions including Cluttons Middle East, Currell Group Limited
and the third party property management business of Broadgate Estates, as well as taking of an initial 25% equity stake in DRC Capital
LLP (with the option to increase this interest to 100% in 2021), growth plans across the Group, the planned expansion of the Group’s
Indian business into a full service platform, reviewed the Group’s funding facilities and agreed a new long-term fixed rate £150m
borrowing facility, whilst maintaining an overview of regulatory and compliance developments globally. One of the Board’s meetings
during the year was specifically devoted to the review of the Group’s strategy and reconfirmation of this in the light of Mark Ridley’s
vision for the Group’s future growth and development. A further Board meeting was held at the offices of the Group’s Spanish business,
which provided Board members with the opportunity to meet with senior individuals from the Spanish business to review the successful
integration of Savills Spain and the Aguirre Newman business acquired in December 2017 and the future growth strategy for the
combined business.
51
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Leadership continued
What the Board did this year continued
The key areas of Board activity during the year are set out below:
Leadership and
people
Oversaw the implementation of the Group CEO succession plan, and the implementation of
consequential senior management changes in the UK and Europe
Oversaw the change of leadership in Savills Investment Management
Reviewed the composition and performance of the Board and its Committees
Strategy
Internal control
and risk
management
Governance
Financial
performance
Reconfirmed the Group’s strategy, in the light of Mark Ridley’s vision for the Group’s future
growth and development
Reviewed the Group’s target delivery and achievement of goals
Considered and approved significant acquisitions completed during the year, including the
acquisitions of Cluttons Middle East, an initial 25% interest in DRC Capital LLP, Currell Group
Limited and the third party property management business of Broadgate Estates
Reviewed the progress made in implementing Group’s Technology Strategy, including cyber
strategy, and approved investments in two technology start-ups (one in Singapore and one
in the UK) which are focussed on developing software which would enhance the Group’s
client offering
Considered and approved the Group’s Going Concern and Viability Statements
Reviewed and confirmed the principal risks facing the Group which are described in detail on
pages 24 to 28
Reviewed the Group’s risk register and the effectiveness of the systems of internal control and
risk management
Received updates on the risk and internal control environments within the Group’s Asia Pacific,
European and UK and Investment Management businesses
Noted developments in legal and regulatory matters globally, and the revisions to the
Group’s established processes to reflect such developments, in particular the introduction
GDPR across Europe
Oversaw the performance of the Board and its principal Committees and that of individual
Directors to ensure that they continued to be effective in support of Group strategy, policy
and practice
Reviewed business performance, profit delivery and cash management performance, and in
each case, assessed performance in these areas against the Group’s strategy, objectives,
business plans and budgets to ensure that the financial resources generated by the Group’s
businesses were applied to the creation of additional value, costs were controlled and that
resources can be made available at the appropriate time to realise business opportunities
Approved 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
Considered the Group’s capital structure, financing and funding, and secured a new £150m fixed
interest rate borrowing facility, Considered and approved the dividend policy and interim and
supplemental dividends and recommended final dividends 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
52
Effectiveness
Nomination & Governance Committee Report
The Nomination & Governance Committee (‘Committee’) has a key 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 Members
Key Objectives
Key Responsibilities
Nicholas Ferguson (Chair*)
Stacey Cartwright
Tim Freshwater
Liz Hewitt
Rupert Robson
Florence Tondu-Mélique
Jeremy Helsby (Executive
Director) (retired effective
31 December 2018)
Mark Ridley (Executive
Director) (with effect from
1 May 2018).
* save in circumstances where the
Chairman’s succession is considered.
The primary objectives of the
Committee are:
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
To monitor of the
Company’s compliance with
applicable codes and other
requirements of Corporate
Governance including
the new 2018 Corporate
Governance Code
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
To keep under review the Company’s compliance with
applicable Codes and other requirements of Corporate
Governance
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.
Changes to the Board and Committees
During the year to 31 December 2018 and since the year end, there
were the following changes to the Board:
Mark Ridley joined the Board as Deputy Group Chief Executive
on 1 May 2018, and was appointed Group Chief Executive
Officer on 1 January 2019
Jeremy Helsby retired from the Board as Group Chief Executive
Officer on 31 December 2018
Stacey Cartwright was appointed Non-Executive Director and
Member of the Audit, Remuneration and Nomination &
Governance Committees on 1 October 2018
Florence Tondu-Mélique was appointed Non-Executive
Director and Member of the Audit, Remuneration and
Nomination & Governance Committees on 1 October 2018
Liz Hewitt and Charles McVeigh will retire from the Board at the
conclusion of the 2019 AGM.
Assessment of the Independence of Non-Executive Directors
The Chairman is committed to ensuring the Board comprises a
majority of independent Non-Executive Directors who objectively
challenge management, balanced against the need to ensure
continuity in the Board. On an annual basis, 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 expertise, strong independent oversight and are
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.
Committee meetings
The Committee met twice during 2018 and each meeting had
full attendance. Members of the Committee also attend the
Company’s AGM at which there is an opportunity to meet with
Shareholders. 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.
Board composition and balance
The Committee has sought to maintain a balance of skills
and experience on the Board and its Committees. We believe
the Board’s composition gives us the necessary balance of
diversity, skills experience, independence and knowledge
to ensure we continue to run the business effectively and
deliver sustainable growth.
53
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Effectiveness continued
Nomination & Governance Committee Report continued
Board composition and balance continued
Balance of the Board (during the year)
Tenure of Non-Executive Directors
Gender
1
3
5
Executive
Non-Executive
Chairman
1
1
0 – 4 years
5 – 9 years
10+ years
4
6
3
Male
Female
At all times during the year at least half of the Board members, excluding the Chairman, were Independent Non-Executive Directors.
The Committee’s Agenda this year
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, eg to reflect changes to the Code or as a result of changes in regulations or best practice). Specifically during the year,
the Committee:
Oversaw Mark Ridley’s succession as Group CEO effective 1 January 2019
Considered Board succession planning including the tenure, mix and diversity of skills and experience of the existing Board Members
in the context of the Group’s strategy
Considered the proposed reappointment of the Non-Executive Directors, before making a recommendation to the Board that each
Non-Executive be proposed to shareholders for re-election at the 2019 AGM
Considered and authorised the Directors’ actual and potential conflict of interests
Led the process which led to the appointments of Stacey Cartwright and Florence Tondu-Mélique to the Board
Monitored progress in the search for a new CEO of Savills Investment Management
In consultation with the Chairmen of the Board Committees, the Nomination & Governance Committee will continue to monitor the
needs of the Board and its Committees in the context of the delivery of the Group’s 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.
Recruitment of two new NEDs
The Board recognises the benefit of progressively refreshing its membership and therefore commenced the search for two additional
independent Non-Executive Directors in 2018. The Committee led the process which led to the appointments of Stacey Cartwright and
Florence Tondu-Mélique to the Board. In this search the Board was conscious of its objective of further strengthening diversity at Board
level. The Committee assessed the balance of skills, knowledge, independence, experience and diversity of the Board and, in view of this
assessment, a description of the role and competencies needed was agreed, with a view to appointing the best qualified individuals for
the role. Odgers Berndtson was selected to lead the search due to its specialist knowledge of recruiting at Board level. Odgers
Berndtson has no other connection with the Group and is a signatory to the Voluntary Code of Conduct of Executive Search Firms.
Odgers Berndtson provided a long list of potential candidates and first stage interviews were led by the Chair of the Committee.
In making the recommendation to the Board on the proposed appointments, the Nomination & Governance Committee specifically
considered the expected time commitment of the proposed Non-Executive Directors and other commitments they already had.
A final shortlist of candidates was selected for final stage interviews with the Committee members, including the Group CEO and
Deputy Group CEO. The Committee was unanimous in their recommendation to the Board that Stacey Cartwright and Florence
Tondu-Mélique be appointed as additional independent Non-Executive Directors, and was delighted to welcome Stacey and Florence
to the Board on 1 October 2018.
Details of the different stages of the appointment process that the Committee followed in relation to the appointment process of Stacey
Cartwright and Florence Tondu-Mélique as below:
Step 1
Engage with Odgers
Berndtson and provide
them with a search
specification
Step 2
Shortlisting of
candidates by the
Committee
Step 3
Interview process with
Committee Members
and the Group CEO and
Deputy CEO
Step 4
Recommendation to
the Board of the chosen
candidates
Step 5
Appointment terms
drafted and agreed
Stacey Cartwright‘s biography
Florence Tondu-Mélique’s biography
See page 45
See page 45
54
Savills Investment Management CEO recruitment
During 2018, the Committee confirmed the process to identify and appoint a new Group Chief Executive Officer of Savills Investment
Management. This process included internal and external candidates. Korn Ferry was selected as executive search providers. Korn Ferry
has no other connection with the Group and is a signatory to the Voluntary Code of Conduct of Executive Search Firms.
Succession planning
We recognise the importance of planning for the future and of having succession plans in place which introduce new skills and perspectives
to the Board and which complement the experience of the existing Board members. The Committee continues to keep the Board’s
composition under review and considers how that composition might be enhanced to ensure that the Board continues to best meet the
needs of the Company and its Shareholders. No Director is involved in decisions regarding his or her own succession The Committee also
monitors the development of the executive team below the Board to ensure that there is a diverse supply of senior executives and potential
future Board members with appropriate skills and experience. The biographies of the Board members appear on pages 42 and 45.
Diversity Policy
We continue to make good progress in terms of diversity. We have noted the recommendation in the Hampton Alexander Review
published in 2016 that a target of 33% female Board representation be achieved by FTSE 350 companies by 2020, and also the
recommendations of the Parker Review Committee published in October 2017 relating to ethnic diversity on Boards.
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 and the Parker Review Committee, 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 additions of Stacey Cartwright and Florence
Tondu-Mélique to the Board has increased the percentage of women on the Board to 33%. Diversity is more than just gender based and
the Board will continue to focus on this important issue in the wider context.
Board Evaluation
In accordance with the provisions of the Code, we conduct an external independent evaluation of the effectiveness and performance of
the Board and its principal Committees at least every three years. This year the annual evaluation was carried out internally, led by the
Senior Independent Director supported by the Legal Director and Company Secretary. Next year the Board will again engage an
independent external facilitator to undertake the evaluation.
The evaluation carried out this year involved every Board member completing a questionnaire which was then used as the basis of a
confidential interview. The matters covered by the evaluation included Board structure, Board effectiveness, working practices,
relationships with shareholders and interaction between Board members and management. The feedback obtained was collated into a
report which was discussed fully by the Board.
The evaluation showed that the Board and its Committees continue to operate effectively without any significant areas of concern.
However, a number of recommendations arising from the suggestions and comments of Directors were agreed to improve further the
effectiveness and efficiency of the Board process. These included the key skill sets appropriate to potential new Directors and further
improving interaction between Directors and management.
Board Induction and development
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.
Access to Appropriate Information
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 further 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.
Governance
The Committee reviewed the Company’s compliance with the Code and was satisfied that the Company complied with the Code. The
Committee would continue to receive updates on corporate governance developments and consider the impact of those developments
on the Company.
Nicholas Ferguson CBE
Chairman of the Nomination & Governance Committee
13 March 2019
55
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Accountability
Review of the effectiveness of the Risk
Management and Internal control
systems
The principal risks and uncertainties
faced by the Group and the associated
mitigating actions for these are set out
on pages 24 to 28.
The Board, assisted by the Audit
Committee, is responsible for reviewing the
operation and effectiveness of the Group’s
internal controls. The internal control
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 is also responsible for ensuring
that appropriate systems are in place to
enable it to identify, assess and manage
key risks. 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. The Board’s attitude and
appetite to risk is communicated to the
Group’s businesses through the strategy
planning processes.
The Board is supported by the Audit
Committee in discharging its oversight
duties with regard to internal control and
risk management. During the year, the
Audit Committee on behalf of the Board,
reviewed the effectiveness of the risk
management systems and internal control
systems, including financial, operational
and compliance controls. The Board did
not identify any significant failings or
weaknesses in the year. Taking into account
the principal risks and uncertainties set out
on pages 24 to 28, the ongoing work of the
Audit Committee in monitoring the risk
management and internal control systems
on behalf of the Board, the Board remains
satisfied that the review of internal controls
did not reveal any significant weaknesses
and they continue to
operate effectively.
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 4 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 £360m committed
revolving credit facility that extends 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.
The Directors have reviewed the current
and projected financial position of the
Group, making reasonable assumptions
about future trading performance. On the
basis of this review, and after making due
enquiries, the Directors have a reasonable
expectation that the Company and the
Group have adequate resources to
continue as a going concern for a period of
at least 12 months from the date of the
approval of the financial statements.
Accordingly, they continue to adopt the
going concern basis in preparing the
Annual Report and Accounts.
Dialogue with Shareholders
In accordance with the Code, the Board
recognises the importance of clear
communication and proactive engagement
with our Shareholders. 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 full Board is kept
informed of any issues raised at these
meetings and the views of Shareholder
on a regular basis to ensure that they
understand the views of Shareholders.
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 Tim
Freshwater as the Senior Independent
Director are also available to meet
Shareholders if so required.
The Annual General Meeting provides the
Board with an opportunity to communicate
with, and answer questions from, private
and institutional shareholders and the
whole Board is available before the
meeting, in particular, for shareholders to
meet new Directors. The Chairman of each
of the Audit, Nomination & Governance
and Remuneration Committees is available
at the Annual General Meeting to answer
questions. Directors are available before
and during the meeting to answer
questions from Shareholders and to meet
Directors following the conclusion of the
formal part of the meeting. 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 1
working days notice is given before
other general meetings.
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.
Details of the resolutions to be proposed at
the Annual General Meeting on 8 May 2019
can be found in the Notice of Meeting
which accompanies this Report and
Accounts. 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 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 172.
56
Audit
Committee
report
Liz Hewitt
Chair of the Audit Committee
“ As Chair of the
Audit Committee
(the ‘Committee’),
I am pleased to
present the Audit
Committee’s report
for the financial
year ended
31 December 2018.”
The aim of this report is to explain the work
undertaken by the Committee during the year and
how it has met the disclosure requirements as set
out in the 2016 Corporate Governance Code (the
‘Code’). The key matters considered in the year are
set out on pages 59 and 60. 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 2018
financial year in ensuring that the Company’s
governance processes remain appropriate, robust,
of a high standard and are rigorously applied.
The 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 Committee also has a
role in representing the interests of Shareholders
by monitoring the activities and conduct of
management and the auditors.
In 2018, the Committee focused 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 2018 Half Year Financial
Statements and 2018 Report and Accounts. The Committee considered, with
management and the External Auditor, the adoption of the new accounting
standards IFRS 9 ‘Financial Statements, IFRS 15 ‘Revenue from contracts with
customers’ (effective for the 2018 financial year) and IFRS 16 ‘Leases’ in
relation to its expected impact in future (effective for 2019 financial year) and
approved the disclosures of these accounting policies and practices in the
notes to the Financial Statements.
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. The Committee considered its compliance
with the Code and the FRC Guidance on Audit Committees. The Committee
believes that it has addressed both the spirit and the requirements of both.
The members of the Committee need to have the right balance of skills and
experience to deliver its responsibilities. During the year, the Board carried out an
internally facilitated evaluation of its performance and that of its Committees. The
Board is satisfied that the Committee members possess relevant experience and
appropriate levels of independence and that its members have the depth of
financial and commercial experience across various industries which is essential
for the effective working of the Committee.
At the request of the Board, the 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.
I will be retiring from the Board and Chair of the Audit Committee at the next
AGM on 8 May 2019. I would like to thank my fellow Audit Committee
members for their support during my time chairing the Committee. I am
delighted to confirm that Stacey Cartwright, who was appointed to the Board
on 1 October 2018, will, subject to her re-election by Shareholders at the next
AGM, be appointed Audit Committee Chair with effect from 8 May 2019.
The Committee noted the unqualified opinion from the External Auditor on
the 2018 Annual Report.
Liz Hewitt
Chair of the Audit Committee
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Financial statementsGovernance Strategic reportOverview Savills plc
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Audit Committee report continued
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 http://ir.savills.com/company-
information/corporate-governance). The
Terms of Reference were reviewed and
updated in June 2017.
The Committee 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 key 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.
Five Independent Non-Executive Directors,
Liz Hewitt, Tim Freshwater Rupert Robson,
Stacey Cartwright and Florence Tondu-
Mélique are members of the Committee.
Members of the Committee are appointed
by the Board following recommendations
by the Nomination & Governance
Committee and membership is reviewed
annually by the Nomination & Governance
Committee as part of the annual Board
performance evaluation. Stacey Cartwright
and Florence Tondu-Mélique were
appointed as members of the Committee
on 1 October 2018.
As at 31 December 2018 and up to the
date of this report, the Committee
comprised entirely Independent Non-
Executive Directors. The Committee
members collectively have a broad range
of financial and commercial experiences
that enables them to provide oversight of
both financial and risk matters, and to
advise the Board accordingly.
The Board considers that Liz Hewitt, as
Chair of the Committee, possesses recent
and relevant financial experience and that
all Committee members have relevant
financial experience as required by the
Code. Biographical details of the
Committee members are shown on
pages 42 and 45.
The Company provides an induction
programme for new Committee members
which includes 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 Audit 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.
In addition to its members, a standing
invitation has been extended by the
Committee to the Non-Executive Chairman
and Group Chief Executive Officer 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 Committee in
discharging its duties.
At least once a year, the Committee meets
with the External Auditor and the Group
Director of Risk & Assurance without
management being present.
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
2018 is shown in the table below:
Committee
member
Liz Hewitt
Tim Freshwater
Rupert Robson
Stacey Cartwright
Florence Tondu-Mélique
58
Member
since
Meetings
attended
Meetings
eligible
to attend
% of eligible
meetings
attended
June 2014
January 2012
June 2015
October 2018
October 2018
4
4
4
1
1
4
4
4
1
1
100%
100%
100%
100%
100%
Activities of the Committee
To enable the Committee to carry out its duties and responsibilities effectively it works to a structured programme of activities and
meetings aligned with the annual financial reporting cycle. This 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.
Following each meeting, the Chair of the Committee reports on the main discussion points and any actions arising from these to the Board.
Responsibilities
How the Committee discharged its responsibilities
Mar
June
Aug
Dec
Financial
Reporting
Reviewed and discussed the key accounting considerations and judgements
reflected in the Group’s results for the half year and full year
External
Audit
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
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 Auditor’s 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
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 & 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
Internal Controls
and Risk
Management
Systems
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
X
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Audit Committee report continued
Activities of the Committee continued
During the year, in addition to its established review processes, the Committee considered and reviewed a number of other areas. These
included updates on the risk and internal control environments within the Group’s Asia Pacific and EMEA businesses as well as Savills
Investment Management. In addition, with the increasing pace of technological change, and for the implementation of GDPR, the
Committee continued to focus on the Group’s IT strategy, with particular focus on cyber security and business continuity. The
Committee specifically considered the processes and assessment of the Group’s prospects and viability made by management to
support the viability statement which can be found at page 29. The Committee’s review included consideration of the time period
adopted, the processes supporting the assessment of the Group’s longer-term solvency and liquidity which support the viability
statement. The Committee 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 and challenged
management as to the appropriateness of the assumptions made.
The Committee received reports from management relating to the adoption of IFRS 9 ‘Financial Instruments, IFRS 15 ‘Revenue from
contracts with customers’ (effective for the 2018 financial year) and IFRS 16 ‘Leases’ in relation to its expected impact in future (effective
for 2019 financial year). Following discussions with management and the External Auditors, the Committee approved the disclosures of
these accounting policies and practices which are set out in note 2.26 to the Financial Statements on pages 112 to 114.
Significant Judgements
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.
This section outlines the main areas of judgement that have been considered by the Committee and ensure that appropriate rigour has
been applied. The key reporting judgements considered by the Committee and discussed with the External Auditor during the year were:
Matter
considered
Action
Goodwill impairment
assessment
The Committee considered management’s approach in relation to the carrying value of the Group’s
businesses, including goodwill.
The Committee reviewed and considered the detailed analysis of the key inputs to forecast
future cash flows and the process by which they were drawn up. The Committee considered the
appropriateness of the assumptions used and reviewed the impact of sensitivity analysis. The
Committee also considered if there were any reasonably possible changes in assumptions that would
result in a material impairment and therefore require further disclosure in the financial statements.
The Committee also considered a report from the External Auditor setting out its analysis and
conclusions in this area.
The Committee was satisfied with the assumptions and judgements applied by Management.
Risk of fraud in revenue
recognition
The Committee considered the presumed risk of fraud as defined by the International
Accounting Standards.
Recoverability of trade
receivables
Provisions for litigation
The Committee discussed and actively challenged management’s conclusions in respect of revenue
recognition policies, satisfying itself that the approach applied to determine revenue recognised in
FY18 was appropriate, consistent across the Group and in line with the Group’s accounting policies.
The Committee also received and discussed the External Auditor reports setting out its work,
testing and conclusions on this area. The Committee, having actively challenged and considered
both management’s judgements and the External Auditor’s conclusions, agreed that there were no
material issues in this area and that the approach taken was appropriate.
The Committee considered and challenged, with the support of the External Auditor, the
judgements regarding the recoverability of trade receivables made. Following its review, the
Committee was satisfied that the judgements taken by management were reasonable and
supported by appropriate evidence in relation to the specific receivables.
The Committee received regular updates on new and existing claims being made against the
Group and the extent to which these had been provided for. The Committee focussed its review
on the provisions held in relation to significant legal matters and assessed the appropriateness of
those provisions as at 31 December 2018. As part of this review, the Committee took into account
the Group’s insurance cover and the advice received from external counsel to ensure that the
appropriate provisions had been made.
The Committee also discussed the matter with the External Auditor, who had determined, as part
of their audit, that Management had made reasonable judgements in their assessment process for
determining the level of provisions held. The Committee concluded that the provisions Management
had made were appropriate.
60
Internal Audit
During 2018, Internal Audit services were
delivered by the Group’s Director of
Internal Audit with support in delivery
by EY. The Board’s responsibility for
internal control and risk is detailed on
page 52 and is incorporated into this
report by reference.
The Committee approved the annual
Group audit plan, and received progress
against that plan during the year. The
Committee ensured that Internal Audit
was appropriately resourced with the
skills and experience relevant to the
operations of the Group and that
information was 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 and the Group
Director of Internal Audit attended
meetings and presented to the Committee.
The Committee monitors the status of
Internal Audit recommendations and
management’s responsiveness to their
implementation and challenge both
Internal Audit and management where
appropriate to provide assurance that the
control environment is robust and effective.
In assessing the performance of Internal
Audit, 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 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 its
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 2018
Reports from the Group Director of
Risk & Assurance including reports on
Group-wide risk assessment activity
and annual self-assessment findings
Reports from the External Auditor on
any issues identified during the course
of their work
The Committee and the Board considered
that the information received was sufficient
to enable a review of the effectiveness of
the Group’s internal controls in accordance
with the FRC’s Guidance on Risk
Management, Internal Control and Related
Financial and Business Reporting.
External Audit
The Committee has primary responsibility
for overseeing the relationship with the
External Auditor, including assessing the
External Auditor’s performance,
independence and effectiveness,
recommending the appointment,
reappointment or removal of the External
Auditor, and negotiating and agreeing the
external audit fees. 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
chair of the Committee 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 re-appointment of
PwC as the Group’s External Auditor and it
was satisfied that it should recommend to
the Board their re-appointment 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
2019 AGM.
PwC has been the Company’s Auditor
since 2001, following a tender for the
External Audit. The Committee continues
to review the auditor appointment and the
need to tender the audit, ensuring
compliance with the Code. The Committee
has considered the timing of a potential
External Audit tender timetable and
processes and concluded that the tender
process should commence in 2019 with the
appointment to be effective at the end of
the next lead audit partner term at 31
December 2020. The Committee is
satisfied that the proposed retender of
audit services was in the best interests of
the Shareholders.
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Audit Committee report continued
External Audit continued
An important aspect of managing the
External Auditor relationship, and of
the annual effectiveness review, is
ensuring that there are adequate
safeguards to protect auditor objectivity
and independence. In conducting its
annual assessment, the Committee
reviews the External Auditor’s own policies
and procedures for safeguarding its
objectivity and independence. As one of
the ways in which it seeks to protect the
independence and objectivity of the
external auditors, the Committee has a
policy governing the engagement of the
external auditors to provide non-audit
services and its assessment of PwC’s
independence is underpinned by this
policy. In accordance with the Group’s
policy in place to 31 December 2018, the
following non-audit services were not
provided by the External Auditor:
Bookkeeping or other services related
to the accounting records or Financial
Statements
Taxation services (except for de minimis
amounts, outside of Europe and outside
the scope of the Group audit)
Financial information systems design
and implementation
Internal Audit outsourcing services
Management functions or human
resources advice
Advising on senior executive (including
Executive Director) remuneration
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 £2.0m for
audit services and £1.0m for non-audit
services, principally for financial due
diligence relating to transactions. Details of
the fees paid to the External Auditor can
be found in note 8.2 to the Financial
Statements on page 124. During the
financial year ended 31 December 2018,
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, that when PwC was used, it 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 2018 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 restrictions (FRC’s Revised Ethical
Standard for Auditors June 2016) 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, were effective for the Group from
1 January 2017. As part of the Group’s
policy 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.
62
Compliance with the UK
Corporate Governance Code
The UK Corporate Governance Code 2016
(the ‘Code’) is the standard against which
we measured ourselves in 2018 and the
Board fully supports the principles set
out in the Code. The Main Principles have
been applied as follows:
A. Leadership
A1 The Board’s Role
The Board met formally eight time
during the year with specific focus on
strategy, performance, leadership an
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 is responsible for the leadership
and effectiveness of the Board, and the
Group Chief Executive 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.
B. Effectiveness
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 & Governance
Committee’s primary objective is to
review the composition of the Board.
In making appointments to the Board,
the Nomination & Governance
Committee assesses the balance of
skills, knowledge, independence,
experience and diversity required in
order to maintain an effective Board.
B2 Board appointments
The Nomination & Governance Committee
leads the appointment of new Directors to
the Board.
B3 Time commitment
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’s development strategy.
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
During 2018, the Board’s annual evaluation
was led by the Chairman and facilitated by
the Group Legal Director & Company
Secretary. The process and key findings are
explained on page 55 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 8 May 2019. Directors’
biographies are set out on pages 42 to 45
of the Annual Report, enabling
Shareholders to take an informed decision
when determining their re-election.
C. Accountability
C1 Financial and business reporting
The Strategic Report is set out on page
4 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 56 of the Annual Report.
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Financial statementsGovernance Strategic reportOverview Savills plc
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Compliance with the UK Corporate Governance Code continued
C2 Risk management and internal control
C3 Audit Committee and Auditors
C4 Tenure of Auditor
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 24 to 28.
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 59
and 60 of the Annual Report.
The Board has satisfied itself that Liz
Hewitt has recent and relevant financial
experience and is confident that the
collective experience of the members
enables it to be effective. The fact that a
person has been identified as having recent
and relevant financial experience does not
impose additional duties, obligations or
responsibilities on that Audit Committee
member. The Committee also has access to
the financial expertise of the Group and its
external and internal auditors and can seek
further professional advice at the
Company’s expense, if required.
The Group Legal Director & Company
Secretary ensures that it receives
information and papers in a timely manner
to enable full and proper consideration of
agenda items. These agenda items are
agreed in advance in its annual meeting
activity plan.
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 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.
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.
At the 2018 AGM, shareholders approved
the re-appointment of PwC as the
Company’s External Auditor.
The Audit Committee has assessed
whether suitable accounting policies have
been adopted and whether management
have made appropriate judgements and
estimates. The main areas of judgement
considered by the Committee during 2018
are presented on page 60 of the Annual
Report. The Audit Committee keeps under
review the independence and objectivity of
the External Auditor, including the review
of audit fee proposals and non-audit fees.
The Committee reported on how the
effectiveness of PwC was assessed for the
2018 financial year on page 61 to 62 of the
Annual Report.
D. Remuneration
D1 Levels and components of
remuneration
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.
64
E. Relations with Shareholders
E1 Shareholder engagement and dialogue
The Group Chief Executive Officer 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 general
meetings
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.
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 Remuneration Policy was reviewed in
2016/17 and approved by Shareholders at
the 2018 AGM (as required by the Directors
Remuneration Regulations 2013).
D2 Procedure
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.
The Remuneration Committee’s terms of
reference are available on our website. An
overview of what the Committee has done
during the year is provided on pages 66 to
84 of the Annual Report.
65
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’
Remuneration
report
Rupert Robson
Chairman of the Remuneration Committee
“ Dear Shareholder
On behalf of the Board, I
am pleased to introduce
our 2018 Directors’
Remuneration Report
(the ‘Report’) which sets
out Savills philosophy and
policy in relation to
Directors’ remuneration
and how this was
implemented in the year
ended 31 December 2018. ”
Included within this Report we have summarised
the Remuneration Policy (‘Policy’) approved
by shareholders at the 2017 AGM rather than
reproduce the Policy in full. This gives an
overview of the Directors’ annual remuneration
framework and the full Policy is available on
our website. The Annual Report on Directors’
Remuneration will be presented to Shareholders
for approval at the AGM on 8 May 2019.
*
The dividend cost for 2018 comprises the cost of the final dividend
recommended by the Board (amounting to £14.8m), payment of
which is subject to shareholder approval at the Company’s Annual
General Meeting (‘AGM’) scheduled to be held on 8 May 2019,
the cost of the supplemental dividend (£21.4m) declared by the
Board on 14 March 2019 (payable to shareholders on the Register
of Members as at 12 April 2019) and the interim dividend (£6.5m)
paid on 3 October 2018.
