savills plc
TRANSCRIPT
Savills plc
Results for the six months ended 30 June 2018
9 August 2018
Disclaimer: Forward-looking statements
2
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.
Results
1 Introduction, Highlights & Business Development 2 Financial Review 3 Management Focus 4 Summary and Outlook
3
Highlights
4
Group Revenue £727.8m
+1.9% (cc 4.8%)
Group UPBT £42.4m
-11.9% (cc -9.6%)
➢Strong Continental European
performance
➢Robust performance from UK
Residential business
➢ Commercial Transaction advisory
revenues flat
➢Property Management revenue up 7%,
Consultancy revenue up 4%
➢Continued investment in Middle East,
PM business and (post period) Real
Estate Debt Investment Management
Group UEPS 23.4p
-8.9%
Net (Debt) / Cash £(94.6)m
(2017 H1: £1.4m)
Dividend 4.80p
+3.2%
cc = constant currency
Savills Diversified Business Model
5
Defensive, Scale Businesses Revenue by Business Cyclical, High-Margin Businesses
Property Management – 36%
Consultancy – 17%
Investment Management – 4%
Commercial Transactions – 33%
Residential Transactions – 10%
• Recurring revenue streams with less
exposure to transaction environment
• 1.89bn ft2 under management
• Strong Property Management business
• €16.2bn AUM
• High-return, but cyclical earnings
• 76:24 split Commercial vs. Residential
• 62:38 Commercial split Tenant rep/leasing
vs. Capital markets
43%(2017-H1: 44%)
57%(2017-H1: 56%)
Combination of cyclical and less cyclical service lines
Broad Geographic Spread
6
Over 31,000 employees in 700 offices in more than 60 countries
580Employees
5,780Employees
126Offices
1,625Employees
44Offices
27,711Employees
66Offices
Revenue
£100.3m
(14% of Total)
794Employees
31Offices
*Staff numbers –
As at 30th June 2018
Revenue
£280.5m
(39% of Total)
Revenue
£96.6m
(13% of Total)
Revenue
£250.4m
(34% of Total)
Over 36,000* employees and over 600 offices in more than 60 countries
187Employees
7Offices
Savills UK & Europe – 5 year Snapshot
7
➢ Focus on building Continental European
Platform through bolt-on and selective
acquisition
➢ Enhanced transactional teams and cross-
border liaison network (team lift/recruitment)
➢ Diversification of service lines into Less
Transactional businesses (eg Project Mgmt)
➢ Building of Property Management business to
sustainable profitability (scale)
➢ Extend network into CEE (Prague) and Middle
East (Cluttons)
2013 2014 2015 2016 2017
Revenues (2013 to 2017)
£518m
£583m
£645m£683m
£748m
Broadgate Estates – Case Study
8
▪ Established 32 years ago and became premier Property
Management business in UK
▪ Specialist in Office, Retail and Residential sectors
▪ 21 million sq. ft under management with International client base
▪ 28 iconic properties, primarily in London
▪ 166 London based staff
▪ Global positioning and track record
Middle East – Case Study
9
▪ Acquisition of Cluttons Middle East,
Established 40 years ago
▪ Leading Consultancy business in the region
with 190 employees
▪ Full service offer including Valuation, Property
Management, Sales & Leasing
▪ 66% of revenues less-transactional
▪ Strong ME activities with expansion
opportunities
▪ Global linkage East and West, through cross
border activity through Savills network
Cairo
Saudi Arabia
Bahrain
AbuDhabi
Oman
Sharjah
Dubai
Financial Review
10
Summary Underlying Result
11
6 months ended 30 June (£m) 2018 2017 % chg
Revenue 727.8 714.4 +1.9%
Underlying PBT 42.4 48.1 (11.9)%
Underlying PBT margin 5.8% 6.7% (0.9)% pts
Underlying basic earnings per share 23.4p 25.7p (8.9)%
Dividend per share 4.80p 4.65p 3.2%
Net (debt) / cash (94.6) 1.4 n/a
Net assets 432.3 382.8 12.9%
Revenue and underlying PBT by business
12
312.1
246.6
121.0
33.6
311.3
263.7
125.8
27.0
0
50
100
150
200
250
300
350
2017
2018
+7%
+4%
(20)%
Revenue
24.6
10.2 10.2
6.6
19.7
12.810.8
2.9
0
5
10
15
20
25
30
+25% +6%
(56)%
Transaction
Advisory
Property
Management Consultancy
Investment
Management
UPBT
0%
(20)%
Margin 7.9% 6.3% 4.1% 4.9% 8.4% 8.6% 19.6% 10.7%
£m
The figures in these charts
exclude revenues of £1.1m in
2017-H1 and other net costs
of £3.8m in 2018-H1 (2017-
H1 £3.5m) not allocated to the
operating activities of the
group’s business segments
Revenue and underlying PBT by region
13
274.2263.5
103.6
72.0
280.5
250.4
100.3 96.6
0
50
100
150
200
250
300
2017
2018
Revenue
UK Asia Pacific North America
UPBT
+2%
Continental Europe
25.3
21.8
3.01.5
23.7
18.6
0.63.3
0
5
10
15
20
25
30 (6)%
(5)%
(3)% +34%
(15)%
+120%(80)%
£m
Margin 9.2% 8.4% 8.3% 7.4% 2.9% 0.6% 2.1% 3.4%
The figures in these charts
exclude revenues of £1.1m in
2017-H1 and other net costs
of £3.8m in 2018-H1 (2017-
H1 £3.5m) not allocated to the
operating activities of the
