AI assistant
PRADA S.p.A. Interim / Quarterly Report 2021
50262_rns_2021-09-17_86ab6562-1ed9-49d6-a99c-7a07a9dc2d5c.pdf
Interim / Quarterly Report
Open in viewerOpens in your device viewer
Interim Financial Report 2021
PRADA spa
(Hong Kong Stock code: 1913)
الخارجية، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها،
INTERIM FINANCIAL REPORT 2021
الخارجية، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان، ومن ثم فإننا ننسب إلى وجود عدد لا متناهٍ من الأعداد التي نسميها «الخارجية» (الخارجية) في كل مكان،
INDEX
The PRADA Group 3
Financial Review 9
Corporate Governance 37
Interim Condensed Consolidated Financial Statements 49
Notes to the Interim Condensed Consolidated Financial Statements 55
Miuccia Prada and Patrizio Bertelli
THE PRADA GROUP
PRADA Group
Interim Financial Report 2021 - The PRADA Group
3
PRADA S.P.A. COMPANY INFORMATION
Registered Office
Via A. Fogazzaro, 28
20135 Milan, Italy
Head Office
Via A. Fogazzaro, 28
20135 Milan, Italy
Place of business in Hong Kong
registered under Part 16
of the Hong Kong Companies Ordinance
8th Floor, One Taikoo Place
979 King's Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
Company Corporate website
www.pradagroup.com
Hong Kong Stock Exchange
Identification Number
1913
Share Capital
Euro 255,882,400
(represented by 2,558,824,000
shares of Euro 0.10 each)
Board of Directors
Paolo Zannoni
(Chairperson & Executive Director)
Miuccia Prada Bianchi (Chief Executive
Officer & Executive Director)
Patrizio Bertelli (Chief Executive Officer &
Executive Director)
Alessandra Cozzani (Chief Financial Officer
& Executive Director)
Lorenzo Bertelli
(Executive Director)
Stefano Simontacchi
(Non-Executive Director)
Marina Sylvia Caprotti
(Independent Non-Executive Director)
Maurizio Cereda
(Independent Non-Executive Director)
Yoël Zaoui
(Independent Non-Executive Director)
Audit Committee
Yoël Zaoui (Chairperson)
Marina Sylvia Caprotti
Maurizio Cereda
Remuneration Committee
Marina Sylvia Caprotti (Chairperson)
Paolo Zannoni
Yoël Zaoui
PRADA Group
Interim Financial Report 2021 - The PRADA Group
PRADA Group
Interim Financial Report 2021 - The PRADA Group
5
Nomination Committee
Maurizio Cereda (Chairperson)
Lorenzo Bertelli
Marina Sylvia Caprotti
Board of Statutory Auditors
Antonino Parisi (Chairperson)
Roberto Spada
David Terracina
Organismo di Vigilanza
(Supervisory Body)
(Italian Leg. Decr. 231/2001)
Stefania Chiaruttini (Chairperson)
Yoël Zaoui
Gianluca Andriani
Main Shareholder
PRADA Holding S.p.A.
Via A. Fogazzaro, 28
20135 Milan, Italy
Joint Company Secretaries
Stefania Cane
Via A. Fogazzaro, 28
20135 Milan, Italy
Ying-Kwai Yuen
8th Floor, One Taikoo Place
979 King's Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
Authorized Representatives
in Hong Kong S.A.R.
Patrizio Bertelli
Via A. Fogazzaro, 28
20135 Milan, Italy
Ying-Kwai Yuen
8th Floor, One Taikoo Place
979 King's Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
Alternate Authorized Representative to
Patrizio Bertelli in Hong Kong S.A.R.
Wendy Pui-Ting Tong
8th Floor, One Taikoo Place
979 King's Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
Hong Kong Share Registrar
Computershare Hong Kong Investor
Services Limited
Shops 1712-1716
17th Floor, Hopewell Centre
183 Queen's Road East
Wanchai, Hong Kong S.A.R. (P.R.C.)
Auditor
Deloitte & Touche S.p.A.
Via Tortona, 25
20144 Milan, Italy
PRADA GROUP STRUCTURE
PRADA spa
Milan
HOLDOG/MANUFACTURING/DISTRIBUTION/SERVICES
| 100% | Church & Co ltd
Northampton
MANUFACTURING/DISTRIBUTION/SERVICES | 100% | IPI Logistica srl
Milan
SERVICES | 100% | PRADA Canada Corp
Toronto
DISTRIBUTION/RETAL | 100% | PRADA Australia pty ltd
Sydney
RETAL |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 100% | Church & Co (Footwear) ltd
Northampton
TRADEMARKS | 66.7% | Artisans Shoes srl
Montegranaro
PRODUCTION | 100% | Post Development Corp
New York
REAL ESTATE | 100% | PRADA Korea llc
Seoul
RETAL |
| 100% | Church UK Retail ltd
Northampton
RETAL | 40% | Les Femmes srl
Porto S. Elpidio
PRODUCTION | 100% | PRADA USA Corp
New York
DISTRIBUTION/SERVICES/RETAL | 100% | PRADA Singapore pte ltd
Singapore
RETAL |
| 100% | Church's English Shoes sa
Brussels
RETAL | 60% | Tannerie Limoges sas
Isle
PRODUCTION | | TRS Hawaii llc
Honolulu
RETAL | 100% | 100% PRADA Retail
Malaysia sdn bhd
Kuala Lumpur
RETAL |
| 100% | Church France sas
Paris
RETAL | 100% | Pelletteria Ennepi srl
Figline e
Incisa Valdarno
PRODUCTION | | PRADA Guam llc
Guam
DORMANT | 100% | 100% PRADA Japan Co ltd
Tokyo
RETAL |
| 100% | Church Spain sl
Madrid
RETAL | 100% | Hipic Prod Impex srl
Sibiu
PRODUCTION | 45% | TRS Guam
Partnership
Guam
RETAL | 55% | 100% Travel Retail Shops
Okinawa kk
Tokyo
RETAL |
| 100% | Church Ireland Retail ltd
Dublin
RETAL | 100% | Figline srl
Milan
PRODUCTION | | PRADA Retail Mexico
S. de R.L. de C.V.
Mexico City
RETAL | 100% | 100% PRADA (Thailand) Co ltd
Bangkok
RETAL |
| 100% | Church Austria gmbh
Vienna
RETAL | 100% | Pelletteria Figline srl
Figline e Incisa
Valdarnno
PRODUCTION | | | | 100% PRADA New Zealand ltd
Wellington
RETAL |
| 100% | Church Netherlands bv
Amsterdam
RETAL | | | 100% | PRADA Brasil
Importação e Comércio
de Artigos de Luxo Itda
São Paulo
RETAL | 100% | PRADA Vietnam Limited
Liability Company
Hanoi
RETAL |
| 100% | Church Footwear ab
Stockholm
RETAL | | | 100% | PRM Services
S. de R.L. de C.V.
Mexico City
SERVICES | 100% | PRADA Saipan llc
Saipan
RETAL |
| 100% | Church Denmark aps
Copenhagen
RETAL | | | 100% | PRADA Panama sa
Panama
RETAL | 100% | TRS Hong Kong ltd
Hong Kong
HOLDOG |
| 100% | Church Germany gmbh
Münich
RETAL | | | 100% | PRADA Retail Aruba nv
Aruba
RETAL | | Macau Branch
Macau
DORMANT |
| 100% | Church's English Shoes
Switzerland sa
Lugano
RETAL | | | 100% | PRADA Saint
Barthelemy sarl
Gustavia
RETAL | 55% | TRS Singapore pte ltd
Singapore
DORMANT |
| 100% | Church Italia srl
Milan
RETAL | | | 100% | PRADA Maroc Sarfau
Casablanca
UNDER LIQUIDATION | | 100% PRADA Asia Pacific ltd
Hong Kong
SERVICES/RETAL |
| 100% | Church & Co (USA) ltd
New York
RETAL | | | | Maroc Branch
Marrakech
UNDER LIQUIDATION | | PRADA Taiwan ltd
Hong Kong
RETAL |
| 100% | Church Hong Kong
Retail ltd
Hong Kong
RETAL | | | | | | Taipei Branch
Taipei
RETAL |
| 100% | Church Japan Company ltd
Tokyo
RETAL | | | | | | PRADA Trading
(Shanghai) Co ltd
Shanghai
DORMANT |
| 100% | Church Singapore pte ltd
Singapore
RETAL | | | | | | PRADA Fashion Commerce
(Shanghai) Co ltd
Shanghai
RETAL |
| 100% | Church Footwear
(Shanghai) Co ltd
Shanghai
RETAL | | | | | | PRADA Macau Co ltd
Macau
RETAL |
| 100% | Church Korea llc
Seoul
RETAL | | | | | | PRADA Dongguan
Trading Co ltd
Dongguan
SERVICES |
6
PRADA Group
Interim Financial Report 2021 - The PRADA Group
PRADA Group
Interim Financial Report 2021 - The PRADA Group
| 60% | PRADA Middle East fzco
Jebel Ali Free Zone-Dubai
DISTRIBUTION/SERVICES | 100% | PRADA Retail France sas
Paris
RETAIL | 100% | Marchesi 1824 srl
Milan
FOOD&BEVERAGE | 100% | PRADA sa
Luxembourg
TRADEMARK |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 49% | PRADA Emirates IIc
Dubai
RETAIL | 100% | PRADA Monte-Carlo sam
Monaco
RETAIL | | UK Branch
London | | Swiss Branch
Lugano
SERVICES |
| 49% | PRADA Kuwait wll
Kuwait City
RETAIL | 100% | PRADA Belgium sprl
Brussels
RETAIL | | | | 100% PRADA Company sa
Luxembourg
SERVICES |
| 100% | PRADA Retail wll
Doha
RETAIL | 100% | PRADA Germany gmbh
Munich
RETAIL/SERVICES | | | | |
| 75% | PRADA Saudi Arabia Itd
Jeddah
RETAIL | 100% | PRADA Austria gmbh
Vienna
RETAIL | | | | |
| 100% | PRADA Retail South Africa (pty) Itd
Sandton
UNDER LIQUIDATION | 100% | PRADA Czech Republic sro
Prague
RETAIL | | | | |
| 100% | PRADA Rus IIc
Moscow
RETAIL | 100% | PRADA Netherlands bv
Amsterdam
RETAIL | | | | |
| 100% | PRADA Ukraine IIc
Kiev
RETAIL | 100% | PRADA Switzerland sa
Lugano
RETAIL | | | | |
| 100% | PRADA Kazakhstan Ilp
Almaty
RETAIL | 100% | PRADA Spain sl
Madrid
RETAIL | | | | |
| | | 100% | PRADA Portugal
Unipessoal Ida
Lisbon
RETAIL | | | | |
| | | 100% | PRADA Hellas
Sole Partner IIc
Athens
RETAIL | | | | |
| | | 100% | PRADA Bosphorus Deri
Mamüller Itd Sirketi
Istanbul
RETAIL | | | | |
| | | 100% | PRADA Retail UK Itd
London
RETAIL | | | | |
| | | | Ireland Branch
Dublin
RETAIL | | | | |
| | | 100% | PRADA Denmark aps
Copenhagen
RETAIL | | | | |
| | | 100% | PRADA Sweden ab
Stockholm
RETAIL | | | | |
| | | 100% | Kenon Itd
London
REAL ESTATE | | | | |
| | | 100% | PRADA San Marino srl
San Marino
RETAIL | | | | |
الخارجية. وقدْ كان من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من
FINANCIAL REVIEW
PRADA Group
Interim Financial Report 2021 - Financial Review
9
FINANCIAL REVIEW BASIS OF PREPARATION
The financial information presented herein refers to the group of companies controlled by PRADA spa (the "Company"), the parent company of the Prada Group (the "Group") and is based on the unaudited Interim Condensed Consolidated Financial Statements for the six-month period ended June 30, 2021.
The tables reported in the Financial Review were prepared in accordance with the International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board ("IASB") and adopted by the European Union.
PRADA Group
Interim Financial Report 2021 - Financial Review
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS ENDED JUNE 30, 2021
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | % | six months ended June 30 2020 (unaudited) | % | six months ended June 30 2019 (unaudited) | % |
|---|---|---|---|---|---|---|
| Net Sales | 1,477,656 | 98.4% | 925,283 | 98.7% | 1,546,378 | 98.5% |
| Royalties | 23,350 | 1.6% | 12,374 | 1.3% | 23,745 | 1.5% |
| Net revenues | 1,501,006 | 100% | 937,657 | 100% | 1,570,123 | 100% |
| Cost of goods sold | (386,021) | -25.7% | (277,332) | -29.6% | (444,374) | -28.3% |
| Gross margin | 1,114,985 | 74.3% | 660,325 | 70.4% | 1,125,749 | 71.7% |
| Product design and development costs | (63,736) | -4.2% | (52,986) | -5.7% | (65,053) | -4.1% |
| Advertising and promotion expenses | (126,892) | -8.5% | (94,177) | -10.0% | (101,477) | -6.5% |
| Selling costs | (651,139) | -43.4% | (611,422) | -65.2% | (706,565) | -45.0% |
| General and administrative expenses | (107,314) | -7.1% | (97,536) | -10.3% | (102,180) | -6.5% |
| Total operating expenses | (949,081) | -63.2% | (856,121) | -91.3% | (975,275) | -62.1% |
| Operating income / (loss) - EBIT | 165,904 | 11.1% | (195,796) | -20.9% | 150,474 | 9.6% |
| Interest and other financial income / (expenses), net | (9,019) | -0.6% | (16,407) | -1.7% | (7,749) | -0.4% |
| Interest expenses on Lease Liability | (18,827) | -1.3% | (23,433) | -2.5% | (24,735) | -1.6% |
| Dividends from investments | 103 | 0.0% | 116 | 0.0% | 2,023 | 0.1% |
| Total financial income / (expenses) | (27,743) | -1.9% | (39,724) | -4.2% | (30,461) | -1.9% |
| Income / (loss) before taxation | 138,161 | 9.2% | (235,520) | -25.1% | 120,013 | 7.7% |
| Taxation | (41,273) | -2.7% | 52,005 | 5.5% | 34,418 | 2.2% |
| Net income / (loss) for the period | 96,888 | 6.5% | (183,515) | -19.6% | 154,431 | 9.9% |
| Net income / (loss) - Non-controlling interests | (355) | 0.0% | (3,183) | -0.3% | (463) | 0.0% |
| Net income / (loss) - Group | 97,243 | 6.5% | (180,332) | -19.2% | 154,894 | 9.9% |
PRADA Group
Interim Financial Report 2021 - Financial Review
KEY FINANCIAL INFORMATION
| Key economic figures
(amounts in thousands of Euro) | six months
ended June 30
2021
(unaudited) | six months
ended June 30
2020
(unaudited) | six months
ended June 30
2019
(unaudited) |
| --- | --- | --- | --- |
| Net revenues | 1,501,006 | 937,657 | 1,570,123 |
| Operating income/(loss) - EBIT | 165,904 | (195,796) | 150,474 |
| % Incidence of the EBIT on net revenues | 11.1% | -20.9% | 9.6% |
| Net income / (loss) of the Group | 97,243 | (180,332) | 154,894 |
| Earnings / (losses) per share (Euro) | 0.038 | (0.070) | 0.061 |
| Average number of employees (in unit) | 12,619 | 13,669 | 13,618 |
| Net Operating Cash Flows (*) | 315,602 | (26,455) | 137,334 |
(*) Non- IFRS measure equal to Net Cash Flows from operating activities less repayments of lease liability
| Key indicators
(amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) | June 30
2020
(unaudited) |
| --- | --- | --- | --- |
| Net operating working capital | 622,203 | 667,024 | 650,444 |
| Net invested capital (Right of Use assets included) | 5,113,568 | 5,296,489 | 5,557,031 |
| Net financial position surplus / (deficit) | (101,814) | (311,357) | (515,488) |
| Group shareholders' equity | 2,881,081 | 2,832,057 | 2,736,332 |
HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2021
In the first six months of 2021, the Prada Group kept up the retail sales performance of the final months of 2020: net revenues were higher than those reported in the same period of 2019 and, naturally, in the past year.
Notwithstanding the Covid-19 pandemic, the Group positioned itself again on a long-term growth trajectory thanks to the ability to grasp and seize the opportunities offered on the markets.
The restrictions on movement imposed by governments all over the world eliminated tourism flows, while benefiting domestic spending and accelerating the impact of digital technology on social relationships and purchasing behavior.
In this scenario, customer centrality and the omnichannel system, a major part of the sales and marketing strategy in recent years, further increased customer interactions. The investments in digital channels continued during the period, transmitting more effectively the brand creativity and facilitating customer engagement. These initiatives, combined with an enhancement of the product offer, were particularly rewarding.
The communications activities fully resumed. In the initial months of the year, the most intensive phases of the 36th edition of the America's Cup presented by Prada and Luna Rossa sponsorships took shape. The extensive broadcasting and
PRADA Group
Interim Financial Report 2021 - Financial Review
webcast coverage of the event - the most viewed ever - successfully promoted the association of the brand with the prestige of the competition. It also drove the identification of activewear line with the concept of extreme technological innovation applied to the world of sailing. Moreover, the sailing team sponsored by the Group won the Prada Cup, setting the stage for the exciting final duel with the Defender for the conquest of the trophy.
The return to in-person shopping gave back the opportunity to engage with consumers: displays dedicated to special collections were set up for both Prada, as in the case of its Outdoor exhibits, and Miu Miu, for example with the new release of the Upcycled project with Levi's.
The interest in the world of art and culture has led to new initiatives. The Group supported the Damien Hirst Archaeology Now exhibition, at the Galleria Borghese Museum in Rome, and undertook valuable collaborations with representatives of the world of cinema to narrate the eternal dream of fashion through an interpretation of the Galleria, the Prada's classic handbag.
Even the post-fashion show conversations of Miuccia Prada and Raf Simons represented a new, valued moment of communication, providing unlimited access to the creative thinking of the two Co-Directors and promoting the concept of dialogue as an occasion for advancement for the entire fashion community.
Investments continued to target the Group's values, embracing sustainability of course. During the period, an action plan was announced to step up the efforts regarding diversity, equity and inclusion, involving prestigious partnerships with universities, large international institutions and activists. In 2021 training programs will be developed to assist the professional careers of young talented people of color in the fashion industry. Equally important plans are being drawn up for the environment.
Metrics measuring brand visibility on social media, particularly followers numbers and engagement, showed important solidity. Further development strategies were devised to achieve both short-term and long-term targets.
Investments continued to regard the digital evolution, spanning all business areas, and enhancement of the store network, with relocation and restyling projects. Agreements were stipulated to acquire the remaining stakes in five subsidiaries operating in the travel retail shop industry and two manufacturing companies specialized in leather goods. On the manufacturing side, in addition to such investments and those to improve existing production and logistics structures, on June 22 the Prada Group announced the commitment to enter with a 40% stake
PRADA Group
Interim Financial Report 2021 - Financial Review
into the share capital of Filati Biagioli Modesto spa. This Tuscan company has been a symbol of excellence for over a century in the production of cashmere and other noble yarns and in the fiber-to-yarn transformation process.
Direct control over the chain of production, which the Group considers key to ensuring perfect quality throughout the entire production process, continues to guide the investments in manufacturing activities with a long-term growth perspective.
The significant generation of operating cash flow in the first six months led management to review the credit lines existing with banks, confident that the current financial resources and those produced by the retail activity, whose projections at the reporting date are very encouraging, can meet the funding demands regarding working capital management, investing activities, loan repayment and dividend payment. Two new ESG-linked loans were stipulated: a Euro 90 million bilateral long term loan and a Euro 400 million revolving credit facility with a pool of banks, the latter amending and increasing an existing Euro 300 million one. Moreover, during the period the Group canceled an additional Euro 300 million back-up revolving credit facility stipulated in May 2020, to add financial flexibility in the midst of the public health emergency.
PRADA Group
Interim Financial Report 2021 - Financial Review
ANALYSIS OF NET REVENUES
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | % | six months ended June 30 2020 (unaudited) | % | six months ended June 30 2019 (unaudited) | % |
|---|---|---|---|---|---|---|
| Net Sales by geographical area | ||||||
| Europe | 372,707 | 25.2% | 297,518 | 32.2% | 598,800 | 38.7% |
| Asia Pacific | 644,716 | 43.6% | 378,971 | 41.0% | 498,578 | 32.2% |
| Americas | 262,738 | 17.8% | 104,857 | 11.3% | 215,676 | 13.9% |
| Japan | 135,905 | 9.2% | 114,765 | 12.4% | 180,556 | 11.7% |
| Middle East and Other countries | 61,590 | 4.2% | 29,172 | 3.2% | 52,768 | 3.4% |
| Total Net Sales | 1,477,656 | 100% | 925,283 | 100% | 1,546,378 | 100% |
| Net Sales by brand | ||||||
| Prada | 1,264,829 | 85.6% | 774,876 | 83.7% | 1,284,429 | 83.1% |
| Miu Miu | 190,938 | 12.9% | 130,878 | 14.1% | 220,774 | 14.3% |
| Church's | 15,752 | 1.1% | 15,054 | 1.6% | 32,844 | 2.1% |
| Other | 6,137 | 0.4% | 4,475 | 0.6% | 8,331 | 0.5% |
| Total Net Sales | 1,477,656 | 100% | 925,283 | 100% | 1,546,378 | 100% |
| Net Sales by product line | ||||||
| Leather goods | 793,647 | 53.7% | 525,621 | 56.8% | 867,852 | 56.1% |
| Clothing | 372,074 | 25.2% | 223,230 | 24.1% | 339,442 | 22.0% |
| Footwear | 290,229 | 19.6% | 162,601 | 17.6% | 309,393 | 20.0% |
| Other | 21,706 | 1.5% | 13,831 | 1.5% | 29,691 | 1.9% |
| Total Net Sales | 1,477,656 | 100% | 925,283 | 100% | 1,546,378 | 100% |
| Net Sales by channel | ||||||
| Net Sales of direct operated stores (DOS) | 1,281,439 | 86.7% | 834,525 | 90.2% | 1,231,918 | 79.7% |
| Sales to independent customers and franchisees | 196,217 | 13.3% | 90,758 | 9.8% | 314,460 | 20.3% |
| Total Net Sales | 1,477,656 | 100% | 925,283 | 100% | 1,546,378 | 100% |
| Net Revenues | ||||||
| Net Sales | 1,477,656 | 98.4% | 925,283 | 98.7% | 1,546,378 | 98.5% |
| Royalties | 23,350 | 1.6% | 12,374 | 1.3% | 23,745 | 1.5% |
| Total Net Revenues | 1,501,006 | 100% | 937,657 | 100% | 1,570,123 | 100% |
DISTRIBUTION CHANNELS
In the first six months of 2021, the Prada Group steadily improved its retail sales performance, showing growth of $60.3\%$ at constant exchange rates compared with the first six months of 2020 (53.6% at current exchange rates) and of $8.4\%$ versus the same period of 2019 (+4% at current exchange rates). Indeed, compared with 2019, sales accelerated from single-digit growth in the first quarter to double-digit in the second one. This was explained by the progressive consolidation of the business strategies of investment in brand positioning, omnichannel expansion and customer service enhancement. Moreover, the e-commerce sales grew significantly in the period, reaching almost $7\%$ of retail sales in the six-month ended June 30, 2021.
