Savills : Preliminary Results Report for the year ended 31 December 2023

14 March 2024

Savills plc

("Savills" or "the Group")

PRELIMINARY RESULTS FOR THE FULL YEAR ENDED 31 DECEMBER 2023

Resilient performance in challenging markets driven by

the Group's less transactional service lines

Summary results:

• Underlying profit before tax ('underlying profit') and underlying basic EPS are alternative performance measures used to assess the performance of the Group. Underlying profit is calculated on a consistently reported basis in accordance with Note 3 to this Preliminary Statement. Underlying EPS is calculated using underlying profit, with the weighted average number of shares remaining the same as the GAAP measure.
• Net cash reflects cash and cash equivalents net of borrowings and overdrafts in the notional pooling arrangement (see Note 8).

Key highlights:

• Robust performance of the less transactional businesses, representing 65% of Group revenue, which grew 7%, underpinning overall Group performance
• Property Management and Consultancy businesses performed well with revenues increasing 11% to £899.5m and 4% to £459.8m, respectively
• Savills Investment Management revenue decreased 6%. Assets under management ('AUM') was stable at £22.1bn (2022: £22.1bn). $1bn commitment from Samsung Life largely awaiting deployment
• Global Transactional Advisory revenues, in aggregate 35% of Group revenue, decreased 17%, reflecting significantly reduced capital and leasing market volumes globally
• Global Residential revenues declined 19% as markets normalised, following high levels of post pandemic activity, and adapted to higher interest rates
• Depth and breadth of team retained throughout the Group to maintain high levels of client service
• Strong net cash position provides resilience and enables continued business development activity

Commenting on the results, Mark Ridley, Group Chief Executive of Savills plc, said:

"Savills resilient performance in 2023 highlights the diversity and strength of our global business. In the context of extremely challenging real estate markets, which saw the lowest levels of transaction volumes for a decade, our less transactional businesses have provided a solid platform for the Group with a resilient and growing earnings stream.

"Current economic and geopolitical conditions remain uncertain and although we expect this to continue for some time, most markets appear to be past the moment of peak uncertainty. There are some early signs of underlying market improvements, which should set the course for a broader recovery during the second half of the year and into 2025.

"Our policy of retaining our core bench strength, enabled by our strong balance sheet, positions the Group well for the future."

The analyst presentation will be held at 9.30am today by webinar. For joining instructions please contact nrichards@savills.com. A recording of the presentation will be available from noon at www.ir.savills.com.

Chair's statement

Results overview

Savills strength across its less transactional service lines continued to provide a resilient earnings stream, underpinning Savills overall performance in a global real estate market challenged by significantly reduced transactional activity. The Group's revenue decreased by 3% to £2.2bn (2022: £2.3bn), 2% down on a constant currency basis. Although not immune to market volatility (particularly in respect of some Consultancy service lines), the strength of our less transactional businesses underpinned Savills performance overall, growing revenue by 7% to £1.5bn. Prime drivers of performance were Consultancy and Property Management, which performed well, growing revenue by 4% and 11% respectively.

The Group's Transactional business experienced a 17% drop in revenue during the year as global market conditions remained extremely subdued for longer than anticipated at the start of 2023. This was the primary cause of the 42% reduction in the Group's underlying profit of £94.8m (2022: £164.6m), representing an underlying profit margin of 4.2% (2022: 7.2%).

Our Investment Management business traded in line with our expectations, although deployment of capital was inevitably reduced given lack of price transparency in most of its target markets. At the year end, Savills Investment Management had significant investment 'dry powder' for both real estate equity and debt opportunities, including Samsung Life having committed its first $1bn to support a number of products.

As a result of the challenging market conditions during 2023, the real estate services industry as a whole undertook a number of rounds of cost reduction and reorganisation actions. In line with our strategy during the global financial crisis of 2008, as well as more recently through the pandemic, and supported by our strong financial position; Savills continued to maintain its core bench-strength around the world, ensuring we provided the highest level of service to our clients throughout the year and remain well positioned for market recovery.

