Fund Management

Cordea Savills manages pooled funds in the UK and Europe for institutional investors. It focuses on market and sector specialist funds as well as core pan-European funds. Through a limited liability partnership, Savills owns 60% of this business; the remaining 40% being owned by members of the Cordea Savills management team. Cordea Savills was created in 2004 by combining the existing UK-based Savills Fund Management business with an external management team with international fund management experience. It is now well established and regarded with around £2.9bn of assets under management. When the business was created, it was agreed that Savills and the management team would review the options for taking it forward in terms of ownership and capital structure after an initial five-year period. To this end, from April 2009, the management team can require Savills to sell to a new partner they introduce, or Savills can buy the management interests by paying £1 more than a new partner offers. Together with the management team, Savills is considering the best way to take this business forward through the next stages of its development.

2008 has been a year of consolidation after previous years of strong growth. Our strategy has focused on ensuring we have the right people and processes across the business.

Revenue increased to £19.5m (2007: £15.4m) with funds under management of £3.0bn (2007: £3.5bn) at the year-end. The decrease in funds under management was due to declines in property valuations and the disposal of a number of funds. Underlying profit before tax was £3.6m (2007: £4.1m) reflecting the investment in additional people to manage and support the funds launched in 2007 as well as non-recurring items, including abortive costs from deciding not to launch a fund due to adverse market conditions.

Cordea Savills will continue to appraise investment markets and sectors for suitable opportunities, although we expect that equity raising for new fund launches will generally continue to be very challenging through 2009.