Savills plc
Results for the year ended 31 December 2014
19 March 2015
1
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
1
Introduction & Highlights
2
Financial Review
3
Business Review
4
Management Focus
5
Summary & Outlook
3
Financial Highlights
Revenue up 19% to £1,078.2m (2013: £904.8m)
Pre-tax margin improved to 9.3% (2013: 8.3%) 5th consecutive year of growth
Underlying PBT up 34% to £100.5m (2013: £75.2m)
Profit before tax up 21% to £84.7m (2013: £70.1m)
Underlying basic EPS up 28% to 55.2p (2013: 43.1p)
Total dividend for the year up 21% to 23.0p per share (2013: 19.0p)
Net cash at the year-end of £154.2m (2013: £112.4m)
4
Business Highlights
Acquisition of Studley in the US - a platform for growth
European recovery under way
Strong Asian performance despite subdued core markets (HK/ China)
Record year in UK driven by regional commercial market
Continued growth in Investment Management
5
Financial Review
6
Summary Underlying Results
Year ended December (£ millions)
2014
2013
% chg
1,078.2
904.8
19.2%
Underlying profit before tax
100.5
75.2
33.6%
Underlying PBT margin
9.3%
8.3%
Underlying basic earnings per share
55.2p
43.1p
28.1%
Dividend per share
23.0p
19.0p
21.1%
Net cash
154.2
112.4
37.2%
Net assets
330.3
270.8
22.0%
Revenue
7
Underlying PBT Reconciliation
Year ended December (£ millions)
2014
2013
Reported profit before tax
84.7
70.1
Intangible asset/investment impairments/amortisation
3.2
2.1
(2.9)
(2.5)
0.9
5.2
(Profit)/loss on disposal of available-for-sale
investments
(2.0)
0.3
Acquisition related costs
16.6
-
Underlying profit before tax
100.5
75.2
Share-based payment adjustment
Restructuring costs
8
Global Revenue and Underlying PBT
Year ended December
(£ millions)
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
Transaction Advisory
494.6
358.2
38.1%
67.8
47.2
43.6%
Property Management
338.6
329.0
2.9%
18.6
17.6
5.7%
Consultancy
217.0
191.6
13.3%
23.4
17.6
33.0%
Investment Management
28.0
26.0
7.7%
4.4
2.9
51.7%
-
-
-
(13.7)
(10.1)
n/a
1,078.2
904.8
19.2%
100.5
75.2
33.6%
9.3%
8.3%
Unallocated / other
Total
UPBT margin
9
Revenue and Underlying Profit by Region
Year ended December
(£ millions)
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
UK
486.4
436.3
11.5%
62.6
52.4
19.5%
Asia Pacific
355.0
354.4
0.2%
34.7
35.5
(2.3)%
Europe
96.5
81.3
18.7%
0.1
(3.9)
n/a
United States
112.3
6.8
n/a
12.4
(1.6)
n/a
Investment Management
28.0
26.0
7.7%
4.4
2.9
51.7%
Other
-
-
-
(13.7)
(10.1)
n/a
Total
1,078.2
904.8
19.2%
100.5
75.2
33.6%
10
Constant Currency Equivalent
Year ended December
(£ millions)
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
UK
486.4
436.3
11.5%
62.6
52.4
19.5%
Asia Pacific
378.9
354.4
6.9%
37.5
35.5
5.6%
Europe
102.1
81.3
25.6%
0.3
(3.9)
n/a
United States
117.7
6.8
n/a
13.0
(1.6)
n/a
Investment Management
28.8
26.0
10.8%
4.6
2.9
58.6%
Other
-
-
-
(13.7)
(10.1)
n/a
Total
1,113.9
904.8
23.1%
104.3
75.2
38.7%
9.4%
8.3%
UPBT margin
11
Studley – Revenue and UPBT
Year ended December
(£ millions)
Pro forma1
Reported
2014
2013
Chg
2014
2013
Chg
Revenue
104.6
-
n/a
164.3
148.7
10.5%
Underlying profit before tax
12.7
-
n/a
16.6
10.2
63%
12.1%
-
n/a
10.1%
6.9%
3.2 pts
Margin (%)
1 Full year result of Studley included in both years
Total consideration for the Studley acquisition was $260m (present value of $224m), payable as
follows:
• $65m cash on completion (30 May 2014)
• $65m in shares, payable in three equal instalments on the first three anniversaries of
the acquisition date
