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Interim Financial Report 2012

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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
25
33
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Patrizio Bertelli

Miuccia Prada2

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The PRADA GroupPRADA GroupInterim Financial Report 2012 - The PRADA 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 XI 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)

Miuccia Prada Bianchi(Chairperson and Executive Director)
Patrizio Bertelli(Chief Executive Officer and Executive Director)
Carlo Mazzi(Deputy Chairman and Executive Director)
Donatello Galli(Chief Financial Officer and Executive Director)
Marco Salomoni(Non-Executive Director)
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)

Audit Committee

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

Remuneration Committee

Gian Franco Oliviero Mattei (Chairman)
Marco Salomoni
Giancarlo Forestieri

Nomination Committee

Gian Franco Oliviero Mattei (Chairman)
Marco Salomoni
Sing Cheong Liu

Board of Statutory Auditors(appointed on May 22, 2012)

Antonino Parisi (Chairman)
Roberto Spada (Standing member)David Terracina (Standing member)Supervisory Board (Law 231/2001) David Terracina (Chairman)
Marco Salomoni
Franco Bertoli

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Main Shareholder

PRADA Holding bv
Dam 3-71012 JS Amsterdam - The Netherlands

Joint Company Secretaries

Patrizia Albano
Via A. Fogazzaro, 28
20135 Milan, Italy
Ying-Kwai Yuen (Fellow member, HKICS)
Flat A, 20th Floor
Block 4, Sceneway Garden
8 Sceneway Road
Kowloon, Hong Kong

Authorized Representatives

Donatello GalliVia Elba, 1020144 Milan, Italy
Ying-Kwai Yuen (Fellow member, HKICS)
Flat A, 20th Floor
Block 4, Sceneway Garden
8 Sceneway Road
Kowloon, Hong Kong

Alternate Authorized
Representative to
Donatello Galli

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

Compliance Advisor

Anglo Chinese Corporate Finance, Limited
40th Floor, Two Exchange Square
8 Connaught PlaceCentralHong Kong

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PRADA Group Structure

PRADA spa
Milan

Holding - Manufacturing, distribution, services

66.7%

Artisan Shoes srl
Montegranaro
Production

100%

IPI Logistica srl
Milan
services

Post Develop. Corp
San Francisco
real eastate

100%

100%

SPACE Caffè srl
Milan
services

Church Holding UK plc
Northampton
sub-Holding

100%

49%

PAC srl
Milan(in liquidation)
equity method

100%
PRADA Canada Corp
TorontoretailPRADA Hong Kong pd ltd 100%Hong Kong
services

100%
Church & Co ltd
UK - Northampton
Manufacturing
distribution-services

100%

PRADA USA Corp
New York
distribution-services-retail

100%
PRADA Far East bv
Amsterdam
sub-Holding / outlet
100% PRADA Australia Pty ltd
SydneyretailPRADA Korea ltd
Seoul
retail100%

100%

Space USA Corp
New Yorkoutlets

100% PRADA Singapore Pte ltd
Singaporeretail55%

TRS Hawaii Ilc
Honolulu
retail100%

55%

TRS Guam PartnershipGuamretail

100%

99.9%

PRADA Mexico
Mexico City
retailPRADA Retail
Malaysia Sdn Bhd
Malaysia
retailPRADA Japan Co ltd
Tokyoretail55%

100%

TRS PRADA
Okinawa KKTokyo - retail
PRADA Thailand Co ltd
Bangkokretail100% Church’s English Shoes
Switzerland sa
Lugano - retail

Church & Co (USA) ltd
New Yorkretail100%

55% Travel Retail Shop Pty ltd
Australia
retail100% Church Japan Company ltd
Tokyo
dorMant

Church UK Retail ltd
Londonretail100%

55%

TRS Saipan partnership
SaipanretailChurch’s English Shoes sa 100%
Bruxelles
retail55%

TRS Hong Kong
Hong Kong
dfs

100%

JCS (2009) ltd
Northampton
distribution

TRS Hong Kong ltd
Macau Branch
Hong Kong - retail

100% Church’s Hong Kong ltd
Hong Kong
retailChurch France sa
Parisretail100%

100% Church & Co (Footwear) ltd
Northampton
tradeMarks

Church Italia srl
Milanretail100%

55%

TRS New Zealand ltd
Aucklandretail100% Church Singapore pte, ltd
SingaporeretailChurch Spain sl
Madridretail100%

55%

TRS Singapore
SingaporeretailChurch Ireland Retail ltd 100%
Dublinretail100%

PRADA Asia PacificHong Kong
distribution-retail-services

100%

Church Netherlands bv
Amsterdam
retail100%

Church Austria gmbh
Wienretail

PAP Macau
Branch ltd
Macau - retail
PRADA Taiwan ltd
Hong Kong
services

100%

Taipei BranchTaipeiretailPRADA China ltd
Hong Kong
retail100%

PRADA Trading
Shanghai Co ltd
Shanghai - retail

100%

Space Hong Kong ltd
Hong Kong
outlet100%

PRADA Fashion
Comm. Shanghai Co ltd 100%
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100%

PRADA Hellas Single
Partner llc
Athens - retail

100%
PRADA Stores srl
Milanretail100%

PRADA Czech Rep. sro
Pragueretail100% PRADA Montecarlo sam
Montecarloretail100%

PRADA Portugal
Unipessoal lda
Lisbon - retail

100%

PRADA Austria gmbh
Wienretail100%

PRADA Company sa
Luxembourg
services

100%

PRADA Rus llc
Moscow
retail100%

PRADA Spain sl
Madridretail100%

Car Shoe sa
Luxembourg
tradeMark

99.9% PRADA Bosphorus Derl
Mamüller ltd Sirketi
Istanbul - retail60%

PRADA Middle East fzco
Jebel AliFree Zone Dubai
distribution-services

49%

PRADA Emirates llc
Dubai
retail99.9%

PRADA BrasilSãu Paulo
retail100%

PRADA Ukraine llc
Kiev
retail100%

PRADA Maroc Sarlau
Casablanca
retailPRADA Group

100% PRADA Germany gmbh
Münchenretail100%

Space sa
Mendrisiooutlets100%

PRADA Retail UK ltd
Londonretail100%
PRADA sa
Luxembourg
tradeMarkPRADA sa
Swiss Branch
Lugano - services

100%
Car Shoe Italia srl
Milan
distribution-retail100%

Car ShoeSingapore pte ltd
Singapore - retail

PRADA Retail UK ltd
Irish Branch
Dublin - retail100%

Car ShoeHong Kong ltd
Hong Kong - retail

100% PRADA Retail France sas
Parisretail100%

Car Shoe UK ltd
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Financial Review

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The Financial Review of the Board of Directors refers to the Group of companies
controlled by PRADA spa (the Company), holding company of the PRADA Group (theGroup) and is based on the Consolidated financial statements of the Company at July
31, 2012. This Financial Review must be read together with the Interim condensed
consolidated financial statements.
Consolidated income statement(amounts in thousands of Euro)

Retail%six months
ended July 31
2011
audited

%1,229,966

79.5%

835,372

73.6%

Wholesale294,72119.0%

282,031

24.9%

Royalties

22,686

1.5%

16,878

1.5%

Net revenues

1,547,373

100.0%

1,134,281

100.0%

Cost of goods sold(440,872)-28.5%(329,098)-29.0%

Gross margin

1,106,501

71.5%

805,183

71.0%

Operating expenses(711,619)-46.0%(551,805)-48.6%

EBIT

394,88225.5%

253.378

22.3%

Interest and other financial expenses, net(2,911)-0.2%(11,600)-1.0%

Income before taxation

391,97125.3%

241,778

21.3%

Taxation(102,756)-6.6%(60,577)-5.3%

Net income from continuing operations

289,21518.7%

181,201

16.0%

Net income for the period

289,21518.7%

181,201

16.0%

2,806

0.2%

1,669

0.1%

Net income – Group

286,40918.5%

179,532

15.8%

Depreciation, amortization and impairment

74,491

4.8%

61,627

5.4%

EBITDA

469,37330.3%

315,005

27.8%

Net income – Non-controlling interests

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

six months
ended July 31
2012
unaudited

PRADA Group

0.112

0.071

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

six months
ended
July 312012
unaudited

twelve months
ended
January 31
2012
auditedsix months
ended
July 312012
unaudited% change
on July
2011

1,134,281

2,555,606

1,547,373

36.4%

EBITDA

315,005759,252

469,373

49.0%

EBIT

253,378

628,935

394,882

55.8%

Income before tax

241,778

602,908

391,971

62.1%

Net income of the Group

59.5%

179,532

431,929

286,409

Average headcount (persons)

7,740

8,067

9,101

17.6%

Earnings per share

0.07

0.17

0.11

56.6%

EBITDA %

27.8%

29.7%

30.3%

EBIT %

22.3%

24.6%

25.5%

July 312011
auditedJanuary 31
2012
auditedJuly 312012
unaudited

Key statement of financial position information(amounts in thousands of Euro)Net operating working capitalchangeon January
2012

354,507357,648

351,874(5,774)

Net invested capital

1,680,572

1,817,327

1,944,812

127,485

Net financial position surplus/(deficit) - including
payable for withholding on dividends(134,365)

13,64082,532

68,892

Group shareholders’ equity

1,541,134

1,822,743

2,017,482

194,739

Capital expenditure

134,726

278,856

121,688-

Net operating cash flows

209,598

479,954

332,192-

2012 first half financial highlights
The results achieved by the Group in the first half of 2012 once again confirmed its
track record of brilliant growth. In a difficult economic environment, with widespread
recession in the Euro zone and some economic slowdown in other regions, Prada
managed to achieve one of the highest growth rates in the worldwide luxury goods
market, further strengthening its major position in the business.
The Group’s retail expansion strategy enabled a further increase in profitability, which
also benefited from favorable exchange rates.
The Group’s consolidated net revenues for the six months ended July 31, 2012,amounted to Euro 1,547.4 million, a 36.4% increase compared to the same periodof 2011, when net revenues totaled Euro 1,134.3 million. In line with the first quarter
ended April 30, 2012, Same Store Sales Growth (SSSG) for the six months period wasvery solid at 19%, while double digit growth was achieved across all markets.
The Directly Operated Stores (DOS) network expansion program saw the Group
opening its first ever DOS in Brazil, Mexico, Morocco and Ukraine while consolidating
established markets with new openings and important renovations.
EBITDA for the first six months improved 49% to Euro 469.4 million compared to Euro
315 million posted in the six months ended July 31, 2011. Contribution to net revenues
advanced to 30.3% from 27.8% for the previous period, improving further the 29.1%
recorded in the first quarter of 2012.
The Group’s net income amounted to Euro 286.4 million, showing a 59.5% increase
compared to Euro 179.5 million for the first half of 2011.
Results from operations and tight control on net working capital needs delivered strong
cash flows that, net of investments for Euro 140 million and dividends for Euro 126
million, allowed the Group to further improve net financial surplus to Euro 82.5 million
from Euro 13.6 million at January 31, 2012.
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Net sales analysis
six months
ended July 31
2012
unaudited%

six months
ended July 31
2011
audited%% changeItaly

259,326

17.0%

213,444

19.1%

21.5%

Europe348,69122.9%

250,664

22.4%

39.1%

Americas224,70214.7%

171,853

15.4%

30.8%

Asia Pacific532,47134.9%

367,995

32.9%

44.7%

Japan

143,874

9.5%

107,193

9.6%

34.2%

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

Other countries

15,623

1.0%

6,254

0.6%

149.8%

1,524,687

100.0%

1,117,403

100.0%

36.4%

Prada

1,233,433

80.9%

878,383

78.6%

40.4%

Miu Miu

245,97116.1%

198,872

17.8%

23.7%

Church's

31,0102.0%

27,003

2.4%

14.8%

Car Shoe

11,342

0.8%

9,711

0.9%

16.8%

Other

2,931

0.2%

3,434

0.3%

-14.6%

Total

1,524,687

100.0%

1,117,403

100.0%

36.4%

Clothing

248,67716.3%

212,371

19.0%

17.1%

Leather goods

943,060

61.8%

617,657

55.3%

52.7%

Footwear

315,29020.7%

275,048

24.6%

14.6%

Other

17,6601.2%

12,327

1.1%

43.3%

Total

1,524,687

100.0%

1,117,403

100.0%

36.4%

1,229,966

80.7%

835,372

74.8%

47.2%

294,72119.3%

282,031

25.2%

4.5%

Total

1,524,687

100.0%

1,117,403

100.0%

36.4%

Net sales

1,524,687

98.5%

1,117,403

98.5%

36.4%

Royalties

22,686

1.5%

16,878

1.5%

34.4%

1,547,373

100.0%

1,134,281

100.0%

36.4%

Total
Net sales by brandNet sales by product line

Net sales by distribution channelDOS
Independent customers and franchises

Total net revenues

For the six months period ended July 31, 2012, consolidated net revenues totaled Euro
1,547.4 million, up by 36.4% (+28.4% at constant exchange rates) on the Euro 1,134.3
million recorded in the same period of 2011.
Distribution channels
The retail channel increased by 47.2% to a total of Euro 1,230 million (Euro 835.4
million in the same period of 2011). At constant exchange rates the increase was
37.4%. This commercial growth was driven by the DOS expansion and 19% SSSG.
The contribution by retail sales to the Group’s consolidated net revenues advanced to80.7% (74.8% in the first half of 2011), confirming the Group’s core strategy focusedon this channel. A net total of 26 new stores (28 openings, 2 closures) opened since
the beginning of the period and took the total number of DOS at July 31, 2012, to 414.
The wholesale network accounted for the remaining 19.3% of total net sales, amounting
to Euro 294.7 million, and achieved 4.5% growth over the same period of 2011. At
constant exchange rates the increase was 1.3%. As already mentioned in the firstquarter results, this channel partially benefited from a shift in deliveries to independent
customers that took place at the end of the last financial year.

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Markets
In the first half of 2012 the Group grew in all geographical areas.
The Asia Pacific market delivered the highest growth rate (+44.7% as reported and+31.8% at constant exchange rates) and volumes, posting net sales of Euro 532.5
million (Euro 368 million in the same period of 2011). Thus, its contribution to total
net sales increased further to 34.9% (32.9% in the same period of 2011). Growth
was achieved almost entirely through the retail channel which recorded a +46.8%
increase (+20% SSSG and +33.3% at constant exchange rates). At July 31, 2012, theDOS network numbered some 119 stores, including 5 stores newly opened during theperiod. The Greater China area (China, Hong Kong and Macau) contributed SSSG of+21% and posted net sales of Euro 334.6 million, an increase of 50.2% compared toEuro 222.8 million recorded for the six months ended July 31, 2011.
As the Group’s second largest market, Europe (excluding Italy) contributed 22.9% of
total net sales for the six months ended July 31, 2012, some Euro 348.7 million (Euro250.7 million in the same period of 2011). The increase (+39.1% as reported and +36.5%
at constant exchange rates) was quite impressive considering the particularly difficult
economic situation in the Euro zone. The appeal of the Group’s stores, together withthe momentum of the Prada and Miu Miu brands, successfully captured the continued
growth in tourist numbers attracted also by a weak Euro. The boost in business was
entirely delivered by the retail network performance (+63.5% as reported, +31%
SSSG and +59.8% at constant exchange rates) which largely offset the impact of
the selective rationalization strategy of the wholesale business. Ten new DOS wereopened in Europe, taking the total number to 125. It is worth highlighting the opening of
the largest store in Moscow, in an impressive building located at Stoleshnikov Pereylok,
and the unveiling of the refurbished Prada flagship store in Old Bond Street, London.
Net sales on the Italian market totaled Euro 259.3 million with a 21.5% increase
compared to Euro 213.4 million for the same period in 2011. The retail channel recorded
a 37.4% increase (+22% SSSG) while the wholesale business showed a +2.5% rise.
The American market generated total net sales of Euro 224.7 million, 30.8% morethan the Euro 171.9 million posted in the same period of 2011 (+18.8% at constantexchange rates). Both channels reported excellent growth rates: retail increased by
38.8% (+10% SSSG, +25.9% at constant exchange rates) and wholesale increased by
17.7% (+7.4% at constant exchange rates). In the first half of 2012, the Americas area
saw the opening of the first stores in two emerging markets (2 stores in Sao Paolo,
Brazil, and 2 stores in Mexico City, Mexico). The DOS network included some 54 shops
at July 31, 2012.
The Japanese market generated net sales of Euro 143.9 million, with a 34.2% increase(+19.8% at constant exchange rates) over the same period in 2011. To the growth
contributed also a net number of 7 stores opened in the second half of 2011 otherthan a 3% SSSG.
The retail development strategy implemented in the Middle East led to the doublingof net sales in Other countries compared to the same period of 2011 (+149.8% asreported and +136.2% at constant exchange rates). During the six months ended July
31, 2012, the Group opened in the prestigious Mall of the Emirates, an undisputed
luxury shopping destination, its third store in Dubai. In addition, it is worth mentioning
the opening of the first 3 stores in Casablanca, Morocco, during the second quarter of2012.

