interim report 2016-sept21.indd 1

22/09/16 13:18

Interim Financial Report 2016

interim report 2016-sept21.indd 2

22/09/16 13:18

interim report 2016-sept21.indd 3

22/09/16 13:18

IndexThe PRADA Group
Financial Review
Corporate GovernanceInterim condensed consolidated financial statements
Notes to the Interim condensed consolidated financial statementsinterim report 2016-sept21.indd 1

3
9
25
33
39

22/09/16 13:18

Patrizio Bertelli

Miuccia Prada

2interim report 2016-sept21.indd 2

PRADA GroupInterim Financial Report 2016

22/09/16 13:18

The PRADA GroupPRADA Group

interim report 2016-sept21.indd 3

Interim Financial Report 2016 - The PRADA Group

3

22/09/16 13:18

Corporate Information
Registered Office

Via A. Fogazzaro, 28
20135 Milan, Italy

Head Office

Via A. Fogazzaro, 28
20135 Milan, Italy

Place of business in Hong Kong
registered under Part 16 of theHong Kong Companies Ordinance

36/F, Gloucester Tower
The Landmark, 11 Pedder Street
Central, Hong Kong

Company web sitewww.pradagroup.com

Hong Kong Stock Exchange
Identification Number

1913

Board of Directors

Carlo Mazzi(Chairman & Executive Director)
Miuccia Prada Bianchi(Chief Executive Officer & Executive Director)
Patrizio Bertelli(Chief Executive Officer & Executive Director)
Alessandra Cozzani(Chief Financial Officer & Executive Director)
Stefano Simontacchi(Non-Executive Director appointed first on April 8,2016 and confirmed on May 24, 2016)
Maurizio Cereda(Non-Executive Director appointed on May 24, 2016)
Gian Franco Oliviero Mattei(Independent Non-Executive Director)
Giancarlo Forestieri(Independent Non-Executive Director)
Sing Cheong Liu(Independent Non-Executive Director)
Donatello Galli (Chief Financial Officer & Executive
Director) resigned with effect from February 19, 2016
Gaetano Micciché (Non-Executive Director)
resigned with effect from April 15, 2016

4

interim report 2016-sept21.indd 4

Audit Committee

Gian Franco Oliviero Mattei (Chairman)
Giancarlo Forestieri
Sing Cheong Liu

Remuneration Committee

Gian Franco Oliviero Mattei (Chairman)
Carlo Mazzi
Giancarlo Forestieri

Nomination Committee

Gian Franco Oliviero Mattei (Chairman)
Carlo Mazzi
Sing Cheong Liu

Board of Statutory Auditors

Antonino Parisi (Chairman)
Roberto Spada (Standing member)David Terracina (Standing member)

PRADA GroupInterim Financial Report 2016 - The PRADA Group

22/09/16 13:18

Supervisory Board(Leg. Decr. 231/2001)

David Terracina (Chairman)
Gian Franco Oliviero Mattei
Paolo De Paoli

Main Shareholder

PRADA Holding S.p.A.
Via A. Fogazzaro, 28
20135 Milan, Italy

Joint Company Secretaries

Patrizia Albano
Via A. Fogazzaro, 28
20135 Milan, Italy
Ying-Kwai Yuen (Fellow member, HKICS)
36/F, Gloucester Tower
The Landmark, 11 Pedder Street
Central, Hong Kong

Authorized Representatives
in Hong Kong

Carlo Mazzi
Via A. Fogazzaro, 28
20135 Milan, Italy
Ying-Kwai Yuen (Fellow member, HKICS)
36/F, Gloucester Tower
The Landmark, 11 Pedder Street
Central, Hong Kong

Alternate Authorized
Representative to Carlo Mazzi
in Hong Kong

Sing Cheong Liu
House 7 Severn Hill
4 Severn Road
The PeakHong Kong

Hong Kong Share Registrar

Computershare Hong Kong Investor
Services Limited
Shops 1712-1716
17th Floor, Hopewell Centre
183 Queen’s Road East
Wanchai, Hong Kong

Auditor

Deloitte & Touche S.p.A.
Via Tortona, 2520144 Milan, Italy

PRADA Group

interim report 2016-sept21.indd 5Interim Financial Report 2016 - The PRADA Group5

22/09/16 13:18

PRADA Group Structure
PRADA spa
Milan

Holding/Manufacturing/distribution/services

100%
66.7%

Artisans Shoes srl
Montegranaro
Production

100%

IPI Logistica srl
Milan
services49%

PAC srl in liquidazione
Milan(in liquidation)

Post Development Corp 100%
San Francisco
real estate

60%

Tannerie Limonges sas
Isle
Production

Church Holding UK ltd
Northampton
Holding

40%

50%

PRADA Dongguan
Trading Co ltd
Dongguanservices

100%

100%

Pelletteria Ennepi srl
Figline e
Incisa Valdarno
Production
Hipic Prod Impex srl
Sibiu
Production

100%

100%

PRADA USA Corp
New York
distribution/services/retail55%

TRS Hawaii Ilc
Honoluludfs

55%

TRS Guam Partnership
Guam
dfs

100%

PRADA Retail Mexico
S. de R.L. de C.V.
Mexico City
retail100%
Church & Co ltd
Northampton
Manufacturing/
distribution/services

100% PRADA New Zealand ltd
Wellington
retail100%

Macau Branch
Macau
dfs

100% Church Singapore pte ltd
Singaporeretail100%

Church Netherlands bv
Amsterdam
outlet/retail

100%

Church Footwear ab
Stockholm
retail100%

Church Denmark aps
Copenhagenretail100%

Church Spain sl
MadridretailChurch Austria gmbh
Viennaretail100%

Church Footwear(Shanghai) Co ltd
Shanghairetail

100%

100%

100%

100%

interim report 2016-sept21.indd 6

PRADA GroupTRS Singapore pte ltd
Singapore
dfs

55%

100%

PRADA Sweden ab
Stockholm
retail100%

Kenon ltd
Londonreal estate

100%

PRADA India Fashion
Private ltd
MumbaidorMant

100% PRADA Vietnam Limited
Liability Company
Hanoi
retail100%

PT PRADA Indonesia
Jakarta
dorMant

PRADA Taiwan ltd
Hong Kong
services
Taipei BranchTaipeiretail

100%

6

55%

Macau Branch
Macau
dorMant

100%

Church Ireland Retail ltd 100%
DublinretailTRS New Zealand ltd
Wellington
dfs

PRADA Asia Pacific ltd
100%
Hong Kong
distribution/retail/services

Church Italia srl
100%
Milan
distribution/retail/services

Travel Retail Shops
Okinawa kk
Tokyo
dfs

55%

Church UK Retail ltd
Northampton
retailChurch’s English Shoes sa 100%
Brussels
retailPRADA Japan Co ltd
Tokyoretail100% PRADA (Thailand) Co ltd
Bangkokretail100% Church Japan Company ltd
TokyoretailChurch France sas
Parisretail100%

PRADA Retail
Malaysia sdn bhd
Kuala Lumpur
retail55%

TRS Hong Kong ltd
Hong Kong
dfs

100% Church & Co (Footwear) ltd
Northampton
tradeMarks100%

TRS Saipan Partnership
Saipandfs
100%

Church Hong Kong
Retail ltd
Hong Kong
retailPRADA Korea llc
Seoulretail100% PRADA Singapore pte ltd
Singaporeretail55%

Church & Co (USA) ltd
New Yorkretail100%

100% PRADA Australia pty ltd
Sydneyretail100%

Church’s English Shoes
Switzerland sa
Luganoretail100%

PRADA Far East bv
Amsterdam
sub-Holding/outlet/retail

PRADA Canada Corp
Toronto
distribution/retail

PRADA Hong Kong PD ltd 100%Hong Kong
services

PRADA Trading(Shanghai) Co ltd
Shanghai
dorMant
PRADA Fashion Commerce(Shanghai) Co ltd
ShanghairetailPRADA Macau Co ltd
MacauretailInterim Financial Report 2016 - The PRADA Group

22/09/16 13:18

PRADA Hellas
Sole Partner llc
Athensretail100%

80%

Marchesi Angelo srl
Milan
confectionery

100% PRADA Czech Republic sro
PragueretailPRADA Portugal
Unipessoal lda
Lisbonretail100%

Montenapoleone 9 srl
Milan
confectionary

PRADA Stores srl
Milanretail/services

PRADA Emirates llc
Dubai
retail100%

49%

PRADA Kuwait wll
Kuwait City
retail100% PRADA Monte-Carlo sam
MonacoretailPRADA Brasil
100% Importação e Comércio
de Artigos de Luxo ltda
São Paulo
retail100%

PRADA Austria gmbh
Viennaretail100%

PRADA Spain sl
Madridretail100%

PRADA Ukraine llc
Kiev
retail100%

PRADA Kazakhstan llp
Almatyretail100% PRADA Germany gmbh
Munichretail/services

100%

PRADA Maroc (Sarlau)
Casablanca
retail100%

PRADA Retail UK ltd
LondonretailIreland Branch
DublinretailMaroc Branch
Marrakech
retail100%

PRADA Denmark aps
Copenhagenretail100%

PRADA Finnish oy
Helsinkiretail100%

PRADA Belgium sprl
Brusselles
retail100%

PRADA Group

interim report 2016-sept21.indd 7

75%

PRADA Switzerland sa
LuganoretailPRADA Company sa
Luxembourg
services

PRADA Middle East fzco
Jebel Ali Free Zone-Dubai
distribution/services

49%

100%

100%

PRADA Bosphorus Deri
Mamüller ltd Sirketi
Istanbul
retail100%

100%

Swiss Branch
Luganoservices

10%90%

PRADA sa
Luxembourg
tradeMarkPRADA Rus llc
Moscow
retail

100%

60%

100%

PRADA RetailSouth Africa (pty) ltd
Sandtonretail100% PRADA Retail France sas
ParisretailPRADA Retail spc
DoharetailPRADA Saudi Arabia ltd
Jeddahretail100%

PRM Services
S. de R.L. de C.V.
Mexico City
services

100%

PRADA Panama sa
Panamaretail100%

PRADA Retail Aruba nv
Aruba
retail100%

PRADA Saint
Barthelemy sarlGustavia
retailInterim Financial Report 2016 - The PRADA Group

7

22/09/16 13:18

8interim report 2016-sept21.indd 8

PRADA GroupInterim Financial Report 2016 - The PRADA Group

22/09/16 13:18

Financial Review

PRADA Group

interim report 2016-sept21.indd 9

Interim Financial Report 2016 - Financial Review

9

22/09/16 13:18

The Board of Directors’ Financial Review refers to the Group of companies controlledby PRADA spa (the "Company"), the operating parent company of the PRADA Group(the "Group"), and is based on the Group’s unaudited Interim condensed financial
statements for the six months ended July 31, 2016 prepared in accordance with “IAS
34 Interim Financial Reporting” and the IFRSs as adopted by the European Union. The
Financial Review is to be read together with the 2016 unaudited Interim condensed
consolidated financial statements.
Consolidated Statement of Profit or Loss(amounts in thousands of Euro)

Retailsix months
ended July 31
2015(unaudited)%

1,276,588

82.1%

1,552,393

85.1%

252,679

16.3%

248,963

13.6%

Royalties

24,905

1.6%

23,077

1.3%

Net revenues

1,554,172

100.0%

1,824,433

100.0%

Cost of goods sold(432,231)-27.8%(498,520)-27.3%

Gross margin

1,121,941

72.2%

1,325,913

72.7%

Operating expenses(908,240)-58.4%(1,032,699)-56.6%

EBIT

213,701

13.8%

293,214

16.1%

Interest and other financial expenses, net(6,756)-0.4%(9,073)

-0.5%

558

0.0%

1,562

0.1%

Income before taxation

207,503

13.4%

285,703

15.7%

Taxation(62,206)-4.1%(94,139)-5.2%

Net income for the period

145,297

9.3%

191,564

10.5%

3,374

0.2%

2,971

0.2%

Net income - Group

141,923

9.1%

188,593

10.3%

Depreciation, amortization and impairment

116,290

7.5%

146,840

8.0%

EBITDA

329,99121.2%

440,054

24.1%

Net income - non-controlling interests

Basic and diluted earnings per share (in Euro pershare)

interim report 2016-sept21.indd 10%

Wholesale

Dividends from investments

10

six months
ended July 31
2016(unaudited)

PRADA Group

0.055

0.074

Interim Financial Report 2016 - Financial Review

22/09/16 13:18

Key financial information
Key figures from statement of profit or loss
(amounts in thousands of Euro)Net revenues

six months
ended
July 312016(unaudited)

twelve months
ended
January 31
2016(audited)six months
change %ended
six months 2016
July 31vs2015
six months 2015
(unaudited)

1,554,172

3,547,771

1,824,433-14.8%EBITDA

329,991

802,758

440,054-25.0%EBITDA %

21.2%

22.6%

24.1%

-

213,701

502,893

293,214-27.1%EBIT
EBIT %Net income of the Group
Earnings per share (Euro)

13.8%

14.2%

16.1%

-

141,923

330,888

188,593-24.7%-25.7%

0.055

0.129

0.074

Capital expenditure

108,085

336,895

176,235-

Net operating cash flows

266,728

368,465

63,374n/a

Average number of employees

12,22812,414

12,365-1.1%

July 312016(unaudited)

January 31
2016(audited)

July 312015(unaudited)changeJuly 2016 vsJanuary 2016

Key figures from statement of financial pos.
(amounts in thousands of Euro)Net operating working capital
Net invested capital

674,446

665,156

747,574

9,290

3,166,777

3,212,172

3,238,133(45,395)

Net financial position surplus/(deficit)(251,727)(114,795)(259,749)(136,932)

Group shareholders’ equity

2,894,984

3,080,340

2,960,909(185,356)

Financial highlights
The net revenues for the first six months of fiscal year 2016 amounted to Euro 1,554.2
million, down by 14.8% compared to the same period of last year. The decrease wasentirely attributable to a sales decline in the retail channel as the wholesales androyalties were positive.
In the six-month period, management undertook several initiatives to assist the retail
performance in the context of an uncertain economy that did not show any significant
improvement with respect to the previous year. So, leveraging its craftsmanship,
manufacturing capacity and unique stylistic identity, the Group launched newcollections in all product categories for all brands. These include, among others, the
new iconic Prada Cahier, Prada Pionnère and Miu Miu Dahlia handbags, as well as
several one-of-a-kind editions created to celebrate seasonal festivities, retail eventsand business partnerships. Despite good results in new products, sales were down
almost everywhere, but, again, the most significant declines were in the leather goods
division, especially in the Far East.
The Group combined its commitment to product design with effective advertising
campaigns and communication activities, and directed its efforts toward additional
enhancement of the customer experience. To this end the Group started to relocate or
expand some of its most important shops, such as the Prada stores on Canton Roadin Hong Kong and at Plaza 66 in Shanghai, and began to roll-out new retail concepts.
At the same time, new stores were opened only in areas deemed strategic, such as
Zurich and Moscow, and such openings were counterbalanced with selected store
closings in secondary cities or where expiring leases could be not be renewed underconditions deemed in line with the market. As in the previous year, all these initiatives
were accompanied by a continuous review of corporate processes and savings to limit
the pressure on operating margins.
At the end of the six-month period the results of the cost containment actions,despite the sales contraction, allowed the Group to achieve an EBIT margin of 13.8%,
PRADA Group

interim report 2016-sept21.indd 11

Interim Financial Report 2016 - Financial Review

11

22/09/16 13:18

compared to 16.1% for the same period of last year. The Group’s net income was Euro
141.9 million, or 9.1% as a percentage of net revenues, whereas it was 10.3% for thesame six-month period of 2015.
The net operating working capital at July 31, 2016 is Euro 674.4 million, practicallyunchanged from the Euro 665.2 million of January 31, 2016. The Group succeeded in
optimizing the management of this item thanks to better retail planning and operations,thus benefiting the Group’s net financial debt, which after the dividend payment ofEuro 281.5 million in June 2016 stood at Euro 251.7 million at July 31, 2016.
Net sales analysis(amounts in thousands of Euro)Net sales of Directly Operated Stores (DOS)Net sales to independent customers andfranchisees
Royalties

six months
ended July 31
2016(unaudited)%

six months
ended July 31
2015(unaudited)%% change

1,276,588

82.1%

1,552,393

85.1%-17.8%

252,679

16.3%

248,963

13.6%

1.5%

24,905

1.6%

23,0771.3%

7.9%

1,554,172

100.0%

1,824,433

100.0%-14.8%

six months
ended July 31
2016(unaudited)%

six months
ended July 31
2015(unaudited)%% changeItaly

158,48512.4%

200,675

12.9%-21.0%

Europe271,03421.2%

340,955

22.0%-20.5%

Americas168,49613.2%

203,81313.1%-17.3%

Asia Pacific434,98434.1%

557,64335.9%-22.0%

Japan

189,73614.9%

194,222

12.5%

-2.3%

Middle East

52,8204.1%

53,418

3.5%

-1.1%

Other countries

1,033

0.1%

1,667

0.1%

-38.0%

1,276,588

100.0%

1,552,393

100.0%-17.8%

Prada

1,028,497

80.6%

1,262,180

81.3%-18.5%Miu Miu

217,49817.0%

257,926

16.6%-15.7%

Church's

25,0732.0%

25,777

1.7%

-2.7%

Other

5,520

0.4%

6,510

0.4%

-15.2%

Total

1,276,588

100.0%

1,552,393

100.0%-17.8%

Clothing

223,27117.5%

248,927

16.0%-10.3%

Leather goods

776,78960.8%

997,07864.2%-22.1%

Footwear

247,585

19.4%

272,890

17.6%

-9.3%

Other

28,943

2.3%

33,4982.2%-13.6%

Total

1,276,588

100.0%

1,552,393

100.0%-17.8%Net revenues, total

Net sales of Directly Operated Stores (DOS)(amounts in thousands of Euro)Net sales of Directly Operated Stores (DOS) bygeographical area

Total
Net sales of Directly Operated Stores (DOS) by
brand

Net sales of Directly Operated Stores (DOS) by
product line

Net sales (retail channel)
Retail sales for the six months ended July 31, 2016 were Euro 1,276.6 million, downby 17.8% from the same period of 2015. At constant exchange rates, the decrease
was 15.9%. The number of Directly Operated Stores (“DOS”) increased from 618 at
January 31, 2016 to 622 at July 31, 2016. Eighteen stores were opened in the six12

interim report 2016-sept21.indd 12

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

month period, including at priority locations like Zurich and the GUM department store
in Moscow. Fourteen stores that were no longer deemed strategic were closed downin the period.
Markets (retail channel)
The Far East market generated net sales of Euro 435 million, a decrease of 22% (-18%
at constant exchange rates) compared to the first six-month of 2015. Hong Kong and
Macau continued to weigh heavily on the region’s contraction, although other areas,
including Mainland China, also had lower sales compared to the same period of theprevious year. Overall, the Greater China region generated retail sales of Euro 278.7
million, down by 24.4% at current exchange rates and by 21% at constant exchange
rates.
Net sales in Europe were Euro 271 million, a decrease of 20.5% at current exchange
rates and 16.3% at constant exchange rates. The reduction of traveler flows, resulting
mainly from the publicized tragic events, had a significant impact on the sales
performance in the region, while local consumption proved to be more resilient. The
only exceptions in Europe were the double-digit growth rates in local currency in Russia
and the positive signs in the UK which benefitted from the weak pound after the Brexit.
In Italy, the retail channel generated net sales of Euro 158.5 million, down by 21% fromthe first six months of 2015. The reasons for this performance were largely the sameas those regarding Europe.
Net sales from the American market totaled Euro 168.5 million, down by 17.3%(-14.8% at constant exchange rates). The decrease in sales was caused by the decline
in tourist flows as well as moderate sales with domestic customers. However, sales
growth was achieved in Brazil and Mexico.
Japan had net sales of Euro 189.7 million, down by 2.3% from the same period oflast year (-9.4% at constant exchange rates). The strong appreciation of the Japanese
yen since the start of the year adversely affected the flow of tourists from China. The
decline in Japan was marginally offset by sales growth in Hawaii.
Net sales in the Middle East region fell by 1.1% at current exchange rates (+0.2% atconstant exchange rates). Sales were sustained by local consumption as the region
continued to suffer from low tourist flows.
Products (retail channel)
Footwear generated net sales of Euro 247.6 million in the retail channel, a decrease of
9.3% at current exchange rates (-6.4% at constant exchange rates). The performanceof this product division was affected by a general contraction in all regions except the
Middle East, where the market delivered double-digit growth.
The clothing division produced net sales of Euro 223.3 million, a 10.3% decrease atcurrent exchange rates (-7.8% at constant exchange rates). Sales were down in all
geographical areas except Japan and the Middle East.
Net sales of leather goods were Euro 776.8 million, down by 22.1% compared to thesame six-month period of last year (-20.7% at constant exchange rates). Negative
trends were reported for all regions.
Brands (retail channel)
The Prada brand generated retail sales of Euro 1,028.5 million, an 18.5% decrease atcurrent exchange rates (-16.6% at constant exchange rates). Sales fell in all regions;
the Far East accounted for most of the decline, although sales in Japan were down
just slightly.
PRADA Group

interim report 2016-sept21.indd 13

Interim Financial Report 2016 - Financial Review

13

22/09/16 13:18

Miu Miu generated net sales of Euro 217.5 million, a 15.7% decrease at current
exchange rates (-14.2% at constant exchange rates). The Middle East region had
double-digit growth for the brand, but sales fell in all other geographical areas comparedto the same six-month period of 2015.
Net sales of the Church’s brand were Euro 25.1 million through its DOS network, a
2.7% decrease compared to the same six-month period of 2015 (+1.5% at constantexchange rates). The brand achieved organic sales growth in Europe and Italy, its two
main markets.
The “other” brand category consists largely of the Marchesi 1824 patisserie products,
whose growth is benefitting from the expansion plan implemented in the second halfof 2015, and the Car Shoe brand, which experienced a double-digit sales decline forthe six-month period.
Net sales (independent customers and franchisees)(amounts in thousands of Euro)six months
ended July 31
2016(unaudited)%

six months
ended July 31
2015(unaudited)%% change

Net sales to independent customers andfranchisees by brandPrada

205,100

81.2%

199,313

80.0%

2.9%

Miu Miu

31,65412.5%

35,992

14.5%-12.1%

Church's

14,673

5.8%

12,602

5.1%

16.4%

Other

1,252

0.5%

1,056

0.4%

18.6%

Total

252,679

100.0%

248,963100.0%

1.5%

The performance of the Prada brand in the first six months of 2016 reflected thehigh-standing accounts selected by the Group pursuant to the long-term, thoroughrationalization process undertaken. The increase for the period was essentiallyattributable to new partnerships forged with leading electronic retailers (“e-tailers”).
The performance of the Miu Miu brand in this channel was affected by an adverse
trend for leather goods, while shoes and clothing sales were up compared to the six
months ended July 31, 2015.
The double-digit growth for the Church’s brand compared to the previous period waseven higher at constant exchange rates (+27.6%), and positive almost everywhere.
Royalties
In the six months ended July 31, 2016, licensing agreements generated royalty incomeof Euro 24.9 million, up by 7.9% from the same six-month period of 2015. The increase
was largely due to the new Miu Miu fragrance, which was launched gradually from
July 2015.

