14 March
2024
Savills plc
("Savills" or "the
Group")
PRELIMINARY RESULTS FOR THE FULL YEAR
ENDED 31 DECEMBER 2023
Resilient performance in challenging
markets driven by
the Group's less transactional service
lines
Summary results:
|
|
31-Dec-23
|
31-Dec-22
|
Change
|
|
Group revenue
|
£2.24bn
|
£2.30bn
|
(3)%
|
|
Underlying profit before
tax*
|
£94.8m
|
£164.6m
|
(42)%
|
|
Reported profit before
tax
|
£55.4m
|
£153.9m
|
(64)%
|
|
Underlying basic EPS*
|
55.1p
|
94.9p
|
(42)%
|
|
Reported basic EPS
|
30.0p
|
87.0p
|
(66)%
|
|
Proposed final ordinary
dividend
|
20.8p
|
20.0p
|
4%
|
|
Total dividend per
share
|
22.8p
|
35.6p
|
(36)%
|
|
Net cash**
|
£157.3m
|
£307.4m
|
(49)%
|
* Underlying
profit before tax ('underlying profit') and underlying basic EPS
are alternative performance measures used to assess the performance
of the Group. Underlying profit is calculated on a consistently
reported basis in accordance with Note 3 to this Preliminary
Statement. Underlying EPS is calculated using underlying profit,
with the weighted average number of shares remaining the same as
the GAAP measure.
** Net cash
reflects cash and cash equivalents net of borrowings and overdrafts
in the notional pooling arrangement (see Note 8).
Key highlights:
· Robust
performance of the less transactional businesses, representing 65%
of Group revenue, which grew 7%, underpinning overall Group
performance
· Property Management and Consultancy businesses performed well
with revenues increasing 11% to £899.5m and 4% to £459.8m,
respectively
· Savills Investment Management revenue decreased 6%. Assets
under management ('AUM') was stable at £22.1bn (2022: £22.1bn).
$1bn commitment from Samsung Life largely awaiting
deployment
· Global
Transactional Advisory revenues, in aggregate 35% of Group revenue,
decreased 17%, reflecting significantly reduced capital and leasing
market volumes globally
· Global
Residential revenues declined 19% as markets normalised, following
high levels of post pandemic activity, and adapted to higher
interest rates
· Depth
and breadth of team retained throughout the Group to maintain high
levels of client service
· Strong
net cash position provides resilience and enables continued
business development activity
Commenting on
the results, Mark Ridley, Group Chief Executive of Savills plc,
said:
"Savills
resilient performance in 2023 highlights the diversity and strength
of our global business. In the context of extremely challenging
real estate markets, which saw the lowest levels of transaction
volumes for a decade, our less transactional businesses have
provided a solid platform for the Group with a resilient and
growing earnings stream.
"Current economic and
geopolitical conditions remain uncertain and although
we expect this to continue for some time, most markets appear to be
past the moment of peak uncertainty. There are some early signs of
underlying market improvements, which should set the course for a
broader recovery during the second half of the year and into
2025.
"Our policy
of retaining our core bench strength, enabled by our strong balance
sheet, positions the Group well for the future."
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.
Chair's statement
Results
overview
Savills strength across its less transactional
service lines continued to provide a resilient earnings stream,
underpinning Savills overall performance in a global real estate
market challenged by significantly reduced transactional activity.
The Group's revenue decreased by 3% to £2.2bn (2022: £2.3bn), 2%
down on a constant currency basis. Although not immune
to market volatility (particularly in respect of some Consultancy
service lines), the strength of our less transactional businesses
underpinned Savills performance overall, growing revenue by 7% to
£1.5bn. Prime drivers of performance were Consultancy and Property
Management, which performed well, growing revenue by 4% and 11%
respectively.
The Group's Transactional business experienced
a 17% drop in revenue during the year as global market conditions
remained extremely subdued for longer than anticipated at the start
of 2023. This was the primary cause of the 42% reduction in the
Group's underlying profit of £94.8m (2022: £164.6m),
representing an underlying profit margin of 4.2%
(2022: 7.2%).
Our Investment Management business traded in
line with our expectations, although deployment of capital was
inevitably reduced given lack of price transparency in most of its
target markets. At the year end, Savills Investment Management had
significant investment 'dry powder' for both real estate equity and
debt opportunities, including Samsung Life having committed its
first $1bn to support a number of products.
As a result of the challenging market
conditions during 2023, the real estate services industry as a
whole undertook a number of rounds of cost reduction and
reorganisation actions. In line with our strategy during the global
financial crisis of 2008, as well as more recently through the
pandemic, and supported by our strong financial position; Savills
continued to maintain its core bench-strength around the world,
ensuring we provided the highest level of service to our clients
throughout the year and remain well positioned for market
recovery.
We did, however, review the global business for
locations or service lines where the anticipated time frames for
market recovery remain protracted. This resulted in selective
restructuring of certain transactional and related support teams
and resulted in one-off costs of £13.9m being incurred.
The costs of this restructuring led Group's
reported profit before tax to decrease by 64% to £55.4m (2022:
£153.9m), representing a pre-tax profit margin of 2.5% (2022:
6.7%).
The Group continued to maintain a positive
liquidity position with net cash (cash and cash equivalents net of
borrowings and overdrafts in the notional pooling arrangements) of
£157.3m at year end (2022: £307.4m).
Currency movements in the year decreased
revenue by £14.4m, underlying profit by £0.7m and reported profit
before taxation by £1.1m.
Market
conditions
Throughout the year, real estate markets across
the globe were challenged by significantly increased interest
rates, geopolitical events and, on a more asset-specific level,
uncertainties over the future role of offices and the valuation of
existing stock in the era of sustainability. These factors,
together with certain location-specific issues, significantly
reduced capital transaction volumes in global markets to their
lowest levels for a decade. In addition, economic uncertainty led
to delays in corporate occupiers committing to new leasing activity
in many markets.
The value recalibration process took time to
catalyse market liquidity, with the majority of lending banks
continuing to extend existing loan terms. The consequence of this
was that global market conditions remained extremely subdued for
longer than originally anticipated at the start of 2023.
However in Q4 2023, we began to see lenders
start to exercise their security rights. This began to have a
positive effect on market activity towards the year end and should
be a catalyst for improved volumes in 2024.
The rate at which individual investment markets
are recalibrating varies around the globe; however, it appears that
the UK prime Commercial market has re-priced to a point where it
represents value, particularly for assets with strong
sustainability credentials, for which there is significant occupier
demand. In addition, our Prime residential business has performed
well, particularly in central London. As anticipated a year ago,
residential markets outside London were more subdued as volumes
reverted to more normal levels of activity after the abnormally
large volumes transacted post-pandemic.
In Europe, investment transaction volumes
reached their lowest levels since the eurozone debt crisis. The
slowing of investment activity quarter-by-quarter was a widespread
trend across all European countries and major asset classes, with
the office sector continuing to face the most significant reduction
in volume.
In the Asia Pacific region, property investment
volumes overall fell by 33% in 2023. China experienced increasing
debt-related difficulties amongst the major domestic developers in
addition to the macro trends affecting manufactured supply to
international markets. Other markets in the region were affected by
the sharply higher cost of borrowing, with significant volume
declines in the mature markets of Australia and South Korea. Hong
Kong was one of two markets which recorded only a single digit
decline, however this was off an already very low base with volumes
still 70% below their previous peak in 2018.
In North America, the office market remained
sluggish as economic uncertainty, questions over the return to
offices, particularly in the major metropolitan markets of the East
and West Coast, and slowing employment growth caused corporates to
delay major leasing decisions, pending greater clarity.
Business
development
Savills has continued to focus on the strategic
development of the business and improving our service offering to
clients; this has been enabled by the Group's strong balance sheet.
In the first half of the 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 Mediaçāo 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.
In the second half of the year, the Group
acquired Site 8 Pty Limited, expanding our retail property
management business in Australia. The UK business recently
completed the acquisition of Nash Bond Limited, a leading UK prime
retail agency and lease consultancy business, enhancing our
position in this recovering market. Finally, DRC Savills Investment
Management established the Group's first position in the US real
estate debt market through a joint venture with QCP LLC, a real
estate debt manager based in Atlanta.
Supported by our strong balance sheet we
continue to review opportunities to enhance our client offering
across geographies and service lines.
Focus on
technology
Technology continues to be an important focus
for the Group, and we are well on the way through implementation of
significant platform upgrades across the globe including both
operating and finance systems and service-specific digital
transformation programmes.
We continue to investigate and experiment with
new and emerging technologies through our innovation and data teams
globally. Recently there has been an increased focus on the
opportunities presented by the latest developments in the broad
area of artificial intelligence ('AI'), or 'Machine Learning',
which we use as a driver of efficiency in many of our bespoke data
and service line platforms across the Group. One example of this is
BrickByte in Germany, which was acquired by the Group in 2022. It
is a technology-enabled method of workspace planning, driven
by Machine Learning, to save time and optimise the use of space and
which has significantly increased its revenues
year-on-year.
Our other digital businesses continue to
perform well. Cureoscity, our wholly-owned platform that connects
occupiers, landlords and their managing agents, continued to grow
Annual Recurring Revenue ('ARR') significantly year-on-year and has
begun to expand into markets outside the UK. Our market-leading UK
on-line auction business continues to take market share, and
despite increasingly challenging markets, sold over £570m of
property during the period, an increase of 25%
year-on-year.
Through our wholly owned technology businesses
and investments, we are experimenting with the latest advances in
generative design particularly to test project feasibility at an
earlier stage in the design process. For example, VU.CITY (in which
the Group has an investment) uses its SiteSolve technology combined
with complete digital city models at 'planning grade' levels of
accuracy, to generate instant development options, taking into
account environmental and other extant planning
constraints.
