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, 2013
- Net revenues were Euro 2,576.1 million, recording an increase of
10.1% compared with the nine months ended October 31, 2012
- Retail net sales were Euro 2,182.0 million, up by 13.8% compared with
the nine months ended October 31, 2012 (+18.7% at constantexchange rates)- Retail Same Store Sales Growth was 7% compared with the ninemonths ended October 31, 2012
- EBITDA was Euro 821.0 million, up by 12.8% compared with the ninemonths ended October 31, 2012, and representing a margin of 31.9%
on net revenues- Group’s net income amounted to Euro 440.9 million, up by 7.9%
compared to Euro 408.6 million for the nine months ended October
31, 2012- Positive net financial position at Euro 303.5 million as at October 31,
2013- Net operating cash flow for the nine months ended October 31, 2013,
was Euro 612.8 million

1Consolidated results for the nine months ended
October 31, 2013
The Board of Directors (the “Board”) of PRADA S.p.A. (the “Company” or“PRADA spa”) is pleased to announce the unaudited Consolidated results of
the Company and its subsidiaries (collectively, the “Group”) for the ninemonths ended October 31, 2013, together with the unaudited comparative
figures for the nine months ended October 31, 2012.

Key financial informationninemonthsended
Oct 312013(unaudited)

twelvemonthsended
Jan 31 2013
(audited)nine months
ended
Oct 31
2012(unaudited)%change vsOct 31
2012

Net revenues
EBITDAEBIT
Income before tax
Net income of the Group
Earnings per share

2,576,101
820,971
677,813663,674
440,879
0.172

3,297,219
1,052,469
889,781883,616
625,6810.245

2,339,322
727,873
612,464
608,170
408,552
0.160

10.1%
12.8%
10.7%
9.1%
7.9%
7.5%

Average headcount (persons)Capital expenditure
Net operating cash flows

10,566
416,400
612,789

9,427
351,129759,272

9,243
202,987535,627

14.3%-

EBITDA %EBIT %

31.9%
26.3%

31.9%
27.0%

31.1%
26.2%

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

as at
Oct 312013(unaudited)

as at
Jan 31 2013
audited

as at
Oct 31
2012(unaudited)change vs
Jan 31 2013

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

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

317,7142,017,844
312,648
2,320,022

332,749
1,923,534
210,569
2,121,976

51,248201,166(9,166)
186,492

Key information from the Income
statement(amounts in thousands of Euro)

Highlights for the nine months ended October 31, 2013
In the nine months ended October 31, 2013, the Group’s net revenues totaled
Euro 2,576.1 million, up by 10.1% compared to Euro 2,339.3 million recordedin the same nine months period of 2012. At constant exchange rates theincrease was 14.3%.
In an economic environment of general contraction of the consumer’s
spending in some regions, the Group continued expanding its retail businessthrough the unveiling of new Directly Operated Stores (DOS), managing toachieve in the channel a 13.8% growth compared to the nine months ended
October 31, 2012. At constant exchange rates, the improvement in the retailbusiness was even higher at 18.7%.
The EBITDA for the nine months ended October 31, 2013, totaled Euro 821.0
million, up by 12.8% over Euro 727.9 million posted in the same period of
2012.
2

The Group’s net result totaled Euro 440.9 million and increased 7.9% overEuro 408.6 million posted in the same period of last year. As a percentage on
net revenues, and compared with the nine months ended October 31, 2012,
the Group’s net result slightly diluted from 17.5% to 17.1%, mainly as aconsequence of the higher impact of depreciation and amortization charges
as well as taxation.
In the period the cash flows generated from operations allowed the Group to
widely sustain both the demanding capital expenditure program and thepayment of dividends as approved by the Annual General Meeting in May 2013
on the 2012 financial statements. At the end of October 2013 the positive net
financial position stood at Euro 303.5 million.

Consolidated income statement for the nine months ended
October 31, 2013
nine months
ended
October 31
2013(unaudited)

% on
Net
revenues

nine months
ended
October 31
2012(unaudited)

% on
Net
revenues

2,576,101(666,862)

100.0%-25.9%

2,339,322(654,877)

100.0%-28.0%

1,909,239

74.1%

1,684,445

72.0%(1,231,426)-47.8%(1,071,981)-45.8%

677,81326.3%

612,46426.2%

5(14,423)-0.5%(4,294)

-0.2%

5

284

-

-

-

663,67425.8%

608,17026.0%(215,135)-8.4%(194,104)-8.3%

Net income from continuing operations

448,53917.4%

414,066

17.7%

Net income for the period

448,53917.4%

414,066

17.7%

7,660

0.3%

5,514

0.2%

Net income – Group

440,87917.1%

408,552

17.5%

Depreciation, amortization and impairment

143,158

5.6%

115,409

4.9%

EBITDA

820,97131.9%

727,873

31.1%(amounts in thousands of Euro)Net revenues
Cost of goods sold

Note

3

Gross margin
Operating expenses

4

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

6

Net income – Non-controlling interests

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

7

0.172

3

0.160

Consolidated income statement for the three months ended
October 31, 2013
three months
ended
October 31
2013(unaudited)

% on
Net
revenues

three months
ended
October 31
2012(unaudited)

% on
Net
revenues

848,035(206,454)

100.0%-24.3%

791,949(214,006)

