Final Results
Savills PLC
08 March 2006
WEDNESDAY 8 MARCH 2006
EXCELLENT YEAR FOR SAVILLS
Savills plc, the international property adviser, today announces its results for
the year ended 31 December 2005. 21% growth in underlying earnings per share.
Financial Highlights
Underlying Results
• Underlying Group profit before tax up 30% to £57.2m (2004 - £43.9m).
Underlying profit is calculated by adjusting reported profit before tax to
deduct profits on disposals of £0.4m (2004 - £11.2m) and share based
payment adjustment of £1.9m (2004 - £3.9m) and add back amortisation of
intangibles and impairment of goodwill of £0.9m (2004 - £0.6m).
• Underlying revenue (excluding trading property sales) up 18% to £373.9m
(2004 - £316.6m).
• Underlying basic earnings per share (based upon underlying
group profit) up 21% to 66.5p (2004 - 55.0p).
Reported Results
• Revenue up 14% to £373.9m (2004 - £328.0m).
• Group profit before taxation of £58.6m (2004 - £58.3m).
• Basic earnings per share of 67.2p (2004 - 72.7p).
• Proposed final dividend up 28% to 16p per share (2004 - 12.5p).
Peter Smith, Chairman of Savills plc, commented:
'Savills has had an excellent year and I am delighted to report a strong set of
results following good performances from all of our operating businesses.
Confidence in investment markets remains strong and the residential prime
markets are resilient. We have enjoyed a positive start to the year and with
the increasing range of services we offer and geographical regions in which we
operate, we are confident that the Group is well placed to have a satisfactory
2006.'
***Chairman's Statement, Group Chief Executive's Review of Operations and
Finance 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
Citigate Dewe Rogerson 020 7638 9571
Simon Rigby
Sarah Gestetner
George Cazenove
There will be an analyst presentation today at 9.30 am at
25 Finsbury Circus, London EC2M 7EE.
CHAIRMAN'S STATEMENT
RESULTS
Savills has had an excellent year and I am delighted to report a strong set of
results following good performances from all of our operating businesses. The
results for the year ended 31 December 2005 are reported in accordance with
International Financial Reporting Standards (IFRS).
Underlying Results
• Underlying Group profit before tax up 30% to £57.2m (2004 - £43.9m).
Underlying profit is calculated by adjusting reported profit before tax to
deduct profits on disposals of £0.4m (2004 - £11.2m) and share based
payment adjustment of £1.9m (2004 - £3.9m) and add back amortisation of
intangibles and impairment of goodwill of £0.9m (2004 - £0.6m).
• Underlying revenue (excluding trading property sales) was up 18% to £373.9m
(2004 - £316.6m).
• Underlying basic earnings per share (based upon underlying group profit) up
21% to 66.5p (2004 - 55.0p).
Reported Results
• Revenue was up 14% to £373.9m (2004 - £328.0m).
• Group profit before taxation was £58.6m (2004 - £58.3m).
• Basic earnings per share were 67.2p (2004 - 72.7p).
• Proposed final dividend is up 28% to 16p per share (2004 - 12.5p).
• Shareholders' funds increased to £167.7m (2004 - £103.5m).
• Cash and cash equivalents increased to £99.9m (2004 - £89.9m).
DIVIDENDS
In the five years to 31 December 2005 reported earnings increased by an average
of 17% per annum and dividends by an average of 22% per annum. This year the
Board has recommended an increase in dividend of 28% with a final dividend of
16p per share to those shareholders on the register on 18 April 2006, payable on
18 May 2006. This gives a total ordinary dividend for the year ended 31
December 2005 of 24p (declared in 2004 - 18.5p), in line with our current
progressive dividend policy.
KEY HIGHLIGHTS
This year Savills continued with the selective expansion of its business in the
UK, continental Europe and specifically in Asia, where we have now established a
market-leading presence in Korea.
In the UK, Savills strengthened its commercial retail offering in Bristol and
Manchester and expanded its expertise in the London West End industrial services
sector. New offices were also opened in Horsham, Huntingdon, Islington,
Tunbridge Wells and Weybridge, thereby expanding our presence in key prime
locations.
In continental Europe, as part of our continued strategy to grow our business in
key commercial centres, we acquired AWON Gestion, a Paris based property
management business and also acquired 51% of Factor Immobilien Management GmbH
in Berlin. In both Italy and Sweden we now offer valuation services. Since the
year-end we have opened a new office in Munich.
In Asia, the investment and transactional markets in Hong Kong remained strong.
We strengthened our valuation and professional services offering in Hong Kong
and created Savills Professional Services, which includes a newly formed real
estate investment trust (REIT) team. The property management team in Hong Kong
acquired Showcase, a business specialising in exhibition and marketing services
to office and retail landlords. Savills now provides the full complement of
agency, property management and professional services in Shanghai and Beijing as
well as in Hong Kong. During the year a new office was added in Macau. As
announced on 19 December 2005 Savills further expanded its operations in South
Korea with the acquisition of a 50% stake in Korean Asset Advisors and BHP Korea
which provide property, asset management and brokerage services in Korea from
their office in Seoul.
Our fund management arm, Cordea Savills has also had an excellent year, offering
an increased range of products to both institutional and retail clients in the
UK and across Europe. Cordea Savills also increased funds under management,
growing the Charities Property Fund and maintaining its position as the leading
property fund for UK charities.
Cordea Savills Wealth Management established its brand and launched three
products: DIVERSE, QPC and Serviced Land Fund No 1.
During the year Trammell Crow Company (TCC) exercised an option to acquire
shares under a Deed of Option dated 9 May 2000. On 29 April 2005, together with
1,677,970 ordinary shares acquired in the market, 5,243,229 ordinary shares were
allotted to TCC. TCC's total holding is therefore 19.43%.
As announced on 8 December 2005, Daily Mail and General Trust plc made an offer
for Fastcrop plc, a public company in which Savills had a 13.72% shareholding
through its wholly owned subsidiary Savills (L&P) Limited. Fastcrop plc is the
owner and operator of the Primelocation website. The proceeds on disposal of
our shareholding amounted to £6.2m and any resultant profit on disposal will be
recognised in the 2006 financial year.
SHARE BUYBACK PROGRAMME AND ANNUAL GENERAL MEETING
At the last Annual General Meeting 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 2005, 100,000 shares (0.15%) were
repurchased for cancellation under this programme. The Company may make further
purchases of shares under this authority in the open period up to the Annual
General Meeting to be held on 10 May 2006.
This programme has proved to be particularly earnings enhancing over the past
couple of years. 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 2005 and which will be distributed to shareholders at the
end of March 2006.
