REG - Savills PLC - Half Yearly Report <Origin Href="QuoteRef">SVS.L</Origin> - Part 2
06/08/2015 07:03
- Part 2: For the preceding part double click ID:nRSF2427Va
available-for-sale investments released to income statement - - - 0.3 - 0.3 - 0.3
Tax on items directly taken to reserves - - - - 4.7 4.7 - 4.7
Currency translation differences - - - 6.1 - 6.1 - 6.1
Total comprehensive income for the year - - - 6.7 50.9 57.6 0.6 58.2
Transactions with owners:
Employee share option scheme:
- Value of services provided - - - - 10.5 10.5 - 10.5
Purchase of treasury shares - - - - (12.1) (12.1) - (12.1)
Share-based payment settlement - - - - (3.6) (3.6) - (3.6)
Shares to be issued - - 34.9 - - 34.9 - 34.9
Disposal of available-for-sale investments (net of tax) - - - (1.3) - (1.3) - (1.3)
Dividends - - - - (24.9) (24.9) (0.3) (25.2)
Transactions with non-controlling interests - - - - (1.6) (1.6) (0.3) (1.9)
Balance at 31 December 2014 3.4 90.1 34.9 22.5 178.6 329.5 0.8 330.3
Notes 1 to 18 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 2015
Six months to 30 June 2015 (unaudited) Six months to 30 June 2014 (unaudited) Year ended 31 December 2014 (audited)
Notes £m £m £m
Cash flows from operating activities
Cash (used in)/generated from operations 11 (47.1) (43.1) 113.6
Interest received 0.7 0.7 1.6
Interest paid (0.4) (0.3) (2.0)
Income tax paid (11.3) (8.5) (17.1)
Net cash (used in)/generated from operating activities (58.1) (51.2) 96.1
Cash flows from investing activities
Proceeds from sale of property, plant and equipment - - 0.1
Proceeds from sale of available-for-sale investments - 2.8 4.0
Proceeds from sale of assets held for sale - - 8.5
Deferred consideration received in relation to prior year disposals - 1.4 1.4
Dividends received from joint ventures and associates 2.2 2.0 5.4
Repayment of loans by joint ventures and associates - 0.2 0.8
Acquisition of subsidiaries, net of cash acquired 13 (26.0) (19.8) (18.1)
Deferred consideration paid in relation to prior year acquisitions (39.2) - -
Purchase of property, plant and equipment (9.4) (4.1) (12.7)
Purchase of intangible assets (0.7) (0.6) (1.5)
Purchase of investment in joint ventures, associates and available-for-sale investments (5.2) (0.6) (2.5)
Net cash used in investing activities (78.3) (18.7) (14.6)
Cash flows from financing activities
Proceeds from issue of share capital 0.9 - -
Proceeds from borrowings 15 139.0 99.0 99.9
Share-based payment settlement - (3.7) (3.6)
Purchase of own shares for Employee Benefit Trust (14.8) (10.2) (12.1)
Purchase of non-controlling interests 12 (0.7) (1.4) (1.9)
Repayments of borrowings 15 (22.6) (24.7) (105.8)
Dividends paid 9 (25.0) (20.0) (25.2)
Net cash received from/(used in) financing activities 76.8 39.0 (48.7)
Net (decrease)/increase in cash and cash equivalents (59.6) (30.9) 32.8
Cash and cash equivalents at beginning of period 158.1 122.2 122.2
Effect of exchange rate fluctuations on cash held (2.5) (4.7) 3.1
Cash and cash equivalents at end of period 96.0 86.6 158.1
Notes 1 to 18 are an integral part of these condensed interim financial
statements.
NOTES
1. General information
The Company is a public limited company incorporated and domiciled in England
and Wales. The address of its registered office is 33 Margaret Street, London
W1G 0JD.
This condensed consolidated interim financial information was approved for
issue by the Board of Directors on 5 August 2015.
