TIDMSVS
RNS Number : 8562I
Savills PLC
10 August 2023
10 August 2023
Savills plc
('Savills' or 'the Group')
RESULTS FOR THE HALF YEARED 30 JUNE 2023
Savills plc, the international real estate advisor, today
announces its unaudited results for the six months ended 30 June
2023.
Key Financial Information
-- Group revenue GBP1,011.4m, down 2.5% (4.1% in constant
currency*) (H1 2022: GBP1,037.4m)
-- Group underlying profit** before tax GBP16.3m (H1 2022:
GBP59.2m)
-- Group profit before tax GBP6.0m (H1 2022: GBP50.4m)
-- Underlying basic earnings per share** 9.2p (H1 2022:
32.4p)
-- Basic earnings per share 3.5p (H1 2022: 26.8p)
-- Interim dividend of 6.9p (H1 2022: 6.6p)
-- Net cash*** GBP12.9m (H1 2022: Net cash GBP149.0m)
* Revenue and underlying profit for the period are translated at
the prior period exchange rates to provide a constant currency
comparative (see Appendices).
** Underlying profit before tax ('underlying profit') and
underlying basic earnings per share ('underlying EPS') are
calculated on a consistently reported basis in accordance with Note
3, Note 8 and Note 11(b) to the Interim Financial Statements.
*** Net cash reflects cash and cash equivalents net of
borrowings and overdrafts in the notional pooling arrangement (see
Note 13 and 19).
Trading performance - Key highlights
-- Transaction Advisory revenues (down 20%) supported by market
share gains
-- Less transactional businesses, performed well in aggregate
with revenue up 9%
-- Property and Facilities Management revenue up 16%,
Consultancy revenue stable
-- Savills Investment Management revenue down 4%
-- 1.6% margin (H1 2022: 5.7%) reflects impact of reduced market
volumes and Savills policy of maintaining bench strength to assist
clients in challenging conditions. This positions the Group to
benefit from recovery in due course
Commenting on the results, Mark Ridley, Group Chief Executive of
Savills plc, said:
"During 2023, global real estate markets have faced the obvious
challenges associated with inflation and the related steep rise in
interest rates. Different regions have varied in the pace of their
adjustment to current conditions and all have experienced a
material decline in trading volumes during that adjustment process.
Market participants, whether investors or occupiers, seek greater
certainty on the trajectory of interest rates over the next 18
months, something which has become somewhat clearer in recent weeks
than for much of the period.
"Savills has weathered both the inflationary cost conditions and
reduced transaction volumes well, increasing market share and,
supported by our strong balance sheet, continuing to undertake
selective business development activities to further the Group's
long term growth strategy.
"We are seeing some positive signs in markets such as the UK and
continued strength in certain Asia Pacific markets including Japan;
in Continental Europe and mainland China we now expect reduced
market volumes to continue through much of the year. In many
locations we are carrying very strong capital transaction pipelines
awaiting the market conditions for launch. In prolonged uncertain
conditions, it remains challenging to predict accurately the timing
of individual market recoveries. Accordingly, our range of
expectations for the year as a whole has reduced somewhat. We do,
however, continue to anticipate a significant improvement in
volumes of activity through the balance of the year, and into
2024."
For further information, contact:
Savills 020 7409 8030
Mark Ridley, Group Chief Executive
Simon Shaw, Group Chief Financial
Officer
Teneo 020 7353 4200
Jo Blackshaw
Will Palfreyman
The analyst presentation will be held at 9.30am today by webinar
. For joining instructions please contact nrichards@savills.com. A
recording of the presentation will be available from noon at
www.ir.savills.com .
Overview
During the first half of 2023, the Group has withstood much
reduced trading volumes as real estate markets progressively adjust
to challenging macro-economic conditions.
In the six months to 30 June 2023, Savills delivered revenue of
GBP1,011.4m, a reduction of 3% (4% in constant currency) over the
comparable period (H1 2022: GBP1,037.4m). Underlying profit was
GBP16.3m, 72% lower than the first half of 2022 (H1 2022: GBP59.2m)
(72% lower in constant currency). The Group's underlying profit
margin was 1.6% (H1 2022: 5.7%). This reflects the anticipated
losses in our transaction business, staff cost inflation and the
maintenance of our professional staff roster to service clients and
benefit from the recovery in due course.
The Group continues to maintain a strong balance sheet with net
cash of GBP12.9m at 30 June 2023 (H1 2022: GBP149.0m).
Reported profit before tax was GBP6.0m (H1 2022: GBP50.4m).
Market conditions
H1 2023 continued the downward trend in real estate trading
volumes, both capital and leasing transactions, experienced in the
second half of 2022 as investors and occupiers reacted primarily to
the significant increase in debt costs. This has been positive for
the flexible business space market, with Savills Workthere flex
advisory business seeing good growth in most markets.
In the UK, capital transactions remained very constrained
throughout the period with market volumes declining c.60%
year-on-year and c.46% below the five year average. Leasing
activity largely focused on grade A stock with strong
sustainability credentials.
The transaction volume of commercial properties in Asia Pacific
fell by 30% year-on-year in H1 2023. Although mainland China
released lockdown restrictions in Q1, the market has been slow to
recover. Singapore remained relatively resilient through the
period, but in Hong Kong and Australia volumes have been
suppressed.
Continental Europe has experienced the most significant
reductions in activity particularly in Germany, France and the
Nordic region. This is partly due to certain valuation bases, which
seek to smooth the effect of significant market movements, thereby
temporarily suspending pressure on Loan to Value ("LTV") ratios,
prolonging the mark-to-market process and stalling transaction
activity.
In the US, where Savills is primarily involved in
occupier-focused activities, the market has seen the volume of
smaller lot size transactions continue relatively well outside the
main metropolis markets. There remains a trend of movement towards
the southern states of Texas and Florida away from the more
traditional markets of San Francisco and New York. However, major
corporate head office moves have often been deferred to await the
emergence of greater economic clarity.
Prime Residential (high equity component) markets, particularly
in the UK and mainland China have remained relatively buoyant in
the first half of 2023 despite the increasing economic headwinds.
This is in contrast to those mainstream or residential new build
markets which are more highly dependent on mortgage finance.
Business development during the period
Savills has continued to focus on the strategic development of
the business, enabled by the Group's strong balance sheet. In the
first half of this year, we progressed our strategy of expanding
our Global Prime Residential services with the acquisition of
agencies in Italy (BeLiving Srl) and Portugal (Predibisa, Sociedade
de Mediaç o Imobiliária, Lda). The Group also acquired Automotive
Property Consultancy Holdings Limited, a specialist property
consultancy dedicated to the franchised motor retail sector in the
UK.
Technology is an important focus for the Group, and we have
continued to implement significant platform upgrades across the
globe including both operating and finance systems and
service-specific digital transformation programmes. In addition we
are increasingly incorporating machine learning capability into our
volume processing activities.
Through our wholly owned technology businesses and investments
we are experimenting with the latest advances in generative design,
in particular to test feasibility at an earlier stage in the design
process. VU.CITY (a Grosvenor Hill Ventures investment) uses its
SiteSolve technology combined with highly accurate city-wide models
to generate development massing options, while BrickByte (our
technology enabled workplace strategy business) applies this
technology to advise corporates on how to optimise the efficiency
of their office portfolios.
Many of our other digital businesses continue to perform well.
Cureoscity, our wholly owned platform that connects occupiers,
landlords and their managing agents has grown year-on-year. Our
online auction business continues to take market share, and despite
increasingly challenging markets, has sold over GBP260m of property
during the period, an increase of 20% year-on-year.
Business review
The following table sets out Group revenue and underlying profit
by operating segment:
Revenue H1 2023 H1 2022 Change
GBPm GBPm
------------------------------------ -------- -------- -------
Transaction Advisory 328.7 413.2 (20%)
Consultancy 195.5 195.7 n/a
Property and Facilities Management 435.5 374.7 16%
Investment Management 51.7 53.8 (4%)
Group revenue 1,011.4 1,037.4 (3%)
------------------------------------ -------- -------- -------
Underlying profit H1 2023 H1 2022 Change
GBPm GBPm
Transaction Advisory (17.0) 22.7 n/a
Consultancy 7.2 16.1 (55%)
Property and Facilities Management 20.1 17.1 18%
Investment Management 7.0 10.3 (32%)
Unallocated cost (1.0) (7.0) n/a
Group underlying profit 16.3 59.2 (72%)
------------------------------------ -------- -------- -------
The following table sets out Group revenue and underlying profit
by geographical area:
Revenue H1 2023 H1 2022 Change
GBPm GBPm
---------------------------------------- -------- -------- -------
UK 409.4 439.2 (7%)
Asia Pacific 313.5 311.7 1%
Continental Europe and the Middle East
('CEME') 149.9 138.1 9%
North America 138.6 148.4 (7%)
Group revenue 1,011.4 1,037.4 (3%)
---------------------------------------- -------- -------- -------
Underlying profit H1 2023 H1 2022 Change
GBPm GBPm
UK 31.6 48.1 (34%)
Asia Pacific 1.9 18.0 (89%)
Continental Europe and the Middle East
('CEME') (12.3) (1.7) n/a
North America (3.9) 1.8 n/a
Unallocated cost (1.0) (7.0) n/a
Group underlying profit 16.3 59.2 (72%)
---------------------------------------- -------- -------- -------
Revenue performance was driven by good growth (9%) in the less
transactional service lines, which largely mitigated the 20%
reduction in transactional revenues. Property Management showed
significant growth in both revenue and profits during the period.
Consultancy revenues remained flat despite the reduction in certain
consultancy activities during a period of economic uncertainty; in
particular valuation, development consultancy and due diligence
services in building consultancy. All geographies/service lines
were affected by continued staff cost increases in the inflationary
environment. The rise in interest rates, coupled with the Group's
strong average net cash position and attractive fixed rate long
term debt has resulted in interest income offsetting the majority
of unallocated cost in H1 2023.
Transaction Advisory
Revenue H1 2023 H1 2022 Change
GBPm GBPm
--------------- -------- -------- -------
UK 109.1 151.4 (28%)
Asia Pacific 50.2 80.4 (38%)
CEME 43.2 49.1 (12%)
North America 126.2 132.3 (5%)
Total 328.7 413.2 (20%)
--------------- -------- -------- -------
Our Transaction Advisory revenues decreased by 20% compared with
H1 2022 (22% in constant currency), with leasing- related revenue
generally remaining more resilient than capital transactions. In
most of our major markets Savills revenue outperformed the market,
indicating increased market share of reduced market volumes. The
transaction business sustained an underlying loss of GBP17.0m (H1
2022: Underlying Profit of GBP22.7m) as we maintained our policy of
keeping teams intact to service clients and ensure our business is
well placed to take advantage of the opportunities we expect to
arise through the recovery.
UK Commercial
UK Commercial Transaction fee income decreased 33% to GBP37.5m
(H1 2022: GBP55.6m), with a significant reduction in both
investment and leasing activity.
Capital transactions remained very constrained throughout the
period with market volumes declining c.54% year-on-year and c.38%
below the five year average. That said, the UK was the most
attractive location for overseas investment during the period as
investors sought Prime Property with the highest sustainability
credentials where rental growth supported yields. Occupational
market trends were slightly more resilient, with office leasing
volumes in both central London and the key regional cities
decreasing over the comparable period by 23%, albeit activity was
still focused on larger lot sizes with good sustainability
characteristics. Against this backdrop, revenue declines of 36% and
29% respectively in capital transactions and leasing reflected
Savills growing and resilient market shares respectively.
Logistics leasing markets performed relatively better and we
benefited from an improvement in retail transactions during the
period.
Decreased revenue resulted in a reduced underlying profit margin
of 6.4% (H1 2022: 17.8%) and underlying profit of GBP2.4m (H1 2022:
GBP9.9m).
UK Residential
In line with our expectations, given steep rises in interest
rates, revenue from Savills UK residential business declined by 25%
to GBP71.6m (H1 2022: GBP95.8m). To put this into context, it was
still Savills third strongest revenue performance in a decade and
25% ahead of the comparable period pre-Covid (2019).
In the second hand agency business, Savills overall transaction
volumes exchanged were down 24%. The average value of London and
regional residential property sold by Savills in the period was 4%
higher in London at GBP2.3m (H1 2022: GBP2.2m) and 8% lower in the
regional markets at GBP1.25m (H1 2022: GBP1.36m).
