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Interim Financial Report 2014

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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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3
9
27
35
41

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Patrizio Bertelli

Miuccia Prada2

PRADA Group

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The PRADA GroupPRADA Group

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Corporate Information
Registered office

Via A. Fogazzaro, 28
20135 Milan, Italy

Headquarters 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 website

www.pradagroup.com

Hong Kong Exchange Stock Code1913

Board of Directors(appointed on May 22, 2012)

Carlo Mazzi(Chairperson, having assumed the role on February
14, 2014, and Executive Director)
Miuccia Prada Bianchi(Chief Executive Officer, having assumed the roleon February 14, 2014, and Executive Director)
Patrizio Bertelli(Chief Executive Officer and Executive Director)
Donatello Galli(Chief Financial Officer and Executive Director)
Alessandra Cozzani(Executive Director appointed on December 20, 2013)
Gaetano Micciché(Non-Executive Director)
Gian Franco Oliviero Mattei(Independent Non-Executive Director)
Giancarlo Forestieri(Independent Non-Executive Director)
Sing Cheong Liu(Independent Non-Executive Director)
Marco Salomoni (Non-Executive Director)
resigned on December 19, 2013

4

Audit Committee

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

Remuneration Committee

Gian Franco Oliviero Mattei (Chairman)
Carlo Mazzi
Giancarlo Forestieri

Nomination Committee

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

Board of Statutory Auditors

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

PRADA Group

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Supervisory Body
(Legislative Decree 231/2001)

David Terracina (Chairman)
Gian Franco Oliviero Mattei
Franco Bertoli

Main Shareholder

PRADA Holding B.V.
Keizersgracht 313 3rd floor
1016 EE Amsterdam - The Netherlands

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 in Hong Kong
to Carlo Mazzi

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 Spa
Via Tortona, 2520144 Milan, Italy

PRADA Group

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PRADA Group Structure

PRADA spa
Milan

Holding/Manufacturing/distribution/services

100%
66.7%

Artisans Shoes srl
Montegranaro
Production

PRADA Hong Kong PD ltd 100%Hong Kong
services

60%

Pellettieri d’Italia srl
Milan
Production

PRADA Dongguan
Trading Co ltd
Dongguanservices100%

IPI Logistica srl
Milan
services

Post Developement Corp 100%
San Francisco
real estate

100%

SPACE Caffè srl
Milan
services

Church Holding UK ltd
Northampton
sub-Holding

49%

PAC srl in liquidazione
Milan(in liquidation)

100%

100%

100%
Church & Co ltd
Northampton
Manufacturing/
distribution/services

PRADA Far East bv
Amsterdam
sub-Holding/outlet

100%

PRADA USA Corp
New York
distribution/services/retail

100% PRADA Australia pty ltd
Sydneyretail100%

PRADA Korea ltd
Seoul
retail100%

Space USA Corp
New Yorkoutlet100% PRADA Singapore pte ltd
Singaporeretail55%

TRS Hawaii Ilc
Honolulu
dfs

100%

55%

TRS Guam Partnership
Guam
dfs

100%

100%

PRADA Retail Mexicos de rm de cv
Mexico City
retail55%

PRADA Retail
Malaysia sdn bhd
Kuala Lumpur
retailPRADA Japan Co ltd
TokyoretailTravel Retail Shops
Okinawa kk
Tokyo
dfs

Church’s English Shoes
Switzerland sa
LuganoretailChurch & Co (USA) ltd
New Yorkretail100%

TRS Saipan Partnership
Saipandfs

55%

100% PRADA (Thailand) Co ltd
Bangkokretail100% Church Japan Company ltd
TokyoretailChurch UK Retail ltd
Northampton
retail100%

TRS Hong Kong ltd
Hong Kong
dfs

55%

100% PRADA New Zealand ltd
Wellington
retail100%

100%

Church Hong Kong
Retail ltd
Hong Kong
retailChurch’s English Shoes sa 100%
Bruxelles
retail100% Church & Co (Footwear) ltd
Northampton
tradeMarks
100% Church Singapore pte ltd
Singaporeretail100%

Church Netherlands bv
Amsterdam
outlet100%

Church Footwear ab
Stockholm
retail100%

Church Denmark aps
CopenhagenretailChurch France sas
ParisretailMacau Branch
Macau
dfs

100%

TRS New Zealand ltd
Wellington
dfs

55%

Church Italia srl
100%
Milan
distribution/retail/services

TRS Singapore pte ltd
Singaporedfs

55%

Church Spain sl
MadridretailChurch Ireland Retail ltd 100%
DublinretailChurch Austria gmbh
Wienretail100%

Church Footwear(Shanghai) Co ltd
Shanghairetail

100%

100%

100%

Kenon ltd
Londonreal estate

100%

PRADA India Fashion
Private ltd
MumbairetailPRADA Taiwan ltd
Hong Kong
services
Taipei BranchTaipeiretail100%

100%

Prada Group-Interim Financial Report 6ott 2014.indd 6

PRADA Sweden ab
Stockholm
retailMacau Branch ltd
Macauretail100%

PRADA Group100%

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

100%

100%

6

100%

PRADA Canada Corp
Toronto
distribution/retail

PRADA Trading(Shanghai) Co ltd
ShanghairetailSpace Hong Kong ltd
Hong Kong
outletPRADA Fashion Commerce(Shanghai) Co ltd
ShanghairetailCar ShoeHong Kong ltd
Hong Kong
dorMant

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100%
PRADA Hellas
Sole Partner llc
Athensretail100%

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

PRADA Rus llc
Moscow
retail100%

PRADA Stores srl
Milanretail/services

Car Shoe Italia srl
Milan
distribution/retail100%

100% PRADA Monte-Carlo sam
Monacoretail100%

PRADA Austria gmbh
Wienretail100%

PRADA Spain sl
MadridretailPRADA Bosphorus Deri
Mamüller ltd Sirketi
Istanbul
retail100% PRADA Germany gmbh
Munichretail/services

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

100%

100%

60%

100%

PRADA sa
Luxembourg
tradeMarkSwiss Branch
Luganoservices

80%

Angelo Marchesi s.r.l.
Milanconfectionery100%

PRADA Company sa
Luxembourg
services

PRADA Retail UK ltd
Londonretail49%

PRADA Emirates llc
Dubai
retailIreland Branch
Dublinretail49%

PRADA Kuwait wll
Kuwait City
retailCar Shoe UK ltd
Londonretail100%

100% PRADA Retail France sas
ParisretailPRADA Brasil
100% Importação e Comércio
de Artigos de Luxo ltda
Sãu Paulo
retail100%

PRADA Ukraine llc
Kiev
retail100%

PRADA Kazakhstan llp
Almatyretail100%

PRADA Maroc (Sarlau)
Casablanca
retail100%

PRADA Retail spc
Doharetail75%

PRADA Saudi Arabia ltd
Jeddahretail100%

PRADA Switzerland sa
LuganoretailPrada Zürich ag
Zürichretail100%

100%

PRM Services,s de rm de cv
Mexicoservices

PRADA Group

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8

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Financial Review

PRADA Group

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The Financial review of the Board of Directors refers to the Group of companies
controlled by PRADA spa (the "Company"), operating holding company of the PRADA
Group (the "Group") and is based on the unaudited Interim condensed consolidated
financial statements of the Group for the six months ended July 31, 2014, prepared inaccordance with IAS 34 and the IFRS as adopted by the European Union. This Financial
review must be read together with the 2014 Interim condensed consolidated financial
statements.
Consolidated income statement(amounts in thousands of Euro)

Retail%six months
ended July 31
2013(unaudited)%

1,442,161

82.3%

1,422,460

82.3%

Wholesale

288,73916.5%

285,124

16.5%

Royalties

20,415

1.2%

20,481

1.2%

Net revenues

1,751,315

100.0%

1,728,065

100.0%

Cost of goods sold(493,715)-28.2%(460,407)-26.6%

Gross margin

1,257,600

71.8%

1,267,658

73.4%

Operating expenses(884,442)-50.5%(809,320)-46.8%

EBIT

373,15821.3%

458,338

26.5%

Interest and other financial income/(expenses), net(9,492)-0.5%(15,194)

-0.9%

455

-

284

-

Income before taxation

364,12120.8%

443,428

25.7%

Taxation(113,075)-6.5%(130,609)-7.6%

Net income from continuing operations

251,04614.3%

312,819

18.1%

Net income for the period

251,04614.3%

312,819

18.1%

Net income from continuing operations –non-controlling interests

6,198

0.3%

4,580

0.3%

Net income – non-controlling interests

6,198

0.3%

4,580

0.3%

Dividends from investments

Net income from continuing operations - Group

244,84814.0%

308,239

17.8%

Net income – Group

244,84814.0%

308,239

17.8%

Depreciation, amortization and impairment

119,677

6.8%

92,715

5.4%

EBITDA

492,835

28.1%

551,053

31.9%

Basic and diluted earnings per share(in Euro per share)10

six months
ended July 31
2014(unaudited)

PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 10

0.096

0.120

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Key financial information
Key income statement information(amounts in thousands of Euro)Net revenues
EBITDAEBITDA %EBITEBIT %

six months
ended
July 312014(unaudited)

twelve months
ended
January 31
2014(audited)six months
ended
July 312013(unaudited)

1,751,315

3,587,347

1,728,065

1.3%

492,835

1,143,186

551,053-10.6%% change
on July 31
2013

28.1%

31.9%

31.9%

-

373,158

939,237

458,338-18.6%

21.3%

26.2%

26.5%

-

Income before tax

364,121922,896

443,428-17.9%Net income of the Group

244,848627,785

308,239-20.6%

Earnings per share (Euro)

0.096

0.245

0.120

-20.6%

Capital expenditure289,616

611,227

293,031-

Net operating cash flows

209,186

769,436

403,764-48.2%

Average number of employees

11,824

10,816

10,364

14.1%

July 312014(unaudited)

January 31
2014(audited)

July 312013(unaudited)change on
January 31
2014
100,443

Key statement of financial position information(amounts in thousands of Euro)Net operating working capital

510,217409,774

323,132

2,683,766

2,405,650

2,205,677

278,116

Net financial surplus/(deficit)(1,366)295,890

195,626(297,256)

Group shareholders’ equity

2,666,923

2,687,554

2,388,096(20,631)

Net invested capital2014 first half financial highlights
During the first half of the year the PRADA Group continued to pursue its longterm growth strategy investing in its brands’ equity. Despite a difficult political andmacroeconomic environment, and a general unfavorable exchange rate situation, theGroup kept strengthening its retail network to further extend its global reach. At thesame time, in order to limit margin pressure, several measures to increase efficiency
have been taken at all operational levels.
The consolidated net revenues amounted to Euro 1,751.3 million, slightly up by 1.3%
compared to Euro 1,728.1 million achieved in the same six months period of 2013. At
constant exchange rates the growth was 4.5%.
The EBITDA for the six months ended July 31, 2014, totaled Euro 492.8 million, down
compared to the EBITDA of Euro 551.1 million achieved in the first half of 2013. The
dilution recorded at gross margin level, mainly due to the negative impact of theexchange rate fluctuations, coupled with the higher incidence of the selling expenses
following the retail expansion, generated the reduction in the EBITDA margin which
went down from 31.9% on net revenues in the six months ended July 31, 2013, to28.1%.
In this first half of 2014, the Group’s net result amounted to Euro 244.8 million, or 14%
as a percentage of net revenues. In the same period of last year, the Group’s net result
totaled Euro 308.2 million, 17.8% on revenues.
The capital expenditure for the period amounted to Euro 289.6 million and was mainly
focused to enlarge, renovate and strengthen the retail network worldwide, but it also
included the significant investment of Euro 61.5 million for the acquisition of the Milanbuildings where the Group operates its corporate headquarter.
At July 31, 2014, the Group’s net financial position was slightly negative for EuroPRADA Group

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1.4 million, decreasing from Euro 295.9 million at January 31, 2014, after the capital
expenditure for the period and the payment of the dividends to the PRADA spa
shareholders for Euro 281.5 million.
Net sales analysis
six months
ended July 31
2014(unaudited)%

six months
ended July 31
2013(unaudited)

%

Italy

286,808

16.6%

268,531

15.7%

6.8%

Europe361,53920.9%

374,300

21.9%

-3.4%

Americas233,452

13.5%

231,587

13.6%

0.8%

Asia Pacific619,22135.8%

627,564

36.8%

-1.3%

Japan

175,26210.1%

159,449

9.3%

9.9%

Middle East

51,9303.0%43,287

2.5%

20.0%

(amounts in thousands of Euro)% change

Net sales by geographical area

Other countries
Total

2,688

0.1%

2,866

0.2%

-6.2%

1,730,900

100.0%

1,707,584

100.0%

1.4%

Net sales by brandPrada

1,431,114

82.7%

1,410,062

82.6%

1.5%

Miu Miu

256,03114.8%

255,950

15.0%

0.0%

Church's

35,5602.0%

32,673

1.9%

8.8%

Car Shoe

6,516

0.4%

7,551

0.4%

-13.7%

Other

1,679

0.1%

1,348

0.1%

24.6%

Total

1,730,900

100.0%

1,707,584

100.0%

1.4%

10.8%

Net sales by product line
Clothing
Leather goods
Footwear

275,77915.9%

248,81714.6%

1,110,715

64.2%

1,156,369

67.7%

-3.9%

314,42318.2%

282,396

16.5%

11.3%

Other

29,983

1.7%

20,002

1.2%

49.9%

Total

1,730,900

100.0%

1,707,584

100.0%

1.4%

1,442,161

83.3%

1,422,460

83.3%

1.4%

288,73916.7%

285,124

16.7%

1.3%

Total

1,730,900

100.0%

1,707,584

100.0%

1.4%

Net sales

1,730,900

98.8%

1,707,584

98.8%

1.4%

Royalties

20,415

1.2%

20,481

1.2%

-0.3%

1,751,315

100.0%

1,728,065

100.0%

1.3%

Net sales by distribution channelDOS
Independent customers and franchises

Total net revenues

Distribution channels
In the six months ended July 31, 2014, the retail channel generated net sales of Euro
1,442.2 million, up by 1.4% compared to Euro 1,422.5 million recorded in the same
period of 2013. At constant exchange rates, the increase was 5.1%. The contribution
to the Group’s total net sales was 83.3%, in line with the same period of last year. As
at July 31, 2014, the number of Directly Operated Stores (DOS) was 566 with a net of
26 new stores operating from the beginning of the fiscal period (32 openings: 17 Prada,
12 Miu Miu, 3 Church’s; 6 closures: 5 Prada, 1 Church’s). From August 1, 2013, thetotal net openings were 75.
For the six months ended July 31, 2014, the wholesale channel delivered net sales
totaling Euro 288.7 million. Compared to Euro 285.1 million posted in the first halfof 2013 the increase was 1.3% as reported and 1.8% at constant exchange rates.

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In the second quarter of 2014 the deliveries to independent clients were normalized
absorbing those timing differences in shipments that affected the comparison of theresults of the first quarter of 2014 with the prior year’s period.
Markets
In the first half of 2014 the Asia Pacific market recorded net sales of Euro 619.2 million,
down by 1.3% compared to Euro 627.6 million of the six months ended July 31, 2013.
At constant exchange rates, there was an increase of 2.3%. Counting on 164 DOS
in the area, the retail channel expanded 2.1% at constant exchange rates comparedto the results posted in the same period of 2013 (-2.1% as reported). In this channel,
the Greater China posted net sales for Euro 388.1 million and recorded an increase of
2.7% at constant exchange rates (1.8% as reported) as a result of double-digit pacesof growth in China and Macau and weak sales in Hong Kong. Sales in South Korea andSingapore were weak too, while the other Asian markets reported solid rates of growthat constant exchange rates. It is worth noting that in South Korea, the only significant
wholesale market in the area, the independent clients business (mainly duty free
operations) increased double-digit both as reported and at constant exchange rates.
The European market reported net sales of Euro 361.5 million, down by 3.4% comparedto Euro 374.3 million achieved in the six months ended July 31, 2013 (-3.1% at constantexchange rates). The uncertainty that prevailed on the political and economic landscape,
together with a relatively strong Euro, resulted in lower flows of tourists; on the otherside, the domestic demand was still weak. In fact, with a total of 159 DOS, the retailchannel recorded a slight contraction of 0.9% (-0.5% at constant exchange rates). Witha longer term view the Group continued to invest in the region through the opening ofsome important new stores to cover primary locations where it was not present yet
such as Geneva, Amsterdam and St Tropez. The wholesale channel posted a doubledigit decrease both as reported and at constant exchange rates compared to the same
period of 2013, principally as a consequence of the ongoing selective strategy of the
independent clients’ accounts and the conversion program of the Swiss market fromwholesale to retail.
In the six months ended July 31, 2014, the Italian market generated net sales of Euro
286.8 million, 6.8% higher than Euro 268.5 million posted in the same period of lastyear. The expansion was substantially achieved through the wholesale channel that
increased by 20.4% over the results recorded in the six months ended July 31, 2013.
The retail channel was basically in line with the same period of 2013.
The Americas, meant as North, Centre and South America, reported net sales of Euro
233.5 million, up by 0.8% over Euro 231.6 million posted in the period of six months
ended July 31, 2013 (+6.3% at constant exchange rates). In the area the progression
in sales was fully delivered by the retail channel that achieved a growth of 8.2% that
became an increase of 14.2% at constant exchange rates. During the period 9 new
DOS were opened in the area out of which 8 were corners converted between UnitedStates and Canada.
In the first half of 2014 the Japanese market confirmed a trend of positive performances
compared to the results recorded in the same period of 2013. Net sales amounted toEuro 175.3 million advancing 9.9% over Euro 159.4 million achieved in the six months
ended July 31, 2013 (+19.5% at constant exchange rates).
The Middle East, that at July 31, 2014, counted 17 stores directly operated by theGroup, reported net sales of Euro 51.9 million and achieved a double-digit expansion
both as reported and at constant exchange rates: +20% and +24.7% respectively.

PRADA Group

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Products
In the six months ended July 31, 2014, net sales generated by leather goods amounted
to Euro 1,110.7 million, down by 3.9% compared to Euro 1,156.4 million recorded in
the same period of 2013 (-0.9% at constant exchange rates). The contribution of thisproduct category to the consolidated net sales dropped to 64.2% from 67.7% achievedin the same period of 2013. As already highlighted in the first quarter of the year, thegood performances delivered by Japan and the Americas were compensated by theslowdowns recorded in Europe (Italy excluded) and in Asia Pacific.
The ready-to-wear division generated net sales of Euro 275.8 million and advanced
10.8% over the results achieved in the six months ended July 31, 2013 (+14.5% atconstant exchange rates). The contribution to consolidated net sales rose to 15.9% from
14.6%. The expansion was totally delivered through the retail network that recorded
double-digit growths both as reported and at constant exchange rates: +13.9% and+18.3% respectively. All markets contributed to the business expansion.
Footwear reported net sales of Euro 314.4 million, up by 11.3% compared to Euro
282.4 million posted in the first half of 2013 (+14.2% at constant exchange rates). As
a result, the contribution to consolidated net sales increased up to 18.2% from 16.5%
recorded in the six months ended July 31, 2013. With the exception of the Americas, allmarkets delivered business expansion. Same as the ready-to-wear division, the growth
was totally generated through the retail channel: +18.8% as reported and +22.6% atconstant exchange rates.
BrandsIn the six months ended July 31, 2014, contributing 82.7% to the total net sales for theGroup, the Prada brand generated Euro 1,431.1 million, up by 1.5% compared to net
sales of Euro 1,410.1 million reported in the same period of last year (+4.7% at constantexchange rates), with similar trends in the two channels. In terms of geography, asreported, Italy, Japan, Middle East and Americas contributed with increases, while
Europe and Asia Pacific slightly contracted. The ready-to-wear and footwear categories
scored double-digit increases both as reported and at constant exchange rates.
Miu Miu net sales amounted to Euro 256 million for the six months ended July 31, 2014,
basically flat as reported compared to the results achieved in the six months ended July
31, 2013 (+3.6% at constant exchange rates). In the retail business Miu Miu advanced
2.9% as reported and 7.1% at constant exchange rates thanks to the contribution ofmarkets such as Asia Pacific, Japan, Middle East and, to a lesser extent, Americas.
Similarly to the Prada brand, it is worth noting the performance of the ready-to-wear
division that increased double-digit at constant exchange rates. Instead, shoes slightly
contracted as reported, but turned into a moderate growth at constant exchange rates.
In the six months ended July 31, 2014, the Church’s brand recorded net sales of Euro
35.6 million, up by 8.8% over Euro 32.7 million reported in the same period of lastyear (+6.8% at constant exchange rates). The expansion was substantially achieved
through the retail network where the brand scored a double-digit growth both asreported (+13.8%) and at constant exchange rates (+12.4%).
Royalties
In the six months ended July 31, 2014, the Group’s licensing agreements generated
royalties for Euro 20.4 million, overall in line with the same period of last year. The
growth achieved in the eyewear business was offset by the contraction reported in
the fragrances.

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Number of stores
July 31, 2014
(unaudited)

January 31, 2014
(audited)

Owned

Franchises

Owned

Franchises

July 31, 2013
(unaudited)
Owned

Franchises

Prada

342

27

330

24

301

23

Miu Miu

162

7

150

8

133

7

Church’s

54

-

52

-

49

-

Car Shoe

8

-

8

-

8

-

Total

566

34

540

32

491

30

July 31, 2014
(unaudited)
Owned

January 31, 2014
(audited)

Franchises

Owned

Franchises

July 31, 2013
(unaudited)
Owned

Franchises

Italy

52

6

51

6

50

6

Europe

159

4

150

6

138

6

Americas

100

-

91

-

75

-

Asia Pacific

164

21

157

20

142

18

Japan

71

-

72

-

70

-

Middle East

17

3

16

-

13

-

Africa

3

-

3

-

3

-

Total

566

34

540

32

491

30

Operating results
The delivery margin for the six months ended July 31, 2014, amounted to Euro
1,257.6 million, down by 0.8% compared to Euro 1,267.7 million recorded in the same
six months period of 2013. Profitability measured as a percentage of net revenues
decreased to 71.8% from 73.4% mainly as a consequence of the negative impact of
the exchange rates.
The EBITDA for the period amounted to Euro 492.8 million, down compared to Euro
551.1 million reported for the six months ended July 31, 2013. The margin went down
to 28.1% from the 31.9% achieved in the same period of 2013. The dilution was dueto the lower gross margin level together with an increased incidence of the selling
expenses. The other expenses contributing to the EBITDA, following the measures
undertaken to operate in the current difficult economic scenario, either kept theirincidence stable or even reduced, like the advertising and promotional expenses.
EBIT for the period totaled Euro 373.2 million compared to Euro 458.3 million reported in
the same period of six months of last year. As a percentage of net revenues profitability
was 21.3% compared to 26.5% achieved in the six months ended July 31, 2013. The
increase in the amortization and depreciation costs was entirely attributable to the retailinvestments. No significant impairment occurred during the period.
The tax burden for the six months ended July 31, 2014, totaled Euro 113.1 million,
down by Euro 17.5 million compared to the same period of last year. The incidence
was higher (from 29.5% to 31.1%) due to a different geographical mix of consolidated
net taxable income.
Finally, the Group’s net income amounted to Euro 244.8 million, or 14% as a percentageof net revenues, compared to Euro 308.2 million for the six months ended July 31,
2013.