14

interim report 2016-sept21.indd 14

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

Number of storesas atJuly 312016

as atJanuary 31
2016

DOS

Franchises

DOS

as at
July 312015

Franchises

DOS

Franchises

Prada

388

23

386

26

372

27

Miu Miu

173

8

173

10

174

10

Church’s

54

-

52

-

54

-

Car Shoe

5

-

5

-

5

-

Marchesi

2

-

2

-

1

-

Total

622

31

618

36

606

37

as at
July 312016

as atJanuary 31
2016

DOS

Franchises

as atJuly 31
2015

DOS

Franchises

DOS

Franchises

Italy

53

4

54

5

53

5

Europe

171

-

167

-

167

-

Americas

115

-

117

-

113

-

Asia Pacific

184

22

183

26

181

27

Japan

77

-

74

-

72

-

Middle East

20

5

21

5

18

5

Africa

2

-

2

-

2

-

Total

622

31

618

36

606

37

Operating results
During the six-month period, management expanded the initiatives introduced last yearwith the result of limiting the pressure of the sales decline on the operating margin.
In the period the Directors revised the useful lives of certain depreciable tangible andintangible assets to better represent their use in the Group’s processes, mainly in theretail area. As explained above the relevant impact on profit or loss was a Euro 27.3
million reduction of depreciation and amortization for the six-month period ended July
31, 2016: Euro 1.2 million at a cost of goods sold level and Euro 26.1 million at an
operating expenses level.
The gross margin for the six months ended July 31, 2016 was Euro 1,121.9 million, or
72.2% of net revenues, fairly in line with that of the previous period.
six months
ended July 31
2016(unaudited)%of netrevenues

six months
ended July 31
2015(unaudited)%of netrevenues

Product design and development costs

64,484

4.1%

69,3083.8%Advertising and communications costs

76,594

4.9%

98,534

5.4%

Selling costs

682,02643.9%

751,977

41.2%

General and administrative costs

85,136

5.5%

112,880

6.2%

Total Operating expenses

908,24058.4%

1,032,699

56.6%(amounts in thousands of Euro)Operating expenses for the six months ended July 31, 2016 amounted to Euro 908.2
million, a decrease of Euro 124.5 million compared to the same period of 2015. As apercentage of net revenues, operating expenses rose from 56.6% in 2015 to 58.4%
in the current period.

PRADA Group

interim report 2016-sept21.indd 15

Interim Financial Report 2016 - Financial Review

15

22/09/16 13:18

Selling costs decreased due to lower variable labor and lease costs, but also as a resultof measures adopted to run the retail operations more efficiently. Notwithstanding
such decrease, the incidence of selling costs on net revenues grew from 41.2% to43.9% compared to the previous six-month period.
Advertising and communications as a percentage on net revenues fell from 5.4% to4.9% in relation to a Euro 21.9 million decrease in their amount. The main differences
emerged from a concentration of special events in the first half of 2015 and a different
phasing of the media spending in the current year.
General and administrative costs decreased by Euro 27.7 million as a result of various
initiatives on discretionary expenditure items, like consultancies and general services;
their incidence on net revenues fell from 6.2% for the six months ended July 31, 2015
to 5.5% for the same period of 2016.
EBITDA for the six months ended July 31, 2016 was Euro 330 million, corresponding
to 21.2% of net revenues, a dilution of 290 basis points compared to the same periodof last year. The EBIT for the six-month period was Euro 213.7 million, or 13.8% of net
revenues, compared to 16.1% for the same period of last year. The EBIT trend wasfrom 6% on net revenues in the first three-month period of 2016 to 19% in the second
three-month period.
Net income
The finance costs of the period were in line with those of the previous period, since
the increase in the average gross bank debt was counterbalanced by lower borrowing
rates, also thanks to the refinancing activities undertaken.
The tax rate was 30%, compared to 32.9% for the same six-month period of last year.
The decrease is attributable primarily to favorable tax laws enacted in Italy and othercountries, although the geographical composition of the sources of taxable income
was less advantageous.
The Group’s net income for the six months amounted to Euro 141.9 million, or 9.1%of net revenues, compared to Euro 188.6 million or 10.3% for the same six-month
period of 2015.

16

interim report 2016-sept21.indd 16

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

Analysis of the statement of financial position
Net invested capital
The following table contains the statement of financial position, as reclassified in orderto provide a better picture of the composition of net invested capital.
(amounts in thousands of Euro)

Non-current assets (excluding deferred tax assets)

July 312016(unaudited)

January 31
2016(audited)

July 312015(unaudited)

2,561,138

2,586,841

2,614,885

Trade receivables, net

314,340

254,183

347,493

Inventories, net

625,482

692,672

778,907

Trade payables(265,376)(281,699)(378,826)

Net operating working capital

674,446

665,156

747,574

Other current assets (excluding items of financial position)

240,832

260,983

208,926

Other current liabilities (excluding items of financial position)(223,457)(234,496)(291,241)

Other current assets/(liabilities), net

17,37526,487(82,315)

Provision for risks(70,037)(69,233)(67,859)

Post-employment benefits(64,287)(69,405)(65,904)

Other long-term liabilities(190,609)(171,364)(164,043)

Deferred taxation, net

238,751

243,690

255,795

Other non-current assets/(liabilities)(86,182)(66,312)(42,011)Net invested capital

3,166,777

3,212,172

3,238,133

Shareholder's equity – Group

(2,894,984)(3,080,340)(2,960,909)

Shareholder's equity – Non-controlling interests
Total Consolidated shareholders' equity(20,066)(17,037)(17,475)(2,915,050)(3,097,377)(2,978,384)(428,088)

Long-term financial payables(586,735)(519,772)

Short-term financial, net surplus/(deficit)

335,008

404,977

168,339

Net financial position surplus/(deficit)(251,727)(114,795)(259,749)(3,166,777)(3,212,172)(3,238,133)

8.6%

3.7%

8.7%

Shareholders’ equity and net financial position
Net Debt to Consolidated equity ratio

At July 31, 2016, the Group maintains a solid balance-sheet structure, based on net
invested capital of Euro 3,166.8 million, financed by net debt of Euro 251.7 million and
the Group shareholder's equity of Euro 2,895 million.
The Euro 25.7 million decrease in non-current assets, consisting primarily of tangible
and intangible assets, was due mainly to the Euro 116.3 million depreciation of theperiod, net of capital expenditures of Euro 108.1 million. These investments regarded
mainly the retail network (Euro 70.3 million), as the Group undertook numerous projects
to expand, relocate and renew the concepts of stores in order to further enhance thecustomer experience. The number of stores rose from 618 at January 31, 2016 to 622
at the reporting date. Other investments totaling Euro 37.8 million were incurred in the
period for the industrial and corporate areas.
At July 31, 2016, the net working capital amounts to Euro 674.4 million, fairly in linewith January 31, 2016:––

Trade receivables increased by Euro 60.2 million, in line with the seasonal trend andthe positive performance of the wholesale channel in the latter months of the period;––

Trade payables decreased by Euro 16.3 million, consistently with seasonal
manufacturing trends and efficiencies achieved following the revision of someindustrial and logistic processes;––

Inventory decreased overall by Euro 67.2 million, benefitting from the significant
reduction of finished products (Euro 64.8 million); this achievement reflects thetarget to gradually reduce inventory, still in progress at the end of the period.

PRADA Group

interim report 2016-sept21.indd 17

Interim Financial Report 2016 - Financial Review

17

22/09/16 13:18

The other current assets (net) do not show a material departure from the balance atJanuary 31, 2016. The Euro 5.2 million decrease was mainly attributable to tax liabilities
accrued in the period and fair value changes in derivative contracts; such changes werepartially offset by the settlement of payables for capital expenditures and payments ofshort-term benefits to employees.
The other non-current liabilities (net) increased from Euro 66.3 million at January 31,
2016 to Euro 86.2 million at July 31, 2016. The difference was attributable to increases
in long-term deferred rent liabilities and fair value changes in derivative contracts
expiring after twelve months.
At July 31, 2016, the Group shareholder's equity amounts to Euro 2,895 million. The
Euro 185.3 million decrease from the Euro 3,080.3 million of January 31, 2016 was due
largely to the Euro 281.5 million dividend payment to PRADA spa shareholders in June
2016, net of the Euro 141.9 million Group’s net income of the six-month period andchanges in IFRSs equity reserves.
Net financial position
The following table summarizes the items of the net financial position.
(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

July 312015(unaudited)

Bonds(130,000)(130,000)(130,000)Bank borrowing – non-current(456,735)(390,475)(298,829)

Total financial payables – non-current(586,735)(520,475)(428,829)

Financial payables and bank overdrafts - current(334,523)(270,112)(379,152)

Payables to parent company and related parties(5,674)(4,858)(2,444)

(218)

(654)

(7)

Total financial payables – current(340,415)(275,624)(381,603)

Total financial payables(927,150)(796,099)(810,432)

-

703

741

Cash and cash equivalents

675,423680,601

549,943

Total financial receivables and cash and cash equivalents

675,423

681,304

550,684

Net financial surplus/(deficit), total(251,727)(114,795)(259,748)

Net financial surplus/(deficit) excluding related party balances(246,053)(110,640)(258,045)-36.2%-14.3%-28.8%

Finance lease obligations – current

Financial receivables from related parties – non-current

NFP/EBITDA ratio

At July 31, 2016, the Group's net financial debt is Euro 251.7 million. During the sixmonth period, net cash flows from operating activities amounting to Euro 266.7 million
were used, together with new credit lines, to finance capital expenditures (Euro 114.7
million the cash out of the period) and to pay dividends to PRADA spa shareholders(Euro 281.5 million).
In the first six months of 2016 the Group, in keeping with the financial strategies adopted
in the previous year, signed new medium/long-term loan agreements for a total valueof Euro 120 million. These loans, thanks to favorable credit market conditions, allowed
the Group to further reduce the average bank borrowing rate and simultaneously
extend its loan maturities. The new loans are secured by financial covenants in line
18

interim report 2016-sept21.indd 18

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

with those for existing loans and relating to the ratio of EBITDA to net financial position
and EBITDA to net finance costs. All the ratios were fully respected at July 31, 2016.
The total amount of unused credit lines at July 31, 2016 is Euro 472.5 million.
Risk factors
Risk factors regarding the international luxury goods market
Risks regarding the general state of the economy and the Group’s international
operations
The performance of the luxury goods market greatly depends on the general economic
conditions. Therefore, the Group’s profitability and operating performance are exposed
to global macroeconomic risk factors because of its operations on an international
scale.
The current international economic environment could adversely affect the demand
for the Group’s products and the access to credit, thereby causing financial problems
for customers and other parties with which the Group operates. Overall, these factors
could have a negative impact on the business and on the Group’s results, cash flows
and financial situation.
A significant portion of the Group’s sales is with customers who purchase goods
during trips abroad. Consequently, an unfavorable economy, social unrest, geopoliticalinstability and natural disasters reducing the flows of travelers or volumes of travel
have had in the past, and could have in the future, a negative impact on the Group’sbusiness and results.
Risks regarding the protection of intellectual property rights
PRADA Group brands have always been associated with beauty, creativity, traditionand excellent quality. Prada’s ability to protect its brands and other intellectual property
rights means safeguarding these fundamental values which form the basis of thesuccess and positioning of the brands on the international luxury goods market.
The Group safeguards and protects its brands, designs, patents and websites byregistering and obtaining legal protection for them in all countries around the world. The
Group is actively committed to fighting against all forms of counterfeiting and breaches
of intellectual property rights and adopts rigorous, thorough measures worldwide. It
uses a large team of in-house and external lawyers to monitor, analyze and oversee
wholesale and retail markets (both on-line and off-line), working on a daily basis inclose collaboration with the competent authorities, customs officials and police.
Risks regarding brand image and recognition
The Group’s success on the international luxury goods market is linked to the image
and distinctiveness of its brands. These features depend on many factors, such as thestyle and design of products, the quality of materials and production techniques used,
the image and location of the DOS and the careful selection of partners for licensed
business, as well as communications activities in terms of public relations, advertising,marketing and the Group profile in general.
Preservation of the image and prestige acquired by its brands in the fashion and luxury
sector is an objective which the PRADA Group pursues by very closely checking every
internal and external phase of the value chain, in order to constantly ensure undisputed
quality and maintain its reputation. This is also achieved by constantly seeking toinnovate in terms of style, product and communications in order to convey a message
consistent with the strong identity of the brands.

PRADA Group

interim report 2016-sept21.indd 19

Interim Financial Report 2016 - Financial Review

19

22/09/16 13:18

Risks regarding ability to anticipate trends and react to changing customer
preferences
The Group’s success depends on its ability to create and drive market and producttrends while anticipating changes in customer preferences and in the dynamics of theluxury goods market.
The Group pursues its objective of driving the luxury goods market by stimulating
consumer markets and setting trends thanks to the creative efforts of its Design and
Product Development department. This area of the business includes approximately
900 persons employed in design – where creativity is heightened by a strong mix ofnationalities, cultures and talents – and development – where craft skills combined withtried-and-true industrial processes ensure that the Group continues to be competitive
and keep up with consumer trends and emerging lifestyles.
Risk factors specific to PRADA Group
Foreign exchange risk
The Group has a vast international presence, and is therefore exposed to foreignexchange risk which can negatively impact revenue, costs, margins and profit. In
order to hedge the foreign exchange risk, the Group enters into hedging derivatives
designed to guarantee the Euro (or other functional currency) amount of the identified
future cash flows. These future cash flows mainly regard the collection of trade andfinancial receivables and the settlement of trade payables. They are concentrated in
PRADA spa, the Group’s parent company and worldwide distributor of Prada and Miu
Miu brand products.
Exchange rate risk management is described in more detail in the Notes to the Interim
condensed consolidated financial statements.
Interest rate risk
Interest rate risk is the risk that cash outflows might vary as a result of interest rate
fluctuations. In order to hedge this risk, which is mainly concentrated in PRADA spa,
the Group uses derivative contracts (e.g. Interest Rate Swaps) to convert variable-rate
debt into fixed-rate debt or debt at rates within a negotiated range.
Interest rate risk management is described in more detail in the Notes to the Interim
condensed consolidated financial statements.
Risks regarding the importance of key personnel
The Group’s results depend both on the contribution of certain key figures who haveplayed an essential role in the development of the Group and who have extensive
experience in the fashion and luxury goods industry, and on Prada’s ability to attract
and retain personnel who are highly capable in terms of the design, marketing andmerchandising of products.
The Group believes it has a management structure capable of guaranteeing theongoing success of the business and has recently implemented a long-term incentive
plan in order to retain key figures so that they will continue to fulfil roles essential toachievement of the challenging objectives set constantly by the Group.
Strategic risks
The Group’s ability to increase revenues and improve profitability depends on the
successful implementation of its strategy for each brand. This strategy is based on
the continuous support and evolution of the retail channel that has reached a global
footprint and is now expected to grow more organically than through new spaces.

20

interim report 2016-sept21.indd 20

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

The Group provides support to the operating performance and results of the retailchannel by constantly checking and, if necessary, redesigning the main businessprocesses, including localized marketing initiatives that reassert the distinctive
strengths of the Group: strong brands identity, close controls over the entire value
chain, an ability to combine innovation and quality in a short period of time and a
network of stores positioned on the most prestigious shopping streets and the mostimportant international department stores. Moreover, in order to ensure the success of
the DOS network, the Group carefully assesses market conditions, consumer trends
and stores productivity in order to ensure that the merchandise mix and the level ofservices are always aligned with the increasingly sophisticated luxury goods market
consumer.
Risks regarding the outsourcing of manufacturing activities
The Group designs, checks and produces in-house most of its prototypes and samples
while outsourcing the production of most of its accessories and products to third
parties with the right experience and skills.
The Group has implemented a rigorous inspection and quality control process for all
outsourced production. Prada contractually requires its outsourcers to comply withrules and regulations on brand ownership and other intellectual property rights, alllegal provisions and national collective agreements on labor and social security rules,
and laws and regulations on health and safety in the workplace. It also requires themto read the PRADA Group Code of Ethics and to comply with the principles set out
therein.
Credit risk
Credit risk is defined as the risk that a counterparty in a transaction may cause afinancial loss for another entity through failure to fulfill its obligations. The maximum
risk to which an entity is potentially exposed is represented by all financial assets
recognized in the financial statements. The Group believes that its credit risk regards
mainly trade receivables generated in the wholesale channel and cash and cash
equivalents. The Group manages credit risk and reduces the negative effects thereofthrough its commercial and financial strategy.
On the trade receivables side, credit risk management is performed by checking andmonitoring the reliability and solvency of customers. At the same time, the fact that the
total receivables balance is not highly concentrated with individual customers and thatnet sales are evenly spread out geographically, and the ongoing strategy of selective
reduction of the wholesale customer base (for reasons including the prevention ofparallel distribution), have reduced the credit risk.
On the cash and cash equivalents side, the risk of default substantially relates to the useof bank deposits, which is the method most widely used by the Group, in accordancewith its low-risk policy, to invest the surplus funds generated by operations. The default
risk is mitigated by the allocation of the funds to bank deposits that are diversified interms of countries, currencies and banks, as well as by the short-term nature of suchinvestments. The residual significant portion of cash and cash equivalents is madeup of bank accounts and cash. The Group maintains that there is no significant riskon these kinds of liquid assets as their use is strictly connected with the business
operations and corporate processes and, as a result, the number of parties involved ishighly fragmented.
Liquidity risk
The liquidity risk relates to the difficulty the Group may have in fulfilling its obligations
with regard to financial liabilities. The Directors are responsible for managing the liquidity
risk while the Corporate Finance department, reporting to the CFO, is responsible for
PRADA Group

interim report 2016-sept21.indd 21

Interim Financial Report 2016 - Financial Review

21

22/09/16 13:18

managing financial resources as best as possible. The Directors believe that the funds
and lines of credit currently available, in addition to those that will be generated byoperating and financing activities, will allow the Group to meet its needs resulting frominvesting activities, working capital management, repayment of loans as they fall due
and dividend payments as planned.
Legal and regulatory risks
The PRADA Group operates in a complex regulatory environment and is exposed tolegal risks and risks regarding compliance with applicable laws, including:––risks associated with failure to comply with the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong or with other laws or regulations
in force in Hong Kong and applicable to the Company following its listing on the
Stock Exchange of Hong Kong Limited;––risks associated with failure to comply with the laws and regulations applicable to
the Company following the listing of the Notes issued on August 2013 on the Irish
Stock Exchange;––risks associated with occupational health and safety in compliance with Italian
Legislative Decree 81/08 and equivalent regulations in other countries;––

possible legal penalties for wrongful acts pursuant to Law 231/2001, as
subsequently amended;––risks associated with antitrust rules in the areas where the Group operates;––

the possibility of events adversely affecting the reliability of annual financial
reporting and the safeguarding of Group assets;––changes in international tax rules applicable in the various countries where theGroup operates that could expose the Group to the risk of non-compliance;––

possible industrial compliance risks regarding the conformity of the finishedgoods distributed and the raw materials and consumables used with Italian andinternational laws and regulations.

The Group involves all its various divisions and uses specialized external advisors asnecessary in order to ensure that its processes and procedures are swiftly updated
to comply with changes in rules and regulations, thereby reducing the risk of noncompliance to an acceptable level. Monitoring activities are performed by Divisional
Managers and auditors as well as by specific entities and committees such as theSupervisory Board, the Internal Control Committee and the Industrial Compliance
Committee.
Risks regarding personal data processing
Data is processed using information systems subject to a governance model which
ensures that:22interim report 2016-sept21.indd 22––

data is adequately protected against the risk of unauthorized access and disclosure(including means for protecting personal privacy and proprietary information),
improper information modification or destruction (including accidental loss) and
use inconsistent with assigned duties;––

data is processed in accordance with applicable laws and regulations.