Revenue from the sale of New Homes declined 28% on H1 2022. This
reflected reduced activity in the lower lot sizes, particularly
outside London, which are more mortgage-dependent. The effect of
this was partly mitigated by relative strength in the Prime London
market which saw a 25% increase in the average lot size
transacted.
Finally, our Operational Capital Markets business, which advises
on the Private Rented Sector ('PRS'), Student and other
institutional residential markets, saw a 26% decline in revenue
period-on-period as the market began to adapt to the effect of
higher interest costs on operating models.
Underlying profits in the UK residential transaction business
decreased to GBP4.7m (H1 2022: GBP13.6m).
Asia Pacific Commercial
Commercial transaction fee income in Asia Pacific decreased by
44% (same in constant currency) to GBP40.2m (H1 2022: GBP71.2m).
All markets experienced a decline in volumes, however Singapore and
Hong Kong showed the greatest period-on-period resilience. We had
anticipated that Mainland China would show good signs of recovery
once Covid restrictions were lifted in Q1 2023. This has proved
somewhat slower as a result of economic uncertainty and our
transaction revenue declined by 29% period-on-period.
Overall the Asia Pacific commercial transaction business
delivered an underlying loss of GBP6.2m for the period (H1 2022:
GBP7.4m).
Asia Pacific Residential
Residential transaction fee income in Asia Pacific increased by
9% to GBP10m (H1 2022: GBP9.2m) (8% in constant currency). Renewed
activity in Mainland China (post Covid restrictions) and
improvements in Hong Kong mitigated the impact of reduced activity
elsewhere in the region.
Underlying profit improved to GBP1.2m for the first half of the
year (H1 2022: GBP0.0m).
CEME
In CEME, transactional advisory revenue declined by 12% to
GBP43.2m (H1 2022: GBP49.1m). Leasing revenues were broadly flat,
partially mitigating a 21% decline in capital transaction revenues.
This compared favourably with a 59% fall in capital transaction
activity for the market as a whole, with office and industrial
sectors declining by 64% and 65% respectively. It is notable that
cross border transactions into Europe were at the lowest levels
seen in over a decade. Significant declines in revenue occurred in
the principal Northern European markets of Germany, France, Sweden,
Ireland and the Netherlands, and were partially offset by resilient
performances in Spain, Poland, Italy and the Middle East. Overall,
cost inflation and the impact of reduced trading activity led to an
increase of the H1 loss to GBP16.2m (H1 2022: GBP8.8m loss).
North America
In North America, where the Group is substantially dependent
upon leasing activity by corporate occupiers, revenue reduced by 5%
to GBP126.2m (H1 2022: GBP132.3m) (9% in constant currency). This
was driven by strong performances in the New Jersey, Philadelphia
and Southern California markets which largely offset a substantial
decline in revenue from the New York office market.
During the period we undertook a reorganisation of the North
American business including both cost saving initiatives (the costs
of which have not been excluded from underlying profit) and
enhancing the focus on our growing Global Occupier Solutions
service. The effects of these activities are expected progressively
to improve profitability in coming periods.
Taking into account both trading, the reorganisation costs and
the impact of inflation, the North American business delivered an
underlying loss of GBP2.9m (H1 2022: GBP0.6m underlying
profit).
Consultancy
Revenue H1 2023 H1 2022 Change
GBPm GBPm
--------------- -------- -------- -------
UK 112.9 109.6 3%
Asia Pacific 37.6 39.5 (5%)
CEME 32.6 30.5 7%
North America 12.4 16.1 (23%)
Total 195.5 195.7 n/a
--------------- -------- -------- -------
Consultancy revenues remained flat year on year as growth was
supressed by two principal factors: first the impact of reduced
global transaction volumes on valuation services, which represent
c.27% of the Group's Consultancy revenues; and secondly the impact
of macro-economic uncertainty which causes client requirements for
longer term strategic services such as development and long term
project consultancy to be deferred for a period.
In the UK, revenue was marginally ahead of the prior period with
growth in the Rural, Building and Project Consultancy and Planning
services offsetting a decline in Development Consultancy revenue.
Of particular note is the positive effect of both sustainability
initiatives to upgrade existing buildings and the increasing focus
on natural capital as an asset class.
The Asia Pacific business revenue declined by 5% (5% on a
constant currency basis), as reductions in Valuations and
Development Consultancy, particularly in Mainland China and Vietnam
outweighed an improved performance in Project Management.
In the CEME business 7% revenue growth comprised growth in the
Middle East, Spain and France in particular which helped offset
reductions in Germany, Ireland and Sweden. In common with all
regions, staff cost inflation remained a significant obstacle to
profitability during the period.
The North American Consultancy business posted a 23% decline in
revenue, primarily as a result of a significant reduction in
activity in the Technology/Life Sciences sector, and profitability
was negatively affected by both cost inflation in Project
Management services and the deferral of some larger
assignments.
As a result of the above factors Underlying profit of the
Consultancy business decreased by 55% to GBP7.2m (H1 2022:
GBP16.1m).
Property and Facilities Management
Revenue H1 2023 H1 2022 Change
GBPm GBPm
-------------- -------- -------- -------
Asia Pacific 221.8 188.4 18%
UK 167.6 149.6 12%
CEME 46.1 36.7 26%
Total 435.5 374.7 16%
-------------- -------- -------- -------
Our Property and Facilities Management business increased global
revenues by 16% (14% in constant currency) to GBP435.5m (H1 2022:
GBP374.7m). Savills total area under management increased 3% to
2.49bn sq ft (H1 2022: 2.42bn sq ft).
In Asia Pacific, revenues increased by 18% (14% in constant
currency), driven by Hong Kong, Korea, Vietnam and Singapore, the
latter benefiting from the full period effect of the acquisition of
Absolute Maintenance Services Pte Limited and Solute Pte Limited
(together "AMS") in August 2022. The impact of staff cost inflation
restricted profit growth to 1% during the period.
UK Property and Facilities Management revenues grew 12%. This
comprised 13% commercial and rural management growth, within which
Facilities Management posted 17% growth. Our Residential Management
(primarily lettings) business grew revenue by 8%. Underlying profit
increased by 29% period-on-period.
The CEME business delivered strong revenue growth of 26% (24% in
constant currency) driven by Germany, Ireland, Spain and the
Netherlands. Cost inflation restricted profitability as the
business reduced H1 losses to GBP0.4m (H1 2022: GBP1.0m loss).
Overall, underlying profit for the Property and Facilities
Management business grew by 18% to GBP20.1m (H1 2022:
GBP17.1m).
Investment Management
Revenue from Investment Management decreased by 4% to GBP51.7m
(H1 2022: GBP53.8m) (5% in constant currency), reflecting lower
transaction fees in line with reduced activity in the market as a
result of interest rate increases and the lack of price clarity
evidenced by market activity. Base management fees remained stable,
representing approximately 81% (HY 2022: 77%) of Investment
Management gross revenues. Lower transaction volumes reduced
transaction fees by 67%, however performance fees rose 37% (to
GBP6.5m) compared with H1 2022. This was primarily due to the
decision to realise value for clients from a number of long-held
investments in the European large unit logistics sector
Assets Under Management ('AUM') decreased by 12% to GBP20.4bn
(H1 2022: GBP23.1bn) as a result of sale activity and valuation
decreases, partially compensated by capital raised and deployed
over the preceding 12 months. The relationship with Samsung Life
progressed well during the period, with contracted investment
commitments being confirmed for a range of debt and equity funds
but, for market reasons, remaining still largely undeployed at the
end of the period.
Despite the challenging market conditions, 68% of funds (by AUM)
continued to exceed their benchmark returns on a five year rolling
basis. Capital raising in the first half of the year remained
consistent with the prior period at GBP1.1bn.
The market based reduction in transaction fees led to a decrease
of 32% in underlying profit to GBP7.0m, against a record H1 2022
result (H1 2022: GBP10.3m), this represented a 14% underlying
profit margin (H1 2022: 19.1%).
Unallocated/central revenue and cost
The unallocated cost segment represents other costs, expenses
and net interest not directly allocated to the operating activities
of the Group's business segments. The H1 decrease in unallocated
net costs to GBP1.0m (H1 2022: GBP7.0m) primarily reflects
decreases in the profit-related bonus provision and increases in
net interest income.
Transaction-related and restructuring costs
During the period the Group incurred an aggregate restructuring
charge of GBPnil (H1 2022: GBP0.1m) and transaction-related costs
of GBP7.1m (H1 2022: GBP5.9m). Transaction-related costs in the
period primarily represent provisions for future consideration
payments which are contingent on the continuity of recipients'
employment at the time of payment together with professional
advisory fees in relation to significant transactions in the
period. The majority of the charge relates to the most recent
acquisitions in the Investment Management business (see Note
8).
Earnings and financial position
The Group's underlying profit margin in the period was 1.6% (H1
2022: 5.7%). This reflects the anticipated net losses in our global
transaction business, staff cost inflation and the maintenance of
our bench strength to service clients.
Basic earnings per share for the six months to 30 June 2023
decreased to 3.5p (H1 2022: 26.8p). Underlying basic earnings per
share decreased to 9.2p (H1 2022: 32.4p).
Cash and cash equivalents, net of overdrafts in notional pooling
arrangements and bank overdrafts (see note 19), at the period end
stood at GBP257.0m (30 June 2022: GBP303.2m, 31 December 2022:
GBP464.3m). The Group typically has a net outflow of cash in the
first half of the year 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
of the year.
The Group had borrowings at 30 June 2023 of GBP249.1m (30 June
2022: GBP156.8m, 31 December 2022: GBP159.7m). These principally
comprise GBP150.0m (30 June 2022 and 31 December 2022: GBP150.0m)
of 7, 10 and 12 year fixed rate notes (carrying a weighted average
interest rate of 3.19%) which were issued in June 2018. At 30 June
2023, borrowings also included GBP13.1m drawn under a revolving
credit facility in North America (30 June 2022: GBP14.1m, 31
December 2022: GBPnil). At 30 June 2023, GBP78.0m of the Group's UK
revolving credit facility ('RCF') was drawn (30 June 2022: GBP5.0m,
31 December 2022: GBPnil), with a total of GBP329.3m of borrowing
facilities available to the Group (30 June 2022: GBP420.0m, 31
December 2022: GBP424.9m).
Cash and cash equivalents net of borrowings and overdrafts in
notional pooling arrangements was GBP12.9m (30 June 2022:
GBP149.0m, 31 December 2022: GBP307.4m).
The funding level of the defined benefit Savills Pension Scheme
in the UK, which is closed to future service based accrual,
decreased during the period primarily as a result of the net effect
of falling LDI asset values and reduced future pension obligations,
in line with rising gilt yields. The Scheme was in a surplus
position of GBP2.5m at 30 June 2023 (30 June 2022: GBP33.3m
surplus, 31 December 2022: GBP22.3m surplus).
Impact of foreign exchange
The Group generates revenues and profits in various territories
and currencies because of its international footprint. Those
results are translated on consolidation at the foreign exchange
rates prevailing at the time. These exchange rates vary from period
to period, so the Group presents some of its results on a constant
currency basis. This means that the current period results are
retranslated using the prior period exchange rates. This eliminates
the effect of exchange from the period-on-period comparison of
results.
The constant currency effect on revenue, profit and underlying
profit is summarised below:
Six months
to 30 June
Six months Constant 2023 at
to 30 June currency constant
2023 effect currency
GBPm GBPm GBPm
------------------------------ ------------ ---------- ------------
Revenue 1,011.4 16.4 995.0
Profit before tax 6.0 (0.3) 6.3
Underlying profit before tax 16.3 (0.2) 16.5
------------------------------ ------------ ---------- ------------
Interim Dividend
The Board has declared an interim ordinary dividend of 6.9p (H1
2022: 6.6p). The dividend, which is designed to provide sustainable
real income growth and be supported by the less transactional
business earnings, will be payable on 2 October 2023 to
shareholders on the register at 1 September 2023.
Principal and emerging risks
The key principal and emerging risks relating to the Group's
operations for the next six months were considered to remain
consistent with those disclosed in the Group's Annual Report and
Accounts 2022. These are listed below, please refer to pages 29 to
35 thereof or to our investors' page on www.savills.com .
