Savills plc Results for the year ended 31 December 2020
11 March 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 Introduction, Highlights & Business Development
Financial Review
Key Priorities, Summary & Outlook Highlights
PERFORMANCE OVERVIEW DRIVERS Transaction advisory revenues down 19% (mainly Group Revenue £1,740.5m Commercial) but Global Residential revenue ahead -9.0% (cc -8.8%) of previous year (+3%)
Group UPBT £96.6m Resilient performance in less transactional services, -32.6% (cc -32.7%) Property Management revenue 2% up on previous year
Group UEPS 56.8p Consultancy revenue reduced by 5%, but with many (2019: 78.0p) business lines strengthened
Net Cash £177.7m Investment Management performing ahead of expectations in 2020, after record year in 2019 (2019: £28.5m) (revenue down 11%)
Dividend 17.0p Strong performance from the UK and Asia Pacific (2019: 4.95p) regions, with profit levels maintained in line with the previous year cc = constant currency
4 Broad Geographic Spread Circa 39,000* employees in 71 countries
2,135 833 6,939 29,160 Employees Employees Employees Employees 48 36 129 58 Offices Offices Offices Offices
Revenue Revenue Revenue Revenue £213.4m £710.7m £240.7m £575.7m (12% of Total) (41% of Total) (14% of Total) (33% of Total)
OPERATION STATUS OPERATION STATUS OPERATION STATUS OPERATION STATUS DURING YEAR: DURING YEAR: DURING YEAR: DURING YEAR: In lockdown for 33% In lockdown for 38% In lockdown for 30% In lockdown for 20% of 2020 of 2020 of 2020 of 2020
* Note – Employee numbers are based on the weighted average number of FTEs for 2020 5 Macro Economics & Real Estate Impact
MACRO THEMES MARKET IMPACTS
. Largest single year fall of 4.3% in global . Global capital raising for real estate fell in GDP since the Second World War 2020 but remains high at US$110.7bn
. Global Government debt reached 365% . Logistics demand at record levels through of World GDP in 2020 surge in online shopping
. Monetary polices adapted to support . Retail and Hospitality markets heavily economic health & welfare crisis impacted with record Retail failures
. Unemployment rates increased by . Lockdown & WFH policies reduce Global between 1.1% and 2% across developed Office Leasing volumes by c. 50% economies . Winners include Life Science, Data & . Asia Pac markets recovering fast with Technology China expected to post growth of over 8% in 2021 and India over 5% . Continued demand for all forms of Residential
. Sustainability & Obsolescence a key focus
6 Savills Diversified Business Model
DEFENSIVE, SCALE BUSINESSES REVENUE BY BUSINESS CYCLICAL, HIGH-MARGIN BUSINESSES
Property Management – 39% Commercial Transactions – 28%
Consultancy – 19% Residential Transactions – 10%
Investment Management – 4% Transactional “Less” • High-return, but cyclical earnings Transactional • Recurring revenue streams with less 38% • 73:27 split Commercial vs. Residential exposure to transaction environment 62% • 62:38 Commercial split Tenant rep/leasing • 2.35 billion sq. ft under management vs. Capital markets • Strong Property Management business • €21.1bn AUM
UK ASIA PACIFIC CEME NORTH AMERICA
“Less” Transactional Transactional Transactional 4% 33% 23% Transactional “Less” “Less” Transactional 41% Transactional “Less” Transactional 59% 67% Transactional 77% 96%
Revenue down 2% year-on-year Revenue down 8% year-on-year Revenue down 9% year-on-year Revenue down 27% year-on-year
7 Strategic Actions & Focus 2020
RESPONSIVE COST MANAGEMENT ‘ADAPT & EVOLVE’
. Reduction in discretionary spend . Building scale in Property Management
. Focused capital expenditure . Continued investment in Data, Technology & Research
. Carefully managed staff costs . Extension & creation of new Consultancy services
. Application of tax deferrals . Focus on growth markets & sectors
. Build balance sheet cash reserves . Maintain ‘experienced’ bench strength
. Working capital management . Continued Graduate and Emerging Leaders Programme
