REG - Savills PLC - Half-year Report
08/08/2024 07:00
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RNS Number : 6145Z Savills PLC 08 August 2024
8 August 2024
Savills plc
('Savills' or 'the Group')
RESULTS FOR THE HALF YEAR ENDED 30 JUNE 2024
Improved performance driven by early signs of market recovery
Savills plc, the international real estate advisor, today announces its
unaudited results for the six months ended 30 June 2024.
Summary results:
H1 2024 H1 2023* Change
Revenue £1,063.2m £1,011.4m 5%
Underlying profit before tax** £21.2m £16.3m 30%
Reported profit before tax £8.9m £6.0m 48%
Underlying basic earnings per share** 12.1p 9.2p 32%
Reported basic earnings per share 6.1p 3.5p 74%
Interim dividend 7.1p 6.9p 3%
Net cash*** £34.0m £12.8m 166%
*See Note 14 for details of prior period restatements in relation to a
measurement period adjustment in accordance with IFRS 3.
** Underlying profit before tax ('underlying profit') and underlying basic
earnings per share ('underlying 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 and Note 7 to the
Interim Financial Statements. Underlying EPS is calculated using underlying
profit, with the weighted average number of shares remaining the same as the
GAAP measure (see Note 10(b)).
*** Net cash reflects cash and cash equivalents net of borrowings and
overdrafts in the notional pooling arrangement (see Note 18).
Key highlights:
· Transaction Advisory revenue up 9% with signs of market recovery
· Less transactional businesses performed well in aggregate with revenue up
3%
o Property and Facilities Management revenue up 5%, Consultancy revenue up
3%
o Savills Investment Management revenue down 10% reflecting continued
weakness of key markets in continental Europe
· Business development activity supported by strong balance sheet,
positioning the Group well for gradual recovery of global markets
Commenting on the results, Mark Ridley, Group Chief Executive of Savills plc,
said:
"Our improved performance in the first half reflects the positive effects of
early recovery phases in a number of our markets, as well as the robust and
growing earnings provided by our less transactional businesses. Whilst we have
seen resilience in prime commercial leasing markets, global capital
transaction volumes remain subdued, although activity is recovering in certain
markets.
"Against this backdrop, we have continued to invest in growing our business
and further enhancing the strength and diversity of the Group, including the
expansion of our Global Prime Residential services, whilst improving our net
cash position year-on-year.
"We have improved transaction pipelines in many locations and, with our core
bench strength in place to support clients, Savills is well positioned to
benefit as markets progressively recover through the next 12-18 months. Our
expectations for the current year remain unchanged."
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
(http://www.ir.savills.com/) .
Overview
The Group returned to growth during the first half of 2024, benefiting from
the early stages of recovery in a number of regions. However, certain major
markets, such as Germany, France and Greater China, remain subdued with very
low transaction volumes as real estate markets progressively adjust to
challenging conditions.
In the six months to 30 June 2024, Savills delivered revenue of £1,063.2m, an
increase of 5% (7% in constant currency) over the comparable period (H1 2023:
£1,011.4m). Underlying profit was £21.2m, 30% higher than the prior period
(H1 2023: £16.3m) (32% in constant currency). The Group's underlying profit
margin was 2.0% (H1 2023: 1.6%). This reflects reduced losses in our
Transaction Advisory business and growth in Property and Facilities Management
and Consultancy profits, offset by a reduction in earnings from Investment
Management.
The Group continues to maintain a strong balance sheet with net cash of
£34.0m at 30 June 2024 (H1 2023: £12.8m - restated).
Reported profit before tax increased by 48% to £8.9m (H1 2023: £6.0m).
Market conditions
The first half of 2024 saw the beginnings of recovery in a number of capital
markets despite expectations of interest rate cuts from mid-year transitioning
to "higher for longer". Occupiers began to commit to larger leasing
transactions albeit in many markets there continues to be limited stock of the
appropriate environmental standard.
In the UK, capital transactions remain largely focused on lot sizes below
£100m. £20bn of commercial property investments were traded in the first six
months of 2024, 8% lower than the same period in 2023. However, this is 6%
higher than the second half of last year, supporting the sentiment that the
market is beginning to recover.
Investment volumes in the Asia Pacific region fell by 9% in H1 2024. Hong Kong
and mainland China showed reduced activity as these markets continued to face
headwinds from higher borrowing costs. Activity in Japan remained relatively
robust through the period and we saw improvement in pipelines in South Korea
and Singapore.
Continental Europe continues to experience some of the weakest activity
globally, with Germany, France and the Nordic region remaining subdued. In
contrast, Ireland, southern European markets and the Middle East showed
considerable resilience and early signs of recovery.
In the US, where Savills is primarily involved in occupier-focused activities,
the market saw the return of larger occupier leasing transactions as
corporates began to commit to future growth. Whilst there is still a trend of
movement towards the southern states of Texas and Florida, we have seen
considerable recovery in New York and Washington consistent with renewed
corporate commitment to larger strategic moves.
Prime Residential (high equity component) markets, particularly in the UK,
Middle East and the South of France remained relatively buoyant in the first
half of 2024, whilst activity in other regions such as Singapore fell during
the period. The same is true of new build markets which tend to be more highly
dependent on mortgage finance.
Business development during the period
During the period, enabled by the Group's strong balance sheet, we continued
to expand our Global Prime Residential services with the acquisition of a
lettings management business in Switzerland (Verbier Hospitality SA) and
increasing our shareholding in an agency in the Riviera region of France
(Riviera Estates SAS). We also invested significantly in prime residential in
the United Arab Emirates and further invested in residential sales in Sydney,
Australia.
In addition, in April 2024, the Group acquired Situu Limited ('Situu'), a
market leading flexible office advisory business in the UK to complement our
WorkThere flexible occupier service. In July 2024, the Group also completed on
the acquisition of a project management consultancy in Malaysia (PMCC Actus
Sdn Bhd) and took on the UK property management business of Montagu Evans.
Many of our digitally-enabled businesses continue to perform well. Our market
leading UK auction business continues to take market share in both the UK
commercial and residential auction markets, selling almost £400m of property
over the period, up 46% year-on-year. Cureoscity, our wholly-owned platform
that connects occupiers, landlords and their managing agents has increased
annual recurring revenue by over 50% year-on-year. Finally, we continue to
investigate and experiment with new and emerging technologies, including AI,
through our innovation and data teams globally.
Business review
The following table sets out Group revenue and underlying profit by operating
segment:
Revenue H1 2024 H1 2023 Change
£m
£m
Transaction Advisory 359.4 328.7 9%
Consultancy 200.5 195.5 3%
Property and Facilities Management 456.9 435.5 5%
Investment Management 46.4 51.7 (10%)
Group revenue 1,063.2 1,011.4 5%
Underlying profit H1 2024 H1 2023 Change
£m
£m
Transaction Advisory (13.4) (17.0) n/a
Consultancy 8.5 7.2 18%
Property and Facilities Management 23.2 20.1 15%
Investment Management 4.3 7.0 (39%)
Unallocated cost (1.4) (1.0) n/a
Group underlying profit 21.2 16.3 30%
The following table sets out Group revenue and underlying profit by
geographical area:
Revenue H1 2024 H1 2023 Change
£m
£m
UK 435.9 409.4 6%
Asia Pacific 326.2 313.5 4%
Continental Europe and the Middle East ('CEME') 158.6 149.9 6%
North America 142.5 138.6 3%
Group revenue 1,063.2 1,011.4 5%
Underlying profit H1 2024 H1 2023 Change
£m
£m
UK 32.9 31.6 4%
Asia Pacific 4.4 1.9 132%
Continental Europe and the Middle East ('CEME') (14.4) (12.3) n/a
North America (0.3) (3.9) n/a
Unallocated cost (1.4) (1.0) n/a
Group underlying profit 21.2 16.3 30%
Revenue performance was driven by 9% growth in the transactional service lines
and 3% in the less transactional service lines in aggregate. Of the latter,
Property and Facilities Management grew revenue by 5%, Consultancy by 3% and
Investment Management revenues declined by 10% as a result of reduced
transaction and performance fees.
