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Interim Financial Report 2017

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IndexThe PRADA Group
Financial Review
Corporate GovernanceInterim condensed consolidated financial statements
Notes to the Interim condensed consolidated financial statements

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9
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Patrizio Bertelli

Miuccia Prada2

PRADA Group

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The PRADA GroupPRADA Group

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PRADA S.p.A. Corporate Information

4

Registered Office

Via A. Fogazzaro, 28
20135 Milan, Italy

Head Office

Via A. Fogazzaro, 28
20135 Milan, Italy

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

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

Company web sitewww.pradagroup.com

Hong Kong Stock Exchange
Identification Number

1913

Board of Directors

Carlo Mazzi(Chairman & Executive Director)
Miuccia Prada Bianchi(Chief Executive Officer & Executive Director)
Patrizio Bertelli(Chief Executive Officer & Executive Director)
Alessandra Cozzani(Chief Financial Officer & Executive Director)
Stefano Simontacchi(Non-Executive Director)
Maurizio Cereda(Non-Executive Director)
Gian Franco Oliviero Mattei(Independent Non-Executive Director)
Giancarlo Forestieri(Independent Non-Executive Director)
Sing Cheong Liu(Independent Non-Executive Director)

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)Supervisory Board(Leg. Decr. 231/2001)

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

PRADA Group

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Main Shareholder

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

Joint Company Secretaries

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

Authorized Representatives
in Hong Kong

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

Alternate Authorized
Representative to Carlo Mazzi
in Hong Kong

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

Hong Kong Share Registrar

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

Auditor

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

PRADA Group

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PRADA Group Structure

PRADA spa
Milan

Holding/Manufacturing/distribution/services

100%
Church Holding UK ltd
Northampton
Holding

100%
Church & Co ltd
Northampton
Manufacturing/
distribution/services
100% Church & Co (Footwear) ltd
Northampton
tradeMarks
100%

Church UK Retail ltd
Northampton
retail100% Church’s English Shoes sa
Brussels
retail100%

Church France sas
Parisretail100%

Church Spain sl
Madridretail100%
Artisans Shoes srl
Montegranaro
Production

100%

IPI Logistica srl
Milan
services49%

PAC srl in liquidazione
Milan(in liquidation)

60%

Tannerie Limoges sas
Isle
Production

TRS Hawaii Ilc
Honolulu
dfs

55%

100% PRADA Singapore pte ltd
SingaporeretailPelletteria Ennepi srl
Figline e
Incisa Valdarno
Production

TRS Guam Partnership
Guam
dfs

55%

100%

Hipic Prod Impex srl
Sibiu
Production

PRADA Retail Mexico
S. de R.L. de C.V.
Mexico City
retail

100%

100%

80%

80%

100%

100% PRADA Australia pty ltd
Sydneyretail100%

PRADA USA Corp
New York
distribution/services/retail

100%

55%

Church Austria gmbh
Viennaretail55%

100% PRADA New Zealand ltd
Wellington
retail100%

Church Footwear ab
Stockholm
retailTRS Singapore pte ltd
Singapore
dfs

55%

100%

Church Denmark aps
CopenhagenretailPRADA Asia Pacific ltd
Hong Kong
services/retail

100%

Church Italia srl
Milanretail/services

100%

Church & Co (USA) ltd
New YorkretailChurch Hong Kong
Retail ltd
Hong Kong
retail100%

Travel Retail Shops
Okinawa kk
Tokyo
dfs

TRS Hong Kong ltd
Hong Kong
dfs

55%

100%

PRADA Japan Co ltd
Tokyoretail100% PRADA (Thailand) Co ltd
BangkokretailMacau Branch
Macau
dfs

100%

PRADA Retail
Malaysia sdn bhd
Kuala Lumpur
retail55%

TRS New Zealand ltd
Wellington
dfs

Church’s English Shoes
Switzerland sa
LuganoretailPRADA Korea llc
SeoulretailTRS Saipan Partnership
Saipandfs

100% Church Netherlands bv
Amsterdam
retail100%

100%

PRADA Sweden ab
Stockholm
retail100%

Kenon ltd
Londonreal estate

100% PRADA Vietnam Limited
Liability Company
Hanoi
retail100%

PT PRADA Indonesia
Jakarta
dorMant

PRADA Taiwan ltd
Hong Kong
services
Taipei BranchTaipeiretail100%

100%

PRADA Trading(Shanghai) Co ltd
Shanghai
dorMant
PRADA Fashion Commerce(Shanghai) Co ltd
Shanghairetail100% Church Japan Company ltd
Tokyoretail100%

PRADA Macau Co ltd
Macauretail100% Church Singapore pte ltd
Singaporeretail100%

PRADA Dongguan
Trading Co ltd
Dongguanservices

Church Footwear(Shanghai) Co ltd
Shanghairetail100%

6PRADA Canada Corp
Toronto
distribution/retail

100% Post Development Corp
New Yorkreal estate

100% Church Ireland Retail ltd
Dublinretail100%

PRADA Far East II srl
Milan
sub-Holding

66.7%

PRADA Group

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

100% PRADA Retail France sas
Parisretail80%

Marchesi Angelo srl
Milan
confectionery

49%

PRADA Emirates llc
Dubai
retail100% PRADA Monte-Carlo sam
Monacoretail100%

Montenapoleone 9 srl
Milan
confectionary

49%

PRADA Kuwait wll
Kuwait City
retail

100%

60%

100%

75%

PRADA Retail spc
DoharetailPRADA Saudi Arabia ltd
JeddahretailPRADA RetailSouth Africa (pty) ltd
Sandtonretail100%

PRADA Rus llc
Moscow
retail100%

PRADA Ukraine llc
Kiev
retail100%

PRADA Kazakhstan llp
Almatyretail100%

100%

PRADA Company sa
Luxembourg
services

PRADA Austria gmbh
Viennaretail100%

PRADA Far East bv
Amsterdam
retail100% PRADA Switzerland sa
Luganoretail
100%

100%

100%

PRADA Spain sl
MadridretailPRADA Portugal
Unipessoal lda
LisbonretailPRADA Hellas
Sole Partner llc
Athensretail100%

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

100%

PRADA Panama sa
Panamaretail100%

PRADA Retail Aruba nv
Aruba
retail100%

PRADA Saint
Barthelemy sarlGustavia
retail100%

PRADA Maroc Sarlau
Casablanca
retail100%

PRADA Denmark aps
CopenhagenretailMaroc Branch
Marrakech
retail100%

PRADA Finnish oy
HelsinkiretailPrada interim report 2017-26set.indd 7

Swiss Branch
Luganoservices

100% PRADA Czech Republic sro
PragueretailPRADA Brasil
Importação e Comércio
de Artigos de Luxo ltda
São Paulo
retailPRADA GroupPRADA sa
Luxembourg
tradeMark

100% PRADA Germany gmbh
Munichretail/services

100%

100%

PRADA Belgium sprl
Brusselles
retail

100%

100%

100%

PRADA Bosphorus Deri
Mamüller ltd Sirketi
Istanbul
retailPRADA Retail UK ltd
LondonretailIreland Branch
DublinretailInterim Financial Report 2017 - The PRADA Group

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8

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Financial Review

PRADA Group

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Consolidated Statement of Profit or Losssix months
ended July 31
2017(unaudited)%

six months
ended July 31
2016(unaudited)%

1,442,556

98.2%

1,529,267

98.4%

26,0801.8%

24,905

1.6%

Net Revenues

1,468,636

100.0%

1,554,172

100.0%

Cost of goods sold(379,995)-25.9%(432,231)-27.8%

Gross Margin

1,088,641

74.1%

1,121,941

72.2%

Operating expenses(921,804)-62.7%(908,240)-58.4%

EBIT

166,837

11.4%

213,701

13.8%

Interest and other financial expenses, net

(890)

-0.1%

(6,756)-0.4%

Dividends from investments

357

0.0%

558

0.0%

Income before taxation

166,304

11.3%

207,503

13.4%

Taxation(50,222)-3.4%(62,206)-4.1%

Net income for the period

116,082

7.9%

145,297

9.3%

340

0.0%

3,374

0.2%

Net income - Group

115,7427.9%

141,923

9.1%

Depreciation, amortization and impairment

112,716

7.7%

116,290

7.5%

EBITDA

279,553

19.1%

329,991

21.2%(amounts in thousands of Euro)

RetailRoyalties

Net income - non-controlling interests

Basic and diluted earnings per share (in Euro pershare)

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0.055

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Key financial information
Key figures from statement of profit or loss
(amounts in thousands of Euro)Net revenues
EBITDAEBITDA%EBIT
EBIT%
Net income of the Group
Earnings per share (Euro)six months twelve months
ended July 31 ended January 31
2017
2017
(unaudited)(audited)six months
change %ended July 31 six months 2017
2016
vs(unaudited) six months 2016

1,468,636

3,184,069

1,554,172-5.5%

279,553

653,448

329,991-15.3%

19.1%

20.5%

21.2%

-

166,837

431,181

213,701-21.9%

11.4%

13.5%

13.8%

-

115,742

278,329

141,923-18.4%-18.4%

0.045

0.109

0.055

Capital expenditure

105,615

251,507108,085-

Net operating cash flows

208,156

631,850

266,728-

Average number of employees

12,094

12,326

12,228-July 312017(unaudited)

January 31
2017(audited)

July 312016(unaudited)changeJuly 2017 vsJanuary 2017

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

552,685556,351

674,446(3,666)

3,022,362

3,086,089

3,166,777(63,727)

Net financial position surplus/(deficit)(223,427)

18,441(251,727)(241,868)Group shareholders' equity

2,776,345

3,080,502

2,894,984(304,157)

Financial highlights
The net revenues for the six months ended July 31, 2017 were Euro 1,468.6 million,
down by 5.5% compared to the same period of last year. The sales performance for theperiod had conflicting trends, with some markets recovering and others contracting.
In terms of profitability, the decline in sales volumes was compensated for by a bettermix, especially regarding the ratio of full-price sales to discounted sales. The grossmargin benefited from this and improved from the same period of the previous year.
With respect to business initiatives, an important e-commerce plan was introduced
for all the Group's brands that include an omnichannel growth strategy focusing on
gradual expansion of the online sales channel in terms of merchandising and territorial
coverage, plus new versions of the websites. Digital initiatives also involved advertisingand communications, with the creation of special content and the acquisition of
online space and media tools intended to create synergy among the three distribution
channels.
Investments were continued in the manufacturing area to boost internal production
volumes, thereby ensuring that a greater number of production processes achieve thehigh standards that have always characterized the output of the Group's production
facilities. The investments of the period also targeted the retail network. The plan
to bring Miu Miu stores into line with the brand's new look progressed, and special
projects for Prada stores were carried out, such as new store layouts and extension of
the “resort” concept to seaside stores.
The recent overhauling of processes and cost structure enabled to keep operating
expenses consistent with those of the prior reporting period.
EBIT for the six months ended July 31, 2017 was Euro 166.8 million, or 11.4% of net
revenues, down from the Euro 213.7 million, or 13.8% of net revenues, of the same
period of the previous year. The Group’s net income was Euro 115.7 million, or 7.9% as apercentage of net revenues, whereas it was 9.1% for the same six-month period of 2016.

PRADA Group

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The net operating working capital at July 31, 2017 is Euro 552.7 million, practicallyunchanged from January 31, 2017. The net financial indebtedness amounts to Euro
223.4 million, after the dividend payment of Euro 307.1 million and a reduction of Euro
40.6 million resulting from the exchange rates fluctuation.
Net Revenues
six months
ended July 31
2017(unaudited)%

six months
ended July 31
2016(unaudited)%% change

Net sales

1,442,556

98.2%

1,529,267

98.4%

-5.7%

Royalties

26,0801.8%

24,905

1.6%

4.7%

1,468,636

100.0%

1,554,172

100.0%-5.5%

six months
ended July 31
2017(unaudited)%

six months
ended July 31
2016(unaudited)%% change

Europe553,63138.4%

599,568

39.2%

-7.7%

Americas210,370

14.6%

218,492

14.3%

-3.7%

Asia Pacific462,95132.1%

461,215

30.2%

0.4%

Japan

164,438

11.4%

191,726

12.5%-14.2%

Middle East

49,208

3.4%

55,702

3.6%-11.7%

Other countries

1,958

0.1%

2,564

0.2%

-23.6%

Total Net sales

1,442,556

100.0%

1,529,267

100.0%

-5.7%

Prada

1,176,843

81.6%

1,233,596

80.7%

-4.6%

Miu Miu

224,371

15.6%

249,152

16.3%

-9.9%

Church's

33,7692.3%

39,7472.6%-15.0%(amounts in thousands of Euro)Net Revenues

Net sales analysis(amounts in thousands of Euro)Net sales by geographical area

Net sales by brand

Other

7,573

0.5%

6,772

0.4%

11.8%

1,442,556

100.0%

1,529,267

100.0%-5.7%

Leather goods

826,906

57.3%

893,468

58.4%

-7.4%

Footwear

310,340

21.5%

343,641

22.5%

-9.7%

Clothing

273,766

19.0%

262,395

17.2%

4.3%

Other

31,5442.2%

29,7631.9%

6.0%

1,442,556

100.0%

1,529,267

100.0%-5.7%

1,177,059

81.6%

1,276,587

84.0%

-7.8%

265,497

18.4%

252,680

16.0%

5.1%

1,442,556

100.0%

1,529,267

100.0%-5.7%

Total Net sales
Net sales by product line

Total Net sales
Net sales by channel
Net Sales of Directly Operated Stores (DOS)Net Sales to independent customers andfranchisees
Total Net sales

Distribution Channels
Retail sales for the six months ended July 31, 2017 were Euro 1,177.1 million, down by
7.8% from the same period of 2016 (-8% at constant exchange rates). Thirteen stores
were closed down in the six-month period (4 Prada, 8 Miu Miu and 1 Church’s) and six
new stores were opened (2 Prada, 2 Miu Miu and 2 Church’s).

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Sales in the wholesale channel grew by 5.1% compared to the same period of theprior year (+4.5% at constant exchange rates), mainly as a result of higher sales tofranchisees and primary selected online retailers ("e-tailers").
Markets
The Asia Pacific market reported growth of 0.4% (-0.6% at constant exchange rates).
The Greater China region generated net sales of Euro 301.9 million, up by 4.5% atcurrent exchange rates and by 5.2% at constant exchange rates, whereas othercountries in the region experienced declines. Overall in the region, sales increased for
clothing and leather goods, whereas footwear sales decreased.
Net sales in Europe fell by 7.7% at current exchange rates compared with the same sixmonth period of the prior year (-6.6% at constant exchange rates). The stronger Euroat the end of the period adversely affected tourist spending. Clothing sales increased,
whereas footwear and leather goods sales declined.
Net sales in the American market fell by 3.7% at current exchange rates (-5.8% atconstant exchange rates). The product trends in this market were similar to thosereported for the European market.
Sales in Japan fell by 14.2% compared with the same period of last year (samedecrease at constant exchange rates). The sales in this region were influenced by adecline primarily in local demand, but also in tourist spending.
Net sales in the Middle East region, which suffered from a geopolitical context
unfavorable to tourism flows, fell by 11.7% at current exchange rates (-13.1% atconstant exchange rates).
Products
Sales of the clothing division rose by 4.3% overall (+4.1% at constant exchange rates),
whereas the Miu Miu brand had double-digit sales growth compared with the same
six months of the prior year.
Sales of the leather goods division fell by 7.4% overall at current exchange rates (-7.9%
at constant exchange rates), with less decline for the Prada brand.
Footwear sales fell by 9.7% at current exchange rates (-9.5% at constant exchange
rates), with a trend similar to that of leather goods.
BrandsThe net sales of the Prada brand fell by 4.6% at current exchange rates (-5% at constantexchange rates). The Asia Pacific region reported sales in line with those of the same
period of last year, whereas the other regions had lower sales.
Miu Miu net sales fell by 9.9% at current exchange rates (-10.2% at constant exchange
rates). The decrease was affected by the closing down of 8 shops during the period.
Net sales of the Church’s brand fell by 15% mainly as a result of the recent restructuringof the distribution channel. The contraction was concentrated in the European market.
The “other” brand category consists of sales of Marchesi 1824 brand patisserie goods,
whose growth is benefiting from the recent expansion plan, and of the Car Shoe brand,which presented a decline for the six-month period.

