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Savills’ profits plummet 99.7%

Savills has revealed a 99.7% decline in pre-tax profit to £0.1m for the first half of the year.

It compares to £33.4 m for the same period last year.

The group’s financial services division experienced the greatest decline in business, with profit down 330% to a loss of £2.3m for the six months to June 30. Fees for the division declined 48% to £5.4m from £10.4m in the same period last year, which the group attributes to the contraction of UK lending markets.

Its residential fee income reduced by 29% to £27.3m, down from £38.3m in the first half of last year, which the agency says is a result of a very poor first quarter followed by progressive improvement in sentiment and transaction volumes through Q2. It attributes this to the strength of the prime London market, and specifically domestic and overseas cash buyers competing for properties in short supply.

The agency’s basic earnings per share have reduced to 0.7p, down from 23.2p last year, with underlying basic earnings per share down from 10.0p to 1.3p. Savills will pay an interim dividend of 3.0p, half of the 6.0p paid last year.

Jeremy Helsby, group chief executive, says: “These results clearly demonstrate our resilience in some of the toughest trading conditions in decades. To generate a profit is testament to the diversification of our business and the quality and determination of our teams around the world. We continue to shape our organisation to withstand the challenging conditions faced by the sector, particularly in markets such as Continental Europe and the US. We remain on track to
achieve at least £50m annualised savings by the year end.”

Savills has reduced its cost base by £20m in the first half of the year, at a costs of £2.3m. This is in addition to the £22m worth of savings it made in 2008. The group aims to make gross annualised cost savings, excluding bonus and commissions, of in excess of £50m during the 24-month period to December 31.


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