Final Results
Savills PLC
04 March 2003
FOR IMMEDIATE RELEASE
TUESDAY 4 MARCH 2003
STRONG OPERATING PROFIT GROWTH FROM SAVILLS
Savills plc, the international property adviser, today announced results for the
year ended 31 December 2002.
• Turnover up 20% to £282.3m (2001 - £235.4m)
• Group operating profit up 60% to £29.2m (2001 - £18.2m)
• Pre-tax profit before permanent diminution in value of investment
property £24.7m (2001 - £21.6m)
• Operating cash flow increased to £46.3m (2001 - £26.0m)
• Basic earnings per share 15.1p (2001 - 24.2p) and adjusted basic
earnings per share before permanent diminution in value of investment
property 22.8p (2001 - 24.2p)
• Final dividend of 6.8p per share making a total for the year of 10.2p,
representing a 5% increase over the dividend of 9.75p for the year to 31
December 2001
Richard Jewson, Chairman of Savills plc, commented:
'I am delighted to report a strong set of results reflecting an outstanding
operating performance in our core businesses. Once again, the Group's success
is due to our talented and hard working staff, particularly bearing in mind the
continued widespread concerns about property transactional markets in the UK and
overseas and general levels of corporate profitability.
'The demand for professional services is high and our strong property management
business underpins revenues, particularly in Asia. With a lean and flexible
cost base, together with highly skilled and motivated staff and a strong balance
sheet, the Board remains confident that we are well placed to respond to changes
in the market in 2003.'
***Chairman's Statement and Review of Operations
Preliminary Announcement of Results to Follow***
Savills plc. Registered in England No. 2122174. Registered Office 20 Grosvenor
Hill, Berkeley Square, London W1K 3HQ
For further information, contact:
Savills 020 7499 8644
Richard Jewson, Chairman
Aubrey Adams, Group Chief Executive
Robert McKellar, Finance Director
Grandfield 020 7417 4170
Harry Hunt
Gareth Penn
CHAIRMAN'S STATEMENT
RESULTS
I am delighted to report a strong set of results reflecting an outstanding
operating performance in our core businesses. Once again, the Group's success is
due to our talented and hard working staff, particularly bearing in mind the
continued widespread concerns about property transactional markets in the UK and
overseas and general levels of corporate profitability.
Against this background Savills has performed outstandingly well and I am
pleased to announce turnover increased by 20% to £282.3m (2001 - £235.4m).
Group operating profit of £29.2m (2001 - £18.2m). Group operating profit
margins were 10% (2001 - 8%). Pre-tax profit was £24.7m before permanent
diminution in value of our investment in The Mill Discount Department Store
(2001 - £21.6m).
Adjusted basic earnings per share before permanent diminution were 22.8p (2001 -
24.2p). Basic earnings per share reduced to 15.1p (2001 - 24.2p), this was
largely due to: an increased tax charge as a result of disallowable losses on
the permanent diminution of investment property; and the substantial write-down
of goodwill in respect of our facility management joint venture Trammell Crow
Savills.
Shareholders' funds increased to £88.5m (2001 - £87.1m). Cash balances
increased to £53.4m (2001 - £40.3m).
DIVIDEND
The Board is recommending a final dividend of 6.8p to those shareholders on the
register on 11 April 2003, payable on 14 May 2003, making a total for the year
of 10.2p (2001 - 9.75p), which represents a 5% increase. This increase is in
line with our progressive dividend policy and reflects long-term confidence in
the business.
HIGHLIGHTS
The Group continues to expand within the UK and overseas to increase the range
of services and its geographical spread by the acquisition of quality staff as
opportunities have arisen. This expansion has made a major contribution to the
outstanding performance of the UK commercial businesses which increased profit
before interest and tax by 42% to £11.5m (2001 - £8.1m).
In the UK, our commercial investment teams were a major beneficiary of strong
market conditions as investors recognised that property has now significantly
outperformed gilts and equities over a range of time periods and that it
provides an excellent diversification to their portfolios.
After the caution in the residential markets in late 2001 following 11
September, the start of 2002 saw a strong return to the residential agency
markets, which continued throughout the year. This was particularly evident for
new build properties, where the market saw high demand.
In mainland Europe, we have expanded our market presence by opening new offices
in Barcelona, Milan and Rome. We have also agreed the purchase of the minority
shareholding in our existing European subsidiaries.
The Asian business continues to expand its market position and Hong Kong's core
agency business division was a market leader. Despite keen competition and a
tough operating environment, FPDSavills Guardian and FPDSavills Property
Management businesses were able to achieve their annual targets. The property
management business in China continued to strengthen and to take advantage of
growth potential in the region. Similarly, Australia has benefited from strong
export growth and the economy has performed favourably, attracting foreign
investment.
We continue to work closely with our strategic partner in the US, Trammell Crow
Company. Following the frustration of failing to secure two potentially very
large outsourcing contracts with German companies, resulting in a substantial
write-off in goodwill and pursuit costs, our joint venture company, Trammell
Crow Savills, is concentrating on smaller outsourcing projects.
