Cushman & Wakefield(69.33% of share capital through EXOR S.A.)


The data presented and commented on below are taken from C&W Group’s consolidated accounting data as of and for the six months ended June 30, 2012, prepared in accordance with International Financial Reporting Standards (“IFRS”), unless otherwise noted.

In order to correctly interpret C&W Group’s performance, it should be noted that a significant portion of C&W Group’s revenue is seasonal, which can affect its ability to compare the financial condition and results of operations on a quarter-by-quarter basis. Historically, this seasonality has caused its revenue, operating income, net income and cash flows from operating activities to be lower for the first two quarters and higher in the third and fourth quarters of each year. The concentration of earnings and cash flows in the fourth quarter is due to a number of factors, including an industry-wide focus on completing transactions toward the calendar year-end.

    Change  
$  million Half I 2012 Half I 2011 Restated (a) Amount % Half I 2011 Published
Net revenues (Commission and service fee) (A) 678.2 703.5 (25.3) (3.6) 703.5
Reimbursed costs - managed properties and other costs (B) 228.3 180.9 47.4 26.2 180.9
Gross revenues (A+B) 906.5 884.4 22.1 2.5 884.4
EBITDA 16.6 31.2 (14.6) (46.8) 8.6
Operating (loss) income (2.8) 11.6 (14.4) n.s. (11.0)
Loss attributable to owners of the parent (18.4) (11.5) (6.9) 60.0 (27.5)
a) Data restated following changes in accounting policies effective January 2012. In the first half of 2012, C&W Group changed its accounting policies regarding the recognition, for interim period reporting, of discretionary incentive plan expenses and “commission bonus program” expenses. Prior to these changes, the Company recognized the discretionary incentive plan expenses, for interim periods, on a straight-line basis based on the latest estimate of the full-year discretionary incentive compensation expense expected to be incurred such that each interim reporting period would bear an equal amount of the expense, and recorded its interim period commission bonus program expense based on a percentage derived from the prior full year’s relationship of actual commission bonus program expense to the related actual Leasing and Capital Markets transactional revenue. Effective January 1, 2012, the Company (1) changed to a proportionate method to account for the discretionary incentive plan expenses under which the Company records its interim period expense in proportion to the actual amount of pre-incentive compensation EBITDA earned for that period in accordance with the funding rate calculation, and (2) adopted a new accounting policy for its commission bonus program under which the interim period expense is recorded based on the actual achievement of the related cash collections metrics in that period.
$ million 30/06/2012 31/12/2011 Change
Equity attributable to owners of the parent 758.2 779.1 (20.9)
Consolidated net financial position (147.3) 9.0 (156.3)

For the first half of 2012 C&W Group made significant progress in executing its long-term strategic plan, investing in quality talent and positioning C&W Group for growth within key markets and service lines. As the firm is focused on enhancing its recurring revenue streams, certain of these activities have been in the Corporate Occupier & Investor Services (“CIS”) business, which have led to significant global assignments in the first half of 2012 with Kraft, Unilever and Symantec and 20% year-over-year revenue growth in this business in the U.S.

In addition to winning these new global assignments, including the Facilities and Project Management for Kraft’s 4.1 million-square-foot portfolio in the U.S. and Canada, C&W Group achieved a number of other successes across the regions, including the following:

  • Represented Salesforce.com in the lease of 401,786 square feet in San Francisco’s Financial District, which represents the largest long-term office lease signed in the area in more than a decade;
  • Advised the iconic British brand Burberry on the pre-lease of 127,000 square feet in one of Central London’s largest leases for this year;
  • Arranged a $610 million sale of Boston’s 100 Federal Street Tower on behalf of Bank of America, which represents one of the largest property sales transactions in the U.S. this year;
  • Completed two of the largest transactions in Hong Kong this year, including the sale of Monetary Court in Jardine Lookout and the sale of Kowloon Commercial Centre in Kowloon;
  • Acquired its third asset for the PURetail Fund - a 100 percent occupied retail property in France;
  • Ranked No. 3 in National Real Estate Investor’s Top Brokerages survey; and
  • Won the Real Estate Board of New York’s Most Ingenious Deal of the Year Award for arranging Conde Nast’s one million-square-foot office lease at One World Trade Center on behalf of the Port Authority of New York and New Jersey.

In addition, subsequent to the end of the first quarter of 2012 the Company announced the execution of an agreement to acquire the Atlanta- and Dallas-based third party client services business of Cousins Properties Incorporated (NYSE: CUZ). The business unit, known as the Client Services Group (CSG) provides third party services to owners of Class A office buildings in Atlanta and Dallas including Leasing, Property Management, and Project Management services. Under the terms of the agreement, up to 128 professionals will transition from Cousins to Cushman & Wakefield, providing immediate enhanced capabilities for clients supported by the firm's Investor Services and Leasing groups in two key geographic areas of focus as part of the firm's strategic growth plan.

