KPIs

The Group produced a resilient performance in 2008 against a backdrop of very challenging market conditions resulting from the credit crunch which impacted upon all our geographical areas.

Revenue

The benefit of the diversification of our client offering ensured that the effect of the credit crunch on transaction volumes was limited due to the strong performance of our consultancy and property management businesses.

Underlying profit

91% of our underlying profit came from our non-transactional businesses, again highlighting the benefit of our strategy of diversifying our client offering. These businesses will underpin our performance in the current tough markets.

Operating margins

Group underlying operating margin was 5.4% (2007: 12.8%). The reduction principally reflects the change in our business mix in 2008, with transactional revenues, on which historically we have enjoyed our highest margins, significantly impacted by the downturn. As transactional income recovers, we expect margins to improve.

Cash generation

We ended 2008 in a strong position with a year-end net cash balance of £45.7m (2007: £77.5m). This reflects our focus on strong cash management. The Group's cash flow profile is highly seasonal, with significant cash outflows in the second quarter of the year for dividends, taxation and staff bonuses. The cash outflow in 2008 in particular reflects the payment of the high level of bonuses earned in 2007 that were paid in 2008.

Geographical spread of revenue

In line with our objective to better balance the Group and ensure that we are not over dependent on any one economy, just over half of the Group's revenue is now earned in the UK (55%), with the balance spread across Asia (33%) and Europe (12%). Our focuses for 2009 will be to continue to build our European business and increase our foothold in the US through selective investment.

Breadth of service offering

A strategic priority for the Group is to reduce its reliance on transactional income and expand our breadth of service offerings. Despite the severe market decline in 2008, consultancy remained strong and property management made significant progress. We continue to selectively invest and expand our service offerings across all markets. For the year ended 31 December 2008, non transactional income represented 63.3% of revenue compared to 53.3% in 2007.

Assets under management

In 2008 we have focused on ensuring that the funds we launched in 2007 were properly supported with having the right people and processes across the business. The reduction in the value of assets under management principally reflects the declines in property values suffered by our funds. 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.

Property sq ft under management

2008 was a strong year for our property management businesses with significant progress made in our key markets. In Asia Pacific, property and facilities management is a cornerstone of our business and helps us secure additional advisory instructions as well as providing contractual income streams. During the year, we continued to expand our business and now manage a total of 944.3m sq ft (2007: 708.4m sq ft).