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Separate Financial Statements 2015

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IndexCorporate Information
Financial Review
Corporate Governance
Financial Statements
Notes to the Financial Statements
Independent Auditors’ Report
Statutory Auditors’ Report

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7
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Patrizio Bertelli

Miuccia Prada2

PRADA spa

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Corporate Information

PRADA spa

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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)
Gaetano Micciché(Non-Executive Director)
Stefano Simontacchi(Non-Executive Director appointed on April 8, 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

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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 spa

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Supervisory Board(Leg. Decr. 231/2001)

David Terracina (Chairman)
Gian Franco Oliviero Mattei
Franco Bertoli

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 spa

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Financial Review

PRADA spa

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Presentation
The Company is the PRADA Group parent company and acts as an operating-holding
company. It operates, directly and through investments in subsidiary and associatecompanies, in manufacturing, distribution, retail, brand and trademark management in
the luxury goods sector.
The Company’s main activities are as follows:––

manufacture of leather goods, clothing, footwear and accessories of all kinds
bearing the Prada, Miu Miu, Car Shoe and Church’s brands;––

worldwide wholesale of leather goods, footwear and clothing bearing the Prada,
Miu Miu and Car Shoe brands;––

retail through company stores and on-line;––

management of investments;––

services provided to Group companies, including:––retail management services regarding preparation of purchasing budgets andselection of product mix, visual displaying and management of stores;––

advertising and promotional services, especially media planning and design
services;––

information technology services regarding the technological infrastructure
and the centralized, integrated management of applications;––engineering services in relation to the opening, refurbishment and maintenanceof stores;––

financial services involving the granting of loans;––

corporate services regarding legal affairs, tax advisory, administration/accounting, human resources, security and logistics consultancy.

The Financial Review by the Board of Directors refers to PRADA spa (the “Company”),
operational holding company of the PRADA Group. It is based on the Separate Financial
Statements at January 31, 2016 (financial year 2015), as prepared in accordance withIFRS adopted by the European Union. The Financial review must be read together with
the Financial statements and the Explanatory notes which form an integral part of the
Separate Financial Statements.
2015 highlights
The economic environment became tougher for the international luxury goods market
in 2015. Difficult times on Asian markets had a significant impact on sales performancethroughout the region, especially in Hong Kong and Macao where the reduction in local
consumption and in the flow of tourism hit harder than elsewhere. At the same time,social and political tensions felt worldwide further contributed to a general reduction
in willingness to consume and in tourist flows. Forex fluctuation also had a significant
effect as the competitive advantage produced by the weaker Euro in the first half ofthe year decreased due to instability on financial markets over the summer period,
reducing the flow of Chinese customers in particular.
A swift response to this complicated situation was needed and, bearing in mind its
core commitment to research and innovation, the Group has implemented a series ofmeasures designed to combat pressure on operating profit resulting from the lack ofretail sales growth and the reduction in the wholesale. The main operating processes

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in the retail and production areas have been reviewed in order to make them more
efficient and measures to improve the mix of products on sale have been identified.
Prices have also been adjusted to take account of foreign exchange rate market trends
and brand positioning. Last but not least, the range of corrective measures taken has
included action to reduce costs. Nevertheless the Group continued to prefer long-term
growth targets committing resources to activities and projects deemed essential tovalue creation. Accordingly, investment in industrial and retail structures has continued,
even though priorities were adjusted during the year. Priority has also been given to
initiatives designed to strengthen brand identity and develop relations with an evermore sophisticated customer base.
The following tables show some of the key performance indicators for the last two
years.
January 31
2016%

January 31
2015%

Net revenues

1,914,781

100.0%

2,027,507

100.0%

Cost of goods sold(890,721)-46.5%(941,628)-46.4%

Gross margin

1,024,060

53.5%

1,085,879

53.6%

Operating expenses(682,777)-35.7%(572,899)-28.3%

7,569

0.4%

34,582

1.7%

Income before tax

348,85318.2%

547,562

27.0%

Income tax(100,432)-5.2%(162,133)-8.0%

Net income for the year

248,42113.0%

385,429

19.0%

ROE

15.46%

25.01%

ROI

17.49%

28.60%

ROS

17.82%

25.30%

Depreciation, amortization and impairment

42,3942.2%

32,444

1.6%

EBIT

341,28417.8%

512,980

25.3%

EBITDA

383,677

20.0%

545,424

26.9%(amounts in thousands of Euro)Interest and other financial income (expenses), net

Net revenues for the twelve months ended January 31, 2016 amounted to Euro 1,914.8
million, a 5.6% decrease compared to the Euro 2,027.5 million reported for prior year.
The decrease is due to the lower volume of sales.
The increase in operating expenses is detailed in the Notes to the Financial Statements,
under Note 24.
EBITDA for the year amounted to Euro 383.7 million, 29.6% down on 2014. The fall in
EBITDA was driven by a decrease in Gross margin and by higher operating expenses.
Net financial income totaled Euro 7.6 million and mainly comprised the following
income and expenses:––

dividend income of Euro 42 million;––

net exchange losses of Euro 10 million;––

net interest income of Euro 6 million;

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––impairment adjustments and losses on sales of subsidiaries of Euro 28.8 million;––

other financial expenses of Euro 1.6 million;

The tax charge for the year, stated as a percentage of income before taxation, was
28.8% against 29.6% last year.
During the year, the Company did not carry out any unusual and/or atypical transactions
with a significant effect on the Financial Statements.
Analysis of the statement of financial position
The following table contains the statement of financial position, as reclassified in orderto provide a better picture of the composition of net invested capital.
January 31
2016

January 31
2015

Non-current assets excluding financial items

1,690,852

1,600,689

Current assets excluding financial assets

1,055,729

1,175,217

Current liabilities excluding financial liabilities

702,514863,256

Net working capital

353,215

311,961Long-term liabilities, including deferred taxation

31,94040,719

Employee benefits

37,86255,878Provisions for risks

25,50322,855

Net invested capital

1,948,761

1,793,199

Shareholders’ equity(amounts in thousands of Euro)

1,603,169

1,607,323

Long-term financial payables

313,926(133,200)

Short-term financial payables (net of cash and cash equivalents)

31,665

319,076

Net financial indebtedness345,592

185,876

1,948,761

1,793,199

Net financial indebtedness/Shareholders’ equity

0.22

0.12

Current assets/Current liabilities

1.50

1.36

Shareholders' equity and net financial indebtedness
Ratios

Net invested capital has increased by Euro 156 million (8.7%) because of a Euro90 million increase in non-current assets as well as the effect of a Euro 41 million
increase in net working capital and a Euro 24 million decrease in long-term liabilities. A
breakdown of non-current assets, excluding financial items is provided below:(amounts in thousands of Euro)

January 31
2016

January 31
2015

Property, plant and equipment

555,913462,270

Intangible assets

125,837

119,103

Investments in subsidiaries and associated undertakings

945,527

931,599

Deferred tax assets

36,78150,145

Other non-current assets

14,452

11,340Derivative financial instruments, non-current

7,546

9,544

Financial receivables and other receivables from parent companies, subsidiaries,
associates and related parties

4,796

16,6881,690,852

1,600,689

0.67

0.66

Total non-current assets, excluding financial items
Proportion of property, plant and equipment already depreciated

Property, plant and equipment and Intangible assets show a net increase of around
Euro 100 million. Details of capital expenditure for the period are provided in Notes 7
and 8.

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Investments in subsidiaries and associated undertakings show a net increase of Euro 14
million, mainly because of capital injections and acquisitions, as highlighted in Note 9.
The following table contains a breakdown of Net working capital.
January 31
2016

January 31
2015

Trade receivables

538,558

741,907

Inventories

320,717

312,797

Trade payables(587,422)(640,984)

Net operating working capital

271,853

413,720(46,229)(amounts in thousands of Euro)

Derivative financial instruments

2,058

Other receivables from parent, subsidiary, associated companies and related parties

26,312

6,357

Other current assets

29,79235,982Current tax receivables (payables)

120,004

62,642Other liabilities to parent, subsidiary, associated companies and related parties(4,139)(3,768)Other current liabilities(92,664)(156,743)

Other current assets (liabilities), net

81,362(101,758)

Net working capital

353,215

311,961

The overall increase of Euro 41.2 million in net working capital is due to a Euro 142
million decrease in net operating working capital, offset by a Euro 183 million increasein other current assets, net. In more detail, the fair value of derivative instruments has
passed from a negative figure of Euro 46 million to a positive amount of Euro 2 million
while other current liabilities have decreased by Euro 64 million. The decrease in othercurrent liabilities is due to the reduction in payables for investments/capex.
The decrease in net operating working capital is due to a decrease in trade receivables(-Euro 203 million) as partially offset by a decrease in trade payables (-Euro 54 million)
and an increase in inventories (+Euro 8 million).
Net financial position
January 31
2016

January 31
2015

Long term financial payables

371,729

129,209

Financial receivables from parent companies, subsidiaries, associates and relatedparties(55,803)(262,409)

Long term financial payables /(receivables)

315,926(133,200)

Bank overdraft and short term loans

207,574

157,972

Financial payables to parent company, subsidiaries, associates and related parties

49,718335,283

Financial receivables from parent company, subsidiaries, associates and relatedparties(69,170)(46,391)(amounts in thousands of Euro)

Obligations under finance leases

654-(157,110)(127,788)

Short-term financial payables

31,665

319,076

Net financial position

347,592

185,876

Net financial position, net of payables to parent company and other Group companies

422,847

159,393

Cash and cash equivalents

As at January 31, 2016, the net financial position shows net debt of Euro 347.6 million,
an increase of Euro 161.8 million compared to the previous year.
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Net long-term financial payables have increased by Euro 449 million due toarrangement of new bank loans of Euro 243 million and a decrease in net long-term
financial receivables from Group companies. The decrease in this last item is due torenegotiation of intercompany loans whereby some maturity dates were transformed
from short-term to long-term and the related balances reclassified accordingly.
Net short-term third party debt has increased due to the arrangement of new bankborrowing facilities totaling Euro 60 million. See Note 11 “Bank overdrafts and shortterm loans” for further information about the operation.
At the reporting date, the Company had additional available lines of credit totaling Euro
411 million (Euro 397 million at January 31 2015).
As shown in the Statement of cash flows, cash flows from operating activities amounted
to Euro 316 million and wholly funded all investing activities for the period (Euro 170
million) as well as contributing towards payment of dividends to shareholders (Euro281.5 million).
Policy on hedging of financial risks
The Company’s financial risk hedging policies and the effects of the strategies adopted
are described in the Notes to the financial statements.
Research and development
The Company sees the creative process as the first step towards quality.
This unique approach enables the Company to anticipate and set trends, experimenting
with shapes and fabrics, leathers and production techniques.
Research and development activities are aimed at the creation of innovative products
through the search for new or improved materials, the research and definition of designconcepts, the development and production of prototypes.
Related party transactions
Details of related party transactions are provided in the Note 27 to the Financial
Statements.
Treasury stock
As at January 31, 2016, the Company did not hold any treasury stock.
Significant events during the reporting period
For details of the most significant events during the reporting period, see the “Corporate
information” and “Significant acquisitions and disinvestments” sections of the Notes
to the financial statements.
Significant events after the reporting period
As reported in the Announcement published by the Company on February 19, 2016,
Director Donatello Galli resigned from the role of Executive Director and CFO witheffect from the same day. The Board of Directors then appointed Alessandra Cozzani– already an Executive Director – as the new CFO.

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Outlook for 2016
Throughout 2015, the luxury goods market had to deal with an economic environment
characterized by volatile financial markets and by heightening geopolitical tension
in many world regions. These conditions are still present and 2016 is again set tobe affected by instability which makes any short-term forecasts uncertain. Bearing
this in mind and in order to ensure satisfactory profit levels, management recently
implemented a thorough review of all operating processes. The results, in terms ofgreater efficiency and productivity, will be apparent in the months to come. At the sametime, the Company continues to work towards a sound base for sustainable long-term
growth with investments aimed at further developing production capacity, in order toguarantee excellence in terms of design, product quality and customer service. The
Company is strongly committed towards new forms and methods of communications
designed to foster and develop a relationship between its brands and an ever broader
public. This will be based on a permanent dialogue and will encompass diverse cultural
fields: art, cinema, architecture, design.
Proposed allocation of net income for the period
The Board of Directors proposes to distribute Euro 281,470,640 to the shareholders,in the form of a dividend of Euro 0.11 per share. The amount to be distributed may beanalysed as follows:− Euro 248,420,818 representing net income for the period;− Euro 33,049,822 from utilization of Retained earnings.

Chief Executive Officer
Patrizio Bertelli

Milan, April 8, 2016

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Corporate Governance

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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 such practices have complied with the code provisions set out in the
Code for the entire financial year ended January 31, 2016 (the “Reviewed Period”).
This Corporate Governance Report summarizes the way in which the Company has
applied the principles and implemented the code provisions contained in the Code forthe duration of the Reviewed Period.
Directors’ securities transactions
The Company has adopted written procedures governing Directors’ securities
transactions on terms no less exacting than the required standard set out in the Model
Code. Specific written acknowledgments have been obtained from each Director toconfirm his/her compliance with the required standard set out in the Model Code andthe Company’s relevant procedures regarding directors’ securities transactions for theduration of the Reviewed Period. There were no incidents of non-compliance during
the Reviewed Period.
The Company has also adopted written procedures governing securities transactions
carried out by the relevant employees who are likely to possess inside information in
relation to the Company and its securities. The terms of these procedures are no lessexacting than the standard set out in the Model Code.
Board of Directors
a. Board Composition
The Board is currently composed of nine Directors, of which four are Executive Directors,
two are Non-Executive Directors and three are Independent Non-Executive Directors.
All Directors have distinguished themselves in their field of expertise and have advised
the Board in the area of their respective specialty, where this is relevant to the businessactivities and strategic development of the Company and the Group. The Company
has maintained both on its own website and on the website of The Stock Exchange
of Hong Kong Limited (the “HKSE”) an updated list of its Directors, identifying theirrespective roles and functions and also specifying if they are an Independent NonExecutive Director.
With a view to achieving a sustainable and balanced development, the Company hasviewed diversity at the Board level as an essential element in supporting the attainmentof its strategic objectives and its development. The Board diversity policy has been
considered and adopted by the Board. All Board appointments are based on meritocracy
and candidates are proposed and selected based on objective criteria, with due regard
for the benefits of diversity within the Board. Diversity in this sense encompasses awide range of factors, including but not limited to gender, age, cultural and educational
background, professional experience, skills and knowledge. The final selection is basedon merit and the contribution which the candidates can bring to the Board.

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The Nomination Committee has been delegated the overall responsibility for
implementing and monitoring the application of the board diversity policy. The
Nomination Committee will discuss any revisions that may be required to ensure theeffectiveness of the board diversity policy and will recommend any such revisions to
the Board for its consideration and approval. The Board will review its composition ona regular basis to assess its optimal structure.
b. Board Meetings
During the Reviewed Period, the Board held six meetings to discuss the Group’s
overall corporate strategic direction and objectives, assess its operational and financial
performance (including the annual budget, as well as the annual, interim and quarterly
results), and to approve connected transactions and the Group’s main investments andcorporate reorganization plans. The average attendance rate of the Directors for thesesix meetings either in person or through electronic means was 81.5%.
Minutes of the Board meetings are kept by the Group Corporate Affairs Director andJoint Company Secretary, Ms. Patrizia Albano. Minutes of the Board meetings and all
the Board Committee meetings are available for inspection by any Director by giving
reasonable notice.

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c. Board Attendance
The details of attendance at Board meetings, Committee meetings and shareholders’general meeting held during the Reviewed Period are set out in the following table:
Directors

Board

Audit
Committee

Remuneration
Committee

Nomination Shareholder’sCommittee
Meeting

Executive Directors
Mr. Carlo MAZZI (Chairman)

6/6

Ms. Miuccia PRADA BIANCHI (Chief Executive
Officer)

2/2

1/1

1/1

2/6

0/1

Mr. Patrizio BERTELLI (Chief Executive Officer)

4/6

0/1

Mr. Donatello GALLI (Chief Financial Officer)

6/6

1/1

Ms. Alessandra COZZANI

6/6

1/1

2/6

0/1

Non-Executive Director
Mr. Gaetano MICCICHÉ
Independent Non-Executive Directors
Mr. Gian Franco Oliviero MATTEI 1

6/6

8/8

2/2

Mr. Giancarlo FORESTIERI 2

6/6

6/8

2/2

1/1

1/1

Mr. Sing Cheong LIU 3

6/6

7/8

Mr. Antonino PARISI (Chairman)

6/6

8/8

1/1

Mr. Roberto SPADA

5/6

6/8

1/1

Mr. David TERRACINA

4/6

5/8

1/1

Mar 27, 2015

Feb 26, 2015

Mar 17, 2015

May 26, 2015

Mar 26, 2015

May 26, 2015

1/1
1/1

1/1

Statutory Auditors

Date(s) of MeetingJun 12, 2015

Jun 12, 2015

July 10, 2015

Sept 15, 2015

Sept 15, 2015

Nov 13, 2015

Dec 15, 2015

Dec 14, 2015

Mar 26, 2015 May 26, 2015

Dec 15, 2015
Jan 22, 2016
Average Attendance Rate of Directors

81.5%

87.5%

100%

100%

66.7%

Notes:
1: Chairman of Audit Committee, Remuneration Committee and Nomination Committee
2: Member of Audit Committee and Remuneration Committee
3: Member of Audit Committee and Nomination Committee

Ms. Miuccia Prada Bianchi, Chief Executive Officer of the Company, was absent for
four of the Board meetings due to prior commitments concerning fashion shows. Prior
to the relevant Board meeting being held, she rendered her views and comments toall the Board members through the Chairman.
d. Roles and Responsibilities
The Board is vested with full powers for the ordinary and extraordinary managementof the Company. The Board has the power to perform all acts it deems advisablefor the successful implementation and attainment of the Company’s corporate
purposes, except for those acts reserved by laws or by the By-laws for resolution ata shareholders’ general meeting. In particular, the Board is responsible for setting up
the overall strategy as well as reviewing the operation and financial performance of theCompany and the Group. The Board reserves for its own consideration and decision
all matters concerning the overall Group strategy, major acquisitions and disposals,
annual budgets, as well as annual, interim and quarterly results, approval of majortransactions, connected transactions and any other significant operational and financial
matters.

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All Board members have been provided with monthly updates prepared by the
Executive Directors with the support of the management in order to give a balanced
and comprehensive assessment of the performance, position and prospects of both
the Company and the Group, in sufficient detail to enable the Board as a whole andeach Director to discharge his/her duties.
The Executive Directors are responsible for the day-to-day management of the Company
and to make operational and business decisions within the control and delegation
framework of the Company.
The types of decisions delegated by the Board to the management include:•

the preparation of annual, interim and quarterly results for the approval of theBoard prior to publication;•

execution of business strategy and other initiatives adopted by the Board;•

monitoring of operating budgets adopted by the Board;•

implementation of adequate systems of internal controls and risk management
procedures; and•compliance with relevant statutory requirements, rules and regulations.

e. Non-Executive Directors
The Non-Executive Directors, including the Independent Non-Executive Directors,
provide the Company with diversified skills, expertise, qualifications as well as varied
backgrounds and perspectives. They participate in the Board and Board Committees(including Audit Committee, Remuneration Committee and Nomination Committee)
meetings to bring independent and objective opinions, advice and judgment on
important issues relating to the Company’s strategy, policy, financial performance, andtake the lead on matters where potential conflicts of interests arise. They also attend
the shareholders’ general meetings of the Company to understand the views of theshareholders. They make a positive contribution to the development of the Company’s
strategy and policy through independent, constructive and informed comments.
f. Independent Non-Executive Directors
The independence of the Independent Non-Executive Directors has been assessedin accordance with the applicable Listing Rules. Each Independent Non-Executive
Director meets the independence guidelines set out in Rule 3.13 of the Listing Rules
and provided the Company with the annual confirmation as to his independence. Thiswas further confirmed by the review of the Nomination Committee made on April
8, 2016. None of the Independent Non-Executive Directors of the Company has any
business or financial interest in the Company or its subsidiaries and they continue tobe considered independent by the Company.
g. Liability Insurance for the Directors
The Company has arranged appropriate liability insurance to indemnify its Directors fortheir liabilities arising out of all corporate activities. The insurance coverage is reviewed
on an annual basis.
h. Directors’ Training
Each Director, after his/her appointment, is provided with a comprehensive, formal
and tailored induction program to ensure that he/she has a proper understanding of
the key areas of business operations and practices of the Company, as well as his/her
responsibilities under the relevant laws, rules and regulations.
All Directors are encouraged to participate in continuous professional training todevelop and refresh their knowledge and skills. In this respect, during the Reviewed
Period, Directors received regular updates on changes to and developments of the
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Group’s business and on the latest development of the laws, rules and/or regulations
relating to Directors’ duties and responsibilities. In addition, all Directors attended
an in-house seminar conducted by the Joint Company Secretaries covering primarily
the ESG reporting obligations and amendment of the Code: risk management andinternal control. These initiatives are taken to ensure the Directors’ awareness of thelatest corporate governance practices and that their contribution to the Board remains
informed and relevant.
Directors are requested to provide records of the continuous training they have received
during the Reviewed Period to the Group Corporate Affairs Director and Joint Company
Secretary, Ms. Patrizia Albano.
Chairman and Chief Executive Officers
The Chairman is Mr. Carlo Mazzi and the Chief Executive Officers are Ms. Miuccia
Prada Bianchi and Mr. Patrizio Bertelli. The role of the Chairman is separate from thatof the Chief Executive Officers. The Chairman is vested with the power to represent
the Company and is responsible for ensuring that the Board is functioning properly andadhering to good corporate governance practices and procedures. The Chief Executive
Officers, supported by the other Executive Directors and senior management, areresponsible for managing the Company’s business, including the implementationof major strategies and other initiatives adopted by the Board. The Chief Executive
Officers are husband and wife.
Appointment of Directors
At the shareholders’ general meeting of the Company held on May 26, 2015, the Board(including the Non-Executive Directors) was appointed for a term of three financial
years. The mandate of all the current Directors will lapse on the date of the shareholders’general meeting called to approve the financial statements of the Company for the year
ended January 31, 2018.
The Board is empowered under the Company’s by-laws to appoint any person as a
Director to fill a casual vacancy.
On February 19, 2016, the Nomination Committee and the Board accepted theresignation of Mr. Donatello Galli, the former Executive Director and Chief Financial
Officer of the Company, and on the same day, the Nomination Committee
recommended and the Board approved the appointment of Ms. Alessandra Cozzani,
an existing Executive Director with the additional role as the Chief Financial Officer.
On April 8, 2016, the Nomination Committee recommended and on the same date,the Board approved, the appointment of Mr. Stefano Simontacchi as Non-Executive
Director of the Company with effect from April 8, 2016, to fill the casual vacancy
caused by Mr. Galli’s resignation. Mr. Stefano Simontacchi’s appointment as NonExecutive Director will be subject to election by the shareholders at the forthcoming
shareholders’ general meeting and his mandate as Non-Executive Director if so electedshall lapse at the same time as the other current Directors.
Under the Company’s By-laws, the Directors may be re-appointed.
Corporate Governance Functions of the Board
The Board is responsible for determining and supervising the application of theCompany’s appropriate corporate governance policies and ensuring its compliancewith the provisions of the Code. The Board’s role in this regard is:(i)20

to develop and review the Company’s policies and practices on corporate
governance;

