Savills plc Results for 6 months ending 30 June 2021
5 August 2021 Mark Ridley & Simon Shaw 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 Results
Introduction, Highlights & Financial Summary & Business Development Review Outlook
3 Introduction, Highlights & Business Development Highlights
PERFORMANCE OVERVIEW DRIVERS
Group Revenue £932.6m ▪ Less transactional businesses continue to perform very +17.8% (cc +21.1%) well with 11% growth
Group UPBT £66.1m ▪ Property and Facilities Management revenue up 6%, +400.8% (cc +412.1%) Consultancy revenue up 20% ▪ Commercial Transaction revenue increased 15% Group UEPS 35.8p overall with strong growth in the UK and Asia Pacific (2020 H1: 7.0p) ▪ Record UK Residential performance with revenue Net Cash £106.7m up 97% (2020 H1: £9.4m) ▪ Savills Investment Management revenue up 25%, with Dividend 6.0p period end AUM up 16% at €23.7bn (2020 H1: 0.0p)
cc = constant currency
5 Savills Diversified Business Model
DEFENSIVE, SCALE BUSINESSES REVENUE BY BUSINESS CYCLICAL, HIGH-MARGIN BUSINESSES
Property Management – 38% Commercial Transactions – 26%
Consultancy – 19% Residential Transactions – 13%
Investment Management – 4% Transactional “Less” Transactional ▪ Recurring revenue streams with less 39% ▪ High-return, but cyclical earnings exposure to transaction environment 61% ▪ 67:33 split Commercial vs. Residential ▪ 2.4 billion sq. ft under management ▪ 59:41 Commercial split Tenant ▪ Strong Property Management business rep/leasing vs. Capital markets ▪ €23.7bn AUM
UK ASIA PACIFIC CEME NORTH AMERICA
“Less” Transactional Transactional Transactional Transactional 8% 26% 35% “Less” 34% Transactional “Less” Transactional “Less” 66% Transactional 74% 65% Transactional 92%
Revenue up 40% year-on-year Revenue up 3% year-on-year Revenue up 6% year-on-year Revenue up 8% year-on-year
6 Focus on Strategic Growth
LIFE SCIENCES: PROPERTY & ASSET MANAGEMENT: ▪ All regions
▪ Regional Asia Pacific & CEME LOGISTICS:
▪ All regions PROJECT MANAGEMENT / WORKPLACE: RESIDENTIAL: ▪ US, CEME & Asia Pacific ▪ All regions
INVESTMENT MANAGEMENT: TECHNOLOGY:
▪ UK, CEME & ▪ Data & real time insight Asia Pacific – K3
7 United Kingdom: Market Dynamics – Commercial
Revenue: £417.4m | Growth: +40% YOY | Employees: 8,134 | Offices: 131 (Total UK)
UK Commercial Investment Volumes 2000-2021 MACRO THEMES 80 Q1 Q2 Q3 Q4 70 ▪ May 2021 GDP growth slightly lower than expected (0.8% month- 60 on-month) but IMF predict economic bounce back of 7% for the year 50 ▪ Inflation reached a 34 month high in June 2021, at 2.5% 40
▪ Return to work programme delayed until September, impacting on 30 £billion City Centres, whilst consumer spending increased by 4% 20 10 MARKET STATISTICS 0
▪ Commercial investment volumes totalled £25.3bn, up 19% year-on- Source: Property Data, Savills year (2020 H1: £21.2bn) Central London office leasing volume ▪ The UK overtook Germany to become the most heavily invested property market in H1 14,000,000 ▪ Largest increases were in the Logistics and Retail Warehousing 12,000,000 sectors, but Central London office investment also up 62% 10,000,000 Q4
▪ Logistics leasing activity in H1 2021 was achieved a record level of ft 8,000,000 24.5m sq ft, 83% above the long term average Q3 Sq 6,000,000 ▪ Office Leasing up 23% regionally but down 1.4% in Central London Q2 4,000,000 vs 2020-H1 Q1 2,000,000
0
2019 2000 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2020 2021 8 United Kingdom: Market Dynamics – Residential
Revenue: £417.4m | Growth: +40% YOY | Employees: 8,134 | Offices: 131 (Total UK)