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EBITDA by brandsix months ended July 31, 2014
(amounts in thousands of Euro)

Group

Prada

Miu Miu

Church’s

Car Shoe

Others

Net sales

1,730,900

1,431,114

256,031

35,560

6,516

1,679

Royalties

20,41518,764

1,643

8

-

-

1,751,315

1,449,878

257,674

35,568

6,516

1,679

EBITDA

492,835

475,306

21,392969(4,019)(813)

EBITDA %

28.1%

32.8%

8.3%

2.7%

-

-

six months ended July 31, 2013
(amounts in thousands of Euro)

Group

Prada

Miu Miu

Church’s

Car Shoe

Others

Net sales

1,707,584

1,410,062

255,950

32,673

7,551

1,348

Royalties

20,481

19,261

1,214

6

-

-

1,728,065

1,429,323

257,164

32,679

7,551

1,348

EBITDA

551,053

507,854

43,6802,569(2,916)(134)

EBITDA %

31.9%

35.5%

17.0%

7.9%

-

-

Change in Net revenues

23,25020,555510

2,889(1,035)331

Percentage change in
Net Revenues

1.3%

1.4%

0.2%

8.8%

-13.7%

24.6%

Change in EBITDA(58,218)(32,548)(22,288)(1,600)(1,103)(679)% change in EBITDA-10.6%-6.4%-51.0%-62.3%--Net revenues

Net revenues

The PRADA brand generated EBITDA of Euro 475.3 million for the six months ended
July 31, 2014, or 32.8% on the relevant net revenues. In the same period last year it
amounted to Euro 507.9 million, or 35.5% on the relevant net revenues. The dilution
came after the negative impact of a relatively strong Euro currency, that diluted the
profitability at gross margin level, and the increased incidence of the labor and rental
costs in the selling area, following the expansion of the retail network pursued in thelast twelve months (52 openings and 11 closures). Against these effects, the measures
undertaken by the management to increase efficiency at all operational levels managed
to limit the margin pressure. The Group believes that is fundamental for the long-term
perspective of the brand to continue investing in design innovation, communication andpromotional activities in order to enhance the leading positioning and global awareness.
To this extent, it is worth highlighting at least two major initiatives undertaken in thelast period: the sponsorship agreement signed on February 27, 2014, with the Luna
Rossa sailing team, that will take part to the the XXXV edition of the America’s Cup,and the important art exhibition “Art or Sound” organized by the Fondazione Prada at
Ca’ Corner della Regina in Venice inaugurated on June 4, 2014. On the retail side, with
the impressive one-month event in Harrods Knightsbridge, one of the world’s most
famous department store, the brand and its products were celebrated with 40 window
displays, a pop-up store, multiple screen displays and an exhibition tracing the brand’s
multivalent obsessions from fashion to art, architecture, cinema, sport and beyond.
The Miu Miu brand generated EBITDA of Euro 21.4 million for the six months ended
July 31, 2014, or 8.3% on the relevant net revenues. In the same period last year
it amounted to Euro 43.7 million, or 17% on the relevant net revenues. The lower
profitability of this six months period is mostly explained by the higher incidence ofthe selling expenses, essentially resulting from the enlargement strategy of the DOS

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network of the brand that the Group is realizing despite the difficult political and macroeconomic scenario and that, given the dimension of the brand, is resulting even morechallenging. With this view, during the six months period, Miu Miu unveiled 12 new
DOS covering Far and Middle East, Europe, Japan and US and reaching a total numberof 162 at July 31, 2014. At the same time the brand continued investing resourcesin the communication activities to enhancing its identity. Among others, it is worth
remembering the exclusive Miu Miu Croisiere 2014-2015 event held at the Palaisd’Iena in Paris on July 5, 2014, or the release of the “Spark and Light” film, the 7th
Miu Miu Women’s tales which premier was screened at the Diamond Horseshoe in
New York.
Church’s generated EBITDA of Euro 1 million for the six months ended July 31, 2014,
or 2.7% on the relevant net revenues. In the same period last year it amounted to Euro
2.6 million, or 7.9% on the relevant net revenues. The expansion of the retail network,that counted new 3 DOS in the six months period (Copenhagen, Wien and Hong Kong),
while giving impulse to the growth of the net sales, entailed more operating expenses
that diluted the profitability. The light contraction occurred in the wholesale business,that the Group is confident will be recovered in the second half of the year, contributed
negatively to the lower EBITDA margin.
The Car Shoe brand reported a negative EBITDA of Euro 4 million, a deterioration on
previous period because of the decline in the wholesale business and a level of retailnet sales not yet at the breakeven.

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

Non-current assets (excluding deferred tax assets)

July 312014(unaudited)

January 31
2014(audited)

July 312013(unaudited)

2,427,553

2,225,451

2,015,666

Trade receivables, net

373,848

308,405

317,519

Inventories, net

539,042449,903

408,534

Trade payables(402,673)(348,534)(402,921)

Net operating working capital

510,217409,774

323,132

Other current assets (excluding items of financial position)

157,567

132,866

165,028

Other current liabilities (excluding items of financial position)(336,490)(291,378)(240,039)

Other current assets/(liabilities), net(178,923)(158,512)(75,011)

Provision for risks(56,229)(52,660)(47,750)

Post-employment benefits(68,760)(63,279)(57,888)

Other long-term liabilities(122,584)(113,698)(89,211)

Deferred taxation, net

172,492

158,574

136,739

Other non-current assets/(liabilities)(75,081)(71,063)(58,110)Net invested capital

2,683,766

2,405,650

2,205,677

Shareholder's equity – Group

(2,666,923)(2,687,554)(2,388,096)

Shareholder's equity – Non-controlling interests(15,477)(13,986)(13,207)(2,682,400)(2,701,540)(2,401,303)

Long-term financial payables(265,972)(207,969)(81,572)

Short-term financial, net surplus/(deficit)

264,606

503,859

277,199--(1)(1,366)295,890

195,626(2,683,766)(2,405,650)(2,205,677)

0.0005n.a.

n.a

Total consolidated shareholders' equity

Payable for dividends
Net financial position surplus/(deficit)
Shareholders’ equity deducted the positive Net financial position
Debt to Equity ratio

At July 31, 2014, Net invested capital stood at Euro 2,683.8 million, Euro 278.1 million
more than the Euro 2,405.7 million reported at January 31, 2014. The increase mainly
regarded non-current assets, especially investments in tangible fixed assets.
The capital expenditure for the first six months of 2014 totaled Euro 289.6 million andwas mainly spent to enlarge, renovate and strengthen the retail network; the amountalso included Euro 61.5 million for the purchase of the headquarter offices in Milan thatwere previously occupied under a rental agreement. The non-current assets at July
31, 2014, include Euro 947.1 million of intangible assets, of which Euro 512.7 million
relating to fixed assets with indefinite useful life (goodwill), for those the management
did not highlight any indication of impairment. Consistently with the guidelines of “IAS
36 Impairment of assets”, the mandatory impairment tests will be performed at year
end.
The Net operating working capital increased by some Euro 100 million, from Euro
409.8 million at January 31, 2014, to Euro 510.2 million at July 31, 2014. The increase
was essentially due to the higher value of retail inventories, mainly because of thelarger number of stores and a wider replenishment strategy deployed to better serve
the retail activities. The increases in the trade receivables and payables that occurredin the six months period were connected to the seasonality of the wholesale deliveries
and manufacturing processes typical of this part of the year.
Total Other net current liabilities increased from Euro 158.5 million at January 31,
2014, to Euro 178.9 million. The variance was essentially due to the lower fair valueof derivative financial instrument for Euro 19.4 million, the higher payable for capital
18

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expenditure for Euro 48.2 million and net of the higher current tax receivables combinedwith less current tax payables for a total amount of Euro 39.1 million.
Other non-current liabilities, net, increased from Euro 71.1 million at January 31, 2014,
to Euro 75.1 million, essentially as a result of increases in liabilities for long-term
employee benefits obligations and in deferred lease income.
The Group shareholders’ equity passed from Euro 2,687.6 million at January 31,
2014, to Euro 2,666.9 million at July 31, 2014. The increase generated by the Group’s
net income for the six months ended July 31, 2014, that amounted to Euro 244.8
million, was offset by the dividends of Euro 281.5 million distributed to the PRADA spa
shareholders and other positive changes totaling a net of Euro 16 million which were
mostly contributed by the positive changes in the translation reserve.
Net financial position
The following table summarizes the items included in the net financial position.
July 312014(unaudited)

January 31
2014(audited)

July 312013(unaudited)(265,965)(207,950)(81,124)

(7)

(19)

(448)

Long-term financial payables(265,972)(207,969)(81,572)

Short-term financial payables and bank overdrafts(242,061)(61,909)(159,468)

Payables to parent company and related parties(3,498)(4,130)(4,205)

11

2,008

1,415

(437)

(524)

(197)

Cash and cash equivalents

510,591

568,414439,654

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

264,606

503,859

277,199--(1)

Net financial surplus/(deficit)(1,366)295,890

195,626

Net financial surplus/(deficit), excluding receivables/(payables) withparent company and other related parties(1,366)

298,012

195,626

NFP/EBITDA ratio

0.003

n.a.

n.a.

(amounts in thousands of Euro)Long term debt
Obligations under finance leases

Receivables from parent company and related parties
Obligations under finance leases

Payable for dividens

At July 31, 2014, the Net financial position was slightly negative at Euro 1.4 million. The
decrease of Euro 297.3 million from the surplus of Euro 295.9 million at January 31,
2014, was due to the uses of cash to support the investing activities (Euro 227.7 million)
and to pay dividends to PRADA spa shareholders and Non-controlling shareholders(Euro 288.2 million), net of the funds generated by the operating activities (Euro 209.2
million).
During the six months ended July 31, 2014, a new loan facility agreement of GB Pound
60 million was signed by the subsidiary Kenon Limited with Unicredit Bank AG, London
Branch. The loan under the facility is secured by a mortgage on the prestigious buildingin Old Bond street, London, home of one of the most important Prada stores in Europe.
It has to be repaid in quarterly equal installments starting from April 2015. The loan will
expire on January 31, 2029.

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Risk factors
Risk factors regarding the international luxury goods market
Risks regarding the general state of the economy and the Group’s international
operations
The Group is exposed to several macroeconomic factors as a consequence of its
operations on an international scale.
The current international economic environment could have a negative impact on
demand for the Group’s products and reduce access to credit, causing financial
problems for customers and other parties with which the Group operates. Overall,these factors could have a negative impact on the business, results, cash flows andthe financial condition of the Group.
A significant portion of the Group’s sales is made to customers who purchasegoods during trips abroad. Consequently, unfavorable economic conditions (e.g. theglobal financial crisis of 2008 and 2009), global political developments (e.g. the war
in Iraq in the spring of 2003), other social or geopolitical factors resulting in unrest,
instability, disorder, civil war or military conflict, natural disasters like fires, flooding andearthquakes, or other events (e.g. the events of September 11, 2001 in the UnitedStates or travel advice issued by the World Health Organization in response to Severe
Acute Respiratory Syndrome, “SARS”) which lead to changes in the flow of travelers
or a reduction in the volume of travel have in the past and could in future have anegative impact on the Group’s business and results.
Risks regarding the protection of intellectual property rights
The Group believes that its trademarks and other intellectual property rights arefundamental to its success and market position. Consequently, the Group’s businessis strongly dependent on its ability to protect and defend its trademarks and otherintellectual property rights.
The Group is constantly committed to the international registration and protection of
its trademarks and other intellectual property. It maintains that its trademarks and otherintellectual property rights are adequately protected on major markets by registration
applications, existing registrations and other legal safeguards.
Risks regarding brand image and recognition
The success of the Group on the international luxury goods market is linked to theimage and distinctiveness of its brands. These features depend on many factors, likethe style and design of products, the quality of materials and production techniques
used, the image and location of the Group’s Directly Operated Stores, the carefulselection of licensees for certain product categories and the communications activities
in terms of public relations, advertising, marketing and Group profile in general.
Preservation of the image and prestige acquired by the Group’s brands and trademarksin the fashion and luxury goods industry is an objective that the PRADA Group pursues
by closely monitoring each step of the process, both inside and outside the company,in order to guarantee uncompromised quality. It also engages in a constant search forinnovation in terms of style, product and communications in order to ensure that its
message is always consistent with the strong identity of the brands.

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Risks regarding the ability to anticipate trends and respond to changing
customer preferences
The Group’s success depends on its ability to create and drive market and producttrends while anticipating changes in customer preferences and in the dynamics of theluxury goods market.
The Group pursues its objective of driving the luxury goods market by stimulating
consumer markets and setting trends thanks to the creative efforts of its Design and
Product Development department. This area of the business includes around 950
persons divided between design – where creativity is boosted by a strong mix ofnationalities, cultures and talents – and development – where craft skills combinedwith tried and tested industrial processes ensure that the Group continues to compete
in order to keep up with consumer trends and emerging lifestyles.
Risk factors specific to the PRADA Group
Risks regarding exchange rate fluctuations
The Group has a vast international presence and is, therefore, exposed to the foreignexchange risk which can negatively impact revenue, costs, margins and profit. In orderto hedge the foreign exchange risk, the Group enters into hedging derivatives designed
to guarantee the Euro (or other operating currency) amount of identified future cash
flows. These future cash flows mainly regard the collection of trade and financial
receivables and the settlement of trade payables. They are mainly concentrated in
PRADA spa, Group holding company and worldwide distributor of Prada and Miu Miu
brand products.
Exchange rate risk management is described in the Notes to the Interim condensed
consolidated financial statements.
Risks regarding interest rate fluctuations
The interest rate risk is the risk that cash outflows might vary as a result of interest
rate fluctuation. In order to hedge this risk, which is mainly concentrated in theparent company PRADA spa, the Group uses interest rate swaps and collars. These
instruments convert variable rate loans into fixed rate loans or loans at rates within anegotiated range of rates.
Interest rate risk management is described in more detail in the Notes to the Interim
condensed consolidated financial statements.
Risks regarding the importance of key personnel
The Group’s results depend both on the contribution of certain key figures who
have played an essential role in the development of the Group and who have great
experience of the fashion and luxury goods industry and on Prada’s ability to attract
and retain personnel who are highly capable in terms of the design, marketing andmerchandising of products.
The Group believes it has a management structure capable of guaranteeing theongoing success of the business and in the last years has been implementing a longterm incentive plan in order to retain key figures so that they will continue to fulfil roles
essential to achievement of the challenging objectives that the Group constantly sets
itself.

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Risks regarding the implementation of strategy
The Group’s ability to increase revenues and improve profitability depends on the
successful implementation of its strategy for each brand. As already stated, thisstrategy is mainly based on the international development of the retail channel.
The Group is pursuing its objectives through gradual expansion in new geographicalareas or in areas where its presence is not yet considered strong enough. In order toensure the success of each new DOS, the Group carefully assesses market conditions
and consumer trends in the new DOS location. In particular, when entering into new
countries, the Group dedicates significant resources to ensuring that sales managers
and personnel convey an image consistent with the identity of the Group brands anda level of service in keeping with the quality of the products. The utmost attention is
also paid to the design and fitting out of the stores themselves so that brand identify
is properly represented.
Risks regarding the outsourcing of manufacturing activities
The Group designs, checks and produces in-house most of its prototypes and samples
while outsourcing production of most of its accessories and products to third parties
with the right experience and skills.
The Group has implemented a rigorous inspection and quality control process for all
outsourced production. Prada contractually requires its outsourcers to comply withrules and regulations on brand ownership and other intellectual property rights, with all
the provisions of laws and national collective agreements on labor and social security
rules and with laws and regulations on health and safety in the workplace. It also
requires them to read the PRADA Group Code of Ethics and make an undertaking torespect the principles set out in it.
Credit risk
Credit risk is defined as the risk that a counterparty in a transaction causes a financial
loss for another entity through failure to fulfill its obligations. The maximum risk to which
an entity is potentially exposed is represented by all financial assets recorded in thefinancial statements. The Group essentially believes that its credit risk mainly regards
trade receivables generated in the wholesale channel and cash equivalents. The Groupmanages the credit risk and reduces its negative effects through its commercial andfinancial strategy.
On the trade receivables side, credit risk management is performed by controlling andmonitoring the reliability and solvency of customers. At the same time, the fact that the
total receivables balance is not highly concentrated on individual customers, the factthat net sales are evenly spread geographically and the ongoing strategy of selective
reduction of the wholesale customer base (for reasons including the prevention ofparallel distribution) have led to a reduced credit risk.
On the cash equivalents side, the risk of default substantially relates to bank deposits
which is the method most widely used by the Group, also considering its low-risk
policy, to invest the surplus funds generated by operations. The default risk is mitigatedby the allocation of the available funds among different bank deposits in terms ofcountries, currencies and banks as well as by the term profile of such investments
which is always short-term. The residual significant portion of the line-item cash andcash equivalents is made up of bank accounts and cash. The Group maintains that there
is no significant risk on these kinds of liquid assets as their use is strictly connectedwith the business operations and corporate processes and, as a result, the number ofparties involved is highly fragmented.

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Liquidity risk
The liquidity risk relates to the difficulty the Group may have in fulfilling its obligations
with regard to financial liabilities. The Directors are responsible for managing the liquidity
risk while the Corporate finance department, reporting to the CFO, is responsible formanaging financial resources as well as possible. The Directors believe that the funds
and lines of credit currently available, in addition to those that will be generated byoperating and financing activities, will allow the Group to meet its needs resulting frominvesting activities, working capital management, repayment of loans as they fall due
and dividend payments as planned.
Legal and regulatory risks
The PRADA Group operates in a complex regulatory environment and is exposed tolegal risks and risks regarding compliance with applicable laws, including:––

the risks associated with the failure to comply with the Rules Governing the
Listing of Securities on the Stock Exchange of Hong Kong or with other laws or
regulations in force in Hong Kong and applicable to the Company following its
listing on the Stock Exchange of Hong Kong Limited;––

the risks associated with the failure to comply with the laws and regulations
applicable to the Company following the listing of the Notes issued on August
2013 on the Irish Stock Exchange;––

the risks associated with health and safety at work in compliance with Italian
Legislative Decree 81/08 and equivalent regulations in other countries;––

possible legal sanctions for wrongful acts pursuant to Law 231/2001, as
subsequently amended;––

the risks associated with antitrust rules in the areas where the Group operates;––

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

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

By involving all of its various divisions and using external specialist advisors whennecessary, the Group ensures that its processes and procedures are updated to comply
changes in rules and regulations, reducing the risk of non-compliance to an acceptablelevel. As well as by divisional managers and by audit activities, monitoring activities arealso carried out by specific entities and committees such as the Supervisory Board, theInternal Control Committee and the Industrial Compliance Committee.
Risks regarding data processing
Data is processed using information systems subject to a governance model which
ensures that:––data is adequately protected against the risk of unauthorized access and disclosure(including means for protecting personal privacy and proprietary information),
improper information modification or destruction (including accidental loss) andutilization inconsistent with assigned duties;––

data is processed in accordance with applicable laws and regulations.

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Information on relationships and transactions with related parties
Information on the Group’s relationships and transactions with related parties isprovided in the Notes to the Interim condensed consolidated financial statementsin accordance with “IAS 24 Related parties“. Some of the transactions reported astransactions with related parties fall also within the application of the Hong Kong
Listing Rules. Information relating to such transactions is provided in accordance with
Chapter 14A of the Hong Kong Listing Rules.
Non-IFRS measures
The Group uses certain financial measures (“non-IFRS measures”) to measure its
operating performance and to help the reader to understand and analyze its statementof financial position. Although they are used by Group management, these measures
are not universally or legally defined and are not regulated by IFRS based on which theInterim condensed consolidated financial statements are prepared. As other companies
operating in the luxury goods segment might utilize the same measures, but based on
different calculation criteria, it is worth noting the fact that said non-IFRS measures
should always be read together with the related notes and may not be suitable for a
direct comparison between different companies.
In this 2014 Interim financial report, the PRADA Group has used the following nonIFRS measures:
EBITDA: Earnings Before Interests, Taxation, Depreciation and Amortization, i.e.
“Consolidated net income for the year” 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 theyear” adjusted to exclude “Interest and other financial income/(expense) and dividends
from investments” and “Taxes on income”.
Net financial position: Short-term and long-term financial payables towards third parties,
towards related parties and under finance leases, plus payables for dividends and less
Cash and cash equivalents, short-term and long-term financial receivables from third
parties and related parties.
Free cash flows: net cash flows generated by operating activities less cash flows
utilized in investing activities.
The following table shows the calculation of EBITDA and EBIT for the last threereporting periods.
(amounts in thousands of Euro)24

six months
ended July 31
2014

six months
ended July 31
2013

six months
ended July 31
2012

Consolidated net income for the year from continuing operations

251,046

312,819289,215

Taxation

113,075

130,609102,756

Interest and other financial income/(expense), net

9,492

15,1942,911

Dividends from investments

(455)

(284)

-

EBIT

373,158

458,338

394,882

Depreciation, amortization and impairment

119,677

92,71574,491

EBITDA

492,835

551,053469,373PRADA Group

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Outlook for second half of 2014
Despite recent trends have not shown signs of improvements, also due to thepersistent difficult economic and political conditions that are adversely impacting
consumers habits, the PRADA Group will remain focused on a medium/long-term
growth and continue investing in brands’ equity. The Group will aim to increase sales
through improvements in the merchandising mix and with marketing activities more
focused on retail and domestic customers, as well as protect margins paying thehighest attention on costs development.
The second half of 2014 is expected to be broadly in line with the first half. Margins
will continue to be under pressure with some marginal improvements deriving fromthe cost-cutting actions. Investments will be focused on strategic locations with highpotential and the maximum attention will be kept on quality and creativity.

