Hong Kong Exchanges and Clearing Limited and The Stock Exchange of Hong Kong Limited
take no responsibility for the contents of this announcement, make no representation as toits accuracy or completeness and expressly disclaim any liability whatsoever for any loss
howsoever arising from or in reliance upon the whole or any part of the contents of thisannouncement.

PRADA spa
(Stock Code: 1913)

ANNOUNCEMENT
OF THE CONSOLIDATED RESULTS FOR THE NINE MONTHSENDED OCTOBER 31, 2014

- Net revenues were Euro 2,552 million, recording a decrease of 0.9%
compared with the nine months ended October 31, 2013 (+0.5% atconstant exchange rates)- Retail net sales were Euro 2,171.7 million, down by 0.5% comparedwith the nine months ended October 31, 2013 (+1.3% at constantexchange rates)- EBITDA was Euro 681.7 million, representing a margin of 26.7% on net
revenues (31.9% in the nine months ended October 31, 2013)- Group’s net income amounted to Euro 319.3 million, compared toEuro 440.9 million for the nine months ended October 31, 2013
- Net financial position standing positive at Euro 90.4 million as at
October 31, 2014
- Net operating cash flow for the nine months ended October 31, 2014,
was Euro 364.3 million

1Consolidated results for the nine months ended
October 31, 2014
The Board of Directors (the “Board”) of PRADA S.p.A. (the “Company”, or“PRADA spa”) announces the unaudited Consolidated results of the Company
and its subsidiaries (collectively, the “Group”) for the nine months ended
October 31, 2014, together with the unaudited comparative figures for thenine months ended October 31, 2013. The following financial information has
been prepared in accordance with the International Financial ReportingStandards (“IFRS”) as adopted by the European Union. The Consolidated
results of the Group for the year ended January 31, 2014, were audited by
Deloitte & Touche spa.

Key financial information
Key information from the Income
statement(amounts in thousands of Euro)nine
monthsended
Oct 31
2014(unaudited)

twelvemonthsended
Jan 312014(audited)ninemonthsended
Oct 312013(unaudited)

Net revenues
EBITDAEBITDA %EBITEBIT %
Income before tax
Net income of the Group
Earnings per share (Euro)
Capital expenditure
Net operating cash flows
Average number of employees

2,552,023
681,67826.7%
496,433
19.5%
480,909319,3190.125
353,074
364,322
11,866

3,587,347
1,143,186
31.9%
939,237
26.2%
922,896627,785
0.245
611,227
769,436
10,816

2,576,101
820,97131.9%
677,81326.3%
663,674
440,879
0.172
416,400
612,789
10,566-0.9%-17.0%-26.8%-27.5%-27.6%-27.6%-40.5%
12.3%

Key information from the Statement offinancial position(amounts in thousands of Euro)

as at
Oct 31
2014(unaudited)

as at
Jan 312014(audited)

as at
Oct 312013(unaudited)change vs
Jan 31
2014

Net operating working capital
Net invested capital
Net financial position surplus/(deficit)
Group shareholders’ equity

528,177
2,724,483
90,3882,797,832

409,774
2,405,650
295,8902,687,554

368,9622,219,010
303,4822,506,514

118,403
318,833(205,502)
110,278%change vsOct 312013

Highlights for the nine months ended October 31, 2014
As at October 31, 2014, the PRADA Group filed its nine months of operation
recording consolidated net revenues of Euro 2,552 million, broadly in linewith the same period of nine months a year earlier. As reported, net
revenues were slightly down for 0.9%, while at constant exchange rates they
were slightly up for 0.5%.
In order to react to the global market challenging scenario, that has beencharacterized also by unfavorable exchange rates trend for most of the ninemonths period and spoilt by some still enduring geo-political issues, theGroup is holding fast to its long-term growth strategy which is based on the2completion of the retail network and on the brand’s equity protection. At thesame time actions have been taken:

to improve the merchandise mix to better cover strategic prices
ranges, especially in the leather goods;
to increase efficiency of all operational level with a comprehensive
cost revision;
to change organizational and operational processes to improve store
efficiency along with a more selective retail expansion.

Some of these actions will produce effects in the forthcoming quarters, since
they require some time to be implemented. So far, despite some actions on
costs have been already put in place, the downward trend on sales resulted inlower profitability in the period: the gross margin for the nine months ended
October 31, 2014, was 72% as a percentage of consolidated net revenues
while the EBITDA stood at 26.7%.
The EBIT margin, also in consequence of the costs associated to theinvestment program undertaken in last years, dropped in the nine months
ended October 31, 2014, to 19.5% from 26.3%.
The Group’s net result totaled Euro 319.3 million in the nine months ended
October 31, 2014, which was 12.5% as a percentage of net revenues. Last
year, for the same nine months period, the Group recorded a net result ofEuro 440.9 million representing a marginality of 17.1%.
The capital expenditure for the period amounted to Euro 353.1 million andwas mainly allocated to the expansion of the retail network in the form of
new openings as well as renovations/enlargements of the existing stores. The
amount also included Euro 61.5 million related to the acquisition of the Milanbuildings where the Group operates its corporate headquarter.
At October 31, 2014, the Group’s net financial position was positive andamounted to Euro 90.4 million (Euro 295.9 million at January 31, 2014) after
the said capital expenditures and the payment of the dividends to the PRADA
spa shareholders for Euro 281.5 million.

3

Consolidated income statement for the nine months ended
October 31, 2014
(amounts in thousands of Euro)Net revenues
Cost of goods soldnine months
nine months
ended
% on
ended
% on
October 31
Net October 31
Net
2014 revenues
2013 revenues(unaudited)(unaudited)

Note

3

2,552,023(715,608)

100.0%-28.0%

2,576,101(666,862)

100.0%-25.9%

1,836,415

72.0%

1,909,239

74.1%(1,339,982)-52.5%(1,231,426)-47.8%

496,433

19.5%

677,81326.3%(15,979)-0.6%(14,423)

-0.5%

455

-

284

-

480,90918.9%

663,67425.8%(154,712)-6.1%(215,135)-8.4%

Net income from continuing operations

326,19712.8%

448,539

17.4%

Net income for the period

326,19712.8%

448,539

17.4%

6,878

0.3%

7,660

0.3%

Net income – Group

319,31912.5%

440,879

17.1%

Depreciation, amortization andimpairment

185,245

7.2%

143,158

5.6%

EBITDA

681,67826.7%

820,971

31.9%

Gross margin
Operating expenses

4

EBIT
Interest and other financial
income/(expenses), net
Dividends received from third parties