Mainstream House Price Growth MAINSTREAM MARKETS Completed Housing Transactions 14% 240,000 ▪ Transaction levels up 103% year on year for H1 and 52% above 2019 12% 210,000 (HMRC) 10% 180,000 ▪ Annual house price growth hits 13.4% by the end of June (Nationwide) 8% 150,000 ▪ Data suggests a moderate slowing of market activity in H2, through a 6% 120,000 4% 90,000 continued demand/supply imbalance and ending of the stamp duty 2% 60,000 holiday 0% 30,000 ▪ 6,914 new Build to Rent units were completed in H1, against a growing -2% 0 institutional appetite for residential investments
Source: Nationwide, HMRC PRIME MARKET £1m+ agreed sales 4,500 Country London 4,000 ▪ Transactions over £1m were more than double 2020 levels, as well as 3,500 78% above 2019 3,000 ▪ Annual price growth in the Prime Country House Market hits 12.9% 2,500 ▪ Prime Central London price growth only 0.5% by the end of June 2,000 ▪ Despite a lack of international travel, there were 237 transactions in the 1,500 market over £5m in London, 60% more than in both 2019 and 2020 1,000 500 0
Source: TwentyCI
9 Asia Pacific: Market Dynamics
Revenue: £287.2m | Growth: +3% YOY | Employees: 27,612 | Offices: 56
MACRO THEMES
▪ Asia Pacific GDP is forecast to rebound strongly by 7.4% in 2021, with an ongoing momentum in 2022 (5.1%) according to The World Bank ▪ A surge in COVID-19 variant cases in India and further outbreaks elsewhere in the region have cast some doubt over the speed of recovery and COVID restrictions remain broadly in force ▪ Expansionary monetary and fiscal policies, including historically low interest rates, quantitative easing etc. are likely to persist in the near future given current uncertainties
sqm 1H/2021 Commercial Leasing Volume Estimate by Market MARKET STATISTICS 700,000 600,000 500,000 ▪ Asia Pacific H1 2021 commercial investment activity increased by 8% YoY, with 400,000 offices the only sector of decline (-12%). Retail and industrial both recorded strong 300,000 rebound figures (55% and 57% respectively) due to a low base in 2020 200,000 ▪ China overtook Japan as the biggest market in Asia Pacific during H1/2021 100,000 - ▪ Overall H1 volumes showed positive growth in Singapore, Taiwan and Hong Kong (100,000) ▪ Despite the ongoing travel restrictions, H1 2021 cross border investment fell only (200,000) marginally by 5% YoY
Source: Real Capital Analytics, Savills Research & Consultancy 10 North America: Market Dynamics
Revenue: £ 114.0m | Growth: +8% YOY | Employees: 904 | Offices: 40
MACRO THEMES US Commercial Investment Volumes – Major Metros $200
▪ GDP increased by 6.4% in the first quarter of 2021 (compared to a $160
decline of 5% in Q1 2020) $120 ▪ U.S. unemployment stood at 5.9% in June (compared to 11.2% in Q4 $80 June 2020) Q3 ▪ By end of H1, 67% of U.S. adults received at least one vaccine $40 Q2 dose, resulting in nearly all restrictions being lifted Q1
$0
2012 2001 2002 2003 2004 2005 2006 2007 2008 2009 2010 2011 2013 2014 2015 2016 2017 2018 2019 2020 2021 MARKET STATISTICS $bn 2000 Source: Real Capital Analytics, Savills, Includes all Commercial Property Types ▪ Office availability continues to climb, now at 22.6% nationwide (compared to 17.3% pre-pandemic) due to sub-lease space US Annual Commercial Office Leasing Volume availability 350 ▪ Demand volume in H1 down 42% from pre-pandemic levels, with 300 just 76 million sq. ft of office space leased to date across major 250 markets 200 ▪ Q2 improvements in several key markets including New York, Los 150 Angeles, Chicago 100