At the Annual General Meeting due to be held on 10 May 2006, it is the Board's
intention to make a recommendation to shareholders that the share capital of
Savills be sub-divided so that each shareholder will receive two shares for
every one share held. Subject to the satisfaction of any relevant regulatory
requirements, further details of the proposed share split will accompany the
Notice of Annual General Meeting which, together with the Report and Accounts
for the year ended 31 December 2005, will be distributed to shareholders at the
end of March 2006.
BOARD AND STAFF
There have been no changes to the composition of the Board this year. As noted
in our last Report and Accounts, with effect from 31 March 2005 Robert McKellar
transferred to Hong Kong to take up the role of Chief Executive - Asia Pacific.
Robert McKellar's Group financial responsibilities have principally been assumed
by Danny O'Donnell, the Group Financial Controller.
Savills' continued development and growth is a result of the committed and
dedicated efforts of our talented staff whose continued ability to provide a
professional service to our clients is the basis for the excellent results
achieved in 2005; 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.
OUTLOOK
Confidence in investment markets remains strong and the residential prime
markets are resilient. We have enjoyed a positive start to the year and with
the increasing range of services we offer and geographical regions in which we
operate, we are confident that the Group is well placed to have a satisfactory
2006.
Peter Smith, Chairman
GROUP CHIEF EXECUTIVE'S REVIEW OF OPERATIONS AND FINANCE
2005 was an excellent year for Savills, as it expanded its range of property
related services to the global market.
Underlying pre-tax profits increased from £43.9m to £57.2m. Underlying profit
is calculated by adjusting reported profit before tax to deduct profits on
disposals of £0.4m (2004 - £11.2m), share based payment adjustment of £1.9m
(2004 - £3.9m) and add back amortisation of intangibles and impairment of
goodwill of £0.9m (2004 - £0.6m). There was a smaller corresponding increase in
underlying earnings per share (based upon underlying group profit) from 55.0p to
66.5p due to the dilutive effect of the issue of new shares to Trammell Crow
Company on 29 April 2005.
In the UK, our Commercial business enjoyed another record year following rapid
expansion and success in acquiring significant new teams. We are recognised as
one of the leading commercial property service providers with national coverage
through specialised offices in the main business centres.
The UK Residential business made a cautious start to the year but the market
regained confidence and the year finished on a much stronger note, particularly
in London.
In Europe the main focus of our business is investment and, as with the UK
markets, this remains strong. There is particular interest at the moment in the
German market where international 'value' investors are particularly active.
Asia Pacific had an outstanding year and overall revenue for that region now
constitutes 26% of the Group's total. The largest part of our Asia Pacific
profits were generated in Hong Kong where we have a particularly strong market
position. We continue to expand our business in China and have recently opened
a new office in Macau, where the new casino developments will provide
substantial growth.
TRANSACTIONAL ADVICE
The Transactional Advice business stream comprises commercial, residential,
agricultural agency and investment. During the year revenue was £166.9m (2004 -
£146.3m), representing 45% of our total revenue, generating operating profits of
£33.0m (2004 - £26.7m).
Commercial Investment and Agency
The investment markets performed well in 2005, as the positive money supply and
increasing demand from both institutional and retail investors continued to
drive pricing. A significant deal was advising Land Securities on the
acquisition of a retail warehouse and food store portfolio for £367m acquired
from LxB. During the year the combined team transacted over £16bn of deals,
strengthening our position in the market.
The International Investment team had another record year with net billings of
c£10.5m. The team continued to operate in a variety of markets including the
UK, France and Italy with the majority of this year's income generated from
projects in the UK; transactions totalled £1.57bn. Two highlights for the year
included advising on the sale of One Curzon Street on behalf of CGI for £280m
and advising on the sale of the Lloyd's Building, London on behalf of DEKA for
£231m.
The Business Space team continued to take market share and one of the more
interesting deals was the sale of Widewater Place, Harefield, Uxbridge on behalf
of Invesco for £35m to Insight Investment.
In January 2005, Savills and its partner Trammell Crow Company were appointed by
Norwich Union to advise on its surplus properties throughout the UK. The
portfolio comprised more than 150 properties, with over 200 sub-leases and 1.69m
sq ft. The appointment was the result of a competitive tender by Norwich Union
and underlines Savills' capability to undertake multiple disposal transactions
for major corporates.
Our Birmingham Development team acted on behalf of Countryside Properties PLC in
joint venture with Quintain Estates and Development PLC in the agreement and
lease with Birmingham City Council to develop City Park Gate, an important
regeneration site on the edge of Birmingham city centre. The scheme will
include up to 600 apartments, 150,000 sq ft of offices and a food store.
Despite rapidly rising commercial rents, our Leasing teams in Hong Kong Island
and Kowloon increased revenue on the back of very strong tenant demand. In
Shenzhen, the Commercial Leasing team was appointed to let Great China
International Exchange Square, a project comprising eight stories of c10.0m sq
ft of retail and over c19.4m sq ft of office space.
In Australia, despite a relatively weak sales and leasing market, profitability
increased. The Australian business has particularly strong operations in
Queensland and Western Australia. The Sydney Commercial Leasing team, leased
eight floors of 60 Union Street, Pyrmont, Sydney totalling 181,135 sq ft to
American Express; this was the largest single leasing deal ever achieved by
Savills in Australia.
The sale of 400 William Street, Melbourne was the Melbourne central business
district's largest site sale in 2005. Savills acted for the purchaser and has
been appointed leasing agents for the project.
Retail and Leisure
With a dedicated team throughout the UK, the Leisure team advised on all aspects
of the leisure industry in 2005. As part of its strategy for growth, the
Commercial Leisure team expanded their expertise into asset management and
investment sectors which culminated in leisure investment transactions in excess
of £250m. In particular, we provided specialist asset management advice at
Printworks, Manchester, a 340,000 sq ft scheme owned by Henderson Global
Investors and British Airways Pension Fund; where we secured four new operators
for Printworks in 2005 and raised footfall by 15% in the same period.
The Out of Town Retail team returned another strong performance despite some
areas of the retail market showing signs of weakness. During the year, the team
further extended its nationwide coverage opening a new commercial office in
Bristol. The team were appointed by Matalan Plc as their national advisers to
provide portfolio asset management, acquisitions and disposals. In 2005, the
team advised on over 100 retail parks for major landlords such as British Land,
Morley, Royal London Asset Management and Legal & General.
