Savills plc ($SVS)

Welcome to the new Savills team as it were, and our soon-to-be colleague from Eastdil Secured. My name is Simon Shaw, 17-year veteran of these presentations, but this is the first one as CEO. To my right is Nick Sanderson, our brand-new CFO, who's been drinking from the fire hose for 4 weeks. And to his right, Michael Van Konynenburg, who is the CEO of Eastdil, and from ever more is going to be called Mike VK, much, much easier. We've got a stack to get through today, but I have to actually just share one little snippet, which is absolutely symbolic of Savills' culture. As I was coming down here to do this, one of our receptionists said, Simon, you look a bit peaky. I said, well, actually, I'm a bit nacket. She said, strap in, you got another day of it, mate, which I think actually articulates about as clearly as you can, the sort of open and transparent Savills culture that we operate. It did make me laugh. We got a load to get through this morning. So I'll speed through the results, if that's okay. And as it's the first time you've heard from me as CEO, I thought it was useful with Nick's help to lay out a summary of our strategy, which is really part evolution and part firming up what you already know. So if we turn to the results first or the overall message really is that these results exceeded our expectations as a result of a very strong finish to the year. And after a volatile couple of years with geopolitical and macroeconomic winds buffeting this way and that and particularly during Q2 and Q3 of last year, we have in profit terms, overtaken the clean pre-COVID year of 2019. But we've done that for the most part, with the great Savills transaction machine really only still firing on about 4 out of 8 cylinders. So I think that shows the extent of the growth and development of this business between times. And I'll come on to a bit more of that in a moment and the strength of our engine. The important factor in this really good performance was the performance of our less transactional business lines and some of the restructuring benefits that we received through the course of the restructuring we've done in previous periods. And these helped to mitigate or improve the performance in some of our weaker markets. Finally, I suppose it's an understatement to say we've been pretty busy strategically as well. And I'm absolutely thrilled that we're announcing today the combination with Eastdil Secured. Now many of you will be more than aware that real estate investment banking is an area that I personally have been looking to build over some years now, and we have been doing so organically for some time. And we've worked with and admired Eastdil for many years on both sides of the table. And you'll see in the appendix, we've got some examples of some of the deals we've worked on opposite and with each other. So I'm extremely pleased that in attracting the preeminent global real estate investment bank to join us, we're hugely accelerating that investment banking theme to our strategic development. And doing so, I think, in a compelling manner for clients, staff and ultimately, shareholders alike. So hold that thought for a bit, and we'll crack on through the highlights of the financials for the year. Under the variable market conditions I just talked about, I'm pretty happy that we hit 6% -- nearly 8% constant currency growth and then further leverage to the bottom line with double-digit underlying EBITDA and underlying PBT growth. It's worth noting that the 30 basis points improvement in margin in an environment where the commercial transaction business, for reasons I'll go into in a moment, actually had a margin that declined 20 basis points during the year. So that's evidence of the efficiency of our restructuring initiatives and the tightening of the rivets on the hull, if you like. And as you look further down the page, the strong EPS growth and cash generation supported the 12% increase in dividend that we're proposing and declaring today, respectively. So let's look at the segmental components of the performance. So before I start here, there's an abridged version for those of you who have been following these presentations for years of the financials, you'd be jolly glad to know. But there is a stack of slides in the appendix that contain all the normal disclosures we give around our segments, and you can look at those at your leisure. What I'll draw attention to is the fact that our transactional revenue growth was positively affected by the burgeoning prime international residential business, which you've heard us talk about before and by the resilience of the U.K. residential business, too. On the Commercial Advisory side, it was affected, particularly in comparison with our U.S. peer group, mainly because of our relative weighting to China and to some of the weaker markets in Continental Europe of Germany and France, albeit recovering. And a particular difference is our very, very low exposure currently to the U.S. capital markets. And you should note that the entire globe was driven last year in volume terms by the surge in activity in U.S. capital markets, as Mike will attest. So our small cap trans team in New York, which is excellent and grew revenues by 58%, but unfortunately, still very small in the context of the overall business. So hold that thought when we talk about the transaction we're just going to talk about. And secondly, a really good performance from our less transactional businesses, the service lines in aggregate, which were driven by consultancy growth at the upper end of our expected range, a solid PM and FM performance and our core style Investment Management business now coming out through the trough of last year as that investment style is coming back into favor. So let's look now at the profit component of our performance. What you see here is the impact in commercial terms of both mix, i.e., where we made our money last year. So think less Japan, very profitable market, more Hong Kong, less profitable, continuation of a weak Mainland Chinese market and significant investment in the regional capital markets business in APAC and in -- across Australia under new leadership. So from Sydney, Melbourne, Brisbane, we've made significant strides in improving and upgrading our teams there, all during the course of around midyear to the end of the year last year, so not covering their cost at this point. And that significantly