The total number of stores remained the same as at December 31, 2020 (633).
PRADA Group
Interim Financial Report 2021 - Financial Review
The wholesale channel declined by 36.9% at constant exchange rates against the first half of 2019 (-37.6% at current exchange rates) following the selective strategy to preserve the brands' positioning. Against the first six-month period of 2020, the channel was up more than 100%.
MARKETS
The retail sales in Asia Pacific for the six months ended June 30, 2021 rose by 64.9% at constant exchange rates from the comparative period (+62% at current exchange rates) and by 34.9% from the corresponding period of 2019. The region showed double-digit growth in both quarters compared with the 2019 data. Consumer demand was particularly strong in key markets compared with the first six-month period of 2019 at constant exchange rates: Mainland China (+77%), Taiwan (+74%) and Korea (+108%).
The wholesale channel reported a slight growth versus the first half of 2019, while against the same six-month period of 2020 it was up triple-digit.
The persistence of the pandemic and of the restrictions imposed by governments impacted considerably retail sales in Europe. At constant exchange rates, during the six-month period the region had retail sales growth of 18.8% over the same period of 2020 (+15.1% at current exchange rates) and a decline of 29.1% compared with the first six months 2019. The region recovered quickly after the re-openings, with robust demand from local customers partially offsetting the lack of tourists. Due to lockdowns, the region operated with 36% fewer working days on average. The wholesale channel contracted double-digit versus the first half of 2019 following the selective strategy. Instead, against the same six-month period of 2020, this channel was up by double-digit.
Retail sales in the American market recovered well from the first half of 2020 (+163.4% at constant exchange rates and +142.1% at current exchange rates) and the same period of 2019 (+52.5% at constant exchange rates), thanks to the strength of the local clientele.
The wholesale channel contracted double-digit versus the first half of 2019 for the aforementioned reasons. Instead, against the first six-month period of 2020, this channel was up by triple-digit.
The Japanese market had retail sales up by 24.7% at constant exchange rates
PRADA Group
Interim Financial Report 2021 - Financial Review
compared with the first half of 2020 (14.6% at current exchange rates) and a decline of 24.3% at constant exchange rates compared with the same period of 2019. The absence of tourism flows and the restrictions imposed by the government ahead of the Olympics affected the results of this region to a substantial degree.
The Middle East, led by the results in the United Arab Emirates driven by local spending, had retail sales growth of 128.7% at constant exchange rates from the first half of 2020 (110% at current exchange rates) and of 28.5% at constant exchange rates against the same period of 2019.
PRODUCTS
Retail sales by product were fairly balanced among the three categories, with a significant growth against the first six months of 2020 and a more moderate one against the same period of 2019. It is worth noting that clothing achieved remarkable results for both Prada and Miu Miu, posting a 24.2% growth at constant exchange rates compared with the first half of 2019.
BRANDS
The retail sales of the Prada and Miu Miu brands, at constant exchange rates, rose by 64.2% (57.2% at current exchange rates) and 43.2% (37.7% at current exchange rates), respectively, from those of the first half of 2020. Against the same six months of 2019 and at constant exchange rates, Prada still shows growth (+13.1%) whereas Miu Miu reports a decline (-7.9%).
The total net sales of Church's brand, which continued to be affected by its dominant presence in Europe, increased by 5.7% at constant exchange rates compared with the corresponding period of 2020 (+4.6% at current exchange rates).
ROYALTIES
Royalty income rose by 88.7% from the same period of 2020. The royalties from fragrances increased after benefiting from the new agreement with L'Oréal, which became effective on January 1, 2021.
PRADA Group
Interim Financial Report 2021 - Financial Review
17
NUMBER OF STORES
| June 30, 2021 | December 31, 2020 | June 30, 2020 | ||||
|---|---|---|---|---|---|---|
| Owned | Franchises | Owned | Franchises | Owned | Franchises | |
| Prada | 415 | 20 | 410 | 20 | 409 | 19 |
| Miu Miu | 148 | 5 | 152 | 6 | 157 | 6 |
| Church's | 62 | - | 62 | - | 62 | - |
| Car Shoe | 2 | - | 3 | - | 3 | - |
| Marchesi 1824 and others | 6 | - | 6 | - | 6 | - |
| Total | 633 | 25 | 633 | 26 | 637 | 25 |
| June 30, 2021 | December 31, 2020 | June 30, 2020 | ||||
| --- | --- | --- | --- | --- | --- | --- |
| Owned | Franchises | Owned | Franchises | Owned | Franchises | |
| Europe | 225 | - | 222 | - | 228 | - |
| Americas | 106 | - | 108 | - | 106 | - |
| Asia Pacific | 193 | 20 | 194 | 21 | 195 | 20 |
| Japan | 88 | - | 88 | - | 87 | - |
| Middle East | 21 | 5 | 21 | 5 | 21 | 5 |
| Total | 633 | 25 | 633 | 26 | 637 | 25 |
PRADA Group
Interim Financial Report 2021 - Financial Review
OPERATING RESULTS
The gross margin of the period (74.3% of net revenues) was higher than that of the same period of 2020 (70.4% of net revenues), essentially as a result of the drop in revenues in 2020 and less absorption of production overheads. A more favorable sales mix in terms of distribution channels, geographical areas and products also improved the margins of the first half of 2021.
The total operating expenses were Euro 949 million, up by Euro 93 million from 2020 as a result of higher variable costs relating to higher sales, greater communication expenses, less Covid-related discounts obtained from lessors, and less use of wage supplements.
EBIT was Euro 166 million, or 11.1% of net revenues, whereas for the first half of 2020 it was negative by Euro 195.8 million.
FINANCIAL EXPENSES AND TAXATION
The net financial expenses were Euro 27.7 million for the six-month period ended June 30, 2021, a considerable decrease from those of the first six months of 2020 (Euro 39.7 million) attributable primarily to lower foreign exchange losses and lower interest expenses on lease liability.
The income tax charge for the period is Euro 41.3 million, 29.9% of the pre-tax profit. It is worth reminding that in the comparative period of 2019 the taxation line-item showed an income of Euro 34.4 million following the recognition of the patent-box tax benefit of Euro 77 million.
PRADA Group
Interim Financial Report 2021 - Financial Review
ANALYSIS OF THE STATEMENT OF FINANCIAL POSITION
NET INVESTED CAPITAL
The following table reclassifies the statement of financial position to provide a better understanding of the composition of the net invested capital:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) | June 30
2020
(unaudited) |
| --- | --- | --- | --- |
| Right of use assets | 2,035,222 | 2,054,338 | 2,224,514 |
| Non-current assets (excluding deferred tax assets) | 2,463,832 | 2,507,244 | 2,544,750 |
| Trade receivables, net | 269,679 | 290,380 | 204,376 |
| Inventories, net | 628,482 | 666,222 | 735,869 |
| Trade payables | (275,958) | (289,578) | (289,801) |
| Net operating working capital | 622,203 | 667,024 | 650,444 |
| Other current assets (excluding items of financial position) | 214,440 | 246,914 | 236,476 |
| Other current liabilities (excluding items of financial position) | (242,604) | (221,421) | (204,918) |
| Other current assets/liabilities), net | (28,164) | 25,493 | 31,558 |
| Provision for risks | (46,044) | (45,416) | (50,790) |
| Post-employment benefits | (73,125) | (73,256) | (66,028) |
| Other long-term liabilities | (76,882) | (61,576) | (42,608) |
| Deferred taxation, net | 216,526 | 222,638 | 265,191 |
| Other non-current assets/liabilities) | 20,475 | 42,390 | 105,765 |
| Net invested capital | 5,113,568 | 5,296,489 | 5,557,031 |
| Shareholder's equity - Group | (2,881,081) | (2,832,057) | (2,736,332) |
| Shareholder's equity - Non-controlling interests | (13,289) | (19,663) | (18,376) |
| Total Consolidated shareholders' equity | (2,894,370) | (2,851,720) | (2,754,708) |
| Long-term financial payables | (391,816) | (450,075) | (504,601) |
| Short-term financial, net surplus/(deficit) | 290,002 | 138,718 | (10,887) |
| Net financial position surplus/(deficit) | (101,814) | (311,357) | (515,488) |
| Net financial deficit to Consolidated shareholders' equity ratio | 3.5% | 10.9% | 18.7% |
| Long-term lease liability | (1,708,185) | (1,729,819) | (1,888,742) |
| Short-term lease liability | (409,199) | (403,593) | (398,093) |
| Total lease liability | (2,117,384) | (2,133,412) | (2,286,835) |
| Net financial position surplus/(deficit), including lease liability | (2,219,198) | (2,444,769) | (2,802,323) |
| Shareholders' equity and net financial position | (5,113,568) | (5,296,489) | (5,557,031) |
The net invested capital at June 30, 2021 is Euro 5,114 million, balanced with net financial debt of Euro 102 million, the lease liability of Euro 2,117 million and the Group's equity of Euro 2,881 million.
The right-of-use asset decreased by Euro 19.1 million as a result of depreciation of Euro 212.8 million, offset by increases for lease renewals and adjustments to revaluation parameters (usually the consumer price index) totaling Euro 192 million and, to a lesser extent, by the favorable impact of foreign exchange differences of Euro 11 million.
PRADA Group
Interim Financial Report 2021 - Financial Review
The non-current assets (excluding deferred tax assets), which consist essentially of tangible assets, intangible assets and financial assets, fell from Euro 2,507.2 million at December 31, 2020 to Euro 2,463.8 million after the depreciation, amortization and impairment of the period (Euro 99.5 million) and the variation of the equity instruments (Euro 37.4 million). Such decreases were offset in part by foreign exchange differences (appreciation of Euro 16.4 million due to the stronger Chinese renminbi, U.S. dollar and British pound sterling against the Euro) and by capital expenditures (Euro 74.8 million). The latter amount is detailed as follows:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Retail | 41,599 | 28,075 |
| Real estate | 19,587 | - |
| Production, logistics and corporate | 13,624 | 21,225 |
| Total | 74,810 | 49,300 |
The capital expenditures regarded primarily store restyling and relocation projects, as well as many technological and digital evolution projects in the retail, manufacturing and corporate areas. In addition, to have greater control over its real estate space, during the period the Group purchased the prestigious building where the Prada store in Athens is located.
The net operating working capital at June 30, 2021 is Euro 622.2 million, down by Euro 44.8 million compared with the end of 2020. The decrease was attributable mainly to a more effective inventory management.
The net current assets, shown as Euro 25.5 million in the net invested capital at December 31, 2020, are now net liabilities of Euro 28.2 million, essentially as a result of the change in the fair value of the hedging instruments and less VAT and other tax credits compared with December 31, 2020.
Other non-current assets, shown in the net invested capital net of the non-current liabilities, are Euro 20 million at June 30, 2021, down by Euro 21.9 million compared with December 31, 2020 substantially as a result of the recognition of deferred income relating to the collection of deferred sales consideration.
PRADA Group
Interim Financial Report 2021 - Financial Review
21
NET FINANCIAL POSITION
The following table provides details of the Group's net financial position:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) | June 30
2020
(unaudited) |
| --- | --- | --- | --- |
| Bank borrowing - non-current | (392,941) | (451,200) | (505,726) |
| Total financial payables - non-current | (392,941) | (451,200) | (505,726) |
| Financial payables and bank overdrafts - current | (311,466) | (300,577) | (537,910) |
| Payables to related parties - current | (3,202) | (3,097) | (3,398) |
| Total financial payables - current | (314,668) | (303,674) | (541,308) |
| Total financial payables | (707,609) | (754,874) | (1,047,034) |
| Cash and cash equivalents | 604,668 | 442,392 | 530,421 |
| Financial receivables from related parties - current | 2 | - | - |
| Financial receivables from related parties - non-current | 1,125 | 1,125 | 1,125 |
| Total Cash and cash equivalents and financial receivables | 605,795 | 443,517 | 531,546 |
| Net financial deficit, total | (101,814) | (311,357) | (515,488) |
The net operating cash flow for the six-month period, after lease payments (Euro 210 million, as shown in the Non-IFRS Measures section), was cash generation equal to Euro 315.6 million ("net operating cash flow" in the table below), which enabled to finance the cash outflows for investing activities of the period (Euro 33.4 million), pay dividends (Euro 84.9 million) and reduce the Group's financial deficit (from Euro 311.4 million to Euro 101.8 million)
During the period, the Group repaid current portions of long-term loans in an amount of Euro 150 million and stipulated a new ESG-linked long-term loan of Euro 90 million from Unicredit.
The total amount of undrawn lines of credit at June 30, 2021 is Euro 825 million, consisting of Euro 400 million in committed lines and Euro 425 million in uncommitted lines.
The loan covenants were fully complied with at the reporting date.
PRADA Group
Interim Financial Report 2021 - Financial Review
The following table sets forth the lease liability:
| (amounts in thousands of Euro) | June 30 2021 (unaudited) | December 31 2020 (unaudited) |
|---|---|---|
| Short-term Lease Liability | 409,199 | 403,593 |
| Long-term Lease Liability | 1,708,185 | 1,729,819 |
| Total | 2,117,384 | 2,133,412 |
The lease liability decreased from Euro 2,133 million at December 31, 2020 to Euro 2,117 million as a result of the payments made in the period (Euro 210 million), net of re-measurements to reflect lease renewals or modifications (Euro 182.5 million) and interest recognized to adjust the present value of the liability (Euro 18.8 million).
The lease liability is concentrated in Japan, the U.S.A. and Italy.
The net financial indebtedness, including the lease liability, is Euro 2,219 million at June 30, 2021.
Further information on the maturity profile of debt and obligation of the Group, currency and interest rate structure, details of charge on Group's assets and contingent liabilities is set out in notes 18, 23 and 25 of the Notes to the Interim Condensed Consolidated Financial Statements.
PRADA Group
Interim Financial Report 2021 - Financial Review
RISK FACTORS
RISK FACTORS REGARDING THE INTERNATIONAL LUXURY GOODS MARKET
ECONOMIC RISKS AND INTERNATIONAL BUSINESS RISKS
The performance of the luxury goods market is influenced by the general economy and by individuals’ propensity to consume. Accordingly, the Group’s financial and business performance is exposed to global social and macroeconomic risks due to its international scale. An unfavorable economy in one or more of the main countries where the Group operates, as well as on a global level, could adversely affect the propensity to spend on luxury goods and have a negative impact on the Group’s operations, results, cash flows and financial condition.
Moreover, a substantial portion of sales originates from purchases of products by customers on trips abroad. Therefore, unfavorable economic conditions, social, health or geopolitical situations leading to instability, adverse natural events or government restrictions on freedom of movement could negatively impact the Group’s sales operations, results, cash flows and general financial condition.
The Group believes that full control over the value chain, a well-balanced physical retail presence in the global market accompanied by an omnichannel strategy with closely integrated sales and communication channels, as well as a sufficiently diversified product range, enable to mitigate the risk that adverse conditions such as these could influence significantly the business performance.
RISKS REGARDING IMAGE AND BRAND RECOGNITION
The Group’s success in the international luxury goods business is linked to the image and distinct character of its brands. These features depend on many factors, such as the style and design of the products, the quality of the materials used and the production techniques, the image and locations of DOS, careful selection of licensees, communications activities and the general corporate profile.
Preserving the image and prestige acquired by its brands is a primary objective of the Prada Group, pursued by monitoring constantly the changes in the society, including through close collaboration with the world of art and culture, and by continuously seeking innovation in styles, products and communications in order to convey messages that are always consistent with the strong brand identities. Meanwhile, monitoring meticulously each internal and external phase of the value chain reduces considerably the risk that inappropriate performance could affect
PRADA Group
Interim Financial Report 2021 - Financial Review
the image and therefore the value of the brands.
RISKS REGARDING ABILITY TO ANTICIPATE TRENDS AND REACT TO SHIFTS IN CONSUMER TASTES
The Group's success is reliant on its ability to create and define fashion and product trends, and to anticipate shifts in consumer tastes and luxury market trends in a timely manner.
Miuccia Prada, assisted by a qualified team of stylists and designers, is capable of combining intellectual curiosity, the pursuit of new and unconventional ideas along with cultural and social interests with a strong sense of fashion. This has made it possible to establish a genuine design culture, based on method and discipline, which guides everyone who works in the creative process. The recent appointment of a Creative Co-Director for the Prada brand enables the Group to benefit from dialogue between two designers widely acknowledged as among the most important and influential of our times. Miuccia Prada and Raf Simons emphasize the importance of creativity, while challenging the idea of individuality in creative authorship, in a constantly evolving cultural landscape.
Approximately one thousand individuals work in the design and product development departments. In the design area, a mix of different nationalities, cultures and talents contribute to creativity, while in the development area, craft skills combined with solid manufacturing processes enable the Group to keep abreast of emerging consumer trends and lifestyles and to continue to be a major player in the industry.
INTELLECTUAL PROPERTY RISKS
The Prada Group's brands have always been associated with beauty, creativity, tradition and excellent quality. Prada's ability to protect its brands and other intellectual property rights means safeguarding these fundamental assets that are responsible for the success of the brands and their positioning.
The Group protects its brands, designs, patents and websites by registering them and obtaining legal protection for them in all countries throughout the world. The Group actively opposes all forms of counterfeiting and intellectual property infringement by adopting strong, systematic measures worldwide. The offline and online markets of the retail and wholesale channels are monitored daily in close collaboration with the Italian and international customs authorities, tax authorities and police.
PRADA Group
Interim Financial Report 2021 - Financial Review
RISKS SPECIFIC TO THE PRADA GROUP
STRATEGIC RISKS
The capacity for the Group to improve its financial and business performance depends on successful implementation of its commercial strategy for each brand, which is achieved through the continuous support and development of retail sales and the constant recognition of the brands as reference points in the industry.
The Group provides support to the retail network by offering leather goods, clothing and footwear that reflect the brand positioning accompanied by a unique buying experience distinguished by careful revision of the physical and digital store concepts and layouts, as well as by constant enrichment of customer services. The performance of the retail channel is supported by marketing initiatives intended to enhance the identity of the brands in the specific markets, emphasizing the unique features that distinguish the style and craftsmanship of the products.
Moreover, the implementation of the omnichannel strategy has paved the way for long-term business development based on product quality, strong innovation and interconnection of distribution and communication channels in line with the evolving demands of consumers.
RISKS REGARDING THE IMPORTANCE OF KEY PERSONNEL
The Group’s success depends on the contribution of key individuals who have played an essential role in the Group’s expansion and who have substantial experience in the fashion and luxury goods business. Its success also depends on Prada’s ability to attract and retain people who are qualified in the design, product development, marketing, merchandising and corporate functions. Another factor for the Group’s success is the capacity to attract and train new generations of artisans.
The Group considers its management structure to be capable of ensuring business continuity, and has a long-term incentive plan to retain key resources so that they will continue to cover the roles essential to the achievement of the challenging objectives that the Group constantly sets itself.
RISKS REGARDING THE OUTSOURCING OF MANUFACTURING ACTIVITIES
The Prada Group’s products are made at 23 manufacturing facilities owned in Europe (20 in Italy, 1 in France, 1 in the United Kingdom and 1 in Romania) and through a network of contract manufacturers carefully selected on the basis of competence, quality and reliability. Nearly all the prototypes and samples are made
PRADA Group
Interim Financial Report 2021 - Financial Review
at the Group's own manufacturing facilities, along with the most sensitive phases of production, such as the cutting of hides, the controls over all raw materials and semi-finished goods, including those to be sent to contract manufacturers, and the realization of part of the finished products.
All stages of the production process are checked by the Prada Group's technical staff to ensure that the products meet the quality standards and that the entire supply chain complies with Prada Spa's Code of Ethics, which must be signed before any business relationship is entered into.
A key part of the strategy is to establish long-term business relationships with suppliers based on mutual trust and transparency. The Prada Group works with approximately one thousand raw material suppliers and contract manufacturers, 80% of which are located in Italy. The Group has implemented a strict quality control process for all outsourced production and contractually requires its contract manufacturers to comply with all regulations on brand ownership and other intellectual property rights. Moreover, the Group demands compliance with applicable regulations concerning labor law, social security and occupational health and safety, and monitors such compliance with a process that uses document controls and, since 2019, audit activities at the suppliers' premises.
CREDIT RISK
Credit risk is defined as the risk of financial loss caused by the failure of a counterparty to meet its contractual obligations. The maximum risk to which an entity is exposed is represented by all the financial assets recognized in the financial statements. The Group considers its credit risk to involve primarily trade receivables generated from the wholesale channel and liquid assets. The Group manages credit risk and mitigates the related effects through its business and financial strategies, which are based on the monitoring of the creditworthiness and solvency of customers, the stipulation of insurance contracts and the use of safe solutions such as advance payments.
Concerning liquid assets, the risk of default substantially relates to bank deposits, which represent the Group's most widely-used financial product for investing surplus operating cash flows. Default risk is mitigated by the allocation of cash holdings to bank deposits that are diversified in terms of counterparties (always investment grade), country and currency, and by the consistently short-term period. The residual portion of liquid assets consists of cash and bank accounts. The Group considers no significant risk to exist on these kinds of liquid assets
PRADA Group
Interim Financial Report 2021 - Financial Review
27
given that they are used for operating activities with a number of independent parties highly fragmented.
