Cushman & Wakefield  (81.07% of capital stock 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 six months ended June 30, 2015, 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 revenues, 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.

  Half 1 Change
$  million 2015 2014 Amount %
Net revenues (commission and service fee) (A) 983.9 895.2 88.7 9.9
Reimbursed costs – managed properties and other costs (B) 353.6 383.8 (30.2) -7.9
Gross revenues (A+B) 1,337.5 1,279.0 58.5 4.6
Costs  979.6 882.6 97.0 11.0
Reimbursed costs – managed properties and other costs 353.6 383.8 (30.2) -7.9
Total costs  1,333.2 1,266.4 66.8 5.3
Operating income (1) 4.3 12.6 (8.3) -65.9
Adjusted EBITDA (2) 29.9 39.0 (9.1) -23.3
EBITDA, as reported 33.1 36.8 (3.7) -10.1
Adjusted (loss) income attributable to owners of the parent (3) (12.4) 1.8 (14.2) -788.9
Income attributable to owners of the parent, as reported 1.0 11.9 (10.9) -91.6
(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, in the current and prior year periods, as well as all costs incurred in connection with the pending merger with DTZ in the current year period, 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 impact of certain acquisition and non-recurring reorganization-related charges in the current year and prior year periods of a credit of $3.2 million and a charge of $2.2 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, our Company’s EBITDA and Adjusted EBITDA may not be comparable to similarly titled measures used by other companies. (3) Adjusted (loss) income attributable to owners of the parent excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related items, certain computer software depreciation charges and certain non-recurring income tax benefits in the current and prior year periods of a net benefit of $13.4 million and a net benefit of $8.3 million, respectively, as well as the tax-affected impact of certain computer software impairment charges of $1.8 million in the prior year period.
$ million 6/30/2015 12/31/2014 Change
Equity attributable to owners of the parent 836.0 837.2 (1.2)
Consolidated net financial position (principally debt in excess of cash) (209.9) (56.8) (153.1)

C&W Group delivered significant revenue growth for the first half of 2015, as net revenue set a new record for the period. The record net revenue performance was led by strong transaction revenues from Capital Markets, which increased 39.6% year-over-year, fueled by organic growth and the acquisition of Massey Knakal, New York’s number one investment sales firm based on the number of transactions, as the Company continues to execute its strategic growth initiatives, as well as continued growth in Corporate Occupier & Investor Services (“CIS”), which was driven by recurring revenue from significant contract awards.

In addition to the strong revenue performance in the first half of the year, the Company continued the robust implementation of its strategic plan in 2015, investing in its foundation cities around the world and making acquisitions that enhance its platforms. In February, C&W acquired Property Tax Resources (“PTR”), adding a best-in-class proprietary tax management platform as part of Valuation and Advisory’s (“V&A”) commitment to provide a national tax advisory practice to our clients. The Company also acquired J.F. McKinney & Associates in May, the market-leading agency leasing firm in Chicago that represents over 16 million square feet of office space, including many distinguished iconic buildings such as the Merchandise Mart and the John Hancock Center.

With respect to its financial performance, C&W Group reported gross revenue growth of 4.6%, or 9.1% excluding the impact of foreign exchange, to a record $1,337.5 million for the first six months of 2015, as compared with $1,279.0 million for the same period in the prior year, while net revenue increased 9.9%, or 15.7% excluding the impact of foreign exchange, to a record $983.9 million for the first six months of 2015, as compared with $895.2 million for the same period in 2014.

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

  Half I Change
$ million 2015 2014 Amount %
Americas 1,008.2 75.4% 927.0 72.5% 81.2 8.8%
EMEA 219.8 16.4% 235.8 18.4% (16.0) -6.8%
Asia Pacific 109.5 8.2% 116.2 9.1% (6.7) -5.8%
Gross revenues 1,337.5 100.0% 1,279.0 100.0% 58.5 4.6%
Americas 740.0 75.2% 625.1 69.8% 114.9 18.4%
EMEA 168.9 17.2% 192.5 21.5% (23.6) -12.3%
Asia Pacific 75.0 7.6% 77.6 8.7% (2.6) -3.4%
Net revenues 983.9 100.0% 895.2 100.0% 88.7 9.9%

Gross and net revenue performance for the current year period was driven by strong growth in the Americas, primarily the U.S. Outside the U.S., reported revenue performance was negatively impacted by foreign exchange due to the sustained strengthening of the U.S. dollar over the period.

