Final Results
Savills PLC
02 March 2005
WEDNESDAY 2 MARCH 2005
RECORD YEAR FOR SAVILLS
Savills plc, the international property adviser, today announces its results for
the year ended 31 December 2004.
• Pre-tax profit of £50.2m (2003 - £34.1m)
• Turnover up 9% to £328.0m (2003 - £301.7m)
• Group operating profit up 10% to £39.0m (2003 - £35.3m)
• Basic earnings per share 62.2p (2003 - 37.0p) and basic earnings per share
excluding sale of trading & investment properties, impairment and
amortisation of goodwill 55.7p (2003 - 37.7p)
• Final dividend up 25% to 12.5p per share (2003 - 10.0p), making 18.5p for
the full year, a 36% increase on last years 13.6p. Plus a special dividend
of 20.0p per share making a total for the year of 38.5p per share (2003 -
13.6p)
Peter Smith, Chairman of Savills plc, commented:
'Our results this year show the rewards to be gained from being a broadly based
property advisory group ready to take the opportunities of a constantly evolving
market. This is my first report as Chairman and I am, therefore, particularly
delighted to be able to report an outstanding set of results following strong
performances from all our operating businesses.
The continuing buoyancy of the global investment markets is encouraging for the
prospects in all parts of our Commercial business in 2005; prime residential
markets remain resilient. We have enjoyed a satisfactory start to the year and
are confident that the Company will continue to perform well.'
***Chairman's Statement, Review of Operations, Financial Review and
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 7409 9923
Aubrey Adams, Group Chief Executive
Robert McKellar, Finance Director
Citigate Dewe Rogerson 020 7638 9571
Simon Rigby
Sarah Gestetner
George Cazenove
There will be an analyst presentation today at 9.30am at 25 Finsbury Circus,
EC2M 7EE.
CHAIRMAN'S STATEMENT
RESULTS
This year marks the 150th anniversary of Savills and it is fitting that this is
also the year in which the Group consolidated all of its subsidiary branding
under the Savills name.
While the name is longstanding and the firm is built on a solid foundation, as a
listed company Savills plc is only fifteen years old and we still consider
ourselves a young, dynamic and forward thinking Group. We continue to broaden
and strengthen our property expertise across a wide spectrum of markets and
disciplines.
Our results this year show the rewards to be gained from being a broadly based
property advisory group ready to take the opportunities of a constantly evolving
market. This is my first report as Chairman and I am, therefore, particularly
delighted to be able to report an outstanding set of results following strong
performances from all our operating businesses.
Profits in the second half have historically exceeded the first half and this
has again been the case this year with a full year pre-tax profit of £50.2m
(2003 - £34.1m). 2004 turnover increased by 9% to £328.0m (2003 - £301.7m).
Group operating profit was £39.0m (2003 - £35.3m). Group operating profit
margins, excluding the sale of trading properties, were 11.6% (2003 - 11.2%).
A reduced effective tax rate of 30.2% (2003 - 36.4%), together with increased
profits resulted in basic earnings per share increasing substantially to 62.2p
(2003 - 37.0p). Shareholders' funds increased to £102.8m (2003 - £95.7m) and
cash balances to £90.1m (2003 - £71.9m).
DIVIDENDS
The Board is recommending a final dividend of 12.5p per share to those
shareholders on the register on 15 April 2005, payable on 12 May 2005, making a
total for the year of 18.5p (2003 - 13.6p). This increase is in line with our
current progressive dividend policy, which remains unchanged and reflects
long-term confidence in the business. In addition to the final dividend and as
announced in our trading update statement of 22 December 2004 the Board have
decided this year to recommend a special dividend of 20.0p per share to be paid
on 12 May 2005 to those on the register as at the close of business on 15 April
2005. This is possible because £15.0m was generated from property trading and
investment over the past few years. These profits are regarded as non-recurring
and the Board has taken the decision to pass the post-tax benefits of these
profits to shareholders.
HIGHLIGHTS
In the UK we have continued to develop the business and expand on the range of
services we are able to offer our clients. The investment markets have remained
strong, and our agency teams have been active and successful. We have expanded
our offering to commercial clients in the UK and in October 2004 opened an
office in Leeds adding to our increased commercial presence in the Regions. We
have also added to our network of residential and multi-disciplinary offices in
fifteen new locations through a combination of new openings and small
acquisitions in key locations.
This year saw the launch of our fund management arm, Cordea Savills. During the
year funds under management increased materially as the result of two new fund
launches: the Savills Investor Syndicate No.1 for UK private and institutional
investors and Europa Immobiliare No.1 a European fund for Italian private
investors where Cordea Savills acts as delegated investment manager and advisor.
The Government has recently reiterated its commitment to the creation of an
increased supply of housing stock. Savills, with its unique expertise in the
areas of affordable housing and mixed-use development, are assisting clients in
these areas. Both commercial and residential investors now have an increased
appreciation of the importance of property as an investment class and Savills is
well placed to take advantage of the opportunities that will arise from this
increased awareness.
Our Research teams continue to provide widely respected advice to private and
commercial clients through the production of articles such as 'The Residential
Property Focus' and 'Office Futures'. New and emerging markets continue to be
explored.
In Europe we recruited a team and opened an office in Poland. We also purchased
a majority stake in our Associate in Sweden, Tufvesson & Partners
Fastighetsradgivning AB, which is part of our continued strategy to grow our
offices in commercial centres throughout Europe.
In Asia and Australia we continue to make progress and consider opportunities as
they arise. This past year we opened an office in Tokyo and expanded our
offering in Singapore through the acquisition of Hampden & Partners, where we
continue to develop our investment operation. Offices in China are now
profitable and making a strong contribution to our Asian business; our new
operation in Macau is offering clients access to professional services and
retail markets.
SHARE BUYBACK PROGRAMME
At the last Annual General Meeting (AGM) shareholders gave authority for a
limited purchase of Savills shares for cancellation of up to 5% of the issued
share capital. During the year ended 31 December 2004 1,410,000 shares (2.3%)
were repurchased for cancellation under this programme. As announced on 22
December 2004, the Company undertook an irrevocable, non-discretionary programme
to re-purchase its own shares during the close period. During this period the
Company bought 100,000 shares for cancellation. The Company may make further
purchases of shares under this authority in the open period up to the AGM to be
held on 4 May 2005. This programme has proved to be particularly earnings
enhancing and Shareholders will again this year be asked to consider a
resolution to approve the re-purchase of shares. This is outlined in the Notice
of Annual General Meeting which will accompany the Report and Accounts for the
year ended 31 December 2004, and which will be distributed to shareholders at
the end of March 2005.
BOARD AND STAFF
I joined the Board on 24 May 2004 and took over as Chairman on 1 November 2004
following the retirement of Richard Jewson. I am privileged to have taken over
at this exciting time in the life of the Company.
On behalf of the Board, I wish to convey our appreciation for the valuable
contribution made by Richard Jewson. Under his guidance, Savills has over the
last decade grown significantly with pre-tax profit having increased tenfold.
