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

PRADA spa
(Stock Code: 1913)

ANNOUNCEMENT
OF THE INTERIM RESULTS FOR THE SIX MONTHSENDED JULY 31, 2015

- Net revenues were Euro 1,824.4 million, recording an increase of 4.2%
compared with the six months ended July 31, 2014 (-5.9% at constantexchange rates)- Retail net sales were Euro 1,552.4 million, up by 7.6% compared withthe six months ended July 31, 2014 (-3.3% at constant exchange rates)- EBIT was Euro 293.2 million, representing a margin of 16.1% on net
revenues- Group’s net income amounted to Euro 188.6 million- Net financial position standing negative at Euro 259.7 million as at
July 31, 20151

Consolidated results for the six months ended July 31,
2015
The Board of Directors (the “Board”) of PRADA S.p.A. (the “Company”, or“PRADA spa”) announces the unaudited Consolidated results of the Company
and its subsidiaries (collectively, the “Group”) for the six months ended July
31, 2015, together with the unaudited comparative figures for the same six
months period ended July 31, 2014. The following financial information has
been prepared in accordance with the International Financial ReportingStandards (“IFRS”) as adopted by the European Union. The Consolidated
results of the Group for the year ended January 31, 2015, were audited by
Deloitte & Touche S.p.A.

Key financial informationsix
monthsended
July 312015(unaudited)

twelvemonthsended
Jan 312015(audited)sixmonthsended
July 312014(unaudited)

1,824,433
440,05424.1%
293,21416.1%
188,5930.074
176,235
63,374

3,551,696
954,24926.9%
701,55119.8%
450,730
0.176
449,735
483,597

1,751,315
492,83528.1%
373,158
21.3%
244,848
0.096
289,616
209,186

4.2%-10.7%-21.4%-23.0%-23.0%-69.7%

12,365

11,962

11,824-

Key information from the Statement offinancial position(amounts in thousands of Euro)

as at
July 312015(unaudited)

as at
Jan 312015(audited)

as atJuly 312014(unaudited)change vs
Jan 31
2015

Net operating working capital
Net invested capital
Net financial position surplus/(deficit)
Group shareholders’ equity

747,574
3,238,133(259,749)
2,960,909

563,4092,829,359
188,7883,000,737

510,217
2,683,766(1,366)
2,666,923

184,165
408,774(448,537)(39,828)

Key information from the Income
statement(amounts in thousands of Euro)Net revenues
EBITDAEBITDA %EBITEBIT %Net income of the Group
Earnings per share (Euro)
Capital expenditure
Net operating cash flows
Average number of employees

2%change vsJuly 312014

Highlights for the six months ended July 31, 2015
Net revenues for the first six months of fiscal year 2015 amounted to Euro
1,824.4 million, up by 4.2% compared to the same period of last year atcurrent exchange rates and down by 5.9% at constant exchange rates. The
increase of 7.6% achieved by the retail channel was consistent all along thesix months and drove the consolidated growth as the wholesale businessdeclined. Sales expansion, essentially driven by the footwear and clothing
divisions, benefited also from the persistent weakness of the Euro, which
fostered the flow of tourists in the Eurozone and led to an increase in thevalue of sales made outside the Eurozone. At the same time, results sufferedfrom the ongoing slowdowns in the Asia Pacific region. In particular, thecontractions recorded in Hong Kong and Macau had a significant impact on
performances for the period, both in terms of sales and margins.
EBIT for the six months ended July 31, 2015, amounted to Euro 293.2 million,
or 16.1% on net revenues, down by 21.4% compared to the Euro 373.2 million
achieved in the first six months of 2014 when the incidence on net revenues
was 21.3%. During the first half of 2015 the management carried on with theactions commenced at the end of 2014, focusing on improving the industrial
and operative processes; these actions resulted in a visible improvement in
profitability compared to the first quarter of 2015 limiting further pressure
on margins. At the same time, despite major part of the retail network
expansion plan is done, the Group made further investments in the DOS
structure to complete the project with some improvement and renovation,
while further increasing the Group’s capacity and control over the supply
chain. Cost containment actions have been carried at all levels, including
advertising and promotion expenses. Nevertheless, some important
initiatives were put in place to promote and strengthen the identity of thebrands so, besides advertising campaigns and retail events, Prada continued
to support the unique initiatives that distinguish the Group for its ability tointeract with worlds other than fashion, namely art and culture. Among themost significant projects supported in the period, it is worth mentioning theunveiling of the new Milan headquarters of the Prada Foundation, an art
museum built on an overall surface of 19,000 m2 and designed by OMA, thearchitectural firm led by Rem Koolhaas. The resonance of this project has
been extremely wide all over the world and the location has been since thebeginning a “must see” for all visitors in Milan.
At July 31, 2015, the Net financial debt of the Group is Euro 259.7 million,
from a net positive position of Euro 188.8 million recorded at January 31,
2015. The reduction was attributable, first, to payment of dividends to
PRADA spa shareholders and, second, to the use of cash to support theinvestment plan for the period and finance increases in net operating
working capital.

3

Consolidated income statement for the six months ended July
31, 2015(amounts in thousands of Euro)Net revenues
Cost of goods soldsix months
ended
% on
July 31
Net2015 revenues(unaudited)

Note

3

six months
ended
% on
July 31
Net2014 revenues(unaudited)

1,824,433(498,520)

100.0%-27.3%

1,751,315(493,715)

100.0%-28.2%

1,325,913

72.7%

1,257,600

71.8%(1,032,699)-56.6%(884,442)-50.5%

293,21416.1%

373,158

21.3%(9,073)-0.5%(9,492)

-0.5%

1,562

0.1%

455

-

285,703

15.7%

364,12120.8%(94,139)-5.2%(113,075)-6.5%

191,56410.5%

251,046

14.3%

2,971

0.2%

6,198

0.3%

Net income – Group

188,593

10.3%

244,848

14.0%

Depreciation, amortization andimpairment

146,840

8.0%

119,677

6.8%

EBITDA

440,05424.1%

492,835

28.1%

Gross margin
Operating expenses

4

EBIT
Interest and other financial
income/(expenses), net
Dividends received from third parties

5

Income before taxes
Taxation

6

Net income for the period
Net income – Non-controlling interests

Basic and diluted earnings per share(in Euro per share)

7

0.074

4

0.096

Consolidated income statement for the three months ended
July 31, 2015
(amounts in thousands of Euro)Net revenues
Cost of goods soldthreemonths
% on
ended
Net
July 31revenues
2015(unaudited)

Note

3

three
months
% on
ended
Net
July 31revenues
2014(unaudited)

996,244(270,646)

100.0%-27.2%

973,575(291,471)