Excluding the impact of foreign exchange, net revenue increased 21.3% in the Americas, 2.1% in Asia Pacific and 1.6% in EMEA.

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

  Half I Change
$ million 2015 2014 Amount %
Leasing 407.8 41.4% 396.2 44.3% 11.6 2.9
Capital Markets 164.6 16.7% 117.9 13.2% 46.7 39.6
CIS  309.9 31.6% 279.6 31.2% 30.3 10.8
Valuation & Advisory and Global Consulting 101.6 10.3% 101.5 11.3% 0.1 0.1
Net revenues 983.9 100.0% 895.2 100.0% 88.7 9.9

The following table presents the changes in net revenues by region and by service line for the first half of 2015, as compared with the same period in the prior year:

  Americas EMEA ASIA PACIFIC Total
$ million change % change % change % change %
Leasing 26.1 8.4 (15.0) -22.7 0.5 2.4 11.6 2.9
Capital Markets 48.1 65.4 1.0 2.9 (2.4) -24.7 46.7 39.6
CIS  36.1 20.2 (4.8) -7.7 (1.0) -2.5 30.3 10.8
Valuation & Advisory and Global Consulting 4.6 7.1 (4.8) -15.6 0.3 4.3 0.1 0.1
Net revenues 114.9 18.4 (23.6) -12.3 (2.6) -3.4 88.7 9.9

Leasing revenue performance for the first half of 2015 was driven by strong growth in the Americas, primarily the U.S.. In the EMEA region, revenue decreased 22.7%, as fewer high profile transactions have been completed in the current year first half, and was further depressed by the negative impact from foreign exchange.

Capital Markets’ positive momentum carried on during the first half of 2015, as capital continued to flow across investor classes, boosted by robust liquidity and continued low interest rates. Growth was driven by strong revenue gains in the Investment Sales & Acquisitions subservice line, up $41.9 million, or 43.3%, globally, $40.6 million, or 70.2%, in the Americas, and $3.0 million, or 10.0%, in the EMEA region, and was tempered by the negative impact from foreign exchange outside the U.S. This performance was fueled by organic growth, as the Company continues the execution of its strategic growth initiatives, as well as the acquisition of Massey Knakal Realty Services on December 31, 2014.

CIS continued with its revenue growth, driven by the Americas, where performance was paced by strong revenue gains in the Facilities Management subservice line, up $33.1 million, or 32.2%, year-over-year, as a major assignment signed in March 2014 added about 27 million square feet of managed facilities, and to a lesser extent the Project Management subservice line, which increased $3.0 million, or 18.7%, primarily due to a higher number of projects, as compared with the same period in the prior year. CIS revenue performance in the Americas was led by the U.S., where revenue increased $43.6 million, or 34.4%, followed by Canada, up $2.9 million, or 8.6%. Outside of the U.S. revenue performance was negatively impacted by foreign exchange fluctuations. Excluding the impact from foreign exchange, CIS’ revenue increased 26.9% in the Americas, 6.1% in EMEA and 2.0% in Asia Pacific.

V&A revenue growth for the six months ended June 30, 2015 was driven by a strong performance in the Americas, primarily in the U.S., fueled by contributions from organic growth, as activity started to pick up from the levels experienced in the second part of 2014, and the acquisition of PTR in February 2015, as the Company continues the execution of its strategic growth initiatives. Asia Pacific revenue growth was driven by strong revenue gains in Hong Kong, largely attributable to the completion of a number of major deals in the current year period. Negative impact from foreign exchange has had a significant effect on EMEA results and economic turmoil in Brazil continued to put downward pressure on revenue. Excluding foreign exchange, V&A revenues in EMEA reported a slight increase, as compared with the same period in the prior year. V&A growth in the Company’s three regions is positive, excluding foreign exchange, as the build out of new businesses fuels diversified revenue sources and produced year-over-year growth.