5

Income before taxes
Taxation

6

Net income – Non-controlling interests

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

7

0.125

4

0.172

Consolidated income statement for the three months ended
October 31, 2014
three
monthsended
October 31
2014(unaudited)

% on
Net
revenues

800,708(221,893)

100.0%-27.7%

848,035(206,454)

100.0%-24.3%

Gross margin578,81572.3%

641,58175.7%

Operating expenses(455,540)-56.9%(422,106)-49.8%

EBIT

123,275

15.4%

219,475

25.9%

Interest and other financial
income/(expenses), net(6,486)

-0.8%

770

0.1%

Income before taxes

116,78914.6%

220,245

26.0%

Taxation(41,637)-5.2%(84,525)-10.0%Net income from continuing operations

75,1529.4%

135,720

16.0%

Net income for the period

75,1529.4%

135,720

16.0%

679

0.1%

3,080

0.4%

Net income – Group

74,473

9.3%

132,640

15.6%

Depreciation, amortization andimpairment

65,5688.2%

50,443

5.9%

EBITDA

188,843

23.6%

269,918

31.8%(amounts in thousands of Euro)Net revenues
Cost of goods sold

Note

3

Net income – Non-controlling interests

5

three
months
% on
ended
Net
October 31
revenues
2013(unaudited)Consolidated statement of financial position(amounts in thousands of Euro)

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

98

523,474
302,434
614,912
9,178

568,414
308,405449,903
13,984

10

4,743

5,993

12

143,242
1,597,983

114,897
1,461,596

11
11

1,394,142
940,876
34,078238,525
80,377468

1,230,192
901,289
21,186201,245
69,8671,430

14,914

1,487

2,703,380
4,301,363

2,426,696
3,888,292

NoteAssetsCurrent assets
Cash and cash equivalents
Trade receivables, net
Inventories, net
Derivative financial instruments - current
Receivables from, and advance payments to,parent company and other related parties current
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Associated undertakings
Deferred tax assets
Other non-current assets
Derivative financial instruments non-current
Receivables from, and advance payments to,parent company and other related parties – noncurrent
Total non-current assets
Total Assets
Liabilities and Shareholders’ equity
Current liabilities
Bank overdrafts and short-term loans
Payables to parent company and other relatedparties - current
Trade payables
Current tax liabilities
Derivative financial instruments - current
Obligations under finance leases - current
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term financial payables
Obligations under finance leases non-current
Post-employment benefits
Provision for risks and charges
Deferred tax liabilities
Other non-current liabilities
Derivative financial instruments non-current
Payables to parent company and other relatedparties – non-current
Total non-current liabilities
Total Liabilities
Share capital
Translation reserve
Total other reserves
Net profit for the period
Total Shareholders’ equity – Group
Shareholders’ equity – Non-controlling interests
Total Liabilities and Shareholders’ equity

13

10

168,287

61,909

14

4,514

4,894

15

389,169
137,866
18,046391
196,530
914,803

348,534
132,1453,803
524
154,666
706,475

260,682
78,06858,52740,054
117,058
3,951

207,950
19
63,27952,66042,671
98,982
1,469

16

17

14

Net current assets
Total assets less current liabilities

6

13,34913,247

571,689
1,486,492
255,882
28,9282,193,703
319,319
2,797,832
17,0394,301,363

480,277
1,186,752
255,882(49,438)
1,853,325
627,785
2,687,554
13,986
3,888,292

683,180
3,386,560

755,1213,181,817

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

EquityNumber of
SharesShare
CapitalBalance at January
31, 2013 (audited)

2,558,824,000

255,882(42,288)

410,047

20,148(6,470)

-

-

-

-

-

-

-

-

-

-

-

-

-

- (230,294) (230,294)-(230,294)

-

-

-

-

-

-

-

-

-

-

-

40

40

-

-

(7,458)-(15,212)-(1,104)-(16,316)

440,879

417,105

7,349

424,454

-

-

-

-

-

(319)

-

-

(319)

-

(319)

-

(319)

2,558,824,000

255,882(49,746 )

410,047

4,936(6,789)4,382 1,446,923 1,859,499

440,879

2,506,514

-

-

-

-

-

-

-

-

-

-

-

(4,753)(4,753)

-

-

-

-

-

-

-

-

-

-

-

-

-

-

-

308

-

(1,237)

-

(274)

-

(1,511)

186,906

185,703

2,761

188,464

-

-

-

-

-

(4,663)--(4,663)-(4,663)-(4,663)

2,558,824,000

255,882(49,438)410,047

3,699(11,452)

4,108 1,446,923 1,853,325

627,785

2,687,554

-

-

-

-

-

-

-

-

-

-

-

-

-

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

-

-

-

-

-

-

-

(2,462)(2,462)-(2,462)106(2,356)

-

-

-

-

-

-

-

-

-

-

-

1,773

1,773

-

-

78,366-(11,204)

-

9,668

-

(1,536)319,319

396,149

7,937

404,086

-

-

-

-

-

(1,938)--(1,938)-(1,938)-(1,938)

Balance at October
2,558,824,000
31, 2014 (unaudited)

255,882

28,928410,047(7,505)(13,390)

13,776 1,790,775 2,193,703

319,319

2,797,832

Balance at October
31, 2013 (unaudited)
Dividends
Capital injection in
subsidiaries
Comprehensive
income for the threemonths(recyclable to P&L)
Comprehensive
income for the threemonths(not recyclable to
P&L)
Balance at January
31, 2014 (audited)
Allocation of 2013
net profit
Dividends
Acquisition ofMarchesi Angelo srl
Capital injection in
subsidiaries
Comprehensive
income for the ninemonths(recyclable to P&L)
Comprehensive
income for the ninemonths(not recyclable to
P&L)

7

Total
other
reserves

Noncontrol
linginterests(amounts inthousands of Euro)

Allocation of 2012
net profit
Dividends
Capital injection in
subsidiaries
Comprehensive
income for the ninemonths(recyclable to P&L)
Comprehensive
income for the ninemonths (notrecyclable to P&L)

Share
Cash flow
premium
hedge
reserve
reserve

Actuarial
gain
Available for
Other(losses) sale reserve reserves
reserve

Translation
reserve

5,486 1,051,536 1,480,747

625,681

627,785

Net
profitOwners of
the Group

625,6812,320,022

625,681 (625,681)