With respect to its financial performance for the first six months of 2012, C&W Group experienced gross revenue growth of 2.5%, or 4.9% excluding the impact of foreign exchange, while its commission and service fee revenues decreased 3.6%, or 1.1% excluding the impact of foreign exchange. This decline, partially offset by a decrease of $7.9 million, or 1.9%, in operating expenses, primarily due to a decrease in certain operating expenses, drove a decline in C&W Group’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $14.6 million to $16.6 million, resulting in an increase in the loss attributable to owners of the parent of $6.9 million to $18.4 million.

For the six months ended June 30, 2012, gross revenue, which include reimbursed costs – managed properties and other costs, increased $22.1 million, or 2.5%, to $906.5 million, as compared with $884.4 million for the same period in the prior year.  Foreign exchange had the impact of reducing the overall increase in gross revenues by $20.1 million.

Net revenues, which exclude reimbursed costs – managed properties and other costs, decreased $25.3 million, or 3.6%, to $678.2 million for the six months ended June 30, 2012, as compared with $703.5 million for the same period in the prior year. Foreign exchange decreased commission and service fee revenues by $18.1 million.

C&W Group’s net revenue performance for the first half of 2012, as compared with the prior year first half, reflects continued growth in the Corporate Occupier & Investors Services and Valuation & Advisory (V&A) businesses across all geographic regions. This revenue growth was offset by declines in Leasing and Capital Markets, which reflect a slowdown in transactional activity resulting from the continuing uncertainty that is impacting the global economic environment, and, therefore the real estate markets, and concerns about Europe’s ability to resolve its sovereign debt issue.

The following presents the breakdown of gross and net revenues by geographical area:

      Change
$ million Half 1 2012 Half 1 2011 Amount %
Americas 663.5 648.7 14.8 2.3
EMEA 184.0 175.9 8.1 4.6
Asia 59.0 59.8 (0.8) (1.3)
Gross revenues 906.5 884.4 22.1 2.5
Americas 490.3 502.0 (11.7) (2.3)
EMEA 142.8 153.9 (11.1) (7.2)
Asia 45.1 47.6 (2.5) (5.3)
Net revenues 678.2 703.5 (25.3) (3.6)

The Americas region, including the United States, Canada and Latin America, comprised 73.2% and 72.3% of gross and net revenues, respectively, for the six months ended June 30, 2012, as compared with 73.3% and 71.4% of gross and net revenues, respectively, for the same period in 2011.

EMEA comprised 20.3% and 21.1% of gross and net revenues, respectively, for the six months ended June 30, 2012, as compared with 19.9% and 21.9% of gross and net revenues, respectively, for the same period in 2011.

Asia comprised 6.5% and 6.6% of gross and net revenues, respectively, for the six months ended June 30, 2012, as compared with 6.8% of gross and net revenues for the same period in the prior year.

For the first half of 2012, C&W Group’s global service lines, including Leasing, CIS, Capital Markets, V&A and Global Business Consulting comprised 51.6%, 23.4%, 12.1%, 11.9% and 1.0% of net revenues, respectively, as compared with 52.8%, 20.7%, 14.2%, 10.9% and 1.4%, respectively, for the first six months of 2011.

From a service line perspective, the decline in commission and service fee revenue for the six months ended June 30, 2012 was primarily driven by decreases in Leasing and Capital Markets revenues of $21.5 million, or 5.8%, and $17.8 million, or 17.8%, respectively, primarily in the Americas and EMEA regions, as the uncertainty surrounding the global economic outlook dampened transactional activity, and to a lesser extent a decline in Global Business Consulting revenue of $2.6 million, or 27.2%, mostly in the Americas, $3.1 million, or 63.9%, partially offset by sustained growth in the CIS and V&A businesses, which saw increases in global revenues of $12.9 million, or 8.9%, and $3.8 million, or 4.9%, respectively. The decrease in transactional activity was evidenced by the decreases in U.S. Leasing of $17.3 million, or 6.9%, U.S. Capital Markets of $8.6 million, or 15.3%, EMEA Leasing of $9.3 million, or 15.9%, and EMEA Capital Markets of $4.2 million, or 13.9%. The increase in CIS revenue was primarily driven by increases in the Facilities Management and Property Management segments of the business across the regions. 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.

Commission expense decreased $10.3 million, or 4.4%, to $224.4 million for the six months ended June 30, 2012, as compared with $234.7 million for the same period in the prior year. The decrease is primarily due to lower Leasing, Capital Markets and Global Business Consulting revenues. Commission expense as a percentage of commission and service fee revenues in the U.S. decreased to 48.6% for the first half of 2012, as compared with 49.1% a year ago.

