2019
Annual Report
and Accounts
Savills plc
Savills plc
Report and Accounts 2019
Our purpose
Our purpose is to assist and advise a wide range
of clients to realise their diverse property goals.
Our vision
To be the property partner of choice for 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.
Culture and values
Savills has a strong and well embedded culture,
founded on an entrepreneurial approach and
underpinned by our values and operational
standards. We recognise our responsibility as a
global corporate citizen and we are committed
to doing the right thing in the right way.
Our values
Pride in everything we do
Take an entrepreneurial approach to business
Help our people fulfil their true potential
Always act with integrity
Read more about these on page 35
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
Material existing and emerging risks and
uncertainties facing the business
31 Viability statement
32 Stakeholder engagement with s.172
35 Responsible business
47 Non-financial information statement 2019
Governance
48 Corporate Governance Statement
48 Chairman’s introduction
50 Board of Directors
54 Group Executive Board
58
Corporate Governance
68 Audit, Risk and Internal Control
69 Audit Committee report
78 Director's Remuneration report
107 Director's report
111
Statement of directors’ responsibilities
in respect of the financial statements
Financial statements
112
Independent auditor’s report
122 Consolidated income statement
123
124
125
126
127
Consolidated statement of comprehensive income
Consolidated and Company statements of
financial position
Consolidated statement of changes in equity
Company statement of changes in equity
Consolidated and Company statements
of cash flows
128 Notes to the financial statements
211 Shareholder information
Savills plc
Report and Accounts 2019
Overview
Strategic report
Governance
Financial statements
Group highlights
£1,930m
57%
£83.6m
Revenue
Breadth of service
(non-transactional)
Statutory profit
after tax
(2018: £1,761m)
(2018: 54%)
(2018: £77.2m)
60.6p
£143.4m £95.4m
Statutory earnings
per share
Underlying profit*
Operating cash
generation
(2018: 56.2p)
(2018: £143.7m)
(2018: £104.3m**)
7.4%
2.3bn
78.0p
Underlying profit
margin*
Property under
management (sq. ft.)
Underlying earnings
per share*
(2018: 8.2%)
(2018: 2.0bn)
(2018: 77.8p)
€20.8bn
6.0%
62%
Assets under
management
Statutory pre-tax
profit margin
Geographical
spread (% non-UK)
(2018: €18.2bn)
(2018: 6.2%)
(2018: 62%)
* 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 further explanation of
underlying profit measures.
** 2018 Cash generated from operations has been re-presented – see page 127 for details.
01
Savills plc
Report and Accounts 2019
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 39,000 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.
650 +
offices
c. 39,000
staff
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.
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.
Consultancy
Investment
Management
Investment
management of
commercial and
residential property
portfolios for
institutional, corporate
or private investors, on
a pooled or segregated
account basis.
Provision of a wide
range of professional
property services
including valuation,
building and housing
consultancy,
environmental
consultancy, landlord
and tenant, rating,
development, planning,
strategic projects,
corporate services
and research.
See page 18
See page 20
See page 21
See page 21
02
Savills plc
Report and Accounts 2019
03
Locations
North
America
United
Kingdom
Europe & the
Middle East
Asia
Pacific
Revenue
£293.0m
Revenue
£727.5m
Revenue
Revenue
£282.4m £627.1m
(2018: £264.5m)
(2018: £662.4m)
(2018: £247.0m)
(2018: £587.5m)
Offices
35
(2018: 31)
Employees
825
(2018: 788)
Offices
134
(2018: 135)
Employees
6,388
(2018: 5,955)
Offices
46
(2018: 52)
Employees
2,032
(2018: 1,752)
Offices
58
(2018: 67)
Employees
29,912
(2018: 28,486)
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Chairman’s
statement
“ Savills delivered revenue
growth and a resilient
performance in 2019 in the
face of some challenging
market conditions.”
£143.4m
Underlying profit
(2018: £143.7m)
£83.6m
Statutory profit
after tax
(2018: £77.2m)
Nicholas Ferguson CBE, Chairman
Results
Against the backdrop of much reduced
transaction volumes in both the UK and
Hong Kong, the Group’s revenue growth
of 10% to £1.93bn (2018: £1.76bn) was
driven by a strong performance in our Less
Transactional business lines. Underlying
profit for the year maintained at £143.4m
(2018: £143.7m) as a result of this change in
business mix and the first time charge under
IFRS 16 which increased Savills property
costs by £3.5m. The Group’s statutory profit
before tax increased by 6% to £115.6m
(2018: £109.4m).
Overview
Savills delivered revenue growth and a
resilient underlying profit in 2019 in the face
of challenging market conditions. Growth in
our Less Transactional businesses and in
North America helped to offset the impact
of declines in transaction volumes in Asia
Pacific and the UK. Currency movements
had a positive impact on the Group,
increasing revenue by £20.7m, underlying
profit by £1.4m and statutory profit before
tax by £1.9m.
Our Transaction Advisory revenue grew by
2%, our Consultancy business revenue by
15% and our Property Management revenue
by 17%. The UK Commercial Transaction
Advisory business delivered a resilient
performance outperforming the rest of the
market which declined by 17% year-on-year
as a result of the political uncertainty until
the end of the year.
Our UK Residential business continued to
perform well in challenging conditions for
much of the year which saw the UK market
volume of transactions with values greater
than £1.0m declining by 2% year-on-year.
Against this backdrop and buoyed by the
clear General Election result in December
Savills UK Residential business performed
well growing revenue by 6% year-on-year. In
Asia Pacific, a sharp decline in investor
confidence in Hong Kong and growth costs
in Australia negatively affected both the
Commercial and Residential transaction
businesses, the impact of which was partially
mitigated by stronger performances in
Japan, Singapore and the Regional
Hospitality advisory group. In the US,
we delivered significant growth in the
Occupier Service business (including tenant
representation brokerage); however the
profitability of the US operation continues to
be affected by the cost of investment in the
business, including further development of
the support services platform.
Savills Investment Management delivered a
record year with both new product launches
and significant capital deployed increasing
its Assets Under Management (‘AUM’) to
£17.7bn (2018: £16.4bn). This, together
with the benefit of performance fees on
certain products, led to a 65% increase in
underlying profits.
The reduction in transaction volumes in Asia
Pacific and growth in our lower margin but
stable Property Management business,
together with the first time impact of IFRS 16
and the cost of our business development
activities in a number of markets resulted in
a reduction to Group underlying profit
margin to 7.4% (2018: 8.2%).
The impact of the aforementioned factors
on the Group underlying profit margin were
offset by lower acquisition-related charges,
higher profits on disposal of investments
04
Savills plc
Report and Accounts 2019
and the absence of the one-off charge in
2018 in relation to the impact of equalising
Guaranteed Minimum Pension (‘GMP’) on
the UK defined benefit pension plan. The
statutory pre-tax profit margin declined
slightly to 6.0% (2018: 6.2%).
Business development
Savills strategy is to be a leading multi-sector
property 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 global cross-border
investment, residential 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 the UK, the business focused on the
successful integration of acquisitions made
in the prior year, including Currell Group
(residential brokerage in East London) and
the Broadgate Estates third party property
management portfolio, into the wider
business. During the year, the business
acquired KKS, a London based workplace
consultancy and design studio which
enhances our service offering, particularly to
corporate occupiers.
Development in Europe & the Middle East
focused on integrating and developing the
Middle East operation, which was acquired
through the acquisition of Cluttons Middle
East in 2018. Team recruitment in the Middle
East, along with Sweden, Germany and
France enhanced our strength in those
regions across key business lines.
In Asia Pacific, having expanded significantly
in 2018, we moderated our hiring in the
region, focusing on Australia and Singapore.
Savills India, in which the Group has a
minority interest, opened for business in
October 2018. It undertook significant
expansion during the year and now
employs over 300 professionals in six
offices (Bangalore, Mumbai, Delhi NCR,
Hyderabad, Pune and Chennai).
In North America, we continued to expand
our occupier-focused business lines through
both recruitment and investment in
technology and central services such
as marketing and research. In March 2019,
the business was re-branded to “Savills”.
Technology continues to be a focal area
across the real estate industry. Over the last
12 months we have witnessed some of the
excitement surrounding ‘Proptech’ being
replaced by a more pragmatic approach to
assessing which new technologies and tools
genuinely address industry challenges and
help drive efficiencies. It is also worth noting
that across the world, countries are at
varying stages in this evolution, and one of
our key focuses has been to foster internal
forums for identifying and sharing promising
innovative opportunities across the
Savills network.
We have continued to invest in our own
technology platforms in order to both deliver
innovative solutions to our clients through
data analysis and insight, and to drive
internal efficiencies in how we deliver
those services. Improving efficiency in our
valuation teams has been a particular area
of focus locally across the Group, and we
continue to roll out our award winning
Knowledge Cubed platform, developed
out of the United States and deployed to
occupier clients across the globe.
We have continued to grow workthere.com,
Savills innovative response to the changing
requirements of occupiers seeking serviced
office/co-working space in global cities,
which has now launched in nine countries
and grew revenue threefold in 2019. Finally,
we have continued to invest in our company-
wide ERP platform, with a number of our
larger markets going live during the year.
Board
Charles McVeigh, who served on the Board
from 2000, and Liz Hewitt, who joined the
Board in 2014 retired at the conclusion of the
Company’s AGM in May 2019. Following Liz
Hewitt’s retirement, Stacey Cartwright
succeeded Liz as Chairman of the Audit
Committee. I would like to thank both
Charlie and Liz for their considerable
contributions to Board and its Committees
during their terms.
In October 2019, the Board announced
the appointment of Dana Roffman as an
additional independent Non-Executive
Director.
Dividends
An initial interim dividend of 4.95p per share
(2018: 4.8p) amounting to £6.7m was paid on
2 October 2019, and a final ordinary dividend
of 12.05p (2018: 10.8p) is recommended,
making the ordinary dividend 17.0p for
the year (2018: 15.6p). In addition, a
supplemental interim dividend of 15.0p
(2018: 15.6p) 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 32.0p per share, representing an
increase of 2.6% on the 2018 aggregate
dividend of 31.2p. The final ordinary dividend
of 12.05p per ordinary share will, subject
to Shareholders’ approval at the AGM on
6 May 2020, be paid alongside the
supplemental interim dividend of 15.0p
per share on 12 May 2020 to Shareholders
on the register at 14 April 2020.
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.
Summary and Outlook
Savills delivered a good performance in
2019 in some challenging market conditions.
This reflects the strength and resilience of
our global, diversified business as we
continued to grow our Less Transactional
service lines and outperform in many of our
transactional markets.
In Asia, particularly China, it is clear that
COVID-19 is having a significant impact on
transactional activity and may have a similar
effect elsewhere, depending to an extent on
the length and severity of each outbreak.
Our focus is on the welfare of our staff and
clients and we have instituted protective
measures in locations potentially affected
by this virus.
The situation is dynamic and due to the
uncertainty, it is difficult accurately to
predict the full impact of this issue on our
business for 2020 as a whole. However,
given the nature of the real estate market,
we would anticipate that any near term
slowdown caused by sentiment and specific
measures taken to combat COVID-19 would
generally result in a temporary delay in
activity rather than an absolute loss
of business.
We remain focused on growing our Less
Transactional businesses, increasing our
share of the global transactional markets and
enhancing the resilience of the business to
challenging market conditions. While we
continue to monitor the impact of global
uncertainties on investor and occupier
demand for real estate, we have made a
good start to 2020 with the first two months
outperforming the same period last year
on all measures. As a result of the dynamic
situation in respect of COVID-19, we do
expect a greater weighting of activity to
the second half of the year.
Nicholas Ferguson CBE
Chairman
05
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
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.
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 48 to 111.
Our resources and relationships
Our business model
Outstanding people
Defensive, scale business
Local knowledge
Entrepreneurial approach
Intellectual property
Market intelligence
Brand and reputation
Long-term client
relationships
Client care programmes
High quality servicer
Financial
Prudent capital structure
Strong cash generation
06
Property
and facilities
management
35%
Consultancy
18%
Investment
management
4%
Revenue
by business
Commercial
transactions
34%
Residential
transactions
9%
Cyclical high-margin
businesses
Savills plc
Report and Accounts 2019
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 39,000 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 values
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
Our value creation
Shareholders
Dividends
32.0p
Underlying
profit
£143.4m 78.0p
Underlying
earnings per share
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
OverviewGovernance Strategic reportFinancial statements
Savills plc
Report and Accounts 2019
Market
insights
UK Commercial
2019 saw the continuing lack of clarity around the UK’s exit from the EU
finally affect the commercial property investment and leasing markets in
the UK. Uncertainty affected both vendors’ willingness to bring assets to
the market and purchasers desire to buy. The total turnover of commercial
property investments in last year was £52bn, a 17% fall on the previous
year. All segments of the UK commercial property market saw year-on-
year falls in investment activity, with the most notable decline being in the
central London office market (-34%). Investment in offices nationally was
27% down, while industrial investment activity was down 14%.
One notable trend of 2019’s investment activity was a very strong
finish to the year, and we estimate that 34% of all the investment
activity by volume took place in the final quarter of the year, and 20%
in December alone. This strength can be jointly attributed to the
relative quiet of the mid part of the year, and a pick-up in investor
confidence after the general election.
Deal activity in most occupational markets was also down year-on-year in
2019. However, in many cases 2018 was a near record year so a weaker
2019 was perhaps inevitable. Occupier take-up in the national logistics
market was 34.2m sq ft. While this was 9% lower than 2018, it was still the
fourth strongest year of the last decade. A similar story prevailed in the
office markets, with take-up in the top six cities outside London being
10% down year-on-year, but 12% above the ten year average. The central
London office market also saw a 15% fall in the volume of leasing activity,
but this still meant that the last three years have been the strongest ever
three-year period for occupational demand in the capital.
The retail sector continued to remain challenging for both landlords
and tenants in 2019. However, one or two bright spots emerged, with
2019 being the best ever year for initial openings of new sites by
international brands in the UK, and also an above average year for
new openings of shops on retail warehouse parks.
Case study: Springfield University
A multi-disciplinary Savills team advised on a £150m ground-breaking
masterplan to redevelop the Springfield University Hospital site in Tooting,
London on behalf of South West London and St Georges Mental Health
NHS Trust. The proposals will bring forward world class mental health
inpatient and community healthcare facilities, 839 new homes and a
public park, with provision for a new school and new transport facilities.
This extremely complex project is an excellent example of a
successful long-term delivery partnership between public and
private sector bodies.
08
Savills plc
Report and Accounts 2019
UK residential
Continued political uncertainty acted as a drag on the UK housing
market in 2019, particularly in London and the South East of the
country. Across the county as a whole, annual house price growth was
constrained to just 1.4% according to the Nationwide, while transaction
levels were largely unchanged at just under 1.2 million.
Activity among first time buyers remained surprisingly strong, in part
because the Government’s Help to Buy scheme boosted activity in the
new build market which continued to underpin housebuilder activity.
Meanwhile interest in the institutional multifamily sector continued to
build, as private investors became increasingly wary of the tightening
regulatory environment.
The prime housing market remained largely price sensitive, though
signs of a bottoming out in London market emerged in the second
half of the year.
Transaction levels in the market over £1m, reflected this. In the half of
the year they were 13% below those in the same six months of 2018
according to figures from HMRC. However, supported in part by a
flurry of activity after the general election in December, they were 13%
higher than 12 months previously in the final quarter of the year,
leaving them little changed across the year as a whole.
Case study: Athelhampton House
Athelhampton House in Dorset, one of England’s Great Tudor
Manor Houses dating from the 15th century and set in exquisite
19th century gardens, was sold by Savills in Autumn 2019, with a
guide price of £7.5m.
09
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Market insights
continued
US
The US. economy continued to expand at a healthy pace, with real
GDP rising by 2.3 percent in 2019 versus 2.5 percent in 2018. The
recovery is now officially the longest in US. history, standing at 42
quarters through the fourth quarter of 2019, surpassing the previous
record of 40 quarters (through December 2007). And no end is (yet)
in sight, even though the drag of the trade war with China reduced
economic growth by about 60-70 basis points. Total payrolls
increased by 1.4 percent (2.1 million jobs) versus 1.8 percent (nearly
2.7 million jobs) in the year prior, and the unemployment rate ended
2019 at a 50-year low of 3.5 percent.
Consistent with the strength in hiring, annual office leasing volumes
increased by more than 3.0 percent overall in 2019 in Savills-tracked
markets. New York had a stand-out year seeing nearly 42 million square
feet leased in total, fueled heavily by growth within the tech sector
(Google, Facebook, Amazon and others were particularly active in the
market). Nationally, growth in asking rents was similar to that seen over
the 2017 to 2018 period, increasing 5.1 percent across all markets for 2019.
With stronger demand, availability tightened in several key markets over
the year including Washington, D.C., Los Angeles, and Chicago.
Investment sales activity was a mixed bag in 2019, with industrial and
multifamily sales volume at or near 20-year highs. Retail and hotel
sales volumes were down year over year, but both are still on par
with their respective long-term averages. The US. office market saw
a modest year over year increase in sales activity in 2019 and stands
just above its 20-year average. Investment activity was fueled by
strong cross-border investment. Globally, Preqin reports that 295
closed-end private real estate funds raised $151 billion of capital in
2019. The Fed reduced key interest rates three times during the year,
resulting in a 10-year Treasury rate of 1.86 percent at year end, nearly
100 basis points lower than at year-end 2018.
Case study:
Savills advises RSM US in HQ upgrade
Savills was asked to find a new headquarters for audit, tax and
consulting firm RSM US in Downtown Chicago. Savills created
leverage for RSM, producing spirited competition for the firm’s
tenancy. RSM opted for 165,000 square feet in prime upper
floors of a building across the street, offering commanding
views. Applying a thorough workplace strategy analysis, Savills
helped RSM gain 20% more capacity in similar square footage
with progressive space sharing and more productive workflows.
10
Savills plc
Report and Accounts 2019
European Economic and Property
The Eurozone economy grew by 0.1% during the final quarter of 2019,
the lowest level of growth since the first quarter of 2013. The
manufacturing sector continued to drag on GDP growth in 2019,
however the latest Euro Area Composite Purchasing Managers Index
(PMI) indicates growth could recover during 2020.
European office take up remained resilient in 2019, reaching 12.4
million sq m and in line with the five year average. A shortage of
available space continues to threaten leasing activity in 2020, as
average office vacancy rates fell a further 20bps during Q4 2019 to
5.4%. Berlin and Paris CBD are the most undersupplied European
markets, which we expect to add further rental growth in 2020.
Companies are having to plan their occupational moves further in
advance, and many are leasing flexible office space, which accounted
for 12% of take up in 2019.
Approximately 11.1% of Western Europe’s retail sales are made online
at the end of 2019, led by the UK, Netherlands and Germany.
Increasing trade volumes and the emergence of last mile delivery is
driving demand for logistics space across Europe. However, Europe’s
prime high street and retail warehouse yields generally remained
stable in 2019.
Investor demand for European real estate remained resilient amid
global trade concerns, lower domestic GDP growth and a shortage of
vendors, as investment transactions reached €302bn during 2019, a
2% increase on the level recorded in 2018. A “lower for longer”
investment environment, driven by cheap debt is encouraging core
investors to step up the risk curve and diversify into new geographies
in order to meet their required returns in 2020.
Case study: Sale of EDF Tower
Savills advised AEW / CNP on the sale of PB6 EDF Tower in La
Défense for €500m+ to GIC / Beaumont
11
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Market insights
continued
Investment Management
Number of closed-ended real estate funds closed in 2019: 181 (down
from 250 in 2018)
Total capital raised in 2019: $135.27bn (up from $131bn in 2018)
181 private equity real estate funds raised total capital of $135bn in
2018. This level of capital raising is exceeded only by the amounts
raised in 2014 and 2015, when volumes were $150bn and $169bn
respectively. The number of funds raising has fallen from 337 in 2017
to 181 in 2019, highlighting the trend for increasingly large funds
dominating the market.
Fundraising for industrial funds dropped sharply in 2019, from $12bn to
$2.4bn, similar to the large drop it witnessed from 2015 to 2016 ($16bn
to $7.4bn). Meanwhile, funds targeting global strategies dominated
fundraising in 2019, accounting for $70bn of capital – nearly half the
total. Funds for single region strategies saw capital raised drop by
40% or more.
Case study:
Acquisition of prime Paris logistics asset
Savills Investment Management acquired a newly constructed
prime Grade A distribution centre in Greater Paris, France, for
EUR 83.8 million on behalf of its European Logistics Fund 3.
The distribution centre is prominently located in Réau on the
outskirts of Paris. It lies in one of the strongest logistics
locations along the La Dorsale logistics axis, which runs from
Lille via Paris and Lyon to Marseille. It offers approximately
67,000 square meters of rental space, and is fully leased to two
logistics service providers on long-term agreements. The
property was acquired from Barings, one of the world’s largest
diversified real estate investment managers, and the asset has
achieved a BREEAM ‘Very Good’ rating.
The acquisition marked the first for Savills IM on behalf of its
newly launched ELF 3. The fund is an open-end German
property specialty fund that invests in prime logistics assets in
the liquid European core markets. The investment style is core/
core-plus, although select properties with asset management
potential may also be considered. The strategy seeks
diversification in terms of geography and different occupier
segments, including industry, trade and services.
12
Savills plc
Report and Accounts 2019
Asia Pacific
Despite plenty of turbulence, real estate investment activity in the
region held up remarkably well in 2019 reflecting the enduring
strength of cross-border transactions volumes as well as the
increasing depth of local markets.
Japan, China, Australia, Singapore and South Korea all posted robust
investment volumes in 2019 at similar levels to 2018 or above. These
mature regional markets offer investors a wide choice of both core
and value-add opportunities as well as niche sector plays.
Capital in the regional has traditionally tended to flow towards safe
haven, liquid investment territories for attractive risk adjusted returns
and just 5% of all office and retail investments in 2019 were made
outside the top six markets.
Yields remained at historical lows across most sectors in most
geographies as policy risk, trade tensions and weak growth in the
economies of major trading partners meant that monetary policy
remained largely accommodative.
Dogged by US/China trade tensions followed by widespread social
unrest, Hong Kong’s fall from grace was perhaps the most spectacular.
On a more positive note, investors from the city became active in
outbound trades across Asia Pacific (notably Australia) and beyond.
Stand out sectors in 2019 included hotels, which also posted a record
year in 2018. Improving tourist infrastructure, rising international
visitor numbers and a proliferation of new brands and offerings are
attracting both portfolio and individual-asset investors.
While many of the traditional sectors took a step back in 2019, we are
beginning to see the emergence of new or alternative asset classes in
the region including seniors housing, multi-family and advanced
logistics among many others.
Case study: One of Sydney’s most iconic
landmark buildings
The MLC Centre is one of Sydney’s most iconic landmark buildings,
located in the heart of Sydney’s financial and cultural districts, with an
ideal blend of office and retail accommodations. As one of the tallest
buildings on the Sydney skyline, the MLC’s upper floors enjoy 360
degree views of the Sydney CBD and surrounds. Savills were exclusively
appointed on the sale of the 50% interest achieving a price of $800m in
early 2019.
13
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Key Performance
Indicators
Financial KPIs
Revenue
£1,930.0m
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.
Cash generation
£95.4m
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.
.
m
0
0
3
9
,
1
£
m
4
.
1
6
7
,
1
£
.
m
0
0
0
6
,
1
£
9
1
0
2
8
1
0
2
7
1
0
2
m
7
.
1
1
1
£
.
m
3
4
0
1
£
.
m
4
5
9
£
.
m
4
3
4
1
£
.
m
7
3
4
1
£
.
m
5
0
4
1
£
Underlying profit
£143.4m
The measure
Underlying profit growth
is the increase/decrease
in underlying profit
year-on-year.
The target
To deliver sustainable
growth in underlying
profit.
9
1
0
2
8
1
0
2
7
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
Underlying earnings per share
Statutory profit after tax
Statutory earnings per share
78.0p
£83.6m
p
0
8
7
.
p
8
7
7
.
p
8
5
7
.
60.6p
.
m
6
3
8
£
m
1
.
1
8
£
.
m
2
7
7
£
.
p
6
0
6
p
8
8
5
.
p
2
6
5
.
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.
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.
9
1
0
2
8
1
0
2
7
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
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.
9
1
0
2
8
1
0
2
7
1
0
2
14
Savills plc
Report and Accounts 2019
Non-Financial KPIs
Underlying profit margin
Breadth of service offering
Geographical spread
.
%
8
% 8
2
8
.
7.4%
%
4
7
.
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.
57.1%
(% 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.
62.3%
(% non-UK)
%
1
.
7
5
%
8
3
5
.
%
3
3
5
.
%
3
.
2
6
%
4
2
6
.
%
0
.
1
6
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.
9
1
0
2
8
1
0
2
7
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
Property under management
Assets under management
.
m
6
5
2
0
2
,
m
5
.
1
0
3
,
2
2,301.5
(million sq. ft.)
The measure
Total square footage
property under
management.
The target
To progressively increase
the global square footage
under management.
.
n
b
8
0
2
€
n
b
2
8
1
.
€
n
b
5
6
1
.
€
.
m
2
5
4
9
,
1
€20.8bn
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.
9
1
0
2
8
1
0
2
7
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
15
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Chief
Executive’s
review
“ 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
all real estate
sectors
16
Mark Ridley, Group Chief Executive
Savills plc
Report and Accounts 2019
Our Strategy
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
UK
Asia Pacific
Europe & the Middle East
North America
Unallocated
Total
2019
2018 % growth
727.5
627.1
282.4
293.0
–
662.4
587.5
247.0
264.5
–
1,930.0 1,761.4
10
7
14
11
n/a
10
2019
81.9
42.6
15.8
17.3
76.8
54.9
12.9
12.8
(14.2)
(13.7)
143.4
143.7
7
(22)
22
35
n/a
–
2018 % growth
On a constant currency* basis Group revenue grew by 8% to £1,909.3m, underlying
profit decreased 1% to £142.0m and statutory profit before tax increased by 4% to
£113.7m. Our Asia Pacific business represented 32% of Group revenue (2018: 33%)
and our overseas businesses as a whole represented 62% of Group revenue (2018:
62%). Our performance by service line is set out below:
Revenue £m
Underlying profit/(loss) £m
2019
2018 % growth
Transaction Advisory
828.2
813.5
Property and Facilities
Management
Consultancy
Investment
Management
Unallocated
Total
684.5
338.1
586.8
294.4
79.2
66.7
–
–
1,930.0 1,761.4
2
17
15
19
n/a
10
2018 % growth
81.1
(14)
2019
69.8
35.2
34.5
32.2
33.1
18.1
11.0
(14.2)
(13.7)
143.4
143.7
9
4
65
n/a
–
Overall, our Commercial and
Residential Transaction Advisory
business revenues together
represented 43% of Group revenue
(2018: 46%). Of this, the Residential
Transaction Advisory business
represented 9% of Group revenue
(2018: 10%). Our Property and Facilities
Management businesses continued to
perform well, growing overall revenue
by 17% and represented 35% of Group
revenue (2018: 33%). Our Consultancy
businesses represented 18% of revenue
(2018: 17%) reflecting a year-on year
increase of 15%. The Investment
Management business reported a
record year as a result of new product
launches, performance fees and
significant capital deployed increasing
revenue by 19% which represents 4%
of Group revenue (2018: 4%).
People
The UK business won a number of
national awards including ‘Industrial
Adviser of the Year’ at the 2019 Estates
Gazette Awards, ‘UK Sales Agency of
the Year’ and ‘Letting Agency of the
Year’ at the 2019 Property Week RESI
Awards as well as ‘Agent of the Year’
Award at the Property Week Student
Accommodation Awards for the
second year running. This year Savills
celebrated being named the Times
Graduate Employer of Choice in
property for the 13th consecutive year
and No.1 UK Real Estate Super brand
for the 12th consecutive year.
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
underpinned a robust performance
in 2019.
Resilient performance reflects
geographic diversity and strength
of Less Transactional service lines
Our Transaction Advisory revenue
grew by 2%, led by North America,
Europe and the Middle East
Further strong growth from
our Less Transactional services
(+16%) with Property and Facilities
Management revenue up 17% and
Consultancy revenue up 15%
UK profits increased by 7% to
£81.9m, led by Property
Management and Consultancy
Savills UK Residential grew
revenues by 6%, outperforming
the decline in UK market volumes
Continued growth in North
America driven by the occupier-
focused business with revenue up
11% and underlying profit up 35%
to £17.3m
Savills Investment Management
reported a record year with
revenue up 19%, profits up 65% to
£18.1m and AUM up 8% to £17.7bn.
£3.1bn new inflows up 29% on
2018 (£2.4bn)
Overall the Group’s underlying
profit maintained at £143.4m
(2018: £143.7m) which includes a
charge of £3.5m as a result of the
implementation of IFRS 16.
On a statutory basis, profit before
tax increased 6% to £115.6m (2018:
£109.4m).
* Revenue and underlying profit for the year are translated at the prior year exchange rates to provide a constant currency comparison.
17
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Chief Executive’s review
continued
In Spain, Savills Aguirre Newman came
top in six categories of the 15th annual
Euromoney real estate survey across a
wide range of sectors including
valuation, residential and green
development. In Italy the ‘Savills Tenant
School’ project has won the ‘Best of
the Best’ award, the highest
recognition possible from the Italian
National Council of Shopping Centres
at their awards ceremony at the end of
December 2019.
In Australia the Savills Valuation &
Advisory Team won ‘Valuation Team of
the Year’ at the 2019 Australia Property
Institute (API) Excellence in Property
Awards and Savills Queensland has
won ‘Commercial Agency of the Year’
at the 2019 REIQ Awards for
Excellence. In the US, our Knowledge
Cubed platform received the American
Business award. These awards are a
testament to the strength of our
people, their use of technology and
approach to client service and I thank
them for their continued commitment,
loyalty and hard work.
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 2% (stable in constant
currency) to £828.2m (2018: £813.5m).
Globally our Commercial Capital
Transaction business revenue declined
by 8% and our Leasing and Occupier
focused transactional revenues grew
by 10%. Our Global Residential
business revenue decreased by 1%.
Underlying profits decreased 14% to
£69.8m (2018: £81.1m), with a reduced
underlying profit margin of 8.4% (2018:
10.0%), as a result of the relative mix of
activity across the globe and the lag
effect of business development costs.
Asia Pacific Commercial
Revenue of the Asia Pacific
Commercial Transaction business
decreased by 13% to £138.6m (2018:
£160.1m), a 15% decrease in constant
currency. This was a result of a
significant decrease in investment
activity in Hong Kong where market
volumes declined by 42% following
the introduction of US/Sino trade
tariffs and ongoing political
uncertainty. The effect of this was
partially offset by substantial
improvements in Japan and our APAC
Hospitality Group. Elsewhere, revenue
growth in Mainland China was 9%,
whilst decreases were seen in
Australia (down 11%), and South Korea
(down 26%).
The challenging market conditions
in Hong Kong and the effect of
business development costs in
Australia are reflected in a 42%
decrease in underlying profit to £12.4m
(2018: £21.2m). This represented a 44%
decrease in constant currency.
UK Commercial
Revenue from UK commercial
transactions decreased 4% to £94.2m
(2018: £98.4m) as the continuing lack
of clarity around the UK’s exit from the
EU and political uncertainty in advance
of the General Election affected
sentiment in the commercial property
investment markets, where volumes
declined 17% year-on-year.
All segments of the UK commercial
property market saw year-on-year
falls in investment activity, with the
most notable decline being in the
central London office market, which
was down 34%. Investment in offices
nationally declined by 26% and retail
by 10%, while industrial investment
activity saw the second largest
year-on-year fall of 14%.
Recognising that the UK property
market represents good value relative
to other major international locations,
investor sentiment improved
substantially following the clear General
Election result and drove a strong finish
to the year, in which our business
significantly outperformed the market
restricting the overall annual decline in
revenue to 4%.
Transaction volumes in most UK
leasing markets also declined in 2019,
following a strong year of take-up in
2018. Occupier take-up in the national
logistics market was 34.2m sq ft.
Although this was 9% lower than 2018,
it was still the fourth strongest year of
18
Savills plc
Report and Accounts 2019
the last decade. In the office markets,
take-up in central London fell by 15%
year-on-year and in the top six cities
outside London by 10%. Savills
outperformed the market with a
decline of 4% in leasing revenues.
The retail sector continued to face
challenges for both landlords and
tenants in 2019. However, 2019 saw the
largest number of initial openings of
new sites by international brands in the
UK, and a stronger year for new shop
openings on retail warehouse parks.
Overall reduced market activity led to a
22% decrease in underlying profit to
£12.3m (2018: £15.7m), with underlying
profit margin falling to 13.1% (2018: 16.0%).
North America
In March the North American business
rebranded to ‘Savills’ and continued to
grow through the year. Our North
American business, which primarily
serves corporate occupiers, increased
revenues by 11% to £293.0m (2018:
£264.5m) reflecting improved
performances across the network. In
constant currency this equated to a
year-on-year increase of 6%.
North American underlying profit
increased by 35% to £17.3m (2018:
£12.8m), a 29% increase in constant
currency, with the underlying profit
margin improving to 5.9% (2018: 4.8%).
After the continued costs of
investment in the business including
significant investment in management
and our central office platform, this
represented improvement towards
desired levels of profitability. As
expected, the capital markets team in
New York significantly reduced
operating losses during the period.
Europe & the Middle East
In Europe & the Middle East
Commercial Transaction fee income
grew by 13% (14% in constant currency)
to £127.5m (2018: £113.1m). Strong
results from investment teams in
France, Benelux and Ireland offset
revenue reductions in Germany, Italy
and Portugal. Office Leasing
performed well across the region
growing 28% year-on-year driven
primarily by strong performances in
France and Germany.
As a result of certain restructuring and
recruitment costs in Sweden, France
and Germany, the Europe & Middle
East transactional business reported
underlying profit of £5.4m (2018:
£5.5m) and an underlying profit margin
of 4.2% (2018: 4.9%).
UK Residential
Our UK Residential business
outperformed a weak UK market, where
the volume of transactions valued above
£1m declined by approximately 2% in
2019, with revenue increasing 6% to
£139.1m (2018: £131.5m). Significant
growth in our Core London business
(average transaction value £1.1m), which
doubled its market share in most
locations, drove this performance
through much of the year. In addition
we experienced a notable increase in
transactions, much of it being the
release of pent up buyer demand, in
the Prime and Super Prime London
markets following the clear General
Election result.
Properties exchanged rose 14% overall
in Prime Central London and Savills
overall transaction volumes exchanged
were up 31% in London and 7% in the
regional markets. This reflected the
increasing importance of Core London
to our business which is also
demonstrated by the 21% reduction in
the average value of London residential
property sold by Savills to £2.1m (2018:
£2.7m). The average transaction value
outside London decreased marginally
to £1.13m (2018: £1.14m).
Revenue
£828.2m
m
2
.
8
2
8
£
.
m
5
3
1
8
£
.
m
2
6
4
7
£
Underlying
profit
£69.8m
m
1
.
1
8
£
m
5
.
1
8
£
.
m
8
9
6
£
9
1
0
2
8
1
0
2
7
1
0
2
+2%
YOY
change
9
1
0
2
8
1
0
2
7
1
0
2
-14%
YOY
change
Contribution to Group revenue
(%)
43%
57%
Transaction Advisory
Rest of Group
19
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Chief Executive’s review
continued
In the New Homes business, revenue
increased by 4%, which represented a
robust performance in the prevailing
market conditions with the number of
reservations increasing by 16%.
Average transaction values declined
1% whilst the number of exchanges
decreased by 10%.
Overall, the UK Residential Transaction
Advisory business showed resilience in
challenging markets, recording a 1%
increase in underlying profits to £17.8m
(2018: £17.6m). The shift in mix in
favour of the Core London market
reduced the underlying profit margin
to 12.8% (2018: 13.4%).
Asia Pacific Residential
Overall, Asia Pacific Residential
revenues decreased 22% to £35.8m
(2018: £45.9m) which represented a
23% decrease in constant currency. A
significant decline was seen in Hong
Kong as investor confidence was
impacted by economic and political
uncertainty, as a result revenue declined
by 37% year-on-year. Elsewhere in the
region, Mainland China revenues were
stable during the period with a slight
decline in Shanghai largely offset by
an increase in Beijing. The business in
Singapore also experienced a decline
in revenue and profits as a result of
the government cooling measures
implemented in 2018. Revenue in
Australia declined substantially due to
weak market conditions and as a result
the business was restructured to
mitigate the effect on profits.
The net effect of all these factors was
resulted in a 45% decrease in underlying
profit to £4.6m (2018: £8.3m).
Property and Facilities
Management
Our Property and Facilities Management
businesses continued to perform
well, growing revenue by 17% (15% in
constant currency) to £684.5m (2018:
£586.8m). Savills total area under
management increased by 14% to
2.3bn sq. ft. (2018: 2.02bn sq. ft.).
Underlying profit increased by 9%
to £35.2m (2018: £32.2m), 8% in
constant currency.
Asia Pacific
The Asia Pacific region grew revenue
by 14% (11% in constant currency) to
£372.5m (2018: £327.0m). The
Property and Facilities Management
business is a significant strength in the
region, representing 59% of Savills Asia
Pacific revenue (2018: 56%) and
complementing our Transaction
Advisory businesses. The total square
footage under management in the
region was up 13% to approximately
1.71bn sq. ft. (2018: approximately
1.51bn sq. ft.). The effect of a strong
performance in Greater China (incl.
Hong Kong) included the revenue
benefit in the initial periods of some
significant facilities management
contracts in Hong Kong/Macau with
little short term effect on profits.
Elsewhere, increased pass through
costs in Singapore and significant
expansion of our business in Vietnam
was offset by the Australian business
which saw a reduction in revenue
alongside restructuring and
recruitment costs in the period.
The underlying profit of the Asia
Pacific Property Management
business remained constant at
£19.2m (2018: £19.2m).
UK
Our UK Property Management teams,
comprising Commercial, Residential
and Lettings, grew revenue by 21% to
£231.1m (2018: £190.9m). This includes
the full year effect of the 2018
acquisitions of the Broadgate Estates’
third party property management
portfolio and the Currell Group.
The business was awarded a number
of significant contracts during the
year including some lower margin
Facilities Management programmes in
the managed estate. The effect of
these wins and investment in the
platform resulted in a flat underlying
profit margin of 6.8% (2018: 6.8%) and
underlying profit growth of 22% to
£15.8m (2018: £13.0m).
Europe & the Middle East
In Europe & the Middle East, revenue
grew by 17% (19% in constant currency)
to £80.9m (2018: £68.9m), including
the full year effect of the 2018
acquisition of Cluttons Middle East.
Some significant mandate wins in the
Middle East drove the overall growth in
revenue, but initial on-boarding costs
and investment in the Spanish
platform, suppressed the margin
during the period. By year end the
total area under management had
increased by 15% to 151.3m sq. ft.
(2018: 131.9m sq. ft.).
Collectively, the region achieved a
small increase in underlying profits
to £0.2m (2018: £0.0m).
20
Savills plc
Report and Accounts 2019
Consutancy
Investment
Management
£338.1m
£79.2m
m
1
.
8
3
3
£
.
m
4
4
9
2
£
m
1
.
3
7
2
£
.
m
2
9
7
£
.
m
7
6
6
£
.
m
5
6
6
£
Revenue
Property and
Facilities
Management
£684.5m
.
m
5
4
8
6
£
.
m
8
6
8
5
£
m
1
.
3
1
5
£
9
1
0
2
8
1
0
2
7
1
0
2
+17%
YOY
change
9
1
0
2
8
1
0
2
7
1
0
2
9
1
0
2
8
1
0
2
7
1
0
2
+15%
YOY
change
+19%
YOY
change
Underlying profit
Property and
Facilities
Management
Consutancy
Investment
Management
£35.2m
£34.5m
£18.1m
m
2
.
5
3
£
.
m
2
2
3
£
.
m
3
5
2
£
.
m
5
4
3
£
m
1
.
3
3
£
m
0
.
1
3
£
m
1
.
8
1
£
m
0
.
1
1
£
.
m
3
3
1
£
9
1
0
2
8
1
0
2
7
1
0
2
+9%
YOY
change
9
1
0
2
8
1
0
2
7
1
0
2
+4%
YOY
change
9
1
0
2
8
1
0
2
7
1
0
2
+65%
YOY
change
21
Consultancy
Global Consultancy revenue increased
by 15% to £338.1 (2018: £294.4m) and
underlying profit grew by 4% to
£34.5m (2018: £33.1m). Currency
movements had a negligible impact on
results in the Consultancy business.
UK
UK Consultancy revenue increased by
6% to £229.9m (2018: £215.9m), with
strong performances in the Housing,
Building Consultancy and Private
Rented Sector (PRS) service lines. This
growth was partially offset by a decline
in Development and Rural and where a
slow down in development advisory
activity impacted revenue and
underlying profits. Overall underlying
profit from the UK Consultancy
business increased by 5% to £27.0m
(2018: £25.8m), with underlying profit
margin declining marginally to 11.7%
(2018: 11.9%).
Asia Pacific
Revenue in the Asia Pacific
Consultancy business increased by
54% to £69.6m (2018: £45.1m), with
minimal currency impact following a
strong revenue performance in China
alongside steady growth in the
majority of the region. Profit growth
was limited by the costs of recent team
recruitment in China, Singapore and
Australia with underlying profit
increasing 7% to £4.6m (2018: £4.3m),
6% on constant currency basis.
Europe & the Middle East
Our Europe & Middle East Consultancy
business, which principally comprises
valuation and underwriting advisory
services, increased revenue by 16%
(17% in constant currency) to £38.6m
(2018: £33.4m) including the full year
effect of the 2018 acquisition of
Cluttons Middle East. Our Consultancy
practices grew across the majority of
the region, but restructuring and
recruitment costs suppressed the
margin to 7.5% (2018: 9.0%)
particularly in the Netherlands, Spain
and Portugal. As a consequence,
underlying profit fell slightly to £2.9m
(2018: £3.0m).