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Products
All product divisions achieved double digit growth rates over the same period of 2011.
However, leather goods, which contributed 61.8% of total net sales, was confirmed as
the leading segment with net sales totaling Euro 943.1 million and reporting a +52.7%
increase (+43% at constant exchange rates). This was mainly due to retail businessexpansion in the Asia Pacific market where handbags and leather accessories represent
the core of the product sales mix. The shift in wholesale deliveries at the end of 2011
materially affected the slowdown of the growth rate for clothing and footwear that wasseen between the first and second quarters of 2012.
BrandsThe Prada brand increased its net sales to Euro 1,233.4 million with a growth of 40.4%(+32.1% at constant exchange rates) over the net sales of Euro 878.4 million recordedin the same period of 2011. The brand’s contribution to total net sales increased to80.9% compared to 78.6% of the same period of last year. The performance comparedto the 2011 results was driven by the retail channel which achieved a +52.3% increase(+42.2% at constant exchange rates). The Prada Woman Spring/Summer 2012
collection with its fifties-style inspiration contributed towards the great success andconfirmed Prada as a sophisticated interpreter of its times and a forerunner of styleand trends. Like bananas and monkeys last summer, cars and cartoon prints became
iconic items for the entire season.
The Miu Miu brand contributed 16.1% to total Group net sales, recording net salesof Euro 246 million in the first half of 2012. The increase over the same period of lastyear was +23.7% (+15.8% at constant exchange rate), mainly thanks to the leather
goods division which achieved +21.2% growth and contributed 62.6% of total Miu Miu
net sales. During the six months ended July 31, 2012, the retail network continued to
expand with 8 new DOS.
In the first half of 2012 the Church’s brand achieved growth of 14.8% over the same
period of 2011. At constant exchange rates the increase was 9.5%. In Europe, Church’s
main market, net sales were strong and increased by 20.6% compared to the same
period of 2011 (+14.1% at constant exchange rates).
Car Shoe net sales increased by 16.8% (+15.2% at constant exchange rates) essentiallybecause of a shift in deliveries at the end of last year.
Royalties
The licensed products business grew by 34.4% during the period ended July 31, 2012,
and contributed net revenues of Euro 22.7 million (Euro 16.9 million for the same period
ended July 31, 2011). The growth was mainly thanks to higher sales of eyewear andto royalties earned under a new licensing agreement with LG for the sale of the new
PRADA Phone by LG 3.0, a premium handset which combines high-end technology
with a design that embodies superior style.

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Prada brand sales
six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% changeItaly

207,661

16.9%

164,797

18.8%

26.0%

Europe274,33622.2%

188,969

21.5%

45.2%

Americas194,284

15.8%

146,278

16.6%

32.8%

Asia Pacific442,96235.9%

298,307

34.0%

48.5%

Japan

101,458

8.2%

75,275

8.6%

34.8%

Other countries

12,732

1.0%

4,757

0.5%

167.6%

1,233,433

100.0%

878,383

100.0%

40.4%

Clothing

204,468

16.6%

180,417

20.5%

13.3%

Leather goods

786,806

63.8%

488,613

55.6%

61.0%

Footwear

226,58918.4%

198,363

22.6%

14.2%

Other

15,5701.2%

10,990

1.3%

41.7%

Total

1,233,433

100.0%

878,383

100.0%

40.4%

1,004,849

81.5%

659,901

75.1%

52.3%

228,584

18.5%

218,482

24.9%

4.6%

Total

1,233,433

100.0%

878,383

100.0%

40.4%

Net sales

1,233,433

98.2%

878,383

98.1%

40.4%

Royalties

21,972

1.8%

16,582

1.9%

32.5%

1,255,405

100.0%

894,965

100.0%

40.3%

six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% changeItaly

37,29415.2%

33,993

17.1%

9.7%

Europe50,61820.6%

41,491

20.9%

22.0%

Americas28,686

11.7%

24,294

12.2%

18.1%

Asia Pacific

85,471

34.7%

66,370

33.4%

28.8%

Japan

41,39916.8%

31,502

15.8%

31.4%

Other countries

2,503

1.0%

1,222

0.6%

105.0%

245,971

100.0%

198,872

100.0%

23.7%

Clothing

43,71217.8%

31,601

15.9%

38.3%

Leather goods

154,055

62.6%

127,103

63.9%

21.2%

Footwear

46,114

18.7%

38,830

19.5%

18.8%

Other

2,090

0.9%

1,338

0.7%

56.2%

Total

245,971

100.0%

198,872

100.0%

23.7%

DOS

200,031

81.3%

153,181

77.0%

30.6%

Independent customers and franchises

45,94018.7%

45,691

23.0%

0.5%

Total

245,971

100.0%

198,872

100.0%

23.7%

Net sales

245,971

99.7%

198,872

99.9%

23.7%

Royalties

651

0.3%

241

0.1%

170.1%

246,622100.0%

199,113100.0%

23.9%(amounts in thousands of Euro)Net sales by geographical area

Total
Net sales by product line

Net sales by distribution channelDOS
Independent customers and franchises

Total net revenues

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

Total
Net sales by product line

Net sales by distribution channel

Total net revenues

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Church’s brand sales
six months
ended
July 31, 2012
unaudited

%

Italy

6,865

Europe18,894

Americas
Asia PacificJapan(amounts in thousands of Euro)six months
ended
July 31, 2011
audited

%

22.1%

7,369

27.3%

-6.8%

60.9%

15,665

58.0%

20.6%

1,372

4.4%

1,116

4.2%

22.9%

2,715

8.8%

2,322

8.6%

16.9%

1,017

3.3%

413

1.5%

146.2%% change

Net sales by geographical area

Other countries

147

0.5%

118

0.4%

24.6%

31,010100.0%

27,003100.0%

14.8%

Clothing

440

1.4%

256

0.9%

71.9%

Leather goods

950

3.1%

662

2.5%

43.5%

Footwear

29,62095.5%

26,085

96.6%

13.6%

Total

31,010100.0%

27,003100.0%

14.8%

DOS

19,70863.6%

17,318

64.1%

13.8%

Independent customers and franchises

11,302

36.4%

9,685

35.9%

16.7%

Total

31,010100.0%

27,003100.0%

14.8%

Net sales

31,01099.8%

27,003

99.8%

14.8%

Royalties

63

0.2%

55

0.2%

14.5%

31,073100.0%

27,058100.0%

14.8%

six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% change

Italy

6,832

60.2%

6,545

67.4%

4.4%

Europe

2,587

22.8%

1,890

19.5%

36.9%

Total
Net sales by product line

Net sales by distribution channel

Total net revenues

Car Shoe brand sales(amounts in thousands of Euro)Net sales by geographical area

Americas

359

3.2%

145

1.5%

147.6%

Asia Pacific

1,323

11.7%

973

10.0%

36.0%

241

2.1%

158

1.6%

52.5%

11,342100.0%

9,711

100.0%

16.8%

Leather goods

1,239

10.9%

1,250

12.9%

-0.9%

Footwear

10,103

89.1%

8,461

87.1%

19.4%

Total

11,342100.0%

9,711

100.0%

16.8%

DOS

4,705

41.5%

4,161

42.8%

13.1%

Independent customers and franchises

6,637

58.5%

5,550

57.2%

19.6%

Total

11,342100.0%

9,711

100.0%

16.8%

Net sales

11,342100.0%

9,711

100.0%

16.8%

Total net revenues

11,342100.0%

9,711

100.0%

16.8%

Other countries
Total
Net sales by product line

Net sales by distribution channel

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EBITDA by brand(amounts in thousands of Euro)six months ended July 31, 2012
unaudited

Group

Prada

Miu Miu

Church’s

Car Shoe

Others

Net sales

1,524,687

1,233,433

245,971

31,01011,342

2,931

Royalties

22,686

21,972

651

63

-

-

1,547,373

1,255,405

246,62231,073

11,342

2,931

EBITDA

469,373415,749

52,653

2,326

(947)

(408)

EBITDA %

30.3%

33.1%

21.3%

7.5%

-

-

six months ended July 31, 2011
audited

Group

Prada

Miu Miu

Church’s

Car Shoe

Others

Net sales

1,117,403

878,383

198,872

27,003

9,711

3,434

Royalties

16,878

16,582

241

55

-

-

1,134,281

894,965

199,11227,059

9,711

3,434

EBITDA

315,005

270,261

42,7893,309(1,302)(52)

EBITDA %

27.8%

30.2%

21.5%

12.2%

-

-

Net revenues

Net revenues

Change in Net revenues in Euro

413,092

360,440

47,509

4,015

1,631

(503)

Change % in Net revenues

36.4%

40.3%

23.9%

14.8%

16.8%

-14.6%

Change in EBITDA in Euro154,368

145,488

9,864

(983)

355

(356)

49.0%

53.8%

23.1%

-29.7%--

Change % in EBITDA

The Prada brand generated EBITDA of Euro 415.7 million, a 53.8% increase over the
first half of 2011. It increased from 30.2% of net revenues in the first half of 2011 to
33.1% in the first half of 2012. The improved profitability was thanks to a combinationof sales growth and tight control on operating expenses so as to profit as much as
possible from economies of scale.
The Miu Miu brand generated EBITDA of Euro 52.7 million, a 23.1% increase over the
first half of 2011. As a percentage of net revenues, EBITDA remained almost unchanged
at 21.3% for the six months ended July 31, 2012, compared to 21.5% for the same
period of 2011. During the six months ended July 31, 2012, Miu Miu committed tocontinued retail expansion as a means of realizing its high growth potential. A total of 8
new stores were opened in both new countries, such as Morocco, Mexico and Brazil,
and new cities on established markets, like Padua in Italy.
The EBITDA of the Church’s brand decreased from Euro 3.3 million in the first half of2011 to Euro 2.3 million. As a percentage of net revenues, EBITDA fell from 12.2% to7.5% mainly because of a dilution in gross margin that was not translated into prices.
The EBITDA of the Car Shoe brand for the six months ended July 31, 2012, wasnegative by Euro 0.9 million as the volume of revenues generated was still insufficientto achieve positive earnings from operations.

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Number of stores
July 31, 2012
unaudited

January 31, 2012
auditedJuly 31, 2011
auditedDOS

Franchises

DOS

Franchises

DOS

Franchises

Prada

263

19

245

20

218

24

Miu Miu

102

6

94

6

82

6

Church’s

43

-

43

-

40

-

Car Shoe

6

-

6

-

5

-

Total

414

25

388

26

345

30

July 31, 2012
unaudited

January 31, 2012
auditedDOS

Franchises

July 31, 2011
auditedDOS

Franchises

DOS

Franchises

Italy

46

5

44

5

42

5

Europe

125

6

115

6

97

12

Americas

54

-

47

1

40

-

Asia Pacific

119

14

115

14

108

13

Japan

64

-

65

-

58

-

Middle East

3

-

2

-

-

-

Africa

3

-

-

-

-

-

Total

414

25

388

26

345

30

Operating results
Profitability measured at Gross margin level improved from 71% to 71.5% on net
revenues, largely because of the progress achieved by the retail channel and thepositive impact of exchange rates fluctuation.
EBITDA for the six months ended July 31, 2012, totaled Euro 469.4 million, 49% morethan the Euro 315 million reported for the same period of the previous year. As apercentage of net revenues, EBITDA improved further compared to the first quarter
2012, when it represented 29.1% of net revenues, and increased to 30.3% from the
27.8% recorded in the six months ended July 31, 2011. Taking advantage of the Grossmargin improvement, EBITDA achieved more growth benefitting from a significant
leverage effect on operating expenses. In actual fact operating costs increased inabsolute terms, but decreased from 48.6% to 46% as a percentage of net revenues.
EBIT also improved to stand at Euro 394.9 million with a 55.8% increase on the Euro
253.4 million recorded in the six months ended July 31, 2011. As a percentage of theGroup’s net revenues, EBIT increased to 25.5% from 24% already reached in the firstquarter of 2012 (22.3% in the six months ended July 31, 2011).
Essentially because of a reduction in bank borrowings, together with an important
increase in liquidity, net finance charges for the six months ended July 31, 2012, totaled
Euro 2.9 million, a significant reduction on the amount of Euro 11.6 million recorded in
the same period of 2011.
The effective tax rate increased from 25.1% in the first six months ended July 31,
2011, to 26.2%, essentially because of higher taxable income earned in countries withhigher tax rate.
The Group’s net income amounted to Euro 286.4 million with 59.5% growth on the net
income of Euro 179.5 million reported for the six months ended July 31, 2011.

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Analysis of the statement of financial position
Net invested capital
The following table reports the Statement of financial position as adjusted in order toprovide a better picture of the composition of the Net invested capital.
(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
auditedJuly 312011
auditedNon-current assets (excluding deferred tax assets)

1,721,908

1,650,329

1,525,708

Trade receivables, net

292,043

266,404

291,657

Inventories, net

380,688374,782

366,813

Trade payables(320,857)(283,538)(303,963)

Net operating working capital

351,874

357,648354,507

Other current assets (excluding financial position items)

152,692

112,623

117,652

Other current liabilities (excluding financial position items)(246,444)(262,534)(272,719)

Other current assets/(liabilities), net(93,752)(149,911)(155,067)

Provision for risks(58,543)(56,921)(54,432)

Post-employment benefits(41,526)(35,898)(35,108)

Other long-term liabilities(90,294)(75,991)(64,664)

Deferred taxation, net

155,145

128,071

109,628

Other non-current assets/(liabilities), net(35,218)(40,739)(44,576)

Net invested capital

1,944,812

1,817,327

1,680,572

Shareholder’s equity – Group(2,017,482)(1,822,743)(1,541,134)

Shareholder’s equity – Non-controlling interests(9,862)(8,224)(5,073)(2,027,344)(1,830,967)(1,546,207)

Long term financial payables(64,154)(179,542)(223,012)

Short term financial, net surplus/(deficit)

151,978

193,182

88,647

Payable for withholding on dividends(5,292)--

Net financial position surplus/(deficit) – including payable forwithholding on dividends

82,532

13,640(134,365)(1,944,812)(1,817,327)(1,680,572)

n.a

n.a

0.09

Total consolidated shareholder’s equity

Shareholder’s equity and Net financial position
Debt to Equity ratio

At July 31, 2012, Net invested capital stood at Euro 1,944.8 million, Euro 127.5 million
higher than at January 31, 2012. The increase was the natural development of Group
operations and there was no significant variance in the composition of Net invested
capital.
The Group’s equity strengthened further and overcame Euro 2 billion notwithstanding
the decrease due to dividends of Euro 128 million recognized to PRADA spa
shareholders, as approved by the Annual General Meeting held in Hong Kong on May
22, 2012, on the financial statements for the year ended January 31, 2012 (including
Euro 123 million disbursed on July 3, 2012, and Euro 5.3 million payable at July 31,
2012, for withholding on dividends to non-Italian residents beneficial owners). The
result was possible thanks to the net income generated by the Group together withthe positive impact of the revaluation of net assets outside the Euro zone.

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Non-current assets(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
auditedJuly 312011
audited

Property, plant and equipment

777,425

713,870

606,971

Intangible assets

860,986

863,526

867,196

Investments in associated undertakings

19,45915,631

1,753

Other non-current assets

64,03857,302

49,241--547

1,721,908

1,650,329

1,525,708

48%

47%

49%

Derivative financial instruments non-current
Total non-current assets
Percentage of tangible assets already depreciated

The increase in Property, plant and equipment was mainly driven by the capital
expenditure incurred during the first six months of the year, as allocated as follows:
Euro 90.5 million in the retail area, Euro 11 million in the production and logistics area
and Euro 20.2 million in the corporate area.
Net financial position
The following table summarizes the items included in the Net financial position.
July 312012
unaudited

January 31
2012
auditedJuly 312011
audited(63,545)(178,442)(221,457)(609)(1,100)(1,555)Long-term financial payables(64,154)(179,542)(223,012)

Bank overdrafts and short-terms loans(161,952)(amounts in thousands of Euro)

Long-term debt
Obligations under financial leases non-current(238,518)(165,485)

Payables to related parties(3,173)(3,574)-

Receivables from related parties

3,040

1,410

1,410

Obligations under financial leases current(3,847)(965)(1,453)

Other Shareholders' loans

-

-

(574)

Cash and cash equivalents

391,594362,284

253,610

Short-term net financial surplus/(deficit)

151,978

193,182

88,647

Net financial position surplus/(deficit)

87,824

13,640(134,365)

Payable for withholding on dividends(5,292)--

Net financial position surplus/(deficit)
including payable for withholding on dividends

82,532

13,640(134,365)

Net financial position surplus/(deficit) - third parties(i.e. excluding financial receivables and payables with related parties)

87,95715,804(135,202)

Net financial position surplus/(deficit) - third parties
including payable for withholding on dividends

82,66515,804(135,202)

n.a

n.a.

0.22

NFP/EBITDA ratio

The free cash flows generated during the first half of 2012 enabled the Group toraise enough liquidity to increase the net financial surplus to Euro 82.5 million despite
dividends totaling some Euro 126 million as paid to PRADA spa shareholders (Euro123 million, net of withholding payables to non-Italian residents beneficial owners) andNon-controlling interests (Euro 3 million).
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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 international environment in which Prada operates exposes the Group to several
macroeconomic factors whose impact on consumer spending and the volume of
tourist travel can affect its income statement, equity and cash flows.
PRADA Group strategy, focusing on international growth in the retail channel, hasalready proven its worth as a means of combating the effects of the worldwide
downturn in 2008-2009 and led to highly satisfactory results when markets recovered.
Risks regarding the protection of intellectual property rights
Trademarks and other intellectual property rights are extremely important in the fashionand luxury goods market.
Prada’s success also depends on its capacity to protect and promote its own trademarks
and intellectual property rights and to prevent counterfeiting. For this purpose, theGroup invests in worldwide trademark protection and in monitoring the market in orderto take tough measures against counterfeiters of trademarks and designs.
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 communications activities interms 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.
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 ProductCreation and Development department.