We did, however, review the global business for locations or service lines where the anticipated time frames for market recovery remain protracted. This resulted in selective restructuring of certain transactional and related support teams and resulted in one-off costs of £13.9m being incurred.

The costs of this restructuring led Group's reported profit before tax to decrease by 64% to £55.4m (2022: £153.9m), representing a pre-tax profit margin of 2.5% (2022: 6.7%).

The Group continued to maintain a positive liquidity position with net cash (cash and cash equivalents net of borrowings and overdrafts in the notional pooling arrangements) of £157.3m at year end (2022: £307.4m).

Currency movements in the year decreased revenue by £14.4m, underlying profit by £0.7m and reported profit before taxation by £1.1m.

Market conditions

Throughout the year, real estate markets across the globe were challenged by significantly increased interest rates, geopolitical events and, on a more asset-specific level, uncertainties over the future role of offices and the valuation of existing stock in the era of sustainability. These factors, together with certain location-specific issues, significantly reduced capital transaction volumes in global markets to their lowest levels for a decade. In addition, economic uncertainty led to delays in corporate occupiers committing to new leasing activity in many markets.

The value recalibration process took time to catalyse market liquidity, with the majority of lending banks continuing to extend existing loan terms. The consequence of this was that global market conditions remained extremely subdued for longer than originally anticipated at the start of 2023.

However in Q4 2023, we began to see lenders start to exercise their security rights. This began to have a positive effect on market activity towards the year end and should be a catalyst for improved volumes in 2024.

The rate at which individual investment markets are recalibrating varies around the globe; however, it appears that the UK prime Commercial market has re-priced to a point where it represents value, particularly for assets with strong sustainability credentials, for which there is significant occupier demand. In addition, our Prime residential business has performed well, particularly in central London. As anticipated a year ago, residential

markets outside London were more subdued as volumes reverted to more normal levels of activity after the abnormally large volumes transacted post-pandemic.

In Europe, investment transaction volumes reached their lowest levels since the eurozone debt crisis. The slowing of investment activity quarter-by-quarter was a widespread trend across all European countries and major asset classes, with the office sector continuing to face the most significant reduction in volume.

In the Asia Pacific region, property investment volumes overall fell by 33% in 2023. China experienced increasing debt-related difficulties amongst the major domestic developers in addition to the macro trends affecting manufactured supply to international markets. Other markets in the region were affected by the sharply higher cost of borrowing, with significant volume declines in the mature markets of Australia and South Korea. Hong Kong was one of two markets which recorded only a single digit decline, however this was off an already very low base with volumes still 70% below their previous peak in 2018.

In North America, the office market remained sluggish as economic uncertainty, questions over the return to offices, particularly in the major metropolitan markets of the East and West Coast, and slowing employment growth caused corporates to delay major leasing decisions, pending greater clarity.

Business development

Savills has continued to focus on the strategic development of the business and improving our service offering to clients; this has been enabled by the Group's strong balance sheet. In the first half of the year, we progressed our strategy of expanding our Global Prime Residential services with the acquisition of agencies in Italy (BeLiving Srl) and Portugal (Predibisa, Sociedade de Mediaçāo Imobiliária, Lda). The Group also acquired Automotive Property Consultancy Holdings Limited, a specialist property consultancy dedicated to the franchised motor retail sector in the UK.

In the second half of the year, the Group acquired Site 8 Pty Limited, expanding our retail property management business in Australia. The UK business recently completed the acquisition of Nash Bond Limited, a leading UK prime retail agency and lease consultancy business, enhancing our position in this recovering market. Finally, DRC Savills Investment Management established the Group's first position in the US real estate debt market through a joint venture with QCP LLC, a real estate debt manager based in Atlanta.

Supported by our strong balance sheet we continue to review opportunities to enhance our client offering across geographies and service lines.

Focus on technology

Technology continues to be an important focus for the Group, and we are well on the way through implementation of significant platform upgrades across the globe including both operating and finance systems and service-specific digital transformation programmes.