LIQUIDITY RISK
Liquidity risk refers to difficulty that the Group could have in meeting its financial obligations. The CFO is responsible for managing liquidity risk and optimizing financial resources.
The Directors consider the currently available funds and lines of credit, in addition to the funding that will be generated by operating and financing activities, to be sufficient for enabling the Group to meet its requirements resulting from working capital management, investing activities, punctual loan repayment and payment of dividends as planned.
TAX RISKS
The Prada Group's tax strategy is based on the prevention of tax risks and on tax certainty, both of which are pursued through ongoing dialogue and long-term, principled interaction with the tax authorities in the countries where it operates. The Group's tax risks, which could arise from compliance errors or incorrect interpretation of regulations, are constantly monitored within the scope of an extensive internal control system, and are managed specifically within the tax control framework.
The effectiveness of the tax risk management system has made Prada spa eligible to participate in the Cooperative Compliance Tax Regime in Italy (under Italian Legislative Decree 128/2015). Within such regime, the Group has expanded a systematic, open communication channel with the Italian tax authorities based on reciprocal transparency and trust, with the purpose of minimizing the level of uncertainty about potentially risky situations.
After the inclusion in the regime, the Italian tax authorities invited some companies of the Group to join the International Compliance Assurance Programme ("ICAP") promoted by the Organisation for Economic Co-operation and Development ("OECD"). The program started with a pilot in 2018, followed by a second pilot, "ICAP 2.0", in December 2019. As part of the first ICAP pilot, the Group's participating companies shared extensive information with the tax authorities of the countries where they reside (Italy, the U.S.A., the U.K., Canada and Australia) and obtained at the end of the assessment the status of "low-risk taxpayer" from their respective tax authorities.
PRADA Group
Interim Financial Report 2021 - Financial Review
LEGAL AND REGULATORY RISKS
As part of the larger organizational and corporate governance structure, the Prada Group manages with centralized models implemented at the parent company level the compliance with regulatory requirements that arise from the complexity of the global framework in which it operates:
- risks associated with non-compliance with the Rules Governing the Listing of Securities on the Stock Exchange of Hong Kong Limited or with other laws or regulations in force in Hong Kong S.A.R. that the Company must observe as it is listed on the Stock Exchange of Hong Kong Limited;
- risks associated with occupational health and safety under Italian Legislative Decree 81/08 and equivalent regulations in force in other countries where the Group operates;
- possible legal penalties for wrongful acts pursuant to Italian Law 231/2001, as subsequently amended;
- possible events that could adversely affect the accuracy of the annual financial statements and the protection of assets;
- possible manufacturing compliance risks regarding Italian and international laws and regulations for finished goods distributed and raw materials and consumables used. In 2020 Prada spa obtained "AEO Full" (Authorized Economic Operator) certification from the Italian Customs Agency for its handling of goods, becoming one of very few taxpayers in Italy to hold simultaneously this qualification and participate in the Cooperative Compliance regime with the Italian Revenue Agency. The AEO Full status enables the Group to reduce considerably the average transfer time for raw materials and finished products.
Compliance with rules or regulations is ensured through operating models based on the implementation by PRADA spa of guidelines, procedures and practices aimed at guaranteeing univocal, and always updated, compliance of processes and behaviors throughout the Group. The Group involves various internal departments and uses external experts as necessary to keep its processes and procedures constantly updated in order to comply with changing rules and regulations, thereby reducing the risk of non-compliance to an acceptable level. For some particular area of compliance, such as those related to the product, tax or customs legislation, the Prada Group has implemented virtuous operating models, in line with international best practices, aimed at benefitting from the opportunities offered by the regulatory contexts to make the management of the entire value chain more effective and profitable.
PRADA Group
Interim Financial Report 2021 - Financial Review
Monitoring activities are performed by the Departments involved, Committees, external Bodies and the Internal Audit Department.
FOREIGN EXCHANGE RISK
The Group has a vast international presence, and therefore is exposed to the risk that changes in currency exchange rates could adversely impact revenue, expenses, margins and profit. In order to hedge the foreign exchange risk, the Group enters into derivative contracts designed to fix the value in Euro (or other functional currency) of identified future cash flows. The future cash flows consist primarily of inflows of trade and financial receivables and outflows of trade payables. They refer mainly to PRADA spa, the Group's parent company and worldwide distributor of Prada and Miu Miu brand products.
The management of interest rate risk is described in more detail in the Notes to the Interim Condensed Consolidated Financial Statements.
INTEREST RATE RISK
Interest rate risk is the risk that future cash flows could be affected by interest rate fluctuation. In order to hedge this risk, which refers mainly to PRADA spa, the Group uses derivatives (such as interest rate swaps) to convert variable-rate debt into fixed-rate debt or debt at rates within a specified range.
The management of interest rate risk is described in more detail in the Notes to the Interim Condensed Consolidated Financial Statements.
DATA PROTECTION
The Prada Group is aware of the importance of ensuring adequate safeguards to stakeholders on the processing of data (including personal data) that each of the companies belonging to the Group performs in the course of its business activities.
In order to ensure the right to protection of personal data of users, customers, employees, business partners and other third parties who establish relations with the Group and to minimize the risks associated with the processing of personal data, the Prada Group have developed policies and implemented security measures in compliance with the European General Data Protection Regulation (GDPR) and with any other applicable privacy law and regulation of the jurisdictions in which the Group operates.
PRADA Group
Interim Financial Report 2021 - Financial Review
The Group adopts technical and organizational measures that ensure, also through automated means, that:
- data are processed in accordance with the applicable laws and regulations;
- data are adequately protected against the risk of accidental or unlawful destruction, loss, alteration, unauthorized disclosure or access;
- personal data collected and processed by the Group's companies are handled with the utmost confidentiality and secrecy, may not be used for purposes other than those that justify and permit their collection, processing and storage, and may not be disclosed or transferred to third parties except in cases permitted by applicable law;
- any service provider who may have access to personal data, processes such personal data only to the extent necessary for the purposes of the service provided under a contractual obligation of confidentiality and ensuring the compliance with the applicable legislation and an adequate level of protection of the data subjects' rights.
Taking into account technological and related regulatory developments, the Prada Group has set up organizational and operational controls, training sessions, assessments and periodic risk reviews in order to adopt appropriate organizational procedures and security measures to minimize the risks of non-compliance - including the potential risk of cyber-attacks - and improve the IT security system. As part of the measures adopted, the Prada Group has designated a Data Protection Officer (DPO), whose functions include supervising regulatory compliance, reporting activities and advising on data protection matters.
Contact the DPO at [email protected].
PRADA Group
Interim Financial Report 2021 - Financial Review
31
OTHER INFORMATION
INFORMATION ON RELATED-PARTY TRANSACTIONS
Information on the Group's transactions and balances with related parties is provided in the Notes to the Interim Condensed Consolidated Financial Statements, insofar as required by IFRS, and in the Corporate Governance Report, insofar as required by the Hong Kong Stock Exchange rules.
NON-IFRS MEASURES
The Group uses certain financial measures ("non-IFRS measures") to assess its business performance and to help readers understand and analyze its financial position. Although they are used by the Group's management, such measures are not universally or legally defined and are not regulated by the IFRS adopted to prepare these unaudited Interim Condensed Consolidated Financial Statements. Other companies operating in the luxury goods business might use the same measures, but with different calculation criteria. For this reason, non-IFRS measures should always be read in conjunction with the related notes, and may not be directly comparable with those used by other companies.
In this Interim Report the Prada Group used the following non-IFRS measures:
EBIT: Earnings before Interest and Taxation, i.e. "Consolidated net result for the period" adjusted to exclude "Total financial income/(expenses)" and "Taxation".
EBITDA: Earnings before Interest, Taxation, Depreciation and Amortization, i.e. "Consolidated net result for the period", adjusted to exclude "Total financial income/(expenses)", "Taxation" and "Total depreciation, amortization and impairment (included the Depreciation and write-downs of Right of Use assets)".
Markdown sales: Net sales of Group's Directly Operated Stores of end of season products at promotional prices.
Full-price sales (or "regular sales"): Net sales of Group's Directly Operated Stores excluding Markdown sales.
Selling expenses of the closed stores during the lockdowns: as a consequence of
PRADA Group
Interim Financial Report 2021 - Financial Review
the health emergency the Group introduced in 2020 a new non-IFRS measure, named as "Selling expenses of the closed stores during the lockdowns" and related to the portion of the selling operating expenses that could not generate revenues following the constraints imposed by the pandemic. By including this non-IFRS measure, the Group would like to provide additional quantitative information to improve the reader's understanding about the impacts of the Covid-19 pandemic on the business, while assisting also the comparison with previous periods.
The Prada Group's EBIT and EBITDA are reported below:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | % on net revenues | six months ended June 30 2020 (unaudited) | % on net revenues |
|---|---|---|---|---|
| Operating income / (loss) - EBIT | 165,904 | 11.1% | (195,796) | -20.9% |
| Selling expenses of the closed stores during the lockdowns | 27,068 | 1.8% | 112,375 | 12.0% |
| Operating income/(loss) - EBIT excluding Selling expenses of the closed stores during the lockdowns | 192,972 | 12.9% | (83,421) | -8.9% |
| Depreciation, amortization and impairment on tangible and intangible fixed assets | 99,504 | 6.6% | 120,284 | 12.8% |
| Depreciation and write-downs of the Right of Use assets | 212,805 | 14.2% | 230,462 | 24.6% |
| Total depreciation, amortization and impairment | 312,309 | 20.8% | 350,746 | 37.4% |
| EBITDA | 478,213 | 31.9% | 154,950 | 16.5% |
The caption "Selling expenses of the closed stores during the lockdowns", Euro 27.1 million for the six months ended June 30, 2021, included the main direct costs pertaining to the retail network during the closure periods related to the pandemic, which prevented the stores from operating (Euro 112.4 for the six months ended June 30, 2020).
The most significant captions were for Euro 10.8 million the depreciation of rights of use assets (Euro 49.9 million at June 30, 2020), net of Covid-related lease discounts obtained from lessors, for Euro 7 million the labor costs, net of government subsidies (Euro 33.8 million at June 30, 2020), and for Euro 8.1 million the depreciation of tangible fixed assets (Euro 23.6 million at June 30, 2020.
Net financial position surplus/(deficit): Short-term and long-term financial payables due to third parties and related parties, net of cash and cash equivalents and short-term and long-term financial receivables due from third parties and
PRADA Group
Interim Financial Report 2021 - Financial Review
related parties.
Net financial position surplus/(deficit), including Lease Liability: Net Financial Position including Lease Liability (current and non-current).
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Net financial position surplus/(deficit) | (101,814) | (311,357) |
| Short-term Lease Liability | (409,199) | (403,593) |
| Long-term Lease Liability | (1,708,185) | (1,729,819) |
| Total Lease Liability | (2,117,384) | (2,133,412) |
| Net financial position surplus/(deficit), including Lease Liability | (2,219,198) | (2,444,769) |
Net Operating Cash Flow: Net Cash Flow generated by operating activities, less the repayment of Lease Liability.
Free cash flow: Net Operating Cash Flow after the net cash flows used for the investing activities.
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | June 30
2020
(unaudited) | June 30
2019
(unaudited) |
| --- | --- | --- | --- |
| Cash Flow from operating activities | 551,817 | 203,975 | 404,939 |
| Cost of net financial debt: interest paid | (6,142) | (6,428) | (452) |
| Lease Liability: interest paid | (18,827) | (23,433) | (24,580) |
| Taxes Paid | (19,974) | (22,980) | (15,724) |
| Net Cash Flow from operating activities | 506,874 | 151,134 | 364,183 |
| Repayment of Lease Liability | (191,273) | (177,589) | (226,849) |
| Net Operating Cash Flow | 315,601 | (26,455) | 137,334 |
| Net cash flow utilized by investing activities | (33,362) | (82,221) | (184,748) |
| Free Cash Flow | 282,239 | (108,677) | (47,414) |
TREASURY SHARES
At June 30, 2021 the Group does not hold treasury shares.
PRADA Group
Interim Financial Report 2021 - Financial Review
EVENTS AFTER THE REPORTING DATE
On July 14, the Group executed its commitment to enter the share capital of Filati Biagioli Modesto S.p.A. with a 40% stake.
OUTLOOK
Commitment to brands and stronger ties with customers have delivered robust growth in sales across markets and product categories. Group's profitability improved, despite the uncertain environment and the sales momentum is expected to remain strong in the second half of the year. The Group's brands have plenty of potential and the management is confident to unlock it over the medium term.
Milan, July 29, 2021
PRADA Group
Interim Financial Report 2021 - Financial Review
35
الخارجية، ومن ثم فإننا ننسب إلى وجود هذه الخسائر التي لا يمكن أن تكون في حالة وجودها، فبعضنا لا يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها، بل يمكن أن يكون في حالة وجودها،
CORPORATE GOVERNANCE
PRADA Group
Interim Financial Report 2021 - Corporate Governance
37
CORPORATE GOVERNANCE PRACTICES
The Company is seamlessly engaged in maintaining a high standard of corporate governance practices as part of its commitment to effective corporate governance. The corporate governance model adopted by the Company consists of a set of rules and standards aimed toward establishing efficient and transparent operations within the Group, to protect the rights of the Company's shareholders and to enhance shareholder value. Such corporate governance model adopted is in compliance with the applicable regulations in Italy, where the Company is incorporated, as well as the principles of the Corporate Governance Code (the "Code") contained in Appendix 14 of the Rules Governing the Listing of Securities on The Stock Exchange of Hong Kong Limited (the "Listing Rules"), where its shares are listed.
COMPLIANCE WITH THE CODE
The Board of Directors of the Company (the "Board") has reviewed the Company's corporate governance practices and is satisfied that such practices have complied with the code provisions set out in the Code throughout the six months from January 1, 2021 to June 30, 2021 (the "Reviewed Period").
THE BOARD
The Board is responsible for setting up the overall strategy, as well as reviewing the operation and financial performance of the Company and the Group.
The Board has established the Audit Committee, the Remuneration Committee and the Nomination Committee. Each Committee is chaired by an independent non-executive director. The written terms of reference of each Committee are on terms no less exacting than those set out in the Code and are available on the websites of the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange").
On May 27, 2021, the 2021 shareholders' general meeting of the Company (the "AGM") has appointed the current Board consisting of nine directors for a term of three financial years, expiring on the date of the shareholders' general meeting to be called to approve the financial statements for the year ending December 31, 2023.
On June 4, 2021, the Board held its first meeting after the AGM to, among others,
PRADA Group
Interim Financial Report 2021 - Corporate Governance
confer the executive roles of the Directors and resolve the membership of the Board Committees.
The Board comprises nine Directors, and their names, roles and functions are set out below:
| Board of Directors | Audit Committee | Remuneration Committee | Nomination Committee | |
|---|---|---|---|---|
| Executive Directors | ||||
| Mr. Paolo Zannoni (Chairperson of the Board) | - | - | Member | - |
| Ms. Miuccia Prada Bianchi (Chief Executive Officer) | - | - | - | - |
| Mr. Patrizio Bertelli (Chief Executive Officer) | - | - | - | - |
| Ms. Alessandra Cozzani (Chief Financial Officer) | - | - | - | - |
| Mr. Lorenzo Bertelli | - | - | - | Member |
| Non-Executive Director | ||||
| Mr. Stefano Simontacchi | - | - | - | - |
| Independent Non-Executive Directors | ||||
| Ms. Marina Sylvia Caprotti | Member | Chairperson | Member | |
| Mr. Maurizio Cereda | Member | - | Chairperson | |
| Mr. Yoël Zaoui | Chairperson | Member | - |
During the Reviewed Period, the Board has held five meetings on January 5, March 10, April 16, June 4 and June 28, 2021.
AUDIT COMMITTEE
The Company has established an Audit Committee in compliance with Rule 3.21 of the Listing Rules where at least one member possesses appropriate professional qualifications in accounting or related financial management expertise to discharge the responsibility of the Audit Committee. The Audit Committee consists of three independent non-executive directors, namely, Mr. Yoël Zaoui (Chairperson), Ms. Marina Sylvia Caprotti and Mr. Maurizio Cereda.
The primary duties of the Audit Committee are to assist the Board in providing an independent view on the effectiveness of the Company's financial reporting process and its internal control and risk management systems, to oversee the external and internal audit processes and the implementation of the Company's risk management functions and to perform other duties and responsibilities as are assigned to the Audit Committee by the Board.
PRADA Group
Interim Financial Report 2021 - Corporate Governance
During the Reviewed Period, the Audit Committee held four meetings on January 29, February 25, March 8 and April 8, 2021, with an attendance rate of 100%. The Audit Committee often invites the Company's senior management, the Group's internal and external auditors and the members of the board of statutory auditors to its meetings. The Audit Committee's activities for the Reviewed Period covered: the audit plan for the year 2021, the findings of the internal auditors, internal controls, risk assessment, annual review of the Group's continuing connected transactions for 2020, tax and legal updates (including management of data privacy matters), the financial reporting matters (including the annual results for the year 2020), before recommending them to the Board for approval.
The Audit Committee held two further meetings on July 16 and 28, 2021 to, among others, appoint its Chairperson and review the interim results for the period ended June 30, 2021, before recommending them to the Board for approval.
REMUNERATION COMMITTEE
The Company has established a Remuneration Committee in compliance with the Code. The Remuneration Committee consists of two independent non-executive directors, Ms. Marina Sylvia Caprotti (Chairperson) and Mr. Yoël Zaoui, and one executive director, Mr. Paolo Zannoni.
The primary duties of the Remuneration Committee are to make recommendations to the Board on the Company's policy and structure for the remuneration package of Directors and senior management and the establishment of a formal and transparent procedure for developing policies on such remuneration. The recommendations of the Remuneration Committee are then put forward to the Board for consideration and, where appropriate, adoption.
During the Reviewed Period, the Remuneration Committee held two meetings on March 31 and June 28, 2021, with an attendance rate of 100% to review and recommend, among others, the aggregate basic remuneration of the Board, the additional remuneration of the directors vested with special authorities, certain updates to the long term incentive plan and the management by objective plans for executives and the executive directors.
PRADA Group
Interim Financial Report 2021 - Corporate Governance
NOMINATION COMMITTEE
The Company has established a Nomination Committee in compliance with the Code. The Nomination Committee consists of two independent non-executive directors, Mr. Maurizio Cereda (Chairperson) and Ms. Marina Sylvia Caprotti, and one executive director, Mr. Lorenzo Bertelli.
The primary duties of the Nomination Committee are to determine the policy for the nomination of directors and to make recommendations to the Board for consideration and, where appropriate, adoption on the structure, size and composition of the Board itself, on the selection of new Directors and on the succession plans for Directors. In discharging its duties, the Nomination Committees has considered the Board Diversity Policy and the Directors' Nomination Policy.
During the Reviewed Period, the Nomination Committee held two meetings on February 26 and April 1, 2021, with an attendance rate of 100%, to perform the annual review of the independence of independent non-executive directors, to recommend to the shareholders the structure of the Board and the election and appointment of nine directors for a term of three financial years and to review the candidates proposed to be elected as Directors by Prada Holding S.p.A..
BOARD OF STATUTORY AUDITORS
Under Italian law, the Company is required to have a board of statutory auditors, appointed by the shareholders for a term of three financial years. The board of statutory auditors has the authority to supervise the Company on its compliance with the applicable law, regulations and the By-laws, as well as on its compliance with the principles of proper management, in particular, on the adequacy of the organizational, administrative and accounting structure adopted by the Company and its functioning.
The AGM has elected the following persons as statutory auditors or alternate statutory auditors (as the case may be) for a term of three financial years, ending on the date of the shareholders' meeting to be called to approve the financial statements for the year ending December 31, 2023:
- Mr. Antonino Parisi - Chairperson of the board of statutory auditors;
- Mr. Roberto Spada - statutory auditor;
- Mr. David Terracina - statutory auditor;
PRADA Group
Interim Financial Report 2021 - Corporate Governance
41
Ms. Stefania Bettoni - alternate statutory auditor; and
Ms. Fioranna Negri - alternate statutory auditor.
During the Reviewed Period, the members of board of statutory auditors attended five meetings of the Board.
ORGANISMO DI VIGILANZA (SUPERVISORY BODY)
In compliance with Italian Legislative Decree 231 of June 8, 2001 (the "Decree"), the Board has established an organismo di vigilanza (supervisory body) whose primary duty is to ensure the functioning, effectiveness and enforcement of the Model of Organization, adopted by the Company pursuant to the same Decree.
The organismo di vigilanza (supervisory body) consists of three members selected among qualified and experienced individuals and appointed by the Board. As at June 30, 2021, the organismo di vigilanza (supervisory body) consists of Ms. Stefania Chiaruttini (Chairperson), Mr. Yoël Zaoui and Mr. Gianluca Andriani.
DIVIDENDS
The Company may distribute dividends subject to the approval of the shareholders in a shareholders' general meeting.
No dividends have been declared or paid by the Company in respect of the Reviewed Period.
On March 10, 2021, the Board recommended for the financial year 2020 the payment of a final dividend of Euro 0.035 per share, representing a total dividend of Euro 89,558,840. The AGM approved the distribution and payment of the final dividend. The dividend was paid on Wednesday, June 30, 2021.