group’s business segments
99
(95)
(150)
(100)
(50)
-
50
100
150
Net debt b/f UPBT Non-cashitems
Workingcapital
Acquisitionspend -
current &deferred
Capex Cash flowfrom
investments
EBT Dividends Tax Foreignexchange
Net debt c/f
Cashflow performance
14
Cash used in operations of £77m
At 30 June 2018 - Net debt of £94.6m
(net cash outflow in H1 of £194m)
At 30 June 2017 - Net cash of £1.4m
(net cash outflow in H1 of £187m)
42 1
118
9
10
17 35
18 5
£m
53
Net cash
Net debt
Overdrafts
RCF
PP
Capital Structure
15Note – borrowings exclude finance leases
30 June 2018
Borrowings Headroom
£178.3m
£96.4m
£253.0m
£293.7m
Borrowings and Headroom at 30 June, 2017 vs 2018
£m
➢ On 20 June 2018 the Group issued
£150m of fixed rate Senior Notes via
Private Placement to US investors
➢ 7 year, 10 year and 12 year notes
issued
➢ Weighted average duration of 10.2
years and weighted average interest
rate of 3.18%
➢ Proceeds used to pay down existing
RCF debt, replacing short term
variable rate borrowings with long
term fixed rate debt
➢ Significant levels of bank facility
headroom for strategic growth and
working capital requirements
30 June 2017 30 June 201830 June 2017
Commercial Transaction Advisory
16
2018 Revenue £235.4m (-1%) 2018 UPBT £10.7m (-34%)
Asia Pacific continued strength in Hong Kong and Korea, timing of transactions in Australia, Japan and China, with robust
pipeline going into the second half.
UK subdued volumes against strong comparative, due to lower stock availability and weakness of retail sector.
Europe impact of recent acquisitions including Aguirre Newman and organic growth in Ireland, Germany, the Netherlands
and Sweden.
North America growth in revenues of 5% in constant currency, continued investment in New York capital markets and
occupier services platform.
59.7
33.941.5
100.3
-
20
40
60
80
100
120
Asia Pacific UK Europe North America
Growth (12)% (14)% +57% (3)%
5.7
2.8
1.6
0.6
-
1
2
3
4
5
6
Asia Pacific UK Europe North America
Growth (41)% (38)% n/a (80)%
Residential Transaction Advisory
17
2018 Revenue £75.9m (+1%) 2018 UPBT £9.0m (+8%)
UK new development sales up 17%; strength in regional development.
UK second-hand sales down marginally due to fewer exchanges, however average values ahead of last year.
Asia Pacific Hong Kong and China remain resilient but slow down in Australia.
58.2
17.7
0
10
20
30
40
50
60
70
UK Asia Pacific
Growth +6% (12)%
6.3
2.7
-
1
2
3
4
5
6
7
UK Asia Pacific
Growth +17% (7)%
Property Management
18
2018 Revenue £263.7m (+7%) 2018 UPBT £12.8m (+25%)
Asia Pacific Continued focus on profitability and contract wins.
UK revenue growth offset by platform investment costs (regulatory/client service centre) in advance of future growth (eg
Broadgate Estates).
Europe revenue growth from Aguirre Newman and Larry Smith acquisitions, organic revenues up 9%.
148.8
84.0
30.9
-
20
40
60
80
100
120
140
160
Asia Pacific UK Europe
Growth (1)% +10% +55%
8.1
4.9
(0.2)(1)
-
1
2
3
4
5
6
7
8
9
Asia Pacific UK Europe
Growth +31% (2)% +80%
Consultancy
19
2018 Revenue £125.8m (+4%) 2018 UPBT £10.8m (+6%)
UK strong performances in housing and development teams.
Asia Pacific strong performance in Singapore. Slight decline in valuation revenues in other markets.
Europe Organic revenue growth of 12% plus positive impact of Aguirre Newman acquisition.
93.0
20.712.1
0
10
20
30
40
50
60
70
80
90
100
UK Asia Pacific Europe
Growth +2% (6)% +66%
8.5
1.7
0.6
0
1
2
3
4
5
6
7
8
9
UK Asia Pacific Europe
Growth +6% (35)% n/a
Investment Management
20
2018 Revenue £27.0m (-20%) 2018 UPBT £2.9m (-56%)
Revenues reduced as anticipated (reduction in SEB liquidating assets vs 2017).
Assets under management increased by 1% to €16.2bn (H1 2017: €16.0bn) with £0.7bn capital raised.
Launched Japan II, SIM’s largest first fund close.
In July announced investment in DRC Capital LLP, a leading European Real Estate Debt Fund Manager.
11.412.1
3.5
-
2
4
6
8
10
12
14
UK Europe Asia Pacific
Growth
1.21.3
0.4
-
0.2
0.4
0.6
0.8
1.0
1.2
1.4
UK Europe Asia Pacific
Growth(34)%(5)% (66)%(50)%+6% n/a
Management Progress
21
Integrate new acquisitions in the UK and Middle East
Continued growth of US business and profit improvement
22
Build Property Management, Consultancy and Investment Management businesses
Pursue Continental Europe/Middle East growth strategies
Management Focus
Resilient first half performance
Outlook for less transactional revenue remaining healthy
23
Continued uncertainty (markets, geo-political risks and rising interest rates), affecting transaction volumes
Summary and Outlook
The Board’s expectation for 2018 remains unchanged.
Connecting people and
property since 1855