affected the APAC transaction business, and you will see that if you look in the appendix. What you also see is the benefit of growth in international residential with revenue really starting to flow through to the bottom line. And then you can see the impact of the consultancy performance, which grew significantly ahead of our normal expected rates for all sorts of good reasons. The return to profit in North America in Consultancy and in Project Management in the Asia Pacific region. In the U.K., our Professional Services, whether it's from rural infrastructure projects, development, planning, all grew nicely. And our valuation business was positively impacted not just by growth, but also by its use of technology in an increasing way, which improves its efficiency. And finally, through a number of the line items, you can see the impact of the restructuring work we've already done, and it's probably no better illustrated than in our Savills Investment Management business. Where you saw revenue had stabilized, as I said, in the market conditions, but profits bounced significantly as a result of the hard yards restructuring that Alex and his team did last year. I should point out that unallocated costs reflect higher incentive payments, a little bit of double counting during our significant succession process, it should be said, and a higher interest expense due to the late pattern of H2 trading, this very strong finish in the last 6 weeks or so of the year. So if we look at the regional snapshot for a second, the message here is about growth across the board, and there are a few highlights. So in EMEA, we were driven by the resilient U.K. performance, as I've mentioned, very much back-end loaded. And in Continental Europe and the Middle East, a return to profit from the loss-making of the previous couple of years. And that's really thanks to reduced losses in Germany and France and improvements elsewhere, particularly Southern Europe and particularly in this period in the Middle East as well. Asia was resilient despite our Chinese exposure. And I should note here, I think we were #2 in capital transactions in Mainland China, and we did 4 of them, all in the last month. So that gives you a sense of how we are really benefiting from a very strong property management business in that region, which keeps going well. Reduction of activity in Japan and the investment I talked about in a number of the other markets, particularly Australia. The upsides were growth in Consultancy and the return to profit that I mentioned in Project Management and the growth of APAC Residential. In North America, improving revenue and the flow-through of cost savings to the bottom line despite continued significant investment in both brokerage and in our global occupier services business and the acquisition of move management consultancy, Hoffman, all contributed to the result you see there. So if we go to the next slide, it takes our standard underlying profit disclosure and reconciles it back to IFRS reported profits, EPS and dividend. Everything is accounted for as usual on a consistent basis and has been for 15, 16 years now. The one thing I will draw your attention to is the restructuring cost of just over GBP 30 million in the middle. That will bring us benefits during the course of the coming year, already has started to bring them, but will bring us more benefit during the course of this year. But that is the well-trailed restructuring that we -- that you would already know about. And I would say that having completed that process, there is a little bit of trailing restructuring costs that will fall into H1 this year, stuff we couldn't account for last year, probably 10% or so of the number you see here. But having done that, I think, we are broadly now in the right shape as an organization as we look forward. So if we turn to the summary and the crystal ball, which is increasingly difficult to look into these days, what is the position as we look forward? Well, definitely momentum built through Q4, and we've seen very strong pipelines through the beginning of this year. They're the healthiest we've had in most locations around the world. The obvious exceptions being, I would say, China and I would argue also probably the U.K. residential market, which is pretty stable and performing very well under the circumstances. Our less transactional business continues to do exactly what it's supposed to. It's performing well, and we remain highly focused on controlling cost. And finally, we started the year slightly ahead of our own forecasts. But the really critical thing is it's impossible to forecast with any accuracy the effect of the Middle East conflict and any contagion there from that may spread. And we're focused really on ensuring that our 800-plus staff, who collectively represent about 5% of profits just by way of background, are kept safe through this period. And that's what management here and locally are completely focused upon. So subject to how that pans out, I think, we're pretty well placed to improve our performance in 2026. What we'll do now is move on to the -- a sort of laying out of our strategy. Now it would be really odd if after 17 years, I was going to move sharply left or right strategically. I think it though is very useful to set out here the core principles of why we exist and the key building blocks upon which our strategy is based. So you can see along the bottom of this slide, a number of key building blocks, as I mentioned. I'll really only draw attention to one in particular, and it's one we've sharpened up in recent times, which is to reassert the importance in this organization of our high-performance culture. It's absolutely vital. It's a core tenet of Savills. And I think we really have reasserted that through last year and into this year. And in terms of capital allocation, to focus the organization, and I have to smile when I say this, given what's coming, on fewer, but more meaningful transactions that might actually turn the dial. I got out it's fairly obvious from what we're about to talk about. But -- and you can certainly see that from today's announcement. So I think that is nuanced difference rather than a material departure. So what I'd like to do now is put our service lines into sort of strategic context because I think it's quite an important way. It's the way we look at our business, and it might help you to do the same. The key strategic thread