Savills plc - Investor relations

GROUP CHIEF EXECUTIVE’SREVIEW OF OPERATIONS CONTINUEDLand and Farm ManagementDespite a difficult market the Rural Property group has had a successful yearwith high margins. The business concentrated on organic growth in specialistareas such as renewable energy, taxation and expert witness. We expandedour management team by recruitment and also by acquisition, the latterincluding Smith Woolley's Norwich office.Aubourn, our specialist farming and rural business consultancy subsidiary,has continued to develop the range of services it can provide. In 2003 itsucceeded in gaining over £3.5m of grant support for clients seeking todevelop and diversify their core businesses. The reform of EU farm policy in2004 is expected to provide further opportunities for the expansion of thecompany's consultancy services.Facilities ManagementFPDSavills Guardian, our Facilities Management operation in Hong Kong,made profits before interest and tax of £0.4m (2002 - loss £2.3m) on turnoverof £27.7m (2002 - £29.8m).Through our alliance with Trammell Crow Company we are able to providecomprehensive property outsourcing services throughout Europe. InDecember 2003 Trammell Crow Company increased their majority holding inTrammell Crow Savills (TCS) and we have written off our remaining investment.Outsourcing is a core offering of Trammell Crow Company and conversely isnot now considered a mainstream Savills activity. We remain totally committedto supporting the business, which will continue to refer the execution oftransactional business to Savills wherever possible.Property Trading and InvestmentGrosvenor Hill Ventures, our principal property trading subsidiary had anexcellent year. They successfully concluded the sale of The Mill DiscountDepartment Store, Yorkshire, for a cash consideration of £9.5m representingthe written down book value.They also made three notable disposals: two properties at Wishaw andLisburn, both held by companies in which we had a 50% interest together withexternal co-investors and a property at Redditch. These sales made asignificant contribution in the second half and profit before interest and taxfor the Property Trading and Investment business for the year was £5.1m(2002 - loss of £4.7m) on turnover of £32.3m (2002 - £17.0m).The business continued to make selective investments in the out-of-townretail sector throughout 2003 and three properties remain within the portfolio.It is anticipated that these will be used to provide initial seed assets for fundsor will be disposed of in due course. The focus for business activities in thefuture will be to provide seed capital for the property fund business.The Group's interest in Managed Office Solutions (GHV), our managed officespace business, continued to make good progress. We believe this businesshas a strong base and the focus is now to expand and add new centres.Financial ServicesThe Financial Services division is mainly comprised of Savills Private FinanceLimited, which provides residential mortgage broking services, commercialdebt broking services and associated financial products. The division had arecord year with profit before interest and tax of £3.9m (2002 - £1.6m) on aturnover of £15.5m (2002 - £12.0m).Savills Private Finance continues to build this quality business and is nowrecognised as the leading provider of mortgage finance to the high net worthmarket. Of particular note, 2003 saw Savills Private Finance voted MortgageBroker of the Year by the mortgage banks. Organic growth is taking placethrough selective recruitment of key staff dedicated to the quality serviceassociated with the Group. The company is now operating from 12 locationsthroughout the UK, with further offices planned for 2004.Aubrey Adams, Group Chief Executive21