** Executive Director remuneration comprises the remuneration paid
to the Group Chief Executive Officer and Group Chief Financial
Officer job holders between 1 January 2014 and 31 December
2018. To allow comparability the remuneration paid to the Deputy
Group Chief Executive in 2018 (the Deputy Group Chief Executive
role being transitional and specific to 2018 alone) has not been
included in this calculation.
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 90 to
91 as specified by the UK Listing Authority
and the Regulations.
Our remuneration philosophy
As previously reported, our long-standing
focus and business philosophy 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.
The 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,
2014-2018 Overview
+43%
Underlying
Profit
66
with a greater emphasis on the performance-
related elements of profit share and/or,
outside the UK, commission in the total
reward package.
Completed the acquisition of
Cluttons Middle East, providing
Savills a strategic platform for
growth in this region
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.
2018 performance and
remuneration
Annual performance-related profit share
Savills delivered resilient performance in
2018 in the face of some challenging
market conditions, reflecting our
geographic diversity, breadth of operations
and recent business investment activity,
with particularly strong performances in
our commercial transactional businesses in
the UK, and in a number of European and
Asia Pacific markets and a good
performance in the conditions from Savills
UK Residential transaction business, of
particular note.
Key financial highlights for the year
included:
Revenue of £1.76bn, representing
growth of 10% on 2017
Underlying profit before tax of
£143.7m which represented 2%
growth on 2017
Transaction Advisory revenues up
9%, Consultancy revenues by 8% and
Property Management by 14%.
Further progressing our strategy of being
the leading advisor in the key markets in
which we operate, by adding
complementary businesses and teams to
our strong core business. In particular
during 2018 we:
In the UK we further enhanced our
leading property management
offering by acquiring the third-
party property management
portfolio of Broadgate Estates and
made a number of incremental
acquisitions to complement our
existing UK business
In Asia Pacific, we made some
significant hires in valuation teams
in Thailand and Singapore and
continued to expand throughout
Australia and in China
In North America, we continued to
expand our occupier-focused
business lines through both
recruitment and investment in
technology
Acquired an initial 25% interest in
DRC LLP, a real estate debt
investment management platform,
with an option to acquire the balance
of the business in 2021, broadening
the offering of Savills Investment
Management
Continued to invest in our own
technology platform in order both to
deliver innovative solutions to our
clients through data analysis and
insight and to drive internal
efficiencies and continued to
support a number of promising
external technology-based
businesses which have the potential
to significantly enhance or disrupt
traditional business models in the
real estate sector.
At the beginning of 2018, the Committee
set stretching financial targets for the 75%
of the performance-related profit share
relating to the delivery of Underlying Profit
before Tax (‘UPBT’). The Group delivered a
resilient financial performance in 2018,
notwithstanding the market uncertainties
noted above. As such, the Executive
Directors received 79% of the maximum
potential award in relation to Group
financial performance. This compares with
an allocation of 77% of the maximum
potential award in relation to financial
performance in the previous year. In
relation to the objectives-based element
which accounts for up to 25% of annual
award, the Executive Directors were
determined 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 72 of
this Report.
2019 remuneration
We were very pleased when shareholders
gave over 99% approval to the renewal of
our Directors’ Remuneration Report at the
2018 AGM and we are not making any
significant changes for 2019. An overview
of the key decisions for 2019 is as follows:
Base salaries: we have an 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).
Salaries continue to be reviewed each
year (although not necessarily
increased) and no increase will be
applied in 2019
Benefits & pension: no changes are
proposed and these continue to be set
below market rates, especially when
considering the relevant pension
contribution rates reflect the low base
salaries offered. The Committee is
aware of the good practice
development for contribution rates to
move over time to be aligned with those
of the wider workforce and the position
will be reviewed as part of the renewal
of the Remuneration Policy at the
2020 AGM
+43%
Dividend Payments
to Shareholders*
-5%
Executive Director
Remuneration**
+18%
Total Shareholder
Return
67
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
2019 remuneration continued
Annual performance-related profit
share: in line with our Policy, the
maximum opportunity for 2019 is
increased in line with the increase in RPI
for 2018. For 2019, the cap on the profit
share opportunity will therefore be, for
the Group Chief Executive Officer,
£2.192m and for the Group Chief
Financial Officer, £1.643m, being 2.7%
higher than the cap applying in 2018,
reflecting year on year growth in RPI
(2018 caps: Group CEO £2.134m; Group
CFO £1.6m). Annual awards will
continue to be determined as follows:
75% based on a Group UPBT
performance
25% on the achievement of pre-set
personal strategic and operational
objectives
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
Performance Share Plan: annual grant to
be made at the existing award levels of
200% of base salary for the Group Chief
Executive Officer and the Group Chief
Financial Officer. The EPS growth and
relative total shareholder return targets
will remain unchanged from those
applying in 2018 but are subject to
ongoing review to ensure that these
continue to provide meaningful targets
in the light of market developments and
the Group’s strategic objectives.
Director changes
As announced in January 2018, Mark
Ridley, formerly CEO of Savills UK and
Europe, became an Executive Director
on 1 May 2018 joining the Board initially
as Deputy Group Chief Executive and
then succeeding Jeremy Helsby upon the
latter’s retirement as Group Chief Executive
Officer effective 1 January 2019. As Deputy
Group Chief Executive, effective 1 May
2018, Mark Ridley’s remuneration package
consisted of a base salary of £255k p.a. and
an annual performance-related profit share
maximum opportunity of £1.867m, with 75%
based on Group UPBT performance and
25% on the achievement of pre-set personal
strategic and operational objectives (in 2018,
both salary and the performance related
profit share opportunity were pro-rated to
reflect the 1 May 2018 appointment date).
He also received a Performance Share
Plan award in line with the other Executive
Directors. Upon Mark Ridley’s appointment
as Group Chief Executive Officer, the
package was adjusted to the same level
as that of the outgoing CEO (subject to any
inflation-related adjustments to salary and/
or bonus potential).
Following his retirement from the Board
at the end of 2018, Jeremy Helsby has
remained available to the Company as an
advisor supporting Mark Ridley and the
Board in the further development of Savills
US business.
Governance developments
I wanted to take the opportunity to
welcome Stacey Cartwright and Florence
Tondu-Mélique, who joined the Committee
upon their appointment to the Board on 1
October 2018. I would also like to thank Liz
Hewitt, who has announced her intention
to retire from the Board at the conclusion
of the 2019 AGM on 8 May, for her
contribution to the Committee since
her appointment in 2014.
As a Committee, we continue to monitor
best practice developments in executive
remuneration and consider whether any
amendments to the Policy are appropriate.
During the year, the Committee has had to
consider the implications for remuneration
arising from the changes regarding the
governance, oversight and design of
remuneration as recommended by the new
UK Corporate Governance Code which
takes effect from 1 January 2019. We will
fully report on the Remuneration
Committee’s response to the new Code in
our Directors’ Remuneration Report for
2019. We will particularly consider these
developments as we undertake a review of
our approach during the course of 2019,
prior to submitting our Remuneration
Policy to shareholders for approval in 2020.
We would consult with shareholders prior
to any substantive changes to our policy.
The Committee is appreciative of the
significant shareholder support that it
has enjoyed in recent years and
welcomed shareholders’ endorsement of
the 2017 Annual Remuneration Report
following the renewal of the Policy at the
2017 AGM. We hope that you find this
year’s Annual Remuneration Report
equally clear and informative and that
you will continue to support us by voting
in favour of the resolution at this year’s
AGM on 8 May 2019.
Rupert Robson
Chairman of the Remuneration Committee
68
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 from 2019 will also set the
remuneration of the Group Executive
Board members, reflecting the 2018 UK
Corporate Governance Code. 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
Stacey Cartwright Member of the Committee
Independent
(from 1 October 2018)
Tim Freshwater
Member of the Committee
Independent
Liz Hewitt
Member of the Committee
Independent
Florence
Tondu-Mélique
Member of the Committee
(from 1 October 2018)
Independent
Committee attendee
Position
Status
Nicholas Ferguson Non-Executive Chairman
Attends by invitation (except
when his own remuneration is
discussed)
Mark Ridley
Group Chief Executive Officer Attends by invitation (except
when his own remuneration is
discussed)
Jeremy Helsby
Former Group Chief
Executive Officer
Chris Lee
Group Legal Director
& Company Secretary
Attended by invitation (except
when his own remuneration is
discussed)
Provides advice and support
(except when his own
remuneration is discussed) as
well as acting as Secretary to
the Committee
Simon Shaw, Group Chief Financial Officer, may be invited to attend meetings to provide
an overview of market conditions and the Group’s prospective financial performance.
Meetings
Attendance table
Committee member
Rupert Robson
Stacey Cartwright
Tim Freshwater
Liz Hewitt
Florence Tondu-Mélique
Meetings attended
Meetings eligible
to attend
4
1
4
3
1
4
1
4
4
1
69
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON
REMUNERATION CONTINUED
Meetings continued
As at 31 December 2018 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 to 45.
The Committee met four times during the
year. The principal agenda items
considered by the Committee during the
year were as follows:
Reconfirming the Group’s Policy in the
context of best practice and corporate
governance developments
Agreeing performance targets for both
the annual performance-related profit
share and Performance Share Plan
awards
Preparing an Annual Remuneration
Report consistent with the legislation
relating to executive remuneration
Agreeing the remuneration packages of
the Executive Directors, including the
proposed package for the new Group
Chief Executive Officer and reviewing
those of Group Executive Board
members
Approving the grant of Performance
Share Plan awards
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, FIT Remuneration
Consultants. 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 2018, FIT
Remuneration Consultants received
fees of £50,637 plus VAT in relation to
advice provided to the Committee. FIT
Remuneration Consultants provided
no other services to the Group during
the year.
The Committee is satisfied that the advice
received from FIT Remuneration
Consultants 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).
70
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 Policy for Executive Directors and how it will be applied for 2019 is set out below.
Element
Summary of approach
Application of Policy for 2019
Base salary
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.
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 will be entitled to a pension from the legacy defined
benefit pension plan but no longer accrues benefits under
the plan.
The Committee has determined that no increase will be
applied for 2019.
Salaries in 2019 will therefore remain as follows:
• Group Chief Executive Officer: £289,000
• Group Chief Financial Officer: £221,000.
Pension contributions/salary supplements for 2019 are:
• Group Chief Executive Officer: 14% of salary
• Group Chief Financial Officer: 18% of salary.
Benefits
Benefits include:
Benefits in line with Policy.
• Medical insurance benefits
• Annual car/car allowance (up to £10,000)
• Permanent Health Insurance
• Life Insurance
• 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. Consequently, 50% of any award
payable above an amount equal to base salary is deferred into
shares for three years.
Malus and clawback provisions apply.
Performance
Share Plan
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.
The maximum potential annual profit share awards for
2019 are:
• Group Chief Executive Officer: £2.192m
• Group Chief Financial Officer: £1.643m
For 2019 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.
The awards for 2019 will be up to 200% of base salary.
For 2019 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).
Share Ownership
Guidelines
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.
500% of base salary for the Group Chief Executive
Officer and Group Chief Financial Officer.
71
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Total remuneration for 2018
Set out below are details of Executive Director remuneration for 2018.
Executive Directors’ ‘single figure’ for the financial year ended 31 December 2018 and as a comparison for the financial year ended
31 December 2017 (audited).
Jeremy Helsby
Mark Ridley1
Simon Shaw
2018
£
2017
£
2018
£
2017
£
2018
£
2017
£
Salary
Benefits2
Pension: contribution
Annual profit share – cash
Annual profit share – deferred shares
286,667
275,000
170,000
10,803
40,133
1,016,000
727,000
10,837
38,500
961,000
686,000
7,202
23,800
653,000
364,000
Near term remuneration
2,080,603
1,971,337
1,218,002
–
–
–
–
–
–
219,167
210,000
11,216
39,450
764,000
543,000
11,216
37,800
723,000
513,000
1,576,833
1,495,016
The aggregate near term remuneration paid to the three Executive Directors in the year ended 31 December 2018 was £4.88m
(2017, two Executive Directors: £3.47m).
Notes
1 Remuneration calculated from date of appointment to the Board on 1 May 2018.
2 Benefits comprise private medical insurance and car allowance.
3
(See the table below) For 2018 the notional value of the PSP award with a performance period which ended on 31 December 2018 (i.e. where the
award will vest in April 2019) 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 2018 (729.4p) per share). For 2017, the value shown has been updated to reflect the actual market sale price at the date of vesting which
was 979.4p per share and Dividend Shares. The estimates provided for long-term share-based reward in last year’s report in respect of 2017 were: Jeremy
Helsby £535,425 and Simon Shaw £340,715. 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).
Gain on long-term share-based awards
Performance Share Plan – performance
element3 (for 2018 : notional)
Performance Share Plan – share
appreciation element3
(for 2018 : notional)
Long-term share-based reward
(non-cash – for 2018 : notional)3
Total i.e. ‘Single Figure’
(for 2018 : part notional)
Jeremy Helsby
Mark Ridley
Simon Shaw
2018
£ Notional
2017
£
Actual
2018
£ Notional
2017
£
Actual
2018
£ Notional
2017
£
Actual
112,749
506,547
51,249
2,508
98,437
1,140
115,257
604,984
52,389
2,195,860
2,576,321
1,270,391
–
–
–
–
51,249
322,342
1,140
62,641
52,389
384,983
1,629,222
1,879,999
The information in this table has been audited by the External Auditor, PricewaterhouseCoopers LLP.
Performance-related remuneration for 2018
Annual performance-related profit share
UPBT performance-related element
The following near-term performance measures applied to the 2018 annual performance-related profit share arrangements:
75% of the award was based on profit performance, defined as UPBT performance. The target range and Savills performance
were as follows:
Minimum (0% of element) Mid-point (62.5% of element)
Maximum target
(100% of element)
Savills UPBT performance
Bonus award (% of element)
£96m
£131.2m
£160m
£143.7m
79%
72
There was straight-line vesting between the minimum and mid-point and the mid-point and maximum.
Reflecting the Group’s resilient performance in 2018, awards at 79% of the maximum potential were earned by the Executive Directors
in respect of the UPBT performance-related element (2017: 77%).
For the part of 2018 prior to his appointment to the Board on 1 May 2018, Mark Ridley participated in the Savills UK & Europe Profit
Share Scheme in his role as CEO of Savills UK and Europe. His pro-rated award under this arrangement has not been included in the
figures above.
The remaining 25% of annual performance-related profit share awards was based on individual performance against key strategic and
operational objectives. The Executive Directors were each awarded 90% of this 25%.
The Committee set strategic and operational objectives for the Executive Directors which were aligned with value creation for Savills.
Details of Jeremy Helsby’s achievement against the key objectives set included the following:
Ensuring a smooth handover of Group Chief Executive Officer responsibilities to Mark Ridley
Further strengthening US executive and regional management to support the further development of Savills North American
platform and broadening of the offering
Continuing to progress the strategy of broadening the Group’s geographic spread and service line offering, which in particular saw
the Group acquire Cluttons Middle East; Savills UK acquire the third-party property management portfolio of Broadgate Estates and
make a number of incremental acquisitions; and Savills Investment Management acquire an initial 25% interest in DRC LLP, a real
estate debt investment management platform, with an option to acquire the balance of the business in 2021, broadening our
investment management capabilities
Implementing various growth opportunities across Asia, in particular the Group’s China growth plan, where we opened three new
offices and recruited approximately 50 new professionals to facilitate our continued long-term expansion in this market, and ensuring
that our Indian start-up (Savills India) opened for business in July in accordance with our business plan
Ensuring the global co-ordination of the Group’s Occupier Service Offering and continuing to grow the Group’s cross-border
investment agency offering
Ensuring progress in the application of new technologies to strengthen client offering and improve operational efficiencies.
Details of Mark Ridley’s achievement against the key objectives set included the following:
Building relationships with major shareholders and key international clients to ensure orderly succession within the business and
key relationships
Ensuring a smooth succession of CEO Responsibilities in the UK and Europe to his successor in the role of CEO UK & EMEA
Building stronger links across Savills International Residential business covering key associates and consultancy services
Ensuring the successful integration of Aguirre Newman in Spain into the Savills network, strengthening the leadership of Savills
Sweden and implementing growth strategies for Savills France and Savills Germany
Continuing to improve diversity across the UK and European businesses, particularly at Director and Senior Business
Management level.
Details of Simon Shaw’s achievement against the key objectives set included the following:
Implementing the new regionalised management structure for Savills Investment Management
Overseeing and sponsoring the Group’s multi-year technology initiatives, including the deployment of Savills award winning
Knowledge Cubed platform to our occupier services clients across all regions and the continued the roll out of Workthere.com,
Savills advisory service to corporates seeking flexible office or co-working space, which had now been launched in eight countries
and has seen significant uptake from both tenants and the serviced office providers, and continued investment in promising
technology opportunities
Leading the review of the Group’s funding facilities and implementing a 7, 10 and 12 year private placement of £150m of fixed rate
notes (issued in June 2018)
Continuing to develop the Group’s risk management/control environment so that it evolves consistent with the growth of Group‘s
geographic spread and the broadening of the service offering
Ensuring that the Group is prepared for Brexit (both hard and soft exits).
For Jeremy Helsby, Mark Ridley and Simon Shaw, in line with the Policy, 50% of their overall awards, above an amount equal to their
respective base salaries, was deferred for a further three-year period in the form of shares.
73
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Long-term incentives
The PSP award granted in 2016 will vest in April 2019, subject to performance in the three years to 31 December 2018. Following an
assessment of Savills performance against targets set at grant, the Committee determined that 20.5% 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.
Underperform
index
RPI plus
8% p.a.
compounded
RPI plus 4.1% p.a.
compounded
0%
41%
Non-Executive Directors fees (audited)
The Non-Executive Director fees for 2018 were as follows:
Basic fee
Additional fees
Senior Independent Director
Remuneration Committee Chairman
Audit Committee Chairman
2018 Total
2017 Total
Stacey
Cartwright
(appointed
1 October
2018)
Nicholas
Ferguson
(Chairman)
Tim
Freshwater
Liz
Hewitt
Charles
McVeigh
Rupert
Robson
Florence
Tondu-
Mélique
(appointed
1 October
2018)
£207,500
£13,325
£52,650
£52,650
£52,650
£51,817
£13,325
£8,000
£15,000
£10,000
£207,500
£13,325
£60,650
£67,650
£52,650
£61,817
£13,325
£193,333
–
£57,500
£63,500
£51,000
£60,583
–
The information in this table has been audited by the External Auditor, PricewaterhouseCoopers LLP.
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.
The fee payable to Nicholas Ferguson as Chairman was increased to £215,000 p.a. in 2018 (from £200,000 p.a.) following consideration
of external market benchmarking and consideration of the scope of the role in the light of the growth of the Group.
The current base fee for the Non-Executive Directors is £53,300 p.a., (2017: £52,200 p.a.) with additional fees payable to the Senior
Independent Director (£8,000 p.a.), the Audit Committee Chairman (£15,000 p.a.) and the Remuneration Committee Chairman
(£10,000 p.a.). Fees were increased in 2018 following consideration of external market benchmarking and the increased time
commitment of the roles.
The Non-Executive Directors do not participate in incentive arrangements or share schemes.
Operation of Policy in 2019
Base salary
The Committee has determined that no increase will be applied for 2019. The base salaries of the Executive Directors are therefore
as follows:
Group Chief Executive Officer: £289,000
Group Chief Financial Officer: £221,000.
In line with our Policy, the base salaries for the Executive Directors continue to be positioned significantly below market median against
the FTSE 250.
74
Variable remuneration
Annual performance-related profit share
The maximum annual performance-related profit share opportunity for 2019 will be:
£2.192m for the Group Chief Executive Officer
£1.643m for the Group Chief Financial Officer.
For the 2019 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 retains a general discretion to reduce the pay-out 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 2019 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 2018 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 2018 and 2017.
Employment costs
Underlying profit before tax
Dividend payment to Shareholders
Executive Director remuneration
Tax
2018
£m
1.160.8
143.7
42.7
4.2
112.4
2017
£m
1,057.7
140.5
41.1
4.0
103.7
%
increase
10
2
4
6
8
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 2018 comprises the cost of the final dividend recommended by the Board (amounting to £14.8m), payment of
which is subject to shareholder approval at the Company’s AGM scheduled to be held on 8 May 2019, the cost of the supplemental
dividend (£21.4m) declared by the Board on 14 March 2019 (payable to shareholders on the Register of Members as at 12 April 2019)
and the interim dividend (£6.5m) paid on 3 October 2018 and is based on the number of shares in issue as at 31 December 2018
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, social security costs, pension costs and share-based payments. To allow
comparability the remuneration paid to the interim role of Deputy Group Chief Executive has been ignored in this calculation.
75
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Total shareholder return and Group Chief Executive Officer remuneration
The total shareholder return delivered by the Company over the last ten years is shown in the chart below. Over this period the
Company has delivered total shareholder return of 16% per annum (FTSE 250 (excluding investment trusts): 14% per annum; FTSE 350
Super Sector Real Estate: 8% per annum). Savills was ranked 76th by TSR performance in the FTSE 250 (excluding investment trusts)
and ranked fourth (of 18 companies) by performance in the FTSE 350 Super Sector Real Estate over the ten years to 31 December 2018.
Total Shareholder Return ('TSR') (rebased)
10 years to 31 December 2018
700
600
500
400
300
200
100
0
Dec
08
Jun
09
Dec
09
Jun
10
Dec
10
Jun
11
Dec
11
Jun
12
Dec
12
Jun
13
Dec
13
Jun
14
Dec
14
Jun
15
Dec
15
Jun
16
Dec
16
Jun
17
Dec
17
Jun
18
Dec
18
Savills
FTSE 250 (excluding investment trusts)
FTSE 350 Super Sector Real Estate
The Board believes that the FTSE 250 Index (excluding investment trusts) remains the most appropriate index against which to
compare TSR over the medium term as it is an index of companies of similar size to Savills. Savills TSR relative to that of the FTSE 350
Super Sector Real Estate Index is also shown, as this index better reflects conditions in real estate markets over recent years.
Pay for performance
Total Single Figure
Remuneration
£’000
UPBT
£m
UPBT annual %
change
2,196
2,507
2,595
2,298
3,279
2,630
1,786
1,268
143.7
140.5
135.8
121.4
100.5
75.2
58.6
50.4
+2.3
+3.5
+12
+21
+34
+28
+16
+7
Annual variable
element:
performance-
related profit share
– annual award
against maximum
potential
%
Long-term
Incentive fully
vested (maximum
potential of award)
100%
82
80
98
100
100
86
65
49
41
84
50
N/A
100
100
100
0
Year
2018
2017
2016
2015
2014
2013
2012
2011
Total remuneration in the years 2012 to 2018 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, 2016, 2017 and 2018 years). The awards granted in 2008 lapsed in 2011.
76
Group Chief Executive Officer pay increase in relation to all UK employees
Group Chief Executive Officer
All UK employees
Notes
Percentage change in remuneration
from 31/12/2017 to 31/12/2018
Percentage change
in base salary %
Percentage change
in benefits %
Percentage change
in profit share
award %
2.8%
1.4%
4.0%
3.8%
5.8%
-3.2%
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, Jeremy Helsby has received a non-pensionable salary supplement equal to 14% of pensionable earnings. Mark Ridley
also receives a non-pensionable salary supplement equal to 14% of pensionable earnings. These salary supplements are at the same
level as pension contributions or non-pensionable salary supplements as are received by all former members of the Savills Defined
Benefit Pension Plan (the ‘Plan’) across the Group. Simon Shaw received a non-pensionable salary supplement equal to 18% of
pensionable earnings in lieu of pension contributions.
Jeremy Helsby and Mark Ridley no longer accrue a pension benefit under the Plan. The value of the legacy benefit is shown below.
Executive Director
Jeremy Helsby
Mark Ridley
Notes
Defined benefit
pension accrued at
31 December 2018
Defined benefit
pension accrued at
31 December 2017
Defined benefit
pensions value for 2018
remuneration table
Defined benefit
pensions value for 2017
remuneration table
54,197
31,875
52,617
31,875
–
–
–
–
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 As Jeremy Helsby is now in receipt of pension benefits, no remuneration amount is applicable relating to 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 2018 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
Mark Ridley
Simon Shaw
Notes
Number of
shares (including
beneficially held
under the SIP)
Unvested
shares subject
to performance
conditions (PSP)
454,846
140,897
155,864
198,6671
125,694
127,947
Deferred share
bonus plan awards
(vesting not subject
to performance
conditions) (DSBP)
221,104
159,647
159,598
Extent to which
shareholding
guideline met
223%
78%
100%
1 Following Jeremy Helsby’s retirement from the Board outstanding PSP awards are subject to pro-rating for service.
77
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Share interests continued
The Company currently applies shareholding requirements 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
Stacey Cartwright
Nicholas Ferguson
Tim Freshwater
Liz Hewitt
Charles McVeigh
Rupert Robson
Florence Tondu-Mélique
At 31 December
2018
–
29,286
–
3,400
–
7,981
–
As at 13 March 2019, no Director had bought or sold shares since 31 December 2018.
The Sharesave Scheme
No Directors hold outstanding options under the Sharesave Scheme and no options were exercised during the year.
Scheme interests granted in 2018
The following table sets out details of awards made to Executive Directors under the PSP in 2018.
Type of award
Basis of award
(face value)
Performance period
% vesting
for threshold
performance
% vesting
for maximum
performance
Jeremy Helsby Nil-cost options
£578,000
Simon Shaw
Nil-cost options
£442,000
1 January 2017 to
31 December 2019
25%
100%
Performance criteria
– 50% of award
Earnings per share growth
– 50% of award
Relative total shareholder
return against the
FTSE 250 (excluding
investment trusts)
Awards were also made during the year under the Deferred Share Bonus Plan. Details of awards under this plan are set out on page 79.
The Performance Share Plan (‘PSP’)
Number of shares
Directors
Jeremy Helsby
Mark Ridley
Simon Shaw
Awarded
during year
Vested
during year
Lapsed
during year
At 31
December
2017 1
67,073
77,084
62,393
–
–
–
–
59,190
35,038
47,646
43,010
42,682
35,038
47,646
–
–
–
–
–
–
–
45,263
56,408
10,665
–
–
–
–
–
–
–
–
–
–
–
–
35,895
6,787
–
–
–
–
–
–
Closing mid-
market price
of a share the
day before
grant
At 31
December
2018
–
77,084
62,393
59,190
35,038
47,646
43,010
–
35,038
47,646
45,263
820.0p
713.5p
881.5p
976.5p
713.5p
881.5p
976.5p
820.0p
713.5p
881.5p
976.5p
Market value
at date of
vesting
First
vesting date2
979.4p
23.04.18
–
–
–
–
–
–
979.4p
–
–
–
27.04.19
22.05.20
16.04.21
27.04.19
22.05.20
16.04.21
23.04.18
27.04.19
22.05.20
16.04.21
Notes
1 Mark Ridley is shown from date of appointment to the Board on 1 May 2018.
2 Awards made from 2017 to Executive Directors at the time of award also include an additional two-year holding period before awards may be released.
78
Awards over 92,303 shares, together with a further 8,781 shares in lieu of dividends, vested under the PSP to Executive Directors during
the year. A subscription cost of 2.5p nominal value per share is payable on actual receipt of shares. The total pre-tax gain on awards
vested during the year was £987,440.
The Deferred Share Bonus Plan (‘DSBP’)
Number of shares
Directors
Jeremy Helsby
Mark Ridley1
Simon Shaw
Awarded
during year
Vested
during year
Closing mid-
market price
of a share the
day before
grant
At 31
December
2018
At 31
December
20171
73,170
86,463
64,391
–
–
–
–
70,250
65,201
47,954
46,492
54,146
60,240
46,824
–
–
–
–
–
–
–
52,534
73,170
–
–
–
–
–
–
54,146
–
–
–
–
86,463
64,391
70,250
65,201
47,954
46,492
–
60,240
46,824
52,534
820.0p
705.5p
929.0p
976.5p
705.5p
929.0p
976.5p
820.0p
705.5p
929.0p
976.5p
Market value
at date of
exercising
Normal
vesting date
979.4p
24.04.18
–
–
–
–
–
–
14.03.19
18.04.20
16.04.21
14.03.19
18.04.20
16.04.21
979.4p
24.04.18
–
–
–
14.03.19
18.04.20
16.04.21
Notes
1 Mark Ridley is shown from date of appointment to the Board on 1 May 2018.
Under the DSBP awards over 127,316 shares and 11,073 shares in lieu of dividends vested to Executive Directors during the year. The total
pre-tax gain on awards vested during the year was £1,355,314. No DSBP awards lapsed.
During the year, the aggregate gain on the exercise of share options and shares vested was £2,342,754. The mid-market closing price of
the shares at 31 December 2018, the last business day of the year, was 707p and the range during the year was 678.5p to 1034p.
Payments to past Directors and payments for loss of office
In accordance with the intention announced in January 2018, Jeremy Helsby retired as Group Chief Executive Officer and from the
Board on 31 December 2018. Following his retirement, Jeremy has remained an advisor to the Company supporting the management
team of the Savills US business.
His remuneration arrangements were in line with the approved Directors’ remuneration policy, and the remuneration he received in
respect of his services as an Executive Director is set out in the 2018 ‘single figure’ table. Jeremy Helsby received his salary, benefits and
pension in accordance with his contract of employment up to the date of departure from the Board. Jeremy Helsby did not receive a
loss of office payment.
