TIDMSVS
RNS Number : 2617X
Savills PLC
09 August 2018
9 August 2018
Savills plc
("Savills" or "the Group")
RESULTS FOR THE HALF YEARED 30 JUNE 2018
Savills plc, the international real estate advisor, today
announces its unaudited results for the six months ended 30 June
2018.
Key Financial Information
-- Group revenue up 2% (5% in constant currency*) to GBP727.8m
(H1 2017: GBP714.4m)
-- Group underlying profit** before tax down 12% (10% in
constant currency) to GBP42.4m (H1 2017: GBP48.1m)
-- Group profit before tax down 18% to GBP26.7m (H1 2017:
GBP32.4m)
-- Underlying basic earnings per share 23.4p (H1 2017:
25.7p)
-- Basic earnings per share 13.8p (H1 2017: 16.1p)
-- Interim dividend up 3% to 4.8p per share (H1 2017: 4.65p)
* Revenue and underlying profit for the period are translated at
the prior period exchange rates to provide a constant currency
comparative.
** Underlying profit before tax ('underlying profit') is
calculated on a consistently reported basis in accordance with Note
3 to the Interim Financial Statements.
Highlights
-- UK Residential Transaction business grew both revenue and
profit during the period. Overall Transaction Advisory revenue
flat, impacted by a slowdown in activity in the UK commercial
market.
-- Strong growth from Continental Europe, both organic and
through the integration of Aguirre Newman in Spain.
-- Property and Facilities Management revenue up 7%, Consultancy
revenue up 4%.
-- Continued expansion and investment through acquisitions and
recruitment. In particular, the acquisition of the Cluttons Middle
East business providing access to a new region for the Group.
-- Savills Investment Management revenue declined, as
anticipated, reflecting the late stage of the liquidation of the
German Open Ended Funds. GBP0.7bn capital raised during the period
and period end AUM up 1% at EUR16.2bn.
-- Board's expectations for the full year remain unchanged.
Commenting on the results, Jeremy Helsby, Group Chief Executive
of Savills plc, said:
"In the face of some challenging market conditions, Savills has
delivered a resilient first half performance reflecting our
geographic diversity, breadth of operations, recent business
investment activity and the strength of our UK residential
business.
In line with our overall growth strategy, we have continued to
invest across the business, which has affected profits in the short
term. During the period we completed the acquisition of Cluttons
Middle East, providing Savills a strategic platform for growth in
this region. In addition, in the UK we further enhanced our leading
property management platform announcing the acquisition of the
third party property management portfolio of 'Broadgate Estates'
from British Land.
Continued growth in our less transactional businesses,
significant overseas earnings and strong shares in many of our most
important transactional markets position Savills well to weather
fluctuations in markets and to capitalise on the opportunities
which we expect to emerge over time.
We have a robust pipeline of activity for the second half,
despite an environment of escalating political and economic
uncertainty, and we continue to anticipate that our performance for
the full year will be in line with the Board's expectations."
For further information, contact:
Savills 020 7409 8934
Jeremy Helsby, Group Chief Executive
Simon Shaw, Group Chief Financial
Officer
Tulchan Communications 020 7353 4200
Peter Hewer and Will Palfreyman
Business review
The following table sets out Group revenue and underlying profit
by operating segment:
Revenue H1 2018 H1 2017 Change
GBPm GBPm
------------------------------------ -------- -------- -------
Transaction Advisory 311.3 312.1 n.m.
Property and Facilities Management 263.7 246.6 7%
Consultancy 125.8 121.0 4%
Investment Management 27.0 33.6 (20%)
Unallocated - 1.1 n/a
------------------------------------ -------- -------- -------
Group revenue 727.8 714.4 2%
------------------------------------ -------- -------- -------
Underlying profit H1 2018 H1 2017 Change
GBPm GBPm
Transaction Advisory 19.7 24.6 (20%)
Property and Facilities Management 12.8 10.2 25%
Consultancy 10.8 10.2 6%
Investment Management 2.9 6.6 (56%)
Unallocated (3.8) (3.5) (9%)
Group underlying profit 42.4 48.1 (12%)
------------------------------------ -------- -------- -------
The following table sets out Group revenue and underlying profit
by geographical area:
Revenue H1 2018 H1 2017 Change
GBPm GBPm
---------------------------------------- -------- -------- -------
UK 280.5 274.2 2%
Asia Pacific 250.4 263.5 (5%)
Continental Europe and the Middle East 96.6 72.0 34%
North America 100.3 103.6 (3%)
Unallocated - 1.1 n/a
Group revenue 727.8 714.4 2%
---------------------------------------- -------- -------- -------
Underlying profit H1 2018 H1 2017 Change
GBPm GBPm
UK 23.7 25.3 (6%)
Asia Pacific 18.6 21.8 (15%)
Continental Europe and the Middle East 3.3 1.5 120%
North America 0.6 3.0 (80%)
Unallocated (3.8) (3.5) (9%)
Group underlying profit 42.4 48.1 (12%)
---------------------------------------- -------- -------- -------
Overview
The Group's results for the six months to 30 June 2018 comprise
revenue growth of 2% (5% in constant currency) to GBP727.8m (H1
2017: GBP714.4m). Underlying profit was GBP42.4m, 12% lower than
the first half of 2017 (H1 2017: GBP48.1m) (10% decline in constant
currency). Currency had a negative impact on Group performance
decreasing revenue by GBP20.8m and underlying profit by GBP1.1m.
Statutory profit before tax, including deferred consideration
provisions and acquisition and restructuring costs was GBP26.7m,
18% lower than the first half of 2017 (H1 2017: GBP32.4m).
At the beginning of the year we anticipated some tempering of
the strong transaction volumes of recent times and this was evident
in the UK and certain Asian commercial markets in H1 2018. However,
a resilient performance in our UK residential transaction business
and robust organic growth in the Continental European business,
including the benefits of recent business acquisitions (primarily
Aguirre Newman), underpinned a better than anticipated performance
in the first half of the year.
We continue to execute our business development plans with
incremental acquisitions and team hires. We expanded our platform
to a new region through the acquisition of Cluttons Middle East,
which will be integrated in to the Continental Europe and Middle
East business. In addition, the integrations of Aguirre Newman and
Larry Smith both proceeded as planned and we continued to invest in
the development of a new business in the Czech Republic, which now
provides a full service offering to commercial clients. In the UK,
we announced the acquisition of the third party property management
portfolio 'Broadgate Estates' from British Land and Porta Planning
LLP, a planning and development consultancy business based in
London. Furthermore, we continued to invest and support the Capital
Markets team in New York. During its first full year of operation
the net costs of this business continued to affect profits in North
America as a whole. Finally, we have recently announced the
proposed acquisition of a 25% interest in DRC Capital LLP ('DRC'),
a leading European investment advisor of real estate debt funds;
this transaction is an exciting opportunity to add real estate debt
to our portfolio of income-focused real estate investment
products.
The Group's underlying profit margin was affected by expenditure
on a number of these investment activities and the reduction in
activity in some of our key commercial transaction markets,
declining to 5.8% (H1 2017: 6.7%).
Current factors affecting Real Estate Markets
In recent years increasing levels of geopolitical uncertainty
have driven a steady shift towards income-producing assets and in a
low interest rate environment, the secure yield has made real
estate a primary asset in this class. In the London office market,
the first half of 2018 saw nearly GBP9.0bn of transactions, 71% of
which were to non-domestic investors. Many of these investors,
while they accept that occupational risk has increased due to
Brexit, still see the UK as comparatively secure in a global
context. Weaker sterling and relatively higher yields have
maintained overseas investor interest in UK real estate. As
interest rates rise, we should expect some tempering of investment
activity in coming periods.
In Continental Europe prospects remain favourable for real
estate with significant investor interest in both core markets in
Northern Europe and more value add opportunities in southern
markets. In Asia Pacific, cross-border capital flows remain robust
although low yields and rising US interest rates are having an
impact on investor sentiment and debt levels in parts of the region
are expected to come under greater scrutiny. The net effect is
likely to be reduced deal volumes. In the US, softness within a
handful of markets, including Houston, Silicon Valley and New
Jersey, created headwinds and reduced national occupancy growth but
projections for economic growth remain strong and the expanding
technology sector should promote further activity over the coming
quarters.
Transaction Advisory
Revenue H1 2018 H1 2017 Change
GBPm GBPm
---------------------------------------- -------- -------- -------
UK 92.1 94.4 (2%)
Asia Pacific 77.4 87.7 (12%)
Continental Europe and the Middle East 41.5 26.4 57%
North America 100.3 103.6 (3%)
Total 311.3 312.1 n.m.
---------------------------------------- -------- -------- -------
Overall, our Transaction Advisory revenues remained stable in
comparison to H1 2017 (3% growth in constant currency). Underlying
profits of our Transaction Advisory business decreased by 20% (18%
in constant currency) to GBP19.7m during the period (H1 2017:
GBP24.6m), reflecting a decline in activity in some of our key
commercial markets.
UK Commercial
UK Commercial Transaction fee income decreased 14% to GBP33.9m
(H1 2017: GBP39.4m), reflecting a quiet start in a commercial
investment market with greater uncertainty and a relative lack of
stock when compared with a strong comparative period. UK commercial
property investment volumes declined by 4% in the first half of
2018, to GBP27.1bn, with retail assets particularly affected.
However there was an improvement in demand for assets in the second
quarter of the year, although bid/offer spreads have widened.
Markets outside London were more resilient with the same volume
invested in the first half of 2018 versus 2017. International
investors continue to remain very active across the UK, accounting
for 40% of commercial property acquisitions in the first half of
this year.