Transaction Advisory
Revenue H1 2024 H1 2023 Change
£m
£m
UK 115.6 109.1 6%
Asia Pacific 61.7 50.2 23%
CEME 52.0 43.2 20%
North America 130.1 126.2 3%
Total 359.4 328.7 9%
Our Transaction Advisory revenue increased by 9% compared with H1 2023 (12% in
constant currency), with leasing- related revenue generally remaining more
resilient than capital transactions. Including the effect of business
development costs in the period, the Transaction Advisory business sustained
an underlying loss of £13.4m (H1 2023: loss of £17.0m) a net improvement of
21% period-on-period. With few exceptions such as Germany, Australia and
China, commercial transactional service lines improved profits. Residential
activity in Asia Pacific declined, and this together with international
residential expansion costs, particularly in Southern Europe and the Middle
East, reduced profits for the period.
UK Commercial
UK Commercial Transaction fee income increased by 3% to £38.8m (H1 2023:
£37.5m), as a result of improved leasing activity, primarily retail,
mitigating a slight reduction in overall investment volumes, particularly in
Q1, compared with the prior period.
Capital transactions remained constrained throughout the period in the larger
lot sizes in Central London, however in national capital markets in general,
smaller lot sizes and sectors such as retail saw an improvement in
transactional demand.
Occupational market trends were slightly more resilient, with office leasing
volumes in both central London and the key regional cities decreasing slightly
as the supply of prime sustainable office space was, and remains, constrained.
Retail leasing showed encouraging growth during the period.
Logistics leasing markets in the UK performed better with take-up in the first
six months of the year 44% higher than the same period in 2023, and 13% above
the long-term average for the same period.
Against this backdrop, revenue stability in capital transactions and 8% growth
in leasing represented a solid performance. The acquisition of Situu (flexible
office advisory) and staff cost increases slightly reduced the UK Commercial
Transaction underlying profit margin to 6.2% (H1 2023: 6.4%) during the period
and underlying profit remained stable at £2.4m (H1 2023: £2.4m).
UK Residential
Our UK Residential business performed strongly in difficult market conditions
with revenue up 7% to £76.8m (H1 2023: £71.6m). This was driven by 10%
growth in re-sales agency, which mitigated declines in both new development
sales and our Private Rented Sector ('PRS') businesses.
In the re-sales agency, Savills overall transaction volumes exchanged were up
4%. The average value of London and regional residential property sold by
Savills in the period was lower in London at £2.0m (H1 2023: £2.3m)
reflecting a greater share of the "core" market (covering properties with
values up to c.£1.5m) and slightly reduced volumes traded in the higher value
market. Outside London the average value traded was stable at £1.3m (H1 2023:
£1.3m).
Revenue from the sale of new homes declined 22% on H1 2023. This reflected
reduced activity in the higher value London market and the continuation of low
trading volumes outside London.
Finally, our Operational Capital Markets business, which advises on the PRS,
student and other institutional residential markets, saw a 3% decline in
revenue period-on-period as a result of transactional timing.
Underlying profits in the UK residential transaction business improved by 11%
to £5.2m (H1 2023: £4.7m).
Asia Pacific Commercial
Commercial transaction fee income in Asia Pacific increased by 34% (44% in
constant currency) to £54.0m (H1 2023: £40.2m). The key areas of growth were
Japan and Australia, albeit the latter off a very low base, with Hong Kong,
Singapore and South Korea all experiencing further reductions in
market-related transactional activity. There was a smaller increase in
transactional revenues in mainland China, albeit that the prevailing level of
activity remains far below the pre-COVID period. Leasing revenues across the
region were marginally reduced primarily as a result of lower levels of
activity in Hong Kong, mainland China and South Korea, which were partially
compensated by improved activity in Singapore and Australia, particularly in
the industrial and logistics sector.
Overall, the Asia Pacific commercial transaction business halved its
underlying loss to £3.2m for the period (H1 2023: £6.2m loss).
Asia Pacific Residential
Residential transaction fee income in Asia Pacific declined by 23% to £7.7m
(H1 2023: £10.0m) (20% in constant currency). A small number of large
transactions in Hong Kong improved revenue from that market by 40%, however a
55% reduction in residential revenues in mainland China, as a result of
economic conditions and a similar decline in Singapore, due largely to
Government cooling measures, led to the revenue decline for the region as a
whole.
Reduced revenue performance and the cost of investment in new teams in
Australia resulted in an underlying loss of £0.6m for the first half of the
year (H1 2023: £1.2m profit).
CEME
In CEME, transactional advisory revenue increased by 20% to £52.0m (H1 2023:
£43.2m) (27% in constant currency). This represented a marginal reduction in
commercial transactional revenues as markets remained highly subdued,
particularly in Germany and France. Revenue growth derived from recent
investment and recruitment in residential businesses in Italy, Switzerland,
Portugal and the Middle East, which collectively delivered the region's
revenue growth but remained loss-making in the start-up phase. This is
anticipated to improve through the second half of the year.
Commercial transaction revenues across the region were down a further 4%
(capital transactions by 6% and leasing by 2%) period-on-period as France,
Italy and Spain saw significant reductions in transaction volumes overall and
German capital markets remained depressed. H1 2024 investment volumes across
Europe were down 8% from the same period last year and, by way of context,
remain 42% below the five-year average.
The effect of previous restructuring significantly reduced Germany's losses
and there were improvements in Ireland, the Netherlands and Czech Republic,
however the combination of continued weakness in core markets and our
investment, primarily in the residential sector, marginally increased the H1
loss to £16.7m (H1 2023: £16.2m loss).
North America
In North America, where the Group is substantially dependent upon leasing
activity by corporate occupiers, revenue increased by 3% to £130.1m (H1 2023:
£126.2m) (6% in constant currency). This was driven by improved performances
in the major metropolis markets of New York, Washington and Chicago. In
general, corporate occupier preparedness to undertake significant transactions
improved greatly; including transactions carried over from 2023, we saw the
volume of more substantial transactions increase by 47% period-over-period. Of
particular note too, was growth in markets where we have invested the most
recently such as Miami, Houston, Dallas, Atlanta and indeed our relatively
young and growing Canadian office network. In addition, our Global Occupier
Services team grew its mandated portfolio with significant account wins during
the period.
Despite the impact of continued investment, the North American Transactional
business substantially reduced its underlying loss to £0.5m (H1 2023: £2.9m
loss).
Consultancy
Revenue H1 2024 H1 2023 Change
£m
£m
UK 116.3 112.9 3%
Asia Pacific 35.7 37.6 (5%)
CEME 36.1 32.6 11%
North America 12.4 12.4 -
Total 200.5 195.5 3%
Consultancy revenues grew by 3% year-on-year (4% in constant currency).
Generally, valuation was a little stronger in markets where transactional
volumes were improving and we saw a greater propensity to commence longer
range development plans which positively affected our planning and rural
development practices in the UK.
In the UK, revenue was 3% ahead of the prior period with growth in the Rural,
Building and Project Consultancy and Planning services, with relative
stability in other services. Housing consultancy delivered a robust
performance, albeit with a slowdown ahead of the UK general election.
The Asia Pacific business revenue declined by 5% (1% in constant currency), as
a result of further reductions in valuation activity in mainland China and
Hong Kong as market transactional volumes declined. Project Management
revenues in the region were stable overall, with growth in South East Asia
being offset by reductions in activity in Australia during the period.
In the CEME business, 11% revenue growth (12% in constant currency) was driven
by Project Management and Building Consultancy and valuations primarily in the
Middle East, Spain and the Netherlands which helped offset reductions in
Germany.
The North American Consultancy business posted stable revenue, with small
reductions in project management being offset by an improvement in workplace
consultancy. The effect of restructuring carried out in 2023 enabled the
business to move back into profit during the period.
As a result of the above factors, underlying profit of the Consultancy
business increased by 18% to £8.5m (H1 2023: £7.2m).
Property and Facilities Management
Revenue H1 2024 H1 2023 Change
£m
£m
Asia Pacific 225.4 221.8 2%
UK 183.6 167.6 10%
CEME 47.9 46.1 4%
Total 456.9 435.5 5%
Our Property and Facilities Management business increased global revenues by
5% (7% in constant currency) to £456.9m (H1 2023: £435.5m). Savills total
area under management increased 6% to 2.63bn sq ft (H1 2023: 2.49bn sq ft).
In Asia Pacific, revenues increased by 2% (5% in constant currency), driven by
the performance of our Singapore business and the inclusion of pass-through
costs in Australia. These factors were outweighed by a reduction in reported
revenues in mainland China and Hong Kong, although they were stable in
constant currency. Cost savings in China and improved profitability in
Singapore contributed to a 4% increase in underlying profits in the region.
