Cushman & Wakefield

(68.58% 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 six months ended June 30, 2013, 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, income attributable to owners of the parent 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.

  Half I Change
$  million 2013 2012 Amount %
Net revenues (Commission and service fee) (A) 721.0 678.2 42.8 6.3
Reimbursed costs - managed properties and other costs 312.9 228.3 84.6 37.1
Gross revenues (A+B) 1,033.9 906.5 127.4 14.1
Adjusted EBITDA (a) 17.5 16.6 0.9 5.4
EBITDA 10.4 16.6 (6.2) (37.3)
Operating loss (7.1) (2.8) (4.3) n.s.
Adjusted loss attributable to owners of the parent  (b) (10.2) (18.4) 8.2 (44.6)
Loss attributable to owners of the parent (14.6) (18.4) 3.8 (20.7)
(a) EBITDA represents earnings before net interest expense, income taxes, and depreciation and amortization, while Adjusted EBITDA removes the impact of acquisition-related charges of $2.4 million and non-recurring reorganization-related charges of $4.7 million. Company management believes that EBITDA and Adjusted EBITDA are useful in evaluating operating performance compared to that of other companies in the industry, as they assist in providing a more complete picture of C&W’s results from operations. Because EBITDA and Adjusted EBITDA are not calculated under IFRS, the Company’s EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. (b) Adjusted loss attributable to owners of the parent excludes the tax-affected impacts of certain acquisition-related and non-recurring reorganization-related charges.
$ million 06/30/2013 12/31/2012 (c) change
Equity attributable to owners of the parent
784.6 804.8   (20.2)
Consolidated net financial position
(129.5) (87.4)   (42.1)
(c) Following the retrospective application of the amendment to IAS 19 – Employee benefits from January 1, 2013, the figures previously reported in the statement of financial position at December 31, 2012 have been restated as required by IAS 1.

In the first half of 2013, C&W Group made significant progress in executing its long-term strategic plan by enhancing recurring revenue streams and delivering a consistent service mix across geographies. The firm drove growth across its global service lines as the first half progressed, as evidenced by the double-digit revenue increases in the Corporate Occupier & Investor Services (“CIS”), Capital Markets and Valuation & Advisory (“V&A”) businesses.

Recurring revenue performance year-to-date was led by the CIS business growth of 17.4% year-over-year following a number of notable wins from iconic brands.  Additionally, CIS’s acquisition of the Singapore-based project management company, Project Solution Group on July 1, positions C&W as a market leader in project management services in the Asia Pacific region. Momentum in V&A’s business was driven by a national scope assignment for a major U.S. retailer.

Capital Markets advised on numerous high-profile transactions including Mitsubishi Estate Company’s sale of the headquarters building of the London Stock Exchange. The firm’s Leasing business remains well positioned to capture opportunities presented by recovering markets as evidenced by Group’s being appointed the exclusive leasing agent for two major office towers in Manhattan, 75 Rockefeller Plaza and 1221 Avenue of the Americas.

The following are some of the specific successes that C&W Group achieved across its regions and service lines during the first half of 2013:

  • Services:
    • Appointed to provide facilities management services for a 1.2 million square foot portfolio in China;
    • Won the property management of a 17 million square foot portfolio in India;
    • Received a portfolio valuation mandate for the largest domestic fund in India, as well as a mandate from the iconic Australian retail brand David Jones;
    • V&A completed a three-phase national scope assignment of over 700 department stores, distribution centers and a corporate headquarters campus for a major national retailer;
    • Won multiple mandates in the first quarter including:  Capital One – 12.5 million square feet (multiple services – global portfolio) and IndCor - a property management mandate for its industrial US portfolio;
  • Leasing activities:
    • Won over 1 million square feet of new instructions including replacing CBRE as joint leasing agent on Brookfield’s iconic 16 story, 600,000 square foot development, Principal Place, EC2, and winning the leasing mandate agents on WR Berkley’s 400,000 square foot iconic development - The Scalpel;
    • Continue to win a number of high profile leasing mandates, including several major shopping center mandates – for example, the new 184,000 square foot TAU Gallery in Russia;
    • Named exclusive leasing agent for two major office towers in Manhattan - 75 Rockefeller Plaza and 1221 Avenue of the Americas;
  • Capital Markets activities:
    • Arranged the 400 million Euro sale of Rosengardcentre, Denmark’s second largest shopping center, located in Odense on Funen;
    • Advised Future Fund on the sale of its 33% share of The Bullring in Birmingham, U.K. to Hammerson and CPPIB for £307 million;
    • Advised Mitsubishi Estate Company (MEC) on the sale of King Edward Court at 10 Paternoster Square, the headquarters building of the London Stock Exchange, to Oxford Properties for £235 million;
    • Arranged the sale of New England Executive Park, a 10-building, 1 million-square-foot park in Burlington, Massachusetts for $216 million;
    •  Executed the Bekasi Square sale in Jakarta ($35 million);
      In addition, C&W Group opened the first office in Taiwan, extended the contract with a key UK client, Everything Everywhere, and was named site-wide property manager for the new World Trade Center site in Lower Manhattan.