The Group's principal property trading subsidiary, Grosvenor Hill Ventures,
continues to make selective investments in out of town retail sectors and to
promote a strategy for joint venture investment. The Mill Discount Department
Store is continuing to increase footfall and revenues. However, the Group's
strategy is to move away from direct management of property assets. A provision
of £4.3m has been made against the investment property in the Accounts for the
year to 31 December 2002.
At the Annual General Meeting (AGM) held on 30 April 2002 shareholders gave
authority for a limited purchase of Savills shares for cancellation of up to 5%
of the issued share capital. As announced on 30 December 2002, the Company
undertook an irrevocable, non-discretionary programme to re-purchase its own
shares during the close period. During this period we bought 350,000 shares for
cancellation under this programme. The Company intends to make further
purchases of shares under this authority in the open period up to the AGM to be
held on 7 May 2003.
BOARD
Fields Wicker-Miurin and Timothy Ingram were appointed as Non-Executive
Directors with effect from 27 June 2002. We welcome the experience they bring
and the contribution they make to our discussions. As announced in June 2002,
after six years on the Board, David Craig resigned as a Non-Executive Director
on 30 June 2002 and we thank him for his valuable contribution to the Company.
On 28 August 2002, Derek McClain replaced E Stevenson Belcher as one of the
Directors nominated to the Board under the terms of our strategic alliance with
Trammell Crow Company.
OUTLOOK
Commercial investment markets in London are showing signs of slowing, partly as
a result of continuing weakness in the corporate letting market. Levels of
activity in the residential markets have reduced, especially in London, as
purchasers remain cautious as a result of depressed financial markets and the
risk of international instability. However, the demand for professional
services is high and our strong property management business underpins revenues,
particularly in Asia.
With a lean and flexible cost base, together with highly skilled and motivated
staff and a strong balance sheet, the Board remains confident that we are well
placed to respond to changes in the market in 2003.
Richard Jewson, Chairman
Group Chief Executive's
Review of Operations
2002 was an excellent year for Savills at a time when property markets were
mixed. There was continuing strong demand for high quality investments although
occupational markets remained weak throughout the year as many major corporates
in the financial and technology sectors downsized their space requirements.
Demand for professional services was generally strong throughout all sectors of
our business. Against this background, our European commercial business
reported record turnover of £12.1m and pre-tax profit of £3.6m. Residential
Agency performed well throughout the year after a very strong start but a
noticeable slackening of demand towards the end of 2002 has continued. These
results also reflect a permanent diminution in the value of The Mill Discount
Department Store of £4.3m and write-offs in respect of goodwill and business
pursuit costs for our facility management joint venture, Trammell Crow Savills.
We continue to develop our business by recruiting staff and, in Europe, average
staff numbers were up 4%. We are also always looking for areas to expand the
scope of our business by offering new services and opening new offices.
We continue to work closely with our strategic partner in the US, Trammell Crow
Company, to develop our mutual international business.
Transactional Advice
The Transactional Advice business stream comprises commercial, residential,
agricultural agency and investment advice on purchases and sales. During the
year turnover was £124.1m (2001 - £103.3m), representing 44% of our total
turnover, generating profit before interest and tax of £20.0m (2001 - £12.2m).
Commercial Agency
The West End office Leasing and Development team performed strongly in a
challenging market which saw activity down 20% on 2001 and a further softening
in rents. Key transactions included the successful completion of the
pre-letting of the entire 340,000 sq ft office element within the 1st phase of
PaddingtonCentral on behalf of Development Securities plc.
Other significant deals included:
- strategic relocation advice resulting in the acquisition of a new
69,000 sq ft headquarters in Kensington for EMI Group plc; and
- the acquisition and subsequent freehold disposal of 111 Edmund Street,
Birmingham, a 45,000 sq ft office redevelopment on behalf of Barwood
Developments Ltd to solicitors Gateley Wareing.
The European offices enjoyed another successful year with record profits.
During the year we significantly expanded our market presence in Europe with the
opening of new offices in Barcelona, Milan and Rome. The success of the
business was fuelled by a number of large investment transactions in Spain,
France and Germany, with German open-ended funds in particular continuing to
invest substantial sums in the European real estate markets. In Berlin, we made
additions to our new industrial, office agency and investment teams.
In Hong Kong, the transactional markets remained difficult, but our Hong Kong
office performed well and exceeded our expectations. Shanghai, despite losses
in the first three quarters, began to contribute positively to the profits in
the last quarter.
Residential Agency
The residential markets started 2002 strongly due to a pent-up demand after the
autumn lull following 11 September. New offices in Chiswick, Sunningdale,
Southampton and Canford Cliffs took our UK residential network to 47 offices.
Trading remained strong throughout the year, although prime central London homes
became harder to sell in the second half, due to falling equity prices and job
losses in the City. By contrast, central London flat departments had a record
year as a result of demand for large lateral space from mainly international
buyers.
