Cushman e Wakefield(80.91% 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, 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.

  9 months
to September 30
Change
$  million 2014 2013 Amount %
Net revenues (Commission and service fee) (A)  1,425.3 1,180.2 245.1 20.8
Reimbursed costs – managed properties and other costs (B) 564.6 484.8 79.8 16.5
Gross revenues 1,989.9 1,665.0 324.9 19.5
Costs  1,384.7 1,159.7 225.0 19.4
Reimbursed costs – managed properties and other costs 564.6 484.8 79.8 16.5
Total costs  1,949.3 1,644.5 304.8 18.5
Operating income (1) 40.6 20.5 20.1 98.0
Adjusted EBITDA (2) 77.1 56.2 20.9 37.2
EBITDA, as reported 74.6 48.9 25.7 52.6
Adjusted income attributable to owners of the parent (3) 10.4 0.0 10.4 n.a.
Income (loss) attributable to owners of the parent, as reported 20.4 (4.1) 24.5 n.m.
(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; 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 $2.5 million and $7.3 million, respectively. 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 these financial measures assist in providing a more complete picture of our results from operations. Because EBITDA and Adjusted EBITDA are not calculated under IFRS, the 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 for the current and prior year periods of $2.0 million and $4.1 million, respectively, as well as the tax-affected impacts of certain computer software accelerated depreciation and impairment charges and certain non-recurring income tax benefits in the current year period of $1.9 million and $13.9 million, respectively.
$ million 09/30/2014 12/31/2013 Change
Equity attributable to owners of the parent 813.9 804.2 9.7
Consolidated net financial position – (principally debt in excess of cash) principally cash in excess of debt (41.3) 3.9 (45.2)

C&W Group continued to deliver solid results for the first nine months of 2014, as revenues reached a record high for the period and Adjusted EBITDA increased 37% year-over-year. Net revenues increased by 20.8% with double-digit gains across all regions by percentages ranging from approximately 18% to 26%. Record high net revenues were fueled by a 47.8% increase in CIS, which were driven by recurring revenues from significant contract awards that increased property under management to 1.1 billion square feet as of September 2014, as well as strong transaction revenues from both Capital Markets and Leasing, which increased 15.1% and 13.5%, respectively, year-over-year. During the period, C&W Group 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.

In addition to strong revenue growth and notable client mandates, C&W Group also 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 19.5%, or 19.7% excluding the impact of foreign exchange, to $1,989.9 million, as compared with $1,665.0 million for the same period in the prior year, while net revenues increased 20.8%, or 21.2% excluding the impact of foreign exchange, to a record $1,425.3 million, as compared with $1,180.2 million for the prior year period.  

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

  9 months
to September 30
Change
$  million 2014 2013 Amount %
Americas 1,449.7 72.9% 1,233.4 74.1% 216.3 17.5
EMEA 370.2 18.6% 301.4 18.1% 68.8 22.8
Asia Pacific 170.0 8.5% 130.2 7.8% 39.8 30.6
Gross revenues 1,989.9 100.0% 1,665.0 100.0% 324.9 19.5
Americas 1,009.6 70.8% 834.7 70.7% 174.9 21.0
EMEA 300.2 21.1% 253.6 21.5% 46.6 18.4
Asia Pacific 115.5 8.1% 91.9 7.8% 23.6 25.7
Net revenues 1,425.3 100.0% 1,180.2 100.0% 245.1 20.8

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 revenue increased $238.5 million, or 22.7%, and $190.3 million, or 28.4%, respectively, as markets continued to improve.

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

  9 months
to September 30
Change
$  million 2014 2013 Amount %
Leasing 639.9 44.9% 563.6 47.8% 76.3 13.5
Capital Markets 197.0 13.8% 171.1 14.5% 25.9 15.1
CIS  433.8 30.4% 293.5 24.9% 140.3 47.8
V & A and Global Consulting 154.6 10.9% 152.0 12.8% 2.6 1.7
Net revenues 1,425.3 100.0% 1,180.2 100.0% 245.1 20.8

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

  Americas EMEA ASIA PACIFIC Total
$  million amount % amount % amount % amount %
Leasing 56,1 12,7 20,7 24,6 (0,5) (1,4) 76,3 13,5
Capital Markets 28,4 28,1 1,0 1,8 (3,5) (23,3) 25,9 15,1
CIS  100,3 54,9 14,4 18,4 25,6 78,8 140,3 47,8
V &A and Global Consulting (9,9) (9,2) 10,5 28,8 2,0 26,7 2,6 1,7
Net revenues 174,9 21,0 46,6 18,4 23,6 25,7 245,1 20,8

Leasing revenue performance, which registered double-digit revenue growth for the first time in three years, was fueled by notable revenue gains in the Office and Retail Subservice lines, up $47.0 million, or 13.1%, and $24.0 million, or 29.8%, respectively. Outstanding revenue gains occurred in the Americas and EMEA regions, while the Asia Pacific region experienced a decline year-over-year. Revenues in Canada, South America and Mexico also 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 protests in Hong Kong 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. Despite the still challenging conditions outside of the U.S., C&W Group, working seamlessly across geographies and service lines, advised world class clients on several significant Leasing transactions. C&W Group represented Salesforce for a new headquarters in the largest office lease in San Francisco history, as well as for an expanded lease in London. C&W Group also represented Millennium Partners’ development at Downtown Crossing in the most significant retail project in Boston of recent years featuring Primark, a leading European fashion retailer.

