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
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