Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited
take no responsibility for the contents of this announcement, make no representation as toits accuracy or completeness and expressly disclaim any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the contents of thisannouncement.

Via A. Fogazzaro n. 28, Milan, Italy
Registry of Companies of Milan, Italy: No. 10115350158(Incorporated under the laws of Italy as a joint-stock company)(Stock Code: 1913)

INTERIM RESULTS ANNOUNCEMENTFOR THE SIX MONTHS ENDED JULY 31, 2012
FINANCIAL HIGHLIGHTS---Group’s net revenues were Euro 1,547.4 million, recording an
increase of 36.4% compared with the six months ended July 31,
2011
Retail net sales were Euro 1,230.0 million, up by 47.2% comparedwith the six months ended July 31, 2011
the number of Directly Operated Stores (DOS) reached 414
Retail Same Store Sale Growth (SSSG) was 19% compared with thesix months ended July 31, 2011
EBITDA was Euro 469.4 million (representing a margin of 30.3% on
net revenues)
Group’s net income amounted Euro 286.4 million, an increase of
59.5% compared to Euro 179.5 million for the six months ended
July 31, 2011
Positive net financial position at Euro 82.5 million as at July 31,
2012
Net operating cash flow for the six months ended July 31, 2012,
was Euro 332.2 million

1Consolidated results for the six months ended July 31,
2012
The Board of Directors (the “Board”) of PRADA S.p.A. (the “Company”, or“PRADA spa”) is pleased to announce the unaudited Consolidated results of
the Company and its subsidiaries (collectively, the “Group”) for the six
months ended July 31, 2012. The following financial information has been
prepared in accordance with the International Financial Reporting Standards(“IFRS”) as adopted by the European Union. The consolidated results of theGroup for the year ended January 31, 2012, and for the period ended July
31, 2011, were audited by Deloitte & Touche spa.

Key financial information
Key income statement information(amounts in thousands of Euro)Net revenues
EBITDAEBIT
Income before tax
Net income of the Group
Average headcount (persons)
Earnings per share
EBITDA %EBIT %Key Statement of financial position
information(amounts in thousands of Euro)Net operating working capital
Net invested capital
Net financial position surplus/(deficit)- including payable for withholding on
dividends
Group shareholders’ equity
Capital expenditure
Net operating cash flows

six months
ended
July 312011
auditedtwelvemonthsended
January
31, 2012
auditedsix months
ended
July 312012
unaudited% changeon
July 2011

1,134,281
315,005
253,378
241,778
179,5327,740
0.07

2,555,606
759,252
628,935
602,908
431,9298,067
0.17

1,547,373
469,373
394,882
391,971
286,409
9,101
0.11

36.4%
49.0%
55.8%
62.1%
59.5%
17.6%
56.6%

27.8%
22.3%

29.7%
24.6%

30.3%
25.5%

as at
July 312011
auditedas atJanuary
31, 2012
auditedas atJuly 312012
unauditedchange on
January
2012

354,507
1,680,572

357,648
1,817,327

351,874
1,944,812(5,774)
127,485(134,365)

13,64082,532

68,892

1,541,134
134,726
209,598

1,822,743
278,856
479,954

2,017,482
121,688332,192

194,739-

Highlights for the six months ended July 31, 2012
The results achieved by the Group in the first half of 2012 once again
confirmed its track record of brilliant growth. In a difficult economic
environment, with widespread recession in the Euro zone and some economic
slowdown in other regions, Prada managed to achieve one of the highest
growth rates in the worldwide luxury goods market, further strengthening its
major position in the business.
The Group’s retail expansion strategy enabled a further increase inprofitability, which also benefitted from favorable exchange rates.

2

The Group’s consolidated net revenues for the six months ended July 31,
2012, amounted to Euro 1,547.4 million, a 36.4% increase compared to thesame period of 2011, when net revenues totaled Euro 1,134.3 million. In linewith the first quarter ended April 30, 2012, Same Store Sales Growth (SSSG)
for the six months period was very solid at 19%, while double digit growth wasachieved across all markets.
The Directly Operated Stores (DOS) network expansion program saw theGroup opening its first ever DOS in Brazil, Mexico, Morocco and Ukraine while
consolidating established markets with new openings and importantrenovations.
EBITDA for the first six months improved 49% to Euro 469.4 million comparedto Euro 315 million posted in the six months ended July 31, 2011.
Contribution to net revenues advanced to 30.3% from 27.8% for the previous
period, improving further the 29.1% recorded in the first quarter of 2012.
The Group’s net income amounted to Euro 286.4 million, showing a 59.5%
increase compared to Euro 179.5 million for the first half of 2011.
Results from operations and tight control on net working capital needsdelivered strong cash flows that, net of investments for Euro 140 million anddividends cash-out for Euro 126 million, allowed the Group to further
improve net financial surplus to Euro 82.5 million from Euro 13.6 million at
January 31, 2012.

3

Consolidated income statement for the six months ended July
31, 2012%

six months
ended
July 312011
audited

%1,547,373(440,872)

100.0%-28.5%

1,134,281(329,098)

100.0%-29.0%

1,106,501

71.5%

805,18371.0%(711,619)-46.0%(551,805)-48.6%

394,882

25.5%

253,378

22.3%(2,911)-0.2%(11,600)-1.0%

391,97125.3%

241,778

21.3%(102,756)-6.6%(60,577)-5.3%

Net income from continuing operations

289,21518.7%

181,201

16.0%

Net income for the period

289,21518.7%

181,201

16.0%

2,806

0.2%

1,669

0.1%

Net income – Group

286,40918.5%

179,532

15.8%

Depreciation, amortization andimpairment

74,491

4.8%

61,627

5.4%

EBITDA

469,37330.3%

315,005

27.8%(amounts in thousands of Euro)Net revenues
Cost of goods sold

Note

3

Gross margin
Operating expenses

4

EBIT
Interest and other financial
income/(expenses), net

5Income before taxes
Taxation

6

Net income – Non-controlling interests

Basic and diluted earnings per share (inEuro per share)7

six months
ended
July 312012
unaudited

0.112

4

0.071

Consolidated income statement for the three months ended
July 31, 2012%

three
monthsended
July 312011
unaudited%

860,639(250,564)

100.0%-29.1%

669,990(206,003)

100.0%-30.7%

Gross margin

610,07570.9%

463,987

69.3%

Operating expenses(379,976)-44.2%(290,742)-43.4%

EBIT

230,09926.7%

173,245

25.9%

Interest and other financial
income/(expenses), net(4,371)-0.5%(9,545)-1.4%

Income before taxes

225,72826.2%

163,700

24.4%

Taxation(59,800)-6.9%(41,019)-6.1%

Net income from continuing operations

165,92819.3%

122,68118.3%

Net income for the period

165,92819.3%

122,681

18.3%

1,238

0.1%

825

0.1%

Net income – Group

164,69019.1%

121,856

18.2%

Depreciation, amortization andimpairment

39,176

4.6%

28,817

4.3%

EBITDA

269,275

31.3%

202,062

30.2%(amounts in thousands of Euro)Net revenues
Cost of goods sold

Note

3

Net income – Non-controlling interests

5

three
monthsended
July 312012
unauditedConsolidated statement of financial position(amounts in thousands of Euro)
AssetsCurrent assets
Cash and cash equivalents
Trade receivables, net
Inventories
Derivative financial instruments - current
Receivables and prepayments fromparent company and other related parties
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Associated undertakings
Deferred tax assets
Other non-current assets
Total non-current assets

