Hong Kong Exchanges and Clearing Limited and The Stock Exchange ofHong Kong Limited take no responsibility for the contents of thisannouncement,
makenorepresentation
as
to
its
accuracyorcompleteness and expressly disclaim any liability whatsoever for any
loss howsoever arising from or in reliance upon the whole or any partof the contents of this announcement.

PRADA spa
(Stock Code: 1913)

ANNOUNCEMENT
OF THE CONSOLIDATED RESULTS
FOR THE TWELVE-MONTH PERIODENDED DECEMBER 31, 2018-

Net revenues were Euro 3,142 million, up by 6% atconstant exchange rates compared with the twelve
months ended December 31, 2017 (+3% at current
exchange rates)-

Net retail sales were Euro 2,532 million, up by 7%
at constant exchange rates compared with the period
ended December 31, 2017 (+4% at current exchange
rates),
withpositive
trendsacrossbrands,products and geographical areas-

EBIT was Euro 324 million, 10% on net revenues-

The Group's net income for the period was Euro 205
million, 7% on net revenues-

Operating net cash flows were Euro 365 million-

The net financial position is indebtedness of Euro
314 million, after dividend payments totaling Euro
198 million
1Presentation of the Prada GroupPRADA spa (the “Company”), together with its subsidiaries(collectively the “Group”), is listed on the Hong Kong
Stock Exchange (HKSE code: 1913). It is one of the leading
companies in the luxury goods industry, where it operates
with the Prada, Miu Miu, Church’s and Car Shoe brands inthedesign,production
anddistributionofluxuryhandbags,
leathergoods,
footwear,clothing
andaccessories. The Group also operates in the eyewear andfragrance industries under specific licensing agreements.
In addition, with its acquisition of Pasticceria Marchesi
1824, the Group made, in the last years, its entry into
the food industry, where it’s consistently positioned at
the highest levels of quality.
As of December 31, 2018, the Group’s products are sold in
70 countries worldwide through a network of 634 directly
operated stores (“DOS”) and a select network of luxury
department stores, independent retailers and franchise
stores.
The Company is a joint-stock company, registereddomiciled in Italy. Its registered office is in
Fogazzaro 28, Milan.

and
via

Key financial information

Key economic figures(amounts in thousands of Euro)

IFRS

Pro-forma

Twelve months
closed at
December 31
2018

Twelve months
closed at
December 31
2017

3,142,148
551,20317.5%
323,84610.3%
205,4430.080

3,056,475
587,98019.2%
360,02011.8%
248,925
0.097

IFRS

IFRS

Net revenues
EBITDAEBITDA %EBITEBIT %Net income of the Group
Earnings per share (Euro)

Key indicators(amounts in thousands of Euro)%change2.8%-6.3%-10.0%-17.5%-17.5%

December 31
2018

December 31
2017change638,493
3,210,574

546,205
2,969,909(103,738)

92,288240,665(209,767)
33,334797(81,409)

Net operating working capital
Net invested capital
Net financial position
surplus/(deficit)
Group shareholders’ equity
Average number of employees
Net operating cash flows (*)(313,505)
2,877,986
13,197365,1082

2,844,652
12,400446,517

(*) figure relates to the eleven-month period for December 31, 2017

Highlights for the period ended December 31, 2018
In 2018 the Prada Group’s sales performance turned around,showing revenue growth that had been absent for someyears. The results, which reflect a plan to increase
volumes and profitability in the medium term, arereassuring to management with respect to the effectivenessof the omnichannel strategy and of the investments made inrecent years.
Changes to the organizational structure, especially at an
operational level, and large steps forward in thedigitalization process have made the Prada Group more
dynamic and able to interpret more rapidly the spirit of
the times. While this has been happening throughout theCompany, the design team has focused its creative talenton the development of products that are particularly
popular with the new generations, such as sneakers,
backpacks and special editions. The collections havetherefore benefited from a product assortment bettertargeted to the tastes of such market segment, while
maintaining the brand identities and essential brandcodes. Nylon was renewed as a major component of theSpring/Summer collection and Fall/Winter Linea Rossa 2018
collections, and was at the center of an important
communications campaign.
Handbags, which have enjoyed the continued success of
iconic models launched in recent collections, contributed
significantly to the annual sales growth.
The strategic decision to go for a product range
increasingly geared toward preserving the exclusivity ofthe brands entailed revising the promotional sales
policies to achieve more effective product positioning. In
terms of volume, discounted sales fell in 2018 while fullprice sales rose. However, the positive contribution ofthis situation is not evident in the operating margin as
it was eliminated by the impact of very unfavorable
exchange rates compared with those of the prior period.
The Fondazione Prada and Luna Rossa sponsorships havepromoted the Prada brand on the international scene andhave enhanced its value through its association with theprestigious cultural center and the oldest surviving
sports competition, respectively. For the first time,
Prada’s role in America’s Cup is not only as a teamsponsor; it is also the Title and Presenting Sponsor of
the entire sailing competition. Thanks to this agreement,
in 2018 the brand began to benefit from growing visibility

3through events regarding the presentation of the 36thedition, such as the hologram presentation of the new AC75
flying monohull and the unveiling of the new trophy.
The brand identity was also strengthened with the additionof new fashion shows, Prada Resort in Manhattan, broadcast
live in Times Square, and Miu Miu Croisière at HotelRegina in Paris.
Special displays at directly operated stores and pop-up
shops at prestigious department stores were used to market
new collections and celebrate re-releases of iconic
products in uniquely designed and conceptualized settings.
Meanwhile, the constant research of store concepts led toadditional restyling projects. Along with investments inthe websites and in social media, these activities havefurther enriched the customer journey and are forging
closer integration of physical retail, digital retail andcommunications.
The investments of the year involved the industrial area,with the reinforcement of manufacturing and logistics
structures in Italy, and the corporate area, withimprovements
tothecentralandregional
offices.
Moreover, an extensive IT investment plan, part of theGroup’s broader digital transformation strategy, isbringing benefits across the Company, such as in the areasof human resources and institutional compliance. This
broad investment plan, prioritized with significant
resources allocated to it by the Directors, enables Prada
to be among the most technologically advanced companies
for traditional retail as well as for its own e-commerce
platforms and manufacturing processes, while preserving
the Group’s characteristic craftsmanship.

4

Basis of Presentation
The Consolidated Financial Statements of the Prada Groupas at December 31, 2018, which consist of the Consolidated
StatementofFinancial
Position,theConsolidated
Statement of Profit or Loss for the twelve months ended
December
31,
2018,
the
Consolidated
StatementofComprehensive Income for the twelve months ended December
31, 2018, the Consolidated Statement of Cash Flows for thetwelve months ended December 31, 2018, the Consolidated
Statement of Changes in Shareholders’ Equity and the Notes
to the Consolidated Financial Statements, have been
prepared in accordance with the International Financial
Reporting Standards (“IFRSs”) issued by the International
Accounting Standards Board (“IASB”) and endorsed by theEuropean Union.
At the date of presentation of the Consolidated Financial
Statements, there were no differences between the IFRSs
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 interpretations of the International
Financial Reporting Interpretations Committee (“IFRIC”),
previously called the Standing Interpretations Committee(“SIC”).
The Consolidated Statement of Financial Position presents
separately
thecurrent
andnon-current
assetsandliabilities. All information necessary for accurate andcomplete disclosure is provided in the Notes to theConsolidated
Financial
Statements.
The
Consolidated
Statement of Profit or Loss is classified by destination.
The Consolidated Statement of Cash Flows has been preparedwith the indirect method.
The Consolidated Financial Statements have been preparedon a going concern basis and are presented in Euro, whichis also the functional currency of PRADA spa.