Milan (Italy), September 19, 2014

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Corporate Governance

PRADA Group

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Corporate governance practices
The Company is committed to maintaining a high standard of corporate governancepractices and fulfilling its commitment to effective corporate governance. The corporate
governance model adopted by the Company consists of a set of rules and standards
with the aim of establishing 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, 2014,
to July 31, 2014 (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 has established the Audit Committee, the Remuneration Committee andthe Nomination Committee. Each Committee is chaired by an independent nonexecutive director. The written terms of reference of each Committee are of no lessthan exacting terms than those set out in the Code and are available on the Company’s
and The Stock Exchange of Hong Kong Limited’s (the “Stock Exchange”) websites.
In addition, the Board has established a Supervisory Body under the Italian Legislative
Decree 231 of June 8, 2001 (the “Decree”).
Audit Committee
The Company has established an Audit Committee in compliance with Rule 3.21 of
the Listing Rules of which at least one member possesses appropriate professional
qualifications in accounting or related financial management expertise to discharge
the responsibility of the Audit Committee. The Audit Committee consists of three
independent non-executive directors, namely, Mr. Gian Franco Oliviero Mattei(Chairman), Mr. Giancarlo Forestieri and Mr. Sing Cheong Liu. The primary duties of
the Audit Committee are to assist the Board in providing an independent view of theactivities of the Company’s financial reporting process and internal control and risk
management systems, to oversee the external audit process and the internal audit
process and to perform other duties and responsibilities as are assigned to the Audit
Committee by the Board. The Audit Committee held four meetings on February 14,
2014, April 1, 2014, June 5, 2014, and September 19, 2014, with an attendance
rate of 100% to discuss, among others, the audit plan for the year 2014, to meetwith the external auditors, to discuss the auditing and internal controls activities, toreview the Group’s continuing connected transactions for 2013, the audited separate
and consolidated financial statements of the Company for the year ended January
31, 2014, the unaudited consolidated quarterly financial statements of the Company
for the three months ended April 30, 2014, and the unaudited consolidated interim
financial statements of the Company for the six months ended July 31, 2014, before
recommending them to the Board for approval.

28

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Remuneration Committee
The Company has established a Remuneration Committee in compliance with the Code.
The primary duties of the Remuneration Committee are to make recommendations to
the Board on the Company’s policy and structure for the remuneration of directors andsenior management and the establishment of a formal and transparent procedure fordeveloping policy on such remuneration. The recommendations of the Remuneration
Committee are then put forward to the Board for consideration and adoption, whereappropriate. The Remuneration Committee consists of two independent non-executive
directors, Mr. Gian Franco Oliviero Mattei (Chairman) and Mr. Giancarlo Forestieri, andone executive director, Mr. Carlo Mazzi. The Remuneration Committee has held one
meeting on April 1, 2014, with an attendance rate of 100% to recommend certain
updates to the long term incentive plan and the increase of the overall amount of theBoard’s remuneration.
Nomination Committee
The Company has established a Nomination Committee in compliance with the Code.
The primary duties of the Nomination Committee are to make recommendations to theBoard on the structure, size and composition of the Board itself, on the selection of
new Directors and on the succession plans for Directors. The Nomination Committee
also assesses the independence of independent non-executive directors. The
recommendation of the Nomination Committee are then put forward to the Board forconsideration and adoption, where appropriate. The Nomination Committee consists of
two independent non-executive directors, Mr. Gian Franco Oliviero Mattei (Chairman)
and Mr. Sing Cheong Liu, and one executive director, Mr. Carlo Mazzi. The Nomination
Committee has held two meetings on February 14, 2014, and April 1, 2014, with anattendance rate of 100% to recommend the appointment of Mr. Carlo Mazzi as the
Chairperson to the Board, to recommend the change of Ms. Miuccia Prada Bianchi’srole as Chief Executive Officer and certain amendments to the powers alreadydelegated by the Board to the executive directors, to perform the annual review of the
independence of independent non-executive directors and to recommend the electionof Ms. Alessandra Cozzani as Director of the Company at its shareholders’ general
meeting held on May 22, 2014.
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.
Franco Bertoli.
Board of Statutory Auditors
Under Italian law, the Company is required to have a board of statutory auditors,
appointed by the shareholders for a term of three financial year, with the authority tosupervise the Company on its compliance with the law and the By-laws, compliancewith the principles of proper management and, in particular, on the adequacy of theorganizational, administrative and accounting structure adopted by the Company andon its functioning.
The board of statutory auditors of the Company consists of Mr. Antonino Parisi(Chairman), Mr. Roberto Spada and Mr. David Terracina.

PRADA Group

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Joint Company Secretaries
As disclosed in the prospectus of the Company dated June 13, 2011, as part of its
application for listing, the Company was granted a waiver by the Stock Exchange fromstrict compliance with Rule 8.17 (now Rule 3.28) of the Listing Rules for three years
with respect to the appointment of Ms. Patrizia Albano as the joint company secretary.
Before the expiration of the waiver, the Company sought confirmation from the Stock
Exchange in relation to the compliance with Rule 3.28 of the Listing Rules regarding
Ms. Patrizia Albano as joint company secretary. On April 8, 2014, the Stock Exchange
confirmed that Ms. Patrizia Albano is qualified to act as the company secretary of
the Company under Rule 3.28 of the Listing Rules; therefore, a further waiver is notnecessary.
Given that the headquarters of the Company are located outside Hong Kong and theCompany is incorporated in Italy, the Company is of the view that it is in the bestinterests of the Company and is of good corporate governance to maintain Ms. Patrizia
Albano and Ms. Yuen Ying Kwai as the joint company secretaries.
Dividends
The Company may distribute dividends subject to the approval of the shareholders ina general shareholders’ meeting.
On April 2, 2014, the Board of the Company recommended the payment of a final
dividend of Euro/cents 11 per share in the capital of the Company, representing a
total dividend of Euro 281,470,640. The Shareholders approved this dividend at theshareholders’ general meeting of the Company held on May 22, 2014. The dividend
was paid on June 20, 2014.
No dividends have been declared or paid by the Company in respect of the six months
ended July 31, 2014.
Change in Information of Directors Pursuant to Listing Rule 13.51B(1)Pursuant to Rule 13.51B(1) of the Listing Rules, the change in information of Director
since the Company’s 2013 Annual Report is set out below:
Name of Director

ChangeMiuccia PRADA BIANCHI

Emolument to be received for the executive role as Chief Executive Officer of the Company
for 2014 financial year: Euro 960,000

Carlo MAZZI

Emolument to be received for the executive role as Chairperson of the Company for 2014
financial year: Euro 960,000

Gaetano MICCICHE’

Ceased as board member of Telecom Italia S.p.A. since April 16, 2014
Ceased as member of the supervisory board of Fondazione Ricerca e Imprenditorialità since
February 22, 2014

Directors’ Securities Transactions
The Company has adopted written procedures governing Directors’ securities
transactions on terms no less exacting than the standard set out in the Model Codefor Securities Transactions by Directors of Listed Issuers as set out in Appendix
10 of the Listing Rules (the “Model Code”). Relevant employees who are likely to
be in possession of unpublished inside information of the Group are also subject
to compliance with written procedures. Specific written confirmations have beenobtained from each Director to confirm compliance with the Model Code for the six
months ended July 31, 2014. There was no incident of non-compliance during the six
months ended July 31, 2014.

30

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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 six months ended July 31, 2014.
Directors’ interests and short positions in securities
As at July 31, 2014, the Directors and chief executives of the Company and theirassociates had the following interests in the shares, underlying shares and debenturesof the Company and its associated corporations (within the meaning of Part XV of the
Securities and Futures Ordinance (“SFO”)) as recorded in the register required to be
kept under Section 352 of the SFO or as otherwise notiﬁed to the Company and theStock 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 B.V. owns approximately 80% of the issued capital in the Company
and is therefore the holding company of the Company.

2.

The entire issued share capital in Prada Holding B.V. is held by Gipafin S.à.r.l..
Ms. Miuccia Prada Bianchi, owns, indirectly through Ludo S.A. 53.8% (which
comprises 438,460 ordinary shares and 100,000 preference shares) of the capitalin Bellatrix S.à.r.l., which in turn owns 65% (which comprises 1,650 ordinary
shares and 300 preference shares) of the capital in Gipafin S.à.r.l.. Ms. Miuccia
Prada Bianchi is therefore deemed under the SFO to be interested in all the sharesregistered in the name of Prada Holding B.V.. Ms. Miuccia Prada Bianchi is also a
director of Ludo S.A..

3.

Mr. Patrizio Bertelli owns, indirectly through companies owned by him (PaBe1
S.A., PaBe2 S.A., PaBe3 S.A. and PaBe4 S.A.), 35% (which comprises 750
ordinary shares and 300 preference shares) of the capital in Gipafin S.à.r.l.. Mr.
Patrizio Bertelli is therefore deemed under the SFO to be interested in all theshares registered in the name of Prada Holding B.V..

PRADA Group

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The deemed interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli in the
2,046,470,760 shares of the Company as at July 31, 2014, are summarized in thefollowing chart:

Miuccia Prada
Bianchi

Patrizio Bertelli

100%

Ludo S.A.
100%

100%

100%

100%

PaBe1 S.A.

PaBe2 S.A.

PaBe3 S.A.

PaBe4 S.A.

17.6%

5.8%

5.8%

5.8%

53.8%

Bellatrix S.à.r.l.
65%

Gipafin S.à.r.l.
100%
Prada
Holding B.V.
80%

PRADA S.p.A.

32

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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 B.V.

Common Shares

1,001

Controlled Corporation

100%

Prapar Corporation

Common Shares

50

As above

100%

EXHL Italia S.r.l.

Participation Quotas (Euro)

15,000As above

100%

I.P.I. (21) UK Ltd

Ordinary Shares

750,000

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%

Gipafin S.à.r.l.

Ordinary Shares

1,650

As above

68.75%

Gipafin S.à.r.l.

Preference Shares300

As above

50%

Bellatrix S.à.r.l.

Ordinary Shares

438,460

As above

49.83%

Bellatrix S.à.r.l.

Preference Shares

100,000

As above

83.34%

Ludo S.A.

Ordinary Shares

100,310

Beneficial Owner

100%

PRADA Arte B.V.

Registered Shares

180

Controlled Corporation

100%

Arte One B.V.

Ordinary Shares

180

As above100%

PRA 1 S.r.l.

Participation Quotas (Euro)

10,000As above100%

Prada Holding B.V.

Common Shares

1,001

Controlled corporation

100%

Prapar Corporation

Common Shares

50

As above

100%

EXHL Italia S.r.l.

Participation Quotas (Euro)

15,000As above

100%

I.P.I. (21) UK Ltd

Ordinary Shares

750,000

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%

Gipafin S.à.r.l.

Ordinary Shares

750

As above31.25%

Gipafin S.à.r.l.

Preference Shares300

As above50%

Mr. Patrizio
Bertelli

Save as disclosed above, as at July 31, 2014, none of the Directors and chief executivesof the Company or their associates had any interest or short position in the shares,
underlying shares and debentures of the Company or any of its associated corporations(within the meaning of 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 theStock Exchange pursuant to the Model Code.

PRADA Group

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Substantial shareholders’ interests and short positions in securities
As at July 31, 2014, other than the interests of the Directors or chief executives of
the Company as disclosed above, the following persons had interests in the shares orunderlying shares of the Company which fall to be disclosed to the Company under
Section 336 of the SFO:
Name of Shareholder

Capacity

Number of Shares

Approximate percentage
of issued capital

Prada Holding B.V.

Legal and beneficial owner

2,046,470,76080%Gipafin S.à.r.l.

Interest of controlled corporation

2,046,470,760

80%Bellatrix S.à.r.l.

Interest of controlled corporation

2,046,470,76080%

Ludo S.A.

Interest of controlled corporation

2,046,470,760

80%

OppenheimerFunds, Inc.

Investment manager

153,708,010

6.01%

Note:
Prada Holding B.V. owns approximately 80% of the issued capital in the Company. As
Ludo S.A. owns 53.8% of Bellatrix S.à.r.l. which in turn owns 65% of Gipafin S.à.r.l(Gipafin S.à.r.l. owns the entire issued capital in Prada Holding B.V.), Gipafin S.à.r.l.,
Bellatrix S.à.r.l. and Ludo S.A. were all deemed to be interested in the 2,046,470,760
shares held by Prada Holding B.V..
Save as disclosed above, as at July 31, 2014, the Company had not been notified of any
interests or short positions being held by any substantial shareholder in the shares orunderlying shares of the Company.

34

PRADA Group

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Interim condensed consolidated financial statements

PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 35

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35

06/10/14 09.54

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

Note

July 312014(unaudited)

January 31
2014(audited)

AssetsCurrent assets
Cash and cash equivalents

6

510,591

568,414

Trade receivables, net

7373,848

308,405

Inventories

8539,042449,903

Derivative financial instruments - current

9

2,754

13,984

Receivables from, and advance payments to, parent company andother related parties - current

10

3,820

5,993

Other current assets

11

Total current assets

151,004

114,897

1,581,059

1,461,596

Non-current assets
Property, plant and equipment

12

1,366,552

1,230,192

Intangible assets

13

947,075

901,289

Associated undertakings

14

27,22821,186

Deferred tax assets

33

212,958

201,245
69,867

Other non-current assets

15

74,208Derivative financial instruments - non current

9

856

1,430

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

10

11,634

1,487

Total non-current assets

2,640,511

2,426,696

Total Assets

4,221,570

3,888,292

61,909Liabilities and Shareholders’ equity
Current liabilities
Bank overdrafts and short-term loans

16242,061

Payables to parent company and other related parties - current

17

4,697

4,894

Trade payables

18

402,673348,534

Current tax liabilities

19

119,534

132,145

Derivative financial instruments - current

911,993

3,803

Obligations under finance leases - current

20

437

524

Other current liabilities

21

203,764

154,666

985,159

706,475
207,950

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

22

265,965

Obligations under finance leases non-current

20

7

19

Long-term employee benefits

23

68,76063,279Provision for contingencies and commitments

24

56,22952,660

Deferred tax liabilities

33

40,46642,671
98,982Other non-current liabilities

25

108,444

Derivative financial instruments non-current

9

825

1,469

Payables to parent company and other related parties – non-current

17

13,315

13,247

Total non-current liabilities
Total Liabilities

480,277
1,186,752

Share capital

255,882

255,882

Other reserves

2,192,938

1,853,325

Translation reserve(26,745)(49,438)

Net profit for the year

244,848627,785

Total Shareholders’ Equity – Group26

2,666,923

2,687,554

Shareholders’ Equity – Non-controlling interests

27

15,477

13,9864,221,570

3,888,292

Total Liabilities and Shareholders’ Equity
Net current assets
Total assets less current liabilities

36

554,011
1,539,170

PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 36

595,900

755,121

3,236,411

3,181,817

Interim Financial Report 2014 - Interim condensed consolidated financial statements

06/10/14 09.54

Consolidated income statementNote

six months
ended
July 312014(unaudited)%

six months
ended
July 312013(unaudited)%

Net revenues

28

1,751,315

100.0%

1,728,065

100.0%

Cost of goods sold29

(493,715)-28.2%(460,407)-26.6%

1,257,600

71.8%

1,267,658

73.4%(884,442)-50.5%(809,320)-46.8%

373,15821.3%

458,338

26.5%(amounts in thousands of Euro)

Gross margin
Operating expenses

30

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

31(9,492)-0.5%(15,194)-0.9%

Dividends from investments

32

455

-

284

-

364,12120.8%

443,42825.7%(113,075)-6.5%(130,609)-7.6%

Net income for the period from continuing operations

251,04614.3%

312,819

18.1%

Net income for the period

251,04614.3%

312,819

18.1%

6,198

0.3%

4,580

0.3%

244,84814.0%

308,239

17.8%

Income before taxes
Taxation

33

Net income – Non-controlling interests

27

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

PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 37

34

0.096

0.120

Interim Financial Report 2014 - Interim condensed consolidated financial statements

37

06/10/14 09.54

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

Income before taxation

six months
ended
July 312014(unaudited)

six months
ended
July 312013(unaudited)

364,121443,428

118,367

91,825

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

1,310

890

Non-monetary financial (income) expenses

14,844

14,512Other non-monetary charges(2,481)

41,137

Other non-current assets and liabilities(14,981)(14,899)

Trade receivables, net(63,655)(13,674)

Inventories, net(82,308)(65,911)

Trade payables

54,49071,296

Other current assets and liabilities(13,470)(33,105)

Cash flows from operating activities

376,236

535,499

Financial expenses, net – third parties(6,106)(6,854)

Taxes paid

(160,944)(124,881)

Net cash flows from operating activities

209,186

403,764

Purchases of property, plant and equipment and intangible assets(220,423)(292,484)

Balance Sheet changes

Disposals of assets
Financial assets held for trading
Dividends from investments
Acquisition of Angelo Marchesi

-

454

(989)

-

284

(7,701)-

Net cash flows utilized by investing activities(227,670)(293,189)

Dividends paid to shareholders of PRADA spa(281,471)(230,294)

Dividends paid to non-controlling shareholders(6,763)(1,881)

Repayment of loans to related companies

(659)

(930)

Repayment of loans by related companies

2,000

-

New loans from related companies--

New loans to related companies--(23,379)(143,436)

Repayment of short-term portion of long term borrowings - third parties
Arrangement of long-term borrowings – third parties

76,48029,812

Change in short-term borrowings – third parties

169,364

100,801

Share capital increases by subsidiaries

1,589

-

-

10

Cash flows generated / (utilized) by financing activities(62,839)(245,918)

Change in cash and cash equivalents, net of bank overdrafts(81,323)(135,343)

Capital contribution by non-controlling interests

Foreign exchange differences

38

-

9,048

3,262

Opening cash and cash equivalents, net of bank overdraft568,299571,722

Closing cash and cash equivalents, net of bank overdraft

496,024439,641

Cash and cash equivalents

510,591

439,654

Bank overdraft(14,567)(13)

Closing cash and cash equivalents, net of bank overdraft finale

496,024439,641

PRADA Group

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06/10/14 09.54

Statement of changes in consolidated shareholders’ equity(amounts in thousands of Euro, except for number of shares)(amounts inthousandsof Euro)Cash flow
Share
Translation
hedge
premium
reserve
reserve
reserve

Actuarial
Available
gain
for sale(losses)
reserve
reserve

Number ofsharesShare
CapitalBalance atJanuary 31, 2013
(audited)

2,558,824,000

255,882

410,047(42,288)

20,148(6,470)5,486

Allocation of 2012
net profit

-

-

-

-

-

-

Other
reserves

1,051,536

EquityNonNet attributable
controlling
profit to owners ofinterests
the Group

Total
Equity625,6812,320,022

10,4702,330,492-

625,681 (625,681)

-

-

-

Dividends

-

-

-

-

-

-

-

(230,294)-(230,294)(1,881)(232,175)

Capital injection in
subsidiaries

-

-

-

-

-

-

-

-

-

-

10

10

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

-

-

-

5,426

(10,225)-(4,764)-308,239

298,676

4,608

303,284

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

-

-

-

-

-

(308)

-

-

-

(308)

-

(308)

2,558,824,000

255,882

410,047(36,862)

9,923(6,778)722

1,446,923

308,2392,388,096

13,2072,401,303

Dividends

-

-

-

-

-

-

-

-

-

-

(4,753)(4,753)

Capital injection in
subsidiaries

-

-

-

-

-

-

-

-

-

-

30

30

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

-

-

-

(12,576)(6,224)

-

3,386

-

319,546

304,132

5,502

309,634

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

-

-

-

-

-

(4,674)---(4,674)-(4,674)

Balance atJanuary 31, 2014
(audited)

2,558,824,000

255,882

410,047(49,438)

3,699(11,452)

4,108

1,446,923

627,785

2,687,554

13,9862,701,540

Allocation of 2013
net profit

-

-

-

-

-

-

-

627,785 (627,785)

-

-

-

Dividends

-

-

-

-

-

-

-

(281,471)-(281,471)(6,763)(288,234)

Acquisition ofMarchesi Angelo srl

-

-

-

-

-

-

-

(2,459)-(2,459)107(2,352)

Capital injection in
subsidiaries

-

-

-

-

-

-

-

-

-

-

1,589

1,589

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

-

-

-

22,693(6,844)

-

4,531

-

244,848

265,2286,558

271,786

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

-

-

-

-

-

(1,929)---(1,929)-(1,929)Balance at July 31,
2,558,824,000
2014 (unaudited)

255,882

410,047(26,745)(3,145)(13,381)

8,639

1,790,778

244,848

2,666,923

15,4772,682,400

Balance at
July 31, 2013
(unaudited)

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Statement of consolidated comprehensive income
six months
ended
July 312014(unaudited)

twelve months
ended
January 31
2014(audited)six months
ended
July 312013(unaudited)

251,046

637,805

312,819

23,053(7,057)

5,454

-

-

-

Change in Translation reserve less tax impact

23,053(7,057)5,454(14,099)(amounts in thousands of Euro)Net income for the period – Consolidated
A)

Items recyclable to P&L:

Change in Translation reserve
Tax impact

Change in Cash Flow Hedge reserve(9,279)(22,755)

Tax impact

2,435

6,306

3,874

Change in Cash Flow Hedge reserve less tax impact(6,844)(16,449)(10,225)(6,352)

Change in Fair Value reserve

6,041(1,837)

Tax impact(1,510)

459

1,588

Change in Fair Value reserve less tax impact

4,531(1,378)(4,764)(2,033)(6,403)

(385)

104

1,418

77

Change in Actuarial reserve less tax impact(1,929)(4,985)(308)

Consolidated comprehensive income for the period

269,857

607,936

302,976

6,558

10,1104,608

263,299

597,826

298,368

B)

Item not recyclable to P&L:

Change in Actuarial reserve
Tax impact

Comprehensive income for the period – Non-controlling Interests
Comprehensive income for the period – GroupThe accounting policies and the following notes constitute an integral part of theInterim condensed consolidated financial statements.

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Notes to the Interim condensed consolidated financial statements

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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, underlicensing agreements, in the eyewear and fragrances sectors. Its products are sold in
70 countries worldwide through a network that included 566 Directly Operated Stores(DOS) at July 31, 2014, and a select network of luxury department stores, independent
retailers and franchise stores.
The Company is a joint-stock company, registered and domiciled in Italy. Its registeredoffice is in via A. Fogazzaro 28, Milan, Italy. At July 31, 2014, 79.98% of the sharecapital was owned by PRADA Holding bv, a company domiciled in The Netherlands,
while the remaining shares were floating on the Main Board of the Hong Kong Stock
Exchange.
The 2014 unaudited Interim condensed consolidated financial statements wereapproved by the Board of Directors of PRADA spa on September 19, 2014.

2.

Basis of preparation of the unaudited 2014 Interim condensed consolidated
financial statements
The 2014 Interim condensed consolidated financial statements of the PRADA Groupfor the six months ended July 31, 2014, including the “Consolidated statementof financial position”, the “Consolidated income statement”, the “Statement ofconsolidated comprehensive income”, the “Consolidated statement of cash flows”,
the “Statement of changes in consolidated shareholders’ equity” and the “Notes
to the interim condensed consolidated financial statements” have been prepared inaccordance with “IAS 34 Interim Financial Reporting” as endorsed by the European
Union.
The Interim condensed consolidated financial statements should be read together with
the Consolidated financial statements of the PRADA Group for the twelve months ended
January 31, 2014, that were prepared in accordance with the International Financial
Reporting Standards (“IFRS”) issued by the International Accounting Standards Board(“IASB”) as endorsed by the European Union.
At the date of presentation of these Interim condensed consolidated financial
statements, there were no differences between IFRS as endorsed by the European
Union, and applicable to the PRADA Group, and those issued by the IASB.
IFRS also refers to all International Accounting Standards (“IAS”) and all interpretationsof the International Financial Reporting Interpretations Committee (“IFRIC”), previously
called the Standing Interpretations Committee (“SIC”).
The Interim condensed consolidated financial statements have been prepared using
the same scope of consolidation, basis of consolidation and accounting policies
adopted for the preparation of the Consolidated financial statements for the twelve
months ended January 31, 2014, except for the amendments to accounting standards
as reported below under Note 3.
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 more complete information are provided in the Notes to the Interim
condensed consolidated financial statements. The Consolidated income statement isclassified by destination. The cash flow information is provided in the Consolidated
Statement of cash flows which has been prepared under the indirect method.