Note

as at
July 312012
unaudited

as atJanuary 31
2012
audited98391,594
292,043
380,688108362,284
266,404
374,782894

30,18912,864125,436
1,220,058

100,275
1,117,503

777,425
860,986
19,459207,33164,0381,929,239

713,870863,526
15,631
175,736
57,302
1,826,065

3,149,297

2,943,568

238,518

165,485

4,358

4,361

320,857
112,746
23,201
965
114,605
815,250

283,538
117,770
15,2001,453
128,777
716,584

63,545609
41,52658,54352,186
89,682612
306,703

178,442
1,100
35,89856,92147,66575,656335
396,017

Total Liabilities

1,121,953

1,112,601

Share capital
Other reserves
Translation reserve
Net profit for the period
Total Shareholders’ Equity – Group

255,882
1,450,837
24,354286,4092,017,482

255,882
1,152,171(17,239)431,929
1,822,743

9,862

8,224

Total Liabilities and Shareholders’ Equity

3,149,297

2,943,568

Net current assets
Total assets less current liabilities

404,808
2,334,047

400,9192,226,984

10
10

Total Assets
Liabilities and Shareholders’ equity
Current liabilities
Bank overdrafts and short-term loans
Payables to parent company and other relatedparties
Trade payables
Current tax liabilities
Derivative financial instruments - current
Obligations under finance leases - current
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term financial payables
Obligations under finance leases non-current
Post-employment benefits
Provision for contingencies and commitments
Deferred tax liabilities
Other non-current liabilities
Derivative financial instruments non-current
Total non-current liabilities

11

Shareholders’ Equity – Non-controlling interests

6

Statement of changes in consolidated shareholders’ equity(amounts in thousands of Euro, except for number of shares)(amounts inthousands ofEuro)

Number of
SharesBalance atJanuary 31, 2011
audited

250,000,000

Allocation of 2011
net profit
Dividends
Capital injection
in subsidiaries
Comprehensive
income for theperiodBalance at
July 31, 2012
Unaudited

Other
reserves

250,000

209,298(40,012)534,245

-

-

-

-

-

-

-

5,882

200,749

-

-

-

-

Equityattributable
NonNetto owners controlling
profitof theinterests
Group

Total
Equity250,819

1,204,350

250,819 (250,819)

-

-

-

-

-

-

-

-

-

206,631-206,631-(35,000)-(35,000)(3,886)(38,886)

-

-

-

-

-

1,412

1,412

-

-

22,773(7,940)431,929446,762

4,910

451,6722,558,824,000

255,882

410,047(17,239)

742,124

431,929

1,822,743

-

-

-

-

431,929 (431,929)

-

-

-

Allocation of 2010
net profit
Conversion ofshares from Euro 2,500,000,000
1.0 to Euro 0.1
Issue of new
58,824,000
sharesDividends
Capital injection
in subsidiaries
Comprehensive
income for theyear
Balance atJanuary 31, 2012
audited

Share
CapitalShareTranslation
premium
reserve
reserve

5,788 1,210,138

8,224 1,830,967

-

-

-

-

(127,941)-(127,941)(2,645)(130,586)

-

-

-

-

-

-

-

1,161

1,161

-

-

-

41,593(5,323)

286,409322,680

3,122

325,8022,558,824,000

255,882

410,047

24,354

1,040,790

286,4092,017,482

9,862 2,027,344

Under Italian law, the Company is required to allocate a portion of its net
profit to non-distributable reserves and to provide additional information on
the distribution of earnings for the period.

7

Statement of consolidated comprehensive income
six months
ended
July 312012
unaudited

twelve months
ended
January 31
2012
audited

Net income for the period – Consolidated

289,215

436,425

Change in Translation reserve
Tax impact
Change in Translation reserve less tax impact

41,91041,91023,20423,204

Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax impact(9,475)2,619(6,856)(10,432)
2,795(7,637)

Change in Actuarial reserve
Tax impact(1,843)
507

(705)
443

Change in Actuarial reserve less tax impact(1,336)(262)

Change in Fair Value reserve
Tax impact
Change in Fair Value reserve less tax impact

3,826
(957)
2,869

(77)
19
(58)

Consolidated comprehensive income for the period

325,802451,672

Comprehensive income for the period – Non-controlling Interests
Comprehensive income for the period - Group

3,122
322,680

4,910
446,762(amounts in thousands of Euro)

8

Net invested capital
The following table reports the Statement of financial position as adjusted inorder to provide a better picture of the composition of the Net invested
capital.
(amounts in thousands of Euro)

Non-current assets (excluding deferred tax assets)
Trade receivables, net
Inventories, net
Trade payables
Net operating working capital
Other current assets (excluding financial position items)
Other current liabilities (excluding financial position items)
Other current assets/(liabilities), net
Provisions for risks
Post-employment benefits
Other long-term liabilities
Deferred taxation, net
Other non-current assets/(liabilities), net
Net invested capital
Shareholders’ equity – Group
Shareholders’ equity – Non Controlling Interests
Total consolidated Shareholders’ equity
Long term financial payables
Short term financial , net surplus/(deficit)
Payable for withholding on dividends
Net financial position surplus/(deficit) – including
payable for withholding on dividends
Shareholders’ equity and Net financial position

9

as at
July 312012
unaudited

as atJanuary 31
2012
audited

1,721,908
292,043
380,688(320,857)
351,874
152,692(246,444)(93,752)(58,543)(41,526)(90,294)
155,145(35,218)
1,944,812(2,017,482)(9,862)(2,027,344)(64,154)
151,978(5,292)

1,650,329
266,404
374,782(283,538)
357,648
112,623(262,534)(149,911)(56,921)(35,898)(75,991)
128,071(40,739)
1,817,327(1,822,743)(8,224)(1,830,967)(179,542)
193,182-

82,532

13,640(1,944,812)(1,817,327)

Net financial position surplus/(deficit)(amounts in thousands of Euro)

as at
July 312012
unaudited

as atJanuary 31
2012
auditedLong term debt
Obligations under finance leases(63,545)(609)(178,442)(1,100)Long term financial payables(64,154)(179,542)

Bank overdraft and short term loans
Payables to related parties
Receivables from related parties
Obligations under finance leases
Cash and cash equivalents(238,518)(3,173)3,040(965)
391,594(165,485)(3,574)
1,410(1,453)362,284

Short term net financial surplus/(deficit)

151,978

193,182

Net financial position surplus/(deficit)

87,824

13,640

Payable for withholding on dividends
Net financial position surplus/(deficit) including payable forwithholding on dividends(5,292)-

82,532

13,640Net financial position surplus/(deficit) – third parties(i.e. excluding financial receivables and payables with relatedparties)

87,95715,804

Net financial position surplus/(deficit) – third parties
including payable for withholding on dividends

82,66515,804

Summarized statement of consolidated cash flows
six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedNet cash flows from operating activities

332,191

209,598

Cash flows generated (utilized) by investing activities(140,054)(134,880)

Cash flows generated (utilized) by financing activities(168,045)

99,51824,092

174,236(amounts in thousands of Euro)

Change in cash and cash equivalents, net of bank overdrafts

10Notes to the Interim condensed consolidated results forthe six months ended July 31, 20121.