-- Market conditions, macro-economic and geopolitical issues
-- Achieving the right market positioning to meet the needs of our clients
-- Recruitment and retention of high-calibre staff
-- Reputational and brand risk
-- Legal risk
-- Failure or significant interruption to IT systems causing disruption to client service
-- Operational resilience/Business continuity
-- Business conduct
-- Changes in the regulatory environment/ regulatory breaches
-- Acquisition/integration risk
-- Environment and sustainability
Board Changes
As announced in March 2023, Nicholas Ferguson will retire as
Chairman and Director on 31 December 2023. He will be succeeded as
Chair, by Stacey Cartwright, currently the Senior Independent
Director since January 2021, having joined the Board as an
independent non-executive director in October 2018. A new Chair of
the Audit Committee will be confirmed in due course.
Summary and outlook
During 2023, global real estate markets have faced the obvious
challenges associated with inflation and the related steep rise in
interest rates. Different regions have varied in the pace of their
adjustment to current conditions and all have experienced a
material decline in trading volumes during that adjustment process.
Market participants, whether investors or occupiers, seek greater
certainty on the trajectory of interest rates over the next 18
months, something which has become somewhat clearer in recent weeks
than for much of the period.
Savills has weathered both the inflationary cost conditions and
reduced transaction volumes well, increasing market share and,
supported by our strong balance sheet, continuing to undertake
selective business development activities to further the Group's
long term growth strategy.
We are seeing some positive signs in markets such as the UK and
continued strength in certain Asia Pacific markets including Japan;
in Continental Europe and mainland China we now expect reduced
market volumes to continue through much of the year. In many
locations we are carrying very strong capital transaction pipelines
awaiting the market conditions for launch. In prolonged uncertain
conditions, it remains challenging to predict accurately the timing
of individual market recoveries. Accordingly, our range of
expectations for the year as a whole has reduced somewhat. We do,
however, continue to anticipate a significant improvement in
volumes of activity through the balance of the year, and into
2024.
Mark Ridley
Group Chief Executive
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 contained in UK-adopted international accounting
standards and that the interim management report includes a fair
review of the information required by DTR 4.2.7R and DTR 4.2.8R,
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 2022. A list of current
Directors is maintained on the Savills plc website:
www.savills.com.
By order of the Board
Mark Ridley, Group Chief Executive
Simon Shaw, Group Chief Financial Officer
9 August 2023
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
Conclusion
We have been engaged by the Company to review the condensed set
of financial statements in the half-yearly financial report for the
six months ended 30 June 2023 which comprises the condensed interim
consolidated income statement, the condensed interim consolidated
statement of comprehensive income, the condensed interim
consolidated statement of financial position, the condensed interim
consolidated statement of changes in equity, the condensed interim
consolidated statement of cash flows and the related explanatory
notes 1 to 24.
We have read the other information contained in the half yearly
financial report and considered whether it contains any apparent
misstatements or material inconsistencies with the information in
the condensed set of financial statements.
Based on our review, nothing has come to our attention that
causes us to believe that the condensed set of financial statements
in the half-yearly financial report for the six months ended 30
June 2023 is not prepared, in all material respects, in accordance
with UK adopted International Accounting Standard 34 and the
Disclosure Guidance and Transparency Rules of the United Kingdom's
Financial Conduct Authority.
Basis for Conclusion
We conducted our review in accordance with International
Standard on Review Engagements 2410 (UK) "Review of Interim
Financial Information Performed by the Independent Auditor of the
Entity" (ISRE) issued by the Financial Reporting Council. 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.
As disclosed in note 2, the annual financial statements of the
group are prepared in accordance with UK adopted international
accounting standards. The condensed set of financial statements
included in this half-yearly financial report has been prepared in
accordance with UK adopted International Accounting Standard 34,
"Interim Financial Reporting".
Conclusions Relating to Going Concern
Based on our review procedures, which are less extensive than
those performed in an audit as described in the Basis of Conclusion
section of this report, nothing has come to our attention to
suggest that management have inappropriately adopted the going
concern basis of accounting or that management have identified
material uncertainties relating to going concern that are not
appropriately disclosed.
This conclusion is based on the review procedures performed in
accordance with this ISRE, however future events or conditions may
cause the entity to cease to continue as a going concern.
Responsibilities of the directors
The directors are responsible for preparing the half-yearly
financial report in accordance with the Disclosure Guidance and
Transparency Rules of the United Kingdom's Financial Conduct
Authority.
In preparing the half-yearly financial report, the directors are
responsible for assessing 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 company or to cease
operations, or have no realistic alternative but to do so.
Auditor's Responsibilities for the review of the financial
information
In reviewing the half-yearly report, we are responsible for
expressing to the Company a conclusion on the condensed set of
financial statements in the half-yearly financial report. Our
conclusion, including our Conclusions Relating to Going Concern,
are based on procedures that are less extensive than audit
procedures, as described in the Basis for Conclusion paragraph of
this report.
Use of our report
This report is made solely to the company in accordance with
guidance contained in International Standard on Review Engagements
2410 (UK) "Review of Interim Financial Information Performed by the
Independent Auditor of the Entity" issued by the Financial
Reporting Council. To the fullest extent permitted by law, we do
not accept or assume responsibility to anyone other than the
company, for our work, for this report, or for the conclusions we
have formed.
Ernst & Young LLP
London
9 August 2023
Savills plc
Condensed interim consolidated income statement
for the period ended 30 June 2023
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 2022 2022
(unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
------------------------------------------ ------ ------------ ------------------ -------------
Revenue 7 1,011.4 1,037.4 2,298.3
------------------------------------------ ------ ------------ ------------------ -------------
Less:
Employee benefits expense (674.9) (688.2) (1,509.8)
Depreciation (34.7) (32.0) (65.8)
Amortisation of intangible assets (7.9) (8.0) (16.9)
Other operating expenses (297.0) (260.6) (562.1)
(Increase)/decrease in provision
for expected credit loss (0.7) 2.4 2.1
Other net gains 1.4 0.1 0.3
Share of post-tax profit from
joint ventures and associates 4.8 4.7 12.1
Operating profit 2.4 55.8 158.2
------------------------------------------ ------ ------------ ------------------ -------------
Finance income 20 21.8 2.3 13.7
Finance costs 20 (18.2) (7.7) (18.0)
------------------------------------------ ------ ------------ ------------------ -------------
Net finance cost 20 3.6 (5.4) (4.3)
Profit before income tax 6.0 50.4 153.9
Income tax expense 9 (1.6) (12.7) (34.1)
Profit for the period 4.4 37.7 119.8
------------------------------------------ ------ ------------ ------------------ -------------
Attributable to:
Owners of the parent 4.8 37.0 119.4
Non-controlling interests (0.4) 0.7 0.4
------------------------------------------ ------ ------------ ------------------ -------------
4.4 37.7 119.8
------------------------------------------ ------ ------------ ------------------ -------------
Earnings per share
Basic earnings per share 11(a) 3.5p 26.8p 87.0p
Diluted earnings per share 11(a) 3.4p 25.2p 82.2p
Supplementary income statement information
Reconciliation to underlying profit before
income tax
Profit before income tax 6.0 50.4 153.9
- restructuring and transaction-related
costs 8 7.1 6.0 15.6
- other underlying adjustments 8 3.2 2.8 (4.9)
------------------------------------------ ------ ------------ ------------------ -------------
Underlying profit before income
tax 8 16.3 59.2 164.6
------------------------------------------ ------ ------------ ------------------ -------------
Notes 1 to 24 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 2023
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 (unaudited) 2022 (unaudited) 2022 (audited)
GBPm GBPm GBPm
-------------------------------------------------- ------------------ ------------------ --------------------
Profit for the period 4.4 37.7 119.8
Other comprehensive (loss)/income
Items that will not be reclassified
to profit or loss:
Remeasurement of defined benefit pension
scheme and employee benefit obligations (20.4) 17.4 6.6
Changes in fair value of equity investments
at FVOCI 0.2 (5.2) (10.9)
Tax on other items that will not be reclassified 7.0 (3.9) (3.9)
-------------------------------------------------- ------------------ ------------------ --------------------
Total items that will not be reclassified
to profit or loss (13.2) 8.3 (8.2)
Items that may be reclassified subsequently
to profit or loss:
Currency translation differences (29.3) 37.7 48.1
Tax on items that may be reclassified - 0.4 -
-------------------------------------------------- ------------------ ------------------ --------------------
Total items that may be reclassified
subsequently to profit or loss (29.3) 38.1 48.1
Other comprehensive (loss)/income for
the period (42.5) 46.4 39.9
-------------------------------------------------- ------------------ ------------------ --------------------
Total comprehensive (loss)/income for
the period (38.1) 84.1 159.7
-------------------------------------------------- ------------------ ------------------ --------------------
Total comprehensive (loss)/income attributable
to:
Owners of the parent (36.7) 83.0 158.4
Non-controlling interests (1.4) 1.1 1.3
-------------------------------------------------- ------------------ ------------------ --------------------
(38.1) 84.1 159.7
-------------------------------------------------- ------------------ ------------------ --------------------
Notes 1 to 24 are an integral part of these condensed interim
financial statements.
Savills plc
Condensed interim consolidated statement of financial
position
at 30 June 2023
30 June 31 December
2022 restated** 2022
30 June
20223 (unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
--------------------------------------- ----- ------------------- ----------------- ------------
Assets: Non-current assets
Property, plant and equipment 71.4 68.9 77.0
Right of use assets 207.4 235.7 223.8
Goodwill 440.2 436.3 449.4
Intangible assets 60.5 69.5 66.3
Investments in joint ventures
and associates 36.2 35.8 37.0
Deferred income tax assets 47.1 37.4 38.6
Financial assets at fair value
through other comprehensive
income ('FVOCI') 6 7.5 11.3 5.7
Financial assets at fair value
through profit and loss ('FVPL') 36.7 33.9 36.8
Defined benefit pension surplus 16 5.8 36.0 25.5
Contract related assets 2.2 3.0 2.4
Trade and other receivables 47.0 36.1 37.5
962.0 1,003.9 1,000.0
--------------------------------------- ----- ------------------- ----------------- ------------
Assets: Current assets
Contract assets 12.9 12.0 7.4
Trade and other receivables 576.7 533.0 643.1
Income tax receivable 9.3 6.0 2.4
Derivative financial instruments 6 1.5 - 0.3
Cash and cash equivalents* 19 442.7 474.7 669.1
1,043.1 1,025.7 1,322.3
--------------------------------------- ----- ------------------- ----------------- ------------
Liabilities: Current liabilities
Borrowings 18 99.9 8.4 10.6
Overdrafts in notional pooling
arrangement* 19 180.7 168.9 202.0
Lease liabilities 51.8 51.9 53.2
Derivative financial instruments 6 - 1.0 1.0
Contract liabilities 17.4 24.9 14.0
Trade and other payables 459.6 536.2 744.3
Income tax liabilities 3.7 16.0 15.5
Employee benefit obligations 16 25.2 25.8 17.7
Provisions 7.8 6.7 9.2
--------------------------------------- ----- ------------------- ----------------- ------------
846.1 839.8 1,067.5
--------------------------------------- ----- ------------------- ----------------- ------------
Net current assets 197.0 185.9 254.8
--------------------------------------- ----- ------------------- ----------------- ------------
Total assets less current liabilities 1,159.0 1,189.8 1,254.8
--------------------------------------- ----- ------------------- ----------------- ------------
Liabilities: Non-current liabilities
Borrowings 18 149.2 148.4 149.1
Lease liabilities 206.2 239.3 224.4
Derivative financial instruments 6 5.2 2.5 6.7
Other payables 26.5 17.5 21.9
Employee benefit obligations 16 25.4 23.0 25.2
Provisions 14.2 20.9 20.6
Deferred income tax liabilities 1.3 2.2 1.6
428.0 453.8 449.5
--------------------------------------- ----- ------------------- ----------------- ------------
Net assets 731.0 736.0 805.3
--------------------------------------- ----- ------------------- ----------------- ------------
Equity:
Share capital 3.6 3.6 3.6
Share premium 104.9 104.8 104.9
Other reserves 85.6 107.7 112.8
Retained earnings 502.2 489.6 546.8
Equity attributable to owners of
the parent 696.3 705.7 768.1
Non-controlling interests 34.7 30.3 37.2
----------------------------------- ------ ------ ------
Total equity 731.0 736.0 805.3
----------------------------------- ------ ------ ------
Notes 1 to 24 are an integral part of these condensed interim
financial statements.