which stretches from our foundation in 1855 right the way through to today's announcement is that Savills raison d'etre is, and always has been, to help clients maximize the performance and value of their assets. And we've been doing this for 170 years through war, pestilence and plague. Of course, for a generation now, the markets we serve have themselves been evolving with a progressive institutionalization and -- of real estate and its close sibling infrastructure. So as a completely accepted and growing asset class globally for investors from sovereigns through private equity, listed sector and family offices, not only has technology in the sector itself advanced, but the financial structures and the language have evolved, and we have had to evolve to remain relevant. So just hold that thought for a second. Here, many of you have heard me speak of the pyramid of service lines that we operate in the business. And clearly, transactional advisory is at the apex of that pyramid down through investment and asset management, the suite of Consultancy services and then its very strong broad base of property and facilities management. Now the arrows on either side indicate the relationship between the volatility of revenue in the sector and the potential margin that one can obtain from these activities. And it's not totally accurate by any means, but it is directionally representative. So our core strategy is to build that base of the pyramid. It's almost the boots on the ground, if you like, and a huge source of data into the organization and grow the suite of Consultancy Services not just here, but exporting them around the world as the markets that we operate in are ripe for those services. And then finally, to build that array of transactional advisory services, you can see at the apex of the pyramid. Now that part of the pyramid has a bit of weird color coding, and I'm told the base color is teal, okay? I know nothing of these matters, but it's teal. The lighter the color, the less exposure we have to that element of the service. Now again, this isn't completely accurate. We do, do some M&A. We do, do some strategic advisory, certainly do some debt placement, and we clearly advise on disposals. But it is there to show the relative growth opportunities. And that, if you put those together, collectively form the real estate investment banking type operations that today, this transaction is going to answer. So I've kind of set out what we're looking to achieve. What are our priorities? Flip the page, clearly to establish a position as a global leader in those transactional services, including real estate investment banking. That is really important, and there's no change in our intent to continue to fill out all of our less transactional businesses as well. And what we do aim to do within those less transactional businesses is to grow them consistently around the high single digits across the cycle. We'll come on to today's announcement in a moment. But before that, we'll briefly cover some of the other strategic priorities that we have, too. If you could flip the slide, that's brilliant. So the 3 planks on this are international coverage of our key service lines, the development of the global high-end residential business and the strategic development of our Investment and Asset Management business. So if we start with the key markets, you can see a number of initiatives here, some of which is really block and tackling, so building out and scaling of PM and consulting across Europe and Asia. But I would say that the nuance change here is that I support us building with real focus and conviction in chosen markets rather than seeking to put bread on the water across the entire waterfront. And I think, again, today's announcement probably indicates a high degree of that focus. So taking APAC as an example of this. Last year was a year, as I said, about building Australia, really focusing on new leadership and building our capital markets and other service line capabilities. And that process still continues this year, but '26 and '27 is much more focused on Japan, another key market that we seek to build. And adding to that, alongside our Southeast Asian operations, which we're completely committed to, we are absolutely committed to India and to our strong Chinese business for the long term. The bigger one to scale is our U.S. business and both our existing occupier-focused organization, and it's not just scaling it, but also diversifying the sectors it's operating in, and we made great strides this year in logistics, for instance, which you will see in the appendix in due course. But today's announcement also delivers the one thing that candidly, a number of people in this room have been crying out for, for years, which is a preeminent capital markets business in the United States, the biggest capital pool capital market for real estate in the world. So that is critical and the connectivity with our group is going to be significant. Prime residential, as I said, is key. And I believe that whilst we've obviously made great strides to date, I do genuinely believe that the prime and super prime residential market globally is white space that the Savills brand can and should occupy. And so you'll see we've done a lot of that over the last couple of years. You've seen some of the benefit in the numbers I showed you of where we've got to date, but that is a core focus for our residential operation. And it does help to cement our relationship with the world's wealth, too. And finally, for now the development of the investment and asset management business, it's really around 2 things. It's around core conviction-led products, and that's discretionary products in the areas of our real capability and particularly around Europe, but also in Asia, and that would be living and logistics, for instance, together with creating a platform, which is a great partner or local operating partner for the world's private equity. We do a lot of that already in Southern Europe, and we're building that through the course of the Savills Investment Management platform. So as I hand over to Nick, I do hope that the last few minutes have given you a sort of sense of focus as to where we're taking this business. I'm incredibly excited about it. I think we've got -- there's a real spring in our step. And I will hand over to my very new colleague to take you through the numbers associated with all of this.

