Interim Management Statement

RNS Number : 1674R

Savills PLC

15 November 2012

 



15 November 2012

SAVILLS PLC

("Savills" or the "Company")

Interim Management Statement

Savills plc, the international real estate advisor, publishes the following Interim Management Statement (IMS) for the period from 1 July 2012 to date.

Summary and Overview

Since June Savills has continued to perform ahead of our expectations. Our Prime London Residential and Asia Pacific businesses have continued to trade well; our UK Commercial business has increased market share; our Fund Management and US businesses have performed in line with our expectations; and our business in Continental Europe, which continues to operate in very tough markets, has increased revenues and reduced losses.

As we enter the final weeks of the year, when a significant part of the Group's annual profit is typically earned, it is clear that there are still significant economic issues facing individual countries, regions and the global economy. Despite the prevailing lack of credit, the World's Prime Residential and Commercial property markets continue to benefit from investors' global search for secure yield.  To date our prime market strength in many of the world's key cities has not only sheltered the Group from the reduction in activity in mainstream markets but has led to further business growth. We have seen a reduction in volumes in some transaction markets, but this is currently tempered by improvements elsewhere and continued growth in our strong non-transactional Consultancy and Property Management businesses.

Property Management

Our Property Management business has continued to perform well showing good growth over the same period last year. UK Property Management has continued to benefit from contract wins and strong growth continues in Asia Pacific. In Continental Europe, we have grown revenues and stabilised much of the business.

Consultancy

Our Consultancy services have continued to show good growth in revenue and maintained profit growth. Our Building Consultancy, and Housing Consultancy businesses have shown strong growth in revenue and profit and our valuations business has continued to improve its performance in both the UK and Asia Pacific regions.

Transactional Advice

Commercial

In the UK, investment activity has continued strongly in the Prime Central London market but largely remains subdued elsewhere. Savills has successfully increased its market share of both buy and sell side instructions during this period as much of our expansion and recruitment of recent years has progressively started to deliver results. Occupier markets have remained reasonably resilient despite cutbacks in the financial services industry with some large insurance and TMT-related instructions underpinning overall City take-up.

Despite an overall reduction of 16% in market volumes in Asia Pacific during the 3^rd quarter, our own transactional activity in the Asia Pacific region has been strong through the period with Hong Kong, Macau, Taiwan and Korea driving improved performance together with strong growth in Japan. The aggregate impact of Government measures to control residential markets in Greater China has been broadly positive for commercial investment markets, albeit in lower lot sizes.

Despite a significant reduction transaction volumes in many markets, our Continental European teams have increased transaction revenues year-on-year, particularly in Ireland, France and the Netherlands.  However macro economic issues have adversely affected activity in many countries. We have restructured the senior team in Germany and recruited a new head of the business. We have also continued to invest in the development of our leasing teams in Germany, France and Poland, with revenue improving substantially year-on-year.

In the US we have completed a restructuring of the business, which will take effect by the end of this year, the fifth anniversary of the acquisition of Granite Partners. This will change the leadership, reduce cost and better align remuneration to business performance from 2013 onwards. We continue to see some improvement in the US markets and increasing cross border interest in US opportunities. We are progressively positioning our business to capitalise on these improvements.

Residential

Our UK Residential Agency business has continued to perform well since June, with a resilient performance from the prime London market despite the imposition of substantial fiscal change on overseas and corporate ownership. Overall, the effect of slightly lower volumes in London has been substantially offset by volume improvement in a number of the commutable areas outside the capital. Furthermore, London has continued to experience strong international demand for development stock in key locations.

In the Asia Pacific region, cumulative control measures, culminating in the recent imposition of substantial stamp duty charges on overseas citizens buying Hong Kong residential property, have had a significant effect on residential sales volumes. However, many investors have turned to commercial assets instead. Our Prime Residential Agency business has slowed significantly in Hong Kong and Vietnam but we have seen recent signs of improvement in the key cities of mainland China.

Fund Management

Cordea Savills is performing in line with our expectations. The business has made good headway during the period, and we have undergone the transition of some key management roles to new recruits. Our open ended funds continue to attract equity inflows and we have recently launched our first fund aimed at the high net worth community in the Asia Pacific region.

Internal Restructuring Activities

In addition to the activities in Continental Europe and the US, during the period we have finalised plans to combine our two UK trading businesses (Savills (L&P) Limited and Savills Commercial Ltd) into one business, Savills (UK) Limited comprising 2900 employees, from 1 January 2013. As part of this integration, we will be combining the two individual London head offices into one new building during the first half of 2013 and streamlining the top management structure of Savills UK. In addition to the costs of the new building prior to its occupation, these activities will result in small net restructuring charges in 2012 and 2013 and will position us to improve client service across the organisation and generate synergies in future periods.

Financial position and outlook

We continue to maintain a strong balance sheet with a net cash position.

Looking forward, Savills is well placed in the prime property markets of many of the World's key cities and much of the recruitment and business development work of the last few years is beginning to bear fruit. Considering our performance to date and the expected conditions for the rest of the year, we currently anticipate that our overall underlying result for the full year will be slightly ahead of our original expectations.

For further information, contact:

Savills    020 7409 8934

Jeremy Helsby, Group Chief Executive

Simon Shaw, Group Chief Financial Officer

Tulchan Communications    020 7353 4200

Katharine Wynne/Martha Kelly

Forward looking statements

Certain information included within this statement is forward-looking and by its nature involve risks and uncertainties because it relates to events and depends on circumstances that will occur in future. 

Forward-looking statements include, without limitation, projections relating to results of operations and financial conditions, market estimates, the Company's plans and objectives for future operations, including future revenues, financial plans and expected expenditures and divestments.

There are a number of factors which could cause actual results and developments to differ materially from those expressed or implied by these forward looking statements including a number of factors outside the Company's control. All forward-looking statements in this report are based upon information known to the Company on the date of this IMS. The Company gives no undertaking to update forward looking statements whether as a result of new information, future events or otherwise.

 

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