5New Standards and Amendments issued by the IASB, endorsedby the European Union and applicable to the Prada Group
from January 1, 2018
New IFRS and Amendments to existing
standards

Effective Datefor
Prada GroupIFRS 9 Financial Instruments

January 1, 2018

IFRS 15 Revenue from Contracts with
Customers

January 1, 2018

Amendments to IFRS 4

January 1, 2018

Clarifications to IFRS 15 Revenue fromContracts with Customers
2014-2016 Cycle affecting IFRS 1, IAS 28,
IFRS 12IFRS 2 Classification and Measurement of
Share-based Payment Transactions

January 1, 2018
January 1, 2018
January 1, 2018

IAS 40: Transfers of Investment Property

January 1, 2018

IFRIC Interpretation 22: “Foreign Currency
Transactions and Advance Consideration”

January 1, 2018

EU endorsement dateEndorsed in November
2016
Endorsed in September
2016
Endorsed in November
2017
Endorsed in October
2017
Endorsed in February
2018
Endorsed in February
2018
Endorsed in March
2018
Endorsed in March2018

IFRS 9 Financial Instruments
On January 1, 2018, IFRS 9 “Financial instruments”
replaced IAS 39 “Financial instruments: recognition andmeasurement”.
The Group adopted the Standard using the exemption whichallows not to restate comparative figures of previous
years
in
terms
of
classification,measurement
andimpairments. Changes in the carrying amounts of financial
assets and liabilities deriving from the adoption of IFRS
9 were recognized in the retained earnings as at January
1, 2018.
IFRS 9 introduced new provisions for the classificationand measurement of financial assets based on the businessmodel with which these activities are managed, taking into
account the characteristics of their financial flows. IFRS
9 classifies financial assets into three main categories:
at amortized cost, at fair value recognized through profit
or loss (FVTPL) and at fair value through othercomprehensive income (FVOCI). Categories indicated by IAS
39, like assets held to maturity, loans and receivables
and assets available for sale are eliminated.
Below are reported the results of the analyzes carried out
and the impacts deriving from the introduction of the new
IFRS 9 Standard in the Group’s Consolidated Financial
Statements.
Classification and measurement
The Group carried out an analysis of financial assets andliabilities to determine impacts deriving from the firsttime application of IFRS 9, considering the contractual
cash flows of financial instruments and the business modelof the Group. The Group has concluded that most of the6non-derivative financial assets in the Group’s financial
statements are classified in the IFRS 9 category of assets
valued at amortized cost.
On the basis of the new classification criteria,
Investments in equity instruments, whose fair value at
December 31, 2017 was Euro 8.4 million and classified asassets available for sale, are now reported in the“Investments in equity instruments” category. For each
investment in equity instrument, the Group has decided
whether the fair value measurement will have to berecognized through profit or loss (FVTPL) or through thestatement of comprehensive income (FVOCI), not recyclable
to profit or loss. This option, applicable to each
investment in equity instrument, it’s an irrevocable
election and cannot change. The Group applied the FVTOCI
criteria for equity investments existing at year end.
Impairment
The new Standard introduced a new method based on the“expected loss”, replacing the previous “incurred loss”
model. In response to this new method for measuring
financialassets,
which
for
the
Prada
Group
are
essentially the trade receivables, a new impairment
procedure was developed deriving in part from thecommercial scoring system already in place in the Group.
Such procedure is based on the probabilities of default of
the country in which the subsidiary owner of thereceivable operates and the probability of default of thecounterparty itself.
The new standard was adopted without restating theDecember 31, 2017 balances and the effect on the opening
equity reserves was Euro 1.7 million, net of taxes.
Hedge accounting
The new model introduced by IFRS 9 aims to simplify hedge
accounting, bringing it closer to the company’s risk
management activities. The application of the new standard
entails a different way of recording derivatives in thefinancial statements, now based on the recognition of allchanges in the fair value in the cash flow hedge reserve,
provided that the hedged cash flow does not already affectthe profit or loss of the year (as already established by
IAS 39).
The
application
of
the
new
Standard
involvedareclassification within equity reserves, between the “cashflow hedge reserve” and the “other reserves”, of Euro 2.1
million, net of taxes.
IFRS 15 Revenue from Contracts with Customers

7

On January 1, 2018, IFRS 15 “Revenue from Contracts with
Customers”
replaced
IAS
18“Revenue”
and
IAS
11
“Construction Contracts”.
IFRS 15 establishes a new model of revenue recognition
based on the allocation of the transaction selling pricebetween the various obligations identified within acontract with a customer.
The criteria for the revenues recognition depends on how aperformance obligation is satisfied, whether at a point intime or over time. The new standard does not allow revenue
to be recognized before the control of the promised goods
or services is transferred to the customer. Moreover, thecosts of fulfilling customer contracts may be capitalized
when such costs are directly related to the contract andrecovered over the life of the contract.
The new standard was adopted by the Group without
restating previous periods and it did have an impact on
the opening equity as at January 1, 2018 amounting to Euro
2.7 million, net of taxes.
The adoption of the new standard had two applications for
the Group. The first one related to a different method forrecognizing future liabilities for returns of finishedproducts, resulting in an increase in the current
liabilities accounted for at December 31, 2017 balanced bya corresponding new inventory item, “return assets” (Euro
4.6 million at January 1, 2018). The second one related to
the write-off of such return assets in order to adjust its
carrying value to the net realizable value (Euro 3.8
million).
No material adjustment to the classification of revenue
and expense in the statement of profit or loss was
identified given that the Prada Group acts on its own
behalf (principal) in each activity concerning finishedproduct sales. Moreover, the new standard did not produce
effects with reference to the license agreements.
New Standards and Amendments issued by the IASB, endorsedby the European Union, but not yet applicable to the PradaGroup as effective for financial years beginning on
January 1, 2019
Effective Datefor
Prada GroupNew IFRS and Amendments to existing
standards

January 1, 2019

IFRS 16 Leases
IFRS 9: Prepayment Features with Negative
Compensation
IFRIC Interpretation 23: “Uncertainty over
Income Tax Treatments”

On

January

13,

2016

IASB

January 1, 2019
January 1, 2019

published

8

EU endorsement status
Endorsed in October
2017
Endorsed in March
2018
Endorsed in October
2018