UK Property and Facilities Management revenues grew 10% overall with
double-digit growth in both Property and Facilities Management and 4% growth
in residential management (lettings). Underlying profit increased by 38%
period-on-period as the business exited from unprofitable mandates and the
residential management business realised operating efficiencies from its
technology investment of recent times.
The CEME business delivered revenue growth of 4% (8% in constant currency)
driven by Germany, Middle East and Spain in particular. Investment in people
in Germany, an office relocation in France (with duplication of office costs
for the period) and cost inflation increased the losses for the period to
£1.9m (H1 2023: £0.4m loss).
Overall, underlying profit for the Property and Facilities Management business
grew by 15% to £23.2m (H1 2023: £20.1m).
Investment Management
Revenue from Investment Management decreased by 10% to £46.4m (H1 2023:
£51.7m) (9% in constant currency), reflecting both lower transaction fees
(down 6%) in line with reduced activity in the market and reduced performance
fees (down 70%) and management fees (down 1%) in line with market value
adjustments. Reduced liquidity in the major European markets and limited price
transparency perpetuated the difficult market in which to deploy core
investment capital However, the strength of the portfolio was evident in the
relative stability of base management fees which represented approximately 89%
(H1 2023: 81%) of Investment Management revenue.
Under INREV reporting standards, Assets Under Management ('AUM') increased by
8% to £22.1bn (H1 2023: £20.4bn) with £1.1bn of equity raised during the
period. The relationship with Samsung Life progressed well and, having
committed the first $1bn, Samsung Life exercised its option, during the
period, to increase its shareholding to 29% of the Investment Management
business (from 25%).
Notwithstanding the challenging market conditions, 68% of discretionary funds
(by AUM) continued to exceed their respective target or benchmark returns on a
5-year rolling basis.
The reduction in fee income, particularly performance and transaction fees,
led to a decrease of 39% in underlying profit to £4.3m (H1 2023: £7.0m),
representing a 9.3% underlying profit margin (H1 2023: 13.5%).
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 increase in unallocated net costs to £1.4m (H1 2023: £1.0m)
primarily relates to the first time inclusion of the Group's share of the loss
of VuCity Limited (a proptech investment of Grosvenor Hill Ventures), as it
transitioned from investment to associate status at the end of 2023.
Transaction-related and restructuring costs
During the period the Group incurred an aggregate restructuring charge of
£0.5m (H1 2023: £nil) and transaction-related costs of £8.5m (H1 2023:
£7.1m). 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. The majority of
the charge relates to the most recent acquisitions in the Investment
Management business (see Note 7).
Earnings and financial position
The Group's underlying profit margin in the period was 2.0% (H1 2023: 1.6%).
This reflects the reduction in net losses in our global transaction business
as transaction activity improved marginally in markets showing early signs of
recovery.
Basic earnings per share for the six months to 30 June 2024 increased to 6.1p
(H1 2023: 3.5p). Underlying basic earnings per share increased to 12.1p (H1
2023: 9.2p).
Cash and cash equivalents, net of overdrafts in notional pooling arrangements
and bank overdrafts (see Note 18), at the period end stood at £261.6m (30
June 2023: £256.9m, 31 December 2023: £310.1m - refer to Note 14 in relation
to a prior period restatement on finalisation of acquired fair values). 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 2024 of £236.6m (30 June 2023: £249.1m,
31 December 2023: £157.2m). These principally comprise £150.0m (30 June 2023
and 31 December 2023: £150.0m) 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 2024, borrowings also included £15.8m drawn under a
revolving credit facility in North America (30 June 2023: £13.1m, 31 December
2023: £nil). At 30 June 2024, £59.0m of the Group's UK revolving credit
facility ('RCF') was drawn (30 June 2023: £78.0m, 31 December 2023: £nil),
with a total of £340.1m of borrowing facilities available to the Group (30
June 2023: £329.3m, 31 December 2023: £422.0m).
In summary, net cash, being cash and cash equivalents net of borrowings and
overdrafts in notional pooling arrangements, was £34.0m (30 June 2023:
£12.8m, 31 December 2023: £157.1m - restated).
The funding level of the UK defined benefit Savills Pension Scheme, which is
closed to future service based accrual, increased during the period primarily
as a result of a rise in AA-rated corporate bond yields offset in part by
lower asset returns reducing the value of the Scheme's assets. The Scheme was
in a surplus position of £5.3m at 30 June 2024 (30 June 2023: £2.5m surplus,
31 December 2023: £0.7m deficit).
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 2024 Constant currency effect Six months to 30 June 2024 at constant currency
£m £m £m
Revenue 1,063.2 (22.6) 1,085.8
Profit before tax 8.9 (0.3) 9.2
Underlying profit before tax 21.2 (0.3) 21.5
Interim Dividend
The Board has declared an interim ordinary dividend of 7.1p (H1 2023: 6.9p).
The dividend, which is designed to provide sustainable real income growth and
be supported by the less transactional business earnings, will be payable on
30 September 2024 to shareholders on the register at 30 August 2024.
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 2023. These are listed below,
please refer to pages 33 to 36 thereof or to our investors' page on
www.savills.com (http://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 2024, Adrianna Karaboutis was appointed as an additional
Independent Non-Executive Director with effect from 14 March 2024.
Summary and outlook
Our improved performance in the first half reflects the positive effects of
early recovery phases in a number of our markets, as well as the robust and
growing earnings provided by our less transactional businesses. Whilst we have
seen resilience in prime commercial leasing markets, global capital
transaction volumes remain subdued, although activity is recovering in certain
markets.
Against this backdrop, we have continued to invest in growing our business and
further enhancing the strength and diversity of the Group, including the
expansion of our Global Prime Residential services, whilst improving our net
cash position year-on-year.
We have improved transaction pipelines in many locations and, with our core
bench strength in place to support clients, Savills is well positioned to
benefit as markets progressively recover through the next 12-18 months. Our
expectations for the current year remain unchanged.
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 that have materially affected the financial position or the
performance of the Company during that period and any material changes in the
related party transactions described in the last Annual Report that could have
a material effect on the financial position or performance of the Company in
the first six months of the current financial year.
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 2023 with the exception of Adrianna Karaboutis
who was appointed to the Board on 14 March 2024. 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
7 August 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.
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.