100.0%-27.0%

Gross margin

641,58175.7%

577,943

73.0%

Operating expenses(422,106)-49.8%(360,362)-45.5%

EBIT

219,47525.9%

217,581

27.5%

770

0.1%

(1,383)-0.2%

Income before taxes

220,245

26.0%

216,198

27.3%

Taxation(84,525)-10.0%(91,349)-11.5%Net income from continuing operations

135,720

16.0%

124,849

15.8%

Net income for the period

135,720

16.0%

124,849

15.8%

3,080

0.4%

2,707

0.3%

Net income – Group132,640

15.6%

122,142

15.4%

Depreciation, amortization and impairment

50,443

5.9%

40,919

5.2%

EBITDA

269,91831.8%

258,500

32.6%(amounts in thousands of Euro)Net revenues
Cost of goods sold

Note

3

Interest and other financial
income/(expenses), net

Net income – Non-controlling interests4Consolidated statement of financial position(amounts in thousands of Euro)

Note

AssetsCurrent 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
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
Total non-current assets

9
8

as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

590,327
265,508460,218
20,296

571,746
304,525
343,80243,06010

6,849

19,493

12

131,799
1,474,997

104,823
1,387,449

11
11

1,097,269
902,917
21,552
190,174
71,738357
2,284,007

857,299
878,750
23,024
176,057
61,682
1,018
1,997,830

3,759,004

3,385,279

68,1694,899
356,764
165,722712
202
157,368
753,836

175,570
5,599
330,613
97,148912
575
131,645742,062

215,401
396
66,05049,93944,025
106,718
147
482,676

78,830518
45,53846,91455,63684,905384
312,725

Total Liabilities

1,236,512

1,054,787

Share capital
Other reserves
Translation reserve
Net profit for the period
Total Shareholders’ equity – Group

255,882
1,859,499(49,746)
440,879
2,506,514

255,882
1,480,747(42,288)625,6812,320,022

15,978

10,470Total Liabilities and Shareholders’ equity

3,759,004

3,385,279

Net current assets
Total assets less current liabilities

721,161
3,005,168

645,387
2,643,217

13

Total Assets
Liabilities and Shareholders’ equity
Current liabilities
Bank overdrafts and short-term loans
Payables to parent company and other related parties
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
Total non-current liabilities

14
15

16

17

Shareholders’ equity – Non-controlling interests

5Statement of changes in consolidated shareholders’ equity(amounts in thousands of Euro, except for number of shares)
Actuarial
gain(losses)
reserve

Available
for salereserve(4,173)(1,192)(58)

747,548(17,239)431,929

1,822,744

8,224

1,830,968

-

-

-

-

431,929-(431,929)

-

-

-

-

-

-

-

-

(127,941)--(127,941)(5,576)(133,517)

-

-

-

-

-

-

-

-

-

1,166

1,166

-

-

-

24,321

-

5,544

-

(25,049)625,681

630,497

6,656

637,153

-

-

-

-

(5,278)

-

-

-

-

(5,278)-(5,278)2,558,824,000

255,882

410,047

20,148(6,470)5,486

1,051,536(42,288)625,6812,320,022

10,4702,330,492(amounts in thousandsof Euro)Number of
SharesShare
CapitalShare Cash flow
premium
hedge
reserve
reserve

Balance at January 31,
2012 (audited)

2,558,824,000

255,882

410,047---

Allocation of 2011 net
profitDividends
Capital injection in
subsidiaries
Comprehensive
income for the year
(recycled to P&L)
Comprehensive
income for the year
(not recycled to P&L)
Balance at January 31,
2013 (audited)
Allocation of 2012 net
profitDividends
Capital injection in
subsidiaries
Comprehensive
income for the year
(recycled to P&L)
Comprehensive
income for the year
(not recycled to P&L)
Balance at October 31,
2013 (unaudited)

EquityNonOther Translatio
attributable
Net profit
controllin
reserves n reserveto owners ofg interests
the Group

Total
Equity

-

-

-

-

-

-

625,681-(625,681)

-

-

-

-

-

-

-

-

-

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

-

-

-

-

-

-

-

-

-

-

40

40

-

-

-

(15,212)-(1,104)-(7,458)440,879

417,105

7,349

424,454

-

-

-

-

(319)

-

-

-

-

(319)

-

(319)

2,558,824,000

255,882

410,047

4,936(6,789)4,382

1,446,923(49,746)

440,879

2,506,514

15,9782,522,492

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

6Summarized statement of consolidated cash flows
nine months
ended
October 31
2013(unaudited)nine months ended
October 31
2012(unaudited)

Net cash flows from operating activities

612,789535,627

Cash flows generated/(utilized) by investing activities(388,156)(213,438)

Cash flows generated/(utilized) by financing activities(208,471)(168,263)

16,162

153,926(amounts in thousands of Euro)

Change in cash and cash equivalents, net of bank overdrafts

Statement of consolidated comprehensive income
nine months
twelve months ended
ended
January 31
October 31
2013
2013
(audited)(unaudited)(amounts in thousands of Euro)Net income for the period – Consolidated

448,539633,277

Change in Translation reserve
Tax impact
Change in Translation reserve less tax impact(7,769)(7,769)(25,989)(25,989)

Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax impact(20,972)
5,760(15,212)33,530(9,209)24,321

Change in Fair Value reserve
Tax impact
Change in Fair Value reserve less tax impact(1,472)368(1,104)