IFRS

16

“Leases”,

intended to supersede IAS 17 – “Leases”, as well as IFRIC
4 “Determining Whether an Arrangement Contains a Lease”,
SIC-15 “Operating Leases — Incentives”, and SIC-27“Evaluating the Substance of Transactions Involving theLegal Form of a Lease”.
The new standard provides a new definition of leases andintroduces a method based on the right of use of an asset
to distinguish between a lease and a service contract,using as discriminating factors: identification of theasset, right of substitution of the asset, right to obtain
substantially all the economic benefits from use of theasset and right to direct the identified leased asset’s
use.
The standard provides for a single model to recognize andmeasure leases whereby a lessee recognizes a right-of-use
asset (including for operating leases) and a leaseliability. The standard does not include significant
changes for lessors.
The standard is effective for annual periods beginning on
or after January 1, 2019 and the Company opted to apply it
retrospectively according to the “modified retrospective
approach”. As a result, the adoption of the standard willentail the recognition on January 1, 2019 of:- a lease liability of Euro 2.4 billion, corresponding to
the present value of future lease payments at thetransition
date,
discounted
using
the
incremental
borrowing rate applicable at the transition date for eachlease. Such amount does not differ significantly from thetotal lease obligations reported in Note 40 of the 2018
Annual Report because the discount component is more orless balanced out by the optional periods, considered onlyin the estimated lease liability. Leases for which theunderlying asset is of low value (“low-value assets”) andshort-term leases constitute an immaterial difference
between the two amounts;- a right-of-use asset of Euro 2.4 billion obtained fromthe amount of the above lease liability reduced by the
total allowances for deferred rent recognized in the
December 31, 2018 financial statements, reclassified fromliabilities to this new asset item pursuant to thetransition. The right-of-use asset was also increased by
the carrying amount of the “store lease acquisition” at
December 31, 2018 and other Statement of Financial
Position components that were immaterial on the whole.
The adoption of the new IFRS Standard will not have any
material effect on the opening equity of the year 2019.
In adopting IFRS 16, the Prada Group intends to use theexemption allowed by IFRS 16:5(a) regarding short-term
9leases and low-value assets, although the effects of the
exemption are expected to be immaterial. For such leases,
the introduction of IFRS 16 will not entail recognition of
the lease liability and the related right of use, but thelease payments will be recognized in the Statement ofProfit or Loss on a straight-line basis over the terms of
the respective leases.
Transition to IFRS 16 introduces areas where professional
judgment may be required, involving the establishment ofsome accounting policies and the use of estimates. The
main ones are summarized below:- the identification of a lease term is very importantbecause the form, legislation and common business practice
regarding leases for real estate vary considerably fromone jurisdiction to another. Based on its past experience,
the Group has set an accounting policy for inclusion of
the lease renewal period beyond the non-cancellable
period, limited to cases in which the lease assigns anenforceable right that the Group is reasonably certain to
exercise;- since most leases stipulated by the Group do not have aninterest rate implicit in the lease, the discount rateapplicable to future lease payments was determined as therisk-free rate of each country in which the leases were
stipulated, with payment dates based on the terms of thespecific lease, increased by the parent company’s credit
spread.
The implementation of the technological solution chosen by
the Group to adopt IFRS 16 was nearly completed at the endof the reporting period. The new structure, designed tosatisfy the new regulatory requirements, while improving
the business processes involved in managing the underlying
assets of leases, intends to ensure an adequate level ofinternal
control
based
on
the
standardization
andautomation of the processes and full integration of the
ERP systems with the financial reporting systems.
The final amount of lease liability is likely to change
between the date of this Financial Statement and the
publication of the financial statement for the interim
financial report ended June 30, 2019 as regards theestimated term of certain leases. This is because market
and technical positions in certain countries could still
evolve in this period, thereby calling into question someof the assumptions used to date to estimate lease terms.

Scope of work of Messrs. Deloitte & Touche S.p.A.
The figures in respect of the Group’s “Consolidated
statement of financial position”, “Consolidated Statement10

of Profit or Loss for the twelve-month period ended
December31,
2018",“Statementofconsolidated
comprehensive income for the twelve-month period ended
December 31, 2018”, “Summarized Statement of Consolidated
cash flows for the twelve-month period ended December 31,
2018”, “Statement of changes in consolidated shareholders’equity” and some of the “Notes to the Consolidated
financial statements” thereto, as set out in thispreliminary announcement have been agreed by the Group's
auditors, Messrs. Deloitte & Touche S.p.A., to the amounts
set out in the Group’s audited Consolidated financial
statements for the twelve-month period ended December 31,
2018. The work performed by Messrs. Deloitte & Touche
S.p.A. in this respect did not constitute an assurance
engagement in accordance with International Standards on
Auditing and consequently no assurance has been expressedby Messrs. Deloitte & Touche S.p.A. on the preliminary
announcement.
The figures in respect of the "Pro-Forma Statement ofProfit or Loss for the twelve-month period ended December
31, 2017" and related details and tables are unaudited.

11Consolidated statement of Profit or Loss for theperiod ended December 31, 2018

(amounts in thousands of Euro)

IFRS

Pro-forma

twelve months
closed at
December 31
2018%

twelvemonthsclosed at
December 31
2017%

Net sales (Note 1)
Royalties
Net revenues

3,098,068
44,0803,142,148

98.6%
1.4%
100%

3,008,280
48,195
3,056,475

98.4%
1.6%
100%

Cost of goods sold(879,554)-28.0%(810,885)-26.5%

Gross margin

2,262,594

72.0%

2,245,590

73.5%-61.7% (1,885,570)-61.7%

323,84610.3%

360,020

11.8%(21,940)-0.7%(6,168)

-0.2%

632

0.0%

670

0.0%

Income before taxation

302,5389.6%

354,522

11.6%

Taxation (Note 4)(94,356)-3.0%(105,284)-3.4%

Net income for the period

208,182

6.6%

249,238

8.2%

2,739

0.1%

313

0.0%

205,443

6.5%

248,925

8.1%

Operating expenses (Note 3)(1,938,748)

EBITInterest and other financial
income/(expenses), net
Dividends from investments

Net income – Non-controllinginterests
Net income – Group
Basic and diluted earnings per
share(in Euro per share) - (Note 5)

0.080

Depreciation, amortization andimpairment

227,357

7.2%

227,960

7.5%

EBITDA

551,203

17.5%

587,980

19.2%

12

0.097

Consolidated statement of financial position
Note

as at
December
31
2018

as at
December 31
2017

6
7

599,821
321,913631,791
9,718

892,610
289,973
569,929
13,923

8

12,6266,107

9185,741
1,761,610

192,072
1,964,614

10
10

1,577,352
920,011
99,538217,104
102,992205
2,917,202
4,678,812

1,522,782
921,458
8,416
209,402110,698
2,005
2,774,761
4,739,375

421,4814,477
315,21185,043
14,220146,429
986,861

352,971
4,488
313,697
68,116
7,654
157,346904,272

487,43160,001
51,31030,050159,013
7,077
794,882
1,781,743

638,954
61,444
61,81532,012
167,595
7,112
968,932
1,873,204

Share capital
Total other reserves
Translation reserve
Net income for the period
Net Equity attributable to owners of
Net Equity attributable to NonTotal Net Equity

255,882
2,383,720
32,941
205,4432,877,986
19,083
2,897,069

255,882
2,375,084(4,035)
217,7212,844,652
21,5192,866,171

Total Liabilities and Total Net Equity

4,678,812

4,739,375

Net current assets
Total assets less current liabilities

774,749
3,691,951

1,060,342
3,835,103(amounts in thousands of Euro)
AssetsCurrent assets
Cash and cash equivalents
Trade receivables, net
Inventories
Derivative financial instruments –Receivables from, and advance payments
to, related parties - current
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Investments in equity instruments
Deferred tax assets
Other non-current assets
Derivative financial instruments - nonTotal non-current assets
Total Assets
Liabilities and Shareholders’ Equity
Current liabilities
Bank overdrafts and short-term loans
Payables to related parties - current
Trade payables
Tax payables
Derivative financial instruments Other current liabilities
Total current liabilities
Non-current liabilities
Long-term financial payables
Post-employment benefits
Provision for risks and charges
Deferred tax liabilities
Other non-current liabilities
Derivative financial instruments nonTotal non-current liabilities
Total Liabilities