In the occupier markets, London office take up was flat on the
comparable period with an 8% increase in the City offset by a
decline in the West End market. Take up in the regional UK markets
was also stable, the exception being a significant (c.33%) increase
in leasing activity for logistics assets.
The reduced revenues led to a decline in underlying profits for
the UK Commercial Transaction business to GBP2.8m (H1 2017:
GBP4.5m).
UK Residential
Despite continued challenging market conditions the UK
Residential Transaction business grew revenue by 6% to GBP58.2m (H1
2017: GBP55.0m). In the second hand agency business, revenues
benefited from a growth in our average sales value, offsetting a
fall in the number of exchanges. Savills overall transaction
volumes were down by 7% in London and 10% in the regional markets;
however the average value of London residential property sold by
Savills in the period was up 16% to GBP3.2m (H1 2017: GBP2.7m) and
regionally up 3% to GBP1.2m (H1 2017: GBP1.1m).
New development sales revenue increased by 17%, reflecting the
strength of our sales teams across the UK and growth in average
transaction value of 9% together with a 10% increase in the number
of units reserved during the period.
Ongoing political and economic uncertainty created by the
negotiations to leave the EU make it difficult to predict market
volumes for the rest of the year.
Our more institutional residential transaction teams in the PRS
and social housing sectors also performed well during the
period.
As a result of the above factors, underlying profits in the UK
residential transaction business increased by 17% to GBP6.3m (H1
2017: GBP5.4m).
Asia Pacific Commercial
Commercial Transaction fee income in Asia Pacific decreased by
12% (6% in constant currency) to GBP59.7m (H1 2017: GBP67.6m). This
was driven by a decline in market volumes in Japan, China and
Australia, relative to a very strong comparable period and in part
due to delayed timing of completions. Indeed, the pipeline going in
to the second half of 2018 remains healthy for these regions. South
Korea and Hong Kong delivered a robust performance, reflecting
advice on some significant transactions and our leading share in
those markets.
Overall, underlying profits from the Asia Pacific commercial
transaction business fell to GBP5.7m (H1 2017: GBP9.7m).
Asia Pacific Residential
Residential Transaction fee income in Asia Pacific decreased by
12% to GBP17.7m (H1 2017: GBP20.1m) (8% in constant currency). The
reduction in revenue was primarily caused by the impact of
Government restrictions over foreign ownership of assets in
Australia and continued pricing pressure. The rest of the region
performed in line with expectations.
Underlying profits in the region declined 7% to GBP2.7m (H1
2017: GBP2.9m).
Continental Europe and the Middle East
In Continental Europe and the Middle East, transaction fee
income increased by 57% to GBP41.5m (H1 2017: GBP26.4m) (54% in
constant currency). The December 2017 acquisition of Aguirre Newman
in Spain contributed significantly to the increase. On an organic
basis (excluding acquisitions), revenue grew by 23%, with strong
performances by investment teams in Ireland, Germany and the
Netherlands. The significant revenue growth delivered a first half
profit of GBP1.6m (H1 2017: GBP0.9m loss) for the Continental
Europe and Middle Eastern transactional business and an underlying
profit margin of 3.9%. Underlying profits continue to be affected
by ongoing investment in the business.
North America
Our North American revenue decreased by 3% (5% increase in
constant currency) to GBP100.3m (H1 2017: GBP103.6m). There were
stronger performances across the main occupier markets in the
United States, with a solid pipeline of activity for the second
half.
The investment in a Capital Markets team in New York in 2017 has
begun to deliver fee income, however the continued investment in
this team alongside the cost impact of recent team lifts and
investment in the platform directly affected underlying profits of
the North American business, which declined to GBP0.6m (H1 2017:
GBP3.0m).
Property and Facilities Management
Revenue H1 2018 H1 2017 Change
GBPm GBPm
---------------------------------------- -------- -------- -------
Asia Pacific 148.8 150.4 (1%)
UK 84.0 76.2 10%
Continental Europe and the Middle East 30.9 20.0 55%
Total 263.7 246.6 7%
---------------------------------------- -------- -------- -------
Our Property and Facilities Management business increased global
revenues by 7% (10% in constant currency) to GBP263.7m (H1 2017:
GBP246.6m). Savills total area under management increased by 2% to
1.89bn sq ft (H1 2017: 1.86bn sq ft), primarily due to the
acquisitions made in Continental Europe and the Middle East since
H1 2017. On a constant currency basis, all regions delivered
revenue growth.
Acquisitions since H1 2017, primarily Aguirre Newman, drove the
significant growth in revenues in the Continental European and
Middle Eastern business. Organic revenue growth in this business
was 9%, reflecting robust performances in Sweden and Ireland.
Reported revenues in Asia Pacific decreased 1% however on a
constant currency basis revenues were up 5%, with notable
performances in Hong Kong, South Korea and Vietnam. UK Commercial
and Residential Management revenues grew on H1 2017, with growth of
11% and 8% respectively. However underlying profits for the UK
business remained flat, reflecting revenue growth in lower margin
business and the impact of platform investment for the next stage
of growth.
Underlying profit for the Property and Facilities Management
business increased by 25% to GBP12.8m (H1 2017: GBP10.2m).
Consultancy
Revenue H1 2018 H1 2017 Change
GBPm GBPm
---------------------------------------- -------- -------- -------
UK 93.0 91.6 2%
Asia Pacific 20.7 22.1 (6%)
Continental Europe and the Middle East 12.1 7.3 66%
Total 125.8 121.0 4%
---------------------------------------- -------- -------- -------
Consultancy fee income increased in the period by 4% (5% in
constant currency) to GBP125.8m (H1 2017: GBP121.0m).
Acquisitions since H1 2017, in particular Aguirre Newman,
contributed significantly to revenue growth in Continental Europe.
Organic revenue growth in this region was 12%, with strong
performances in Spain and Germany. In the UK, underlying profit was
up 6%, with strong growth from the housing and development teams.
Asia Pacific revenues were down 6% (2% down in constant currency);
a robust H1 performance in Singapore following an increase in en
bloc valuation activity was offset by small reductions in
valuations activity throughout the rest of the region.
Underlying profit increased in the Consultancy business by 6% to
GBP10.8m (H1 2017: GBP10.2m), with an improved underlying profit
margin of 8.6% (H1 2017: 8.4%).
Investment Management
Revenue from Investment Management decreased by 20% to GBP27.0m
(H1 2017: GBP33.6m). As expected, transaction volumes reduced in
comparison with H1 2017 to GBP1.1bn (H1 2017: GBP2.6bn) due to the
tail off of disposals from the portfolio of liquidating German Open
Ended Funds. New capital inflows into funds and mandates were
comparable to H1 2017 at GBP0.7bn. During the period we launched
the Japan II Fund, which was a record first close for Savills
Investment Management. Assets under management increased by 1% to
EUR16.2bn (H1 2017: EUR16.0bn).
Underlying profits for Investment Management decreased by 56% to
GBP2.9m (H1 2017: GBP6.6m), reflecting the above mentioned reduced
transactional revenues during the first half of the year.
Unallocated revenue and cost
The unallocated segment represents other costs, expenses and net
interest not directly allocated to the operating activities of the
Group's business segments. These are stated net of revenue earned
centrally. The H1 increase in unallocated net costs of 9% to
GBP3.8m (H1 2017: GBP3.5m) reflects the receipt of dividends from a
trade investment of the Group and transactional income recognised
in H1 2017, which were not repeated in H1 2018.
Acquisition and restructuring costs
During the period the Group incurred an aggregate restructuring
charge of GBP2.8m (H1 2017: GBP1.8m) and acquisition related costs
of GBP10.7m (H1 2017: GBP13.3m). The restructuring charge relates
principally to the integration of Aguirre Newman (2017 acquisition)
into the Continental Europe and Middle Eastern business. Current
period acquisition related costs consisted of GBP1.5m of
transaction related costs and GBP2.2m in respect of Savills
Investment Management's 2014 acquisition of Merchant Capital. In
addition, there was a GBP7.0m charge for future consideration
payments which are contingent on the continuity of recipients'
employment in the future. A significant portion of this charge
relates to the 2017 acquisition of Aguirre Newman.
Earnings, financial strength and dividends
The Group's underlying profit margin in the period was 5.8% (H1
2017: 6.7%), primarily reflecting the lower proportion of higher
margin commercial transactional business in the period, the lag
effect of recent team lifts and the continued investment in the
business. Basic earnings per share for the six months to 30 June
2018 decreased by 14% to 13.8p (H1 2017: 16.1p). Underlying
earnings per share decreased 9% to 23.4p (H1 2017: 25.7p).
The impact of foreign exchange movements on the translation of
profits from our overseas businesses resulted in a decrease in
underlying profit of GBP1.1m.
At 30 June 2018, net debt was GBP94.6m (30 June 2017: GBP1.4m
net cash). This decrease was driven primarily by acquisition
related payments since 30 June 2017, in particular the acquisitions
of Aguirre Newman in December 2017 and Cluttons Middle East in May
2018 and deferred payments in relation to the Studley (May 2014)
and Smiths Gore (May 2015) acquisitions. At 30 June 2018 the Group
had cash balances of GBP158.6m (30 June 2017: GBP179.7m) less
borrowings of GBP253.2m (30 June 2017: GBP178.3m), with GBP293.7m
of credit facilities remaining available for utilisation (30 June
2017: GBP96.4m).
