Global market real estate agency Knight Frank has released its latest figures and provides details on how the business has performed in “one of the most extraordinary years” of its 125-year history. story. There is also a lot of interesting information about the company’s approach to issues such as diversity, equality and climate change.
The title numbers are:
• Revenue down 7% to £ 512.7 million (2020: £ 549.6 million)
• Record pre-tax profit, up 23% to £ 173.7m (2020: £ 141.1m)
• Strong balance sheet with net assets of £ 299.4m (2020: £ 264.1m)
• Healthy cash flow at more than seven months of normal operating costs (2020: five months)
The overview of the results was given by Alistair Elliott, Senior Partner & Group Chairman:
After one of the most extraordinary years in our 125-year history, I am pleased to report a strong set of results.
The agility and rapidity of the company’s reaction to the pandemic allowed us to exceed our initial financial expectations. This year has strengthened our confidence in the firm’s global platform. At the heart of it all is our partnership structure, which has allowed us to plan and respond quickly. We remained committed to focusing on our people and the need to continue investing in our business for the future.
In times of adversity, Knight Frank has always shown his true colors – no more than during the pandemic, when I experienced the business at its best. From day one, we came together to share early lessons from our businesses around the world, allowing us to respond quickly with confidence. This firm-wide collaboration continues to give us the expertise to better advise our clients in all areas of real estate.
Our diverse offering and the early steps we have taken to shape the company for future headwinds underpin these strong results and record earnings.
Revenue was down only 7%, largely due to a reduction in transactional activity in the capital markets and a desk agency far stronger than our budgets. We planned cautiously in the face of global uncertainty, then adjusted our position to focus on the right areas to generate outperformance for ourselves and our clients. In particular, the residential sector in the United Kingdom, and especially our campaign activities, which have seen record levels of demand.
The rapid re-engagement of the market, along with cost constraints, resulted in our profit growth of 23% over the previous year.
As a group, we have reduced our marketing expenses, our employees have traveled less and our personnel costs have fallen – all of which have had a positive impact on the profitability of the company.
Knight Frank first took advantage of the UK government’s leave scheme and asked all of our employees to sacrifice their wages – precautionary measures taken in anticipation of what the company thought they could expect. Yet, with the markets responding better than expected, we were delighted to repay vacation subsidies and fully repay our employees’ wage sacrifice.
Throughout the year, Knight Frank has remained focused on being a responsible company that puts people first. Our Investment Management business (KFIM) delivered strong profits and Knight Frank’s Residential Facilities Management department significantly increased revenue and margin. Internationally, our performances in the Middle East, Hong Kong and India are particularly remarkable.
We remained a clean recruiter, progressed through our early career program, welcomed all interns and graduates – and achieved a record number of promotions. We strengthened our coverage in Africa and Europe, opening new offices in Sofia, Athens and Belgrade and announcing new partnerships in Cape Town, Lyon and North America. The company also supported Fifth Wall, the world’s largest real estate technology-focused venture capital firm, by investing in its European Real Estate Technology Fund.
We are happy to confirm that we remain an independent, debt-free partnership with a strong platform for the future.
We believe the year ahead will see greater clarity for key markets – as people continue to return to workspaces and cities once again take center stage for homebuyers and businesses. . The year will also be marked by continued ESG growth [Environment, social and corporate governance] has led to investment needs and a search for income as we enter a cycle of rate tightening. Investor orientation will lead to continuous innovation in real estate markets around the world.
This year, the Knight Frank Group, which employs more than 16,000 people in 384 offices in 51 territories, achieved combined annual revenue of over £ 1.7 billion. There remains a great opportunity for Knight Frank on the global stage and we are focused on a number of key growth areas to move the business forward.
The firm’s ESG commitment and the advice we give to our clients have never been more important. Further developing our internal expertise, Sarah Beattie has joined as a partner our Corporate ESG Strategy team, responsible for developing and leading our corporate ESG strategy across our business.
Our goal is to work responsibly, in partnership, to improve people’s lives and the environment. Playing our role in the fight against climate change is essential and it is the responsibility of each company to manage its greenhouse gas emissions. Knight Frank has a huge opportunity to make a difference, both through our own actions and the advice we provide to our clients. Following a six-month consultation with The Carbon Trust, the company has joined the global race to net zero, committing to achieve net zero by 2030 globally, with the UK meeting this target by 2027.
To achieve this, Knight Frank will adapt its buildings, business operations and behaviors, and use technology and nature-based solutions to reduce the carbon it releases into the atmosphere. We are looking for alternative energy sources to run our operations and switch to 100% renewable electricity, our fleet of cars will go electric and we are reviewing our entire supply chain to collaborate with companies that share our ambition of zero net.
Our population of young talent is a key pipeline for our future, and in our 2021 internship cohort we had 44% female, 56% male, 36% BAME intern, which in the industry is a big change. and exceeds our own goals.
Our intake of UK graduates for this year joined in September and included 49% female and 51% male. In 2022, we are aiming for gender parity and once again exceeding our own BAME and education goals.
Over the past year, we’ve rolled out our Leaders for Today program, where 200 of our leaders have completed a six-month Inclusive Leadership Program, helping to ensure the mindset and approach is deeply rooted in our culture.
The second cohort will begin in 2022, ensuring that all who lead and manage teams are fully inclusive and address diversity at every stage of their teams’ careers. We’re reviewing our parental leave policies that give our employees the time and support they need to grow their families, seeking to equalize them for primary and secondary caregivers.
We have conducted a forensic review of our promotions process to ensure that we plan to promote all employees in the company to all levels of their careers. Our vision is to ensure that Knight Frank is an environment where everyone feels comfortable being themselves and that there are equal and transparent opportunities for all – there is no doubt that this important initiative is growing and is already generating positive results.
After 38 years with the firm, the last eight of which as a senior partner, I am retiring from the partnership in March 2022. Following an election in December 2020, William Beardmore-Gray will succeed me as a partner principal and chairman of the cabinet group. , as of April 1, 2022.