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

Related party disclosures
Information on the Group’s balances and transactions with related parties is provided
in the Directors’ Report, insofar as required by IFRS, and in the Corporate Governance
Report, insofar as required by the Hong Kong Stock Exchange Rules.
Non-IFRS measures
The Group uses certain financial measures (“non-IFRS measures”) to measure
its operating performance and to help the reader to understand and analyze thestatement of financial position. Although they are used by the Group’s management,these measures are not universally or legally defined and are not regulated by IFRS,
based on which the consolidated financial statements are prepared. Other companies
operating in the luxury goods segment might use the same measures created withdifferent calculation criteria; therefore, the non-IFRS measures should always be read
together with the related notes and may not be direct comparable with those of othercompanies.
In this Interim Financial Report, the PRADA Group used the following non-IFRS
measures:
EBITDA: Earnings Before Interest, Taxation, Depreciation and Amortization, i.e.
“consolidated net income for the period” adjusted to exclude “interest and otherfinancial income/(expense) and dividends from investments”, “taxes on income” and“depreciation, amortization and impairment”.
EBIT: Earnings Before Interest and Taxation, i.e. “consolidated net income for theperiod” adjusted to exclude “interest and other financial income/(expense) anddividends from investments” and “taxes on income”.
Net financial position: short-term and long-term financial payables due to third parties,
related parties and under finance leases, less cash and cash equivalents, and shortterm and long-term financial receivables due from third parties and related parties.
Free cash flows: net cash flows generated by operating activities less cash flows used
in investing activities.
Tax rate: taxation on result before taxation
The following table shows the calculation of EBITDA and EBIT.
(amounts in thousands of Euro)

twelve months
ended Jan 31
2016(audited)six months
ended July 31
2015(unaudited)

Consolidated net income for the period

145,297

333,338

191,564

Taxes on income

62,206

141,994

94,139Interest and other financial (income)/expense anddividends from investments

6,198

27,561

7,511

EBIT (Earnings Before Interest and Taxation)

213,701

502,893

293,214

Depreciation, amortization and impairment

116,290299,865

146,840

EBITDA (Earnings Before Interest, Taxation, Depreciation andAmortization)

329,991

802,758

440,054

PRADA Group

interim report 2016-sept21.indd 23

six months
ended July 31
2016(unaudited)

Interim Financial Report 2016 - Financial Review

23

22/09/16 13:18

Outlook
The Prada Group has begun a phase of profound transformation that will enable it
to respond quickly to the challenges and opportunities of a rapidly evolving market.
Management sees 2016 as a turning point from where the Group will return to growthby focusing on the values that made Prada the iconic company it is today: quality,
innovation and ability to lead and interpret trends.
The Group’s business and marketing strategies are redefining the products by focusing
fully on the needs of individual markets and strategic price points for the Group’s
brands, while promoting the collections by stepping up the digital communications.
The Group is also rationalizing its retail network and optimizing the spaces within thestores. This process will be accompanied by the roll-out of the new store concept - asseen in the recent restyling of Prada stores in Shanghai, Plaza 66, and GUM storesin Moscow - redesigned to guarantee a more exclusive shopping experience forincreasingly sophisticated and demanding international customers.
The Group is confident that all the actions underway will enable it to pave the way forthe growth in the future.

Milan, August 26, 2016

24

interim report 2016-sept21.indd 24

PRADA GroupInterim Financial Report 2016 - Financial Review

22/09/16 13:18

Corporate Governance

PRADA Group

interim report 2016-sept21.indd 25

Interim Financial Report 2016 - Corporate Governance25

22/09/16 13:18

Corporate Governance practices
The Company is committed to maintaining a high standard of corporate governancepractices as part of its commitment to effective corporate governance. The corporate
governance model adopted by the Company consists of a set of rules and standards
aimed toward establishing efficient and transparent operations within the Group, toprotect the rights of the Company’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 Code
The Board has reviewed the Company’s corporate governance practices and issatisfied that the Company’s corporate governance practices have complied with thecode provisions set out in the Code throughout the six months from February 1, 2016,
to July 31, 2016 (the “Reviewed Period”).
The Board
The Board of Directors of the Company (the “Board”) is responsible for setting up theoverall strategy as well as reviewing the operation and financial performance of theCompany and the Group.
The Board is composed of nine Directors of which four are executive Directors, two
are non-executive Directors and three are Independent non-executive Directors.
As resolved at the shareholders’ general meeting of the Company on May 24, 2016(“the AGM date”), each of Mr. Stefano Simontacchi and Mr. Maurizio Cereda waselected as non-executive director of the Company - to fill the casual vacancies causedby the resignations of Mr. Donatello Galli and Mr. Gaetano Miccichè respectively - fora term expiring at the same time as the other current Directors (i.e. on the date of theshareholders’ general meeting to be called to approve the financial statements of theCompany for the year ending January 31, 2018).
The Board has established the Audit Committee, the Remuneration Committee andthe Nomination Committee. Each Committee is chaired by an independent nonexecutive director. The written terms of reference of each Committee are of no lessthan exacting terms than those set out in the Code and are available on the websites of
the Company and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”)
websites.
In addition, the Board has established a Supervisory Body under the Italian Legislative
Decree 231 of June 8, 2001 (the “Decree”).
Audit Committee
The Company has established an Audit Committee in compliance with Rule 3.21 of
the Listing Rules of which at least one member possesses appropriate professional
qualifications in accounting or related financial management expertise to discharge
the responsibility of the Audit Committee. The Audit Committee consists 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 assist the Board in providing an independent view of theactivities of the Company’s financial reporting process and internal control and risk
management systems, to oversee the external audit process and the internal audit
process and to perform other duties and responsibilities as are assigned to the Audit
Committee by the Board. The Audit Committee held three meetings on April 8, 2016,

26

interim report 2016-sept21.indd 26

PRADA GroupInterim Financial Report 2016 - Corporate Governance

22/09/16 13:18

June 30, 2016, and August 26, 2016, with an attendance rate of 100% to review withthe senior management, the Group’s internal and external auditors and the board of
statutory auditors the audit plan for the year 2016, the auditing and internal controls
activities, the Group’s continuing connected transactions for 2015, the update on risk
assessment and the financial reporting matters (including the annual results for theyear 2015 and the interim results for the year 2016, before recommending them to theBoard for approval), and to recommend the appointment of the external auditors of theCompany for the three financial years ending January 31, 2019.
Remuneration Committee
The Company has established a Remuneration Committee in compliance with the Code.
The primary duties of the Remuneration Committee are to make recommendations to
the Board on the Company’s policy and structure for the remuneration of directors andsenior management and the establishment of a formal and transparent procedure fordeveloping policy on such remuneration. The recommendations of the Remuneration
Committee are then put forward to the Board for consideration and adoption, whereappropriate. The Remuneration Committee consists of two independent non-executive
directors, Mr. Gian Franco Oliviero Mattei (Chairman) and Mr. Giancarlo Forestieri, andone executive director, Mr. Carlo Mazzi. The Remuneration Committee held threemeetings on April 7, 2016, May 24, 2016, and June 29, 2016, with an attendance rateof 100% to review and recommend certain updates to the long term incentive planfor executives and Directors and to review the management by objectives plan for theCompany’s executives.
Nomination Committee
The Company has established a Nomination Committee in compliance with the Code.
The primary duties of the Nomination Committee are to make recommendations to theBoard on the structure, size and composition of the Board itself, on the selection of
new Directors and on the succession plans for Directors. The Nomination Committee
also assesses the independence of independent non-executive directors. The
recommendations of the Nomination Committee are then put forward to the Board forconsideration and adoption, where appropriate. The Nomination Committee consists of
two independent non-executive directors, Mr. Gian Franco Oliviero Mattei (Chairman)
and Mr. Sing Cheong Liu, and one executive director, Mr. Carlo Mazzi. The Nomination
Committee held three meetings on February 19, 2016, April 8, 2016, and May 4, 2016,
with an attendance rate of 100% to perform the annual review of the independence ofindependent non-executive directors, to acknowledge the resignations of an executive
director (who was also the Chief Financial Officer) and a non-executive director and torecommend the appointment of new directors of the Company and the appointmentof the Chief Financial Officer.
Supervisory Body
In compliance with the Decree, the Company has established a supervisory bodywhose primary duty is to ensure the functioning, effectiveness and enforcement of theCompany’s Model of Organization, adopted by the Company pursuant to the Decree.
The supervisory body consists of three members appointed by the Board selectedamong qualified and experienced individuals, including independent non-executive
directors, qualified auditors, executives or external individuals. The supervisory bodyconsists of Mr. David Terracina (Chairman), Mr. Gian Franco Oliviero Mattei and Mr.
Paolo De Paoli, who replaced Mr. Franco Bertoli on June 30, 2016.
Board of Statutory Auditors
Under Italian law, the Company is required to have a board of statutory auditors,
appointed by the shareholders for a term of three financial years, with the authority to

PRADA Group

interim report 2016-sept21.indd 27

Interim Financial Report 2016 - Corporate Governance27

22/09/16 13:18

supervise the Company on its compliance with the law and the By-laws, compliancewith the principles of proper management and, in particular, on the adequacy of theorganizational, administrative and accounting structure adopted by the Company andon its functioning.
The board of statutory auditors of the Company consists of Mr. Antonino Parisi(chairman), Mr. Roberto Spada and Mr. David Terracina. The alternate statutory auditors
are Ms. Stefania Bettoni and Mr. Cristiano Proserpio.
Dividends
The Company may distribute dividends subject to the approval of the shareholders ina general shareholders’ meeting.
On April 8, 2016, the Board of the Company recommended the payment of a final
dividend for the financial year 2015 of Euro/cents 11 per share in the capital of theCompany, representing a total dividend of Euro 281,470,640. The Shareholders
approved this dividend at the shareholders’ general meeting of the Company held on
May 24, 2016. The dividend was paid on June 13, 2016.
No dividends have been declared or paid by the Company in respect of the Reviewed
Period.
Change in Information of Directors Pursuant to Listing Rule 13.51B(1)Pursuant to Rule 13.51B(1) of the Listing Rules, the change in information of Director
since the Company’s 2015 Annual Report is set out below:
Name of Director

ChangeSing Cheong LIU

Ceased to be the Vice Chairman of Hongkong Sales (International) Limited

As mentioned above Mr Maurizio Cereda was elected as non-executive Director of
the Company at the shareholders’ general meeting of the Company on May 24, 2016.
His full biography was published in the Supplemental Circular issued by the Company
on May 6, 2016 and there is no change to the information required to be disclosed
pursuant to paragraphs (a) to (e) and (g) of Listing Rule 13.51(2) from that date to July
31, 2016.
In addition, Mr Stefano Simontacchi was re-elected as non-executive Director of theCompany at the shareholders’ general meeting of the Company on May 24, 2016. His
full biography was published in Company’s 2015 Annual Report and there is no change
to the information required to be disclosed pursuant to paragraphs (a) to (e) and (g) of
Listing Rule 13.51(2) from that date to July 31, 2016.
Directors’ Securities Transactions
The Company has adopted written procedures governing Directors’ securities
transactions on terms no less exacting than the standard set out in the Model Codefor Securities Transactions by Directors of Listed Issuers as set out in Appendix 10of the Listing Rules (the “Model Code”). Relevant employees who are likely to bein possession of unpublished inside information of the Group are also subject tocompliance with written procedures. Specific written confirmations have been obtained
from each Director to confirm his/her compliance with the required standard set out inthe Model Code and the Company’s relevant procedures regarding Directors’ securities
transactions for the Reviewed Period. There was no incident of non-compliance during
the Reviewed Period.

28

interim report 2016-sept21.indd 28

PRADA GroupInterim Financial Report 2016 - Corporate Governance

22/09/16 13:18

Purchase, Sale, or Redemption of the Company’s Listed Securities
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed anyof the Company’s listed securities during the Reviewed Period.
Directors’ interests and short positions in securities
As at July 31, 2016, the Directors of the Company and their associates held thefollowing interests in the shares, underlying shares and debentures of the Company
and its associated corporations (within the meaning of Part XV of the Securities andFutures Ordinance (“SFO”)) as recorded in the register required to be kept by theCompany under Section 352 of the SFO or as otherwise notiﬁed to the Company andthe Stock Exchange pursuant to the Model Code:(a) Long positions in shares and underlying shares of the Company
Name of Director

Number of Shares

Nature of Interest

Approximate Percentage
of Issued Capital

Ms. Miuccia Prada Bianchi

2,046,470,760(Notes 1 and 2)

Interest of Controlled
corporation

80%

Mr. Patrizio Bertelli

2,046,470,760(Notes 1 and 3)

Interest of Controlled
corporation80%

Notes:
1.

Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company
and is therefore the holding company of the Company.

2.

Ms. Miuccia Prada Bianchi, owns indirectly through Ludo S.r.l. 53.8% (comprisedof 438,460 ordinary shares and 100,000 preference shares) of the capital in
Bellatrix S.p.A., which in turn owns 65% (comprised of 1,650 ordinary shares and
300 preference shares) of the capital in Prada Holding S.p.A.. Ms. Miuccia Prada
Bianchi is therefore deemed under the SFO to be interested in all the sharesregistered in the name of Prada Holding S.p.A.. Ms. Miuccia Prada Bianchi is alsoa director of Prada Holding S.p.A., Bellatrix S.p.A. and Ludo S.r.l..

3.

Mr. Patrizio Bertelli owns, indirectly through PABE 1 S.r.l. 35% (comprised of 750
ordinary shares and 300 preference shares) of the capital in Prada Holding S.p.A..
Mr. Patrizio Bertelli is therefore deemed under the SFO to be interested in all theshares registered in the name of Prada Holding S.p.A.. Mr. Patrizio Bertelli is alsoa director of PABE 1 S.r.l.

PRADA Group

interim report 2016-sept21.indd 29

Interim Financial Report 2016 - Corporate Governance29

22/09/16 13:18

The deemed interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli in theshares of the Company as at July 31, 2016 are summarized in the following chart:

Miuccia Prada
Bianchi

Patrizio Bertelli

100%

100%

Ludo S.r.l.
53.8%

PABE 1 S.r.l.

Bellatrix S.p.A.
65%

35%

Prada Holding S.p.A.
80%

PRADA S.p.A.

30

interim report 2016-sept21.indd 30

PRADA GroupInterim Financial Report 2016 - Corporate Governance

22/09/16 13:18

(b) Long positions in shares and underlying shares of associated corporations
Name ofDirector

Name of associatedcorporations

Class of shares

Numberof shares

Nature of Interests

Approximate
percentage ofInterests

Ms. Miuccia
Prada Bianchi

Prada Holding S.p.A.

Ordinary Shares

1,650

Controlled Corporation

68.75%

Prada Holding S.p.A.

Preference Shares300

As above

50%

Prapar Corporation

Common Shares

50

As above

100%

MFH Munich Fashion
Holding GmbH

Registered Share1

As above

100%

PAC S.r.l.
(in liquidation)

Participation Quotas (Euro)30,600As above100%

Bellatrix S.p.A.

Ordinary Shares

438,460

As above

49.83%

Bellatrix S.p.A.

Preference Shares

100,000

As above

83.34%

Ludo S.r.l.

Ordinary Shares

100,311

Beneficial Owner100%

PRA 1 S.r.l.

Participation Quotas (Euro)

10,000Controlled Corporation

100%

C.I.D. – Cosmetics
International
Distribution Corp.

Common Share1

As above100%

Fratelli Prada S.p.A.

Ordinary Shares

734,754

As above73.48%

Prada Holding S.p.A.

Ordinary Shares

750

Controlled corporation

31.25%

Prada Holding S.p.A.

Preference Shares300

As above

50%

Prapar Corporation

Common Shares

50

As above

100%

MFH Munich Fashion
Holding GmbH

Registered Share1

As above

100%

PAC S.r.l.
(in liquidation)

Participation Quotas (Euro)30,600As above100%

C.I.D. – Cosmetics
International
Distribution Corp.

Common Share1

As above100%

Mr. Patrizio
Bertelli

Save as disclosed above, as at July 31, 2016, none of the Directors of the Company or
their associates held any interest or short position in the shares, underlying shares anddebentures of the Company or any of its associated corporations (within the meaningof Part XV of the SFO) as recorded in the register required to be kept under Section 352
of the SFO or as otherwise notiﬁed to the Company and the Stock Exchange pursuant
to the Model Code.

PRADA Group

interim report 2016-sept21.indd 31

Interim Financial Report 2016 - Corporate Governance31

22/09/16 13:18

Substantial shareholders’ interests and short positions in securities
As at July 31, 2016, other than the interests of the Directors of the Company as
disclosed above, the following persons held interests in the shares or underlying
shares of the Company which fall to be disclosed to the Company under Section 336
of the SFO:
Capacity

Number of Shares

Approximate percentage
of issued capital

Prada Holding S.p.A.

Legal and beneficial owner

2,046,470,760

80%Bellatrix S.p.A.

Interest of controlled corporation

2,046,470,76080%

Ludo S.r.l.

Interest of controlled corporation

2,046,470,760

80%

PABE 1 S.r.l.

Interest of controlled corporation

2,046,470,760

80%

OppenheimerFunds, Inc.

Investment manager

154,063,010

6.02%

Oppenheimer Developing
Markets Fund

Beneficial owner

128,488,610

5.02%

Harris Associates L.P.

Investment manager

180,009,502

7.03%

Harris Associates
Investment Trust

Trustee (other than a bare trustee)

128,059,300

5.00%

JPMorgan Chase & Co.

Beneficial owner (2,592,011)
Trustee (other than a bare trustee)(7,178)Custodian corporation / approved
lending agent (134,642,111)

137,241,300

5.36%

Beneficial owner

2,488,000

0.09%

Custodian corporation / approved
lending agent

134,642,111

5.26%

Name of Shareholder

Long Positions

Short Positions
JPMorgan Chase & Co.
Lending Pool
JPMorgan Chase & Co.

Note:
Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company.
As Ludo S.r.l. owns 53.8% of Bellatrix S.p.A. which in turn owns 65% of Prada Holding
S.p.A. and PABE 1 S.r.l. owns 35% of Prada Holding S.p.A., Bellatrix S.p.A., Ludo S.r.l.
and PABE 1 S.r.l. are all deemed to be interested in the 2,046,470,760 shares held by
Prada Holding S.p.A..
Save as disclosed above, the Company had not been notified of any short positions
being held by any substantial shareholder in the shares or underlying shares of theCompany as at July 31, 2016.

32

interim report 2016-sept21.indd 32

PRADA GroupInterim Financial Report 2016 - Corporate Governance

22/09/16 13:18

Interim condensed consolidated financial statements

PRADA Group

interim report 2016-sept21.indd 33

Interim Financial Report 2016 - Interim condensed consolidated financial statements

33

22/09/16 13:18

Consolidated statement of financial position(amounts in thousands of Euro)

Note

July 31, 2016 January 31, 2016
(unaudited)(audited)

AssetsCurrent assets
Cash and cash equivalents

6675,423680,601

Trade receivables, net

7314,340

254,183
692,672

Inventories

8625,482

Derivative financial instruments – current

9

11,423

11,682

Receivables from, and advance payments to, related parties – current

10

17,793

19,629Other current assets

11

Total current assets

211,616

229,671

1,856,077

1,888,438

Non-current assets
Property, plant and equipment

12

1,505,147

1,517,779

Intangible assets

13

918,685

932,238

Associated undertakings

14

16,68917,354

Deferred tax assets

32

272,505

280,572
113,954

Other non-current assets

15

116,650

Derivative financial instruments – non current

9

204

721

Receivables from, and advance payments to, related parties – non-current

10

3,762

5,499

Total non-current assets

2,833,642

2,868,117

Total Assets

4,689,719

4,756,555

270,112

Liabilities and Shareholders’ Equity
Current liabilities
Bank overdrafts and short-term loans

16

334,523

Payables to related parties – current

17

6,319

5,244

Trade payables

18

265,376

281,699

Tax payables

19

70,39680,744

Derivative financial instruments – current

925,153

11,095

218

654

20

127,263

142,271829,248

791,819
520,475

Obligations under finance leases – current
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term financial payables

21

586,735

Post-employment benefits

22

64,287

69,405

Provision for risks and charges

23

70,037

69,233

Deferred tax liabilities

32

33,75436,882Other non-current liabilities

24

174,344

161,317

Derivative financial instruments non-current

9

Total non-current liabilities
Total Liabilities
Share capital
Total other reserves

34

interim report 2016-sept21.indd 34

16,264

10,047

945,421867,359

1,774,669

1,659,178

255,882

255,882

2,386,277

2,355,023

Translation reserve

110,902138,547

Net income for the year

141,923

330,888

Equity attributable to owners of Group25

2,894,984

3,080,340

Equity attributable to Non-controlling interests

26

20,066

17,037

Total Equity

2,915,050

3,097,377

Total Liabilities and Total Equity

4,689,719

4,756,555

Net current assets

1,026,829

1,096,619

Total assets less current liabilities

3,860,471

3,964,736

PRADA GroupInterim Financial Report 2016 - Interim condensed consolidated financial statements

22/09/16 13:18

Consolidated Statement of Profit or LossNote

six months
ended
July 312016(unaudited)%

six months
ended
July 312015(unaudited)%

Net revenues

27

1,554,172

100.0%

1,824,433

100.0%

Cost of goods sold

28

(432,231)-27.8%(498,520)-27.3%

1,121,941

72.2%

1,325,913

72.7%(908,240)-58.4%(1,032,699)-56.6%

213,701

13.8%

293,214

16.1%(amounts in thousands of Euro)

Gross margin
Operating expenses

29

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

30(6,756)-0.4%(9,073)-0.5%

Dividends from investments

31

558

0.0%

1,562

0.1%

207,503

13.4%

285,703

15.7%(62,206)-4.1%(94,139)-5.2%

145,297

9.3%

191,564

10.5%

3,374

0.2%

2,971

0.2%

141,923

9.1%

188,593

10.3%

Income before taxes
Taxation

32

Net income for the period from continuing operations
Net income – Non-controlling interests

26

Net income – Group
Basic and diluted earnings per share(in Euro per share)