This condensed consolidated interim financial information does not comprise
statutory financial statements within the meaning of section 434 of the
Companies Act 2006. Statutory financial statements for the year ended 31
December 2014 were approved by the Board of Directors on 18 March 2015 and
delivered to the Registrar of Companies. The auditors' report on these
accounts was unqualified, did not contain an emphasis of matter paragraph and
did not contain a statement under section 498 of the Companies Act 2006.
This condensed consolidated interim financial information has been reviewed,
not audited.
2. Basis of preparation
This condensed consolidated interim financial information for the half-year
ended 30 June 2015 has been prepared in accordance with the Disclosure and
Transparency Rules of the Financial Conduct Authority and with IAS 34,
'Interim financial reporting' as adopted by the European Union. The condensed
consolidated interim financial information should be read in conjunction with
the annual financial statements for the year ended 31 December 2014, which
have been prepared in accordance with IFRSs as adopted by the European Union.
Going concern
The Group's forecasts and projections, taking account of reasonably possible
changes in trading performance, show that the Group should be able to operate
within the level of its agreed facilities. Having reassessed the principal
risks, the Directors considered it appropriate to adopt the going concern
basis of accounting in preparing the interim financial information.
3. Accounting policies
Except as described below, the accounting policies applied are consistent with
those of the annual financial statements for the year ended 31 December 2014,
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.
Standards, amendments and interpretations effective for the first time for the
financial year beginning 1 January 2015 are not relevant to the Group.
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. They are used by Savills 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 term 'underlying' refers to the relevant measure of profit, earnings or
taxation being reported excluding the following items:
- amortisation of acquired intangible assets (excluding software);
- the difference between IFRS 2 charges related to in year profit related
performance compensation
subject to deferral and the opportunity cash cost of such compensation (refer
to Note 7 for further
explanation);
- items that are considered non-operational in nature including
restructuring costs, impairments of
goodwill, intangible assets and investments and profits or losses arising on
disposals of
subsidiaries and other investments; and
- significant acquisition costs related to business combinations.
A reconciliation between GAAP items and underlying results are set out in Note
7.
The underlying effective tax rate represents the underlying effective income
tax expense expressed as a percentage of underlying profit before tax. The
underlying effective 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.
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 2014,
with the exception of changes in estimates that are required in determining
the provision for income taxes.
5. Financial risk management
Financial risk factors
The Group's activities expose it to a variety of financial risks including
foreign exchange risk, interest rate risk, credit risk and liquidity risk. The
condensed interim financial statements do not include all financial risk
management information and disclosures as required in the annual financial
statements; they should be read in conjunction with the Group's annual
financial statements as at 31 December 2014. There have been no changes in any
risk management policies since the year end.
Fair value estimation
The table below analyses financial instruments carried at fair value, by
valuation method. The different levels have been defined as follows:
- Quoted prices (unadjusted) in active markets for identical assets and
liabilities (Level 1).
- Inputs other than quoted prices included within Level 1 that are
observable for the asset or liability,
either directly (that is, as prices) or indirectly (that is, derived from
prices) (Level 2).
- Inputs for the asset or liability that are not based on observable market
data (that is, unobservable
inputs) (Level 3).
The following table presents the Group's assets, liabilities and equity items
that are measured at fair value at 30 June 2015:
£m Level 1 Level 2 Level 3 Total
2015
Assets
Available-for-sale investments
- Unlisted - 12.0 - 12.0
Total assets - 12.0 - 12.0
Equity
Shares to be issued - 22.9 - 22.9
Total equity - 22.9 - 22.9
The following table presents the Group's assets, liabilities and equity items
that are measured at fair value at 31 December 2014:
£m Level 1 Level 2 Level 3 Total
2014
Assets
Available-for-sale investments
- Unlisted - 11.7 - 11.7
Total assets - 11.7 - 11.7
Equity
Shares to be issued - 34.9 - 34.9
Total equity - 34.9 - 34.9
There were no transfers between levels of the fair value hierarchy in the
period.
There were no changes in valuation techniques during the period.
The fair value of all other financial assets and liabilities approximate their
carrying amount.