627,785 (627,785)

-

-

Total
Equity10,470 2,330,492--(1,881) (232,175)

15,978 2,522,492

13,986 2,701,540--(6,763) (288,234)

17,039 2,814,871

Condensed statement of consolidated cash flows
nine months
nine months ended
ended
October 31
October 31
2013
2014
(unaudited)(unaudited)(amounts in thousands of Euro)Net cash flows from operating activities

364,322612,789

Cash flows generated/(utilized) by investing activities(311,966)(388,156)

Cash flows generated/(utilized) by financing activities(128,915)(208,471)

Change in cash and cash equivalents, net of bank overdrafts(76,559)

16,162

Statement of consolidated comprehensive income
nine months twelve months
ended
ended
October 31
January 31
2014
2014
(unaudited)(audited)(amounts in thousands of Euro)Net income for the period – Consolidated

nine months
ended
October 31
2013(unaudited)

326,197

637,805

448,539

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

79,42579,425(7,057)(7,057)(7,769)(7,769)Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax impact(15,092)
3,888(11,204)(22,755)
6,306(16,449)(20,972)
5,760(15,212)

Change in Fair Value reserve
Tax impact
Change in Fair Value reserve less tax impact

12,891(3,223)
9,668(1,837)459(1,378)(1,472)368(1,104)

Change in Actuarial reserve
Tax impact
Change in Actuarial reserve less tax impact(2,033)95(1,938)(6,403)
1,418(4,985)

(386)
67
(319)

Consolidated comprehensive income for the period

402,148

607,936

424,135

Comprehensive income for the period – Noncontrolling Interests

7,937

10,1107,349

Comprehensive income for the period – Group394,211597,826

416,786A) Items recyclable to P&L:

B) Item not recyclable to P&L:

8

Notes to the consolidated results for the nine months
ended October 31, 2014
1.

Presentation of PRADA GroupPRADA spa (the “Company”), together with its subsidiaries (jointly the“Group”), is listed on the Hong Kong Stock Exchange (stock code: 1913). It is
one of the world leaders in the luxury goods sector where it operates with
the Prada, Miu Miu, Church’s and Car Shoe brands in the design, production
and distribution of luxury handbags, leather goods, footwear, apparel andaccessories. The Group also operates, under licensing agreements, in theeyewear and fragrances sectors. Its products are sold in 70 countries
worldwide through a network that included 580 Directly Operated Stores(DOS) at October 31, 2014, 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
registered office is in Via Antonio Fogazzaro 28, Milan, Italy.

2.

Basis of preparation

The consolidated financial information for the nine months ended October
31, 2014, included in this Announcement refers to the Group of companies
controlled by PRADA spa (the "Company"), holding company of the PRADA
Group (the "Group"), and is based on its Consolidated financial statements.
Such consolidated results for the nine months ended October 31, 2014, wereprepared on a consistent basis compared to the Consolidated financial
statements of the Group for the twelve months ended January 31, 2014, withthe exception of the new and revised IFRS issued by the IASB and endorsed by
the European Union that are effective for the PRADA Group starting fromFebruary 1, 2014. Such new and revised IFRS did not have a significant
impact on the Consolidated financial statements for the nine months ended
October 31, 2014.
IFRS also refer to all the International Accounting Standards (“IAS”) and all
the interpretations of the International Financial Reporting Interpretation
Committee (“IFRIC”), previously named the Standing Interpretations
Committee (“SIC”).
New standards and amendments issued by the IASB, endorsed by theEuropean Union and applicable to the PRADA Group from February 1, 2014
The following amendments to IFRS have been endorsed by the European
Union and are applicable to the PRADA Group effective from February 1,
2014. These changes do not have any significant impact to the Group as ofthe date of these consolidated financial statements:
 “IFRIC Interpretation 21 Levies”;
 Amendments to “IAS 36 Impairment of Assets”;
 Amendments to “IAS 39 Financial Instruments:

Measurement”;

9

Recognitionand “Investment Entities”, meant as a group of amendments to IFRS 10, IFRS








12 and IAS 27;
Transition Guidance (amendments to IFRS 10, IFRS 11 and IFRS 12);“IFRS 10 Consolidated Financial Statements”;“IFRS 11 Joint Arrangements”;“IFRS 12 Disclosure of Interests in Other Entities”;
Amendments to “IAS 28 Investment in Associates and Joint Ventures”;
Amendments to “IAS 27 Separate Financial Statements”;
Amendments to “IAS 32 Financial Instruments: Presentation”.

10

3.

Net revenues analysis

Net revenues for the nine months ended October 31, 2014
nine months
ended
October 31
2014(unaudited)nine months
ended%
October 31
2013 change(unaudited)

Net sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan
Middle East
Other countries
Total

402,817 16.0%
544,141 21.6%
336,459 13.3%
902,855 35.8%
259,306 10.3%
74,017
2.9%
3,565
0.1%
2,523,160 100.0%

398,563 15.6%
1.1%
572,012 22.5% -4.9%
335,679 13.2%
0.2%
931,978 36.6% -3.1%
239,755
9.4%
8.2%
65,036
2.5% 13.8%
4,183
0.2% -14.8%
2,547,206 100.0% -0.9%

Net sales by brand
Prada
Miu Miu
Church's
Car Shoe
Other
Total

2,082,904 82.5%
373,498 14.8%
54,921
2.2%
9,138
0.4%
2,699
0.1%
2,523,160 100.0%

2,114,410 83.0% -1.5%
367,998 14.5%
1.5%
51,261
2.0%
7.1%
10,953
0.4% -16.6%
2,584
0.1%
4.5%
2,547,206 100.0% -0.9%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

412,500 16.4%
1,614,761 64.0%
451,979 17.9%
43,9201.7%
2,523,160 100.0%

390,342 15.3%
1,710,783 67.2%
415,358 16.3%
30,723
1.2%
2,547,206 100.0%

5.7%
-5.6%
8.8%
43.0%
-0.9%

Net sales by distribution channelDOS
Independent customers and franchises
Total

2,171,675 86.1%
351,485 13.9%
2,523,160 100.0%

2,182,040 85.7%
365,166 14.3%
2,547,206 100.0%

-0.5%
-3.7%
-0.9%

Net sales
Royalties

2,523,160
28,863

2,547,206
28,895

98.9%
1.1%

-0.9%
-0.1%

Total net revenues

2,552,023 100.0%

2,576,101 100.0%-0.9%(amounts in thousands of Euro)

