This article is from the Australian Property Journal archive
LONDON Stock Exchange-listed Savills’ full year group revenue was down 9%, while global transaction advisory revenues declined 19% as the pandemic significantly reduced the volume of transactions worldwide.
Revenue was £1.74 billion, while underlying profit before tax came in at £96.6 million, down from £143.4 million.
Statutory profit before tax was £83.2 million, a fall from £115.6 million.
Savills said resilient revenues from less transactional services helped to mitigate a reduction in transaction volumes. It also said the performance reflected geographic diversity, with 59% non-UK revenue, and the strength of less transactional service lines – making up 62% of group revenue over the year, versus 57% in 2019.
Less transactional services revenues was down 1% as property and facilities management businesses achieved a 4% uplift in underlying profit to £91.1 million.
Mixed results across Asia Pacific
Revenue from the Asia Pacific commercial transaction business decreased by 25% to £103.9 million.
“Those markets which are typically most dependent upon cross border capital were particularly affected, namely Singapore, Hong Kong and Australia. Conversely, those countries with strong domestic trade, namely China, South Korea and Vietnam, were better able to withstand the impact.”
Its South Korea and Vietnam operations saw strong year-on–year growth in transactional revenues.
“In Australia and Singapore, the combination of lockdowns, lack of incoming cross-border activity and continued recruitment costs, resulted in the commercial transaction businesses making a loss for the year.
“Overall, leasing markets remained subdued as corporates continued to defer significant long term decisions. In general, having been first into the pandemic, the region was also the first to start to see signs of recovery as lockdowns eased.”
The reduction in revenues saw underlying profits in the region decline by 73% to £3.3 million.
Strong activity in China helped the group in both the commercial and residential transaction businesses. Revenue from the Asia Pacific residential transaction business decreased by 25% to £26.9 million, with heavy falls in activity levels reported across Hong Kong, Australia, Singapore and Vietnam.
Underlying profits dropped 26% in the segment to £3.4 million. Savills said this reflected a lower profit contribution from its joint venture in Singapore, but was offset by cost reductions, most notably in Australia as a result of the cost rationalisation program of 2019.
Revenue reductions in South Korea, China and Australia were almost entirely offset by higher revenues as a result of contract wins and ad hoc fees in Hong Kong, Vietnam, Singapore and Japan, it said.
The Asia Pacific consultancy business showed resilience. Revenues – primarily comprising valuations, research and project management – decreased by 1% to £69.1 million. Australia, Japan, Singapore and South Korea were the biggest contributors, predominantly as a result of increased levels of portfolio advisory valuation and research activity which outweighed the decline in the security valuations associated with transaction volumes.
Project management revenues remained resilient, particularly in Australia. Underlying profits in the segment grew 41% to £6.5 million.