With respect to its financial performance in the first half of 2013, C&W Group reported double-digit gross revenue growth of 14.1%, or 14.9% excluding the impact of foreign exchange, to $1,033.9 million, as compared with $906.5 million for the same period in the prior year, while net revenue increased 6.3%, or 7.2% excluding the impact of foreign exchange, to $721.0 million, as compared with $678.2 million for the prior year first half.

The following presents the breakdown of gross and net revenue by geographical area.

  Half I Change
$ million  2013 2012 Amount %
Americas 771.9 74.7% 663.5 73.2% 108.4 16.3
EMEA 184.3 17.8% 184.0 20.3% 0.3 0.2
Asia 77.7 7.5% 59.0 6.5% 18.7 31.7
Gross revenue 1,033.9 100.0% 906.5 100.0% 127.4 14.1
Americas 514.7 71.4% 490.3 72.3% 24.4 5.0
EMEA 150.6 20.9% 142.8 21.1% 7.8 5.5
Asia  55.7 7.7% 45.1 6.6% 10.6 23.5
Net revenue 721.0 100.0% 678.2 100.0% 42.8 6.3

Net revenue increased across all three regions, with notable revenue gains in the Americas, primarily in the U.S. and Latin America, where revenue grew $14.4 million, or 3.7%, and $8.6 million, or 16.0%, respectively, followed by the Asia Pacific region.

The following presents the breakdown of net revenue by service line:

  Half I Change
$  million 2013 2012 Amount %
Leasing 337.3 46.8% 349.7 51.6% (12.4) (3.5)
CIS  186.5 25.9% 158.7 23.4% 27.8 17.4
Capital Markets 98.1 13.6% 82.0 12.1% 16.1 19.6
V&A 91.5 12.7% 80.7 11.9% 10.8 13.4
Business Consulting 7.6 1.0% 7.1 1.0% 0.5 7.0
Net revenue 721.0 100.0% 678.2 100.0% 42.8 6.3

From a service line perspective, net revenue growth for the period was driven by year-over-year, double-digit growth in CIS, Capital Markets and V&A, partially offset by a slight decline in Leasing revenue.

The following table presents the changes in net revenue by region and by service line for the six months ended June 30, 2013, as compared with the six months ended June 30, 2012:

  Americas EMEA ASIA Total
$ million amount % amount % amount % amount %
Leasing (15.5) (5.5) (3.7) (7.5) 6.8 36.4 (12.4) (3.5)
CIS 20.2 20.5 4.6 10.2 3.0 20.1 27.8 17.4
Capital Markets 8.9 18.1 6.6 25.3 0.6 9.1 16.1 19.6
V&A 10.7 18.2 (0.3) (1.6) 0.4 14.3 10.8 13.4
Business Consulting 0.1 3.9 0.6 19.7 (0.2) (9.5) 0.5 7.0
Net revenue
24.4 5.0 7.8 5.5 10.6 23.5 42.8 6.3

CIS revenue, which increased in all three regions, was primarily driven by revenue gains in the Project, Property and Facilities Management subservice lines, primarily in the Americas and EMEA regions, due to new major client wins in the latter part of 2012 and in 2013, as the Company continues to build its platform across the globe.  Also contributing to the increase in CIS was revenue from the Client Services Group (“CSG”), the Atlanta- and Dallas-based third party client services business of Cousins Properties Incorporated, which was acquired by the Company on September 28, 2012.

Capital Markets increased primarily in the Americas and EMEA regions driven by revenue gains in the Investment Sales & Acquisitions segment of the business.

The V&A business, which, along with CIS, is a major component of the Company’s strategic growth plan and initiatives to enhance recurring revenue streams, continued to grow steadily, primarily in the U.S. and South America, where revenue increased $6.7 million, or 13.1%, and $2.5 million, respectively.

Leasing revenue decreased primarily due to a reduction in Office Leasing revenue in the Americas and the EMEA regions, reflecting continued caution regarding the economic recovery, while revenue is up in the Asia Pacific region due to an increase in the number of large transactions closed during the first half of 2013, as compared with the prior year period.