Investment Management
Revenue from Investment Management
increased by 19% to £79.2m (2018:
£66.7m). Net base management fees
represented approximately 66% (2018:
64%) of Investment Management
revenues and grew by 22% during the
period. In an environment of fewer
transactions (£3.1bn in 2019 vs £3.8bn
in 2018), transaction-related fees
declined by 1%, however the business
benefitted from performance fees on
certain products and 85% of funds (by
AUM) exceeding their benchmark
returns on a five year rolling basis. This
track record supported a record year
for new capital inflows of £3.1bn (2018:
£2.4bn) despite more challenging
market conditions.
Assets under management increased
by 8% to £17.7bn (2018: £16.4bn).
Underlying profits for Investment
Management increased by 65% to
£18.1m (2018: £11.0m).
Mark Ridley
Group Chief Executive
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Chief Financial
Officer’s
review
“ Basic earnings per share
increased 8% to 60.6p
(2018: 56.2p), reflecting an
8% increase in statutory
profit after tax.”
Simon Shaw, Group Chief Financial Officer
Underlying profit margin
Underlying profit margin decreased to
7.4% (2018: 8.2%), reflecting business mix
and the cost of business development in
a number of regions. In terms of revenue,
the reduction in activity in some higher
margin capital transaction markets was
mitigated by growth in the lower margin
leasing activity and, in particular, by
growth in the Property Management
business globally.
Taxation
The tax charge for the year decreased
slightly to £32.0m (2018: £32.2m),
reflecting an effective tax rate on
statutory profit before tax of 27.7%
(2018: 29.4%). In both years, the Group’s
effective reported tax rate is higher than
the UK effective rate of tax of 19% (2018:
19%), reflecting the effect of higher
foreign rates of tax and permanently
disallowed charges, including non-
deductible acquisition costs.
The underlying effective tax rate
reduced slightly to 25.1% (2018: 25.7%).
Restructuring and acquisition-
related costs
During the year the Group recognised
a total of £25.2m in restructuring and
acquisition-related costs (2018:
£29.1m). These comprised an
aggregate restructuring charge of
£11.5m (2018: £8.4m). These related
principally to costs incurred in
rebranding the North American
business to Savills in line with the
original integration plan and the final
reorganisation within the ex SEB
German Investment Management
business in line with the transfer of the
remaining open ended fund assets
(primarily liquid assets) to the fund
custodian.
The reduction in acquisition-related
costs in 2019 to £13.7m (2018: £20.7m)
reflected a reduction in corporate
acquisition activity year-on-year. These
costs related to future consideration
payments, associated with past
acquisitions, which are subject to a
future service condition. The largest
components of this charge relate to
the acquisitions of Aguirre Newman in
2017 and Currell Group in 2018.
These charges have been excluded
from the calculation of underlying
profit in line with Group policy.
Earnings per share
Basic earnings per share increased 8%
to 60.6p (2018: 56.2p), reflecting an 8%
increase 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
marginally to 78.0p (2018: 77.8p).
Fully diluted earnings per share
increased by 8% to 58.8p (2018:
54.6p). The underlying fully diluted
earnings per share increased slightly
to 75.7p (2018: 75.6p).
The first-time implementation of IFRS
16 (Leases), reduced earnings per share
by 2.6p year-on-year.
Cash resources, borrowings
and liquidity
Gross cash and cash equivalents at year
end decreased 6% to £209.9m (2018:
£223.9m). This decrease primarily
reflected the £10.3m of losses in the
year on translation of cash balances
held in non-sterling currencies (2018:
£9.8m of translation gains).
Gross borrowings at year end
increased to £181.4m (2018: £150.0m).
These principally comprise £150.0m
22
Savills plc
Report and Accounts 2019
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 increase in revenue (2018:
£20.7m decrease) and an increase of
£1.4m in underlying profit (2018: £1.3m
decrease). Refer to Note 3.2 to the
financial statements for further
information on foreign exchange risk.
Simon Shaw
Group Chief Financial Officer
(2018: £150.0m) of 7, 10 and 12 year
fixed rate notes which were issued in
June 2018, along with £32.5m (2018:
£nil) drawn under the Group’s
Revolving Credit Facility (‘RCF’). In
June 2019 the Group amended and
extended its existing £360m RCF to
include a £90m accordion facility and
extend the expiry date from December
2020 to June 2024. At the year end,
net cash was £28.5m (2018: £73.9m).
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
£95.4m (2018: £104.3m).
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.
Capital and Shareholders’
interests
During the year 0.1m shares (2018:
0.2m) were issued to participants
under the Performance Share Plan and
0.1m (2018: 0.8m) new shares were
issued to participants on exercise of
options under the Group’s SAYE
Schemes. The total number of ordinary
shares in issue at 31 December 2019
was 143.1m (2018: 142.9m).
Savills Pension Scheme
The funding level of the defined benefit
Savills Pension Scheme in the UK,
which is closed to future service-based
accrual, fell during the year primarily as
a result of a decrease in the yield on
AA-rated corporate bonds, increasing
the value of the liabilities, offset by the
impact of contributions made by the
Group. The plan was in a liability
position of £9.4m at the year-end
(2018: £2.8m surplus).
During the prior year the Group
incurred an additional exceptional
charge of £3.1m in respect of the
equalisation of the Guaranteed
Minimum Pension (‘GMP’) on the UK
defined benefit pension plan.
Net assets
Net assets as at 31 December 2019
were £503.2m (2018: £505.0m). This
movement reflects the Group’s
trading performance which has been
more than offset by the effects of
foreign currency translation of
foreign subsidiaries along with the
actuarial loss 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
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Material
existing and
emerging
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.”
24
Savills plc
Report and Accounts 2019
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 material risks and
the emergence of new material 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. Material
risks are those to which the Board and
senior management pay particular
attention and which could cause the
delivery of the Group’s strategy, results,
financial condition or prospects to differ
materially from expectations. Emerging
risks are those which have unknown
components, the impact of which could
crystallise over a longer period of time.
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
potentially material 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 a
financial, 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
Review and confirmation
Review and confirmation by the Board.
PLC AUDIT COMMITTEE
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.
GROUP EXECUTIVE BOARD
GROUP RISK COMMITTEE
EXECUTIVE COMMITTEES
GROUP RISK
HEADS
OF GROUP
FUNCTIONS
Key risks:
Heads of Group
functions identify the
key risks and develop
mitigation actions
HEADS OF
OPERATING
COMPANIES
Key risks:
Heads of operating
companies create a
register of their top
risks and mitigation
actions
25
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Material existing and emerging risks and
uncertainties facing the business continued
Roles and responsibilities
The Board continuously reviews the
Group’s key risks and is supported in
the discharge of this responsibility by
various committees, and in particular
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 discharged
during the year.
1. Board
Responsibilities
2. Group Executive Board
Responsibilities
4. Heads of the Group functions and
operating companies
Strategic leadership of the Group’s
Responsibilities
operations
Ensure that the Group’s risk
management and other policies are
implemented and embedded
Monitor that appropriate actions are
taken to manage material 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
Maintain an effective system of risk
management and internal control
within their function/operating
company.
Actions
Regularly review operational, project,
functional and strategic risks as well
as emerging risks
Review mitigating controls, whether
financial, operational or compliance
and mitigation plans to address
control gaps
Approve the Group’s strategy
Monthly/quarterly finance and
Plan, execute and report on
Determine Group appetite for risk in
achieving its strategic objectives
Establish the Group’s systems of risk
management and internal control.
performance reviews
Receive updates from Group
Risk Committee
Monitor the application of risk
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
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
Receive regular risk updates from
assurance activities and processes
the businesses
Determine the nature and extent of
the principal Group risks and assess
the effectiveness of mitigating
actions
Annually review the effectiveness of
risk management and internal control
systems
Approve the Group risk management
policy.
3. Subsidiary Executive
Committees’ Responsibilities
Responsibilities
Responsible for risk management
and internal control systems within
their regions/businesses
Monitor the discharge of their
responsibilities by operating
companies.
Actions
Review key risks and mitigation plans
Review results of assurance activities
Escalate key risks to Group
Management and Group Executive
and Plc Boards.
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
advisors where applicable.
Principal and emerging risks
The Directors have carried out a robust
assessment of the material existing and
emerging 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 risks and
uncertainties other than 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 69 to 77.
26
Savills plc
Report and Accounts 2019
In summary, our material existing and emerging risks (not in order of priority) are:
1.
COVID-19
5. Reputational and brand risk
9. Business conduct
2. Business conditions, general
6. Legal risk
economy and geopolitical issues
3.
Achieving the right market positioning
in response to the needs of our clients
7.
Failure or significant interruption
to IT systems causing disruption
to client service
4. Recruitment and retention of
8. Operational resilience/Business
high-calibre staff
continuity
Risk
Description
Mitigations
10. Changes in the regulatory
environment/regulatory breaches
11. Acquisition/integration risk
Change
from 2018
New
1 COVID-19
Strategic objective:
Financial strength/
Strength in Residential
and Commercial markets/
Commitment to clients
COVID-19 may have a significant impact on
transactional activity globally, as it already has
in Greater China, but it is difficult to predict this
impact accurately in a dynamic environment.
We are closely monitoring the short and medium-
term impacts of the Covid-19 virus, The welfare
of our staff and clients is paramount and we have
implemented risk management measures consistent
with government guidances in relation to affected
locations. In addition, we have business continuity
and crisis plans (refer to risk 8 below) which will
enable us to respond quickly to mitigate the impact.
Any longer-term impacts will also be considered
and monitored, as appropriate.
2 Business conditions, general economy and geopolitical issues
Strategic objective:
Geographic
diversification/ Financial
strength
Global market conditions are currently volatile,
with political and economic uncertainty in some
sectors and markets, particularly the unrest in
Hong Kong, the uncertainty around the trade
agreements being negotiated by the UK with
Europe following Brexit and the continuing US/
China tariffs dispute.
Group earnings and our financial condition could
be adversely affected by these and other macro-
economic uncertainties.
Savills operates in a number of countries
where the transactional business is the largest
component and thereby increases the level of
economic risk.
There is a currency risk from operating in a large
number of countries.
The strength of Savills business and brand and the focus
on client service.
Our strategy of diversifying our service offering and
geographic spread mitigates the impact on the business
of economic downturns and weak market conditions in
specific geographies, but these factors cannot entirely
mitigate the overall risk to earnings. To manage these
risks, we maintain a continuous 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, economic trends and
adverse events. Continual monitoring of market
conditions, market changes and other events 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
have been undertaken 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
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.
Key: Change from 2018
Increase
No change
Reduced
27
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Material existing and emerging risks and
uncertainties facing the business continued
Risk
Description
Mitigations
Change
from 2018
3 Achieving the right market positioning in response to the needs of our clients
Strategic objective:
Business diversification/
Strength in Residential
and Commercial
markets/Geographical
diversification/
Commitment to clients
The markets in which we operate are highly
competitive. Competition could lead to a
reduction in market share and/or a decline in
revenue. Our focus is on retaining existing clients
as well as engaging with new clients. Our service
offering continuously evolves and improves to
meet the changing needs of our clients.
To remain competitive in all markets, we continue
to promote and differentiate our strengths whilst
focusing on providing the quality of service that
our clients require.
We continue to invest in the development of client
relationships globally and associated systems/
digital technology to support, enhance and extend
our client service offering.
4 Recruitment and retention of high-calibre staff
Strategic objective:
Financial strength/
Commitment to clients
We recognise that the future success of our
business is dependent on attracting, developing,
motivating and retaining people of the highest
quality.
We continue to invest in the development of
our people and our training and development
programmes across the businesses.
Our partnership style culture and profit-sharing
approach to remuneration is combined with
selective use of share-based and other rewards
to incentivise and retain our best people for the
long-term benefit of the Group.
5 Reputational and brand risk
Strategic objective:
Strength in Residential
and Commercial markets/
Commitment to clients
‘Savills’ is a strong, well recognised and valued
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 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.
We recognise the need to maintain this
reputation by ensuring the quality of the service
we provide and as described below, requiring
our people to operate to the highest ethical
standards.
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 as set out in
Responsible Business on pages 35 to 46.
28
Savills plc
Report and Accounts 2019
Risk
Description
Mitigations
Change
from 2018
6 Legal risk
Strategic objective:
Financial strength/
Commitment to clients
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 and Project Management
businesses, we may be responsible for
appointing or overseeing 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.
The Group has a range of policies in place including
client acceptance, legal and regulatory compliance,
data protection, 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.
7 Failure or significant interruption to our IT systems causing disruption to client service
Strategic objective:
Financial strength/
Commitment to clients
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.
8 Operational resilience/ Business Continuity
Strategic objective:
Financial strength/
commitment to clients
Significant non-IT. events may affect continuity of
service to clients, consequential revenue loss and
reputational damage.
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.
Our IT strategy is to diversify our services utilising cloud
and hosting in order to avoid a single point of failure.
Penetration testing and vulnerability testing is
carried out regularly.
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.
New
Business continuity plans are in place across our
businesses worldwide to enable us to respond to
external incidents which threaten the continuity of
our operations. Currently, the impact of COVID-19
is being monitored and appropriate plans /
measures put in place (refer to risk 1 above), but
continuity plans encompass a range of events that
could impact on our people or buildings such as
pandemics, terrorist events and natural disasters.
29
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Material existing and emerging risks and
uncertainties facing the business continued
Risk
Description
Mitigations
Change
from 2018
9 Business conduct
Strategic objective:
Business diversification/
Geographical
diversification/
Commitment to clients
We operate in international markets that may
present business conduct-related risks involving,
for example, fraud, bribery or corruption.
We have programmes to promote compliance with
our Code of Conduct, particularly in areas of higher
risk such as procurement.
Failure by the Group and its employees to
observe the highest standards of integrity and
conduct in dealing with clients, suppliers and
other stakeholders could result in civil and/or
criminal penalties, regulatory sanction, debarring
and/or reputational damage.
We have a zero tolerance approach to breaches of
our Code of Conduct.
10 Changes in the regulatory environment/regulatory breaches
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 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.
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, Savills Capital Advisors and Savills
Investment Management are authorised and
regulated by the Financial Conduct Authority
(‘FCA’) in respect of activities conducted
pursuant to the Markets in Financial Instruments
Directive (‘MIFID’) and Alternative Investment
Fund Managers Directive (‘AIFMD’).
Some Savills Investment Management entities
are variously authorised by the Bank of Italy,
MAS in Singapore, BaFin in Germany, JFSC in
Jersey, CSSF in Luxembourg, ASIC in Australia.
Savills Group companies also hold financial
services advisory licences in Japan and USA.
Our entities across the Group employ resources
and maintain a framework of controls aimed
at preventing our business being used to
facilitate financial crime, and to comply with
complex financial sanctions regimes which
are continually changing in response to
global events.
Some of our service businesses are regulated
by The Royal Institution of Chartered Surveyors
(‘RICS’), for example Savills UK.
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.
11 Acquisition/integration risk
Strategic objective:
Business diversification/
Geographical
diversification/Strength
in Residential and
Commercial markets/
Financial strength
30
The structuring and integration of acquisitions is
critical to realising the benefits sought. People,
systems and processes are key components.
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.
Savills plc
Report and Accounts 2019
Viability Statement
In addition to the going concern statement, the Directors have considered the viability of the business. The UK Corporate
Governance Code (the ‘Code’) requires the Company to issue a viability statement stating whether the Board believes that
the Group is able to continue to operate and meet its liabilities, taking into account its current position and principal risks. In
accordance with Provision 31 of the UK Corporate Governance Code, the Directors have assessed the viability of the Company
over a three year period to 31 December 2022, 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 47. The Group’s emerging risks are also disclosed in the Strategic Report. This longer-term assessment supports the
Board’s statements on both viability, as set out below, and going concern as set out on page 107.
Period for Assessment
The Directors concluded that three years would be an appropriate time frame 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 47. 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,
a severe global economic downturn analogous to that experienced during the Global Financial Crisis in 2008/09 and a
specific scenario related to the current Covid-19 outbreak. 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 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 2022.
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.
31
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Stakeholder
engagement
with s.172
Engaging with our stakeholders
The following disclosure is made in line with the Companies
(Miscellaneous Reporting) Regulations 2018 which requires
Companies to report on employee and stakeholder
engagement. The Board remains committed to further
strengthening its dialogue with employees and the Company’s
wider stakeholder group. The Board recognises that
engagement is fundamental to the success of the Company
and, in performing its duties under s172, considers the views of
key stakeholders in its decision-making, recognising that they
are central to the long-term prospects of the Company.
Who are our
stakeholders
Why we focus on
these stakeholders
How do we
engage them?
Clients
Our clients are key
to the success our
business
Our businesses are in continuous contact with our clients, to understand their requirements, to listen to
their feedback on our service levels and to understand their expectations in terms of the development of
our service offering. As part of the client relationship management 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 and business leadership
teams.
The quality of our service performance is regularly assessed by independent reviewers which helps us
better understand how we are managing the relationship and what we need to change to deliver the
service and added value our clients expect. In the last year we have increased the level of feedback we
receive which has enabled us to tailor better our approach to individual clients, making their experience
of Savills more bespoke to them and their needs.
Client relationship leads also act as a focal point for client servicing enquiries and it is their responsibility
to quickly identify and resolve any service issues.
This feedback helps us maintain the highest levels of client service and develop and
extend our client offering.
Our People
Our people are our
most valuable asset.
We firmly believe that
our people are key to
delivering excellent
service to our clients
and achieving our
objectives
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.
We take feedback from our staff on or leadership and training courses and as a result look to improve
future training and development programmes
In 2019, we focused on strengthening our communication channels with employees, in response to the
new Code requirements. After this review we introduced two key enhancements as follows:
(a) the creation and promotion of a digital platform which will allow direct employee communication
(in local language) with non-executive directors (including the Chairman) in areas of focus (such as
strategy, training and development opportunities; measurement of staff performance and promotion
criteria; diversity; and flexible working). Following development, this portal is now being piloted in our
UK and US businesses, prior to global launch (in local languages) later in 2020; and
(b) asking the Non-Executive Directors (including the Chairman) to join staff ‘Town Hall’ / Employee
Briefing sessions by region, and, for example, meet with young leader groups without management
being present. Reflecting the geographical spread of the Group, all of our Non-Executive Directors will
participate in this programme (rather than a specific Non-Executive Director being asked to assume
this responsibility).
All of the Group’s Non–Executive Directors are involved in our workforce engagement programme,
with each NED focussing on specific regions reflecting their own domiciles. The Board believes this will
enhance each of the Director’s engagement with, and understanding of, workforce views, leverages
cultural awareness and is more efficient.
We continue to monitor and develop our approach to employee engagement in the light of emerging
practice.
32
Savills plc
Report and Accounts 2019
Who are our
stakeholders
Why we focus on
these stakeholders
How do we
engage them?
Community
and
environment
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
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.
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.
Savills Corporate Responsibility Steering Group (‘CR Steering Group’) co-ordinates the Group’s corporate
responsibility activity to deliver Savills agreed goals and ensures that key CR responsibilities and
achievements are communicated to all staff globally and externally to interested parties.
The CR Steering Group monitors Group-wide corporate responsibility progress and performance,
identifying to the Group Executive Board areas where action needs to be taken. The progress made on
corporate responsibility matters and the achievements of the Group’s Principal Businesses in each year
are considered by the Board and included in the Group’s Report & Accounts annually.
2019 marked the end of our three year GHG reduction plan and we reported a reduction of 30% in
GHG emission intensity. The 30% GHG intensity reduction against the baseline year has been achieved
progressively, with an 8% year on year improvement in 2017, 9% in 2018 and an additional 13% in 2019.
Shareholders We believe that
We are in regular contact with our major Shareholders and potential Shareholders.
engaging with our
Shareholders and
encouraging an open,
meaningful dialogue
between Shareholders
and the Company
is vital to ensuring
mutual understanding
Delivering for our
Shareholders ensures
the business continues
to be successful in
the long term and can
therefore continue
to deliver for all our
stakeholders
We have an active engagement programme with our Shareholders involving a regular, scheduled
programme of meetings as part of our continuing commitment to open and transparent dialogue,
including the Group’s approach to remuneration.
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.
The Board is available at the AGM to meet with Shareholders. The AGM provides the Board with an
opportunity to engage with our Shareholders.
The Chairman and Tim Freshwater as the Senior Independent Director are also available to meet
Shareholders at all times as required.
All resolutions put to Shareholders at the 2019 AGM were passed with over 92% approval.
Suppliers
As a Group we do
not have any material
dependency on a
specific supplier
Our property management businesses work with supply partners to ensure that we can deliver the
best services for our clients. Our businesses have regular engagement with their key suppliers, who are
required to operate with high service levels and the ethical standards that are set out in our Code of
Conduct. We regularly monitor the relationship and engagement approach with our third-party suppliers.
In this area our primary
focus is on developing
strong relationships
with our property
management supply
partners across the
world to help us to
provide consistent
standards and the
services required by
clients across our
property management
business
33
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Stakeholder engagement
with s.172 continued
Section 172(1) Statement
The Board of Directors of Savills Plc consider, both individually and together, that they have acted in the way they consider, in
good faith, would be most likely to promote the success of the Company for the benefit of its members as a whole. In doing
this, the Directors have had regard to the stakeholders and amongst other matters to those set out in s172(1) (a-f) of the Act)
in the decisions taken during the year ended 31 December 2019:
likely consequences of any decisions in the long term;
interests of the Company’s employees;
need to foster the Company’s business relationships with suppliers, clients and others;
impact of the Company’s operations on the community and environment;
Company’s reputation for high standards of business conduct; and
need to act fairly as between members of the Company.
The disclosures set out on this page are some examples of how the Directors have had regard to the matters set out in
Section 172(1)(a) to (f) when discharging their section 172 duties and the effect of that on certain of the decisions taken by
them. More detail on how our Board operates, including the matters it discussed and debated during the year are in the
Governance Report on pages 48 to 111. Illustrations of how section 172 factors have been applied by the Board can be found
throughout the Strategic Report. For example, for details on how we have considered the impact of the Company’s
operations on the environment see pages 42 to 43 of Responsible Business. For further details of how we have considered
our clients see page 36 of Responsible Business.
Principal Board decisions
made in the year
Disclosures
Strategy
Considered the Group’s
preparations in relation
to Brexit
As part of the Group’s preparations in relation to Brexit, the Board in particular considered location of Savills
Investment Management’s regulatory AIFM licenced activities in the context of the risk that the established
‘passporting’ of UK permissions was excluded by Brexit. As part of the decision making process on whether
to transfer the registration to Luxembourg, the Board considered the impact on servicing clients and our people.
The decision was taken to move the AIFM licence to Luxembourg with the creation of additional roles in country
and without the reduction of staff in Savills Investment Management in London.
Governance
Appointed Dana Roffman as
an additional Non-Executive
Director to the Board
Finance
Reviewed the 2020-22
Business Plan and
approved the 2020 Budget
Moving the AIFM licence to Luxembourg removed the risk that Savills Investment Management would no longer be
able to manage AIFs in Europe, which is fundamental to the continued operation of the SIM business.
The Board is committed to ensuring that its membership provides the necessary balance of diversity, skills
experience, independence and knowledge to ensure we continue to run the business effectively and deliver
sustainable growth.
In this context, in making the recommendation to the Board on the proposed appointment of an additional Non-
Executive Director, the Nomination & Governance Committee in particular considered the Board’s blend of skills
and experience. In making the recommendation to the Board on the proposed appointment of an additional Non-
Executive Director, the Nomination & Governance Committee considered the Board’s commitment to continuing to
ensure the Group has a balanced Board. The Committee was unanimous in its recommendation to the Board that
Dana Roffman be appointed as additional independent Non-Executive Director as she brings providing extensive
real estate experience in relation to the US market, improving the skill set of the Board. Dana Roffman’s knowledge
of the US market built up over many years will help shape the Group’s US strategy in particular.
On 31 October 2019 we announced that a new Non-Executive Director, Dana Roffman would join the Board on
1 November 2019.
The Group’s Business Plan is designed to promote the success of the Company by driving the growth of the
business in the long term which is in the interests of all stakeholders, ensuring that:-
we are not over-dependent on one market or service line by further broadening the depth and breadth of our
geographic presence and client offering;
we deliver the highest standards of client service by having motivated and engaged staff by providing an
environment in which our people can succeed so sustaining the inclusive, diverse and supportive culture that is
encapsulated in our business philosophy and our values;
we continue to innovate and extend our client offering to ensure that we can meet the evolving requirements of
our clients, in particular in areas such as sustainability;
our environmental impact continues to be minimised; having achieved a 30% reduction in GHC emissions over
2016-19 (see Responsible Business Environment on pages 42 to 43), we are now considering the future targets
for our 2020-22 Sustainability Programme, including a Zero Carbon target, which will be agreed during 2020.
34
Savills plc
Report and Accounts 2019
Responsible business
Our corporate responsibility structure
Values
Group Chief Executive
and the Board
Responsibility for Our Corporate Responsibility
programme sits with the Group Chief Executive and
the Board
Corporate Responsibility
Steering Group
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
Pride in
Everything We Do
Take an Entrepreneurial
Approach to Business
Help our People Fulfil
Their True Potential
Always Act
With Integrity
Reinforcing Culture
We are committed to doing
the right thing in the right
way and this is reflected in
the Savills Code of
Conduct.
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.
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.
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.
Read more on pages
37 to 40
Read more on page 41
Read more on pages
42 and 43
Read more on pages
44 and 45
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, while our
localised approach provides the flexibility required to have
meaning and impact at a local level.
We focus on those key areas where we believe we can make a
difference and 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
foster a positive approach towards corporate responsibility as
an integral part of our day-to-day activities.
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.
35
Governance Financial statements Savills plc
Report and Accounts 2019
Responsible business
continued
Our Clients
Taking an Entrepreneurial approach to Business, we:
Seek out new markets and opportunities for clients.
Take a creative and entrepreneurial approach to delivering value.
Are forward thinking, and always aim to build long-term client relationships.
Aim to be a leader in every market we enter.
Creating and nurturing 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 training, tools
and motivation to deliver an exceptional
and personal client experience which is
tailored to our clients’ requirements and
needs. We continue to invest in our
people to ensure they have the right
skills to deliver the high standard of
advice our clients expect as well as
provide training in Client Relationship
Management (CRM) relevant to
individuals’ roles and skills gaps. This
ensures we have expert teams who can
deliver the best quality advice in their
specialism and markets, and who at the
same time can work collaboratively
within a client relationship team to
ensure our clients receive a joined up
and consistent service, as well as a
solution bespoke to their requirements.
To support greater collaboration
among client relationship teams, we
invest in various initiatives to ensure our
professionals also build strong
relationships with each other. We
continued the further roll out of our
internal collaboration platform. The
platform allows Savills client teams to
share real-time information relating to
clients across teams and countries. In
parallel to the continued
implementation of our CRM platform in
Europe, our North America business
has also launched a new CRM system.
The CRM technology is facilitating
greater visibility of client information
and is aiding collaboration among client
service teams.
36
In order to deliver a personal client
experience in line with our clients’
evolving needs, regular communication
is a key priority. As part of the client
relationship management 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, how
we’re managing the relationship and
what we need to adjust to deliver the
service and added value our clients
expect. In the last year we have
increased the level of feedback we
receive which has enabled us to tailor
our approach to individual clients,
making their experience of Savills more
bespoke to them and their needs. It has
also meant that we can be more
proactive in offering solutions which
may involve other specialist teams in
the business. Client relationship leads
also act as a focal point for client
servicing enquiries and it is their
responsibility to quickly identify and
resolve any service issues.
Savills plc
Report and Accounts 2019
Our People
Helping our people fulfil their true potential, we:
Encourage an open and supportive culture in which
Believe that a rewarding workplace inspires and
every individual is respected.
motivates.
Help our people to excel through appropriate training
and development.
Share success and reward achievement.
Recognise that our people’s diverse strengths combined
with good teamwork produce the best results.
Strive to provide an environment in which our people
can flourish and succeed – this allows us to recruit,
motivate and retain talented people and build on our
status as an employer of choice.
Engage with our people to communicate our vision and
strategy through well-established internal channels.
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 also have a specific project
on improving the effectiveness of all
managers in role. We have improved
the clarity of our reward and benefits
through the use of, for example, in the
UK, 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.
Developing talent for the future
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’).
In order to manage individual
development and ongoing learning,
we launched a Learning Management
System (‘LMS’) in the UK which has
now been rolled out across Europe.
The LMS is mobile compatible, allows
individuals to track and manage their
development, watch video podcasts
and download course materials. The
LMS will be rolled out across the Middle
East and US.
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.
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 2019 ranked 92 in the Times Top
100 Graduate Employers.
The leading real estate firm in the
Times Top 100.
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
third year. Savills US Academy, a
multi-year business mentorship
programme aimed at harnessing the
talent of the rising stars, is now in its
fourth year.
In 2019, in Asia Pacific, we continued to
run our 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.
37
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Responsible business
continued
Our People continued
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.
Our Strategic Approach
Our commitment is to promote on
merit regardless of any other factors,
creating equal opportunities for
career progression and ensuring that
every single person within the Savills
Group has a sense of belonging.
Savills policy is to embrace diversity
and provide a platform and a
supportive environment for everyone
to be the best they can be.
We are committed to developing a
culture of inclusivity and diversity within
the property profession with six key
areas of focus: gender, disability,
LGBTQ+, socio-economic, ethnicity and
age. We have led on this with our
programme in the UK, and our Diversity
Group in the UK is now in its fifth year
and continuing to develop our
programme across the Group. The main
objective is to highlight the diversity of
our business and ensure that we are
communicating clearly and effectively
about our people and our clients:
38
Area of Focus
Objectives
Age
Encourage a wider age profile within the property
industry by focusing on ensuring that appropriate
support is available and offered at all stages of an
individual’s career
Disability
Ensure all staff feel included and supported
regardless of any disability (discernible or hidden).
We want to highlight the benefits of having a
business that is aware of and understands the
needs of employees, clients, tenants, visitors and
all those that interface with Savills that have any
form of disability
Ethnicity
Increase the ethnic diversity of people working
within Savills and the wider property industry
by embracing a rich, diverse cultural mix to
promote inclusion and engagement between all
staff and clients
Gender
To create a strategy that provides an equal and fair
platform for everyone to be the best they can be
Continue to ensure that our training fully
We are working hard to redress our balance of men and women in more
supports our approach to diversity and
senior roles through a number of initiatives
LGBTQ+
Embrace diversity and provides a platform and a
supportive environment for everyone to be the best
they can be
Improve lesbian, gay, bi and trans (LGBTQ+)
inclusion in the work place
Socio
Economic
Create a strategy that provides an equal and fair
platform for everyone to be the best they can be
regardless of their socio economic background
Implementation
Flexible Working
Improving Internal Communication of
Examples of progress on achieving objectives
We support a significant number of people flexibly for different
reasons to accommodate personal and professional requirements
existing and new policies
In the UK, ‘Making your Mentoring programme relevant for the modern
Promoting Mentoring and Rewarding Loyalty
Ensuring that policies and support are
offered for Working Carers
workplace’ Savills has adopted a flat mentoring scheme for many years,
allowing both mentor and mentee to benefit from their involvement. A
recent trial within the UK business has also seen employees matched
with colleagues in the same division, who are just slightly further along
in their careers, to allow for similar experiences to be shared
Raising awareness through supporting
We are committed to being a Valuable 500 business, which is a pledge
internal and external events
to encourage 500 companies across the globe to sign up and agree to
Implement compulsory diversity and equality
be more inclusive in terms of disability
awareness training across the business
Savills achieved certification as a Disability Confident Committed
Employer (Level 2) in the UK
Engaging with a number of professional
bodies and diversity groups and will ask for
their assistance and expertise
Removing the stigma – promote awareness
of mental health issues
Ensuring zero tolerance of harassment and
Savills has signed up to the Race at Work Charter, an initiative designed
bullying
to improve outcomes for Black, Asian and Minority Ethnic (BAME)
Making equality in the workplace the
employees in the UK
responsibility of all leaders and managers
Our US Building Inclusivity and Diversity Group regularly hosts
Taking action that supports ethnic minority
career progression
speaker and panel-discussion events for our employees and clients to
encourage awareness and constructive dialogue regarding diversity
and inclusion. We recently hosted at the Smithsonian Institution’s
National Museum of African American History and Culture in
Washington, DC, was attended by clients and staff. The event
included a programme of speakers who shared current initiatives
and best practices for raising awareness for diversity and inclusion
at their companies
inclusion
Relaunched our gender equality and
Hampton-Alexander Review criteria, was 22.5% as at 31 December 2019.
unconscious bias training, to further raise
Whilst this progress reflects our commitment to improve diversity, in a
Our ‘Women in Leadership positions’, determined in accordance with the
awareness of diversity
sector where historically there has been a shortage of women leaders,
we fully acknowledge that we need to remain focused into the medium
term on further improving diversity
We will continue to evolve our approach to meet the needs of our
Raising Awareness
Recruit and Retain best people
Savills plc and Savills UK improved 137 places in the 2019 UK Stonewall
Workplace Equality Index. We hope to continue to improve on this
clients and people
in 2020
Creating a workplace that provides an equal
In the UK, Savills with Schools initiative now in place across 26 regional
and fair platform for everyone to be the
offices, to date the business has engaged with over 5,000 pupils
best they can be regardless of their socio
economic background
Increasing diversity of talent pool
Founding sponsor of Rethink Food, providing vertical farming towers
in primary schools in the UK
Supporting London based charity, The Big House, which works with
Inspiring the next generation to consider
care leavers who are at a high risk of social exclusion by providing a
property for their career
platform to participate in the making of theatre
Savills plc
Report and Accounts 2019
Implementation
Examples of progress on achieving objectives
Flexible Working
Improving Internal Communication of
existing and new policies
Promoting Mentoring and Rewarding Loyalty
Ensuring that policies and support are
offered for Working Carers
We support a significant number of people flexibly for different
reasons to accommodate personal and professional requirements
In the UK, ‘Making your Mentoring programme relevant for the modern
workplace’ Savills has adopted a flat mentoring scheme for many years,
allowing both mentor and mentee to benefit from their involvement. A
recent trial within the UK business has also seen employees matched
with colleagues in the same division, who are just slightly further along
in their careers, to allow for similar experiences to be shared
Implement compulsory diversity and equality
Raising awareness through supporting
internal and external events
We are committed to being a Valuable 500 business, which is a pledge
to encourage 500 companies across the globe to sign up and agree to
be more inclusive in terms of disability
Area of Focus
Objectives
Age
Encourage a wider age profile within the property
industry by focusing on ensuring that appropriate
support is available and offered at all stages of an
individual’s career
Disability
Ensure all staff feel included and supported
regardless of any disability (discernible or hidden).
We want to highlight the benefits of having a
business that is aware of and understands the
needs of employees, clients, tenants, visitors and
all those that interface with Savills that have any
form of disability
Ethnicity
Increase the ethnic diversity of people working
within Savills and the wider property industry
by embracing a rich, diverse cultural mix to
promote inclusion and engagement between all
staff and clients
Gender
To create a strategy that provides an equal and fair
platform for everyone to be the best they can be
Improve lesbian, gay, bi and trans (LGBTQ+)
inclusion in the work place
Socio
Economic
Create a strategy that provides an equal and fair
platform for everyone to be the best they can be
regardless of their socio economic background
awareness training across the business
Engaging with a number of professional
bodies and diversity groups and will ask for
their assistance and expertise
Removing the stigma – promote awareness
of mental health issues
Savills achieved certification as a Disability Confident Committed
Employer (Level 2) in the UK
Ensuring zero tolerance of harassment and
Savills has signed up to the Race at Work Charter, an initiative designed
bullying
Making equality in the workplace the
responsibility of all leaders and managers
Taking action that supports ethnic minority
career progression
Continue to ensure that our training fully
supports our approach to diversity and
inclusion
Relaunched our gender equality and
unconscious bias training, to further raise
awareness of diversity
LGBTQ+
Embrace diversity and provides a platform and a
supportive environment for everyone to be the best
they can be
Raising Awareness
Recruit and Retain best people
to improve outcomes for Black, Asian and Minority Ethnic (BAME)
employees in the UK
Our US Building Inclusivity and Diversity Group regularly hosts
speaker and panel-discussion events for our employees and clients to
encourage awareness and constructive dialogue regarding diversity
and inclusion. We recently hosted at the Smithsonian Institution’s
National Museum of African American History and Culture in
Washington, DC, was attended by clients and staff. The event
included a programme of speakers who shared current initiatives
and best practices for raising awareness for diversity and inclusion
at their companies
We are working hard to redress our balance of men and women in more
senior roles through a number of initiatives
Our ‘Women in Leadership positions’, determined in accordance with the
Hampton-Alexander Review criteria, was 22.5% as at 31 December 2019.
Whilst this progress reflects our commitment to improve diversity, in a
sector where historically there has been a shortage of women leaders,
we fully acknowledge that we need to remain focused into the medium
term on further improving diversity
We will continue to evolve our approach to meet the needs of our
clients and people
Savills plc and Savills UK improved 137 places in the 2019 UK Stonewall
Workplace Equality Index. We hope to continue to improve on this
in 2020
Creating a workplace that provides an equal
and fair platform for everyone to be the
best they can be regardless of their socio
economic background
Increasing diversity of talent pool
Inspiring the next generation to consider
property for their career
In the UK, Savills with Schools initiative now in place across 26 regional
offices, to date the business has engaged with over 5,000 pupils
Founding sponsor of Rethink Food, providing vertical farming towers
in primary schools in the UK
Supporting London based charity, The Big House, which works with
care leavers who are at a high risk of social exclusion by providing a
platform to participate in the making of theatre
39
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Responsible business
continued
Our People continued
The Diversity Group
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
58 local state schools 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 event 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 ,Disability, BAME and
LGBT groups. We also
participated in the London
Pride March with the rest of
the CTFOP companies.
Careers in property
Apprenticeships
Savills Surveying
Apprentices join teams
across the UK and we now
have 50 apprentices in the
UK. After six years in the
business they will gain their
BSc in Real Estate and their
full MRICS status.
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
Pathways to Property
and Urban Plan campaigns
in schools.
Inclusive Culture
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.
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.
Wellbeing and mental health also
continue to be key areas of focus for
the Group.
Gender Balance
In accordance with Companies Act
2006, as at 31 December 2019 our total
global workforce of 39,580 colleagues
comprised 21,712 males and 17,168
females. Of these, 229 were senior
executives (194 males, 35 females)
comprising members of the Group
Executive Board and Board members
of the corporate entities whose financial
information is incorporated in the
Group’s 2019 consolidated accounts in
this Annual Report. During the year, the
Company’s Board of Directors
comprised eight members – five males
and three female.
In accordance with the Equality Act
2010, Savills UK, as an employer with
250 or more UK employees publishes
its gender pay picture (calculated in
accordance with the published
requirements) on the Savills UK’s
website and in 2019 our gender pay gap
has remained static.
Total global workforce
gender balance
Male – 21,712
Female – 17,168
40
Savills plc
Report and Accounts 2019
Culture
Always acting with integrity, we:
Behave responsibly.
Act with honesty and respect for other people.
Adhere to the highest standards of professional ethics.
To facilitate the Savills Board’s
assessment and monitoring of culture,
the Board agreed a number of KPIs, set
out on page 59 of the Governance
report, against which performance will
be assessed annually.
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.
Our approach to Human Rights
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.
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 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.
41
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Responsible business
continued
Environment
New sustainable working
Our newly refurbished office in
Madrid is one of the most recent
examples of implementation of our
sustainability policy and alignment
with the best practice sustainability
standards, which has resulted in an
achievement of the LEED GOLD
certificate for interior design and
construction. The project has
included purchasing of carbon
credits of 4,455 MtCO2e, aimed
at offsetting the remaining
operational emissions from the
use of the office space in the
coming years.
42
Environment
We are committed to reducing the
impact that our operations have on the
environment and this includes measuring
and being accountable for our actions. In
2019, we have achieved a 30% reduction
in our Greenhouse Gas Emissions (GHG)
intensity measured against our 2016
baseline year, significantly exceeding the
5% reduction target. In 2020, we will be
undertaking a review of our sustainability
strategy and will develop our new
environmental commitment.
The Group’s environmental policy sets
out Savills approach to achieving our
environmental objectives, and the
responsibilities of Group and operating
companies. We are committed to the
evaluation and continuous
improvement of our environmental
performance, reduction of resource
consumption and provision of services
to clients in a way that takes
appropriate account of sustainability
issues. Each operating company
business unit is responsible for ensuring
that the Group’s environmental policy is
implemented and assuring compliance
with national and local legislation. Our
CR Steering Group discusses the
Group’s environmental performance on
at least an annual basis, including a
review of the policy opportunities for
improvement, new and existing
environmental objectives and any
system changes that may be required.
Across all regions we are continuing to
pursue initiatives to improve
environmental performance through
the design, retrofit and an ongoing
active management of the offices we
occupy. Our newly refurbished office in
Madrid is one of the most recent
examples of implementation of our
sustainability strategy and alignment
with the best practice sustainability
standards, which has resulted in an
achievement of the LEED GOLD
certificate for interior design and
construction. The project included
purchasing carbon credits of 4,455
MtCO2e, aimed at offsetting the
remaining operational emissions from
the use of the office space in the
coming years.
Our UK business now has 114 offices
within the scope of its environmental
management system, certified to
ISO14001:2015. The Savills UK
environmental management system
provides a uniform method of evaluating
environmental risks that pose a threat to
the business at micro and macro level
and ensures compliance with relevant
legislation. The system also ensures the
appropriate persons are adequately
trained and aware in terms of the role
they can play in minimising our
Company environmental impact.
The Group supports the
recommendations of the Taskforce on
Climate-Related Financial Disclosures
(TCFD) and will seek to incorporate
these recommendations in our
reporting over time.
Following the achievement of our
2017-2019 Plan (and the achievement of
our target to reduce the Group’s GHG
emissions), we are reviewing our
Sustainability Strategy (including
climate change) from both a client
facing and corporate perspective to
determine new targets to ensure a
co-ordinated global approach to our
strong and well developed client
service sustainability offering. This
review is being led by the Group Chief
Executive Officer.
Greenhouse Gas Emissions
Our 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 2019.
Reporting Methodology
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 and includes emissions from
Savills plc
Report and Accounts 2019
Savills PLC and Company subsidiaries.
