Knight Frank LLP (“Knight Frank”), the world’s leading independent property advisor, today announced its financial results for the year ended 31 March 2013.
Highlights:
Group profit before tax up 7% to £102.7m (2012: £95.9m)
Group turnover up 5% to £350.0m (2012: £333.9m)
Strong balance sheet with net cash balances at £105.3m (2012: £98.5m)
Alistair Elliott, Knight Frank’s senior partner and group chairman, commented: “I am delighted to report that Knight Frank has increased both profit and turnover year-on-year whilst continuing to invest in the group.
“We are making great progress towards achieving our goal of being recognised as the advisor of choice in global real estate, best placed to engage with occupiers, investors and private wealth across prime residential and commercial property. I believe the prospects for Knight Frank around the world have never been better and we are determined to drive our business forward.
“There are some extremely encouraging indicators: within the UK our fees per fee earner are the highest of all major firms; our businesses around the world are planning headcount growth of 15% over the next three years; and in line with our global strategy we are on target to secure $1bn turnover across the extended group in 2017.
“The breadth of our business is highlighted by recent deals including:
• Sale of 20 Grosvenor Square, London for £258m to an international investment company with Finchatton as project coordinator
• Sale of Winchester House to the Chinese Investment Corporation for £250 million, its first investment in Central London
• Instruction to sell the home of Estee Lauder’s founder in the South of France
• Relocation of Barclays Bank to a new 110,000 sq ft head office in Gaborone, Botswana
• Sale of The Gallery Hotel on Singapore’s Robertson Quay for over S$230m to RB Capital
• Relocation of UPS to its new 159,000 sq ft UAE HQ
• Acquisition of Bayer House in Mumbai for Hiranandani Properties Pvt. Ltd.
• Appointment on the facilities management of 1.6m sq m of Charter Hall’s Office and Industrial portfolio in Queensland, Western Australia, South Australia, ACT and Tasmania
• We are also proud to have been recognised by our clients and peers highlighted by some of our recent awards, including: Residential Agency Team of the Year 2013 – RICS Hong Kong; International Sales Agency of the Year 2013 – UK RESI; UK Sales Agency of the Year 2013 – UK RESI; National Property Advisor of the Year 2012 – Estates Gazette UK; Residential Property Advisor of the Year 2012 – Estates Gazette UK
“Over the past 12 months we have seen a strong recovery in appetite for commercial and residential assets and our performance has been helped by our unique position in the property world, especially our strong links to corporate, sovereign and private investors. Knight Frank’s Wealth Report revealed that a net balance of 25% of HNWIs across the globe wanted to increase their exposure to property in 2013, and we expect this trend to continue in the years to come.”
Global update
“Residential markets around the world experienced mixed fortunes. There were continued strong performances from the prime markets in London and New York, and firm recoveries in Dubai and Singapore. Elsewhere, in line with varying economic conditions around the world and the slowdown in China affecting Asia, markets were more challenging.
“In the UK, the prime London market continues to show strong activity and a steady rise in values. While international demand has remained strong, the resurgence of domestic demand, fuelled by improving conditions in the UK economy, has added impetus to both activity and price growth. The private rented sector continues to outperform and we expect this to continue over the next few years.
“On the commercial front, there is increased demand for office space from the technology and media sector as more businesses seek a collaborative working environment. Foreign money dominates investment in London property, although UK funds are reviving their interest in the regions. Many companies have delayed relocating offices in recent years, to avoid the expense of a move. However, as current properties become obsolete, the pressure to relocate will grow, generating the next wave of occupier demand. Investors will want to capitalise on this increase in future occupier activity.
“Elsewhere in Europe, the markets appear to have turned a corner and positive sentiment is slowly returning. We have opened a new office in Berlin, formed a new alliance in Dublin and will continue to seek out strategic locations to build our brand in the key European cities. With pricing increasingly in line with market sentiment, the indications are that investors are now more confident about Europe than they were 12 months ago.
“In Africa, we are now market leaders with 23 offices in nine countries. We have expanded our platform by forming an alliance with Galetti in South Africa. Asian, Middle Eastern and South African investors have increasingly dominated the growing list of clients seeking commercial and residential development and investment opportunities in the key 10 sub-Saharan cities. Growing interest from the burgeoning professional classes and demand for minerals, oil and gas all combine to support our confidence in the growth potential of the African markets.
“Knight Frank is now firmly established in the Middle East. We are growing our residential presence and building an enviable client base. The Dubai and Abu Dhabi property markets are performing strongly and have an increasingly global appeal to investors and occupiers alike, across all real estate sectors.
“Whilst the pace of growth in Asia Pacific has eased, this slow-down is expected to be temporary and the region remains integral to our plans for growth. In the past year we have taken an equity share in our Malaysian operations, established an alliance with Sumitomo Mitsui in Japan and appointed a new chief executive of our India business.
“Concentrating our efforts on what we do best remains central to our strategy. We will continue to invest in the best people and to focus on our four global service lines of capital markets, office agency, residential and valuations in key locations around the world.”
Knight Frank LLP Consolidated Profit and Loss Account
2013 2012
£m £m
Turnover 350.0 333.9
Staff costs (156.3) (141.3)
Depreciation and amortisation (3.6) (4.7)
Other operating income 5.7 3.6
Other operating costs (97.6) (100.7)
Operating profit 98.2 90.9
Share of operating profits of associated undertakings 2.0 2.4
Income from fixed asset investments 0.6 0.9
Profit before interest and taxation 100.8 94.2
Interest receivable and similar income 2.7 1.9
Interest payable and similar charges (0.8) (0.5)
Other financial income – 0.3
Profit on ordinary activities before taxation 102.7 95.9
Tax on profit on ordinary activities (2.2) (2.7)
Profit before members’ remuneration and profit share 100.5 93.2
Knight Frank LLP Consolidated Balance Sheet
2013 2012
£m £m
Intangible assets 0.1 0.7
Other fixed assets 20.8 16.4
Fixed assets 20.9 17.1
Cash at bank and in hand 105.3 98.5
Other net current assets 38.7 38.3
Net current assets 144.0 136.8
Creditors: amounts falling due after more than one year (1.1) (1.2)
Provision for liabilities and charges (20.1) (18.0)
Pension liabilities (15.0) (13.4)
Net assets 128.7 121.3