Cushman & Wakefield

(69.48% of share capital through EXOR S.A.)

 

 

The data presented and commented on below is taken from C&W Group’s consolidated accounting data as of and for the year ended December 31, 2011, prepared in accordance with International Financial Reporting Standards (“IFRS”), unless otherwise noted.

    Change
US$  million 2011 2010 Amount %
         
Commission and service fee revenues (Net Revenues) (A) 1,572.3 1,399.6 172.7 12.3
Reimbursed costs - managed properties and other costs (B) 423.4 359.8 63.6 17.7
Gross revenues (A+B) 1,995.7 1,759.4 236.3 13.4
         
EBITDA 111.1 92.8 18.3 19.7
Operating income 64.5 51.6 12.9 25.0
Income attributable to owners of the parent 14.9 13.1 1.8 13.7
         
U.S. GAAP results (*)        
EBITDA 109.4 107.3 2.1 2.0
Income attributable to owners of the parent 19.0 25.7 (6.7) (26.1)
(*) The difference between income attributable to owners of the parent, as determined under IFRS, and income attributable to owners of the parent, as determined under U.S. GAAP, is primarily due to the accounting for compensation-related taxes and charges, the non-controlling interests’ put option rights and income taxes. The difference between the EBITDA under IFRS, as discussed below, and the EBITDA under U.S. GAAP is attributable to those same items, excluding the income tax impacts.
$ million  12/31/2011  12/31/2010 Change
       
Equity attributable to owners of the parent 779.1 762.7 16.4
Consolidated net financial position 9.0 (52.2) 61.2

In 2011, C&W Group made strides on major initiatives global alignment of management, providing a consistent service mix, restructruring its credit facilities, continued reduction of debt and making strategic hires. These moves have set the stage in balancing the platform to provide consistent and quality services to its global clients.

C&W Group experienced significant revenue growth in all geographic regions and all service lines and improved year-over-year operating performance. C&W Group generated $2.0 billion in revenue, representing year-over-year revenue growth of 13.4%, which drove a 25.0% year-over-year improvement in operating income, while EBITDA increased 19.7% for 2011, as compared with 2010.

For the year ended December 31, 2011, gross revenues, which include reimbursed costs - managed properties and other costs, increased $236.3 million, or 13.4%, to $1,995.7 million, as compared with $1,759.4 million for 2010. The impact from foreign exchange accounted for $23.8 million.

Commission and service fee revenues, which exclude reimbursed costs - managed properties and other costs, increased $172.7 million, or 12.3%, to $1,572.3 million for the year ended December 31, 2011, as compared with $1,399.6 million for 2010.  The impact from foreign exchange accounted for $21.8 million.

The following presents the breakdown of gross and commission and service fee revenues by geographical area:

    Change
$  million 2011 2010 Amount %
Americas 1,425.8 1,282.4 143.4 11.2
EMEA 434.7 360.8 73.9 20.5
Asia  135.2 116.2 19.0 16.4
Gross revenues 1,995.7 1,759.4 236.3 13.4
         
Americas 1,100.2 969.6 130.6 13.5
EMEA 361.9 335.2 26.7 8.0
Asia  110.2 94.8 15.4 16.2
Commission and service fee revenues 1,572.3 1,399.6 172.7 12.3

The Americas region, including the United States, Canada and Latin America, comprised 71.4% and 70.0% of gross and commission and service fee revenues, respectively, for the year ended December 31, 2011, as compared with 72.9% and 69.3% of gross and commission and service fee revenues, respectively, for 2010.

EMEA, which includes Europe, the Middle East and Africa, comprised 21.8% and 23.0% of gross and commission and service fee revenues, respectively, for the year ended December 31, 2011, as compared with 20.5% and 23.9% of gross and commission and service fee revenues, respectively, for 2010.

For same period, Asia comprised 6.8% and 7.0% of gross and commission and service fee revenues, respectively, as compared with 6.6% and 6.8% of gross and commission and service fee revenues, respectively, for the same period in the prior year.