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Royalties
In the six months ended July 31, 2017, licensing agreements generated royalty incomeof Euro 26.1 million, up by 4.7% from the same six-month period of 2016. The increase
was attributable largely to the success of the new Prada fragrances.
Number of storesas atJuly 312017

as atJanuary 31
2017

DOS

Franchises

as atJuly 31
2016

DOS

Franchises

DOS

Franchises

Prada

385

25

387

25

388

23

Miu Miu

165

9

171

9

173

8

Church’s

55

-

54

-

54

-

Car Shoe

5

-

5

-

5

-

Marchesi

3

-

3

-

2

-

Total

613

34

620

34

622

31

as at
July 312017

as atJanuary 31
2017

DOS

Franchises

as atJuly 31
2016

DOS

Franchises

DOS

Franchises
4

Europe

219

4

220

4

224

Americas

112

-

113

-

115

-

Asia Pacific

181

25

187

25

184

22

Japan

79

-

78

-

77

-

Middle East and Africa

22

5

22

5

22

5

Total

613

34

620

34

622

31

Operating results
The gross margin for the six months ended July 31, 2017 was Euro 1,088.6 million, or
74.1% of net sales, up by 190 basis points from the same period of the previous year.
The profit margin improved as a result of a better sales mix, in terms of the ratio offull-price sales to discounted sales and the effect of exchange rates.
The increase in operating expenses, net of exchange differences of Euro 3.7 million,
was attributable primarily to an increase in advertising and communication activities,
particularly with digital technology, and a higher cost of labor regarding short-term
incentives. All other expense items were in line with those of 2016, a year in which theGroup carried out an important cost reduction program.
EBITDA for the six months ended July 31, 2017 was Euro 279.6 million, corresponding
to 19.1% of net revenues, a dilution of 210 basis points compared with the same
period of last year.
EBIT for the six months ended July 31, 2017 was Euro 166.8 million, or 11.4% of net
revenues, compared with Euro 213.7 million, or 13.8% of net revenues, for the same
period of last year.
Finance costs benefited from a stronger Euro near the end of the period, which resulted
in the recognition of positive exchange differences on financial items. The cost of bankdebt, effectively eliminated by such benefit, was nevertheless lower than that of thecomparative period due to less average bank debt and lower interest rates.
The effective tax rate of 30% is in line with the same period of last year. The benefit

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deriving from a lower Italian income tax rate was offset by the less advantageous
geographical sources of income.
The Group’s net income for the six months amounted to Euro 115.7 million, or 7.9%of net revenues.
Analysis of the statement of financial position
Net invested capital
The following table reclassifies the statement of financial position to provide a betterview of net invested capital.
(amounts in thousands of Euro)

Non-current assets (excluding deferred tax assets)

July 312017(unaudited)

January 31
2017(audited)

July 312016(unaudited)

2,529,920

2,599,620

2,561,138

Trade receivables, net

266,795

285,504

314,340

Inventories, net

562,620526,941

625,482

Trade payables(276,730)(256,094)(265,376)

Net operating working capital

552,685556,351

674,446

Other current assets (excluding items of financial position)

244,992

275,384

240,832

Other current liabilities (excluding items of financial position)(194,043)(224,536)(223,457)

Other current assets/(liabilities), net

50,94850,84817,375

Provision for risks(77,546)(82,323)(70,037)

Post-employment benefits(60,215)(67,211)(64,287)

Other long-term liabilities(176,799)(187,322)(190,609)

Deferred taxation, net

203,369

216,126

238,751

Other non-current assets/(liabilities)(111,191)(120,730)(86,182)

Net invested capital

3,022,362

3,086,089

3,166,777

Shareholder's equity - Group

(2,776,345)(3,080,502)(2,894,984)

Shareholder's equity - Non-controlling interests(22,590)(24,028)(20,066)

Total consolidated shareholders' equity(2,798,935)(3,104,530)(2,915,050)(586,735)

Long-term financial, net surplus/(deficit)(529,428)(547,628)

Short-term financial, net surplus/(deficit)

306,001

566,069

335,008

Net financial position surplus/(deficit)(223,427)

18,441(251,727)(3,022,362)(3,086,089)(3,166,777)

7.4%

n/a

8.6%

Shareholders' equity and net financial position
Debt to Equity ratio

At July 31, 2017, the consolidated asset and financial structure was based on net
invested capital of Euro 3,022.4 million, financed by net debt of Euro 223.4 million andGroup equity of Euro 2,776.4 million.
The Euro 69.7 million decrease in non-current assets, consisting primarily of tangible
and intangible assets, was due mainly to the Euro 112.7 million depreciation of theperiod and exchange differences of Euro 49.4 million, net of capital expenditures ofEuro 105.6 million. The expenditures included Euro 63.6 million targeted to the retail
network to finance numerous projects to renovate store layout in order to further
enhance the customer experience. Other capital expenditures totaling Euro 42 million
were allotted to the production and logistics structure and to information technology,
specifically to implement the omnichannel marketing strategy.
The net operating working capital at July 31, 2017 is Euro 552.7 million, practicallyunchanged from January 31, 2017:––

trade receivables fell by Euro 18.7 million due to exchange differences and differences
occurred in the timing of collection of some receivable;––

inventory rose by Euro 35.7 million, consisting of Euro 21.3 million for finished products
and Euro 14.4 million for raw materials and work in progress. The increase coincides

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with a retail restocking phase;––

trade payables rose by Euro 20.6 million, consistently with the dynamics of the
production cycle.

The other current assets (net) are practically unchanged from January 31, 2017
because the Euro 30 million decrease in tax credits was offset by the closing ofderivative contracts, a decrease in investment debts and a decrease in payables due
to employees.
The other non-current liabilities (net) fell by Euro 9.5 million, mainly as a result of
reduced risk provisions and long-term rent and deferred benefit liabilities.
During the six-month period the Group paid Euro 307.1 million in dividends to PRADA
spa shareholders. The Group's equity was further reduced by Euro 121.1 million as aresult of the weakening of the major foreign currencies against the Euro.
Net financial position
The following table provides details of the Group’s net financial position.
(amounts in thousands of Euro)

July 312017(unaudited)

January 31
2017(audited)

July 312016(unaudited)

Bonds(130,000)(130,000)(130,000)Bank borrowing – non-current(399,428)(417,628)(456,735)

Total financial payables - non-current(529,428)(547,628)(586,735)

Financial payables and bank overdrafts - current, Finance leaseobligations - current(359,206)(151,211)(334,741)(4,523)(4,934)(5,674)

Total financial payables - current

Payables to parent company and related parties(363,729)(156,145)(340,415)

Total financial payables(893,157)(703,773)(927,150)

Cash and cash equivalents

669,730

722,214

675,423

Total financial receivables and cash and cash equivalents

669,730

722,214

675,423

Net financial surplus/(deficit), total(223,427)

18,441(251,727)

Net financial surplus/(deficit) excluding related party balances(218,904)

23,375(246,053)-37.1%

n/a-36.2%

NFP/EBITDA ratio

The cash flow generated by operating activities in the six-month period (Euro 208.2
million) enabled to finance the capital expenditures of the period (Euro 105.6 million)
and to contribute to the payment of dividends to PRADA spa shareholders (Euro 307.1
million); the remaining portion of the dividends was paid through the use of credit lines.
The financial position, net of the aforementioned cash flows, was further reduced byEuro 40.6 million on account of depreciation of the major currencies against the Euro.
In order to benefit from favorable financial market conditions, during the period PRADA
spa stipulated a new long-term loan of Euro 200 million with IntesaSanpaolo spa, whichis still unused as of July 31, 2017. The total amount of undrawn credit lines at July 31,2017 is Euro 639 million.

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Risk factors
Risk factors regarding the international luxury goods market
Economic risks and international business risks
The performance of the luxury goods market is influenced to a large extent by thegeneral economy. Accordingly, the Group’s business performance is exposed to global
macroeconomic risks due to its international scale.
The international economic environment could adversely affect the demand for theGroup’s products and access to credit, causing financial difficulties for customers
and other parties with which the Group operates. Overall, these factors could have anegative impact on the Group's operations, results, cash flows and financial condition.
A substantial portion of the Group’s sales originates from purchases of products bycustomers on trips abroad. Consequently, unfavorable economic conditions, social
or geopolitical situations leading to instability and natural disasters resulting in lower
travel volumes have in the past, and could in the future, negatively impact the Group’sbusiness and results. At the same time, the global scale of the retail network enables
to mitigate the risk that the sales of a particular geographical area could influencesignificantly the consolidated sales.
Intellectual property risks
The Prada Group's brands have always been associated with beauty, creativity,
tradition and excellent quality. Prada’s ability to protect its brands and other intellectual
property rights means safeguarding these fundamental assets that are responsible forthe success of the brands and the brand positioning.
The Group protects its brands, designs, patents and websites by registering them andobtaining legal protection for them in all countries throughout the world. The Group
actively opposes all forms of counterfeiting and intellectual property infringement byadopting strong, systematic measures worldwide. The wholesale, retail, online andoff-line markets are monitored daily in close collaboration with the relevant authorities,
customs agencies and police.
Risks regarding image and brand recognition
The Group’s success in the international luxury goods business is linked to the image
and distinct character of its brands. These features depend on many factors, suchas the style and design of the products, the quality of the materials and production
techniques used, the image and locations of DOS, careful selection of licensees,
communications activities and the general corporate profile.
Preserving the image and prestige acquired by its brands in the fashion and luxury
business is an objective that the Prada Group pursues by monitoring meticulously
each internal and external phase of the value chain thus ensuring excellent quality
while upholding the Group’s reputation. The prestige of the brands is also pursued byinnovation in styles, products and communications in order to convey messages thatare always consistent with the strong brand identities.

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Risks regarding ability to anticipate trends and react to shifts in consumer tastes
The Group’s success is reliant on its ability to create and define fashion and producttrends, and to anticipate shifts in consumer tastes and luxury market trends in a timely
manner.
The Group pursues its objective of leading the luxury goods market by stimulating
consumer markets and inspiring trends through the creative efforts of its design andproduct development teams. This business area consists of approximately 1,000
individuals working in the design division, where a mix of nationalities, cultures andtalents contribute to creativity, and in the development division, where craft skills
combined with solid manufacturing processes enable the Group to continue tocompete and keep abreast of emerging consumer trends and lifestyles.
Risks specific to the Prada Group
Strategic risks
The possibility for the Group to improve its business performance depends on the
successful implementation of its strategy for each brand, based primarily on thecontinuous support of the performance of the retail network and its ongoing integration
with the digital universe.
The Group provides support to the retail network by offering leather goods, clothing
and footwear that reflect the brand positions, accompanied by store management
geared toward making the buying experience unique. The performance of the retailchannel is also supported by localized marketing initiatives intended to enhance theidentity of the brands and the key features of the Group's value chain. Numerous
store renovation and restyling projects aim to further expand the capacity to attract
customers and create an increasingly exclusive store ambiance.
Risks regarding the importance of key personnel
The Group’s success depends on the contribution of key individuals who have played
an essential role in the Group's expansion and who have substantial experience inthe fashion and luxury goods business, and on Prada’s ability to attract and retain
people who are qualified in the design, marketing, merchandising and distribution of
the products.
The Group considers its management structure to be capable of ensuring business
continuity, and has recently implemented a long-term incentive plan to retain key
employees so that they will continue to cover the roles essential to the achievementof the challenging objectives that the Group constantly sets itself.
Risks regarding the outsourcing of manufacturing activities
While the Group designs, controls and produces in-house the majority of its prototypes,
samples and most sophisticated products, it outsources the production of its otherfinished products to external manufacturers with appropriate expertise and capacity.
The Group has implemented a strict inspection and quality control process for all
outsourced production. Prada contractually requires its contract manufacturers tocomply with all laws and regulations on brand ownership and other intellectual property
rights, and with collective bargaining agreements concerning labor, social security, theworkplace, and occupational health and safety. The Group also requires its contract
manufacturers to read the Prada Group Code of Ethics and comply with the principles
set forth therein.

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Credit risk
Credit risk is defined as the risk of financial loss caused by the failure of a counterparty
to meet its contractual obligations. The maximum risk to which an entity is exposedis represented by all the financial assets recognized in the financial statements. The
Group considers its credit risk to involve primarily trade receivables generated from thewholesale channel and liquid assets. The Group manages credit risk and mitigates therelated effects through its business and financial strategies.
With respect to trade receivables, credit risk is managed by monitoring and checking
the reliability and solvency of customers. The lack of concentration of the total tradereceivables with any one customer and the evenly spread out geographical compositionof the receivables mitigate the exposure to credit risk.
With respect to liquid assets, the risk of default substantially relates to bank deposits,
which represent the Group's most widely-used financial product for investing its
operating cash flows, in keeping with its low-risk policy. Default risk is mitigated by theallocation of cash holdings to bank deposits that are diversified in terms of counterparty,
country and currency, and by the consistently short-term period. The residual portion ofliquid assets consists of cash and bank accounts. The Group considers no significant
risk to exist on these kinds of liquid assets given that they are used for operating
activities and business processes and, consequently, the number of third parties
involved is fragmented.
Liquidity risk
Cash flow risk refers to difficulty that the Group could have in meeting its financial
obligations. The Directors are responsible for managing cash flow risk, whereas
the Corporate Finance management, which reports to the CFO, is responsible for
optimizing financial resources.
The Directors consider the current funds and credit lines, in addition to those that will
be generated by operating and financing activities, to be sufficient for enabling theGroup to meet its requirements emerging from investing activities, manage working
capital, make punctual loan repayments and pay dividends as planned.
Legal and regulatory risks
The Prada Group operates in a complex regulatory environment and so is exposed to
the following legal risks:––

risks associated with non-compliance with the Rules Governing the Listing of
Securities on the Stock Exchange of Hong Kong or with other laws or regulations
in force in Hong Kong that the Company must observe as it is listed on the Stock
Exchange of Hong Kong Limited;––risks associated with non-compliance with laws and regulations applicable to theCompany due to the listing on the Irish Stock Exchange of the bond notes issuedin August 2013;––

risks associated with occupational health and safety under Italian Legislative
Decree 81/08 and equivalent regulations in force in other countries;––

possible legal penalties for wrongful acts pursuant to Italian Law 231/2001 as
subsequently amended;––possible events that could adversely affect the reliability of the annual financial
statements and the protection of assets;

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––changes in international tax rules applicable in the various countries where theGroup operates;––

possible manufacturing compliance risks regarding Italian and international laws
and regulations for finished goods distributed and raw materials and consumables
used.

The Group involves various divisions and uses external experts as necessary to keep
its processes and procedures constantly updated in order to comply with changing
rules and regulations, thereby reducing legal and regulatory risk to an acceptablelevel. Monitoring activities are performed by divisional managers, auditors, and special
entities and committees such as the Supervisory Board, Internal Control Committee
and Industrial Compliance Committee.
Foreign exchange risk
The Group has a vast international presence, and therefore is exposed to the riskthat changes in currency exchange rates could adversely impact revenue, costs,
margins and profit. In order to hedge the foreign exchange risk, the Group enters into
derivative contracts designed to fix the value in Euro (or other functional currency) of
the identified future cash flows. The future cash flows consist primarily of inflows oftrade and financial receivables and outflows of trade payables. They refer mainly to
PRADA spa, the Group's holding company and worldwide distributor of Prada and Miu
Miu brand products.
The management of interest rate risk is described in more detail in the Notes to theInterim condensed consolidated financial statements.
Interest rate risk
Interest rate risk is the risk that future cash flows could be affected by interest rate
fluctuation. In order to hedge this risk, which refers mainly to PRADA spa, the Group
uses derivatives (such as interest rate swaps) to convert variable-rate debt into fixedrate debt or debt within a specified range of rates.
The management of interest rate risk is described in more detail in the Notes to theInterim condensed consolidated financial statements.
Data processing risk
Data is processed using information systems whose governance model ensures that:––

information is adequately protected against the risk of unauthorized access anddisclosure (including means to protect personal privacy and proprietary information),
improper information modification or destruction (including accidental loss), anduse incompatible with the job assigned;––

data is processed in accordance with the applicable laws and regulations.

Information on related-party transactions
Information on the Group’s transactions and balances with related parties is provided
in the Notes to the Interim condensed consolidated financial statements, insofar
as required by IFRS, and in the Board of Directors' Financial Review and Corporate
Governance Report, insofar as required by the Hong Kong Stock Exchange rules.
Non-IFRS measures
The Group uses certain financial measures (“non-IFRS measures”) to measure its
business performance and to help readers understand and analyze its statement offinancial position. Although they are used by the Group's management, the measures
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are not universally or legally defined and are not regulated by the IFRS adopted toprepare the Interim condensed consolidated financial statements. Other companies
operating in the luxury goods business might use the same measures, but with different
calculation criteria, so non-IFRS measures should always be read in conjunction withthe related notes, and may not be directly comparable with those used by othercompanies. In this Interim Financial Report, the Prada Group used the following nonIFRS measures:
EBITDA: Earnings Before Interest, Taxation, Depreciation and Amortization, i.e.
"consolidated net income for the period” adjusted to exclude “interest and otherfinancial income/(expense) and dividends from investments”, “taxes on income” and"depreciation, amortization and impairment".
EBIT: Earnings Before Interest and Taxation, i.e. “consolidated net income for theperiod” adjusted to exclude “interest and other financial income/(expense) anddividends from investments” and “taxes on income”.
Net Financial Position: Short-term and long-term financial payables due to third andrelated parties, including lease obligations, net of cash and cash equivalents and shortterm and long-term financial receivables due from third and related parties.
Free cash flows: net cash flows generated by operating activities, net of cash flows
used in investing activities.
The following table sets forth the EBITDA and EBIT of the reported periods.
(amounts in thousands of Euro)six months
ended July 31
2017(unaudited)

twelve months
ended Jan 31
2017(audited)six months
ended July 31
2016(unaudited)

Consolidated net income for the period

116,082

284,189

145,297

Taxes on income

50,222

131,258

62,206533

15,733

6,198

EBIT - Earnings Before Interest and Taxation

166,837

431,180

213,701

Depreciation, amortization and impairment

112,716

222,267

116,290

EBITDA

279,553

653,447

329,991

Interest and other fin. income/(expenses) and div. from investments

Financial Review Basis of Preparation
The Board of Directors' Financial Review refers to the Group of companies controlledby PRADA spa (the "Company"), operating holding company of the Prada Group (the"Group"), and is based on the Interim condensed consolidated financial statements of
the Group for the six months ended July 31, 2017 prepared in accordance with IFRS
as adopted by the European Union. This Financial Review must be read in conjunction
with the Interim condensed consolidated financial statements and the related Notes,
which are an integral part of the latter.