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(ii) to review and monitor the training and continuous professional development of
directors and senior management;(iii) to review and monitor the Company’s policies and practices regarding compliancewith legal and regulatory requirements;(iv) to develop, review and monitor the Code of Ethics, the Organization, Management
and Control Model (adopted pursuant to Italian Legislative Decree no. 231 of June
8, 2001) and the Company’s procedures applicable to employees and directors;(v) to review the Company’s compliance with the Code and disclosure of such in the
Corporate Governance Report; and(vi) to perform any other corporate governance duties and functions set out by the
Listing Rules or other applicable rules, for which the Board shall be responsible.
During the Reviewed Period, the Board considered the following corporate governancematters:(i)

reviewed connected transactions of the Company;(ii) reviewed the level of compliance with the Code;(iii) reviewed the effectiveness of the internal control and risk management systems of
the Company through the Internal Control Department and the Audit Committee;(iv) approved the Group’s main investments and corporate reorganization plans.
Board Committees
The Board has established the Audit Committee, the Remuneration Committee and theNomination Committee. Each Committee is chaired by an Independent Non-Executive
Director. Each of the Committees’ terms of reference is available on both the websiteof the Company and the Stock Exchange. The terms of reference in respect of eachCommittee are of no less exacting than those terms set out in the Code.
In addition, the Board has established a supervisory body under the Italian Legislative
Decree no. 231 of June 8, 2001.
a. Audit Committee
The Company has established an Audit Committee in compliance with Rule 3.21 of
the Listing Rules where at least one member possesses appropriate professional
qualifications in accounting or possesses related financial management expertise todischarge the responsibility of the Audit Committee. The membership of 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 the effectiveness of the Company’s financial reporting process
and its internal control and risk management systems, to oversee the external audit
process, the internal audit process and to perform any other duties and responsibilities
as are assigned to it by the Board.
During the Reviewed Period, the Audit Committee held eight meetings (with anattendance rate of 87.5%) mainly to review with senior management, the Group’s
internal and external auditor and the board of statutory auditors, the significant internaland external audit findings and financial matters as required under the Committee’s
terms of reference. The Audit Committee’s review covers the audit plans as wellas the findings of both the internal and the external auditors, internal controls, risk
assessment, annual review of the continuing connected transactions of the Group, tax
updates and financial reporting matters (including the annual results for the year ended

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January 31, 2015, the first quarter results as of April 30, 2015, the interim financial
results as of July 31, 2015 and third quarter results as of October 31, 2015) before
recommending them to the Board for approval.
The Audit Committee has also held a meeting on April 8, 2016 to review the annual
results for the year ended January 31, 2016 before recommending it to the Board forapproval.
Auditor’s compensation
The total fees accrued in favor of Deloitte & Touche S.p.A. and its network for theaudit of the Consolidated financial statements and the Separate financial statements
for the year ended January 31, 2016, together with non-audit services rendered toPrada S.p.A. amounting to Euro 879 thousand, are illustrated below. The other services
provided by Deloitte Network to the Company mainly relate to advisory services tosupport the analysis of human resources data management and to the organization
process aimed at creating a Data Warehouse.
Fees in thousandsof EuroType of service

Audit Firm

Audit services

Deloitte & Touche spa

485

Other services

Deloitte Network

879

Total fees of audit firm for period ended January 31, 2016

1,364

b. 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 package of
Directors and senior management and the establishment of a formal and transparent
procedure for developing policies on such remuneration. The recommendations of
the Remuneration Committee are then put forward to the Board for consideration
and adoption, where appropriate. The Remuneration Committee consists of two
Independent Non-Executive Directors, Mr. Gian Franco Oliviero Mattei (Chairman) and
Mr. Giancarlo Forestieri and one Executive Director, Mr. Carlo Mazzi.
During the Reviewed Period, the Remuneration Committee held two meetings (withan attendance rate of 100%) mainly to recommend certain updates to the longterm incentive plan connected to the Group’s results, the proposed allocation of theaggregate basic remuneration of the Board to the directors and of the aggregate basic
remuneration of the Board of the Statutory Auditors (which were both approved by theshareholders at the general meeting on May 26, 2015) and the proposed allocation of
the additional remuneration of the directors vested with special authorities (that is tothe executive directors and members of the Board’s committees).
Remuneration Policy
The Company compensation policy is aimed at attracting, rewarding and protecting
personnel, who are considered to be key to the success of the Company business.
The Company has an incentive system that links compensation with the annual
performance of the Group, taking into account the Group’s objectives in net sales, aswell as the objectives of each department.
The Company has adopted long term cash incentive plans for senior managers and key
managers for retention purposes, under which the benefit to a senior manager or a key
manager under the incentive plan would vest subject to the achievement by the Groupof one or more economic objectives and his/her presence within the Group at the end

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of a three-year period. In addition, technicians of the Company may receive a collection
bonus that is provided to them following the development of a seasonal collection.
The aggregate basic remuneration of the Board is approved by the shareholders
in a general meeting. The additional remuneration of each Director vested withspecial authorities (that is to the Executive Directors and members of the Board’s
Committees) is determined by the Board - having considered the recommendation of
the Remuneration Committee and the opinion of the Board of Statutory Auditors.
Under the current compensation arrangements, the Executive Directors receive
compensation in the form of fees, salaries and other benefits, discretionary bonuses
and/or other incentives, including non-monetary benefits and other allowances andcontributions such as to retirement benefits schemes. The Non-Executive Directors(including Independent Non-Executive Directors) receive compensation in the form offees, salaries and contributions to retirement benefits scheme, as the case may be. No
Director is allowed to approve his/her own remuneration.
c. Nomination Committee
The Company has established a Nomination Committee in compliance with the Code.
The primary duties of the Nomination Committee are to determine the policy for thenomination of Directors and to make recommendations to the Board regarding thestructure, 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 for consideration and,
where appropriate, adoption. 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.
During the Reviewed Period, the Nomination Committee held one meeting to assessand confirm the independence of the Independent Non-Executive Directors of theCompany for the 2014 financial year and to recommend to the shareholders the current
structure of the Board and the re-election of nine directors at the shareholders’ general
meeting held on May 26, 2015.
On February 19, 2016, the Nomination Committee (with all members attending) andthe Board accepted the resignation of Mr. Donatello Galli, the former Executive Director
and Chief Financial Officer of the Company, and on the same day, the Nomination
Committee recommended and the Board approved the appointment of Ms. Alessandra
Cozzani, an existing Executive Director with the additional role as the Chief Financial
Officer.
On April 8, 2016, the Nomination Committee recommended and on the same date, theBoard approved the appointment of Mr. Stefano Simontacchi as Non-Executive Directorof the Company with effect from April 8, 2016, to fill the casual vacancy caused by Mr.
Galli’s resignation. In addition, they recommended to the shareholders the election of
Mr. Stefano Simontacchi as Non-Executive Director at the forthcoming shareholders’general meeting. The Nomination Committee also assessed and confirmed the
independence of the Independent Non-Executive Directors of the Company for the
Reviewed Period.
d. Supervisory Body
In compliance with Italian Legislative Decree no. 231 of June 8, 2001, the Company
has established a supervisory body whose primary duty is to ensure the functioning,
effectiveness and enforcement of the Company’s Model of Organization, adopted by
the Company pursuant to the Decree. 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 or external

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individuals. The supervisory body consists of Mr. David Terracina (Chairman), Mr.
Franco Bertoli and Mr. Gian Franco Oliviero Mattei.
Board of statutory auditors
Under Italian law, a joint-stock 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 applicable laws, regulations andthe By-laws, as well as compliance with the principles of proper management and,in particular, on the adequacy of the organizational, administrative and accounting
structure adopted by the Company and its functioning.
At the shareholders’ general meeting of the Company held on May 26, 2015, the boardof statutory auditors (including the alternate statutory auditors) was appointed for aterm of three financial years. The mandate of the Board of Statutory Auditors will expire
at the shareholders’ general meeting called to approve the financial statements of theCompany for the year ended January 31, 2018.
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.
Directors’ responsibility and auditors’ responsibility for Separate financial
statements
The Directors are responsible for preparing the Separate financial statements of
the Company for the year ended January 31, 2016 with a view to ensuring suchfinancial statements give a true and fair view of the state of affairs of the Company
itself. In preparing these Separate financial statements, the Directors have selectedsuitable accounting policies and made judgments and estimates that are prudent andreasonable. The non-executive director appointed on April 8, 2016, having been duly
informed about the principles and criteria underlying the preparation of the Separate
financial statements of the Company for the year ended January 31, 2016, has duly
acknowledged them. The Separate financial statements have been prepared on a going
concern basis and in accordance with International Financial Reporting Standards issued
by the International Accounting Standards Board as adopted by the European Union.
As regards the auditor of the Company, its responsibilities are stated in the auditor’sreport on the Separate financial statements.
Internal control
The Board places great importance on maintaining a sound and effective system ofinternal control to safeguard the shareholders’ investment and the Company’s assets.
The Board is also responsible for assessing the overall effectiveness of the internal
control system including financial, operational and compliance controls and risk
management functions.
The Internal Audit Department provides an independent review of the adequacy andeffectiveness of the internal control system. The audit plan is discussed and agreed
every year with the Audit Committee and then submitted to the Board for approval. In
addition to its agreed annual schedule of work, the Internal Audit Department conducts
other special reviews as required.
To better control its activities in moving toward achievement of the establishedobjectives, the Company has adopted the “Enterprise Risk Management – Integrated
Framework” as reference method to identify and deal with specific risks arising outof the continuous changes which affect the regulatory framework and the Company’s
operations.

24

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The Company’s internal control system has mainly been designed to safeguard theassets of the Company itself, to maintain proper accounting standards, to ensure thatappropriate authority has been given for the performance of acts by the Company,
and to comply with relevant laws and regulations. During the Reviewed Period, no
significant control failings or weaknesses was identified. The Board, through the
Audit Committee, reviewed and is generally satisfied that the internal control system
has functioned effectively throughout the Reviewed Period and is adequate for theCompany and the Group as a whole. In particular the Board is generally satisfied of theadeguacy of resources, staff qualifications and experience, training programme andbudget of the Company’s accounting and financial reporting function.
Joint Company Secretaries
The Company has appointed Ms. Patrizia Albano and Ms. Yuen Ying Kwai as jointcompany secretaries.
Given that the headquarter of the Company is located outside Hong Kong and theCompany is incorporated in Italy, the Company is of the view that it is in the bestinterests of the Company and is of good corporate governance to maintain Ms. Patrizia
Albano and Ms. Yuen Ying Kwai as the joint company secretaries.
During the Reviewed Period each of Ms. Patrizia Albano and Ms. Yuen Ying Kwai,
respectively, undertook over 15 hours of relevant professional training to update theirskills and knowledge. In addition, they have attended a training session held by theCompany’s legal advisor (Slaughter and May) relating to the Listing Rules which lasted
for two hours.
Shareholders’ Rights
a. Convening of the shareholders’ general meeting at the shareholders’ request
Pursuant to Article 14.2 of the Company’s By-Laws, a shareholders’ general meetinghas to be called by the Board when requested by shareholders representing at least
one-twentieth of the Company’s share capital, provided that the request mentions theitem(s) to be discussed at the meeting. If there is an unjustified delay in calling themeeting by the Board, action will be taken by the board of statutory auditors.
b. Putting forward proposals at shareholders’ general meeting
Pursuant to Articles 14.4 and 14.5 of the Company’s By-Laws, shareholders who,
individually or jointly, own or control at least one-fortieth of the Company’s sharecapital may request in writing for additions to be made to the list of items on theagenda, within ten days from the notice of call for a shareholders’ general meeting,by setting out the proposed additions (five days in advance in the circumstancesindicated under the second paragraph of Article 14.4). The proposals should be directedto the Group Corporate Affairs Director and Joint Company Secretary by email at
corporateaffairs@pradagroup.com or at the Company’s address: Via A. Fogazzaro n.
28, Milan 20135, Italy.
c. Making an enquiry to the Board
Enquiries about matters to be put forward to the Board should be directed to
the Group Corporate Affairs Director and Joint Company Secretary by email at
corporateaffairs@pradagroup.com or at the Company’s address: Via A. Fogazzaro n.
28, Milan 20135, Italy. The Company will not normally deal with verbal or anonymous
enquiries.
d. Procedures for a shareholders’ to propose a person for election as Director
The procedures for a shareholder to nominate a person for election as a Director of theCompany are set out in Articles 19.3 and 19.4 of the Company’s By-laws, details of
which have been disclosed in the Company’s announcement dated March 30, 2012.
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Constitutional Documents
During the Reviewed Period, there was no change to the Company’s constitutional
documents.
Communication with Shareholdersa. Investor relations and communications
The Company endeavors to maintain a high level of transparency when communicatingwith the shareholders and the financial community in general. The Company has
maintained regular dialogue and fair disclosure with institutional shareholders, fundmanagers, research analysts and the finance media. Investor/analysts briefings and oneon-one meetings, roadshows (both domestic and international), investor conferences,site visits and results briefings are conducted on a regular basis in order to facilitatecommunication between the Company, shareholders and the investment community.
The Company strives to ensure effective and timely dissemination of information toshareholders and the investment community at all times and will regularly review thearrangements to ensure its effectiveness.
The Company’s corporate website (www.pradagroup.com) facilitates effective
communications with shareholders, investors and other stakeholders, making
corporate information and other relevant financial and non-financial information
available electronically and on a timely basis. This includes extensive information
about the Group’s performance and activities via the annual report, interim report,press releases, presentations, announcements, circulars to shareholders and noticesof general meetings, etc.
b. Shareholders’ Meetings
The Company strives to maintain an on-going dialogue with its shareholders.
Shareholders are encouraged to participate in general meetings or to appoint proxies
to attend and vote at meetings for and on their behalf if they are unable to attend suchmeetings. The process of the Company’s general meeting is monitored and reviewed
on a regular basis.
The Company uses the shareholders’ general meeting as one of the principal channels
for communicating with the shareholders and to ensure that shareholders’ views arecommunicated to the Board. At the shareholders’ general meeting, each substantiallyseparate issue is proposed and considered by a separate resolution (including theelection of individual directors).
The last shareholders’ general meeting of the Company was held on May 26, 2015 at
the Company’s registered office at Via A. Fogazzaro n. 28, Milan, Italy with a videoconference system located at the registered office of Prada Asia Pacific Limited at 36/F,
Gloucester Tower, The Landmark, 11 Pedder Street, Central, Hong Kong (the “2015
Shareholders’ General Meeting”). The Directors, including the Chairman of the Board,
the Chairman of the Board Committees and the auditor of the Company, Deloitte &Touche S.p.A., attended the 2015 Shareholders’ General Meeting.

26

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Separate resolutions were proposed at the 2015 Shareholders’ General Meeting
relating to each issue and the voting results of such resolutions were disclosed in
the announcement of the Company dated May 26, 2015. The number of votes cast in
favour of each resolution (and the corresponding percentage level) is set out below:
Brief summary of the Ordinary Resolutions passed at the 2015 Shareholders’
General Meeting

Number of Votes
cast in favour (%)

1.

To approve the Audited Separate Financial Statements and the Audited
Consolidated Financial Statements of the Company for the year ended
January 31, 2015 together with the Reports of the Board of Directors, theBoard of Statutory Auditors and the Independent Auditors.

2,437,083,011(99.90%)2

To approve the allocation of the net income for the year ended January 31,2015 to Shareholders as a final dividend of Euro 11 cents per share and toretained earnings.

2,437,083,011(99.90%)3.

To approve the Board of Directors will consist of nine Directors and will be
appointed for a term of three financial years.

2,436,935,534(99.90%)

4.

To re-elect Mr. Carlo MAZZI as Director of the Company.

2,427,022,857(99.49%)5.

To re-elect Ms. Miuccia PRADA BIANCHI as Director of the Company.

2,427,704,847(99.52%)

6.

To re-elect Mr. Patrizio BERTELLI as Director of the Company.

2,428,032,347(99.53%)

7.

To re-elect Mr. Donatello GALLI as Director of the Company.

2,429,336,549(99.59%)8.

To re-elect Ms. Alessandra COZZANI as Director of the Company.

2,436,308,549(99.87%)

9.

To re-elect Mr. Gaetano MICCICHÈ as Director of the Company.

2,229,312,499(91.39%)10.

To re-elect Mr. Gian Franco Oliverio MATTEI as Director of the Company.

2,428,902,675(99.57%)

11.

To re-elect Mr. Giancarlo FORESTIERI as Director of the Company.

2,436,796,211(99.89%)12.

To re-elect Mr. Sing Cheong LIU as Director of the Company.

2,436,373,736(99.87%)

13.

To re-elect Mr. Carlo MAZZI as Chairman of the Board of Directors.

2,419,333,786(99.18%)14.

To approve the aggregate basic remuneration of the Board of Directors for
its three-year term.

2,249,876,629(92.23%)15.

To re-elect Mr. Antonino PARISI as effective member of the Board of
Statutory Auditors of the Company for a term of three financial years.

2,417,340,311(99.09%)16.

To re-elect Mr. Roberto SPADA as effective member of the Board of Statutory
Auditors of the Company for a term of three financial years.

2,409,119,099(98.76%)17.

To re-elect Mr. David TERRACINA as effective member of the Statutory
Auditors of the Company for a term of three financial years.

2,417,340,311(99.09%)18.

To elect Ms. Stefania BETTONI as alternate statutory auditor of the Company
for a term of three financial years.

2,417,340,311(99.09%)19.

To re-elect Mr. Cristiano PROSERPIO as alternate statutory auditor of theCompany for a term of three financial years.

2,417,340,311(99.09%)20.

To approve the aggregate remuneration of the Board of Statutory Auditors
for its three-year term.

2,437,083,011(99.90%)23.

To elect as Chairman of the Board of Statutory Auditors for a term of threefinancial yearss.

Mr. Antonino PARISI
2,358,402,644(96.68%)All resolutions put to the shareholders at the 2015 Shareholders’ General Meetingwere duly passed. Computershare Hong Kong Investor Services Limited, theCompany’s Hong Kong share registrar, acted as scrutineer for the vote taking at the2015 Shareholders’ General Meeting.
c. Corporate Communications
In order to increase efficiency in communication with shareholders and to contributeto environmental protection, the Company has made arrangements from September
2011 to ascertain how its shareholders wish to receive corporate communications.
Shareholders have the right to choose the language, either in English or Chinese, orboth, and means of receipt of the corporate communications, in printed form or byelectronic means through the Company’s website at www.pradagroup.com.