CHANGE IN INFORMATION OF DIRECTORS DISCLOSED PURSUANT TO LISTING RULE 13.51B(1)
Pursuant to Rule 13.51B(1) of the Listing Rules, the changes in information of Directors since the Company's 2020 Annual Report and the Company's announcement dated May 27, 2021 in respect of the change of Directors and authorized representative, other than the changes disclosed in other paragraphs of this Interim Report, are set out below:
PRADA Group
Interim Financial Report 2021 - Corporate Governance
| Name of Director | Change |
|---|---|
| Miuccia Prada Bianchi | For each financial year of the three-year term mandate as Executive Director and Chief Executive Officer, a fixed remuneration of Euro 15,000,000 plus a bonus equal to half percentage point (0.50%) of the Group's consolidated profit before tax recorded in each financial year of the three-year office |
| Patrizio Bertelli | For each financial year of the three-year term mandate as Executive Director and Chief Executive Officer, a fixed remuneration of Euro 15,000,000 plus a bonus equal to half percentage point (0.50%) of the Group's consolidated profit before tax recorded in each financial year of the three-year office |
| Paolo Zannoni | Fixed remuneration for each financial year of the three-year term mandate as Chairperson of the Board and Executive Director equal to Euro 1,500,000 |
| Alessandra Cozzani | Waived base remuneration as Director equal to Euro 50,000 for each financial year of the three-year term mandate, with an increase of the same amount in her annual salary |
| Lorenzo Bertelli | Waived base remuneration as a Director and a member of the Nomination Committee equal to Euro 60,000 for each financial year of the three-year mandate, with an increase of the same amount in his annual salary |
| Maurizio Cereda | Ceased to act as the Chairperson and member of the Remuneration Committee as of May 27, 2021 |
| Appointed as the Chairperson of the Nomination Committee on July 29, 2021 | |
| Aggregate annual remuneration equal to Euro 80,000 for each financial year of the three-year mandate, being Euro 50,000 as a Board member, Euro 20,000 as Chairperson of the Nomination Committee and Euro 10,000 as a member of the Audit Committee | |
| Marina Sylvia Caprotti | Aggregate annual remuneration equal to Euro 90,000 for each financial year of the three-year mandate, being Euro 50,000 as Board member, Euro 20,000 as Chairperson of the Remuneration Committee, Euro 10,000 as a member of the Audit Committee and Euro 10,000 as a member of the Nomination Committee |
| Yoël Zaoui | Aggregate annual remuneration equal to Euro 130,000 for each financial year of the three-year mandate, being Euro 50,000 as a Board member, Euro 50,000 as Chairperson of the Audit Committee, Euro 10,000 as a member of the Remuneration Committee and Euro 20,000 as a member of the Organismo di Vigilanza (Supervisory Body) |
| Stefano Simontacchi | In May 2021, Mr. Simontacchi has been re-appointed as President of BonelliErede Law Firm for a further three-year term mandate |
CHANGE OF COMPANY SECRETARY
On June 4, 2021, Ms. Patrizia Albano ceased to serve as a joint company secretary and Ms. Ying-Kwai Yuen, previously a joint company secretary, assumed the role as the sole company secretary of the Company until July 29, 2021.
On July 29, 2021, Ms. Stefania Cane was appointed as the joint company secretary of the Company to work together with Ms. Yuen (the other joint company secretary) to discharge the corporate secretarial and compliance matters of the Company.
DIRECTORS' SECURITIES TRANSACTIONS
The Company has adopted written procedures governing Directors' securities transactions on terms no less exacting than the standard set out in the Model Code for Securities Transactions by Directors of Listed Issuers as set out in Appendix 10 of the Listing Rules (the "Model Code"). Specific written confirmations have been obtained from each Director (where practicable) to confirm his/her compliance with the required standard set out in the Model Code and the Company's relevant procedures regarding Directors' securities transactions for the Reviewed Period. There was no incident of non-compliance during the Reviewed Period.
The Company has also adopted written procedures governing securities transactions carried out by relevant employees who are likely to be in possession of inside
PRADA Group
Interim Financial Report 2021 - Corporate Governance
information in relation to the Company and its securities. The terms of these procedures are no less exacting than the standard set out in the Model Code.
PURCHASE, SALE, OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries has purchased, sold or redeemed any of the Company's listed securities during the Reviewed Period.
DIRECTORS' INTERESTS AND SHORT POSITIONS IN SECURITIES
As at June 30, 2021, the Directors of the Company and their associates held the following interests in the shares, underlying shares and debentures of the Company and its associated corporations (within the meaning of Part XV of the Securities and Futures Ordinance ("SFO")), as recorded in the register required to be kept by the Company under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code:
(a) Long positions in shares and underlying shares of the Company
| Name of Director | Number of Shares | Nature of Interest | Approximate percentage of Issued Capital |
|---|---|---|---|
| Ms. Miuccia Prada Bianchi | 2,046,470,760 | ||
| (Notes 1 and 2) | Interest of Controlled Corporation | 80% | |
| Mr. Patrizio Bertelli | 2,046,470,760 | ||
| (Notes 1 and 3) | Interest of Controlled Corporation | 80% |
Notes:
- Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company and is therefore the holding company of the Company.
- Ms. Miuccia Prada Bianchi controls, indirectly through Ludo S.p.A. 53.8% (comprised of 438,460 ordinary shares and 100,000 preference shares) of the capital in Bellatrix S.p.A., which in turn owns 65% (comprised of 1,650 ordinary shares and 300 preference shares) of the capital in Prada Holding S.p.A.. Ms. Miuccia Prada Bianchi is therefore deemed under the SFO to be interested in all the shares registered in the name of Prada Holding S.p.A.. Ms. Miuccia Prada Bianchi is also a director of Prada Holding S.p.A., Bellatrix S.p.A. and Ludo S.p.A..
- Mr. Patrizio Bertelli controls, indirectly through PA BE 1 S.r.l., 35% (comprised of 750 ordinary shares and 300 preference shares) of the capital in Prada Holding S.p.A.. Mr. Patrizio Bertelli is therefore deemed under the SFO to be interested in all the shares registered in the name of Prada Holding S.p.A.. Mr.
PRADA Group
Interim Financial Report 2021 - Corporate Governance
Patrizio Bertelli is also a director of PA BE 1 S.r.l..
The deemed interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli in the shares of the Company as at June 30, 2021 are summarized in the following chart:
PRADA Group
Interim Financial Report 2021 - Corporate Governance
45
(b) Long positions in shares and underlying shares of associated corporations:
| Name of Director | Name of associated corporations | Class of shares | Number of shares | Nature of Interests | Approximate percentage of Interests |
|---|---|---|---|---|---|
| Ms. Miuccia Prada Bianchi | Prada Holding S.p.A. | Ordinary Shares | 1,650 | Controlled Corporation | 68.75% |
| Prada Holding S.p.A. | Preference Shares | 300 | As above | 50% | |
| MFH Munich Fashion Holding GmbH | Registered Share | 1 | As above | 100% | |
| Bellatrix S.p.A. | Ordinary Shares | 438,460 | As above | 49.83% | |
| Bellatrix S.p.A. | Preference Shares | 100,000 | As above | 83.34% | |
| Ludo S.p.A. | Class A | ||||
| Class B | 5,066,000 | ||||
| 4,965,100 | Beneficial Owner | 100% | |||
| C.I.D. - Cosmetics International Distribution Corp. | Common Share | 1 | Controlled Corporation | 100% | |
| PH-RE LLC | Capital Contribution (JPY) | 1,000,000 | As above | 100% | |
| Orexis S.r.l. | Participation Quota (Euro) | 1 | As above | 100% | |
| Mr. Patrizio Bertelli | Prada Holding S.p.A. | Ordinary Shares | 750 | Controlled Corporation | 31.25% |
| Prada Holding S.p.A. | Preference Shares | 300 | As above | 50% | |
| MFH Munich Fashion Holding GmbH | Registered Share | 1 | As above | 100% | |
| C.I.D. - Cosmetics International Distribution Corp. | Common Share | 1 | As above | 100% | |
| PH-RE LLC | Capital Contribution (JPY) | 1,000,000 | As above | 100% | |
| Orexis S.r.l. | Participation Quota (Euro) | 1 | As above | 100% |
Save as disclosed above, as at June 30, 2021, none of the Directors of the Company or their associates held any interest or short position in the shares, underlying shares and debentures of the Company or any of its associated corporations (within the meaning of Part XV of the SFO), as recorded in the register required to be kept under Section 352 of the SFO or as otherwise notified to the Company and the Stock Exchange pursuant to the Model Code.
PRADA Group
Interim Financial Report 2021 - Corporate Governance
SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SECURITIES
As at June 30, 2021, other than the interests of the Directors of the Company as disclosed above, the following persons held interests in the shares or underlying shares of the Company, which fall to be disclosed to the Company under Section 336 of the SFO:
| Name of Shareholder | Capacity | Number of Shares | Approximate percentage of issued capital |
|---|---|---|---|
| Long Positions | |||
| Prada Holding S.p.A. | Legal and beneficial Owner | 2,046,470,760 | 80.00% |
| Bellatrix S.p.A. | Interest of controlled Corporation | 2,046,470,760 | 80.00% |
| Ludo S.p.A. | Interest of controlled Corporation | 2,046,470,760 | 80.00% |
| PA BE 1 S.r.l. | Interest of controlled Corporation | 2,046,470,760 | 80.00% |
Note:
Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company. As Ludo S.p.A. owns 53.8% of Bellatrix S.p.A. which in turn owns 65% of Prada Holding S.p.A. and PA BE 1 S.r.l. owns 35% of Prada Holding S.p.A., Bellatrix S.p.A., Ludo S.p.A. and PA BE 1 S.r.l. are all deemed to be interested in the 2,046,470,760 shares held by Prada Holding S.p.A..
PRADA Group
Interim Financial Report 2021 - Corporate Governance
47
الخارجية. وقدْ وجدنا أن هذه الأعداد التي لا يمكن أن تكون غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة، بل هي غير مألوفة،
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PRADA Group
Interim Financial Report 2021 - Interim condensed consolidated financial statements
49
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| (amounts in thousands of Euro) | Notes | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- | --- |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | 6 | 604,668 | 442,392 |
| Trade receivables, net | 7 | 269,679 | 290,380 |
| Inventories, net | 8 | 628,482 | 666,222 |
| Derivative financial instruments - current | 9 | 6,249 | 10,691 |
| Receivables from, and advance payments to, related parties - current | 10 | 42,142 | 51,035 |
| Other current assets | 11 | 175,026 | 194,188 |
| Total current assets | | 1,726,246 | 1,654,908 |
| Non-current assets | | | |
| Property, plant and equipment | 12 | 1,500,026 | 1,506,011 |
| Intangible assets | 13 | 829,699 | 832,445 |
| Right of Use assets | 14 | 2,035,222 | 2,054,338 |
| Investments in equity instruments | 15 | 28,786 | 66,191 |
| Deferred tax assets | 33 | 246,162 | 251,888 |
| Other non-current assets | 16 | 143,352 | 142,712 |
| Receivables from, and advance payments to, related parties - non-current | 10 | 19,434 | 19,434 |
| Total non-current assets | | 4,802,681 | 4,873,019 |
| Total Assets | | 6,528,927 | 6,527,927 |
| Liabilities and Shareholders' Equity | | | |
| Current liabilities | | | |
| Short-term lease liability | 17 | 409,199 | 403,593 |
| Short-term financial payables and bank overdrafts | 18 | 311,466 | 300,577 |
| Payables to related parties - current | 19 | 3,201 | 3,481 |
| Trade payables | 20 | 275,958 | 289,578 |
| Tax payables | 21 | 75,422 | 68,863 |
| Derivative financial instruments - current | 9 | 15,484 | 7,789 |
| Other current liabilities | 22 | 160,673 | 153,382 |
| Total current liabilities | | 1,251,403 | 1,227,263 |
| Non-current liabilities | | | |
| Long-term lease liability | 17 | 1,708,185 | 1,729,819 |
| Long-term financial payables | 23 | 392,941 | 451,200 |
| Long-term employee benefits | 24 | 73,125 | 73,256 |
| Provision for risks and charges | 25 | 46,044 | 45,416 |
| Deferred tax liabilities | 33 | 29,636 | 29,250 |
| Other non-current liabilities | 26 | 126,507 | 110,754 |
| Derivative financial instruments - non-current | 9 | 6,716 | 9,249 |
| Total non-current liabilities | | 2,383,154 | 2,448,944 |
| Total Liabilities | | 3,634,557 | 3,676,207 |
| Share capital | | 255,882 | 255,882 |
| Total other reserves | | 2,499,847 | 2,633,673 |
| Translation reserve | | 28,109 | (3,359) |
| Net income / (loss) for the period | | 97,243 | (54,139) |
| Net Equity attributable to owners of the Group | 27 | 2,881,081 | 2,832,057 |
| Net Equity attributable to Non-controlling interests | 28 | 13,289 | 19,663 |
| Total Net Equity | | 2,894,370 | 2,851,720 |
| Total Liabilities and Total Net Equity | | 6,528,927 | 6,527,927 |
| Net current assets | | 474,843 | 427,645 |
| Total Assets less current liabilities | | 5,277,524 | 5,300,664 |
PRADA Group
Interim Financial Report 2021 - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS ENDED JUNE 30, 2021
| (amounts in thousands of Euro) | Notes | six months ended June 30 2021 (unaudited) | % | six months ended June 30 2020 (unaudited) | % |
|---|---|---|---|---|---|
| Net Revenues | 29 | 1,501,006 | 100.0% | 937,657 | 100.0% |
| Cost of goods sold | 30 | (386,021) | -25.7% | (277,332) | -29.6% |
| Gross margin | 1,114,985 | 74.3% | 660,325 | 70.4% | |
| Operating expenses | 31 | (949,081) | -63.2% | (856,121) | -91.3% |
| Operating income / (loss) - EBIT | 165,904 | 11.1% | (195,796) | -20.9% | |
| Interest and other financial income/(expenses), net | (9,019) | -0.5% | (16,407) | -1.7% | |
| Interest expenses on Lease Liability | (18,827) | -1.3% | (23,433) | -2.5% | |
| Dividends from investments | 103 | 0.0% | 116 | 0.0% | |
| Total financial income/(expenses) | 32 | (27,743) | -1.9% | (39,724) | -4.2% |
| Income / (loss) before taxation | 138,161 | 9.2% | (235,520) | -25.1% | |
| Taxation | 33 | (41,273) | -2.7% | 52,005 | 5.5% |
| Net income / (loss) for the period | 96,888 | 6.5% | (183,515) | -19.6% | |
| Net income / (loss) - Non-controlling interests | 28 | (355) | 0.0% | (3,183) | -0.3% |
| Net income / (loss) - Group | 27 | 97,243 | 6.5% | (180,332) | -19.2% |
| Basic and diluted earnings / (losses) per share (in Euro per share) | 34 | 0.038 | (0.070) |
PRADA Group
Interim Financial Report 2021 - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2021
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Income / (loss) before taxation | 138,161 | (235,520) |
| Profit or loss adjustments | ||
| Depreciation and write-downs of the Right of Use assets | 212,805 | 230,462 |
| Depreciation and amortization of property, plant and equipment and intangible assets | 99,212 | 113,740 |
| Impairment of property, plant and equipment and intangible assets | 292 | 6,544 |
| Non-monetary financial (income) expenses | 7,539 | 25,701 |
| Interest expenses on Lease Liability | 18,827 | 23,433 |
| Other non-monetary (income) expenses | 3,522 | (53,896) |
| Balance Sheet changes | ||
| Other non-current assets and liabilities | 11,070 | 34,842 |
| Trade receivables, net | 23,246 | 109,714 |
| Inventories, net | 40,711 | (35,932) |
| Trade payables | (17,541) | (41,607) |
| Other current assets and liabilities | 13,973 | 26,494 |
| Cash flows from operating activities | 551,817 | 203,975 |
| Interest paid (net), including interest paid on Lease Liability | (24,969) | (29,861) |
| Taxes paid | (19,974) | (22,980) |
| Net cash flows from operating activities | 506,874 | 151,134 |
| Purchases of property, plant and equipment and intangible assets | (76,588) | (49,905) |
| Disposals of property, plant and equipment and intangible assets | 15 | 396 |
| Dividends from investments | 103 | 116 |
| Disposal of Investments in equity instruments | 50,935 | - |
| Acquisition of additional shares from Non-Controlling | (7,827) | - |
| Business Combination | - | (32,828) |
| Net cash flow utilized by investing activities | (33,362) | (82,221) |
| Dividends paid to shareholders of PRADA Spa | (84,859) | - |
| Dividends paid to Non-Controlling shareholders | (1,491) | - |
| Repayment of Lease Liability | (191,273) | (177,589) |
| Repayment of short-term portion of long-term borrowings - third parties | (149,614) | (154,959) |
| Arrangement of long-term borrowings - third parties | 90,000 | 175,000 |
| Change in short-term borrowings - third parties | 13,780 | 199,975 |
| Repayment of Loans from related parties | - | 2,000 |
| Loans to related parties | - | (750) |
| Net cash flows generated/lutilized) by financing activities | (323,457) | 43,677 |
| Change in cash and cash equivalents, net of bank overdrafts | 150,055 | 112,590 |
| Foreign exchange differences | 12,221 | (3,238) |
| Opening cash and cash equivalents, net of bank overdrafts | 442,392 | 421,069 |
| Closing cash and cash equivalents, net of bank overdrafts | 604,668 | 530,421 |
| Cash and cash equivalents, net of bank overdrafts | 604,668 | 530,421 |
| Closing cash and cash equivalents, net of bank overdrafts | 604,668 | 530,421 |
PRADA Group
Interim Financial Report 2021 - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME / (LOSS) FOR THE SIX MONTHS ENDED JUNE 30, 2021
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | twelve months ended December 31 2020 (audited) |
|---|---|---|
| Net income / (loss) for the period - Consolidated | 96,888 | (54,368) |
| A) Items recyclable to P&L: | ||
| Change in Translation Reserve | 33,552 | (66,321) |
| Tax impact | - | - |
| Change in Translation Reserve less tax impact | 33,552 | (66,321) |
| Change in Cash Flow Hedge reserve | (5,359) | 4,402 |
| Tax impact | 1,769 | (1,727) |
| Change in Cash Flow Hedge reserve less tax impact | (3,590) | 2,675 |
| B) Items not recycled to P&L: | ||
| Change in Fair Value in equity instruments reserve | 4,143 | (15,206) |
| Tax impact | - | - |
| Change in Fair Value in equity instruments reserve less tax impact | 4,143 | (15,206) |
| Change in Actuarial reserve | - | (4,676) |
| Tax impact | (385) | 1,041 |
| Change in Actuarial reserve less tax impact | (385) | (3,635) |
| Consolidated comprehensive income / (loss) for the period | 130,608 | (136,855) |
| Comprehensive income / (loss) for the period - Non Controlling Interests | 8 | (1,754) |
| Comprehensive income / (loss) for the period - Group | 130,600 | (135,101) |
PRADA Group
Interim Financial Report 2021 - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
(AMOUNTS IN THOUSANDS OF EURO, EXCEPT NUMBER OF SHARES)
| (amounts in thousands of Euro) | Number of shares | Share Capital | Translation Reserve | Share premium Reserve | Cash flow hedge Reserve | Actua- rial Reserve | Fair Value Invest- ments in equity instru- ments Reserve | Other Reserves | Total Other Reserves | Net result for the period | Equity | ||
|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
| Net Equity attributable to owners of the Group | Net Equity attributable Non-con- trolling interests | Total Net Equity | |||||||||||
| Balance at December 31, 2019 (audited) | 2,558,824,000 | 255,882 | 61,437 | 410,047 | (8,469) | (4,516) | (9,982) | 2,006,971 | 2,394,051 | 255,788 | 2,967,158 | 21,417 | 2,988,575 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Allocation of 2019 net income - retained earnings | - | - | - | - | - | - | - | 204,612 | 204,612 | (204,612) | - | - | - |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Allocation of 2019 net income - extraordinary reserves | - | - | - | - | - | - | - | 51,176 | 51,176 | (51,176) | - | - | - |
| Comprehensive income/(loss) for the period (recyclable to P&L) | - | - | (20,742) | - | (108) | - | - | - | (108) | (180,332) | (201,182) | (3,041) | (204,223) |
| Comprehensive income/(loss) for the period (not recyclable to P&L) | - | - | - | - | - | (198) | (29,450) | 4 | (29,644) | - | (29,644) | - | (29,644) |
| Balance at June 30, 2020 (unaudited) | 2,558,824,000 | 255,882 | 40,695 | 410,047 | (8,577) | (4,714) | (39,432) | 2,262,763 | 2,620,087 | (180,332) | 2,736,332 | 18,376 | 2,754,708 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Comprehensive income/(loss) for the period (recyclable to P&L) | - | - | (44,054) | - | 2,783 | - | - | - | 2,783 | 126,193 | 84,922 | 1,286 | 86,208 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Comprehensive income/(loss) for the period (not recyclable to P&L) | - | - | - | - | - | (3,437) | 14,244 | (4) | 10,803 | - | 10,803 | 1 | 10,804 |
| Balance at December 31, 2020 (audited) | 2,558,824,000 | 255,882 | (3,359) | 410,047 | (5,794) | (8,151) | (25,188) | 2,262,759 | 2,633,673 | (54,139) | 2,832,057 | 19,663 | 2,851,720 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Allocation of 2020 net loss | - | - | - | - | - | - | - | (54,139) | (54,139) | 54,139 | - | - | - |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
| Dividends | - | - | - | - | - | - | - | (89,559) | (89,559) | - | (89,559) | (1,491) | (91,050) |
| Share capital increase/(reduction) | - | - | - | - | - | - | - | - | - | - | - | (140) | (140) |
| Release for disposal of equity instruments | - | - | - | - | - | - | 8,977 | 411 | 9,388 | - | 9,388 | - | 9,388 |
| Acquisition of additional shares in companies already controlled | - | - | (1,721) | - | - | (7) | - | 323 | 316 | - | (1,405) | (4,751) | (6,156) |
| Comprehensive income/(loss) for the period (recyclable to P&L) | - | - | 33,189 | - | (3,590) | (385) | - | - | (3,975) | 97,243 | 126,457 | 8 | 126,465 |
| Comprehensive income/(loss) for the period (not recyclable to P&L) | - | - | - | - | - | - | 4,143 | - | 4,143 | - | 4,143 | - | 4,143 |
| Balance at June 30, 2021 (unaudited) | 2,558,824,000 | 255,882 | 28,109 | 410,047 | (9,384) | (8,543) | (12,068) | 2,119,795 | 2,499,847 | 97,243 | 2,881,081 | 13,289 | 2,894,370 |
| --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- | --- |
PRADA Group
Interim Financial Report 2021 - Interim condensed consolidated financial statements
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements 55
1. GENERAL INFORMATION
PRADA spa (the "Company" or "Parent Company"), together with its subsidiaries (collectively the "Group"), is listed on the Hong Kong Stock Exchange (HKSE code: 1913). The Prada Group is a leading business in the luxury goods industry, where it operates with the Prada, Miu Miu, Church's and Car Shoe brands producing and distributing leather goods, footwear and apparel. It also operates in the food industry with the brand Marchesi 1824 and in the eyewear and fragrance industries under licensing agreements.