8 August 2024
Savills plc
Condensed interim consolidated income statement
for the period ended 30 June 2024
Six months to 30 June 2024 Six months to 30 June 2023 Year ended
31 December 2023
(unaudited) (unaudited) (audited)
Note £m £m £m
Revenue 6 1,063.2 1,011.4 2,238.0
Less:
Employee benefits expense (710.8) (674.9) (1,496.3)
Depreciation (35.7) (34.7) (69.6)
Amortisation of intangible assets (7.9) (7.9) (15.8)
Impairment of goodwill - - (3.9)
Other operating expenses (308.8) (297.0) (619.5)
Increase in provision for expected credit loss (2.8) (0.7) (1.8)
Other net gains 1.8 1.4 2.0
Share of post-tax profit from joint ventures and associates 3.3 4.8 10.2
Operating profit 2.3 2.4 43.3
Finance income 19 28.9 21.8 50.6
Finance costs 19 (22.3) (18.2) (38.5)
Net finance income 19 6.6 3.6 12.1
Profit before income tax 8.9 6.0 55.4
Income tax expense 8 (1.4) (1.6) (15.9)
Profit for the period 7.5 4.4 39.5
Attributable to:
Owners of the parent 8.3 4.8 40.8
Non-controlling interests (0.8) (0.4) (1.3)
7.5 4.4 39.5
Earnings per share
Basic earnings per share 10(a) 6.1p 3.5p 30.0p
Diluted earnings per share 10(a) 5.8p 3.4p 28.8p
Supplementary income statement information
Reconciliation to underlying profit before income tax
Profit before income tax 8.9 6.0 55.4
- restructuring and transaction-related costs 7 9.0 7.1 28.5
- other underlying adjustments 7 3.3 3.2 10.9
Underlying profit before income tax 7 21.2 16.3 94.8
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 2024
Six months to 30 June 2024 (unaudited) Six months to 30 June 2023 (unaudited) Year ended 31 December 2023 (audited)
£m £m £m
Profit for the period 7.5 4.4 39.5
Other comprehensive income/(loss)
Items that will not be reclassified to profit or loss:
Remeasurement of defined benefit pension scheme and employee benefit 6.4 (20.4) (24.7)
obligations
Changes in fair value of equity investments at held at fair value through (0.1) 0.2 0.6
other comprehensive income ('FVOCI')
Tax on other items that will not be reclassified (1.5) 7.0 8.4
Total items that will not be reclassified to profit or loss 4.8 (13.2) (15.7)
Items that may be reclassified subsequently to profit or loss:
Currency translation differences (3.9) (29.3) (27.3)
Total items that may be reclassified subsequently to profit or loss (3.9) (29.3) (27.3)
Other comprehensive income/(loss) for the period 0.9 (42.5) (43.0)
Total comprehensive income/(loss) for the period 8.4 (38.1) (3.5)
Total comprehensive income/(loss) attributable to:
Owners of the parent 9.7 (36.7) (1.4)
Non-controlling interests (1.3) (1.4) (2.1)
8.4 (38.1) (3.5)
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 2024
30 June 2024 (unaudited) 30 June 2023 restated* 31 December 2023 restated*
(unaudited) (audited)
Note £m £m £m
Assets: Non-current assets
Property, plant and equipment 65.4 71.4 68.1
Right of use assets 183.4 207.8 198.3
Goodwill 451.3 440.3 443.6
Intangible assets 52.7 60.5 55.8
Investments in joint ventures and associates 37.3 36.2 38.9
Deferred income tax assets 61.4 47.1 57.2
Financial assets at FVOCI 5 4.8 7.5 5.0
Financial assets at fair value through profit and loss ('FVPL') 5 41.4 36.7 38.5
Defined benefit pension surplus 15 9.2 5.8 3.2
Contract related assets 1.7 2.2 1.8
Trade and other receivables 75.0 47.0 69.3
983.6 962.5 979.7
Assets: Current assets
Contract assets 12.1 12.9 12.6
Trade and other receivables 576.1 576.7 656.7
Income tax receivable 11.0 9.3 4.7
Derivative financial instruments 5 0.1 1.5 1.0
Cash and cash equivalents(†) 18 461.3 442.6 506.6
1,060.6 1,043.0 1,181.6
Liabilities: Current liabilities
Borrowings 17 117.2 99.9 7.9
Overdrafts in notional pooling arrangement(†) 18 190.7 180.7 192.3
Lease liabilities 51.7 51.9 52.9
Derivative financial instruments 5 4.4 - 2.5
Contract liabilities 19.1 17.4 11.9
Trade and other payables 489.5 459.5 682.2
Income tax liabilities 7.3 3.8 6.9
Employee benefit obligations 15 25.0 25.2 18.5
Provisions 9.0 7.8 17.2
913.9 846.2 992.3
Net current assets 146.7 196.8 189.3
Total assets less current liabilities 1,130.3 1,159.3 1,169.0
Liabilities: Non-current liabilities
Borrowings 17 119.4 149.2 149.3
Lease liabilities 185.7 206.5 201.3
Derivative financial instruments 5 4.0 5.2 3.2
Other payables 12.8 26.5 10.4
Retirement and employee benefit obligations 15 26.7 25.4 26.2
Provisions 25.2 14.2 23.9
Deferred income tax liabilities 1.6 1.3 1.9
375.4 428.3 416.2
Net assets 754.9 731.0 752.8
Equity:
Share capital 3.6 3.6 3.6
Share premium 104.9 104.9 104.9
Other reserves 90.8 85.6 94.5
Retained earnings 518.4 502.2 514.9
Equity attributable to owners of the parent 717.7 696.3 717.9
Non-controlling interests 37.2 34.7 34.9
Total equity 754.9 731.0 752.8
Notes 1 to 24 are an integral part of these condensed interim financial
statements.
(†) Included within cash and cash equivalents are cash balances of £191.8m
(30 June 2023: £181.9m, 31 December 2023: £193.3m) that are operated within
a notional cash pooling arrangement together with overdraft balances of
£190.7m (30 June 2023: £180.7m, 31 December 2023: £192.3m) presented above
in current liabilities. See Note 18 for further details.
*See Note 14 for details of prior period restatements in relation to a
measurement period adjustment in accordance with IFRS 3.
Savills plc
Condensed interim consolidated statement of changes in equity
for the period ended 30 June 2024
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 2024 3.6 104.9 94.5 514.9 717.9 34.9 752.8
(audited)
Profit for the period - - - 8.3 8.3 (0.8) 7.5
Other comprehensive (loss)/income:
Re-measurement of defined benefit pension scheme and employee benefit - - - 6.4 6.4 - 6.4
obligations
Changes in fair value of financial assets at FVOCI - - (0.1) - (0.1) - (0.1)
Currency translation differences - - (3.4) - (3.4) (0.5) (3.9)
Tax on other items directly taken to other comprehensive (loss)/income - - - (1.5) (1.5) - (1.5)
Total comprehensive (loss)/income for the period - - (3.5) 13.2 9.7 (1.3) 8.4
Employee share option scheme:
- Value of services provided - - - 16.1 16.1 - 16.1
- Tax on employee share option schemes - - - 0.8 0.8 - 0.8
Purchase of treasury shares - - - (11.5) (11.5) - (11.5)
Transaction with non-controlling interest (Note 20) - - (0.2) 6.4 6.2 5.1 11.3
Dividends (Note 10) - - - (21.5) (21.5) (1.5) (23.0)
Balance at 30 June 2024 (unaudited) 3.6 104.9 90.8 518.4 717.7 37.2 754.9
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
(audited)
Profit for the period - - - 4.8 4.8 (0.4) 4.4
Other comprehensive income/(loss):
Re-measurement of defined benefit pension scheme and employee benefit - - - (20.4) (20.4) - (20.4)
obligations
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 income/(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 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
(audited)
Profit for the year - - - 40.8 40.8 (1.3) 39.5
Other comprehensive income/(loss):
Re-measurement of defined benefit pension scheme and employee benefit - - - (24.6) (24.6) (0.1) (24.7)
obligations
Changes in fair value of financial assets at FVOCI - - 0.6 - 0.6 - 0.6
Tax on items directly 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 (audited) 3.6 104.9 94.5 514.9 717.9 34.9 752.8
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 2024
Six months to 30 June 2024 (unaudited) Six months to 30 June 2023 Year ended 31 December 2023
restated* restated*
(unaudited) (audited)
Note £m £m £m
Cash flows from operating activities
Cash (used in)/generated from operations 11 (46.5) (166.1) 49.2
Interest received 21.1 21.2 40.6
Interest paid (16.7) (18.0) (33.3)
Income tax paid (13.8) (22.9) (37.7)
Net cash (used in)/generated from operating activities (55.9) (185.8) 18.8
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - 3.9 5.3
Proceeds from sale of financial assets held at FVOCI and FVPL 0.5 2.1 4.8
Proceeds from sale of interests in joint ventures 0.1 - 0.3
Dividends received from joint ventures 1.5 2.9 8.6
Dividends received from associates 2.7 0.9 1.4
Dividends received from other parties - - 0.2
Repayment of loans by joint ventures - - 0.1
Repayment of loans by associates - 0.1 0.2
Loans to associates - (0.1) -
Loans to other parties (0.2) (1.6) (2.5)
Acquisition of subsidiaries, net of cash and overdrafts acquired (0.8) (2.7) (8.9)
Deferred consideration paid in relation to prior year acquisitions (0.4) (0.9) (1.9)
Sublease income 0.8 - 0.7
Purchase of property, plant and equipment (6.4) (8.9) (17.4)
Purchase of intangible assets (2.7) (3.1) (5.5)
Purchase of financial assets held at FVOCI and FVPL (4.1) (3.5) (6.7)
Purchase of investment in joint ventures (0.1) (0.2) (0.5)
Net cash used in investing activities (9.1) (11.1) (21.8)
Cash flows from financing activities
Proceeds from borrowings 82.8 98.7 105.7
Repayments of borrowings (7.6) (11.3) (109.9)
Transactions with non-controlling interests 20 11.3 - -
Principal elements of lease payments (29.2) (27.5) (54.7)
Purchase of treasury shares (11.5) (11.9) (26.3)
Dividends paid (23.0) (40.4) (51.0)
Net cash from/(used in) financing activities 22.8 7.6 (136.2)
Net decrease in cash, cash equivalents and bank overdrafts (42.2) (189.3) (139.2)
Cash, cash equivalents and bank overdrafts at beginning of period 310.1 464.3 464.3
Effect of exchange rate fluctuations on cash held (6.3) (18.1) (15.0)
Cash, cash equivalents and bank overdrafts at end of period 18 261.6 256.9 310.1
Notes 1 to 24 are an integral part of these condensed interim financial
statements.
