Savills Regulatory News (SVS)

14 November 2013

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 2013 to date.

Summary and Overview

Since June Savills has continued to perform well despite the expected significant reduction in transaction volumes in Hong Kong compared with Q3 2012. Our Prime UK Residential and Commercial businesses have continued to trade well, with increasing activity outside London; our Investment Management, US and Continental European businesses have performed in line with our expectations. In addition, our non-transactional businesses, Consultancy and Property Management, have also continued to perform well.

Transactional Advice

Commercial

In the UK, investment activity has continued to be buoyant in the Prime Central London market and the increase in transaction volumes outside London has accelerated. Savills has successfully maintained or increased its market share of both buy and sell side instructions during this period. Occupier markets in the City have benefited from take up in the Insurance and TMT sectors and there has been a pick up in leasing activity outside London across all sectors.

As anticipated, prompted by the rise in Stamp Duty in Q1, there has been a significant reduction in activity in the investment markets in Hong Kong, where market volumes in Q3 have declined by over 35% year-on-year. In contrast the leasing business has remained relatively stable despite the decline in average office rents in the CBD. Elsewhere in the Asia Pacific region, we have continued to experience improved performances in the transactional markets. Japan, in particular has shown substantial year-on-year revenue growth of over 100%. Strong performances have also come from Mainland China, Korea and Australia, the former in part being due to a focus by Hong Kong developers on opportunities in Mainland China.

Our Continental European teams have increased transaction revenues year-on-year, particularly in Ireland, Germany and Spain. We have further strengthened the senior team in Germany and are better positioned in that market, which is more active than a year ago.

In the US we have begun to benefit from the restructuring of the business at the end of 2012 with a revenue increase of approximately 18%, compared to the same period last year, largely as a result of a strong performance from our cross border and multifamily teams.

Residential

Our UK Residential Agency business has continued to trade well since June, with a resilient performance from the prime London markets, where secondary market transaction volumes have increased by over 12%. Our average transaction value is up 6% to £3m, driven primarily by the owner occupier demand in the Southwest London region. In the country market the volume of transactions agreed has increased by 4% albeit activity is concentrated in the sub £2m market. Residential Development sales have continued to perform strongly.

In the Asia Pacific region, cumulative control measures over the last few years in certain markets, culminating in the imposition of substantial stamp duty charges on residential investors in Hong Kong, have had a significant effect on residential sales volumes. There is early evidence in this prime market that developers have started to offer discounts to counter much of the incremental Stamp Duty impact for non-resident buyers, which has helped development sales. Volumes in the secondary market have remained very low with values anticipated to decline by up to 10% by year end with a similar level of correction anticipated in 2014. Despite this, the Asia Pacific Residential business has continued to grow revenue as a result of an improved performance in Australia and Mainland China (Shanghai) in particular.

Consultancy

Our Consultancy services business has continued to show strong growth in revenue and profit driven primarily by improved activity in the UK and Continental Europe. In the UK, Valuation, Planning, Development and Housing consultancy have all shown significant improvement as regional activity levels have accelerated somewhat faster than anticipated. This bodes well for longer term recovery in the regional market.

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 further Commercial contract wins and revenue growth in Residential Management (including lettings). Strong growth continued in Asia Pacific, particularly in mainland China and Hong Kong. In Continental Europe, we have maintained revenues and further stabilised the business. As anticipated, the current underlying profit margin of Property Management during the period has continued to be somewhat affected by the cost of expansion in UK residential management/lettings, including new offices, and investment in Continental Europe, particularly the commercial management operation in Poland.

Investment Management

Cordea Savills is performing in line with our expectations. The business has continued to make good progress during the period, with significant growth in committed fund inflows, primarily through our appointment on a number of segregated mandates and family office investment accounts. Assets Under Management (AUM) have risen by approximately 17% to €4.8bn. Our open ended funds continue to attract equity inflows and we anticipate having substantial investment capacity going into 2014.

Financial position and outlook

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

Overall, we have had a strong period of trading and benefited from the diversity of our service lines and regional locations. We remain somewhat cautious about the extent to which Hong Kong's market weakness will continue to be matched by relative out-performance elsewhere in the Group through the final quarter. However, given trading in the period to date, the improvements we have seen in a number of markets, and the quicker than expected pick up in the UK regions, we currently anticipate that our overall underlying result for the year will be towards the upper end of our previous 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

Peter Hewer

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.