Cushman & Wakefield
(69.27% 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 nine months ended September 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 revenues 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 revenues, operating income, income attributable to owners of the parent and cash flows from operating activities to be lower in the first half of the year and higher in the second half. 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.

  9 months to September 30 Change 9 months to September 30
$  million 2012 2011 Restated (a)  Amount % 2011 Published
Net revenues (Commission and service fee) (A) 1,056.3 1,105.6 (49.3) (4.5) 1,105.6
Reimbursed costs - managed properties and other costs  336.1 297.5 38.6 13.0 297.5
Gross revenues (A+B) 1,392.4 1,403.1 (10.7) (0.8) 1,403.1
EBITDA 38.9 60.8 (21.9) (36.0) 41.8
Operating income 6.3 30.9 (24.6) (79.6) 11.9
Loss attributable to owners of the parent (17.2) (5.1) (12.1) n.s. (19.4)
U.S. GAAP results (b)          
EBITDA 40.8 62.4 (21.6) (34.6) 43.4
Loss attributable to owners of the parent (18.9) (4.6) (14.3) n.s. (13.5)
(a) Data restated following changes in accounting policies effective January 2012. In 2012, C&W Group changed its accounting policies under both IFRS and U.S. GAAP 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 revenues. 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. In addition, the U.S. GAAP income tax expense, and, therefore, the income (loss) attributable to owners of the parent amounts, for the three and the nine months ended September 30, 2011, have been changed from what was originally reported for those periods to reflect a change in the methodology for applying the full-year estimated global effective tax rate, for interim period reporting, to certain non-U.S. pre-tax losses. The accounting policy and income tax methodology changes had no impact on the previously reported results for full-year 2011 for IFRS or U.S. GAAP. (b) The difference between the loss attributable to owners of the parent, as determined under IFRS, and the loss attributable to owners of the parent, as determined under accounting principles generally accepted in the United States of America (“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 Earnings before interest, taxes, depreciation and amortization (“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 30/09/2012 31/12/2011 Change
Equity attributable to owners of the parent 764.4 779.1 (14.7)
Consolidated net financial position (123.3) 9.0 (132.3)

In the first three quarters of 2012, C&W Group continued executing key initiatives of its long-term strategic plan, including a focus on balancing its global platform to deliver a consistent service mix across markets on behalf of its clients. As part of its strategic initiatives, C&W is focused on enhancing its recurring revenue streams, as evidenced in the Corporate Occupier & Investor Services (“CIS”) business’ revenue growth of 19% year-over-year in the U.S. and its winning 317 million square feet of new business year-to-date, including significant assignments for Kraft, Unilever, Symantec, Underwriters Labs and Heinz.
Additionally, CIS’s recent acquisition of the third-party client services business of Cousins Properties will provide enhanced client support capabilities in two key, strategic growth areas.

In addition, C&W Group achieved a number of other successes across its regions and service lines, including the following:

  • Completed the two largest office leases in San Francisco to date. Represented Salesforce.com in the lease of 401,786 square feet in San Francisco’s Financial District, the largest long-term office lease signed in the area in more than a decade, and represented Hudson Pacific Properties Inc. in the 250,000-square-foot office lease to Square Inc.;
  • Advised the iconic British brand Burberry on the pre-lease of 127,000 square feet office space 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;
  • 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;
  • Arranged the $230 million senior mortgage loan for  100 Church Street, a 1.05-million-square-foot office building in Manhattan;
  • Represented luxury retailers Burberry and Tom Ford in establishing flagship stores in Hong Kong and the UK, respectively;
  • As part of our global alignment initiative, we reinforced our commitment to the iDesk by establishing the Asia iDesk in New York to drive an increase in cross-border transactions and enhance our ability to service clients across markets more efficiently and effectively;
  • Advised The Crown Estate on the £87 million purchase of BAFTA Headquarters in London; and
  • Opened new offices in Brisbane, Australia; Ahmedabad, India; Ulaanbaatar, Mongolia; and added an office in Shanghai; along with four Alliance firms in the U.S. and one in Canada.

 With respect to its financial performance for the first nine months of 2012, gross revenues decreased 0.8%, or increased 1.8% excluding the impact of foreign exchange, while its net revenues decreased $49.3 million, or 4.5%, or $18.2 million and 1.7% excluding the impact of foreign exchange. This decline, partially offset by a net decrease of $18.8 million, or 2.9%, in operating expenses, drove a decline in C&W Group’s earnings before interest, taxes, depreciation and amortization (“EBITDA”) of $21.9 million to $38.9 million, resulting in an increase in the loss attributable to owners of the parent of $12.1 million to $17.2 million, as compared with $5.1 million, in the prior year period.

For the nine months ended September 30, 2012, gross revenues, which include reimbursed costs – managed properties and other costs, decreased $10.7 million, or 0.8%, to $1,392.4 million, as compared with $1,403.1 million for the same period in the prior year. Foreign exchange decreased gross revenues by $34.8 million, or 2.5 percentage points.

