Pirelli & C. Real Estate

On September 9th, 2004 the Board of Directors of Pirelli & C. Real Estate examined and approved the Group financial statements for the first half ending on June 30th, 2004. The results confirmed an ongoing growth trend, in line with the targets set out in the Three-Year Plan.

The aggregate value of production, net of acquisitions, totalled € 910.7 million, with growth of 31% as compared with € 693 million in the first half of 2003. As at June 30th, the value of consolidated production alone stood at € 257.8 million, as against € 282.2 million in 2003. Consistent with the Group’s business model this decrease is due to the growing impact of share capital initiatives involving significant minority stakes, as opposed to initiatives involving consolidated capital.

EBIT (including pro-quota income from participations) totalled € 66.2 million, as against € 53.3 million in the first half of 2003, representing growth of 24%.

Consolidated net income was € 50.5 million, as compared with 40.3 million Euro in the first half of 2003, with growth of 25%.

Shareholders’ equity as at June 30th, 2004 was € 417.9 million as compared with € 421.6 million at the end of 2003. The decrease is largely due to the differential between the distribution of dividends (€ 53.8 million) and profit for the period (€ 50.5 million).

Assets under management, including non-performing loans at market value (and not at gross book value as in the past), amounted to € 10 billion, an increase compared to the figure of € 9.7 billion at the end of 20031. The figure as at June 30th still does not include the portfolio of non-performing loans arising from the binding contract signed with Morgan Stanley Real Estate Funds after the end of the period, and thanks to which assets under management at market value rise to a figure in excess of € 11 billion.

Assets under management (€ 10 billion) are broken down into € 8.2 billion of opportunistic portfolio and € 1.8 billion of long term portfolio. Pirelli RE’s stake in the opportunistic portfolio is 29% (26% at the end of 2003); in the long term portfolio, managed by Pirelli RE SGR, the figure stands at 3.8% (this business was not present in 2003). Further to the different management mix, and in line with the three-year plan, the overall stake of Pirelli RE is € 2.4 billion, equal to 24% (€ 2.6 billion, or 26%, at the end of 2003).

The Net Asset Value, the sum of shareholders’ equity and the implicit pro-quota capital gains (equal to € 664.5 million), stood at € 1,082.4 million.

The net financial position was negative at € 43.6 million, an improvement of € 27.8 million compared with € 71.4 million as at June 30th, 2003 (€ 9.2 million at the close of 2003).

The adjusted financial position (gross of shareholders loans to companies where a minority stake is held) was negative at € 278.5 million as compared with the negative figure of € 249.3 million as at June 30th, 2003 (negative at € 223,7 million at the end of 2003). The gearing ratio stood at 0.66 as against 0,69 on June 30th 2003 (0.53 as at December 31st, 2003), in line with the targets of the three-year plan.

Group headcount as at June 30th, 2004 stood at 1,530 personnel, as compared with the figure of 1,515 at the close of 2003.

Outlook for 2004
On the basis of the data currently available, all reasonable forecasts suggest that in 2004 EBIT (inclusive of results from participations), will record further growth compared with 2003, in line with the three year plan.

Source: Pirelli & C. Real Estate

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