Press release Prelios: Bod Approves The Data As At 30 September 2015

Milan, 6 November 2015 - At its meeting held today, the Board of Directors of Prelios S.p.A. examined and approved the consolidated results as at 30 September 2015 .

Group performance as at 30 September 2015

The Group reported consolidated revenues of € 45.8 million (€ 51.1 million as at 30 September 2014), composed for the most part of the € 41.8 million of Italian and foreign services platform revenue (€ 50.5 million as at September 2014). The drop in turnover is largely attributable to the services platform in Italy that has been affected by the decline in revenues related both to the Fondo Olinda Fund, now wound up, and the Fondo Tecla Fund, the management fees for which are required by law to be reduced in the event of extraordinary extension of its term.

The negative Group EBIT reached € 12.1 million (€ -6.2 million as at 30 September 2014) and is composed as follows:

  • of the services platform operations that recorded a positive result of € 2.5 million (€ 8.7 million at September 2014) excluding general and administrative expenses (G&A) that amounted to € 5.8 million;
  • of the investment operations, i.e. the revenue generated by Prelios through its investments in funds and companies which hold real estate and Non-Performing Loans, which are negative as at € 8.8 million (€ -6.3 million as at 30 September 2014).

The net result for the Group is a loss of € 16.6 million. The loss is reduced to a third compared with the result as at 30 September 2014 (loss of € 48.4 million).

The net result, in addition to benefiting from the positive effects arising from the repayment of the debt related to UBI Banca, was only marginally affected by items outside of ordinary operations, and in particular:

  • property revaluations/write downs, that had a positive impact of € 2.7 million (loss of € 23.6 million as at 30 September 2014);
  • restructuring charges that had a positive impact of € 0.6 million (loss of € 2.3 million as at 30 September 2014).

Consolidated shareholders' equity is positive and amounts to € 90.8 million compared with € 107.3 million.

The net negative financial position amounts to € 199.5 million (loss of € 187.6 million as at 31 December 2014).

Performance of the Business Divisions as at 30 September 2015

ITALY

The EBIT of the service Platform in Italy as at 30 September 2015 is positive amounting to € 2.4 million, compared to a positive value of € 7.3 million in the same period of 2014. The reduction in performance is largely attributable to the drop in revenues due to the reduction in the above mentioned fund fees and a temporary reduction of the assets under management. In detail:

 

 

 

  • Prelios SGR (Fund Management) posted revenues of € 11.2 million (€ 15.4 million in the same period of 2014) and a positive EBIT of € 2.1 million (€ 5.9 million as at 30 September 2014). This decline is attributable both to the exit from management of the listed fund Olinda Fondo Shops, the winding-up of which was completed in the first half of this year, as well as to the reduction in management fees relating to the Fondo Tecla fund, the term of which was extended. As at 30 September 2015 Prelios SGR had assets under management of approximately € 3.5 billion. The outlook for internal growth of the Asset Management Company will focus not only on traditional real estate funds (for example, the assets of social security institutions and pension funds, contributions from the public, capital assets) but also in the field of the "innovative" funds (for example social housing, school construction, loan funds, infrastructures) and the new investment facilities (for example Sicafs, Sicavs, SIFs, SIIQs).
  • Prelios Credit Servicing (the Group company engaged in the management of non-performing loans) posted revenues of € 4.8 million (€ 6.2 million in September 2014). The decline is due both to the end of the special servicing mandate following on the sale of DGAD, as well as the lack of una tantum revenue components which instead characterised the first nine months of 2014 and were gained from the sale of the Mediofactoring portfolio. EBIT was negative, amounting to € 2.4 million, compared with a negative value of € 0.5 million as at 30 September 2014 mainly as a result of the aforementioned drop in revenues. Collection of non-performing loans amounted to € 39.6 million, against € 36.3 million as at 30 September 2014. In collaboration with Prelios, Fortress completed the acquisition of UCCMB on 30 October 2015, including a portfolio of non-performing loans amounting to € 2.4 billion.
  • Prelios Integra posted revenues of € 12.8 million compared to € 14.0 million recorded in the same period of 2014. The decline is mainly due to lower fees generated by the management of shopping centres, only partially offset by improved results from global services, development and sales support. Despite the fall in revenues, the positive EBIT amounting to € 1.6 million, is slightly up against the figure posted in the first nine months of 2014, which was positive at € 1.4 million, thanks in particular to the writing-off of certain liabilities. In July a framework agreement was signed for the duration of two years with Unicredit Business Integrated Solutions for Building & Construction operations in some types of premises for office and bank use for Unicredit and Fineco Bank branches.
  • Prelios Agency posted revenues of € 1.6 million (€ 2.4 million in the same period of last year) with a negative EBIT of € 1.7 million (€ -0.5 million at 30 September 2014). The decline in both indicators is attributable to the winding-up of Olinda-Fondo Shops, in 2014, as well as to lower commissions as a result of the renegotiation of some lease agreements.
  • Prelios Valuations (the Group company that operates in the field of appraisals of individual buildings and real estate for commercial and residential use, specializing in valuation services for banks) posted revenues of € 4.3 million (€ 3.1 million at 30 September 2014) with a positive EBIT of € 0.4 million as at September 2014. The improvement in revenues attributable to the loan services business is not totally reflected on the result due to a different mix of margins.

Germany

The revenues at 30 September 2015 of the German services platform amounted to € 7.7 million (€ 9.6 million at 30 September 2014) and the EBIT was positive to the sum of € 2.7 million (€ 2.2 million at 30 September 2015). The decline in revenues is to be attributed to the loss of some third-party mandates in the shopping mall sector that expired at the end of 2014 and have not been entirely offset by the acquisition of new business. The EBIT at 30 September 2015, conversely, has benefited from the positive impact arising from the analysis of the recoverability of the shareholder loan granted to Gadeke due to the definition of a sale price for the underlying property that was higher than expected.

POLAND

The Polish services platform posted positive revenues of € 0.3 million (€ 0.2 million at September 2014), while the EBIT recorded a slight improvement, but was still negative by € 0.2 million. The good performance of business in Poland helped to boost, in the third quarter, the creation and launch of Prelios Real Estate Advisory – REA, the company entirely devoted to advisory services on the Polish market that supports the business activities that have historically been present in the region. The company aims to aggregate investor demand on the local market for advisory services in property investment, asset management and brokerage.

Business outlook

Also in consideration of the already referred-to improved developments in the reference market, Prelios has identified and is currently implementing, as regards the individual Business Units of the Group, a series of measures and initiatives implementing the 2015-2017 Business Plan approved by the Board of Directors on 6 August.

From a management point of view, the year 2015 – which represents the final year for the transformation of the company into a pure management company – will be dedicated, also in the last quarter, to the re-launch of Prelios as a European reference hub in the property and financial services sector.

For this purpose, as already announced to the market, the Company passed a resolution (i) for the spin-off of the investments segment from the services segment with the aim of accelerating the achievement of the so-called objective of repositioning the company within the framework of a redefinition of the scope of the Group’s activities and (ii) for the strengthening of the overall financial and equity position also through the expected share capital increase under option.

Albeit within the low levels of the range, the Group confirms the following financial targets for 2015 that were already announced to the market with the 2015-2017 Business Plan:

  • Turnover of the Services Platform: between € 75 and 80 million
  • Positive EBIT of the Services Platform amounting to € 6-8 million, excluding the general and administrative expenses.

In conclusion, following the results of the 2015-2017 Business Plan, as well as the expected completion of the spin-off and the strengthening of capital, the Directors of Prelios consider it appropriate to assume that the Group may continue to operate as a going concern.

Last updated: 08/04/2016