During the period, the Group raised GBP150.0m long term debt via
a private note placement into the US institutional market. The
average tenor is 10.2 years at a weighted average fixed interest
rate of 3.18%. The proceeds were used to pay down the majority of
the Group's outstanding balances on its existing GBP360.0m
revolving credit facility to balance the Group's exposure to short
term interest rate fluctuations in coming years.
The Board has declared an interim dividend of 4.8p per share
(2017: 4.65p). The performance of the Group's Transaction Advisory
businesses will be taken into account in the consideration of any
proposed final ordinary and supplemental interim dividends
alongside the results for the full year.
The interim dividend of 4.8p per share will be payable on 3
October 2018 to shareholders on the register on 7 September
2018.
Principal risks and uncertainties
The key risks and uncertainties relating to the Group's
operations remain largely consistent with those disclosed in the
Group's Annual Report and Accounts 2017. These are listed below,
please refer to pages 25 to 29 thereof or to our investors' page on
www.savills.com for further details on each risk:
-- Economic / country risks, particularly the impact of a global economic downturn;
-- Achieving the right market positioning in response to the needs of our clients;
-- Recruitment and retention of high-calibre staff;
-- Reputational and brand risk;
-- Legal risk;
-- Failure or significant interruption to our IT systems causing disruption to client service;
-- Business conduct;
-- Changes in the regulatory environment; and
-- Acquisition / integration risk.
In addition, further specific risks which might affect the
outlook for the second half are disclosed in the Summary and
outlook statement below.
Summary and outlook
In the face of some challenging market conditions, Savills has
delivered a resilient first half performance reflecting our
geographic diversity, breadth of operations, recent business
investment activity and the strength of our UK residential
business.
In line with our overall growth strategy, we have continued to
invest across the business, which has affected profits in the short
term. During the period we completed the acquisition of Cluttons
Middle East, providing Savills a strategic platform for growth in
this region. In addition, in the UK we further enhanced our leading
property management platform announcing the acquisition of the
third party property management portfolio of 'Broadgate Estates'
from British Land.
Continued growth in our less transactional businesses,
significant overseas earnings and strong shares in many of our most
important transactional markets position Savills well to weather
fluctuations in markets and to capitalise on the opportunities
which we expect to emerge over time.
We have a robust pipeline of activity for the second half,
despite an environment of escalating political and economic
uncertainty and we continue to anticipate that our performance for
the full year will be in line with the Board's expectations.
Jeremy Helsby Nicholas Ferguson CBE
Group Chief Executive Chairman
STATEMENT OF DIRECTORS' RESPONSIBILITIES
The Directors confirm that this condensed consolidated interim
financial statements have been prepared in accordance with
International Accounting Standard 34, 'Interim Financial
Reporting', as adopted by the European Union and that the interim
management report includes a fair review of the information
required by DTR 4.2.7 and DTR 4.2.8, namely:
-- an indication of important events that have occurred during the
first six months and their impact on the condensed consolidated
interim financial statements and a description of the principal
risks and uncertainties for the remaining six months of the financial
year; and
-- material related party transactions in the first six months of
the financial year and any material changes in the related party
transactions described in the last Annual Report.
The Directors are responsible for the maintenance and integrity
of the Company's website. Legislation in the United Kingdom
governing the preparation and dissemination of financial statements
may differ from legislation in other jurisdictions.
The Directors of Savills plc are listed in the Company's Report
and Accounts for the year ended 31 December 2017. A list of current
Directors is maintained on the Savills plc website:
www.savills.com.
By order of the Board
Jeremy Helsby, Group Chief Executive
Simon Shaw, Group Chief Financial Officer
8 August 2018
Forward-Looking Statements
The financial information contained in this announcement has not
been audited. Certain statements made in this announcement are
forward-looking statements. Undue reliance should not be placed on
such statements, which are based on current expectations and are
subject to a number of risks and uncertainties that could cause
actual results to differ materially from any expected future
results in forward-looking statements.
The Company accepts no obligation to publicly revise or update
these forward-looking statements or adjust them to future events or
developments, whether as a result of new information, future events
or otherwise, except to the extent legally required.
Independent review report to Savills plc
Report on the condensed consolidated interim financial
statements
Our conclusion
We have reviewed Savills plc's interim financial statements (the
'interim financial statements') in the results for the half year of
Savills plc for the 6 month period ended 30 June 2018. Based on our
review, nothing has come to our attention that causes us to believe
that the interim financial statements are not prepared, in all
material respects, in accordance with International Accounting
Standard 34, 'Interim Financial Reporting', as adopted by the
European Union and the Disclosure Guidance and Transparency Rules
sourcebook of the United Kingdom's Financial Conduct Authority.
What we have reviewed
The interim financial statements comprise:
-- the condensed interim consolidated statement of financial position as at 30 June 2018;
-- the condensed interim consolidated income statement and
condensed interim consolidated statement of comprehensive income
for the period then ended;
-- the condensed interim consolidated statement of cash flows for the period then ended;
-- the condensed interim consolidated statement of changes in
equity for the period then ended; and
-- the explanatory notes to the interim financial statements.
The interim financial statements included in the results for the
half year have been prepared in accordance with International
Accounting Standard 34, 'Interim Financial Reporting', as adopted
by the European Union and the Disclosure Guidance and Transparency
Rules sourcebook of the United Kingdom's Financial Conduct
Authority.
As disclosed in note 2 to the interim financial statements, the
financial reporting framework that has been applied in the
preparation of the full annual financial statements of the Group is
applicable law and International Financial Reporting Standards
(IFRSs) as adopted by the European Union.
Responsibilities for the interim financial statements and the
review
Our responsibilities and those of the directors
The results for the half year, including the interim financial
statements, is the responsibility of, and has been approved by, the
directors. The directors are responsible for preparing the results
for the half year in accordance with the Disclosure Guidance and
Transparency Rules sourcebook of the United Kingdom's Financial
Conduct Authority.
Our responsibility is to express a conclusion on the interim
financial statements in the results for the half year based on our
review. This report, including the conclusion, has been prepared
for and only for the company for the purpose of complying with the
Disclosure Guidance and Transparency Rules sourcebook of the United
Kingdom's Financial Conduct Authority and for no other purpose. We
do not, in giving this conclusion, accept or assume responsibility
for any other purpose or to any other person to whom this report is
shown or into whose hands it may come save where expressly agreed
by our prior consent in writing.
What a review of interim financial statements involves
We conducted our review in accordance with International
Standard on Review Engagements (UK and Ireland) 2410, 'Review of
Interim Financial Information Performed by the Independent Auditor
of the Entity' issued by the Auditing Practices Board for use in
the United Kingdom. A review of interim financial information
consists of making enquiries, primarily of persons responsible for
financial and accounting matters, and applying analytical and other
review procedures.
A review is substantially less in scope than an audit conducted
in accordance with International Standards on Auditing (UK) and,
consequently, does not enable us to obtain assurance that we would
become aware of all significant matters that might be identified in
an audit. Accordingly, we do not express an audit opinion.
We have read the other information contained in the results for
the half year and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the interim financial statements.
PricewaterhouseCoopers LLP
Chartered Accountants
8 August 2018
London
Savills plc
Condensed interim consolidated income statement
for the period ended 30 June 2018
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 2017 2017
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
------------------------------------------ ------ ------------ ------------ -------------
Revenue 6 727.8 714.4 1,600.0
------------------------------------------ ------ ------------ ------------ -------------
Less:
Employee benefits expense (476.6) (470.2) (1,061.7)
Depreciation (7.3) (6.9) (13.5)
Amortisation of intangible assets
and impairment of goodwill (4.3) (3.1) (9.3)
Other operating expenses (216.2) (205.9) (418.5)
Other operating income 0.3 0.5 0.9
Other gains/(losses) 0.1 0.9 5.9
Operating profit 23.8 29.7 103.8
------------------------------------------ ------ ------------ ------------ -------------
Finance income 1.8 1.2 2.8
Finance costs (2.1) (1.6) (4.1)
------------------------------------------ ------ ------------ ------------ -------------
(0.3) (0.4) (1.3)
Share of post-tax profit from
joint ventures and associates 3.2 3.1 9.9
------------------------------------------ ------ ------------ ------------ -------------
Profit before income tax 26.7 32.4 112.4
Comprising:
- underlying profit before
tax 6,7 42.4 48.1 140.5
- restructuring and acquisition-related
costs 7 (13.5) (15.1) (29.0)
- other underlying adjustments 7 (2.2) (0.6) 0.9
========================================== ====== ============ ============ =============
26.7 32.4 112.4
========================================== ====== ============ ============ =============
Income tax expense 8 (7.8) (10.2) (31.3)
Profit for the period 18.9 22.2 81.1
------------------------------------------ ------ ------------ ------------ -------------
Attributable to:
Owners of the parent 18.8 21.9 80.1
Non-controlling interests 0.1 0.3 1.0
------------------------------------------ ------ ------------ ------------ -------------
18.9 22.2 81.1
Earnings per share
Basic earnings per share 10(a) 13.8p 16.1p 58.8p
Diluted earnings per share 10(a) 13.4p 15.7p 57.5p
Underlying earnings per share
Basic earnings per share 10(b) 23.4p 25.7p 75.8p
Diluted earnings per share 10(b) 22.8p 25.1p 74.1p
Notes 1 to 19 are an integral part of these condensed interim
financial statements.