Presentation of PRADA GroupPRADA spa (the “Company”), together with its subsidiaries (jointly the“Group”), is listed on the Hong Kong Stock Exchange (HKSE code: 1913) andis one of the world leaders in the luxury goods sector where it operates with
the Prada, Miu Miu, Church’s and Car Shoe brands in the design, production
and distribution of luxury handbags, leather goods, footwear, apparel andaccessories. The Group also operates, under licensing agreements, in theeyewear, fragrances and mobile telephone sectors. Its products are sold in 70
countries worldwide through a network that included 414 Directly Operated
Stores (DOS) at July 31, 2012, and a selected network of luxury department
stores, independent retailers and franchise stores.
The Company is a joint-stock company, registered and domiciled in Italy. Its
registered office is in Via Fogazzaro 28, Milan, Italy.

2.

Basis of preparation

The Interim condensed consolidated financial statements of PRADA Group forthe six months ending July 31, 2012, including the “Consolidated statementof financial position”, the “Consolidated income statement”, the “Statementof consolidated cash flows”, the “Statement of changes in consolidated
shareholders’ equity”, the “Statement of consolidated comprehensive
income” and the “Notes to the Interim condensed consolidated financial
statements” have been prepared in accordance with IAS 34 “Interim financial
reporting” as endorsed by the European Union.
The Interim condensed consolidated financial statements should be read
together with the Consolidated financial statements of the PRADA Group forthe twelve months ended January 31, 2012. Such year-end Consolidated
financial statements were prepared in accordance with the International
Financial Reporting Standards (“IFRS”) issued by the International AccountingStandards Board (“IASB”) as endorsed by the European Union.
At the date of presentation of these Interim condensed consolidated financial
statements, there were no differences between IFRS as endorsed by theEuropean Union and applicable to the PRADA Group and those issued by the
IASB.
The Interim results announcement for the six months ended July 31, 2012,refers to the contents included in the 2012 Interim financial report. The 2012
Interim financial report, including the Interim condensed consolidated
financial statements and the Financial Review, has been prepared inaccordance with the same accounting policies adopted in the 2011 Annual
report.
IFRS also refers to all International Accounting Standards (“IAS”) and allinterpretations of the International Financial Reporting Standard

11

Interpretations Committee (“IFRSIC”), previously called the Standing
Interpretations Committee (SIC).

3.

Operating segment

IFRS 8 requires that detailed information be provided for each operating
segment that makes up the business. An operating segment is intended as abusiness division whose operating results are regularly reviewed by top
management so that they can make decisions about the resources to beallocated to the segment and assess its performance.
The Group’s matrix-based organizational structure - whereby responsibility is
assigned cross-functionally in relation to brands, products, distribution
channels and geographical areas, together with the complementary nature of
the production processes of the various brands and the many relationships
between the different business segments – means that operating segmentsthat meet the IFRS 8 definition cannot be identified, as top management isonly provided with income statement results on a Group wide level. For thisreason, the business has been considered as a single operating segment as
this better represents the specific characteristics of the PRADA Groupbusiness model.
Detailed information on net revenues by brand, geographical area, products
and distribution channel is provided below.

12

Net revenues analysis
Net revenues for the six months ended July 31, 2012
six months
ended
July 312012
unaudited(amounts in thousands of Euro)six months
ended%
July 312011 change
auditedNet sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan
Other countries
Total

259,326 17.0%
348,691 22.9%
224,702 14.7%
532,471 34.9%
143,874
9.5%
15,6231.0%
1,524,687 100.0%

213,444
250,664
171,853
367,995
107,193
6,254
1,117,403

Net sales by brand
Prada
Miu Miu
Church's
Car Shoe
Other
Total

1,233,433 80.9%
245,971 16.1%
31,0102.0%
11,342
0.8%
2,931
0.2%
1,524,687 100.0%

878,383 78.6% 40.4%
198,872 17.8% 23.7%
27,003
2.4% 14.8%
9,711
0.9% 16.8%
3,434
0.3% -14.6%
1,117,403 100.0% 36.4%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

248,677 16.3%
943,060 61.8%
315,290 20.7%
17,6601.2%
1,524,687 100.0%

212,371 19.0%
617,657 55.3%
275,048 24.6%
12,3271.1%
1,117,403 100.0%

17.1%
52.7%
14.6%
43.3%
36.4%

Net sales by distribution channelDOS
Independent customers and franchises
Total

1,229,966 80.7%
294,721 19.3%
1,524,687 100.0%

835,372 74.8%
282,031 25.2%
1,117,403 100.0%

47.2%
4.5%
36.4%

Net sales
Royalties
Total net revenues

1,524,687 98.5%
22,686
1.5%
1,547,373 100.0%

1,117,403 98.5%
16,8781.5%
1,134,281 100.0%

36.4%
34.4%
36.4%

13

19.1% 21.5%
22.4% 39.1%
15.4% 30.8%
32.9% 44.7%
9.6% 34.2%
0.6% 149.8%
100% 36.4%

Prada brand sales
six months
ended
July 312012
unaudited

six months
ended%
July 31change2011
auditedNet sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan
Other countries
Total

207,661 16.9%
274,336 22.2%
194,284 15.8%
442,962 35.9%
101,458
8.2%
12,7321.0%
1,233,433 100.0%

164,797 18.8% 26.0%
188,969 21.5% 45.2%
146,278 16.6% 32.8%
298,307 34.0% 48.5%
75,275
8.6% 34.8%
4,757
0.5% 167.6%
878,383 100.0% 40.4%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

204,468 16.6%
786,806 63.8%
226,589 18.4%
15,5701.2%
1,233,433 100.0%

180,417 20.5%
488,613 55.6%
198,363 22.6%
10,9901.3%
878,383 100.0%

13.3%
61.0%
14.2%
41.7%
40.4%

Net sales by distribution channelDOS
Independent customers and franchises
Total

1,004,849 81.5%
228,584 18.5%
1,233,433 100.0%

659,901 75.1%
218,482 24.9%
878,383 100.0%

52.3%
4.6%
40.4%

Net sales
Royalties
Total net revenues

1,233,433 98.2%
21,9721.8%
1,255,405 100.0%

878,383 98.1%
16,582
1.9%
894,965 100.0%

40.4%
32.5%
40.3%

(amounts in thousands of Euro)14

Miu Miu brand sales
six months
ended
July 312012
unaudited(amounts in thousands of Euro)six months
ended%
July 31change2011
auditedNet sales by geographical area
Italy
Europe37,29450,618

15.2%
20.6%

33,99341,491

17.1%
20.9%

9.7%
22.0%

Americas28,686

11.7%

24,294

12.2%

18.1%

Asia PacificJapan

85,471
41,399

34.7%
16.8%

66,37031,502

33.4%
15.8%

28.8%
31.4%

2,503

1.0%

1,222

0.6% 105.0%

Other countries
Total

245,971 100.0%

198,872 100.0%

23.7%

Clothing
Leather goods

43,712
154,055

17.8%
62.6%

31,601
127,103

15.9%
63.9%

38.3%
21.2%

Footwear

46,114

18.7%

38,830

19.5%

18.8%

Other

2,090

0.9%

1,338

0.7%

56.2%

245,971 100.0%

198,872 100.0%

23.7%

DOS
Independent customers and franchises

200,03145,940153,181
45,691

77.0%
23.0%

30.6%
0.5%

Total

245,971 100.0%

198,872 100.0%

23.7%

Net sales

245,971

99.7%

198,872

23.7%

Royalties

651

0.3%

241

Net sales by product line

Total
Net sales by distribution channel

Total net revenues

81.3%
18.7%

246,622 100.0%

15

99.9%

0.1% 170.1%

199,113 100.0%

23.9%

Church’s brand sales
six months
ended
July 312012
unaudited

six months
ended%
July 31change2011
auditedNet sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan
Other countries
Total