100.0%-29.9%

Gross margin

725,598

72.8%

682,104

70.1%

Operating expenses(523,102)-52.5%(465,288)-47.8%

EBIT

202,49620.3%

216,816

22.3%(7,139)-0.7%(3,452)

-0.4%

-

-

-

-

Income before taxes

195,357

19.6%

213,364

21.9%

Taxation(64,139)-6.4%(71,743)-7.4%

Net income for the period

131,218

13.2%

141,621

14.5%

1,371

0.1%

2,104

0.2%

Net income – Group

129,847

13.0%

139,517

14.3%

Depreciation, amortization andimpairment

74,847

7.5%

62,072

6.4%

EBITDA

277,34327.8%

278,888

28.7%

Interest and other financial
income/(expenses), net
Dividends received from third parties

Net income – Non-controlling interests

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

as at
July 312015(unaudited)

as atJanuary 31
2015(audited)

98

549,943
347,493778,907
8,025

708,966
346,284
654,545
6,287

10

7,843

3,240

12

193,057
1,885,268

180,633
1,899,955

11
11

1,520,168
946,936
25,769296,606
101,580
1,408

1,474,218
943,304
30,529280,983
91,353
1,106

19,765

17,4292,912,232
4,797,500

2,838,922
4,738,877

379,153
3,124
378,826
105,510
37,627
7
147,423
1,051,670

263,335
3,083
437,420
133,91456,772
21
220,480
1,115,025

428,829
65,90467,85940,811
153,539
10,504
767,446
1,819,116
255,882
2,345,464
170,970
188,5932,960,909
17,475
4,797,500

255,20385,754
63,695
41,634
128,752
17,283
13,384605,705
1,720,730
255,882
2,163,129
130,996
450,730
3,000,737
17,4104,738,877

833,598
3,745,830

784,930
3,623,852

NoteAssetsCurrent assets
Cash and cash equivalents
Trade receivables, net
Inventories, net
Derivative financial instruments - current
Receivables from, and advance payments to,related parties - current
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Associated undertakings
Deferred tax assets
Other non-current assets
Derivative financial instruments non-current
Receivables from, and advance payments to,related parties – non-current
Total non-current assets
Total Assets
Liabilities and Shareholders’ equity
Current liabilities
Bank overdrafts and short-term loans
Payables to related parties - current
Trade payables
Current tax liabilities
Derivative financial instruments - current
Obligations under finance leases - current
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term financial payables
Post-employment benefits
Provision for risks and charges
Deferred tax liabilities
Other non-current liabilities
Derivative financial instruments non-current
Payables to related parties – non-current
Total non-current liabilities
Total Liabilities
Share capital
Total other reserves
Translation reserve
Net profit for the period
Total Shareholders’ equity – Group
Shareholders’ equity – Non-controlling interests
Total Liabilities and Shareholders’ equity

13
10

14
15

16

17

14

Net current assets
Total assets less current liabilities

6

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

Number of
SharesShare
CapitalTranslation
Reserve

Fair Value
Share
Cash flow
Total
Actuarial Available for
Otherpremium
hedge
Other
Reservesalereserves
reserve
reserve
Reserves
Reserve

Balance at January
31, 2014 (audited)

2,558,824,000

255,882(49,438)410,047

3,699(11,452)

Allocation of 2013
net income

-

-

-

-

-

-

-

Dividends

-

-

-

-

-

-

- (281,471) (281,471)

-

-

-

-

-

-

-

(2,459)(2,459)

-

-

-

-

-

-

-

-

-

-

-

22,693-(6,844)

-

4,531

-

-

-

-

-

-

(1,929)--2,558,824,000

255,882(26,745)

410,047(3,145)(13,381)

Acquisition ofMarchesi Angelo srl
Capital injection in
subsidiaries
Comprehensive
income for the six
months(recyclable to P&L)
Comprehensive
income for the six
months(not recyclable to
P&L)
Balance at July 31,
2014 (unaudited)
Acquisition ofMarchesi Angelo srl
Dividends
Capital injection in
subsidiaries
Comprehensive
income for the six
months(recyclable to P&L)
Comprehensive
income for the six
months(not recyclable to
P&L)
Balance at January
31, 2015 (audited)

4,108 1,446,923 1,853,325

627,785

EquityNonattributacontrolble toling
owners ofinterests
Group

Net
income627,785 2,687,554

Total
Equity13,986 2,701,540

-

-

-

-

(281,471)(6,763)(288,234)-(2,459)107(2,352)

-

-

1,589

1,589

(2,313)244,848

265,2286,558

271,786(1,929)-(1,929)-(1,929)627,785 (627,785)

8,639 1,790,778 2,192,938

244,848 2,666,923

15,477 2,682,400

-

-

-

-

-

-

-

(7)

(7)

-

(7)

-

(7)

-

-

-

-

-

-

-

-

-

-

-

(2,615)(2,615)

-

-

-

-

-

-

-

-

-

-

-

536

536

-

-

157,741-(32,178)

-

2,476

-

(29,702)205,882

333,9214,015

337,936

-

-

-

-

-

(100)

-

-

(100)

-

(100)

(3)

(103)

2,558,824,000

255,882

130,996410,047(35,323)(13,481)

11,115 1,790,771 2,163,129

450,730 3,000,737

17,410 3,018,147

Allocation of 2014
net income

-

-

-

-

-

-

-

-

-

-

Dividends

-

-

-

-

-

-

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

-

-

-

-

-

-

-

(719)

(719)

-

(719)

(39)

(758)

-

-

-

-

-

-

-

-

-

-

-

409

409

-

-

39,974-

16,044-(3,571)-

12,473

188,593

241,040

2,923

243,963

-

-

-

-

-

1,322

-

-

1,322

-

1,322

-

1,322

2,558,824,000

255,882

170,970410,047(19,279)(12,159)

Transactions with
non-controllinginterests
Capital injection in
subsidiaries
Comprehensive
income for the six
months(recyclable to P&L)
Comprehensive
income for the six
months(not recyclable to
P&L)
Balance at July 31,2015 (unaudited)7

450,730

450,730 (450,730)

7,544 1,959,311 2,345,464

188,593 2,960,909

17,475 2,978,384

Condensed statement of consolidated cash flows
six months
ended
July 312015(unaudited)

six months
ended
July 312014(unaudited)

63,374

209,186

Cash flows generated/(utilized) by investing activities(235,889)(227,670)

Cash flows generated/(utilized) by financing activities

1,902(62,839)(170,613)(81,323)(amounts in thousands of Euro)Net cash flows from operating activities

Change in cash and cash equivalents, net of bank overdrafts

Statement of consolidated comprehensive income
six months twelve months
ended
ended
July 31January 31
2015
2015
(unaudited)(audited)(amounts in thousands of Euro)Net income for the period – Consolidated

six months
ended
July 312014(unaudited)

191,564

459,218

251,046

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

39,92739,927

182,519
182,519

23,05323,053

Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax impact

21,734(5,690)16,044(52,817)
13,795(39,022)(9,279)2,435(6,844)

Change in Fair Value reserve
Tax impact
Change in Fair Value reserve less tax impact(4,761)
1,190(3,571)

9,343(2,336)
7,007

6,041
(1,510)
4,531

1,823
(501)
1,322

(2,338)306(2,032)(2,033)104(1,929)245,286

607,690

269,857

Comprehensive income for the period – Noncontrolling Interests

2,923

10,5706,558

Comprehensive income for the period – Group

242,363

597,120

263,299A) Items recyclable to P&L:

B) Item not recyclable to P&L:
Change in Actuarial reserve
Tax impact
Change in Actuarial reserve less tax impact
Consolidated comprehensive income for the period8Notes to the consolidated results for the six months
ended July 31, 2015
1.