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Outlook
The complex task of restructuring all operating processes, which is aimed at providing
the Group with the tools needed to access an increasingly competitive market, isprogressing well; however, more remains to be done.
Having one of the most recognized and most respected international brands, with
undisputed leadership in design and innovation, means the Group has to make choicesin the pursuit of growth that privilege the preservation of the cultural and stylistic
fundamentals that the brand identity is based on.
The positive trends in Ready-to-Wear, which has been growing over many seasons, areconfirmed as well as in the new products in the Leather goods segment, which have
had an excellent reception in all markets. The Group remains committed to creating abalanced offer in terms of price ranges.
The extensive overhaul of Prada Group’s cost structure creates operating leverage thatwill allow the Group profits to benefit rapidly from revenue growth. In the meantime,
control over investments and net working capital will continue to protect cash
generation.
The Group is confident that its action plan is the best way to return to steady growth inrevenues and margins, albeit aware that benefits may take longer than expected. The
Group’s cash flow and balance sheet remain solid, allowing to focus on value creation
for shareholders over a broad time horizon.

Milan, September 8, 201722

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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 the Company’s corporate governance practices have complied with thecode provisions set out in the Code throughout the six months from February 1, 2017,
to July 31, 2017 (the “Reviewed Period”).
The Board
The Board of Directors of the Company (the “Board”) is responsible for setting up theoverall strategy as well as reviewing the operation and financial performance of theCompany and the Group.
The Board is composed of nine Directors of which four are executive Directors, two
are non-executive Directors and three are independent non-executive Directors.
The Board has established the Audit Committee, the Remuneration Committee and theNomination Committee. Each Committee is chaired by an independent non-executive
director. The written terms of reference of each Committee are of no less exacting
terms than those set out in the Code and are available on the websites of the Company
and The Stock Exchange of Hong Kong Limited (the “Stock Exchange”).
In addition, the Board has established a Supervisory Body under the Italian Legislative
Decree 231 of June 8, 2001 (the “Decree”).
Audit Committee
The Company has established an Audit Committee in compliance with Rule 3.21 of
the Listing Rules where at least one member possesses appropriate professional
qualifications in accounting or related financial management expertise to discharge
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 independentview of the effectiveness of the Company’s financial reporting process and its internal
control and risk management systems, to oversee the external and internal audit
processes and the implementation of the Company’s risk management functions andto perform other duties and responsibilities as are assigned to the Audit Committeeby the Board. During the Reviewed Period, the Audit Committee held four meetingson March 1, 2017, April 6, 2017, April 12, 2017 and June 29, 2017, with an averageattendance rate of 92%, mainly to review with the senior management, the Group’s
internal and external auditors and the board of statutory auditors, significant internaland external audit findings and financial matters, as required under the Committee’s
terms of reference, and to make relevant recommendations to the Board. The Audit
Committee’s review covered the audit plan for the year 2017, the findings of theinternal auditors, internal controls, risk assessment, annual review of the Group’s
continuing connected transactions for 2016, tax and legal updates (including litigations)

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and the financial reporting matters (including the annual results for the year 2016,
before recommending them to the Board for approval).
The Audit Committee also held a meeting on September 5, 2017 to update on internal
audit and risk management activities (attendance rate of 100%) and held a meetingon September 8, 2017 (attendance rate of 67%) to review the interim results for theperiod ended July 31, 2017, before recommending them to the Board for approval.
Remuneration Committee
The Company has established a Remuneration Committee in compliance with theCode. In compliance with Listing Rule 3.25, the Remuneration Committee is chairedby an independent non-executive director and comprises of a majority of independent
non-executive directors. 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, where appropriate, adoption. 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 on
April 11, 2017 and June 29, 2017, with an attendance rate of 100% to review andrecommend certain updates to the long term incentive plan for executives and Directors
and to review the management by objectives plan for the Company’s executives.
Nomination Committee
The Company has established a Nomination Committee in compliance with the Code.
The primary duties of the Nomination Committee are to determine the policy for thenomination of directors and to make recommendations to the Board on the structure,size and composition of the Board itself, on the selection of new Directors and on
the succession plans for Directors. The Nomination Committee also assesses theindependence of independent non-executive directors. The recommendations of theNomination Committee are then put forward to the Board for consideration and, whereappropriate, adoption. The Nomination Committee consists of two independent nonexecutive directors, Mr. Gian Franco Oliviero Mattei (Chairman) and Mr. Sing Cheong
Liu, and one executive director, Mr. Carlo Mazzi. During the Reviewed Period, theNomination Committee held one meeting on April 11, 2017, with an attendance rateof 100% to perform the annual review of the independence of independent nonexecutive directors.
Board of Statutory Auditors
Under Italian law, the Company is required to have a board of statutory auditors,
appointed by the shareholders for a term of three financial years, with the authority
to supervise the Company on its compliance with the applicable law, regulations andthe By-laws, as well as on its 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.
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. During the Reviewed Period, theboard of statutory auditors attended two Board meetings of the Company on April 12,2017 and June 29, 2017. They also attended the Board meeting of the Company on
September 8, 2017.

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Supervisory Body
In compliance with the Decree, the Company has established a supervisory bodywhose primary duty is to ensure the functioning, effectiveness and enforcement of theCompany’s Model of Organization, adopted by the Company pursuant to the Decree.
The supervisory body consists of three members appointed by the Board selectedamong qualified and experienced individuals, including independent non-executive
directors, qualified auditors, executives or external individuals. The supervisory bodyconsists of Mr. David Terracina (Chairman), Mr. Gian Franco Oliviero Mattei and Mr.
Paolo De Paoli.
Dividends
The Company may distribute dividends subject to the approval of the shareholders ina shareholders’ general meeting.
No dividends have been declared or paid by the Company in respect of the Reviewed
Period.
On April 12, 2017, the Board of the Company recommended the payment of a final
dividend for the financial year 2016 of Euro/cents 12 per share in the capital of theCompany, representing a total dividend of Euro 307,058,880. The Shareholders
approved the distribution and payment of this dividend at the shareholders’ general
meeting of the Company held on May 31, 2017. The dividend was paid on June 20,
2017.
Change in Information of Directors Pursuant to Listing Rule 13.51B(1)Pursuant to Rule 13.51B(1) of the Listing Rules, there was no change in information of
Directors since the Company’s 2016 Annual Report.
Directors’ Securities Transactions
The Company has adopted written procedures governing Directors’ securities
transactions on terms no less exacting than the standard set out in the Model Code for
Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the
Listing Rules (the “Model Code”). Specific written confirmations have been obtained
from each Director to confirm his/her compliance with the required standard set out inthe Model Code and the Company’s relevant procedures regarding Directors’ securities
transactions for the Reviewed Period. There was no incident of non-compliance during
the Reviewed Period.
The Company has also adopted written procedures governing securities transactions
carried out by relevant employees who are likely to be in possession of inside informationin relation to the Company and its securities. The terms of these procedures are noless exacting than the standard set out in the Model Code.

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Purchase, Sale, or Redemption of the Company’s Listed Securities
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed anyof the Company’s listed securities during the Reviewed Period.
Directors’ interests and short positions in securities
As at July 31, 2017, the Directors of the Company and their associates held thefollowing interests in the shares, underlying shares and debentures of the Company
and its associated corporations (within the meaning of Part XV of the Securities andFutures Ordinance (“SFO”)) as recorded in the register required to be kept by theCompany under Section 352 of the SFO or as otherwise notiﬁed to the Company andthe Stock Exchange pursuant to the Model Code:(a) Long positions in shares and underlying shares of the Company
Name of Director

Number of Shares

Nature of Interest

Approximate Percentage
of Issued Capital

Ms. Miuccia Prada Bianchi

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

Interest of Controlled
corporation

80%

Mr. Patrizio Bertelli

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

Interest of Controlled
corporation80%

Notes:
1.

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

2.

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

3.

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

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The deemed interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli in theshares of the Company as at July 31, 2017 are summarized in the following chart:

Miuccia Prada
Bianchi

Patrizio Bertelli

100%

100%

Ludo S.r.l.
53.8%

PABE 1 S.r.l.

Bellatrix S.p.A.
65%

35%

Prada Holding S.p.A.
80%

PRADA S.p.A.

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

Name of associatedcorporations

Class of shares

Numberof shares

Nature of Interests

Approximate
percentage ofInterests

Ms. Miuccia
Prada Bianchi

Prada Holding S.p.A.

Ordinary Shares

1,650

Controlled Corporation

68.75%

Prada Holding S.p.A.

Preference Shares300

As above

50%

Prapar Corporation

Common Shares

50

As above

100%

MFH Munich Fashion
Holding GmbH

Registered Share1

As above

100%

PAC S.r.l.
(in liquidation)

Participation Quotas (Euro)30,600As above100%

Bellatrix S.p.A.

Ordinary Shares

438,460

As above

49.83%

Bellatrix S.p.A.

Preference Shares

100,000

As above

83.34%

Ludo S.r.l.

Ordinary Shares

100,311

Beneficial Owner100%

PRA 1 S.r.l.

Participation Quotas (Euro)

10,000Controlled Corporation

100%

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

Common Share1

As above100%

Fratelli Prada S.p.A.

Ordinary Shares

734,754

As above73.48%

Petranera S.r.l.

Participation Quotas (Euro)2

As above100%

PABE-RE LLC

Capital Contribution (JPY)

1,000,000

As above100%

Prada Holding S.p.A.

Ordinary Shares

750

Controlled corporation

31.25%

Prada Holding S.p.A.

Preference Shares300

As above

50%

Prapar Corporation

Common Shares

50

As above

100%

MFH Munich Fashion
Holding GmbH

Registered Share1

As above

100%

PAC S.r.l.
(in liquidation)

Participation Quotas (Euro)30,600As above100%

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

Common Share1

As above100%

PABE-RE LLC

Capital Contribution (JPY)

1,000,000

As above100%

Mr. Patrizio
Bertelli

Save as disclosed above, as at July 31, 2017, none of the Directors of the Company or
their associates held any interest or short position in the shares, underlying shares anddebentures of the Company or any of its associated corporations (within the meaningof Part XV of the SFO) as recorded in the register required to be kept under Section 352
of the SFO or as otherwise notiﬁed to the Company and the Stock Exchange pursuant
to the Model Code.

PRADA Group

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Substantial shareholders’ interests and short positions in securities
As at July 31, 2017, other than the interests of the Directors of the Company as
disclosed above, the following persons held interests in the shares or underlying
shares of the Company which fall to be disclosed to the Company under Section 336
of the SFO:
Capacity

Number of Shares

Approximate percentage
of issued capital

Prada Holding S.p.A.

Legal and beneficial owner

2,046,470,760

80.00%

Bellatrix S.p.A.

Interest of controlled corporation

2,046,470,760

80.00%

Ludo S.r.l.

Interest of controlled corporation

2,046,470,760

80.00%

PABE 1 S.r.l.

Interest of controlled corporation

2,046,470,760

80.00%

OppenheimerFunds, Inc.

Beneficial owner150,723,710

5.89%

128,182,809

5.00%

Beneficial owner481,024

0.01%

Custodian corporation / approved
lending agent

125,445,611

4.90%

Name of Shareholder
Long Positions

Beneficial owner(1,704,720)
Investment manager(1,025,300)
JPMorgan Chase & Co.

Trustee (other than a bare trustee)(7,178)Custodian corporation / approved
lending agent(125,445,611)

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

Note:
Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company.
As Ludo S.r.l. owns 53.8% of Bellatrix S.p.A. which in turn owns 65% of Prada Holding
S.p.A. and PABE 1 S.r.l. owns 35% of Prada Holding S.p.A., Bellatrix S.p.A., Ludo S.r.l.
and PABE 1 S.r.l. are all deemed to be interested in the 2,046,470,760 shares held by
Prada Holding S.p.A..

30

PRADA Group

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Interim condensed consolidated financial statements

PRADA Group

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31

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

Note

July 312017(unaudited)

January 31
2017(audited)

AssetsCurrent assets
Cash and cash equivalents

6669,730

722,214

Trade receivables, net

7266,795

285,504
526,941

Inventories, net

8562,620

Derivative financial instruments - current

920,416

7,045

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

10

9,425

14,964

Other current assets

11

Total current assets

215,150

253,375

1,744,136

1,810,043

Non-current assets
Property, plant and equipment

12

1,490,151

1,542,684

Intangible assets

13915,913921,800

Associated undertakings

14

9,311

11,775

Deferred tax assets

32

237,478

247,266

Other non-current assets

15

111,925

123,361

Derivative financial instruments - not current

9

2,620

-

Total non-current assets

2,767,398

2,846,886

Total Assets

4,511,534

4,656,929

151,211

Liabilities and total Shareholders' Equity
Current liabilities
Short-terms financial payables and bank overdrafts

16359,206

Payables to related parties - current

17

5,058

5,542

Trade payables

18

276,730

256,094

Tax payables

19

49,73765,467

Derivative financial instruments - current

911,32013,634

Other current liabilities

20

Total current liabilities

132,451

144,827

834,502636,775
547,628

Non-current liabilities
Long-term financial payables

21

529,428

Post-employment benefits

22

60,21567,211

Provision for risk and charges

23

77,54682,323

Deferred tax liabilities

32

34,10931,140

Other non-current liabilities

24

169,436

179,072

Derivative financial instruments - not current

9

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

8,250
915,624

1,712,599

1,552,399

255,882

255,882

2,381,085

2,401,500

Translation reserve

23,636

144,791

Net income for the period

115,742

278,329

Equity attributable to owners of the Group25

2,776,345

3,080,502

Equity attributable to Non-controlling interests

26

22,59024,028

Total Equity

2,798,935

3,104,530

Total Liabilities and Total Equity

4,511,534

4,656,929

Net current assets
Total assets less current liabilities

32

7,363
878,097

PRADA Group

Prada interim report 2017-26set.indd 32

909,634

1,173,268

3,677,032

4,020,154

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Consolidated Statement of Profit or LossNote

six months
ended July 31
2017(unaudited)%

six months
ended July 31
2016(unaudited)%

Net Revenues

27

1,468,636

100.0%

1,554,172

100.0%

Cost of goods sold

28

(379,995)-25.9%(432,231)-27.8%

1,088,641

74.1%

1,121,941

72.2%(921,804)-62.7%(908,240)-58.4%

166,837

11.4%

213,701

13.8%(amounts in thousands of Euro)

Gross Margin
Operating expenses

29

EBIT
Interest and other financial expenses, net

30

(890)

-0.1%

(6,756)-0.4%

Dividends from investments

31

357

0.0%

558

0.0%

166,304

11.3%

207,503

13.4%(50,222)-3.4%(62,206)-4.1%

116,082

7.9%

145,297

9.3%

Income before taxation
Taxation

32

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

26

340

0.0%

3,374

0.2%

Net income - Group

25

115,7427.9%

141,923

9.1%

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

33

0.045

PRADA Group

Prada interim report 2017-26set.indd 33

0.055

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33

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

Income before taxation

six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

166,303

207,503108,334

112,703

4,382

3,588

Profit or loss adjustments
Depreciation and amortization from continuing operations
Impairment of property, plant and equipment and intangible assets
Non-monetary financial (income) expenses
Other non-monetary charges(12,487)

118

9,899

1,517

Balance Sheet changes
Other non-current assets and liabilities(10,799)(9,841)

Trade receivables, net

13,134(57,234)

Inventories, net(54,017)

68,426

Trade payables

25,265(16,554)

Other current assets and liabilities(16,932)

3,318

Cash flows from operating activities

233,082

313,544

Interest paid, net – third parties(7,318)(8,464)

Taxes paid

(17,608)(38,352)

Net cash flows from operating activities

208,156

266,728

Purchases of property, plant and equipment and intangible assets(103,869)(114,335)

Disposals of property, plant and equipment and intangible assets

841

708

-

575

Dividends from investments
Transactions with Non-controlling shareholders(1,275)--(1,623)

Net cash flow utilized by investing activities(104,303)(114,675)

Dividends paid to shareholders of PRADA spa(307,059)(281,471)

Business combination

Dividends paid to non-controlling shareholders
New loans from related companies
Repayment of short term portion of long term borrowings - third parties
Arrangement of long-term borrowings – third parties
Change in short-term borrowings – third parties
Share capital increases by non-controlling shareholders of subsidiaries

(369)

-

1,000

(26,909)(46,550)

8,668

120,000

218,623

51,03889

109(107,039)(156,243)

Change in cash and cash equivalents, net of bank overdrafts(3,186)(4,190)Foreign exchange differences(49,686)(986)