Savills plc
Condensed interim consolidated statement of comprehensive
income
for the period ended 30 June 2018
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
GBPm GBPm GBPm
--------------------------------------------- ------------------ ------------------ ----------------
Profit for the period 18.9 22.2 81.1
Other comprehensive income/(loss)
Items that will not be reclassified
to profit or loss:
Remeasurement of defined benefit pension
scheme obligation 12.8 3.9 14.1
Changes in fair value of equity investments
at FVOCI (0.5) - -
Tax on items that will not be reclassified (2.5) (0.5) (2.8)
--------------------------------------------- ------------------ ------------------ ----------------
Total items that will not be reclassified
to profit or loss 9.8 3.4 11.3
Items that may be reclassified subsequently
to profit or loss:
Fair value gain on available-for-sale
investments - - 0.3
Fair value gain on available-for-sale
investment released to income statement - (0.5) -
Currency translation differences 8.1 (8.0) (16.2)
Tax on items that may be reclassified 0.4 1.2 2.3
--------------------------------------------- ------------------ ------------------ ----------------
Total items that may be reclassified
subsequently to profit or loss 8.5 (7.3) (13.6)
Other comprehensive income/(loss) for
the period, net of tax 18.3 (3.9) (2.3)
--------------------------------------------- ------------------ ------------------ ----------------
Total comprehensive income for the period 37.2 18.3 78.8
--------------------------------------------- ------------------ ------------------ ----------------
Total comprehensive income attributable
to:
Owners of the parent 37.1 18.0 77.8
Non-controlling interests 0.1 0.3 1.0
--------------------------------------------- ------------------ ------------------ ----------------
37.2 18.3 78.8
--------------------------------------------- ------------------ ------------------ ----------------
Notes 1 to 19 are an integral part of these condensed interim
financial statements.
Savills plc
Condensed interim consolidated statement of financial
position
at 30 June 2018
30 June 31 December
2017 2017
30 June Restated* Restated*
2018 (unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
-------------------------------------- ----- ------------------ ------------- ------------
Assets: Non-current assets
Property, plant and equipment 68.0 61.5 68.2
Goodwill 373.9 312.1 353.3
Intangible assets 32.4 30.7 34.4
Investments in joint ventures
and associates 30.6 26.3 30.0
Deferred income tax assets 32.5 37.3 36.9
Available-for-sale investments - 24.4 24.6
Financial assets at fair value
through other comprehensive
income 27.4 - -
Retirement benefit surplus 14 0.6 1.0 1.3
Derivative financial instruments - 0.1 -
Contract assets 0.8 - -
Other receivables 15.8 16.9 15.7
582.0 510.3 564.4
-------------------------------------- ----- ------------------ ------------- ------------
Assets: Current assets
Contract assets 10.9 6.8 6.0
Trade and other receivables 421.4 364.4 490.6
Current income tax receivable 3.2 5.1 2.3
Derivative financial instruments 0.1 - 0.5
Cash and cash equivalents 158.6 179.7 208.8
594.2 556.0 708.2
-------------------------------------- ----- ------------------ ------------- ------------
Liabilities: Current liabilities
Borrowings 15 103.6 178.3 110.1
Derivative financial instruments 0.6 0.1 0.1
Contract liabilities 21.4 9.5 10.3
Trade and other payables 366.0 356.2 584.4
Current income tax liabilities 5.4 16.0 16.4
Employee benefit obligations 14 16.1 12.4 11.2
Provisions for other liabilities
and charges 9.3 9.2 11.4
522.4 581.7 743.9
-------------------------------------- ----- ------------------ ------------- ------------
Net current assets/(liabilities) 71.8 (25.7) (35.7)
Total assets less current
liabilities 653.8 484.6 528.7
Liabilities: Non-current liabilities
Borrowings 15 149.6 - 0.1
Other payables 40.2 38.7 35.6
Retirement and employee benefit
obligations 14 14.5 47.8 35.5
Provisions for other liabilities
and charges 14.6 12.4 12.9
Deferred income tax liabilities 2.6 2.9 2.9
221.5 101.8 87.0
-------------------------------------- ----- ------------------ ------------- ------------
Net assets 432.3 382.8 441.7
-------------------------------------- ----- ------------------ ------------- ------------
Equity: Capital and reserves attributable to owners
of the parent
Share capital 3.6 3.5 3.5
Share premium 91.1 91.1 91.1
Other reserves 106.0 106.7 98.4
Retained earnings 231.2 180.0 247.2
431.9 381.3 440.2
Non-controlling interests 0.4 1.5 1.5
-------------------------------------- ----- ------------------ ------------- ------------
Total equity 432.3 382.8 441.7
-------------------------------------- ----- ------------------ ------------- ------------
* See Note 3 for details about changes in accounting policies
and resulting prior period restatement and Note 12 for prior period
restatement of goodwill.
Notes 1 to 19 are an integral part of these condensed interim
financial statements.
Savills plc
Condensed interim consolidated statement of changes in
equity
for the period ended 30 June 2018
Attributable to owners of the parent
---------------------------- ----------------------------------------------------- --------------------------
Share Share Other Retained Non-controlling Total
capital premium reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm
---------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Balance at 1 January
2018 3.5 91.1 98.4 247.2 440.2 1.5 441.7
(audited)
---------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Profit for the period - - - 18.8 18.8 0.1 18.9
Other comprehensive
(loss)/income:
Changes in fair value
of equity investments
at FVOCI - - (0.5) - (0.5) - (0.5)
Remeasurement of defined
benefit pension scheme
obligation / retirement
benefits - - - 12.8 12.8 - 12.8
Tax on items directly
taken to reserves - - - (2.1) (2.1) - (2.1)
Currency translation
differences - - 8.1 - 8.1 - 8.1
----------------------------
Total comprehensive
income for the period - - 7.6 29.5 37.1 0.1 37.2
---------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Employee share option
scheme:
- Value of services
provided - - - 8.6 8.6 - 8.6
Purchase of treasury
shares - - - (17.4) (17.4) - (17.4)
Shares issued 0.1 - - - 0.1 - 0.1
Dividends - - - (34.9) (34.9) - (34.9)
Transactions with
non-controlling interests
(Note 13) - - - (1.8) (1.8) (1.2) (3.0)
Balance at 30 June
2018 (unaudited) 3.6 91.1 106.0 231.2 431.9 0.4 432.3
---------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Attributable to owners of the parent
------------------------- --------------------------------------------------------------- ---------------- --------
Shares
Share Share to be Other Retained Non-controlling Total
capital premium issued reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Balance at 1 January
2017
(audited) 3.5 91.1 11.3 103.9 195.8 405.6 1.4 407.0
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Profit for the period - - - - 21.9 21.9 0.3 22.2
Other comprehensive
(loss)/income:
Fair value gain on
available-for-sale
investment released
to income statement - - - (0.5) - (0.5) - (0.5)
Remeasurement of defined
benefit pension scheme
obligation / retirement
benefits - - - - 3.9 3.9 - 3.9
Tax on items directly
taken to reserves - - - - 0.7 0.7 - 0.7
Currency translation
differences - - - (8.0) - (8.0) - (8.0)
-------------------------
Total comprehensive
(loss)/income for
the period - - - (8.5) 26.5 18.0 0.3 18.3
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Employee share option
scheme:
- Value of services
provided - - - - 7.9 7.9 - 7.9
Purchase of treasury
shares - - - - (17.2) (17.2) - (17.2)
Shares issued - - (11.3) 11.3 - - - -
Dividends - - - - (33.0) (33.0) (0.2) (33.2)
Balance at 30 June
2017 (unaudited) 3.5 91.1 - 106.7 180.0 381.3 1.5 382.8
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Attributable to owners of the parent
------------------------- --------------------------------------------------------------- --------------------------
Shares
Share Share to be Other Retained Non-controlling Total
capital premium issued reserves earnings Total interests equity
GBPm GBPm GBPm GBPm GBPm GBPm GBPm GBPm
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Balance at 1 January
2017 3.5 91.1 11.3 103.9 195.8 405.6 1.4 407.0
(audited)
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Profit for the year - - - - 80.1 80.1 1.0 81.1
Other comprehensive
income/(loss):
Remeasurement of
defined
benefit pension scheme
obligation - - - - 14.1 14.1 - 14.1
Fair value gain on
available-for-sale
investments - - - 0.3 - 0.3 - 0.3
Tax on items directly
taken to reserves - - - 0.3 (0.8) (0.5) - (0.5)
Currency translation
differences - - - (16.2) - (16.2) - (16.2)
-------------------------
Total comprehensive
income/(loss)
for the year - - - (15.6) 93.4 77.8 1.0 78.8
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Employee share option
scheme:
- Value of services
provided - - - - 14.5 14.5 - 14.5
Purchase of treasury
shares - - - - (17.2) (17.2) - (17.2)
Shares issued - - (11.3) 11.3 - - - -
Disposal of
available-for-sale
investments - - - (1.2) - (1.2) - (1.2)
Dividends - - - - (39.3) (39.3) (0.9) (40.2)
Balance at 31 December
2017 3.5 91.1 - 98.4 247.2 440.2 1.5 441.7
(audited)
------------------------- --------- --------- -------- ---------- ---------- ------- ---------------- --------
Notes 1 to 19 are an integral part of these condensed interim
financial statements.