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28

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Financial Statements

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Statement of financial position(amounts in Euro)

Note

January 31
2016

January 31
2015

AssetsCurrent assets
Cash and cash equivalents

1

157,110,450

127,787,969

Trade receivables, net

2538,558,345

741,906,807
312,796,775

Inventories

3

320,716,642

Derivative financial instruments

4

11,275,513

6,478,732

Financial and other receivables from parent company, subsidiaries,
associates and related parties

5

95,481,368

52,747,407

Other current assets

6

158,866,447

107,677,969

1,282,008,763

1,349,395,659

Total current assets
Non-current assets
Property, plant and equipment

7555,912,576

462,269,754

Intangible assets

8

125,837,147

119,103,441
931,598,587

Investments in subsidiaries and associated undertakings

9945,527,134

Deferred tax assets

26

36,781,398

50,145,019

Other non-current assets

10

16,451,780

11,340,219

Derivative financial instruments - non current

47,545,907

9,544,294

Financial and other receivables from parent company, subsidiaries,
associates and related parties

5

330,164,119

309,564,076

Total non-current assets

2,018,220,061

1,893,565,389

Total assets

3,300,228,824

3,242,961,048

Liabilities and Shareholders' equity
Current liabilities
Bank overdrafts and short-term loans

11207,574,259

157,971,753

Financial and other payables to parent company, subsidiaries,
associates and related parties

12

53,856,528

339,050,737
640,984,035

Trade payables

13

587,421,931

Current tax liabilities

14

9,070,686

9,053,188

Derivative financial instruments

4

9,217,812

52,707,897

Obligations under finance leases

15653,672-

Other current liabilities

16

92,664,475

156,742,674

960,459,362

1,356,510,283
129,209,196

Total current liabilities
Non-current liabilities
Long-term financial payables

17

371,729,170

Employee benefits

18

37,862,381

55,877,874

Provisions

19

25,502,846

22,854,586

Deferred tax liabilities

26

4,844,616

7,612,430

Other non-current liabilities

20

17,257,004

5,844,170

Derivative financial instruments - non current

49,838,701

13,878,544

Financial and other payables to parent company, subsidiaries, associates and related parties

12

Total non current liabilities
Total liabilities

43,850,938
279,127,738

1,697,059,618

1,635,638,021

Share capital

255,882,400

255,882,400

Other reserves

1,098,865,988

966,011,544

Net income/(loss) of the year
Shareholders' equity

21

Total liabilities and shareholders’ equity

30

269,565,537
736,600,256

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248,420,818

385,429,083

1,603,169,207

1,607,323,027

3,300,228,824

3,242,961,048

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Income statement
Note

January 31
2016

January 31
2015

Net revenues

22

1,914,781,496

2,027,507,034

Cost of goods sold

23

(890,721,141)(941,628,037)

1,024,060,355

1,085,878,997(amounts in Euro)

Gross Margin
Operating expenses

24(682,776,702)(572,898,684)

Interest and other financial income (expenses), net

25

7,568,880

34,582,059

348,852,533

547,562,372(100,431,715)(162,133,289)

248,420,818

385,429,083

January 31
2016

January 31
2015

248,421385,429

Fair value movements recognized in cash flow hedge reserve

38,711(43,658)

Tax impact of above item

(10,646)

12,006

Change in Cash Flow Hedge reserve less tax impact

28,066(31,652)830(2,950)

Income before taxation
Income taxes

26

Net income for the year

Statement of comprehensive income(amounts in thousands of Euro)Net income for the year
Items recycled to P&L:

Items not recycled to P&L:
Gains/ (losses) recognized in actuarial gains/(losses) reserve
Tax impact of above item

-

340

830

(2,610)Net gains (losses) recognized directly in equity

28,896(34,262)

Total comprehensive income for the year

277,317351,167

Change in Actuarial reserve less tax impact

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Statement of cash flows(amounts in thousands of Euro)

January 31
2016

January 31
2015

348,853

547,562

41,77932,317

Cash flows generated by operating activities:
Income before taxation
Adjustments for:
Depreciation and amortization
Impairment of fixed assets

615

127

Losses/(gains) on disposal of fixed assets

(22)

2,140

Impairment of investments

28,79332,417

Non-monetary financial income (expenses)(47,947)(98,110)

Provisions and other non-monetary charges

24,25140,053

Changes in statement of financial position:
Trade receivables, net

197,322(115,213)

Inventories, net(30,345)(124,724)

Trade payables(54,139)

202,594

Other current assets and liabilities(36,800)(15,803)

Other non-current assets and liabilities(1,623)(19,421)

Cash flows generated by operating activities

470,737

483,939

Interest paid, net(7,862)(6,988)

Income taxes paid, net(147,325)(204,745)

Net cash flows generated by operating activities

315,550

272,206

Purchase of property, plant and equipment(174,164)(100,331)

Disposal of property, plant and equipment

-

3,355

(24,429)(11,588)

Cash flow generated (used) by investing activities:

Purchase of intangible assets
Disposal of intangible assets

97

1,318

Investments in subsidiaries(13,161)(54,861)

Dividends received
Cash flows generated (used) by investing activities

42,03992,982(169,618)(69,125)

Cash flows generated (used) by financing activities
Dividends paid

(281,470)(281,470)

Change in short-term bank loans

49,125

161,476

Change in short-term intercompany loans(48,629)

3,212

Repayment of loans from subsidiaries

25,09589,981

Disbursement of loans to subsidiaries(118,700)(160,973)

Repayment (Disbursement of) long-term loans to related parties
Repayment of short-term portion of long-term bank loans(741)(7,636)(12,984)

New long term borrowings arranged

265,654-

Cash flow generated (used) by financing activities(116,523)(201,499)

29,4091,582

Change in cash and cash equivalents net of bank overdraft
Exchange differences(1)2

Opening cash and cash equivalents, net of bank overdraft

127,699

126,115

Closing cash and cash equivalents, net of bank overdraft

157,107

127,699

Cash and bank balances

157,110

127,788

Bank overdraft
Closing cash and cash equivalents, net of bank overdraft

32

38

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(3)

(89)

157,107

127,699

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Statement of changes in shareholders’ equity(amounts in thousands of Euro, except for number of shares)
CashNet
flow income
hedge (loss) for
reserve the year

Number ofsharesSharecapitalSharepremium
reserve

Legal
reserve

Other Retained
reserves earnings

2,558,824,000

255,882

410,047

51,177

182,899

241,883

Allocation of 2013 net
income

-

-

-

-

-

395,574- (395,574)

Other movements

-

-

-

-

-

(3,514)--(3,514)

Dividends paid

-

-

-

-

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

Comprehensive income
for the year (recycled
to P&L)

-

-

-

-

-

- (31,652)

385,429353,777

Comprehensive income
for the year (notrecycled to P&L)

-

-

-

-

-

-

(2,610)2,558,824,000

255,882

410,047

51,177

182,899

Allocation of 2014 net
income

-

-

-

-

-

Dividends paid

-

-

-

-

- (281,471)

Comprehensive income
for the year (recycled
to P&L)

-

-

-

-

-

Comprehensive income
for the year (notrecycled to P&L)

-

-

-

-

Balance atJanuary 31, 2016

2,558,824,000

255,882

410,047

51,177PRADA spa

Separate Financial Statements 2015 - Financial Statements(amounts in thousandsof Euro)Balance atJanuary 31, 2014

Balance atJanuary 31, 2015

Separate Financial Statements 2015-15aprile.indd 33(2,610)3,679-

349,862 (27,973)

385,429

Shareholders’equity395,574 1,541,141-

385,429 1,607,323- (385,429)

-

-

-

(281,471)-

28,066248,421276,487

-

830

-

-

830

182,899454,65093

248,421 1,603,16933

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Notes to the Financial Statements

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Corporate information
PRADA spa is a joint-stock company, registered and domiciled in Italy. Its registeredoffice is in via A. Fogazzaro 28, Milan, Italy. At January 31, 2016, 79.98% of the sharecapital was owned by PRADA Holding spa, an Italian company, while the remaining
shares were listed on the Main Board of the Hong Kong Stock Exchange.
The ultimate indirect shareholders of PRADA Holding spa are Patrizio Bertelli and thePrada family.
In terms of Art. 2497 et seq of the Italian Civil Code, the Company is not subject to the
management and control of any company or entity.
These Financial Statements were approved by the Board of Directors on April 8, 2016.
Basis of preparation
The Financial Statements, comprising the Statement of financial position, Income
statement, Statement of comprehensive income, Statement of cash flows, Statementof changes in shareholders’ equity and Notes to the financial statements, are preparedin compliance with International Financial Reporting Standards (IAS/IFRS) and related
interpretations (SIC/IFRIC) as approved by the European Commission and in force at
the reporting date.
The Financial Statements have been prepared on a going concern basis.
Amendments to IFRS
New standards and amendments issued by the IASB, endorsed by the European
Union and applicable to the PRADA spa from February 1, 2015
The following new IFRS and amendments to existing IFRS have been endorsed by theEuropean Union and are applicable to the PRADA spa effective from February 1, 2015.
These changes do not have any significant impact to the Company as of the date ofthese separate financial statements:

36––

Annual improvements to IFRS (2011–2013 Cycle). Such improvements impacted:–– “IFRS 1 First-time Adoption of IFRS”, clarifying the meaning of “effective
IFRS”;–– “IFRS 3 Business Combinations”, clarifying that the IFRS does not apply tothe accounting for the formation of a joint arrangement;–– “IFRS 13 Fair Value Measurement”, clarifying the application of the IFRS tofinancial assets and financial liabilities with offsetting positions in market risks
or counterparty credit risk;–– “IAS 40 Investment Property”, clarifying the interrelationship between IFRS
3 and IAS 40 when classifying property as investment property or owneroccupied property.

––

Amendments to “IAS 19 Employee Benefits”. The IASB has amended therequirements in IAS 19 for contributions from employees or third parties that arelinked to a service.

––

Annual improvements to IFRS (2010–2012 Cycle). Such improvements, effective
for annual periods beginning on or after July 1, 2014, impacted:–– “IFRS 2 Share-based Payment”, amending the definition of vesting condition;–– “IFRS 3 Business Combinations”, amending the accounting for contingent
consideration in a business combination;–– “IFRS 8 Operating Segments”, requesting more disclosure when aggregating
operating segments and requiring the reconciliation of the total of thereportable segments’ assets to the entity’s assets;

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––
––
––
––

“IFRS 13 Fair Value Measurement”, clarifying the impact of the standard on
the measurement of short-term receivables and payables;“IAS 16 Property, Plant and Equipment”, amending the revaluation method;“IAS 24 Related Party Disclosure”, amending the definition of key
management personnel;“IAS 38 Intangible Assets”, amending the revaluation method.

New standards and amendments issued by the IASB, endorsed by the European
Union, but not yet applicable to the Company as effective from annual periods
beginning on or after January 1, 2016.
––

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.

––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 explainingthat 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 primaryfinancial 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;–– removing 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 infinancial reports;–– adding additional explanations with examples of how IAS 1 requirements aredesigned to shape financial statements instead of specifying precise terms
that must 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). Such improvements, effective
for annual periods beginning on or after January 1, 2016, impact:–– “IFRS 5 Non-current Assets Held for Sale and Discontinued Operations”,
changing the methods of disposal.
–– “IFRS 7 Financial Instruments: Disclosures”, applying disclosure requirements

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––
––
––

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 at the date of these financial statements

38––"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 theiruseful 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
was not readily determinable, the lessee must use its incremental borrowing rate.
Also in the new standard, as already happen 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). If the agreement transfers substantially all the risks andrewards the appropriate classification is the finance lease, otherwise it will bean operating lease. For finance leases a lessor recognizes finance income overthe lease term, based on a pattern reflecting a constant periodic rate of returnon the net investment. A lessor recognizes operating lease payments as income
on a straight-line basis or, if more representative of the pattern in which benefit
from use of the underlying asset is diminished, another systematic basis.
The standard provides for exceptions to the recognition of a finance lease (opting
for the accounting of an operating leases), related to the duration of the contract(less than 12 months, without purchase options) and the amount of the leased asset(low value like for example the cost of personal computers or small office items).
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”.

––“IFRS 15 Revenue from contracts with Customers”. The core principle of IFRS
15, effective for annual periods beginning on or after January 1, 2017 (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.

––

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, clarifying the following aspects:–– Unrealized losses on debt instruments measured at fair value and measured
at cost for tax purposes give rise to a deductible temporary difference
regardless of whether the debt instrument's holder expects to recover the
carrying amount of the debt instrument by sale or by use.
–– The carrying amount of an asset does not limit the estimation of probablefuture taxable profits.
–– Estimates for future taxable profits exclude tax deductions resulting from the

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––reversal of deductible temporary differences.
An entity assesses a deferred tax asset in combination with other deferred
tax assets. Where tax law restricts the utilization of tax losses, an entity would
assess a deferred tax asset in combination with other deferred tax assets ofthe same type.

These amendments are applicable for annual periods beginning on or after January
1, 2017. Early application is permitted.
––

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 control of subsidiaries or otherbusinesses;–– the effect of changes in foreign exchange rates;–– changes in fair value;–– other changes.
These amendments are applicable for annual periods beginning on or after January
1, 2017.

––“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.

––“IFRS 14 Regulatory Deferral Accounts”. This Standard, effective for annual
periods beginning on or after January 1, 2016, permits an entity that adopts
IFRS to continue to use, in its first and subsequent IFRS financial statements, its
previous GAAP accounting policies for the recognition, measurement, impairment
and de-recognition of regulatory deferral account balances without specificallyconsidering the requirements of paragraph 11 of IAS 8.

––

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 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 throughprofit or loss in accordance with paragraph 31 of IFRS 10. Those amendments
are applicable for annual periods beginning on or after January 1, 2016. Earlier
application is permitted.

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As at the date of these Separate financial statements, the Directors have not completed
the analysis necessary to assess the impacts of the new standards, amendments andoperational guides not yet applicable to the Company. However, given the significancethat rental contracts have for the Company, it is reasonable to conclude that the impactof ''IFRS 16 Leasing" will be material.
Financial statements
The Company has prepared the Statement of financial position classifying separately
current and non-current assets and liabilities. The Notes contain more detailed
information with further breakdowns of the items reported in the Statement of
Financial Position.
The Income Statement is classified by destination.
Cash flow information is reported in the Statement of cash flows which forms an
integral part of the Financial Statements.
The accounting policies and the notes are an integral part of the Financial Statements.
Every item in the Statement of financial position, Income statement, Statement ofcash flows and Statement of changes in shareholder’s equity is detailed in the Notes
to the financial statements.
Main accounting policies
Cash and cash equivalents
Cash and cash equivalents are carried in the statement of financial position at nominal
value. Cash equivalents include all highly liquid investments with an original maturity of
three months or less. For the purposes of the cash flow statement only, cash and cash
equivalents comprise cash on hand, bank accounts, deposit accounts.
In the statement of financial position, bank overdrafts and current portions of payables
to banks for medium and long-term loans are included in Bank overdrafts and shortterm loans.
Trade receivables and payables
Trade receivables are carried at nominal amount less the allowance for doubtful
accounts, estimated based on an assessment of all disputed and doubtful balances at
year-end. Bad debts are written off when identified.
Trade payables are recorded at nominal amount.
Transactions denominated in foreign currencies are recorded at the exchange rate as at
the date of the transaction. At the reporting date, transactions denominated in foreign
currencies are translated using the exchange rate as at the reporting date. Gains andlosses arising from the translation are reflected in the income statement.
The transfer of a financial asset to third parties implies its derecognition from thestatement of financial position only if all risks and rewards connected with the financial
asset are substantially transferred. Risks and rewards are considered transferred when
exposure to variability in the present value of future net cash flows associated with theasset changes significantly as a result of the transfer.
Inventories
Raw materials, work in progress and finished products are recorded at the lowerof acquisition cost, production cost and net realizable value. Cost comprises direct
production costs and those overheads that have been incurred in bringing the inventories

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to their present location and condition. Acquisition or production cost is determined ona weighted average basis. Provisions, adjusting the value of the inventory, are madefor slow moving and obsolete inventories and if estimated selling prices are lower thancost.
Derivative financial instruments
Derivative financial instruments that hedge interest rate risk and exchange rate risk
exposure are recorded based on hedge accounting rules.
Hedging contracts are designated as cash flow hedges. Hedge accounting treatment
is used if derivative financial instruments is designated as a hedge of the exposure
to changes in future cash flows of a recognized asset or liability or a highly probabletransaction and which could affect profit or loss. In this case, the effective portionof the gain or loss on the hedging instrument is recognized in shareholders’ equity.
Accumulated gains or losses are reversed from shareholders’ equity and recordedin the income statement for the period in which the income statement effect of thehedged operation is recorded. Any gain or loss on a hedging instrument (or portion
thereof) which is no longer effective as a cash flow hedge is immediately recorded in
the income statement.
If a hedging instrument or a hedging relationship has expired but the hedged transaction
has not yet occurred, any accumulated gains or losses, recognized in shareholders’equity until then, are recorded in the income statement when the transaction takes
place. If the hedge transaction is no longer expected to take place, any related
cumulative gain or loss outstanding in equity will be recognized immediately in theincome statement.
Derivative instruments designated not to be hedges are recorded at fair value to profit
and loss.
Assets held for sale
A non-current asset is classified as held for sale if its carrying amount will be mainly
recovered through sale rather than through its continued usage.
Assets classified as held for sale are valued at the lower of net book value and fairvalue less any costs to sell.
Property, plant and equipment
Property, plant and equipment are recorded at purchase cost or production cost, including
any charges directly attributable. They are shown net of accumulated depreciation
calculated on the basis of the useful lives of the assets and any impairment losses.
Interest costs on borrowings to finance directly purchase, construction or production
are capitalized to increase the value of the asset. All other borrowing costs are charged
to the Income Statement.
Ordinary maintenance expenses are charged in full to the Income Statement for theyear they are incurred.
Extraordinary maintenance expenses are capitalized if they increase the value or usefullife of the related asset.
The costs included in Leasehold improvements relate to refurbishment work carriedout on assets not owned by the Company. They are capitalized and amortized basedon the lease agreement, taking account of any renewals. All costs incurred during
the period between the start of refurbishment work and the opening of the store arecapitalized as Leasehold improvements, as they are deemed necessary to bring therelated assets to their working condition in accordance with company guidelines.
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Depreciation methods, useful lives and net book values are reviewed annually. The
depreciation rates representing the useful lives are listed below:
Category of property, plant and equipment

Depreciation rate

Buildings

3% -10%

Production plant and equipment
Leasehold improvements

7.5% - 25%
Remaining lease term

Furniture and fittings

12%

Other equipment

15% - 33%

When assets are disposed of, their cost and accumulated depreciation are eliminatedfrom the financial statements and any gains or losses are recognized in the income
statement.
The value of land is stated separately from the value of buildings. Depreciation is only
charged on the value of buildings.
Every year, a test is performed for indications that the value of property, plant andequipment has been impaired. If any such indications are found, an impairment test
is used to estimate the recoverable amount of the asset. The Impairment of assets
paragraph describes the method used to perform the impairment test.
Impairment losses are recorded immediately in the Income Statement.
At every reporting date, the Company will assess whether there is any indication thatan impairment loss recognized in prior periods may no longer apply and should bedecreased. If any such indication exists, the Company will estimate the recoverable
amount of that asset. The recoverable value of the asset shall not exceed the carrying
amount that would have been determined had no impairment loss been recognized forthe asset in prior years.
Reversal of an impairment loss for an asset will be recorded in the Income Statement.
Intangible assets
Only identifiable assets, controlled by the Company and capable of producing future
economic benefits are included in intangible assets.
Intangible assets include goodwill, development costs, store lease acquisition costs
and software.
Development costs include expenses incurred to strengthen the brand image throughprojects aimed at developing the store “concept”. The relevant useful life is estimatedbased on the Directors’ understanding and amounts to between three and five years.
Software refers to Information Technology development projects and includes all
internal and external costs incurred to bring the asset into use. IT projects include
costs incurred to acquire licenses as well as the cost of development and installation.
Software is capitalized on condition that it is identifiable, reliably measurable and if it isprobable that the asset will generate future economic benefits.
Store lease acquisition costs represent expenditures incurred to enter into or take overretail store lease agreements. These costs are capitalized and amortized over the lease
term.

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Intangible assets with a determinate useful life are amortized on a straight-line basis
at the following rates:
Category of intangible assets

Amortization rate

Software

10% - 33%

Store lease acquisition costs
Right of usufruct

Shorter of lease term and 10 years
Duration of real right (10 years)

Other intangible assets

20% - 33%

All business combinations included within the scope of IFRS 3 are recorded using
the acquisition method whereby identifiable assets, liabilities and potential liabilities of
the acquired business, which satisfy recognition requirements, are measured at theiracquisition-date fair value.
The difference between the cost of the business combination and the interest acquiredin the net fair value of identifiable assets, liabilities and potential liabilities is recorded
as goodwill. If additional interests in subsidiaries already controlled are acquired, thepositive difference between the acquisition cost and the value of the interest acquired
is recognized in equity.
Goodwill, as an asset that produces future economic benefits but which is notindividually identified and separately measured, is initially recognized at cost.
Goodwill is not amortized but tested for impairment every year to check if its value
has been impaired. If specific events or altered circumstances indicate the possibility
that goodwill has been impaired, the impairment test is performed more frequently. If
goodwill is initially recorded during the current year, the impairment test is performed
before the end of the year.
An impairment loss recorded for goodwill is never reversed in subsequent years.
Impairment of assets
IAS 36 requires an impairment test to be performed on property, plant and equipment,
intangible assets and investments whenever there is an indication of impairment.
Goodwill, investments and other intangible assets with an indefinite useful life andassets not yet available for use are tested for impairment at least once a year.
When the carrying amount of these assets exceeds their value in use or their fair value,
it is reduced accordingly and the impairment is recognized in the Income Statement.
The recoverable amount of the asset is calculated comparing its carrying amount withthe higher of its net selling price (where there is an active market) and its value in use.
Value in use is determined by discounting cash flows expected to arise from the useof the asset or Cash Generating Unit, as well as from the cash flow expected to arise
from its disposal at the end of its useful life.
Cash flow projections are based on budgets and forecasts and on long-term plans(generally 5 years) approved by the management and by the relevant business units.
Cash Generating Units are determined based on the organizational structure andrepresent groups of assets that generate independent cash inflows from continuing
use of the relevant assets.
Prada’s Cash Generating Units include brands, sales channels and geographical areas.

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Investments
Investments in subsidiaries, associated undertakings and joint ventures are accounted
for under the cost method and periodically tested for impairment. This test is performedat least once a year or whenever there is an indication of impairment.
The valuation method used is the Discounted Cash Flow model, adopting the processdescribed in the Note Impairment of assets. If an impairment loss has to be recognized,
it is charged to the Income Statement in the period in which it is identified. If the reason
for the impairment loss no longer applies, the carrying amount of the investment isrestored but not to more than its original cost. Such reversals are recorded in theincome statement.
Deferred tax assets
Deferred tax assets are amounts of income taxes recoverable in future periods inrelation to:––

deductible temporary differences;––carryforward of unused tax losses.