In total, almost 2,500 properties were sold during the year equating to over
£2bn in value, an 11% uplift on the previous year. The average property made
£1.35m in London and £600,000 in the country last year. Highlights included the
sale of a house in Belgravia at around £19m and Combe Hay Manor, Somerset, at
well in excess of its £6m guide price. Prime barriers were broken for houses in
Fulham and Wandsworth, and the sale of Narborough set a new record for the sale
of a house in Norfolk (guide price £2.25m).
In February 2002, FPDSavills launched Prime Purchase, a wholly owned subsidiary
which specialises in the search and acquisition of residential property in
central London as well as houses, farms and estates in the country on behalf of
retained clients. Of particular note were the acquisition of a large family
house in prime Notting Hill for over £5m and the purchase of St. Clair's in
Hampshire, a residential, sporting and farming estate of over 950 acres.
Auctions
The London Auction department held eight auctions last year, offering over 600
lots and achieving an average success rate of 87%. The value of the average lot
was £210,000, with a significant increase in the number of higher lots sold,
eight going for over £1m, with £4m being the highest. This reflects growing
seller confidence in auctions as a quick way of achieving premium prices.
New Homes
The New Homes division turned in a record performance in 2002, with demand
continuing from private investors in the buy-to-let market. Unit sales
increased to 3,197, with a total value of £1.15bn, an increase of 41% on last
year. New operations in Southampton and Scotland now mean that we offer
residential development services from 18 of our UK offices. We carried out a
number of successful exhibitions of London developments in South Africa and
continue to identify new markets for the promotion of UK housing stock.
Development
The national Development department enjoyed significant growth through 2002 and
is now dealing with over 25,000 acres of development land, 85% of which is now
on brownfield sites.
The number of major development consultancy instructions has also increased,
providing solid recurring income. In Swansea we have been instructed as lead
development consultants by the Welsh Development Agency on a 100 acre scheme
comprising more than 1,000 residential units and 2.5m sq ft of mixed commercial/
retail institutional development.
Major projects this year included:
- £4m conversion of a previous Bookers Cash & Carry unit into a bespoke
call centre on behalf of Green Property Management Limited;
- £4m, 90,000 sq ft distribution depot of Schneider Electric Limited;
and
- acting as Stanhope/Chelsfield's residential development consultants
on the Stratford City project (73.4 hectares).
The Development department has continued to be involved in providing planning
strategy and viability advice across all sectors, including master-planning for
developers undertaking a variety of schemes, totalling over 25m sq ft and
including some of the largest projects in London. The team advised Quintain
Estates and Developments PLC on the acquisition of property surrounding Wembley
Stadium. This team also advised Meridian Delta Ltd on the regeneration of
Greenwich Peninsula and provided regeneration advice to a range of public
authorities such as Lambeth, Islington, Hackney and Hounslow Borough Councils,
as well as housing charities such as the Peabody Trust.
Residential Letting
The Residential Letting business had one of its most difficult years in recent
times. Demand fell in London due to the large US corporations, which make up
60% of the market, laying off staff and cutting housing budgets. Outside
London, the lettings market has also softened as a result of low interest rates,
which in some cases has made mortgages cheaper than renting. Looking forward,
the lettings market can often thrive when residential markets become more
difficult and cautious buyers prefer the short-term commitment of letting as
opposed to the long-term commitment of buying.
Farm and Estate Agency
2002 was an exceptional year for country house sales and the market for
commercial farms recovered after the previous year, which was marred by foot and
mouth. While the market remains difficult for the average property, some
notable results confirmed that the outstanding property will always achieve a
premium, even against a more troubled economic background.
Highlights included:
- the sale of the Tyntesfield Estate, 1,870 acres in Bristol, the major
part of which sold to the National Trust; and
- the sale of Encombe, 2,026 acres including 2.4 miles of World
Heritage Coastline, on the south Dorset coast.
Commercial Investment
Our Investment team was a major beneficiary of a strong market and concluded
transactions in excess of £2bn. The buying teams were also particularly strong
in the retail warehouse sector, with acquisitions in Lowestoft, Rochdale and
Birstall. A notable transaction of the year was advising DIFA on the
acquisition of Sainsbury's headquarters at 33 Holborn for circa £240m.
Other key transactions included:
- the sale on behalf of Pillar Property plc of eleven retail parks in
The Gateway Portfolio to Morley Fund Management for £183m;
- the sale on behalf of Delancey of 151 Buckingham Palace Road, London
for £185m;
- the acquisition of Bridgewater House for the UBS Triton Property Fund
for £21.1m; and
- the acquisition of the Somerfield National Distribution Centre for
Isis Asset Management plc for £21.4m.
During the year the Commercial Business Space team represented Arlington
Property Investments in simultaneously acquiring The Quays, Oxford Road,
Uxbridge, an 87,000 sq ft headquarters from the Lincoln Group and leasing it on
a 20 year lease to Parexel International Limited.
Retail
The Retail Warehouse team has had another successful year increasing turnover
and profit on last year. Operating from offices in London, Manchester and
Edinburgh the team has increased market share by growing its landlord and
retailer client base. The team has acquired and let over 1.8m sq ft of floor
space for retailers such as B&Q, Argos and Uniqlo.