The Board is pleased to announce that with effect from 31 March 2005, Robert
McKellar has been appointed to the role of Chief Executive - Asia Pacific. He
will have specific responsibilities for growing and developing this important
part of our business. Danny O'Donnell, will be appointed Group Financial
Controller and will report directly to the Group Chief Executive. Danny
O'Donnell will have specific responsibilities for managing, monitoring and
controlling the Group's systems of financial control. In addition, each
operating division has a dedicated Finance Director who liaise closely with the
corporate financial management team.
Savills' continued development and growth is a result of the committed and
dedicated efforts of our talented staff whose ability to add value to our
clients is the basis for the excellent results achieved in 2004; I thank them
all for their contribution. Our reward system is an important mechanism in
providing a balance between the interests of staff and shareholders.
My appointment as Chairman presented a timely opportunity for the Board to
consider the composition of its various Committees and to ensure that its
governance processes fully reflected the requirements both of the size and
structure of the Company as well as that of the revised Combined Code. Full
details of the various committees is outlined in the Corporate Governance Report
in Savills' Report and Accounts for the year ended 31 December 2004 which will
be distributed to shareholders at the end of March 2005.
OUTLOOK
The continuing buoyancy of the global investment markets is encouraging for the
prospects in all parts of our Commercial business in 2005; prime residential
markets remain resilient. We have enjoyed a satisfactory start to the year and
are confident that the Company will continue to perform well.
Peter Smith, Chairman
GROUP CHIEF EXECUTIVE'S REVIEW OF OPERATIONS
2004 was a record year for Savills with pre-tax profits up by 47% and basic
earnings per share of 62.2p (2003 - 37.0p). This was largely as a result of
strong operating profits from all parts of the business, with the commercial
investment markets particularly buoyant.
The commercial agency markets continued to perform well throughout 2004 despite
concerns that the market was slowing; strength in transactional income was
primarily from the investment market where investor confidence remained strong.
In the UK we have increased our services to commercial clients in key regional
locations through a number of small strategic acquisitions and additional office
openings.
Trading in Savills' European offices was again profitable this year with strong
performances from Spain, Germany and Italy. Our investment teams in Germany and
Spain performed particularly well in a very difficult market. We continue to
expand and strengthen our presence in Europe, where we identified opportunities
for growth and this year saw the opening of a new office in Poland. In December
we acquired a 51% stake in our associate business in Sweden.
Our investment in the development of our fund management operations both within
the UK and on a pan-European basis, resulted in Cordea Savills becoming the
manager of two new closed end property funds. €283m of equity was raised in
respect of Europa Immobiliare No.1 for investment in property assets over the
next couple of years and £24m of equity was raised in respect of Savills
Investor Syndicate No.1 Fund for UK investors.
In Asia, the business continued to benefit from a strong market and a dominant
position in investment and residential sales with Chinese buyers continuing to
be active despite rising prices. In China, income growth remained strong, in
particular the property management sector which has been successful in winning
several new mandates. In Singapore, the addition of a residential business
increased the scope of the property services offered. Towards the end of the
year following the acquisition of a third-party property management business, we
opened an office in Tokyo. This acquisition ties in with our strategy to
further expand our successful Asian operations.
As announced today, Robert McKellar, our Group Finance Director has been
appointed as Chief Executive - Asia Pacific with effect from 31 March 2005.
Savills remains focused on developing and expanding the services it offers both
in the UK and internationally by recruiting high quality staff, investing in new
areas of business and where appropriate opening new offices.
TRANSACTIONAL ADVICE
The Transactional Advice business stream comprises commercial, residential,
agricultural agency and investment. During the year turnover was £149.0m (2003
- £119.4m), representing 45% of our total turnover, generating profit before
interest and tax of £25.1m (2003 - £18.0m).
Commercial Investment and Agency
In the first quarter of 2004, property remained in strong demand from both
private and individual funds in the UK and abroad, who were attracted by the
relatively high secure yields offered by commercial property investment. During
2004, this increased demand and competition for stock gave rise to some yield
compression but the markets have remained firm.
The European investment team acted in the sale of a new office development in
Paris for CGI for €334m.
In the UK, our London and regional investment teams were also involved in a
number of significant transactions, including:
• the acquisition for CGI of White City retail development, the UK's single
largest commercial property transaction in 2004;
• the disposal for Deka Immobilien Investment GmbH of St Enoch Centre,
Glasgow for £272.5m;
• the disposal for Pillar of a number of retail and leisure assets; including
the disposal of Fulham Broadway Shopping Centre (£97.7m), London; Omni
Leisure Park Edinburgh (£74.3m) and Gallions Reach Shopping Park, Beckton
(£78.7m);
• £195m worth of acquisitions and disposals on behalf of Modus Properties
which included C12 Shopping Park, Southport and Castle Dene Shopping
Centre, Peterlee;
• the acquisitions of Durham City Retail Park, Nova Scotia Retail Park,
Blackburn and the sale of the B&Q Warehouse, Sunderland on behalf of F&C
Asset Management;
• one of the largest industrial estate transactions in the North West, Globe
Industrial Estate, on behalf of ING Real Estate;
• the disposal of BHP Billiton Petroleum Great Britain Limited UK office
headquarters, namely One Neathouse Place, London for Quintain, achieving
a price of £68m;
• advising the Prudential on the acquisition of Temple Quay House, Bristol
for £44m;
• the sale of Forbury Square, Reading comprising of 148,000 sq ft new Grade A
offices on behalf of Argent Estates Limited sold to Stonemartin Plc and
Morley Fund Management for £40m; and
• the acquisition of Leon House, Croydon, for Exemplar Properties and HSBC
Active Property Fund at a price of £35m.
A developing part of our investment business is the provision of property
investment advice to clients in relation to indirect investment in property.
This year our investment advisory team acted for UBS in relation to the property
related aspects in respect of their South East Office Recovery Fund (SERF).
The West End Office Agency department acted in 40 transactions totalling 330,000
sq ft. Notable transactions included the assignment of the lease of the 50,000
sqft. 30 Berkeley Square, Mayfair to GE Capital and advising Boodle Hatfield,
solicitors, on their relocation to new offices of 30,000 sq ft at Lumina, 89 New
Bond Street.
In the City, we advised IPC on the acquisition of their new European
headquarters building of 450,000 sq ft at 1 Bankside for c£200m.
The transactional markets in Hong Kong rebounded significantly from the
difficulties experienced in 2003, with income increasing by 100%. The huge
upsurge in demand emanated predominantly from Hong Kong and Chinese buyers who
were quick to realise the hidden value in previously depressed prices. Savills
was able to act for over 50% of the grade A transactions in Hong Kong and
strengthen its position as the premier capital transactions agent.
Retail and Leisure
The Retail Warehouse team experienced another strong growth year with an
increased number of leasing and development instructions. The team advised on
over 100 retail parks throughout the UK for clients such as Hammerson plc,
Pillar Plc, Henderson Retail Warehouse Fund and Royal London Asset Management,
as well as leading retailers such as B&Q plc, Boots The Chemist Ltd and Next
plc.
