RESULTS IMPACTED BY TEMPORARY DECLINE IN AUM IN ITALY
LOSS REDUCED BY ONE THIRD AGAINTS THE SAME PERIOD OF LAST YEAR
- GROUP REVENUES EQUAL TO 32.8 €/MLN (35.2 €/MLN AT 30 JUNE 2014)
- GROUP EBIT NEGATIVE FOR 10.7 €MLN (-5.6 €/MLN AT 30 JUNE 2014)
- MANAGEMENT PLATFORM REVENUES EQUAL TO 29 €/MLN (34.9 €/MLN AT 30 JUNE 2014)
- MANAGEMENT PLATFORM EBIT  NEGATIVE FOR 3.6 €/MLN (-0.2 €/MLN AT 30 JUNE 2014)
- EBIT FROM FOREIGN SERVICE MANAGEMENT PLATFORM (GERMANY + POLAND) EQUAL TO 1.8 €/MLN VS. 1.1 €/MLN IN 1H 2014
- EBIT FROM INVESTMENT ACTIVITIES EQUAL TO -7.1 €/MLN (-5.4 €/MLN AT JUNE 2014)
- NET FINANCIAL POSITION NEGATIVE FOR 191.1 €/MLN (IT WAS NEGATIVE FOR 185.2 €/MLN AT 31 MAY 2015)
- GROUP NET RESULTS NEGATIVE FOR 13.1 €/MLN, LOSS REDUCED BY APPROXIMATELY ONE THIRD VS. -37.6 €/MLN AT 30 JUNE 2014
Milan, 29 July 2015 – The Board of Directors of Prelios S.p.A., that held its meeting on today’s date, examined and approved the Half-Year Report at 30 June 2015.
Group performance at 30 June 2015
The Group reported consolidated revenues equal to 32.8 million euro (35.2 million euro at 30 June 2014), made up of Italian and foreign management platform revenues for 29 million euro, recording a decrease versus 34.9 million euro in the same period of 2014.
The Group net result in the first semester of 2015 records a loss for 13.1 million euro, i.e. nearly one third of the loss recorded in the same period of 2014, equal to 37.6 million euro. The net result, differently from what occurred in 2014, was only marginally impacted by items that are not part of the ordinary operation, and namely:
- real estate revaluations/writedowns, with a positive impact for 2.5 million euro (negative for 21.2 million euro at 30 June 2014);
- restructuring costs, with a negative impact for 2.0 million euro versus 1.8 million euro in the first semester of 2014. Such data primarily includes costs related to the Group rationalization, bad debts and waivers made in the framework of the debt restructuring plan of some subsidiaries;
- the result deriving from the assets and liabilities transferred and/or to be transferred, which had a positive impact for 3.2 million euro against the adjusted estimate of the residual cash flows from the disposition of the German residential portfolio called DGAG that was transferred in 2014 to the company Buwog (100% of Austrian Group Immofinanz), together with the residential management platform related to Prelios Deutschland.
The EBIT is negative for 10.7 million euro (-5.6 million at 30 June 2014) and is made as follows:
- the EBIT from management platform, including Holding costs and G&A, is equal to -3.6 million euro (-0.2 million euro at 30 June 2014). The decrease is mainly attributable to service activities in Italy;
- investment activities, i.e. what has been generated by Prelios through its equity investments in funds and companies that hold real estate assets and Non Performing Loans, the EBIT of which is equal to -7.1 million euro (-5.4 million euro at 30 June 2014). The sales of properties completed in the first semester of 2015 (data referred to 100% of the sales of properties made by subsidiaries, affiliated companies, joint ventures and funds in which the Group holds equity investments) amounted to 472.1 million euro vs. 312.1 million euro in the first semester of 2014. This data confirms the objective of the acceleration of the process for the disposition of real estate assets. Transactions occurred at values substantially in line with book value.
The net consolidated equity at 30 June 2015 is positive for 93.4 million euro against a value positive for 107.3 million euro at 31 December 2014. The variation recorded in the period is largely attributable to the loss for the period.
The net financial position is negative for 191.1 million euro (it was negative for 185.2 million euro at 31 May 2015 and negative for 187.6 million euro at 31 December 2014).
Performance of the Business Divisions at 30 June 2015
The EBIT from the Management Platform in Italy at 30 June 2015 is positive for 1.6 million euro (at 30 June 2014 it was positive for 4.7 million euro). In particular, the performances of the domestic management platform reflect a decline in revenues which is attributable to a temporary and physiological reduction in AuM.
Prelios SGR Fund Management reported revenues for 7.4 million euro (10.3 million euro in the same period of 2014) and an EBIT equal to 1.1 million euro (3.7 million euro at 30 June 2014).
The decline in revenues is attributable to the exit from the listed fund Olinda Fondo Shops, the winding-up of which was completed in the first semester of this year, as well as to the reduction in the management fees relating to Fondo Tecla, the term of which has been extended. Finally, in the first semester, Prelios SGR completed the process for the winding-up of a speculative fund reserved for institutional investors following to an organized asset disposition process.
At 30 June 2015 Prelios SGR manages 25 funds in total, of which 13 are ordinary funds (including one listed fund) and twelve are speculative funds, in addition to a contract for the management of the process for the disposition of a real estate asset portfolio. With regard to new projects, in the period of reference Prelios SGR established the new fund called Aurora by contributed assets and was assigned the mandate for the management of another fund with contributed assets. In both cases the Funds are reserved for leading institutional investors. Moreover, the activities aimed at increasing the assets under management have continued through the acquisition and the contribution of new properties by the funds under its management.