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. Scope 1 and Scope 2 ‘location-
based’ emissions are calculated using
regional/ national emission factors
published by International Energy
Agency (IEA), the UK Government GHG
Conversion Factors for Company
Reporting, US Environmental Protection
Agency (EPA), Swedish Environmental
Protection Agency (SEPA), Australia
Department of the Environment and
Energy and other national agencies and
internationally recognised guidelines for
each reporting period. Under the Scope
2 ‘market-based’ method, no emissions
were accounted for the electricity
supplies backed with the Renewable
Energy Guarantees of Origin and, where
possible, the residual mixes were used to
account for the remaining consumption.
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. 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
2019 marks the end of our three year GHG reduction target and we are pleased to
report a reduction of 30% in GHG emission intensity, exceeding the 5% target set
in 2017. Reduction in our GHG intensity numbers is driven by both improvements
in energy efficiency in our offices and reduction in business travel, as well as an
increase in data quality and our reporting scope which has now account for more
locations with lower intensity ratios. The 30% GHG intensity reduction against the
baseline year has been achieved gradually, with an 8% year on year improvement
in 2017, 9% in 2018 and an additional 13% in 2019.
Since 2016, our absolute Scope 1 and 2 emissions GHG emissions have decreased
by 5%, which accounts for a significant reduction on our Scope 1 emissions and an
increase in the Scope 2 emissions associated with the electricity use within our
offices. During the same period, our business has grown by 21% based on revenue
and in 2019 we are operating from more locations than in 2016. Our reporting
scope has increased to account for more offices operating globally as well as
more offices reporting the data, which has led to an increase in absolute
electricity use. In 2019, the data was reported or estimated for 282 offices
of 305 offices in scope for the reporting year.
Our absolute energy use has continued to decline year on year reduction, and
had decreased by over 4% in 2019. This is mostly due to a decrease in business
travel using Company vehicles, which has been reported across several regions
and with a most notable change in the UK.
In 2019, we have undertaken actions to ensure compliance with the EU Efficiency
Directive (article 8) obligations in the UK known as the Energy Savings
Opportunity Scheme (ESOS). ESOS compliance led to a programme of energy
audits across our offices within the UK, identifying opportunities to maximise
efficiency and reduce operational costs. We have identified an estimated 2 million
kWh, equal 510 tonnes of CO2, which could be saved through further lighting,
heating and cooling and office equipment upgrades. We will regularly review
these recommendations in line with the company environmental policy.
tCO2e
Global GHG Emissions
2019
2018
2016
baseline
change vs
2018
change vs
2016
Scope 1 (Direct)
1,775
2,162
2,518
-17.9%
-29.5%
Scope 2
(Indirect, location-based)
Total Scope 1 and 21
Scope 2
(Indirect, market-based)
Office-based employees
(FTE yr. av. adjusted)
GHG Intensity Ratio1 2
6,719
8,494
6,697
8,858
6,450
8,968
+0.3%
-4.1%
+4.2%
-5.3%
6,358
6,299
nr
+0.9%
–
11,310
0.75
9,970
8,342
+13.4%
+35.6%
0.89
1.08
-15.5%
-30.1%
MWh
Global Energy Use
Total energy use
Notes
2019
2018
2016
baseline
change vs
2018
change vs
2016
25,938
27,079
nr
-4.2%
-
1. Total Scope 1 and 2 emissions and GHG Intensity ratio calculated using location-based Scope 2
emissions.
2. Total Scope 1 and 2 emissions, divide by total full-time equivalent office-based employees year
average.
43
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Responsible business
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.
Community case study
Savills LGBTQ+ group hosted a pre-Pride parade
breakfast at the Margaret Street office, which saw more
than 120 people from across the industry in attendance.
The group joined the 600 other groups and 30,000
people taking part in the parade under the banner of
Changing the Face of Property (CTFOP).
UK Property Management –
Great Ormond Street Hospital
‘One Great Day’
Savills shopping centres have now been taking part in
One Great Day (OGD) for over four years. 2019 saw
77 centres taking part, raising over £76,574, beating
2018 where we raised £50,175, with only 30 centres
taking part. We currently have 82 centres registered to
take part in One Great Day, for 2020, all to raise money
and awareness for Great Ormond Street Hospital.
The centres are not the only ones pitching in. The
London Retail team volunteered to help the OGD team.
during their lunch hours to help pack all the OGD
boxes, that are shipped out all over the country.
The retail team also volunteered, in teams of five,
to join the race to GOSH, a 5k run through the
streets of London.
Graduates YoungMinds
Climb Snowdon
The Graduate Charity Committee have been
supporting YoungMinds since May 2017.
YoungMinds is a charity which provides
support for young people, and their families,
who are struggling with mental health issues.
The Triple Snowdon Challenge in which
12 graduates from both the London and
regional offices took part raised just
under £6,000 so far.
44
Savills plc
Report and Accounts 2019
US JDEF Fundraising
China Vertical Marathon
Savills North America is the founding partner of the
annual JDRF Real Estate Games, raising more than $10
million over 30 years for critical Type 1 diabetes research.
The Games are day-long, Olympics-style events in which
local commercial real estate companies compete in a
variety of friendly challenges and athletic competitions.
The 2019 International Vertical Marathon Open
Shenzhen Nanshan China Resources Tower Station
was held in Shenzhen in April, 2019.
The building is 392.5 metres in height and participants
climbed a total 1,964 steps to reach the finish.
The event encouraged the public to engage in
environmental protection through sports and fitness
and the proceeds went to the green projects in
Shenzhen and elsewhere.
45
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Responsible business
continued
Social Matters continued
Poland Beach Volleyball
Every year, Savills Volleyball Team participates in a charity tournament
in Poland. In 2019, for the 10th year in a row, the event has welcomed
in total, 60 teams, 420 contestants and 2,500 guests and raised PLN
1.18 million through donors, sponsors and players. The beneficent was
‘Na Ratunek Dzieciom z Chorobą Nowotworową’ (To Rescue Children
with Cancer Foundation). This money will enable the charity to buy
equipment for the patients at the Przylądek Nadziei (Cape of Hope)
oncological clinic in Wrocław.
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 FTSE4Good criteria, and has satisfied the
requirements to remain a constituent of the
FTSE4Good Index Series. Created by the global
index company FTSE Group, FTSE4Good is an
equity index series that is designed to facilitate
investment in companies that meet globally
recognised corporate responsibility standards.
Companies in the FTSE4Good Index Series
have met stringent environmental, social and
governance criteria, and are positioned to
capitalise on the benefits of responsible
business practice.
46
Savills plc
Report and Accounts 2019
Non-financial
information
statement 2019
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 requirements.
The table below, and the information it refers to, is intended to help
stakeholders understand our position on key non-financial matters.
Reporting
Requirement
Policies and standards
which govern our approach
Where to read about
our impact in this report
Environmental matters
Environmental Policy
‘Environment’ section of Responsible Business
Employees
H&S Policy
Equality & Diversity Policy
Code of Conduct
Whistleblowing Policy
Human Rights
Social matters
Code of Conduct
Modern Slavery Statement
Code of Conduct
Modern Slavery Statement
Tax Strategy
Financial Crime (Anti
Money Laundering
and Anti Bribery and
corruption)
Code of Conduct
Whistleblowing Policy
Anti-Bribery and
Corruption Policy
CEO Review
Business Model
‘People’ section of Responsible Business
‘Culture’ section of Responsible Business
‘People and culture’ Principal Risk in the Principal
and Emerging Risks and Uncertainties
S172 (1) Companies Act statement – People
Corporate Governance Report
Remuneration Report
‘Culture’ section of Responsible Business
Page
42–43
16–21
6–7
37–40
41
24–30
32
48–68
78–106
41
‘Social Matters’ section of Responsible Business
44–45
Culture section of Responsible Business
Corporate Governance Report
41
48–68
Outcome of non-
financial policies and
standards
Business model
Due diligence
processes in place in
pursuance of promoting
non-financial policies
and standards
Carbon emissions reporting
Gender Diversity reporting in
‘Environment’ section of Responsible Business
Corporate Governance Report
42–43
48–68
accordance with the Corporate
Governance Code 2018
Our business model section of the Strategic Report
6–7
All employees required to read
and adhere to the Code of
Conduct
Whistleblowing reports
reviewed by the Board
Anti-corruption and
anti-bribery training and
monitoring
41
47
Governance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Chairman’s
introduction
“ 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.”
48
Nicolas Ferguson CBE Chairman of Savills plc
Board Leadership and
company purpose
Responsibility for good governance lies
with the Board. The Board is committed
to maintaining the highest standards of
corporate governance, which are
fundamental to discharging our
responsibilities. 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
6 to 7.
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, 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 50 and 53.
In accordance with the 2018 UK
Corporate Governance Code, all of the
Directors, will stand for re-election at the
Savills plc
Report and Accounts 2019
2020 AGM on 6 May 2020. 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.
Culture and values
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. Our whistleblowing
policy enables employees to raise any
matters of concern anonymously and is
embedded into our business.
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 47.
Board effectiveness
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. In 2019 the Board and
Committee evaluation was facilitated by
an independent external consultant, Alice
Perkins of AP Consulting. The process,
key conclusions and areas of focus for
2019 are explained on pages 66 to 67.
We are confident that your Board has
the right balance of skills, experience
and diversity of personality to continue
to encourage open, transparent debate
and challenge. Following this review,
I am satisfied that the Board is
performing effectively.
Board changes
Charles McVeigh, who has served on
the Board since 2000, and Liz Hewitt,
who has been on the Board since 2014
retired at the conclusion of the
Company’s AGM in May 2019. Following
Liz Hewitt’s retirement at the conclusion
of the AGM in May, Stacey Cartwright
succeeded Liz as Chairman of the Audit
Committee. I would like to thank both
Charlie and Liz for their considerable
contributions to Board and its
Committees during their terms.
During the year, the Nomination &
Governance Committee and the Board
agreed that it would be appropriate to
appoint an additional Non-Executive
Director to further expand the range of
skills, experience and knowledge
available to the Board. I am pleased to
report that, following an extensive search
process supported by an independent
specialist search firm (as set out in detail
in the Nomination & Governance
Committee Report on pages 64 to 67),
on 1 November 2019 Dana Roffman was
appointed as an additional independent
Non-Executive Director. I was delighted
to welcome Dana to the Board. Dana has
extensive experience which will
complement and further enhance the
wide-ranging skills and experience
of the Board and its Committees.
Risk and control
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 69 to
77 sets out in more detail the systems of
risk management and internal control.
Details of our material existing and
emerging risks and uncertainties can be
found on pages 24 to 30.
Included within this Report is the
Directors’ Remuneration Policy (the
‘Policy’), which subject to Shareholder
approval at the 2020 Annual General
Meeting (‘AGM’) will apply from that
date, 6 May 2020, replacing the Policy
which was approved by Shareholders at
the AGM in 2017. The Policy, together
with our Annual Report on Directors’
Remuneration, will be presented to
Shareholders for approval at the AGM
on 6 May 2020.
Stakeholder engagement
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 61 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.
2018 UK Corporate Governance
Code and 2019 statutory reporting
requirements
This is the first year in which the
Company will be reporting against the
2018 UK Corporate Governance Code
2018 (the ‘Code’) and the Companies
(Miscellaneous Reporting) Regulations
2018 (the ‘Regulations’). Our
Governance Report reflects these
requirements as they apply to Savills and
includes cross references to relevant
sections of the Strategic Report and
other related disclosures. As part of this
reporting, a Section 172(1) statement can
be found on pages 32 to 34 of the
Strategic Report. A copy of the Code is
available from the Financial Reporting
Council’s website at www.frc.org.uk.
Throughout the year Savills has applied
the Principles and complied with the
Provisions of the Code.
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
12 March 2020
49
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Board of
Directors
50
Nicholas Ferguson CBE
Chairman of Savills plc and Chairman
of the Nomination & Governance
Committee
Appointment to the Board
Nicholas was appointed to the Board
as a Non-Executive Director on
26 January 2016 and became
Chairman in May 2016.
Background and relevant experience
Nicholas has held a number of
leadership roles in the private equity
and investment sectors. He was
co-founder of Schroder Ventures
(the private equity group which later
became Permira) of which he served as
Chairman from 1984 to 2001. He later
served as Chairman of SVG Capital plc,
a publicly quoted private equity group,
from April 2005 to November 2012.
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. Chairman of African
Logistical Properties; and Chairman and
founder of The Kilfinan Group, which
provides mentoring by Chairmen and
CEOs to heads of charities.
Committee Membership
Nomination & Governance Committee.
Savills plc
Report and Accounts 2019
Mark Ridley
Simon Shaw
Tim Freshwater
Group Chief Executive Officer
Group Chief Financial Officer
Independent Non-Executive Director.
Senior Independent Director
Appointment to the Board
Appointment to the Board
Appointment to the Board
Mark joined Savills in 1996 and was
appointed to the Board on 1 May 2018.
Simon joined Savills as Group Chief
Financial Officer in March 2009.
Background and relevant experience
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
Trustee of Reading Real Estate
Foundation. Policy Committee
Member, British Property Federation.
Committee Membership
Nomination & Governance Committee.
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.
Tim was appointed to the Board as a
Non-Executive Director on 1 January
2012.
Background and relevant experience
Tim is Chairman of Goldman Sachs Asia
Bank Limited and was formerly
Chairman of Corporate Finance for
Goldman Sachs (Asia).
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
Audit, Remuneration and Nomination &
Governance Committees.
51
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Board of Directors
continued
Rupert Robson
Stacey Cartwright
Florence Tondu-Mélique
Independent Non-Executive Director
and Chair of the Remuneration
Committee
Independent Non-Executive Director
and Chair of the Audit Committee
Independent Non-Executive Director
Appointment to the Board
Appointment to the Board
Appointment to the Board
Rupert was appointed to the
Board as a Non-Executive Director
on 23 June 2015.
Stacey was appointed to the
Board as a Non-Executive Director
on 1 October 2018.
Florence was appointed to the
Board as a Non-Executive Director
on 1 October 2018.
Background and relevant experience
Background and relevant experience
Background and relevant experience
Rupert has held a number of senior
roles in financial institutions, most
recently Chairman of TP ICAP plc,
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 Sanne Group plc.
Committee Membership
Audit, Remuneration and Nomination
& Governance Committees.
Stacey most recently served as Chief
Executive and then Deputy Chairman
of Harvey Nichols Group until 2018, and
prior to that was EVP 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 Ltd, serves on the Board
of AerCap Holdings and Genpact Ltd.
Committee Membership
Audit, Remuneration and Nomination
& Governance Committees.
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
Audit, Remuneration and Nomination
& Governance Committees.
52
Savills plc
Report and Accounts 2019
53
Dana Roffman
Independent Non-Executive Director
Appointment to the Board
Dana was appointed to the Board
as a Non-Executive Director on
1 November 2019.
Background and relevant experience
Dana was most recently a partner and
founding member of the Real Estate
Private Equity group at Angelo Gordon,
a privately held alternative investment
firm. During her 25 year tenure, ending
in December 2019, she served as a
manager and leader of investment
teams across all major US markets, and
served as a Member of the Investment
Committees for the firm’s US
Opportunistic, Core Plus and Value
Real Estate Funds. She spent her early
career in real estate valuation and
advisory at Arthur Andersen LLP in
Washington, DC.
Other appointments
Advisory Board of NYU Schack
Institute of Real Estate.
Committee Membership
Audit, Remuneration and Nomination
& Governance Committees.
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Group
Executive
Board
54
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
50 to 53 for full biography)
Simon Shaw
Group Chief Financial Officer
(see Board of Directors on pages
50 to 53 for full biography)
Savills plc
Report and Accounts 2019
James Sparrow
Chris Lee
Raymond Lee
Chief Executive Officer, UK & EMEA
Group Legal Director
& Company Secretary
Chief Executive – Hong Kong,
Macau and Greater China
Appointment to the
Group Executive Board
Appointment to the
Group Executive Board
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.
Chris joined Savills in June 2008 and
was appointed to the Group Executive
Board in August 2008. He has
responsibility for legal and compliance
issues globally.
Background and relevant experience
He held equivalent roles with Alfred
McAlpine plc, Courts plc and Scholl plc
between 1997 and 2008, prior to which
he was Deputy Group Secretary of
Delta plc from 1990 to 1997.
Raymond 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.
55
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Group Executive Board
continued
Simon Hope
Mitchell Steir
Mitchell E. Rudin
Global Head of Capital Markets
Chairman & CEO – Savills US
President – Savills US
(alternate member with Mitchell Rudin)
(alternate member with Mitchell Steir)
Appointment to the
Group Executive Board
Appointment to the
Group Executive Board
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, Trustee of Racing Welfare, The
Jockey Club’s charity, and Governor of
Magdalen College School, Oxford.
Mitch was appointed to the Group
Executive Board in May 2014.
Mitch was appointed to the Group
Executive Board in January 2019.
Background and relevant experience
Background and relevant experience
Mitch joined Savills Studley in 1988 and
has served as Chairman and CEO since
2003. Under his strategic leadership,
the North American region has
bolstered its capabilities and reach,
enhanced its infrastructure and
technologies, and strengthened its
executive teams to place the Company
at the forefront of tenant advisory
nationwide. With more than 35 years of
experience and expertise in managing
complex commercial real estate
transactions, Mitch remains the
top-producing broker in the US.
Other appointments
Mitch serves on the boards of the
Museum of the City of New York, the
Realty Foundation of New York, the
Avenue of Americas Association, the
Mount Sinai Hospital Surgery Advisory
Board and the Citizens Budget
Commission.
Mitch joined Savills Studley as
President in 2019, bringing more than
30 years of leadership in the
commercial real estate industry. He has
served as CEO of Mack-Cali Realty
Corporation, Brookfield Office
Properties US. Commercial Operations,
and CBRE’s (formerly ESG and Insignia)
New York Tri-State Region. Through
strategic financial management,
operational logistics, client
representation, and market positioning,
Mitch successfully guided each
company in periods of rapid growth
and dramatic transformation. His
leadership led to increased revenue,
profit margins, and brand capital.
Other appointments
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.
56
Christian Mancini
Alex Jeffrey
Chief Executive Officer –
Asia Pacific (ex Greater China)
Chief Executive Officer –
Savills Investment Management
Appointment to the
Group Executive Board
Appointment to the
Group Executive Board
Christian was appointed to the Group
Executive Board on 1 July 2016.
Alex was appointed to the Group
Executive Board on 1 November 2019.
Background and relevant experience
Christian was made CEO of Savills
Japan in 2007 and appointed CEO of
Savills Northeast Asia in 2012.
Other appointments
Christian also serves as Non-Executive
Director in Savills Asset Advisory, the
wholly-owned asset management
subsidiary of Savills Japan Co, Ltd
created in May 2012
Background and relevant experience:
Alex became Global CEO of Savills
Investment Management on 1
November 2019 and was appointed to
Savills Group Executive Board at that
time. Alex was previously Head of Asia
Pacific for M&G Investments based in
Singapore, with responsibility for the
development and leadership of that
company’s business across all
investment sectors in Asia Pacific. Prior
to this, he was Chief Executive of M&G
Real Estate, based in London, where he
led the significant growth of the firm
from c. £15bn AUM in 2012 to over
£30bn in 2018. Before that he was
Chief Investment Officer and CEO
Europe of MGPA Limited.
Savills plc
Report and Accounts 2019
57
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Corporate Governance
Board governance framework
Board (Chairman, two Executive Directors and five Non-Executive Directors).
Has primary responsibility for providing
entrepreneurial leadership for the Group
businesses act ethically and that obligations
to Shareholders are understood and met
Oversees the overall strategic development
of the Group and approves the strategy to
achieve the Group’s strategic aims
Sets the Group’s values and standards
Ensures effective governance and risk
management and that the Group’s
Delegates the management of the day-to-
day operation of the business to the Group
Chief Executive, supported by the Group
Executive Board subject to appropriate risk
parameters
Matters reserved to the Board
The Board has adopted a formal schedule of
matters specifically reserved to it for
decision-making. A full schedule of matters
reserved for the Board’s decision along with
the Terms of Reference of the Board’s
principal Committees can be found on the
Company’s website at http://ir.savills.com
Nomination &
Governance Committee
Group Chief Executive
Responsible for size, structure
and composition of the Board
Responsible for the day-to-
day management of the Group
Audit Committee
Remuneration Committee
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 Group Executive Board
members
Chair: Rupert Robson
Number of meetings
in the year: 4
For more information
see pages 79 to 106
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 external 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: Stacey Cartwrightt
Number of meetings
in the year: 5
For more information
see pages 69 to 77
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
For more information
see pages 64 to 67
CR Steering Group
Executive Committees
Co-ordinates Corporate Responsibility (‘CR’) activity to deliver
Lead each Principal Business
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
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 them by
the Group Executive Board
58
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
Group Risk Committee
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
Savills plc
Report and Accounts 2019
Board Leadership and Company Purpose
Role of the Board
As set out in the Company’s Governance
Framework on page 58 the Board
has primary responsibility for providing
entrepreneurial leadership for the
Group; specifically the Board:
Oversees the overall strategic
development of the Group and
approves the strategy to achieve
the Group’s strategic aims
Sets the Group’s values and
standards
Ensures effective governance and
risk management and 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
Board Committees
The Board has established three
principal Committees to which it has
delegated certain of its responsibilities,
as set out below. The roles, membership
and activities of these Committees can
be found in the pages which follow.
Group Executive Board (‘GEB’)
The Group Chief Executive is supported
by the GEB. The GEB is the key
management committee of the Group.
It is chaired by the Group Chief
Executive and comprises the Group
Chief Financial Officer, the Heads of the
Principal Businesses and the Group
Legal Director & Company Secretary.
The GEB meets regularly and under the
leadership of the Group Chief
Executive, the GEB is responsible for
the day to day management of the
Group including overseeing the
development and implementation of
strategy, capital expenditure, and
investment budgets, for the ongoing
review and control of the Group’s
Material Existing and Emerging Risks
and Uncertainties as detailed on pages
24 to 30 and reporting on these areas
to the Board for approval, implementing
Group policy, monitoring financial and
operational performance of the Group
and other specific matters delegated to
it by the Board. The Group CEO is also
supported by Regional Service Strategy
Groups which are tasked with the
continuous development of service line
offerings and client relationship
management in each region, in
particular to ensure that the Group’s
offering across its key service lines
continues to evolve to meet new client
requirements and to ensure consistent
approach across the Group. An
explanation of how the Group creates
and preserves value, and the strategy
for delivering its objectives is included
in the Strategic Report on pages 4 to
47.
Purpose, Culture and Values
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 and ethical
standards. Everything 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. Our Code of Conduct
underpins our social, ethical and
environmental commitments and sets
out the standards of behaviour we
expect our employees to demonstrate
and adhere to. Our whistleblowing
policy enables employees to raise any
matters of concern anonymously and is
embedded into our business.
In addition to facilitate the Savills
Board’s assessment and monitoring of
culture the Board agreed a number of
KPIs against which performance will be
assessed annually:
Staff turnover, retention and
absenteeism rates
Training & Development (programme
overview and outputs)
Recruitment, reward and promotion
decisions (overview)
Whistleblowing, grievance and
‘speak-up’ data
Employee surveys
Exit interviews
Promptness of payments to suppliers
Core areas of Focus for the Board
in 2019
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
59
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Corporate Governance
continued
Board Leadership and Company Purpose continued
Core areas of Focus for the Board in 2019 continued
In 2019, the Board additionally considered the growth plans
across the Group, and approved material recruitment plans,
specifically in relation to strengthening the Capital Markets
and Office Leasing offerings in China, the recruitment of the
market leading Singapore Capital Markets team, the growth
of the Group’s Indian business and the development of
Logistics, Retail and Office Leasing offerings across Australia.
In parallel, investment in the strengthening the Group’s US
tenant rep platform and to broaden the US service offering,
in particular by building out the logistics / industrial
brokerage and advisory offerings in the US, continued. One
of the Board’s meetings during the year was specifically
devoted to the review of the Group’s strategy. The key areas
of Board activity during the year are set out below:
Leadership
and people
Strategy
Reviewed the composition and performance of the Board and its Committees
Considered the Group’s preparations in relation to Brexit
Savills US – Strategy and Performance Update and Re-branding
Reviewed the progress made in identifying opportunities offered by new digital and technology developments
and generally in implementing the Group’s Technology Strategy, which is focused on enhancing the client service
offering and improving operating efficiencies
Internal control
and risk
management
Reviewed and confirmed the Material Existing and emerging risks facing the Group which are described in detail on
pages 24 to 29
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
businesses and Savills Investment Management
Governance
Considered the output from the review of the External auditor and approved the appointment, subject to Shareholder
approval, of Ernst & Young as Group auditor with effect from 1 January 2021
Financial
performance
Noted developments in legal and regulatory matters globally
Reviewed and discussed the evaluation of the performance of the Board, its Committees and individual Directors and
conflicts of interest to ensure that they continued to be effective in support of Group strategy, policy and practice
Considered feedback from ‘Employee Voice’ programme meetings
Reviewed issues raised through the Group’s Confidential Reporting (‘Speak Up’) channels
Reviewed the 2020-22 Business Plan and approved the 2020 Budget
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 could be made available at the appropriate time to realise business opportunities
Considered and approved the Going Concern and Viability Statements
Reviewed and approved the Company’s 2019 Tax Strategy
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
Reviewed financing options and renewed and extended the Groups £360M Revolving Credit 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
Growth
Considered and approved the following growth initiatives consistent with the Group’s strategic plan:
The development of Logistics, Retail and Office Leasing offerings across Australia
The strengthening of the Capital Markets and Office Leasing offerings in China
The recruitment of the market leading Singapore Capital Markets team
The growth of the Group’s Indian business
The continued strengthening the Group’s US tenant rep platform and broadening of the US service offering, in
particular by building out the logistics / industrial brokerage and advisory offerings in the US
Shareholder
relations
Received and considered feedback collated by the Group’s brokers from road-shows, presentations and face-to-
face meetings between investors and the Group Chief Executive and/or Group Chief Financial Officer
60
Savills plc
Report and Accounts 2019
Engagement with Stakeholders
In accordance with the Code, the Board
recognises the importance of clear
communication and proactive
engagement with our Stakeholders. The
Board recognises the importance of
engagement with all stakeholder
groups and more information on this
is set out in the Strategic Report on
pages 4 and 47. 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 at all times as required.
The Annual General Meeting (AGM)
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 Committees is available at the AGM
to answer questions. Directors are
available before and during the meeting
to answer questions from Shareholders
and to meet with Shareholders
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
15 working days notice would be 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 6 May 2020 can be found in the
Notice of Meeting which accompanies
this Annual 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 211.
Workforce Engagement
In relation to Workforce Engagement,
the Board considered the three
mechanisms set out in the Code and
determined, in particular reflecting the
Group’s geographic spread, that it
would be beneficial for all of the NEDs
to engage in this programme, with
each NED to focus on specific regions
reflecting their own domiciles, and
should therefore to be “designated” for
workforce engagement purposes,
(rather than nominating a single NED).
The Board believes this will enhance
each of the Director’s engagement
with, and understanding of, workforce
views, leverages cultural awareness
and is more efficient (in that it does
not require a single designated NED to
engage across of the Group’s diverse
geographic markets).
In December 2018, and in response to
the Code, the Board further developed
communication channels to further
encourage the two way flow of
information between the Group’s
businesses and workforce, and in
particular to allow feedback from
the Group’s Principal Businesses
to flow to the Board direct. Two key
enhancements were agreed to the
established channels:
(a) the creation and promotion of a
digital platform to allow direct
employee communication (in local
languages) with Non-Executive
Directors (including the Chairman)
in areas of focus (such as strategy,
training & development
opportunities; measurement of staff
performance and promotion criteria;
diversity; and flexible working).
Following development, this portal
is now being tested in our UK and US
businesses, prior to global launch (in
local languages) later in 2020; and
(b) by asking the Non-Executive
Directors (including the Chairman)
to join staff ‘Town Hall’ / Employee
Briefing (including in the UK,
Diversity Initiatives) sessions by
region, and for example meet with
young leader groups without
management being present.
The feedback from the initial “employee
voice” sessions and young leader group
meetings during 2019 was considered by
the Board at its October Board meeting,
and in particular highlighted the need to
maintain the focus on exploring new
technologies and to improve
communication around the adoption
and application of these which can
enhance the client offering and improve
operational efficiency.
61
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Corporate Governance
continued
Board Leadership and
Company Purpose continued
Division of Responsibilities
Workforce Engagement continued
These communication channels will be further developed in
the light of emerging practice.
More detail about our commitment to our people is set out in
the Responsible Business section of this Annual Report and
Accounts in the Strategic Report on pages 4 to 47.
Conflicts of Interest
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 2019, the
actual and situational conflicts of interest that were identified
by each Director were reviewed and 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.
Roles on the Board
The roles of Chairman and Group Chief Executive are distinct
and separate and their roles and responsibilities are clearly
established. The Chairman is responsible for:
leading the Board and its overall effectiveness
demonstrating objective judgement
promoting a culture of openness and constructive
challenge and debate between all Directors
facilitating constructive Board relations and the effective
contribution of all Non-Executive Directors
ensuring Directors receive accurate, clear and timely
information.
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.
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 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.
Time commitment and conflicts
All potential new Directors are asked to disclose their other
significant commitments. The Nomination & Governance
Committee takes this into account when considering
proposed appointments to ensure that Directors can
discharge their responsibilities to the Group effectively. This
means not only attending and preparing for formal Board
and Committee meetings, but also making time to
understand the business, and to undertake training. The time
commitment is agreed with each Non-Executive Director on
an individual basis. In addition, all Directors must seek
approval before accepting any significant new commitment.
The Board is satisfied that the Chairman and each of the
Non-Executive Directors committed sufficient time during
the year to enable them to meet their Board responsibilities
and fulfil their duties as Directors of the Company.
For the year ended 31 December 2019 and as at the date of
publication of this Annual Report, the Board is satisfied that
none of the Directors is over-committed and that each of the
Directors allocates sufficient time to his or her role in order to
discharge their responsibilities effectively.
62
Savills plc
Report and Accounts 2019
Information provided to the Board
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.
Attendance at Board and Committee meetings
Attendance at all Board and Committee meetings by
Directors is as shown in the table below.
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
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.
Non-Executive Directors
Nicholas Ferguson1
Stacey Cartwright
Tim Freshwater
Liz Hewitt
(retired 8 May 2019)
Rupert Robson
Charles McVeigh
(retired 8 May 2019)
Florence Tondu-Mélique
Dana Roffman
(appointed 1 November 2019)
Executive Directors
Mark Ridley3
Simon Shaw3
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
8
8
8
3
8
3
8
2
8
8
8
8
8
3
8
3
8
2
8
8
–1
5
5
1
5
–
5
0
–4
–5
–1
5
5
1
5
–
5
1
–4
–5
2
2
2
1
2
–
2
0
2
–2
3
3
2
3
–
3
1
2
2
2
1
2
–
2
0
2
–2
3
3
2
3
–
3
1
1. The Chairman attended two Audit Committee meetings by invitation.
2. The Chairman attended two Remuneration Committee meetings by invitation.
3. Members of the Group Executive Board.
4. The Group Chief Executive attended three Audit Committee meetings by invitation.
5. The Group Chief Financial Officer attended five Audit Committee meetings by invitation.
63
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Corporate Governance
continued
Composition, Succession and Evaluation
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.
Membership and meetings
Committee Members
Nicholas Ferguson (Chair*)
Stacey Cartwright
Tim Freshwater
Liz Hewitt (retired 8 May 2019)
Rupert Robson
Florence Tondu-Mélique
Dana Roffman (appointed 1 November 2019)
Mark Ridley (Executive Director)
Key Objectives
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
*
save in circumstances where the Chairman’s succession is considered.
The Committee met twice during 2019. Individual attendance by Directors at this meeting is shown in the table on page 63.
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.
Changes to the Board and Committees
During the year to 31 December 2019 and since the year end, there were the following changes to the Board:
Dana Roffman was appointed Non-Executive Director and Member of the Audit, Remuneration and Nomination &
Governance Committees on 1 November 2019
Liz Hewitt and Charles McVeigh retired from the Board at the conclusion of the 2019 AGM.
Key Responsibilities
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
Principal Activity during 2019
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:
considered Board succession planning including the tenure,
responsible for overseeing the development
of a diverse pipeline for succession to senior
management
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
mix and diversity of skills and experience of the existing Board
Members in the context of the Group’s strategy
oversaw, with the support of the Remuneration Committee, the
proposed appointment of the new Chief Executive Officer of
Savills Investment Management
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 2020 AGM
considered and authorised the actual and potential conflicts of
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 http://ir.savills.com.
interests of Directors
Roffman to the Board
64
led the process which resulted in the appointment of Dana
Savills plc
Report and Accounts 2019
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.
Board composition
In line with the requirements of the Code, the Board comprises a majority of independent Non-Executive Directors. We
consider the independence of our Non-Executive Directors annually, having regard to the independence criteria set out in the
Code. As part of this process, the Board keeps under review the length of tenure of all Directors, which can affect
independence. 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.
Board Composition as at 31 December 2019
Balance of Non-Executive Directors – Executive Directors
Gender Balance
Length of Tenure Non-Executive Directors
2
6
Non-Executive Directors
Executive Directors
3
5
2
4
Male
Female
0-4
5-9
Board appointments
The Board recognises the benefit of progressively refreshing its membership and therefore commenced the search for an
additional independent Non-Executive Director in 2019. The Committee led the process which led to the appointment of Dana
Roffman 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 appointment, the Nomination & Governance
Committee specifically considered the expected time commitment of the proposed Non-Executive Director and the other
commitments that they already had. A final shortlist of candidates was selected for final stage interviews with the Committee
members, the Group Chief Executive Officer and the Group Chief Financial Officer. The Committee was unanimous in their
recommendation to the Board that Dana Roffman be appointed as additional independent Non-Executive Director, and was
delighted to welcome Dana to the Board on 1 November 2019.
Details of the different stages of the appointment process that the Committee followed in relation to the appointment process
of Dana Roffman as below:
Step 1
Step 2
Step 3
Step 4
Step 5
Engage with Odgers Berndtson
and provide them with a search
specification
Shortlisting of
candidates by
the Committee
Interview process with Committee
Members, the Group CEO, and the
Group Chief Financial Officer
Recommendation
to the Board of the
chosen candidate
Appointment
terms drafted
and agreed
Dana Roffman’s biography
See page 53
65
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Corporate Governance
continued
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 and was facilitated by Korn Ferry. Following
the conclusion of the process, the Board was delighted to welcome Alex Jeffrey to the Group as the new Chief Executive
Officer of Savills Investment Management with effect from 22 October and as a Member of the GEB with effect from
1 November 2019.
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 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.
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 50 and 53.
Diversity & Inclusion
The Committee is responsible for overseeing the development of a diverse pipeline for succession to senior management. We
continue to make good progress in terms of diversity and inclusion initiatives. The additions of Stacey Cartwright, Florence
Tondu-Mélique and Dana Roffman to the Board have increased the percentage of women on the Board to 37%, exceeding the
Hampton-Alexander Review target of 33% female Board representation be achieved by FTSE 350 companies by 2020, We
note the recommendations of the Parker Review Committee published in October 2017 relating to ethnic diversity on Boards.
Diversity is more than just gender based and the Board will continue to focus on this important issue in the wider context. All
appointments to the Board are made on merit and within this context, 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.
Diversity across the Group remains a key area of focus. For the purposes of complying with the requirements of the Code
Provision 23, Senior Management is defined as the Group Executive Board (‘GEB’). As at 31 December 2019 the GEB
members and their direct reports totalled 89 of which 20 were female, 69 were male. Accordingly, our Group Women in
Leadership percentage (determined in accordance with the Hampton-Alexander Review criteria) was 22.5% as at 31
December 2019. Our previous Group Women in Leadership percentages as reported by the Hampton Alexander review
were 16.5% (as at 30 June 2019) and 12.4% (as at 30 June 2018).
We anticipate a further increase in the Women in Leadership percentage in 2020.
More information on our commitment to diversity is set out on pages 38 to 39 of the Strategic Report.
Review of Board and Committee effectiveness and performance
The Board undertakes a rigorous and formal evaluation of its performance and that of its Committees and its Directors
annually. In accordance with the Code requirements, the Board believes that an external independent evaluation of Board
effectiveness and performance and that of its principal Committees at least every three years brings further insight into its
performance. As well as looking to continually improve the Board’s processes, the evaluation process is used to reflect on
areas that the Board would like to see more focus on. The 2019 review of the Board’s effectiveness was carried out by an
external facilitator, Alice Perkins, who operates as an independent adviser. She also undertook the previous independent
Board evaluation in late 2016 and was therefore able to see clearly what changes had been made over the last three years but
otherwise has had no other contact with the Company.
66
Savills plc
Report and Accounts 2019
This review was conducted as a facilitated self-evaluation. Alice Perkins interviewed each of the Board Directors and the
Group Legal Director and Company Secretary on a confidential basis. She also interviewed the Savills’ audit partner at PwC,
and reviewed Board and Committee papers, agendas and minutes.
The Board report addressed the views of Directors on the effectiveness of the organisation and dynamics of the Board and
the Committees, the papers and topics covered at the Board and Committee meetings, stakeholder engagement including
the arrangements to engage with employees, the relationships between the Non-Executive Directors and the management,
the individual contributions of Directors to meetings (on which a separate report was submitted to the Chairman), the
composition of the Board and the leadership of the Board by the Chairman.
The output of the evaluation was presented in a report to the Board in March 2020 and the Directors discussed the points
raised by the review.
The overall conclusion from the 2019 Board Review was that the Board and its Committees continue to operate to a high
standard and work well and effectively. All of the Board members are very committed to the Company’s success and were
keen to use this review as an opportunity to identify ways to improve performance further. There were some positive
suggestions for this, all of which were relatively minor.
There have been significant changes to the Board over the last 18 months, including a new Group Chief Executive Officer, the
retirement of two NEDs and the appointment of three more. These changes have markedly increased the diversity of the
Board’s membership in terms of gender, age, geographical coverage and sector experience. While the Board is still in
transition, these changes have been welcomed and the Board is benefiting from them. It will keep succession under review
taking account of the changing environment in which it is working.
The Chairman is regarded as fulfilling his role very successfully. He is much respected. He chairs meetings well, takes trouble
to encourage everyone to take a full part in discussions, involves the NEDs in planning the future work of the Board and has
embraced engaging with employees to good effect.
Relationships between the Board and the Executives are good. The Board has been impressed by the strategy and approach
of the new Group Chief Executive Officer.
Support to the Board is professional. The minutes and papers are clear and the Secretariat facilitates contact between the
NEDs and the Company very positively.
The key Committees are working well and are thought to be well-chaired and supported. The increased number of Audit
Committee meetings and the recent changes in the scheduling of its meetings and those of the Remuneration Committee
mean that they and the Board are well paced.
Board Induction, training 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.
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
12 March 2020
67
OverviewGovernance Strategic reportFinancial statements
Savills plc
Report and Accounts 2019
Audit, Risk
and Internal Control
Review of the effectiveness of the Risk Management and Internal control systems
The material existing and emerging risks and uncertainties faced by the Group and the associated mitigating actions for these
are set out on pages 24 to 29.
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 and emerging and
uncertainties set out on pages 24 to 29, 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.
68
Audit
Committee
report
“ 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 2019.”
Savills plc
Report and Accounts 2019
Stacey Cartwright Chair of the Audit
Committee
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 2018 Corporate Governance
Code (the ‘Code’). The key matters
considered in the year are set out
on pages 73 and 74.
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 2019 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 external and internal auditors.
69
Governance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Audit Committee report
continued
On 20 December 2019 it was
announced that the Board had
approved the proposed appointment
(subject to approval by Shareholders at
the 2021 Annual General Meeting) of
Ernst & Young LLP as the Group’s
External auditor for financial years
commencing on or after 1 January 2021.
This appointment follows a competitive
tender process conducted by the
Committee. PricewaterhouseCoopers
LLP, the current External auditor, will
continue in its role until the conclusion
of the 31 December 2020 audit, subject
to reappointment by Shareholders at
the 2020 Annual General Meeting to be
held on 6 May 2020.
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.
The Committee noted the unqualified
opinion from the External auditor on
the 2019 Annual Report.
Stacey Cartwright
Chair of the Audit Committee
In 2019, the Committee focused on the
effectiveness of the Group’s internal
controls and reviewed the Group’s
principal risks and uncertainties, 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 2019 Half Year Financial
Statements and 2019 Report and
Accounts. The Committee also led the
tender process for the appointment of
the Group’s External auditor, for
financial years commencing after 1
January 2021.
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.
In accordance with our three year
Board and Board Committee
performance evaluation cycle, during
the year, the Board carried out an
externally 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.
70
Savills plc
Report and Accounts 2019
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 (which are
reviewed at least annually or as
required).
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 Stacey Cartwright. Five Independent
Non-Executive Directors, Stacey
Cartwright, Tim Freshwater, Rupert
Robson, Florence Tondu-Mélique
and Dana Roffman 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. Dana Roffman
was appointed as a member of the
Committee on 1 November 2019.
As at 31 December 2019 and up to the
date of this report, the Committee
comprised entirely Independent
Non-Executive Directors. The members
of the Audit Committee have been
chosen to provide the wide range of
financial and commercial experience
needed to undertake its duties and
each member of the Audit Committee
brings an appropriate balance of
financial and commercial experience,
combined with a sound understanding
of the Company’s business, and is
therefore considered by the Board to
be competent in the Company’s sector.
The expertise and experience of the
members of the Audit Committee are
summarised on pages 50 and 53.
The Board considers that each member
of the Audit Committee is independent
within the definition set out in the Code
and is capable of assessing the work of
management and the assurances
provided by the Internal and External
audit functions. The Board also
considers that Stacey Cartwright, as
Chair of the Committee, possesses
significant, recent and relevant financial
experience and that all Committee
members have relevant financial
experience as required by the Code.
All members of the Audit Committee
receive an appropriate induction, 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, including the
applicable accounting standards and
statements of recommended practice,
key aspects of the Company’s policies,
financing, internal control mechanisms,
and matters that require the use of
judgement in the presentation of
accounts and key figures as well as
the role of Internal Audit and the
External auditor.
Engagement
The Chair of the Committee meets
informally and is in regular contact
with key individuals involved with the
Company’s governance, including the
Group Chief Financial Officer, Group
Director of Risk & Assurance, the Head
of Internal Audit of Savills Investment
Management (‘SIM’) 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, the
Head of Internal Audit of Savills
Investment Management, 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.