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Risk factors specific to the PRADA Group
Risks regarding exchange rates fluctuations
The exchange rates risk to which the Group is exposed depends on the foreign
currency fluctuations against the Euro. In order to hedge this risk, which is mainly
concentrated in the parent company PRADA spa as worldwide distributor of mostproducts, the Group enters into option and forward sale and purchase agreements so
as to guarantee the counter value in Euro of identified financial and commercial cash
flows.
Exchange rates risk management is described in the Notes to the Interim condensed
consolidated financial statements.
Risks regarding interest rates fluctuations
The interest rates risk is the risk that cash outflows might vary as a result of interest
rates 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 rates risk management is described 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 andretain personnel highly capable in terms of the design, marketing and merchandisingof products.
The Group believes that its management structure is capable of guaranteeing theongoing success of the business.
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 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 strong enough. In order to ensure
the success of each new DOS, the Group carefully assesses market conditions andconsumer 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’s brands anda level of service in keeping with the quality of the products. The utmost attention ispaid to the design and fitting out of the stores themselves.
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

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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.
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 towhich an entity is potentially exposed is represented by all financial assets recordedin the financial statements. The Directors essentially believe that the Group’s credit
risk mainly regards trade receivables generated in the wholesale channel. The Groupmanages the credit risk and reduces its negative effects through its commercial andfinancial strategy. Credit risk management is performed by controlling and monitoring
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 fact thatnet 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.
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 theliquidity risk while the Group Corporate Finance Department, reporting to the CFO, is
responsible for managing financial resources as well as possible. The Directors believethat the funds and lines of credit currently available, in addition to those that will be
generated by operating and financing activities, will allow the Group to meet its needs
resulting from investing activities, working capital management and repayment ofloans as they fall due. This can be achieved without using all available fund and surplus
resources can thus be used to pay dividends.
Legal and regulatory risks
The Group operates in a complex regulatory environment and is exposed to legal risks
and risks regarding compliance with applicable laws, including:––

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

the 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 annual financial
reporting and the safeguarding of Group assets;––changes in international tax rules that could expose the Group to the risk of noncompliance;––

the 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.

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Risks regarding data processing
Data is processed using information systems subject to a governance model that
ensures that:––data is adequately protected against the risk of unauthorized access, loss (including
accidental loss) and utilization inconsistent with assigned duties;––

data is processed in accordance with applicable laws and regulations.

Outlook for second half of 2012
Market conditions are expected to remain very challenging for the short term withsome more general volatility. Against this backdrop, the Group has shown so far aremarkable capacity to grow, meeting plans and expectations and further strengthening
its leading position in the luxury industry. The Directors thus remain confident about
the near future and will continue to pursue the retail focused strategy which is an
essential pillar of our long term growth prospects.

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Corporate Governance

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Corporate governance practices
The Company is committed to maintaining a high standard of corporate governancepractices 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 Corporate Governance Code of the Listing Rules
The Board has reviewed the Company’s corporate governance practices and is satisfied
that the Company has been in compliance with all the applicable code provisions set
out in the Code on Corporate Governance Practices (effective until March 31, 2012)
and Corporate Governance Code (effective from April 1, 2012) contained in Appendix
14 of the Listing Rules throughout the six months ended July 31, 2012.
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.
As resolved at the Annual General Meeting of the Company on May 22, 2012, thefollowing persons were re-elected as members of the Board and Ms. Miuccia Prada
Bianchi was elected as the Chairperson of the Board (and the other executive roles
were confirmed at the first Board meeting thereafter in accordance with Italian law andthe by-laws of the Company, the “By-laws”) for a term of three financial years, endingon the date of the shareholders’ meeting called to approve the financial statements forthe last year of the Board’s office:Ms. Miuccia Prada Bianchi as executive director and Chairperson of the Board;
Mr. Patrizio Bertelli as executive director and Chief Executive Officer;
Mr. Carlo Mazzi as executive director and Deputy Chairman;
Mr. Donatello Galli as executive director and Chief Financial Officer;
Mr. Marco Salomoni as non-executive director;
Mr. Gaetano Micciché as non-executive director;
Mr. Gian Franco Oliviero Mattei as independent non-executive director;
Mr. Giancarlo Forestieri as independent non-executive director; andMr. Sing Cheong Liu as independent non-executive director.
The Board has established the Audit Committee, the Remuneration Committee andthe Nomination Committee. Each is chaired by an independent non-executive director.
The written terms of reference of each Committee are available on the Company’s andStock Exchange’s 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. The members of the audit committee consist of three independent nonexecutive directors, namely, Mr. Gian Franco Oliviero Mattei (Chairman), Mr. Giancarlo
Forestieri and Mr. Sing Cheong Liu. The primary duties of the audit committee areto review and supervise our financial reporting process and internal controls of the26

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Group. The Audit Committee has held three meetings on March 29, 2012, June 7,
2012, and September 24, 2012, with an attendance rate of 100% to discuss theauditing and internal controls activities of the Group, to review the audited separate
and consolidated financial statements of the Company for the year ended January 31,
2012, to appoint its Chairman following the Annual General Meeting on May 22, 2012,
to review the unaudited consolidated quarterly financial statements of the Company
for the three months ended April 30, 2012, and the unaudited consolidated interim
financial statements of the Company for the six months ended July 31, 2012, before
recommending to the Board for approval.
Remuneration Committee
The Company has established a remuneration committee in compliance with the Code.
According to its terms of reference, the primary duties of the remuneration committee
are to make recommendations to the Board on the Company’s policy and structure
for all remuneration of directors and senior management and the establishment of
a formal and transparent procedure for developing policy on such remuneration. The
remuneration committee consists of two independent non-executive directors, Mr.
Gian Franco Oliviero Mattei (Chairman) and Mr. Giancarlo Forestieri and one nonexecutive director, Mr. Marco Salomoni. The Remuneration Committee has held two
meetings on March 27, 2012, and June 7, 2012, with an attendance rate of 100% todiscuss the update of the plan for attribution of specific benefits to the managementof the Company, the renewal of the consultancy agreements with two Executive
Directors, Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli, the proposal of allocationof the aggregate compensation of the Directors and the Committee members which
was resolved by the Annual General Meeting of the Company on May 22, 2012, and to
appoint its Chairman following the Annual General Meeting on May 22, 2012.
Nomination Committee
The Company has established a nomination committee on March 29, 2012, to comply
with the Code. According to its terms of reference, the primary duties of the nominationcommittee are to make recommendations to the Board on the structure, size andcomposition of the Board itself, on the selection of new Directors and on the succession
plans for Directors. The nomination committee consists of two independent nonexecutive directors, Mr. Gian Franco Oliviero Mattei (Chairman) and Mr. Sing Cheong
Liu (who replaced Mr. Giancarlo Forestieri as a Committee member on June 7, 2012)and one non-executive director, Mr. Marco Salomoni. The Nomination Committee has
held one meeting on June 7, 2012, with attendance rate of 100% to elect its Chairman
following the Annual General Meeting on May 22, 2012.
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 non-executive directors,
qualified auditors, executives or external individuals. The supervisory body consists of
Mr. David Terracina (Chairman), Mr. Franco Bertoli and Mr. Marco Salomoni.
Board of Statutory Auditors
Under Italian law, the Company is required to have a board of statutory auditors,
appointed by the Shareholders, wich has the authority to supervise the Company on
its compliance with the law and the By-Laws, compliance with the principles of proper
management and, in particular, on the adequacy of the organizational, administrative
and accounting structure adopted by the Company and on its functioning.

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As resolved at the Annual General Meeting of the Company on May 22, 2012, thefollowing persons were elected/re-elected as members of the board of statutory
auditors of the Company for a term of three financial years, ending on the date of theshareholders’ meeting called to approve the financial statements for the last year of
the board of statutory auditors’ office:Mr. Antonino Parisi as statutory auditor and Chairperson of the board of statutory auditors;
Mr. Roberto Spada as statutory auditor; andMr. David Terracina as statutory auditor.
Dividends
The Company may distribute dividends subject to the approval of the shareholders inan ordinary shareholders’ meeting.
On March 29, 2012, the Board of Company recommended the payment of a final
dividend of Euro/cents 5 per share in the capital of the Company, representing a total
dividend of Euro 127,941,200. The Shareholders approved this dividend at the Annual
General Meeting of the Company held on May 22, 2012. The dividend was paid on
July 3, 2012.
No dividends have been declared or paid by the Company in respect of the six months
ended July 31, 2012.
Changes in Information of Directors Pursuant to Listing Rule 13.51B(1)Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in information of Directors
since the Company’s 2011 Annual Report are set out below:
Director

Changes

Miuccia PRADA BIANCHI

Annual cap for the remuneration under the renewed consultancy agreement for the year
ending January 31, 2013 is Euro 9,700,000 (last year Euro 8,700,000)

Patrizio BERTELLIAnnual cap for the remuneration under the renewed consultancy agreement for the year
ending January 31, 2013 is Euro 10,000,000 (last year Euro 9,000,000)

Carlo MAZZI

Director’s fee for the year ending January 31, 2013 was increased by Euro 50,000(last year Euro 250,000)

Donatello GALLI

Director’s fee for the year ending January 31, 2013 is Euro 40,000 (waived last year)

Marco SALOMONI

Director’s fee for the year ending January 31, 2013 is Euro 60,000 (waived last year)

Giancarlo FORESTIERI

Ceased as member of Nomination Committee since June 7, 2012

Sing Cheong LIU

Director’s fee for the year ending January 31, 2013 was increased by Euro 10,000(Euro 37,000 last year, instead of Euro 50,000, due to pro-rata payment for appointment
since May 2011)
Appointed as member of Nomination Committee since June 7, 2012Retired from the membership of the Security and Guarding Services Industry Authority witheffect from May 31, 2012
Resigned from the offices of the Board of Directors of the Hong Kong Science andTechnology Parks Corporation and Part-time Member of the Central Policy Unit of theGovernment of the Hong Kong Special Administrative Region with effect from June 30, 2012

Directors’ Securities Transactions
The Company has adopted written procedures governing Directors’ securities
transactions in compliance with on terms no less than the standard set out
in the Model Code for Securities Transactions by Directors of Listed Issuers(the “Model Code”) as set out in Appendix 10 of the Listing Rules. Relevant
employees who are likely to be in possession of unpublished price-sensitive
information of the Group are also subject to compliance with written procedures.
Specific written confirmations have been obtained from each Director to confirm
compliance with the Model Code for the six months ended July 31, 2012.
There was no incident of non-compliance during the six months ended July 31, 2012.

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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, 2012.
Directors’ interests and short positions in securities
As at July 31, 2012, 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 The
Stock Exchange of Hong Kong Limited (the “Stock Exchange”) pursuant to the Model
Code:(a) Long positions in shares and underlying shares of the Company
Name of Director

Number of Shares

Nature of Interest

Approximate Percentage
of issued Capital

Ms. Miuccia Prada Bianchi

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

Interest of Controlled
corporation

80%

Mr. Patrizio Bertelli

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

Interest of Controlled
corporation

80%

Notes
1.

Prada Holding bv 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 bv is held by Gipafin sàrl. Ms.
Miuccia Prada Bianchi, owns, indirectly through Ludo sa 53.8%* of the capital in
Bellatrix sàrl, which in turn owns 65% (or the entire Class B of 1,950 shares) of thecapital in Gipafin sàrl. Ms. Prada Bianchi is therefore deemed under the SFO to beinterested in all the shares registered in the name of Prada Holding bv. Ms. Prada
Bianchi is also a director of Ludo sa.
* Ludo sa’s effective shareholding of 53.8% in Bellatrix sàrl comprises 42,690 shares (being the entire Class A shares)
and 495,770 shares (being approximately 51.79% of the Class B shares of 957,310 shares).

3.

Mr. Patrizio Bertelli owns, indirectly through companies owned by him (PaBe1 sa,
PaBe2 sa, PaBe3 sa and PaBe4 sa), 35% (or the entire Class A of 1,050 shares)of the capital in Gipafin sàrl. Mr. Bertelli is therefore deemed under the SFO to beinterested in all the shares registered in the name of Prada Holding bv.

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The interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli in the shares of theCompany as at July 31, 2012 are summarized in the following chart:

Patrizio
Bertelli

M iuccia Prada
BianchiLudo S.A.
53.8%

PaBe1 S.A.
17.6%

PaBe2 S.A.
5.8%

PaBe3 S.A.
5.8%

PaBe4 S.A.
5.8%

Bellatrix S.à.r.l.
65%

Gipafin S.à.r.l.
100%

Prada
Holding B.V.
80%

Prada S.p.A.

30

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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 bv

Common Shares

1,001

Controlled Corporation

100%

PRADA Arte bv

Registered Shares

180

As above100%

Prapar Corporation

Common Shares

50

As above

100%

EXHL Italia srl

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 above100%

PAC srl (in liquidation) Participation Quotas (Euro)30,600As above100%

Gipafin sàrlClass B Shares

1,950

As above100%

Bellatrix sàrlClass A Shares

42,690As above100%

Bellatrix sàrlClass B Shares

495,770

As above51.79%

Ludo sa

Ordinary Shares

100,310

Beneficial Owner

100%

Arte One bv

Ordinary Shares

180

Controlled Corporation

100%

PRA 1 srl

Participation Quotas (Euro)

10,000As above100%

Prada Holding bv

Common Shares

1,001

Controlled corporation

100%

Prapar Corporation

Common Shares

50

As above

100%

EXHL Italia srl

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 above100%

PAC srl(in liquidation)

Participation Quotas (Euro)30,600As above100%

Gipafin sàrlClass A Shares

1,050

As above100%

Mr. Patrizio
Bertelli

Save as disclosed above, as at July 31, 2012, none of the Directors or the Chief
Executives of 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 associatedcorporations (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 theCompany and the Stock Exchange pursuant to the Model Code.
Substantial shareholders’ interests and short positions in securities
As at July 31, 2012, other than the interests of the Directors or the Chief Executivesof the Company as disclosed above, the following persons had interests or shortpositions in the shares or underlying 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 bv

Legal and beneficial owner

2,046,470,76080%Gipafin sàrlInterest of controlled corporation

2,046,470,760

80%Bellatrix sàrlInterest of controlled corporation

2,046,470,76080%

Ludo sa

Interest of controlled corporation

2,046,470,760

80%

Note:
Prada Holding bv owns approximately 80% of the issued capital in the Company. As
Ludo sa owns 53.8% of Bellatrix sàrl which in turn owns 65% of Gipafin sàrl (Giapfin
sàrl owns the entire issued capital in Prada Holding bv), Gipafin sàrl, Bellatrix sàrl andLudo sa were all deemed to be interested in the 2,046,470,760 shares held by Prada
Holding bv.
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Interim condensed consolidated financial statements

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

Note

July 312012
unaudited

January 31
2012
auditedAssetsCurrent assets
Cash and cash equivalents

6

391,594362,284

Trade receivables, net

7292,043

266,404

Inventories

8

380,688374,782

Derivative financial instruments - current

9

108

894

Receivables and prepayments from parent company and otherrelated parties

1030,18912,864

Other current assets

11

Total current assets

125,436

100,275

1,220,058

1,117,503

Non-current assets
Property, plant and equipment

12

777,425

713,870

Intangible assets

13

860,986

863,526

Associated undertakings

14

19,45915,631

Deferred tax assets

32

207,331

175,736

Other non-current assets

15

64,03857,302

Total non-current assets

1,929,239

1,826,065

Total Assets

3,149,297

2,943,568

165,485

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

16

238,518

Payables to parent company and other related parties

17

4,358

4,361

Trade payables

18

320,857

283,538

Current tax liabilities

19

112,746

117,770

Derivative financial instruments - current

923,201

15,200Obligations under finance leases - current

20

965

1,453

Other current liabilities

21

114,605

128,777

815,250

716,584
178,442

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

22

63,545

Obligations under finance leases non-current

20

609

1,100

Post-employment benefits

23

41,52635,898Provision for contingencies and commitments

24

58,54356,921

Deferred tax liabilities

32

52,186

47,665

Other non-current liabilities

25

89,68275,656

Derivative financial instruments non-current

9

612

335

306,703

396,017

1,121,953

1,112,601

Total non-current liabilities
Total Liabilities
Share capital

255,882

255,882

Other reserves

1,450,837

1,152,171

Translation reserve

24,354(17,239)

Net profit for the year

286,409431,929

Total Shareholders’ Equity – Group26

2,017,482

1,822,743

Shareholders’ Equity – Non-controlling interests

27

9,862

8,224

3,149,297

2,943,568

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

34

PRADA Group

404,808

400,919

2,334,047

2,226,984

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Consolidated income statementNote

six months
ended
July 312012
unaudited%

six months
ended
July 312011
audited%Net revenues

28

1,547,373

100.0%

1,134,281

100.0%

Cost of goods sold29

(440,872)-28.5%(329,098)-29.0%

1,106,501

71.5%

805,18371.0%(711,619)-46.0%(551,805)-48.6%

394,882

25.5%

253,378

22.3%(2,911)-0.2%(11,600)-1.0%

391,97125.3%

241,778

21.3%(102,756)-6.6%(60,577)-5.3%

Net income for the period from continuing operations

289,21518.7%

181,201

16.0%

Net income for the period

289,21518.7%

181,201

16.0%

2,806

18.5%

1,669

0.1%

Net income for the period – Group

286,40918.5%

179,532

15.8%

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

0.112(amounts in thousands of Euro)

Gross margin
Operating expenses

30

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

31

Income before taxes
Taxation

32

Net income for the period – Non-controlling interests

PRADA Group

27

0.071

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Consolidated statement of cash flows
six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedIncome before taxation from continuing operations

391,971

241,778

Total income before taxation

391,971

241,778

73,63059,835861

1,795(amounts in thousands of Euro)

Income statement adjustments
Depreciation and amortization
Impairment of property, plant and equipment and intangible assets
Non-monetary financial (income)/expenses

6,478

8,323

Other non-monetary charges

9,661

12,996

Changes in Statement of financial position
Other non-current assets and liabilities(7,721)(6,122)

Trade receivables, net(20,671)(18,475)

Inventories, net

381(87,506)

Trade payables

41,86966,116

Other current assets and liabilities(30,657)(22,450)

Cash flows from operating activities

465,802

256,290

Interest paid, net(4,498)(9,132)

Taxes paid

(129,113)(37,560)

Net cash flows from operating activities

332,191

209,598

Purchases of property, plant and equipment and intangible assets(142,008)(138,480)

1,954

1,800

Disposals of assets
Disposal of investments held for sale

-

1,800

Cash flows generated (utilized) by investing activities(140,054)(134,880)