6,865 22.1%
18,894 60.9%
1,372
4.4%
2,715
8.8%
1,017
3.3%
147
0.5%
31,010 100.0%

7,369 27.3% -6.8%
15,665 58.0% 20.6%
1,116
4.2% 22.9%
2,322
8.6% 16.9%
413
1.5% 146.2%
118
0.4% 24.6%
27,003 100.0% 14.8%

Net sales by product line
Clothing
Leather goods
Footwear
Total

440
1.4%
950
3.1%
29,620 95.5%
31,010 100.0%

256
0.9%
662
2.5%
26,085 96.6%
27,003 100.0%

71.9%
43.5%
13.6%
14.8%

Net sales by distribution channelDOS
Independent customers and franchises
Total

19,708 63.6%
11,302 36.4%
31,010 100.0%

17,318 64.1%
9,685 35.9%
27,003 100.0%

13.8%
16.7%
14.8%

Net sales
Royalties
Total net revenues

31,010 99.8%
63
0.2%
31,073 100.0%

27,003 99.8%
55
0.2%
27,058 100.0%

14.8%
14.5%
14.8%

(amounts in thousands of Euro)

16

Car Shoe brand sales
six months
ended
July 312012
unaudited(amounts in thousands of Euro)six months
ended
July 312011
auditedvar.
%

Net sales by geographical area
Italy
EuropeAmericas
Asia Pacific
Other countries
Total

6,832 60.2%
2,587 22.8%359
3.2%
1,323 11.7%
241
2.1%
11,342 100.0%

6,545 67.4%
4.4%
1,890 19.5% 36.9%
145
1.5% 147.6%
973 10.0% 36.0%
158
1.6% 52.5%
9,711 100.0% 16.8%

Net sales by product line
Leather goods
Footwear
Total

1,239 10.9%
10,103 89.1%
11,342 100.0%

1,250 12.9%
8,461 87.1%
9,711 100.0%

-0.9%
19.4%
16.8%

Net sales by distribution channelDOS
Independent customers and franchises
Total

4,705 41.5%
6,637 58.5%
11,342 100.0%

4,161 42.8%
5,550 57.2%
9,711 100.0%

13.1%
19.6%
16.8%

Net sales
Total net revenues

11,342 100.0%
11,342 100.0%

9,711 100.0%
9,711 100.0%

16.8%
16.8%

17

Net revenues analysis for the three months ended July 31,
2012
three months
ended
July 312012
unaudited

three months
ended%
July 312011 change
unaudited

Net sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan
Other countries
Total

149,261 17.5%
200,674 23.6%
138,242 16.2%
279,698 32.9%
73,2108.6%
10,325
1.2%
851,410 100.0%

141,811 21.4%
5.3%
156,294 23.6% 28.4%
107,368 16.2% 28.8%
195,973 29.6% 42.7%
56,2608.5% 30.1%
4,194
0.7% 146.2%
661,900 100.0% 28.6%

Net sales by brand
Prada
Miu Miu
Church's
Car Shoe
Other
Total

691,894 81.3%
138,633 16.3%
14,706
1.7%
5,040
0.6%
1,137
0.1%
851,410 100.0%

525,003 79.3% 31.8%
116,818 17.7% 18.7%
13,341
2.0% 10.2%
5,333
0.8% -5.5%
1,405
0.2% -19.1%
661,900 100.0% 28.6%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

134,840 15.8%
525,803 61.8%
180,596 21.2%
10,171
1.2%
851,410 100.0%

124,602 18.8%
353,959 53.5%
176,260 26.6%
7,079
1.1%
661,900 100.0%

8.2%
48.5%
2.5%
43.7%
28.6%

Net sales by distribution channelDOS
Independent customers and franchises
Total

660,314 77.6%
191,096 22.4%
851,410 100.0%

453,101 68.5%
208,799 31.5%
661,900 100.0%

45.7%
-8.5%
28.6%

Net sales
Royalties
Total net revenues

851,410 98.9%
9,229
1.1%
860,639 100.0%

661,900 98.8%
8,089
1.2%
669,989 100.0%

28.6%
14.1%
28.5%

(amounts in thousands of Euro)18

Number of stores
July 312012
DOS
franchises

January 31
2012
DOS
franchises

July 312011
DOS
franchises

Prada
Miu Miu
Church’s
Car Shoe

263
102
43
6

19
6
-

245
94
43
6

20
6
-

218
82
40
5

24
6
-

Total

414

25

388

26

345

30

July 312012
DOS
franchises

January 31
2012
DOS
franchises

July 312011
DOS
franchises

ItalyEuropeAmericas
Asia PacificJapan
Middle East
Africa

46
125
54
119
64
3
3

5
6
14
-

44
115
47
115
65
2
-

5
6
1
14
-

42
97
40
108
58
-

5
12
13
-

Total

414

25

388

26

345

30

4.

Operating Expenses
six months
ended
July 312012
unaudited% of netrevenues

six months
ended
July 312011
auditedProduct design and development costs
Advertising and communications costs
Selling costs
General and administrative costs

56,226
68,295488,920
98,178

3.6%
4.4%
31.6%
6.3%

51,45353,915357,156
89,281

4.5%
4.8%
31.5%
7.9%

Total

711,61946.0%

551,805

48.6%(amounts in thousands of Euro)5.

% of netrevenues

Interest and other financial expenses, net
six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedInterests expenses on borrowings
Interest income
Exchange gains / (losses) – realized
Exchange gains/ (losses) – unrealized
Other financial income / (expenses)(6,184)
2,557
8,203(5,074)(2,413)(8,966)
583
35
(924)
(2,328)

Total(2,911)(11,600)(amounts in thousands of Euro)

19

6.

Taxation
six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedCurrent taxation
Deferred taxation

119,942(17,186)

82,007(21,430)

Income taxes

102,756

60,577(amounts in thousands of Euro)

7.

Earnings and dividends per share

Earnings per share
Earnings per share are calculated by dividing the net income attributable toGroup’s shareholders by the weighted average number of ordinary shares inissue.
six months
ended
July 312012
unauditedGroup’s net income in Euro
Weighted average number of ordinary shares in issue
Earnings per share in Euro, calculated on weighted average
number of shares

six months
ended
July 312011
audited286,408,505
179,531,725
2,558,824,000 2,512,349,790
0.112

0.071

On May 26, 2011, a Shareholders’ Meeting of PRADA spa resolved to change
the par value of the Company’s shares from Euro 1 to Euro 0.1 each. In
accordance with IAS 33, the number of shares in issue in 2011 was
retrospectively adjusted for the purposes of the calculation of earnings per
share.

Dividends per share
During the period ended July 31, 2012, the Company distributed dividends forEuro 127,941,200, as approved by the Annual General Meeting held on May
22, 2012, to approve the financial statements for the year ended January 31,
2012. The payment was arranged on July 3, 2012, and the outstandingbalance was Euro 5.3 million at July 31, 2012, shown under Other current
liabilities in the Statement of financial position, related to the Italian
withholding tax payable, as arising from the application to the whole amountof dividends payable to beneficial owners of the Company shares held throughthe Hong Kong Central Clearing and Settlement System of the Italian ordinary
withholding tax rate for dividends paid to non-Italian residents on or afterJanuary 1, 2012 (i.e. 20%).

