Aeffe

Interim / Quarterly Report • Nov 11, 2015

INTERIM FINANCIAL STATEMENT AT 30 SEPTEMBER 2015

Disclaimer

This Interim financial statement has been translated into English solely for the convenience of the International reader. In the event of conflict or inconsistency between the terms used in the Italian Version of the report and the English version, the Italian version shall prevail, as the Italian version constitutes the official document.

SUMMARY

INTERIM FINANCIAL STATEMENT AT 30 SEPTEMBER 2015	1
CORPORATE BOARDS OF THE PARENT COMPANY	3
ORGANISATION CHART	4
BRANDS PORTFOLIO	5
HEADQUARTERS	6
SHOWROOMS	7
MAIN FLAGSHIPSTORE LOCATIONS UNDER DIRECT MANAGEMENT	8
MAIN ECONOMIC-FINANCIAL DATA	9
FINANCIAL STATEMENTS	10
INTERIM MANAGEMENT REPORT	15
EXPLANATORY NOTES	17

Corporate Boards of the Parent Company

Chairman

Massimo Ferretti

• Deputy Chairman
• Alberta Ferretti

Chief Executive Officer

Simone Badioli

Directors

Board of Directors

Marcello Tassinari – Managing Director Roberto Lugano Pierfrancesco Giustiniani Marco Salomoni Sabrina Borocci

President

Pier Francesco Sportoletti

Board of Statutory Auditors

Statutory Auditors

Fernando Ciotti Daniela Saitta

Alternate Auditors

Barbara Ceppellini Luca Sapucci

Board of Compensation Committee

President

Sabrina Borocci

Members

Roberto Lugano Pierfrancesco Giustiniani

Board of Internal Control Committee

President

Roberto Lugano

Members

Sabrina Borocci Pierfrancesco Giustiniani

Organisation chart

Brands portfolio

Headquarters

AEFFE

Via Delle Querce, 51 47842 - San Giovanni in Marignano (RN) Italy

MOSCHINO

Via San Gregorio, 28 20124 - Milan Italy

POLLINI

Via Erbosa I° tratto, 92 47030 - Gatteo (FC) Italy

VELMAR

Via Delle Querce, 51 47842 - San Giovanni in Marignano (RN) Italy

Showrooms

MILAN (FERRETTI - POLLINI – CEDRIC CHARLIER – UNGARO) Via Donizetti, 48 20122 - Milan Italy

LONDON

(FERRETTI - MOSCHINO) 28-29, Conduit Street W1S 2YB - London UK

PARIS

(FERRETTI - MOSCHINO - POLLINI) 43, Rue due Faubourg Saint Honoré 75008 - Paris France

NEW YORK

(GROUP) 30, West 56th Street 10019 - New York USA

MILAN

(MOSCHINO) Via San Gregorio, 28 20124 - Milan Italy

MILAN

(LOVE MOSCHINO) Via Settembrini, 1 20124 - Milan Italy

PARIS

(CEDRIC CHARLIER) 28, Rue de Sevigne 75004 - Paris France

Main flagshipstore locations under direct management

ALBERTA FERRETTI

Milan Rome Capri Paris London Los Angeles

POLLINI

Milan Venice Bolzano Varese Verona

SPAZIO A

Florence Venice

MOSCHINO

Milan Rome Capri Paris London Berlin Los Angeles New York Seoul Pusan Daegu

Main economic-financial data

		9 M	9 M
		2014	2015
Total revenues	(Values in millions of EUR)	196.1	209.7
Gross operating margin (EBITDA)	(Values in millions of EUR)	22.6	17.9
Net operating profit (EBIT)	(Values in millions of EUR)	12.7	8.4
Profit before taxes	(Values in millions of EUR)	7.6	5.7
Net profit for the Group	(Values in millions of EUR)	2.5	1.5
Basic earnings per share	(Values in units of EUR)	0.024	0.015
Cash Flow (net profit + depreciation)	(Values in millions of EUR)	8.0	8.0
Cash Flow/Total revenues	Ratio	4.1	3.8

		31 December	30 September	31 December	30 September
		2013	2014	2014	2015
Net capital invested	(Values in millions of EUR)	232.0	238.3	231.5	249.1
Net financial indebtedness	(Values in millions of EUR)	88.6	90.2	83.6	99.5
Group net equity	(Values in millions of EUR)	126.8	130.5	130.1	131.5
Group net equity per share	(Values in units of EUR)	1.2	1.2	1.2	1.2
Current assets/Current liabilities	Ratio	2.2	2.5	2.1	2.6
Current assets less invent./Current liabilities (ACID Test)	Ratio	1.0	1.2	1.0	1.2
Net financial indebtedness/Net equity	Ratio	0.6	0.6	0.6	0.7