Jeremy Helsby received an annual performance-related profit share in respect of 2018 which was calculated in the usual way. His
outstanding deferred share bonus plan awards will be released in accordance with the plan rules and remain subject to malus and
clawback provisions.
The Committee determined that Jeremy Helsby should be allowed to retain his unvested PSP awards. These awards will vest in
accordance with the original timetable, subject to satisfaction of the original performance conditions applying to them, remain subject
to malus and clawback provisions, and will be pro-rated for service.
No other Executive Director left the Company during the year ended 31 December 2018. No payments for compensation for loss of
office were paid to, or receivable by, any Director for that or any earlier year.
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Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
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 2018, 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
Mark Ridley
Simon Shaw
Contract date
1 May 2018
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
Stacey Cartwright
Nicholas Ferguson
Tim Freshwater
Liz Hewitt
Charles McVeigh
Rupert Robson
Florence Tondu-Mélique
Date appointed to Board
End date of current letter of appointment
1 October 2018
26 January 2016
1 January 2012
25 June 2014
1 August 2000
23 June 2015
1 October 2018
30 September 2021
26 January 2022
31 December 2020
30 June 2020
AGM May 2019
22 June 2021
30 September 2021
The Directors’ service contracts and letters of appointment are available for inspection at our City office, 15 Finsbury Circus, London EC2M 7EB.
Shareholder votes on remuneration matters
The table below shows the voting outcomes for the 2017 Annual Remuneration Report at the AGM held on 8 May 2018 and the
Directors’ Remuneration Policy at the AGM held on 9 May 2017.
2017 Annual Directors’
Remuneration Report
Directors’ Remuneration Policy
* A vote withheld is not a vote in law.
Number of
votes ‘For’ and
Number of
discretionary % of votes cast
votes ‘Against’ % of votes cast
Total number
of votes cast
Number
of votes
‘Withheld’*
106,844,393
104,842,007
99.13%
98.35%
935,315
1,753,512
0.87%
107,779,708
1.65% 106,595,519
1,484,651
2,665,000
80
Policy table extract from the Directors’ Remuneration Policy approved by shareholders at the 2017 AGM
The following sets out the table of remuneration elements from the Remuneration Policy, which was approved by shareholders at the
2017 AGM. To provide consistency with the remainder of the Report, salaries shown are 2019 salaries and annual performance-related
profit share levels have been updated for the operation of the Policy in 2019.
Purpose and
link to strategy
Operation
Potential
Performance measures
The Committee considers base salary
levels annually taking into consideration:
• The Group’s philosophy to place greater
emphasis on variable performance-
related remuneration
Set significantly below market median levels with
greater emphasis on the performance-related
elements of reward. For 2019, The Committee
determined that no increase will be applied. Base
salaries therefore remain unchanged as follows:
n/a
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 individual’s experience
• The size and scope of the role
• The general level of salary reviews
across the Group
• Appropriate external market
competitive data.
Pension
• Provides
appropriate
retirement
benefits
• Rewards sustained
contribution.
Defined contribution pension
arrangements are provided.
HMRC approved salary and profit share
sacrifice arrangements are in place.
Pension benefits are provided either
through a Group personal pension plan,
as a non-pensionable salary supplement,
contribution to a personal pension
arrangement, or equivalent arrangement
for overseas jurisdictions.
• Group Chief Executive Officer: £289,000
• Group Chief Financial Officer: £221,000.
The Committee retains the flexibility to award
base salary increases taking into consideration the
factors considered as part of the annual review.
Although base salaries are reviewed annually, in line
with the Group’s philosophy the Committee may
elect to only notionally rather than actually increase
base salaries for Executive Directors. In such
circumstances this notionally increased Reference
Salary would be used as the base for future base
salary increases.
• The annual base salary for any existing Executive
Director shall not exceed £500,000.
For 2019 the pension contributions/supplements are:
n/a
• 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.
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Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
Purpose and
link to strategy
Operation
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.
Potential
Performance measures
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.
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.
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.
Malus/clawback provisions apply, allowing
for the reduction of awards as explained in
the notes to this table.
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 2019 are:
• £2.192m for the Group Chief
Executive Officer
• £1.643m for the Group Chief
Financial Officer.
For a new Executive Director, the
Committee would determine the
appropriate normal maximum taking
into account the role and responsibility,
subject to a maximum of £2.192m p.a.
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).
For 2019 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.
82
Purpose and
link to strategy
Operation
Performance Share Plan (‘PSP’)
Potential
Performance measures
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.
n/a
n/a
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.).
• 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.
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.
Shareholding Guidelines
500% of base salary for all
Executive Directors.
• 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.
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.
83
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ Remuneration report continued
ANNUAL REPORT ON REMUNERATION CONTINUED
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.
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 fees for membership of a Committee
or chairmanship or membership of subsidiary
boards or other fixed fees may be introduced,
if considered appropriate.
Additional benefits may
be provided in the future if
the Board considered this
appropriate.
84
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 97 which shows a reported profit for the financial
year attributable to the shareholders of the Company of £76.7m (2017: £80.1m).
Dividend
An interim dividend of 4.8p per ordinary share amounting to £6.6m (2017: £6.3m) was paid on 3 October 2018. It is recommended that
a final dividend of 10.8p per ordinary share (amounting to £14.8m) is paid, together with a supplemental interim dividend of 15.6p per
ordinary share (amounting to £21.4m) and to be declared by the Board on 14 March 2019 and paid on 13 May 2019 to shareholders on
the register at 12 April 2019. More details of the proposed dividend and the Company’s performance can be found in the Chairman’s
statement on pages 4 and 5.
Principal developments
The principal developments of the business are detailed in the Strategic Report on pages 4 to 39 and incorporated into this Report
by reference.
The principal risks and uncertainties are detailed on pages 24 to 29 and incorporated into this Report by reference.
Directors
Biographical details of the current Directors are shown on pages 42 to 45. All the Board members served throughout the year save
for Mark Ridley who was appointed as Deputy Group Chief Executive with effect from 1 May 2018 and Stacey Cartwright and Florence
Tondu-Mélique who were appointed as Independent Non-Executive Directors with effect from 1 October 2018. Jeremy Helsby retired
as Group Chief Executive at the year-end. As at 31 December 2018 the Board comprised the Non-Executive Chairman, two Executive
Directors and six Non-Executive Directors. Charles McVeigh, who has served on the Board since 2000, will retire at the conclusion of
the Company’s AGM in May 2019. Liz Hewitt, who served on the Board since 2014, will also retire at the conclusion of the AGM.
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 77 and 78 of the Remuneration Report. Details of share options held by the Directors
pursuant to the Company’s share option schemes are provided in the Remuneration Report on pages 78 and 79. It is the Board’s policy
that the GEB Members should retain at least 105,000 shares (value at 31 December 2018: £742,350) in the Company and that the Group
Chief Executive Officer and Group Chief Financial Officer hold shares to the value of five times their respective base salaries
(£1,445,000 and £1,105,000 respectively).
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 88 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 85 to 86, together with the Strategic Report on pages 4 to 39, form the Management Report for
the purposes of DTR 4.1.5R.
85
Financial statementsGovernance Strategic reportOverview Savills plc
Report and Accounts 2018
Directors’ report continued
Additional Information Disclosure
Pursuant to regulations made under the CA 2006 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 2018 comprised 142,923,604 2.5p ordinary shares, details of which may be
found on pages 156 and 157.
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 for general meetings of the Company, by members 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 general meeting or the adjourned meeting (as the case may be).
There are no unusual restrictions on the transfer of ordinary shares. The Directors may refuse to register a transfer of a certificated share
unless the instrument of transfer is: (i) lodged at the registered office of the Company or any other place as the Board may decide
accompanied by the certificate for the shares to be transferred and such other evidence as the Directors may reasonably require to
show the right of the transferor to make the transfer; or (ii) in respect of only one class of shares.
The Directors may also refuse to register a transfer of a share (whether certificated or uncertificated), whether fully paid or not, in favour
of more than four persons jointly.
As at 31 December 2018 the Company had been notified of the following interests in the Company’s ordinary share capital in
accordance with DTR 5:
Shareholders
Heronbridge Investment Management LLP
Aberdeen Asset Managers Limited (and/or acting for its affiliates) as discretionary investment
manager on behalf of multiple managed portfolios
Merian Global Investors (UK) Limited
Standard Life Investments (Holdings) Limited
Aggregate of Standard Life Aberdeen plc affiliated investment management entities with delegated
voting rights on behalf of multiple managed portfolios
Old Mutual Plc
Number of
shares
7,249,840
7,189,327
7,184,549
6,723,563
7,068,920
6,685,646
%
5.07
5.07
5.02
<5.00
4.98
4.71
Note: On 22 February 2019, BlackRock, Inc. disclosed a shareholding of 5.04% and then on 6 March 2019 disclosed a shareholding of less than 5%. No other
changes to the above have been disclosed to the Company in accordance with DTR 5, between 31 December 2018 and 14 March 2019.
As at 31 December 2018, the Savills plc 1992 Employee Benefit Trust (the ‘EBT’) held 5,502,275 ordinary shares and the Savills Rabbi
Trust held 1,386,356 ordinary shares. Any voting or other similar decisions relating to these shares held in trust are taken by the trustees,
who may take account of any recommendation of the Company. In December 2017 the EBT Trust Deed was amended so that future
Savills plc dividends will be waived in full. The Savills Rabbi Trust does not currently waive Savills plc dividends. For further details of the
trusts please refer to note 2.21 to the Financial Statements.
Purchase of own shares
In accordance with the Listing Rules, at the AGM on 8 May 2018 shareholders gave authority for a limited purchase of Savills shares of
up to 10% of the issued share capital of the Company. During the year, no shares were purchased under the authority.
The Board proposes to seek shareholder approval at the AGM on 8 May 2019 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 and Accounts (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 its Directors are contained in the Articles. The powers of the Directors
are determined by UK legislation and the Articles in force from time to time.
Unless determined by ordinary resolution of the Company, the number of Directors shall be not less than three and not more than 18.
A Director is not required to hold any shares in the Company by way of qualification. However, as more fully described on page 83, in
accordance with Board policy, the members of the GEB (which includes the Executive Directors) are expected to build-up and maintain
86
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 re-appointment 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 8 May 2019; 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. Instead, Half Year results
statements are published on the Company’s website. This is consistent with our target to reduce printing and distribution costs.
Political contributions
The Company made no political contributions during the year (2017: £nil).
Employees’ policies and involvement
The Directors recognise that the quality, commitment and motivation of Savills staff is a key element to the success of the Group; see
pages 32 to 35 for more information as to employee engagement.
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 82 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 the 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 the current statutory limit of £150
per month) from pre-tax income. Shares under the SIP normally vest after five years and are free from income tax and national
insurance contributions.
Human rights and equal opportunities
We support the principles of the UN Universal Declaration of Human Rights and the Core Principles of the International Labour
Organization.
It is Group policy to provide employment on an equal basis irrespective of gender, sexual orientation, marital or civil partner status,
gender reassignment, race, colour, nationality, ethnic or national origin, religion or belief, disability or age. In particular, the Group gives
full consideration to applications for employment from disabled persons. Where existing employees become disabled, it is the Group’s
policy wherever practicable to provide continuing employment and to provide training and career development and promotion to
disabled employees.
Independent Auditors
In accordance with section 489 of the CA 2006, a resolution for the re-appointment 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 of 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 37 and are
incorporated into this Report by reference.
By order of the Board
Chris Lee
Group Legal Director & Company Secretary
13 March 2019
Savills plc
Registered in England No. 2122174
87
Financial statementsGovernance Strategic reportOverview 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.
13 March 2019
Savills plc
Report and Accounts 2018
Directors’
responsibilities
Statement of Directors’
responsibilities in respect of the
financial statements The Directors
are responsible for preparing the
Annual Report and the Financial
Statements in accordance with
applicable law and regulation.
Company law requires the Directors to
prepare financial statements for each
financial year. Under that law the Directors
have prepared the Group and parent
Company 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 Group and
parent Company and of the profit or loss
of the Group and parent Company for
that period. In preparing the financial
statements, the Directors are required to:
select suitable accounting policies
and then apply them consistently;
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;
make judgements and accounting
estimates that are reasonable and
prudent; and
prepare the financial statements on
the going concern basis unless it is
inappropriate to presume that the
Group and parent Company will
continue in business.
The Directors are responsible for keeping
adequate accounting records that are
sufficient to show and explain the group
and parent company’s transactions and
disclose with reasonable accuracy at any
time the financial position of the Group
and parent company 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.
The Directors are also responsible for
safeguarding the assets of the Group and
parent Company 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 Group
and parent 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 Group and
parent company’s performance, business
model and strategy.
Each of the Directors, whose names and
functions are listed on pages 42–45 confirm
that, to the best of their knowledge:
the Group and parent Company
financial statements, which have been
prepared in accordance with IFRSs as
adopted by the European Union, give a
true and fair view of the assets, liabilities,
financial position and profit of the Group
and profit of the parent company; and
the Directors’ Report includes a fair review
of the development and performance of
the business and the position of the Group
and parent company, together with a
description of the principal risks and
uncertainties that it faces.
In the case of each Director in office at the
date the Directors’ Report is approved:
so far as the Director is aware, there is
no relevant audit information of which
the Group and parent company’s
auditors are unaware; and
they have taken all the steps that they
ought to have taken as a Director in
order to make themselves aware of any
relevant audit information and to
establish that the Group and parent
Company’s auditors are aware of that
information.
On behalf of the Board
Mark Ridley
Group Chief Executive
Chris Lee
Group Legal Director &
Company Secretary
88
Overview
Strategic report
Governance
Financial statements
Financial
statements
90 Independent auditor’s report
97 Consolidated income statement
98
99
Consolidated statement of comprehensive
income
Consolidated and Company statements
of financial position
100 Consolidated statement of changes in equity
101 Company statement of changes in equity
102 Consolidated and Company statements of
cash flows
103 Notes to the financial statements
172 Shareholder information
Savills plc
Report and Accounts 2018
89
Independent auditors’ report
to the members of Savills plc
Report on the audit of the financial statements
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 2018 and of the
Group’s profit and the Group’s and the Company’s cash flows for the year then ended;
have been properly prepared in accordance with International Financial Reporting Standards (IFRSs) as adopted by the
European Union and, as regards the Company’s financial statements, as applied in accordance with the provisions of the
Companies Act 2006; and
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.
We have audited the financial statements, included within the Report and Accounts (the ‘Annual Report’), which comprise:
the Consolidated and Company statements of financial position as at 31 December 2018; the Consolidated income statement;
the Consolidated statement of comprehensive income, the Consolidated statement of changes in equity and the Company
statement of changes in equity for the year then ended; the Consolidated and Company statements of cash flows; and the
notes to the financial statements, which include a description of the significant accounting policies.
Our opinion is consistent with our reporting to the Audit Committee.
Basis for opinion
We conducted our audit in accordance with International Standards on Auditing (UK) (“ISAs (UK)”) and applicable law. Our
responsibilities under ISAs (UK) are further described in the Auditors’ responsibilities for the audit of the financial statements
section of our report. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for
our opinion.
Independence
We remained independent of the Group in accordance with the ethical requirements that are relevant to our audit of the
financial statements in the UK, which includes the FRC’s Ethical Standard, as applicable to listed public interest entities, and
we have fulfilled our other ethical responsibilities in accordance with these requirements.
To the best of our knowledge and belief, we declare that non-audit services prohibited by the FRC’s Ethical Standard were
not provided to the Group or the Company.
Other than those disclosed in the Directors’ Report, we have provided no non-audit services to the Group or the Company
in the period from 1 January 2018 to 31 December 2018.
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, Europe & the Middle East, North America and Asia Pacific.
Overview
Overall Group materiality: £7.2m (2017: £7.0m), based on 5% of Group underlying profit
before tax as defined in note 2.2 to the financial statements.
Overall Company materiality: £2.4m (2017: £2.3m), based on 1% of total assets.
We conducted audit work in the UK, Germany, Spain, North America, Hong Kong, China, South
Korea, Singapore, Japan, UAE and Australia, 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), Australia, South Korea, Spain as well as the German
Investment Management business.
We carried out specified procedures over the financial information of the entities in Beijing,
Dubai, Sharjah, Japan and Singapore.
We carried out procedures on components of the business which accounted for 82% (2017:
86%) of Group revenues and 91% (2017: 91%) of Group underlying profit before tax.
Risk of fraud in revenue recognition in relation to cut-off for transaction income in the
investment management and transactional advisory businesses (Group).
Goodwill impairment assessment – particularly for European businesses and the US (Group).
90
Savills plc
Report and Accounts 2018
Provisions for litigation (Group).
Recoverability of trade receivables (Group).
The scope of our audit
As part of designing our audit, we determined materiality and assessed 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.
We gained an understanding of the legal and regulatory framework applicable to the Group and the industry in which it
operates, and considered the risk of acts by the Group which were contrary to applicable laws and regulations, including
fraud. We designed audit procedures at Group and significant component level to respond to the risk, recognising that the
risk of not detecting a material misstatement due to fraud is higher than the risk of not detecting one resulting from error,
as fraud may involve deliberate concealment by, for example, forgery or intentional misrepresentations, or through collusion.
We focused on laws and regulations that could give rise to a material misstatement in the Group and Company financial
statements, including those relating to financial services, company law and real estate services across the Group. Our tests
included discussing compliance with internal legal counsel, Group’s primary external legal counsel and examining litigation
costs incurred by the Group over the financial year.
We did not identify any key audit matters relating to irregularities, including fraud. As in all of our audits we also addressed
the risk of management override of internal controls, including testing journals and evaluating whether there was evidence
of bias by the Directors that represented a risk of material misstatement due to fraud.
Key audit matters
Key audit matters are those matters that, in the auditors’ professional judgement, were of most significance in the audit of
the financial statements of the current period and include the most significant assessed risks of material misstatement
(whether or not due to fraud) identified by the auditors, including those which had the greatest effect on: the overall audit
strategy; the allocation of resources in the audit; and directing the efforts of the engagement team. These matters, and any
comments we make on the results of our procedures thereon, were addressed in the context of our audit of the financial
statements as a whole, and in forming our opinion thereon, and we do not provide a separate opinion on these matters. This
is not a complete list of all risks identified by our audit.
Key audit matter
How our audit addressed the key audit matter
Risk of fraud in revenue recognition in relation to
cut-off for transaction income in the investment
management and transactional advisory businesses
(Group)
For a sample of material transactions, we evaluated the commercial
rationale and the revenue recognition policy adopted and determined
that the related revenue had been recorded on a consistent basis
across the Group in accordance with Group policies and IFRS 15.
Refer to page 103 (note 2 to the financial statements)
for the Directors’ disclosures of the related
accounting policies, judgments 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.
The recognition of revenue is largely dependent on
the date the underlying transaction is deemed to
be completed.
There was a significant risk identified around cut off of transactions
which was tested through agreeing a sample of revenue transactions
to underlying contracts and third party completion documentation,
for example, property sales completion statements, determining that
these sales had taken place and were recorded in the correct period.
There were no material issues identified by our testing of revenue
recognition in the year.
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Financial statementsGovernance Strategic reportOverview Independent auditors’ report continued
Our audit approach continued
Key audit matters continued
Key audit matter
How our audit addressed the key audit matter
Goodwill impairment assessment (Group)
Refer to page 57 (Audit Committee Report), page 103
and (Significant Accounting Policies) and pages 136
to 139 (notes).
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.
The Group carried £383.8m of goodwill at 31
December 2018 (2017: £353.3m) of which £156m
related to the US.
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. A particular focus during our testing was
the goodwill balance in relation to US which makes up
40.7% of the total goodwill.
Provisions for litigation (Group)
Refer to page 57 (Audit Committee Report), page 103
(Significant Accounting Policies) and pages 155 to 156
(notes).
The Group is subject to a number of legal claims in
the normal course of business. The calculation of
provisions against these claims is judgmental, given
the range of possible outcomes on each claim.
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. The Group
provision for litigation as at 31 December 2018 is
£11.0m (2017: £11.3m).
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.
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 as there is sufficient headroom
across all the cash generating units.
In order to assess the accuracy and completeness of the provisions
held at the balance sheet date, we performed the following
procedures:
Obtained and read the legal claim letters and accompanying third
party documentation received by the Group;
Obtained and read the legal insurance contract, and verified that
the terms were appropriately accounted for;
Met with the Group’s internal and external legal counsels to
consider in detail a number of cases, including the potential
exposure after taking into account the Group’s insurance cover;
Verified the amounts and other details in respect of each new
claim to the relevant supporting documentation;
Reviewed the outcome of prior year estimates of litigation
provisions to help assess the reliability of the estimates this year;
Reviewed the legal cases settled during the year and, where
relevant, traced the related cash payments to bank statements; and
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 the Directors
had made reasonable judgments 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.
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Key audit matter
How our audit addressed the key audit matter
Recoverability of trade receivables (Group)
Refer to page 57 (Audit Committee Report), page 103
(Significant Accounting Policies) and pages 149 to 151
(notes).
The Group is exposed to a risk of default in respect
of trade receivables given the current global
environment, and there is therefore a risk that the net
valuation of receivables could be overstated. This risk
is factored into our audit approach with respect to
the provision against trade receivables.
In order to test the recoverability of trade receivables, we performed
the following procedures:
A sample of trade receivables invoices were agreed to the post
year end cash receipts by vouching to bank statements.
Where 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 local management teams. We also evaluated the
Group’s credit control procedures, and assessed the ageing profile
of 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; and
We reviewed management’s bad debt provision calculations and
ensured that these were consistent with Group policy, now being
the expected credit loss model as stipulated by IFRS 9, and that
they provided appropriate cover over older uncollected debts.
Based upon the above, we are satisfied that management had taken
reasonable judgments that were supported by the available evidence
in respect of the relevant receivables.
We determined that there were no key audit matters applicable to the Company to communicate in our report.
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 structure of the Group and the Company, the accounting processes and
controls, and the industry in which they operate.
Taken together, our full scope audit procedures accounted for 82% (2017: 86%) of Group revenues and 91% (2017: 91%) 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 North America the local functions report to the North America finance team
in New York. At a Group level, a separate finance team consolidates the reporting packs of Europe & the Middle East, Asia
Pacific, UK, North America and the central functions.
In our view, due to their significance and/or risk characteristics, businesses in the UK and North America, Spain, Hong Kong,
Shanghai (China Central), South Korea and Australia within the Asia Pacific region, and the German Investment Management
business, 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, Dubai, Sharjah, Japan and Singapore.
Based upon Group materiality, we did not carry out detailed audit procedures on Savills Europe other than Spain. Local
audit teams perform statutory audits of subsidiary companies in Europe where required by local legislation. These audits
were carried out to the same timetable as the Group audit and, accordingly, we were able to incorporate the results of their
work into our overall risk assessment.
In order to direct and supervise the Group audit, the Group engagement team sent detailed instructions to significant
component audit teams. This included communication of the areas of focus above and other required communications.
The Group engagement team held regular meetings throughout the year with all significant component audit teams.
The Group team visited the audit teams located at the Savills Asia Pacific head office in Hong Kong, given the significance
of this region to the Group and the North America head office in New York. This ensured that we had a comprehensive
understanding of the results of their work – particularly insofar as it related to the identified areas of focus.
The Group consolidation, financial statement disclosures and a number of complex items were audited by the Group
engagement team at the head office. These included pensions, share-based payments, tax and goodwill impairment.
Taken together, these procedures gave us the evidence we needed for our opinion on the financial statements as a whole.
Savills plc
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Financial statementsGovernance Strategic reportOverview Independent auditors’ report continued
Our audit approach 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 in aggregate on the financial statements as a whole.
Based on our professional judgement, we determined materiality for the financial statements as a whole as follows:
Group financial statements
Company financial statements
Overall materiality
£7.2m (2017: £7.0m).
How we
determined it
5% of Group underlying profit before tax as defined in
note 2.2 to the financial statements.
£2.4m (2017: £2.3m).
1% of total assets.
Rationale for
benchmark applied
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.
The parent Company is a non-trading holding
Company and accordingly we conclude that
the total assets is an appropriate benchmark.
For each component in the scope of our Group audit, we allocated a materiality that is less than our overall Group
materiality. The range of materiality allocated across components was £1.1m and £6.2m. Certain components were
audited to a local statutory audit materiality that was also less than our overall Group materiality.
We agreed with the Audit Committee that we would report to them misstatements identified during our audit above £0.3m
(Group audit) (2017: £0.3m) and £0.3m (Company audit) (2017: £0.3m) as well as misstatements below those amounts that,
in our view, warranted reporting for qualitative reasons.
Going concern
In accordance with ISAs (UK) we report as follows:
Reporting obligation
Outcome
We are required to report if we have anything material to add
or draw attention to in respect of the Directors’ statement
in the financial statements about whether the Directors
considered it appropriate to adopt the going concern basis
of accounting in preparing the financial statements and the
Directors’ identification of any material uncertainties to the
Group’s and the Company’s ability to continue as a going
concern over a period of at least twelve months from the
date of approval of the financial statements.
We have nothing material to add or to draw attention to.
As not all future events or conditions can be predicted, this
statement is not a guarantee as to the Group’s and Company’s
ability to continue as a going concern. For example, the
terms on which the United Kingdom may withdraw from the
European Union, which is currently due to occur on 29 March
2019, are not clear, and it is difficult to evaluate all of the
potential implications on the Group’s and Company’s trade,
customers, suppliers and the wider economy.
We are required to report if the Directors’ statement relating
to Going Concern in accordance with Listing Rule 9.8.6R(3)
is materially inconsistent with our knowledge obtained in
the audit.
We have nothing to report.
Reporting on other information
The other information comprises all of the information in the Annual Report other than the financial statements and our
auditors’ report thereon. The Directors are responsible for the other information. Our opinion on the financial statements
does not cover the other information and, accordingly, we do not express an audit opinion or, except to the extent otherwise
explicitly stated in this report, any form of assurance thereon.
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Savills plc
Report and Accounts 2018
In connection with our audit of the financial statements, our responsibility is to read the other information and, in doing so,
consider whether the other information is materially inconsistent with the financial statements or our knowledge obtained in
the audit, or otherwise appears to be materially misstated. If we identify an apparent material inconsistency or material
misstatement, we are required to perform procedures to conclude whether there is a material misstatement of the financial
statements or a material misstatement of the other information. If, based on the work we have performed, we conclude that
there is a material misstatement of this other information, we are required to report that fact. We have nothing to report
based on these responsibilities.
With respect to the Strategic Report and Directors’ Report, we also considered whether the disclosures required by the UK
Companies Act 2006 have been included.
Based on the responsibilities described above and our work undertaken in the course of the audit, the Companies Act 2006
(CA06), ISAs (UK) and the Listing Rules of the Financial Conduct Authority (FCA) require us also to report certain opinions
and matters as described below (required by ISAs (UK) unless otherwise stated).
Strategic Report and Directors’ Report
In our opinion, based on the work undertaken in the course of the audit, the information given in the Strategic Report and
Directors’ Report for the year ended 31 December 2018 is consistent with the financial statements and has been prepared in
accordance with applicable legal requirements. (CA06)
In light of the knowledge and understanding of the Group and Company and their environment obtained in the course of the
audit, we did not identify any material misstatements in the Strategic Report and Directors’ Report. (CA06)
The Directors’ assessment of the prospects of the Group and of the principal risks that would threaten the solvency or
liquidity of the Group
We have nothing material to add or draw attention to regarding:
The Directors’ confirmation on page 24 of the Annual Report 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.
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 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 to report having performed a review of the Directors’ statement that they have carried out a robust
assessment of the principal risks facing the Group and 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 UK
Corporate Governance Code (the ‘Code’); and considering whether the statements are consistent with the knowledge and
understanding of the Group and Company and their environment obtained in the course of the audit. (Listing Rules)
Other Code Provisions
We have nothing to report in respect of our responsibility to report when:
The statement given by the Directors, on page 88, that they consider the Annual Report taken as a whole to be fair,
balanced and understandable, and provides the information necessary for the 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 obtained in the course of performing our audit.
The section of the Annual Report on page 56 describing the work of the Audit Committee does not appropriately address
matters communicated by us to the Audit Committee.
The Directors’ statement relating to the Company’s compliance with the Code does not properly disclose a departure
from a relevant provision of the Code specified, under the Listing Rules, for review by the auditors.
Directors’ Remuneration
In our opinion, the part of the Directors’ Remuneration Report to be audited has been properly prepared in accordance with
the Companies Act 2006. (CA06)
Savills plc
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Financial statementsGovernance Strategic reportOverview Independent auditors’ report continued
Responsibilities for the financial statements and the audit
Responsibilities of the Directors for the financial statements
As explained more fully in the Directors’ Responsibility Statement set out on page 88, the Directors are responsible for the
preparation of the financial statements in accordance with the applicable framework and for being satisfied that they give a
true and fair view. The Directors are also responsible for such internal control as they determine is necessary to enable the
preparation of financial statements that are free from material misstatement, whether due to fraud or error.
In preparing the financial statements, the Directors are responsible for assessing the Group’s and the Company’s ability to
continue as a going concern, disclosing as applicable, matters related to going concern and using the going concern basis of
accounting unless the Directors either intend to liquidate the Group or the Company or to cease operations, or have no
realistic alternative but to do so.
Auditors’ responsibilities for the audit of the financial statements
Our objectives are to obtain reasonable assurance about whether the financial statements as a whole are free from material
misstatement, whether due to fraud or error, and to issue an auditors’ report that includes our opinion. Reasonable assurance
is a high level of assurance, but is not a guarantee that an audit conducted in accordance with ISAs (UK) will always detect a
material misstatement when it exists. Misstatements can arise from fraud or error and are considered material if, individually
or in the aggregate, they could reasonably be expected to influence the economic decisions of users taken on the basis of
these financial statements.