20

During the period ended July 31, 2011, the Company distributed dividends ofEuro 35 million, as approved by the Shareholders’ Meeting held on March 28,
2011, to approve the financial statements for the year ended January 31,
2011. Some Euro 32.5 million of the dividend liability arising was offset
against receivables due from parent company PRADA Holding bv while theremaining amount was paid in April 2011.

8.

Inventories
as atJuly 312012
unaudited

as atJanuary 31
2012
auditedRaw materials
Work in progress
Finished products
Allowance for obsolete and slow moving inventories

77,09423,531
351,945(71,882)

66,575
17,187360,379(69,359)

Total

380,688374,782(amounts in thousands of Euro)The containment in finished products was achieved following planned actions
aimed at further improving the sell-through retail ratio so as to better react
to market changes and reduce risks.
Movements on the allowance for obsolete and slow moving inventories areanalyzed as follows:Rawmaterials

Finished
Products

Total

Balance at January 31, 2012 (audited)

29,75439,60569,359Exchange differences
Increases
Decreases
Other movements

4
1,500
-

21
1,126
(1)
(127)

25
2,626
(1)
(127)

Balance at July 31, 2012 (unaudited)

31,25840,62471,882(amounts in thousands of Euro)

9.

Trade receivables, net

The Group manages the credit risk and reduces negative effects through its
commercial and financial strategy. Credit risk management is performed bycontrolling and monitoring the reliability and solvency of customers. At thesame time, the fact that the total receivables balance is not highly
concentrated on individual customers and the fact that net sales are evenly
spread geographically lead to a reduced risk of financial losses.

21

Trade receivables are detailed as follows:
as atJuly 312012
unaudited

as atJanuary 31
2012
audited

Trade receivables from third parties
Trade receivables from related parties

270,60721,436

247,577
18,827

Total

292,043

266,404(amounts in thousands of Euro)

Trade receivables from related parties included a total amount of Euro 21.1
million essentially arising from sales of finished products and royalties tocompanies owned by the main shareholder of PRADA Holding bv andoperating the retail business under franchise agreements.
Trade receivables from third parties increased by Euro 23 million comparedto January 31, 2012, and stood at Euro 270.6 million at July 31, 2012. Higher
sales and royalties, together with the weakening of Euro, were the main
reasons behind the increase.
as atJuly 312012
unaudited

as atJanuary 31
2012
auditedThird parties trade receivables, grossAllowance for bad and doubtful debts

283,062(12,455)

259,258(11,681)

Total third parties trade receivables, net

270,607247,577(amounts in thousands of Euro)

During the six months period, there were no material changes to significantly
affect the estimates making up the allowance.
Movements during the period may be analyzed as follows:(amounts in thousands of Euro)

Opening balance
Exchange differences
Increases
Uses
Reversals
Closing balance

22

as at
July 312012
unaudited

as atJanuary 31
2012
audited11,681

10,537

187
917
(305)
(25)

198
2,369
(866)
(557)

12,455

11,681

The following table contains a summary of total receivables before theallowance for doubtful debts at the reporting date:(amounts inthousands of Euro)

as at
July 312012
unaudited

Trade receivables

304,498

Total

304,498(amounts inthousands of Euro)

as at
January
31 2012
audited

Trade receivables

278,085

Total

278,085

Overdue (days)
Current

1 < 3031 < 60

61 < 90

91 < 120> 120

255,229

15,702

6,518

7,425

7,153

12,471

255,229

15,702

6,518

7,425

7,153

12,471

Overdue (days)
Current

1 < 3031 < 60

61 < 90

91 < 120> 120

226,300

18,991

12,096

5,031

2,167

13,500226,300

18,991

12,096

5,031

2,167

13,500The following table contains a summary by due date of trade receivables lessthe allowance for doubtful accounts at the reporting date:as atJuly 312012
unaudited

Current

Trade receivables
less allowance for
doubtful accounts

292,043

254,682

15,607

6,335

Total

292,043

254,682

15,607

6,335

as at
January 31
2012
auditedCurrent

Trade receivables
less allowance for
doubtful accounts

266,404

Total

266,404(amounts inthousands of Euro)(amounts inthousands of Euro)

Overdue (days)
1 < 3031 < 60 61 < 90

91 < 120

> 120

7,238

7,117

1,064

7,238

7,117

1,064

Overdue (days)
1 < 3031 < 60

61 < 90

91 < 120> 120

225,313

18,944

12,056

4,864

2,044

3,183

225,313

18,944

12,056

4,864

2,044

3,183

23

10. Capital expenditure
Changes in the net book value of “Property, plant and equipment” in the
period ended July 31, 2012, are as follows:
Production Leasehold
Furniture
plant and
improve& fittingsmachineryments(amounts inthousands of Euro)Land andbuildings

Balance at January
31, 2011 (audited)

145,602

15,042

220,112

72,10924,69559,157536,71740,806(5,055)-

7,030(6,635)(4)

110,797(62,899)(61)

29,329(18,691)(183)

18,825(5,850)(63)

51,820(15)

258,607(99,130)
(326)

1,443

28

14,637

2,405

325

3,501

22,339

288
-

15
-

24,011(2,273)

3,885
(470)

2,091
(41)

(30,627)(1,216)(337)(4,000)183,084

15,476304,324

88,38439,982

82,620713,870

11,516(2,940)(3)

3,316(3,447)-50,404(40,128)(103)

20,730(11,854)
(297)

2,491
(3,324)(12,897)

28,349(1)

116,806(61,693)(13,301)

2,800

57

14,897

3,082

348

1,814

22,998

3,333
-

123
-

31,358
(556)

1,832
(179)

1,320
(16)

(38,362)
(108)

(396)
(859)

197,790

15,525360,196

101,698

27,90474,312

777,425

Additions
Depreciation
Disposals
Exchangedifferences
Other movements
Impairment
Balance at January
31, 2012 (audited)
Additions
Depreciation
Disposals
Exchangedifferences
Other movements
Impairment
Balance at July 31,
2012 (unaudited)24

Other Assets under
tangible construction

Total net
book value

Changes in the net book value of “Intangible assets” in the period ended July
31, 2012 are as follows:(amounts inthousands of Euro)

Trademarks

Goodwill

Balance at January
31, 2011 (audited)

312,460

503,946

36,087

6,385

7,869

2,372

869,119166(11,025)--

14,393(8,354)-

4,178(3,067)(4)

128(4,726)
(1)

1,384
-

20,249(27,172)
(5)

1,707

274

358

16

-

12

2,367

-

-

190
-

1,071
(1)

-

(2,278)(14)(1,017)(15)

303,308504,220

42,674

8,578

3,270

1,476

863,526

115(5,542)--

1,350(4,045)-572(1,491)
-

(859)
-

2,845
-

4,882
(11,937)
-

3,701

595

541

8

-

(2)

4,843

-

-

(5)
-

359
-

-

(681)
(1)

(327)
(1)

301,582

504,815

40,515

8,026

2,411

3,637

860,986

Additions
Amortization
Disposals
Exchangedifferences
Other movements
Impairment
Balance at January
31, 2012 (audited)
Additions
Amortization
Disposals
Exchangedifferences
Other movements
Impairment
Balance at July 31,
2012 (unaudited)

Store Lease
Development Assets in
SoftwareAcquisitions
costs progress

Total net
book value

11. Trade payables(amounts in thousands of Euro)

as at
July 312012
unaudited

as atJanuary 31
2012
audited

Trade payables – third parties
Trade payables – related parties

318,844
2,013

280,808
2,730

Total

320,857

283,538

The increase in Trade payables was due to the growth of the business ingeneral.

