SEARCH

RSS

Share to Facebook Share to Twitter Share to Linkedin More...

Board of directors approves draft financial statements for 2008

  • REAL ESTATE ASSETS MANAGED: €15.4 BILLION (€12.6 BILLION IN 2007)
  • RENTS TOTAL €669.2 MILLION (€535.8 MILLION IN 2007)
  • TOTAL REAL ESTATE SALES €864.9 MILLION (€1,804.9 MILLION IN 2007)
  • EBIT INCL. NET INCOME FROM INVESTMENTS AND BEFORE RESTRUCTING COSTS AND WRITEDOWNS: -€59.7 MILLION (+€83.6 MILLION IN 2007, NET OF DGAG)
  • WRITEDOWNS TOTAL €135.8 MILLION AND RESTRUCTURING €44.2 MILLION
  • TOTAL EBIT: -€239.7 MILLION (+€151.1 MILLION IN 2007, NET OF DGAG)
  • NET CONSOLIDATED INCOME: -€195 MILLION (+€162.8 MILLION IN 2007, NET OF DGAG) INCL. DISCONTINUED OPERATIONS OF €74.6 MILLION (SALE OF PIRELLI RE INTEGRATED FACILITY MANAGEMENT)
  • NET FINANCIAL POSITION: NET DEBT OF €289.5 MILLION (DOWN €34.3 MILLION SINCE SEPT-30-2008, IN LINE WITH DEC-31-2007)

THE BOARD HAS APPROVED THE DOCUMENT ON THE PROPOSED CAPITAL INCREASE OF €400 MILLION AND HAS CONVENED AN EXTRAORDINARY SHAREHOLDERS’ MEETING FOR APRIL 17TH TO APPROVE THIS OPERATION

At today’s meeting, the Board of Directors of Pirelli & C. Real Estate examined and approved the draft financial statements at December 31st, 2008, which will be presented for the approval of the ordinary shareholders’ meeting convened for April 17th, 2009.


Performance of the Group in 2008


The real estate market has suffered for a year of serious international crisis. Price reductions, fewer transactions and difficulty in accessing credit have penalized all companies in this sector. In order to face this new scenario, Pirelli RE announced at the end of last year plans to cut costs and reorganize with the focus on the two macro geographical areas of Italy and Germany/Poland, less exposed to real estate market volatility, and geared to relaunching the business and capitalizing on the quality of the assets held.

When reading the figures, please note that the Integrated Facility Management business, sold during the year, has been classified in “discontinued operations” and so its results are reported at the foot of the income statement immediately before net income. The figures for 2007 have been reclassified accordingly for the sake of consistent comparison.

Assets under management have a market value of €17.3 billion at the end of 2008, of which €15.4 billion in properties (€12.6 billion at December 31st, 2007) and €1.9 billion in non performing loans – NPL (€2.4 billion at December 31st, 2007).

The increase in properties, from €12.6 to 15.4 billion, is due to acquisitions (of approximately €5 billion, of which the Highstreet portfolio accounts for €4.6 billion), the transfer of management of the Berenice and Teodora funds to another fund manager (-€1 billion), property writedowns (-€0.6 billion), sales (-€0.9 billion) and other changes (+€0.3 billion).

The appendices contain an analysis of the assets managed by country and by type.
Rents totaled €669.2 million (€535,8 million nel 2007), of which Pirelli RE’s portion was €164.9 million compared to €158.3 million in 2007.
Real estate sales amounted to €864.9 million in 2008 (€1,804.9 million in 2007), of which the Pirelli RE share was €361.8 million (€526.8 million in 2007). Sales margin was 19% (22% in 2007).
Consolidated revenues amount to €365.1 million compared with €334.1 million at December 31st, 2007.

EBIT including net income from investments, before restructuring costs and property writedowns/revaluations, is a negative €59.7 million compared with a positive €83.6 million in 2007 (net of DGAG). The decrease of €143.3 million comprises €29.7 million in lower EBIT) and €113.6 million in lower income from investments (mainly attributable to €74 million in lower sales volumes, €21.6 million in lower success fees from capital activities and €18 million in fair value adjustments on interest rate hedging instruments).

Restructuring carried out in 2008 cost €44.2 million; the writedowns booked in 2008 amount to €135.8 million, compared with €67.5 million in revaluations in 2007; EBIT including net income from investments is, therefore, a negative €239.7 million (compared with a positive €151.1 million in 2007 net of DGAG).