A further description of our responsibilities for the audit of the financial statements is located on the FRC’s website at:
www.frc.org.uk/auditorsresponsibilities. This description forms part of our auditors’ report.
Use of this report
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.
Other required reporting
Companies Act 2006 exception reporting
Under the Companies Act 2006 we are required to report to you if, in our opinion:
we have not received all the information and explanations we require for our audit; or
adequate accounting records have not been kept by the Company, or returns adequate for our audit have not
been received from branches not visited by us; or
certain disclosures of Directors’ remuneration specified by law are not made; or
the Company financial statements and the part of the Directors’ Remuneration Report to be audited are not in
agreement with the accounting records and returns.
We have no exceptions to report arising from this responsibility.
Appointment
Following the recommendation of the audit committee, we were appointed by the members on 30 April 2001 to audit
the financial statements for the year ended 31 December 2001 and subsequent financial periods. The period of total
uninterrupted engagement is 17 years, covering the years ended 31 December 2001 to 31 December 2018.
John Waters (Senior Statutory Auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory Auditors
London
13 March 2019
96
Savills plc
Report and Accounts 2018
Consolidated income statement
for the year ended 31 December 2018
Revenue
Less:
Employee benefits expense
Depreciation
Amortisation of intangible assets and impairment of goodwill and intangible assets
Other operating expenses
Other operating income
Other gains
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
6 and 7
2018
£m
2017
£m
1,761.4
1,600.0
10.1
(1,165.0)
(1,061.7)
17
16
8.1
8.1
8.1
12
12
18.1
9
9
9
13
15.1
15.1
15.2
15.2
(14.9)
(10.6)
(473.3)
0.1
2.9
(13.5)
(9.3)
(418.5)
0.9
5.9
100.6
103.8
4.4
(6.7)
(2.3)
11.1
109.4
143.7
(29.1)
(5.2)
109.4
(32.2)
77.2
76.7
0.5
77.2
56.2p
54.6p
77.8p
75.6p
2.8
(4.1)
(1.3)
9.9
112.4
140.5
(29.0)
0.9
112.4
(31.3)
81.1
80.1
1.0
81.1
58.8p
57.5p
75.8p
74.1p
Savills plc
Report and Accounts 2018
97
Financial statementsGovernance Strategic reportOverview
Consolidated statement of comprehensive income
for the year ended 31 December 2018
Profit for the year
Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension scheme obligation
Changes in fair value of equity investments at FVOCI
Tax on items that will not be reclassified
Total items that will not be reclassified to profit or loss
Items that may be reclassified subsequently to profit or loss:
Fair value gain on available-for-sale investments
Currency translation differences
Tax on items that may be reclassified
Total items that may be reclassified subsequently to profit or loss
Other comprehensive income/(loss) for the year, net of tax
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
Notes
11.2
13
18.2
13
2018
£m
77.2
2017
£m
81.1
15.7
(0.1)
(2.8)
(12.8)
–
19.3
(0.3)
19.0
31.8
109.0
108.5
0.5
109.0
14.1
–
(2.8)
11.3
0.3
(16.2)
2.3
(13.6)
(2.3)
78.8
77.8
1.0
78.8
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 £55.5m (2017: £64.0m).
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Savills plc
Report and Accounts 2018
Consolidated and Company statements of financial position
as at 31 December 2018
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
Financial assets at fair value through other comprehensive
income (‘FVOCI’)
Retirement benefit surplus
Contract assets
Other receivables
Assets: Current assets
Contract assets
Trade and other receivables
Income tax receivable
Derivative financial instruments
Cash and cash equivalents
Liabilities: Current liabilities
Borrowings
Derivative financial instruments
Contract liabilities
Trade and other payables
Income tax liabilities
Employee benefit obligations
Provisions
Net current assets/(liabilities)
Total assets less current liabilities
Liabilities: Non-current liabilities
Borrowings
Other payables
Retirement and employee benefit obligations
Provisions
Deferred income tax liabilities
Net assets
Equity:
Share capital
Share premium
Other reserves
Retained earnings
Equity attributable to owners of the parent
Non-controlling interests
Total equity
Notes
17
16
16
18.4
18.1
19
18.2
18.3
11.2
6.1
6.1
20.1
24
21
23
24
6.1
22.1
25.2
25.1
23
22.2
11.2 and 25.2
25.1
19
26
28
28
Group
Company
2018
£m
2017
Restated*
£m
2018
£m
2017
£m
71.5
383.8
48.7
–
48.3
29.7
–
31.2
2.8
1.3
19.1
636.4
7.8
528.3
2.7
0.1
223.9
762.8
0.4
0.1
11.1
629.1
11.0
15.8
8.4
675.9
86.9
723.3
149.6
38.2
11.7
12.8
6.0
218.3
505.0
3.6
96.6
117.6
286.5
504.3
0.7
505.0
68.2
353.3
34.4
–
30.0
36.9
24.6
–
1.3
–
15.7
564.4
6.0
490.6
2.3
0.5
208.8
708.2
110.1
0.1
7.1
587.6
16.4
11.2
11.4
743.9
(35.7)
528.7
0.1
35.6
35.5
12.9
2.9
87.0
441.7
3.5
91.1
98.4
247.2
440.2
1.5
441.7
1.6
–
4.8
128.8
–
1.4
–
–
0.1
–
–
136.7
–
10.3
2.2
–
90.2
102.7
–
–
–
14.6
–
0.1
–
14.7
88.0
224.7
–
–
–
–
–
–
224.7
3.6
96.6
38.2
86.3
224.7
–
224.7
1.7
–
2.7
123.7
–
2.2
–
–
–
–
–
130.3
–
7.9
2.6
–
90.8
101.3
–
–
–
13.1
–
0.1
–
13.2
88.1
218.4
–
–
1.1
0.6
–
1.7
216.7
3.5
91.1
38.2
83.9
216.7
–
216.7
*
See Note 2.26 for details about changes in accounting policies and resulting prior year restatement and Note 18.2 for prior period restatement of goodwill
and trade and other payables in relation to a measurement period adjustment in accordance with IFRS 3.
The consolidated and Company financial statements on pages 97 to 171 were authorised for issue by the Board of Directors
on 13 March 2019 and were signed on its behalf by:
J J M Ridley
S J B Shaw
Savills plc
Registered in England No. 2122174
Savills plc
Report and Accounts 2018
99
Financial statementsGovernance Strategic reportOverview
Consolidated statement of changes in equity
for the year ended 31 December 2018
Attributable to owners of the parent
Share
capital
£m
Share
premium
£m
Other
reserves*
£m
Retained
earnings**
£m
Notes
Non-
controlling
interests
£m
Total
£m
91.1
98.4
247.2
440.2
Balance at 1 January 2018
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension
scheme obligation/retirement benefit
surplus
11.2
Changes in fair value of financial assets at
FVOCI
Tax on items directly taken to reserves
13
Currency translation differences
Total comprehensive income for the year
Employee share option scheme:
– Value of services provided
Purchase of treasury shares
Shares issued
Dividends
14
Disposal of financial assets at FVOCI
Transfer between reserves
Transactions with non-controlling interests
Movement related to business combinations 18.5
3.5
–
–
–
–
–
–
–
–
0.1
5.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.1)
0.1
19.3
19.3
–
–
–
–
(0.5)
0.4
–
–
76.7
76.7
15.7
15.7
–
(3.2)
–
(0.1)
(3.1)
19.3
1.5
0.5
–
–
–
–
89.2
108.5
0.5
109.0
18.2
18.2
(25.1)
(25.1)
–
5.6
–
–
–
18.2
(25.1)
5.6
(41.4)
(41.4)
(0.2)
(41.6)
0.6
(0.4)
(1.8)
–
0.1
–
–
–
(1.8)
(1.2)
–
0.1
0.7
Balance at 31 December 2018
3.6
96.6
117.6
286.5
504.3
Attributable to owners of the parent
Share
capital
£m
Share
premium
£m
Notes
Shares
to be
issued
£m
Other
reserves*
£m
Retained
earnings**
£m
Non-
controlling
interests
£m
Total
£m
3.5
91.1
11.3
103.9
195.8
405.6
Balance at 1 January 2017
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension
scheme obligation
11.2
Fair value gain on available-for-sale
investments
Tax on items directly taken to reserves
18.2
13
Currency translation differences
Total comprehensive income for the year
Employee share option scheme:
– Value of services provided
Purchase of treasury shares
Shares issued
Disposal of available-for-sale investments
Dividends
14
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Balance at 31 December 2017
3.5
91.1
–
–
–
–
–
–
–
–
–
–
–
–
–
0.3
0.3
(16.2)
(15.6)
80.1
80.1
14.1
14.1
–
0.3
(0.8)
(0.5)
–
(16.2)
1.4
1.0
–
–
–
–
93.4
77.8
1.0
78.8
–
–
14.5
14.5
(17.2)
(17.2)
(11.3)
11.3
(1.2)
–
–
–
(1.2)
–
–
–
–
14.5
(17.2)
–
(1.2)
–
(39.3)
(39.3)
(0.9)
(40.2)
98.4
247.2
440.2
1.5
441.7
*
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.
100
Savills plc
Report and Accounts 2018
Total
equity
£m
441.7
77.2
15.7
(0.1)
(3.1)
19.3
0.1
–
(3.0)
0.1
505.0
Total
equity
£m
407.0
81.1
14.1
0.3
(0.5)
(16.2)
Company statement of changes in equity
for the year ended 31 December 2018
Attributable to owners of the Company
Share
capital
£m
Share
premium
£m
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Notes
Share-
based
payments
reserve**
£m
Balance at 1 January 2018
3.5
91.1
0.3
34.9
3.0
5.5
Profit for the year
Other comprehensive income:
Remeasurement of defined benefit
retirement surplus
Tax on items directly taken to reserves
11.2
13
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 2018
14
0.1
–
3.6
5.5
–
96.6
Retained
earnings**
£m
78.4
55.5
Total
equity
£m
216.7
55.5
0.9
0.9
(0.2)
(0.2)
56.2
56.2
–
–
–
–
2.1
(2.6)
–
–
–
–
2.1
(7.5)
(10.1)
(4.1)
(4.1)
–
5.6
(41.7)
(41.7)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.3
34.9
3.0
5.0
81.3
224.7
Attributable to owners of the Company
Share
capital
£m
Share
premium
£m
Notes
Shares
to be
issued
£m
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Share-
based
payments
reserve**
£m
Retained
earnings**
£m
Total
equity
£m
3.5
91.1
11.3
0.3
23.6
3.0
5.0
67.2
205.0
Balance at 1 January 2017
Profit for the year
Other comprehensive income:
Remeasurement of defined benefit
pension scheme obligation
11.2
Tax on items directly taken to reserves
13
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
14
–
–
–
–
–
–
–
–
–
Balance at 31 December 2017
3.5
91.1
–
–
–
–
–
–
–
–
–
–
–
–
–
–
– (11.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.3
–
–
–
–
–
–
–
–
–
–
–
–
–
–
64.0
64.0
0.7
0.3
0.7
0.3
65.0
65.0
2.4
–
2.4
(1.9)
(11.5)
(13.4)
–
–
–
(3.0)
(3.0)
–
–
(39.3)
(39.3)
0.3
34.9
3.0
5.5
78.4
216.7
*
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.
Savills plc
Report and Accounts 2018
101
Financial statementsGovernance Strategic reportOverview
Acquisition of subsidiaries, net of net cash acquired
18.5
(35.5)
(39.8)
Consolidated and Company statements of cash flows
for the year ended 31 December 2018
Group
2018
£m
Company
2017
£m
2018
£m
2017
£m
Notes
31
147.8
145.1
4.0
(5.1)
(34.4)
112.3
0.2
12.3
1.5
11.2
–
(1.1)
0.4
2.7
(2.1)
(34.0)
111.7
0.1
4.6
0.4
8.3
–
(0.6)
–
(24.0)
(16.9)
(5.9)
(25.3)
(83.1)
(67.9)
(23.1)
(8.8)
(9.4)
(136.2)
5.6
305.0
–
181.5
(261.6)
(110.6)
43.9
1.1
–
3.0
48.0
–
–
–
–
49.9
0.9
–
1.5
52.3
–
–
–
–
40.0
(45.1)
3.6
(8.6)
–
–
–
(0.8)
(2.5)
–
(8.4)
5.6
–
–
–
–
–
(0.9)
(1.6)
–
(7.5)
–
–
–
–
(25.1)
(2.6)
(41.6)
(20.3)
8.9
205.2
9.8
223.9
–
(4.1)
(3.0)
(17.2)
–
(40.2)
13.5
(11.0)
223.4
(7.2)
205.2
–
–
(41.7)
(40.2)
(0.6)
90.8
–
90.2
–
–
(39.3)
(42.3)
2.5
88.3
–
90.8
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 equity investments
18.2 – 18.3
Proceeds from sale of interests in joint ventures and
associates
Dividends received from joint ventures and associates
Repayment of loans by joint ventures, associates and
subsidiaries
Loans to joint ventures, associates and subsidiaries
Disposal of subsidiaries, net of cash disposed
Deferred consideration paid in relation to current and
prior year acquisitions
Purchase of property, plant and equipment
Purchase of intangible assets
17
16
Purchase of investment in joint ventures, associates
and equity investments
18.1 – 18.3
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 treasury shares
Purchase of non-controlling interests
Dividends paid
28
18.6
14
Net cash (used) in/received from financing activities
Net increase/(decrease) 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
21 and 23
102
Savills plc
Report and Accounts 2018
Notes to the financial statements
Year ended 31 December 2018
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, Europe, Asia Pacific, North America, Africa and the Middle East. Savills is
listed on the London Stock Exchange and employs 36,981 staff worldwide.
The Company is a public limited company incorporated and domiciled in the United Kingdom. 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 13 March 2019.
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 equity investments held at fair value 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 9 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
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 9 (underlying profit before tax) and Note 15.2
(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.
Savills plc
Report and Accounts 2018
103
Financial statementsGovernance Strategic reportOverview Notes to the financial statements continued
2. Accounting policies continued
2.3 Consolidation
The consolidated financial statements include those of the Company and its subsidiary undertakings, together with the
Group’s share of results of its associates and joint ventures.
(a) Subsidiaries
Subsidiaries are all entities over which the Group has control. The Group controls an entity when the Group is exposed to,
or has rights to, variable returns from its involvement with the entity and has the ability to affect those returns through its
power over the entity. Subsidiaries are fully consolidated from the date on which control is transferred to the Group.
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) Acquisition of subsidiaries
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. 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.
Any contingent consideration to be transferred by the Group is recognised at fair value at the acquisition date. Contingent
consideration only applies to situations where contingent payments are not dependent on future employment of vendors.
Payments dependent on future employment are expensed to the income statement over the relevant period of employment
as required by IFRS 3 (revised). 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.
Acquisition-related costs are expensed as incurred.
(c) 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.
(d) Disposal of subsidiaries
When the Group ceases to control any retained interest in a subsidiary, 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.
(e) 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 18.1).
The Group’s share of its associates’ post-acquisition profits or losses is recognised in the income statement 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.
The carrying amount of associates is tested for impairment in accordance with the policy described in Note 2.9.
104
Savills plc
Report and Accounts 2018
Year ended 31 December 2018 (f) 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 of accounting, 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 share of its joint venture’s post-acquisition profits or losses is recognised in the income statement with a
corresponding adjustment to the carrying amount of the investment. 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 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. 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.
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.
Savills plc
Report and Accounts 2018
105
Financial statementsGovernance Strategic reportOverview 2. Accounting policies continued
2.6 Property, plant and equipment
Property, plant and equipment is stated at historical cost less accumulated depreciation and impairment. Historical cost
includes expenditure directly attributable to acquisition.
Subsequent costs are included in the asset’s carrying amount or recognised as a separate asset, as appropriate, only when it
is probable that the future economic benefits associated with the item will flow to the Group and the cost of the item can be
measured reliably.
Provision for depreciation is made at rates calculated on a straight-line basis to write-off the assets over their estimated
useful lives as follows:
Freehold property
Short leasehold property (less than 50 years)
Equipment and motor vehicles
50 years
Over unexpired term of lease
3–10 years
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 16).
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
It can be demonstrated how the software product will generate probable future economic benefits
Adequate technical, financial and other resources to complete the development and to use or sell the software product
are available
The expenditure attributable to the software product during its development can be reliably measured.
Measurement subsequent to initial recognition is at cost less accumulated amortisation and impairment.
106
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 Amortisation charges are spread on a straight-line basis over the period of the assets’ estimated useful lives as follows:
Customer relationships
Order backlogs
Contracts – investment, property management and other existing business contracts
Brands
Computer software
3–15 years
2 years
2–20 years
2 years
3–7 years
Acquired investment management contracts relating to open-ended funds have been attributed indefinite useful lives,
reflecting the open-ended nature of the funds, the Group’s intention to continue with the management of the funds for the
foreseeable future and the expectation that these contracts are expected to generate net cash inflows for the Group for this
foreseeable period.
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 or amortised cost
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 Equity investments
Classification of equity investments at fair value through other comprehensive income (FVOCI)
The Group has made an irrevocable election at initial recognition for certain equity investments to be classified as FVOCI.
Changes in fair value are recognised through other comprehensive income rather than profit or loss. Dividends from these
investments are recognised in profit or loss. When such investments are disposed of or become impaired, the accumulated
gains and losses, recognised in other comprehensive income, are reclassified to retained earnings and will not be recycled to
the income statement.
Accounting policy applied prior to 1 January 2018
Under IAS 39 (prior to transition to IFRS 9), these investments were categorised as available-for-sale investments and were
stated at fair value, with changes in fair value being recognised in other comprehensive income. When such investments
were disposed of or became impaired, the accumulated gains and losses, previously recognised in other comprehensive
income, were recognised in the income statement.
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2.12 Trade receivables
Trade receivables are recognised initially at their transaction price and subsequently measured at amortised cost less
provision for impairment. Receivables are discounted where the time value of money is material.
The Group applies the simplified approach to providing for expected credit losses prescribed by IFRS 9, which permits the
use of the lifetime expected loss provision for all trade receivables.
Accounting policy applied prior to 1 January 2018
Under IAS 39 (prior to transition to IFRS 9), a provision for impairment of trade receivables was established when there
was objective evidence that the Group would not be able to collect all amounts due according to the original terms of the
receivables. The amount of the provision was 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 was reduced through the use of an allowance account, and the amount of the loss was
recognised in the income statement within ‘other operating expenses’. When a trade receivable was uncollected, it was
written off against the allowance account for trade receivables. Subsequent recoveries of amounts previously written off
were credited against ‘other operating expenses’ in the income statement.
2.13 Cash and cash equivalents
Cash and cash equivalents include cash in hand and deposits held on call with banks, together with other short-term highly
liquid investments with original maturities of three months or less and working capital overdrafts, which are subject to an
insignificant risk of changes in value. Bank overdrafts are included under borrowings in the statement of financial position.
2.14 Bank borrowings
Interest-bearing bank loans and overdrafts are initially measured at fair value, net of transaction costs incurred, and
subsequently measured at amortised cost using the effective interest rate method.
2.15 Trade payables
Trade payables are initially measured at fair value and subsequently measured at amortised cost using the effective interest
rate method. Trade payables are classified as current liabilities if payment is due within one year or less. If not, they are
presented as non-current liabilities.
2.16 Derivative financial instruments
Derivatives are initially recognised at fair value on the date a derivative contract is entered into and are subsequently
remeasured at fair value. Changes in the fair value of the Group’s 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 and the Savills Rabbi 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.
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Notes to the financial statements continuedYear ended 31 December 2018 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 asset or liability recognised in the statement of financial position in respect of defined benefit pension plans is the
present value of the defined benefit obligation at the reporting date less the fair value of plan assets. The defined benefit
obligation is calculated annually by independent actuaries using the projected unit credit method. The present value of the
defined benefit obligation is determined by discounting the estimated future cash outflows.
The defined benefit scheme charge consists of net interest costs, past service costs and the impact of any settlements or
curtailments and is charged as an expense as they fall due.
All actuarial gains and losses are recognised immediately in other comprehensive income in the period in which they arise.
The Group also operates a defined contribution Group Personal Pension Plan for new entrants and a number of defined
contribution individual pension plans. Contributions in respect of defined contribution pension schemes are charged to the
income statement when they are payable. The Group has no further payment obligations once the contributions have been
paid. Prepaid contributions are recognised as an asset to the extent that a cash refund or a reduction in the future payments
is available.
The net defined benefit cost is allocated amongst participating Group subsidiaries on the basis of pensionable salaries.
2.20 Share-based payments
The Group operates equity-settled share-based compensation plans. The fair value of the employee services received in
exchange for the grant of the options is recognised as an expense.
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 and Savills Rabbi Trust
The Company has established the Savills plc 1992 Employee Benefit Trust (the ‘EBT’) and the Savills Rabbi Trust (the ‘Rabbi
Trust’), 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 and Rabbi Trust
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.
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2.22 Provisions continued
(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. The Group recognises
a provision up to the limit of its self-insured liabilities in respect of any claim, with the excess of any self-insured element
settled by professional indemnity insurance cover. The professional indemnity insurance cover is spread across a panel of
insurers so that it is highly unlikely that the Group would be liable for any settlement in excess of the self-insured element of
any given claim. As a result, the amount of the claim in excess of the self-insured element is not included in the professional
indemnity claims provision.
(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
The Group recognises revenue from the following major sources:
Residential property transactions
Commercial property transactions
Property consultancy services
Property and facilities management services
Investment management services.
Revenue is measured based on the consideration specified in a contract with a customer and excludes amounts collected
on behalf of third parties. The Group recognises revenue when it transfers control of a product or service to a customer.
(a) Residential property transactions
Generally, revenue is recognised at a point in time, when unconditional contracts are exchanged. Fees are a fixed
consideration or a fixed percentage of the transaction value and are invoiced to the client upon completion.
For new home developments revenue is recognised following the terms of the contract. In some instances revenue is
recognised on a staged basis, reflecting the Group’s obligations to find a buyer and to further support the client after
exchange of contracts through to completion of the build and contract, which can be a number of years later. For these
developments, revenue recognition commences when the underlying contracts are exchanged, with total revenue from
the contract recognised by the date of completion in accordance with contractual terms. Fees are a fixed consideration
or a fixed percentage of the transaction value and are invoiced to the client at each contractual milestone, in line with
the recognition of revenue. In other instances, the revenue will be recognised when contracts are exchanged and the
transaction is unconditional, in these instances no further support is provided to the client after this point.
(b) Commercial property transactions
Generally, revenue is recognised at a point in time on the date of completion or when unconditional contracts have been
exchanged. Fees are a fixed consideration or a fixed percentage of the transaction value and are invoiced to the client
upon completion.
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Notes to the financial statements continuedYear ended 31 December 2018 (c) Property consultancy services
The Group primarily provides a wide range of professional property services including valuation, building and housing
consultancy, environmental consultancy, development, planning, research, corporate services, landlord and tenant services
and strategic projects.
Generally, revenue is recognised over a period of time as services are rendered in accordance with the contract terms.
Fee arrangements include fixed fee arrangements and fee for service arrangements (“time and materials”).
For fixed-price contracts, revenue is recognised based on the stage of completion with reference to the actual services
provided to the end of the reporting period as a proportion of the total services to be provided under the contract. This is
determined on a contract by contract basis with reference to actual costs incurred in relation to the best estimate of total
costs expected for completion of the contract or using a milestone based approach, depending on the contract terms.
For fee for service contracts, revenue is recognised up to the amount of fees that the Group is entitled to invoice for services
performed to date based on contracted rates.
Payment arrangements vary between contracts, ranging from monthly retainers, monthly invoicing, quarterly invoicing,
invoicing upon reaching certain milestones in the contract or payment upon completion of the final performance obligation
in the contract. As a result, services rendered under a contract will often exceed consideration received from a customer and
a contract asset will be recognised.
If payments exceed services rendered, a contract liability will be recognised.
In some instances, revenue will be recognised at a point in time upon delivery of the final report to the client. This is often
the case for standalone valuation reports where the performance obligation is the provision of a property valuation report
to the client. The Group is entitled to invoice the customer when the final report has been issued, at which point payment
will be due.
(d) Property and facilities management services
The Group primarily manages commercial, industrial, residential, leisure and agricultural property for owners.
The primary performance obligation relates to the ongoing management of a property where revenue is recognised over
a period of time as services are rendered in accordance with the contract terms. Payment arrangements vary between
contracts. The majority of customers are invoiced monthly or quarterly in advance, with consideration payable upon the
issue of an invoice. Where invoicing is in advance a contract liability will be recognised.
In some property management arrangements, the Group is required to evaluate whether it is the principal (report revenues
on a gross basis) or agent (report revenues on a net basis). Where the primary performance obligation of the contract relates
to the arrangement of services for a customer rather than the responsibility to provide the services, the Group is considered
the agent and the mark-up for the sub-contracted services will be recognised as revenue (revenues reported on a net basis).
For leasing fees and management fees on repairs or other ad hoc property management services outside of the standard
contract terms, revenue is recognised at a point in time upon completion of the performance obligation. In these instances,
the invoice would be raised to the customer upon completion of the performance obligation and payment due at this time.
(e) Investment management services
Base management fees are received for the provision of fund and asset management services. Fund management fees
are typically either fixed or calculated as a fixed percentage of the net asset value or gross asset value of the underlying
portfolio of investments. Asset management fees are typically calculated as a fixed percentage of gross rental income or
passing rents. Revenue is recognised over a period of time as services are rendered in accordance with the contract terms.
Customers are generally invoiced quarterly in advance, as a result a contract liability will be recognised as the payments
received will exceed services rendered.
Transaction fees are received for the coordination and management of the due diligence in connection with acquisitions and
sales of assets for customers. Transaction fees are calculated as a fixed percentage on the purchase or sales price and are
recognised at a point in time upon unconditional exchange of contracts.
Performance fees are received when a fund’s performance exceeds a designated return hurdle rate or pre-defined
benchmark or when the sale of individual assets exceeds a designated return hurdle rate. The Group estimates fees for this
variable fee arrangement using a most likely amount approach on a contract by contract basis. Variable consideration is
included in revenue only to the extent that it is highly probable that the amount will not be subject to significant reversal
when the uncertainty is resolved.
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2.23 Revenue continued
(f) Financing components
The Group does not expect to have any contracts where the period between the transfer of the promised goods or services
to the customer and payment by the customer exceeds one year. As a consequence, the Group does not adjust any of the
transaction prices for the time value of money.
(g) Costs of obtaining a contract
In the Investment Management business the Group pays placement fees to third parties for sourcing new investors and
equity for a fund. These costs are capitalised and amortised on a straight-line basis over the life of the fund, consistent
with the pattern of transfer of service to which the asset relates.
Incremental costs of obtaining a contract are recognised as an expense when incurred when the amortisation period of
the asset that would otherwise have been recognised is less than a year.
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.
2.26 Adoption of standards, amendments and interpretations to standards
Standards, amendments and interpretations endorsed by the EU and mandatorily effective for the first time for the financial
year beginning 1 January 2018 include the following:
IFRS 9, ‘Financial instruments’ (‘IFRS 9’), replaces the provisions of IAS 39 that relate to the recognition, classification
and measurement of financial assets and financial liabilities; derecognition of financial instruments; impairment of
financial assets and hedge accounting. IFRS 9 also significantly amends other standards dealing with financial
instruments such as IFRS 7, ‘Financial Instruments: Disclosures’. In accordance with the transitional provisions in IFRS 9
(7.2.15), comparative figures have not been restated and continue to be accounted for in accordance with the Group’s
previous accounting policy.
The transition to IFRS 9 did not have a material impact on the Group’s opening retained earnings, as a result a
reconciliation of retained earnings is not required.
The only reclassification adjustment upon transition to IFRS 9 relates to the Group’s available-for-sale investments, which
have been reclassified to financial assets through other comprehensive income (following the Group’s decision to apply
the irrevocable election available in IFRS 9). This reclassification did not have an impact on the carrying value of these
financial assets and only impacts the accounting treatment in future periods when these investments are disposed of.
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Notes to the financial statements continuedYear ended 31 December 2018 IFRS 15, ‘Revenue from contracts with customers’ (‘IFRS 15’), establishes a principles based approach for revenue
recognition and is based on the concept of recognising revenue for obligations only when they are satisfied and the
control of goods or services is transferred. It applies to all contracts with customers, except those in the scope of other
standards. The implementation of IFRS 15 resulted in some refinement in the timing of recognition of investment
management performance fees and the amortisation period for contract costs.
In accordance with transition provisions in IFRS 15 the new rules have been adopted using the simplified retrospective
transition method. The transition to IFRS 15 did not have a material impact on the Group’s opening retained earnings,
as a result a reconciliation of retained earnings is not required. There have however been a number of balance sheet
reclassifications upon transition to IFRS 15 as follows:
– Contract assets recognised in relation to consulting contracts were previously presented as work in progress.
– Contract liabilities recognised which were previously presented in trade and other payables as deferred revenue.
Current assets
Work in progress
Contract assets
Current liabilities
Contract liabilities
Trade and other payables
2017
Reported
£m
Reclassification
£m
2017
Restated
£m
6.0
–
–
592.7
(6.0)
6.0
7.1
(7.1)
–
6.0
7.1
585.6
In addition to the above, December 2017 goodwill and trade and other payables balances have been restated by a further
£2.0m in relation to a measurement period adjustment in accordance with IFRS 3. See Note 18.5 for details.