The In-Town Retail department was expanded with the recruitment of three new
Directors who joined the London office in July. Along with the Commercial
Investment team, the department provided advice to Land Securities Plc closing
one of the largest swap deals ever recorded which included acquiring four
shopping centres at Lewisham, Welwyn Garden City, Glasgow and Taplow which
formed part of the £720m combined asset swap transaction with Slough Estates,
completed in December 2004.
Hotels and Healthcare
2004 has seen further growth in revenue and profit together with continued
expansion of the department with the recruitment of additional valuers and
agents. Notable deals include the Corus Hotels PLC portfolio and a portfolio of
Accor hotels, acquired by London and Regional Properties under a sale and
leaseback transaction. We increased our international presence with particular
involvement in Spain, Barbados and the negotiation of a deal with Four Seasons
for a significant resort in Mauritius.
The National Healthcare team continued to consolidate their position as one of
the market leaders in the sector in terms of both transactional and consultancy
advice. The team widened their banking client base and advised on primary
healthcare LIFT schemes. Notable transactions included the sale of Brookmoon
Healthcare Ltd, a Midlands based portfolio of purpose built care homes, to
Barchester plc and the sale of Scottish care home group Burnfoot Homes Limited
to Mead Medical.
Residential Agency
The residential markets noticed a significant increase in buyer confidence in
the first six months of 2004, which resulted in strong activity. On the back of
this we expanded our business in the Home Counties and opened new offices in
Farnham, Beaconsfield and Harpenden. We also opened offices further afield in
Cirencester, Solihull, Wilmslow and Clifton.
2,600 properties were sold during the year equating to approximately £2.6bn in
value. The average property sale was c£1.5m in London and c£0.7m in the
country. Highlights included:
• the sale of eight houses in excess of £10m in London;
• the sale of Moundsmere, Hampshire, a substantial country house for well
in excess of the £6m guide price; and
• Ayot Mountfitchet, the most expensive house ever to be sold in rural
Hertfordshire (guide price £5.5m).
In Hong Kong, the strength of the recovery enabled Savills to act for an
increasing number of local buyers who were keen to take advantage of rising
prices for prime residential properties, including new developments.
Purchasing Advice
Prime Purchase, a wholly owned subsidiary specialising in acquiring residential
property in both London and the country on behalf of retained clients, commenced
trading in 2002. During the last two years the business has seen excellent
growth and had a successful year doubling its turnover in 2004 over that of the
previous year.
Of particular note was the acquisition of a substantial house in Chesham Place
(over 7,250 sq ft) and the purchase of Chedington Court near Sherborne in
Dorset, one of the South West's most impressive country houses.
Residential Letting
There were strong indications of a recovery in the residential lettings market
in 2004, illustrated by a 10% growth in new lets in the London region which
represented the core of our lettings business. New lettings businesses were
acquired in Harpenden and Sunningdale.
Auctions
With the ever increasing interest in property as an investment or pension
provision, a diverse range of clients are now using auctions as a fast and
effective method of property acquisition and disposal, for example we acted for
private and public companies, local authorities, county councils, housing
associations, charities and development agencies.
During the year, the London National Auction department sold 640 lots with a
value of £140m at an average success rate of 87%, one of the highest in the
industry. Residential and commercial properties were sold in Manchester,
Liverpool, Birmingham and across the South East to Bristol and the West Country.
A new dedicated commercial auction department has been recruited into our London
office which will further increase the profile of our auctions business.
New Homes
At the Building Homes 2004 awards, the Savills New Homes department won 'Best
New Homes Agent'. We continue to develop our expertise in the rapidly emerging
key worker and residential investment sectors and are advising on many major
regeneration schemes which should lead to significant future new homes
instructions.
The new homes market has experienced some slow down, but despite this 3,535
units were sold with a total value of £1.28bn. Notable transactions included
sales at The Knightsbridge, London's most prestigious development, where close
to half the 200 apartments are now sold, including a penthouse with an asking
price of £18m.
New instructions included the appointment by Crest Nicholson for the first phase
of their Harbourside scheme in Bristol, and by Ballymore Properties on their 260
unit, Ontario tower development in London's Docklands.
International New Homes
The International Residential department had a successful year selling property
at new resort developments around the world, including The Palm Islands in
Dubai, the Arc1950 ski resort in the French Alps and The Provence Golf and
Country Club near Avignon in the South of France. A recent trend has been the
growing interest in resort buy-to-let property. The associate network has been
expanded and the number of high-end instructions and sales has increased. We
have recently set up an emerging markets and international residential
consultancy division, which has secured several good instructions.
Development
The Savills Development and Regeneration team assists a range of clients on
projects with issues such as sustainable and green designs, collaboration and
partnerships in and across private and public sectors, and large scale
multi-sector projects. The team was also involved in promoting a number of
highly sustainable schemes aimed at reducing CO2 emissions from both buildings
and modern lifestyles, including projects in urban and on brown-field sites,
using land value and enhanced density to create cross-subsidy. These projects
require co-ordination and financial modelling capability. The team's
involvement included acting as core advisors and agents on some of the largest
development projects in London such as: New Wembley for Quintain Estates and
Development PLC; Greenwich Peninsula on behalf of Meridian Delta Ltd; the
regeneration of town centres such as Feltham where a multi-use scheme of
approximately 1m sq ft is being developed.
Farm and Estate Agency
Although a number of properties were traded privately throughout 2004, there
were fewer flagship estates on the open market and fewer acres of farmland sold
than in 2003. The effect of this shortage of supply was that land prices rose
by up to 20% during the year.
Savills were seen to be active during the year both on the sale and the
acquisition of farms and estates for clients. Successes included the sale of
the largest privately available estate in 2004 and other highlights included the
1,000 acre Dunmore Estate in Kent. Purchases included the majority of The
Burnley Hall Estate in Norfolk, The North Green Estate in Norfolk with a guide
price of £3.75m and the Eastcourt Estate in Gloucestershire with a guide price
of £4.75m.
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 £9.6m (2003 - £7.6m) on turnover of £60.2m
(2003 - £49.1m).
Valuation
The Commercial Valuation department had another exceptional year, increasing
billing by 38% in London. In addition, our recently established teams in
Manchester and Edinburgh enjoyed similar success. The core business of the
department continues to be valuations for lenders for loan security purposes,
for which we provided advice to over 50 lending organisations during the year.
We also saw an increase in our litigation support work. We have gained a
reputation, not only for impartiality, but also for valuing properties at the
upper end of the market, including major portfolios for financing purposes. Our
instructions included a portfolio of 24 Debenhams department stores and a
portfolio of 56 Somerfield food stores valued at over £400m and over £150m
respectively. We advised on many properties with a value in excess of £100m
including St Katharine's Dock, E1 at over £300m, again for financing purposes.
The regular valuation of large parts of Canary Wharf for financing, accounts and
other purposes remains a major instruction.
The Residential Valuation department had another successful year building on its
strength as a 'One Stop Shop' professional services provider. The newly
dedicated Land and New Homes Valuation team valued in excess of £1bn of
residential and mixed use development schemes in London and the South East. In
addition, we valued for loan security purposes in excess of £2bn worth of
property, including an unprecedented number of houses in excess of £10m each in
London. We continue to advise landlords and tenants on enfranchisement
valuations, and provide valuations for matrimonial settlement, being retained in
some high profile cases. We also valued c£300m of residential property held as
portfolio investments.