7,391(1,847)
5,544

(386)
67
(319)

(6,369)1,091(5,278)424,135

631,875

7,349

6,656

416,786625,219A) Items recycled to P&L:

B)

Item not recycled to P&L

Change in Actuarial reserve
Tax impact
Change in Actuarial reserve less tax impact
Consolidated comprehensive income for the period
Comprehensive income for the period – Non-controlling Interests
Comprehensive income for the period – Group7

Notes to the consolidated results for the nine months
ended October 31, 2013
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, fragrances and mobile telephone sectors. Its products are sold in
more than 70 countries worldwide through a network that included 516
Directly Operated Stores (DOS) at October 31, 2013, and a selected networkof 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, 2013, 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 results. Such
consolidated results for the nine months ended October 31, 2013, wereprepared on a consistent basis compared to the Consolidated financial
statements of the Group for the twelve months ended January 31, 2013, 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 from thecurrent period’s financial information.
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
the European Union and applicable to the PRADA Group fromFebruary 1, 2013
- Amendments to “IAS 1 Presentation of financial statements”;- Amendments to “IAS 19 Employee benefits”;- “IFRS 13 Fair Value Measurement”;- Amendments to “IAS 12 Income Taxes”;- Amendments to “IFRS 7 Financial Instruments: Disclosures”;- “IFRIC Interpretation 20 Stripping Costs in the Production Phase of a
Surface Mine”;- Amendments to “IFRS 1 First-time Adoption of IFRS – Governments Loans”;- Annual improvements to IFRSs (2009-2011 Cycle).

8

On December 29, 2012, the European Union endorsed the “IFRS 10
Consolidated Financial Statements”, the “IFRS 11 Joint Arrangements”, the“IFRS 12 Disclosure of Interests in Other Entities”, the Amendments to “IAS
28 Investment in Associates and Joint Ventures” and the Amendments to “IAS
27 Separate Financial Statements” that, according to IASB, are effectivefrom January 1, 2013, but, because of the timing of the endorsement process
in the European Union, are applicable to the PRADA Group effective fromFebruary 1, 2014. The early adoption of these new IFRS and amendments
would not have had any significant impact on the Consolidated financial
information of the Prada Group for the nine months ended October 31, 2013.

9

3.

Net revenues analysis

Net revenues for the nine months ended October 31, 2013
nine months
ended
October 31
2013(unaudited)nine months
ended%
October 31
2012 change(unaudited)

Net sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan (including Hawaii)
Middle East
Other countries
Total

398,563 15.6%
572,012 22.5%
335,679 13.2%
931,978 36.6%
239,755
9.4%
65,036
2.5%
4,183
0.2%
2,547,206 100.0%

385,065 16.7%
3.5%
537,297 23.3%
6.5%
295,775 12.8% 13.5%
814,694 35.3% 14.4%
246,880 10.7% -2.9%
24,044
1.0% 170.5%
4,248
0.2% -1.5%
2,308,003 100.0% 10.4%

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

2,114,410 83.0%
367,998 14.5%
51,261
2.0%
10,953
0.4%
2,584
0.1%
2,547,206 100.0%

1,876,603 81.3% 12.7%
360,664 15.6%
2.0%50,1372.2%
2.2%
15,134
0.7% -27.6%
5,465
0.2% -52.7%
2,308,003 100.0% 10.4%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

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

387,929 16.8%
1,444,217 62.6%
450,344 19.5%
25,5131.1%
2,308,003 100.0%

0.6%
18.5%
-7.8%
20.4%
10.4%

Net sales by distribution channelDOS
Independent customers and franchises
Total

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

1,917,552 83.1%
390,451 16.9%
2,308,003 100.0%

13.8%
-6.5%
10.4%

Net sales
Royalties

2,547,206
28,8952,308,003
31,319

98.7%
1.3%

10.4%
-7.7%

Total net revenues

2,576,101 100.0%

2,339,322 100.0%

10.1%(amounts in thousands of Euro)

10

98.9%
1.1%

Net revenues for the three months ended October 31, 2013
three months
ended
October 31
2013(unaudited)

three months
ended%
October 31
2012 change(unaudited)

Net sales by geographical area
Italy
EuropeAmericas
Asia PacificJapan (including Hawaii)
Middle East
Other countries
Total

130,032 15.5%
197,712 23.5%
104,092 12.4%
304,414 36.2%
80,306
9.6%
21,749
2.6%
1,317
0.2%
839,622 100.0%

125,739 16.1%
3.4%
188,020 24.0%
5.2%
91,614 11.7% 13.6%
282,223 36.0%
7.9%
82,465 10.5% -2.6%
11,494
1.5% 89.2%
1,761
0.2% -25.2%
783,316 100.0%
7.2%

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

704,348 83.9%
112,048 13.3%
18,588
2.2%
3,402
0.4%
1,236
0.2%
839,622 100.0%

643,170 82.1%
9.5%
114,693 14.6% -2.3%
19,127
2.5% -2.8%
3,792
0.5% -10.3%
2,534
0.3% -51.2%
783,316 100.0%
7.2%