71
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Audit Committee report
continued
The Chair of the Committee also attends the AGM to respond to Shareholder
questions on its activities.
The remuneration of the members of the Audit Committee and the policy with
regard to the remuneration of the Non-Executive Directors are set out on pages 78
and 106.
The Committee met five times during the year and reports to the Board after
each Committee meeting. Attendance at meetings during 2019 is shown in the
table below:
Committee member
Member since
Stacey Cartwright
(Chair from 8 May 2019)
October 2018
Liz Hewitt (until 8 May 2019) *
June 2014
Tim Freshwater
Rupert Robson
January 2012
June 2015
Florence Tondu-Mélique
October 2018
Dana Roffman
November 2019
Meetings
attended
Meetings
eligible to
attend
5
1
5
5
5
0
5
1
5
5
5
1
* Liz Hewitt retired from the Board and Audit Committee at the conclusion of the AGM on 8 May 2019
Activities of the Committee during the year
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.
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Savills plc
Report and Accounts 2019
Responsibilities
How the Committee discharged its responsibilities
Mar
June
Aug
Oct
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
Reviewed and discussed the key accounting considerations and judgements
reflected in the Group’s results
Reviewed the assessment supporting the going concern basis of accounting
Reviewed the viability statement and considered the processes supporting
the assessment of the longer-term solvency and liquidity
External
Audit
Agreed the External Audit strategy and scope
Considered and, where appropriate, approved the instruction of the Group’s
External auditor’s provision of non-audit services
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
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
Internal
Controls
and Risk
Management
Systems
Reviewed the effectiveness of the Group’s risk management system and
internal controls in place to manage the Group’s material existing and
emerging 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
Reviewed the reports provided by the Group’s Legal Director & Company
Secretary on significant legal matters
73
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Audit Committee report
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 UK, US, Asia Pacific and EMEA
businesses and overseeing the strengthening of the regulatory framework in Savills Investment Management. In addition, with
the increasing pace of technological change, the Committee continued to focus on the Group’s IT strategy, with particular
focus on cyber security and disaster recovery. 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 31. 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 disclosure. 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.
Following discussions with management and the External Auditor, the Committee approved the disclosures of these
accounting policies and practices which are set out in note 2 to the Financial Statements on pages 128 to 142.
Significant financial reporting 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
Risk of fraud in
revenue recognition
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 FY19 was appropriate, consistent across the Group and in line with the Group’s
accounting policies.
Recoverability of
trade receivables
Recognition of right
of use assets and
leased liabilities in
accordance with
IFRS 16
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,
management’s estimates regarding the recoverability of trade receivables specifically with
respect to expected credit losses across the Group. 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 Group adopted IFRS 16 ‘Leases’ on 1 January 2019 and accordingly recognised lease liabilities
and right of use assets in relation to leases which had previously been classified as ‘operating
leases’ under the principles of IAS 17 Leases.
The Committee considered management’s approach in relation to the adoption of IFRS 16
‘Leases’ (adopted with effect from 1 January 2019) in determining the value of the right-of-use
assets and lease liabilities requires management. The Committee also received and discussed
the External auditor reports setting out its analysis on the recognition of right-of-use-assets and
leased liabilities.
The Committee was satisfied with the assumptions and judgements applied by management.
74
Savills plc
Report and Accounts 2019
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.
Provisions for
litigation
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.
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 focused its review
on the provisions held in relation to significant legal matters and assessed the appropriateness of
those provisions as at 31 December 2019. 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 and determined that
management had made reasonable judgements in their assessment process for determining the
level of provisions held.
Internal Audit
During 2019, Internal Audit services were delivered by the Group’s Director of Internal Audit with support in delivery by Ernst
& Young. In the second half of the year, Savills Investment Management (SIM) appointed a Head of Internal Audit who has
assumed responsibility for internal audit planning and delivery within SIM.
The Board’s responsibility for internal control and risk is detailed on page 76 and is incorporated into this report by reference.
The Committee approved the annual Group Internal Audit plan and the SIM Internal Audit plan, and received progress against
those plans 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 from both Group and SIM on a regular basis and the Group Director of Risk &
Assurance, the Group Director of Internal Audit and the SIM Head of Internal Audit attended meetings and presented to the
Committee where appropriate. The Committee monitors the status of all Internal Audit recommendations and management’s
responsiveness to their implementation and challenges 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 auditors’ findings and recommendations and reports from the External auditor on any issues identified during the
course of their work.
75
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Audit Committee report
continued
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 2019
reports from the Group Director of
Risk & Assurance including reports
on Group-wide risk assessment
activity and annual self-assessment
findings
reports from the SIM Head of Risk &
Compliance and the SIM Head of
Internal Audit
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 2020 AGM.
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 auditor 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
2019, 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
76
Savills plc
Report and Accounts 2019
Audit and non-audit fees
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 £2.2m
for audit services and £0.2m for
non-audit services, principally for audit
related assurance services 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 155. During the financial year
ended 31 December 2019 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 ended
31 December 2019 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.
Audit Tender
PwC has been the Company’s auditor
since 2001. In 2018 the Committee
considered the timing of a potential
External Audit tender process, given
the requirement for
PricewaterhouseCoopers LLP to be
replaced after the 31 December 2020
audit due to Mandatory External auditor
rotation rules. The Committee
commenced the External Audit tender
process in Q2 2019, ensuring
compliance with the Code. This
concluded with the Committee’s
recommendation to the Board at the
Committee’s December 2019 meeting
that Ernst & Young (‘EY’) be appointed
as External auditor (subject to
Shareholder approval) for financial
years commencing on or after 1 January
2021. The Committee approved the
tender participants, process, timetable
and assessment criteria. As a first
phase, the participants were provided
access to a data room which contained
information to enable the participants
to gain a better understanding of how
the Group is structured and operates.
The information was supplemented by
meetings with the Committee Chair and
senior management across the Group.
This process ran in parallel with each
firm conducting an auditor
independence assessment for the
purpose of the 2020 financial year. The
second phase of the process included
an evaluation of each of the tender
participants by way of scorecards
detailed in the Request for Proposal
document and subsequent shortlisting
for progression to presentation stage.
The Committee then reviewed the
written proposals and met with the
tender participants who were assessed
against a range of criteria, including
industry expertise, FTSE 250 market
segment expertise, geographic
coverage, breadth of sector experience
and specialist expertise. This was led by
the Committee Chair and the
Committee concluded its deliberations
at its meeting in December 2019,
resulting in the recommendation to the
Board to approve the appointment of
Ernst & Young, which will be proposed
for Shareholder approval at the 2021
AGM. Going forward, the Committee
anticipates that the audit will be put out
to tender at least every 10 years.
During the year, the Company confirms
that it has complied with the provisions
of The Statutory Audit Services for
Large Companies Market Investigation
(Mandatory Use of Competitive Tender
Processes and Audit Committee
Responsibilities) Order 2014.
77
Governance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’
Remuneration
report
“ On behalf of the Board,
I am pleased to introduce
our 2019 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 2019.”
Rupert Robson, Chairman
of the Remuneration Committee
2015–2019 Overview
+18%
Underlying
Profit
+8%
+26%
Dividend Payments
to Shareholders*
+96%
Executive Director
Remuneration**
Total Shareholder
Return
ANNUAL STATEMENT
Governance
This Report has been prepared on behalf of
the Board by the Remuneration Committee
(the ‘Committee’) in accordance with the
requirements of the Companies Act 2006
and the Large and Medium-sized
Companies and Groups (Accounts and
Reports) (Amendment) Regulations 2013
(‘Regulations’) and the auditable
disclosures referred to in the External
auditor’s Report on pages 112 to 121 as
specified by the UK Listing Authority and
the Regulations.
*
The dividend cost for 2019 comprises the cost of the final dividend
recommended by the Board (amounting to £16.5m), payment of which
is subject to Shareholder approval at the Company’s Annual General
Meeting (‘AGM’) scheduled to be held on 6 May 2020, the cost of the
supplemental dividend (£20.5m) declared by the Board on 12 March 2020
(payable to Shareholders on the Register of Members as at 14 April 2020)
and the interim dividend (£6.7m) paid on 2 October 2019.
** Executive Director remuneration comprises the remuneration paid to
the Group Chief Executive Officer and Group Chief Financial Officer job
holders between 1 January 2015 and 31 December 2019.
78
Savills plc
Report and Accounts 2019
Dear Shareholder
On behalf of the Board, I am pleased to
introduce our 2019 Directors’
Remuneration Report (the ‘Report’).
Included within this Report is the
Directors’ Remuneration Policy (the
‘Policy’), which subject to Shareholder
approval at the 2020 Annual General
Meeting (‘AGM’) will apply from that
date, 6 May 2020, replacing the Policy
which was approved by Shareholders at
the AGM in 2017. The Policy, together
with our Annual Report on Directors’
Remuneration, will be presented to
Shareholders for approval at the AGM
on 6 May 2020.
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, with a greater emphasis on
the performance-related elements of
profit share and/or, outside the UK,
commission in the total reward package.
The Committee is mindful of its
responsibility to reward appropriately,
but not excessively. As such, it places
great emphasis on the calibration of
Executive Director remuneration and
structure against internal relativities,
whilst also rigorously assessing
competitive positioning in setting
remuneration. Finally, it determines
targets to ensure that reward properly
reflects performance, that it supports
the delivery of our strategic and
operational objectives and that it is fair
to management and Shareholders alike.
Overall, we continue to expect
employment costs over the cycle to be
in the range of 65%–70% of revenues.
2019 performance and
remuneration
Annual performance-related
profit share
Savills delivered a resilient full year
performance reflecting both the
robustness and geographic diversity of
our market positions generally, and the
strength of our less transactional
businesses. This result was achieved
against the backdrop of significant
challenges in the UK and Hong Kong,
two of our key markets. In the UK, the
effect of Brexit and political uncertainty
suppressed market activity in both
Commercial and Residential
transactional markets until mid-
December. The clear outcome of the
General Election prompted a strong
close to the year as confidence to
transact returned to the market. In Hong
Kong, the political unrest severely
reduced the volume of trading activity
from mid-year. The strength of Savills
position in both markets contributed to a
resilient performance through increased
market share, despite lower volumes of
activity generally. Thanks largely to an
excellent performance in the UK,
significant year-on-year growth in the
US and a strong performance from
Savills Investment Management, the
Group delivered underlying profit for the
year to 31 December 2019 of £143.4m.
Key financial highlights for the year
included:
Revenue of £1.93bn, representing
growth of nearly 10% on 2018
Underlying profit before tax
of £143.4m (2018 : £143.7m)
Transaction Advisory revenues up
2%, Consultancy revenues by 15%
and Property Management by 17%.
Further progressing our strategy of
being a leading advisor in the key
markets in which we operate, by
adding complementary businesses
and teams to our strong core
business. In particular during 2019 we:
– in Asia Pacific, continued to
expand throughout Australia and
in Singapore, where we recruited
circa 50 professionals across our
service lines. Savills India, which
opened for business in October
2018, saw significant expansion
and now employs over 300
professionals in six offices
(Bangalore, Mumbai, Delhi NCR,
Hyderabad, Pune and Chennai)
– in EMEA, further integrated and
developed the Middle East
operation acquired in 2018, with
team recruitment in the Middle
East, along with Sweden,
Germany and France enhancing
our strength in those regions
across key business lines
– in North America, continued to
expand our occupier-focused
business lines through both
recruitment and investment in
technology and central services
such as marketing and research. In
March 2019, the business was
re-branded to Savills Inc
– in the UK, completed the
successful integration of
acquisitions made in 2018,
including Currell Group and the
Broadgate Estates third party
property management portfolio
and acquired KKS a workplace
consultancy and design business
– 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. Improving efficiency
in our Valuation teams is a
particular area of focus locally in
multiple parts of the Group, and
we continued to roll out our award
winning Knowledge Cubed
platform, developed out of the
United States and deployed to
occupier clients across the globe
79
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
At the beginning of 2019, 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 2019,
notwithstanding the market
uncertainties noted above. As such, the
Executive Directors received 79.7% of
the maximum potential award in
relation to Group financial performance.
This compares with an allocation of
78.7% of the maximum potential award
in relation to financial performance in
the previous year. It should be noted
that 2019 UPBT includes a first time
charge under IFRS16 which increased
the Group’s property costs by £3.5m
(2018: £nil) and that accordingly the
UPBT targets and performance are not
directly comparable with 2018. 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, taking account as well of the
challenging conditions in the UK and
Hong Kong. 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 96 of this Report.
Performance Share Plan
The end of the 2019 financial year was
also the end of the three-year
performance period for our
Performance Share Plan (‘PSP’) awards
made in May 2017. In this regard:
the 50% of PSP award shares subject
to a TSR condition measured against
the FTSE 250 Index (excluding
investment trusts) are anticipated to
vest at 100% for this part, reflecting
relative TSR performance
outperforming the Index by more
than 8% p.a.; and
the 50% of PSP award shares subject
to an EPS condition are anticipated
to vest at 0% for this part.
The Committee determined that it
would be appropriate for annual
performance-related profit share
outcomes to be determined as
described above and for the May 2017
PSP awards to vest in May 2022 without
further adjustment as both were valid
reflections of overall performance by
the Company.
The Committee exercised what it
regards as normal commercial
judgement in respect of Directors’
remuneration throughout the year (and
in all cases in line with the Company’s
Directors’ Remuneration Policy)
including in relation to setting
performance metrics and confirming
the outcome of performance for the
incentive arrangements. There were no
other exercises of judgment or
discretion by the Committee save as
detailed in this report.
Policy for 2020–23
During the course of 2019 the
Committee undertook a review of the
Directors’ Remuneration Policy
approved by Shareholders in 2017 in
anticipation of seeking Shareholder
approval at the 2020 AGM for the Policy
which will apply for the next three years.
This review has been completed and the
Committee has concluded that the
Group’s long-standing approach to
Executive Director (and senior
management) reward should be
maintained and that accordingly we
should leave the expiring policy broadly
unchanged save for some amendments
to ensure consistency with emerging
governance best practice. The
Committee therefore recommends that
the Directors’ Remuneration Policy is
renewed on the following basis:
Base salaries: no change to the
established approach of offering low
base salaries relative to market
medians (which approach applies to
the Executive Directors, Group
Executive Board Members and other
senior fee earners). Salaries continue
to be reviewed each year (although
not necessarily increased). For 2020,
the Committee approved a 2%
increase in the Executive Directors’
base salaries, the same as that
applying generally to Savills UK staff.
Pension: for all new appointments
the pension contribution will be
aligned to the wider UK workforce
contribution rate, which is currently
8% of salary at Savills UK (although
subject to periodic review). For the
two existing Executive Directors, the
pension contribution continues to be
set at 14% and 18% of annual base
salary respectively for the reasons
set out below.
– The Group Chief Executive Officer
was a member of the defined
benefit Savills Pension Plan when
that Plan was closed to future
benefit accrual in 2010. The Plan
was historically an ‘all employee’
Scheme. When the Plan was
closed to future benefit accrual in
2010, it was agreed that all the
then Plan members should
subsequently be entitled to a 14%
of salary employer pension
contribution or equivalent. There
remain a significant number of
other long-standing employees
who are former members of the
Plan and who remain on the same
14% rate, so the Group Chief
Executive Officer is fully aligned
with staff with an equivalent level
of service to him. For these
reasons, the Remuneration
Committee does not believe there
should be a requirement to adjust
the Group Chief Executive
Officer’s pension contribution
rate.
– The Group Chief Financial Officer
joined the Company in March
2009, at which time the approach
when the issue was raised as part
of the recruitment dialogue was
for the Company to agree a
pension contribution at the same
level as that then being paid as
the employer contribution to the
Plan, after which the individual
contribution would be fixed and
would not adjust up or down in
line with future actuarial
assumption changes. The Group
Chief Financial Officer has,
therefore, a long-standing
contractual right to receive an 18%
of salary contribution. As the
differential between the two
Executive Director rates is
relatively small and the
contribution rate is driven off the
low salaries that are a feature to
the Company’s pay structure, the
Remuneration Committee has
80
Savills plc
Report and Accounts 2019
determined that it remains
appropriate to maintain the
current levels.
Benefits: no changes are proposed.
Annual performance-related profit
share: maximum opportunity to be
increased in line with increases in RPI
annually (or if no increase in RPI to
remain unchanged) to incentivise and
reward the Executive Directors for
delivering further strong
performance. For 2020, the cap on
the profit share opportunity will
therefore be, for the Group Chief
Executive Officer, £2.240m and for
the Group Chief Financial Officer,
£1.679m, being 2.2% higher than the
cap applying in 2019, reflecting year
on year growth in RPI (2019 caps:
Group Chief Executive Officer
£2.192m; Chief Financial Officer
£1.643m). Annual awards will
continue to be determined as follows:
– 75% based on Group UPBT
performance
– 25% on the achievement of
pre-set personal strategic and
operational objectives
Reflecting feedback from some
Shareholders, the UPBT target range will
be made narrower than at present by
significantly raising the lower threshold.
In order to maintain an appropriate
calibration, one third of the maximum
award will be payable for threshold
performance (as opposed to 25%
currently). The new, increased threshold
level will be higher than the point at
which one-third would currently be
payable. As the UPBT outturn moves
above this threshold, payouts will
increase on a straight-line basis, with
two-thirds of the maximum payable at
the midpoint (which is effectively 50% of
the bonus opportunity above the
threshold). Consistent with market
practice, the actual range will be set
around the start of the financial year.
The Group UPBT payment scale will be
adjusted for any acquisitions/disposals in
the year which impact Group UPBT by
more than 7.5% (on an annualised basis).
In such cases the scale will be adjusted
to neutralise the benefit of any overage
above the 7.5% level.
As now, the first element of any award
(equal to up to 100% of base salary) will
be paid as cash. Above the level of this
first element, 50% of any award will be
deferred in the form of shares for three
years, receipt of which will be
contingent on continued employment
(subject to normal good leaver
protections). The minimum cash
threshold reflects Savills highly unusual
approach of a low base salary which
with regard to bonus deferral unfairly
penalises Executive Directors relative
both to internal and external
comparators.
There was some Shareholder feedback
that the retention of the charitable
giving facility in the current policy
(which allowed the Executive Directors
to give to charity out of their bonus
prior to the 50% cash/shares split of
bonus) was no longer appropriate. As
charitable waivers are no longer
effective (due to changes in HMRC
Regulations), and are no longer offered
by the Group, we propose to
discontinue this item in the new policy.
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.
For the 2020 awards, the EPS growth
and relative total Shareholder return
targets will continue to be used and
a third ROE measure is also being
introduced with an equal weighting
to the TSR and EPS measures. The
ROE measure is being introduced as
this is considered to be a good
indicator of the operating efficiency
of the Group and accords with the
goal of creating Shareholder value by
delivering good sustainable returns
across the cycle. Awards that have
satisfied the performance conditions
attaching to them (measured over a
three-year performance period) will
vest once a further two-year holding
period has passed, that is, on the
fifth anniversary of grant.
Share Ownership Guidelines are
500% of salary, which can be
achieved through purchase or the
retention of any after-tax shares
which vest until the guideline is met.
New PSP awards (and bonus
deferrals) will be placed into a
nominee account until such time as
this level is achieved. In addition to
the annual performance-related
profit share deferral period and PSP
holding period that remain in place
for departing Executive Directors, an
additional post-cessation
shareholding requirement is being
introduced at 250% of salary, which
will need to be held for two years
post cessation.
Governance developments
On behalf of the Committee, I wanted
to take the opportunity to thank Liz
Hewitt, who served as a member of the
Committee until her retirement from
the Board at the conclusion of the 2019
AGM. I also welcome Dana Roffman,
who joined the Committee following
her appointment to the Board as a
Non-Executive Director on 1
November 2019.
2019 was the first year the Company
was subject to the 2018 UK Corporate
Governance Code and accordingly the
Committee’s remit was expanded to be
responsible for setting all elements of
the remuneration of the Group Executive
Board members in addition to the
Executive Directors. The Committee
also received a report on workforce
remuneration during the year.
As a Committee, we continue to monitor
best practice developments in executive
remuneration and have incorporated a
number of these features in the proposed
refined Directors’ Remuneration Policy.
We have consulted with our major
Shareholders in relation to the proposed
Policy who, I am pleased to report, were
broadly supportive.
The Committee is appreciative of the
significant Shareholder support that it
has enjoyed in recent years and
welcomed Shareholders’ endorsement of
the 2018 Annual Remuneration Report at
the 2019 AGM. We hope that you find this
year’s Annual Remuneration Report
equally clear and informative and that
you will continue to support us by voting
in favour of the resolutions at this year’s
AGM on 6 May 2020.
Rupert Robson
Chairman of the Remuneration
Committee
81
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Annual Report on Remuneration
Role of the Committee
The principal role of the Committee is
to support the Group to achieve its
strategic objectives by designing a
remuneration policy consistent with the
Group’s business model such that we
have the ability to attract, recruit, retain
and motivate the high-calibre
individuals needed to deliver the
Group’s strategy so promoting the
long-term interests of the Company.
The Committee also considers the
broader implications of the Policy in the
context of environmental, social or
governance considerations and how the
Policy best supports the Group’s
delivery of its objectives in these areas.
The Committee is responsible for the
broad policy governing senior staff
remuneration. It sets the actual levels of
all elements of the remuneration of the
Executive Directors and the Group
Executive Board members. The
Committee also reviews workplace
remuneration and related policies and
the alignment of incentives and rewards
with culture; and when setting the
policy for Executive Director
remuneration takes those matters into
account. The Policy remains under
periodic review to ensure that it remains
consistent with the Company’s scale
and scope of operations, supports
business strategy, its environmental,
social and governance strategy and its
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
Tim Freshwater
Member of the Committee
Independent
Dana Roffman
Florence
Tondu-Mélique
Member of the Committee
(from 1 November 2019)
Independent
Member of the Committee Independent
Committee attendee
Position
Status
Nicholas Ferguson Non-Executive Chairman
Mark Ridley
Group Chief Executive
Officer
Chris Lee
Group Legal Director &
Company Secretary
Attends by invitation (except
when his own remuneration
is discussed)
Attends by invitation (except
when his own remuneration
is discussed)
Provides advice and support
(except when his own
remuneration is discussed)
as well as acting as Secretary
to the Committee
Simon Shaw, Group 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
Florence Tondu-Mélique
Dana Roffman (appointed 1 November 2019)
Liz Hewitt (retired 8 May 2019)
Meetings
attended
Meetings
eligible
to attend
3
3
3
2
1
2
3
3
3
3
1
2
As at 31 December 2019 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 52 to 53.
82
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 and
other Group Executive Board members.
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).
The Committee met three times during
the year. The principal agenda items
considered by the Committee during
the year were as follows:
reviewing the Directors’
Remuneration Policy in the context
of best practice and corporate
governance developments and
taking account of workforce
remuneration across the Group;
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 and Group
Executive Board members; and
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 2019, FIT
Remuneration Consultants received fees
of £47,384.70 plus VAT in relation to
advice provided to the Committee. FIT
Remuneration Consultants provided no
other services to the Group during
the year.
Savills plc
Report and Accounts 2019
83
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Remuneration Policy
The Group’s remuneration arrangements for the Executive Directors, Group Executive Board members and senior fee-earners
are structured to provide a competitive mix of variable performance-related (i.e. annual performance profit share and
longer-term incentives) and fixed remuneration (principally base salary) to reflect individual and corporate performance.
The objective is to set targets which provide an appropriate balance between being achievable and stretching.
In determining the remuneration of the Executive Directors and reviewing that of the Group Executive Board members, the
Committee reviews the role and responsibility of the individual, their performance, the arrangements applying across the
wider employee group and internal pay relativities. It also considers sector and broader market practice in the context of the
prevailing economic conditions and corporate performance on environmental, social and governance issues.
Overview of the Policy
A summary of the proposed policy for Executive Directors, the proposed amendments to the current Policy and how it will be
applied for 2020 is set out below.
Element
Summary of approach
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.
Change from
previous policy
No change.
Application of Policy for 2020
The Committee has determined that base
salaries will be increased by 2.0% effective
1 March 2020, consistent with the rate of
increase in Savills UK.
Salaries in 2020 will therefore be as follows:
Group Chief Executive Officer: £295,000
Group Chief Financial Officer: £225,500
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 Group Chief Executive Officer will be entitled to a
pension from the legacy defined benefit pension plan
but no longer accrues benefits under the plan.
For new
appointments the
pension contribution
will be aligned to the
wider UK workforce
contribution rate.
Pension contributions/salary supplements for
2020 are:
Group Chief Executive Officer:
14% of salary
Group Chief Financial Officer:
18% of salary
Benefits
Benefits include:
No change.
Benefits in line with Policy.
Medical insurance benefits;
Annual car/car allowance (up to £9,000);
Permanent Health Insurance;
Life Insurance; and
Relocation expenses.
Annual
performance-
related profit
share
Reflects the Group’s annual profit performance and
personal performance against pre-set objectives and
overall contribution.
The maximum
potential has been
increased by RPI.
In line with the Group’s philosophy that there is greater
emphasis (than is the norm for listed companies) 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.
Narrowed UPBT
target range
with significantly
increased threshold
level.
Malus and clawback provisions apply.
Removal of the
charitable giving
item in the current
policy.
The maximum potential annual profit share
awards for 2020 are:
Group Chief Executive Officer: £ 2.240m
Group Chief Financial Officer: £1.679m.
For 2020 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.
84
Savills plc
Report and Accounts 2019
Directors’ Remuneration Policy
Element
Summary of approach
Change from
previous policy
Application of Policy for 2020
Performance
Share Plan
Awards of shares are made subject to a three-year
performance period. Any awards which satisfy the
three-year performance conditions attaching to them
will then be subject to an additional two-year holding
period before vesting.
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.
Introduction of new
third metric: ROE.
The awards for 2020 will be up to 200% of
base salary.
For 2020 Performance Share Plan awards,
one-third of the award will vest subject to
Earnings Per Share performance, one-third
will vest subject to relative TSR performance
against the FTSE Mid 250 Index (excluding
investment trusts) and one-third will vest
subject to ROE performance measured over
the three year period starting on 1 January
2020.
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.
Introduction of
post-cessation
shareholding
requirements.
500% of base salary for the Group Chief
Executive Officer and Group Chief Financial
Officer while in post.
250% of salary applying for two years post-
cessation.
Non-Executive Director fees, which are set consistent with the median for the FTSE 250 and which are subject to annual
review, will next be reviewed in July 2020 with any increase capped at RPI. Additional fees, again set consistent with the
median for the FTSE 250, which are payable to the Senior Independent Director and Committee Chairs to recognise their
additional responsibilities will also next be reviewed in July 2020. The Chairman’s fee, which again is set at levels consistent
with the median for the FTSE 250 and is subject to annual review, capped at RPI, will next be reviewed in July 2020.
The Committee has ensured that the Directors’ Remuneration Policy and practices are consistent with the six factors set out
in Provision 40 of the Corporate Governance Code:
Clarity – Our Directors’ Remuneration Policy is well understood by our senior executive team and has been clearly articulated
to our Shareholders and representative bodies (both on an ongoing basis and during consultation when changes are being
made).
Simplicity – The Committee is mindful of the need to avoid overly complex remuneration structures which can be
misunderstood and deliver unintended outcomes. Therefore, a key objective of the Committee is to ensure that our Directors’
Remuneration Policy and practices are straightforward to communicate and operate.
Risk – Our Directors’ Remuneration Policy has been designed to ensure that inappropriate risk-taking is discouraged and will
not be rewarded via (i) the balanced use of both annual incentives and long-term incentives which employ a blend of financial,
non-financial and Shareholder return targets, (ii) the significant role played by shares in our incentive plans including the
deferral under the annual performance-related profit share (together with in employment and post cessation shareholding
guidelines) and (iii) malus/clawback provisions within all our incentive plans.
Predictability – Our incentive plans are subject to individual caps, with our share plans also subject to market standard
dilution limits. The use of shares within our incentive plans means that actual pay outcomes are highly aligned to the
experience of our Shareholders.
Proportionality – There is a clear link between individual awards, delivery of strategy and our long-term performance. In
addition, the significant role played by incentive/‘at-risk’ pay, together with the structure of the Executive Directors’ service
contracts, ensures that poor performance is not rewarded.
Alignment to culture – Our executive pay policies are fully aligned to the Company’s culture through the use of metrics in
both the Annual performance-related profit share and PSP that measure how we perform against key aspects of our strategy,
which has the objective of delivering sustainable growth in profit and ROE. A similar structure operates across the Group.
85
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Directors’ Remuneration Policy continued
This part of the Report sets out the policy which will be put forward for Shareholder approval at the 2020 AGM in
accordance with section 439A of the Companies Act 2006 (the ‘Policy’). The Policy will apply from the 2020 AGM,
subject to Shareholder approval.
Policy table
The following table sets out the Policy for each component of Executive Directors’ remuneration.
Purpose and
link to strategy
Base salary
A core component
of the total reward
package, which overall
is designed to attract,
motivate and retain
individuals of the
highest quality.
Pension
Provides appropriate
retirement benefits.
Rewards sustained
contribution.
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
the individual’s experience
the size and scope of the role
the general level of salary
reviews across the Group
appropriate external market
competitive data
Set significantly below market median levels with greater
emphasis on the performance-related elements of reward. The
Committee has determined that base salaries will be increased
by 2.0% effective 1 March 2020, consistent with the rate of
increase in Savills UK.
n/a
Salaries in 2020 will therefore be as follows:
Group Chief Executive Officer: £295,000
Group Chief Financial Officer: £225,500
The Committee retains the flexibility to award base salary
increases taking into consideration the factors considered
as part of the annual review.
The annual base salary for any existing Executive Director
shall not exceed £500,000.
Defined contribution pension
arrangements are provided.
HMRC approved salary and profit
share sacrifice arrangements
are in place. Pension benefits
are provided either through a
Group personal pension plan,
as a non-pensionable salary
supplement, contribution to a
personal pension arrangement,
or equivalent arrangement for
overseas jurisdictions.
For 2020 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 general rate available for 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 the maximum level will be aligned to the
wider employer workforce contribution rate, which is currently
8% of salary in Savills UK.
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.
86
Savills plc
Report and Accounts 2019
Purpose and
link to strategy
Benefits
To provide
market
competitive
benefits.
Operation
Potential
Performance measures
Benefits currently comprise:
Medical insurance benefits
Car/car allowance
Permanent Health Insurance
Life insurance
Other benefits may be provided
if the Committee considers it
appropriate.
Where an Executive Director is
located in a different international
jurisdiction, benefits may reflect
market practice in that jurisdiction.
In the event that an existing
Executive Director or new
Executive Director is required
by the Group to relocate, other
benefits may be provided
including (but not limited to) a
relocation allowance, housing
allowance and tax equalisation.
Car allowance (currently up to a
maximum of £9,000 p.a.).
n/a
There is no overall maximum as the
cost of insurance benefits depends
on the individual’s circumstances,
but the provision of taxable benefits
will normally operate within an
annual limit of 30% of an Executive
Director’s annual base salary.
The Committee will monitor the
costs in practice and ensure that
the overall costs do not increase
by more than the Committee
considers to be reasonable in all the
circumstances.
Relocation expenses may be
provided for a limited period and
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 2020 are:
£2.240m for the Group Chief
Executive Officer.
£1.679m 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 £2.240m 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 2020 the weighting will be 75% in
relation to the Group’s annual profit
performance, defined as underlying profit
before tax performance, and 25% in relation
to delivery against a mix of personal,
strategic and operational objectives. The
Committee reserves the right to vary these
proportions in subsequent years and/or to
add additional or substitute measures to
ensure that incentive remains appropriate
to business strategy.
The scale for the profit share element of any
award will be disclosed annually in arrears.
Unless the Committee determines
otherwise, this scale will normally be
adjusted for any acquisitions/disposals in a
single year which impact (on an annualised
basis) UPBT by more than 7.5%. In such
cases the scale will be adjusted to neutralise
the benefit of any overage above the
7.5% level.
If there is significant transaction that results
in the scale becoming inappropriate then
Shareholders will be consulted about any
adjustment to the scale.
The award potential at threshold is 25%. As
the arrangement is an annual profit share
there is no pre-set award level for on-target
performance.
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Directors’ Remuneration report
continued
Directors’ Remuneration Policy continued
Purpose and
link to strategy
Operation
Performance Share Plan (‘PSP’)
Potential
Performance measures
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.
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.
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
initially proposed to be based
on three measures:
Relative TSR against the
FTSE 250 (excluding
investment trusts) or
other appropriate
comparator group;
Earnings per share; and
Return on Equity
The Committee may review
the performance measures
for the PSP to ensure they
remain aligned to the Group’s
strategy. The Committee would
consult with major Shareholders
in advance of a change in
performance measures used for
the PSP.
No more than 25% of an
award vests for threshold
performance.
UK tax advantaged all-employee share plans
Share plans
available to all UK
employees in the
Group who satisfy
the statutory
requirements.
Executive Directors are eligible to participate in
any of the Group’s all-employee share plans on
the same terms as other UK employees.
Maximum Partnership Shares in
accordance with statutory limits.
The Company does not presently
offer Free Shares, Matching Shares
or Dividend Shares.
n/a
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Report and Accounts 2019
Purpose and
link to strategy
Operation
Shareholding Guidelines
To encourage
share ownership
by the Executive
Directors and
ensure interests
are aligned.
Executive Directors are expected to purchase
and/or retain all shares (net of tax) which vest
under the Group’s share plans (or any other
discretionary long-term incentive arrangement
introduced in the future) until such time as they
hold a specified value of shares.
Only beneficially owned shares and PSP
awards subject to a holding period (discounted
for anticipated tax liabilities) may be counted
during the holding period for the purposes of
the guidelines. Share awards do not otherwise
count towards this requirement.
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.
Potential
Performance measures
500% of base salary for all
Executive Directors.
n/a
From the adoption of this policy
at the 2020 AGM, a guideline will
apply additionally for a period of
two years from the date on which
an Executive Director stands down
from the Board. The requirement
in these circumstances will be
to retain shares with a value
equivalent to the lower of either:
250% of base salary; or the value
of shares held at the date of
standing down from the Board.
In these circumstances, however,
the requirement will not apply
either to shares purchased by an
Executive Director with their own
funds or obtained under awards
granted at recruitment to buy-out
awards from a previous employer.
Malus and clawback
Malus (being the reduction or forfeiture of bonus or 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.
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Directors’ Remuneration report
continued
Directors’ Remuneration Policy continued
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 reviewed
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.
Non-Executive Directors are not
entitled to participate in any of the
Group’s incentive arrangements or
share schemes.
Non-Executive Directors do not
currently receive any taxable
benefits (however, they are covered
by Directors and Officers liability
insurance).
Expenses incurred in the performance
of Non-Executive duties for the
Company may be reimbursed or paid
for directly by the Company, including
any tax due on the benefits.
Additional benefits may be provided
in the future if the Board considered
this appropriate.
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; and
Committee chairmanship and
Senior Independent Director fees to
reflect the additional responsibilities
and time commitment of the roles.
The Chairman receives an all-inclusive
fee for the role.
Additional fees for membership of
a Committee or chairmanship or
membership of subsidiary boards or
other fixed fees may be introduced, if
considered appropriate.
The Committee may make minor amendments to the Policy (for example for regulatory, exchange control, tax or
administrative purposes or to take account of a change in legislation) without obtaining Shareholder approval for that
amendment.
The Committee reserves the right to make any remuneration payments and payments for loss of office (including exercising
any discretions available to it in connection with such payments) notwithstanding that they are not in line with the policy set
out above where the terms of the payment were agreed before the Policy came into effect or at a time when the relevant
individual was not a Director of the Company and, in the opinion of the Committee, the payment was not in consideration for
the individual becoming a Director of the Company. For these purposes, ‘payments’ includes pension payments under legacy
defined benefit pension plans and the satisfaction of awards of variable remuneration and, in relation to an award over shares,
the terms of the payment were ‘agreed’ at the time the award was granted.
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Clawback or malus may apply where stated in the above table. Other elements of remuneration are not subject to clawback
or malus. The Committee may increase the proportion of annual performance-related profit share deferred into shares. The
PSP will be operated in accordance with the rules of that plan as approved by Shareholders. In accordance with those rules
the Committee has discretion in the following areas (as well as general administrative discretion):
the Committee may adjust the number of shares under award if there is a capitalisation, rights issue, subdivision, reduction
or any other variation in the share capital, a demerger or special dividend;
a performance condition for an existing award may be amended if an event occurs which causes the Committee to
consider that an amended performance condition would be a fairer measure of performance and would be no less difficult
to satisfy;
on a change of control or winding up the number of shares will be subject to any relevant performance conditions and time
pro-rated.
The Committee has discretion not to apply this reduction or to apply an alternative or no performance condition.
Additionally, participants may have the opportunity to exchange their awards for equivalent awards in the new holding
Company; and
the Committee has the discretion to treat a demerger as an early vesting event on the same basis as a change of control.
Performance measures and target setting
Annual Performance-Related Profit Share
Performance measures for the annual performance-related profit share are intended to provide a balance between
incentivising executives to meet near-term profit objectives and the creation of longer-term Shareholder value through an
appropriate mix of strategic, operational and personal performance goals.
Consistent with the Group’s partnership style culture, annual profit performance is the primary performance measure. Targets
are set to be appropriately stretching, by reference to the Group’s internal business plans and to align with returns to
Shareholders over the cycle.
A portion of the award relates to strategic, operational and personal objectives. These objectives are determined annually by
the Committee and incentivise sustainable improvements in the underlying drivers of performance and the continued
development and further growth of the Group.
Performance Share Plan
For the PSP, the use of a mix of relative Total Shareholder Return, earnings and return based measures ensures that the
Executive Directors are focused on delivering both absolute bottom line growth and strong returns to Shareholders relative to
an appropriate comparator group. In the event the Committee considered it appropriate to change the performance
measures for the PSP, any new measure would be selected to be in line with the Group’s long-term business strategy and to
support long-term Shareholder value creation. The Committee would consult with major Shareholders in advance of a change
in a performance measure used for the PSP.
The performance targets for the PSP are reviewed periodically and set taking into account market conditions, external market
forecasts, internal business forecasts and market practice. The Committee may also adjust the targets in the light of corporate
activity (e.g. merger and acquisition activity), capital events or changes to accounting rules to ensure that targets remain
appropriate.
Remuneration arrangements throughout the Group
The remuneration policy for Executive Directors follows the same key principles as that for senior and fee-earning employees
generally in the Group – that salaries are below the market median with a greater emphasis placed on variable, performance-
related remuneration. Any differences in the specific policies generally reflect differences in market practice for differences in
seniority. For support staff, salaries are set around market median levels to ensure the Group is able to recruit and retain high
quality individuals.
Other than Executive Directors, only Group Executive Board members are currently eligible to receive awards under the PSP
on an annual basis. Other senior staff may be granted share awards under the Company’s Deferred Share Plan if there are
particular business reasons for applying a retention element to remuneration.
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Directors’ Remuneration report
continued
Directors’ Remuneration Policy continued
Approach to remuneration on recruitment
In the event that the Board appoints a new Executive Director, in determining his or her new remuneration package the
Committee would take into consideration all relevant factors including the calibre, skills and experience of the individual and
the market from which they are recruited. In determining the remuneration package the Committee remains mindful of the
need to avoid paying more than is necessary on recruitment.
‘Buy-outs’
To facilitate the recruitment of a new Executive Director, the Committee may make awards to ‘buy-out’ remuneration forfeited
on leaving the previous employer. In doing so, the Committee would take into account all relevant factors including the form
of awards, the vesting conditions attached to the awards and any performance conditions. The overriding principle will be
that any replacement ‘buy-out’ awards will be of up to a comparable commercial value of the awards that have been forfeited.
The Committee may make use of LR9.4.2 of the Listing Rules for the purpose of buy-outs only.
Fixed remuneration
The remuneration policy for current Executive Directors reflects the Group’s overall philosophy of setting base salaries for fee
earners which are significantly below market medians and placing greater emphasis on performance-related elements of
reward. However, the Committee is mindful of the need to retain flexibility for the purpose of recruitment, taking into account
the range of potential circumstances which might give rise to the need to recruit a new Executive Director. Against that
background, the policy for the fixed element of reward for a new Executive Director allows:
the base salary for a new appointee to be set in line with market levels rather than below market levels; or
provision of a salary supplement for a period of time as an Executive Director transitions to a lower fixed pay over time.
Where an Executive Director is located in a different international jurisdiction, benefits may reflect market practice in that
jurisdiction.
New recruits would normally participate in defined contribution arrangements or take a non-pensionable salary supplement.
The level of contribution would be determined at the time of appointment and may be set at a higher level than set out above.
This might arise, for example, where a newly appointed Executive Director is recruited on a significantly lower salary than in
his or her previous position taking into account the structure of remuneration at Savills. For international appointments, the
Committee may determine that alternative pension provisions will operate, and when determining arrangements the
Committee will give regard to the cost of the arrangements, market practice in the relevant international jurisdiction and the
pension arrangements received elsewhere in the Group.
Consistent with the Regulations, the formal caps on fixed pay in the Policy do not apply on recruitment although the
Committee would seek to apply such caps in any element to the extent it considers it to be feasible to do so.
Variable remuneration
The variable remuneration (annual performance-related profit share and PSP awards) for a new recruit would be consistent
with the policy in the table on pages 87 and 88 (excluding buy-outs).
In the case of an employee who is promoted to the position of Executive Director (including if an Executive Director is
appointed following an acquisition or merger), it is the Company’s policy to honour pre-existing awards and contractual
commitments.
Non-Executive Directors
In the event of the appointment of a new Non-Executive Director, remuneration arrangements will normally be in line with
those detailed in the relevant table above.
Interim appointments
In the event that an interim appointment is made to fill an Executive Director role on a short-term basis or a Non-Executive
Director taking on an executive function on a short-term basis, then an additional fee or salary supplement (and/or
participation in the variable pay arrangements) may be provided.
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Director service contracts and termination policy
When determining the leaving arrangements for an Executive Director, the Committee takes into account any pre-established
agreements including the provision of any incentive plans, typical market practice, the performance and conduct of the
individual and the commercial justification for any payments.
The following summarises our policy in relation to Executive Director service contracts and payments in the event of a loss
of office:
Notice
periods
12 months’ notice by either the Company or the Executive Director.
