Cushman & Wakefield

(68.57% 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, 2013, prepared in accordance with International Financial Reporting Standards (“IFRS”). 

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, profit (loss) 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.

  9 months
to September 30
Change
$ in million 2013 2012 Amount %
Net revenues (Commission and service fee)(A) 1,180.2 1,056.3 123.9 11.7
Reimbursed costs - managed properties and other costs (B) 484.8 336.1 148.7 44.2
Gross revenues (A+B) 1,665.0 1,392.4 272.6 19.6
Adjusted EBITDA (a) 56.2 38,9 17.3 44.5
EBITDA 48.9 38,9 10.0 25.7
Operating income 20.5 6,3 14.2 n.s.
Adjusted loss attributable to owners of the parent (b) 0.0 (17.2) 17.2 n.s.
Loss attributable to owners of the parent (4.1) (17.2) 13.1 (76.2)
(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 $2.5 million and non-recurring reorganization-related charges of $4.8 million. 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 results from operations. Because EBITDA and Adjusted EBITDA are not calculated under IFRS, C&W’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.
$ in million 9/30/2013 12/31/2012
(c) Change
Equity attributable to owners of the parent 796.5 804.6  (8.1)
Consolidated net financial position (85.0) (87.4)  2.4
(c) Following the application of the amendment to IAS 19 – Employee benefits, retrospectively, from January 1, 2013, figures previously reported in the statement of financial position at December 31, 2012 have been restated accordingly.

In the first three quarters of 2013, C&W Group continued executing its long-term strategic plan of enhancing recurring revenue streams across geographies. The firm’s growth accelerated as the year-to-date period progressed as gross revenue in the third quarter increased 30% and Adjusted EBITDA increased 74%, as compared to the same period last year.

With respect to its financial performance in the first nine months of 2013, C&W Group reported double-digit gross revenue growth of 19.6%, or 20.5% excluding the impact of foreign exchange, to $1,665.0 million, as compared to $1,392.4 for the same period in the prior year, while net revenue increased 11.7%, or 12.8% excluding the impact of foreign exchange, to $1,180.2 million, as compared to $1,056.3 million for the prior year period. Net revenue increased by double digits across the Capital Markets, Valuation and Advisory (“V&A”) and Corporate Occupier & Investors Services (“CIS”) service lines. Capital Markets and CIS net revenue increased by double digits in all regions, including the Americas, EMEA and Asia Pacific.

Recurring net revenue performance was driven by CIS growth of 21.5% led by the Americas, which acquired the Atlanta-based third-party client services business of Cousins Properties in September 2012. Additionally, CIS acquired the Singapore-based project management company Project Solution Group on July 1, 2013, which positions C&W as a market leader in project management services in the Asia Pacific region. Momentum in V&A’s business (which increased net revenues 14.3%) highlighted a national scope assignment for a major U.S. retailer.

Capital Markets (which increased net revenues by 27.8% mainly in EMEA) executed many high profile assignments, including advising Mitsubishi Estate Company on the sale of the headquarters building of the London Stock Exchange and the largest investment deal in the Czech Republic ever.

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

  9 months
to September 30
Change
$  in millions  2013 2012 Amount %
Americas 1,233,4 74.1% 1,015.5 73.0% 217.9 21.5
EMEA 301,4 18.1% 284.5 20.4% 16.9 5.9
Asia  130,2 7.8% 92.4 6.6% 37.8 40.9
Gross Revenue 1,665.0 100.0% 1,392.4 100.0% 272.6 19.6
Americas 834.7 70.7% 762.4 72.2% 72.3 9.5
EMEA 253.6 21.5% 222.3 21.0% 31.3 14.1
Asia  91.9 7.8% 71.6 6.8% 20.3 28.4
Net Revenue 1,180.2 100.0% 1,056.3 100.0% 123.9 11.7

Net revenue increased across all three regions, with notable revenue gains in the Americas, primarily in the U.S. where revenue grew $63.8 million, or 10.5%, followed by EMEA and the Asia Pacific region.

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

  9 months
to September 30
Change
$  in million
2013 2012 Amount %
Leasing 563.6 47.8% 547.9 51.9% 15.7 2.9
Capital Markets 171.1 14.5% 133.9 12.7% 37.2 27.8
CIS  293.5 24.9% 241.6 22.9% 51.9 21.5
Valuation & Advisory 139.9 11.9% 122.4 11.6% 17.5 14.3
Business Consulting 12.1 0.9% 10.5 0.9% 1.6 15.2
Net revenue 1,180.2 100.0% 1,056.3 100.0% 123.9 11.7

From a service line perspective, net revenue reported positive revenue growth across all service lines, with CIS, Capital Markets, V&A and Business Consulting registering double-digit growth.

The following table presents the changes in net revenue by region and by service line for the nine months ended September 30, 2013, as compared to the same period in the prior year:

  Americas EMEA ASIA Total
$ million Change % Change % Change % Change %
Leasing 5.8 1.3 4.2 5.3 5.7 18.3 15.7 2.9
Capital Markets 16.3 19.2 14.9 37.3 6.0 66.7 37.2 27.8
CIS  34.7 23.4 8.1 11.6 9.1 38.9 51.9 21.5
Valuation & Advisory 15.0 16.6 2.5 9.1 - - 17.5 14.3
Business Consulting 0.5 22.7 1.6 32.7 (0.5) (14.7) 1.6 15.2
Net revenue72.39.531.314.120.328.4123.911.7