Valuation techniques used to derive Level 2 fair values
The fair value of investment funds is based on underlying asset values
determined by the Fund Manager's audited annual financial statements. The fair
value of other unlisted investments is based on price earnings models.
Shares to be issued were fair valued using the Actuarial Binomial model of
actuaries Lane Clark & Peacock LLP.
6. Segment analysis
Six months to 30 June 2015 Trans-action Advisory Consult-ancy Property and Facilities Manage-ment Invest-ment Manage-ment Other Total
(unaudited) £m £m £m £m £m £m
Revenue
United Kingdom
- commercial 41.9 56.0 42.8 14.0 - 154.7
- residential 51.8 18.6 11.6 - - 82.0
Total United Kingdom 93.7 74.6 54.4 14.0 - 236.7
Continental Europe 19.0 6.8 12.9 - - 38.7
Asia Pacific
- commercial 46.1 15.0 111.1 - - 172.2
- residential 12.7 - - - - 12.7
Total Asia Pacific 58.8 15.0 111.1 - - 184.9
United States 86.7 - - - - 86.7
Total revenue 258.2 96.4 178.4 14.0 - 547.0
Underlying profit/(loss) before tax
United Kingdom
- commercial 5.9 4.0 3.1 2.5 (3.9) 11.6
- residential 5.4 2.1 0.2 - - 7.7
Total United Kingdom 11.3 6.1 3.3 2.5 (3.9) 19.3
Continental Europe (0.1) 0.7 (1.8) - - (1.2)
Asia Pacific
- commercial 4.5 1.0 6.2 - - 11.7
- residential 1.1 - - - - 1.1
Total Asia Pacific 5.6 1.0 6.2 - - 12.8
United States 7.5 - - - - 7.5
Underlying profit/(loss) before tax 24.3 7.8 7.7 2.5 (3.9) 38.4
Six months to 30 June 2014 Trans-action Advisory Consult-ancy Property and Facilities Manage-ment Invest-ment Manage-ment Other Total
(unaudited) £m £m £m £m £m £m
Revenue
United Kingdom
- commercial 30.3 54.2 36.5 12.7 - 133.7
- residential 59.6 17.6 11.4 - - 88.6
Total United Kingdom 89.9 71.8 47.9 12.7 - 222.3
Continental Europe 20.5 7.3 11.5 - - 39.3
Asia Pacific
- commercial 35.7 14.4 99.1 - - 149.2
- residential 8.9 - - - - 8.9
Total Asia Pacific 44.6 14.4 99.1 - - 158.1
United States 11.1 - - - - 11.1
Total revenue 166.1 93.5 158.5 12.7 - 430.8
Underlying profit/(loss) before tax
United Kingdom
- commercial 2.5 4.3 2.8 1.6 (3.8) 7.4
- residential 8.4 2.0 0.8 - - 11.2
Total United Kingdom 10.9 6.3 3.6 1.6 (3.8) 18.6
Continental Europe 1.1 0.7 (1.7) - - 0.1
Asia Pacific
- commercial 3.5 1.4 5.7 - - 10.6
- residential 1.5 - - - - 1.5
Total Asia Pacific 5.0 1.4 5.7 - - 12.1
United States (0.7) - - - - (0.7)
Underlying profit/(loss) before tax 16.3 8.4 7.6 1.6 (3.8) 30.1
Year ended to 31 December 2014 Trans-action Advisory Consult-ancy Property and Facilities Manage-ment Invest-ment Manage-ment Other Total
(audited) £m £m £m £m £m £m
Revenue
United Kingdom
- commercial 84.1 126.9 79.8 28.0 - 318.8
- residential 129.2 41.3 25.1 - - 195.6
Total United Kingdom 213.3 168.2 104.9 28.0 - 514.4
Continental Europe 51.1 18.8 26.6 - - 96.5
Asia Pacific
- commercial 96.3 30.0 207.1 - - 333.4
- residential 21.6 - - - - 21.6
Total Asia Pacific 117.9 30.0 207.1 - - 355.0
United States 112.3 - - - - 112.3
Total revenue 494.6 217.0 338.6 28.0 - 1,078.2
Underlying profit/(loss) before tax
United Kingdom
- commercial 14.0 13.1 7.3 4.4 (13.7) 25.1
- residential 19.7 6.3 2.2 - - 28.2
Total United Kingdom 33.7 19.4 9.5 4.4 (13.7) 53.3
Continental Europe 1.3 1.4 (2.6) - - 0.1
Asia Pacific
- commercial 16.7 2.6 11.7 - - 31.0
- residential 3.7 - - - - 3.7
Total Asia Pacific 20.4 2.6 11.7 - - 34.7
United States 12.4 - - - - 12.4
Underlying profit/(loss) before tax 67.8 23.4 18.6 4.4 (13.7) 100.5
Operating segments reflect internal management reporting to the Group's chief
operating decision maker, defined as the Group Executive Board ('GEB'). The