We continue to investigate and experiment with new and emerging technologies through our innovation and data teams globally. Recently there has been an increased focus on the opportunities presented by the latest developments in the broad area of artificial intelligence ('AI'), or 'Machine Learning', which we use as a driver of efficiency in many of our bespoke data and service line platforms across the Group. One example of this is BrickByte in Germany, which was acquired by the Group in 2022. It is a technology-enabled method of workspace planning, driven by Machine Learning, to save time and optimise the use of space and which has significantly increased its revenues year-on-year.

Our other digital businesses continue to perform well. Cureoscity, our wholly-owned platform that connects occupiers, landlords and their managing agents, continued to grow Annual Recurring Revenue ('ARR') significantly year-on-year and has begun to expand into markets outside the UK. Our market-leading UK online auction business continues to take market share, and despite increasingly challenging markets, sold over £570m of property during the period, an increase of 25% year-on-year.

Through our wholly owned technology businesses and investments, we are experimenting with the latest advances in generative design particularly to test project feasibility at an earlier stage in the design process. For example, VU.CITY (in which the Group has an investment) uses its SiteSolve technology combined with complete digital city models at 'planning grade' levels of accuracy, to generate instant development options, taking into account environmental and other extant planning constraints.

We maintain our policy of continuing to support technology initiatives across the Group, striking the balance between locally led innovation and broader centralised initiatives.

Board

On 1 January 2024, I became Chair on the retirement of Nicholas Ferguson. Since he was appointed in May 2016, Savills has both delivered commendable growth and successfully navigated the challenges of both COVID and the market corrections of the last two years. I would like to thank him for his enormous contribution to the business.

On 13 December 2023, John Waters was appointed as an additional Independent Non-Executive Director and replaced me as Chair of the Savills Audit Committee with effect from 1 January 2024. We are delighted that John has joined the Board and look forward to benefitting from his extensive experience to support our future growth.

Dividends

An interim dividend of 6.9p per share (2022: 6.6p), amounting to £9.4m was paid on 2 October 2023, and a final

ordinary dividend of 13.9p per share (2022: 13.4p) is recommended, making the ordinary dividend 20.8p per

share for the year (2022: 20.0p). A supplemental interim dividend of 2.0p per share (2022: 15.6p) is declared, taking into account the significantly reduced underlying performance of our Global Transaction Advisory business. Taken together, the ordinary and supplemental interim dividends comprise an aggregate distribution for the year of 22.8p per share, representing a decrease of 36% on the 2022 aggregate ordinary and supplemental dividend of 35.6p.

Subject to Shareholder approval of the proposed final dividend at the AGM on 15 May 2024, the aggregate final and supplementary interim dividends of 15.9p will be paid on 23 May 2024 to Shareholders on the register at 12 April 2024.

People

On behalf of the Board, I wish to express my thanks to all our people worldwide for their hard work, commitment, collaborative approach and continued focus on client service, which enabled the Group to deliver results in line with our expectations in such challenging times.

Summary and Outlook

Savills resilient performance in 2023 highlights the diversity and strength of our global business. In the context of extremely challenging real estate markets, which saw the lowest levels of transaction volumes for a decade, our less transactional businesses have provided a solid platform for the Group with a resilient and growing earnings stream.

With increased expectation of a reduction in the cost of capital being likely during 2024, we expect re-financing driven activity and the sustainability agenda to be positive for transaction volumes, and therefore improving price transparency, in a number of markets. There also remain, for the near term at least, questions over office utilisation in certain locations, perhaps most keenly felt in the North American metropolitan markets of the eastern and western seaboards.

Current economic and geopolitical conditions remain uncertain and although we expect this to continue for some time, most markets appear to be past the moment of peak uncertainty. There are some early signs of underlying market improvements, which should set the course for a broader recovery during the second half of the year and into 2025.

Our policy of retaining our core bench-strength, enabled by our strong balance sheet, positions the Group well for the future.