The table below shows the impact of the application of IFRS 15 on a financial statement line item basis in the current period:
Income statement
Revenue
Employee benefits expense
Statement of financial position
Contract assets (non-current)
Trade and other receivables (current)
Trade and other payables (current)
Retained earnings
2018
(pre IFRS 15)
£m
Application of
IFRS 15
£m
2018
Reported
£m
1,760.7
1,164.7
–
528.9
628.8
286.1
0.7
0.3
1.3
(0.6)
0.3
0.4
1,761.4
1,165.0
1.3
528.3
629.1
286.5
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2.26 Adoption of standards, amendments and interpretations to standards continued
Standards, amendments and interpretations endorsed by the EU and mandatorily effective for the first time for the
financial year beginning 1 January 2018 that are not relevant or considered to have a significant impact on the Group and
its financial statements include the following:
New interpretation IFRIC 22
Foreign Currency Transactions and Advance Consideration
Amendments to IFRS 2
Amendments to IAS 40
Amendments to IFRS 1
Amendments to IAS 28
Amendments to IFRS 4
Classification and Measurement of Share-based payment transactions
Transfers of Investment Property
First time Adoption of IFRS and deletion of short-term exemptions
Investments in Associates and clarification for venture capital
organisations
Applying IFRS 9 Financial Instruments with IFRS 4 Insurance Contracts
The following standards and amendments to published standards are mandatory for accounting periods beginning on or
after 1 January 2018, and have not been early adopted:
IFRS 16, ‘Leases’, effective for the accounting periods beginning on or after 1 January 2019. 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 standard
will have a material impact on the consolidated financial statements of the Group. On adoption, lease agreements will give
rise to both a right-of-use asset and a lease liability for future lease payables. Depreciation of the right-of-use asset will be
recognised in the income statement on a straight-line basis, with interest recognised on the lease liability. This will result in
a change to the profile of the net charge taken to the income statement over the life of the lease. These charges will
replace the lease costs currently charged to the income statement.
The Group will apply the standard from its mandatory adoption date of 1 January 2019 and intends to apply the simplified
transition approach and will not restate comparative amounts for the year prior to first adoption. Right-of-use assets will
be measured on transition either as if the new rules had always been applied or at the amount of the lease liability on
adoption (adjusted for any prepaid or accrued lease expenses and onerous lease provisions where applicable).
As at the reporting date, the Group has non-cancellable operating lease commitments of £354.0m, see note 30. Of these
commitments, approximately £5.2m relates to short-term leases and £0.2m to low value leases which will both be
recognised on a straight-line basis as expense in the income statement.
For the remaining lease commitments the Group expects to recognise lease liabilities of £300.6m, an increase to
property, plant and equipment of approximately £260.5m through the recognition of right-of-use assets on 1 January
2019 and an increase to deferred tax assets of £1.5m. Transitional adjustments will also include the reduction of trade and
other receivables of £1.7m (prepayments) and trade and other payables of £33.1m (primarily deferred rent accruals).
Overall, net assets will be approximately £7.2m lower and net current assets will be £15.3m lower due to the presentation
of a portion of the liability as a current liability.
The Group expects that underlying profit before tax will decrease approximately £3.1m for 2019 as a result of adopting the
new rules.
The Group’s activities as a lessor are not material and hence the Group does not expect any significant impact on the
financial statements with respect to sub-leasing activities.
Other standards, amendments and interpretations not yet effective and not discussed above are not relevant or considered
significant to the Group.
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Notes to the financial statements continuedYear ended 31 December 2018 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.
For the years ended 31 December, 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
2018
Estimated impact on post-tax profit
Euro
Hong Kong dollar
US dollar
Estimated impact on components of equity
Euro
Hong Kong dollar
US dollar
2017
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%
(1.0)
(1.7)
(0.7)
1.0
(13.8)
(18.0)
(1.0)
(1.5)
0.9
1.0
(12.3)
(12.1)
(0.5)
(0.9)
(0.4)
0.6
(7.2)
(9.4)
(0.5)
(0.8)
0.5
0.5
(6.5)
(6.3)
0.6
1.0
0.4
(0.6)
8.0
10.4
0.6
0.9
(0.5)
(0.6)
7.1
7.0
1.3
2.1
0.9
(1.3)
16.9
22.0
1.2
1.8
(1.1)
(1.2)
15.1
14.8
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Financial statementsGovernance Strategic reportOverview 3. Financial risk management continued
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 2018, if the average interest rate for the year had changed with all other variables held
constant, the Group’s post-tax profit for the year and equity would have increased or decreased as shown below:
£m
2018
Estimated impact on post-tax profit and equity
2017
Estimated impact on post-tax profit and equity
£m
2018
Increase in interest rates
+0.5%
+1.0%
+1.5%
+2.0%
0.5
0.3
0.8
1.2
1.6
0.6
1.0
1.4
Decrease in interest rates
-0.5%
-1.0%
-1.5%
-2.0%
Estimated impact on post-tax profit and equity
(0.3)
(0.3)
0.1
0.4
2017
Estimated impact on post-tax profit and equity
(0.5)
(0.9)
(0.9)
(0.6)
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, equity investments, derivative financial instruments and deposits with
banks and financial institutions, as well as credit exposures to clients, including outstanding receivables and committed
transactions. The Group has policies that require appropriate credit checks on potential customers before engaging with
them. A risk control framework is used to assess the credit quality of clients, taking into account financial position, past
experience and other factors.
Individual risk limits for banks and financial institutions are set based on external ratings and in accordance with limits set
by the Board. The utilisation of credit limits is regularly monitored.
As at the reporting date, no significant credit risk existed in relation to banking counterparties. No credit limits were
exceeded during the reporting year, and management does not expect any losses from non-performance by these
counterparties. There were no other significant receivables or individual trade receivable balances as at 31 December
2018. Refer to Note 20 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
116
Savills plc
Report and Accounts 2018
2018
£m
25.7
55.4
101.8
17.0
24.0
223.9
2017
£m
24.7
30.2
96.6
16.6
40.7
208.8
Notes to the financial statements continuedYear ended 31 December 2018 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 21) 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.
£m
2018
Borrowings
Finance leases
Derivative financial instruments
Trade and other payables
2017
Borrowings
Finance leases
Derivative financial instruments
Trade and other payables
Less than a
year
Between
1 and 2 years
Between
2 and 5 years
Over 5 years
0.4
–
0.1
563.8
564.3
110.1
–
0.1
538.0
648.2
–
0.1
–
30.8
30.9
–
0.1
–
13.9
14.0
–
–
–
8.4
8.4
–
–
–
18.6
18.6
150.0
–
–
0.2
150.2
–
–
–
5.2
5.2
3.6 Capital risk management
The Group’s objectives when managing capital are:
To safeguard the Group’s ability to provide returns for shareholders and benefits for other stakeholders
To maintain an optimal capital structure to reduce the cost of capital.
The Group’s overall strategy remains unchanged from 2017.
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
2018. The Savills Investment Management group has regulated entities in the UK, Jersey, Luxembourg, Germany, Italy, Japan,
Singapore, Hong Kong, China, Australia and the US. 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.
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.
Savills plc
Report and Accounts 2018
117
Financial statementsGovernance Strategic reportOverview 3. Financial risk management continued
3.6 Capital risk management continued
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.
Group
Company
2018
505.0
223.9
–
(150.0)
73.9
2017
441.7
208.8
(3.6)
(106.6)
98.6
2018
224.7
90.2
–
–
2017
216.7
90.8
–
–
90.2
90.8
Financial
assets at
FVPL
2018
£m
Financial
assets at
FVOCI
2018
£m
Financial
assets at
amortised
cost
2018
£m
Total
carrying
amount
2018
£m
Financial
asset at
fair value
2017
£m
Available-
for-sale
financial
assets
2017
£m
Loans and
receivables
2017
£m
Total
carrying
amount
2017
£m
–
–
–
0.1
–
0.1
31.2
–
–
–
–
31.2
–
–
31.2
–
470.4
470.4
–
223.9
694.3
0.1
223.9
725.6
–
–
–
0.5
–
0.5
–
24.6
–
–
–
24.6
–
–
–
24.6
440.0
440.0
–
208.8
648.8
0.5
208.8
673.9
Financial
liabilities
at
amortised
cost
2018
£m
Financial
liabilities
at FVPL
2018
£m
Total
carrying
amount
2018
£m
Financial
liabilities at
fair value
2017
£m
Financial
liabilities at
amortised
cost
2017
£m
Total
carrying
amount
2017
£m
–
–
0.1
0.1
150.0
602.0
–
150.0
602.0
0.1
752.0
752.1
–
–
0.1
0.1
110.2
573.6
–
110.2
573.6
0.1
683.8
683.9
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:
Financial assets at FVOCI
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
118
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 3.8 Fair value estimation
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2018:
£m
2018
Assets
Financial assets at FVOCI
– Listed
– Unlisted
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Total liabilities
Level 1
Level 2
Level 3
Total
1.1
–
–
1.1
–
–
–
10.4
0.1
10.5
0.1
0.1
–
19.7
–
19.7
–
–
1.1
30.1
0.1
31.3
0.1
0.1
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2017:
£m
2017
Assets
Available-for-sale investments
– Unlisted
Derivative financial instruments
Total assets
Liabilities
Derivative financial instruments
Total liabilities
Level 1
Level 2
Level 3
Total
–
–
–
–
–
24.6
0.5
25.1
0.1
0.1
–
–
–
–
–
24.6
0.5
25.1
0.1
0.1
Level 1 instruments are those whose fair values are based on quoted market prices.
The fair value of Level 2 unlisted available-for-sale investments and financial assets at FVOCI 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. 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.
Following the implementation of IFRS 9, unlisted equity securities, where cost has been determined as the best
approximation of fair value, the fair value estimates have now been included in Level 3. Cost is considered the best
approximation of fair value in these instances either due to insufficient more recent information being available and/or there
being a wide range of possible fair value measurements due to the nature of the investments and cost is considered the best
estimate of fair value within the range.
The following table presents the changes in Level 3 items for the period ended 31 December 2018.
Opening balance 1 January 2018
Transfer from Level 2
Additions
Closing balance 31 December 2018
Unlisted
equity
securities
£m
–
14.7
5.0
19.7
Savills plc
Report and Accounts 2018
119
Financial statementsGovernance Strategic reportOverview 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 2018
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
As at 31 December 2017
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
Gross financial
assets/
(liabilities)
Amounts
offset in the
balance sheet
Net amount in
the balance
sheet
364.1
(140.2)
223.9
(140.2)
140.2
–
371.1
(162.3)
208.8
(165.9)
162.3
(3.6)
5. Critical accounting estimates and management judgements
5.1 Accounting estimates
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 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 11.2.
(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) 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.
120
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 (e) Goodwill and intangible assets with indefinite useful lives
The Group tests goodwill and intangible assets with indefinite useful lives for impairment on an annual basis. Within this
process, the Group makes a number of key assumptions including discount rates, terminal growth rates and forecast cash
flows. The assumptions impact the recoverability of goodwill and intangible assets with indefinite useful lives and the
requirement for impairment charges in the income statement. Additional information is disclosed in Note 16.
(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. Known claims could be inadequately provided for or additional claims could be
made which might not be covered by existing provisions or by insurance as detailed in Note 29.
5.2 Management judgements
In the course of preparing the financial statements, no judgements have been made in the process of applying the Group’s
accounting policies, other than those involving estimations, that have had a significant effect on the amounts recognised in
the financial statements.
6. Revenue from contracts with customers
Revenue of £1,761.4m (2017: £1.600.0m) in the income statement relates solely to revenue arising from contracts
with customers.
The Group derives revenue from the transfer of services over time and at a point in time in the major product lines and
geographical regions as highlighted in the Group’s segment analysis (Note 7).
6.1 Contract assets and liabilities
The Group recognised the following revenue-related contract assets and liabilities:
Asset recognised for costs incurred to obtain a contract – investment management contracts
Work in progress – consulting contracts
Total contract assets
Current
Non-current
Deferred revenue
Total contract liabilities – current
2018
£m
1.3
7.8
9.1
7.8
1.3
9.1
11.1
11.1
2017
Restated*
£m
–
6.0
6.0
6.0
–
6.0
7.1
7.1
* See Note 2.26 for details about changes in accounting policies and resulting prior year restatement.
There were no impairment losses recognised on any contract asset in the reporting period (2017: £nil).
Amortisation on contract costs recognised in the income statement amounted to £0.1m (2017: £nil).
All consulting contracts are for periods of one year or less. As permitted under IFRS 15, the transaction price allocated to
these unsatisfied contracts is not disclosed.
6.2 Revenue recognised in relation to contract liabilities
Revenue recognised in the year that was included in the contract liability balance at the beginning of the period totalled £6.0m.
Revenue recognised in the year from performance obligations satisfied in previous years was not material.
Savills plc
Report and Accounts 2018
121
Financial statementsGovernance Strategic reportOverview 7. 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 18 to 21 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, Taipei,
Thailand, Singapore, Vietnam, Australia, Indonesia, Malaysia and Myanmar. Europe & the Middle East segment operations are
based in Germany, France, Spain, Portugal, the Netherlands, Belgium, Sweden, Italy, Ireland, Poland, Czech Republic, United
Arab Emirates, Egypt, Oman, Bahrain and Saudi Arabia. North America segment operations are based in a number of states
throughout 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,
Taipei 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 123.
The segment information provided to the GEB for revenue and underlying profit/(loss) for the year ended 31 December 2018
is as follows:
Transaction
Advisory
£m
Consultancy
£m
Property
and Facilities
Management
£m
Investment
Management
£m
Other
£m
Total
£m
98.4
131.5
229.9
113.1
160.1
45.9
206.0
264.5
813.5
15.7
17.6
33.3
5.5
21.2
8.3
29.5
12.8
81.1
171.5
44.4
215.9
33.4
45.1
–
45.1
–
157.1
33.8
190.9
68.9
327.0
–
327.0
–
25.7
–
25.7
31.6
9.4
–
9.4
–
294.4
586.8
66.7
19.0
6.8
25.8
3.0
4.3
–
4.3
–
33.1
10.2
2.8
13.0
–
19.2
–
19.2
–
32.2
4.7
–
4.7
4.4
1.9
–
1.9
–
–
–
–
–
–
–
–
–
–
(13.7)
–
(13.7)
–
–
–
–
–
452.7
209.7
662.4
247.0
541.6
45.9
587.5
264.5
1,761.4
35.9
27.2
63.1
12.9
46.6
8.3
54.9
12.8
11.0
(13.7)
143.7
2018
Revenue
United Kingdom – commercial
United Kingdom – residential
Total United Kingdom
Europe & the Middle East
Asia Pacific – commercial
Asia Pacific – residential
Total Asia Pacific*
North America
Revenue
Underlying profit/(loss) before tax
United Kingdom – commercial
United Kingdom – residential
Total United Kingdom
Europe & the Middle East
Asia Pacific – commercial
Asia Pacific – residential
Total Asia Pacific
North America
Underlying profit/(loss) before tax**
122
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 The segment information provided to the GEB for revenue and underlying profit/(loss) for the year ended 31 December 2017
is as follows:
2017
Revenue
United Kingdom – commercial
United Kingdom – residential
Total United Kingdom
Europe & the Middle East
Asia Pacific – commercial
Asia Pacific – residential
Total Asia Pacific*
North America
Revenue
Underlying profit/(loss) before tax
United Kingdom – commercial
United Kingdom – residential
Total United Kingdom
Europe & the Middle East
Asia Pacific – commercial
Asia Pacific – 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
101.6
128.9
230.5
78.2
168.4
44.3
212.7
224.8
746.2
17.2
18.7
35.9
4.5
26.9
6.4
33.3
7.8
81.5
160.2
44.7
204.9
22.5
45.7
–
45.7
–
273.1
17.1
6.8
23.9
2.0
5.1
–
5.1
–
31.0
135.1
30.7
165.8
46.4
300.9
–
300.9
–
513.1
9.0
2.7
11.7
(1.8)
15.4
–
15.4
–
25.3
24.8
–
24.8
35.3
6.4
–
6.4
–
66.5
5.0
–
5.0
6.5
1.8
–
1.8
–
1.1
–
1.1
–
–
–
–
–
422.8
204.3
627.1
182.4
521.4
44.3
565.7
224.8
1.1
1,600.0
(10.6)
–
(10.6)
–
–
–
–
–
37.7
28.2
65.9
11.2
49.2
6.4
55.6
7.8
13.3
(10.6)
140.5
* Revenues of £275.4m (2017: £243.7m) are attributable to the Hong Kong and Macau region.
** Transaction Advisory underlying profit before tax includes depreciation of £7.5m (2017: £6.6m), software amortisation of £1.1m (2017: £0.8m) and share
of post-tax profit from joint ventures and associates of £3.1m (2017: £2.2m). Consultancy underlying profit before tax includes depreciation of £2.3m
(2017: £2.0m), software amortisation of £0.6m (2017: £0.4m) and share of post-tax loss from joint ventures and associates of £0.2m (2017: £nil). Property
and Facilities Management underlying profit before tax includes depreciation of £3.9m (2017: £3.4m), software amortisation of £1.1m (2017: £1.3m)
and share of post-tax profit from joint ventures and associates of £7.8m (2017: £7.7m). Investment Management underlying profit before tax includes
depreciation of £0.3m (2017: £0.4m) and software amortisation of £0.4m (2017: £0.4m) and share of post-tax gain from associates of £0.4m (2017: £nil).
Included in Other underlying loss is depreciation of £0.9m (2017: £1.1m) and software amortisation of £0.4m (2017: £0.3m).
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 9.
Inter-segmental revenue is not material. No single customer contributed 10% or more to the Group’s revenue for both 2018
and 2017.
Non-current assets by geography are set out below:
Non-current assets
United Kingdom
Europe & the Middle East
Asia Pacific
North America
Total non-current assets
2018
£m
2017
£m
168.7
119.3
90.9
176.2
555.1
131.1
96.7
87.6
169.8
485.2
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, financial assets held at FVOCI, non-current other
receivables, non-current contract assets and deferred tax assets are not included.
Savills plc
Report and Accounts 2018
123
Financial statementsGovernance Strategic reportOverview 8. Operating profit
8.1 Operating profit
Operating profit is stated after charging/(crediting):
In other operating expenses
– Net foreign exchange (gains)/losses (excluding net losses on forward foreign exchange
contracts)
– Net losses/(gains) on forward foreign exchange contracts
– Significant restructuring costs*
– Acquisition-related costs**
– Operating lease costs
In other operating income
– Dividends from equity investments held at FVOCI
Related to investments held at the end of the reporting period
– Dividends from available-for-sale investments
In other gains/losses
– Profit on disposal of joint venture
– Profit on disposal of subsidiaries
– Profit on disposal of available-for-sale investments
Group
2018
£m
(0.2)
0.2
8.4
20.7
59.1
(0.1)
–
(1.0)
(0.4)
–
2017
£m
0.3
(0.2)
7.7
21.3
54.6
–
(0.9)
–
–
(5.9)
*
Significant restructuring costs include staff related costs of £4.7m (2017: £5.1m), an onerous lease charge of £1.2m (2017: £2.3m) and other related
restructuring costs of £2.5m (2017: £nil) arising primarily from integration activities in relation to the acquisitions of Aguirre Newman and Cluttons Middle
East (2017: Smiths Gore, GBR Phoenix Beard and SEB).
** Refer to Note 9 for a further breakdown of acquisition-related costs.
8.2 Fees payable to the Company’s auditors, PricewaterhouseCoopers LLP, and its associates
Group
2018
£m
0.3
1.7
2.0
0.1
0.8
0.1
1.0
3.0
2017
£m
0.2
1.6
1.8
0.2
0.6
–
0.8
2.6
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
Audit-related assurance services
Transaction advisory services
Other assurance services
Total
124
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 9. Underlying profit before tax
Statutory profit before tax
Adjustments:
Amortisation of acquired intangible assets (excluding software)
Impairment of goodwill and acquired intangible assets (excluding software)
Share-based payment adjustment
Profit on disposal of subsidiaries, joint venture and available-for-sale investments
Restructuring costs
Acquisition-related costs
GMP equalisation charge
Underlying profit before tax
2018
£m
109.4
6.6
0.3
(1.9)
(2.9)
8.4
20.7
3.1
143.7
2017
£m
112.4
3.9
2.3
(1.2)
(5.9)
7.7
21.3
–
140.5
An impairment charge of £0.3m was recognised in the year relating to acquired investment management contracts. In the
prior year, a £2.3m impairment charge was recognised relating to the goodwill of the Group’s Swedish property
management business.
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 to align the underlying staff cost in the year with
the revenue recognised in the same period.
Profit on disposal includes profits recognised in relation to the disposal of subsidiaries (100% of Savills Asset Management
Pte Ltd and 80.5% of FPD Property Services (India) Private Ltd, which is now treated as an equity investment held at FVOCI)
and the part disposal of a joint venture (Beijing Financial Street Savills Property Management Company Ltd) in Asia Pacific.
In the prior year, profit on disposal included profits recognised in relation to the disposals of the Group’s available-for-sale
investments, SPF Private Clients Limited (£5.3m) and Cordea Savills German Retail Fund (£0.6m).
Restructuring costs includes costs of integration activities in relation to recent significant business acquisitions (primarily
Aguirre Newman in Spain and Cluttons Middle East). In the prior year, costs related to the integration of Smiths Gore and
GBR Phoenix Beard (‘GBR’) in the UK and Savills Investment Management’s acquisition of SEB.
Acquisition-related costs include £14.2m (2017: £17.2m) of provisions for future payments in relation to business acquisitions,
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. These relate to acquisitions in the UK (£3.6m - primarily GBR and Smiths Gore), North
America (£2.6m) and Europe & the Middle East (£8.0m - primarily Aguirre Newman). In the prior year, these costs related to
acquisitions in the UK (£3.8m – primarily GBR and Smiths Gore), North America (£13.2m – primarily Studley) and Europe
(£0.3m). In addition, acquisition-related costs includes £2.2m for payments in relation to Savills Investment Management’s
acquisition of Merchant Capital (Japan) in May 2014 (2017: £1.4m), £1.0m of unwinding of interest on deferred consideration
payments (2017: £0.6m) and £3.3m of transaction costs (2017: £2.1m).
Guaranteed Minimum Pension (‘GMP’) equalisation charge in the year reflects the past service cost on the UK defined
benefit pension scheme, which is the estimated cost of equalising GMPs for the impact between males and females; this
follows the conclusion of a High Court case in the UK on 26 October 2018. Refer to Note 11.2.
Savills plc
Report and Accounts 2018
125
Financial statementsGovernance Strategic reportOverview 2017
£m
8.2
5.8
14.0
2.0
0.3
2.4
18.7
2017
125
–
–
–
10. Employees
10.1 Employee benefits expense
Basic salaries and wages
Profit share and commissions
Wages and salaries
Social security costs
Other pension costs
Share-based payments
Group
Company
2018
£m
581.8
463.2
1,045.0
71.1
30.7
18.2
2017
£m
530.5
426.7
957.2
63.0
27.0
14.5
1,165.0
1,061.7
2018
£m
8.5
5.3
13.8
1.7
0.5
2.1
18.1
10.2 Staff numbers
The monthly average number of employees (including Directors) for the year was:
Group
Company
United Kingdom
Europe & the Middle East
Asia Pacific
North America
2018
5,955
1,752
28,486
788
36,981
2017
5,554
1,206
26,894
775
34,429
2018
133
–
–
–
133
125
The average number of UK employees (including Directors) during the year included 157 employed under fixed-term and
temporary contracts (2017: 96).
10.3 Key management compensation
Key management
– Short-term employee benefits
– Post-employment benefits
– Share-based payments
Group
2018
£m
30.5
0.2
2.6
33.3
2017
£m
28.0
0.2
3.3
31.5
The key management of the Group for the year ended 31 December 2018 comprised Executive Directors and the GEB
members. Details of Directors’ remuneration is contained in the Remuneration report on pages 66 to 84.
During the year eight (2017: seven) GEB members made aggregate gains totalling £5.4m (2017: £3.5m) on the exercise of
options under PSP, DSP and DSBP schemes (2017: PSP, DSP and DSBP schemes).
Retirement benefits under the defined benefit scheme are accruing for three (2017: three) GEB members and benefits are
accruing under a defined contribution scheme in Hong Kong for two (2017: two) GEB members.
126
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 11. Pension schemes
11.1 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 £27.5m (2017: £26.9m). The amount outstanding as at
31 December 2018 in relation to defined contribution schemes is £2.0m (2017: £1.9m).
11.2 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 was carried out as at 31 March 2016 and has been updated to 31 December 2018 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
13 active employees and 102 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 2018 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:
(Asset)/liability in the statement of financial position
Past service cost included in employee benefit expense
Net interest cost included in finance costs
Actuarial gain included in other comprehensive income
Group
Company
2018
£m
(2.8)
3.1
0.4
16.8
2017
£m
19.5
–
1.0
13.3
2018
£m
(0.1)
0.2
–
0.9
2017
£m
1.1
–
0.7
The past service cost in 2018 relates to the estimated cost of equalising GMP for the impact between males and females; this
follows the conclusion of a High Court case in the UK on 26 October 2018.
Rule 23 of the governing Trust Deed and Rules of the UK Plan covers the rights upon termination of the UK Plan, which is
triggered when there are no beneficiaries surviving in accordance with Rule 19. Management interprets these rules that in the
event of the UK Plan winding up with no members, any surplus assets would be returned to the Company. Based on these
rights, any net surplus in the scheme is recognised in full.
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
(Asset)/liability recognised in the statement of financial position
Group
Company
2018
£m
262.1
(264.9)
(2.8)
2017
£m
298.2
(278.7)
19.5
2018
£m
14.6
(14.7)
(0.1)
2017
£m
16.5
(15.4)
1.1
Savills plc
Report and Accounts 2018
127
Financial statementsGovernance Strategic reportOverview 11. Pension schemes continued
11.2 Defined benefit plan continued
The movement in the defined benefit obligation/(asset) for the UK Plan over the year is as follows:
At 1 January 2018
Interest expense/(income)
Past service cost
Remeasurements:
– Losses on plan assets, excluding amounts
included in interest income
– Gain from change in financial assumptions
– Gain from change in demographic assumptions
– Experience gains
Employer contributions
Benefit payments
At 31 December 2018
At 1 January 2017
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 gains
Employer contributions
Benefit payments
At 31 December 2017
Group
Company
Present value
of obligation
£m
Fair value of
plan assets
£m
298.2
(278.7)
7.4
3.1
(7.0)
–
–
21.8
(28.8)
(8.0)
(1.8)
–
(8.0)
–
–
–
(9.0)
8.0
Total
£m
19.5
0.4
3.1
21.8
(28.8)
(8.0)
(1.8)
(9.0)
–
262.1
(264.9)
(2.8)
Present value
of obligation
£m
Fair value of
plan assets
£m
16.5
0.4
0.2
–
(1.6)
(0.4)
(0.1)
–
(0.4)
14.6
(15.4)
(0.4)
–
1.2
–
–
–
(0.5)
0.4
(14.7)
Group
Company
Present value
of obligation
£m
Fair value of
plan assets
£m
298.4
(257.6)
7.8
(6.8)
–
10.2
–
(0.2)
–
(18.0)
298.2
(23.3)
–
–
–
(9.0)
18.0
(278.7)
Total
£m
40.8
1.0
(23.3)
10.2
–
(0.2)
(9.0)
–
19.5
Present value
of obligation
£m
Fair value of
plan assets
£m
16.5
0.4
(14.2)
(0.4)
–
0.6
–
–
–
(1.0)
16.5
(1.3)
–
–
–
(0.5)
1.0
(15.4)
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
SFM Plan
2018
£m
0.3
0.1
1.1
Total
£m
1.1
–
0.2
1.2
(1.6)
(0.4)
(0.1)
(0.5)
–
(0.1)
Total
£m
2.3
–
(1.3)
0.6
–
–
(0.5)
–
1.1
2017
£m
(1.3)
0.1
(0.8)
Section 5.2 of the SFM Plan Trust Deed provides the Trustor (Savills Fund Management GmbH, Savills Fund Management
Holding AG, and Savills Investment Management (Germany) GmbH respectively) with an unconditional right to a refund of
surplus assets assuming the full settlement of plan liabilities in the event of a plan wind-up. Furthermore, in the ordinary
course of business neither Trustor nor Trustee have any rights to unilaterally wind up, or otherwise augment the benefits
due to members of the scheme. Based on these rights, any net surplus in the scheme is recognised in full.