Presentation of PRADA GroupPRADA spa (the “Company”), together with its subsidiaries (jointly the“Group”), is listed on the Hong Kong Stock Exchange (HKSE code: 1913). 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 andaccessories. Moreover, in 2014, Prada acquired the 80% of Angelo Marchesi
srl, owners of the historic Milanese pastry shop founded in 1824. The Group
operates, under licensing agreements, in the eyewear and fragrances
sectors. Its products are sold in 70 countries worldwide through a networkthat includes 605 Directly Operated Stores (“DOS”) at July 31, 2015, and aselect network of luxury department stores, independent retailers andfranchise stores. The Company is a joint-stock company, registered anddomiciled in Italy. Its registered office is in Via Antonio Fogazzaro 28, Milan,
Italy.

2.

Basis of preparation

The financial information for the six months ended July 31, 2015, included inthis Announcement refers to the Group of companies controlled by PRADA
spa, holding company of the PRADA Group (the "Group"), and is based on its
unaudited Interim condensed consolidated financial statements. Such Interim
results for the six months ended July 31, 2015, were prepared on aconsistent basis compared to the Consolidated financial statements of theGroup for the twelve months ended January 31, 2015, with the exception of
the revised IFRS issued by the International Accounting Standard Board(“IASB”) below reported. IFRS also refer to all the International AccountingStandards (“IAS”) and all the interpretations of the International Financial
Reporting Interpretation Committee (“IFRIC”), previously named theStanding Interpretations Committee (“SIC”).
Amendments issued by the IASB, endorsed by the European Union andapplicable to the PRADA Group from February 1, 2015
The following amendments to IFRS have been endorsed by the European
Union and are applicable to the PRADA Group effective from February 1,
2015. These changes did not have any significant impact on the figures
reported in this Announcement:








Amendments to “IFRS 3 Business Combinations”;
Amendments to “IFRS 13 Fair Value Measurement”;
Amendments to “IAS 40 Investment Property”;
Amendments to “IAS 19 Employee Benefits”;
Amendments to “IFRS 2 Share-based Payment”;
Amendments to “IFRS 8 Operating Segments”;
Amendments to “IAS 16 Property, Plant and Equipment”;
9 Amendments to “IAS 24 Related Party Disclosure”;
 Amendments to “IAS 38 Intangible Assets”;

10

3.

Net revenues

Net revenues for the six months ended July 31, 2015
(unaudited)
six months
ended
July 312015(unaudited)(amounts in thousands of Euro)six months
ended%
July 312014 change(unaudited)

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

286,210 15.9%
379,178 21.0%
264,912 14.7%
610,266 33.9%
195,902 10.9%
61,379
3.4%
3,509
0.2%
1,801,356 100.0%

286,808 16.6%
361,539 20.9%
233,452 13.5%
619,221 35.8%
175,262 10.1%
51,930
3.0%
2,688
0.1%
1,730,900 100.0%

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

1,461,493 81.2%
293,919 16.3%
38,379
2.1%
5,514
0.3%
2,051
0.1%
1,801,356 100.0%

1,431,114 82.7%
2.1%
256,031 14.8% 14.8%
35,560
2.0%
7.9%
6,516
0.4% -15.4%
1,679
0.1% 22.2%
1,730,900 100.0%
4.1%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

288,229 16.0%
1,107,761 61.5%
370,415 20.6%
34,9511.9%
1,801,356 100.0%

275,779 15.9%
1,110,715 64.2%
314,423 18.2%
29,9831.7%
1,730,900 100.0%

Net sales by distribution channelDOS
Independent customers and franchises
Total

1,552,393 86.2%
248,963 13.8%
1,801,356 100.0%

1,442,161 83.3%
7.6%
288,739 16.7% -13.8%
1,730,900 100.0%
4.1%

Net sales
Royalties

1,801,356
23,077

1,730,900
20,415

Total net revenues

1,824,433 100.0%

11

98.7%
1.3%

-0.2%
4.9%
13.5%
-1.4%
11.8%
18.2%
30.5%
4.1%

4.5%
-0.3%
17.8%
16.6%
4.1%

98.8%
1.2%

4.1%
13.0%

1,751,315 100.0%

4.2%

Net revenues for the three months ended July 31, 2015
(unaudited)
three months
ended
July 312015(unaudited)(amounts in thousands of Euro)

three months
ended%
July 312014 change(unaudited)

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

183,122 18.6%
215,463 21.9%
153,850 15.6%
301,201 30.6%
97,1299.9%31,382
3.2%
2,443
0.2%
984,590 100.0%

189,855 19.7%
209,778 21.8%
139,981 14.6%
311,853 32.4%
82,874
8.6%
26,313
2.7%
1,795
0.2%
962,449 100.0%

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

799,193 81.2%
162,201 16.5%
19,129
1.9%
3,186
0.3%
881
0.1%
984,590 100.0%

790,194 82.1%
1.1%
148,845 15.5%
9.0%
18,369
1.9%
4.1%
3,852
0.4% -17.3%
1,189
0.1% -25.9%
962,449 100.0%
2.3%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

160,925 16.4%
591,021 60.0%
213,579 21.7%
19,065
1.9%
984,590 100.0%

157,093 16.3%
593,568 61.7%
194,260 20.2%
17,5281.8%
962,449 100.0%

Net sales by distribution channelDOS
Independent customers and franchises
Total

803,034 81.6%
181,556 18.4%
984,590 100.0%

744,350 77.3%
7.9%
218,099 22.7% -16.8%
962,449 100.0%
2.3%

Net sales
Royalties

984,590
11,654

962,449
11,126

Total net revenues

996,244 100.0%

12

98.8%
1.2%

-3.5%
2.7%
9.9%
-3.4%
17.2%
19.3%
36.1%
2.3%

2.4%
-0.4%
9.9%
8.8%
2.3%

98.9%
1.1%

2.3%
4.7%

973,575 100.0%

2.3%

Number of storesas atJuly 31
2015
DOS
franchises

as atJanuary 31
2015
DOS
franchises

as atJuly 312014
DOS
franchises

Prada
Miu Miu
Church’s
Car Shoe

372
174
54
5

27
10
-

362
169
55
8

27
8
-

342
162
54
8

27
7
-

Total

605

37

594

35

566

34

as at
July 31
2015
DOS
franchises

as atJanuary 31
2015
DOS
franchises

as atJuly 312014
DOS
franchises

ItalyEuropeAmericas
Asia PacificJapan
Middle East
Africa

52
167
113
181
72
18
2

5
27
5
-

51
167
110
175
70
17
4

6
3
22
4
-

52
159
100
164
71
17
3

6
4
21
3
-

Total

605

37

594

35

566

34

4.