Opening cash and cash equivalents, net of bank overdraft722,214680,595

Closing cash and cash equivalents, net of bank overdraft669,342

675,419

Cash and cash equivalents

669,730

675,423

Cash flows generated/(utilized) by financing activities

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

34

(451)

PRADA Group

Prada interim report 2017-26set.indd 34

(388)

(4)

669,342

675,419

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Consolidated statement of changes in Shareholders' equity(amounts in thousands of Euro, except number of shares)
EquityNumber ofsharesShare
CapitalTranslaSharetion premium
Reserve
reserve

CashFair Valueflow Actuarial Available
hedge Reserve
for salereserve
Reserve

Balance atJanuary 31, 2016
(audited)

2,558,824,000

255,882

138,547410,047(7,100)(8,161)

933

Allocation of2015 net income

-

-

-

-

-

-

-

330,888

Dividends

-

-

-

-

-

-

-

(281,471) (281,471)

Transactions with
non-controllinginterests

-

-

-

-

-

-

-

(1,283)

Capital injection
in subsidiaries

-

-

-

-

-

-

-

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

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

-

-

-

2,558,824,000

255,882

110,902

Dividends

-

-

-

-

-

Share Capital
Increase

-

-

-

-

Transactions with
non-controllinginterests---

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

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

Balance atJanuary 31, 2017
(audited)(amounts inthousandsof Euro)

Total
Other
Reserves

Net
income1,959,304 2,355,023

330,888

3,080,340

330,888 (330,888)

-

Other
reserves

EquityNon attributable
controllingto owners ofinterests
Group

Total
Equity17,037 3,097,377

-

-

-

(281,471)(1,283)-(1,283)(249)(1,532)

-

-

-

-

109

109

(486)

-

(14,616)

141,923

99,662

3,538

103,200(2,264)--(2,264)-(2,264)-(2,264)410,047 (21,230) (10,425)

447

2,007,438 2,386,277

141,923

2,894,984

-

-

-

-

-

-

(337)

(337)

-

-

-

-

-

-

-

905

905

-

-

-

-

(725)

(725)

-

(725)

529

(196)

33,889-13,333-(2,103)-

11,230136,406

181,525

2,863

184,388

-

-

-

-

4,718

-

-

4,718

-

4,718

2

4,720

2,558,824,000

255,882

144,791

410,047(7,897)(5,707)(1,656)

2,006,713 2,401,500

278,3293,080,502

Allocation of2016 net income

-

-

-

-

-

-

-

278,329

278,329 (278,329)-

Dividends

-

-

-

-

-

-

-

(307,059) (307,059)-(307,059)

Transactions with
non-controllinginterests

-

-

-

-

-

-

-

-

-

-

-

335

335

Capital injection
in subsidiaries

-

-

-

-

-

-

-

-

-

-

-

89

89

Comprehensive
income for the six
months (recyclable
to P&L)-- (121,155)-

10,212-(1,903)

4

8,313

115,742

2,900(1,411)

1,489

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

-

-

-

-

-

2

-

-

2

-

2

-

2

2,558,824,000

255,882

23,636410,047

2,315(5,705)(3,559)1,977,987 2,381,085

115,7422,776,345

Balance at
July 31, 2016
(unaudited)

Balance at
July 31, 2017
(unaudited)

PRADA Group

Prada interim report 2017-26set.indd 35--

Interim Financial Report 2017 - Interim condensed consolidated financial statements(369) (281,840)

20,066 2,915,050

24,028 3,104,530--(451) (307,510)

22,590 2,798,935

35

27/09/17 09:51

Consolidated statement of comprehensive income(amounts in thousands of Euro)Net income for the period – ConsolidatedA)

six months twelve months
ended July 31 ended January 31
2017
2017
(unaudited)(audited)six months
ended July 31
2016(unaudited)

116,082

284,190145,297(122,894)

6,784(27,480)---(122,894)

6,784(27,480)(18,080)

Items recyclable to P&L:

Change in Translation Reserve
Tax impact
Change in Translation Reserve less Tax Impact
Change in Cash Flow Hedge reserve

13,477(914)

Tax impact(3,265)

117

3,950

Change in Cash Flow Hedge reserve less Tax Impact

10,212(797)(14,130)

Change in Fair Value reserve(2,475)(3,452)

(648)

572

863

162

(1,903)(2,589)(486)(2,409)Tax impact
Change in Fair Value reserve less Tax Impact
B)

Items not recycled to P&L:

Change in Actuarial reserve

-

3,277

Tax impact

-

(821)

145

Change in Actuarial reserve less Tax Impact

-

2,456

(2,264)

Consolidated comprehensive income for the period

1,497

290,044

100,937

Comprehensive income for the period - Non Controlling Interests(1,411)

6,403

3,538

86

283,641

97,399Comprehensive income for the period - GroupThe accounting policies and the notes are an integral part of the consolidated financial
statements.

36

PRADA Group

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Notes to the Interim condensed consolidated financial statements

PRADA Group

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37

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1.

General information
PRADA spa (the “Company”), together with its subsidiaries (jointly the “Group”), islisted on the Hong Kong Stock Exchange (HKSE code: 1913). It is one of the world
leaders in the luxury goods sector where it operates with the Prada, Miu Miu, Church’s
and Car Shoe brands in the design, production and distribution of luxury handbags,
leather goods, footwear, apparel and accessories. The Group also operates in theeyewear and fragrance industries under specific licensing agreements stipulated withindustry leaders, and with the recent acquisition (2014) of Pasticceria Marchesi 1824,
it has made its entry into the food industry, where it is positioned at the highest levelsof quality.
The Group’s products are sold in 70 countries worldwide through a network that
included 613 Directly Operated Stores (DOS) at July 31, 2017 and a selected networkof luxury department stores, independent retailers, franchise stores and on-line
distributors (e-tailers).
The Company is a joint-stock company, registered and domiciled in Italy. Its registeredoffice is in via Fogazzaro 28, Milan, Italy. At the date of these unaudited Interim
condensed consolidated financial statements, 79.98% of the share capital is ownedby PRADA Holding spa, a company domiciled in Italy, while the remaining shares arefloating on the Main Board of the Hong Kong Stock Exchange.
The Interim condensed consolidated financial statements were approved andauthorized for issue by the Board of Directors of PRADA spa on September 08, 2017.

2.

Basis of preparation
The unaudited Interim condensed consolidated financial statements of the Prada Groupfor the six months ended July 31, 2017, including the “Consolidated statement offinancial position”, the “Consolidated Statement of Profit or Loss”, the “Consolidated
statement of comprehensive income”, the “Consolidated statement of cash flows”,
the “Consolidated statement of changes in Shareholders’ equity” and the “Notes tothe Interim condensed consolidated financial statements”, have been prepared inaccordance with the “IAS 34 Interim Financial Reporting”.
These Interim condensed consolidated financial statements should be read together
with the Consolidated financial statements of the Prada Group for the twelve months
ended January 31, 2017 that were prepared in accordance with the International
Financial Reporting Standards (“IFRSs”) issued by the International AccountingStandards Board (“IASB”) as endorsed by the European Union.
At the date of presentation of these Interim condensed consolidated financial
statements, there were no differences between IFRSs as endorsed by the European
Union and applicable to the Prada Group and those issued by the IASB.
IFRSs also refer to all International Accounting Standards (“IAS”) and all interpretationsof the International Financial Reporting Interpretations Committee (“IFRIC”), previously
called the Standing Interpretations Committee (“SIC”).
The Group has prepared the Interim condensed consolidated statement of financial
position presenting separately current and non-current assets and liabilities. All thedetails needed for an accurate and complete information are provided in the Notes tothe Interim condensed consolidated financial statements. The Consolidated statementof profit or loss is classified by destination. The cash flow information is provided in
the Consolidated statement of cash flows which has been prepared under the indirect
method.
The Interim condensed consolidated financial statements have been prepared on a38

PRADA Group

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27/09/17 09:51

going concern basis and are presented in Euro which is also the functional currency of
PRADA spa.
In accordance with IFRSs, the preparation of consolidated financial statements requires
management to make estimates and assumptions when determining the values ofcertain types of assets, liabilities, revenues and costs and when assessing contingent
assets and liabilities.
3.

New IFRS and amendments to IFRS
New standards and amendments issued by the IASB, endorsed by the European
Union and applicable to the Prada Group from February 1, 2017.
No new principles have been adopted by the European Union, therefore the IFRS
standards adopted in the preparation of this document are the same as those used in
the preparation of the Consolidated financial statements as at January 31, 2017.
New standards and amendments issued by the IASB, endorsed by the European
Union but not yet applicable to the Prada Group as effective for financial years
beginning on January 1, 2018.
New standards

Effective date for the
Prada GroupEU endorsement status

IFRS 9 Financial Instruments

January 1, 2018

Endorsed on November 2016

IFRS 15 Revenues from Contracts with Customers

January 1, 2018

Endorsed on September 2016

New Standards, changes and operational guidelines issued by the IASB, notyet endorsed by the European Union at the date of this Interim consolidated
financial statements.
New standards

Effective date for the
Prada GroupEU endorsement status

IFRS 14 Regulatory Deferral Accounts

January 1, 2016 (*)

Not yet endorsed

IFRS 16 Leases

January 1, 2019

Not yet endorsed

IFRS 17 Insurance Contracts

January 1, 2021

Not yet endorsed

Amendments to existing standards

Effective date for the
Prada GroupEU endorsement status

IFRS 10 and IAS 28: Sale or assignment of assets

February 1, 2016

Not yet endorsed

IAS 12 Recognition of Deferred Tax Assets for Unrealised
LossesJanuary 1, 2017 (*)

Not yet endorsed

IAS 7 Statement of Cash Flows

January 1, 2017 (*)

Not yet endorsed

2014–2016 Cycle that impacted IFRS 1, IAS 28, IFRS12January 1, 2017 (*)

Not yet endorsed

Clarification on IFRS 15 Revenues from Contracts with
Customers

January 1, 2018

Not yet endorsed

IFRS 2 Share-based Payments

January 1, 2018

Not yet endorsed

IAS 40 Investment Property

January 1, 2018

Not yet endorsed

IFRIC 22 Interpretation on transactions involving
an advance in foreign currency

January 1, 2018

Not yet endorsed

IFRIC 23 Interpretation regarding the accountingof income taxes

January 1, 2019

Not yet endorsed(*) Changes issued by the IASB effective from January 1, 2017 (IFRS 14, IAS 12, IFRS 7, Cycle 2014-2016) have not yet terminatedthe EU approval process on July 31, 2017. However, the Directors consider their impact not material.

At the date of this Consolidated financial statements, the Directors did not finish
the necessary analyzes to estimate the impacts of the new standards, changes andoperating guidelines not yet applicable to the Prada Group. However, in view of thesignificance of commercial lease contracts for the Group, it is reasonable to conclude
that the impact of "IFRS 16 Leases" will be material.

PRADA Group

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39

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4.

Acquisitions and incorporation of companies
On April 7, 2017, PRADA Far East II bv, a company entirely owned by PRADA spa,
concluded the process of transferring its registered office from the Netherlands to Italy
and changed its name into PRADA Far East II srl; it will be soon merged into PRADA
spa.
On April 18, 2017, the parent company PRADA spa acquired a further 30% stake in
Hipic Prod Impex srl, bringing its ownership to 80%.
On May 1, 2017, PRADA Hong Kong P.D. Limited was incorporated into PRADA Asia
Pacific Limited.

5.

Operating segments"IFRS 8 Operating Segments" requires that detailed information be provided for each
operating segment that makes up the business. An operating segment is defined as abusiness division whose operating results are regularly reviewed by top management
in order to allocate appropriate resources to the segment and assess its performance.
Because of the Group’s matrix-based organizational structure (whereby responsibility
is assigned cross-functionally in relation to brands, products, distribution channels
and geographical areas), the complementary nature of the various brands' production
processes and the many relationships between the different business divisions, it is
not possible to designate operating segments as defined by IFRS 8 since the top
management is only provided with the financial performance on a Group-wide level.
For this reason, the business is considered a single operating segment as this better
represents the specific characteristics of the Prada Group business model.
The detailed information given below on net revenues by distribution channel, brand,
geographical area and product, as well as non-current assets by geographical area, isalso provided in the Financial Review together with additional comments.
Net Revenues
six months
ended July 31
2017(unaudited)%

six months
ended July 31
2016(unaudited)%% change

Net Sales

1,442,556

98.2%

1,529,267

98.4%

-5.7%

Royalties

26,0801.8%

24,905

1.6%

4.7%

1,554,172

100.0%-5.5%(amounts in thousands of Euro)0
Net Revenues

40

PRADA Group

Prada interim report 2017-26set.indd 40

1,468,636

100%

Interim Financial Report 2017 - Notes to the Interim condensed consolidated financial statements

27/09/17 09:51

Net sales analysis
six months
ended July 31
2017(unaudited)%

six months
ended July 31
2016(unaudited)%% change

Europe553,63138.4%

599,568

39.2%

-7.7%

Americas210,370

14.6%

218,492

14.3%

-3.7%

Asia Pacific462,95132.1%

461,215

30.2%

0.4%

Japan

164,438

11.4%

191,726

12.5%-14.2%

Middle East

49,208

3.4%

55,702

3.6%-11.7%

Other countries

1,958

0.1%

2,564

0.2%

-23.6%

Total Net Sales

1,442,556

100.0%

1,529,267

100.0%

-5.7%

Prada

1,176,843

81.6%

1,233,596

80.7%

-4.6%

Miu Miu

224,371

15.6%

249,152

16.3%

-9.9%

Church's

33,7692.3%

39,7472.6%-15.0%(amounts in thousands of Euro)Net sales by geographical area

Net sales by brand

Other

7,573

0.5%

6,772

0.4%

11.8%

1,442,556

100.0%

1,529,267

100.0%-5.7%

Leather goods

826,906

57.3%

893,468

58.4%

-7.4%

Footwear

310,340

21.5%

343,641

22.5%

-9.7%

Clothing

273,766

19.0%

262,395

17.2%

4.3%

Other

31,5442.2%

29,7631.9%

6.0%

1,442,556

100.0%

1,529,267

100.0%-5.7%

1,177,059

81.6%

1,276,587

84.0%

-7.8%

265,497

18.4%

252,680

16.0%

5.1%

1,442,556

100.0%

1,529,267

100.0%-5.7%

Total Net Sales
Net sales by product line

Total Net Sales
Net Sales by channel
Net Sales of Directly Operated Stores (DOS)Net Sales to independent customers and franchisees
Total Net Sales

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

July 312017(unaudited)

January 31
2017(audited)

Europe1,995,732

1,940,111

USA

145,692

210,183

Asia Pacific

253,637

307,035

Japan

92,80599,559Middle East

27,29929,469Africa

2,281

3,030

Total

2,517,446

2,589,387

The total amount of Euro 2,517 million (Euro 2,589 million at January 31, 2017) relates
to the Group’s non-current assets excluding, as requested by IFRS 8, those relating tofinancial instruments, deferred tax assets and pension fund surplus.

PRADA Group

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6.

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

July 312017(unaudited)

January 31
2017(audited)

Cash on hand

36,86442,449Bank deposit accounts

437,938

459,965

Bank current accounts

194,928

219,800

Total

669,730

722,214

July 312017(unaudited)

January 31
2017(audited)

Renmimbi

94,092

67,960US Dollar

206

34,626

Korean Won

20,13754,629Hong Kong Dollar

313,755

293,644

Other currencies

9,748

9,106

437,938

459,965

July 312017(unaudited)

January 31
2017(audited)Euro

44,097

109,606

US Dollar

66,74650,224

Korean Won

1,065

1,374

Hong Kong Dollar

4,603

6,056

GB Pound

8,101

5,947

Other currencies

70,316

46,593

Total bank current accounts

194,928

219,800

Bank deposits accounts are broken down by currency as follows:(amounts in thousands of Euro)

Total bank deposit accounts

Bank current accounts are broken down by currency as follows:(amounts in thousands of Euro)At July 31, 2017, bank current accounts and deposit accounts generated interest
income between 0% and 8.3% per annum (between 0% and 9.4% at January 31,2017).
The Group maintains that there is no significant risk regarding bank current accounts astheir use is strictly connected with the business operations and corporate processes
and, as a result, the number of parties involved is fragmented.

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7.

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

July 312017(unaudited)

January 31
2017(audited)

Trade receivables - third parties

255,210268,223

Provision for doubtful debts(6,483)(6,654)

Trade receivables related parties

18,06823,935

Total

266,795

285,504

Trade receivables fell by Euro 18.7 million due to exchange differences and differences
occurred in the timing of collection of some receivables. Trade receivables from relatedparties mainly refer to the sale of finished products to Fratelli Prada spa, a relatedcompany and franchisee of the Prada Group.
Movements during the period in the provision for doubtful debts are as follows:
July 312017(unaudited)

January 31
2017(audited)

Opening Balance

6,654

6,546
(78)

(amounts in thousands of Euro)

Exchange differences(182)

Increases

390

578

Utilization

(356)

(190)

Reversals

(23)

(202)

6,483

6,654

Closing Balance

The following table contains a summary, by due date, of total receivables before theallowance for doubtful debts at the reporting date:
Overdue (in days)

July 312017(unaudited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120≥ 121

Trade receivables

273,278

238,441

10,712

6,823

4,436

1,544

11,322

Total

273,278

238,441

10,712

6,823

4,436

1,544

11,322January 31
2017(audited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120≥ 121

Trade receivables

292,158

226,210

22,631

16,259

5,766

3,193

18,099

Total

292,158

226,210

22,631

16,259

5,766

3,193

18,099(amounts in thousands of Euro)(amounts in thousands of Euro)PRADA Group

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The following table contains a summary, by due date, of trade receivables less theallowance for doubtful accounts at the reporting date:8.