GEB assess the performance of operating segments based on a measure of
underlying profit before tax which adjusts reported pre-tax profit by
amortisation of intangibles (excluding software), share-based payment
adjustments, exceptional items that are considered non-operational in nature
and significant acquisition costs related to business combinations. Segmental
assets and liabilities are not measured or reported to the GEB.
The Other segment includes costs and other expenses at holding company and
subsidiary levels, which are not directly attributable to the operating
activities of the Group's business segments.
A reconciliation of underlying profit before tax to reported profit before tax
is provided in Note 7.
7. Underlying profit before tax
The Directors seek to present a measure of underlying performance which is not
impacted by exceptional items or items considered non-operational in nature.
This measure of profit is described as 'underlying' and is used by management
to measure and monitor performance.
Six months to 30 June 2015 (unaudited) Six months to 30 June 2014 (unaudited) Year ended 31 December 2014 (audited)
£m £m £m
Reported profit before tax 26.4 24.7 84.7
Adjustments:
- Amortisation of intangible assets (excluding software) 1.5 1.1 2.6
- Impairment of available-for-sale investment - - 0.6
- Share-based payment adjustment (0.6) (0.4) (2.9)
- Profit on disposal of available-for-sale investment - (2.2) (2.0)
- Restructuring costs 0.5 0.5 0.9
- Acquisition related costs 10.6 6.4 16.6
Underlying profit before tax 38.4 30.1 100.5
The adjustment for share-based payment relates to the impact of the accounting
standard for share-based compensation. The annual bonus is paid in a mixture
of cash and deferred shares and the proportions can vary from one year to
another. Under IFRS the deferred share element is amortised to the income
statement over the vesting period whilst the cash element is expensed in the
year. The adjustment above addresses this by deducting from profit the
difference between the IFRS 2 charge and the effective value of the annual
share award in order better to match the underlying staff costs in the year
with the revenue recognised in the same period.
Acquisition related costs include £9.7m of provisions for future payments in
relation to acquisitions in the US and the UK, £9.2m of which relates to the
Studley, Inc. acquisition in May 2014. These are expensed through the income
statement to reflect the requirement for the recipients to remain actively
engaged in the business at the payment date. The remaining £0.9m relates to
transaction costs on acquisitions during the year.
8. Income tax expense
The income tax expense has been calculated on the basis of the underlying rate
in each jurisdiction adjusted for any disallowable charges.
Six months to 30 June 2015 (unaudited) Six months to 30 June 2014 (unaudited) Year ended 31 December 2014 (audited)
£m £m £m
United Kingdom
- Current tax 4.2 5.3 14.8
- Deferred tax (0.9) (1.2) (1.4)
Foreign tax
- Current tax 4.3 8.3 12.2
- Deferred tax 2.7 (6.3) (3.6)
Income tax expense 10.3 6.1 22.0
The Group effective tax rate is 39.0% (30 June 2014: 24.7% and 31 December
2014: 26.0%), which is higher (30 June 2014 and 31 December 2014: higher) than
the UK standard effective annual rate of corporation tax of 20.25% (30 June
2014 and 31 December 2014: 21.5%). This reflects permanent disallowable
expenses, including acquisition costs. The Group underlying effective tax rate
was 28.6% (30 June 2014: 24.9% and 31 December 2014: 26.6%).