Dividends paid to shareholders of PRADA spa(122,963)(2,482)

Dividends paid to Non-controlling shareholders(2,645)(3,886)-(14,294)(61,472)(58,737)

Repayment of long-term borrowings - third parties
Repayment of short-term portion of long term borrowings - third parties
Repayment of loans to related parties

(538)

(209)

New long-term borrowings – third parties arranged

29,8403,354

Change in short-term borrowings – third parties(9,883)(32,171)

New loans to related companies(1,545)--

206,560

Issue of new shares by PRADA spa
Share capital increases by subsidiary companies

1,161

1,383

(168,045)

99,518Change in cash and cash equivalents, net of bank overdrafts

24,092

174,236

Foreign exchange differences

13,546(1,163)

Opening cash and cash equivalents, net of bank overdraft

353,554

79,498

Closing cash and cash equivalents, net of bank overdraft

391,192

252,571

Cash and cash equivalents

391,594

253,610

Cash flows generated (utilized) by financing activities

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

36

PRADA Group(402)(1,039)391,192

252,571

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

Actuarial
Available
gain
for sale(losses)
reserve
reserve

EquityNonNet attributable
controlling
profit to owners ofinterests
the Group(amounts inthousandsof Euro)Number ofsharesShare
CapitalBalance atJanuary 31, 2011
audited

250,000,000

250,000

209,298(40,012)

3,464

(948)

-

531,729

250,819

1,204,350

5,788

1,210,138

Allocation of 2010
net profit

-

-

-

-

-

-

-

250,819 (250,819)

-

-

-

Conversion ofshares from Euro
1.0 to Euro 0.1
each2,500,000,000

-

-

-

-

-

-

-

-

-

-

-

58,824,000

5,882

200,749

-

-

-

-

-

-

206,631-206,631

Issue of newsharesOther
reserves

Total
EquityDividends

-

-

-

-

-

-

-

(35,000)-(35,000)(3,886)(38,886)

Capital injection
in subsidiaries

-

-

-

-

-

-

-

-

-

-

1,412

1,412

Comprehensive
income for the
year

-

-

-

22,773(7,637)

(244)

(58)

-

431,929446,762

4,910

451,6722,558,824,000

255,882

410,047(17,239)(4,173)(1,192)(58)

747,548

431,929

1,822,743

8,224

1,830,967

Allocation of 2011
net profit

-

-

-

-

-

-

-

431,929 (431,929)

-

-

-

Dividends

-

-

-

-

-

-

-

(127,941)-(127,941)(2,645)(130,586)

Capital injection
in subsidiaries

-

-

-

-

-

-

-

-

-

-

1,161

1,161

Comprehensive
income for theperiod---41,593(6,856)(1,336)

2,869-

286,409322,680

3,122

325,8022,558,824,000

255,882

410,047

24,354(11,029)(2,528)2,811

1,051,536

286,4092,017,482

9,862

2,027,344

Balance atJanuary 31, 2012
auditedBalance at
July 31, 2012
unaudited

Under Italian law, the Company is required to allocate a portion of its net profit tonon-distributable reserves and to provide additional information on the distribution of
earnings for the period (Note 33).

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Statement of consolidated comprehensive income
six months
ended
July 312012
unaudited

twelve months
ended
January 31
2012
audited

Net income for the period – Consolidated

289,215

436,425

Change in Translation reserve

41,91023,204(amounts in thousands of Euro)Tax impact--

Change in Translation reserve less tax impact

41,91023,204

Change in Cash flow hedge reserve(9,475)(10,432)

Tax impact

2,619

2,795

Change in Cash flow hedge reserve less tax impact(6,856)(7,637)

Change in Actuarial reserve(1,843)(705)

Tax impact

507

443

Change in Actuarial reserve less tax impact(1,336)

(262)
(77)

Change in Fair value reserve

3,826

Tax impact

(957)

19

Change in Fair value reserve less tax impact

2,869

(58)

325,802451,672

Consolidated comprehensive income for the period
Comprehensive income for the period – Non-controlling Interests
Comprehensive income for the period – Group

3,122

4,910

322,680446,762

The accounting policies and the following notes constitute an integral part of theInterim condensed consolidated financial statements.

38

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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) and 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, fragrances and mobile telephone sectors. Its
products are sold in 70 countries worldwide through a network that included 414
Directly Operated Stores (DOS) at July 31, 2012, and a selected 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 Fogazzaro 28, Milan, Italy. At July 31, 2012, 79.98% of the share capital
was owned by PRADA Holding bv, a company domiciled in The Netherlands, while theremaining shares were floating on the Main Board of the Hong Kong Stock Exchange.
The Interim condensed consolidated financial statements were approved andauthorized for issue by the Board of Directors of PRADA spa on September 24, 2012.

2.

Basis of preparation
The Interim condensed consolidated financial statements of PRADA Group for thesix months ending July 31, 2012, including the “Consolidated statement of financial
position”, the “Consolidated income statement”, the “Consolidated statement ofcash flows“, the “Statement of changes in consolidated shareholders’ equity”, the“Statement of consolidated comprehensive income” and the “Notes to the Interim
consolidated financial statements” have been prepared in accordance 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, 2012. These year-end Consolidated financial statements have been
prepared in accordance with the International Financial Reporting Standards (“IFRS”)
issued by the International Accounting Standards Board (“IASB”) as endorsed by theEuropean 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 Standard Interpretations Committee (“IFRSIC”),
previously called the Standing Interpretations Committee (“SIC”).
The Interim condensed consolidated financial statements have been prepared using thesame scope of consolidation, basis of consolidation and accounting policies adopted
for the preparation of the Consolidated financial statements as at January 31, 2012,
except for the amendments to accounting standards as reported below under Note 3.
The Group has prepared the Consolidated statement of financial position classifying
separately current and non-current assets and liabilities. All the details needed formore complete information are provided in the Notes.
The Consolidated income statement is classified by destination.
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 are presented in Euro which is also the functional currency of
the Company.
3.

Amendments to accounting standards
Amendments to IFRS applicable to the PRADA Group from February 1, 2012
The following amendments to IFRS have been endorsed by the European Union andare applicable to the PRADA Group effective from February 1, 2012. The matters inquestion are not applicable to the Group as of the date of these financial statements,
but they could have future accounting effects:––

IFRS 7 “Financial instruments: disclosures”. The amendments made to thisstandard, effective from July 1, 2011, are intended to improve the quality of
disclosures on the de-recognition of financial instruments and when an excessive
number of transactions is put in place at the end of a period;––

IAS 19 “Employee benefits”. The amendments made to this standard, effectivefrom January 1, 2013, exclude the application of the corridor method and require
additional disclosures.

New standards and amendments issued by the IASB, endorsed by the European
Union and early adopted by the PRADA Group––IAS 1 “Presentation of financial statements”. The amendments made to thisstandard, effective from July 1, 2012, are intended to clarify the criteria for
preparation of the statement of “Other items of comprehensive income”.

New standards and amendments issued by the IASB that are not applicable to
the PRADA Group and have not yet been endorsed by the European Union––IFRS 9 “Financial instruments”. This new standard, effective from January 1, 2015,
represents the first phase of a series of standards intended to replace entirely IAS
39 “Financial instruments: recognition and measurement” with the introductionof new criteria for the classification of financial assets and liabilities and for thede-recognition of financial assets. In more details, the rules set out by IAS 39
will no longer apply to qualify, then value, a financial asset. Instead, the valuation
criteria of the financial asset will be addressed by the way a company manages
its financial instruments together with the relevant contractual cash flows. On
the financial liabilities side, the main change will entail recognition through othercomprehensive income statements, and no longer through income statements,of the change in the fair value of financial liabilities as a result of a change in thecredit rating;––

IFRS 10 “Consolidated Financial Statements”. This new standard, effective fromJanuary 1, 2013, further develops the definition of control as a fundamental
concept for consolidation. In June 2012 the IASB approved the “Transition
Guidance on Consolidated Financial Statements, Joint Arrangements andDisclosure of Interests in Other Entities” to clarify and explain that the “dateof initial application” in IFRS 10 means “the beginning of the annual reporting
period in which IFRS 10 is applied for the first time”. An entity is not required
to make adjustments to previous accounting for its involvement with entities if
the consolidation conclusion reached at the date of initial application is the same
when applying IAS 27 and when applying IFRS 10. Instead, an investor shall adjust
comparative periods retrospectively if the consolidation conclusion reached at thedate of initial application is different when applying IFRS 10 when compared with
applying IAS 27;

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––

IFRS 11 ”Joint Arrangements”. This new standard, effective from January 1,
2013, will entirely replace IAS 31 “Interests in Joint Ventures” and SIC 13 “Jointlycontrolled entities”. It provides new criteria for use identifying joint arrangements
and indicates the equity method as the only method for use in accounting forinvestments in jointly controlled entities in Consolidated financial statements;––

IFRS 12 “Disclosure of interests in other entities”. This standard, effective fromJanuary 1, 2013, represents a new guideline on disclosures required in relation
to all types of interests in entities, including subsidiaries, joint arrangements,
associated and structured entities that are not controlled by the entity;––

IFRS 13 “Fair value measurement”. This new standard, effective from January 1,
2013, provides a guide to measurement at, and disclosure of, the fair value;––

IAS 12 “Income taxes”. The amendments made to this standard, effective fromJanuary 1, 2012, require the measurement of deferred tax relating to an asset
depending on how the carrying amount of the asset will be recovered (i.e. throughuse or sale);––

IFRS 7 “Financial instruments: disclosures”. The amendments made to thisstandard, effective from January 1, 2013, require additional disclosures to measure
the effects or potential effects of the offsetting of financial assets and liabilities on
the financial position of an entity;––

IAS 32 “Financial instruments: presentation”. The amendments made to thisstandard, effective from January 1, 2014, supplement the guidelines on theoffsetting of financial assets and liabilities.

As at July 31, 2012, the European Union has not completed yet the endorsement of
the new standards and amendments as described above.
4.

Significant acquisitions and disinvestments
There were no significant acquisitions and disinvestments during the period ended
July 31, 2012.

5.

Operating segments
IFRS 8 requires that detailed information be provided for each operating segmentthat makes up the business. An operating segment is intended as a business division
whose operating results are regularly reviewed by top management so that they canmake decisions about the resources to be allocated to the 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, products anddistribution channel is provided below. It is also reported in the Financial Review where
it is accompanied by further information on the Group’s operating results.

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Net sales analysis
six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% changeItaly

259,326

17.0%

213,444

19.1%

21.5%

Europe348,69122.9%

250,664

22.4%

39.1%

Americas224,70214.7%

171,853

15.4%

30.8%

Asia Pacific532,47134.9%

367,995

32.9%

44.7%

Japan

143,874

9.5%

107,193

9.6%

34.2%

Other countries

15,623

1.0%

6,254

0.6%

149.8%

1,524,687

100.0%

1,117,403

100.0%

36.4%

Prada

1,233,433

80.9%

878,383

78.6%

40.4%

Miu Miu

245,97116.1%

198,872

17.8%

23.7%

Church's

31,0102.0%

27,003

2.4%

14.8%

Car Shoe

11,342

0.8%

9,711

0.9%

16.8%

Other

2,931

0.2%

3,434

0.3%

-14.6%

Total

1,524,687

100.0%

1,117,403

100.0%

36.4%

Clothing

248,67716.3%

212,371

19.0%

17.1%

Leather goods

943,060

61.8%

617,657

55.3%

52.7%

Footwear

315,29020.7%

275,048

24.6%

14.6%

Other

17,6601.2%

12,327

1.1%

43.3%

Total

1,524,687

100.0%

1,117,403

100.0%

36.4%

1,229,966

80.7%

835,372

74.8%

47.2%

294,72119.3%

282,031

25.2%

4.5%

Total

1,524,687

100.0%

1,117,403

100.0%

36.4%

Net sales

1,524,687

98.5%

1,117,403

98.5%

36.4%

Royalties

22,686

1.5%

16,878

1.5%

34.4%

1,547,373

100.0%

1,134,281

100.0%

36.4%(amounts in thousands of Euro)Net sales by geographical area

Total
Net sales by brandNet sales by product line

Net sales by distribution channelDOS
Independent customers and franchises

Total net revenues

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Prada brand sales
six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% changeItaly

207,661

16.9%

164,797

18.8%

26.0%

Europe274,33622.2%

188,969

21.5%

45.2%

Americas194,284

15.8%

146,278

16.6%

32.8%

Asia Pacific442,96235.9%

298,307

34.0%

48.5%

Japan

101,458

8.2%

75,275

8.6%

34.8%

Other countries

12,732

1.0%

4,757

0.5%

167.6%

1,233,433

100.0%

878,383

100.0%

40.4%

Clothing

204,468

16.6%

180,417

20.5%

13.3%

Leather goods

786,806

63.8%

488,613

55.6%

61.0%

Footwear

226,58918.4%

198,363

22.6%

14.2%

Other

15,5701.2%

10,990

1.3%

41.7%

Total

1,233,433

100.0%

878,383

100.0%

40.4%

1,004,849

81.5%

659,901

75.1%

52.3%

228,584

18.5%

218,482

24.9%

4.6%

Total

1,233,433

100.0%

878,383

100.0%

40.4%

Net sales

1,233,433

98.2%

878,383

98.1%

40.4%

Royalties

21,972

1.8%

16,582

1.9%

32.5%

1,255,405

100.0%

894,965

100.0%

40.3%

six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% changeItaly

37,29415.2%

33,993

17.1%

9.7%

Europe50,61820.6%

41,491

20.9%

22.0%

Americas28,686

11.7%

24,294

12.2%

18.1%

Asia Pacific

85,471

34.7%

66,370

33.4%

28.8%

Japan

41,39916.8%

31,502

15.8%

31.4%

Other countries

2,503

1.0%

1,222

0.6%

105.0%

245,971

100.0%

198,872

100.0%

23.7%

Clothing

43,71217.8%

31,601

15.9%

38.3%

Leather goods

154,055

62.6%

127,103

63.9%

21.2%

Footwear

46,114

18.7%

38,830

19.5%

18.8%

Other

2,090

0.9%

1,338

0.7%

56.2%

Total

245,971

100.0%

198,872

100.0%

23.7%

DOS

200,031

81.3%

153,181

77.0%

30.6%

Independent customers and franchises

45,94018.7%

45,691

23.0%

0.5%

Total

245,971

100.0%

198,872

100.0%

23.7%

Net sales

245,971

99.7%

198,872

99.9%

23.7%

Royalties

651

0.3%

241

0.1%

170.1%

246,622100.0%

199,113100.0%

23.9%(amounts in thousands of Euro)Net sales by geographical area

Total
Net sales by product line

Net sales by distribution channelDOS
Independent customers and franchises

Total net revenues

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

Total
Net sales by product line

Net sales by distribution channel

Total net revenues

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Church’s brand sales
six months
ended
July 31, 2012
unaudited

%

Italy

6,865

Europe18,894

Americas
Asia PacificJapan(amounts in thousands of Euro)six months
ended
July 31, 2011
audited

%

22.1%

7,369

27.3%

-6.8%

60.9%

15,665

58.0%

20.6%

1,372

4.4%

1,116

4.2%

22.9%

2,715

8.8%

2,322

8.6%

16.9%

1,017

3.3%

413

1.5%

146.2%% change

Net sales by geographical area

Other countries

147

0.5%

118

0.4%

24.6%

31,010100.0%

27,003100.0%

14.8%

Clothing

440

1.4%

256

0.9%

71.9%

Leather goods

950

3.1%

662

2.5%

43.5%

Footwear

29,62095.5%

26,085

96.6%

13.6%

Total

31,010100.0%

27,003100.0%

14.8%

DOS

19,70863.6%

17,318

64.1%

13.8%

Independent customers and franchises

11,302

36.4%

9,685

35.9%

16.7%

Total

31,010100.0%

27,003100.0%

14.8%

Net sales

31,01099.8%

27,003

99.8%

14.8%

Royalties

63

0.2%

55

0.2%

14.5%

31,073100.0%

27,058100.0%

14.8%

six months
ended
July 31, 2012
unaudited%

six months
ended
July 31, 2011
audited%% change

Italy

6,832

60.2%

6,545

67.4%

4.4%

Europe

2,587

22.8%

1,890

19.5%

36.9%

Total
Net sales by product line

Net sales by distribution channel

Total net revenues

Car Shoe brand sales(amounts in thousands of Euro)Net sales by geographical area

Americas

359

3.2%

145

1.5%

147.6%

Asia Pacific

1,323

11.7%

973

10.0%

36.0%

241

2.1%

158

1.6%

52.5%

11,342100.0%

9,711

100.0%

16.8%

Leather goods

1,239

10.9%

1,250

12.9%

-0.9%

Footwear

10,103

89.1%

8,461

87.1%

19.4%

Total

11,342100.0%

9,711

100.0%

16.8%

DOS

4,705

41.5%

4,161

42.8%

13.1%

Independent customers and franchises

6,637

58.5%

5,550

57.2%

19.6%

Total

11,342100.0%

9,711

100.0%

16.8%

Net sales

11,342100.0%

9,711

100.0%

16.8%

Total net revenues

11,342100.0%

9,711

100.0%

16.8%

Other countries
Total
Net sales by product line

Net sales by distribution channel

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Information about non-current assets by geographical areas
The following table reports the carrying value of most of the Group’s non-current assets
by geographical area, as requested by “IFRS 8 Operating segments” for entities thathave a single reportable segment.
July 312012
unaudited

January 31
2012
auditedItaly

434,356

416,542Europe822,676814,240

Americas172,819

160,539

Japan

117,807

119,355

Asia Pacific150,182

124,527

Other countries

19,608

10,9381,717,448

1,646,141(amounts in thousands of Euro)Total

The total amount of Euro 1,717.4 million relates to the Group’s non-current assets
excluding, as requested by “IFRS 8 Operating segments”, those relating to financial
instruments, deferred tax assets and the surplus arising from a pension benefit scheme.
6.