For new appointees, the Committee reserves the right to increase the period of notice required from
the Company in the first year of employment to up to 24 months, decreasing on a monthly basis to
12 months on the first anniversary of employment.
Contract
dates
– Mark Ridley – 1 May 2018
– Simon Shaw – 16 March 2009
Expiry dates
Contracts are rolling service contracts with no expiry date.
Elements of
remuneration
Executive Directors’ service contracts contain provisions relating to base salary, pension, private
medical insurance, car allowance (or the provision of a company car) and confirm their eligibility to
participate (although not necessarily receive any award) in the Company’s annual performance-related
profit share arrangements, the PSP and other employee share schemes.
Termination
payments and
treatment of
the annual
performance-
related profit
share
If an Executive Director’s employment is to be terminated, the Committee’s policy in respect of the
service contract, in the absence of a breach by the Director, is to agree a termination payment based
on the value of base salary and contractual benefits and pension entitlements in their notice period.
In addition, if they are classified as ‘good leavers’ as defined in their Service Agreements (which
expression does not include dismissal due to poor performance or voluntary resignation unless the
Committee so determines), they may also receive a pro-rata annual performance related profit share
and retain outstanding incentive awards. The policy is that, as is considered appropriate at the time,
the departing Executive Director may work, or be placed on garden leave, for all or part of his/her
notice period, or receive a payment in lieu of notice in accordance with the Service Agreement. The
Committee will consider mitigation to reduce the termination payment to a leaving Director when
appropriate to do so, having regard to the circumstances. No performance-related profit share element
would be paid in respect of notice periods not worked.
In addition, where the Director may be entitled to pursue a claim against the Company in respect of
his/her statutory employment rights or any other claim arising from the employment or its termination,
the Company will be entitled to negotiate settlement terms (financial or otherwise) with the Director
that the Committee considers to be reasonable in the circumstances and in the best interests of
the Company and to enter into a Settlement Agreement with the Director to effect both the terms
agreed under the Service Agreement and any additional statutory or other claims, and to record any
agreement in relation to any annual performance-related profit share award, in line with the policies
described above and/or, as below, share awards.
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Directors’ Remuneration report
continued
Directors’ Remuneration Policy continued
Treatment
of share
incentives
Deferred share awards
Deferred share awards made (or to be made) under the annual performance-related profit share
scheme are subject to forfeiture if the award holder leaves service prior to the vesting date other than
in defined ‘good leaver’ situations. Good leaver circumstances are death, ill-health, injury or disability,
redundancy, retirement, the employing Company being sold or transferred outside of the Group, or
any other reason at the discretion of the Committee.
For ‘good leavers’, any outstanding deferred share award will normally vest on the normal maturity
date (although the Committee has discretion to accelerate to the date of cessation). Where a good
leaver circumstance is at the Committee’s discretion rather than a prescribed circumstance, vesting
may be on such date and such terms as it may determine.
PSP
In the event that a participant is a ‘good leaver’, any outstanding unvested PSP awards will normally be
pro-rated for time in service during the relevant performance period with performance measured to
the end of the performance period and vesting occurring at the normal vesting date. Any applicable
holding period will also normally apply although the Committee may choose to release such shares
earlier. In particular circumstances (e.g. death), the Committee has the power to vary these provisions,
including to allow for early vesting. For all other leavers, outstanding unvested awards lapse. Good
leaver circumstances are leaving due to death, injury, ill-health, disability, redundancy, or any other
reason at the discretion of the Committee (for example, retirement).
If an award has been granted as an option and a participant ceases to work for the Group after the
option has become exercisable, he/she will normally be permitted to exercise outstanding options within
a period of six months following the end of the performance period or cessation of employment where
this is after the end of the performance period (as appropriate). In the event of the death of a participant
the personal representatives will be able to exercise an option in accordance with the PSP rules.
All-employee share plans
Sharesave: Awards vest in accordance with their terms, under which ‘good leavers’ are entitled to
receive shares on or shortly after cessation, but other leavers normally forfeit any awards.
Share Incentive Plan (’SIP’): shares which have been held in the SIP for at least five years are released
to leavers free from income tax and social security charges. Some tax and social security charges
will be payable on shares taken out of the SIP within five years of purchase unless the participant is
a ‘good leaver’.
Other awards Where an award is made for the purpose of recruitment (for example a buy-out award under LR
9.4.2) then the leaver provisions would be determined at the time of award having regard to the
circumstances of the recruitment, the terms of awards being bought out and the principles for
leavers in the current policy.
Other
information
Executive Directors are subject to post employment restrictive covenants for a period of six months
post cessation.
The Company may also meet ancillary costs, such as outplacement consultancy and/or reasonable
legal costs, if the Company terminates an Executive Director’s service contract.
Consideration of conditions elsewhere in the Group
In making remuneration decisions, the Committee considers the pay and employment conditions elsewhere in the Group. As
part of decisions being made on the annual pay review, the Committee is informed about the approach to salary increase and
the outcome of annual performance-related profit share (and other incentive arrangements such as fee-earner commission
schemes) across the Group. The Committee is also provided with comparative metrics on total employment costs across the
Group as a percentage of revenue.
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Savills plc
Report and Accounts 2019
Annual Report on Remuneration
The Company operates a consistent remuneration philosophy across the Group. In this context, the Committee does not
consider it necessary to consult with employees in the Group on the specific remuneration policy for Executive Directors,
although Executive Director pay is included as a standing agenda item for ‘Employee Voice’ forums.
Consideration of Shareholder views
The Committee takes into account the views of the Group’s Shareholders and investor bodies. The Board and the Committee
(through the Committee Chairman) has open and regular dialogue with our major Shareholders on remuneration matters,
including consulting with major Shareholders where the Committee is considering making material changes to the
remuneration policy.
Illustrations of application of the Policy
The charts below illustrate how much the current Executive Directors could earn under four different performance scenarios
for 2020: ‘Minimum’, ‘On-target performance’, ‘Maximum with share price growth’ – based on the assumptions below.
Group Chief Executive Officer
Group Chief Financial Officer
Maximum with
share price growth
10%
65%
25%
£3.47m
Maximum with
share price growth
11%
64%
26%
£2.63m
Maximum
11%
71%
19%
£3.17m
Maximum
12%
70%
19%
£2.41m
On-target
21%
69%
9%
£1.61m
On-target
23%
68%
9%
£1.23m
Minimum
100%
£0.35m
Minimum
100%
£0.28m
Fixed pay
Annual award
Long term reward
Element in the
above chart
Component
Fixed Pay
Base salary
Pension
Benefits
‘Minimum’
‘On-target’
‘Maximum’
2020 annual base salary
14% of salary for the Group Chief Executive,
18% of salary for the Group Chief Financial Officer
Annual taxable value of benefits provided in 2019
Annual
reward
Annual performance-
related profit share
0% of maximum award
50% of maximum award
Long term
reward
PSP
0% of maximum award
25% of maximum award
Group Chief Executive
Officer – £2,240,000
Group Chief Financial
Officer – £1,679,000
Group Chief Executive
Officer – £590,000
Group Chief Financial
Officer – £451,000
Other
assumptions
‘Maximum with share price growth’ is as ‘Maximum’ including assumed 50% share price growth
Excludes additional shares representing the value of dividends declared during the vesting period which
may attach to the deferred element of any annual performance-related profit share award
or PSP award at vesting
Assumes that no awards are made under tax advantaged all-employee share plans
The proposed new policy does not include an on-target level for the annual performance-related
profit share so a 50% of maximum award has been used for illustrative purposes
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OverviewGovernance Strategic reportFinancial statements Savills plc
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Directors’ Remuneration report
continued
Annual Report on Remuneration continued
Total remuneration for 2019
Set out below are details of Executive Director remuneration for 2019.
Executive Directors’ ‘single figure’ for the financial year ended 31 December 2019 and as a comparison for the financial year
ended 31 December 2018 (audited).
Mark Ridley1
Simon Shaw
Jeremy Helsby2
2019
£
2018
£
2019
£
2018
£
2019
£
Salary
Benefits3
Pension: contribution
Annual profit share – cash
289,000
170,000
221,000
219,167
11,035
40,460
7,202
23,800
15,639
39,780
11,216
39,450
1,047,770
653,000
785,560
764,000
Annual profit share – deferred shares
755,770
364,000
564,500
543,000
Near term remuneration
2,141,035 1,218,002
1,626,479 1,576,833
–
–
–
–
–
–
2018
£
286,667
10,803
40,133
1,016,000
727,000
2,080,603
The aggregate near term remuneration paid to the two Executive Directors in the year ended 31 December 2019 was £3.77m (2018 three Executive
Directors: £4.88m).
Mark Ridley1
Simon Shaw
Jeremy Helsby2
2019
£
2018
£
2019
£
2018
£
2019
£
Notional
Actual
Notional
Actual
Notional
2018
£
Actual
Gain on long-term share-based awards
Performance Share Plan – performance
element4 (for 2019: notional)
Performance Share Plan – share appreciation
element4 (for 2019: notional)
Long-term share-based reward (non-cash –
for 2019: notional)4
210,000
56,552
210,000
56,552
22,827
13,530
22,827
13,530
232,827
70,082
232,827
70,082
Total i.e. ‘Single Figure’ (for 2019: part notional) 2,373,862 1,288,084 1,859,306 1,646,915
The information in this table has been audited by the External auditor, PricewaterhouseCoopers LLP.
Notes:
1. Remuneration for 2018 calculated from date of appointment to the Board on 1 May 2018.
2. Retired from the Board 31 December 2018.
–
–
–
–
124,399
29,762
154,161
2,234,764
3. Benefits comprise private medical insurance and car allowance. For Simon Shaw in 2019 this also includes £4,423 being the cash equivalent of additional
holiday entitlement accruing under the Company’s loyalty holiday reward scheme (and reflecting Simon Shaw’s 10th year of service).
4. For 2019 the notional value of the PSP award with a performance period which ended on 31 December 2019 (i.e. where the award will vest in May 2022)
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 2019 (977.3p)
per share). For 2018, the value shown has been updated to reflect the actual market sale price at the date of vesting which was 884.2p per share and
Dividend Shares. The estimates provided for long-term share-based reward in last year’s report in respect of 2018 were: Mark Ridley £52,389, Simon Shaw
£52,389 and Jeremy Helsby £115,257. 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).
96
Savills plc
Report and Accounts 2019
Performance-related remuneration for 2019
Annual performance-related profit share
UPBT performance-related element
The following near-term performance measures applied to the 2019 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)
£98.8m
Mid-point
(62.5% of element)
Maximum target
(100% of element)
£129.4m
£160m
Savills UPBT
performance
£143.4m
Bonus award
(% of element)
79.7%
Due to the change in accounting policy following the adopting of IFRS 16, the UPBT targets and performance are not directly comparable with 2018.
There was straight-line vesting between the minimum and mid-point and the mid-point and maximum.
Reflecting the Group’s resilient performance in 2019, awards at 79.7% of the maximum potential were earned by the Executive
Directors in respect of the UPBT performance-related element (2018: 78.7%).
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 Mark Ridley’s achievement against the key objectives set included the following:
ensuring strong relationships with the Group’s key regional leaders to achieve a smooth transition from Jeremy Helsby
securing the existing and building bench strength across the Regions to ensure that the platform supports the Board’s
vision for growth
establishing regional service line strategy boards for all core service lines to ensure the delivery of an integrated offering
and the sharing of best practice regionally (and ultimately globally)
implementing new initiatives in key markets to drive further growth, in particular:-
– in Asia Pacific, overseeing the successful strengthening of the Capital Markets and Office Leasing offerings in China, the
recruitment of the market leading Singapore Capital Markets team, the growth of the Group’s Indian business (which,
having been launched in October 2018, now operates in six cities employing 300 people) and the development of
Logistics, Retail and Office Leasing offerings across Australia;
– in the US, driving new US leadership team to (a) deliver the targeted improvement in performance, resulting in a strong
result in 2019; and (b) continue to grow and strengthen the tenant rep platform and to broaden the service offering, in
particular by building out the logistics/industrial brokerage and advisory offerings in the US; and
– overseeing the recruitment of a new CEO to lead the next phase of Savills Investment Management’s growth
enhancing the Group’s investor relations programme to build investor understanding and re-position the business with
markets and investors
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OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Annual Report on Remuneration continued
Details of Simon Shaw’s achievement against the key objectives set included the following:
leading on the recruitment of the new CEO for Savills Investment Management and successfully effecting consequential
management changes in that business
ensuring that the Group was prepared for Brexit, in particular re-locating the AIFM authorisations held by Savills
Investment Management to Luxembourg
overseeing and sponsoring the Group’s multi-year technology initiatives, including during the year
– the deployment of Savills award winning Knowledge Cubed platform to our occupier services clients across all regions;
– the continued roll out of Workthere.com, Savills advisory service to corporates seeking flexible office or co-working
space, which had now been launched in ten countries;
– continuing the progressive harmonisation of accounting systems across the Group based on AX Dynamics
implementations; and
– sponsoring the launch of digitised offerings for, for example, Valuation Services, and in the UK Auctions and digital tools
to enhance remote working in the Group’s UK residential business
leading the review of the Group’s funding facilities and re-arranging the Group’s £360m RCF and extending this to 2024
(with two term extension options)
continuing to develop the Group’s risk management/control environment so that it evolves consistent with the growth of
the Group‘s geographic spread and the broadening of the service offering
In line with the Policy, 50% of the overall awards to Mark Ridley and Simon Shaw, above an amount equal to their respective
base salaries, was deferred for a further three-year period in the form of shares.
Long-term incentives
The PSP award granted in 2017 is subject to performance in the three years to 31 December 2019. Following an assessment of
Savills performance against targets set at grant, the Committee determined that 50% of the award had met the performance
criteria and will vest at the end of the two-year holding period in May 2022. The targets and Savills performance were as
follows:
Relative TSR versus FTSE Mid 250 index
(excluding investment trusts)
% EPS growth
Weighting
50%
Threshold target
(25% vesting)
Maximum target
(100% vesting)
Savills
performance
Equal to index Outperform index
by 8% p.a.
Outperform index
by 8.2% p.a.
Vesting
(% of
maximum)
100%
50% RPI plus 3% p.a.
compounded
RPI plus 8% p.a.
compounded
Below threshold
0%
98
Savills plc
Report and Accounts 2019
Non-Executive Directors fees (audited)
The Non-Executive Director fees for 2019 were as follows:
Nicholas
Ferguson
(Chairman)
Stacey
Cartwright
Tim
Freshwater
Liz Hewitt
(retired in
May 2019)
Charles
McVeigh
(retired in
May 2019)
Rupert
Robson
Florence
Tondu-
Mélique
Dana
Roffman
(appointed
1 November
2019)
Basic fee
£215,000
£54,000
£54,000
£18,925
£18,925
£54,000
£54,000
£9,117
Additional fees
Senior Independent
Director
Remuneration
Committee Chairman
Audit Committee
Chairman
2019 Total
2018 Total
£8,000
£10,000
£9,728
£5,326
£215,000
£63,728
£62,000
£24,251
£18,925
£64,000
£54,000
£9,117
£207,500
£13,325
£60,650
£67,650
£52,650
£61,817
£13,325
-
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 current fee payable to Nicholas Ferguson as Chairman is £215,000 p.a. (2018: £215,000 p.a.).
The current base fee for the Non-Executive Directors is £54,700 p.a., (2018: £53,300 p.a.) with additional fees payable to the
Senior Independent Director (£8,000 p.a.; 2018 : £5,000 p.a.), the Audit Committee Chairman (unchanged at £15,000 p.a.)
and the Remuneration Committee Chairman (unchanged at £10,000 p.a.).
Fees were increased in 2019 with effect from 1 July 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 2020
Base salary
The Committee has determined that an increase of 2% will be applied for 2020. The base salaries of the Executive Directors
will therefore be as follows:
Group Chief Executive Officer: £295,000; and
Group Chief Financial Officer: £225,500.
In line with our Policy, the base salaries for the Executive Directors continue to be positioned significantly below market
median against the FTSE 250.
Variable remuneration
Annual performance-related profit share
The maximum annual performance-related profit share opportunity for 2020 will be:
£2.240m for the Group Chief Executive Officer; and
£1.679m for the Group Chief Financial Officer.
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OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Annual Report on Remuneration continued
For the 2020 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 payout level to reflect exceptional events over the performance period.
Performance Share Plan
The remuneration policy is for maximum awards of 200% of base salary. The PSP awards for 2020 will be up to 2x each
Executive Director’s base salary.
Awards will vest subject to the satisfaction of EPS targets for one-third 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 2019 EPS base starting
position, this would represent outstanding performance for Shareholders.
A further one-third 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.
A further one-third of the award will vest subject to the satisfaction of Return on Equity Targets as follows:
25% (i.e. threshold) of the element to vest if the Company’s ROE is 24.0%;
100% (i.e. the maximum) of the element to vest if the Company’s ROE is 32.5% or more; and
with straight-line vesting between the two points. ROE is defined as underlying profit before tax (‘UPBT’)/average ordinary
Shareholders’ equity, measured over the three-year performance period.
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 2019 and 2018.
Employment costs
Underlying profit before tax
Dividend payment to Shareholders
Executive Director remuneration
Tax
100
2019
£m
2018
£m
% increase
1,240.5
1,160.8
143.4
143.7
43.7
4.2
42.7
4.2
122.4
112.4
7
–
2
2
9
Savills plc
Report and Accounts 2019
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 2019 comprises the cost of the final dividend recommended by the Board (amounting to £16.5m),
payment of which is subject to Shareholder approval at the Company’s AGM scheduled to be held on 6 May 2020, the cost
of the supplemental dividend (£20.5m) declared by the Board on 12 March 2020 (payable to Shareholders on the Register
of Members as at 14 April 2020) and the interim dividend (£6.7m) paid on 2 October 2019 and is based on the number of
shares in issue as at 31 December 2019.
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.
Total Shareholder return and Group Chief Executive Officer remuneration
The total Shareholder return delivered by the Company over the last 10 years is shown in the chart below. Over this period the
Company has delivered total Shareholder return of 17% per annum (FTSE 250 (excluding investment trusts): 12% per annum;
FTSE 350 Super Sector Real Estate: 9% per annum). Savills was ranked 51st by TSR performance in the FTSE 250 (excluding
investment trusts) and ranked fourth (of 27 companies) by performance in the FTSE 350 Super Sector Real Estate over the 10
years to 31 December 2019.
Total Shareholder Return ('TSR')
600
500
400
300
200
100
0
Dec
08
Dec
09
Dec
10
Dec
11
Dec
12
Dec
13
Dec
14
Dec
15
Dec
16
Dec
17
Dec
18
Dec
19
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.
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OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Annual Report on Remuneration continued
Pay for performance
Year
Group Chief Executive Officer
2019 Mark Ridley
2018
2017
2016
2015
2014
2013
2012
2011
Jeremy Helsby
Jeremy Helsby
Jeremy Helsby
Jeremy Helsby
Jeremy Helsby
Jeremy Helsby
Jeremy Helsby
Jeremy Helsby
Total Single Figure
Remuneration
£’000
UPBT
£m
UPBT annual
% change
Annual variable
element: performance-
related profit share
– annual award against
maximum potential %
Long-term Incentive
to vest (maximum
potential of award)
100%
2,377
2,196
2,507
2,595
2,298
3,279
2,630
1,786
1,268
143.4
143.7
140.5
135.8
121.4
100.5
75.2
58.6
50.4
-0.2
+ 2.3
+3.5
+12
+21
+34
+28
+16
+7
84
82
80
98
100
100
86
65
49
50
41
84
50
N/A
100
100
100
0
Total remuneration in the years 2012 to 2019 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, 2018 and 2019 years).
The awards granted in 2008 lapsed in 2011.
Group Chief Executive Officer pay increase in relation to all UK employees
Group Chief Executive Officer
All UK employees
Notes:
Percentage change in remuneration from 31/12/2018 to 31/12/2019
Percentage change
in base salary %
Percentage change
in benefits %
Percentage change in
profit share award %
1%
3%
2%
16%
3%
-2%
1. The percentage change for the Group Chief Executive Officer is comparing the pay of Mark Ridley in 2019 with that of Jeremy Helsby in 2018.
2. Salary, benefits and bonus is compared against full-time equivalent UK employees. The UK workforce was chosen as a suitable comparator group as Mark
Ridley 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.)
3. The base salary for the Group Chief Executive Officer continues to be positioned significantly below the market median against the FTSE 250.
CEO to employee pay ratio
The table below shows how the CEO’s single figure remuneration (as taken from the single figure remuneration table on
page 96) compares to the equivalent single figure remuneration for full-time equivalent UK employees, ranked at the 25th,
50th and 75th percentile.
Year
2019
Method
25th percentile pay ratio
Median pay ratio
75th percentile pay ratio
Option A
86 : 1
58 : 1
32 : 1
102
Savills plc
Report and Accounts 2019
Notes to the CEO to employee pay ratio:
The regulations provide three options which may be used to calculate the pay for the employees at the 25th percentile,
median and 75th percentile. We have used Option A, following guidance that this is the preferred approach of some proxy
advisors and institutional Shareholders. Option A captures all relevant pay and benefits for all employees in line with the single
figure for remuneration calculated for Executive Directors.
The ratios shown are representative of the FTE 25th percentile, median and 75th percentile pay for UK employees within the
Group during the 2019 calendar year.
The pay for part-time employees has been grossed-up to one FTE.
The Committee has reviewed the employee data and believes the median pay ratio to be consistent with the pay, reward and
progression policies for the Company’s UK employees over the period.
The CEO’s pay is based on the single figure of remuneration set out on page 96 of this report. Because a large portion of the
CEO’s pay is variable, the pay ratio is heavily dependent on the outcomes of variable pay plans and, in the case of long-term
share-based awards, share price movements.
The total pay and benefits and the salary component of total pay and benefits for the employee at each of the 25th percentile,
the median and the 75th percentile are shown below:
Year
2019
25th percentile
Median
75th percentile
25th percentile
Median
75th percentile
£24,000
£30,796
£47,176
£27,626
£40,981
£73,564
Salary
Total pay and benefits
Pensions disclosure
Mark Ridley receives a non-pensionable salary supplement equal to 14% of pensionable earnings. This salary supplement is 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. For the Group Chief Financial Officer, the Company
contributes 18% per annum of pensionable earnings to his personal pension plan in line with his service contract agreed at the
time of appointment.
Mark Ridley no longer accrues a pension benefit under the Plan. The value of the legacy benefit is shown below.
Executive Director
Mark Ridley
Defined benefit
pension accrued at
31 December 2019
Defined benefit
pension accrued at
31 December 2018
Defined benefit
pensions value for 2019
remuneration table
Defined benefit
pensions value for 2018
remuneration table
34,815
33,734
−
−
Mark Ridley’s accrued pension ceased to be linked to salary from 29 February 2016, at which point the accrued pension was
£31,875 p.a. The pension now increases in line with the standard revaluation provisions of the Plan that apply to all deferred
pensioners. The amounts shown include revaluation to 31 December 2018 and 31 December 2019 respectively. In last year’s
report we showed the pension accrued at the date the salary link was ceased. No additional benefit is due in the event of early
retirement.
Share interests
Details of shares in the Company which the Directors beneficially held or had a beneficial interest in as at 31 December 2019
are shown below.
Where the performance conditions attaching to any PSP award have been satisfied and the award is due to vest in the future,
the PSP award shares (discounted for anticipated tax liabilities) will count towards the shareholding requirements:
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OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Annual Report on Remuneration continued
Executive Directors
Mark Ridley
Simon Shaw
Number of shares
(including beneficially
held under the SIP)
Unvested shares
subject to performance
conditions (PSP)
Deferred share bonus
plan awards (vesting not
subject to performance
conditions) (DSBP)
Extent to
which shareholding
guideline met
182,961
155,864
153,653
141,083
134,119
158,540
143%
160%
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
Nicholas Ferguson
Stacey Cartwright
Tim Freshwater
Rupert Robson
Dana Roffman
Florence Tondu-Mélique
At 31 December 2019
29,286
2,860
–
7,981
–
–
As at 12 March 2020, no Director had bought or sold shares since 31 December 2019.
The Sharesave Scheme
No Directors hold outstanding options under the Sharesave Scheme and no options were exercised during the year.
Scheme interests granted in 2019
The following table sets out details of awards made to Executive Directors under the PSP in 2019.
Type of award
Basis
of award
(face value)
Performance period
% vesting for
threshold
performance
% vesting for
maximum
performance
Mark Ridley
Nil-cost options
£578,000
Simon Shaw Nil-cost options
£442,000
1 January 2019 to
31 December 2021
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
the following page.
104
Savills plc
Report and Accounts 2019
Market value
at date of
vesting
First
vesting date
884.2p
27.04.19
–
–
–
22.05.22
16.04.23
15.04.24
884.2p
27.04.19
–
–
–
22.05.22
16.04.23
15.04.24
The Performance Share Plan (‘PSP’)
Number of shares
Directors
Mark Ridley
Simon Shaw
At
31 December
2018
35,038
47,646
43,010
–
–
–
–
62,997
35,038
47,646
45,263
–
–
–
–
48,174
Awarded
during year
Vested
during year
Lapsed
during year
At
31 December
2019
Date
of grant
Closing mid-
market price of
a share the day
before grant
7,926
27,112
–
27.04.16
–
–
–
–
–
–
47,646 22.05.17
43,010 16.04.18
62,997 15.04.19
7,926
27,112
–
27.04.16
–
–
–
–
–
–
47,646 22.05.17
45,263 16.04.18
48,174 15.04.19
713.5p
881.5p
976.5p
917.5p
713.5p
881.5p
976.5p
917.5p
Awards over 14,364 shares, together with a further 1,488 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 £139,767.
The Deferred Share Bonus Plan (‘DSBP’)
Number of shares
Directors
Mark Ridley
Simon Shaw
At
31 December
2018
Awarded
during year
Vested
during year
At
31 December
2019
Date
of grant
Closing mid-
market price of
a share the day
before grant
65,201
47,954
46,492
–
–
–
–
39,673
60,240
46,824
52,534
–
–
–
–
59,182
65,201
–
14.03.16
–
–
–
47,954 18.04.17
46,492 16.04.18
39,673 15.04.19
60,240
–
14.03.16
–
–
–
46,824 18.04.17
52,534 16.04.18
59,182 15.04.19
705.5p
929.0p
976.5p
917.5p
705.5p
929.0p
976.5p
917.5p
Market value
at date of
vesting
First
vesting date
916.8p
14.03.19
–
–
–
18.04.20
16.04.21
15.04.22
916.8p
14.03.19
–
–
–
18.04.20
16.04.21
15.04.22
Under the DSBP awards over 125,441 shares and 12,278 shares in lieu of dividends vested to Executive Directors during the
year. The total pre-tax gain on awards vested during the year was £1,262,589. No DSBP awards lapsed.
During the year, the aggregate gain on the exercise of share options and shares vested was £1,402,356. The mid-market
closing price of the shares at 31 December 2019, the last business day of the year, was 1,135p and the range during the year
was 706p to 1,175p.
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OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ Remuneration report
continued
Annual Report on Remuneration continued
Payments to past Directors and payments for loss of office
No Executive Director left the Company during the year ended 31 December 2019. No payments for compensation for loss of
office were paid to, or receivable by, any Director for that or any earlier year.
External directorships
Savills recognises that its Executive Directors may be invited to become non-executive directors of other companies. Such
non-executive duties can broaden experience and knowledge which can benefit Savills. Subject to approval by the Board and
any conditions which it might impose, the Executive Directors and Group Executive Board members are allowed to accept
external non-executive directorships and retain the fees received, provided that these appointments are not likely to lead to
conflicts of interest. For non-executive directorships which are considered to arise by virtue of an Executive Director’s or
Group Executive Board member’s position within Savills, the fees are paid directly to Savills.
During 2019, 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
Rupert Robson
Dana Roffman
Florence Tondu-Mélique
Date appointed to Board
End date of current letter of appointment
1 October 2018
26 January 2016
1 January 2012
23 June 2015
1 November 2019
1 October 2018
30 September 2021
26 January 2022
31 December 2020
22 June 2021
31 October 2022
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 2018 Annual Remuneration Report at the AGM held on 8 May 2019 and
the Directors’ Remuneration Policy at the AGM held on 9 May 2017.
2018 Annual Directors’
Remuneration Report
Number of
votes ‘For’ and
discretionary
100,373,254
Directors’ Remuneration Policy 104,842,007
* A vote withheld is not a vote in law.
106
% of votes cast
Number of votes
‘Against’
% of votes cast
Total number of
votes cast
Number of votes
‘Withheld’*
93.18%
98.35%
7,349,199
1,753,512
6.82%
107,722,453
5,636
1.65%
106,595,519
2,665,000
Savills plc
Report and Accounts 2019
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.
Other information incorporated into this report by reference
can be found at:
on pagse 22 to 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.
Strategic Report
Principal developments
Material existing and emerging risks and
uncertancies
Statement of Directors’ responsibilities
Corporate Governance Statement
Engagement with UK employees
Greenhouse gas emissions
Engagement with suppliers, customers
and others in a business relationship
Page/Note
4
18
24
111
48
32
43
32
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 and dividends
The results for the Group are set out in the consolidated
income statement on page 122 which shows a reported profit
for the financial year attributable to the Shareholders of the
Company of £82.9m (2018: £76.7m).
An interim dividend of 4.95p per ordinary share amounting
to £6.7m (2018: £6.5m) was paid on 2 October 2019. It is
recommended that a final dividend of 12.05p per ordinary
share (amounting to £16.5m) is paid, together with a
supplemental interim dividend of 15.0p per ordinary share
(amounting to £20.5m) and to be declared by the Board on
12 March 2020 and paid on 12 May 2020 to Shareholders on
the register at 14 April 2020. More details of the proposed
dividend and the Company’s performance can be found in
the Chairman’s statement on pages 4 and 5.
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 47. The financial position of the Group, its cash
flows, liquidity position and borrowing facilities are described
The Group has considerable financial resources, including a
£360m committed revolving credit facility that extends to
June 2024. 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.
Directors
Biographical details of the current Directors are shown on
pages 50 to 53. All the Board members served throughout
the year save for Dana Roffman who was appointed as an
Independent Non-Executive Director with effect from
1 November 2019. As at 31 December 2019 the Board
comprised the Non-Executive Chairman, two Executive
Directors and five Non-Executive Directors.
Interests in the issued share capital of the Company held at
the end of the period under review and up to the date of this
Report by the Directors or their families are set out on
page 104 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 104 and 105. It is the Board’s policy that the
GEB Members should retain at least 105,000 shares (value at
31 December 2019: £1,191,750) 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.
107
Governance Strategic reportFinancial statements As at 31 December 2019 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
Number of
shares
%
7,249,840
5.07
Aberdeen Asset Managers Limited
(and/or acting for its affiliates) as
discretionary investment manager on
behalf of multiple managed portfolios
7,189,327
Liontrust Investment Partners LLP
7,210,255
Merian Global Investors (UK) Limited 7,184,549
5.07
5.04
5.02
Standard Life Investments (Holdings)
Limited
BlackRock, Inc.
6,723,563
<5.00
not known
<5.00
Aggregate of Standard Life Aberdeen
plc affiliated investment management
entities with delegated voting rights on
behalf of multiple managed portfolios
Old Mutual Plc
7,068,920
6,685,646
4.98
4.71
Note: On 24 Febuary 2020, Heronbridge Investment
Management LLP 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
2019 and 12 March 2020.
Savills plc
Report and Accounts 2019
Directors’ report
continued
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 2019 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.
Management Report
This Directors’ Report, on pages 107 to 108, together with the
Strategic Report on pages 4 to 47, form the Management
Report for the purposes of DTR 4.1.5R.
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
2019 comprised 143,056,718 2.5p ordinary shares, details of
which may be found on pages 188 and 189.
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.
108
Savills plc
Report and Accounts 2019
Overview
As at 31 December 2019, the Savills plc 1992 Employee
Benefit Trust (the ‘EBT’) held 4,388,054 ordinary shares and
the Savills Rabbi Trust held 1,602,405 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. The EBT waives its
right to receive Savills plc dividends. 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.
Repurchase of shares
In accordance with the Listing Rules, at the AGM on 8 May
2019 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 6 May 2020 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 89, in accordance with Board policy, the
members of the GEB (which includes the Executive Directors)
are expected to build-up and maintain a shareholding in the
Company. The Board may appoint any person to be a Director
and such Director shall hold office only until the next AGM
when he or she shall then be eligible for 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 Finsbury Circus House, 15 Finsbury
Circus, London EC2M 7EB at 12 noon on 6 May 2020; 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
(2018: £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 page 32 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 91 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.
109
Governance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Directors’ report
continued
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.
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.
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.
Disclosure of information to the auditor
Each Director confirms that, so far as he/she is aware, there
is no relevant audit information of which the Company’s
auditors are unaware and that each of the Directors has
taken all the steps that he/she ought to have taken as a
Director to make himself/herself aware of any relevant audit
information and to establish that the Company’s auditors are
aware of that information. This confirmation is given pursuant
to section 418 of the Companies Act 2006 and should be
interpreted in accordance with an subject to those provisions.
Engagement with UK employees
In accordance with s172 our statement on engagement with
UK employees is on page 32.
Engagement with suppliers, customers and others
in a business relationship with the company
In accordance with s172 our statement on engagement with
suppliers, customers and others in a business relationship
with the company is on pages 32 and 33.
By order of the Board
Chris Lee
Group Legal Director & Company Secretary
12 March 2020
Savills plc
Registered in England No. 2122174
110
Savills plc
Report and Accounts 2019
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 50 to 53 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
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.
12 March 2020
111
Governance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Independent auditors’ report
to the members of Savills plc
Report on the audit of the financial statements
Opinion
In our opinion, Savills Group financial statements and Company financial statements (the 'financial statement'):
give a true and fair view of the state of the Group’s and of the Company’s affairs as at 31 December 2019 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 2019; the Consolidated
income statement, the Consolidated statement of comprehensive income, the Consolidated statement of changes in
equity, the Company statement of changes in equity and the Consolidated and Company statements
of cash flows for the year then ended; 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 Audit Committee Report, we have provided no non-audit services to the Group or the
Company in the period from 1 January 2019 to 31 December 2019.
Our audit approach
Context
Savills plc is listed on the London Stock Exchange and has four business lines: Transactional Advisory, Consultancy,
Property and Facilities Management and Investment Management. 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.
112
Savills plc
Report and Accounts 2019
Overview
Overall Group materiality: £7.1 million (2018: £7.2 million), based on 5% of Group underlying
profit before tax as defined in note 2.2 to the financial statements.
Overall Company materiality: £2.5 million (2018: £2.4 million), based on 1% of total assets.
We conducted audit work in the UK, Germany, Spain, Ireland, Dubai, Sharjah, United States
of America, Hong Kong, China, Republic of Korea, Singapore, Japan and Australia, and
across all four of the Group’s business lines.
Audits of the complete financial information were performed on the UK, Germany, Spain,
Ireland, United States of America, Hong Kong, Shanghai (China Central), Republic of Korea,
Singapore (Investment Management) and Australia businesses.
We carried out specified audit procedures over the financial information of the entities in
Dubai, Sharjah, Beijing, Singapore (excluding Investment Management) and Japan.
We carried out full scope audit procedures on parts of the business which accounted for 85%
(2018: 82%) of Group revenues and 86% (2018: 91%) of Group underlying profit before tax.
The areas of focus were:
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 the Middle East business (Group).
Provisions for litigation (Group).
Recoverability of trade receivables (Group).
Recognition of Right-of-use-assets and leased liabilities in accordance with IFRS 16 (Group
and Company).
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.
Capability of the audit in detecting irregularities, including fraud
Based on our understanding of the Group and industry, we identified that the principal risks of non-compliance with
laws and regulations related to financial services and real estate services across the Group, and we considered the
extent to which non-compliance might have a material effect on the financial statements. We also considered those
laws and regulations that have a direct impact on the preparation of the financial statements such as the Companies
Act 2006, Listing Rules, pensions legislation, UK and international tax legislation and equivalent local laws and
regulations applicable to significant component teams. We evaluated management’s incentives and opportunities
for fraudulent manipulation of the financial statements (including the risk of override of controls) and determined that
the principal risks were related to posting inappropriate journal entries to increase revenue and management bias in
accounting estimates. The Group engagement team shared this risk assessment with the component auditors so that
they could include appropriate audit procedures in response to such risks in their work. Audit procedures performed
by the Group engagement team and/or component auditors included:
Discussions with management, internal audit and the Group’s legal team and external legal counsel, including
consideration of known or suspected instances of non-compliance with laws and regulation and fraud;
Challenging assumptions and judgments made by management in its significant accounting estimates, in particular in
relation to litigation provisions, recoverability of trade receivables and impairment of goodwill (see related key audit
matters below);
Identifying and testing journal entries, in particular any journal entries posted with unusual account combinations or
posted by senior management.
There are inherent limitations in the audit procedures described above and the further removed non-compliance with
laws and regulations is from the events and transactions reflected in the financial statements, the less likely we would
become aware of it. Also, 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.
113
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Independent auditors’ report
continued
to the members of Savills plc
Report on the audit of the financial statements continued
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)
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.
We examined the appropriateness of the Group's accounting policy for
revenue recognition, and its compliance with IFRSs as adopted by the EU,
and tested the application of this policy.
For a sample of material transactions, we evaluated the contractual terms
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 (Revenue from contracts with
customers).
We have tested through agreeing a sample of revenue transactions to
underlying contracts and third party documentation, for example, property
sales completion statements, determining that these sales had taken place
and were recorded in the correct period.
We also tested journal entries posted to revenue accounts to identify any
unusual or irregular items, and the reconciliations between the revenue
subledgers used by the Group and their financial ledgers.
There were no material issues identified by our testing of revenue recognition
in the year.
114
Savills plc
Report and Accounts 2019
Key audit matter
How our audit addressed the key audit matter
Goodwill impairment
assessment (Group)
The Group carried £374.2m of goodwill
at 31 December 2019 (2018: £383.8m).
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 the Middle East business.
No goodwill impairment charge was
taken as a result of the Directors' review.
Provisions for litigation (Group)
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 2019 is £11.5m (2018:
£11.0m).
We evaluated and challenged the Directors’ future cash flow forecasts and
the process by which they were drawn up, and tested the underlying value in
use calculations. We compared management’s forecast with the latest Board-
approved budget and found them to be consistent.
We challenged:
the key assumptions for short and long term growth rates in the forecasts
by comparing them with historical results, as well as economic and
industry forecasts for the relevant international property markets; and
the discount rate used in the calculations by assessing the cost of capital
for the Group and comparable organisations and assessed the specific
risk premium applied to each CGU.
We involved PwC valuation experts to determine a range of acceptable
discount rates, with reference to valuations of similar companies and other
relevant external data and compared this range with the discount rates
adopted by the Group. The discount rates adopted by the Group were below
the discount rates determined by the valuation experts.
We performed sensitivity analysis on the key assumptions within the cash flow
forecasts which 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 the
likelihood of material impairment to be reasonably possible.
In our work, we did not identify any material misstatements.
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 legal claim letters and accompanying third party
documentation received by the Group;
Obtained and read insurance contracts, and verified that the terms were
appropriately accounted for;
Met with the Group’s internal and external legal counsels to discuss
material developments and the latest status of legal matters, including the
potential exposure after taking into account the Group’s insurance cover;
Verified the amounts and other details in respect of new claims 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.
115
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Independent auditors’ report
continued
to the members of Savills plc
Report on the audit of the financial statements continued
Key audit matters continued
Key audit matter
How our audit addressed the key audit matter
Recoverability of trade
receivables (Group)
In order to test the recoverability of trade receivables, we performed the
following procedures:
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.
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 loss allowance provision for trade receivables
calculations and ensured that these were consistent with Group policy,
and the expected credit loss model as stipulated by IFRS 9, and that
they provided appropriate level of provision against the non-recovery of
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.
116
Savills plc
Report and Accounts 2019
Key audit matter
How our audit addressed the key audit matter
In order to assess the recognition of Right-of-use-assets and leased liabilities
in accordance with IFRS 16, we performed the following procedures:
Considered completeness by testing the reconciliation to the Group’s
operating lease commitments, and comparing those leases recorded in the
Group’s lease management system with the number and types of leases in
each of the Group’s significant businesses;
Verified the accuracy of the underlying lease data by agreeing a sample
of leases to original contract or other supporting information, and agreed
the integrity and mechanical accuracy of the IFRS 16 calculations for each
lease sampled through recalculation of the expected IFRS 16 adjustment;
Assessed the appropriateness of the discount rates applied in determining
lease liabilities; and
Assessed whether the disclosures within the financial statements are
appropriate and complete.
Challenged the key judgements and assumptions used by management.
In particular, we evaluated whether management was reasonably certain
to undertake renewal options and had appropriately accounted for the
measurement of lease liabilities for renewal terms.
Based upon the work performed, we consider that the key assumptions used,
and calculations undertaken by management to determine the right-of-use
assets and liabilities as defined by IFRS 16 and the corresponding disclosure
made to be appropriate.
Recognition of Right-of-use-assets
and leased liabilities in accordance
with IFRS 16 (Group and Company)
The Group adopted IFRS 16 ‘Leases’
with effect from 1 January 2019. IFRS
16 replaces the existing standard IAS
17 and specifies how a business should
recognise, measure, present and disclose
leases. The standard provides a single
lessee accounting model, requiring
lessee to recognise assets and liabilities
for all leases unless the lease term is 12
months or less or the underlying asset
has a low value.
Determining the value of the Right-of-
use assets and lease liabilities requires
management to make judgements over
key estimates and assumptions, including
the certainty of lease term renewals and
determination of appropriate discount
rates to be applied.
Our specific audit focus was on the
recognition of Right-of-use-assets and
leased liabilities considering the following
areas of risk:
Leasing arrangements within the
scope of IFRS 16 are not identified;
The underlying lease data used to
calculate the impact is incomplete
and/or inaccurate;
Specific assumptions applied to
determine the discount rates and
lease term renewals;
The disclosures in the financial
statements are insufficient especially
as to the transitional impact.
117
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Independent auditors’ report
continued
to the members of Savills plc
Report on the audit of the financial statements continued
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 85% (2018: 82%) of Group revenues and 86% (2018: 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
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, Germany, Spain, Ireland, the
United States of America, Hong Kong, Shanghai (China Central), Australia, Republic of Korea, Singapore (Investment
Management) and Australia 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
(excluding investment management business).
