• Board of Directors
• Nomination Committee
• Audit Committee
• Remuneration Committee
• Relations with Shareholders
• Internal Control and Risk Management

A summary of the Company's application of the principles contained in the Combined Code (the "Code") are outlined below:

Board of Directors

The Board is responsible to shareholders for the management and control of the Company's activities and is committed to high standards of Corporate Governance. The principal governance rules applying to UK companies listed on the London Stock Exchange are contained in the Combined Code on Corporate Governance adopted by the Financial Reporting Council in June 2006 (The Code).

The Board comprises a Non-Executive Chairman, four Independent Non-Executive Directors and six Executive Directors. The Chairman is responsible for the workings and leadership of the Board and for the balance of its membership. The Chief Executive is responsible for leading and managing the business within the authorities delegated by the Board. The Board considers that the Non-Executive Directors are independent of management and have no business or other relationship which could interfere materially with the exercise of their judgement.

The Board is not currently compliant with the provision of the Code which requires that at least half the Board, excluding the Chairman, be independent Non-Executive Directors. The Board considers that under Savills current operational structure it is appropriate for the key members of the executive management team to be members of the Savills plc Board and that there is an appropriate balance between Executive and Non-Executive Directors and that no individual or small group of individuals dominates the Board's decision making. The Non-Executive Directors have a wide range of business experience and expertise and provide a strong independent element to the Board. The Board will keep under review the need for any changes to the composition of the Board. Since 1 November 2004, Timothy Ingram has been the Senior Independent Director. He is available to shareholders if they have concerns which have not been addressed by contact with the Chairman, Group Chief Executive or Group Finance Director.

Functioning of the Board

The Directors receive management information, including financial, operating and strategic reports, in advance of Board meetings. During 2007, the Board held seven scheduled meetings and also spent a day and a half reviewing and agreeing the future Group strategy. In addition, during 2007, five other ad hoc Board meetings were also held to deal with specific matters. When unable to be present in person, Directors may attend by audio or video-conference. When Directors are not able to attend Board or Committee meetings, their comments on the papers to be considered at that meeting are relayed in advance to the relevant Chairman. The Board has adopted a formal schedule of matters specifically referred to it for decision. These matters reserved for the Board include:

• approval and management of Group strategy;
• review of Group policies and codes of conduct;
• approval of the annual operating and capital expenditure budgets and any material changes;
• review of performance, assessed against the Group's strategy, objectives, business plans and budgets;
• approval of interim and preliminary announcements and the Annual Report and Accounts;
• approval of the dividend policy;
• approval of any significant changes in accounting policies or practices;
• extension of the Group's activities into new/other geographic areas;
• approval of any significant acquisitions or investments;
• any decision to divest any Group business;
• delegation of the appropriate authorities and agreeing terms of reference for its various committees;
• delegation of the appropriate authorities to the Executive Sub Committee; and
• the appointment of new Directors.

The Non-Executive Directors meet separately at least twice each year without the presence of the Executive Directors and also meet without the Chairman, at which time the Chairman's performance is appraised. There is an approved procedure for Directors to take independent professional advice at the Group's expense. In addition, all the Directors have access to the advice and services of the Company Secretary.

Board committees

The Board has delegated certain authorities to committees each with formal terms of reference. The principal committees of the Board are as follows:

Nomination Committee
The Committee consists of the four independent Non-Executive Directors and the Chairman. The Committee is chaired by Peter Smith. The Committee meets at least once a year and otherwise as required to nominate candidates for the approval of the Board to fill vacancies or new positions on the Board of Directors and to make recommendations to the Board on certain matters including its composition and balance. The Committee met twice in 2007.

The Company's Articles of Association provide that Directors must submit themselves for re-election every three years and that newly appointed Directors must submit themselves for re-election at the first Annual General Meeting after their appointment. In making recommendations to shareholders for the re-appointment of any Director, the Nomination Committee considers that Director's performance and ongoing contribution to the success of the Company and makes its relevant recommendation to the Board.

Nomination - website (PDF - 70 KB)

Audit Committee
The Committee consists of the four independent Non-Executive Directors. The Committee is chaired by Fields Wicker-Miurin and met four times during the year. The Non-Executive Chairman, Group Chief Executive, Group Finance Director, other Executive Directors, Group Financial Controller, the internal auditors, the external auditors, Group Risk Director and other senior executives of the Group may be invited to attend meetings of the Committee, but are not members. The Board considers that the members of the Audit Committee collectively have sufficient recent and relevant financial experience to carry out the functions of the Committee.

The Committee is authorised to investigate any matter within its terms of reference and, where necessary, to obtain external legal or other independent professional advice. The Committee's activities during 2007 have included:

• reviewing the half-year and annual financial statements with particular reference to accounting policies, together with significant estimates and financial reporting judgements and the disclosures made therein;
• reviewing the management representations made to the external auditors and the Company's procedures to ensure all relevant information has been disclosed;
• discussing any issues arising out of the interim review or the full year audit with the external auditors (in the absence of management where appropriate);
• monitoring and reviewing the effectiveness of the internal audit function and reviewing all reports prepared by the internal auditors and assessing the management's responsiveness to such reports;
• making recommendations to the Board with regard to continuing the appointment and remuneration of the external auditor; overseeing the Company's relations with the external auditor and the effectiveness of the audit process; and
• reviewing, and assessing the effectiveness of, the Group's internal financial controls together with its internal control and risk management systems.