Financial statements

Income statement at 30 September

(Values in units of EUR)	Notes	9 M	% on	9 M	% on	Change	%
		2015	revenues	2014	revenues
REVENUES FROM SALES AND SERVICES	(1)	206,468,631	100.0%	192,942,277	100.0%	13,526,354	7.0%
Other revenues and income		3,238,518	1.6%	3,196,071	1.7%	42,447	1.3%
TOTAL REVENUES		209,707,149	101.6%	196,138,348	101.7%	13,568,801	6.9%
Changes in inventory		1,159,694	0.6%	4,952,688	2.6%	( 3,792,994)	(76.6%)
Costs of raw materials, cons. and goods for resale		( 67,954,807)	(32.9%)	( 65,547,910)	(34.0%)	( 2,406,897)	3.7%
Costs of services		( 58,592,608)	(28.4%)	( 50,096,304)	(26.0%)	( 8,496,304)	17.0%
Costs for use of third parties assets		( 17,730,925)	(8.6%)	( 15,959,515)	(8.3%)	( 1,771,410)	11.1%
Labour costs		( 45,237,851)	(21.9%)	( 43,799,417)	(22.7%)	( 1,438,434)	3.3%
Other operating expenses		( 3,402,238)	(1.6%)	( 3,057,696)	(1.6%)	( 344,542)	11.3%
Total Operating Costs		( 191,758,735)	(92.9%)	( 173,508,154)	(89.9%)	( 18,250,581)	10.5%
GROSS OPERATING MARGIN (EBITDA)	(2)	17,948,414	8.7%	22,630,194	11.7%	( 4,681,780)	(20.7%)
Amortisation of intangible fixed assets		( 5,350,196)	(2.6%)	( 5,203,756)	(2.7%)	( 146,440)	2.8%
Depreciation of tangible fixed assets		( 4,078,081)	(2.0%)	( 3,956,180)	(2.1%)	( 121,901)	3.1%
Revaluations/(write-downs) and provisions		( 160,316)	(0.1%)	( 723,393)	(0.4%)	563,077	(77.8%)
Total Amortisation, write-downs and provisions		( 9,588,593)	(4.6%)	( 9,883,329)	(5.1%)	294,736	(3.0%)
NET OPERATING PROFIT/LOSS (EBIT)		8,359,821	4.0%	12,746,865	6.6%	( 4,387,044)	(34.4%)
Financial income		584,595	0.3%	374,394	0.2%	210,201	56.1%
Financial expenses		( 3,261,142)	(1.6%)	( 5,485,405)	(2.8%)	2,224,263	(40.5%)
Total Financial Income/(expenses)		( 2,676,547)	(1.3%)	( 5,111,011)	(2.6%)	2,434,464	(47.6%)
PROFIT/LOSS BEFORE TAXES		5,683,274	2.8%	7,635,854	4.0%	( 1,952,580)	(25.6%)
Taxes		( 3,969,755)	(1.9%)	( 4,187,526)	(2.2%)	217,771	(5.2%)
NET PROFIT/LOSS		1,713,519	0.8%	3,448,328	1.8%	( 1,734,809)	(50.3%)
(Profit)/loss attributable to minority shareholders		( 173,731)	(0.1%)	( 966,820)	(0.5%)	793,089	(82.0%)
NET PROFIT/LOSS FOR THE GROUP	(3)	1,539,788	0.7%	2,481,508	1.3%	( 941,720)	(37.9%)

Income statement for the third quarter

(Values in units of EUR)	Notes	III Q	% on	III Q	% on	Change	%
		2015	revenues	2014	revenues
REVENUES FROM SALES AND SERVICES	(1)	77,746,056	100.0%	71,877,344	100.0%	5,868,712	8.2%
Other revenues and income		( 48,166)	(0.1%)	1,170,314	1.6%	( 1,218,480)	(104.1%)
TOTAL REVENUES		77,697,890	99.9%	73,047,658	101.6%	4,650,232	6.4%
Changes in inventory		( 7,771,928)	(10.0%)	( 840,394)	(1.2%)	( 6,931,534)	824.8%
Costs of raw materials, cons. and goods for resale		( 19,052,560)	(24.5%)	( 22,905,418)	(31.9%)	3,852,858	(16.8%)
Costs of services		( 21,032,329)	(27.1%)	( 18,082,992)	(25.2%)	( 2,949,337)	16.3%
Costs for use of third parties assets		( 6,359,500)	(8.2%)	( 5,504,076)	(7.7%)	( 855,424)	15.5%
Labour costs		( 14,509,720)	(18.7%)	( 14,593,898)	(20.3%)	84,178	(0.6%)
Other operating expenses		( 787,260)	(1.0%)	( 1,060,957)	(1.5%)	273,697	(25.8%)
Total Operating Costs		( 69,513,297)	(89.4%)	( 62,987,735)	(87.6%)	( 6,525,562)	10.4%
GROSS OPERATING MARGIN (EBITDA)	(2)	8,184,593	10.5%	10,059,923	14.0%	( 1,875,330)	(18.6%)
Amortisation of intangible fixed assets		( 1,774,988)	(2.3%)	( 1,775,334)	(2.5%)	346	(0.0%)
Depreciation of tangible fixed assets		( 1,416,413)	(1.8%)	( 1,343,949)	(1.9%)	( 72,464)	5.4%
Revaluations/(write-downs) and provisions		( 59,700)	(0.1%)	( 476,306)	(0.7%)	416,606	(87.5%)
Total Amortisation, write-downs and provisions		( 3,251,101)	(4.2%)	( 3,595,589)	(5.0%)	344,488	(9.6%)
NET OPERATING PROFIT/LOSS (EBIT)		4,933,492	6.3%	6,464,334	9.0%	( 1,530,842)	(23.7%)
Financial income		97,088	0.1%	253,853	0.4%	( 156,765)	(61.8%)
Financial expenses		( 1,032,078)	(1.3%)	( 1,827,877)	(2.5%)	795,799	(43.5%)
Total Financial Income/(expenses)		( 934,990)	(1.2%)	( 1,574,024)	(2.2%)	639,034	(40.6%)
PROFIT/LOSS BEFORE TAXES		3,998,502	5.1%	4,890,310	6.8%	( 891,808)	(18.2%)
Taxes		( 2,383,831)	(3.1%)	( 2,092,031)	(2.9%)	( 291,800)	13.9%
NET PROFIT/LOSS		1,614,671	2.1%	2,798,279	3.9%	( 1,183,608)	(42.3%)
(Profit)/loss attributable to minority shareholders		( 109,540)	(0.1%)	( 467,085)	(0.6%)	357,545	(76.5%)
NET PROFIT/LOSS FOR THE GROUP	(3)	1,505,131	1.9%	2,331,194	3.2%	( 826,063)	(35.4%)