9. Dividends
Six months to 30 June 2015 (unaudited) Six months to 30 June 2014 (unaudited) Year ended 31 December 2014 (audited)
£m £m £m
Amounts recognised as distribution to equity holders in the year:
Ordinary final dividend of 7.25p per share (2014: 7.0p) 9.4 9.0 9.0
Supplemental interim dividend of 12.0p per share (2014: 8.5p) 15.6 11.0 11.0
Interim dividend of 3.75p per share - - 4.9
25.0 20.0 24.9
Proposed interim dividend for the six months ended 30 June 2015 5.3 4.9
The Board has declared an interim dividend for the six months ended 30 June
2015 of 4.0p per ordinary share (30 June 2014: 3.75p) to be paid on 12 October
2015 to shareholders on the register on 11 September 2015. The interim
dividend has not been recognised in these interim financial statements. It
will be recognised in equity in the year to 31 December 2015.
10(a). Basic and diluted earnings per share
2015 2015 2015 2014 2014 2014
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June £m million pence £m million pence
Basic earnings per share 15.9 136.2 11.7 18.4 130.1 14.1
Effect of additional shares issuable under option - 3.0 (0.3) - 4.7 (0.5)
Diluted earnings per share 15.9 139.2 11.4 18.4 134.8 13.6
2014 2014 2014
Earnings Shares EPS
Year to 31 December £m million pence
Basic earnings per share 62.1 132.7 46.8
Effect of additional shares issuable under option - 4.4 (1.5)
Diluted earnings per share 62.1 137.1 45.3
10(b). Underlying basic and diluted earnings per share
2015 2015 2015 2014 2014 2014
Earnings Shares EPS Earnings Shares EPS
Six months to 30 June £m million pence £m million pence
Basic earnings per share 15.9 136.2 11.7 18.4 130.1 14.1
- Amortisation of intangible assets (excluding software) after tax 0.8 - 0.6 0.8 - 0.6
- Share-based payment adjustment after tax (0.5) - (0.4) (0.3) - (0.2)
- Restructuring costs after tax 0.5 - 0.4 0.5 - 0.4
- Profit on disposal of available-for-sale investments after tax - - - (1.7) - (1.3)
- Acquisition related costs after tax 10.5 - 7.7 6.4 - 4.9
- Net tax effect following acquisition - - - (1.7) - (1.3)
Underlying basic earnings per share 27.2 136.2 20.0 22.4 130.1 17.2
Effect of additional shares issuable under option - 3.0 (0.5) - 4.7 (0.6)
Underlying diluted earnings per share 27.2 139.2 19.5 22.4 134.8 16.6
2014 2014 2014
Earnings Shares EPS
Year to 31 December £m million pence
Basic earnings per share 62.1 132.7 46.8
- Amortisation of intangibles (excluding software) after tax 1.5 - 1.1
-Impairment of available-for-sale investment after tax 0.6 - 0.5
- Share-based payment adjustment after tax (2.2) - (1.7)
- Restructuring costs after tax 0.9 - 0.7
- Profit on disposal of available-for-sale investment after tax (2.0) - (1.5)
- Acquisition related costs after tax 16.7 - 12.6
- Net tax effect following acquisition (4.4) - (3.3)
Underlying basic earnings per share 73.2 132.7 55.2
Effect of additional shares issuable under option - 4.4 (1.8)
Underlying diluted earnings per share 73.2 137.1 53.4
11. Cash (used in)/generated from operations
Six months to 30 June 2015 (unaudited) Six months to 30 June 2014 (unaudited) Year ended 31 December 2014 (audited)
£m £m £m
Profit for the period 16.1 18.6 62.7
Adjustments for:
Income tax (Note 8) 10.3 6.1 22.0
Depreciation 4.8 4.0 8.4
Amortisation of intangible assets 2.4 2.1 4.6
Loss on sale of property, plant and equipment 0.1 - 0.2
Profit on disposal of available-for-sale investments - (2.2) (2.0)
Net finance cost/(income) 0.1 (0.2) 0.8
Share of post-tax profit from joint ventures and associates (2.4) (2.9) (7.0)
Decrease in employee and retirement obligations (2.1) (5.5) (7.4)
Exchange movements on operating activities (1.1) 1.4 0.5
(Decrease)/increase in provisions (2.3) (1.7) -
Impairment of available-for-sale investment included within other operating expenses - - 0.6
Charge for share-based compensation 5.4 5.3 10.5
Operating cash flows before movements in working capital 31.3 25.0 93.9
(Increase)/decrease in work in progress (0.5) (1.3) 0.1