Net sales by product line
Clothing
Leather goods
Footwear
Other
Total

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

139,252 17.8%
501,157 64.0%
135,054 17.2%
7,853
1.0%
783,316 100.0%

Net sales by distribution channelDOS
Independent customers and franchises
Total

759,580 90.5%
80,042
9.5%
839,622 100.0%

687,586 87.8% 10.5%
95,730 12.2% -16.4%
783,316 100.0%
7.2%

Net sales
Royalties

839,6228,414

783,316
8,633

Total net revenues

848,036 100.0%(amounts in thousands of Euro)

11

99.0%
1.0%

1.6%
10.6%
-1.5%
36.5%
7.2%

98.9%
1.1%

7.2%
-2.5%

791,949 100.0%

7.1%

Number of storesas at
October 31
2013
DOS
franchises

as atJanuary 31
2013
DOS
franchises

as atOctober 31
2012
DOS
franchises

Prada
Miu Miu
Church’s
Car Shoe

312
146
50
8

23
7
-

283
126
45
7

19
6
-

270
108
44
6

19
6
-

Total

516

30

461

25

428

25

as at
October 31
2013
DOS
franchises

as atJanuary 31
2013
DOS
franchises

as atOctober 31
2012
DOS
franchises

ItalyEuropeAmericas
Asia PacificJapan (includ. Hawaii)
Middle East
Africa

50
139
84
154
70
16
3

6
6
18
-

48
137
66
130
66
11
3

5
6
14
-

48
129
51
120
71
6
3

5
6
14
-

Total

516

30

461

25

428

25

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

nine months
ended
October 31
2012(unaudited)% on netrevenues

94,077
135,878859,247
142,224

3.6%
5.3%
33.4%
5.5%

78,725
110,352
748,108
134,796

3.4%
4.7%
32.0%
5.7%

1,231,426

47.8%

1,071,981

45.8%

4.

Operating expenses(amounts in thousands of Euro)

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

12

5.

Interest and other financial expenses, net
nine months
ended
October 31
2013(unaudited)nine months
ended
October 31
2012(unaudited)

Interests expenses on borrowings
Interest income
Exchange gains /(losses) – realized
Exchange gains/(losses) – unrealized
Other financial income/(expenses)
Dividends received from third parties(6,833)
2,732(8,022)558(2,858)284(9,408)
3,553
5,737
(659)
(3,517)-

Total(14,139)(4,294)nine months
ended
October 31
2013(unaudited)nine months
ended
October 31
2012(unaudited)

Current taxation
Deferred taxation

238,541(23,406)

205,300(11,196)

Income taxes

215,135

194,104(amounts in thousands of Euro)

6.

Taxation(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.

Group’s net income in Euro
Weighted average number of ordinary shares in issue
Earnings per share in Euro, calculated on weighted average numberof shares

nine months
ended
October 31
2013(unaudited)nine months
ended
October 31
2012(unaudited)

440,879,330
2,558,824,000

408,552,227
2,558,824,000

0.172

0.160

Dividends per share
During the nine months ended October 31, 2013, the Company distributed
dividends for Euro 230,294,160, as approved by the Annual General Meeting
held on May 23, 2013, to approve the financial statements for the year ended
January 31, 2013. The payment was arranged on June 2013, net of the Italian
withholding tax payable (Euro 9.2 million), as arising from the application to
the whole amount of dividends payable to beneficial owners of the Company
13

shares held through the Hong Kong Central Clearing and Settlement System of
the Italian ordinary withholding tax rate for dividends paid to non-Italianresidents.
During the period ended January 31, 2013, the Company distributed dividendsof Euro 127,941,200, as approved by the Annual General Meeting held on May
22, 2012, to approve the financial statements for the year ended January 31,
2012. The payment of the dividends and the related Italian withholding tax
payable, arising from the application of the Italian ordinary withholding tax
rate to the whole amount of dividends paid to beneficial owners of theCompany shares held through the Hong Kong Central Clearing and Settlement
System, was completed by January 31, 2013.

8.

Inventories, net
as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

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

103,157
36,090395,490(74,519)

79,55924,620314,244(74,621)

Total

460,218

343,802(amounts in thousands of Euro)

The increase in inventory was essentially attributable to the number ofstores opened since the beginning of the year, to the more expensive
fall/winter collection stocked at October 31, 2013, as well as to the larger
quantities of raw material purchased to support the growth of the retailbusiness.

9.

Trade receivables, net
as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

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

240,236(11,857)
37,129286,390(11,547)
29,682

Total

265,508

304,525(amounts in thousands of Euro)The Net Trade receivable, compared with January 2013, decreased thanks tothe collection of the wholesale deliveries, typical of this part of the year.

1410. Receivables from, and advance payments to, parent
company and other related parties
as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

Financial receivables from other related parties
Other receivables from PRADA Holding bv
Other receivables from companies controlled by PRADA Holding bv
Other receivables from other related parties
Advance payments to other related parties

1,415
342
19
2,866
2,207

1,413
249
3
2,652
15,176

Total

6,849

19,493(amounts in thousands of Euro)

The decrease in Advance payments to other related parties referred for Euro
12.3 million to the release through income statement of the advancepayments made at January 31, 2013, to Luna Rossa Challenge NZ ltd andLuna Rossa Challenge srl following the completion of the XXXIV edition
America’s Cup competition during the current period. At October 31, 2013,
the caption included advance payments of Euro 2.1 million made to Progetto
Prada Arte srl and Stichting Fondazione Prada for cultural initiatives to beundertaken after the reporting period.