We maintain our policy of continuing to support
technology initiatives across the Group, striking the balance
between locally led innovation and broader centralised
initiatives.
Board
On 1 January 2024, I became Chair on the
retirement of Nicholas Ferguson. Since he was appointed in May
2016, Savills has both delivered commendable growth and
successfully navigated the challenges of both COVID and the market
corrections of the last two years. I would like to thank him for
his enormous contribution to the business.
On 13 December 2023, John Waters was appointed
as an additional Independent Non-Executive Director and replaced me
as Chair of the Savills Audit Committee with effect from 1 January
2024. We are delighted that John has joined the Board and look
forward to benefitting from his extensive experience to support our
future growth.
Dividends
An interim dividend of 6.9p per share (2022:
6.6p), amounting to £9.4m was paid on 2 October 2023, and a final
ordinary dividend of 13.9p per share (2022: 13.4p) is recommended,
making the ordinary dividend 20.8p per share for the year (2022:
20.0p). A supplemental interim dividend of 2.0p per share (2022:
15.6p) is declared, taking into account the significantly reduced
underlying performance of our Global Transaction Advisory business.
Taken together, the ordinary and supplemental interim dividends
comprise an aggregate distribution for the year of 22.8p per share,
representing a decrease of 36% on the 2022 aggregate ordinary and
supplemental dividend of 35.6p.
Subject to Shareholder approval of the proposed
final dividend at the AGM on 15 May 2024, the aggregate final and
supplementary interim dividends of 15.9p will be paid on 23 May
2024 to Shareholders on the register at 12 April 2024.
People
On behalf of the Board, I wish to express my
thanks to all our people worldwide for their hard work, commitment,
collaborative approach and continued focus on client service, which
enabled the Group to deliver results in line with our expectations
in such challenging times.
Summary and
Outlook
Savills resilient performance in 2023
highlights the diversity and strength of our global business. In
the context of extremely challenging real estate markets, which saw
the lowest levels of transaction volumes for a decade, our less
transactional businesses have provided a solid platform for the
Group with a resilient and growing earnings stream.
With increased expectation of a reduction in
the cost of capital being likely during 2024, we expect
re-financing driven activity and the sustainability agenda to be
positive for transaction volumes, and therefore improving price
transparency, in a number of markets. There also remain, for the
near term at least, questions over office utilisation in certain
locations, perhaps most keenly felt in the North American
metropolitan markets of the eastern and western
seaboards.
Current economic and geopolitical
conditions remain uncertain and although we expect this to
continue for some time, most markets appear to be past the moment
of peak uncertainty. There are some early signs of underlying
market improvements, which should set the course for a broader
recovery during the second half of the year and into
2025.
Our policy of retaining our core
bench-strength, enabled by our strong balance sheet, positions the
Group well for the future.
Stacey
Cartwright
Chair
Review of operations
Savills geographic and business diversity were
key to achieving the year's results. Our performance analysed by
region was as follows:
|
|
Revenue £m
|
Underlying profit/(loss)
£m
|
|
|
2023
|
2022
|
%
change
|
2023
|
2022
|
%
change
|
|
UK
|
941.5
|
956.3
|
(2)
|
98.3
|
118.1
|
(17)
|
|
Asia Pacific
|
659.0
|
669.7
|
(2)
|
23.4
|
41.4
|
(43)
|
|
CEME
|
342.4
|
335.0
|
2
|
(9.8)
|
17.3
|
n/a
|
|
North America
|
295.1
|
337.3
|
(13)
|
(8.4)
|
4.1
|
n/a
|
|
Unallocated
|
-
|
-
|
n/a
|
(8.7)
|
(16.3)
|
n/a
|
|
Total
|
2,238.0
|
2,298.3
|
(3)
|
94.8
|
164.6
|
(42)
|
On a constant currency basis Group revenue
decreased by 2% to £2,252.4m, underlying profit decreased 42% to
£95.5m and reported profit before tax decreased by 63% to £56.5m.
Our Asia Pacific business represented 30% of Group revenue (2022:
29%) and our overseas businesses as a whole represented 58% of
Group revenue (2022: 58%). Our performance by service line is set
out below:
|
|
Revenue £m
|
Underlying profit/(loss)
£m
|
|
|
2023
|
2022
|
%
change
|
2023
|
2022
|
%
change
|
|
Transaction Advisory
|
772.9
|
930.1
|
(17)
|
4.3
|
71.9
|
(94)
|
|
Property and Facilities
Management
|
899.5
|
813.9
|
11
|
48.8
|
46.5
|
5
|
|
Consultancy
|
459.8
|
441.5
|
4
|
35.6
|
41.3
|
(14)
|
|
Investment Management
|
105.8
|
112.8
|
(6)
|
14.8
|
21.2
|
(30)
|
|
Unallocated
|
-
|
-
|
n/a
|
(8.7)
|
(16.3)
|
n/a
|
|
Total
|
2,238.0
|
2,298.3
|
(3)
|
94.8
|
164.6
|
(42)
|
Overall, our Commercial and Residential
Transaction Advisory business revenue represented 35% of
Group revenue (2022: 40%) and was the service line most directly
affected by the challenging market conditions during the year. Of
this, Residential Transaction Advisory represented 9% of Group
revenue (2022: 10%). Our Property and Facilities Management
businesses continued to perform well, growing year-on-year and
representing 40% of Group revenue (2022: 35%). Our Consultancy
businesses increased revenue by 4% and represented 20% of revenue
(2022: 19%), albeit that the performance of some of the service
lines, such as security valuations, were affected by reduced market
volumes. Finally, Investment Management again represented 5% of
Group revenue (2022: 5%).
Unallocated costs reduced year-on-year as a
result of central interest income and the reduction in
profit-related remuneration payable to the Group's senior
management.
Transaction Advisory
Overall, our Transaction Advisory revenue
decreased by 17% (16% on constant currency basis) to £772.9m (2022:
£930.1m). Globally our commercial capital transaction business
revenue decreased by 30% and our leasing and occupier-focused
transactional revenues by 9%. Our Global Residential business
revenue reduced by 19% against a strong comparative in
2022.
Underlying profits fell to £4.3m (2022:
£71.9m), reflecting the impact of sharply reduced volumes
transacted worldwide and the Group's policy of retaining core
bench-strength during market corrections to maintain client service
and enable the Group to benefit from future market
recovery.
Asia Pacific
Commercial
Revenue from the Asia Pacific Commercial
Transactional business decreased by 30% to £102.1m (2022: £145.3m),
a decrease of 27% in constant currency.
There were significant revenue reductions
across the region as markets began to recalibrate in the face of
interest rate rises and other challenges. In China, we did not see
the broad return of transaction volumes, which was anticipated
after the end of COVID-related lockdowns in Q1 2023. Instead,
transactional revenues declined by approximately 15% in China and
6% in Hong Kong in comparison with a low base in 2022. However, the
recently recruited logistics teams performed well and enabled the
mainland Chinese transaction business largely to mitigate the
effect of the revenue fall on profits. The other principal
countries showing revenue and profit reduction year-on-year were
Australia; which was one of the last markets to begin
recalibration, Singapore, South Korea and Japan, albeit the latter
came off a record performance in 2022 and continued to trade
profitably during 2023.
Overall the Asia Pacific Commercial
Transactional business recorded underlying losses of £2.9m (2022:
£13.4m underlying profit).
UK
Commercial
UK Commercial Transactional revenue fell by 15%
to £100.6m (2022: £118.9m), reflecting fewer transactions in
investment markets and more subdued leasing activity.
Just over £39bn of commercial property
investments were traded in the UK in 2023, which is 41% lower than
the previous year and 38% down on the five-year average. All
commercial property sectors experienced lower investment volumes in
2023 than 2022, with the largest fall being in offices (-47%) and
the smallest being in retail (-12%).
While the second half of 2023 saw the Bank of
England base rate stabilise, this did not quickly feed through into
a notable pick-up in commercial property investment activity in the
UK. Rather, Savills increased its share of available market
activity, for instance in prime Grade A sustainable office
transactions. Indeed, Savills advised on 11 of the 16 largest
transactions to occur in the year.
Economic uncertainty continued to delay
corporate decision-making which resulted in a reduction in take-up
across all the main commercial property sectors in
most markets. One exception to this trend was the drive for
sustainability which saw take-up in the City of London office
market (Grade A with high sustainability rating) increase by 12%
year-on-year. However, at a national level, office leasing activity
outside London was 12% down on 2022 and large logistics take-up was
down 40% year-on-year.
As a result, despite market share gains,
underlying profits fell by 31% to £14.0m (2022: £20.4m) with a
reduced margin of 13.9% (2022: 17.2%).
North
America
Revenue from the North America Transactional
business decreased to £266.7m (2022: £303.5m), a 12% decrease at
both prevailing and constant currency rates.
The overwhelming majority of North American
revenue relates to occupier leasing transactions across the office
sector, which were considerably affected by the understandable
tendency for corporate occupiers to delay transactions in the face
of uncertain market conditions. We saw growth in Southern
California, Washington DC, Chicago and in the US segment of the
recently launched Global Occupier Services business, which more
than doubled revenue, albeit off a low base. These partially
mitigated reductions in activity elsewhere. In the major
metropolitan markets such as New York and San Francisco, where the
continuation of homeworking in the face of return-to-work
strategies, in the financial services and technology sectors
particularly, restricted demand for offices for much of the year.
There were signs of improved activity emerging in Q4 2023, which
should support improved performance in 2024. Capital markets
revenues reduced by 48% to £12.4m (2022: £23.7m) as investors came
to terms with both reduced occupier demand for metropolitan office
space and the rising cost of debt.
Profits were significantly impacted by the
effect of market conditions on revenue. During the year a focused
restructuring exercise was carried out to improve profitability in
the future, as well as continuing investment in growth of the newly
established Occupier Services platform.