The Prada Group owns 23 manufacturing plants (20 in Italy, 1 in France, 1 in the United Kingdom and 1 in Romania) and its products are sold in 70 countries worldwide, primarily through directly operated stores (DOS), of which there were 633 at June 30, 2021. The Prada Group's products are also sold through the brands' e-commerce, selected prestigious department stores, independent retailers in very exclusive locations and important e-tailers.
The Company is a joint-stock company, registered and domiciled in Italy. Its registered office is at via Fogazzaro 28, Milan. At June 30, 2021, 79.98% of the share capital was owned by PRADA Holding spa, a company domiciled in Italy, and the remainder consisted of floating shares on the Main Board of the Hong Kong Stock Exchange.
The unaudited Interim Condensed Consolidated Financial Statements were approved and authorized for issue by the Board of Directors of PRADA spa on July 29, 2021.
2. BASIS OF PREPARATION
The unaudited Interim Condensed Consolidated Financial Statements of the Prada Group for the six months ended June 30, 2021, consisting of the "Consolidated Statement of Financial Position", the "Consolidated Statement of Profit or Loss", the "Consolidated Statement of Cash Flows", the "Consolidated Statement of Comprehensive Income/(Loss)", the "Consolidated Statement of Changes in Equity" and the "Notes to the Interim Condensed Consolidated Financial Statements", have been prepared in accordance with "IAS 34 - Interim Financial Reporting". These unaudited Interim Condensed Consolidated Financial Statements should be
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
read together with the Consolidated Financial Statements of the Prada Group for the twelve months ended December 31, 2020, which were prepared in accordance with the International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board ("IASB") as endorsed by the European Union.
With the exception of the "Covid-Related Rent Concessions Amendment to IFRS 16 Beyond June 30, 2021" ("the Amendment") explained below, at the date of presentation of this unaudited Interim Condensed Consolidated Financial Statements, there were no differences between IFRSs as endorsed by the European Union and applicable to the Prada Group and those issued by the IASB.
IFRSs also refer to all International Accounting Standards ("IAS") and all interpretations of the International Financial Reporting Interpretations Committee ("IFRIC"), previously called the Standing Interpretations Committee ("SIC").
The Group has prepared the Interim Condensed Consolidated Statement of Financial Position presenting separately current and non-current assets and liabilities. All the details needed for accurate and complete information are provided in the Notes to the Interim Condensed Consolidated Financial Statements.
The Consolidated Statement of Profit or Loss is classified by destination. The cash flow information is provided in the Consolidated Statement of Cash Flows, which has been prepared using the indirect method.
The unaudited Interim Condensed Consolidated Financial Statements have been prepared on a going concern basis and are presented in Euro, which is also the functional currency of PRADA spa.
3. NEW IFRS AND AMENDMENTS TO IFRS
Amendments to existing standards issued by the International Accounting Standard Board ("IASB"), endorsed by the European Union and applicable to the Prada Group from January 1, 2021.
| Amendments to existing standards | Effective date for Prada Group | EU endorsement dates |
|---|---|---|
| Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9 | January 1, 2021 | Endorsed in December 2020 |
| Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform - Phase 2 | January 1, 2021 | Endorsed in January 2021 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
Amendments to existing standards issued by the IASB, endorsed by the European Union but not yet applicable to the Prada Group.
| Amendments to existing standards | Effective date for Prada Group | EU endorsement dates |
|---|---|---|
| Amendments to: | ||
| - IFRS 3 Business Combinations; | ||
| - IAS 16 Property, Plant and Equipment; | ||
| - IAS 37 Provisions, Contingent Liabilities and Contingent Assets; | ||
| - Annual Improvements 2018-2020 | January 1, 2022 | Endorsed in June 2021 |
New Standards and Amendment to existing standards issued by the IASB, but not yet endorsed by the European Union as of June 30, 2021.
| New IFRS and Amendments to existing standards | Date of possible adoption | EU endorsement status |
|---|---|---|
| Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021 (issued on 31 March 2021) | April 1, 2021 | Not endorsed yet |
| IFRS 17 Insurance contracts | January 1, 2023 | Not endorsed yet |
| Amendment to IAS 1 Presentation of Financial Statements | January 1, 2023 | Not endorsed yet |
| Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies (issued on 12 February 2021) | January 1, 2023 | Not endorsed yet |
| Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates (issued on 12 February 2021) | January 1, 2023 | Not endorsed yet |
| Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising from a single transaction | January 1, 2023 | Not endorsed yet |
AMENDMENT TO "IFRS 16 LEASES" FOR COVID-RELATED RENT CONCESSIONS BEYOND JUNE 30, 2021
On March 31, 2021, the IASB extended by one year the application period of the practical expedient in IFRS 16, previously approved by the IASB on May 28, 2020 and subsequently endorsed by the European Union. As a result of this amendment, added in response to the protraction of the Covid-19 pandemic, immediate recognition in profit or loss of rent discounts is applicable if the rent reduction affects payments originally due on or before June 30, 2022 (instead of June 30, 2021); the other requirements previously stated in the standard and in the practical expedient adopted in 2020 remain.
The amendment is effective for annual reporting periods ending on or after April 1, 2021 and the approval by the European Union has not been completed yet.
In the six months ended June 30, 2021, the Group recognized Covid-19 related rent discounts of Euro 21.7 million, none of which in relation to the above-described 2021 amendment, case for which no significant cases emerged at the reporting date.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
4. MERGERS AND ACQUISITIONS
On January 29, 2021, the Prada Group signed a contract with DFS Group L.P. for the acquisition of the residual minority stake in the "Travel Retail Shop" companies, managed together with the latter group on the basis of a joint venture agreement that expired on January 31, 2021.
Pursuant to this transaction, since February 1, 2021 the Prada Group has wholly owned TRS Hong Kong ltd, TRS Saipan llc, TRS Hawaii llc, TRS Okinawa kk and TRS Guam ltd (TRS Singapore pte ltd, for which a liquidation process had already initiated, was not part of the acquisition). The price for the share purchase amounted to approximately Euro 6 million.
On April 15, 2021, PRADA spa established the company PRADA S.M. srl with the aim of expanding commercial activities in the area of central Italy.
On April 23, 2021 PRADA spa exercised the purchase option on the remaining 10% of the share capital of Pelletteria Ennepi srl, located in Italy. As a result of the agreement, the Prada Group wholly owns that company.
On May 26, 2021, PRADA spa exercised the purchase option on the remaining 20% of the share capital of Hipic Prod Impex Srl., located in Romania. As a result of the agreement, the Prada Group wholly owns that company.
On June 22, 2021 Prada Group and Ermenegildo Zegna Group signed an agreement under which each will acquire 40% of Filati Biagioli Modesto S.p.A., a company based in Italy (Montale, Pistoia) that for over a century has excelled in the production of cashmere and other noble yarns and in the fiber-to-yarn transformation process, assuring perfect quality throughout the entire production process.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
5. OPERATING SEGMENTS
"IFRS 8 Operating Segments" requires that detailed information be provided for each operating segment that makes up the business. An operating segment is defined as a business division whose operating results are regularly reviewed by top management in order to allocate appropriate resources to the segment and assess its performance.
Because of the Group's matrix-based organizational structure (whereby responsibility is assigned cross-functionally in relation to brands, products, distribution channels and geographical areas), the complementary nature of the various brands' production processes and the many relationships between the different business divisions, it is not possible to designate operating segments as defined by IFRS 8 since the top management is only provided with the financial performance solely on a Group-wide level. For this reason, the business is considered a single operating segment, as it better represents the specific characteristics of the Prada Group business model.
NET REVENUES
Detailed information on net revenues by distribution channel, brand, geographical area and product are provided in the Financial Review together with additional comments.
GEOGRAPHICAL INFORMATION
The following table reports the carrying amount of the Group's non-current assets by geographical area, as requested by "IFRS 8 Operating Segments" for entities, like the Prada Group, that have a single reportable segment.
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Europe | 3,039,383 | 3,016,375 |
| Americas | 493,378 | 515,662 |
| Asia Pacific | 509,763 | 533,832 |
| Japan | 439,150 | 477,799 |
| Middle East and Africa | 63,024 | 66,181 |
| Total | 4,544,698 | 4,609,849 |
The total amount of Euro 4,545 million (Euro 4,610 million at December 31, 2020)
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
relates to the Group's non-current assets. Consistently with IFRS 8, the table does not include in both periods derivative financial instruments, deferred tax assets and the pension fund surplus.
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
6. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are detailed as follow:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Cash on hand | 24,446 | 25,818 |
| Bank deposit accounts | 179,721 | 120,563 |
| Bank current accounts | 400,501 | 296,011 |
| Total | 604,668 | 442,392 |
Bank deposits accounts are broken down by currency as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Hong Kong Dollar | 82,298 | 62,305 |
| Chinese Renmimbi | 54,470 | 37,606 |
| Other Currencies | 42,953 | 20,652 |
| Total bank deposit accounts | 179,721 | 120,563 |
Bank current accounts are broken down by currency as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Euro | 51,017 | 108,877 |
| US Dollar | 172,993 | 76,925 |
| GB Pound | 10,447 | 10,953 |
| Hong Kong Dollar | 7,975 | 6,439 |
| Korean Won | 14,048 | 5,027 |
| Other Currencies | 144,021 | 87,790 |
| Total bank current accounts | 400,501 | 296,011 |
At June 30, 2021, bank current accounts and bank deposit accounts generated
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
interest income of between 0% and 2.3% per year (between 0% and 2.1% at December 31, 2020).
The Group considers no significant risk to exist on bank accounts given that their use is strictly connected with operating activities and business processes and, therefore, they are spread over a large number of banks.
7. TRADE RECEIVABLES, NET
Trade receivables are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Trade receivables - third parties | 277,949 | 297,953 |
| Allowance for bad and doubtful debts | (12,308) | (11,979) |
| Trade receivables - related parties | 4,038 | 4,406 |
| Total | 269,679 | 290,380 |
Movements during the period in the allowance for bad and doubtful debts were as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Opening Balance (audited) | 11,979 | 9,354 |
| Exchange differences | 225 | (317) |
| Increases | 402 | 4,135 |
| Reversals | (116) | (109) |
| Utilization | (182) | (1,084) |
| Closing Balance (unaudited) | 12,308 | 11,979 |
The following table contains a summary, by due date, of total receivables before the allowance for bad and doubtful debts at the reporting date:
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The following table contains a summary, by due date, of trade receivables less the allowance for bad and doubtful accounts at the reporting date:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables | 281,987 | 240,689 | 13,588 | 1,666 | 3,808 | 3,230 | 19,006 |
| Total | 281,987 | 240,689 | 13,588 | 1,666 | 3,808 | 3,230 | 19,006 |
| (amounts in thousands of Euro) | December 31
2020
(audited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables | 302,359 | 265,763 | 6,157 | 12,724 | 1,492 | 895 | 15,328 |
| Total | 302,359 | 265,763 | 6,157 | 12,724 | 1,492 | 895 | 15,328 |
| (amounts in thousands of Euro) | December 31
2020
(audited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables less allowance for doubtful debts | 290,380 | 263,358 | 6,094 | 12,720 | 1,492 | 854 | 5,862 |
| Total | 290,380 | 263,358 | 6,094 | 12,720 | 1,492 | 854 | 5,862 |
8. INVENTORIES, NET
Inventories are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Raw materials | 99,928 | 99,827 |
| Work in progress | 31,177 | 20,386 |
| Finished products | 543,384 | 586,917 |
| Return assets | 7,080 | 6,974 |
| Allowance for obsolete, slow-moving inventories and return assets | (53,087) | (47,882) |
| Total | 628,482 | 666,222 |
The inventories decreased from Euro 666.2 million at December 31, 2020 to
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
Euro 628.5 million at June 30, 2021, following a more effective inventory management.
The changes in the provision for obsolete and slow-moving inventories were as follows:
| (amounts in thousands of Euro) | Raw materials | Finished Products and return assets | Total allowance for obsolete, slow-moving inventories and return assets |
|---|---|---|---|
| Opening balance (audited) | 24,449 | 23,433 | 47,882 |
| Exchange differences | 6 | 104 | 110 |
| Increases | - | 5,298 | 5,298 |
| Utilization | - | (37) | (37) |
| Reversal | - | (166) | (166) |
| Closing balance (unaudited) | 24,455 | 28,632 | 53,087 |
9. DERIVATIVE FINANCIAL INSTRUMENTS: ASSETS AND LIABILITIES
Derivative financial instruments: assets and liabilities, current and non-current portion:
| (amounts in thousands of Euro) | June 30 2021 (unaudited) | December 31 2020 (audited) |
|---|---|---|
| Financial assets regarding derivative instruments - current | 6,249 | 10,691 |
| Total Financial Assets - Derivative financial instruments | 6,249 | 10,691 |
| Financial liabilities regarding derivative instruments - current | (15,484) | (7,789) |
| Financial liabilities regarding derivative instruments - non-current | (6,716) | (9,249) |
| Total Financial Liabilities - Derivative financial instruments | (22,200) | (17,038) |
| Net carrying amount - current and non-current portion | (15,951) | (6,347) |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The net carrying amount of derivatives, both the current and the non-current portion, has the following composition:
| (amounts in thousands of Euro) | June 30 2021 (unaudited) | December 31 2020 (audited) | IFRS7 Category |
|---|---|---|---|
| Forward contracts | 5,668 | 7,770 | Level II |
| Options | 581 | 2,921 | Level II |
| Positive fair value | 6,249 | 10,691 | |
| Forward contracts | (9,700) | (3,006) | Level II |
| Options | (3,285) | (2,030) | Level II |
| Interest rate swaps | (9,215) | (12,002) | Level II |
| Negative fair value | (22,200) | (17,038) | |
| Net carrying amount - current and non-current | (15,951) | (6,347) |
All of the above derivative instruments are qualified as Level II in the fair value hierarchy. The Group has not entered into any derivative contracts that could be qualified as Level I or III.
The fair values of derivatives arranged to hedge interest rate risks (interest rate swaps, "IRS") and of derivatives arranged to hedge foreign exchange rate risks (forward contracts and options) were determined by using one of the most widely used valuation platforms on the financial market and are based on the interest rate curves and on spot and forward exchange rates at the reporting date.
The Group entered into the derivative contracts in the course of its risk management activities, in order to hedge financial risks stemming from exchange and interest rate fluctuation.
FOREIGN EXCHANGE RATE TRANSACTIONS
The cash flows resulting from the Group's international activities are exposed to exchange rate volatility. In order to hedge this risk, the Group enters into options and forward sale and purchase agreements, so as to guarantee the value of identified cash flows in Euro (or in other currencies used locally). The projected future cash flows mainly regard the collection of trade receivables, the settlement of trade payables and financial cash flows.
At the reporting date, the notional amounts of the derivative contracts designated as foreign exchange risk hedges (translated at the European Central Bank
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
exchange rate at June 30, 2020) are as stated below.
Contracts in effect as of June 30, 2021 to hedge projected future trade cash flows:
| (amounts in thousands of Euro) | Options | Forward sale contracts | Forward purchase contracts | June 30 2021 (unaudited) |
|---|---|---|---|---|
| Currency | ||||
| US Dollar | 38,708 | 25,581 | (22,726) | 41,563 |
| Chinese Renminbi | 56,032 | 82,875 | - | 138,907 |
| Japanese Yen | 11,337 | 35,133 | - | 46,470 |
| GB Pound | 13,542 | 27,935 | (1,713) | 39,764 |
| Hong Kong Dollar | - | 9,456 | (18,759) | (9,303) |
| Korean Won | 20,128 | 34,729 | - | 54,857 |
| Canadian Dollar | - | 12,396 | (1,087) | 11,309 |
| Russian Ruble | - | 6,603 | - | 6,603 |
| Swiss Franc | - | 6,885 | (6,647) | 238 |
| Taiwan Dollar | 1,584 | 6,018 | - | 7,602 |
| Malaysian Ringgit | - | 5,179 | - | 5,179 |
| Other currencies | 10,005 | 12,261 | (194) | 22,072 |
| Total | 151,336 | 265,051 | (51,126) | 365,261 |
Contracts in effect as of June 30, 2021 to hedge projected future financial cash flows:
| (amounts in thousands of Euro) | Forward sale contracts | Forward purchase contracts | June 30 2021 (unaudited) |
|---|---|---|---|
| Currency | |||
| GB Pound | 72,257 | - | 72,257 |
| Swiss Franc | 48,725 | (16,667) | 32,058 |
| Other currencies | 24,603 | - | 24,603 |
| Total | 145,585 | (16,667) | 128,918 |
All contracts to hedge projected future future financial cash flows in place as at June 30, 2021 have a maturity shorter than twelve months.
All contracts in place at the reporting date were entered into with major financial institutions, and no counterparties are expected to default.
INTEREST RATE TRANSACTIONS
The Group enters into interest rate swaps (IRS) in order to hedge the risk of interest rate fluctuations on bank loans. The key features of the IRS agreements in place as at June 30, 2021 are summarized as follows:
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
| Interest Rate Swap (IRS) Agreement | Hedged loan | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Contract | Currency | Notional amount | Interest rate | Maturity date | June 30, 2021 (unaudited) | Currency | Type of debt | Amount | Expiry |
| IRS | Euro/000 | 33,000 | 1.457% | May-2030 | (2,587) | EUR | Term Loan | 33,000 | May-2030 |
| IRS | Euro/000 | 50,000 | -0.094% | Feb-2022 | (153) | EUR | Term Loan | 50,000 | Feb-2022 |
| IRS | GBP/000 | 47,550 | 2.778% | Jan-2029 | (6,475) | GBP | Term Loan | 47,550 | Jan-2029 |
| Total fair value (amounts in thousands of Euro) | (9,215) |
The IRS convert the variable interest rates on bank loans into fixed interest rates. They have been arranged with major financial institutions, and no counterparties are expected to default.
10. RECEIVABLES FROM, AND ADVANCE PAYMENTS TO, RELATED PARTIES - CURRENT AND NON-CURRENT
The current receivables and advances from related parties are detailed as follows:
| (amounts in thousands of Euro) | June 30 2021 (unaudited) | December 31 2020 (audited) |
|---|---|---|
| Prepayments | 16,453 | 25,032 |
| Other receivables and advances | 25,689 | 26,003 |
| Receivables from and advances to related parties - current | 42,142 | 51,035 |
The prepayments at June 30, 2021 regard the sponsorship agreements in place between PRADA spa and Luna Rossa Challenge srl, and PRADA spa and Challenger of Record 36 srl, both in relation to the 36th America's Cup events. Such prepayments are going to be released by the end of the year.
In the Other receivables and advances, Euro 20 million refer to the short-term instalment for the sale of the property in Via della Spiga 18 in Milan occurred in December 2020.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The non-current receivables and advances from related parties are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Other receivables and advances | 18,309 | 18,309 |
| Financial receivables | 1,125 | 1,125 |
| Receivables from and advances to related parties - non-current | 19,434 | 19,434 |
The Other receivables and advances essentially refer to the long-term instalment for the aforementioned sale of property in Milan.
Additional information on related party transactions is provided in Note 37.
11. OTHER CURRENT ASSETS
The other current assets are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| VAT | 18,860 | 34,677 |
| Income tax and other tax receivables | 88,683 | 100,406 |
| Prepayments | 54,205 | 48,319 |
| Deposits | 6,026 | 6,181 |
| Advances to suppliers | 2,998 | 1,250 |
| Other receivables | 4,254 | 3,355 |
| Total | 175,026 | 194,188 |
PREPAYMENTS
The prepayments are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Rental costs | 2,835 | 1,689 |
| Insurance | 3,590 | 1,957 |
| Design costs | 21,461 | 21,198 |
| Fashion shows and advances on advertising campaigns | 8,588 | 6,911 |
| Other | 17,731 | 16,564 |
| Total | 54,205 | 48,319 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The prepaid design costs mainly consist of costs incurred to design collections that will generate revenue after the reporting period.
DEPOSITS
The guarantee deposit refer primarily to security deposits paid under retail leases.
12. PROPERTY, PLANT AND EQUIPMENT
Historical cost and accumulated depreciation are set forth below:
| (amounts in thousands of Euro) | Land and buildings | Production plant and machinery | Leasehold improvements | Furniture & fittings | Other tangibles | Assets under construction | Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 917,519 | 230,663 | 1,309,080 | 599,787 | 178,915 | 38,332 | 3,274,296 |
| Accumulated depreciation | (155,018) | (171,987) | (991,399) | (333,605) | (116,276) | - | (1,768,285) |
| Net carrying amount at December 31, 2020 (audited) | 762,501 | 58,676 | 317,681 | 266,182 | 62,639 | 38,332 | 1,506,011 |
| (amounts in thousands of Euro) | Land and buildings | Production plant and machinery | Leasehold improvements | Furniture & fittings | Other tangibles | Assets under construction | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Historical cost | 958,409 | 236,999 | 1,320,067 | 621,362 | 180,924 | 26,672 | 3,344,433 |
| Accumulated depreciation | (165,327) | (178,336) | (1,023,238) | (356,136) | (121,370) | - | (1,844,407) |
| Net carrying amount at June 30, 2021 (unaudited) | 793,082 | 58,663 | 296,829 | 265,226 | 59,554 | 26,672 | 1,500,026 |
The changes in the net carrying amount during the six months ended June 30, 2021 were as follows:
| (amounts in thousands of Euro) | Land and buildings | Production plant and machinery | Leasehold improvements | Furniture & fittings | Other tangibles | Assets under construction | Total net carrying amount |
|---|---|---|---|---|---|---|---|
| Opening balance (audited) | 762,501 | 58,676 | 317,681 | 266,182 | 62,639 | 38,332 | 1,506,011 |
| Additions | 20,006 | 2,389 | 16,414 | 11,825 | 1,600 | 9,533 | 61,767 |
| Depreciation | (8,802) | (5,965) | (43,791) | (18,320) | (4,851) | - | (81,729) |
| Disposals | - | (9) | - | - | (6) | - | (15) |
| Exchange differences | 8,065 | 78 | 3,850 | 2,407 | 99 | 67 | 14,566 |
| Other movements | 11,312 | 3,494 | 2,823 | 3,271 | 78 | (21,260) | (282) |
| Impairment | - | - | (148) | (139) | (5) | - | (292) |
| Closing balance (unaudited) | 793,082 | 58,663 | 296,829 | 265,226 | 59,554 | 26,672 | 1,500,026 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The capital expenditures regarded primarily store restyling and relocation projects, as well as many technological and digital evolution projects in the retail, manufacturing and corporate areas. Moreover, for the purpose of greater control over real estate space, during the period the Group purchased the prestigious building where the Prada store in Athens is located.
