hidden obstacles
Since its creation, the company has faced steep losses and a slow but steady impact on public finances. Financial institutions faced substantial write-downs between 2008 and 2012, and more losses followed in subsequent years. The annual report is due at year’s end, and the financial figures already show a growing deficit that affects government accounts. In the first half of the previous year, the firm posted a significant loss, contributing to a broader negative effect on state finances.
In March 2021, Eurostat required the public sector to recognize the company for accounting purposes, which increased reported government debt and widened the deficit. The losses accumulated from the company’s founding in 2012 through 2020, plus additional charges in the following two years, reduced its own capital and far-reaching liabilities supported by the State and private shareholders, prompting the community statistics office to intervene.
The operation continued after a legal change approved by the government in March 2020, designed to permit ongoing activities despite a heavily negative equity position that could push other firms toward bankruptcy. Yet the entity still carries substantial depreciation on state-guaranteed debt, and the assets transferred to the salvaged pool remain tied to those obligations. With limited state resources, the government considered nationalizing the entity at the start of 2022 if sufficient revenue to service the debt remains unavailable. The state would need to step in if the debt cannot be repaid.
To generate usable income, roughly 26.465 million euros in assets are slated for sale before November 2027 unless the government extends the period, a move it has begun to consider in the past. The portfolio includes hidden obstacles, with almost 8.569 million held in reserve by mid-year. More than half of the portfolio items are priced above current market values, meaning selling them at a loss is likely unless a difficult re-pricing occurs.
Last year showed a loss of 1.506 million, reflecting the gap between initial asset transfers and the fees obtained on sales. There was a notable clearance of government-guaranteed debt, yet the total outstanding balance still exceeds the recoverable amount, highlighting the ongoing challenge of balance sheet timing and cash flow planning.
More revenue, less expense
The company reported 2.361 million entries, marking an 8% rise over 2021 and an uptick in the sale of physical assets such as homes, plots, and industrial property. Real estate sales accounted for the majority of revenues, while income from financial assets, notably loans to developers in distress, declined as expected with the reduction in such loans. These activities now represent a smaller portion of the portfolio, with the company prioritizing the sale of properties or honoring warranties while retaining some assets for potential future value.
Despite higher trading activity, property management costs fell by 11% due to savings from a contract shift with partner companies that help move assets. A portion of expenditures relates to taxes on real estate portfolios and other non-deductible charges. On the operational side, internal processes became more efficient, thanks to a broad efficiency plan enacted in 2020, resulting in an 8% cut in core operating expenses.