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Pirelli Real Estate H1 2009

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Abstract from Pirelli Group H1-’09 Financial Results, this presentation is about Pirelli Real Estate results.

More on: http://pirelli.webcasting.it/2907/client/?lang=eng

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Pirelli Real Estate H1 2009

  1. 1. MILAN - JULY 29th, 2009 Abstract from Pirelli Group H1-’09 Financial Results
  2. 2. Consolidated Profit and Loss €/mln 1H’09 1Q’09 1H’08 Revenues 115.8 53.8 192.8 of which services 94.7 47.7 115.0 of which other revenues 21.1 6.1 77.8 EBIT before restructuring costs (2.0) (2.2) 20.3 Income from Equity Participations (20.9) (12.5) 17.4 A EBIT inl. Inc. From Equity Part. Before Restructuring costs, writedowns/revaluations (22.9) (14.7) 37.7 Restructuring Costs (11.5) 0.0 (16.2) Real Estate writedowns/revaluations (4.8) 0.0 (0.8) EBIT inl. Inc.From Equity Part. After Restructuring costs, writedowns/revaluations (39.3) (14.7) 20.7 B Interest Income from Participations 13.7 8.5 13.6 EBIT incl. Income from Equity Part. & Interest Income from Part. (25.6) (6.2) 34.3 Financial Charges (14.7) (8.3) (20.9) Profit Before taxes (40.3) (14.5) 13.4 Income Taxes (2.4) (2.1) (6.4) Net Income before discontinued operations (42.7) (16.6) 7.0 Discontinued Operations 0.0 0.0 4.4 Net Income (42.7) (16.6) 11.4 Minority Interests 0.4 0.8 (2.4) Net Income after minority interests (42.3) (15.8) 9.0 A+B (9.2) (6.2) 51.3 (*) Related to revenues on controlled initiatives 1
  3. 3. Writedowns and Revaluations €/mln Total Italy Pirelli RE 20.5 1.8 45.5 (18.7) (4.8) Germany & Poland 25.0 (50.3) (6.6) (31.6) Writedowns Of which Highstreet (28.1) Revaluations Based on independent appraisals, on a like for like basis, market value of real estate participated assets were written down by 2.3% In Italy the writedowns were -1.7% In Germany we had writedowns of ca. -2.8% (of which 257 €/mln with a pro quota Pirelli Re economic impact of 28.1 €/mln) and in Poland of -6% With the application of the announced hold strategy, a large part of the German residential portfolio and the trophy assets in Italy of the Retail and Entertainment funds, have been accounted according to IAS 40 with a revaluation in the Book Value 2
  4. 4. Update on Headcount and on Cost savings (€/mln) 1,110 Headcount Reduction from 2,956 in 220 NPL reduction 1,473 2007 to 1,267 as of June. 1,267 New targets confirmed 890(*) 2008 A 1H’09 2009 E (*) Not Including possible outsourcing for 160 FTE 29 € mln savings as of 2009 (of which approx. 50% related to 55/60 €/mln headcount). Year end Cost Savings 14 € target improved mln 29 compared to the 50 € €/mln 15 mln forecast €/mln Headcount Other Total Expected cost fixed Savings Savings costs June 2009 12/2009 3