Overdue (days)(amounts in thousands of Euro)

July 312017(unaudited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120≥ 121

Trade receivables less provision
for doubtful debts

266,795

238,322

10,712

6,823

4,436

1,544

4,958

Total

266,795

238,322

10,712

6,823

4,436

1,544

4,958

(amounts in thousands of Euro)

January 31
2017(audited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120≥ 121

Trade receivables less provision
for doubtful debts

285,504

225,905

22,613

16,259

5,766

3,193

11,768

Total

285,504

225,905

22,613

16,259

5,766

3,193

11,768

Overdue (days)

Inventories, net
Inventories are analyzed as follows:
July 312017(unaudited)

January 31
2017(audited)

Raw materials

107,613103,679

Work in progress

36,85326,368Finished products

465,370444,049

Provision for obsolete and slow moving inventories(47,216)(47,155)

Total

562,620526,941(amounts in thousands of Euro)

The inventory increased from Euro 526.9 million to Euro 562.6 million. The differenceof Euro 35.7 million consisted of Euro 21.3 million of finished products and Euro 14.4
million of raw materials and work in progress. The increase coincides with a retail
restocking phase.
Movements on the allowance for obsolete and slow moving inventories are analyzed
as follows:(amounts in thousands of Euro)

Balance at January 31, 2017 (audited)

Finished
Products

Total

25,676

21,47947,155(73)

Exchange differences

-

(73)

Increase

-

261

261

Utilization

-

(127)

(127)

25,676

21,54047,216

Balance at July 31, 2017 (unaudited)44

Rawmaterials

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9.

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

July 312017(unaudited)

January 31
2017(audited)

Financial assets regarding derivative instruments - current

20,416

7,045

Financial assets regarding derivative instruments – non-current

2,620

-

Total Financial Assets - Derivative financial instruments

23,036

7,045

Financial liabilities regarding derivative instruments – current(11,320)(13,634)

Financial liabilities regarding derivative instruments – non-current(7,363)(8,250)Total Financial Liabilities - Derivative financial instruments(18,683)(21,884)

4,353(14,839)

Net carrying amount - current and non-current portion

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

July 312017(unaudited)

January 31
2017(audited)

IFRS7
Category

Forward contracts

21,256

6,168

Level II

Options

1,780

877

Level II

Positive Fair Value

23,036

7,045

Forward contracts(7,692)(10,865)

Level II

(62)

(134)

Level IIInterest rate swaps(10,929)(10,885)

Level II

Negative Fair Value(18,683)(21,884)

4,353(14,839)

Options

Net carrying amount – current and non-current

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

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payables and financial cash flows.
At the reporting date, the notional amounts of the derivative contracts designated as
foreign exchange risk hedges (as translated at the European Central Bank exchange
rate at July 31, 2017) were as stated below.
Contracts in place as at July 31, 2017 to hedge projected future trade cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts (*)

July 312017(unaudited)

Currency
Swiss Franc

-

5,810

(2,646)

3,164

GB Pound-

37,408(5,212)32,196(23,987)

10,15329,477(63,617)

Japanese Yen

Hong Kong Dollar-

46,261-

46,261

Korean Won-

37,549-37,549Chinese Renminbi-

72,184-72,184

11,512

63,528(11,537)

63,503

Other-

51,457-51,457

Total

21,665

343,674(83,012)282,327

US Dollar(*) Positive figures represent forward sales, negative figures represent forward purchases of currency

Contracts in place as at July 31, 2017 to hedge projected future financial cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts (*)

July 312017(unaudited)

Currency
Swiss Franc-

50,180-50,180

GB Pound-

21,404(1,275)

20,129Japanese Yen-

32,691-

32,691US Dollar

-

9,273

(54,149)(44,876)

Other

-

5,760

-

5,760

Total

-

119,308(55,424)

63,884(*) Positive figures represent forward sales, negative figures represent forward purchases of currency

Contracts in place as at January 31, 2017 to hedge projected future trade cash flows.
Options

Forward sale
contracts

Forwardpurchase
contracts (*)

Swiss Franc

-

12,936(12,370)566

GB Pound-

73,050(22,537)

50,513(1,027)(amounts in thousands of Euro)

January 31
2017(audited)

Currency

17,97847,581(66,586)

Japanese Yen

Hong Kong Dollar-

95,949(26,174)

69,775

Korean Won-

53,906-53,906
53,106Chinese Renminbi-

96,255(43,149)

63,226

111,576(112,136)

62,666

Other-

99,366(38,200)

61,166

Total

81,204590,619(321,152)

350,671

US Dollar(*) Positive figures represent forward sales, negative figures represent forward purchases of currency

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Contracts in place as at January 31, 2017 to hedge projected future financial cash
flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts (*)

January 31
2017(audited)

53,431

Currency
Swiss Franc

-53,431-

Brazilian Real

-

895

(895)

-

GB Pound-

22,229-22,229Japanese Yen-

34,771-

34,771US Dollar-

10,112(59,042)(48,930)

Other

-

9,919

-

9,919

Total

-

131,357(59,937)

71,420(*) Positive figures represent forward sales, negative figures represent forward purchases of currency

All contracts in place as at July 31, 2017 mature within 12 months, except for someforward contracts to hedge future financial cash flows expiring after July 31, 2018
and whose notional net amount is Euro 45.8 million (wholly consisting of forward sale
contracts).
All contracts in place at the reporting date were entered into with major financial
institutions and the Group expects none of them to default.

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Interest rate transactions
The Group enters into Interest Rate Swaps agreements (IRS) in order to hedge the riskof interest rate fluctuations in relation to several bank loans. The key features of the IRS
agreements in place as at July 31, 2017 and January 31, 2017 are summarized as follows:
Interest Rate Swap (IRS) Agreement
Contract

Currency

Notional
amountInterest
rate

Hedged loan
July 31
Maturity
2017
date(unaudited)

Currency

Lending
institution

AmountExpiryEuro/000IntesaSanpaolo

47,667May-30Mar-19(amounts inthousandsof Euro)
IRS

Euro/000

47,6671.457%

May-30IRS

Euro/000

60,0000.105%

Mar-19(399)

Euro/000

Unicredit

60,000IRS

Euro/000

90,0000.013%

Feb-21(191)

Euro/000

Unicredit

90,000Feb-21IRS

Euro/000

100,000

0.250%

Jun-21(465)

Euro/000 CR Firenze

100,000

Jun-21IRS

GBP/000

56,4002.778%

Jan-29(7,478)

GBP/000

Unicredit

56,400Jan-29IRS

Yen/000

1,800,000

1.360%

Mar-20(179)

Yen/000

Mizuho2,100,000

Mar-20Total(2,217)(10,929)
Interest Rate Swap (IRS) Agreement

Contract

Currency

Notional
amountInterest
rate

Hedged loan
January 31
Maturity
2017
date(audited)

Currency

Lending
institution

AmountExpiryEuro/000IntesaSanpaolo

49,500May-30Mar-19(amounts inthousandsof Euro)
IRS

Euro/000

49,5001.457%

May-30(2,563)IRS

Euro/000

60,0000.105%

Mar-19(470)Euro/000

Unicredit

60,000IRS

Euro/000

90,0000.013%

Feb-19(300)

Euro/000

Unicredit

90,000Feb-19IRS

GBP/000

57,3002.828%

Jan-29(7,294)

GBP/000

Unicredit

57,300Jan-29IRS

Yen/000

250,000

1.875%

Mar-17(11)

Yen/000

Mizuho250,000

Mar-17

IRS

Yen/000

2,100,000

1.360%

Mar-20(247)

Yen/000

Mizuho2,100,000

Mar-20Total(10,885)

The IRS agreements convert the variable interest rates applying to a series of loans
into fixed interest rates. These agreements have been arranged with leading financial
institutions and the Group does not expect them to default.
10. Receivables from, and advance payments to, related parties
Receivables from, and advances to, related parties current are detailed below:
July 312017(unaudited)

January 31
2017(audited)

Prepaid sponsorships

3,259

8,741

Prepaid Expenses & Accrued Income

6,166

6,223

Receivables from and advances to related parties - current

9,425

14,964(amounts in thousands of Euro)

The prepaid sponsorships refer to the amount paid to Luna Rossa Challenge srl underagreements in effect as at July 31, 2017. Additional information on related party
transactions is provided in Note 36.

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

July 312017(unaudited)

January 31
2017(audited)

VAT

44,183

48,582

Income tax and other tax receivables

74,082

117,244

Other asset

23,887

27,218Prepayments

65,682

55,676

Deposits

7,316

4,655

215,150

253,375

July 312017(unaudited)

January 31
2017(audited)Advertising contributions under license agreements

6,478

5,072

Advances to suppliers

3,133

1,353

Incentives for retail investments

7,251

12,171

Total

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

Advances to employees

918

807

Other receivables

6,107

7,815

Total

23,887

27,218July 312017(unaudited)

January 31
2017(audited)

Rental costs

26,98521,038Insurance

3,272

2,447

Design Costs

11,901

13,182

Fashion shows and advances on advertising campaigns

7,284

3,888

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

Amortized costs on loans

938

1,077

Other

15,302

14,044

Total

65,682

55,676

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

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12. Property, plant and equipment
The changes in the historical cost and accumulated depreciation are set forth below:(amounts in thousands of Euro)Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

Assetsunderconstruction

Total

75,7902,983,101

Historical cost752,702167,863

1,380,474

433,346

172,926

Accumulated depreciation(96,178)(130,876)(872,603)(250,502)(90,258)

Net carring amount at
January 31, 2017 (audited)

656,524

36,987

507,871

182,844

82,66875,7901,542,684

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

Assetsunderconstruction

Total

96,9812,929,806(amounts in thousands of Euro)Historical cost

744,474

171,540

1,324,693

420,306

171,812

Accumulated depreciation(101,802)(134,195)(857,373)(253,351)(92,934)

Net carring amount at
July 31, 2017 (unaudited)

642,672

37,345467,320

166,955

78,878- (1,440,417)- (1,439,655)

96,981

1,490,151

The changes in the carrying amount during the six months ended July 31, 2017 are as
follows:(amounts in thousands of Euro)

Balance atJanuary 31, 2017 (audited)

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

AssetsTotal
under historicalconstruction
cost

656,524

36,987

507,871

182,844

82,66875,790 1,542,684

Additions

3,465

4,446

22,872

8,394

2,034

50,39091,601

Depreciation(8,128)(3,893)(57,708)(17,468)(5,285)-(92,482)

Disposals
Exchange differences
Other movements
Impairment
Balance at
July 31, 2017 (unaudited)

(8)

(471)

(155)

(202)

(5)

-

(841)

(9,194)(47)(25,668)(7,594)(571)(2,177)(45,251)

13

323

22,6782,702

117(27,011)(1,178)--(2,570)(1,721)

(80)

(11)

(4,382)642,672

37,345467,320

166,955

78,87896,981 1,490,151

The additions of the period are mainly related to the retail network to revamp the store
layout in order to further enhance the customer experience.
The asset impairment of Euro 4.3 million refers to stores closures for strategic purposes(thirteen stores were closed down in the six-month period) and renovations.

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13. Intangible assets
The historical cost and accumulated amortization are set forth below:(amounts in thousands of Euro)

Trademarks

Goodwill

Store Lease
Acquisitions

Development
Software costs and otherintangibles

Assets inprogress

Total

Historical cost392,205

547,460

216,951

100,099

63,32027,767

1,347,802

Accumulated depreciation(143,761)(28,863)(127,965)(75,000)(50,413)-(426,002)

Net carrying amount at
January 31, 2017 (audited)

248,444518,597

88,98625,09912,907

27,767

921,800

Trademarks

Goodwill

Store Lease
Acquisitions

Development
Software costs and otherintangibles

Assets inprogressTotal(amounts in thousands of Euro)Historical cost

390,554547,604

211,606

108,178

62,91031,756

1,352,608

Accumulated depreciation(148,129)(29,335)(129,919)(78,332)(50,980)-(436,695)

Net carrying amount at
July 31, 2017 (unaudited)

242,425

518,269

81,687

29,846

11,93031,756915,913

The changes in the carrying amount during the six months ended July 31, 2017 are as
follows:
Trademarks

Goodwill

Store Lease
Acquisitions

248,444518,597

88,986

Additions

1,156

-

-

Amortization(5,519)-(5,211)(amounts in thousands of Euro)

Balance at January 31, 2017
(audited)

Disposals
Exchange differences
Other movements
Balance at July 31, 2017
(unaudited)

Development
Software costs and otherintangibles

Assets inprogress

Total

12,907

27,767

921,800

3,793

418

8,647

14,014(3,718)(1,403)-(15,851)

25,099

-

-

-

-

-

-

-

(1,656)(328)(2,089)

(15)

(1)

(22)

(4,111)

-

-

1

4,687

9

(4,636)

61

242,425

518,269

81,687

29,846

11,93031,756915,913

The carrying amount of trademarks at the reporting date is broken down in the following table:
July 312017(unaudited)

January 31
2017(audited)

Miu Miu

145,896

148,661

Church's

83,85187,429

Prada

3,579

3,660

Other

9,099

8,694

Total

242,425

248,444(amounts in thousands of Euro)No impairment was recognized for the Group's trademarks during the period. "Other"
consists of trademark registration costs plus the Car Shoe and Luna Rossa trademarks.
"Key money" includes intangible assets recognized in respect of costs incurred by theGroup to stipulate or take over leases for retail premises in prestigious locations.

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The total capital expenditure for tangibles and intangibles in the six months ended July
31, 2017 was Euro 105.6 million, as broken down below.
July 312017(unaudited)

January 31
2017(audited)

Retail

63,566151,218

Production and logistics

42,049100,289

Total

105,615

251,507(amounts in thousands of Euro)

Impairment test
As required by “IAS 36 Impairment of Assets” goodwill with an indefinite useful life
is not amortized. Instead, it is tested for impairment at least once a year. As at July
31, 2017 goodwill amounted to Euro 518.3 million, detailed by Cash Generating Unit
(CGU) as follows:(amounts in thousands of Euro)

July 312017(unaudited)

January 31
2017(audited)

Italy Wholesale

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

311,936

Italy Retail25,85025,850Germany and Austria Retail

5,064

5,064

United Kingdom Retail

9,300

9,300

Spain Retail

1,400

1,400

France and Monaco Retail

11,70011,700

North America Retail and Wholesale

48,00048,000

Production Division

10,169

10,169Church's

8,520

8,848

Marchesi Angelo

7,975

7,975

518,269

518,597Total

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

Investment available for sale
Other investments
Total

July 312017(unaudited)

January 31
2017(audited)

9,272

11,749

39

26

9,311

11,775The investments available for sale regard a 4.88% stake in Sitoy Group Holdings ltd,
a company listed on the Hong Kong Stock Exchange as at July 31, 2017. The valueof the investment was measured at fair value in line with the official quoted shareprice (Level I of the fair value hierarchy according to “IFRS 7 Financial Instruments:
Disclosures”). The fair value decrease of Euro 2.5 million compared to January 31,2017 was recognized in a specific equity reserve, net of the related tax effect (Euro
0.5 million). In 2017, the Group accounted for net dividends from Sitoy Group Holdings
totaling HKD 3 million (Euro 0.4 million).
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15. Other non-current assets
Other non-current assets are detailed as follows:
July 312017(unaudited)

January 31
2017(audited)

Guarantee deposits

68,98677,007

Deferred rental income

14,09816,807Pension fund surplus

9,854

10,233

Other long-term assets

18,987

19,314

Total

111,925

123,361

July 312017(unaudited)

January 31
2017(audited)

Stores62,977

71,680

Offices

4,908

3,943

(amounts in thousands of Euro)

Guarantee deposits are analyzed below by nature and maturity:(amounts in thousands of Euro)Nature:Warehouses

112

116

Other

989

1,268

Total

68,98677,007
July 312017(unaudited)(amounts in thousands of Euro)
Maturity:
By 31.07.2019

20,907

By 31.07.2020

16,804

By 31.07.2021

6,273

After 31.07.2021

25,002

Total

68,986

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

July 312017(unaudited)

January 31
2017(audited)

389-

Short-term bank loans

296,463

80,626

Current portion of long term loans

62,65370,506

Deferred costs on loans

(529)

(364)

Financial lease

230

443

359,206

151,211Total

The increase in short-term bank loans is attributable primarily to the drawdown forEuro 140 million of the revolving credit facility stipulated by PRADA spa in 2014 with abanking syndicate, and to the drawdown of some bilateral uncommitted credit facilities.
The revolving credit facility is subject to covenants based on the results of PRADA spa's
consolidated financial statements. Specifically, the net debt-to-EBITDA ratio must notexceed 3 and the EBITDA-to-interest coverage ratio must exceed 4. Both covenants werecomplied with as at July 31, 2017.
In addition to the above credit facilities, the short-term bank loans as at July 31, 2017
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consist of a Euro 30 million loan granted to PRADA spa by Mitsubishi Bank of Tokyo, andcredit lines granted to PRADA Japan co ltd, for a total equivalent value of Euro 50.9 million.
Some of the credit lines contain covenants based on the results of PRADA Japan co ltd's
financial statements, all of which were complied with as at July 31, 2017.
Mortgage loans
The current portion of long-term loans includes Euro 3.7 million (Euro 3.7 million as atJanuary 31, 2017) regarding a mortgage loan stipulated by IntesaSanpaolo for PRADA
spa in 2014 and disbursed in 2015. The collateral securing this loan is the building in Milanused for the Group’s headquarters. The non-current portion of the loan amounts to Euro
44 million (Note 24).
The 2017 current portion of long-term loans includes Euro 2.2 million (Euro 2.1 million as
at January 31, 2017) regarding a mortgage loan granted to Kenon ltd by Unicredit Group
in 2014 and secured by a mortgage on a building in Old Bond Street, London, used by
the Group for one of the most strategically positioned Prada stores in the world. The noncurrent portion of the loan amounts to Euro 60.9 million (Note 24).
Short-term bank loans and the current portion of long-term loans are analyzed by currency
as follows:
July 312017(unaudited)

January 31
2017(audited)

Euro276,273

63,280Japanese Yen

79,19984,915

Other Currencies

3,594

3,380

359,066

151,575(amounts in thousands of Euro)

Total
Bank overdraft

529-

Amortized costs on loans

(389)

(364)

359,206

151,211Total

The Group generally borrows at variable interest rates and manages the risk of interest
rate fluctuations by using hedging instruments (Note 9).
Considering the hedges in place at the reporting date, 39% of the current portion of
medium/long-term loans regarded fixed-rate loans (39% as at January 31, 2017), and
61% regarded variable-rate loans (61% as at January 31, 2017).
The total amount of unused credit lines at July 31, 2017 is Euro 639 million.
17. Payables to related parties – current
The current portions due to related parties are presented below:(amounts in thousands of Euro)

Financial payables
Other payables
Payables to related parties – current

July 312017(unaudited)

January 31
2017(audited)

4,524

4,934

534

608

5,058

5,542

The financial payables due to related parties regard two interest-free loans granted by
the non-controlling shareholders of the Group’s subsidiaries in the Middle East (Note 36).

