BOD APPROVES DRAFT AND CONSOLIDATED 2014 FINANCIAL STATEMENTS1

RESULTS IN LINE WITH BUSINESS PLAN 2014 OBJECTIVES AND SIGNIFICANTLY IMPROVED MARGINS AS A RESULT OF FOCUS ON SERVICES AND COST CONTROL

• MANAGEMENT PLATFORM REVENUES AT 70.1€/MLN (68.6 €/MLN IN 2013)
• SIGNIFICANTLY IMPROVED EBIT OF MANAGEMENT PLATFORM¹, POSITIVE FOR 0.6 €/MLN (-5.4 €/MLN AT 31 DECEMBER 2013)
• GROUP EBIT² POSITIVE FOR 15 €/MLN (-28.1 €/MLN IN 2013)
• GROUP NET RESULT AT -61.1 €/MLN (SUBSTANTIALLY IMPROVING VS. -332.8 €/MLN IN 2013), IMPACTED BY EXTRAORDINARY ITEMS, ALMOST ENTIRELY ATTRIBUTABLE TO INVESTMENT ACTIVITIES, FOR A TOTAL AMOUNT OF -59.3 €/MLN
• NET FINANCIAL POSITION NEGATIVE FOR 187.6 €/MLN (-205.8 €/MLN AT NOVEMBER 2014,
  -388.4 €/mln AT 31 DECEMBER 2013). THE NFP AT 31 DECEMBER 2013 WAS EQUAL TO -152.5 €/MLN, FACTORING IN THE CONVERSION OF THE CONVERTIBLE DEBENTURE LOAN.

BOD ALSO DISCUSSED AND UPDATED THE 2015 BUDGET AND
THE 2015-2017 BUSINESS OUTLOOK

• REVENUES OF MANAGEMENT AND SERVICE PLATFORM:

•    2015: 75 TO 80 €/MLN

•    2016: 100 TO 105 €/MLN

•    2017: 120 TO 125 €/MLN

• EBIT OF MANAGEMENT AND SERVICE PLATFORM³:

•    2015: 6 TO 8 €/MLN

•    2016: 10 TO 12 €/MLN

•    2017: 18 TO 20 €/MLN

• THE BUSINESS MODEL AS PURE MANAGEMENT COMPANY WAS CONFIRMED AND TARGETS WERE UPDATED ALSO CONSIDERING THE ACTIVITIES CARRIED OUT IN RELATION TO BUSINESS DEVELOPMENT AND OF THE RESULTS ACHIEVED, LIKE, FOR EXAMPLE, THE ACTIVITY OF LOCAL PARTNER FOR FORTRESS ON UCCMB

CALL FOR SHAREHOLDERS’ MEETING

Milan, 10 March 2015 – The Board of Directors of Prelios S.p.A., that held its meeting on today’s date, examined and approved the Draft and Consolidated 2014 Financial Statements, to be submitted to the next ordinary Shareholders’ Meeting for approval.

Group performance at 31 December 2014

The Group reported consolidated revenues equal to 72.1 million euro versus 73.1 million euro at 31 December 2013. In particular, management platform revenues, in Italy and in foreign countries, amounted to 70.1 million euro, increasing vs. 68.6 million euro in 2013, as a result of the good performance of integrated services in Italy.

The EBIT⁴ reverted its trend and was positive for 15 million euro, recording a strong growth of 177% versus -28.1 million at December 2013, and is made up as follows:

• Management platform operations record an EBIT positive for 0.6 million euro, against a negative result of 5.4 million euro at 31 December 2013;
• Investment activities⁵, i.e. the EBIT generated by Prelios through its equity investments in funds and companies, are positive for 14.4 million euro (-22.7 million euro in 2013).

The Group net result for the period was negative for 61.1 million euro, improving by over 80% against an actual result at 31 December 2013 that was negative for 332.8 million euro, which had been largely impacted by the disposition of the German residential asset portfolio known as DGAG and the related residential management platform for 142.6 million euro.

The net result has been largely determined by items that are beyond the ordinary operations, mainly attributable to investment activities, and namely:

• value impairments and real estate devaluations that had a negative impact of 45.4 million euro (-111.1 million euro at December 2013);
• restructuring costs, that had a negative impact of 13.9 million euro,
  (-42.6 million euro at 31 December 2013). Such data includes doubtful debts and waivers made within the scope of the plan for the re-organization of some subsidiaries and the costs related to the Group rationalization, enabling the Company to have a leaner and more competitive structure.

