The Board of Managing Partners of Pirelli & C. met today and approved the Company's financial statements for the year ending 31.12.2000

The balance sheet of Pirelli & C., the parent company, closed with a profit of 503 billion lira (? 260 million) as compared with 75 billion lira (? 39 million) the previous year.
As of this year, and in agreement with the auditors, dividends in controlled or affiliated companies will be accounted for on the basis of the principle of competence. This has resulted in the recording of increased dividends, to a value of ? 114 million.

The consolidated Group Financial Statements of the Pirelli & C. Group closed with a net result of 7,278 billion lira (? 3,759 million) as against 567 billion lira (? 293 million) the previous year.
This result reflects both an improvement in ordinary operating results, which grew from ? 322 to ? 432 million, and also a number of extraordinary operations involving both the Pirelli S.p.A. group (the sale to Corning of Optical Components; the sale to Cisco Systems of Terrestrial Optical Systems and extraordinary charges for investments in rationalisation and manufacturing efficiency) and also the Pirelli & C. Real Estate S.p.A group, the latter being the new name given to Milano Centrale S.p.A. (the UNIM acquisition).
The balance of these extraordinary operations generated gross revenues of ? 4,521 as compared with ? 93 million the previous year.

Sales totalled 14,903 lira (? 7,697 million), an increase of 15.7% compared to 1999.

Gross operating profit, at ? 850 million, recorded an increase of 21.6% on the 1999 figure of ? 699.

The operating result totalled ? 432 million, equal to 5.6% on sales, as opposed to ? 322 million the previous year (4.8% on sales).

The net financial position moved from debt of ? 1,597 on December 31st, 1999, to a positive position of ? 2,635 million.

As regards the performance of the operational activities of the Group we would remind you that the Pirelli & C. Group essentially consists of the following sectors:

• Cables and Systems (through the subsidiary Pirelli SpA)
• Tyres (through the subsidiary Pirelli SpA)
• Property (through the subsidiary Pirelli & C. Real Estate)
• Environment (through the subsidiary Pirelli Ambiente SpA)
  
  As regards the Cables and Systems and Tyres Sectors, please refer to the press release issued by Pirelli SpA yesterday.
  
  Pirelli & C. Real Estate S.p.A. This company of the Pirelli & C. Group operates both in Property Asset Management (Residential and Commercial), providing strategic management services and participating in the risk capital of the projects undertaken, as well as providing Specialist Services (Residential and Commercial Estate Agents, Project Management, Urban Development Promotion and Property and Facility Management) for these projects and directly on behalf of third-party customers.
  
  The consolidated financial and economic position of Pirelli & C. Real Estate S.p.A. for the period 1/1/2000-31/12/2000 closed with a net profit for the period of 295 billion lira (? 152.4 million), as compared to 21 billion lira (? 11 million) in 1999. The overall impact of extraordinary operations amounted to ? 132.3 million and that of ordinary operations was ? 20.1 million, an increase on the previous year of 83%.
  
  The year 2000 was marked by a number of key events. The following are worthy of particular note:
• On January 7th, with the settlement of the payment ? 2,044.6 million, Pirelli & C. Real Estate formally acquired 88,88% of the entire share capital of Unione Immobiliare (UNIM), following the public purchase offer launched in the second half of 1999 for the full share capital of the company. April saw the conclusion of the residual public purchase offer for the full share capital of UNIM. Taking into account the shares held by UNIM, the stake of Pirelli & C. Real Estate rose to 98.78% of the whole share capital. Pirelli & C. Real Estate subsequently exercised its right to buy the residual shares still on the market.
• January 25th witnessed the stipulation of the services contract between the Ministry of Labour and Social Security and the G6 Advisor Consortium, (in which the company has a stake) for the co-ordination and implementation of all services and activities related to the disposal of the property assets of the social security institutions, assets with a value in excess of ? 1,500 million.
• In February, along with the Benetton Group and Caltagirone/Vianini, won the tender for the "Progetto Grandi Stazioni" ("Major Stations Project"). This project, developed by the State Railways, is aimed at the restructuring, enhancement and integrated management of 13 railway station complexes in Italy's main cities.
• The company also took on the management of the home property portal "CasaClick" (the product of the merger between Domusclick and Brainworks), and signed an agreement with Gabetti Holding for a commercial partnership in the residential sector.
• In October an agreement was reached with Regus for the development over the next five years of a chain of temporary offices in Italy.
• In December the company handled the acquisition of the property assets of RCS on behalf of two companies in which HdP and Morgan Stanley have varying stakes. The company has retained roughly 20%.
• December also witnessed the acquisition of approximately 50% of the property assets of "Risanamento Napoli" which, with the support of other investors, led to the setting up of a company that features leading Italian banks and operators from within the sector. The company has maintained roughly 32%.
  