Hotels and Healthcare
The hotel investment market doubled in 2005 with strong operator demand; the
department capitalised on this by leading many transactions including Marstons,
Queens Moat Houses and Radisson. The apart-hotel concept emerged and Savills
led the market on schemes throughout London and Europe.
The Healthcare team had another strong year in which key valuation and agency
staff were recruited, thereby strengthening the team. The team have advised on
and sold over £800m healthcare related properties and businesses in 2005.
Institutional
The specialist Institutional team has significant activity in the conference
centre, schools and charity sectors. Highlights included the acquisition of the
Sundridge Park Hotel and Conference Centre (140,000 sq ft) on behalf of
Cathedral Group Plc in a deal worth in the region of £15m. The team also worked
with the Healthcare team on retirement property projects with assets worth in
excess of £150m. An unusual sale was that of Green Island, in Poole Harbour,
which had been used for a number of years by a charitable trust for holidays for
those with disabilities. This was acquired by a private purchaser for a sum in
excess of the £2.5m guide price.
Residential Agency
After a poor start to the year, the residential markets gained momentum and
traded well during the late spring and summer with a strong performance during
the autumn. The average Savills property sold for £1.3m in London and £0.7m in
the country. Our Knightsbridge office was involved in two of the highest value
residential sales in central London; a house in Belgrave Square, SW1 with an
asking price of £33m; and the sale on behalf of Hammerson plc and Grosvenor of
Dudley House, 100 Park Lane at a guide price of £40m.
Other highlights included the sale of Maperton House, Somerset, voted Country
Life 'House of the Year' in excess of its £3.5m guide price, Tor Point in Surrey
at a guide price of £5.2m and the Ward Estate on Loch Lomond sold for in excess
of £3m, possibly the most expensive property in West Scotland during 2005.
Residential Investment
The Residential Investment team continue to value a wide range of investment
portfolios as well as several large portfolios for institutional clients and
banks, including a large investment portfolio of tenanted apartment blocks
throughout England on behalf of British Land with a value in the region of £30m.
Purchasing Advice
Prime Purchase, Savills' independent subsidiary which specialises in acquiring
residential property in both central London and the country for retained
clients, continued its impressive growth since it began in 2002, with an
increase in turnover of over 29% during the year.
Of particular note was the purchase in London of the freehold of 4 Wilton
Crescent and its mews house and in the country of West Court near Newbury, which
was included in the Country Life List of the 10 best houses to have been sold
during the year. Country houses with amenity land of between 200 and 550 acres
were acquired for clients in Surrey, the Cotswolds and Devon. Over 55% of
purchases in the country last year were secured for clients either privately or
before marketing.
Residential Letting
With the opening of lettings businesses in Islington, Chiswick, Wimbledon and
Tunbridge Wells, residential lettings have continued to grow in an increasingly
buoyant market. Our core lettings business in London had a record year, whilst
country lettings also showed growth with further scope for expansion. Average
rents have increased, particularly in the prime central London house market and
the large country house market.
Auctions
The auction market continues to grow in importance as a method of sale and this
year we added a commercial auction department to complement our existing
residential auction team. Considerable synergy has developed between the two
teams that allows a comprehensive sales service to a full range of clients on a
wide range of property types which is reflected in our achieving sales of over
£287m this year. We sold over 1,000 properties, with an overall success rate of
85%; making Savills the fourth largest property auction house in the UK by
volume.
The Commercial team sold over £104m in its first nine months trading and we
expect to improve on this figure with a full year's trading in 2006.
The Auction business benefits considerably from our extensive office network;
this year we created a Savills Auction Subscription Service which allows
subscribers to receive electronic catalogues and up-to-date research as well as
financial market movements supplied by Savills Private Finance, our financial
services business.
New Homes
Following the expansion and growth of our New Homes department we now offer
clients 22 specialised operations across the UK with further openings planned in
2006. In 2005, we sold 3,922 units with a combined value of £1.4bn. Working
independently or with Development and Planning disciplines we are now advising
on a substantial number of major regeneration schemes; it is hoped this will
lead to significant instructions over the coming years.
New instructions included Pan Peninsula by Ballymore Properties near Canary
Wharf, a 340 unit development with a 50th floor cocktail bar and panoramic views
over London. Launched in November, 143 reservations were received on launch day.
We were also instructed by Arsenal Football Club plc on the development of
Highbury Stadium into 711 apartments with a total value of £300m; this scheme
was launched in September 2005 with sales achieving record levels. Upper Strand
Developments instructed us in a 500 unit development in Edinburgh's Granton
district, which forms part of one of the largest waterfront regeneration schemes
in Europe.
International New Homes
The demand for residential and investment property abroad continues to expand
both in volume and exposure to new regions. 'Leaseback' skiing properties in
Switzerland and France have been particularly popular for both investment and
leisure opportunities. We have successfully introduced projects in a number of
emerging markets such as Croatia and Bulgaria and established a number of new
local associations.
Development
The Development team has substantially grown and the future pipeline of both
consultancy and agency instructions has increased significantly. The team
maintained an involvement in a number of major projects across Greater London
which included consultancy work as part of the delivery of the Olympics'
facilities in 2012.
The Development & Regeneration team increased their involvement in public sector
projects as key authorities have taken a role in the regeneration of east London
and the Olympic area.
Our expertise and market share in the delivery of major strategic developments
outside London have also been expanded. We are currently advising BP on two
major new settlements: Harlow (8,000 houses) and Swansea (5,000 houses) and the
design and format of the new settlements is being directed by the Princes
Foundation.
Farm and Estate Agency
2005 has been a year of recovery in the agricultural agency market with more
farms for sale but supply still limited. The average value of farmland
increased by 12% during the year. The finalising of European support payments
in spring 2006 is expected to bring more normality to a market still trading on
low national turnover. Sale instructions ranged from Brook Hall in Suffolk
(guide price £6.2m) to the Trewarthenick Estate in Cornwall (guide price £9m).
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. Operating profit for
the year was £12.9m (2004 - £10.9m) on revenue of £71.8m (2004 - £59.3m).
Valuation
The Commercial Valuation department is regarded as one of the leading valuation
teams in the UK. Based in our principal offices of London, Manchester and
Edinburgh, the team provides national and international advice on investment and
development property for a range of purposes including advice to lenders for
loan security purposes and to clients for litigation, stock exchange, tax and
accounts purposes. Over the course of 2005, the department expanded with the
addition of new consultants. The department valued in excess of £20bn of real
estate assets and has provided independent valuation advice to over 50 different
lending organisations as well as many property companies and property owners.
