THE BOD APPROVES THE 2015 DRAFT SEPARATE AND CONSOLIDATED FINANCIAL STATEMENTS

BUSINESS PLAN TARGETS CONFIRMED FOR 2016 AND 2017

 2015 FIGURES ARE IN LINE WITH THE TARGETS ANNOUNCED TO THE MARKET NOTWITHSTANDING THE SLIGHT DECLINE IN REVENUES

• € 70.1 MILLION IN REVENUE FOR THE SERVICES PLATFORM[1] (€ 71.7 MILLION IN 2014)
• € 7.3 MILLION IN EBIT FOR THE SERVICES PLATFORM[2] (€ 12,5 MILLION IN 2014)
• € -44.5 MILLION IN NET LOSS ATTRIBUTABLE TO THE GROUP (€ -61.1 MILLION IN 2014), MAINLY DUE TO THE LOSS (€ -8.9 MILLION) AND NON-RECURRING ITEMS (€ -20.1 MILLION) OF THE INVESTMENT PORTFOLIO CONTRIBUTED TO FOCUS INVESTMENTS
• € -184.9 MILLION NET FINANCIAL POSITION (€ -187.6 MILLION AT 31 DECEMBER 2014)

THE PROCESS OF REPOSITIONING AS A PURE MANAGEMENT COMPANY COMPLETED WITH THE CONCLUSION OF THE INVESTMENTS SPIN-OFF AND THE CAPITAL INCREASE

• CORPORATE BANK DEBT[3] REDUCED TO APPROXIMATELY € 20 MILLION (FROM € 258.5 MILLION IN 2014)
• POST-CAPITAL INCREASE PRO FORMA NET FINANCIAL POSITION € +5.8 MILLION (€ -187.6 MILLION IN 2014)
• THE BOARD THANKS OUTGOING SERGIO IASI FOR HIS WORK AND APPOINTS RICCARDO SERRINI AS GENERAL MANAGER

CALL OF SHAREHOLDERS' MEETING

Milan, 21 March 2016 – Meeting today, the Board of Directors of Prelios S.p.A. has examined and approved the 2015 Draft Separate and Consolidated Financial Statements, which will be submitted to the next Ordinary Shareholders' Meeting.

The Company Board of Directors, who had already acknowledged the results of the recent share capital increase, has also expressed its appreciation for the successful conclusion of the process of repositioning the Company as a pure management company through the spin-off of real estate assets to the new special purpose vehicle Focus Investments, the debt restructuring and the Rights Offering subscribed for approximately 92% by the market, with the remaining amount being subscribed by Intesa Sanpaolo through the conversion of financial receivables.

Today, Sergio Iasi, Prelios S.p.A.’s Chief Executive Officer, resigned from his position having met the objectives he set out to achieve, most recently the successful Rights Offering. Mr Iasi has led the company since 2013 and successfully completed Prelios’ repositioning as a pure management company. The Board of Directors and the Shareholders thank him for his work. In order to ensure management continuity and given the new structure achieved, which is fundamental to the company’s future growth and the creation of a European asset management hub, the Board of Directors set up a General Management department, without appointing – for the time being – a new CEO, and granted Riccardo Serrini all operating powers in this respect. Mr Serrini will maintain his role as CEO of Prelios Credit Servicing, the Group’s platform specialised in non-performing loans; moreover, together with the management team of the individual business divisions, he will be responsible for the development and the focussing on asset management activities and services.

Former CEO and CIO of Prelios SGR and with more than 20 years of experience as a manager, of which 15 in the real estate finance industry, Riccardo Serrini has originated, structured, distributed and managed more than Euro 12 billion of debt, quasi equity and equity transactions, real estate securitizations (CMBS/RMBS) and non-performing loan acquisitions.

GROUP OPERATING PERFORMANCE AT 31 DECEMBER 2015

The Group had consolidated revenue of Euro 70.9 million, compared with Euro 72.1 million at 31 December 2014. In particular, services platform revenue[4], from inside and outside Italy was Euro 70.1 million, down slightly from Euro 71.7 million in 2014 and slightly less than the targets announced to the market.

EBIT[5] was a negative Euro 9.7 million, as compared with Euro 15.0 million at 31 December 2014. It was composed as follows:

• the services platform activities[6] had positive EBIT for Euro 7.3 million (12.5 million at 31 December 2014) in line with the targets announced to the market.
• investment activities[7], i.e. the EBIT generated by Prelios through its own investments in funds and companies, totalled a negative Euro 8.9 million (Euro +14.4 million in 2014, as it included a considerable gain from the sale of an area in Poland).

