Savills plc. Results for the year ended 31 December March 2018

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Ira Jacob Chapman
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1 Savills plc Results for the year ended 31 December March 2018

2 Disclaimer: Forward-looking statements These slides contain certain forward-looking statements including the Group s financial condition, results of operations and business, and management s strategy, plans and objectives for the Group. These statements are not guarantees of future performance and are subject to risks, uncertainties and other factors, some of which are beyond the Group s control, are difficult to predict and could cause actual results to differ materially from those expressed or implied or forecast in the forward-looking statements. These factors include, but are not limited to, the fact that the Group operates in a highly competitive environment. All forward-looking statements in these slides are based on information known to the Group on the date hereof. The Group undertakes no obligation publically to update or revise any forward-looking statements, whether as a result of new information, future events or otherwise. 2

3 Results 1 Introduction, Highlights & Business Development 2 Financial Review 3 Management Focus & Summary & Outlook 3

4 Introduction, Highlights & Business Development 4

5 Highlights Performance Overview Group Revenue 1,600.0m +10.7% (cc 7.3%) Group UPBT Group UEPS 75.8p +4.6% Net Cash Dividend 30.2p +4.1% 140.5m +3.5% (cc 0.6%) 98.6m (2016: 187.8m) Drivers Transaction advisory revenues up 13%, reflecting strong performance throughout Asia and UK Commercial and resilient UK Residential markets Property Management revenue up 9%, Consultancy revenue up 14% Significant expansion in Europe and North America, through acquisitions and recruitment Savills IM revenue ahead of expectations cc = constant currency 5

6 Ten Year Revenues m 1,800 1,600 1,400 1,200 1, Total Revenue 1,600.0m Total Revenue 904.8m 47% 46% Total Revenue 568.5m 48% 46% 40% 38% 38% 40% 37% 35% 54% 53% 52% 60% 54% 62% 62% 63% 65% 60% Transactional "Less-Transactional" 6

7 Ten Year Return on Capital Employed 40% 35% 30% 25% Return on capital employed 1 The effect of adjusting for the investment in: New York capital markets Czech Republic Gives an underlying ROCE of 30.4%. 20% 15% 10% 5% 10 Year Average ROCE 26% 2017 ROCE 29% 0% Return on capital employed (ROCE) = Adjusted EBIT / Average of opening and closing debt + shareholders equity 7

8 Savills Diversified Business Model Defensive, Scale Businesses Revenue by Business Cyclical, High-Margin Businesses Property Management 32% Consultancy 17% Commercial Transactions 36% Residential Transactions 11% Investment Management 4% Recurring revenue streams with less exposure to transaction environment 1.95bn ft 2 under management Strong Property Management business 53% 47% High-return, but cyclical earnings 77:23 split Commercial vs. Residential 54:46 Commercial split Tenant rep/leasing vs. Capital markets 16.5bn AUM Combination of cyclical and less cyclical service lines 8

Broad Geographic Spread Over 34,000* employees and over 600 offices in 70 countries 5,554 Employees 124 Offices 1,206 Employees 45 Offices 775 Employees 30 Offices 26,894 Employees 67

9 Broad Geographic Spread Over 34,000* employees and over 600 offices in 70 countries 5,554 Employees 124 Offices 1,206 Employees 45 Offices 775 Employees 30 Offices 26,894 Employees 67 Offices 580 Revenue 224.8m Employees (14% of Total) Revenue 627.1m (39% of Total) Revenue 182.4m (12% of Total) Revenue 565.7m (35% of Total) *Staff numbers weighted average for

10 Recent Acquisitions in Europe Aguirre Newman (Spain / Portugal) Net Revenue 40m 400 staff Larry Smith (Italy) Net Revenue c. 7m 80 staff Map shows current offices of Aguirre Newman and Larry Smith. Savills has existing offices in Madrid, Barcelona and Milan 10

11 Financial Review 11

12 Summary Underlying Result Year ended 31 December ( m) % chg Revenue 1, , % Underlying PBT % Underlying PBT margin 8.8% 9.4% (0.6)% pts Underlying basic earnings per share 75.8p 72.5p +4.6% Dividend per share 30.2p 29.0p +4.1% Net cash (47.5)% Net assets % 12

13 Dividends Year ended 31 December (pence) % chg Interim ordinary ( Less Transactional ) 4.65p 4.40p +6% Final ordinary ( Less Transactional ) 10.45p 10.10p +3% Supplemental ( Transactional ) 15.10p 14.50p +4% Total distribution (per share) 30.20p 29.00p +4% Total distribution ( m) % 13

14 Revenue and Underlying PBT by Business Revenue m Transaction Advisory % Property Management % Consultancy % Investment Management 72.0 (8)% UPBT % 81.5 Combined revenue and UPBT growth of 10% and 14% respectively +7% +20% (24)% The figures in these charts exclude revenues of 1.1m and other net costs of 10.6m ( m) not allocated to the operating activities of the group s business segments Margin 12.1% 10.9% 5.0% 4.9% 10.8% 11.4% 24.4% 20.0% 14