* Included within cash and cash equivalents are cash balances of
GBP181.9m (30 June 2022: GBP169.3m, 31 December 2022: GBP205.0m)
that are operated within a notional cash pooling arrangement
together with overdraft balances of GBP180.7m (30 June 2022:
GBP168.9m, 31 December 2022: GBP202.0m) presented above in current
liabilities. See Note 19 for further details.
** See Note 4 for details on the prior period restatement.
Savills plc
Condensed interim consolidated statement of changes in
equity
for the period ended 30 June 2023
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
2023 3.6 104.9 112.8 546.8 768.1 37.2 805.3
(audited)
--------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Profit for the period - - - 4.8 4.8 (0.4) 4.4
Other comprehensive (loss)/income:
Re-measurement of
defined benefit pension
scheme and employee
benefit obligations - - - (20.4) (20.4) - (20.4)
Changes in fair value
of financial assets
at FVOCI - - 0.2 - 0.2 - 0.2
Currency translation
differences - - (28.3) - (28.3) (1.0) (29.3)
Tax on other items
directly taken to
other comprehensive
loss - - - 7.0 7.0 - 7.0
---------------------------
Total comprehensive
loss for the period - - (28.1) (8.6) (36.7) (1.4) (38.1)
--------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Employee share option
scheme:
- Value of services
provided - - - 15.6 15.6 0.4 16.0
- Tax on employee
share option schemes - - - 0.1 0.1 - 0.1
Purchase of treasury
shares - - - (11.9) (11.9) - (11.9)
Transfer between equity
accounts - - 0.9 (0.6) 0.3 (0.3) -
Dividends (Note 10) - - - (39.4) (39.4) (1.0) (40.4)
Balance at 30 June
2023 (unaudited) 3.6 104.9 85.6 502.0 696.1 34.9 731.0
--------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
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
2022 3.6 104.4 76.2 540.0 724.2 29.2 753.4
(audited)
--------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Profit for the period - - - 37.0 37.0 0.7 37.7
Other comprehensive income/(loss):
Re-measurement of
defined benefit pension
scheme and employee
benefit obligations - - - 17.4 17.4 - 17.4
Changes in fair value
of financial assets
at FVOCI - - (5.2) - (5.2) - (5.2)
Currency translation
differences - - 37.3 - 37.3 0.4 37.7
Tax on other items
directly taken to
other comprehensive
income - - - (3.5) (3.5) - (3.5)
---------------------------
Total comprehensive
income for the period - - 32.1 50.9 83.0 1.1 84.1
--------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Employee share option
scheme:
- Value of services
provided - - - 15.1 15.1 - 15.1
- Tax on employee
share option schemes - - - (2.1) (2.1) - (2.1)
Purchase of treasury
shares - - - (37.6) (37.6) - (37.6)
Shares issued - 0.4 - - 0.4 - 0.4
Tax on other items
taken to reserves - - - (0.1) (0.1) - (0.1)
Disposal of financial
assets at FVOCI - - (0.2) - (0.2) - (0.2)
Transfer between equity
accounts - - (0.4) - (0.4) 0.4 -
Dividends (Note 10) - - - (76.6) (76.6) (0.4) (77.0)
Balance at 30 June
2022 (unaudited) 3.6 104.8 107.7 489.6 705.7 30.3 736.0
--------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
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
2022 3.6 104.4 76.2 540.0 724.2 29.2 753.4
(audited)
------------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Profit for the year - - - 119.4 119.4 0.4 119.8
Other comprehensive income/(loss):
Remeasurement of defined
benefit pension scheme
and employee benefit
obligations - - - 6.1 6.1 0.5 6.6
Changes in fair value
of financial assets
at FVOCI - - (10.9) - (10.9) - (10.9)
Tax on items directly
taken to other comprehensive
income - - - (3.7) (3.7) (0.2) (3.9)
Currency translation
differences - - 47.5 - 47.5 0.6 48.1
------------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Total comprehensive
income for the year - - 36.6 121.8 158.4 1.3 159.7
------------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Employee share option
scheme:
- Value of services
provided - - - 29.6 29.6 0.8 30.4
- Tax on employee
share option schemes - - - (2.6) (2.6) - (2.6)
Issue of share capital - 0.5 - - 0.5 - 0.5
Tax on other items
taken to reserves - - - 0.3 0.3 - 0.3
Purchase of treasury
shares - - - (49.0) (49.0) - (49.0)
Dividends - - - (85.5) (85.5) (0.4) (85.9)
Transfer between reserves - - 0.4 (4.0) (3.6) 3.6 -
Fair value of derivative
financial instrument - - - (4.5) (4.5) - (4.5)
Transactions with
non-controlling interests - - (0.4) 0.7 0.3 - 0.3
Additions through
business combinations - - - - - 2.7 2.7
Balance at 31 December
2022 (audited) 3.6 104.9 112.8 546.8 768.1 37.2 805.3
------------------------------- --------- --------- ---------- ---------- ------- ---------------- --------
Notes 1 to 24 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 2023
Six months Year ended
to 30 June 31 December
2022 2022
Six months
to 30 June
2023 (unaudited) (unaudited) (audited)
Note GBPm GBPm GBPm
------------------------------------------------ ----- ------------------ -------------- -------------
Cash flows from operating activities
Cash (used in)/generated from operations 12 (166.1) (34.7) 210.9
Interest received 21.2 2.3 13.3
Interest paid (18.0) (7.4) (16.9)
Income tax paid (22.9) (22.1) (43.3)
Net cash (used in)/generated from operating
activities (185.8) (61.9) 164.0
------------------------------------------------ ----- ------------------ -------------- -------------
Cash flows from investing activities
Proceeds from sale of property, plant and
equipment 3.9 0.1 0.2
Proceeds from sale of financial assets
held at FVOCI and FVPL 2.1 0.7 1.6
Proceeds from sale of interests in joint
ventures - 0.1 0.1
Dividends received from joint ventures 2.9 2.3 7.1
Dividends received from associates 0.9 2.3 4.2
Dividends received from other parties - - 0.2
Repayment of loans by joint ventures - - 0.1
Repayment of loans by associates 0.1 - 0.4
Repayment of loans by other parties - - 0.7
Loans to joint ventures - - (0.1)
Loans to associates (0.1) - (0.4)
Loans to other parties (1.6) (0.5) (1.7)
Acquisition of subsidiaries, net of cash
and overdrafts acquired (2.6) (2.8) (14.9)
Deferred consideration paid in relation
to prior year acquisitions (0.9) (1.5) (3.3)
Purchase of property, plant and equipment (8.9) (7.7) (19.8)
Purchase of intangible assets (3.1) (3.9) (7.0)
Purchase of financial assets held at FVOCI
and FVPL (3.5) (4.3) (8.8)
Purchase of investment in joint ventures (0.2) (0.1) (0.4)
Purchase of investment in associates - - -
Net cash used in investing activities (11.0) (15.3) (41.8)
------------------------------------------------ ----- ------------------ -------------- -------------
Cash flows from financing activities
Proceeds from issues of share capital - 0.4 0.5
Proceeds from transaction with non-controlling
interest - 7.9 7.9
Transaction costs incurred on transaction
with non-controlling interest - (0.2) (0.2)
Proceeds from borrowings 98.7 9.1 9.6
Repayments of borrowings (11.3) (4.3) (5.6)
Financing fees paid - (0.4) (0.4)
Principal elements of lease payments (27.5) (24.3) (51.4)
Purchase of treasury shares (11.9) (37.6) (49.0)
Dividends paid (40.4) (77.0) (85.9)
Net cash from/(used in) financing activities 7.6 (126.4) (174.5)
------------------------------------------------ ----- ------------------ -------------- -------------
Net decrease in cash, cash equivalents
and bank overdrafts (189.2) (203.6) (52.3)
Cash, cash equivalents and bank overdrafts
at beginning of period 464.3 490.0 490.0
Effect of exchange rate fluctuations on
cash held (18.1) 16.8 26.6
Cash, cash equivalents and bank overdrafts
at end of period 19 257.0 303.2 464.3
------------------------------------------------ ----- ------------------ -------------- -------------
Notes 1 to 23 are an integral part of these condensed interim
financial statements.
NOTES
1. General information
Savills plc ('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.
Savills plc 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.
This condensed consolidated interim financial report was
approved for issue by the Board of Directors on 9 August 2023.
This condensed consolidated interim financial report does not
comprise statutory financial statements within the meaning of
section 434 of the Companies Act 2006. The financial information
presented for the year ended 31 December 2022 is derived from the
statutory accounts for that year. Statutory financial statements
for the year ended 31 December 2022 were approved by the Board of
Directors on 15 March 2023 and delivered to the Registrar of
Companies. The auditor's report on these accounts was unqualified,
did not contain an emphasis of matter paragraph and did not contain
a statement under section 498(2) or (3) of the Companies Act
2006.
This condensed consolidated interim financial report has been
reviewed, not audited.
2. Basis of preparation
The annual financial statements of Savills plc are prepared in
accordance with UK-adopted international accounting standards
('UK-adopted IFRSs' or 'IFRS'). This condensed consolidated interim
financial report for the half-year reporting period ended 30 June
2023 has been prepared in accordance with the Disclosure Guidance
and Transparency Rules of the Financial Conduct Authority and in
accordance with IAS 34 'Interim Financial Reporting' as contained
in UK-adopted IFRSs.
The interim report does not include all the notes of the type
normally included in an annual financial report. Accordingly, this
report is to be read in conjunction with the annual financial
statements for the year ended 31 December 2022, which has been
prepared in accordance with UK-adopted IFRSs.
Consistent with our approach to preparing the annual financial
statements for the year ended 31 December 2022, management has
considered the impact of risks and opportunities relating to
climate change, in accordance with the TCFD obligations, when
preparing the financial report for half-year reporting at 30 June
2023. Consistent with the 2022 year end, we concluded that as
sufficient mitigation actions were in place relating to climate
change risks, the risks identified did not have a material impact
on the financial reporting judgements and estimates and are not
expected to have a significant impact on the Group's going concern.
For further information on our climate related risks and
opportunities refer to our 2022 TCFD report -
https://www.savills.com/why-savills/tcfd-report-2022.pdf.
Going concern
Management has performed a detailed going concern assessment to
test the Group's liquidity and banking covenant compliance up until
the end of 2024 based on latest financial forecasts. These
forecasts are taking into account the Group's performance over the
period and positive prospects (see 'Summary and outlook' section
for more information) as well as the principal risks and
uncertainties facing the business (see 'Principal and Emerging
risks' section). In addition, sensitivity analysis has been
performed to assess liquidity availability and covenant compliance
over the period until 31 December 2024, looking at the level of
decline in the base case forecast that could be withstood before
the leverage ratio covenant would be breached. The results of this
sensitivity analysis showed that the Group has sufficient headroom
to withstand the impact of a severe global economic downturn. Based
on the Group's net cash position of GBP12.9m at the period end and
the level of undrawn facilities available (see Note 18 for
information on the current level of undrawn facilities), alongside
the assessment noted above, the Directors consider that the Group
has adequate resources in place until at least the end of 2024 and
have therefore adopted the going concern basis of accounting in
preparing the interim financial report.
3. Accounting policies
Except as described below, the accounting policies applied and
methods of computation used are consistent with those of the annual
financial statements for the year ended 31 December 2022, 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.
Adoption of standards, amendments and interpretations to
standards
Standards, amendments and interpretations adopted for use in the
United Kingdom and mandatorily effective for the first time for the
financial year beginning 1 January 2023 that are not relevant or
considered to have a significant impact on the Group and its
financial statements include the following:
IFRS 17: Insurance Contracts New standard
Amendments to IFRS 17
Initial Application of IFRS 17 and IFRS Comparative Information
9
Amendments to IAS 12 Deferred Tax related to Assets
and Liabilities arising from a
Single Transaction
Amendments to IAS 8 Definition of Accounting Estimates
Amendments to IAS 1 and IFRS Practice Disclosure of Accounting policies
Statement 2
---------------------------------------- -----------------------------------
Finance (No 2) Bill 2023, that includes Pillar Two legislation,
was substantively enacted in the UK on 20 June 2023, to apply for
periods commencing 1 January 2024. Pillar Two Model Rules
(Amendments to IAS 12) as issued in May 2023, was adopted as from
that date. The amendments to IAS 12 introduce a temporary mandatory
relief from accounting for deferred tax that arise from legislation
implementing OECD Pillar Two. As required by the amendments to IAS
12 the group has applied the exception to recognising and
disclosing information about deferred tax assets and liabilities
related to Pillar Two income taxes.
