Savills Stock

Okay. Good morning, everyone. Welcome to Margaret Street, and thank you for joining us this morning despite the hot central line for some people. My name is Simon Shaw, CEO; and I'm joined by Nick Sanderson, our Group Chief Financial Officer.

And today, I'm actually delighted to be reporting on a very strong first half for Savills, and also to really recognize the fact that we're at an inflection point, a genuine inflection point for this business, having completed the Eastdil Secured Savills transaction 2 weeks ago. So we'll probably spend a bit of time on both of those today. Let's change the slides.

The format for today is pretty standard. I'll take you through the highlights of our performance during the first half. Nick will take you through the financial details. And I also want to spend a little time looking at the context for our performance, which you'll see in a moment, which is very important. I'll then remind you of the strategy which we talked about back in about March and together with some of the steps we've taken both in business development stand-alone Savills, but also with Eastdil Secured Savills. And then we'll try and do a bit of crystal ball gazing for 2026 as a whole.

So let's crack on. This is a very strong set of results in conditions that were far from easy in many of the markets in which we operate. So I'm particularly delighted with them. You can see from the charts on the right of this slide that all the major metrics are moving in the right direction, and this is essentially driven by three factors. First of all, our Transactional business generally improving, which was -- and I'm particularly glad to see, significantly assisted by a strong performance in our North American occupier-facing leasing market, but our capital transaction business also significantly improved despite the fact, and this is important, you'll see in a minute, that we had very, very little exposure to the driver of world capital transaction volumes in the U.S. market during the period.

Secondly, our Less Transactional business grew as we anticipated, and you'll see later on with significant improvement to the bottom line. And finally, and these two are connected actually, we started to see the benefits of our cost-saving initiatives from last year.

We've also worked hard to broaden and deepen our bench during this period with some key recruitment and team leads. And of course, Eastdil Secured Savills joined the group at the 31st of July, just 2 weeks ago. And frankly, we're both delighted now to be able to get on with business. You'll see later that they actually unsurprisingly had a very strong first half too, and I'll talk a bit about what we're doing in terms of integration, et cetera.

Finally, on this slide, reflecting our confidence and the normal operation of our ordinary dividend, we've declared an interim dividend of 7.8p, up 5.5% or so year-on-year.

So let's start by looking at the capital market context for our performance. So what these charts show is the 12-month rolling investment market volumes quarter-by-quarter since 2020. And the reason we do that, it's the best way to minimize background noise and seasonality from the data. And what you'll see during the last 6 months from the top left is that global volumes were recovering nicely, up 18% half year-on-half year. And if you look to the top right, you can see that the U.S. market has driven that global growth. You will have also picked that up from the results of our peer group companies with large exposure to the U.S. over the last couple of weeks or so.

And bear in mind, the U.S. capital market represented 60% of global volumes, and it grew by 24% half year-on-half year. And remember, we had next to no exposure to that market during the first half of '26. Thankfully, we've got Eastdil in the hutch now. APAC and EMEA were markets that performed slightly differently where -- and they are markets where our traditional investment agency strength lies. So what you see from the bottom left is APAC coming back nicely, but from a low base. And critically, sentiment in EMEA, really for obvious reasons, was affected by its nature as the most hydrocarbon import-dependent market on the planet. And for obvious reasons, that's caused a lot of issues over the course of this period.

So the three conclusions to draw from this slide are that: number one, market share gains in our markets outside the U.S. has enabled us to perform as well as we did do during the first half in some difficult conditions; number two, it's self-evident why we desire the quality exposure to the U.S. that Eastdil Secured Savills provides us; and finally, this is an implication rather than overt on the slide, the resilience and profitable growth of our Less Transactional business has been and will remain hugely important to the performance of our organization overall, both in terms of our client service and our financial performance.

So with that in mind, let's have a quick look at the revenue highlights. So in these couple of slides, I'm going to focus on revenue. Nick will talk through profitability, but you'll see that every business line has improved during this period on the bottom line. Across the board in our Transactional business, it is a story of gains in market share, enabling us to perform as we have and show the growth in revenues that we have. We start with the Commercial Transaction business. Revenues up 19% overall with capital transactions up 22%, well ahead of market in what was described in Q2 as a delayed, not destroyed continuation of recovery in EMEA in particular.