The Residential Valuation department is also a leader in providing valuation and
investment appraisal services for loan security, acquisition, disposals and
accounts. We acted on behalf of Westminster City Council in the sale of their
headlease in the landmark building Dolphin Square, Pimlico, to Westbrook
Partners, a US property investment company, for a price in excess of £175m.
Another key highlight was our appointment to manage and value the renowned
Phillimore Kensington Estate in London, the first change in managing agents for
200 years. The addition of the Phillimore Estate Management team has provided
synergy with the other portfolio and leasehold enfranchisement activities of the
department.
The expanded Loan Security Valuation team valued in excess of £4bn of
residential and mixed use development schemes and high value property. In
addition to our valuation departments in London, valuations of both commercial
and residential properties were undertaken in 22 offices throughout the country
from Edinburgh to Southampton and Norwich to Exeter.
In Asia, Savills were successful in recruiting a 35 man professional team for
Hong Kong and mainland China, which specialises in valuation, land use rights,
tribunal and other forms of consultancy. The team was very active in initial
public offering ('IPO') and real estate investment trust ('REIT') consultancy
advice and was involved in the valuation of the property portfolio for the
listing of the Construction Bank of China, the largest global IPO in 2005.
In Singapore, the acquisition of Valuers & Property Consultants (Singapore) Pte
Ltd, a specialist valuation team, has increased our revenue and profile
considerably.
In Australia, the professional services division secured the appointment by the
Australian Department of Foreign Affairs and Trade to value 121 Australian
embassies and ambassadorial residences globally.
Building Consultancy
The Commercial Building Consultancy business was reorganised in 2005 into
specialist service focused teams which enabled the business to take on more
complex, high value projects.
The Technical Due Diligence and Project Monitoring teams were involved in a
number of high profile commissions during the year including the survey of 12
German shopping centres for the Kenmore Group and the construction monitoring of
a large City office building for DIFA, Deutsche Immobilien Fonds AG. They also
acted for the Gatsby Charitable Foundation on feasibility work in relation to
their planned donation of c£45m to the University of Cambridge for the
establishment of a new institute for the study of plant diversity and
development.
The Lease Management team provided strategic dilapidations and service charge
advice to some 120 landlord and tenant clients on claims and reviews between
£10k and £25m. 40% of this work was undertaken in the capacity of expert in
dispute resolution procedures.
The Project Management team undertook a number of projects for Japanese clients
including Mitsui & Co (UK) Plc, Japan Satellite Television (Europe) Ltd and
Suzuki GB PLC.
The Refurbishment team rolled out an improved full design and contract
administration service to their residential and commercial clients, securing 18
new projects with a total value in excess of £20m.
Industrial Building Consultancy has continued to expand its services in the
logistics and distribution sector having acted as 'Fund Surveyors' on over 2m sq
ft of new-build space for MetLife Investments and pre-acquisition support on
around 1.5m sq ft of new developments. Retailer and logistics occupier clients
include Mothercare and Frans Maas.
Building consultancy services in our regional offices continued to grow at a
steady rate with billings for Manchester and Birmingham reaching £1.6m. The
team continues to be involved with Kenmore Group on pre-acquisition surveys and
the refurbishment of a number of buildings.
Our professional team continue to undertake pre-acquisition surveys,
dilapidations instructions and minor refurbishments on behalf of ICI Dulux
Decorator Centres, who have become a key client. Close liaison with Greater
Manchester Pension Fund has provided good instructions on the Roundthorn
Industrial Estate where a number of refurbishments have been undertaken in the
last twelve months.
Landlord and Tenant
Following the negative rental growth during the last couple of years, the
markets have seen a return to positive growth in 2005, with the market now
generally optimistic about increased levels of rental growth in 2006 and beyond.
During the year, the Rent Review team expanded through acquisition and
recruitment; retail specialists have been added in Bristol and London. We now
act for over 60 landlords in this high profile sector of the property market.
Affordable Housing and Student Accommodation
The department has continued to strengthen its profile in the specialist
affordable and student accommodation markets winning an increasing proportion of
agency instructions; the largest of which in 2005 was the disposal of a mixed
student/affordable scheme in Brentford comprising accommodation of 1,000 beds.
Rating
Our specialist Rating department has been assisting business with all aspects of
rating for over 50 years. The department is now working on the 2005 list
appeals; one supermarket has already had its 2005 list bill reduced by £0.25m.
Planning
The Planning division expanded in 2005, with teams operating from ten offices
and increasing the diversity of our skills base to include urban design, master
planning and environmental impact assessment alongside planning and retail
consultancy. Recent changes to planning legislation are producing a peak in
planning consultancy work and there are pressures to deliver high quality growth
and regeneration. Our ability to integrate planning advice and urban design
with wider property and research skills enables us to produce development
solutions that are marketable, sustainable and most importantly can be delivered
through the planning process.
Notable projects during the year included the promotion of several of the
country's largest urban extensions including 14,000 new homes at Harlow and
7,000 houses at Milton Keynes. In the energy and water industry sectors, we
have prepared an application and environmental impact assessment for the UK's
largest proposed windfarm in Scotland and we are handling a major new waste
water treatment facility on the south coast.
Housing Consultancy
The department reported its strongest financial performance since it was
established in 1989; a new team was recruited in Horsham which increased the
size of the team by 60%. Working internationally for the first time, the team
valued several substantial housing portfolios. Strategic advisory work continued
to grow with a number of new instructions from national housing providers and
strong ongoing instructions for loan security valuations.
Strategic Projects
Our Telecoms team has significantly increased its market share and has ongoing
work with Vodafone, Orange and O2 as the mobile phone operators continue to roll
out the 3G Network.
Following the electricity regulator's last price review, there has been a
significant increase in activity as UK regional electricity companies invest in
the refurbishment of their networks and we are involved in managing the
interface between landowners and the construction teams.
Portfolio valuation advice was provided to National Grid as part of its disposal
of four of its distribution networks.
In Australia, Savills announced the formation of a Strategic Project Delivery
business, which will focus on the delivery of infrastructure, commercial and
industrial projects.
Research
The Research department advised a wide variety of clients on investment,
development, planning and other issues relevant to all sectors of the UK and
overseas property markets. Our prognosis for a soft landing in the UK housing
market was proved to be correct; house price inflation in 2005 according to the
Government's index looks set to be very close to our 2% forecast and our
forecast of falls in urban building land values was also correct, falling by
-2.5% in 2005.
The department continues to have involvement with some of the biggest UK
development sites, providing in-depth studies of housing demand, pricing and
phasing as well as ground-breaking research and information on place-making,
plus the integration, management and funding of neighbourhood and commercial
uses.