13. INTANGIBLE ASSETS
Historical cost and accumulated amortization are set forth below:
| (amounts in thousands of Euro) | Trademarks and other intellectual property rights | Goodwill | Store Lease Acquisitions | Software | Other intangibles | Assets in progress | Total |
|---|---|---|---|---|---|---|---|
| Historical cost | 404,261 | 551,217 | 54,445 | 201,677 | 63,620 | 20,985 | 1,296,205 |
| Accumulated amortization | (193,856) | (37,731) | (53,675) | (120,709) | (57,789) | - | (463,760) |
| Net carrying amount at December 31, 2020 (audited) | 210,405 | 513,486 | 770 | 80,968 | 5,831 | 20,985 | 832,445 |
| (amounts in thousands of Euro) | Trademarks and other intellectual property rights | Goodwill | Store Lease Acquisitions | Software | Other intangibles | Assets in progress | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Historical cost | 425,518 | 579,574 | 54,759 | 206,938 | 65,383 | 9,415 | 1,341,587 |
| Accumulated amortization | (202,773) | (66,163) | (54,119) | (129,691) | (59,142) | - | (511,888) |
| Net carrying amount at June 30, 2021 (unaudited) | 222,745 | 513,411 | 640 | 77,247 | 6,241 | 9,415 | 829,699 |
The changes in the net carrying amount during the six months ended June 30, 2021 were as follows:
| (amounts in thousands of Euro) | Trademarks and other intellectual property rights | Goodwill | Store Lease Acquisitions | Software | Other intangibles | Assets in progress | Total net carrying amount |
|---|---|---|---|---|---|---|---|
| Opening balance (audited) | 210,405 | 513,486 | 770 | 80,968 | 5,831 | 20,985 | 832,445 |
| Additions | 393 | - | 7 | 2,984 | 429 | 9,229 | 13,042 |
| Amortization | (7,166) | - | (178) | (8,786) | (1,353) | - | (17,483) |
| Exchange differences | 1,713 | - | - | 15 | 3 | - | 1,731 |
| Other movements | 17,400 | (75) | 41 | 2,066 | 1,331 | (20,799) | (36) |
| Closing balance (unaudited) | 222,745 | 513,411 | 640 | 77,247 | 6,241 | 9,415 | 829,699 |
The carrying amount of trademarks at the reporting date is broken down as follows:
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Miu Miu | 124,611 | 127,362 |
| Church's | 70,555 | 70,757 |
| Prada | 5,177 | 5,141 |
| Other trademarks and other intellectual property right | 22,402 | 7,145 |
| Total | 222,745 | 210,405 |
No impairment was recognized for the Group's trademarks during the period.
The total capital expenditure for tangibles and intangibles in the six months ended June 30, 2021 was Euro 49.3 million, as broken down below:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Retail | 41,599 | 28,075 |
| Real estate | 19,587 | - |
| Production, Logistics and Corporate | 13,624 | 21,225 |
| Total | 74,810 | 49,300 |
IMPAIRMENT TEST
As required by IAS 36, "Impairment of Assets," intangible assets with indefinite useful lives are not amortized, but they are tested for impairment at least once per year. The Group reports no intangible assets with indefinite useful lives other than goodwill. At June 30, 2021, goodwill amounts to Euro 513.4 million, detailed by cash generating unit ("CGU") hereunder:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Italy Wholesale | 78,355 | 78,355 |
| Asia Pacific and Japan Retail | 311,936 | 311,936 |
| Italy Retail | 25,850 | 25,850 |
| Germany and Austria Retail | 5,064 | 5,064 |
| United Kingdom Retail | 9,300 | 9,300 |
| Spain Retail | 1,400 | 1,400 |
| France and Montecarlo Retail | 11,700 | 11,700 |
| North America Retail and Wholesale | 48,000 | 48,000 |
| Production Division | 13,831 | 13,906 |
| Pasticceria Marchesi 1824 | 7,975 | 7,975 |
| Total | 513,411 | 513,486 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
IAS 36 also requires an entity to assess at each reporting date whether there are indications of impairment for any other assets recognized in the statement of financial position. Due to the ongoing effects of the Covid-19 pandemic on the Church's CGU (with net invested capital of Euro 82 million, including Euro 70.6 million of trademark), influenced by a dominant presence in Europe, management decided to update the 2020 impairment testing. The lack of recovery for retail sales (down by 1.7% at constant exchange rates compared with the six months ended June 30, 2020) was identified as an indication of impairment.
Consistently with the test performed for the 2020 Annual Report, the carrying amount of the net invested capital items of such CGU was checked against the related fair value (less costs to sell). The fair value of the brand was measured using the royalty relief method, estimating the cash flows obtainable from a hypothetical licensing of the asset and assuming to earn royalty income of 9%, in line with market practices for similar transactions. The carrying amounts of the rest of the net invested capital (of which Euro 46 million refers to the right-of-use asset and Euro 21 million to net operating working capital) were deemed to be approximately their realizable value.
No indications of impairment were identified for the other CGUs.
The impairment test, as described above, did not result in the identification of an impairment loss. However, since the recoverable amount is determined on the basis of estimates and assumptions, management cannot guarantee that the value of the intangible assets recognized could not be impaired in the future.
14. RIGHT OF USE ASSETS
The changes in the net carrying amount of the Right of Use assets for the period ended June 30, 2021 are shown below:
| (amounts in thousands of Euro) | Real Estate | Vehicles | Hardware | Plant and machinery | Total net carrying amount |
|---|---|---|---|---|---|
| Opening balance (audited) | 2,050,768 | 1,163 | 228 | 2,179 | 2,054,338 |
| New contracts, initial direct costs and re-measurement | 191,497 | 245 | 5 | 46 | 191,793 |
| Depreciation | (211,894) | (494) | (39) | (378) | (212,805) |
| Contracts termination | (9,365) | (3) | - | 55 | (9,313) |
| Exchange differences | 11,204 | (1) | 5 | 1 | 11,209 |
| Closing balance (unaudited) | 2,032,210 | 910 | 199 | 1,903 | 2,035,222 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The increase for new contracts, initial direct costs and re-measurements was attributable both to contract renewals (mainly in Italy, Russia, Australia, USA and Mainland China) and re-measurement of contractual provisions like indexes-linked payments.
15. INVESTMENTS IN EQUITY INSTRUMENTS
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Investments in equity instruments | 26,791 | 64,203 |
| Other investments | 1,995 | 1,988 |
| Total | 28,786 | 66,191 |
The Group, subject to an appropriate assessment by the respective corporate bodies, invests surplus liquidity in highly rated equity security listed on the most important stock markets in the world. The change in the six months period ended June 30, 2021 mainly referred to the sale of securities for approximately Euro 51 million. These investments in equity instruments are measured at the fair value.
16. OTHER NON-CURRENT ASSETS
The other non-current assets are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Guarantee deposits | 61,772 | 60,051 |
| Deferred rental income | 471 | 533 |
| Pension fund surplus | 11,815 | 11,277 |
| Prepayments for commercial agreements | 56,340 | 58,427 |
| Other long-term assets | 12,954 | 12,424 |
| Total | 143,352 | 142,712 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The guarantee deposits are set forth below by nature and maturity:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Nature: | | |
| Stores | 56,033 | 53,637 |
| Offices | 3,909 | 3,847 |
| Warehouses | 188 | 123 |
| Other | 1,642 | 2,444 |
| Total | 61,772 | 60,051 |
| (amounts in thousands of Euro) | June 30
2021
(unaudited) |
| --- | --- |
| Maturity: | |
| Between one to two years | 9,508 |
| Between two to five years | 21,348 |
| After more than five years | 30,916 |
| Total | 61,772 |
The guarantee deposits refer primarily to security deposits paid under retail leases. Prepayments for commercial agreements relate to a commercial contract signed in 2019 for which the related benefits started on January 2021.
17. LEASE LIABILITY
The following table sets forth the lease liabilities:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Short-term Lease Liability | 409,199 | 403,593 |
| Long-term Lease Liability | 1,708,185 | 1,729,819 |
| Total | 2,117,384 | 2,133,412 |
The lease liability decreased from Euro 2,133 million at December 31, 2020 to Euro 2,117 million as a result of the payments made in the period (Euro 210.3 million), net of re-measurements to reflect contract renewals or modifications (Euro 182.5 million) and interest recognized to adjust the present value of the liability (Euro 18.8 million).
The lease liability is concentrated in Japan, the U.S.A. and Italy.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
18. SHORT-TERM FINANCIAL PAYABLES AND BANK OVERDRAFTS
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Short-term bank loans | 107,767 | 97,115 |
| Current portion of long-term loans | 204,144 | 203,861 |
| Deferred costs on loans | (445) | (399) |
| Total | 311,466 | 300,577 |
The short-term bank loans, Euro 107.8 million at June 30, 2021, consist of credit lines of PRADA Japan co ltd for Euro 57 million and of PRADA spa for Euro 25.2 million, and two short-term loans totaling Euro 25 million stipulated in the period by PRADA France and guaranteed by Banque Publique d'Investissement (or BPIfrance, the French public investment bank). Some of PRADA Japan co ltd's credit lines contain covenants based on the results of its financial statements, all of which were complied with at the date of this writing.
The current portion of the loans, Euro 204.1 million, is the result of a reduction for repayments due in the period (Euro 150 million) and of an increase for the period by the reclassifications from long-term to short-term of the payments due in the next 12 months.
Short-term loans are broken down by currency below:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Euro | 50,187 | 576 |
| Japanese Yen | 57,074 | 96,462 |
| Other Currencies | 506 | 77 |
| Total | 107,767 | 97,115 |
The Group generally borrows at variable interest rates and manages the risk of interest rate fluctuations by using hedging agreements (as explained in Note 9).
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
19. PAYABLES TO RELATED PARTIES - CURRENT
The current payables to related parties are shown below:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Financial payables | 3,201 | 3,101 |
| Other payables | - | 380 |
| Payables to related parties - current | 3,201 | 3,481 |
The financial payables due to related parties regard two interest-free loans granted by non-controlling shareholders of the Group's subsidiaries in the Middle East.
20. TRADE PAYABLES
Trade payables are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Trade payables - third parties | 273,308 | 286,653 |
| Trade payables - related parties | 2,650 | 2,925 |
| Total | 275,958 | 289,578 |
The following table summarizes trade payables by maturity date:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade payables | 275,958 | 251,689 | 5,377 | 3,611 | 1,626 | 977 | 12,678 |
| Total | 275,958 | 251,689 | 5,377 | 3,611 | 1,626 | 977 | 12,678 |
| (amounts in thousands of Euro) | December 31
2020
(audited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade payables | 289,578 | 262,158 | 10,830 | 2,725 | 1,139 | 652 | 12,074 |
| Total | 289,578 | 262,158 | 10,830 | 2,725 | 1,139 | 652 | 12,074 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
21. TAX PAYABLES
The tax payables are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Current taxation | 15,282 | 15,691 |
| VAT and other taxes | 60,140 | 53,172 |
| Total | 75,422 | 68,863 |
The Group recognizes current tax liabilities of Euro 15.3 million as of June 30, 2021 (Euro 15.7 million as at December 31, 2020) against tax receivables of Euro 88.7 million (Euro 100.4 million as of December 31, 2020), as reported in Note 11.
22. OTHER CURRENT LIABILITIES
The other current liabilities are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Payables for capital expenditure | 37,610 | 39,958 |
| Accrued expenses and deferred income | 23,576 | 24,944 |
| Other payables | 99,487 | 88,480 |
| Total | 160,673 | 153,382 |
The other payables are detailed as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Short-term benefits for employees and other personnel | 63,803 | 55,525 |
| Customer advances | 18,402 | 16,980 |
| Returns from customers | 15,082 | 14,006 |
| Other | 2,200 | 1,969 |
| Total | 99,487 | 88,480 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
23. LONG-TERM FINANCIAL PAYABLES
The long-term financial payables are as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Long-term bank borrowings | 393,540 | 451,695 |
| Deferred costs on loans | (599) | (495) |
| Total | 392,941 | 451,200 |
During the period PRADA spa took out a new sustainability-linked bank loan of Euro 90 million; it provides for an adjustment of the annual interest based on the achievement of sustainability goals regarding the quantity of scrap materials regenerated and recycled in the business and the production of energy by new photovoltaic systems.
PRADA spa's loan covenants were fully complied with at June 30, 2021.
The long-term bank borrowings as of June 30, 2021, excluding the amortized costs, are set forth below:
| Borrower | Amount in thousands of Euro | Type of loan | Currency | Expiry date | Interest rate (1) | Current Portion (Euro thousands) | Non-current Portion (Euro thousands) | Pledge |
|---|---|---|---|---|---|---|---|---|
| PRADA spa | 50,000 | Term-loan | EUR | 02/2022 | 0.406% | 50,000 | - | - |
| PRADA spa | 50,000 | Term-loan | EUR | 06/2022 | 0.750% | 50,000 | - | - |
| PRADA spa | 33,000 | Term-loan | EUR | 05/2030 | 2.737% | 3,667 | 29,333 | Mortgage loan |
| PRADA spa | 35,000 | Term-loan | EUR | 10/2024 | 0.600% | 10,000 | 25,000 | - |
| PRADA spa | 100,000 | Term-loan | EUR | 04/2025 | 0.147% | - | 100,000 | - |
| PRADA spa | 25,000 | Term-loan | EUR | 06/2022 | 0.480% | 25,000 | - | - |
| PRADA spa | 90,000 | Term-loan | EUR | 02/2026 | 1.250% | - | 90,000 | - |
| PRADA spa | 66,667 | Term-loan | EUR | 06/2024 | 0.127% | 22,223 | 44,444 | - |
| PRADA spa | 66,000 | Term-loan | EUR | 01/2025 | 0.265% | 18,000 | 48,000 | - |
| PRADA Japan Co.Ltd | 9,511 | Syndicate loan | JPY | 09/2022 | 0.469% | 7,609 | 1,902 | - |
| PRADA Japan Co.Ltd | 9,511 | Syndicate loan | JPY | 09/2022 | 0.469% | 7,609 | 1,902 | - |
| Kenon Ltd | 55,417 | Term-loan | GBP | 01/2029 | 4.477% | 3,583 | 51,834 | Mortgage loan |
| Prada Middle East | 3,155 | Term-loan | USD | 02/2022 | 2.190% | 3,155 | - | - |
| Tannerie Limoges sas | 1,625 | Term-loan | EUR | 07/2024 | 1.200% | 500 | 1,125 | Mortgage loan |
| Hipic Prod Impex srl | 2,798 | Term-loan | RON | 11/2021 | 3.990% | 2,798 | - | - |
| Total | 597,684 | 204,144 | 393,540 | |||||
| (1) the interest rates include the effect of interest rate risk hedges, if any |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The mortgage loan granted to PRADA spa is secured against the building in Milan used for the Group's headquarters, and Kenon Ltd's mortgage loan is secured against the building on Old Bond Street, London, used for one of the most prestigious Prada stores in Europe. The loan granted to Tannerie Limoges sas is secured by that company's factory building.
The Group generally borrows at variable interest rates and manages the risk of interest rate fluctuations through hedging agreements, as described in Note 9.
The financial payables are set forth hereunder by their portions with fixed and variable interest rates:
| (amounts in thousands of Euro) | June 30, 2021 (unaudited) | December 31, 2020 (audited) | ||
|---|---|---|---|---|
| variable interest rates | fixed interest rates | variable interest rates | fixed interest rates | |
| Short-term financial payables | 82% | 18% | 65% | 35% |
| Long-term financial payables | 79% | 21% | 71% | 29% |
24. LONG-TERM EMPLOYEE BENEFITS
| (amounts in thousands of Euro) | June 30 2021 (unaudited) | December 31 2020 (audited) |
|---|---|---|
| Post-employment benefits | 53,458 | 54,160 |
| Other long-term employee benefits | 19,667 | 19,096 |
| Total liabilities for long-term benefits | 73,125 | 73,256 |
| Pension plan surplus (Note 16) | (11,815) | (11,277) |
| Net liabilities for long-term benefits | 61,310 | 61,979 |
The net balance of long-term employee benefits as at June 30, 2021 is Euro 61.3 million (Euro 62 million as at December 31, 2020), and all the benefits are classified as defined benefit plans.
The post-employment benefits consist of Euro 27.3 million (Euro 28.1 million at December 31, 2020) in liabilities accounted for by Italian companies and Euro 26.1 million by the foreign subsidiaries (Euro 26.1 million at December 31, 2020).
The following table shows the changes in long-term employee benefits in the six months ended June 30, 2021:
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
| (amounts in thousands of Euro) | Defined Benefit Plans in Italy (TFR) | Defined Benefit Plans in other countries (including Japan) | Pension Funds in UK | Other long-term employee benefits | Total |
|---|---|---|---|---|---|
| Opening balance (audited) | 28,050 | 26,111 | (11,277) | 19,095 | 61,979 |
| Current service cost | 330 | 1,799 | - | 7,090 | 9,219 |
| Benefits paid | (1,034) | (1,002) | - | (6,746) | (8,782) |
| Exchange differences | - | (796) | (538) | 228 | (1,106) |
| Closing balance (unaudited) | 27,346 | 26,112 | (11,815) | 19,667 | 61,310 |
The defined benefit obligations are measured in accordance with independent appraisals on a yearly basis.
25. PROVISIONS FOR RISKS AND CHARGES
The changes in the Provisions for risks and charges for the six-month period ended June 30, 2021 are as follows:
| (amounts in thousands of Euro) | Provision for litigation | Provision for tax disputes | Other provisions | Total |
|---|---|---|---|---|
| Opening balance (audited) | 389 | 1,858 | 43,169 | 45,416 |
| Exchange differences | (1) | 30 | 1,066 | 1,095 |
| Reversals | (10) | - | (11) | (21) |
| Utilized | (80) | (25) | (1,356) | (1,461) |
| Increases | - | 312 | 703 | 1,015 |
| Closing balance (unaudited) | 298 | 2,175 | 43,571 | 46,044 |
The provisions for risks and charges represent management's best estimate of the maximum amount of potential liabilities. In the Directors' opinion, based on the information available to them, as also supported by the opinions of independent experts, the total amount allocated for risks and charges at the reporting date is adequate in respect of the liabilities that could arise from them.
With regards to the Other provisions, which mainly consist of contractual obligations to restore leased commercial properties to their original condition, the decrease of the period related to stores closed, essentially in the Asia Pacific region.
In respects of the tax disputes, no significant facts or change in circumstances occurred in the period so as to entail an adjustment to the provisions accrued at December 31, 2020.
In addition, at the date of the approval of this Interim Report, the Company is
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
investigating the existence of a potential liability connected with the non-renewal of the advisory agreement with Chora Srl, a company owned by the former Chairman Carlo Mazzi. At this stage, Prada spa, also supported by a legal opinion, deems appropriate not to accrue any provision in this respect, since the potential liability is not probable and, in any case, not reliably measurable.
26. OTHER NON-CURRENT LIABILITIES
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Deferred costs for lease payments | 4,430 | 4,362 |
| Deferred income for commercial agreements | 121,148 | 104,000 |
| Other non-current liabilities | 929 | 2,392 |
| Total | 126,507 | 110,754 |
Deferred income for commercial agreements relates to contracts that became effective on January 1, 2021.
27. EQUITY ATTRIBUTABLE TO THE OWNERS OF THE GROUP
The equity attributable to owners of the Group is as follows:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Share Capital | 255,882 | 255,882 |
| Share premium reserve | 410,047 | 410,047 |
| Other reserves | 2,119,795 | 2,262,759 |
| Actuarial reserve | (8,543) | (8,151) |
| Fair value Investments in equity instruments reserve | (12,068) | (25,188) |
| Cash flow hedge reserve | (9,384) | (5,794) |
| Translation reserve | 28,109 | (3,359) |
| Net income / (loss) for the period | 97,243 | (54,139) |
| Total | 2,881,081 | 2,832,057 |
SHARE CAPITAL
As at June 30, 2021, approximately 80% of PRADA spa's share capital is owned by PRADA Holding spa and the remainder is listed on the Main Board of the Hong Kong Stock Exchange.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
TRANSLATION RESERVE
The changes in this reserve result from the translation into Euro of the foreign currency financial statements of the consolidated companies. The reserve increased from the Euro -3.4 million at December 31, 2020 to Euro 28.1 million.
OTHER RESERVES
The Other reserves decreased from Euro 2,263 million at December 31, 2020 to Euro 2,120 million as at June 30, 2021 as a consequence of the allocation of 2020 net loss and the distribution of dividends of Euro 89,558,840, as approved at the General Meeting held on May 27, 2021 for the approval of the financial statements for the year ended December 31, 2020.
The dividends net of the withholding taxes (Euro 84.9 million) were paid during the period under review, whereas the withholding tax (Euro 4.7 million), calculated by applying the ordinary Italian tax rate to the entire amount of the dividends distributed to the beneficial owners of the Company's shares held through the Hong Kong Central Clearing and Settlement System, was paid in July 2021.
NET INCOME / (LOSS) FOR THE PERIOD
The Group's net income for the six months ended June 30, 2021 was Euro 97.2 million (net loss of Euro 54.1 million for the twelve months ended December 31, 2020).
28. EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
The following table shows the changes in the non-controlling interests during the periods ended June 30, 2021 and December 31, 2020:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Opening Balance (audited) | 19,663 | 21,417 |
| Disposal of additional shares to the Group | (4,751) | - |
| Share capital increase / (reduction) | (140) | - |
| Translation differences | 363 | (1,526) |
| Dividends | (1,491) | - |
| Net income / (loss) for the period | (355) | (229) |
| Actuarial reserve | - | 1 |
| Closing balance (unaudited) | 13,289 | 19,663 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The disposal of additional shares to the Group refers to the transaction made with DFS Group L.P. for the acquisition of the residual minority stake in the "Travel Retail Shop" companies as explained in paragraph 4. Mergers and acquisitions.
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For a better understanding of the performance of the first six-month period of 2021, reference is made to the Financial Review.