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

July 312012
unaudited

January 31
2012
auditedCash on hand

25,70823,770Bank deposit accounts

112,177

195,227

Bank current accounts

253,709143,287

Total

391,594362,284

At July 31, 2012, bank current accounts and deposit accounts generate interest incomeof between 0.0% and 4% per annum (between 0.0% and 4.08% at January 31, 2012).
Bank deposit accounts and current accounts are broken down by currency as follows:
July 312012
unaudited

January 31
2012
auditedEuro87,790108,286

US Dollar

81,49856,170

Korean Won

31,36827,529Hong Kong Dollar

33,89570,045

Other currencies

131,335

76,484

Total bank deposit accounts and current accounts

365,886

338,514(amounts in thousands of Euro)46

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7.

Trade receivables, net
Trade receivables are detailed as follows:
July 312012
unaudited

January 31
2012
audited

Trade receivables from third parties

270,607247,577

Trade receivables from related parties

21,436

18,827

Total

292,043

266,404(amounts in thousands of Euro)

Trade receivables from related parties included a total amount of Euro 21.1 million
essentially arising from sales of finished products and royalties to companies ownedby the main shareholder of PRADA Holding bv and operating the retail business underfranchise agreements.
Trade receivables from third parties increased by Euro 23 million compared to January
31, 2012, and stood at Euro 270.6 million at July 31, 2012. Higher sales and royalties,
together with the weakening of Euro, were the main reasons behind the increase.
Trade receivables from third parties consist of the following:(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
auditedThird parties trade receivables, gross

283,062259,258

Allowance for bad and doubtful debts(12,455)(11,681)

Total third parties trade receivables, net

270,607247,577

Change in the Allowance for bad and doubtful debts consists of the following:(amounts in thousands of Euro)

Opening balance

July 312012
unaudited

January 31
2012
audited11,681

10,537

Exchange differences

187

198

Increases

917

2,369

Uses

(305)

(866)

Reversals

(25)

(557)

12,455

11,681

Closing balance

During the six months period, there were no material changes to significantly affectthe estimates making up the allowance.

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8.

Inventories
Inventories consist of the following:
July 312012
unaudited

January 31
2012
auditedRaw materials

77,094

66,575Work in progress

23,531

17,187

Finished products

351,945

360,379

Allowance for obsolete and slow moving inventories(71,882)(69,359)

Total

380,688374,782(amounts in thousands of Euro)The containment in finished products was achieved following planned actions aimed
at further improving the sell-through retail ratio so as to better react to market changes
and reduce risks.
Movements in the allowance for obsolete and slow moving inventories are analyzed
as follows:(amounts in thousands of Euro)

Balance at January 31, 2012 (audited)Rawmaterials

Finished
Products

Total

29,75439,60569,359Exchange differences
Increases

21

25

1,126

2,626

Decreases

-

(1)

(1)

Other movements

-

(127)

(127)

31,25840,62471,882

Balance at July 31, 2012 (unaudited)

9.

4
1,500

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

Financial assets regarding derivative instruments

July 312012
unaudited

January 31
2012
audited108

894

Financial liabilities regarding derivative instruments(23,201)(15,200)

Net carrying amount – current(23,093)(14,306)

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

Financial assets regarding derivative instruments

48

July 312012
unaudited

January 31
2012
audited--Financial liabilities regarding derivative instruments

(612)

(335)

Net carrying amount – non-current

(612)

(335)

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The net carrying amount of derivative financial instruments, current and non-current
taken together, consists of the following:
July 312012
unaudited(amounts in thousands of Euro)

January 31
2012
auditedIFRS7
Category

Forward contracts

47

316

Level II

Options

61

578

Level II

Positive fair value

108

894

Forward contracts(5,452)(3,279)Level II

Options(16,632)(11,428)

Level IIInterest rate swaps(1,729)(828)

Level II

Negative fair value(23,813)(15,535)

Net carrying amount(23,705)(14,641)

All of the above derivative instruments are qualified as Level II of the fair value hierarchy
proposed by IFRS 7. The Group has not entered into any derivative contracts that may
be classed as Level I or III.
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 rates
and interest rates fluctuations.
Foreign exchange rates transactions
The cash flows resulting from the Group’s international activities are exposed to
exchange rates 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 in othercurrencies of the various Group companies) of identified cash flows.
Expected future cash flows mainly regard the collection of trade receivables andsettlement of trade payables. The most important currencies in terms of hedged
amounts are: Hong Kong Dollar, US Dollar and Japanese Yen.
The notional amounts of the derivative contracts designated as foreign exchange riskhedges (as translated at the European Central Bank exchange rates at July 31, 2012)
are stated below.
Contracts in place at July 31, 2012, to hedge projected future trade cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts (*)

July 312012
unaudited

Currency
US Dollar

65,752--65,752GB Pound

34,046--

34,046

Japanese Yen

48,412--

48,412

Hong Kong Dollar

95,689739-

96,428-

17,689-17,689Singapore Dollar

Korean Won

16,337262-

16,599Other

17,187

15,364(913)

31,638

Total

277,423

34,054(913)

310,564(*) Positive figures represent forward sales, negative figures represent forward purchases of currency.

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Contracts in place as at July 31, 2012, to hedge projected future financial cash flows.
(amounts in thousands of Euro)

Options

Forward sale
contracts

Forwardpurchase
contracts

July 312012
unaudited

Currency
Japanese Yen-

62,480-62,480Hong Kong Dollar--(26,248)(26,248)

Total-

62,480(26,248)

36,232All contracts in place as at July 31, 2012, will mature within 12 months.
Contracts in place at January 31, 2012, to hedge projected future trade cash flows.
Options

Forward sale
contracts

Forwardpurchase
contracts (*)

US Dollar

123,812-(26,563)

97,249GB Pound

42,672--

42,672

Japanese Yen

67,604

1,985(34,781)

34,808Hong Kong Dollar

159,657

4,893-

164,550

Swiss Franc

2,706

3,362

-

6,068

Singapore Dollar

14,551--

14,551

Other

18,15539,831(1,190)56,796

Total

429,157

50,071(62,534)

416,694(amounts in thousands of Euro)

January 31
2012
auditedCurrency(*) Positive figures represent forward sales, negative figures represent forward purchases of currency.

Contracts in place as at January 31, 2012, to hedge projected future financial cash
flows.
Options

Forward sale
contracts

Forwardpurchase
contracts

January 31
2012
auditedJapanese Yen-

76,617-76,617

Total-

76,617-76,617(amounts in thousands of Euro)

Currency

All contracts in place as at January 31, 2012, had an expiry date shorter than twelve
months. 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 rates transactions
The Group enters into Interest Rate Swaps agreements (IRS) in order to hedge the riskof interest rates fluctuations in relation to several bank loans. The key features of the
IRS agreements in place as at July 31, 2012, and January 31, 2012, are summarized
as follows:
Contract

Currency

Notional
amountInterest
rate

Maturity
date

Currency

Hedgedloan –
lending
institution

AmountExpiryEuro/000

Pool loan

140,000

07/2013(156)

Euro/000IntesaSanpaolo

15,00006/2014

July 312012
unauditedfair value
I.000

IRS

Euro/000

IRS

Euro/000

140,000

1.511%

15,0001.545%

26/07/2013
02/06/2014(1,060)IRS

Euro/000

3,600

2.210%

01/07/2015(96)

Euro/000

MPS

3,600

07/2015

IRS

Yen/000

2,000,000

1.875%

31/03/2017(417)

Yen/000

Mizuho2,000,000

03/2017

Contract

Currency

Notional
amountInterest
rate

Maturity
date

January 31
2012
auditedCurrency

Hedgedloan –
lending
institution

AmountExpiryEuro/000

Pool loan

180,000

07/2013(66)

Euro/000IntesaSanpaolo

18,75006/2014

fair value
I.000
IRS
IRS

Euro/000

180,000

1.511%

18,750IRS

Euro/000

12,000*1.745%

29/05/2012(1)

Euro/000

Unicredit

12,00005/2014IRS

Euro/000

4,200

2.210%

01/07/2015(80)

Euro/000

MPS

4,200

07/2015

Euro/000

Carilucca,
Pisa eLivorno3,750

08/2012

Euro/000

3,750

3.500%

02/06/2014(638)

Euro/000

IRS

1.545%

26/07/2013

01/08/2012(43)* IRS discontinued in compliance with IAS 39

The IRS converts the variable interest rates applying to a series of loans into fixedinterest rates. These agreements have been arranged with leading financial institutions
and the Group does not expect them to default.
Movements in the cash flow hedge reserve included in Group shareholders’ equity,
before tax effects, since February 1, 2011, are as follows:(amounts in thousands of Euro)
Opening balance as at February 1, 2011 (audited)
Change in the translation reserve

4,780
7

Change in fair value, recognized in equity(7,223)

Change in fair value, charged to Income statement(3,209)

Closing balance at January 31, 2012 (audited)(5,645)

Change in the translation reserve(7)

Change in fair value, recognized in equity(21,056)

Change in fair value, charged to Income statement

11,581

Closing balance at July 31, 2012 (unaudited)(15,127)

Changes in the reserve that are charged to the Income statement are recorded underInterest and other financial income/(expense), net or within the EBIT following thenature of the underlying.

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Credit risk
Credit risk is defined as the risk that an entity in a transaction causes a financial loss
to another entity by not fulfilling its obligations. The maximum risk to which an entity
is potentially exposed is represented by all financial assets recorded in the financial
statements. The Directors essentially believe that the Group’s credit risk mainly regards
trade receivables generated in the wholesale channel.
The Group manages the credit risk and reduces negative effects through its
commercial and financial strategy. Credit risk management is performed by controllingand monitoring the reliability and solvency of customers. At the same time, the factthat the total receivables balance is not highly concentrated on individual customers
and the fact that net sales are evenly spread geographically lead to a reduced risk offinancial losses.
The following table contains a summary of total receivables before the allowance for
doubtful debts at the reporting date:July 312012
unaudited

Current

Trade receivables

304,498

Total(amounts in thousands of Euro)

Overdue (days)
1 < 3031 < 60

61 < 90

91 < 120> 121

255,229

15,702

6,518

7,425

7,153

12,471

304,498

255,229

15,702

6,518

7,425

7,153

12,471January 31
2012
auditedCurrent

1 < 3031 < 60

61 < 90

91 < 120> 121

Trade receivables

278,085

226,300

18,991

12,096

5,031

2,167

13,500

Total

278,085

226,300

18,991

12,096

5,031

2,167

13,500(amounts in thousands of Euro)

Overdue (days)

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 312012
unaudited

Current

Trade receivables less allowancefor doubtful accounts

292,043

Total

Overdue (days)
1 < 3031 < 60

61 < 90

91 < 120> 121

254,682

15,607

6,335

7,238

7,117

1,064

292,043

254,682

15,607

6,335

7,238

7,117

1,064

(amounts in thousands of Euro)

January 31
2012
auditedCurrent

Trade receivables less allowancefor doubtful accounts

266,404

Total

266,404

Overdue (days)
1 < 3031 < 60

61 < 90

91 < 120> 121

225,313

18,944

12,056

4,864

2,044

3,183

225,313

18,944

12,056

4,864

2,044

3,183

At the reporting date, the expected loss on doubtful receivables was fully coveredby the allowance for doubtful receivables. Movements in the allowance for doubtfulreceivables are shown in Note 7.

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The following table summarizes trade payables by maturity date.
July 312012
unaudited

Current

Trade payables

320,857

Total(amounts in thousands of Euro)

Overdue (days)
1 < 3031 < 60

61 < 90

91 < 120> 121

288,554

14,819

8,786

4,601

642

3,455

320,857

288,554

14,819

8,786

4,601

642

3,455

January 31
2012
auditedCurrent

1 < 3031 < 60

61 < 90

91 < 120> 121

Trade payables

283,538

251,483

17,392

5,507

2,553

2,131

4,472

Total

283,538

251,483

17,392

5,507

2,553

2,131

4,472

(amounts in thousands of Euro)

Overdue (days)

10. Receivables and prepayments from parent companies and other related parties
Receivables and prepayments from parent companies and other related parties consistof the following:(amounts in thousands of Euro)

Financial receivables – other related parties

July 312012
unaudited

January 31
2012
audited

3,040

1,410

Other receivables – PRADA Holding bv

222

654

Other receivables – other related parties

12,254

1,646

Other receivables – other companies controlled by PRADA Holding bv

4

154

Prepayments – other related parties

14,669

9,000

Total

30,18912,864

During the six months period ended July 31, 2012, an interest-free loan of USD 2
million was granted to a Non-controlling interest entity for the development of theretail network in the Middle East. Hence, financial receivables from other relatedparties increased from Euro 1.4 million to Euro 3 million.
Prepayments includes Euro 12 million of advance payments made to Luna Rossa
Challenge NZ ltd and Luna Rossa Challenge srl, in accordance with the contracts signedwith subsidiary PRADA sa, for sponsorship of the Luna Rossa yacht in relation to its
participation in the XXXIV edition of the America’s Cup to be held in San Francisco,California, in 2013. The remaining Euro 2.6 million essentially consisted of advances
paid to Progetto Prada Arte srl and Stichting Fondazione Prada for cultural initiatives tobe undertaken after the reporting period.
Other receivables include Euro 10.9 million arising from the sale of works of art torelated parties. The transaction, as disclosed by the Company’s announcement dated
June 28, 2012, involved the sale of a total of 10 assets that, deemed as non-core
investments by the Directors, were realized at the fair value, as confirmed by anappraisal performed by an independent advisor.
Details of receivables from parent companies and related parties are provided in Note
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11. Other current assets
Other current assets are detailed as follows:
July 312012
unaudited

January 31
2012
auditedVAT

32,66037,372

Income tax and other tax receivables

9,841

6,597

Other assets

33,694

15,337

Prepayments and accrued income

46,84439,049Deposits

2,397

1,920

125,436

100,275

July 312012
unaudited

January 31
2012
auditedAdvertising contributions under license agreements

10,143

3,693

Advances to suppliers

4,371

4,832

Incentives for retail investments

4,501

4,152

Advances to employees

1,111

754

Other receivables

13,568

1,906

Total

33,694

15,337(amounts in thousands of Euro)

Total

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

Other receivables, amounting to Euro 13.6 million at July 31, 2012, mainly include
down payments made to enter into preliminary agreements for the development of
the retail network.
Prepayments and accrued income are detailed as follows:
July 312012
unaudited

January 31
2012
auditedRental charges

18,771

15,664

Insurance

2,823

1,033

Design costs

11,639

9,914

Fashion shows and advertising campaigns

4,639

4,138

Sponsorship

1,000

704

Consulting

1,506

1,757

(amounts in thousands of Euro)

Amortized costs on loans

394

591

Other

6,072

5,248

Total

46,84439,049Design costs mainly include costs incurred for the conception and realization ofcollections that will generate revenue in the future.

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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, 2012, and January 31, 2012, are as follows:
Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

AssetsTotal
under historicalconstruction
cost

Balance at January 31, 2011
(audited)

172,525

97,048487,208

176,51284,49359,157 1,076,943

Additions40,806

7,030

110,797

29,32918,82551,820258,607

Disposals

-

(300)

(106)

(525)

(1,656)(15)(2,602)

1,968

238

29,531

6,090

944

3,501

42,272288

1523,893

4,860

1,116

(30,627)

(455)

-

(8)

(10,187)(5,470)(646)(1,216)(17,527)

Balance at January 31, 2012
(audited)

215,587

104,023

641,136

210,796

103,076

Additions

11,516

3,316

50,404

20,7302,491

28,349116,806

Disposals

(3)

(22)

(154)

(587)

(13,373)(1)(14,140)

Exchange differences

3,817

516

33,486

7,669

957

1,814

48,259Other movements

3,333

123

31,296

1,831

1,320

(38,362)

(459)

-

-

(2,367)(1,997)(1,195)(108)(5,667)234,250

107,956

753,801

238,442

93,276(amounts in thousands of Euro)

Exchange differences
Other movements
Impairment

Impairment
Balance at July 31, 2012
(unaudited)

82,620 1,357,238

74,312 1,502,037

Changes in accumulated depreciation of Property, plant and equipment in the period
ended July 31, 2012, and January 31, 2012, are as follows:
Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

Othertangibles

Total accum.
depreciation

Balance at January 31, 2011
(audited)

26,92382,006

267,096

104,403

59,798540,226

Depreciation

5,055

6,635

62,89918,691

5,850

99,130

-

(296)

(45)

(342)

(1,593)(2,276)
19,933(amounts in thousands of Euro)

Disposals

525

210

14,894

3,685

619

Other movements

Exchange differences

-

-

(118)

975

(975)

(118)

Impairment-(8)(7,914)(5,000)(605)(13,527)

Balance at January 31, 2012
(audited)

32,50388,547

336,812

122,41263,094643,368

Depreciation

2,940

3,447

40,128

11,854

3,324

61,693

-

(22)

(51)

(290)

(476)

(839)

1,017

459

18,5894,587

609

25,261

Disposals
Exchange differences
Other movements

-

-

(62)

(1)

-

(63)

Impairment--(1,811)(1,818)(1,179)(4,808)36,46092,431

393,605

136,744

65,372

724,612

Balance at July 31, 2012
(unaudited)

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Changes in the net book value of Property, plant and equipment in the period ended
July 31, 2012, and January 31, 2012, are as follows:(amounts in thousands of Euro)

Balance at January 31, 2011
(audited)

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture& fittings

145,602

15,042

220,112

72,109Other Assets under
tangibles construction

24,69559,157

Total net
book
value

536,717Additions40,806

7,030

110,797

29,32918,82551,820258,607

Depreciation(5,055)(6,635)(62,899)(18,691)(5,850)-(99,130)

Disposals

-

(4)

(61)

(183)

(63)

(15)

(326)