In Asia, the Savills Research & Consultancy business provided economic and
property market analysis for The Link Management on the £2.5bn government
privatisation of 180 retail and car park facilities. This was Hong Kong's
largest privatisation and the world's largest IPO of a real estate investment
trust (REIT).
Savills Research & Consultancy was appointed to advise on the successful launch
in December 2005 of Prosperity REIT, established by Cheung Kong Holdings, Hong
Kong's largest property developer. The REIT consisted of office and industrial
properties valued at approximately £338.0m.
PROPERTY AND FACILITIES MANAGEMENT
The Property and Facilities Management business continued to grow, generating
fee income from managing commercial, residential and agricultural properties.
During the year, revenue was £104.4m (2004 - £85.8m), generating an operating
profit of £7.8m (2004 - £6.0m).
Facilities Management
Savills Guardian, an integrated facility management business based in Hong Kong
had another successful year. The business secured a Public Sector Association
contract managing 5,000 housing units and a contract for hotel cleaning and
maintenance for Disneyland, Hong Kong. Overall margins in Hong Kong for
Guardian are under pressure and the business is looking to mainland China and
Macau to secure more lucrative contract margins.
Commercial Management
The UK Property Management business has continued to develop at an impressive
rate in terms of overall turnover, quality of instructions and client profile.
Organic growth has been achieved and our client base now represents the full
spectrum of UK property investors with each office acting for a mix of local
investors and major funds. The team has successfully expanded a number of
existing mandates from clients such as GE Real Estate, Morley Fund Management
and UBS.
Of particular note is the recruitment of a three-man management team in
Birmingham which has helped strengthen the department. A new management
department has also been set up in Leeds and it is hoped that similar expansion
in Bristol will follow.
The Japanese business, which is headquartered in Tokyo, was acquired at the end
of 2004 and generated property management and leasing revenues of £1.2m in 2005.
Long term, Japan will be a key market for Savills in Asia and we are
developing our plans to grow our presence in the world's second largest real
estate market.
The property management business in Hong Kong increased revenues by 30% and
acquired a business called 'Showcase' which specialises in offering exhibition
and marketing services to office and retail landlords and has a close alignment
with the property management business.
In Korea, Savills acquired a 50% stake in Korean Asset Advisors and BHP Korea,
approved by the Bank of Korea on 3 January 2006 and which operates property,
asset management and brokerage services in Seoul. The business manages over 10m
sq ft of grade A office and retail space in Seoul and acts for key institutional
clients. The opportunities to expand and grow the Korean business are
considerable and benefits are already emerging from synergies between our
businesses in China and Korea.
Land and Farm Management
2005 began to see the countryside adjust to EU reform of the Common Agricultural
Policy. Against this background of reform, Savills has been consolidating the
growth of its rural business following the acquisition of Smith Woolley,
Colvilles and Elvey & Co. This has broadened our network and skill base
allowing us to provide a much improved service to our clients and led to
enhanced fee income.
PROPERTY TRADING AND INVESTMENT
As there were no properties held for sale during the year no revenue was
generated in 2005 (2004 - £13.0m) nor operating profit reported (2004 - £10.1m).
FINANCIAL SERVICES
The Financial Services division comprises Savills Private Finance Limited, which
provides residential mortgage broking services, commercial debt broking
services, commercial and private insurance services and associated financial
planning products. The division made operating profit of £4.4m (2004 - £3.9m)
on a revenue of £25.8m (2004 - £20.1m).
Savills Private Finance continued to trade well, especially in the high net
worth mortgage broking market. The Commercial Debt Broking, Financial Planning
and Property Insurance divisions have also made significant contributions. New
offices have been opened in Leeds, Sevenoaks and York bringing the total number
of offices to twenty. Despite an increase in fixed costs associated with the
investment in and growth of the business, profit for the year was ahead of 2004.
The business is now well placed to ensure further profit growth.
FUND MANAGEMENT
Cordea Savills, the Group's fund management business, made operating profit of
£0.6m (2004 - loss of £0.5m) on revenue of £4.7m (2004 - £3.6m). Funds under
management expanded to £1.7bn during 2005 but the year was characterised by
investment in infrastructure and developing a pipeline of new funds to be
launched in 2006.
In the UK, Cordea Savills achieved strong investment performance for its
discretionary pension funds. The year was also notable for the growth of the
Charities Property Fund, which expanded in size from £242m to £309m, making it
the leading property fund for UK charities. We launched our first pooled
product aimed at UK and European pension funds: the Cordea Savills Student
Managed Hall Fund; this fund was seeded with £65m of halls purchased from UNITE
Group plc. 2005 also saw Cordea Savills Wealth Management establish its brand
in the UK private investor market with the launch of its first three products:
DIVERSE, QPC and Serviced Land Fund No 1.
In Italy, Cordea Savills received approval from the Bank of Italy for an SGR
(the regulated Italian fund management company) and an exceptional team has been
formed with Gerardo Solaro del Borgo appointed as Managing Director and Riccardo
Delli Santi and Gualtiero Tamburini appointed as Independent Directors. With
strong management and investment teams positioned in offices in Milan and Rome,
the business is poised for further growth in the rapidly growing Italian
property funds market.
We expect Cordea Savills to emerge, in due course, as a major European
investment manager servicing the needs of a wide range of domestic and
international clients.
FINANCIAL HIGHLIGHTS:
• Underlying Group operating margins of 14.3% (2004 - 13.2%).
• Strong cash balances with a year-end balance of £99.9m, even after making
an additional lump sum payment of £10m into the Pension Plan.
• A very strong performance from Asia Pacific this year with turnover up
16% and operating profit up 30%.
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 (in aggregate £9.4m) and
overseas (in aggregate £3.2m) including:
• On 1 March 2005, Savills (L&P) Limited acquired Holden Matthews Estate
Agents Limited.
• On 31 March 2005, Savills SA acquired AWON Gestion, a Paris based property
management business.
• On 13 May 2005, Savills Commercial Limited acquired Mansfield Elstob Main
Limited, a Bristol based commercial property services business.
• On 22 June 2005, Savills PM Holding purchased Showcase Ltd.
• On 13 October 2005, Savills (Overseas Holdings) Limited acquired a major
shareholding in Factor Immobilien Management GmbH.
• On 26 September 2005, Savills Commercial Limited acquired Brown Harknett
International Limited.
• On 7 October 2005, Savills Commercial Limited acquired S Y Moorhouse Wright
Limited.
• On 19 December 2005, Savills announced the acquisition of a 50%
shareholding in Korea Asset Advisors and BHP Korea, which received formal
approval from the Bank of Korea on 3 January 2006.