The net loss attributable to the Group was Euro 44.5 million, marking an improvement from the net loss of Euro 61.1 million in 2014. The reduction in the net loss from the last year stemmed, inter alia, from the reduced impact of impairment of real estate.

Real estate sales[8] during 2015 totalled Euro 549.2 million (amount attributable to the Group: Euro 141.3 million), compared with Euro 877.7 million at 31 December 2014.

The net financial position[9] at 31 December 2015 was a negative Euro 184.9 million (Euro -187.6 million in December 2014) in line with the trend tracked by cash attributable to the Group.

Consolidated equity totalled Euro 66.0 million (Euro 107.3 million at 31 December 2014) and the equity attributable to the Group was Euro 63.2 million (Euro 104.8 million at 31 December 2014).

Effects of the extraordinary spin-off transaction and conclusion of the repositioning process as a pure management company

In the first few months of 2016, the Company successfully completed the extraordinary spin-off transaction. This was marked by the spin-off of the investments business unit, restructuring of the debt and the Euro 66.5 million rights offering that was subscribed by approximately 92% by the market and the remainder by Intesa Sanpaolo through the conversion of financial receivables. On the basis of the pro forma figures, in consequence of the transaction:

• The corporate bank debt[10] of Prelios was reduced by Euro 238.5 million to Euro 20.1 million, in consequence of the full release of Prelios from joint liability related to the debt contributed to Focus Investments and the completion of the rights offering;
• New conditions were defined for the remaining Euro 20.1 million of Prelios. These new conditions were added to the original loan agreement and the Restructuring Agreement with the Lending Banks[11]. Inter alia, these new conditions postpone the due date beyond the horizon of the Business Plan;
• Consolidated equity amounts to approximately Euro 123 million after the share capital increase;
• The net financial position improved by Euro 190.7 million from the Euro -184.9 million at 31 December 2015 to Euro 5.8 million.

PERFORMANCE OF THE BUSINESS DIVISIONS AT 31 DECEMBER 2015[12]

ITALY

The revenues of the Italian Services Platform at 31 December 2015 total Euro 57.4 million (Euro 56.3 million at 31 December 2014). The Services Platform in Italy had positive EBIT of Euro 4.5 million at 31 December 2015, down from the Euro 9.5 million reported in 2014. Specifically in regard to the performance and prospects of the individual companies of the domestic services platform, it is noted that:

Prelios SGR (Fund management) had a total of Euro 16.7 million in revenue (Euro 20.5 million in 2014) and positive EBIT of Euro 3.6 million (Euro 7.3 million at 31 December 2014).

The reduction in revenue is attributable both to termination of management of the listed fund Olinda Fondo Shops, whose liquidation was completed in the first half of the year, and to the reduction in management fees generated by the Tecla Fund, for which an extension has been requested. Prelios SGR had about Euro 3.8 billion in assets under management at 31 December 2015.

With respect to new projects, during the year, Prelios SGR established a new fund called Aurora by contributed assets and a collection fund called Weybridge. Furthermore, it established three new funds, two of which are focused on social housing, which will become operational in early 2016. Moreover, Prelios SGR has taken over the management of two real estate funds, bringing the new projects under way to six. Activities also continued to increase the amount of assets managed through the funds already under management, with the acquisition and contribution of new properties, and continuation of property development projects.

Prelios Credit Servicing, a Group company operating in the non-performing loan management sector, with a gross book value (GBV) under management of Euro 9.5 billion at 31 December 2015, had revenue of Euro 9.5 million in the same period (Euro 7.7 million at 31 December 2014). EBIT was a negative Euro 0.7 million, marking an improvement over the Euro -1.4 million at 31 December 2014. The fees generated by ICR8 made a positive contribution to earnings.

Prelios Integra had revenue of Euro 20.9 million, up from Euro 19.1 million in 2014. This increase is mainly due to the improved results from the general building contract activity related to the remodelling of Unicredit bank branches and for due diligence and urban planning activity (Unicredit Leasing, Aeroporti di Roma, Abaco Servizi, Unipol, CDP SGR). It had EBIT totalling a positive Euro 1.4 million, down from Euro 2.5 million in 2014. This decrease stemmed partly from the higher costs incurred for professional engagements related to subcontracting of the land registry compliance service, the costs for services related to the general building contract and urban planning activity, and the costs incurred for legal advice.