The business recognised an overall underlying
loss of £7.4m (2022: £2.3m underlying profit).
Continental
Europe and the Middle East ('CEME')
In CEME, transaction fee income decreased by
12% to £114.6m (2022: £129.8m); 10% in constant
currency.
The primary market-related themes were similar
to those experienced elsewhere, however the extent of their impact
alongside other more local issues, particularly in Germany,
continental Europe's largest real estate market, was significant to
the extent that our transactional business there made a material
loss. Germany is one of the slowest global markets to recalibrate
and market conditions in France were not dissimilar.
In contrast, our businesses in the Middle East,
Italy, Czech Republic and Portugal saw transactional revenue growth
as a consequence of both organic investment and recent acquisition
activity. Spain and Ireland showed considerable resilience in their
transactional performances too, maintaining strong market share. We
continued to grow market share in many countries but could not
mitigate the effect of volume reductions in most
markets.
Profitability was impacted primarily by the
significant downturn in activity causing losses in both the major
markets of France and Germany and also in the Netherlands and
Belgium. This together with increased interest costs on CEME net
borrowings resulted in an underlying loss for the year of £20.3m
(2022: £2.7m underlying loss).
UK
Residential
UK Residential Transactional revenue decreased
by 18% to £171.0m (2022: £208.3m), reflecting the decrease in
market volumes with successive interest rate rises and the
consequent fall in mortgage approvals dampening demand.
Second-hand sales revenue declined by 23% with
a reduction in the number of exchanges of 23% to 4,735 (2022:
6,124). This was exacerbated by a decrease in the average sales
value by 4% to £1.61m (2022: £1.68m). In London the average lot
size transacted by Savills was down 3% to £2.23m and by 8% to
£1.27m in the regions. Volumes in both the regional UK market and
central London declined significantly, but consistent with our
expectations.
Revenue from the sale of new homes reduced 24%
year-on-year, reflecting a decrease of 27% in the number of
exchanges, much of which occurred in the regional markets with
London more resilient, which was also manifested by an 8% increase
in average value transacted.
Underlying profit reduced by 45% to £19.4m
(2022: £35.1m), reflecting the effect of the revenue reduction
year-on-year. This performance represented an underlying profit
margin of 11.4% (2022: 16.9%).
Asia Pacific
Residential
Revenue from the Asia Pacific Residential
Transaction business decreased by 26% to £17.9m (2022: £24.3m), a
fall of 24% in constant currency.
86% of the regional revenue was generated in
Greater China, where debt costs drove falls in revenue of between
22% and 25% in mainland China and Hong Kong, although profits from
those regions only fell by £0.7m in aggregate. Elsewhere revenues
reduced by between 20% and 50%, the latter in Singapore where
market conditions, including the impact of stamp duty for
non-residents, were also reflected in a temporarily reduced share
of profit from our associate, Huttons. The effect of these
reductions were partially mitigated by small increases in
profitability in our businesses in Thailand and Vietnam, however
overall underlying profits fell to £1.5m (2022: £3.4m).
Property and Facilities
Management
Our Property and Facilities Management
businesses continued to perform well, with revenues growing by 11%
to £899.5m (2022: £813.9m); 11% in constant currency. Savills total
area under management increased by 7% to 2.63bn sq ft (2022: 2.47bn
sq ft). Underlying profit increased by 5% to £48.8m (2022: £46.5m),
6% in constant currency.
Asia
Pacific
In Asia Pacific, Property Management revenue
was £447.1m, an increase of 10% year-on-year (2022: £404.9m); 12%
increase in constant currency.
Revenue grew across the region with improved
performances in Singapore, South Korea and Vietnam. Hong Kong
experienced revenue growth of 1% overall, however much of this was
in lower margin Facilities Management, which did not mitigate the
effect of a reduced contribution from a long-standing joint venture
in Macau, as the leisure industry there saw much reduced
throughput-related demand. In mainland China, revenue growth of 2%
was offset by growth in staff costs, including temporary staff
filling vacancies caused in part by migration. Meanwhile in
Singapore, revenue and profitability were significantly enhanced
through a much improved performance by Absolute Maintenance
Services Pte Limited and Solute Pte Limited ('AMS'), both acquired
the previous year.
The Asia Pacific region's underlying profits
increased by 6% year-on-year to £22.2m (2022: £21.0m) reflecting a
slightly reduced margin of 5.0% (2022: 5.2%).
UK
The UK Property Management business grew
revenues by 9% to £355.7m (2022: £327.4m) with square footage under
management increasing by 4% (31 December 2023: 600.1m sq ft, 31
December 2022: 577.0m sq ft). During the year we continued to
diversify our Facilities Management business into new service
lines, such as car park consultancy, as well as securing
significant new mandates.
Our Residential Lettings business had another
successful year with revenues and profit increasing by 6%. This was
primarily driven by the London market which was characterised by
strong tenant demand, albeit with reduced supply.
Finally, our rural management business also
performed well with revenue growth of 5% and significant profit
improvement.
Overall, the UK Property Management business
increased underlying profit by 17% to £30.4m (2022:
£25.9m).
Continental
Europe and the Middle East
CEME Property Management revenues increased by
19% to £96.7m (2022: £81.6m); the same on a constant currency
basis. Over half of this increase was in respect of pass-through
costs for outsourced services in Germany, which had no effect on
profits.
Revenues grew in all regions, reflecting
significant contract wins in the Middle East, Spain, Ireland and
Poland.
Area under management at 31 December 2023 was
294.8m sq ft, up 11% on last year (31 December 2022: 265.4m sq
ft).
Profitability and margins in the CEME
businesses were significantly affected by initial scale-up costs on
new contract wins, inflationary cost pressures, reduced levels of
profitable ad hoc consultancy work in the prevailing economic
environment and a higher interest cost on debt balances associated
with recent acquisitions. As a result, the CEME business recognised
an underlying loss of £3.8m (2022: £0.4m loss).
Consultancy
Global Consultancy revenue increased by 4% to
£459.8m (2022: £441.5m), 5% at constant currency rates. Much of the
revenue growth derived from lower margin service lines, whilst some
of the higher margin services were materially affected by either
reduced market volumes (e.g. security valuations) or the impact of
market sentiment on client willingness to commit to longer-term
projects (e.g. Development Consultancy/Planning). In addition, the
cost base was affected by salary inflation in respect of
professional consultants. These factors were most marked during the
first half of the year. Thereafter, we experienced improved
activity particularly in Q4, improving on our H1 2023 underlying
profit decline of 55% to end the year with underlying profit
decreasing by only 14% to £35.6m (2022: £41.3m); 13% on a constant
currency basis.
UK
The UK Consultancy businesses, comprising a
broad range of advisory activities, increased revenue by 9% to
£271.0m (2022: £248.4m).
Revenue growth came from most main service
lines with the exception of Development Consultancy, as developers
delayed projects in the prevailing economic climate. Project
Management Consultancy continued to grow well with increasing
numbers of Green "retro-fit" assignments. Housing Consultancy also
performed well and, whilst Planning Consultancy revenue grew
somewhat, it was largely derived from smaller project work, rather
than master planning and major schemes, with a consequent reduction
in profitability.
The above factors in addition to professional
staff cost increases, resulted in underlying profit increasing by
6% to £29.7m (2022: £28.0m).
Asia
Pacific
In the Asia Pacific Consultancy segment,
revenues decreased by 4% to £84.1m (2022: £87.4m); 1% on a constant
currency basis. The overwhelming majority of revenues are earned in
Australia, mainland China and Hong Kong. All of these were affected
by reductions in valuation, development and research consultancy
which linked to the impact of reduced transaction volumes on
sentiment and in particular in China, the effect of economic
conditions and debt on development activity.
Project management and green fit-out
assignments in particular, improved performance in Singapore and
selective markets in South East Asia.
The above factors resulted in underlying profit
decreasing by 34% to £1.9m (2022: £2.9m), 31% in constant
currency.
Continental
Europe and the Middle East
Revenue increased by 6% (as reported and in
constant currency) to £76.3m (2022: £71.9m).
Revenue growth was driven primarily by the
Middle East, Portugal and Italy. Reduced revenue in Germany and
Netherlands reflected substantially reduced valuation business as a
result of reduced transactional activity in those markets. The cost
base was further impacted by investment in new residential and
workplace strategy recruitment in Germany and France respectively
and increased interest costs on prior acquisitions.
Underlying profit fell by 42% to £5.0m (2022:
£8.6m); 41% in constant currency.
North America
This segment primarily comprises complex
project management through Macro Consultants LLC ('Macro'), a
national project management consultancy business and T3 Advisors, a
workplace solutions advisory firm specialising in the life sciences
and technology sectors.
Revenue decreased by 16% to £28.4m (2022:
£33.8m), as reported and in constant currency. This was primarily
as a result of two factors. First, in Project Management, a major
media business client put on indefinite hold a number of
significant projects for the year, for which staff had already been
allocated. Secondly, the T3 business was affected by
retrenchment in the technology sector. Both businesses
significantly refocused to replace their work in progress pipelines
but suffered losses during the year, which could only be partially
mitigated by improvements in other consultancy services such as
workplace and incentives consultancy.
The impact of these factors resulted in an
underlying loss of £1.0m (2022: £1.8m underlying
profit).
Investment Management
Despite the prolonged challenging macro
environment, Savills Investment Management delivered a resilient
result with revenue down 6% to £105.8m (2022: £112.8m), 7% down on
a constant currency basis.
The decrease was primarily due to a 35%
reduction in transaction fees in line with the reduced activity in
the overall market. Base management fees declined marginally to
£84.0m (2022: £85.7m) and represented 79% of gross revenues (2022:
76%). The decline was consistent with expectations as several
existing products came to their natural end-of-life whilst new
strategies were initiated during the year and will take time to
build scale.