Real estate asset sales⁶ in 2014 amounted to 877.7 million euro (164.3 million euro on a pro rata basis) against 1.322,9 million euro at 31 December 2013⁷. Except for the disposition of an area mainly for retail use located in Poland, which had a significantly positive impact on book values, the Group carried out its real estate transactions at values substantially in line with book value, as it occurred at 31 December 2013. As a result of said dispositions, the pro rata net debt of co-investment activities decreased to 0.5 billion euro (from 0.75 billion in 2013) against pro rata assets equal to 0.9 billion euro (1.2 billion euro in 2013).

Real Estate Asset Under Management⁸ at 31 December 2014 amounted to 5.2 billion euro (6 billion euro at 31 December 2013) with a holding of Prelios equal to 0.8 billion euro (1.1 billion euro at 31 December 2013).

With regard to asset allocation by geographical area, out of 5.2 billion euro real estate asset under management 79% refer to Italy, while the residual 21% refer to Germany and Poland.

Consolidated net equity was equal to 107.3 million euro (-66.3 million at 31 December 2013) and the Group equity was equal to 104.8 million euro (-69.1 million at the end of 2013).
 
The net financial position⁹ at 31 December 2014 was negative for 187.6 million euro (-205.8 million euro at November 2014, -388.4 million euro at 31 December 2013). Variations are mainly attributable to the capital increase following to the automatic implementation of the compulsory early repayment of “2013-2019 Prelios Convertible Loan”.

It should be noted that financial mitigation actions were successfully completed, consequently favouring a better correlation between cash inflows and outflows.

Performance of the Business Divisions at 31 December 2014¹⁰

ITALY

The Italian management platform revenues at 31 December 2014 amounted to 56.3 million euro (50.1 million euro at 31 December 2013). The EBIT of the Italian management platform at 31 December 2014 was positive for 9.6 million euro, strongly increasing vs. 1.5 million euro in 2013.

In particular, as regards the performance and perspectives of each service of the domestic management platform, the following should be noted:

• Prelios SGR (Fund Management) reported revenues for 20.5 million euro (21 million  euro in 2013) and an EBIT positive for 7.3 million euro (7.6 million euro at 31 December 2013). This slight reduction shall be mainly attributed to the exit of the fund Spazio Industriale from the funds under management and to the redefinition of the fees relating to some funds for which debt restructuring plans are under implementation. With regard to the activity for the development of new projects started by the new management, the Company increased the AuM through the establishment and management of three new ordinary real estate funds (Fund “PAI – Parco Agroalimentare Italiano”, Fund “IGEA” and Fund “Primo RE”) and acquired the management of a fourth fund, destined to social housing activities (ASCI “Abitare Sostenibile Centro Italia”). Considering however a new fund established in 2015, the number of funds under management rises to 26. During the year, Prelios SGR entered into a purchase and sale contract with a foreign real estate fund, which took over the entire residual asset portfolio of Olinda – Fondo Shops. This sale allowed the disposition of the fund’s investments by the Fund’s expiry date, envisaged at 31 December 2014. Moreover, as already disclosed to the market, in the period of reference Prelios SGR entered into an important commercial agreement with SecondCap Ltd with the purpose of increasing the liquidity of investments in the reserved real estate funds under the SGR management. The Company internal growth perspectives will focus not only within the framework of traditional real estate funds (for example, the assets of social security funds and pension funds, contributions by the public, instrumental assets) but also within the framework of «innovative» funds (for example, school building).
• Prelios Credit Servicing (the Group company operating in non performing loan management for a Gross Book Value “GBV” of 8.7 billion euro) recorded revenues for 7.8 million euro (8.5 million euro at December 2013). The EBIT was negative for 1.4 million euro, substantially improving vs. -3.2 million euro at 31 December 2013. The increase is attributable to cost control thanks to the restructuring plan completed at the end of the prior year that entailed a saving of about 2.4 million euro under item labour cost and a slight reduction of structural costs. The collections of non performing loans were equal to 44 million euro vs. 94 million euro at 31 December 2013. Such reduction substantially reflects the gradual withdrawal, occurred between 2013 and 2014, from the special servicing mandates relating to the portfolios owned by Crédit Agricole – CIB following to its exit from the Company shareholders. The decline in revenues due to collections has been more than offset by the increase in revenues related to the new business and to one-off activities that generated success fees. Finally, in 2014 Prelios Credit Servicing participated in the two most important sale transactions occurred on the Italian market: in the first case the seller decided to suspend the transaction and in the second the Company was assigned the contract together with investor Fortress with which a cooperation agreement was stipulated for a long-term partnership (reference should be made to Paragraph “Events occurred after the closing of the period”).
• Prelios Integra recorded revenues for 19.1 million euro, recording an increase vs. 15.2 million euro in 2013. This increase is mainly due to the increase in Third Party management services and in global servicing activities. The EBIT is positive for 2.5 million euro, recording an increase vs. 0.8 million euro. During 2014 the company continued its repositioning in service companies capable to compete on the market independently from the Group to which it belongs, introducing and developing third party clients with external growth strategy objectives.  In 2014, the Company managed real estate assets corresponding to about 6,000 lease contracts, increased the number of new contracts and was assigned new long-term mandates. The most important mandates closed in the last period include the project management of some real estate projects under development and/or under improvement, technical services for the construction of the innovative theme park “Fico Eataly World” of Bologna and for the construction of an important hotel to be built in the centre of Milan, important framework agreements relating to the assets of some among the most important Italian entities in the energy, banking and utilities sector.  Moreover, during 2014, the Italian Competition Authority assigned the Company the “Legality Rating” with a rating of 2 stars ++, which adds up to the S.O.A. attestations for the following categories: OG 1 Class VIII, OS 28 Class V, OS 30 Class IV bis and OS 3 Class II.
• Prelios Agency recorded revenues for 5 million euro (1.6 million euro in 2013) and an EBIT that is significantly improving, recording again a positive value for 0.9 million euro (-3.4 million euro at 31 December 2013). The improvement is primarily due to the effects of the activity underlying the new mandates of renegotiation of the lease contracts, to the sales made relating to various assets and, above all, to the stipulation of a preliminary deed of transfer of an important portfolio to an international investor. During 2014 the company leased out about 77,000 sq m vs. about 45,000 sq m in the previous year, for a value of about 9.6 million euro intermediated rents against about 4.3 million euro in 2013. The volumes intermediated by the company amounted to 353.8 million euro, vs. 43.8 million euro in 2013. The results are also positively impacted by the benefits deriving from the cost control action that started in 2013 and from the process for the restructuring and strategic repositioning of the commercial offering, that led the Company to focus on an exclusive basis on the institutional agency service as well as on international capital market operators.
• Prelios Valuations (the Group company operating in the sector of appraisal of single properties and real estate asset portfolios for office/light industrial and residential use, specialised in valuation services to banks) recorded revenues for 4 million euro (3.4 million euro at 31 December 2013) and an EBIT positive for 0.3 million euro (positive for 0.4 million euro in 2013).  During the period, the Company was awarded a contract following to a tender called for by Bank of Italy for the Asset Quality Review of the portfolios of the leading Italian banks, within the framework of the comprehensive assessment activities carried out by the ECB. Prelios Valuations also consolidated its position in the sector of appraisals for banks by three important framework agreements:  the first was stipulated with Unicredit for retail loans (about 15,000 appraisals) while the second and the third were stipulated for retail, small business and corporate loans with BNL and BPER.  Finally, the company strengthened its positioning also in the sector of second level audits of independent appraiser valuations.

Germany

The revenues recorded by the management platform in Germany at 31 December 2014 were equal to 15.1 million euro (17.9 million euro at December 2013) as a result of the reduction of some fees following to the transfer of some commercial properties and the consequent decrease in assets under management. The EBIT of the German management platform at 31 December 2014 was positive for 3.3 million euro (5.3 million euro in the previous year). The results are impacted by the reduction of the Highstreet portfolio management fees following to the dispositions largely made during 2013 that entailed a reduction of the assets under management and, consequently, of the fees generated in 2014.

Poland

The revenues recorded by the management platform in Poland at 31 December 2014 were equal to 0.3 million euro (0.5 million at 31 December 2013), while the EBIT was negative for 0.4 million euro, slightly improving against -0.5 million euro at 31 December 2013. During 2014 Prelios disposed an area of about 55,000 sq m mainly for retail use in Warsaw, with a consequent significantly positive impact against book values.