25

The following table summarizes trade payables by maturity date.
(amounts inthousands of Euro)

as at
July 312012

Overdue
Current

1 < 3031 < 60

61 < 90

91 < 120> 120

Trade payables

320,857

288,554

14,819

8,786

4,601

642

3,455

Total

320,857

288,554

14,819

8,786

4,601

642

3,455

as at
January 31
2012

Current

1 < 3031 < 60

61 < 90

91 < 120> 120

Trade payables

283,538

251,483

17,392

5,507

2,553

2,131

4,472

Total

283,538

251,483

17,392

5,507

2,553

2,131

4,472

(amounts inthousands of Euro)

Overdue26

Management Discussion and Analysis for the threemonths period ended July 31, 2012
Net revenues
Consolidated net revenues for the three months period ended July 31, 2012,
totaled Euro 860.6 million and recorded an increase of 28.5% (+20% atconstant exchange rates) over Euro 670 million posted the same quarter of
2011.
The growth was achieved thanks to the retail channel that, scoring a 45.7%
increase compared to the same three months period of 2011 (+33.9% atconstant exchange rates and +20% SSSG), boosted net sales to Euro 660.3
million and compensated a 8.5% wholesale shrinkage which was expected andin line with Group’s strategy of rationalization of this channel. A number ofnet 19 new stores (20 openings, 1 closure) were opened from May 1 to July
31, 2012.
The Asia Pacific market recorded the highest growth rate over the same
three months of 2011 (+42.7% as reported and +27.1% at constant exchange
rates). In Italy and in Europe, the closing of wholesale accounts was morethan compensated by the progress of the retail that, thanks to travelers,
recorded SSSG of 26% in Italy compared to the three months ended July 31,
2011, and of 32% in Europe.
In terms of product mix, leather goods, thanks to the performance of theretail and to travelers, drove the growth with a 48.5% increase over thethree months ended July 31, 2011.
Prada was the brand leading the net sales improvement thus increasing its
contribution to Group’s net sales from 79.3% in the three months ended July
31, 2011, to 81.3% in the same period of 2012.

Operating results
In the three months ended July 31, 2012, EBITDA amounted to Euro 269.3
million, up by 33.3% compared to the same period of 2011 when EBITDA
totaled Euro 202.1 million. The incidence on net revenues went from 30.2%
to 31.3%. Main explanation of these improvements is to be found in thehigher contribution of the retail channel (from 68.5% in the three months
ended July 31, 2011, to 77.6% in the same period of 2012).
Group’s net result totaled Euro 164.7 million and recorded a 35.2% growthover Euro 121.9 million of the same three months period of 2011. The
incidence on net revenues grew from 18.2% to 19.1% even though tax rateincreased from 25.1% to 26.5%.

27

Management Discussion and Analysis for the six months
period ended July 31, 2012
Net revenues
For the six months period ended July 31, 2012, consolidated net revenues
totaled Euro 1,547.4 million, up by 36.4% (+28.4% at constant exchange
rates) on the Euro 1,134.3 million recorded in the same period of 2011.

Distribution channels
The retail channel increased by 47.2% to a total of Euro 1,230 million (Euro835.4 million in the same period of 2011). At constant exchange rates theincrease was 37.4%. This commercial growth was driven by the DOS
expansion and 19% SSSG. The contribution by retail sales to the Group’s
consolidated net revenues advanced to 80.7% (74.8% in the first half of2011), confirming the Group’s core strategy focused on this channel. A net
total of 26 new stores (28 openings, 2 closures) opened since the beginningof the period and took the total number of DOS at July 31, 2012, to 414.
The wholesale network accounted for the remaining 19.3% of total net sales,amounting to Euro 294.7 million, and achieved 4.5% growth over the same
period of 2011. At constant exchange rates the increase was 1.3%. As alreadymentioned in the first quarter results, this channel partially benefited from ashift in deliveries to independent customers that took place at the end of
the last financial year.

Markets
In the first half of 2012 the Group grew in all geographical areas.
The Asia Pacific market delivered the highest growth rate (+44.7% asreported and +31.8% at constant exchange rates) and volumes, posting net
sales of Euro 532.5 million (Euro 368 million in the same period of 2011).
Thus, its contribution to total net sales increased further to 34.9% (32.9% in
the same period of 2011). Growth was achieved almost entirely through theretail channel which recorded a +46.8% increase (+20% SSSG and +33.3% atconstant exchange rates). At July 31, 2012, the DOS network numbered some
119 stores, including 5 stores newly opened during the period. The Greater
China area (China, Hong Kong and Macau) contributed SSSG of +21% andposted net sales of Euro 334.6 million, an increase of 50.2% compared toEuro 222.8 million recorded for the six months ended July 31, 2011.
As the Group’s second largest market, Europe (excluding Italy) contributed
22.9% of total net sales for the six months ended July 31, 2012, some Euro
348.7 million (Euro 250.7 million in the same period of 2011). The increase(+39.1% as reported and +36.5% at constant exchange rates) was quite
impressive considering the particularly difficult economic situation in theEuro zone. The appeal of the Group’s stores, together with the momentumof the Prada and Miu Miu brands, successfully captured the continued growth
in tourist numbers attracted also by a weak Euro. The boost in business was
entirely delivered by the retail network performance (+63.5% as reported,28

+31% SSSG and +59.8% at constant exchange rates) which largely offset the
impact of the selective rationalization strategy of the wholesale business.
Ten new DOS were opened in Europe, taking the total number to 125. It is
worth highlighting the opening of the largest store in Moscow, in an
impressive building located at Stoleshnikov Pereylok, and the unveiling of
the refurbished Prada flagship store in Old Bond Street, London.
Net sales on the Italian market totaled Euro 259.3 million with a 21.5%
increase compared to Euro 213.4 million for the same period in 2011. The
retail channel recorded a 37.4% increase (+22% SSSG) while the wholesale
business showed a +2.5% rise.
The American market generated total net sales of Euro 224.7 million, 30.8%
more than the Euro 171.9 million posted in the same period of 2011 (+18.8%
at constant exchange rates). Both channels reported excellent growth rates:
retail increased by 38.8% (+10% SSSG, +25.9% at constant exchange rates)
and wholesale increased by 17.7% (+7.4% at constant exchange rates). In thefirst half of 2012, the Americas area saw the opening of the first stores in
two emerging markets (2 stores in Sao Paolo, Brazil, and 2 stores in Mexico
City, Mexico). The DOS network included some 54 shops at July 31, 2012.
The Japanese market generated net sales of Euro 143.9 million, with a 34.2%
increase (+19.8% at constant exchange rates) over the same period in 2011.
To the growth contributed also a number of net 7 stores opened in thesecond half of 2011 other than a 3% SSSG.
The retail development strategy implemented in the Middle East led to the
doubling of net sales in Other countries compared to the same period of
2011 (+149.8% as reported and +136.2% at constant exchange rates). During
the six months ended July 31, 2012, the Group opened in the prestigious Mallof the Emirates, an undisputed luxury shopping destination, its third store in
Dubai. In addition, it is worth mentioning the opening of the first 3 stores inCasablanca, Morocco, during the second quarter 2012.

Products
All product divisions achieved double digit growth rates over the same periodof 2011. However, leather goods, which contributed 61.8% of total net sales,
was confirmed as the leading segment with net sales totaling Euro 943.1
million and reporting a +52.7% increase (+43% at constant exchange rates).
This was mainly due to retail business expansion in the Asia Pacific market
where handbags and leather accessories represent the core of the productsales mix. The shift in wholesale deliveries at the end of 2011 materiallyaffected the slowdown of the growth rate for clothing and footwear that wasseen between the first and second quarters of 2012.