15 Revenue and Underlying PBT by Region m UK Asia Pacific North America +8% % Continental Europe Revenue % % UPBT % % Margin 12.5% 12.2% 8.8% 9.8% 9.0% 3.5% 7.9% 6.1% (59)% (17)% 11.2 The figures in these charts exclude revenues of 1.1m and other net costs of 10.6m ( m) not allocated to the operating activities of the group s business segments 15

16 Cashflow Performance Cash generation from operations of 145m (2016: 117.8m) Acquisition spend 117m (2016: 27.1m) m Net cash at 31-Dec-2016 UPBT Non-cash items Working capital Cash flows from investments Acquisition spend - current & deferred Capex Purchase of EBT shares Dividends paid Tax Foreign exchange Net cash at 31-Dec

17 Commercial Transaction Advisory 2017 Revenue 573.0m (+15%) 2017 UPBT 56.4m (-5%) Asia Pacific UK Europe North America - Asia Pacific UK Europe North America Growth +30% +18% +9% +6% Growth +31% +17% (10)% (59)% Asia Pacific strong growth in revenues and profitability in Hong Kong, Japan, Australia and Mainland China. UK significant growth in Investment and Central London & International teams. Europe revenue growth in both Tenant Rep/Leasing and Investment teams in particular Germany, Netherlands, Spain and Italy. New start-ups in Czech Republic and developing logistics expertise in Netherlands and Poland affected profits. North America Significant reduction in government and large/complex corporate transactions. Investment in Capital Markets and other team hires significantly affected profits. 17

18 Residential Transaction Advisory 2017 Revenue 173.2m (+7%) 2017 UPBT 25.1m (+21%) Asia Pacific UK Asia Pacific 18.7 UK Growth +16% +4% Growth +94% +7% Asia Pacific strong growth in Hong Kong high end Residential sales and Singapore project sales. UK revenue growth in second-hand sales in both London and outside the capital. UK new development revenues up reflecting higher average unit values, despite lower volumes. 18

19 Property Management 2017 Revenue 513.1m (+9%) 2017 UPBT 25.3m (+7%) Asia Pacific UK Europe (2) (4) (1.8) Asia Pacific UK Europe Growth +10% +4% +16% Growth +6% +4% +18% Asia Pacific revenue growth in Hong Kong and Mainland China. UK strong underlying revenue growth in Residential Lettings and Commercial Property Management. Europe revenue growth in the Netherlands and Ireland, supported by the acquisition of Larry Smith (Italy). 19

20 Consultancy 2017 Revenue 273.1m (+14%) 2017 UPBT 31.0m (+20%) UK Asia Pacific Europe 0.0 UK Asia Pacific Europe Growth +12% +21% +17% Growth +8% +113% +54% UK Strong performances in Building & Project Consultancy, Hotels & Leisure and Business Space. Asia Pacific Valuation and Research Consultancy growth in Mainland China and Hong Kong. Europe growth in Germany, France, the Netherlands and Spain (predominantly valuations). 20

21 Investment Management 2017 Revenue 66.5m (-8%) 2017 UPBT 13.3m (-24%) UK Europe Asia Pacific UK Europe Asia Pacific Growth -4% -11% 0% Growth -22% -31% 0% As anticipated, revenue/profit affected by the decrease in disposal activity from the liquidating SEB German Open Ended Funds vs Transactions of circa 4.8bn (2016: 4.4bn) executed, including 2.58bn disposals and 2.23bn acquisitions. AUM increased to 14.6bn (2016: 13.9bn); new capital offsetting liquidation distributions of SEB funds to date. 21

Company Business Total Investment Cost Realised to date Net Investment Percentage Ownership Notes Digital Hybrid Residential Agent 13.5m 3.6m 9.9m 22.

22 Company Business Total Investment Cost Realised to date Net Investment Percentage Ownership Notes Digital Hybrid Residential Agent 13.5m 3.6m 9.9m 22.8% Grown to become 10th largest UK Estate Agent, clear no.2 to PurpleBricks amongst all hybrids Digitally enabled Tenant Rep for co-working / serviced offices 0.75m N/A 0.75m 100% Autonomous start up within Savills AI approach to real estate valuation 50k N/A N/A 5% Stake taken in consideration for use of Savills data and market know how to prove models Highly accurate 3D digital city-scape models to speed up planning process 4m N/A 4m 33% Seed funding roll out of VuCity business model 22

23 Management Focus & Summary & Outlook 23

24 Management Focus Integrate acquisitions and review new opportunities Continue expansion of Savills Investment Management s platform Continue to invest and grow Property Management and Consultancy (e.g. Europe) Deliver on investments in the US business Deliver succession plan 24

25 Summary & Outlook A strong 2017 despite market challenges Solid start to 2018 Heightened uncertainty (markets, geopolitical risks and rising interest rates) likely to temper strong transaction volumes in some markets The Board s expectations for 2018 currently remain unchanged 25

26 Connecting people and property since 1855

Savills plc. Results for the six months ended 30 th June August 2017

Savills plc. Results for the six months ended 30 th June August 2017 Savills plc Results for the six months ended 30 th June 2017 10 August 2017 Disclaimer: Forward-looking statements These slides contain certain forward-looking statements including the Group s financial