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The Interim condensed consolidated financial statements have been prepared on agoing concern basis and presented in Euro which is also the functional currency of theCompany.
3.

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, 2014
The following new IFRS and amendments to existing IFRS have been endorsed by theEuropean Union and are applicable to the PRADA Group effective from February 1,
2014. These changes do not have any significant impact to the Group as of the date ofthese consolidated financial statements:––“IFRIC Interpretation 21 Levies”. This interpretation, effective from annual periods
beginning on or after January 1, 2014, provides guidance on when to recognize
a liability for a levy imposed by a government, both for levies that are accounted
for in accordance with “IAS 37 Provisions, Contingent Liabilities and Contingent
Assets” and those where the timing and amount of the levy is certain.

––

Amendments to “IAS 36 Impairment of Assets”. The objective of the amendments
made to this standard, effective from annual periods beginning on or after January
1, 2014, is to clarify that the scope of the disclosures of information about therecoverable amount of assets, where that amount is based on fair value lesscosts of disposal, is limited to impaired assets. The amendments also requires
more disclosure about the recoverable amount of any cash-generating unit
for which the carrying amount of goodwill or intangible assets with indefinite
useful lives allocated to that unit is significant in comparison with the entity’s
total carrying amount of goodwill or intangible assets with indefinite useful lives.
Such amendments are required to apply for annual periods beginning on or afterJanuary 1, 2014. An entity shall not apply those amendments in periods (including
comparative periods) in which it does not also apply IFRS 13.

––

Recoverable amount disclosures for non-financial assets (amendments to “IAS
36 Impairment of Assets”). The amendment requires more disclosure about therecoverable amount of any cash-generating unit for which the carrying amountof goodwill or intangible assets with indefinite useful lives allocated to that unit
is significant in comparison with the entity’s total carrying amount of goodwill or
intangible assets with indefinite useful lives. Such amendments are required toapply for annual periods beginning on or after January 1, 2014. An entity shall not
apply those amendments in periods (including comparative periods) in which itdoes not also apply IFRS 13.

––

Amendments to “IAS 39 Financial Instruments: Recognition and Measurement”.
Such amendments provides relief from discontinuing hedge accounting whennovation to a central counterparty following the introduction of a new law or
regulation of a derivative designated as a hedging instrument meets certain
criteria. Such amendments are required to apply for annual periods beginning on
or after January 1, 2014.

––“Investment Entities”, meant as a group of amendments to IFRS 10, IFRS 12
and IAS 27. “IFRS 10 Consolidated Financial Statements” has been amended
in order to better reflect the business model of investment entities. It requiresthat investment entities measure their subsidiaries at fair value through profit orloss account rather than consolidate them. “IFRS 12 Disclosure of Interests in
Other Entities” has been amended in order to require specific disclosure aboutsuch subsidiaries of investment entities. The amendments to “IAS 27 Separate
Financial Statements” also removed the option for investment entities to measure

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investments in certain subsidiaries either at cost or at fair value in their separate
financial statements. The Amendments are applicable to the PRADA Group at thelatest as from the commencement date of a financial year starting on January 1,
2014.

44

––

Transition Guidance (amendments to IFRS 10, IFRS 11 and IFRS 12). The objectiveof the amendments is to clarify the IASB’s intention when first issuing the transition
guidance in “IFRS 10 Consolidated Financial Statements”. The amendments also
provide additional transition relief in IFRS 10, “IFRS 11 Joint Arrangements” and“IFRS 12 Disclosure of Interests in Other Entities”, limiting the requirement toprovide adjusted comparative information to only the preceding comparative
period. Furthermore, for disclosures related to unconsolidated structured entities,
the amendments remove the requirement to present comparative information for
periods before IFRS 12 is first applied. The Amendments are applicable to the
PRADA Group at the latest as from the commencement date of a financial year
starting on January 1, 2014.

––“IFRS 10 Consolidated Financial Statements”. This new Standard, applicable to
the PRADA Group at the latest as from the commencement date of a financial
year starting on January 1, 2014, grounds on previous version of “IAS 27
Consolidated and Separate Financial Statements” and provide more guidance
for the presentation and preparation of consolidated financial statements. It
enforces the definition of control as basis for determining which entities have to
be consolidated. It also supersedes “IAS 27 Consolidated and Separate Financial
Statements” and “SIC 12 Consolidation – Special Purpose Entities”.

––“IFRS 11 Joint Arrangements”. This new Standard, applicable to the PRADA Groupat the latest as from the commencement date of a financial year starting on January
1, 2014, establishes principles for financial reporting to entities that are parties to a
joint arrangement and supersedes “IAS 31 Interests in Joint Ventures” and “SIC
13 Jointly Controlled Entities - Non-monetary Contributions by Ventures’”. The
IFRS provides guidelines to determine the type of joint arrangement in which
an entity is involved (joint operation or joint venture) by assessing its rights andobligations and to account for those rights and obligations in accordance with thattype of joint arrangement.

––“IFRS 12 Disclosure of Interests in Other Entities”. This new standard, applicableto the PRADA Group at the latest as from the commencement date of a financial
year starting on January 1, 2014, applies to entities that have an interest in a
subsidiary, a joint arrangement, an associate or an unconsolidated structured
entity. It requires the entity to disclose information that enable users of its financial
statements to evaluate the nature of, and risks associated with, its interests inother entities as well as the effects of those interests on its financial position,
financial performance and cash flows.

––

Amendments to “IAS 28 Investment in Associates and Joint Ventures”. The
amendments to this Standard, effective at the latest as from the commencement
date of a financial year starting on January 1, 2014, have to be read together with“IFRS 11 Joint Arrangements” and “IAS 27 Separate Financial Statements”. The
standard (as amended in 2011) is to be applied by all entities that are investors withjoint control of, or significant influence over, an investee and defines the equity
method as a method of accounting whereby the investment is initially recognizedat cost and adjusted thereafter for the post-acquisition change in the investor’sshare of net assets of the investee.

––

Amendments to “IAS 27 Separate Financial Statements”. The amendments tothis standard followed the issue of “IFRS 10 Consolidated Financial Statements”,“IFRS 11 Joint Arrangements”, “IFRS 12 Disclosure of Interests in Other Entities”

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and the amendments to “IAS 28 Investment in Associates and Joint Ventures”
and prescribe the accounting and disclosure requirements for investments in
subsidiaries, joint ventures and associates when an entity prepares separate
financial statements. Such amendments are applicable to the PRADA Group at
the latest as from the commencement date of a financial year starting on January
1, 2014.
––

Amendments to “IAS 32 Financial Instruments: Presentation”. The amendments
made to this Standard, effective from annual periods beginning on or after January
1, 2014, and to be applied retrospectively, clarify the criterion to be followed whenan entity currently has legally enforceable right to set off the financial assets andfinancial liabilities.

New standards and amendments issued by the IASB, endorsed by the European
Union, but not yet applicable to the PRADA Group as effective from annual
periods beginning on or after January 1, 2015
None
New standards and amendments issued by the IASB, but not yet endorsed by
the European Union––“IFRS 9 Financial instruments”. This Standard will replace “IAS 39 Financial
Instruments: Recognition and Measurement” in its entirety and currently, there
is no mandatory effective date to adopt IFRS 9, but entities may however stillchoose to early apply it. Such replacement project has been divided into threemain phases, namely the measurement of financial assets and financial liabilities,
the impairment methodology and the hedge accounting.

––“IFRS 14 Regulatory Deferral Accounts”. This new IFRS describes regulatorydeferral account balances as amounts of expense or income that would not berecognized as assets or liabilities in accordance with other Standards, but that
qualify to be deferred in accordance with this Standard because the amount isincluded, or is expected to be included, by the rate regulator in establishing theprice(s) that an entity can charge to customers for rate-regulated goods or services.

––“IFRS 15 Revenue from contracts with Customers”. The core principle of IFRS
15, effective for annual periods beginning on or after January 1, 2017 (earlier
application is permitted), is that an entity recognizes revenue to depict thetransfer of promised goods or services to customers in an amount that reflects
the consideration to which the entity expects to be entitled in exchange for those
goods or services. An entity should recognize revenue in accordance with thatcore principle by applying the following steps:
Step 1: Identify the contract(s). In some cases, IFRS 15 requires an entity to
combine contracts and account for them as one contract. IFRS 15 also provides
requirements for the accounting for contract modifications.
Step 2: Identify the performance obligations in the contract. If those goods orservices are distinct, the promises are performance obligations and are accounted
for separately.
Step 3: Determine the transaction price. If the consideration is variable, an entity
estimates the amount of consideration to which it will be entitled in exchange forthe promised goods or services. The estimated amount of variable consideration
will be included in the transaction price only to the extent that it is highly probablethat a significant reversal in the amount of cumulative revenue recognized will
not occur when the uncertainty associated with the variable consideration issubsequently resolved.

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Step 4: Allocate the transaction price to the performance obligations in the contract.
Step 5: Recognize revenue when (or as) the entity satisfies a performanceobligation—an entity recognizes revenue when (or as) it satisfies a performanceobligation by transferring a promised good or service to a customer (which iswhen the customer obtains control of that good or service).
––

Amendment to IAS 16 and IAS 38 “Clarification of Acceptable Methods ofDepreciation and Amortization”. The IASB amended “IAS 16 Property, Plant andEquipment” and “IAS 38 Intangible assets” to address the concerns regarding
the use of a revenue-based method for depreciating an asset. An entity shall apply
those amendments prospectively for annual periods beginning on or after January
1, 2016.

––

Amendment to “IAS 11 Accounting for Acquisitions of Interests in Joint
Operations”. This amendment requires the acquirer of an interest in a joint
operation in which the activity constitutes a business, as defined in “IFRS 3
Business Combinations”, to apply all of the principles on business combinations
accounting in IFRS 3 and other IFRSs except for those principles that conflict withthe guidance in this IFRS. In addition, the acquirer shall disclose the information
required by IFRS 3 and other IFRSs for business combinations. An entity shallapply that amendment in annual periods beginning on or after January 1, 2016.

––

Amendments to “IAS 19 Employee Benefits”. IASB has amended therequirements in IAS 19 for contributions from employees or third parties thatare linked to a service. If the amount of the contributions is independent of thenumber of years of service, an entity is permitted to recognize such contributions
as a reduction in the service cost in the period in which the related service isrendered, instead of attributing the contributions to the periods of service. If theamount of the contributions is dependent on the number of years of service, an
entity is required to attribute those contributions to periods of service using thesame attribution method required by paragraph 70 of IAS 19 for the gross benefit(i.e. either using the plan’s contribution formula or on a straight-line basis). An
entity shall apply those amendments for annual periods beginning on or after July
1, 2014, retrospectively in accordance with “IAS 8 Accounting Policies, Changes
in Accounting Estimates and Errors”. Earlier application is permitted. If an entity
applies those amendments for an earlier period, it shall disclose that fact.

––

Annual improvements to IFRS (2010–2012 Cycle). Such improvements impacted:“IFRS 2 Share-based Payment”, amending the definition of vesting condition;“IFRS 3 Business Combinations”, amending the accounting for contingent
consideration in a business combination;“IFRS 8 Operating Segments”, requesting more disclosure when aggregating
operating segments and requiring the reconciliation of the total of the reportablesegments’ assets to the entity’s assets;“IFRS 13 Fair Value Measurement”, clarifying the impact of the standard on themeasurement of short-term receivables and payables;“IAS 16 Property, Plant and Equipment”, amending the revaluation method;“IAS 24 Related Party Disclosure”, amending the definition of key management
personnel;“IAS 38 Intangible Assets”, amending the revaluation method.

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

As at September 19, 2014, the date of approval of these Interim condensed consolidated
financial statements, the European Union has not completed yet the endorsement of
the new standards and amendments as described above.
4.

Acquisitions, disinvestments and incorporation of companies
On February 1, 2014, PRADA Stores srl transferred its 100% participation in Space sa
to Prada Switzerland sa and on June 2, 2014, Space sa merged by incorporation into
PRADA Switzerland sa.
On February 5, 2014, PRADA Switzerland sa acquired the 100% investment into
Burgerhaus Zurich sa (PRADA Zurich ag) to operate the retail business in Switzerland.
On February 27, 2014, the Group set up PRM Services S. De R.L. de CV in orderto develop its commercial activities in Mexico. The Group owns the 100% of theCompany.
On March 13, 2014, the Group set up Church Denmark aps in order to develop its
commercial activities in Denmark. The Group owns the 100% of the Company.
On March 14, 2014, the Group acquired the 80% of the Marchesi Angelo srl, ownerof the historic Milanese pastry shop founded in 1824. The acquisition was aimed atenhancing the “Pasticceria Marchesi” brand, a synonym to quality in the Italian foodindustry, joining it with Prada and Miu Miu brands, leaders in the luxury goods market,
within the Group’s development worldwide.
On July 2, 2014, the Group set up PRADA Saudi Arabia in order to develop its commercial
activities in the Middle East area. The Group owns the 75% of the Company.
On July 18, 2014, Prada China Limited has been liquidated.

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Marchesi Angelo srl
On March 14, 2014, the Group acquired the 80% of the Marchesi Angelo srl, ownerof the historic Milanese pastry shop founded in 1824. The acquisition was aimed atenhancing the “Pasticceria Marchesi” brand, a synonym to quality in the Italian foodindustry, joining it with Prada and Miu Miu brands, leaders in the luxury goods market,
within the Group’s development worldwide. At the date of the preparation of the Interim
condensed consolidated financial statements, the measurement of the fair value of theconsideration was not completed, so the purchase accounting is provisional. The net
cash-out for the acquisition amounted to Euro 7.7 million and resulted as the net ofthe consideration paid, Euro 8.4 million, and the cash surplus included in the net asset
acquired, Euro 0.7 million(amounts in Euro thousand)Cash surplus

fair value of net
assets acquired
707

Tangible fixed assets

88

Other current assets/(liabilities)(53)

Other non current assets/(liabilities)(210)

Net assets acquired532

Non-controlling interests (measured at net assets acquired)(107)

Consideration paid

8,400

Provisional Goodwill

7,975

The purchase commitments for minority interests resulting from the agreements wererecognized in the Group’s equity reserves for an amount equal to Euro 2.5 million.
5.

Operating segments“IFRS 8 Operating Segments” requires that detailed information must be provided
for each operating segment that makes up the business. An operating segment isintended as a business division whose operating results are regularly reviewed by top
management so that they can make decisions about the resources to be allocated tothe segment and assess its performance.
The Group’s matrix-based organizational structure - whereby responsibility is assigned
cross-functionally in relation to brands, products, distribution channels and geographicalareas, together with the complementary nature of the production processes of thevarious brands and the many relationships between the different business segments– means that operating segments that meet the IFRS 8 definition cannot be identified,
as top management is only provided with income statement results on a Group-widelevel. For this reason, the business has been considered as a single operating segment
as this better represents the specific characteristics of the PRADA Group businessmodel.
Detailed information on net revenues by brand, geographical area, product anddistribution channel, as well as EBITDA by brand and non-current assets by geographicalarea are provided below while the complementary management discussion andanalyses are provided in the Financial Review.

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Net sales analysis
six months
ended
July 312014(unaudited)%

six months
ended
July 312013(unaudited)

%

Italy

286,808

16.6%

268,531

15.7%

6.8%

Europe361,53920.9%

374,300

21.9%

-3.4%

Americas233,452

13.5%

231,587

13.6%

0.8%

Asia Pacific619,22135.8%

627,564

36.8%

-1.3%

Japan

175,26210.1%

159,449

9.3%

9.9%

Middle East

51,9303.0%43,287

2.5%

20.0%

(amounts in thousands of Euro)% change

Net sales by geographical area

Other countries

2,688

0.1%

2,866

0.2%

-6.2%

1,730,900

100.0%

1,707,584

100.0%

1.4%

Prada

1,431,114

82.7%

1,410,062

82.6%

1.5%

Miu Miu

256,03114.8%

255,950

15.0%

0.0%

Church's

35,5602.0%

32,673

1.9%

8.8%

Car Shoe

6,516

0.4%

7,551

0.4%

-13.7%Total
Net sales by brand

Other

1,679

0.1%

1,348

0.1%

24.6%

Total

1,730,900

100.0%

1,707,584

100.0%

1.4%

10.8%

Net sales by product line
Clothing
Leather goods
Footwear

275,77915.9%

248,81714.6%

1,110,715

64.2%

1,156,369

67.7%

-3.9%

314,42318.2%

282,396

16.5%

11.3%

Other

29,983

1.7%

20,002

1.2%

49.9%

Total

1,730,900

100.0%

1,707,584

100.0%

1.4%

1,442,161

83.3%

1,422,460

83.3%

1.4%

288,73916.7%

285,124

16.7%

1.3%

Total

1,730,900

100.0%

1,707,584

100.0%

1.4%

Net sales

1,730,900

98.8%

1,707,584

98.8%

1.4%

Royalties

20,415

1.2%

20,481

1.2%

-0.3%

1,751,315

100.0%

1,728,065

100.0%

1.3%

Net sales by distribution channelDOS
Independent customers and franchises

Total net revenues

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EBITDA by brandsix months ended July 31, 2014
(amounts in thousands of Euro)

Group

Prada

Miu Miu

Church’s

Car Shoe

Others

Net sales

1,730,900

1,431,114

256,031

35,560

6,516

1,679

Royalties

20,41518,764

1,643

8

-

-

1,751,315

1,449,878

257,674

35,568

6,516

1,679

EBITDA

492,835

475,306

21,392969(4,019)(813)

EBITDA %

28.1%

32.8%

8.3%

2.7%

-

-

six months ended July 31, 2013
(amounts in thousands of Euro)

Group

Prada

Miu Miu

Church’s

Car Shoe

Others

Net sales

1,707,584

1,410,062

255,950

32,673

7,551

1,348

Royalties

20,481

19,261

1,214

6

-

-

1,728,065

1,429,323

257,164

32,679

7,551

1,348

EBITDA

551,053

507,854

43,6802,569(2,916)(134)

EBITDA %

31.9%

35.5%

17.0%

7.9%

-

-

Change in Net revenues

23,25020,555510

2,889(1,035)331

Percentage change in
Net Revenues

1.3%

1.4%

0.2%

8.8%

-13.7%

24.6%

Change in EBITDA(58,218)(32,548)(22,288)(1,600)(1,103)(679)% change in EBITDA-10.6%-6.4%-51.0%-62.3%--Net revenues

Net revenues

The PRADA brand generated EBITDA of Euro 475.3 million for the six months ended
July 31, 2014, or 32.8% on the relevant net revenues. In the same period last year it
amounted to Euro 507.9 million, or 35.5% on the relevant net revenues. The dilution
came after the negative impact of a relatively strong Euro currency, that diluted the
profitability at gross margin level, and the increased incidence of the labor and rental
costs in the selling area, following the expansion of the retail network pursued in thelast twelve months (52 openings and 11 closures). Against these effects, the measures
undertaken by the management to increase efficiency at all operational levels managed
to limit the margin pressure. The Group believes that is fundamental for the long-term
perspective of the brand to continue investing in design innovation, communication andpromotional activities in order to enhance the leading positioning and global awareness.
To this extent, it is worth highlighting at least two major initiatives undertaken in thelast period: the sponsorship agreement signed on February 27, 2014, with the Luna
Rossa sailing team, that will take part to the the XXXV edition of the America’s Cup,and the important art exhibition “Art or Sound” organized by the Fondazione Prada at
Ca’ Corner della Regina in Venice inaugurated on June 4, 2014. On the retail side, with
the impressive one-month event in Harrods Knightsbridge, one of the world’s most
famous department store, the brand and its products were celebrated with 40 window
displays, a pop-up store, multiple screen displays and an exhibition tracing the brand’s
multivalent obsessions from fashion to art, architecture, cinema, sport and beyond.
The Miu Miu brand generated EBITDA of Euro 21.4 million for the six months ended
July 31, 2014, or 8.3% on the relevant net revenues. In the same period last year
it amounted to Euro 43.7 million, or 17% on the relevant net revenues. The lower
profitability of this six months period is mostly explained by the higher incidence ofthe selling expenses, essentially resulting from the enlargement strategy of the DOS

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network of the brand that the Group is realizing despite the difficult political and macroeconomic scenario and that, given the dimension of the brand, is resulting even morechallenging. With this view, during the six months period, Miu Miu unveiled 12 new
DOS covering Far and Middle East, Europe, Japan and US and reaching a total numberof 162 at July 31, 2014. At the same time the brand continued investing resourcesin the communication activities to enhancing its identity. Among others, it is worth
remembering the exclusive Miu Miu Croisiere 2014-2015 event held at the Palaisd’Iena in Paris on July 5, 2014, or the release of the “Spark and Light” film, the 7th
Miu Miu Women’s tales which premier was screened at the Diamond Horseshoe in
New York.
Church’s generated EBITDA of Euro 1 million for the six months ended July 31, 2014,
or 2.7% on the relevant net revenues. In the same period last year it amounted to Euro
2.6 million, or 7.9% on the relevant net revenues. The expansion of the retail network,that counted new 3 DOS in the six months period (Copenhagen, Wien and Hong Kong),
while giving impulse to the growth of the net sales, entailed more operating expenses
that diluted the profitability. The light contraction occurred in the wholesale business,that the Group is confident will be recovered in the second half of the year, contributed
negatively to the lower EBITDA margin.
The Car Shoe brand reported a negative EBITDA of Euro 4 million, a deterioration on
previous period because of the decline in the wholesale business and a level of retailnet sales not yet at the breakeven.
Geographical information
The following table reports the carrying amount of most of the Group’s non-current
assets by geographical area, as requested by “IFRS 8 Operating Segments” for entities
that, like the PRADA Group, have a single reportable segment.
(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(audited)

Italy

703,681569,176

Europe1,122,603

1,054,397

Americas199,118

198,453

Asia Pacific

254,403

260,175

Japan

110,307

102,628

Middle East

31,65733,873

Other countries

4,926

5,319

2,426,695

2,224,021

Total

The total amount of Euro 2,426.7 million (Euro 2,224 million at January 31, 2014) relates
to the Group’s non-current assets excluding, as requested by IFRS 8, those relating tofinancial instruments and deferred tax.

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6.