Savills plc
Condensed interim consolidated statement of cash flows
for the period ended 30 June 2018
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
Note GBPm GBPm GBPm
----------------------------------------------- ----- ------------------ ------------------ ----------------
Cash flows from operating activities
Cash (used in)/generated from operations 11 (77.2) (35.3) 145.1
Interest received 1.6 1.2 2.7
Interest paid (1.4) (0.7) (2.1)
Income tax paid (17.9) (13.7) (34.0)
Net cash (used in)/generated from operating
activities (94.9) (48.5) 111.7
----------------------------------------------- ----- ------------------ ------------------ ----------------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 0.3 0.3 0.1
Proceeds from sale of equity investments 9.0 1.5 4.6
Proceeds from sale of interests in joint
ventures and associates - - 0.4
Proceeds from sale of subsidiary, net of
cash disposed 0.5 - -
Dividends received from joint ventures
and associates 5.0 4.6 8.3
Loans issued to joint ventures and associates (0.9) (0.1) (0.6)
Acquisition of subsidiaries, net of cash
acquired (17.6) (9.3) (39.8)
Deferred consideration paid in relation
to current and prior year acquisitions (32.7) (60.2) (67.9)
Purchase of property, plant and equipment (6.5) (9.4) (23.1)
Purchase of intangible assets (2.6) (5.0) (8.8)
Purchase of investment in joint ventures,
associates and equity investments (3.3) (4.6) (9.4)
Net cash used in investing activities (48.8) (82.2) (136.2)
----------------------------------------------- ----- ------------------ ------------------ ----------------
Cash flows from financing activities
Proceeds from issue of share capital 0.1 - -
Proceeds from borrowings 411.0 181.2 181.5
Repayments of borrowings (265.0) (40.8) (110.6)
Purchase of treasury shares (17.4) (17.2) (17.2)
Purchase of non-controlling interests (2.6) - -
Dividends paid (34.9) (33.2) (40.2)
Net cash received from financing activities 91.2 90.0 13.5
----------------------------------------------- ----- ------------------ ------------------ ----------------
Net decrease in cash, cash equivalents
and bank overdrafts (52.5) (40.7) (11.0)
Cash, cash equivalents and bank overdrafts
at beginning of period 205.2 223.4 223.4
Effect of exchange rate fluctuations on
cash held 5.3 (5.4) (7.2)
Cash, cash equivalents and bank overdrafts
at end of period 158.0 177.3 205.2
----------------------------------------------- ----- ------------------ ------------------ ----------------
Notes 1 to 19 are an integral part of these condensed interim
financial statements.
NOTES
1. General information
The Company is a public limited company incorporated and
domiciled in England and Wales. The address of its registered
office is 33 Margaret Street, London W1G 0JD.
This condensed consolidated interim financial information was
approved for issue by the Board of Directors on 8 August 2018.
This condensed consolidated interim financial information does
not comprise statutory financial statements within the meaning of
section 434 of the Companies Act 2006. Statutory financial
statements for the year ended 31 December 2017 were approved by the
Board of Directors on 14 March 2018 and delivered to the Registrar
of Companies. The auditors' report on these accounts was
unqualified, did not contain an emphasis of matter paragraph and
did not contain a statement under section 498 of the Companies Act
2006.
This condensed consolidated interim financial information has
been reviewed, not audited.
2. Basis of preparation
This condensed consolidated interim financial information for
the half-year ended 30 June 2018 has been prepared in accordance
with the Disclosure and Transparency Rules of the Financial Conduct
Authority and with IAS 34, 'Interim financial reporting' as adopted
by the European Union. The condensed consolidated interim financial
information should be read in conjunction with the annual financial
statements for the year ended 31 December 2017, which have been
prepared in accordance with IFRSs as adopted by the European
Union.
Going concern
The Group's forecasts and projections, taking account of
reasonably possible changes in trading performance, show that the
Group should be able to operate within the level of its agreed
facilities. Having reassessed the principal risks, the Directors
considered it appropriate to adopt the going concern basis of
accounting in preparing the interim financial information.
3. Accounting policies
Except as described below, the accounting policies applied are
consistent with those of the annual financial statements for the
year ended 31 December 2017, as described in those financial
statements.
Taxes on income in the interim periods are accrued using the tax
rate that would be applicable to expected total annual profit or
loss.
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.
Accounting policy applied prior to 1 January 2018
Under IAS 39 (prior to transition to IFRS 9), these investments
were categorised as available-for-sale investments and were stated
at fair value, with changes in fair value being recognised in other
comprehensive income. When such investments were disposed of or
became impaired, the accumulated gains and losses, previously
recognised in other comprehensive income, were recognised in the
income statement.
Trade receivables
Trade receivables are recognised initially at their transaction
price and subsequently measured at amortised cost less provision
for impairment. Receivables are discounted where the time value of
money is material.
The Group applies the simplified approach to providing for
expected credit losses prescribed by IFRS 9, which permits the use
of the lifetime expected loss provision for all trade
receivables.
Accounting policy applied prior to 1 January 2018
Under IAS 39 (prior to transition to IFRS 9), a provision for
impairment of trade receivables was established when there was
objective evidence that the Group would not be able to collect all
amounts due according to the original terms of the receivables. The
amount of the provision was the difference between the asset's
carrying amount and the present value of estimated future cash
flows, discounted at the original effective interest rate.
The carrying amount of the asset was reduced through the use of
an allowance account, and the amount of the loss was recognised in
the income statement within 'other operating expenses'. When a
trade receivable was uncollected, it was written off against the
allowance account for trade receivables. Subsequent recoveries of
amounts previously written off were credited against 'other
operating expenses' in the income statement.
Revenue
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.
Adoption of standards, amendments and interpretations to
standards
Standards, amendments and interpretations endorsed by the EU and
mandatorily effective for the first time for the financial year
beginning 1 January 2018 relevant to the Group are as follows:
-- IFRS 9, 'Financial instruments', replaces the provisions of
IAS 39 that relate to the recognition, classification and
measurement of financial assets and financial liabilities;
derecognition of financial instruments; impairment of financial
assets and hedge accounting. IFRS 9 also significantly amends other
standards dealing with financial instruments such as IFRS 7
Financial Instruments: Disclosures. In accordance with the
transitional provisions in IFRS 9 (7.2.15), comparative figures
have not been restated and continue to be accounted for in
accordance with the Group's previous accounting policy.
The transition to IFRS 9 did not have a material impact on the
Group's opening retained earnings, as a result a reconciliation of
retained earnings is not required.
The only reclassification adjustment upon transition to IFRS 9
relates to the Group's available-for-sale investments, which have
been reclassified to financial assets through other comprehensive
income (following the Group's decision to apply the irrevocable
election available in IFRS 9). This reclassification did not have
an impact on the carrying value of these financial assets and only
impacts the accounting treatment in future periods when these
investments are disposed of.
-- IFRS 15, 'Revenue from contracts with customers' ('IFRS 15'),
establishes a principles based approach for revenue recognition and
is based on the concept of recognising revenue for obligations only
when they are satisfied and the control of goods or services is
transferred. It applies to all contracts with customers, except
those in the scope of other standards. The implementation of IFRS
15 resulted in some refinement in the timing of recognition of
investment management performance fees and the amortisation period
for contract costs.
In accordance with transition provisions in IFRS 15 the new
rules have been adopted using the simplified retrospective
transition method. The transition to IFRS 15 did not have a
material impact on the Group's opening retained earnings, as a
result a reconciliation of retained earnings is not required. There
have however been a number of balance sheet reclassifications upon
transition to IFRS 15 as follows:
-- Contract assets recognised in relation to consulting
contracts were previously presented as work in progress.
-- Contract liabilities recognised which were previously
presented in trade and other payables as deferred revenue.
December
June 2017 December 2017
June 2017 Reclass-ification Restated 2017 Reclass-ification Restated
GBPm GBPm GBPm GBPm GBPm GBPm
---------------------- ---------- ------------------ ---------- --------- ------------------ ----------
Current assets
Work in progress 6.8 (6.8) - 6.0 (6.0) -
Contract assets - 6.8 6.8 - 6.0 6.0
Current liabilities
Contract liabilities - 9.5 9.5 - 10.3 10.3
Trade and other
payables 365.7 (9.5) 356.2 592.7 (10.3) 582.4
---------------------- ---------- ------------------ ---------- --------- ------------------ ----------
In addition to the above, the December 2017 goodwill and trade
and other payables balances have been restated by a further
GBP2.0m. See Note 12 for details.
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, 'Share-based Payment' ('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 7
for further explanation);
-- items that are considered exceptional by size or nature
including restructuring costs, impairments of goodwill, intangible
assets and investments and profits or losses arising on disposals
of subsidiaries and other investments; and
-- significant acquisition costs related to business combinations.
The underlying effective tax rate represents the underlying
income tax expense expressed as a percentage of underlying profit
before tax. The underlying income tax expense is the income tax
expense excluding the tax effect of the adjustments made to arrive
at underlying profit before tax and other tax effects related to
these adjustments.
Underlying basic earnings per share and underlying diluted
earnings per share both utilise the underlying profit after tax
measure instead of GAAP earnings. The weighted average number of
shares remain the same as the GAAP measure.
A reconciliation between GAAP and underlying measures are set
out in Note 7 (underlying profit before tax) and Note 10b)
(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.
4. Estimates
The preparation of interim financial statements requires
management to make judgements, estimates and assumptions that
affect the application of accounting policies and the reported
amounts of assets and liabilities, income and expense. Actual
results may differ from these estimates.
In preparing these condensed interim financial statements, the
significant judgements made by management in applying the Group's
accounting policies and the key sources of estimation uncertainty
were the same as those that applied to the consolidated financial
statements for the year ended 31 December 2017, with the exception
of changes in estimates that are required in determining the
provision for income taxes.
5. Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial risks
including foreign exchange risk, interest rate risk, credit risk
and liquidity risk. The condensed interim financial statements do
not include all financial risk management information and
disclosures as required in the annual financial statements; they
should be read in conjunction with the Group's annual financial
statements as at 31 December 2017. There have been no changes in
any risk management policies since the year end.
Fair value estimation
The table below analyses financial instruments carried at fair
value, by valuation method. The different levels have been defined
as follows:
- Quoted prices (unadjusted) in active markets for identical
assets and liabilities (Level 1).
- Inputs other than quoted prices included within Level 1 that
are observable for the asset or liability, either directly (that
is, as prices) or indirectly (that is, derived from prices) (Level
2).
- Inputs for the asset or liability that are not based on
observable market data (that is, unobservable inputs) (Level
3).
The following table presents the Group's assets and liabilities
that are measured at fair value at 30 June 2018:
GBPm Level 1 Level 2 Level 3 Total
Assets
Financial assets held at
FVOCI
- Listed 0.9 - - 0.9
- Unlisted - 26.5 - 26.5
Derivative financial instruments - 0.1 - 0.1
---------------------------------- -------- -------- -------- ------
Total assets 0.9 26.6 - 27.5
---------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - 0.6 - 0.6
---------------------------------- -------- -------- -------- ------
Total liabilities - 0.6 - 0.6
---------------------------------- -------- -------- -------- ------
The following table presents the Group's assets and liabilities
that are measured at fair value at 31 December 2017:
GBPm Level 1 Level 2 Level 3 Total
---------------------------------- --------- -------- -------- ------
Assets
Available-for-sale investments
- Unlisted - 24.6 - 24.6
Derivative financial instruments - 0.5 - 0.5
Total assets - 25.1 - 25.1
---------------------------------- --------- -------- -------- ------
Liabilities
Derivative financial instruments - 0.1 - 0.1
---------------------------------- --------- -------- -------- ------
Total liabilities - 0.1 - 0.1
---------------------------------- --------- -------- -------- ------
There were no transfers between levels of the fair value
hierarchy in the period.
There were no changes in valuation techniques during the
period.
The fair value of all other financial assets and liabilities
approximate their carrying amount.
Valuation techniques
Level 1 instruments are those whose fair values are based on
quoted market prices.
Level 2 instruments include investment funds, the fair value of
these funds are based on underlying asset values determined by the
Fund Manager's audited annual financial statements. The fair value
of other unlisted investments also included as Level 2 are based on
price earnings models and historical cost information.
If one or more of the significant inputs is not based on
observable market data, the instrument is included in Level 3. The
Group has no Level 3 instruments.
6. Segment analysis
Property Invest-
Six months to 30 June Trans-action and Facilities ment
2018 Advisory Manage-ment Consult-ancy Manage-ment Other Total
(unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Revenue
United Kingdom
- commercial 33.9 69.6 73.6 11.4 - 188.5
- residential 58.2 14.4 19.4 - - 92.0
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total United Kingdom 92.1 84.0 93.0 11.4 - 280.5
Continental Europe and
the Middle East 41.5 30.9 12.1 12.1 - 96.6
Asia Pacific
- commercial 59.7 148.8 20.7 3.5 - 232.7
- residential 17.7 - - - - 17.7
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total Asia Pacific 77.4 148.8 20.7 3.5 - 250.4
North America 100.3 - - - - 100.3
--------------------------
Total revenue 311.3 263.7 125.8 27.0 - 727.8
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Underlying profit/(loss)
before tax
United Kingdom
- commercial 2.8 4.2 6.3 1.2 (3.8) 10.7
- residential 6.3 0.7 2.2 - - 9.2
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total United Kingdom 9.1 4.9 8.5 1.2 (3.8) 19.9
Continental Europe and
the Middle East 1.6 (0.2) 0.6 1.3 - 3.3
Asia Pacific
- commercial 5.7 8.1 1.7 0.4 - 15.9
- residential 2.7 - - - - 2.7
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total Asia Pacific 8.4 8.1 1.7 0.4 - 18.6
North America 0.6 - - - - 0.6
--------------------------
Underlying profit/(loss)
before tax 19.7 12.8 10.8 2.9 (3.8) 42.4
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Property Invest-
Six months to 30 June Trans-action and Facilities ment
2017 Advisory Manage-ment Consult-ancy Manage-ment Other Total
(unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Revenue
United Kingdom
- commercial 39.4 62.9 71.0 12.0 1.1 186.4
- residential 55.0 13.3 20.6 - - 88.9
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total United Kingdom 94.4 76.2 91.6 12.0 1.1 275.3
Continental Europe 26.4 20.0 7.3 18.3 - 72.0
Asia Pacific
- commercial 67.6 150.4 22.1 3.3 - 243.4
- residential 20.1 - - - - 20.1
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total Asia Pacific 87.7 150.4 22.1 3.3 - 263.5
North America 103.6 - - - - 103.6
--------------------------
Total revenue 312.1 246.6 121.0 33.6 1.1 714.4
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Underlying profit/(loss)
before tax
United Kingdom
- commercial 4.5 4.2 5.2 2.4 (3.5) 12.8
- residential 5.4 0.8 2.8 - - 9.0
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total United Kingdom 9.9 5.0 8.0 2.4 (3.5) 21.8
Continental Europe (0.9) (1.0) (0.4) 3.8 - 1.5
Asia Pacific
- commercial 9.7 6.2 2.6 0.4 - 18.9
- residential 2.9 - - - - 2.9
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Total Asia Pacific 12.6 6.2 2.6 0.4 - 21.8
North America 3.0 - - - - 3.0
--------------------------
Underlying profit/(loss)
before tax 24.6 10.2 10.2 6.6 (3.5) 48.1
-------------------------- ------------- ---------------- ------------- ------------- ------ ------
Property
Year ended to 31 December Trans-action and Facilities Invest-ment
2017 Advisory Manage-ment Consult-ancy Manage-ment Other Total
(audited) GBPm GBPm GBPm GBPm GBPm GBPm
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Revenue
United Kingdom
- commercial 101.6 135.1 160.2 24.8 1.1 422.8
- residential 128.9 30.7 44.7 - - 204.3
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Total United Kingdom 230.5 165.8 204.9 24.8 1.1 627.1
Continental Europe 78.2 46.4 22.5 35.3 - 182.4
Asia Pacific
- commercial 168.4 300.9 45.7 6.4 - 521.4
- residential 44.3 - - - - 44.3
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Total Asia Pacific 212.7 300.9 45.7 6.4 - 565.7
North America 224.8 - - - - 224.8
---------------------------
Total revenue 746.2 513.1 273.1 66.5 1.1 1,600.0
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Underlying profit/(loss)
before tax
United Kingdom
- commercial 17.2 9.0 17.1 5.0 (10.6) 37.7
- residential 18.7 2.7 6.8 - - 28.2
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Total United Kingdom 35.9 11.7 23.9 5.0 (10.6) 65.9
Continental Europe 4.5 (1.8) 2.0 6.5 - 11.2
Asia Pacific
- commercial 26.9 15.4 5.1 1.8 - 49.2
- residential 6.4 - - - - 6.4
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Total Asia Pacific 33.3 15.4 5.1 1.8 - 55.6
North America 7.8 - - - - 7.8
---------------------------
Underlying profit/(loss)
before tax 81.5 25.3 31.0 13.3 (10.6) 140.5
--------------------------- ------------- ---------------- ------------- ------------- ------- --------
Operating segments reflect internal management reporting to the
Group's chief operating decision maker, defined as the Group
Executive Board (GEB). 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.
The Other segment includes revenue, 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 reported
profit before tax is provided in Note 7.
7. Underlying profit before tax
The Directors seek to present a measure of underlying
performance which is not impacted by exceptional items or items
considered non-operational in nature. This measure is described as
'underlying' and is used by management to assess and monitor
performance.
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
GBPm GBPm GBPm
--------------------------------------- ------------------ ------------------ ----------------
Reported profit before tax 26.7 32.4 112.4
Adjustments:
- Amortisation of acquired intangible
assets (excluding software) 2.6 1.9 3.9
- Impairment of goodwill - - 2.3
- Share-based payment adjustment (0.3) (0.4) (1.2)
- Profit on disposal of subsidiary
and equity investments (0.1) (0.9) (5.9)
- Restructuring costs 2.8 1.8 7.7
- Acquisition-related costs 10.7 13.3 21.3
--------------------------------------- ------------------ ------------------ ----------------
Underlying profit before tax 42.4 48.1 140.5
--------------------------------------- ------------------ ------------------ ----------------
The adjustment for share-based payments relates to the impact of
the accounting standard for share-based compensation. The annual
bonus is paid in a mixture of cash and deferred shares and the
proportions can vary from one year to another. Under IFRS the
deferred share element is amortised to the income statement over
the vesting period whilst the cash element is expensed in the year.
The adjustment above addresses this by adding to or deducting from
profit the difference between the IFRS 2 charge in relation to
outstanding bonus-related share awards and the estimated value of
the current year bonus pool to be awarded in deferred shares. This
adjustment is made in order to better match the underlying staff
cost in the year with the revenue recognised in the same
period.
During the period, the Group disposed of Savills Asset
Management Co. Ltd., a South Korean asset management company,
resulting in a GBP0.1m profit. The profit in the period ended 30
June 2017 related to the disposal of the Group's equity investment
in the Cordea Savills German Retail Fund.
Restructuring costs includes costs of integration activities in
relation to significant business acquisitions. Costs in the period
ended 30 June 2018 relate primarily to the 2017 acquisition of
Aguirre Newman in Spain. Costs in the period ended 30 June 2017
relate primarily to the 2015 acquisition of Smiths Gore in the UK
and Savills Investment Management's acquisition of SEB, also in
2015.