Operating expenses(amounts in thousands of Euro)six months
ended
July 312015(unaudited)% on netrevenues

six months
ended
July 312014(unaudited)% on netrevenues

69,30898,534751,977
112,880

3.8%
5.4%
41.2%
6.2%

69,68676,535639,366
98,855

4.0%
4.4%
36.5%
5.6%

1,032,699

56.6%

884,44250.5%

Product design and development costs
Advertising and communication costs
Selling costs
General and administrative costs
Total

5.

Interest and other financial income/(expenses), net
six months
ended
July 312015(unaudited)

six months
ended
July 312014(unaudited)

Interest expenses on borrowings
Interest expenses IAS 19
Interest income
Exchange gains / (losses) – realized
Exchange gains/ (losses) – unrealized
Other financial income / (expenses)(7,592)
(58)
1,548
3,930
(5,360)(1,541)(6,020)
(101)
1,713
3,031
(6,707)(1,408)

Total(9,073)(9,492)(amounts in thousands of Euro)

13

6.

Taxation
six months
ended
July 312015(unaudited)

six months
ended
July 312014(unaudited)

Current taxation
Deferred taxation

114,514(20,375)

123,157(10,082)

Income taxes

94,139113,075(amounts in thousands of Euro)

7.

Earnings and dividends per share

Earnings per share
Earnings per share are calculated by dividing the net income attributable toGroup’s shareholders by the weighted average number of ordinary shares inissue.
six months
ended
July 312015(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 312014(unaudited)

188,593,497 244,847,587
2,558,824,000 2,558,824,000
0.074

0.096

Dividend per share
During the six months ended July 31, 2015, the Company distributed
dividends of Euro 281,470,640, as approved by the Shareholders’ Meeting heldon May 26, 2015, to approve the financial statements for the year ended
January 31, 2015.
The payment of the dividends and the related Italian withholding tax liability(Euro 14.6 million), arising from the application of the Italian ordinary
withholding tax rate to the whole 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, 2015.

14

8.

Inventories, net
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Raw materials
Work in progress
Finished products
Allowance for obsolete and slow moving inventories

128,806
31,176
683,060(64,135)

106,843
40,786571,115(64,199)

Total

778,907654,545(amounts in thousands of Euro)

The increase in inventories was generally due to the different approach toreplenishment and shipping which started in the last few months of 2014 andto the additional 11 DOS (net) since January 31, 2015.
Movements on the allowance for obsolete and slow moving inventories areanalyzed as follows:Rawmaterials

Finished
Products

Total

26,79837,40164,199

6
-

6
(76)

12
(76)

26,80437,33164,135

as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Trade receivables from third parties
Allowance for bad and doubtful debts
Trade receivables from related parties

322,342(7,907)33,058317,147(7,784)36,921

Total

347,493346,284(amounts in thousands of Euro)
Balance at January 31, 2015 (audited)
Exchange differences
Utilization
Balance at July 31, 2015 (unaudited)9.

Trade receivables, net(amounts in thousands of Euro)

Trade receivables from related parties are made up of receivables due from
Fratelli Prada spa, a retail company owned by the majority shareholders ofparent company PRADA Holding spa, for Euro 24.6 million (Euro 29.3 million
at January 31, 2015) and relating to the sale of finished products, services
recharges and royalties as provided by the franchising agreement signed withthe said related party.
The allowance for doubtful accounts was determined on a specific basis
considering all information available at the date the financial statements
were prepared. It is revised periodically to bring receivables as close as
possible to their fair value.

15

Movements during the period may be analyzed as follows:(amounts in thousands of Euro)

as at
July 312015(unaudited)

as atJanuary 31
2015(audited)

7,784

10,432

104
112
(58)
(35)

17
463
109
(3,173)
(64)

7,907

7,784

Opening balance
Change in scope of consolidation
Exchange differences
Increases
Utilized
Reversals
Closing balance

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

as at
July 31
Current
2015(unaudited)

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

Trade receivables

355,400 279,619

28,60813,528

9,721

2,296

21,628

Total

355,400 279,619

28,60813,528

9,721

2,296

21,628(amounts inthousands of Euro)

as at
January 31,
Current
2015(audited)

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

Trade receivables

354,068 283,878

28,279

11,202

10,0293,840

16,840

Total

354,068 283,878

28,279

11,202

10,0293,840

16,840The following table contains a summary, by due date, of trade receivables
less the allowance for doubtful accounts at the reporting date:(amounts inthousands of Euro)

as at
July 312015(unaudited)

Overdue (days)
Current

Trade receivables
less allowance for
doubtful accounts

347,493

Total

347,4931 ≤ 3031 ≤ 60 61 ≤ 90

278,822

28,60813,528278,822

28,60813,52816

91 ≤ 120

> 120

9,721

2,296

14,518

9,721

2,296

14,518(amounts inthousands of Euro)

as at
January 31,
2015(audited)

Current

Overdue (days)

Trade receivables
less allowance for
doubtful accounts

346,284

Total

346,284

1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

283,137

28,279

11,202

10,029

3,840

9,797

283,137

28,279

11,202

10,029

3,840

9,797

10. Receivables from, and advance payments to, relatedparties – current and non-current
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Financial receivables
Other receivables and advance payments

7,843

11
3,229

Receivables from, and advance payments to, related parties current

7,843

3,240

(amounts in thousands of Euro)

The increase in the caption mainly relates to advance payments made infulfillment of obligations under a consulting agreement signed with PRADA
spa.
Receivables from, and advance payments to, related parties non-current are
detailed as follows:
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Prepaid sponsorship
Deferred rental income – long-term
Loans

17,641
1,383
741

12,3794,309
741

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

19,765

17,429(amounts in thousands of Euro)

Prepaid sponsorship refers to the amount paid to Luna Rossa Challenge srl in
respect of the arrangements in force at July 31, 2015. Deferred rental
income – long-term were recognized in application of “IAS 17 Leases” which
requires rental income to be recognized on a constant basis.