BrandsThe Prada brand increased its net sales to Euro 1,233.4 million with a growthof 40.4% (+32.1% at constant exchange rates) over the net sales of Euro
878.4 million recorded in the same period of 2011. The brand’s contribution
to total net sales increased to 80.9% compared to 78.6% of the same periodof last year. The performance compared to the 2011 results was driven by29the retail channel which achieved a +52.3% increase (+42.2% at constantexchange rates). The Prada Woman Spring/Summer 2012 collection with its
fifties-style inspiration contributed towards the great success and confirmed
Prada as a sophisticated interpreter of its times and a forerunner of styleand trends. Like bananas and monkeys last summer, cars and cartoon prints
became iconic items for the entire season.
The Miu Miu brand contributed 16.1% to total Group net sales, recording net
sales of Euro 246 million in the first half of 2012. The increase over the same
period of last year was +23.7% (+15.8% at constant exchange rate), mainly
thanks to the leather goods division which achieved +21.2% growth andcontributed 62.6% of total Miu Miu net sales. During the six months ended
July 31, 2012, the retail network continued to expand with 8 new DOS.
In the first half of 2012 the Church’s brand achieved growth of 14.8% overthe same period of 2011. At constant exchange rates the increase was 9.5%.
In Europe, Church’s main market, net sales were strong and increased by
20.6% compared to the same period of 2011 (+14.1% at constant exchange
rates).
Car Shoe net sales increased by 16.8% (+15.2% at constant exchange rates)
essentially because of a shift in deliveries at the end of last year.

Royalties
The licensed products business grew by 34.4% during the period ended July
31, 2012, and contributed net revenues of Euro 22.7 million (Euro 16.9
million for the same period ended July 31, 2011). The growth was mainly
thanks to higher sales of eyewear and to royalties earned under a newlicensing agreement with LG for the sale of the new PRADA Phone by LG 3.0,
a premium handset which combines high-end technology with a design that
embodies superior style.

Operating results
Profitability measured at Gross margin level improved from 71% to 71.5% on
net revenues, largely because of the progress achieved by the retail channel
and the positive impact of exchange rate fluctuation.
EBITDA for the six months ended July 31, 2012, totaled Euro 469.4 million,
49% more than the Euro 315 million reported for the same period of theprevious year. As a percentage of net revenues, EBITDA improved further
compared to the first quarter 2012, when it represented 29.1% of net
revenues, and increased to 30.3% from the 27.8% recorded in the six months
ended July 31, 2011. Taking advantage of the Gross margin improvement,
EBITDA achieved more growth benefitting from a significant leverage effecton operating expenses. In actual fact operating costs increased in absoluteterms, from Euro 551.8 million in the six months period ended July 31, 2011,
to Euro 711.6 million, but decreased from 48.6% to 46% as a percentage ofnet revenues.
More in detail, product design and development expenses increased slightly
compared to the six months period ended July 31, 2011, but decreased as a30

percentage of net revenues as most of the costs of this corporate area are
fixed.
Advertising and communications costs in both periods were essentially driven
by the purchase of media spaces. Moreover, in the first half of 2012, theGroup started to sponsor the Luna Rossa yacht which has started racing inthe 2012 America’s Cup World series and took part in regattas in Naples,
Venice and Newport in the first half of the year.
Selling costs increased from Euro 357.2 million in the first half of 2011 toEuro 488.9 million. They remained almost unchanged as a percentage of net
revenues notwithstanding a total of 69 new DOS, net, opened since July 31,
2011 (including 26 opened in the first half of 2012).
General and administrative expenses increased to Euro 98.2 million in thefirst half of 2012 from Euro 89.3 million. The business expansion led to higher
overhead expenses, mainly labor costs and consultancy expenses.
EBIT improved to stand at Euro 394.9 million with a 55.8% increase on theEuro 253.4 million recorded in the six months ended July 31, 2011. As apercentage of the Group’s net revenues, EBIT increased to 25.5% from 24%
already reached in the first quarter of 2012 (22.3% in the six months ended
July 31, 2011).
Essentially because of a reduction in bank borrowings, together with animportant increase in liquidity, net finance charges for the six months ended
July 31, 2012, totaled Euro 2.9 million, a significant reduction on the amountof Euro 11.6 million recorded in the same period of 2011.
The effective tax rate increased from 25.1% in the first six months ended
July 31, 2011, to 26.2%, essentially because of higher taxable income earnedin countries with higher tax rate.
The Group’s net income amounted to Euro 286.4 million with 59.5% growth on
the net income of Euro 179.5 million reported for the six months ended July
31, 2011.

Net invested capital
At July 31, 2012, Net invested capital stood at Euro 1,944.8 million, Euro
127.5 million higher than at January 31, 2012. The increase was the naturalof the development of Group operations and there was no significant
variance in the composition of Net invested capital.
The Group’s equity strengthened further and overcame Euro 2 billion
notwithstanding the decrease due to dividends of Euro 128 million
recognized to PRADA spa shareholders, as approved by the Annual General
Meeting held in Hong Kong on May 22, 2012, on the financial statement for
the year ended January 31, 2012 (including Euro 123 million disbursed on
July 3, 2012, and Euro 5.3 million payable at July 31, 2012, for withholding
on dividends to non-Italian residents beneficial owners). The result waspossible thanks to the net income generated by the Group together with thepositive impact of the revaluation of net assets outside the Euro zone.

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Net financial position
The free cash flows generated during the first half of 2012 enabled the Groupto raise enough liquidity to increase the net financial surplus to Euro 82.5
million despite dividends totaling some Euro 126 million as paid to PRADA spa
shareholders (Euro 123 million, net of withholding payables to non-Italianresidents beneficial owners) and Non-controlling interests (Euro 3 million).

Analysis of Capital expenditure
The increase in Property, plant and equipment was mainly driven by thecapital expenditure incurred during the first six months of the year, as
allocated as follows: Euro 90.5 million in the retail area, Euro 11 million in
the production and logistics area and Euro 20.2 million in the corporate area.

Outlook for second half of 2012
Market conditions are expected to remain very challenging for the short termwith some more general volatility. Against this backdrop, the Group has
shown so far a remarkable capacity to grow, meeting plans and expectations
and further strengthening its leading position in the luxury industry. The
Directors thus remain confident about the near future and will continue topursue the retail focused strategy which is an essential pillar of our longterm growth prospects.

32Corporate governance practices
The Company is committed to maintaining a high standard of corporate
governance practices and fulfilling its commitment to effective corporate
governance. The corporate governance model adopted by the Company
consists of a set of rules and standards with the aim of establishing efficientand transparent operations within the Group, to protect the rights of theCompany’s shareholders and to enhance shareholder value. The corporate
governance model adopted by the Company is in compliance with theapplicable regulations in Italy, as well as the principles of the Corporate
Governance Code (the “Code”) contained in Appendix 14 of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited (the “Listing Rules”).

Compliance with the Corporate Governance Code of the Listing
Rules
The Board has reviewed the Company’s corporate governance practices andis satisfied that the Company has been in compliance with all the applicablecode provisions set out in the Code on Corporate Governance Practices(effective until March 31, 2012) and Corporate Governance Code (effectivefrom April 1, 2012) contained in Appendix 14 of the Listing Rules throughout
the six months ended July 31, 2012.