Cost of services sold increased $7.3 million, or 17.9%, to $48.1 million for the six months ended June 30, 2012, as compared with $40.8 million for the same period in 2011, primarily due to higher CIS revenues. The increase in cost of services sold was driven by increases in Latin America, EMEA, the U.S. and Canada of $4.7 million, $3.3 million, $0.3 million and $0.1 million, respectively, partially offset by a decrease in Asia Pacific of $1.1 million. The increase in EMEA is also attributable to the acquisition of the remaining 50% ownership interest in COS in April 2011.

Operating expenses for the six months ended June 30, 2012 decreased $7.9 million, or 1.9%, to $408.5 million, as compared with $416.4 million for the same period last year.

At the operating income level, C&W Group’s results decreased by $14.4 million, to an operating loss of $2.8 million for the first half of 2012, as compared with operating income of $11.6 million in the prior year first half.

Other expenses, net (which are not included in operating results) decreased $1.3 million, or 19.4%, to $5.4 million for the first half of 2012, as compared with $6.7 million for the prior year first half, primarily due to the recognition in the prior year period of a $3.6 million non-recurring charge, lower management fees, due to the cancellation of the agreement effective January 1, 2012, partially offset by higher foreign exchange losses and an unfavorable variance related to the non-controlling shareholders put option liability.

Interest expense, net decreased $8.3 million, or 66.9%, to $4.1 million, for the first half of 2012, as compared with $12.4 million for the same period last year, primarily due to the recognition in the prior year period of interest expense of $4.8 million related to non-recurring charges and lower interest rates resulting from our refinancing activities in the second quarter of 2011.

The decrease in operating results, partially offset by improvements in other expenses, net and interest expense, drove a decline in C&W Group’s pre-tax loss of $4.8 million, or 64.0%, to $12.3 million for the first half of 2012, as compared with $7.5 million for the same period in the prior year.

Income tax provision increased $2.2 million, or 55.0%, to $6.2 million for the first half of 2012, as compared with $4.0 million for the same period in the prior year, primarily due to an increase in the U.S. pre-tax income, partially offset by higher foreign losses that are tax affected at lower rates than the U.S. rate or for which no tax benefit could be recognized and a year-over-year decrease in discrete charges. The income tax provisions recorded for the six months ended June 30, 2012 and 2011 represented reported tax rates of a negative 50.4% and a negative 53.3% (provision on a pre-tax loss), respectively.

As a result of the above factors, the loss attributable to owners of the parent increased by $6.9 million to $18.4 million for the six months ended June 30, 2012, as compared with $11.5 million for the prior year first half.

C&W Group’s net financial position decreased $31.8 million to a negative $147.3 million (principally debt in excess of cash) as of June 30, 2012, as compared with a negative $115.5 million as of June 30, 2011.

C&W Group remains focused on achieving its goals, and looks forward to the balance of 2012 expecting year-over-year revenue and EBITDA growth, as compared with 2011. There is caution regarding the global economic outlook due to the European sovereign debt issue and the ongoing uncertainty that have resulted in businesses, households and investors remaining cautious and risk averse, which has inhibited growth across the globe.

For the second quarter of 2012, gross revenue decreased less than 1%, or increased 3.2% excluding the impact of foreign exchange, to $503.7 million, as compared with $504.4 million for the prior year quarter.  Commission and service fee revenue declined 6.1%, or 2.6% excluding the impact of foreign exchange, to $381.6 million, as compared with $406.3 million for the prior year quarter. The slight decline reflected a slowdown in transactional activity resulting from the continuing uncertainty impacting the global economic environment, and, therefore, the real estate markets. For the second quarter of 2012, operating expenses decreased $21 million (-9.3%) to $206 million as compared with $227 million for the second quarter of 2011. C&W Group’s operating results increased $1.2 million, or 5.9%, to $21.4 million for the three months ended June 30, 2012, as compared with $20.2 million for the three months ended June 30, 2011, largely driven by a decrease in certain operating expenses, which offset the reduction in commission and service fee revenue. Further non-operating expense reductions contributed to an improvement in EBITDA results of $2.6 million, or 9.5%, to $30.1 million for the current year quarter, as compared with $27.5 million for the prior year quarter. With year-over-year growth in operating income and EBITDA and a reduction in interest expense, partially offset by higher income taxes expense, C&W Group improved income attributable to owners of the parent by $4.6 million, to $6.8 million in the second quarter of 2012, as compared with $2.2 million for the second quarter of 2011. 

 

Commercial Register No.64236277 Legal notes | Credits