11

98.9%
1.1%

Net revenues for the three months ended October 31, 2014
three months
ended
October 31
2014(unaudited)

three months
ended%
October 31
2013 change(unaudited)

Net sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan
Middle East
Other countries
Total

116,009 14.6%
182,602 23.1%
103,007 13.0%
283,634 35.8%
84,044 10.6%
22,087
2.8%
877
0.1%
792,260 100.0%

130,032 15.5% -10.8%
197,712 23.5% -7.6%
104,092 12.4% -1.0%
304,414 36.2% -6.8%
80,306
9.6%
4.7%
21,749
2.6%
1.6%
1,317
0.2% -33.4%
839,622 100.0% -5.6%

Net sales by brand
Prada
Miu Miu
Church's
Car Shoe
Other
Total

651,790 82.3%
117,467 14.8%
19,361
2.5%
2,622
0.3%
1,020
0.1%
792,260 100.0%

704,348 83.9% -7.5%
112,048 13.3%
4.8%
18,588
2.2%
4.2%
3,402
0.4% -22.9%
1,236
0.2% -17.5%
839,622 100.0% -5.6%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

136,721 17.3%
504,046 63.6%
137,556 17.4%
13,9371.7%
792,260 100.0%

141,525 16.9%
554,414 66.0%
132,962 15.8%
10,721
1.3%
839,622 100.0%

Net sales by distribution channelDOS
Independent customers and franchises
Total

729,514 92.1%
62,746
7.9%
792,260 100.0%

759,580 90.5% -4.0%
80,042
9.5% -21.6%
839,622 100.0% -5.6%

Net sales
Royalties
Total net revenues

792,260 98.9%
8,448
1.1%
800,708 100.0%

839,622 99.0%
8,414
1.0%
848,036 100.0%(amounts in thousands of Euro)

12

-3.4%
-9.1%
3.5%
30.0%
-5.6%

-5.6%
0.4%
-5.6%

Number of storesas at
October 31
2014
DOS
franchises

as atJanuary 31
2014
DOS
franchises

as atOctober 31
2013
DOS
franchises

Prada
Miu Miu
Church’s
Car Shoe

350
167
55
8

26
7
-

330
150
52
8

24
8
-

312
146
50
8

23
7
-

Total

580

33

540

32

516

30

as at
October 31
2014
DOS
franchises

as atJanuary 31
2014
DOS
franchises

as atOctober 31
2013
DOS
franchises

ItalyEuropeAmericas
Asia PacificJapan
Middle East
Africa

52
164
104
170
70
17
3

6
3
21
3
-

51
150
91
157
72
16
3

6
6
20
-

50
139
84
154
70
16
3

6
6
18
-

Total

580

33

540

32

516

30

4.

Operative expenses(amounts in thousands of Euro)nine months
ended
October 31
2014(unaudited)% on netrevenues

nine months
ended
October 31
2013(unaudited)% on netrevenues

96,172120,295
971,608
151,907

3.8%
4.7%
38.0%
6.0%

94,077
135,878859,247
142,224

3.6%
5.3%
33.4%
5.5%

1,339,982

52.5%

1,231,426

47.8%

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

5.

Interest and other financial income/(expenses), net
nine months
ended
October 31
2014(unaudited)nine months
ended
October 31
2013(unaudited)

Interests expenses on borrowings
Interest expenses IAS 19
Interest income
Exchange gains /(losses) – realized
Exchange gains/(losses) – unrealized
Other financial income/(expenses)(9,206)
(121)
2,394
2,816
(9,499)(2,363)(6,833)(168)
2,732(8,022)558(2,690)Total(15,979)(14,423)(amounts in thousands of Euro)

13

6.

Taxationnine months
ended
October 31
2014(unaudited)nine months
ended
October 31
2013(unaudited)

Current taxation
Deferred taxation

182,699(27,987)

238,541(23,406)

Income taxes

154,712215,135(amounts in thousands of Euro)

7.

Earnings and dividends per share

Earnings per share
Earnings per share are calculated by dividing the net income attributable toGroup’s shareholders by the weighted average number of ordinary shares inissue.
nine months
ended
October 31
2014(unaudited)Group net income in Euro
Weighted average number of ordinary shares in issue
Earnings per share in Euro, calculated on weighted average
number of sharesnine months
ended
October 31
2013(unaudited)319,319,389 440,879,330
2,558,824,000 2,558,824,000
0.125

0.172

Dividends per share
During the nine months ended October 31, 2014, the Company distributed
dividends of Euro 281,470,640 (or Euro 11 cents per share), as approved by
the Shareholders’ Meeting held on May 22, 2014, to approve the financial
statements for the year ended January 31, 2014. The payment of thedividends and the related Italian withholding tax payable (Euro 11.3 million),
arising from the application of the Italian ordinary withholding tax rate to thewhole amount of dividends paid to beneficial owners of the Company shares
held through the Hong Kong Central Clearing and Settlement System, wascompleted by July 31, 2014.
During the year ended January 31, 2014, the Company distributed dividendsof Euro 230,294,160 (or Euro 9 cents per share) as approved by the
Shareholders’ Meeting held on May 23, 2013, to approve the financial
statements for the year ended January 31, 2013. The payment of thedividends and the related Italian withholding tax payable (Euro 9.2 million),
arising from the application of the Italian ordinary withholding tax rate to thewhole amount of dividends paid to beneficial owners of the Company shares
held through the Hong Kong Central Clearing and Settlement System, wascompleted by July 31, 2013.

14

8.

Inventories, net
as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

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

117,005
43,287518,974(64,354)

85,33328,424403,473(67,327)

Total

614,912449,903(amounts in thousands of Euro)Overall, the increase in inventories was due to the larger number of DOS aswell as the wider replenishment strategy that the Group is realizing with theaim to better serve the retail activities.

9.

Trade receivables, net
as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

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

277,665(10,526)
35,295288,504(10,432)
30,333

Total

302,434

308,405(amounts in thousands of Euro)

Trade receivables from third parties decreased during the nine months ended
October 31, 2014, mainly as a result of lower amounts arising from the retailbusiness which were partially offset by the increase resulting from the 2014
F/W collection wholesale deliveries.