29. NET REVENUES
The consolidated net revenues are mainly generated by sales of finished products and are stated net of returns and discounts:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Net sales | 1,477,656 | 925,283 |
| Royalties | 23,350 | 12,374 |
| Total | 1,501,006 | 937,657 |
The Financial Review describes the net revenues by distribution channel, geographical area, brand and product.
30. COST OF GOODS SOLD
The cost of goods sold has the following composition:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Purchases of raw materials and manufacturing services | 202,352 | 203,714 |
| Depreciation, amortization and impairment on tangible and intangible fixed assets | 8,906 | 8,797 |
| Depreciation and write-downs of the Right of Use assets | 1,528 | 1,543 |
| Labor cost | 57,740 | 56,391 |
| Short-term and low value lease (IFRS 16) | 14 | 413 |
| Logistics costs, duties and insurance | 72,596 | 36,327 |
| Change in inventories | 42,885 | (29,853) |
| Total | 386,021 | 277,332 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The incidence of the cost of good sold on net revenues for the six months ended June 30, 2021 was equal to 25.7%, while in the corresponding period of 2020 stood at 29.6%. The improvement in profitability was due to the reduced economies of scale in the manufacturing division for the Covid-19 pandemic, that significantly impacted the first six months of 2020, as well as a more favorable sales mix in terms of distribution channels, geographical areas and product in 2021.
31. OPERATING EXPENSES
The operating costs are detailed below:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | % of net revenues | six months ended June 30 2020 (unaudited) | % of net revenues |
|---|---|---|---|---|
| Product design and development costs | 63,736 | 4.2% | 52,986 | 5.7% |
| Advertising and communications costs | 126,892 | 8.5% | 94,177 | 10.0% |
| Selling costs | 651,139 | 43.4% | 611,422 | 65.2% |
| General and administrative costs | 107,314 | 7.1% | 97,536 | 10.3% |
| Total | 949,081 | 63.2% | 856,121 | 91.3% |
The total operating expenses were Euro 949 million, up by Euro 93 million from 2020 as a result of higher variable costs relating to higher sales, greater communication expenses, less Covid discounts obtained from lessors, and less use of wage supplements.
In parallel, 2021 benefited from a lower charge of "Selling expenses of the closed stores during the lockdowns", estimated as Euro 27.1 million in the six months ended June 30, 2021 and Euro 112.4 million in the comparative period. On average, during the period under review some $17\%$ of the stores were prevented to operate following the pandemic, while in the same period of 2020 the number of stores closed was $27\%$ .
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The following table sets forth depreciation, amortization, impairment, cost of labor and rent expense included within the operating expenses, in accordance with the requirements of IAS 1:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Depreciation, amortization and impairment on tangible and intangible fixed assets | 90,598 | 111,487 |
| Depreciation and write-downs of the Right of Use assets | 211,277 | 228,919 |
| Labor Cost | 308,660 | 282,942 |
| Pure variable lease (IFRS 16) | 78,439 | 52,618 |
| Short term and low value lease (IFRS 16) | 2,778 | 2,314 |
32. FINANCIAL INCOME/(EXPENSES)
The net interest and other financial income/(expenses) are analyzed as follows:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Interest expenses on borrowings | (4,378) | (4,894) |
| Interest income | 660 | 1,214 |
| Exchange gains / (losses) - realized | (1,699) | (1,348) |
| Exchange gains / (losses) - unrealized | (2,334) | (9,974) |
| Other financial income / (expenses) | (1,268) | (1,405) |
| Interest and other financial income / (expenses), net | (9,019) | (16,407) |
| Interest expenses on Lease Liability | (18,827) | (23,433) |
| Dividends from investments | 103 | 116 |
| Total financial expenses | (27,743) | (39,724) |
The net financial expenses were Euro 27.7 million for the six-month period ended June 30, 2021, a considerable decrease from those of the first six months of 2020 (Euro 39.7 million) attributable primarily to lower foreign exchange losses and lower interest expenses on lease liability.
33. TAXATION
Income taxes have the following composition:
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The income tax charge for the period is Euro 41.3 million, 29.9% of the pre-tax profit. It is worth reminding that in the comparative period of 2019 the taxation line-item showed an income of Euro 34.4 million following the recognition of the patent-box tax benefit of Euro 77 million.
The changes in deferred tax assets and liabilities are set forth below:
| (amounts in thousands of Euro) | June 30
2021
(unaudited) | December 31
2020
(audited) |
| --- | --- | --- |
| Opening balance (audited) | 222,638 | 214,869 |
| Exchange differences | 2,653 | (10,888) |
| Deferred taxes on acquisition | - | (1,318) |
| Deferred taxes on derivative instruments recorded in equity (cash flow hedges) | 1,769 | (1,727) |
| Deferred taxes on post-employment benefits recorded in equity (reserve for actuarial differences) | (379) | 1,034 |
| Other movements | (54) | 589 |
| Deferred taxes for the period in profit or loss | (10,101) | 20,079 |
| Closing balance (unaudited) | 216,526 | 222,638 |
Deferred tax assets and liabilities are classified by nature hereunder:
| (amounts in thousands of Euro) | June 30, 2021 (unaudited) | December 31, 2020 (audited) | ||
|---|---|---|---|---|
| Deferred tax assets | Deferred tax liabilities | Deferred tax assets | Deferred tax liabilities | |
| Inventories | 124,664 | - | 123,078 | - |
| Receivables and other assets | 1,683 | 1,585 | 1,177 | 1,548 |
| Useful life of non-current assets | 34,760 | 7,996 | 34,975 | 8,447 |
| Deferred taxes due to acquisitions | - | 12,668 | - | 12,699 |
| Provision for risks / accrued expenses | 15,092 | 495 | 13,135 | 429 |
| Non-deductible / taxable charges/income | 6,721 | 1,668 | 6,148 | 1,639 |
| Deferred tax assets on rental contract | 39,874 | 487 | 40,630 | 504 |
| Tax loss carryforwards | 5,939 | - | 12,189 | - |
| Derivative financial instruments | 3,062 | - | 1,508 | 222 |
| Long-term employee benefits | 10,528 | 3,084 | 10,911 | 2,262 |
| Other | 3,839 | 1,653 | 8,137 | 1,500 |
| Total | 246,162 | 29,636 | 251,888 | 29,250 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
34. EARNINGS / (LOSSES) AND DIVIDENDS PER SHARE
EARNINGS / (LOSSES) PER SHARE BASIC AND DILUTED
Earnings/(losses) per share are calculated by dividing the net profit (or net loss) of the period attributable to the Group's shareholders by the weighted average number of ordinary shares outstanding.
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Group net income / (loss) in Euro | 97,243,973 | (180,332,175) |
| Weighted average number of ordinary shares in issue | 2,558,824,000 | 2,558,824,000 |
| Basic and diluted earnings / (losses) per share in Euro, calculated on weighted average number of shares | 0.038 | (0.070) |
DIVIDENDS
During the six-month period ended June 30, 2021, the Company distributed dividends of Euro 89,558,840, as approved at the General Meeting held on May 27, 2021 for the approval of the financial statements for the year ended December 31, 2020.
The dividends net of the withholding taxes (Euro 84.9 million) were paid during the period under review, whereas the withholding tax (Euro 4.7 million), calculated by applying the ordinary Italian tax rate to the entire amount of the dividends distributed to the beneficial owners of the Company's shares held through the Hong Kong Central Clearing and Settlement System, was paid in July 2021.
35. ADDITIONAL INFORMATION
NUMBER OF EMPLOYEES
The average number of employees by business division is presented below:
| (number of employees) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Production | 2,866 | 3,062 |
| Product design and development | 950 | 1,027 |
| Advertising and Communications | 171 | 167 |
| Selling | 7,705 | 8,427 |
| General and administrative services | 927 | 986 |
| Total | 12,619 | 13,669 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
EMPLOYEE REMUNERATION
The employee remuneration by business division, net of government subsidies for Covid-19 pandemic, is presented below:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Production | 61,753 | 51,862 |
| Product design and development | 34,774 | 27,732 |
| Advertising and Communications | 8,795 | 7,233 |
| Selling | 205,620 | 185,691 |
| General and administrative services | 47,860 | 40,349 |
| Total | 358,802 | 312,867 |
The types of employee remuneration are presented below:
| (amounts in thousands of Euro) | six months ended June 30 2021 (unaudited) | six months ended June 30 2020 (unaudited) |
|---|---|---|
| Wages and salaries | 269,649 | 235,144 |
| Post-employment benefits and other long-term benefits | 18,754 | 14,821 |
| Social contributions | 55,700 | 50,717 |
| Other | 14,699 | 12,185 |
| Total | 358,802 | 312,867 |
DISTRIBUTABLE RESERVES OF PARENT COMPANY, PRADA SPA
| (amounts in thousands of Euro) | June 30, 2021 (unaudited) | Possible utilization | Distributable amount | Summary of utilization in the last three years | |
|---|---|---|---|---|---|
| Coverage of losses | Distribution of dividends | ||||
| Share Capital | 255,882 | - | - | - | - |
| Share premium reserve | 410,047 | A, B, C | 410,047 | - | - |
| Legal reserve | 51,176 | B | - | - | - |
| Other reserves | 182,899 | A, B, C | 182,899 | - | - |
| Retained earnings | 973,885 | A, B, C | 948,471 | - | 345,441 |
| Fair value reserve | (12,068) | - | - | - | - |
| Time value reserve | (901) | - | - | - | - |
| Intrinsic value reserve | (3,997) | - | - | - | - |
| Distributable amount | - | - | 1,541,417 | - | 345,441 |
| A share capital increase | |||||
| B coverage of losses | |||||
| C distributable to shareholders |
Under Italian Civil Code Article 2431, the share premium reserve is fully distributable since the amount of the legal reserve is equal to or exceeds $20\%$
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
of share capital. Under Italian Legislative Decree 38/2005, Article 7, Euro 20.5 million of the retained earnings is not distributable.
EXCHANGE RATES
The exchange rates against the Euro used for consolidation of the statements of financial position and statements of profit or loss whose presentation currency differed from that of the consolidated financial statements as at June 30, 2021, June 30, 2020 and December 31, 2020 are listed hereunder:
| Currency | Average rate six months ended June 30 2021 | Average rate six months ended June 30 2020 | Closing rate June 30 2021 | Closing rate December 31 2020 |
|---|---|---|---|---|
| UAE Dirham | 4.428 | 4.046 | 4.365 | 4.507 |
| Australian Dollar | 1.563 | 1.678 | 1.585 | 1.590 |
| Brazilian Real | 6.494 | 5.404 | 5.905 | 6.374 |
| Canadian Dollar | 1.504 | 1.503 | 1.472 | 1.563 |
| Swiss Franc | 1.094 | 1.064 | 1.098 | 1.080 |
| Czech Koruna | 25.862 | 26.335 | 25.488 | 26.242 |
| Danish Kronor | 7.437 | 7.465 | 7.436 | 7.441 |
| GB Pound | 0.868 | 0.874 | 0.858 | 0.899 |
| Hong Kong Dollar | 9.356 | 8.550 | 9.229 | 9.514 |
| Japanese Yen | 129.779 | 119.237 | 131.430 | 126.490 |
| Korean Won | 1,347.015 | 1,328.724 | 1,341.410 | 1,336.000 |
| Kuwait Dinar | 0.364 | 0.339 | 0.358 | 0.373 |
| Kazakhstan Tenge | 511.236 | 445.562 | 508.850 | 516.790 |
| Macau Pataca | 10.750 | 8.809 | 10.598 | 10.882 |
| Moroccan Dirham | 9.632 | 10.763 | 9.484 | 9.792 |
| Mexican Peso | 24.324 | 23.853 | 23.578 | 24.416 |
| Malaysian Ringgit | 4.937 | 4.681 | 4.934 | 4.934 |
| New Zealand Dollar | 1.681 | 1.760 | 1.703 | 1.698 |
| Qatari Riyal | 4.448 | 4.040 | 4.406 | 4.535 |
| Chinese Renminbi | 7.799 | 7.747 | 7.674 | 8.023 |
| Romanian Leu | 4.901 | 4.817 | 4.928 | 4.868 |
| Russian Ruble | 89.604 | 76.683 | 86.773 | 91.467 |
| Saudi Riyal | 4.521 | 4.137 | 4.461 | 4.603 |
| Swedish Kronor | 10.131 | 10.664 | 10.111 | 10.034 |
| Singapore Dollar | 1.606 | 1.541 | 1.598 | 1.622 |
| Thai Baht | 37.122 | 34.828 | 38.118 | 36.727 |
| Turkish Lira | 9.498 | 7.146 | 10.321 | 9.113 |
| Taiwan Dollar | 33.788 | 33.057 | 33.151 | 34.468 |
| Ukrainian Hryvna | 33.476 | 28.633 | 32.346 | 34.740 |
| US Dollar | 1.205 | 1.102 | 1.188 | 1.227 |
| Vietnamese Dong | 27,924.144 | 25,591.124 | 27,585.000 | 28,469.000 |
| South African Rand | 17.531 | 18.308 | 17.011 | 18.022 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
36. REMUNERATION OF BOARD OF DIRECTORS
REMUNERATION OF THE PRADA SPA BOARD OF DIRECTORS FOR THE SIX MONTHS ENDED JUNE 30, 2021
| (amounts in thousands of Euro) | Directors' fees | Remuneration and other benefits | Bonuses and other incentives | Benefits in kind | Pension, healthcare and TFR contributions | June 30 2021 (unaudited) |
|---|---|---|---|---|---|---|
| Paolo Zannoni | 125 | - | - | - | 20 | 145 |
| Miuccia Prada Bianchi | 6,250 | - | - | - | 24 | 6,274 |
| Patrizio Bertelli | 6,250 | - | - | - | 24 | 6,274 |
| Lorenzo Bertelli | - | 94 | 27 | - | 32 | 153 |
| Alessandra Cozzani | - | 190 | 205 | 6 | 93 | 494 |
| Stefano Simontacchi | 25 | - | - | - | - | 25 |
| Maurizio Cereda | 40 | - | - | - | - | 40 |
| Marina Sylvia Caprotti | 8 | - | - | - | 1 | 9 |
| Yoël Zaoui | 9 | - | - | - | 1 | 10 |
| Total | 12,707 | 284 | 232 | 6 | 195 | 13,424 |
REMUNERATION OF THE PRADA SPA BOARD OF DIRECTORS FOR THE SIX MONTHS ENDED JUNE 30, 2020
| (amounts in thousands of Euro) | Directors' fees | Remuneration and other benefits | Bonuses and other incentives | Benefits in kind | Pension, healthcare and TFR contributions | June 30 2020 (unaudited) |
|---|---|---|---|---|---|---|
| Carlo Mazzi | 409 | - | - | 68 | 18 | 495 |
| Miuccia Prada Bianchi | 4,887 | - | 21 | - | 23 | 4,931 |
| Patrizio Bertelli | 4,887 | - | 21 | - | 23 | 4,931 |
| Alessandra Cozzani | 25 | 147 | 3 | 3 | 56 | 234 |
| Stefano Simontacchi | 18 | - | - | - | 1 | 19 |
| Maurizio Cereda | 36 | - | - | - | 2 | 38 |
| Gian Franco Oliviero Mattei | 46 | - | - | - | 13 | 59 |
| Giancarlo Forestieri | 21 | - | - | - | 3 | 24 |
| Sing Cheong Liu | 21 | - | - | - | 5 | 26 |
| Total | 10,350 | 147 | 45 | 71 | 144 | 10,757 |
37. RELATED PARTY TRANSACTIONS
The Group carries out transactions with companies classifiable as related parties according to IAS 24 "Related Party Disclosures". These transactions mainly refer to the sales and purchase of goods, supplies of services, loans, sponsorships, leases and franchise agreements. These transactions take place on an arm's length basis.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
The following tables show the effect of related-party transactions on the consolidated financial statements in terms of statement of financial position balances at the reporting date and total transactions affecting the statement of profit or loss.
STATEMENT OF FINANCIAL POSITION BALANCES AS OF JUNE 30, 2021 (UNAUDITED)
| (amounts in thousands of Euro) | Trade receivables | Receivables from, and advances to, related parties - current | Receivables from, and advances to, related parties - non current | Right of Use Assets | Trade payables | Payables to related parties - current | Other liabilities | Lease Liabilities |
|---|---|---|---|---|---|---|---|---|
| Les Femmes Srl | 287 | 3 | 1,125 | - | 1,173 | - | - | - |
| COR 36 S.r.l. New Zeland Branch | 856 | - | - | - | - | - | - | - |
| DFS DFS Cotai limitada | - | - | - | 10,064 | - | - | - | - |
| SPELM SA | - | - | - | 4,189 | - | - | - | 4,231 |
| Rubaiyat Modern Lux.Pr.Co.Ltd | - | - | - | - | - | 946 | - | - |
| LUDO DUE S.R.L. | - | - | - | 4,112 | - | - | - | 4,551 |
| PAC S.R.L. lex Prada Challenge America'sl | - | - | - | - | - | - | - | - |
| Luna Rossa Challenge Srl | 2,086 | 10,703 | - | - | - | - | - | - |
| Chora Srl | - | 5,686 | - | - | 433 | - | - | - |
| Peschiera Immobiliare srl | - | - | - | 3,541 | 38 | - | - | 4,111 |
| Premiata Srl | 11 | - | - | - | 113 | - | - | - |
| Conceria Superior S.p.A. | 1 | - | - | - | 669 | - | - | - |
| Perseo srl | 1 | - | - | - | 188 | - | - | - |
| COR 36 S.r.l. | 49 | 5,750 | - | - | - | - | - | - |
| Al Tayer Group LLC | - | - | - | - | 3 | - | - | - |
| Al Tayer Insignia LLC | 729 | - | - | - | 22 | 2,255 | - | - |
| Danzas LLC | - | - | 309 | - | - | - | 386 | - |
| Al Sanam Rent a Car LLC | - | - | - | - | 2 | - | - | - |
| JCS (2009) Limited ex (Joseph Cheaney & Sons Ltd) | - | - | - | - | - | - | - | - |
| TRS New Zealand Pty. Ltd | - | - | - | - | 2 | - | - | - |
| Prada Hawaii Corp. | - | - | - | - | 7 | - | - | - |
| Prada Finnish Oy | - | - | - | - | - | - | - | - |
| PRADA HOLDING S.P.A. | 14 | - | - | - | - | - | - | - |
| BELLATRIX S.P.A. | - | - | - | - | - | - | - | - |
| Orexis S.r.l. | - | 20,000 | 18,000 | - | - | - | - | - |
| PH-RE | - | - | - | 238,509 | - | - | - | 261,922 |
| Other Related Parties | 4 | - | - | - | - | - | - | - |
| Members of the Board of Directors of PRADA spa | - | - | - | - | - | - | 2,860 | - |
| Relatives of members of the Board of Directors | - | - | - | - | - | - | 1,125 | - |
| Total at June 30, 2021 (unaudited) | 4,038 | 42,142 | 19,434 | 260,415 | 2,650 | 3,201 | 4,371 | 274,815 |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
STATEMENT OF FINANCIAL POSITION BALANCES AS OF DECEMBER 31, 2020 (AUDITED)
| (amounts in thousands of Euro) | Trade receivables | Receivables from, and advances to, related parties – current | Receivables from, and advances to, related parties – non-current | Right of Use Assets | Trade payables | Payables to related parties – current | Lease Liability | Other Liabilities |
|---|---|---|---|---|---|---|---|---|
| Les Femmes srl | 331 | - | 1,125 | - | 960 | - | - | - |
| CECCO BRUNA 2011 srl | - | - | - | 10 | (54) | - | 6 | - |
| Luna Rossa Challenge 2013 NZ ltd | 228 | - | - | - | - | - | - | - |
| COR 36 srl New Zeland Branch | 856 | - | - | - | - | - | - | - |
| DFS Hawaii | - | - | - | - | 3 | - | - | - |
| DFS Cotai limitada | 188 | - | - | 5,673 | 355 | - | 7,347 | - |
| DFS Guam LP | - | - | - | 87 | - | - | 144 | - |
| DFS Saipan Ltd | - | - | - | 12 | - | - | 24 | - |
| DFS Okinawa | - | - | - | 31 | - | - | 92 | - |
| SPELM SA | - | - | - | 4,524 | - | - | 4,560 | - |
| Rubaiyat Modern Lux.Pr.Co.Ltd | - | - | - | - | - | 917 | - | - |
| LUDO DUE S.R.L. | - | - | - | 4,671 | - | - | 5,154 | - |
| Orexis S.r.l. | - | 20,000 | 18,000 | - | - | - | - | - |
| Progetto Prada Arte srl | 3 | - | - | - | - | - | - | - |
| Luna Rossa Challenge 2013 srl | 2,152 | 18,532 | - | - | - | - | - | - |
| Chora Srl | - | 5,848 | - | - | 403 | - | - | - |
| Peschiera Immobiliare srl | - | - | - | 3,820 | 38 | - | 4,384 | - |
| Premiata srl | - | - | - | - | 125 | - | - | - |
| Conceria Superior spa | 1 | - | - | - | 661 | - | - | - |
| Perseo srl | - | - | - | - | 330 | - | - | - |
| COR 36 srl | 46 | 6,500 | - | - | - | - | - | - |
| Al Tayer Group llc | - | - | - | - | 8 | - | - | - |
| Al Tayer Insignia llc | 596 | - | - | - | 45 | 2,184 | - | - |
| Danzas llc | - | - | 309 | - | 50 | - | - | 234 |
| Al Sanam Rent a Car llc | - | - | - | - | 1 | - | - | - |
| PRADA HOLDING spa | 5 | - | - | - | - | - | - | - |
| BELLATRIX spa | - | - | - | - | - | - | - | - |
| PH-RE | - | 155 | - | 257,496 | - | - | 280,168 | - |
| Members of the Board of Directors of PRADA spa | - | - | - | - | - | 380 (*) | - | 2,206 |
| Relatives of members of the Board of Directors | - | - | - | - | - | - | - | 471 |
| Total at December 31, 2020 (audited) | 4,406 | 51,035 | 19,434 | 276,324 | 2,925 | 3,481 | 301,879 | 2,911 |
(*) Payables for the acquisition of Fratelli Prada spa
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2021 (UNAUDITED)
| (amounts in thousands of Euro) | Net revenues | Cost of goods sold | General, admin. & selling costs (incomes) | Interest incomes | Interest expenses |
|---|---|---|---|---|---|
| Les Femmes Srl | - | 2,311 | - | 6 | - |
| CECCO BRUNA 2011 SRL | - | 2 | - | - | - |
| Luna Rossa Challenge 2013 NZ LTD | - | - | (12) | - | - |
| SPELM SA | - | - | 263 | - | 18 |
| LUDO DUE S.R.L. | - | - | 558 | - | 21 |
| Ludo Tre S.r.l. | - | - | (1) | - | - |
| Luna Rossa Challenge Srl | 3 | - | 10,527 | - | - |
| Chora Srl | - | - | 861 | - | - |
| Peschiera Immobiliare srl | - | 21 | 265 | - | 18 |
| Premiata Srl | - | 9 | 338 | - | - |
| Conceria Superior S.p.A. | - | 4,405 | 30 | - | - |
| Perseo srl | - | 321 | - | - | - |
| COR 36 S.r.l. | 1 | - | 5,748 | - | - |
| Al Tayer Group LLC | - | - | 14 | - | - |
| Al Tayer Insignia LLC | 910 | - | 66 | - | - |
| Danzas LLC | - | 20 | 24 | - | - |
| Al Sanam Rent a Car LLC | - | - | 5 | - | - |
| PRADA HOLDING S.P.A. | - | - | (7) | - | - |
| PH-RE | - | - | 9,427 | - | 1,225 |
| Relatives of members of the Board of Directors | - | - | 1,005 | - | - |
| Total at June 30, 2021 (unaudited) | 914 | 7,089 | 29,111 | 6 | 1,282 |
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2020 (UNAUDITED)
| (amounts in thousands of Euro) | Net revenues | Cost of goods sold | General, admin. & selling costs (incomes) | Interest incomes | Interest expenses |
|---|---|---|---|---|---|
| Les Femmes Srl | - | 1,684 | - | 3 | - |
| CECCO BRUNA 2011 SRL | - | 42 | - | - | - |
| COR 36 S.r.l. New Zeland Branch | 121 | - | 205 | - | - |
| DFS Hawaii | - | - | 605 | - | - |
| DFS Venture Singapore (Pte) Limited | - | - | 22 | - | - |
| DFS DFS Cotai limitada | - | - | 819 | - | 187 |
| SPELM SA | - | - | 270 | - | 21 |
| LUDO DUE S.R.L. | - | - | 553 | - | 26 |
| Luna Rossa Challenge 2013 Srl | 451 | 1 | 8,011 | - | - |
| Chora Srl | - | - | 1,030 | - | - |
| Peschiera Immobiliare srl | - | 23 | 9 | - | - |
| Premiata Srl | - | 209 | 273 | - | - |
| Conceria Superior S.p.A. | 203 | 2,896 | 37 | - | - |
| Perseo srl | - | 321 | - | - | - |
| COR 36 S.r.l. | 22 | - | 5,697 | 9 | - |
| Al Tayer Group LLC | - | - | 56 | - | - |
| Al Tayer Insignia LLC | 425 | - | 66 | - | - |
| Danzas LLC | - | 16 | 51 | - | - |
| Al Sanam Rent a Car LLC | - | - | 5 | - | - |
| PRADA HOLDING S.P.A. | - | - | 9 | - | - |
| LUDO S.R.L. | - | - | 1 | - | - |
| PH-RE | - | - | 10,260 | - | 1,410 |
| Relatives of members of the Board of Directors | - | - | 449 | - | - |
| Total at June 30, 2020 (unaudited) | 1,222 | 5,190 | 28,000 | 12 | 1,644 |
The foregoing tables report information on transactions with related parties in accordance with IAS 24, "Related Party Disclosures", while the following transactions with related parties fall within the scope of application of the Hong Kong Stock Exchange Listing Rules.
