Prelios: Board approves 2017 draft separate financial statements and consolidated financial statements

Apr 27 2018
Price sensitive

2017 market targets beaten

Improvement in key business and financial indicators

 

Consolidated EBIT[1] improves (+72%) to € 6.9 million (€ 4.1 million in 2016)

Consolidated revenues up to € 80.4 million (€ 76.8 million[2] in 2016)

Consolidated net loss of € 33.8 million (loss of € 29.8 million in 2016),

net of the Investments arm net profit of € 2.6 million (net loss of € 11.1 million 2016)

Net Financial Position reflects liquidity of € 1.3 million

(debt of € 6.5 million at December 31, 2016)

 

*

 

Mandatory global public tender offer on Prelios S.p.A. shares by Lavaredo S.p.A.

after exceeding the 95% threshold required for exercise of the squeeze-out.

Prelios will be delisted with Lavaredo S.p.A. as sole shareholder

 

Milan, April 27, 2018 – At a meeting today chaired by Fabrizio Palenzona, the Board of Directors of Prelios S.p.A. reviewed and approved the 2017 Draft Financial Statements and Consolidated Financial Statements.

The results as at December 31, 2017 beat the targets announced to the market in the 2015-2017 Business Plan.

In 2017 the Prelios Group reported a significant improvement in many indicators compared with 2016, specifically:

  • a 5% increase in consolidated revenues, from € 76.8 million in 2016 to € 80.4 million in 2017;
  • consolidated EBIT up 72% to € 6.9 million (€ 4.1 million in 2016);
  • an improvement in consolidated ROS to 8.6%, from 5% in 2016;
  • an improvement in the net financial position to reflect liquidity of € 1.3 million at December 31, 2017, compared with debt of € 6.5 million at the end of 2016.

 

Prelios Group performance at December 31, 2017

The Prelios Group reported 5% growth in consolidated revenues, from € 76.8 million in 2016 to
€ 80.4 million in 2017. The increase confirms the constant progress in Group revenues since 2015, with a 2015-2017 CAGR of 6.6%.

Consolidated EBIT (including G&A holding expenses) was € 6.9 million, up 72% from € 4.1 million in 2016, reflecting higher business volumes at the Group's Business Units and the on-going optimization of costs.

Consolidated ROS rose from 5.3% in 2016 to 8.6% in 2017.

The Group posted a consolidated net loss for 2017 of € 33.8 million, against a loss of € 29.8 million for 2016. The downturn of € 4 million reflected the negative effect of the Investments arm, arising largely from the write-down on the equity investment in Focus Investments S.p.A.

Without the Investments arm, the Prelios Group would have posted net income for 2017 of approximately € 2.6 million (compared with a net loss of € 11.1 million reported for 2016).

The net financial position4 of the Prelios Group at December 31, 2017 reflected liquidity of € 1.3 million, a strong improvement from debt of € 6.5 million at December 31, 2016. The trend was assisted by the now consolidated generation of cash flows by ordinary operations, and also, largely, by distributions paid out by the Cloe Fund.

Consolidated net assets amounted to € 58.4 million, compared with € 91.0 million at December 31, 2016. The change arose almost entirely as a result of the loss for the year.

Alternative Asset Management Performance

The Prelios Group's Alternative Asset Management operations – thanks to the results of Prelios SGR and Prelios Credit Servicing – recorded total revenues of € 31.5 million, an increase of 20.7% from € 26.1 million in 2016. Operating profit was approximately € 7.1 million, up from operating profit of € 5.5 million in 2016.

Prelios SGR reported 2017 revenues of € 18.0 million, up from € 17.3 million in 2016. Operating profit was € 6.8 million, rising from € 5.8 million in 2016. Prelios SGR, which has assets under management of approximately € 4.1 billion, set up three new Alternative Investment Funds in 2017, with assets for an acquisition value of € 357.9 million:

  • Areef 1 Italy REIF Fund, whose investment policy focuses on properties largely for commercial use with a core plus-value added profile;
  • Estia Social Housing Fund, which began operations in January 2017;
  • Ermete Fund, set up on November 14, 2017, whose investment policy focuses on properties for industrial/logistics use.

On November 15, 2017, FICO Eataly World, the world's largest agro-food park, financed by Prelios SGR through the PAI Parchi Agroalimentari Italiani Fund, was officially opened in Bologna. On March 15, 2018, the park, for which Prelios Integra acted as project manager, was awarded first place in the Best Shopping Center category at the prestigious MIPIM Awards.

In 2017, Prelios Credit Servicing (PRECS) recorded revenues of € 13.5 million, an improvement of 53% from € 8.8 million the previous year. It posted an operating profit for 2017 of € 0.4 million, compared with an operating loss of € 0.3 million in 2016. During 2017, PRECS acted as Special and Master Servicer on 75% of public transactions with GACS (the Italian treasury's NPL securitization guarantee), providing solid due diligence and advisoring support to help many leading banks draw up and implement optimal strategies to enhance NPLs through sales or securitization with GACS; completing, on behalf of a leading Italian banking group, the second GACS securitization transaction on a portfolio with an overall nominal value of approximately € 960 million, and its management start-up; assisting various international investors bidding for NPL portfolios; bringing management of the portfolios acquired in 2016 to full operation and monitoring management of the portfolios acquired in previous years, in its role both as special servicer and master servicer. In February 2017, Standard & Poor's confirmed PRECS’ “Above Average” rating as a Special and Master Servicer. In June 2017 Fitch Ratings confirmed its RSS2+ and CSS2+ ratings for PRECS as a Special Servicer.