AUM, including undrawn commitments, remained
stable at £22.1bn (2022: £22.1bn). Successful new product launches
and new mandates, as well as improved capital raising of £2.0bn
(2022: £1.6bn) despite the difficult market conditions were offset
by disposal activity and valuation reductions during the period.
The relationship with Samsung Life continued well, with Samsung
having committed its contracted $1bn to various products, much of
which is yet to be deployed and is included in the approximately
£1.7bn of investable funds carried over to 2024. At the most recent
measurement date prior to this report, 79% of funds (by AUM)
continued to exceed their respective fund target or benchmark
returns on a five-year rolling basis.
Successes during the year include significant
new mandates won in Spain and Italy and growth of the Living
platform in the UK and continental Europe. DRC Savills Investment
Management expanded into new territories, launching the DRC SIM
Australia Real Estate Debt Fund and establishing its first position
in the US real estate debt market through a joint venture with QCP
LLC, an Atlanta based real estate debt manager
Underlying profits for Investment Management
decreased by 30% to £14.8m (2022: £21.2m), 31% on a constant
currency basis. In addition to the fall in revenue noted above, the
year was also impacted by salary inflation in the sector and the
cost of further platform growth for new product strategies, in
advance of material revenues as capital is deployed.
Financial review
Profit margin
Underlying profit margin decreased to 4.2%
(2022: 7.2%), see Note 3 for further explanation of underlying
profit measures. From a trading perspective, this reflected the
mix of business in the face of significant
market-related revenue decreases substantially reducing profits in
higher margin Transactional and Investment Management businesses,
with revenue falling 17% and 6% respectively. It also reflected
Group policy to retain core bench-strength through market downturns
in order to maintain client service and benefit from market
recovery in due course.
Reported pre-tax profit margin decreased to
2.5% (2022: 6.7%).
Taxation
The tax charge for the year decreased to £15.9m
(2022: £34.1m), representing an effective tax rate on reported
profit before tax of 28.7% (2022: 22.2%). The Group's effective
reported tax rate is higher than the UK effective rate of tax of
23.5% as a result of disallowable expenses largely arising from
transaction-related costs.
The underlying effective tax rate increased to
22.3% (2022: 20.5%).
Transaction-related costs
During the year the Group recognised a total of
£14.6m in transaction-related costs (2022: £15.5m). These costs
primarily represent liabilities for future consideration payments
which are contingent on the continuity of recipients' employment at
the time of payment (2023: £12.7m, 2022: £14.8m). The largest
individual component of this charge related to the acquisition
during 2021 of the 75% partnership interests in DRC Capital LLP,
which the Group did not already then own.
These charges have been excluded from the
calculation of underlying profit on a consistent basis in line with
the Group's policy.
Restructuring
costs
In response to the challenging market
conditions, during the year, management conducted a focussed review
of the Group's businesses, where market recovery was not
anticipated to be significant in the short or medium term. As
described in the CEO's review, this resulted in non-recurring
restructuring costs of £13.9m in aggregate.
Accordingly, these charges have been excluded
from the calculation of underlying profit on a consistent basis in
line with the Group's policy.
Earnings per share
Basic earnings per share decreased 66% to 30.0p
(2022: 87.0p), reflecting a 67% decrease in reported profit after
tax. Adjusted on a consistent basis for significant restructuring,
transaction-related costs, profits and losses on disposals, certain
share-based payment adjustments, amortisation of intangible assets
arising from business combinations, impairments of goodwill and
significant transaction-related fair value gains, underlying basic
earnings per share decreased 42% to 55.1p (2022: 94.9p).
Fully diluted earnings per share decreased by
65% to 28.8p (2022: 82.2p). The underlying fully diluted earnings
per share decreased 41% to 52.9p (2022: 89.8p).
Cash resources, borrowings and
liquidity
Cash and cash equivalents, net of overdrafts in
notional pooling arrangements, at year end decreased 33% to £314.5m
(2022: £467.1m). This decrease reflected the Group's reduced
profitability in the year and the related increase in net working
capital.
Gross borrowings at year end decreased to
£157.2m (2022: £159.7m). These principally comprise £150.0m (2022:
£150.0m) of 7,10 and 12 year fixed rate notes, which were issued in
June 2018. The Group's £360.0m UK revolving credit facility ('RCF')
was undrawn at the end of the year (2022: undrawn), part of a total
of £422.0m (2022: £426.2m) of undrawn borrowing facilities
available to the Group. At the year end, cash and cash equivalents
net of borrowings was £157.3m (2022: £307.4m).
Cash is typically retained in a number of the
Group's subsidiaries in order to meet the requirements of
commercial contracts or capital adequacy. In addition, cash in
certain territories is retained to meet future growth
requirements.
The Group's net inflow of cash is typically
greater in the second half of the year. This is as a result of
seasonality in trading and the major cash outflows associated with
dividends, profit-related remuneration payments and related payroll
taxes in the first half. The Group cash inflow for the year from
operating activities was £18.8m (2022: £164.0m). As previously
mentioned, this reduction was due to reduced profits year-on-year
and the related short-term increase in net working
capital.
With a significant proportion of the Group's
revenue typically being transactional in nature, the Board's
strategy is to maintain low levels of gearing, but
retain sufficient credit facilities to enable it to meet cash
requirements during the year and finance the majority of business
development opportunities as they arise.
Capital and Shareholders'
interests
During the year 4,322 (2022: 68,739) new
ordinary shares were issued on the exercise of options by
participants of the Group's SAYE schemes and 32,549 (2022: 81,098)
of new ordinary shares were issued to participants of the Group's
PSP schemes. The total number of ordinary shares in issue (before
the impact of shares held by the Savills plc 1992 Employee Benefit
Trust and the Savills Rabbi Trust) at 31 December 2023 was
144,389,919 (2022: 144,353,048).
Savills Pension Scheme
The funding level of the defined benefit
Savills Pension Scheme in the UK, which is closed to future
service-based accrual, worsened during the year, with lower asset
returns reducing the value of the Scheme's assets and a rise in the
yield on AA-rated corporate bonds increasing the Scheme's
liabilities. The plan was in a deficit position of £0.7m at the
year-end (2022: £22.3m surplus).
Net assets
Net assets as at 31 December 2023 were £752.8m
(2022: £805.3m). This movement reflects primarily the Group's
profit for the year offset by currency translation losses,
reflecting the strengthening of sterling during the year, purchases
of treasury shares, dividend payments and actuarial losses
recognised on the Group's defined benefit pension
schemes.
Foreign currency
The Group operates internationally and is
exposed to foreign exchange risks. As both revenue and costs in
each location are generally denominated in the same currency,
transaction-related risks are relatively low and generally
associated with intra Group activities. Consequently,
the overriding foreign currency risk relates to the translation of
overseas profits and losses into sterling on consolidation. The
Group does not actively seek to hedge risks arising from foreign
currency translations due to their non-cash nature.
The net impact of foreign exchange rate
movements during the year represented a £14.4m decrease in revenue
and a £0.7m decrease in underlying profit.
Principal risks and
uncertainties
The Directors have carried out a robust
assessment of the principal risks facing the Group -
including those that would threaten its business model, future
performance, solvency, liquidity and/or pose a material
reputational risk. Further detail on these principal risks will be
provided in the Group's Annual Report and Accounts, which
will be available on publication
at www.ir.savills.com on 8 April 2024.