PRADA Group

interim report 2016-sept21.indd 35

33

0.055

0.074

Interim Financial Report 2016 - Interim condensed consolidated financial statements

35

22/09/16 13:18

Consolidated statement of cash flows(amounts in thousands of Euro)

Income before taxation

six months
ended
July 312016(unaudited)

six months
ended
July 312015(unaudited)

207,503285,703112,703145,802

Income Statement adjustments
Depreciation and amortization from continuing operations
Impairment of property, plant and equipment and intangible assets

3,588

1,037

118

(1,985)

1,517

3,380

Other non-current assets and liabilities(9,841)(44,342)

Trade receivables, net(57,234)(654)

Inventories, net

68,426(119,316)

Trade payables

Non-monetary financial (income) expenses
Other non-monetary charges
Balance Sheet changes(16,554)(61,319)

Other current assets and liabilities

3,318(17,705)

Cash flows from operating activities

313,544

190,601

Interest paid, net – third parties(8,464)(6,869)Taxes paid

(38,352)(120,358)

Net cash flows from operating activities

266,728

63,374Purchases of property, plant and equipment and intangible assets(114,335)(239,496)

Disposals of property, plant and equipment and intangible assets

708

2,806

Dividends from investments

575

1,562

-

(761)

Transactions with Non-controlling shareholders
Business combination(1,623)-

Net cash flows utilized by investing activities(114,675)(235,889)

Dividends paid to shareholders of PRADA spa(281,471)(281,471)

Dividends paid to non-controlling shareholders(369)(3,229)New loans from related companies

1,000

-

Repayment of short term portion of long term borrowings - third parties(46,550)(21,376)

Arrangement of long-term borrowings – third parties

120,000

192,346

Change in short-term borrowings – third parties

51,038115,223

Share capital increases by non-controlling shareholders of subsidiaries
Cash flows generated/(utilized) by financing activities
Change in cash and cash equivalents, net of bank overdrafts
Foreign exchange differences

1,902(4,190)(170,613)
11,653

Opening cash and cash equivalents, net of bank overdraft

680,595

708,873

Closing cash and cash equivalents, net of bank overdraft

675,419549,913

Cash and cash equivalents

675,423549,943

Closing cash and cash equivalents, net of bank overdraft

interim report 2016-sept21.indd 36409(156,243)(986)

Bank overdraft

36

109

PRADA Group

(4)

(30)

675,419549,913Interim Financial Report 2016 - Interim condensed consolidated financial statements

22/09/16 13:18

Statement of changes in consolidated shareholders’ equity(amounts in thousands of Euro, except for number of shares)(amounts inthousandsof Euro)Share
CapitalTranslaSharetion premium
Reserve
reserve

CashFair Valueflow Actuarial Available
hedge Reserve
for salereserve
Reserve

EquityTotal
Other
Reserves

Net
income1,790,771 2,163,129

450,730

3,000,737

450,730 (450,730)

-

Other
reserves

Balance atJanuary 31, 2015
(audited)

2,558,824,000

Allocation of2014 net income

-

-

-

-

-

-

-

450,730

Dividends

-

-

-

-

-

-

-

(281,471) (281,471)

Transactions with
non-controllinginterests

-

-

-

-

-

-

-

(719)

Capital injection
in subsidiaries

-

-

-

-

-

-

-

Comprehensive
income for the six
months (recyclable
to P&L)--39,974-

16,044-Comprehensive
income for thesix months (notrecyclable to P&L)

-

-

-

-

-

Balance at
July 31, 2015
(unaudited)

2,558,824,000

255,882 130,996

255,882 170,970

410,047 (35,323) (13,481)

11,115EquityNonattributable
controllingto owners ofinterests
Group

Total
Equity17,410 3,018,147

-

-

-

(281,471)(3,228) (284,699)

(719)

-

(719)

(39)

(758)

-

-

-

-

409

409

(3,571)-

12,473

188,593

241,040

2,923

243,963

1,322

-

-

1,322

-

1,322

-

1,322

410,047 (19,279) (12,159)

7,544

1,959,311 2,345,464

188,5932,960,909

17,475 2,978,384

Transactions with
non-controllinginterests

-

-

-

-

-

-

-

(7)

(7)

-

(7)

-

(7)

Comprehensive
income for the six
months (recyclable
to P&L)-- (32,423)-

12,179-(6,611)-

5,568

142,295

115,440(444)

114,996

Comprehensive
income for thesix months (notrecyclable to P&L)

-

-

-

-

-

3,998

-

-

3,998

-

3,998

6

4,004

Balance atJanuary 31, 2016
(audited)

2,558,824,000

255,882 138,547

410,047(7,100)(8,161)933

1,959,304 2,355,023

330,888

3,080,340

Allocation of2015 net income

-

-

-

-

-

-

-

330,888 (330,888)-

Dividends

-

-

-

-

-

-

- (281,471) (281,471)-(281,471)

Transactions with
non-controllinginterests

-

-

-

-

-

-

-

(1,283)(1,283)-(1,283)(249)(1,532)

Capital injection
in subsidiaries

-

-

-

-

-

-

-

-

-

-

-

109

109

Comprehensive
income for the six
months (recyclable
to P&L)-- (27,645)- (14,130)

-

(486)

-

(14,616) 141,923

99,662

3,538

103,200

Comprehensive
income for thesix months (notrecyclable to P&L)

-

-

-

(2,264)--(2,264)-(2,264)-(2,264)447 2,007,438 2,386,277 141,923

2,894,984

Balance at
July 31, 2016
(unaudited)

PRADA Group

interim report 2016-sept21.indd 37

Number ofshares--2,558,824,000 255,882 110,902 410,047 (21,230) (10,425)

330,888

Interim Financial Report 2016 - Interim condensed consolidated financial statements

17,037 3,097,377--(369) (281,840)

20,066 2,915,050

37

22/09/16 13:18

Statement of consolidated comprehensive income
six months
ended
July 312016(unaudited)

twelve months
ended
January 31
2016(audited)six months
ended
July 312015(unaudited)

145,297

333,338

191,564(27,480)

7,580

39,927---

Change in Translation reserve less tax impact(27,480)

7,580

39,927

Change in Cash Flow Hedge reserve(18,080)

38,907

21,734

3,950(10,684)(5,690)(14,130)

28,223

16,044(4,761)(amounts in thousands of Euro)Net income for the period – Consolidated
A)

Items recyclable to P&L:

Change in Translation reserve
Tax impact

Tax impact
Change in Cash Flow Hedge reserve less tax impact
Change in Fair Value reserve(648)(13,576)

Tax impact

162

3,394

1,190

Change in Fair Value reserve less tax impact(486)(10,182)(3,571)(2,409)

6,526

1,823

145

(1,200)(501)

Change in Actuarial reserve less tax impact(2,264)

5,326

1,322

Consolidated comprehensive income for the period

100,937

364,285

245,286

Comprehensive income for the period – Non-controlling Interests

3,538

2,485

2,923

Comprehensive income for the period – Group

97,399361,800

242,363

B)

Item not recyclable to P&L:

Change in Actuarial reserve
Tax impact

The accounting policies and the notes constitute an integral part of the Interim
condensed consolidated financial statements.

38

interim report 2016-sept21.indd 38

PRADA GroupInterim Financial Report 2016 - Interim condensed consolidated financial statements

22/09/16 13:18

Notes to the Interim condensed consolidated financial statements

PRADA Group

interim report 2016-sept21.indd 39

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

39

22/09/16 13:18

1.

General information
PRADA spa (the “Company”), together with its subsidiaries (jointly the “Group”), islisted on the Hong Kong Stock Exchange (HKSE code: 1913). It is 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 and accessories. The Group also operates under
specific licensing agreements in the eyewear and fragrances, and, starting from 2014,
in the food & beverage business through the historical Milanese patisserie Marchesi
1824. Its products are sold in 70 countries worldwide through a network that included
622 Directly Operated Stores (DOS) at July 31, 2016 and a select network of luxury
department stores, independent retailers and franchise stores.
The Company is a joint-stock company, registered and domiciled in Italy. Its registeredoffice is in via A. Fogazzaro 28, Milan, Italy. At the date of these unaudited Interim
condensed consolidated financial statements, 79.98% of the share capital was ownedby PRADA Holding spa, a company domiciled in Italy, while the remaining shares were
floating on the Main Board of the Hong Kong Stock Exchange.
The Interim condensed consolidated financial statements were approved andauthorized for issue by the Board of Directors of PRADA spa on August 26, 2016.

2.

Basis of preparation
The unaudited 2016 Interim condensed consolidated financial statements of the
PRADA Group for the six months ended July 31, 2016, including the “Consolidated
statement of financial position”, the “Consolidated Statement of Profit or Loss”, the“Consolidated statement of cash flows”, the “Statement of changes in consolidated
shareholders’ equity”, the “Statement of consolidated comprehensive income” andthe “Notes to the Interim condensed consolidated financial statements” have been
prepared in accordance with “IAS 34 Interim Financial Reporting” as endorsed by theEuropean Union.
These Interim condensed consolidated financial statements should be read together
with the Consolidated financial statements of the PRADA Group for the twelve months
ended January 31, 2016 that were prepared in accordance with the International
Financial Reporting Standards (“IFRSs”) 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 IFRSs as endorsed by the European
Union and applicable to the PRADA Group and those issued by the IASB.
IFRS also refers to all International Accounting Standards (“IAS”) and all interpretationsof the International Financial Reporting Interpretations Committee (“IFRIC”), previously
called the Standing Interpretations Committee (“SIC”).
The Group has prepared the Interim condensed consolidated statement of financial
position presenting separately current and non-current assets and liabilities. All thedetails needed for an accurate and complete information are provided in the relevantNotes. The Consolidated statement of profit or loss is classified by destination. The
cash flow information is provided in the Consolidated statement of cash flows which
was prepared under the indirect method.
The Consolidated financial statements have been prepared on a going concern basis
and are presented in Euro which is also the functional currency of PRADA spa.

40

interim report 2016-sept21.indd 40

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

In accordance with IFRSs, the preparation of consolidated financial statements requires
management to make estimates and assumptions when determining the values ofcertain types of assets, liabilities, revenues and costs and when assessing contingent
assets and liabilities.
In the six-month period, in accordance with the aforementioned applicable accounting
standards, the Directors revised the estimated useful lives of some depreciable assets,
mainly for the retail area, as shown below:
retail area
useful life used until
Jan. 31, 2016

category of depreciable asset

useful life usedfrom Feb. 1, 2016

Improvements to leased retail premises

shorter of lease term and 10 years

lease term (*)

Furniture and fixtures in leased premises

5 – 10 years

lease term (*)

shorter of lease term and 10 years

lease term (*)

Storelease acquisition(*) the lease term includes the renewal period when the exercise of the option is deemed reasonable

The Prada Group has amassed experience in the development and management ofretail premises under its long-term expansion plan and continuous improvements
in practices and processes. The experience and information accumulated over theyears led management to consider the 10-year limit as no longer representative of
the useful life of improvements made to retail premises. In fact, the average life of astore exceeds ten years and the benefits from improvements made to retail space andfrom the furniture and fixtures installed there, especially when a new store is opened,
continue to flow to the Group until the store is closed down.
February 1, 2016 has been conventionally identified as the date on which theaforementioned accounting estimates were changed. The extension of the useful lives
affected profit or loss by reducing the depreciation and amortization charges by Euro
27.3 million for the six months ended July 31, 2016: Euro 1.2 million at a cost of goods
sold level and Euro 26.1 million at an operating expenses level.
3.

New IFRS and amendments to IFRS
New standards and amendments issued by the IASB, endorsed by the European
Union and applicable to the PRADA Group from February 1, 2016
The following new IFRS and amendments to existing IFRS have been endorsed by theEuropean Union and are applicable to the PRADA Group effective from February 1,
2016. These changes do not have any significant impact on the Group as of the dateof these consolidated financial statements:––

Amendment to IAS 16 and IAS 38 “Clarification of Acceptable Methods ofDepreciation and Amortization”. The IASB amended “IAS 16 Property, Plant
and Equipment” and “IAS 38 Intangible assets” clarifying that, even though
the selection of an amortization methodology involves the use of judgement, arevenue-based method is not considered to be an appropriate manifestation of
consumption for depreciating an asset.

––

Amendment to “IFRS 11 Accounting for Acquisitions of Interests in Joint
Operations”. This amendment requires the acquirer of an interest in a joint
operation in which the activity constitutes a business, as defined in “IFRS 3
Business Combinations”, to apply all of the principles on business combinations
accounting in IFRS 3 and other IFRSs except for those principles that conflictwith the guidance in “IFRS 11 Joint Arrangements”. In addition, the acquirer
shall disclose the information required by IFRS 3 and other IFRSs for businesscombinations.

PRADA Group

interim report 2016-sept21.indd 41

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

41

22/09/16 13:18

––Disclosure Initiative: Amendments to “IAS 1 Presentation of Financial Statements”.
This project is part of the IASB's overall disclosure initiative and it considers
proposals such as:–– adding an explanation in IAS 1 similar to more recent standards explaining that
too much detail can obscure useful information;–– clarifying that materiality applies to the whole financial statements and that
information which is not material need not be presented in the primary financial
statements or disclosed in the notes;–– clarifying that some disclosures specified in standards are simply not importantenough to justify separate disclosure for a particular entity;–– making it clear that preparers should exercise professional judgment inpresenting their financial reports;–– remove the perception of a “normal order of presentation” of financial
statements, making it easier for entities to provide more contextual information;–– reducing restrictions on how accounting policies should be presented, allowing
important accounting policies to be given greater prominence in financial
reports;–– adding additional explanations with examples of how IAS 1 requirements aredesigned to shape financial statements instead of specifying precise terms thatmust be used, including whether subtotals of IFRS numbers such as earnings
before interest and tax (EBIT) and earnings before interest, tax, depreciation
and amortization (EBITDA) should be acknowledged in IAS 1;–– adding a requirement that entities disclose and explain their net debt
reconciliation.

––

Annual Improvements to IFRSs (2012–2014 Cycle) impacted:–– “IFRS 5 Non-current Assets Held for Sale and Discontinued Operations”,
changing the methods of disposal.
–– “IFRS 7 Financial Instruments: Disclosures”, applying disclosure requirements
to a servicing contract.
–– “IAS 19 Employee Benefits”, clarifying the discount rate to be used for actuarial
assumption.
–– “IAS 34 Interim Financial Reporting".

––

Amendments to “IAS 27 Separate Financial Statements”. The amendments
reinstate the equity method as an accounting option for investments in subsidiaries,
joint ventures and associates in an entity's separate financial statements.

New standards and amendments issued by the IASB, but not yet endorsed by
the European Union
New Standards––"IFRS 16 Leases". This new standard will replace the actual "IAS 17 Leases".
Under this new standard, the lessee will record a right-of-use assets and therelated financial liability. The asset, recorded in the balance sheet of the lessee,
will result in the recording of interest expense and will be depreciated over its
useful life. The financial liability is initially measured at the present value of the
future lease payments over the term of the lease, discounted at the implicit
interest rate of the lease if it can be reasonably determined. If this implicit rate
is not readily determinable, the lessee must use its incremental borrowing rate.
Also in the new standard, as already happened with the application of the current
IAS 17, the lessors are required to classify the lease on the basis of their nature(operating or financial). The new standard IFRS 16 will be effective for annual
periods beginning on or after January 1, 2019. Earlier application is permitted if
the company has simultaneously applied the "IFRS 15 Revenue from contracts
with customers".

42

interim report 2016-sept21.indd 42

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

––“IFRS 15 Revenue from contracts with Customers”. The core principle of IFRS
15, effective for annual periods beginning on or after January 1, 2018 (earlier
application is permitted), is that an entity recognizes revenue to depict thetransfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those
goods or services. An entity should recognize revenue in accordance with thatcore principle by applying the following steps: identify the contract, identify theperformance obligations in the contract, determine the transaction price, allocate
the transaction price to the performance obligations in the contract and recognize
revenue when the entity satisfies a performance obligation.

––“IFRS 9 Financial instruments”. This Standard will replace “IAS 39 Financial
Instruments: Recognition and Measurement” in its entirety. An entity shall apply
this Standard for annual periods beginning on or after January 1, 2018 with earlier
application permitted. Such replacement project has been divided into three main
phases, namely the measurement of financial assets and financial liabilities, theimpairment methodology and the hedge accounting.

Amendments––

Amendments to "IAS 7 Cash flow statement": these changes should enable agreater understanding and measurement of liabilities arising from financing
activities, including changes in cash flows and non-monetary changes (such as
the gain or loss on foreign exchange). To achieve this objective, the IASB requiresthat the main changes in liabilities arising from financing activities are reported in
the explanatory notes (as necessary), such as:–– changes in cash flows;–– changes arising from the acquisition or loss of subsidiaries or other businesses;–– the effect of changes in foreign exchange rates;–– changes in fair value and other changes.
These amendments are applicable for annual periods beginning on or after January
1, 2017.

––

Amendments to IFRS 10, IFRS 12 and IAS 28. “IFRS 10 Consolidated Financial
Statements” has been amended to confirm that the exemption from preparing
consolidated financial statements set out in paragraph 4(a) of IFRS 10 is available
to a parent entity that is a subsidiary of an investment entity. This because aninvestment entity may measure all of its subsidiaries at fair value through profit orloss in accordance with paragraph 31 of IFRS 10. Those amendments are applicablefor annual periods beginning on or after January 1, 2016. Earlier application ispermitted, providing disclosure.

––

Amendments to IFRS 10 and IAS 28: “Sale or Contribution of Assets between
an Investor and its Associate or Joint Venture”. The amendments address a
conflict between the requirements of “IAS 28 Investments in Associates andJoint Ventures” and “IFRS 10 Consolidated Financial Statements” and clarify
that in a transaction involving an associate or joint venture the extent of gain orloss recognition depends on whether the assets sold or contributed constitute abusiness. They are effective for annual periods beginning on or after January 1,
2016 with earlier application being permitted.

––

Amendments to IAS 12 "Recognition of Deferred Tax Assets for Unrealized
Losses": the changes are related to the recognition of deferred taxes on unrealized
losses. These amendments are applicable for annual periods beginning on or afterJanuary 1, 2017. Early application is permitted.

––

Clarification to IFRS 15 revenue from contracts with customers. This amendment
regards three of the five topics identified (identifying performance obligations,

PRADA Group

interim report 2016-sept21.indd 43

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

43

22/09/16 13:18

principal versus agent considerations and licensing) and provide some transition
relief for modified contracts and completed contracts.
––

Amendments to IFRS 2 Share-based Payment.

As at the date of these Interim Financial Report the Directors have not completed theanalysis necessary to assess the impacts of the new standards, amendments andoperational guides not yet applicable to the PRADA Group. However, in relation to thesignificance that rental contracts for commercial premises do have for the Group, it isreasonable to conclude that the impact of ''IFRS 16 Leases" will be material.
4.

Acquisitions and incorporation of companies
In the month of April 2016, PRADA spa and its 100% controlled company PRADAStores srl drew and approved the merger by incorporation of the latter into PRADA
spa. The merger is expected to be completed by the end of fiscal year.
On April 15, 2016, the parent company PRADA spa acquired 50% of the share capitalof the Romanian company Hipic Prod Impex srl, a supplier for leather products. The
agreements signed with the partner allowed the Group to acquire the control, as definedin “IFRS 10 Consolidated Financial Statements”. The net cash-out for the acquisition
was Euro 2.1 million and the goodwill arising from the acquisition amounted to Euro
2.4 million, as shown below:(amounts in thousands of Euro)

Cash / (Bank overdraft)fair value of net
assets acquired(18)

Property, plant and equipment

719

Other current assets/(liabilities)(1,179)Other non-current assets/(liabilities)(22)

Net assets acquired(500)

Non-controlling interests (measured in proportion to net assets acquired)(250)

Consideration paid

2,125

Goodwill

2,375

On April 18, 2016, the Group incorporated PRADA Saint Barthelemy sarl. The company
will operate the retail business and is 100% controlled by PRADA spa.

44

interim report 2016-sept21.indd 44

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

5.

Operating segments“IFRS 8 Operating Segments” 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 be allocated 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 geographicalareas, together with the complementary nature of the production processes of thevarious brands and the many relationships between the different business segments– means that operating segments that meet the IFRS 8 definition cannot be identified,
as top management is only provided with income statement results on a Group-widelevel. For this reason, the business has been considered as a single operating segment
as this better represents the specific characteristics of the PRADA Group businessmodel.
Detailed information on net revenues by channel, brand, geographical area and productas well as non-current assets by geographical area are provided below. Information
on net revenues is also reported in the Financial review where it is accompanied byfurther comments.