The Committee also considers on an ongoing basis the independence of the external auditors and has established policies to consider the appropriateness or otherwise of appointing the external auditors to perform non-audit services.

Audit - website (PDF - 69 KB)

Remuneration Committee
The Committee consists of the four independent Non-Executive Directors. The Committee is chaired by Charles McVeigh and meets at least twice a year to determine Company policy on senior executive remuneration and to agree the detailed remuneration packages of the Executive Directors. The Remuneration Committee takes the advice of external consultants from time to time. The Group Chief Executive is consulted on the remuneration packages of the other Directors and senior executives and attends remuneration discussions by invitation, except when his own position is being discussed. Given the central part that remuneration plays in the success of the Group, the Chairman is also invited to attend meetings of the Committee.

Remuneration - website (PDF - 59 KB)

Relations with Shareholders

The Board seeks to maintain an open relationship and the Group Chief Executive and Group Finance Director have a regular programme of meetings with analysts and maintains a dialogue with shareholders which ensures that the Board is aware of shareholder sentiment. Meetings are held with major institutional shareholders regularly and include presentations at the time of the Company's preliminary announcement of annual and interim results. The Senior Independent Director makes himself available for the investor meetings held by the Group Chief Executive or Group Finance Director upon request. The Board also reviews a report at least once each year from its corporate broker on feedback from investors and the market's view of the Company.

The participation of private shareholders at the AGM is welcomed and all shareholders are invited to attend the Company's AGM, which is attended by the Board. In accordance with the Code, the Chairman declared the level and manner of voting of proxies lodged on each resolution at the AGM held during the year. The Chairmen of the Board's principal committees were present at the 2008 AGM to answer shareholders' questions as required. The Directors aim to give as much notice of the AGM as possible which will be at least 21 days, as required by the Company's Articles of Association.

Internal Control and Risk Management

The Board recognises that it has overall responsibility for establishing and maintaining the Group's system of risk management and internal control to safeguard the shareholders' investment and the Group's assets, and for reviewing its effectiveness. The system of risk management and internal control is designed to manage but not to eliminate the risk of failure of the Group to meet its business objectives and as such only provides reasonable but not absolute assurance against material loss.

The Board confirms that it has conducted a review of the effectiveness of the system of risk management and internal control and that the system has been in place throughout the year and up to the date of approval of the accounts and complies with the 2005 Turnbull guidance. Reflecting a commitment to the continued development of our system for risk management and internal control, a Group Risk Management Function was established during 2007 to support the activities of the Board, Group Risk Committee and operating subsidiaries.

Key elements of the Group's system of risk management and internal control during 2007 were:

• A comprehensive system for planning and reporting the performance of each operating subsidiary. The Board met regularly and reviewed the Group's overall results against plan and the previous year. The Group regularly updated its forecast of results. Clear responsibilities were given to operational and financial managers for the maintenance of effective financial controls and the production of accurate and timely financial management information;
• The regular review and assessment of the performance of the business including in relation to risk management and internal control by the Board and its sub committees, including the Executive Sub Committee;
• Attendance at operating subsidiary and associate boards by Executive Directors. These boards and their associated committees also meet regularly and have formal reporting structures. Directors of operating subsidiaries were also closely involved in the day-to-day business of their respective operations identifying key risks and appropriate action to be taken;
• A Group Risk Management Policy which sets out our process for identifying, evaluating, assessing, and managing the key risks to our business objectives, supported by an appropriate organisational structure and clearly defined management responsibilities;
• A Group Risk Committee, which reported to the Executive Sub Committee and was tasked with the review, discussion and challenge of key risks reported, the ongoing Group-wide development of internal control, and the monitoring of internal audits and other sources of assurance on the effectiveness of internal controls. The Committee consists of the Group Chief Executive, Group Finance Director, senior subsidiary business management and Group function heads including the Group Risk Director;
• A framework of delegated authorities and control procedures, as defined by Group and subsidiary business policies, processes and standards, which are subject to regular review by the Group Risk Committee in light of key risk reporting and our changing risk environment; and
• A programme of assurance activities which assess the effectiveness of our internal controls in respect of our key risks which includes:
  • A programme of internal audits undertaken in accordance with an annual risk based plan approved by the Audit Committee. The plan is designed to ensure that internal audit reviews are focused on priority controls across the Group to provide both independent review and challenge on the effectiveness of these controls; and the promotion of good practice and consistency in their development;
  • Compliance programmes within our regulated businesses in support of the Group's commitment to conduct its business responsibly and in accordance with all laws and regulations to which its business activities are subject;
  • An annual self assessment and certification by management of the existence and effectiveness of the controls within each of our operating subsidiaries. The results were collated for review and challenge by the Group Risk Committee and onward reporting to the Executive Sub Committee and Audit Committee; and
  • There were also procedures available to employees who are concerned about possible impropriety, financial or otherwise, and who may wish to ensure that action is taken without fear of victimisation or reprisal.