Of note was U.K. growth of 17% against a market where volumes actually declined by 12% half year-on-half year, very strong performance. In APAC, it was again a market share story with our business development activities of last year starting to come good in Australia during the ramp-up phase. And importantly, the market in Greater China beginning to turn more positive, again, off a low base. Finally, we saw different levels of market recovery across continental Europe with, broadly speaking, the further south you get, the better, the further north, the more compromised. But -- and our occupier advisory business, particularly in the U.S. was very strong, 23% growth in revenues year-on-year, which is really good to see. And Nick will talk a bit more about the profitability improvement in due course.

Residential was more mixed. We had revenues up 3% overall, and this is a very good performance in some tricky market conditions, particularly given the strong -- the largest part of our residential business being the U.K., was down 9%, and Nick will talk about the impact of the Renters' Rights Act in a moment, because that's the predominant reason for that decline. The brightest was our secondary sales or conventional state agency, if you will, where we saw growth of 2%, again, driven against declines in market volumes, but increase in our market share of transactions above GBP 5 million.

Finally, the Middle East was up 34% on a very strong first quarter before conflict escalation constrained new development sales from Q2. But one thing I will point out here is we've seen no evidence to date of expat repatriation from the region, which is important as we look forward.

So let's turn to our Less Transactional lines. Here, you'll see significant in due course, growth from these -- profit growth from these businesses in a moment. But if we start with PM and FM, we saw revenue growth in line with our long-term expectations of mid to high single digits. And that is net of the impact of last year's restructuring in China, which reduced revenue. For your note, it's about 170 basis points of reduction in revenue simply through that restructuring, but improved profits.

Elsewhere, we're winning new business across EMEA and in Asia Pacific and broadening the client offering in Singapore, where we're pushing into government-mandated integrated facilities management contracts, much aided by the acquisition of Alpina in that market last year. MEIT Consultants is a small business, but I put it there and reference it because it brings critical M&E and environmental engineering capability into the data center sector for us in EMEA.

Moving on to our consulting business. It grew revenue by 2% with strong valuations and building consultancy contributing in EMEA and the successful integration of our move and change management business, Hoffman, in the U.S. These were offset at the revenue [Technical Difficulty] by a significant reduction in project management pass-through costs in India, so 0 profit impact, but again, another reduction in revenue and the impact of last year's restructuring in China as well, which had a small impact on the revenue line here. Again, positive impact on profits.

I should note that in many of these consultancy lines, we are beginning to benefit significantly from investment in data curation and digitization. Finally, Savills Investment Management grew revenues by 8% despite a still very challenging capital raising market across EMEA. And it was higher transaction fees and asset management fees that drove that growth. We've also made some management changes in that, in both Europe and Asia and now working on the next 5-year plan for that business. All in all, our Less Transactional businesses performed well and really anchored the performance of the group overall.

So I'll now turn to our newest family member, Eastdil Secured, which obviously didn't affect our performance during this first 6 months other than that we had to recognize some of the costs of acquisition before the period end. So the first half momentum, both in revenue and in pipeline, evidence why we are so excited about this combination. The mix of revenue was well balanced, roughly 60% equity related, 40% debt related. And I would draw your attention to the fact that actually that debt advisory business is the Eastdil Secured Savills equivalent of the recurring revenue line, which is important to us as we go forward.

I'd also draw your attention to the fact that you see from the chart below that Eastdil Secured Savills was #1 in the U.S. public M&A market advisory league table during this period, which was an exceptional performance in both senses of that word, exceptional. So don't expect that necessarily to continue through the second half, but it's great to see it.

And it definitely helped drive their revenue growth in the U.S., up 33% versus the European revenue growth up a healthy 23% during the period. Obviously, H1 was pre-acquisition and therefore, doesn't directly benefit Savills' shareholders during the period. What I do think it does do though is it underpins the rationale, structure and ultimately, the Board decision to go ahead with that transaction when we did.

So if you hold that thought, I'll hand over to Nick to take you through the detail of our finances.