Real Estate Services Performance

Italian and international Real Estate Services operations recorded total revenues of approximately
€ 49.6 million, essentially in line with the prior-year figure of € 50.3 million. Operating profit was
€ 5.7 million, up by 5% from € 5.4 million in 2016.

This result arose from the positive performance of Italian operations, with an increase in revenues and a significant improvement in margins (+18%), and the performance of operations outside Italy, which were affected by start-up expense on the Frankfurt investment management platform.

Prelios Integra S.p.A. reported revenues of € 22.8 million for 2017, a small increase from € 22.7 million in 2016. Operating profit was € 2.5 million, an improvement from € 2.4 million in 2016. In 2017 Prelios Integra successfully continued the process begun in previous years to transform itself from a business unit with primarily captive clients to a service provider deploying an external-growth open market strategy under which it establishes and develops relations with third-party clients. New business relations were formed during the year with qualified international investors, and ties with existing investor clients were strengthened. In 2017 the company also acquired a number of new contracts, through public and private tenders and/or through direct offers. Specifically, it signed new property mandates with BNP Paribas Real Estate, Amissima Assicurazioni and Zurich Assicurazioni; due diligence engagements with Cerberus and LFPI Foncière relating to acquisitions in Italy; project/engineering engagements with Collegio San Carlo S.r.l., Poste Italiane and Leonardo Global Solution S.p.A. In December 2017, Prelios Integra and Siemens Italia entered into a cooperation agreement on digital technology for buildings. The aim is to increase the value of properties through energy savings and building performance sustainability.

Prelios Agency S.p.A. reported revenues of € 3.6 million, compared with € 3.0 million in 2016. It brokered transactions for € 115.4 million, of which € 86.6 million for third parties. Operating profit was € 0.3 million – from an operating loss of € 0.1 million in 2016 – driven by a different revenue mix with higher margins, and the containment of overheads. In 2017, Prelios Agency continued with its transformation from a company primarily dedicated to captive clients to a broker and advisor addressing third-party clients, positioning itself as a strategic partner in real estate brokerage for public or private investors, as well as for real estate funds and institutional operators. At December 31, 2017, the Prelios Agency sales mandate portfolio stood at approximately € 1.9 billion, compared to approximately € 1.6 billion at December 31, 2016; the lease mandate portfolio consisted of 207,000 sq.m with rents for approximately € 33.0 million. In 2017, 31,000 sq.m were leased for full-service annual rents of € 6.4 million, and leases were re-negotiated for 4,400 sq.m for full-service annual rents of € 1.1 million.

Prelios Valuations S.p.A. had revenues of € 11.0 million in 2017, a slight increase from € 10.5 million in 2016 reflecting the rise in revenues from Full Appraisal operations. 2017 operating profit was € 2.0 million, up from € 1.9 million in 2016. In Loan Services – property appraisals for banks in connection with mortgage loans – Prelios Valuations reported volume growth on almost all existing clients, driven by interest rates still at record lows, stronger competition among banks and a general climate of confidence in the upturn of the real estate market. In 2017 Prelios Valuations was awarded six important contracts through bids and/or private negotiations for appraisal services in the residential and non-residential segments. In Risk Management Solutions it continued providing regular asset revaluation services with the MAGISTER system. In the first half of 2018, Prelios Valuations will officially present PREMIUM, the new property risk management platform developed in collaboration with BRaVE m&t (a spin-off of the Politecnico di Milano), Microsoft, Consodata, Magister and Agic Technology.

Prelios Immobilien Management GmbH (Germany) reported revenues for € 11.5 million, down from the 2016 figure of € 13.7 million, which reflected the positive impact of agency fees generated from the sale for a third party of a commercial property in Dresden. The German company had an operating break-even compared with an operating profit of € 1.4 million in 2016, largely as a result of expenses incurred for the start-up of the new Prelios German Retail Property Fund. Prelios Real Estate Advisory Sp. z o.o. (Poland) reported revenues of € 0.7 million in 2017, up from € 0.4 million in 2016. It posted an operating profit of € 0.9 million after substantially breaking even in 2016.



1 From an industrial viewpoint, the consolidated financial statements provide a better representation of the Group as a whole, since the Group is made up of a number of companies in which Prelios S.p.A. holds equity investments directly or indirectly.
2 The company's EBIT consists of the operating result – inclusive of general and administrative expense (G&A Holding) and adjusted for restructuring costs – and the net income/(loss) from equity investments relating to the operating companies active in Alternative Asset Management and Real Estate Services.
3 2016 revenues do not include revenues at the Investments arm (€ 4.5 million). In 2016 Prelios completed the spin-off of the Investments arm into Focus Investments S.p.A..
4 Excluding shareholder loans.