▪ The Industrial / Logistics market saw Q2 quarterly leasing volumes 50 Total volume (sq ft; million) (sq ft; volumeTotal nearly 10% higher than the pre-pandemic 5-year average 0 2014 2015 2016 2017 2018 2019 2020 H1 2021 Source: Savills, Includes New Leases and Renewals
11 CEME: Market Dynamics
Revenue: £114.0m | Growth: +6% YOY | Employees: 2,272 | Offices: 49
European Investment Volumes MACRO THEMES 400 ▪ GDP forecast to recover by 4.6% in 2021, following a 6.2% decline in 2020 350 Q4 300 Q3 ▪ Significant regional variations, with resilience experienced in Germany, Netherlands and 250 the Nordics, whilst Spain, France and Italy all observed significant GDP declines 200 Q2
▪ Lockdown restrictions gradually being lifted across most markets amid vaccine rollouts EurosBillion 150 100 Q1 ▪ Eurozone inflation increased to 1.9% yoy in June 2021, due to rising input costs and 50 extensive quantitative easing, prompting speculation over an interest rate rise 5-year 0 H1 average 2013 2014 2015 2016 2017 2018 2019 2020 2021 MARKET STATISTICS European Office Take Up (sq m) Q1 Q2 Q3 Q4 H1 Average ▪ European investment volumes in H1 2021 fell by (-8%) against the five year H1 average 12,000,000 to €124bn, as the second quarter gathered momentum 10,000,000 ▪ Investment activity in Germany decreased by -1% in H1, with France (-15%), Netherlands 8,000,000 (-41%), and UK (-4%) observing similar decreases, as Spain (+10%) and Denmark (+7%) recorded increases 6,000,000
▪ Office leasing activity in H1 2021 was down by 24% against the five year average, and 4,000,000 vacancy rates have increased from an average of 5.7% to 7.2% over the last year 2,000,000 ▪ Investor demand weighted towards Logistics, Prime Offices and Multi-Family, with Retail experiencing the weakest demand 0 2016 2017 2018 2019 2020 2021
12 Savills Investment Management: Market Dynamics
Revenue: £38.2m | Growth: 25% YOY | Employees: 304 | Offices: 16
Percentage AUM MACRO THEMES Savills IM Capital Raising outperforming respective 4,000 benchmarks to Q1 2021 ▪ Economic activity strongly rebounding from the lows of last year with the US leading the 76% way given its highly expansive fiscal policy 3,500 ▪ Inflationary pressures building but most economists believe it is a temporary rise 74% ▪ Real estate transaction activity picked up with most of the capital being focused towards 3,000 Multi-Family, Logistics and prime CBD offices 72% Last ▪ Overall market valuations have not fallen to the extent expected 2,500 5 yrs ▪ Rent capture considerably improved with collection rates in the high 90s percentage levels 70% 75% 2,000 BUSINESS DEVELOPMENT 68% 1,500 Last ▪ Capital raising has continued to grow with total AUM reaching €23.7bn (16% increase over 66% 3 yrs H1 2020), with a solid transaction pipeline; market conditions posing challenges for both 1,000 68% raising and deploying capital 64% ▪ Continued growth of Logistics platform (€5bn), with significant transaction activity 500 65% ▪ Key strategic recruitment in Australia and Japan, in Capital Raising and in key infrastructure 62% -
▪ Growth of debt investment, with DRC Savills Investment Management, revenue up 109% EUR m 2013 2014 2015 2016 2017 2018 2019 2020 2021 compared with H1 2020 60% Target Actual Actual ▪ Strategic Investment Alliance with Samsung Life and Samsung SRA to boost seeding of Half-year Full-year new funds in Europe and Asia ($1bn commitment) * 2021 includes DRC capital raising from 1 January 2021
13 ESG
How we ensure ESG is embedded globally Our Approach Actions
Developing talent and promoting Diversity and Inclusion diversity and inclusion within real estate Focus on 6 key pillars