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

July 312014(unaudited)

January 31
2014(audited)

Cash on hand

37,77735,541

Bank deposit accounts

324,733

342,399

Bank current accounts

148,081

190,474

Total

510,591

568,414At July 31, 2014, bank current accounts and deposit accounts generated interest
income of between 0% and 3% per annum (between 0% and 2.5% at January 31,2014).
Bank deposit accounts are broken down by currency as follows:
July 312014(unaudited)

January 31
2014(audited)Euro12,70040,000US Dollar

32,31931,992

Korean Won

13,12750,880Hong Kong Dollar

248,531

190,458

Other currencies

18,05629,069Total bank deposit accounts

324,733

342,399(amounts in thousands of Euro)The Group seeks to mitigate the default risk on bank deposit accounts by allocating
available funds to several accounts that differ in terms of currency, country and bank;these investments are always short-term in nature.
Bank current accounts are broken down by currency as follows:
July 312014(unaudited)

January 31
2014(audited)Euro

16,357

93,690US Dollar

56,44946,532

Korean Won

8,577

3,083

Hong Kong Dollar

6,719

5,112

GB Pound

4,867

5,934

Other currencies

55,11236,123

Total bank current accounts

148,081

190,474(amounts in thousands of Euro)The Group maintains that there is no significant risk regarding bank current accounts astheir use is strictly connected with the business operations and corporate processes
and, as result, the number of parties involved is fragmented.

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7.

Trade receivables, net
Trade receivables are detailed as follows:
July 312014(unaudited)(amounts in thousands of Euro)

January 31
2014(audited)

Trade receivables – third parties

347,864

288,504

Allowance for bad and doubtful debts(10,560)(10,432)

Trade receivables – related parties

36,54430,333

Total

373,848

308,405

Trade receivables from third parties increased for the six months ended July 31, 2014,
by Euro 59.4 million compared to January 31, 2014, and stood at Euro 347.9 million.
The rise mainly followed the deliveries of the 2014 fall/winter collection to independent
clients that occurred significantly in July.
Trade receivables from related parties includes an amount of Euro 28.6 million (Euro25.5 million at January 31, 2014) essentially arising from sales of finished products
and royalties, as provided by the franchising agreement with Fratelli Prada spa, a retailcompany owned by the majority shareholders of parent company PRADA Holding bv.
The allowance for doubtful debts was determined on a specific basis considering all
information available at the date the financial statements were prepared. It is revised
periodically to bring receivables as close as possible to the fair value.
Movements during the period were as follows:(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(audited)

10,432

11,547

Opening balance
Exchange differences

555

Increases

375

830

Uses

(207)

(1,922)

Reversals

(62)

(78)

Change in scope of consolidation

17-

10,56010,432

Closing balance

The following table contains a summary of total receivables before the allowance for
doubtful accounts at the reporting date:July 312014(unaudited)

Current

Trade receivables

384,408

Total(amounts in thousands of Euro)

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 90

91 < 120≥ 120

315,256

26,788

11,624

3,986

7,098

19,656384,408

315,256

26,788

11,624

3,986

7,098

19,656

January 31
2014(audited)

Current

Trade receivables

318,837

Total

318,837(amounts in thousands of Euro)PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 53

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 90

91 < 120≥ 120

262,213

20,331

9,817

6,446

3,633

16,397262,213

20,331

9,817

6,446

3,633

16,397

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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:(amounts in thousands of Euro)

July 312014(unaudited)

Current

Trade receivables less allowancefor doubtful accounts

373,848

Total

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 90

91 < 120≥ 120

314,765

26,789

11,624

3,800

7,098

9,772

373,848314,765

26,789

11,624

3,800

7,098

9,772

(amounts in thousands of Euro)

January 31
2014(audited)

Current

Trade receivables less allowancefor doubtful accounts

308,405

Total

308,405

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 90

91 < 120≥ 120

261,862

20,331

9,817

6,213

3,633

6,549

261,862

20,331

9,817

6,213

3,633

6,549

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

Inventories, net
Inventories are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

Raw materials

106,41285,333Work in progress

36,41828,424

Finished products

460,574

403,473

Allowance for obsolete and slow moving inventories(64,362)(67,327)

Total

539,042449,903(amounts in thousands of Euro)Overall, the increase in inventories was due to the larger number of stores and thewider replenishment strategy that the Group is realizing with the aim to better serve
the retail activities.
Movements on the allowance for obsolete and slow moving inventories are analyzed
as follows:(amounts in thousands of Euro)

Balance at January 31, 2014 (audited)Rawmaterials

Finished
Products

Total

29,78037,54767,327

Exchange differences

3

8

11

Increases

-

24

24

Reversals(3,000)-(3,000)

Balance at July 31, 2014 (unaudited)

26,78337,57964,362

The allowance for obsolete and slow moving inventories has been adjusted to bringthe value of inventories into line with their realizable amount.

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9.

Derivative financial instruments: assets and liabilities
Derivative financial instruments: assets and liabilities, current portion.
July 312014(unaudited)(amounts in thousands of Euro)

January 31
2014(audited)

Financial assets regarding derivative instruments

2,754

13,984

Financial liabilities regarding derivative instruments(11,993)(3,803)

Net carrying amount – current(9,239)10,181

Derivative financial instruments: assets and liabilities, non-current portion.
July 312014(unaudited)(amounts in thousands of Euro)

January 31
2014(audited)

Financial assets regarding derivative instruments

856

1,430

Financial liabilities regarding derivative instruments(825)(1,469)31(39)

Net carrying amount – non current

The net carrying amount of derivative financial instruments, current and non-current
taken together, consists of the following:(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(audited)

IFRS7
Category

Forward contracts

1,750

8,582

Level II

Options

1,048

5,402

Level IIInterest rate swaps

812

1,430

Level II

Positive fair value

3,610

15,414

Forward contracts(8,275)(1,990)Level II

Options(2,776)(1,364)

Level IIInterest rate swaps(1,767)(1,918)

Level II

Negative fair value(12,818)(5,272)

Net carrying amount – current and non-current(9,208)

10,142All of the above derivative instruments are qualified as Level II of the fair value hierarchy
proposed by IFRS 7.
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 rates fluctuations.

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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
payables and financial cash flows. The most important currencies in terms of hedged
amounts are: Hong Kong Dollar, US Dollar, Japanese Yen, GB Pound, Korean Won,
Swiss Franc and Chinese Renminbi.
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, 2014) were as stated below.
Contracts in place at July 31, 2014, to hedge projected future trade cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts (*)

Forwardpurchase
contracts (*)

July 312014(unaudited)

Currency
US Dollar

67,27010,464-77,734

Hong Kong Dollar

31,34443,004(974)

73,374

Japanese Yen

38,42833,779-72,207

GB Pound56,10549,651-

105,756

Korean Won
Chinese Renminbi
Swiss Franc

-

61,921-

61,921

30,25915,792-

46,051-

12,310-12,310Other

479

51,454(40)

51,893

Total

223,885

278,375(1,014)501,246(*) Positive figures represent forward sales, negative figures represent forward purchases of currency.

Contracts in place as at July 31, 2014, to hedge projected future financial cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts (*)

Forwardpurchase
contracts (*)

July 312014(unaudited)

Currency
GB Pound

-

8,829

-

8,829

US Dollar-

48,883-48,883

Japanese Yen

-

9,008

-

9,008

Swiss Franc

-

53,689-53,689Other-

23,453-23,453

Total-

143,862-

143,862

The contracts in place as at July 31, 2014, will expire within 12 months except forforward contracts sales and options with a maturity date after July 31, 2015, whose
notional amount is equal to Euro 53.1 million.

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Contracts in place at January 31, 2014, to hedge projected future trade cash flow.
(amounts in thousands of Euro)

Options

Forward sale
contracts (*)

Forwardpurchase
contracts (*)

January 31
2014(audited)

Currency
US Dollar

115,789

37,733(51,050)

102,472

Hong Kong Dollar

59,541111,938-

171,479

Japanese Yen

40,976

43,799(18,099)

66,676

GB Pound

58,90336,282-

95,18560,346-60,346-Chinese Renminbi

Korean Won

39,672

9,533-

49,205

Other

4,167

84,642(4,920)83,889Total

319,048384,273(74,069)

629,252(*) Positive figures represent forward sales, negative figures represent forward purchases of currency.

Contracts in place as at January 31, 2014, to hedge projected future financial cash
flows.
Forwardpurchase
contracts

January 31
2014(audited)

Options

Forward sale
contracts

GB Pound-

79,138-79,138US Dollar-

48,387-

48,387(amounts in thousands of Euro)

Currency

Japanese Yen-

29,248-29,248Other-

15,989-15,989

Total-

172,762-

172,762

The contracts in place at January 31, 2014, expired during the six months period,
except for forward sale contracts and options with maturity date after July 31, 2014
and totalling a notional amount of Euro 184.6 million.
All contracts in place at the reporting date were entered into with leading financial
institutions and the Group does not expect any default by these institutions.

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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 bank loans outstanding at the reporting date.
The key features of the IRS agreements in place as at July 31, 2014, and January 31,
2014, are summarized as follows:
Hedging Instrument
Contract

Currency

Notional
amountHedged Item

Interest
rate

Maturitydate

July 312014(unaudited)

Hedgedloan –
Currency
lending
institution

AmountExpiry1,200

07/2015

fair value
I.000
IRS

Euro/000

1,200

2.210%

01/07/2015(17)

Euro/000MPS

IRSEuro/000

55,0001.457%

23/05/2030(83)Euro/000IntesaSanpaolo

55,00005/2030IRS

GBP/000

60,0002.778%

31/01/2029(842)

GBP/000

Unicredit

60,00001/2029

IRS

Yen/000

1,500,000

1.875%

31/03/2017(178)

Yen/000

Mizuho1,500,000

03/2017

Hedging Instrument
Contract

Currency

Notional
amountHedged Item

Interest
rate

Maturity
date

January 31
2014(audited)

Hedgedloan –
Currency
lending
institution

AmountExpiryfair value
I.000
IRS

Euro/000

1,800
3,750

2.210%
1.545%

01/07/2015
02/06/2014(33)

Euro/000

MPS

1,800

07/2015(23)

Euro/000IntesaSanpaolo

3,750

06/2014IRS

Euro/000IRS

GBP/000

60,0002.778%

31/01/2029(198)

GBP/000

Unicredit

60,00001/2029

IRS

Yen/000

1,750,000

1.875%

31/03/2017(194)

Yen/000

Mizuho1,750,000

03/2017The IRS agreements convert the variable interest rates applying to a series of loans(i.e. the hedged items in the tables above) into fixed interest rates. These agreements
have been arranged with leading financial institutions and the Group does not expect
them to default.
Movements on the cash flow hedge reserve included in Group shareholders’ equity,
before tax effects, since February 1, 2013, may be analyzed as follows:(amounts in thousands of Euro)
Opening balance at January 31, 2013 (audited)
Change in the translation reserve
Change in fair value, recognized in Equity
Change in fair value, charged to Income Statement
Closing balance at January 31, 2014 (audited)
Change in the translation reserve

27,9045
9,148(31,902)5,155(2)

Change in fair value, recognized in Equity(6,858)Change in fair value, charged to Income Statement(2,420)

Closing balance at July 31, 2014 (unaudited)(4,125)

Changes in the reserve that are charged to the income statement are included in
the Interest and other financial income/(expense), net, or in the operating income
depending on the nature of the underlying.

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10. 10. Receivables from, and advance payments to, parent companies and otherrelated parties – current and non-current
Receivables from, and advance payments to, parent company and other related partiesare detailed below:
July 312014(unaudited)

January 31
2014(audited)

Financial receivables – other related parties

11

2,008

Other receivables – PRADA Holding bv

185

356

Other receivables – other companies controlled by PRADA Holding bv

21

36

Other receivables – other related parties

2,348

2,159

Advance payments – other related companies

1,255

1,434

Receivables from, and advance payments to, parent company and other relatedparties - current

3,820

5,993

(amounts in thousands of Euro)The financial receivables from other related parties reported at January 31, 2014, were
due from Luna Rossa Challenge 2013 srl and were reimbursed in the first half of 2014
financial period. Details of receivables and advance payments to parent company andother related parties are provided in Note 36.
July 312014(unaudited)

January 31
2014(audited)

Accrued rental income – long-term

2,905

1,487

Deferred sponsorship expenses

8,729

-

Receivables from, and advance payments to, parent company and other relatedparties – non-current

11,634

1,487(amounts in thousands of Euro)Accrued rental income – long-term - was recognized in relation to Fratelli Prada spa andProgetto Prada Arte srl in application of “IAS 17 Leases” which requires rental income
to be recognized on a constant basis. Deferred sponsorship expenses related to thesponsorship of the Luna Rossa sailing team for the participation in the XXXV edition of
the America’s Cup, as in compliance with the agreement signed on February 27, 2014.
Further information on related party transactions is provided in Note 36.
11. Other current assets
Other current assets are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

VAT

39,924

39,250

Income tax and other tax receivables

39,88014,062Other assets

17,205

13,470Prepayments and accrued income

48,76842,375

Deposits

5,227

5,740

151,004

114,897(amounts in thousands of Euro)

Total

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Other assets
Other assets are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)Advertising contributions under license agreements

6,696

1,293

Advances to suppliers

1,919

3,184

Incentives for retail investments

4,237

3,645

(amounts in thousands of Euro)

Advances to employees

691

695

Other receivables

3,662

4,653

Total

17,205

13,470July 312014(unaudited)

January 31
2014(audited)

Rental charges

20,14815,875

Insurance

3,033

1,931

Design costs

11,254

13,997

Fashion shows and advertising campaigns

5,751

2,585

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

Amortized costs on loans

759

973

Other

7,823

7,014

Total

48,76842,375

Design costs mainly include costs incurred for the conception and realization ofcollections that will generate revenues after July 31, 2014.

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12. Property, plant and equipment
Changes in the historical cost of Property, plant and equipment in the period ended
July 31, 2014, and in prior year are as follows:(amounts in thousands of Euro)

Balance at January 31, 2013
(audited)
Change in scope of consolidation
Additions
Disposals

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

AssetsTotal
under historicalconstruction
cost

252,917

112,098

762,837

250,581

93,832

105,505 1,577,770

-

-

-

-

-

-

-

175,197

10,710215,784

70,42732,17955,499559,796

(15)

(789)

(1,060)

(789)

(857)

(130)

(3,640)Exchange differences

4,574

346

(21,741)(4,419)(649)(1,759)(23,648)

Other movements

7,884

48

25,951

8,384

6,071

(49,113)

(775)

-

(18)

(31,370)(9,072)(1,086)(644)(42,190)

440,557

122,395

950,401

315,112

129,490

Impairment
Balance at January 31, 2014
(audited)
Change in scope of consolidation
Additions
Disposals
Exchange differences
Other movements
Impairment
Balance at July 31, 2014
(unaudited)

109,358 2,067,313

-

185

-

100

101

-

386

67,071

3,940

55,85525,2583,088

73,289228,501(2,838)

(21)

(256)

(145)

(868)

(243)

(1,305)

7,055

305

7,866

3,867

399

514

20,006595

121

20,400

4,937

77(27,137)(1,007)--(5,173)(1,606)

(19)

(111)

(6,909)515,257

126,6901,029,204

346,800

132,893

154,608 2,305,452

Changes in accumulated depreciation of Property, plant and equipment in the period
ended July 31, 2014, and in prior year are as follows:(amounts in thousands of Euro)

Balance at January 31, 2013
(audited)
Change in scope of consolidation
Depreciation

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

Total accum.
depreciation

41,337

94,650389,794140,271

54,419720,471

-

-

-

-

-

-

7,931

7,926

112,932

31,9008,064

168,753

Disposals

(10)

(754)

(977)

(231)

(775)

(2,747)

Exchange differences

100

312

(8,623)(2,535)(409)(11,155)

Other movements

522

-

(846)

(41)

(6)

(371)

-

(18)

(29,106)(7,680)(1,026)(37,830)

49,880102,116

463,174

161,684

60,267

837,121

Impairment
Balance at January 31, 2014
(audited)
Change in scope of consolidation

-

142

-

81

78

301

4,463

4,157

69,27918,301

4,721

100,921

Disposals

(2)

(238)

(70)

(694)

(200)

(1,204)

Exchange differences

109

276

5,617

2,107

272

8,381

Other movements

-

(3)

(655)

(280)

(43)

(981)

Impairment--(4,324)(1,309)(6)(5,639)54,450106,450533,021

179,89065,089938,900

Depreciation

Balance at July 31, 2014
(unaudited)

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Changes in the net book value of Property, plant and equipment in the period ended
July 31, 2014, and in prior year are as follows:(amounts in thousands of Euro)

Balance at January 31, 2013
(audited)
Change in scope of consolidation

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

211,580

17,448373,043

110,310

Other Assets under
tangibles construction

39,413

105,505

Total net
book
value

857,299

-

-

-

-

-

-

-

Additions

175,197

10,710215,784

70,42732,17955,499559,796

Depreciation(7,931)(7,926)(112,932)(31,900)(8,064)

(5)

(35)

(83)

(558)

(82)

(130)

(893)

Exchange differences

4,474

34

(13,118)(1,884)(240)(1,759)(12,493)

Other movements

7,362

48

26,797

8,425

6,077

(49,113)

(404)

-

-

(2,264)(1,392)

(60)

(644)

(4,360)390,677

20,279487,227

153,428

69,223

Disposals

Impairment
Balance at January 31, 2014
(audited)
Change in scope of consolidation- (168,753)

109,358 1,230,192

-

42

-

19

24

-

85

Additions

67,071

3,940

55,85525,2583,088

73,289228,501

Depreciation(4,463)(4,156)(69,280)(18,301)(4,721)

(19)

(18)

(75)

(174)

(43)

(1,305)(1,634)

6,946

29

2,249

1,760

127

514

11,625595

124

21,0565,217

119(27,137)

(26)

-

-

(849)

(297)

(13)

(111)

(1,270)460,807

20,240496,183

166,91067,804

Disposals
Exchange differences
Other movements
Impairment
Balance at July 31, 2014
(unaudited)- (100,921)

154,608 1,366,552

Additions to land and buildings, that amounted to Euro 67 million, were almost entirely
contributed by the acquisition of the building located in Milan that the Group was
already occupying with its corporate Headquarter.
The additions to Production, plant and machinery mainly related to purchases ofequipment for use in manufacturing processes.
The increases in leasehold improvements, furniture and fixture and assets underconstruction were mostly explained by the Group’s strategy of retail network expansion
and renovation.
Total capital expenditure in the retail channel for the six months ended July 31, 2014,
amounted to some Euro 174 million. This amount included Euro 111 million invested
in newly opened stores (Euro 108 million for stores opened during the period andEuro 3 million for stores opening shortly), while Euro 63 million were invested in the
refurbishment and relocation of existing stores.
The impairment adjustments recorded in the six months ended July 31, 2014, related
to assets involved in relocation and renewal retail projects.
At July 31, 2014, the Group did not own any land in Hong Kong. All of the Group’s landoutside Hong Kong is owned on a freehold basis.

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13. Intangible assets
Changes in the historical cost of Intangible assets in the period ended July 31, 2014,
and in prior year are as follows:(amounts in thousands of Euro)

Balance at January 31, 2013
(audited)
Change in scope of consolidation
Additions
Disposals

Trademarks

Goodwill

Store Lease
Acquisitions

SoftwareDevelopment
costs and otherintangible
assetsAssets inprogressTotal
historicalcost

390,889533,291

155,445

68,32045,5808,230

1,201,755

-

-

-

-

-

-

-

616

-

21,816

3,927

20,1294,943

51,431

-

-

(380)

-

-

(14)

(394)

Exchange differences

3,301

1,179

(133)

(58)

-

(113)

4,176

Other movements

(121)

-

4,400

2,622

288

(7,386)

(197)

-

-

(693)

(566)

(1,113)(317)(2,689)394,685

534,470

180,455

74,24564,884

5,343

1,254,082

Impairment
Balance at January 31, 2014
(audited)
Change in scope of consolidation

-

7,983

21,3312

1-29,317

Additions92-

11,442494

133

19,552

31,713

Disposals

-

-

-

(9)

-

(1)

(10)

2,859

1,020

682

141

-

30

4,732

Other movements

-

-

3,767

332

-

(4,536)(437)

Impairment

-

-

-

-

-

(41)

(41)

397,636

543,473

217,677

75,20565,01820,347

1,319,356

Exchange differences

Balance at July 31, 2014
(unaudited)

Changes in the accumulated amortization of Intangible assets in the period ended July
31, 2014, and in prior year are as follows:(amounts in thousands of Euro)

Balance at January 31, 2013
(audited)
Change in scope of consolidation
Additions
Disposals

Trademarks

Goodwill

Store Lease
Acquisitions

SoftwareDevelopment
costs and otherintangible
assetsTotal
accumulated
amortization

99,78429,304

89,68260,332

43,903

323,005

-

-

-

-

-

-

11,060-12,614

3,505

2,925

30,104

-

-

(291)

-

-

(291)

Exchange differences

1,031

793

40

(15)

-

1,849

Other movements

(103)

-

110

(28)

103

82

-

-

(694)

(186)

(1,076)(1,956)

111,772

30,097

101,461

63,60845,855352,793

-

-

-

-

-

-

5,552

-

8,710

1,808

1,376

17,446

Impairment
Balance at January 31, 2014
(audited)
Change in scope of consolidation
Additions
Disposals

-

-

-

(5)

-

(5)

940

686

251

115

-

1,992

Other movements

-

-

55

(1)

1

55

Impairment

-

-

-

-

-

-

118,264

30,783

110,477

65,52547,232372,281

Exchange differences

Balance at July 31, 2014
(unaudited)

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Changes in the net book value of Intangible assets in the period ended July 31, 2014,
and in prior year are as follows:(amounts in thousands of Euro)

Balance at January 31, 2013
(audited)
Change in scope of consolidation
Additions
Amortization
Disposals
Exchange differences
Other movements
Impairment
Balance at January 31, 2014
(audited)
Change in scope of consolidation
Additions
Amortization
Disposals

Trademarks

Goodwill

Store Lease
Acquisitions

SoftwareDevelopment
costs and otherintangible
assets291,105

503,987

65,763

7,988

1,677

Assets in
Total netprogress book value

8,230

878,750

-

-

-

-

-

-

-

616

-

21,816

3,927

20,1294,943

51,431(11,060)-(12,614)(3,505)(2,925)-(30,104)

-

-

(89)

-

-

(14)

(103)

2,270

386

(173)

(43)

-

(113)

2,327

(18)

-

4,290

2,650

185

(7,386)

(279)

-

-

1

(380)

(37)

(317)

(733)

282,913504,373

78,994

10,63719,0295,343

901,289

29,317-

7,983

21,331

2

1

-

92

-

11,443494

133

19,551

31,713(5,552)-(8,710)(1,807)(1,377)-(17,446)

-

-

-

(5)

-

-

(5)

1,919

334

430

26

-

31

2,740

Other movements

-

-

3,712

332

-

(4,537)(493)

Impairment

-

-

-

-

-

(40)

(40)

279,372

512,690

107,200

9,679

17,786

20,348947,075

Exchange differences

Balance at July 31, 2014
(unaudited)

The net book value of Trademarks at July 31, 2014, and January 31, 2014, is broken
down as follows:
July 312014(unaudited)

January 31
2014(audited)

Miu Miu

162,621

165,386

Church's

101,422

101,480

Luna Rossa

4,659

5,150

Car Shoe

5,337

5,437

Prada

4,068

4,148

Other

1,265

1,313

Total

279,372

282,914(amounts in thousands of Euro)No impairment losses were recorded in relation to the Group’s trademarks in the six
months ended July 31, 2014. Trademark registration costs are included in Other.
Store lease acquisition costs (key-money) includes intangible assets recognized
in respect of costs incurred by the Group to enter into, take over or extend leaseagreements for retail premises in the most prestigious retail locations worldwide. The
increases recorded during the period regard lease agreements signed in Europe.