Thank you, Simon. Good morning, everyone. As you read from Simon, hot summer's day, very impressed to see a few ties in the room. Thankfully, no shorts from Clyde.

So let's turn to the headline results, where the group has delivered strong earnings growth driven by an increase in revenue along with positive margin progression. Revenue of more than GBP 1.2 billion is up 8.7%, predominantly organically generated with underlying EBITDA up 32% to almost GBP 74 million. Underlying PBT at GBP 34.3 million is up 47% or almost 49% on a constant currency basis, delivering underlying EPS of 17.9p. This strong EPS growth means the interim dividend has again been increased at a rate well ahead of inflation with a 5.4% uplift delivering a payout of 7.8p per share. And as you can see, we ended the period with net debt of less than GBP 50 million, although we moved back to a net cash position at the end of July ahead of completion of the Eastdil acquisition.

As you heard from Simon, revenue growth was delivered across all Savill's main business areas, including Transactional revenues up 14% overall, driven by a strong commercial performance, particularly in North America, offsetting some of the headwinds in EMEA residential. Less Transactional revenues again rose up 6%. Overall, Less Transactional revenues of GBP 776 million represented 63% of group total revenues, a critical component of Savill's diversified and well-balanced business model. And as you can see bottom right, the consistent revenue growth delivered by the group over the last 4 years is up by more than 20%.

This strong performance delivered not only revenue growth, but also a significant increase in underlying profit before tax, too, which was up 47%. There was a significant reduction in first half losses on the Commercial Transactional side, driven by improved performances, notably in the U.S., Hong Kong, Germany, Italy and the U.K. The group also benefited from the inherent operational leverage within the business. Residential advisory activities delivered a profit of GBP 2.1 million, although this was down from last year, principally due to the onetime negative income recognition effects of the imposition of the Renters' Rights Act in the U.K.

First half profits on the Less Transactional side were up 28% to GBP 42.2 million with a particularly strong uplift of 74% on the consultancy side, largely resulting from the restructuring activities last year in China and strong progress year-to-date in North America.

The Property and Facilities Management business delivered another resilient performance, and the group continues to focus on lifting the Investment Management margin. So with first half underlying profits of GBP 34.3 million, you can see in the bar chart that margin growth momentum continues to build across the business, one of the group's key strategic priorities.

Equally, this improved level of profit came through across all of the group's regions, with the smallest uplift but highest profits coming from EMEA, where an improved performance on the continent was largely offset by lower U.K. residential profits.

APAC performed strongly, delivering a 75% increase in profit, driven by a strong capital markets performance and cost-saving measures in China. And following our targeted investments in the region, particularly in Australia and Japan, there should be more profits in coming periods. And North America generated a profit of GBP 2.6 million, a positive GBP 9 million swing year-on-year, driven by both our transactional and consultancy activities delivering positive margins. On the occupier leasing side, there was an increase in larger office deals and overall pipelines for the second half was strong across both Office and Industrial.

So pulling this all together with the group's customary reconciliation of underlying profit to IFRS reported profits. There are two key points to highlight alongside the more detailed reconciliation included in the appendices. Firstly, the GBP 7.2 million of restructuring costs includes the previously guided GBP 3 million overhang from last year's restructuring activities, with the balance linked to the further rightsizing of certain service lines, predominantly in APAC and on the continent.

And for the second half, a similar quantum is expected as the group completes its strategic restructuring activities, including some Eastdil related integration costs, which, as you would expect, are predominantly in Europe. In total, the full year's restructuring and integration costs are likely to be around half of last year's GBP 30 million charge and are expected to benefit the group's profits and margin in future years.

Secondly, the GBP 13.5 million of transaction costs includes professional adviser fees related to the Eastdil purchase. And following successful closing of the deal, the balance of the adviser costs and fees associated with the acquisition mean group transaction costs are expected to be higher in the second half than the first. So whilst the group's profits are consistently second half weighted, this has been a strong first half for the Savills team with underlying EPS up 53%.