Prelios Agency had a total of Euro 3.6 million in revenue (Euro 5.0 million in 2014) and negative EBIT of Euro 0.9 million (positive Euro 0.8 million at 31 December 2014). During the year, the Company was awarded new contracts and renewed a number of commercialisation agreements worth approximately Euro 478 million. Furthermore, it was assigned new important leases worth roughly Euro 9 million. Over the year, an annual agreement was concluded with Telecom Italia S.p.A. for the renegotiation of rents on industrial and mixed-use properties, as well as sales mandates for office, retail and residential property portfolios of major investors, such as Finanziaria Internazionale SGR, CDP Investimenti SGR, UnipolSai Real Estate, Unicredit and BNP Paribas Reim SGR.

Prelios Valuations is the Group company providing valuations of individual properties and real estate portfolios for service sector and residential use, specialising in valuation services for banks. In 2015 it had revenue of Euro 6.7 million (Euro 4.0 million at 31 December 2014) and positive EBIT of Euro 1.1 million (positive Euro 0.3 in 2014). The uptick in the first indicator stemmed largely from higher loan services revenue and does not entirely reflect on the result due to the different mix of margins.

GERMANY
The revenue generated by the German management platform reported at 31 December 2015 totalled Euro 12.3 million (Euro 15.1 million at 31 December 2014). The decrease is mainly due to the loss of some mandates which expired at the end of 2014 and which have not yet been fully offset by the new business. The German management platform had positive EBIT of Euro 3.2 million at 31 December 2015 (Euro 3.3 million in 2014).

POLAND
The revenue of the Polish management platform at 31 December 2015 totalled Euro 0.3 million (in line with the result at 31 December 2014). The EBIT reported by the Polish management platform was a negative Euro 0.3 million, marking a slight improvement from the Euro -0.4 million at 31 December 2014. Prelios Real Estate Advisory – REA was established and started up in the third quarter of the year. This firm is dedicated entirely to providing advice on the Polish market, complementing the business activities historically present in that country. The company aims to aggregate the demand of investors on the local market for advisory services in property investment, asset management and brokerage.

PARENT COMPANY PRELIOS S.P.A. AT 31 DECEMBER 2015

At 31 December 2015, Prelios S.p.A. reported a net loss of Euro 29.6 million, compared with a net loss of Euro 74.1 million in the previous year.

Operating revenue amounted to Euro 12.4 million, compared with Euro 14.5 million in the previous year, and mainly relates to staff services provided centrally by the parent company for its subsidiaries, as well as the recovery of various costs (especially recovery of site costs), brand licensing and asset management fees. They also include the reversal of some provisions accrued in previous years. In 2014 they included Euro 2.5 million in income recognised from the subsidiary Edilnord Gestioni S.r.l. (in liquidation) following the settlement of lawsuits related to past contract work managed for Inpdap.

The operating loss, including the net income from equity investments, was a negative Euro 33.0 million, compared to a loss of Euro 67.6 million in 2014. The improvement was primarily due to the reduction of the net decreases in the value of equity investments, which (net of the assessments included in the item "Net income (loss) from discontinued operations"), fell from Euro 64.9 million in 2014 to Euro 30.4 million in 2015. Other positive effects included the reduction in the operating loss (Euro 9.1 million for the year ended 31 December 2015, compared to Euro 18.2 million in 2014) and the change in dividends received, which amounted to Euro 6.5 million in 2015, compared to Euro 15.9 million in the previous year.

Financial operations, net of financial income included in “Net income (loss) from discontinued operations”, generated a loss of Euro 0.7 million, compared with a loss of Euro 16.7 million in the previous year. At 31 December 2015, financial income included the proceeds realised from early repayment, through payment of a lump-sum amount less than the par value, of the financial payable to UBI Banca, both for the senior and for the super senior loans. In 2014 this item was negatively impacted by the Euro 6.3 million adjustment of the junior securities. The residual change is related to the reduction in figurative costs recognised for the senior and super senior loans, and a positive effect in the foreign exchange delta on Polish zloty denominated loans.

Just as in the previous year, net income (loss) from discontinued operations refers to the income and expenses resulting from the assets and liabilities included in the “discontinued operations”. This is the IFRS 5 classification used for the sale to others of shares in the real estate companies that own the German residential property portfolio, DGAG (Deutsche Grundvermögen GmbH).This result at 31 December 2015 totals a positive Euro 4.3 million and includes the adjustment to the investment in Solaia RE S.à.r.l. and the loans made on behalf of the subsidiary Prelios Netherland B.V. to the companies which owned the investment in the DGAG portfolio. In 2014 the positive result of Euro 9.6 million also included the Euro 1.2 million gain realised on the sale of the minority stakes held directly by Prelios S.p.A. in the German companies belonging to the DGAG Group.