17

11. Capital expenditure
Changes in the net book value of Property, plant and equipment in the period
ended July 31, 2015, are as follows:(amounts inthousands ofEuro)

Land andbuildings

Balance atJanuary 31,2015 (audited)

477,940

21,176513,302

178,661

70,273

212,866

1,474,218

32,044(5,302)-

5,519(4,934)(77)

45,766(86,269)(2,403)

10,815(24,755)
(224)

2,051
(5,292)(26)

58,011(76)

154,206(126,552)(2,806)

14,586

56

4,889

1,571

55

842

21,99957,811

2,631

47,893

8,588

222(117,357)

(212)

-

(63)

(134)

(455)

(33)

-

(685)

577,079

24,308523,044

174,201

67,250154,286

1,520,168

Additions
Depreciation
Disposals
Exchangedifferences
Other
movements
Impairment
Balance at
July 31, 2015
(unaudited)

Production Leasehold Furniture
AssetsTotal net
Other
plant and improve&
under
book
tangibles
machineryments
fittings
construction
value

Changes in the net book value of Intangible assets in the period ended July
31, 2015, are as follows:
Trademarks

Balance atJanuary 31,2015 (audited)

277,232

513,214

106,492

10,82816,725

18,813

943,304

153(5,790)
-

257
-

251
(10,486)(1,928)

1,094(1,968)-96(1,006)-

20,175-22,026(19,250)(1,928)

3,768

677

(892)

(35)

-

(30)

3,488

-

(8)
(80)

15,317
(272)

1,335
-

- (16,996)
-

(352)
(352)

275,363514,060

108,482

11,254

Additions
Amortization
Disposals
Exchangedifferences
Other movements
Impairment
Balance at
July 31, 2015
(unaudited)

Store
Goodwill
Lease
SoftwareAcquisitions

Development
costs and
Assets Total net
other
in
book
intangible progress value
assets(amounts inthousands of
Euro)

18

15,81521,962946,936

12. Other current assets
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

VAT
Income tax and other tax receivables
Other assets
Prepayments and accrued income
Deposits

62,74934,607
29,38063,3982,923

56,93453,307
11,45454,642
4,296

Total

193,057

180,633

as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Guarantee deposits
Deferred rental income
Pension fund surplus
Other long-term assets

73,144
13,625
2,683
12,12870,004
9,056
2,515
9,778

Total

101,580

91,353(amounts in thousands of Euro)

13. Other non-current assets(amounts in thousands of Euro)

14. Payables to related parties – current and non-current
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Financial payables
Other payables

2,444
680

2,371
712

Payables to related parties – current

3,124

3,083

(amounts in thousands of Euro)

Financial payables towards other related parties, totaling Euro 2.4 million at
July 31, 2015, include an interest-free loan provided by Al Tayer, the noncontrolling shareholder of PRADA Middle East fzco, according to the numberof shares held by it in said company.
The non-current portion of payables to related parties is detailed as follows:(amounts in thousands of Euro)

as at
July 312015(unaudited)

as atJanuary 31
2015(audited)

Other payables – related parties-

13,384

Payables to related parties – non-current-

13,384

As a result of transactions with Non-controlling shareholders of a Group’s
subsidiary during the six months ended July 31, 2015, Fin-reta srl is no longer19

a related party but a third party. Consequently, the payables in question are
now reported under “Other non-current liabilities”.

15. Trade payables(amounts in thousands of Euro)

as at
July 312015(unaudited)

as atJanuary 31
2015(audited)

Trade payables – third parties
Trade payables – related parties

355,383
23,443410,977
26,443

Total

378,826

437,420

The following table contains a summary, by due date, of total payables:(amounts inthousands of Euro)

as at
July 31
Current
2015(unaudited)

Overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

Trade payables

378,826 331,478

24,621

8,080

3,718

2,253

8,676

Total

378,826 331,478

24,621

8,080

3,718

2,253

8,676

as at
January 31
2015(audited)

Current

Trade payables

437,420

Total

437,420(amounts inthousands of Euro)

Overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120> 120

392,284

21,893

10,967

1,936

1,424

8,916

392,284

21,893

10,967

1,936

1,424

8,916

16. Other current liabilities
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)

Payables for capital expenditure
Accrued expenses and deferred income
Other payables

58,313
17,632
71,478

128,346
17,35474,780

Total

147,423

220,480(amounts in thousands of Euro)20

17. Provisions for risks and charges
Movements in provisions for risks and charges are summarized as follows:
Provision
for litigation

Provision fortax disputes

Provisions
for othercharges

Total

Balance at January 31, 2015
(audited)

1,876

25,53736,282

63,695

Exchange differences
Reversals
Uses
Increases

14
(120)
(8)
151

2
91

654
(237)
(682)
4,299

670
(357)
(690)
4,541

Balance at July 31, 2015
(unaudited)

1,913

25,63040,31667,859(amounts in thousands of Euro)

Provisions represent the Directors’ best estimate of maximum contingent
liabilities. In the Directors’ opinion and based on the information available tothem as supported by the opinions of independent experts at the reporting
date, the total amount provided for risks and charges is reasonableconsidering the liabilities that might arise. During the six months ended July
31, 2015, there were no significant developments regarding litigation ongoingat January 31, 2015. Moreover, no new contingencies requiring significant
adjustment to the provisions for risks and charges reported at July 31, 2015
emerged.

21

Management Discussion and Analysis for the threemonths ended July 31, 2015
Net revenues
Consolidated net revenues for the three months ended July 31, 2015,
amounted to Euro 996.2 million, up by 2.3% compared to Euro 973.6 million
for the same three month period of 2014. The revenue growth was largely
driven by favorable exchange rates which boosted tourist flows in theEurozone and increased the Euro value of sales made in other major
currencies. At the same time, the downturn in the entire Asia Pacific region
affected performance of both the retail and wholesale channels, thus
countering the sales growth recorded in America, Japan and the Middle East.
Europe (including Italy) was almost flat in the quarter compared to the same
period in the prior year. A net of 2 new shops (9 openings and 7 closures) was
added during the three month period ended July 31, 2015.

Operating results
In the three months ended July 31, 2015, consolidated gross margin was
72.8%, recording an improvement compared to 70.1% achieved in the same
three months in prior year for the reasons highlighted before whencommenting on the half year results. The EBITDA totaled Euro 277.3 million,
or 27.8% on net revenues, slightly down compared to 28.7% for the same
period in prior year. The improvement recognized at gross margin level wasoffset by the higher incidence of operating expenses. The EBIT went downfrom Euro 216.8 million for the three months ended July 31, 2014, or 22.3%
on net revenues, to Euro 202.5 million, or 20.3% on net revenues, for ahigher incidence of depreciation and amortization. The second quarter,
nevertheless, saw a marked improvement compared to the first quarter ofthis year (when the EBIT was 11% on net revenues) due to a slightly better
top line performance and the cost containment initiatives undertaken so far.