11

12
13
14

15

13

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

Fair
Number of
Cash
Value
Share Transla- Share
SharesActuariflow
AvailabCapitation(inpremiumalhedge
le forlReserve reserve
thousands
Reserve
reservesale)
Reserve

Balance at
2,558,824
January 31, 2017

Allocation of2016 net income
Dividends-

255,882-

Otherreserves

Total
Other
Reserves

Net
incomeforyear

Equityattribut
Equitya-ble toattributa
Non-ble toControll
owners of.
GroupInterests

144,791 410,047 (7,897) (5,707) (1,656) 2,006,713 2,401,500 278,329 3,080,502

-

-

-

-

-

278,329

278,329(278,32
9)

-

Total
Equity24,0283,104,53
0--(308,073(1,014)
)

-

-

-

-

-

-

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

-

-

-

-

-

-

-

-

-

-

-

89

89

-

-

-

-

-

-

-

-

-

-

-

323

323

-

-

(148,826
)

-

4,624

- (3,914)-

710 217,721

69,605(1,894)67,711

-

-

-

-

-

1,604

(13)

1,591

2,558,824

255,882(4,035) 410,047 (3,273) (4,103) (5,570) 1,977,983 2,375,084 217,721 2,844,652

21,5192,866,17
1

-

-

-

-

-

-

-

(2,740)(2,740)-(2,740)-(2,740)

-

-

-

-

-

-

-

(1,724)(1,724)-(1,724)(33)(1,757)---- (2,063)

-

-

2,063

-

-

-

-

-

2,558,824

255,882(4,035) 410,047 (5,336) (4,103) (5,570) 1,975,582 2,370,620 217,721 2,840,188

21,486

2,861,67
4

Allocation of2017 net income

-

-

-

-

Dividends

-

-

-

-

-

-

- (191,912) (191,912)

-

-

-

-

-

-

-

-

-

-

-

345

345

-

-

-

-

-

-

-

-

-

-

-

(577)

(577)

-

-

36,976- (5,284)---(5,284) 205,443

237,135

3,567

240,702---(719) (6,706)-(7,425)(7,425)(9)(7,434)

Share capitalincrease
Transactions
with Noncontrollingshareholders
Comprehensive
income for theperiod(recyclable to
P&L)
Comprehensive
income for theperiod(not recyclable
to P&L)
Balance at
December 31,
2017
First Time
Adoption IFRS 15– Allowance for
return assets
First Time
Adoption IFRS 9– Allowance forbad and doubtful
debtsFirst Time
Adoption IFRS 9– Derivatives
Balance atJanuary 1,
2018

Share capitalincrease
Transactions
with Noncontrollingshareholders
Comprehensive
income for theperiod(recyclable to
P&L)
Comprehensive
income for theperiod (not

-

-

-

-

-

1,604

-

14

-

-

-

217,7211,604

217,721-(217,721)-- (191,912)-(197,641(5,729))recyclable to
P&L)
Balance at
December 31,
2018

2,558,824

255,882

32,941 410,047(10,620(12,276(4,822)2,001,391 2,383,720 205,443 2,877,986))

15

19,083

2,897,06
9

Summarized statement of consolidated cash flows
IFRS

IFRS

twelvemonthsended
December 31
2018

elevenmonthsended
December 31
2017

365,108

446,517

Cash flows generated/(utilized) by investingti iti(379,421)(211,609)

Cash flows generated/(utilized) by financing
ti iti(288,828)

324

Change in cash and cash equivalents, net of bankoverdrafts(303,141)

235,232(amounts in thousands of Euro)Net cash flows from operating activities

Statement of consolidated comprehensive income
twelvemonthsended
December 31
2018

elevenmonthsended
December 31
2017

208,182

218,017

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

37,80437,804(151,016)(151,016)

Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax
impact(7,300)
2,016

5,729
(1,105)(5,284)4,624

Change in Fair Value reserve
Tax impact
Change in Fair Value reserve less tax impact(6,706)(6,706)(3,362)(552)(3,914)

Change in Actuarial reserve
Tax impact
Change in Actuarial reserve less tax impact

(826)
98
(728)

1,921
(330)
1,591

233,268

69,302Comprehensive income for the period – Noncontrolling Interests

3,558(1,907)

Comprehensive income for the period – Group229,710

71,209(amounts in thousands of Euro)Net income for the period – ConsolidatedA) Items recyclable to P&L:

B) Item not recyclable to P&L:

Consolidated comprehensive income for the period

16Notes to the consolidated results for theperiod ended December 31, 2018
1. Analysis of Net Revenues(amounts in thousands of Euro)

IFRS

Pro-forma

twelve months
ended
December 31
2018

twelve months
ended
December 31
2017%changeNet Sales by geographical area
EuropeAmericas
Asia PacificJapan
Middle East
Other countries
Total Net Sales

1,188,910
426,184
1,035,061
350,31393,655
3,945
3,098,068

38.4% 1,169,679
13.8%
431,84333.4%
972,88811.3%
336,8103.0%
92,9240.1%
4,136
100% 3,008,280

38.9%
1.6%
14.4% -1.3%
32.3%
6.4%
11.2%
4.0%
3.1%
0.8%
0.1% -4.6%
100%
3.0%

Net Sales by brand
Prada
Miu Miu
Church's
Other
Total Net Sales

2,558,108
453,476
69,07917,405
3,098,068

82.6% 2,461,246
14.6%
459,338
2.2%
70,9990.6%
16,697
100% 3,008,280

81.8%
3.9%
15.3% -1.3%
2.4% -2.7%
0.5%
4.2%
100%
3.0%

Net Sales by product line
Leather goods
Footwear
Clothing
Other
Total Net Sales

1,756,288
616,263
666,187
59,3303,098,068

56.7% 1,702,824
19.9%
624,598
21.5%
623,988
1.9%
56,870100% 3,008,280

56.6%
3.1%
20.8% -1.3%
20.7%
6.8%
1.9%
4.3%
100%
3.0%

2,532,004

81.7% 2,443,697

81.2%

3.6%

18.3%

564,583

18.8%

0.3%

3,098,068

100% 3,008,280

100%

3.0%

Net Revenues
Net Sales
Royalties

3,098,068
44,08098.6% 3,008,280
1.4%
48,195

98.4%
1.6%

3.0%
-8.5%

Total Net revenues

3,142,148

100%

100%

2.8%

Net Sales by channel
Net Sales of direct operated stores(DOS)
Sales to Independent customers andfranchisees
Total Net Sales

566,06417

3,056,475

2. Number of stores
December 31, 2018
Franchise
Ownedes

December 31, 2017
Franchise
Owned
es

January 31, 2017
Owned

Franchisees

Prada
Miu Miu
Church's
Car Shoe
Marchesi

398
166
63
4
3

25
9
-

394
167
57
4
3

25
9
-

387
171
54
5
3

25
9
-

Total

634

34

625

34

620

34

December 31, 2018
Franchise
Ownedes

December 31, 2017
Franchise
Owned
es

January 31, 2017
Owned

Franchisees

EuropeAmericas
Asia PacificJapan
Middle East &Africa

224
111
195
81

4
25
-

229
112
184
79

4
25
-

220
113
187
78

4
25
-

23

5

21

5

22

5

Total

634

34

625

34

620

34

3. Operating expenses
IFRS(amounts in thousands of Euro)

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

Pro-forma

twelvetwelve months
monthsended% on net% on net
ended
December 31 revenues
revenues
December 31
2018
2017
125,179

