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PRADA S.p.A. Interim / Quarterly Report 2023
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Interim / Quarterly Report
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PRADA Group
2023 Interim Financial Report
PRADA 508 Hong Kong Stock code: 1913
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
2023 INTERIM FINANCIAL REPORT
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،
TABLE OF CONTENTS
The Prada Group 3
Financial Review 9
Corporate Governance 39
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
2023 Interim Financial Report - 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
Patrizio Bertelli
(Chairman & Executive Director)
Paolo Zannoni
(Executive Deputy Chairman & Executive Director)
Andrea Guerra (Chief Executive Officer & Executive Director)
Miuccia Prada Bianchi (Executive Director)
Andrea Bonini (Chief Financial Officer & Executive Director)
Lorenzo Bertelli
(Executive Director)
Yoël Zaoui
(Lead Independent Non-Executive Director)
Marina Sylvia Caprotti
(Independent Non-Executive Director)
Maurizio Cereda
(Independent Non-Executive Director)
Pamela Yvonne Culpepper
(Independent Non-Executive Director)
Anna Maria Rugarli
(Independent Non-Executive Director)
Audit and Risk Committee
Yoël Zaoui (Chairman)
Marina Sylvia Caprotti
Maurizio Cereda
PRADA Group
2023 Interim Financial Report - The PRADA Group
PRADA Group
2023 Interim Financial Report - The PRADA Group
Remuneration Committee
Marina Sylvia Caprotti (Chairwoman)
Paolo Zannoni
Yoël Zaoui
Nomination Committee
Maurizio Cereda (Chairman)
Lorenzo Bertelli
Marina Sylvia Caprotti
Sustainability Committee
Pamela Yvonne Culpepper (Chairwoman)
Lorenzo Bertelli
Anna Maria Rugarli
Board of Statutory Auditors
Antonino Parisi (Chairman)
Roberto Spada
David Terracina
Organismo di Vigilanza
(Supervisory Body)
(Italian Legislative Decree 231/2001)
Stefania Chiaruttini (Chairwoman)
Armando Simbari (replaced Yoël Zaoui on July 26, 2023)
Roberto Spada
Main Shareholder
Prada Holding S.p.A.
Via A. Fogazzaro, 28
20135 Milan, Italy
Company Secretary
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 Group
2023 Interim Financial Report - The PRADA Group
PRADA Group
2023 Interim Financial Report - The PRADA Group
| 40% | Prada Middle East fzoo
Jebel Ali Free Zone-Dubai
DISTRIBUTION/SERVICES | 100% | Prada Retail France sas
Paris
RETAIL | 100% | Marchesi 1824 S.r.l.
Milan
FOOD&BEVERAGE | 100% | Prada sa
Luxembourg
TRADEMARK |
| --- | --- | --- | --- | --- | --- | --- | --- |
| 49% | Prada Emirates llc
Dubai
RETAIL | 100% | Prada Monte-Carlo sam
Monaco
RETAIL | 100% | UK Branch
London | 100% | Swiss Branch
Lugano
SERVICES |
| 49% | Prada Kuwait wll
Kuwait City
RETAIL | 100% | Prada Belgium sprl
Brussels
RETAIL | 100% | Luna Rossa Challenge S.r.l.
Grosseto
MANAGEMENT SALING TEAM | 100% | Prada Company sa
Luxembourg
SERVICES |
| 100% | Prada Retail wll
Doha
RETAIL | 100% | Prada Germany gmbh
Munich
RETAIL/SERVICES | | | | |
| 75% | Prada Saudi Arabia ltd
Jeddah
RETAIL | 100% | Prada Austria gmbh
Vienna
RETAIL | | | | |
| | | 100% | Church Austria gmbh
Vienna
UNDER LIQUIDATION | | | | |
| 100% | Prada Rus llc
MOSCOW
RETAIL | 100% | Prada Czech Republic sro
Prague
RETAIL | | | | |
| 100% | Prada Ukraine llc
Kiev
RETAIL | 100% | Prada Netherlands bv
Amsterdam
RETAIL | | | | |
| 100% | Prada Kazakhstan llp
Almaty
RETAIL | 100% | Prada Switzerland sa
Lugano
RETAIL | | | | |
| | | 100% | Prada Spain sl
Madrid
RETAIL | | | | |
| 100% | Prada Retail
South Africa lptyl ltd
Sandton
DORMANT | 100% | Prada Portugal
Unipessoal lda
Hilbon
RETAIL | | | | |
| 100% | Prada Maroc Sarlau
Casablanca
UNDER LIQUIDATION | 100% | Prada Hellas
Sole Partner llc
Athens
RETAIL | | | | |
| | | 100% | Prada Bosphorus Deri
Mamüller ltd Sirketi
Istanbul
RETAIL | | | | |
| 100% | Church's English Shoes sa
Brussels
RETAIL | 100% | Prada Retail UK ltd
London
RETAIL | | | | |
| 100% | Church France sas
Paris
RETAIL | 100% | Ireland Branch
Dublin
RETAIL | | | | |
| 100% | Church Japan Company ltd
Tokyo
RETAIL | 100% | Prada Denmark aps
Copenhagen
RETAIL | | | | |
| 100% | Church Italia S.r.l.
Milan
RETAIL | 100% | Prada Sweden ab
Stockholm
RETAIL | | | | |
| | | 100% | Prada Norway as
Oslo
RETAIL | | | | |
| | | 100% | Prada San Marino S.r.l.
San Marino
RETAIL | | | | |
| | | 100% | Kenon ltd
London
REAL ESTATE | | | | |
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،
FINANCIAL REVIEW
PRADA Group
2023 Interim Financial Report - Financial Review
9
BASIS OF PREPARATION
The Board of Director’s Financial Review refers to the group of companies controlled by Prada S.p.A. (“Prada” or the “Company”), the operating parent company of the Prada Group (the “Group” or “Prada Group”), and it is based on the unaudited Interim Condensed Consolidated Financial Statements for the six-month period ended June 30, 2023.
The tables reported in the Financial Review have been prepared in accordance with the measurement and classification criteria of the International Financial Reporting Standards (“IFRSs”) issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union. Some “non-IFRS measures” are also used within the Financial Review in order to represent some financial aspects of the period from a management perspective.