*See Note 14 for details of prior period restatements in relation to a
measurement period adjustment in accordance with IFRS 3.
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 8 August 2024.
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 2023 is derived from the statutory accounts for that year. Statutory
financial statements for the year ended 31 December 2023 were approved by the
Board of Directors on 13 March 2024 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 2024 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 2023, 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 2023, 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 2024. Consistent with the 2023 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 2023 TCFD report -
https://www.savills.com/why-savills/tcfd-report-2023.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 2025
based on latest financial forecasts. These forecasts take 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 2025, 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 £34.0m at the period end and the level of
undrawn facilities available (see Note 17 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 2025 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 2023, 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 2024 relevant to the Group are as follows:
- Amendments to IFRS 7 and IAS 7 require additional disclosures with
respect to supplier finance arrangements that exist within the Group,
including the terms and conditions of the arrangements, the value of such
liabilities presented in trade and other payables and ranges of payment due
dates. The Group has commenced a review of its arrangements to ensure the
required disclosure information can be made as at 31 December 2024. The
disclosures are not required for interim reporting.
- 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, were 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. Under the legislation, the Group is liable to pay a
top-up tax for the difference between its GloBE effective tax rate per
jurisdiction and the 15% minimum rate. Since Pillar Two legislation was not
effective at the previous 31 December 2023 reporting date, the Group has no
brought forward related current tax exposure. Management's assessment of the
Group's potential exposure to additional top‑up tax based on current
forecasts has identified some entities within the Group that may have an
effective tax rate below 15% however operations in these entities are not
significant and the value of the additional top-up tax would not be material
for the Group.
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 2024 that are not relevant nor considered to have a
significant impact on the Group and its financial statements include the
following:
- Amendments to IAS 1: Classification of Liabilities as Non-Current or
Current, Non-Current Liabilities with Covenants
- Amendments to IFRS 16: Lease Liability in a Sale and Leaseback
There are no other 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 with the exception of IFRS 18
Presentation and Disclosure in Financial Statements which is effective from 1
January 2027. The Group has commenced a review of the requirements to ensure
the presentation changes and additional disclosure information can be made in
line with the required dates.
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 or lower than reported profit before tax as a result of the
adjustments.
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, 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. 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 Appendices). 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 7
(underlying profit before tax) and Note 10(b) (underlying basic earnings per
share and underlying diluted earnings per share).
4. Estimates
The preparation of interim financial statements requires management to make
judgements, estimates and assumptions that affect the application of
accounting policies and the reported amounts of assets and liabilities, income
and expense. Actual results may differ from these estimates.
In preparing these condensed interim financial statements, the significant
judgements made by management in applying the Group's accounting policies and
the key sources of estimation uncertainty were the same as those that applied
to the consolidated financial statements for the year ended 31 December 2023.
Refer to Note 16 for information on the expected credit loss provision in
relation to trade receivables and Note 5 for information on fair value
estimates.
5. Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial risks including
foreign exchange risk, interest rate risk, credit risk and liquidity risk. The
condensed interim financial statements do not include all financial risk
management information and disclosures as required in the annual financial
statements; they should be read in conjunction with the Group's annual
financial statements as at 31 December 2023. 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 2024:
£m Level 2 Level 3 Total
2024
Assets
Financial assets at FVOCI - unlisted equity investments - 4.8 4.8
Financial assets at FVPL - 41.4 41.4
Derivative financial instruments 0.1 - 0.1
Total assets 0.1 46.2 46.3
Liabilities
Derivative financial instruments 0.4 8.0 8.4
Total liabilities 0.4 8.0 8.4
The following table presents the Group's assets and liabilities that are
measured at fair value at 31 December 2023:
£m Level 2 Level 3 Total
2023
Assets
Financial assets at FVOCI - unlisted equity investments - 5.0 5.0
Financial assets at FVPL - 38.5 38.5
Derivative financial instruments 1.0 - 1.0
Total assets 1.0 43.5 44.5
Liabilities
Derivative financial instruments - 5.7 5.7
Total liabilities - 5.7 5.7
The following table presents the Group's assets and liabilities that are
measured at fair value at 30 June 2023:
£m Level 1 Level 2 Level 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
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 17.
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.
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 6%
over the next two 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 Absolute Maintenance
Services Pte Ltd and Solute Pte Ltd ('AMS') businesses (60% of which was
acquired by the Group during 2022). Under this agreement, in 2024 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% in 2027. This option is classed as current and 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 2024:
Derivative financial instruments Unlisted equity investments Financial assets at FVPL
£m £m £m
Opening balance 1 January 2024 (5.7) 5.0 38.5
Additions - - 4.1
Disposals - - (0.5)
Exchange movement 0.3 (0.1) (0.1)
Re-measurements (2.6) (0.1) (0.6)
Closing balance 30 June 2024 (8.0) 4.8 41.4
6. Segment analysis
Six months to 30 June 2024 Transaction Advisory Consultancy Property and Facilities Management Investment Management Unallocated Total
(unaudited) £m £m £m £m £m £m
Revenue
United Kingdom
- commercial 38.8 96.0 160.9 20.4 - 316.1
- residential 76.8 20.3 22.7 - - 119.8
Total United Kingdom 115.6 116.3 183.6 20.4 - 435.9
CEME 52.0 36.1 47.9 22.6 - 158.6
Asia Pacific
- commercial 54.0 35.7 225.4 3.4 - 318.5
- residential 7.7 - - - - 7.7
Total Asia Pacific 61.7 35.7 225.4 3.4 - 326.2
North America 130.1 12.4 - - - 142.5
Total revenue 359.4 200.5 456.9 46.4 - 1,063.2
Underlying profit/(loss) before tax
United Kingdom
- commercial 2.4 8.1 13.3 0.5 (1.4) 22.9
- residential 5.2 1.3 2.1 - - 8.6
Total United Kingdom 7.6 9.4 15.4 0.5 (1.4) 31.5
CEME (16.7) 0.8 (1.9) 3.4 - (14.4)
Asia Pacific
- commercial (3.2) (1.9) 9.7 0.4 - 5.0
- residential (0.6) - - - - (0.6)
Total Asia Pacific (3.8) (1.9) 9.7 0.4 - 4.4
North America (0.5) 0.2 - - - (0.3)
Underlying profit/(loss) before tax (13.4) 8.5 23.2 4.3 (1.4) 21.2
Six months to 30 June 2023 Transaction Advisory Consultancy Property and Facilities Management Investment Management Unallocated Total
(unaudited) £m £m £m £m £m £m
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
Year ended 31 December 2023 Transaction Advisory Consultancy Property and Facilities Management Investment Management Unallocated Total
(audited) £m £m £m £m £m £m
Revenue
United Kingdom
- commercial 100.6 227.8 304.5 43.2 - 676.1
- 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
- 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
Total 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
- 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
- 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
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 7.
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.
Inter-segmental revenue is not material.
7. Underlying profit before tax
Six months to 30 June 2024 (unaudited) Six months to 30 June 2023 Year ended 31 December 2023 (audited)
(unaudited)
£m £m £m
Reported profit before tax 8.9 6.0 55.4
Adjustments:
- Amortisation of acquired intangible assets arising from business 4.8 5.0 9.9
acquisitions
- Impairment of goodwill - - 3.9
- Share-based payment adjustment (refer to Note 3) 0.3 (0.5) (1.1)
- Profit on disposal of joint ventures - - (0.4)
- Restructuring costs 0.5 - 13.9
- Transaction-related costs 8.5 7.1 14.6
- Fair value gain on step acquisition of subsidiary previously classified as (4.4) - -
an associate
- Fair value loss/(gain) on transaction-related options 2.6 (1.3) (1.4)
Underlying profit before tax 21.2 16.3 94.8
There have been no impairments of goodwill and intangible assets arising from
business combinations recognised in the current or prior period. Impairment of
goodwill in the prior year related to the Indonesia cash generating unit.
Restructuring costs in the current period and prior year principally include
the pay-out of settlement costs and the cost of a restructuring programme,
which is focused principally on a small number of areas of the global business
where management anticipates that market recovery will take longer to emerge.
Transaction-related costs includes a net £8.3m charge for future
consideration payments which are contingent on the continuity of recipients'
employment in the future (30 June 2023: £6.2m, 31 December 2023: £12.7m).
