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 the three months ended March 31, 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.

  QI Change
$ million 2015 2014 Amount %
Net revenues (commission and service fee) (A) 452.6 381.3 71.3 18.7
Reimbursed costs - managed properties and other costs (B) 174.0 188.1 (14.1) (7.5)
Gross revenues (A+B) 626.6 569.4 57.2 10.0
Costs 462.7 390.2 72.5 18.6
Reimbursed costs - managed properties and other costs 174.0 188.1 (14.1) (7.5)
Total costs 636.7 578.3 58.4 10.1
Operating loss (1) (10.1) (8.9) (1.2) 13.5
Adjusted EBITDA (2) 5.9 3.9 2.0 51.3
EBITDA 2.3 1.3 1,0 76.9
Adjusted loss attributable to owners of the parent (3) (10.6) (10.4) (0,2) 1.9
Loss attributable to owners of the parent  (13.0) (12.5) (0,5) 4.0
(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 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 $3.6 million and $2.6 million, respectively. Management believes that EBITDA and Adjusted EBITDA are useful in evaluating our 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 loss attributable to owners of the parent excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges of $2.2 million and $2.1 million for the current year and prior year periods, respectively, as well as the tax-affected impacts of certain computer software accelerated depreciation of $0.2 million for the current year period.
$ million 3/31/2015
12/31/2014
Change
Equity attributable to owners of the parent 812.3 837.2 (24.9)
Consolidated net financial position  (principally debt in excess of cash) (154.3) (56.8) (97.5)

For the first quarter of 2015, C&W Group broke the historical seasonal trend for the second consecutive year by generating positive Adjusted EBITDA in the first quarter, as net revenues increased to a record level for the period. The record net revenue performance was led by Corporate Occupier & Investor Services (“CIS”), which was driven by recurring revenues from significant contract awards as well as strong transaction revenues from both Capital Markets, which increased 33.2%, and Leasing, which increased 15.5%, driven by strong performance advising clients across property sectors and working seamlessly across geographies and services.

In addition to strong financial performance in the first quarter, C&W continued the robust implementation of its strategic plan in 2015 by hiring key talent, investing in its foundation cities around the world and making acquisitions that enhance its platforms. In February, C&W acquired Property Tax Resources, 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 10.0%, or 14.3% excluding the impact of foreign exchange, to a record $626.6 million for the first quarter of 2015, as compared with $569.4 million for the same period in the prior year, while net revenues increased 18.7%, or 24.6% excluding the impact of foreign exchange, to a record $452.6 million for the first quarter, as compared with $381.3 million for the same period in 2014. 

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

  QI Change
$  million 2015 2014 Amount %
Americas 479.9 76.6% 413.0 72.5% 66.9 16.2
EMEA 96.1 15.3% 100.6 17.7% (4.5) -4.5
Asia Pacific 50.6 8.1% 55.8 9.8% (5.2) -9.3
Gross revenues 626,6 100.0% 569.4 100.0% 57.2 10.0
Americas 348.2 76.9% 263.3 69.1% 84.9 32.2
EMEA 70.7 15.6% 83.5 21.9% (12.8) -15.3
Asia Pacific 33.7 7.5% 34.5 9.0% (0.8) -2.3
Net revenues 452.6 100.0% 381.3 100.0% 71.3 18.7

Gross and net revenue performance for the current year quarter 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 revenues increased 35.4% in the Americas, 2.3% in Asia Pacific, and decreased 2.2% in EMEA.

