Cushman e Wakefield

(68.33% 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 three months ended March 31, 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 an industry-wide focus on completing transactions toward the calendar year-end.

 QIChange
$  million  2014   2013   Amount  % 
 Net revenues (Commission and service fee)
 381.3   311.1   70.2   22.6 
 Reimbursed costs - managed properties and other costs
 188.1   140.2   47.9   34.2 
 Gross revenues
 569.4   451.3   118.1   26.2 
 Costs  390.2   335.2   55.0   16.4 
 Reimbursed costs - managed properties and other costs 
 188.1   140.2   47.9   34.2 
 Total Costs  578.3   475.4   102.9   21.6 
 Operating loss (1)    (8.9)   (24.1)   15.2   (63.1) 
 Positive (negative) Adjusted EBITDA (2)    3.9   (11.5)   15.4   n,s, 
 EBITDA   1.3   (11.5)   12.8   n,s, 
 Adjusted loss attributable to owners of the parent (3)    (10.4)   (22.4)   12.0   (53.6) 
Loss attributable to owners of the parent. as reported  (12.5)   (22.4)   9.9   (44.2) 
(1) Operating loss 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 income statement; 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 non-recurring reorganization-related charges of $2.6 million. Our management believes that EBITDA and Adjusted EBITDA are useful in evaluating our operating performance compared to that of other companies in our industry, as they assist in providing a more complete picture of our results from operations. Because EBITDA and Adjusted EBITDA are not calculated under IFRS, our company’s EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. (3) Adjusted loss attributable to owners of the parent excludes the tax-affected impacts of certain non-recurring reorganization-related charges of $2.6 million.
$ million 3.31.2014 12.31.2013   Change
Equity attributable to owners of the parent 790.9 804.2   (13.3)
Consolidated net financial position (125.6) 3.9   (129.5)

C&W Group broke the historical seasonal trend by generating positive EBITDA for the first quarter of 2014 as year-over-year revenue growth momentum continued while expenses were well controlled. Gross and net revenues both increased by double digits across all regions and nearly all service lines. Net revenue growth was led by Corporate Occupier & Investor Services “CIS”, which was driven by recurring revenue from significant contract awards in 2013 that increased property under management to over 1 billion square feet, as well as seasonally strong transaction revenues from both Capital Markets and Leasing.

In addition to strong revenue growth, 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, 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 26.2%, or 27.6% excluding the impact of foreign exchange, to $569.4 million, as compared to $451.3 million for the same period in the prior year, while net revenues increased 22.6%, or 24.5% excluding the impact of foreign exchange, to $381.3 million, as compared to $311.1 million for the prior year period.

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

  QI Change
$  million 2014 2013 Amount %
Americas 413.0 72.5% 336.2 74.5% 76.8 22.8
EMEA 100.6 17.7% 80.5 17.8% 20.1 25.0
Asia  55.8 9.8% 34.6 7.7% 21.2 61.3
Gross revenues 569.4 100.0% 451.3 100.0% 118.1 26.2
Americas 263.3 69.1% 222.2 71.4% 41.1 18.5
EMEA 83.5 21.9% 63.0 20.3% 20.5 32.5
Asia  34.5 9.0% 25.9 8.3% 8.6 33.2
Net revenues 381.3 100.0% 311.1 100.0% 70.2 22.6

Net revenues reported double-digit revenue growth across all regions, driven by notable revenue gains in the U.S., where revenues increased $45.6 million, or 26.9%.

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

  QI Change

$  million
2014 2013 Amount %
Leasing 163.7 42.9% 143.7 46.2% 20.0 13.9
Capital Markets 51.8 13.6% 37.2 12.0% 14.6 39.2
CIS  119.6 31.4% 87.0 28.0% 32.6 37.5
Valuation & Advisory 41.5 10.9% 39.8 12.8% 1.7 4.3
Global Consulting 4.7 1.2% 3.4 1.0% 1.3 38.2
Net revenues 381.3 100.0% 311.1 100.0% 70.2 22.6

The following table presents the changes in net revenues by region and by service line for the quarter ended March 31, 2014, as compared to the same quarter in the prior year:

  Americas EMEA ASIA Total
$ million amount % amount % amount % amount %
Leasing 15.2 13.5 8.3 43.7 (3.5) (29.2) 20.0 13.9
Capital Markets 9.3 41.0 4.5 41.3 0.8 22.2 14.6 39.2
CIS 16.5 29.1 5.6 25.0 10.5 n,s 32.6 37.5
Valuation & Advisory (0.6) (2.0) 1.6 18.6 0.7 43.8 1.7 4.3
Global Consulting 0.7 n,s, 0.5 23.8 0.1 12.5 1.3 38.2
Net revenues
41.1 18.5 20.5 32.5 8.6 33.2 70.2 22.6

CIS continued with its robust growth, globally and across the regions, fueled by significant revenue gains in the Facilities and Project Management subservice lines, primarily in the U.S. and Asia Pacific.  Facilities Management, which increased $17.8 million globally, grew $14.4 million in the U.S., and $2.0 million in EMEA and $1.1 million in Asia Pacific, while Project Management increased $13.5 million, globally, led by Asia Pacific, up $9.0 million, 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 the Americas, up $2.5 million, and EMEA, up $2.1 million.  MetLife awarded the CIS business office and retail leasing and project management for a 781,963 square foot institutional property in Washington, D.C., and IndCor appointed the company to perform property management for an additional 1.7 million square feet of industrial assets in Chicago.