There are no standards, amendments and interpretations to
standards that are not yet effective that would be expected to have
a material impact on the entity in the current or future reporting
periods and on foreseeable future transactions.
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 by excluding significant non-operational costs/income from the
GAAP measures. The 'underlying' measures are also used by the Group
for internal performance analysis and incentive compensation
arrangements for employees.
These terms are not defined terms under IFRS and may therefore
not be comparable with similarly-titled profit measures reported by
other companies. They are not intended to be a substitute for, or
superior to, GAAP measures. The non-GAAP measures may be materially
higher or lower than GAAP measures and should not be regarded as a
complete picture of the Group's financial performance. In
particular, underlying profit before tax may be materially higher
than reported profit before tax if there have been significant
impairments, restructuring costs excluded and significant recent
business acquisitions. Similarly, underlying profit before tax may
be materially lower than reported profit before tax if there have
been significant profitable disposals.
The term 'underlying' refers to the relevant measure of profit,
earnings or taxation being reported mainly excluding the impact
(pre and post-tax where applicable) of the following items:
-- the difference between IFRS 2 charges related to outstanding
bonus-related deferred share awards and the estimated value of the
current period bonus pool expected to be allocated to deferred
share awards;
-- amortisation of intangible assets arising from business
combinations (this excludes software or other pre-existing
intangible assets of the acquiree);
-- items that are considered significant in size and
non-operational in nature including restructuring costs associated
with business acquisitions, impairments of goodwill and intangible
assets arising from business combinations and profits or losses
arising on disposals of subsidiaries and other investments; and
-- significant transaction-related costs associated with business combinations.
The majority of adjustments made to the GAAP measures to arrive
at "underlying" measures relate to charges arising as a result of
business combinations. The nature of the Group's business and the
businesses that the Group acquires (being "asset light" people
businesses) requires the Group to structure business acquisitions
such that often payment of deferred consideration is linked to
recipients' continuing and active engagement in the business at the
date of the deferred payment, with these payments required to be
expensed to the income statement under IFRS 3. For internal
performance analysis and incentive compensation arrangements, these
charges are considered part of the initial cost of acquiring a
business, instead of an ongoing operational cost, and are therefore
excluded from the Group's "underlying" measures. The same rationale
is applied to the exclusion of amortisation of intangible assets
arising from business combinations (excluding software or other
pre-existing intangible assets of the acquiree), any impairments of
goodwill and the aforementioned intangible assets, significant
transaction-related costs associated with business combinations and
significant restructuring costs that are related to the acquisition
of a business. These items are not considered to reflect the
business's trading performance and so are adjusted to ensure
consistency between periods.
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 period 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
period. 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 period bonus pool to be awarded in
deferred shares. This adjustment is made to align the underlying
staff cost in the period with the revenue recognised in the same
period, providing additional information on the Group's performance
over time with respect to profitability.
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.
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 period
revenue and underlying profit using the prior period exchange rates
(see page 8). This measure allows the Group to assess the results
of the current period compared to the prior period, excluding the
impact of foreign currency movements.
A reconciliation between GAAP and underlying measures are set
out in Note 8 (underlying profit before tax) and Note 11(b)
(underlying basic earnings per share and underlying diluted
earnings per share).
4. Prior period restatement
Reclassification of financial assets held at FVPL
The Group's prior interim period Statement of Financial Position
included financial assets held at FVPL incorrectly classified as
financial assets held at FVOCI. Some financial assets had
originally been classified as equity instruments, with the Group
making an irrevocable election for these to be classified as FVOCI.
In the prior year, the Group made further investments and
reassessed the accounting treatment for all financial assets
previously classified as FVOCI. It was determined that some of
these financial assets do not meet the definition of an equity
instrument under IFRS 9: 'Financial Instruments' and as a result
should be classified as financial assets held at FVPL with changes
in fair value recognised through the income statement. The period
ending 30 June 2022 fair value gains and losses recognised in OCI
and the cumulative fair value gains and losses recognised in
previous periods on these instruments are not material to the
Group.
These are correctly reflected in the Statement of Financial
Position as at 30 June 2023 and 31 December 2022. The prior period
comparatives as at 30 June 2022 have been restated in accordance
with IAS 8 'Accounting Policies, Changes in Accounting Estimates
and Errors' to meet the presentation requirements of IAS 1
'Presentation of Financial Statements'.
In addition, the Group's prior period Statement of Financial
Position included other financial assets appropriately held at FVPL
which were included within non-current trade receivables. As a
consequence of the above correction of prior period classification
error, these financial assets have been included in the financial
asset held at FVPL line item in the Statement of Financial Position
to conform to the current period presentation, which also reflects
the nature of these instruments.
The financial assets held at FVPL, previously classified as
Level 2 in the fair value measurement hierarchy, have also been
transferred to Level 3 in the fair value measurement hierarchy.
The table below show the impact of the prior period restatement
on the Group's primary financial statements:
Statement of Financial Position
30 June 2022 30 June 2022
reported Restatement restated
GBPm GBPm GBPm
---------------------------------------------------------------------------- ------------ ----------- ------------
Assets: Non-current assets
Financial assets at fair value through other comprehensive income ('FVOCI') 28.3 (17.0) 11.3
Financial assets at fair value through profit and loss ('FVPL') - 33.9 33.9
Trade and other receivables 53.0 (16.9) 36.1
---------------------------------------------------------------------------- ------------ ----------- ------------
This prior period restatement does not have a material impact on
the Group's Income Statement, Statement of Cash Flows, Statement of
Changes in Equity or Statement of Comprehensive Income. The prior
period restatement also does not have an impact on the Group's net
assets or net current assets.
5. 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 2022. Refer to Note 18
for information on the expected credit loss provision in relation
to trade receivables and Note 6 for information on fair value
estimates.
6. 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 2022. There have been no changes in
any risk management policies since the year end.
Fair value estimation
The tables below analyse financial instruments carried at fair
value, by valuation method.
The following table presents the Group's assets and liabilities
that are measured at fair value at 30 June 2023:
Level Level Level
GBPm 1 2 3 Total
--------------------------------- ------ ------ ------ ------
2023
Assets
Financial assets at FVOCI
- Listed equity investments 0.6 - - 0.6
- Unlisted equity investments - - 6.9 6.9
Financial assets at FVPL - - 36.7 36.7
Derivative financial instruments - 1.5 - 1.5
Total assets 0.6 1.5 43.6 45.7
--------------------------------- ------ ------ ------ ------
Liabilities
Derivative financial instruments - - 5.2 5.2
--------------------------------- ------ ------ ------ ------
Total liabilities - - 5.2 5.2
--------------------------------- ------ ------ ------ ------
The following table presents the Group's assets and liabilities
that are measured at fair value at 31 December 2022:
GBPm Level 1 Level 2 Level 3 Total
--------------------------------- -------- -------- -------- ------
2022
Assets
Financial assets at FVOCI
- Listed equity investments 0.8 - - 0.8
- Unlisted equity investments - - 4.9 4.9
Financial assets at FVPL - - 36.8 36.8
Derivative financial instruments - 0.3 - 0.3
Total assets 0.8 0.3 41.7 42.8
--------------------------------- -------- -------- -------- ------
Liabilities
Derivative financial instruments - 1.0 6.7 7.7
--------------------------------- -------- -------- -------- ------
Total liabilities - 1.0 6.7 7.7
--------------------------------- -------- -------- -------- ------
The following table presents the Group's assets and liabilities
that are measured at fair value at 30 June 2022:
Level Level Level
GBPm restated* 1 2 3 Total
--------------------------------- ------ ------ ------ ------
2022
Assets
Financial assets at FVOCI
- Listed equity investments 1.0 - - 1.0
- Unlisted equity investments - - 10.3 10.3
Financial assets at FVPL - - 33.9 33.9
Total assets 1.0 - 44.2 45.2
--------------------------------- ------ ------ ------ ------
Liabilities
Derivative financial instruments - 1.0 2.5 3.5
--------------------------------- ------ ------ ------ ------
Total liabilities - 1.0 2.5 3.5
--------------------------------- ------ ------ ------ ------
* See Note 4 for details on the prior period restatement.
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, with the exception of the
Group's long term fixed rate private note placements detailed in
Note 18.
Valuation techniques
Level 1
Level 1 instruments are those whose fair values are based on
quoted prices (unadjusted) in active markets for identical assets
and liabilities.
Level 2
Level 2 instruments are those whose fair values are based on
inputs other than quoted prices included within Level 1 that are
observable for the asset or liability, either directly or
indirectly. The fair value of derivative financial instruments
relating to forward foreign exchange contracts are determined by
using valuation techniques using observable market data.
Level 3
If one or more of the significant inputs is not based on
observable market data, the instrument is included in Level 3.
Financial assets held at FVOCI (unlisted equity investments)
included in Level 3 fall under two categories. The first, where
cost has been determined as the best approximation of fair value.
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
second, where management have determined the fair value of the
unlisted equity security based upon the latest trading performance
of the investments, cash flow forecasts of the investments and
applying these to a discounted cash flow valuation and/or
considering evidence from recent fundraising initiatives
undertaken.
Financial assets held at FVPL included in Level 3 fall under two
categories. The first, where the fair value of investment funds is
based on underlying asset values determined by the Fund Manager's
quarterly financial statements. The second, where management have
determined the fair value of convertible loans based upon the
latest trading performance of the equity investments and cash flow
forecasts of the investments and applying these to a discounted
cash flow valuation.
Deferred consideration held at fair value relates to contingent
deferred consideration. The fair value of contingent deferred
consideration classified as Level 3 is derived from management's
best estimate of future revenue / profits of the relevant acquired
business, in accordance with the contractually agreed earn-out
targets.
The derivative financial liabilities classified as Level 3
relate to put and call options, the fair value of which is derived
from management's best estimate of the average EBITDA forecast of
the relevant businesses. These include a call option on the Savills
IM Holdings Ltd group whereby under this agreement Samsung Life has
the option to increase its interest by up to 10% over the next four
years, depending upon the quantum and timing of the provision of
capital to Savills Investment Management's investment products, the
maximum being achievable if at least US$2bn of capital is
committed. This option is classed as non-current. Gains and losses
are recognised in operating profits in the income statement.
Derivative financial liabilities also include a put and call option
on the remaining 40% of the AMS businesses (60% of which was
acquired by the Group during 2022). Under this agreement, after 2
years the Group has the option to purchase and the non-controlling
interest holder has the option to request the Group to purchase an
additional 20%, with the remaining 20% after 5 years. This option
is classed as non-current. The loss upon recognition has been
recognised in reserves. Subsequent gains and losses are recognised
in operating profits in the income statement.
The following table presents changes in Level 3 items for the
period ended 30 June 2023:
Derivative financial
instruments Unlisted equity investments Financial assets at FVPL
GBPm GBPm GBPm
------------------------------ ----------------------------- ---------------------------- -------------------------
Opening balance 1 January
2023 (6.7) 4.9 36.8
Additions - 3.5 1.6
Disposals - (1.6) (0.5)
Transfer - (0.1) 0.1
Exchange movement 0.3 (0.2) (0.4)
Re-measurements 1.2 0.4 (0.9)
Closing balance 30 June 2023 (5.2) 6.9 36.7
------------------------------ ----------------------------- ---------------------------- -------------------------
The re-measurement of unlisted equity securities in the period
of GBP0.4m is based upon evidence from recent fundraising
initiatives undertaken.