Thank you, Simon. Good morning, everyone. And what a morning to be joining the Savills Board. It's been quite an introduction to life at Savills. Now the clear strategy Simon has laid out, when combined with delivery against our KPIs and targets, positions us to drive meaningful margin improvement, one of our key financial priorities. So starting with Transaction Advisory. Our teams are well positioned for market recovery as we seek to be a top 3 player in all our target markets and return to generating 10% plus underlying PBT margins as we leverage our operating capacity. Across our Consultancy and Property Management businesses, we'll aim to combine both geographic and service offer expansion with market share gains so as to hit average annualized revenue growth of around 10%. And we're looking to continue generating high single-digit to low teen margins in Consultancy and mid-single-digit margins in Property Management. Turning to Investment Management. We will focus on our clear areas of sectoral expertise while looking to scale our platform and consistently deliver healthy investment outperformance for clients. And over the medium term, we're targeting a margin of 20% or more from IM. So with clear revenue and margin growth ambitions, we will also be maintaining our capital allocation discipline and balance sheet strength. Our strong cash flow generation, including the underpin from our resilient less transactional earnings, supports our policy of running with some low financial leverage. Ordinarily, we would expect our year-end net debt-to-EBITDA ratio to be around 1x or less. Opportunistically, we would be comfortable going a little higher, such as to finance a highly compelling cash-generative acquisition, provided we have good line of sight on relatively quick debt paydown as we do on today's transaction. We'll continue to drive organic growth, leveraging our capital-light model with ongoing investment in our platform, people and technology. And we will also pursue targeted M&A where there is a strong strategic, cultural and service line fit, but only when the prospective financial returns are compelling too, ahead of our cost of capital and accretive to EPS with an attractive stabilized return on capital employed. Finally, we will maintain our attractive shareholder distribution policy. Our progressive ordinary dividend is well supported by our less transactional earnings with the supplemental dividend driven by the transactional earnings performance. All in all, we're looking to more than maintain Savills' track record of delivering double-digit annualized total shareholder returns as the group has done since 2007. Now back to Simon to run through the big news of the day.

Thank you, Nick. And for many of you, you will note that this is the first time we have put out long-term targets, which I think is a good thing. So we're now going to take you through the acquisition of Eastdil Secured, and I am so excited about this. I think it's something, as I said, I've wanted to do for some years. And to be frank, over the last year, the stars have aligned to enable us to do it, which is fantastic. But I do want to point out very, very clearly, this is not a transaction for today or tomorrow or next week or next quarter. This is a deal that will superpower this organization for the next generation. It is that important to us to do it. And I think that -- and I should also say it will be important in the mutual growth of our 2 businesses. So this slide summarizes really the rationale, the fit and some of the financial metrics of the transaction. And I won't dwell on those because Nick will take you through those in a moment. But I will go into a bit more detail on a few things. First of all, this is not some opportunistic deal dreamt up by investment bankers. We love you, and we particularly love those of you in the congregation today. We've known each other for years. We've worked, as I said, alongside each other and across the table from each other, and we respect and admire each other. And I can honestly say I do not believe that in this industry, there are 2 more compatible major players who could come together. And it's not often you can say that. We've noted some of the deals we worked on in the appendix for you. And this is -- so genuinely is a strategic combination of 2 great businesses. And one of the brilliant things about it is there is very, very little overlap, whether it's services, locations or clients. So this creates to use that banal phrase, but I think it's right here. This creates a lot of white space for the combined group to move into and to bring a broader suite of services to each of our clients. And I think that's hugely exciting. I see some of my capital markets colleagues nodding their heads in the audience at the moment. So I'm glad you agree. The one other thing is that I think the cultural fit is absolutely palpable. We may do largely different things around the world to date, some similarities, as I've mentioned, but the culture is extraordinarily similar. Although I don't know whether your receptionist would have said that to you on the way in this morning, but there we are. Some might have done. So I'll start with some quick overview slides before handing over to Mike to tell you about the firm that he's been instrumental in building for a significant period of time. So if we start with the deal, and you've read all of this in the release, but for good order, I'll just run through it, a few key points. So we're acquiring subject to the regulatory approvals were required to get in various locations, I should say, 100% of the equity interests of Eastdil Secured Holdings LLC and affiliates in a ratio of 60-40 cash and equity for a total of GBP 685 million. I'll say right from the start, picking up on Nick's point, we are using Savills' strong balance sheet to part finance this compelling strategic move, and Nick will give you the