1510. Receivables from, and advance payments to, parent
company and other related parties – current and non-current(amounts in thousands of Euro)

Financial receivables - other related parties
Other receivables - PRADA Holding bv and other companies
controlled by PRADA Holding bv
Other receivables - other related parties
Advance payments - other related parties
Receivables from, and advance payments to, parent company andother related parties - current

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

11

2,008

178

392

498
4,056

2,159
1,434

4,743

5,993

The financial receivables from other related parties reported at January 31,
2014, were due from Luna Rossa Challenge 2013 srl and were reimbursed in
the period.
Receivables from, and advance payments to, parent company and otherrelated parties non-current is detailed as follows:
as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Accrued rental income other related parties – long-term
Deferred expenses other related parties

3,610
11,304

1,487-

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

14,914

1,487(amounts in thousands of Euro)Accrued rental income – long-term - was recognized in relation to Fratelli
Prada spa and Progetto Prada Arte srl in application of “IAS 17 Leases” which
requires rental income to be recognized on a constant basis. Deferred
expenses mainly related to the sponsorship of the Luna Rossa sailing team forthe participation in the XXXV edition of the America’s Cup, as in compliancewith the agreement signed on February 27, 2014.

16

11. Capital expenditure
Changes in the net book value of Property, plant and equipment in the period
ended October 31, 2014, are as follows:(amounts inthousands ofEuro)

Land andbuildings

Balance atJanuary 31,
2014 (audited)

390,677

20,279487,227

153,428

69,223

109,358

1,230,192

-

49

(7)

19

24

-

85

68,055(7,042)(58)

5,347(6,278)(31)

76,394(106,569)(188)

35,680(28,669)
(347)

6,374
(7,262)(71)

98,236(1,470)290,086(155,820)(2,165)9,497

38

17,083

5,623

490

1,937

34,668728

121

22,9885,962

155(29,954)---(1,474)(1,175)

(16)

(239)

(2,904)

461,857

19,525495,454

170,52168,917

177,868

1,394,142

Change inscope ofconsolidation
Additions
Depreciation
Disposals
Exchangedifferences
Reclass. from
Assets inprogress/Other
movements
Impairment
Balance at
October 31,
2014(unaudited)

Production Leasehold Furniture
AssetsOther
plant and improve&under
tangiblemachineryments
fittings
construction

Total net
book
value

Changes in the net book value of Intangible assets in the period ended
October 31, 2014, are as follows:
Trademarks

Balance atJanuary 31,
2014 (audited)

282,913504,373

78,994

10,63719,0295,343

901,289-

7,983

21,8432

1-

29,829351(8,372)--13,802(13,515)-931(2,640)(5)133(1,953)017,858(1)

33,075(26,480)
(6)

2,513

439

790

30

2

29

3,803

-

-

2,417

290

(2)

(3,298)

(593)

-

-

-

-

-

(41)

(41)

277,405

512,795

104,331

9,245

17,21019,890940,876

Change in scopeof consolidation
Additions
Amortization
Disposals
Exchangedifferences
Reclassificationfrom Assets inprogress / Other
movements
Impairment
Balance at
October 31,
2014 (unaudited)

Store
Goodwill
Lease
SoftwareAcquisitions

Development
costs and
Assets Total net
other
in
book
intangible progress value
assets(amounts inthousands of
Euro)

17

12. Other current assets
as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

VAT
Income tax and other tax receivables
Other assets
Prepayments and accrued income
Deposits

45,501
17,256
18,91456,955
4,616

39,25014,062
13,47042,375
5,740

Total

143,242

114,897

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Guarantee deposits
Deferred rental income
Other receivables

64,144
6,535
9,698

57,158
6,923
5,786

Total

80,377

69,867(amounts in thousands of Euro)

13. Other non-current assets(amounts in thousands of Euro)

14. Payables to parent company and other related parties –current and non-current(amounts in thousands of Euro)

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Other payables - PRADA Holding bv and other companies
controlled by PRADA Holding bv
Financial payables - other related parties
Other payables - other related parties

10

136

3,736
768

4,130
628

Payables to parent company and other related parties – current

4,514

4,894

Financial payables towards other related parties, totaling Euro 3.7 million at
October 31, 2014, related to an interest-free loan contributed by Al Tayer,
the non-controlling shareholder of PRADA Middle East fzco, according to its
share in the said company. The loan was partially repaid during the period.
The non-current portion of payables to parent company and other relatedparties is detailed as follows:
as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Other payables – other related companies

13,34913,247

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

13,34913,247(amounts in thousands of Euro)

18

Other payables to related companies includes the amount due to Fin-Reta srl
in relation to the establishment in the year 2013 of a ten year right ofusufruct to a real estate property in Tuscany, Italy, and to a business party to
the rental agreement for said property which the Group is using as part of its
retail operations. The payable reported at October 31, 2014, represents thepresent value of future payments due after October 31, 2015.

15. Trade payables(amounts in thousands of Euro)

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Trade payables – third parties
Trade payables – related parties

373,230
15,939337,807
10,727

Total

389,169

348,534

The increase in Trade payables is strictly connected with the intense
industrial activities incurred in the last months aimed to sustain theimpressive retail replenishment strategy ongoing at the reporting date.

16. Other current liabilities
as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Payables for capital expenditure
Accrued expenses and deferred income
Other payables

98,02915,357
83,14470,848
10,842
72,976

Total

196,530

154,666(amounts in thousands of Euro)

17. Provisions for charges
Movements in provisions for risks and charges are summarized as follows:
Provision
for litigation

Provision fortax disputes

Provisions
for othercharges

Total

Balance at January 31, 2014
(audited)

1,400

22,72428,536

52,660Exchange differences
Other
Reversals
Uses
Increases

36
149
(190)
(102)
5

4
3,729

1,647
(149)
(483)
(624)
1,845

1,687
(673)
(726)
5,579

Balance at October 31, 2014
(unaudited)

1,298

26,45730,77258,527(amounts in thousands of Euro)

Provisions represent the Directors’ best estimate of maximum contingent
liabilities. In the Directors’ opinion, and based on the information available
19

to them as supported by the opinions of independent experts at the reporting
date, the total amount provided for risks and charges is reasonableconsidering the contingent liabilities that might arise.
The increases occurred in the provision for tax disputes during the ninemonths ended October 31, 2014, for Euro 3.7 million essentially related to
tax risks on direct taxes with reference to subsidiaries located in theEuropean Union for which the management deemed more likely than not therising of future liabilities as a consequence of the probable outcome of tax
inspections ongoing at the reporting date.