  5. 5. Details on Service Platform & on Vehicles /Funds (€/mln) Service Platform & Holding 1H’09 1Q’09 1H’08 Net of one-off Consolidated Revenues 94.7 47.7 115.0 1.6 Other Revenues (*) 2.0 0.0 17.6 -17.0 Berenice Fee Total Revenues 96.7 47.7 132.6 -15.4 EBIT (**) (3.2) (1.3) 1.6 Vehicles & Funds 1H’09 1Q’09 1H’08 Vehicles & funds (19.8) (13.4) 36.2 -of which Real Estate (22.8) (16.6) 24.5 -of which NPLs 3.0 3.2 11.8 Interests Income from Participations 13.7 8.4 13.6 EBIT(**) (6.0) (4.9) 49.7 TOTAL Pirelli RE (9.2) (6.2) 51.3 (*) Includes the result from participated companies, success fees, promote and a capital gain from quota disposals (**) EBIT is referred to operating income results including income from equity participations, before restructuring costs, writedowns / revaluations, but including interest income from equity participations 4
  6. 6. Economic Results – Italy (€/mln) Service Platform 1H’09 1Q’09 1H’08 Net of one-off Consolidated Revenues 50.1 26.2 59.5 16.9 Other Revenues (*) 0.0 0.0 17.0 -17.0 Berenice Fee Total Revenues 50.1 26.2 76.5 -0.1 EBIT (**) 6.7 4.9 16.9 Vehicles & Funds 1H’09 1Q’09 1H’08 Vehicles & funds (14.6) (10.7) 4.3 Interests Income from Participations 4.3 2.5 5.0 EBIT(**) (10.3) (8.2) 9.3 TOTAL ITALY (3.6) (3.3) 26.2 (*) Includes the result from participated companies, success fees, promote and a capital gain from quota disposals (**) EBIT is referred to operating income results including income from equity participations, before restructuring costs, writedowns / revaluations, but including interest income from equity participations 5
  7. 7. Economic Results – Germany (€/mln) Service Platform 1H’09 1Q’09 1H’08 Consolidated Revenues 28.5 13.5 30.2 Other Revenues (*) 0.0 0.0 0.4 Total Revenues 28.5 13.5 30.6 EBIT (**) 2.7 1.4 (2.3) Vehicles & Funds 1H’09 1Q’09 1H’08 Vehicles & funds (8.8) (6.1) 2.0 Interests Income from Participations 7.9 3.7 4.1 EBIT(**) (0.9) (2.4) 6.1 TOTAL GERMANY 1.8 (1.0) 3.8 (**) (*) Includes the result from participated companies, success fees, promote and a capital gain from quota disposals (**) EBIT is referred to operating income results including income from equity participations, before restructuring costs, writedowns / revaluations, but including interest income from equity participations 6
  8. 8. Economic Results – Poland (€/mln) Service Platform 1H’09 1Q’09 1H’08 Consolidated Revenues 3.1 2.1 4.5 Total Revenues 3.1 2.1 4.5 EBIT (**) (0.1) 0.4 0.6 Vehicles & Funds 1H’09 1Q’09 1H’08 Vehicles & funds 0.6 0.2 18.2 Interests Income from Participations 1.1 0.5 0.5 EBIT(**) 1.7 0.7 18.7 (***) TOTAL POLAND 1.6 1.0 19.2 (**) (*) Includes the result from participated companies, success fees, promote and a capital gain from quota disposals EBIT is referred to operating income results including income from equity participations, before restructuring costs, (**) writedowns / revaluations, but including interest income from equity participations (***) Includes result from disposal of one asset 7
  9. 9. Economic Results – NPLs (€/mln) Service Platform 1H’09 1Q’09 1H’08 Consolidated Revenues 8.7 3.6 18.0 Other Revenues (*) 2.0 0.0 0.0 Total Revenues 10.7 3.6 18.0 EBIT (**) (2.4) (2.9) 2.3 Vehicles & Funds 1H’09 1Q’09 1H’08 Vehicles & funds 3.0 3.2 11.8 Interests Income from Participations 0.4 1.7 4.1 EBIT(**) 3.4 4.9 15.8 TOTAL NPLs 1.0 2.0 18.2 (**) (*) Includes the result from participated companies, success fees, promote and a capital gain from quota disposals (**) EBIT is referred to operating income results including income from equity participations, before restructuring costs, writedowns / revaluations, but including interest income from equity participations 8