7. Segment analysis
Property
Six months to Transaction and Facilities Investment
30 June 2023 Advisory Consultancy Management Management Unallocated Total
(unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Revenue
United Kingdom
- commercial 37.5 93.5 146.1 19.8 - 296.9
- residential 71.6 19.4 21.5 - - 112.5
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Total United Kingdom 109.1 112.9 167.6 19.8 - 409.4
CEME 43.2 32.6 46.1 28.0 - 149.9
Asia Pacific
- commercial 40.2 37.6 221.8 3.9 - 303.5
- residential 10.0 - - - - 10.0
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Total Asia Pacific 50.2 37.6 221.8 3.9 - 313.5
North America 126.2 12.4 - - - 138.6
--------------------------
Total revenue 328.7 195.5 435.5 51.7 - 1,011.4
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Underlying profit/(loss)
before tax
United Kingdom
- commercial 2.4 8.6 9.7 3.5 (1.0) 23.2
- residential 4.7 1.2 1.5 - - 7.4
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Total United Kingdom 7.1 9.8 11.2 3.5 (1.0) 30.6
CEME (16.2) 0.1 (0.4) 4.2 - (12.3)
Asia Pacific
- commercial (6.2) (1.7) 9.3 (0.7) - 0.7
- residential 1.2 - - - - 1.2
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Total Asia Pacific (5.0) (1.7) 9.3 (0.7) - 1.9
North America (2.9) (1.0) - - - (3.9)
--------------------------
Underlying profit/(loss)
before tax (17.0) 7.2 20.1 7.0 (1.0) 16.3
-------------------------- ------------ ------------ ---------------- ------------ ------------ ---------
Property
Six months to Transaction and Facilities Investment
30 June 2022 Advisory Consultancy* Management* Management Unallocated Total
(unaudited) GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Revenue
United Kingdom
- commercial 55.6 87.6 129.7 28.6 - 301.5
- residential 95.8 22.0 19.9 - - 137.7
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total United Kingdom 151.4 109.6 149.6 28.6 - 439.2
CEME* 49.1 30.5 36.7 21.8 - 138.1
Asia Pacific
- commercial 71.2 39.5 188.4 3.4 - 302.5
- residential 9.2 - - - - 9.2
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total Asia Pacific 80.4 39.5 188.4 3.4 - 311.7
North America 132.3 16.1 - - - 148.4
--------------------------
Total revenue 413.2 195.7 374.7 53.8 - 1,037.4
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Underlying profit/(loss)
before tax
United Kingdom
- commercial 9.9 7.7 8.0 5.7 (7.0) 24.3
- residential 13.6 2.5 0.7 - - 16.8
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total United Kingdom 23.5 10.2 8.7 5.7 (7.0) 41.1
CEME* (8.8) 3.8 (1.0) 4.3 - (1.7)
Asia Pacific
- commercial 7.4 0.9 9.4 0.3 - 18.0
- residential - - - - - -
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total Asia Pacific 7.4 0.9 9.4 0.3 - 18.0
North America 0.6 1.2 - - - 1.8
--------------------------
Underlying profit/(loss)
before tax 22.7 16.1 17.1 10.3 (7.0) 59.2
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
* Revenue (GBP11.4m) and underlying profit (GBP1.5m)
attributable to the project management consultancy business in CEME
has been reclassified from Property and Facilities Management to
Consultancy.
Property
Year ended 31 Transaction and Facilities Investment
December 2022 Advisory Consultancy* Management* Management Unallocated Total
(audited) GBPm GBPm GBPm GBPm GBPm GBPm
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Revenue
United Kingdom
- commercial 118.9 202.0 278.7 53.3 - 652.9
- residential 208.3 46.4 48.7 - - 303.4
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total United Kingdom 327.2 248.4 327.4 53.3 - 956.3
CEME* 129.8 72.1 81.4 51.7 - 335.0
Asia Pacific
- commercial 145.3 87.4 404.9 7.8 - 645.4
- residential 24.3 - - - - 24.3
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total Asia Pacific 169.6 87.4 404.9 7.8 - 669.7
North America 303.5 33.8 - - - 337.3
--------------------------
Total revenue 930.1 441.7 813.7 112.8 - 2,298.3
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Underlying profit/(loss)
before tax
United Kingdom
- commercial 20.4 21.8 21.2 8.7 (16.3) 55.8
- residential 35.1 6.2 4.7 - - 46.0
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total United Kingdom 55.5 28.0 25.9 8.7 (16.3) 101.8
CEME* (2.7) 8.7 (0.5) 11.8 - 17.3
Asia Pacific
- commercial 13.4 2.9 21.0 0.7 - 38.0
- residential 3.4 - - - - 3.4
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
Total Asia Pacific 16.8 2.9 21.0 0.7 - 41.4
North America 2.3 1.8 - - - 4.1
--------------------------
Underlying profit/(loss)
before tax 71.9 41.4 46.4 21.2 (16.3) 164.6
-------------------------- ------------ ------------- ---------------- ------------ ------------ --------
* Revenue (GBP27.8m) and underlying profit (GBP3.8m)
attributable to the project management consultancy business in CEME
has been reclassified from Property and Facilities Management to
Consultancy.
Operating segments reflect internal management reporting to the
Group's chief operating decision maker, defined as the Group
Executive Board ('GEB'). The GEB primarily manages the business
based on the geographic location in which the Group operates, with
the Investment Management business being managed separately.
The operating segments are identified as the following regions:
the UK, CEME , Asia Pacific and North America. The Savills
Investment Management business is also considered a separate
operating segment. The reportable operating segments derive their
revenue primarily from property related services. Within the UK and
Asia Pacific, both commercial and residential services are
provided. Other segments are largely commercial-based.
The GEB also reviews the business with reference to the nature
of the services in each region. Therefore, the Group has presented
its segment analysis above in a matrix with the primary operating
segments based on regions in which the Group operates.
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, significant
transaction-related costs, amortisation and impairment of
intangible assets arising from business combinations, impairment of
goodwill and other items that are considered non-operational and
material.
A reconciliation of underlying profit before tax to reported
profit before tax is provided in Note 8.
The Unallocated 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.
8. Underlying profit before tax
Six months
to 30 June
2022
Six months Year ended
to 30 June 31 December
2023 (unaudited) (unaudited) 2022 (audited)
GBPm GBPm GBPm
-------------------------------------------- ------------------ -------------- ----------------
Reported profit before tax 6.0 50.4 153.9
Adjustments:
- Amortisation of acquired intangible
assets arising from business acquisitions 5.0 5.1 9.9
- Share-based payment adjustment (refer
to Note 3) (0.5) (2.3) (14.7)
- Restructuring costs - 0.1 0.1
- Transaction-related costs 7.1 5.9 15.5
- Fair value (gain) on transaction-related
call option (1.3) - (0.1)
Underlying profit before tax 16.3 59.2 164.6
-------------------------------------------- ------------------ -------------- ----------------
There have been no impairments of goodwill and intangible assets
arising from business combinations recognised in the current or
prior year.
Transaction-related costs includes a net GBP6.2m charge for
future consideration payments which are contingent on the
continuity of recipients' employment in the future (30 June 2022:
GBP6.9m, 31 December 2022: GBP14.8m). For the period ended 30 June
2023, the period ended 30 June 2022 and the year ended 31 December
2022, a significant portion of the charge related to the
acquisition of DRC Capital LLP ('DRC') in 2021. In the current
period, transaction-related costs also consist of GBP0.4
professional advisory transaction fees (30 June 2022: GBP0.2m, 31
December 2022: GBP1.4m) and GBP0.4m of interest on deferred
consideration and non-current future payments in relation to
business acquisitions that are linked to employment (30 June 2022:
GBP0.2m, 31 December 2022: GBP0.3m). In the current period,
transaction-related costs included a GBP0.1m (30 June 2022:
GBP0.2m, 31 December 2022: GBP0.6m) charge relating to prepaid
amounts issued as part of business acquisitions that are linked to
continued active engagement in the business. Of these items,
prepaid amounts that are linked to active engagement in the
business are recorded as employee benefits expenses in the income
statement, unwinding of interest is recorded as a finance cost in
the income statement and all other charges/(credits) are recorded
within other operating expenses. In the period ended 30 June 2022
and the year ended 31 December 2022, transaction-related costs also
consisted of a GBP1.6m credit for fair value changes to c ontingent
deferred consideration not related to continuity of employment.
Refer to Note 6 for fair value estimations.
For the period ended 30 June 2023 and year ended 31 December
2022, a fair value gain was recognised on the fair value
measurement of the Samsung Life call option, which gives Samsung
Life the right to purchase up to an additional 10% shareholding in
the Savills Investment Management group subject to the quantum of
capital it has invested in Savills IM products during the initial 5
year term.
9. 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
2023 (unaudited) 2022 (unaudited) 2022 (audited)
GBPm GBPm GBPm
-------------------- ------------------ ------------------ ----------------
UK
- Current tax 2.4 8.9 18.7
- Deferred tax 0.5 (3.3) (1.4)
Foreign tax
- Current tax 3.0 8.6 23.1
- Deferred tax (4.3) (1.5) (6.3)
-------------------- ------------------ ------------------ ----------------
Income tax expense 1.6 12.7 34.1
-------------------- ------------------ ------------------ ----------------
The forecast Group effective tax rate is 26.7% (30 June 2022:
25.2% and 31 December 2022 reported effective tax rate: 22.2%),
which is higher (30 June 2022: higher, 31 December 2022: higher)
than the UK standard effective annual rate of corporation tax of
23.5% (30 June 2022 and 31 December 2022: 19%). This primarily
reflects permanent disallowable expenses, including
transaction-related costs. The Group underlying effective tax rate
is 24.5% (30 June 2022: 23.3% and 31 December 2022: 20.5%).
A full analysis has not yet been completed on the impact of the
OECD's Pillar Two Model Rules. The Group does not generally operate
in low tax jurisdictions however, and as a result the impact is not
expected to be material.
10. Dividends
Six months Six months Year ended
to 30 June to 30 June 31 December
2023 (unaudited) 2022 (unaudited) 2022 (audited)
GBPm GBPm GBPm
---------------------------------------- ------------------ ------------------ ----------------
Amounts recognised as distribution to
equity holders in the period:
In respect of previous period
Ordinary final dividend of 13.4p per
share (2021: 12.75p) 18.2 17.6 17.6
Supplemental interim dividend of 15.6p
per share (2021: 15.6p) 21.2 21.6 21.6
Special dividend of GBPnil per share
(2021: 27.05p) - 37.4 37.4
In respect of current period
Interim dividend of GBPnil per share
(2022: 6.6p) - - 8.9
---------------------------------------- ------------------ ------------------ ----------------
39.4 76.6 85.5
---------------------------------------- ------------------ ------------------ ----------------
Proposed interim dividend for the six
months ended 30 June 2023 GBP9.5m
---------------------------------------- ------------------
The Board has declared an interim dividend for the six months
ended 30 June 2023 of 6.9p per ordinary share (30 June 2022: 6.6p)
to be paid on 2 October 2023 to shareholders on the register on 1
September 2023. The interim dividend has not been recognised in
these interim financial statements. It will be recognised in equity
in the year to 31 December 2023.
11(a). Basic and diluted earnings per share
2023 2023 2023 2022 2022 2022
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June (unaudited) GBPm million Pence GBPm million pence
----------------------------------- --------- -------- ------ --------- -------- ------
Basic earnings per share 4.8 136.1 3.5 37.0 138.3 26.8
Effect of additional shares
issuable under option - 5.5 (0.1) - 8.5 (1.6)
-----------------------------------
Diluted earnings per share 4.8 141.6 3.4 37.0 146.8 25.2
----------------------------------- --------- -------- ------ --------- -------- ------
2022 2022 2022
Earnings Shares EPS
Year to 31 December (audited) GBPm million Pence
----------------------------------- --------- -------- ------ --------- -------- ------
Basic earnings per share 119.4 137.3 87.0
Effect of additional shares
issuable under option - 7.9 (4.8)
----------------------------------- --------- -------- ------ --------- -------- ------
Diluted earnings per share 119.4 145.2 82.2
----------------------------------- --------- -------- ------ --------- -------- ------
11(b). Underlying basic and diluted earnings per share
2023 2023 2023 2022 2022 2022
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June
(unaudited) GBPm million pence GBPm million Pence
------------------------------------------ --------- -------- ------- --------- -------- --------------
Basic earnings per share 4.8 136.1 3.5 37.0 138.3 26.8
- Amortisation of intangible
assets arising from business
combinations after tax 3.6 - 2.6 3.9 - 2.8
- Share-based payment adjustment
after tax (0.5) - (0.4) (2.0) - (1.4)
- Restructuring costs after
tax - - - 0.1 - 0.1
- Transaction-related costs
after tax 7.1 - 5.2 5.7 - 4.1
- Fair value gain on transaction-related
call option after tax (1.2) - (0.9) - - -
- Effect of application
of annual tax rate (1.1) - (0.8) - - -
Underlying basic earnings
per share 12.7 136.1 9.2 44.7 138.3 32.4
------------------------------------------ --------- -------- ------- --------- -------- --------------
Effect of additional shares
issuable under option - 5.5 (0.2) - 8.5 (2.0)
------------------------------------------
Underlying diluted earnings
per share 12.7 141.6 9.0 44.7 146.8 30.4
------------------------------------------ --------- -------- ------- --------- -------- --------------
2022 2022 2022
Earnings Shares EPS
Year to 31 December (audited) GBPm Million Pence
------------------------------------------ --------- -------- ------- --------- -------- --------------
Basic earnings per share 119.4 137.3 87.0
- Amortisation of intangible
assets arising from business
combinations after tax 7.6 - 5.5
- Share-based payment adjustment
after tax (11.9) - (8.7)
- Restructuring costs after
tax 0.1 - 0.1
- Transaction-related costs
after tax 15.3 - 11.1
- Fair value loss on transaction-related
call option after tax (0.1) - (0.1)
Underlying basic earnings
per share 130.4 137.3 94.9
------------------------------------------ --------- -------- ------- --------- -------- --------------
Effect of additional shares
issuable under option - 7.9 (51)
------------------------------------------ --------- --------
Underlying diluted earnings
per share 130.4 145.2 89.8
------------------------------------------ --------- -------- ------- --------- -------- --------------
Refer to Note 8 for the gross amounts of the above adjustments
and a reconciliation between reported profit before tax and
underlying profit before tax, alongside further details on each of
the adjustments.