20

Management Discussion and Analysis for the threemonths period ended October 31, 2014
Net revenues
In the three months ended October 31, 2014, the Group’s net revenues
amounted to Euro 800.7 million, down by 5.6% compared to Euro 848 million
recorded in the same three months period of last year.
Contributing 92.1% to the consolidated net sales generated in the period of
three months ended October 31, 2014, the retail channel delivered net sales
for Euro 729.5 million, down by 4% compared to Euro 759.6 million achievedin the same period a year earlier. The net total of new stores opened by theGroup during this third quarter of 2014 was 14: 15 openings (9 Prada, 5 Miu
Miu and 1 Church’s) and 1 closure (Prada). In the same period, the wholesale
business recorded shrinkage of some Euro 17 million over the results
achieved in the three months ended October 31, 2013.
In terms of geography, net sales contracted in all markets with the exceptionof Japan and Middle East which, as reported, delivered growths over the
results achieved in the same period last year: +4.7% and +1.6% respectively.
The Prada brand alone contributed 82.3% to the consolidated net sales forthe period under analysis and generated net sales of Euro 651.8 million,
down by 7.5% over Euro 704.3 million posted in the same period of 2013. On
the contrary Miu Miu posted a positive trend as well as Church’s brand filing
growths as reported of +4.8% and +4.2% respectively.
In the three months ended October 31, 2014, the leather goods divisioncontracted by 9.1% as reported with net sales amounting to Euro 504 million,some Euro 50 million less than the results achieved in the same period a year
earlier. Ready-to-wear also decreased in this third quarter (-3.4% asreported), while shoes advanced (3.5% as reported).

Operating results
The consolidated EBITDA for the three months ended October 31, 2014,
totaled Euro 188.8 million, some Euro 81 million less than the results scoredin the same period of 2013. As a percentage of net revenues the margindecreased from 31.8% to 23.6%. The dilution was essentially the result of theabove detailed sales trend, especially in the leather goods division, combinedwith the increase of the selling expenses which went up by 12.5% comparedto the same three months period of last year.
In the three months ended October 31, 2014, the EBIT was down to 15.4%
from 25.9%, also following the increase in the level of amortization anddepreciation costs.
The taxation of the three months ended October 31, 2014, was affected by
the recognition of some Euro 3 million following the rejection by the Italian
Tax Authorities of the PRADA spa’s request not to apply the Italian Controlled
Foreign Companies rules (“CFC”) to its Dutch sub-holding company PRADA Far
East bv for the tax year 2013. As a consequence of the above, the effective
21

tax rate for the three months ended October 31, 2014, reached 35.7%,
anyway lower compared to 38.4% reported for the same period a year
earlier, when the three months tax burden included some Euro 22 million
extraordinary charges, as explained in the Announcements for the ninemonths period ended October 31, 2013.
In the period of three months under analysis the Group’s net result amounted
to Euro 74.5 million while in the same period of last year it totaled Euro132.6 million.

Management Discussion and Analysis for the ninemonths ended October 31, 2014
Distribution channels
In the nine months ended October 31, 2014, the net sales generated by theretail channel amounted to Euro 2,171.7 million, or 86.1% of the total net
sales for the Group, almost in line (-0.5%) with the results achieved in thesame period of 2013. At constant exchange rates there was a growth of 1.3%.
As at October 31, 2014, the Group operated through a network of 580
Directly Operated Stores (DOS), a net of 40 new openings from the beginningof the financial period (47 openings and 7 closures). From November 1, 2013,
the total net openings were 64.
The wholesale channel, contributing for the remaining 13.9% to theconsolidated net sales, delivered net sales of Euro 351.5 million, down by
3.7% as reported and 4.2% at constant exchange rates. Against growths
achieved in Italy and Asia Pacific, the wholesale business significantly
contracted in Europe and America, also as a consequence of the enduring
selective policy of the Group in this channel and the conversion strategy
adopted.

Markets
In the nine months ended October 31, 2014, the Asia Pacific market
delivered net sales for Euro 902.9 million, down by 3.1% compared to Euro
932.0 million recorded in the same period of nine months a year earlier. At
constant exchange rates there was a decrease of 2%. At October 31, 2014, in
the area the Group operated through 170 DOS, out of which 16 new shops
unveiled during the period and 3 stores closed. The retail channel contracted
by 4.3% (-2.8% at constant exchange rates) as a result of a general slowdown
in demand particularly strong in Hong Kong and Macau. Overall the Greater
China retail net sales amounted to Euro 566.2 million, down by 4.1% (-2.3%
at constant exchange rates). It is worth highlighting that in South Korea, theonly significant wholesale market in the area, the independent clients’business (mainly duty free operations) recorded double-digit growth both asreported and at constant exchange rates, benefitting of more consistent
tourist spending mainly from China.
The European market posted net sales for Euro 544.1 million, down by 4.9%
compared to Euro 572 million achieved in the same period of last year (-5%at constant exchange rates). The drop was determined mainly by the leather
22goods performance as ready-to-wear and shoes were positive. In terms ofchannels, the retail contracted 1.9% while the wholesale decreased 22.7%
also following the ongoing selective strategy of the independent clients’accounts and the conversion program of the Swiss market from wholesale toretail. As at October 31, 2014, the Group operated in the area through 164
DOS with 15 new shops opened from February 1, 2014, and 1 closure.
In the period of nine months ended October 31, 2014, the Italian market
recorded net sales for Euro 402.8 million, slightly up by 1.1% compared toEuro 398.6 million posted in the same period of 2013 thanks to the expansionof the wholesale business that increased 6.8%. The retail channel wasbasically in line with the same period of 2013.
In the nine months ended October 31, 2014, Americas delivered net sales forEuro 336.5 million, in line with previous period and showing an increase of
2.9% at constant exchange rates. Strong of a network of 104 DOS, the retailchannel expanded 6% as reported and 8.8% at constant exchange rates.
During the period a total of 13 new stores were unveiled (11 in North
America and 2 in Central America).
The Japanese market confirmed the strong performance showed all along
the period that resulted for the nine months ended October 31, 2014, in net
sales totaling Euro 259.3 million. The increase was equal to 8.2% as reported
and 15.4% at constant exchange rates. In the period the Group optimized its
retail structure through the closing of 3 stores.
In the nine months ended October 31, 2014, the Middle East reported net
sales for Euro 74 million, expanding double-digit both as reported and atconstant exchange rates: +13.8% and +15.7% respectively.

