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Savills plc
Results for the year ended 31 December 2018
14 March 2019
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 Key Priorities &
Summary & Outlook
3
Introduction, Highlights & Business Development
4
Highlights
5
Performance Overview Drivers
Group Revenue £1,761.4m
+10.1% (cc 11.4%)
Group UPBT £143.7m
+2.3% (cc 3.2%)
Transaction advisory revenues up 9% despite
challenging market conditions
Strong growth in less transactional services -
Property Management revenue up 14%,
Consultancy revenue up 8%
Growth of 35% from Europe and Middle East,
both organic growth and acquisition, including
Aguirre Newman (Spain) and Cluttons
(Middle East)
North America delivered significant growth
with revenue up 18% and underlying profit up
64%
SIM raised £2.4bn in new funds, with AUM up
12% to £16.4bn
Group UEPS 77.8p
+2.6%
Net Cash £73.9m
(2017: £98.6m)
Dividend 31.2p
+3.3%
cc = constant currency
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
Employer of choice and strong talent retention
Conservative financial structure
Provide strong returns to shareholders
…. An entrepreneurial spirit and ambition
for continued growth
‘Global Real Estate Adviser of the Year’ –EG Awards 2018
‘Deal of the Year’, ‘Residential Team of the Year’ – RICS Hong Kong Awards 2018
‘The Times Graduate Employer of Choice for Property’ – 12th year
‘No.1 Real Estate Superbrand’ –Superbrands 2018
6
Management Changes: Succession Delivered in 2018
UK
Group CEO UK & EMEA – James Sparrow
Managing Director UK – Richard Rees
North America:
CEO – Mitch Rudin
COO – Matthew Morgan
CFO – Gerald Prager
Europe & Middle East
CEO Middle East – Steve Morgan
CEO Sweden – Niklas Sammuelson
CEO Spain – Jaime Pascual-Sanchiz
Asia Pacific
CEO Korea – Crystal Lee
CEO Singapore – Marcus Loo
India
CEO – Anurag Mathur
Group CEO – Mark Ridley
Strengthening the bench
7
Ten Year Revenues
8
-
200
400
600
800
1,000
1,200
1,400
1,600
1,800
2,000
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018
£m
Transactional "Less-Transactional"
Total Revenue
£1,761.4m
Total Revenue
£560.7m
46%47%
47%
46%
48%
38%38%40%
35%
54%53%54%52%54%60%62%62%60%65%
40%
46%
46%
Percentage of Revenue
Property Management – 33%
Consultancy – 17%
Investment Management – 4%
Percentage of Revenue
Commercial Transactions – 36%
Residential Transactions – 10%
Broad Geographic Spread
9
580Employees
Revenue
£264.5m
(15% of Total)
*Staff numbers – weighted average for 2018
Revenue
£662.4m
(38% of Total)
Revenue
£247.0m
(14% of Total)
Revenue
£587.5m
(33% of Total)
Over 36,000* employees in 71 countries
788
Employees
31
Offices
5,955
Employees
135
Offices
1,752
Employees
52
Offices
28,486
Employees
67
Offices
UK
Market Dynamics
Macro themes
• GDP growth of 1.4% but uncertainty stalling activity in some sectors
• Comparative risk and pricing (including sterling devaluation) attractive to non-domestic investors
Market statistics
• Commercial property investment volumes down (-5.3%), but London remains the World’s no.1 destination for cross border investment
• All property commercial prime yields eased 25 bps, whilst UK office take up reached its second highest level ever, with national average vacancy rates of 8.7%
• Logistics - take up rose by 45% year on year with new
records being set in many markets including the North
West, Yorkshire and the East Midlands
• UK housing transaction volumes, down -2.5% but UK house prices up 0.5%, whilst PCL down 4.1%
Business Development Focus:
Growth of Property Management & Consultancy, strengthening selective transactional teams
Property Management
• Acq Broadgate Estates, 3rd party portfolio (21m sq. ft)
Consultancy
• Acq Porta Planning LLP
• Acq CMS (place making)
• Opened new Newcastle office
Residential Sales & Lettings
• Acq J P Case (Manchester)
• Acq Martel Maides (Guernsey)
• Acq The Currell Group (East London)
Transactional
• New Edinburgh Office Leasing Team
• New Debt Advisory Team
• Strengthened National Retail Leasing
Revenue
£662.4m
Growth
6% YOY
10
11
Revenue
£587.5m
Growth
4% YOY
Market Dynamics
Macro themes
• A generally positive year ended on a more cautious note, with the US / China Trade War the biggest threat
• Slowing economy in China and greater capital controls.
