Savills PLC (SVS) - Interim Management Statement
RNS Number : 1674R
15 November 2012
15 November 2012
("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.
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
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
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
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
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.
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.
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.
This information is provided by RNS
The company news service from the London Stock Exchange
IMSEAPFLFFNAFFF -0- Nov/15/2012 07:00 GMT
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