4.0%

130,468

4.3%

207,278

6.6%

184,752

6.0%

1,414,153
192,138

45.0%
6.1%

1,399,273
171,077

45.8%
5.6%

1,938,748

61.7%

1,885,570

61.7%

18

4. Taxation
as at
December 31
2018

as at
December 31
2017

Current taxation
Deferred taxation

95,184(828)

69,896
21,904

Total

94,35691,800(amounts in thousands of Euro)PRADA spa is eligible to benefit from the Patent box
regime that grants a tax exemption for income derived fromthe use of the qualified intangible assets, for both
Italian corporate income tax (IRES) and Italian regionaltax (IRAP) purposes. This optional Patent box regime wasintroduced by the 2015 Italian Bill, Italian Law No. 190
of December 2014 (subsequently amended and supplemented)
and lasts as of fiscal year 2015 to fiscal year 2019.
On January 29, 2016 PRADA spa formally applied for the
Patent box regime to Italian Tax authorities for the
directuseofintangibles,
whose
methodforthedetermination of the exemption has to be mandatorily
agreed in the framework of a tax ruling. The procedure has
seen significant progresses in last period and theCompany’s Directors expect to formally sign the agreementin 2019.
Therefore in 2019 Financial statements, PRADA spa willrecognize the patent box benefit for the whole 5 years
period.

5. Earnings and dividends per share, basic anddilutedEarnings per share
Earnings per share are calculated by dividing the net
income of the period attributable to Group’s shareholders
by the weighted average number of ordinary shares inissue.

Group net income in Euro
Weighted average number of ordinary shares in
issue
Basic and Diluted earnings per share in Euro,
calculated on weighted average number of shares

19

IFRS

Pro-Forma

twelve months
ended
December 31
2018

twelvemonthsended
December 31
2017

205,443,297

248,924,973
2,558,824,00
2,558,824,000
0
0.080

0.097

Dividend per share
The Board of Directors of PRADA spa has proposed a
dividend of Euro 153,529,440 (Euro 0.06 per share) for thetwelve months ended December 31, 2018.
During 2018 the Company distributed dividends of Euro
191,911,800 (Euro 0.075 per share), as approved at theGeneral Meeting held on April 27, 2018 to approve theDecember 31, 2017 financial statements.
The dividends and the related Italian withholding tax(Euro 10 million), determined by applying the ordinary
Italian tax rate to the entire amount of the dividends
distributed to the beneficial owners of the Company’s
shares held through the Hong Kong Central Clearing and
Settlement System, were fully paid during the year.

6. Trade receivables, net
as at
December 31
2018

as at
December 31
2017

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

319,945(8,821)
10,789284,602(7,892)
13,263

Total

321,913289,973(amounts in thousands of Euro)The change in the provision for doubtful debts for theperiod is detailed below:(amounts in thousands of Euro)

Opening balance
IFRS 9 First Time Adoption - Bad Debt Provision
Exchange differences
Increases
Reversals
Utilization
Closing balance

20

as at
December 31
2018

as at
December 31
2017

7,892

6,654

2,246
7
413
(325)
(1,412)

(171)
1,926
(517)

8,821

7,892

An aging analysis of the trade receivables, before theprovision for doubtful debts, is shown below:
Overdue (days)
31 ≤61 ≤ 90 91 ≤ 120
60(amounts inthousands of Euro)

as at
Not
Dec. 31 overdu
2018eTrade receivables

330,734

283,862

18,226 12,021

1,565

2,278

12,782

Total

330,734

283,862

18,226 12,021

1,565

2,278

12,782(amounts inthousands of Euro)

as at
Not
Dec. 31 overdu
2017e1 ≤ 30 31 ≤ 60 61 ≤ 90 91 ≤ 120> 120

Trade receivables

297,865

267,27
1

9,871

6,225

2,052

1,622

10,824

Total

297,865

267,27
1

9,871

6,225

2,052

1,622

10,8241 ≤ 30> 120

Overdue (days)

An aging analysis of the trade receivables, net of theprovision for doubtful debts, is shown below:(amounts inthousands of Euro)

as at
Not
Dec. 31
overdue
2018

Overdue (days)
61 ≤1 ≤ 30 31 ≤ 60
91 ≤ 12090

Trade receivables
less allowance for
doubtful accounts

321,913 281,485

18,137

11,993

1,331

2,264

6,703

Total

321,913 281,485

18,137

11,993

1,331

2,264

6,703

(amounts inthousands of
Euro)

as at
Not
Dec. 31
overdue2017

1 ≤ 30 31 ≤ 60 61 ≤ 90

91 ≤
120

> 120

Trade
receivables lessallowance for
doubtfulaccounts

289,973

267,133

9,871

6,225

2,052

1,622

3,070

Total

289,973

267,133

9,871

6,225

2,052

1,622

3,070

> 120

Overdue (days)21

7. Inventories, net
as at
December 31
2018

as at
December 31
2017

104,036
36,327530,324

102,246
30,556
484,709(39,312)(47,582)

Total

631,375

569,929

Return assets
Allowance for return assets

2,391(1,975)-

Total

631,791

569,929(amounts in thousands of Euro)

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

Net inventories rose by Euro 61.9 million from December
31, 2017 due essentially to the restocking of finishedproducts at the retail network.
The changes in the provision for obsolete and slow-moving
inventories are as follows:
Total allowance AllowanceTotal(amounts in
Raw Finished
for obsoleteforallowance
thousands of Euro) materials products and slow-moving
returnoninventories
assets inventories
Balance at
December 31, 2017
First time
adoption IFRS 15 –Allowance for
return assets
Exchangedifferences
Increases
Utilization
Reversal
Balance at
December 31, 2018

23,77423,80847,582-47,582

-

-

-

3,800

3,800

(1)

(32)

(33)

-

(33)

130
6,855
(707) (11,996)(2,506)(13)

6,985(12,703)(2,519)(1,825)-

6,985(14,528)(2,519)39,312

1,975

41,287

20,69018,622The change of the allowance is mainly related to the useof merchandise written down in prior years.

8. Receivables from, and advance payments to,related parties(amounts in thousands of Euro)

as at
December 31
2018

as at
December 31
2017

Prepaid sponsorship
Other receivables and advances

6,761
5,865

6,107

Receivables from and advances to related parties- current

12,6266,107

22

9. Other current assets
as at
December 31
2018

as at
December 31
2017

VAT
Income tax and other tax receivables
Other assets
Prepayments
Deposits

48,57654,181
14,11555,897
12,97242,44469,652
18,75552,779
8,442

Total

185,741

192,072(amounts in thousands of Euro)

10. Capital expenditure
The changes in the carrying amount of property, plant andequipment for the period ended December 31, 2018 are shown
below:(amounts inthousands ofEuro)

Producti
Total
Land
Leasehol Furnitu
Assetson plant
Other
net
and
d
re &
under
and
tangiblcarryinbuildinimprove- fitting
constructmachiner
es
g
gs
ments
s
ion
y
amountBalance at
December 31,
2017659,350

45,73731,880(16,553)(1,153)

17,733

Additions
Depreciation
Disposals
Exchangedifferences
Other movements
Impairment
Balance at
December 31,
2018456,999 175,471