For the period ended 30 June 2024, the period ended 30 June 2023 and the year
ended 31 December 2023, 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 £nil professional advisory
transaction fees (30 June 2023: £0.4m, 31 December 2023: £1.5m) and £0.2m
of interest on deferred consideration and non-current future payments in
relation to business acquisitions that are linked to employment (30 June 2023:
£0.4m, 31 December 2023: £0.3m). In the current period, transaction-related
costs included a £nil (30 June 2023: £0.1m, 31 December 2023: £0.1m) 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 current period, a fair value gain of £4.4m was recognised on the
re-measurement of the Group's holding in its associate, Riviera Estates SAS,
prior to the Group's acquisition of a further 24% equity interest in the
business, bringing the Group's total shareholding to 75%.
The fair value loss on transaction-related call options in the current period
relates primarily to the re-measurement of the AMS option, which gives the
Group the right to purchase the remaining 40% shareholding in these
subsidiaries (20% in 2024 and 20% in 2027). In the prior period and prior
year, the fair value gain related to the re-measurement of the Samsung Life
call option, which at the time gave Samsung Life the right to purchase up to
an additional 10% shareholding in the Savills IM Holding Ltd group subject to
the quantum of capital it has invested in Savills Investment Management
products during the initial 5 year term. In H1 2024, Samsung Life exercised
the first tranche of the option, purchasing an additional 4% in the Savills IM
Holding Ltd group leaving Samsung Life the right to purchase a further 6%
shareholding under the terms of the option (Note 20).
8. Income tax expense
The income tax expense has been calculated on the basis of the statutory rates
in each jurisdiction adjusted for any disallowable charges.
Six months to 30 June 2024 (unaudited) Six months to 30 June 2023 (unaudited) Year ended 31 December 2023 (audited)
£m £m £m
UK
- Current tax 4.8 2.4 13.9
- Deferred tax (1.7) 0.5 (2.5)
Foreign tax
- Current tax 3.7 3.0 13.8
- Deferred tax (5.4) (4.3) (9.3)
Income tax expense 1.4 1.6 15.9
The forecast Group effective tax rate is 15.7% (30 June 2023: 26.7%, 31
December 2023: 28.7%), which is lower (30 June 2023: higher, 31 December 2023:
higher) than the UK standard effective annual rate of corporation tax of 25.0%
(30 June 2023 and 31 December 2023: 23.5%). This primarily reflects the effect
of prior year tax credits recognised in the period. The Group underlying
effective tax rate is 26.5% (30 June 2023: 24.5%, 31 December 2023: 22.4%).
Detailed analysis of the impact from the application of OECD's Pillar Two
Model Rules on both historical performance and forward-looking projections is
underway. As the Group does not generally operate in low tax jurisdictions,
the impact is not expected to be material.
9. Dividends
Six months to 30 June 2024 (unaudited) Six months to 30 June 2023 (unaudited) Year ended 31 December 2023 (audited)
£m £m £m
Amounts recognised as distribution to equity holders in the period:
In respect of previous period
Ordinary final dividend of 13.9p per share (2022: 13.4p) 21.2 18.2 18.2
Supplemental interim dividend of 2.0p per share (2022: 15.6p) 0.3 21.2 21.2
In respect of current period
Interim dividend of £nil per share (2023: 6.9p) - - 9.4
21.5 39.4 48.8
Proposed interim dividend for the six months ended 30 June 2024 £9.7m
The Board has declared an interim dividend for the six months ended 30 June
2024 of 7.1p per ordinary share (30 June 2023: 6.9p) to be paid on 30
September 2024 to shareholders on the register on 30 August 2024. The interim
dividend has not been recognised in these interim financial statements. It
will be recognised in equity in the year to 31 December 2024.
10(a). Basic and diluted earnings per share
2024 2024 2024 2023 2023 2023
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June (unaudited) £m million Pence £m million pence
Basic earnings per share 8.3 135.7 6.1 4.8 136.1 3.5
Effect of additional shares issuable under option - 7.1 (0.3) - 5.5 (0.1)
Diluted earnings per share 8.3 142.8 5.8 4.8 141.6 3.4
2023 2023 2023
Earnings Shares EPS
Year to 31 December (audited) £m million Pence
Basic earnings per share 40.8 135.9 30.0
Effect of additional shares issuable under option - 5.8 (1.2)
Diluted earnings per share 40.8 141.7 28.8
10(b). Underlying basic and diluted earnings per share
2024 2024 2024 2023 2023 2023
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June (unaudited) £m million pence £m million Pence
Basic earnings per share 8.3 135.7 6.1 4.8 136.1 3.5
- Amortisation of intangible assets arising from business combinations after 3.7 - 2.7 3.6 - 2.6
tax
- Share-based payment adjustment after tax 0.1 - 0.1 (0.5) - (0.4)
- Restructuring costs after tax 0.4 - 0.3 - - -
- Transaction-related costs after tax 8.3 - 6.1 7.1 - 5.2
- Other exceptional items after tax (1.8) - (1.3) (1.2) - (0.9)
- Effect of application of annual tax rate (2.6) - (1.9) (1.1) - (0.8)
Underlying basic earnings per share 16.4 135.7 12.1 12.7 136.1 9.2
Effect of additional shares issuable under option - 7.1 (0.6) - 5.5 (0.2)
Underlying diluted earnings per share 16.4 142.8 11.5 12.7 141.6 9.0
2023 2023 2023
Earnings Shares EPS
Year to 31 December (audited) £m Million Pence
Basic earnings per share 40.8 135.9 30.0
- Amortisation of intangible assets arising from business combinations after 7.6 - 5.6
tax
- Impairment of goodwill after tax 4.0 - 2.9
- Share-based payment adjustment after tax (0.6) - (0.4)
- Profit on disposal of joint ventures after tax (0.4) - (0.3)
- Restructuring costs after tax 10.6 - 7.8
- Transaction-related costs after tax 14.3 - 10.5
- Fair value loss on transaction-related call option after tax (1.4) - (1.0)
Underlying basic earnings per share 74.9 135.9 55.1
Effect of additional shares issuable under option - 5.8 (2.2)
Underlying diluted earnings per share 74.9 141.7 52.9
Refer to Note 7 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.
11. Cash generated from operations
Six months to 30 June 2024 (unaudited) Six months to 30 June 2023 (unaudited) Year ended 31 December 2023 (audited)
£m £m £m
Profit for the period 7.5 4.4 39.5
Adjustments for:
Income tax (Note 8) 1.4 1.6 15.9
Depreciation 35.7 34.7 69.6
Amortisation of intangible assets 7.9 7.9 15.8
Fair value gain on derivative financial instrument and FVPL investments 0.1 - (2.1)
(Gain)/loss on disposal of property, plant and equipment and intangible assets (0.2) 0.3 (4.0)
Impairment of property, plant and equipment - - 3.9
Net finance income (6.6) (3.6) (12.1)
Share of post-tax profit from joint ventures and associates (3.3) (4.8) (10.2)
Dividends from other parties - - (0.2)
Increase in employee and retirement obligations 8.1 9.8 2.5
Exchange movement and fair value movements on financial instruments in (2.0) (2.2) 0.5
operating activities
(Decrease)/increase in provisions (7.1) (3.1) 11.2
Increase in insurance reimbursement asset - - (3.4)
Charge for share-based compensation 16.1 16.0 28.8
Operating cash flows before movements in working capital 57.6 61.0 155.7
Decrease/(increase) in trade and other receivables and contract assets 85.0 33.0 (45.5)
Decrease in trade and other payables and contract liabilities (189.1) (260.1) (61.0)
Cash (used in)/generated from operations (46.5) (166.1) 49.2
Foreign exchange movements resulted in a £0.5m increase in current and
non-current trade and other receivables (30 June 2023: £21.5m decrease and 31
December 2023: £20.1m decrease) and a £5.2m decrease in current and
non-current trade and other payables (30 June 2023: £23.7m decrease and 31
December 2023: £21.3m decrease).