12. Cash generated from operations
Six months
to 30 June
2022
Six months Year ended
to 30 June 31 December
2023 (unaudited) (unaudited) 2022 (audited)
GBPm GBPm GBPm
--------------------------------------------- ------------------ -------------- ----------------
Profit for the period 4.4 37.7 119.8
Adjustments for:
Income tax (Note 9) 1.6 12.7 34.1
Depreciation 34.7 32.0 65.8
Amortisation of intangible assets 7.9 8.0 16.9
Loss on disposal of property, plant
and equipment and intangible assets 0.3 0.1 1.1
Impairment of property, plant and equipment - - 0.8
Net finance (income)/cost (3.6) 5.4 4.3
Share of post-tax profit from joint
ventures and associates (4.8) (4.7) (12.1)
Dividends from other parties - - (0.2)
Increase in employee and retirement
obligations 9.8 9.2 2.6
Exchange movement and fair value movements
on financial instruments in operating
activities (2.2) (1.0) 0.5
Decrease in provisions (3.1) (2.0) (4.7)
Charge for share-based compensation 16.0 15.1 30.4
Operating cash flows before movements
in working capital 61.0 112.5 259.3
--------------------------------------------- ------------------ -------------- ----------------
Decrease/(increase) in trade and other
receivables and contract assets 33.0 82.1 (7.3)
Decrease in trade and other payables
and contract liabilities (260.1) (229.3) (41.1)
--------------------------------------------- ------------------ -------------- ----------------
Cash (used in)/generated from operations (166.1) (34.7) 210.9
--------------------------------------------- ------------------ -------------- ----------------
Foreign exchange movements resulted in a GBP21.5m decrease in
current and non-current trade and other receivables (30 June 2022:
GBP34.8m increase and 31 December 2022: GBP37.3m increase) and a
GBP23.7m decrease in current and non-current trade and other
payables (30 June 2022: GBP37.2m increase and 31 December 2022:
GBP43.8m increase).
13. Analysis of liabilities arising from financing
activities
Non-cash Movements
movements through
recognised Other business
Six months to At 1 Cash in income non- cash combinations Exchange At 30
30 June 2023 January flows statement movements and disposals movements June
(unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- --------- ------- ------------- ----------- --------------- ----------- --------
Bank loans (4.5) (90.4) - - - 0.4 (94.5)
Loan notes (153.7) 3.0 - - - - (150.7)
Transaction costs 1.4 - (0.3) - - - 1.1
Lease liabilities* (277.6) 32.0 (4.5) (16.0) 0.1 8.0 (258.0)
--------------------- --------- ------- ------------- ----------- --------------- ----------- --------
Liabilities arising
from financing
activities (434.4) (55.4) (4.8) (16.0) 0.1 8.4 (502.1)
--------------------- --------- ------- ------------- ----------- --------------- ----------- --------
Non-cash Movements
movements through
recognised Other business
Six months to At 1 Cash in income non- cash combinations Exchange At 30
30 June 2022 January flows statement movements and disposals movements June
(unaudited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- --------- ------- ------------- ----------- --------------- ----------- --------
Bank loans (0.9) (4.8) - - - (0.2) (5.9)
Loan notes (150.0) - - - - - (150.0)
Transaction costs 1.6 0.4 (0.3) - - - 1.7
Lease liabilities* (285.0) 28.8 (4.5) (17.6) - (12.9) (291.2)
--------------------- --------- ------- ------------- ----------- --------------- ----------- --------
Liabilities arising
from financing
activities (434.3) 24.4 (4.8) (17.6) - (13.1) (445.4)
--------------------- --------- ------- ------------- ----------- --------------- ----------- --------
Non-cash Movements
movements through
recognised Other business
Year to 31 December At 1 Cash in income non- cash combinations Exchange At 31
2022 January flows statement movements and disposals movements December
(audited) GBPm GBPm GBPm GBPm GBPm GBPm GBPm
--------------------- --------- ------- ------------ ----------- --------------- ----------- ----------
Bank loans (0.9) (0.3) - - (3.2) (0.1) (4.5)
Loan notes (150.0) (3.7) - - - - (153.7)
Transaction costs 1.6 0.4 (0.6) - - - 1.4
Lease liabilities* (285.0) 60.5 (9.0) (27.3) (2.7) (14.1) (277.6)
--------------------- --------- ------- ------------ ----------- --------------- ----------- ----------
Liabilities arising
from financing
activities (434.3) 56.9 (9.6) (27.3) (5.9) (14.2) (434.4)
--------------------- --------- ------- ------------ ----------- --------------- ----------- ----------
* The part of the lease payment that represents cash payments
for the principal portion of the lease liability is presented as a
cash flow resulting from
financing activities (period to 30 June 2023: GBP27.5m, period
to 30 June 2022: GBP24.3m, year to 31 December 2022: GBP51.4m). The
part of the lease payment that represents interest portion of the
lease liability is presented as an operating cash flow, consistent
with the presentation of the Group's loan and bank interest
payments (period to 30 June 2023: GBP4.5m, period to 30 June 2022:
GBP4.5m, year to 31 December 2022: GBP9.0m).
Non-cash movements recognised in the income statement represent
amortisation of transaction costs and unwinding of discount on
lease liabilities. Other non-cash movements to lease liabilities
represent new leases and disposal of leases.
Cash subject to restrictions in Asia Pacific amounts to GBP23.2m
(30 June 2022: GBP21.9m and 31 December 2022: GBP25.6m) which is
cash pledged to banks in relation to property management contracts
and cash remittance restrictions in certain countries. These
amounts are consolidated within the Group's cash and cash
equivalents.
14. Goodwill
Management have determined that there has been no impairment to
the CGUs within the Group. The US and Middle East CGUs continue to
be identified as the material CGUs that are considered to be
sensitive to changes in key assumptions. Refer to the Group's
Annual Report and Accounts 2022 for key assumptions applied.
15. Acquisition of subsidiaries
On 6 January 2023, the Group acquired 100% of the equity
interest in Automotive Property Consultancy Holdings Limited, a
specialist property consultancy company dedicated to the franchised
motor retail sector. In addition, on 31 March 2023, the Group
acquired 51% of the equity interest in BeLiving SRL, a real estate
company specialising in residential sales and rentals in Italy. On
31 May 2023 the Group also acquired 100% of the equity interest in
Predibisa, Sociedade de Mediaç o Imobiliária, Lda., a residential
and commercial real estate company based in two offices in Porto,
Portugal.
Cash consideration for these transactions amounted to GBP5.2m.
The remainder of the acquisition consideration relates to deferred
consideration of GBP0.5m payable within one year of the reporting
date.
Goodwill of GBP3.5m 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.
Acquisition-related costs of GBP0.4m have been expensed as
incurred to the income statement and classified within other
operating expenses.
The acquired businesses contributed revenue of GBP1.2m and a
profit of GBP0.4m to the Group for the period from acquisition to
30 June 2023. Had the acquisitions been made at the beginning of
the financial year, revenue would have been GBP2.4m and the profit
would have been GBP0.2m. The impact on the Group's overall revenue
and profits is not material.
Due to the timing of the acquisitions, 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
--------------------------------------------------- --------------
Non-current assets: Property, plant and equipment 0.2
Current assets: Trade and other receivables 0.6
Accrued income 0.3
Tax receivable 0.1
Cash and cash equivalents 2.6
--------------------------------------------------- --------------
Total assets 3.8
Current liabilities: Trade and other payables (1.5)
Current tax payable (0.1)
Net assets acquired 2.2
Goodwill 3.5
--------------------------------------------------- --------------
Purchase consideration 5.7
--------------------------------------------------- --------------
Consideration satisfied by:
Cash paid 5.2
Deferred consideration < 1 year 0.5
5.7
--------------------------------------------------- --------------
Update to provisional fair value of prior period
acquisitions
There were no changes to the provisional fair values in respect
of acquisitions as reported in the Group's 2022 Annual Report and
interim financial report for the six months to 30 June 2022.
16. 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 6 active
employees and 108 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 2022 and as follows:
UK Plan SFM Plan
------------------------------------ ------------------------------------
Year Year
Six months ended Six Six months ended
Six months to 30 31 months to 30 31
to 30 June December to 30 June December
June 2023 2022 2022 June 2023 2022 2022
------------------------------- ----------- ----------- ---------- ----------- ----------- ----------
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 5.10% 3.80% 4.80% 4.02% 3.36% 4.24%
Inflation assumption 3.20% 3.00% 3.20% 2.20% 1.75% 2.20%
Rate of increase to pensions
in payment
- accrued before 6 April
1997 3.00% 3.00% 3.00% - - -
- accrued after 5 April
1997 3.00% 2.90% 3.00% - - -
- accrued after 5 April
2005 2.10% 2.00% 2.00% - - -
- pension promise before
1 January 1986 - - - 2.20% 2.25% 2.20%
- pension promise after
1 January 1986 - - - 2.20% 1.75% 2.20%
Rate of increase to pensions
in deferment
- accrued before 6 April
2001 5.00% 5.00% 5.00% - - -
- accrued after 5 April
2001 2.80% 2.30% 2.60% - - -
- accrued after 5 April
2009 2.50% 2.30% 2.50% - - -
------------------------------- ----------- ----------- ---------- ----------- ----------- ----------
The amounts recognised in the statement of financial position
are as follows:
30 June 31 December
2023 30 June 2022 2022
UK Plan GBPm GBPm GBPm
------------------------------------------------ -------- ------------- ------------
Present value of funded obligations (179.8) (205.3) (186.7)
Fair value of plan assets 182.3 238.6 209.0
------------------------------------------------ -------- ------------- ------------
Surplus recognised in the statement
of financial position (included in retirement
benefit surplus) 2.5 33.3 22.3
------------------------------------------------ -------- ------------- ------------
30 June 31 December
2023 30 June 2022 2022
SFM Plan GBPm GBPm GBPm
------------------------------------------------ -------- ------------- ------------
Present value of funded obligations (9.9) (10.0) (9.9)
Fair value of plan assets 13.2 12.7 13.1
------------------------------------------------ -------- ------------- ------------
Surplus recognised in the statement
of financial position (included in retirement
benefit surplus) 3.3 2.7 3.2
------------------------------------------------ -------- ------------- ------------
The amount recognised within the income statement in relation to
the UK Plan for the period ended 30 June 2023 is a net interest
income of GBP0.5m (30 June 2022: GBP0.2m, 31 December 2022:
GBP0.4m).
Total employee benefit obligations of GBP49.3m relates to
holiday pay and long service leave (30 June 2022: GBP48.8m, 31
December 2022: GBP42.9m).
17. Trade receivables - Loss allowance
The Group has no significant concentrations of credit risk. The
trade receivables balance is spread across a large number of
different customers and geographic regions.
Local management have assessed the expected credit losses for
trade receivables in the current geopolitical and economic
environment and the expected loss rates have been reviewed based on
their judgement as to the impact on their trade receivables
portfolio. Overall, the expected loss rate on trade receivables has
increased to 5.2% (31 December 2022: 4.8%) primarily due to a
higher proportion of balances being greater than 90 days past
due.