8 New & Enhanced Service Lines
SUSTAINABILITY: SAVILLS OFFICE FiT: . Expanded services . Workplace & Workforce analytics . Energy & Waste Consultancy . Smart Building Design . Carbon off-setting
SAVILLS FLEX: RE-PURPOSING RETAIL:
. ‘Workthere’ . Planning & Consultancy . ‘Pivot’ . Multi-sector re-use . Consultancy HEALTH & WELLBEING:
. Thermal monitoring VIRTUAL VIEWINGS: . Cleaning . Remote inspections . Ventilation . Online Auctions . Occupational density / circulation design
9 United Kingdom: Market Dynamics
Revenue: £710.7m | Growth: -2% YOY | Employees: 6,939 | Offices: 129
Market Impact UK Commercial Investment Volumes 2000-2020 80 Q1 Q2 Q3 Q4 70 . UK Investment volumes -18%, but -28% in London 60 . Office Leasing -30% regionally, -60% in Central London 50 40 . Logistics take up hits a record 50m sq. ft, 50% up on previous year
£ billion £ 30 . Retail investment volume fell to its lowest level, shopping centres 20 hardest hit 10 0 . Residential transaction volumes -11%, but Q4 increase of +19%
Business Development £1m+ Agreed Sales (Net of Fall-throughs) London Rest of UK . Property Management: Took on 12 Intu shopping centres, totalling 4,000 12.9m sq. ft 3,000 . Residential: Expanded Residential core 2,000 . Expanded Multi-Family and Debt Advisory 1,000 0
. Strengthened Leasing & Tenant Advisory Jul-20
. Grew Life Sciences team nationally Jul-19
Jan-19 Jan-20
Mar-19 Mar-20
Sep-19 Nov-19 Sep-20 Nov-20
May-19 May-20
10 Asia Pacific: Market Dynamics
Revenue: £575.7m | Growth: -8% YOY | Employees: 29,160 | Offices: 58
Market Impact Asia Pacific Commercial Investment Volumes
140 . GDP growth led by Greater China and Vietnam 120 . Hong Kong office investment volumes fell by -39%, Grade A office rents -17% but 100 residential remained relatively stable 80 Q4 . China investment volumes down 21% but residential volumes increased by 11% 60 Q3 . Investment market saw declines in Japan (-15%), Australia (-45%) and Singapore (-73%) 40 Q2 . Strength of logistics markets notable across all regions Q1 20 0
Business Development
2012 2018 2009 2010 2011 2013 2014 2015 2016 2017 2019 2020 £bns . Greater China: Grew Greater Bay team, strengthened Property Management & Facilities Management, expanded Residential Sales Asia Pacific Commercial Investment Volume by Market 35 . South East Asia: Expanded Valuation Consultancy, re-structured Residential Sales in 30 Singapore, new Logistics teams in Indonesia & Thailand 25 2015 . South Korea: Established Data Centre team, grew Commercial Investment & Advisory 20 2016 . Vietnam: Grew Property Management and Industrial and Logistics 15 2017 . Japan: Expanded Asset Management & set up Construction Management team 2018 10 . Australia & New Zealand: Grew Industrial and Logistics and Student Housing 2019 5 . India: Established new office in Hyderabad, expanded Project Management, Commercial 2020 -
Leasing & Industrial and Logistics £bns
11 North America: Market Dynamics
Revenue: £213.4m | Growth: -27% YOY | Employees: 833 | Offices: 36
Market Impact US Commercial Investment Volumes – Major Metros $200
. Real GDP declined -3.5% on an annualised basis $160 . US office demand fell sharply by -40% year on year . Decline even more pronounced in major urban centres, Los Angeles - $120 Q4 47%, New York -51%, & San Francisco -68% $80 Q3 . Logistics remained resilient, with net absorption up 27% year on year Q2 . Commercial Investment volumes fell back by -31% across all property $40 Q1
types $0
2010 2001 2002 2003 2004 2005 2006 2007 2008 2009 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 Business Development $bn 2000 Source: Real Capital Analytics, Savills, Includes all Commercial Property Types
