Group Objectives
The Group manages the business in accordance with the following key principles:
- Maintaining its ‘best in class’ client service
- Reducing its cost base, with a focus on enhancing the Group’s margins
- Providing sufficient working capital to enable the Company to weather the current market volatility
- Restructuring the business to ensure it is best placed to benefit from a future recovery in market conditions.
At a time of upheaval in markets worldwide, the past 12 months have presented a number of challenges for DTZ, as they have for industry and commerce as a whole. It has been, and will continue to be, our ability to respond to this new economic environment that is the defining factor for the Company’s future performance.
The changing economic landscape has meant that this year has been a period of adjustment and adaptation, not just to ensure that we are better placed to deal with the current industry-wide reality, but also to create a more stable platform for future growth. Difficult decisions have had to be taken, but, throughout, strengthening the Company’s future has been the unambiguous objective. Change has been driven into every corner of the Company - our strategy, our operating protocols, our culture - as we seek to regain profitability and our growth momentum.
The DTZ emerging from this ongoing process of change is one that will be ‘match-fit’, more competitive in the face of the prevailing market conditions and, have greater flexibility - enabling it to be better suited to the uncertain economic environment we believe we will continue to face. It will be a DTZ that is even more responsive to clients and well poised to enjoy the growth opportunities that will return as markets recover. I am confident that it will be a success and I am excited about our prospects and possibilities.
Results
Revenues for the financial year ended 30 April 2009 fell by 18.4% to £364.1 million (2008: £446.3 million) resulting in a loss before taxation and exceptional items of £35.1 million (2008: profit £20.6 million). After exceptional items we report a loss of £79.7 million (2008: profit £5.6 million). Exceptional items comprised restructuring charges of £17.3 million, and a non-cash impairment charge of £27.3 million relating to our North American operations, primarily as a result of the sale of our 50% interest in DTZ Rockwood to the joint venture partner.
While the market conditions continue to be extremely challenging, we are still benefiting from, and building on, leading positions in our home market, the UK, as well as in continental Europe, the Middle East, and particularly Asia Pacific:
- In Asia Pacific, our Valuation, Professional Services and Consulting & Research businesses grew combined revenues by 16.4%
- Our Asia Pacific Professional Services business saw revenue increase by 23.1%
- In China, we advised on 70% of all significant investment deals completed in mainland China during the reporting period. In doing so, we have firmly maintained our position as China’s leading real estate advisory and management firm, and this calendar year have grown our Greater China revenues by 25% quarter on quarter.
A full review of activities across our service lines is provided in the Operating Review.
Capital Raising
We completed a successful equity raising during the year securing £48.7 million before expenses. Recognising the flexibility that cash on-hand provides, and the important reassurance that it gives to clients and staff, we continued working after the equity issuance to improve the terms of our banking facilities and to agree an additional credit facility with SGP, our largest shareholder, of up to £15 million. The success of these efforts, details of which can be found in the Financial Review, provides the desired enhanced stability to move forward with actions to strengthen the underlying performance of the Group.
Restructuring
With our shareholders, our clients, and our employees, we have been transparent about our restructuring plans and the full financial impact of these measures will be reflected in future results statements.
We are implementing a far more rigorous approach to day-to-day elements of our business in order to improve shareholder returns and make us even more responsive to clients. Our budgeting, cost control, recruitment, and marketing procedures have all been upgraded, with the aim of improving operating margins, lowering the cost base, and recruiting and retaining the best available talent.
In addition, the creation of the Executive Committee will streamline decision-making processes and create unambiguous responsibilities and accountabilities across the entire firm.
We have implemented measures in the year ended 30 April 2009 that will deliver cost savings of over £30 million on an annualised basis. We anticipate that we will deliver an additional further annualised saving of at least £20 million for the year ending 30 April 2010. We are working to accelerate and increase further realisable cost reductions. Further analysis on cost reduction is provided in the Financial Review.
The strategic review of our operations during the year led to a series of disposals in line with our stated aim to enhance efficiency, profitability and margins. We closed non-strategic businesses in Austria and Portugal and we continue to monitor underperforming areas across the Group.
Another demonstration of this reshaping of the business and intention to focus our resources more prudently was the decision to sell our 50% interest in DTZ Rockwood back to the joint venture partner in May 2009. Under the terms of the agreement, the US-based firm will continue to operate under the DTZ brand as a licensee. The disposal frees up working capital, while ensuring that the needs of DTZ’s clients in the US and Mexico will continue to benefit from the services provided by DTZ Rockwood.
Lastly, as part of our reorganisation, we have transitioned our Capital Markets and Consulting & Research service lines to operate as global businesses in order to accelerate the development of specialised skills and deliver a globally joined-up product for our clients.