Deductible temporary differences are differences between the carrying amount ofan asset or liability in the statement of financial position and its tax value which, in
determining taxable income for future years, will result in deductible amounts when
the carrying amount of the asset or liability is realized or settled.
Deferred tax assets are recognized for all deductible timing differences, tax losses
carry-forwards and unused tax credits only to the extent that is probable that taxable
profit will be available in future years against which the deductible timing differences
can be used. Recoverability is reviewed at every year end. Deferred tax assets aremeasured at the tax rates which are expected to apply to the period when the asset isrealized based on tax rates (and tax laws) in force at the reporting date.
Deferred tax assets are not discounted.
Deferred tax assets are recognized through the income statement unless the tax
amount is generated from a transaction or an event directly recognized in equity orfrom a business combination.
Deferred tax assets relating to items credited or debited directly to shareholders’equity are also credited or debited directly to shareholders’ equity.
Obligations under finance leases
Fixed assets acquired under finance leases are recorded at the lower of market value
and the present value of future payments due under the lease agreement on the dateof the transaction and are depreciated based on their useful life.
Short-term portions of obligations related to discounted future lease payments arerecorded among current liabilities under Obligations under finance leases, current,
while medium and long- term portions are recorded among non-current liabilities under
Obligations under finance leases, non-current.
Non-current financial liabilities
Non-current financial liabilities include payables to banks for medium and long termloans. Bank borrowing includes principal amounts, interest and additional arrangement
costs accruing and due at the balance sheet date even when they are charged at alater date.

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Non-current financial liabilities are initially recorded at fair value on the transaction dateless transaction costs which are directly attributable to the acquisition.
After initial recognition, non-current financial liabilities are valued at amortized costi.e. at the initial amount less principal repayments already made plus or minus theamortization (using the effective interest method) of any difference between that initialamount and the maturity amount.
The effective rate of interest is the rate used to discount payments based on thecontractual term of the loan or on a shorter period, if appropriate.
Employee benefits
Post-employment benefits mainly consist of Italian Staff Leaving Indemnities(hereinafter TFR) which are classed as defined-benefit plans.
Defined benefit plans are recognized, using actuarial techniques to estimate the amountof the obligations resulting from employee service in the current and past periods anddiscounting it to determine the present value of the Company’s obligations.
The actuarial valuation is carried out by an independent actuary using the Projected
Unit Credit Method.
This method considers each period of service provided by the employee as anadditional unit right and measures the actuarial liability on the basis of the matured
years of service only at the date of measurement. This actuarial liability is then remeasured taking into account the relationship between the service years provided by
the employee at the date of measurement and the total years of service expected at
the forecast date of settlement of the benefit. Moreover, this method takes accountof future salary increases, for whatever reason (inflation, career progression and new
employment agreements) until the estimated termination date of the employment
relationship.
Actuarial gains and losses are recognized directly in equity, net of the tax effect.
Other long-term employee benefits are recorded among non-current liabilities andtheir value corresponds to the present value of the defined benefit obligation at thereporting date, adjusted according to the period of the underlying agreement. Like
defined benefit plans, other long term benefits are also valued using the Projected Unit
Credit Method.
Provisions for risks and charges
Provisions for risks and charges cover costs of a determinate nature that were certainor probable but whose amount or due date was uncertain at year end. Provisions are
only recorded when the Company has a legal or constructive obligation as a resultof past events, it is probable that an outflow of resources will be required to settle
the obligation and a reliable estimate of the amount can be made based on available
information.
Where the Company expects reimbursement of a charge that has been provided for(e.g. under an insurance policy) the reimbursement is recognized as a separate asset
but only when the reimbursement is certain.
Deferred tax liabilities
Deferred tax liabilities are amounts of income taxes due in future periods in respect oftaxable temporary differences.
Taxable temporary differences are differences between the carrying amount of an asset

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or liability in the statement of financial position and its tax base which, in determining
the taxable income for future years, will result in taxable amounts when the carrying
amount of the asset or liability is recovered or settled.
Deferred tax liabilities are recognized for all taxable timing differences except whenliability is generated by:––

the initial recognition of goodwill, or––

the initial recognition of an asset or liability in a transaction other than a businesscombination that does not affect the accounting result or the tax result at thetransaction date.

Deferred tax liabilities are measured at the tax rates which are expected to apply tothe period when the liability is settled, based on tax rates (and tax laws) that have beenenacted or substantively enacted by the balance sheet date.
Deferred tax liabilities are not discounted.
Deferred tax liabilities are recognized in the income statement unless the tax amountis generated by a transaction or an event directly recognized in equity or by a businesscombination.
Taxation for deferred tax liabilities relating to items credited or debited directly toshareholders’ equity is also credited or debited directly to shareholders’ equity.
The deferred tax liabilities is only offset against deferred tax assets, when the twoitems refer to the same tax and the same period.
Revenue recognition
Revenues from the sale of goods are recognized in the income statement when:––

the significant risks and rewards of ownership are transferred to the buyer;––

the amount of the revenues can be reliably measured;––

the Company’s effective control over the goods sold has ceased;––

the economic benefits generated by the transaction will probably be enjoyed by
the Company;––

the costs pertaining to the transaction can be reliably measured.

Royalties are accounted for based on sales made by the licensees and the terms ofthe contracts. Royalties under franchise agreements are recorded based on the sales
made by the Company to the franchisees. Cash discounts are recorded as financial
expenses.
Dividends are booked in the income statement when the shareholders’ become
entitled to receive payment.

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Accounting for costs
Costs are recorded on an accrual basis. In particular, a cost is immediately recognizedin the income statement when:––an expense does not generate any future economic benefit;––

the future economic benefits do not qualify or cease to qualify as assets forrecognition in the statement of financial position;––a liability is incurred and no asset has been recorded.

Operating leases
Operating leases are recorded in the income statement on a straight-line basis for thewhole lease term.
When calculating the lease term, renewal periods are also considered if provided for by
the agreement and the amount due is known or can be estimated.
Financial expenses
Financial expenses include interest on bank overdrafts, on short and long term loans,financial expenses on finance leases and securitization operations, amortization of
initial costs of loan operations, changes in the fair value of derivatives – insofar as
chargeable to the income statement – and annual interest maturing on the present
value of post-employment benefits.
Income taxes
The provision for income taxes is determined based on a realistic estimate of the tax
charge of each entity included in the tax consolidation, in accordance with the tax rates
and tax laws in force or substantially approved in each country at the reporting date.
Current taxes are recorded in the income statement as an expense. This is except fortaxes deriving from transactions or events directly recognized through shareholders’equity which are directly charged to equity.
Changes of accounting policy, errors and changes in accounting estimates
The accounting policies adopted are only modified from one year to another if thechange is required by an accounting standard or if it provides more reliable and more
relevant information on the effects of operations on the Company’s Statement offinancial position, Income statement or Cash flows.
Changes of accounting policy are applied retrospectively, adjusting the opening balanceof each affected component of equity for the earliest prior period presented. Other
comparative amounts, disclosed for each prior period presented, are also adjusted as if
the new accounting policy had always been applied. A prospective approach is applied
only when it is not possible to restate the comparative information.
The adoption of a new or amended accounting standard is implemented in accordancewith the requirements of the standard itself. If the new standard does not include
specific transition provisions, the change of accounting policy is applied retrospectively
or, if this is not feasible, prospectively.
In the case of material errors, the same approach adopted for changes in accounting
standards described in the previous paragraph shall be followed. Non material errors
are recognized in the income statement in the period in which the error is identified.
The effect of changes in accounting estimates is prospectively recorded in the income

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statement for the year the change takes place if it is the only year affected. It is also
reflected in later years if they too are affected by the change.
Financial risk management
The Company’s international activities expose it to a variety of financial risks including
the risk of exchange rate and interest rate fluctuation. The Company’s overall risk
management policy takes account of the volatility of financial markets and seeks tominimize uncertainty regarding cash flow and the resulting potential adverse effects
on its results.
The Company enters into hedging contracts to manage risks arising from exposure to
the exchange rate and interest rate risks.
Financial instruments are accounted for based on hedge accounting rules. At the
inception of the hedge contract, the Company formally documents the hedging
relationship assuming that the hedging is effective during the different accounting
periods it is designated for.
Exchange rate risk
The Company’s export sales activities expose it to an exchange rate risk due tofluctuations in the exchange rate of the Euro primarily against the US Dollar, Hong
Kong Dollar, Chinese Renminbi, Japanese Yen and, to a lesser extent, other currencies.
The Corporate Finance Department is responsible for foreign exchange risk hedging
by entering into derivative contracts (forward sale and purchase, options) with third
parties.
In accordance with IAS 39, these hedging contracts are classed as cash flow hedges.
The fair value of the hedging contracts designated as cash flow hedges is recorded
under shareholders’ equity net of the tax effect.
Interest rate risk
The debt taken on by the Company exposes it to an interest rate risk. The Corporate
Finance Department hedges this risk by arranging Interest Rate Swap and Collar
agreements.
The fair value of derivative contracts designated as cash flow hedges is recorded undershareholders’ equity net of the tax effect.
Meanwhile, for non-hedging derivatives qualified as fair value to profit and loss, fairvalue is recorded in full in the income statement.
Use of estimates
In accordance with IAS/IFRS, the preparation of these financial statements requires
the use of estimates and assumptions regarding certain types of assets, liabilities,
revenues and expenses and when valuing contingent assets and liabilities.
Such assumptions relate primarily to transactions and events not settled as of the yearend. Accordingly, upon settlement, the actual results may differ from the estimatedamounts. Estimates and assumptions are periodically reviewed and the effects of any
differences are immediately charged to the Income statement.
Estimates have been used when performing impairment tests, in determining provisions
for risks and charges, the allowance for doubtful accounts, the allowance for obsolete
and slow moving inventories, post-employment benefits, when calculating taxes andmeasuring derivative instruments and securities available for sale. The fair value ofderivatives and securities available for sale is based on market listed prices at the48

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reporting date. The fair value of derivative instruments used to hedge the interest raterisk (IRS) and derivative instruments used to hedge the exchange rate risk (forward
contracts and options) has been determined using one of the valuation platforms inmost widespread use on the market and based on interest rate curves and spot andforward exchange rates at the reporting date.
Significant acquisitions and divestments
On April 22, 2015, Montenapoleone 9 srl was incorporated by PRADA spa and Marchesi
Angelo srl, with ownership interests of 90% and 10%, respectively, in order to develop
the commercial business of the Marchesi brand.
On May 19, 2015, PRADA spa incorporated PRADA Denmark aps in order to develop
its commercial activities in Denmark.
On November 9, 2015, PRADA spa incorporated PRADA Finnish Oy in order to develop
its commercial activities in Finland.
In 2015, PRADA spa acquired the remaining 40% of the quota capital of Pellettieri d’Italia
srl. On November 24, 2015, Pellettieri d’Italia srl was merged through incorporation
into Prada spa.
On December 4, 2015, PRADA spa incorporated PRADA Belgium SPRL in order todevelop its commercial activities in Belgium.

PRADA spa

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Statement of financial position
1.

Cash and cash equivalents
The following table details the balance at January 31, 2016 and 2015:(amounts in thousands of Euro)

Cash on hand

January 31
2016

January 31
2015

2,250

2,176

Bank deposit accounts

11Bank current accounts

154,859

125,611

Total cash and cash equivalents

157,110

127,788

See the Statement of cash flows and Financial review for details of cash flows for the
year.
2.

Trade receivables
Trade receivables may be analyzed as follows:(amounts in thousands of Euro)

January 31
2016

January 31
2015

Trade receivables - Third parties

119,524

176,102

Trade receivables - Parent company

478

140

Trade receivables - Subsidiaries and associates

394,648529,255

Trade receivables – Related companies

23,90936,410Total trade receivables

538,559

741,907

The decrease in trade receivables is due to the lower level of retail and wholesale sales.
Trade receivables from related companies refer to sales of finished products to retailcompanies owned by the main shareholders of PRADA Holding spa.
A detailed breakdown of these receivables by debtor is provided in Note 27 “Transactions
with parent, subsidiary and associated companies and related parties”.
The allowance for doubtful debts was determined on a specific basis considering all
information available at the date the financial statements were prepared in order to bringreceivables in line with their fair value.
January 31
2016

January 31
2015

Trade receivables, gross

122,746

180,290

Allowance for bad and doubtful debts(3,222)(4,188)Trade receivables, net

119,523

176,102(amounts in thousands of Euro)50

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Movements on the allowance for bad and doubtful debts during the year are detailed
as follows:(amounts in thousands of Euro)

January 31
2016

January 31
2015

4,188

4,884

-

232

Opening balanceContributed upon merger
Increases

350-

Utilized(1,316)(927)

Closing amount

3,222

4,189

Gross trade receivables at January 31, 2016 are analyzed by maturity date as follows:3.

(amounts in thousands of Euro)

January 31
2016

Current

Overdue (in days)
1

30

31

60

61

90

91

120

> 120

Trade receivables, third parties

122,746

111,464

3,275

1,344

1,410

723

4,530

Trade receivables, parent,
subsidiaries, associates andrelated parties

419,035

227,662

18,48850,787

19,063

14,981

88,054

Total

541,781339,126

21,76352,131

20,47315,704

92,584(amounts in thousands of Euro)

January 31
2015

Current

1

31

91

120

> 120

Overdue (in days)
30

60

61

90

Trade receivables, third parties

180,290

153,643

10,542

3,827

3,966

2,064

6,248

Trade receivables, parent,
subsidiaries, associates andrelated parties

565,804

372,879

30,61534,84922,344

15,47989,638

Total

746,094

526,522

41,157

38,67626,31017,543

95,886Inventories
Inventories may be analyzed as follows:
January 31
2016

January 31
2015

Raw materials

102,553

101,425

Work in progress

15,69936,199Finished products

252,348

238,691

Allowance for obsolete and slow-moving inventories(49,883)(63,518)

Inventories, net

320,717

312,797(amounts in thousands of Euro)Inventories are valued at weighted average cost.

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Movements on the allowance for obsolete and slow moving inventories are analyzed
as follows:(amounts in thousands of Euro)
Balance at January 31, 2015

Raw materials

Finished products

Total

26,374

37,14463,518-(13,635)(13,635)

26,37423,50949,883

Utilized
Balance at January 31, 2016

The allowance for obsolete finished products has decreased following the scrapping ofitems already provided for in prior years.
4.

Derivative financial instruments: assets and liabilities
Derivative financial instruments - assets and liabilities, current portion:
January 31
2016(amounts in thousands of Euro)

January 31
2015

Financial assets regarding derivative instruments, current

11,276

6,479

Financial liabilities regarding derivative instruments, current(9,218)(52,708)

Net carrying amount

2,058(46,229)

Derivative financial instruments - assets and liabilities, non-current portion:
January 31
2016(amounts in thousands of Euro)

January 31
2015

Financial assets regarding derivative instruments, non-current

7,546

9,544

Financial liabilities regarding derivative instruments, non-current(9,839)(13,879)

Net carrying amount(2,293)(4,334)

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

January 31
2016

January 31
2015

IFRS7
Category

Forward contracts

7,738

5,864

Level II

Options

2,309

38

Level IIInterest rate swap – fair value to profit and loss

8,775

10,121

Level II

Positive fair value

18,822

16,023Forward contracts(4,175)(19,570)

Level II

Options(2,479)(34,287)

Level IIInterest rate swap – cash flow hedge(3,953)(2,965)

Level IIInterest rate swap – fair value to profit and loss

(8,450)(9,764)

Level II

Negative fair value(19,057)(66,586)

Net carrying amount(235)(50,563)

All of the derivative instruments reported above are classified as Level II of the fairvalue hierarchy proposed by IFRS 7. The Company has not entered into any derivative
contracts that may be classed as Level I or III.

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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 Company entered into the financial derivative contracts in the course of its risk
management activities in order to hedge financial risks connected with exchange rateand interest rate fluctuations.
Foreign exchange transactions
The international nature of the Company’s activities expose its cash flows – especiallythose relating to sales - to exchange rate volatility. In order to hedge this risk, theCompany enters into options and forward sale and purchase agreements so as toguarantee the value in Euro of identified cash flows.
Expected future cash flows mainly regard the collection of trade receivables andsettlement of trade payables. The most important currencies in terms of hedged
amounts are: U.S. Dollar, Hong Kong Dollar, Japanese Yen, GB Pound, Swiss Franc,
Korean Won and Chinese Renminbi.
The notional amounts of the derivative contracts, designated as foreign exchange
risk hedges (as translated at the European Central Bank exchange rate at January 31,2016), are stated below.
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

Currency
Hong Kong Dollar

99,881-(37,602)62,279US Dollar

145,421

21,062(74,725)

91,758Chinese Renmimbi

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-

15,210(8,674)

6,536

Other

Swiss Franc164

86,214(18,114)

68,264

Total

368,236

366,124(212,934)

521,426

All contracts in place as at the reporting date will mature by January 31, 2017.

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Contracts in place at January 31, 2015 to hedge projected future trade cash flows:
Forwardpurchase
contracts

Options

Forward sale
contracts

Hong Kong Dollar

182,117

28,661-

210,778

US Dollar

197,258-(59,651)

137,607(Amounts in thousands of Euro)

January 31
2015

Currency

Chinese Renmimbi

99,237

33,692(24,349)

108,580

Japanese Yen

22,017

91,824(5,493)

108,348

GB Pound55,252

38,610(11,290)

82,572-

67,326-

67,326

Korean Won-

18,283(8,063)

10,220

Other

Swiss Franc

17,74967,984(24,533)

61,200

Total

573,630

346,380(133,379)

786,631

All contracts in place as of January 31 2015 matured by January 31, 2016.
Contracts in place at January 31, 2016 and 2015 to hedge projected future financial
cash flows:
January 31
2016

January 31
2015

Brazilian Real

8,331

25,138

GB Pound

49,915

21,116

Swiss Franc

8,973

5,088

-

9,384

US Dollar

7,212

-

Total

74,43160,726(amounts in thousands of Euro)
Forward Contracts
Currency

Russian Ruble

A liquidity analysis on the maturity dates of these derivative contracts is included inthese Notes in the Information on Financial Risks section.
All contracts in place at the reporting date were entered into with leading financial
institutions and the Company does not expect any default by these institutions.
Interest rate transactions
The Company enters into Interest Rate Swaps agreements (IRS) in order to hedge therisk of interest rate fluctuations regarding several loans payable. The key features of
the IRS agreements in place as at January 31, 2016 and January 31, 2015:
Contract

Currency

Notional
amountInterest
rate

Maturity
date

January 31
2016

Hedged loan –lending institution

AmountMaturity

Fair value
IRS

Euro/000

60,0000.105%

23/05/2030(653)

Unicredit

60,00003/2019

IRS

Euro/000

53,1671.457%

23/05/2030(3,299)Intesa-Sanpaolo

53,16705/2030

Hedged loan –lending institution

AmountMaturity

Total IRS – Cash flow hedges

Contract

Currency(3,952)

Notional
amountInterest
rate

Maturity
date

January 31
2015
Fair value

IRS

Euro/000

600

2.210%

01/07/2015

(6)

MPS

600

07/2015IRS

Euro/000

55,0001.457%

23/05/2030

2,959

Intesa-Sanpaolo

55,00005/2030

Total IRS – Cash flow hedges

2,953

The IRS convert the variable interest rates applying to a series of loans into fixed

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interest rates. These agreements have been arranged with leading financial institutions
and the Company does not expect them to default.
Under applicable regulations all of the derivatives in place at the reporting date meetthe requirements for designation as cash flow hedges.
The Company entered into an IRS agreement, in relation to loans arranged by a UK
subsidiary and signed an IRS agreement with the same characteristics with said
subsidiary. These contracts have been accounted for as non-hedging instruments (fairvalue to profit and loss):
Contract

Currency

Notional
amountInterest
rate paid

Interest
rate
received

Maturity
date

January 31
2016

January 31
2015

Fair value
Euro/000Fair value
Euro/000Counterparty

IRS

GBP/000

58,8002.778%

Libor
GBP/365

31/01/2029(8,450)(9,764)

Unicredit

IRS

GBP /000

58,800Libor
GBP/365

2.83%

31/01/2029

8,775

10,121

Kenon Ltd

325

357

Total IRS – Fair value to profit and loss

Movements on the cash flow hedge reserve included in shareholders’ equity, before
tax effects, since February 1, 2014, may be analyzed as follows:(amounts in thousands of Euro)
Closing balance at January 31 2014

5,075

Change in fair value, recognized in Equity(67,805)

Change in fair value, charged to Income Statement

24,147

Closing balance at January 31 2015

(38,583)

Change in fair value, recognized in Equity(10,760)

Change in fair value, charged to Income Statement

49,471

Closing balance at January 31 2016

128

Changes in the reserve that are charged to the Income Statement are recorded
under Interest and other financial income/(expense)”, net or as operating income andexpenses depending on the nature of the underlying transaction.

