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RNS Number : 6207L
Savills PLC
14 January 2021
14 January 2021
SAVILLS PLC
("Savills" or the "Group")
Year-End Trading Update
Savills plc, the international real estate advisor, publishes
the following trading update in respect of the year ended 31
December 2020.
Against the backdrop of the COVID-19 pandemic, the Group has
delivered a resilient full year performance reflecting both the
robustness and geographic diversity of our business and the
mitigating actions taken by staff across the globe. Thanks largely
to excellent performances in the UK, Asia Pacific and Savills
Investment Management, reflecting the strength of our less
transactional service lines, the Group anticipates that underlying
results for the year to 31 December 2020 will be at the upper end
of the Board's expectations.
Covid-19 impact and response
Savills has shown considerable resilience in a year in which the
Group faced significant challenges, particularly to our
transactional advisory businesses worldwide. The cycle of lockdowns
and other measures, such as travel restrictions, from Q1 2020 had a
significant global impact on the ability and preparedness of both
investors and occupiers of real estate to transact. As a
consequence, in major markets, both investment and leasing volumes
contracted significantly compared with 2019 and previous
periods.
As announced previously, the Group was quick to adopt a number
of operational and financial initiatives to minimise the impact on
the business as a whole. Savills strategy was to minimise
discretionary expenditure while maintaining our staffing levels to
ensure seamless service to clients around the Globe. In addition
the Board suspended distributions to shareholders pending greater
visibility of future market recovery. The consequence, particularly
of retaining our staff, has been improved market share in most of
our markets. This both partially mitigated the impact of volume
declines in transactional markets and improved our win ratio of
tenders for less transactional real estate services such as
consultancy and property management. Additional cash management
activities, including taking the opportunity in H1, at no cost, to
defer certain predominantly VAT/sales tax payments of c. GBP50m,
ensured that the Group remained in a robust financial position
through the period and finished the year with net cash in excess of
GBP160m (2019: GBP28.5m).
Performance by region
UK
Despite the backdrop of restrictions and uncertainty, the UK
performed well across all business lines with notably strong
performances from our Consultancy and Property Management
businesses. Commercial transaction activities, particularly
leasing, were significantly affected by the pandemic. Our
Commercial investment activities benefited from our involvement in
some of the largest transactions seen in the UK and more generally
from an increase in activity, albeit still substantially below 2019
levels, which began to occur in Q4. Our UK prime residential
business, which effectively missed the spring selling season during
the first lockdown, showed an extraordinary rebound in activity
from the end of May, predominantly in the regional markets outside
London where the volume of activity in prime residential markets
for the year as a whole was the strongest since before the global
financial crisis.
Asia Pacific
Our Asia Pacific business as a whole performed ahead of our
original expectations as markets such as Mainland China recovered
more quickly from the original lockdowns and residential sales
activity remained strong through the period. Commercial investment
volumes were significantly reduced, however we partially mitigated
the impact with market share gains in China including Hong Kong. We
also benefited from a strong performance by our substantial
Property and Facilities Management business in the region. Korea,
Vietnam and Japan also performed well during the period and by the
end of the year there was a discernible improvement in sentiment in
both Australia and Singapore.
Europe & the Middle East
In Continental Europe and the Middle East, where our business is
much more dependent upon transactional activity, Savills performed
broadly in line with expectations in the context of a decline in
the transaction volumes in some of the major markets. Those
countries where we provide the broadest range of services such as
the Middle East, Germany, the Netherlands and Spain showed relative
resilience to declines in transactional activity.
North America
In North America, where Savills is largely focused on commercial
occupier leasing transactions, the pandemic, had a significant
effect on our business, with market leasing volumes declining by c.
40% year-on-year and more (c.50%-70%) in the largest metro markets
of New York, San Francisco, Chicago and Los Angeles. Against that
backdrop, market share gains and our ability to close some
individually significant transactions partially mitigated the
market-related decline in our leasing revenues.
SIM
Savills Investment Management performed ahead of our
expectations with both new fund launches and strong investment
performance from the majority of our products. Our strategy was to
adopt a cautious approach to the deployment of capital in markets
where, for much of the period, there was limited price
transparency. Accordingly, whilst base management fees remained
highly resilient the business experienced better than anticipated,
albeit substantially reduced year-on-year, performance and
transaction fees during the period.
Outlook
Looking to the year ahead, with renewed lockdowns and
substantial increases in infection rates in most markets, it is too
early to predict the direction of market activity in the short
term. That said, global investor demand for secure income,
restricted supply and expectations of continued low interest rates
suggest that the medium and long term attraction of real estate as
an asset class remains highly positive. The pace and efficacy of
mass vaccination programmes and consequent reductions in lockdown
and travel restrictions will dictate the rate at which
transactional markets recover from here to reflect underlying
demand. With the operating environment currently restricted in most
markets, the Board considers it inappropriate to resume guidance at
this stage. However, in general terms, we expect transactional
activity to remain suppressed in the first half of 2021 with
improvement commencing in some individual markets in the second
quarter followed by progressive recovery through the second half of
the year.
Savills is a resilient, globally diversified business with a
strong balance sheet and the Group is well positioned to continue
to execute its growth strategies and further enhance its market
position.
Savills intends to report 2020 full year results on 11 March
2021.
For further information, contact:
Savills 020 7409 8934
Mark Ridley, Group Chief Executive
Simon Shaw, Group Chief Financial Officer
Tulchan Communications 020 7353 4200
David Allchurch
Elizabeth Snow
Forward looking statements
Certain statements in this announcement are forward-looking
statements relating to the Group's operations, performance and
financial position based on current expectations of, and
assumptions and forecasts made by, management. They are subject to
a number of risks, uncertainties and other factors which could
cause actual results, performance or achievements of the Group to
differ materially from any outcomes or results expressed or implied
by such forward-looking statements. The Group's principal risks are
described in the 2019 Savills plc Annual Report which can be viewed
online at http://www.savills.com . Such forward looking statements
should therefore be construed in light of such risks, uncertainties
and other factors and undue reliance should not be placed on them.
They are made only as of the date of this announcement and no
representation, assurance, guarantee or warranty is given in
relation to them including as to their accuracy, completeness, or
the basis on which they are made. No obligation is accepted to
publicly revise or update these forward-looking statements or
adjust them as a result of new information or for future events or
developments, except to the extent legally required. Nothing in
this Statement should be construed as a profit forecast.
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