Total costs, which excludes other expense, net and excludes reimbursed costs of $353.6 million and $383.8 million for the six months ended June 30, 2015 and 2014, respectively, increased $97.0 million, or 11.0%, to $979.6 million, as compared with $882.6 million for the same period in the prior year. For the first half of 2015, Group’s total costs exceeded its increase in net revenue, primarily due to an increase in commission expense attributable to the strong growth in Capital Markets and year-over-year favorability in Leasing net revenues, higher cost of services sold due to continued growth in CIS, and planned increases in employment and other operating expenses to drive the Group’s full-year 2015 revenue growth and strategic plan initiatives. Total costs included certain acquisition and non-recurring reorganization-related charges totaling $1.0 million and $0.8 million, that are excluded from Adjusted EBITDA for the six month periods ended June 30, 2015 and 2014, respectively, and certain computer software accelerated depreciation expense of $0.6 million and $0.1 million, which is excluded from Adjusted (loss) income attributable to owners of the parent for the six month periods ended June 30, 2015 and 2014 respectively, as well as a non-recurring impairment charge of $2.8 million, which was excluded from Adjusted income attributable to owners of the parent for the first half of 2014.

On an operational level, operating income for the six months ended June 30, 2015 was $4.3 million, as compared with $12.6 million for the same period in the prior year.

For the first half of 2015, other expense, net decreased $1.9 million to $2.8 million for the six months ended June 30, 2015, as compared with $4.7 million for the same period in the prior year.  The decrease in other expense, net is primarily attributable to a decrease of $13.5 million in the charge related to the non-controlling shareholders put option liability, which included a non-recurring reorganization-related credit of $16.6 million resulting from the pending merger with DTZ.  This decrease was partially offset by an increase in non-recurring reorganization-related charges of $11.0 million, to $12.4 million in the current year period, as compared with $1.4 million in the same period in the prior year, with the current period charges including $11.9 million of costs incurred in connection with the merger. The net non-recurring reorganization-related credit and charge of $4.2 million and $1.4 million, respectively, are excluded from Adjusted EBITDA for the six month periods ended June 30, 2015 and 2014.

Adjusted EBITDA decreased $9.1 million, or 23.3%, to $29.9 million for the six months ended June 30, 2015, as compared with $39.0 million for the same period in the prior year. EBITDA, as reported, was $33.1 million for the six months ended June 30, 2015, a decrease of $3.7 million, or 10.1%, as compared with a record of $36.8 million for the same period in the prior year.

The Adjusted loss attributable to owners of the parent for the first six months of 2015 was $12.4 million, as compared with the Adjusted income attributable to owners of the parent of $1.8 million for the first six months of 2014. The Adjusted (loss) income attributable to owners of the parent excludes the total tax-affected impact of certain acquisition and non-recurring reorganization-related items, certain computer software depreciation charges, as well as certain non-recurring income tax benefits in the current and prior year periods of a net benefit of $13.4 million and a net benefit of $8.3 million, respectively. In addition, the Adjusted income attributable to owners of the parent for the prior year period excluded the tax-affected impacts of certain computer software impairment charges of $1.8 million. The income attributable to owners of the parent, as reported, was $1.0 million for the six months ended June 30, 2015, as compared with the income attributable to owners of the parent of $11.9 million for the same period in the prior year.

C&W Group’s net financial position as of June 30, 2015 was a negative $209.9 million (principally debt in excess of cash), as compared with a negative $56.8 million as of December 31, 2014.

The strong momentum in the commercial real estate environment carried over from 2014 and through the first half of the year. Looking ahead, C&W Group expects positive activity to continue in 2015 and remains focused on performing at the highest level and enhancing market share in foundation cities around the globe. In addition, earlier this year, the Board of Directors of C&W Group, Inc. began a process to identify a new partner that would accelerate its plans for growth. On May 11, the Company announced that it had signed a definitive agreement to merge with DTZ with the combined company becoming one of the largest global real estate services companies, and continuing to operate under the Cushman & Wakefield brand. The transaction is expected to close before the end of the third quarter of 2015 and is subject to customary closing conditions.

 

Commercial Register No.64236277 Legal notes | Credits