Based upon Group materiality, other than in Spain, Ireland and Germany we did not carry out detailed audit procedures
on Savills Europe.
In order to direct and supervise the Group audit, the Group engagement team sent detailed instructions to 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 and Republic of Korea, given
the significance of this region to the Group, Germany, Spain 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
assessment. Taken together, these procedures gave us the evidence we needed for our opinion on the financial
statements as a whole.
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
£7.1 million (2018: £7.2 million).
£2.5 million (2018: £2.4 million).
How we determined it
5% of Group underlying profit before tax as defined
in note 2.2 to the financial statements.
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.
118
Savills plc
Report and Accounts 2019
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 £0.5 million to £6.6 million. 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
£0.3 million (Group audit) (2018: £0.3 million) and £0.3 million (Company audit) (2018: £0.3 million) 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 12 months from the date of
approval of the financial statements.
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 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
of the United Kingdom’s withdrawal from the
European Union are not clear, and it is difficult
to evaluate all of the potential implications on
the Group’s trade, customers, suppliers and the
wider economy.
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.
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 2019 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)
119
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Independent auditors’ report
continued
to the members of Savills plc
Reporting on other information continued
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 25 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 31 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 111, 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 pages 69 to 77 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)
Responsibilities for the financial statements and the audit
Responsibilities of the directors for the financial statements
As explained more fully in the Statement of Directors' responsibilities in respect of the financial statements set out on
page 111, 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.
120
Savills plc
Report and Accounts 2019
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 18 years, covering the years ended 31 December 2001 to 31 December 2019.
John Waters (Senior Statutory auditor)
for and on behalf of PricewaterhouseCoopers LLP
Chartered Accountants and Statutory auditors
London
12 March 2020
121
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Consolidated income statement
for the year ended 31 December 2019
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
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
Supplementary income statement information
Reconciliation to underlying profit before income tax
Profit before tax
– restructuring and acquisition-related costs
– other underlying adjustments
Underlying profit before income tax
Underlying earnings per share
Basic earnings per share
Diluted earnings per share
Notes
6 and 7
10.1
17 and 18
2019
£m
1,930.0
(1,240.5)
(60.6)
2018
£m
1,761.4
(1,165.0)
(14.9)
16
8.1
8.1
8.1
12
12
19.1
13
15.1
15.1
9
9
9
7
15.2
15.2
(10.4)
(505.1)
0.5
1.7
115.6
6.5
(18.3)
(11.8)
11.8
115.6
(32.0)
83.6
82.9
0.7
83.6
60.6p
58.8p
115.6
25.2
2.6
143.4
78.0p
75.7p
(10.6)
(473.3)
0.1
2.9
100.6
4.4
(6.7)
(2.3)
11.1
109.4
(32.2)
77.2
76.7
0.5
77.2
56.2p
54.6p
109.4
29.1
5.2
143.7
77.8p
75.6p
* Depreciation, Other Operating Expenses and Finance costs in 2019 have been impacted by the adoption of IFRS 16. As a result of the adoption in 2019,
Depreciation has increased by £44.2m, Finance costs have increased by £9.3m, and other operating expenses have reduced by £50.0m in comparison
to the 2019 results if prepared on the same lease accounting policy used in 2018. Comparative results have not been restated as a result of the modified
retrospective transition approach used. See Note 2.26 and Note 8 for more information.
122
Consolidated statement
of comprehensive income
for the year ended 31 December 2019
Notes
Profit for the year
Other comprehensive (loss)/income
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension scheme and employee
benefit obligations
11.2 and 27.2
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:
Currency translation differences
Tax on items that may be reclassified
Total items that may be reclassified subsequently to profit or loss
Other comprehensive (loss)/income for the year, net of tax
13
13
Total comprehensive income for the year
Total comprehensive income attributable to:
Owners of the parent
Non-controlling interests
Savills plc
Report and Accounts 2019
2019
£m
83.6
(23.2)
(0.3)
4.4
(19.1)
(21.0)
3.8
(17.2)
(36.3)
47.3
46.6
0.7
47.3
2018
£m
77.2
15.7
(0.1)
(2.8)
12.8
19.3
(0.3)
19.0
31.8
109.0
108.5
0.5
109.0
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 £55.6m (2018: £55.5m).
123
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Consolidated and Company
statements of financial position
as at 31 December 2019
Assets: Non-current assets
Property, plant and equipment
Right of use assets
Goodwill
Intangible assets
Investments in subsidiaries
Investments in joint ventures and associates
Deferred income tax assets
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
Lease liabilities
Derivative financial instruments
Contract liabilities
Trade and other payables
Income tax liabilities
Employee benefit obligations
Provisions
Notes
17
18
16
16
19.3
19.1
20
19.2
11.2
6.1
6.1
21.1
26
22
24
25
26
6.1
23.1
27.2
27.1
Net current assets
Total assets less current liabilities
Liabilities: Non-current liabilities
Borrowings
Lease liabilities
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
24
25
23.2
11.2 and 27.2
27.1
20
28
30
30
Group
2019
£m
2018
£m
68.9
226.2
374.2
44.5
–
51.4
32.7
32.6
–
1.6
27.3
859.4
7.5
568.9
3.6
0.2
209.9
790.1
33.4
45.3
0.1
10.8
589.9
17.2
16.2
10.7
723.6
66.5
925.9
148.0
221.8
17.7
20.5
12.6
2.1
422.7
503.2
3.6
97.2
95.5
306.2
502.5
0.7
503.2
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
Company
2019
£m
2.7
58.7
–
6.7
81.5
–
2.7
–
–
–
–
152.3
–
73.4
1.7
–
83.1
158.2
–
5.4
–
–
13.9
-
0.1
–
19.4
138.8
291.1
–
69.9
–
0.5
1.2
–
71.6
219.5
3.6
97.2
38.2
80.5
219.5
–
219.5
2018
£m
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
The consolidated and Company financial statements on pages 122 to 210 were authorised for issue by the Board of
Directors on 11 March 2020 and were signed on its behalf by:
J J M Ridley
Savills plc
Registered in England No. 2122174
S J B Shaw
124
Consolidated statement
of changes in equity
for the year ended 31 December 2019
Balance at 1 January 2019
Change in accounting policy (IFRS 16 adoption)
Balance at 1 January 2019 (restated)
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension
scheme and employee benefit obligations
Changes in fair value of financial assets at FVOCI
Tax on items directly taken to reserves
Currency translation differences
Total comprehensive income for the year
Employee share option scheme:
– Value of services provided
Purchase of treasury shares
Shares issued
Dividends
Disposal of financial assets at FVOCI
Transactions with non-controlling interests
Balance at 31 December 2019
Notes
2.26
11.2
and 27.2
13
14
3.6
–
3.6
–
–
–
–
–
–
–
–
–
–
–
–
3.6
Savills plc
Report and Accounts 2019
Attributable to owners of the parent
Share
capital
£m
Share
premium
£m
Other
reserves*
£m
Retained
earnings**
£m
96.6
–
96.6
–
117.6
–
117.6
–
286.5
(9.3)
277.2
82.9
Total
£m
504.3
(9.3)
495.0
82.9
Non-
controlling
interests
£m
–
–
–
–
–
–
–
0.6
–
–
–
97.2
–
(0.3)
–
(21.0)
(21.3)
–
–
–
–
(0.8)
–
95.5
(23.2)
–
8.2
–
67.9
(23.2)
(0.3)
8.2
(21.0)
46.6
17.8
(14.1)
–
(42.8)
0.8
(0.6)
306.2
17.8
(14.1)
0.6
(42.8)
–
(0.6)
502.5
Attributable to owners of the parent
Balance at 1 January 2018
Profit for the year
Other comprehensive income/(loss):
Remeasurement of defined benefit pension
scheme obligations/retirement benefit surplus
Changes in fair value of financial assets at FVOCI
Tax on items directly taken to reserves
Currency translation differences
Total comprehensive income for the year
Employee share option scheme:
– Value of services provided
Purchase of treasury shares
Shares issued
Dividends
Disposal of financial assets at FVOCI
Transfer between reserves
Transactions with non-controlling interests
Movement related to business combinations
Balance at 31 December 2018
Share
capital
£m
Share
premium
£m
Other
reserves*
£m
Retained
earnings**
£m
Notes
3.5
–
91.1
–
98.4
–
247.2
76.7
11.2
13
14
19.4
–
–
–
–
–
–
–
0.1
–
–
–
–
–
3.6
–
–
–
–
–
–
–
5.5
–
–
–
–
–
96.6
–
(0.1)
0.1
19.3
19.3
–
–
–
–
(0.5)
0.4
–
–
117.6
15.7
–
(3.2)
–
89.2
18.2
(25.1)
–
(41.4)
0.6
(0.4)
(1.8)
–
286.5
Non-
controlling
interests
£m
1.5
0.5
–
–
–
–
0.5
–
–
–
(0.2)
–
–
(1.2)
0.1
0.7
Total
£m
440.2
76.7
15.7
(0.1)
(3.1)
19.3
108.5
18.2
(25.1)
5.6
(41.4)
0.1
–
(1.8)
–
504.3
*
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 30.
** 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 30.
125
0.7
–
0.7
0.7
–
–
–
–
0.7
–
–
–
(0.5)
–
(0.2)
0.7
Total
equity
£m
505.0
(9.3)
495.7
83.6
(23.2)
(0.3)
8.2
(21.0)
47.3
17.8
(14.1)
0.6
(43.3)
–
(0.8)
503.2
Total
equity
£m
441.7
77.2
15.7
(0.1)
(3.1)
19.3
109.0
18.2
(25.1)
5.6
(41.6)
0.1
–
(3.0)
0.1
505.0
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Company statement
of changes in equity
for the year ended 31 December 2019
Balance at 1 January 2019
Change in accounting policy
(IFRS 16 adoption)
Attributable to owners of the Company
Share
capital
£m
Share
premium
£m
Notes
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Share-
based
payments
reserve**
£m
Retained
earnings**
£m
Total
equity
£m
3.6
96.6
0.3
34.9
3.0
5.0
81.3
224.7
2.26
(6.3)
(6.3)
Balance at 1 January 2019 (restated)
3.6
96.6
0.3
34.9
3.0
5.0
75.0
218.4
Profit for the year
Other comprehensive income:
Remeasurement of defined benefit
retirement surplus and long term service
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
14
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
55.6
55.6
(1.2)
(1.2)
1.6
56.0
1.6
56.0
1.0
–
1.0
(1.9)
(14.8)
(16.7)
–
–
–
3.5
–
3.5
0.6
(43.3)
(43.3)
Balance at 31 December 2019
3.6
97.2
0.3
34.9
3.0
4.1
76.4
219.5
Attributable to owners of the Company
Share
capital
£m
Share
premium
£m
Notes
Capital
redemption
reserve*
£m
Merger
relief
reserve*
£m
Other
reserves*
£m
Balance at 1 January 2018
Profit for the year
Other comprehensive income:
Remeasurement of defined benefit
retirement surplus
Tax on items directly taken to reserves
Total comprehensive income for the year
Employee share option scheme:
– Value of services provided
– Exercise of share options
Distribution for Employee Benefit Trust
11.2
13
3.5
–
–
–
–
–
–
–
91.1
–
–
–
–
–
–
–
Shares issued
Dividends
Balance at 31 December 2018
14
0.1
–
3.6
5.5
–
96.6
Share-
based
payments
reserve**
£m
5.5
–
–
–
–
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)
(4.1)
–
(10.1)
(4.1)
5.6
(41.7)
(41.7)
0.3
–
–
–
–
–
–
–
–
–
34.9
–
–
–
–
–
–
–
–
–
3.0
–
–
–
–
–
–
–
–
–
0.3
34.9
3.0
5.0
81.3
224.7
*
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.
126
Consolidated and Company
statements of cash flows
for the year ended 31 December 2019
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
19.2
Proceeds from sale of interests in joint ventures,
associates and other investments
Dividends received from joint ventures and associates
Repayment of loans by joint ventures, associates and subsidiaries
Loans to joint ventures, associates and subsidiaries
Loans to other parties
Disposal of subsidiaries, net of cash disposed
Acquisition of subsidiaries, net of cash acquired
19.4
Deferred consideration paid in relation to current and prior year acquisitions
Purchase of property, plant and equipment
Purchase of intangible assets
Purchase of investment in joint ventures, associates
and equity investments
Net cash used in investing activities
Cash flows from financing activities
Proceeds from issue of share capital
Proceeds from borrowings
Repayments of borrowings
Financing fees paid
Principal elements of lease payments
Contribution to Employee Benefit Trust
Purchase of treasury shares
Purchase of non-controlling interests
Dividends paid
Net cash (used) in financing activities
Savills plc
Report and Accounts 2019
Group
Company
Notes
2019
£m
2018*
£m
2019
£m
2018
£m
33
132.6
139.8
6.4
(17.8)
(25.8)
4.0
(5.1)
(34.4)
95.4
104.3
44.5
1.2
(2.5)
2.8
46.0
–
–
–
–
43.9
1.1
–
3.0
48.0
–
–
–
–
35.0
40.0
0.2
12.3
1.5
11.2
–
0.2
4.5
2.1
10.5
–
(1.1)
(6.1)
–
(1.5)
(5.0)
(1.1)
(40.0)
(45.1)
–
0.4
(35.5)
(16.0)
(16.9)
(5.9)
–
–
–
-
–
–
–
–
(1.4)
(2.4)
(0.8)
(2.5)
17
16
(16.2)
(7.3)
19.1–19.2
(8.4)
(28.3)
(25.3)
(75.1)
–
–
(8.8)
(8.4)
25
30
14
0.6
5.6
0.6
5.6
158.1
305.0
(125.2)
(261.6)
(1.8)
(45.0)
–
(14.1)
(0.1)
(43.3)
(70.8)
(3.7)
223.9
(10.3)
209.9
–
–
–
(25.1)
(2.6)
(41.6)
(20.3)
8.9
205.2
9.8
223.9
–
–
–
(5.1)
3.5
–
–
(43.3)
(44.3)
(7.1)
90.2
–
83.1
–
–
–
–
(4.1)
–
–
(41.7)
(40.2)
(0.6)
90.8
–
90.2
Net (decrease)/increase in cash, cash equivalents and bank overdrafts
Cash, cash equivalents and bank overdrafts at beginning of year
Effect of exchange rate fluctuations on cash and cash equivalents held
Cash, cash equivalents and bank overdrafts at end of year
22 and 24
* 2018 Cash generated from operations has been re-presented to reflect £8.0m of employment-linked deferred consideration payments previously
shown as cash used in investing activities, now shown in cash generated from operations to reflect the requirement for recipients to remain engaged
actively in the business at the payment date in accordance with IAS 7.
127
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
Year ended 31 December 2019
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 39,319 staff worldwide.
The Company is a public limited company incorporated and domiciled in England, 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 11 March 2020.
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 and derivative financial instruments held at fair value and the IFRS 2 share-based
payments charge which is based on fair value movements of the Group’s share price.
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; and
significant acquisition costs related to business combinations.
The underlying effective tax rate represents the underlying income tax expense expressed as a percentage of
underlying profit before tax. The underlying income tax expense is the income tax expense excluding the tax effect
of the adjustments made to arrive at underlying profit before tax and other tax effects related to these adjustments.
Underlying basic earnings per share and underlying diluted earnings per share both utilise the underlying profit after tax
measure instead of GAAP earnings. The weighted average number of shares remain the same as the GAAP measure.
128
Savills plc
Report and Accounts 2019
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.
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 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.
129
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
2.3 Consolidation continued
(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 19.1).
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.
(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.
130
Savills plc
Report and Accounts 2019
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
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.
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.
131
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
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; and
the expenditure attributable to the software product during its development can be reliably measured.
Measurement subsequent to initial recognition is at cost less accumulated amortisation and impairment.
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.
132
Savills plc
Report and Accounts 2019
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 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.
2.12 Trade and other 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 and other receivables.
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.
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OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
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.
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.
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Report and Accounts 2019
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 obligations at the reporting date less the fair value of plan assets. The defined
benefit obligations are calculated annually by independent actuaries using the projected unit credit method. The
present value of the defined benefit obligations are 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 net defined benefit cost is allocated amongst participating Group subsidiaries on the basis of pensionable salaries.
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.
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.
135
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
2.22 Provisions
Provisions are recognised when the Group has a present legal or constructive obligation as a result of a past event, it is
probable that the Group will be required to settle that obligation and the amount has been reliably estimated. Provisions
are measured at the Directors’ best estimate of the expenditure required to settle the obligation at the reporting date
and are discounted to present value where the effect is material.
(a) Professional indemnity claims
Provisions on professional indemnity claims are recognised when it is probable that the Group will be required to settle
claims against it as a result of a past event and the amount of the obligation can be reliably estimated. 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
Up to 31 December 2018, the Group recognised a provision when 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.
From 1 January 2019, following the adoption of IFRS16, circumstances previously represented as onerous lease
contracts are reflected as a reduction in the carrying value of the right-of-use asset as explained in Note 2.26.
(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.
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Report and Accounts 2019
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.
(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.
137
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
2.23 Revenue continued
(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.
(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
As explained below in Note 2.26, the Group has revised its accounting policy for leases where the Group is the lessee
following the adoption of IFRS 16 on 1 January 2019.
The Group enters into lease agreements for the use of buildings, equipment and motor vehicles. Lease terms are
negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do
not impose any covenants other than the security interests in the leased assets that are held by the lessor. Leased
assets may not be used as security for borrowing purposes.
Until the 2018 financial year, leases of property, plant and equipment were classified as either finance leases or
operating leases, see note 32 for details. From 1 January 2019, following the adoption of IFRS 16, leases are recognised
as a right-of-use asset and a corresponding lease liability for future lease payables at the date at which the leased asset
is available for use by the Group. 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.
138
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Report and Accounts 2019
Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net
present value of the following lease payments:
fixed payments (including in-substance fixed payments), less any lease incentives receivable
variable lease payment that are based on an index or a rate, initially measured using the index or rate as at the
commencement date
amounts expected to be payable by the Group under residual value guarantees
the exercise price of a purchase option if the Group is reasonably certain to exercise that option, and
payments of penalties for terminating the lease, if the lease term reflects the Group exercising that option.
Lease payments to be made under reasonably certain extension options are also included in the measurement of
the liability.
The lease payments are discounted using the interest rate implicit in the lease. If that rate cannot be readily determined,
which is generally the case for leases in the Group, the lessee’s incremental borrowing rate is used, being the rate that
the individual lessee would have to pay to borrow the funds necessary to obtain an asset of similar value to the right-of-
use asset in a similar economic environment with similar terms, security and conditions.
The Group is exposed to potential future increases in variable lease payments based on an index or rate, which are not
included in the lease liability until they take effect. When adjustments to lease payments based on an index or rate take
effect, the lease liability is reassessed and adjusted against the right-of-use asset.
Lease payments are allocated between principal and interest cost. The finance cost is charged to the income statement
over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for
each period.
Right-of-use assets are measured at cost comprising the following:
the amount of the initial measurement of lease liability
any lease payments made at or before the commencement date less any lease incentives received
any initial direct costs, and
restoration costs.
Right-of-use assets are generally depreciated over the shorter of the asset's useful life and the lease term on a straight-
line basis. If the Group is reasonably certain to exercise a purchase option, the right-of-use asset is depreciated over the
underlying asset’s useful life. 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.
Payments associated with short-term leases of equipment and vehicles and all leases of low-value assets are recognised
on a straight-line basis as an expense in profit or loss in accordance with IFRS 16 p.5. Short-term leases are leases with a
lease term of 12 months or less. Low-value assets comprise IT equipment and small items of office furniture.
Extension and termination options are included in a number of property and equipment leases across the Group. These
are used to maximise operational flexibility in terms of managing the assets used in the Group’s operations. The majority
of extension and termination options held are exercisable only by the Group and not by the respective lessor.
139
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
2.24 Leases continued
Accounting policy applied prior to 1 January 2019
Under IAS 17 (prior to transition to IFRS 16), leases of property, plant and equipment where the Group has substantially
all the risks and rewards of ownership were classified as finance leases. Finance lease assets were 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 were 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 were included as liabilities in the statement of financial
position. Leasing payments comprise capital and finance elements and the finance element was charged to the
income statement.
The annual payments under all other lease agreements (operating leases) were 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
were also spread on a straight-line basis over the lease term.
A lease was 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 2019 are as follows:
IFRS 16, ‘Leases’, replaces IAS 17 that relates to the classification, measurement and recognition of leases with the
objective of ensuring that lessees and lessors provide relevant information that represents those transactions. The
standard is effective for the Group from 1 January 2019.
The Group applies the simplified transition approach and will not restate comparative amounts for the year prior to first
adoption. Right-of-use assets have been 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).
The Group’s activities as a lessor are not material and hence there is no significant impact on the financial statements
with respect to sub-leasing activities.
On adoption of IFRS 16, the Group recognised lease liabilities in relation to leases which had previously been classified
as ‘operating leases’ under the principles of IAS 17 Leases. These liabilities were measured at the present value of the
remaining lease payments, discounted using the lessee’s incremental borrowing rate as of 1 January 2019. The weighted
average lessee’s incremental borrowing rate applied to the lease liabilities on 1 January 2019 was 3.36%.
For leases previously classified as finance leases, the Group recognised the carrying amount of the lease asset and lease
liability immediately before transition as the carrying amount of the right of use asset and the lease liability at the date
of initial application. The measurement principles of IFRS 16 are only applied after that date.
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Savills plc
Report and Accounts 2019
Practical expedients applied
In applying IFRS 16 for the first time, the Group has used the following practical expedients permitted by the standard:
applying a single discount rate to a portfolio of leases with reasonably similar characteristics for example leases of
similar assets, in the same geographic area with consistent length of lease term
relying on previous assessments on whether leases are onerous as an alternative to performing an impairment review
accounting for operating leases with a remaining lease term of less than 12 months as at 1 January 2019 as short-term
leases
excluding initial direct costs for the measurement of the right-of-use asset at the date of initial application, and
using hindsight in determining the lease term where the contract contains options to extend or terminate the lease.
The Group has also elected not to reassess whether a contract is, or contains a lease at the date of initial application.
Instead, for contracts entered into before the transition date the Group relied on its assessment made applying IAS 17
and IFRIC 4 Determining whether an Arrangement contains a Lease.
The table below reconciles the measurement of lease liabilities upon transition with reference to operating lease
commitments disclosed at 31 December 2018.
Operating lease commitments disclosed as at 31 December 2018
(Less): short-term leases recognised on a straight-line basis as expense
Add: adjustments as a result of a different treatment of extension
and termination options
(Less): adjustments for leases committed but not yet commenced
Discounted using the lessee’s incremental borrowing rate at the date
of initial application
Lease liability recognised as at 1 January 2019
Of which are:
Current lease liabilities
Non-current lease liabilities
Group
£m
354.0
(5.4)
0.9
(5.2)
(46.6)
297.7
45.2
252.5
297.7
Company
£m
96.4
–
–
–
(18.8)
77.6
4.6
73.0
77.6
The associated right-of-use assets for certain property leases were measured on a retrospective basis as if the new
rules had always been applied. Other right-of use assets were measured at the amount equal to the lease liability,
adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the balance sheet
as at 31 December 2018.
The recognised right-of-use assets relate to the following types of assets:
Leasehold properties
Equipment and motor vehicles
Total right-of-use assets
Group
Company
31 December
2019
£m
1 January
2019
£m
31 December
2019
£m
1 January
2019
£m
221.8
4.4
226.2
253.0
4.3
257.3
58.7
–
58.7
60.6
–
60.6
141
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
2. Accounting policies continued
2.26 Adoption of standards, amendments and interpretations to standards continued
Practical expedients applied continued
The change in accounting policy affected the following items in the balance sheet on 1 January 2019:
Group
Company
1 January 2019
– pre IFRS 16
£m
Application of
IFRS 16
£m
1 January 2019
– Restated
£m
1 January 2019
– pre IFRS 16
£m
Application of
IFRS 16
£m
1 January 2019
– Restated
£m
Right of use assets
Trade and other receivables
Trade and other payables
Lease liabilities (current)
Provisions (current)
Trade and other payables (non-current)
Lease liabilities (non-current)
Provisions (non-current)
Retained Earnings
–
528.3
629.1
–
8.4
38.2
–
12.8
286.5
257.3
4.5
(10.8)
45.2
(0.6)
(14.7)
252.5
(0.5)
(9.3)
257.3
532.8
618.3
45.2
7.8
23.5
252.5
12.3
277.2
–
22.3
26.1
–
1.2
–
–
–
86.5
60.6
–
(10.7)
4.6
–
–
73.0
–
(6.3)
60.6
22.3
15.4
4.6
1.2
–
73.0
–
80.2
Earnings per share decreased by 2.6p per share for the year ended 31 December 2019 as a result of the adoption of
IFRS 16.
Standards, amendments and interpretations endorsed by the EU and mandatorily effective for the first time for the
financial year beginning 1 January 2019 that are not relevant or considered to have a significant impact on the Group
and its financial statements include the following:
IFRIC 23 New Interpretation
Uncertainty over Income Tax Treatments
Amendments to IFRS 9
Prepayment Features with Negative Compensation
Amendments to IAS 28
Long-term Interests in Associates and Joint Ventures
Amendments to IAS 19
Plan Amendment, Curtailment or Settlement
AIP Amendments to IFRS 3
Previously held Interests in a joint operation
AIP Amendments to IFRS 11
Previously held Interests in a joint operation
AIP Amendments to IAS 12
Income tax consequences of payments on financial instruments classified as equity
AIP Amendments to IAS 23
Borrowing costs eligible for capitalisation
There are no other standards that are not yet effective and that would be expected to have a material impact on the
entity in the current or future reporting periods and on foreseeable future transactions.
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Report and Accounts 2019
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
2019
Estimated impact on post-tax profit
Euro
Hong Kong dollar
US dollar
Estimated impact on components of equity
Euro
Hong Kong dollar
US dollar
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
3.3 Interest rate risk
Movement of currency against sterling
-10.0%
-5.0%
+5.0%
+10.0%
(1.6)
(1.0)
(0.9)
0.4
(14.2)
(16.6)
(1.0)
(1.7)
(0.7)
1.0
(13.8)
(18.0)
(0.8)
(0.5)
(0.5)
0.2
(7.5)
(8.7)
(0.5)
(0.9)
(0.4)
0.6
(7.2)
(9.4)
0.9
0.6
0.5
(0.2)
8.2
9.6
0.6
1.0
0.4
(0.6)
8.0
10.4
2.0
1.2
1.1
(0.5)
17.4
20.2
1.3
2.1
0.9
(1.3)
16.9
22.0
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.
143
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
3. Financial risk management continued
3.3 Interest rate risk continued
For the year ended 31 December 2019, 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
2019
Estimated impact on post-tax profit and equity
2018
Estimated impact on post-tax profit and equity
£m
2019
Increase in interest rates
+0.5%
+1.0%
+1.5%
+2.0%
0.2
0.5
0.7
0.8
1.1
1.2
1.6
1.6
Decrease in interest rates
-0.5%
-1.0%
-1.5%
-2.0%
Estimated impact on post-tax profit and equity
(0.6)
(1.1)
(1.4)
(1.1)
2018
Estimated impact on post-tax profit and equity
(0.3)
(0.3)
0.1
0.4
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
2019. Refer to Note 21 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
144
2019
£m
45.1
23.4
91.3
22.6
27.5
209.9
2018
£m
25.7
55.4
101.8
17.0
24.0
223.9
Savills plc
Report and Accounts 2019
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 24) and cash and cash equivalents (Note 22) 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
2019
Borrowings
Lease liabilities
Derivative financial instruments
Trade and other payables
2018
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
33.4
45.3
0.1
524.0
602.8
0.4
–
0.1
563.8
564.3
–
54.9
–
15.2
70.1
–
0.1
–
30.8
30.9
–
84.7
–
2.5
87.2
–
–
–
8.4
8.4
148.0
104.9
–
0.5
253.4
149.6
–
–
0.2
149.8
3.6 Capital risk management
The Group’s objectives when managing capital are:
to safeguard the Group’s ability to provide returns for Shareholders and benefits for other stakeholders; and
to maintain an optimal capital structure to reduce the cost of capital.
The Group’s overall strategy remains unchanged from 2018.
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 2019. The Savills Investment Management Group has regulated entities in the UK, Jersey,
Luxembourg, Germany, Italy, Japan, Singapore, 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.
145
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
3. Financial risk management continued
3.6 Capital risk management continued
The Board has put in place a distribution policy which takes into account the degree of maintainability of the Group’s
different profit streams and the Group’s overall exposure to cyclical Transaction Advisory profits, as well as the
requirement to maintain a certain level of cash resources for working capital and corporate development purposes.
The Board will recommend an ordinary dividend broadly reflecting the profits derived from the Group’s less volatile
businesses. In addition, when profits from the cyclical Transaction Advisory business are strong, the Board will consider
and, if appropriate, recommend the payment of a supplemental dividend alongside the final ordinary dividend. The
value of any such supplemental dividend will vary depending on the performance of the Group’s Transaction Advisory
business and the Group’s anticipated working capital and corporate development requirements through the cycle. It is
intended that, in normal circumstances, the combined value of the ordinary and supplemental dividends declared in
respect of any year are covered at least 1.5 times by statutory retained earnings and/or at least 2.0 times by underlying
profits after taxation. The Group complied with this policy throughout the year.
The Group’s policy is to borrow centrally, if required, to meet anticipated funding requirements. These borrowings,
together with cash generated from operations, are then on-lent or contributed as equity to certain subsidiaries. The
Board of Directors monitors a number of debt measures on a rolling forward 12-month basis including: gross cash by
location; gross debt by location; cash subject to restrictions; total debt servicing cost to operating profit; gross
borrowings as a percentage of EBITDA (earnings before interest, tax, depreciation and amortisation); and forecast
headroom against available facilities. These internal measures indicate the levels of debt that the Group has and are
closely monitored to ensure compliance with banking covenants and to confirm that the Group has sufficient unused
facilities. The Group complied with all banking covenants throughout the year and met all internal counterparty
exposure limits set by the Board.
The capital structure is as follows:
£m
Equity
Cash and cash equivalents
Bank overdrafts
Borrowings
Net cash
Group
Company
2019
503.0
209.9
(0.1)
(181.3)
28.5
2018
505.0
223.9
–
(150.0)
73.9
2019
219.5
83.1
–
–
83.1
2018
224.7
90.2
–
–
90.2
146
Savills plc
Report and Accounts 2019
3.7 Categories of financial instruments
Financial assets:
Financial assets at FVOCI
Trade and other receivables
Derivative financial instruments
Cash and cash equivalents
Total financial assets
Financial liabilities:
Borrowings
Lease liabilities
Trade and other payables
Derivative financial instruments
Total financial liabilities
3.8 Fair value estimation
Financial
assets at
FVOCI
2019
£m
Financial
assets at
amortised
cost
2019
£m
Financial
assets at
FVPL 2019
£m
Total
carrying
amount
2019
£m
Financial
assets at
FVPL 2018
£m
Financial
assets at
FVOCI
2018
£m
Financial
assets at
amortised
cost
2018
£m
Total
carrying
amount
2018
£m
–
–
0.2
–
0.2
32.6
–
32.6
–
–
–
32.6
505.9
505.9
–
209.9
715.8
0.2
209.9
748.6
–
–
0.1
–
0.1
31.2
–
31.2
–
–
–
31.2
470.4
470.4
–
223.9
694.3
0.1
223.9
725.6
Financial
liabilities at
FVPL 2019
£m
Financial
liabilities at
amortised cost
2019
£m
Total carrying
amount
2019
£m
Financial
liabilities at
FVPL 2018
£m
Financial
liabilities at
amortised cost
2018
£m
Total carrying
amount
2018
£m
–
–
–
0.1
0.1
181.4
267.1
540.9
–
989.4
181.4
267.1
540.9
0.1
989.5
–
–
–
0.1
0.1
150.0
150.0
–
602.0
–
752.0
–
602.0
0.1
752.1
The following table presents the Group’s assets and liabilities that are measured at fair value at 31 December 2019:
£m
2019
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
0.8
–
–
0.8
–
–
–
6.9
0.2
7.1
0.1
0.1
–
24.9
–
24.9
–
–
0.8
31.8
0.2
32.8
0.1
0.1
147
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
3. Financial risk management continued
3.8 Fair value estimation continued
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
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.
Unlisted equity securities, where cost has been determined as the best approximation of fair value, the fair value
estimates is 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 2019.
Opening balance 1 January 2019
Additions
Disposal
Closing balance 31 December 2019
Unlisted equity
securities
£m
19.7
5.3
(0.1)
24.9
148
Savills plc
Report and Accounts 2019
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 2019
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
As at 31 December 2018
Assets
Cash and cash equivalents
Liabilities
Bank overdrafts
Gross financial
assets/
(liabilities)
Amounts
offset in the
balance sheet
Net amount
in the
balance sheet
371.4
(161.5)
209.9
(161.6)
161.5
(0.1)
364.1
(140.2)
223.9
(140.2)
140.2
–
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.
149
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
5. Critical accounting estimates and management judgements continued
5.1 Accounting estimates continued
(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.
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 27.1. 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 31.
g) Estimate involved in determination of the incremental borrowing rate applied in discounting lease liabilities
To determine the incremental borrowing rate, the Group:
where possible, uses recent third-party financing received by the individual lessee as a starting point, adjusted to
reflect changes in financing conditions since third party financing was received
uses a build-up approach that starts with a risk-free interest rate adjusted for credit risk for leases held by the Group,
which does not have recent third party financing, and
makes adjustments specific to the lease, eg term, country, currency and security.
5.2 Management judgements
The following are critical judgements, apart from those involving estimations (which are dealt with separately above),
that the Directors have made in the process of applying the Group’s accounting policies and that have the most
significant effect on the amounts recognised in the financial statements.
a) Non-underlying items
The Group presents underlying profit, earnings and taxation as part of its non-GAAP measures explained in Note 2.2.
These measures involve the exclusion of items that, in the judgement of the Directors, need to be disclosed separately
in order to obtain a clear and consistent presentation of the Group’s underlying performance as they are deemed to be
material, exceptional and/or non-operational by virtue of their nature. Further details of these items disclosed by the
Directors in the reconciliation to underlying profit are detailed in Note 9.
b) Critical judgements in determining the lease term
In determining the lease term, management considers all facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a termination option. Extension options (or periods after termination
options) are only included in the lease term if the lease is reasonably certain to be extended (or not terminated).
The assessment is reviewed if a significant event or a significant change in circumstances occurs which affects this
assessment and that is within the control of the lessee.
c) Accounting of equity investments
The Group holds more than 20% of the equity interest in YOPA Property Ltd and Vucity Ltd. The Group has deemed
that it does not exert significant influence over these investments and has therefore not adopted equity accounting.
Further details are given in Note 19.2.
150
Savills plc
Report and Accounts 2019
6. Revenue from contracts with customers
Revenue of £1.930.0m (2018: £1,761.4m) 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
2019
£m
1.6
7.5
9.1
7.5
1.6
9.1
10.8
10.8
2018
£m
1.3
7.8
9.1
7.8
1.3
9.1
11.1
11.1
An impairment loss on contract assets of £0.2m was recognised in the income statement in the reporting period
(2018: £nil).
Amortisation on contract costs recognised in the income statement amounted to £0.2m (2018 £0.1m).
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 £8.6m.
Revenue recognised in the year from performance obligations satisfied in previous years was not material.
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 2 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, Taiwan, 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,
Taiwan and Thailand.
151
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
7. Segment analysis continued
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 154.
The segment information provided to the GEB for revenue and underlying profit/(loss) for the year ended 31 December
2019 is as follows:
2019
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
94.2
139.1
233.3
127.5
138.6
35.8
174.4
293.0
828.2
12.3
17.8
30.1
5.4
12.4
4.6
17.0
17.3
69.8
180.3
49.6
229.9
38.6
69.6
–
69.6
–
190.1
41.0
231.1
80.9
372.5
–
372.5
–
338.1
684.5
19.4
7.6
27.0
2.9
4.6
–
4.6
–
34.5
12.1
3.7
15.8
0.2
19.2
–
19.2
–
35.2
33.2
–
33.2
35.4
10.6
–
10.6
–
79.2
9.0
–
9.0
7.3
1.8
–
1.8
–
–
–
–
–
–
–
–
–
–
(14.2)
–
(14.2)
–
–
–
–
–
497.8
229.7
727.5
282.4
591.3
35.8
627.1
293.0
1,930.0
38.6
29.1
67.7
15.8
38.0
4.6
42.6
17.3
18.1
(14.2)
143.4
152
Savills plc
Report and Accounts 2019
The segment information provided to the GEB for revenue and underlying profit/(loss) for the year ended 31 December
2018 is as follows:
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**
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
* Revenues of £293.7m (2018: £275.4m) are attributable to the Hong Kong and Macau region.
** Transaction Advisory underlying profit before tax includes depreciation of £29.6m (2018: £7.5m), software amortisation of £1.3m (2018: £1.1m) and
share of post-tax profit from joint ventures and associates of £0.9m (2018: £3.1m). Consultancy underlying profit before tax includes depreciation of
£7.9m (2018: £2.3m), software amortisation of £0.5m (2018: £0.6m) and share of post-tax profit from joint ventures and associates of £0.1m (2018:
£0.2m loss). Property and Facilities Management underlying profit before tax includes depreciation of £15.8m (2018: £3.9m), software amortisation of
£1.0m (2018: £1.1m) and share of post-tax profit from joint ventures and associates of £9.4m (2018: £7.8m). Investment Management underlying profit
before tax includes depreciation of £1.9m (2018: £0.3m) and software amortisation of £0.1m (2018: £0.4m) and share of post-tax gain from associates
of £1.4m (2018: £0.4m). Included in Other underlying loss is depreciation of £5.6 m (2018: £0.9m) and software amortisation of £0.5m (2018: £0.4m).
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.
153
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
7. Segment analysis continued
Inter-segmental revenue is not material. No single customer contributed 10% or more to the Group’s revenue for both
2019 and 2018.
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
2019
£m
283.8
150.3
134.4
196.7
765.2
2018
£m
168.7
119.3
90.9
176.2
555.1
Non-current assets include goodwill and intangible assets, plant, property and equipment, right-of-use assets,
investments in joint ventures and associates and retirement benefits. Financial assets held at FVOCI, non-current other
receivables, non-current contract assets and deferred tax assets are not included.
8. Operating profit
8.1 Operating profit
Operating profit is stated after charging/(crediting):
In depreciation
– Depreciation of right of use assets – leasehold properties
– Depreciation of right of use assets – equipment and motor vehicles
In other operating expenses
– Net foreign exchange (gains)/losses (excluding net losses/(gains) on forward
foreign exchange contracts)
– Net losses/(gains) on forward foreign exchange contracts
– Significant restructuring costs*
– Acquisition-related costs**
– IAS 17 Operating lease costs
– Expense relating to short-term leases
– Expense relating to variable lease payments not included in lease liabilities
In other operating income
– Dividends from equity investments held at FVOCI
Related to investments held at the end of the reporting period
In other gains/losses
– Profit on disposal of joint ventures, associates & other investments
– Profit on disposal of subsidiaries
Group
2019
£m
42.4
1.8
1.4
0.1
11.5
13.7
–
0.9
1.2
(0.5)
(1.5)
(0.2)
2018
£m
–
–
(0.2)
0.2
8.4
20.7
59.1
–
–
(0.1)
(1.0)
(0.4)
* Significant restructuring costs include staff related costs of £ 1.5m (2018: £4.7m), an impairment of right of use assets of £0.5m (2018: £1.2m onerous
contract provisions) and other related restructuring costs of £ 9.5 m (2018: £2.5m) arising primarily from costs incurred in rebranding the North
American business to and the final reorganisation within the ex SEB German Investment management business (2018: integration of the Aguirre
Newman and Cluttons Middle East acquisitions).
** Refer to Note 9 for a further breakdown of acquisition-related costs.
154
Savills plc
Report and Accounts 2019
8.2 Fees payable to the Company’s auditors, PricewaterhouseCoopers LLP, and its associates
audit services
Fees payable to the Company’s auditors for the audit of parent Company
Fees payable to the Company’s auditors for the audit of the Company’s subsidiaries
Audit-related assurance services
Transaction advisory services
Other assurance services
Total
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
Group
2019
£m
0.4
1.8
2.2
0.2
–
–
0.2
2.4
2019
£m
115.6
6.9
–
(2.6)
(1.7)
11.5
13.7
–
143.4
2018
£m
0.3
1.7
2.0
0.1
0.8
0.1
1.0
3.0
2018
£m
109.4
6.6
0.3
(1.9)
(2.9)
8.4
20.7
3.1
143.7
In the prior year, a £0.3m impairment charge was recognised relating to acquired investment management contracts.
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 proceeds received in relation to legacy real estate funds
in North America and disposal of a portion of the Group's holding in a joint venture in China (Beijing Jiaming Savills
Property Management Company Ltd). In the prior year, profit on disposal included profits recognised in relation to the
disposals of subsidiaries (100% of Savills Asset Management Pte Ltd and 80.5% of FPD Property Services (India) Private
Ltd (Savills India), 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.
155
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
9. Underlying profit before tax continued
Restructuring costs includes costs of integration activities in relation to significant business acquisitions. Charges in the
year primarily relate to costs incurred in rebranding the North American business to Savills in line with the original
integration plan and the final reorganisation within the German Investment management business associated with the
SEB acquisition of 2015. In the prior year, costs related to the integration of Aguirre Newman in Spain and Cluttons
Middle East.
Acquisition-related costs include £12.4m (2018: £14.2m) 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
engaged actively in the business at the payment date. These relate to acquisitions in the UK (£5.0m - primarily Currell
Group), North America (£2.9m) and Europe & the Middle East (£4.5m - primarily Aguirre Newman). In the prior year,
these costs related 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 addition, acquisition-related costs includes £0.5m of
unwinding of interest on deferred consideration payments (2018: £1.0m) and £0.8m of transaction costs (2018: £3.3m).
The prior year also included £2.2m for payments in relation to Savills Investment Management’s acquisition of Merchant
Capital (Japan) in May 2014.
The 2018 Guaranteed Minimum Pension (‘GMP’) equalisation charge 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.