CIS revenue performance, which reported solid revenue gains in all three regions, was primarily driven by outstanding performance in the Facilities, Project and Property Management subservice lines, due to new major client wins in the latter part of 2012 and in 2013.  Facilities Management contributed approximately $20.6 million of the total increase in CIS revenue, primarily in the Americas, which increased $18.2 million, evenly split between the U.S. and Latin America.  Project Management reported an increase of $16.2 million, primarily driven by the U.S. and Asia, where revenue grew $6.7 million and $6.4 million, respectively, while Property Management contributed $12.9 million - $4.6 million in Asia, $4.3 million in the U.S. and $4.0 million in EMEA.  Also contributing to the increase in CIS was about $7.6 million of revenue from the Client Services Group (“CSG”), the Atlanta- and Dallas-based third party client services business acquired from Cousins Properties Incorporated, and $4.0 million from project management activities in Singapore. CIS performance followed a number of notable wins from well-known global companies and iconic brands, including the property management of a 17 million square foot portfolio for DLF, the largest developer in India and a contract by a U.S. investor firm for Property Management and Project Management covering 3.5 million square feet in 5 states in the U.S. CIS was also named by the Port Authority of New York & New Jersey as Property Manager of the common areas and key operational facilities for the new World Trade Center campus in Lower Manhattan.

Capital Markets’ strong performance in all three regions was primarily attributable to revenue gains in the Investment Sales & Acquisitions segment of the business, which, alone, contributed $34.2 million of the total increase, reflecting an improvement in business confidence across the globe. Capital Markets executed many high profile assignments, including advising Mitsubishi Estate Company on the sale of King Edward Court, the headquarters building of the London Stock Exchange, to Oxford Properties for £235 million, and Aberdeen Asset Management Deutschland AG on the sale of the "The Park", a complex of twelve office buildings in Prague, to an affiliate of Starwood Capital Group, the largest investment deal in the Czech Republic ever. Other successes include representing St. John’s University in the sale of 101 Murray Street to a partnership between Fisher Brothers and The Witkoff Group for $223 million, the largest residential development site sale in Lower Manhattan and arranging the sale of a 30-story office building at 113 Argyle Street in Hong Kong for $372 million.

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., Latin America and EMEA regions, where revenue grew $10.0 million, or 13.0%, $4.0 million, or 114.5%,  and $2.5 million, or 9.1%, respectively.  Momentum in V&A’s business was driven by a national scope assignment of over 700 department stores, distribution centers and a corporate headquarters campus for a major U.S. retailer, as well as the appraisal of the 1,501 room Mandarin Orchard and the 125,293 square foot Mandarin Gallery for OUE Hospitality Trust prior to one of Singapore’s largest hotel and retail asset Initial Public Offering (”IPO”) in recent years.

Leasing revenue performance, which also increased in all three regions driven by a strong performance in the third quarter, was attributable to revenue gains in the Industrial and Office Leasing subservice lines, reflecting rising demand for space, as signs of a sustainable economic recovery started to materialize.  Cushman & Wakefield’s Leasing business remains well positioned to capture opportunities presented by recovering markets, as evidenced by appointments as exclusive leasing agent for two major office towers in Manhattan, 75 Rockefeller Plaza and 1221 Avenue of the Americas and winning the leasing mandate on the Scalpel, WR Berkley’s 400,000 square foot iconic development in London. Cushman & Wakefield was also appointed Retail & Leisure consultant on the iconic 1 million square feet Battersea Power Station development in London and chosen by Syniverse Technologies for a strategic tenant advisory assignment for a 200,000 square foot global headquarters. In addition, C&W Group assisted Farmers Insurance with a 12 year, 500,000 square foot relocation lease transaction in Los Angeles, and represented Capital One in a 243,000 square foot lease at 299 Park Avenue in New York.

Total operating expenses increased $59.1 million, or 9.5%, to $680.0 million for the first nine months of 2013, as compared to $620.9 million for the same period in the prior year, primarily due to increases in employment-related expenses, as well as other direct costs in line with Group’s revenue growth and strategic plan initiatives.  Also included in operating expenses for the current year nine month period are certain acquisition and non-recurring reorganization-related charges of approximately $1.6 million, which are excluded from Adjusted EBITDA.

At the operating level, C&W Group’s income rose $14.2 million to $20.5 million for the first nine months of 2013, as compared to $6.3 million in the prior year period.

Other expense, net increased $4.2 million, or 89.4%, to $8.9 million for the nine months ended September 30, 2013, as compared to $4.7 million for the prior year period, primarily due to an acquisition-related charge in the current year period of approximately $3.0 million, which is excluded from Adjusted EBITDA, and an increase in the charge related to C&W’s non-controlling shareholder put option liability of $1.6 million, comprising a non-recurring reorganization-related charge of $2.7 million (excluded from Adjusted EBITDA), partially offset by lower foreign exchange losses of $0.4 million.

Adjusted EBITDA was $56.2 million for the current year-to-date period, representing an increase of $17.3 million, or 44.5% over EBITDA of $38.9 million for the prior nine month period, which was not impacted by any acquisition or non-recurring reorganization-related charges. EBITDA as reported increased $10.0 million to $48.9 million in the first nine months of 2013, as compared to the first nine months of 2012. 

C&W Group recorded an income tax expense of $8.7 million for the first nine months of 2013, as compared to $12.6 million for the prior year same period. The decrease in income tax expense for the nine months ended September 30, 2013 is primarily attributable to the change in the composition of the net pre-tax income between U.S. income and foreign losses and a decrease in income tax benefits on those losses. 

Adjusted loss attributable to owners of the parent improved $17.2 million, or 100%, to break-even for the current nine month period, as compared to the loss attributable to owners of the parent of $17.2 million for the same period in the prior year. 

C&W Group’s net financial position improved $2.4 million to a negative $85.0 million (principally debt in excess of cash) as of September 30, 2013, as compared to a negative $87.4 million as of December 31, 2012. The net financial position was a negative $123.3 million as of September 30, 2012.

Commercial Register No.64236277 Legal notes | Credits