128
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 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 obligation/(asset) for the SFM Plan over the year is as follows:
SFM Plan
2018
£m
14.0
(13.7)
0.3
2017
£m
13.9
(15.2)
(1.3)
At 1 January 2018
Current service cost
Interest expense/(income)
Remeasurements:
– Losses on plan assets, excluding amounts included in interest income
– Loss from change in demographic assumptions
– Experience gains
Employer contributions
Benefit payments
Exchange movement
At 31 December 2018
At 1 January 2017
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
Transfers
Employer contributions
Benefit payments
Exchange movement
At 31 December 2017
SFM Plan
Present value
of obligation
£m
Fair value of
plan assets
£m
13.9
0.1
0.3
–
0.1
(0.1)
–
(0.4)
0.1
14.0
(15.2)
–
(0.3)
1.1
–
–
0.4
0.4
(0.1)
(13.7)
SFM Plan
Present value
of obligation
£m
Fair value of
plan assets
£m
14.4
0.1
0.3
–
(0.5)
(0.1)
(0.3)
–
(0.4)
0.4
13.9
(14.0)
–
(0.3)
(0.2)
–
–
0.3
(0.9)
0.4
(0.5)
(15.2)
Total
£m
(1.3)
0.1
–
1.1
0.1
(0.1)
0.4
–
–
0.3
Total
£m
0.4
0.1
–
(0.2)
(0.5)
(0.1)
–
(0.9)
–
(0.1)
(1.3)
Savills plc
Report and Accounts 2018
129
Financial statementsGovernance Strategic reportOverview 11. Pension schemes continued
11.2 Defined benefit plan continued
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
UK Plan
2018
3.25%
2017
3.25%
2018
2.50%
2.25%
2.25%
1.75%
–
–
–
–
–
–
2017
2.50%
2.25%
2.25%
1.75%
–
–
–
–
–
–
2.07%
1.75%
2.06%
1.75%
–
–
–
3.00%
3.20%
2.30%
5.00%
2.30%
2.30%
2.90%
3.40%
–
–
–
3.00%
3.30%
2.30%
5.00%
2.30%
2.30%
2.50%
3.40%
2017
88.8
90.3
91.0
92.7
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
SFM Plan
UK Plan
2018
85.0
88.6
87.4
90.7
2017
83.9
88.4
86.6
91.0
2018
88.2
89.6
90.0
91.5
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
Impact on present value of
scheme obligations £m
Impact on present value of
scheme obligations £m
(0.2)
0.2
–
0.6
(5.7)
3.2
0.5
10.5
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.
130
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018
Plan assets are comprised as follows:
Equity instruments
Liability-driven investment (LDI)
Investment funds
Bonds
Cash and cash equivalents
Total
SFM Plan
UK Plan
2018
2017
2018
2017
£m
–
–
%
–
–
£m
–
–
%
–
–
13.7
100%
15.2
100%
–
–
–
–
–
–
–
–
£m
17.1
69.3
67.9
79.3
31.3
%
6%
26%
26%
30%
12%
£m
92.4
82.0
30.9
72.6
0.8
%
33%
29%
11%
26%
1%
13.7
100%
15.2
100%
264.9
100%
278.7
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 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 2019 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 17 years for the SFM Plan.
Expected maturity analysis of the undiscounted pension benefits:
At 31 December 2018
Pension benefit payments
– UK Plan
– SFM Plan
Less than
a year
£m
Between
1–2 years
£m
Between
2–5 years
£m
4.6
0.5
4.6
0.5
18.3
1.5
Over
5 years
£m
587.8
18.7
Total
£m
615.3
21.2
Savills plc
Report and Accounts 2018
131
Financial statementsGovernance Strategic reportOverview Group
2018
£m
4.0
0.4
4.4
(5.1)
(1.1)
(0.4)
(0.1)
(6.7)
(2.3)
Group
2018
£m
13.8
(1.4)
12.4
19.8
0.2
32.4
(2.1)
0.4
–
(0.1)
1.6
(0.2)
32.2
2017
£m
2.7
0.1
2.8
(2.1)
(0.7)
(1.0)
(0.3)
(4.1)
(1.3)
2017
£m
14.9
0.5
15.4
23.9
(0.7)
38.6
(3.3)
(0.1)
(4.7)
1.0
(0.2)
(7.3)
31.3
12. 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
13. 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
Effect of change in overseas tax rate on deferred tax
Adjustment in respect of prior years
Total deferred tax (Note 19)
Income tax expense
132
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 The tax on the Group’s profit before income tax differs from the theoretical amount that would arise using the UK weighted
average tax rate of 19% (2017: 19.25%) applicable to profits of the consolidated entities as follows:
Profit before income tax
Tax on profit at 19% (2017: 19.25%)
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
Group
2018
£m
109.4
2017
£m
112.4
20.8
21.6
0.4
4.3
–
8.6
(2.2)
0.3
32.2
(0.5)
2.2
(0.4)
9.7
(2.3)
1.0
31.3
The effective tax rate of the Group for the year ended 31 December 2018 is 29.4% (2017: 27.8%), which is higher (2017: higher)
than the UK weighted average applicable rate.
The UK corporate tax rate is to reduce to 17% 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.
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 on pension actuarial gains/(losses)
Tax on items that may subsequently be reclassified to profit or loss
Current tax credit on employee benefits
Current tax credit/(charge) 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 on revaluations of available-for-sale investments
Deferred tax on foreign exchange reserves
Tax on items relating to components of other comprehensive
income
Group
Company
2018
£m
(2.8)
(2.8)
2.4
0.3
1.7
(1.7)
–
(3.1)
–
0.1
(0.3)
(3.1)
2017
£m
(2.8)
(2.8)
3.1
(0.3)
1.7
(1.7)
0.1
(0.8)
0.1
0.1
2.3
2018
£m
(0.2)
(0.2)
0.6
–
0.1
(0.1)
(0.6)
–
–
–
–
(0.5)
(0.2)
2017
£m
(0.1)
(0.1)
0.5
–
0.1
(0.2)
–
–
–
–
0.4
0.3
Savills plc
Report and Accounts 2018
133
Financial statementsGovernance Strategic reportOverview 14. Dividends – Group and Company
Amounts recognised as distribution to equity holders in the year:
Ordinary final dividend of 10.45p per share (2016: 10.1p)
Supplemental interim dividend of 15.1p per share (2016: 14.5p)
Interim dividend of 4.8p per share (2017: 4.65p)
Group
2018
£m
14.3
20.6
6.5
41.4
2017
£m
13.5
19.5
6.3
39.3
Company
2018
£m
14.4
20.7
6.6
41.7
2017
£m
13.5
19.5
6.3
39.3
In addition, the Group paid £0.2m (2017: £0.9m) of dividends to non-controlling interests.
The Board recommends a final dividend of 10.8p (net) per ordinary share (amounting to £14.8m) is paid, alongside the
supplemental interim dividend of 15.6p per ordinary share (amounting to £21.4m), to be paid on 13 May 2019 to shareholders
on the register at 12 April 2019. These financial statements do not reflect this dividend payable.
Under the terms of the Savills plc 1992 Employee Benefit Trust (the ‘EBT’), the Trustees have waived their dividend
entitlement for all shares held by the Trust. The dividends paid to the Rabbi Trust are eliminated upon Group consolidation,
as a result the dividends paid by the Group and the Company are not equal.
The total paid and recommended ordinary and supplemental dividends for the 2018 financial year comprises an aggregate
distribution of 31.2p per ordinary share (2017: 30.2p per ordinary share).
15. Earnings per share
15.1 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, 5,502,275 shares (2017: 4,819,684
shares) and the Rabbi Trust, 1,386,356 shares (2017: 800,000).
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
2018
Earnings
£m
76.7
–
76.7
2018
Shares
million
136.4
4.0
140.4
2018
EPS
pence
56.2
(1.6)
54.6
2017
Earnings
£m
80.1
–
80.1
2017
Shares
million
136.2
3.0
139.2
2017
EPS
pence
58.8
(1.3)
57.5
134
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 15.2 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), restructuring costs, acquisition-related costs and other exceptional costs.
Basic earnings per share
Amortisation of acquired intangible assets
(excluding software) after tax
Impairment of goodwill and acquired intangible
assets (excluding software) after tax
Share-based payment adjustment after tax
Profit on disposal of subsidiaries, joint ventures
and equity investments after tax
Restructuring costs after tax
Acquisition-related costs after tax
GMP equalisation charge after tax
Underlying basic earnings per share
Effect of additional shares issuable under option
Underlying diluted earnings per share
2018
Earnings
£m
76.7
2018
Shares
million
136.4
2018
EPS
pence
56.2
2017
Earnings
£m
80.1
2017
Shares
million
136.2
4.7
0.3
(1.7)
(2.9)
6.9
19.7
2.5
106.2
–
106.2
–
–
–
–
–
–
–
136.4
4.0
140.4
3.4
2.1
0.2
(1.2)
(2.1)
5.1
14.4
1.8
77.8
(2.2)
75.6
2.3
(1.0)
(5.9)
6.0
19.6
–
103.2
–
103.2
–
–
–
–
–
–
–
136.2
3.0
139.2
2017
EPS
pence
58.8
1.5
1.7
(0.7)
(4.3)
4.4
14.4
–
75.8
(1.7)
74.1
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 9) are amortisation of acquired intangible assets (excluding software)
£6.6m (2017: £3.9m), impairment of goodwill and acquired intangible assets (excluding software) of £0.3m (2017: £2.3m),
share-based payment adjustment £1.9m credit (2017: £1.2m credit), restructuring costs of £8.4m (2017: £7.7m), net profit on
disposals of £2.9m (2017: £5.9m profit), acquisition-related costs of £20.7m (2017: £21.3m) and the GMP equalisation charge
of £3.1m (2017: £nil).
Savills plc
Report and Accounts 2018
135
Financial statementsGovernance Strategic reportOverview 16. Goodwill and intangible assets
Cost
At 1 January 2018*
Additions through business combinations
(Note 18.5)
Other additions
Disposals
Exchange movement
At 31 December 2018
Accumulated amortisation and
impairment
At 1 January 2018
Amortisation charge for the year
Impairment charge
Disposals
Exchange movement
At 31 December 2018
Net book value
At 31 December 2018
Group
Company
Customer/
business
relationships
£m
Investment
and property
management
contracts
£m
Goodwill*
£m
Order
backlogs
£m
Brands
£m
Computer
software
£m
Total*
£m
Total
£m
402.7
23.6
27.1
6.5
1.3
24.4
485.6
21.1
–
–
10.7
434.5
49.4
–
–
–
1.3
50.7
4.3
–
(6.2)
0.2
21.9
19.8
2.3
–
(6.2)
0.2
16.1
15.1
–
(0.4)
0.3
42.1
12.8
2.3
0.3
(0.4)
0.3
15.3
–
–
–
0.4
6.9
4.7
1.4
–
–
0.2
6.3
–
–
–
–
–
0.6
–
–
0.1
0.7
–
5.9
40.5
5.9
(3.4)
(10.0)
(1.0)
–
11.6
1.3
26.9
533.6
11.2
3.7
–
97.9
10.3
0.3
(2.9)
(9.5)
(1.0)
–
2.1
12.0
101.1
–
2.5
5.8
–
2.5
–
7.3
3.1
0.4
–
383.8
5.8
26.8
0.6
0.6
14.9
432.5
4.8
*
Goodwill cost as at 1 January 2018 has been restated by £2.0m as a result of a measurement period adjustment in accordance with IFRS 3. See Note 18.5
for details.
The carrying amount of intangible assets with indefinite useful lives totals £2.9m as at 31 December 2018 (2017: £3.2m),
which consists of investment management contracts in relation to open-ended funds. An impairment charge of £0.3m
has been recognised during the year in relation to one of these investment management contracts.
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.
136
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 Cost
At 1 January 2017
Goodwill*
£m
358.1
Additions through business combinations*
59.8
Other additions
Disposals
Exchange movement
At 31 December 2017*
Accumulated amortisation and
impairment
At 1 January 2017
Amortisation charge for the year
Impairment charge
Disposals
Exchange movement
At 31 December 2017
Net book value
At 31 December 2017*
Group
Company
Customer/
business
relationships
£m
Investment
and property
management
contracts
£m
Order
backlogs
£m
Brands
£m
Computer
software
£m
Total*
£m
Total
£m
22.6
1.5
–
–
(0.5)
23.6
19.9
0.3
–
–
(0.4)
19.8
–
–
(15.2)
402.7
48.3
–
2.3
–
(1.2)
49.4
26.3
0.9
–
–
6.8
0.3
–
–
(0.1)
(0.6)
–
1.3
–
–
–
18.8
432.6
–
8.8
63.8
8.8
4.4
–
1.6
(2.9)
(2.9)
(0.2)
(0.3)
(16.7)
27.1
6.5
1.3
24.4
485.6
10.3
2.4
–
–
0.1
12.8
3.9
1.2
–
–
(0.4)
4.7
–
–
–
–
–
–
11.2
93.6
3.1
–
(2.8)
(0.3)
11.2
7.0
2.3
(2.8)
(2.2)
97.9
–
5.8
3.0
0.3
–
(0.2)
–
3.1
2.7
353.3
3.8
14.3
1.8
1.3
13.2
387.7
*
Goodwill recognised through business combinations during 2017 and the resulting net book value and closing cost as at 31 December 2017 has been
restated by £2.0m in total as a result of a measurement period adjustment in accordance with IFRS 3. See Note 18.5 for details.
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:
2018
United Kingdom
Europe & the Middle East
Asia Pacific
North America
Total goodwill and indefinite life intangible assets
2017
United Kingdom
Europe & the Middle East*
Asia Pacific
North America
Total goodwill and indefinite life intangible assets
Transaction
Advisory
£m
Consultancy
£m
Property and
Facilities
Management
£m
Investment
Management
£m
28.7
62.2
15.2
156.0
262.1
10.4
19.9
4.8
–
35.1
30.8
19.2
30.3
–
80.3
2.0
4.9
2.3
–
9.2
Transaction
Advisory*
£m
Consultancy*
£m
Property
and Facilities
Management*
£m
Investment
Management
£m
26.0
60.8
15.1
147.4
249.3
9.3
16.8
4.7
–
30.8
27.4
8.9
30.6
–
66.9
2.0
5.2
2.3
–
9.5
Total
£m
71.9
106.2
52.6
156.0
386.7
Total
£m
64.7
91.7
52.7
147.4
356.5
*
Goodwill in relation to Europe’s Transaction Advisory, Consultancy and Property and Facilities Management segments has been restated by £2.0m as a
result of a measurement period adjustment in accordance with IFRS 3. See Note 18.5 for details.
Savills plc
Report and Accounts 2018
137
Financial statementsGovernance Strategic reportOverview 16. Goodwill and intangible assets continued
16.1 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 a £0.3m impairment charge recognised
against investment management contracts arising from the annual impairment tests conducted (2017: £2.3m impairment
charge recognised against goodwill).
16.2 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 pre-tax discount rate applied to cash flows of each CGU is based on the Group’s Weighted Average Cost of Capital
(‘WACC’). WACC is the average cost of sources of financing (debt and equity), each of which is weighted by its respective use.
Key inputs to the WACC calculation are the risk-free rate, the equity market risk premium (the return that Savills shares
provide over the risk-free rate), beta (reflecting the risk of the Group relative to the market as a whole) and the Group’s
borrowing rates.
Group WACC was adjusted for risk relative to the country in which the assets were located. The risk-adjusted discount range
of rates used in each region for impairment testing are as follows:
United Kingdom
Europe
Asia Pacific
North America
(c) Long-term growth rate
2018
Discount rate
range
9.3%–12.2%
7.9%–13.1%
7.7%–11.2%
9.3%–9.8%
2017
Discount rate
range
10.0%
10.0%
11.2%–18.1%
10.0%
To forecast beyond the five years covered by detailed forecasts, a terminal value was calculated, using average long-term
growth rates. The rates are based on the long-term growth rate in the countries in which the Group operates. The long-term
growth rates used in each region for impairment testing are as follows:
United Kingdom
Europe
Asia Pacific
North America
2018
Long-term growth
rate range
2017
Long-term growth
rate range
1.6%–2.0%
0.8%–3.0%
0.6%–5.9%
1.7%–1.8%
2.0%
1.4%–2.6%
0.8%–5.7%
2.3%
16.3 Impairment charge
Following impairment testing, a £0.3m charge has been recognised through the income statement (2017: £2.3m relating to
goodwill on the Group’s Swedish property management business) relating to an indefinite life investment management
contract, which has been fully impaired.
16.4 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:
138
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 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 2018’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.
17. Property, plant and equipment
Group
Cost
At 1 January 2018
Additions through business combinations (Note 18.5)
Disposal of subsidiary
Additions
Disposals
Exchange movement
At 31 December 2018
Accumulated depreciation and impairment
At 1 January 2018
Charge for the year
Disposals
Exchange movement
At 31 December 2018
Net book value
At 31 December 2018
Freehold
property
£m
Short
leasehold
property
£m
Equipment and
motor vehicles
£m
0.1
–
–
–
–
–
0.1
–
–
–
–
–
69.7
0.1
–
4.6
(0.1)
1.1
75.4
23.5
6.4
(0.1)
0.2
30.0
58.3
0.9
(0.1)
12.3
(5.7)
1.4
67.1
36.4
8.5
(4.7)
0.9
41.1
Total
£m
128.1
1.0
(0.1)
16.9
(5.8)
2.5
142.6
59.9
14.9
(4.8)
1.1
71.1
0.1
45.4
26.0
71.5
The Directors consider that the fair value of property, plant and equipment approximates carrying value.
Group
Cost
At 1 January 2017
Additions through business combinations
Additions
Disposals
Exchange movement
At 31 December 2017
Accumulated depreciation and impairment
At 1 January 2017
Charge for the year
Disposals
Exchange movement
At 31 December 2017
Net book value
At 31 December 2017
Freehold
property
£m
Short leasehold
property
£m
Equipment and
motor vehicles
£m
0.1
–
–
–
–
0.1
–
–
–
–
–
55.4
–
15.8
(0.4)
(1.1)
69.7
18.5
5.5
(0.4)
(0.1)
23.5
60.8
0.4
7.3
(8.4)
(1.8)
58.3
38.1
8.0
(8.4)
(1.3)
36.4
Total
£m
116.3
0.4
23.1
(8.8)
(2.9)
128.1
56.6
13.5
(8.8)
(1.4)
59.9
0.1
46.2
21.9
68.2
Savills plc
Report and Accounts 2018
139
Financial statementsGovernance Strategic reportOverview Freehold
property
£m
Equipment and
motor vehicles
£m
0.1
–
–
0.1
–
–
–
–
7.2
0.8
(0.1)
7.9
5.6
0.9
(0.1)
6.4
Total
£m
7.3
0.8
(0.1)
8.0
5.6
0.9
(0.1)
6.4
0.1
1.5
1.6
Freehold
property
£m
Equipment and
motor vehicles
£m
0.1
–
–
0.1
–
–
–
–
6.6
0.9
(0.3)
7.2
4.8
1.1
(0.3)
5.6
Total
£m
6.7
0.9
(0.3)
7.3
4.8
1.1
(0.3)
5.6
0.1
1.6
1.7
17. Property, plant and equipment continued
Company
Cost
At 1 January 2018
Additions
Disposals
At 31 December 2018
Accumulated depreciation and impairment
At 1 January 2018
Charge for the year
Disposals
At 31 December 2018
Net book value
At 31 December 2018
Company
Cost
At 1 January 2017
Additions
Disposals
At 31 December 2017
Accumulated depreciation and impairment
At 1 January 2017
Charge for the year
Disposals
At 31 December 2017
Net book value
At 31 December 2017
140
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 18. Investments and transactions
18.1 Group – Investments in joint ventures and associates
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Goodwill
£m
Cost or valuation
At 1 January 2018
Additions through business combinations (Note
18.5)
Additions
Disposals
Loans advanced
Exchange movement
At 31 December 2018
Share of profit
At 1 January 2018
Group’s share of profit from continuing
operations
Dividends received
Disposals
Exchange movement
At 31 December 2018
Total
At 31 December 2018
Cost or valuation
At 1 January 2017
Additions
Disposals
Loans advanced
Exchange movement
At 31 December 2017
Share of profit
At 1 January 2017
Group’s share of profit from continuing
operations
Dividends received
Exchange movement
At 31 December 2017
Total
At 31 December 2017
9.2
–
1.4
(0.2)
–
0.3
10.7
10.3
6.0
(5.8)
(0.4)
0.5
10.6
0.6
0.5
–
–
1.1
0.1
2.3
–
–
–
–
–
–
9.8
0.5
1.4
(0.2)
1.1
0.4
13.0
10.3
6.0
(5.8)
(0.4)
0.5
10.6
21.3
2.3
23.6
2.1
–
0.5
(0.2)
–
0.1
2.5
7.5
5.1
(5.4)
–
0.2
7.4
9.9
9.3
0.3
(0.1)
–
(0.3)
9.2
10.4
6.2
(5.3)
(1.0)
10.3
–
–
–
0.6
–
0.6
–
–
–
–
–
9.3
0.3
(0.1)
0.6
(0.3)
9.8
2.1
0.3
(0.2)
–
(0.1)
2.1
10.4
6.8
6.2
(5.3)
(1.0)
10.3
3.7
(3.0)
–
7.5
9.6
19.5
0.6
20.1
0.3
–
14.5
–
–
–
14.8
–
–
–
–
–
–
0.3
–
–
–
–
0.3
–
–
–
–
–
0.3
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Goodwill
£m
14.8
24.7
Total
£m
2.4
–
15.0
(0.2)
–
0.1
17.3
7.5
5.1
(5.4)
–
0.2
7.4
Total
£m
2.4
0.3
(0.2)
–
(0.1)
2.4
6.8
3.7
(3.0)
–
7.5
9.9
On 28 September 2018, the Group acquired a 25% interest in DRC Capital LLP (‘DRC’), a commercial real estate debt
investment advisor for consideration of £15.0m, with the option to purchase the remaining 75% of DRC in 2021.
In the opinion of the Directors, the Group does not have any joint ventures or associates that are individually material to
the results of the Group.
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.
Savills plc
Report and Accounts 2018
141
Financial statementsGovernance Strategic reportOverview 18. Investments and transactions continued
18.2 Group – Available-for-sale investments
Following the adoption of IFRS 9 from 1 January 2018, equity investments previously classified as available-for-sale investments
have been reclassified to financial assets held at FVOCI (Note 18.3). In accordance with transitional provisions in IFRS 9 (7.2.15),
comparative figures have not been restated.
At 1 January
Additions
Disposals
Additions through business combinations
Net fair value gain transferred to other comprehensive income
Exchange movement
At 31 December
Available-for-sale investments comprised the following:
Unlisted securities
UK – equity securities
UK – investment funds
European – equity securities
European – investment funds
Asia Pacific – equity securities
Asia Pacific – investment funds
Available-for-sale investments are denominated in the following currencies:
Sterling
Euro
Other
At 31 December 2017, the Group held the following principal available-for-sale investments:
2017
£m
20.8
8.8
(5.3)
0.1
0.3
(0.1)
24.6
2017
£m
14.2
2.3
0.1
1.9
0.4
5.7
24.6
2017
£m
16.5
2.0
6.1
24.6
Investment
YOPA Property Ltd (registered in England and Wales)*
Vucity Ltd (registered in England and Wales)*
Proportunity Ltd (registered in England and Wales)
Cordea Savills Dawn Syndication LP (registered in England and Wales)
Serviced Land No. 2 LP (registered in England and Wales)
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)
Principal activity
Holding
22.80%
Digital hybrid agency
33.33% Digital architectural design and planning
Digital real estate valuation
Investment property fund
UK land investment fund
Retail investment property fund
5.11%
3.70%
1.97%
11.33%
4.17%
UK land investment fund
0.86%
London residential development fund
1.12%
3.50%
3.25%
15.00%
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 and Vucity Ltd, however does not have the power to participate in the
financial and operational decisions of these entities, does not have representation on the Board of Directors of these entities and does not participate
in major policy-making processes of the entities. As a result, the Group’s investments in YOPA Property Ltd and Vucity Ltd are treated as available-for-
sale investments.
142
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 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 2017 the Group held conditional commitments to co-invest £0.3m in the Greater Tokyo Office Fund, £0.2m
in the Cordea Savills UK Property Ventures Fund No. 1 LP, and £0.1m in the Prime London Residential Development Fund II.
18.3 Group – Financial assets at fair value through other comprehensive income (‘FVOCI’)
Financial assets at FVOCI comprise the following individual equity investments:
Non-current assets
Listed securities
OnTheMarket plc
Unlisted securities
YOPA Property Ltd*
Vucity Ltd*
Savills IM Japan Value Fund II
Aomi Project TMK
Greater Tokyo Office Fund
Euro V
Prime London Residential Development Fund II
Cordea Savills UK Property Ventures No. 1 LP
Prime London Residential Development Fund
Serviced Land No. 2 LP
Home Click Pte Ltd
FPD Property Services (India) Private Ltd
Other smaller investments
2018
£m
2017*
£m
1.1
12.7
6.0
2.4
2.3
2.1
1.4
0.8
0.6
0.3
0.3
0.2
0.2
0.8
31.2
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
*
The Group holds more than 20% of the equity interest in YOPA Property Ltd and Vucity Ltd, however does not have the power to participate in the
financial and operational decisions of these entities, does not have representation on the Board of Directors of these entities and does not participate in
major policy-making processes of the entities. As a result, the Group does not exert significant influence over these investments.
These investments were classified as available-for-sale investments in 2017, see Note 18.2. During the year, the Group
increased its investment in YOPA Property Ltd and Vucity Ltd at a total cost of £4.5m and made new investments in
Home Click Pte Ltd, Euro V and Savills IM Japan Value Fund II at a total cost of £4.0m. Furthermore, the Group previously
held loan notes (£0.9m) due from Agents Mutual Ltd, which were converted to shares in OntheMarket plc and sold its
majority shareholding in FPD Property Services (India) Private Ltd with the resulting shareholding of 19.5% held as an
equity investment at FVOCI (£0.2m).
Equity investments at FVOCI are denominated in the following currencies:
Sterling
Japanese yen
Hong Kong dollar
Euro
Other
2018
£m
22.0
5.0
2.1
1.6
0.5
31.2
2017
£m
–
–
–
–
–
–
Refer to Note 3.8 for information about methods and assumptions used in determining fair value.
At 31 December 2018 the Group held conditional commitments to co-invest £0.2m in the Cordea Savills UK Property
Ventures Fund No. 1 LP.
Savills plc
Report and Accounts 2018
143
Financial statementsGovernance Strategic reportOverview 18. Investments and transactions continued
18.4 Company – Investments in subsidiaries
Cost
At 1 January 2017
Loans advanced
Loans repaid
At 31 December 2017
Loans advanced
Loans repaid
At 31 December 2018
Shares
in Group
undertaking
£m
Loans to Group
undertakings
£m
57.2
–
–
57.2
–
–
57.2
61.5
8.6
(3.6)
66.5
45.1
(40.0)
71.6
Total
£m
118.7
8.6
(3.6)
123.7
45.1
(40.0)
128.8
Refer to Note 34 for a full list of the Group’s subsidiaries.
18.5 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
Cluttons
Middle East
£m
Broadgate
£m
Currell
£m
Other
acquisitions
£m
0.4
0.5
5.5
4.8
0.4
11.6
(1.2)
–
(1.3)
(0.8)
(0.9)
7.4
(0.1)
7.3
13.9
21.2
17.5
3.7
21.2
–
–
13.5
–
–
13.5
–
–
–
–
(2.3)
11.2
–
11.2
2.3
13.5
12.6
0.9
13.5
0.4
–
–
1.5
0.5
2.4
(1.2)
–
–
–
–
1.2
1.2
1.8
3.0
3.0
–
3.0
0.2
–
0.4
0.5
0.4
1.5
(0.6)
(0.2)
–
–
(0.1)
0.6
–
0.6
3.1
3.7
3.7
–
3.7
Total
£m
1.0
0.5
19.4
6.8
1.3
29.0
(3.0)
(0.2)
(1.3)
(0.8)
(3.3)
20.4
(0.1)
20.3
21.1
41.4
36.8
4.6
41.4
Property, plant and
equipment
Investment in joint
ventures
Intangible assets
Current assets:
Total assets
Trade and other
receivables
Cash and cash equivalents
Current liabilities:
Trade and other payables
Current income tax liability
Employment benefit
provision
Non-current other
payables
Deferred income tax
liabilities
Net assets
Non-controlling interests
Net assets acquired
Goodwill
Purchase consideration
Consideration satisfied by:
Net cash paid
Discounted value of deferred consideration owing at
the reporting date
144
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018
Cluttons International Holdings Limited and Cluttons Management Limited (collectively ‘Cluttons Middle East’)
On 31 May 2018 the Group acquired 100% of the equity interest in Cluttons Middle East, establishing the Group’s first wholly
owned business in the region.
Total acquisition consideration is provisionally determined at £21.2m, £17.5m of which was settled on completion and the
remainder relating to the discounted value of deferred consideration of up to £3.7m, payable on the first, second and third
anniversaries of completion.
Acquisition-related costs of £1.2m have been expensed as incurred to the income statement.
The fair value exercise is in progress and goodwill of £13.9m has 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 business contributed revenue of £7.6m and underlying profit of £0.9m to the Group for the period from 1 June
2018 to 31 December 2018. Had the acquisition been made at the beginning of the financial year, revenue would have been
£12.3m and underlying profit would have been £1.4m.
The fair value of trade and other receivables is £4.8m and includes trade receivables with a fair value of £2.3m. The gross
contractual amount for trade receivables is £2.6m, of which £0.3m is expected to be uncollectible.
Third party property management portfolio of Broadgate Estates Limited (‘Broadgate’)
On 2 August 2018 the Group acquired Broadgate from British Land.
Total acquisition consideration is provisionally determined at £13.5m, £12.6m of which has been settled in cash during the
year with a further estimated £0.9m expected to be paid during 2019.
Acquisition-related costs of £0.6m have been expensed as incurred to the income statement.
The fair value exercise is in progress and goodwill of £2.3m has been provisionally determined. Goodwill is attributable to
the strong industry reputation and is not expected to be deductible for tax purposes.
The acquired business contributed revenue of £6.0m and underlying profit of £0.6m to the Group for the period from
2 August 2018 to 31 December 2018. Had the acquisition been made at the beginning of the financial year, revenue would
have been £15.0m and underlying profit would have been £1.5m.
The Currell Group Ltd (‘Currell’)
On 10 December 2018 the Group acquired 100% of the equity interest in Currell, a property services company in East
London, UK.
Total acquisition consideration is provisionally determined at £3.0m, all of which was settled on completion.