Reclassified balance sheet

(Values in units of EUR)	Notes	30 September	31 December	30 September
		2015	2014	2014
Trade receivables		49,990,183	36,884,748	45,532,343
Stocks and inventories		87,440,303	83,867,256	79,115,769
Trade payables		( 46,802,813)	( 55,052,139)	( 43,514,050)
Operating net working capital	(4)	90,627,673	65,699,865	81,134,062
Other short term receivables		24,781,336	24,881,205	21,873,831
Tax receivables		7,226,736	8,531,445	6,469,688
Other short term liabilities		( 17,008,483)	( 14,319,321)	( 15,913,026)
Tax payables		( 2,559,792)	( 3,124,892)	( 3,011,852)
Net working capital		103,067,470	81,668,302	90,552,703
Tangible fixed assets		63,692,176	63,770,590	63,279,075
Intangible fixed assets		124,214,974	127,926,760	128,556,798
Equity investments		131,557	80,268	30,252
Other fixed assets		4,430,133	4,701,444	4,496,134
Fixed assets	(5)	192,468,840	196,479,062	196,362,259
Post employment benefits		( 6,871,403)	( 7,457,710)	( 7,003,259)
Provisions		( 974,203)	( 2,047,384)	( 1,736,583)
Assets available for sale		436,885	436,885	436,885
Long term not financial liabilities		( 14,480,132)	( 14,080,132)	( 14,080,132)
Deferred tax assets		12,461,981	13,368,052	11,050,999
Deferred tax liabilities		( 36,984,235)	( 36,828,733)	( 37,275,755)
NET CAPITAL INVESTED		249,125,203	231,538,342	238,307,117
Share capital		25,371,407	25,371,407	25,371,407
Other reserves		114,040,678	115,285,814	114,805,074
Profits/(Losses) carried-forward		( 9,405,881)	( 13,341,832)	( 12,112,826)
Profit/(Loss) of the period		1,539,788	2,741,670	2,481,508
Group interest in shareholders' equity		131,545,992	130,057,059	130,545,163
Minority interests in shareholders' equity		18,088,453	17,914,722	17,611,136
Total shareholders' equity	(6)	149,634,445	147,971,781	148,156,299
Short term financial receivables		( 2,255,854)	( 1,000,000)	( 1,000,000)
Cash		( 7,084,492)	( 6,691,668)	( 6,368,388)
Long term financial liabilities		16,799,601	12,752,273	13,582,347
Long term financial receivables		( 1,945,640)	( 1,718,063)	( 1,622,586)
Short term financial liabilities		93,977,143	80,224,019	85,559,445
NET FINANCIAL POSITION	(7)	99,490,758	83,566,561	90,150,818
SHAREHOLDERS' EQUITY AND NET FINANCIAL INDEBTEDNESS		249,125,203	231,538,342	238,307,117

Cash flow

CLOSING BALANCE		7,084	6,368
CASH FLOW (ABSORBED) / GENERATED BY FINANCING ACTIVITY		13,860	( 3,130)
Financial income (+) and financial charges (-)		( 2,677)	( 5,111)
Increase (-) / decrease (+) of financial receivables		( 1,212)	249
Increase (+) / decrease (-) of financial liabilities		17,800	443
Dividends paid		-	-
Other variations in reserves and profits carried-forward of shareholders'equity		( 51)	1,289
CASH FLOW (ABSORBED) / GENERATED BY INVESTING ACTIVITY		( 5,690)	( 3,573)
Investments and write-downs (-)/ Disinvestments and revaluations (+)		( 51)	-
Increase (-) / decrease (+) in tangible fixed assets		( 4,000)	( 2,601)
Increase (-) / decrease (+) in intangible fixed assets		( 1,639)	( 972)
CASH FLOW (ABSORBED) / GENERATED BY OPERATING ACTIVITY		( 7,778)	5,547
Change in operating assets and liabilities		( 20,434)	( 13,089)
Financial income (-) and financial charges (+)		2,677	5,111
Paid income taxes		( 3,473)	( 3,013)
Accrual (+) / availment (-) of long term provisions and post employment benefits		( 1,659)	( 258)
Amortisation / write-downs		9,428	9,160
Profit / loss before taxes		5,683	7,636
OPENING BALANCE		6,692	7,524
		2015	2014
(Values in thousands of EUR)	Notes	9 M	9 M