1,443

28

14,637

2,405

325

3,501

22,339288

1524,011

3,885

2,091

(30,627)

(337)

-

-

(2,273)

(470)

(41)

(1,216)(4,000)183,084

15,476304,324

88,38439,982

82,620713,870

Exchange differences
Other movements
Impairment
Balance at January 31, 2012
(audited)
Additions

11,516

3,316

50,404

20,7302,491

28,349116,806

Depreciation(2,940)(3,447)(40,128)(11,854)(3,324)-(61,693)

Disposals

(3)

-

(103)

(297)

(12,897)(1)(13,301)

Exchange differences

2,800

57

14,897

3,082

348

1,814

22,998Other movements

3,333

123

31,358

1,832

1,320

(38,362)

(396)

-

-

(556)

(179)

(16)

(108)

(859)

197,790

15,525360,196

101,698

27,90474,312

777,425

Impairment
Balance at July 31, 2012
(unaudited)

Additions to Land and buildings amounted to Euro 11.5 million and mainly referred tothe acquisition of two buildings situated in central Italy as set out by the agreement
signed by the Company in 2010 to commit to purchase a number of properties. These
last two acquisitions (the commitment was entirely fulfilled at July 31, 2012) related
to buildings already involved in the Group’s production and engineering processes
through rental agreements.
The increases in Production plant and machinery mainly related to purchases ofequipment involved in footwear production.
Taken together, total capital expenditure on tangible and intangible fixed assets for thesix months period amounted to Euro 121.7 million. In line with the Group’s growthstrategy, most of it was focused on the retail network (Euro 90.5 million), some Euro
51.9 million for the opening of new stores (Euro 39.7 million for stores opened before
July 31, 2012, and Euro 12.2 million for stores opening soon) and Euro 38.6 million for
the expansion and refurbishment of existing stores.
Assets under construction amounted to Euro 74.3 million as at July 31, 2012, andmainly related to investments in the retail network.
Disposals of Other tangible assets essentially relate to the sale of works of art torelated parties as described in Note 10.
Land and buildings included capitalized interest charges as follows:(amounts in thousands of Euro)

Opening net
book value

Increases

Exchangedifferences

Amortization

Closing net
book value

8,377

45

378

(147)

8,653

Land and buildings

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13. Intangible assets
Changes in the historical cost of Intangible assets in the period ended July 31, 2012,
and January 31, 2012, are as follows:
Trademarks

Goodwill

Store Lease
Acquisitions

SoftwareDevelopment
costs

Assets inprogressTotal
historicalcost

390,091

533,168

107,760

60,72845,4652,372

1,139,584

Additions166-

14,393

4,178

128

1,384

20,249

Disposals

-

-

-

(12)

(1)

-

(13)

2,341

835

686

268

-

12

4,142

Other movements

-

-

300

1,082

180

(2,278)(716)

Impairment

-

-

-

(38)

(191)

(14)

(243)

392,598

534,003

123,139

66,20645,581

1,476

1,163,003

Additions

115

-

1,350

572

-

2,845

4,882

Disposals

-

-

-

-

-

-

-

5,093

1,818

1,094

339

-

(2)

8,342

Other movements

-

-

50

363

-

(681)

(268)

Impairment

-

-

-

(25)

-

(1)

(26)

397,806

535,821

125,633

67,45545,581

3,637

1,175,933(amounts in thousands of Euro)

Balance at January 31, 2011
(audited)

Exchange differences

Balance at January 31, 2012
(audited)

Exchange differences

Balance at July 31, 2012
(unaudited)

Changes in the accumulated amortization of Intangible assets in the period ended July
31, 2012, and January 31, 2012, are as follows:
Trademarks

Goodwill

Store Lease
Acquisitions

SoftwareDevelopment
costs

Total
accumulated
amortization

Balance at January 31, 2011
(audited)

77,631

29,222

71,67354,34337,596

270,465

Amortization

11,025

-

8,354

3,067

4,726

27,172

-

-

-

(8)

-

(8)

634

561

328

252

-

1,775

Other movements

-

-

110

11

180

301

Impairment

-

-

-

(37)

(191)

(228)

Balance at January 31, 2012
(audited)

89,29029,78380,46557,62842,311

299,477

Amortization

5,542

-

4,045

1,491

859

11,937

-

-

-

-

-

-

1,392

1,223

553

331

-

3,499

Other movements

-

-

55

4

-

59

Impairment

-

-

0

(25)

-

(25)

96,22431,006

85,11859,42943,170314,947(amounts in thousands of Euro)

Disposals
Exchange differences

Disposals
Exchange differences

Balance at July 31, 2012
(unaudited)

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Changes in the net book value of Intangible assets in the period ended July 31, 2012,
and January 31, 2012, are as follows:(amounts in thousands of Euro)

Balance at January 31, 2011
(audited)

Trademarks

Goodwill

Store Lease
Acquisitions

SoftwareDevelopment
costs

312,460

503,946

36,087

6,385

7,869

2,372

166

-

14,393

4,178

128

1,384

20,249(11,025)-(8,354)(3,067)(4,726)-(27,172)

Additions
Amortization
Disposals

Assets in
Total netprogress book value

869,119

-

-

-

(4)

(1)

-

(5)

1,707

274

358

16

-

12

2,367

Other movements

-

-

190

1,071

-

(2,278)(1,017)

Impairment

-

-

-

(1)

-

(14)

(15)

303,308504,220

42,674

8,578

3,270

1,476

863,526

115

-

1,350

572

-

2,845

4,882

(5,542)-(4,045)(1,491)(859)-(11,937)

Exchange differences

Balance at January 31, 2012
(audited)
Additions
Amortization
Disposals

-

-

-

-

-

-

-

3,701

595

541

8

-

(2)

4,843

Other movements

-

-

(5)

359

-

(681)

(327)

Impairment

-

-

-

-

-

(1)

(1)

301,582

504,815

40,515

8,026

2,411

3,637

860,986

Exchange differences

Balance at July 31, 2012
(unaudited)

The net book value of Trademarks at July 31, 2012, and January 31, 2012, is broken
down as follows.
July 312012
unaudited

January 31
2012
auditedMiu Miu

173,764

176,537

Church’s

110,140

108,411

Luna Rossa

6,622

7,111

Car Shoe

5,880

5,983

Prada

4,393

4,474

Other

783

792

Total

301,582

303,308(amounts in thousands of Euro)Store lease acquisition costs (key-money) include 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
increase recorded during the period regards lease agreements in Europe.
Additions to Intangible assets under construction mainly refer to licenses for IT projects
other than improvements to software already in use.

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The following table contains a summary of total additions to Property, plant andequipment and Intangible assets for each business area.
July 312012
unaudited

January 31
2012
auditedRetail

90,456

191,169

Production and logistics

20,22457,828

Corporate

11,00829,859

Total

121,688278,856(amounts in thousands of Euro)

Goodwill
As at July 31, 2012, Goodwill amounted to Euro 504.8 million.
A breakdown of goodwill by Cash Generating Unit (CGU) is provided below:(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
auditedItaly Wholesale

78,35578,355Asia Pacific and Japan Retail311,935

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

9,719

9,123

Total

504,815504,220

As required by IAS 36, goodwill with an indefinite useful life is not amortized. Instead,
it is tested for impairment at least once a year.
The method used to identify the recoverable value (value in use) was based on the
discounted expected free cash-flow generated by the assets directly attributable to thebusiness to which the goodwill has been allocated (CGU).
Value in use was calculated as the sum of the present value of future free cash-flows
expected from the business plan projections prepared for each CGU and the present
value of the operating activities of the sector at the end of the business plan period(terminal value).
Business plans covered a period of five years and the discount rate used to discountcash flows was calculated using the weighted average cost of capital approach (WACC).
For the year ended January 31, 2012, the WACC used for discounting purposes was ina range between 6.8% and 23.3%.
The impairment test performed as at January 31, 2012, did not identify any impairment
loss for the Group CGUs. However, as value in use was measured based on estimates,
the Group cannot guarantee that the value of goodwill will not be impaired in future.

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14. Investments(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
auditedInvestment in associated undertaking

1,739

1,739

Investment available for sale

17,706

13,87814

14

19,45915,631Other investments
Total

Investment in associated undertaking regards a 49% interest in Pac srl (in liquidation)that 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 on the
Asian market in the production of leather bags and other products. In accordance with
IAS 39, the investment was initially recognized at cost and subsequently restated at fairvalue in line with the official quoted share price on the Hong Kong Stock Exchange at
the reporting date (Level I of the fair value hierarchy per IFRS 7). Fair value adjustments
are recognized in a specific equity reserve.
15. Other non-current assets
Other non-current assets are detailed as follows:
July 312012
unaudited

January 31
2012
auditedGuarantee deposits

56,221

49,526

Deferred rental income

2,609

2,893

Other receivables

5,208

4,883

Total

64,03857,302(amounts in thousands of Euro)

The increase in Guarantee deposits is due to the expansion of the retail network.
Guarantee deposits are below analyzed by nature and maturity:
July 312012
unaudited

January 31
2012
auditedStores

53,84447,652

Offices

1,691

1,335

Warehouses

178

148

Other

508

391

Total

56,221

49,526(amounts in thousands of Euro)Nature:60

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July 312012
unaudited(amounts in thousands of Euro)

Maturity:
By July 31, 2014

14,211

By July 31, 2015

7,542

By July 31, 2016

2,535

By July 31, 2017

2,797

After July 31, 201729,136

Total

56,221

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

July 312012
unaudited

January 31
2012
audited

402

8,730

Short-term bank loans

20,82729,871

Current portion of long-term loans

218,511

128,273

Deferred costs on loans(1,222)(1,389)

Total

238,518

165,485

The increase in the Current portion of long-term loans is essentially due, net of
repayments made during the six months ended July 31, 2012, to the reclassificationfrom long to short-term of Euro 60 million relating to the Pool loan taken on by PRADA
spa and of Euro 24.9 million (or Japan Yen equivalent) relating to loans arranged by
PRADA Japan co ltd.
Short-term bank loans and the current portion of long-term loans by currency consistof the following:
July 312012
unaudited

January 31
2012
auditedEuro160,026

99,993

Japanese Yen

61,15344,476

Renminbi

16,75912,818Other currencies

1,400

857

239,338

158,144(amounts in thousands of Euro)

Total Short term bank loans and Current portion of long-term loans

Considering hedges in place at the reporting date, some 74% of the current portion of
medium/long term loans consisted of fixed rate loans (81% at January 31, 2012) withvariable rate loans making up the remaining 26% (19% at January 31, 2012).
Short-term financial payables are stated net of amortized costs incurred to arrange theloans and amounting, at July 31, 2012, to Euro 1.2 million.

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17. Payables to parent companies and related parties
Payables to parent companies and related parties consist of the following:(amounts in thousands of Euro)

Financial payables – other related parties

July 312012
unaudited

January 31
2012
audited

3,173

3,574

Other payables – PRADA Holding bv

134-

Other payables – other related parties

1,049

528

2

259

4,358

4,361

Other payables – other companies controlled by PRADA Holding bv
Total

Financial payables towards other related parties, totaling Euro 3.2 million at July 31,
2012, related to an interest-free loan contributed by Al Tayer, the Non-controllingshareholder of PRADA Middle East fzco, according to its stake in the Prada Group’s
subsidiary. The fund was used to develop the retail business in the Middle East.
18. Trade payables
Trade payables consist of the following:(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
audited

Trade payables – third parties

318,844

280,808

Trade payables – related parties

2,013

2,730

320,857

283,538

Total

The increase in Trade payables was due to the growth of the business in general.
19. Tax payables
Current tax payables consist of the following:
July 312012
unaudited

January 31
2012
auditedCurrent income taxes

89,394

94,858

VAT and other taxes

23,352

22,912

Total

112,746

117,770(amounts in thousands of Euro)

20. Obligations under finance leases
At July 31, 2012, Obligations under finance leases consisted of Euro 1 million undercurrent liabilities and Euro 0.6 million under non-current liabilities. They mainly related
to properties leased in Italy.

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21. Other current liabilities
Other current liabilities consist of the following:(amounts in thousands of Euro)

July 312012
unaudited

January 31
2012
auditedPayables for capital expenditure

34,616

57,844

Accrued expenses and deferred income

15,866

12,944

Other payables

64,12357,989

Total

114,605

128,777

July 312012
unaudited

January 31
2012
auditedShort-term benefits for employees and other personnel

46,001

44,550

Customer advances

5,752

4,688

Returns from customers

6,014

6,988

Payable for withholding on dividends

5,292

-

Other

1,064

1,763

Total

64,12357,989Other payables consist of the following:(amounts in thousands of Euro)

The payable for withholding on dividends, amounting to Euro 5.3 million at July 31,
2012, was related to the application of the Italian ordinary withholding tax rate to thewhole amount of dividends paid in relation to the 2011 Company Financial statements,
as approved by the Annual General Meeting held on May 22, 2012, to non-Italianresidents beneficial owners (on or after January 1, 2012) of the Company shares held
through the Hong Kong Central Clearing and Settlement System.
22. Long-term financial payables
Long-term financial payables are analyzed below:(amounts in thousands of Euro)Bank borrowings
Deferred costs on loans
Total

July 312012
unaudited

January 31
2012
audited63,570178,919

(25)

(477)

63,545

178,442

The reduction in long-term financial payables was mainly due to the reclassification of
the current portion to Short-term financial payables and bank overdrafts.
The Group generally borrows at variable rates of interest and manages the risk ofinterest rates fluctuation by entering into hedging agreements as described in Note 9.
At the reporting date, some 23% of long-term loans consisted of fixed rates loans(70% at January 31, 2012) with variable rates loans making up the remaining 77%(30% at January 31, 2012).

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Details of long-term borrowings at July 31, 2012, are provided below:
amount inthousandsof EuroBorrower

Loan currency

LenderExpiry date Interest rate (1)PRADA spa

2,400

Euro

Monte dei Paschi di Siena (2)07/2015

3.310%PRADA spa

7,500

Euro

IntesaSanPaolo

06/20142.145%PRADA spa

4,800

Euro

Unicredit

05/20142.345%PRADA spa

12,903Euro

Cariparma (2)08/2015

2.309%PRADA Japan co ltd

20,827

Japanese Yen

Mizhuo Bank

03/20171.075%PRADA Fashion Commerce(Shanghai) co limited

5,438

Renminbi

Mizuho Bank

09/20136.650%PRADA Middle East fzco

9,702

US dollar

ENBD

09/20163.960%

Total

63,570(1) the interest rates include the effect of hedging instruments(2) secured by a mortgage on a building

Details of long-term borrowings at January 31, 2012, are provided below:
Borroweramount inthousandsof Euro

PRADA spa
PRADA spa

Loan currency

Lender100,000

Euro

Pool loan

07/20133.010%

3,000

Euro

Monte dei Paschi di Siena (2)07/2015

3.310%PRADA spa

11,250Euro

IntesaSanPaolo

06/20142.145%PRADA spa

7,200

Euro

Unicredit

05/20142.345%PRADA spa

13,779Euro

Cariparma (2)08/2015

2.590%PRADA Japan co ltd

3,279

Japanese Yen

Mizhuo Bank

07/20132.090%GB Pound

HSBC

07/20131.200%

Church & Co plc

856

Expiry date Interest rate (1)PRADA Japan co ltd

27,825

Japanese Yen

Mizhuo Bank

07/2013

1.540%PRADA Fashion Commerce(Shanghai) co limited

11,730Renminbi

Mizuho Bank

09/20136.650%

Total

178,919(1) the interest rates include the effect of hedging instruments(2) secured by a mortgage on a building

During the six months ended July 31, 2012, the Group arranged three new long-termloans.
In March 2012, PRADA Japan co ltd signed a term loan agreement with Mizuho fora total amount of Japanese Yen 2 billion. The term loan is subject to interest at the 6month TIBOR plus a spread of 0.625% and has to be repaid in eight equal semiannual
installments starting from September 2013.
In May 2012, PRADA Middle East fzco signed a term loan agreement with ENBD for a
total amount of US Dollar 22 million, or AE Dirham equivalent. The term loan is subject
to interest at the 3 month LIBOR plus a spread of 3.5% for drawdowns in US Dollar or,
alternatively, to interest at the 3 month EIBOR plus a spread of 2.5% for drawdowns
in AE Dirham. The loan is repayable in ten equal quarterly installments starting from
June 2014. At July 31, 2012, the loan was partially drawn in US Dollar only. The loan issubject to a Debt/Equity ratio covenant which was fully respected at the reporting date.
In July 2012, PRADA Fashion Commerce (Shanghai) co limited signed a term loan
agreement with IntesaSanPaolo for a total amount of RMB 50 million. The term loan
is subject to interest at 98% of the PBOC Base Rate determined on a quarterly base.
It has to be repaid in six equal quarterly installments starting from March 2014. The
availability period ends on December 31, 2013, and at the reporting date the loan had
not been drawn down.