Healthcare
The Healthcare team have seen an increase in activity within the care sector
over the past 18 months, which has resulted from lower interest rates and
improved availability of bank funding for acquisitions and improvements. The
team has advised on 190 healthcare properties with valuations and sales in the
order of £240m.
Some notable instructions included:
- Highcare Group plc sold its entire issued share capital to Ridgemont
Holdings Limited at an asking price of £12.75m; and
- the acquisition of the business and assets from Elifar on behalf of
Robinia Care plc.
Fund Management
The UK Fund Management department has enjoyed its most successful year with a
high level of activity throughout 2002. The department is focusing on the
expansion of indirect funds which will form a key part of its strategy in 2003.
With both institutional and private clients rebalancing portfolios, the
department administered £920m of funds, half of which were on a discretionary
basis. One highlight of 2002 was the expansion of The Charities Property Fund,
which now has just under £100m worth of assets.
Consultancy
Our Consultancy business generates fee income from a wide range of professional
property services including valuation, building consultancy, landlord and
tenant, rating, planning, strategic projects and research. Profit before
interest and tax for the year was £6.3m (2001 - £5.6m) on turnover of £43.0m
(2001 - £37.3m).
Valuation
The Commercial Valuation team has enjoyed another year of increased growth in
turnover and profitability. The main focus of business is on London and the
South East, together with the major cities in the UK. We have recently
established a commercial valuation team in Manchester. Europe remains a
significant growth opportunity for the department and we have expanded our
valuation teams in both Paris and Frankfurt. The bulk of the fee income has
again been generated from loan security valuations, helped by a strong
investment and finance market and low cost of money. We have advised on the two
latest securitisations at Canary Wharf. Other notable instructions include
advising Arsenal Football Club for finance purposes on the relocation of its
stadium and the development potential released from the existing site and the
valuation of a number of landmark residential and commercial investment and
development properties.
The Residential Valuation department has continued to grow and is now the
largest team of residential valuers in central London. FPDSavills has
co-sponsored significant research into relative lease length values in central
London which will reinforce our position as the market leaders in this area.
The Commonhold and Leasehold Reform Act 2002 has provided significant
opportunities to act for both landlords and tenants who wish to extend leases or
purchase freeholds. Litigation support services have continued to grow and have
been involved in several high profile cases including Lambert and Lambert, the
record divorce settlement and the successful and far reaching Antrobus Gains Tax
Relief action against the Inland Revenue.
Building Consultancy
The commercial Building Consultancy team had another successful year continuing
an annual trend of lifting income and profit by strengthening the team with the
appointment of senior staff and expanding building surveying into the Birmingham
office. Increased emphasis has been given to sector focus and depth of
expertise. Geographical coverage has been extended to mainland Europe, managing
fitting out projects for occupiers in Amsterdam, Munich, Milan and Brussels and
advising clients in Madrid and Athens.
In the social housing sector we have enjoyed another year of expansion and
remain market leaders in the provision of stock condition surveys. We have also
expanded our procurement advisory services with several senior appointments and
have advised on the procurement strategy of refurbishment expenditure of £750m
required over a five year period to some 80,000 dwellings.
Our wholly owned subsidiary CMI Project Services Limited has continued to advise
Hutchison Whampoa on the project management of Albion Riverside, a mixed
development comprising 190 luxury apartments together with affordable housing
and commercial units close to Battersea Bridge. They have also provided project
management services to Pembroke Real Estate (a subsidiary of Fidelity
Investments) on their Millharbour project, comprising 1m sq ft commercial office
development in London Docklands and to Reebok for their new sports club at
Canary Wharf.
The residential Building Consultancy team has expanded its range of services and
is now a registered architects practice with RIBA qualification. A specialism
has been converting large houses and institutional buildings into apartments,
both in London and nationwide.
Landlord and Tenant
2002 was a record year for the Landlord and Tenant department. These figures
were the result of a combination of factors and were achieved against a
background of mixed occupational demand. The strongest income streams were
produced by central London and Out of Town retail teams.
In 2003, out of town retail is expected to feature strongly in overall
performance as this market continues to out-perform other sectors in terms of
rental growth. Key instructions confirmed for 2003 include Fosse Park South,
Monks Cross and Middlebrook, all of which are landmark schemes. Improved income
levels are also expected in the High Street and Industrial sectors.
Rating
The Business Rates team achieved an average reduction last year of over 7%
against a Government target to limit rateable value reductions to 4.7%.
Successes came both from appeals against initial assessments and from subsequent
appeals following changes to clients' properties. Notable successes of the team
were from an amusement machine manufacturer, wholesaler and boutique hotel
company, on which cumulative savings on two properties will be in excess of £1m.
Planning
The Planning division continues to grow and during the year we established a
planning department in Birmingham. The Planning division is now one of the ten
largest planning consultancy teams in the UK, operating from nine locations and
handling projects across the residential, commercial, leisure, retail,
institutional and energy sectors.