Leasing revenue growth for the quarter was driven by a strong performance in the Office and Retail Leasing subservice lines, up $11.9 million, or 13.5%, and $7.8 million, or 36.4%, respectively, while Industrial Leasing grew $1.2 million, or 4.2%, from a year ago, led by the U.S., which was up $21.0 million, or 23.3%, followed by the EMEA region, up $8.3 million, or 43.7%. Revenues in Canada, Latin America and Asia Pacific declined, as fewer high profile transactions have been completed in the current year quarter, reflecting an 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 addition, revenues outside of the U.S. were further depressed by negative foreign exchange impact. During the first quarter of 2014, C&W Group advised world class clients on significant Leasing transactions, including the representation of Mount Sinai Medical Center on 450,000 square feet of office space in midtown Manhattan, as well as Ernst & Young on 207,000 square feet of office space at Canary Wharf in London.

Capital Markets’ revenues increased in all regions, paced by strong revenue gains in the Investment Sales & Acquisitions subservice line, which contributed $13.1 million to the total increase. Positive momentum in capital markets carried over from the second half of 2013, as the improved credit environment and lower interest rates boosted capital flows across investor classes. Capital Markets executed several high profile assignments, including advising the State Oil Fund of the Republic of Azerbaijan (SOFAZ) on the largest first quarter investment transaction in Seoul, South Korea of trophy office Pine Tower A for $447 million, as well as arranging $120 million of financing and preferred equity for ECA Capital for a Rodeo Drive retail location in Beverly Hills, California.

The Valuation & Advisory (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 with its steady growth, led by EMEA, thanks to increased capital market transactions, while the company experienced reductions in Canada and the U.S., as fewer major appraisal deals have been completed in the current year quarter. During the first quarter of 2014, V&A was appointed to advise Sirius Real Estate Ltd’s property portfolio in Germany, as well as to revalue the portfolio of OUE Hospitality Trust in Singapore.

Total costs, excluding reimbursed costs of $188.1 million and $140.2 million for the first three months of 2014 and 2013, respectively, increased $55.0 million, or 16.4%, to $390.2 million, as compared with $335.2 million for the same quarter in the prior year, primarily due to increases in commission expense, cost of services sold and employment-related expenses in line with Group’s revenue growth and strategic plan initiatives. Also included in total costs for the current year are certain non-recurring reorganization-related charges of approximately $1.7 million, which are excluded from Adjusted EBITDA.

At the operating level, C&W Group’s results improved $15.2 million, or 63.1%, to an operating loss of $8.9 million for the quarter ended March 31, 2014, as compared with an operating loss of $24.1 million in the prior year quarter.

Other expense, net increased $3.1 million to other expense of $2.9 million for the three months ended March 31, 2014, as compared with other income of $0.2 million for the prior year quarter, primarily due to an unfavorable variance of $2.8 million in the charge related to C&W’s non-controlling minority shareholders put option liability due to an increase in the company’s share price as well as a $0.9 million non-recurring reorganization-related charge in the current year period, which is excluded from Adjusted EBITDA, and higher foreign exchange losses.

Adjusted EBITDA was $3.9 million for the current year quarter, representing an increase of $15.4 million over negative EBITDA of $11.5 million for the same quarter in 2013, which was not impacted by any non-recurring reorganization-related charges. EBITDA as reported increased to a positive $1.3 million for the quarter ended March 31, 2014, as compared with negative EBITDA of $11.5 million for the prior year quarter.

The Adjusted loss attributable to owners of the parent improved $12.0 million, or 53.6%, to an Adjusted loss attributable to owners of the parent of $10.4 million, for the three months ended March 31, 2014, as compared with a loss attributable to owners of the parent of $22.4 million for the prior year quarter. The loss attributable to owners of the parent, as reported, improved to a loss of $12.5 million for the three months ended March 31, 2014, as compared to the prior year quarter.

C&W Group’s net financial position decreased $129.5 million to a negative $125.6 million (principally debt in excess of cash) as of March 31, 2014, 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 quarter operational needs, which are primarily driven by seasonality and the traditionally lower net revenues in the first quarter, as compared with the fourth quarter, and the timing of the annual incentive compensation payments in the first quarter. C&W Group’s net financial position as of March 31, 2014 improved $8.2 million, as compared with its net financial position as of March 31, 2013, which was a negative $133.8 million (principally debt in excess of cash)

Commercial Register No.64236277 Legal notes | Credits