. Acquired and actively integrating Macro . Grew Workplace consultancy US Annual Commercial Office Leasing Volume . Expanded Logistics consultancy in Charleston, Charlotte, & Houston 350 . Significantly expanded Seattle operations, with team acquisition; 300 expanded Calgary and Detroit operations 250 . Strengthened New York Tenant Rep 200 . Grew Occupier Services business . Continued investing in and expanding K3 technology 150 . Secured largest commercial office deals of the year in four key markets 100
50 Total volume (sq ft; million) (sq ft; volumeTotal 0 2014 2015 2016 2017 2018 2019 2020 Source: Savills, Includes New Leases and Renewals
12 CEME: Market Dynamics
Revenue: £240.7m | Growth: -9% YOY | Employees: 2,135 | Offices: 48
Market Impact GDP Growth Forecast
10.0%
%
%
% %
7.5% 5.1%
4.4
%
3.7%
3.5% 3.3
. European (excl UK) Investment volumes -20% , but smallest falls in Industrial & 3.1
3.0%
2.8%
2.8%
2.8 2.7%
5.0% 2.6% 1.8% Multi-family -1% & -6% 2.5% 1.3 0.0% -2.5%
. Office Leasing volumes -37%, but Logistics take up +12% -5.0%
1.9%
2.0%
%
- -
-7.5% %
%
4.1% %
- 2020 5.2 -10.0% 5.2%
. Germany, France and the Netherlands remained the most active investment 5.5
5.8
- -
-
-
7.2 7.7%
-12.5% - - 2020-2025 pa
markets -15.0% 10.7%
-17.5% - . Activity across the Middle East, focused on Saudi Arabia & Egypt -20.0% Business Development
. Germany: Acquisition of the Omega Property Management platform, new Logistics team in Hamburg & growth of Munich . France: Growth of regional capabilities in Valuation and Investment and European (excl UK) investment volume strengthened Multi-family 300 € 250 € . Spain & Portugal: Opened office in Valencia, (established new Residential 200 € Q4 business in Portugal) bn 150 €
€ Q3 100 € . CEE: Expanded Valuation, Project Management & Logistics in Czech Republic & Q2 50 € opened new office in Katowice, Poland Q1 - € . Middle East: Created new Building Project Management team operating across UAE
13 Savills Investment Management: Market Dynamics
Revenue: £70.8m | Growth: -11% YOY | Employees: 284 | Offices: 17
Market Impact Percentage AUM Savills IM Capital Raising and AuM outperforming respective . Real estate a beneficiary of strong capital inflows 2013 - 2020 benchmarks to Q3 2020
. Investor appetite geared to Logistics, Multi-family and emerging sectors like 4,000 25 80% Life Sciences/Datacentres
. Relative lack of price transparency 3,500
. Retail and hospitality suffering the most but prices stabilising in Retail 20 AuM (EUR bn) 75% Warehouses 3,000 Last . Increased appetite in Debt & Sustainable Impact Funds Capital Capital Raised (EUR m) 5 yrs 2,500 Last 15 70% 78% Business Development & Outlook 3 yrs 65% . Capital raising has continued, growing total AUM to €21.1bn (1% increase 2,000 75% over FY 2019), with solid transaction pipeline 10 65% . Achieved 4 new Fund launches across Europe & Asia Pac, within total equity 1,500 raise of €1.7bn 65% . Charities Property Fund & UKIG have performed in the top quartile 1,000 5 60% . Strengthened platform in the Nordics, Malaysia & Australia 500 . Appointed new Head of Product Strategy & Development (London)
- 0 55% 2013 2014 2015 2016 2017 2018 2019 2020 Target Actual Actual 5 3 years years Half-year Full-year AuM
14 ESG – Strategic Commitments
Commitment to 9 UN Climate Change People Sustainable Goals . Global reduction of GHG of 36.3% . Developing Talent over 2018-2020 . Diversity & Inclusion . UK commitment to achieve net zero by 2030; Overall plans to be announced . Promoting Health & Wellbeing within 12 months . Influence suppliers and stakeholders to work towards carbon neutrality . Comprehensive Sustainability Consultancy services Financial Review Summary Underlying Result
Year ended 31 December (£m) 2020 2019 % chg
Revenue 1,740.5 1,913.4 (9.0)%
Underlying PBT 96.6 143.4 (32.6)%
Underlying PBT margin 5.6% 7.5% (1.9) pts
Underlying basic earnings per share 56.8p 78.0p (27.2)%
Basic earnings per share 49.0p 60.6p (19.1)%
Dividend per share 17.0p 4.95p n/a
Net cash 177.7 28.5 n/a
17 Dividends
Year ended 31 December 2020 2019 % chg
Interim ordinary (“Less Transactional”) - 4.95p n/a
Final ordinary (“Less Transactional”) 17.00p 12.05p +41%