Notable successes during the year included:
- obtaining planning permission on behalf of Persimmon Homes for 100
apartments, 37,000 sq ft of offices, leisure uses and a piazza as a major
regeneration project; and
- securing a major development area of 3,000 dwellings, 10 hectares of
business space, leisure, education and transport infrastructure at
Aylesbury for a consortium of developers.
Housing Consultancy
We continue to enjoy a regular flow of valuation work throughout the UK from our
affordable landlord clients and their lenders. New areas of business have
opened up including advice on urban regeneration and asset management
strategies, often in areas of housing stress. As our clients have diversified
into new types of property, so we have grown the range of advice on offer.
Our affordable development and special projects business has expanded with an
increasing number of developers looking to us for advice on land for affordable
housing and Section 106 planning strategy. The Housing Consultancy department
have also been finding sites for Housing Associations and their developer
partners, a sector which is now attracting increasing institutional interest.
Research
The Research team remains unique amongst property service companies in offering
information, analysis and research consultancy services across all major
property sectors, including commercial, rural and residential property, as well
as niche markets such as leisure and hotels.
In 2002, the team added a new specialism in land and mixed development issues.
Recent government directives and planning guidance has meant that development
increasingly takes place on complex urban sites.
Property Management
The Property Management business continues to perform in line with expectation
in generating fee income from managing commercial, residential and agricultural
properties for owners. During the year, turnover was £56.4m (2001 - £49.7m),
generating a profit before interest and tax of £3.1m (2001 - £2.9m).
Commercial and Residential Management
The commercial property management business had an excellent year achieving
record profits. This follows a period of investment in this business by both
recruitment of senior staff and the introduction of a new state of the art
database and accounting system across all our commercial offices. The main
focus of the business is on managing high quality office and retail buildings
including 1 Curzon Street, Mayfair managed on behalf of CGI-HausInvest and The
Brewery, Romford for Henderson Global Investors and Clerical Medical.
We continued to expand our consultancy teams in Europe including the
establishment of a property management department in Madrid.
In Hong Kong, the property management business continued to perform well.
Despite almost flat revenue growth in 2002, the business achieved its financial
targets. One notable transaction was to secure sixteen new management contracts
with a total area of 700,000 sq m. In China, the property management business
performed strongly, managing over 10m sq m of top grade commercial and
residential space concentrated in Shanghai, Beijing, Guangzhou and other major
cities.
Australia performed strongly in 2002 with record revenues up 13.5% on the
previous year. During the year the Group were appointed to manage a 90,000 sq m
shopping centre currently under construction in Dubai and currently manage over
160 shopping centres in Australia.
2002 was a year of consolidation within the institutional residential sector.
Our most significant achievement was successfully re-tendering for the
management of a larger proportion of the Schroders Residential Property Unit
Trust portfolio. During the year we completed the transfer of the ING
Residential Fund and we now manage the whole of their English portfolio. Many
of our existing clients have also added to their portfolios during 2002. We
successfully tendered for the management of a new and innovative residential
fund launching in spring 2003 with an initial investment target of £50m plus
gearing.
Land and Farm Management
Against a backdrop of continuing rural recession our land and farm management
market share increased significantly during 2002. A number of significant
estate management mandates were won both from private and corporate clients.
Likely changes emanating from the Curry Report, CAP mid-term review and ever
increasing regulation of the countryside have increased demand for our wide
range of professional services.
A specialist team has been created to service the emerging business from
renewable energy. We have also widened our expert witness service in the face
of increasing property litigation. A new service has been created to aid
clients in recruiting leaders in various types of rural business.
Aubourn Farming, our specialist farming subsidiary, acquired the South & West
Partnership of Andersons during 2002. This move has substantially increased the
Company's market share, broadened our range of specialist skills and provided
national coverage throughout England. Challenges to farming are ever increasing
and Aubourn's resources are increasingly required in the restructuring and
management required for businesses to remain viable.
Facilities Management
Our Facilities Management operation consists of two main parts; FPDSavills
Guardian in Hong Kong and Trammell Crow Savills in Europe. During the year, the
loss before interest and tax was of £2.3m (2001 - profit £2.3m) on turnover of
£29.8m (2001 - £32.6m).
FPDSavills Guardian continues to perform well securing five new government
property management service contracts with total contract value in excess of
HK$120m.
Following the frustration of failing to secure two potentially very large
outsourcing contracts with German companies, resulting in a substantial
write-off in pursuit costs, our joint venture company, Trammell Crow Savills, is
concentrating on smaller outsourcing projects mainly in the UK.
Property Trading and Investment
Grosvenor Hill Ventures, our principal property trading subsidiary, has
continued to make selective joint venture investments in the out of town retail
sector. The Group's interest in Managed Office Solutions (GHV), our managed
office space business, made good progress which should continue throughout 2003.
After a difficult start to the year, The Mill Discount Department Store is
trading well. However, the Group's strategy is to move away from direct
management of property assets. A provision of £4.3m for permanent diminution in
value of this property as been made in the Accounts for the year to 31 December
2002.
