CUSHMAN & WAKEFIEL (80.89% 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, 2014, prepared in accordance with International Financial Reporting Standards (“IFRS”).

    Change
$ million 2014 2013 Amount %
Net revenues (commissions and service fee)  2,096.1 1,808.5 287.6 15.9
Reimbursed costs – managed properties and other costs  752.9 690.1 62.8 9.1
Gross revenues 2,849.0 2,498.6 350.4 14.0
Costs 1,982.0 1,719.4 262.6 15.3
Reimbursed costs – managed properties and other costs 752.9 690.1 62.8 9.1
Total costs 2,734.9 2,409.5 325.4 13.5
Operating income(1) 114.1 89.1 25.0 28.1
Adjusted EBITDA(2) 171.0 130.1 40.9 31.4
EBITDA, as reported 165.3 119.1 46.2 38.8
Adjusted income attributable to owners of the parent(3) 56.3 34.0 22.3 65.6
Income attributable to owners of the parent, as reported 68.7 28.7 40.0 n.s.
(1) Operating income excludes the impact of the changes in C&W’s non-controlling minority shareholders put option liability, foreign exchange gains and losses and miscellaneous income (expense), net, which are included in other expense, net in the consolidated statements of operations. (2) EBITDA represents earnings before net interest expense, income taxes, and depreciation and amortization, while Adjusted EBITDA removes the total impact of certain acquisition and non-recurring reorganization-related charges in the current and prior year of $5.7 million and $11.0 million, respectively. Management believes that EBITDA and Adjusted EBITDA are useful in evaluating operating performance compared to that of other companies in the industry, as these financial measures assist in providing a more complete picture of the results from operations. Because EBITDA and Adjusted EBITDA are not calculated under IFRS, C&W Group’s EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. (3) Adjusted income attributable to owners of the parent excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges of $3.0 million and $9.1 million for the current and prior year, respectively, the tax-affected impacts of certain computer software accelerated depreciation and impairment charges of $1.8 million for the current year and certain non-recurring income tax benefits of $17.2 million and $3.8 million for the current and prior year, respectively.
$ million 12/31/2014
12/31/2013
Change
Equity attributable to owners of the parent 837.2 804.2 33.0
Consolidated net financial position – (principally debt in excess of cash) / principally cash in excess of debt) (56.8) 3.9 (60.7)

C&W Group delivered record revenues and profitability in 2014, as gross revenues reached a record high of $2.8 billion and Adjusted EBITDA increased 31% year-over-year. Net revenues also increased to a record $2.1 billion fueled by a 42.1% growth in CIS, as property under management increased 7.0% to 1.1 billion square feet as of December 31, 2014. Transaction revenues from both Capital Markets, which increased 16.2%, and Leasing, which increased 7.1% on a record value of transaction volumes, was driven by strong performance advising clients across property sectors and working seamlessly across geographies and services. Net revenues increased by double-digits across all regions with percentage gains ranging from approximately 15% to 25%.

In addition to record financial performance during 2014, on December 31, 2014, C&W Group acquired Massey Knakal Realty Services, a premier investment sales firm and one of the leaders in New York for midsized office, retail and apartment building sales, which is expected to significantly enhance C&W Group’s Capital Markets presence in the New York Tri-State region.

C&W Group also advised world class clients, including salesforce.com, Millennium Partners and Ericsson on significant transactions. Reflecting the innovative real estate solutions resulting in transformational changes that help clients achieve their business objectives, C&W Group was named Best Overall Advisory Firm in North America, the United States, Canada and India in Euromoney's 10th Annual Real Estate Survey.

Furthermore, C&W Group undertook several initiatives to reimagine services provided, including anticipating clients’ needs by launching Risk Management Services, which offers select global clients tailored solutions to identify, mitigate and respond to risks around the world, as well as structuring services around clients by forming U.S. Investor Services, which is comprised of Capital Markets, Agency Leasing, and Asset and Property Management services.

With respect to its financial performance, C&W Group reported gross revenue growth of 14.0%, or 15.0% excluding the impact of foreign exchange, to $2,849.0 million, as compared with $2,498.6 million for the prior year, while net revenues increased 15.9%, or 17.2% excluding the impact of foreign exchange, to a record $2,096.1 million, as compared with $1,808.5 million for the prior year.

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

    Change
$ million 2014 2013 Amount %
Americas 2,043.3 71.7% 1,842.5 73.7% 200.8 10.9
EMEA 557.7 19.6% 463.8 18.6% 93.9 20.2
Asia Pacific 248.0 8.7% 192.3 7.7% 55.7 29.0
Gross revenues 2,849.0 100.0% 2,498.6 100.0% 350.4 14.0
Americas 1,464.7 69.9% 1,271.2 70.3% 193.5 15.2
EMEA 458.6 21.9% 399.1 22.1% 59.5 14.9
Asia Pacific 172.8 8.2% 138.2 7.6% 34.6 25.0
Net revenues 2,096.1 100.0% 1,808.5 100.0% 287.6 15.9

Gross and net revenues both reported notable revenue gains globally and across the regions, led by the Americas, more specifically the U.S., where gross and net revenues increased $230.5 million, or 14.6% and $213.7 million, or 20.6%, respectively, as C&W Group continues to gain market share and macro conditions continued to improve.