11. Capital expenditure
Changes in the net book value of Property, plant and equipment in the period
ended October 31, 2013, are as follows:(amounts inthousands ofEuro)
Balance atJanuary 31, 2013
(audited)
Change in scopeof consolidation
Additions
Depreciation
Disposals
Exchangedifferences
Other
movements
Impairment
Balance at Oct
31, 2013(unaudited)

Land andbuildings

Production
plant andmachinery

Leaseholdimprovements

Furniture&
fittings

Othertangible

Assetsunderconstruction

Total net
book value

211,580

17,448373,043

110,310

39,413

105,505

857,299

-

-

5

103

-

-

108

110,274(5,796)(5)

7,313(5,803)(35)

119,784(79,904)(80)

44,355(23,058)(402)

28,482(5,641)(57)

66,090(50)

376,298(120,202)
(629)

(48)

7

(9,366)(1,675)(160)(2,066)(13,308)

7,362

48

32,002

8,414

5,615

(54,116)

(675)

-

-

(1,015)

(584)

(4)

(19)

(1,622)

323,367

18,978434,469

137,463

67,648115,344

1,097,269

15

Changes in the net book value of Intangible assets in the period ended
October 31, 2013, are as follows:
Development
Total net
costs and other Assets inbookintangible
progressvalue
assets(amounts inthousands of Euro)

Trademarks

Goodwill

Store
Lease
Acquisitions

SoftwareBalance at January
31,2013 (audited)291,105

503,987

65,763

7,988

1,677

8,230

878,750

-

-

4,892

-

-

-

4,892

244
(8,265)--

14,293(9,244)-

1,248(2,535)-

19,128(1,168)-5,189-

40,102(21,212)
-

424

71

(254)

(24)

-

(106)

111

-

-

3,617
-

1,735
(76)

759
-

(5,715)
(46)

396
(122)

283,508

504,058

79,067

8,336

20,396

7,552

902,917

Change in scope of
consolidation
Additions
Amortization
Disposals
Exchangedifferences
Other movements
Impairment
Balance at Oct 31,
2013 (unaudited)

12. Other current assets
as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

VAT
Income tax and other tax receivables
Other assets
Prepayments and accrued income
Deposits
Financial assets held for trading

32,603
13,77924,34755,061
5,044
965

25,072
20,54016,731
41,266
1,214
-

Total

131,799

104,823

as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

Guarantee deposits
Deferred rental income
Other receivables

56,7795,127
9,832

50,898
2,410
8,374

Total

71,73861,682(amounts in thousands of Euro)

13. Other non-current assets(amounts in thousands of Euro)16

14. Payables to parent company and other related parties
as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

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

4,092
126

5,018
120

-

3

681

458

Total

4,899

5,599

(amounts in thousands of Euro)

as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

Trade payables – third parties
Trade payables – related parties

340,973
15,791

323,894
6,719

Total

356,764

330,613

as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)

Payables for capital expenditure
Accrued expenses and deferred income
Other payables

70,974
10,301
76,09357,9699,810
63,866

Total

157,368

131,645(amounts in thousands of Euro)

15. Trade payables

16. Other current liabilities(amounts in thousands of Euro)

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

Provision Provision for tax
for litigation
disputes

Other
provisions

Total

Balance at January 31, 2013 (audited)

1,775

27,467

17,672

46,914

Exchange differences
Reversals
Uses
Increases

(4)
(16)
(72)
33

(402)
(2)
(361)
694

(625)
(60)
(556)
4,396

(1,031)
(78)
(989)
5,123

Balance at October 31, 2013
(unaudited)

1,716

27,396

20,82749,939During the nine months ended October 31, 2013, there were neither
significant development regarding the outstanding litigations at January 31,
2013, nor new controversy occurred during the period so as to considerably17

adjust the estimates made to account for Provisions for risks and charges at
January 31, 2013.

Management Discussion and Analysis for the threemonths period ended October 31, 2013
Net revenues
In the three months ended October 31, 2013, the Group’s net revenues
amounted to Euro 848.0 million, advancing 7.1% compared to Euro 792.0
million posted in the three months ended October 31, 2012. At constantexchange rates the increase was 13.2%.
The net sales were almost entirely contributed by the retail channel that,covering 90.5% of the net sales of the three months ended October 31, 2013,
increased by 10.5% compared to the same period of last year. At constantexchange rates the progress was even more solid standing at 17.2%.
At constant exchange rates, all regions expanded their business compared tothe same three months period of 2012. Precisely, Americas and Japan
accelerated the growth trends achieved during the year, while Europe andAsia Pacific slightly decelerated their pace of growth following a generalmarket trend. Italy confirmed the results posted during the first six months
and the Middle East continued delivering impressive paces of growth.
Again, Prada and the Leather goods category were the driving forces for the
net revenues expansion even if their growth rates decelerated compared to
the results posted in the first six months of 2013.
During the three months ended October 31, 2013, a net of 25 new stores (30openings and 5 closures) were opened by the Group.