Building Consultancy
Our Building Consultancy team focused on stock condition surveys and procurement
advice in the social housing sector and enjoyed another year of growth, doubling
the size of the business. The Government objective of making all social housing
properties decent by 2010 has substantially increased the demand for our
specialist services. During the last year, we worked with many Housing
Associations and most of the large Metropolitan Local Authorities with notable
projects in Haringey, Birmingham, Manchester, Liverpool, Newcastle, Glasgow and
Aberdeen. We have also advised on a number of housing PFI schemes.
We acted for purchasers of the Radisson SAS Hotel at Manchester Airport as well
as a number of prime office buildings. Our sizeable national team carried out
the pre-acquisition surveys of the part of the Safeway supermarket portfolio
acquired by Barclays Capital and Robert Tchenguiz from Morrisons and now let to
Somerfield. We represented the Sainsbury Family Charitable Trusts on a number
of projects including the extension and refurbishment of Lord Foster's Sainsbury
Centre for Visual Arts.
The City based Project Management team, which focus on occupier 'fit out' works,
have been successful in securing some significant projects including the
monitoring of IPC's new 500,000 sq ft headquarters at Land Securities Bankside
scheme, the development, monitoring and fitting out of a new UK parts
distribution unit for Suzuki GB PLC and numerous offices including DLA Piper
Rudnick Gray Cary Solicitors in Sheffield for Mitsui & Co's European and UK head
office. A significant number of pre-acquisition surveys were undertaken in the
City, the largest being for Lloyds of London, which reflects the current high
demand for investment properties.
The Manchester based Building Consultancy team increased their contribution this
year. Key clients include Kenmore, Burford and UBS; with the size of projects
getting larger year on year. Key framework agreements are now in place with
Morley and UBS.
Landlord and Tenant
Whilst the office market in London and the South East was more difficult with
fewer rent review fees generated than in the previous year, the Landlord and
Tenant department reported income for the year marginally below that of 2003
with market share increasing.
Work on over 200 properties was completed during the financial year; this
included working on many of the highest value out-of-town retail schemes
throughout the UK. We now act for over 60 landlords in this high profile sector
of the property market.
The strength and depth across all sectors gives stability and certainty of
income in times when individual markets are weak, as was the case in 2004.
Rating
During the year the Business Rates team in the UK continued to settle appeals
achieving an average reduction of 13% with successful appeals. Despite the fact
that the appeals we are finalising related to the third regular recent rating
revaluation, we still obtained significant six figure savings for a food
manufacturing client who we have advised on rating matters for over 40 years.
Rates continue to be an operating cost that merit investigation by clients.
Our expert knowledge of the interaction of value and liability through the
operation of the relevant legislation enabled us to double savings for a number
of clients; the technical aspects of the UK business rates system require
detailed and comprehensive knowledge to maximise savings. We are well placed to
advise clients in connection with the 2005 Rating Revaluation.
Planning
The Commercial Planning team has grown significantly in 2004, following the
acquisition by Savills of PDC Planning Development Consultancy Limited, a
specialist planning consultancy firm based in Manchester. The entire team of
seven staff transferred to the Manchester office in September 2004. The
Manchester team works closely with London, and has already introduced new
clients, including Helical Bar Plc for a major redevelopment project in Cardiff
city centre. The team already works closely with Land Securities Properties Ltd
on a number of projects throughout the UK.
The Planning division continues to expand, and is now the sixth largest planning
consultancy in the UK according to Planning Magazine's annual survey. Our
current position reflects the high level of professional expertise across our
planning teams in nine locations. In addition to major developers, landowners
and investors, our clients also include English Partnerships and five Regional
Development Agencies.
Notable projects last year included a new rail station and transport interchange
with hotel, offices and housing for Network Rail and Kier Group; and an Urban
Village of 4,000 houses, business and community uses for BP on their redundant
Llandarcy Oil Refinery in South Wales.
Urban design and environmental impact assessment are major components of our
work. With a diverse and healthy work stream, we are looking forward to further
growth of our planning and urban design teams in 2005.
Housing Consultancy
The Housing Consultancy department operates from four offices nationally with
approximately 45% of turnover from annual repeat valuations. We continue to
increase the range of advice on offer as our Local Authority and Housing
Association customers diversify and move into new forms of housing and
investment. New instructions included asset strategies for six major housing
providers and we are beginning to create opportunities for the regeneration of
run down housing.
Research
The Research department continues to provide robust and respected information in
the main property sectors, whilst also exploring new and emerging markets where
little or no other analysis has been carried out. The geographical information
facility within the department developed a new and innovative method of
assessing the rapidly growing market of retirement villages as well as
developing a European retail demand model. The Residential Research team
launched an innovative new subscription service to clients called 'The
Residential Property Focus'. The Commercial Research team published a major
forward looking project for the British Council for Offices, 'Office Futures',
looking at trends over the next 20 years. The European team undertook a
feasibility study for a 12m sq ft mixed-use scheme in Cyprus, which is now going
through the planning process.
The mixed use team continued to innovate in this fast-emerging area, including
development of a research tool to inform the master planning process by
assessing the appropriate quantity and mix of facilities and amenities in a new
community and their impact on property and land values.
PROPERTY MANAGEMENT
The Property Management business continued to show significant growth,
generating increased fee income from managing commercial, residential and
agricultural properties for owners. During the year, turnover was £63.3m (2003
- £57.8m), generating a profit before interest and tax of £4.0m (2003 - £3.9m).
Commercial Management
Commercial Management grew significantly in 2004, primarily resulting from the
recruitment of the Shopping Centre team, who were supported in their move by a
number of key clients including Catalyst Capita, Edinburgh House Estates,
Parkwood Asset Management, O&H Properties and PropInvest. In addition, a number
of new clients were won during the year including Morley who appointed Savills
in respect of 64 properties throughout the UK.
The client base has also been widened and performance will also ensure organic
growth. Strong foundations have been laid for the future and there is focus to
strengthen and grow the teams throughout the UK.
The Property Management businesses in Asia were able to increase revenue despite
continued competition and fee cutting. Commercial office rents in Hong Kong
have risen significantly which has alleviated pressure on fee levels. Elsewhere
in Asia, Savills has opened an office in Tokyo and acquired a property and asset
management business that had over twenty contracts for a number of large
commercial buildings in Tokyo.
Land and Farm Management
The major issue affecting the countryside in 2004 was the development of the
reform of the Common Agricultural Policy ('CAP'). Savills, with the benefit of
extensive research facilities, have played a major role in commenting on
government proposals and worked closely with the CLA throughout the year. We
are now in an unrivalled position to advise clients on the major effects these
reforms will have in terms of both land ownership and agri-business. Government
regulations and legal requirements in regard to health and safety, insurance
compliance, asbestos regulations and similar issues continue to put burdens on
property ownership with requirements for greater management input and
responsibility. Opportunities continue to arise from the close correlation
between the estate management teams and Savills' in-house development and
planning expertise.