Assets classified as held for sale
On 16 December 2005, Savills announced the acquisition of 100% of the units in a
property unit trust which owns a portfolio of three student accommodation
buildings operated by UNITE plc. The assets are to be used as seed capital for a
fund launched and managed by Cordea Savills. The assets acquired are recorded
as held for sale and total cash consideration was £16.5m.
Net cash outflow for investing activities during the year amounted to £31.8m
(2004 - inflow of £3.1m).
Aubrey Adams, Group Chief Executive
SAVILLS plc
CONSOLIDATED INCOME STATEMENT
for the year ended 31 December 2005
Year ended Year ended
2005 2004
Notes £'000 £'000
Continuing operations
Revenue
Revenue 373,866 316,619
Other revenue - sale of trading properties - 11,356
Total revenue 2 373,866 327,975
Employee benefits expense (227,510) (190,922)
Depreciation expense (4,573) (4,051)
Amortisation of intangibles & impairment of goodwill (1,465) (1,302)
Changes in trading property stock - (9,177)
Other operating expenses (85,914) (75,363)
Profit on disposal of investment property - 8,094
Profit on disposal of subsidiary, associate & available for sale
investments 367 917
Operating profit 2 54,771 56,171
Finance income 3,940 2,361
Finance costs (461) (584)
3,479 1,777
Share of post tax profit from associates and joint ventures 329 364
Profit before income tax 58,579 58,312
Income tax expense (including foreign tax of £4.3m (2004 - 4 (17,799) (17,340)
£2.3m))
Profit for the year from continuing operations 40,780 40,972
Discontinued operations
Loss for the year from discontinued operations 3 (504) -
Profit after income tax 40,276 40,972
Attributable to:
Equity shareholders of the parent 39,974 40,690
Minority interest 302 282
40,276 40,972
Earnings per share
From continuing and discontinued operations
Basic earnings per share 7 67.2p 72.7p
Diluted earnings per share 7 62.6p 66.1p
From continuing operations
Basic earnings per share 7 68.1p 72.7p
Diluted earnings per share 7 63.4p 66.1p
From discontinued operations
Basic earnings per share -0.9p 0.0p
Diluted earnings per share -0.8p 0.0p
Dividends per share
Final dividend proposed 5 16.0p 12.5p
Dividends paid (ordinary and special) 5 40.5p 16.0p
SAVILLS plc
CONSOLIDATED BALANCE SHEET
at 31 December 2005
31.12.05 31.12.04
Notes £'000 £'000
ASSETS
Non-current assets
Property, plant and equipment
14,679 11,922
Goodwill
54,255 46,095
Intangible assets
4,699 2,549
Investments in associates and joint ventures
3,402 2,831
Financial assets
- Other investments - 3,834
- Available for sale investments 10 10,486 -
Deferred income tax assets 23,892 17,333
111,413 84,564
Current assets
Assets classified as held for sale 64,853 -
Work in progress 3,180 2,666
Trade and other receivables 115,336 87,241
Cash and cash equivalents 99,921 89,919
283,290 179,826
LIABILITIES
Current Liabilities
Borrowings 1,910 3,823
Liabilities directly related to assets 48,867 -
classified as held for sale
Trade and other payables 136,102 113,367
Current income tax liabilities 5,644 8,405
Employee benefit obligations 1,739 1,499
Provisions for other liabilities and charges 675 665
194,937 127,759
Net current assets 88,353 52,067
Total assets less current liabilities 199,766 136,631
Non-current Liabilities
Borrowings 1,516 1,115
Trade and other payables 989 2,269
Retirement and employee benefit obligations 24,926 27,490
Provisions for other liabilities and charges 1,708 1,999
Deferred income tax liabilities 2,313 62
31,452 32,935
Net assets 168,314 103,696
EQUITY
Capital and reserves attributable to equity
holders of the parent
Share capital 9, 11 3,325 3,026
Share premium 11 80,885 43,114
Other reserves 11 6,528 (1,243)
Retained earnings 11 77,001 58,609
167,739 103,506
Minority interest 11 575 190
Total equity 168,314 103,696
SAVILLS plc
CONSOLIDATED STATEMENT OF CASH FLOWS
for the year ended 31 December 2005
Year ended Year
ended
2005 2004
Notes £'000 £'000
CASH FLOWS FROM OPERATING ACTIVITIES
Cash generated from continuing operations 8 44,859 58,004
Interest received 3,829 2,454
Interest paid (461) (584)
Income tax paid (15,564) (15,303)
Net cash generated from operating activities 32,663 44,571
CASH FLOWS FROM INVESTING ACTIVITIES
Proceeds from sale of subsidiary, net of cash disposed 120 4,666
Proceeds from sale of property, plant and equipment 38 99
Proceeds from sale of associates, joint ventures and investment property 503 15,628
Dividends received 324 3,144
Net loans (to)/repayments received from related parties (413) 96
Acquisition of subsidiaries, net of cash acquired (7,528) (10,418)
Acquisition of assets for sale (16,490) -
Purchases of property, plant and equipment (7,268) (6,458)
Purchases of intangible assets (872) (944)
Purchase of investment in associates, joint ventures and other investments (176) (2,715)
Net cash (used in)/generated from investing activities (31,762) 3,098
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from issue of share capital 38,075 903
Proceeds from borrowings 706 1,605
Repurchase of own shares (520) (5,751)
Purchase of own shares for Employee Benefit Trust (4,158) (4,238)
Repayments of borrowings (4,322) (7,598)
Dividends paid (23,133) (9,309)
Net cash generated from/(used in) financing activities 6,648 (24,388)
Net increase in cash and cash equivalents 7,549 23,281
Cash and cash equivalents at beginning of the year 89,919 67,625
Effect of exchange rate fluctuations on cash held 2,453 (987)
Cash and cash equivalents at end of year 99,921 89,919
SAVILLS plc
CONSOLIDATED STATEMENT OF RECOGNISED INCOME & EXPENSE
for the year ended 31 December 2005
Year ended Year ended
2005 2004
Notes £'000 £'000
Profit for the year 40,276 40,972
Revaluation of available for sale investments 6,582 -
Actuarial loss on defined benefit pension scheme (7,301) (9,495)
Tax on items directly taken to reserves 9,574 4,652
Foreign exchange translation differences 2,702 (1,401)
Net income/(expense) recognised directly in equity 11,557 (6,244)
Total recognised income and expense for the year 51,833 34,728
Attributable to:
Equity shareholders of the parent 51,621 34,427
Minority interest 212 301
51,833 34,728
Effects of changes in accounting policies
Attributable to equity shareholders of the parent
- increase in retained earnings due to revaluation of available
for sale investments on adoption of IAS 32&39 on 1 January 2005 960 -
Attributable to minority interest - -
960 -
NOTES
1. Basis of preparation
The results for the year ended 31 December 2005 have been extracted from the
audited financial statements. The financial statements have been prepared in
accordance with International Financial Reporting Standards and IFRIC
interpretations as adopted by the European Union and with those parts of the
Companies Act, 1985 applicable to companies reporting under IFRS.