A further £3.5m is payable in December 2019, 2020 and 2021 and is deemed to be linked to continued active engagement
within the business. As required by IFRS 3 (revised) these payments will be expensed to the income statement over
the relevant period of engagement. Acquisition-related costs of £0.2m have been expensed as incurred to the
income statement.
The fair value exercise is in progress and goodwill of £1.8m has 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 business contributed revenue of £0.4m and underlying profit of £nil to the Group for the period from 10
December 2018 to 31 December 2018. Had the acquisition been made at the beginning of the financial year, revenue would
have been £8.3m and underlying profit would have been £0.7m.
The fair value of trade and other receivables is £1.5m and includes trade receivables with a fair value of £0.5m. The gross
contractual amount for trade receivables is £0.5m, all of which is expected to be collectible.
Savills plc
Report and Accounts 2018
145
Financial statementsGovernance Strategic reportOverview 18. Investments and transactions continued
18.5 Acquisitions of subsidiaries continued
Other acquisitions during the period
During the period, the Group also made a number of smaller acquisitions, including 100% of Central Management Solutions
Limited, an urban-centre management company in the UK, JP Case & Co Property Services Ltd, a Manchester city centre
based lettings and new homes business, Porta Planning LLP, a London based planning and development consultancy, Martel
Maides Ltd, a property agency in Guernsey and the Knutsford (UK) branch of residential agency Meller Braggins.
Total cash consideration paid was £3.7m. A further £2.2m is subject to service conditions and will be expensed to the income
statement over the period of service. Goodwill of £3.1m has been provisionally determined.
Acquisition-related costs of £0.2m have been expensed as incurred to the income statement.
The acquired businesses contributed revenue of £2.3m and underlying profit of £0.3m to the Group for the year ended 31
December 2018. Had the acquisitions been made at the beginning of the financial year, revenue would have been £5.4m and
underlying profit would have been £0.9m.
The total fair value of trade and other receivables is £0.5m and includes trade receivables with a fair value of £nil.
Update to provisional fair value of prior period acquisition
During the period, the total acquisition consideration payable for the Aguirre Newman acquisition on 29 December 2017
was finalised, with an additional £2.0m of consideration paid. This adjustment is considered a measurement period
adjustment in accordance with IFRS 3 and as a result the prior period comparatives have been restated by increasing
goodwill arising on the acquisition by £2.0m, with a corresponding increase in trade and other payables to recognise
additional deferred consideration as at 31 December 2017.
18.6 Transactions with non-controlling interests
During the year, the Group undertook the following transactions with non-controlling interests:
Name
Savills Investment Management SGR
Date
April 2018
Total
holding at
31 December
2018
100%
Holding
acquired
25%
(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 this transaction were not significant.
In April 2018, the Group acquired an additional 25% of the shares in its Italian investment management business, Savills
Investment Management SGR (‘SIMSGR’), for a net consideration of £3.0m, with £2.6m paid on completion. This takes the
Group’s shareholding in the entity to 100%. The carrying amount of SIMSGR’s net assets on the date of acquisition was
£5.0m. The Group recognised a decrease in non-controlling interest of £1.2m. The amount charged to retained earnings
in respect of the transaction was £1.8m.
Carrying amount of non-controlling interests acquired
Net consideration to acquire non-controlling interests
Charge recognised in parent’s equity
2018
£m
1.2
(3.0)
(1.8)
146
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 19. 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
2018
£m
21.3
8.4
29.7
(4.6)
(1.4)
(6.0)
2017
£m
29.5
7.4
36.9
(2.2)
(0.7)
(2.9)
Company
2018
£m
0.8
0.6
1.4
–
–
–
2017
£m
1.5
0.7
2.2
–
–
–
Deferred tax asset – net
23.7
34.0
1.4
2.2
At 1 January – asset
Amount credited/(charged) to the income statement (Note 13)
Effect of tax rate change within the income statement (Note 13)
Tax credited/(charged) to other comprehensive income
– Pension asset on actuarial gain
– Pension asset on additional contributions
– Pension asset – effect of UK tax rate change within other
comprehensive income
– Employee benefits
– Revaluations of available-for-sale investments
– Movement on foreign exchange reserves
Additions through business combinations (Note 18.5)
Disposal of subsidiaries
Exchange movement
At 31 December – asset
Group
Company
2018
£m
34.0
0.5
(0.3)
(2.8)
(1.7)
–
(3.1)
–
0.1
(3.3)
(0.2)
0.5
23.7
2017
£m
32.9
8.2
(0.9)
(2.8)
(1.7)
0.1
(0.8)
0.1
0.1
(0.8)
–
(0.4)
34.0
2018
£m
2.2
0.1
–
(0.2)
(0.1)
–
(0.6)
–
–
–
–
–
2017
£m
2.5
–
–
(0.1)
(0.2)
–
–
–
–
–
–
–
1.4
2.2
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.
Savills plc
Report and Accounts 2018
147
Financial statementsGovernance Strategic reportOverview 19. Deferred income tax continued
As at the reporting date the Group did not recognise deferred tax income tax assets of £1.8m (2017: £1.4m) in respect of
losses amounting to £7.8m (2017: £5.9m), of which £0.2m expires within 5 years (2017: £nil) and the remaining £1.6m being
carried forward indefinitely against future taxable income.
Deferred tax assets – Group
At 1 January 2017
Amount credited/(charged) to the income
statement (Note 13)
Effect of tax rate change within income
statement (Note 13)
Tax charged to other comprehensive income
(Note 13)
Effect of tax rate change charged to other
comprehensive income (Note 13)
Transfer to/(from) deferred tax assets
Additions through business combinations
Exchange movement
At 31 December 2017
Amount (charged)/credited to the income
statement (Note 13)
Effect of tax rate change within the income
statement (Note 13)
Amounted credited/(charged) to other
comprehensive income (Note 13)
Transfer to deferred tax liabilities
Disposal of subsidiaries
Exchange movement
At 31 December 2018
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Tax losses
£m
Retirement
benefits
£m Revaluations
16.0
3.5
10.2
5.2
(0.9)
–
(1.0)
(0.2)
0.1
1.4
0.5
–
–
–
0.3
–
–
2.2
–
–
(0.1)
0.1
(0.6)
19.6
(0.5)
(2.2)
(0.1)
(0.2)
–
–
–
–
1.6
–
–
(0.2)
0.4
17.4
Employee
benefits
£m
5.4
2.3
Total
£m
36.5
7.1
–
(1.1)
(0.8)
(5.3)
–
–
–
–
6.9
0.1
–
0.1
(0.5)
36.9
–
–
–
–
0.1
2.5
0.7
–
–
–
–
0.1
3.3
(4.5)
0.1
(0.2)
–
–
5.7
–
0.4
(3.6)
–
0.1
2.4
(0.2)
0.2
1.0
(1.0)
–
(0.3)
(3.1)
–
–
–
0.2
4.8
–
–
–
–
–
–
–
–
–
–
–
–
–
–
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Retirement
benefits
£m
Revaluations
£m
Intangible
assets
£m
(0.1)
–
–
–
–
–
(0.1)
(0.1)
–
–
–
–
(0.2)
(1.6)
0.6
–
0.1
–
–
(0.9)
–
–
–
–
–
–
–
–
0.7
0.1
(4.9)
–
–
(0.2)
(1.0)
3.6
–
0.1
(0.5)
(0.1)
–
–
0.1
–
–
–
–
–
–
–
–
–
(1.8)
0.5
0.2
–
(0.9)
0.1
(1.9)
0.9
–
–
(3.3)
–
(4.3)
Deferred tax liabilities – Group
At 1 January 2017
Amount credited to the income statement (Note 13)
Effect of tax rate change within the income statement
(Note 13)
Tax credited to other comprehensive income (Note 13)
Additions through business combinations
Exchange movement
At 31 December 2017
Tax (charged)/credited to the income statement (Note 13)
Tax credited/(charged) to other comprehensive income
(Note 13)
Transfer from deferred tax assets
Additions through business combinations (Note 18.5)
Exchange movement
At 31 December 2018
Net deferred tax asset
At 31 December 2018
At 31 December 2017
148
Savills plc
Report and Accounts 2018
(2.7)
(3.6)
(0.2)
0.6
29.7
Total
£m
(3.6)
1.1
0.2
0.2
(0.9)
0.1
(2.9)
1.5
(4.8)
3.6
(3.3)
(0.1)
(6.0)
23.7
34.0
Notes to the financial statements continuedYear ended 31 December 2018 Deferred tax assets – Company
At 1 January 2017
Amount (charged)/credited to the income statement
Tax charged to other comprehensive income (Note 13)
At 31 December 2017
Amount (charged)/credited to the income statement
Tax charged to other comprehensive income (Note 13)
At 31 December 2018
Net deferred tax asset
At 31 December 2018
At 31 December 2017
20. Trade and other receivables
20.1 Trade and other receivables – current
Trade receivables
Less: loss allowance/impairment of receivables provision
Trade receivables – net
Amounts owed by subsidiary undertakings
Other receivables
Prepayments and accrued income
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Retirement
benefits
£m
Employee
benefits
£m
0.3
–
–
0.3
–
–
0.3
0.7
(0.4)
–
0.3
(0.2)
–
0.1
0.4
–
(0.3)
0.1
0.2
(0.3)
–
1.1
0.4
–
1.5
0.1
(0.6)
1.0
Group
Company
2018
£m
441.8
(22.6)
419.2
–
32.1
77.0
528.3
2017
£m
391.2
(19.9)
371.3
–
53.0
66.3
490.6
2018
£m
–
–
–
7.8
0.1
2.4
10.3
Total
£m
2.5
–
(0.3)
2.2
0.1
(0.9)
1.4
1.4
2.2
2017
£m
–
–
–
5.3
0.1
2.5
7.9
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.
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.
Amounts owed by subsidiary undertakings are unsecured, interest-free and generally cleared within the month.
The carrying amounts of the Group’s gross trade receivables are denominated in the following currencies:
Sterling
Euro
US dollar
Hong Kong dollar
Australian dollar
Chinese renminbi
Other*
Group
2018
£m
174.0
86.8
47.8
28.5
49.1
26.9
28.7
2017
£m
155.0
73.2
42.6
39.6
31.4
22.6
26.8
441.8
391.2
*
Other currencies include United Arab Emirates Dirham, 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.
Savills plc
Report and Accounts 2018
149
Financial statementsGovernance Strategic reportOverview 20. Trade and other receivables continued
20.2 Group – Loss allowance/impairment of trade receivables provision
The difference between the impairment of receivables provision as at 31 December 2017 and the opening loss allowance
provision for trade receivables as at 1 January 2018 under IFRS 9 is not considered material, after the impact on bonus.
Therefore no adjustments have been made to opening retained earnings.
The other classes within trade and other receivables do not contain impaired assets.
The loss allowance provision for trade receivables as at 31 December 2018 and 1 January 2018 (on adoption of IFRS 9) was
determined as follows; the expected credit losses below also incorporate forward looking information.
31 December 2018
Expected loss rate
Gross carrying amount (£m)
Loss allowance provision (£m)
1 January 2018
Expected loss rate
Gross carrying amount (£m)
Loss allowance provision (£m)
Current
0.8%
323.9
(2.5)
Current
0.6%
258.0
(1.6)
More than
30 days
past due
More than
60 days
past due
More than
90 days
past due
More than
180 days
past due
1.2%
40.3
(0.5)
1.1%
27.1
(0.3)
10.4%
25.9
(2.7)
67.5%
24.6
(16.6)
More than
30 days
past due
More than
60 days
past due
More than
90 days
past due
More than
180 days
past due
1.4%
57.6
(0.8)
1.4%
21.7
(0.3)
8.3%
25.4
(2.1)
51.6%
28.5
(14.7)
Total
5.1%
441.8
(22.6)
Total
5.0%
391.2
(19.5)
The loss allowance provision for trade receivables as at 31 December reconciles to the opening loss allowance for that
provision as follows:
At 1 January
Amendment following implementation of IFRS 9
Adjusted balance as at 1 January
Increase in loan loss allowance recognised in the income statement during the period
Receivables written off during the year as uncollectible
Foreign exchange
At 31 December
2018
£m
2017
£m
(19.9)
(19.3)
0.4
–
(19.5)
(19.3)
(5.1)
(4.2)
2.4
–
2.9
0.7
(22.6)
(19.9)
In accordance with transitional provisions in IFRS 9 (7.2.15), comparative figures have not been restated. The following
disclosures relate to the 2017 comparatives.
As at 31 December 2017, trade receivables of £280.6m were neither past due nor impaired and fully performing.
As at 31 December 2017, trade receivables of £19.9m were impaired and provided for. The individually impaired receivables
mainly relate to receivables from clients that have been affected by the uncertain economic conditions where funding and
completion have been delayed and cash flow has become uncertain.
The ageing of these receivables is as follows:
Up to 3 months
3 to 6 months
Over 6 months
2017
£m
1.6
4.9
13.4
19.9
As at 31 December 2017, trade receivables of £90.7m 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.
150
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 The ageing of these receivables is as follows:
Up to 3 months
3 to 6 months
Over 6 months
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
2017
£m
69.4
16.1
5.2
90.7
2017
£m
(19.3)
(7.2)
2.9
3.0
0.7
(19.9)
The creation and release of the provision for impaired receivables have been included in other operating expenses in the
income statement.
21. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Group
Company
2018
£m
192.6
31.3
223.9
2017
£m
198.1
10.7
208.8
2018
£m
90.2
–
90.2
2017
£m
90.8
–
90.8
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 2018 was 1.91% (2017: 1.35%); these deposits have
an average maturity of 36 days (2017: 53 days).
Cash subject to restrictions in Asia Pacific amounts to £34.7m (2017: £41.6m) 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:
Sterling
Hong Kong dollar
Euro
Chinese renminbi
US dollar
Japanese yen
Australian dollar
South Korean won
Singapore dollar
Other currencies*
Group
Company
2018
£m
8.9
62.9
35.4
36.4
36.7
4.8
7.1
9.8
6.6
2017
£m
5.1
61.5
56.1
37.9
10.1
8.6
7.7
6.8
4.3
15.3
223.9
10.7
208.8
2018
£m
90.1
–
–
–
0.1
–
–
–
–
–
2017
£m
90.8
–
–
–
–
–
–
–
–
–
90.2
90.8
*
Other currencies include United Arab Emirates Dirham, Canadian dollar, Czech koruna, New Taiwan dollar, Macau pataca, Thai baht, Vietnamese dong,
New Zealand dollar, Philippine peso, Danish krone, Polish zloty and Swedish krona.
Savills plc
Report and Accounts 2018
151
Financial statementsGovernance Strategic reportOverview 22. Trade and other payables
22.1 Trade and other payables – current
Deferred consideration (Note 22.3)
Trade payables
Amounts owed to subsidiary undertakings
Other taxation and social security
Other payables
Accruals
Group
Company
2018
£m
15.7
109.4
–
54.2
63.0
386.8
629.1
2017
Restated*
£m
21.3
111.6
–
46.4
49.7
358.6
587.6
2018
£m
–
1.9
2.5
0.8
0.1
9.3
14.6
2017
£m
–
1.7
2.4
0.9
–
8.1
13.1
*
See Note 2.26 for details about changes in accounting policies and prior year restatement and Note 18.2 for details of prior period restatement of trade
and other payables in relation to a measurement period adjustment in accordance with IFRS 3.
The carrying value of trade and other payables is approximate to their fair value.
Amounts due to subsidiary undertakings are unsecured, interest-free and repayable on demand.
22.2 Other payables – non-current
Group
Company
Deferred consideration (Note 22.4)
Other payables
22.3 Deferred consideration – current
At 1 January
Reclassification from non-current deferred consideration (Note 22.4)
Additions through business combinations (Note 18.5)
Deferred consideration linked to employment accrued during year
Interest unwind
Deferred consideration paid
Exchange movements
At 31 December
2018
£m
22.1
16.1
38.2
2017
£m
21.6
14.0
35.6
2018
£m
–
–
–
2018
£m
21.3
10.7
3.5
3.6
0.6
(24.0)
–
15.7
2017
£m
–
–
–
2017
Restated*
£m
59.1
16.4
4.2
4.2
0.4
(60.4)
(2.6)
21.3
*
See Note 2.26 for details of prior period restatement of current deferred consideration in relation to a measurement period adjustment in accordance
with IFRS 3.
22.4 Deferred consideration – non-current
At 1 January
Reclassification to current deferred consideration (Note 22.3)
Additions through business combinations (Note 18.5)
Deferred consideration linked to employment accrued during year
Interest unwind on discounted deferred consideration
Deferred consideration paid
Exchange movements
At 31 December
152
Savills plc
Report and Accounts 2018
2018
£m
21.6
(10.7)
1.8
8.4
0.5
–
0.5
22.1
2017
£m
23.5
(16.4)
11.3
6.3
0.3
(2.8)
(0.6)
21.6
Notes to the financial statements continuedYear ended 31 December 2018 23. Borrowings
Current
Bank overdrafts
Unsecured bank loans due within one year or on demand
Non-current
Loan notes
Transaction costs (issuance of loan notes)
Finance leases
Group
2018
£m
–
0.4
0.4
150.0
(0.5)
0.1
149.6
150.0
2017
£m
3.6
106.5
110.1
–
–
0.1
0.1
110.2
The Company does not have any borrowings as at 31 December 2018 and 31 December 2017.
In April 2018, the Group increased the multi-currency revolving credit facility (‘RCF’) by £60.0m to £360.0m. The RCF
expires on 15 December 2020. As at 31 December 2018 £nil (2017: £106.0m) of the RCF was drawn.
In June 2018, the Group raised £150.0m of long-term debt through the issuance of 7, 10 and 12 year fixed rate private note
placements into the US institutional market.
The unsecured bank loans due within one year or on demand reflects a £0.4m working capital loan in Thailand, which is
payable on demand, denominated in Thailand baht and has an effective interest rate of 4.55%.
Movements in borrowings are analysed as follows:
Opening amount as at 1 January
Additional borrowings
Borrowings acquired through business combinations
Repayments of borrowings (including overdraft movement)
Closing amount as at 31 December
The exposure of the Group’s borrowings to interest rate changes at the reporting date are:
Less than 1 year
Between 2 and 5 years
Group
2018
£m
110.2
305.0
–
(265.2)
150.0
2017
£m
35.8
184.9
0.1
(110.6)
110.2
Group
2018
£m
0.4
0.1
0.5
2017
£m
110.1
0.1
110.2
The Group’s non-current loan notes are fixed rate notes and therefore excluded from the above analysis.
The effective interest rates at the reporting date were as follows:
Bank overdrafts
Bank loans
Loan notes
The carrying amounts of borrowings are approximate to their fair value.
Group
2018
%
–
4.09
3.16
2017
%
2.62
1.51
–
Savills plc
Report and Accounts 2018
153
Financial statementsGovernance Strategic reportOverview 23. Borrowings continued
The carrying amounts of the Group’s borrowings are denominated in the following currencies:
Sterling
Other
The Group has the following undrawn borrowing facilities:
Floating rate – expiring within 1 year or on demand
Floating rate – expiring between 1 and 5 years
24. Derivative financial instruments
2018
Forward foreign exchange contracts – at fair value
Interest rate cap contract – at fair value
2017
Forward foreign exchange contracts – at fair value
Interest rate cap contract – at fair value
Group
2018
£m
149.5
0.5
150.0
Group
2018
£m
32.1
360.1
392.2
2017
£m
109.4
0.8
110.2
2017
£m
33.5
194.2
227.7
Group
Assets
£m
Liabilities
£m
0.1
–
0.1
0.1
–
0.1
Group
Assets
£m
Liabilities
£m
0.5
–
0.5
0.1
–
0.1
The Company does not have any derivative financial instruments as at 31 December 2018 and 31 December 2017.
Forward foreign exchange contracts
The gross notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2018 were
£43.5m (2017: £94.1m). 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.
Gains and losses on the interest rate cap are recognised in net finance costs in the income statement.
154
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 25. Provisions
25.1 Provisions
At 1 January 2018
Provided during the year
Utilised during the year
Released during the year
Total
Less non-current portion
Current portion
2017
Current
Non-current
Total
Professional
indemnity
claims
£m
11.3
2.6
(1.4)
(1.5)
11.0
5.5
5.5
Professional
indemnity
claims
£m
5.1
6.2
11.3
Dilapidation
provisions
£m
Onerous leases
£m
Restructuring
provision
£m
Group total
£m
Company
£m
7.0
1.0
–
–
8.0
6.6
1.4
2.0
0.4
(1.0)
–
1.4
0.7
0.7
4.0
0.2
(2.6)
(0.8)
0.8
–
0.8
24.3
4.2
(5.0)
(2.3)
21.2
12.8
8.4
0.6
–
–
(0.6)
–
–
–
Dilapidation
provisions
£m
Onerous leases
£m
Restructuring
provision
£m
Group total
£m
Company
£m
1.4
5.6
7.0
0.9
1.1
2.0
4.0
–
4.0
11.4
12.9
24.3
–
0.6
0.6
(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 nine 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 five years.
(d) Restructuring provision
This provision comprises termination payments to employees affected by restructuring and lease termination penalties.
Savills plc
Report and Accounts 2018
155
Financial statementsGovernance Strategic reportOverview
25. Provisions continued
25.2 Employee benefit obligations
In addition to the defined benefit obligation pension scheme disclosed in Note 11.2, the following are included in employee
benefit obligations:
Group
At 1 January 2018
Additions through business combinations (Note 18.5)
Provided during the year
Utilised during the year
Exchange movements
At 31 December 2018
Total
£m
27.2
1.3
6.0
(7.6)
0.3
27.2
The above provisions relate to holiday pay and long service leave in the UK, Asia Pacific and Europe & the Middle East.
Profit shares are included within accruals (Note 22).
The Company had £0.1m of employee benefit obligations as at 31 December 2018 (2017: £0.1m), relating to holiday pay and
long service leave.
The above employee benefit obligations have been analysed between current and non-current as follows:
Current
Non-current
26. Share capital – Group and Company
Authorised and allotted
Ordinary shares of 2.5p each:
Authorised
Issued, called up and fully paid
Movement in issued, called up and fully paid share capital:
2018
Number of
shares
2017
Number of
shares
202,000,000 202,000,000
142,923,604 141,931,341
Group
2018
£m
15.8
11.4
27.2
2018
£m
5.1
3.6
At 1 January
2018
2017
Number of
shares
£m
Number of
shares
141,931,341
3.5 139,809,677
Issued to direct participants on exercise of options under the
Sharesave Scheme
Issued to direct participants under the Performance Share Plan
Issued to satisfy final instalment of shares due to former Studley, Inc.
stockholders in relation to the acquisition in 2014
820,985
171,278
–
0.1
–
–
6,891
166,797
1,947,976
2017
£m
11.2
16.0
27.2
2017
£m
5.1
3.5
£m
3.5
–
–
–
At 31 December
142,923,604
3.6 141,931,341
3.5
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.
156
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 As at 31 December 2018, the EBT held 5,502,275 shares (2017: 4,819,684 shares) and the Rabbi Trust held 1,386,356 shares
(2017: 800,000). 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 and the Rabbi Trust, who may take account of any recommendation of the Company. The
EBT waives all of its dividend entitlement. For further details of the EBT and the Rabbi Trust refer to Note 2.21.
At the Annual General Meeting (‘AGM’) held on 8 May 2018, the shareholders gave the Company authority, subject to stated
conditions, to purchase for cancellation up to 14,178,941 of its own ordinary shares (AGM held on 9 May 2017: 13,967,033).
Such authority remains valid until the conclusion of the next AGM or 7 August 2019, whichever is the earlier.
27. Share-based payment
The Group operates four equity-settled share-based payment arrangements, namely the Sharesave Scheme, the
Performance Share Plan (‘PSP’), the Deferred Share Plan (‘DSP’) and the Deferred Share Bonus Plan (‘DSBP’). The Group
recognised total expenses relating to equity-settled share-based payment transactions of £18.2m in 2018 (2017: £14.5m). Of
the total share-based payments charge, £0.5m (2017: £0.6m) relates to the Sharesave schemes, £0.4m (2017: £0.6m) relates
to PSP schemes, £7.1m (2017: £4.7m) relates to DSP schemes and £10.2m (2017: £8.6m) relates to DSBP schemes.
Refer to the Remuneration Report for details of the various schemes, pages 66 to 84.
27.1 Movements in share schemes
2018 number of awards (‘000)
Outstanding at 1 January
Granted
Exercised/cancelled
Forfeited/lapsed
Outstanding at 31 December
Exercisable at 31 December
Weighted average exercise price for awards outstanding
at end of the year (pence)
Weighted average remaining contractual life (years)
Weighted average share price at the date of exercise for
awards exercised in the year (pence)
2017 number of awards (‘000)
Outstanding at 1 January
Granted
Exercised/cancelled
Forfeited/lapsed
Outstanding at 31 December
Exercisable at 31 December
Weighted average exercise price for awards outstanding
at end of the year (pence)
Weighted average remaining contractual life (years)
Weighted average share price at the date of exercise for
awards exercised in the year (pence)
Sharesave
awards
PSP awards
DSP awards
DSBP awards
967
1,467
(829)
(12)
1,593
72
638.8
2.6
558
170
(156)
(30)
542
–
–
2.5
2,560
1,606
(411)
(166)
4,050
1,101
(995)
(74)
3,589
4,082
–
–
1.9
–
–
1.6
840.0
979.4
941.4
968.0
Sharesave
awards
1,066
–
(42)
(57)
967
–
666.2
0.5
PSP awards
DSP awards
DSBP awards
690
172
(152)
(152)
558
–
–
1.9
2,333
1,135
(854)
(54)
2,560
–
–
2.0
3,992
1,053
(954)
(41)
4,050
–
–
1.7
652.6
868.1
912.5
918.2
Savills plc
Report and Accounts 2018
157
Financial statementsGovernance Strategic reportOverview 27. Share-based payment continued
27.2 Fair value of options
For all the DSP and DSBP schemes the fair value of awards is the closing share price before award date. The Actuarial
Binomial model of actuaries Lane Clark & Peacock LLP is used to fair value awards granted under the PSP and Sharesave
schemes. The key inputs to determine the fair value of the awards granted under the PSP scheme and Sharesave scheme
during 2018 are shown below.
Performance Share Plan: Awards in the year ended 31 December 2018
Share price at grant date
Risk-free rate
Volatility of Savills share price
Correlation of Savills share price to index
Employee turnover
16 April 2018
973.5p
1.2%
23% per annum
44%
Zero
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.
Sharesave Plan: Awards in the year ended 31 December 2018
Share price at grant date
Risk-free rate
Volatility of Savills share price
Allowance for pre-vesting cancellations
Employee turnover
The fair values of options granted in the period are shown below.
2 October 2018
782.5p
1.0%
23% per annum
4% over the vesting
period
Zero
Grant
DSP 2018
DSP 2018
DSP 2018
DSP 2018
DSP 2018
DSBP 2018
PSP 2018
SAYE 2018
Grant date
Deferred period
Fair value pence
8 January 2018
3 – 5 years
16 April 2018
3 years
6 June 2018
1 – 5 years
10 August 2018
3 September 2018
16 April 2018
16 April 2018
2 October 2018
3 years
3 – 5 years
3 – 4 years
5 years
3 years
980.0
976.5
963.1
829.5
800.0
976.5
739.3
146.2
158
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 28. Retained earnings and other reserves
Share-
based
payments
reserve
£m
Treasury
shares
£m
Profit
and loss
account*
£m
Total
retained
earnings*
£m
Capital
redemption
and capital
reserve
£m
Merger
relief
reserve
£m
Foreign
exchange
reserve
£m
Revaluation
reserve
£m
Total
other
reserves
£m
Balance at 1 January 2018
33.2
(41.7) 255.7
247.2
1.7
34.9
61.0
0.8
98.4
Profit attributable to owners of the
Company
Other comprehensive income/(loss)
Employee share option scheme:
–
–
– Value of services provided
18.2
–
–
–
– Exercise of options
(14.0)
11.4
76.7
12.5
–
2.6
76.7
12.5
18.2
–
Purchase of treasury shares
Dividends
Disposal of equity investments at
FVOCI
Transfer between reserves
Transactions with non-controlling
interests
–
–
–
–
–
(25.1)
–
(25.1)
–
–
–
–
(41.4)
(41.4)
0.6
0.6
(0.4)
(0.4)
(1.8)
(1.8)
Balance at 31 December 2018
37.4
(55.4) 304.5
286.5
–
–
–
–
–
–
–
0.4
–
2.1
–
–
–
–
–
–
–
–
–
–
19.5
–
–
(0.2)
19.3
–
–
–
–
–
–
–
–
–
–
–
–
(0.4)
(0.1)
(0.5)
–
–
–
–
0.4
–
34.9
80.1
0.5
117.6
*
Included within profit and loss account is tax on items taken directly to equity (Note 13) as disclosed above.
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
Foreign
exchange
reserve
£m
Revaluation
reserve
£m
Total
other
reserves
£m
Balance at 1 January 2017
28.9
(37.9) 204.8
195.8
1.7
23.6
77.6
1.0
103.9
Profit attributable to owners of the
Company
Other comprehensive income/(loss)
Employee share option scheme:
–
–
– Value of services provided
14.5
–
–
–
80.1
13.3
80.1
13.3
–
14.5
– Exercise of options
(10.1)
13.4
(3.3)
– Withdrawal of options
(0.1)
–
Purchase of treasury shares
Dividends
Shares issued
Disposal of available-for-sale
investments
–
–
–
–
(17.2)
–
–
–
–
–
(17.2)
0.1
–
(39.3)
(39.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.3
–
–
–
–
(16.1)
0.5
(15.6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
11.3
(0.5)
61.0
(0.7)
(1.2)
0.8
98.4
Balance at 31 December 2017
33.2
(41.7)
255.7
247.2
1.7
34.9
*
Included within profit and loss account is tax on items taken directly to equity (Note 13) as disclosed above.