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The total capital expenditure on Property, plant and equipment and Intangible assets
for the six months ended July 31, 2014, amounted to Euro 289.6 million, allocated asfollows:
July 312014(unaudited)

January 31
2014(audited)

Retail173,895

521,545

Production and logistics

31,88033,482

Corporate

83,841

56,200

Total

289,616

611,227(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, 2014, Goodwill amounted to Euro 512.7 million, detailed by Cash Generating Unit
(CGU) as follows:(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(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 Monte Carlo Retail

11,70011,700

North America Retail and Wholesale

48,00048,000

Production division

3,492

3,492

Church’s

9,610

9,276

Provisional Goodwill of Marchesi Angelo srl

7,983

-

512,690504,373Total

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

July 312014(unaudited)

January 31
2014(audited)

Investment in associated undertaking

1,738

1,738

Investment available for sale

25,476

19,43414

14

27,22821,186

Other investments
Total

Investment in associated undertaking regards a 49% interest in Pac srl (in liquidation)
which has been recorded under the equity method.
Investment available for sale regards the 4.88% stake in the share capital of Sitoy
Group Holdings ltd, a company listed on the Hong Kong Stock Exchange that operates

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on the Asian market in the production of accessories and other products. In accordancewith “IAS 39 Financial instruments: recognition and measurement”, the investment
was initially recognized at cost and subsequently restated at fair value in line with theofficial quoted share price on the Hong Kong Stock Exchange as at July 31, 2014 (Level
I of the fair value hierarchy per “IFRS 7 Financial Instruments: Disclosures”). Changes
to fair value compared to January 31, 2014 – positive for Euro 6.0 million – have beenrecognized in a specific equity reserve net of the taxation effect. In the six months
ended July 31, 2014, the Group received net dividends from Sitoy Group Holdings ltd
totaling Hong Kong Dollar 4.9 million (Euro 0.5 million).
15. Other non-current assets
Other non-current assets are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

Guarantee deposits

57,691

57,158Deferred rental income

6,868

6,923

Other receivables

9,649

5,786

Total

74,20869,867

July 312014(unaudited)

January 31
2014(audited)

Stores54,44954,140

Offices

1,999

2,080

184

163

Other

1,059

775

Total

57,691

57,158(amounts in thousands of Euro)

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

July 312014(unaudited)

Maturity:66

By 31.07.2016

13,633

By 31.07.2017

2,101

By 31.07.2018

7,433

By 31.07.2019

7,146

After 31.07.2020

27,378

Total

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

July 312014(unaudited)

January 31
2014(audited)

Bank overdrafts and commercial lines of credit

14,567

114

Short-term bank loans

191,957

21,845Current portion of long term loans

36,09040,416

(553)

(466)

242,061

61,909Deferred costs on loans
Total

At July 31, 2014, the mainly increase in the short-term bank loans is due to thedrawdown of the revolving credit line for Euro 170 million on PRADA spa that was
signed with a pool of foreign banks. The expiry date is May 2016. The remaining partof the outstanding short-term loans is relevant to the use of a short-term committed
line on PRADA Japan. This revolving credit line is subject to compliance with a numberof covenants calculated based on the Consolidated financial statements of PRADA spa
which were fully respected at July 31, 2014.
The current portion of long-term loans at July 31, 2014, essentially includes loans
arranged in Italy, China and Japan.
Current portion of long-term loans includes a loan signed by PRADA spa with Banca
Monte dei Paschi di Siena in the 2008. The relevant outstanding amount at July 31,
2014, Euro 1.2 million, is secured by a mortgage on a building in Tuscany that houses
offices and research and development workshops.
The current portion of long-term loan also includes a loan signed by PRADA spa with
Cassa di Risparmio Parma e Piacenza in the 2008 and whose current portion at July 31,
2014, is Euro 5.2 million. This loan is secured by a mortgage on a building in Tuscany
where the Group concentrated the logistics activities of the leather goods division.
Short-term bank loans and the current portion of long-term borrowings by currency are
analyzed as follows:
July 312014(unaudited)

January 31
2014(audited)

Euro

176,781

14,484

Japanese Yen

32,63330,375Chinese Renminbi

13,22913,391Other currencies

5,404

4,011

228,047

62,261(amounts in thousands of Euro)

Total

The Group generally borrows at variable rates of interest and manages the risk ofinterest rate fluctuation by entering into hedging agreements as described in Note 9.
Considering hedges in place at the reporting date, some 16% of the current portion of
medium/long-term loans consisted of fixed rate loans (23% at January 31, 2014) withvariable rate loans making up the remaining 84% (77% at January 31, 2014).
Bank borrowings are stated net of amortized costs incurred to arrange the loans (Euro
0.6 million short-term and Euro 1.7 million medium/long-term).
At July 31, 2014, the Group had a total of Euro 285.9 million of available unused credit
facilities (Euro 454.3 million at January 31, 2014).

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17. Payables to parent company and other related parties – current and non-current
Payables to parent company and other related parties are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

119

136

Financial payables – other related companies

3,498

4,130

Other payables – other related companies

1,080

628

Payables to parent company and other related parties – current

4,697

4,894

(amounts in thousands of Euro)

Other payables – PRADA Holding bv and other companies controlled by PRADA
Holding bv

Financial payables towards other related parties, totaling Euro 3.5 million at July
31, 2014, include an interest-free loan contributed by Al Tayer, the non-controllingshareholder of PRADA Middle East fzco, according to its share in the said company.
The loan was partially repaid during the period. Details of payables to parent company
and other related parties are provided in Note 36.
The non-current portion of payables to parent company and other related parties aredetailed as follows:(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(audited)

Other payables – related parties

13,315

13,247

Payables to parent company and other related parties – non-current

13,315

13,247

Other payables to related companies includes the amount due to Fin-Reta srl in relation
to the establishment of a ten year right of usufruct to a real estate property in Tuscany,
Italy, and to a business party to the rental agreement for said property which theGroup is using as part of its retail operations. The payable reported at July 31, 2014,
represents the present value of future payments due after July 31, 2015. Details of
payables to parent company and other related parties – non-current are provided in
Note 36.
18. Trade payables
Trade payables are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

Trade payables – third parties

392,061

337,807

Trade payables – related parties

10,612

10,727

Total

402,673348,534(amounts in thousands of Euro)

The increase in Trade payables is typical of this part of the year and it is strictly connectedwith the industrial processes involved in the ongoing strategy pursued by the Group to
replenishing the inventories with the aim to better serve the retail activities.

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The following table summarizes trade payables by maturity date:July 312014(unaudited)

Current

Trade payables

402,673

Total(amounts in thousands of Euro)

Overdue (days)
1 ≤ 3031 ≤ 60

61 ≤ 90

91 < 120≥ 120

365,743

18,170

7,681

2,359

591

8,129

402,673

365,743

18,170

7,681

2,359

591

8,129

January 31
2014(audited)

Current

1 ≤ 3031 ≤ 60

61 ≤ 90

91 < 120≥ 120

Trade payables

348,534

314,375

17,261

8,524

2,099

1,086

5,189

Total

348,534

314,375

17,261

8,524

2,099

1,086

5,189

(amounts in thousands of Euro)

Overdue (days)

19. Current tax liabilities
Tax payables are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

Current income taxes

89,107101,018

VAT and other taxes

30,427

31,127

Total

119,534

132,145(amounts in thousands of Euro)Net of current income tax receivables, current income tax payables total Euro 49.2
million at July 31, 2014 (Euro 87 million at January 31, 2014).
20. Obligations under finance leases
At July 31, 2014, Obligations under finance leases included short-term payables ofEuro 437 thousand (Euro 524 thousand at January 31, 2014) and long-term payables ofEuro 7 thousand (Euro 19 thousand at January 31, 2014). They mainly related to leasesof properties situated in Italy. Further information is provided in Note 37. The Group’s
obligations under finance leases are secured on the leased assets.
21. Other current liabilities
Other current liabilities are detailed as follows:(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(audited)

Payables for capital expenditure

119,076

70,848

Accrued expenses and deferred income

13,078

10,842Other payables

71,61072,976

Total

203,764

154,666

The increase in payables for capital expenditure is significatively contributed by theoutstanding payable of Euro 55 million relating to the purchase of the corporate
headquarter real-estate in Milan that occurred in June 2014.

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Other payables are detailed as follows:
July 312014(unaudited)

January 31
2014(audited)

Short-term benefits for employees and other personnel

54,80357,817

Customer advances

6,267

5,298

Returns from customers

8,878

8,300

Other

1,662

1,561

Total

71,61072,976

July 312014(unaudited)

January 31
2014(audited)(amounts in thousands of Euro)

22. Long-term bank borrowings and bondLong-term financial payables are analyzed below:(amounts in thousands of Euro)

Long-term bank borrowings

137,694

79,805

Bond

130,000

130,000

Deferred costs on loans(1,729)(1,855)

Total

265,965

207,950

Long-term bank borrowings increased essentialy for the new loan facility agreementof GB Pound 60 million (Euro 74.9 million at July 31, 2014) signed by the subsidiary
Kenon Limited with Unicredit Bank AG, London Branch. The loan under the facility issecured by a mortgage on the prestigious building in Old Bond street, London, homeof one of the most important Prada stores in Europe. It has to be repaid in quarterly
equal installments starting from April 2015. The loan will expire on January 31, 2029.
The Group generally borrows at variable rates of interest and manages the risk ofinterest rate fluctuation by entering into hedging agreements as described in Note 9.
At the reporting date, some 79% of long-term loans consisted of fixed rate loans (67%
at January 31, 2014) with variable rate loans making up the remaining 21% (33% at
January 31, 2014).
Details of long-term borrowings at July 31, 2014, are provided below.
amount inthousands of Euro

Borrower

Loan currency Lender

Expirydate

Interest rate
(1)

PRADA spa

130,000

Euro

Bond

08/20182.750%PRADA spa

2,610

Euro

Cariparma

08/2015

1.337%PRADA Middle East FZCO

5,780

US Dollar

ENBD

09/2016

3.735%PRADA Japan. Co. Ltd

7,264

Japanese Yen

Mizhuo Bank

03/20171.875%PRADA Japan Co. Ltd

4,359

Japanese Yen

Sumitomo Mitsui Trust

08/20160.686%PRADA Japan Co. Ltd

10,461

Japanese Yen

Syndicated loan

07/2018

1.100%PRADA Japan Co. Ltd

23,973

Japanese Yen

Syndicated loan

01/2018

1.100%PRADA Fashion Commerce(Shanghai) co limited

4,539

ChineseRenminbi

Mizuho Bank

11/2015

6.150%

Kenon Ltd74,924

GB PoundUnicredit

01/20294.477%

Church and co. ltd

3,784

GB Pound

HSBC

05/2018

2.020%

Total

267,694(1) the interest rates include the effect of any interest rate risk hedging instrument

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Details of long-term borrowings at January 31, 2014, are provided below.
amount inthousands of Euro

Borrower

Loan currency Lender

Expirydate

Interest rate
(1)

PRADA spa

130,000

Euro

Bonds

08/20182.750%PRADA spa

600

Euro

Monte dei Paschi di Siena

07/2015

3.310%PRADA spa

5,202

Euro

Cariparma

08/20151.290%PRADA Middle East FZCO

9,254

US Dollar

ENBD

09/2016

3.811%PRADA Japan Co. Ltd

9,049

Japanese Yen

Mizhuo Bank

03/20171.875%PRADA Japan Co. Ltd

5,068

Japanese Yen

Sumitomo Mitsui Trust

08/20160.708%PRADA Japan Co. Ltd

12,162

Japanese Yen

Syndicated loan

07/2018

1.117%PRADA Japan Co. Ltd

26,063

Japanese Yen

Syndicated loan

01/2018

1.117%PRADA Fashion Commerce(Shanghai) co limited

9,155

ChineseRenminbi

Mizuho Bank

11/2015

6.150%PRADA Fashion Commerce(Shanghai) co limited

2,034

ChineseRenminbi

Intesa SanPaolo

06/2015

6.027%

Church and co. ltd

1,218

GB Pound

HSBC

05/2018

2.020%

Total

209,805(1) the interest rates include the effect of any interest rate risk hedging instrument

On June 23, 2014, PRADA spa signed with Intesa Sanpaolo a long-term loan secured
by a legal mortgage on a building in Milan (corporate offices) for a total amount of Euro
55 million which will be drawn in May 2015. The loan will expire in May 2030; it isrepayable in 30 equal instalments starting from November 2015.
The loan from Sumitomo Mitsui Trust Bank is subject to compliance with certain
covenants based on the Statutory financial statements of PRADA Japan co ltd. At July
31, 2014, the covenants were fully respected.
The bond, which is listed on the Irish Stock Exchange, bears a fixed interest rate. The
fair value of the bond at July 31, 2014, is Euro 137 million, while its carrying amount isequal to Euro 130 million.
All bank borrowings are analyzed by security profile as follows:(amounts in thousands of Euro)

July 312014(unaudited)

January 31
2014(audited)

Secured84,65912,137

Unsecured

425,649

260,043

Total

510,308

272,180

Other than PRADA spa, no Group company had issued any debt securities at the endof the current period.

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23. Long-term employee benefits
July 312014(unaudited)

January 31
2014(audited)

Post-employment benefits

42,23839,568Other long term employee benefits

26,522

23,711

Total liabilities for long term benefits

68,76063,279(amounts in thousands of Euro)

Post-employment benefits
Liabilities for post-employment benefits reported at July 31, 2014, totaled Euro 42.2
million (Euro 39.6 million at January 31, 2014) and all were qualified as defined benefit
plans.
The balance includes Euro 25.4 million of liabilities recorded in the financial statementsof Italian companies and Euro 16.8 million reported by non-Italian companies. The Italianliabilities for post-employment benefits regard the “Trattamento di Fine Rapporto”(hereinafter “TFR” i.e. staff leaving indemnity), a deferred employee benefit that mustbe paid by Italian businesses and is linked to length of working life and remuneration
received. The fair value of the liability as reported was determined projecting thebenefit, accruing under Italian law at the reporting date, to the future date when theemployment relationship will be terminated and discounting it at the reporting dateusing the actuarial “Projected Unit Credit Method (PUCM)”.
The following table shows movements on liabilities for post-employment benefits in
six months ended July 31, 2014.

Balance at January 31, 2014 (audited)

Defined Benefit
Plans in Italy(TFR)

Defined Benefit
Plans abroad(including Japanand UK)

Other
long-term
employeebenefits

Total

23,892

15,67623,711

63,279Acquisitions

236

-

-

236

Current service cost

82

1,042

2,864

3,988

38

-

62

100

Actuarial (gains)/losses

Interest expenses (income)

2,033

-

129

2,162

Benefits paid

(840)

-

(365)

(1,205)

-

79

121

200

25,441

16,797

26,522

68,760Exchange differences
Balance at July 31, 2014 (unaudited)

The current service cost and the interest cost/(revenue) were recognized throughincome statement. For Other long-term employee benefits only, actuarial differenceswere also recognized through the income statement. The TFR liability was determinedbased on an independent appraisal by Federica Zappari, an Italian registered actuary(no 1134) of Ordine Nazionale degli Attuari. The technical part of the computation was
based on an historical analysis of the data. For the demographic assumptions, variables
such as the likelihood of death, early retirement and resignation, dismissal, expiry of
employment contract, advance payment on leaving indemnities and supplementary
pension schemes were considered.
The surplus of the pension plans relating to Group companies operating in the United
Kingdom which provide pension services for their employees amounted to zero at
January 31, 2014, as resulting from the relevant actuary report. Such evaluation was
not updated on July 31, 2014, as the Directors believed that no significant changes
incurred in the fair value during the six months ended July 31, 2014.
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Other long-term employee benefits
Other long-term employee benefits come under the IAS 19 category “Other longterm employee benefits” and relate to long-term retention and performance plans
recognized in favor of Group employees. As at July 31, 2014, their actuarial valuation,
obtained using the Projected Unit Cost Method, was Euro 26.5 million (Euro 23.7
million as at January 31, 2014), as determined based on an independent actuarial
appraisal. The increase in 2014 mainly regards revaluation of existing plans. Some Euro
10.7 million of the long-term benefits at July 31, 2014, is recognized in favor of relatedparties (Euro 8.3 million as at January 31, 2014).
24. Provisions for risks and charges
Movements on provisions for risks and charges are summarized as follows:(amounts in thousands of Euro)

Balance at January 31, 2014 (audited)
Exchange differences

Provision
for litigation

Provision fortax disputes

Other
provisions

Total

1,400

22,72428,536

52,660

6

1

258

265

148

(17)

(148)

(17)

Reversals

(101)

-

(510)

(611)

Uses

(188)

-

(557)

(745)

-

3,232

1,445

4,677

1,265

25,94029,02456,229Reclassifications

Increases
Balance at July 31, 2014 (unaudited)

Provisions represent the Directors’ best estimate of maximum contingent liabilities. In
the Directors’ opinion, and based on the information available to them as supported by
the opinions of independent experts at the reporting date, the total amount provided
for risks and charges is reasonable considering the contingent liabilities that mightarise.
Provision for tax disputes
The increases occurred during the six months ended July 31, 2014, for Euro 3.2 million
essentially related to tax risks on direct taxes with reference to subsidiaries locatedin the European Union for which the management deemed more likely than not therising of future liabilities as a consequence of the probable outcome of tax inspections
ongoing at the reporting date.
Provision for litigation
The provision for litigation amounted to Euro 1.3 million at July 31, 2014, and mainly
regarded disputes with suppliers, former employees of the Group and government
authorities in relation to social contributions.
Other provisions for risks
Other provisions for risks amounted to Euro 29 million as at July 31, 2014, and related
to lease agreements defined as onerous – in terms of “IAS 37 Provisions, Contingent
liabilities and Contingent assets” - and obligations to return premises held under leaseagreements in their original state.
25. Other non-current liabilities
Other non-current liabilities amounted to Euro 108.4 million (Euro 99.0 million as atJanuary 31, 2014). They mainly regarded liabilities to be recognized on a straight-line
basis in relation to commercial lease costs.

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26. Shareholders’ equity - GroupThe Group’s shareholders’ equity is as follows:
July 312014(unaudited)

January 31
2014(audited)

Share Capital

255,882

255,882

Share premium reserve

410,047410,047

Other reserves

1,790,778

1,446,923

Actuarial reserve(13,381)(11,452)

Fair value reserve

8,639

4,108

Cash flow hedge reserve(3,145)

3,699

Translation reserve(26,745)(49,438)

Net income for the period

244,848627,7852,666,923

2,687,554(amounts in thousands of Euro)

Total

Share capital
At July 31, 2014, some 80% of the share capital of PRADA spa is held by PRADA
Holding bv while the remainder is floating on the Main Board of the Hong Kong Stock
Exchange.
Share premium reserve
The share premium reserve is unchanged compared to January 31, 2014.
Translation reserve
Movements on this reserve related to the translation of the financial statementsof consolidated companies named in foreign currency. The reserve changed fromnegative Euro 49.4 million at January 31, 2014, to negative Euro 26.7 million.
Other reserves
At July 31, 2014, other reserves amounted to Euro 1,790.8 million. They increased byEuro 343.9 million compared to January 31, 2014, mainly as a result of the allocation of
the Group’s net income for the previous year (Euro 627.8 million), net of the distributionof dividends (Euro 281.5 million) to PRADA spa shareholders.
Net income for the year
The Group’s net income for the six months ended July 31, 2014, amounted to Euro
244.8 million (Euro 627.8 million for the twelve months ended January 31, 2014).
Capital gain tax in Italy
Capital gains realized on disposals of shares in the Company may be subject to tax
in Italy. Further details of Italian capital gains taxation are provided in the Tax Booklet
available on the Company’s website (www.pradagroup.com).