In line with the restructuring of CAP affecting both the business of land
occupation and land ownership, Savills acquired the remaining minority interest
in Aubourn Limited and have integrated this service with their land agency
advisory management service. They will continue to provide agri-business advice
under the Aubourn name within the Savills' group umbrella.
Our Rural Property Management in the UK, a core part of Savills' growth, was
increased by the acquisition of Smith Woolley (Oxford and the East Midlands),
Colvilles (South West) and Elvy & Co (Ayrshire). The addition of these
businesses adds about 265,000 acres of management and consultancy work to
Savills' existing portfolio.
FACILITIES MANAGEMENT
Savills Guardian (Holdings) Limited, our facilities management operation in Hong
Kong, made profits before interest and tax of £1.8m (2003 - £0.4m) on turnover
of £22.5m (2003 - £27.7m).
The Hong Kong based facilities management business continued to perform well.
Given the integrated offering of our Property Management and Facilities
Management business, in the future we will report the figures for Facilities
Management with those of our Property Management division.
PROPERTY TRADING AND INVESTMENT
These sales made a significant contribution in the second half and operating
profit for the Property Trading and Investment business for the year was £2.0m
(2003 - £5.1m) on turnover of £13.0m (2003 - £32.3m) and an additional £8.1m
profit on disposal of investment property.
During the year Savills completed the sale of the remaining properties held
within the Property Trading and Investment division. As announced on 10 August
2004, the sale of Talbot Green Retail Park, Llantrisant generated a profit of
£8.1m. Matalan, Leicester Street, Northwich was transferred at market value of
£8.5m to Savills Investor Syndicate No.1 LP and 86-88 Above Bar, Southampton was
disposed of for £2.9m. No properties now remain within the Property Trading and
Investment division.
The Group's interest in Managed Office Solutions (GHV), our managed office space
business, continued to develop a strong base and focus on expansion.
FINANCIAL SERVICES
The Financial Services division is comprised of Savills Private Finance Limited,
which provides residential mortgage broking services, commercial debt broking
services, commercial and private insurance services and associated financial
products. The division made profit before interest and tax of £3.9m (2003 -
£3.9m) on a turnover of £20.1m (2003 - £15.5m).
Savills Private Finance is recognised as one of the leading providers of
mortgage finance to the high net worth market covering both residential and
commercial properties. During the year, growth has taken place through
selective recruitment of key staff and the acquisition of Sherwins Mortgage
Services Limited which enabled the company to enter the affordable housing
market. The company is now operating from 19 locations throughout the UK.
Fund Management
2004 was a milestone year with the Fund Management business being rebranded and
restructured as Cordea Savills. The repositioning of the business and the
recruitment of a number of high quality individuals to complement the existing
management team, has enabled Cordea Savills to emerge as an important
independent fund management organisation.
As well as the growth of existing funds, a strategic decision has been taken to
create products specifically aimed at UK private investors. In response to this
demand, Cordea Savills Wealth Management was created and the first product for
the private investor market, Savills Investor Syndicate No.1 Fund, was launched
in October 2004. A number of further product launches for private investors are
expected during the first half of 2005. Within Europe, Europa Immobiliare No.1
was launched in 2004 in a joint venture with local partner Vegagest SGR. This
fund, advised and managed by Cordea Savills, provides a diversified European
real estate portfolio for Italian private investors. The fund was distributed
principally by Poste Italiane and equity raised substantially exceeded initial
expectations.
In order to support the current and future growth of the business, Cordea
Savills has invested heavily during 2004 in infrastructure and people. Further
investment is planned during 2005, which will constrain profits growth in the
short term. However, the success of the business in retaining and growing its
historic client base, coupled with its successful expansion into new growth
areas, bodes very well for the future.
Aubrey Adams, Group Chief Executive
FINANCIAL REVIEW
Results for the year
Group turnover increased by 9% from £301.7m to £328.0m. Excluding turnover from
property disposals the overall increase was 16%. Group profit before tax
increased from £34.1m to £50.2m and basic EPS increased from 37.0p to 62.2p.
Financial highlights for the year:
• The Group operating margins, excluding property trading profits, increased
from 11.2% to 11.6% in 2004.
• Operating losses from acquisitions of £0.4m was attributable to the start-up
costs surrounding the acquisitions of Smith Woolley and Harpenden.
• Profit from the sale of trading property assets of £2.2m was generated
during the period compared to £4.7m in 2003.
• Profits of £0.3m arising from associated undertakings during the year
compares favourably to the final write down of the remaining goodwill in
the Group's associated undertaking Trammell Crow Company Limited (formerly
Trammell Crow Savills Limited) to a nil value, together with related
operating losses, totalling £1.6m in 2003.
• Profits of £0.8m from the disposal of an interest in a subsidiary
undertaking arose following the decision to dispose of a controlling
stake in Adventis Group plc, which was floated on the AIM in September 2004.
• Disposal profits on property investment sales of £8.1m were realised in
2004.
Acquisitions and Disposals
During the year we have completed a number of acquisitions and disposals of
businesses or interests in ventures, both in the UK and overseas including:
• On 6 October 2004 Savills (L&P) Limited acquired the Smith Woolley
partnership for a consideration of £2.4m.
• On 1 October 2004 Savills Private Finance acquired the business known
as Sherwins Mortgage Services Ltd for £847,000.
• In September 2004, Savills acquired the property management business of
GMAC Commercial Mortgage Japan KK, which is based in Toyko, for £651,000.
• On 22 December 2004 Savills acquired 51% of the Tufvesson & Partners
Fastighetsradgivning AB, a Swedish property consultancy business based
in Stockholm, for £953,000.
• On 6 July 2004 Savills Commercial Limited acquired a business known as
the PDC Planning Development Consultancy Limited based in Manchester
for £1,000,000.
• On 22 November 2004 Savills Commercial Limited acquired a Leeds based
investment team for £909,000.
• On 1 July 2004 Savills (L&P) Limited disposed of 26% of its shareholding
in Adventis Group plc when the Company was floated on the AIM. Savills (L&P)
Limited retains 45.5% of the share capital of the business.
Net cash outflow for acquisitions and disposals during the year amounted to
£5.7m (2003 - £7.6m).
Treasury Activities and Policies
The Group's treasury operations are co-ordinated and managed in accordance with
policies and procedures approved by the Board. They are designed to reduce the
financial risks faced by the Group, which primarily relate to funding and
liquidity, interest rate exposure and currency rate exposures.
The Group's financial instruments comprise borrowings, some cash and liquid
resources and various other items such as trade debtors and trade creditors that
arise directly from its operations. The Group does not engage in trades of a
speculative nature.
Further details of financial instruments are provided in Note 18 to the Report
and Accounts for the year ended 31 December 2004. The Board reviews and agrees
policies for managing each of the above-mentioned risks. These have remained
unchanged during the year under review and are summarised below.
Interest Rate Risk
The Group finances its operations through a mixture of retained profits and bank
borrowings, at both fixed and floating interest rates.
