Savills plc 2012 Annual Report - (PDF) - Investor relations

Segmental reviewscontinuedMany of the expansion activities of previous periods began todemonstrate their potential, particularly in the Central Londonmarket where our revenue increased by over 80% year on year.This positively affected the UK Transaction Advisory margin whichrose to 11.6% (2011: 9.6%). In absolute terms, TransactionAdvisory underlying profits grew 52% to £7.0m (2011: £4.6m).Asia Pacific ResidentialThe Residential Transaction Advisory business in Asia is focusedprimarily on new developments and secondary sales and leasingof prime properties in the region. It excludes mixed usedevelopments, which represent a significant proportion of theregion’s development and are accounted for within theCommercial Transaction Advisory business. Overall the AsiaPacific Residential business recorded a 7% reduction in revenueto £18.5m (2011: £19.9m). This result reflected the effect ofgovernment measures to control activity, particularly in HongKong, and a weak market in Vietnam together with strongerperformances from Singapore, Thailand and mainland Chinaand resulted in the region reporting a 21% increase in underlyingprofit to £4.6m (2011: £3.8m).Continental European CommercialThe Continental European Commercial business saw revenueincrease by 14% to £29.6m (2011: £26.0m). In constant currencythe underlying increase was 21%. For much of the year capitalmarkets remained very weak as a result of macro-economicfactors. There were marked improvements in revenue in Ireland,France, the Netherlands and Belgium which offset weaker marketperformances in Sweden, Italy and Germany. The restructuringactivities of recent years, together with leadership changes madeduring the year in the Netherlands and Germany, helped to reducethe overall underlying loss by 32% to £6.0m (2011: £8.8m loss).Within this loss, the business incurred approximately £0.6m ofredundancy costs in Germany and Sweden.US CommercialThe revenue of our New York based Investment Advisory businessremained largely flat at £6.1m (2011: £6.3m) although we haveseen increased interest in the US from international investors.The Healthcare, Retail and Cross-Border teams enjoyed strongermarket conditions than in 2011 with some significant domesticand cross-border transactions.In the third quarter, approaching the fifth anniversary of theacquisition of Granite Partners, we were able to makemanagement changes and revise the local compensation planfor periods beginning 1 January 2013. This resulted in a smallredundancy cost and a more muted Q4 than the previous year.As a result of these factors, the underlying loss for the yearincreased to £2.1m (2011: £1.4m loss). However, on the basisof the deal pipeline going into the new year, we anticipate animproved performance in 2013.ConsultancyRevenue£172.2m +20%20122011201020092008Contribution to Grouprevenue21%ConsultancyRest of Group172.2 2012143.4 2011134.2 2010119.4 2009131.8 2008Underlying profit before tax *£14.8m +17%Services14.812.610.610.916.3Affordable Housing andStudent AccommodationBuilding ConsultancyCapital Allowances and RatingDevelopmentEnvironmental ConsultancyHousing ConsultancyLease ConsultancyPlanningPublic SectorResearchStrategic ProjectsOur Consultancy business improved its performance,demonstrating its overall strength in markets which continue toexperience pressure on fees and the high costs of professionalindemnity insurance.UK ConsultancyConsultancy service revenue in the UK increased by 23% to£132.3m (2011: £107.4m). Strong all round performances inBuilding Consultancy, Lease Consultancy, Planning, Development,Public Sector and the Housing Consultancy practices eachcontributed to the increase. Our Valuations teams enjoyed stablerevenues despite continued fee pressure and profitability wasmarginally affected by an increase in new insurance provisionsyear on year. Overall underlying profit from the UK Consultancybusiness increased by 14% to £12.4m (2011: £10.9m).Asia Pacific ConsultancyRevenue in the Asia Pacific Consultancy business increasedby 11% to £27.6m (2011: £24.9m) with increased valuation andfeasibility study assignments in Greater China, Taiwan andVietnam offsetting the effect of marginally reduced activity inAustralia and Singapore. This improved underlying profit by61% to £2.9m (2011: £1.8m).Continental European ConsultancyOur Continental European Consultancy business, which principallycomprises valuation services, faced continued challenges throughthe year in line with the performance of most European markets.Revenue improved by 11% to £12.3m (2011: £11.1m) with strongerperformances in Germany, Poland and Spain offsetting flat ormarginally decreased revenues in other markets. In the fourthquarter action was taken to restructure certain teams, particularlyin Sweden which resulted in increased overall losses for theEuropean Consultancy business of £0.5m (2011: loss £0.1m).Our business Our governance Our results* Refer to definition on page 17.Savills plc Report and Accounts 2012 21