  10. 10. Evolution of Real Estate sales and NPL recoveries €/mln REAL ESTATE SALES NPL RECOVERIES 100% Pro quota 100% Pro quota 207.7 207.7 527.6 527.6 527.6 235.0 351.9 207.7 116.6 175.8 67.4 54.3 1H’09 1H’08 1H’09 1H’08 1H’09 1H’08 1H’09 1H’08 Margin on sales is approx. 15% as of June 2009 Confirmed 1 €/bln of real estate sales by year end, including the preliminary contracts, offers received and undergoing negotiations 9
  11. 11. Net Asset Value as of June 2009 Real Estate NAV at 100% (€/bn) Real Estate NAV Pro quota (€/bn) Participated AUM RE Unrealized Capital Gain 0.2 14.7 3.9 13.9 3.7 10.3 2.7 4.4 1.2 1.2 1.1 0.4 SHL SHL 11.4 3.3 3.1 0.8 0.8 Book Value Mkt Value Net Debt NAV Book Value Mkt Value Net Debt NAV NAV 06/2009 12/2008 As of June 2009, unrealized capital gain (Market Value – Book Value) is approximately 200 €/mln with Real Estate NAV (Market Value – Bank Debt) of approximately 1.2 €/bln. 10
  12. 12. Agenda Pirelli Group 1H’09 Key Messages Pirelli Group Financial Review Pirelli Tyre Results Pirelli Eco Technology Results Pirelli Real Estate Results Appendix 11
  13. 13. Asset allocation by Products / Countries (Market Value) (€/mln) Market Value June 2009: 16.8 € bln Market Value Dec. 2008: 17.3 € bln NPL 1.7 NPL 1.9 Real Estate 15.1 Real Estate 15.4 Of which participated 15.0 Of which participated 14.7 o/w Real Estate o/w Real Estate Poland 1% Poland 1% Germany 49% Italy 50% Germany 49% Italy 50% 12
  14. 14. AUM participated Real Estate – 100% (€/000) Jun-09 PRE Quota Passing Rent Passing Yield Vacancy Book Value Market Value Net Financial Position Of which Net Debt Commercial Core Italy 90,758 5.7% 9.7% 1,592,340 1,722,030 1,132,574 1,098,676 Tecla Fondo Uffici 45.0% 40,499 5.6% 8.6% 725,280 725,280 502,923 502,923 Fondo Cloe 18.6% 26,959 6.9% 11.2% 390,224 500,800 226,804 226,804 Fondo Retail & Entertainm 31.6% 23,300 4.9% 13.1% 476,837 495,950 402,847 368,949 Commercial Yieding Italy 178,676 7.0% 6.2% 2,549,786 2,733,885 1,432,114 1,367,749 Fiprs 22.0% 21,249 8.2% 0 259,309 303,300 206,973 193,823 Tiglio 1 12.9% 13,978 6.9% 37.8% 201,999 219,300 121,554 121,554 Raissa 35.0% 23,917 6.8% 0 351,830 359,810 194,115 164,441 Olinda Fondo Shop 11.8% 38,389 6.6% 3.1% 578,870 638,990 293,363 293,363 Dolcetto Tre S.r.l. 33.0% 1,426 10.4% 0.0% 13,675 20,180 9,171 9,171 Progetto Perugia 100.0% 1,587 4.8% 1.7% 33,138 33,700 - Armilla 2.3% 16,790 7.5% 0.0% 224,970 238,700 133,985 133,985 Spazio Industriale Fondo (Portafoglio) 22.1% 42,330 7.2% 1.9% 585,119 608,020 313,127 313,127 Fo. Hospitality & Leisure 35.0% 9,012 8.3% 0.0% 108,653 114,620 100,646 79,105 Italia Turismo 16.3% 9,998 5.2% 0.0% 192,223 197,265 59,179 59,179 TOTAL Italy 269,433 6.5% 6.9% 4,142,126 4,455,915 2,564,688 2,466,426 Commercial Core Germany 118,690 6.2% 0.0% 1,925,333 1,936,809 1,336,148 1,223,491 Mistral 35.0% 9,500 6.3% 0.0% 151,479 161,110 114,542 99,655 Highstreet 12.1% 109,190 6.2% 