Acquisition related costs consist of GBP1.5m of transaction
related costs (30 June 2017: GBPnil) and GBP2.2m in respect of
Savills Investment Management's 2014 acquisition of Merchant
Capital (30 June 2017: GBP1.4m). In addition, there was a GBP7.0m
charge for future consideration payments which are contingent on
the continuity of recipients' employment in the future (30 June
2017: GBP11.9m). For the period ended 30 June 2018 a significant
portion of this charge relates to the Aguirre Newman acquisition.
For the period ended 30 June 2017 a significant portion of the
charge related to the Studley acquisition.
8. Income tax expense
The income tax expense has been calculated on the basis of the
statutory rates in each jurisdiction adjusted for any disallowable
charges.
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
GBPm GBPm GBPm
-------------------- ------------------ ------------------ ----------------
UK
- Current tax 3.8 5.7 15.4
- Deferred tax (1.1) (1.6) (3.8)
Foreign tax
- Current tax 5.5 9.1 23.2
- Deferred tax (0.4) (3.0) (3.5)
-------------------- ------------------ ------------------ ----------------
Income tax expense 7.8 10.2 31.3
-------------------- ------------------ ------------------ ----------------
The forecast Group effective tax rate is 29.2% (30 June 2017:
31.5% and 31 December 2017: 27.8%), which is higher (30 June 2017
and 31 December 2017: higher) than the UK standard effective annual
rate of corporation tax of 19% (30 June 2017 and 31 December 2017:
19.25%). This reflects permanent disallowable expenses, including
acquisition costs. The Group underlying effective tax rate was
24.5% (30 June 2017: 26.6% and 31 December 2017: 25.8%).
9. Dividends
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
GBPm GBPm GBPm
------------------------------------- ------------------ ------------------ ------------------
Amounts recognised as distribution
to equity holders in the year:
Ordinary final dividend of 10.45p
per share (2016: 10.1p) 14.3 13.5 13.5
Supplemental interim dividend of
15.1p per share (2016: 14.5p) 20.6 19.5 19.5
Interim dividend of 4.65p per share - - 6.3
------------------------------------- ------------------ ------------------ ------------------
34.9 33.0 39.3
------------------------------------- ------------------ ------------------ ------------------
Proposed interim dividend for the
six months ended 30 June 2018 GBP6.5m
------------------------------------- ------------------ ------------------ ------------------
The Board has declared an interim dividend for the six months
ended 30 June 2018 of 4.8p per ordinary share (30 June 2017: 4.65p)
to be paid on 3 October 2018 to shareholders on the register on 7
September 2018. The interim dividend has not been recognised in
these interim financial statements. It will be recognised in equity
in the year to 31 December 2018.
10(a). Basic and diluted earnings per share
2018 2018 2018 2017 2017 2017
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June
(unaudited) GBPm million pence GBPm million pence
------------------------------- --------- -------- ------ --------- -------- ------
Basic earnings per share 18.8 136.3 13.8 21.9 136.2 16.1
Effect of additional
shares issuable under
option - 3.9 (0.4) - 3.1 (0.4)
-------------------------------
Diluted earnings per
share 18.8 140.2 13.4 21.9 139.3 15.7
------------------------------- --------- -------- ------ --------- -------- ------
2017 2017 2017
Earnings Shares EPS
Year to 31 December (audited) GBPm million pence
------------------------------- --------- -------- ------ --------- -------- ------
Basic earnings per share 80.1 136.2 58.8
Effect of additional
shares issuable under
option - 3.0 (1.3)
------------------------------- --------- -------- ------ --------- -------- ------
Diluted earnings per
share 80.1 139.2 57.5
------------------------------- --------- -------- ------ --------- -------- ------
10(b). Underlying basic and diluted earnings per share
2018 2018 2018 2017 2017 2017
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June
(unaudited) GBPm million pence GBPm million pence
--------------------------------- --------- -------- ------ --------- -------- ------
Basic earnings per share 18.8 136.3 13.8 21.9 136.2 16.1
- Amortisation of acquired
intangible assets (excluding
software) after tax 1.9 - 1.4 1.1 - 0.8
- Share-based payment
adjustment after tax (0.3) - (0.2) (0.3) - (0.2)
- Restructuring costs
after tax 2.6 - 1.9 1.6 - 1.1
- Profit on disposal of
subsidiary and equity
investments after tax (0.1) - (0.1) (0.8) - (0.6)
- Acquisition-related
costs after tax 10.3 - 7.6 12.5 - 9.2
- Forecast annual tax
rate adjustment (1.3) - (1.0) (1.0) - (0.7)
Underlying basic earnings
per share 31.9 136.3 23.4 35.0 136.2 25.7
--------------------------------- --------- -------- ------ --------- -------- ------
Effect of additional shares
issuable under option - 3.9 (0.6) - 3.1 (0.6)
---------------------------------
Underlying diluted earnings
per share 31.9 140.2 22.8 35.0 139.3 25.1
--------------------------------- --------- -------- ------ --------- -------- ------
2017 2017 2017
Earnings Shares EPS
Year to 31 December (audited) GBPm million pence
--------------------------------- --------- -------- ------ --------- -------- ------
Basic earnings per share 80.1 136.2 58.8
- Amortisation of acquired
intangible assets (excluding
software) after tax 2.1 - 1.5
- Impairment of goodwill
after tax 2.3 - 1.7
- Share-based payment
adjustment after tax (1.0) - (0.7)
- Profit on disposal of
available-for-sale investments
after tax (5.9) - (4.3)
- Restructuring costs
after tax 6.0 - 4.4
- Acquisition-related
costs after tax 19.6 - 14.4
--------- --------
Underlying basic earnings
per share 103.2 136.2 75.8
--------------------------------- --------- -------- ------ --------- -------- ------
Effect of additional shares
issuable under option - 3.0 (1.7)
--------------------------------- --------- --------
Underlying diluted earnings
per share 103.2 139.2 74.1
--------------------------------- --------- -------- ------ --------- -------- ------
11. Cash (used in)/generated from operations
Six months Six months Year ended
to 30 June to 30 June 31 December
2018 (unaudited) 2017 (unaudited) 2017 (audited)
GBPm GBPm GBPm
------------------------------------------ ------------------ ------------------ ----------------
Profit for the period 18.9 22.2 81.1
Adjustments for:
Income tax (Note 8) 7.8 10.2 31.3
Depreciation 7.3 6.9 13.5
Amortisation of intangible assets 4.3 3.1 7.0
Impairment of goodwill - - 2.3
Profit on disposal of subsidiary
and equity investments (0.1) (0.9) (5.9)
Net finance cost 0.3 0.4 1.3
Share of post-tax profit from joint
ventures and associates (3.2) (3.1) (9.9)
Decrease in employee and retirement
obligations (3.7) (3.1) (7.9)
Exchange movements and unrealised
gains/losses on financial instruments
in operating activities 0.6 0.3 (0.2)
(Decrease)/increase in provisions (0.3) (0.4) 2.3
Charge for share-based compensation 8.6 7.9 14.5
Operating cash flows before movements
in working capital 40.5 43.5 129.4
------------------------------------------ ------------------ ------------------ ----------------
Decrease/(increase) in trade and
other receivables and contract assets 60.5 46.3 (44.8)
(Decrease)/increase in trade and
other payables and contract liabilities (178.2) (125.1) 60.5
------------------------------------------ ------------------ ------------------ ----------------
Cash (used in)/generated from operations (77.2) (35.3) 145.1
------------------------------------------ ------------------ ------------------ ----------------
12. Acquisition of subsidiaries
Cluttons International Holdings Limited and Cluttons Management
Limited (collectively 'Cluttons Middle East')
On 31 May 2018 the Group acquired 100% of the equity interest in
Cluttons Middle East, establishing the Group's first wholly owned
business in the region.
Total acquisition consideration is provisionally determined at
GBP21.1m, GBP17.5m of which was settled on completion and the
remainder relating to the discounted value of deferred
consideration of up to GBP3.6m, payable on the first, second and
third anniversaries of completion.
Acquisition-related costs of GBP0.9m have been expensed as
incurred to the income statement.
The fair value exercise is in progress and goodwill of GBP17.4m
has been provisionally determined. Goodwill is attributable to the
experience and expertise of key staff and strong industry
reputation and is not expected to be deductible for tax
purposes.
The acquired business contributed revenue of GBP1.1m and
underlying profit of GBP0.2m to the Group for the period from 1
June 2018 to 30 June 2018. Had the acquisition been made at the
beginning of the financial year, revenue would have been GBP6.6m
and underlying profit would have been GBP1.0m.
Due to the timing of the acquisition, the fair values of the
assets acquired and liabilities assumed are provisional and will be
finalised within 12 months of the acquisition date. These are
summarised below:
Provisional
fair value
to the Group
GBPm
---------------------------------------------------------- --------------
Property, plant and equipment 0.4
Investment in joint ventures 0.3
Current assets: Trade and other receivables 4.5
Cash and cash equivalents 0.4
---------------------------------------------------------- --------------
Total assets 5.6
Current liabilities: Trade and other payables (1.0)
Employment benefit provision (0.9)
---------------------------------------------------------- --------------
Net assets acquired 3.7
Goodwill 17.4
---------------------------------------------------------- --------------
Purchase consideration 21.1
---------------------------------------------------------- --------------
Consideration satisfied by:
Net cash paid 17.5
Discounted value of deferred consideration owing
at reporting date 3.6
21.1
---------------------------------------------------------- --------------
The fair value of trade and other receivables is GBP4.5m and
includes trade receivables with a fair value of GBP2.6m. The gross
contractual amount for trade receivables is GBP2.7m, of which
GBP0.1m is expected to be uncollectible.