Stacey Cartwright

Chair

Review of operations

Savills geographic and business diversity were key to achieving the year's results. Our performance analysed by region was as follows:

On a constant currency basis Group revenue decreased by 2% to £2,252.4m, underlying profit decreased 42% to £95.5m and reported profit before tax decreased by 63% to £56.5m. Our Asia Pacific business represented 30% of Group revenue (2022: 29%) and our overseas businesses as a whole represented 58% of Group revenue (2022: 58%). Our performance by service line is set out below:

Overall, our Commercial and Residential Transaction Advisory business revenue represented 35% of Group revenue (2022: 40%) and was the service line most directly affected by the challenging market conditions during the year. Of this, Residential Transaction Advisory represented 9% of Group revenue (2022: 10%). Our Property and Facilities Management businesses continued to perform well, growing year-on-year and representing 40% of Group revenue (2022: 35%). Our Consultancy businesses increased revenue by 4% and represented 20% of revenue (2022: 19%), albeit that the performance of some of the service lines, such as security valuations, were affected by reduced market volumes. Finally, Investment Management again represented 5% of Group revenue (2022: 5%).

Unallocated costs reduced year-on-year as a result of central interest income and the reduction in profit-related remuneration payable to the Group's senior management.

Transaction Advisory

Overall, our Transaction Advisory revenue decreased by 17% (16% on constant currency basis) to £772.9m (2022: £930.1m). Globally our commercial capital transaction business revenue decreased by 30% and our leasing and occupier-focused transactional revenues by 9%. Our Global Residential business revenue reduced by 19% against a strong comparative in 2022.

Underlying profits fell to £4.3m (2022: £71.9m), reflecting the impact of sharply reduced volumes transacted worldwide and the Group's policy of retaining core bench-strength during market corrections to maintain client service and enable the Group to benefit from future market recovery.

Asia Pacific Commercial

Revenue from the Asia Pacific Commercial Transactional business decreased by 30% to £102.1m (2022: £145.3m), a decrease of 27% in constant currency.

There were significant revenue reductions across the region as markets began to recalibrate in the face of interest rate rises and other challenges. In China, we did not see the broad return of transaction volumes, which was anticipated after the end of COVID-related lockdowns in Q1 2023. Instead, transactional revenues declined by approximately 15% in China and 6% in Hong Kong in comparison with a low base in 2022. However, the recently recruited logistics teams performed well and enabled the mainland Chinese transaction business largely to mitigate the effect of the revenue fall on profits. The other principal countries showing revenue and profit reduction year-on-year were Australia; which was one of the last markets to begin recalibration, Singapore, South Korea and Japan, albeit the latter came off a record performance in 2022 and continued to trade profitably during 2023.

Overall the Asia Pacific Commercial Transactional business recorded underlying losses of £2.9m (2022: £13.4m underlying profit).

UK Commercial

UK Commercial Transactional revenue fell by 15% to £100.6m (2022: £118.9m), reflecting fewer transactions in investment markets and more subdued leasing activity.

Just over £39bn of commercial property investments were traded in the UK in 2023, which is 41% lower than the previous year and 38% down on the five-year average. All commercial property sectors experienced lower investment volumes in 2023 than 2022, with the largest fall being in offices (-47%) and the smallest being in retail (-12%).

While the second half of 2023 saw the Bank of England base rate stabilise, this did not quickly feed through into a notable pick-up in commercial property investment activity in the UK. Rather, Savills increased its share of available market activity, for instance in prime Grade A sustainable office transactions. Indeed, Savills advised on 11 of the 16 largest transactions to occur in the year.

Economic uncertainty continued to delay corporate decision-making which resulted in a reduction in take-up across all the main commercial property sectors in most markets. One exception to this trend was the drive for sustainability which saw take-up in the City of London office market (Grade A with high sustainability rating) increase by 12% year-on-year. However, at a national level, office leasing activity outside London was 12% down on 2022 and large logistics take-up was down 40% year-on-year.

As a result, despite market share gains, underlying profits fell by 31% to £14.0m (2022: £20.4m) with a reduced

margin of 13.9% (2022: 17.2%).