The loss before interest and tax for the Property Trading business for the year
was £4.7m (2001 - loss of £400k) on turnover of £17.0m (2001 - £4.3m).
Financial Services
The Financial Services division is mainly comprised of Savills Private Finance
Limited, which focuses primarily on residential mortgage broking and associated
financial products. During the year profit before interest and tax for the
Financial Services businesses was £1.6m (2001 - £2.5m) on a turnover of £12.0m
(2001 - £8.2m).
Savills Private Finance established itself as one of the leading providers of
mortgage finance to the high net worth market. Mortgages in excess of £1.5bn
were arranged and Savills Private Finance is now operating from ten locations
throughout the UK, with two further offices in Southampton and Glasgow planned
for 2003. Both the Commercial Debt Broking and specialist independent Financial
Planning teams made significant contributions and further growth is planned for
both divisions.
Aubrey Adams, Group Chief Executive
SAVILLS plc
PRELIMINARY ANNOUNCEMENT OF RESULTS
year ended 31 December 2002
Restated
Year to Year to
31.12.02 31.12.01
Notes £'000 £'000
Turnover - Group & share of joint ventures
Other continuing operations 267,862 239,269
Disposal of property held for resale 14,049 650
Acquisitions 865 -
Less: Share of joint ventures (442) (4,483)
Total Group turnover 3 282,334 235,436
Operating Profit
Other continuing operations 27,651 18,044
Disposal of property held for resale 1,266 194
Acquisitions 291 -
Group operating profit 2&3 29,208 18,238
Share of operating profit of joint ventures 9 708
Share of operating loss of associated undertakings 4 (3,928) (773)
Operating profit including share of joint ventures &
associated undertakings 25,289 18,173
(Loss)/profit on disposal of interests in subsidiary undertakings (216) 435
Profit on disposal of interest in joint venture - 1,052
Profit on disposal of interest in associated undertakings 53 2,455
Profit on disposal of property - 121
Profit on disposal of investment - 53
Permanent diminution in value of investment property (4,332) -
Profit on ordinary activities before interest 3 20,794 22,289
Net interest
Group (289) (719)
Joint ventures (13) 16
Associated undertakings (111) (36)
Total net interest (413) (739)
Profit on ordinary activities before taxation 20,381 21,550
Taxation on profit on ordinary activities 5 (10,115) (6,881)
Profit on ordinary activities after taxation 10,266 14,669
Equity minority interests (1,722) (1,108)
Profit for the financial year 8,544 13,561
Dividends paid & proposed 6 (5,803) (5,490)
Profit for the year transferred to reserves 2,741 8,071
Basic earnings per share 7(a) 15.1p 24.2p
Adjusted basic earnings per share before permanent diminution
in value of investment property 7(b) 22.8p 24.2p
Diluted earnings per share 7(a) 13.8p 21.8p
Adjusted basic earnings per share before interest, tax,
depreciation & amortisation (EBITDA) 7(a) 53.5p 51.6p
Dividend per share 6 10.2p 9.75p
SAVILLS plc
SUMMARY GROUP BALANCE SEET
at 31 December 2002
Restated
31.12.02 31.12.01
£'000 £'000
Fixed assets
Intangible assets 30,115 29,738
Tangible assets 21,740 29,137
Investments
Investments in joint ventures
Share of gross assets 845 589
Share of gross liabilities (303) (31)
542 558
Investment in associated undertakings 4,247 5,936
Other investments 3,302 4,419
Total investments 8,091 10,913
Total fixed assets 59,946 69,788
Current assets
Property held for sale 24,656 25,446
Work in progress 2,736 2,473
Debtors 71,632 62,578
Cash at bank & short term deposits 53,435 40,299
152,459 130,796
Creditors - amounts falling due within
one year (95,811) (87,178)
Net current assets 56,648 43,618
Total assets less current liabilities 116,594 113,406
Creditors- amounts falling due after
more than one year (21,877) (22,568)
Provisions for liabilities & charges (5,578) (2,843)
Net assets 89,139 87,995
Capital & Reserves
Called up equity share capital 3,159 3,146
Share premium account 41,512 41,227
Profit & loss account 43,834 42,723
Equity shareholders' funds 88,505 87,096
Equity minority interests 634 899
89,139 87,995
SAVILLS plc
CONSOLIDATED CASH FLOW STATEMENT
year ended 31 December 2002
Year to Year to
31.12.02 31.12.01
Notes £'000 £'000
Net cash inflow from operating activitites 8(a) 46,272 25,991
Dividends from joint ventures & associated undertakings 444 1,047
Net cash outflow from returns on investments & servicing
of finance (1,037) (1,846)
Tax paid (9,063) (10,548)
Net cash outflow for capital expenditure & financial investment (4,283) (6,436)
Net cash (outflow)/inflow from acquisitions & disposals (3,681) 2,144
Equity dividends paid (5,586) (5,203)
Cash inflow before use of liquid resources & financing 23,066 5,149
Net cash (outflow)/inflow from management of liquid resources (5,635) 1,911
Net cash (outflow)/inflow from financing (7,325) 6,232
Increase in cash 8(b) 10,106 13,292
SAVILLS plc
