(79.79% of share capital through EXOR S.A.) Cushman e Wakefield

 

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, 2014, 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, 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. This has historically resulted in lower profits, or a loss, for the first and second quarters, with profits growing or losses decreasing in each subsequent quarter.

            Half I Change
$ million  2014 2013 Amount %
Net revenues (Commission and service fee)   895.2 721.0 174.2 24.2
Reimbursed costs - managed properties and other costs   383.8 312.9 70.9 22.7
Gross revenues   1,279.0 1,033.9 245.1 23.7
Costs  882.6 728.1 154.5 21.2
Reimbursed costs - managed properties and other costs   383.8 312.9 70.9 22.7
Total Costs  1,266.4 1,041.0 225.4 21.7
Operating income (loss)(1) 12.6 (7.1) 19.7 n.s.
Adjusted EBITDA(2) 39.0 17.5 21.5 n.s.
EBITDA, as reported  36.8 10.4 26.4 n.s.
Adjusted income (loss) attributable to owners of the parent (3)  1.8 (10.2) 12.0 n.s.
Income (loss) attributable to owners of the parent, as reported  11.9 (14.6) 26.5 n.s.
(1) Operating results exclude 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; however, these items are included in “Operating income (loss)” in EXOR’s consolidated income statement. (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 for the current and prior year periods of $2.2 million and $7.1 million, respectively. C&W’s management believes that EBITDA and Adjusted EBITDA are useful in evaluating its operating performance compared to that of other companies in its industry, as these financial measures assist in providing a more complete picture of its 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. (3) Adjusted income (loss) attributable to owners of the parent excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges for the current and prior year periods of $2.2 million and $7.1 million, respectively, as well as certain computer software accelerated depreciation and impairment charges and certain non-recurring income tax benefits in the current year period of $2.9 million and $13.9 million, respectively
$ million 6/30/2014 12/31/2013
Equity attributable to owners of the parent  818.0 804.2
Consolidated net financial positionposition – (principally debt in excess of cash) principally cash in excess of debt (88.9) 3.9

C&W Group delivered strong results for the first half of 2014 as revenue reached a record high for the first half year period and Adjusted EBITDA more than doubled year-over-year on the revenue growth momentum, which outpaced the growth in total costs that resulted from increased business activity. Net revenue increased by double-digits across all regions by percentages ranging from approximately 21% to 39%. The record high net revenue was fueled by a 49.9% increase in CIS, which was driven by recurring revenue from significant contract awards that increased property under management to over 1.2 billion square feet as of June 30, 2014, as well as strong transaction revenues from both Capital Markets and Leasing, which increased 20.2% and 17.5%, respectively, year-over-year.

C&W Group also undertook several initiatives to reimagine services provided by launching Risk Management Services, which offers select global clients tailored solutions to identify, mitigate and respond to risks around the world, 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 23.7%, or 24.3% excluding the impact of foreign exchange, to $1,279.0 million, as compared with $1,033.9 million for the same period in the prior year, while net revenues increased 24.2%, or 25.0% excluding the impact of foreign exchange, to a record $895.2 million, as compared with $721.0 million for the prior year period. 

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

  Half I Change
$  million 2014 2013 Amount %
Americas 927.0 72.5% 771.9 74.7% 155.1 20.1
EMEA 235.8 18.4% 184.3 17.8% 51.5 27.9
Asia Pacific 116.2 9.1% 77.7 7.5% 38.5 49.5
Gross revenues 1,279.0 100.0% 1,033.9 100.0% 245.1 23.7
Americas 625.1 69.8% 514.7 71.4% 110.4 21.4
EMEA 192.5 21.5% 150.6 20.9% 41.9 27.8
Asia PAcific 77.6 8.7% 55.7 7.7% 21.9 39.3
Net revenues 895.2 100.0% 721.0 100.0% 174.2 24.2

Gross and net revenues both reported double-digit revenue growth globally and across the regions, led by the Americas, more specifically the U.S., where gross and net revenues increased $168.0 million, or 25.8%, and $121.3 million, or 29.9%, respectively.