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.
Savills plc
Report and Accounts 2018
159
Financial statementsGovernance Strategic reportOverview 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
2018
£m
55.9
178.7
119.4
354.0
2017
£m
51.1
136.8
123.0
310.9
Company
2018
£m
7.0
28.1
61.3
96.4
2017
£m
7.0
28.1
70.3
105.4
Significant operating leases relate to the various property leases for Savills offices in the UK, Europe & the Middle East, Asia
Pacific and North America. There are no significant non-cancellable sub-leases.
31. Cash generated from operations
Group
Company
Profit for the year
Adjustments for:
Income tax (Note 13)
Depreciation (Note 17)
Amortisation of intangible assets (Note 16)
Impairment of goodwill and intangible assets (Note 16)
Loss on disposal of property, plant and equipment and intangible
assets
Profit on disposal of subsidiaries, joint ventures and equity
investments
Net finance cost/(income) (Note 12)
Share of post-tax profit from joint ventures and associates (Note
18.1)
Decrease in employee and retirement obligations
Exchange movement on operating activities
(Decrease)/increase in provisions
Charge for share-based compensation (Note 27)
Exercise of share options
2018
£m
77.2
32.2
14.9
10.3
0.3
0.8
(2.9)
2.3
(11.1)
(7.0)
(0.6)
(3.2)
18.2
–
2017
£m
81.1
31.3
13.5
7.0
2.3
–
(5.9)
1.3
(9.9)
(7.9)
(0.2)
2.3
14.5
–
Operating cash flows before movements in working capital
131.4
129.4
2018
£m
55.5
(2.1)
0.9
0.4
–
–
–
(1.1)
–
(0.3)
–
(0.6)
2.1
(10.1)
44.7
2017
£m
64.0
(2.1)
1.1
0.3
–
–
–
(0.8)
–
(0.5)
–
(1.3)
2.4
(13.4)
49.7
(Increase)/decrease in trade and other receivables and contract
assets
Increase/(decrease) in trade and other payables and contract
liabilities
Cash generated from operations
(36.7)
(44.8)
(2.3)
8.6
53.1
147.8
60.5
145.1
1.5
43.9
(8.4)
49.9
Foreign exchange movements resulted in a £10.9m increase in current and non-current trade and other receivables and
contract assets (2017: £8.9m decrease) and a £12.3m increase in current and non-current trade and other payables and
contract liabilities (2017: £16.4m decrease).
160
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 32. Analysis of cash net of debt
2018
Cash and cash equivalents
Bank overdrafts
Bank loans
Loan notes
Transaction costs (issuance of loan notes)
Finance leases
Cash and cash equivalents net of debt
2017
Cash and cash equivalents
Bank overdrafts
Bank loans
Finance leases
Cash and cash equivalents net of debt
At 1 January
£m
Cash flows
£m
208.8
(3.6)
205.2
(106.5)
–
–
(0.1)
98.6
6.7
3.6
10.3
106.1
(150.0)
0.5
–
(33.1)
At 1 January
£m
223.6
(0.2)
223.4
(35.6)
–
187.8
Cash flows
£m
(7.6)
(3.4)
(11.0)
(70.9)
–
(81.9)
Movements
through
business
combinations
and disposals
£m
(1.4)
–
(1.4)
–
–
–
–
(1.4)
Additions
through
business
combinations
£m
–
–
–
–
(0.1)
(0.1)
Exchange
movement
£m
At 31
December £m
9.8
–
9.8
–
–
–
–
9.8
223.9
–
223.9
(0.4)
(150.0)
0.5
(0.1)
73.9
Exchange
movement
£m
(7.2)
–
(7.2)
–
–
(7.2)
At 31
December £m
208.8
(3.6)
205.2
(106.5)
(0.1)
98.6
33. Related party transactions
Other than disclosed below and the information provided within the Remuneration Report, there were no significant related
party transactions during the year.
(a) Loans to related parties
Loans to joint ventures are disclosed in Note 18.1.
(b) Company transactions
The Company provided corporate function services to its subsidiaries at an arm’s length value of £21.6m (2017: £19.4m).
Dividends of £55.3m were received from subsidiaries during the year (2017: £60.0m). Amounts outstanding to and from
subsidiaries as at 31 December 2018 are disclosed in Notes 20 and 22.
Savills plc
Report and Accounts 2018
161
Financial statementsGovernance Strategic reportOverview 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 2018, 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
Australia
Australia
Australia
Australia
Australia
Registered office
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
(ii) Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
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 Investment Management (Australia) Pty Ltd
Savills Project Management Pty Ltd
Savills Project Services (SA) Pty Ltd
Savills Property Management (NSW) Pty Ltd
Savills Valuations Pty Ltd
Cluttons Bahrain Limited SPC
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Australia
Bahrain
Cluttons Sales SPC
(iv) Bahrain
Savills Canada Inc
Savills Studley Services Inc
Savills Studley Inc (Canada)
Guardian Property Services (Shanghai) Company Ltd
Savills Business Information Technology (Shenzhen) Ltd
Savills Property Services (Beijing) Company Ltd
Savills Property Services (Chengdu) Company Ltd
Canada
Canada
Canada
China
China
China
China
Savills Property Services (Guangzhou) Company Ltd
China
Savills Property Services (Hengqin) Ltd
Savills Property Services (Shanghai) Company Ltd
Savills Property Services (Tianjin) Company Ltd
Savills Property Services (Wuhan) Company Ltd
Savills Property Services (Zhuhai) Company Ltd
Savills Real Estate Valuation (Beijing) Company Ltd
China
China
China
China
China
China
162
Savills plc
Report and Accounts 2018
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 36, Gateway, 1 Macquarie Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Level 25, 1 Farrer Place, Sydney, NSW 2000
Flat/shop: 2804, Building: 2504, Road: 2832, Block: 428,
Area: Al Seef, Manama
Flat/shop: 2802, Building: 2504, Road: 2832, Block: 428,
Area: Al Seef, Manama
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
Room 220, Block 1, No.100 Jinyu Road, Pu Dong, Shanghai
Unit 201, A Tower, No.1 QianWan Yi Road, Qianhai Shengan
Cooperation District, Shenzhen
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 1301, R&F Center, No.10 Hua Xia Road, Zhujiang New Town,
Guangzhou 510623
Room 105-19233, No. 6 Baohua Road, Hengqin New Area, Zhuhai
Unit D, Room 62, Block 3, No.227, Ru Shan Road, Shanghai
Unit 4607, Tianjin World Financial Center, No.2 Dagu North Road,
Xiaobailou Street, Heping District, Tianjin
Unit 08-10, 27/F, CITIC PACIFIC Mansion, No.1627 Zhongshan
Avenue, Jiang’an District
Room 2204, 22/F, Tower B, China Overseas Building, Midtown,
No. 2021 Jiuzhou West Avenue, Zhuhai
Unit 01, 21/F, East Tower, Twin Towers, B-12 Jianguomenwai Avenue,
Chaoyang District, Beijing 100022
Notes to the financial statements continuedYear ended 31 December 2018 Fully-owned subsidiary
Savills Real Estate Valuation (Guangzhou) Company Ltd
Country of
incorporation
China
Savills Valuation and Professional Services (BJ) Ltd
Savills Valuation and Professional Services (GZ) Ltd
Shanghai Shan Mei Real Consulting Ltd
Shanghai XinMin Equity Investment Management
Company Ltd
Shenzhen Guardian Property Management Ltd
Swan Property Services (Beijing) Company Ltd
China
China
China
China
China
China
Registered office
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 2105, R&F Centre, No.10 Hua Xia Road, Zhujiang New Town,
Guangzhou
Room 5, 2F, No. 707 Zhangyang Road, Pilot Free Trade Zone,
Shanghai
Unit 602, No. 4, Lane 541, Wenshui East Road, Hongkou District,
Shanghai
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
Savills CZ s.r.o.
Czech Republic V Celnici 1031/4, 110 00 Prague 1
Savills Investment Management ApS
Denmark
Østergade 13, 2/F, 1100, København K
Cluttons Egypt Consulting JSC
Savills Investment Management SAS
Piccadilly General Partner GmbH
Savills Advisory Services Germany GmbH & Co. KG
Savills Advisory Services GmbH
Savills Fund Management Holding AG
Savills Immobilien Beratungs GmbH
Savills Immobilien Beteiligungs GmbH
Savills Immobilien Management GmbH
Savills Investment Management (Germany) GmbH
Martel Maides Ltd
Savills Channel Islands Ltd
Bridgewater Management Ltd
BTHK Property Management Ltd
Egypt
France
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Germany
Guernsey
Guernsey
Building 17, Street 210, Al Maadi, Cairo
54-56 Avenue Hoche, 75008 Paris
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Taunusanlage 18, 60325 Frankfurt-am-Main
Taunusanlage 18, 60325 Frankfurt-am-Main
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Taunusanlage 18, 60325 Frankfurt-am-Main
Taunusanlage 18, 60325 Frankfurt-am-Main
Taunusanlage 18, 60325 Frankfurt-am-Main
Sonnenstrasse 19, Munich
1 Le Truchot, St Peter Port, Guernsey, GY1 1WD
22 Smith Street, St Peter Port, Guernsey, GY1 2JQ
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
Rooms 805-813, 8/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
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
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
Larry Smith Asia 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
Unit 1009, 10/F, Chinachem Golden Plaza, 77 Mody Road
Tsim Sha Tsui East, Kowloon,
Savills plc
Report and Accounts 2018
163
Financial statementsGovernance Strategic reportOverview 34. Group – Investments continued
Fully-owned subsidiary
Mount Link Services Ltd
Quartey Properties Ltd
Savills (China) Ltd
Savills (Hong Kong) Ltd
Savills Asia Pacific Ltd
Savills Building Services Ltd
Savills Design Ltd
Savills Engineering Ltd
Savills Guardian (Holdings) Ltd
Country of
incorporation
Hong Kong
Registered office
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/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
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
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Savills IM Shanghai Investco Limited
Hong Kong
16F Nexxus Building, 41 Connaught Road, Central
Savills India Holding Ltd
Savills Indonesia Holding Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
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
Savills Management Services Ltd
Savills Philippines Holding Ltd
Savills Project Consultancy Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
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 Realty Ltd
Savills Regional Services Ltd
Savills Residence Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Savills Valuation and Professional Services Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
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
The Peninsular Centre Retailers Association Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Cluttons (India) Private Limited
Actium
Anateo Ltd
HOK Financial Services
Liffey Valley Management Ltd
Mahon Point Management Ltd
Savills Advisory Services (Ireland) Limited
India
(ii) Ireland
(ii) Ireland
Ireland
Ireland
Ireland
Ireland
Flat no. 333, 3/F, Devika Tower, 6 Nehru Place, New Delhi 110019
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
33 Molesworth Street, Dublin 2
Savills Commercial (Ireland) Ltd
(ii) Ireland
33 Molesworth Street, Dublin 2
Savills Management Resource Ireland Ltd
Savills Residential (Ireland) Ltd
White Water (Newbridge) Ltd
White Water Management Ltd
White Water Residential DAC
Savills Investment Management SGR S.p.A
Savills Italy S.r.l.
Savills Larry Smith S.r.l.
Savills Asset Advisory Company Ltd
Savills Investment Architecture Design GK
Savills Japan Company Ltd
Ireland
Ireland
Ireland
Ireland
Ireland
Italy
Italy
Italy
Japan
Japan
Japan
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
Viale Vittorio Veneto 20, 20124 Milan
Yurakucho ITOCIA 15/F, 2-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-
0006
3/F BPR Place Kamiyacho, 1-11-9 Azabudai, 1 Chome-11 Azabudai,
Minato-ku, Tokyo 106-0041
Yurakucho ITOCIA 15/F, 2-7-1 Yurakucho, Chiyoda-ku, Tokyo 100-
0006
Savills IM CMISIM Co-Investment GP Ltd
Jersey
3/F Liberation House, Castle Street, St Helier, JE1 1BL
164
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 Fully-owned subsidiary
Greater Tokyo Office Fund (Jersey) GP Ltd
Prime London Residential Development Jersey GP Ltd
Prime London Residential Development Jersey II GP Ltd
Savills (Jersey) Ltd
Savills IM CMISIM Co-Investment GP Ltd
Savills Investment Management (Jersey) Ltd
Country of
incorporation
Jersey
Jersey
Jersey
Jersey
Jersey
Jersey
Registered office
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
3/F Liberation House, Castle Street, St Helier, JE1 1BL
3/F Walker House, 28-34 Hill Street, St Helier, JE4 8PN
Savills IM European Fund V GP 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 B.V.
Savills Holdings B.V.
Macau
Macau
Macau
Myanmar
Suite 1309-1310, 13/F Macau Landmark, 555 Avenida da Amizade
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
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
12/F, Times Plaza Building, United Nations Avenue corner Taft
Avenue, Ermita, Manila 1000
Savills Investment Management Sp Zoo
Savills Property Management Sp Zoo
Savills Sp Zoo
Aguirre Newman Portugal Consultoria Lda
Aguirre Newman Portugal Mediacao Imobiliaria Lda
iProcurePro Pte Ltd
Savills (SEA) Pte Ltd
Savills (Singapore) Pte Ltd
Savills Investment Management Pte Ltd
Savills Property Management Pte Ltd
Savills Residential Pte Ltd
Savills Valuation & Professional Services (S) Pte Ltd
Poland
Poland
Poland
Portugal
Portugal
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Singapore
Ul. Miła 2, 00-180 Warsaw
Ul. Złota 59, 00-120 Warsaw
Ul. Złota 59, 00-120 Warsaw
Praça Marquês de Pombal, 16 – 7º, 1250163 Lisbon
Praça Marquês de Pombal, 16 – 7º, 1250163 Lisbon
30 Cecil Street, #20-03 Prudential Tower, 049712
30 Cecil Street #20-03 Prudential Tower, 049712
30 Cecil Street #20-03 Prudential Tower, 049712
80 Robinson Road, #02-00, 068898
20 Martin Road #03-01/02 Seng Kee Building, 239070
30 Cecil Street #20-03 Prudential Tower, 049712
30 Cecil Street #20-03 Prudential Tower, 049712
Savills Korea Advisors Realty Company Ltd
South Korea
15F Tower 8, 7 Jongro5-gil Jongno-gu, Seoul
Savills Korea Company Ltd
South Korea
13F Seoul Finance Center, 136 Sejong-daero Jung-gu, Seoul
Savills Aguirre Newman Arquitectura Barcelona SAU
Savills Aguirre Newman Arquitectura SAU
Savills Aguirre Newman Barcelona SAU
Savills Aguirre Newman Consultores SAU
Savills Aguirre Newman SAU
Savills Aguirre Newman Urbanismo SAU
Savills Aguirre Newman Valoraciones y Tasaciones SAU
Savills Consultores Inmobiliarios SA
Savills Investment Management S.L
Zaphir Asset Management SLU
Loudden Bygg-och Fastighetsservice AB
Savills Förvaltning AB
Savills Investment Management AB
Savills Sweden AB
Savills Sweden Investment AB
Savills (Taiwan) Ltd
Savills Residential Services (Taiwan) Ltd
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Sweden
Sweden
Sweden
Sweden
Sweden
Taipei
Taipei
Avda. Diagonal 609-615, Barcelona
Calle General Lacy 23, 28045 Madrid
Avda. Diagonal 609-615, Barcelona
Calle General Lacy 23, 28045 Madrid
Calle General Lacy 23, 28045 Madrid
Calle General Lacy 23, 28045 Madrid
Avda. Diagonal 609-615, Barcelona
José Abascal, 45 – 1ª planta, 28003 Madrid
Calle Velazquez 78 1, 28001 Madrid
Calle General Lacy 23, 28045 Madrid
Box 6317, 102 35 Stockholm
Sergels Torg 12, 111 57 Stockholm
Kungsgatan 56, 111 22 Stockholm
Sergels Torg 12, 111 57 Stockholm
Sergels Torg 12, 111 57 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) Taipei
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
Savills plc
Report and Accounts 2018
165
Financial statementsGovernance Strategic reportOverview 34. Group – Investments continued
Fully-owned subsidiary
Savills (Thailand) Ltd
Savills Services (Thailand) Ltd
Cluttons LLC
Cluttons Real Estate LLC
B Bids Ltd
Blair Kirkman LLP
Buckleys Estate Agents Ltd
Chesterfield & Co (Rentals) Ltd
Christopher Rowland Ltd
CMS Creative Ltd
Collier & Madge Holdings Ltd
Collier & Madge plc
Cordea Savillls SLP GP Ltd
Cordea Savillls SLP II LP
Cordea Savillls SLP LP
Country of
incorporation
Thailand
Thailand
(iv) United Arab
Emirates
(iv) United Arab
Emirates
Registered office
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
22/F, Arenco Tower, Sheikh Zayed Road, PO Box 3087
2702C, Al Marzouqi Towers, King Faisal Street
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 Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
Cordea Savills Investments Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Currell Commercial Ltd
Currell Management LLP
Currell Residential Ltd
GBR Phoenix Beard Ltd
GBR Phoenix Beard Group Ltd
GBR Phoenix Beard Holdings Ltd
GBR Phoenix Beard Residential Ltd
GBR Property Consultants Ltd
Granville Residential Ltd
Grosvenor Hill Ventures Ltd
GTOF Co-Investment GP LLP
GTOF Co-Investment LP
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
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 Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
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
JP Case & Co Property Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
LIBRA Housing Advisory Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Management Exclusive LLP
Mansfield Elstob Main Ltd
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
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
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
PCA Management Consultants Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Phoenix Beard Landscaping Ltd
Phoenix Beard Manpower Ltd
Phoenix Beard Trustees 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
166
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 Fully-owned subsidiary
Portnalls Ltd
Prime London Residential Development Co-Investment
GP LLP
Prime London Residential Development Co-Investment II
GP LLP
Country of
incorporation
United Kingdom 33 Margaret Street, London, W1G 0JD
Registered office
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
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
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
Savillls IM SLP II GP LLP
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 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Savillls IM UK Income and Growth General Partner LLP
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills (Europe) Ltd
Savills (L&P) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
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 Finance Holdings plc
Savills Financial Services Ltd
Savills Holding Company Ltd
Savills IM Dawn GP 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
United Kingdom 33 Margaret Street, London, W1G 0JD
(i) United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills IM Euro V Co-Investment GP LLP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ
Savills IM Euro V Co-Investment LP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ
Savills IM Holdings Ltd
Savills IM Investco Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills IM JVF II Co-Investment GP LLP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ
Savills IM JVF II Co-Investment LP
Savills IM SLP General Partner LLP
Savills IM SLP III GP LLP
Savills IM SLP III LP
Savills IM UK One Ltd
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, Scotland, EH3 9WJ
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, Scotland, EH12 5HD
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
Savills India Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
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 Italy Holding Ltd
Savills KSA Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills plc
Report and Accounts 2018
167
Financial statementsGovernance Strategic reportOverview Notes to the financial statements continued
34. Group – Investments continued
Fully-owned subsidiary
Savills Lending Solutions Ltd
Country of
incorporation
Registered office
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Management Resources Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills ME Ltd
Savills Middle East Holdings Ltd
Savills Nominee Company 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
Savills Place-Shaping & Marketing Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
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
The Currell Group Ltd
The Destination Partnership Ltd
The London Planning Practice Ltd
Wellington Holdings Ltd
Yoohop Ltd
BTR Capital Advisors I LLC
BTR Capital Advisors II Inc
BTR Capital Advisors III Inc
Gravitas Lease Audit Services LLC
Gravitas Real Estate Solutions LLC
Kelly, Legan & Gerard Inc
Savills (L&P) Inc
Savills America 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 9 Bonhill Street, London, EC2A 4DJ
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 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
Unex House, 132-134 Hils Road, Cambridge CB2 8PA
United States
399 Park Avenue – 11/F, New York, NY 10022
Savills Investment Management (USA) Inc
United States
251 Little Falls Drive, Wilmington, DE 19808
Savills Investment Management Inc
United States
251 Little Falls Drive, Wilmington, DE 19808
Savills LLC
Savills Studley (GA) Inc
Savills Studley (ME) LLC
Savills Studley Inc
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
Savills Studley Occupier Services Inc
United States
399 Park Avenue – 11/F, New York, NY 10022
Savills Studley Securities LLC
United States
399 Park Avenue – 11/F, New York, NY 10022
SSOC LLC
Studley Associates Inc
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
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
Studley International Inc
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 Company Ltd
Vietnam
6/F, Sentinel Place building, 41A Ly Thai To, Hoan Kiem District,
Hanoi City
168
Savills plc
Report and Accounts 2018
Year ended 31 December 2018 Subsidiaries of which the Group
owns less than 100%
Savills Belux Group SA
%
owned
Country of
incorporation
Registered office
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
Savills Valuation SAS
99.97 France
99.97 France
21 Boulevard Haussmann 75009, Paris
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
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 (Luxembourg) S.à.r.l. 94.90 Luxembourg
10, rue C.M. Spoo
Savill Asset and Property Management BV
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Savills Agency BV
Savills Consultancy BV
Savills Investments BV
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Savills Nederland Holdings BV
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Savills Retail BV
Tagis BV
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Tagis Property Management BV
90.25 Netherlands
Viñoly Building, Claude Debussylaan 48, Amsterdam 1082 MD
Cluttons & Partners LLC
65.00 Oman
Hatat Complex Suite 30-36, G/F, P O Box 1475, Ruwi, Sultanate of
Oman, Location – Wadi Adai – Romellah
SGDN Ltd
51.00 United Kingdom Stuart House, City Road, Peterborough, PE1 1QF
Joint Ventures
%
owned
Country of
incorporation Registered office
Anlian Savills Property Management (Shenzhen) Ltd
25.50 China
Unit B02(b), 19/F,Anlian Plaza, No.4018, Jintian Road, Futian
District, Shenzhen
Beijing BHG Savills Retail & Property Management
Company Ltd
Beijing CCP & Savills Property Services Management
Company Ltd
Beijing China Railway Savills Property Management
Services Company Ltd
Beijing Financial Street Savills Property Management
Company Ltd
30.00 China
Room 107, Block 1, No 208, Lane 4, North Xiangyun Road, Daxing
District, Beijing
25.00 China
A6 West Da Wang Road, Chaoyang District, Beijing
49.00 China
Room 926, 15 Guang An Road, Feng Tai District, Beijing
20.00 China
B1/F, Tong Tai Building, 33 Financial Street, West District, Beijing
Beijing Haizhi Savills Property Management Company Ltd 40.00 China
Zone B, 6/F, Tower B, No.18 Zhong Guan Cun Avenue, Haidian
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
Unit 303, 3/F No, 9 West Street Wangfujing, Dongcheng District,
Beijing
Beijing Tianrun Savills Property Management Company
Ltd
49.00 China
Unit 3501A, 35/F, No. 8 Jianguomenwai Dajie, Chaoyang District,
Beijing
Beijing Zhaotai Savills Property Services Company Ltd
30.00 China
Beijing Zhong Bao Savills Property Management
Company Ltd
Chongqing Huayu Savills Property Services Group
Company Ltd
10.00 China
B1 Floor, 11 Fenghui Yuan, Tai Ping Avenue, Xicheng District,
Beijing
603 China Life Tower, 16 Chao Wai Street, Chaoyang District,
Beijing
30.00 China
No. 118-6, Taishan Avenue, Yubei District, Chongqing
COSCO FPDSavills Property Development Company Ltd 25.00 China
Unit M, 7/F, No.720 Pudong Ave, Pudong District, Shanghai
Daisy Savills Property Management (Beijing) Company
Ltd
35.00 China
Unit 702, Tower 2, Office Building, 7/F, No. 18 Jianguomennei
Avenue, Chaoyang District, Beijing
Everbright Savills Property Management Company Ltd
45.00 China
Room E-266, 3/F, Ru Shan Road No.227, Pilot Free Trade Zone,
Shanghai
Fuzhou Hengli & Savills Property Management Company
Ltd
45.00 China
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 plc
Report and Accounts 2018
169
Financial statementsGovernance Strategic reportOverview 34. Group – Investments continued
Joint Ventures
%
owned
Country of
incorporation Registered office
Guangzhou Nansi & Savills Property Management
Company Ltd
49.00 China
Room 1304, Feng Ze Dong Road No.106, Nan Sha Area,
Guangzhou
Beijing Hongyuan Savills Property Management Company
Ltd
40.00 China
Unit 104, 1/F, Building 4, No.2 Jinsui Avenue, Shunyi District,
Beijing
Nanjing Smart Science Technology Park & Savills Property
Management Company Ltd
30.00 China
Room 468, 4/F, Building 9, Xingzhihui Business Garden, 19
Xinghuo Road, Jiangbei New District, Nanjing 210008
Savills BM Property Services Company Ltd
40.00 China
Room 115, No.53, Lane 749, Middle Tianmu Road, Zhabei
District, Shanghai
Savills Raycom Property Management (Beijing) Company
Ltd
Shanghai No.1 and FPDSavills Property Management
Company Ltd
30.00 China
Unit B1-08, No.2 South Road Ke Xue Yan, Haidian District, Beijing
51.00 China
Unit B1-08, No.2 South Road Ke Xue Yan, Haidian District, Beijing
Shanghai Poly Savills Property Management Company
Ltd
30.00 China
Unit 01, 20/F, South Tower, No.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 40.00 China
Unit 201, A Tower, No.1, Qian Wan Road, Qianhai Shengan
Cooperation District, Shenzhen
Suzhou Industrial Park Wanrun & FPD Savills Property
Management Company Ltd
45.00 China
2/F, International Building, No.2 Suzhou Avenue West, Suzhou
industrial Park
Tianjin TEDA Savills Property Services Company Ltd
10.00 China
Wuhan Yuexiu Savills Property Services Company Ltd
40.00 China
5/F, Tower C3, Zone C, Teda MSD, No.79 First Avenue, Economy
& Technology Development Zone, Tianjin
Yuexiu Xinghuiyunjin, 2/F, No.1 Zhongshan Ave, Qiaokou District,
Wuhan
Zhongzheng Savills Property Management (Beijing) Co
Ltd
49.00 China
Unit A4-12, 4/F, Building 4, No, 24 Yard, Jiuxianqiao Middle 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
Skywise Technology & Innovation Company Ltd
50.00 Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Savills IM CMISIM Jersey GP Ltd
G.E.S. Holdings Ltd
G.E.S. Ltd
50.00 Jersey
50.00 Macau
50.00 Macau
3/F, Liberation House, Castle Street, St Helier, JE1 1BL
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
Cluttons Saudi Arabia Company Ltd
49.00 Saudi Arabia Dammam, Malek Saud Street, 31411
Savills Science Ltd
50.00 United
33 Margaret Street, London, W1G 0JD
Kingdom
170
Savills plc
Report and Accounts 2018
Notes to the financial statements continuedYear ended 31 December 2018 Associates
SAS Riviera Estates
Guardian Home Ltd
%
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
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
Yuen Sang Property Management Company Ltd
50.00 Hong Kong
7th Floor, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hengli Savills Property Management Ltd
49.00 Hong Kong
Unit 1806-08, Tower Two, Lippo Centre, 89 Queensway
Cordea Nichani India Advisers Private Ltd
25.00 India
Ground Floor Front, 19 Kumarakrupa Road, Bangalore 560001
Savills (Johor) Sdn Bhd
Savills (KL) Sdn Bhd
45.00 Malaysia
45.00 Malaysia
Savills (Malaysia) Sdn Bhd
45.00 Malaysia
Savills (Penang) Sdn Bhd
45.00 Malaysia
Savills (Project Management) Sdn Bhd
45.00 Malaysia
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
No. 2 Jalan Raja Abdullah, Off Jalan Sultan Ismail, 50300 Kuala
Lumpur
Rootcorp Ranganatha Ltd
Monaco Real Estates SARL
Huttons Asia Pte Ltd
Huttons Capital Pte Ltd
DRC Capital LLP
25.00 Mauritius
4/F, Raffles Tower, 19 Cybercity, Ebene
51.00 Monaco
10 Ter Boulevard Princesse Charlotte
48.00 Singapore
3 Bishan Place, #02-01 CPF Bishan Building, S 579838
48.00 Singapore
3 Bishan Place, #05-01 CPF Bishan Building, S 579838
United
Kingdom
25.00
4/F, 6 Duke Street St James's, London, SW1Y 6BN
(i) Directly owned by Savills plc.
(ii) Both ordinary and redeemable shares owned by the Group.
(iii) Partnership interest.
(iv) Economic interest/part economic interest.
The total non-controlling interest at the end of the year is £0.7m (2017: £1.5m). 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.
There were no material transactions with non-controlling interests during the year. Refer to Note 21 for details on restrictions
on the Group’s ability to access cash in the Group’s Asia Pacific operating subsidiaries.
Savills plc
Report and Accounts 2018
171
Financial statementsGovernance Strategic reportOverview Shareholder Information
Key dates for 2019
Annual General Meeting
Financial half year end
Announcement of half year results
8 May 2019
30 June 2019
8 August 2019
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 call +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 Year
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
172
Savills plc
Report and Accounts 2018
Year ended 31 December 2018 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.
Savills plc
Report and Accounts 2018
173
Financial statementsGovernance Strategic reportOverview Savills plc
33 Margaret Street
London W1G 0JD
T: +44 (0)20 7499 8644
www.savills.com
Registered in England
No. 2122174