Changes in shareholders' equity

(Values in thousands of EUR)	Share capital	Share premium reserve	Other reserves	Fair Value reserve	IAS reserve	Profits/(Losses) carried forward	Reamisurement of defined benefit plans reserve	Net profit / loss for the Group	Translation reserve	shareholders' equity Group interest in	Minority interests in shareholders' equity	Total shareholders' equity
BALANCES AT 1 January 2014	25,371	71,240	31,765	7,901	11,459				( 14,198) ( 833) ( 3,198) ( 2,733)	126,774	16,644	143,418
Allocation of 31/12/13 profit/(loss)	-	-	( 5,284)	-	-	2,086	-	3,198	-	-	-	-
Dividends paid	-	-	-	-	-	-	-	-	-	-	-	-
Treasury stock (buy-back)/ sale	-	-	-	-	-	-	-	-	-	-	-	-
Total comprehensive income/(loss) at 30/09/14	-	-	-	-	-	-	-	2,482	1,289	3,771	967	4,738
Other changes	-	-	-	-	-	-	-	-	-	-	-	-
BALANCES AT 30 September 2014	25,371	71,240	26,481	7,901	11,459	( 12,112) ( 833)		2,482	( 1,444)	130,545	17,611	148,156
(Values in thousands of EUR)	Share capital	Share premium reserve	Other reserves	Fair Value reserve	IAS reserve	Profits/(Losses) carried forward	Reamisurement of defined benefit plans reserve	Net profit / loss for the Group	Translation reserve	shareholders' equity Group interest in	Minority interests in shareholders' equity	Total shareholders' equity
BALANCES AT 1 January 2015	25,371	71,240	26,481	7,901	11,459	( 12,112) ( 1,229)		2,742	( 1,796)	130,057	17,915	147,972
Allocation of 31/12/14 profit/(loss)	-	-	35	-	-	2,707	-	( 2,742)	-	-	-	-
Dividends paid	-	-	-	-	-	-	-	-	-	-	-	-
Treasury stock (buy-back)/ sale	-	-	-	-	-	-	-	-	-	-	-	-
Total comprehensive income/(loss) at 30/09/15	-	-	-	-	-	-	-	1,540	( 51)	1,489	173	1,662
Other changes	-	-	-	-	-	-	-	-	-	-	-	-

14

Interim management report

In the first nine months of 2015, revenues from sales and services are equal to EUR 206,469 thousand with an increase of 7.0%, at current exchange rates and +5.1% at constant exchange rates, compared to EUR 192,942 thousand in the first nine months of 2014.

Revenues of the prêt-à-porter division increase by 7.7% (+5.2% at constant exchange rates) to EUR 158,610 thousand, while revenues of the footwear and leather goods division increase by 14.1%, before interdivisional eliminations, to EUR 72,733 thousand.

In the first nine months of 2015 consolidated EBITDA is equal to EUR 17,948 thousand (with an incidence of 8.7% of consolidated sales), compared to EUR 22,630 thousand in the first nine months of 2014 (11.7% of total sales), with a decrease of EUR 4,682 thousand (-20.7%), related to the prêt-à-porter division.

In detail, in the first nine months of 2015 EBITDA of the prêt-à-porter division amounts to EUR 10,663 thousand (representing 6.7% of sales), compared to EUR 17,147 thousand in the same period of 2014 (11.6% of sales), with a decrease of EUR 6,484 thousand.

In the period under review, the profitability is affected by a series of factors, mainly attributable to long-term strategic initiatives to strengthen the visibility of the group's brands, which have already produced a 14.3% increase of the orders' backlog of the Spring/Summer 2016 collections compared to the corresponding season of 2015.

The main expense items that affect the decrease in marginality in the period are as follows:

a) increase in marketing and advertising activities aimed at further enhancing Moschino and Alberta Ferretti brands, along with Philosophy brand's relaunch;

b) costs for events dedicated to Moschino brand to promote the new men's collection, which will be produced in house starting from the Autumn/Winter 2015 season;

c) investments for the reorganization of the Moschino boutiques network.

Moreover, significant discounts were granted to Russian customers to support them in the current difficult economic local situation, given the importance of this market for the Group. Finally, there is a decrease in income from royalties and commissions attributable to both Love Moschino apparel and Moschino minor licenses, that need progressive adjustments following to the change in style of Maison Moschino.