The identified principal risks are summarised below:
· 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
Savills plc
Consolidated income
statement
for the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
Note
|
£m
|
£m
|
|
|
|
|
|
|
Revenue
|
2
|
2,238.0
|
2,298.3
|
|
Less:
|
|
|
|
|
Employee benefits expense
|
|
(1,496.3)
|
(1,509.8)
|
|
Depreciation
|
|
(69.6)
|
(65.8)
|
|
Amortisation of intangible assets
|
|
(15.8)
|
(16.9)
|
|
Impairment of goodwill
|
3
|
(3.9)
|
-
|
|
Other operating expenses
|
|
(619.5)
|
(562.1)
|
|
(Increase)/decrease in provision for expected
credit loss
|
|
(1.8)
|
2.1
|
|
Other net gains
|
|
2.0
|
0.3
|
|
Share of post-tax profit from joint ventures and
associates
|
|
10.2
|
12.1
|
|
Operating
profit
|
|
43.3
|
158.2
|
|
|
|
|
|
|
Finance income
|
11
|
50.6
|
13.7
|
|
Finance costs
|
11
|
(38.5)
|
(18.0)
|
|
Net finance
income/(costs)
|
11
|
12.1
|
(4.3)
|
|
|
|
|
|
|
Profit before
income tax
|
|
55.4
|
153.9
|
|
|
|
|
|
|
Income tax expense
|
4
|
(15.9)
|
(34.1)
|
|
Profit for the
year
|
|
39.5
|
119.8
|
|
|
|
|
|
|
Attributable
to:
|
|
|
|
|
Owners of the parent
|
|
40.8
|
119.4
|
|
Non-controlling interests
|
|
(1.3)
|
0.4
|
|
|
|
39.5
|
119.8
|
|
|
|
|
|
|
Earnings per
share
|
|
|
|
|
Basic earnings per share
|
6(a)
|
30.0p
|
87.0p
|
|
Diluted earnings per share
|
6(a)
|
28.8p
|
82.2p
|
|
|
|
|
|
Supplementary income statement information
|
Reconciliation
to underlying profit before income tax
|
|
|
|
|
Profit before
income tax
|
|
55.4
|
153.9
|
|
- restructuring and transaction-related
costs
|
|
28.5
|
15.6
|
|
- other underlying adjustments
|
|
10.9
|
(4.9)
|
|
Underlying
profit before income tax
|
2 and
3
|
94.8
|
164.6
|
|
|
|
|
|
Savills plc
Consolidated statement of comprehensive
income
for the year ended 31 December
2023
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Profit for the year
|
39.5
|
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
|
(24.7)
|
6.6
|
|
Changes in fair value of financial assets at
FVOCI
|
0.6
|
(10.9)
|
|
Tax on other items that will not be
reclassified
|
8.4
|
(3.9)
|
|
Total items
that will not be reclassified to profit or loss
|
(15.7)
|
(8.2)
|
|
|
|
|
|
Items that may
be reclassified subsequently to profit or loss:
|
|
|
|
Currency translation differences
|
(27.3)
|
48.1
|
|
Total items
that may be reclassified subsequently to profit or
loss
|
(27.3)
|
48.1
|
|
|
|
|
|
Other
comprehensive (loss)/income for the year
|
(43.0)
|
39.9
|
|
|
|
|
|
Total
comprehensive (loss)/income for the year
|
(3.5)
|
159.7
|
|
|
|
|
|
Total
comprehensive (loss)/income attributable to:
|
|
|
|
Owners of the parent
|
(1.4)
|
158.4
|
|
Non-controlling interests
|
(2.1)
|
1.3
|
|
|
(3.5)
|
159.7
|
Savills plc
Consolidated statement of financial
position
at 31 December 2023
|
|
|
2023
|
2022
restated*
|
|
|
Note
|
£m
|
£m
|
|
Assets: Non-current assets
|
|
|
|
|
Property, plant and
equipment
|
|
68.1
|
77.0
|
|
Right-of-use assets
|
|
198.3
|
223.8
|
|
Goodwill*
|
|
443.6
|
449.6
|
|
Intangible assets
|
|
55.8
|
66.3
|
|
Investments in joint ventures and
associates
|
|
38.9
|
37.0
|
|
Deferred income tax assets
|
|
57.2
|
38.6
|
|
Financial assets at fair value
through other comprehensive income ('FVOCI')
|
|
5.0
|
5.7
|
|
Financial assets at fair value
through profit and loss ('FVPL')
|
|
38.5
|
36.8
|
|
Defined benefit pension
surplus
|
|
3.2
|
25.5
|
|
Contract related assets
|
|
1.8
|
2.4
|
|
Trade and other
receivables
|
|
69.3
|
37.5
|
|
|
|
979.7
|
1,000.2
|
|
Assets: Current assets
|
|
|
|
|
Contract assets
|
|
12.6
|
7.4
|
|
Trade and other
receivables
|
|
656.4
|
643.1
|
|
Income tax receivable
|
|
4.7
|
2.4
|
|
Derivative financial
instruments
|
|
1.0
|
0.3
|
|
Cash and cash
equivalents**
|
|
506.8
|
669.1
|
|
|
|
1,181.5
|
1,322.3
|
|
Liabilities: Current liabilities
|
|
|
|
|
Borrowings
|
10
|
7.9
|
10.6
|
|
Overdrafts in notional pooling
arrangement**
|
|
192.3
|
202.0
|
|
Lease liabilities
|
|
52.9
|
53.2
|
|
Derivative financial
instruments
|
|
2.5
|
1.0
|
|
Contract liabilities
|
|
11.9
|
14.0
|
|
Trade and other payables*
|
|
682.1
|
744.5
|
|
Income tax liabilities
|
|
6.9
|
15.5
|
|
Employee benefit
obligations
|
|
18.5
|
17.7
|
|
Provisions
|
|
17.2
|
9.2
|
|
|
|
992.2
|
1,067.7
|
|
Net
current assets
|
|
189.3
|
254.6
|
|
Total assets less current liabilities
|
|
1,169.0
|
1,254.8
|
|
Liabilities: Non-current liabilities
|
|
|
|
|
Borrowings
|
10
|
149.3
|
149.1
|
|
Lease liabilities
|
|
201.3
|
224.4
|
|
Derivative financial
instruments
|
|
3.2
|
6.7
|
|
Other payables
|
|
10.4
|
21.9
|
|
Employee benefit
obligations
|
|
26.2
|
25.2
|
|
Provisions
|
|
23.9
|
20.6
|
|
Deferred income tax
liabilities
|
|
1.9
|
1.6
|
|
|
|
416.2
|
449.5
|
|
Net
assets
|
|
752.8
|
805.3
|
|
Equity:
|
|
Share capital
|
|
3.6
|
3.6
|
|
Share premium
|
|
104.9
|
104.9
|
|
Other reserves
|
|
94.5
|
112.8
|
|
Retained earnings
|
|
514.9
|
546.8
|
|
Equity attributable to owners of the parent
|
|
717.9
|
768.1
|
|
Non-controlling interests
|
|
34.9
|
37.2
|
|
Total equity
|
|
752.8
|
805.3
|
* See Note 9 for details on the prior
year restatement.
** Included within cash and cash
equivalents are cash balances of £193.3m (31 December 2022:
£205.0m) that are operated within a notional cash pooling
arrangement together with overdraft balances of £192.3m (31
December 2022: £202.0m) presented above in current liabilities. See
Note 8 for further details.
Savills plc
Consolidated statement of changes in
equity
for the year ended 31 December
2023
|
|
Attributable to owners of the
parent
|
|
|
|
Share
capital
|
Share
premium
|
Other
reserves
|
Retained
earnings
|
Total
|
Non-controlling
interests
|
Total
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Balance at 1 January 2023
|
3.6
|
104.9
|
112.8
|
546.8
|
768.1
|
37.2
|
805.3
|
|
Profit for the year
|
-
|
-
|
-
|
40.8
|
40.8
|
(1.3)
|
39.5
|
|
Other comprehensive income/(loss):
|
|
|
|
|
|
|
|
|
Remeasurement of defined benefit
pension scheme and employee benefit obligations
|
-
|
-
|
-
|
(24.6)
|
(24.6)
|
(0.1)
|
(24.7)
|
|
Changes in fair value of financial
assets at FVOCI
|
-
|
-
|
0.6
|
-
|
0.6
|
-
|
0.6
|
|
Tax on items taken to other
comprehensive income/(loss)
|
-
|
-
|
-
|
8.4
|
8.4
|
-
|
8.4
|
|
Currency translation
differences
|
-
|
-
|
(26.6)
|
-
|
(26.6)
|
(0.7)
|
(27.3)
|
|
Total comprehensive (loss)/income for
the year
|
-
|
-
|
(26.0)
|
24.6
|
(1.4)
|
(2.1)
|
(3.5)
|
|
Employee share option
scheme:
|
|
|
|
|
|
|
|
|
- Value of services
provided
|
-
|
-
|
-
|
28.8
|
28.8
|
-
|
28.8
|
|
- Tax on
employee share option schemes
|
-
|
-
|
-
|
0.5
|
0.5
|
-
|
0.5
|
|
Tax on other items taken to
reserves
|
-
|
-
|
-
|
(0.4)
|
(0.4)
|
-
|
(0.4)
|
|
Purchase of treasury
shares
|
-
|
-
|
-
|
(26.3)
|
(26.3)
|
-
|
(26.3)
|
|
Dividends
|
-
|
-
|
-
|
(48.8)
|
(48.8)
|
(2.2)
|
(51.0)
|
|
Transfer between reserves
|
-
|
-
|
7.7
|
(9.7)
|
(2.0)
|
2.0
|
-
|
|
Fair value of derivative financial
instrument
|
-
|
-
|
-
|
(0.6)
|
(0.6)
|
-
|
(0.6)
|
|
Balance at 31 December 2023
|
3.6
|
104.9
|
94.5
|
514.9
|
717.9
|
34.9
|
752.8
|
|
|
Attributable to owners of the
parent
|
|
|
|
Share
capital
|
Share
premium
|
Other
reserves
|
Retained
earnings
|
Total
|
Non-controlling
interests
|
Total
equity
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Balance at 1 January 2022
|
3.6
|
104.4
|
76.2
|
540.0
|
724.2
|
29.2
|
753.4
|
|
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 taken to other
comprehensive income/(loss)
|
-
|
-
|
-
|
(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)
|
|
Transaction with non-controlling
interest
|
-
|
-
|
(0.4)
|
0.7
|
0.3
|
-
|
0.3
|
|
Additions through business
combinations
|
-
|
-
|
-
|
-
|
-
|
2.7
|
2.7
|
|
Balance at 31 December 2022
|
3.6
|
104.9
|
112.8
|
546.8
|
768.1
|
37.2
|
805.3
|
Savills plc
Consolidated statement of cash
flows
for the year ended 31 December
2023
|
|
|
2023
|
2022
|
|
|
Note
|
£m
|
£m
|
|
Cash flows from
operating activities
|
|
|
|
|
Cash generated from operations
|
7
|
49.2
|
210.9
|
|
Interest received
|
|
40.6
|
13.3
|
|
Interest paid
|
|
(33.3)
|
(16.9)
|
|
Income tax paid
|
|
(37.7)
|
(43.3)
|
|
Net cash
generated from operating activities
|
|
18.8
|
164.0
|
|
Cash flows from
investing activities
|
|
|
|
|
Proceeds from sale of property, plant and
equipment
|
|
5.3
|
0.2
|
|
Proceeds from sale of financial assets held at
FVOCI and FVPL
|
|
4.8
|
1.6
|
|
Proceeds from sale of interests in joint
ventures
|
|
0.3
|
0.1
|
|
Dividends received from joint
ventures
|
|
8.6
|
7.1
|
|
Dividends received from associates
|
|
1.4
|
4.2
|
|
Dividends received from other parties
|
|
0.2
|
0.2
|
|
Repayment of loans by joint ventures
|
|
0.1
|
0.1
|
|
Repayment of loans by associates
|
|
0.2
|
0.4
|
|
Repayment of loans by other parties
|
|
-
|
0.7
|
|
Loans to joint ventures
|
|
-
|
(0.1)
|
|
Loans to associates
|
|
-
|
(0.4)
|
|
Loans to other parties
|
|
(2.5)
|
(1.7)
|
|
Acquisition of subsidiaries, net of cash and
overdrafts acquired
|
|
(8.7)
|
(14.9)
|
|
Deferred consideration paid in relation prior
year acquisitions
|
|
(1.9)
|
(3.3)
|
|
Sublease income
|
|
0.7
|
-
|
|
Purchase of property, plant and
equipment
|
|
(17.4)
|
(19.8)
|
|
Purchase of intangible assets
|
|
(5.5)
|
(7.0)
|
|
Purchase of financial assets held at FVOCI and
FVPL
|
|
(6.7)
|
(8.8)
|
|
Purchase of investment in joint
ventures
|
|
(0.5)
|
(0.4)
|
|
Net cash used
in investing activities
|
|
(21.6)
|
(41.8)
|
|
Cash flows from
financing activities
|
|
|
|
|
Proceeds from issue of share capital
|
|
-
|
0.5
|
|
Proceeds from transaction with non-controlling
interest
|
|
-
|
7.9
|
|
Transaction costs incurred on transactions with
non-controlling interest
|
|
-
|
(0.2)
|
|
Proceeds from borrowings
|
|
105.7
|
9.6
|
|
Repayments of borrowings
|
|
(109.9)
|
(5.6)
|
|
Financing fees paid
|
|
-
|
(0.4)
|
|
Principal elements of lease payments
|
|
(54.7)
|
(51.4)
|
|
Purchase of treasury shares
|
|
(26.3)
|
(49.0)
|
|
Dividends paid
|
|
(51.0)
|
(85.9)
|
|
Net cash used
in financing activities
|
|
(136.2)
|
(174.5)
|
|
Net decrease in
cash, cash equivalents and bank overdrafts
|
|
(139.0)
|
(52.3)
|
|
Cash, cash equivalents and bank overdrafts at
beginning of year
|
|
464.3
|
490.0
|
|
Effect of exchange rate fluctuations on cash and
cash equivalents held
|
|
(15.0)
|
26.6
|
|
Cash, cash
equivalents and bank overdrafts at end of year
|
|
310.3
|
464.3
|
NOTES
1(a). Basis of
preparation
The results for the year ended 31 December
2023 have been extracted from the audited financial statements. The
financial statements have been prepared in accordance with UK
adopted international accounting standards.
