Italiano




Services

I. Description

By establishing specialized service companies in the technical and commercial areas, Pirelli RE has developed in-house all the skills needed to complement and support its Investment & Asset Management business.

Service Provider is a fundamental part of enhancing the value of the asset acquired. The services are provided to the funds and investment vehicles in which the Group holds an interest, as well as to other third-party customers in both the private and public sectors.

This has enabled it to offer the unique expertise gained from working on the real estate projects developed by the Group, and also to improve its know-how and boost the quality of the services provided through competing on the market.

II. Main events

  • On July 27th, 2006 Pirelli RE Facility Management purchased for 2.4 million euro all of Aponeo, a service company specializing in document storage and management. This acquisition forms part of the strategy to grow by external means, designed to assist geographical expansion – Pirelli RE Facility Management now owns document storage facilities in Novara, Turin, Genoa, Ivrea, Milan, Rome and Bologna – while benefiting from economies of scale.

  • After winning a competitive bid, Pirelli RE Facility Management signed a binding agreement on December 14th, 2006 to buy 100% of Ingest Facility from Business Solutions, a member of the Fiat Group, for the sum of 33 million euro. Ingest Facility heads up a group consisting of facility management businesses in Italy and the subsidiaries Ingest Facility Poland and Fiat Finance et Services SA, which provides facility management services to Fiat Group companies in France. As a result of this acquisition, the Pirelli RE Group will focus on entering other European service provider markets, in tandem with the acquisition of real estate investments in Central and Eastern Europe.
III. Results
(Euro/million)
SERVICES - 01.01.2006/12.31.2006
 Total services (3) Totale services (4)
Commercial Services Technical Services (Direct services)        
Direct Services Agency (1) Indirect Services Franchising Total commercial Property (1) (3)
(4)		 Facility /Property (1) Total technical (3) Totale technical (4) Credit Servicing(1)    
                       
Consolidated revenues 92.1 22.9 115.0 60.2 60.2 223.4 283.6 283.6 4.8 395.8 395.8
EBIT 41.8 2.4 44.2 10.4 5.7 16.2 26.6 21.9 3.2 73.92 69.2
EBIT including net income from investments 41.8 2.4 44.2 10.4 5.7 16.0 26.4 32.1 1.1 71.6 66.9
PBT 42.0 2.1 44.1 9.8 5.1 14.5 24.3 29.4 1.1 69.5 64.8
ROS (2) 45% 10% 38% 17% 9% 7% 9% 8% na 19% 17%
                       


(Euro/million)
SERVICES - 01.01.2005/12.31.2005
 Total services (3)
Commercial Services Technical Services (Direct services) Credit Servicing(1)  
Direct Services Agency (1) Indirect Services Franchising Total commercial Property (1) Facility /Property (1) Totale technical  
                 
Consolidated revenues 96.4 19.5 115.9 56.2 203.8 260.0 1.8 371.5
EBIT 42.8 1.3 44.1 8.5 11.7 20.2 0.7 65.0
EBIT including net income from investments 42.8 1.3 44.1 8.5 13.2 21.7 3.9 69.8
PBT 43.0 1.2 44.2 7.9 12.3 20.2 4.0 68.4
ROS (2) 44% 7% 38% 15% 6% 8% na 17%
                 


Note: the total includes eliminations of transactions between product lines in the same business unit.

(1) Included in the “Service Provider” reporting segment.
(2) ROS is calculated as the ratio between EBIT and consolidated revenues.
(3) Figures stated before 4.7 million euro in charges relating to the years 2002-2004.
(4) Figures stated after 4.7 million euro in charges relating to the years 2002-2004.

The services are performed by specialized companies, which are subsidiaries of Pirelli RE, whose activities are briefly described below.

Consolidated revenues from services amounted to 395.8 million euro in 2006, an increase of 7% on the figure of 371.5 million euro reported in 2005.

Excluding the charges relating to the years 2002-2004, EBIT came to 73.9 million euro, up 14% from 65 million euro in 2005. Including the charges mentioned above, EBIT amounted to 69.2 million euro compared with 65 million euro in 2005 (ROS of 17%).

Commercial services

Direct commercial services and those provided through the franchising network closed 2006 with 115.0 million euro in revenues compareds with 115.9 million euro the year before.

EBIT was 44.2 million euro compared with 44.1 million euro last year, while ROS was unchanged at 38%.

Agency

Agency provides advisory services involving the purchase, sale, lease and appraisal of properties used for office, industrial, commercial and residential purposes.

The company is organized by types of property and customer, and operates throughout the country, providing its services to the largest national and international operators in the sector. In Italy it represents the British Group of Knight Frank, which is the global partner of the US firm of Grubb & Ellis.