North America

Revenue from the North America Transactional business decreased to £266.7m (2022: £303.5m), a 12% decrease at both prevailing and constant currency rates.

The overwhelming majority of North American revenue relates to occupier leasing transactions across the office sector, which were considerably affected by the understandable tendency for corporate occupiers to delay transactions in the face of uncertain market conditions. We saw growth in Southern California, Washington DC, Chicago and in the US segment of the recently launched Global Occupier Services business, which more than doubled revenue, albeit off a low base. These partially mitigated reductions in activity elsewhere. In the major metropolitan markets such as New York and San Francisco, where the continuation of homeworking in the face of return-to-work strategies, in the financial services and technology sectors particularly, restricted demand for offices for much of the year. There were signs of improved activity emerging in Q4 2023, which should support improved performance in 2024. Capital markets revenues reduced by 48% to £12.4m (2022: £23.7m) as investors came to terms with both reduced occupier demand for metropolitan office space and the rising cost of debt.

Profits were significantly impacted by the effect of market conditions on revenue. During the year a focused restructuring exercise was carried out to improve profitability in the future, as well as continuing investment in growth of the newly established Occupier Services platform.

The business recognised an overall underlying loss of £7.4m (2022: £2.3m underlying profit).

Continental Europe and the Middle East ('CEME')

In CEME, transaction fee income decreased by 12% to £114.6m (2022: £129.8m); 10% in constant currency.

The primary market-related themes were similar to those experienced elsewhere, however the extent of their impact alongside other more local issues, particularly in Germany, continental Europe's largest real estate market, was significant to the extent that our transactional business there made a material loss. Germany is one of the slowest global markets to recalibrate and market conditions in France were not dissimilar.

In contrast, our businesses in the Middle East, Italy, Czech Republic and Portugal saw transactional revenue growth as a consequence of both organic investment and recent acquisition activity. Spain and Ireland showed considerable resilience in their transactional performances too, maintaining strong market share. We continued to grow market share in many countries but could not mitigate the effect of volume reductions in most markets.

Profitability was impacted primarily by the significant downturn in activity causing losses in both the major markets of France and Germany and also in the Netherlands and Belgium. This together with increased interest costs on CEME net borrowings resulted in an underlying loss for the year of £20.3m (2022: £2.7m underlying loss).

UK Residential

UK Residential Transactional revenue decreased by 18% to £171.0m (2022: £208.3m), reflecting the decrease in market volumes with successive interest rate rises and the consequent fall in mortgage approvals dampening demand.

Second-hand sales revenue declined by 23% with a reduction in the number of exchanges of 23% to 4,735 (2022: 6,124). This was exacerbated by a decrease in the average sales value by 4% to £1.61m (2022: £1.68m). In London the average lot size transacted by Savills was down 3% to £2.23m and by 8% to £1.27m in the regions. Volumes in both the regional UK market and central London declined significantly, but consistent with our expectations.

Revenue from the sale of new homes reduced 24% year-on-year, reflecting a decrease of 27% in the number of exchanges, much of which occurred in the regional markets with London more resilient, which was also manifested by an 8% increase in average value transacted.

Underlying profit reduced by 45% to £19.4m (2022: £35.1m), reflecting the effect of the revenue reduction year-

on-year. This performance represented an underlying profit margin of 11.4% (2022: 16.9%).

Asia Pacific Residential

Revenue from the Asia Pacific Residential Transaction business decreased by 26% to £17.9m (2022: £24.3m), a fall of 24% in constant currency.

86% of the regional revenue was generated in Greater China, where debt costs drove falls in revenue of between 22% and 25% in mainland China and Hong Kong, although profits from those regions only fell by £0.7m in aggregate. Elsewhere revenues reduced by between 20% and 50%, the latter in Singapore where market conditions, including the impact of stamp duty for non-residents, were also reflected in a temporarily reduced share of profit from our associate, Huttons. The effect of these reductions were partially mitigated by small increases in profitability in our businesses in Thailand and Vietnam, however overall underlying profits fell to £1.5m (2022: £3.4m).

