Pirelli Real Estate board examines preliminary results for H1 2005 (IT)

The Board of Directors of Pirelli & C. Real Estate met yesterday to examine the Group's preliminary, unaudited results for the six months ended 30 June 2005, which report another set of strong results.

Before examining the figures in detail, it should be noted that Pirelli RE is a management company, which manages funds and special purpose companies that own properties and nonperforming loans, and in which it holds minority interests (the fund and asset management businesses). It also provides a full range of property services to the above vehicles and to other customers (the property services business), either directly or via its franchise network of estate agents. Aggregate revenues (which according to IAS/IFRS accounting standards substantially equate with the previously used aggregate value of production net of acquisitions) and operating profit including income from equity participations are, therefore, the most appropriate measure of the Group's turnover and operating performance.

Group operating performance in H1 2005
The figures for the first half of 2005 are compared with those for the same period of 2004, after reclassification in accordance with international accounting standards. Aggregate revenues amount to approximately €1,742m, marking a 44% improvement on the €1.213.5m of the first half of 2004. Operating profit including income from equity participations amounts to approximately €80m, rising 38% on the €58.2m of the previous first half (up 21% on the figure for the same period of 2004 based on Italian GAAP, which forms the basis on which the Company measures its performance against the targets set out in its three-year plan for 2003-2005).

Net debt stands at approximately €43m, representing an improvement compared with the €46.3m of June 2004 (€12.4m at 31 March 2005). Adjusted net debt (including shareholder loans to companies in which the Group has minority stakes) totals approximately €273m, compared with €281.2m at 30 June 2004 (€200.1m at the end of March 2005). The Group's gearing is expected to be down compared with the 0.69 of June 2004.

Performance of main areas of business in H1 2005
Fund and Asset Management
Aggregate revenues from Fund and Asset Management amount to approximately €1,496m for the first six months of 2005, representing a rise of 45% compared with the same period of 2004 (€1,028m). This reflects the significant increase in sales during the period and the strong performance of management fees. The figure does not include revenues of approximately €110m earned by Rinascente S.p.A., in which Pirelli RE has held a 20% stake since 6 May, in that such revenues are not related to the property business.
Asset management activities generated property sales of approximately €1,265m during the period, with gross gains amounting to approximately €357m. This compares with sales and contributions to funds of €2,206.4m in the first half of 2004 (realising a gain of
€295.3m). No contributions to funds were carried out during the first half, unlike the corresponding period of the previous year when asset contributions amounted to €1,532.9m. The results for the period under examination do not yet take account of the July placement of shares in the Berenice Offices Fund, the fifth seeded real estate fund to be launched by Pirelli RE SGR.

Operating profit including income from equity participations amounts to approximately €63m for the first half of 2005, up 19% on the €53.0m of the same period of the previous year. For the first time, non-performing loans made a positive contribution of approximately €2m, compared with a loss of €0.7m recorded in the first half of 2004. Purchase agreements worth a total of approximately €1,920m have been entered into to date, with transactions amounting to €1,490m completed during the first half of the year, compared with €578.4m in the same period of 2004. Pirelli RE's share of the total stands at around 28%.

Property Services
Property services generated a consolidated revenues of approximately €167m, compa

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