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Information on financial risks
Capital Management
The Company’s capital management strategy is intended to safeguard the Group’s
ability to continue to guarantee a return to shareholders, protect the interests of otherstakeholders and respect covenants, while maintaining an adequate, balanced capital
structure.
Categories of financial assets and liabilities according to IAS 39
Financial assets
Financial assets at January 31, 2016

Loans andreceivables

Derivative financial
instruments

Total

Note

Cash and cash equivalents

157,110

157,1101

Trade receivables, net

538,558

538,5582

18,821

4

394,538

5

Derivative financial instruments
Financial receivables from parent,
subsidiary and associated companies andrelated parties
Total

Financial assets at January 31, 2015

18,821
394,538

1,090,206

18,821

1,109,027

Loans andreceivables

Derivative financial
instruments

Total

Note

Cash and cash equivalents

127,788

127,7881

Trade receivables, net

741,907741,9072

16,023

4

339,267

5

Derivative financial instruments
Financial receivables from parent,
subsidiary and associated companies andrelated parties
Total

16,023
339,267

1,208,962

16,023

1,224,985

Loans andreceivables

Derivative financial
instruments

Total

Note

Financial liabilities
Financial liabilities at January 31, 2016

Financial payables - third party

579,957

579,957

11,17

Financial payables - parent, subsidiary andassociated companies and related parties

319,283

319,28312

Trade payables

587,422

587,42213

19,057

19,057

4

1,486,662

19,057

1,505,719

Loans andreceivables

Derivative financial
instruments

Total

Note

Derivative financial instruments
Total

Financial liabilities at January 31, 2015

Financial payables - third party

287,181

287,181

11,17

Financial payables - parent, subsidiary andassociated companies and related parties

365,750

365,750

12

Trade payables

640,984

Derivative financial instruments
Total

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Separate Financial Statements 2015-15aprile.indd 56

1,293,915

640,984

13

66,586

66,586

4

66,586

1,360,501

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Fair Value
The reported amount of derivative instruments, where assets or liabilities, is equal totheir fair value, as explained here in Note 4.
The reported amount of financial assets reasonably approximates their fair value.
The reported amount of financial liabilities, excluding the bonds, reasonably approximates
their fair value.
The bonds, reported at an amount of Euro 129 million (nominal amount of Euro 130
million as adjusted by Euro 0.6 million under the amortized cost method), are included
under financial liabilities. Their fair value, calculated based on the official Irish Stock
Exchange listing as at January 31, 2016 is equal to Euro 136.9 million.
Credit risk
Credit risk is defined as the risk that a counterparty in a transaction, by not fulfilling
its obligations, causes a financial loss for another entity. The maximum risk to which
an entity is potentially exposed is represented by all financial assets recorded in thefinancial statements.
The Directors believe that the Company’s credit risk essentially regards tradereceivables generated by sales to independent customers in the wholesale channel.
The Company manages the credit risk and reduces its negative effects through its
commercial and financial strategy. Credit risk management is performed by controllingand monitoring the reliability and solvency of customers and is carried out by theGroup’s Commercial Departments.
At the same time, the fact that the total receivables balance is not highly concentrated
on individual customers and the fact that net sales are evenly spread around the world
lead to a reduced risk of financial losses.
The expected loss on bad and doubtful receivables at the reporting date is entirely
covered by the allowance for doubtful accounts.
Movements on the allowance for doubtful accounts are shown in Note 2. Trade
receivables.
Liquidity risk
The liquidity risk relates to the difficulty the Company may face in fulfilling its obligations
with regard to financial liabilities. The Directors are responsible for managing theliquidity risk while the Group Corporate Finance Department, reporting to the CFO, is
responsible for managing financial resources.
The Directors believe that the funds and lines of credit currently available, in addition to
those that will be generated by operating and financing activities, will allow the Company
to meet its needs resulting from investing activities, working capital management andrepayment of loans as they fall due. This can be achieved without using all available
fund and surplus resources can thus be used to pay dividends.
At January 31, 2016, the Company had unused and available bank borrowing facilities
totaling Euro 411 million.

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The following table details the maturity of financial liabilities, showing the earliest dateon which the Company could be called upon to make payment (worst-case scenario).
Financial liabilities under derivative financial instruments
Future contractual cash
flows at Jan. 31, 2016

6 mthsor less

6 to 12mths

1 to 2years

2 to 3years

more
than 3years(4,183)(2,548)(1,286)

(349)

(-)

-

-

-

-

-

-

-

Interest rate swaps(3,730)

(457)

(538)

(1,033)

(800)

(902)

Net value(7,913)(3,005)(1,824)(1,382)

(800)

(902)

Future contractual cash
flows at Jan. 31, 2015

6 mthsor less

6 to 12mths

1 to 2years

2 to 3years

more
than 3
years(24,027)(8,632)(10,772)(4,041)

(581)

-

-

-

-

-

-

-

(31,887)(18,059)(13,828)

-

-

-

-

-

-

-

-

-

Interest rate swaps(2,848)

14

(345)

(642)

(548)

(1,327)

Net value(58,762)(26,678)(24,945)(4,682)(1,130)(1,327)(amounts in thousands of Euro)
Forward contracts designatedas cash flow hedges
Cash outflows
Other contracts designated as
cash flow hedges (Options)
Cash outflows(amounts in thousands of Euro)

Forward contracts designatedas cash flow hedges
Cash outflows
Cash inflows
Other contracts designated as
cash flow hedges (Options)
Cash outflows
Cash inflows

58

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Financial liabilities(amounts inthousands of Euro)

FutureReported
contractual
amount at
cash flows at
January 31
January 31
2016
2016

upon
request6 mthsor less

6 to 12mths

1 to 2years

2 to 3years

3 to 4years

more
than 4years

Financial payables tobanks

580,486

599,542-

196,356

14,55425,283

215,453

104,372

43,524

Financial payables tosubsidiaries, parent
company and relatedparties319,283

325,876

49,718

1,650

1,650

258,907

13,951

-

-

654

654

-

436

218

-

-

-

-

900,423

926,072

49,718

198,442

16,422

284,190

229,404

104,372

43,524

FutureReported
contractual
amount at
cash flows at
January 31
January 31
2015
2015

upon
request6 mthsor less

6 to 12mths

1 to 2years

2 to 3years

3 to 4years

4 to 5years

Financial leases
Total(amounts inthousands of Euro)

Financial payables tobanks

287,972

363,92189

153,472

8,428

7,995

7,985

137,984

47,968Financial payables tosubsidiaries, parent
company and relatedparties

365,750

368,850

99,454804

237,335353

16,943

13,962-

Total

653,722732,771

99,543

154,275

245,763

8,348

24,928151,946

47,968Exchange rate risk
The exchange rate risk to which the Company is exposed depends on foreign currency
fluctuation against the Euro.
The exchange rate risk mainly involves the risk that the cash flows of the Group’s
distribution company will fluctuate as a result of changes in exchange rates. The mostimportant currencies for the Company are: the U.S. Dollar, Hong Kong Dollar, JapaneseYen, Chinese Renminbi and British Pound.
Exchange rate risk management is one of the risk management activities carried out
by the Company’s centralized Treasury Department.
The following table shows the sensitivity of the Company’s net income and shareholders’equity to a range of fluctuation in the main foreign currencies against Euro, based on
the statement of financial position at January 31, 2016.
Euro --> + 5%
(amounts in thousands of Euro)Euro --> - 5%

Positive/ (negative)
Positive/ (negative)
Positive/ (negative)
Positive/ (negative)
effect on
effect on
effect on net income
effect on net income
shareholders’ equity
shareholders’ equity

GB Pound

(168)

3,941

837

51

Hong Kong Dollar

5,422

7,802

(6,425)(10,848)

Japanese Yen

(210)

4,828

17

(3,652)Chinese Remnimbi

557

6,394

(672)

(6,926)US Dollar(5,078)

128

5,557

(1,691)Other currencies(1,344)

6,009

4,464

(2,233)(821)

29,102

3,778(25,299)

Total

The total impact on shareholders’ equity (positive by Euro 29.1 million and negative byEuro 25.3 million) is the sum of the effect on the income statement and on the cash

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flow hedge reserve of an hypothetical strengthening/weakening of the Euro against
other currencies. The effects on net income and shareholders’ equity are stated before
the effect of taxation.
Management considers this sensitivity analysis purely indicative, as it is based on the
period end exposure which might not reflect the effects actually generated during theyear.
Interest rate risk
The Company is exposed to the risk of interest rate fluctuations mainly with regard to theinterest charges on its financial indebtedness. The interest rate risk is managed as partof the risk management activities carried out by the centralized Treasury Department.
The following table shows the sensitivity of the Company’s net income and shareholders’equity to a shift in the interest rate curve in relation to its financial position as at January
31, 2016.

(amounts in thousands of Euro)

Shift ininterest rate
curve

Positive/
Positive/(negative)(negative)
effect on net
effect on
income for shareholders’
the period
equityShift ininterest rate
curve

Positive/
Positive/(negative)(negative)
effect on net
effect on
income for shareholders’
the period
equityEuro+ 0.50%(1,838)1,075-0.50%

1,842(1,178)

GB Pound+ 0.50%

(108)

(108)

- 0.50%

(822)

(822)

Hong Kong Dollar+ 0.50%

(514)

(514)

- 0.50%514

514

US Dollar+ 0.50%79

79- 0.50%

(79)

(79)

Other currencies+ 0.50%188

188- 0.50%

(188)

(188)

(2,193)

720

1,267

(1,753)Total

The total impact on shareholders’ equity is the sum of the effect of an hypothetical shift
in the interest rate curve on the income statement and on shareholders’ equity. The
effects on the income statement and on equity are stated before taxation.
The sensitivity analysis was based on the period end net financial position so it might
not reflect the actual exposure to the interest rate risk during the year. Therefore, thisanalysis should be considered as indicative only.
5.

Financial receivables and other receivables from parent, subsidiary and associatedcompanies and related parties
Short-term receivables from parent companies and other companies are analyzed asfollows:
January 31
2016

January 31
2015

Financial receivables

69,17046,391Other receivables

26,311

6,357

Financial receivables and other receivables – due within a year

95,481

52,748(amounts in thousands of Euro)

Financial receivables include correspondence current accounts of Euro 15.4 million andshort-term loans of Euro 53.7 million which bear interest and form part of the Group’s
centralized treasury management.
A detailed breakdown of the balance is provided in Note 27.

60

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Long-term receivables from parent companies and other companies are detailed asfollows:(amounts in thousands of Euro)

Financial receivables

January 31
2016

January 31
2015

325,368

292,877

Prepaid Sponsorship expenses

3,164

12,379Other receivables

1,632

4,309

330,164

309,565

Financial receivables and other receivables – due after more than a year

Financial receivables include the capital element of loans to subsidiaries due after morethan a year.
Prepaid sponsorship expenses refer to costs relating to future periods but already paid
to Luna Rossa Challenge srl, in accordance with agreements in place at January 31,
2016.
Other receivables refer to deferred rental income from Fratelli Prada spa and Progetto
Prada in compliance with IAS 17 “Leases”. See Note 27 for a description of theoperation and details by counterparty.
6.

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

VAT and other tax receivables

January 31
2016

January 31
2015

129,075

71,896

Other current assets

3,741

4,395

Prepayments and accrued income

26,05031,387

Total other current assets

158,866

107,678

Tax receivables include VAT receivables of Euro 40.2 million and current income tax
receivables of Euro 86.6 million.
Other current assets include advances paid towards services and advances to suppliers.
Prepayments and accrued income include the following prepaid expenses: design,
advertising campaign and fashion show costs totaling Euro 16.9 million; software
assistance costs of Euro 3.7 million; industrial property rental costs of Euro 2.5 million;
deferred costs on loans of Euro 1 million; insurance premiums of Euro 0.9 million; andother costs of Euro 1 million. Prepaid design costs mainly includes costs incurred todevelop collections that will generate revenue the following year.

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7.

Property, plant and equipment
Changes in the historical cost of Property, plant and equipment during the year ended
January 31, 2016 and in prior year were as follows:
Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

Balance at January 31, 2014

198,912110,462

54,90942,34963,584

66,749536,965

Additions

78,130

8,777

7,478

2,762

3,947

70,924

172,018

Disposals(1,418)(562)(1,394)(1,884)(679)(1,443)(7,381)Other movements

1,908

273

1,557

2,424

141

(3,136)

3,167

-

(1)

(116)

-

-

(37)

(155)

Balance at January 31, 2015

277,532

118,948

62,43345,651

66,993133,057

704,614Additions

56,515

13,508

4,331

5,287

2,779

26,616109,036

Disposals

-

(15)

(3)

-

(646)

(3)

(667)

116,704

2,170

1,140

372

19,420(120,895)

18,911(amounts in thousands of Euro)

Impairment

Other movements
Impairment
Balance at January 31, 2016

AssetsTotal
under historicalconstruction
cost

-

(859)

-

(1)

(287)

-

(1,147)450,751

133,752

67,90151,30988,25938,775

830,747

Changes in accumulated depreciation of Property, plant and equipment during the year
ended January 31, 2016 and in prior year were as follows:(amounts in thousands of Euro)Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Other Assets under
tangibles construction

Balance at January 31, 2014

30,013

91,482

26,93028,512

42,033

Depreciation

5,665

8,138

4,422

2,732

4,120

25,076

Disposals

(746)

(531)

(812)

(1,422)(622)(4,132)Other movements

-

115

676

1,614

96

2,500

Impairment

-

(1)

(68)

-

-

(69)

Balance at January 31, 2015

34,932

99,202

31,14831,43545,627242,344

Depreciation

11,413

9,713

4,688

3,019

5,128

33,961

(1)

(15)

(1)

(136)

(635)

(788)

Other movements

-

1

1

2

5

9

Impairment

-

(796)

392

-

(287)

(692)

46,344

108,105

36,22834,32049,838274,834

Disposals

Balance at January 31, 2016

218,969

Changes in the net book value of Property, plant and equipment in the year ended
January 31, 2016 and in prior year were as follows:
Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Balance at January 31, 2014

168,899

18,981

27,978

13,837

21,551

66,749Additions

78,130

8,777

7,478

2,762

3,947

70,924

172,018

Depreciation(5,665)(8,138)(4,422)(2,732)(4,120)-(25,076)

Disposals

(672)

(31)

(582)

(463)

(58)

(1,443)(3,248)Other movements

1,908

158

881

811

45

(3,136)

667

-

-

(48)

-

-

(37)

(86)

Balance at January 31, 2015

242,600

19,746

31,285

14,21521,366

133,057

462,270

Additions

56,515

13,508

4,331

5,287

2,779

26,616109,035

Depreciation(11,412)(9,713)(4,688)(3,019)(5,128)-(33,960)(amounts in thousands of Euro)

Impairment

Disposals
Other movements
Impairment
Balance at January 31, 2016

62

PRADA spa

Separate Financial Statements 2015-15aprile.indd 62

Total
Other Assets underhistoricaltangibles construction
cost
317,996

1

-

(2)

136

(11)

(3)

121

116,704

2,168

1,139

370

19,415(120,895)

18,901

-

(62)

(392)

-

-

-

(454)

404,408

25,647

31,673

16,98938,421

38,775555,913

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At January 31, 2016, “Land and buildings” included capitalized interest expenses ofEuro 1.3 million.
Additions to Land and buildings mainly includes the investment in the art gallery andcultural center managed by Fondazione Prada and designed by architect Rem Koolhaas.
The remaining additions regard industrial facilities in order to increase competitiveness.
Additions to Production plant and machinery mainly related to purchases of equipment
for use in the manufacturing processes.
Additions to Leasehold improvements regard the refurbishment of leased industrial
and commercial property.
Additions to Assets under construction, totaling Euro 27 million, mainly include Euro
16 million of capex on a real estate property in Milan and Euro 11 million on properties
in Tuscany that are not yet ready for use.
Other tangible assets includes the historical archive of finished products which
embodies the identity and the legacy of the Group brands and is a constant source ofinspiration.
8.

Intangible assets
Changes in the historical cost of Intangible assets during the year ended January 31,
2016 and in prior year were as follows:(amounts in thousands of Euro)

Balance at January 31, 2014

Other
intangible
assetsTrademarks

Store Lease
SoftwareAcquisitions

Goodwill

Assets inprogressTotal
historicalcost
180,000

25,833

2,102

3,205

62,48985,425947

Additions

168

-

7,630

2,782

-

1,513

12,093

Disposals

(273)

-

(1,400)

(16)

(671)

-

(2,360)

Other movements

273

-

1,400

633

671

(628)

2,348

-

-

-

-

-

(41)

(41)

26,001

2,102

10,83565,88785,425

1,791

192,041

Additions

17

-

226

6,584

337

7,426

14,590

Disposals

-

-

-

(96)

-

-

(96)

226

-

-

1,542

-

(1,542)

226

26,244

2,102

11,06173,91785,762

7,675

206,761

Impairment
Balance at January 31, 2015

Other movements
Balance at January 31, 2016

Changes in the accumulated amortization of Intangible assets during the year ended
January 31, 2016 and in prior year were as follows:
Other
intangible
assetsTrademarks

Balance at January 31, 2014

7,580

2,099

405

Amortization

2,125

1

1,789

Disposals

(174)

-

(187)

(amounts in thousands of Euro)

Other movements

Store Lease
SoftwareAcquisitions

Goodwill

Total accumulated
amortization

52,4243,303

65,811

3,325

-

7,240

(10)

(671)

(1,042)

161

-

93

3

671

928

Balance at January 31, 2015

9,692

2,100

2,101

55,742

3,303

72,938

Amortization

7,817

1,949

1

2,186

3,681

-

Disposals

8

-

-

-

-

8

Other movements

-

-

-

-

161

161

11,649

2,101

4,287

59,423

3,464

80,924

Balance at January 31, 2016

PRADA spa

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Changes in the net book value of Intangible assets during the year ended January 31,
2016 and in prior year were as follows:
Other
intangible
assetsTrademarks

18,2533

2,800

10,064

82,123

946

168

-

7,630

2,782

-

1,513

12,093(2,125)(1)(1,789)(3,325)--(7,240)

Disposals(98)-(1,213)(6)--(1,317)

Other movements

112

-

1,306

630

-

(628)

1,420

-

-

-

-

-

(41)

(41)

16,3102

8,734

10,14582,123

1,790

119,103(amounts in thousands of Euro)

Balance at January 31, 2014
Additions
Amortization

Impairment
Balance at January 31, 2015
Additions
Amortization
Disposals
Other movements
Impairment
Balance at January 31, 2016

Store Lease
SoftwareAcquisitions

Goodwill

Assets in
Total netprogress book value

114,188

17

-

226

6,584

337

7,427

14,590(1,949)(1)(2,186)(3,681)--(7,817)
(96)

-

-

-

(96)

-

-

217

-

-

1,542

-

(1,542)

217

-

-

-

-

(161)

-

(161)

14,595

1

6,774

14,49482,2997,675

125,837

Goodwill
Goodwill amounted to Euro 82.3 million at January 31, 2016 and included Euro 78.3
million relating to sales and distribution activities in Italy. As required by IAS 36, goodwill
with an indefinite useful life is not amortized but tested for impairment at least oncea year.
The method used to determine recoverable value (value in use) is based on the
discounted expected free cash-flow generated by the assets directly attributable tothe business to which the goodwill has been allocated (Cash Generating Unit).
Value in use is calculated as the sum of the present value of future free cash-flows
expected from the business plan projections prepared for each CGU and the present
value of the operating activities of the sector at the end of the business plan period(terminal value).
The business plans cover a period of five years and the discount rate used to discountcash flows is calculated using the weighted average cost of capital approach (WACC).
The weighted average cost of capital used for discounting purposes was 9.15%. A
sensitivity analysis was performed to ensure that changes in the main assumptions(WACC and “g” growth rate) did not significantly affect the coverage results. The
outcome of this simulation did not highlight any indication that values in use could havebeen lower than the carrying amount.
The impairment test performed as at January 31, 2016 did not identify any impairment
losses on goodwill.

64

PRADA spa

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9.

Investments(amounts in thousands of Euro)
Investments in subsidiaries and associated undertakings
Other investments
Total

January 31
2016

January 31
2015

945,514931,586

13

13

945,527

931,599

Investments in subsidiaries and associated undertakings at January 31, 2016 and 2015
are analyzed as follows:(amounts in thousands of Euro)

Note

January 31
2015

Increases

Decreases

January 31
2016

Investments in subsidiaries:
Artisans Shoes srl
Church Holding UK plc
IPI Logistica srl

2,706

-

-

2,706

108,828--

108,828

1,798

-

-

1,798

Marchesi Angelo Srl

(1)

8,617

46

-

8,663

Montenapoleone 9 srl

(2)

-

900

-

900

Pellettieri d’Italia srl

(3)

601

1,370

1,971

-

54,807--54,807

Post Development Corp.
PRADA Belgium sprl

(4)

PRADA Bosphorus Deri Mamuller Limited Sirketi
PRADA Brazil Importaçao e Comercio de Artigos
de Luxo ltda

(5)

Prada Canada Corp.
PRADA Czech Republic sro
PRADA Denmark Aps(6)

PRADA Far East bv
PRADA Finnish Oy

(7)

-

804

-

804

13,536--

13,536

17,853

2,286

20,139

-

5,086

-

-

5,086

1,894

-

-

1,894

-

7

-

7

383,590--

383,590

-

3

-

3

PRADA Hellas Single Partner Limited Liability Company

1,764

-

-

1,764

PRADA Hong Kong P.D. limited

1,120

-

-

1,120

PRADA Kazakhstan llp

5,390

-

-

5,390

3,667

-

3,667

-

PRADA Middle East Fzco

2,069

-

-

2,069

Prada Panama sa

1,760

-

-

1,760

955

-

-

955

1,623

-

-

1,623

1,794

1,914

-

3,708

3,041

-

-

3,041

16,801

31,976-

48,777PRADA sa

23,315--23,315PRADA Saudi Arabia ltd

3,935

-

-

3,935

PRADA Stores srl

80,237--80,237PRADA Switzerland sa

36,177PRADA Maroc sarlau(8)

PRADA Portugal. Unipessoal lda
Prada Retail Aruba nv
Prada Retail South Africa pty ltd(9)Prada Retail SPC
PRADA Rus llc(10)36,177--PRADA Ukraine llc

-

-

-

-

PRADA USA Corp.