The following table presents the breakdown of net revenues by service line:

      Change
$ milion 2014 2013   Amount %
Leasing 955.4 45.6% 892.3 49.3%   63.1 7.1
Capital Markets 309.7 14.8% 266.5 14.7%   43.2 16.2
CIS  604.7 28.8% 425.4 23.5%   179.3 42.1
V&A and Global Consulting 226.3 10.8% 224.3 12.5%   2.0 0.9
Net revenues 2,096.1 100.0% 1,808.5 100.0%   287.6 15.9

The following table presents the changes in net revenues by region and by service line for the full-year 2014, as compared with the same period in the prior year:

  Americas EMEA ASIA PACIFIC Total
$ million Change % Change % Change % Change %
Leasing 40.2 5.7 19.6 14.3 3.3 5.9 63.1 7.1
Capital Markets 26.1 16.2 16.5 19.5 0.6 2.9 43.2 16.2
CIS  136.7 53.0 13.4 11.5 29.2 57.6 179.3 42.1
V&A and Global Consulting (9.5) (6.2) 10.0 16.5 1.5 13.3 2.0 0.9
Net revenues 193.5 15.2 59.5 14.9 34.6 25.0 87.6 15.9

Leasing revenue performance registered positive growth in all three regions, paced by the Americas and EMEA. Strong revenue gains were notable in the U.S. and the UK, up $57.6 million, or 9.6%, and $12.1 million, or 28.3%, respectively, as Group’s initiatives to gain market shares started to materialize and macro conditions continued to improve. Positive growth in Asia Pacific, was driven by a strong finish in the fourth quarter, reflecting a rebound in transactional activity from the low levels experienced in the first nine months. In the Americas, revenues in Canada, South America and Mexico declined, year-over-year, as fewer high profile transactions have been completed, reflecting an uneven economic recovery among geographies. In addition, revenues outside of the U.S. were further depressed by negative foreign exchange impact. Leasing commission and service fee revenue growth in 2014 was driven by strong performance advising clients across property sectors, primarily Office and Retail Leasing, which increased $41.8 million, or 7.3% and $18.7 million, or 14.1%, respectively, on record value of transaction volumes, which increased 15.6% to $63.9 billion. Working seamlessly across geographies and services, C&W advised world  class clients on several significant leasing transactions. C&W Group represented salesforce.com for a new headquarters, the largest office lease in San Francisco history, as well as for an expanded lease in London. C&W Group also advised Brookfield Property at Principal Place on London’s largest 2014 office leasing transaction. In addition, C&W Group represented Millennium Partners’ development at Downtown Crossing in the most significant retail project in Boston in recent history featuring Primark, a leading European fashion retailer.

C&W is also well-positioned to capture future opportunities, as evidenced by its appointment as joint marketing and leasing agent for Swire Properties and HKR International of two office towers totaling 1.9 million square feet for their new Dazhongli development in Shanghai.

Capital Markets continued with its positive momentum, as capital has moved increasingly across investor classes during the year, boosted by the improved credit environment, robust liquidity and continued low interest rates.  Growth was paced by strong revenue gains in the Investment Sales & Acquisitions subservice line, which contributed $42.2 million to the total increase, $23.4 million in the EMEA region, $18.0 million in the Americas, and $0.9 million in Asia Pacific. Revenue gains were particularly impressive in the U.S. and the UK, up $15.9 million, or 13.4%, and $7.9 million, or 24.4%, respectively.  Other noteworthy revenue gains occurred in Germany, up $4.4 million, Spain, $4.1 million, France, $3.1 million and Canada, and Poland, $1.6 million, each. During 2014, Capital Markets executed several high-profile assignments including advising salesforce.com in the largest Occupier transaction in San Francisco history for the purchase of 50 Fremont Street from TIAA-CREF. C&W also advised Blackstone on the acquisition of a pan-European logistics portfolio in Europe from SEB Asset Management for €275 million. In addition, C&W Group arranged Canada's largest hotel investment sale in 2014 of the iconic Fairmont Empress in Victoria, as well as advised the State Oil Fund of the Republic of Azerbaijan (SOFAZ) on the largest investment transaction in Seoul, South Korea in 2014. Cushman & Wakefield’s acquisition of Massey Knakal on December 31, 2014 significantly enhances C&W Group’s Capital Markets presence. Being the #1 Investment Sales Firm based on number of transactions in the New York metro area transforms C&W both locally and around the world.

