Savills' text-book diversification

Underlying pre-tax profits were still up 7 per cent at £50.4m, reflecting a sharp fall in profits in Savills' once core transactional businesses that was more than offset by growth in its newer consultancy, property management and fund management divisions. The strategy of investing in recurring (as opposed to deal-dependent) revenue streams, which management has repeatedly stressed since the property boom collapsed, seems to be working precisely as planned.

That said, the broking businesses received the bulk of investment last year – transactional profits fell 21 per cent to £24.2m even as revenues grew by 2 per cent. Finance director Simon Shaw says that market share gains will soon make up for the lost profits. "We've always made our most successful moves in difficult markets – you can't get people to move in good markets except by overpaying them," he explains.

Savills is best known in the UK for its upmarket estate agency, which grew revenue 9 per cent, thanks to the cosmopolitan buoyancy of the central London housing market. The company's 73 regional branches have been much quieter, but Mr Shaw says the market for prime country homes has started to pick up as domestic buyers slowly regain confidence.

Unsurprisingly, the weakest division was the European commercial brokerage, where revenues fell 14 per cent to £26m and losses doubled to £8.8m. Management made further cuts to its Spanish, Italian and Dutch operations in the second half, incurring £1.9m of restructuring costs, while bolstering its offices in Paris and major German cities in anticipation of a rebound. Meanwhile, Savills' large Far East arm – the main growth engine of recent years – took a back seat as the Hong Kong property market cooled.

Broker Numis Securities expects underlying pre-tax profits of £54.5m and EPS of 31p this year (£50.4m and 28.2p in 2011).