business summary v1.0

Business Vision at glanceNon Profit Loans & OpenERP & RE asset market repositioning

ver 1.0

Marinelli Nicola

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Good Business includes stronghold element with resiliency capability

Current global market is very dynamic and under several events changing the wind, so the resiliency of a business is important, unless the business is just very short time oriented.

A business must have a stronghold element and flexibilityA business must have a stronghold element and flexibility. A stronghold business domain is the Real Estate market

It’s a primary need It’s tangible It can have a market repositioning

Real Estate has several market branches: Building a RE physical unit Maintenance and administration of a RE physical unit Traditional trading: sell/buy a RE unit Financing a RE trade operation.

Mortgage/Loan Credit Management

Profitable or Performing Loan Sub Profitable or Sub Performing Loan Not Profitable or Not Performing Loan the NPL domainthe NPL domain

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A definition of NPL

As simple definition: a Non Performing Loans are loans that the borrowers have stopped making payments on.

Since 2003, there is a market that is constantly growing and giving proof of high revenue: the NPL abbreviation for Non Profit Loan also known as Non Performing Loan.

Mostly it's dedicated to the Real Estate even if it is applied also in other markets wherever distressed loans are present.

The crisis has seen an tremendous increment of this financial phenomenon of NPL having as consequence a huge number of real estate units coming in the bank assets volumes.

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NPL, from an issue to an opportunity These huge amount of RE assets is not an advantage for banks, not being able to sell these

properties in profitable way in short term of time. This also for the financial crisis. In this context, Banks have a very expensive and very severe constraint: the TIME. These Real Estate units bring high additional costs fo banks:

fiscal weight maintenance costs administration and legal costs in order and especially to be compliant with the IAS and Basel2.

So often, Banks are available to sell even with great discount these Real Estate assets, from 20% to 80% cut of price.

Financial Market Crisis = Real Estate Opportunities

1st2nd

3rd

4th 5th

Eur

nominal Credit

waiting timelegal action

Time

The market value of

collateral *

The center of the area of a

potential agreement

Expected recovery value through a legal

actions **

Auction

* Market value increasing over time according to a revaluation rate

** Expected recovery value growing over time when decreasing the discount factor

offers

NPL time frame

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NPL growing volumes in Italy, in billion of Eurobillion of Euro

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Major owners of NPL portfolio in Italy, in billion of Eurobillion of Euro

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NPL Bank management

The traditional NPL management approach: external legal and consulting studios costs and not full control judicial procedures costs, lot of time and not full control

The modern NPL management approach: Mostly Internal servicing less expensive and full control Private agreements less expensive, less time and full control

For Banks the NPLs cost is one of the most negative item in the economic accounting with an impact near the 20% of revenue associated to the Real Estate intermediation revenues.Source: A.T. Kearney analysis on Bilbank data

The IT is fundamental and with the utmost priority in order toThe IT is fundamental and with the utmost priority in order to : Time to market factor Repository of documentation and information Control of process workflow per each involved role Reports, plan, statistics and forecasts (collection scoring) Ubiquity of access (internet) Not so expensive if open software oriented IT represents the injector of flexibility in the RE stronghold domainIT represents the injector of flexibility in the RE stronghold domain.

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Possible Business opportunities

This picture can bring at least 3 possible business opportunities:A.A. Creating a software for the management of the NPL to be used by banks Creating a software for the management of the NPL to be used by banks

and their financial partners.and their financial partners.

B.B. Negotiating with a bank an interesting price for some interesting real estate Negotiating with a bank an interesting price for some interesting real estate units in order to purchase them as investment.units in order to purchase them as investment.

C.C. Real Estate asset Market Repositioning.Real Estate asset Market Repositioning.

As further resiliency capability, these possible business opportunities, depending by the chosen strategy, can be detached or connected, partially or totally.

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A) NPL Software package to be used by banks and their financial partners

Currently there are some and few vertical dedicated software solution for the NLP domain but it's still missing a solution integrated an in an ERP (Enterprise Resource Planning) product.

What is an ERP ? One database for whole the company having all company processes integrated. Keeping also a vertical view per company department Automatic notification and communication between departments Automatic actions log history

Why an ERP ? The key answer can come from another question: even if there is a missing module associated to

business domain, why reinventing the wheel for other associated and correlated business ? Because it gives more market capability penetration, being wide and vertical at the same time

depending by the needs. Easier centralized hw/sw infrastructure, so easier maintenance and less expensive.

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In the ERP world, the point of reference usually considered is SAP. Currently SAP has the module RE-FX (Real Estate Flexible) covering the standard Real Estate management

operation with the added value of an integration with other modules FI/CO/TR/PM/PS/FA, but there is not module covering the Risk and Credit and Property management associated to the NPL domain.

Producing a dedicated module in SAP would be very expensive for license, for customization costs considering also an not easy and not friendly key programming language used into it: ABAP.