PRADA Group
2023 Interim Financial Report - Financial Review
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS ENDED JUNE 30, 2023 (INCLUDES NON-IFRS MEASURES)
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | % | six months ended June 30 2022 (unaudited) | % | change | % change |
|---|---|---|---|---|---|---|
| Net sales | 2,184,896 | 97.9% | 1,872,418 | 98.5% | 312,478 | 16.7% |
| Royalties | 47,483 | 2.1% | 28,524 | 1.5% | 18,959 | 66.5% |
| Net revenues | 2,232,379 | 100% | 1,900,942 | 100% | 331,437 | 17.4% |
| Cost of goods sold | (438,984) | -19.7% | (423,451) | -22.3% | (15,533) | 3.7% |
| Gross margin | 1,793,395 | 80.3% | 1,477,491 | 77.7% | 315,904 | 21.4% |
| Product design and development costs | (72,489) | -3.2% | (68,581) | -3.6% | (3,908) | 5.7% |
| Advertising and communications costs | (187,274) | -8.4% | (155,168) | -8.2% | (32,106) | 20.7% |
| Selling costs | (894,587) | -40.1% | (795,510) | -41.8% | (99,077) | 12.5% |
| General and administrative costs | (147,626) | -6.6% | (127,430) | -6.7% | (20,196) | 15.8% |
| Total operating expenses | (1,301,976) | -58.3% | (1,146,689) | -60.3% | (155,287) | 13.5% |
| Recurring operating income / (loss) - EBIT Adjusted | 491,419 | 22.0% | 330,802 | 17.4% | 160,617 | 48.6% |
| Other non-recurring income / (expenses) | - | - | (26,000) | -1.4% | 26,000 | -100% |
| Operating income / (loss) - EBIT | 491,419 | 22.0% | 304,802 | 16.0% | 186,617 | 61.2% |
| Interest and other financial income / (expenses), net | (19,292) | -0.9% | (8,584) | -0.5% | (10,708) | 124.7% |
| Interest expenses on lease liability | (27,342) | -1.2% | (18,887) | -1.0% | (8,455) | 44.8% |
| Dividends from investments | 226 | 0.0% | 119 | 0.0% | 107 | 89.9% |
| Total financial income / (expenses) | (46,408) | -2.1% | (27,352) | -1.4% | (19,056) | 69.7% |
| Income / (loss) before taxation | 445,011 | 19.9% | 277,450 | 14.6% | 167,561 | 60.4% |
| Taxation | (138,381) | -6.2% | (88,033) | -4.6% | (50,348) | 57.2% |
| Net income / (loss) for the period | 306,630 | 13.7% | 189,417 | 10.0% | 117,213 | 61.9% |
| Net income / (loss) - Non-Controlling interests | 1,462 | 0.1% | 1,153 | 0.1% | 309 | 26.8% |
| Net income / (loss) - Group | 305,168 | 13.7% | 188,264 | 9.9% | 116,904 | 62.1% |
PRADA Group
2023 Interim Financial Report - Financial Review
KEY FINANCIAL INFORMATION
| Key economic figures
(amounts in thousands of Euro) | six months
ended June 30
2023
(unaudited) | six months
ended June 30
2022
(unaudited) |
| --- | --- | --- |
| Net revenues | 2,232,379 | 1,900,942 |
| EBIT Adjusted () | 491,419 | 330,802 |
| % Incidence on net revenues | 22.0% | 17.4% |
| EBIT () | 491,419 | 304,802 |
| % Incidence on net revenues | 22.0% | 16.0% |
| Net income / (loss) of the Group | 305,168 | 188,264 |
| Earnings / (losses) per share (Euro) | 0.119 | 0.074 |
| Net operating cash flow (**) | 181,753 | 158,202 |
() Non-IFRS measure equal to EBIT less other non-recurring income / (expenses)
() Non-IFRS measure equal to earnings before interest and taxation
(**) Non-IFRS measure equal to net cash flow from operating activities less repayment of lease liability
| Key indicators
(amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Net operating working capital | 723,262 | 690,573 |
| Net invested capital (right of use assets included) | 5,427,546 | 5,073,699 |
| Net financial surplus / (deficit) (*) | 282,887 | 534,900 |
| Group shareholders' equity | 3,501,416 | 3,482,217 |
(*) Non-IFRS measure equal to 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 related parties
HIGHLIGHTS FOR THE SIX MONTHS ENDED JUNE 30, 2023
In the first half of 2023 Prada Group achieved solid performance driven by strong brand identity, creativity and disciplined execution amidst an ever-changing global macroeconomic scenario.
Group's net revenues grew by 20.5% at constant exchange rates compared to first half of 2022, with retail sales marking double-digit growth across all product categories.
At brand level, Prada retail net sales increased by 17.7% in the first six months of 2023, reporting a growth of +14.7% in the second quarter, a more moderate but solid pace compared to the +21.1% of the first quarter, on a high basis of comparison with the exception of China. Miu Miu retail net sales grew at 50.1% in the semester, with the second quarter in further acceleration at +57.3% versus the +41.9% of the first quarter, an excellent performance supported by the higher exposure to China and Asia.
Both gross margin (80.3%) and EBIT margin (22.0%) showed further expansion, notwithstanding higher investments behind the brands. The net financial position remained robust, providing comfortable headroom to fund future strategic
PRADA Group
2023 Interim Financial Report - Financial Review
initiatives.
With respect to Prada, over the period the focus has been on nurturing the desirability of the brand, whose Menswear FW23 / SS24 and Womenswear FW23 shows confirmed excellent reception across all audiences. Through the highly successful "The Glass Age" campaign, the iconic Galleria bag has been reinterpreted and celebrated; at the same time, the introduction of novelties continued across all categories with the ongoing and broad-based success of the brand's collections. Contributing to the dialogue with growing audiences, in the second quarter, Prada and Adidas unveiled the "adidas Football for Prada" collection. Throughout the semester, the brand also realised a number of successful activations, including dedicated events for the Eternal Gold fine jewellery collection, Prada Extends in Bangkok, Prada Mode in Tokyo, and the opening of the very impactful Prada Caffè at Harrods.
As for Miu Miu, the standout performance was supported by the highly successful FW23 fashion show, the launch of the SS23 campaign with exceptional personalities, and continued investment to amplify the brand awareness to a growing client base. The "matelassé" leather and its dedicated campaigns resonated strongly, as demonstrated by the success of Wander and recently launched Arcadie bags; likewise, the second drop of the New Balance x Miu Miu sneakers created strong commercial response, increasing the brand visibility. Miu Miu consolidated formats, like the Miu Miu Women's Tales as well as Miu Miu Select, also contributed to foster the relationship with the community on a global scale. The brand strategy remains focused on reinforcing brand codes, with a constant flow of contemporary collections that fuel desirability across all product categories.
Adding to the client engagement initiatives of the brands, the Group continued to invest in the retail network upgrade at pace, with c.70 renovation projects completed in the semester, instrumental to elevate the client experience in store and to increase productivity.
On the industrial front, the focus has been on expanding capacity and reinforcing the strategic control of the know-how. In this context, the Group also announced the acquisition of a minority stake in Luigi Fedeli e Figlio S.r.l., an Italian family business globally recognised for the excellence of its knitwear and fine yarns.
Additionally, in March the Group unveiled an ambitious hiring plan concentrated on the regions of Tuscany, Umbria and Marche, which will add 400 resources by the end of the year. More than half of the professionals will be trained internally by the Prada Group Academy, as part of the Group's mission to preserve craftmanship
PRADA Group
2023 Interim Financial Report - Financial Review
know-how.