The EBITDA of the footwear and leather goods division increases from EUR 5,483 thousand in the first nine months of 2014 (representing 8.6% of consolidated sales) to EUR 7,285 thousand in the first nine months of 2015 (representing 10.0% of consolidated sales), with an improvement of EUR 1,802 thousand, attributable to the excellent sales growth of the Moschino accessories lines.

Consolidated EBIT amounts to EUR 8,360 thousand, showing a decrease of EUR 4,387 thousand compared to an EBIT of EUR 12,747 thousand in the first nine months of 2014. The decrease reflects the reduction in EBITDA.

In the first nine months of 2015 there is an important decline of the financial expenses that amounts to EUR 2,677 thousand from EUR 5,111 thousand in the first nine months of 2014, with a 47.6% decrease.

Thanks to the significant drop in financial charges, the Profit before taxes for the period partially recovers the decrease in EBITDA to EUR 5,683 thousand, compared to EUR 7,636 thousand in the first nine months of 2014, reporting a decrease of EUR 1,953 thousand.

Despite significant investments, the Group post a Net Profit of EUR 1,540 thousand, compared to the net profit of EUR 2,482 thousand in the first nine months of 2014, with a decrease of 942 thousand, result obtained thanks to the significant reduction in financial charges.

Looking at the balance sheet as of 30 September 2015, shareholders' equity is equal to EUR 131,546 thousand and net financial debt amounts to EUR 99,491 thousand compared to EUR 90,151 thousand as of 30 September 2014 and EUR 83,567 thousand as of 31 December 2014. The increase in net financial debt compared to the first nine months of 2014 referred mainly to the increase in net working capital and to higher capex of the period.

As of 30 September 2015 operating net working capital amounts to EUR 90,628 thousand (34% of LTM sales) compared to EUR 81,668 as of 30 September 2014 (32% of sales).

The percentage increase on sales is mainly related to the increase in inventories driven, in turn, by the growth of the sales of the period and of orders' backlog for Autumn/Winter 2015 and Spring/Summer 2016 collections compared to the corresponding seasons of last year.

Capex in the first nine months of 2015 amounts to EUR 5,690 thousand and are mainly related to stores' refurbishment and maintenance.

Explanatory notes

Income statement

1. Revenues from sales and services

Nine months 2015 vs 2014

In the first nine months of 2015, revenues from sales and services are equal to EUR 206,469 thousand with an increase of 7.0%, at current exchange rates and +5.1% at constant exchange rates, compared to EUR 192,942 thousand in the first nine months of 2014.

Sales by brand
(Values in thousands of EUR)	9 M		9 M			Change
	2015	%	2014	%	∆	%
Alberta Ferretti	19,904	9.6%	16,371	8.5%	3,533	21.6%
Philosophy	8,748	4.2%	11,811	6.1%	( 3,063)	(25.9%)
Moschino	140,781	68.2%	121,573	63.0%	19,208	15.8%
Pollini	22,519	10.9%	25,636	13.3%	( 3,117)	(12.2%)
Other	14,517	7.1%	17,551	9.1%	( 3,034)	(17.3%)
Total	206,469	100.0%	192,942	100.0%	13,527	7.0%

In the first nine months of 2015, Alberta Ferretti brand increases by 21.6% (+18.8% at constant exchange rates), generating 9.6% of consolidated sales, while Philosophy brand decreases by 25.9% (-27.7% at constant exchange rates), generating 4.2% of consolidated sales.

In the same period, Moschino brand sales increase by 15.8% (+14.0% at constant exchange rates) contributing to 68.2% of consolidated sales.

Pollini brand decreases by 12.2% (-12.7% at constant exchange rates), generating 10.9% of consolidated sales, while the other brands sales decrease by 17.3% (-20.8% at constant exchange rates) contributing to 7.1% of consolidated sales.

(Values in thousands of EUR)	9 M		9 M			Change
	2015	%	2014	%	∆	%
Italy	92,583	44.8%	87,600	45.4%	4,983	5.7%
Europe (Italy and Russia excluded)	44,460	21.5%	42,963	22.3%	1,497	3.5%
Russia	7,036	3.4%	13,637	7.1%	( 6,601)	(48.4%)
United States	16,280	7.9%	11,364	5.9%	4,916	43.3%
Japan	5,622	2.7%	4,982	2.6%	640	12.8%
Rest of the World	40,488	19.7%	32,396	16.7%	8,092	25.0%
Total	206,469	100.0%	192,942	100.0%	13,527	7.0%

Sales by geographical area

In the first nine months of 2015 sales in Italy register a very positive trend increasing by 5.7% to EUR 92,583 thousand. Sales in Europe, that amount to EUR 44,460 thousand, increase by 3.5% (+2.0% at constant exchange rates), contributing to 21.5% of consolidated sales, while the Russian market records sales equal to EUR 7,036 thousand, contributing to 3.4% of consolidated sales, with a reduction of 48.4% compared to the corresponding period of 2014, solely due to current difficulties of the domestic economic situation.

