Savills plc Results for the year ended 31 December 2018 14 March 2019 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 & Key Priorities & Financial Review 1 Business Development 2 3 Summary & Outlook 3 Introduction, Highlights & Business Development 4 Highlights Performance Overview Drivers Transaction advisory revenues up 9% despite Group Revenue £1,761.4m challenging market conditions +10.1% (cc 11.4%) Strong growth in less transactional services - Group UPBT £143.7m Property Management revenue up 14%, Consultancy revenue up 8% +2.3% (cc 3.2%) Growth of 35% from Europe and Middle East, Group UEPS 77.8p both organic growth and acquisition, including +2.6% Aguirre Newman (Spain) and Cluttons (Middle East) Net Cash £73.9m (2017: £98.6m) North America delivered significant growth with revenue up 18% and underlying profit up Dividend 31.2p 64% +3.3% SIM raised £2.4bn in new funds, with AUM up 12% to £16.4bn cc = constant currency 5 Savills Business Today . Top 5 Global Real Estate Adviser . Strong market share in key International markets . Balance of transactional/less transactional service lines . Leading multi-sector expertise . Brand strength and business heritage . Unique culture ‘Global Real Estate Adviser of the Year’ – ‘Deal of the Year’, ‘Residential Team of the EG Awards 2018 Year’ – RICS Hong Kong Awards 2018 . Employer of choice and strong talent retention . Conservative financial structure . Provide strong returns to shareholders …. An entrepreneurial spirit and ambition for continued growth ‘The Times Graduate Employer of Choice ‘No.1 Real Estate Superbrand’ – for Property’ – 12th year Superbrands 2018 6 Management Changes: Succession Delivered in 2018 Group CEO – Mark Ridley UK Asia Pacific Group CEO UK & EMEA – James Sparrow CEO Korea – Crystal Lee Managing Director UK – Richard Rees CEO Singapore – Marcus Loo North America: India CEO – Mitch Rudin CEO – Anurag Mathur COO – Matthew Morgan CFO – Gerald Prager Europe & Middle East CEO Middle East – Steve Morgan CEO Sweden – Niklas Sammuelson CEO Spain – Jaime Pascual-Sanchiz Strengthening the bench 7 Ten Year Revenues Total Revenue £m £1,761.4m 2,000 Percentage of Revenue 1,800 1,600 Commercial Transactions – 36% 1,400 46% 46% Residential47% Transactions – 10% 1,200 Total Revenue 47% £560.7m 46% 1,000 48% 800 46% 40% Percentage of Revenue 600 38% 40% 38% 35% 400 Property Management – 33% 200 65% 60% 62% 62% 60% 54% 52% 54% 53% 54% Consultancy – 17% - Investment Management – 4% 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 Transactional "Less-Transactional" 8 Broad Geographic Spread Over 36,000* employees in 71 countries 788 5,955 1,752 28,486 Employees Employees Employees Employees 31 135 52 67 Offices Offices Offices Offices Revenue Revenue Revenue Revenue £264.5m580 £662.4m £247.0m £587.5m (15%Employees of Total) (38% of Total) (14% of Total) (33% of Total) *Staff numbers – weighted average for 2018 9 UK Business Development Focus: Market Dynamics Growth of Property Management & Consultancy, strengthening selective transactional teams Macro themes Revenue • GDP growth of 1.4% but uncertainty stalling activity in £662.4m some sectors Growth Property Management • Comparative risk and pricing (including sterling • Acq Broadgate Estates, 3rd party portfolio (21m sq. ft) devaluation) attractive to non-domestic investors 6% YOY Consultancy Market statistics • Acq Porta Planning LLP • Commercial property investment volumes down (-5.3%), but London remains the World’s no.1 destination for cross • Acq CMS (place making) border investment • Opened new Newcastle office • All property commercial prime yields eased 25 bps, whilst UK office take up reached its second highest level ever, Residential Sales & Lettings with national average vacancy rates of 8.7% • Acq J P Case (Manchester) • Logistics - take up rose by 45% year on year with new records being set in many markets including the North • Acq Martel Maides (Guernsey) West, Yorkshire and the East Midlands • Acq The Currell Group (East London) • UK housing transaction volumes, down -2.5% but UK house prices up 0.5%, whilst PCL down 4.1% Transactional • New Edinburgh Office Leasing Team • New Debt Advisory Team • Strengthened National Retail Leasing 10 Asia Pacific Business Development Focus: Market Dynamics Continued organic growth across