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18. Trade payables
Trade payables are detailed as follows:
July 312017(unaudited)

January 31
2017(audited)

Trade payables - third parties

266,962

241,901

Trade payables - related parties

9,768

14,193276,730

256,094(amounts in thousands of Euro)

Total

Trade payables rose by Euro 20.6 million, consistently with the dynamics of the
production cycle.
The following table summarizes trade payables by maturity date:July 312017(unaudited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120≥121

Trade payables

276,730

251,090

13,618

3,315

1,064

734

6,909

Total

276,730

251,090

13,618

3,315

1,064

734

6,909

January 31
2017(audited)

Not
overdue1 ≤ 3031 ≤ 60

61 ≤ 9091 ≤ 120≥121

Trade payables

256,094

221,125

15,884

4,670

2,955

582

10,878

Total

256,094

221,125

15,884

4,670

2,955

582

10,878(amounts in thousands of Euro)(amounts in thousands of Euro)

Overdue (in days)

Overdue (in days)

19. Tax payables
Tax payables are detailed as follows:
July 312017(unaudited)

January 31
2017(audited)

Current income taxes

23,464

31,990

VAT and other taxes

26,27333,477

Total

49,73765,467(amounts in thousands of Euro)The Group recognizes current tax liabilities of Euro 24 million as at July 31, 2017 (Euro32 million as at January 31, 2017) against tax credits of Euro 74 million (Euro 117.2
million as at January 31, 2017), as reported in Note 11.

PRADA Group

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

July 312017(unaudited)

January 31
2017(audited)

Payables for capital expenditure

46,55756,639Accrued expenses and deferred income

20,386

18,636

Other payables

65,50869,552

Total

132,451

144,827

July 312017(unaudited)

January 31
2017(audited)

Short-term benefits for employees and other personnel

53,00557,608Customer advances

6,433

5,782

Returns from customers

3,911

4,087

Other

2,159

2,075

Total

65,50869,552

July 312017(unaudited)

January 31
2017(audited)Long-term bank borrowings

398,418

416,491

Bonds

130,000

130,000

Deferred costs on loans(1,146)(1,135)

Obbligations under financial lease

2,156

2,272

529,428

547,628

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

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

Total

In order to take advantage of the favorable financial market conditions, during the firsthalf of 2017 PRADA spa signed a new long-term loan agreement with Banca Intesa,
which is undrawn as at July 31, 2017.
The Group generally borrows at variable interest rates and manages the risk of interest
rate fluctuations through hedging agreements (Note 9).
Long-term loans are made up of fixed-rate loans for a portion equal to 77% (78% as
at January 31, 2017), while the remaining 23% regard variable-rate loans (22% as atJanuary 31, 2017).

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The long-term borrowings as at July 31, 2017, excluding financial lease obligations andamortized costs, are set forth below:
Borroweramount inthousands of Euro

Loan currency Lender

Expirydate

Interest rate
(1)

PRADA spa

130,000

Euro

Bonds

Aug-182.75%

PRADA spa

60,000Euro

UnicreditMar-190.76%

PRADA spa

44,000Euro

Intesa SanPaolo

May-302.74%

PRADA spa

40,000Euro

Intesa SanPaolo

Feb-190.61%

PRADA spa

60,000Euro

Monte dei Paschi di Siena

Dec-180.32%

PRADA spa

8,333

Euro

Intesa SanPaolo

Dec-180.60%

PRADA spa

90,000Euro

UnicreditFeb-210.96%

PRADA spa

10,000Euro

Banca Popolare di Milano

Mar-190.71%

PRADA Japan Co. Ltd

9,252

Japanese Yen

Mizuho Bank

Mar-201.36%

PRADA Japan Co. Ltd

3,084

Japanese Yen

MUFG

Mar-200.81%

PRADA Japan Co. Ltd

1,542

Japanese Yen

Sumitomo Mitsui TrustMar-201.18%

Kenon Ltd60,892GB PoundUnicreditJan-29

4.48%

Tannerie Limoges sas

2,500

Euro

BNP Paribas

Jan-241.20%

Pelletteria Ennepi srl

125

Euro

Mediocredito Italiano

Jun-192.50%

Hipic Prod Impex srl

21

Euro

BRD –Societè Generale

Feb-19

4.50%

Prada Middle East

8,669

US Dollar

ENBD

Feb-22

3.20%

Total

528,418(1) the interest rates include the effect of interest rate risk hedges, if any

The long-term borrowings as at January 31, 2017, excluding financial lease obligations
and amortized costs, are set forth below:
Borroweramount inthousands of Euro

Loan currency Lender

Expirydate

Interest rate
(1)

PRADA spa

130,000

Euro

Bonds

Aug-182.75%

PRADA spa

60,000Euro

UnicreditMar-190.76%

PRADA spa

45,833Euro

Intesa SanPaolo

May-302.74%

PRADA spa

40,000Euro

Intesa SanPaolo

Feb-190.61%

PRADA spa

60,000Euro

Monte dei Paschi di Siena

Dec-180.38%

PRADA spa

16,667

Euro

Intesa SanPaolo

Dec-180.60%

PRADA spa

90,000Euro

UnicreditFeb-210.96%

PRADA spa

15,000Euro

Banca Popolare di Milano

Mar-190.71%

PRADA Japan Co. Ltd

1,968

Japanese Yen

Syndicate loan

Jul-180.91%

PRADA Japan Co. Ltd

12,301

Japanese Yen

Mizuho Bank

Mar-201.36%

PRADA Japan Co. Ltd

4,100

Japanese Yen

MUFG

Mar-200.81%

PRADA Japan Co. Ltd

2,050

Japanese Yen

Sumitomo Mitsui TrustMar-201.18%

PRADA Japan Co. Ltd

820

Japanese Yen

SMBC

Mar-180.46%

64,456

GB PoundUnicreditJan-29

4.48%

581

GB Pound

HSBC

May-18

1.88%

Kenon Ltd
Church & Co. ltd
Tannerie Limoges sas

2,500

Euro

BNP Paribas

Jan-241.20%

Pelletteria Ennepi srl

188

Euro

Mediocredito Italiano

Jun-192.55%

Hipic Prod Impex srl

27

Euro

BRD –Societè Generale

Feb-19

4.50%

Total

546,491(1) the interest rates include the effect of interest rate risk hedges, if any

PRADA Group

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The secured and unsecured portions of the bank borrowings are set forth below:
July 312017(unaudited)

January 31
2017(audited)

Secured113,240

116,046

Unsecured

776,671581,577

Total

889,911697,623(amounts in thousands of Euro)

Other than PRADA spa, no Group company had issued any debt securities at the endof the reporting date.
22. Post-employment benefits
July 312017(unaudited)

January 31
2017(audited)

Post-employment benefits

45,674

46,779Other long-term employee benefits

14,541

20,432

Total liabilities for long-term benefits

60,21567,211

Post-employment benefit (pension plan surplus)

9,854

10,233Net liabilities for long-term benefits

50,361

56,978(amounts in thousands of Euro)The net balance of long-term employee benefits as at July 31, 2017 is Euro 50.4 million(Euro 57 million as at January 31, 2017), and all the benefits are classified as defined
benefit plans.
The post-employment benefits consist of Euro 23.3 million (Euro 24.3 million in 2016)
in liabilities accounted for by Italian companies and Euro 22.4 million by the foreignsubsidiaries (Euro 22.5 million in 2016).
The following table shows movements on liabilities for post-employment benefits inthe six months ended July 31, 2017:(amounts in thousands of Euro)

Balance at January 31, 2017 (audited)

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

Other
long-term
employeebenefits

Total(10,233)

20,432

56,978
4,557

24,251

22,528

198

1,349

-

3,010

-

-

-

6

6

(1,180)(54)-(8,683)(9,917)

Exchange differences-(1,418)

379

(335)

(1,374)

Other Movements

-

-

-

111

111

23,26922,405(9,854)

14,54150,361

Current service cost
Actuarial (gains)/losses
Benefits paid

Balance at July 31, 2017 (unaudited)58

DefinedBenefit Plans
in Italy(TFR)

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23. Provisions for risks and charges
Movements on provisions for risks and charges are summarized as follows:(amounts in thousands of Euro)

Provision
for litigation

Provision fortax disputes

Other
provisions

Total

1,788

24,90555,63082,323(3,601)

Balance at January 31, 2017 (audited)
Exchange differences

(43)

(96)

(3,462)

Reversals

(351)

(51)

(73)

(475)

Utilized(2)-(2,665)(2,667)

Increases

152

20

1,794

1,966

1,544

24,77851,22477,546

Balance at July 31, 2017 (unaudited)

Provisions represent the Directors’ best estimate of maximum contingent liabilities at
the reporting date. In the Directors’ opinion and based on the information available tothem as supported by the opinions of independent experts, the total amount provided
for risks and charges is reasonable considering the liabilities that might arise. During
the six months ended July 31, 2017, there were no significant developments regarding
litigation ongoing at January 31, 2017. Moreover, no new contingencies requiring
significant adjustment to the provisions for risks and charges reported at July 31, 2017
emerged.
24. Other non-current liabilities
Other non-current liabilities amount to Euro 169.4 million (Euro 179.1 million as atJanuary 31, 2017). They mainly regard liabilities to recognize, on a straight-line basis,
commercial lease costs.
25. Equity attributable to the owners of the Group
Group shareholders’ equity is as follows:
July 312017(unaudited)

January 31
2017(audited)

Share capital

255,882

255,882

Share premium reserve

410,047410,047

Other reserves

1,977,987

2,006,713

Actuarial reserve(5,705)(5,707)

Fair value reserve(3,559)(1,656)

Cash flow hedge reserve

2,315(7,897)

Translation reserve

23,636

144,791

Net profit (loss)

115,742

278,329

2,776,345

3,080,502(amounts in thousands of Euro)

Total

Share capital
As at July 31, 2017, approximately 80% of PRADA spa' share capital is owned by
PRADA Holding spa and the remainder is listed on the Main Board of the Hong Kong
Stock Exchange.
Share premium reserve
The share premium reserve of Euro 410 million did not change from that of January
31, 2017.

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Translation reserve
The changes in this reserve result from the translation into Euro of the foreign currency
financial statements of consolidated companies. The reserve decreased from the Euro
144.8 million at January 31, 2017 to Euro 23.6 million. The negative change of Euro121.1 million was mainly due to the strengthening of the Euro against the Hong Kong
Dollar and the US Dollar.
Other reserves
The other reserves amount to Euro 1,978 million as at July 31, 2017. They decreasedby Euro 28.7 million from January 31, 2017 was due to the allocation of the previous
fiscal year's profit (Euro 278.3 million), net of the dividends distributed to PRADA spa
shareholders (Euro 307.1 million).
Net income for the period
The Group’s net income for the six months ended July 31, 2017 was Euro 115.7 million(Euro 278.3 million for the twelve months ended January 31, 2017).
Capital gains tax in Italy
Capital gains realized from the sale in an Italian company by shareholders resident inHong Kong are no longer subject to taxation in Italy, applying as at January 1, 2016.
Further details on Italian capital gains taxation have already been reported in the Tax
Booklet available on the Company’s website www.pradagroup.com.
26. Equity attributable to Non-controlling interests
The following table shows movements on the Shareholders’ equity of Non-controllinginterests during the periods ended July 31, 2017 and January 31, 2017.
July 312017(unaudited)

January 31
2017(audited)

Opening Balance

24,02817,037

Translation differences(amounts in thousands of Euro)(1,752)

540

Dividends

(451)

(706)

Net result for the period

340

5,861

Actuarial reserve-

2

Capital injection in subsidiaries

89

1,014

Transactions with non-controlling shareholders

335

280

22,59024,028

Closing balance

27. Net revenues
Consolidated net revenues are mainly generated by sales of finished products and arestated net of returns and discounts.
six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

Net sales

1,442,556

1,529,267

Royalties

26,08024,905

1,468,636

1,554,172(amounts in thousands of Euro)

Total

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A breakdown of net sales by brand, distribution channel, geographical area and productis provided in the Financial review.
28. Cost of goods soldCost of goods sold is analyzed as follows:
six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

Purchases of raw materials and production costs

365,403297,339

Logistic costs, duties and insurance

68,84365,404

Change in inventories(54,251)

69,488

Total

379,995

432,231(amounts in thousands of Euro)The cost of goods sold decreased from 27.8% to 25.9% of net revenues mainly
following a favorable sales mix in terms of ratio of full-price sales to discounted sales
and the effect of exchange rates.
29. Operating expenses
Operating costs are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2017(unaudited)% of netrevenues

six months
ended July 31
2016(unaudited)% of netrevenues

Product design and development costs

66,786

4.5%

63,703

4.1%

Advertising and promotion expenses

82,587

5.6%

75,984

4.9%

Selling expenses

679,606

46.3%

678,158

43.6%

General and administrative costs

92,825

6.3%

90,395

5.8%

Total

921,804

62.7%

908,240

58.4%

The detail of the operating expenses was restated compared to the 2016 Interim Report so as to provide a better representationof the results of the revision of short-term incentives to employees.

The increase in operating expenses, net of exchange differences of Euro 3.7
million, was attributable primarily to an increase in advertising and communication
activities, particularly with digital technology, and a higher cost of labor regarding the
aforementioned revision in 2016 of short-term incentives. All other expense items
were in line with those of 2016, a year in which the Group carried out an important
cost reduction program.
The following table shows the depreciation, amortization and impairment costs, laborcosts and rental costs included in operating costs.
six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

Depreciation, amortization and impairment

105,789

109,733

Labour Cost

279,735

273,749

Variable rent

161,511

168,941

Fixed rent

153,827

148,627

Total

700,862

701,050(amounts in thousands of Euro)PRADA Group

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30. Interest and other financial income/(expenses), net
Interest and other financial income/(expenses), net are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2017(unaudited)

six months
ended July 31
2017(unaudited)

Interest expenses on borrowings(7,157)(7,722)

Interest income

2,882

2,008

Interest income/(expenses) IAS 19

-

(89)

Exchange gains/(losses) - realized(2,372)

2,943

Exchange gains/(losses) - unrealized

6,638(2,615)

Other financial income/(expenses)(881)(1,281)

Total

(890)

(6,756)

Finance costs benefited from a stronger Euro near the end of the period, which resulted
in the recognition of positive exchange differences on financial items. The cost of bankdebt, effectively eliminated by such benefit, was nevertheless lower than that of thecomparative period due to less average bank debt.
31. Dividends from investments
As at July 31, 2017, the Group held a 4.88% interest (unchanged on prior year) in
Sitoy Group Holdings ltd, a company listed on Hong Kong Stock Exchange (HK: 1023).
During these six months of 2017 the dividends accrued from said company amounted
to Euro 357 thousand (Euro 558 thousand in the same period of last year).
32. Taxation
Income taxes have the following composition:
six months
ended July 31
2017(unaudited)

six months
ended July 31
2017(unaudited)

Current taxation

52,77149,047

Deferred taxation(2,549)13,159

Income taxes

50,222

62,206(amounts in thousands of Euro)The effective tax rate of 30% is in line with the same period of last year. The benefit
deriving from a lower Italian income tax rate was offset by the less advantageous
geographical sources of income.