The financial statements are prepared on a
going concern basis and under the historical cost convention as
modified by the revaluation of loans receivable, equity investments
and derivative financial instruments held at fair value.
The financial information in this statement
does not constitute statutory accounts within the meaning of s434
of the Companies Act 2006. The statutory accounts for the year
ended 31 December 2023, on which the auditors have given an
unqualified audit report, have not yet been filed with the
Registrar of Companies.
The preparation of financial statements in
conformity with IFRS requires the use of estimates and assumptions
that affect the reported amounts of assets and liabilities at the
date of the financial statements and the reported amounts of
revenues and expenses during the reporting period. Although these
estimates are based on management's best knowledge of the amount,
event or actions, actual results ultimately may differ from those
estimates.
Going
concern
The Group has prepared its going concern
assessment for the period to the end of June 2025. As in prior
years, the Board undertook a strategic business review in the
current year, taking account of the Group's current position and
prospects, the Group's strategic plan, and the Group's principal
risks and the management of those risks and the Board's risk
appetite. Sensitivity analysis was also undertaken, including
financing projections, to flex the financial forecasts under
several severe downside scenarios, which involved applying
different assumptions to the underlying forecasted revenues, costs
and underlying profits both individually and in aggregate. These
scenarios assess the potential impact from several macro-economic
risks, including a severe global economic downturn analogous to
that experienced during the Global Financial Crisis in 2008/09. The
results of this sensitivity analysis showed that the Group would
retain liquidity and maintain significant available facility and
covenant headroom to be able to withstand the impact of such
scenarios over the period of the financial forecast, as a result of
the resilience and diversity of the Group, underpinned by a strong
balance sheet.
Based on the Group's positive net cash position
of £157.3m (cash and cash equivalents less overdrafts in notional
pooling arrangements and borrowings) and undrawn £360.0m revolving
credit facility at the year end, combined with the assessment
explained above, the Directors have formed the judgement at the
time of approving the financial statements, that there is a
reasonable expectation that the Group has adequate resources to
continue as a going concern for a period of at least 12 months from
the date of the approval of the financial statements until at least
June 2025. For this reason, they continue to adopt the going
concern basis of accounting in preparing the Consolidated Financial
Statements.
2. Segment
analysis
|
|
|
|
Property and
|
|
|
|
|
|
Transaction
|
|
Facilities
|
Investment
|
|
|
|
|
Advisory
|
Consultancy
|
Management
|
Management
|
Unallocated
|
Total
|
|
2023
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Revenue
|
|
|
|
|
|
|
|
United Kingdom - commercial
|
100.6
|
227.8
|
304.5
|
43.2
|
-
|
676.1
|
|
United Kingdom - residential
|
171.0
|
43.2
|
51.2
|
-
|
-
|
265.4
|
|
Total United Kingdom
|
271.6
|
271.0
|
355.7
|
43.2
|
-
|
941.5
|
|
CEME
|
114.6
|
76.3
|
96.7
|
54.8
|
-
|
342.4
|
|
Asia Pacific - commercial
|
102.1
|
84.1
|
447.1
|
7.8
|
-
|
641.1
|
|
Asia Pacific - residential
|
17.9
|
-
|
-
|
-
|
-
|
17.9
|
|
Total Asia Pacific
|
120.0
|
84.1
|
447.1
|
7.8
|
-
|
659.0
|
|
North America
|
266.7
|
28.4
|
-
|
-
|
-
|
295.1
|
|
Revenue
|
772.9
|
459.8
|
899.5
|
105.8
|
-
|
2,238.0
|
|
Underlying
profit/(loss) before tax
|
|
|
|
|
|
|
|
United Kingdom - commercial
|
14.0
|
25.4
|
24.5
|
4.8
|
(8.7)
|
60.0
|
|
United Kingdom - residential
|
19.4
|
4.3
|
5.9
|
-
|
-
|
29.6
|
|
Total United Kingdom
|
33.4
|
29.7
|
30.4
|
4.8
|
(8.7)
|
89.6
|
|
CEME
|
(20.3)
|
5.0
|
(3.8)
|
9.3
|
-
|
(9.8)
|
|
Asia Pacific - commercial
|
(2.9)
|
1.9
|
22.2
|
0.7
|
-
|
21.9
|
|
Asia Pacific - residential
|
1.5
|
-
|
-
|
-
|
-
|
1.5
|
|
Total Asia Pacific
|
(1.4)
|
1.9
|
22.2
|
0.7
|
-
|
23.4
|
|
North America
|
(7.4)
|
(1.0)
|
-
|
-
|
-
|
(8.4)
|
|
Underlying
profit/(loss) before tax
|
4.3
|
35.6
|
48.8
|
14.8
|
(8.7)
|
94.8
|
|
|
|
|
Property and
|
|
|
|
|
|
Transaction
|
|
Facilities
|
Investment
|
|
|
|
|
Advisory
|
Consultancy
|
Management
|
Management
|
Unallocated
|
Total
|
|
2022
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Revenue
|
|
|
|
|
|
|
|
United Kingdom - commercial
|
118.9
|
202.0
|
278.7
|
53.3
|
-
|
652.9
|
|
United Kingdom - 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
|
71.9
|
81.6
|
51.7
|
-
|
335.0
|
|
Asia Pacific - commercial
|
145.3
|
87.4
|
404.9
|
7.8
|
-
|
645.4
|
|
Asia Pacific - 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
|
|
Revenue
|
930.1
|
441.5
|
813.9
|
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
|
|
United Kingdom - 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)
|
8.6
|
(0.4)
|
11.8
|
-
|
17.3
|
|
Asia Pacific - commercial
|
13.4
|
2.9
|
21.0
|
0.7
|
-
|
38.0
|
|
Asia Pacific - 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
|
41.3
|
46.5
|
21.2
|
(16.3)
|
164.6
|
* Revenue (£27.6m) and underlying
profit (£3.7m) attributable to the project management consultancy
business in CEME has been reclassified from Property and Facilities
Management to Consultancy to ensure a consistent presentation of
this business stream with the rest of the Group.
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 locations in which the Group
operates, with the Investment Management business being managed
separately.
The operating segments are identified as the
following regions: the UK, Continental Europe and the Middle East
('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 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 (fair value gain on a transaction-related call option in
the current and prior year).
A reconciliation of underlying profit before
tax to reported profit before tax is provided in Note 3.
3. Underlying
profit before tax
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.
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Reported profit
before tax
|
55.4
|
153.9
|
|
Adjustments:
|
|
|
|
Amortisation of intangible assets arising from
business combinations
|
9.9
|
9.9
|
|
Impairment of goodwill
|
3.9
|
-
|
|
Share-based payment adjustment (see Note 2.3 for
explanation)
|
(1.1)
|
(14.7)
|
|
Profit on disposal of joint ventures
|
(0.4)
|
-
|
|
Restructuring costs
|
13.9
|
0.1
|
|
Transaction-related costs
|
14.6
|
15.5
|
|
Fair value gain on transaction-related call
option
|
(1.4)
|
(0.1)
|
|
Underlying
profit before tax
|
94.8
|
164.6
|
The adjustment for share-based payments relates
to the impact of the accounting standard for share-based
compensation. The annual bonus is paid in a mixture of cash and
deferred shares and the proportions can vary from one year to
another. Under IFRS, the deferred share element is amortised to the
income statement over the vesting period whilst the cash element is
expensed in the year. The adjustment above addresses this by adding
to or deducting from profit the difference between the IFRS 2
charge in relation to outstanding bonus-related share awards and
the estimated value of the current year bonus pool to be awarded in
deferred shares. This adjustment is made to align the underlying
staff cost in the year with the revenue recognised in the same
period, providing additional information on the Group's performance
over time with respect to profitability.