145,759--

145,759

PRM Services S. De R.L. de CV

407

-

-

407

Tannerie Limoges sas

720

-

-

720

Investments in associated undertakings:
PAC srl - in liquidation

(11)

1,738

-

1,738

-

Pelletteria Ennepì srl

(12)

-

2,138

-

2,138

13

-

-

13

931,599

41,44427,515945,527

Investments in other entities
Total

PRADA spa

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65

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Investments were tested for impairment and impairment losses of Euro 24 million
were identified at January 31, 2016, as follows:(amounts in thousands of Euro)

January 31
2016

PRADA Maroc sarlau(3,667)PRADA Brazil Importaçao e Comercio de Artigos de Luxo ltda

(20,139)

Total(23,806)

This test is performed at least once a year or whenever there is an indication ofprobable impairment.
Notes:(1) The increase is due to acquisition related expenses.
(2) On April 22, 2015, PRADA spa and Marchesi Angelo srl incorporated
Montenapoleone 9 srl in order to develop the commercial activities of the Marchesi
brand. The increase refers to payment of the subscribed quota capital.
(3) The increase represents the sum of the acquisition cost of a 40% interest inPellettieri d’Italia srl and the waiver of receivables in order to cover losses. On
November 24, 2015, Pellettieri d’Italia srl was merged through incorporation into
the Company.
(4) On December 4, 2015, the Company incorporated PRADA Belgium SPRL in orderto develop the retail business in Belgium. The increase represents the sharecapital paid.
(5) The increase refers to the recapitalization of the company on January 22, 2016. The
decrease regards the impairment adjustment made following the impairment tests.
(6) On May 19, 2015, PRADA spa incorporated PRADA Denmark aps in order todevelop the retail business in Denmark. The increase represents the share capital
paid.
(7) On November 9, 2015, the Company incorporated PRADA Finnish Oy in order todevelop the retail business in Finland. The increase represents the share capital
paid.
(8) The decrease refers to an impairment adjustment made following an impairment test.
(9) The increase refers to capital paid into the company on March 20, 2015.
(10) The increase refers to a share capital increase performed through the conversionof loans of Euro 26 million and payment of Euro 6 million.
(11) At January 31, 2015, Investment in associated undertaking included a 49%
interest in Pac srl (in liquidation), an unlisted company based in Italy. During theyear, the liquidation process of said entity was almost completed, although someformalities had not yet been concluded at year end. Accordingly, at January 31,
2016, the value of the investment was written off.
(12) On October 16, 2015, the Company acquired a 40% interest in Pelletteria Ennepì
srl, a company specializing in the production of wallets, travel items, bags andsmall leather goods.

66

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Additional information on subsidiaries and associated undertakings:(Amounts in currency /000)

Artisans Shoes srl
Church Holding UK plc

Share
CapitalLatest net
income /(loss)

EURO

1,000

1,126

8,059

66.70%

GBP

78,126

530

122,938

100.00%100.00%Carrying
amountLocal
currency

2,706
108,828

Share% interest
holders’
heldequity

IPI Logistica srl

1,798

EURO

600

105

2,665

Marchesi Angelo Srl

8,662

EURO

23

175

920

80.00%

Montenapoleone 9 srl

900

EURO

1,000

(2,149)(1,149)90.00%

Post Development Corp.

54,807

USD

45,138920

78,940100.00%

804

EURO

800

0

800

100.00%13,536TRY

41,000(5,594)

19,033100.00%PRADA Belgium sprl
PRADA Bosphorus Deri Mamuller Limited Sirketi
PRADA Brazil Importaçao e Comercio de Artigos
de Luxo ltda-

BRL

97,000(50,411)(4,769)100.00%PRADA Canada Corp.

5,086

CAD

300

3,145

39,789100.00%PRADA Czech Republic sro

1,894

CZK

2,500

3,334

28,096100.00%

7

DKK

50

(1)

49

100.00%PRADA Denmark Aps
PRADA Far East bv

383,590EURO

20

63,064

490,746

100.00%PRADA Finnish Oy

3

EURO

3

(216)

(214)

100.00%PRADA Hellas Single Partner Limited Liability
Company

1,764

EURO

2,850

6

979

100.00%PRADA Hong Kong P.D. limited

1,120

HKD

11,000555

14,683100.00%PRADA Kazakhstan llp

5,390

KZT

500,000(229,124)

14,281100.00%-MAD

95,000(54,269)(17,094)

100.00%PRADA Middle East Fzco

2,069

AED

18,00055,846

170,885

60.00%PRADA Panama sa

1,760

PAB

30

76

2,172

100.00%

955

EURO

5

170

2,289

100.00%

1,623

USD

2,011

32

2,104

100.00%PRADA Maroc sarlau

PRADA Portugal. Unipessoal lda
PRADA Retail Aruba nv
PRADA Retail South Africa pty ltd

3,041

ZAR

50,000(13,613)34,959100.00%PRADA Retail SPC

48,777QAR

15,0004,541

22,204100.00%PRADA Rus llc

23,315RUB

250(32,010)2,075,971

100.00%PRADA sa

3,935

EURO

31

19,963

276,294

100.00%PRADA Saudi Arabia ltd

3,709

SAR

11,00021,401

302,54575.00%PRADA Stores srl

80,237EURO

520(1,553)

26,156100.00%PRADA Switzerland sa

36,177

CHF

24,000(4,206)

15,863100.00%PRADA Ukraine llc-

UAH

30,000(86,367)(140,818)

100.00%PRADA USA Corp.

145,759

USD

152,211

15,105

263,977

100.00%PRM Services S. De R.L. de CV

407

MXN

7,203

(3,124)8,033

100.00%Tannerie Limoges sas

720

EURO

1,200

(666)

108

60.00%

2,138

EURO

93

90

2,907

40.00%

Pelletteria Ennepì S.r.l. (1)945,5141) Figures at 31/12/2014

The amounts shown are those reported for consolidation purposes before theresolutions by the respective Boards of Directors approving the financial statements
and could well differ from the final version.

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10. Other non-current assets
Other non-current assets may be analyzed as follows:
January 31
2016

January 31
2015Long-term prepaid expenses

9,030

2,720

Advances and payments on account

3,773

2,831

Other financial receivables

2,000

3,900

Sundry other long-term receivables

708

652

Long-term guarantee deposits

571

537

Other tax receivables

370

700

16,452

11,340(amounts in thousands of Euro)

Total

Long-term prepaid expenses refer to the portion of stamp duty paid on the Galleria
Vittorio Emanuele II concession fees which relates to future reporting periods andother costs relating to future periods.
Other long-term receivables include Euro 0.6 million relating to insurance policies inrespect of staff leaving indemnity liabilities towards several employees.
11. Short-term financial payables and bank overdrafts
January 31
2016(amounts in thousands of Euro)

January 31
2015

Bank overdrafts

3

89

Short-term loans

185,098

150,106

Current portion of long term loans

22,551

7,777

(78)

(1)

207,574

157,971

Deferred costs on loans
Short-term financial payables and bank overdrafts

Short-term financial payables mainly include finance of Euro 125 million on therevolving line of credit of Euro 315 million arranged by PRADA spa in 2014 with a
syndicate of banks. The revolving line of credit is subject to compliance with several
covenants determined based 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 not exceed 4.
Both covenants were respected at January 31, 2016.
The current portion of long-term borrowings is analyzed as follows:
Intesa San Paolo

3,667

Euro/000

May 2030

2.737%

Intesa San Paolo

16,667

Euro/000

December 2018

0.600%

Interest accruing and due

2,217Euro/000

July-August 2016

The amount of Euro 3.7 million at January 31, 2016 (zero at January 31, 2015) regards
a mortgage loan approved by IntesaSanpaolo for PRADA spa in 2014 and disbursed in2015. This loan is secured by a mortgage on the Milan property used as the Group’s
headquarters.

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12. Financial payables and other payables to parent, subsidiary and associatedcompanies and related parties
Current payables to parent, subsidiary and associated companies and related parties
are analyzed as follows:
January 31
2016

January 31
2015

Financial payables

49,718335,283

Other payables

4,139

3,768

Total payables due within a year

53,857

339,051(amounts in thousands of Euro)

Financial payables to subsidiaries have decreased due to the reclassification fromcurrent to non-current following the renegotiation of loan agreements.
Other payables include sundry interest-free payables to subsidiaries.
See Note 27 for a detailed breakdown of the balance by creditor.
Non-current payables to parent, subsidiary and associated companies and relatedparties are analyzed as follows:(amounts in thousands of Euro)

Financial payables

January 31
2016

January 31
2015

269,566

30,467

Payables to related parties for investments-

13,384

Total payables due after more than a year

269,566

43,851

Following the buyback of quotas by the non-controlling quotaholder of Fin-reta srl
in the first half of 2015, said company is no longer a related party but a third party.
Consequently, the related payables have been reclassified to “Other non-current
liabilities”. See note 20 for further information.
13. Trade payables
Trade payables may be analyzed as follows:
January 31
2016

January 31
2015

Trade payables – third parties

173,246

301,457

Trade payables – subsidiaries and associated undertakings

405,279

318,494

8,897

21,033

587,422640,984(amounts in thousands of Euro)

Trade payables – related parties
Total

The decrease in Trade payables towards third parties is essentially due to different
production scheduling adopted in the last months of the current period.
The increase in Trade payables towards subsidiaries and associated undertakings is dueto the higher net expense from the share of profits and losses of the retail companies,
as described in Note 24 “Operating expenses”. A detailed breakdown of this item bycreditor is provided in Note 27 “Transactions with parent, subsidiary and associatedcompanies and related parties”.
Trade payables due to related parties regard purchases of finished products from retailcompanies owned by the main shareholders of PRADA Holding spa.
PRADA spa

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Total trade payables are summarized below by maturity date.
(amounts in thousands of Euro)

January 31
2016

Current

Overdue (days)
1

30

31

60

61

90

91

120

> 120

Trade payables - third parties

173,246

160,278

5,544

3,356

873

139

3,057

Trade payables – parent,
subsidiaries, associates andrelated parties

414,176

387,210

834

4,749

1,051

777

19,554

Total

587,422547,488

6,378

8,105

1,924

916

22,611January 31
2015

Current

120

> 120

(amounts in thousands of Euro)

Overdue (days)
1

30

31

60

61

90

91

Trade payables - third parties

301,457

275,618

16,259

4,516

1,038

463

3,563

Trade payables – parent,
subsidiaries, associates andrelated parties

339,527

316,895

3,394

3,458

1,682

3,616

10,482

Total

640,984

592,513

19,653

7,974

2,720

4,079

14,045

14. Current tax liabilities
Current tax liabilities are detailed as follows:
January 31
2016

January 31
2015

VAT and other taxes

4,485

4,178

Social security and pension contribution liabilities

4,586

4,875

Total

9,071

9,053

(amounts in thousands of Euro)

VAT and other taxes refers to withholding taxes on employee remuneration andprofessional fees and to VAT liabilities arising from e-commerce sales in EU countries.
15. Obligations under finance leases
The increase in obligations under finance leases is due to a new contract signed during
the year.
16. Other current liabilities
Other current liabilities may be analyzed as follows:
January 31
2016

January 31
2015

Provision for Returns

34,76834,336

Payables for capex

30,12992,784

Payables to employees

26,974

28,618Deferred income

417

622

Other payables

375

382

92,664

156,743(amounts in thousands of Euro)

Total

Payables to employees include wages and salaries, 13th and 14th months’ salaries,
accrued holidays and productivity bonuses.
The provision for returns goods is created to cover identifiable future liabilities for
returns whose amount and due date was not known at the reporting date. The amount70

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of the provision was estimated on the basis of historical/statistical data and on forecastsof the number of items sold that could be returned in future.
“Payables for capital expenditure” include liabilities as at January 31, 2016 for capital
expenditure described in Notes 7 and 8 on Property, plant and equipment and Intangible
assets. The decrease is due to settlement of the balance of Euro 55 million, due toBeni Stabili, on the purchase price of the property in Milan used as the Company’s
headquarters.
Other payables includes advances of Euro 0.2 million received from customers andsundry payables of Euro 0.1 million.
17. Long-term financial payables
Long-term financial payables are analyzed below:
January 31
2016

January 31
2015

Bonds

130,000

130,000

Long-term bank borrowings

242,833-

Deferred costs on long term loans(1,104)

(791)

Total

371,729

129,209(amounts in thousands of Euro)

Long-term financial payables at January 31, 2016 are analyzed as follows:
Maturity
dateInterest rate
(1)

August 2018

2.750%

December 2018

0.558%

Amounts in Euro/000

Principal

Loan currency

Lender

PRADA spa

130,000

Euro

Bonds

PRADA spa

60,000Euro

Monte dei Paschi di Siena

PRADA spa

33,333Euro

Intesa San Paolo

December 2018

0.600%PRADA spa

40,000Euro

Intesa San Paolo

February 2019

0.608%PRADA spa

60,000Euro

Unicredit

March 20190.755%PRADA spa

49,500Euro

Intesa San Paolo

May 2030

2.737%

Total

372,833(1) Interest rates include, where applicable, the effect of any interest rate risk hedging transactions

Long-term financial payables at January 31, 2015 are analyzed as follows:
Amounts in Euro/000

Principal

Loan currency

LenderMaturity
dateInterest rate
(1)

PRADA spa

130,000

Euro

Bonds

August 2018

2.750%

Total

130,000(1) Interest rates include the effect of any interest rate risk hedging transactions

On June 23, 2014, PRADA spa arranged with Intesa-Sanpaolo Group a long-term loan
secured by a mortgage on the property in Milan used as the Group Head Office. The
loan was disbursed in 2015 in the amount of Euro 55 million and its outstanding, longterm amount at January 31 2016 was Euro 49.5 million.
The bonds are listed on the Irish Stock Exchange and mature interest at a fixed rate.
At January 31, 2016, the fair value of the bonds payable was Euro 136.9 million while
their carrying amount was Euro 129.4 million i.e. amortized cost.
An analysis of these payables by maturity date is provided in Note 4.

PRADA spa

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18. Employee benefits
January 31
2016

January 31
2015

Post-employment benefits

20,42322,214

Other long term employee benefits

17,43933,664

Total

37,86255,878(amounts in thousands of Euro)

Post-employment benefits
Liabilities for post-employment benefits totaled Euro 20.4 million at January 31, 2016,
regarded the TFR liability and were all classified as defined benefit plans.
The TFR liability was determined using the “Projected Unit Credit Method” byindependent expert Federica Zappari, an Italian registered actuary (no 1134) of Ordine
Nazionale degli Attuari. The main actuarial assumptions made in the years of appraisal
shown were as follows:
January 31
2016
Average duration of plan (years)

January 31
2015

10.9

11.1

Discount rate

1.513%

0.9%

Inflation rate

1.5%

1.0%

The discount rate used to value the defined benefit plans was determined on the basisof the yield on bonds with an AA rating and a maturity date similar to that of the plansin question.
The actuarial gains and losses are determined as follows:
Defined Benefit Plans
in Italy (TFR)
Actuarial adjustments due to(a) Changes in financial assumptions(873)(b) Changes in other assumptions (e.g. demographic assumptions, remuneration increases)

73(c) Other(30)

Actuarial (gains)/losses(830)

The sensitivity analysis performed on the main actuarial assumptions applied at January
31, 2016 highlighted that an increase or decrease of 50 basis points in the parameters(discount rate, rate of inflation, likelihood of termination of employment relationshipand percentage of advances on TFR) would have an impact of less than 5% on the
total amount of the obligations. Consequently, the result of the test was considered
immaterial in terms of possible impact on the financial statements.
Payments expected in relation to the TFR liability in the years following these financial
statements are shown below:

72(amounts in thousands of Euro)

2016

2017

2018

2019

After 2019

Defined Benefit Plans (TFR)

1,375

957

1,007

1,044

20,388PRADA spa

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Movements on liabilities for post-employment benefits in the period ended January
31, 2016 are shown in the following table:(amounts in thousands of Euro)
Balance at January 31, 201522.214Current service costs

87

Financial expenses

24

Increase due to merger

84

Transfers(14)

Acquisition of branches

568

Actuarial (Gains)/Losses(830)

Indemnities paid

(1.710)

Balance at January 31, 2016

20.423

Other long-term employee benefits
Other long-term employee benefits have been classed under the IAS 19 category “Other
long-term employee benefits” and relate to long-term retention and performance plans
recognized in favor of Company employees. As at January 31, 2016, their actuarial
valuation, obtained using the Projected Unit Cost Method, was Euro 17.4 million (Euro33.7 million as at January 31, 2015). This valuation was performed by independentactuary Federica Zappari.
Movements on other long-term employee benefits in the twelve months ended
January 31, 2016 are shown below:(amounts in thousands of Euro)

Other long-term benefits

Balance at January 31, 2015

33,664

Increases

4,948

Utilization for payments(21,172)

Balance at January 31, 2016

17,43919. 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, 2015

Provision
for litigation

Provision
Provision for coveragefor tax
of losses ofdisputes subsidiaries /associates

Other
provision

Total

351

21,766-

737

22,855

Increases

-

163

1,725

1,024

2,912

Increases due to mergers

-

-

-

49

49

Reversals

-

(264)

-

(49)

(312)

351

21,666

1,725

1,761

25,503

Balance at January 31, 2016

Provisions represent the Directors’ best estimate of maximum contingent liabilities. In
the Directors’ opinion and based on the information available to them as supported by
the opinions of independent experts at the reporting date, the total amount provided forrisks and charges is reasonable considering the contingent liabilities that might arise.

PRADA spa

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Provision for tax disputes
On December 30, 2005, PRADA spa (for companies incorporated into PRADA spa,
Genny Spa and Byblos Spa, the respective sellers of the “Genny” and “Byblos”
businesses) received two notices of tax assessment for VAT purposes for the 2002
fiscal year. The assessments regarded the sales of the “Genny” and “Byblos”
businesses which the authorities sought to treat as sales of the respective brands.
The amount assessed was about Euro 21 million. The Company successfully appealed
at the first and second levels of appeal. The Tax Authority then announced its appeal
to the Supreme Court of Cassation against which the Company submitted a counterappeal. No further developments took place in 2015.
On August 4, 2006, PRADA spa (for IPI Italia spa, a company incorporated into it andthe seller of the “Genny” business), received a demand for VAT penalties totaling Euro
5.7 million for the year 2002 in relation to its alleged failure to issue a “self-invoice”
for the value of the “Genny” brand. Even though it submitted its defensive arguments
against this claim, on October 9, 2007, the Company received a request for penalties
against which it filed appeals at two levels but was unsuccessful with both. Finally,
the Company then made a further appeal to the Supreme Court of Cassation against
which the Tax Authority filed its own counter appeal. No further developments took
place in 2015.
In October 2012, October 2013 and October 2014, the Italian Tax Authorities rejected
PRADA spa’s request not to apply the Italian Controlled Foreign Companies rules (CFC)
to its Dutch sub-holding company PRADA Far East bv for the tax years from 2010 to 2013.
In order to reduce the risk of application of additional penalties in case of assessment,
Prada spa paid some Euro 66 million, including Euro 42 million recorded in the 2012
income statement, Euro 22 million in the 2013 income statement and Euro 3 million in
the 2014 income statement. The amounts paid followed the “ravvedimento operoso”
procedure (or voluntary settlement of dispute) and represented the taxes due in Italy
by PRADA spa on the taxable income of PRADA Far East bv – a total of Euro 42 million
for 2010 and 2011 and a total of Euro 22 million for 2012. The tax due for 2013 was
not paid due to the credit arising from payments made on account. In October 2012,
October 2013, May 2014 and October 2014, the Italian tax authorities also declared
inadmissible the requests filed by PRADA spa for the tax years from 2010 to 2014 not
to apply CFC rules to other Group countries operating in countries on the fiscal black
list. In January 2013, January 2014 and January 2015, PRADA spa filed appeals to theRome Provincial Tax Commission in relation to the rejection of its requests regarding
PRADA Far East bv and the declaration of inadmissibility of its petitions regarding theother “black list” companies; it also requested the reimbursement of the amounts paidin relation to PRADA Far East bv. In October 2015, the Italian tax authorities upheld
Prada spa’s request for the non-application of CFC rules for 2014 in relation to Groupsubsidiaries operating in countries on the fiscal black list; this decision is effectivefrom 2014 onwards on condition that there are no significant changes to the structureof the companies involved. Meanwhile, the petition to set aside the CFC rules for
Dutch sub-holding company Prada Far East for the 2014 fiscal year was not presented
because the legal requirements for it to be classed as a CFC were no longer met forthat year. Consequently, no tax costs resulting from CFC rules have been recorded forsaid company in the 2015 income statement.
In May 2012, the Italian Customs Authority began an audit of PRADA spa on the 20072011 tax years and with reference to the method used to value imported products
in specific circumstances. This audit led to the detection of customs irregularities
subject to administrative and criminal penalties; PRADA spa provided all of the
documentation requested. In March 2012, the Company applied to the Central Italian
Customs Authority in Rome for a ruling on the same issue and, in 2013, it submitted
two explanatory statements to the Public Prosecutor and the Customs Head Office.