For the full year 2011, C&W Group’s global service lines, including Leasing, Corporate Occupier & Investor Services, Capital Markets, Valuation & Advisory and Global Business Consulting comprised 53.3%, 20.5%, 14.0%, 10.8% and 1.4% of commission and service fee revenues, respectively, as compared with 55.5%, 19.2%, 13.3%, 11.1% and 0.9%, respectively, for the full year 2010.

From a service line perspective, the improved commission and service fee revenue performance for the year ended December 31, 2011 was primarily driven by increases in Leasing, Corporate Occupier & Investor Services (“CIS”) and Capital Markets revenues of $62.1 million, or 8.0%, $54.7 million, or 20.4% and $33.6 million, or 18.0%, respectively. The increase in Leasing revenues was driven by increased activity, particularly in major business districts in the U.S., Latin America and Canada. The CIS increase in revenue was primarily driven by increases in the Facilities Management and Property Management segments of the business, primarily in the Americas and EMEA. CIS revenues also included revenue from Corporate Occupier Solutions Limited (“COS”), relating to which the remaining 50% ownership interest was acquired on April 30, 2011. Capital Markets (except for EMEA where revenues were negatively impacted due to the sovereign debt issues in Europe) benefited from the increased availability of credit and capital allotted to real estate investments, primarily in the U.S.

Commission expense increased $55.9 million, or 11.9%, to $525.9 million for the year ended December 31, 2011, as compared with $470.0 million for 2010. Foreign exchange increased commission expense by $2.0 million, or 0.4 percentage points.

Commission expense as a percentage of commission and service fee revenues in the U.S. decreased to 50.1% for the full year 2011, as compared with 50.5% a year ago. 

Cost of services sold increased $27.6 million, or 43.0%, to $91.8 million for the year ended December 31, 2011, as compared with $64.2 million for the full year 2010. Foreign exchange increased cost of services sold by $2.7 million, or 4.2 percentage points. The increase of $27.6 million is driven by increases in EMEA, Latin America and Asia of $12.5 million, $10.9 million and $5.0 million, respectively, primarily due to higher CIS revenues, an increase in employment related costs and the acquisition of the remaining 50% ownership interest in COS in April 2011.

Total operating expenses increased $76.3 million, or 9.4%, to $890.1 million for the year ended December 31, 2011, as compared with $813.8 million for the full year 2010. Foreign exchange increased operating expenses by $15.7 million, or 1.9 percentage points. Excluding foreign exchange, operating expenses increased $60.6 million, or 7.4%. 

This increase, which is less as a percentage than the percentage growth in revenue, was primarily driven by increases in employment expenses and other operations-related costs in support of C&W Group’s strategic growth initiatives.

C&W Group’s other expenses, net decreased $11.8 million, or 81.4%, to $2.7 million for 2011, as compared with $14.5 million for 2010, which was largely attributable to a decrease in management fees and a favorable variance related to the non-controlling shareholder put liability.

As a result of the above factors, C&W Group’s performance in the full-year 2011 led to improved year-over-year EBITDA and operating results (operating results exclude other expenses, net). For the year ended December 31, 2011, C&W Group’s EBITDA increased $18.3 million, or 19.7%, to $111.1 million, as compared with $92.8 million for full-year 2010. At the operating income level, C&W Group’s operating results improved $12.9 million, or 25.0%, to operating income of $64.5 million for the year ended December 31, 2011, as compared with operating income of $51.6 million for the full-year 2010.

Interest expense decreased $7.3 million, or 39.2%, to $11.3 million for the current year, as compared with $18.6 million for 2010, which was due primarily to lower interest rates resulting from C&W Group’s debt refinancing and lower average debt levels.