Impairment of goodwill in the year relates to
the Indonesia cash generating unit.
Profit on disposal recognised is primarily in
relation to disposal of holdings in joint ventures in
China.
Restructuring costs in the current year
includes the pay-out of settlement costs and the cost of a
restructuring programme, which was focused principally on a small
number of areas of the global business where management anticipates
that market recovery will take longer to emerge. In the prior year,
restructuring costs related to the ongoing IFRS 2 'Share-based
Payment' charge for deferred shares, with a five-year vesting
period, issued in relation to the restructuring upon acquisition of
Aguirre Newman SA ('Aguirre Newman') in 2017.
Transaction-related costs includes a £12.7m
charge for future consideration payments which are contingent on
the continuity of recipients' employment in the future (2022:
£14.8m). In the current and prior year, a significant portion of
the charge related to the acquisition of DRC Capital LLP ('DRC') in
2021. Transaction-related costs also consist of £1.5m of
professional advisory transaction fees (2022: £1.4m) and £0.3m of
interest on deferred consideration and non-current future payments
in relation to business acquisitions that are linked to employment
(2022: £0.3m). In addition, transaction-related costs included a
£0.1m (2022: £0.6m) 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 prior year,
transaction-related costs also consist of a £1.6m credit (2023:
£nil) for fair value changes to contingent deferred consideration
not related to continuity of employment.
In the current year, a fair value gain of £1.4m
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 SIM
products during the initial five-year term (2022: fair value gain
of £0.1m).
4. Income tax
expense
The income tax expense has been calculated on
the basis of the underlying rate in each jurisdiction adjusted for
any disallowable charges.
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
United Kingdom
|
|
|
|
- Current tax
|
13.9
|
18.7
|
|
- Deferred tax
|
(2.5)
|
(1.5)
|
|
|
|
|
|
Foreign tax
|
|
|
|
- Current tax
|
13.8
|
23.1
|
|
- Deferred tax
|
(9.3)
|
(6.2)
|
|
Income tax expense
|
15.9
|
34.1
|
5.
Dividends
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Amounts recognised as distribution to equity
holders in the year:
|
|
|
|
In respect of
the previous year
|
|
|
|
Ordinary final dividend of 13.4p per share
(2021: 12.75p)
|
18.2
|
17.6
|
|
Supplemental interim dividend of 15.6p per share
(2021: 15.6p)
|
21.2
|
21.6
|
|
Special dividend of £nil per share (2021:
27.05p)
|
-
|
37.4
|
|
In respect of
the current year
|
|
|
|
Interim dividend of 6.9p per share (2022:
6.6p)
|
9.4
|
8.9
|
|
|
48.8
|
85.5
|
The Group paid £2.2m (2022: £0.4m) of dividends
to non-controlling interests.
The Board recommends a final dividend of 13.9p
per ordinary share (amounting to £19.0m), alongside the
supplemental interim dividend of 2.0p per ordinary share (amounting
to £2.7m), to be paid on 23 May 2024 to shareholders on the
register at 12 April 2024. These financial statements do not
reflect this dividend payable.
The total paid and recommended ordinary and
supplemental dividend for the 2023 financial year comprises an
aggregate distribution of 22.8p per ordinary share (2022: 35.6p per
ordinary share).
6(a). Basic and
diluted earnings per share
|
|
2023
|
2023
|
2023
|
2022
|
2022
|
2022
|
|
|
Earnings
|
Shares
|
EPS
|
Earnings
|
Shares
|
EPS
|
|
|
£m
|
million
|
pence
|
£m
|
million
|
Pence
|
|
Basic earnings per share
|
40.8
|
135.9
|
30.0
|
119.4
|
137.3
|
87.0
|
|
Effect of additional shares issuable under
option
|
-
|
5.8
|
(1.2)
|
-
|
7.9
|
(4.8)
|
|
Diluted earnings per share
|
40.8
|
141.7
|
28.8
|
119.4
|
145.2
|
82.2
|
6(b).
Underlying basic and diluted earnings per share
|
|
2023
|
2023
|
2023
|
2022
|
2022
|
2022
|
|
|
Earnings
|
Shares
|
EPS
|
Earnings
|
Shares
|
EPS
|
|
|
£m
|
million
|
Pence
|
£m
|
million
|
Pence
|
|
Basic earnings per share
|
40.8
|
135.9
|
30.0
|
119.4
|
137.3
|
87.0
|
|
Amortisation of intangible assets arising from
business combinations after tax
|
7.6
|
-
|
5.6
|
7.6
|
-
|
5.5
|
|
Impairment of goodwill after tax
|
4.0
|
-
|
2.9
|
-
|
-
|
-
|
|
Share-based payment adjustment after
tax
|
(0.6)
|
-
|
(0.4)
|
(11.9)
|
-
|
(8.7)
|
|
Profit on disposal of joint ventures after
tax
|
(0.4)
|
-
|
(0.3)
|
-
|
-
|
-
|
|
Restructuring costs after tax
|
10.6
|
-
|
7.8
|
0.1
|
-
|
0.1
|
|
Transaction-related costs after tax
|
14.3
|
-
|
10.5
|
15.3
|
-
|
11.1
|
|
Fair value gain on transaction-related call
option
|
(1.4)
|
-
|
(1.0)
|
(0.1)
|
-
|
(0.1)
|
|
Underlying basic earnings per share
|
74.9
|
135.9
|
55.1
|
130.4
|
137.3
|
94.9
|
|
Effect of additional shares issuable under
option
|
-
|
5.8
|
(2.2)
|
-
|
7.9
|
(5.1)
|
|
Underlying diluted earnings per share
|
74.9
|
141.7
|
52.9
|
130.4
|
145.2
|
89.8
|
7. Cash
generated from operations
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Profit for the year
|
39.5
|
119.8
|
|
Adjustments for:
|
|
|
|
Income tax
|
15.9
|
34.1
|
|
Depreciation
|
69.6
|
65.8
|
|
Amortisation of intangible assets
|
15.8
|
16.9
|
|
Fair value gain on derivative financial
instrument and FVPL investments
|
(2.1)
|
(0.1)
|
|
(Gain)/loss on disposal of property, plant and
equipment, intangible assets and leases
|
(4.0)
|
1.1
|
|
Impairment of property, plant and equipment and
goodwill
|
3.9
|
0.8
|
|
Net finance (income)/cost (Note 11)
|
(12.1)
|
4.3
|
|
Share of post-tax profit from joint ventures and
associates
|
(10.2)
|
(12.1)
|
|
Dividends from other parties
|
(0.2)
|
(0.2)
|
|
Increase in employee and retirement
obligations
|
2.5
|
2.6
|
|
Exchange movement and fair value movements on
financial instruments in operating activities
|
0.5
|
0.6
|
|
Increase/(decrease) in provisions
|
11.2
|
(4.7)
|
|
Increase in insurance reimbursement
asset
|
(3.4)
|
-
|
|
Charge for share-based compensation
|
28.8
|
30.4
|
|
Operating cash flows before movements in working
capital
|
155.7
|
259.3
|
|
Increase in trade and other receivables and
contract assets
|
(45.5)
|
(7.3)
|
|
Decrease in trade and other payables and
contract liabilities
|
(61.0)
|
(41.1)
|
|
Cash generated
from operations
|
49.2
|
210.9
|
Foreign exchange movements resulted in a £20.1m
decrease in current and non-current trade and other receivables
(2022: £37.3m increase) and a £21.3m decrease in current and
non-current trade and other payables (2022: £43.8m
increase).
8. Notional
pooling arrangement
For internal cash management purposes, the
Group maintains a notional cash pooling arrangement with Barclays
Bank PLC, whereby credit and debit cash balances 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 31 December
2023, the notional cash pooling arrangement included cash balances
of £193.3m presented in cash and cash equivalents (December 2022:
£205.0m) and overdrafts of £192.3m (31 December 2022: £202.0m)
presented in current liabilities. This represents as at 31 December
2023 surplus pooled credit cash balances of £1.0m (31 December
2022: surplus pooled credit cash £3.0m).
For the purpose of the Statement of Cash Flows,
cash and cash equivalents net of overdrafts comprise the
following:
|
|
31 December
|
31 December
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Cash and cash equivalents
|
506.8
|
669.1
|
|
Overdrafts in notional pooling
arrangement
|
(192.3)
|
(202.0)
|
|
Bank overdrafts (see Note 10)
|
(4.2)
|
(2.8)
|
|
|
310.3
|
464.3
|
9.