12. Analysis of liabilities arising from financing activities
Six months to 30 June 2024 At 1 January Cash flows Non-cash movements recognised in income statement Other non- cash movements Movements through business combinations and disposals Exchange movements At 30 June
(unaudited) £m £m £m £m £m £m £m
Bank loans (3.1) (75.9) - - - 0.8 (78.2)
Loan notes (150.7) 0.7 - - - - (150.0)
Transaction costs 0.8 - (0.2) - - - 0.6
Lease liabilities* (254.3) 34.3 (5.1) (13.5) - 1.2 (237.4)
Liabilities arising from financing activities (407.3) (40.9) (5.3) (13.5) - 2.0 (465.0)
At 1 January Cash flows Other non- cash movements Movements through business combinations and disposals Exchange movements At 30 June
Non-cash movements recognised in income statement
Six months to 30 June 2023
(unaudited) £m £m £m £m £m £m £m
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)
Year to 31 December 2023 At 1 January Cash flows Non-cash movements recognised in income statement Other non- cash movements Movements through business combinations and disposals Exchange movements At 31 December
(audited) £m £m £m £m £m £m £m
Bank loans (4.5) 1.0 - - - 0.4 (3.1)
Loan notes (153.8) 3.2 - - - (0.1) (150.7)
Transaction costs 1.4 - (0.6) - - - 0.8
Lease liabilities* (277.6) 63.9 (9.2) (38.4) (0.5) 7.5 (254.3)
Liabilities arising from financing activities (434.5) 68.1 (9.8) (38.4) (0.5) 7.8 (407.3)
* 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 2024: £29.2m, period to 30 June
2023: £27.5m, year to 31 December 2023: £54.7m). 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 2024: £5.1m, period to 30
June 2023: £4.5m, year to 31 December 2023: £9.2m).
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 £21.1m (30 June 2023:
£23.2m, 31 December 2023: £34.3m) which is cash pledged to banks in relation
to property management contracts and cash remittance restrictions in certain
countries. These amounts are accessible by the Group and are consolidated
within the Group's cash and cash equivalents.
13. Goodwill
Management have determined that there has been no impairment of goodwill in
the period. The US and Australia 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 2023 for key
assumptions applied. Latest full year trading expectations for these regions
remain materially consistent with management's original expectations.
14. Acquisition of subsidiaries
On 3 January 2024, the Group acquired 100% of the equity interest in Verbier
Hospitality SA, which specialises in holiday rentals in Verbier, Switzerland.
In addition, on 11 April 2024, the Group acquired Situu Limited and Situu
Management Limited, a flexible office advisory business in the UK. On 12 April
2024, the Group also acquired a further 24% equity interest in Riviera Estates
SAS, a luxury property agency in the south of France, bringing the total
shareholding to 75%.
Total acquisition consideration for these transactions is provisionally
determined at £11.5m, of which £6.3m was settled on completion. The
remainder of the acquisition consideration relates to deferred consideration
of £0.2m payable within one year of the reporting date and £5.0m relating to
the fair value of the initial 50% investment in Riviera Estates SAS (equity
accounted as an associate).
Goodwill of £9.3m has been provisionally determined. Goodwill is attributable
to the experience and expertise of key staff and strong industry reputation
and is not expected to be deductible for tax purposes.
The acquired businesses contributed revenue of £2.1m and a loss of £0.1m to
the Group for the period from acquisition to 30 June 2024. Had the
acquisitions been made at the beginning of the financial year, revenue would
have been £4.2m and the loss would have been £0.3m. 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
£m
Non-current assets: Property, plant and equipment 0.7
Intangible 1.9
assets
Current assets: Trade and other receivables 1.0
Accrued income 0.1
Cash and cash equivalents 5.5
Total assets 9.2
Current liabilities: Trade and other payables (4.6)
Contract liabilities (2.0)
Current tax payable (0.4)
Net assets acquired 2.2
Goodwill 9.3
Purchase consideration 11.5
Consideration satisfied by:
Cash paid 6.3
Fair value of associate holding, prior to acquisition 5.0
Deferred consideration < 1 year 0.2
11.5
Update to provisional fair value of prior period acquisition at 30 June 2023
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. Provisional fair values relating to this acquisition as at 30 June 2023
were finalised at 31 December 2023, with adjustments recognised as at 31
December 2023. This adjustment is considered a measurement period adjustment
in accordance with IFRS 3 and as a result the prior period comparatives have
been restated.
The changes to the Statement of Financial Position as at 30 June 2023 were an
increase of £0.4m to the value of non-current assets, an increase to
non-current liabilities of £0.3m, a decrease to current assets of £0.1m, and
an increase to current liabilities of £0.1m acquired. This resulted in an
additional £0.1m of goodwill recognised upon acquisition.
Update to provisional fair value of prior period acquisition at 31 December
2023
On 27 November 2023, the Group acquired 100% of the equity interest in Nash
Bond, a leading retail agency and lease consultancy business based in the UK.
Provisional fair values relating to this acquisition as at 31 December 2023
were finalised at 30 June 2024, with adjustments recognised as at 30 June
2024. This adjustment is considered a measurement period adjustment in
accordance with IFRS 3 and as a result the prior period comparatives have been
restated.
The changes to the Statement of Financial Position as at 31 December 2023 were
an increase of £0.1m to the value of current assets and a £0.3m decrease to
current liabilities acquired. The value of deferred consideration payable also
increased by £0.4m (impacting current liabilities), therefore there was no
change to the value of goodwill recognised upon acquisition.
15. 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 2023 and as follows:
UK Plan SFM Plan
Six months to 30 June 2024 Six months to 30 June 2023 Year ended 31 Six Six months to 30 June 2023 Year ended 31
December 2023 months to 30 June 2024 December 2023
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% 5.10% 4.50% 3.82% 4.02% 3.55%
Inflation assumption 3.10% 3.20% 3.00% 2.20% 2.20% 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 2.90% 3.00% 2.80% - - -
- accrued after 5 April 2005 2.00% 2.10% 2.00% - - -
- pension promise before 1 January 1986 - - - 2.20% 2.20% 2.20%
- pension promise after 1 January 1986 - - - 2.20% 2.20% 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 2.70% 2.80% 2.50% - - -
- accrued after 5 April 2009 2.50% 2.50% 2.50% - - -
The amounts recognised in the statement of financial position are as follows:
UK Plan 30 June 2024 30 June 2023 31 December 2023
£m £m £m
Present value of funded obligations (180.0) (179.8) (195.1)
Fair value of plan assets 185.3 182.3 194.4
Asset/(liability) recognised in the statement of financial position (included 5.3 2.5 (0.7)
in retirement benefit surplus)
SFM Plan 30 June 2024 30 June 2023 31 December 2023
£m £m £m
Present value of funded obligations (10.2) (9.9) (10.8)
Fair value of plan assets 14.1 13.2 14.0
Asset recognised in the statement of financial position (included in 3.9 3.3 3.2
retirement benefit surplus)
In June 2023, the High Court handed down a decision (Virgin Media Limited v
NTL Pension Trustees II Limited and others) which potentially has implications
for the validity of amendments made by schemes, including the UK Plan, which
were contracted-out on a salary-related basis between 6 April 1997 and the
abolition of contracting-out in 2016. The Court of Appeal upheld this decision
in July 2024. Given the timing of the Court of Appeal decision, the updated
valuation as at 30 June 2024 does not reflect the High Court ruling.
Management have commenced a review to determine the impact of the decision on
the IAS 19 liabilities of the UK Plan.
The amount recognised within the income statement in relation to the UK Plan
for the period ended 30 June 2024 is a net interest of £nil (30 June 2023:
£0.5m interest income, 31 December 2023: £1.0m interest income).
Total employee benefit obligations of £51.7m relates to holiday pay and long
service leave (30 June 2023: £50.6m, 31 December 2023: £44.0m).
16. 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 4.9% (31 December 2023: 4.0%) 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:
30 June 2024 Current More than 30 days past due More than 60 days past due More than 90 days past due More than 180 days past due Total
Expected loss rate 0.4% 0.7% 2.0% 7.2% 40.6% 4.9%
Gross carrying amount (£m) 267.9 43.6 24.5 36.3 38.9 411.2
Loss allowance provision (£m) (1.0) (0.3) (0.5) (2.6) (15.8) (20.2)
30 June 2023 Current More than 30 days past due More than 60 days past due More than 90 days past due More than 180 days past due Total
Expected loss rate 0.2% 0.2% 1.1% 4.7% 40.9% 5.2%
Gross carrying amount (£m) 264.0 40.9 28.0 34.0 46.0 412.9
Loss allowance provision (£m) (0.5) (0.1) (0.3) (1.6) (18.8) (21.3)
31 December 2023 Current More than 30 days past due More than 60 days past due More than 90 days past due More than 180 days past due Total
Expected loss rate 0.3% 0.5% 2.1% 6.4% 45.9% 4.0%
Gross carrying amount (£m) 364.5 43.6 24.3 28.2 35.1 495.7
Loss allowance provision (£m) (1.0) (0.2) (0.5) (1.8) (16.1) (19.6)
17. Borrowings
Movements in borrowings are analysed as follows:
6 months ended 30 June 2024 6 months ended 30 June 2023 12 months ended 31 December 2023
£m £m £m
Opening amount as at 1 January 157.2 159.7 159.7
Additional borrowings (including additional overdraft)* 87.6 100.9 107.2
Repayments of borrowings (7.6) (11.3) (109.9)
Amortisation of transaction costs 0.2 0.3 0.6
Foreign exchange movement (0.8) (0.5) (0.4)
Closing amount 236.6 249.1 157.2
* Period to 30 June 2024 includes a £4.8m increase in overdraft balances
(period to 30 June 2023: £2.2m increase, year to 31 December 2023: £1.5m
increase) within additional borrowings.