And we are pleased to report the same for our new colleagues at Eastdil Secured Savills too, who had a particularly strong first half. You can see in the second column, Eastdil's H1 revenues were GBP 225 million, the USD 302 million Simon referred to earlier. This delivered an underlying EBITDA of GBP 38.4 million for the 6 months, presented on the same U.S. GAAP basis as Eastdil's GBP 84 million EBITDA for the full year 2025 that we disclosed back in March.

Further down the page, you can see that this EBITDA of GBP 38.4 million would translate into an illustrative estimated underlying PBT of GBP 37.8 million or margin of 17% post conversion to IFRS and adjusting for depreciation and other items. This underlying profit is presented on a consistent basis with the Savills' stand-alone underlying PBT, including adjustments for the amortization expense relating to the historic onetime Eastdil SIP put in place in 2025.

As disclosed on purchase, the 5-year SIP results in a non-cash annual charge of around GBP 30 million or GBP 15 million each 6 months, which will continue to be reflected in reported profits until maturity in 2030. To give you a sense of the pro forma group profitability pre-synergies, we've combined the stand-alone Eastdil and Savills H1 performances, along with the expected initial interest expense associated with the $800 million of acquisition financing, which should, of course, fall over time as the debt is paid down from free cash flow. So taken together, on a pro forma illustrative basis, the combination would have increased the H1 group UPBT by GBP 21 million to GBP 55 million, an uplift of 60%. This reaffirms the Board's view that the combination should not only deliver better client outcomes, but also meaningful earnings accretion and strong returns for shareholders, too.

So looking ahead to the full year 2026 numbers for the enlarged group, which will include Eastdil's contribution from August through to December. With Eastdil historically having a much less skewed profit weighting to the second half than Savills' stand-alone, current expectations are for a 5-month profit contribution to the group, broadly similar to the Eastdil profit performance in the first half. We will, of course, be able to provide actual rather than illustrative financials at year-end, and we'll give you clear line of sight of Eastdil's performance as well as updating our segmental reporting.

Finally from me, the group remains committed to maintaining a strong balance sheet with the cash flow generation of the group, including the underpin from Savill's resilient Less Transactional earnings, supporting a capital allocation policy of running with some low financial leverage.

To facilitate the combination with Eastdil, the team successfully arranged an attractive $800 million bridge facility from existing group lenders. $450 million of this has already been refinanced with a 3 plus 1 plus 1-year term bank loan, which has pricing and covenants in line with the group's existing main revolving credit facility, which matures in 2030. The remaining $350 million is expected to be refinanced within the next 12 months through the issuance of new fixed coupon, medium-term U.S. private placement notes in a market well known to Savills. These combined U.S. dollar facilities are expected to have an all-in cost between 5.5% and 6%.

Looking ahead, the expected strong cash generation of the enlarged group is set to deliver a net debt-to-EBITDA of 1.5x or less by year-end '26 and around 1x at the end of 2027, all else equal. And the enlarged group's through the year cash flow profile will be similar to Savills' historic profile, so you should continue to see a higher leverage ratio at half year than the full year.

Taken together, the Board remains committed to maintaining the group's strong balance sheet and attractive shareholder distribution policy while still having some scope to pursue further growth opportunities, always taking a disciplined approach. With these positive financial results along with the technical guidance slide included in the appendix, you should hopefully have all the key data points to update your models. Now back to Simon to talk about strategy.

Thank you, Nick. I won't take too long now. Before I get into that, I'd just like to reemphasize around the Eastdil Secured transaction and articulate to clearly and directly how I believe it benefits all the stakeholders of Savills. Because I'm genuinely confident on all three accounts I'm about to give you. So first of all, and most importantly, for clients, clients gain a partner who can help them from the very largest, most complex of transaction down through leasing and other services that we provide to the day-to-day management of their assets and portfolios.

Our people benefit from a larger playing field, broader and deeper client relationships and more opportunity in a genuinely global franchise. And finally, our shareholders gain, as you've heard, an earnings-enhancing transaction that lifts our margin trajectory, provides attractive returns and strengthens the global position of this group.