94,21991,006

63,933 46,549 11,303(110,494 (35,419 (11,596(9,550)
)
)
)
(74)
(2)
(67) (8,063)

(950)

(14)

50,591(15)

723,150

5,111

2,389

102

8,005
(43)

17,942
6,731(4,902) (2,068)

166
(47)

61,794

428,587 193,586

86,084

1,522,782

75,645 247,043(183,612)- (9,359)
537

7,175
(82,715)720(322) (7,397)

84,151

1,577,352

The changes in the carrying amount of intangible assets
for the period ended December 31, 2018 are shown below:(amounts inthousands of
Euro)

Total
Store
AssetsOther
net
TradeLease Softwar
inGoodwill
intangibcarryinmarks
AcquisitieprogreslesgonssamountBalance at
December 31,
2017248,990

518,336

76,7291,431(14,021)--

11,973

-

(325)

(70)

Additions
Amortization
Disposals
Exchangedifferences-

35,085

9,280(11,019(9,136))(1,633)
(22)
550

23

(4)

11,256 31,062 921,458

118 13,742(2,094)
1

36,544(36,270)- (1,655)

(14)

138

Other movements--

17,65011,655

Impairment

-

-

-

(1)

236,075

518,266

96,13344,974

Balance at
December 31,
2018

24

(29,329
)
(78)

(101)

(125)
(79)

9,180 15,383 920,011

11. Other non-current assets
as at
as at
December 31 December 31
2018
2017

(amounts in thousands of Euro)

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

64,7709,606
11,71916,89866,511
13,004
13,021
18,162

Total

102,993

110,698

12. Payables to related parties - current
as at
as at
December 31 December 31
2018
2017

(amounts in thousands of Euro)

Financial payables
Other payables

4,415
62

4,423
65

Payables to related parties - current

4,477

4,488

13. Trade payables
as at
as at
December 31 December 31
2018
2017

(amounts in thousands of Euro)

Trade payables – third parties
Trade payables – related parties

309,294
5,917

302,847
10,850Total

315,211

313,697

An aging analysis of the trade payables at the reporting
date is shown below:(amounts inthousands of
Euro)

as at
Dec. 312018

Not
overdue

Overdue (days)
1 ≤ 30Trade payables

315,211

280,453

18,034

5,727

2,024

1,072

7,901

Total

315,211

280,453

18,034

5,727

2,024

1,072

7,901

(amounts inthousands of
Euro)

as at
Dec. 312017

Not
overdue1 ≤ 3031 ≤ 60 61 ≤ 90 91 ≤ 120> 120

Trade payables

313,697

284,005

13,277

7,097

1,411

748

7,159

Total

313,697

284,005

13,277

7,097

1,411

748

7,159

31 ≤ 60 61 ≤ 90 91 ≤ 120> 120

Overdue (days)

25

14. Other current liabilities
as at
as at
December 31 December 31
2018
2017

(amounts in thousands of Euro)

Payables for capital expenditure
Accrued expenses and deferred income
Other payables

50,086
19,71976,62562,357
20,94374,046

Total

146,430

157,346

15. Provisions for risks and charges
The changes in the provisions for risks and charges are as
follows:(amounts in thousands ofEuro)

Provisionforlitigation

Provisionfor tax
disputes

Other
Provisions

Total

Balance at December 31,
2017

3,094

9,928

48,793

61,815

Exchange differences
Reversals
Utilized
Increases
Reclassification

53
(929)
(928)
135
-

44
(5,719)(652)
1,728(2,228)724(1,139)(4,437)
2,843
-

821
(7,787)(6,017)
4,706(2,228)

Balance at December 31,
2018

1,425

3,101

46,78451,310The
provisions
for
risks
and
charges
represent
management’s best estimate of the maximum amount ofpotential liabilities. In the Directors’ opinion, based on
the information available to them, the total amountallocated for risks and charges at the reporting date isadequate in respect of the liabilities that could arise
from them.

26

Management Discussion and Analysis for theperiod ended December 31, 2018
Distribution channels
Net retail sales for the twelve months ended December 31,
2018 showed growth of 6.8% at constant exchange rates and3.6% at current exchange rates. The annual performance waspositive, although it slowed down in the latter months due
primarily to the volatility of some markets and thestrategic decision to reduce the discounted sales. The
number of Directly Operated Stores, including 29 openings
and 20 closures, rose from 625 at December 31, 2017 to 634
at December 31, 2018.
Sales from the wholesale channel were substantiallyconsistent with those of the prior period, as they rose by
1.3% at constant exchange rates and by 0.3% at current
exchange rates. Wholesale orders to e-tailers increased inline with the Group’s digital strategy.

Markets
Net sales in the Asia-Pacific market rose by 9.7% atconstant exchange rates (6.4% at current exchange rates),with gains from the twelve months pro-forma of 2017 in all
the main markets (especially South Korea) as a result ofgrowth with both the local clientele and with intraregional travelers flows. Greater China produced net salesof Euro 675 million, up by 8.2% at constant exchange rates
and 4.5% at current exchange rates.
Europe had a 2.8% increase in sales at constant exchange
rates (+1.6% at current exchange rates). The growth wasconcentrated in purchases by local customers.
Net sales in the American market rose by 3.9% at constantexchange rates (-1.3% at current exchange rates). The
increase was split evenly between local customers andtravelers.
Japan reported higher net sales both at constant exchange
rates (+7.4%) and at current exchange rates (+4%), mainly
as a result of the recovery in domestic consumer spending.
Net sales in the Middle East rose by 5.2% at constantexchange rates (+0.8% at current exchange rates). The
opening of two important stores, Prada and Miu Miu, inside
the prestigious Dubai Mall contributed to the growth ofthe period.

Products
Clothing sales rose by 9.6% at constant exchange rates and27

by 6.8% at current exchange rates. The sales increase
involved all Prada and Miu Miu markets.
Sales of leather goods rose by 5.9% at constant exchange
rates and by 3.1% at current exchange rates. Handbag
sales, driven by the continued success of iconic models,
showed the greatest increases. All regions reported sales
growth.
Footwear sales rose by 1.5% at constant exchange rates andfell by 1.3% at current exchange rates, with different
trends for the various markets: from double-digit growth
in Japan and Asia Pacific to a slight decline in theAmericas, concentrated in the wholesale channel.

BrandsPrada brand net sales increased by 6.7% at constantexchange rates (+3.9% at current exchange rates). At
constant exchange rates, all product categories reported
higher sales than those of 2017.
Miu Miu net sales rose by 1.7% at constant exchange rates(while they fell by 1.3% at current exchange rates),reflecting growth for clothing and almost steady results
for footwear and leather goods compared with the previous
period.
The Church’s brand reported a decline of 1.6% at constantexchange rates (-2.7% at current exchange rates). The
increase in retail sales, achieved through both existing
stores and six store openings, compensated for thedecrease
in
sales
to
independent
customers.
The
reorganization of the Church’s wholesale distribution
channel, carried out in the past two years, coincided witha period of temporary downturn in the performance of thischannel.
“Other brands” consisted primarily of sales of Marchesi
1824 brand patisserie products, which grew from the priorperiod.

Royalties
Licensed businesses generated royalties of Euro 44.1
million, down by 8.5% at current exchange rates. The delaythat occurred in 2018 was substantially attributable toeyewear licenses, which are currently in a phase ofreorganization and renewal.