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Current
Bank overdrafts 9.0 5.0 4.2
Unsecured bank loans 78.2 94.2 3.0
Loan notes due within one year or on demand 30.0 0.7 0.7
Non-current
Unsecured bank loans - 0.3 0.1
Loan notes 120.0 150.0 150.0
Transaction costs (0.6) (1.1) (0.8)
236.6 249.1 157.2
The Group has the following undrawn borrowing facilities:
30 June 2024 30 June 2023 31 December 2023
£m £m £m
Floating rate - expiring within 1 year or on demand 37.2 46.3 58.8
Floating rate - expiring between 1 and 5 years 301.0 282.1 360.0
Floating rate - expiring greater than 5 years 1.6 - -
Fixed rate - expiring within 1 year or on demand 0.3 0.9 3.0
Fixed rate - expiring between 1 and 5 years - - 0.2
340.1 329.3 422.0
The Group holds a £360m multi-currency revolving credit facility ('RCF'),
which includes a £90m accordion facility, expiring in June 2026. As at 30
June 2024 £59.0m (30 June 2023: £78.0m, 31 December 2023: none) of the RCF
was drawn.
The unsecured bank loans reflect a £0.8m working capital loan in Thailand,
which is repayable on demand and denominated in Thai baht (30 June 2023:
£0.9m, 31 December 2023: £0.9m), a £1.8m working capital loan in Indonesia,
which is repayable on demand and denominated in Indonesian rupiah (30 June
2023: £1.1m, 31 December 2023: £1.4m) and £0.8m of loans in Singapore,
denominated in Singapore dollar (30 June 2023: £1.4m, 31 December 2023:
£0.8m). Of the loans in Singapore, £0.5m relates to a factoring facility
maturing within one year (30 June 2023: £0.8m, 31 December 2023: £0.3m) and
a £0.2m bridging loan expiring within one year (30 June 2023: £0.5m, 31
December 2023: £0.4m). The remaining £0.1m of loans in Singapore are bank
loans maturing within one year (30 June 2023: £0.1m, 31 December 2023:
£0.1m). The balance also includes £15.8m utilisation of a revolving credit
facility in North America for working capital purposes (30 June 2023: £13.1m,
31 December 2023: £nil).
The Group holds £150.0m of 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 2024 is £134.5m
(30 June 2023: £123.4m, 31 December 2023: £135.6m). 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.
18. 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 2024, the notional cash pooling arrangement
included cash balances of £191.8m presented in cash and cash equivalents (30
June 2023: £181.9m, 31 December 2023: £193.3m) and overdrafts of £190.7m
(30 June 2023: £180.7m, 31 December 2023: £192.3m) presented in current
liabilities. This represents as at 30 June 2024 surplus pooled credit cash
balances of £1.1m (30 June 2023: surplus pooled credit cash balances of
£1.2m, 31 December 2023: surplus pooled credit cash balances of £1.0m).
For the purpose of the statement of cash flows, cash and cash equivalents net
of overdrafts comprise the following:
30 June 2024 30 June 2023 restated* 31 December 2023 restated*
£m £m £m
Cash and cash equivalents 461.3 442.6 506.6
Overdrafts in notional pooling arrangement (190.7) (180.7) (192.3)
Bank overdrafts (see Note 17) (9.0) (5.0) (4.2)
261.6 256.9 310.1
*See note 14 for details of prior period restatements in relation to a
measurement period adjustment in accordance with IFRS 3.
19. Finance income and costs
Finance income and finance costs have increased in the period as a result of
global interest rate rises.
20. Transaction with non-controlling interest
Under IFRS 10, transactions with non-controlling interests must be accounted
for as equity transactions. During the period, the Group undertook the
following transaction with a non-controlling interest:
Effective holding disposed Total effective holding at 30 June 2024
Savills IM Holdings Ltd 4% 71%
In March 2024, Samsung Life completed on its call option to purchase a further
4% in Savills IM Holdings Limited for consideration of £11.3m, increasing
their shareholding to 29%. The carrying amount of the Savills IM Holdings
Limited group net assets on the date of disposal was £133.6m. The Group has
recognised an increase in non-controlling interest of £5.1m and a profit of
£6.2m to retained earnings in respect of this transaction..
30 June 2024
£m
Carrying amount of non-controlling interests disposed of (5.1)
Consideration paid by non-controlling interest holder 11.3
Excess of consideration received recognised in parent's equity 6.2
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 2024, there were £0.7m of loans receivable from joint ventures
(30 June 2023: £0.1m, 31 December 2023: £0.1m), £0.9m of loans receivable
from associates and £0.2m of loans payable to associates (30 June 2023:
£1.6m of loans receivable from associates and £0.2m of loans payable to
associates, 31 December 2023: £0.6m of loans receivable from 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 (http://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:
2024
Constant 2024 at
currency Constant
2024 effect currency
£m £m £m
Revenue 1,063.2 (22.6) 1,085.8
Profit before tax 8.9 (0.3) 9.2
Underlying profit before tax 21.2 (0.3) 21.5
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
2024 at Constant Currency £m £m £m £m £m £m
Revenue
United Kingdom - commercial 38.8 96.0 160.9 20.4 - 316.1
United Kingdom - residential 76.8 20.3 22.7 - - 119.8
Total United Kingdom 115.6 116.3 183.6 20.4 - 435.9
CEME 54.8 36.6 49.9 23.1 - 164.4
Asia Pacific - commercial 57.8 37.2 232.8 3.7 - 331.5
Asia Pacific - residential 8.0 - - - - 8.0
Total Asia Pacific 65.8 37.2 232.8 3.7 - 339.5
North America 133.3 12.7 - - - 146.0
Revenue 369.5 202.8 466.3 47.2 - 1,085.8
Underlying profit/(loss) before tax
United Kingdom - commercial 2.4 8.1 13.3 0.5 (1.4) 22.9
United Kingdom - residential 5.2 1.3 2.1 - - 8.6
Total United Kingdom 7.6 9.4 15.4 0.5 (1.4) 31.5
CEME (16.8) 0.8 (1.9) 3.5 - (14.4)
Asia Pacific - commercial (3.1) (2.0) 10.0 0.4 - 5.3
Asia Pacific - residential (0.6) - - - - (0.6)
Total Asia Pacific (3.7) (2.0) 10.0 0.4 - 4.7
North America (0.5) 0.2 - - - (0.3)
Underlying profit/(loss) before tax (13.4) 8.4 23.5 4.4 (1.4) 21.5
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
2024 - Constant Currency Effect £m £m £m £m £m £m
Revenue
United Kingdom - commercial - - - - - -
United Kingdom - residential - - - - - -
Total United Kingdom - - - - - -
CEME (2.8) (0.5) (2.0) (0.5) - (5.8)
Asia Pacific - commercial (3.8) (1.5) (7.4) (0.3) - (13.0)
Asia Pacific - residential (0.3) - - - - (0.3)
Total Asia Pacific (4.1) (1.5) (7.4) (0.3) - (13.3)
North America (3.2) (0.3) - - - (3.5)
Revenue (10.1) (2.3) (9.4) (0.8) - (22.6)
Underlying profit/(loss) before tax
United Kingdom - commercial - - - - - -
United Kingdom - residential - - - - - -
Total United Kingdom - - - - - -
CEME 0.1 - - (0.1) - -
Asia Pacific - commercial (0.1) 0.1 (0.3) - - (0.3)
Asia Pacific - residential - - - - - -
Total Asia Pacific (0.1) 0.1 (0.3) - - (0.3)
North America - - - - - -
Underlying profit/(loss) before tax - 0.1 (0.3) (0.1) - (0.3)
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