Savills (SVS) H2 2011 earnings summary

Executive summary

• Revenue rose 7% to £721.5m and underlying profit before tax increased 7% to £50.4m; diversification and recurring property services helped offset weaker transaction markets.

• Prime London residential, China, Property and Facilities Management, and Fund Management performed strongly; Continental European transaction markets weakened in H2.

Financial highlights

• Reported profit before tax rose 9% to £40.0m; profit for the year was £26.8m versus £25.1m in 2010.

• Revenue grew 6% in constant currency; underlying profit margin held at 7.0%.

• Underlying basic EPS increased 4% to 29.0p; reported basic EPS was 21.5p versus 20.5p.

• Operating cash generation fell to £35.7m from £68.4m, mainly reflecting higher profit-related remuneration payments.

Outlook and guidance

• 2012 started well; challenging transaction conditions are expected in H1, with greater confidence supporting improved financial performance in H2.

• Expected: further US recovery, relative stability in Prime Central London, continued Fund Management growth, and lower Asian transaction volumes partly offset by China and non-transactional growth.

• Continental Europe is expected to remain difficult, but performance is forecast to improve and losses to reduce; full-year performance expected in line with expectations, subject to unforeseen circumstances.