So let's look at that in the context of what has become affectionately known as the pyramid of promise, which is our strategic slide. Because that really is the heart of the story. And you will have seen this in March when I put it up for the first time for you. But if we start at the base of that pyramid, we have always had a focus on building our less transactional business lines around the world, that's property management, facilities management. They represent our constant practical touch point with our clients. And corporately, they act as the keel on the ship in all weathers. We then move up through the pyramid through Investment Management and into the transactional element of our business via consultancy as well.

The Transactional business element has its own hierarchy of volatility and profitability. So if you look at the debt element, as I mentioned earlier, that's much more of a recurring business line despite it being transactional. And at the apex, M&A and strategic advice (sic) [ advisory ] is perhaps most profitable, but also inherently variable. So building on our historic strength in capital transactions, Eastdil Secured Savills builds out that part of the portfolio of services by enhancing that strategic M&A advisory, portfolio recap, debt and equity capability and most importantly, at scale, both in EMEA and in North America. And if you recall my slide right at the beginning, that is really important to us.

Overall, as I just said, the combination dramatically increases our ability to serve our clients from the discreet conversation in the Boardroom down through the execution of real estate transactions into the day-to-day management of underlying real estate portfolios and assets.

So I'm just going to turn now to another slide I put up in March. I'm not going to go through the whole lot. You've seen most of this before. But on the left-hand side are the many reasons why this investment banking business of Eastdil is attractive to us. But I want to just underline two further points. First of all, it enables us to access and partner with the top global investors in real estate at the very highest level before there is a transaction or an asset management strategy in mind, and that is critical. Secondly, debt advisory at scale enables us to serve every element of the cap table of the world's real estate investors. Those are the two important things about this deal.

Finally, I do believe that this is a genuinely symbiotic relationship between the two sides of our business. Our respective service lines are compatible and complementary, and there is opportunity going both ways, as this slide tries to show. And it will catalyze our ability to develop the global portfolio of our traditional service lines over the coming years as well. So it's important in many different ways.

If we turn to the business itself, some practical elements around our modus operandi. There's nothing particularly new here in that -- we referenced that this is going to be our strategy in -- back in March. But you'll recall that this is a combination which unusually for a sizable deal in our sector carries very little overlap between the two businesses. This is important as it should help to mitigate revenue attrition which inevitably occurs in major mergers this time.

Critically too, our respective cultures are very, very similar. And the one thing I would say is that with the broader and deeper interactions we've had between the businesses, between our people since March, that factor has just become ever more clear and ever more obvious to both of us, which is growth. So what we've done from an operating perspective is to ensure that Eastdil Secured Savills retains its existing modus operandi, its existing operating model, a single global P&L, a single global bonus pool with the frontline connectivity between us managed by something called the buddy system, which is awful phrase, but you remember it because it's awful. Under which Savills' individuals and their respective counterparts at Eastdil develop assisted relationships across service lines and sectors to know how to work together to go with joint offerings to the client or as a conduit for referrals.

From a governance perspective, Eastdil Secured's CEO and President have both joined the Group Executive Board, which is chaired by me, and it is the primary committee responsible for running this business overall around the globe. And finally, I'm particularly pleased that even in the 2 weeks since we've actually consummated the transaction, we're already starting to see potential opportunities across referrals, but also joint approaches to market and indeed joint appointments. So that's great news.

Our results today, turning to other strategic priorities apart from the Eastdil position, are important because they reflect the stand-alone strategic and tactical initiatives we've taken over previous periods. I set out all of these other strategic priorities in March, so I'm not going to go through them all in detail, but I would categorize them as classic growth and infill strategies as we seek to bring the appropriate segments of that pyramid of promise to our clients and markets around the world over time. You'll see we've done quite a lot over the last few months from the bottom of this slide. Much of it from China to the private office to Savills Investment Management has been about enhancing our roster of leaders and senior team members.

But we're still keeping a very close eye on cost and on both individual and team performance across the business, alongside some focused growth initiatives, which you will have heard about from recruiting of the leading data center team in Japan and [Technical Difficulty] Investment Management leader there as well and through to investing into our proprietary CRM systems in global residential and broader initiatives in data curation and there I use the acronym AI as well, where we've got a lot going on as we go.