Operating results
The Gross margin for the three months ended October 31, 2013, climbed up
to 75.7% as a percentage on net revenues compared to 73% related to thesame quarter of last year. The improvement was recorded following a higher
exposure on retail and leather goods. In addition, the margin benefitted fromactions taken in the pricing policy.
In the three months ended October 31, 2013, the EBITDA totaled Euro 269.9
million that, compared to Euro 258.5 million achieved in the same period of
2012, delivered an increase of 4.4%. Interim operating results may bevariable quarter on quarter and were impacted in these three months by the
sharp reduction of the wholesale business (-16.4%), the higher impact of thesponsorship spending as well as the retail expansion program.
The taxation of the three months ended October 31, 2013, was affected by
the recognition of a Euro 22 million charge regarding a new rejection by the
Italian Tax Authorities of the PRADA spa’s request not to apply the ItalianControlled Foreign Companies rules (“CFC”) to its Dutch sub-holding company
PRADA Far East bv. In fact, on October 24, 2013, the Italian Tax Authority
denied the request filed by PRADA spa on June 26, 2013, not to apply the18

Italian CFC rules to its Dutch sub-holding company PRADA Far East bv withreference to the 2012 tax year.
As reported in the 2012 Annual Report and Announcements, the Italian Tax
Authorities already denied in October 2012 the requests of PRADA spa not toapply the Italian CFC rules with reference to the 2010 and 2011 tax years.
Accordingly, the income statement for the three months ended October 31,
2012, included some Euro 42 million as a result of the payment made at thattime and relating to such deny.
In spite of the above mentioned circumstances, PRADA spa, persuaded of its
position, decided in 2012 to appeal in order to make opposition against the
reply of the Tax Authorities and, further, to obtain the refund of the amountalready paid, equal to Euro 42 million for the years 2010 and 2011. PRADA
spa is preparing the appeal in order to make opposition also for the tax year
2012 and to obtain the refund of the amount already paid, equal to Euro 22
million.
As a consequence of the above, the effective tax rate for the three months
ended October 31, 2013, was equal to 38.4%, but decreased anyway
compared to the same quarter last year essentially because of the different
weight of the two above mentioned extraordinary charges in the twoquarters under comparison.
The net result of the Group for the three months ended October 31, 2013,
amounted to Euro 132.6 million, up by 8.6% compared to Euro 122.1 million
posted in the three months ended October 31, 2012. As a result of all above,
the Group’s net result as a percentage on net revenues slightly improved
from 15.4% for the three months ended October 31, 2012, to 15.6%.

Management Discussion and Analysis for the ninemonths ended October 31, 2013
Net revenues
In the nine months ended October 31, 2013, the consolidated net revenuesof the Group totaled Euro 2,576.1 million and recorded an increase of 10.1%
over Euro 2,339.3 million posted in the same period of last year.

Distribution channels
The net sales generated by the retail channel amounted to Euro 2,182.0
million for the nine months ended October 31, 2013, and, contributing 85.7%
to consolidated net sales, showed a progress of 13.8% compared to Euro
1,917.6 million achieved in the same period of last year. The increase atconstant exchange rates was 18.7% while, at Same Store Sales Growth (SSSG)
basis, the business expansion was 7%, reporting a pretty stable trend along
the nine months despite the still uncertain general economic environment.
During the nine months ended October 31, 2013, the Group increased thenumber of DOS with a net of 55 new shops (66 openings and 11 closures).
Contributing for the remaining 14.3% of total net sales, the wholesalechannel contracted 6.5% compared to the same period of 2012. This was the19result of the persisting strategy aimed to improve the quality of this channel
through the confirmation of the best independent accounts only and throughthe conversion program of corners into DOS in US and Canada. Anyway, it is
to be noted that four key duty free franchisee shops opened in the period
which helped to partially compensate the shrinkage.

Markets
In terms of geographical areas, the nine months ended October 31, 2013,
reported positive growth at constant exchange rates in all regions comparedto the same period of last year.
More in details, the Asia Pacific market posted net sales of Euro 932.0
million, showing an increase of 14.4% over Euro 814.7 million achieved in thenine months ended October 31, 2012 (+16.7% at constant exchange rates). In
the region, the retail channel contributed almost totally to the businessexpansion counting on a total of 154 DOS at October 31, 2013, out of which a
net of 24 were opened from the beginning of the period (26 openings and 2
closures). The Greater China posted net sales of Euro 592.6 million andrecorded a growth of 14.8% compared to Euro 516.1 million reported in thenine months ended October 31, 2012.
In the nine months ended October 31, 2013, the European market delivered
net sales totaling Euro 572.0 million over Euro 537.3 million achieved in thesame period of 2012. The growth was 6.5% as reported and 8.6% at constantexchange rates. The retail chain operating in the region counted on a totalof 139 DOS at the end of the period and managed to deliver a solid doubledigit grow all along the current period. On the contrary, but confirming thetrend already recorded in previous quarters, the wholesale channel suffered.
The Italian market recorded net sales of Euro 398.6 million, up by 3.5% overEuro 385.1 million achieved in the nine months ended October 31, 2012.
Especially in secondary cities, the domestic market suffered the current
economic situation that negatively affected the results of the wholesalechannel.
In the nine months ended October 31, 2013, the American market scored net
sales amounting to Euro 335.7 million and posted a 13.5% growth comparedto Euro 295.8 million recorded in the same period of last year (+17.5% atconstant exchange rates). In the region the performances of the retailchannel grounded on a solid SSSG rate and were further strengthened by thecontribution of the recent strategic conversion program that helped raising
the number of DOS from 61 at the beginning of the 2013 financial year to 84(26 openings and 3 closures).
The Japanese market (including Hawaii) generated net sales of Euro 239.8
million posting a 2.9% slowdown mainly due to the progressive weakening of
the Japanese Yen. In fact, at constant exchange rates, the area posted a
growth of 18.6% compared to the nine months ended October 31, 2012. In
the period it is worth highlighting the unveiling of the impressive store in
Shinsaibashi in Osaka occurred last July 2013.
The Middle East market, which was counting on its 16 DOS, continued
delivering impressive paces of growth and recorded net sales of Euro 65.0
20

million compared to Euro 24.0 million achieved in the same period of 2012.