The Parent Company Prelios S.p.A. at 31 December 2014

The Board of Directors of Prelios S.p.A. examined and approved also the Company’s draft financial statements at 31 December 2014.

Operating revenues amounted to 14.5 million euro, vs. 13 million in the previous year, and mainly refer to staff services performed centrally by the Parent Company, provided to subsidiary companies, as well as to miscellaneous cost recovery (in particular, recovery of costs relating to the various offices), brand use and asset management fees; they also include the release of some provisions for risks and of the provision for bad debts made in the previous years.  Such proceeds have largely offset the decreased revenues for staff services from subsidiaries compared to the previous year.

The operating result including the result from equity investments was negative for 67.6 million euro against a negative value for 202.5 million euro in 2013. The improvement is mainly due to the decreasing impairment values of equity investments, which (net of valuations included in item “Result from assets held for sale”) decreased from 173.6 million euro recorded in 2013 to  64.9 million euro in 2014. Other positive effects are caused by the improved operating result (negative for 18.2 million euro at 31 December 2014 against a negative value for 28.4 million euro in 2013) and by the change in received dividends which in 2014 amounted to 15.9 million euro against a substantially nihil value in the previous year.

The net equity at 31 December 2014 was equal to 49.4 million euro against 31 December 2013 when the value was negative for 113 million euro; such change is mainly attributable to the conversion into share capital of the Convertible Debenture Loan that was implemented on 14 April 2014, for the amount of 236.5 million euro, as well as to the result for the period negative for 74.1 million euro. In the situation re-determined at 31 December 2013, the net equity was equal to 122.9 million euro, already factoring in the conversion of the convertible debenture loan.

The Net Financial Position at 31 December 2014 was negative for 256.9 million euro, against the end of 2013 when the value was negative for 417.7 million euro. The change may be attributed to the positive effect of the afore-mentioned conversion of the Debenture Loan, partially offset by the reduction of the cash available (decreasing from 69 million euro at 31 December 2013 to 31.3 million euro at 31 December 2014) and by the increase in bank debt for financial costs accrued and not yet paid, as well as for the recognized figurative charges.

Considering the value of the loss for the period of Prelios S.p.A., the share capital decreased by over one third, resulting in the case envisaged by art. 2446, par. 2, of the Italian Civil Code and, consequently, the Shareholders’ Meeting to be called for the approval of the financial statements at 31 December 2014 shall also resolve on the relevant measures to be adopted in this respect.

Approval of 2015 budget and update of 2015-2017 outlook

The actual data of 2014 have been largely determined by the accelerated processes for cost control and rationalization, together with a market repositioning of service companies to higher value added areas, which entailed a substantial margin upswing.  The BoD approved the 2015 budget and discussed and updated the 2015-2017 Group Business Plan outlook, taking into account the activities that Prelios is carrying out with regard to business development.  Over the last months, the Group actually completed important activities (like, for example, the work performed with Fortress in UCCMB, or the role of local partner\arranger for leading foreign investors), and also implementing the business portfolio with international advisory services,  which add up to the three segments of asset management, real estate services and non performing loan management.

Based on the identified management and business guidelines, in line with the pure management company model and with the objective to re-launch Prelios as European partner of reference in the real estate and financial services sector, the Group updated the outlook for the period 2015-2017 and set the following objectives:

• REVENUES of the management and service platform:

•    2015: 75 to 80 million euro

•    2016: 100 to 105 million euro

•    2017: 120 to 125 million euro

• EBIT of the management and service platform¹¹:

•    2015: 6 to 8 million euro

•    2016: 10 to 12 million euro

•    2017: 18 to 20 million euro

Against 12 million euro of 2104 actual central costs and also with a view to possibly redefining its activities, the Company intends to pursue a cost reduction up to 50% by 2017.

Events occurred after the closing of the period

In February 2015 Unicredit closed the agreement relating to the sales of the entire stake in UniCredit Credit Management Bank S.p.A. ("UCCMB”) and of an NPL portfolio (GBV about 2.4 billion euro) to Fortress affiliated companies. The agreement also envisages a long-term management contract for a portion of the stock and of some future Unicredit Group NPL flows. Prelios, industrial partner of the acquiring alliance, entered into an agreement with Fortress whereby a long-term collaboration was defined for credit servicing and real estate activities. The transaction completion, subject to regulatory authorizations and standard conditions for this type of transactions, is expected to take place in the second quarter of 2015.

