Business Segments

12 Months Ended

Dec. 31, 2019

Business Segments

3. BUSINESS SEGMENTS

We manage and report our operations as four business segments:

The three geographic regions of RES including:

(1) Americas,

(2) EMEA and

(3) Asia Pacific;

and

(4) LaSalle, which offers investment management services on a global basis.

Each geographic region offers our full range of real estate services, including agency leasing and tenant representation, capital markets, property and facility management, project and development management, energy management and sustainability, construction management, and advisory, consulting and valuation services. LaSalle provides investment management services to institutional investors and high-net-worth individuals.

Operating income represents total revenue less direct and allocated indirect expenses. We allocate all indirect expenses to our segments, other than interest and income taxes, as nearly all expenses incurred benefit one or more of the segments. Allocated expenses primarily consist of corporate global overhead, which we allocate to the business segments based on the budgeted operating expenses of each segment.

For segment reporting, (i) gross contract costs and (ii) net non-cash mortgage servicing rights ("MSR") and mortgage banking derivative activity are both excluded from revenue in determining "fee revenue". Gross contract costs are excluded from operating expenses in determining "fee-based operating expenses." Excluding these costs from revenue and expenses results in a net presentation which we believe more accurately reflects how we manage our expense base, operating margins and performance. Refer to Results of Operations, included in Item 7. Management's Discussion and Analysis of Financial Condition and Results of Operations, for a full description of gross contract costs. In addition, our measure of segment results excludes Restructuring and acquisition charges.

The Chief Operating Decision Maker of JLL measures and evaluates the segment results excluding (a) gross contract costs, (b) net non-cash MSR and mortgage banking derivative activity and (c) Restructuring and acquisition charges. As of December 31, 2019, we define the Chief Operating Decision Maker collectively as our Global Executive Board, which comprises the following:



• Global Chief Executive Officer	• Chief Executive Officers of each of our four business segments
• Global Chief Financial Officer	• Global Chief Executive Officer of Corporate Solutions
• Global Chief Administrative Officer	• Global Head of Capital Markets
	• Global Co-Chief Executive Officers of JLL Technologies

Summarized financial information by business segment is as follows.



	Year Ended December 31,
($ in millions)	2019			2018		2017
Americas - Real Estate Services
Leasing	$	1,960.5		1,754.1		1,510.1
Capital Markets	914.2			500.3		473.0
Property & Facility Management	5,607.9			5,142.2		4,503.5
Project & Development Services	1,689.6			1,301.7		1,242.8
Advisory, Consulting and Other	406.7			342.7		285.7
Revenue	10,578.9			9,041.0		8,015.1
Reimbursements	(5,857.8		)	(5,164.7	)	(4,648.5	)
Revenue before reimbursements	4,721.1			3,876.3		3,366.6
Gross contract costs	(800.2		)	(652.9	)	(521.0	)
Net non-cash MSR and mortgage banking derivative activity	(21.2		)	(8.3	)	(15.7	)
Fee revenue	3,899.7			3,215.1		2,829.9
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	3,983.2			3,345.3		2,918.6
Depreciation and amortization	126.5			109.1		97.5
Segment operating expenses, excluding reimbursed expenses	4,109.7			3,454.4		3,016.1
Gross contract costs	(800.2		)	(652.9	)	(521.0	)
Fee-based segment operating expenses	3,309.5			2,801.5		2,495.1
Segment operating income	$	611.4		421.9		350.5
Equity earnings (losses)	1.7			0.8		(0.2	)
Segment income	$	613.1		422.7		350.3

EMEA - Real Estate Services
Leasing	$	302.7		333.0		303.6
Capital Markets	411.9			464.1		465.1
Property & Facility Management	1,551.6			1,482.2		1,342.7
Project & Development Services	904.3			920.3		691.1
Advisory, Consulting and Other	300.2			295.4		272.5
Revenue	3,470.7			3,495.0		3,075.0
Reimbursements	(709.7		)	(677.5	)	(471.9	)
Revenue before reimbursements	2,761.0			2,817.5		2,603.1
Gross contract costs	(1,104.2		)	(1,108.0	)	(1,038.7	)
Fee revenue	1,656.8			1,709.5		1,564.4
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	2,670.9			2,689.7		2,507.9
Depreciation and amortization	43.1			50.8		44.6
Segment operating expenses, excluding reimbursed expenses	2,714.0			2,740.5		2,552.5
Gross contract costs	(1,104.2		)	(1,108.0	)	(1,038.7	)
Fee-based segment operating expenses	1,609.8			1,632.5		1,513.8
Segment operating income	$	47.0		77.0		50.6
Equity (losses) earnings	(1.0		)	—		0.3
Segment income	$	46.0		77.0		50.9

Continued: Summarized financial information by business segment is as follows.