Products
In the nine months ended October 31, 2013, the Leather goods productcategory contributed 67.2% to consolidated net sales. The businessgenerated was Euro 1,710.8 million, advancing 18.5% over Euro 1,444.2
million posted in the same period of last year. At constant exchange rates,
the performance of this merchandise category was 23.2%, scoring doubledigit growths in all regions and in both channels.
The Footwear category delivered net sales of Euro 415.4 million, contracting
7.8% compared to Euro 450.3 million posted in the nine months ended
October 31, 2012 (-4.9% at constant exchange rates). The shrinkage was dueto the strategy of rationalization applied to the wholesale business even if
the growth achieved in the retail channel relieved the negative results.
Thanks to retail, the third quarter of the 2013 helped to slightly improve theReady-to-wear performances for the nine months ended October 31, 2013,
compared to the same period of last year. Net sales were Euro 390.3 million
and recorded an increase of 0.6% over Euro 387.9 million posted in the ninemonths ended October 31, 2012 (+4.3% at constant exchange rates).

BrandsIn the nine months ended October 31, 2013, the Prada brand delivered net
sales amounting to Euro 2,114.4 million, reporting an increase of 12.7% overEuro 1,876.6 million posted in the same period of 2012 (+16.8% at constantexchange rates). As a result of its growth, the contribution of the brand tothe consolidated net sales climbed from 81.3% in the nine months ended
October 31, 2012, to 83%. Confirming the trend of the first six months of theyear, the Prada brand, except for Italy, recorded solid double-digit
performances everywhere at constant exchange rates.
The Miu Miu brand generated net sales of Euro 368.0 million, up by 2%
compared to Euro 360.7 million posted in the nine months ended October 31,
2012. At constant exchange rates the increase raised up to 7.1%. From a
product point of view, the brand advanced in all categories at constantexchange rates while, from a geographical perspective, Americas, Asia
Pacific, Italy and Middle East showed positive trends.
The performances of the Church’s brand were driven by the wholesalechannel and the European market. In the nine months ended October 31,
2013, net sales totaled Euro 51.3 million and recorded an increase of 2.2%(+5.6% at constant exchange rates) over the results achieved in the same
period of 2012.
Car Shoes net sales amounted to Euro 11.0 million, down by 27.6% over thesame period of last year. This was due also because of timing differences inwholesale deliveries occurred last year.

Royalties
The business of the licensed products contributed net revenues of Euro 28.9
21

million compared to Euro 31.3 million posted in the nine months ended
October 31, 2012. The comparative results contained some Euro 5 million
related to the launch of the PRADA Phone by LG 3.0 in partnership with LG
Electronics that finished contributing royalties by the end of last financial
year. Normalized of this effect, the royalties income of the nine months
ended October 31, 2013, increased thanks to the eyewear and fragrances
licenses.

Operating results
The consolidated Gross margin for the nine months ended October 31, 2013,
amounted to Euro 1,909.2 million and recorded an increase of 13.3%
compared to Euro 1,684.4 million posted in the same period of 2012. In terms
of profitability, the Gross margin raised to 74.1% from 72% mainly thanks to amore favorable mix of sales in terms of channel, geographical area andproduct category and, to a lesser extent, the first results of actions taken in
the pricing policy.
As a consequence of the above, the EBITDA margin raised from 31.1% to31.9%, despite a higher incidence of the operating expenses especially in theadvertising and selling area. The consolidated EBITDA totaled Euro 821.0
million, up by 12.8% compared to Euro 727.9 million scored in the same
period of 2012.
In the nine months ended October 31, 2013, the EBIT amounted to Euro 677.8
million advancing 10.7% over Euro 612.5 million recorded in the same periodof 2012. As a percentage on consolidated net revenues, the EBIT margin
remained almost unchanged compared to previous period, standing at 26.3%
this reporting period.
The effective tax rate for the nine months ended October 31, 2013, meant as
taxation on result before taxation, was equal to 32.4%, reporting a small
increase compared to 31.9% posted in same period of last year. Both periods
under comparison were affected by extraordinary charges regarding therejection by the Italian Tax Authorities, in 2013 and 2012 respectively, 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.
The Group’s net result for the nine months ended October 31, 2013, totaled
Euro 440.9 million and posted an increase of 7.9% over Euro 408.6 million
recorded in the nine months ended October 31, 2012. In terms of
profitability, the net result suffered a further dilution due to the negative
impact of the exchange rates fluctuations on the financial charges of theperiod.