stats and lay out our commitment to pay down debt at a strong cash generation. Eastdil Secured current shareholders represent 3 institutions, so Temasek, Guggenheim and Wells Fargo. And your 85 senior employees will be subject to lockup arrangements on their shares, and that really aligns all of our interests in delivering significant value for shareholders over a long period of time. And finally, we believe the price and transaction structure is absolutely fair to all parties. And I do think this transaction will have a real halo effect on all of our business, but we've deliberately adopted a very cautious approach to the quantum and timing of direct revenue synergies that we've disclosed in this transaction. And I should add here, there is no intention to -- for any redundancies associated with this deal or any change in compensation arrangements in either group. So we flip the slide. I think every presentation of this nature requires a killer slide. And this is the one that encapsulates in a nutshell why we're so keen on this combination. What it shows is the global value of real estate traded over the 5 years, '21 to '25 in lot sizes of greater than GBP 100 million. So it's a proxy for the big deal doers. In Eastdil, we are buying the #1 player in the U.S. market. And collectively, we move solidly into the #2 position globally. And you should also be aware that clearly, for large parts of this measurement period, there are significant parts of our world that have been pretty weak in terms of capital transaction markets. So I think that is an incredibly strong story. What this does is significantly enhance our position in the eyes of investors globally to whom the enlarged firm will provide a serious choice of a full-service advisory firm. And you really can't say more than that. But if we do unpack the thought a little, flip the slide, what you see here is the before and after wagon wheel of our service lines exposures. So what that shows is that 76% of Eastdil's class leading capital markets business is in North America. In combination with Savills, this immediately creates a preeminent position for us amongst the world's most significant real estate investors and will allow us to bring forward plans for ancillary services to them, which today we have not been in a position to do. It does a number of other things, too. It brings a first-class financing capability, debt and equity to our larger occupier and campus clients. So whether it's development or construction finance or indeed triple net transactions, it gives us the opportunity to bring those service lines to our large occupier client base of the current Savills business in the U.S. In APAC, Savills has the local connectivity and the relationships across the investor market to enable the expansion of Eastdil service lines into that market. I know you already do some very big transactions, but I think there's a hell of a lot more we can do together to serve clients in that part of the world. And finally, in EMEA, the combination of 2 strong advisory businesses brings Investment Banking and deep property intelligence and skills to become a compelling prospect for clients. And I think that really mustn't be forgotten in all of this. It's terribly important. So I'll now hand over to my soon-to-be colleague, Mike VK, who's been waiting patiently to tell you about the business that he's built over all these years.

Thank you, Simon, and it's good to meet a number of you and be here today. What I thought -- what we're doing on this slide is just to give you a little bit better picture of what our business looks like for some people who are familiar with us, some people aren't given that we are heavily U.S. But I'll highlight a few things in the boxes on the left-hand side. So that top left, as Simon mentioned, we're fortunate to have a #1 market share in the U.S. of $100 million-plus transactions. And as we see in the world right now, the U.S. capital markets are the deepest and the most liquid, and that really drives big opportunity going forward. On the top right, I think that if you can see it, we are fortunate to do about 200 billion a year of transaction activity in the Capital Markets business, our Investment Banking business with only 450 client-facing professionals. So that's analysts through Managing Director. And I would say that one of the key things to be able to do that volume with only 450 professionals is really the culture of the firm, which I think we share a lot together, and that has been the biggest, as we've gotten to know each other and dated for a while. It has been a unique culture because what we do in our culture is we really have driven home this internal collaboration. We're externally competitive. It's a very competitive business, but we want to be internally collaborative by doing a single global bonus pool and sharing ideas and relationships and information across the firm to really drive the maximum outcome for clients. So that's been a big part of it. I think the third thing I would point out to you is that third row, third row across the middle one, we are #2 in the U.S. in terms of total debt placement. So arranging financing for clients, corporate clients, investor clients, developer clients, but we are #1 on the average loan size. So we are known for bigger deals than transaction, bigger institutional deals. Our average loan size that we arrange in the U.S. is $225 million. So that's the average transaction size in our financing business. That is 3.5x bigger than our nearest competitor. Our nearest competitor's average transaction size and debt placement is $60 million. And I think what we really like about the debt placement, and I'll talk about the business lines on the right, but it does have -- financing is something that needs to happen regularly, whereas M&A transactions, investment sales, JVs tend to happen based on the move in the market. And so that is a super