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

  QI  Change
$  million 2015 2014 Amount %
Leasing 189.1 41.8% 163.7 42.9% 25.4 15.5
Capital Markets 69.0 15.2% 51.8 13.6% 17.2 33.2
CIS  150.9 33.4% 119.6 31.4% 31.3 26.2
Valuation & Advisory and Global Consulting 43.6 9.6% 46.2 12.1% (2.6) -5.6
Net revenues 452.6 100.0% 381.3 100.0% 71.3 18.7

The following table presents the changes in net revenues by region and by service line for the quarter ended March 31, 2015, as compared with the same period in the prior year:

  Americas EMEA ASIA PACIFIC Total
$  million amount % amount % amount % amount %
Leasing 32,3 25,3 (7,5) (27,5) 0,6 7,1 25,4 15,5
Capital Markets 20,1 62,8 (2,1) (13,6) (0,8) (18,2) 17,2 33,2
CIS  33,6 45,9 (1,6) (5,7) (0,7) (3,8) 31,3 26,2
Valuation & Advisory e Global Consulting (1,1) (3,6) (1,6) (12,5) 0,1 3,1 (2,6) (5,6)
Net revenues 84,9 32,2 (12,8) (15,3) (0,8) (2,3) 71,3 18,7

Leasing revenue performance for the first quarter of 2015 was driven by strong growth in the Americas, primarily the U.S., fueled by contributions from the Office and Industrial Leasing subservice lines, up $26.3 million, or 36.7%, and $5.0 million, or 24.5%, respectively, as C&W Group continues the execution of its strategic initiatives to gain market share and macro conditions continued to improve. Outside the U.S., reported revenue performance was negatively impacted by foreign exchange. Leasing revenues decreased in the EMEA region, as fewer high profile transactions have been completed in the current year quarter, as compared with a very strong quarter in the prior year, where year-over-year revenue growth surged 43.7% over the first quarter of 2013. Growth in Asia Pacific carried over from the fourth quarter of the prior year, as transactional activity continued to pick up from the levels experienced in the first nine months of 2014.

In the first quarter of 2015, C&W Group advised world class clients on significant Leasing transactions, including MetLife on its headquarter relocation at 200 Park Avenue that exceeded 500,000 square feet, which was the largest lease in New York during the period. In addition, the Company was appointed as joint leasing agent on Westfield Stratford City in London, the largest urban retail destination in Europe. Furthermore, C&W was appointed as an exclusive leasing agent for the Paradise City Project in Korea, a 330,000 square meter mixed-use development project consisting of commercial retail facilities, casino, hotels and a public spa, scheduled to open in late 2017.

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 driven by strong revenue gains in the Investment Sales & Acquisitions subservice line, which contributed $18.4 million to the total increase, of which $18.5 million, or 71.7%, was generated by the Americas. The strong growth was achieved over the first quarter of 2014, a quarter where Capital Markets revenues grew 39.2% globally, 41.0% in the Americas, 41.3% in EMEA and 22.2% in the Asia Pacific region. This performance was fueled by contributions from organic growth, as the Company continues the execution of its strategic growth initiatives, as well as from hiring key talents and making investments in its foundation cities, including the acquisition of Massey Knakal Realty Services on December 31, 2014, the number one investment sales firm based on number of transactions in the New York metro area and one of the leaders in New York for midsized office, retail and apartment building sales, which is reinforcing the Company’s Capital Markets presence in the New York Tri-State region. During the first quarter of 2015, Capital Markets executed several high profile assignments, including advising TIBCO Software on the sale-leaseback of a 292,000-square foot office / R&D campus in Stanford Research Park to Morgan Stanley for $330 million, the largest sale in Palo Alto history. The Company also advised on the sale of Gran Via 32 in Madrid for approximately €400 million to Inditex Group, Spain’s largest ever High Street deal. In addition, Capital Markets’ Corporate Finance team was awarded an €8.4 billion loan portfolio sale mandate from the National Asset Management Agency of Ireland.

CIS continued with its robust growth, in the first quarter of 2015, led by the Americas, where performance was driven by revenue gains in the Facilities Management subservice line, primarily in the U.S, as a major assignment signed in March 2014 added about 27 million square feet of managed facilities. Outside the U.S., revenues were negatively impacted by foreign exchange. Excluding the impact from foreign exchange, CIS’ revenues increased 53% in the Americas, 8% in EMEA and was flat in Asia Pacific. CIS also enhanced several existing client relationships during the first quarter, including a renewal to provide services for a 97 million square foot global portfolio, having expanded the scope of services over the course of the contract. The Company also secured Unilever’s real estate transaction management requirements in the Americas and Europe.