28

Operating results
The gross margin showed a dilution of 150 basis points,
decreasing from 73.5% for the pro-forma twelve-month
period ended December 31, 2017 to 72% for 2018. The
negative impact of exchange rates, including the effect ofhedges, was nearly wholly responsible for this, despite
the positive contribution of a more favorable ratio offull-price sales to discounted sales.
Operating expenses rose by Euro 53.2 million compared withthe 2017 pro-forma twelve-month period (from Euro 1,885.6
million to Euro 1,938.7 million), whereas they remained
consistent as a percentage of net revenues (61.7%).
Selling costs rose mainly as a result of the increase intheretailsales
staff,
whereasadvertisingandcommunications costs rose on account of the numerous
initiatives of the year, including digital ones, andsponsorship costs.
IFRS(amounts in thousands of Euro)

Product design and development
costs
Advertising and communications
costs
Selling costs
General and administrative costs
Total Operating expenses

Pro-forma

twelvemonths%ended
on netDecember 31 revenues
2018

twelvemonths%ended
on netDecember 31 revenues
2017

125,179

4.0%

130,468

4.3%

207,278

6.6%

184,752

6.0%

1,414,153
192,138

45.0%
6.1%

1,399,273
171,077

45.8%
5.6%

1,938,748

61.7%

1,885,570

61.7%

EBIT for the twelve months ended December 31, 2018 wasEuro 323.8 million, or 10.3% of net revenues, whereas in
the 2017 pro-forma period it was Euro 360 million, or
11.8% of net revenues. The adverse effect of exchange
rates had a large impact on the dilution of the operating
margin.
The increase in finance costs was attributable primarily
to exchange differences on financial items.

29

Net invested capitalThe
followingtable
reclassifies
thestatementoffinancial position to provide a better understanding of
the composition of the net invested capital:
as at
as at
December 31 December 31
2018
2017

(amounts in thousands of Euro)

Non-current assets (excluding deferred tax assets)
Trade receivables, net
Inventories, net
Trade payables
Net operating working capital
Other current assets (excluding items of financial
position)
Other current liabilities (excluding items offinancial position)
Other current assets/(liabilities), net
Provision for risks
Post-employment benefits
Other long-term liabilities
Deferred taxation, net
Other non-current assets/(liabilities)
Net invested capital
Shareholder's equity – Group
Shareholder's equity – Non-controlling interests
Total Consolidated shareholders' equity
Long-term financial payables
Short-term financial, net surplus/(deficit)
Net financial position surplus/(deficit)
Shareholders’ equity and net financial position
Net Debt to Consolidated shareholders' equity ratio

2,700,098
321,913631,791(315,211)
638,4932,565,359
289,973
569,929(313,697)
546,205

208,085

212,102(245,754)(233,181)(37,669)(21,079)(51,310)(61,815)(60,001)(61,444)(166,091)(174,706)
187,054
177,389(90,348)(120,576)
3,210,574
2,969,909(2,877,986) (2,844,652)(19,083)(21,519)(2,897,069) (2,866,171)(487,431)(638,954)
173,926535,216(313,505)(103,738)(3,210,574) (2,969,909)
10.8%
3.5%

As at December 31, 2018, the Group has net invested
capitalofEuro
3,210.6
million,net
financialindebtedness of Euro 313.5 million and consolidated
shareholders’ equity of Euro 2,897.1 million.
Non-current assets, consisting essentially of property
plant, equipment and intangible assets, increased fromEuro 2,565.4 million as at December 31, 2017 to Euro
2,700.1 million as at December 31, 2018. The difference
was affected mainly by the investments in property plant,
equipment and intangible assets (Euro 283.6 million) anduse of liquidity in financial investments (Euro 91.4
million),netofdepreciation,amortization
andimpairments (Euro 227.4 million) and assets disposal (Euro
11 million).
The capital expenditure is detailed below:
twelveelevenmonthsmonthsended
ended
December 31 December 31
2018
2017

(amounts in thousands of Euro)30

Retail
Production, logistics and corporate

135,997
147,590

110,026
140,638

Total

283,587

250,664

Approximately 50% of the total capital expenditure of theyear was invested in the retail area primarily for store
restyling and relocation projects, and to a lesser extent
in the store openings of the period. Other capital
expenditure was used to build up the manufacturing andlogistics structures in Italy, improve the corporate areas
and fund the digital transformation process.
The net operating working capital is Euro 638.5 million,
up by Euro 92.3 million from that of December 31, 2017,
due essentially to the restocking of finished products at
the retail network.
Other current liabilities, net increased by Euro 16.6
million due to greater current tax liabilities and thefair value change of derivatives.
Other non-current liabilities, net, showed a decrease ofEuro 30.2 million attributable to the use of provisions
for deferred rent and other medium/long-term liabilities.
During the year the Group paid dividends for an amount ofEuro 197.6 million.

31

Net financial position surplus/(deficit)
The following table presents the composition of the net
financial position:
as at
as at
December 31 December 31
2018
2017

(amounts in thousands of Euro)Bank borrowing – non-current
Total financial payables – non-current(487,431)(487,431)(638,954)(638,954)

Bond – current
Financial payables and bank overdrafts - current
Payables to related parties
Total financial payables – current(421,481)(4,415)(425,896)(130,000)(222,971)(4,423)(357,394)

Total financial payables(913,326)(996,348)

Cash and cash equivalents

599,821892,610

Total Cash and cash equivalents

599,821892,610

Net financial surplus/(deficit), total(313,505)(103,738)

Net financial surplus/(deficit) excluding related
party balances(309,090)(99,315)

1.76

5.67

EBITDA / Net financial deficit(*) The ratio of EBITDA on Net financial deficit at December 31, 2017 was determinedtaking into account the EBITDA pro-forma for the 12 months of 2017

The net financial indebtedness as at December 31, 2018 isEuro 313.5 million, an increase of Euro 209.8 million
compared with that of December 31, 2017. Funding was usedprimarily for the distribution of dividends (Euro 197.6
million), capital expenditures and cash investments (Euro379.4 million), net of the operating cash flow (Euro 365.1
million).
The total amount of undrawn lines of credit at December
31, 2018 is Euro 597 million.

32

Events after the reporting dateNo significant events.

Outlook
The process of business transformation started in 2017 isdelivering positive results.
The strategic renewal and subsequent organizational
review, which will be completed in the months to come,will give the Group a more dynamic structure and a renewed
capacity to interpret the cultural evolution of the newgenerations with which to share the identity of Group’s
brands.
The Group has already started a technological upgrade
program that will increase control and efficiency of all
business factors, from marketing to logistics and fromproduct to customer service.
It’s clear that the digital transformation has radicallyaltered relationships with consumers, making them evermore aware of their purchasing choices. In this context,
communication takes on an even more crucial importance toeffectively reach Group’s customers.
With this objective in mind the Group will continue toinvest in all its digital assets to create an increasingly
immersive brand experience with a unique and engaging
involvement at all touch points.
The Group is also investing to strengthen the industrial
infrastructure to ensure timely responses to the different
needs of the individual markets, translating its creative
vision of the evolution of looks into products readily
available at stores.
It’s on the basis of these plans that
expectation of a progressive recovery of
margins is based.