important part of our business, and it goes very well with the others. I'll point to the next one is the bottom left. And as Simon pointed out, about 76% of the revenue comes out of the U.S., about 24% here out of EMEA, excuse me, it sounds like I'm American. But the -- I think what's interesting for us is we see big opportunity here in Europe, too. Fifteen years ago when my partner, Jim McCaffrey, who runs the business here, set up our European business with us and built out an amazing group of about 100 professionals here. Europe was about -- was 0% of our business. So it was a big business to begin with in the U.S. and then being able to get to almost 25% over the last 15 years. And then this combination, in our mind, creates so much more additional opportunity here as well as in the U.S. And then the last box I'll point out is the bottom right, which is the average margin that we run. It was about an 18% EBITDA margin. Again, I think that obviously, bigger transaction activity, it's a bigger margin business. But I will also point this to having a very unique bonus system and culture around compensation. So we've chosen to run a single global bonus pool. So we run one P&L across everything. We pay people once a year bonus that is tied to that global profitability. And we don't pay off of gross revenue, we pay off what is the net income that the firm generates. And so that creates a lot of incentive internally naturally to, number one, collaborate with each other because we're all being paid out of the same bonus pool once a year. Number two, it makes -- everyone's watching the expenses because expenses drive down the bonus pool dollar for dollar. And so everyone's got a natural incentive to watch what we spend. And then number three is this major desire to cross-sell and create synergies around our business lines to grow that overall top line because it grows the bottom line. So I think the margin that we're able to enjoy has really been -- as we keep talking of bringing up culture driven by a culture of being Uber collaborative internally and really pushing everyone to perform given that we all need to hold each other accountable. So those are some of the things on that left-hand side. The right-hand side just kind of highlights the various business lines that we're in. You'll see at the top is our M&A business. This would be traditional advising large clients, particularly private equity clients, big REITs on doing major strategic transactions. That business is obviously a big fee business, but it's a volatile business. The next one below that is the continuation vehicle and joint venture vehicle. We see as investment managers around the world continue to grow their AUM, and that is obviously a big push. The big investors are getting bigger around the world. There's a growing desire to have multiple different funds and move funds from when one strategy has matured, potentially buy those into another fund, create a continuation vehicle or a joint venture. So we do a lot of that. The traditional asset sales, which is part of the core of the business, clearly been there. Then the debt placement business, which we -- which drives a lot of the ability to cross-sell back and forth in liquidity. Our debt advisory business, our structured credit business really is one of the exciting things to work with the tenant business in the U.S., in particular, in the occupier business because there are so many different places where occupiers are going to either build a facility, lease a facility. We want to look at -- help them look at their balance sheet, how to best finance that short term and long term. So we see a lot of opportunity there together. We rotate that around to our loan sale business. That's what I call our countercyclical business tends to be -- go down when the markets are good. When the markets get bad, the lenders are looking for liquidity, it goes up. Our capital formation business, which is really raising funds. We did a very large digital infrastructure fund for a big REIT this year, global raise of over 3 billion for them in a discretionary fund. And then last is the traditional corporate finance business, which is helping corporations identify ways to monetize assets and best use their balance sheet. So I'll go to the next slide. And the left hand just kind of gives you some samples of some of the bigger marquee transactions and some of the things that we're known for. I'll highlight the left-hand side, that's a transaction we did last year for Blue Owl. That was a $18 billion data center financing in the U.S. So one of the largest financings done in the data center space, the digital infrastructure space continues to be a huge growth opportunity that we've got going on. The next one next to that is the deal we did also did last year where we served as financial adviser to Ares in their $5 billion acquisition of GLP. GLP was an investment management platform with about $44 billion of assets under management. So we served as financial adviser to Ares in their acquisition of that platform. The middle one there, close nearby, we served as -- in 2022, we did a $1 billion financing on Bishopsgate for a partnership that owned by AXA, PSP out of Canada, Temasek and QuadReal also out of Canada. The next one there, the GIC one, this is a very marquee transaction. We represented GIC. We're their financial adviser in a $15 billion acquisition of STORE Capital, which was a net -- triple net lease REIT. We did that in 2023. And then the last one on the right side, which is an example of the continuation vehicles. This was one of the biggest real estate transactions ever done, again, done in here in Europe. We acted as financial adviser to Blackstone on the EUR 21 billion recap and continuation vehicle of Mileway Logistics Company in 2022. So that just gives you some of the sense of the type of opportunities we have to work with some of the biggest investors around