Decrease/(increase) in trade and other receivables 29.8 13.5 (44.1)
(Decrease)/increase in trade and other payables (107.7) (80.3) 63.7
Cash (used in)/generated from operations (47.1) (43.1) 113.6
12. Transactions with non-controlling interests
In April 2015, the Group acquired an additional 30% of the shares in its
Swedish facilities management business, Loudden Bygg-och Fastighetsservice AB
('Loudden'), for consideration of £0.7m. This takes the Group's shareholding
to 100%. The carrying amount of Loudden's net assets on the date of
acquisition was £0.4m. The Group recognised a decrease in non-controlling
interest of £0.2m. The amount charged to retained earnings in respect of the
transaction was £0.6m.
13. Acquisition of subsidiaries
Smiths Gore
On 31 May 2015 the Group acquired the trade and assets of partners of Smiths
Gore ('Smiths Gore'), a market leader in the provision of rural property
management services for private clients, institutions and the public sector
throughout the United Kingdom. The acquisition will complement the Group's
existing rural business in the United Kingdom, providing a more balanced
business with an enhanced focus on management services and expanding the
geographical reach of the rural business in the United Kingdom.
Total acquisition consideration is provisionally determined at £34.2m, of
which £16.0m was settled in cash on completion. The remainder of the
acquisition consideration relates to discounted deferred consideration of
£18.2m, £3.3m of which is payable within one year of the reporting date,
£12.2m payable on the 3rd anniversary of completion and £2.7m payable on the
5th anniversary of completion. The deferred payments payable on the 3rd and
5th anniversary of completion are contingent and subject to achievement of
certain performance targets, as at the reporting date it is expected that
these targets will be achieved.
Further to this, up to £4.2m is also payable to certain key staff, salaried
partners and fixed share partners by the 3rd anniversary of completion subject
to them being actively engaged in the business at the time of payment. As
required by IFRS 3 (revised) these payments are expensed to the income
statement over the relevant period of active engagement (H1 2015: £0.3m).
Transaction costs of £0.5m were also expensed as incurred to the income
statement.
Goodwill of £19.2m and intangible assets of £7.0m relating to client
relationships have been provisionally determined. Goodwill is attributed to
the experience, reputation and expertise of the fee earners and is not
expected to be deductible for tax purposes.
The acquired business contributed revenue of £2.5m and underlying operating
profit of £0.2m to the Group for the period from 1 June 2015 to 30 June 2015.
Had the acquisition been made at the beginning of the financial year, revenue
would have been £15.6m and underlying operating profit would have been £0.7m.
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:
Provisionalfair value tothe Group
£m
Property, plant and equipment 0.8
Intangible assets 7.0
Current assets: Work in progress 2.2
Trade and other receivables 7.8
Total assets 17.8
Current liabilities: Trade and other payables 2.3
Provisions for other liabilities and charges 0.5
Net assets acquired 15.0
Goodwill 19.2
Purchase consideration 34.2
Consideration satisfied by:
Net cash paid 16.0
Deferred consideration owing at the reporting date 18.2
34.2
US acquisitions
In April 2015, the Group acquired 100% of the assets of the Cooper Brady
Partnership, a leading commercial real estate services firm specialising in
tenant representation in the Silicon Valley, California. The Group also
acquired 100% of the equity of Vertical Integration, Inc. and KLG Advisors
(Kelly Legan & Gerard, Inc.). Vertical Integration, Inc. provides
full-service real estate solutions for corporate and government entities and
KLG Advisors provides corporate real estate advisory services. These
acquisitions significantly strengthen the Group's Occupier Services offerings
in the US.