More sophisticated architecture and maintenance

Here below a list of the ERP leader products for the Open source and Licensed market

Not entering in deep details, more info about the products comparison for the key parameters can be found at these addresses:

www.evaluation-matrix.com/comparison www.evaluation-matrix.com/graph/

In all key comparison, OpenERP is on good position even with the main competitor SAPIn all key comparison, OpenERP is on good position even with the main competitor SAP

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Preamble about Open ERP OpenERP is a modern Suite of Business Applications, released under the AGPL license, and featuring CRM,

HR, Sales, Accounting, Manufacturing, Warehouse Management, Project Management and more. It is based on a modular, scalable, and intuitive Rapid Application Development (RAD) framework written in

Python. that is a high-level dynamic programming language, ideal for RAD, combining power with clear syntax, and a core kept small by design.

The motto associated to these products gives the idea of the mentality distinction between the mature software and the agile softwareThe motto associated to these products gives the idea of the mentality distinction between the mature software and the agile software

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What’s ready in Open ERP! One software package covers all your enterprise needs (Dpt functionalities)

Accounting & Financial Mgt Manufacturing resource planning Inventory control Document Management System SMS and Mass mailing services

No double encoding of information Automates tasks by integrating business processes Automate all administrative tasks User-friendly web and rich interface Evolution as needed with the huge modules list

Business

ManagementSales

MRP/Procurement

In this context is possible to create a Real Estate module focusing the NPL domain.In this context is possible to create a Real Estate module focusing the NPL domain.

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Asset MngAsset MngSuiteSuite Legal / Tax AdvisorLegal / Tax Advisor

ServicerServicer

Draft CheckDraft Check

ImprovementImprovement

Asset ManagerAsset Manager

Due DilligenceDue Dilligence

Property ManagerProperty Manager

Sales / PurchaseSales / Purchaseexistentexistent

Includes reporting at all levels

Every user has a role in the module portal with a set of allowed actions depending by the profile role.

The module includes also an Aplication Program Interface (API) in order to interact with third part products, for example Payment Gateways or Legacy Data migration, etc.

All information among entities having a common interacting with the schema of other OpenERP modules, when /if needed.

Every transaction is recorded, so that it can be reviewed in the future

In case of error,it can be easily detected

Financial InstitutionFinancial Institution

Product Model: Asset Management SuiteProduct Model: Asset Management Suite

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Sales / PurchaseSales / Purchase

When Ready, this module could be proposed, As OpenERP module to the banks having NLP division.

An added value would be that even other existing modules might be part of the Bank information system, so giving a wider panorama not only associated to the Asset Mng Suite module.

A possible attractive approach for potential customers to consider initially this module could be: the executable module is be given for free, with just a short cost for initial setup and training. After, the profit would come as percentage of the Real Estate assets administered and sold by means the usage of this module. (anyway discussions about this point are open)

Product Model: Asset Management SuiteProduct Model: Asset Management Suite

CRMCRM

Asset Mng SuiteAsset Mng Suite

...Other Modules...Other Modules

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OpenERP architecture and technology allow to perform quickly and easily a number of activities such as: Creating reports; Workflow adaptation; New process creation; Uploading batch files for data migration; Adding fields; Customizing screens; Defining interface; Implementing authorizations; Configuring.

Asset Management Suite : the implementation costAsset Management Suite : the implementation cost

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At glance, the implementation cost of an OpenERP project is composed of 10% for the hw purchase and setup 10% for the Project Management 60% for the new module product and integration in OpenErp,

including: Recruiting Training/Coaching Analysis Development Integration Configuration Validation

20% for the change management

Asset Management Suite : the implementation costAsset Management Suite : the implementation cost

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Asset Management Suite : module production planAsset Management Suite : module production plan

After a formal agreement, from the very beginning to the end, included the Industrialization of the module as Ready for the Open Market, at most 40 weeks.

Workforce: 1 PM with tech background covering also some analysis 1 Analyst covering also some Tech Architecture 2 Sw Developers 2 Testers with 1 capable to care also the “cosmetic” of Web GUI 1 System and Network Eng

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B) Negotiating with a bank an interesting price for some interesting real estate units in order to purchase them as investment.

Having a strategy associating it to the point A, so having the point B1: the bank using the new module Asset Mng Suite, could also give a mandate

to care the servicing of the real estate units in the NPL. So, it could be possible to have the added task, and associated added revenue, to care all the selling process of these RE units in the NPL.

Having a strategy totally detached by the point A, so having the point B2: it could be possible to create a servicing NPL company to care these huge

RE assets or having a partnership with an already existing servicing management company dedicated to the NPL.

In this last point, I already have a competent and reliable person to considerIn this last point, I already have a competent and reliable person to consider

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C) Real Estate asset Market Repositioning

In Italy there is the greatest artistic patrimony, the most appreciated gastronomic tradition, good weather, all kind of natural landscapes from high mountains to the sea. In general, very attractive from the tourist point of view.

Depending by the the type of the RE unit, it could be possible to manage the Market repositioning with several kind of option: hotel, spa, b&b, house, depots, offices, shops, etc

Even in this case, IT can give a great support. In this context it would be better some vertical web oriented solution.

as example, for the B&B business, it could be possible to create a site similar to

www.bed-and-breakfast-in-italy.com/

In this last point, I already have a competent and reliable company to considerIn this last point, I already have a competent and reliable company to consider

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Thank You for the attention

Marinelli Nicola

Mobile: +39 3475180182

Email: [email protected]