22

Management Discussion and Analysis for the six months
ended July 31, 2015
Distribution channels
In the six months ended July 31, 2015, retail sales amounted to Euro 1,552.4
million, up by 7.6% compared to Euro 1,442.2 million achieved for the same
period of last year. At constant exchange rates there was a 3.3% decrease.
The overall improvement in performance was driven only by the favorable
exchange rate trends and by new openings. In the first six months of 2015,
the number of Directly Operated Stores (DOS) rose from 594 at January 31,
2015, to 605 at July 31, 2015 (20 openings and 9 closures).
The wholesale channel generated total net sales of Euro 249 million, downby 13.8% compared to Euro 288.7 million for the six months ended July 31,
2014. The decrease was determined by the ongoing selective strategy as well
as by a significant slow-down in the duty-free channel in South Korea,
following a decline of tourist flows impacted, above all, by the MERS
outburst.

Markets
In Asia Pacific, net sales amounted to Euro 610.3 million, down by 1.4%
compared to Euro 619.2 million reported for the same period of 2014 (-17.5%
at constant exchange rates). The performance was significantly penalized byHong Kong and Macau which failed to show any signs of recovery throughout
the six month period at industry level. The Greater China recorded net sales
for Euro 384.5 million, down by 1.2% as reported and down by 19.3% atconstant exchange rates. In the period the Group opened its first store in
Hanoi, Vietnam.
Net sales generated in Europe totaled Euro 379.2 million, up by 4.9% asreported and up by 2.5% at constant exchange rates. The growth wasentirely delivered by the retail channel. In the first six months of 2015 justone DOS was opened. Net sales in the wholesale channel were down
compared to the corresponding period of prior year, also at current
exchange rates, as a result of the Group’s ongoing highly selective policy inthe region and the impact of the conversion program in Switzerland.
The Italian market contributed Euro 286.2 million to consolidated net sales,
basically the same amount compared to the same six month period of lastyear when net sales totaled Euro 286.8 million. The positive performanceachieved by the stores directly operated by the Group (+14.9%) was
counterbalanced by a significant reduction recorded in the wholesalechannel. The only opening in the first half of 2015 was the Prada store in
Galleria Vittorio Emanuele II, Milan which became a DOS after a period when
it was operated under a franchise agreement by a related party.
Net sales on the American market totaled Euro 264.9 million, up by 13.5%
compared to Euro 233.5 million for the same period of 2014. At constantexchange rates, net sales fell by 6.1%. As reported, the retail channel
achieved double-digit growth, while at constant exchange rates it
23

decreased, also because of the impacts of a strong US Dollar. Wholesale
business grew single-digit as reported, but decreased double-digit atconstant exchange rates. In the period, the Group opened its first Prada
store in Panama City.
In Japan net sales totaled Euro 195.9 million, 11.8% up on Euro 175.3 million
reported for the same period of 2014 (4.9% up at constant exchange rates),
despite the very unfavorable comparison base of the first two months when2014 results largely benefitted from anticipated purchases ahead of a VAT
increase that came into force from April 2014.
The Middle East generated net sales of Euro 61.4 million, up by 18.2%
compared to Euro 51.9 million for the six months ended July 31, 2014. At
constant exchange rates net sales were down by 2%. It is worth highlighting
the positive performance of the Miu Miu brand which also grew at constantexchange rates. In the period, the Group opened its first Miu Miu store in
Jeddah, Saudi Arabia.

Products
In the six months ended July 31, 2015, leather goods generated net sales ofEuro 1,107.8 million which were down by 0.3% compared to Euro 1,110.7
million for the same period of 2014. At constant exchange rates, thereduction was equal to 10%.
Net sales in the ready-to-wear department amounted to Euro 288.2 million,
up by 4.5% as reported and down by 5.3% at constant exchange rates, with asignificative impact of the reduced wholesale business. This productcategory was weak in all regions except Japan, where there was double-digit
sales growth.
The footwear division continued its growth in all regions and, despite being
hit by the wholesale business reduction, posted net sales of Euro 370.4
million, showing an increase of 17.8% compared to Euro 314.4 million
reported for the same six month period in prior year. At constant exchange
rates there was 5.8% growth.

BrandsThe Prada brand generated net sales of Euro 1,461.5 million recording an
increase of 2.1% compared to Euro 1,431.1 million reported for the same
period of 2014. At constant exchange rates there was a 7.9% decrease,essentially determined by the performances of the leather goods division andespecially in Asia Pacific. In terms of channels the retail grew, althoughmainly thanks to better exchange rates, while the wholesale declined
double-digit both as reported and at constant exchange rates.
In the six months ended July 31, 2015, the Miu Miu brand contributed net
sales of Euro 293.9 million, a 14.8% increase as reported and a 3.3% increaseat constant exchange rates compared to Euro 256 million for the same periodof last year. All regions recorded sales growth at constant exchange rates
with the sole exception of Asia Pacific. In absolute terms, the growth was
driven by the retail channel with leather goods and footwear both
performing well.
24

In the period under analysis the Church’s brand recorded net sales of Euro
38.4 million, a 7.9% increase compared to Euro 35.6 million for the same
period of last year. At constant exchange rates the increase became a slightdecrease of 0.8% due to the UK Pound movements. The retail channel
achieved growth at constant exchange rates and also on a SSSG basis thanks
to the good performances recorded mainly in Europe. The wholesale businessdecreased following the selective policy applied to some independentaccounts and the DOS expansion in Europe.

Royalties
In the six months ended July 31, 2015, licensing agreements generated
royalties income of Euro 23.1 million, 13% more than the Euro 20.4 million
reported for the same period of prior year. This encouraging performance
reaffirms the global appeal of the brands and regarded both the eyewear andfragrance businesses. In addition, it was achieved without the benefit of thelaunch of the first Miu Miu fragrance distribution of which commenced inAugust 2015.