Prada Group's focus on vertical integration was also reflected in the progress made with building an increasingly responsible business model, throughout the key areas of supply chain transparency, raw materials traceability, Scope 3 CO2 emissions reduction, chemicals management in industrial processes and a wider Water Conservation programme.
Moreover, the Group's ongoing commitment to the ocean through the SEA BEYOND project continues, with the announcement on June 27 of a new enhanced partnership with IOC-UNESCO. Specifically, Prada Group will donate 1% of the proceeds of the Prada Re-Nylon collection to enrich educational programme and extend the scope of SEA BEYOND towards two new areas of focus: support for ocean-related scientific research and humanitarian projects.
Finally, with the onboarding of Andrea Guerra as Prada Group CEO in January, the Group further strengthened its governance, thus enhancing its ability to execute the strategy while also easing the generational transition.
PRADA Group
2023 Interim Financial Report - Financial Review
ANALYSIS OF NET REVENUES
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) | % change current exc. rates | % change constant exc. rates | ||
|---|---|---|---|---|---|---|
| Net revenues | ||||||
| Retail net sales (Directly Operated Stores and e-commerce) | 1,974,710 | 88.5% | 1,677,950 | 88.3% | 17.7% | 21.1% |
| Wholesale net sales (independent customers and franchisees) | 210,186 | 9.4% | 194,468 | 10.2% | 8.1% | 8.5% |
| Royalties | 47,483 | 2.1% | 28,524 | 1.5% | 66.5% | 66.5% |
| Total net revenues | 2,232,379 | 100% | 1,900,942 | 100% | 17.4% | 20.5% |
| Retail net sales by brand | ||||||
| Prada | 1,667,909 | 84.5% | 1,457,314 | 86.9% | 14.5% | 17.7% |
| Miu Miu | 285,160 | 14.4% | 196,483 | 11.7% | 45.1% | 50.1% |
| Church's | 12,665 | 0.6% | 16,223 | 1.0% | -21.9% | -20.6% |
| Other | 8,976 | 0.5% | 7,930 | 0.5% | 13.2% | 13.6% |
| Total retail net sales | 1,974,710 | 100% | 1,677,950 | 100% | 17.7% | 21.1% |
| Retail net sales by geographical area | ||||||
| Asia Pacific | 715,724 | 36.2% | 590,478 | 35.2% | 21.2% | 25.3% |
| Europe | 582,112 | 29.5% | 486,001 | 29.0% | 19.8% | 24.2% |
| Americas | 361,073 | 18.3% | 359,791 | 21.4% | 0.4% | -1.0% |
| Japan | 223,587 | 11.3% | 161,470 | 9.6% | 38.5% | 49.2% |
| Middle East | 92,214 | 4.7% | 80,210 | 4.8% | 15.0% | 13.5% |
| Total retail net sales | 1,974,710 | 100% | 1,677,950 | 100% | 17.7% | 21.1% |
| Retail net sales by product category | ||||||
| Leather goods | 924,814 | 46.8% | 851,182 | 50.7% | 8.7% | 11.7% |
| Ready to wear | 609,495 | 30.9% | 461,395 | 27.5% | 32.1% | 36.1% |
| Footwear | 373,920 | 18.9% | 320,160 | 19.1% | 16.8% | 20.3% |
| Other | 66,481 | 3.4% | 45,213 | 2.7% | 47.0% | 49.8% |
| Total retail net sales | 1,974,710 | 100% | 1,677,950 | 100% | 17.7% | 21.1% |
(growth percentages at constant exchange rates, unless differently specified)
The Prada Group generated net revenues of Euro 2,232.4 million in the six months ended June 30, 2023, up by 20.5% compared to the first six months of 2022. Exchange rate fluctuations reduced the increase by 3.1%, to 17.4%.
During the first six months of 2023, retail sales rose by double digits against the same period of 2022, with a +21.1% increase driven by the organic growth of full-price sales, which benefited from an increase in both average prices and volumes sold. Over the period, retail sales accounted for 89% of total net revenues, therefore in line with 2022 levels.
At June 30, 2023, the Group operated 603 stores, following 14 openings and 23 closures over the period.
Sales in the wholesale channel rose by 8.5% compared to the corresponding period of 2022, in particular due to the recovery of duty-free sales.
PRADA Group
2023 Interim Financial Report - Financial Review
Royalty income grew by 66.5% compared to the first six months of 2022, a performance driven by the strong contribution of both eyewear and fragrances.
NUMBER OF STORES
| June 30, 2023 | December 31, 2022 | June 30, 2022 | ||||
|---|---|---|---|---|---|---|
| Owned | Franchises | Owned | Franchises | Owned | Franchises | |
| Prada | 426 | 22 | 422 | 21 | 421 | 22 |
| Miu Miu | 141 | 6 | 145 | 5 | 146 | 5 |
| Church's | 28 | - | 37 | - | 52 | - |
| Car Shoe | 2 | - | 2 | - | 2 | - |
| Marchesi 1824 | 6 | - | 6 | - | 6 | - |
| Total | 603 | 28 | 612 | 26 | 627 | 27 |
| June 30, 2023 | December 31, 2022 | June 30, 2022 | ||||
| --- | --- | --- | --- | --- | --- | --- |
| Owned | Franchises | Owned | Franchises | Owned | Franchises | |
| Europe | 200 | - | 209 | - | 219 | - |
| Asia Pacific | 192 | 25 | 190 | 21 | 195 | 22 |
| Americas | 102 | - | 104 | - | 105 | - |
| Japan | 86 | - | 86 | - | 86 | - |
| Middle East | 23 | 3 | 23 | 5 | 22 | 5 |
| Total | 603 | 28 | 612 | 26 | 627 | 27 |
BRANDS
At brand level Prada remained on a sound trajectory while Miu Miu reported a remarkably strong performance.
Prada net retail sales increased by 17.7% in the first six months of 2023, reporting a growth of +14.7% in the second quarter, a more moderate but solid pace compared to the +21.1% of the first quarter, on a high basis of comparison with the exception of China.
As for Miu Miu, net retail sales rose by 50.1%, with the second quarter in further acceleration at +57.3% versus the +41.9% of the first quarter, an excellent outcome supported by the higher exposure to China and Asia, and driven by growth across all markets and all product categories, thanks in part to the retail renovation plan underway.