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

  Half I Change
$  million 2014 2013 Amount %
Leasing 396.2 44.3% 337.3 46.8% 58.9 17.5
Capital Markets 117.9 13.2% 98.1 13.6% 19.8 20.2
CIS  279.6 31.2% 186.5 25.9% 93.1 49.9
V&A and Global Consulting 101.5 11.3% 99.1 13.7% 2.4 2.4
Net revenues 895.2 100.0% 721.0 100.0% 174.2 24.2

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

  Americas EMEA ASIA PACIFIC Totale
$  million amount % amount % amount % amount %
Leasing 42.4 15.9 21.2 46.7 (4.7) (18.5) 58.9 17.5
Capital Markets 15.6 26.9 1.8 5.5 2.4 32.9 19.8 20.2
CIS  59.2 49.8 10.8 21.7 23.1 n.s 93.1 49.9
V&A and Global Consulting (6.8) (9.6) 8.1 35.5 1.1 21.6 2.4 2.4
Net revenues 110.4 21.4 41.9 27.8 21.9 39.3 174.2 24.2

Leasing revenue growth for the period was driven by strong performances in the Office, Retail and Industrial Leasing subservice lines, up $35.3 million, or 16.6%, $15.5 million, or 32.2%, and $8.1 million, or 12.4%, respectively, primarily in the Americas, led by the U.S., and EMEA region, while Asia Pacific experienced a decline year-over-year.  Total Leasing revenues increased $53.3 million, or 24.0% in the U.S. and $21.2 million, or 46.7% in EMEA, led by the UK and France, where revenues increased by $7.7 million and $3.5 million, respectively. Revenues in Canada, Latin America and Asia Pacific declined, as fewer high profile transactions have been completed in the current year period, reflecting the uneven economic recovery among geographies, with improved fundamentals in the U.S. and EMEA, and still sluggish economic conditions in the rest of the world, particularly in emerging countries. In Asia Pacific, particularly, occupiers generally remained cautious about long-term commitments, as real estate property prices in Hong Kong have recently been subject to adjustments and on-going elections in Indonesia and India increased uncertainty. In addition, revenues outside of the U.S. were further depressed by negative foreign exchange impact. During the first half of 2014, C&W Group advised world class clients, including salesforce.com, Millennium Partners and Vornado, on several significant Leasing transactions.

Capital Markets continued with its positive momentum, as the improved credit environment and continued low interest rates boosted capital flows across investor classes.  Revenues increased in all regions, paced by strong revenue gains in the Investment Sales & Acquisitions subservice line, which contributed $16.8 million to the total increase, $10.2 million in the Americas, $3.4 million in EMEA and $3.2 million in Asia Pacific.  During the first half of 2014, Capital Markets executed several high profile assignments, including advising the State Oil Fund of the Republic of Azerbaijan (SOFAZ) on an investment transaction in Seoul, South Korea for $447 million. The C&W Group also advised Blackstone on the acquisition of a pan-European logistics portfolio in Europe from SEB Asset Management for €275 million. In addition, Capital Markets arranged Canada's largest hotel investment sale this year of the iconic Fairmont Empress in Victoria.

CIS continued with its robust growth, registering double-digit revenue growth in all regions. Revenue performance was fueled by significant revenue gains in the Facilities Management subservice line, led by the Americas, and the Project Management segment of the business, primarily in Asia Pacific, driven by organic growth from major new wins, as well as targeted acquisitions and key hires in foundation cities, as the Company continues to expand its platform across the globe and enhance its recurring revenue streams. Facilities Management, which increased $62.4 million globally, grew $56.5 million in the Americas, $3.6 million in EMEA and $2.3 million in Asia Pacific, while Project Management increased $26.9 million globally, of which $20.1 million was 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, followed by EMEA, up $3.7 million, and the Americas, up $3.1 million.  Property under management globally as of June 30, 2014 increased 14.1% to a record 1.2 billion square feet, as compared with year-end 2013.  Ericsson awarded C&W Group comprehensive services consisting of site selection, brokerage and project management related to Silicon Valley’s largest office leasing transaction of 2014 for a new campus of over 400,000 square feet and IndCor appointed the Company to perform property management for an additional 1.7 million square feet of industrial assets in Chicago.