Liquidity Risk
The Group prepares an annual funding plan approved by the Board which sets out
the Group's expected financing requirements for the next 12 months. At the
year-end, the Group had no debt on which there were fixed or floating interest
rates.
Foreign Currency Risk
Our policy is for each business to borrow in local currencies where possible.
The Group does not actively seek to hedge risks arising from foreign currency
transactions due to their non-cash nature and the high costs associated with
such hedging.
Borrowing
The Group retains substantial short-term money market facilities with its
bankers of £19m which are currently not utilised.
Net Interest
Net interest receivable is £1.9m (2003 - £0.2m payable). Higher operating cash
flows, increased average deposit rates and the disposal of the entire property
portfolio during the year together with associated debt, gave rise to the
significant movement on last year.
Taxation
The taxation charge decreased to 30.2% of the profit before tax compared with
36.4% during the year to 31 December 2003. The lower tax charge mainly reflects
increased profits from Hong Kong where applicable rates are lower.
Minority Interests
The minority interest share decreased to £0.2m (2003 - £0.8m) and reflects that
element of profits due to the majority shareholders for the year 2004 prior to
the disposal of a controlling stake in Adventis Group plc.
Earnings and Dividend
Basic earnings per share amounted to 62.2p (2003 - 37.0p). Adjusted basic
earnings per share excluding sale of trading and investment properties,
impairments and amortisation of goodwill amounted to 55.7p (2003 - 37.7p).
The Board is recommending a final dividend of 12.5p (net), making 18.5p for the
full year, a 36% increase on last year. In addition, the Board is recommending
a special dividend of 20.0p per share to reflect the profits derived from a
series of one-off property gains during 2003 and 2004 which are unlikely to be
repeated.
Share Capital
During the year ended 31 December 2004, 17,500 shares were issued to
participants in the Savills plc United Kingdom Executive Share Option Scheme,
75,000 to participants in The Savills Executive Share Option Scheme and 375,375
to participants in the Savills Sharesave Scheme. A further 55,839 shares were
issued to the QUEST. During the year ended 31 December 2004, 1,410,000 shares
were re-purchased for cancellation. The total number of Ordinary Shares issued
at 31 December 2004 was 60.5m (2003 - 61.4m). Since the year-end, 100,000
shares were re-purchased for cancellation as at 2 March 2005.
Cash Flow and Liquidity
Net cash inflow from operating activities totalled £56.3m which, after allowing
for cash flows including taxation, dividends, investments and capital
expenditure (see below), produced a net increase in cash of £23.3m. At 31
December 2004, the Group's cash at bank and on short term deposit amounted to
£90.1m. This was deposited with banks and financial institutions with top
credit ratings for periods not exceeding six months, to match known outgoings.
The Group continues to operate a centralised treasury function, which is not a
separate profit centre but purely provides a service to the operating companies.
Fixed Asset Investments and Capital Expenditure cash outflow amounted to
£9.3m.
Pension Scheme
During the year, the Company undertook the required triennial valuation of the
Pension and Life Assurance Plan of Savills ('the Plan'). Full details of this
are provided in the Notes to the Report and Accounts for the year ended 31
December 2004. As a result of this valuation and in order to improve the
financial position of the Plan and remove part of the deficit, the Company made
a lump sum prepayment of £15m into the Plan in 2004.
Intellectual Property
No value is attributed in the Group balance sheet to internally generated
intangibles such as brand name or intellectual property rights.
New Accounting Standards
UITF 38 'Accounting for ESOP trusts'
In accordance with UITF 38, investment in the Group's own shares, which are held
to provide shares to certain employees under a long term incentive plan through
its Employee Share Ownership Plan Trust (ESOP) are shown as a deduction from
shareholders' funds. Total Shareholders funds as at 31 December 2003 have been
reduced by £1,406,000. This change of accounting policy has been reflected as a
prior year adjustment and the corresponding amounts have been restated.
The restatement of the prior year figures reduced profit on ordinary activities
after taxation by £1,207,000 for the year ended 31 December 2003, reflecting an
ESOP charge based on the market value of shares at award date rather than cost
as required by UITF 17 as revised by UITF 38. The cash flow statement has also
been restated to show the relevant cash flows in financing rather than capital
expenditure and financial investment.
FRS 17 'Retirement Benefits'
Full adoption of FRS 17 issued in November 2000 by the Accounting Standards
Board which replaces SSAP 24 'Accounting for Pension Costs', has been deferred
by the ASB until periods beginning on or after 1 January 2005. In accordance
with the transitional arrangements of FRS 17, certain additional disclosures are
included in Note 7 of the Report and Accounts for the year ended 31 December
2004.
The table in Note 7 illustrates that if FRS 17 had been fully in force as at 31
December 2004, the net worth for the Group would have been reduced by £14.2m
(2003 - £17.9m) as a result of a shortfall in the Plan's funding. The Board is
reviewing a number of alternative options for providing employee pension
benefits due to the increasing economic risk and uncertainty that determine the
pension valuations going forward.
International Financial Reporting Standards (IFRS)
International Financial Reporting Standards (IFRS) will be applied, as required
for all European listed companies, for our financial year ending 31 December
2005. The Group has been working towards implementation of IFRS and is well
advanced in its plan to meet the requirements of IFRS implementation.
The Company has extensively reviewed the impact of the applicable International
Accounting Standards (IAS) on the reported UK GAAP results for 2004. The
financial effects of the relevant changes are not set out in the accounts for
the year ended 31 December 2004. However, the Group can provide guidance as to
the accounting impact of IFRS and the principal areas where IFRS differs from UK
GAAP, affecting the Group's results are shown below:
• Share-based payments - under UK GAAP, the Group has fully expensed the
shares granted based on the market value, such that the annual charge
represents the annual award. Under IFRS 2, the Group is required to
measure the cost of all share based payments granted since 7 November 2002
that have not fully vested and amortise those over the life of the grant
using an option pricing model. The cost of the options charged to the
profit and loss account in 2004 will now need to be spread over the vesting
period.
• Goodwill amortisation - under UK GAAP, the Group's policy is to amortise
capitalised goodwill on a straight-line basis over its estimated useful
economic life. On transition to IFRS, instead of an annual charge to the
profit and loss, an impairment review will be carried out at each balance
sheet date. Under UK GAAP goodwill amortisation of £2.9m was charged to the
profit and loss account in 2004.
• Proposed dividends - unlike UK GAAP, which requires proposed final dividends
to be accrued, IFRS only permits recognition of the liability to pay a final
dividend which has been approved by the shareholders. This will lead to a
one off increase in net asset value.
• Pension scheme - the Group will be adjusting the opening net assets for the
net pension liability of £14.2m in line with IAS 19 as at 1 January 2005.