 Business outlook

As for business management, 2015 is the year of the final transition by the Company to a pure management company model. In order to pursue such model, as a consequence of the disposition plan which was preliminarily disclosed to the market on 12 June 2014.  In order to pursue such model, with special reference to the re-definition of the Group activities, the Board of Directors gave mandate to the CEO Sergio Iasi to verify the viability thereof. Consequently, with reference to some rumours reported today in the press, the news regarding the occurred completion of a transaction for the demerger of the investment business from the service business is unfounded.

While confirming its repositioning as a strategic goal, the Company has identified a number of initiatives to be implemented, some of which have been already completed while others are still underway, among which:

• Holding company cost rationalization and control;

• leaner operations for the Group companies and continuation of the disposal of the investment portfolio;

• revenue increase through the implementation of the projects included in the business development pipeline, including, for example, the project “Magnete Milano” (for the renovation of the Portello area in Milan), Prelios Europe (in relation to which agreements are being finalized for the acquisition of 80% of a British asset manager company), the set up for the launch of an Italian SIIQ and the project “Magnete Cultura” (for the incorporation of a company focused on the value enhancement of cultural assets in Italy also from the real estate viewpoint);

• evaluation of possible disposals of portfolio assets.

A number of actions and initiatives already identified are progressing in the meantime for the implementation of the plan guidelines set by the single Business Units of the Group, in particular:

• focus of services on reference markets (Italy, Germany and Poland);

• continued enlargement of the NPL and securities asset management activities;

• entering new innovative sectors related and linked to real estate, like, for example, the energy efficiency improvement and culture sectors, in partnership with institutional entities;

• growth by external lines, taking advantage of the future opportunities especially in asset management.

2015 Shareholders’ Meeting

The Board of Directors resolved to call for the Shareholders’ Meeting that shall approve the 2014 Financial Statements, giving mandate to the Chairman to fix the day, time and venue of the meeting on single call.

The Shareholders’ Meeting will be requested to resolve in ordinary session upon the following:

1. Financial Statements at 31 December 2014. Relevant and consequent resolutions;
2. Remuneration Report: consultation on the Remuneration Policy.

The Shareholders’ Meeting will be also requested to resolve in extraordinary session upon the following:

1. Measures to be adopted pursuant to article 2446, par. 2, of the Italian Civil Code: reduction of share capital. Relevant and consequent resolutions (including the amendment to and update of article 5 of the Company By-Laws). Assignment of powers.

§

The annual results at 31 December 2014 will be presented today, 10 March, at h. 6:00 pm during the conference call with Prelios top management. The journalists may follow the presentation by phone, without having the right to ask questions, dialing +39 02 805 88 27. The slides of the presentation may be viewed on the company website in the section Investor Relations at www.prelios.com.

§

The Draft and Consolidated 2014 Financial Statements will be made available pursuant to law to anyone who may request it at the offices of the Company in Milan, Viale Piero e Alberto Pirelli 27, at the offices of Borsa Italiana S.p.A. and on the Information Portal at www.1info.it. The same documents will be also made available on the Company website at www.prelios.com in the section Investors.

***

The Financial Reporting Officer of Prelios S.p.A. Dr. Marco Andreasi, certifies - pursuant to art. 154-bis, par. 2, of the Consolidated Finance Act (Italian Legislative Decree 58/1998) - that the accounting information contained in this press release corresponds to the Company's underlying documentary records, books of account and accounting entries.

This press release, and in particular, the section “Business outlook”, contains forecast statements. These forecasts are based on the current estimates and projections of the Group in relation to future events and, by their nature, these are subject to inherent risk and uncertainty elements. The actual results could be significantly different from those contained in said forecasts due to several factors, including a continuous volatility and a further deterioration of capital and stock markets, any change in macroeconomic conditions and in the economic growth, and any other change in business conditions, in addition to other factors, the majority of which is not under the Group’s control.

In compliance with CONSOB Communication 6064291 of 28 July 2006, the statements attached hereto have not been audited by the independent auditors Reconta Ernst & Young S.p.A.

***

For further information:

Prelios Press Office Tel. +39/02/6281.41571

pressoffice@prelios.com

Prelios Investor Relations Tel. +39/02/62.81.4104
ir@prelios.com

www.prelios.com