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cash flow analysis
Net cash generated from operating activities
Over the last year, net cash flow from operating activities increased from -£5.5m to £39.7m, in spite of the profit before tax was decreased from £33.2m (2008) to £25.2m (2009). The principal reason for the change in cash flow was due to the increase in cash generated from operations, which saw a generation of cash is £46.2m compares to £14.1m in the previous year.
Analysis in cash flow from operation shows an increase in cash flow due to the profit for 2009 is £9.2m which compare the loss £12.3m in 2008, although the underlying profit before tax declined by 24% to £25.2m (2008: £33.2m), with a negligible net effect from foreign exchange movement. Due to the continued poor US market conditions, an impairment has been recognized of £4.3m in Savills America (2008 £7.7m). While it is assumed that the US market will slowly begin to recover, transaction activity may not pick up as soon as anticipated; therefore a more cautious approach to revenue and profit margins has been taken. Key assumptions include a pre-tax discount rate of 12.5%. Profit on disposal of associate, joint ventures and available-for-sale investments in 2009 is nil (2008: £17.4m). It include that Savills represented Lend Lease Europe and Quintain in the sale of the share capital in their joint venture Meridian Delta Dome Limited (MDDL) to Trinity College Cambridge for £24m and Savills closed $162m Joint Venture capitalization for new cancer centre in Dallas, Texas. In the current trade and other receivables, Savills cash generation decreased £70.6m from 2008(£71.6m) to 2009(£1.0m), the total trade receivables are £116.5m in 2009 and £122.7m in 2008, the net trade receivable in two years are -£9.4m and -£10m respectively, which less the provision for impairment of receivables. The individually impaired receivables mainly relate to receivables from clients that have been affected by the uncertain economic conditions where funding and completion have been delayed and cash flow has become uncertain.
In the contrary, the trade and payables was increased over £100m, it offset the adverse influence about cash generation which trade and receivables brought.
Net cash generated from investment activities
During last year, net cash spend in investment is £2.6m and £9.1m in 2008. Capital spent in the purchase of property, plant and equipment was £3.2m in 2009 (2008 -£8.5m). With the comparison, it demonstrated that Savills spent less money in the short leasing property which is £0.8m and equipment and motor vehicles owned is £2.4m in 2009 (2008 £3.2m, £5.3m). And proceed from fixed asset in 2 years are £0.5m and £0.2m respectively.
Net cash generated from financial activities The dividend paid in 2009 is £8.5m decreased 66%, compared £25.1m in 2008 the main reason is board consider the preservation of cash to be of permanent importance both to safeguard the business against the risk of market deterioration and to enable the group to take opportunities as they present themselves. According to this part, net cash flow from financial activities increased £11.4m, although net cash generated from financial activities in two year are both negative. At last, cash, cash equivalents and bank overdrafts at the end of year in both two years are £80.9m and £75.3m (2008). It represented that liquidity in Savills is stay on a health level.
Consolidated and Company statement of cash flows for the year ended 31 December 2009
Cash generated from operations
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