SUBSEQUENT EVENTS

On 21 March, the Company set up a General Management department and granted Riccardo Serrini all operating powers formerly held by the MD. He will be responsible for managing and, specifically, developing the business and focussing Service activities together with the business units’ managers. On the same date, the Company approved the 2016 Budget that, within the framework of the 2015-2017 Business Plan, confirms the focus of the activity of the Prelios Group on the Services sector (asset and fund management, property & project management, agency, valuations and credit servicing) and the full start-up of the new market-oriented business model. This model requires new expertise and know-how to carry out the strategy of gradually reducing captive activities and growing the revenue from non-captive customers. In accordance with the 2015-2017 Business Plan, the 2016 Budget sets the following main short-term targets:

• stabilisation and growth of revenue of the services platform, improvement of margins for certain Group companies and implementation of the guidelines defined by the individual operating companies;
• full implementation of the mandate from DoBank (formerly UCCMB);
• development of new strategic projects for the Group, with a special focus on asset management markets (Prelios Europe). In line with current market trends and considering asset management laws and regulations (“AIFMD”), Prelios aims to attract major international investors with instruments that are alternative to real estate funds;
• transformation of the German company's mission from a local operating company resulting from previous co-investments into the Prelios Group's second "hub" (after Italy), with responsibility for developing business in central and northern Europe;
• launch of new indirect investment vehicles (the Listed Real Estate Investment Company Project – “Project SIIQ”): exploiting recent changes in the law, and with the aim of attracting new foreign capital on Italian regulated markets, Prelios would like to promote the launch of a joint stock company in the form of a listed real estate investment company (SIIQ);
• continued focus on streamlining fixed costs.
• the 2016 Budget confirms the targets announced to the market as part of the 2015-2017 Industrial Plan approved by the Board of Directors on 6 August 2015.

BUSINESS OUTLOOK

Partly in light of the previously mentioned improvement in the reference market, Prelios has identified and is implementing a series of measures and initiatives at the level of the individual Group business units to implement the 2016 Budget approved by the Board of Directors on 21 March 2016 and the 2015-2017 Business Plan approved by the Board of Directors on 6 August 2015.

From the management standpoint, 2016 – with completion of the Centauro Extraordinary Spin-Off Transaction in the first quarter – will be dedicated to re-launching Prelios as a major European real estate and financial services centre.

As previously described in the part dedicated to “subsequent events”, the Company approved the 2016 Budget that confirms the following economic targets already announced to the market with the 2015-2017 Business Plan:

• Services Platform turnover: between Euro 100 million and Euro 105 million;
• positive EBIT for the Services Platform, gross of G&A, of Euro 10 to 12 million.
• 2017 economic targets confirmed for both turnover and EBIT and central costs reduction.

In conclusion, the Directors of Prelios believe that it is reasonable to assume the Group can continue operating as a going concern, inter alia in consequence of the Extraordinary Spin-Off Transaction that has just been completed and following the results of the 2016 Budget and 2015-2017 Business Plan.

Information about the termination of the employment relationship with Sergio Iasi

Considering the early termination of his position, the remuneration due to Mr Iasi, in line and in compliance with the Company’s Remuneration Policy and with the favourable opinion of the Remuneration Committee (in its role of Related Party Transactions Committee), totals Euro 1,560,000, being the total of the fixed and variable remuneration that he would have accrued until the end of his term of office. Euro 40,000 will be paid as a compromise amount in addition to the above amount before 30 March 2016. As of the same date, Euro 400,000 will be paid in four quarterly instalments as part of a one-year non-competition agreement.

SHAREHOLDERS' MEETING 2016

The Board of Directors has resolved to convene the Shareholders' Meeting to approve the 2015 Financial Statements by delegating the Chairman authority to select the day, time and place of the meeting to be held on single call, updating the date of 29 April 2016 previously announced to the market.

The Ordinary Shareholders' Meeting will be asked to resolve on:

1. Financial Statements at 31 December 2015. Related and consequent resolutions.
2. Appointment of a Director and/or reduction in the number of Board members. Related and consequent resolutions.
3. Appointment of the Board of Statutory Auditors:

appointment of the Standing and Alternate Statutory Auditors;

appointment of the Chairman of the Board of Statutory Auditors;

determination of the remuneration of the members of the Board of Statutory Auditors.

4. Remuneration Report: consultation on the Remuneration Policy.

§

The folder containing the Draft Financial Statements and the 2015 Consolidated Financial Statements and the additional documentation related to the items listed on the agenda of the Shareholders' Meeting shall be provided by the legal deadline at the head office of the Company in Milan, Viale Piero e Alberto Pirelli no. 27, and published on the website (www.prelios.com).

The same documents will also be made available at Borsa Italiana S.p.A. and on the authorised eMarket Storage website (www.emarketstorage.com).