Performance by division in 2008

During the course of 2008, Pirelli RE adopted a new structure according to geographical area.

ItalY

Real estate sales in 2008 are Euros 570.5 million compared to Euros 1,730.4 million in the prior year. In Italy, the sales margin is 18 percent (in 2007, it was 22 percent). Total rents amount to Euros 336.9 million (Euros 371.9 million in 2007).

Operating profit (loss) (EBIT) including earnings (losses) from investments before restructuring expenses and property writedowns/revaluations in 2008 is a loss of Euros 19.2 million compared to a profit of Euros 77.9 million in 2007. The reduction of Euros 97.1 million is attributable to a reduction of Euros 75 million in earnings from capital activities and a decrease of Euros 22.1 million in earnings from management activities, especially reflecting the sharp decline in the agency business.

Germany

Real estate sales in 2008 are Euros 184.5 million compared to Euros 43.4 million in the prior year. In Germany, the sales margin is 16 percent (in 2007, it was 13 percent). Total rents amount to Euros 331.9 million (Euros 163 million in 2007).

Operating profit (loss) (EBIT) including earnings (losses) from investments before restructuring expenses and property writedowns/revaluations in 2008 is a loss of Euros 35.3 million compared to a profit of Euros 5.6 million in 2007. The change during the year is -Euros 40.9 million and is composed of -Euros 26.2 million from management activities (which last year, among others, included Euros 11.2 million of gains from the sale of investments) and -Euros 14.7 million from capital activities.

PolAND

Real estate sales in 2008 are Euros 109.9 million compared to Euros 31.1 million in the prior year. In Poland, the sales margin is 31 percent (in 2007, it was 33 percent).

Operating profit (loss) (EBIT) including earnings (losses) from investments before restructuring expenses and property writedowns/revaluations in 2008 is a profit of Euros 18.2 million compared to a profit of Euros 6.8 million in 2007. The increase during the year totaling Euros 11.4 million includes a negative change of Euros 1 million (in addition to Euros 2 million of costs relating to Romania and Bulgaria which have now ceased operations) from management activities and a positive change of Euros 14.4 million from capital activities. The improvement is due to the sale of part of the real estate portfolio in Warsaw.

NON-PERFORMING LOANS

Collections on non-performing loans are Euros 514.2 million in 2008 compared to Euros 541 million in the prior year.

Operating profit (loss) (EBIT) including earnings (losses) from investments in 2008 is a profit of Euros 10.1 million compared to a profit of Euros 23.4 million in 2007.

The reduction of -Euros 13.3 million is due to the negative change of Euros 4.9 million from management activities and the negative difference of Euros 8.4 million from capital activities.