the world. And in the right-hand side, we just highlighted some of our top 20 clients around the world. Those clients, just those 20 that you see on that list, which would be the 20 of the biggest of the firm, represent over 1.6 trillion of assets under management. So we are very fortunate. We talk about a lot in our firm that it is decades, not deals. It is so important to be the trusted adviser to these big clients so that you're the go-to person that they can trust to be quiet, discrete, protect their information, but give them great advice by leveraging around the talent around the firm and around the world. If we go to the next slide. So this is our revenues, and that's never a good sign like that. But I think what's interesting, obviously, we're heavily U.S. business. The commercial real estate markets have not seen a major downturn since the GFC in 2008 to 2010. It felt like before that in my career, I started my career in 1985, we were lucky we had about 5 good years followed by 2 bad years. The market had almost 15 -- a very long run of 10, 11, 12, 13 years after the GFC, 2010 to 2022, then the Ukraine war hit, inflation hit very hard, and we saw a major retraction and repricing of assets. And so you saw the revenue dip pretty steadily there to 2023. Now still was profitable, and that was because of having the loan sale business, the debt placement business, the different advisory businesses. But I think the trajectory now that we're seeing, and we're seeing -- you can't eat pipeline, we can't -- and we can't necessarily predict pipeline, particularly in the current environment with the geopolitical environment globally, but we are seeing a very strong resurgence as transaction activity picks up coming out of this downturn. And then the right-hand side just gives you a sense of the margins that we've run over this year and the profitability. Again, 2023 being the nadir and -- but still a profitable year, again, because our compensation is tied to our net income, not our gross income. So we've never had an unprofitable year in the history of the firm because if we're unprofitable, we don't pay our people very much. But hopefully, when we are profitable, we can make up for that. So I think that covers all that I have, but I'd be happy to join Simon, whatever else he needs me to talk about.

Brilliant. Thank you, Mike. And you do see on that previous slide, the benefit of that debt advisory service and the loan sale in the downturn. It's not quite, as I said, our Property Management business, but it's a real solidity to the P&L in difficult times. So I for one, I'm very excited about working with you and the team and what we can achieve together. I'm not going to dwell too long on this slide, and we'll try to speed up a bit for you for the rest of this. This sets the 2 businesses side by side in terms of service line. And again, it's directional. It's not absolute. But I think what you can see is the near perfect filling of gaps or the relatively smaller provision of a service that we have today alongside our long-standing desire to grow those businesses. So I do think this transaction effectively supercharges the capabilities that we already had, in some cases, in a nascent way. And debt advisory will be a classic example of that in the middle of the slide. So here, you see the one tick. We do have it. It's EMEA solely and a strong desire to grow it, but we will be combining with the class leader in this sphere. So over on the right, we've set out a number of areas where we see potential growth through the combination. And again, I'm not going to go through that in detail. But the crucial point here is you only get these things if you have alignment between you. So if we flip the slide, you've met Mike today, and I can assure you he's part of a truly impressive management team who built this business through thick and thin and remained energetic and hungry and with a continued desire to win. As I said, both firms' long history with each other on both sides of the table has really attested to the fact that we have a natural cultural alignment. And looking at some of my colleagues, the conversation about bonus pools in the last section absolutely proves that point as well. We both share a relentless focus on the needs of the client. And finally, in this transaction, the Eastdil's existing incentivization program and the strongly equity-focused element of the transaction ensures that the team is clearly aligned collectively to the success of the enlarged group, which is important. So I'm going to put another slide, and I think this is almost the second killer slide. Before I hand over to Nick to deal with the metrics of the deal, I'd just like to focus on the market context, and this picks up some of what Mike was saying and some of what I was saying earlier. What you can see from the chart is that although there's been growth in the real estate investment volumes through '25, actually, if you look across, as I said earlier, we haven't quite matched the COVID year of 2020 globally yet. So you need to look at both this transaction and the forecasts that are projections, I should say, that are there on this slide for global real estate volume growth in that light. We are nowhere near in a go-go top of the market situation right now. And that is important when it comes to timing and the stars aligning around this transaction. Likewise, if you look at the right-hand side, and this is that classic wall of debt maturity theory, but this really is what will drive not only the debt side of the business, but also clearly, it prompts equity-type transactions as well, as well as refinancings. So I think that will also hugely benefit our combined capital markets business. But as I said earlier, this is a move that will further power up the organization, not just now, but for a very long period of time. And with that, I will hand you over to Nick to go through the numbers.