Operating results
Gross margin for the six months ended July 31, 2015, amounted to Euro
1,325.9 million, or 72.7% on net revenues. The improvement compared to the
71.8% gross margin reported for the previous period was due, despite a lessfavorable product and geographical mix, to improvements on industrial costs
as well as to the positive impact of exchange rates.
EBITDA for the six months amounted to Euro 440.1 million, or 24.1% on net
revenues, down from Euro 492.8 million for the first six months of 2014, or
28.1% on net revenues. The dilution in profitability was caused by thenegative operational leverage, especially at selling expenses level and inadvertising and communication expenses, mainly for a concentration of
spending in the early months of the current year. The dilution was recordedat the EBIT level also as a result of the increased level of depreciation andamortization charges. At the end of the six months the EBIT totaled Euro
293.2 million, or 16.1% on net revenues, down by 21.4% compared to the Euro
373.2 million achieved in the previous six month period when the incidence
on net revenues was 21.3%.
Net financial expenses amounted to Euro 7.5 million, showing overall adecrease compared to the expense of Euro 9 million recorded in the same
period of prior year. In addition to higher interest on bank borrowings during
the period – because of higher average financial debt – there were lower
exchange financial losses and higher dividends from financial investments.

25

Net invested capital
The following table contains the Statement of financial position reclassified
in order to provide a better picture of the composition of the Net invested
capital.
(amounts in thousands of Euro)

as at
July 312015(unaudited)

as atJanuary 31
2015(audited)

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

2,614,885
347,493778,907(378,826)
747,574
208,926(291,241)(82,315)(67,859)(65,904)(164,043)
255,795(42,011)3,238,133(2,960,909)(17,475)(2,978,384)(428,088)
168,339(259,749)(3,238,133)
0.09

2,557,198
346,284
654,545(437,420)
563,409
190,149(411,878)(221,729)(63,695)(85,754)(159,419)
239,349(69,519)
2,829,359(3,000,737)(17,410)(3,018,147)(254,462)
443,250
188,788(2,829,359)
n.a.

At July 31, 2015, Net invested capital amounts to Euro 3,238.1 million, an
increase of Euro 408.8 million compared to the figure of Euro 2,829.4 million
reported at January 31, 2015.
Non-current assets (deferred tax assets excluded) increased from Euro2,557.2 million at January 31, 2015, to Euro 2,614.9 million at July 31, 2015.
The increase of Euro 57.7 million was driven by capital expenditure for theperiod amounting to Euro 176.2 million, of which Euro 113.2 million for the
expansion and improvement of the retail network, Euro 25.3 million for thestrengthening of the industrial facilities and processes and Euro 37.7 million
for the corporate area. Intangible assets recognized at July 31, 2015, include
goodwill of Euro 514.1 million in respect of which management did not
identify any indicators of impairment. In accordance with the requirementsof “IAS 36 Impairment of assets”, mandatory impairment tests will be
performed at year end.
Net operating working capital increased from Euro 563.4 million at January
31, 2015, to Euro 747.6 million. The Euro 184.2 million increase was mainly
due to the higher level of inventories as a result of both a different approachto replenishment and shipping which started in the last few months of 2014
and new openings (39 since July 31, 2014), as well as to a decrease of trade
26

payables following a different phasing of the procurement strategy of raw
materials which was anticipated compared to the past. Finished products
and raw materials in inventory at period end are measured at estimatedrealizable value and are stated net of obsolescence and slow moving
provision of Euro 64.1 million.
Other current liabilities, net, decreased from Euro 221.7 million at January
31, 2015, to Euro 82.3 million, following settlement of payables forinvestments in tangible and intangible assets and expiry of hedging
derivative contracts which had a negative fair value at January 31, 2015.
Other non-current liabilities, net, amount to Euro 42 million. They decreasedby Euro 27.5 million compared to the figure at January 31, 2015, as a resultof higher level of deferred tax assets recognized on temporary differences
between the tax values and the amounts reported in the consolidated
financial statements for finished products, as well as because of payment ofsome Euro 23 million of long-term employee benefits.
The Group’s net equity at July 31, 2015, amounts to Euro 2,960.9 million.
During the year, dividends of Euro 281.5 million were distributed toshareholders of PRADA spa, as approved by the Annual General Meeting heldon May 26, 2015, with reference to the financial statements for the year
ended January 31, 2015.

Net financial position surplus/(deficit)
as atJuly 312015(unaudited)

as atJanuary 31
2015(audited)Long-term debt
Long-term financial receivables due from related parties(428,829)
741(255,203)
741

Long-term financial payables(428,088)(254,462)

Bank overdraft and short-term loans
Payables to related parties
Receivables from related parties
Obligations under finance leases
Cash and cash equivalents(379,153)(2,444)(7)549,943(263,335)(2,371)11(21)
708,966

Short-term net financial surplus/(deficit)

168,339443,250

Net financial position surplus/(deficit)(259,749)

188,788(amounts in thousands of Euro)At July 31, 2015, the Net financial position of the group is negative andstands at Euro 259.7 million. There was an overall decrease of Euro 450
million compared to the figure at January 31, 2015, as a result of the use of
cash flows generated by operating activities, together with existing cash, tofinance the investment plan (Euro 235.9 million) and to pay dividends to theshareholders of PRADA spa (Euro 281.5 million) and to the non-controllingshareholders of the Group’ subsidiaries (Euro 9.4 million). It should be noted
that, following some supply chain processes reengineering, purchases of raw
materials were brought forward compared to previous standard for incoming
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fall/winter deliveries and had a significant impact in terms of cash
consumption as the net operating working capital increased from Euro 563.4
million at January 31, 2015, to Euro 747.6 million at July 31, 2015.
In terms of maturity of bank borrowings, the Group managed to improve its
financial flexibility, while also taking advantage of the favorable conditions
on the credit market. It did so by signing during the six month period newlong-term facilities in Euro and Japanese yen for a total amount ofapproximately Euro 80 million. The total amount of available and unused
credit lines amount to Euro 295.1 million at July 31, 2015.

Outlook
The global economic environment is still volatile and recent instability in Asia
has not helped ease the situation so visibility will probably remain low for
the time being.
Given this challenging environment, management has continued to performthe wide-ranging review of critical processes that began in the previous
year, focusing on supply chain management (planning, procurement,
manufacturing and logistics organization, product development), the productoffering and pricing structure. This ongoing process is aimed at streamlining
operations and reducing costs but also at adapting our business to immediateand long-term market challenges. Moreover, from a shorter term
perspective, action has been taken to cut discretionary expenditure. Someinitial positive effects of these measures are already visible in the lastquarter.
Management remains committed and confident that, thanks to the work thathas been done so far and all the efforts that are being made in relation toindustrial, marketing and retail activities, the Group will be in a position to
face the current and future evolution of the international markets while also
leveraging global awareness of the brands, coupled with the broadinternational footprint guaranteed by direct retail network expansion.