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The changes in deferred tax assets and liabilities are set forth below:
six months twelve months
ended July 31 ended January 31
2017
2017
(unaudited)(audited)(amounts in thousands of Euro)

Opening balance

216,126

243,690

Exchange differences(12,956)

5,746

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

463(2,693)

117

-

(821)

Deferred taxes on post-employment benefits recorded in equity (reserve for actuarial
differences)
Other movements
Deferred taxes for the period in income statement
Closing balance

517

2,524

2,375

(35,593)

203,369

216,126

Deferred tax assets and liabilities are analyzed by nature as follows:(amounts in thousands of Euro)

July 31, 2017
(unaudited)
Deferred tax
assetsInventories

January 31, 2017
(audited)Deferred tax
liabilities

Deferred tax
assetsDeferred tax
liabilities

108,339-

108,560-

Receivables and other assets

549

1,420

462

1,417

Useful life of non-current assets

51,951

8,728

55,124

8,712-

15,170-16,957

Deferred taxes due to acquisitions
Provision for risks / accrued expenses

48,637717

54,945816

Non-deductible / taxable charges/income

8,129

2,566

11,096448

Tax loss carryforwards

5,606

-

3,561

-

Derivative financial instruments

1,390

2,718

1,885

-

Long term employee benefits

8,220

1,676

9,395

1,740

Other

4,657

1,114

2,238

1,050

Total

237,478

34,109247,266

31,14033. Earnings and Dividends per share
Earnings per share basic and diluted
Earnings per share are calculated by dividing the net income attributable to shareholders
by the weighted average number of ordinary shares in issue.
six months
ended July 31
2017(unaudited)Group net income in Euro
Weighted average number of ordinary shares in issue
Earnings per share in Euro, calculated on weighted average number of shares

six months
ended July 31
2016(unaudited)

115,741,559

141,923,268

2,558,824,000

2,558,824,000

0.045

0.055

Dividends per share
During the six months ended July 31, 2017, the Company distributed dividends ofEuro 307,058,880, as approved by the Shareholders’ Meeting held on May 31, 2017 toapprove the financial statements for the year ended January 31, 2017.

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34. Additional information
The average headcount by functional area is as follows:(number of employees)

Production

six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

2,552

2,170

Product design and development

996

1,000

Advertising and Communications

125

119

7,479

7,925

942

1,014

12,094

12,228six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

Production

59,07053,666

Product design and development

34,84534,122Advertising and Communications

7,365

6,517

Selling

196,109

194,889

General and administrative services

41,41638,221

Total

338,805

327,415

six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

Wages and salaries

255,790

246,363

Post-employment benefits and other long-term benefits

16,213

12,512Social contributions

54,45653,785

Other

12,346

14,755

Total

338,805

327,415

Selling
General and administrative services
Total

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

Employee remuneration by functional nature is as follows:(amounts in thousands of Euro)64

PRADA Group

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

July 31, 2017
(unaudited)

Share Capital

255,882

Share premium reserve

410,047

Summary of utilization in the last
three years

Possibleutilization

Distributableamount---A, B, C

410,047--

Coverage oflossesDistribution ofdividends

Legal reserve

51,176B---

Other reserves

182,899

A, B, C

182,899--

Retained earnings

282,100

A, B, C261,584-

844,410--

Cash flow hedge reserve

8,728

Distributable amount

854,530

844,410

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

Under Italian Civil Code Article 2431, the share premium reserve is fully distributablebecause the amount of the legal reserve is at least 20% of share capital. A nondistributable portion of retained earnings amounting to Euro 20,516 thousand refers to
restricted reserves under Legislative Decree 38/2005, Article 7.

PRADA Group

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Exchange rates
The exchange rates against the Euro used to consolidate Statements of financial
position and Statement of Profit or Loss prepared in other currencies as at July 31,2017 are shown below:
Currency

Average rate
six months
ended July 31
2016

Rate atJuly 312017

Rate atJanuary 31
2017

UAE Dirham

4.029

4.112

4.307

3.905

Australian Dollar

1.444

1.509

1.471

1.420

Brazilian Real

3.488

4.008

3.676

3.354

Canadian Dollar

1.454

1.469

1.462

1.406

Swiss Franc

1.082

1.095

1.136

1.067

Czech Koruna

26.63527.04226.07927.021Danish Kronor

7.437

7.446

7.436

7.434

GB Pound

0.864

0.792

0.894

0.861

Hong Kong Dollar

8.536

8.692

9.160

8.344

Indonesian Rupiah

14,615.598

14,873.898

15,625.050

14,363.560

Japanese Yen

122.852

122.404

129.700

121.940

Korean Won

1,243.630

1,312.197

1,315.970

1,244.760

Kuwait Dinar
Kazakhstani Tenge

0.334

0.337

0.354

0.328

348.484

382.878384.830

347.200

Macau Pataca

8.792

8.953

9.435

8.594

Mexican Peso

20.67820.32620.86222.286

Malaysian Ringgit

4.783

4.532

5.021

4.761

New Zealand Dollar

1.541

1.630

1.567

1.471

Panamanian Balboa

1.097

1.120

1.173

1.075

Qatari Riyal

4.008

4.078

4.302

3.931

Chinese Renminbi

7.518

7.338

7.890

7.397

Romanian Leu

4.548

4.488

4.559

4.503
64.430Russian Ruble

63.58576.39070.464

Saudi Riyal

4.113

4.199

4.398

4.034

Swedish Kronor

9.608

9.334

9.542

9.451

Singapore Dollar

1.530

1.531

1.592

1.520

Thai Baht

37.75939.49239.05137.793

Turkish Lira

3.956

3.260

4.131

4.063

Taiwan Dollar

33.41336.44935.48033.666

Ukrainian Hryvna

29.10528.61630.39628.828US Dollar

1.097

1.120

1.173

1.076

24,495.588

24,496.816

26,342.000

23,807.500

14.427

16.91015.37214.444

Vietnamese DongSouth African Rand

66

Average rate six
monthsended July 31
2017

PRADA Group

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35. Remuneration of Board of Directors
Remuneration of the PRADA spa Board of Directors for the six months ended
July 31, 2017
(amounts in thousands of Euro)

Directors’fees

Remunerationand otherbenefits

Bonusesand other
incentives

Benefits
in kindPension,healthcare
and TFR
contributions

July 312017(unaudited)

Carlo Mazzi

1,510

-

-

37

3

1,550

Miuccia Prada Bianchi

6,335

-

-

-

-

6,335

Patrizio Bertelli

6,335

-

-

-

-

6,335

Alessandra Cozzani

25

135

21

35

63

280

Stefano Simontacchi

25

-

-

-

1

26

Maurizio Cereda

25

-

-

-

1

26

Gian Franco Oliviero Mattei

75

-

-

-

-

75

Giancarlo Forestieri

35

-

-

-

6

41

Sing Cheong Liu

35

-

-

-

8

43

14,399

135

21

72

82

14,710

Total

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

Carlo Mazzi

Directors’fees

Remunerationand otherbenefits

Bonusesand other
incentives

Benefits
in kindPension,healthcare
and TFR
contributions

July 312016(unaudited)

510

-

-

39

8

557

Miuccia Prada Bianchi

6,000

-

-

-

-

6,000

Patrizio Bertelli

6,000

-

-

-

-

6,000

Alessandra Cozzani

25

100

-

7

68

200

Stefano Simontacchi

13

-

-

-

-

13

Maurizio Cereda

8

-

-

-

-

8

Gian Franco Oliviero Mattei

75

-

-

-

-

75

Giancarlo Forestieri

35

-

-

-

5

40

Sing Cheong Liu

35

-

-

-

7

42

12,701

100

-

46

88

12,935Total

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36. Related party transactions
The Group enters into transactions with parties that can be qualified as related
according to “IAS 24 Related Party Disclosures”. These transactions mainly refer tothe sale and purchase of goods, supply of services, the granting and receipt of loans
as well as sponsorship, lease and franchise agreements. These transactions take place
on an arm’s length basis.
The following tables show the impact of related party transactions in terms of statementof financial position balances at the reporting date and the total of transactions with anincome statement impact.
Statement of financial position amounts at July 31, 2017 (unaudited)(amounts in thousands of Euro)Trade
payablesPayablesPayablesto related
to relatedparties –parties –current non current

Othercurrent
liabilities,
Other LTliabilities

DFS Hawaii

-

-

-

513

-

-

-

DFS New Zealand Limited

-

-

-

10

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

-

22

24

-

-

DFS Cotai limitada

38

-

-

223

431

-

-

Rubaiyat Modern Lux.Pr.Co.Ltd

-

-

-

-

2,238

-

-

STICHTING Prada (ex Stiching
Fondazione Prada)

1

-

-

-

-

-

-

Progetto Prada Arte Srl

3

-

-

-

-

-

-

140

3,259

-

13

62

-

-

Chora srl

-

5,848

-

259

-

-

-

Peschiera Immobiliare srl

-

89

-

-

-

-

-

Luna Rossa Challenge 2013 srl

Premiata srl

157

-

-

584

-

-

-

Le Mazza srl

276

-

-

429

-

-

-

Friuli 64 srl

-

-

-

90

-

-

-

Conceria Superior spa

9

-

-

4,911

-

-

-

Perseo srl

306

-

-

985

-

-

-

Al Tayer Group LLC

-

-

-

2

-

-

-

Al Tayer Insignia LLC

602

-

-

15

2,285

-

-

-

-

-

6

10

-

(81)

Danzas LLC
Al Tayer Trends
Al Sanam Rent a Car LLC

13

-

-

-

-

-

-

-

-

-

1

-

-

-

Prapar Corporation

-

-

-

-

-

-

-

PRADA HOLDING spa

39

-

-

-

-

-

-

FRATELLI Prada spa

16,480

118

-

1,665

8

-

-

PRA 1 srl

-

111

-

39

-

-

-

Other

4

Members of the Board of
Directors of PRADA spa

-

-

-

-

-

-

4,263

Relatives of members of theBoard of Directors

-

-

-

-

-

-

378

18,068

9,425

-

9,768

5,058

-

4,560

Total

68

Receivables Receivables
Tradefrom related from related
receivables,
parties –parties –netcurrent non current

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Statement of financial position amounts at January 31, 2017 (audited)(amounts in thousands of Euro)STICHTING Prada (ex Stiching
Fondazione Prada)

Receivables Receivables
Tradefrom related from related
receivables,
parties –parties –netcurrent non current

(1)

-

Trade
payables--PayablesPayablesto related
to relatedparties –parties –current non current

-

Other
current
liabilities,
Other LTliabilities--

Progetto Prada Arte srl

-

-

-

(3)

-

-

-

Al Tayer Group LLC

-

-

-

1

-

-

-

Al Tayer Insignia LLC

-

-

-

20

2,492

-

-

Danzas LLC - UAE

-

-

-

11

20

-

-

DFS Hawaii

-

-

-

618

-

-

-

DFS New Zealand Limited

-

-

-

25

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

-

53

-

-

-

Luna Rossa Challenge 2013 Srl

129

8,741

-

11

55

-

-

-

5,848

-

2,203

-

-

-

Chora Srl
DFS Cotai limitada

11

-

-

313

526

-

-

Al Tayer Trends

14

-

-

-

-

-

-

Al Sanam Rent a Car LLC

-

-

-

2

-

-

-

Peschiera Immobiliare srl

-

88

-

-

-

-

-

Premiata srl

10

-

-

423

-

-

-

Le Mazza srl

134

-

-

412

-

-

-

Friuli 64 srl

-

-

-

152

-

-

-

SPELM SA

-

78

-

-

-

-

-

Conceria Superior spa

32

-

-

8,290

-

-

-

PRADA HOLDING S.P.A.

788

-

-

-

-

-

-

22,770

118

-

1,184

8

-

-

PRA 1 srl

Fratelli Prada spa

-

91

-

95

-

-

-

Perseo srl

48

-

-

384

-

-

-

Rubaiyat Modern Lux.Pr.Co.Ltd

-

-

-

(1)

2,441

-

-

Members of the Board of
Directors of PRADA spa

-

-

-

-

-

-

3,433

Relatives of members of theBoard of Directors

-

-

-

-

-

-

340

23,935

14,964-

14,193

5,542

-

3,773

Total

PRADA Group

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Statement of profit or loss for the six months ended July 31, 2017 (unaudited)
Net revenues

Cost ofgoods soldGeneral, admin.
& selling costs(income)Royalties
incomeDFS Hawaii

-

-

1,705

-

DFS Hong Kong Limited

-

-

2

-

DFS New Zealand Limited

-

-

66

-

DFS Venture Singapore (Pte) Limited

-

-

132

-

DFS Cotai limitada

-

-

2,307

-

SPELM SA

-

-

270

-

Luna Rossa Challenge 2013 srl

-

-

5,984

-

Chora Srl

-

-

1,099

-

Peschiera Immobiliare srl

-

-

277

-

Premiata srl

-

624

333

-

Le Mazza srl

-

659

-

-

Conceria Superior spa

4

12,95322-

Perseo srl

-

1,119

-

-

PABE

-

-

9,243

-

Al Tayer Group LLC

-

-

10

-

Al Tayer Insignia LLC

643

-

113

-

Danzas LLC

-

330

20

-

Al Sanam Rent a Car LLC

-

-

6

-

PRADA HOLDING spa

-

-

(36)

-

15,347

227

1,237

458

PRA 1 srl

-

-

672

-

Relative of PRADA spa Director

-

-

381

-

15,994

15,912

24,619458(amounts in thousands of Euro)FRATELLI Prada spa

Total

70

PRADA Group

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Statement of profit or loss for the six months ended July 31, 2016 (unaudited)
General,admin. &selling costs(income)Royalties
incomeInterest
incomeInterest
expense

-

(1)

-

-

-

-

624

-

-

-

-

-

21

-

-

-

Al Tayer Insignia LLC

-

-

125

-

-

-

Danzas LLC – UAE

-

282

23

-

-

-

DFS Hawaii

-

-

2,159

-

-

-

DFS New Zealand Limited

-

-

119

-

-

-

DFS Venture Singapore (Pte)
Limited

-

-

143

-

-

-

Luna Rossa Challenge 2013 srl

2

-

5,822

-

-

-

Al Tayer Motors

-

-

5

-

-

-

Chora Srl

-

-

888

-

-

32

DFS Cotai limitada

-

-

2,191

-

-

-

Al Sanam Rent a Car LLC

-

-

5

-

-

-

Peschiera Immobiliare srl

-

-

270

-

-

-

Premiata srl

-

583

-

-

-

-

Le Mazza srl

-

536

-

-

-

-

Friuli 64 srl

-

-

285

-

-

-

SPELM SA

-

-

228

-

-

-

Conceria Superior spa

191

6,219

27

-

-

-

PRADA HOLDING spa

-

-

(129)

-

-

-

14,097

385

(280)

428

-

-

Petranera srl

-

-

(2)

-

-

-

PABE-RE LLC

-

-

8,336

-

-

-

PRA 1 srl

-

-

584

-

-

-

Perseo srl

-

1,339

-

-

-

-

Relatives of PRADA spa Directors

-

-

311

-

-

-

14,2909,344

21,754428-

32

Net revenues

Cost ofgoods sold

Progetto Prada Arte srl-

Progetto Prada Arte Srl (Galleria)*-

Al Tayer Group LLC(amounts in thousands of Euro)

Fratelli Prada spa

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

The foregoing tables report information on transactions with related parties inaccordance with IAS 24, "Related Party Disclosures". The following transactions withrelated parties fall within the scope of application of the Hong Kong Stock Exchange
Listing Rules.
The transactions with related party “PABE-RE LLC” refer to the transaction between
PABE-RE LLC and Prada Japan in relation to the lease for the Aoyama buildings inTokyo. The transactions reported for the six months ended July 31, 2017 are regulated
by Chapter 14A of the Listing Rules because they are considered continuing connectedtransactions subject to disclosure, but they are exempt from the independent
shareholders' approval requirement. As required by the Listing Rules, comprehensive
disclosure of those continuing connected transactions is contained in PRADA spa's
Announcement dated July 15, 2015 (“Prada Aoyama”) and May 26, 2017 (“Miu Miu
Aoyama”).
The transactions with related party “Fratelli Prada spa – franchising” refer totransactions between the Company and Fratelli Prada spa in relation to the franchisingagreement for the Prada stores in Milan. The transactions reported for the six months
ended July 31, 2017 are regulated by Chapter 14A of the Listing Rules because they
are considered continuing connected transactions subject to disclosure, but they are

PRADA Group

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exempt from the independent shareholders' approval requirement. As required by the
Listing Rules, comprehensive disclosure of those continuing connected transactions iscontained in PRADA spa's Announcement dated January 25, 2017.
The transactions with related party Luna Rossa Challenge srl for the six months ended
July 31, 2017 are regulated by Chapter 14A of the Listing Rules because they are
considered continuing connected transactions subject to disclosure, but they are
exempt from the independent shareholders' approval requirement. As required by the
Listing Rules, comprehensive disclosure of those continuing connected transactions iscontained in PRADA spa's Announcement dated February 27, 2014.
Apart from the non-exempt continuing connected transactions and non-exempt
connected transactions reported in Note 36, no transaction reported in the 2017
Interim condensed consolidated financial statements meets the definition of“connected transaction” or “continuing connected transaction” contained in Chapter
14A of the Hong Kong Stock Exchange Listing Rules or, if it does meet the definition of“connected transaction” or “continuing connected transaction” according to Chapter
14A, it is exempt from the announcement, disclosure and independent shareholders’approval requirements laid down in Chapter 14A.