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The customs authorities suspended their judgment until completion of the criminal
proceedings which were discontinued in 2015. Although, in August and September
2014, PRADA spa received two amended notices of assessment from the customs
authorities in relation customs duties (and related demands for payment), the Directors
do not believe that any provision need be made. Indeed, the company has submitted
its comments in relation to the amended notices of assessment. Moreover, after its
petition for suspension of the demand for payment was rejected, the Company has
paid the tax demands issued in the meantime while also filing the necessary appeals
by the legally required deadlines.
Except where there is an express statement that no provision has been made, theDirectors, supported by the opinion of their tax advisors, believe that the provisions
totaling Euro 21.7 million carried at January 31, 2016 in respect of the tax disputes
described above represents the best estimate of the obligations that the Company
could be called upon to fulfill.
Provision for litigation
This provision represents the Directors’ assessment of litigation risks at the end of
financial year 2015.
There were no significant developments in relation to ongoing litigation during 2015.
Other provisions
Other provisions for risks amounted to Euro 1.8 million as at January 31, 2016 andrelated to obligations to return premises under lease agreements in their original state.
20. Other non-current liabilities
Other non-current liabilities amount to Euro 17 million and include Euro 8.7 million
outstanding payables for the right of usufruct of retail premises. The rest of the balance
regards liabilities recognized in order to record on a straight-line basis the concession
fees for the premises in Galleria Vittorio Emanuele II in Milan and rental costs for other
outlet stores.
21. Shareholders’ equity
Shareholders’ equity is analyzed as follows:
January 31
2016

January 31
2015

Share capital

255,882

255,882

Other reserves

1,098,866

966,012Net income for the period

248,421385,429

Total shareholders’ equity

1,603,169

1,607,323(amounts in thousands of Euro)

Share capital
At January 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 is unchanged compared to January 31, 2015.

PRADA spa

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Dividends
During the period, the Company distributed dividends of Euro 281.5 million, as
approved by the Annual General Meeting held on May 26, 2015 to approve thefinancial statements for the year ended January 31, 2015. Payment of the dividends
was completed by January 31, 2016.
Availability of shareholders’ equity(amounts in thousands of Euro)

January 31
2016

Possibleutilization

Amountdistributable

Summary of utilizationin 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

454,651

A, B, C434,135-

588,530--

Cash flow hedge reserve

93

Distributable amount

1,027,081

588,530

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

Pursuant to Article 2431 of the Italian Civil Code, the share premium reserve is fully
distributable only when the legal reserve reaches an amount equal to 20% of sharecapital.
A non-distributable portion of retained earnings amounting to Euro 20,516 million
refers to restricted reserves under Art. 7 of Legislative Decree 38/2005.

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Income statement
22. Net revenues
Net revenues are mainly generated by sales of finished products and are stated netof returns and discounts. Net sales for the twelve months ended January 31, 2016
amounted to Euro 1,870 million, 5.9% less than in prior year (Euro 1,988 million in2014) because of lower sales both to Group companies and in the wholesale channel.
Royalties income of Euro 42 million was earned by the Company from Fragrance andSkincare sl and Luxottica Group on sales of cosmetics and eyewear, respectively.
Franchising royalties income totaled Euro 2.9 million, broadly in line with prior year
(Euro 2.7 million).
January 31
2016

January 31
2015

Net sales

1,869,706

1,987,923

Royalties

45,07539,584

1,914,781

2,027,507

January 31
2016

January 31
2015

Purchases of raw materials and production costs

826,647

942,289

Logistics costs, duties and insurance

87,774

110,128

Change in inventories(23,701)(110,790)

Total

890,721941,628(amounts in thousands of Euro)Net revenues

23. Cost of goods soldCost of goods sold may be analyzed as follows:(amounts in thousands of Euro)

Cost of goods sold has decreased by Euro 51 million in absolute terms because thelower volume of production. Compared to prior year, cost of goods sold has remained
stable at 46.5% of net revenues.
24. Operating expenses
Operating expenses may be analyzed as follows:
January 31
2016

January 31
2015

Advertising and communications costs

126,642

122,895

Product design and development costs

112,782

116,207

Selling costs

358,099

264,070

General and administrative costs

85,25369,727

Operating expenses

682,777

572,899(amounts in thousands of Euro)

Advertising and communications costs include expenses incurred to organize
advertising campaigns, fashion shows and other events plus overheads regarding thisarea of the business. The increase compared to prior year is mainly due to the higher
cost of sponsorship of Fondazione Prada which organized a series of exhibitions andcultural events in 2015.
Product design and development costs include both the design phase – i.e. researchand testing of shapes, fabrics, leather and production techniques plus definition of the
PRADA spa

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design concept - and the product development phase, involving planning of products,
production of prototypes and manufacture of the products themselves. Product designand development costs decreased by Euro 3.4 million compared to 2014.
Selling costs have increased by Euro 94 million mainly because of a rise in net expenses
from participation in the profits and losses of retail companies which have gone fromEuro 140 million to Euro 242 million.
The “Additional information” section contains an income statement reclassified bynature.
25. Net interest and other financial income/(expenses)(amounts in thousands of Euro)

January 31
2016

Interest income / (expenses), net

5,908

5,129

Exchange gains / (losses) - realized

3,313(2,209)Exchange gains / (losses) – unrealized(13,392)(27,379)

Dividends

42,03992,982Other financial income / (expenses)(30,299)(33,940)

7,569

34,582

Total

January 31
2015

Net interest income, amounting to Euro 5.9 million represents the difference between
total interest income of Euro 16.8 million (Euro 15.3 million in 2014) and interest
expenses of Euro 10.9 million (Euro 10.2 million in 2014).
The increase in net interest income is consistent with the reduction in debt.
Other financial expenses represent impairment adjustments to investments in
subsidiaries, following impairment tests.
26. Income taxes
Income taxes for the twelve months ended January 31, 2016 and January 31, 2015 areanalyzed as follows:
January 31
2016

January 31
2015

Current taxes

103,093

163,070

Prior year taxes(2,611)

3,423

Deferred taxes(50)(4,360)100,432

162,133(amounts in thousands of Euro)Total

The decrease in current income taxes in absolute terms is essentially due to the
reduction in income before taxation. As a percentage of income before taxation, thetax burden decreased from 29.6% to 28.8%.
Movements on net deferred tax assets and deferred tax liabilities are shown below:(amounts in thousands of Euro)

78

January 31
2016

Opening balance, net

42,532

Deferred taxes for the period(10,595)

Closing balance, net

31,937PRADA spa

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The deferred tax assets and deferred tax liabilities recorded at the end of the reporting
period and at the end of the prior period are shown below and classified based on thenature of the line item to which they relate:
Deferred tax assets, net(amounts in thousands of Euro)

January 31
2016

Employee benefits – defined benefit plans

January 31
2015

IncomeStatement
effectEquityeffect

607

607

-

-

Inventories

15,51019,792(4,281)-

Property, plant and equipment(2,970)(4,482)

1,512

-

(120)

(100)

(20)

-

Provisions for risks and charges

11,297

11,188

109-

Allowance for doubtful debts(1,414)(1,331)

(83)

-

(35)

10,610-(10,645)

Other temporary differences

9,063

6,248

2,815

Total

31,93742,53250

Intangible assets

Derivative instruments(10,645)

The following table shows a reconciliation between the effective tax rate and thetheoretical tax rate:
IRES

Eff. IRES
rate

IRAP

Eff. IRAP
rate

Theoretical tax on income before
taxation

95,93427.50%

13,710

Dividends exempted(10,983)-3.15%-

ACE(8,390)-2.40%

Impairment adjustment toinvestments

7,062

2.02%

(amounts in thousands of Euro)

Total
taxation

Total Eff.
rate

3.93%

109,644

31.43%-(10,983)-3.15%--(8,390)-2.40%

-

-

7,062

2.02%

Taxation of revenue allocatedto OCI

228

0.07%

-

-

228

0.07%

Other permanent differences

1,426

0.37%

67

-0.11%

1,493

0.26%

Adjustments in annual tax
return “UNICO”(2,059)-0.59%(557)-0.16%(2,616)-0.75%

-

-

3,993

1.14%

3,993

1.14%

83,21923.82%

17,213

4.81%

100,432

28.62%

492

0.15%

(442)

-0.13%

50

0.03%

83,71123.97%

16,771

100,482

28.65%

Difference between income
before taxation and net value of
production
Taxes for period
Temporary differences
Current taxation

27. Transactions with parent, subsidiary and associated companies and relatedparties
The Company enters into commercial and financial transactions with companies
owned by entities that directly or indirectly control PRADA spa (related parties). Detailsof the amounts reported in the financial statements resulting from transactions withrelated parties are summarized in the table below.
The said transactions mainly refer to the sale of goods, commercial services, loans
granted and received. These transactions take place on an arm’s length basis on thesame economic terms as transactions with third parties.
The tables mentioned above provide details of related party transactions in accordancewith IAS 24 “Related Party Disclosures”. The related party disclosures provided below
are also consistent with the Listing Rules of the Hong Kong Stock Exchange.
The transactions with related party “Fratelli Prada spa – franchising” refer to thetransactions between the Company and Fratelli Prada spa in relation to the franchising

PRADA spa

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79

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agreement for the Prada stores in Milan. The transactions reported for the twelve
months ended January 31, 2016 fall within the scope of application of Chapter 14Aof the 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 was includedin the PRADA spa Announcement dated January 29, 2014 while a summary update isreported in the Corporate Governance section of these Separate Financial Statements.
The transactions with related party “Fratelli Prada spa – Galleria” refer to the transactions
between the Company and Fratelli Prada spa in relation to the business managementagreement over the use by the latter of part of the Galleria Vittorio Emanuele II property
in Milan to conduct retail business. The transactions reported refer to the period fromFebruary 1 to April 1, 2015, following the termination agreement signed by the parties
on March 31, 2015, contents of which are reported in the Prada spa announcement
dated April 2, 2015.
The transactions with related party “Progetto Prada Arte srl - Galleria” refer to thetransactions between the Company 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 for the twelve months ended January 31, 2016 fall within thescope of application of Chapter 14A of the Hong Kong Stock Exchange Listing Rules
as they were qualified as continuing connected transactions subject to reporting anddisclosure but exempted from independent shareholders’ approval requirements.
As requested by the Listing Rules, comprehensive disclosure of these continuingconnected transactions was included in the PRADA spa Announcement dated January
29, 2013 while a summary update is reported in the Corporate Governance section ofthese Separate Financial Statements.
The transactions with related party Luna Rossa Challenge srl reported for the twelve
months ended January 31, 2016 fall within the scope of application of Chapter 14Aof the 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 was included in
the PRADA spa Announcement dated February 27, 2014 while a summary update isreported in the Corporate Governance section of these Separate Financial Statements.
Other than the “non-exempt continuing connected transactions” and the “non-exempt
connected transactions”, no other transactions reported in the Separate Financial
Statements fall within the definition of “connected transactions” or “continuingconnected transactions” under Chapter 14A of the Hong Kong Stock Exchange
Listing Rules or, if they did fall within the definition of “connected transactions” or“continuous connected transactions” in terms of said Chapter 14A, they are exempt
from the reporting, disclosure and independent shareholders’ approval requirementsof Chapter 14A.

80

PRADA spa

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Statement of financial position(amounts in thousands of Euro)

Trade
receivables

Tradereceivables

Jan 31, 2016

Jan 31, 2015

Trade
payablesTradepayablesJan 31, 2016

Jan 31, 2015

Parent company

478

140

-

1

PRADA Holding Spa

478

140

-

1

394,641

529,255

405,279

318,494336

477

18,38927,241

Church Footwear (Shanghai) Co. Ltd

3

7

-

-

Church & Co. (USA) Ltd

30

20

1

1
1,101

Subsidiaries and associates
Artisans Shoes Srl

30,00019,3692,912

Church Austria Gmbh

Church & Co. Plc

144

129

-

-

Church Denmark Aps

53

46

-

-

Church English shoes Sa
Church Footwear Ab

3

2

-

-

168

159

-

-

Church France Sa

234

122

5

-

Church Holding UK Plc

368

367

-

-

Church Hong Kong Retail Ltd

218

186

-

-

2

1

-

45

Church Ireland Retail Ltd

299

1,458

54

Church Japan Co.. Ltd

Church Italia Srl

0

5

-

-

Church Netherlands Bv

200

183

-

-

Church Singapore Pte Ltd

121

167

-

-

Church Spain Sl

50

38

-

-

1,149

1,005

8

8

Church's English Shoes Sw.Sa

Church UK Retail Ltd

14

28

6

6

IPI Logistica Srl

3,162

388

594

3,216

Kenon Ltd.

1

(1)

-

-

Marchesi Angelo srl

4

-

0

10

Montenapoleone 9 srl
Pellettieri d'Italia Srl

1,710

-

24

-

-

37

(0)

1,248

Post Development Corp.

3

3

-

-

PRADA (Thailand) Co..Ltd

404

688

2,372

214

PRADA Asia Pacific Ltd

35,417

111,029

52,44911,587PRADA Australia Pty. Ltd

628

524

2,815

663

2,307,86

3,421

312

1,059

PRADA Austria Gmbh
PRADA Bosphorus Deri Mamuller Limited Sirketi

6,732

3,137

3,935

5,224

PRADA Brasil Importaçao e Comercio de Artigos deLuxo Ltda

2,146

4,789

-

16,337
2,674

PRADA Canada Corp.

4,172

2,350

2,374

PRADA Company Sa

(10)

(10)

-

-

PRADA Czech Republic Sro

1,166

755

157

611

PRADA Dongguan Trading Co. Ltd

59

57

464

349

PRADA Emirates Llc (1)

948

1,153

70

23

-

-

-

-

PRADA Far East Bv

3,596

3,139

916

1,058

PRADA Fashion Commerce (Shanghai) Co. Ltd

31,431PRADA China Ltd

24,711

17,363

57,959PRADA Belgium Sprl

438

-

466

-

PRADA Denmark

311

-

197

-

PRADA Finnish Oy

94,47

-

338

-

PRADA Germany Gmbh

11,707

15,120270

3,050

PRADA Hellas S. Ltd

1,288

126

48

122

155

201

517

280

PRADA Hong Kong P.D. Ltd

-

19

-

-

PRADA Japan Co.. Ltd

PRADA India Fashion Private Ltd.

5,530

22,485397

1,208

PRADA Kazakhstan Llp

3,222

5,613

297

556

PRADA spa

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81

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(amounts in thousands of Euro)

Trade
receivablesTradepayablesTradepayablesJan 31, 2016

Jan 31, 2015

Jan 31, 2016

Jan 31, 2015

PRADA Korea Ltd

25,903

15,848617

394

PRADA Kuwaitt Wll

554

559

4

-

PRADA Macau Co.. ltd

584

-

1,860

-

PRADA Maroc Sarlau

3,710

2,599

2,569

3,675

PRADA Middle East Fzco

21,432

21,294976

1,069

PRADA Montecarlo Sam

84

(376)

2,204

1,816

PRADA New Zealand Pty ltd

349

260

639

375

PRADA Panama, S.a.

1,529

279

957

268

PRADA Portugal, Unipessoal Lda

1,313

2,612

61

249

PRADA Retail Aruba N.v.

694

2,165

84

380
14,598PRADA Retail France Sas

15,672

20,585

11,908PRADA Retail Malaysia Sdn

123

101

16

71

PRADA Retail Mexico S. de r.l.

7,558

6,970

4,197

4,967
222

PRADA Retail South Africa (Pty) Ltd

4,273

312

1,579

PRADA Retail Spc

1,616

2,954

12

27

PRADA Retail UK Ltd

2,406

28,584

4,115

6,742

PRADA Rus Llc

8,323

8,312

356

4,088

536

15,903

66,963

29,204PRADA SaPRADA Saudi Arabia Ltd.

887

199

1

-

PRADA Singapore Pte, Ltd

494,60275

14,965

14,816PRADA Spain Sa

8,758

10,46167420

PRADA Stores Srl

37,85744,450

3,647

7,964

PRADA Sweden Ab
PRADA Switzerland Sa
PRADA Taiwan Ltd Taipei

(611)

(762)

144

262

(1,899)

5,252

1,781

1,381
5,038

348

564

4,215

PRADA Ukraine Llc

5,383

3,261

1,245

991

PRADA Usa Corp.

101,816

91,734

124,873

101,632

1,154

822

1,674

858

52

133

1

-

1,077

425

79

-

PRADA Vietnam Limited Liability Company
Prm Services, S. de R.l. de CV
Tannerie Limoges sas

82

Trade
receivables

Space Hong Kong Ltd

-

24

-

0

Space Usa Corp.

-

24,507-

5,947

TRS Guam Boutique

201

136

-

-

TRS Hawaii Llc

925

1,190

2,296

1,669

TRS Hong Kong Ltd

14

10

-

-

TRS Hong Kong Ltd - Macau

103

366

-

0

TRS New Zealand Pty. Ltd

51

28

-

-

TRS Okinawa Kk

709

746

205

103

TRS Saipan Boutique

120

55

-

-

TRS Singapore Pte Limited

20

57

-

-

PRADA spa

Separate Financial Statements 2015-15aprile.indd 82

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15/04/16 14:44

(amounts in thousands of Euro)

Related parties

Trade
receivables

Tradereceivables

Jan 31, 2016

Jan 31, 2015

Trade
payablesTradepayablesJan 31, 2016

Jan 31, 2015
21,03323,90936,4108,897

Chora Srl

-

-

4,279

3,233

Conceria Superior Spa

2

1

3,081

12,226F.lli PRADA Spa

23,78330,173913

2,617

Gran Caffè snc

-

-

-

2

HMP Srl

8

8

-

-

Le Mazza Srl

63

105

823

867

-

1,278

-

-

53

721

7

154

Luna Rossa Challenge 2013 NZ Ltd
Luna Rossa Challenge Srl
Peschiera Immobiliare Srl

-

-

64

-

PRA 1 Srl

-

-

144

75

Progetto PRADA Arte Srl

-

336

(500)

1,781

Progetto PRADA Arte Srl (Galleria) (2)-566

Rubaiyat Modern Lux. Prod. Ltd

-

2,342

-

-

Stiching Fondazione PRADA

-

880

-

-

Other (3)
Total

-

-

86

78

419,027

565,805

414,176

339,527Note:(1) Company consolidated on basis of definition of control expressed in IFRS 10(2) Amount represents recharged portion of rental costs for premises occupied by Progetto PRADA Arte srl at Galleria Vittorio Emanuele
II in Milan, on the basis of temporary business partnership agreement between PRADA spa and Progetto Prada Arte srl.
(3) Relative of a director.

PRADA spa

Separate Financial Statements 2015-15aprile.indd 83

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83

15/04/16 14:44

(amounts in thousands of Euro)

Subsidiaries and associates

Other
receivables

Financialreceivables

Other
receivables

Jan 31, 2016

Jan 31, 2016

Jan 31, 2015

Jan 31, 2015

393,835

6,757

338,526

3,173

Artisans Shoes srl

4,892

456

5,420

1,304

Church & Co. plc

2,201

-

2,206

-

Church Holding UK plc

1,493

-

1,522

-

Church Italia srl

-

1,108

-

179

IPI Logistica srl

-

24

-

10

Montenapoleone 9 srl

-

1

-

-

PRADA Asia Pacific ltd

-

68

-

65

PRADA Austria gmbh

7,002

-

7,003

-

PRADA Belgium Sprl

-

222

-

-

PRADA Bosphorus Deri Mamuller Limited Sirketi

10,920-12,793-PRADA Brasil Importaçao e Comercio de Artigos deLuxo Ltda

17,214

5

24,083-PRADA Czech Republic sro

864

-

1,571

PRADA Denmark Aps

-

92

-

-

PRADA Dongguan Trading Co. Ltd

-

5

-

3

PRADA Finnish

-

14

-

-

PRADA Fashion Commerce (Shanghai) Co. Ltd

-

17

-

0

PRADA Germany gmbh

27,358116

17,345116

PRADA Hellas S. ltd

1,845

0

2,003

-

-

80

470

84

PRADA Maroc Sarlau

2,982

-

5,667

-

PRADA Middle East Fzco

3,681

-

3,556

(0)

PRADA Montecarlo sam.

3,520

-

4,238

-

PRADA Portugal, Unipessoal lda

1,262

-

1,895

-

-

-

-

327
3

Prada Hong Kong P.D. Ltd.

PRADA Retail Aruba N.v.
PRADA Retail Mexico S. de r.l.

-

12

-

60,883-60,684

-

-

45

-

45

PRADA Retail UK

43,966-

17,594-PRADA Rus LLC

0-17,205-PRADA Sa

-

118

-

125

PRADA Saudi Arabia Ltd.

7,212

-

-

6

PRADA Singapore Pte, ltd

-

-

-

24

PRADA Retail France sas
PRADA Retail South Africa (Pty) Ltd

PRADA Spain sa

16,120-16,141(0)

PRADA Stores srl

148,559

4,352

127,357

795

PRADA Switzerland Sa

23,630

-

5,141

1

PRADA Ukraine Llc.

4,581

-

4,632

1

PRADA USA Corp.

-

15

-

18

-

7

-

4

3,652

-

-

60

Prm Services, S. de R.l. de CV
Tannerie Limoges sas

84

Financialreceivables

PRADA spa

Separate Financial Statements 2015-15aprile.indd 84

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15/04/16 14:44

(amounts in thousands of Euro)

Related parties

Financialreceivables

Other
receivables

Financialreceivables

Other
receivables

Jan 31, 2016

Jan 31, 2016

Jan 31, 2015

Jan 31, 2015

703

24,350741

19,871Chora srl

-

5,848

-

2,924

F.lli Prada spa

-

-

-

3,174

Luna Rossa Challenge Srl-

16,790-12,379Peschiera Immobiliare srl

-

-

-

82

PRA 1 Srl

-

80

-

90

Progetto Prada Arte Srl

-

-

-

88

703

1,632

741

1,134

394,538

31,107339,267

23,044

Progetto Prada Arte Srl – Galleria (1)
Total

Note:
(1) Sundry receivables regard a non-monetary receivable for deferred rental income due from Progetto Prada Arte srl following
application of “IAS 17 Leases” to the temporary business partnership contract between PRADA spa and Progetto Prada Artesrl. It earns interest at a rate of 2.5% and will last for the concession period.