Total acquisition consideration for these transactions is provisionally
determined at £14.0m. Cash consideration payable on completion of these
transactions amounted to £9.5m. Deferred consideration of up to £4.5m is
payable in instalments by the 3rd anniversary of completion, of which £0.8m is
subject to achievement of certain revenue targets. As at the reporting date it
is expected that these targets will be achieved.
Further to this, £2.7m is payable in instalments by the 4th anniversary of
completion and is subject to certain employment conditions. As required by
IFRS 3 (revised) these payments are expensed to the income statement over the
relevant period of employment (H1 2015: £0.2m).
Goodwill of £10.6m and intangible assets of £2.1m relating to the order
backlog (£0.9m) and client contracts (£1.2m) has been provisionally
determined. Goodwill is attributable to the experience, reputation and
expertise of key staff and is not expected to be deductible for tax purposes.
The acquired businesses contributed revenue of £2.4m and underlying operating
profit of £0.4m to the Group for the period from April 2015 to 30 June 2015.
Had the acquisitions been made at the beginning of the financial year, revenue
would have been £4.8m and underlying operating profit would have been £0.6m.
Other acquisitions
During the period, the Group also acquired 100% of Colliers & Madge plc, a
London based commercial property management business, and ProDirections, a
project management consultancy in New Zealand. Cash consideration for these
transactions amounted to £1.3m. A further £0.9m is subject to service
conditions and will be expensed to the income statement over the period of
service. Goodwill of £0.8m and intangible assets of £0.3m relating to customer
contracts have been provisionally determined. Goodwill is attributable to the
experience and expertise of key staff and strong industry reputation.
14. Retirement and employee benefit obligations
Defined benefit plan
The Pension Plan of Savills (the 'Plan') 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 Plan are provided through the Group's
defined contribution Personal Pension Plan.
Significant actuarial pension assumptions are detailed in the Group's Annual
Report and Accounts 2014 and are the same as at 31 December 2014 except for
the following:
Six months to 30 June 2015 Six months to 30 June 2014 Year ended 31 December 2014
Expected rate of salary increases 3.85% 3.85% 3.85%
Discount rate 3.80% 4.20% 3.60%
Inflation assumption 3.40% 3.30% 3.20%
Rate of increase to pensions in payment
- accrued before 6 April 1997 3.00% 3.00% 3.00%
- accrued after 5 April 1997 3.30% 3.30% 3.10%
- accrued after 5 April 2005 2.30% 2.40% 2.10%
Rate of increase to pensions in deferment
- accrued before 6 April 2001 5.00% 5.00% 5.00%
- accrued after 5 April 2001 2.30% 2.30% 2.10%
- accrued after 5 April 2009 2.30% 2.30% 2.10%
The amounts recognised in the statement of financial position are as follows:
30 June 2015£m 30 June 2014£m 31 December 2014£m
Present value of funded obligations 222.3 200.2 225.9
Fair value of plan assets (213.7) (188.8) (206.5)
Liability recognised in the statement of financial position (included in retirement and employee benefit obligations) 8.6 11.4 19.4
The amount recognised within the income statement for the period ended 30 June
2015 is a net interest cost of £0.3m (30 June 2014: £0.2m, 31 December 2014:
£0.3m).
Included in retirement and employee benefit obligations is £18.1m relating to
holiday pay and long service leave (30 June 2014: £14.5m, 31 December 2014:
£16.4m).
15. Borrowings
Movements in borrowings are analysed as follows:
£m
Opening amount as at 1 January 2015 3.9
Additional borrowings 139.0
Repayments of borrowings (22.6)
Closing amount as at 30 June 2015 120.3
30 June 2015 30 June 2014 31 December 2014
Current £m
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