Net revenues, which exclude reimbursed costs – managed properties and other costs, decreased $49.3 million, or 4.5%, to $1,056.3 million for the nine months ended September 30, 2012, as compared with $1,105.6 million for the same period in the prior year. Foreign exchange decreased net revenues by $31.1 million, or 2.8 percentage points.

The year-over-year decrease in revenue performance throughout 2012, as compared with 2011, is largely attributable to the negative impact from foreign exchange, a decline in the Leasing and Capital Markets service lines in the Americas (principally in the U.S.) and the Europe, Middle East and Africa (“EMEA”) regions, and a decline in Capital Markets in the Asia Pacific region.  These declines were partially offset by a year-over-year increase in revenue in the Corporate Occupier & Investor Services (“CIS”) and Valuation & Advisory (“V&A”) businesses, primarily in the Americas and Asia Pacific regions.  The revenue declines in Leasing and Capital Markets are due in part to transaction delays, including approximately $24 million of revenue relating to transactions that were originally anticipated to close in September of 2012 that are now expected to close in the fourth quarter, and in part to a decrease in transactional activity resulting from the continuing uncertainty that is impacting the global economic environment.
Despite these macroeconomic issues, the Company’s revenue pipeline at September 30, 2012 supports approximately 95% of its full-year revenue outlook, including 96% to 102% of its Leasing and Capital Markets estimates, respectively. 

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

  9 months to September 30 Change
$ million 2012 2011 Amount %
Americas 1,015.5 72.9% 1,020.8 72.8% (5.3) (0.5)
EMEA 284.5 20.4% 287.9 20.5% (3.4) (1.2)
Asia 92.4 6.7% 94.4 6.7% (2.0) (2.1)
Gross revenues 1,392.4 100.0% 1,403.1 100.0% (10.7) (0.8)
Americas 762.4 72.2% 786.1 71.1% (23.7) (3.0)
EMEA 222.3 21.0% 243.8 22.1% (21.5) (8.8)
Asia 71.6 6.8% 75.7 6.8% (4.1) (5.4)
Net revenues 1,056.3 100.0% 1,105.6 100.0% (49.3) (4.5)

For the first nine months of 2012, C&W Group’s global service lines, including Leasing, CIS, Capital Markets, V&A and Global Business Consulting comprised 51.9%, 22.9%, 12.7%, 11.6% and 0.9% of net revenues, respectively, as compared with 53.2%, 20.6%, 14.1%, 10.7% and 1.4%, respectively, for the first nine months of 2011.

From a service line perspective, the decline in net revenues for the nine months ended September 30, 2012 was primarily driven by decreases in Leasing and Capital Markets revenues of $39.9 million, or 6.8%, and $22.0 million, or 14.1%, respectively, primarily in the Americas and EMEA regions, as well as the Asia Pacific region for Capital markets. The nine months ended September 30, 2012 also saw Global Business Consulting revenue declines by $4.7 million, or 30.5%, mostly in the Americas, where revenues decreased $5.8 million, or 72.7%. The decrease in transactional activity was evidenced by decreases in U.S. Leasing of $41.8 million, or 10.4%, EMEA Leasing of $11.9 million, or 13.0%, U.S. Capital Markets of $5.9 million, or 6.7%, EMEA Capital Markets of $6.4 million, or 13.8%, and Asia Pacific Capital Markets of $10.3 million, or 53.4%. These decreases were partially offset by sustained growth in the CIS business, primarily in the Facilities Management and Property Management segments, and the V&A service line, which experienced increases in global revenues of $13.6 million, or 6.0%, and $4.0 million, or 3.4%, respectively. CIS revenues also included revenues from Corporate Occupier Solutions Limited (“COS”), relating to which the remaining 50% ownership interest was acquired on April 30, 2011.

Commission expense decreased $13.7 million, or 3.7%, to $356.6 million for the nine months ended September 30, 2012, as compared with $370.3 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 net revenues in the U.S. decreased to 49.4% for the first three quarters of 2012, as compared with 49.5% a year ago.  Foreign exchange decreased commission expense by $1.5 million, or 0.4 percentage points.

Cost of services sold increased $7.8 million, or 12.1%, to $72.5 million for the nine months ended September 30, 2012, as compared with $64.7 million for the same period in 2011, primarily due to higher CIS revenues. Foreign exchange had the impact of reducing the overall increase in cost of services sold by $7.7 million, or 11.9 percentage points. The increase in cost of services sold was driven by increases in Latin America, EMEA, the U.S. and Canada of $4.1 million, $3.1 million, $0.6 million and $0.3 million, respectively, partially offset by a decrease in Asia Pacific of $0.3 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 nine months ended September 30, 2012 decreased $18.8 million, or 2.9%, to $620.9 million, as compared with $639.7 million for the same period last year.  Foreign exchange decreased operating expenses by $18.5 million, or 2.9 percentage points.