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
2019
£m
644.5
466.8
2018
£m
581.8
463.2
1,111.3
1,045.0
80.0
31.5
17.7
71.1
30.7
18.2
1,240.5
1,165.0
2019
£m
9.2
5.9
15.1
2.0
0.5
1.0
18.6
10.2 Staff numbers
The monthly average number of employees (including Directors) for the year was:
United Kingdom
Europe & the Middle East
Asia Pacific
North America
Group
Company
2019
6,388
2,032
29,912
825
39,157
2018
5,955
1,752
28,486
788
36,981
2019
143
–
–
–
143
2018
£m
8.5
5.3
13.8
1.7
0.5
2.1
18.1
2018
133
–
–
–
133
The average number of UK employees (including Directors) during the year included 113 employed under fixed-term
and temporary contracts (2018: 157).
156
10.3 Key management compensation
Key management
– Short-term employee benefits
– Post-employment benefits
– Share-based payments
Savills plc
Report and Accounts 2019
Group
2019
£m
23.2
0.1
2.6
25.9
2018
£m
30.5
0.2
2.6
33.3
The key management of the Group for the year ended 31 December 2019 comprised Executive Directors and the GEB
members. Details of Directors’ remuneration is contained in the Remuneration report on pages 96 to 99.
During the year, seven (2018: eight) GEB members made aggregate gains totalling £2.1m (2018: £5.4m) on the exercise
of options under PSP and DSBP schemes (2018: PSP, DSP and DSBP schemes).
Retirement benefits under the defined benefit scheme are accruing for three (2018: three) GEB members and benefits
are accruing under a defined contribution scheme in Hong Kong for two (2018: two) GEB members.
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 £31.5m (2018: £27.5m). The amount outstanding as at 31
December 2019 in relation to defined contribution schemes is £1.3m (2018: £2.0m).
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 2019 and has been updated to 31 December 2019
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.
157
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
11. Pension schemes continued
11.2 Defined benefit plan continued
A full actuarial valuation of the SFM Plan was carried out as at 31 December 2019 by a qualified independent actuary.
The table below outlines the Group’s and Company’s defined benefit pension amounts in relation to the UK Plan:
Liability/(asset) in the statement of financial position
Past service cost included in employee benefit expense
Net interest (income)/cost included in finance costs
Actuarial (loss)/gain included in other comprehensive income
Group
Company
2019
£m
9.4
–
(0.2)
(21.4)
2018
£m
(2.8)
3.1
0.4
16.8
2019
£m
0.6
–
–
(1.1)
2018
£m
(0.1)
0.2
–
0.9
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
Liability/(asset) recognised in the statement of financial position
Group
Company
2019
£m
309.9
(300.5)
9.4
2018
£m
262.1
(264.9)
(2.8)
2019
£m
17.1
(16.6)
0.5
2018
£m
14.6
(14.7)
(0.1)
158
Savills plc
Report and Accounts 2019
The movement in the defined benefit obligation/(asset) for the UK Plan over the year is as follows:
At 1 January 2019
Interest expense/(income)
Remeasurements:
– Gains on plan assets, excluding
amounts included in interest income
– Loss from change in financial
assumptions
– Gain from change in demographic
assumptions
– Experience losses
Employer contributions
Benefit payments
At 31 December 2019
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
Group
Company
Present value
of obligation
£m
Fair value of
plan assets
£m
262.1
7.5
(264.9)
(7.7)
Total
£m
(2.8)
(0.2)
Present value
of obligation
£m
Fair value of
plan assets
£m
14.6
0.4
(14.7)
(0.4)
Total
£m
(0.1)
–
(1.4)
(1.4)
–
(25.7)
(25.7)
45.0
(2.2)
4.3
–
(6.8)
309.9
–
–
–
(9.0)
6.8
(300.5)
45.0
(2.2)
4.3
(9.0)
–
9.4
–
2.5
(0.1)
0.1
–
(0.4)
17.1
–
–
–
(0.5)
0.4
(16.6)
Group
Company
Present value
of obligation
£m
Fair value of
plan assets
£m
298.2
(278.7)
7.4
3.1
(7.0)
–
Total
£m
19.5
0.4
3.1
Present value
of obligation
£m
Fair value of
plan assets
£m
16.5
0.4
0.2
(15.4)
(0.4)
–
2.5
(0.1)
0.1
(0.5)
–
0.5
Total
£m
1.1
–
0.2
–
21.8
21.8
–
1.2
1.2
(28.8)
(8.0)
(1.8)
–
(8.0)
–
–
–
(9.0)
8.0
262.1
(264.9)
(28.8)
(1.6)
(8.0)
(1.8)
(9.0)
–
(2.8)
(0.4)
(0.1)
–
(0.4)
14.6
–
–
–
(0.5)
0.4
(14.7)
(1.6)
(0.4)
(0.1)
(0.5)
–
(0.1)
159
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
11. Pension schemes continued
11.2 Defined benefit plan continued
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
2019
£m
0.8
–
1.3
2018
£m
0.3
0.1
1.1
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.
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
SFM Plan
2019
£m
14.6
(13.8)
0.8
The movement in the defined benefit obligation/(asset) for the SFM Plan over the year is as follows:
At 1 January 2019
Interest expense/(income)
Remeasurements:
– Gains 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 2019
Present value
of obligation
£m
SFM Plan
Fair value
of plan assets
£m
14.0
0.3
–
1.6
0.4
–
(0.9)
(0.8)
14.6
(13.7)
(0.3)
(0.7)
–
–
(0.8)
0.9
0.8
(13.8)
2018
£m
14.0
(13.7)
0.3
Total
£m
0.3
–
(0.7)
1.6
0.4
(0.8)
–
–
0.8
160
Savills plc
Report and Accounts 2019
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
The significant actuarial assumptions were as follows:
As at 31 December
Expected rate of salary increases
Projection of social security contribution ceiling
Rate of increase to pensions in payment
– pension promise before 1 January 1986
– pension promise after 1 January 1986
– accrued before 6 April 1997
– accrued after 5 April 1997
– accrued after 5 April 2005
Rate of increase to pensions in deferment
– accrued before 6 April 2001
– accrued after 5 April 2001
– accrued after 5 April 2009
Discount rate
Inflation assumption
SFM Plan
Present value
of obligation
£m
Fair value
of plan assets
£m
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)
Total
£m
(1.3)
0.1
–
1.1
0.1
(0.1)
0.4
–
–
0.3
SFM Plan
UK Plan
2019
2.50%
2.25%
2.25%
1.75%
–
–
–
–
–
–
2018
2.50%
2.25%
2.25%
1.75%
–
–
–
–
–
–
1.39%
1.75%
2.07%
1.75%
2019
3.25%
2018
3.25%
–
–
–
3.00%
3.10%
2.30%
5.00%
2.20%
2.20%
2.00%
3.20%
–
–
–
3.00%
3.20%
2.30%
5.00%
2.30%
2.30%
2.90%
3.40%
161
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
11. Pension schemes continued
11.2 Defined benefit plan continued
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
2019
84.8
88.9
87.6
90.9
2018
85.0
88.6
87.4
90.7
2019
88.2
89.7
89.9
91.4
2018
88.2
89.6
90.0
91.5
The sensitivity of the defined benefit obligations 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
0.7
(6.0)
3.8
0.3
13.0
The sensitivity analysis presented above may not be representative of the actual change in the defined benefit
obligations 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 obligations 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 obligations liability recognised in the statement of financial position.
Plan assets are comprised as follows:
Equity instruments
Liability-driven investment (LDI)
Investment funds
Bonds
Cash and cash equivalents
Asset backed securities
Total
SFM Plan
UK Plan
2019
2018
2019
2018
£m
–
–
%
–
–
£m
–
–
%
–
–
13.8
100%
13.7
100%
–
–
–
–
–
–
–
–
–
–
–
–
£m
–
72.9
31.2
127.6
0.7
68.1
13.8
100%
13.7
100%
300.5
%
–
24%
10%
43%
–
23%
100%
£m
17.1
69.3
67.9
79.3
31.3
–
%
6%
26%
26%
30%
12%
–
264.9
100%
162
Savills plc
Report and Accounts 2019
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 2020 are £0.4m. The
Company expects to contribute £nil.
The weighted average duration of the defined benefit obligations is 20 years for the UK Plan and 17 years for the
SFM Plan.
Expected maturity analysis of the undiscounted pension benefits:
At 31 December 2019
Pension benefit payments
– UK Plan
– SFM Plan
Less than
a year
£m
Between
1–2 years
£m
Between
2–5 years
£m
6.6
0.9
4.7
0.4
17.9
1.0
Over
5 years
£m
464.5
16.4
Total
£m
493.7
18.7
163
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
12. Finance income and costs
Bank interest receivable
Fair value gain
Finance income
Bank interest payable
Unwinding of discounts on liabilities
Finance charges on lease liabilities
Net interest on defined benefit pension obligations
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 20)
Income tax expense
164
Group
2019
£m
6.4
0.1
6.5
(8.4)
(0.8)
(9.3)
0.2
–
(18.3)
(11.8)
Group
2019
£m
13.3
(0.5)
12.8
22.6
0.2
35.6
(2.8)
0.2
(1.3)
0.5
(0.2)
(3.6)
32.0
2018
£m
4.0
0.4
4.4
(5.1)
(1.1)
–
(0.4)
(0.1)
(6.7)
(2.3)
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
Savills plc
Report and Accounts 2019
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% (2018: 19%) applicable to profits of the consolidated entities as follows:
Profit before income tax
Tax on profit at 19% (2018: 19%)
Effects of:
Adjustment in respect of prior years
Difference in overseas 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
2019
£m
115.6
22.0
(0.5)
4.2
(0.4)
8.4
(2.4)
0.7
32.0
2018
£m
109.4
20.8
0.4
4.3
–
8.6
(2.2)
0.3
32.2
The effective tax rate of the Group for the year ended 31 December 2019 is 27.7% (2018: 29.4%), which is higher (2018:
higher) than the UK weighted average applicable rate.
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:
Group
Company
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
Current tax on IFRS16 initial lease recognition release
Deferred tax on additional pension contributions
Deferred tax on pension – effect of tax rate change
Deferred tax on employee benefits
Deferred tax on foreign exchange reserves
Deferred tax on IFRS16 recognition and release
Tax on items relating to components of other
comprehensive income
2019
£m
4.4
4.4
2.3
0.2
1.7
(0.2)
(1.7)
(0.2)
–
0.1
1.6
3.8
8.2
2018
£m
(2.8)
(2.8)
2.4
0.3
1.7
–
(1.7)
–
(3.1)
0.1
–
(0.3)
(3.1)
2019
£m
0.2
0.2
0.5
–
0.1
(0.1)
(0.1)
–
(0.1)
–
1.1
1.4
1.6
2018
£m
(0.2)
(0.2)
0.6
–
0.1
-
(0.1)
–
(0.6)
–
–
–
(0.2)
165
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
14. Dividends – Group and Company
Amounts recognised as distribution to equity holders in the year:
In respect of the previous year
Ordinary final dividend of 10.8p per share (2017: 10.45p)
Supplemental interim dividend of 15.6p per share (2017: 15.1p)
In respect of the current year
Interim dividend of 4.95p per share (2018: 4.8p)
Group
2019
£m
14.8
21.3
6.7
42.8
2018
£m
14.3
20.6
6.5
41.4
Company
2019
£m
2018
£m
14.9
21.5
6.9
43.3
14.4
20.7
6.6
41.7
In addition, the Group paid £0.5m (2018: £0.2m) of dividends to non-controlling interests.
The Board recommends a final dividend of 12.05p (net) per ordinary share (amounting to £16.5m) is paid, alongside
the supplemental interim dividend of 15.0p per ordinary share (amounting to £20.5m), to be paid on 12 May 2020
to Shareholders on the register at 14 April 2020. 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 2019 financial year comprises an
aggregate distribution of 32.0p per ordinary share (2018: 31.2p 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, 4,388,054 shares
(2018: 5,502,275 shares) and the Rabbi Trust, 1,602,405 shares (2018: 1,386,356).
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
2019
Earnings
£m
82.9
–
82.9
2019
Shares
million
136.7
4.2
140.9
2019
EPS
pence
60.6
(1.8)
58.8
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
166
Savills plc
Report and Accounts 2019
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
2019
Earnings
£m
82.9
2019
Shares
million
136.7
5.1
–
(2.2)
(1.2)
9.3
12.8
–
106.7
–
106.7
–
–
–
–
–
–
136.7
4.2
140.9
2019
EPS
pence
60.6
3.7
–
(1.6)
(0.9)
6.8
9.4
–
78.0
(2.3)
75.7
2018
Earnings
£m
76.7
4.7
0.3
(1.7)
(2.9)
6.9
19.7
2.5
2018
Shares
million
136.4
–
–
–
–
–
–
–
106.2
–
106.2
136.4
4.0
140.4
2018
EPS
pence
56.2
3.4
0.2
(1.2)
(2.1)
5.1
14.4
1.8
77.8
(2.2)
75.6
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) £6.9m (2018: £6.6m), share-based payment adjustment £2.6m credit (2018: £1.9m credit), restructuring costs
of £11.5 m (2018: £8.4m), net profit on disposals of £1.7m (2018: £2.9m profit) and the acquisition-related costs of £13.7m
(2018: £20.7m).
167
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
16. Goodwill and intangible assets
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
434.5
21.9
42.1
6.9
1.3
26.9
533.6
1.5
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(13.1)
422.9
(0.4)
21.5
(0.7)
41.4
(0.3)
6.6
(0.1)
1.2
–
7.3
(4.7)
(0.4)
1.5
7.3
(4.7)
(15.0)
29.1
522.7
50.7
–
–
(2.0)
48.7
16.1
2.2
–
(0.3)
18.0
15.3
3.8
–
(0.7)
18.4
6.3
0.3
–
(0.2)
6.4
0.7
0.6
–
(0.1)
1.2
12.0
3.5
(3.9)
(0.3)
101.1
10.4
(3.9)
(3.6)
11.3
104.0
374.2
3.5
23.0
0.2
–
17.8
418.7
7.3
–
2.4
(0.4)
–
9.3
2.5
0.5
(0.4)
–
2.6
6.7
Cost
At 1 January 2019
Additions through business
combinations (Note 19.4)
Other additions
Disposals
Exchange movement
At 31 December 2019
Accumulated amortisation and
impairment
At 1 January 2019
Amortisation charge for the year
Disposals
Exchange movement
At 31 December 2019
Net book value
At 31 December 2019
The carrying amount of intangible assets with indefinite useful lives totals £2.9m as at 31 December 2019 (2018: £2.9m),
which consists of investment management contracts in relation to open-ended funds. No impairment charge has been
recognised in 2019 (2018: £0.3m 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.
168
Savills plc
Report and Accounts 2019
The Company’s intangible assets consist of computer software only.
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
Cost
At 1 January 2018
402.7
23.6
27.1
6.5
1.3
24.4
485.6
Additions through business
combinations
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
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
383.8
5.8
26.8
–
–
–
0.4
6.9
4.7
1.4
–
–
0.2
6.3
0.6
–
–
–
–
1.3
–
0.6
–
–
0.1
0.7
11.2
3.7
–
(2.9)
–
97.9
10.3
0.3
(9.5)
2.1
12.0
101.1
0.6
14.9
432.5
–
5.9
40.5
5.9
(3.4)
(10.0)
(1.0)
–
26.9
11.6
533.6
–
7.3
5.8
–
2.5
3.1
0.4
–
(1.0)
–
2.5
4.8
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:
2019
United Kingdom
Europe & the Middle East
Asia Pacific
North America
Total goodwill and indefinite life intangible assets
2018
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
59.6
14.7
150.7
253.7
11.9
19.0
4.7
–
35.6
30.9
18.4
29.5
–
78.8
2.0
4.7
2.3
–
9.0
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
Total
£m
73.5
101.7
51.2
150.7
377.1
Total
£m
71.9
106.2
52.6
156.0
386.7
169
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
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, adjusted to incorporate cash flows arising from leases held. Cash flows beyond the five-year period are
extrapolated using a terminal value. There was no impairment charge for goodwill and intangible assets arising from
the annual impairment testing (2018: £0.3m relating to an indefinite life investment management contract, which has
been fully impaired).
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
Middle East
(c) Long-term growth rate
2019
Discount rate range
2018
Discount rate range
8.2%–11.1%
8.0%–13.1%
8.1%–9.6%
8.2%–8.3%
8.5%
9.3%–12.2%
7.9%–13.1%
7.7%–11.2%
9.3%–9.8%
n/a
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
Middle East
2019
Long-term growth
rate range
2018
Long-term growth
rate range
1.8%–2.0%
0.8%–3.0%
0.6%–5.9%
1.6%–1.8%
2.5%
1.6%–2.0%
0.8%–3.0%
0.6%–5.9%
1.7%–1.8%
n/a
16.3 Sensitivity to changes in assumptions
The level of impairment is a reflection of best estimates in arriving at value-in-use, future growth rates and the discount
rate applied to cash flow projections. Nonetheless, there are no CGUs for which management considers a reasonable
possible change in a key assumption would give rise to an impairment.
170
Savills plc
Report and Accounts 2019
Future impairments on goodwill and intangible assets relating to any of the Group’s investments may be impacted by
the following factors:
Market conditions – the expectations for future market conditions are key assumptions in the determination of the
cash flow projections. For the purposes of the impairment tests, management expects the markets to remain stable.
Cost base – the cost base assumptions reflect 2019’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 2019
Additions
Disposals
Exchange movement
At 31 December 2019
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
Disposals
Exchange movement
At 31 December 2019
Net book value
At 31 December 2019
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
–
0.1
–
–
–
–
–
75.4
4.3
(4.3)
(0.9)
74.5
30.0
7.0
(4.2)
(0.4)
32.4
67.1
11.9
(11.6)
(1.9)
65.5
41.1
9.4
(10.7)
(1.0)
38.8
Total
£m
142.6
16.2
(15.9)
(2.8)
140.1
71.1
16.4
(14.9)
(1.4)
71.2
0.1
42.1
26.7
68.9
The Directors consider that the fair value of property, plant and equipment approximates carrying value.
Group
Cost
At 1 January 2018
Additions through business combinations
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
171
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
17. Property, plant and equipment continued
Company
Cost
At 1 January 2019
Additions
Disposals
Transfer from Group Company
At 31 December 2019
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
Disposals
At 31 December 2019
Net book value
At 31 December 2019
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
172
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
–
0.1
–
–
–
–
–
–
–
–
0.7
0.7
–
–
–
–
–
7.9
1.4
(2.1)
–
7.2
–
6.4
1.0
(2.1)
5.3
Total
£m
8.0
1.4
(2.1)
0.7
8.0
–
6.4
1.0
(2.1)
5.3
0.1
0.7
1.9
2.7
Freehold
property
£m
Short
leasehold
property
£m
Equipment
and motor
vehicles
£m
0.1
–
–
0.1
–
–
–
–
0.1
–
–
–
–
–
–
–
–
–
Total
£m
7.3
0.8
(0.1)
8.0
5.6
0.9
(0.1)
6.4
7.2
0.8
(0.1)
7.9
5.6
0.9
(0.1)
6.4
1.5
1.6
Savills plc
Report and Accounts 2019
18. Right of use assets
As explained in Note 2.26, the Group has revised its accounting policy for leases where the Group is the lessee following
the adoption of IFRS 16 on 1 January 2019. The balance sheet shows the following amounts relating to Right of use assets:
Group
Cost
At 1 January 2019
Change in accounting policy (IFRS 16 adoption Note 2.26)
At 1 January 2019 restated
Additions
Disposals
Exchange movement
At 31 December 2019
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
Impairment
Disposals
Exchange Movements
At 31 December 2019
Net book value
At 31 December 2019
Company
Cost
At 1 January 2019
Change in accounting policy (IFRS 16 adoption Note 2.26)
At 1 January 2019 restated
Additions
Disposals
At 31 December 2019
Accumulated depreciation and impairment
At 1 January 2019
Charge for the year
At 31 December 2019
Net book value
At 31 December 2019
Leasehold
properties
£m
Equipment
and motor
vehicles
£m
Total right
of use assets
£m
–
253.0
253.0
16.6
(0.8)
(5.2)
263.6
–
42.4
0.5
(0.4)
(0.7)
41.8
221.8
–
4.3
4.3
2.3
(0.1)
(0.3)
6.2
–
1.8
–
–
–
1.8
4.4
–
257.3
257.3
18.9
(0.9)
(5.5)
269.8
–
44.2
0.5
(0.4)
(0.7)
43.6
226.2
Leasehold
properties
£m
Equipment
and motor
vehicles
£m
Total right
of use assets
£m
–
60.6
60.6
2.8
–
63.4
–
4.7
4.7
58.7
–
–
–
–
–
–
–
–
–
–
–
60.6
60.6
2.8
–
63.4
–
4.7
4.7
58.7
In the previous year, the Group only recognised lease assets and lease liabilities in relation to leases that were classified
as ‘finance leases’ under IAS 17 Leases. The assets were presented in property, plant and equipment and the liabilities
as part of the Group’s borrowings. For adjustments recognised on adoption of IFRS 16 on 1 January 2019, please refer
to Note 2.26.
173
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
19. Investments and transactions
19.1 Group – Investments in joint ventures and associates
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Loans
£m
Goodwill
£m
Total
£m
10.7
2.0
(0.4)
(0.4)
11.9
10.6
7.8
(6.8)
(0.4)
11.2
2.3
–
–
0.5
–
2.8
–
–
–
–
–
13.0
2.0
(0.4)
0.5
(0.4)
14.7
2.5
0.1
–
–
(0.1)
2.5
10.6
7.4
7.8
(6.8)
(0.4)
11.2
4.0
(3.7)
(0.2)
7.5
–
–
–
0.6
–
0.6
–
–
–
–
–
14.8
–
–
–
0.1
14.9
–
–
–
–
–
17.3
0.1
–
0.6
–
18.0
7.4
4.0
(3.7)
(0.2)
7.5
23.1
2.8
25.9
10.0
0.6
14.9
25.5
Joint ventures
Associates
Investment
£m
Loans
£m
Total
£m
Investment
£m
Loans
£m
Goodwill
£m
Total
£m
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
2.1
–
0.5
(0.2)
(0.2)
1.1
0.4
13.0
10.3
6.0
(5.8)
(0.4)
0.5
10.6
–
0.1
2.5
7.5
5.1
(5.4)
–
0.2
7.4
9.9
21.3
2.3
23.6
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
0.3
–
14.5
–
–
–
14.8
–
–
–
–
–
–
2.4
–
15.0
(0.2)
–
0.1
17.3
7.5
5.1
(5.4)
–
0.2
7.4
14.8
24.7
Cost or valuation
At 1 January 2019
Additions
Disposals
Loans advanced
Exchange movement
At 31 December 2019
Share of profit
At 1 January 2019
Group’s share of profit from continuing
operations
Dividends received
Exchange movement
At 31 December 2019
Total
At 31 December 2019
Cost or valuation
At 1 January 2018
Additions through business combinations
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
174
Savills plc
Report and Accounts 2019
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.
19.2 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*
Aomi Project TMK
Savills IM Japan Value Fund II
Euro V
Prime London Residential Development Fund II
Cordea Savills UK Property Ventures No. 1 LP
Daishin GK Canal
Prime London Residential Development Fund
Home Click Pte Ltd
Savills Property Services (India) Private Ltd
Greater Tokyo Office Fund
Serviced Land No. 2 LP
Other smaller investments
2019
£m
0.8
15.2
8.0
2.1
1.7
1.6
0.7
0.6
0.5
0.2
0.2
0.2
–
–
0.8
32.6
2018
£m
1.1
12.7
6.0
2.3
2.4
1.4
0.8
0.6
–
0.3
0.2
0.2
2.1
0.3
0.8
31.2
* The Group holds more than 20% of the equity interest in Vucity Ltd and during the year held more than 20% of the equity interest in YOPA Property
Ltd. However, the Group 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.
During the year the Group increased its investment in YOPA Property Ltd and Vucity Ltd at a total cost of £4.5m. New
investments relating to a number of investments in Japan of £0.9m include Daishin GK Canal (£0.5m), and additional
investments were made in Euro V and Savills IM Japan Value Fund II at a total cost of £0.9m. The Group made disposals
of investments totalling £4.5m including partial disposals of Greater Tokyo Office Fund (£2.3m), Savills IM Japan Value
Fund II (£1.4m), and full disposal of its holding in Serviced Land Fund 2 (£0.4m) following the funds liquidation.
During the prior 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 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).
175
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
19. Investments and transactions continued
19.2 Group – Financial assets at fair value through other comprehensive income (‘FVOCI’) continued
Equity investments at FVOCI are denominated in the following currencies:
Sterling
Japanese yen
Hong Kong dollar
Euro
Other
2019
£m
25.6
4.6
0.2
1.8
0.4
32.6
2018
£m
22.0
5.0
2.1
1.6
0.5
31.2
Refer to Note 3.8 for information about methods and assumptions used in determining fair value.
At 31 December 2019 the Group held conditional commitments to co-invest £4.4m in the Savills IM Japan Value Fund II,
£2.7m in Euro V, and £0.2m (2018: £0.2m) in the Cordea Savills UK Property Ventures Fund No. 1 LP.
19.3 Company – Investments in subsidiaries
Cost
At 1 January 2018
Loans advanced
Loans repaid
At 31 December 2018
Loans advanced
Loans repaid
Loans capitalised
Loans transferred to amounts owed by subsidiary undertakings
(Note 21.1)
At 31 December 2019
Refer to Note 36 for a full list of the Group’s subsidiaries.
19.4 Acquisitions of subsidiaries
Shares in Group
undertaking
£m
Loans to Group
undertakings
£m
57.2
–
–
57.2
–
–
24.3
–
81.5
66.5
45.1
(40.0)
71.6
40.0
(35.0)
(24.3)
(52.3)
–
Total
£m
123.7
45.1
(40.0)
128.8
40.0
(35.0)
–
(52.3)
81.5
On 3 June 2019, the Group acquired the trade and assets of KKS Strategy LLP, a London-based workplace consultancy
and design studio. Total acquisition consideration is provisionally determined at £1.5m, all of which was settled on
completion. A further £1.6m is payable over instalments in June 2020, 2021 and 2022 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.
The fair value exercise is in progress and goodwill of £1.5m has been provisionally determined being equal to the cash
consideration paid upon completion. No other assets were identified as part of the fair value exercise undertaken.
2018 Acquisitions
In the year ended 31 December 2018 the Group acquired Cluttons Middle East and the Currell Group along with the
third party property management portfolio of Broadgate Estates Limited. There are no changes to the provisional
fair values in respect of these acquisitions as reported in the Group’s 2018 Annual Report.
176
Savills plc
Report and Accounts 2019
20. 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 are as follows:
The movement on the deferred tax account is shown below:
Group
Company
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
Deferred tax asset – net
2019
£m
23.9
8.8
32.7
(1.2)
(0.9)
(2.1)
30.6
2018
£m
21.3
8.4
29.7
(4.6)
(1.4)
(6.0)
23.7
2.1
0.6
2.7
–
–
–
2.7
2019
£m
2018
£m
Group
Company
At 1 January – asset
Change in accounting policy (IFRS 16 adoption Note 2.26)
At 1 January 2019 (restated)
Amount credited to the income statement (Note 13)
2019
£m
23.7
1.6
25.3
4.3
2018
£m
34.0
–
34.0
0.5
Effect of tax rate change within the income statement (Note 13)
(0.7)
(0.3)
Tax credited/(charged) to other comprehensive income
– Pension asset on actuarial loss/(gain)
– Pension asset on additional contributions
– Pension asset – effect of UK tax rate change within other
comprehensive income
– Employee benefits
– Movement on foreign exchange reserves
– IFRS16 Initial lease recognition released to reserves
Additions through business combinations (Note 19.4)
Disposal of subsidiaries
Exchange movement
At 31 December – asset
4.4
(1.7)
(0.2)
–
0.1
(0.2)
–
–
(0.7)
30.6
(2.8)
(1.7)
–
(3.1)
0.1
–
(3.3)
(0.2)
0.5
23.7
2019
£m
1.4
1.1
2.5
0.3
–
0.2
(0.1)
–
(0.1)
–
(0.1)
–
–
–
2.7
Deferred income tax assets have been recognised for tax loss carry-forwards and other temporary differences to the
extent that the realisation of the related tax benefit through future taxable profits is probable.
177
0.8
0.6
1.4
–
–
–
1.4
2018
£m
2.2
–
–
0.1
–
(0.2)
(0.1)
–
(0.6)
–
–
–
–
–
1.4
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
20. Deferred income tax continued
As at the reporting date the Group did not recognise deferred tax income tax assets of £1.7m (2018: £1.8m) in respect of
losses amounting to £7.3m (2018: £7.8m), of which £0.6m expires within 5 years (2018: £0.2m) and the remaining £6.7m
being carried forward indefinitely against future taxable income (2018: £1.6m).
Tax losses
£m
Retirement
benefits
£m
Revaluations
£m
Employee
benefits
£m
5.7
(0.2)
0.2
6.9
1.0
Total
£m
36.9
(1.0)
2.5
0.7
–
–
–
–
0.1
3.3
–
3.3
1.0
–
–
–
–
(0.2)
4.1
–
0.4
(3.6)
–
0.1
2.4
–
2.4
(0.2)
–
2.7
(0.2)
(0.5)
(0.1)
4.1
–
–
–
–
–
0.2
–
0.2
–
–
–
–
–
–
–
(0.3)
(3.1)
–
–
–
4.8
–
4.8
(2.7)
(3.6)
(0.2)
0.6
29.7
1.6
31.3
2.6
3.3
–
–
–
–
–
(0.6)
2.6
(0.2)
(0.5)
(0.8)
0.2
7.4
35.1
(2.4)
32.7
Accelerated
capital
allowances
£m
Other
including
provisions
£m
2.2
19.6
(0.5)
(2.2)
(0.1)
(0.2)
–
–
–
–
1.6
–
1.6
0.6
–
–
–
–
–
2.2
–
–
(0.2)
0.4
17.4
1.6
19.0
(0.7)
(0.6)
(0.1)
–
–
(0.5)
17.1
Deferred tax assets – Group
At 1 January 2018
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
Change in accounting policy
(IFRS 16 adoption Note 2.26)
Balance at 1 January 2019 (restated)
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)
Effect of UK rate change within other
comprehensive income (Note 13)
Transfer to deferred tax liabilities
Exchange movement
At 31 December 2019
Set-off of deferred tax liabilities pursuant
to set-off provisions
Net Deferred Tax Asset
at 31 December 2019
178
Savills plc
Report and Accounts 2019
Accelerated
capital
allowances
£m
Other
including
provisions
£m
Retirement
Benefits
£m
Intangible
assets
£m
(0.1)
(0.1)
–
–
–
–
(0.2)
0.1
–
–
–
(0.1)
(0.9)
–
0.1
–
–
(0.2)
(1.0)
–
–
–
0.1
(0.9)
–
0.7
(4.9)
3.6
–
0.1
(0.5)
–
–
0.5
–
–
(1.9)
0.9
–
–
(3.3)
–
(4.3)
0.9
(0.1)
–
–
(3.5)
Deferred tax liabilities – Group
At 1 January 2018
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 19.4)
Exchange movement
At 31 December 2018
Tax (charged)/credited to the income statement (Note 13)
Effect of tax rate change within income statement
Transfer from deferred tax assets
Exchange movement
At 31 December 2019
Set-off of deferred tax liabilities pursuant to set-off provisions
Net Deferred Tax Liabilities at 31 December 2019
Net deferred tax asset
At 31 December 2019
At 31 December 2018
Accelerated
capital
allowances
£m
Other including
provisions
£m
Retirement
benefits
£m
Employee
benefits
£m
0.1
0.2
1.5
0.1
Deferred tax assets – Company
At 1 January 2018
Amount (charged)/credited to the income statement
Tax charged to other comprehensive income
(Note 13)
At 31 December 2018
Change in accounting policy (IFRS 16 adoption)
Balance at 1 January 2019 (restated)
Amount (charged)/credited to the income statement
Tax charged to other comprehensive income
(Note 13)
At 31 December 2019
Net deferred tax asset
At 31 December 2019
At 31 December 2018
0.3
–
–
0.3
–
0.3
–
–
0.3
0.3
(0.2)
–
0.1
1.1
1.2
–
(0.1)
1.1
Total
£m
(2.9)
1.5
(4.8)
3.6
(3.3)
(0.1)
(6.0)
1.0
(0.1)
0.5
0.1
(4.5)
2.4
(2.1)
30.6
23.7
Total
£m
2.2
0.1
(0.3)
(0.6)
(0.9)
–
–
–
–
0.1
0.1
1.0
–
1.0
0.3
(0.1)
1.2
1.4
1.1
2.5
0.3
(0.1)
2.7
2.7
1.4
179
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
21. Trade and other receivables
21.1 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
Accrued income
Group
Company
2019
£m
463.0
(25.6)
437.4
–
41.1
48.0
42.3
2018
£m
441.8
(22.6)
419.2
–
32.1
39.8
37.2
568.9
528.3
2019
£m
–
–
–
70.9
–
2.5
–
73.4
2018
£m
–
–
–
7.8
0.1
2.4
–
10.3
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.
Accrued income is expected to be settled within 12 months of the balance sheet date.
The carrying amounts of the Group’s gross trade receivables are denominated in the following currencies:
Sterling
Euro
Hong Kong dollar
US dollar
Australian dollar
Chinese renminbi
Other*
Group
2019
£m
191.5
93.3
51.0
44.0
24.0
26.5
32.7
2018
£m
174.0
86.8
47.8
49.1
28.5
26.9
28.7
463.0
441.8
* 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.
180
Savills plc
Report and Accounts 2019
21.2 Group – Loss allowance/impairment of trade receivables provision
The other classes within trade and other receivables do not contain impaired assets.
The loss allowance provision for trade receivables as at 31 December 2019 and 31 December 2018 was determined as
follows; the expected credit losses below also incorporate forward looking information.
31 December 2019
Expected loss rate
Gross carrying amount (£m)
Loss allowance provision (£m)
31 December 2018
Expected loss rate
Gross carrying amount (£m)
Loss allowance provision (£m)
More than
30 days
past due
More than
60 days
past due
1.5%
58.1
(0.9)
1.9%
31.7
(0.6)
More than
90 days
past due
13.9%
27.3
(3.8)
More than
180 days
past due
49.9%
36.0
(18.0)
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)
Current
0.7%
309.9
(2.3)
Current
0.8%
323.9
(2.5)
Total
5.5%
463.0
(25.6)
Total
5.1%
441.8
(22.6)
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
2019
£m
(22.6)
–
(22.6)
(7.2)
2.4
1.8
2018
£m
(19.9)
0.4
(19.5)
(5.1)
2.4
–
(25.6)
(22.6)
181
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
22. Cash and cash equivalents
Cash at bank and in hand
Short-term bank deposits
Group
Company
2019
£m
168.2
41.7
209.9
2018
£m
192.6
31.3
223.9
2019
£m
83.1
–
83.1
2018
£m
90.2
–
90.2
The carrying value of cash and cash equivalents approximates their fair value.
The effective interest rate on short-term bank deposits as at 31 December 2019 was 2.49% (2018: 1.91%); these deposits
have an average maturity of 30 days (2018: 36 days).
Cash subject to restrictions in Asia Pacific amounts to £34.8m (2018: £34.7m) 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
2019
£m
8.7
55.2
43.7
31.6
20.2
12.9
6.2
8.8
5.0
2018
£m
8.9
62.9
35.4
36.4
36.7
4.8
7.1
9.8
6.6
17.6
209.9
15.3
223.9
2019
£m
83.1
–
–
–
–
–
–
–
–
–
2018
£m
90.1
–
–
–
0.1
–
–
–
–
–
83.1
90.2
* 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.
182
Savills plc
Report and Accounts 2019
23. Trade and other payables
23.1 Trade and other payables – current
Deferred consideration (Note 23.3)
Trade payables
Amounts owed to subsidiary undertakings
Other taxation and social security
Other payables
Accruals
Group
Company
2019
£m
18.1
103.6
–
55.0
54.3
358.9
589.9
2018
£m
15.7
109.4
–
54.2
63.0
386.8
629.1
2019
£m
–
1.7
3.1
0.3
–
8.8
13.9
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.
23.2 Other payables – non-current
Group
Company
Deferred consideration (Note 23.4)
Other payables
23.3 Deferred consideration – current
At 1 January
Reclassification from non-current deferred consideration (Note 23.4)
Additions through business combinations (Note 19.4)
Deferred consideration linked to employment accrued during year
Interest unwind
Deferred consideration paid
Exchange movements
At 31 December
2019
£m
13.1
4.6
17.7
2018
£m
22.1
16.1
38.2
2019
£m
–
–
–
2019
£m
15.7
12.2
–
6.5
0.2
2018
£m
–
1.9
2.5
0.8
0.1
9.3
14.6
2018
£m
–
–
–
2018
£m
21.3
10.7
3.5
3.6
0.6
(16.5)
(24.0)
–
18.1
–
15.7
183
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
23. Trade and other payables continued
23.4 Deferred consideration – non-current
At 1 January
Reclassification to current deferred consideration (Note 23.3)
Additions through business combinations (Note 19.4)
Deferred consideration linked to employment accrued during year
Interest unwind on discounted deferred consideration
Deferred consideration paid
Exchange movements
At 31 December
24. Borrowings
Current
Bank overdrafts
Unsecured bank loans due within one year or on demand
Non-current
Loan notes
Transaction costs (issuance of loan notes and RCF arrangement fees)
Finance leases
2019
£m
22.1
2018
£m
21.6
(12.2)
(10.7)
–
3.0
0.5
–
(0.3)
13.1
Group
2019
£m
0.1
33.3
33.4
150.0
(2.0)
–
148.0
181.4
1.8
8.4
0.5
–
0.5
22.1
2018
£m
–
0.4
0.4
150.0
(0.5)
0.1
149.6
150.0
The Company does not have any borrowings as at 31 December 2019 and 31 December 2018.
In June 2019 the Group amended and extended its existing £360m multi-currency revolving credit facility (‘RCF’) to
include a £90m accordion facility and extend the expiry date from December 2020 to June 2024. As at 31 December
2019 £32.5m (2018: £nil) 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 remaining unsecured bank loans due within one year or on demand reflects a £0.8m working capital loan in
Thailand, which is payable on demand, denominated in Thailand baht and has an effective interest rate of 4.55%.
184
Movements in borrowings are analysed as follows:
Opening amount as at 1 January
Additional borrowings
Repayments of borrowings (including overdraft movement)
Non-cash 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
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.
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
Group
2019
%
7.85
1.67
3.16
Group
2019
£m
180.5
0.9
181.4
Group
2019
£m
45.3
328.0
373.3
Savills plc
Report and Accounts 2019
Group
2019
£m
150.0
158.1
2018
£m
110.2
305.0
(125.2)
(265.2)
(1.5)
181.4
–
150.0
Group
2019
£m
32.6
–
32.6
2018
£m
0.4
0.1
0.5
2018
%
–
4.09
3.16
2018
£m
149.5
0.5
150.0
2018
£m
32.1
360.1
392.2
185
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
25. Lease liabilities
As explained in note 2.26, the Group has revised its accounting policy for leases where the Group is the lessee following
the adoption of IFRS 16 on 1 January 2019. The balance sheet shows the following amount relating to lease liabilities:
As at 1 January 2019
Change in accounting policy (IFRS 16 adoption Note 2.26)
At 1 January 2019 (restated)
Additions – new leases
Repayments of lease liabilities
Unwinding of discount
Exchange Movements
Closing amount as at 31 December 2019
Current
Non-current
26. Derivative financial instruments
2019
Forward foreign exchange contracts – at fair value
Interest rate cap contract – at fair value
2018
Forward foreign exchange contracts – at fair value
Interest rate cap contract – at fair value
2019
Group
£m
-
297.7
297.7
19.7
(54.3)
9.3
(5.3)
267.1
45.3
221.8
Company
£m
-
77.6
77.6
2.8
(7.6)
2.5
-
75.3
5.4
69.9
Group
Assets
£m
Liabilities
£m
0.2
–
0.2
0.1
–
0.1
Group
Assets
£m
Liabilities
£m
0.1
–
0.1
0.1
–
0.1
The Company does not have any derivative financial instruments as at 31 December 2019 and 31 December 2018.
Forward foreign exchange contracts
The gross notional principal amounts of the outstanding forward foreign exchange contracts at 31 December 2019 were
£35.0m (2018: £43.5m). 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.
186
Savills plc
Report and Accounts 2019
27. Provisions
27.1 Provisions
At 1 January 2019
Change in accounting policy
(IFRS 16 adoption Note 2.26)
At 1 January 2019 (restated)
Provided during the year
Utilised during the year
Released during the year
Transfer from Group Company
Total
Less non-current portion
Current portion
2018
Current
Non-current
Total
Professional
indemnity
claims
£m
Dilapidation
provisions
£m
Onerous leases
£m
Restructuring
provision
£m
Group total
£m
Company
£m
11.0
–
11.0
3.1
(1.8)
(0.8)
–
11.5
6.3
5.2
8.0
–
8.0
0.5
(0.2)
(0.5)
–
7.8
6.3
1.5
1.4
(1.1)
0.3
–
(0.1)
–
–
0.2
–
0.2
0.8
–
0.8
3.6
(0.4)
(0.2)
–
3.8
–
3.8
21.2
(1.1)
20.1
7.2
(3.2)
(1.9)
–
23.3
12.6
10.7
–
–
–
–
–
–
1.2
1.2
1.2
–
Professional
indemnity
claims
£m
5.5
5.5
11.0
Dilapidation
provisions
£m
Onerous leases
£m
Restructuring
provision
£m
Group total
£m
Company
£m
1.4
6.6
8.0
0.7
0.7
1.4
0.8
–
0.8
8.4
12.8
21.2
–
–
–
(a) Professional indemnity claims
These arise from various legal actions, proceedings and other claims that are pending against the Group and are based
on reasonable estimates, taking into account the opinions of legal counsel. The nature of the amounts provided in
respect of legal actions, proceedings and other claims is such that the extent and timing of cash flows can be difficult to
estimate and the ultimate liability may vary from the amounts provided. The non-current portion of these provisions is
expected to be utilised within the next two to five years. Included are provisions for claims relating to subsidiaries prior
to their disposal.