Market statistics
• Commercial property investment up 1.3% - a record year and China remained the largest market, despite slowest growth since 2014
• Strong yield compression across the markets (avg -1.5%) with continued demand for prime
• Total investment activity down slightly on 2018, with mixed volumes, eg Tokyo (-10%), HK (+32%), Seoul (+58%)
• Strong rental growth in office markets, HK (7.8% pa), Tokyo (4.9% pa) & Singapore (9.5%) whilst China saw ‘grade A’ supply decrease by 47% in first tier cities
Business Development Focus:
Continued organic growth across the region with selected office openings in China and India
Hong Kong
• Strengthened Property Management & Capital Markets businesses
China
• New offices in Wuhan, Changsha and Hainan, focusing on Property Management, Commercial Leasing & Retail
• Strengthened Leasing teams in Guangzhou, Chengdu & Hangzhou
Australia
• Significant national team lifts in Logistics (NSW & Vic), Office Leasing & Sales (NSW) & Property Management
South East Asia
• Acquired Valuations teams in Singapore & Thailand
India
• Opened 3 new offices in New Delhi, Mumbai & Bangalore, with 2 more planned in 2019
• Service lines established, covering Tenant Rep, Capital Markets, Project Management, Valuations, Leasing & Residential Sales
Asia Pacific
North America
Revenue
£264.5m
Growth
18% YOY
Market Dynamics
Macro themes
• Real GDP growth of 2.9% but rising interest rates, economic protectionism, and political uncertainty create headwinds
• Unemployment rate ended the year near post-war low of 3.9%, strong corporate growth
Market statistics
• Commercial office investment above historical averages (+13.5%) yet well below 2007 peak (-66%)
• Leasing volume up (+14.0%) across overall US office market, with particular strength in New York, San Francisco & Washington DC
• Office rents continue to rise (+2.9%) in top-tier markets, however, leasing concessions rising
• Average vacancy rates reduced to 9.5% but robust development pipeline being delivered in many primary markets
Business Development Focus:
Organic growth of occupier focused business with diversification on sector & services
Central Management
• New team with 6 key appointments and rebranding to Savills – H1 2019
Tenant Representation
• Growth of business in Minneapolis, LA, Dallas, Toronto & Columbus
Logistics
• Growth of National Logistics capability
Project Management & Consultancy
• Growth of Workplace & Project Management nationally
Capital Markets
• Integration of recently acquired New York Capital Markets business
Technology
• Continued investment in award winning technology (egKnowledge Cubed)
12
Europe & Middle East
Revenue
£247.0m
Growth
35% YOY
Market Dynamics
Macro themes
• Investor demand strong, but challenges of liquidity and pricing
• Slowing economic growth in core Europe particularly Germany & Italy
• Increased political & economic uncertainty in UAE
Market statistics
• European investment volumes down -7.5%, primarily due to lack of liquidity
• Major country investment down -15%, but Poland +16%, Ireland +35%, Portugal +80% as investors seek smaller markets
• Office leasing volumes down 2% as availability tightens (average European vacancy rate 5.7%)
• Prime CBD office rents in Europe grew 3.4% on average, secondary 5.5% on average
• UAE capital and rental values remain under downward pressure
Business Development Focus:
Continued growth in core European markets and integration of Middle East business
Spain & Portugal
• Integration of Aguirre Newman business, office HQ relocation in Madrid and expansion of Resi business
France
• Strengthened Office Leasing in Paris & Lyon
Sweden
• New CEO & new Capital Markets team in Stockholm
Italy
• New High Street Retail Agency team
Poland
• Strengthened Logistics business in Leasing & Capital Markets
Netherlands
• New office opening in Utrecht
Middle East
• Integration of Cluttons multi-sector business across 5 Gulf Countries
13
Savills Investment Management (SIM)
Revenue
£66.7m
Growth
0% YOY
Business Development Focus:
Growth of AUM and launch of products focused on UK, Europe & Asia Pacific markets
• AUM increased by 12% to £16.4bn (£14.6bn in 2017)
• Transacted over £3.8bn (£2.8bn acquisitions and £1bn disposals)
• Continued strong Investment performance
• Acquired 25% of DRC, leading specialist Debt Fund Manager
• Raised £2.4bn of new equity across 22 products