Make progress against Enhance our ESG Enhancing our social impact and our 9 Sustainable global strategy and Social Impact improving the quality of education, health Development reporting framework Employer of Choice and Community and wellbeing Goals globally engagement
Achieving Net Zero targets by adopting Sustainability Adoption of targets by business and a progressive road map globally suppliers
Align to Task Force Move further on Providing expertise on Energy and for Climate Related journey towards our Consultancy Disclosure (TCFD) Net Zero Goals Sustainability for clients to assist on their Comprehensive sustainability services ESG agendas
RECOGNISED ON THE FINANCIAL TIMES ’ INAUGURAL LIST OF EUROPEAN CLIMATE LEADERS 2021
Committed to 9 Decent work Responsible Sustainable sustainable goals: Good Health & economic Gender Affordable & Climate consumption Quality cities & Life & Wellbeing growth equality clean energy action & production education communities on land
14 Financial Review Summary Underlying Result
6 months ended 30 June (£m) 2021 2020 % chg
Revenue 932.6 791.4 +17.8%
Underlying PBT 66.1 13.2 +400.8%
Underlying PBT margin 7.1% 1.7% +5.4% pts
Underlying basic earnings per share 35.8p 7.0p +411.4%
Dividend per share 6.0p 0.0p n/a
Net cash/(debt) 106.7 9.4 1,035%
Net assets 605.3 536.6 12.8%
16 H1 2021 vs H1 2019
6 months ended 30 June (£m) 2021 2019 % chg
Revenue 932.6 847.0 +10.1%
Underlying PBT 66.1 38.4 +72.1%
Underlying PBT margin 7.1% 4.5% +2.6% pts
Underlying basic earnings per share 35.8p 20.9p +71.3%
Dividend per share 6.00p 4.95p +21.2%
Net cash/(debt) 106.7 (139.0) n/a
Net assets 605.3 461.5 31.2%
17 Revenue and underlying PBT by business
Transaction Property Investment Advisory Management Consultancy Management £m +30% +6% 400 362.0 359.0 350 337.8 2020 300 278.5 2021 250 +20% Revenue 200 173.4 144.6 150 100 +25% 50 30.5 38.2 0
Combined revenue and UPBT growth of 11% and 40% respectively
n/a 35 29.1 +84% 30 +8% 25 19.2 18.8 UPBT 20 17.7 +65% 15 10.2 7.1 10 4.3 5 - The figures in these charts (5) exclude costs of £8.1m in (10) 2021-H1 (2020-H1 £4.3m) not (15) allocated to the operating (20) (14.7) activities of the group’s business segments Margin (5.3)% 8.0% 5.2% 5.3% 7.1% 10.8% 14.1% 18.6%
18 Revenue and underlying PBT by region
UK Asia Pacific North America CEME £m +40% 450 417.4 400 +3% 2020 350 298.8 287.2 2021 300 279.7 Revenue 250 200 +8% +6% 150 105.5 114.0 107.4 114.0 100 50 0 +254% 60 53.1 50 40 +103% 30 UPBT 24.0 20 15.0 11.8 n/a 10 +7% The figures in these charts 1.2 exclude costs of £8.1m in 2021-H1 (2020-H1 £4.3m) not - allocated to the operating activities of the group’s (10) (4.9) (4.4) (4.1) business segments Margin 5.0% 12.7% 4.2% 8.4% (4.6)% 1.1% (4.1)% (3.6)%
19 Cashflow performance
Cash generated from operations1 of £41.5m (2020 H1: £13.1m) £300m
£32.6m
£250m £66.1m
£5.4m
£(57.2)m £200m £177.7m
£(50.8)m £(9.4)m £150m £(8.3)m
£(23.8)m £(6.4)m £106.7m £(13.7)m £100m £(5.5)m
£50m
- Net cash b/f UPBT Non-cash items Working capital Investment cash Acquisitions Net capex EBT shares Dividends Interest Tax Other Net cash c/f flows
1 Cash generated from operations include “principal elements of lease payments” which are included within financing activities in the statutory cash flow 20 Commercial Transaction Advisory
2021 Revenue £244.0m (+15%) 2021 UPBT £4.9m (2020-H1 -£17.9m) 120 10 105.1 7.4 8 100 6 5.2 80 4 0.8 60.5 2 60 - 38.5 39.9 (2) 40 (4) (6) 20 (8) (8.5) - (10) Asia Pacific UK CEME North America Asia Pacific UK CEME North America