• $60m of promissory notes payable on 30 May 2015
• $70m of promissory notes payable on 30 May 2017
Up to $25m EBITDA related contingent bonus payable in March 2018
12
SEB Overview
• Acquisition of SEB expected to complete by Q3 2015
• SEB comprises c. 148 staff based in Frankfurt and Singapore and approximately €10bn of
real estate AUM globally as at 31 December 2014
• Approximately 40% of the AUM, €4bn, represents Institutional Funds with the remainder,
approximately €6bn in German Open Ended Funds which are in the process of liquidation
• Consideration of up to €21.5m (£15.6m) cash
• The combination of Savills existing AUM of over €7bn with SEB will create a leading
European investment management business with an initial AUM of approximately €15bn
and an Asia Pacific platform with approximately €2bn under management
• For the year ended 31 December 2014, SEB's turnover was €43.6million, and profit before
tax was €8.1million
13
Transaction Advisory Business
Year ended December
(£ millions)
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
- Asia Pacific
96.3
99.3
(3.0)%
16.7
16.6
0.6%
- UK
84.1
73.4
14.6%
14.0
10.3
35.9%
- Europe
51.1
38.0
34.5%
1.3
(3.0)
n/a
- United States
112.3
6.8
n/a
12.4
(1.6)
n/a
343.8
217.5
58.1%
44.4
22.3
99.1%
- UK
129.2
118.0
9.5%
19.7
19.0
3.7%
- Asia Pacific
21.6
22.7
(4.8)%
3.7
5.9
(37.3)%
Total Residential Transactions
150.8
140.7
7.2%
23.4
24.9
(6.0)%
Total
494.6
358.2
38.1%
67.8
47.2
43.6%
13.7%
13.2%
Commercial
Transactions
Total Commercial Transactions
Residential
Transactions
UPBT margin
14
Non-transactional Business
Year ended December
(£ millions)
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
- Asia Pacific
207.1
205.1
1.0%
11.7
11.1
5.4%
- UK
104.9
96.2
9.0%
9.5
8.8
8.0%
- Europe
26.6
27.7
(4.0)%
(2.6)
(2.3)
n/a
338.6
329.0
2.9%
18.6
17.6
5.7%
- UK
168.2
148.7
13.1%
19.4
14.3
35.7%
- Asia Pacific
30.0
27.3
9.9%
2.6
1.9
36.8%
- Europe
18.8
15.6
20.5%
1.4
1.4
-
Total Consultancy
217.0
191.6
13.3%
23.4
17.6
33.0%
Investment Management
28.0
26.0
7.7%
4.4
2.9
51.7%
Total
583.6
546.6
6.8%
46.4
38.1
21.8%
8.0%
7.0%
Property Management
Total Property Management
Consultancy
UPBT margin
15
Business Review
Service Lines
16
Commercial Transaction Advisory
Year ended December
(£ millions)
Commercial
Transactions
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
- Asia Pacific
96.3
99.3
(3.0)%
16.7
16.6
0.6%
- UK
84.1
73.4
14.6%
14.0
10.3
35.9%
- Europe
51.1
38.0
34.5%
1.3
(3.0)
n/a
- United States
112.3
6.8
n/a
12.4
(1.6)
n/a
343.8
217.5
58.1%
44.4
22.3
99.1%
12.9%
10.3%
Total Commercial Transactions
UPBT margin
• Asia Pacific – strong growth in Japan and Australia offset by lower revenues in China and Hong Kong
• UK driven by regional recovery and stable London market
• Europe returning to profit through strong growth in Germany, Ireland, Netherlands and Spain
• US – Growth through Studley and capital markets business profitable
17
US – Savills Studley offices
Chicago
Top 3
New York
Number 1
Washington
LA
Top 3
Top 3
Houston
Number 1
18
Residential Transaction Advisory
Year ended December
(£ millions)
Residential
Transactions
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
- UK
129.2
118.0
9.5%
19.7
19.0
3.7%
- Asia Pacific
21.6
22.7
(4.8)%
3.7
5.9
(37.3)%
150.8
140.7
7.2%
23.4
24.9
(6.0)%
15.5%
17.7%
Total Residential Transactions
UPBT margin
• Growth in the UK driven by higher volumes in the regions (+9%) and Central London (+1%)