Property and Facilities Management

Our Property and Facilities Management businesses continued to perform well, with revenues growing by 11% to £899.5m (2022: £813.9m); 11% in constant currency. Savills total area under management increased by 7% to 2.63bn sq ft (2022: 2.47bn sq ft). Underlying profit increased by 5% to £48.8m (2022: £46.5m), 6% in constant currency.

Asia Pacific

In Asia Pacific, Property Management revenue was £447.1m, an increase of 10% year-on-year (2022: £404.9m); 12% increase in constant currency.

Revenue grew across the region with improved performances in Singapore, South Korea and Vietnam. Hong Kong experienced revenue growth of 1% overall, however much of this was in lower margin Facilities Management, which did not mitigate the effect of a reduced contribution from a long-standing joint venture in Macau, as the leisure industry there saw much reduced throughput-related demand. In mainland China, revenue growth of 2% was offset by growth in staff costs, including temporary staff filling vacancies caused in part by migration. Meanwhile in Singapore, revenue and profitability were significantly enhanced through a much improved performance by Absolute Maintenance Services Pte Limited and Solute Pte Limited ('AMS'), both acquired the previous year.

The Asia Pacific region's underlying profits increased by 6% year-on-year to £22.2m (2022: £21.0m) reflecting

a slightly reduced margin of 5.0% (2022: 5.2%).

UK

The UK Property Management business grew revenues by 9% to £355.7m (2022: £327.4m) with square footage

under management increasing by 4% (31 December 2023: 600.1m sq ft, 31 December 2022: 577.0m sq ft). During the year we continued to diversify our Facilities Management business into new service lines, such as car park consultancy, as well as securing significant new mandates.

Our Residential Lettings business had another successful year with revenues and profit increasing by 6%. This was primarily driven by the London market which was characterised by strong tenant demand, albeit with reduced supply.

Finally, our rural management business also performed well with revenue growth of 5% and significant profit improvement.

Overall, the UK Property Management business increased underlying profit by 17% to £30.4m (2022: £25.9m).

Continental Europe and the Middle East

CEME Property Management revenues increased by 19% to £96.7m (2022: £81.6m); the same on a constant currency basis. Over half of this increase was in respect of pass-through costs for outsourced services in Germany, which had no effect on profits.

Revenues grew in all regions, reflecting significant contract wins in the Middle East, Spain, Ireland and Poland.

Area under management at 31 December 2023 was 294.8m sq ft, up 11% on last year (31 December 2022: 265.4m sq ft).

Profitability and margins in the CEME businesses were significantly affected by initial scale-up costs on new contract wins, inflationary cost pressures, reduced levels of profitable ad hoc consultancy work in the prevailing economic environment and a higher interest cost on debt balances associated with recent acquisitions. As a result, the CEME business recognised an underlying loss of £3.8m (2022: £0.4m loss).

Consultancy

Global Consultancy revenue increased by 4% to £459.8m (2022: £441.5m), 5% at constant currency rates. Much of the revenue growth derived from lower margin service lines, whilst some of the higher margin services were materially affected by either reduced market volumes (e.g. security valuations) or the impact of market sentiment on client willingness to commit to longer-term projects (e.g. Development Consultancy/Planning). In addition, the cost base was affected by salary inflation in respect of professional consultants. These factors were most marked during the first half of the year. Thereafter, we experienced improved activity particularly in Q4, improving on our H1 2023 underlying profit decline of 55% to end the year with underlying profit decreasing by only 14% to £35.6m (2022: £41.3m); 13% on a constant currency basis.

UK

The UK Consultancy businesses, comprising a broad range of advisory activities, increased revenue by 9% to £271.0m (2022: £248.4m).

Revenue growth came from most main service lines with the exception of Development Consultancy, as developers delayed projects in the prevailing economic climate. Project Management Consultancy continued to grow well with increasing numbers of Green "retro-fit" assignments. Housing Consultancy also performed well and, whilst Planning Consultancy revenue grew somewhat, it was largely derived from smaller project work, rather than master planning and major schemes, with a consequent reduction in profitability.