V&A revenues for the quarter experienced a modest decrease year-over-year, driven in large part by reduced revenues in South America, Canada and EMEA, primarily due to the negative impact from foreign exchange. Excluding the impact of foreign exchange, revenues increased 3% globally, 19% in the Asia Pacific region and 12% in EMEA, while they remained flat in the Americas. V&A revenues increased in the U.S., as activity started to pick up from the levels experienced in the second part of 2014. Growth excluding the negative impact from foreign exchange in EMEA was driven by increased opportunities and higher activity levels, as compared with the same quarter in the prior year, while Asia Pacific revenue performance benefited from an expanded service platform in the current year period. 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 and to continue to grow the business across all regions. During the first quarter of 2015, V&A appraised a Motel 6 portfolio of 507 properties for JPMorgan Chase.

Total costs, excluding reimbursed costs of $174.0 million and $188.1 million for the three months ended March 31, 2015 and 2014, respectively, increased $72.5 million, or 18.6%, to $462.7 million, as compared with $390.2 million for the same period in the prior year, primarily due to increases in commission expense due to the Leasing revenue performance, cost of services sold, employment and other operating expenses in line with 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 quarters ended March 31, 2015 and 2014 of approximately $2.8 million and $1.7 million, respectively, and certain computer software accelerated depreciation expense which is excluded from Adjusted loss attributable to owners of the parent for the quarter ended March 31, 2015 of $0.3 million.

On an operational level, the operating loss for the quarter ended March 31, 2015 was $10.1 million, as compared with an operating loss of $8.9 million for the same period in the prior year.

Other expense, net increased $0.4 million, or 13.8%, to $3.3 million (of which $0.8 million is excluded from Adjusted EBITDA), as compared with $2.9 million (of which $0.9 million is excluded from Adjusted EBITDA) for the prior year, primarily due to higher foreign exchange losses due to the strengthening of the U.S. currency in the current year period, partially offset by a favorable variance in the charge related to C&W’s non-controlling shareholder put option liability.

Adjusted EBITDA increased $2.0 million, or 51.3%, to $5.9 million for the quarter ended March 31, 2015, as compared with $3.9 million for the same period in the prior year. EBITDA, as reported, increased $1.0 million, or 76.9%, to $2.3 million for the quarter ended March 31, 2015, as compared with $1.3 million for the same period in the prior year. This is the second consecutive year C&W Group delivered positive EBITDA in the first quarter, despite seasonality, reflecting the impacts from the Company’s strategic initiatives.

The Adjusted loss attributable to owners of the parent for the first quarter of 2015 was $10.6 million, a slight increase from the Adjusted loss attributable to owners of the parent of $10.4 million for the first quarter of 2014.  The Adjusted loss attributable to owners of the parent excludes the tax-affected impacts of certain acquisition and non-recurring reorganization-related charges totaling $2.2 million and $2.1 million for the current and prior year periods, respectively, and the tax-affected impacts of certain computer software accelerated depreciation charges of $0.2 million for the current year period. The loss attributable to owners of the parent, as reported, was $13.0 million for the quarter ended March 31, 2015, as compared with the loss attributable to owners of the parent of $12.5 million for the same period in the prior year.

C&W Group’s net financial position as of March 31, 2015 was a negative $154.3 million (principally debt in excess of cash), as compared with a negative $56.8 million as of December 31, 2014. 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 was a negative $125.6 million. The change from March 31, 2014 to March 31, 2015 is primarily attributable to higher debt levels at the end of the current period due to the low cost financing used for the December 31, 2014 acquisition of Massey Knakal, in support of the Company’s strategic growth initiatives.

 

 

Commercial Register No.64236277 Legal notes | Credits