Sales in the United States are equal to EUR 16,280 thousand, contributing to 7.9% of consolidated sales, posting in the period a very important growth equal to 43.3% (+20.9% at constant exchange rates). Also Japanese sales, contributing to 2.7% of consolidated sales, register a significant increase of 12.8% both at current and constant exchange rates.

In the Rest of the World, sales are equal to EUR 40,488 thousand, contributing to 19.7% of consolidated sales, with an increase of 25.0% (+23.4% at constant exchange rates) compared to the corresponding period of 2014, especially thanks to a good trend in Greater China, which grows by 65% in the period.

(Values in thousands of EUR)	9 M		9 M			Change
	2015	%	2014	%	∆	%
Wholesale	140,700	68.1%	129,306	67.0%	11,394	8.8%
Retail	58,251	28.2%	52,883	27.4%	5,368	10.1%
Royalties	7,518	3.7%	10,753	5.6%	( 3,235)	(30.1%)
Total	206,469	100.0%	192,942	100.0%	13,527	7.0%

Sales by distribution channel

By distribution channel in the first nine months of 2015, wholesale sales increase by 8.8% (+7.0% at constant exchange rates) contributing to 68.1% of consolidated sales.

Sales of our directly-operated stores (retail channel) amount to EUR 58,251 thousand with an increase of 10.1% (+7.7% at constant exchange rates) contributing to 28.2% of consolidated sales.

Royalty income is 30.1% lower than in the corresponding period of the previous year, representing 3.7% of consolidated sales.

Third quarter 2015 vs 2014

In the third quarter of 2015, revenues from sales and services are equal to EUR 77,746 thousand with an increase of 8.2% compared with EUR 71,877 thousand in the third quarter of 2014.

Sales by brand

(Values in thousands of EUR)	III Q		III Q			Change
	2015	%	2014	%	∆	%
Alberta Ferretti	7,046	9.1%	6,014	8.4%	1,032	17.2%
Philosophy	2,836	3.6%	3,580	5.0%	( 744)	(20.8%)
Moschino	53,480	68.8%	46,232	64.3%	7,248	15.7%
Pollini	8,610	11.1%	10,187	14.2%	( 1,577)	(15.5%)
Other	5,774	7.4%	5,864	8.1%	( 90)	(1.5%)
Total	77,746	100.0%	71,877	100.0%	5,869	8.2%

In the third quarter of 2015, Alberta Ferretti brand increases by 17.2% generating 9.1% of consolidated sales, while Philosophy brand decreases by 20.8% generating 3.6% of consolidated sales.

In the same period, Moschino brand sales increase by 15.7% contributing to 68.8% of consolidated sales.

Pollini brand decreases by 15.5% generating 11.1% of consolidated sales, while the other brands sales decrease by 1.5% contributing to 7.4% of consolidated sales.

Sales by geographical area

(Values in thousands of EUR)	III Q		III Q			Change
	2015	%	2014	%	∆	%
Italy	35,449	45.6%	34,675	48.2%	774	2.2%
Europe (Italy and Russia excluded)	15,803	20.4%	14,547	20.2%	1,256	8.6%
Russia	2,370	3.0%	4,155	5.8%	( 1,785)	(43.0%)
United States	6,551	8.4%	4,264	5.9%	2,287	53.6%
Japan	1,733	2.2%	1,759	2.4%	( 26)	(1.5%)
Rest of the World	15,840	20.4%	12,477	17.5%	3,363	27.0%
Total	77,746	100.0%	71,877	100.0%	5,869	8.2%

In the third quarter of 2015 sales in Italy increase by 2.2% to EUR 35,449 thousand, contributing to 45.6% of consolidated sales.

Sales in Europe increase by 8.6% contributing to 20.4% of consolidated sales, while the Russian market records sales equal to EUR 2,370 thousand, contributing to 3.0% of consolidated sales, with a decrease of 43.0%. Sales in the United States are equal to EUR 6,551 thousand, contributing to 8.4% of consolidated sales, with an increase of 53.6%. In Japan sales decrease by 1.5% to EUR 1,733 thousand, contributing to 2.2% of consolidated sales.

In the Rest of the World, sales are equal to EUR 15,840 thousand with an increase of 27.0% and a contribution of 20.4% of consolidated sales.

Sales by distribution channel

(Values in thousands of EUR)	III Q		III Q			Change
	2015	%	2014	%	∆	%
Wholesale	55,150	70.9%	50,041	69.6%	5,109	10.2%
Retail	20,026	25.8%	18,369	25.6%	1,657	9.0%
Royalties	2,570	3.3%	3,467	4.8%	( 897)	(25.9%)
Total	77,746	100.0%	71,877	100.0%	5,869	8.2%

By distribution channel in the third quarter of 2015, wholesale sales increase by 10.2% contributing to 70.9% of consolidated sales.

Sales of our directly-operated stores (retail channel) amount to EUR 20,026 thousand with an increase of 9.0% contributing to 25.8% of consolidated sales.

Royalty income is 25.9% lower than in the corresponding period of the previous year, representing 3.3% of consolidated sales.