Robert McKellar, Finance Director
SAVILLS plc
CONSOLIDATED PROFIT & LOSS ACCOUNT
year ended 31 December 2004
Restated
(See Note
2)
Year Year
to 31.12.04 to
31.12.03
Notes £'000 £'000
Turnover - Group & share of joint ventures
Other continuing operations 316,259 274,015
Sale of trading properties 11,356 28,987
Acquisitions 2,124 -
Less: Share of turnover of joint ventures (1,764) (1,310)
Total Group turnover 3&4 327,975 301,692
Operating profit
Other continuing operations 37,127 30,568
Sale of trading properties 2,179 4,714
Acquisitions (355) -
Group operating profit 3&4 38,951 35,282
Share of operating profit of joint ventures 55 30
Share of operating profit/(loss) of associated undertakings 5 274 (1,559)
Operating profit including share of joint ventures &
associated undertakings 39,280 33,753
Profit on disposal of interest in subsidiary undertakings 763 -
Profit on disposal of interest in associated undertakings 154 -
Profit on disposal of investment property 8,094 -
Profit on disposal of investments - 521
Profit on ordinary activities before interest 3&4 48,291 34,274
Net interest
Group 1,870 (208)
Joint ventures 4 (2)
Associated undertakings 28 (7)
Total net interest 1,902 (217)
Profit on ordinary activities before taxation 3&4 50,193 34,057
Taxation on profit on ordinary activities 6 (15,168) (12,409)
Profit on ordinary activities after taxation 35,025 21,648
Equity minority interests (250) (838)
Profit for the financial year 34,775 20,810
Dividends paid & proposed 7 (21,359) (7,584)
Profit for the financial year transferred to reserves 13,416 13,226
Basic earnings per share 8(a) 62.2p 37.0p
Adjusted basic earnings per share excluding sale of
trading & investment properties, impairments and
amortisation of goodwill 8(b) 55.7p 37.7p
Diluted earnings per share 8(a) 56.5p 34.1p
Dividend per share 7 38.5p 13.6p
SAVILLS plc
CONSOLIDATED GROUP BALANCE SHEET
at 31 December 2004
Restated
(See Note 2)
31.12.04 31.12.03
Notes £'000 £'000
Fixed assets
Intangible assets 44,449 36,021
Tangible assets 12,732 26,762
Investments
Investments in joint ventures
Share of gross assets 1,472 901
Share of gross liabilities (730) (361)
742 540
Investment in associated
undertakings 2,082 280
Other investments 3,834 1,427
Total investments 6,658 2,247
Total fixed assets 63,839 65,030
Current assets
Property held for sale - 8,081
Work in progress 2,666 2,801
Debtors
Prepaid pension contributions 13,763 -
Other debtors 91,473 82,074
105,236 82,074
Cash at bank & short-term
deposits 90,056 71,871
197,958 164,827
Creditors - amounts falling due
within one year (144,184) (103,753)
Net current assets 53,774 61,074
Total assets less current liabilities 117,613 126,104
Creditors - amounts falling due
after more than one year (3,384) (19,521)
Provisions for liabilities & charges (11,320) (10,306)
Net assets 102,909 96,277
Capital & Reserves
Called up equity share capital 3,026 3,070
Share premium account 43,114 42,237
Capital redemption reserve 177 107
Profit & loss account 2 56,434 50,301
Equity shareholders' funds 102,751 95,715
Equity minority interests 158 562
102,909 96,277
SAVILLS plc
CONSOLIDATED CASH FLOW STATEMENT
year ended 31 December 2004
Restated
(See Note 2)
Year Year
to 31.12.04 to
31.12.03
Notes £'000 £'000
Net cash inflow from operating activities 9(a) 56,281 60,563
Dividends from joint ventures & associated undertakings 231 349
Net cash inflow/(outflow) from returns on investments &
servicing of finance 1,581 (1,466)
Tax paid (14,834) (11,086)
Net cash inflow/(outflow) for capital expenditure &
financial investment 6,108 (9,886)
Net cash outflow from acquisitions & disposals (5,738) (7,604)
Equity dividends paid (9,001) (5,840)
Cash inflow before use of liquid resources &
financing 34,628 25,030
Net cash inflow/(outflow) from management of liquid
resources 3,732 (9,425)
Net cash outflow from financing (15,079) (5,157)
Increase in cash 9(b) 23,281 10,448
SAVILLS plc
STATEMENT OF TOTAL RECOGNISED GAINS & LOSSES
year ended 31 December 2004
Restated
(see Note 2)
Year Year
to 31.12.04 to
31.12.03
£'000 £'000
Profit for the financial year
Group 34,515 22,531
Joint ventures (1) 6
Associated undertakings 261 (1,727)
34,775 20,810
Currency translation differences on foreign currency net
investments (1,420) (2,304)
Total recognised gains & losses for the year 33,355 18,506
Prior year adjustment - UITF 17 'Employee Share Schemes'
as revised by 38 'Accounting for ESOP trusts' (See note 2) (1,207) -
Total recognised gains & losses since last Annual Report 32,148 18,506
RECONCILIATION OF MOVEMENTS IN SHAREHOLDERS' FUNDS
year ended 31 December 2004
Restated
(See Note 2)
Year Year
to 31.12.04 to
31.12.03
£'000 £'000
Profit for the financial year 34,775 20,810
Dividends (21,359) (7,584)
Retained profit for the year 13,416 13,226
Issue of share capital 903 743
Purchase of own shares (5,751) (4,256)
Purchase own shares for EBT (4,238) (831)
Share based compensation credit 4,126 2,158
Currency translation differences (1,420) (2,304)
Net increase in shareholders' funds 7,036 8,736
Shareholders' funds at beginning of year (December 2003
originally £97,121 000 before deducting prior year
adjustment of £1 406 000 - see note 2) 95,715 86,979
Shareholders' funds at end of year 102,751 95,715
NOTES
1. Basis of preparation
The results for the year ended 31 December 2004 have been extracted from the audited
financial statements. The financial statements 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
modified in order to comply with UITF 38 'Accounting for ESOP trusts' (note 2).
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 2004, on which the auditors have given an unqualified audit report, have not
yet been filed with the Registrar of Companies.
2. Prior year adjustment
In accordance with UITF 38 'Accounting for ESOP trusts', investment in the Group's own shares,
which are held to provide shares to certain employees under a long term incentive plan through
its Employee Benefit Trust (EBT) are shown as a deduction from shareholders'
funds. Total Shareholders funds as at 31 December 2003 have been reduced by £1,406,000.
This change of accounting policy has been reflected as a prior year adjustment and the
corresponding amounts have been restated.
The restatement of the prior year figures reduced profit on ordinary activities after taxation by
£1,207,000 for the year ended 31 December 2003, reflecting a charge based on the
market value of shares at award date rather than cost as required by UITF 17 as revised by UITF 38. There
was no impact on the profit and loss account for the year ended 31 December 2004 as the charge for Deferred
Share Benefit Plan shares is deducted from the total bonus before determining cash payments
The cash flow statement has also been restated by £831,000 for the year ended
31 December 2003 to show the relevant cash flows in financing rather than capital
expenditure and financial investment.