PRADA Group

interim report 2016-sept21.indd 45

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

45

22/09/16 13:18

Net sales analysis(amounts in thousands of Euro)Net sales of Directly Operated Stores (DOS)six months
ended
July 312016(unaudited)%

six months
ended
July 312015(unaudited)%% change

1,276,588

82.1%

1,552,393

85.1%-17.8%Net sales to independent customers andfranchisees

252,679

16.3%

248,963

13.6%

1.5%

Royalties

24,905

1.6%

23,0771.3%

7.9%

1,554,172

100.0%

1,824,433

100.0%-14.8%

six months
ended
July 312016(unaudited)%

six months
ended
July 312015(unaudited)%% changeItaly

158,48512.4%

200,675

12.9%-21.0%

Europe271,03421.2%

340,955

22.0%-20.5%

Americas168,49613.2%

203,81313.1%-17.3%

Asia Pacific434,98434.1%

557,64335.9%-22.0%

Japan

189,73614.9%

194,222

12.5%

-2.3%

Middle East

52,8204.1%

53,418

3.5%

-1.1%

Other countries

1,033

0.1%

1,667

0.1%

-38.0%

1,276,588

100.0%

1,552,393

100.0%-17.8%

Prada

1,028,497

80.6%

1,262,180

81.3%-18.5%Miu Miu

217,49817.0%

257,926

16.6%-15.7%

Church's

25,0732.0%

25,777

1.7%

-2.7%

Other

5,520

0.4%

6,510

0.4%

-15.2%

Total

1,276,588

100.0%

1,552,393

100.0%-17.8%

Clothing

223,27117.5%

248,927

16.0%-10.3%

Leather goods

776,78960.8%

997,07864.2%-22.1%

Footwear

247,585

19.4%

272,890

17.6%

-9.3%

Other

28,943

2.3%

33,4982.2%-13.6%

Total

1,276,588

100.0%

1,552,393

100.0%-17.8%% change

Net revenues, total

Net sales of Directly Operated Stores (DOS)(amounts in thousands of Euro)Net sales of Directly Operated Stores (DOS) bygeographical area

Total
Net sales of Directly Operated Stores (DOS) by
brand

Net sales of Directly Operated Stores (DOS) by
product line

Net sales to independent customers and franchisees
six months
ended
July 312016(unaudited)%

six months
ended
July 312015(unaudited)

%

Prada

205,100

81.2%

199,313

80.0%

2.9%

Miu Miu

31,65412.5%

35,992

14.5%-12.1%

Church's

14,673

5.8%

12,602

5.1%

16.4%

Other

1,252

0.5%

1,056

0.4%

18.6%

Total

252,679

100.0%

248,963100.0%

1.5%(amounts in thousands of Euro)Net sales to independent customers andfranchisees by brand46

interim report 2016-sept21.indd 46

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Geographical information
The following table reports the carrying amount of the Group’s non-current assets bygeographical area, as requested by “IFRS 8 Operating Segments” for entities, like the
PRADA Group, that have a single reportable segment.
(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Italy

830,945829,524

Europe1,080,831

1,108,104

Americas214,491

220,403

Asia Pacific294,904

295,089

Japan

101,791

91,264

Middle East

27,48830,854Africa

3,442

3,808

Total

2,553,892

2,579,046

The total amount of Euro 2,554 million (Euro 2,579 million at January 31, 2016) relates
to the Group’s non-current assets excluding, as requested by IFRS 8, those relating tofinancial instruments, deferred tax assets and pension fund surplus.

PRADA Group

interim report 2016-sept21.indd 47

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

47

22/09/16 13:18

6.

Cash and cash equivalents
Cash and cash equivalents are detailed as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Cash on hand

46,762

46,290Bank deposit accounts

356,082

357,159

Bank current accounts

272,579

277,152

Total

675,423680,601

At July 31, 2016, bank current accounts and deposit accounts generated interest
income of between 0.0% and 14.1% per annum (between 0.0% and 9.3% at January
31, 2016).
Bank deposit accounts are broken down by currency as follows:(amounts in thousands of Euro)Euro

July 312016(unaudited)

January 31
2016(audited)-

24,100US Dollar

31,55436,393

Korean Won

32,081

17,443

Hong Kong Dollar

241,404

228,529

Chinese Renminbi

40,994-

Other currencies

10,04950,694

Total bank deposit accounts

356,082

357,159

The Group seeks to mitigate the default risk on bank deposit accounts by allocating
available funds to several accounts that differ in terms of currency, country and bank;these investments are always short-term in nature.
Bank current accounts are broken down by currency as follows:
July 312016(unaudited)

January 31
2016(audited)Euro

158,663

154,807

US Dollar

44,62552,830

Korean Won

2,054

1,535

Hong Kong Dollar

6,465

4,724

GB Pound

10,736

10,103

Other currencies

50,03653,153

Total bank current accounts

272,579

277,152(amounts in thousands of Euro)The Group maintains that there is no significant risk regarding bank current accounts astheir use is strictly connected with the business operations and corporate processes
and, as a result, the number of parties involved is fragmented.

48

interim report 2016-sept21.indd 48

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

7.

Trade receivables, net
Trade receivables are detailed as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Trade receivables – third parties

292,552

235,718

Allowance for bad and doubtful debts(6,604)(6,546)

Trade receivables – related parties

28,39225,011

Total

314,340

254,183

Trade receivables increased by Euro 60.2 million, in line with the seasonal trend andthe positive performance of the wholesale channel occurred in the latter months ofthe period.
Trade receivables from related parties mainly refer to the sale of finished products to
Fratelli Prada spa, a related company and franchisee of the PRADA Group.
Movements during the period were as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

6,546

7,784
(47)

Opening balance (audited)
Exchange differences(59)

Increases

206

418

Utilized(49)(1,321)

Reversals

(40)

(288)

6,604

6,546

Closing balance (unaudited)

The following table contains a summary of total receivables before the allowance for
doubtful debts at the reporting date:July 312016(unaudited)

Current

Trade receivables

320,944

Total(amounts in thousands of Euro)1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

267,527

18,696

5,903

6,308

7,352

15,158

320,944

267,527

18,696

5,903

6,308

7,352

15,158January 31
2016(audited)

Current

Trade receivables

260,729

Total

260,729(amounts in thousands of Euro)PRADA Group

interim report 2016-sept21.indd 49

Overdue (in days)

Overdue (in days)
1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

217,808

17,077

6,848

5,257

3,400

10,339217,808

17,077

6,848

5,257

3,400

10,339Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

49

22/09/16 13:18

The following table contains a summary, by due date, of trade receivables less theallowance for doubtful accounts at the reporting date:(amounts in thousands of Euro)

July 312016(unaudited)

Current

Trade receivables less allowancefor doubtful accounts

314,340

Total

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

267,021

18,679

5,903

6,308

7,352

9,077

314,340

267,021

18,679

5,903

6,308

7,352

9,077

(amounts in thousands of Euro)

January 31
2016(audited)

Current

Trade receivables less allowancefor doubtful accounts

254,183

Total

254,183

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

217,327

17,077

6,848

5,257

3,400

4,274

217,327

17,077

6,848

5,257

3,400

4,274

At the reporting date, the expected loss on doubtful receivables was fully covered by
the allowance for doubtful receivables.
8.

Inventories, net
Inventories are analyzed as follows:
July 312016(unaudited)

January 31
2016(audited)

Raw materials

105,065

107,782

Work in progress

21,242

20,925

Finished products

549,307614,423

Allowance for obsolete and slow moving inventories(50,132)(50,458)

Total

625,482

692,672(amounts in thousands of Euro)The reduction in finished products amounting to Euro 64.8 million represents the resultof actions undertaken to gradually lowering the level of inventories.
Movements on the allowance for obsolete and slow moving inventories are analyzed
as follows:(amounts in thousands of Euro)

Balance at January 31, 2016 (audited)
Exchange differencesinterim report 2016-sept21.indd 50

Finished
Products

Total

26,757

23,70150,458
(15)

(5)

(10)

Increases

-

173

173

Utilization

-

(484)

(484)

26,752

23,38050,132

Balance at July 31, 2016 (unaudited)50

Rawmaterials

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

9.

Derivative financial instruments: assets and liabilities
Derivative financial instruments: assets and liabilities, current and non-current portion.
July 312016(unaudited)

January 31
2016(audited)

11,423

11,682

204

721

Total Financial Assets - Derivative financial instruments

11,627

12,403Financial liabilities regarding derivative instruments – current(25,153)(11,095)

Financial liabilities regarding derivative instruments – non-current(16,264)(10,047)

Total Financial Liabilities – Derivative financial instruments(41,417)(21,142)

Net carrying amount – current and non-current portion(29,790)(8,739)(amounts in thousands of Euro)

Financial assets regarding derivative instruments – current
Financial assets regarding derivative instruments – non-current

The net carrying amount of derivative financial instruments, current and non-current
combined, is as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

IFRS7
Category

Forward contracts

8,218

10,094

Level II

Options

3,409

2,309

Level II

Positive fair value

11,627

12,403Forward contracts(18,584)(5,854)

Level II

Options(4,122)(2,479)Level IIInterest rate swaps(18,711)(12,809)

Level II

Negative fair value(41,417)(21,142)

Net carrying amount – current and non-current(29,790)(8,739)All of the above derivative instruments are qualified as Level II of the fair value hierarchy
proposed by IFRS 7. The Group has not entered into any derivative contracts that may
be qualified as Level I or III.
The fair values of derivatives arranged to hedge interest rate risks (IRS) and ofderivatives arranged to hedge exchange rate risks (forward contracts and options) havebeen determined utilizing one of the valuation platforms in most widespread use on
the financial market and are based on the interest rate curves and on spot and forward
exchange rates at the reporting date.
The Group entered into the financial derivative contracts in the course of its risk
management activities in order to hedge financial risks connected with exchange andinterest rate fluctuation.
Foreign exchange rate transactions
The cash flows resulting from the Group’s international activities are exposed to
exchange rate volatility. In order to hedge this risk, the Group enters into options andforward sale and purchase agreements so as to guarantee the value in Euro (or inother currencies of the various Group companies) of identified cash flows. Expected
future cash flows mainly regard the collection of trade receivables, settlement of trade
PRADA Group

interim report 2016-sept21.indd 51

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

51

22/09/16 13:18

payables and financial cash flows.
At the reporting date, the notional amounts of the derivative contracts designated as
foreign exchange risk hedges (as translated at the European Central Bank exchange
rate at July 31, 2016) were as stated below.
Contracts in place at July 31, 2016 to hedge projected future trade cash flows.
Options

Forward sale
contracts (*)

Forwardpurchase
contracts (*)

July 312016(unaudited)Hong Kong Dollar

29,579-(53,567)(23,988)

US Dollar

73,787-(19,347)

54,440-66,975(29,815)

37,160Japanese Yen

29,609139,119-

168,728

GB Pound

26,30337,678-63,981-

22,938-22,938(amounts in thousands of Euro)
Currency

Chinese Renminbi

Korean Won
Swiss Franc
Other currencies
Total

-

12,843(417)

12,426

7,226

48,363(2,042)53,547

166,504

327,916(105,188)

389,233(*) Positive figures represent forward sales, negative figures represent forward purchases of currency

Contracts in place at July 31, 2016 to hedge projected future financial cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts

July 312016(unaudited)

Currency
Swiss Franc-45,274-45,274

GB Pound-

39,265(8,294)30,971

Japanese Yen-

28,216-28,216US Dollar-

10,686(57,140)(46,454)

Other

-

9,436

(2,741)

6,695

Total

-

132,877(68,175)

64,701

All of the contracts in place at July 31, 2016 are scheduled to mature within 12 months,
except for several forward contracts to hedge future financial cash flows which mature
after July 31, 2017 and whose notional net amount is Euro 13.8 million (wholly consistingof forward sale contracts).
Contracts in place at January 31, 2016 to hedge projected future trade cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts (*)

Forwardpurchase
contracts (*)

January 31
2016(audited)

Currency
Hong Kong Dollar

99,881-(38,248)

61,633

US Dollar

145,421

21,063(74,789)

91,695Chinese Renminbi

11,837

121,849(43,643)

90,043

Japanese Yen

53,61153,875(7,561)

99,925

GB Pound

57,322

21,463(22,615)

56,170-46,451-46,451

Korean Won
Swiss Franc-

15,210(8,674)

6,536

Other currencies

14,21286,445(18,144)

82,513

Total

382,284

366,356(213,674)

534,966(*) Positive figures represent forward sales, negative figures represent forward purchases of currency

52

interim report 2016-sept21.indd 52

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Contracts in place at January 31, 2016 to hedge projected future financial cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts

January 31
2016(audited)
57,430Currency
Swiss Franc-

64,340(6,910)Brazilian Real

-

8,331

-

8,331

GB Pound-

49,915(6,544)43,371

Japanese Yen-

24,499-24,499US Dollar-

10,875(58,150)(47,275)

Other-

10,258(3,621)

6,637

Total

-

168,218(75,225)

92,993All contracts in place at the reporting date were entered into with leading financial
institutions and the Group does not expect any default by these institutions.
Interest rate transactions
The Group enters into Interest Rate Swaps agreements (IRS) in order to hedge the riskof interest rate fluctuations in relation to several bank loans. The key features of the IRS
agreements in place as at July 31, 2016 and January 31, 2016 are summarized as follows:
Interest Rate Swap (IRS) Agreement
Contract

Currency

Notional
amountInterest
rate

Hedged loan
fair value
Maturity
July 31
date
2016(unaudited)

Currency

Lending
institution

AmountExpiryEuro/000IntesaSanpaolo

47,66705/2030(amounts inthousandsof Euro)
IRS

Euro/000

51,3331.457%

23/05/2030(4,472)IRS

Euro/000

60,0000.105%

09/03/2019(754)

Euro/000

Unicredit

60,00003/2019

IRS

Euro/000

90,0000.013%

09/02/2021(1,402)

Euro/000

Unicredit

90,00002/2021IRS

GBP/000

58,0502.828%

31/01/2029(11,683)

GBP/000

Unicredit

58,05001/2029

IRS

Yen/000

500,000

1.875%

31/03/2017(36)

Yen/000

Mizuho500,000

03/2017

IRS

Yen/000

2,400,000

1.360%

30/03/2020(364)

Yen/000

Mizuho2,400,000

03/2020

Total(18,711)
Interest Rate Swap (IRS) Agreement

Contract

Currency

Notional
amountInterest
rate

Hedged loan
fair value
Maturity January 31
date
2016
(audited)

Currency

Lending
institution

AmountExpiry(3,299)Euro/000IntesaSanpaolo

53,16705/2030
02/2019(amounts inthousandsof Euro)
IRS

Euro/000

53,1671.457%

23/05/2030

IRS

Euro/000

60,0000.105%

09/03/2019(653)

Euro/000

Unicredit

60,000IRS

GBP/000

58,8802.828%

31/01/2029(8.450)

GBP/000

Unicredit

58,88001/2029

IRS

Yen/000

750,000

1.875%

31/03/2017(57)

Yen/000

Mizuho750,000

03/2017

IRS

Yen/000

2,700,000

1.360%

31/03/2017(350)

Yen/000

Mizuho2,700,000

03/2020

Total(12,809)

The IRS agreements convert the variable interest rates applying to a series of loans
into fixed interest rates. These agreements have been arranged with leading financial
institutions and the Group does not expect them to default.

PRADA Group

interim report 2016-sept21.indd 53

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

53

22/09/16 13:18

Movements on the cash flow hedge reserve included in Group shareholders’ equity,
before tax effects, since February 1, 2015, may be analyzed as follows:(amounts in thousands of Euro)
Closing balance at January 31, 2015 (audited)(47,630)

Change in the translation reserve-

Change in fair value, recognized in Equity(10,564)

Change in fair value, charged to Profit or Loss

49,471

Closing balance at January 31, 2016 (audited)(8,723)

Change in the translation reserve(13)

Change in fair value, recognized in Equity(23,212)

Change in fair value, charged to Profit or Loss

5,127

Closing balance at July 31, 2016 (unaudited)(26,821)

Changes in the reserve that are charged to the Profit or Loss are recorded underInterest and other financial income/(expense), net or as operating income and expenses
depending on the nature of the underlying.
10. Receivables from, and advance payments to, related parties, current and noncurrent
Receivables from, and advances to, related parties current are detailed below:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Prepaid sponsorship

11,686

13,626

Other receivables and advances

6,107

6,003

Receivables from and advances to related parties – current

17,793

19,629Receivables from, and advances to, related parties non-current are detailed below:(amounts in thousands of Euro)

Prepaid sponsorship
Deferred rental income – long-term
Loans
Receivables from and advances to related parties – non-current

July 312016(unaudited)

January 31
2016(audited)

2,946

3,164

816

1,632

-

703

3,762

5,499

Prepaid sponsorship, both current and non-current, regards the amount paid to Luna
Rossa Challenge srl in compliance with agreements in force at July 31, 2016. Further
information on related party transactions is provided in Note 36.

54interim report 2016-sept21.indd 54

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

11. Other current assets
Other current assets are detailed as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

VAT

44,091

59,917

Income tax and other tax receivables

78,227

100,838

Other assets

24,211

12,242

Prepayments

59,511

51,863

Deposits

5,576

4,811

211,616

229,671

July 312016(unaudited)

January 31
2016(audited)

Total

Other assets
Other assets are detailed as follows:(amounts in thousands of Euro)

Advertising contributions under license agreements

7,597

721

Advances to suppliers

2,591

1,282

Incentives for retail investments

5,596

4,628

Advances to employees

640

694

Other receivables

7,787

4,917

Total

24,211

12,242

July 312016(unaudited)

January 31
2016(audited)

Rental costs

23,145

19,391

Insurance

3,119

2,510

Design costs

12,071

13,914

Fashion shows and advances on advertising campaigns

5,890

3,416

Prepayments
Prepayments are detailed as follows:(amounts in thousands of Euro)

Consulting

58

198

Amortized costs on loans

1,219

1,020

Other

14,00911,414

Total

59,511

51,863

Prepaid design costs mainly include costs incurred for the conception and realization ofcollections that will generate revenue after the reporting period.
Deposits
Deposits mainly include guarantee deposits paid under commercial lease agreements.

PRADA Group

interim report 2016-sept21.indd 55

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

55

22/09/16 13:18

12. Property, plant and equipment
Changes in historical cost and accumulated depreciation in the last periods are shown
below:(amounts in thousands of Euro)Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

AssetsTotal
under historicalconstruction
cost

Historical cost

539,914132,086

1,172,742

385,326

140,851

212,866 2,583,784

Accumulated depreciation(61,974)(110,910)(659,440)(206,665)(70,578)- (1,109,566)

Net carrying amount at
January 31, 2015 (audited)

477,940

21,176513,302

178,661

70,273

212,866 1,474,218

Historical cost

718,020

148,645

1,289,672

431,639

166,561

96,744 2,851,281

Accumulated depreciation(78,189)(119,954)(810,955)(243,952)(80,452)- (1,333,502)

Net carrying amount at
January 31, 2016 (audited)

639,831

28,691

478,717

187,687

86,10996,744 1,517,779

Historical cost

709,371

152,867

1,355,581

438,832

168,765

89,430 2,914,846

Accumulated depreciation(85,092)(122,501)(859,989)(257,447)(84,670)- (1,409,699)

Net carrying amount at
July 31, 2016 (unaudited)

624,279

30,366495,592

181,385

84,09589,430 1,505,147

Changes in net carrying amount during the six months ended July 31, 2016 were as
follows:(amounts in thousands of Euro)

Balance atJanuary 31, 2016 (audited)
Change in consolidation area
AdditionsLand andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

AssetsTotal
under historicalconstruction
cost

639,831

28,691

478,717

187,687

86,10996,744 1,517,779

92

597

-

28

-

1

718

3,344

3,552

44,993

8,631

3,828

36,055

100,403(96,978)

Depreciation(8,747)(3,751)(59,986)(17,763)(6,731)-

Disposals(1,316)

(57)

(103)

(256)

(46)

(27)

(1,805)

Exchange differences(17,054)

(95)

6,041

(1,090)224

76(11,898)

8,129

1,429

28,6494,756

740(43,190)

513

-

-

(2,719)

(608)

(29)

(229)

(3,585)624,279

30,366495,592

181,385

84,095

Other movements
Impairment
Balance at
July 31, 2016 (unaudited)

89,430 1,505,147

Change in the consolidation area refers to the acquisition of the company Hipic Prod
Impex srl, a leather manufacturer.
The additions of the period mainly related to the strategy aimed at strengthening theretail network of the Group as well as to investments in the industrial area. In the six
months the Group completed important expansion and renovation projects, such as
the Prada store in Hong Kong (Canton Road) and Shangai (Plaza 66). The latter, together
with other important unveiling of the period such as the Prada stores in Moscow,
convey a new store concept that deftly combines the tradition and history of Pradawith the continuous research and evolution that has always characterized the brand.
The opening of the period were only those deemed strategic, like Zurich.
The impairment adjustments recorded in this period related to projects for the relocation
and renewal of retail premises, as well as to the closure of a few stores.