At the operating income level, C&W Group’s results decreased by $24.6 million, to an operating income of $6.3 million for the first three quarters of 2012, as compared with operating income of $30.9 million in the prior year period.

Other expenses, net (which are not included in operating results) decreased $3.2 million, or 40.5%, to $4.7 million for the first nine months of 2012, as compared with $7.9 million for the prior year period, primarily due to the recognition in the prior year period of a $3.6 million non-recurring charge, the recognition in the current year period of $0.9 million of dividend income from NorthMarq Real Estate Services LLC, a venture formed by Group in September 2011, lower management fees of $0.6 million and lower losses from unconsolidated subsidiaries of $0.3 million, partially offset by an unfavorable variance related to the non-controlling shareholders put option liability of $2.2 million.

Interest expense, net decreased $7.4 million, or 54.0%, to $6.3 million, for the first nine months of 2012, as compared with $13.7 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 at the end of the second quarter of 2011.

The decrease in operating income, partially offset by improvements in other expenses, net and interest expense, drove a decline in C&W Group’s pre-tax results of $14.0 million to a pre-tax loss of $4.7 million for the first nine months of 2012, as compared with a pre-tax income of $9.3 million for the same period in the prior year.
Income tax provision decreased $1.7 million, or 11.9%, to $12.6 million for the first three quarters of 2012, as compared with $14.3 million for the same period in the prior year, primarily due to an increase in the foreign losses, which are tax-effected at a lower tax rate than the U.S. statutory rate of 35%, and a year-over-year decrease in discrete charges of $4.2 million, partially offset by an increase in U.S. pre-tax-income and an increase in foreign losses for which no tax benefit could be recognized due to a lack of forecasted taxable income in the foreseeable future to enable the ultimate realization of such benefits.

As a result of the above factors, the loss attributable to owners of the parent increased by $12.1 million to $17.2 million for the nine months ended September 30, 2012, as compared with $5.1 million for the prior year period, as reported under IFRS. As reported under U.S. GAAP, the Company’s loss attributable to owners of the parent increased $14.3 million to a loss attributable to owners of the parent of $18.9 million for the nine months ended September 30, 2012, as compared with a loss attributable to owners of the parent of $4.6 million for the same period in the prior year.

C&W Group’s net financial position decreased $42.8 million to a negative $123.3 million (principally debt in excess of cash) as of September 30, 2012, as compared with a negative $80.5 million as of September 30, 2011.

C&W Group remains focused on achieving its goals, and looks forward to the fourth quarter of 2012 expecting strong operating performance that will enable the company, for 2012, to meet or exceed its full-year 2011 revenue and EBITDA results despite the continued caution regarding the global economic outlook due to the ongoing uncertainty that has dampened business confidence and inhibited growth across the globe. C&W Group continues to believe that the economic landscape should strengthen in 2013, as underlying economic fundamentals come to the fore and the real estate markets improve, and is committed to continuing its investment in the firm and executing its strategic growth initiatives to expand its platform and provide consistent and quality services to its global clients.

For the third quarter of 2012, gross revenues decreased 6.3%, or 3.6% excluding the impact of foreign exchange, to $485.9 million, as compared with $518.8 million for the prior year quarter. Net revenues declined $24.0 million, or 6.0%, or $11.0 million and 2.8% excluding the impact of foreign exchange, to $378.1 million, as compared with $402.1 million for the prior year quarter. As outlined above, the decline reflected the negative impact from foreign exchange and a decline in transactional activity due in part to delays relating to transactions that are now expected to close in the fourth quarter and from the continuing uncertainty impacting the global economic environment.
Total operating expenses decreased $10.8 million, or 4.8%, to $212.4 million for the quarter ended September 30, 2012, as compared with $223.2 million for the prior year quarter.
C&W Group’s operating income decreased $10.3 million to $9.1 million for the three months ended September 30, 2012, as compared with $19.4 million for the three months ended September 30, 2011, largely driven by the reduction in net revenues, partially offset by a net decrease in operating expenses.  The decline of $7.3 million to an EBITDA of $22.3 million for the quarter ended September 30, 2012, as compared with $29.6 million for the prior year period, was lower than the decrease in operating income primarily due to a reduction in non-operating expenses.
Interest expense increased $1.0 million due to higher average debts, while the income tax provision decreased $4.0 million. As a result of the factors above, income attributable to owners of the parent decreased $5.2 million to $1.2 million in the third quarter of 2012, as compared with $6.4 million for the third quarter of 2011, as reported under IFRS. As reported under U.S. GAAP, the Company’s income attributable to owners of the parent decreased $6.9 million to a loss attributable to owners of the parent of $1.8 million for the quarter ended September 30, 2012, as compared with income attributable to owners of the parent of $5.1 million for the same period in the prior year.

Commercial Register No.64236277 Legal notes | Credits