PRADA Group
2023 Interim Financial Report - Financial Review
The breakdown of net revenues by brand is shown below:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) | % change current exc. rates | % change constant exc. rates | ||
|---|---|---|---|---|---|---|
| Net revenues by brand | ||||||
| Prada | 1,880,406 | 84.2% | 1,650,963 | 86.8% | 13.9% | 16.8% |
| Miu Miu | 326,620 | 14.6% | 219,526 | 11.5% | 48.8% | 53.3% |
| Church's | 15,521 | 0.7% | 21,399 | 1.1% | -27.5% | -26.5% |
| Other | 9,832 | 0.4% | 9,054 | 0.5% | 8.6% | 8.9% |
| Total net revenues | 2,232,379 | 100% | 1,900,942 | 100% | 17.4% | 20.5% |
MARKETS
Over the period the Group delivered double-digit growth across all regions, excluding Americas.
In Asia Pacific, net retail sales rose by 25.3%, benefiting in particular from the recovery in China and a favorable comparison with 2022 data, particularly in April and May.
In Europe, retail sales rose by 24.2%, supported by healthy local demand and high level of tourism.
Retail sales in the Americas fell by 1%. However, the North American client cluster, that has been showing strength for a prolonged period, continued to grow throughout the semester, including in the second quarter.
As for Japan, retail sales rose by 49.2%, benefiting from recent investments in the retail network, solid domestic spending and progressive recovery of tourism flows. Retail sales in the Middle East also delivered solid growth reporting +13.5%.
PRODUCTS
The Group reported double-digit growth across all product categories compared with the first six months of 2022.
Leather Goods recorded retail sales growth of +11.7%, assisted by both novel and iconic products. Ready-to-Wear remained the fastest growing category (+36.1%) thanks to both Prada and Miu Miu, while Footwear performance of +20.3% against 2022 was driven by the contribution of lifestyle products, sneakers and formal items.
PRADA Group
2023 Interim Financial Report - Financial Review
OPERATING RESULTS
The gross margin for the six months ended June 30, 2023 corresponded to 80.3% of the net revenues, up substantially from the 77.7% of the corresponding period in 2022. Higher average prices, a better sales mix in terms of distribution channels and greater absorption of production overheads are the key drivers of this improvement, together with subsidizing inflationary pressures.
Operating expenses totaled Euro 1,302 million, up by Euro 129.3 million versus 2022, which included non-recurring expenses of Euro 26 million. The increase is attributable primarily to higher variable costs ensuing from the sales increase, more communication activities, higher personnel expenses and other general and administrative costs.
The operating income for the period, or EBIT, was Euro 491.4 million (22% of net revenues), compared to the Euro 304.8 million (16%) of the first six months of 2022.
FINANCIAL EXPENSES AND TAXATION
The net financial expenses of Euro 46.4 million are Euro 19 million higher than in 2022 (Euro 27.4 million). The increase is attributable largely to higher foreign exchange losses and interest expense on lease liabilities, offset in part by lower costs associated with the net financial surplus, which improved from the same period of 2022.
The net income tax for the six months ended June 30, 2023 is Euro 138.4 million, corresponding to 31.1% of the profit before tax.
NET INCOME
The net income for the period is Euro 306.6 million (13.7% of net revenues), versus Euro 189.4 million (10%) reported in 2022.
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2023 Interim Financial Report - Financial Review
ANALYSIS OF THE STATEMENT OF FINANCIAL POSITION
NET INVESTED CAPITAL
The following table reclassifies the Statement of Financial Position to provide a information on the composition of the net invested capital:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Right of use assets | 2,082,146 | 2,011,474 |
| Non-current assets (excluding deferred tax assets), net | 2,544,595 | 2,517,042 |
| Trade receivables, net | 325,296 | 331,915 |
| Inventories, net | 784,525 | 760,457 |
| Trade payables | (386,559) | (401,799) |
| Net operating working capital | 723,262 | 690,573 |
| Other current assets (excluding items of financial position) | 279,997 | 229,575 |
| Other current liabilities (excluding items of financial position) | (374,413) | (522,553) |
| Other current assets/(liabilities), net | (94,416) | (292,978) |
| Provision for risks | (47,024) | (51,486) |
| Post-employment benefits | (56,323) | (67,571) |
| Other long-term liabilities | (61,443) | (65,590) |
| Deferred taxation assets / (liabilities), net | 336,749 | 332,235 |
| Other non-current assets / (liabilities) | 171,959 | 147,588 |
| Net invested capital | 5,427,546 | 5,073,699 |
| Shareholder's equity - Group | (3,501,416) | (3,482,217) |
| Shareholder's equity - Non-controlling interests | (19,825) | (18,805) |
| Total consolidated shareholders' equity | (3,521,241) | (3,501,022) |
| Long-term financial payables, net | (348,589) | (394,531) |
| Short-term financial, net surplus / (deficit) | 631,476 | 929,431 |
| Net financial surplus / (deficit) | 282,887 | 534,900 |
| Net financial surplus / (deficit) to consolidated shareholders' equity ratio | -8% | -15.3% |
| Long-term lease liability | (1,768,803) | (1,715,451) |
| Short-term lease liability | (420,389) | (392,126) |
| Total lease liability | (2,189,192) | (2,107,577) |
| Net financial surplus / (deficit), including lease liability | (1,906,305) | (1,572,677) |
| Shareholders' equity and net financial surplus / (deficit), including lease liability | (5,427,546) | (5,073,699) |
The net invested capital at June 30, 2023 is Euro 5,428 million, with equity of Euro 3,521 million and lease liabilities of Euro 2,189 million; the net financial position at the end of the period is a surplus of Euro 282.9 million.
Right of use assets increased by Euro 70.7 million, mainly as a result of increases for new leases, remeasurements of existing leases and revaluations totaling Euro 296 million, net of depreciation of Euro 221.2 million and writedowns of Euro 3.9 million regarding leases in Russia.
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2023 Interim Financial Report - Financial Review
The non-current assets (net) rose by Euro 28 million (Euro 2,545 million at June 30, 2023 versus Euro 2,517 million at December 31, 2022).
The capital expenditures for the period amount to Euro 150.5 million, against depreciation, amortisation and impairment losses of Euro 111.4 million.
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Retail | 94,650 | 62,051 |
| Production, logistics and corporate | 55,856 | 35,145 |
| Total | 150,506 | 97,196 |
Capital expenditures relate primarily to store restyling and relocation projects, as well as the advancement of the technological and digital roadmap in the retail, manufacturing and corporate areas and continued investments in the production facilities to strengthen the supply chain.
The net operating working capital at June 30, 2023 is Euro 723.3 million, up by Euro 32.7 million from December 31, 2022. The increase is largely attributable to the increase in inventories to support the sales growth.
The other current liabilities (net) amount to Euro 94.4 million at June 30, 2023, down by Euro 198.6 million from December 31, 2022, essentially due to the reduced current tax liability resulting from the payment of the prior period's income taxes. The other non-current assets (net) of Euro 172 million at June 30, 2023 present an increase of Euro 24.4 million from December 31, 2022, referring mainly to the reduction of liabilities regarding long-term employee benefits due to the payments made in the period.