STATEMENT OF RECOGNISED GAINS & LOSSES
year ended 31 December 2002
Restated
Year to Year to
31.12.02 31.12.01
£'000 £'000
Profit for the financial year
Group 12,137 13,700
Joint ventures 5 610
Associated undertakings (3,598) (749)
8,544 13,561
Currency translation differences on foreign currency net
investments (1,630) 859
Total recognised gains & losses for the year 6,914 14,420
Prior year adjustment - FRS19 'Deferred Tax' 568 -
Total recognised gains & losses since last Annual Report 7,482 14,420
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
Restated
Year to Year to
31.12.02 31.12.01
£'000 £'000
Profit for the financial year 8,544 13,561
Dividends (5,803) (5,490)
Retained profit for the year 2,741 8,071
Issue of share capital 298 377
Currency translation differences (1,630) 859
Goodwill previously written off to reserves - 156
Net increase in shareholders' funds 1,409 9,463
Shareholders' funds at beginning of year
(opening shareholders' funds at 1 January 2001 was originally
£77,065,000 before adding prior year adjustment of £568,000) 87,096 77,633
Shareholders' funds at end of year 88,505 87,096
NOTES
1. Basis of preparation
The results for the year ended 31 December 2002 have been extracted from
audited financial statements. The Accounts have been prepared under the
historical cost convention, modified to include the revaluation of
investment properties and in accordance with applicable United Kingdom
accounting standards on a consistent basis with prior years, except as
noted below.
Financial Reporting Standard No. 19 - 'Deferred Tax' (FRS 19) has been
adopted for the first time by the Group this financial year. In previous
years the Group has complied with Statement of Standard Accounting Practice
15 - 'Deferred Taxation (SSAP 15). SSAP 15 required provision for deferred
taxation to be made using the liability method to the extent that net
deferred tax assets or liabilities were likely to crystallise in the
foreseeable future. FRS 19 requires deferred tax to be recognised on all
timing differences that have occurred by the balance sheet date which give
rise to an obligation to pay more tax in the future, or the right to pay
less tax in the future. This has resulted in a deferred tax asset of £1.0m
being recognised at 31 December 2002 (2001 - £1.0m). The restatement of the
prior year figures had no impact on the tax charge to 31 December 2001.
The financial information in this statement does not constitute statutory
accounts within the meaning of s240 of the Companies Act 1985. The
statutory accounts for the year ended 31 December 2001, on which the
auditors have given an unqualified audit report, have been filed with the
Registrar of Companies.
2. Segmental Analysis
Property
Year to Trans- Property Facilities Trading
31 actional Consult- Manage- Manage- & Inve- Financial Holding
December Advice ancy ment ment stment Services Company Total
2002 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total
Group
turnover 124,143 42,992 56,411 29,811 16,975 12,002 - 282,334
Operating
profit/(loss) 19,967 6,336 2,569 2,323 (336) 1,558 (3,209) 29,208
Profit/(loss)
before
interest &
taxation 19,962 6,336 3,087 (2,272) (4,668) 1,558 (3,209) 20,794
Property
Year to Trans- Property Facilities Trading
31 actional Consult- Manage- Manage- & Inve- Financial Holding
December Advice ancy ment ment stment Services Company Total
2001 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total
Group
turnover 103,305 37,295 49,711 32,611 4,349 8,165 - 235,436
Operating
profit/(loss) 11,954 5,455 2,143 1,845 (396) 159 (2,922) 18,238
Profit/(loss)
before
interest &
taxation 12,172 5,613 2,916 2,317 (396) 2,468 (2,801) 22,289
3. Geographical analysis of turnover, Group operating profit & profit before
interest & tax (PBIT)
Group Group
Group operating Group operating
Year to turnover profit PBIT turnover profit PBIT
31 December 2002 2002 2002 2001 2001 2001
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 184,145 22,798 14,570 141,867 15,367 16,923
Rest of Europe 12,090 3,581 3,577 8,724 1,778 1,936
Asia 86,099 2,829 2,647 84,845 1,093 3,430
282,334 29,208 20,794 235,436 18,238 22,289
Profit before interest and tax for the year ended 31 December 2002 for Asia is
shown after charging goodwill amortisation of £1,338,000 (2001 - £1,350,000).
The profit before interest and tax for the year ended 31 December 2002 for
Europe is shown after charging goodwill amortisation of £205,000 (2001 -
£178,000).
4. Share of operating loss of associated undertakings
Year to Year to
31.12.02 31.12.01
£'000 £'000
Share of operating loss from interest in associated undertakings (1,278) (553)
Goodwill amortisation on investment in associated undertakings (245) (220)
Impairment of goodwill in Trammell Crow Savills Limited (2,405) -
(3,928) (773)
The taxation charge has been calculated on the basis of the underlying rate in
each jurisdiction adjusted for any disallowable charges.