A summary of trade receivables and the loss provision has been
provided below:
More than More than More than More than
30 days 60 days 90 days 180 days
30 June 2023 Current past due past due past due past due Total
-------------------------- -------- ---------- ---------- ---------- ---------- -------
Expected loss rate 0.2% 0.2% 1.1% 4.7% 40.9% 5.2%
Gross carrying amount
(GBPm) 264.0 40.9 28.0 34.0 46.0 412.9
Loss allowance provision
(GBPm) (0.5) (0.1) (0.3) (1.6) (18.8) (21.3)
-------------------------- -------- ---------- ---------- ---------- ---------- -------
More than More than More than More than
30 days 60 days 90 days 180 days
30 June 2022 Current past due past due past due past due Total
-------------------------- -------- ---------- ---------- ---------- ---------- -------
Expected loss rate 0.2% 0.5% 1.2% 6.7% 47.5% 6.6%
Gross carrying amount
(GBPm) 260.3 41.3 25.9 34.3 50.5 412.3
Loss allowance provision
(GBPm) (0.5) (0.2) (0.3) (2.3) (24.0) (27.3)
-------------------------- -------- ---------- ---------- ---------- ---------- -------
More than More than More than More than
30 days 60 days 90 days 180 days
31 December 2022 Current past due past due past due past due Total
-------------------------- -------- ---------- ---------- ---------- ---------- -------
Expected loss rate 0.2% 0.2% 1.0% 4.6% 46.9% 4.8%
Gross carrying amount
(GBPm) 346.2 49.3 30.3 30.4 46.3 502.5
Loss allowance provision
(GBPm) (0.6) (0.1) (0.3) (1.4) (21.7) (24.1)
-------------------------- -------- ---------- ---------- ---------- ---------- -------
18. Borrowings
Movements in borrowings are analysed as follows:
12 months
6 months 6 months ended 31
ended 30 ended 30 December
June 2023 June 2022 2022
GBPm GBPm GBPm
----------------------------------------------- ----------- ----------- ----------
Opening amount as at 1 January 159.7 150.5 150.5
Additional borrowings, net of transaction
costs paid (including additional overdraft)* 100.9 10.1 10.8
Repayments of borrowings (11.3) (4.3) (5.6)
Addition through business combination - - 3.2
Amortisation of transaction costs 0.3 0.3 0.6
Foreign exchange movement (0.5) 0.2 0.2
Closing amount 249.1 156.8 159.7
----------------------------------------------- ----------- ----------- ----------
* Period to 30 June 2023 includes a GBP2.2m increase in
overdraft balances (period to 30 June 2022: GBP1.3m increase, year
to 31 December 2022: GBP1.5m increase) and GBPnil of transaction
costs paid (period to 30 June 2022: GBP0.3m, year to 31 December
2022: GBP0.3m) within additional borrowings.
30 June 31 December
2023 30 June 2022 2022
GBPm GBPm GBPm
----------------------------------- -------- ------------- ------------
Current
Bank overdrafts 5.0 2.6 2.8
Unsecured bank loans 94.2 5.8 4.0
Loan notes due within one year or
on demand 0.7 - 3.8
Non-current
Unsecured bank loans 0.3 0.1 0.5
Loan notes 150.0 150.0 150.0
Transaction costs (1.1) (1.7) (1.4)
249.1 156.8 159.7
----------------------------------- -------- ------------- ------------
The Group has the following undrawn borrowing facilities:
30 June 31 December
2023 30 June 2022 2022
GBPm GBPm GBPm
------------------------------------- -------- ------------- ------------
Floating rate - expiring within 1
year or on demand 46.3 64.0 64.9
Floating rate - expiring between 1
and 5 years 282.1 356.0 360.0
Fixed rate - expiring within 1 year
or on demand 0.9 - 1.1
Fixed rate - expiring between 1 and
5 years - - 0.2
------------------------------------- -------- ------------- ------------
329.3 420.0 426.2
------------------------------------- -------- ------------- ------------
The Group holds a GBP360m multi-currency revolving credit
facility ('RCF'), which includes a GBP90m accordion facility. In
June 2022 the Group extended the maturity date of the RCF by a
further year to June 2026. As at 30 June 2023 GBP78.0m (30 June
2022: GBP5.0m, 31 December 2022: none) of the RCF was drawn .
The unsecured bank loans reflect a GBP0.9m working capital loan
in Thailand, which is repayable on demand and denominated in
Thailand baht (30 June 2022: GBP0.8m, 31 December 2022: GBP0.9m), a
GBP1.1m working capital loan in Indonesia, which is repayable on
demand and denominated in Indonesian Rupiah (30 June 2022: GBP0.2m,
31 December 2022: GBP0.3m) and GBP1.4m of loans in Singapore,
denominated in Singapore dollar (30 June 2022: GBP0.1m, 31 December
2022: GBP3.3m). Of the loans in Singapore, GBPnil (30 June 2022:
GBPnil, 31 December 2022: GBP2.3m) relates to property loans,
GBP0.8m factoring facility maturing within one year (30 June 2022:
GBPnil, 31 December 2022: GBP0.6m) and a GBP0.5m bridging loan
(GBP0.3m expiring within one year and GBP0.2m expiring within two
years) (30 June 2022: GBPnil, 31 December 2022: GBP0.3m). The
remaining GBP0.1m of loans in Singapore are bank loans maturing
within one year (30 June 2022: GBP0.1m, 31 December 2022: GBP0.1m).
The balance also includes GBP 13.1 m utilisation of a revolving
credit facility in North America for working capital purposes (30
June 2022: GBP14.1m, 31 December 2022: GBPnil).
The Group holds GBP150.0m of long term debt through the issuance
of 7, 10 and 12 year fixed rate private note placements in the US
institutional market, which were issued in June 2018.
The carrying amounts of borrowings are materially approximate to
their fair value, with the exception of the Group's long-term fixed
rate private note placements. The fair value of these loan notes as
at 30 June 2023 is GBP123.4m (30 June 2022: GBP139.1m, 31 December
2022: GBP131.5m), the difference between the fair value and the
book value is not recognised in the reported results for the
period. The fair value has been calculated based upon a discounted
cash flow valuation utilising observable market rates of borrowing
that are comparable to the remaining length of the loan notes. The
valuation technique falls within Level 2 of the fair value
hierarchy in IFRS 13.
19. Notional pooling arrangement
For internal cash management purposes, the Group maintains a
notional cash pooling arrangement with Barclays Bank PLC, whereby
credit cash balances (cash) and debit cash balances (overdrafts)
for the participating bank accounts are notionally offset. There is
no overdraft cost or charge associated with any pooled overdraft
that is fully offset by pooled credit cash balances. As at 30 June
2023, the notional cash pooling arrangement included cash balances
of GBP181.9m presented in cash and cash equivalents (30 June 2022:
GBP169.3m, 31 December 2022: GBP205.0m) and overdrafts of GBP180.7m
(30 June 2022: GBP168.9m, 31 December 2022: GBP202.0m) presented in
current liabilities. This represents as at 30 June 2023 surplus
pooled credit cash balances of GBP1.2m (30 June 2022: surplus
pooled credit cash balances of GBP0.4m, 31 December 2022: surplus
pooled credit cash balances of GBP3.0m).
For the purpose of the statement of cash flows, cash and cash
equivalents net of overdrafts comprise the following:
30 June 31 December
2023 30 June 2022 2022
GBPm GBPm GBPm
-------------------------------------------- -------- ------------- ------------
Cash and cash equivalents 442.7 474.7 669.1
Overdrafts in notional pooling arrangement (180.7) (168.9) (202.0)
Bank overdrafts (see Note 18) (5.0) (2.6) (2.8)
-------------------------------------------- -------- ------------- ------------
257.0 303.2 464.3
-------------------------------------------- -------- ------------- ------------
20. Finance income and costs
Finance income and finance costs have increased in the period as
a result of global interest rate rises.
21. Related party transactions
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.
As at 30 June 2023, there were GBP0.1m of loans outstanding to
joint ventures (30 June 2022: GBP0.2m of loans outstanding to joint
ventures, 31 December 2022: GBP0.2m of loans outstanding to joint
ventures), GBP1.6m of loans outstanding to associates and GBP0.2m
of loans payable to associates (30 June 2022: GBP1.4m of loans
outstanding to associates, 31 December 2022: GBP1.7m of loans
outstanding to associates).
22 . Contingent liabilities
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 can be estimated reliably and settlement
is probable.
23. Events after the balance sheet date
There have been no material events that require adjustment to
the Financial Statements or are considered to have a material
impact on the understanding of the Group's current financial
position.
24. Seasonality
Traditionally, 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.
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.
Appendices
Constant currency
The Group generates revenues and profits in various territories
and currencies because of its international footprint. Those
results are translated on consolidation at the foreign exchange
rates prevailing at the time. These exchange rates vary from year
to year, so the Group presents some of its results on a constant
currency basis. This means that the current period results are
retranslated using the prior period exchange rates. This eliminates
the effect of exchange from the year-on-year comparison of
results.
The constant currency effect on revenue, reported profit and
underlying profit is summarised below:
2023
Constant 2023 at
currency Constant
2023 effect currency
GBPm GBPm GBPm
Revenue 1,011.4 16.4 995.0
Profit before tax 6.0 (0.3) 6.3
Underlying profit before tax 16.3 (0.2) 16.5
The Group's segmental results for the current period are
presented below in constant currency:
Property and
Transaction Facilities Investment
Advisory Consultancy Management Management Unallocated Total
2023 at Constant Currency GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
United Kingdom - commercial 37.5 93.5 146.1 19.8 - 296.9
United Kingdom - residential 71.6 19.4 21.5 - - 112.5
Total United Kingdom 109.1 112.9 167.6 19.8 - 409.4
CEME 42.6 32.1 45.4 27.2 - 147.3
Asia Pacific - commercial 40.0 37.6 214.7 3.9 - 296.2
Asia Pacific - residential 9.9 - - - - 9.9
Total Asia Pacific 49.9 37.6 214.7 3.9 - 306.1
North America 120.4 11.8 - - - 132.2
Revenue 322.0 194.4 427.7 50.9 - 995.0
Underlying profit/(loss) before tax
United Kingdom - commercial 2.4 8.6 9.7 3.5 (1.0) 23.2
United Kingdom - residential 4.7 1.2 1.5 - - 7.4
Total United Kingdom 7.1 9.8 11.2 3.5 (1.0) 30.6
CEME (16.0) 0.1 (0.4) 4.1 (12.2)
Asia Pacific - commercial (6.3) (1.8) 9.2 (0.6) - 0.5
Asia Pacific - residential 1.3 - - - - 1.3
Total Asia Pacific (5.0) (1.8) 9.2 (0.6) - 1.8
North America (2.8) (0.9) - - - (3.7)
Underlying profit/(loss) before tax (16.7) 7.2 20.0 7.0 (1.0) 16.5
The constant currency effect on the Group's segmental results
for the current period is presented below:
Property and
Transaction Facilities Investment
Advisory Consultancy Management Management Unallocated Total
2023 - Constant Currency Effect GBPm GBPm GBPm GBPm GBPm GBPm
Revenue
United Kingdom - commercial - - - - - -
United Kingdom - residential - - - - - -
Total United Kingdom - - - - - -
CEME 0.6 0.5 0.7 0.8 - 2.6
Asia Pacific - commercial 0.2 - 7.1 - - 7.3
Asia Pacific - residential 0.1 - - - - 0.1
Total Asia Pacific 0.3 - 7.1 - - 7.4
North America 5.8 0.6 - - - 6.4
Revenue 6.7 1.1 7.8 0.8 - 16.4
Underlying profit/(loss) before tax
United Kingdom - commercial - - - - - -
United Kingdom - residential - - - - - -
Total United Kingdom - - - - - -
CEME (0.2) - - 0.1 - (0.1)
Asia Pacific - commercial 0.1 0.1 0.1 (0.1) - 0.2
Asia Pacific - residential (0.1) - - - - (0.1)
Total Asia Pacific - 0.1 0.1 (0.1) - 0.1
North America (0.1) (0.1) - - - (0.2)
Underlying profit/(loss) before tax (0.3) - 0.1 - - (0.2)
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IR GZGGRNLMGFZM
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August 10, 2023 02:00 ET (06:00 GMT)
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