2. Gross Operating Margin (EBITDA)

Nine months 2015 vs 2014

In the first nine months of 2015 consolidated EBITDA is equal to EUR 17,948 thousand (with an incidence of 8.7% of consolidated sales), compared to EUR 22,630 thousand in the first nine months of 2014 (11.7% of total sales). In the period under review, the profitability is affected by a series of factors, mainly attributable to long-term strategic initiatives to strengthen the visibility of the group's brands, which have already produced a 14.3% increase of the orders' backlog of the Spring/Summer 2016 collections compared to the corresponding season of 2015.

The main expense items that affect the decrease in marginality in the period are as follows:

a) increase in marketing and advertising activities aimed at further enhancing Moschino and Alberta Ferretti brands, along with Philosophy brand's relaunch;

b) costs for events dedicated to Moschino brand to promote the new men's collection, which will be produced in house starting from the Autumn/Winter 2015 season

c) investments for the reorganization of the Moschino boutiques network.

Moreover, significant discounts were granted to Russian customers to support them in the current difficult economic local situation, given the importance of this market for the Group. Finally, there is a decrease in income from royalties and commissions attributable to both Love Moschino apparel and Moschino minor licenses, that need progressive adjustments following to the change in style of Maison Moschino.

Third quarter 2015 vs 2014

In the third quarter of 2015 consolidated EBITDA is EUR 8,185 thousand (with an incidence of 10.5% of consolidated sales), showing a decrease of profitability compared to EUR 10,060 thousand in the third quarter of 2014, (with an incidence of 14.0% of consolidated sales).

3. Net profit for the Group

Nine months 2015 vs 2014

Despite significant investments, the Group posts a Net Profit of EUR 1,540 thousand, compared to the net profit of EUR 2,482 thousand in the first nine months of 2014, with a EUR 942 thousand decrease, result obtained thanks to the significant reduction in financial charges.

Third quarter 2015 vs 2014

In the third quarter of 2015 Group records a net profit of EUR 1,505 thousand showing a decrease compared to a net profit of EUR 2,331 thousand in the third quarter of 2014.

Segment information

Economic performance by Divisions

At international level, the Group is divided into two main business sectors:

• (i) Prêt-à porter Division;
• (ii) Footwear and leather goods Division.

Nine months 2015 vs 2014

The following tables indicate the main economic data for the first nine months of 2015 and 2014 of the Prêtà porter and Footwear and leather goods Divisions.

(Values in thousand of EUR)		Prêt-à porter Division Footwear and leather	Elimination of	Total
9M 2015		goods Division	intercompany
			transactions
SECTOR REVENUES	158,610	72,733	( 24,874)	206,469
Intercompany revenues	( 5,609)	( 19,265)	24,874	-
Revenues with third parties	153,001	53,468	-	206,469
Gross operating margin (EBITDA)	10,663	7,285	-	17,948
Amortisation	( 7,309)	( 2,119)	-	( 9,428)
Other non monetary items:
Revaluations / write-downs		( 160)		( 160)
Net operating profit / loss (EBIT)	3,354	5,006	-	8,360
Financial income	987	5	( 408)	584
Financial expenses	( 2,688)	( 981)	408	( 3,261)
Profit / loss before taxes	1,653	4,030	-	5,683
Income taxes	( 2,489)	( 1,481)	-	( 3,970)
Net profit / loss	( 836)	2,549	-	1,713

(Values in thousand of EUR)		Prêt-à porter Division Footwear and leather	Elimination of	Total
		goods Division	intercompany
9M 2014			transactions
SECTOR REVENUES	147,319	63,758	( 18,135)	192,942
Intercompany revenues	( 4,836)	( 13,299)	18,135	-
Revenues with third parties	142,483	50,459	-	192,942
Gross operating margin (EBITDA)	17,147	5,483	-	22,630
Amortisation	( 7,027)	( 2,133)	-	( 9,160)
Other non monetary items:
Revaluations / write-downs	( 609)	( 114)		( 723)
Net operating profit / loss (EBIT)	9,511	3,236	-	12,747
Financial income	983	9	( 618)	374
Financial expenses	( 4,746)	( 1,357)	618	( 5,485)
Profit / loss before taxes	5,748	1,888	-	7,636
Income taxes	( 3,339)	( 849)	-	( 4,188)
Net profit / loss	2,409	1,039	-	3,448

Third Quarter 2015 vs 2014

The following tables indicate the main economic data for the third quarter of 2015 and 2014 of the Prêt-à porter and Footwear and leather goods Divisions.