Other acquisitions during the period
During the period, the Group also acquired 100% of Central
Management Solutions Limited, an urban-centre management company
based in the UK. Cash consideration paid was GBP0.8m. A further
GBP0.3m is subject to service conditions and will be expensed to
the income statement over the period of service. Goodwill of
GBP0.4m has been provisionally determined.
Update to provisional fair value of prior period acquisition
During the period, the total acquisition consideration payable
for the Aguirre Newman acquisition on 29 December 2017 was
finalised, with an additional GBP2.0m of consideration paid. This
adjustment is considered a measurement period adjustment in
accordance with IFRS 3 and as a result the prior period
comparatives have been restated by increasing goodwill arising on
the acquisition by GBP2.0m, with a corresponding increase in trade
and other payables to recognise additional deferred consideration
as at 31 December 2017.
13. Transactions with non-controlling interests
During the year, the Group undertook the following transactions
with non-controlling interests:
Total holding
Holding at
Name Date acquired 30 June 2018
============================== =========== ========= =============
Savills Investment Management
SGR April 2018 25% 100%
============================== =========== ========= =============
(a) Acquisitions of additional interest in subsidiaries
Under IFRS 10, transactions with non-controlling interests must
be accounted for as equity transactions, therefore no goodwill has
been recognised. Acquisition costs related to this transaction were
not significant.
In April 2018, the Group acquired an additional 25% of the
shares in its Italian investment management business, Savills
Investment Management SGR ("SIMSGR"), for a net consideration of
GBP3.0m, with GBP2.6m paid on completion. This takes the Group's
shareholding in the entity to 100%. The carrying amount of SIMSGR's
net assets on the date of acquisition was GBP5.0m. The Group
recognised a decrease in non-controlling interest of GBP1.2m. The
amount charged to retained earnings in respect of the transaction
was GBP1.8m.
2018
GBPm
------------------------------------------------------- -----
Carrying amount of non-controlling interests acquired 1.2
Net consideration to acquire non-controlling interests (3.0)
------------------------------------------------------- -----
Charge recognised in parent's equity (1.8)
------------------------------------------------------- -----
14. Retirement and employee benefit obligations
Defined benefit plans
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 members of the UK Plan are provided through the Group's
defined contribution Personal Pension Plan.
The Savills Fund Management GMBH Plan (the 'SFM Plan') is a
Germany-based plan which provides final salary benefits to 17
active employees and 97 former employees. The plan is closed to
future service-based benefit accrual.
Significant actuarial pension assumptions are detailed in the
Group's Annual Report and Accounts 2017 and are the same as at 31
December 2017 except for the following:
UK Plan SFM Plan
------------------------------------- -------------------------------------
Year ended Year ended
Six months Six months 31 Six months Six months 31
to 30 to 30 December to 30 to 30 December
June 2018 June 2017 2017 June 2018 June 2017 2017
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
Expected rate of salary increases 3.25% 3.25% 3.25% 2.50% 2.50% 2.50%
Projection of social security
contribution ceiling - - - 2.25% 2.25% 2.25%
Discount rate 2.80% 2.60% 2.50% 2.06% 2.12% 2.06%
Inflation assumption 3.30% 3.40% 3.40% 1.75% 1.75% 1.75%
Rate of increase to pensions
in payment
- accrued before 6 April
1997 3.00% 3.00% 3.00% - - -
- accrued after 5 April 1997 3.20% 3.30% 3.30% - - -
- accrued after 5 April 2005 2.20% 2.30% 2.30% - - -
- pension promise before
1 January 1986 - - - 2.25% 2.25% 2.25%
- pension promise after 1
January 1986 - - - 1.75% 1.75% 1.75%
Rate of increase to pensions
in deferment
- accrued before 6 April
2001 5.00% 5.00% 5.00% - - -
- accrued after 5 April 2001 2.20% 2.30% 2.30% - - -
- accrued after 5 April 2009 2.20% 2.30% 2.30% - - -
----------------------------------- ----------- ----------- ----------- ----------- ----------- -----------
The amounts recognised in the statement of financial position
are as follows:
30 June 30 June 31 December
2018 2017 2017
UK Plan GBPm GBPm GBPm
--------------------------------------- -------- -------- ------------
Present value of funded obligations 273.9 299.9 298.2
Fair value of plan assets (273.3) (267.7) (278.7)
--------------------------------------- -------- -------- ------------
Liability recognised in the statement
of financial position (included
in retirement and employee benefit
obligations) 0.6 32.2 19.5
--------------------------------------- -------- -------- ------------
30 June 30 June 31 December
2018 2017 2017
SFM Plan GBPm GBPm GBPm
------------------------------------- -------- -------- ------------
Present value of funded obligations 13.8 13.8 13.9
Fair value of plan assets (14.4) (14.8) (15.2)
------------------------------------- -------- -------- ------------
Asset recognised in the statement
of financial position (included
in retirement benefit surplus) (0.6) (1.0) (1.3)
------------------------------------- -------- -------- ------------
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 amount recognised within the income statement in relation to
the UK Plan for the period ended 30 June 2018 is a net interest
cost of GBP0.2m (30 June 2017: GBP0.5m, 31 December 2017:
GBP1.0m).
The amount recognised within the income statement in relation to
the SFM Plan for the period ended 30 June 2018 is a current service
cost of GBPnil (30 June 2017: GBP0.1m, 31 December 2017:
GBP0.1m).
Included in retirement and employee benefit obligations is
GBP30.0m relating to holiday pay and long service leave (30 June
2017: GBP28.0m, 31 December 2017: GBP27.2m).
15. Borrowings
Movements in borrowings are analysed as follows:
GBPm
------------------------------------- --------
Opening amount as at 1 January 2018 110.2
Additional borrowings 411.5
Repayments of borrowings (268.5)
Closing amount as at 30 June 2018 253.2
--------------------------------------- --------
30 June 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
-------------------------------- -------- -------- ------------
Current
Bank overdrafts 0.6 2.4 3.6
Unsecured bank loans 102.9 175.9 106.5
Finance leases 0.1 - -
Non-current
Loan notes, net of transaction 149.5 - -
costs
Finance leases 0.1 - 0.1
253.2 178.3 110.2
-------------------------------- -------- -------- ------------
The Group has the following undrawn borrowing facilities:
30 June 30 June 31 December
2018 2017 2017
GBPm GBPm GBPm
----------------------------------- -------- -------- ------------
Floating rate
- expiring within one year or on
demand 36.2 21.4 33.5
- expiring between 1 and 5 years 257.5 75.0 194.2
----------------------------------- -------- -------- ------------
293.7 96.4 227.7
----------------------------------- -------- -------- ------------
In April 2018, the Group increased the multi-currency revolving
credit facility ('RCF') by GBP60.0m to GBP360.0m. The RCF expires
on 15 December 2020. As at 30 June 2018 GBP102.5m (30 June 2017:
GBP175.0m, 31 December 2017: GBP106.0m) of the RCF was drawn.
In June 2018, the Group raised GBP150.0m through the issue of 7,
10 and 12 year private placement fixed rate notes.
16. Related party transactions
As at 30 June 2018, there were no loans outstanding to
associates and GBP1.5m of loans outstanding to joint ventures (30
June 2017: GBP0.1m of loans outstanding to joint ventures, 31
December 2017: GBP0.6m loans outstanding to joint ventures and
GBP0.3m loans outstanding to associates).
There were no material related party transactions during the
period. All related party transactions take place on an
arm's-length basis under the same terms as those available to other
customers in the ordinary course of business.
17. 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.
18. Seasonality
A significant percentage of revenue is seasonal which has
historically caused revenue, profits and cash flow from operating
activities to be lower in the first half and higher in the second
half of each year. The concentration of revenue and cash flow in
the fourth quarter is due to an industry-wide focus on completing
transactions toward the calendar year end.
19. Events after the balance sheet date
DRC Capital LLP ('DRC')
On 26 July 2018, the Group announced the proposed acquisition by
Savills Investment Management of a 25% interest in DRC, a leading
European investment advisor of real estate debt funds. In addition,
the partners of DRC have granted Savills Investment Management a
call option to acquire the remaining 75% interest in DRC on the
third anniversary of the completion of the initial transaction. DRC
is a specialist real estate debt investment advisor with current
AUM of GBP2.0bn comprising a series of High Yield, Senior and Whole
Loan funds. Subject to regulatory approvals, the transaction is
expected to close in the third quarter of 2018.
SHAREHOLDER INFORMATION
Like many other listed public companies, Savills no longer
issues a hard copy of the Interim Statement to shareholders.
This announcement together with the attached financial
statements and notes may be downloaded from the investor relations
section of the Company website at www.savills.com.
This information is provided by RNS, the news service of the
London Stock Exchange. RNS is approved by the Financial Conduct
Authority to act as a Primary Information Provider in the United
Kingdom. Terms and conditions relating to the use and distribution
of this information may apply. For further information, please
contact rns@lseg.com or visit www.rns.com.
END
IR GMGGRNRMGRZM
(END) Dow Jones Newswires
August 09, 2018 02:00 ET (06:00 GMT)
Savills (LSE:SVS)
Historical Stock Chart
From Apr 2024 to May 2024
Savills (LSE:SVS)
Historical Stock Chart
From May 2023 to May 2024