Revenues amounted to 92.1 million euro in 2006 compared with 96.4 million euro in 2005.

EBIT was 41.8 million euro in 2006 compared with 42.8 million euro in 2005.

ROS was 45% compared with 44% in 2005.

Pirelli RE Agency provided around 80% of its services in 2006 to Pirelli RE subsidiaries, associates and joint ventures and to funds managed by Pirelli RE SGR or Pirelli RE SGR Opportunities, while 20% of its services were provided to third-party customers.

Franchising

Pirelli RE Franchising agencies not only offer the retail market traditional real estate agency services, they also provide customers with a complete range of banking and insurance products thanks to commercial agreements with SelmaBipiemme Leasing, Unicredit and Assicurazioni Generali.

During 2006 Pirelli RE Franchising continued to work on creating a network that provides real estate, banking and insurance services to the retail market. At the end of 2006 the franchising network’s 637 working agencies had sold 553.4 million euro in properties under engagements from Pirelli RE Agency (40% more than in 2005) and recommended 327.6 million euro in financial products (mortgages and leases), a 187% increase on December 31st, 2005.

The network reported a positive EBIT of 2.4 million euro, marking an 85% improvement on the prior year figure of 1.3 million euro.

Technical services

The technical services of facility, project and property management reported 283.6 million euro in revenues in 2006, an increase of 9% on the prior year figure of 260.0 million euro.

Excluding the charges relating to the years 2002-2004, EBIT came to 26.6 million euro, up 32% from 20.2 million euro in 2005. The ROS of technical services was 9% compared with 8% in 2005. Including the charges mentioned above, EBIT amounted to 21.9 million euro compared with 20.2 million euro in 2005 (ROS of 8%).


Facility and Project Management

I. Description

Facility Management provides services to the users of predominantly commercial buildings, by improving their standard and optimizing their efficiency.

Acting as the sole point of reference for all the activities performed within a building, it is able to optimize economic, logistical, technological and organizational processes, ensuring the greatest cost savings and flexibility.

Following the merger on December 11th, 2006, Pirelli RE Facility Management now includes the activities previously performed by Pirelli RE Project Management, a company specializing in the integrated management of the design, redevelopment and construction of new property complexes for commercial, residential and mixed uses, and the related urbanization work.

Project Management business works together with Pirelli RE’s own asset management businesses and third-party customers, who engage it to manage their real estate projects. The services relate to a variety of different sectors, from engineering, to safety, to site development and urbanization.


II. Results

Consolidated revenues reported a 10% increase, from 203.8 million euro in 2005 to 223.4 million euro in 2006.

EBIT was 38% higher at 16.2 million euro, up from 11.7 million euro in 2005. The improvement in EBIT reflects not only the larger amount of business after taking in-house certain maintenance and environmental services but also greater efficiency as a result of the steps taken, mostly last year, to reorganize.

ROS improved from 6% in 2005 to 7% in 2006.

Facility and Project Management provided around 18% of its services in 2006 to Pirelli RE subsidiaries, associates and joint ventures and to funds managed by Pirelli RE SGR or Pirelli RE SGR Opportunities, while 82% of its services were provided to third-party customers.


Property Management

I. Description

Property Management is provided to property owners, with a view to maximizing their income and giving them administrative support in purchasing, managing and selling their property.

The Property Management company not only manages all the asset in which Pirelli RE has invested, it also provides its services to large industrial groups and public and private entities in over eighty locations throughout Italy.


II. Results

Revenues amounted to 60.2 million euro in 2006, having increased by 7% on the figure of 56.2 million euro reported in 2005.

Excluding the charges relating to the years 2002-2004, EBIT came to 10.4 million euro, up 22% from 8.5 million euro in 2005. Including the charges mentioned above, EBIT amounted to 4.7 million euro compared with 8.5 million euro in 2005. In this case, ROS was 9%.

Pirelli RE Property provided around 40% of its services in 2006 to Pirelli RE subsidiaries, associates and joint ventures and to funds managed by Pirelli RE SGR or Pirelli RE SGR Opportunities, while 60% of its services were provided to third-party customers.


Credit Servicing

I. Description

Credit servicing activities involve valuing portfolios of predominantly mortgage loans and managing their recovery through legal actions both in and out of court.

In July 2006 Standard & Poor’s Ratings Services awarded Credit Servicing an “above average” rating, confirming the perceived reliability of the services provided.


II. Results

This business, whose results are closely related to those of NPL Asset Management, was wholly acquired by the Group in November 2006. It reported a positive EBIT of 3.2 million euro compared with 0.7 million euro last year.