(Values in thousand of EUR)		Prêt-à porter Division Footwear and leather	Elimination of	Total
		goods Division	intercompany
III Q 2015			transactions
SECTOR REVENUES	59,073	26,700	( 8,027)	77,746
Intercompany revenues	( 2,181)	( 5,846)	8,027	-
Revenues with third parties	56,892	20,854		77,746
Gross operating margin (EBITDA)	5,129	3,055		8,184
Amortisation	( 2,462)	( 729)		( 3,191)
Other non monetary items:
Revaluations / write-downs		( 59)		( 59)
Net operating profit / loss (EBIT)	2,667	2,267		4,934
Financial income	232	( 3)	( 133)	96
Financial expenses	( 821)	( 344)	133	( 1,032)
Profit / loss before taxes	2,078	1,920		3,998
Income taxes	( 1,677)	( 707)		( 2,384)
Net profit / loss	401	1,213		1,614

(Values in thousand of EUR)		Prêt-à porter Division Footwear and leather	Elimination of	Total
III Q 2014		goods Division	intercompany
			transactions
SECTOR REVENUES	52,496	26,029	( 6,648)	71,877
Intercompany revenues	( 2,069)	( 4,579)	6,648	-
Revenues with third parties	50,427	21,450		71,877
Gross operating margin (EBITDA)	6,491	3,569		10,060
Amortisation	( 2,408)	( 712)		( 3,120)
Other non monetary items:
Revaluations / write-downs	( 425)	( 51)		( 476)
Net operating profit / loss (EBIT)	3,658	2,806		6,464
Financial income	436	( 2)	( 181)	253
Financial expenses	( 1,578)	( 430)	181	( 1,827)
Profit / loss before taxes	2,516	2,374		4,890
Income taxes	( 1,243)	( 849)		( 2,092)
Net profit / loss	1,273	1,525		2,798

Prêt-à porter Division

In the first nine months of 2015, revenues of the prêt-à-porter division increase by 7.7% (+5.2% at constant exchange rates) to EUR 158,610 thousand. This division contributes to 69.8% of consolidated revenues in the first nine months of 2014 and 68.6% in the first nine months of 2015, before inter-divisional eliminations.

EBITDA of the prêt-à-porter division is equal to EUR 10,663 thousand in the first nine months of 2015 (representing 6.7% of consolidated sales) compared to an EBITDA of EUR 17,147 thousand in the first nine months of 2014 (representing 11.6% of consolidated sales), showing a decrease of EUR 6,484 thousand.

Footwear and leather goods Division

Revenues of the footwear and leather goods division increase by 14.1% from EUR 63,758 thousand in the first nine months of 2014 to EUR 72,733 thousand in the first nine months of 2015.

The EBITDA of the footwear and leather goods division increases from EUR 5,483 thousand in the first nine months of 2014 (representing 8.6% of consolidated sales) to EUR 7,285 thousand in the first nine months of 2015 (representing 10.0% of consolidated sales), with an improvement of EUR 1,802 thousand, attributable to the excellent sales growth of the Moschino accessories lines.

Balance sheet

Compared to 31 December 2014, the balance sheet at 30 September 2015 shows an increase in shareholders' equity from EUR 147,972 thousand to EUR 149,634 thousand.

4. Net working capital

At 30 September 2015, net working capital amounts to EUR 103,067 thousand (38.9% of LTM sales) compared to EUR 81,668 thousand at 31 December 2014 (32.5% of sales) and to EUR 90,553 thousand (36.1% of LTM sales) at 30 September 2014; the increase of net working capital's incidence on sales is mainly related to the increase in inventories driven, in turn, by the growth of the sales of the period and of orders' backlog for Autumn/Winter 2015 and Spring/Summer 2016 collections compared to the corresponding seasons of last year.

5. Fixed assets

Capex realised in the period, for EUR 5,690 thousand, are mainly related to stores' refurbishment and maintenance.

6. Shareholders' equity

Changes in shareholders' equity are presented in tables at page 14.

7. Net financial position

The net financial indebtedness amounts to EUR 99,491 thousand in growth compared to EUR 90,151 thousand at 30 September 2014 and EUR 83,567 thousand at 31 December 2014.

Other information

Earnings per share

Basic earnings per share:

(Values in thousands of EUR)	30 September	30 September
	2015	2014
Consolidated earnings/(losses) for the period for the
shareholders of the Parent Company	1,540	2,482
Weighted average number of oustabding shares	101,486	101,486
Basic earnings per share	0.015	0.024

Accounting policies

The main accounting policies and measurement basis adopted in preparing the consolidated financial statements at 30 September 2015, except for the interpretations and amendments to the accounting principles that have been mandatory since 1 January 2015 and illustrated in the half yearly financial statement at 30 June 2015, are the same used in preparing the consolidated financial statements at 31 December 2014.

Significant events subsequent to the balance sheet date

After the 30 September 2015 no significant events regarding the Group's activities have to be reported.

Outlook

The Group is embarking on a steady growth path, both in the prêt-à-porter and accessories segments, together with an expansion of its geographic presence in high-potential markets for our brands, such as United States and Asia. Looking forward with foresight, we are focused in the implementation of a significant strategic investment plan for the development of our brands, which will allow us to catch new growth opportunities in the medium-long term. We are therefore optimistic, encouraged by the results of the first nine months of the year and by the orders intake for next Spring/Summer collections, up by 14.3%.

The executive responsible for preparing the company's accounting documentation Marcello Tassinari declares, pursuant to paragraph 2 of art. 154b of the Consolidated Finance Law, that the accounting information contained in this document agrees with the underlying documentation, records and accounting entries.