Interim Management Statement

RNS Number : 2472S

Savills PLC

17 November 2011

 



17 November 2011

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 2011 to date.

Summary and Overview

Since June our business overall has continued to perform in line with our expectations. Our Prime London Residential and Asia Pacific businesses have continued to perform well, compensating for under performance in Continental Europe. Our UK Commercial, Fund Management and US businesses have also continued to perform as anticipated. 

As we enter the final weeks of the year, when a significant part of the Group's annual profit is earned, it is clear that there are major issues facing individual countries, regions and the global economy. The property markets are not immune to these challenges.  To date our strength in the prime markets of London and Asia has sheltered the Group from the reduction in activity in mainstream markets and compensated for underperformance in continental Europe. We do see a reduction in volumes in some regional pipelines but any short term risk in our principal commercial markets is more related to the timing of completions than to a lack of underlying activity. We currently anticipate that, provided macro-economic concerns do not cause a material delay in transactions, our performance for the full year will be in line with expectations.

Transactional Advice

Commercial

In the UK, investment market activity has continued in line with our expectations but essentially remains focused on prime assets. A substantial amount of such stock has been listed for sale since the summer and we expect that this will represent an opportunity for investors to place significant capital into the market over the next few months. It will also test the continued strength of the international demand which has helped to drive the Central London market for some time. In the rental markets, the City of London office market has continued to see weak take-up; however the West End has proved resilient.

Transaction activity in the Asia Pacific region, has continued well through the period with Hong Kong remaining stronger than anticipated, albeit the volume of activity has declined year-on-year. In Mainland China, Savills transaction teams have seen strong performance in both investment and retail leasing activities. The aggregate impact of Government measures in the region has reduced the volume of transactions and we anticipate that this will continue into the first half of 2012.

In Continental Europe there has been improved transaction activity year-on-year in Germany and the Nordic region. However macro economic issues have curtailed activity in many countries and we are taking steps to further reduce our presence and cost base in a number of non-core markets. We have continued to invest in teams and individuals to strengthen our businesses in the core markets of Paris, the principal German cities, Sweden and Poland.

In the US the real estate investment market showed significant improvement through to mid-summer, when the financing market slowed significantly. Our business has performed in line with our growth expectations thus far, with particular strengths in the Retail, Healthcare and Multi-family segments. We have further strengthened our business with the recruitment of a hospitality team in our Washington office.

Residential

Our UK Residential Agency business has continued to perform well since June driven by continued strength in the prime London market. Having been very quiet for the first six months of the year, the Country market has begun to show some signs of increased activity in the South East. Lately the pace of activity in the Prime London Market has become less frenetic, which is to be expected given the unusually strong performance in the early part of the year. It is clear that investors continue to see the prime London postcodes as a "safe harbour" for value in uncertain times and, for this reason, we do not anticipate any significant reduction in activity through the balance of the year.

In the Asia Pacific region, for much of the period to date, our Prime Residential Agency business has continued to track last year's performance despite Government measures to cool the mainstream markets in China, Hong Kong and Singapore. More recently, the Prime segment has slowed down and we continue to anticipate a further slowing of activity in our market segment in this final quarter and into 2012.

Property Management

Overall our Property Management business has continued to perform well showing good growth in revenue and profits over the same period last year.  UK Property Management has continued to benefit from the significant recruitment made in 2010 and growth in the Asia Pacific Property Management business has largely made up for reductions in profitability in the Facilities Management business due, in part, to the effect of minimum wage legislation in Hong Kong. In Continental Europe, we continue to mitigate our exposure to loss making countries and invest only in core territories.

Fund Management

Revenue and profits of Cordea Savills are in line with our expectations. The business has made good headway during the period, winning some important investment mandates and continuing to receive inflows of equity into its open-ended funds. In addition the team has a number of new funds in the pre-marketing and marketing phase.

Consultancy

Overall our consultancy services have traded largely in line with the previous year with recruitment costs in our Continental European valuations business largely matched by small increases in profits in the UK and Asia.

For further information, contact:

Savills    020 7409 8844

Jeremy Helsby, Group Chief Executive

Simon Shaw, Group Chief Financial Officer

Tulchan Communications    020 7353 4200

John Sunnucks

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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