56

interim report 2016-sept21.indd 56

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

13. Intangible assets
Changes in historical cost and accumulated amortization in the last periods are shown
below:(amounts in thousands of Euro)

Trademarks

Goodwill

Store Lease
Acquisitions

Development
Software costs and otherintangibles

Assets inprogressTotal
historicalcost

Historical cost

402,604

545,054

227,81378,77565,011

18,813

1,338,070

Accumulated depreciation(125,372)(31,840)(121,321)(67,947)(48,286)-(394,766)

Net carrying amount at
January 31, 2015 (audited)

277,232

513,214

106,492

10,82816,725

18,813

943,304

Historical cost

401,503544,388236,655

86,75564,981

26,2481,360,530

Accumulated depreciation(136,265)(31,170)(139,145)(71,718)(49,994)-(428,292)

Net carrying amount at
January 31, 2016 (audited)

265,238

513,218

97,51015,037

14,987

26,248932,238

Historical cost

393,513544,142

238,145

94,29364,99822,3691,357,460

Accumulated depreciation(138,793)(29,244)(145,120)(74,594)(51,024)-(438,775)

Net carrying amount at
July 31, 2016 (unaudited)

254,720514,898

93,025

19,69913,97422,369918,685

Changes in net carrying amount during the six months ended July 31, 2016 were as
follows:(amounts in thousands of Euro)

Balance atJanuary 31, 2016 (audited)
Change in consolidation area
Additions
Amortization
Disposals

Trademarks

Goodwill

Store Lease
Acquisitions

265,238

513,218

97,510Development
Software costs and otherintangibles

15,037

14,987

Assets inprogress

Total Net
carrying
amount26,248932,238

2,377

-

2,375

-

-

2

-

87

263

-

1,009

13

3,215

4,587

(5,593)(13)(6,158)(2,933)(1,028)-(15,725)

-

-

-

-

-

-

-

(5,012)

(945)

1,125

28

-

38

(4,766)

Other movements

-

-

548

6,560

-

(7,132)(24)

Impairment

-

-

-

(2)

-

-

(2)

254,720514,898

93,025

19,69913,97422,369918,685

Exchange differences

Balance at
July 31, 2016 (unaudited)

The net carrying amount of Trademarks at the reporting date is analyzed in the following table:
July 312016(unaudited)

January 31
2016(audited)

Miu Miu

151,463

154,236

Church's

90,30097,323

Prada

3,742

3,823

Other

9,215

9,856

Total

254,720265,238(amounts in thousands of Euro)No impairment losses were recorded in relation to the Group’s trademarks in the year
ended July 31, 2016. “Other” includes trademark registration costs plus the Car Shoeand Luna Rossa trademarks.
PRADA Group

interim report 2016-sept21.indd 57

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

57

22/09/16 13:18

Total capital expenditure on Property, plant and equipment and Intangible assets forthe six months ended July 31, 2016 was Euro 108.1 million, as analyzed below.
July 312016(unaudited)

January 31
2016(audited)

Retail

70,256

175,019

Production and logistics

12,424

57,849Corporate

25,405104,027

Total

108,085

336,895(amounts in thousands of Euro)

Impairment test
As required by “IAS 36 Impairment of Assets” goodwill with an indefinite useful life
is not amortized. Instead, it is tested for impairment at least once a year. As at July
31, 2016, Goodwill amounted to Euro 514.9 million, detailed by Cash Generating Unit
(CGU) as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Italy Wholesale

78,35578,355Asia Pacific and Japan Retail311,936

311,936

Italy Retail25,85025,850Germany and Austria Retail

5,064

5,064

United Kingdom Retail

9,300

9,300

Spain Retail

1,400

1,400

France and Monaco Retail

11,70011,700

North America Retail and Wholesale

48,00048,000

Production division

6,291

3,667

Church’s

9,027

9,971

Marchesi Angelo

7,975

7,975

514,898513,218

Total

No evidence emerged during the period under review to suggest any indication of
impairment. However, as value in use is measured based on estimates, the Group
cannot guarantee that the value of goodwill or other intangible assets will not be
impaired in future.
14. Associated undertakings(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Investment in associated undertaking

2,138

2,138

Investment available for sale

14,551

15,201-

15

16,68917,354

Other investments
Total

Investment available for sale regards a 4.88% stake in the share capital of Sitoy Group
Holdings ltd, a company listed on Hong Kong Stock Exchange at July 31, 2016. The
value of the investment has been restated at fair value in line with the official quoted
share price on the Hong Kong Stock Exchange (Level I of the fair value hierarchy per“IFRS 7 Financial Instruments: Disclosures”). The change of Euro 0.6 million in fairvalue compared to January 31, 2016 has been recognized in a specific equity reserve,
58

interim report 2016-sept21.indd 58

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

net of the taxation effect (Euro 0.2 million). In these six months of 2016 the Group
accrued net dividends totaling HKD 4.8 million (Euro 0.6 million) from Sitoy Group
Holdings.
15. Other non-current assets
Other non-current assets are detailed as follows:
July 312016(unaudited)

January 31
2016(audited)

Guarantee deposits

73,98473,974

Deferred rental income

16,877

13,716

Pension fund surplus

7,041

7,778

Other long-term assets

18,74818,486

Total

116,650

113,954(amounts in thousands of Euro)At July 31, 2016, Other non-current assets includes Euro 7 million representing theactuarial valuation of the pension plans the Group has in the United Kingdom (Note 22).
Guarantee deposits are analyzed below by nature and maturity:
July 312016(unaudited)

January 31
2016(audited)

Stores

68,824

68,576

Offices

3,981

4,076

(amounts in thousands of Euro)Nature:Warehouses

181

180

Other

998

1,142

Total

73,98473,974
July 312016(unaudited)(amounts in thousands of Euro)
Maturity:
By 31.07.2018

15,783

By 31.07.2019

19,155

By 31.07.2020

15,050

By 31.07.2021

4,160

After 31.07.2021

19,836

Total

73,984

16. Bank overdrafts and Short-term loans(amounts in thousands of Euro)Bank overdrafts and commercial lines of credit

July 312016(unaudited)

January 31
2016(audited)

4

7

Short-term bank loans

272,994

216,522

Current portion of long-term loans

62,03854,043

(513)

(460)

334,523

270,112Deferred costs on loans
Total

Short-term bank loans mainly include a loan of Euro 160 million on the revolving line ofcredit of Euro 315 million arranged by PRADA spa in 2014 with a syndicate of banks.

PRADA Group

interim report 2016-sept21.indd 59

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

59

22/09/16 13:18

The revolving line of credit is subject to compliance with several covenants determinedbased on the PRADA spa Consolidated financial statements. Specifically, the ratio between
total net bank borrowing and EBITDA must not exceed 3 and the ratio between EBITDA
and total net interest expenses must exceed 4. Both covenants were respected at July
31, 2016.
Short-term bank loans also include a loan of Euro 30 million extended for an additional yearby PRADA spa with Mitsubishi Bank of Tokyo and repayable in the first half of 2017. The
remaining Euro 45 million part of short-term bank loans is made up of uncommitted lines
in Euro and JPY.
Short-term bank loans also include committed line of credit arranged by PRADA Japanco ltd which is also subject to a series of covenants based on the financial statementsof PRADA Japan co ltd; the covenants were respected in full at July 31, 2016. The total
amount of this loan at July 31, 2016 was Euro 26.1 million.
The current portion of long-term bank loans includes an amount of Euro 3.7 million at July
31, 2016 (Euro 3.7 million at January 31, 2016) regarding a mortgage loan by IntesaSanpaolo
to PRADA spa in 2014 and disbursed in 2015. This loan is secured by a mortgage on the
Milan property used as the Group’s Headquarters.
At July 31, 2016, the current portion of long-term bank loans also includes Euro 2 million(Euro 2 million at January 31, 2016) regarding a loan arranged by subsidiary Kenon Ltd withUnicredit Group in 2014 and secured by a mortgage on a property on Old Bond Street
London which the Group uses as one of the most strategic Prada stores in the world.
Short-term bank loans and the current portion of long-term loans are analyzed by currency
as follows:
July 312016(unaudited)

January 31
2016(audited)

Euro266,302207,631

Japanese Yen

64,09550,769Other currencies

4,635

12,165335,033

270,565(amounts in thousands of Euro)

Total

The Group mainly borrows at variable rates of interest and manages the interest raterisk by entering into hedging agreements as described in Note 9.
Considering hedges in place at the reporting date, some 48% of the current portion of
medium/long-term loans consisted of fixed rate loans (34% at January 31, 2016) withvariable rate loans making up the remaining 52% (66% at January 31, 2016).
Financial payables are stated net of amortized costs incurred to arrange the loans (Euro
0.5 million short term and Euro 1.5 million medium/long-term).
17. Payables to related parties – current
The current portion of payables to related parties is detailed as follows:(amounts in thousands of Euro)

Financial payables
Other payables
Payables to related parties – current

60

interim report 2016-sept21.indd 60

PRADA Group

July 312016(unaudited)

January 31
2016(audited)

5,674

4,858

645

386

6,319

5,244

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Financial payables to related parties regard two interest-free loans from the noncontrolling shareholders of the Group’s subsidiaries in the Middle East. A breakdownof payables to parent company and other related parties is provided in Note 36.
18. Trade payables
Trade payables are detailed as follows:
July 312016(unaudited)

January 31
2016(audited)

Trade payables – third parties

253,663266,701

Trade payables – related parties

11,713

14,998

Total

265,376

281,699(amounts in thousands of Euro)

Trade payables decreased by Euro 16.3 million, consistently primarily with seasonal
manufacturing trends and efficiencies achieved following the revision of industrial andlogistic processes.
The following table summarizes trade payables by maturity date:July 312016(unaudited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

Trade payables

265,376

235,764

13,386

5,684

1,000

1,322

8,220

Total

265,376

235,764

13,386

5,684

1,000

1,322

8,220

January 31
2016(audited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

Trade payables

281,699

246,525

16,418

10,190

1,912

670

5,984

Total

281,699

246,525

16,418

10,190

1,912

670

5,984

(amounts in thousands of Euro)(amounts in thousands of Euro)

Overdue (in days)

Overdue (in days)

19. Tax payables
Tax payables are detailed as follows:
July 312016(unaudited)

January 31
2016(audited)

Current income taxes

39,36049,700

VAT and other taxes

31,03631,044

Total

70,39680,744(amounts in thousands of Euro)PRADA Group

interim report 2016-sept21.indd 61

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

61

22/09/16 13:18

20. Other current liabilities
Other current liabilities are detailed as follows:(amounts in thousands of Euro)

July 312016(unaudited)

January 31
2016(audited)

Payables for capital expenditure

34,24654,132

Accrued expenses and deferred income

17,05016,379Other payables

75,967

71,760Total

127,263

142,271

July 312016(unaudited)

January 31
2016(audited)

Short term benefits for employees and other personnel

52,32158,533Customer advances

15,7184,563

Returns from customers

5,490

5,488

Other

2,438

3,176

Total

75,967

71,760July 312016(unaudited)

January 31
2016(audited)Long-term bank borrowings

458,225

391,942

Bonds

130,000

130,000

Deferred costs on loans(1,490)(1,467)

Total

586,735

520,475

Other payables are detailed as follows:(amounts in thousands of Euro)

21. Long-term financial payables
Long-term financial payables are analyzed as follows:(amounts in thousands of Euro)

During first six months of 2016 the Group arranged new medium/long-term bankloans for Euro 30 million with Banca Popolare di Milano and for Euro 90 million withUnicredit: these loans are subject to compliance with a number of covenants based on
the PRADA spa Consolidated financial statements. The covenants were all respected
at July 31, 2016.
The Group mainly borrows at variable rates of interest and manages the interest raterisk by entering into hedging agreements as described in Note 9.
At the reporting date, some 75% of non-current loans were at fixed rates of interest(66% at January 31, 2016) with variable rate loans making up the remaining 25% (34%
at January 31, 2016).

62

interim report 2016-sept21.indd 62

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Details of long-term borrowing at July 31, 2016 are provided below:
Borroweramount inthousands of Euro

Loan currency Lender

Expirydate

Interest rate
(1)

PRADA spa

130,000

Euro

Bonds

08/20182.750%PRADA spa

60,000Euro

Unicredit

03/20190.755%PRADA spa

47,667

Euro

Intesa SanPaolo

05/2030

2.737%PRADA spa

40,000Euro

Intesa SanPaolo

02/20190.608%PRADA spa

60,000Euro

Monte dei Paschi di Siena

12/2018

0.422%PRADA spa

25,000Euro

Intesa SanPaolo

12/20180.600%PRADA spa

90,000Euro

Unicredit

02/2021

0,963%PRADA spa

20,000Euro

Banca Popolare di Milano

03/20190,710%PRADA Japan Co. Ltd

4,180

Japanese Yen

Syndicate loan

07/20180.909%PRADA Japan Co. Ltd

18,287

Japanese Yen

Syndicate loan

01/20180.909%PRADA Japan Co. Ltd

15,675

Japanese Yen

Mizuho Bank

03/2020

1.360%PRADA Japan Co. Ltd

5,225

Japanese Yen

MUFG

03/20200.810%PRADA Japan Co. Ltd

2,613

Japanese Yen

Sumitomo Mitsui Trust

03/2020

1.180%PRADA Japan Co. Ltd

1,568Japanese Yen

SMBC

03/20180.455%

Kenon Ltd66,825

GB PoundUnicredit

01/20294.477%

Church & Co. ltd

1,185

GB Pound

HSBC

05/2018

2.088%

Total

588,225(1) the interest rates include the effect of any interest rate risk hedging transactions

Details of long-term borrowing at January 31, 2016 are provided below:
Borroweramount inthousands of Euro

Loan currency Lender

Expirydate

Interest rate
(1)

PRADA spa

130,000

Euro

Bonds

08/20182.750%PRADA spa

60,000Euro

Unicredit

03/20190.755%PRADA spa

49,500Euro

Intesa SanPaolo

05/2030

2.737%PRADA spa

40,000Euro

Intesa SanPaolo

02/20190.608%PRADA spa

60,000Euro

Monte dei Paschi di Siena

12/2018

0.558%PRADA spa

33,334Euro

Intesa SanPaolo

12/20180.600%PRADA Fashion
Commerce Ltd

20,889ChineseRenminbi

Mizuho12/2018

3.915%PRADA Japan Co. Ltd

1,890Japanese Yen

Mizuho Bank

03/20171.875%PRADA Japan Co. Ltd

5,444

Japanese Yen

Syndicate loan

07/2018

1.057%PRADA Japan Co. Ltd

18,147

Japanese Yen

Syndicate loan

01/2018

1.057%PRADA Japan Co. Ltd

15,879Japanese Yen

Mizuho Bank

03/2020

1.360%PRADA Japan Co. Ltd

5,293

Japanese Yen

MUFG

03/20200.810%PRADA Japan Co. Ltd

2,647

Japanese Yen

Sumitomo Mitsui Trust

03/2020

1.180%PRADA Japan Co. Ltd

1,966Japanese Yen

SMBC

03/20180.455%

Kenon Ltd74,990

GB PoundUnicredit

01/20294.477%

Church & Co. ltd

1,963

GB Pound

HSBC

05/2018

2.026%

Total

521,942(1) the interest rates include the effect of any interest rate risk hedging transactions

The Bonds are reported at a net amount of Euro 129.6 million (nominal amount of Euro
130 million as adjusted by Euro 0.4 million following application of the amortized cost
method). Their fair value at July 31, 2016 - as determined based on the official listed
price on the Irish Stock Exchange – is Euro 135.7 million.

PRADA Group

interim report 2016-sept21.indd 63

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

63

22/09/16 13:18

All bank borrowing is analyzed by security profile as follows.
July 312016(unaudited)

January 31
2016(audited)

Secured120,113130,119

Unsecured

803,148

662,395

Total

923,261

792,514(amounts in thousands of Euro)

Other than PRADA spa, no Group company had issued any debt securities at July 31,
2016.
22. Post-employment benefits
July 312016(unaudited)

January 31
2016(audited)

Post-employment benefits

50,19544,579Other long term employee benefits

14,09324,826

Total liabilities for long term benefits

64,28869,405

Post-employment benefit (pension plan surplus)

7,041

7,778

Net liabilities for long term benefits

57,247

61,627(amounts in thousands of Euro)

Liabilities and assets for post-employment benefits reported at July 31, 2016 totaled
Euro 50.2 million, net (Euro 44.6 million at January 31, 2016) and all were classed as
defined benefit plans. The pension plan surplus relates to Group companies operatingin the United Kingdom. It amounted to Euro 7 million at July 31, 2016 compared toEuro 7.8 million at January 31, 2016 and the change is only related to devaluation of the
GB Pound. This item is included in Other non-current assets, Note 15.
Post-employment benefits includes Euro 26.2 million (Euro 24.1 million at January
31, 2016) of liabilities recorded in the financial statements of Italian companies andEuro 24 million reported by non-Italian companies (Euro 20.5 million at January 31,2016). The Italian liabilities for post-employment benefits regard the “Trattamento diFine Rapporto” (hereinafter “TFR” i.e. staff leaving indemnity), a deferred employee
benefit that must be paid by Italian businesses and is linked to length of working
life and remuneration received. The present value of the liability as reported wasdetermined projecting the benefit, accruing under Italian law at the reporting date, tothe future date when the employment relationship will be terminated and discounting
it at the reporting date using the actuarial “Projected Unit Credit Method (PUCM)”.

64

interim report 2016-sept21.indd 64

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

The following table shows movements on liabilities for post-employment benefits inthe six months ended July 31, 2016.

(amounts in thousands of Euro)DefinedBenefit Plans
in Italy(TFR)

Balance at January 31, 2016 (audited)

DefinedBenefit Plans
in other Pension Funds
countries
UK(including
Japan)

Total

24,826

61,627

24,106

20,473

354

794

-

526

1,674

-

-

-

(89)

(89)

Actuarial (gains)/losses

2,409

-

-

(2,140)269

Benefits paid

(706)

(129)

-

(9,080)(9,915)

-

2,894

737

50

3,681

26,16324,032(7,041)

14,09357,247

Current service cost
Interest expenses (income)Exchange differences
Balance at July 31, 2016 (unaudited)(7,778)Otherlong-term
employeebenefits

The current service cost and the interest cost/(revenue) were recognized through profit
or loss. For Other long-term employee benefits only, actuarial differences were also
recognized through profit or loss.
The TFR liability was determined based on an independent appraisal by Federica
Zappari, an Italian registered actuary (no 1134) of Ordine Nazionale degli Attuari.
Other long-term employee benefits
Other long-term employee benefits come under the IAS 19 category “Other long-term
employee benefits” and relate to long-term retention and performance plans in favorof Group employees. As at July 31, 2016, their actuarial valuation, obtained using the
Projected Unit Cost Method, was Euro 14.1 million (Euro 24.8 million as at January
31, 2016), as determined based on an independent actuarial appraisal. The decrease
compared to January 31, 2016 was mainly related to benefits paid during the period
and amounting to Euro 9 million.
23. Provisions for risks and charges
Movements on provisions for risks and charges are summarized as follows:(amounts in thousands of Euro)

Balance at January 31, 2016 (audited)

Provision
for litigation

Provision fortax disputes

Other
provisions

Total

2,041

22,84644,346

69,233

Exchange differences

(16)

(2)

147

129

Reversals

(81)

-

-

(81)

Utilized

(225)

(79)

(970)

(1,274)

Increases

25

74

1,931

2,030

1,744

22,83945,45470,037

Balance at July 31, 2016 (unaudited)

Provisions represent the Directors’ best estimate of maximum contingent liabilities at
the reporting date. In the Directors’ opinion and based on the information available tothem as supported by the opinions of independent experts, the total amount provided
for risks and charges is reasonable considering the liabilities that might arise. During
the six months ended July 31, 2016, there were no significant developments regarding
litigation ongoing at January 31, 2016. Moreover, no new contingencies requiring
significant adjustment to the provisions for risks and charges reported at July 31, 2016,
emerged.

PRADA Group

interim report 2016-sept21.indd 65

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

65

22/09/16 13:18

24. Other non-current liabilities
Other non-current liabilities amount to Euro 174.3 million (Euro 161.3 million as atJanuary 31, 2016). They mainly regarded liabilities to be recognized on a straight-line
basis in relation to commercial lease costs.
25. Shareholders’ equity - Group
Group shareholders’ equity is as follows:
July 312016(unaudited)

January 31
2016(audited)

Share Capital

255,882

255,882

Share premium reserve

410,047410,047

Other reserves

2,007,438

1,959,304

Actuarial reserve(10,425)(8,161)

Fair value reserve

447

933

Cash flow hedge reserve(21,230)(7,100)Translation reserve

110,902138,547

Net income for the period

141,923

330,8882,894,984

3,080,340(amounts in thousands of Euro)

Total

Share capital
At July 31, 2016, some 80% of the share capital of PRADA spa was held by PRADA
Holding spa while the remainder was listed on the Main Board of the Hong Kong Stock
Exchange.
Share premium reserve
The share premium reserve of Euro 410 million is unchanged compared to January 31,
2016.
Translation reserve
Movements on this reserve relate to the translation of foreign currency financial
statements of consolidated companies. The reserve decreased from Euro 138.5 million
at January 31, 2016 to Euro 110.9 million. The negative change of Euro 27.6 million ismainly due to the devaluation of the GB Pound against the Euro.
Other reserves
At July 31, 2016, other reserves amount to Euro 2,007.4 million. They increased byEuro 48.1 million compared to January 31, 2016. The increase was mainly related toallocation of net income for the previous year (Euro 330.9 million) less the distributionof dividends to PRADA spa shareholders (Euro 281.5 million).
Net income for the period
The Group’s net income for the six months ended July 31, 2016 amounted to Euro
141.9 million (Euro 330.9 million for the twelve months ended January 31, 2016).
Capital gains tax in Italy
Capital gains realized on disposals of shares in the Company may be subject to tax
in Italy. Further details of Italian capital gains taxation are provided in the Tax Booklet
available on the Company’s website (www.pradagroup.com).

66

interim report 2016-sept21.indd 66

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

26. Shareholders’equity – Non-controlling interests
The following table shows movements on the Shareholders’ equity of Non-controllinginterests during the periods ended July 31, 2016 and January 31, 2016.
(amounts in thousands of Euro)

Opening balance

July 312016(unaudited)

January 31
2016(audited)

17,037

17,410Translation differences

164

29

Dividends(369)(3,228)Net income for the period

3,374

2,450

Actuarial reserve-

6

Capital injection in subsidiaries

109

409

Transactions with non-controlling shareholders

(249)

(39)

20,066

17,037

Closing balance

27. Net revenues
Consolidated net revenues are mainly generated by sales of finished products and arestated net of returns and discounts.
six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Net sales

1,529,267

1,801,356

Royalties

24,90523,077

1,554,172

1,824,433(amounts in thousands of Euro)

Total

A breakdown of net revenues by brand, distribution channel, geographical area andproduct is provided in the Financial review.
28. Cost of goods soldCost of goods sold is analyzed as follows:
six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Purchases of raw materials and production costs

297,339

510,894

Logistics costs, duties and insurance

65,404

100,628

Change in inventories

69,488(113,002)

Total

432,231498,520(amounts in thousands of Euro)The cost of goods sold for the six months ended July 31, 2016 amounted to Euro 432.2
million, or 27.8% of net revenues, slightly up from the 27.3% achieved in the same
six-month period of 2015.