Thank you, Simon. So not only do we think this combination will enhance outcomes for our clients, it will enhance financial returns for shareholders, too, particularly through margin accretion. We've set out here the stand-alone 2025 financials for Savills and Eastdil, along with a pre-synergies pro forma. The combination will give us more scale, lifting total annual revenues above GBP 3 billion, including a 70% uplift in commercial transaction revenues. And as you can see in the bottom pie, total transaction revenues would be around half of group revenues. Underlying EBITDA rises materially, too. To aid comparability and ahead of undertaking a full GAAP conversion exercise, we show Eastdil's GBP 84 million U.S. GAAP outturn alongside our GBP 154 million pre-IFRS 16 results, which also broadly aligns with the EBITDA metric used by our lenders. And both numbers are presented in line with the group's accounting policy of excluding exceptional nonoperational items from underlying EBITDA. Taken together, this gives an EBITDA uplift of more than 50% and margin uplift of nearly 2 percentage points, whilst also increasing annual operating cash generation to more than GBP 300 million. So attractive combined financials even before we consider synergies and accelerated growth opportunities. As you heard from Simon, this combination positions us as the #2 global real estate adviser on bigger deals and will create a significant halo effect, helping drive new client wins and market share gains. Whilst there's a clear opportunity to deliver new service lines to the enlarged client base, in particular, accelerating the group's growth strategy in the U.S. But in terms of direct quantified synergies, these are driven by the provision of existing services to each other's existing client base. So as a result, the combined teams conservatively expect run rate revenue synergies of more than GBP 60 million a year, representing around 2% of the enlarged group's pro forma revenue. And these synergies should generate more than GBP 15 million of annual EBITDA in the medium term. And importantly, these identified synergies are not overly dependent on any single geography, any single service line or any single client type. And so whilst this combination will drive growth, as Simon said, it is being enabled by our strong balance sheet, which we will be maintaining. The team have arranged an attractive $800 million debt facility from a couple of existing group lenders, which we expect to refinance through a flexible term bank loan and longer-dated USPP notes, a market that we know well. As you can see on the right, on a pro forma basis, leverage will be 1.8x and with strong cash generation set to deliver a meaningful reduction by the end of this year. And all else equal, we expect around 1x leverage at the end of 2027, giving us scope to pursue further growth opportunities. And we have a strong underpin to leverage, too, with our less transactional activities generating more than GBP 110 million of underlying profit alone. And the enlarged group's through the year cash flow profile will be broadly similar to Savills' current one. So this is a financially compelling transaction across all of our key metrics. We expect low to mid-teens EPS accretion next year even before considering synergies and high teens group return on capital employed by 2028. We expect to generate low teens unlevered pre-synergy returns on invested capital in the medium term, well ahead of our WACC. The group's EBITDA margin will be enhanced through more higher-margin investment banking revenues. And finally, with strong cash generation and in line with our commitments to disciplined capital allocation and our attractive distribution policy, the combination also enhances our ability to deliver sustainable shareholder returns. Now back to Simon to wrap up.

Thanks, Nick. So I'm conscious that we've tried to cover a lot of ground today, and it's been a bit of a marathon. So bear with, we're nearly there. Guess what, this transaction fills in beautifully the rest of my pyramid. And I'm absolutely delighted that it gives us the ability to grow every aspect of that pyramid as we grow over time. And we'll only do that by executing the strategies that I laid out earlier. I'm genuinely excited by the opportunities to serve our clients with a broader range of services. I'm really excited by the combined opportunity to enable our staff not just to do well, but in the mantra of Savills to be extraordinary together. And I'm really excited by the prospect of the shareholder value that we can create very significantly over the coming periods. So I'm not going to go through this slide. We talked about the outlook earlier. But what I will do is say, I need to say thank you very much to all of our employees for really working at it in 2025 to give us the results that you gave us. It's massively appreciated, and it's part of the Savills culture where nose to the grindstone come rain or shine. And I'd lastly say to you guys, we put you through a bit of a marathon this morning. Thank you for that. Please don't hesitate to ask any questions you may have. Alternatively given the time, we will be around for a moment or 2 afterwards if you'd like to talk to any of the 3 of us. So with that, thank you very much, indeed.