	Year Ended December 31,
($ in millions)	2019			2018		2017
Asia Pacific - Real Estate Services
Leasing	$	260.8		285.0		238.2
Capital Markets	216.1			181.0		211.3
Property & Facility Management	2,205.2			2,158.4		1,975.1
Project & Development Services	527.6			447.0		410.6
Advisory, Consulting and Other	197.8			177.1		172.1
Revenue	3,407.5			3,248.5		3,007.3
Reimbursements	(1,377.2		)	(1,369.2	)	(1,347.9	)
Revenue before reimbursements	2,030.3			1,879.3		1,659.4
Gross contract costs	(950.5		)	(829.6	)	(650.7	)
Fee revenue	1,079.8			1,049.7		1,008.7
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	1,876.6			1,743.0		1,520.1
Depreciation and amortization	26.4			23.2		22.1
Segment operating expenses, excluding reimbursed expenses	1,903.0			1,766.2		1,542.2
Gross contract costs	(950.5		)	(829.6	)	(650.7	)
Fee-based segment operating expenses	952.5			936.6		891.5
Segment operating income	$	127.3		113.1		117.2
Equity earnings	2.3			2.0		3.2
Segment income	$	129.6		115.1		120.4

LaSalle
Advisory fees	$	326.4		276.7		265.5
Transaction fees & other	61.3			41.4		33.4
Incentive fees	138.4			215.8		56.9
Revenue	526.1			533.9		355.8
Reimbursements	(7.9		)	(17.5	)	(17.5	)
Revenue before reimbursements	518.2			516.4		338.3
Gross contract costs	(15.3		)	(4.5	)	(5.1	)
Fee revenue	502.9			511.9		333.2
Operating expenses, excluding reimbursed expenses:
Compensation, operating and administrative expenses	397.7			379.7		277.0
Depreciation and amortization	6.4			3.0		3.0
Segment operating expenses, excluding reimbursed expenses	404.1			382.7		280.0
Gross contract costs	(15.3		)	(4.5	)	(5.1	)
Fee-based segment operating expenses	388.8			378.2		274.9
Segment operating income	$	114.1		133.7		58.3
Equity earnings	33.3			30.0		41.1
Segment income	$	147.4		163.7		99.4



	Year Ended December 31,
(in millions)	2019		2018	2017
Segment Reconciling Items
Fee revenue	$	7,139.2	6,486.2	5,736.2
Gross contract costs	2,870.2		2,595.0	2,215.5
Net non-cash MSR and mortgage banking derivative activity	21.2		8.3	15.7
Revenue before reimbursements	10,030.6		9,089.5	7,967.4
Reimbursements	7,952.6		7,228.9	6,485.8
Revenue	$	17,983.2	16,318.4	14,453.2
Total segment operating expenses, excluding reimbursed expenses & before restructuring and acquisition charges	$	9,130.8	8,343.8	7,390.8
Reimbursed expenses	7,952.6		7,228.9	6,485.8
Total segment operating expenses before restructuring and acquisition charges	$	17,083.4	15,572.7	13,876.6
Operating income before restructuring and acquisition charges	$	899.8	745.7	576.6
Restructuring and acquisition charges	184.4		38.8	30.7
Operating income	$	715.4	706.9	545.9

Identifiable assets by segment are those assets used by, or result from, each segment's business. Corporate assets are principally cash and cash equivalents, software, and computer hardware. The following table reconciles segment identifiable assets and investments in real estate ventures to consolidated amounts.



	12/31/2019			12/31/2018
($ in millions)	IDENTIFIABLE ASSETS		INVESTMENTS IN REAL ESTATE VENTURES	IDENTIFIABLE ASSETS		INVESTMENTS IN REAL ESTATE VENTURES
Real Estate Services:
Americas	$	8,256.4	23.9	$	5,288.9	17.0
EMEA	2,658.4		2.4	2,325.4		3.5
Asia Pacific	1,642.8		13.3	1,437.3		11.9
LaSalle	774.5		321.7	666.8		305.8
Corporate	340.5		42.9	307.1		18.7
Consolidated	$	13,672.6	404.2	$	10,025.5	356.9

The table below reconciles segment property and equipment expenditures to consolidated expenditures.



	Year Ended December 31,
($ in millions)	2019		2018	2017
Real Estate Services:
Americas	$	135.6	109.1	62.6
EMEA	41.6		39.0	44.5
Asia Pacific	43.4		25.4	20.3
LaSalle	7.6		3.0	1.2
Corporate	38.8		32.5	25.1
Total capital expenditures⁽¹⁾	$	267.0	209.0	153.7

(1) Included in total capital expenditures for the years ended December 31, 2019, 2018 and 2017, were $79.2 million, $47.1 million, and $2.3 million, respectively, related to acquisition of investment properties by less than wholly-owned consolidated VIEs.

The following table sets forth the revenue and assets from our most significant currencies.



	TOTAL REVENUE				TOTAL ASSETS
	Year Ended December 31,				December 31,
($ in millions)	2019		2018	2017	2019		2018
United States dollar	$	10,054.9	8,523.8	7,572.1	$	9,015.7	5,866.4
British pound	1,514.8		1,526.3	1,447.3	1,320.0		1,187.3
Euro	1,507.7		1,527.1	1,244.8	984.7		932.2
Australian dollar	924.5		916.7	909.7	323.3		291.6
Indian rupee	651.8		580.4	516.2	372.4		317.5
Hong Kong dollar	533.8		487.2	450.0	218.5		187.1
Chinese yuan	505.9		505.5	439.7	207.2		190.4
Canadian dollar	435.5		390.5	333.4	194.3		172.0
Japanese yen	349.4		285.2	238.2	146.8		96.4
Singapore dollar	309.2		458.7	268.0	217.3		236.5
Other currencies	1,195.7		1,117.0	1,033.8	672.4		548.1
	$	17,983.2	16,318.4	14,453.2	$	13,672.6	10,025.5

We face restrictions in certain countries that limit or prevent the transfer of funds to other countries or the exchange of the local currency to other currencies, however, we generally face no such restrictions with regard to the use or application of funds for ordinary course business activities within such countries. The assets of these countries represented approximately 5% and 6% of our total assets as of December 31, 2019 and 2018, respectively.