(amounts in thousands of Euro)

Kenon LtdPRADA spa

Separate Financial Statements 2015-15aprile.indd 85

Fair value IRS “fair value to profit and loss”
January 31, 2016

January 31, 2015

8,775

10,121

Separate Financial Statements 2015 - Notes to the Financial Statements

85

15/04/16 14:44

(amounts in thousands of Euro)

Subsidiaries and associates

FinancialpayablesOtherpayablesFinancialpayablesOtherpayablesJan 31, 2016

Jan 31, 2016

Jan 31, 2015

Jan 31, 2015

319,283

4,105

365,750

3,497

Artisans Shoes srl

0

84

-

161

Church Italia srl

-

68

-

57

IPI Logistica srl

224

6

465

3

Marchesi Angelo srl

-

4

-

-

Pellettieri d'Italia srl

-

-

-

372

22,283

134

22,104

129

-

61

-

61

240,326-

236,625-

PRADA Germany gmbh

1,959

1

2,689

-

PRADA Retail France sas

2,643

4

6,692

-

61

-

-

1,573

Post Development Corp.
PRADA Dongguan Trading Co. Ltd
PRADA Far East bv

PRADA Retail UK

51,567

1,572

96,959PRADA Spain sa

PRADA sa

-

148

-

-

PRADA Stores srl

-

2,005

-

1,140

PRADA Switzerland Sa

17

20

18

-

PRADA USA Corp.

205

-

198

-

Related parties

-

34

-

13,655

Fin-Reta Srl

-

-

-

13,384F.lli Prada Spa

-

8

-

8

Luna Rossa Challenge srl

-

26

-

21

Progetto Prada Arte Srl

-

-

-

211

Stiching Fondazione Prada

-

-

-

32

319,283

4,139

365,750

17,152

Total(amounts in thousands of Euro)

Members of the Board of Directors
Others (1)Other liabilities
January 31, 2016

January 31, 2015

2,652

143

72

354

Note:
(1) Relative of a Director

86

PRADA spa

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15/04/16 14:44

Income Statement
Net
Revenues

Net
Revenues

Jan 31, 2016

Jan 31, 2015

1,342,308

1,441,947

78,81093,923(0)-57,37975,012

Church & Co. Plc

10,572

6,637

1,758

1,217

Church France Sa

-

-

5

-

1,331

2,488

0

3,586

(amounts in thousands of Euro)

Subsidiaries and associates
Artisans Shoes Srl

Church Italia Srl

Cost ofgoods soldCost ofgoods soldJan 31, 2016

Jan 31, 2015

IPI Logistica Srl

-

-

2,847

Montenapoleone 9 srl

2

-

-

-

Pellettieri d'Italia Srl

-

-

-

7,238

PRADA (Thailand) Co.,Ltd
PRADA Asia Pacific Ltd
PRADA Australia Pty. Ltd

1

-

2

(1)

487,729

600,221

1,329

1,049

2

-

39

-

PRADA Austria Gmbh

20,664

15,963(1)

6

PRADA Bosphorus Deri Mamuller Limited Sirketi

8,817

8,371

48

11

PRADA Brasil Importaçao e Comercio de Artigos
de Luxo Ltda

(38)

-

(2)

(0)

PRADA Canada Corp.

22,89821,811

4(0)

PRADA Czech Republic Sro

4,413

3,093

1

(0)

-

-

2,537

1,796

PRADA Emirates Llc

PRADA Dongguan Trading Co. Ltd

967

921

26

7

PRADA Far East Bv

26,522

21,735

-

-

8

-

0

10

PRADA Germany Gmbh

46,36035,41083

22

PRADA Hellas S. Ltd

1,722

1,528

-

6

146

-

1,707

1,618

PRADA Japan Co., Ltd

118,323

118,546

339

580

PRADA Kazakhstan Llp

2,121

2,507

-

-

20

-

143

386

PRADA Fashion Commerce (Shanghai) Co. Ltd

PRADA Hong Kong P.D. Ltd.

PRADA Korea Ltd

478

395

(4)

-

PRADA Maroc Sarlau

PRADA Kuwait Wll(1,079)

1,263

-

-

PRADA Middle East Fzco

55,017

43,142

(16)

(16)

-

-

(3)

-

2,396

2,010

(1)

-

PRADA Macau
PRADA Montecarlo Sam
PRADA Panama

1,545

-

-

-

PRADA Portugal, Unipessoal Lda

4,247

5,913

(0)

6

PRADA Retail Aruba N.v.

(325)

720

-

-

PRADA Retail France Sas

67,13370,683

3,376

198
16

PRADA Retail Malaysia Sdn
PRADA Retail Mexico S. de r.l.
PRADA Retail New Zealand
PRADA Retail Spc

1

-

25

4,712

2,843

(2)

-

-

-

43

-

(16)

(14)

2

(0)

PRADA Retail UK Ltd

86,631

105,053

3,346

390

PRADA Rus Llc

12

15,112

13,277

11

PRADA Saudi Arabia ltd

185

-

(3)

-

PRADA Singapore Pte, Ltd

2

539

165

60

PRADA South Africa (Pty) ltd

3,257

-

-

-

PRADA Spain Sa

17,86014,680

2

6

PRADA Stores Srl

36,981

25,347573

22

PRADA Sweden Ab

563

89

(0)

(0)

11,185

18,510

80

27

3

-

17

(2)

PRADA Switzerland Sa
PRADA Taiwan Ltd Taipei
PRADA Ukraine Llc

1,937

1,065

-

-

PRADA Usa Corp.

267,317215,072

2,784

662

1,109

623

-

-

-

-

174

-

PRADA Vietnam Limited Liability Company
Tannerie Limoges sas

PRADA spa

Separate Financial Statements 2015-15aprile.indd 87

Separate Financial Statements 2015 - Notes to the Financial Statements

87

15/04/16 14:44

(amounts in thousands of Euro)Net
Revenues

Cost ofgoods soldCost ofgoods soldJan 31, 2016

Jan 31, 2015

Jan 31, 2016

Space Hong Kong Ltd

-

64

-

-

Space USA Corp.

-

67,932

-

-

-

-

(1)

-

7,938

8,639

-

-

TRS Guam Boutique
TRS Hawaii Llc
TRS Hong Kong Ltd - Macau

Jan 31, 2015

-

-

(2)

-

TRS Okinawa Kk

5,543

4,871

-

-

Related parties

31,465

38,11825,14520,477--22,49918,476

Conceria Superior Spa
Gran Caffè srl
F.lli PRADA Spa
Le Mazza Srl
Luna Rossa Challenge Srl
Pelletteria Reta Srl
Progetto PRADA Arte Srl
Rubaiyat Modern Lux. Prod. Ltd
Total

88

Net
Revenues

PRADA spa

Separate Financial Statements 2015-15aprile.indd 88

-

-

7

-

31,24337,942

70

17
1,715

-

-

2,082

11

8

-

-

-

-

17

9

-

1

470

260

211

167

-

-

1,373,773

1,480,066

103,955

114,400

Separate Financial Statements 2015 - Notes to the Financial Statements

15/04/16 14:44

(amounts in thousands of Euro)Operatingexpenses

Operatingexpenses

Jan 31, 2016

Jan 31, 2015

Interest andother financial
income(expenses), net

Interest andother financial
income(expenses), net

Jan 31, 2016

Jan 31, 2015

Parent company

(327)

(69)

-

-

PRADA Holding Spa

(327)

(69)

-

-

233,925

144,058

57,334

105,501

3,279

2,990

8

22

-

-

2,039

1,022

Subsidiaries and associates
Artisans Shoes Srl
Artisans Shoes Srl – dividends paid
Church & Co. (USa) Ltd
Church & Co. Plc

(19)

(28)

-

-

(1,105)(1,086)64

63

Church Austria Gmbh

(16)

(63)

-

-

Church Denmark Aps

(7)

(44)

-

-

Church English shoes Sa

(13)

(8)

-

-

Church Footwear (Shanghai) Co. Ltd

(14)

(18)

-

-

Church Footwear Ab
Church France Sa

(9)

(25)

-

-

(138)

(98)

-

46

Church Holding UK Plc

(1)

(1)

56

Church Hong Kong Retail

(30)

(64)

-

-

Church Japan Co., Ltd

(8)

(12)

-

-

(5)

(8)

-

-

Church Italia Srl

Church Ireland Retail Ltd

(558)

(783)

-

-

Church Netherlands Bv

(17)

(18)

-

-

Church Singapore Pte Ltd

(7)

(58)

-

-

Church Spain Sl

(12)

(11)

-

-

Church UK Retail Ltd

(144)

(200)

-

-

Church's Eng. Shoes Sw.Sa

(23)

(33)

-

-

IPI Logistica Srl

364

150

-

(1)

IPI Logistica Srl - dividends paid
Kenon LtdMarchesi Angelo Srl

-

-

-

960

(3)

(2)

1,844

1,712

2

9

-

-

(1,575)---Pellettieri d'Italia Srl

-

396

-

-

Post Development Corp.

-

(3)

(178)

(250)

Montenapoleone 9 S.r.l.

PRADA (Thailand) Co.,Ltd

1,678

(662)

-

-

PRADA Asia Pacific Ltd

39,750(16,305)

0(8)

PRADA Australia Pty. Ltd

2,099

(217)

-

-

PRADA Austria Gmbh

(664)

(372)

205

3

PRADA Belgium sprl
PRADA Bosphorus Deri Mamuller Limited Sirketi

356

-

-

-

2,021

3,040

1,693

1,080
2,948

PRADA Brasil Importaçao e Comercio de Artigos de Luxo Ltda

(54)

14,463

4,036

PRADA Canada Corp.

802

(195)

-

-

PRADA Denmark Aps

45

-

-

-

PRADA Czech Republic Sro

(281)

(168)

35

56

PRADA Dongguan Trading Co. Ltd

(54)

(65)

-

-

PRADA Emirates Llc (1)

(554)

(835)

-

-

PRADA Far East Bv

(498)

(497)

(2,587)(3,223)71,000PRADA Far East bv – dividends paid
PRADA Fashion Commerce (Shanghai) Co. Ltd
PRADA Finnish Oy
PRADA Germany Gmbh--

20,00045,531

22,822

-

-

244

-

-

124

(1,725)(2,271)270

PRADA Hellas S. Ltd

(444)

(447)

95

69

PRADA Hong Kong P.D. Ltd

1,558

1,514

22

63

PRADA India Fashion Private Ltd
PRADA Japan Co., Ltd

PRADA spa

Separate Financial Statements 2015-15aprile.indd 89

19

(19)

-

-

(2,502)(7,269)--Separate Financial Statements 2015 - Notes to the Financial Statements

89

15/04/16 14:44

Interest andother financial
income(expenses), net

Operatingexpenses

Jan 31, 2016

Jan 31, 2015

Jan 31, 2016

(412)

83

-

-

(14,176)(17,060)--PRADA Kuwait Wll

(257)

(286)

-

-

PRADA Macau Co., Ltd.

1,214

-

-

78

(amounts in thousands of Euro)PRADA Kazakhstan Llp
PRADA Korea Ltd

PRADA Maroc Sarlau

Jan 31, 2015

(239)

1,850

90

PRADA Middle East Fzco

(1,367)(1,142)--PRADA Montecarlo Sam

1,351

275

208

97

PRADA New Zealand Pty Ltd

510

227

-

-

PRADA Panama, S.a.

603

(6)

-

35

PRADA Portugal, Unipessoal Lda

(633)

(689)

19

PRADA Retail Aruba N.v.

(126)

(72)

-

-

PRADA Retail France Sas

9,058

9,008

1,444

1,001

PRADA Retail Malaysia Sdn

(258)

(223)

-

-

PRADA Retail Mexico S. de r.l.

2,852

3,537

-

-

PRADA Retail South Africa (Pty) Ltd
PRADA Retail Spc

817

(80)

-

-

(1,754)(2,951)-95

PRADA Retail UK(3,794)

5,872

528

224

PRADA Rus Llc(1,614)

290

1,738

2,240

PRADA Sa37,39938,941

(233)

(155)

-

-

20,00020,000PRADA Sa – dividends paid
PRADA Saudi Arabia Ltd.

(593)

(196)

-

-

PRADA Singapore Pte, Ltd

12,783

12,949--PRADA Spain Sa(1,391)(1,481)

493

613

PRADA Stores Srl(9,388)(5,718)

4,326

4,550

PRADA Sweden Ab

(177)

(73)

-

-

PRADA Switzerland Sa(207)(2,585)793

813

PRADA Taiwan Ltd Taipei

3,048

3,465

-

-

PRADA Ukraine Llc

245

655

275

222

PRADA Usa Corp.

113,02187,327

-

-

1,514

698

-

-

Prm Services, S. de R.l. de CV

(100)

(156)

-

-

Tannerie Limoges sas

(217)

(17)

52

-

PRADA Vietnam Limited Liability Company

Space Hong Kong Ltd

-

(56)

-

-

Space USA Corp.

-

(731)

-

-

TRS Guam Boutique

(213)

(153)

-

-

TRS Hawaii Llc

(250)

(225)

-

-

TRS Hong Kong Ltd
TRS Hong Kong Ltd - Macau

90

Interest andother financial
income(expenses), net

Operatingexpenses

(4)

(6)

-

-

(231)

(430)

-

-

TRS New Zealand Pty. Ltd

(23)

(29)

-

-

TRS Okinawa Kk

(158)

(130)

-

-

TRS Saipan Boutique

(124)

(57)

-

-

TRS Singapore Pte Limited

(53)

(66)

-

-

Companies controlled by PRADA Holding spa

-

(6)

-

-

EXHL Italia Srl

-

(6)

-

-

PRADA spa

Separate Financial Statements 2015-15aprile.indd 90

Separate Financial Statements 2015 - Notes to the Financial Statements

15/04/16 14:44

Interest andother financial
income(expenses), net

Interest andother financial
income(expenses), net

Jan 31, 2016

Jan 31, 2015

22,890

18

(133)

3,156

(1)

(15)

130

34

-

-

125

120

-

(137)

F.lli PRADA Spa

2,406(5,007)--

Gran Caffè snc

1

4

-

-

HMP Srl

13

35

-

-

Le Mazza Srl

16

3

-

-

Operatingexpenses

Operatingexpenses

Jan 31, 2016

Jan 31, 2015

Related parties

18,765Chora Srl

2,605

Conceria Superior Spa
Fin-Reta Srl(amounts in thousands of Euro)

Luna Rossa Challenge 2013 NZ Ltd
Luna Rossa Challenge Srl

-

6

-

-

13,546

12,157--

Pelletteria Reta Srl

51

(0)

-

-

Peschiera Immobiliare Srl

522

505

-

-

PRA 1 Srl

1,187

797

-

-

Progetto PRADA Arte Srl

(252)

7,506

-

19

Progetto PRADA Arte Srl (Galleria)(2)(1,318)(1,517)19

Rubaiyat Modern Lux. Prod. Ltd(858)(2,172)--

Stiching Fondazione PRADA

(152)

6,700

-

-

Others (3)
Total

742

563

-

-

252,363

166,874

57,352

105,368

Notes:(1) Company consolidated on basis of definition of control expressed in IFRS 10(2) Amount includes non-monetary deferred rental income of Euro 387 thousand recognized in relation to Progetto Prada
Arte srl following application of “IAS 17 Leases” to the temporary business partnership agreement between PRADA spa andProgetto Prada Arte. The interest is earned on the financial receivable relating to the investment in the premises in Galleria
Vittorio Emanuele II.
(3) Relative of a Director

PRADA spa

Separate Financial Statements 2015-15aprile.indd 91

Separate Financial Statements 2015 - Notes to the Financial Statements

91

15/04/16 14:44

Commitments
Guarantees given––

Guarantees given relate to:––sureties of Euro 321 million in favor of third parties and related parties on behalfof Group companies––

comfort letters for Euro 273 million issued to banks on behalf of subsidiaries.

Operating leases
As at January 31, 2016, operating lease and concession fee commitments were broken
down by due date as follows:
January 31
2016

January 31
2015

Due within a year

20,24919,266

Due between one and five years

71,21067,951

Due after more than five years

90,931

101,212

Total commitments for operating lease/concession fees

182,390

188,429(amounts in thousands of Euro)

Rental/lease income commitments are shown by due date as follows:(amounts in thousands of Euro)

January 31
2016

January 31
2015

Due within a year

4,023

8,388

Due between one and five years

15,93832,128Due after more than five years

17,99887,421

Total rental/lease income commitments

37,959127,937

Other commitments
At January 31, 2016, the Company had no significant binding purchase commitments.
PRADA spa and Al Tayer Insignia llc are party to an agreement signed in 2011 withthe objective of developing the PRADA and MIU MIU brands in the retail business in
the Middle East. The agreement grants PRADA spa a call option on up to 20% of theshare capital of PRADA Middle East Fzco. As indicated by Paragraph 46 of IAS 39, an
entity must measure financial assets, including derivatives, at fair value, except forinvestments in equity instruments that do not have a market price listed on an active
market and whose fair value cannot be reliably measured. PRADA SpA management
believes that, at the reporting date, the above option fell under the circumstances
described by IAS 39 and, consequently, its fair value cannot be reliably measured.
Additional information
Remuneration of the Board of Directors(amounts in thousands of Euro)
Directors’ fees

22,575

Remuneration and other benefits

4,772

Bonuses and other incentives

1,555

Benefits in kind

136

Pension, healthcare and TFR contributions

377

Total

92

January 31
2016

PRADA spa

Separate Financial Statements 2015-15aprile.indd 92

29,415

Separate Financial Statements 2015 - Notes to the Financial Statements

15/04/16 14:44

Fees of Deloitte & Touche Spa
The fees of independent audit firm Deloitte & Touche spa for the statutory audit of
PRADA spa (audit of the Separate and Consolidated Financial Statements, checks thatthe accounting records are properly maintained and operations are correctly reflectedin the accounting records) amounted to Euro 0.5 million.
The following table shows the fees paid to Deloitte & Touche spa and its network forthe audit of the financial statements for the period ended January 31 2016 and forother non-audit services. The Other advisory services amounting to Euro 879 thousandprovided by Deloitte to PRADA spa relate to the transformation of information systems
in support of human resources processes.
Auditor’s compensation
The total fees and expenses accrued in favor of Deloitte & Touche S.p.A. and its
network for the audit of the Consolidated financial statements and the Separate
financial statements for the year ended January 31, 2016, together with non-audit
services, are illustrated below:
Fees in thousandsof EuroType of service

Audit Firm

Audit services

Deloitte & Touche spa

485

Other advisory services

Deloitte Network

879

Total fees of audit firm for period ended January 31, 2016

1,364

The Other advisory services amounting to Euro 879 thousand provided by Deloitte
relate to the transformation of information systems in support of human resources
processes and to the organization process aimed at creating a Data Warehouse andsome customer segmentation activities.
Income statement by nature(amounts in thousands of Euro)Net revenues

January 31
2016
2,139,473

Change in inventories

8,252

Purchases of raw materials and finished goods

643,950

Labor costs

233,943

Amortization, depreciation and impairment

42,394

Other operating expenses

886,155

EBIT

341,284

Interest income (expenses), net

5,908

Exchange gains (losses) - realized

3,313

Exchange gains (losses) - unrealized(13,392)

Dividends

42,039Other financial income (expenses)(30,299)

Interest and other financial income (expenses)

7,569

Income before taxation

348,853

Taxation

100,432

Net income for the period

248,421PRADA spa

Separate Financial Statements 2015-15aprile.indd 93

Separate Financial Statements 2015 - Notes to the Financial Statements

93

15/04/16 14:44

Headcount
The average headcount by business division at January 31, 2016 and 2015 is shown
below:(number of employees)

Production

January 31
2016

January 31
2015

1,427

1,349

Product design and development

999

932

Communications

54

54

Selling

589

595

General and administrative services

520

529

3,589

3,458

Total

Employee remuneration
Employee remuneration in the periods ended January 31, 2016 and January 31, 2015is analyzed by business division as follows:
January 31
2016

January 31
2015

Production

73,60170,907

Product design and development

64,351

63,481

Communications

6,252

6,453

Selling

36,92241,009General and administrative services

52,81745,850Total

233,943

227,700(amounts in thousands of Euro)94

PRADA spa

Separate Financial Statements 2015-15aprile.indd 94

Separate Financial Statements 2015 - Notes to the Financial Statements

15/04/16 14:44

Independent Auditors’ Report

PRADA spa

Separate Financial Statements 2015-15aprile.indd 95

Separate Financial Statements 2015 - Independent Auditors' Report95

15/04/16 14:44

96

PRADA spa

Separate Financial Statements 2015-15aprile.indd 96

Separate Financial Statements 2015 - Independent Auditors' Report

15/04/16 14:44

PRADA spa

Separate Financial Statements 2015-15aprile.indd 97

Separate Financial Statements 2015 - Independent Auditors' Report97

15/04/16 14:44

98

PRADA spa

Separate Financial Statements 2015-15aprile.indd 98

Separate Financial Statements 2015 - Independent Auditors' Report

15/04/16 14:44

Statutory Auditors' Report

PRADA spa

Separate Financial Statements 2015-15aprile.indd 99

Separate Financial Statements 2015 - Statutory Auditors' Report99

15/04/16 14:44

100

PRADA spa

Separate Financial Statements 2015-15aprile.indd 100

Separate Financial Statements 2015 - Statutory Auditors' Report

15/04/16 14:44

PRADA spa

Separate Financial Statements 2015-15aprile.indd 101

Separate Financial Statements 2015 - Statutory Auditors' Report101

15/04/16 14:44

102

PRADA spa

Separate Financial Statements 2015-15aprile.indd 102

Separate Financial Statements 2015 - Statutory Auditors' Report

15/04/16 14:44

PRADA spa

Separate Financial Statements 2015-15aprile.indd 103

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103

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