DTZ, the UK’s second-largest agent, has doubled its profit to almost £5m, thanks to a surge in fee levels.
Pretax profit for the year to April surged 114% to £4.9m on turnover up 11% at £66m. Chairman Richard Lay said that there were three reasons for the improved performance: a “significant recovery” in fee levels, buoyant conditions throughout the property market and better-quality work in the UK and overseas.
DTZ also announced the appointment of Abbey Nat-ional director Charles Villiers to its board as a non-executive.
Lay said that fee levels have picked up dramatically in the past 12 months. “Clients have accepted quality rather than price,” he said. “It has taken quite a while for clients to realise that fee levels should be lower down on their list of priorities. There is a greater understanding that fees need to be at a level that provides a good service.”
Lay described the market as “buoyant” and said that he aims to grow turnover and profit margins over the next few years. Profit margins increased from 3.8% to 7.4% this year, but Lay wants to push them higher. “This is still relatively thin and needs to grow a bit,” he said.
He said that demand from occupiers in all key sectors of the market – offices, retail and industrial – has picked up and that there is no sign that increased amounts of development will choke off rental growth in the future.
But Lay warned that a hike in stamp duty to 5% or more in next week’s Budget could stifle property investment.
“I am concerned that the UK investment market may become as inflexible as those in certain other countries in Europe, with the resultant fall in investment activity,” he commented.
A smaller tax bill helped to push earnings per share up 123% to 6.2p and the final dividend to shareholders was raised to 1.5p per share, up from 0.9p last time. All DTZ staff have received a profit-related bonus.