  Consolidated sales revenues at 31.12.2000 were 473.2 billion lira (? 244.4 million), as compared with 393.4 billion (? 203.2 million) in 1999. Net of the effects of the UNIM operation and of the acquisitions (? 38.0 million as against ? 110.4 million in 1999), sales revenues were 276.1 billion lira (? 142.6 million) as compared with 179.7 billion lira (? 92.8 million) in 1999, an increase on the preceding year of 54%.
  
  The operating result was ? 34,5 million as against ? 19.9 million in 1999, with an increase on the previous year of 73%. The operating result stems almost entirely from activities comparable with those of the previous year, given that the effect of extraordinary operations on the result in question was virtually nil.
  
  The result gross of tax charges was ? 198.3 million, as compared to ? 15.6 million in 1999. The overall impact of extraordinary operations amounted to ? 167.7 million and that of ordinary operations was ? 30.6 million, an increase on the previous year of 96%.
  
  The net result was 295.1 billion lira (? 152.4 million), as compared to 21.3 billion (? 11.0 million) in 1999. The overall impact of extraordinary operations amounted to ? 132.3 million and that of ordinary operations was ? 20.1 million, an increase on the previous year of 83%.
  
  Fixed assets totalled ? 168 million as compared to ? 11million at 31/12/1999. The increase largely reflects the new stakes in associated companies, as well as a securities portfolio which was the subject of an equity swap contract worth ? 96.4 million on 31/12/2000.
  
  Net working capital was ? 324.2 million as compared to ? 108.8 million on 31.12.1999. The increase of ? 215.4 million stemmed mainly from increased tax credits related to Unim dividends (? 168.1 million). Consolidated inventory, totalling ? 308.3 million (of which roughly 50% have already been placed) as compared to ? 295.6 million on 31.12.1999, mainly relates to construction sites, properties under construction or being restructured and properties completed for trading purposes.
  
  The net financial position, net of financing related to a previously placed operation for which a contract attributable to project financing was stipulated, totalled ? 364.4 million, as compared to ? 78.0 million on 31.12.99. This indebtedness is equal to ? 29,1 million when excluding the debt guaranteed by the securities portfolio (which was the object of an equity swap), equal to ? 335.5.
  
  Pirelli Ambiente SpA The company's activities included operations in the areas of ecology and co-generation. The year saw the beginning of the disposal of the co-generation sector through the sale of stakes in the controlled companies, with the aim of exploiting the resources arising from the sales to accelerate development in the ecology sector.
  
  2000 saw the sale to Sondel International B.V. (a company within the Falck group) of the stake in Turk Pirelli Energji S.A. at a price of USA$ 9.5 million, with the realisation of capital gains of ? 5.3 million. The sale of the stake in Pirelli Energie Deutschland A.G. took place in January 2001 at a price of ? 1.6 million capital gains of ? 0.5 million.
  
  The consolidated result of the company as at December 31st, 2000 was a profit of ? 2.5 million as compared with a loss of ? 0.8 million the previous year. In the near future the company will focus on penetration of the field of energy generation from waste, through a series of projects that will be both innovative and economically self-sufficient.
  
  Outlook for the current year
  
  For the current year, if there is no further deterioration of the general economic-financial situation, the Pirelli & C. Group forecast the achievement of operating and net results at least in line with those of 2000 (albeit obviously without taking into account extraordinary items from the previous year).
  
  * * *
  
  The Board of Managing Partners of the company will propose to the Annual Meeting of the Shareholders, convened in first call on April 30th and in second call on May 10th, the distribution of a dividend increased from 120 lira (? 0.0620) to 400 lira (? 0.2065) for ordinary shares and from 140 lira (? 0.0724) to 420 lira (? 0.2169) for savings shares. The dividend shall be paid as of May 24th, 2001.
  
  Addenda: summary of key figures from the profit & loss account and balance sheet (as yet uncertified by the auditors and unverified by the Board of Auditors)
  
  The consolidated balance sheet of the Group as at December 31st, 2000 may be summarised as follows (PDF)
  
  Download the Press Release (PDF, 43Kb)