33

the Group’s
volumes andCorporate Governance practices
The Company is committed to maintaining a high standard ofcorporate governance practices as part of its commitmenttoeffective
corporate
governance.
The
corporate
governance model adopted by the Company consists of a setof rules and standards aimed toward establishing efficientand transparent operations within the Company and its
subsidiaries (the “Group”), to protect the rights of theCompany’s shareholders and to enhance shareholder value.
The corporate governance model adopted by the Company isin compliance with the applicable 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”). Full details
on the Company’s corporate governance practices are set
out in the Company’s 2018 Annual Report.

Audit Committee
The Company has established an Audit Committee incompliance with Rule 3.21 of the Listing Rules where atleast one member possesses appropriate professional
qualifications
inaccountingor
possesses
relatedfinancialmanagement
expertisetodischarge
theresponsibility of the Audit Committee. The membership of
the Audit Committee consists of three Independent NonExecutive Directors, namely, Mr. Gian Franco Oliviero
Mattei (Chairman), Mr. Giancarlo Forestieri and Mr.
Maurizio Cereda who, as of May 23, 2018, has replaced Mr.
Sing Cheong Liu.
During the year ended December 31, 2018 (the “Reviewed
Period”), the Audit Committee held eight meetings (with anattendance rate of 100%) mainly to review with senior
management, the Group’s internal and external auditor andthe board of statutory auditors, significant internal andexternal audit findings and financial matters as required
under the Committee’s terms of reference and make relevant
recommendations to the Board. The Audit Committee’s review
covered the audit plan for the year 2018, the findings ofboththeinternal
andexternal
auditors,
internal
controls, risk assessment, annual review of the continuingconnected transaction of the Group for 2018, tax and legal
updates (including litigations and cooperative complianceregime with the Italian tax authorities) and the financial
reporting matters (including the annual results for theyear ended December 31, 2017 and the interim financial
results as at June 30, 2018) before recommending them tothe Board for approval.
The Audit Committee also held two meetings on March 12 and34

15, 2019, to review the final results for the Reviewed
Period, before recommending it to the Board for approval.

Compliance with the Code
The Board has reviewed the Company’s corporate governancepractices and is satisfied that such practices havecomplied with the code provisions set out in the Code, forthe entire Reviewed Period.

Directors’ Securities Transactions
The Company has adopted written procedures governing
Directors’ securities transactions on terms no lessexacting than the required standard set out in the Model
Code for Securities Transactions by Directors of Listed
Issuers(the“ModelCode”).
Specific
writtenacknowledgments have been obtained from each Director toconfirm his/her compliance with required standard set out
in the Model Code and the Company’s relevant procedures
regarding directors’ securities transactions for theduration of the Reviewed Period. There were no incidents
of non-compliance during the Reviewed Period.
The Company has also adopted written procedures governing
securities transactions carried out by the relevant
employees who are likely to possess inside information in
relation to the Company and its securities. The terms ofthese procedures are no less exacting than the standard
set out in the Model Code.
The Company has adopted policies to ensure that inside
information are handled and disseminated in accordancewith the requirements of the Securities and Futures
Ordinance and the Listing Rules.

Purchase, Sale or
Listed Securities

Redemption

of

the

Company’s

On August 1, 2018, the Company redeemed Euro 130 million,
2.75% notes on their maturity date (the “Notes”). The
aggregate price paid for the redemption of the Notes wasEuro 130 million. The Notes were issued by the Company on
August 1, 2013 for subscription by professional andinstitutional investors only and were admitted to theofficial list on the Irish Stock Exchange. Following theredemption, the Notes were cancelled and delisted from the
Irish Stock Exchange listing.
Save as disclosed above, neither the Company nor any of
its subsidiaries has purchased, sold or redeemed any of
the Company’s listed securities during the Reviewed
Period.

35

Shareholders’ general meeting
The Shareholders’ general meeting of the Company will beheld on Tuesday, April 30, 2019 (the “AGM”).
Notice of the AGM will be published on the Company’s
website at www.pradagroup.com and on the Hong Kong
Exchanges
andClearing
Limited’s
websiteatwww.hkexnews.hk and dispatched to the shareholders of theCompany in due course.

Final Dividend
The Board recommends, for the Reviewed Period, a final
dividend of Euro 153,529,440 (Euro 0.06 per share).The
payments shall be made:(i) in Euro to the shareholders recorded in thesection of the Company’s shareholders register
kept by the Company at its registered office in
Milan (Italy), and(ii) in Hong Kong dollars to the shareholders recordedin the section of the Company’s shareholders
register kept in Hong Kong. The relevant exchange
rate will be the opening buying T/T rate of Hong
Kong dollars to Euros as announced by the Hong
Kong Association of Banks (www.hkab.org.hk) on the
day the final dividend is approved by theshareholders.
Subject to the shareholders’ approval of the payment of
the final dividend at the forthcoming shareholders’general meeting of the Company to be held on Tuesday,
April 30, 2019, such dividend will be paid on Friday, May
24, 2019.

Book Closure and Record Dates
For determining shareholders’ right to attend and vote at
the AGM:
Latest time to lodge transfer
documents with the Company’s Hong
Kong
Share
RegistrarortheCompany in Milan (Note 1)

April 25, 2019 4:30 pm HK
time/10:30 am CET
time

Book closure (both sections) (NoteFrom April 26 toApril 30, 2019 (bothdays inclusive)

2)

Record date

April 26, 201936

For determining shareholders’ entitlement to the paymentof the proposed final dividend:Latest time to lodge transfer documentswith the Company’s Hong Kong Share
Registrar or the Company in Milan (Note 1)

May 7, 2019 4:30 pm

Book closure (both sections) (Note 2)

May 8, 2019

Record Date

May 8, 2019

Dispatch date of dividend warrants

May 24, 2019

HK time/10:30
am CET time

Notes:
1. All transfers accompanied by the relevant sharecertificate(s) must be lodged with:(i) theCompany’s
Hong
Kong
share
registrar,
Computershare
Hong
Kong
Investor
Services
Limited whose address is at Shops 1712-16, 17th
Floor, Hopewell Centre, 183 Queen's Road East,
Wanchai, Hong Kong, if the transfer concerns
sharesregisteredinthesectionoftheCompany’s shareholders register kept by theCompany’s Hong Kong share registrar itself; or(ii) the Company’s registered office at Via Antonio
Fogazzaro no. 28, Milan 20135, Italy, if thetransfer concerns shares registered in thesection of the Company’s shareholders register
kept by the Company itself.
2. No transfer of shares will be registered on the bookclosure date.

Publication ofAnnual Report

AnnualResults

Announcement

andThis Annual Results Announcement is published on the
Company’s website at www.pradagroup.com and on the Hong
Kong
Exchanges
andClearing
Limited’s
websiteatwww.hkexnews.hk. The Company’s 2018 Annual Report will be
published on the same websites and dispatched toshareholders of the Company in due course.
By Order of the Board
PRADA S.p.A.
Mr. Carlo Mazzi
Chairman
Milan (Italy), March 15, 201937

As at the date of this announcement, the Company’s executive
directors are Mr. Carlo MAZZI, Ms. Miuccia PRADA BIANCHI, Mr.
Patrizio BERTELLI and Ms. Alessandra COZZANI; the Company’s
non-executive director is Stefano SIMONTACCHI and the Company’s
independent non-executive directors are Mr. Gian Franco
Oliviero MATTEI, Mr. Giancarlo FORESTIERI, Mr. Sing Cheong LIU
and Mr. Maurizio CEREDA.

38