PRADA Group

interim report 2016-sept21.indd 67

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

67

22/09/16 13:18

29. Operating expenses
Operating costs are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2016(unaudited)% of netrevenues

six months
ended July 31
2015(unaudited)% of netrevenues

Product design and development costs

64,484

4.1%

69,3083.8%Advertising and communications costs

76,594

4.9%

98,534

5.4%

Selling costs

682,02643.9%

751,977

41.2%

General and administrative costs

85,136

5.5%

112,880

6.2%

Total Operating expenses

908,24058.4%

1,032,699

56.6%

During the six-month period, management expanded the initiatives introduced last yearwith the result of limiting the pressure of the sales decline on the operating margin.
Operating expenses for the six months ended July 31, 2016 amounted to Euro 908.2
million, with a decrease of Euro 124.5 million compared to the same period of 2015.
As a percentage of net revenues, operating expenses raised from 56.6% in 2015 to
58.4%.
Selling costs decreased due to lower variable labor and lease costs, but also as a resultof measures adopted to run the retail operations more efficiently. Notwithstanding
such decrease, the incidence of selling costs on net revenues grew from 41.2% to43.9% compared to the previous six-month period.
Advertising and communications as a percentage on net revenues fell from 5.4% to4.9% in relation to a Euro 21.9 million decrease in their amount. The main differences
emerged from a concentration of special events in the first half of 2015 and a different
phasing of the media spending in the current year.
General and administrative costs decreased by Euro 27.7 million as a result of various
initiatives on discretionary expenditure items, like consultancies and general services;
their incidence on net revenues fell from 6.2% for the six months ended July 31, 2015
to 5.5% for the same period of 2016.
The following table shows the depreciation, amortization and impairment costs, laborcosts and rental costs included in operating costs.
six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Depreciation, amortization and impairment

109,733

139,796

Labor cost

285,347

301,518

Variable rent

168,941

180,735

Fixed rent

148,627

145,296

Total

712,648

767,345(amounts in thousands of Euro)

68

interim report 2016-sept21.indd 68

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

30. Interest and other financial income/(expenses), net
Interest and other financial income/(expenses), net may be analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Interest expenses on borrowings(7,722)(7,592)

Interest expenses IAS 19
Interest income

(89)

(58)

2,008

1,548

Exchange gains / (losses) – realized

2,943

3,930

Exchange gains/ (losses) – unrealized(2,615)(5,360)

Other financial income / (expenses)(1,281)(1,541)

Total(6,756)(9,073)The interest expenses on borrowings of the period were almost in line with theprevious period as the increase in the average bank debt was balanced by lower
borrowing rates, also thanks to the refinancing activities undertaken. Moreover, theimpact of exchange rates was neutral in 2016 given the mix of signs that characterized
the trends of the Euro against the other main currencies in the period.
31. Dividends from investments
As at July 31, 2016, the Group held a 4.88% interest (unchanged on prior year) in
Sitoy Group Holdings ltd, a company listed on Hong Kong Stock Exchange (HK: 1023).
During these six months of 2016 the dividends accrued from said company amounted
to Euro 558 thousand (Euro 1,562 thousand in the same period of last year (July 31,2015) and Euro 2,311 thousand for the twelve months of 2015).
32. Taxation
Current and deferred taxes are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Current taxation

49,047

114,514

Deferred taxation

13,159(20,375)

Income taxes

62,206

94,139The tax rate was 30%, compared to 32.9% for the same six-month period of last year.
The decrease is attributable primarily to favorable tax laws enacted in Italy and othercountries, although the geographical composition of the sources of taxable income
was less advantageous.

PRADA Group

interim report 2016-sept21.indd 69

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

69

22/09/16 13:18

Movements on net deferred tax assets and deferred tax liabilities are shown in thefollowing table:(amounts in thousands of Euro)

Opening balance

six months
ended
July 312016

twelve months
ended
January 31
2016

243,690239,349

Exchange differences

3,962

528

Deferred taxes on derivative instruments recorded in equity (cash flow hedges)

3,950(10,684)

145(1,200)

Deferred taxes on post-employment benefits recorded in equity (reserve for actuarial
differences)
Other movements

163

(466)

Deferred taxes for the period in income statement(13,159)

16,163

Closing balance

238,751

243,690

The following table shows deferred tax assets and liabilities classified by nature:
July 31, 2016
(amounts in thousands of Euro)Deferred tax
assetsInventories

January 31, 2016
Deferred tax
liabilities

Deferred tax
assetsDeferred tax
liabilities

127,326-

140,922-

Receivables and other assets

391

1,408

386

1,616

Useful life of non-current assets

63,784

9,518

60,255

9,848-

18,346-

20,725

Provision for risks / accrued expenses

50,9882,338

49,611

2,561

Non-deductible / taxable charges/income

8,538

597

12,653446

Tax loss carryforwards

3,396

-

3,809

-

Derivative financial instruments

5,699

35

1,800

35

Long term employee benefits

10,499

1,268

9,268

1,401

Other

1,884

244

1,868

250

Total

272,505

33,754

280,572

36,882

Deferred taxes due to acquisitions

33. Earnings and Dividends per share
Earnings per share
Earnings per share are calculated by dividing the net income attributable to shareholders
by the weighted average number of ordinary shares in issue.
six months
ended July 31
2016(unaudited)Group 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 31
2015(unaudited)

141,923,268

188,593,497

2,558,824,000

2,558,824,000

0.055

0.074

Dividends per share
During the six months ended July 31, 2016, the Company distributed dividends ofEuro 281,470,640, as approved by the Shareholders’ Meeting held on May 24, 2016 toapprove the financial statements for the year ended January 31, 2016.
The payment of the dividends and the related Italian withholding tax liability (Euro 14.6

70

interim report 2016-sept21.indd 70

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

million), arising from the application of the Italian ordinary withholding tax rate to thewhole amount of dividends paid to beneficial owners of the Company shares held
through the Hong Kong Central Clearing and Settlement System, was completed by
July 31, 2016.
34. Additional information
The average headcount by functional area is as follows:
six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Production

2,170

2,067

Product Design and Development

1,000

1,045

Advertising and Communications

119

120

Selling

7,925

8,110

General and Administrative services

1,014

1,023

Total

12,22812,365six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Production

53,666

51,837

Product Design and Development

34,122

36,170Advertising and Communications

6,517

7,190

Selling

194,889

210,402

General and Administrative services

49,81947,756

Total

339,013353,355

six months
ended July 31
2016(unaudited)

six months
ended July 31
2015(unaudited)

Wages and salaries

257,961

267,357

Post-employment benefits and other long-term benefits

12,512

16,840Social contributions

53,78555,056

Other

14,755

14,102

Total

339,013353,355(number of employees)

Employee remuneration
Employee remuneration by functional area is as follows:(amounts in thousands of Euro)

Employee remuneration by nature is as follows:(amounts in thousands of Euro)PRADA Group

interim report 2016-sept21.indd 71

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

71

22/09/16 13:18

Distributable reserves of parent company PRADA spa(amounts in thousands of Euro)

July 31, 2016
(unaudited)

Possibleutilization

DistributableamountSummary of utilization in the last
three years
Coverage oflossesDistribution ofdividends-

Share Capital

255,882

Share premium reserve

410,047

A, B, C

410,047-

Legal reserve

51,176B---

Other reserves

182,899

A, B, C

182,899--

Retained earnings

419,397

A, B, C387,940-(793,235)

Cash flow hedge reserve(10,940)--

Distributable amount

980,886(793,235)

A: share capital increase
B: coverage of losses
C: distributable to shareholders

Under Italian law (art. 2431 Codice Civile), the share premium reserve is fully
distributable as the legal reserve has reached an amount equal to 20% of share capital.
The retained earnings are non-distributable for an amount equal to Euro 20,516
thousand following the application of Art. 7 of Legislative Decree 38/2005 and for Euro
10,940 thousand being the coverage of the negative value of the Cash flow hedge
reserve.

72

interim report 2016-sept21.indd 72

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Exchange rates
The exchange rates against the Euro used to consolidate Statements of financial
position and Statement of Profit or Loss prepared in other currencies as at July 31,
2016 are shown below:
Currency

Average ratein prior six
month period

Closing rate

Opening rate

US Dollar

1.120

1.106

1.111

1.092

Canadian Dollar

1.469

1.379

1.464

1.536

GB Pound

0.792

0.723

0.844

0.764

Swiss Franc

1.095

1.049

1.082

1.114

Australian Dollar

1.509

1.433

1.478

1.539

Korean Won

1,312.197

1,225.970

1,246.830

1,318.600

Japanese Yen

132.250

122.404

133.887

114.830

Hong Kong Dollar

8.692

8.574

8.621

8.510

Singapore Dollar

1.531

1.497

1.502

1.555

Thai Baht

39.49236.72138.71238.973

Taiwan Dollar

36.44934.39535.43536.572

Russian Ruble

76.39062.70274.48882.847

Czech Koruna

27.04227.37127.03127.026

Macau Pataca

8.953

8.830

8.880

8.764

Chinese Renminbi

7.338

6.877

7.391

7.181

New Zealand Dollar

1.630

1.527

1.562

1.679

Malaysian Ringgit

4.532

4.065

4.520

4.530

Turkish Lira

3.260

2.905

3.352

3.237

Brazilian Real

4.008

3.385

3.648

4.429
20.005

Mexican Peso

20.32616.95921.029UAE Dirham

4.112

4.061

4.082

4.011

Ukrainian Hryvna

28.61624.80627.50127.42310.767

Moroccan Dirham

10.90010.80210.905

Kuwait Dinar

0.337

0.332

0.336

0.332

Danish Kronor

7.446

7.460

7.437

7.463

Swedish Kronor

9.334

9.333

9.567

9.348

Kazakhstani Tenge

382.878

205.404

391.280

397.880

Qatari Riyal

4.078

4.027

4.066

3.952

Indian Rupee

75.21469.76274.40774.104

Saudi Riyal

4.199

4.147

4.168

4.095

South African Rand

16.91013.34215.73017.493

Vietnamese Dong

24,496.816

23,831.722

24,231.000

23,922.500

Indonesian Rupiah

14,873.899

14,485.430

14,559.700

14,967.640

PRADA Group

interim report 2016-sept21.indd 73

Average rate

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

73

22/09/16 13:18

35. Remuneration of Board of Directors
Remuneration of the PRADA spa Board of Directors for the six months ended
July 31, 2016
(amounts in thousands of Euro)

Carlo Mazzi

Directors’fees

Remunerationand otherbenefits

Bonusesand other
incentives

Benefits
in kindPension,healthcare
and TFR
contributions

July 312016(unaudited)

510

-

-

39

8

557

Miuccia Prada Bianchi

6,000

-

-

-

-

6,000

Patrizio Bertelli

6,000

-

-

-

-

6,000

Alessandra Cozzani

25

100

-

7

68

200

Stefano Simontacchi

13

-

-

-

-

13

Maurizio Cereda

8

-

-

-

-

8

Gian Franco Oliviero Mattei

75

-

-

-

-

75

Giancarlo Forestieri

35

-

-

-

5

40

Sing Cheong Liu

35

-

-

-

7

42

12,701

100

-

46

88

12,935

Total

Remuneration of the PRADA spa Board of Directors for the six months ended
July 31, 2015
(amounts in thousands of Euro)

Carlo Mazzi

interim report 2016-sept21.indd 74

Remunerationand otherbenefits

Bonusesand other
incentives

Benefits
in kindPension,healthcare
and TFR
contributions

July 312015(unaudited)

510

-

-

42

2

554

Miuccia Prada Bianchi

4,352

2,675

-

-

-

7,027
7,102

Patrizio Bertelli

4,352

1,500

1,250

-

-

Donatello Galli

22

203

125

20

88

458

Alessandra Cozzani

22

95

56

6

42

221

Gaetano Micciché

22

-

-

-

-

22

Gian Franco Oliviero Mattei

75

-

-

-

-

75

Giancarlo Forestieri

32

-

-

-

5

37

Sing Cheong Liu

32

-

-

-

6

38

9,419

4,473

1,431

68

143

15,534

Total

74

Directors’fees

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

36. Related party transactions
The Group enters into transactions with parties that can be qualified as related
according to “IAS 24 Related Party Disclosures”. These transactions mainly refer tothe sale and purchase of goods, supply of services, the granting and receipt of loans
as well as sponsorship, lease and franchise agreements. These transactions take place
on an arm’s length basis.
The following tables show the impact of related party transactions in terms of statementof financial position balances at the reporting date and the total of transactions with anincome statement impact.
Statement of financial position amounts at July 31, 2016 (unaudited)(amounts in thousands of Euro)

Progetto Prada Arte Srl
HMP Srl

PayablesPayablesto parent
to parent
Trade companies companies
payables and related and relatedparties –parties –current non current

Other
Liabilities

277

-

816

(503)

-

-

-

8

-

-

-

-

-

-

Al Tayer Group LLC

-

-

-

6

-

-

-

Al Tayer Insignia LLC

-

-

-

59

2,412

-

-

Danzas LLC - UAE

-

-

-

2

23

-

-

DFS Hawaii

-

-

-

742

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

-

26

23

-

-

Luna Rossa Challenge 2013 Srl

64

11,687

2,946

8

37

-

-

-

-

-

2

-

-

-

Al Tayer Motors
Chora srl

-

5,848

-

3,109

-

-

-

DFS DFS Cotai limitada

44

-

-

330

334

-

-

Al Tayer Trends

13

-

-

-

-

-

-

-

-

-

2

-

-

-

Al Sanam Rent a Car LLC
Peschiera Immobiliare srl

-

89

-

164

-

-

-

Premiata Srl

5

-

-

361

-

-

-

La Mazza Srl

61

-

-

597

-

-

-

Friuli 64 Srl

-

-

-

134

-

-

-

-

77

-

-

-

-

-

148

-

-

4,034

-

-

-

SPELM SA
Conceria Superior SpA
PRADA HOLDING SpA
Fratelli Prada SpA

684

-

-

-

-

-

-

26,956

-

-

1,280

228

-

-

PRA 1 Srl

-

92

-

64

-

-

-

Petranera Srl

2

-

-

-

-

-

-

Perseo Srl

130

-

-

1,296

-

-

-

Rubaiyat Modern Lux.Pr.Co.Ltd

-

-

-

-

3,262

-

-

Members of the Board of
Directors of PRADA spa

-

-

-

-

-

-

2,734

Relatives of members of theBoard of Directors

-

-

-

-

-

-

86

28,392

17,793

3,762

11,713

6,319

-

2,820

Total at July 31, 2016

PRADA Group

interim report 2016-sept21.indd 75

Receivables Receivablesfrom andfrom andadvances
advancesTradeto parent
to parent
receivables companies companies
and related and relatedparties – parties – noncurrent
current

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

75

22/09/16 13:18

Statement of financial position amounts at January 31, 2016 (audited)(amounts in thousands of Euro)

Receivables Receivablesfrom andfrom andadvances
advancesTradeto parent
to parent
receivables companies companies
and related and relatedparties – parties – noncurrent
current

PayablesPayablesto parent
to parent
Trade companies companies
payables and related and relatedparties –parties –current non current

Other
Liabilities

STICHTING Prada (ex Stiching
Fondazione Prada)

(1)

-

-

-

-

-

-

Progetto Prada Arte Srl

(12)

-

703

(503)

-

-

-

Progetto Prada Arte Srl(Galleria) (*)

-

-

1,632

-

-

-

-

HMP Srl

8

-

-

-

-

-

-

Al Tayer Group LLC

-

-

-

4

-

-

-

Al Tayer Insignia LLC

-

-

-

21

2,455

-

-

Danzas LLC - UAE

-

-

-

-

37

-

-

DFS Hawaii

-

-

-

660

-

-

-

DFS New Zealand Limited

-

-

-

35

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

-

44

-

-

-

Luna Rossa Challenge 2013 Srl

56

13,626

3,164

7

26

-

-

Al Tayer Motors

-

-

-

1

-

-

-

Chora Srl

-

5,848

-

4,279

-

-

-

DFS DFS Cotai limitada

54

-

-

905

-

-

-

Al Tayer Trends

14

-

-

-

-

-

-

Al Sanam Rent a Car LLC

-

-

-

2

-

-

-

Peschiera Immobiliare srl

-

-

-

64

-

-

-

Premiata Srl

63

-

-

476

-

-

-

La Mazza srl

63

-

-

823

-

-

-

Friuli 64 srl

-

-

-

152

-

-

-

SPELM SA

-

75

-

-

-

-

-

Conceria Superior S.p.A.

2

-

-

3,083

-

-

-

PRADA HOLDING S.P.A.

502

-

-

-

-

-

-

Fratelli Prada SpA
PRA 1 S.r.l.

24,118

-

-

1,496

322

-

-

-

80

-

144

-

-

-

Perseo srl

21

-

-

1,222

-

-

-

Rubaiyat Modern Lux.Pr.Co.Ltd

123

-

-

2,083

2,404

-

-

Members of the Board of
Directors of PRADA spa

-

-

-

-

-

-

2,652

Relatives of members of theBoard of Directors

-

-

-

-

-

-

72

25,011

19,6295,499

14,998

5,244

-

2,724

Total at January 31, 2016(*) The non-current receivable of Euro 1,632 thousand recognized in relation to Progetto Prada Arte srl represents deferred
rental income upon application of “IAS 17 Leases” to the temporary business partnership between PRADA spa and Progetto
Prada Arte srl.

76

interim report 2016-sept21.indd 76

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Statement of Profit or Loss for the six months ended July 31, 2016 (unaudited)(amounts in thousands of Euro)

Progetto Prada Arte Srl

Net revenues

Cost ofgoods sold--

Progetto Prada Arte Srl (Galleria) (*)

General,admin. &selling costs(income)Royalties
incomeInterest
incomeInterest
expense

(1)

-

-

-

624

Al Tayer Group LLC

-

-

21

-

-

-

Al Tayer Insignia LLC

-

-

125

-

-

-

Danzas LLC – UAE

-

282

23

-

-

-

DFS Hawaii

-

-

2,159

-

-

-

DFS New Zealand Limited

-

-

119

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

143

-

-

-

Luna Rossa Challenge 2013 Srl

2

-

5,822

-

-

-

Al Tayer Motors

-

-

5

-

-

32

Chora Srl

-

-

888

-

-

DFS DFS Cotai limitada

-

-

2,191

-

-

-

Al Sanam Rent a Car LLC

-

-

5

-

-

-

Peschiera Immobiliare Srl

-

-

270

-

-

-

Premiata Srl

-

583

-

-

-

-

La Mazza Srl

-

536

-

-

-

-

Friuli 64 Srl

-

-

285

-

-

-

-

-

228

-

-

-

191

6,219

27

-

-

-

SPELM SA
Conceria Superior SpA
PRADA HOLDING SpA
Fratelli Prada SpA

-

-

(129)

-

-

-

14,097

385

(280)

428

-

-

Petranera Srl

-

-

(2)

-

-

-

PABE-RE LLC.

-

-

8,336

-

-

-

Perseo Srl

-

1,339

-

-

-

-

Relative of PRADA spa Director

-

-

311

-

-

-

14,2909,344

21,754428-

32

PRA 1 Srl

Total at July 31, 2016

584(*) This amount includes non-monetary expense in the form of derecognition of deferred rental income of Euro 816 thousand
recognized in previous years in relation to Progetto Prada Arte srl in application of “IAS 17 Leases” to the temporary business
partnership contract between PRADA spa and Progetto Prada Arte srl (such contract was terminated on April 8, 2016).

PRADA Group

interim report 2016-sept21.indd 77

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

77

22/09/16 13:18

Statement of Profit or Loss for the six months ended July 31, 2015 (unaudited)
General,admin. &selling costs(income)Royalties
incomeInterest
incomeInterest
expense

-

(3)

-

-

-

-

857

-

-

-

260

273

-

9

-

Net revenues

Cost ofgoods sold

EXHL Italia Srl-

STICHTING Prada

16-(amounts in thousands of Euro)

Progetto Prada Arte srl
Progetto Prada Arte srl (Galleria) (*)(756)

HMP Srl

-

-

13

-

-

-

Al Tayer Group LLC

-

-

31

-

-

-

Al Tayer Insignia LLC

-

-

242

-

-

-

Danzas LLC - UAE

-

642

83

-

-

-

Al Tayer Travels

-

-

45

-

-

-

(2)

-

2,141

-

-

-

DFS New Zealand Limited

-

-

153

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

172

-

-

-

DFS Hawaii

DFS Cotai limitada

-

-

3,528

-

-

-

13

-

6,693

-

-

-

Al Tayer Motors

-

-

3

-

-

-

Chora Srl

-

-

1,499

-

-

-

Al Sanam Rent a Car LLC

-

-

5

-

-

-

Peschiera Immobiliare Srl

-

-

251

-

-

-

Premiata Srl

-

1,914

1

-

-

-

La Mazza Srl

-

903

8

-

-

-

Fin_Reta srl

-

125

-

-

-

-

Pelletteria Reta Srl

-

53

1

-

-

-

Friuli 64 Srl

-

-

371

-

-

-

SPELM SA

-

-

238

-

-

-

Gran Caffè snc

-

4

4

-

-

-

165

-

(858)

165

-

-

Conceria Superior spa-

18,543

76

-

-

-

PRADA HOLDING spa (Main
Shareholder)

-

-

(199)

-

-

-

F.lli Prada spa (franchising)

14,244

94

(717)

406

-

-

Luna Rossa Challenge 2013 Srl

Rubaiyat Modern Lux. Prod. Ltd

F.lli Prada spa (Galleria) (**)

1,200

PRA 1 Srl

-

-

558

-

-

-

Isarcodue Srl

-

(30)

-

-

-

-

PABE-RE LLC.