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All bank borrowings are analyzed below by security profile.
July 312012
unaudited(amounts in thousands of Euro)

January 31
2012
auditedSecured

21,46020,443

Unsecured

281,850

325,350

Total

303,310345,793

July 312012
unaudited

January 31
2012
auditedPost-employment benefits

38,25235,283

Other long-term employee benefits

3,274

615

Total liabilities for long-term benefits

41,52635,898Post-employment benefit (pension plan surplus)(4,461)(4,187)Net liabilities for long-term benefits

37,06531,711

23. Long-term employee benefits(amounts in thousands of Euro)

Post-employment benefits
Liabilities and assets for post-employment benefits reported at July 31, 2012, totaled
Euro 33.8 million, net (Euro 31.1 million, net at January 31, 2012) and all were qualified
as defined benefit plans. The pension plan surplus is included in Other non-current
assets, Note 15.
The balance included Euro 21.3 million of liabilities recorded in the financial statementsof Italian companies and Euro 17 million reported by foreign companies. The Italianliabilities for post-employment benefits regarded the “Trattamento di Fine Rapporto”(hereinafter “TFR” i.e. staff leaving indemnity) and the balance - which reflected fairvalue - was determined projecting the benefit, accruing under Italian law at the reporting
date, to the future date when the employment relationship will be terminated anddiscounting it at the reporting date using the actuarial “Projected Unit Credit Method(PUCM)”.
The following table shows movements on liabilities for post-employment benefits inthe six months ended July 31, 2012.
Post-employment benefits
Italian companies (TFR)

Post-employment benefits
non-Italian companies

Group
Total

20,208

10,88831,096

Current service cost

81

1,641

1,722

Interest cost

196

51

247

Actuarial (gains)/losses

1,843

-

1,843

Benefits paid

(1,036)(602)(1,638)

-

521

521

21,292

12,49933,791

Balance at January 31, 2012 (audited)

Exchange differences
Balance at July 31, 2012 (unaudited)

The TFR liability was determined based on an independent appraisal by Federica
Zappari, an Italian national registered actuary (n. 1134) of Ordine Nazionale degli Attuari.

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Post-employment benefits of non-Italian companies are stated net of the surplus on
pension plans relating to Group companies operating in the United Kingdom which
provide pension services for their employees.
The positive fair value of these pension funds, amounting to Euro 4.5 million as at July
31, 2012, was not updated since January 2012. The Directors believe that there havebeen no significant changes in their fair value during the period.
The amount relating to the current service cost, equal to Euro 1.7 million (Euro 1.3
million as at July 2011) and interest costs of Euro 0.3 million (Euro 0.3 million as at July2011) were recognized through the income statement.
Other long-term employee benefits
These long-term employee benefits fall into the IAS 19 category “Other long-term
employee benefits”. As at July 31, 2012, their actuarial valuation, obtained using the
PUCM, was Euro 3.3 million.
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, 2012 (audited)

Provision
for litigation

Provision fortax disputes

Other
provisions

Total

1,618

37,335

17,96856,921
1,975

Exchange differences

7

829

1,139

Reversals

-

(103)

(37)

(140)

(662)

(146)

(1,093)(1,901)

-

915

773

1,688

963

38,83018,75058,543

Uses
Increases
Balance at July 31, 2012 (unaudited)

There have been no significant developments in outstanding litigations at January 31,
2012, or any new controversies occurred in the six months period ended July 31, 2012,
so as to considerably adjust the estimates made to account for Provisions for risks andcharges at January 31, 2012.
In June 2012, PRADA Retail France sas received confirmation from the French Tax
Authorities that the mutual agreement procedure with Swiss Competent Authority
was officially closed. The adjustment to the income of PRADA Retail France sas
agreed with the tax authorities did not generate any corporate income tax cash out inFrance, but merely affected the accumulated tax losses. An amount of deferred tax
assets of Euro 1.6 million was, therefore, recognized on the tax losses remaining after
the closure of the procedure.
25. Other non-current liabilities
Other non-current liabilities amounted to Euro 89.7 million (Euro 75.7 million as atJanuary 31, 2012). They mainly regarded liabilities to be recognized on a straight-line
basis in relation to commercial lease costs. The increase was due to expansion of theretail network.

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26. Shareholders’ equity - GroupThe Group’s shareholders’ equity is as follows:
July 312012
unaudited

January 31
2012
auditedShare Capital

255,882

255,882

Other reserves

1,051,536

747,547

Actuarial reserve(2,528)(1,192)

Fair value in asset available for sale

2,811

(58)

(11,029)(4,173)

Translation reserve

24,354(17,239)

Share premium reserve

410,047410,047

Net income for the period

286,409431,929

2,017,482

1,822,743(amounts in thousands of Euro)

Cash flow hedge reserve

Total

Share capital
At July 31, 2012, some 79.98% of the share capital of PRADA spa was held by PRADA
Holding bv while the remainder was floating on the Main Board of the Hong Kong
Stock Exchange.
Other reserves
At July 31, 2012, Other reserves amounted to Euro 1,051.5 million and mainly consistedof prior years retained earnings.
Translation reserve
The change in the Translation reserve at July 31, 2012, compared to January 31, 2012, wasdue to the higher value of net assets contributed by subsidiaries outside the Euro zone.
Net income for the period
The Group’s net income for the period amounted to Euro 286.4 million (Euro 431.9
million for the year ended January 31, 2012).
27. Shareholders’ equity – Non-controlling interests
The following table shows the changes incurred in the Non-controlling interests portionof Shareholders’ equity during periods ended July 31, 2012, and January 31, 2012.
(amounts in thousands of Euro)

Opening balance

July 312012
unaudited

8,224

Translation differences

January 31
2012
audited

5,788

316

432

Dividends(2,645)(3,886)

Net income for the period

2,806

4,496

Actuarial Reserve

-

(18)

Capital injection in subsidiaries

1,161

1,412

Closing balance

9,862

8,224

The capital injection into subsidiaries related to TRS Australia ltd and was made by
Non-controlling shareholders in proportion to the number of shares held by them.

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Dividends for the six months ended July 31, 2012, (Euro 2.6 million) were distributedby subsidiaries TRS Hong Kong ltd and Artisans Shoes srl.
28. Net revenues
Consolidated revenues are mainly generated by sales of products and are stated netof returns and discounts:
six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedNet sales

1,524,687

1,117,403

Royalties

22,686

16,8781,547,373

1,134,281(amounts in thousands of Euro)

Total

A breakdown of net revenues by brand, distribution channel, geographical area andproduct is provided in the Financial Review.
Royalties are paid under licensing agreements on sales of eyewear, smart phones,
fragrances and concept cars. The increase in royalties income compared to the six
months ended July 31, 2011, was mainly due to higher sales of eyewear and toroyalties arising under a new licensing agreement with LG for the sale of the new
PRADA Phone by LG 3.0.
29. Cost of goods soldCost of goods sold is analyzed as follows:
six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedPurchases of raw materials and production costs

360,694

349,833

Logistics costs, duties and insurance

76,15662,994

Change in inventories

4,022(83,729)440,872

329,098(amounts in thousands of Euro)

Total

Cost of goods sold increased in absolute terms, but decreased as a percentage on net
revenues from 29% in the six months ended July 31, 2011, to 28.5%. This improvement
was mainly due to a more favorable sales mix in terms of distribution channels, as wellas to the positive impact of exchange rates, resulting from the weakening of Euro in thefirst half of 2012 compared to the same period of 2011, as the effect on net revenues
largely compensated the increase in cost of goods sold arising from currencies.

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30. Operating expenses
Operating expenses can be analyzed as follows:(amounts in thousands of Euro)six months
ended
July 312012
unaudited% of netrevenues

six months
ended
July 312011
audited% of netrevenues

Product design and development costs

56,226

3.6%

51,453

4.5%

Advertising and communications costs

68,295

4.4%

53,915

4.8%

Selling costs

488,92031.6%

357,156

31.5%

General and administrative costs

98,178

6.3%

89,281

7.9%

Total

711,61946.0%

551,805

48.6%

Operating expenses increased from Euro 551.8 million in the six months ended July 31,
2011, to Euro 711.6 million and fell from 48.6% of net revenues to 46%. At constantexchange rates, operating expenses increased by 20.1% rather than by 29%.
Product design and development expenses increased slightly compared to the six
months ended July 31, 2011, but decreased as a percentage of net revenues as mostof the costs of this corporate area are fixed.
Advertising and communications costs in both periods were essentially driven by thepurchase of media spaces. Moreover, in the first half of 2012, the Group started tosponsor the Luna Rossa yacht which has started racing in the 2012 America’s Cup
World series and took part in regattas in Naples, Venice and Newport in the first halfof the year.
Selling costs increased from Euro 357.2 million in the first half of 2011 to Euro
488.9 million. They remained almost unchanged as a percentage of net revenues
notwithstanding a total of 69 new DOS, net, opened since July 31, 2011 (including 26
opened in the first half of 2012).
General and administrative expenses increased to Euro 98.2 million in the first half of2012 from Euro 89.3 million. The business expansion led to higher overhead expenses,
mainly labor costs and consultancy expenses.
Operating expenses included most of the total of depreciation, amortization andimpairment adjustments for both property, plant and equipment and intangible assets,
for a total amount of Euro 69.8 million (Euro 57.4 million in the six months ended July
31, 2011), most of the labor costs, for Euro 213.7 million (Euro 178.7 million in the six
months ended July 31, 2011), most of the fixed rent, for Euro 98.5 million (Euro 80
million in the six months ended July 31, 2011) and most of the variable rent, for Euro
119.9 million (Euro 80.1 million in the six months ended July 31, 2011).

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31. Interest and other financial income/(expenses), net
Interest and other financial income/(expenses), net consist of the following:(amounts in thousands of Euro)six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedInterest expense on borrowings(6,184)(8,966)

Interest income

2,557

583

Exchange gains / (losses) – realized

8,203

35

Exchange gains/ (losses) – unrealized(5,074)(924)

Other financial income / (expenses)(2,413)(2,328)

Total(2,911)(11,600)

Net financial expenses decreased by Euro 8.7 million compared to the six months
ended July 31, 2011, resulting in total net finance change of Euro 2.9 million for the
first half of 2012.
Interest expenses decreased essentially because of a reduction in bank borrowings,
especially on the long-term side. Instead, interest income was earned by investing theincreased liquidity across a number of currencies, countries and banks, in compliancewith the Group’s corporate finance strategy which favors low-risk investments.
32. Income taxes
Income taxes consist of the following:(amounts in thousands of Euro)six months
ended
July 312012
unaudited

six months
ended
July 312011
auditedCurrent taxation

119,94282,007

Deferred taxation(17,186)(21,430)

Income taxes

102,756

60,577The increase in income taxes in absolute terms is essentially due to the growth of theGroup business in general. The tax rate increased from 25.1% in the six months ended
July 31, 2011, to 26.2% mainly as a result of higher taxable income earned in countries
with higher tax rates.
Movements on net deferred tax assets and deferred tax liabilities are as follows:
July 312012
unaudited

January 31
2012
audited

128,071

88,667

Exchange differences

7,086

6,848

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

2,619

2,795

80

443

-

1,023

(amounts in thousands of Euro)

Opening balance

Deferred taxes on post-employment benefits recorded in equity(reserve for actuarial differences)
Deferred taxes on costs attributable to the share capital increase/IPO
Other movements

70

103

(27)

Deferred taxes for the period in income statement

17,18628,322

Closing balance

155,145

128,071

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Deferred tax assets and liabilities by nature consist of the following:(amounts in thousands of Euro)

July 31, 2012
unaudited
Deferred tax
assetsInventories

January 31, 2012
auditedDeferred tax
liabilities

Deferred tax
assetsDeferred tax
liabilities

89,873-

86,126-

Receivables and other assets

412

1,577

1,103

1,575

Useful life of non-current assets

55,936

14,30358,695

14,032-28,963-28,556

Provision for risks / accrued expenses

34,0792,245

12,928267

Non deductible / taxable charges / income

6,678

1,379

3,566

535

Tax loss carryforwards

7,960

-

4,788

-

Derivative financial instruments

4,174

-

1,552

-

Long-term employee benefits

7,163

2,291

6,674

2,015

Other

1,056

1,428

304

685

Total

207,331

52,186

175,736

47,665

Deferred taxes due to acquisitions

33. Additional information
Earnings per share
Earnings per share are calculated by dividing the net income attributable to Group’s
shareholders by the weighted average number of ordinary shares in issue.
six months
ended July 31
2012
unauditedGroup‘s net income in Euro
Weighted average number of ordinary shares in issue
Earnings per share in Euro, calculated on weighted average number of shares

six months
ended July 31
2011
audited286,408,505

179,531,725

2,558,824,000

2,512,349,790

0.112

0.071

On May 26, 2011, a Shareholders’ Meeting of PRADA spa resolved to change thepar value of the Company’s shares from Euro 1 to Euro 0.1 each. In accordance with
IAS 33, the number of shares in issue in 2011 was retrospectively adjusted for the
purposes of the calculation of earnings per share.
Dividends per share
During the period ended July 31, 2012, the Company distributed dividends for Euro
127,941,200, as approved by the Annual General Meeting held on May 22, 2012, toapprove the financial statements for the year ended January 31, 2012. The payment
was arranged on July 3, 2012, and the outstanding balance amounting to Euro 5.3
million at July 31, 2012, shown under Other current liabilities (Note 21), related to the
Italian withholding tax payable, as arising from the application to the whole amount ofdividends payable to beneficial owners of the Company shares held through the Hong
Kong Central Clearing and Settlement System of the Italian ordinary withholding tax
rate for dividends paid to non-Italian residents on or after January 1, 2012 (i.e. 20%).
During the period ended July 31, 2011, the Company distributed dividends of Euro 35
million, as approved by the Shareholders’ Meeting held on March 28, 2011, to approve
the financial statements for the year ended January 31, 2011. Some Euro 32.5 millionof the dividend liability arising was offset against receivables due from parent company
PRADA Holding bv while the remaining amount was paid in April 2011.

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Headcount
The average headcount by functional area for the periods ended July 31, 2012, andJuly 31, 2011, was as follows:(number of employees)

Production

six months
ended July 31
2012
unaudited

six months
ended July 31
2011
audited

1,736

1,699

Product design and development

849

793

Advertising and Communications

109

98

5,612

4,461

795

689

9,101

7,740

Selling
General and administrative services
Total

Employee remuneration
Employee remuneration by functional area for the periods ended July 31, 2012, andJuly 31, 2011, was as follows:
six months
ended July 31
2012
unaudited

six months
ended July 31
2011
auditedProduction

41,412

38,208

Product design and development

28,513

26,207Advertising and Communications

5,530

4,818

Selling

140,536

105,481

General and administrative services

39,15042,180

Total

255,141

216,894(amounts in thousands of Euro)

Employee remuneration by nature for the periods ended July 31, 2012, and July 31,
2011, was as follows:
six months
ended July 31
2012
unaudited

six months
ended July 31
2011
auditedWages and salaries

192,454

167,355

Post-employment benefits

10,9607,576Social security

42,73534,835

Other

8,992

7,128

Total

255,141

216,894(amounts in thousands of Euro)72

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

Amount at
July 31, 2012
unaudited

Possibleutilization

Distributableamount405,260

Share Capital

255,882

Share premium reserve

410,047

A,B,C

Legal reserve

46,390B

Other reserves

182,899

A,B,C

182,899

Non distributable reserves Art. 7of Legislative Decree 38/2005

20,516
A,B,C

160,651

Retained earnings

171,541

Fair Value Reserve(10,890)

Distributable Amount

Summary of utilizationin last three years
Coverage oflossesDistribution ofdividends

15,774

193,750

748,810

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

Pursuant to Article 2431 of the Italian Civil Code, the share premium reserve is fully
distributable only when the legal reserve reaches an amount equal to 20% of sharecapital. As at January 31, 2012, the adjustment required to reach this amount wouldbe Euro 16,736 thousands.
(amounts in thousands of Euro)

Directors’fees

Salariesand otherbenefits

Bonusesand other
incentives

Contributions
Non-monetary to retirement
benefits
benefits
schemeTotal

Miuccia Prada Bianchi

500

4,850

-

-

-

5,350

Patrizio Bertelli

500

3,000

1,500

-

-

5,000

Carlo Mazzi

150

-

-

41

9

200

Donatello Galli

20

150

38

19

77

304
238

Marco Salomoni

30

200

-

-

8

Gian Franco Oliviero Mattei

70

-

-

-

8

78

Giancarlo Forestieri

30

-

-

-

4

34

Gaetano Micciché

20

-

-

-

-

20

Sing Cheong Liu

30

-

-

-

6

36

1,350

8,200

1,538

60

112

11,260Total

The salary and other benefits amounting to Euro 4,850 thousands recognized to Miuccia
Prada Bianchi remunerates the services that she provided for the six months ended
July 31, 2012, as a strategic consultant for the Group, in accordance with the Renewed
Consultancy Agreement signed on April 26, 2012. Such Renewed Consultancy
Agreement constitutes a continuing connected transaction of the Company under
Chapter 14A of the Rules Governing the Listing of Securities on The Stock Exchange ofHong Kong Limited and, as such, has been disclosed with a Company’s announcement
dated April 27, 2012.
The salary and other benefits and bonuses and other incentives totaling Euro 4,500
thousands recognized to Patrizio Bertelli remunerates the services that he provided
for the six months ended July 31, 2012, as a strategic consultant for the Group, in
accordance with the Renewed Consultancy Agreement signed on April 26, 2012. Such
Renewed Consultancy Agreement constitutes a continuing connected transaction of
the Company under Chapter 14A of the Rules Governing the Listing of Securities on
The Stock Exchange of Hong Kong Limited and, as such, has been disclosed with aCompany’s announcement dated April 27, 2012.