• Successful disposition Japan I; significant outperformance; Japan II strong first close
• Integrated Zaphir Asset Management and grew AUM in Spain
• Search for new Global CEO of SIM approaching conclusion
Market Dynamics
• Brexit & European Geo-Political concerns impacted on equity raising and investment activity
• Concerns around general pricing across all asset classes – late cycle
• Increasing level of regulatory compliance
• Continued consolidation of smaller investment managers
• Weight of capital targeting property sector remains well above average
• Brexit worries reduce activity in final quarter of 2018 particularly for Retail funds
• Real Estate debt and alternatives increasingly attractive asset classes
14
Financial Review
15
Summary Underlying Result
16
Year ended 31 December (£m) 2018 2017 % chg
Revenue 1,761.4 1,600.0 +10.1%
Underlying PBT 143.7 140.5 +2.3%
Underlying PBT margin 8.2% 8.8% (0.6)% pts
Underlying basic earnings per share 77.8p 75.8p 2.6%
Dividend per share 31.2p 30.2p 3.3%
Net cash 73.9 98.6 (25.1)%
Net assets 505.0 441.7 14.3%
Dividends
17
Year ended 31 December 2018 2017 % chg
Interim ordinary (“Less Transactional”) 4.80p 4.65p 3.2%
Final ordinary (“Less Transactional”) 10.80p 10.45p 3.3%
Supplemental (“Transactional”) 15.60p 15.10p 3.3%
Total distribution (per share) 31.20p 30.20p 3.3%
Total distribution (£m) 42.7 41.2 3.6%
Revenue and Underlying PBT by Region
18
626.0
565.7
224.8182.4
662.4
587.5
264.5 247.0
-
100
200
300
400
500
600
7002017
2018
Revenue
UK Asia Pacific North America
UPBT
+6%
E&ME
76.5
55.6
7.811.2
76.8
54.9
12.8 12.9
0
10
20
30
40
50
60
70
80
900%
+4%
+18%+35%
(1)%
+15%+64%
£m
Margin 12.2% 11.6% 9.8% 9.3% 3.5% 4.8% 6.1% 5.2%
The figures in these charts
exclude revenues of £0.0m
(2017: £1.1m) and other net
costs of £13.7m (2017: £10.6m)
not allocated to the operating
activities of the group’s
business segments
Revenue and Underlying PBT by Service Line
19
746.2
513.1
273.1
66.5
813.5
586.8
294.4
66.7
0
100
200
300
400
500
600
700
800
900
2017
2018
+14%
+8%
0%
Revenue
81.5
25.331.0
13.3
81.1
32.2 33.1
11.0
0
10
20
30
40
50
60
70
80
90
+27% +7%
(17)%
Transaction
Advisory
Property
Management Consultancy
Investment
Management
UPBT
+9%
0%
Margin 10.9% 10.0% 4.9% 5.5% 11.4% 11.2% 20.0% 16.5%
£m
The figures in these charts
exclude revenues of £0.0m
(2017: £1.1m) and other net
costs of £13.7m (2017: £10.6m)
not allocated to the operating
activities of the group’s
business segments
Combined revenue and UPBT growth of 11% and 10% respectively
Cashflow Performance
20
98.6
73.9
143.7 16.4
23.9
5.6
9.8
12.3
87.0
22.6
25.1
41.6 1.1
34.4
0
50
100
150
200
250
300
Net cash at 31-Dec-2017
UPBT Non-cash itemsWorking capital Cash flowsfrom
investments
Acquisitionspend - current
& deferred
Capex Purchase ofEBT shares
Proceeds fromissue of shares
Dividends paid Interest Tax Foreignexchange
Net cash at 31-Dec-2018
£m
Cash generation from operations of £147.8m
(2017:£145.1m)
Acquisition spend £87.0m (2017: £117.1m)
Commercial Transaction Advisory
21
2018 Revenue £636.1m (+11%) 2018 UPBT £55.2m (-2%)
Asia Pacific Growth in Hong Kong and South Korea offset by a slow down in Investment transactions in Mainland China, Australia and Japan
UK investment market volumes down, particularly the retail sector, impacting revenues in our Investment and Central London & International teams
Europe & Middle East positive impact of Aguirre Newman and Cluttons Middle East acquisitions. Investment growth in Ireland, Germany and the
Czech Republic and leasing revenue growth in Sweden
North America significant growth in Occupier Service business – Washington DC, Southern California, New York, Atlanta and Denver
160.1
98.4113.1
264.5
-
50
100
150
200
250
300
Asia Pacific UK E&ME North America
Growth (5)% (3)% +45% +18%
21.2
15.7
5.5
12.8
-
5
10
15
20
25
Asia Pacific UK E&ME North America
Growth (21)% (9)% +22% +64%
£m £m
Residential Transaction Advisory
22
2018 Revenue £177.4m (+2%) 2018 UPBT £25.9m (+3%)
Asia Pacific strong growth in Hong Kong high-end Residential sales and good performances elsewhere offsetting weaker
markets such as Australia
UK revenue broadly flat in second-hand sales; London marginally up; Regions marginally down. New development revenues
up slightly, reflecting higher average unit values, and higher volumes
UK significant Residential Capital Markets revenue growth
45.9
131.5
0
20
40
60
80
100
120
140
Asia Pacific UK
Growth +4% +2%
8.3
17.6
-
2
4
6
8
10
12
14
16
18