the region with Macro themes Revenue selected office openings in China and India • A generally positive year ended on a more cautious note, £587.5m with the US / China Trade War the biggest threat Growth Hong Kong 4% YOY • Strengthened Property Management & Capital Markets • Slowing economy in China and greater capital controls. businesses China Market statistics • New offices in Wuhan, Changsha and Hainan, focusing on Property Management, Commercial Leasing & Retail • Commercial property investment up 1.3% - a record year and China remained the largest market, despite slowest • Strengthened Leasing teams in Guangzhou, Chengdu & growth since 2014 Hangzhou Australia • Strong yield compression across the markets (avg -1.5%) • Significant national team lifts in Logistics (NSW & Vic), with continued demand for prime Office Leasing & Sales (NSW) & Property Management South East Asia • Total investment activity down slightly on 2018, with • Acquired Valuations teams in Singapore & Thailand mixed volumes, eg Tokyo (-10%), HK (+32%), Seoul India (+58%) • Opened 3 new offices in New Delhi, Mumbai & Bangalore, with 2 more planned in 2019 • Strong rental growth in office markets, HK (7.8% pa), • Service lines established, covering Tenant Rep, Capital Tokyo (4.9% pa) & Singapore (9.5%) whilst China saw Markets, Project Management, Valuations, Leasing & ‘grade A’ supply decrease by 47% in first tier cities Residential Sales 11 North America Business Development Focus: Market Dynamics Organic growth of occupier focused business with diversification on sector & services Macro themes Revenue • Real GDP growth of 2.9% but rising interest rates, economic protectionism, and political uncertainty create £264.5m Central Management headwinds Growth • New team with 6 key appointments and rebranding to Savills – H1 2019 18% YOY • Unemployment rate ended the year near post-war low of Tenant Representation 3.9%, strong corporate growth • Growth of business in Minneapolis, LA, Dallas, Toronto & Columbus Market statistics Logistics • Commercial office investment above historical averages • Growth of National Logistics capability (+13.5%) yet well below 2007 peak (-66%) Project Management & Consultancy • Growth of Workplace & Project Management nationally • Leasing volume up (+14.0%) across overall US office Capital Markets market, with particular strength in New York, San Francisco & Washington DC • Integration of recently acquired New York Capital Markets business Technology • Office rents continue to rise (+2.9%) in top-tier markets, however, leasing concessions rising • Continued investment in award winning technology (eg Knowledge Cubed) • Average vacancy rates reduced to 9.5% but robust development pipeline being delivered in many primary markets 12 Europe & Middle East Business Development Focus: Continued growth in core European markets and Market Dynamics integration of Middle East business Macro themes Revenue Spain & Portugal • Investor demand strong, but challenges of liquidity and pricing £247.0m • Integration of Aguirre Newman business, office HQ relocation in Madrid and expansion of Resi business • Slowing economic growth in core Europe particularly Growth France Germany & Italy 35% YOY • Increased political & economic uncertainty in UAE • Strengthened Office Leasing in Paris & Lyon Sweden Market statistics • New CEO & new Capital Markets team in Stockholm • European investment volumes down -7.5%, primarily due Italy to lack of liquidity • New High Street Retail Agency team • Major country investment down -15%, but Poland +16%, Poland Ireland +35%, Portugal +80% as investors seek smaller markets • Strengthened Logistics business in Leasing & Capital Markets • Office leasing volumes down 2% as availability tightens (average European vacancy rate 5.7%) Netherlands • Prime CBD office rents in Europe grew 3.4% on average, • New office opening in Utrecht secondary 5.5% on average Middle East • UAE capital and rental values remain under downward • Integration of Cluttons multi-sector business across 5 Gulf pressure Countries 13 Savills Investment Management (SIM) Market Dynamics Business Development Focus: Growth of AUM and launch of products focused on • Brexit & European Geo-Political concerns impacted on equity raising and investment activity UK, Europe & Asia Pacific markets