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27. Shareholders’ equity – Non-controlling interests
The following table shows movements on the Shareholders’ equity of Non-controllinginterests during the six months ended July 31, 2014, and January 31, 2014.
(amounts in thousands of Euro)

Opening balance
Translation differences

July 312014(unaudited)

January 31
2014(audited)

13,986

10,470360

93Dividends(6,763)(6,634)

Net income for the year

6,198

10,020

-

(3)

1,589

40

107

-

15,477

13,986

Actuarial reserve
Capital injection in subsidiaries
Acquisition of Marchesi Angelo srl
Closing balance

The capital injection into subsidiaries related to Pellettieri d’Italia srl for Euro 0.3 million
and for Euro 1.3 million to Prada Saudi Arabia, a new company set up by the Group on
July 2, 2014 (the Group owns 75% of the said Company).
Dividends paid during the six months ended July 31, 2014, totaled Euro 6.8 million
and were distributed by the following subsidiaries: TRS New Zeland, TRS Guam, TRS
Saipan,TRS Hong Kong, TRS Singapore, TRS Macau, TRS Okinawa and Artisan Shoessrl.
28. Net revenues
Consolidated net revenues are mainly generated by sales of products and are stated
net of returns and discounts.
six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Net sales

1,730,900

1,707,584

Royalties

20,415

20,481

1,751,315

1,728,065(amounts in thousands of Euro)

Total

Breakdowns and comments of net revenues by brand, distribution channel,
geographical area and product are provided in the Financial review.
29. Cost of goods soldCost of goods sold is analyzed as follows:
six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Purchases of raw materials and production costs

476,558

426,385

Logistics costs, duties and insurance

95,64190,780Change in inventories(78,484)(56,758)

Total

493,715

460,407(amounts in thousands of Euro)PRADA Group

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In absolute terms, cost of goods sold increased from Euro 460.4 million in the first six
months ended July 31, 2013, to Euro 493.7 million. As a percentage of net revenues
it increased from 26.6% to 28.2% because of the negative impact on the net sales of
the current period as a result of a Euro currency stronger on average compared to thesame period last year.
30. Operating costs
Operating costs are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2014(unaudited)% of netrevenues

six months
ended July 31
2013(unaudited)% of netrevenues

Product design and development costs

69,686

4.0%

66,405

3.8%

Advertising and communications costs

76,535

4.4%

82,053

4.7%

Selling costs

639,366

36.5%

563,954

32.6%

General and administrative costs

98,855

5.6%

96,908

5.6%

Total

884,44250.5%

809,320

46.8%

Operating costs amounted to Euro 884.4 million and increased their incidence on net
revenues from 46.8% to 50.5%.
Product design and development costs advanced from Euro 66.4 million in the six
months ended July 31, 2013, to Euro 69.7 million mainly because of a rise in the labour
cost.
Advertising and communications costs decreased from Euro 82.1 million in the six
months ended July 31, 2013, to Euro 76.5 million and, as a percentage of net revenues,
from 4.7% to 4.4%. This was the result of lower sponsorhip expenses in these first six
months of 2014 related to the Luna Rossa yacht, as in 2013 it was challenging for the
XXXIV edition of the America’s Cup.
Selling costs totaled Euro 639.4 million in the six months ended July 31, 2014, andincreased from Euro 564 million in the same period of last year. Also their incidence
on net revenues went up to 36.5% from 32.6%. The rise was due to the labour, rental
and depreciation expenses following the strenghtening strategy of the retail network.
General and administrative costs amounted to Euro 98.9 million for the first half of2014 and advanced from Euro 96.9 million of the previous period. Their incidence on
net revenues was stable.
As requested by “IAS 1 Presentation of Financial Statements” the following table
reports the total of depreciation, amortization and impairment, labor cost and rent
included under the operating costs.
(amounts in thousands of Euro)76

six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Depreciation, amortization and impairment

119,677

92,715

Labor cost

314,235

283,219

Variable rent

148,198

297,550

Fixed rent

125,136

247,814

Total

707,246921,298

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31. Interest and other financial income/(expense), net
Interest and other financial income/(expenses), net, are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Interest expenses on borrowings(6,020)(4,402)

Interest expenses IAS 19

(101)

(125)

Interest income

1,713

2,035

Exchange gains /(losses) – realized

3,031(4,148)Exchange gains/(losses) – unrealized(6,707)(6,248)Other financial income/(expenses)(1,408)(2,306)

Total(9,492)(15,194)

Interest expenses have decreased primarily because of lower average indebtedness
and the different composition of the bank debt in terms of maturity. In both periods,
interest income was earned by investing the increased liquidity across a number ofcurrencies, countries and banks, in compliance with the Group’s corporate strategy
which permits only low-risk investments.
32. Dividends received
For the six months ended July 31, 2014, the Group received Euro 454.8 thousands ofdividends (Euro 284.5 thousands as at July 31, 2013) from Sitoy Group Holdings ltd,
a company listed on the Hong Kong Stock Exchange (HKSE code: 1023) in which theGroup held a 4.88% interest at July 31, 2014 (same as at January 31, 2014).
33. Income taxes
Income taxes are analyzed as follows:(amounts in thousands of Euro)six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Current taxation

123,157

143,557

Deferred taxation(10,082)(12,948)

Income taxes

113,075

130,609

The tax burden for the six months ended July 31, 2014, totaled Euro 113.1 million, downby Euro 17.5 million compared to the same period of last year but, as a percentage ofresult before taxation, it went up to 31.1% from 29.5%. The rise in the effective tax
rate was due to a different geographical mix of consolidated net taxable income.

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Movements on net deferred tax assets and deferred tax liabilities are shown in thefollowing table:
July 312014(unaudited)

January 31
2014(audited)

158,574

120,421

Exchange differences

1,298(4,763)

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

2,438

6,303

104

1,418

(amounts in thousands of Euro)

Opening balance

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

(4)

110

Deferred taxes for the period in income statement

10,08235,085

Closing balance

172,492

158,574

The following table shows deferred tax assets and liabilities classified by nature:(amounts in thousands of Euro)

July 31, 2014
(unaudited)
Deferred tax
assetsInventories

January 31, 2014
(audited)Deferred tax
liabilities

Deferred tax
assetsDeferred tax
liabilities

100,990-

95,240130

Receivables and other assets

438

1,583

451

1,582

Useful life of non-current assets

48,98913,15546,197

13,249-21,618-22,666

Provision for risks / accrued expenses

40,7262,248

37,4562,151

Non-deductible / taxable charges / income

5,683

661

6,752

370

Tax loss carryforwards

6,579

-

6,945

-

Derivative financial instruments

1,111

-

81

1,396

Long term employee benefits

Deferred taxes due to acquisitions

7,709

451

7,364

151

Other

733

750

759

976

Total

212,958

40,466201,245

42,671

34. Earnings and Dividends per share
Earnings per share
Earnings per share are calculated by dividing the net income attributable to the PRADA
spa shareholders by the weighted average number of ordinary shares in issue.
six months
ended July 31
2014(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

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six months
ended July 31
2013(unaudited)

244,847,587

308,238,604

2,558,824,000

2,558,824,000

0.096

0.120

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Dividends per share
During the six months ended July 31, 2014, the Company distributed dividends of Euro
281,470,640 (or Euro 11 cents per share), as approved by the Shareholders’ Meeting
held on May 22, 2014, to approve the financial statements for the year ended January
31, 2014. The payment of the dividends and the related Italian withholding tax payable(Euro 11.3 million), arising from the application of the Italian ordinary withholding tax
rate to the whole amount of dividends paid to beneficial owners of the Company shares
held through the Hong Kong Central Clearing and Settlement System, was completedby July 31, 2014.
During the year ended January 31, 2014, the Company distributed dividends of Euro
230,294,160 (or Euro 9 cents per share) as approved by the Shareholders’ Meeting
held on May 23, 2013, to approve the financial statements for the year ended January
31, 2013. The payment of the dividends and the related Italian withholding tax payable(Euro 9.2 million), arising from the application of the Italian ordinary withholding tax rate
to the whole amount of dividends paid to beneficial owners of the Company shares
held through the Hong Kong Central Clearing and Settlement System, was completedby July 31, 2013.
35. Additional information
The average headcount by functional area for the six months periods ended July 31,
2014, and July 31, 2013, is as follows:(number of employees)

Production

six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

1,987

1,852

Product design and development

950

890

Advertising and Communications

115

112

7,785

6,637

987

873

11,824

10,364

Selling
General and administrative services
Total

Employee remuneration
Employee remuneration by functional area for the six months periods ended July 31,
2014, and July 31, 2013, is as follows:
six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Production

49,15845,385

Product design and development

34,88230,187Advertising and Communications

5,940

5,977

Selling

181,036

161,641

General and administrative services

43,21940,029Total

314,235

283,219(amounts in thousands of Euro)PRADA Group

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Employee remuneration by nature for the six months periods ended July 31, 2014, andJuly 31, 2013, is as follows:
six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Wages and salaries

238,205

212,662

Post-employment benefits

13,121

13,117

Social security

52,39047,244Other

10,51910,196

Total

314,235

283,219(amounts in thousands of Euro)Distributable reserves of parent company PRADA spa(amounts in thousands of Euro)

Amount at
July 31, 2014
(unaudited)

Possibleutilization

Distributableamount410,047

Share Capital

255,882

Share premium reserve

410,047

A,B,C

Legal reserve

51,176B

Other reserves

182,899

A,B,C

182,899

Retained earnings

354,249

A,B,C

333,733

Cash flow hedge reserve(2,394)

Distributable amount

Summary of utilization in last
three years
Coverage oflossesDistribution ofdividends-

674,706 (*)

926,679(*) Dividends distributed include also the dividends paid during the six months ended July 31, 2014, on the financial statements
ended January 31, 2014.
A share capital increase
B coverage of losses
C distributable to shareholders

Pursuant to Article 2431 of the Italian Civil Code, the share premium reserve is fully
distributable as the legal reserve has reached an amount equal to 20% of share capital.
The non-distributable portion of Retained earnings, Euro 20,516 million, refers to
restricted reserves under Article 7 of Legislative Decree 38/2005.

80

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Exchange rates
The exchange rates against the Euro used to consolidate statements of financial
position and income statements prepared in other currencies as at July 31, 2014,
January 31, 2014, and July 31, 2013, are shown below.

Currency

Average rate
for the six
monthsended July 31,
2014

Average rate
for the six
monthsended July 31,
2013

Closing rate

Opening rate

US Dollar

1.369

1.310

1.338

1.352

Canadian Dollar

1.497

1.342

1.461

1.513

GB Pound

0.816

0.856

0.793

0.821

Swiss Franc

1.219

1.231

1.217

1.222

1.483

1.323

1.440

1.552

Korean Won

Australian Dollar

1,426.771

1,460.408

1,378.500

1,464.230

Japanese Yen

139.755

127.466

137.660

138.130

Hong Kong Dollar

10.61810.16710.36910.497Singapore Dollar

1.720

1.638

1.668

1.728

Thai Baht

44.39139.32742.95944.599Taiwan Dollar

41.30239.05840.11440.945

Russian Ruble

48.15841.20047.52247.748Czech Koruna

27.43825.76227.57027.500Macau Pataca

10.936

10.472

10.68010.812Chinese Renminbi

8.475

8.091

8.262

8.192

New Zealand Dollar

1.601

1.599

1.576

1.668

Malaysian Ringgit

4.446

4.063

4.277

4.525

Turkish Lira

2.942

2.409

2.855

3.074

Brazilian Real

3.113

2.708

3.016

3.283

Mexican Peso17.90916.47417.63618.161UAE Dirham

5.029

4.813

4.914

4.964

Ukrainian Hryvna

14.89510.476

16.212

10.877
11.214

Moroccan Dirham

11.23911.14911.201

Kuwait Dinar

0.386

0.373

0.379

0.382

Swedish Kronor

9.018

8.536

9.226

8.851

Kazakhstani Tenge

210.750248.369

198.134

245.410

Qatari Riyal

4.986

4.769

4.871

4.923

Indian Rupee

82.770-81.01784.688Danish Kronor

7.462

7.457

7.456

7.462

Saudi Arabian Ryal

5.135

4.914

5.017

5.069

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Remuneration of Board of Directors
Remuneration of the PRADA spa Board of Directors for the six months ended
July 31, 2014
(amounts in thousands of Euro)

Directors’fees

Remuneration
Bonusesand otherand otherbenefits incentives (*)

Benefits
in kind

CPension,
healthcare
and TFR
contributions

Total

Patrizio Bertelli

500

3,000

2,623

-

-

6,123

Miuccia Prada Bianchi

500

5,350

585

-

-

6,435

Carlo Mazzi

510

-

-

42

11

563

Donatello Galli

20

208

76

20

106

430
202

Alessandra Cozzani

20

86

37

7

52

Gaetano Micciché

20

-

-

-

-

20

Gian Franco Oliviero Mattei

80

-

-

-

-

80

Giancarlo Forestieri

30

-

-

-

4

34

Sing Cheong Liu

30

-

-

-

6

36

1,710

8,644

3,321

69

179

13,923Total(*) Bonuses and other incentives includes Other long-term benefits in favor of Patrizio Bertelli and Miuccia Prada Bianchi for
an amount of Euro 623 thousand and Euro 585 thousand, respectively. As required by IAS 19, the amounts shown reflect theeffects of an actuarial valuation. Further information on Other long-term benefits is provided in Note 23.

Remuneration of the PRADA spa Board of Directors for the six months ended
July 31, 2013
(amounts in thousands of Euro)

Directors’fees

Remuneration
Bonusesand otherand otherbenefits incentives (*)

Benefits
in kind

CPension,
healthcare
and TFR
contributions

Total

Miuccia Prada Bianchi

500

4,850

1,553

-

1

6,904

Patrizio Bertelli

500

3,000

3,769

-

1

7,270

Carlo Mazzi

150

-

-

40

10

200

Donatello Galli

20

153

91

19

90

373

Marco Salomoni

30

-

-

-

-

30

Gian Franco Oliviero Mattei

70

-

-

-

2

72

Giancarlo Forestieri

30

-

-

-

4

34

Gaetano Micciché

20

-

-

-

-

20

Sing Cheong Liu

30

-

-

-

6

36

1,350

8,003

5,413

59

114

14,939Total(*) Bonuses and other incentives includes Other long-term benefits in favor of Patrizio Bertelli and Miuccia Prada Bianchi for
an amount of Euro 1,769 thousand and Euro 1,553 thousand, respectively. As required by IAS 19, the amounts shown reflect
the effects of an actuarial valuation. Further information on Other long-term benefits is provided in Note 23.

The Remuneration and other benefits and the Bonuses and other incentives of the
Chief Executive Officer Miuccia Prada Bianchi for the six months ended July 31, 2014,
falls within the scope of application of Chapter 14A of the Hong Kong Stock Exchange
Listing Rules as it has been qualified as a continuing connected transaction subject
to reporting and disclosure but exempted from independent shareholders’ approvalrequirements. As requested by the Listing Rules, comprehensive disclosure of thiscontinuing connected transaction was communicated to the market through theAnnouncements published by PRADA spa on April 27, 2012, and April 5, 2013.
The Remuneration and other benefits and the Bonuses and other incentives of the
Chief Executive Officer Patrizio Bertelli for the six months ended July 31, 2014, falls
within the scope of application of Chapter 14A of the Hong Kong Stock Exchange
Listing Rules as it has been qualified as a continuing connected transaction subject
to reporting and disclosure but exempted from independent shareholders’ approvalrequirements. As requested by the Listing Rules, comprehensive disclosure of this82

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continuing connected transaction was communicated to the market through theAnnouncements published by PRADA spa on April 27, 2012, and April 5, 2013.
36. Transactions with related parties
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 details of related party transactions for each item in theStatement of financial position and in the Income statement. They show amounts
relating to each related party and the total amount relating to each line item.

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Statement of financial position amounts at July 31, 2014 (unaudited)Trade
receivables

Receivables
from, andadvancesto, parent
companies
and relatedparties –current

PRADA Holding bv-

185

Other payables – other companies
controlled by PRADA Holding bv-

21(amounts in thousands of Euro)

EXHL Italia srl
Other related parties

Receivables
from, andadvancesto, parent
companies
and relatedparties –non current

TradepayablesPayablesto parent
companies
and relatedparties current

-

-

119

-

-

-

-

-

Payablesto parent
companies
and relatedparties –non current

-

21

-

-

-

-

36,544

3,614

11,634

10,612

4,578

13,315DFS Hawaii

-

-

-

667

-

-

DFS Venture Singapore pte ltd

-

-

-

29

21

-

DFS Cotai ltd
DFS New Zealand ltd

40

-

-

1,165

-

-

-

-

-

41

-

-

F.lli Prada spa

28,616

-

-

5,104

323

-

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

2,998

-

2,019

-

-

-

-

-

-

15

-

-

Al Tayer Insignia llc

Al Tayer Travels

18

-

-

96

3,498

-

Al Tayer Trends

11

-

-

-

-

-

Al Tayer Group llc

-

-

-

4

-

-

Danzas llc UAE
Luna Rossa Challenge 2013 NZ ltd
Luna Rossa Challenge 2013 srl
Stiching Fondazione Prada

-

-

-

78

117

-

1,293

-

-

-

-

-

515

11

8,730

154

21

-

-

578

-

-

34

-

Stiching Prada

-

354

-

-

-

-

Progetto Prada Arte srl

-

2,304

-

-

551

-

715

-

885

-

-

-

Progetto Prada Arte srl (Galleria)(**) (****)
Gipafin sarl

-

6

-

-

-

-

Granello sa

-

191

-

-

-

-

HMP srl

-

8

-

-

-

-

PRA 1 srl

883

72

-

18

-

-

Premiata srl

291

-

-

1,515

-

-

La Mazza srl

85

-

-

594

-

-

Peschiera Immobiliare srl

-

82

-

-

-

-

Secva srl

-

-

-

732

-

-

PRADA Arte bv

-

8

-

-

-

-

FinReta srl

-

-

-

151

-

13,315Pelletteria Reta srl

-

-

-

78

13

-

Friuli 64 srl

-

-

-

121

-

-

Spelm sa

-

-

-

34

-

-

Gran Cafè snc

-

-

-

14

-

-

1,079

-

-

-

-

-

Other

Rubaiyat Modern Lux. Prod. ltd

-

-

-

2

-

-

Members of the Board of
Directors of PRADA spa

-

-

-

223

-

-

Relative of a Director of PRADA spa

-

-

-

387

-

-

Total at July 31, 2014 (unaudited)

36,544

3,820

11,634

11,222

4,697

13,315(*) the accrual non-current amounting to Euro 2,019 thousand represents the deferred rental income recognized in relation to
Fratelli Prada spa in application of “IAS 17 Leases” to the business management agreement between PRADA spa and Fratelli
Prada spa.
(**) The accrual non-current amounting to Euro 885 thousand represents the deferred rental income recognized in relation toProgetto Prada Arte srl in application of “IAS 17 Leases” to the business combination agreement between PRADA spa andProgetto Prada Arte srl.
(***) the receivable of Euro 2,998 thousand represents the business management fee to be paid by Fratelli Prada spa for the
management of the retail business in Galleria Vittorio Emanuele II in Milan in accordance with the business managementagreement between PRADA spa and Fratelli Prada spa.
(****) the receivable of Euro 715 thousand represents the recharged portion of rental costs for premises occupied by Progetto
Prada Arte srl at Galleria Vittorio Emanuele II property in Milan in accordance with the business combination agreement
between PRADA spa and Progetto Prada Arte srl.

84

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Statement of financial position amounts at January 31, 2014 (audited)Trade
receivables

Receivables
from, andadvancesto, parent
companies
and relatedparties –current

PRADA Holding bv-

356

Other payables – other companies
controlled by PRADA Holding bv-

36(amounts in thousands of Euro)

Receivables
from, andadvancesto, parent
companies
and relatedparties –non current

TradepayablesPayablesto parent
companies
and relatedparties current

-

-

136

-

-

-

-

-

Payablesto parent
companies
and relatedparties –non current

Prapar Corporation

-

-

-

-

-

-

EXHL Italia srl

-

36

-

-

-

13,24730,333

5,601

1,487

10,7274,758

DFS Hawaii

Other related parties

-

-

-

775

-

-

DFS Venture Singapore pte ltd

-

-

-

81

-

-

DFS Cotai ltd

25

-

-

1,766

-

-

-

-

-

63

-

-

F.lli Prada spa

25,457

1

-

2,379

323

-

F.lli Prada spa (Galleria)

1,335

-

851

-

-

-

DFS New Zealand ltd

Al Tayer Travels
Al Tayer Insignia llc

-

-

-

11

-

-

18

-

-

32

4,130

-

Al Tayer Logistics

-

-

-

-

-

-

Al Tayer Motors

-

-

-

2

-

-

Al Tayer Trends

11

-

-

-

-

-

Al Tayer Group llc

-

3

-

32

-

-

Danzas llc UAE
Luna Rossa Challenge 2013 NZ ltd
Luna Rossa Challenge 2013 srl
Aati Contracs

-

-

-

-

127

-

1,299

-

-

-

-

-

164

2,008

-

154

21

-

-

-

-

-

-

-

Stiching Fondazione Prada

-

625

-

-

61

-

Stiching Prada

-

206

-

-

-

-

-

2,492

-

-

81

-

876

-

637

-

-

-

Progetto Prada Arte srl
Progetto Prada Arte srl (Galleria)
Gipafin sarl

-

6

-

-

-

-

Granello sa

-

166

-

-

-

-

HMP srl

-

8

-

-

-

-

Prada America’s Cup srl

-

-

-

-

-

-

PRA 1 srl

983

-

-

-

-

-

Premiata srl

94

-

-

1,951

-

-

La Mazza srl

71

-

-

511

-

-

-

-

-

61

-

-

Peschiera Immobiliare srl

-

81

-

-

-

-

Secva srl

-

-

-

2,707

-

-

Calzaturificio Mazza Graziano

PRADA Arte bv

-

-

-

-

-

-

FinReta srl

-

-

-

140

-

13,247

Pelletteria Reta srl

-

-

-

61

13

-

Other

-

5

-

1

2

-

Members of the Board of
Directors of PRADA spa

-

-

-

143

-

-

Relative of a Director of PRADA spa

-

-

-

341

-

-

30,333

5,993

1,487

11,211

4,894

13,247

Total at January 31, 2014
(audited)

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Income statement for the six months ended July 31, 2014 (unaudited)
Net sales

Cost ofgoods soldGeneral,admin. &selling costs(income)Royalties
incomeInterest
incomeInterest
expensePRADA Holding bv

-

-

(57)

-

-

-

Other companies controlled by
PRADA Holding bv

-

-

(3)

-

-

-

(amounts in thousands of Euro)

-

-

(3)

-

-

-

Other related parties

EXHL Italia

16,793

4,847

16,510522

370F.lli Prada spa (Franchising)

16,7922(1,045)522--

F.lli Prada spa (Galleria) (*)--(2,329)---Danzas llc

-

667

96

-

-

-

DFS Hawaii

-

-

2,213

-

-

-

DFS New Zealand ltd

-

-

244

-

-

-

DFS Cotai ltd

-

-

4,333

-

-

-

DFS Venture Singapore pte ltd

-

-

164

-

-

-

Al Tayer Travels

-

5

214

-

-

-

Al Tayer Group llc

-

-

13

-

-

-

Al Tayer Insignia llc

-

38

128

-

-

-

Al Tayer Motors

-

-

2

-

-

-

Al Sanam Rent a Car llc

-

-

2

-

-

2

Secva srl (****)

-

-

1,493

-

-

Luna Rossa Challenge 2013 NZ ltd

-

-

6

-

-

-

Luna Rossa Challenge 2013 srl

-

(8)

5,482

-

3

-

HMP srl

-

-

20

-

-

-

Stiching Fondazione Prada

-

-

2,417

-

-

-

Progetto Prada Arte srl(Sponsorship)

1

(15)

3,601

-

-

-

Progetto Prada Arte srl (Galleria)
(**)

-

-

(758)

-

-

-

Peschiera Immobiliare srl

-

-

248

-

-

-

Premiata srl

-

2,783

-

-

-

-

La Mazza srl

-

1,014

2

-

-

-

Gipafin sarl

-

-

(18)

-

-

-

PRADA Arte bv

-

-

(3)

-

-

-

PRA 1 Srl

-

-

388

-

-

68

FinReta srl (***)

-

248

-

-

-

Pelletteria Reta srl

-

111

-

-

-

-

Friuli 64 srl

-

-

360

-

-

-

Spelm sa

-

-

34

-

-

-

Gran Cafè snc

-

2

1

-

-

-

Rubaiyat Modern Lux. Prod. ltd

-

-

(795)

-

-

-

Other

-

-

(3)

-

-

-

Relative of a Director of PRADA spa

-

-

295

-

-

-

Total at July 31, 2014 (unaudited)

16,793

4,847

16,450522

370(*) This amount contains non-monetary income in the form of deferred rental income of Euro 1,169 thousand recognized inrelation to Fratelli Prada spa in application of “IAS 17 Leases” to the business management agreement between PRADA spa
and Fratelli Prada spa.
(**) This amount includes non-monetary income in the form of deferred rental income of Euro 249 thousand recognized inrelation to Progetto Prada Arte srl in application of “IAS 17 Leases” to the temporary business partnership contract between
PRADA spa and Progetto Prada Arte srl.
(***) The interest expense represents the expense for the six months as calculated with the effective interest rate applied tothe discounted long-term liability agreed to establish the right of usufruct.
(****) The interest expense represents the expense for the six months resulting from discounting of the liability for deferredfees due after more than a year.