0.0% 1,773,854 1,775,699 1,221,606 1,123,836 Commercial Germany 169,316 7.0% 1.3% 2,414,096 2,421,800 2,639,774 2,499,478 Highstreet 12.1% 162,144 7.1% 1.0% 2,280,869.838 2,286,490 2,524,164 2,398,205 Mistral 35.0% 7,172 5.4% 10.8% 133,226.194 135,310 115,609 101,273 Residential Yielding Germany 190,624 6.9% 6.0% 2,768,410 2,833,865 2,615,151 2,262,949 DGAG 40.0% 70,429 7.5% 3.6% 934,494.972 979,237 843,268 730,428 BIB 40.0% 102,152 6.6% 7.1% 1,557,380.44 1,565,198 1,534,587 1,335,138 Small Deal 49.9% 18,044 6.5% 9.1% 276,535.011 289,430 237,296 197,382 TOTAL Germany 478,631 6.7% 4.0% 7,107,839 7,192,474 6,591,073 5,985,918 INCOME PORTFOLIO 748,064 6.6% 5.0% 11,249,965 11,648,389 9,155,761 8,452,344 Residential Small Office House Office ITA 21,056 n.m. n.m. 1,057,852 1,212,107 899,508 745,660 Development ITA 2,401 1,328,085 1,418,230 1,108,793 928,253 Development Germany 8,121 163,753 187,570 138,197 138,197 Development Poland 176 140,785 182,415 122,173 62,567 OTHER PORTFOLIO 31,755 2,690,475 3,000,322 2,268,671 1,874,678 GRAND TOTAL 779,819 13,940,440 14,648,711 11,424,433 10,327,021 13
  15. 15. AUM participated Real Estate – pro-quota (€/000) Jun-09 Passing Rent pro-quota Passing Yield Vacancy Book Value pro-quota Market Value pro-quota Net Financial Position Of which Net Debt Proquota Commercial Core Italy 30,602 5.6% 9.4% 549,638 576,245 410,169 389,407 Tecla Fondo Uffici 18,225 5.6% 8.6% 326,376 326,376 233,452 233,452 Fondo Cloe 5,014 6.9% 11.2% 72,582 93,149 42,185 42,185 Fondo Retail & Entertainm 7,363 4.9% 13.1% 150,680 156,720 134,532 113,771 Commercial Yieding Italy 35,969 7.0% 4.0% 516,166 548,963 300,978 277,894 Fiprs 4,675 8.2% 0 57,048 66,726 55,566 50,408 Tiglio 1 1,802 6.9% 37.8% 26,038 28,268 15,959 15,959 Raissa 8,371 6.8% 0 123,140 125,934 67,940 57,554 Olinda Fondo Shop 4,530 6.6% 0.9% 68,307 75,401 34,681 34,681 Dolcetto Tre S.r.l. 471 10.4% 0.0% 4,513 6,659 3,027 3,027 Progetto Perugia 1,587 4.8% 1.7% 33,138 33,700 Armilla 386 7.5% 0.0% 5,174 5,490 3,028 3,028 Spazio Industriale Fondo (Portafoglio) 9,363 7.2% 1.9% 129,428 134,494 69,278 69,278 Fo. Hospitality & Leisure 3,154 8.3% 0.0% 38,028 40,117 35,226 27,687 Italia Turismo 1,631 5.2% 0.0% 31,352 32,174 16,272 16,272 TOTAL Italy 66,571 6.2% 5.5% 1,065,804 1,125,208 711,146 667,301 Commercial Core Germany 16,434 6.2% 0.0% 266,008 269,515 253,886 214,814 Mistral 3,240 6.3% 0.0% 51,666 54,951 39,121 24,762 Highstreet 13,194 6.2% 0.0% 214,342 214,565 214,765 190,051 Commercial Germany 21,468 6.5% 1.5% 328,069 329,480 320,878 274,703 Highstreet 19,592 7.1% 1.0% 275,607 276,286 276,688 244,848 Mistral 1,875 3.6% 10.8% 52,462 53,194 44,191 29,855 Residential Yielding Germany 78,044 7.0% 6.1% 1,119,503 1,145,958 1,056,785 904,411 DGAG 28,172 7.5% 3.6% 373,798 391,695 337,307 280,284 BIB 40,861 6.6% 7.1% 622,952 626,079 613,835 535,524 Small Deal 9,012 7.3% 9.1% 122,753 128,184 105,643 88,603 TOTAL Germany 115,946 6.8% 5.2% 1,713,579 1,744,953 1,631,549 1,393,928 INCOME PORTFOLIO 182,517 6.6% 5.3% 2,779,383 2,870,161 2,342,695 2,061,229 Residential Small Office House Office ITA 6,857 n.m n.m 356,642 414,423 294,010 242,384 Development ITA 600 428,885 456,670 368,967 297,137 Development Germany 3,592 70,313 81,154 59,106 59,106 Development Poland 60 54,058 69,136 48,968 25,017 OTHER PORTFOLIO 11,109 909,897 1,021,382 771,051 623,644 GRAND TOTAL 193,626 3,689,280 3,891,543 3,113,746 2,684,873 14