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2023 Interim Financial Report - Financial Review
NET FINANCIAL POSITION
The following table provides details of the net financial position:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Bank borrowing - non-current | (349,714) | (395,656) |
| Financial payables and bank overdrafts - current | (131,991) | (160,847) |
| Financial payables due to related parties - current | (5,032) | (3,568) |
| Total financial payables - current | (137,023) | (164,415) |
| Total financial payables | (486,737) | (560,071) |
| Cash and cash equivalents | 766,271 | 1,091,622 |
| Financial receivables from related parties - non-current | 1,125 | 1,125 |
| Financial receivables from related parties - current | 2,228 | 2,224 |
| Total cash and cash equivalents and financial receivables | 769,624 | 1,094,971 |
| Net financial surplus / (deficit) | 282,887 | 534,900 |
The net operating cash flow for the six-month period, after fixed lease payments (Euro 211.8 million), was a surplus of Euro 181.8 million. After the cash outflows for investing activities (Euro 149 million) and dividend payments (Euro 267.1 million), and considering the foreign exchange differences (Euro 13.9 million) resulting from the performance of the main currencies against the Euro, the net financial surplus was Euro 282.9 million at the end of the period.
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | June 30
2022
(unaudited) |
| --- | --- | --- |
| Cash flow from operating activities | 720,344 | 537,742 |
| Cost of net financial debt: interest paid | 5,424 | (4,685) |
| Lease liability: interest paid | (27,342) | (18,887) |
| Taxes paid | (304,922) | (139,495) |
| Net cash flow from operating activities | 393,504 | 374,675 |
| Repayment of lease liability | (211,751) | (216,473) |
| Net operating cash flow | 181,753 | 158,202 |
| Net cash flow utilised by investing activities | (148,975) | (93,067) |
| Free cash flow | 32,778 | 65,135 |
The total amount of undrawn lines of credit at June 30, 2023 is Euro 792
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2023 Interim Financial Report - Financial Review
million, consisting of Euro 427 million of committed lines and Euro 365 million of uncommitted lines (of which Euro 100 million of uncommitted commercial facilities).
All financial covenants were fully complied with at June 30, 2023 and they are expected to be met in the next 12 months as well.
The following table sets forth the lease liability:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Long-term lease liability | 1,768,803 | 1,715,451 |
| Short-term lease liability | 420,389 | 392,126 |
| Total | 2,189,192 | 2,107,577 |
The lease liability increased from Euro 2,108 million at December 31, 2022 to Euro 2,189 million at June 30, 2023, primarily as a result of remeasurements for lease extensions or modifications (Euro 350.3 million) net of the payments of the period (Euro 211.8 million) and the exchange differences for the period (Euro 56.7 million) resulting from the appreciation of the Euro against the main currencies in the countries where the Group operates.
The lease liability is concentrated in Japan, the U.S.A. and Italy.
The net financial indebtedness, including the lease liability, is Euro 1,906 million at June 30, 2023 (Euro 1,573 million at December 31, 2022).
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.
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2023 Interim Financial Report - Financial Review
RISK FACTORS AND MANAGEMENT
| Risk Category | Risk |
|---|---|
| 1. Risk related to strategy | 1.1 Strategic risks |
| 1.2 Risk regarding image and brand recognition | |
| 1.3 Intellectual property risk | |
| 2. Geopolitical/External | 2.1 Economic risks and international business risks |
| 3. Operational | 3.1 Business Interruption risk |
| 3.2 Risk regarding ability to anticipate trends and react to shift in consumer tastes | |
| 3.3 Data protection risks | |
| 3.4 Risk of loss of key resources | |
| 3.5 Risks related to the supply chain | |
| 3.6 Health and safety risk | |
| 4. Financial | 4.1 Credit risk |
| 4.2 Liquidity risk | |
| 4.3 Tax risk | |
| 4.4 Foreign exchange risk | |
| 4.5 Interest rate risk | |
| 5. Compliance | 5.1 Legal and regulatory risks |
| 6. ESG | 6.1 ESG Risks |
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2023 Interim Financial Report - Financial Review
1. RISK RELATED TO STRATEGY
1.1 Strategic risks
| Description | What we do |
|---|---|
| The possibility 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 position, accompanied by a unique buying experience featuring a careful revisiting of the physical and digital store concepts and layouts and 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 integration of distribution and communication channels in line with the evolving demands of consumers. |
1.2 Risk regarding image and brand recognition
| Description | What we do |
|---|---|
| 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 production techniques, the image and locations of DOS, the careful selection of business partners, the communications activities and the corporate profile in general. | Preserving the image and prestige acquired by its brands is a primary objective of the Prada Group. This is pursued by constantly observing society and the changes therein, in part through close collaborations with the world of art and culture, and by continuously seeking innovation in styles, products and communications. In addition, the Group actively seeks 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 the image and therefore the value of the brands. |
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2023 Interim Financial Report - Financial Review
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1.3 Intellectual property risk
| Description | What we do |
|---|---|
| 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 the brand 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. At a global level, the Group actively opposes all forms of counterfeiting and intellectual property infringement by adopting strong, systematic measures. The wholesale, retail, online and offline markets are monitored daily in close collaboration with customs authorities, tax authorities and the police. |
2. GEOPOLITICAL/EXTERNAL RISKS
2.1 Economic risks and international business risks
| Description | What we do |
|---|---|
| The performance of the luxury goods market is influenced by individuals’ propensity to consume and by the general economy. Accordingly, the Group’s financial and business performance is exposed to global macroeconomic, social and political risks due to its international scale. An unfavorable economy in one or more of the main countries where the Group operates, or at 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 and economic, health or geopolitical situations leading to instability, social conflicts at home and with other countries, as well as adverse natural events or government restrictions on movement could negatively affect the Group’s sales, operations (including the supply chain), results, cash flows and general financial condition. | The Group believes that a well-balanced physical retail presence in the global market accompanied by an omnichannel strategy with closely integrated sales and communication channels, and a sufficiently diversified product range enable it to mitigate the risk that adverse conditions such as these could influence significantly the business performance. |
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2023 Interim Financial Report - Financial Review
3. OPERATIONAL RISKS
3.1 Business Interruption risk
| Description | What we do |
|---|---|
| Business interruption can occur due to a variety of factors, including: property damage caused by an extreme weather event, machinery breakdowns, labor disputes, and cyberattacks. The resulting losses can be economic (e.g., decreased sales, increased labor costs due to the loss of a key supplier, decreased revenue potential due to natural disasters) and reputational to the Group's image. | The Group has an insurance program that includes business interruption coverage related to property damages incurred in the sales network. |
| With reference to cybersecurity, organizations are becoming more vulnerable to cyber threats due to their increasing reliance on computers, networks, programs, social media and data. | |
| An external cyberattack, insider threat or supplier breach could cause service interruption, confidential data breaches and incapacity to perform daily operations, thus affecting the Group and potentially the stakeholders involved. | In light of the recent increased threats of cybersecurity attacks worldwide, the Prada Group has raised the security levels of its information systems while reinforcing the lines of defense, taking the measures needed to ensure business continuity and enforcing the security awareness maturity level within the organization. |
| The Group recently conducted a testing campaign aimed at simulating external attacks, which led to setting up a milestone IT security program based on recurring campaigns of cyberattack simulation and cyber-security training through e-learning courses and specific programs for those most exposed. | |
| The Group has also designated a Chief Information Security Officer (CISO) to guarantee that cyber security risks are addressed and managed effectively across all operations and sites. |
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3.2 Risk regarding ability to anticipate trends and react to shift in consumer tastes
| Description | What we do |
|---|---|
| The Group's success is reliant on its ability to create and influence fashion and product trends, and to anticipate shifts in consumer tastes and societal 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, and 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 appointment of a Creative Co-Director for the Prada brand enables the Group to benefit from cooperation between two renowned designers - Miuccia Prada and Raf Simons - emphasizing the importance and power of creativity. Approximately one thousand individuals work in the design department and in the development department. In the first one, a mix of different nationalities, cultures and talents contribute to creativity, while in the second one craft skills combined with solid manufacturing processes dominate the area. This enables the Group to keep abreast of emerging consumer trends and lifestyles and remain a major player in the industry. |