• Average price in Prime Central London up 3%; up 4% in the regions
• General Election induced UK slow down from Q4
• Asia Pacific region impacted by falling volumes particularly in Singapore
19
Property Management
Year ended December
(£ millions)
Property Management
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
- Asia Pacific
207.1
205.1
1.0%
11.7
11.1
5.4%
- UK
104.9
96.2
9.0%
9.5
8.8
8.0%
- Europe
26.6
27.7
(4.0)%
(2.6)
(2.3)
n/a
338.6
329.0
2.9%
18.6
17.6
5.7%
5.5%
5.3%
Total Property Management
UPBT margin
• Area under management up 3% to c.2,090m ft2 (2013: 2,032m ft2)
• Asia Pacific – higher revenues despite the weakening of the Hong Kong dollar. 21% growth in China
• UK revenues up in both the Property management and Lettings businesses. Profits impacted by
investment in the new teams
• European losses resulted from lower revenues in Sweden, growth costs in Poland and operational
and system improvement costs in Ireland
20
Consultancy
Year ended December
(£ millions)
Consultancy
Total Consultancy
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
- UK
168.2
148.7
13.1%
19.4
14.3
35.7%
- Asia Pacific
30.0
27.3
9.9%
2.6
1.9
36.8%
- Europe
18.8
15.6
20.5%
1.4
1.4
-
217.0
191.6
13.3%
23.4
17.6
33.0%
10.8%
9.2%
UPBT margin
• Continued strength in the UK in the Housing, Development, Valuation and Hotel and Leisure
teams
• Solid growth across the Asia Pacific Region
• Revenue growth in Europe driven by German Valuation business
21
Investment Management
Year ended December
(£ millions)
Investment Management
Revenue
UPBT
2014
2013
% chg
2014
2013
% chg
28.0
26.0
7.7%
4.4
2.9
51.7%
15.7%
11.2%
UPBT margin
• Assets under management grew by 41% to €7.2bn (2013: €5.1bn)
• Margin improvement assisted by 2013 cost restructuring exercise
• Japanese acquisition (Merchant Capital: AUM €505m) completed in May 2014
• Proposed acquisition of SEB Asset Management announced today
22
Diversification
Revenue by Geography (£m )
2014
2013
Revenue by Business (£m )
2014
2013
UK
514.4
462.3
Transaction Advisory
494.6
358.2
Asia Pacific
355.0
354.4
Property / Facilities Management
338.6
329.0
Europe
96.5
81.3
Consultancy
217.0
191.6
United States
112.3
6.8
Investment Management
28.0
26.0
Europe
9%
(2013: 9%)
United
States
10%
(2013: 1%)
Consultancy
20%
(2013: 21%)
UK
48%
(2013: 51%)
Property /
Facilities
Mgmt
31%
(2013: 36%)
Asia Pacific
33%
(2013: 39%)
23
Investment
Mgmt
3%
(2013: 3%)
Transaction
Advisory
46%
(2013: 40%)
Looking Ahead
24
Management Focus
Growing our Savills Studley US business through acquisition and recruitment
In Europe, building on the recent success and reducing dependency on
transactional income over time
In Asia building on our recent Indonesia and Malaysia acquisitions and growing
our Property Management and Tenant Rep business
In the UK, continuing expansion into the core London Residential sales and
lettings market and further growth in Commercial PM and Consultancy
Investment Management, integrating our proposed SEB acquisition and then
expanding the combined platform in Europe and Asia
25
Summary and Outlook
Strong results from our Global business benefiting from breadth and depth
Regional recovery and stable London supporting UK commercial business
Cautious stance on the UK Residential market in first half – continued
uncertainty re. the UK General Election
Hong Kong, China and Singapore to remain subdued; Japan strong
Balanced business positions Savills well for the future
26
Connecting people and
property since 1855