Prelios Credit Servicing reported revenues for 3.0 million euro in the first semester of 2015, recording a decrease versus 4.9 million euro in the first semester of 2014, a value that was still positively impacted by the management of some portfolios related to the joint venture with DGAD International S.à.r.l.. The operating result at 30 June 2015 was negative for 1.8 million euro against a positive value for 0.2 million euro recorded in the first semester of 2014. The difference fully reflects the aforesaid decline in revenues resulting from the reduction in volumes under management. As it is known, in February 2015, following to the agreements negotiated starting from July 2014, Unicredit entered into the long-term strategic agreement with Fortress-Prelios alliance, which envisages:
- the sale to Fortress affiliated companies of the entire stake in UniCredit Credit Management Bank S.p.A. ("UCCMB"), including an NPL portfolio for a gross value of about 2.4 billion euro;
- the main terms and conditions of a long-term strategic contract in relation to the management of current and future distressed loans of small and medium size. Fortress and Prelios agreed to collaborate as industrial partners in the management of some distressed loans.
The transaction completion is subject to regulatory authorizations and standard conditions for this type of transactions. This agreement will contribute to make the Italian credit servicing market more independent and represents a positive step for the sector development, as it already occurred in other European countries.
Prelios Integra generated revenues for 9.4 million euro (9.6 million euro in the first semester 2014) with an EBIT positive for 1.1 million euro, a value that has remained unchanged compared to the first semester 2014. Prelios Integra is a leading Italian operator in the sector of integrated services for property management and project development, with about 5 billion euro worth properties under management for over 5.4 million sq m. During 2015, the Company continued the process, already started in the previous year, for its conversion from a Business Unit with mainly captive clients into a service company capable to compete on the market independently from the Group to which it belongs, introducing and developing third party clients with strategic objectives of external growth.
Prelios Agency recorded revenues for 1.3 million euro (in line with the data recorded in 1H 2014) with an EBIT negative for 0.8 million euro (which was negative for 0.6 million euro at 30 June 2014). In particular, during the first semester of 2015, the company acquired new mandates and renewed sale agency agreements for about 311 million euro as well as important lease agency mandates relating to about 2,200 sq m and with rents equal to about 0.5 million euro. The volumes intermediated by the Company reached a value of 98.2 million euro against 18.9 million euro in 1H 2014. Recently, an annual lease contract has been entered into with Telecom Italia S.p.A. relating to the re-negotiation of rents for industrial and mixed-use properties.
Prelios Valuations is a leading Italian independent operator in the sector of appraisal of single properties and real estate asset portfolios for office/light-industrial and residential use and is specialised in valuation services for banks. Prelios Valuations recorded revenues for 2.8 million euro (2.5 million euro at 30 June 2014) with an EBIT positive for 0.3 million euro (0.6 million euro at June 2014). In the first semester of 2015 the company has been awarded the following tender contracts:
- Unicredit (UBIS): auction for the supply of “Corporate” appraisal services for Unicredit S.p.A.;
- Unicredit (Arianna Project): valuation of properties repossessed by the banks of Unicredit Group;
- Hypo Alpe Adria: property valuation services;
- REAM SGR: independent appraiser of Fondo Social & Human Purpose, a fund exclusively participated by some Piedmont Bank Foundations, and dedicated to the investment in properties used for collective social purposes.
The revenues from the German service platform at 30 June 2015 were equal to 5.6 million euro (6.1 million euro at 30 June 2014). The decrease in revenues is mainly due to the loss of some third party mandates that expired at the end of 2014, which have not yet been fully offset by the acquisition of new business. The EBIT was positive for 1.9 million euro (1.3 at 30 June 2014).
The results recorded by the management platform in Poland were substantially in line with those of last year: revenues equal to 0.2 million euro (0.1 million euro at 30 June 2014), and an EBIT negative for 0.1 million euro (negative for 0.2 million euro in the first semester of 2014).
Considering the better outlook of the market of reference, Prelios has identified and has been implementing a number of initiatives aimed at the company reorganization and at maintaining business continuity conditions; a series of actions and initiatives are actually continuing successfully for the implementation of the plan guidelines as defined by the Group single Business Units.
From the operating viewpoint, the year 2015 – which is the year marking the company transition to the pure management company model – will be dedicated to the re-launch of Prelios as European group of reference in the sector of real estate and financial services.
To this end, in line with what was previously disclosed to the market, the Board of Directors at its meeting of 29 July 2015 gave the company management the green light to continue the finalization of the activities aimed at achieving the objective of the company repositioning as a pure management company, while the Company is continuing the activities aimed at permitting the realization of the spin-off of the investment business and the service business, with the purpose of accelerating the achievement of the aforementioned objective, in the framework of a redefinition of the Group activities and of an overall financial and equity strengthening.
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.
. Management platform EBIT indicates income generated by the Company through fund management operations, specialised real estate services (Integra and agency), services connected with NPL management (credit servicing), as well as general and administrative expenses (G&A) for -5.2 million euro (-6.2 million euro at 30 June 2014).
. EBIT from Investment Activities is the value generated by the Group through its equity investments in funds and investment companies. The value does not include the value impairment of the NPL portfolio (equal to 0.7 million euro in the first semester of 2014).
. EBIT indicates the value made up of EBIT plus net income from equity investments and income from shareholder loans, adjusted for restructuring costs and property writedowns/revaluations. The value does not include the impairment loss of the NPL portfolio (equal to 0.7 million euro in 1H 2014).
. Excluding receivables for shareholder loans.
. It should be noted that the results indicated in this paragraph (net of restructuring costs and property writedowns/revaluations) refer to the result of the service activities as well as of investment activities and include the proceeds from shareholder loan, while they do not include the relevant G&A/holding costs).