72

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37. Commitments
Operating leases
At July 31, 2017, and January 31, 2017, operating lease commitments, by maturity
date, are as follows:(amounts in thousands of Euro)Within a year
After between one year and five years
After more than five years
Total

six months twelve months
ended July 31 ended January 31
2017
2017
(unaudited)(audited)
723,618

459,520

1,187,248

1,268,394

767,125

1,274,402

2,677,991

3,002,316

The amounts recognized in the profit or loss in relation to lease agreements were as
follows:(amounts in thousands of Euro)six months
ended July 31
2017(unaudited)

six months
ended July 31
2016(unaudited)

Fixed minimum lease payments

155,076

149,790

Variable lease payments

161,511

168,941

Total

316,587

318,731

Some Group companies are required to pay lease expenses based on a fixed percentageof net sales.
At July 31, 2017 and January 31, 2017, future rental income under current operatingleases for properties owned by the Group is analyzed by maturity as follows:(amounts in thousands of Euro)six months twelve months
ended July 31 ended January 31
2017
2017
(unaudited)(audited)

Within a year

4,812

4,739

After between one year and five years

15,854

16,479817

2,071

21,48323,289After more than five years
Total

Other commitments
At July 31, 2017, the Group has no significant binding purchase commitments.

PRADA Group

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38. Historical Statement of Profit or Loss and Statement of financial position
highlights
January 31
2017(amounts in thousands of Euro)

January 31
2016

January 31
2015

January 31
2014

January 31
2013

Net revenues

3,184,069

3,547,771

3,551,696

3,587,347

3,297,219

Gross margin

2,289,112

2,567,565

2,550,579

2,648,649

2,376,541

Operating income (EBIT)

431,181502,893

701,551

939,237

889,781Group net income

278,329

330,888

450,730

627,785625,681

Total assets

4,656,929

4,756,555

4,738,877

3,888,292

3,385,279

Total liabilities

1,552,399

1,659,178

1,720,730

1,186,752

1,054,787

Total Group shareholders’ equity

3,080,502

3,080,340

3,000,737

2,687,554

2,320,022

39. Consolidated Companies

EntityShare%
CapitalInterest(/000)

Registeredoffice andprincipal
country ofoperation

EUR

255,882

Milan, IT

Localcurrency

Date ofincorporation/
establishment

Main Business

Italy
PRADA Spa

74

Holding Group/
Manufacturing/
Distribution

Artisans Shoes Srl (*)

EUR

1,000

66.7

Montegranaro, IT 2/9/1977

Manufacturing

IPI Logistica Srl (*)

EUR

600

100

Milan, IT

Services

Pelletteria Ennepì Srl (*)

EUR

93

80

Figline e Incisa
12/1/2016
Valdarno, IT

1/26/1999

Manufacturing

Church Italia Srl

EUR

51

100

Milan, IT

1/31/1992

Services/Retail

Marchesi Angelo Srl (*)

EUR

23

80

Milan, IT

7/10/2013

Confectionary

Montenapoleone 9 Srl (*)

EUR

1,000

100

Milan, IT

4/22/2015

Confectionary

PRADA Group

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Localcurrency

Company

Share%
CapitalInterest(/000)

Registeredoffice andprincipal
country ofoperation

Date ofincorporation/
establishment

Main Business

EuropePRADA Retail UK Ltd

GBP

5,000

100

London, UK

1/7/1997

RetailPRADA Germany Gmbh

EUR

215

100

Munich, GE

3/20/1995

Retail/Services

PRADA Austria Gmbh

EUR

40

100

Vienna, AT

3/14/1996

RetailPRADA Spain Sl

EUR

240

100

Madrid, ES

5/14/1986

RetailPRADA Retail France Sas

EUR

4,000

100

Paris, FR

10/10/1984

RetailPRADA Hellas Sole Partner
Llc (*)

EUR

2,850

100

Athens, GR

12/19/2007

RetailPRADA Monte-Carlo Sam

EUR

2,000

100

Monte-Carlo,FR

5/25/1999

Retail

7/29/1994

Trademarks/Services

PRADA Sa (*)

EUR

31

100

Luxembourg,
LU

PRADA Company Sa

EUR

3,204

100

Luxembourg,
LU

4/12/1999

Services

PRADA Far East Bv (*)

EUR

20

100

Amsterdam,
NL

3/27/2000

RetailPRADA Far East Bv II (*)

EUR

10

100

Amsterdam,
NL

3/27/2000

Sub-Holding

Church Denmark Aps

DKK

50

100

Copenhagen,DK

3/13/2014

RetailChurch Holding UK Ltd (*)

GBP78,126

100

Northampton,UK

7/22/1999

Sub-Holding

Church France Sas

EUR

241

100

Paris, FR

6/1/1955

RetailChurch UK Retail Ltd

GBP

1,021

100

Northampton,UK

7/16/1987

RetailChurch’s English Shoes
Switzerland Sa

CHF

100

100

Lugano, CH

12/29/2000

RetailChurch & Co. Ltd

GBP

2,811

100

Northampton,
UK

1/16/1926

Sub-Holding/
Manufacturing/
Distribution

Church & Co. (Footwear) Ltd

GBP

44

100

Northampton,
UK

3/6/1954

Trademarks

Church English Shoes Sa

EUR

75

100

Brussels, BE

2/25/1963

RetailPRADA Czech Republic
Sro (*)

CZK

2,500

100

Prague, CZ

6/25/2008

RetailPRADA Portugal Unipessoal
Lda (*)

EUR

5

100

Lisbon, PT

8/7/2008

RetailPRADA Rus Llc (*)

RUB

250

100

Moscow, RU

11/7/2008

RetailChurch Spain Sl

EUR

3

100

Madrid, ES

5/6/2009

RetailPRADA Bosphorus Deri
Mamuller Ltd Sirketi (*)

TRY

73,000100

Istanbul, TR

2/26/2009

RetailPRADA Ukraine Llc (*)

UAH

240,000

100

Kiev, UA

10/14/2011

RetailChurch Netherlands Bv

EUR

18

100

Amsterdam,
NL

7/7/2011

RetailChurch Ireland Retail Ltd

EUR

50

100

Dublin, IE

11/20/2011

RetailChurch Austria Gmbh

EUR

35

100

Vienna, AT

1/17/2012

RetailPrada Sweden Ab

SEK

500

100

Stockholm, SE 12/18/2012

RetailChurch Footwear Ab

SEK

100

100

Stockholm, SE 12/18/2012

RetailPrada Switzerland Sa (*)

CHF

24,000100

Lugano, CH

Retail

9/28/2012

Prada Kazakhstan Llp (*)

KZT500,000

100

Almaty, KZ

6/24/2013

RetailKenon Ltd

GBP

84,000100

London, UK

2/7/2013

Real Estate

Tannerie Limoges Sas (*)

EUR

955

60

Isle, FR

8/19/2014

Manufacturing

100

Copenhagen,DK

5/19/2015

RetailPrada Denmark Aps (*)

DKK

26,000Prada Finnish Oy (*)

EUR

2

100

Helsinki, FI

11/9/2015

RetailPrada Belgium Sprl (*)

EUR

800

100

Brussels, BE

12/4/2015

RetailHipic Prod Impex Srl

RON

200

50

Sibiu, RO

4/15/2016

Manufacturing

PRADA Group

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Localcurrency

EntityShare%
CapitalInterest(/000)

Registeredoffice andprincipal
country ofoperation

Date ofincorporation/
establishment

Main Business

152,211

New York, US

10/25/1993

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

USD

100

TRS Hawaii Llc

USD

400

55

Honolulu, US

11/17/1999

Duty-Free Stores

PRADA Canada Corp. (*)

CAD

300

100

Toronto, CA

5/1/1998

Distribution/Retail

Church & Co. (USA) Ltd

USD

85

100

New York, US

9/8/1930

RetailPost Development Corp (*)

USD

45,138100

New York, US

2/18/1997

Real Estate

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

MXN

269,058

100

Mexico City,MX

7/12/2011

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

BRL

210,000

100

Sao Paulo, BR

4/12/2011

Retail

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

MXN

7,203

100

Mexico City,MX

2/27/2014

Services

PRADA Panama Sa (*)

PAB

30

100

Panama, PA

9/15/2014

Retail

9/25/2014

Retail4/1/2016

RetailPRADA Retail Aruba Nv (*)

USD

2,012

100

Oranjestad,AW

PRADA St. Barthelemy Sarl (*)

EUR

1,220

100

Gustavia, BL

Asia-Pacific and Japan
PRADA Asia Pacific Ltd

HKD

3,000

100

Hong Kong, HK 9/12/1997

Retail/Services

PRADA Taiwan Ltd

TWD

3,800

100

Hong Kong, HK 9/16/1993

RetailPRADA Retail Malaysia Sdn.
Bnd.

MYR

1,000

100

Kuala Lumpur,
1/23/2002
MY

RetailTRS Hong Kong Ltd

HKD

500

55

Hong Kong, HK 2/23/2001

Duty-Free Stores

PRADA Singapore Pte Ltd

SGD

1,000

100

Singapore, SG 10/31/1992

RetailTRS Singapore Pte Ltd

SGD

500

55

Singapore, SG 8/8/2002

Duty-Free Stores

PRADA Korea Llc

KRW

8,125,000

100

Seoul, KR

RetailPRADA (Thailand) co Ltd

THB

372,000

100

Bangkok, TH

6/19/1997

RetailPRADA Japan co Ltd

JPY

1,200,000

100

Tokyo, JP

3/1/1991

RetailTRS Guam Partnership

USD

1,095

55

Guam, GU

7/1/1999

Duty-Free Stores

TRS Saipan Partnership

USD

1,405

55

Saipan, MP

7/1/1999

Duty-Free Stores

TRS New Zealand ltd

NZD

100

55

Wellington, NZ 11/4/1999

Duty-Free Stores

PRADA Australia Pty Ltd

AUD

13,500100

Sydney, AU

4/21/1997

RetailPRADA Trading (Shanghai)co Ltd

RMB

1,653

100

Shanghai,
CN Limited
Liability
Company

2/9/2004

RetailTRS Okinawa KK

JPY

10,00055

Tokyo, JP

1/21/2005

Duty-Free Stores

100

Shanghai,
CN Limited
Liability
Company

10/31/2005

RetailPRADA Fashion Commerce(Shanghai) co Ltd

76

11/27/1995

RMB

474,950

Church Japan Company Ltd

JPY

31,525

100

Tokyo, JP

4/17/1992

RetailChurch Hong Kong Retail Ltd

HKD

1,000

100

Hong Kong, HK 6/4/2004

RetailChurch Singapore Pte. Ltd

SGD

500

100

Singapore, SG 8/18/2009

RetailServices

Prada Dongguan Trading Co.,
Ltd

RMB

8,500

100

Dongguan, CN
Limited Liability 11/28/2012
Company

Church Footwear (Shanghai)Co., Ltd

RMB

21,900100

Shanghai,
CN Limited
Liability
Company

12/5/2012

Retail100

Wellington, NZ 7/5/2013

RetailPrada New Zealand Ltd

NZD

3,500

PRADA Vietnam Limited
Liability Company

VND

66,606,570

100

Hanoi City, VN 9/9/2014

RetailPT PRADA Indonesia

IDR

3,023,844

100

Jakarta, ID

10/15/2014

Dormant/Distribution

PRADA Macau Co Ltd

MOP

25

100

Macau, MO

1/22/2015

RetailPRADA Group

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Share%CapitalInterest(/000)

Registeredoffice andprincipal
country ofoperation

Date ofincorporation/
establishment

Main Business

AED

18,000Jebel Ali Free
Zone, AE

5/25/2011

Distribution/Services

Localcurrency

EntityMiddle East
PRADA Middle East Fzco (*)

60

PRADA Emirates Llc (**)

AED

300

49

Dubai, AE

8/4/2011

RetailPRADA Kuwait Wll (**)

KWD

50

49

Kuwait city,
KW

9/18/2012

RetailPRADA Retail Spc (*)

QAR

15,000100

Doha, QA

2/3/2013

RetailPRADA Saudi Arabia Ltd (*)

SAR

26,66675

Jeddah, SA

7/2/2014

RetailPRADA Maroc Sarlau (*)

MAD

95,000100

Casablanca,
MA

11/11/2011

RetailPRADA Retail South Africa pty
Ltd (*)

ZAR

50,000100

Sandton, ZA

9/6/2014

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

Companies not included in scope of consolidation
Company

Percentage
direct interest at
July 31, 2017

Percentage
direct interest at
January 31, 2017

Note

Consolidation method

49.00

49.00

Associate

Equity method

PAC Srl (in liquidation)

40. Disclosures regarding non-controlling interests
The financial information of companies not entirely controlled by the Group is provided
below, as required by IFRS 12. The amounts are stated before the consolidation
adjustments.
Financial statements at July 31, 2017:

Company

Percentage
interest heldLocal
currency

Total assets

Total equity

Net
revenues

Net
Dividends
income/paid to non(loss)
controlling
for theshareholders
periodArtisans Shoes S.r.l.

67.00

EUR

28,9138,179

30,8181,215

451

TRS Hawaii LLC

55.00

USD

5,647

3,360

5,945

(154)

-

TRS Hong Kong Ltd

55.00

HKD

81

70

-

(4)

-

TRS Singapore Pte
Limited

55.00

SGD

2,261

1,929

1,002

161

-

TRS Guam

55.00

USD

7,167

6,429

4,988

697

-

TRS Saipan

55.00

USD

3,108

2,826

1,524

267

-

TRS New ZealandPty. Ltd

55.00

NZD

2,025

1,563

412

59

-

TRS Okinawa

55.00

JPY

7,231

5,480

4,318

467

-

TRS MACAU

55.00

MOP

17,064

11,03012,547

1,366-

Prada United Arab Emirates

49.00

AED

44,869(13,116)

21,318(3,750)-Prada Middle East FZCO

60.00

AED

80,89948,69929,192

4,247-

Prada Kuwait

49.00

KWD

18,343

115

11,263(403)-

Prada Saudi Arabia

75.00

SAR

16,963

4,134

7,866

(1,135)-

Marchesi Angelo Srl

80.00

EUR

1,495

294

904

(340)

-

Tannerie Limoges S.A.S.

60.00

EUR

8,419

236

3,463

(135)

-

Hipic Prod Impex Srl

80.00

RON

2,029

(1,329)

-

(234)

-

Pelletteria Ennepì S.r.l.

80.00

EUR

6,703

1,952

-

21

-

PRADA Group

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Financial statements at January 31, 2017:
Company(amounts inthousands)

Percentage
interest heldLocal
currency

Total assets

Total equity

Net
revenues

Net
Dividends
income/paid to non(loss)
controlling
for theshareholders
periodArtisans Shoes Srl

67.00

EUR

25,728

8,318

51,034

1,368

369

TRS Hawaii Llc

55.00

USD

6,288

4,109

16,898(303)-

TRS Hong Kong

55.00

HKD

674

598

-

(127)

-

TRS Singapore

55.00

SGD

3,347

2,824

3,320

508

-

TRS Guam Partnership

55.00

USD

7,848

6,775

12,906

2,078-

TRS Saipan Partnership

55.00

USD

3,421

3,021

3,985

697

-

TRS New Zealand Ltd

55.00

NZD

3,292

2,359

2,301

234

-

TRS Okinawa KK

55.00

JPY

814,110653,268

1,222,107

137,782337

TRS Hong Kong branchin Macau

55.00

MOP

163,842

91,979215,538

34,067-PRADA Emirates Llc

49.00

AED

158,897(41,388)

190,807(25,943)-PRADA Middle East
fzco

60.00

AED

276,994

192,653

202,910

27,675-

Prada Kuwait Wll

49.00

KWD

6,052

175

7,946

92

-

PRADA Saudi Arabia
Ltd

75.00

SAR

75,10222,85857,574(8,713)-

Marchesi Angelo Srl

80.00

EUR

2,445

636

3,091

(284)

-

Tannerie Limoges Sas

60.00

EUR

8,305

290

2,914

(581)

-

Hipic Prod Impex Srl

50.00

RON

6,753

(4,997)-(2,762)-Pelletteria Ennepì S.r.l.

80.00

EUR

6,406

1,931

-

29

-

There were no significant restrictions on the Group’s ability to access or use assets andsettle liabilities as of the reporting date.
41. Subsequent Events
No significant events occurred after the reporting period.

78

PRADA Group

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