We're also planning -- the planning stage, I should say, for the launch of future service line enhancements in North America over the coming periods. There'll be more about that over the next few years. So there's a lot going on, but with some very clear strategic filters in place to ensure that we make the best use of both our human and capital resources. So I look forward to updating you more fully in future periods along these lines.

I want to finish by looking into that crystal ball. And after a strong H1, we're in a good place with significant pipelines. But I am constantly reminded of my new colleague, Mike Van Konynenburg, CEO of Eastdil, and his great line, which resonates, "Pipeline is great, but you can't eat it." It obviously has to convert into closed transactions and revenue over the course of this period. And to be frank, that execution timing is the hardest thing to predict in current market conditions in many, many markets in which we operate. Which also include, I should say, the new political landscape in the U.K., too, in advance of the budget in October.

That said, our Less Transactional businesses are giving us both the resilience and the growth we expect, which together with those pipelines means that our expectations for the full year remain unchanged. I want to finish by thanking all our colleagues around the world for their hard work, resilience in some tricky market conditions and their relentless focus on client service and rigorous execution without which none of this would be possible.

So as we go into questions, I'll leave a concluding slide up for you, which I think just sets out how we as management feel about Savills at the moment. And this slide speaks to the breadth of our business, both by geography and by service lines, which provides overall diversification, but also critically good growth potential. It speaks to our financial strength and the discipline with which we use it and to our focus on margin improvement. And I do believe that this set of characteristics supports the enlarged Savills strategy, which pursued with conviction and a relentless focus on client needs will enable us to deliver very attractive shareholder returns over the coming periods.

So thank you. That concludes the formal part of this morning. We'll now take some questions. If you have any, please do state your name and institution for the record. And I think Susie is going to govern any questions that come in online as well. Have even a microphone for Clyde, although you probably don't need it, to be fair.

First question was on market share. It sounds like you've done a cracking job in U.K. in particular. But it would be fascinating to know a little bit more about how you've been so successful there? And also what sort of response we've seen from the competitors I suppose?

I suppose it differs across the different service lines. But I mean, if you take one of the most acute pieces of evidence around that would be in the residential market, which you know only too well. And clearly, it hasn't been a great overall market for U.K. residential for all sorts of well-rehearsed reasons we don't need to go into. I think the laser eyed focus of our teams on proper advice to clients in an environment where one can end up with agents bidding for the business with overvaluation, et cetera, has made a significant difference to us. I think also, and if you've followed us for many years, as you know, in difficult market conditions, there is a tendency for a flight to quality and a flight to a degree of certainty of execution when it's necessary. And I think we always benefit from that. Certainly, in my nearly 18 years, we've always benefited in more difficult market conditions. So I think there are two quite important factors there.

I think in the commercial side of our business, we've just really stuck at it through thick and thin, I think about, for instance, the retail market over previous years. And we start to benefit from the business that is there. I would also say that there is an element also, the halo effect of the Eastdil Secured transaction in many markets, particularly the case in the U.S., I would suggest. Even though what we do in the U.S. today is leasing, there is a halo effect benefit to our organization from being aligned to Eastdil Secured sales, which is obviously much better known in the U.S. than it is necessarily over here. So those are a couple of factors.

Second one on acquisition pipeline. I mean, obviously, you've done smaller bolt-on deals fairly consistently over time. Is there going to be a bit of a pause given obviously the big deals done, you've got an awful lot of work to do. I mean the organic opportunities from Eastdil obviously are humongous. So does that get parked?

I think not parked, but we -- really, the next 6 months plus is all about generating the mutual benefit out of this large transaction we've done. We will still do bolt-on infill things that, as I referenced earlier, which is a normal course of events. Where we have gap to fill, we will fill it. But I wouldn't expect a hero style deal over the next few months at all. It's all about making the best of what we've now got, which is very exciting.

I do one more and then I'll -- And the buddy system and I suppose opportunities for Savills to piggyback on Eastdil and vice versa. I mean 6 months on from when the deal was announced, you've had an awful lot of, I'm sure interaction with them. Where have your thoughts around the biggest opportunities for organic development sort of evolved to, what's the sort of top two or three areas that you can see evolving?