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Corporate governance practices
The Company is committed to maintaining a high standard of corporate
governance practices 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 efficientand transparent operations within the Group, to protect the rights of theCompany’s shareholders and to enhance shareholder value. The corporate
governance model adopted by the Company is in compliance with theapplicable regulations in Italy, as well as the principles of the Corporate
Governance Code (the “Code”) contained in Appendix 14 of the Rules
Governing the Listing of Securities on The Stock Exchange of Hong Kong
Limited (the “Listing Rules”).
Corporate governance practices adopted by the Company during the six
months ended July 31, 2015 (the “Reviewed Period”), are in line with thosepractices set out in the Company’s 2014 Annual Report and the Code.

Compliance with the Code
The Board has reviewed the Company’s corporate governance practices andis satisfied that the Company’s corporate governance practices havecomplied with the code provisions set out in the Code throughout the
Reviewed Period.

The Board
The Board of Directors of the Company (the “Board”) is responsible forsetting up the overall strategy as well as reviewing the operation andfinancial performance of the Company and the Group.
As resolved at the shareholders’ general meeting of the Company on May 26,
2015, the following persons were re-elected as members of the Board andMr. Carlo Mazzi was elected as the Chairman of the Board for a term of threefinancial years, ending on the date of the shareholders’ meeting called toapprove the financial statements for the last year of the Board’s office, andthe other executive roles were conferred at the first Board meeting
thereafter in accordance with Italian law and the by-laws of the Company(the “By-laws”):
Mr. Carlo Mazzi as executive director and Chairman of the Board;
Ms. Miuccia Prada Bianchi as executive director and Chief Executive Officer;
Mr. Patrizio Bertelli as executive director and Chief Executive Officer;
Mr. Donatello Galli as executive director and Chief Financial Officer;
Ms. Alessandra Cozzani as executive director;
Mr. Gaetano Micciché as non-executive director;
Mr. Gian Franco Oliviero Mattei as independent non-executive director;
Mr. Giancarlo Forestieri as independent non-executive director; andMr. Sing Cheong Liu as independent non-executive director.

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The Board has established the following committees with written terms ofreference, which are of no less exacting terms than those set out in the
Code:
1.

Audit Committee

2.

Remuneration Committee

3.

Nomination Committee

Audit Committee
The Company has established an Audit Committee in compliance with Rule3.21 of the Listing Rules 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 theBoard in providing an independent view of the activities 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 four meetings on
February 26, 2015, March 26, 2015, June 12, 2015, and September 15, 2015,
with an attendance rate of 100%, mainly to review with the senior
management, the Group’s internal and external auditors and the board of
statutory auditors the audit plan for the year 2015, the auditing and internal
controls activities, the Group’s continuing connected transactions for 2014,
the update on risk assessment and the financial reporting matters (including
the annual results for the year 2014 and the first quarterly results andinterim results for the year 2015 before recommending them to the Board forapproval).

Remuneration Committee
The Company has established a Remuneration Committee in compliance with
the Code. The primary duties of the Remuneration Committee are to makerecommendations to the Board on the Company’s policy and structure for the
remuneration of directors and senior management and the establishment of aformal and transparent procedure for developing policy on such
remuneration. The recommendations of the Remuneration Committee arethen put forward to the Board for consideration and adoption, whereappropriate. The Remuneration Committee consists of two independent nonexecutive directors, Mr. Gian Franco Oliviero Mattei (Chairman) and Mr.
Giancarlo Forestieri and one executive director, Mr. Carlo Mazzi. The
Remuneration Committee held two meetings on March 17, 2015, and May 26,
2015, with an attendance rate of 100%, to recommend certain updates to thelong term incentive plan, the proposed allocation of the aggregate basic
remuneration of the Board to the directors (subject to the aggregate basic
remuneration being approved by the shareholders at the general meeting on
May 26, 2015) and the additional remuneration of the directors vested with30

special authorities (that is to the executive directors and members of theBoard’s committees).

Nomination Committee
The Company has established a Nomination Committee in compliance with
the Code. The primary duties of the Nomination Committee are to makerecommendations to the Board on the structure, size and composition of theBoard itself, on the selection of new Directors and on the succession plansfor Directors. The Nomination Committee also assesses the independence ofindependent non-executive directors. The recommendations of theNomination Committee are then put forward to the Board for consideration
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 a meeting on March 26, 2015, with anattendance rate of 100%, to perform the annual review of the independence
of independent non-executive directors and to recommend the re-election of
all the directors of the Company at its shareholders’ general meeting held on
May 26, 2015.

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

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 supervise the Company on its compliance with the law
and the By-laws, compliance with the principles of proper management and,in particular, on the adequacy of the organizational, administrative andaccounting structure adopted by the Company and on its functioning.
As resolved at the shareholders general meeting of the Company on May 26,
2015, the following persons were elected/re-elected as members of theboard of statutory auditors or alternate statutory auditors of the Company(as the case may be) for a term of three financial years, ending on the dateof the shareholders’ meeting called to approve the financial statements forthe last year of the board of statutory auditors’ office:31

Mr. Antonino Parisi as statutory auditor and Chairman of the board of
statutory auditors;
Mr. Roberto Spada as statutory auditor;
Mr. David Terracina as statutory auditor;
Ms. Stefania Bettoni as alternate statutory auditor; andMr. Cristiano Proserpio as alternate statutory auditor.

Dividends
The Company may distribute dividends subject to the approval of theshareholders in a general shareholders’ meeting.
On March 27, 2015, the Board of the Company recommended the payment ofa final dividend for the financial year 2014 of Euro/cents 11 per share in thecapital of the Company, 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 26, 2015. The dividend was paid on
June 15, 2015.
No dividends have been declared or paid by the Company in respect of the
Reviewed Period.

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
Code for Securities Transactions by Directors of Listed Issuers as set out inAppendix 10 of the Listing Rules (the “Model Code”). Relevant employees
who are likely to be in possession of unpublished inside information of theGroup are also subject to compliance with written procedures. Specific
written confirmations have been obtained from each Director to confirm
his/her compliance with the required standard set out in the Model Code andthe Company’s relevant procedures regarding directors’ securities
transactions for the Reviewed Period. There was no incident of noncompliance during the Reviewed Period.

Purchase, Sale, or Redemption of the Company’s Listed
Securities
Neither the Company nor any of its subsidiaries has purchased, sold orredeemed any of the Company’s listed securities during the Reviewed Period.

32

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

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

Milan (Italy), September 15, 2015
As at the date of this announcement, the Company’s executive directors are Mr.
Carlo MAZZI, Ms. Miuccia PRADA BIANCHI, Mr. Patrizio BERTELLI, Mr. Donatello
GALLI and Ms. Alessandra COZZANI; the Company’s non-executive director is Mr.
Gaetano MICCICHÈ and the Company’s independent non-executive directors are Mr.
Gian Franco Oliviero MATTEI, Mr. Giancarlo FORESTIERI and Mr. Sing Cheong LIU.

33