The transactions with related party PH-RE llc (formerly PABE-RE llc) refer to the transaction between such company and PRADA Japan co ltd in relation to the lease for the two Aoyama Buildings in Tokyo for Prada and Miu Miu stores. The transactions reported for the six months ended June 30, 2021 are regulated by Chapter 14A of the Listing Rules because they are considered continuing connected transactions subject to disclosure, but they are exempt from the independent shareholders' approval requirement. As required by the Listing Rules, comprehensive disclosure of those continuing connected transactions is contained in PRADA spa's Announcements dated, respectively, July 15, 2015 ("Prada Aoyama") and May 26,
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
2017 ("Miu Miu Aoyama").
The transactions with related party Luna Rossa Challenge srl for the six months ended June 30, 2021 are regulated by Chapter 14A of the Listing Rules because they are considered continuing connected transactions subject to disclosure, but they are exempt from the independent shareholders' approval requirement. As required by the Listing Rules, comprehensive disclosure of those continuing connected transactions is contained in PRADA spa's Announcements dated, respectively, December 1, 2017 ("Sponsorship Agreement") and November 20, 2020 ("Amendment to Sponsorship Agreement"). In fact, during the reporting period PRADA spa stipulated with Luna Rossa Challenge srl an amendment to the sponsorship agreement, regarding an additional contribution to the one originally agreed upon.
The transactions with related party Challenger of Record 36 srl for the six months ended June 30, 2021 are regulated by Chapter 14A of the Listing Rules because they are considered continuing connected transaction subject to disclosure, but they are exempt from the independent shareholders' approval requirement. As required by the Listing Rules, comprehensive disclosure of those continuing connected transaction is contained in PRADA spa's Announcement dated March 1, 2020.
The transaction with related party Orexis srl for the six months ended June 30, 2021 is regulated by Chapter 14A of the Listing Rules because it is considered a connected transaction subject to disclosure, but it is exempt from the independent shareholders' approval requirement. As required by the Listing Rules, comprehensive disclosure of this connected transaction is contained in PRADA spa's Announcement dated December 29, 2020.
Apart from the non-exempt continuing connected transactions and non-exempt connected transactions reported above, no other transaction reported in the 2021 Interim condensed consolidated financial statements meets the definition of "connected transaction" or "continuing connected transaction" contained in Chapter 14A of the Hong Kong Stock Exchange Listing Rules or, if it does meet the definition of "connected transaction" or "continuing connected transaction" according to Chapter 14A, it is exempt from the announcement, disclosure and
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
95
independent shareholders' approval requirements laid down in Chapter 14A.
38. FINANCIAL TREND
| (amounts in thousands of Euro) | December 31 2020 | December 31 2019 | December 31 2018 | December 31 2017 (*) | January 31 2017 |
|---|---|---|---|---|---|
| Net revenues | 2,422,739 | 3,225,594 | 3,142,148 | 2,741,095 | 3,184,069 |
| Gross margin | 1,743,378 | 2,319,612 | 2,262,594 | 2,030,696 | 2,289,112 |
| Operating income (EBIT) | 20,061 | 306,779 | 323,846 | 315,878 | 431,181 |
| Group net income | (54,139) | 255,788 | 205,443 | 217,721 | 278,329 |
| Total assets | 6,527,927 | 7,038,439 | 4,678,812 | 4,739,375 | 4,656,929 |
| Total liabilities | 3,676,207 | 4,049,864 | 1,781,743 | 1,873,204 | 1,552,399 |
| Total Group shareholders' equity | 2,832,057 | 2,967,158 | 2,877,986 | 2,844,652 | 3,080,502 |
(*) eleven-month statement of profit or loss
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
- CONSOLIDATED COMPANIES
| Company | Local currency | Share capital (000s of local currency) | % Interest | Registered office | Principal place of operation | Date of incorporation/establishment (MM/DD/YYYY) | Main Business |
|---|---|---|---|---|---|---|---|
| Italy | |||||||
| PRADA Spa | EUR | 255,882 | Milan | Italy | Group Holding/Manufacturing/Distribution/Retail | ||
| Artisans Shoes Srl (*) | EUR | 1,000 | 66.7 | Montegranaro | Italy | 02/09/1977 | Manufacturing |
| IPI Logistica Srl (*) | EUR | 600 | 100 | Milan | Italy | 01/26/1999 | Services |
| Pelletteria Ennepi Srl (*) | EUR | 93 | 100 | Figline e Incisa Valdarno | Italy | 12/01/2016 | Manufacturing |
| Church Italia Srl | EUR | 51 | 100 | Milan | Italy | 01/31/1992 | Retail/Services |
| Marchesi 1824 Srl (*) | EUR | 914 | 100 | Milan | Italy | 07/10/2013 | Food&Beverage |
| Figline Srl (*) | EUR | 10 | 100 | Milan | Italy | 07/24/2019 | Manufacturing |
| Pelletteria Figline Srl | EUR | 20 | 100 | Figline e Incisa Valdarno | Italy | 09/30/2020 | Manufacturing |
| Europe | |||||||
| PRADA Retail UK Ltd (*) | GBP | 5,000 | 100 | London | U.K. | 01/07/1997 | Retail |
| PRADA Germany GmbH (*) | EUR | 215 | 100 | Munich | Germany | 03/20/1995 | Retail/Services |
| PRADA Austria GmbH (*) | EUR | 40 | 100 | Wien | Austria | 03/14/1996 | Retail |
| PRADA Spain Srl (*) | EUR | 240 | 100 | Madrid | Spain | 05/14/1986 | Retail |
| PRADA Retail France Sas (*) | EUR | 4,000 | 100 | Paris | France | 10/10/1984 | Retail |
| PRADA Hellas Sole Partner Llc (*) | EUR | 4,350 | 100 | Athens | Greece | 12/19/2007 | Retail |
| PRADA Monte-Carlo Sam (*) | EUR | 2,000 | 100 | Monaco | Principality of Monaco | 05/25/1999 | Retail |
| PRADA Sa (*) | EUR | 31 | 100 | Luxembourg | Switzerland | 07/29/1994 | Trademarks/Services |
| PRADA Company Sa | EUR | 3,204 | 100 | Luxembourg | Luxembourg | 04/12/1999 | Services |
| PRADA Netherlands Bv (*) | EUR | 20 | 100 | Amsterdam | Netherlands | 03/27/2000 | Retail |
| Church Denmark Aps | DKK | 50 | 100 | Copenhagen | Denmark | 03/13/2014 | Retail |
| Church France Sas | EUR | 2,856 | 100 | Paris | France | 06/01/1955 | Retail |
| Church UK Retail Ltd | GBP | 1,021 | 100 | Northampton | U.K. | 07/16/1987 | Retail |
| Church's English Shoes Switzerland Sa | CHF | 100 | 100 | Lugano | Switzerland | 12/29/2000 | Retail |
| Church & Co. Ltd (*) | GBP | 2,811 | 100 | Northampton | U.K. | 01/16/1926 | Sub-Holding/Manufacturing/Distribution |
| Church & Co. (Footwear) Ltd | GBP | 44 | 100 | Northampton | U.K. | 03/06/1954 | Trademarks |
| Church English Shoes Sa | EUR | 75 | 100 | Brussels | Belgium | 02/25/1963 | Retail |
| PRADA Czech Republic Sro (*) | CZK | 2,500 | 100 | Prague | Czech Republic | 06/25/2008 | Retail |
| PRADA Portugal Unipessoal Lda (*) | EUR | 5 | 100 | Lisbon | Portugal | 08/07/2008 | Retail |
| PRADA Rus Llc (*) | RUB | 250 | 100 | Moscow | Russian Federation | 11/07/2008 | Retail |
| Church Spain Srl | EUR | 3 | 100 | Madrid | Spain | 05/06/2009 | Retail |
| PRADA Bosphorus Deri Mamuller Ltd Sirketi (*) | TRY | 73,000 | 100 | Istanbul | Turkey | 02/26/2009 | Retail |
| PRADA Ukraine Llc (*) | UAH | 240,000 | 100 | Kiev | Ukraine | 10/14/2011 | Retail |
| Church Netherlands Bv | EUR | 18 | 100 | Amsterdam | Netherlands | 07/07/2011 | Retail |
| Church Ireland Retail Ltd | EUR | 50 | 100 | Dublin | Ireland | 11/20/2011 | Retail |
| Church Austria GmbH | EUR | 35 | 100 | Wien | Austria | 01/17/2012 | Retail |
| Prada Sweden Ab (*) | SEK | 500 | 100 | Stockholm | Sweden | 12/18/2012 | Retail |
| Church Footwear Ab | SEK | 100 | 100 | Stockholm | Sweden | 12/18/2012 | Retail |
| Prada Switzerland Sa (*) | CHF | 24,000 | 100 | Lugano | Switzerland | 09/28/2012 | Retail |
| Prada Kazakhstan Llp (*) | KZT | 500,000 | 100 | Almaty | Kazakhstan | 06/24/2013 | Retail |
| Kenon Ltd (*) | GBP | 84,000 | 100 | London | U.K. | 02/07/2013 | Real Estate |
| Tannerie Limoges Sas (*) | EUR | 600 | 60 | Isle | France | 08/19/2014 | Manufacturing |
| Prada Denmark Aps (*) | DKK | 26,000 | 100 | Copenhagen | Denmark | 05/19/2015 | Retail |
| Prada Belgium Sprl (*) | EUR | 4,000 | 100 | Brussels | Belgium | 12/04/2015 | Retail |
| Hipic Prod Impex Srl (*) | RON | 200 | 100 | Sibiu | Romania | 04/15/2016 | Manufacturing |
| Church Germany GmbH | EUR | 200 | 100 | Munich | Germany | 09/18/2018 | Retail |
| Prada San Marino | EUR | 26 | 100 | Falciano | San.Marino | 04/15/2021 | Retail |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
| Company | Local currency | Share capital (000s of local currency) | % Interest | Registered office | Principal place of operation | Date of incorporation/establishment (MM/DD/YYYY) | Main Business |
|---|---|---|---|---|---|---|---|
| Americas | |||||||
| PRADA USA Corp. (*) | USD | 152,211 | 100 | New York | U.S.A. | 10/25/1993 | Distribution/Services/Retail |
| TRS Hawaii Llc | USD | 400 | 100 | Honolulu | U.S.A. | 11/17/1999 | Duty-Free Stores |
| PRADA Canada Corp. (*) | CAD | 300 | 100 | Toronto | Canada | 05/01/1998 | Distribution/Retail |
| Church & Co. (USA) Ltd | USD | 85 | 100 | New York | U.S.A. | 09/08/1930 | Retail |
| Post Development Corp (*) | USD | 86,592 | 100 | New York | U.S.A. | 02/18/1997 | Real Estate |
| PRADA Retail Mexico, S. de R.L. de C.V. | MXN | 269,140 | 100 | Mexico City | Mexico | 07/12/2011 | Retail |
| PRADA Brasil Importação e Comércio de Artigos de Luxo Ltda (*) | BRL | 340,000 | 100 | Sao Paulo | Brazil | 04/12/2011 | Retail |
| PRM Services S. de R.L. de C.V. (*) | MXN | 7,203 | 100 | Mexico City | Mexico | 02/27/2014 | Services |
| PRADA Panama Sa (*) | USD | 30 | 100 | Panama | Panama | 09/15/2014 | Retail |
| PRADA Retail Aruba Nv (*) | USD | 2,011 | 100 | Oranjestad | Aruba | 09/25/2014 | Retail |
| PRADA St. Barthelemy Sarl (*) | EUR | 1,600 | 100 | Gustavia | St. Barthelemy | 04/01/2016 | Retail |
| Asia-Pacific and Japan | |||||||
| PRADA Asia Pacific Ltd (*) | HKD | 3,000 | 100 | Hong Kong | Hong Kong S.A.R., P.R.C. | 09/12/1997 | Retail/Services |
| PRADA Taiwan Ltd | TWD | 3,800 | 100 | Hong Kong | Taiwan P.R.C. | 09/16/1993 | Retail |
| PRADA Retail Malaysia Sdn. Bhd. (*) | MYR | 1,000 | 100 | Kuala Lumpur | Malaysia | 01/23/2002 | Retail |
| TRS Hong Kong Ltd (*) | HKD | 500 | 100 | Hong Kong | Macau S.A.R., P.R.C. | 02/23/2001 | Duty-Free Stores |
| PRADA Singapore Pte Ltd (*) | SGD | 1,000 | 100 | Singapore | Singapore | 10/31/1992 | Retail |
| TRS Singapore Pte Ltd (*) | SGD | 0.1 | 55 | Singapore | Singapore | 08/08/2002 | Dormant |
| PRADA Korea Llc (*) | KRW | 8,125,000 | 100 | Seoul | South Korea | 11/27/1995 | Retail |
| PRADA (Thailand) Co. Ltd (*) | THB | 372,000 | 100 | Bangkok | Thailand | 06/19/1997 | Retail |
| PRADA Japan Co. Ltd (*) | JPY | 1,200,000 | 100 | Tokyo | Japan | 03/01/1991 | Retail |
| TRS Guam Partnership | USD | 1,095 | 100 | Guam | Guam | 07/01/1999 | Duty-Free Stores |
| Prada Guam Llc | USD | 0.001 | 100 | Guam | Guam | 02/04/2021 | Retail |
| Prada Saipan Llc (*) | USD | 1,405 | 100 | Saipan | Saipan | 01/20/2021 | Duty-Free Stores |
| PRADA Australia Pty Ltd (*) | AUD | 13,500 | 100 | Sydney | Australia | 04/21/1997 | Retail |
| PRADA Trading (Shanghai) Co. Ltd (***) | RMB | 1,653 | 100 | Shanghai | P.R.C. | 02/09/2004 | Retail/Dormant |
| TRS Okinawa KK | JPY | 10,000 | 100 | Tokyo | Japan | 01/21/2005 | Duty-Free Stores |
| PRADA Fashion Commerce (Shanghai) Co. Ltd (***) | RMB | 624,950 | 100 | Shanghai | P.R.C. | 10/31/2005 | Retail |
| Church Japan Company Ltd | JPY | 100,000 | 100 | Tokyo | Japan | 04/17/1992 | Retail |
| Church Hong Kong Retail Ltd | HKD | 29,004 | 100 | Hong Kong | Hong Kong S.A.R., P.R.C. | 06/04/2004 | Retail |
| Church Singapore Pte Ltd | SGD | 7,752 | 100 | Singapore | Singapore | 08/18/2009 | Retail |
| Prada Dongguan Trading Co. Ltd (***) | RMB | 8,500 | 100 | Dongguan | P.R.C. | 11/28/2012 | Services |
| Church Footwear (Shanghai) Co. Ltd (***) | RMB | 31,900 | 100 | Shanghai | P.R.C. | 12/05/2012 | Retail |
| Prada New Zealand Ltd (*) | NZD | 3,500 | 100 | Wellington | New Zealand | 07/05/2013 | Retail |
| PRADA Vietnam Limited Liability Company (*) | VND | 66,606,570 | 100 | Hanoi | Vietnam | 09/09/2014 | Retail |
| PRADA Macau Co. Ltd | MOP | 25 | 100 | Macau | Macau S.A.R., P.R.C. | 01/22/2015 | Retail |
| Church Korea Llc | KRW | 650,000 | 100 | Seoul | South Korea | 09/03/2018 | Retail |
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
| Company | Local currency | Share capital (000s of local currency) | % Interest | Registered office | Principal place of operation | Date of incorporation/ establishment (MM/DD/YYYY) | Main Business |
|---|---|---|---|---|---|---|---|
| Middle East | |||||||
| PRADA Middle East Fzco (*) | AED | 18,000 | 60 | Jebel Ali Free Zone | U.A.E. | 05/25/2011 | Distribution/ Services |
| PRADA Emirates Llc (**) | AED | 300 | 29.4 | Dubai | U.A.E. | 08/04/2011 | Retail |
| PRADA Kuwait Wll (**) | KWD | 50 | 29.4 | Kuwait City | Kuwait | 09/18/2012 | Retail |
| PRADA Retail Wll (*) | QAR | 15,000 | 100 | Doha | Qatar | 02/03/2013 | Retail |
| PRADA Saudi Arabia Ltd (*) | SAR | 26,666 | 75 | Jeddah | Saudi Arabia | 07/02/2014 | Retail |
| Other countries | |||||||
| PRADA Maroc Sarlau (*) | MAD | 95,000 | 100 | Casablanca | Morocco | 11/11/2011 | Under liquidation |
| PRADA Retail South Africa (pty) Ltd (*) | ZAR | 50,000 | 100 | Sandton | South Africa | 06/09/2014 | Under liquidation |
| (*) Company owned directly by PRADA spa | |||||||
| (**) Company consolidated based on definition of control per IFRS 10 | |||||||
| (***) Wholly foreign owned enterprises |
40. DISCLOSURES REGARDING NON-CONTROLLING INTERESTS
The financial information of companies not entirely controlled by the Group is provided below, as required by IFRS 12. The amounts are stated before the consolidation adjustments.
June 30, 2021 financial statements (amounts in thousands of Euro):
| (amounts in thousands of Euro) | Group's percentage interest | Local currency | Total assets | Total equity | Net revenues | Net income / (loss) | Dividends paid to non-controlling shareholders |
|---|---|---|---|---|---|---|---|
| Artisans Shoes S.r.l. | 66.7 | EUR | 26,971 | 7,475 | 23,367 | (275) | - |
| TRS Singapore Pte Limited | 55 | SGD | 409 | 409 | - | (5) | - |
| Prada Emirates Llc | 29.4 | AED | 66,712 | (13,934) | 31,359 | 960 | - |
| Prada Middle East Fzco | 60 | AED | 81,770 | 42,289 | 30,112 | 936 | - |
| Prada Kuwait Wll | 29.4 | KWD | 17,116 | 2,262 | 11,631 | 428 | - |
| Prada Saudi Arabia Ltd | 75 | SAR | 16,975 | 5,115 | 8,057 | 588 | - |
| Tannerie Limoges S.A.S. | 60 | EUR | 9,547 | 52 | 2,958 | (94) | - |
There are no significant restrictions on the Group's ability to access or use assets and settle liabilities as of the reporting date.
PRADA Group Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
100
PRADA Group
Interim Financial Report 2021 - Notes to the Interim condensed consolidated financial statements
41. EVENTS AFTER THE REPORTING DATE
On July 14, the Group executed its commitment to enter the share capital of Filati Biagioli Modesto spa with a 40% stake.
الخارجية. وقدْ كان من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من الممكن أن يكون من