The Board
The Board of Directors of the Company (the “Board”) is responsible forsetting up the overall strategy as well as reviewing the operation andfinancial performance of the Company and the Group.
As resolved at the Annual General Meeting of the Company on May 22, 2012,
the following persons were re-elected as members of the Board and Ms.
Miuccia Prada Bianchi was elected as the Chairperson of the Board (and theother executive roles were confirmed at the first Board meeting thereafter inaccordance with Italian law and the by-laws of the Company (the “By-laws”)
for a term of three financial years, ending on the date of the shareholders’meeting called to approve the financial statements for the last year of theBoard’s office:Ms. Miuccia Prada Bianchi as executive director and Chairperson of theBoard;
Mr. Patrizio Bertelli as executive director and Chief Executive Officer;
Mr. Carlo Mazzi as executive director and Deputy Chairman;
Mr. Donatello Galli as executive director and Chief Financial Officer;
Mr. Marco Salomoni as non-executive director;
Mr. Gaetano Micciché as non-executive director;
Mr. Gian Franco Oliviero Mattei as independent non-executive director;
Mr. Giancarlo Forestieri as independent non-executive director; and33

Mr. Sing Cheong Liu as independent non-executive director.
The Board has established the following committees:
1.

Audit Committee

2.

Remuneration Committee

3.

Nomination Committee

Audit Committee
The Company has established an audit committee in compliance with Rule3.21 of the Listing Rules. The members of the audit committee consist of
three independent non-executive directors, namely, Mr. Gian Franco Oliviero
Mattei (Chairman), Mr. Giancarlo Forestieri and Mr. Sing Cheong Liu. The
primary duties of the audit committee are to review and supervise ourfinancial reporting process and internal controls of the Group. The Audit
Committee has held three meetings on March 29, 2012, June 7, 2012, andSeptember 24, 2012, with an attendance rate of 100% to discuss the auditing
and internal controls activities of the Group, to review the audited separate
and consolidated financial statements of the Company for the year ended
January 31, 2012, to appoint its Chairman following the Annual General
Meeting on May 22, 2012, to review the unaudited consolidated quarterly
financial statements of the Company for the three months ended April 31,
2012, and the unaudited consolidated interim financial statements of theCompany for the six months ended July 31, 2012, before recommending to
the Board for approval.

Remuneration Committee
The Company has established a remuneration committee in compliance with
the Code. According to its terms of reference, the primary duties of the
remuneration committee are to make recommendations to the Board on the
Company’s policy and structure for all remuneration of directors and senior
management and the establishment of a formal and transparent procedurefor developing policy on such remuneration. The remuneration committee
consists of two independent non-executive directors, Mr. Gian Franco
Oliviero Mattei (Chairman) and Mr. Giancarlo Forestieri and one nonexecutive director, Mr. Marco Salomoni. The Remuneration Committee has
held two meetings on March 27, 2012, and June 7, 2012, with an attendance
rate of 100% to discuss the update of the plan for attribution of specificbenefits to the management of the Company, the renewal of the consultancy
agreements with two Executive Directors, Ms. Miuccia Prada Bianchi and Mr.
Patrizio Bertelli, the proposal of allocation of the aggregate compensation of
the Directors and the Committee members which was resolved by the Annual
General Meeting of the Company on May 22, 2012, and to appoint its
Chairman following the Annual General Meeting on May 22, 2012.

34

Nomination Committee
The Company has established a nomination committee on March 29, 2012, tocomply with the Code. According to its terms of reference, the primary
duties of the nomination committee are to make recommendations to theBoard on the structure, size and composition of the Board itself, on theselection of new Directors and on the succession plans for Directors. The
nomination committee consists of two independent non-executive directors,
Mr. Gian Franco Oliviero Mattei (Chairman) and Mr. Sing Cheong Liu (whoreplaced Mr. Giancarlo Forestieri as a Committee member on June 7, 2012)and one non-executive director, Mr. Marco Salomoni. The Nomination
Committee has held one meeting on June 7, 2012, with attendance rate of
100% to appoint its Chairman following the Annual General Meeting on May
22, 2012.

Supervisory Body
In compliance with Italian Legislative Decree 231 of June 8, 2001 (the“Decree”), the Company has established a supervisory body whose primary
duty is to ensure the functioning, effectiveness and enforcement of theCompany’s Model of Organization, adopted by the Company pursuant to theDecree. The supervisory body consists of three members appointed by the
Board selected among qualified and experienced individuals, including nonexecutive director, qualified auditors, executives or external individuals.
The supervisory body consists of Mr. David Terracina (Chairman), Mr. Franco
Bertoli and Mr. Marco Salomoni.

Board of Statutory Auditors
Under Italian law, the Company is required to have a board of statutory
auditors, appointed by the Shareholders, which has the authority to supervise
the Company on its compliance with the law and the By-Laws, compliancewith the principles of proper management and, in particular, on theadequacy of the organizational, administrative and accounting structure
adopted by the Company and on its functioning.
As resolved at the Annual General Meeting of the Company on May 22, 2012,
the following persons were elected/re-elected as members of the board of
statutory auditors of the Company for a term of three financial years, endingon the date of the shareholders’ meeting called to approve the financial
statements for the last year of the board of statutory auditors’ office:Mr. Antonino Parisi as statutory auditor and Chairperson of the board of
statutory auditors;
Mr. Roberto Spada as statutory auditor; andMr. David Terracina as statutory auditor.

35

Dividends
The Company may distribute dividends subject to the approval of theshareholders in an ordinary shareholders’ meeting.
On March 29, 2012, the Board of Company recommended the payment of a
final dividend of Euro/cents 5 per share in the capital of the Company,
representing a total dividend of Euro 127,941,200. The Shareholders
approved this dividend at the Annual General Meeting of the Company heldon May 22, 2012. The dividend was paid on July 3, 2012.

Directors’ Securities Transactions
The Company has adopted written procedures governing Directors’ securities
transactions in compliance with on terms no less than the standard set out inthe Model Code for Securities Transactions by Directors of Listed Issuers (the“Model Code”) as set out in Appendix 10 of the Listing Rules. Relevant
employees who are likely to be in possession of unpublished price-sensitive
information of the Group are also subject to compliance with written
procedures. Specific written confirmations have been obtained from each
Director to confirm compliance with the Model Code for the six months
ended July 31, 2012. There was no incident of non-compliance during the six
months ended July 31, 2012.

Purchase, Sale, or Redemption of the Company’s Listed
Securities
Neither the Company nor any of its subsidiaries has purchased, sold orredeemed any of the Company’s listed securities during the six months ended
July 31, 2012.

36

Publication of Interim Results Announcement and Interim
Report
The interim results announcement of the Company is published on thewebsites of the Hong Kong Exchanges and Clearing Limited atwww.hkexnews.hk and the Company at www.pradagroup.com. The interim
report will be available on the same websites and despatched to theshareholders of the Company in due course.

By Order of the Board
PRADA S.p.A.
Mr. Carlo Mazzi
Deputy Chairman

Milan (Italy), September 24, 2012
As at the date of this announcement, the Company’s executive directors are Ms.
Miuccia PRADA BIANCHI, Mr. Patrizio BERTELLI, Mr. Carlo MAZZI and Mr. Donatello
GALLI; the Company’s non-executive directors are Mr. Marco SALOMONI and Mr.
Gaetano MICCICHÈ and the Company’s independent non-executive directors are Mr.
Gian Franco Oliviero MATTEI, Mr. Giancarlo FORESTIERI and Mr. Sing Cheong LIU.

37