With the year-over-year improvements in EBITDA, operating income, other expenses, net and interest expense, C&W Group’s pre-tax income increased $32.0 million, to $50.5 million for 2011, as compared with $18.5 million for 2010.  Despite this improvement, income attributable to owners of the parent improved by only $1.8 million, or 13.7%, to $14.9 million for the year ended December 31, 2011, as compared with $13.1 million for 2010, as reported under IFRS.

The 2011 results were negatively impacted by an increase in income tax expense of $30.3 million to $35.6 million for the year ended December 31, 2011, as compared with $5.3 million for 2010, representing an increase in C&W Group’s reported tax rate to 70.5% for the current year, as compared with 28.6% for the prior year. On a comparative basis, the 2011 reported rate was negatively impacted by a year-over-year increase in discrete period and other net charges and the generation of a higher mix of C&W Group’s earnings in the U.S., which are taxed at higher rates.

As reported under accounting principles generally accepted in the United States of America (“U.S. GAAP”), C&W Group’s income attributable to owners of the parent decreased $6.7 million, or 26.1%, to $19.0 million for the year ended December 31, 2011, as compared with income attributable to owners of the parent of $25.7 million for the prior year. 

Similar to IFRS, the 2011 results were negatively impacted by an increase in income tax expense of $22.9 million to $30.4 million for the year ended December 31, 2011, as compared with $7.5 million for 2010, representing an increase in C&W Group’s reported tax rate to 61.5% for the current year, as compared with 22.6% for the prior year.  The year-over-year increase in the reported rate is primarily attributable to the same reasons driving the IFRS reported rate, as outlined above, excluding the tax impacts relating to the non-controlling shareholder put liability and stock-based compensation, as these only impact C&W Group’s IFRS results.

C&W Group’s strong operating performance for full-year 2011 drove strong cash flow and debt reduction, as reflected in the Group’s net financial position (defined principally as cash less debt), which improved by $61.2 million to a positive $9.0 million (principally cash in excess of debt) as of December 31, 2011, as compared with a negative $52.2 million (principally debt in excess of cash) a year ago. During the second quarter of 2011, C&W Group refinanced its existing $350 million senior secured revolving credit and $50 million EXOR subordinated facilities with a new five-year $350 million senior secured revolving credit facility and a five-year $150 million senior secured term loan.  In addition to expanding its borrowing capacity, the new arrangement reflects more favorable borrowing terms, including interest rates, collateral packages and expanded geographic borrowings.

As C&W remains focused on achieving its goals as it looks forward to 2012 expecting continued revenue and EBITDA growth.  While there is caution regarding the global economy, including the European debt crisis, that has slowed C&W’s performance during the last quarter of 2011, the firm believes that the 2012 economic landscape should strengthen during the second half as underlying economic fundamentals come to the fore, and the real estate markets improve as a result.

Significant events

Significant events during 2011 include the following:

  • C&W advised Google on its acquisition of two buildings in Dublin. The transaction was in excess of €100 million and was the largest investment transaction in Dublin since 2007.
  • C&W arranged the $715 million sale of Capital Square, a 386,000-square-foot, class-A office building in Singapore.
  • C&W arranged a 1 million-square-foot lease at One World Trade Center in lower Manhattan, New York on behalf of The Port Authority of New York and New Jersey to Conde Nast, arranged a 900,000-square-foot lease for Nomura Holdings at Worldwide Plaza in Manhattan, New York and completed the year’s largest office lease through its representation of Shell Oil Company in its 1.2 million square foot renewal in Houston. 

C&W ‘s Corporate Occupier & Investor Services service line had major wins in landing the global accounts of Harley Davidson, Ernst & Young and New York Life and in its expansion of services with United Technologies.

C&W was named winner of CoreNet Global’s 2011 Sustainable Leadership Award for its corporate initiative known as the Cushman & Wakefield Environmental Challenge, named No. 1 brokerage firm in Manhattan, New York according to a ranking by Real Estate Forum magazine and the Top Property Manager in New York by Crain’s New York Business.

 

Commercial Register No.64236277 Legal notes | Credits