22

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
2013(unaudited)

as atJanuary 31
2013(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

2,093,833
265,508460,218(356,764)
368,962
157,528(324,608)(167,080)(49,939)(66,050)(106,865)
146,149(76,705)
2,219,010(2,506,514)(15,978)(2,522,492)(215,797)
519,279
303,482(2,219,010)

1,821,773
304,525
343,802(330,613)
317,714
165,962(230,285)(64,323)(46,914)(45,538)(85,289)
120,421(57,320)2,017,844(2,320,022)(10,470)(2,330,492)(79,348)
391,996
312,648(2,017,844)

At October 31, 2013, the Net invested capital totaled Euro 2,219.0 million
compared to Euro 2,017.8 million at January 31, 2013. The higher value
essentially resulted from the increase of the Non-current assets, driven by
the capital expenditure of the period, the growth of the Net operating
working capital, following a raise in the level of inventories as explained
under Note 8, and more current liabilities.
The Group’s net equity rose from Euro 2,320 million to Euro 2,506.5 million
at October 31, 2013. The increase generated by the Group’s net income forthe nine months ended October 31, 2013, amounting to Euro 440.9 million,
was partially offset by Euro 230.3 million of dividends distributed to the
PRADA spa shareholders (as approved on May 23, 2013, by the Annual general
Meeting on the financial statements for the year ended January 31, 2013)
and by Euro 1.9 million of dividends paid to Non-controlling interests. Other
charges resulting from translation differences and charges in the fair value ofequity reserves accounted for the rest and netting the increase.

23

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

as at
October 31
2013(unaudited)

as atJanuary 31
2013(audited)Long-term debt
Obligations under finance leases(215,401)(396)(78,830)(518)

Long-term financial payables(215,797)(79,348)

Bank overdraft and short term loans
Payables to related parties
Receivables from related parties
Obligations under finance leases
Cash and cash equivalents(68,169)(4,092)
1,415(202)
590,327(175,570)(5,018)1,413(575)
571,746

Short-term net financial surplus/(deficit)

519,279

391,996

Net financial position surplus/(deficit)

303,482

312,648

The free cash flow for the nine months ended October 31, 2013, amounted
to Euro 224.6 million and resulted from the generation of cash fromoperations for Euro 612.8 million and the utilization of funds for investing
activities for Euro 388.2 million. The surplus funds achieved allowed to pay a
total of dividends to Controlling and Non-controlling shareholders for Euro232.2 million and to maintain at the end of October a positive net financial
position of Euro 303.5 million.
In terms of maturity of the bank debt, it is worth highlighting that the longterm side increased essentially because of a couple of new arrangements in
PRADA spa and PRADA Japan co ltd. On August 1, 2013, PRADA spa settled aEuro 130 million Notes listed on the Irish Stock Exchange and issued with aprice of 99.641 per cent. The Notes is due in 2018 and pays annual interestat the rate of 2.75%. On March 29, 2013, PRADA Japan co ltd entered into a
syndicate loan agreement with a pool of Japanese banks for a total amountof Japanese Yen 6 billion, drawn at October 31, 2013, for some JapaneseYen 5.6 billion, or Euro 43.4 million.
On the short-term side, the decrease of Euro 107.4 million in Bank overdraft
and short-term loans was essentially attributable to the repayment of the
Pool loan borrowed by PRADA spa, for a total amount equal to Euro 100
million, and to that of PRADA Japan co ltd, for an amount equal to someEuro 21 million. The decrease was also affected by some new minor
arrangement then partially offset by the reclassification of the current
portion of some long-term loans.

Analysis of capital expenditure
The capital expenditure in Property, plant and equipment and Intangible
assets for the nine months ended October 31, 2013, was allocated to thestrengthening of the retail channel for Euro 355 million, to the production
and logistics activities for Euro 20 million and to the corporate area for Euro24

41 million. In particular, the retail network development included thepurchase of a prestigious real estate in 17-18 Old Bond Street, London,
already operating under a lease agreement (Prada women shop).

Events after the reporting dateOn December 11, 2013, the Group finalized the agreement with third parties
for the purchase of a further prestigious real estate in London, namely 16 Old
Bond street, already occupied under a rental agreement (Prada men shop).

OutlookIn the current volatile environment, the Group will seek to strengthen its
leading position in the luxury space, mainly through its retail operations.
Unfavorable exchange rates and softening consumption patterns in someregions could weight on results and thus will require increasing attention by
the management in order to insure profitability and continue the retail
expansion.

25

Corporate Governance Practices
Audit Committee
The Audit Committee, which comprises three independent non-executive
directors, on December 20, 2013, has reviewed the unaudited consolidated
results of the Company and its subsidiaries for the nine months ended
October 31, 2013.

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 three months ended October 31, 2013.

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 three months
ended October 31, 2013.

Publication of Announcement on consolidated results for thenine months ended October 31, 2013This announcement on the consolidated results for the nine months ended
October 31, 2013 is published on the Company’s website atwww.pradagroup.com and on the Hong Kong Exchanges and Clearing
Limited’s website at www.hkexnews.hk.

By Order of the Board
PRADA S.p.A.
Mr. Carlo Mazzi
Deputy Chairman
Milan (Italy), December 20, 2013
As at the date of this announcement, the Company’s executive directors are Ms.
Miuccia PRADA BIANCHI, Mr. Patrizio BERTELLI, Mr. Carlo MAZZI, Mr. Donatello
GALLI and Ms. Alessandra COZZANI; the Company’s non-executive director is Mr.
Gaetano MICCICHÈ and the Company’s independent non-executive directors are Mr.
Gian Franco Oliviero MATTEI, Mr. Giancarlo FORESTIERI and Mr. Sing Cheong LIU.

26