(b) Dilapidation provisions
The Group is required to perform dilapidation repairs and in certain instances restore properties to agreed
specifications prior to the properties being vacated at the end of their lease term. These amounts are based on
estimates of repair and restoration costs at a future date and therefore a degree of uncertainty exists over the future
outflows, given that these are subject to repair and restoration cost price fluctuations and the extent of repairs to be
completed. The majority of the non-current portion of these provisions is expected to be utilised within the next two
to 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.
From 1 January 2019, following the adoption of IFRS16, circumstances previously represented as onerous lease
contracts are reflected as a reduction in the carrying value of the right-of-use asset as explained in Note 2.26.
(d) Restructuring provision
This provision comprises termination payments to employees affected by restructuring and lease termination penalties.
187
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
27. Provisions continued
27.2 Employee benefit obligations
In addition to the defined benefit obligations pension scheme disclosed in Note 11.2, the following are included in
employee benefit obligations:
Group
At 1 January 2019
Provided during the year
Re-measurement of long service leave obligation
Utilised during the year
Exchange movements
At 31 December 2019
Total
£m
27.2
4.5
0.5
(4.9)
(0.8)
26.5
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 23).
The Company had £0.1m of employee benefit obligations as at 31 December 2019 (2018: £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
28. 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:
2019
Number of
shares
2018
Number of
shares
202,000,000
202,000,000
143,056,718
142,923,604
Group
2019
£m
16.2
10.3
26.5
2019
£m
5.1
3.6
At 1 January
Issued to direct participants on exercise of options under the
Sharesave Scheme
Issued to direct participants under the Performance Share Plan
At 31 December
2019
Number
of shares
2018
£m
Number
of shares
142,923,604
3.6 141,931,341
87,938
45,176
–
–
820,985
171,278
143,056,718
3.6 142,923,604
2018
£m
15.8
11.4
27.2
2018
£m
5.1
3.6
£m
3.5
0.1
–
3.6
188
Savills plc
Report and Accounts 2019
Each issued, called up and fully paid ordinary share of 2.5p is a voting share in the capital of the Company, is entitled
to participate in the profits of the Company and on winding-up is entitled to participate in the assets of the Company.
As at 31 December 2019, the EBT held 4,388,054 shares (2018: 5,502,275 shares) and the Rabbi Trust held 1,602,405
shares (2018: 1,386,356). 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 2019, the Shareholders gave the Company authority, subject to
stated conditions, to purchase for cancellation up to 14,295,352 of its own ordinary shares (AGM held on 8 May 2018:
14,178,941). Such authority remains valid until the conclusion of the next AGM or 7 August 2020, whichever is the earlier.
29. 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 £17.0m in 2019
(2018: £18.2m). Of the total share-based payments charge, £0.6m (2018: £0.5m) relates to the Sharesave, £8.2m
(2018: £7.1m) relates to DSP schemes and £8.5m (2018: £10.2m) relates to DSBP schemes offset by a credit of £0.3m
(2018: £0.4m expense) relating to PSP schemes
Refer to the Remuneration Report for details of the various schemes, pages 96 to 106.
29.1 Movements in share schemes
2019 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)
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)
Sharesave
awards
1,593
–
(88)
(151)
1,354
640.0
1.8
PSP awards
DSP awards
DSBP awards
542
136
(45)
(155)
478
–
3.3
3,589
1,461
4,082
1,134
(1,059)
(1,130)
(170)
3,821
(87)
3,999
–
1.8
–
1.6
855.8
888.5
618.0
885.4
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
189
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
29. Share-based payment continued
29.2 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 scheme.
The key inputs to determine the fair value of the awards granted under the PSP scheme during 2019 are shown below.
Performance Share Plan: Awards in the year ended 31 December 2019
Share price at grant date
Risk-free rate
Volatility of Savills share price
Correlation of Savills share price to index
Employee turnover
15 April 2019
925.0p
0.9%
22% per annum
55%
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.
The fair values of options granted in the period are shown below.
Grant
DSP 2019
DSBP 2019
DSP 2019
DSP 2019
DSP 2019
DSP 2019
Grant date
Deferred period
Fair value pence
19 December 2018
1 – 3 years
15 April 2019
3 – 5 years
15 April 2019
3 years
9 May 2019
3 – 5 years
16 September 2019
3 – 5 years
1 October 2019
3 years
690.0
917.5
917.5
884.0
897.0
885.5
190
Savills plc
Report and Accounts 2019
30. 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 2019
37.4
(55.4)
304.5
286.5
2.1
34.9
80.1
0.5
117.6
Change in accounting policy
(IFRS 16 adoption Note 2.26)
Balance at 1 January 2019
restated
Profit attributable to owners of
the Company
Other comprehensive income/
(loss)
Employee share option
scheme:
Purchase of treasury shares
Dividends
Disposal of equity investments
at FVOCI
Transactions with
non-controlling interests
Balance at 31 December
2019
–
–
(9.3)
(9.3)
–
–
–
–
–
37.4
(55.4)
295.2
277.2
2.1
34.9
80.1
0.5
117.6
–
–
–
82.9
82.9
–
(15.0)
(15.0)
17.8
–
(14.1)
(42.8)
(14.1)
–
(42.8)
–
–
–
–
–
–
–
0.8
0.8
(0.6)
(0.6)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(21.0)
(0.3)
(21.3)
–
–
–
–
–
–
–
–
–
–
–
–
–
–
(0.8)
(0.8)
–
–
38.5
(50.0)
317.7
306.2
2.1
34.9
59.1
(0.6)
95.5
– Value of services provided
17.8
–
–
– Exercise of options
(16.7)
19.5
(2.8)
*
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 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
Purchase of treasury shares
Dividends
Disposal of equity
investments at FVOCI
Transfer between reserves
Transactions with
non-controlling interests
–
–
–
–
–
(25.1)
–
–
–
–
76.7
76.7
12.5
12.5
–
2.6
–
(41.4)
0.6
(0.4)
18.2
–
(25.1)
(41.4)
0.6
(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.
191
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
31. 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.
32. Operating lease commitments – minimum lease payments
The Group leases various property, equipment and vehicles under lease agreements which were classified as non-
cancellable operating leases up to the 31 December 2018.
From 1 January 2019, following the adoption of IFRS 16, the Group has recognised right-of-use assets for these leases,
except for short-term and low-value leases, and no longer classifies leases as operating or finance leases. See Note 2.26
and Note 18 for further information.
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
Company
2018
£m
7.0
28.1
61.3
96.4
Significant operating leases relate to the various property leases for Savills offices in the UK, Continental Europe & the
Middle East, Asia Pacific and North America. There are no significant non-cancellable sub-leases.
192
Savills plc
Report and Accounts 2019
33. Cash generated from operations
Group
Company
Profit for the year
Adjustments for:
Income tax (Note 13)
Depreciation (Note 17 & 18)
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)
2019
£m
83.6
32.0
60.6
10.4
–
1.4
(1.7)
11.8
2018*
£m
77.2
32.2
14.9
10.3
0.3
0.8
(2.9)
2.3
Share of post-tax profit from joint ventures and associates
(Note 19.1)
(11.8)
(11.1)
Decrease in employee and retirement obligations
Exchange movement on operating activities
Increase/(decrease) in provisions
Charge for share-based compensation (Note 29)
Exercise of share options
Operating cash flows before movements in working capital
(Increase)/decrease in contract assets
Increase/(decrease) in contract liabilities
(Increase)/decrease in trade and other receivables
Increase/(decrease) in trade and other payables
Cash generated from operations
(9.5)
(0.2)
3.4
17.8
–
197.8
(0.2)
–
(50.5)
(14.5)
132.6
(7.0)
(0.6)
(3.2)
18.2
–
131.4
(3.1)
2.8
(33.6)
42.3
139.8
2019
£m
55.6
(2.0)
5.6
0.4
–
–
–
1.3
–
(0.5)
–
1.2
1.0
(16.7)
45.9
–
–
(0.6)
(0.6)
44.6
2018
£m
55.5
(2.1)
0.9
0.4
–
–
–
(1.1)
–
(0.3)
–
(0.6)
2.1
(10.1)
44.7
–
–
(2.3)
1.5
43.9
* 2018 Cash generated from operations has been re-presented to reflect £8.0m of employment-linked deferred consideration payments previously
shown as cash used in investing activities, now shown in cash generated from operations to reflect the requirement for recipients to remain actively
engaged in the business at the payment date.
Foreign exchange movements resulted in a £13.0m decrease in current and non-current trade and other receivables (2018:
£10.9m increase) and a £15.3m decrease in current and non-current trade and other payables (2018: £12.3m increase).
193
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
34. Analysis of cash net of debt
2019
Cash and cash equivalents
Bank overdrafts
Bank loans
Loan notes
Transaction costs (issuance of loan notes and RCF
arrangement fees)
Finance leases
Cash and cash equivalents 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
At 1 January
£m
Cash flows
£m
223.9
–
223.9
(3.7)
(0.1)
(3.8)
(0.4)
(32.9)
(150.0)
0.5
(0.1)
73.9
–
1.5
0.1
(35.1)
Movements
through
business
combinations
and disposals
£m
–
–
–
–
–
–
–
Exchange
movement
£m
At
31 December
£m
(10.3)
–
(10.3)
–
–
–
–
(10.3)
209.9
(0.1)
209.8
(33.3)
(150.0)
2.0
–
28.5
At 1 January
£m
Cash flows
£m
Movements
through
business
combinations
£m
Exchange
movement
£m
At
31 December
£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
–
(1.4)
–
(1.4)
–
–
–
–
9.8
–
9.8
–
–
–
–
(33.1)
(1.4)
9.8
223.9
–
223.9
(0.4)
(150.0)
0.5
(0.1)
73.9
35. Related party transactions
Other than disclosed below and the information provided within the Remuneration Report and Note 10.3 Key
management compensation, there were no significant related party transactions during the year.
(a) Loans to related parties
Loans to joint ventures and associates are disclosed in Note 19.1.
(b) Company transactions
The Company provided corporate function services to its subsidiaries at an arm’s length value of £23.5m (2018: £21.6m).
Dividends of £48.5m were received from subsidiaries during the year (2018: £55.3m). Amounts outstanding to and from
subsidiaries as at 31 December 2019 are disclosed in Notes 21 and 23.
(c) Transactions with associates
In the year the Group received income of £0.2m (2018: £nil) from an associate.
194
Savills plc
Report and Accounts 2019
36. 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 2019, 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.
Fully-owned subsidiary
Incoll Group Pty Ltd
Country of
incorporation
Registered office
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Incoll Management Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Moores Cost Consulting Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills (ACT) Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills (Aust) Holdings Pty Ltd
(ii) Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
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
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills Capital Advisory Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills Investment Management (Australia)
Pty Limited
Australia
Level 36, Gateway, 1 Macquarie Place, Sydney
NSW 2000, Australia
Savills Occupier Services Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills Project Management Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills Project Services (SA) Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Savills Valuations Pty Ltd
Australia
Level 25, 1 Farrer Place, Sydney, NSW 2000
Cluttons Sales SPC
(iv) Bahrain
Savills Middle East Co. S.P.C
Savills Canada, Inc.
Savills Inc.
Savills Services Inc.
Bahrain
Canada
Canada
Canada
Flat/shop: 2802, Building: 2504, Road: 2832,
Block: 428, Area: Al Seef, Manama
Flat/shop: 2804, 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
195
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Fully-owned subsidiary
Guardian Property Services (Shanghai)
Company Ltd
Savills Business Information Technology
(Shenzhen) Limited
Savills Property Services (Beijing)
Company Ltd
Savills Property Services (Chengdu)
Company Ltd
Savills Property Services (Guangzhou)
Company Ltd
China
China
China
China
China
Savills Property Services (Hengqin) Limited
China
Country of
incorporation
Registered office
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
Savills Property Services (Shanghai) Company Ltd China
Unit D, Room 62,Block 3, No.227, Ru Shan Road, Shanghai
Savills Property Services (Tianjin) Company Ltd
China
Savills Property Services (Wuhan) Company Ltd
China
Savills Property Services (Zhuhai) Company Ltd
China
Savills Real Estate Valuation (Beijing) Company Ltd China
Savills Real Estate Valuation (Guangzhou)
Company Ltd
Savills Technology Innovation Services
(Shanghai) Company Ltd
Savills Valuation and Professional
Services (BJ) Ltd
Savills Valuation and Professional
Services (GZ) Ltd
China
China
China
China
Shanghai Shan Mei Real Consulting Limited
China
Shanghai XinMin Equity Investment
Management Co. Ltd
Shenzhen Guardian Property
Management Ltd
Swan Property Services (Beijing)
Company Ltd
China
China
China
Unit 4607, Tianjin World Financial Center, No.2 Dagu
North Road, Xiaobailou Street, Heping District, Tianjin
Unit 08-10, 27th Floor,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
Room 2105, R&F Center, No.10 Hua Xia Road, Zhujiang
New Town, Guangzhou 510623
Room 205, floor 2 west, No. 707 zhangyang road, China
(Shanghai) Pilot Free Trade Zone
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 City
Unit 03, 9/F, China Resources Tower, No.2666, Keyuan
South Road, Nanshan District, Shenzhen, 518000, China
2101 East Tower, Twin Towers, B-12 Jianguomenwai
Avenue, Chaoyang District, Beijing 100022
196
Savills plc
Report and Accounts 2019
Fully-owned subsidiary
Savills CZ s.r.o.
Country of
incorporation
Registered office
Czech Republic Florentinum, Building A, Na Florenci 2116/15, Prague 1,
110 00
Savills Investment Management ApS
Denmark
Østergade 13, 2nd Floor, 1100, København K, Denmark
Cluttons Egypt Consulting JSC
Savills Egypt Consulting JSC
Savills Investment Management SAS
Savills Valuation SAS
Egypt
Egypt
France
France
Building 17, Street 210, Al Maadi, Cairo
Building 17, Street 210, Maadi, Cairo.
54–56 avenue Hoche, 75008 Paris
21 Boulevard Haussmann 75009, Paris, France
Savills Advisory Services GmbH
Germany
Taunusanlage 18, 60325 Frankfurt am Main
Savills Fund Management Holding AG
Germany
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Savills Immobilien Beratungs GmbH
Germany
Taunusanlage 18, 60325 Frankfurt am Main
Savills Immobilien Beteiligungs -GmbH
Germany
Taunusanlage 18, 60325 Frankfurt am Main
Savills Immobilien Management GmbH
Germany
Taunusanlage 18, 60325 Frankfurt am Main
Savills Investment Management (Germany) GmbH Germany
Sonnenstrasse 19, Munich
Martel Maides Limited
Guernsey
1 Le Truchot St Peter Port GUERNSEY GY1 1WD
Parkes & Associates Limited
Guernsey
First Floor, Harbour Court, Les Amballes, St Peter Port,
Guernsey, GY1 1WU
Savills Channel Islands Limited
Guernsey
22 Smith Street, St Peter Port, Guernsey, GY1 2JQ
Bridgewater Management Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
BTHK Property Management Ltd
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
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
East Full Company Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Express Engineering Ltd
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
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
197
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Fully-owned subsidiary
Country of
incorporation
Registered office
Guardian Management Services Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Guardian Mandarin Management Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Guardian Partners Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Guardian Property Agencies Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Guardian Property Management Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hip Kwan Property Management Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Kenda Services Ltd
Kwik Park Ltd
Larry Smith Asia Ltd
Mount Link Services Ltd
Quartey Properties Ltd
Savills (China) Ltd
Savills (Hong Kong) Ltd
Savills Asia Pacific 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
Unit 1009 10/f Chinachem golden Plaza 77 Mody Road
Tsim Sha Tsui East, Kowloon HK
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
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Building Services Ltd
Hong Kong
Savills Design Ltd
Savills Engineering Ltd
Hong Kong
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Savills Guardian (Holdings) Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Savills IM Shanghai Investco Limited
Hong Kong
6/F, International Trade Tower, 348 Kwun Tong Road,
Kowloon, Hong Kong
Savills India Holding Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Indonesia Holding Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Investment Management
(Hong Kong) Limited
Hong Kong
Level 54, Hopewell Centre, 183 Queen's Road East,
Hong Kong
Savills Investment Management Asia Limited
Hong Kong
Level 54, Hopewell Centre, 183 Queen's Road East,
Hong Kong
198
Savills plc
Report and Accounts 2019
Fully-owned subsidiary
Country of
incorporation
Registered office
Savills Management Services Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Philippines Holding Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Project Consultancy Ltd
Hong Kong
Savills Property Management Holdings Ltd
Hong Kong
Savills Property Management Ltd
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Savills Realty Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Regional Services Ltd
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Savills Residence Ltd
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Savills Valuation and Professional Services Ltd
Hong Kong
Room 1208, Cityplaza One, 1111 King’s Road, Taikoo Shing,
Hong Kong
Security and Safety Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Swan Hygiene Services Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Swan Pest Control Services Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Tarrayon Ltd
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
The Peninsular Centre Retailers
Association Ltd
Cluttons (India) Private Limited
Actium
Anateo Ltd
HOK Financial services
Liffey Valley Management Ltd
Mahon Point Management Ltd
Savills Advisory Services (Ireland) Limited
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
(ii)
(ii)
India
Ireland
Ireland
Ireland
Ireland
Ireland
Ireland
Flat no. 333, 3rd Floor, Devika Tower, 6 Nehru Place,
New Delhi 110019
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
Savills Commercial (Ireland) Limited
(ii)
Ireland
33 Molesworth Street, Dublin 2, Ireland
Savills Management Resource Ireland Ltd
Ireland
33 Molesworth Street, Dublin 2, Ireland
199
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Fully-owned subsidiary
Savills Residential (Ireland) Ltd
White Water (Newbridge) Limited
White Water Management Limited
White Water Residential DAC (Designated
Activity Company)
Savills Investment Management SGR S.p.A
Savills Italia S.r.l.
Savills Italy SRL (EUR)
Savills Asset Advisory Company Ltd
Ireland
Ireland
Ireland
Ireland
Italy
Italy
Italy
Japan
Savills Investment Architecture Design GK
Japan
Savills Japan Company Ltd
SIM Real Estate GK
Japan
Japan
Greater Tokyo Office Fund (Jersey) GP Limited
Jersey
Prime London Residential Development
Jersey GP Limited
Prime London Residential Development
Jersey II GP Limited
Savills (Jersey) Ltd
Savills Investment Management
(Jersey) Limited
Jersey
Jersey
Jersey
Jersey
Country of
incorporation
Registered office
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
33 Molesworth Street, Dublin 2, Ireland
via San Paolo 7, 20121 Milan, Italy
Via Manzoni, 37 – 20121 Milano
Via Manzoni, 37 – 20121 Milano
Yurakucho ITOCIA 15/F, 2-7-1 Yurakucho, Chiyoda-ku,
Tokyo 100-0006
3F 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
3F BPR Place Kamiyacho, 1-11-9 Azabudai, 1 Chome-11
Azabudai, Minato-ku, Tokyo 106-0041
3rd Floor Walker House, 28-34 Hill Street, St Helier,
Jersey, JE4 8PN
3rd Floor Walker House, 28-34 Hill Street, St Helier,
Jersey, JE4 8PN
3rd Floor Walker House, 28-34 Hill Street, St Helier,
Jersey, JE4 8PN
19 Halkett Place, St Helier, JE2 4WG
3rd Floor, Walker House, 28-34 Hill St, St Helier,
Jersey, JE4 8PN
Savills IM European Fund V GP S.a.r.l
Luxembourg
10, rue C.M. Spoo
Savills (Macau) Ltd
Macau
Savills Project Consultancy (Macau) Ltd
Macau
Savills Property Management (Macau) Ltd
Macau
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
200
Savills plc
Report and Accounts 2019
Fully-owned subsidiary
Savills (Myanmar) Ltd
Country of
incorporation
Myanmar
Savills Asset and Property Management BV
Netherlands
Registered office
No. 8, Unit 8-A, Centerpoint Towers, No. 65,
Corner of Sule Pagoda Road & Merchant Street,
Kyauktada Township, Yangon
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills Agency B.V.
Savills B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills Building & Project Consultancy B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills Consultancy B.V.
Savills Holdings B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills Investment Management B.V
Netherlands
Vida Building, Kabelweg 57, 1014 BA Amsterdam
Savills Investments B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills Nederland Holdings BV
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills Retail B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Tagis Property Management B.V.
Netherlands
Viñoly Building, Claude Debussylaan 48,
Amsterdam 1082 MD, Netherlands
Savills (NZ) Ltd
Savills (NI) Limited
New Zealand
Level 6, 41 Shortland Street, Auckland Central,
Auckland, 1010
Northern Ireland 2nd Floor, Longbridge House, 16-24 Waring Street,
Belfast, BT1 2DX, Northern Ireland
FPD Management Services Philippines Inc.
Philippines
12/F., Times Plaza Building, United Nations Avenue
corner Taft Avenue, Ermita, Manila 1000 Phlippines
Savills Investment Management SP Z.O.O
Savills Property Management Sp Zoo
Savills Sp z o o
Poland
Poland
Poland
Ul. Miła 2, 00-180, Warszawa, Poland
Al. Jana Pawła II 22, Warszawa
Al. Jana Pawła II 22, Warszawa
201
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Fully-owned subsidiary
Savills Portugal – Consultoria, Lda.
Savills Portugal – Mediaçao Imobiliaria Lda
iProcurePro Pte Ltd
Savills (SEA) Pte Ltd
Country of
incorporation
Portugal
Portugal
Registered office
Praça Marquês de Pombal, 16 – 7º, 1250163 Lisbon
Praça Marquês de Pombal, 16 – 7º, 1250163 Lisbon
Singapore
30 Cecil Street #20-03 Prudential Tower, 049712
Singapore
30 Cecil Street #20-03 Prudential Tower, 049712
Savills (Singapore) Pte Ltd
Singapore
30 Cecil Street #20-03 Prudential Tower, 049712
Savills Investment Management Pte. Limited
Singapore
80 Robinson Road, #02-00, Singapore 068898
Savills Property Management Pte Ltd
Singapore
20 Martin Road #03-01/02 Seng Kee Building, 239070
Savills Residential Pte Ltd
Singapore
30 Cecil Street #20-03 Prudential Tower, 049712
Savills Valuation & Professional Services (S)
Pte Ltd
Singapore
30 Cecil Street #20-03 Prudential Tower, 049712
Savills Korea Advisors Realty Company Ltd
South Korea
Savills Korea Company Ltd
South Korea
13/F Seoul Finance Center, 136 Sejong-daero Jung-gu,
Seoul
13/F Seoul Finance Center, 136 Sejong-daero Jung-gu,
Seoul
Savills Aguirre Newman Arquitectura
Barcelona SAU
Savills Aguirre Newman Arquitectura SA
Savills Aguirre Newman Barcelona SA
Savills Aguirre Newman Consultores, S.A.U
Savills Aguirre Newman Corporate Finance,
S.A.U.
Savills Aguirre Newman S.A.U.
Savills Aguirre Newman Valoraciones y
Tasaciones SA
Savills Consultores Inmobiliarios SA
Savills Investment Management SLU
Loudden Bygg-och Fastighetsservice AB
Savills Förvaltning AB
Savills Investment Management AB
Savills Sweden AB
Spain
Avda. Diagonal 609-615, Barcelona
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Spain
Sweden
Sweden
Sweden
Sweden
Paseo de la Castellana, 81 28046 Madrid
Avda. Diagonal 609-615, Barcelona
Paseo de la Castellana, 81 28046 Madrid
Paseo de la Castellana, 81 28046 Madrid
Paseo de la Castellana, 81 28046 Madrid
Avda. Diagonal 609-615, Barcelona
Paseo de la Castellana, 81 28046 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
202
Savills plc
Report and Accounts 2019
Fully-owned subsidiary
Savills (Taiwan) Ltd
Savills Residential Services (Taiwan) Ltd
Savills Valuation & Professional Services
(Taiwan)
Country of
incorporation
Registered office
Taipei
Taipei
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
(iii) Taipei
21/F, No. 68, Sec. 5, Zhong-Xiao East Road, Taipei 110
Savills (Thailand) Ltd
Thailand
Savills Services (Thailand) Limited
Thailand
990 Abdulrahim Place Building, 26/F, Rama IV Road,
Silom Subdistrict, Bang Rak District, Bangkok
990 Abdulrahim Place Building, 26/F, Rama IV Road,
Silom Subdistrict, Bang Rak District, Bangkok
Savills Real Estate LLC (Dubai)
(iv) United Arab
Emirates
22nd Floor, Arenco Tower, Sheikh Zayed Road,
PO Box 3087 Dubai
Savills Real Estate LLC (Sharjah)
(iv) United Arab
Emirates
2702C, Al Marzouqi Towers, King Faisal Street, UAE
B Bids Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Buckleys Estate Agents Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Chesterfield & Co (Rentals) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
CMS Creative Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Cordea Savillls SLP GP Limited
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh, EH3 6DH
Cordea Savillls SLP II LP
Cordea Savillls SLP LP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
United Kingdom Wemyss House, 3 Wemyss Place, Edinburgh, EH3 6DH
Cordea Savills Investments Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Currell Commercial Limited
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
Currell Management LLP
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
Currell Residential Limited
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
Grosvenor Hill Ventures Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
GTOF Co-Investment GP LLP
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh,
Scotland, EH12 5HD
GTOF Co-Investment LP
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, EH12 5HD
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
203
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Fully-owned subsidiary
Country of
incorporation
Registered office
JP Case & Co Property Services Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
LIBRA Housing Advisory Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Liverpool ONE Management Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Mansfield Elstob Main Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Moor House Management Services Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
PCA Holdings Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
PCA Management Consultants Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Portnalls Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Prime London Residential Development
Co-Investment GP LLP
Prime London Residential Development
Co-Investment II GP LLP
Prime London Residential Development
Co-Investment II LP
Prime London Residential Development
Co-Investment LP
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
United Kingdom 50 Lothian Road, Festival Square, Edinburgh, EH3 9WJ
Prime London Residential Development GP LLP
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Prime London Residential Development II GP LLP United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Prime Purchase Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Rickitt Grant & Company Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
S F Securities Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savillls IM SLP II GP LLP
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, UK, 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) Limited
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
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Asset Warehouse 1 Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
204
Savills plc
Report and Accounts 2019
Fully-owned subsidiary
Country of
incorporation
Registered office
Savills Asset Warehouse 2 Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Capital Advisors Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Commercial (Leeds) Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Commercial Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Finance Holdings plc
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Financial Services Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Holding Company Ltd
(i)
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills IM Dawn GP Limited
United Kingdom 33 Margaret Street, London, UK, 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 Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills IM Investco Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills IM Investments Limited
United Kingdom 33 Margaret Street, London, UK, 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
United Kingdom 50 Lothian Road, Festival Square, Edinburgh,
Scotland, EH3 9WJ
Savills IM SLP General Partner LLP
United Kingdom Wemyss House, 8 Wemyss Place, Edinburgh,
United Kingdom, EH3 6DH
Savills IM SLP III GP LLP
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh,
Scotland, EH12 5HD
Savills IM SLP III LP
United Kingdom Citypoint, 65 Haymarket Terrace, Edinburgh, EH12 5HD
Savills IM UK One Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills IM UK Property Ventures No.1 GP Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills IM UK Two Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills India Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Investment Management (UK) Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills Investment Management LLP
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Savills Investment Management Overseas
Holdings Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
205
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Fully-owned subsidiary
Country of
incorporation
Registered office
Savills Italy Holding Limited
United Kingdom 33 Margaret St, London W1G 0JD
Savills KSA Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Lending Solutions Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Management Resources Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Management Resource Northern
Ireland Ltd
United Kingdom Longbridge House 2nd Floor, 16-24 Waring Street,
Belfast, Northern Ireland, BT1 2DX
Savills ME Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Middle East Holdings Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Place-Shaping & Marketing Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Telecom Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Savills Trust Company Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
Serviced Land No.1 GP Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Serviced Land No.2 GP Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Serviced Land No.2 JV GP Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
Smith Woolley Ltd
Smiths Gore Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
United Kingdom 33 Margaret Street, London, W1G 0JD
Stratland Management Limited
United Kingdom 33 Margaret Street, London, UK, W1G 0JD
The Currell Group Limited
United Kingdom 9 Bonhill Street, London, EC2A 4DJ
The London planning Practice Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Wellington Holdings Ltd
United Kingdom 33 Margaret Street, London, W1G 0JD
Yoohop Limited
United Kingdom 33 Margaret Street, London, W1G 0JD
BTR Capital Advisors I, LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
BTR Capital Advisors II, Inc.
United States
399 Park Avenue – 11th FL, New York, NY 10022
BTR Capital Advisors III, Inc.
United States
399 Park Avenue – 11th FL, New York, NY 10022
Gravitas Lease Audit Services LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
Gravitas Real Estate Solutions LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
Kelly, Legan & Gerard Inc.
United States
398 Park Avenue – 11th FL, New York, NY 10022
Savills (L&P) Inc
Savills (ME) LLC
Savills America Ltd
United States
Unex House, 132–134 Hils Road, Cambridge CB2 8PA
United States
399 Park Avenue – 11th FL, New York, NY 10022
United States
399 Park Avenue – 11/F, New York, NY 10022
Savills Capital Markets LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
Savills Gravitas Real Estate Solutions LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
Savills Inc.
United States
399 Park Avenue – 11th FL, New York, NY 10022
206
Savills plc
Report and Accounts 2019
Fully-owned subsidiary
Country of
incorporation
Registered office
Savills Investment Management Inc.
United States
251 Little Falls Drive, Wilmington, DE 19808
Savills Occupier Services Inc.
United States
399 Park Avenue – 11th FL, New York, NY 10022
SSOC, LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
Studley International, Inc
United States
399 Park Avenue – 11th FL, New York, NY 10022
Studley Advisors, Inc
United States
399 Park Avenue – 11th FL, New York, NY 10022
SVS (GA) Inc.
SVS Stone LLC
United States
399 Park Avenue – 11th FL, New York, NY 10022
United States
399 Park Avenue – 11th FL, New York, NY 10022
The Great Studley Stamp Company
United States
399 Park Avenue – 11th FL, New York, NY 10022
Savills Vietnam Company Ltd
SVVN Price Valuation Limited
Liability Company
Vietnam
Vietnam
6/F, Sentinel Place building, 41A Ly Thai To, Hoan Kiem
District, Hanoi City
81-83-83B-85 Ham Nghi Street, Nguyen Thai Binh Ward,
District 1, Ho Chi Minh City, Vietnam
Subsidiaries of which the Group
owns less than 100%
%
owned
Country of
incorporation
Registered office
Savills Belux Group SA
99.9
Belgium
Avenue Louise 81, 1050 Brussels, Belgium
Savills Property Services (Shenzhen)
Company Ltd
85
China
Unit 02, 9/F, China Resources Tower, No.2666,
Keyuan South Road, Nanshan District, Shenzhen,
518000, China
Savills SA
99.97 France
21 Boulevard Haussmann 75009, Paris, France
Savills Fund Management GmbH
94
Germany
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Savills Investment Management
(KVG) GmbH
Piccadilly General Partner GmbH
Savills Sweden Investment AB
94.9
Germany
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
94
51
Germany
Rotfeder-Ring 7, D-60327 Frankfurt-am-Main
Sweden
Segels Torg 12, 111 57 Stockholm
Absolute Result Ltd
80.2
Hong Kong
Savills Billion Property Management Ltd 80
Hong Kong
The Aurora Management Services Ltd
80
Hong Kong
PT Savills Consultants Indonesia
80.4
Indonesia
23/F, Two Exchange Square, 8 Connaught Place,
Central
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Panin Tower – Senayan City, 16/F, Jl.Asia Afrika Lot.19,
Jakarta 10270, Indonesia
Savills Investment Management
(Luxembourg) S.à r.l.
94.9
Luxembourg
10, rue C.M. Spoo
207
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Subsidiaries of which the Group
owns less than 100%
%
owned
Country of
incorporation
Registered office
Savills & Partners LLC
65
Oman
Hatat Complex Suite 30-36, Ground Floor, P O Box
1475, Ruwi, Sultanate of Oman, Location - Wadi Adai –
Romellah
Liverpool ONE Management
Company Ltd
50
United Kingdom 33 Margaret Street, London, W1G 0JD
SGDN Ltd
51
United Kingdom Stuart House, City Road, Peterborough, PE1 1QF
Joint Ventures
%
owned
Country of
incorporation
Registered office
Shanghai No.1 and FPDSavills Property
Management Company Ltd
Zhuhai Hengqin Savills Assets Operation
Management Company Ltd
51
51
China
China
Building No1, 3rd Floor, No.400, Fangchun Rd, Pudong
District, Shanghai
Room 105-1460, No. 6 Baohua road, Hengqin new area,
Zhuhai
Beijing China Railway Savills Property
Management Services Company Ltd
49
China
Room 202 Tower D, Beijing China Railway Plaza, No.3
South Road Auto Museum, Fengtai District, Beijing
Beijing Tianrun Savills Property
Management Company Ltd
Gohigh Savills (Shanghai) Property
Management Company Ltd
Guangzhou Nansi & Savills Property
Management Co Ltd
49
China
49
China
49
China
Unit 3501A, 35/F, No. 8 Jianguomenwai Dajie, Chaoyang
District, Beijing, PRC
Room 203D, 2/F, No. 21, Lane 596, Middle Yanan Road,
Jingan District, Shanghai
Room 1304, Feng Ze Dong Road No.106, Nan Sha Area,
Guang Zhou PRC
Shanghai Qihui Savills Property Services
Company Ltd
Everbright Savills Property Management
(Shanghai) Company Ltd
Fuzhou Hengli & Savills Property
Management Company Ltd
Beijing Haizhi Savills Property
Management Company Ltd
Savills BM Property Services
Company Ltd
Shenzhen Qianhai Savills Property
Services Company Ltd
Daisy Savills Property Management
(Beijing) Company Ltd
Suzhou Industrial Park Hengtai Savills
Property Management Company Ltd
49
China
Rm 548, 9F, No. 583 Lingmu Rd., Xuhui District, Shanghai
45
45
China
China
40
China
40
China
40
China
35
35
China
China
Room E-266, 3/F, Ru Shan Road No.227, Pilot Free Trade
Zone, Shanghai
8/F, No.128 Wusi Road, Gudong Street, Gulou District,
Fuzhou
Zone B, 6/F, Tower B, No.18 Zhong Guan Cun Avenue,
Haidian District, Beijing
Room 115, No.53, Lane 749, Middle Tianmu Road, Zhabei
District, Shanghai
Unit 201,A Tower, No.1, QianWan Road,Qianhai Shengan
Cooperation District,Shenzhen
Unit 702, Tower 2, Office Building, 7/F, No. 18
Jianguomennei Avenue, Chaoyang District, Beijing
Unit 303-304, Moon Bay International Business Center,
9 Cuiwei Avenue, Suzhou Industrial Park, Suzhou
Beijing BHG Savills Retail & Property
Management Company Ltd
30
China
Room 107, Block 1, No 208, Lane 4, North Xiangyun Road,
Daxing District, Beijing
Beijing Oriental Savills Asset Management
Company Ltd
30
China
Unit 303, 3/F No, 9 West Street Wangfujing, Dongcheng
District, Beijing
Beijing Zhaotai Savills Property Services
Company Ltd
30
China
B1/F, 11 Fenghui Yuan, Tai Ping Avenue, Xicheng District,
Beijing, P.R.C
208
Savills plc
Report and Accounts 2019
Joint Ventures
%
owned
Country of
incorporation
Registered office
Chongqing Shenghua Savills Property
Services Group Company Ltd
30
China
Room 102, 1st Floor, GuoHua Financial Center, No. 9
JuXianYan Square, JiangBeiZui, Chongqing
Nanjing Smart Science Technology
Park & Savills Property Management
Company Ltd
30
China
Room 468, Floor 4, building 9, Xingzhihui Business
Garden, No. 19, Xinghuo Road, Jiangbei New District,
Nanjing, 210008, China
Savills Raycom Property Management
(Beijing) Company Ltd
30
China
Unit B1-08, No.2 South Road Ke Xue Yan, Haidian District,
Beijing
Shanghai Poly Savills Property
Management Company Ltd
30
China
Unit 01, 20/F, South Tower, No.528 South Pu Dong Road,
Pu Dong, Shanghai
Shanxi Zhidi Savills Property Services
Company Ltd
30
China
4/F, Block 3, No.42 Xing Shan Temple, Xian City
Anlian Savills Property Management
(Shenzhen) Ltd
25.5
China
Unit B02(b), 19/F, Anlian Plaza, No.4018, Jintian Road,
Futian District, Shenzhen
COSCO Savills Property Development
Company Ltd
25
China
Unit M, 7th Floor, No.720 Pudong Ave, Pudong District,
Shanghai
Beijing Financial Street Savills Property
Management Company Ltd
20
China
B1/F, Tong Tai Building, 33 Financial Street, West District,
Beijing.
Beijing Zhong Bao Savills Property
Management Company Ltd
Tianjin TEDA Savills Property Services
Company Ltd
SERE Egypt Consulting JSC
Jiayi Savills Property Services Ltd
Greenmile Ventures Ltd
Greenwall Gateway Ltd
Skywise Technology & Innovation
Company Limited
10
10
54
51
50
50
50
China
China
603 China Life Tower, 16 Chao Wai Street, Chaoyang
District, Beijing
B2/F, Zone A1, Teda MSD, No.56 Second Avenue,
Economy & Technology Development Zone, Tianjin
Egypt
Building 17, Street 210, Maadi, Cairo.
Hong Kong
23/F, Two Exchange Square, 8 Connaught Place, Central
Hong Kong
Vistra Corporate Services Centre, Wickhams Cay II, Road
Town, Tortola, VG1110, British Virgin Islands
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
G.E.S. Holdings Ltd
50
Macau
G.E.S. Ltd
50
Macau
Savills (Johor) Sdn Bhd
49
Malaysia
Savills (KL) Sdn Bhd
49
Malaysia
Savills (Malaysia) Sdn Bhd
49
Malaysia
Savills (Penang) Sdn Bhd
49
Malaysia
Savills (Project Management) Sdn Bhd
49
Malaysia
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
Upper Penthouse, Wisma RKT, No. 2 Jalan Raja Abdullah,
Off Jalan Sultan Ismail, 50300 Kuala Lumpur
Upper Penthouse, Wisma RKT, No. 2 Jalan Raja Abdullah,
Off Jalan Sultan Ismail, 50300 Kuala Lumpur
Upper Penthouse, Wisma RKT, No. 2 Jalan Raja Abdullah,
Off Jalan Sultan Ismail, 50300 Kuala Lumpur
Upper Penthouse, Wisma RKT, No. 2 Jalan Raja Abdullah,
Off Jalan Sultan Ismail, 50300 Kuala Lumpur
Upper Penthouse, Wisma RKT, No. 2 Jalan Raja Abdullah,
Off Jalan Sultan Ismail, 50300 Kuala Lumpur
Cluttons Saudi Arabia Company Limited
Savills Science Ltd
49
50
Saudi Arabia
Dammam, Malek Saud Street, 31411
United Kingdom 33 Margaret Street, London, W1G 0JD
209
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Notes to the financial statements
continued
Year ended 31 December 2019
36. Group – Investments continued
Associates
%
owned
Country of
incorporation
Registered office
SAS – Riviera Estates
44.8
France
11 Avenue Jean Medecin, 06000, Nice
KSH Guardian Property Management Ltd
Lippo-Savills Property Management Ltd
50
50
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Hong Kong
Room 2301, 23/F, Tower One, Lippo Centre,
89 Queensway
Yuen Sang Property Management
Company Ltd
50
Hong Kong
7/F, Cityplaza One, 1111 King’s Road, Taikoo Shing
Savills Taiping Property Management Ltd 45
Hong Kong
Guardian Home Ltd
40
Hong Kong
Rooms 805-813, 8/F, Cityplaza One, 1111 King's Road,
Taikoo Shing
Flat G&H, 55/F, Block 3, Metro Town, Tseung Kwan O,
New Territories
Hengli Savills Property Management
Limited
49
Hong Kong
Unit 1806-08, Tower Two, Lippo Centre, 89 Queensway,
Hong Kong
Cordea Nichani India Advisers Private
Limited
25
India
Ground Floor Front, 19 Kumarakrupa Road, Bangalore
560001, India
Rootcorp Ranganatha Limited
Monaco Real estates SARL
Really Pte Ltd
Huttons Asia Pte Ltd
Huttons Capital Pte Ltd
DRC Capital LLP
25
51
50
48
48
25
Mauritius
4th Floor, Raffles Tower, 19 Cybercity, Ebene, Mauritius
Monaco
10 Ter Boulevard Princesse Charlotte
Singapore
19 Cecil Street #05-09 The Quadrant at Cecil
Singapore 049704
Singapore
3 Bishan Place #05-01 CPF Bishan Building S 579838
Singapore
3 Bishan Place #05-01 CPF Bishan Building S 579838
United Kingdom 4th Floor, 6 Duke Street St James's, London,
United Kingdom, SW1Y 6BN
Other significant holdings
%
owned
Country of
incorporation
Registered office
Vucity Ltd
(ii)
33.33 United Kingdom George Hay, Brigham House, Biggleswade, England,
SG18 0LD
(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 (2018: £0.7m). The non-controlling interests in respect
of the above subsidiaries that the Group does not own a holding of 100% are not considered to be individually material.
There were no material transactions with non-controlling interests during the year. Refer to Note 22 for details on
restrictions on the Group’s ability to access cash in the Group’s Asia Pacific operating subsidiaries.
210
Savills plc
Report and Accounts 2019
Shareholder Information
Key dates for 2020
Annual General Meeting
Financial half year end
Announcement of half year results
6 May 2020
30 June 2020
6 August 2020
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
Joint Stockbrokers
CMS Cameron McKenna Nabarro Olswang LLP
UBS Investment Bank
Cannon Place
78 Cannon Street
London EC4N 6AF
Registrars
Equiniti
Aspect House
Spencer Road
Lancing
West Sussex BN99 6DA
Statutory auditor
PricewaterhouseCoopers LLP
1 Embankment Place
London WC2N 6RH
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
211
OverviewGovernance Strategic reportFinancial statements Savills plc
Report and Accounts 2019
Shareholder Information
continued
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.
212
Savills plc
33 Margaret Street
London W1G 0JD
T: +44 (0)20 7499 8644
www.savills.com
Registered in England
No. 2122174