-

-

745

-

-

-

Perseo Srl

-

(68)

-

-

-

-

Relative of Director of PRADA spa

-

-

427

-

-

-

Total at July 31, 2015 (unaudited)

14,43622,44017,085571

9-(*) This amount includes non-monetary income in the form of deferred rental income of Euro 249 thousand recognized inrelation to Progetto Prada Arte srl in application of “IAS 17 Leases” to the temporary business partnership contract between
PRADA spa and Progetto Prada Arte srl.
(**) This amount includes non-monetary expense in the form of derecognition of deferred rental income of Euro 1,587 thousand
recognized in relation to Fratelli Prada spa in application of “IAS 17 Leases” to the temporary business partnership contract
between PRADA spa and Fratelli Prada spa (such contract was terminated on March 31,2015.

The above tables report information on transactions with related parties in accordancewith “IAS 24 Related Party Disclosures”. As stated below, some of these transactions
fall within the application of the Hong Kong Stock Exchange Listing Rules.
The transactions with related party PABE-RE LLC refer to the transaction between
PABE-RE LLC and PRADA Japan co ltd in relation to the rental contract for the Aoyama
Building in Tokyo. The transactions reported for the six months ended July 31, 2016
fall within the scope of application of Chapter 14A of the Hong Kong Stock Exchange
Listing Rules as they were qualified as continuing connected transactions subject

78

interim report 2016-sept21.indd 78

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

to reporting and disclosure but exempted from independent shareholders’ approvalrequirements. As requested by the Listing Rules, comprehensive disclosure of thesecontinuing connected transactions is contained in the PRADA spa Announcement
dated July 15, 2015.
The transactions with related party Fratelli Prada spa – franchising refer to transactions
between the PRADA Group and Fratelli Prada spa in relation to the franchisingagreement regarding the Prada stores in Milan. The transactions reported for the six
months ended July 31, 2016 fall within the scope of application of Chapter 14A ofthe Hong Kong Stock Exchange Listing Rules as they were qualified as continuingconnected transactions subject to reporting and disclosure but exempted fromindependent shareholders’ approval requirements. As requested by the Listing Rules,
comprehensive disclosure of these continuing connected transactions is contained in
the PRADA spa Announcement dated January 29, 2014.
The transactions with related party Progetto Prada Arte srl - Galleria refer to thetransactions between the PRADA Group and Progetto Prada Arte srl in relation to thetemporary business partnership agreement regarding the use by the latter of part of
the Galleria Vittorio Emanuele II property in Milan to carry out cultural activities. The
transactions reported refer to the period from February 1 to April 8, 2016, following thetermination agreement signed by the parties on the same date, details of which werereported in the PRADA spa Announcement of April 8, 2016.
The transactions with related party Luna Rossa Challenge 2013 srl reported for thesix months ended July 31, 2016 fall within the scope of application of Chapter 14Aof the Hong Kong Stock Exchange Listing Rules as they were qualified as connectedtransactions subject to reporting and announcement but exempted from theindependent shareholders’ approval requirement. As requested by the Listing Rules,
comprehensive disclosure of these connected transactions was included in the PRADA
spa Announcements dated February 27, 2014.
Unlike the “non-exempt continuing connected transactions” and the “non-exempt
connected transactions” no other transaction reported in the unaudited Interim
condensed consolidated financial statements falls under the definition of “connectedtransaction” or “continuing connected transaction” provided by Chapter 14A of the
Listing Rules or, if it does fall under the definition of “connected transaction” or“continuing connected transaction” in terms of said Chapter 14A, is exempted from
reporting, disclosure and independent shareholders’ approval requirements again
under Chapter 14A.

PRADA Group

interim report 2016-sept21.indd 79

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

79

22/09/16 13:18

37. Commitments
Operating leases
At July 31, 2016 and January 31, 2016, operating lease commitments by maturity datewere as follows:(amounts in thousands of Euro)Within a year

six months
ended
July 31, 2016
(unaudited)

twelve months
ended
January 31, 2016
(audited)

445,902435,241

After between one year and five years

1,209,626

1,218,665

After more than five years

1,083,145

1,053,674

Total

2,738,673

2,707,580

Operating lease commitments for the 2016 reporting period include Euro 2,671 million
regarding lease agreements for retail premises (Euro 2,636 million for 2015).
The amounts recognized in the profit or loss in relation to lease agreements were as
follows:(amounts in thousands of Euro)six months
ended July 31,
2016(unaudited)

six months
ended July 31,
2015(unaudited)

Fixed minimum lease expenses

149,790

146,511

Variable lease expenses

168,941

180,735

Total

318,731327,246

Some Group companies are required to pay lease expenses based on a fixed percentageof net sales.
At July 31, 2016 and January 31, 2016, future rental income under current operatingleases for properties owned by the Group was analyzed by maturity as follows:(amounts in thousands of Euro)six months twelve months
ended
ended
July 31, 2016 January 31, 2016
(unaudited)(audited)

Within a year

7,605

6,776

After between one year and five years

28,99523,709After more than five years

18,713

19,286

Total

55,31349,771Other commitments
At July 31, 2016, the Group had no significant binding purchase commitments.

80

interim report 2016-sept21.indd 80

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

38. Historical Statement of Profit or Loss and Statement of financial position
highlights
January 31
2016(amounts in thousands of Euro)

January 31
2015

January 31
2014

January 31
2013

January 31
2012

Net revenues

3,547,771

3,551,696

3,587,347

3,297,219

2,555,606

Gross margin

2,567,565

2,550,579

2,648,649

2,376,541

1,828,025

Operating income (EBIT)

502,893

701,551

939,237

889,781

628,935

Group net income

330,888

450,730

627,785625,681431,929

Total assets

4,756,555

4,738,877

3,888,292

3,385,279

2,943,568

Total liabilities

1,659,178

1,720,730

1,186,752

1,054,787

1,112,601

Total Group shareholders’ equity

3,080,340

3,000,737

2,687,554

2,320,022

1,822,743

39. Consolidated companies

Company

Share
Capital%(000s of Interest
LC)

Registeredoffice andprincipal
country ofoperations

EUR

255,882

Milan, IT

Localcurrency

Date ofincorporation/
establishment

Main business

Italy
PRADA Spa
Artisans Shoes Srl (*)

EUR

1,000

66.70

Montegranaro, IT 09/02/1977

Production

IPI Logistica Srl (*)

EUR

600

100.00Milan, IT

26/01/1999

Services

PRADA Stores Srl (*)

EUR

520

100.00Milan, IT

11/04/2001

Retail/Services

31/01/1992

Distribution/Retail/Services

Church Italia Srl

EUR

51

100.00Milan, IT

Marchesi Angelo Srl (*)

EUR

23

80.00

Milan, IT

10/07/2013

Confectionary

Montenapoleone 9 Srl (*)

EUR

1,000

98.00

Milan, IT

22/04/2015

Confectionary

PRADA Group

interim report 2016-sept21.indd 81

Group Holding/
Production/Distribution

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

81

22/09/16 13:18

Localcurrency

Company

Share
Capital%(000s of Interest
LC)

Registeredoffice andprincipal
country ofoperations

Date ofincorporation/
establishment

Main business

EuropePRADA Retail UK Ltd

GBP

5,000

100.00London, UK

07/01/1997

RetailPRADA Germany Gmbh

EUR

215

100.00

Munich, GE

20/03/1995

Retail/Services

PRADA Austria Gmbh

EUR

40

100.00Vienna, AT

14/03/1996

RetailPRADA Spain Sl

EUR

240

100.00Madrid, ES

14/05/1986

RetailPRADA Retail France Sas

EUR

4,000

100.00Paris, FR

10/10/1984

RetailPRADA Hellas Sole
Partner Llc (*)

EUR

2,850

100.00Athens, GR

19/12/2007

RetailPRADA Monte-Carlo Sam

EUR

2,000

100.00Monte-Carlo,FR

25/05/1999

Retail

29/07/1994

Trademark Owner/
Services

PRADA Sa (*)

EUR

31

100.00

Luxembourg,
LU

PRADA Company Sa

EUR

3,204

100.00

Luxembourg,
LU

12/04/1999

Service

PRADA Far East Bv (*)

EUR

20

100.00Amsterdam,
NL

27/03/2000

Sub-Holding

Church Denmark Aps

DKK

50

100.00Copenhagen,
DK

13/03/2014

RetailChurch Holding UK Ltd (*)

GBP78,126100.00

Northampton,UK

22/07/1999

Sub-Holding

Church France Sas

EUR

241

100.00Paris, FR

01/06/1955

Retail

16/07/1987

RetailChurch UK Retail Ltd

GBP

1,021

100.00

Northampton,
UK

Church’s English Shoes
Switzerland Sa

CHF

100

100.00

Lugano, CH

29/12/2000

RetailChurch & Co. Ltd

GBP

2,811

100.00

Northampton,
UK

16/01/1926

Sub-Holding/Production/
Distribution

Church & Co. (Footwear) Ltd

GBP

44

100.00

Northampton,
UK

06/03/1954

Trademark Owner

Church English Shoes Sa

EUR

75

100.00Brussels, BE

25/02/1963

RetailPRADA Czech Republic
Sro (*)

CZK

2,500

100.00Prague, CZ

25/06/2008

RetailPRADA Portugal
Unipessoal Lda (*)

EUR

5100.00Lisbon, PT

07/08/2008

RetailPRADA Rus Llc (*)

RUB

250

100.00

Moscow, RU

07/11/2008

RetailChurch Spain Sl

EUR

3

100.00Madrid, ES

06/05/2009

RetailPRADA Bosphorus Deri
Mamuller Ltd Sirketi (*)

TRY65,500100.00Istanbul, TR

26/02/2009

RetailPRADA Ukraine Llc (*)

UAH

30,000100.00Kiev, UA

14/10/2011

Retail100.00Amsterdam,
NL

07/07/2011

RetailChurch Netherlands Bv

82

interim report 2016-sept21.indd 82

EUR

18

Church Ireland Retail Ltd

EUR

50

100.00Dublin, IE

20/11/2011

RetailChurch Austria Gmbh

EUR

35

100.00Vienna, AT

17/01/2012

RetailPrada Sweden Ab

SEK

500

100.00Stockholm, SE 18/12/2012

RetailChurch Footwear Ab

SEK

100

100.00Stockholm, SE 18/12/2012

RetailPrada Switzerland Sa (*)

CHF

24,000100.00

Lugano, CH

28/09/2012

RetailPrada Kazakhstan Llp (*)

KZT500,000

100.00

Almaty, KZ

24/06/2013

RetailKenon Ltd

GBP

84,000100.00London, UK

07/02/2013

Real Estate

Tannerie Limoges Sas (*)

EUR

1,200

60.00

Isle, FR

19/08/2014

Production

Prada Denmark Aps (*)

DKK

20,412100.00Copenhagen,
DK

19/05/2015

RetailPrada Finnish Oy (*)

EUR

2.5

100.00Helsinki, FI

09/11/2015

RetailPrada Belgium Sprl (*)

EUR

800

100.00Brussels, BE

04/12/2012

RetailHipic Prod Impex Srl

RON

200

50.00

Sibiu, RO

15/04/2016

Production

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Localcurrency

Company

Share
Capital%(000s of Interest
LC)

Registeredoffice andprincipal
country ofoperations

Date ofincorporation/
establishment

Main business

152,211

New York, US

25/10/1993

Services/Distribution/
RetailAmericas
PRADA USA Corp. (*)

USD

100.00TRS Hawaii Llc

USD

400

55.00

Honolulu, US

17/11/1999

Duty-free stores

PRADA Canada Corp. (*)

CAD

300

100.00Toronto, CA

01/05/1998

Distribution/Retail

08/09/1930

Church & Co. (USA) Ltd

USD

85

100.00

New York, US

Post Development Corp (*)

USD

45,138100.00San Francisco, US 18/02/1997

Real estate

RetailPRADA Retail Mexico, S. de
R.L. de C.V. (*)

MXN

269,058

100.00

Mexico City,MX

12/07/2011

RetailPRADA Brasil Importação e
Comércio de Artigos de Luxo
Ltda (*)

BRL

198,000

100.00

Sao Paulo, BR

12/04/2011

Retail

PRM Services
S. de R.L. de C.V. (*)

MXN

7,203

100.00

Mexico City,MX

27/02/2014

Services

PRADA Panama Sa (*)

PAB

30

100.00Panama, PA

15/09/2014

Retail

25/09/2014

Retail01/04/2016

RetailPRADA Retail Aruba Nv (*)

USD

2,012

100.00

Oranjestad,AW

PRADA St. Barthelemy Sarl (*)

EUR

320

100.00

Gustavia, BL

PRADA Asia Pacific Ltd

HKD

3,000

100.00Hong Kong, HK 12/09/1997

Retail /Distribution/
Services

PRADA Taiwan Ltd

TWD

3,800

100.00Hong Kong, HK 16/09/1993

RetailRetailDuty-free stores

Asia-Pacific and Japan

PRADA Retail Malaysia Sdn.
Bnd.

MYR

1,000

100.00

Kuala Lumpur,
23/01/2002
MY

TRS Hong Kong Ltd

HKD

500

55.00

Hong Kong, HK 23/02/2001

PRADA Singapore Pte Ltd

SGD

1,000

100.00Singapore, SG 31/10/1992

RetailTRS Singapore Pte Ltd

SGD

500

55.00

Singapore, SG 08/08/2002

Duty-free stores

PRADA Korea Llc

KRW

8,125,000

100.00Seoul, KR

27/11/1995

RetailPRADA (Thailand) co Ltd

THB

372,000

100.00

Bangkok, TH

19/06/1997

RetailPRADA Japan co Ltd

JPY

1,200,000

100.00Tokyo, JP

01/03/1991

RetailTRS Guam Partnership

USD

1,095

55.00

Guam, GU

01/07/1999

Duty-free stores

TRS Saipan Partnership

USD

1,405

55.00

Saipan, MP

01/07/1999

Duty-free stores

TRS New Zealand ltd

NZD

100

55.00

Wellington, NZ 04/11/1999

Duty-free stores

PRADA Australia Pty Ltd

AUD

13,500100.00

Sydney, AU

21/04/1997

RetailShanghai,
CN Limited
Liability
Company

09/02/2004

RetailPRADA Trading (Shanghai)co LtdRMB

1,653

100.00TRS Okinawa KK

JPY

10,000

55.00

Tokyo, JP

21/01/2005

Duty-free stores

100.00Shanghai,
CN Limited
Liability
Company

31/10/2005

RetailPRADA Fashion Commerce(Shanghai) co Ltd

474,950

Church Japan Company Ltd

JPY

31,525100.00Tokyo, JP

17/04/1992

RetailChurch Hong Kong Retail Ltd

HKD

1,000

100.00Hong Kong, HK 04/06/2004

RetailChurch Singapore Pte. Ltd

SGD

500

100.00Singapore, SG 18/08/2009

RetailPRADA Hong Kong P.D. Ltd (*)

HKD

11,000100.00Hong Kong, HK 15/12/2011

Service company

Prada Dongguan
Trading Co., Ltd

RMB

8,500

100.00

Dongguan,
CN Limited
Liability
Company

28/11/2012

Service company

Church Footwear(Shanghai) Co., Ltd

RMB

21,900100.00Shanghai,
CN Limited
Liability
Company

05/12/2012

RetailPrada New Zealand Ltd

NZD

3,500

100.00Wellington, NZ 05/07/2013

RetailPRADA India Fashion
Private Ltd

INR

100

100.00

Mumbai, IN

30/09/2013

RetailPRADA Vietnam Limited
Liability Company

VND

21,906,570

100.00Hanoi City, VN 09/09/2014

RetailPT PRADA Indonesia

IDR

3,023,844

100.00

Jakarta, ID

15/10/2014

Distribution

PRADA Macau Co Ltd

MOP

25

100.00Macau, MO

22/01/2015

RetailPRADA Group

interim report 2016-sept21.indd 83

RMB

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

83

22/09/16 13:18

ShareCapital%(000s of Interest
LC)

Registeredoffice andprincipal
country ofoperations

Date ofincorporation/
establishment

Main business

AED

18,000Jebel Ali Free
Zone, AE

25/05/2011

Distribution/Services

Localcurrency

Company

Middle East
PRADA Middle East Fzco (*)

60.00

PRADA Emirates Llc (**)

AED

300

49.00

Dubai, AE

04/08/2011

RetailPRADA Kuwait Wll (**)

KWD

50

49.00

Kuwait city,
KW

18/09/2012

RetailPRADA Retail Spc (*)

QAR

15,000100.00Doha, QA

03/02/2013

RetailPRADA Saudi Arabia Ltd (*)

SAR

26,66675.00

Jeddah, SA

02/07/2014

RetailPRADA Maroc Sarlau (*)

MAD

95,000100.00Casablanca,
MA

11/11/2011

RetailPRADA Retail South Africa pty
Ltd (*)

ZAR

50,000100.00

Sandton, ZA

06/09/2014

RetailOther countries(*) Company owned directly by PRADA spa(**) Company consolidated based on definition of control per IFRS 10

Companies not included in scope of consolidation:
Percentage
direct interest at
January 31, 2016

Percentage
direct interest at
January 31, 2015

Note

Consolidation method

PAC Srl (in liquidation)

49.00

49.00

Associate

Equity method

Pelletteria Ennepì Srl

40.00

-

Associate

Equity method

Company

40. Information on Non-Controlling Interests
Financial information on the companies not entirely controlled by the Group is provided
below, as required by IFRS 12. The amounts below are stated before consolidation
adjustments.
Financial statements at July 31, 2016:
Company(amounts inthousands)

Percentage
interest heldLocal
currency

Total assets

Total equity

Net
revenues

Net
Dividends
income/ paid to non(loss)
controllingfor year shareholders

Artisans Shoes Srl

67.00

EUR

26,645

7,878

26,909928

369

TRS Hawaii Llc

60.00

USD

9,215

4,364

8,319

(48)

-

TRS Hong Kong Ltd

55.00

HKD

818

746

-

(52)

-

TRS Singapore Pte
Limited

55.00

SGD

3,160

2,602

1,664

286

-

TRS Guam

55.00

USD

6,747

5,685

6,108

988

-

TRS Saipan

55.00

USD

2,978

2,636

1,996

312

-

TRS New Zealand Pty Ltd

55.00

NZD

3,234

2,306

1,322

181

-

TRS Okinawa

55.00

JPY

926,165

695,343638,859

83,426-TRS Hong Kong Macau

55.00

MOP

150,185

84,663

110,443

26,677-

Prada United ArabEmirates (*)

49.00

AED

166,135(28,151)

98,682(12,706)-

Prada Middle East FZCO

60.00

AED

296,068

194,295

123,410

23,411-

Prada Kuwait (*)

49.00

KWD

6,230

(252)

4,463

151

-

Prada Saudi Arabia

75.00

SAR

85,892

14,31933,849(2,353)-

Marchesi Angelo Srl

80.00

EUR

1,109

368

864

(552)

-

Montenapoleone 9 Srl

98.00

EUR

2,570

(129)

1,368

(2,038)-Tannerie Limoges S.A.S.

60.00

EUR

6,028

648

1,142

(223)

-

Hipic Prod Impex Srl (*)

50.00

EUR

5,967

(3,170)

-

(935)

-

(*) Company consolidated based on definition of control per IFRS 1084interim report 2016-sept21.indd 84

PRADA GroupInterim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

22/09/16 13:18

Financial statements at January 31, 2016:
Company(amounts inthousands)

Percentage
interest heldLocal
currency

Total assets

Total equity

Net
revenues

Net
Dividends
income/ paid to non(loss)
controllingfor year shareholders

Artisans Shoes Srl

67.00

EUR

27,556

8,059

56,9801,126

TRS Hawaii Llc

60.00

USD

8,486

4,413

17,153

(581)

1,018
-

TRS Hong Kong Ltd

55.00

HKD

978

797

-

(91)

22,500TRS Singapore Pte
Limited

55.00

SGD

3,012

2,315

3,669

498

-

TRS Guam

55.00

USD

6,000

4,697

12,536(1,069)-TRS Saipan

55.00

USD

2,982

2,324

5,925

681

-

TRS New Zealand Pty Ltd

55.00

NZD

2,625

2,125

3,407

466

-

TRS Okinawa

55.00

JPY

928,706

611,917

1,615,184

226,390-

TRS Hong Kong Macau

55.00

MOP

104,465

57,987325,079

45,175-

Prada United ArabEmirates (*)

49.00

AED

175,547(15,445)

224,236(35,096)-

Prada Middle East
FZCO

60.00

AED

319,288

170,885

289,841

55,846-

Prada Kuwait (*)

49.00

KWD

6,031

(403)

8,537

(486)

-

Prada Saudi Arabia

75.00

SAR

110,618

16,67221,011(6,762)-

Marchesi Angelo Srl

80.00

EUR

1,865

920

3,380

175

-

Montenapoleone 9 Srl

98.00

EUR

2,584

(1,149)1,533(2,149)-Tannerie Limoges S.A.S.

60.00

EUR

5,281

108

610

(666)

-

(*) Company consolidated based on definition of control per IFRS 10

At the date of these consolidated financial statements, there were no significant
restrictions on the Group’s ability to access or utilize its assets and settle its liabilities.
In 2011, PRADA spa and Al Tayer Insignia llc signed an agreement with the objective ofdeveloping the Prada and Miu Miu brands in the retail business in the Middle East. The
agreement gives PRADA spa a call option on up to 20% of the share capital of PRADA
Middle East Fzco. At the reporting date, PRADA spa is not reasonably certain that it
can estimate the likelihood that the option will be exercised and, therefore, measure
the fair value of the option
41. Events after the reporting period
Nothing to mention.

PRADA Group

interim report 2016-sept21.indd 85

Interim Financial Report 2016 - Notes to the Interim condensed consolidated financial statements

85

22/09/16 13:18

interim report 2016-sept21.indd 86

22/09/16 13:18