In preparing comparatives for 2004, the Group has chosen to utilise the IFRS1
exemption from the requirement to restate comparative information for IAS32 and
IAS39 on financial instruments.
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 2005, on which the auditors have given
an unqualified audit report, have not yet been filed with the Registrar of
Companies.
The financial information in this statement has been prepared in accordance with
the IFRS accounting policies set out in the Group 2005 Annual Report & Accounts.
These policies are in line with the press release entitled 'adoption of
International Financial reporting Standards' and issued on 29 June 2005. This is
available on the Company's investor relations website at ir.savills.com.
The preparation of financial statements in conformity with generally accepted
accounting principles requires the use of estimates and assumptions that affect
the reported amounts of assets and liabilities at the date of the financial
statements and the reported amounts of revenues and expenses during the
reporting period. Although these estimates are based on management's best
knowledge of the amount, event or actions, actual results ultimately may differ
from those estimates.
2. Segment analysis
Year ended 31 Transactional Consultancy Property & Fund Property, Financial Unallocated Total
December 2005 Advice Facilities Management Trading & Services *
Management Investment
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
United Kingdom
- Commercial 60,759 39,850 32,838 4,733 - 3,211 127 141,518
- Residential 61,124 22,358 7,013 - - 22,596 - 113,091
121,883 62,208 39,851 4,733 - 25,807 127 254,609
Rest of Europe 15,148 2,112 4,642 - - - 39 21,941
Asia Pacific 29,854 7,494 59,968 - - - - 97,316
Total revenue 166,885 71,814 104,461 4,733 - 25,807 166 373,866
Operating profit
United Kingdom
- Commercial 13,929 7,881 3,224 580 - 828 (4,335) 22,107
- Residential 10,120 3,946 857 - - 3,533 - 18,456
24,049 11,827 4,081 580 - 4,361 (4,335) 40,563
Rest of Europe 3,768 402 255 - - - 99 4,524
Asia Pacific 5,223 676 3,503 - - - 282 9,684
Operating profit/ 33,040 12,905 7,839 580 - 4,361 (3,954) 54,771
(loss)
Net Finance income 3,479
Share of results of associates and joint ventures 329
Profit before income tax 58,579
Income tax expense (17,799)
Profit for the year from continuing operations
40,780
Year ended 31 Transactional Consultancy Property & Fund Property, Financial Unallocated Total
December 2004 Advice Facilities Management Trading & Services *
Management Investment
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Revenue
United Kingdom
- Commercial 51,785 34,068 24,481 3,637 12,953 2,575 - 129,499
- Residential 58,747 18,346 5,457 - - 17,477 - 100,027
110,532 52,414 29,938 3,637 12,953 20,052 - 229,526
Rest of Europe 11,143 1,120 2,320 - - - - 14,583
Asia Pacific 24,611 5,723 53,532 - - - - 83,866
Total revenue 146,286 59,257 85,790 3,637 12,953 20,052 - 327,975
Operating profit
United Kingdom
- Commercial 12,645 7,010 1,933 (543) 10,100 744 (862) 31,027
- Residential 8,280 3,115 286 - - 3,163 - 14,844
20,925 10,125 2,219 (543) 10,100 3,907 (862) 45,871
Rest of Europe 2,289 226 318 - - - - 2,833
Asia Pacific 3,492 508 3,467 - - - - 7,467
Operating profit/ 26,706 10,859 6,004 (543) 10,100 3,907 (862) 56,171
(loss)
Net Finance income 1,777
Share of results of associates and joint ventures 364
Profit before income tax 58,312
Income tax expense (17,340)
Profit for the year from continuing operations 40,972
The unallocated segment includes holding company costs, group bonuses and other
expenses not directly attributable to the operating activities of the Group's
business segments.
*For the purpose of the segmental information above, and to assist in the
comparison of segmental information, the benefit arising from the amortisation
of the share based payment charge as discussed in more detail in note 6, is
retained within the unallocated segment.
3. Discontinued operations
Year ended Year ended
2005 2004
£'000 £'000
Revenue 149 -
Expenses (869) -
Loss before income tax (720) -
Income tax credit 216 -
Loss after income tax (504) -
Student accommodation assets and associated debt were acquired during the year
as seed assets for a Cordea Savills fund to be launched in the 1st quarter 2006.
It is expected the Group's share of these assets will be diluted to a small
holding of a maximum of 5% before the next balance sheet date and as such these
assets and associated liabilities are classified as held for sale.
The loss for the year relates to losses on the mark to market of two interest
rate swaps taken out on the loans secured on the properties. All operating
results are classified under discontinued operations. The discontinued
operations all relate to the unallocated segment.
4. Income tax expense
The income tax expense has been calculated on the basis of the underlying rate
in each jurisdiction adjusted for any disallowable charges.
Year ended Year ended
2005 2004
£'000 £'000
United Kingdom corporation tax (13,009) (16,059)
Foreign tax (3,964) (2,296)
Deferred tax (826) 1,015
(17,799) (17,340)
5. Dividends Year ended Year ended
2005 2004
£'000 £'000
Amounts recognised as distribution to equity holders in the period:
Interim dividend of 8.0p per share (2004 - 6.0p per 4,942 3,394
share)
Ordinary final dividend of 12.5p per share (2004 - 10.0p) 6,990 5,563
Special dividend of 20.0p per share (2004 - nil) 11,128 -
23,060 8,957
Proposed final dividend for the twelve months ended
31 December 2005 of 16p per share 9,861 -
The Directors have recommended a final dividend for the twelve months ended 31 December
2005 of 16 pence per ordinary share. The final dividend, if approved at the Annual
General Meeting on 10 May 2006, will be paid on 18 May 2006 to shareholders on the
register as at 18 April 2006.
6. Underlying profit before tax
Year Year
ended ended
2005 2004
£'000 £'000
Reported Profit before tax 58,579 58,312
Add back amortisation of intangibles (excluding software) & 913 639
impairment of goodwill
Less disposal of trading & investment properties, subsidiary,
associates & available for sale investments (367) (11,190)
Less Share based payment adjustment (1,934) (3,906)
57,191 43,855
The Directors regard the above adjustments necessary to give a fair picture of
the underlying results of the Group for the period. The adjustment for Share
based payment relates to the transitional impact of the new accounting standard
accounting for share based compensation.
