Savills plc 2012 Annual Report - (PDF) - Investor relations

Notes to the financial statementsYear ended 31 December 20121. General informationSavills plc (the ‘Company’) and its subsidiaries (together the‘Group’) is a leading international property advisory Group. TheGroup operates through a network of offices in the UK, Europe,Asia Pacific and the US. Savills is listed on the London StockExchange and employs 25,016 staff worldwide.The Company is a public limited company incorporated anddomiciled in England and Wales. The address of its registeredoffice is 20 Grosvenor Hill, Berkeley Square, London W1K 3HQ.These consolidated financial statements were approved for issueby the Board of Directors on 13 March 2013.2. Accounting policiesThe principal accounting policies applied in the preparation of theseconsolidated financial statements are set out below. These policieshave been consistently applied to all the years presented, unlessotherwise stated, and are also applicable to the parent Company.Basis of preparationThese financial statements have been prepared in accordancewith International Financial Reporting Standards (IFRSs) and IFRICinterpretations as adopted by the European Union and with thoseparts of the Companies Act 2006 applicable to companiesreporting under IFRS.The preparation of financial statements in conformity with IFRSrequires the use of certain critical accounting estimates and formanagement to exercise judgement in the process of applying theGroup’s accounting policies. The areas involving a higher degreeof judgement or complexity, or areas where assumptions andestimates are significant to the consolidated financial statements,are disclosed in Note 4.The financial statements are prepared on a going concern basisand under the historical cost convention as modified by therevaluation of available for sale investments and derivativefinancial instruments.ConsolidationThe consolidated financial statements include those of theCompany and its subsidiary undertakings, together with theGroup’s share of results of its associates and joint ventures.SubsidiariesSubsidiaries are all entities (including special purpose entities)over which the Group has the power to govern the financial andoperating policies generally accompanying a shareholding of morethan one half of the voting rights. The existence and effect ofpotential voting rights that are currently exercisable or convertibleare considered when assessing whether the Group controlsanother entity. The Group also assesses existence of controlwhere it does not have more than 50% of the voting power butis able to govern the financial and operating policies by virtue ofde-facto control. De-facto control may arise in circumstanceswhere the size of the Group’s voting rights relative to the sizeand dispersion of holdings of other shareholders give the Groupthe power to govern the financial and operating policies.Subsidiaries are fully consolidated from the date on which controlis transferred to the Group. They are de-consolidated from thedate that control ceases.The Group applies the acquisition method of accounting toaccount for business combinations. The consideration transferredfor the acquisition of a subsidiary is the fair values of the assetstransferred, the liabilities incurred and the equity interests issuedby the Group. The consideration transferred includes the fair valueof any asset or liability resulting from a contingent considerationarrangement. Identifiable assets acquired and liabilities andcontingent liabilities assumed in a business combination aremeasured initially at their fair values at the acquisition date. TheGroup recognises any non-controlling interest in the acquiree onan acquisition-by-acquisition basis, either at fair value or at thenon-controlling interest’s proportionate share of the recognisedamounts of the acquiree’s identifiable net assets.Acquisition related costs are expensed as incurred.If the business combination is achieved in stages, the acquisitiondate fair value of the acquirer’s previously held equity interest inthe acquiree is remeasured to fair value at the acquisition datethrough profit or loss.Any contingent consideration to be transferred by the Group isrecognised at fair value at the acquisition date. Subsequentchanges to the fair value of the contingent consideration that isdeemed to be an asset or liability is recognised in accordancewith IAS 39 either in profit or loss or as a change to othercomprehensive income. Contingent consideration that is classifiedas equity is not remeasured, and its subsequent settlement isaccounted for within equity.Goodwill is initially measured as the excess of the aggregate ofthe consideration transferred and the fair value of non-controllinginterest over the net identifiable assets acquired and liabilitiesassumed. If this consideration is lower than the fair value of thenet assets of the subsidiary acquired, the difference is recognisedin profit or loss.Inter-company transactions, balances, income and expenses ontransactions between Group companies are eliminated. Profitsand losses resulting from inter-company transactions that arerecognised in assets are also eliminated. Accounting policiesof subsidiaries have been changed where necessary to ensureconsistency with the policies adopted by the Group.Investments in subsidiaries held by the Company are held at cost,less any provision for impairment.Non-controlling interestsTransactions with non-controlling interests that do not result inloss of control are accounted for as equity transactions – that is,as transactions with the owners in their capacity as owners. Thedifference between fair value of any consideration paid and therelevant share acquired of the carrying value of net assets of thesubsidiary is recorded in equity. Gains or losses on disposals tonon-controlling interests are also recorded in equity.66Savills plc Report and Accounts 2012