Profits and turnover have stayed relatively stable at Knight Frank in a year that included four months of Covid-based turmoil across its Asian business and continued Brexit and election distraction in the UK.
Group turnover nudged up by 6% to £549.6m in the year to 31 March, while pretax profits fell by 4% o £142.7m.
Alistair Elliott, senior partner and group chairman (pictured), said the results demonstrated the firm’s “ongoing resilience”, adding that hesitation due to Covid-19 in the final part of the year under review had resulted in a slight drop in profits, caused by a number of transactions deferring into the following financial year.
“Our connected global platform, extensive range of services and consultancy advice have proven invaluable. As the pandemic has reached markets around the world in varying strengths and at different times, through close collaboration, we have learnt from each other and taken decisions to protect the long-term future of the firm,” said Elliott.
That protection includes maintaining cash in the business to cover five months of operating costs. During the year under review, the firm increased its cash in hand from £173.1m to £175.5m.
“For many years now we have not fully distributed our profits and this has allowed us to develop a strong cash reserve,” said Elliott. “We have underpinned by our business model of long-term organic growth, rather than acquisition, ensuring our balance sheet is not inflated with goodwill, nor burdened with debt.”
That debt includes payouts from the government in the form of furlough grants, which the business is now working to pay back.
“In the spring, with a great deal of uncertainty as to what the next few months of trading would offer, our group executive board decided it would be prudent to furlough staff in the UK and claim the appropriate grants,” explained Elliott. “But as we closed last financial year and began the new one, new budgets were formulated and plans developed.
“With markets stalled and our offices closed, it was the right decision for the time. Now as we pass the half-year point, income year to date is better than expected and, consequently, we have engaged with HMRC to establish the mechanisms upon which we will return these sums.”
Despite the disruption brought about by the pandemic, Elliott said Knight Frank had continued to expand, building teams around PRS and retirement housing, data centres, restructuring and recovery, corporate finance and capital advice.
He said he believed that there was a huge market and opportunity to deliver advice to occupiers in the face of the changing dynamic of the workplace, with every occupier now needing “completely different” advice to what it would have been receiving 12 months ago.
The business is also doubling down on its ESG focus as environmental and social issues move up the agendas of its clients.
“We are focused on a number of key growth areas to drive the business forward,” said Elliott. “We have diversified across our residential, commercial and consultancy businesses and have sharpened our focus on ESG.
“We are working with the Carbon Trust on our firm-wide net zero strategy and will shortly be setting clear target dates for the achievement of net zero, in accordance with the Science Based Targets Initiative. This is a critical adaptation of our own business model while also ensuring that we can advise our clients on the challenges and opportunities.”
He added: “As we look to the future, we believe that next year offers an exciting prospect, albeit the sector will continue through some structural change as a consequence of this year’s events, presenting opportunities and challenges in equal measure.
“Occupational markets across all sectors are broad and dynamic – each will have a different response, and we are analysing this daily to inform the advice we give. While markets remain constrained, we are committed to growing our business organically in those areas our clients need us most.”
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