Products
In terms of product category, the Group recorded progresses in the ready-towear and shoes divisions and contractions in the leather goods.
Footwear delivered net sales for Euro 452.0 million and expanded 8.8% asreported and 10% at constant exchange rates compared to the results posted
in the same period a year earlier. The contribution of this product category
to the consolidated net sales for the period increased up to 17.9% from 16.3%
of last year. The expansion was achieved in almost all markets. In the retailchannel, shoes advanced 18.9% as reported and 20.7% at constant exchange
rates.
In the nine months ended October 31, 2014, the ready-to-wear division, that
contributed 16.4% to the consolidated net sales for the period (15.3% a year
earlier), recorded net sales of Euro 412.5 million, up by 5.7% compared toEuro 390.3 million posted in the same period of 2013 (+7.6% at constantexchange rates). In terms of geography, the paces of growth were broadly
balanced worldwide. In the retail channel, ready-to-wear advanced 7.5% asreported and 9.7% at constant exchange rates.
The performance of the leather goods division essentially affected theperformance of the entire Group for the nine months ended October 31,
2014. Net sales amounted to Euro 1,614.8 million, down by 5.6% compared to23

Euro 1,710.8 million posted in the same period of last year (-4.2% at constantexchange rates). All markets were down with the exception of Japan andAmericas. The contribution to the consolidated net sales dropped to 64%
from 67.2%.

BrandsIn the nine months ended October 31, 2014, the Prada brand posted net
sales amounting to Euro 2,082.9 million, decreasing by 1.5% compared to thesame period of last year when net sales totaled Euro 2,114.4 million. The
drop was equally spread between the two channels. In terms of markets, thereported growths achieved in Italy, Japan and the Middle East were
exceeded by the shrinkages recorded in Europe and Asia Pacific, while
Americas was almost flat. The trends by product division were in line withthe consolidated figures.
Miu Miu net sales totaled Euro 373.5 million and recorded an increase of 1.5%
compared to Euro 368.0 million posted in the nine months ended October 31,
2013 (+3.4% at constant exchange rates). The growth was entirely
contributed by the retail channel which scored a 3.9% increase (+6.1% atconstant exchange rates) as the wholesale business contracted double-digit.
More in details the retail channel advanced everywhere, but in Italy. Sameas Prada, the trends by product division were in line with the consolidated
figures.
In the nine months ended October 31, 2014, the Church’s brand generated
net sales of Euro 54.9 million and expanded 7.1% compared to Euro 51.3
million posted in the same nine months period of last year. The increase atconstant exchange rates was 4.5%. The retail channel strongly contributed
double-digit to the growth during the entire period (+13.3% as reported and+11.1% at constant exchange rates) as the wholesale business slightly
decreased.

Royalties
In the nine months ended October 31, 2014, the Group’s licensing
agreements generated royalties for Euro 28.9 million, in line with the same
period of last year. The growth achieved in the eyewear business was offset
by the contraction reported in the fragrances.

Operating results
In the nine months ended October 31, 2014, the delivery margin amounted toEuro 1,836.4 million, or 72% as a percentage of consolidated net revenues,
down by 3.8% compared to Euro 1,909.2 million earned in the same period of
2013. The dilution was mainly caused by the negative impact of the exchange
rates fluctuations.
The EBITDA for the nine months ended October 31, 2014, amounted to Euro
681.7 million, down compared to the EBITDA of Euro 821.0 million reached in
the same period of last year. As a percentage of net revenues, profitability
went down from 31.9% to 26.7% following the pressure recorded at thedelivery margin level, as already mentioned, together with the increased24

incidence in the costs connected to the selling activities. The actions
undertaken by the management are granting lower spending on most of thediscretionary costs, so as to preserve margins as far as possible.
The EBIT for the period totaled Euro 496.4 million, or 19.5% as a percentage
of consolidated net revenues. The drop in profitability, that was equal to26.3% in the nine months ended October 31, 2013, was essentiallyattributable to the volume of depreciation and amortization determined by
the retail network expansion.
The tax charges for the nine months ended October 31, 2014, totaled Euro
154.7 million, down by some Euro 60 million compared to the same period ofprevious year. Despite the lower tax burden, the effective tax rate did notchange and was equal to 32.2%.
Finally, the Group’s net income amounted to Euro 319.3 million, or 12.5% asa percentage of net revenues, compared to Euro 440.9 million for the ninemonths ended October 31, 2013.

Net invested capital
The following table contains the Statement of financial position reclassified
in order to provide a better picture of the composition of the Net invested
capital.
(amounts in thousands of Euro)

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)

Non-current assets (excluding deferred tax assets)
Trade receivables, net
Inventories, net
Trade payables
Net operating working capital
Other current assets (excluding financial position items)
Other current liabilities (excluding financial position items)
Other current assets/(liabilities), net
Provisions for risks
Post-employment benefits
Other long-term liabilities
Deferred taxation, net
Other non-current assets/(liabilities), net
Net invested capital
Shareholders’ equity – Group
Shareholders’ equity – Non Controlling Interests
Total consolidated Shareholders’ equity
Long term financial payables
Short term financial , net surplus/(deficit)
Net financial position surplus/(deficit)
Shareholders’ equity and Net financial position

2,464,855
302,434
614,912(389,169)
528,177
157,154(353,219)(196,065)(58,527)(78,068)(134,360)
198,471(72,484)
2,724,483(2,797,832)(17,039)(2,814,871)(260,682)
351,070
90,388(2,724,483)

2,225,451
308,405449,903(348,534)
409,774
132,866(291,378)(158,512)(52,660)(63,279)(113,698)
158,574(71,063)
2,405,650(2,687,554)(13,986)(2,701,540)(207,969)
503,858
295,890(2,405,650)

At October 31, 2014, Net invested capital stood at Euro 2,724.5 million, Euro
318.8 million more than the Euro 2,405.7 million reported at January 31,