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Remuneration of the PRADA spa Board of Directors for the period ended July
31, 2011(amounts in thousands of Euro)

Directors’fees

Salariesand otherbenefits

Bonusesand other
incentives

Contributions
Non-monetary to retirement
benefits
benefits
schemeTotal

Miuccia Prada Bianchi

500

4,350

-

-

-

4,850

Patrizio Bertelli

500

2,500

1,500

-

-

4,500

Marco Salomoni
Carlo Mazzi
Donatello Galli

-

200

-

-

8

208

125

-

-

40

-

165
254

-

141

34

17

62

Marco Cerrina Feroni

11

-

-

-

-

11

Davide Mereghetti

11

-

-

-

-

11

Giancarlo Forestieri

30

-

-

-

-

30

Gian Franco Oliviero Mattei

65

-

-

-

4

69

Gaetano Micciché

9

-

-

-

-

9

Sing Cheong Liu

11

-

-

-

-

11

1,262

7,191

1,534

57

74

10,118

Total

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, 2012,
January 31, 2012, and July 31, 2011, are shown below.
Currency

Average rate

Closing rate

Opening rate

US Dollar

1.287

1.418

1.228

1.318

Canadian Dollar

1.294

1.376

1.231

1.313

GB Pound

0.815

0.874

0.784

0.835

Swiss Franc

1.203

1.254

1.201

1.205

Australian Dollar

74

Average ratein prior period

1.248

1.355

1.168

1.237

Korean Won

1,469.141

1,546.938

1,387.850

1,477.990

Japanese Yen

102.994

115.489

96.030100.630

Hong Kong Dollar

9.986

11.034

9.525

10.219Singapore Dollar

1.623

1.768

1.528

1.649

Thai Baht

40.07743.01638.67040.753

Taiwan Dollar

38.14641.14636.87838.952

Russian Ruble

39.60840.07839.52739.690Czech Koruna

25.15424.32825.25525.188Macau Pataca

10.28511.3659.810

10.522Chinese Renminbi

8.141

9.239

7.815

8.312

New Zealand Dollar

1.601

1.795

1.517

1.592

Malaysian Ringgit

3.983

4.284

3.846

4.013

Turkish Lira

2.312

2.251

2.199

2.333

Brazilian Real

2.444

2.287

2.512

2.289

Mexican Peso17.03916.75216.28617.057

UAE Dirham

4.725

5.206

4.512

4.840

Ukrainian Hryvna

10.296

11.4249.788

10.551

Moroccan Dirham

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Independent Auditors compensation
The total fees and expenses accrued to Deloitte & Touche spa and its network for theaudit of the financial statements ending January 31, 2013, together with non-audit
services, are illustrated below:
Type of service

Audit Firm

provided toFees in thousandsof EuroAudit services

Deloitte & Touche spa

PRADA spa

307

Audit services

Deloitte Network/
Deloitte & Touche spa

Subsidiaries

540

Total audit fees accrued for thesix months ended July 31, 2012

847

Certificate sales

Deloitte Network/
Deloitte & Touche spa

Subsidiaries

40

Tax advices

Deloitte Network

PRADA spa/
Subsidiaries

85

Other

Deloitte Network

Subsidiaries

5

Total non-audit fees accrued for thesix months ended July 31, 2012
Out of pocket expenses

130

9

Total independent auditors compensation
accrued for the six months ended July 31, 2012

986

34. Transactions with related parties
The Group enters into commercial and financial transactions with companies owned
by entities that directly or indirectly control PRADA spa or with companies controlled
by Non-controlling interests shareholders. All of them are related parties.
These transactions mainly refer to the sale of goods, the supply of services, the granting
and receipt of loans and sponsorship and franchise agreements. These transactions
take place on an arm’s length basis at the same economic terms as those applied tothird parties.
The following tables show details of related party transactions for each item in theStatement of financial position and Income statement. They show amounts relating toeach related party and the total amount relating to each line item.

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Statement of financial position amounts at July 31, 2012 (unaudited)(amounts in thousands of Euro)PRADA Holding bv
Other related parties

TradepayablesPayables toparent companies
and other relatedparties

-

222

-

134

21,43629,963

2,014

4,222

DFS Hawaii

-

-

607

-

DFS Cotai ltd

11

-

379

415

DFS New Zealand ltd

-

-

-

39

DFS Venture Singapore (pte) ltd

-

-

41

46

21,139

-

631

313

Al Tayer Travels

-

-

5

-

Al Tayer Insignia llc

-

-

105

3,173

Al Tayer Trends

37

1,628

-

-

Danzas llc UAE

-

-

67

163

Fratelli Prada spa

Aati Contracts

76

Receivables andprepayments fromTrade
parent companies
receivables
and other relatedparties

-

-

175

-

Luna Rossa Challenge 2013 NZ ltd

147

11,138--Luna Rossa Challenge 2013 srl

101

862

-

-

Stiching Fondazione Prada/Progetto Prada Arte srl

-

3,818

-

72

HMP srl

-

78

-

-

PABE 1 sa

-

6,788

-

-

LUDO sa

-

4,142

-

Prada America’s Cup srl

-

1,397

-

-

Other

1

111

4

1

Prada Arte bv

-

1

-

-

Other companies controlled by PRADA Holding bv

-

3

-

2

Prapar Corporation

-

-

-

2

EXHL Italia

-

3

-

-

Members of the Board of Directors

-

-

-

147

Other related parties

-

9

-

80

Total at July 31, 2012

21,43630,197

2,014

4,585

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Statement of financial position amounts at January 31, 2012 (audited)(amounts in thousands of Euro)PRADA Holding bv

Receivables andprepayments fromTrade
parent companies
receivables
and other relatedpartiesTradepayablesPayables toparent companies
and other relatedparties

-

654

-

-

18,827

12,056

2,730

4,102

DFS Hawaii

-

-

480

-

DFS Australia pty ltd

-

-

347

616

Other related partiesDFS Cotai ltd

4

-

457

-

F.lli Prada srl

18,618

18

938

313

-

-

5

-

205

-

435

2,995

Al Tayer Travels
Al Tayer Insignia llc
Danzas llc UAE

-

-

26

21

Luna Rossa Challenge 2013 NZ ltd

-

7,350

-

-

Luna Rossa Challenge 2013 srl

-

150

-

-

Stellarea

-

28

-

-

Stitching Fondazione Prada/Progetto Prada Arte srl

-

2,725

-

61

Gipafin sarl

-

20

-

-

CID USA Corp.

-

78

-

-

HMP srl

-

195

-

-

Prada America’s Cup srl

-

1,397

-

-

Other

-

95

42

96

Other companies controlled by PRADA Holding bv

-

154

-

259

Prapar Corporation

-

148

-

259

EXHL Italia

-

6

-

-

Members of the Board of Directors

-

-

-

87

Other related parties

-

-

-

266

18,827

12,864

2,730

4,714

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Income statement amounts at July 31, 2012 (unaudited)(amounts in thousands of Euro)Net
Cost of
General, admin. & Royalties
revenues goods sold selling costs (income) income

PRADA Holding bv

Interest Interest
income expense

-

-

(77)

-

-

-

Other related parties

20,5671,317

14,004564

190Fratelli Prada spa

20,567

1,041(1,143)

564

-

-

278

-

-

-

-

-

1,750

-

-

-

Danzas llc
DFS Hawaii-

DFS New Zealand ltd

-

-

228

-

-

-

DFS Australia pty ltd

-

-

-

-

-

14

DFS Cotai ltd

-

-

2,265

-

-

-

DFS Venture Singapore pte ltd

-

-

216

-

-

-

Al Tayer Travels

-

-

24

-

-

-

Al Tayer Group llc

-

-

18

-

-

11
65

Al Tayer Insignia llc

-

-

87

-

-

Luna Rossa Challenge sl

-

-

22

-

-

-

HMP srl

-

-

248

-

1

-

Stitching Fondazione Prada/Progetto Prada Arte srl

-

(2)

2,336

-

-

-

Luna Rossa Challenge 2013 NZ ltd

-

-

6,838

-

-

-

Luna Rossa Challenge 2013 srl

-

-

461

-

-

Other

-

-

654 (*)---

Other companies controlled by PRADA Holding bv

-

-

(6)

-

-

-

EXHL Italia srl

-

-

(6)

-

-

-

20,567

1,317

13,921564

190

Total at July 31, 2012(*) This amount includes fees for services provided by Patrizia Albano (wife of Carlo Mazzi, Deputy Chairman of PRADA spa
at July 31, 2012) and Secva srl (an Italian company whose Chairman and majority owner is Carlo Mazzi).

Income statement amounts at July 31, 2011 (audited)(amounts in thousands of Euro)PRADA Holding bv
Other related parties

Net
revenues

Cost of General, admin.
Royalties
goods & selling costs
incomesold(income)Interest
incomeInterest
expense

-

-

(72)

-

149

-

19,431

1.259

4,004

522

1

-

Venezia 3 srl

2,042

140

(914)

54

-

-

F.lli Prada srl

6,648

344

203

179

-

-

Montenapoleone 6 srl

3,155

175

91

85

-

-

IPR srl

4,838

473

(119)

129

-

-

Spiga 1 srl

2,742

156

(27)

75

-

-

-

-

(114)

-

-

-

PRADA Italia spa
Luna Rossa Challenge 2007

-

(25)

1,999

-

-

-

HMP srl

-

-

235

-

1

-

Stitching Fondazione Prada/Progetto Prada Arte srl

6

(4)

2,098

-

-

-

Other

-

-

553 (*)---

Other companies controlled by PRADA Holding bv

-

-

(9)

-

-

1

Prapar Corporation

-

-

-

-

-

1

EXHL Italia srl

-

-

(3)

-

-

-

EXHL Japan co ltd

-

-

(3)

-

-

-

Prada Arte bv

-

-

(3)

-

-

-

Other

-

-

-

-

-

-

19,431

1,259

3,924

522

150

1

Total at July 31, 2011(*) This amount includes fees for services provided by Marina Prada Bianchi (sister of Miuccia Prada Bianchi), Alberto Prada
Bianchi (brother of Miuccia Prada Bianchi) and Patrizia Albano (wife of Carlo Mazzi, Deputy Chairman of PRADA spa at July
31, 2011).

The above tables disclose information on transactions and outstanding balances withrelated parties in accordance with IAS 24 Related party disclosure. Some of these78

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transactions fall within the application of the Hong Kong Listing Rules, in particular:––

the income statement transactions with related party Fratelli Prada spa reported
for the six months ended July 31, 2012, together with the outstanding balancesat July 31, 2012, fall within the scope of application of Chapter 14A of the Hong
Kong Stock Exchange Listing Rules as they are qualified as continuing connectedtransactions. Disclosure of these continuing connected transactions has been
made in the Company’s prospectus dated June 13, 2011;––

the income statement transactions with related parties Luna Rossa Challenge
2013 NZ ltd and Luna Rossa Challenge 2013 srl reported for the six months ended
July 31, 2012, together with the outstanding balances at July 31, 2012, fall within
the scope of application of Chapter 14A of the Hong Kong Stock Exchange Listing
Rules as they are qualified as non-exempted connected transactions. Disclosureof these non-exempted connected transactions has been made in the Company’s
announcement dated January 10, 2012, in accordance with the applicablerequirements of Chapter 14A of the Listing Rules;––

all of the other related parties transactions reported either fall outside the definitionof connected transaction under the Hong Kong Stock Exchange Listing Rules orare exempted from the reporting, annual review, announcement and independent
shareholders’ approval requirements.

Compensation of key management personnel
Key management consists of the Company’s Board of Directors and the remunerationof Directors is determined by the Remuneration Committee having regard to theperformance of individuals and market trends. Details of the Directors’ remuneration
are disclosed in Note 33.
35. Commitments
Operating leases
At July 31, 2012, and January 31, 2012, operating lease commitments, by maturity
date, were as follows:
July 312012
unaudited

January 31
2012
auditedWithin a year

254,457

245,310After between one year and five years

771,420

746,902

After more than five years

574,301

596,745

1,600,178

1,588,957(amounts in thousands of Euro)Total

The following table shows the amounts paid in first half of 2012 and 2011:(amounts in thousands of Euro)

July 312012
unaudited

July 312012
auditedFixed minimum lease payments

100,10982,208

Variable lease payments

119,916

80,234

Total

220,025

162,442

Some Group companies are required to pay lease charges based on a fixed percentageof net sales.

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Finance leases
Property, plant and equipment include the following assets held under finance leases:
July 312012
unaudited

January 31
2012
auditedLand and buildings

12,284

15,284

Furniture and fittings

15,983

15,253

Other tangibles

3,869

3,926

Accumulated depreciation(19,496)(19,124)

Total

12,64015,339(amounts in thousands of Euro)

The present value of lease payments due after July 31, 2012, is detailed by maturity
date below:(amounts in thousands of Euro)
Payable by
July 31, 2013

965

July 31, 2014

180

July 31, 2015

415

July 31, 2016

5

July 31, 20179after July 31, 2017

-

Total

1,574

Other commitments
The Shareholders’ agreement signed between PRADA spa and Al Tayer Insignia llc forthe development of a Prada and Miu Miu network in the Middle East provides that theparties may exercise an option whereby PRADA will buy back up to 20% of PRADA
Middle East fzco shares. The Directors maintain that the fair value of this clause cannot
be reliably measured.
During the six months ended July 31, 2012, the Group signed preliminary contracts toacquire retail businesses in prestigious retail locations in Italy. The total considerationagreed was equal to Euro 9.5 million, out of which Euro 6 million paid in advance at thereporting date.
During the six months ended July 31, 2012, the Group signed a preliminary contract toenter into a lease agreement relating to a prestigious retail location in Europe. The total
consideration agreed was equal to approximately Euro 16 million, out of which Euro
1.7 million paid in advance at the reporting date. The agreement was settled and any
consideration paid before these Interim consolidated condensed financial statements
were approved and authorized for issue.

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36. Consolidated companies
The companies included in the scope of consolidation are as follows.

EntityLocalcurrency

Sharecapital%(000s ofinterest
local
currency)

RegisteredofficeDate ofincorporation/ Main businessestablishment

Italy
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

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Localcurrency

EntitySharecapital%(000s ofinterest
local
currency)

RegisteredofficeDate ofincorporation/ Main businessestablishment

100.00London, UK

07/01/1997

EuropePRADA Retail UK ltd

GBP

RetailPRADA Germany gmbh

EUR

215

100.00

Munich,Germany

20/03/1995

RetailPRADA Austria gmbh

EUR

40

100.00Vienna, Austria 14/03/1996

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

6,000

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

Car Shoe sa

EUR

2,100

100.00

Luxembourg

13/03/2001

Service company/
Trademark owner

27/03/2000

Sub-holding company/
Service company/ Retail

PRADA Far East bv (*)

EUR

20

100.00Amsterdam,
Netherlands

Space sa

CHF

200

100.00

Lugano,Switzerland

17/07/2008

RetailChurch Holding UK plc (*)

GBP

78,126100.00

Northampton,UK

22/07/1999

Sub-holding

Church France sa

EUR

241

100.00Paris, France

01/06/1955

RetailChurch UK Retail ltd

GBP

1,021

100.00

Northampton,
UK

16/07/1987

RetailChurch’s English Shoes
Switzerland sa

CHF

100

100.00

Lugano,Switzerland

29/12/2000

RetailChurch & Co ltd

GBP

2,811

100.00

Northampton,
UK

16/01/1926

Sub-holding company/
Production/Distribution

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
Republic

25/06/2008

RetailPRADA Portugal. Unipessoal
lda (*)

EUR

5

100.00Lisbon, Portugal

07/08/2008

Retail07/11/2008

RetailPRADA Rus llc (*)

RUR

250

100.00

Moscow,
RussiaChurch Spain sl

EUR

3

100.00Madrid, Spain

06/05/2009

RetailPRADA Bosphorus Deri
Mamuller Ticaret Limited
Sirketi (*)

TRY

7,630

99.99

Istanbul,
Turkey26/02/2009

RetailPRADA Ukraine llc (*)

UAH

30,000100.00Kyiv, Ukraine

14/10/2011

Retail100.00Amsterdam,
Netherlands

07/07/2011

RetailChurch Netherlands bv

82

5,000

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

100.00Vienna, Austria 17/01/2012

RetailJCS (2009) ltd

GBP

90

100.00

Northampton,
UK

Dormant

PRADA Group

21/09/1920

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EntityLocalcurrency

Sharecapital%(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.

Duty-free stores

17/11/1999

PRADA Canada corp. (*)

CAD

300

100.00Toronto, Canada 01/05/1998

Distribution/Retail

Church & Co (USA) ltd

USD

85

100.00

New York, U.S.A. 08/09/1930

RetailPost Development corp (*)

USD

42,221100.00

New York,
U.S.A.

18/02/1997

Real estate

12/07/2011

RetailPRADA Retail Mexico, S. de
R.L. de C.V.

MXN

2,058

99.99

Mexico City,
MexicoPRADA Brasil Importação e
Comércio de Artigos de Luxo
Ltda (*)

BRL

19,28099.99

Sao Paulo,
Brazil12/04/2011

RetailPRADA Asia Pacific ltd

HKD

3,000

100.00Hong Kong

12/09/1997

Retail /Distribution/
Services

Asia-Pacific and Japan

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

Malaysia

23/01/2002

RetailPRADA China ltd

HKD

7,000

100.00Hong Kong

03/11/1997

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

Retail19/06/1997

Retail01/03/1991

RetailPRADA (Thailand) Co ltd

BTH

172,000

100.00

Bangkok,Thailand

PRADA Japan Co ltd

JPY

200,000

100.00Tokyo, JapanTRS 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

Auckland, New
04/11/1999
ZealandDuty-free stores

PRADA Australia Pty ltd

AUD

7,500

100.00

Sydney, Australia

21/04/1997

Retail23/03/2000

Duty-free stores

TRS Australia ltd

AUD

3,821

55.00

Sydney, Australia

PRADA 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

31/10/2005

Retail

17/04/1992

Dormant

PRADA Fashion Commerce(Shanghai) Co ltd

RMB

48,966100.00Shanghai,
China

Church Japan Co ltd

JPY

3,050

100.00Tokyo, Japan

Church 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 Singapore ltd

SGD

500

100.00Singapore

01/02/2010

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

PRADA Maroc sarlau (*)

MAD

25,384100.00Casablanca,
Morocco

11/11/2011

RetailPRADA Middle East fzco (*)

AED

18,00060.00

Jebel Ali Free
Zone Dubai

25/05/2011

Services / Distribution

PRADA United Arab Emiratesllc (**)

AED

300

-

Dubai

04/08/2011

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

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The following table shows the companies not included in the consolidation area andthe related consolidation method:
Company

Percentage directinterest as at
July 31, 2012

Percentage directinterest as at
July 31, 2011

Note

Consolidation method

49.00

49.00

Associate

Equity method

PAC srl (in liquidation)

37. Events after the reporting period
No significant events occurred after the reporting period.

84

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