Savills plc Results for 6 months ending 30 June 2021 - 5 August 2021 Mark Ridley & Simon Shaw
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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”
▪ Recurring revenue streams with less
Transactional
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%
34% 26% 35%
“Less”
Transactional “Less”
Transactional “Less”
66% 74%
Transactional
Transactional
65%
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
£ billion
▪ Return to work programme delayed until September, impacting on 30
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
14,000,000
property market in H1
▪ 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
Sq ft
8,000,000
24.5m sq ft, 83% above the long term average Q3
6,000,000
▪ Office Leasing up 23% regionally but down 1.4% in Central London 4,000,000
Q2
vs 2020-H1 Q1
2,000,000
0
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
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
6% 120,000
▪ Data suggests a moderate slowing of market activity in H2, through a
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
1,000
market over £5m in London, 60% more than in both 2019 and 2020
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
700,000
MARKET STATISTICS
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
100,000
▪ China overtook Japan as the biggest market in Asia Pacific during H1/2021 -
▪ 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
10North 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 $0
Q1
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
2013
2014
2015
2016
2017
2018
2019
2020
2021
MARKET STATISTICS $bn
Source: Real Capital Analytics, Savills, Includes all Commercial Property Types
▪ Office availability continues to climb, now at 22.6% nationwide
US Annual Commercial Office Leasing Volume
(compared to 17.3% pre-pandemic) due to sub-lease space
350
availability
Total volume (sq ft; million)
▪ Demand volume in H1 down 42% from pre-pandemic levels, with 300
250
just 76 million sq. ft of office space leased to date across major
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
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
11CEME: Market Dynamics
Revenue: £114.0m | Growth: +6% YOY | Employees: 2,272 | Offices: 49
European Investment Volumes
MACRO THEMES 400
350 Q4
▪ GDP forecast to recover by 4.6% in 2021, following a 6.2% decline in 2020
300
Billion Euros
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 150
100 Q1
▪ Eurozone inflation increased to 1.9% yoy in June 2021, due to rising input costs and 50
5-year
extensive quantitative easing, prompting speculation over an interest rate rise H1 average
0
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
12Savills 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
68%
BUSINESS DEVELOPMENT
1,500
Last
▪ Capital raising has continued to grow with total AUM reaching €23.7bn (16% increase over 66%
H1 2020), with a solid transaction pipeline; market conditions posing challenges for both 1,000 3 yrs
raising and deploying capital 68%
64%
▪ Continued growth of Logistics platform (€5bn), with significant transaction activity 500 65%
EUR m
▪ 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% 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
13ESG
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
Goals globally engagement
and wellbeing
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
Sustainability for clients to assist on their Disclosure (TCFD) Net Zero Goals
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
14Financial 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%
16H1 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%
17Revenue and underlying PBT by business
Transaction Property Investment
Advisory Management Consultancy Management
£m
+30% +6%
400 362.0 359.0
337.8
350 2020
300 278.5
250
2021
+20%
Revenue 200 173.4
144.6
150
100 +25%
30.5 38.2
50
0
Combined revenue and UPBT growth of 11% and 40% respectively
n/a
35 29.1 +84%
30 +8%
UPBT 25
20 17.7 19.2 18.8
+65%
15 10.2
10 7.1
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
activities of the group’s
(20) (14.7)
business segments
Margin (5.3)% 8.0% 5.2% 5.3% 7.1% 10.8% 14.1% 18.6%
18Revenue and underlying PBT by region
UK Asia Pacific North America CEME
£m
+40%
450 417.4
400 +3% 2020
350
298.8
279.7 287.2 2021
300
250
Revenue +8% +6%
200
150 105.5 114.0 107.4 114.0
100
50
0
+254%
60 53.1
50
40
+103%
30 24.0
UPBT 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)%
19Cashflow 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 20Commercial 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
2 0.8
60.5
60 -
38.5 39.9 (2)
40 (4)
(6)
20
(8)
(10) (8.5)
-
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
21Residential 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
13.8 5 3.7
20
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
22Property Management
2021 Revenue £359.0m (+6%) 2021 UPBT £19.2m (+8%)
200 12
173.7 10.4
180 9.4
10
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
23Consultancy
2021 Revenue £173.4m (+20%) 2021 UPBT £18.8m (+84%)
120 109.9 16
14.1
14
100
12
80
10
60 8
40
36.2 6
18.4 4 2.3
20 1.9
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
24Investment 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)
25Summary & 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
27Thank you
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