Consolidated net income amounted to a negative €195 million (compared with a positive €162.8 million in 2007 net of DGAG), including €74.6 million in following the sale of the investment in Integrated Facility Management.

NAV of real estate assets attributable to Pirelli RE is approximately €0.8 billion, being the balance between its share of the market value of the assets held by Pirelli RE (€3.8 billion) and its share of the net financial position equal to €3 billion.
Group net equity is €361.7 million at December 31st, 2008 compared with €715.7 million at the end of 2007: the reduction mainly reflects the net consolidated loss (-€195.0 million), the distribution of dividends (-€85.1 million) and the decrease in the reserve for interest rate hedges (-€54.4 million).
The net financial position reports net debt of €289.5 million at the end of 2008, an improvement of €34.3 million since September 30th, 2008 (net debt of €289.7 million at December 31st, 2007). The adjusted net financial position (excluding shareholder loans to companies in which minority shareholdings are held) reports net debt of €861.8 million, down from €934.5 million at September 30th, 2008 (€816.1 million at December 31st, 2007). The gearing ratio went from 1.52 at the end of September 2008 to 2.35 at December 31st, 2008 (1.13 at the end of the prior year).

The net financial position of real estate funds and vehicle companies invested in by Pirelli RE is approximately €11.3 billion at December 31st, 2008 (€10.1 billion in bank debt and €1.2 billion in shareholder loans). The net financial position of the NPL amounts to €1.7 billion.
Pirelli RE’s total share of the financial position of the funds and investment companies is €3.6 billion (of which €0.4 billion in shareholder loans relating to real estate and €0.2 billion in shareholder loans relating to NPL). Bank debt of €3 billion is comprised of €2.6 billion for real estate and €0.4 billion for the NPL. This debt, which has an average residual life of 3.6 years, is secured against the properties and NPL underlying the loans.

The Group had, excluding temporary workers, 1,473 employees at December 31st, 2008 (2,956 at the end of 2007, of whom 1,168 working in businesses sold in the year, primarily the Integrated Facility Management joint venture sold on December 23rd).


Divisional performance in 2008


During the period under review the Company adopted a new structure by geographical areas. The results will now be examined, distinguishing between those from capital activities and those from management activities (asset management and services):


ITALY


Real estate sales amounted to €570.5 million at December 31st, 2008 compared with €1,730.4 million in the previous year. The sales margin in Italy was 18% (22% in 2007). Rents totalled €336.9 million (compared to €371.9 million in 2007).
EBIT including net income from investments, before restructuring costs and property writedowns/revaluations was a negative €19.2 million at December 31st, 2008 compared with a positive €77.9 million at December 31st, 2007. The decrease of €97.1 million is attributable to a reduction of €75 million in earnings from capital activities and a reduction of €22.1 million in earnings from management activities, reflecting above all the steep decline in the agency business.


GERMANY
Real estate sales amounted to €184.5 million at December 31st, 2008 compared with €43.4 million in the previous year. The sales margin in Germany was 16% (13% in 2007). Rents totalled €331.9 million (compared to €163 million in 2007).
EBIT including net income from investments, before restructuring costs and property writedowns/revaluations was a negative €35.3 million at December 31st, 2008 compared with a positive €5.6 million at December 31st, 2007. The decrease of €40.9 million comprises -€26.2 million from management activities (which in the previous year included €11.2 million in capital gains on the disposal of investments) and -€14.7 million from capital activities.


POLAND


Real estate sales amounted to €109.9 million at December 31st, 2008 compared with €31.1 million in the previous year. The sales margin in Poland was 31% (33% in 2007).
EBIT including net income from investments, before restructuring costs and property writedowns/revaluations was a positive €18.2 million at December 31st, 2008 compared with a positive €6.8 million at December 31st, 2007. The increase of €11.4 million includes a negative €1 million (which reflects €2 million in costs related to disposals in Romania and Bulgaria) from management activities and a positive €14.4 million in earnings from capital activities. The improvement is due to the sale of part of the property portfolio in Warsaw.


NPL


Collections of non performing loans amounted to €514.2 million at December 31st, 2008, compared with €541 million in the previous year.
EBIT including net income from investments was a positive €10.1 million at December 31st, 2008 compared with a positive €23.4 million at December 31st, 2007.
The decrease of €13.3 million comprises a reduction of €4.9 million in earnings from management activities, and a reduction of €8.4 million in earnings from capital activities.

Categories: Pirelli RE