Total ordinary (“Less Transactional”) 17.00p 17.00p -
Supplemental (“Transactional”) - 15.00p n/a
Total distribution (per share) 17.00p 4.95p n/a
Total distribution (£m) 23.8 6.7 +255%
Note - 2019 Final ordinary and supplemental dividends shown in red were subsequently cancelled 18 Revenue and Underlying PBT by Region
UK Asia Pacific North America CEME £m (2)% 800 727.5 710.7 (8)% 2019 700 627.1 600 575.7 2020 500 (27)% 400 (9)% Revenue 293.0 300 265.8 213.4 240.7 200 100 - (4)% 90 81.9 78.8 80 70 (1)% The figures in these charts 60 exclude costs of £13.9m (2019: 50 42.6 42.3 £14.2m) not allocated to the n/a n/a operating activities of the 40 group’s business segments UPBT 30 17.3 20 15.8 10 - (10) (2.2) (20) (8.4)
Margin 11.3% 11.1% 6.8% 7.3% 5.9% (3.9)% 5.9% (0.9)%
19 Revenue and Underlying PBT by Service Line
Transaction Property Investment Advisory Management Consultancy Management £m (19)% 900 828.2 +2% 800 681.9 2019 700 667.2 667.9 600 2020 500 (5)% Revenue 400 338.1 320.6 300 (11)% 200 79.2 100 70.8 0 (72)% 80 69.8 Combined revenue reduction of 1% and UPBT growth of 4% 70 60 +27% 50 44.8 The figures in these charts (9)% exclude costs of £13.9m (2019: UPBT 40 35.2 34.5 £14.2m) not allocated to the 31.5 operating activities of the 30 (18)% group’s business segments 19.4 18.1 20 14.8 10 0
Margin 8.4% 2.9% 5.3% 6.6% 10.2% 9.8% 22.9% 20.9%
20 Cashflow Performance
£300m
£103.1m £1.1m Cash generation from operations of £242.1m (2019: £87.6m) breaks down as follows: £250m £(26.5)m 2020 2019 £(18.0)m Underlying profit before tax £96.6m £143.4m £(8.3)m £200m Non-underlying items £(13.4)m £(27.8)m £(11.6)m £177.7m Statutory profit before tax £83.2m £115.6m £42.4m Depreciation & Amortisation £73.9m £71.0m £(29.6)m Change in debtors £84.5m £(50.7)m £150m Delayed sales tax payment £49.2m - £96.6m Change in other creditors £(30.6)m £(14.5)m Total financing and investing activities of £92.9m Change in pensions £3.4m £(9.5)m £100m (2019: £133.0m) Other items £26.2m £20.7m
Cash from operations (per R&A) £289.8m £132.6m
Principal elements of lease £(47.7)m £(45.0)m £50m payments £28.5m Cash from operations £242.1m £87.6m
- Net cash b/f UPBT Non-cash Working Investment Acquisitions Net capex EBT shares Interest Tax Net cash c/f items capital cash flows
21 Commercial Transaction Advisory
2020 Revenue £487.1m (-25%) 2020 UPBT £(7.0)m (2019: £47.4m profit) £m £m 250 15 205.2 9.5 10 200 5 3.3 150 103.9 98.2 - 100 79.8 (5)
50 (10) (7.5) (12.3) - (15) Asia Pacific UK CEME North America Asia Pacific UK CEME North America
Growth (25)% (15)% (23)% (30)% Growth (73)% (23)% n/a n/a
Asia Pacific: Investment market volumes slowed by reduced cross border flows in Singapore, Hong Kong and Australia, leasing markets also subdued.
UK: Market share gains in nationwide investment markets despite the reduced market volumes. Significant growth in National Logistics.
CEME: Significant lock down periods affecting many of our key markets, including Ireland, Spain and France. Full year impact of growth in new teams impacting profitability.
North America: Leasing volumes in the US fell by 40%, significant market out-performance in many regions including Northern New Jersey, South Florida, Houston, Atlanta and Philadelphia.
22 Residential Transaction Advisory
2020 Revenue £180.1m (+3%) 2020 UPBT £26.4m (+18%)
£m £m 180 25 23.0 160 153.2 140 20 120 15 100 80 10 60 40 26.9 5 3.4 20 - - Asia Pacific UK Asia Pacific UK
Growth (25)% +10% Growth (26)% +29%
Asia Pacific: slow down in residential markets in Hong Kong, Australia, Singapore and Vietnam. China resilient after faster recovery from pandemic. UK: surge in activity after the first national lock down from June onwards as people reassessed their housing needs, coupled with the effect of lower stamp duty rates. UK: new homes market was slower to recover, with the inability and reluctance of overseas buyers to travel limiting demand.