I think in no particular order, the obvious one is with a debt advisory business of scale in the organization. We already have one in the U.K., small -- effective but small and U.K. focused. But our clients around the globe could well do with that debt advisory capability that comes from the Eastdil side. So that's almost a no-brainer.

I think the other area which is very exciting, and we've been bolstering our roster, as you heard in this over the course of the last few months as well, is the whole area of digital infrastructure and data centers. And I'm particularly interested in how Eastdil Secured Savills and Savills can work together in the APAC region, which I think is incredibly exciting. It will be the case in EMEA as well that APAC is almost virgin territory for us. So I think those are two areas where you can really point to activity and potential quite quickly. I think the rest of it is a long burn. We talked about synergies at the March announcement. So I've got every confidence that the sort of numbers we put up there are going to be obliterated in real life over a number of years as we look out.

Chris Millington at Deutsche. First one is just a quick checking question about the dividend. Obviously, as you say, ahead of inflation, but somewhat lacking earnings growth. Is there any reason to think there's any sort of change there going forward or we should keep a similar...?

No change to the policy at all. And clearly, the one thing that we'll need to work through is that we'll have a 5-month contribution this year from Eastdil, but all the shares have been issued, but the approach around progressively growing the ordinary dividend by the Less Transactional plus the supplemental dividend absolutely in place.

Next one is restructuring. What do you think the benefit this year is in terms of cost savings? I know it's always a bit difficult to get underneath, but what do you think?

I think it's very difficult because obviously, you've got business -- uncovered business development costs as well. Take our Australia business. We invested a lot in Australia and starting to see the results both in reality in the P&L, but also in pipelines interestingly. But if you look at gross benefit before that additional cost load, I suggest it's around half the GBP 13 million, around about GBP 6 million of it that we guided to last year in this period.

I'll do two more. APAC, that -- the page you showed, the kind of backdrop of market conditions and APAC looks fairly flat. Now we know it's not flat, and you need to go a little bit further back in the chart to show that. But perhaps you can give us a context of where Asia is now, where it used to be and perhaps a bigger focus on mainland China, Hong Kong, which are clearly hard [Technical Difficulty]?

Yes. I think not to go on for too long, but I think one of the big differences -- Asia, and our Asia business has historically been very Sino-centric. It's been really around Greater China. So Mainland China, Hong Kong, and indeed Taiwan, Chinese Taipei as well. I -- We have consciously sought to build our business in Australia and Japan over time. Those are the two markets that have actually strengthened somewhat over the course of this first 6 months. And we've also seen a strengthening of the Chinese market, both Hong Kong and Mainland China, but candidly off a very low base of last year. So I would expect to see further growth coming through in the next 18 months or so in that traditional heartland of the Sino axis, but I'm also very excited about the things that we're doing in Australia and Japan that will leverage underlying market growth in those markets. Not to leave aside Singapore, Korea, et cetera, but those are the material ones where there's significant value on international scale.

And sorry, this is the final one. Investment Management, the only thing which didn't really move forward. What's the outlook for capital raising in the second half? But also, do you think the business now needs additional scale to kind of keep up where you are? I mean, is that still a big focus point to move that ahead?

Yes. I think we're looking at it at the moment under new leadership, both at the chief executive level and also in the crucial Japanese market, where we have recruited a very strong individual from the market to run our business there. The honest answer is that raising capital for core, and potentially core plus blind pool real estate funds is very, very difficult. So we're doing a lot more in the region of joint ventures and partnerships with local operating partner, with private equity. And I do see that as a significant part of the long-term future. But what I'm doing at the moment is allowing new leadership to come up with their plan for the next period, which, of course, we'll be discussing with Samsung, our partner in case of Savills Investment Management.

Zachary Gauge from UBS. Just one question from me on U.K. residential, obviously, challenging first half for obvious reasons. But are you seeing any light at the end of the tunnel into 2H? I guess with the Renters' Rights Act specifically, that will continue to drag because you [indiscernible] a 12-month run rate of monthly collections for that [indiscernible]? And then on the sales market, on the -- are we seeing anything to be slightly more positive about people talking about Help to Buy potentially coming back, just any thoughts you had around that market picking up or is it just going to remain difficult?

