Savills' (SVS) shares leapt 7 per cent on the morning it announced its annual results. A strong final quarter in both London and East Asia buoyed profits in the group's key property broking division by 36 per cent to £32.8m. That drove a 21 per cent increase in underlying pre-tax profits to £60.8m at the group level.
This radical improvement in patchy property markets partly reflects a weak 2011. Savills has used the downturn to recruit top staff ("elephant hunters", finance chief Simon Shaw calls them) from its rivals. That suppressed profit margins last year, but seems to have paid off - particularly in the central London commercial market, where Savills acted on one in four transactions in the final quarter. Back in the boom days it was a marginal player best-known for work with Irish developers, so £60.4m of UK commercial broking revenues last year bears witness to an impressive turnaround.
The UK estate-agency business, meanwhile, experienced a slower year, with both exchanges and sales up just 2 per cent after an exceptionally strong 2011. Prime London house prices continue to glide up, but the increase in stamp duty to 7 per cent for residential sales above £2m choked off volumes.
Stock broker Numis Securities expects adjusted pre-tax profits of £64m this year, giving EPS of 36.8p (up from £60.8m and 35.3p in 2012).
SAVILLS (SVS) | ||||
|---|---|---|---|---|
| ORD PRICE: | 593p | MARKET VALUE: | £791m | |
| TOUCH: | 590-596p | 12-MONTH HIGH: | 608p | 293p |
| DIVIDEND YIELD: | 2.7% | PE RATIO: | 19 | |
| NET ASSET VALUE: | 174p* | NET CASH: | £91.6m | |
| Year to 31 Dec | Turnover (£m) | Pre-tax profit (£m) | Earnings per share (p) | Dividend per share (p) |
|---|---|---|---|---|
| 2008 | 569 | -7.7 | -9.3 | 9.0 |
| 2009 | 561 | 13.5 | 7.3 | 9.0 |
| 2010 | 677 | 36.8 | 20.5 | 13.0 |
| 2011 | 722 | 40.0 | 21.5 | 13.5 |
| 2012 | 806 | 54.2 | 30.8 | 16.0 |
| % change | +12 | +36 | +43 | +19 |
Ex-div: 10 Apr Payment: 13 May *Includes intangible assets of £154m, or 115p a share | ||||