The above factors in addition to professional staff cost increases, resulted in underlying profit increasing by 6% to £29.7m (2022: £28.0m).

Asia Pacific

In the Asia Pacific Consultancy segment, revenues decreased by 4% to £84.1m (2022: £87.4m); 1% on a constant currency basis. The overwhelming majority of revenues are earned in Australia, mainland China and Hong Kong. All of these were affected by reductions in valuation, development and research consultancy which linked to the impact of reduced transaction volumes on sentiment and in particular in China, the effect of economic conditions and debt on development activity.

Project management and green fit-out assignments in particular, improved performance in Singapore and selective markets in South East Asia.

The above factors resulted in underlying profit decreasing by 34% to £1.9m (2022: £2.9m), 31% in constant currency.

Continental Europe and the Middle East

Revenue increased by 6% (as reported and in constant currency) to £76.3m (2022: £71.9m).

Revenue growth was driven primarily by the Middle East, Portugal and Italy. Reduced revenue in Germany and Netherlands reflected substantially reduced valuation business as a result of reduced transactional activity in those markets. The cost base was further impacted by investment in new residential and workplace strategy recruitment in Germany and France respectively and increased interest costs on prior acquisitions.

Underlying profit fell by 42% to £5.0m (2022: £8.6m); 41% in constant currency.

North America

This segment primarily comprises complex project management through Macro Consultants LLC ('Macro'), a national project management consultancy business and T3 Advisors, a workplace solutions advisory firm specialising in the life sciences and technology sectors.

Revenue decreased by 16% to £28.4m (2022: £33.8m), as reported and in constant currency. This was primarily as a result of two factors. First, in Project Management, a major media business client put on indefinite hold a number of significant projects for the year, for which staff had already been allocated. Secondly, the T3 business was affected by retrenchment in the technology sector. Both businesses significantly refocused to replace their work in progress pipelines but suffered losses during the year, which could only be partially mitigated by improvements in other consultancy services such as workplace and incentives consultancy.

The impact of these factors resulted in an underlying loss of £1.0m (2022: £1.8m underlying profit).

Investment Management

Despite the prolonged challenging macro environment, Savills Investment Management delivered a resilient result with revenue down 6% to £105.8m (2022: £112.8m), 7% down on a constant currency basis.

The decrease was primarily due to a 35% reduction in transaction fees in line with the reduced activity in the overall market. Base management fees declined marginally to £84.0m (2022: £85.7m) and represented 79% of gross revenues (2022: 76%). The decline was consistent with expectations as several existing products came to their natural end-of-life whilst new strategies were initiated during the year and will take time to build scale.

AUM, including undrawn commitments, remained stable at £22.1bn (2022: £22.1bn). Successful new product

launches and new mandates, as well as improved capital raising of £2.0bn (2022: £1.6bn) despite the difficult market conditions were offset by disposal activity and valuation reductions during the period. The relationship with Samsung Life continued well, with Samsung having committed its contracted $1bn to various products, much of which is yet to be deployed and is included in the approximately £1.7bn of investable funds carried over to 2024. At the most recent measurement date prior to this report, 79% of funds (by AUM) continued to exceed their respective fund target or benchmark returns on a five-year rolling basis.

Successes during the year include significant new mandates won in Spain and Italy and growth of the Living platform in the UK and continental Europe. DRC Savills Investment Management expanded into new territories, launching the DRC SIM Australia Real Estate Debt Fund and establishing its first position in the US real estate debt market through a joint venture with QCP LLC, an Atlanta based real estate debt manager

Underlying profits for Investment Management decreased by 30% to £14.8m (2022: £21.2m), 31% on a constant currency basis. In addition to the fall in revenue noted above, the year was also impacted by salary inflation in the sector and the cost of further platform growth for new product strategies, in advance of material revenues as capital is deployed.