Capital Markets continued with its positive momentum, as the improved credit environment, robust liquidity and continued low interest rates boosted capital flows across investor classes.  Growth was paced by strong revenue gains in the Investment Sales & Acquisitions subservice line, which contributed $24.7 million to the total increase, $20.7 million in the Americas and $5.2 million in the EMEA region, partially offset by a $1.1 million decrease in Asia Pacific, primarily due to the slippage of a number of transactions to the following periods, as rising uncertainty lowered business confidence. During the first nine months 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 of a trophy office building for $447 million. 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 three 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 a targeted acquisition and key hires in foundation cities, as the Group continues to expand its platform across the globe and enhance its recurring revenue streams. Facilities Management, which increased $105.3 million globally, grew $95.6 million in the Americas, $5.0 million in Asia Pacific and $4.8 million in EMEA. Project Management increased $29.2 million globally, of which $19.5 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 $5.3 million, and the Americas, up $4.3 million. Property Management increased $7.0 million, $3.2 million in the Americas, and $2.9 million and $0.9 million in EMEA and Asia Pacific, respectively. Property under management globally as of September 30, 2014 increased 2.9%, as compared with year-end 2013 to 1.1 billion square feet. Ericsson awarded C&W Group 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. In addition, IndCor appointed C&W Group to perform property management for an additional 1.7 million square feet of industrial assets in Chicago.

V&A revenues for the first nine months of the year experienced a decline year-over-year, driven in large part to reduced revenues across the Americas due to fewer appraisal deals completed in the current year, as activity slowed down from high levels in the prior year period.  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 the Company’s strategic growth plan and initiatives to enhance recurring EBITDA, remains well positioned to capitalize on the Company’s strategic initiatives and to continue to grow the business across all regions. V&A completed appraisals on behalf of the world’s largest real estate investors and lenders during the first nine months of 2014 with global value exceeding $800 billion, a 6.0% increase compared to the prior year period. Of particular note was the appraisal of New York City’s largest enclosed mall, Mall at Bay Plaza. Together with the adjacent Bay Plaza Shopping Center, the entire development will be more than 2 million square feet.

Total costs, excluding reimbursed costs of $564.6 million and $484.8 million for the first nine months of 2014 and 2013, respectively, increased $225.0 million, or 19.4%, to $1,384.7 million, as compared with $1,159.7 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 Group’s revenue growth and strategic plan initiatives. For the nine months ended September 30, 2014 and 2013, total costs included certain non-recurring acquisition and reorganization-related charges totaling approximately $1.0 million and $1.6 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 $3.2 million, which are excluded from Adjusted income attributable to owners of the parent. 

At the operating level, C&W Group virtually doubled its results, as operating income increased $20.1 million, or 98.0%, to $40.6 million for the nine months ended September 30, 2014, from $20.5 million for the prior year period.   

Other expense, net decreased $0.8 million, or 9.0%, to $8.1 million (of which $1.5 million is excluded from Adjusted EBITDA) for the nine months ended September 30, 2014, as compared with $8.9 million (of which $5.7 million is excluded from Adjusted EBITDA) for the same period in the prior year,  primarily due to the $3.0 million earn-out charge in the prior year period and a net decrease in the charge related to C&W’s non-controlling minority shareholders put option liability of $1.6 million (due to a decrease in certain non-recurring reorganization-related charges of $1.6 million), partially offset by the recognition in the current year period of management fees of $1.9 million and higher foreign exchange losses of $1.8 million, largely due to the strengthening of the USD.

Adjusted EBITDA increased $20.9 million, or 37.2%, to $77.1 million for the first nine months of 2014, as compared with $56.2 million for the first nine months of 2013. EBITDA, as reported, increased $25.7 million, or 52.6%, to $74.6 million for the nine months ended September 30, 2014 from $48.9 million in the prior year. 

The Group recorded income tax expense of $6.0 million for the first nine months of 2014, as compared with a provision of $8.7 million for the same period in 2013. During the nine months ended September 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 nine months of 2014 was $10.4 million, representing an improvement of $10.4 million over an Adjusted income attributable to owners of the parent that was break-even for the prior year period. The income attributable to owners of the parent, as reported, was $20.4 million for the nine months ended September 30, 2014, representing an improvement of $24.5 million over a loss of $4.1 million for the first nine months 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 September 30, 2014 improved $43.7 million, to a negative $41.3 million (principally debt in excess of cash), as compared with a negative $85.0 million as of September 30, 2013, primarily due to the Company’s solid performance in the year-to-date period as well as in the fourth quarter of 2013, which resulted in strong cash generation and a slight decrease in debt. C&W Group’s net financial position as of September 30, 2014 decreased $45.2 million, as compared with a positive $3.9 million (principally cash in excess of debt) as of December 31, 2013. The change is primarily driven by seasonality and the concentration of earnings and cash flows in the fourth quarter due to a number of factors, including an industry-wide focus on completing transactions toward the calendar year-end.

Commercial Register No.64236277 Legal notes | Credits