V&A revenue performance in total for the first half of the year was flat, as compared with the prior year period, with strong revenue gains in the EMEA region, where increased capital market transactions, offset by reduced revenues across the Americas, primarily due to fewer appraisal deals completed in the current year, as activity slowed down from high levels in the prior year period and lower demand for appraisals further compressed fees.

The V&A business, which, along with CIS, is a major component of the C&W Group’s strategic growth plan and initiatives to enhance recurring revenue streams, remains well positioned to capitalize on the company’s strategic initiatives and continue to grow the business across all regions.

During the first half of 2014, V&A completed appraisals with a global value exceeding $500 billion. Notable appointments include advising Sirius Real Estate Ltd in Germany, as well as OUE Hospitality Trust in Singapore.

Total costs, excluding reimbursed costs of $383.8 million and $312.9 million for the first half of 2014 and 2013, respectively, increased $154.5 million, or 21.2%, to $882.6 million, as compared with $728.1 million for the same period in 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. For the six months ended June 30, 2014 and 2013, total costs included certain non-recurring acquisition and reorganization-related charges totaling approximately $0.8 million and $1.3 million, respectively, which are excluded from Adjusted EBITDA. Total costs for the current year period also included certain computer software accelerated depreciation and impairment charges totaling $2.9 million, which are excluded from Adjusted income attributable to owners of the parent.

At the operating level, C&W Group’s results improved $19.7 million to an operating income of $12.6 million for the six months ended June 30, 2014, as compared with an operating loss of $7.1 million in the prior year first half.

Other expense, net decreased $2.2 million to $4.7 million (of which $1.4 million are excluded from Adjusted EBITDA) for the six months ended June 30, 2014, as compared with $6.9 million (of which $5.8 million were excluded from Adjusted EBITDA) for the same period in the prior year,  primarily due to the accrual in the prior year period of an earn-out of $3.0 million and a net decrease in the charge related to C&W’s non-controlling minority shareholders put option liability of $0.2 million (due to a decrease in certain non-recurring reorganization-related charges of $1.8 million, in part offset by an unfavorable variance in the changes in the fair value of the put option liability of $1.6 million), partially offset by higher foreign exchange losses of $1.2 million, primarily due to the strengthening of the USD.  

Adjusted EBITDA was $39.0 million for the first half of 2014, representing an increase of $21.5 million over Adjusted EBITDA of $17.5 million for the same period in 2013. EBITDA, as reported, increased to $36.8 million for the six months ended June 30, 2014, as compared with EBITDA of $10.4 million for the prior year period.

C&W Group recorded an income tax benefit of $8.5 million for the first half of 2014, as compared with a benefit of $3.3 million for the same period in 2013.  During the six months ended June 30, 2014, Group recognized certain non-recurring income tax benefits of $13.9 million, which were excluded from Adjusted income attributable to owners of the parent.

The Adjusted income attributable to owners of the parent for the first half of 2014 was $1.8 million, representing an improvement of $12.0 million over an Adjusted loss attributable to owners of the parent of $10.2 million for the prior year period. The income attributable to owners of the parent, as reported, was $11.9 million for the six months ended June 30, 2014, representing an improvement of $26.5 million over a loss of $14.6 million for the first half of 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 June 30, 2014 improved $40.6 million, to a negative $88.9 million, as compared with a negative $129.5 million (principally debt in excess of cash) as of June 30, 2013. C&W Group’s net financial position decreased $92.9 million, as compared with a positive $3.9 million (principally cash in excess of debt) as of December 31, 2013. The change is due to first half operational needs, which are primarily driven by seasonality and the traditionally lower commission and service fee revenues 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. 

 

 

 

 

Commercial Register No.64236277 Legal notes | Credits