23 Property Management
2020 Revenue £681.9m (+2%) 2020 UPBT £44.8m (+27%) £m £m 400 368.3 30 27.7 350 25 300 245.0 20 17.2 250 15 200 10 150 5 100 68.6 50 - (0.1) - (5) Asia Pacific UK CEME Asia Pacific UK CEME
Growth (1)% +6% +7% Growth +44% +9% n/a
Asia Pacific: revenue reductions in South Korea, China and Australia, offset by contract wins and ad hoc fees in Hong Kong, Vietnam, Singapore and Japan. Cost saving measures in Australia, Hong Kong and Singapore driving profit growth. UK: new Intu contract won in Q3, supporting solid growth in Commercial property management. Robust performance from the Lettings business. CEME: acquisition in Q3 of Omega in Germany. Revenue growth in the Middle East and the Netherlands, partially offset by reductions in Sweden and France.
24 Consultancy
2020 Revenue £320.6m (-5%) 2020 UPBT £31.5m (-9%) £m £m 250 25 23.5 205.8 200 20 15 150 10 6.5 100 69.1 5 2.4 37.5 50 - 8.2 (0.9) - (5) UK Asia Pacific CEME North America UK Asia Pacific CEME North America
Growth (10)% (1)% (3)% n/a Growth (13)% +41% (17)% n/a
UK: services suffered from reduced activity as a result of the Covid-19 pandemic as well as consultancy projects being delayed or deferred into 2021. Asia Pacific: increased valuations activity in Australia, Japan, Singapore and South Korea, offsetting lower levels of activity elsewhere. CEME: reductions in Ireland, the Middle East, Spain and France were partially offset by growth in Germany and the Netherlands.
25 Investment Management
2020 Revenue £70.8m (-11%) 2020 UPBT £14.8m (-18%) £m £m 40 36.4 9.0 7.8 35 8.0 30 26.9 7.0 6.0 5.6 25 5.0 20 4.0 15 3.0 10 7.5 2.0 1.4 5 1.0 - - UK CEME Asia Pacific UK CEME Asia Pacific
Growth (19)% +3% (29)% Growth (38)% +7% (22)%
Transactions of circa £2.2bn (2019: £3.1bn) executed, including £0.7bn disposals and £1.5bn acquisitions. AUM increased to £19.0bn (2019: £17.7bn). Strong Fund performance (78% of funds exceeding 5 year benchmarks). Raised more than £1.7bn of new equity. The profits include £2.2m (2019: £1.4m) from our 25% stake in DRC.
26 Revenue Evolution
2020 Total Revenue £1,741m 2009 to 2020 Revenue growth - Transactional Organic and Acquired £667m “Less-Transactional” £1,741m £1,073m 31% of growth is from £2,000m acquisitions
£1,800m 2009
£1,600m Total Revenue £561m Transactional £1,400m £209m 57% 69% of growth is “Less-Transactional” 54% organic £1,200m 62% £352m 53% 54% £1,000m 52% £561m £800m 54%
£600m 60% 62% 49% 59% 61% 43% £400m 47% 60% 63% 47% 46% 46% 38% 48% 48% 47% 46% £200m 40% 53% 51% 41% 39% 38% 53% 52% 40% 37% - 2004 2005 2006 2007 2008 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2009 2020 Transactional "Less" Transactional
27 Key Priorities & Summary & Outlook Key Priorities
Transactional: focus growth on accelerating sectors, including Life Science, Technology, Logistics and Residential
Property Management: Continue to build out our market leading capability across all markets
Consultancy: Enhance our Consultancy services, including Project Management, Occupier Services and Sustainability
Savills Investment Management: Continue strong performance based growth across the platform including Debt products
Maintain tight financial control to ensure stability and support growth strategies
29 Summary & Outlook
A resilient performance, particularly from UK & APAC region
Good start to 2021, with potential for momentum to develop, weighted to H2
Strong demand for Real Estate advice from Occupiers in all sectors
Significant appetite for Real Estate investment
Timing of recovery linked to lifting of lockdown restrictions
30 The bench strength of the business
31 Thank you