20
Asia Pacific UK
Growth +30% (6)%
£m £m
Property Management
23
2018 Revenue £586.8m (+14%) 2018 UPBT £32.2m (+27%)
Asia Pacific revenue growth in Hong Kong property and facilities management, new contracts in Hong Kong, Macau,
Mainland China and Vietnam
UK strong underlying revenue growth in Residential Lettings and Commercial Property Management. Positive impact of
Broadgate Estates management portfolio acquired during the year
Europe & Middle East revenue growth as a result of acquisitions, supported by organic growth in the Czech Republic,
France and Sweden. Break-even achieved (2017: £1.8m loss)
327.0
190.9
68.9
-
50
100
150
200
250
300
350
Asia Pacific UK E&ME
Growth +9% +15% +48%
19.2
13.0
--
5
10
15
20
25
Asia Pacific UK E&ME
Growth +25% +11% n/a
£m £m
Consultancy
24
2018 Revenue £294.4m (+8%) 2018 UPBT £33.1m (+7%)
UK strong performances in Planning, Development, Building & Project Consultancy, Hotels Leisure and Trading and Housing &
Healthcare
Asia Pacific Constant currency revenue up 2% with growth in much of the region offset by reduced Valuations activity in
Australia and Hong Kong
Europe & Middle East acquisitions in Spain and the Middle East, supported by organic growth (10% overall) driven by
Germany
215.9
45.133.4
0
50
100
150
200
250
UK Asia Pacific E&ME
Growth +5% (1)% +48%
25.8
4.3 3.0
-
5
10
15
20
25
30
UK Asia Pacific E&ME
Growth +8% (16)% +50%
£m £m
Investment Management
25
2018 Revenue £66.7m (2017: £66.5m) 2018 UPBT £11.0m (-17%)
As anticipated, revenue/profit affected by the decrease in disposal activity from the liquidating SEB German Open Ended
Funds vs 2017
Transactions of circa £3.8bn (2017: £4.8bn) executed, including £1.0bn disposals and £2.8bn acquisitions. AUM
increased to £16.4bn (2017: £14.6bn)
Acquisition of 25% stake in debt investment management business DRC Capital LLP, with option to buy the remaining
75% in 2021
Strong Fund performance (82% of funds exceeding 5 yr benchmarks)
25.7
31.6
9.4
-
5
10
15
20
25
30
35
UK E&ME Asia Pacific
Growth
4.74.4
1.9
-
0.5
1.0
1.5
2.0
2.5
3.0
3.5
4.0
4.5
5.0
UK E&ME Asia Pacific
Growth(10)%+4% (32)%(6)%+47% +6%
£m £m
26
Technology Investment- “Internal”
UK/Europe Real estate data analytics
UK Digitisation of valuation process
US CRM system
Global “Knowledge³” Occupier service analytics (CoreNet and FT awards for
innovation)
Progressive harmonisation of Savills ERP system Globally (Dynamics AX)
271 Ordinary and preference shares 2 Ordinary shares and redeemable preference shares
Company Business
Total
Investment
Cost
Realised
to date
Net
Investment
Percentage
OwnershipNotes
“Digital Hybrid”
Residential Agent
(UK)
£16.0m £3.6m £12.4m 21.3%1
Grown to become 8th largest UK
Estate Agent, clear no.2 to
PurpleBricks amongst all hybrids.
Digitally enabled Tenant
Rep for co-working /
serviced offices
(Global)
£1.0m N/A £1.0m 100%
Autonomous start up within Savills.
Launched in 8 countries. 2018
revenue > £1.2m 100% growth in yr
2.
AI approach to real
estate valuation
(UK)
N/A N/A N/A 5%
Stake taken in consideration for use
of Savills data and market know how
to prove models.
The “Smart-City” digital
platform
(UK)
£6m N/A £6m 33%2
Largest most accurate City model in
existence. Licensed by 18/32 London
Boroughs. Interest from Global Cities.
Tenant focused
residential block
management tool
(Singapore)
£250k N/A £250k 19.7%Currently in use in 54 Condos (c.
26,000 tenants).
Portfolio
Key Priorities &
Summary & Outlook
28
29
Key Priorities
Asia Pacific: further growth in key Asian markets, balanced between
Transactional & Consultancy Services
North America: diversification of services & sector coverage including Project
Management, Workplace Consultancy, Logistics & Retail
Europe & Middle East: continued investment in stronger core European
markets, with emphasis on Property Management & Consultancy Services
UK: Maintain core strength & National multi-service expertise
Savills Investment Management: continue the development of SIM across
Europe & Asia Pac and, longer term, in the US
General monitoring of market conditions and careful cost control
30
Summary & Outlook
A robust 2018 despite market challenges
Solid start to 2019
Heightened uncertainty (market & geopolitical risk) likely to temper strong
transaction volumes in some markets
Continued growth in less transactional service lines
The Board’s expectations for 2019 currently remain unchanged
Connecting people and
property since 1855