Yes. I think it's definitely a needs-based market without question. And I do think we are pretty resilient, but at the sort of levels that we've talked about in the first half. On a sort of a macro level for the U.K. business, I would say our international business is performing pretty well, but it's naturally a bit smaller still than the U.K. For the U.K. business as a whole, I think there is a genuine need. Markets like a degree of certainty and clarity over possibly. And I think when we get past the first Healey budget at the end of October, we'll start to get that clarity, which we badly need. Obviously, any demand side incentive would be very positive, and there are plenty of house builders quite rightly who would like to see that. But clarity is above all what we need.

I would just add to that, on a like-for-like basis, our U.K. residential leasing business was up, like-for-like. And that I think is going back to one of Simon's comments earlier in more challenging markets, and this is a more challenging environment to be a landlord, you go to the best advisers to help you. Clearly, this year's numbers will be lower within that part of the business just because of the timing of the invoicing associated with that work. But like-for-like, the business is doing very well, led by Andrew over here.

That's a very good point. Anybody else?

James Fletcher from Berenberg. Three, if I may, sorry about that. Just can you give us a bit more color on Middle East and just its impact on transaction advisory business sentiment, I don't think we touched on it too much? Then -- or perhaps we should do one at a time.

Okay. Well, first up, Middle East. I mean, obviously, relatively -- still a relatively new business in residential transactional terms for us, very strong Q1 with the conflict, that really have an impact on new development sales. It's really a secondary sales market at the moment as people who are living there start to trade up when they see the opportunities to do so. But critically, the major developments in Dubai are somewhat slower to the market at the moment, as you can imagine for obvious reasons. Abu Dhabi is a little bit stronger, and Egypt is performing very well, too, which is excellent news. But it definitely will stall the trajectory, which is stratospheric over the last 18 months in residential sales in the Middle East. It will stall that for a bit, but that's inevitable.

Perfect. And then second one was just on synergies. So I wondered kind of -- you talked about data centers and debt advisory. I wondered kind of what the U.S. client base were thinking about the prospect of having some of the Less Transactional services that you deliver? Is there kind of any signs of positivity there in terms of synergies?

Well, it's very, very early days. But I was lucky enough to be invited to the Eastdil Secured Private Equity Conference in Utah about 5, 6, 7 weeks ago now, which is C-suite of global private equity. And all I can say is that the goodwill towards the Eastdil-Savills combination was extraordinary. And I very much hope that we would see more activity out of that. It's sort of glorified halo effect actually from how we described these things back in March. And I'm pretty sure we will see that. It will take time to kick in, but we'll see it.

Okay. And then final one was just on -- where -- on seasonality with regards Eastdil, I think you might have mentioned this briefly, Nick. Just kind of going forward, what should we think is a normalized kind of H1, H2? So I don't think you gave a comp for EBITDA.

And that's partly because there is a track record associated with given its lumpiness. But what I would say is if you look at Savills over the last 10 years, the weighting has been anywhere from 15% through to 35% profit first half versus balance in the second half. They are much nearer the kind of 35%, 40% first half, second half. I think with regards to the guidance that we've given, suggesting that the 5-month contribution will be broadly similar to their first half is part just the fact they had such a strong first half. And we also know that in a market like we're having at the moment, particularly given a lot of their deals tend to be larger, there's a timing risk associated with them. So the overall seasonality within the enlarged group will be lower going forward than historically.

Susie, you've got one online, I think.

Yes. I've got one from Dan Cowan at BNP Paribas. Are there any specific risks you perceive from the changed U.K. political landscape? Or is it just general macro policy risk?

Well, obviously, we shelter under macro policy full stop across the board in the U.K. I think I don't see any -- foresee any specific risks. There are a lot of sound bites all over the place as there always are, and we're getting used to those in any given moment in the U.K. But I do think, I would reemphasize, that clarity is the important thing more than anything else. That's what people can react to and work on.

We're done? Unless there are any more questions, thank you very much for your attention and time today. Look forward to updating you in March.

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.