Savills buoyed by strong Asian and UK commercial performance

By Paul Norman - Thursday, August 10, 2017 9:58

Savills toasted what it termed "great results" driven by strong growth in Asia and resilience in the UK as it posted rising pretax profits and revenue in its half year results.

For the six months ended 30 June 2017 group revenue was up 15% (7% to £714.4m (H1 2016: £622.7m) while group underlying profit before tax was up 12% (5% in constant currency) to £48.1m (H1 2016: £42.8m).

Group profit before tax was up 27% to £32.4m (H1 2016: £25.5m) while underlying basic earnings per share up 18% to 25.7p (H1 2016: 21.8p).

Basic earnings per share up 39% to 16.1p (H1 2016: 11.6p). Interim dividend increased 6% to 4.65p per share (H1 2016: 4.4p).

Transaction advisory revenue is up 15%, reflecting strong performances in Asia, Europe and the UK commercial market offsetting a slight decline in UK residential revenue.

Property management revenue is up 13%, while consultancy revenue is up 15%.

Jeremy Helsby, group chief executive of Savills, said: “Savills has delivered a great first half performance across the Group driven, in particular, by strong growth in Asia and a resilient performance in the UK.

"In line with our overall growth strategy, we have continued to build on the Savills Studley platform in the US, particularly our Capital Markets business, with recruitment and incremental acquisition activity across the country. In addition, we have continued to invest in our Asian platform and, since the period end, in Europe we have announced the acquisitions of Larry Smith and Aguirre Newman, further strengthening our positions in Italy and Spain respectively.

"Continued growth in our less transactional businesses, significant overseas earnings and strong market shares in many of our most important transactional locations position the Group to withstand short term reductions in local activity and to capitalise on the opportunities which we expect to emerge.

"In an environment of ongoing political and economic uncertainty, we continue to anticipate that our performance for the full year will be in line with the Board’s expectations.”

Savills' Transaction Advisory businesses performed well during the period with revenue increasing in most of its markets, it said.

Overall, the underlying profits of its Transaction Advisory business increased by 6% to £24.6m during the period (H1 2016: £23.3m), driven primarily by a strong performance in Asia Pacific, which offset the continued investment in North America as its seeks to grow its Capital Markets offering.

UK Commercial Transaction fee income was up 23% to £39.4m (H1 2016: £32.1m), despite "additional uncertainty caused by the unexpected General Election".

UK commercial property investment volumes rose 1% in the first half of 2017, reaching £27.2bn, helped by some "very high value transactions in central London".

Savills said across the UK investors 2continue to be attracted by the underlying strength of the commercial property market, with overseas buyers additionally benefiting from sterling devaluation".

Underlying profits for the UK Commercial Transaction business increased by 67% to £4.5m (H1 2016: £2.7m).

UK Residential Transaction fee income decreased by 4% to £55.0m (H1 2016: £57.2m). Overall, volumes in the UK Prime Residential market were lower in the period in comparison with the higher volume traded in advance of April 2016’s increase in Stamp Duty. Savills said this was somewhat offset by stronger activity in May and June compared to the comparable period, which was relatively muted in the run up to the EU referendum in 2016. In the second hand sales market, Savills overall transaction volumes were down by 3% in London and 6% in the country market. The average value of London residential property sold by Savills in the period was £2.7m (H1 2016: £2.5m), and £1.1m (H1 2016: £1.0m) in the country.

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