25

2014. The investments that occurred in the period in the retail, industrial
and corporate areas contributed the most to the raise in the value.
The capital expenditure for the first nine months of 2014 totaled Euro 353.1
million and was spent to enlarge, renovate and strengthen the retail network
for Euro 217.3 million, to purchase the strategic headquarter offices in Milanfor Euro 61.5 million (previously occupied under a rental agreement), toenlarge and improve the industrial and logistic facilities for Euro 41.3 million
and to improve other corporate processes and premises for a total of Euro 33
million.
The Net operating working capital increased by some Euro 118.4 million,
reaching Euro 528.2 million at October 31, 2014, from Euro 409.8 million at
January 31, 2014. The increase in the net value was essentially absorbed by
the higher quantities of finished products stocked at the reporting date,following the larger number of DOS opened in the nine months period, and awider ongoing replenishment strategy deployed to better serve the retail
activities that were suffering of insufficient availability on some important
product ranges.
Total Other net current liabilities increased from Euro 158.5 million at
January 31, 2014, to Euro 196.1 million. The variance was due to the lower
fair value of derivative financial instrument for Euro 19 million, the higher
payable for capital expenditure for Euro 27.2 million and a net of othervariances totaling lower liabilities for Euro 8.6 million.
The caption other non-current liabilities, net, remained almost unchanged in
the total as it increased from Euro 71.1 million at January 31, 2014, to Euro72.5 million at October 31, 2014. Rather, in details, the net value increasedfor Euro 39.9 million as a result of higher deferred tax assets for temporary
differences on inventories while it reduced for higher long-term liabilities
connected to long-term employee incentives.
The Group shareholders’ equity stood at Euro 2,797.8 million at October 31,
2014, increasing by Euro 110.3 million compared to Euro 2,687.6 million
reported at January 31, 2014. During the nine months period the Group
achieved a net result of Euro 319.3 million while it distributed dividends ofEuro 281.5 million on the 2013 financial statements. The rest of the increasein the Group’s equity, which means some Euro 72 million, was essentiallydelivered by the higher value of the net assets contributed by the foreignsubsidiaries as a result of the weakening of the Euro currency occurred in the
period.

26

Net financial position surplus/(deficit)(amounts in thousands of Euro)

as at
October 31
2014(unaudited)

as atJanuary 31
2014(audited)Long-term debt
Obligations under finance leases(260,862)-(207,950)(19)

Long-term financial payables(260,862)(207,969)

Bank overdraft and short-term loans
Payables to related parties
Receivables from related parties
Obligations under finance leases
Cash and cash equivalents(168,291)(3,737)
12(391)
523,477(61,909)(4,130)2,008(524)
568,414

Short-term net financial surplus/(deficit)

351,070

503,859

Net financial position surplus/(deficit)

90,388295,890

At October 31, 2014, the Net financial position was a surplus amounting toEuro 90.4 million. The net operating cash flow generated in the nine months
period and amounting to Euro 364.3 million allowed the Group to entirely
finance the capital expenditure spending for Euro 312 million and partiallyfund the dividends distributions to PRADA spa shareholders and Noncontrolling shareholders that, taken together, absorbed Euro 288.2 million.
The rest of the cash disbursement to pay dividends was granted by the net
cash surplus available at the beginning of the period.
During the nine months ended October 31, 2014, a new loan facility
agreement of GB Pound 60 million was signed by the subsidiary Kenon
Limited with Unicredit Bank AG, London Branch. The loan under the facility
is secured by a mortgage on the prestigious building in Old Bond street,
London, home of one of the most important Prada stores in Europe. It has tobe repaid in quarterly equal installments starting from April 2015. The loan
will expire on January 31, 2029.
On December 1, 2014, PRADA spa signed a new revolving credit facility with apool of banks amounting to Euro 315 million, expiring in December 2019. The
loan, which replaces the existing revolving line of credit due in May 2016,
was negotiated to support the financial cycle of the business, while taking
benefit from the current favorable credit markets conditions and extending
the financial flexibility of the group for a longer period.

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Significant acquisitions of subsidiaries
Marchesi Angelo srl
On March 14, 2014, the Group acquired the 80% of the Marchesi Angelo srl,
owner of the historic Milanese pastry shop founded in 1824. The acquisition
was aimed at enhancing the “Pasticceria Marchesi” brand, a synonym toquality in the Italian food industry, joining it with Prada and Miu Miu brands,
leaders in the luxury goods market, within the Group’s development
worldwide.
The net cash-out for the acquisition amounted to Euro 7.7 million andresulted as the net of the consideration paid, Euro 8.4 million, and the cash
surplus included in the net asset acquired, Euro 0.7 million.
fair valueof net assets acquired(amounts in Euro thousand)Cash surplus
Tangible fixed assets
Other current assets/(liabilities)
Other non-current assets/(liabilities)
Net assets acquired

707
88
(53)
(210)
532

Non-controlling interests (measured at net assets)(106)

Consideration paid

8,400

Goodwill

7,974

Outlook
On top of the ongoing difficult international economic environment, theluxury goods market is undergoing a certain readjustment, the extent andnature of which is not yet entirely clear. We are confident that the market
has a positive medium-term growth outlook, but also aware of the increased
level of competition. As a result, while we remain convinced of our growthon the long-term, on the short-term we will also have to strive to increase
the efficiency of our structures and the operating performance of ourexisting stores, in order to ensure the Group achieves satisfactory levels of
profitability.

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Corporate governance practices
Audit Committee
The Audit Committee, which comprises three independent non-executive
directors, on December 5, 2014, has reviewed the unaudited consolidated
results of the Company and its subsidiaries for the nine months ended
October 31, 2014.

Compliance with the Corporate Governance Code of the Listing
Rules
The Board has reviewed the Company’s corporate governance practices andis satisfied that the Company has complied with the applicable codeprovisions set out in the Corporate Governance Code contained in Appendix
14 of the Listing Rules during the nine months ended October 31, 2014.

Purchase, Sale, or Redemption of the Company’s Listed
Securities
Neither the Company nor any of its subsidiaries has purchased, sold orredeemed any of the Company’s listed securities during the nine months
ended October 31, 2014.

Withholding Tax applicable to Dividend Payment
The rate of Italian withholding tax applicable to future dividend payment haschanged from 20% to 26%.

Publication of Announcement on Consolidated results for thenine months ended October 31, 2014
This announcement on the consolidated results for the nine months ended
October 31, 2014, is published on the Company’s website atwww.pradagroup.com and on the Hong Kong Stock Exchanges’ website atwww.hkexnews.hk.
By Order of the Board
PRADA S.p.A.
Mr. Carlo Mazzi
Chairperson
Milan (Italy), December 5, 2014
As at the date of this announcement, the Company’s executive directors are
Mr. Carlo MAZZI, Ms. Miuccia PRADA BIANCHI, Mr. Patrizio BERTELLI, Mr.
Donatello GALLI and Ms. Alessandra COZZANI; the Company’s non-executive
director is Mr. Gaetano MICCICHÈ and the Company’s independent nonexecutive directors are Mr. Gian Franco Oliviero MATTEI, Mr. Giancarlo
FORESTIERI and Mr. Sing Cheong LIU.

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