86

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Income statement for the six months ended July 31, 2013 (unaudited)
Net sales

Cost ofgoods soldGeneral, admin.
& selling costs(income)Royalties
incomeInterest
incomePRADA Holding bv

-

-

(48)

-

-

Other companies controlled by
PRADA Holding bv

-

-

(3)

-

-

(amounts in thousands of Euro)

-

-

(3)

-

-

Other related parties

EXHL Italia

24,091

4,234

28,927689

1F.lli Prada srl

24,090988(1,834)689-

Danzas llc

-

585

17

-

-

DFS Hawaii

(1)

-

2,043

-

-

-

-

281

-

-

DFS New Zealand ltd
DFS Australia pty ltd

-

-

-

-

-

DFS Cotai ltd

-

-

3,819

-

-

DFS Venture Singapore pte ltd

-

-

284

-

-

Al Tayer Travels

-

-

164

-

-

Al Tayer Group llc

-

-

22

-

-

Al Tayer Insignia llc

-

17

75

-

-

Al Tayer Trends

-

40

265

-

-

Secva srl

-

-

1,352

-

-

Luna Rossa Challenge 2013 NZ ltd

1(8)

16,536--

Luna Rossa Challenge 2013 srl sl

-

-

1,209

-

1

HMP srl

-

-

227

-

PRA 1 srl

-

-

178

-

-

Stitching Fondazione Prada

-

-

1,353

-

-

Progetto Prada Arte srl

-

(17)

2,398

-

-

Peschiera Immobiliare srl

-

-

245

-

-

Premiata srl

-

1,844

-

-

-

Calzaturificio Mazza Graziano

-

-

300

-

-

Le Mazza srl

-

785

-

-

-

Gipafin sarl

-

-

(18)

-

-

PRADA Arte bv

-

-

(3)

-

-

Other

1

-

14

-

-

Relative of a member of theBoard of Directors

-

-

365

-

-

24,091

4,234

29,241689

1Total at July 31, 2013 (unaudited)

The above tables report information on transactions with related parties in accordancewith “IAS 24 Related Party Disclosures”. As stated below, some of these transactions
fall within the application of the Hong Kong Stock Exchange Listing Rules.
The transactions with related party “Fratelli Prada spa – franchising” refer totransactions between the Company and Fratelli Prada spa in relation to the franchisingagreement regarding the Prada stores in Milan. The transactions reported for the six
months ended July 31, 2014, fell within the scope of application of Chapter 14A ofthe Hong Kong Stock Exchange Listing Rules as they were qualified as continuingconnected transactions subject to reporting and disclosure but exempted fromindependent shareholders’ approval requirements. As requested by the Listing Rules,
comprehensive disclosure of these continuing connected transactions was included in
the PRADA spa Announcement dated January 29, 2014.
The transactions with related party “Fratelli Prada spa – Galleria” refer to thetransactions between the Company and Fratelli Prada spa in relation to the business
management agreement over the use by the latter of part of the Galleria Vittorio
Emanuele II property in Milan to conduct retail business. The transactions reported forthe six months ended July 31, 2014, fell within the scope of application of Chapter 14A

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of the Hong Kong Stock Exchange Listing Rules as they were qualified as continuingconnected transactions subject to reporting and disclosure but exempted fromindependent shareholders’ approval requirements. As requested by the Listing Rules,
comprehensive disclosure of these continuing connected transactions was included in
the PRADA spa Announcement dated January 29, 2013.
The transactions with related party “Progetto Prada Arte srl - Galleria” refer to thetransactions between the Company and Progetto Prada Arte srl in relation to thebusiness combination agreement regarding the use by the latter of part of the Galleria
Vittorio Emanuele II property in Milan to carry out cultural activities. The transactions
reported for the six months ended July 31, 2014, fell within the scope of application ofChapter 14A of the Hong Kong Stock Exchange Listing Rules as they were qualified ascontinuing connected transactions subject to reporting and disclosure but exemptedfrom independent shareholders’ approval requirements. As requested by the Listing
Rules, comprehensive disclosure of these continuing connected transactions was
included in the PRADA spa Announcement dated January 29, 2013.
The transactions with related party “Progetto Prada Arte srl - Sponsorship” refer tothe transactions between PRADA spa and Progetto Prada Arte srl in performance ofthe sponsorship agreement for cultural activities to be carried out by the latter. The
transactions reported for the six months ended July 31, 2014, fell within the scopeof application of Chapter 14A of the Hong Kong Stock Exchange Listing Rules as
they were qualified as connected transactions subject to reporting and disclosure but
exempted from independent shareholders’ approval requirements. As requested by
the Listing Rules, comprehensive disclosure of these connected transactions was
included in the PRADA spa Announcement dated February 27, 2014.
The transactions with related party Luna Rossa Challenge 2013 srl reported for thesix months ended July 31, 2014, fell within the scope of application of Chapter 14Aof the Hong Kong Stock Exchange Listing Rules as they are qualified as connectedtransactions subject to reporting and announcement but exempted from theindependent shareholders’ approval requirement. As requested by the Listing Rules,
comprehensive disclosure of these connected transactions was included in the PRADA
spa Announcement dated February 27, 2014.
Unlike the “non-exempt continuing connected transactions” and “non-exempt
connected transactions” described above, no other transaction reported for the six
months ended July 31, 2014, fell under the definition of “connected transaction” or“continuing connected transaction” provided by Chapter 14A of the Hong Kong Stock
Exchange Listing Rules or, if it did fall under the definition of “connected transaction”
or “continuing connected transaction” in terms of said Chapter 14A, is exempt from
reporting, disclosure and independent shareholders’ approval requirements again
under Chapter 14A.

88

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37. Commitments
Operating leases
At July 31, 2014, and January 31, 2014, operating lease commitments, by maturity
date, were as follows:(amounts in thousands of Euro)Within a year
After between one year and five years
After more than five years
Total

July 312014(unaudited)

January 31
2014(audited)

355,546

321,342

1,134,941

981,601

868,341874,0732,358,828

2,177,016

Operating lease commitments for the 2014 reporting period included Euro 2,273
million regarding lease agreements for retail premises (Euro 2,095 million for 2013).
The increase in operating lease commitments is mainly due to new operating leases
entered into in Asia Pacific.
The amounts recorded in the income statement in relation to lease agreements forthe six months ended July 31, 2014, and six months ended July 31, 2013, are shown
below:(amounts in thousands of Euro)six months
ended July 31
2014(unaudited)

six months
ended July 31
2013(unaudited)

Fixed minimum lease expenses

125,136

113,634

Variable lease expenses

148,198

143,162

Total

273,334

256,796

Some Group companies are required to pay lease charges based on a fixed percentageof net sales.
At July 31, 2014, and January 31, 2014, future rental income under current operatingleases for properties owned by the Group was analyzed by maturity as follows.
July 312014(unaudited)

January 31
2014(audited)

Within a year

14,16913,303After between one year and five years

49,87049,770After more than five years

100,525

105,094

Total

164,564

168,167(amounts in thousands of Euro)The future rental income mainly relates to the business management agreement
signed with the related company Fratelli Prada spa as described in Note 36.

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Finance leases
Property, plant and equipment includes the following assets held under finance leases:(amounts in thousands of Euro)Land and buildings
Furniture and fittings

July 312014(unaudited)

January 31
2014(audited)

7,836

7,836

-

-

73

67

Accumulated depreciation(1,867)(1,728)

Total

6,042

6,175

Other tangibles

Other commitments
At July 31, 2014, the Group did not have significant commitments to purchase assets.
38. Comparative income statement and statement of financial position information
January 31
2014(audited)(amounts in thousands of Euro)

January 31
2013(audited)

January 31
2012(audited)

January 31
2011(audited)

January 31
2010(audited)
1,561,238

Net revenues

3,587,347

3,297,219

2,555,606

2,046,651

Gross margin

2,648,649

2,376,541

1,828,025

1,387,888

974,656

Operating income (EBIT)

939,237

889,781

628,935

418,387

187,032

Group net income

627,785625,681431,929

250,819

100,163

Total assets

3,888,292

3,385,279

2,943,568

2,366,015

2,147,481

Total liabilities

1,186,752

1,054,787

1,112,601

1,155,877

1,090,822

Total Group shareholders’ equity

2,687,554

2,320,022

1,822,743

1,204,350

1,047,903

39. Consolidated companies

EntityLocalcurrency

Sharecapital%(000s ofinterest
local
currency)

RegisteredofficeDate ofincorporation/ Main businessestablishment

Italy

90

PRADA spa

EUR

255,882

Artisans Shoes srl (*)

EUR

1,000

66.70

Milan, Italy

Production/Distribution/
Group Holding company

Montegranaro,
09/02/1977
Italy

Footwear production

Space Caffè srl (*)

EUR

20

100.00Milan, Italy

06/12/1990

Service company

IPI Logistica srl (*)

EUR

600

100.00Milan, Italy

26/01/1999

Service company

PRADA Stores srl (*)

EUR

520

100.00Milan, Italy

11/04/2001

Retail/sub holding
company

Car Shoe Italia srl (*)

EUR

10

100.00Milan, Italy

16/03/2001

Distribution/Retail

Church Italia srl

EUR

51

100.00Milan, Italy

31/01/1992

Distribution/Retail

Pellettieri d’Italia srl (*)

EUR

100

60.00

Milan, Italy

10/07/2013

Production

Marchesi Angelo srl (*)

EUR

23

80.00

Milan, Italy

14/03/2014

Service company

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Localcurrency

EntitySharecapital%(000s ofinterest
local
currency)

RegisteredofficeDate ofincorporation/ Main businessestablishment

100.00London, UK

07/01/1997
20/03/1995

Retail

14/03/1996

RetailEuropePRADA Retail UK ltd

GBP

5,000

PRADA Germany gmbh

EUR

215

100.00

Munich,Germany

PRADA Austria gmbh

EUR

40

100.00Wien, Austria

RetailPRADA Spain sa

EUR

240

100.00Madrid, Spain

14/05/1986

RetailPRADA Retail France sas

EUR

4,000

100.00Paris, France

10/10/1984

RetailPRADA Hellas Single
Partner Limited Liability
Company (*)

EUR

2,850

100.00Athens, Greece 19/12/2007

RetailPRADA Monte-Carlo sam

EUR

150

100.00Monte-Carlo,
Monaco25/05/1999

RetailPRADA sa (*)

EUR

31

100.00

Luxembourg

29/07/1994

Service company /Trademark owner

PRADA Company sa

EUR

3,204

100.00

Luxembourg

12/04/1999

Service company

100.00Amsterdam,
Netherlands

27/03/2000

Sub-holding company /Service company / RetailNorthampton,UK

22/07/1999

Sub-holding company

PRADA Far East bv (*)

EUR

20

Church Holding UK plc (*)

GBP

78,126100.00Church France sa

EUR

241

100.00Paris, France

01/06/1955

Retail

16/07/1987

RetailChurch UK Retail ltd

GBP

1,021

100.00

Northampton,
UK

Church’s English Shoes
Switzerland sa

CHF

100

100.00

Lugano,Switzerland

29/12/2000

Retail

16/01/1926

Sub-holding company /Production/Distribution

Church & Co. ltd

GBP

2,811

100.00

Northampton,
UK

Church & Co. (Footwear) ltd

GBP

44

100.00

Northampton,
UK

06/03/1954

Trademark ownerChurch English Shoes sa

EUR

75

100.00Brussels,
Belgium

25/02/1963

RetailPRADA Czech Republicsro (*)

CZK

2,500

100.00Prague, Czech
Rep.

25/06/2008

RetailPRADA Portugal. Unipessoal
lda (*)

EUR

5

100.00Lisbon, Portugal

07/08/2008

RetailPRADA Rus llc (*)

RUB

250

100.00

Moscow,
Russia07/11/2008

RetailChurch Spain sl

EUR

3

100.00Madrid, Spain

06/05/2009

RetailIstanbul,
Turkey26/02/2009

RetailPRADA Bosphorus Deri
Mamuller Ticaret Limited
Sirketi (*)

TRY41,000100.00PRADA Ukraine llc (*)

UAH

30,000100.00Kiev, Ukraine

14/10/2011

Retail100.00Amsterdam,
Netherlands

07/07/2011

RetailChurch Netherlands bv

EUR

18

Car Shoe UK ltd

GBP

100

100.00London, UK

28/10/2011

RetailChurch Ireland Retail ltd

EUR

50

100.00Dublin, Ireland 20/11/2011

RetailChurch Austria gmbh

EUR

35

100.00Wien, Austria

17/01/2012

Retail18/12/2012

RetailPrada Sweden AB

SEK

500

100.00Stockholm,
SwedenChurch Footwear AB

SEK

100

100.00Stockholm,
Sweden

18/12/2012

RetailPrada Switzerland sa (*)

CHF

226

100.00Geneva,Switzerland

28/09/2012

RetailPrada Kazakhstan llp (*)

KZT500,000

100.00

Almaty, Kazakhstan

24/06/2013

RetailKenon Limited

GBP

84,000100.00London, UK

07/02/2013

Real estate company

100.00Copenhagen,Denmark

13/03/2014

RetailChurch Denmark aps

PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 91

DKK

50

Interim Financial Report 2014 - Notes to the Interim condensed consolidated financial statements

91

06/10/14 09.54

Localcurrency

EntitySharecapital%(000s ofinterest
local
currency)

RegisteredofficeDate ofincorporation/ Main businessestablishment

Americas
PRADA USA Corp. (*)

USD

152,211100.00

New York,
U.S.A

25/10/1993

Services / Distribution/
RetailSpace USA Corp.

USD

301

100.00

New York,
U.S.A.

15/02/1994

RetailTRS Hawaii llc

USD

400

55.00

Honolulu,
U.S.A.

17/11/1999

Duty-free stores

PRADA Canada Corp. (*)

CAD

300

100.00Toronto,Canada01/05/1998

Distribution/Retail

Church & Co. (USA) ltd

USD

85

100.00

New York,
U.S.A.

08/09/1930

RetailReal estate company

Post Development corp (*)

USD

45,138100.00San Francisco,18/02/1997
U.S.A.

PRADA Retail Mexico, s de
rm de cv

MXN

2,058

100.00

Mexico City,
Mexico12/07/2011

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

BRL

47,000100.00

Sao Paolo,
Brazil12/04/2011

Retail

PRM Services S. De R.L. de CV

MXN

7,203

100.00

Mexico City,
Mexico27/02/2014

Retail/Services

PRADA Asia Pacific ltd

HKD

3,000

100.00Hong Kong

12/09/1997

Retail /Distribution/
Services

Asia-Pacific and Japan

92

PRADA Taiwan ltd

TWD

3,800

100.00Hong Kong

16/09/1993

RetailSpace HK ltd

HKD

1,000

100.00Hong Kong

25/02/1993

RetailPRADA Retail Malaysia Sdn.
Bnd.

MYR

1,000

100.00

Kuala Lumpur,
23/01/2002
Malaysia

RetailTRS Hong Kong

HKD

500

55.00

Hong Kong

23/02/2001

Duty-free stores

PRADA Singapore Pte ltd

SGD

1,000

100.00Singapore

31/10/1992

RetailTRS Singapore

SGD

500

55.00

Singapore

08/08/2002

Duty-free stores

PRADA Korea ltd

KRW

8,125,000

100.00Seoul, Korea

27/11/1995

RetailPRADA (Thailand) co ltd

THB

172,000

100.00

Bangkok,Thailand19/06/1997

RetailPRADA Japan co ltd

JPY

1,200,000

100.00Tokyo, Japan

01/03/1991

RetailTRS Guam Partnership

USD

1,095

55.00

Guam

01/07/1999

Duty-free stores

TRS Saipan Partnership

USD

1,405

55.00

Saipan01/07/1999

Duty-free stores

TRS New Zealand ltd

NZD

100

55.00

Wellington,
New Zealand

04/11/1999

Duty-free stores

PRADA Australia Pty ltd

AUD

10,500100.00

Sydney, Australia

21/04/1997

RetailPRADA Trading (Shanghai)co ltdRMB

1,653

100.00Shanghai,China

09/02/2004

RetailTRS Okinawa KK

JPY

10,000

55.00

Tokyo, Japan

21/01/2005

Duty-free stores

PRADA Fashion Commerce(Shanghai) co ltd

RMB

174,950

100.00Shanghai,China

31/10/2005

RetailChurch Japan co ltd

JPY

31,525100.00Tokyo, Japan

17/04/1992

RetailChurch Hong Kong Retail ltd

HKD

1,000

100.00Hong Kong

04/06/2004

RetailChurch Singapore Pte. ltd

SGD

500

100.00Singapore

18/08/2009

RetailCar Shoe Hong Kong ltd

HKD

3,000

100.00Hong Kong

26/02/2010

RetailPRADA Hong Kong P.D. ltd (*)

HKD

11,000100.00Hong Kong

15/12/2011

Service company

28/11/2012

Service company
RetailPrada Dongguan Trading Co.,
Ltd

HKD

3,000

100.00

Dongguan,
China

Church Footwear (Shanghai)Co., Ltd

RMB

11,900100.00Shanghai,China

05/12/2012

Prada New Zealand ltd

NZD

500

100.00Wellington,
New Zealand

05/07/2013

RetailPRADA India Fashion Private ltd

INR

100

100.00

Mumbai, India 30/09/2013

RetailPRADA Group

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Localcurrency

EntitySharecapital%(000s ofinterest
local
currency)

RegisteredofficeDate ofincorporation/ Main businessestablishment

Jebel Ali Free
Zone, Dubai

25/05/2011

Middle East
PRADA Middle East fzco (*)

AED

18,00060.00

Distribution/Services

PRADA Emirates llc (**)

AED

300

49.00

Dubai

04/08/2011

RetailPrada Kuwait wll (**)

KWD

50

49.00

Kuwait city

18/09/2012

RetailPrada Retail SPC (*)

QAR

15,000100.00Doha

03/02/2013

RetailPrada Saudi Arabia ltd (*)

AED

26,66675.00

Jeddah02/07/2014

RetailMAD

68,000100.00Casablanca,
Morocco

11/11/2011

RetailOther countries
PRADA Maroc sarlau (*)(*) Companies owned directly by PRADA spa(**) Company consolidated based on definition of control per IAS 27

Companies not included in scope of consolidation:
Company

PAC srl (in liquidation)

PRADA Group

Prada Group-Interim Financial Report 6ott 2014.indd 93

Percentage directinterest as at
July 31, 2014

Percentage directinterest as atJanuary 31, 2014

Note

Consolidation method

49.00

49.00

Associate

Equity method

Interim Financial Report 2014 - Notes to the Interim condensed consolidated financial statements

93

06/10/14 09.54

40. Disclousure of interests in other entities
Below are reported summarized financial information about the subsidiaries where theGroup have Non-controlling interest, as requested by IFRS 12.
Financial information for the six months period ended July 31, 2014, is as follows:Totalcurrent
assetsTotal
non-current
assetsTotalcurrent
liabilities

Total
non-current
liabilities

Net
Revenue

Net result
for the year

Dividends
paid to noncontrollinginterests

Localcurrency
/000

Local
currency
/000

Local
currency
/000

Local
currency
/000

Local
currency
/000

Local
currency
/000

Local
currency/000

Artisans Shoes srl

35,306

1,044

25,611

1,806

40,2722,008

510

Pellettieri d’Italia srl

459

342

1,372

83

-

(749)

-

TRS Hawaii llc

7,364

2,089

5,126

-

10,508406-

TRS Hong Kong

1,065

-

109

-

-

(101)

36,000TRS Singapore

1,909

374

609

85

2,209

307

900

TRS Guam Partnership

4,332

2,812

1,581

-

8,197

797

1,125

TRS Saipan Partnership

1,824

11

710

-

3,734

694

450

TRS New Zealand ltd

1,763

28

467

80

2,754

491

585

TRS Okinawa KK

403,956

129,208

197,427

45,349693,685

84,77590,000TRS Macau

146,50231,531

95,736

4,974

312,087

76,612-PRADA Emirates llc

110,476

90,487

178,200

4,081

132,529(3,223)-PRADA Middle East
fzco

279,429

4,466

155,733

29,570122,329

17,192-

Prada Kuwait wll

3,262

3,457

5,811

795

4,656

87

-

745

91

110

237

575

(42)

-

EntityMarchesi Angelo Srl

Financial information for the six months period ended July 31, 2013, is as follows:Totalcurrent
assetsTotal
non-current
assetsTotalcurrent
liabilities

Total
non-current
liabilities

Net
Revenue

Net result
for the year

Dividends
paid to noncontrollinginterests

Localcurrency
/000

Local
currency
/000

Local
currency
/000

Local
currency
/000

Local
currency
/000

Local
currency
/000

Local
currency/000

29,447958

21,834

1,735

26,612

(91)

352

25

-

-

-

-

-

-

TRS Hawaii llc

4,742

2,788

4,475

-

9,336

544

-

TRS Hong Kong

1,129

-

40

-

-

(37)

15,278TRS Singapore

3,130

554

911

79

3,914

857

-

TRS Guam Partnership

9,151

2,733

3,521

-

5,720

1,035

-

TRS Saipan Partnership

2,917

11

1,237

-

3,690

712

-

TRS New Zealand ltd

1,831

142

591

80

3,227

683

-

TRS Okinawa KK

511,456

143,942

129,205

37,421

572,651

54,917-TRS Macau

114,083

47,51972,214

6,111

275,377

55,224-PRADA Emirates llc

90,704

91,641

152,351

1,995

134,969

11,371-PRADA Middle East
fzco

249,003

1,887

130,83159,904

138,518

20,691-

Prada Kuwait wll

2,866

4,402

6,185

1,025

4,430

104

-

-

-

-

-

-

-

-

EntityArtisans Shoes srl
Pellettieri d’Italia srl

Marchesi Angelo Srl

At the reporting date of these 2014 Interim condensed consolidated financial statements
there are no significant restriction to the ability of the Group to access or use assets
and settle liabilities.
As described in Note 4, on March 14, 2014, the Group acquired the 80% of Marchesi
Angelo srl. The purchase commitments on the remaning 20% of the minority interests

94

PRADA Group

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06/10/14 09.54

resulting from the agreements were recognized in the Group’s equity reserves for an
amount equal to Euro 2.5 million.
The shareholders’ agreement signed by PRADA spa and Al Tayer Insignia llc witha view to developing a Prada and Miu Miu brand DOS network in the Middle East
provides that the parties may opt to exercise an option for PRADA spa to buy back up
to 20% of the share capital of PRADA Middle East fzco. As indicate in paragraph 46 of
IAS 39 an entity shall measure financial assets, including derivatives that are assets, attheir fair values, except for investments in equity instruments that do not have a quoted
market price in an active market and whose fair value cannot be reliably measured andderivatives that are linked to, and must be settled by, delivery of such unquoted equity
instruments, which shall be measured at cost. At the reporting date the PRADA’s
management maintains that the above mentioned option continue to fall under this
scenario described by IAS 39 and, as a result, the fair value of said derivative financial
instrument cannot be reasonably measured.
41. Events after the reporting period
Nothing to report.

PRADA Group

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