  16. 16. Net invested Capital €/bln 1.2 Italy 1.1 1.1 0.8 Market Value Participated Real Estate Asset Investment under Management Italy Real Estate 0.6 Germany Investment & Poland 7.6 Italy 7.1 0.8 Investment Germany Germany 0.2 0.3 Services Ita 0.2 Services NPL 0.3 0.1 Services Ger 0.1 Total NIC NIC excluding NPL Net Invested Capital of 1.2 € bln, of which: Approx. 0.8 € bln in Real Estate and for 0.3 € bln in the service platform Total Net Invested Capital in Italy – NPLs included – is approx. 75% of the total 15
  17. 17. Consolidated Balance Sheet €/mln 2009 Post 2008 actual 1H’09 1H’08 cap. increase Fixed Assets 583.0 589.1 795.3 - of which participations 406.7 405.7 608.5 - of which goodwill 137.0 137.8 141.7 Net Working Capital 122.4 133.1 183.1 Net Invested Capital 705.3 722.2 978.4 Net Equity 308.2 707.5 366.4 657.1 - of which Group Net Equity 302.3 361.7 650.1 Funds 59.8 66.3 50.8 Net Financial Position 337.3 289.5 270.5 - of which shareholders' Loans (491.1) (572.3) (539.2) Total Sources 705.3 722.2 978.4 NFP excluding shareholders' Loans 828.5 429.2 861.8 809.8 NIC excluding shareholders' Loans 1,196.4 1,294.5 1,517.6 Gearing 2.69 0.61 2.35 1.23 (*) Capital Increase of 399,3 €/mln gross of closing costs 16
  18. 18. Consolidated Net Cash Flow €/mln 1H’09 1H’08 Ebit before restructuring costs (2.0) 20.3 Depreciation 3.6 4.3 Change in investments (37.5) 9.3 Change in other fixed assets (0.7) (15.0) Change in NWC, Funds and other 15.7 (22.7) Free Chas Flow (20.8) (3.8) Impact from Facility Mgm disposal 0.0 102.4 Restructuring costs ( provisioned in 2008) (23.6) (7.8) Interest Income /expenses and Taxes (3.4) 13.5 Cash Flow before dividends (47.8) 104.3 Dividend paid 0.0 (85.1) Net Cash Flow (47.8) 19.2 Capital Increase 0.0 0.0 Treasury shares purchase/sales 0.0 0.0 Net Cash Flow (47.8) 19.2 17
  19. 19. Financial situation Vehicles and participated Funds 100% 13.0 3.7 Euro / bn 0.5 0.5 2.7 SPVs DEBT Pro-Quota Shareholders’ NPL RE Assets PRE Loans Ero B o M?? 2.685 133 248 771 MATURITY Euro / mln High Street 1,533 415 RE Assets 2009 2010 2011 Ahed Banks Debt characteristics: Average maturities closed to 3.2 years Average Spread (*): 178 bps (pro-quota PRE 154 bps) 81% hedged against interests rate change Average leverage (LTV): Real Estate 69% of which Italy 59% and Germany 80% Pro quota recourse debt approximately 46.5 mln/€ (*) Excluding NPL e subsidies. 18
  20. 20. NFP evolution excluding shareholders’ loans (€/mln) 23.6 898.4 27.5 (89.2) 16.0 861.8 (11.2) 828.5 429.2 NPL ( 20% NFP NFP Equity PFN Dicembre 2008 sales of C.S Working PFN NFP June 2009 December injections Investments Layoff and Capital & Mach June 2009 (Post Cap. 2008 to vehicles refinincing.to Others 2009 Calyon) increase) (*) (*) Capital Increase of 399.3 € mln gross of closing costs 19

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