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3.3 Data protection risk
| Description | What we do |
|---|---|
| The Prada Group is aware of the importance of ensuring adequate safeguards to its stakeholders on the processing of the personal data and information that each Group company carries out in the course of its business activities. | In order to ensure personal data protection and minimize the risks associated with data processing, the Prada Group has adopted policies, technical initiatives and organizational security measures in order to guarantee that: |
| - the 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 and in the manner permitted by applicable law; | |
| - personal data are processed in compliance with the European General Data Protection Regulation (GDPR) and all other applicable privacy laws and regulations of the jurisdictions in which the Group operates. | |
| As part of the measures adopted, the Prada Group has designated a Chief Information Security Officer (CISO) and a Data Protection Officer (DPO). Their responsibilities, among others, include monitoring regulatory compliance, reporting and advising on personal data protection matters. |
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3.4 Risk of loss of key resources
| Description | What we do |
|---|---|
| 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 retain people who are qualified in the design, product development, marketing, merchandising and corporate functions, and to train new generations of artisans. | The Group considers its management structure to be capable of ensuring managerial continuity, and has recently implemented a long-term incentive plan to retain key employees so that they will continue to cover the roles essential to the achievement of the challenging objectives that the Group constantly sets for itself. |
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3.5 Risks related to the supply chain
| Description | What we do |
|---|---|
| The outsourcing of the production process could represent a risk in terms of dependence on key suppliers, non-compliance with quality, quantity and safety standards and availability of quality raw materials, resulting in product returns and reputational risk. | The Prada Group’s products are made at manufacturing facilities owned in Europe, mainly in Italy, and by contract manufacturers carefully selected on the basis of competence, quality and reliability. Nearly all the prototypes and samples and some finished products are made at the Group’s own manufacturing facilities. Most sensitive phases of production, such as the cutting of hides and the controls conducted over all raw materials (including those to be sent to contract manufacturers) and semifinished goods take place there as well. |
| 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 S.p.A.’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 raw material suppliers and contract manufacturers, located mainly 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 the applicable regulations concerning labor law, social security and occupational health and safety, and monitors such compliance with a process that uses document controls and audits conducted at the suppliers’ premises. |
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3.6 Health and Safety risks
| Description | What we do |
|---|---|
| The Group is exposed to risks related to workers' health and safety, such as injuries, occupational diseases and accidents that could lead to physical harm to people, litigation and damage to the Group's image. | In order to mitigate these risks, the Group conducts periodic safety training and refresher courses. |
| In addition, the locations undergo risk assessment to determine the necessity of PPE (Personal Protective Equipment) and health surveillance (medical examinations). Visits are conducted regularly at the manufacturing facilities, offices and stores in order to identify and promptly resolve any critical H&S issues. |
4. FINANCIAL RISKS
4.1 Credit risk
| Description | What we do |
|---|---|
| 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 a control system 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 given that they are used for operating activities and business processes and, consequently, the number of independent parties involved is fragmented. However, there is a potential risk related to cash shortages at stores. The Group has equipped itself with various control tools, preventive and deterrent, aimed at improving the efficiency of cash management activities. |
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2023 Interim Financial Report - Financial Review
4.2 Liquidity risk
| Description | What we do |
|---|---|
| Liquidity risk refers to difficulty that the Group could have in meeting its financial obligations. The Directors are responsible for managing liquidity risk, whereas the Corporate Finance management, which reports to the CFO, is responsible for 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 in terms of working capital management, investing activities, punctual loan repayment and the payment of any dividends as planned. |
4.3 Tax risk
| Description | What we do |
|---|---|
| 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, incorporated into the tax control framework. |
| The effectiveness of the tax risk management system has made Prada S.p.A. eligible to participate in the Cooperative Compliance Tax Regime in Italy (under Italian Legislative Decree 128/2015), enhancing its tax control framework. | |
| Within such regime, the Group has expanded a systematic, open communication channel with the Italian and the foreign tax authorities of the most strategically important countries where it operates, based on reciprocal transparency and trust, with the purpose of minimizing the level of uncertainty about potentially risky situations. |
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4.4 Foreign exchange risk
| Description | What we do |
|---|---|
| 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 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 S.p.A., the Group's parent company and worldwide distributor of Prada and Miu Miu brand products. | The management of foreign exchange risk is described in more detail in the Notes to the Interim Condensed Consolidated Financial Statements. |
4.5 Interest rate risk
| Description | What we do |
|---|---|
| Interest rate risk is the risk that future cash flows could be affected by interest rate fluctuations. In order to hedge this risk, which refers mainly to Prada S.p.A., 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. |
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5. COMPLIANCE RISKS
5.1 Legal and regulatory risks
| Description | What we do |
|---|---|
| In the various jurisdiction where it operates, the Group is subject to laws and regulations and, therefore, exposed to the risk of non-compliance, which - in the case of a major breach - could have a material impact on the business and performance of the Group. This can concern, in particular, the following: | The Group involves various divisions and uses external experts as necessary to keep its processes and procedures constantly updated in order to comply with changing rules and regulations in a timely manner, thereby reducing the risk of non-compliance to an acceptable level. Monitoring activities are performed by division managers, auditors, special entities and committees such as the Supervisory Body and the Audit and Risk Committee. |
| - 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 81/2008 and equivalent regulations in force in other countries; | Prada S.p.A. holds the status of Full Authorized Economic Operator (AEO). This recognition, issued by the Customs Agency, is granted to companies that prove to be competent and virtuous in the management of their business processes, in compliance with both customs regulations and safety standards for goods. |
| - possible legal penalties for wrongful acts pursuant to Italian Law 231/2001, as subsequently amended; | |
| - events that could adversely affect the accuracy of the annual financial statements and the protection of assets; | |
| - manufacturing compliance risks with respect to Italian and international laws and regulations regarding finished goods distributed and raw materials and consumables used. |
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6. ESG
6.1 ESG (Environmental, Social, Governance) risks
| Description | What we do |
|---|---|
| The main ESG risks relating to material sustainability impacts, and associated with the Prada Group’s value chain, are identified by the Group in: climate change, human rights, occupational health and safety, diversity and equal opportunity. Strategic, operational, financial and compliance risks are present in such areas, and their assessment is currently underway. | The Prada Group is mindful of the transparency and accountability demanded by its stakeholders in the rapidly evolving environmental, social and regulatory landscape in which it operates, and it intends to strengthen its control system to ensure more pervasive integration of the ESG aspects into its business strategy and model. The Prada Group started up a process to assess the main ESG risks, which was completed at the beginning of 2023 and did not reveal any relevant risks for the organization. |
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 analyse its financial situation. 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 the consolidated financial statements. Other companies operating in the luxury goods industry might use the same measures, but with different calculation criteria. For this reason, it is important for non-IFRS measures to always be read in conjunction with the related explanatory notes, and for readers to be aware that such measures may not be directly comparable with those used by other companies.