The annual bonus is paid in a mixture of cash and deferred shares and the
proportions can vary from one year to another. Under IFRS the deferred share
element is amortised to the income statement over the vesting period whilst the
cash element is expensed in the year. The adjustment above addresses this by
deducting from profit the difference between the IFRS 2 charge and the value of
the annual share award.
7. Basic & Diluted earnings per share
Year to Earnings Shares EPS Earnings Shares EPS
31 December 2005 2005 2005 2004 2004 2004
£'000 '000 Pence £'000 '000 Pence
From continuing and discontinued operations
Basic earnings per share 39,974 59,450 67.2 40,690 55,938 72.7
Effect of additional shares - 4,418 (4.6) - 5,647 (6.6)
issuable under option
Diluted earnings per share 39,974 63,868 62.6 40,690 61,585 66.1
From continuing operations
Basic earnings per share 40,478 59,450 68.1 40,690 55,938 72.7
Effect of additional shares - 4,418 (4.7) - 5,647 (6.6)
issuable under option
Diluted earnings per share 40,478 63,868 63.4 40,690 61,585 66.1
Adjusted underlying basic earnings per share
Year to Earnings Shares EPS Earnings Shares EPS
31 December 2005 2005 2005 2004 2004 2004
£'000 000 Pence £'000 000 Pence
From continuing operations
Basic earnings from continuing 40,478 59,450 68.1 40,690 55,938 72.7
operations
Amortisation of intangibles 639 - 1.1 639 - 1.1
(excluding software) and impairment
of goodwill after tax
Share based payment adjustment (1,354) - (2.3) (2,734) (4.9)
after tax -
Less sale of trading properties - - - (1,525) (2.7)
after tax -
Less sale of investment property - - - (5,666) (10.1)
after tax -
Less sale of subsidiary, associate ( 257) - (0.4) (642) - (1.1)
& available for sale investments
after tax
Adjusted underlying basic earnings
per share 39,506 59,450 66.5 30,762 55,938 55.0
8. Cash generated from continuing operations Year ended Year ended
2005 2004
£'000 £'000
Profit for the year from continuing operations 40,780 40,972
Adjustments for:
Taxation 17,799 17,340
Depreciation expense 4,573 4,051
Amortisation of intangibles & impairment of goodwill 1,465 1,302
Net finance income (3,479) (1,777)
Share of post tax profit from associates and joint ventures (329) (364)
Profit on disposal of investment property - (8,094)
Profit on disposal of subsidiary, associates & available for sale
investments (367) (917)
Loss on sale of property, plant and equipment 364 193
Decrease in property held for sale - 2,052
(Decrease)/increase in provisions (833) 481
Decrease in employee and retirement obligations (9,574) (13,964)
Charge for share based compensation 1,913 1,144
Provision against investments in associates and joint ventures 18 16
Operating cash flows before movements in working capital 52,330 42,435
(Increase)/decrease in work in progress (431) 126
Increase in debtors (23,471) (14,671)
Increase in creditors 16,431 30,114
Cash generated from operations 44,859 58,004
9. Share capital
On 29 April 2005 Trammell Crow Company (TCC) exercised an option to subscribe
for 5,243,229 shares representing over 7% of the Group's share capital. This was
in accordance with the terms of an agreed Option Deed dated 9 May 2000, entered
into at the time of the Strategic Alliance. The shares were issued at a price of
701.28p, representing a 20% premium to the average closing mid-market price of
the Ordinary Shares as taken over the preceding five days prior to exercise.
10. Available for sale investments
The Group adopted accounting standards IAS 32 and IAS 39 covering financial
instruments from 1 January 2005 and this resulted in a change in the measurement
of available for sale investments from cost to fair value. At 1 January 2005,
this change resulted in an increase in the value of the Group's investments of
£960,000 reflecting the valuation of certain of the Group's listed equity
investments to market value.
Further revaluations were made during the period relating to the Group's
investments in unlisted equity securities, the largest of which was an increase
of £4.9m relating to the Group's holding in Fastcrop plc. This investment has
been sold subsequent to year end.
£'000
At 31 December 2004 -
Adoption of IAS 32 & 39 - reclassification from other investments 3,834
Remeasure to fair value 960
At 1 January 2005 4,794
Additions 10
Disposal (900)
Revaluation 6,582
At 31 December 2005 10,486
Available-for-sale financial assets include the following:
Listed securities UK - equity securities 10
Unlisted securities UK - equity securities 7,618
UK - limited partnership 2,858
10,486
11. Statement of changes in equity
Minority Total
Attributable to equity holders of the Group interest equity
Share Share Translation Revaluation Other Retained
capital premium reserve reserve reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 31 December 2004 3,026 43,114 (1,420) - 177 58,609 190 103,696
Adoption of IAS 32 and IAS 39 - - - - 288 - 960
672
Balance at 1 January 2005 3,026 43,114 (1,420) 672 177 58,897 190 104,656
Total recognised income and - - 2,792 4,900 - 43,929 212 51,833
expense for the period
Employee share option scheme:
- Value of services provided - - - - - 1,913 - 1,913
Issue of share capital 304 37,771 - - - - - 38,075
Purchase of own shares (5) - - - 5 (520) - (520)
Purchase of treasury shares - - - - - (4,158) - (4,158)
Dividends - - - - - (23,060) (73) (23,133)
Disposals - - - (598) - - - (598)
Business combinations - - - - - - 246 246
Balance at 31 December 2005 3,325 80,885 1,372 4,974 182 77,001 575 168,314
Minority Total
Attributable to equity holders of the Group interest equity
Share Share Translation Revaluation Other Retained
capital premium reserve reserve reserves earnings
£'000 £'000 £'000 £'000 £'000 £'000 £'000 £'000
Balance at 1 January 2004 3,070 42,237 - - 107 40,564 562 86,540
Total recognised income and - - (1,420) - - 35,847 301 34,728
expense for the period
Employee share option scheme:
- Value of services provided - - - - - 1,144 - 1,144
Issue of share capital 26 877 - - - - - 903
Purchase of own shares (70) - - - 70 (5,751) - (5,751)
Purchase of treasury shares - - - - - (4,238) -
(4,238)
Dividends - - - - - (8,957) (352) (9,309)
Business combinations - - - - - - (321) (321)
Balance at 31 December 2004 3,026 43,114 (1,420) - 177 58,609 190 103,696
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 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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