Acquisition of subsidiaries
The fair values of the assets acquired and
liabilities assumed as part of the Group's acquisitions in the year
are provisional and will be finalised within 12 months of the
acquisition date. These are summarised below:
|
|
|
Provisional fair value to the
Group
|
|
|
|
Nash Bond
|
Others
|
Total
|
|
|
|
£m
|
£m
|
£m
|
|
Non-current assets:
|
Property, plant and equipment
|
0.1
|
0.2
|
0.3
|
|
|
Right-of-use asset
|
-
|
0.5
|
0.5
|
|
|
Intangible assets
|
-
|
0.5
|
0.5
|
|
|
Trade and other receivables
|
-
|
0.1
|
0.1
|
|
Current assets:
|
Contract assets
|
-
|
0.3
|
0.3
|
|
|
Trade and other receivables
|
0.5
|
0.7
|
1.2
|
|
|
Income tax receivable
|
0.1
|
-
|
0.1
|
|
|
Cash and cash equivalents
|
2.3
|
2.5
|
4.8
|
|
Current liabilities:
|
Lease liabilities
|
-
|
(0.1)
|
(0.1)
|
|
|
Trade and other payables
|
(1.0)
|
(1.5)
|
(2.5)
|
|
|
Income tax liabilities
|
-
|
(0.1)
|
(0.1)
|
|
|
Employee benefit obligations
|
-
|
(0.1)
|
(0.1)
|
|
Non-current liabilities:
|
Lease liabilities
|
-
|
(0.3)
|
(0.3)
|
|
|
Deferred tax liabilities
|
-
|
(0.2)
|
(0.2)
|
|
Net assets
acquired
|
|
2.0
|
2.5
|
4.5
|
|
Goodwill (provisional)
|
5.0
|
5.4
|
10.4
|
|
Purchase
consideration
|
|
7.0
|
7.9
|
14.9
|
|
Consideration
satisfied by:
|
|
|
|
|
Cash paid
|
7.0
|
6.5
|
13.5
|
|
Deferred consideration < 1 year
|
-
|
0.5
|
0.5
|
|
Deferred consideration > 1 year
|
-
|
0.9
|
0.9
|
|
|
|
7.0
|
7.9
|
14.9
|
Nash Bond
Limited ('Nash Bond')
On 27 November 2023, the Group acquired 100% of
the equity interest in Nash Bond, a retail agency and lease
consultancy business based in the UK. The acquisition enhances the
strength of the Group's Central London retail business to take
advantage of the anticipated recovery in the retail
market.
Total acquisition consideration has
provisionally been determined at £7.0m, all of which was settled on
completion.
Acquisition-related costs of £0.5m have been
expensed as incurred to the income statement and classified within
other operating expenses.
Provisional goodwill of £5.0m has been
determined. Goodwill is attributable to the experience and
expertise of key staff members and is not expected to be deductible
for tax purposes.
The acquired business contributed revenue of
£0.1m and profit of £0.1m to the Group for the period from the date
of acquisition to 31 December 2023. Had the acquisition been made
at the beginning of the financial year, revenue would have been
£4.7m and a profit of £0.5m would have been recognised.
The fair value of trade and other receivables
is £0.5m, £0.4m of which relates to trade receivables. The gross
contractual amount for trade receivables is £0.4m, all of which is
expected to be collectible.
Other
acquisitions
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 the United Kingdom. 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 of Predibisa, Sociedade de Mediaçāo Imobiliária, Lda., a
residential and commercial real estate company based in Porto,
Portugal. In addition, on 1 August 2023, the Group acquired a 55%
equity interest in Site 8 Pty Limited, a retail property agency in
Australia.
Cash consideration for these transactions
amounted to £6.5m. The remainder of the acquisition consideration
relates to deferred consideration of £1.4m payable, of which £0.5m
is payable within one year of the reporting date.
Goodwill of £5.4m has been provisionally
determined. Goodwill is attributable to the experience and
expertise of key staff and strong industry reputation and is not
expected to be deductible for tax purposes.
Acquisition-related costs of £0.6m have been
expensed as incurred to the income statement and classified within
other operating expenses.
The acquired businesses contributed revenue of
£5.7m and a profit of £0.4m to the Group for the period from
acquisition to 31 December 2023. Had the acquisitions been made at
the beginning of the financial year, revenue would have been £7.7m
and the profit would have been £0.5m. The impact on the Group's
overall revenue and profits is not material.
The fair value of trade and other receivables
acquired is £0.7m, £0.6m of which relates to trade receivables. The
gross contractual amount for trade receivables is £0.6m, all of
which is expected to be collectible.
2022
acquisitions and prior year restatement
In the year ended 31 December 2022, the Group
acquired a 60% equity interest in Absolute Maintenance Services Pte
Limited and Solute Pte Limited ('AMS'), 100% equity interest in
Pitmore 1 Limited, a 60% equity interest in Simply Affordable Homes
LLP, 100% of the equity interest in BrickByte GmbH, 100% of SRS
Lease Administration LLC, a 60% equity interest in PT CB Advisory,
70% of the equity interest in PT Cakrawala Baswara Cemerlang and a
60% equity interest in PT Cakrawala Baswara Indonesia. The Group
also acquired the trade and assets of Cureoscity Limited, James A
Baker and the trade and assets of a property management company
based in Poland.
During the current year, provisional fair
values relating to the acquisition of AMS were finalised, resulting
in an increase to goodwill of £0.2m and a corresponding increase in
deferred consideration payable. This adjustment is considered a
measurement period adjustment in accordance with IFRS 3 and as a
result the prior period comparatives have been restated.
10.
Borrowings
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Current
|
|
|
|
Bank overdrafts
|
4.2
|
2.8
|
|
Unsecured bank loans due within one year or on
demand
|
3.0
|
4.0
|
|
Loan notes due within one year or on
demand
|
0.7
|
3.8
|
|
|
7.9
|
10.6
|
|
Non-current
|
|
|
|
Unsecured bank loans
|
0.1
|
0.5
|
|
Loan notes
|
150.0
|
150.0
|
|
Transaction costs (issuance of loan notes and
RCF arrangement fees)
|
(0.8)
|
(1.4)
|
|
|
149.3
|
149.1
|
|
|
157.2
|
159.7
|
The Group holds a £360.0m multi-currency
revolving credit facility ('RCF'), which includes an additional
£90.0m accordion facility, expiring in June 2026. As
at 31 December 2023, none (2022: none) of the RCF was
drawn.
Non-current loan notes reflect the £150.0m of
long-term debt held by the Group 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.
Movements in borrowings are analysed as
follows:
|
|
Group
|
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Opening amount
as at 1 January
|
159.7
|
150.5
|
|
Additional borrowings, net of transaction costs
paid (including overdraft movement)*
|
107.2
|
10.8
|
|
Repayments of borrowings
|
(109.9)
|
(5.6)
|
|
Addition through business combination
|
-
|
3.2
|
|
Amortisation of transaction costs
|
0.6
|
0.6
|
|
Foreign exchange
|
(0.4)
|
0.2
|
|
Closing amount
as at 31 December
|
157.2
|
159.7
|
* 2023 includes a £1.5m increase in overdraft balances within
additional borrowings. 2022 includes £1.5m increase in overdraft
balances and £0.3m of transaction costs paid within additional
borrowings.
The Group has the following undrawn borrowing
facilities:
|
|
Group
|
|
|
2023
|
2022
|
|
|
Fixed
|
Floating
|
Total
|
Fixed
|
Floating
|
Total
|
|
|
£m
|
£m
|
£m
|
£m
|
£m
|
£m
|
|
Expiring within 1 year or on demand
|
3.0
|
58.8
|
61.8
|
1.1
|
64.9
|
66.0
|
|
Expiring between 1 and 5 years
|
0.2
|
360.0
|
360.2
|
0.2
|
360.0
|
360.2
|
|
|
3.2
|
418.8
|
422.0
|
1.3
|
424.9
|
426.2
|
11. Finance
income and costs
|
|
2023
|
2022
|
|
|
£m
|
£m
|
|
Bank interest receivable
|
49.5
|
13.3
|
|
Net interest on defined benefit pension
assets
|
1.1
|
0.4
|
|
Finance income
|
50.6
|
13.7
|
|
|
|
|
|
Bank interest payable
|
(28.9)
|
(8.5)
|
|
Unwinding of discounts on liabilities
|
(0.4)
|
(0.5)
|
|
Finance charges on lease liabilities
|
(9.2)
|
(9.0)
|
|
Finance costs
|
(38.5)
|
(18.0)
|
|
|
|
|
|
Net finance
income/(cost)
|
12.1
|
(4.3)
|
12. Related
party transactions
As at 31 December 2023, there were £0.1m of
loans receivable from joint ventures, £1.9m of loans receivable
from associates and £0.2m of loans payable to associates (2022:
£0.2m of loans receivable from joint ventures and £1.7m of loans
receivable from associates).
There were no other 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.
13. Events
after the balance sheet date
In February 2024, Samsung Life served notice on
the call option to purchase a further 4% in the Savills IM Holdings
Limited group, which will increase their total shareholding to 29%.
This transaction is expected to complete towards the end of March
2024, with the Group due to receive £11.3m of proceeds.
There have been no other 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.
14. Annual
report and accounts
Copies of the Annual Report and Accounts for
the year ended 31 December 2023 will be circulated to shareholders
on 8 April 2024 and will also be available from the investor
relations section of the Company website at www.ir.savills.com or
from:
Savills plc, 33 Margaret Street, London, W1G
0JD
Telephone: 020 7499 8644
Directors'
responsibilities in respect of the financial
statements
We confirm that to the best of our
knowledge:
· that
the consolidated financial statements, prepared in accordance with UK-adopted international
accounting standards give a true and fair view of
the assets, liabilities, financial
position and profit of the parent company
and undertakings included in the consolidation taken as a whole;
and
· the
Annual Report, including the Strategic Report, includes a fair
review of the development and performance of the business and the
position of the company and undertakings included in the
consolidation taken as a whole, together with a description of the
principal risks and uncertainties that they face.
The contents of this announcement,
including the responsibility statement above, have been extracted
from the annual report and accounts for the year ended 31 December
2023, which will be available on publication
at www.ir.savills.com. Accordingly, this responsibility statement
makes reference to the financial statements of the Company and the
Group and the relevant narrative appearing in that annual report
and accounts rather than the contents of this
announcement.
On behalf of the Board
Mark Ridley
Group Chief Executive
Chris Lee
Group Legal Director and Company
Secretary
14 March 2024
Forward-looking
statements
The financial information contained in this
announcement has not been audited. Certain statements made in this
announcement are forward-looking statements and are therefore
subject to risks, assumptions and uncertainties that could cause
actual results to differ materially from those expressed or implied
because they relate to future events. These forward-looking
statements include, but are not limited to, statements relating to
the Company's expectations.
END