In this Interim Report the Prada Group uses 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".
Other non-recurring income / (expenses): transactions qualified by the Directors as non-recurring for their nature, materiality or frequency. Other non-recurring transactions could include, for example, impairment losses or reversal of impairment losses of fixed assets, restructuring costs, litigation costs, and gains and losses on disposals of fixed assets only when they are related to unusual material transactions considered outside the normal course of business.
Recurring operating income/(loss) - EBIT Adjusted: the difference between the "Operating income/(loss) - EBIT" and the "Other non-recurring income / (expenses)".
The reconciliation of Prada Group's EBIT adjusted and EBIT with the nearest IFRS measure (Net income / (loss) for the period) are reported below:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | % on net revenues | six months ended June 30 2022 (unaudited) | % on net revenues |
|---|---|---|---|---|
| Net income / (loss) for the period | 306,630 | 13.7% | 189,417 | 10.0% |
| Taxation | 138,381 | 6.2% | 88,033 | 4.6% |
| Total financial income / (expenses) | 46,408 | 2.1% | 27,352 | 1.4% |
| Operating income / (loss) - EBIT | 491,419 | 22.0% | 304,802 | 16.0% |
| Other non-recurring income / (expenses) | - | - | 26,000 | 1.4% |
| Recurring operating income / (loss) - EBIT Adjusted | 491,419 | 22.0% | 330,802 | 17.4% |
For the six months ended June 30, 2023, the other non-recurring income and expenses is nil while in the six months ended June 30, 2022 they included a write-down of Euro 26 million of tangible fixed assets and right of use assets as a result of the extraordinary market conditions in Russia.
Net financial 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
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and long-term financial receivables due from third parties and related parties.
Net financial surplus/(deficit), including lease liability: Net financial position including lease liability.
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Net financial surplus / (deficit) | 282,887 | 534,900 |
| Long-term lease liability | (1,768,803) | (1,715,451) |
| Short-term lease liability | (420,389) | (392,126) |
| Total lease liability | (2,189,192) | (2,107,577) |
| Net financial surplus / (deficit), including lease liability | (1,906,305) | (1,572,677) |
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
2023
(unaudited) | June 30
2022
(unaudited) |
| --- | --- | --- |
| Cash flow from operating activities | 720,344 | 537,742 |
| Cost of net financial debt: interest paid | 5,424 | (4,685) |
| Lease liability: interest paid | (27,342) | (18,887) |
| Taxes paid | (304,922) | (139,495) |
| Net cash flow from operating activities | 393,504 | 374,675 |
| Repayment of lease liability | (211,751) | (216,473) |
| Net operating cash flow | 181,753 | 158,202 |
| Net cash flow utilized by investing activities | (148,975) | (93,067) |
| Free cash flow | 32,778 | 65,135 |
TREASURY SHARES
At June 30, 2023 the Group does not hold treasury shares.
EVENTS AFTER THE REPORTING DATE
There have been no significant events to report.
PRADA Group
2023 Interim Financial Report - Financial Review
OUTLOOK
The Group will continue to act with a long-term perspective, investing behind the brands while maintaining maximum focus on retail execution and productivity. For the current year, management retains the ambition to deliver solid, sustainable and above-market growth, considering a more challenging basis of comparison in the third quarter, and a fourth quarter 2022 that was again impacted by new Covid restrictions in Asia. The organisation will remain vigilant and nimble to deal with different macroeconomic and demand scenarios that may materialise ahead.
Milan, July 27, 2023
PRADA Group
2023 Interim Financial Report - Financial Review
CORPORATE GOVERNANCE
PRADA Group
2023 Interim Financial Report - Corporate Governance
39
CORPORATE GOVERNANCE PRACTICES
The Company is committed to maintaining the highest standards of corporate governance to create long-term sustainable value for all its stakeholders, including its shareholders.
The corporate governance model adopted by the Company consists of a set of rules, standards and structured procedures aimed at establishing efficient and transparent operations within the Group, to protect the rights of the Company's shareholders, to enhance shareholders' value and to uphold the Group's credibility and reputation. The corporate governance model adopted by the Company complies with the applicable laws and 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").
COMPLIANCE WITH THE CODE
The Board of Directors of the Company (the "Board") has reviewed the Company's corporate governance practices and it is satisfied that such practices have complied with the code provisions set out in the Code throughout the six months from January 1, 2023, to June 30, 2023 (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 is currently made up of eleven directors, of which six are Executive Directors and five are Independent Non-Executive Directors.
During the Reviewed Period, the Board held three meetings on January 26, March 9 and May 11, 2023.
The Board has established the Audit and Risk Committee, the Remuneration Committee, the Nomination Committee and the Sustainability Committee, each chaired by an Independent Non-Executive Director, in compliance with the Code. The Terms of Reference and composition of the first three Board Committees are published on the websites of both the Company and The Stock Exchange of Hong Kong Limited (the "Stock Exchange"). The Terms of Reference of the Board Committees are no less exacting than those set out in the Code.
PRADA Group
2023 Interim Financial Report - Corporate Governance
AUDIT AND RISK COMMITTEE
The Company has established an Audit and Risk Committee in compliance with Rule 3.21 of the Listing Rules, where at least one member possesses related financial management expertise to discharge the responsibility of the Audit and Risk Committee. The Audit and Risk Committee consists of three Independent Non-Executive Directors, namely, Mr. Yoël Zaoui (Chairman), Ms. Marina Sylvia Caprotti and Mr. Maurizio Cereda.