Commission expense increased $1.1 million, or 0.5%, to $225.5 million for the six months ended June 30, 2013, as compared with $224.4 million for the same period in the prior year, primarily due to the higher Capital Markets and V&A revenues reported above, partially offset by the decrease in Leasing revenue. Foreign exchange decreased commission expense by $0.1 million, or 0.1 percentage points.

The U.S. accounted for 56.4% and 57.8% of the global net revenue for the six months ended June 30, 2013 and 2012, respectively. EMEA, which has the lowest commission expense as a percentage of net revenue, accounted for 20.9% and 21.1% of the global net revenue for the six months ended June 30, 2013 and 2012, respectively.  Total commission expense as a percentage of total net revenue was 31.3% and 33.1% for the first six months of 2013 and 2012, respectively. The decrease of 1.8 percentage points is primarily due to the reduction in Leasing revenue.

Cost of services sold increased $14.2 million, or 29.5%, to $62.3 million for the six months ended June 30, 2013, as compared with $48.1 million for the same period in 2012, primarily due to the higher CIS revenue, in addition to an increase in assignments where the Company is acting as the principal and the costs are not subject to reimbursement, as well as an increase in the utilization of outside professionals to complete time sensitive Project Management and Lease Administration assignments. Foreign exchange decreased cost of services sold by $2.7 million, or 5.7 percentage points.

Operating expenses for the six months ended June 30, 2013 increased $31.8 million, or 7.8%, to $440.3 million, as compared with $408.5 million for the same period last year, primarily due to higher employment expenses, largely driven by merit increases and higher headcounts, as well as increases in other direct costs in line with Group’s revenue growth and strategic plan initiatives. Also included in operating expenses are certain acquisition and non-recurring reorganization-related costs of $1.3 million, which are excluded from Adjusted EBITDA, and certain non-recurring employment-related costs. Foreign exchange decreased operating expenses by $3.2 million, or 0.8 percentage points.

At the operating level, C&W Group’s results decreased by $4.3 million to an operating loss of $7.1 million for the first half of 2013, as compared with an operating loss of $2.8 million in the prior year period.

Other expense, net increased $1.5 million, or 27.8%, to $6.9 million for the six months ended June 30, 2013, as compared with $5.4 million for the prior year period, primarily due to an acquisition-related charge in the current year quarter of approximately $3.0 million in connection with the purchase accounting for the earn-out relating to a business combination (excluded from Adjusted EBITDA), partially offset by increases in foreign currency gains of $0.6 million and a decrease in the charge related to C&W’s non-controlling shareholder put option liability of $1.0 million, comprising a non-recurring reorganization-related charge of $2.8 million (excluded from Adjusted EBITDA). 

Adjusted EBITDA, which excludes the impact of certain acquisition and non-recurring reorganization-related charges that are reported in operating expenses and other expense of $1.3 million and $5.8 million, respectively, was $17.5 million for the current year-to-date period, representing a 5.4 % increase over EBITDA of $16.6 million for the prior half year period, which was not impacted by any acquisition or non-recurring reorganization-related charges.  EBITDA as reported declined $6.2 million to $10.4 million in the first half of 2013, as compared with the first half of 2012.

The Company recorded an income tax benefit of $3.3 million for the first half of 2013, as compared with an income tax expense of $6.2 million for the same period in the prior year, representing a decrease in income tax expense of $9.5 million.  The decrease in income tax expense for the six months ended June 30, 2013, as compared with the same period in the prior year, is primarily attributable to an increase in the net pre-tax loss, the change in the composition of the net pre-tax loss between U.S. income and foreign losses and an increase in income tax benefits on those losses.

Adjusted loss attributable to owners of the parent, which excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges, was $10.2 million for the current year six month period, representing an improvement of $8.2 million, or 44.6%, over the loss attributable to owners of the parent of $18.4 million for the prior year six month period.  The prior year-to-date period loss attributable to owners of the parent as reported was not impacted by any acquisition or non-recurring reorganization-related charges.

The loss attributable to owners of the parent as reported improved by $3.8 million, or 20.7%, to $14.6 million for the six months ended June 30, 2013, as compared with the prior year six month period.

C&W Group’s net financial position changed $42.1 million to a negative $129.5 million (principally debt in excess of cash) as of June 30, 2013, as compared with a negative $87.4 million as of December 31, 2012. The change is due to first half operational needs, which are primarily driven by seasonality and the traditionally lower net revenue in the first half, as compared with the second half, and the timing of the prior year annual incentive compensation payments in the first quarter.  The net financial position was a negative $147.3 million as of June 30, 2012.

Commercial Register No.64236277 Legal notes | Credits