5. Taxation
The taxation charge has been calculated on the basis of the underlying rate
in each jurisdiction adjusted for any disallowable charges.
Year to Year to
31.12.02 31.12.01
£'000 £'000
United Kingdom corporation taxation (7,371) (4,733)
Foreign taxation (2,930) (2,189)
Deferred taxation 186 41
(10,115) (6,881)
6. Dividends
Year to Year to
31.12.02 31.12.01
£'000 £'000
Ordinary interim dividend of 3.4p per share (2001 - 3.25p per share) 1,940 1,834
Ordinary proposed final dividend of 6.8p per share (2001 - 6.5p per
share) 3,863 3,656
5,803 5,490
A final dividend of 6.8p per ordinary share is recommended and, assuming
approval at the Annual General Meeting, will be paid on 14 May 2003 to
shareholders on the register as at 11 April 2003. The current number of shares
in issue is 62,831,142.
7. Earnings per share
(a) Basic & diluted earnings per share
Year to Year to Year to Year to Year to Year to
31.12.02 31.12.02 31.12.02 31.12.01 31.12.01 31.12.01
Earnings Shares EPS Earnings Shares EPS
£'000 '000 Pence £'000 '000 Pence
Earnings before interest, tax,
depreciation & amortisation
of goodwill (EBITDA) 30,292 56,574 53.5 28,945 56,112 51.6
Interest, tax, depreciation &
amortisation of goodwill (21,748) - (38.4) (15,384) - (27.4)
Basic earnings per share 8,544 56,574 15.1 13,561 56,112 24.2
Effect of additional shares
issuable under option - 5,116 - - 6,116 -
Diluted earnings per share 8,544 61,690 13.8 13,561 62,228 21.8
(b) Adjusted basic earnings per share before permanent diminution in value of
investment property
Year to Year to Year to Year to Year to Year to
31.12.02 31.12.02 31.12.02 31.12.01 31.12.01 31.12.01
Earnings Shares EPS Earnings Shares EPS
£'000 '000 Pence £'000 '000 Pence
Basic earnings per share as above 8,544 56,574 15.1 13,561 56,112 24.2
Add back loss on permanent
diminution in value of investment
property 4,332 - 7.7 - - -
Adjusted basic earnings per
share before loss on permanent
diminution in value of investment
property 12,876 56,574 22.8 13,561 56,112 24.2
8. Notes to consolidated cash flow statement
Year to Year to
(a) Reconciliation of operating profit to net cash inflow 31.12.02 31.12.01
from operating activities £'000 £'000
Operating profit 29,208 18,238
Depreciation charges 5,388 5,840
Impairment on tangible fixed assets 1,173 -
Amortisation of goodwill 1,882 1,748
Loss on the sale of fixed assets 127 679
Increase in property held for sale (2,890) (9,645)
(Increase)/decrease in work in progress (91) 357
(Increase)/decrease in debtors (10,398) 984
Increase in creditors 17,574 5,074
Increase in provisions 2,651 589
Increase in provision for share options granted 1,159 1,427
Provision against fixed asset investments 489 700
Net cash inflow from operating activities 46,272 25,991
Year to Year to
31.12.02 31.12.01
(b) Reconciliation of net cash flows to net funds £'000 £'000
Increase in cash 10,106 13,292
Cash outflow/(inflow) from decrease/(increase) in debt 7,607 (6,073)
Capital element of finance leases repaid 16 218
Increase/(decrease) in liquid resources 5,635 (1,911)
Finance leases & loans acquired with subsidiaries - (62)
Loans disposed with subsidiaries 2,665 -
Loan notes issued on acquisition of subsidiary (490) -
Exchange movements (1,493) 739
24,046 6,203
Net funds at beginning year 6,452 249
Net funds at end of year 30,498 6,452
Disposals
(excluding Other
At Cash cash & non-cash Exchange At
(c) Analysis of changes in net 01.01.02 flows overdrafts) movement movement 31.12.02
funds £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank 23,755 8,970 - - (1,182) 31,543
Overdrafts (1,538) 1,136 - - (1) (403)
10,106
Liquid funds on one month 1,713 (100) - - - 1,613
deposit
Liquid funds - short-term
deposit 14,831 5,735 - - (287) 20,279
38,761 15,741 - - (1,470) 53,032
Debt - due within one year (9,693) 9,017 111 (170) 41 (694)
- due after one year (22,517) (1,410) 2,554 (320) (64) (21,757)
Finance leases (99) 16 - - - (83)
6,452 23,364 2,665 (490) (1,493) 30,498
Other non-cash movement relates to the issue of loan notes on acquisition of a
subsidiary.
Copies of this statement are being sent to shareholders and are available from:
Savills plc, 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ
Telephone: 020 7409 9920 Fax: 020 7491 0505 Email: meast@fpdsavills.co.uk
Contact: Michaela East
In addition, with prior notice, copies in alternative formats i.e. large
print, audio tape, braille are available if required from:
Lloyds TSB Registrars, The Causeway, Worthing, West Sussex BN99 6DA
This information is also available on the Company's website at:
www.fpdsavills.com
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