3. Segmental Analysis
Year to 31 Trans-actional Consult- Property Facilities Property Financial Holding Total
December Advice ancy Manage- Manage- Trading& Services Company
ment ment Invest-
2004 ment
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total
Group
turnover 149,014 60,166 63,290 22,500 12,953 20,052 - 327,975
Group
operating
profit/ 24,229 9,782 3,477 1,732 1,992 3,907 (6,168) 38,951
(loss)
Profit/
(loss)
before
interest &
taxation 25,127 9,605 3,952 1,782 10,086 3,907 (6,168) 48,291
Net interest 1,902
Profit on
ordinary
activities
before tax 50,193
Restated Year Trans-actional Consult- Property Facilities Property Financial Holding Total
to 31 Manage- Manage- Trading & Services Company
Invest-
December Advice ancy ment ment ment
2003 £'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Total
Group
turnover 119,377 49,133 57,785 27,651 32,285 15,461 - 301,692
Group
operating
profit/(loss) 18,047 7,555 3,538 1,889 5,109 3,386 (4,242) 35,282
Profit/(loss)
before
interest &
taxation 17,953 7,555 3,898 411 5,109 3,867 (4,519) 34,274
Net interest (217)
Profit on
ordinary
activities
before tax 34,057
4. Geographical analysis of turnover, Group operating profit & profit before interest
& tax (PBIT)
Restated
Total Group Total Group
Group operating Group operating Restated
Year to turnover profit PBIT turnover profit PBIT
31 December 2004 2004 2004 2003 2003 2003
£'000 £'000 £'000 £'000 £'000 £'000
United Kingdom 229,526 30,904 39,810 206,715 30,021 28,837
Rest of Europe 14,583 2,303 2,303 12,198 2,122 2,068
Asia Pacific 83,866 5,744 6,178 82,779 3,139 3,369
327,975 38,951 48,291 301,692 35,282 34,274
The profit before interest and tax for the year ended 31 December 2004 for Asia Pacific is shown
after charging goodwill amortisation of £1,561,000 (2003 - £1,544,000). The profit before interest and
tax for the year ended 31 December 2004 for Europe is shown after charging goodwill amortisation
of £531,000 (2003 - £278,000). The profit before interest and tax for the year ended 31 December
2004 for the UK is shown after charging goodwill amortisation of £817,000 (2003 - £661,000).
5. Share of operating profit/(loss) of associated undertakings
Year Year
to 31.12.04 to 31.12.03
£'000 £'000
Share of operating profit/(loss) from interest in associated
undertakings 280 (193)
Goodwill amortisation on investment in associated
undertakings (180)
(6)
Impairment of goodwill in Trammell Crow Company Limited (formerly (1,186)
Trammell Crow Savills Limited) -
274 (1,559)
6. Taxation
The taxation charge has been calculated on the basis of the underlying rate in each jurisdiction
adjusted for any disallowable charges.
Year Year
to 31.12.04 to
31.12.03
£'000 £'000
United Kingdom corporation tax (14,930) (11,007)
Foreign tax (2,363) (2,431)
Deferred tax 2,125 1,029
(15,168) (12,409)
7. Dividends Year Year
to 31.12.04 to
31.12.03
£'000 £'000
Ordinary interim dividend of 6.0p per share (2003 - 3.6p) 3,364 2,021
Ordinary proposed final dividend of 12.5p per share (2003 - 10p) 6,943 5,563
Special dividend of 20p per share (2003 - nil) 11,052 -
21,359 7,584
The Directors have recommended a final dividend for the year ended 31 December 2004
of 12.5 pence per ordinary share plus a special dividend of 20.0 pence per share and assuming
approval at the Annual General Meeting, these will be paid on 12 May 2005 to the shareholders
on the register as at 15 April 2005.
8. Earnings per share
(a) Basic & diluted earnings per share
Restated Restated
Year to Earnings Shares EPS Earnings Shares EPS
31 December 2004 2004 2004 2003 2003 2003
£'000 '000 Pence £'000 '000 Pence
Basic earnings per share 34,775 37.0
55,938 62.2 20,810 56,207
Effect of additional shares
issuable under option - 5,647 - - 4,900 -
Diluted earnings per share 34,775 61,585 56.5 20,810 61,107 34.1
(b) Adjusted basic earnings per share excluding sale of trading & investment properties, impairments and
amortisation of goodwill
Restated Restated
Year to Earnings Shares EPS Earnings Shares EPS
31 December 2004 2004 2004 2003 2003 2003
£'000 '000 Pence £'000 '000 Pence
Basic earnings per share as
in part (a) above 34,775 55,938 62.2 20,810 56,207 37.0
Amortisation of goodwill 2,915 - 5.2 2,483 - 4.4
Impairment of goodwill 639 1.1 1,186 - 2.1
Less sale of trading properties
after tax (1,525) - (2.7) (3,300) - (5.8)
Less sale of investment property
after tax (5,666) - (10.1) - - -
Adjusted basic earnings per
share excluding sale of trading
& investment properties,
impairments and
amortisation of goodwill 31,138 55,938 55.7 21,179 56,207 37.7
9. Notes to consolidated cash flow statement
Restated
(a) Reconciliation of operating profit to net cash Year Year
inflow
from operating activities to 31.12.04 to 31.12.03
£'000 £'000
Operating profit 38,951 35,282
Depreciation charges 4,711 4,923
Goodwill impairment 639 -
Amortisation of goodwill 2,909 2,303
Loss on the sale of fixed assets 193 121
Decrease in property held for sale 2,052 16,575
Decrease/(increase) in work in progress 126 (82)
Increase in debtors (14,544) (8,180)
Increase in prepaid pension contributions (13,763) -
Increase in creditors 29,652 2,726
Increase in provisions 1,213 4,269
Charge for share based compensation 4,126 2,158
Provision against fixed asset investments 16 468
Net cash inflow from operating activities 56,281 60,563
Restated
Year Year
(b) Reconciliation of net cash flows to net funds to 31.12.04 to 31.12.03
£'000 £'000
Increase in cash 23,281 10,448
Cash outflow from decrease in debt 5,993 787
Capital element of finance leases repaid - 26
New finance lease -
(24)
Net loans disposed with subsidiaries 12,168 -
Finance lease acquired with subsidiary (34) -
Loan notes issued on acquisition of subsidiary (552) -
(Decrease)/increase in liquid resources (3,732) 9,425
Exchange movements (804) (2,205)
36,296 18,481
Net funds at beginning year 48,979 30,498
Net funds at end of year 85,275 48,979
Acquisitions
& disposals
At Cash (excl cash Other Exchange At
(c) Analysis of changes in 01.01.04 flows & overdrafts) non-cash movement 31.12.04
net funds £'000 £'000 £'000 £'000 £'000 £'000
Cash at bank 41,773 22,903 - - (400) 64,276
Overdrafts (508) 378 - - (1) (131)
23,281
Liquid funds on one month 8,808 (7,761) - - - 1,047
deposit
Liquid funds - short-term 21,290 4,029 - - (586) 24,733
deposit
71,363 19,549 - - (987) 89,925
Debt
- due within one (2,961) (599) (20) (251) 46 (3,785)
year
- due after one (19,374) 6,592 12,188 (301) 137 (758)
year
Finance leases (49) - (34) (24) - (107)
48,979 25,542 12,134 (576) (804) 85,275
Savills plc, 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ
Telephone: 020 7409 9928 Fax: 020 7491 0505 Email: vgrady@savills.com
Contact: Victoria Grady
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.savills.com
End
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