Growth +46% +25% +5% +3% Growth n/a +478% +13% n/a
Asia Pacific strong recovery in Japan, Australia, Singapore and parts of China. HK volumes remain subdued UK significant growth outside the capital, London slower to date; growing pipeline going into H2 CEME modest recovery across the continent. Continued investment in new teams and technology North America revenue up 13% on a constant currency basis; growth in pre-transactional activity
21 Residential Transaction Advisory
2021 Revenue £118.0m (+78%) 2021 UPBT £24.2m (+656%) 120 25 104.2 20.5 100 20 80 15 60 10 40 3.7 20 13.8 5
0 - UK Asia Pacific UK Asia Pacific
Growth +97% +4% Growth +1,181% +131%
UK both second-hand and new homes sales up significantly driven by the search for space
Asia Pacific significant increases in Mainland China, partially offset by quieter market in Hong Kong
22 Property Management
2021 Revenue £359.0m (+6%) 2021 UPBT £19.2m (+8%)
200 12 173.7 10.4 180 10 9.4 160 145.2 140 8 120 6 100 80 4 60 40.1 2 40 - 20 - (2) (0.6) Asia Pacific UK CEME Asia Pacific UK CEME
Growth (9)% +32% +6% Growth (16)% +84% n/a
Asia Pacific revenues down; primarily termination of some significant (revenue) contracts in Hong Kong and South Korea, partially offset by growth in Mainland China and Australia UK benefitted from the new “Intu” mandate contracts won in H2 2020 CEME revenue growth from the acquisition of Omega in Germany and further contract wins in France and the Middle East
23 Consultancy
2021 Revenue £173.4m (+20%) 2021 UPBT £18.8m (+84%) 120 16 109.9 14.1 14 100 12 80 10 60 8 36.2 6 40 4 18.4 1.9 2.3 20 8.9 2 0.5 0 - UK Asia Pacific CEME North America UK Asia Pacific CEME North America
Growth +19% +12% +13% +141% Growth +131% (5)% (4)% n/a
UK strong performances in Development, Housing and Building & Planning Consultancy Asia Pacific growth in Valuations and Research, most notably in Mainland China, Hong Kong and Australia, partially offset by lower project management revenues, due to pandemic-related delays to project completions and new project starts CEME strong performances in the Middle East, France, Italy and Ireland. Investment in new teams in Spain and the Middle East impacting profits North America full period post-acquisition (March 2020) of Macro Consultants (Project Management), plus further expansion of the consultancy offering with investments in life sciences and workplace solutions
24 Investment Management
2021 Revenue £38.2m (+25%) 2021 UPBT £7.1m (+65%) 25 4.5 3.9 4.0 19.6 20 3.5 15.6 3.0 2.7 15 2.5 2.0 10 1.5 1.0 0.6 5 3.0 0.5 - - (0.5) (0.1) UK CEME Asia Pacific UK CEME Asia Pacific North America
Growth +54% +2% +20% Growth +200% (4)% +200% n/a
Revenues base management fees represented approximately 78% (H1 2020: 82%) of revenues and grew by 20% during the period. This growth was supported by growth in performance fee income
Performance 75% of funds (by AUM) continued to exceed their benchmark returns on a five year rolling basis. Capital raised in the period was £0.8bn (H1 2020: £0.7bn)
DRC remaining 75% stake acquired in May 2021 Assets under management increased by 16% to €23.7bn (H1 2020: €20.4bn)
25 Summary & Outlook Summary & Outlook
A record H1 performance; strong Residential Continued growth Strong balance sheet markets and improving in Less Transactional supports business sentiment generally businesses development opportunities
Subject to COVID, Board Benefit of discretionary cost Continued recruitment expectations containment (eg T & E) will in focus markets for FY 2021 meaningfully normalise progressively /sectors ahead
27 Thank you