CIS continued with its robust growth, registering double-digit revenue growth in all three regions. Revenue performance was fueled by significant revenue gains in the Facilities Management subservice line, led by the Americas, where a major assignment in the U.S. added about 27 million square feet of managed facilities, and the Project Management segment of the business, primarily in Asia Pacific, largely due to the acquisition of the Singapore-based project management company, Project Solution Group (“PSG”), which was acquired on July 1,2013, as C&W Group continues to expand its platform across the globe and enhance its recurring revenue streams. Facilities Management, which increased $146.4 million globally, grew $134.1 million in the Americas, $7.8 million in Asia Pacific and $4.5 million in EMEA.  Project Management increased $29.6 million globally, of which $19.9 million was in Asia Pacific, followed by EMEA, up $5.5 million, and the Americas, up $4.2 million.  Property Management increased $6.5 million, $3.6 million in the Americas, and $1.7 million and $1.3 million in EMEA and Asia Pacific, respectively. Property under management globally as of December 31, 2014 increased 7.0% compared with year-end 2013 to 1.1 billion square feet. CIS also expanded several client relationships including Ericsson, which awarded C&W comprehensive services related to one of Silicon Valley’s largest office leasing transactions in 2014 for a new campus of over 400,000 square feet. In addition, IndCor appointed C&W as property manager for an additional 6.9 million square feet of industrial assets.

V&A revenues for the full-year experienced a modest decrease year-over-year, driven in large part by reduced revenues across the Americas primarily due to industry-wide fee compression and lower demand, as activity slowed down from high levels in the prior year.  The decline was partially offset by strong revenue gains in the EMEA region, where increased capital market transactions, cross border activities and effective execution drove significant growth, and Asia Pacific, primarily due the completion of a number of major deals in the current year.  The V&A business, which, along with CIS, is a major component of C&W Group’s strategic growth plan and initiatives to enhance recurring EBITDA, remains well positioned to capitalize on C&W Group’s strategic initiatives and to continue to grow the business across all regions. During 2014, V&A completed appraisals on behalf of the world’s largest real estate investors and lenders with a record global value exceeding $1.2 trillion, a 6.4% increase compared with the prior year. Of particular note, C&W advised Chinese insurance company Anbang Asset Management (Hong Kong) Co. Limited by conducting valuation services on its purchase of the Waldorf Astoria Hotel & Towers from Blackstone for $1.95 billion, the largest hotel sale in U.S. history. In addition, C&W Group was engaged as an independent appraiser of Saks Fifth Avenue’s flagship store in Manhattan to value the landmark building and land for a ground mortgage.

Total costs, excluding reimbursed costs of $752.9 million and $690.1 million for 2014 and 2013, respectively, increased $262.6 million, or 15.3%, to $1,982.0 million, as compared with $1,719.4 million for the prior year, primarily due to increases in commission expense, cost of services sold, employment and other operating expenses in line with C&W Group’s revenue growth and strategic plan initiatives. Total costs included certain acquisition- and non-recurring reorganization-related charges that are excluded from Adjusted EBITDA for the years ended December 31, 2014 and 2013 of approximately $6.4 million and $4.6 million, respectively, and certain computer software accelerated depreciation and impairment charges which are excluded from Adjusted income attributable to owners of the parent for the year ended December 31, 2014 of $3.5 million.

At the operating level, C&W Group’s income increased $25.0 million, or 28.1%, to $114.1 million for the full year 2014, from $89.1 million for the prior year.

Other expense, net decreased $15.0 million, or 75.4%, to $4.9 million (of which a credit of $0.7 million is excluded from Adjusted EBITDA), as compared with $19.9 million (of which a charge of $6.4 million is excluded from Adjusted EBITDA) for the prior year,  primarily due to a higher charge related to C&W’s non-controlling shareholder put option liability of $11.1 million in the prior year, and the reversal in the current year of approximately $4.2 million of earn-out related to a business combination.

Adjusted EBITDA increased $40.9 million, or 31.4%, to $171.0 million for the full year 2014, as compared with $130.1 million for the prior year. EBITDA, as reported, increased $46.2 million, or 38.8%, to $165.3 million for the full year 2014, as compared with $119.1 million in the prior year.

C&W Group recorded income tax expense of $33.4 million for the full-year 2014, as compared with a provision of $32.0 million for 2013.  During 2014 and 2013, Group recognized certain non-recurring income tax benefits of $17.2 million and $3.8 million, respectively, which were excluded from Adjusted income attributable to owners of the parent.

The Adjusted income attributable to owners of the parent for the full-year 2014 was $56.3 million, representing an improvement of $22.3 million, or 65.6%, over an Adjusted income attributable to owners of the parent of $34.0 million for the prior year. The income attributable to owners of the parent, as reported, was $68.7 million for the full-year 2014, representing an improvement of $40.0 million, as compared with $28.7 million for 2013.

On June 27, 2014, C&W Group amended its 2011 existing credit agreement covering its $350 million senior secured revolving credit commitment and $150 million senior secured term loan with an outstanding balance of approximately $132 million. The new agreement, which includes a $350 million senior unsecured revolving credit facility and a $150 million senior unsecured term loan facility, extends maturity from June 2016 to June 2019 and provides for improved borrowing terms and lower cost structure.

C&W Group’s net financial position as of December 31, 2014 decreased $60.7 million, to a negative $56.8 million (principally debt in excess of cash), as compared with a positive $3.9 million (principally cash in excess of debt) as of December 31, 2013. The change is primarily attributable to the low cost financing used for the acquisition of Massey Knakal Realty Services, in support of C&W Group’s strategic growth initiatives.

 

 

Commercial Register No.64236277 Legal notes | Credits