The primary duties of the Audit and Risk Committee are to assist the Board in providing an independent view on the independence, adequacy, effectiveness and efficiency of the internal audit function, Company's financial reporting process and its internal control and risk management system, to oversee the external audit processes, the internal audit process and financial controls activity, to implement the Company's risk management functions, to assess the Company's business model and strategies, to examine the work plan of internal audit, to review the relationship with the external auditors by reference to the work performed by the external auditors, as well as their independence, fees and terms of engagement, and to perform any other duties and responsibilities assigned to it by the Board.
During the Reviewed Period, the Audit and Risk Committee held four meetings, respectively on January 25, February 27, March 8, and May 10, 2023, with an attendance rate of 91.67%, mainly to review, with senior management, the Group's internal and external auditors and the Board of Statutory Auditors, the significant internal and external audit findings and financial matters as required under the Audit and Risk Committee's Terms of Reference, and to make relevant recommendations to the Board. The Audit and Risk Committee's activities covered, among others, the financial year 2023 budget, the audit plan for the year 2023, the 2022 Sustainability Report, the findings of both the internal and external auditors, internal controls, risk assessment, annual review of the Group's continuing connected transactions for the year 2022, tax and legal updates (including management of data privacy matters and review of extraordinary transactions), and the financial reporting matters (including the annual results for the year ended December 31, 2022 and the unaudited financial results for the first quarter ended March 31, 2023), before recommending them to the Board for approval.
The Audit and Risk Committee held a further meeting on July 26, 2023 to, among
PRADA Group
2023 Interim Financial Report - Corporate Governance
41
others, review the interim results for the period ended June 30, 2023, before recommending them to the Board for approval.
REMUNERATION COMMITTEE
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 submitted to the Board for consideration and adoption, where appropriate. The Remuneration Committee consists of two Independent Non-Executive Directors, Ms. Marina Sylvia Caprotti (Chairwoman) and Mr. Yoël Zaoui, and the Executive Director and Executive Deputy Chairman, Mr. Paolo Zannoni.
During the Reviewed Period, the Remuneration Committee held two meetings, respectively on January 25 and March 6, 2023, with an attendance rate of 100% to review the remuneration of Mr. Paolo Zannoni, Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli, as Directors with special offices, before recommending it to the Board for approval, as well as to review the aggregate basic remuneration of the Board, to be resolved upon by the Annual General Meeting, and for the members of the Board Committees, before recommending it to the Board for approval.
NOMINATION COMMITTEE
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.
The Nomination Committee consists of two Independent Non-Executive Director, Mr. Maurizio Cereda (Chairman) and Ms. Marina Sylvia Caprotti, and one Executive Director, Mr. Lorenzo Bertelli.
During the Reviewed Period, the Nomination Committee held two meetings on, respectively, January 18, and March 1, 2023, with an attendance rate of 100% to
PRADA Group
2023 Interim Financial Report - Corporate Governance
recommend to the Board the appointment of Mr. Andrea Guerra as an Executive Director, in replacement of the Non-Executive Director, Mr. Stefano Simontacchi, as well as to review the proposal for the appointment of Mr. Patrizio Bertelli as the new Chairman of the Board, to verify the independence of the Independent Non-Executive Directors, the composition and the size of the Board for the Year 2022.
SUSTAINABILITY COMMITTEE
The Sustainability Committee assists and supports the Board with proposing and advisory functions in its assessments and decisions on sustainability, meaning the processes, initiatives, and activities, aimed at overseeing the Company's commitment to sustainable development along the value chain and strategy. Moreover, the Committee supports the preparation and review of non-financial reports, including the annual Sustainability Report, and communications concerning sustainability to be submitted to the Board for approval.
The Sustainability Committee consists of two Independent Non-Executive Directors, Ms. Pamela Yvonne Culpepper (Chairwoman) and Ms. Anna Maria Rugarli, and one Executive Director, Mr. Lorenzo Bertelli.
During the Reviewed Period, the Sustainability Committee held a meeting on March 2, 2023, with an attendance rate of 100%, to provide updates on progresses and achievements in ESG, approve the Sustainability Report for the Year 2022, and the industrial roadmap for supporting sustainability in the Group's operations.
The Sustainability Committee held a further meeting on July 12, 2023 to, among others, provide further updates on the latest initiatives and achievements in ESG, as well as on the industrial roadmap to support sustainability of operations, and to discuss the ESG results to be included in the presentation of the interim results for the period ended June 30, 2023.
BOARD OF STATUTORY AUDITORS
Under Italian law, a joint-stock company is required to have a board of statutory auditors, appointed by the shareholders for a term of three financial years, with the authority to supervise the Company on its compliance with the applicable law, regulations, its By-laws, the principles of proper management and, in particular, on the adequacy and functioning of the organizational, administrative and accounting
PRADA Group
2023 Interim Financial Report - Corporate Governance
structure adopted by the Company.
The Board of Statutory Auditors consists of Mr. Antonino Parisi (Chairman), Mr. Roberto Spada, and Mr. David Terracina. The alternate statutory auditors are Ms. Stefania Bettoni and Ms. Fioranna Negri.
During the Reviewed Period, the Board of Statutory Auditors held three meetings.
ORGANISMO DI VIGILANZA (SUPERVISORY BODY)
In compliance with Italian Legislative Decree 231 of June 8, 2001 (the "Decree"), the Company established an "Organismo di Vigilanza" whose primary duty is to ensure the functioning, effectiveness and enforcement of the Company's Organization, Management and Control Model, adopted by the Company pursuant to the same Decree. The "Organismo di Vigilanza" has three members appointed by the Board and selected among qualified and experienced individuals. The "Organismo di Vigilanza" consists of Ms. Stefania Chiaruttini (Chairwoman), Mr. Armando Simbari (replaced Mr. Yoël Zaoui, Independent Non-Executive Director, on July 26, 2023), and Mr. Roberto Spada, Statutory Auditor.
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 9, 2023, the Board recommended for the financial year 2022 the payment of a final dividend of Euro 0.11 per share, representing a total dividend of Euro 281,470,640. The shareholders approved the distribution and payment of the final dividend at the annual general meeting held on April 27, 2023. The dividend was paid on May 19, 2023, while the relevant withholding tax was paid in July 2023.
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 2022 Annual Report, the Company's announcement
PRADA Group
2023 Interim Financial Report - Corporate Governance
dated April 27, 2023 (in respect of the shareholders' approval of the change of Chairman of the Board to Mr. Patrizio Bertelli, the emoluments of Mr. Andrea Guerra, the increase of aggregate basic remuneration of the Board and the confirmation of appointment of Mr. Andrea Bonini and Mr. Andrea Guerra as Executive Directors), and the Company's announcement dated May 11, 2023 (in respect of the appointment of Mr. Paolo Zannoni as the Executive Deputy Chairman, and Mr. Yoël Zaoui as the Lead Independent Director), other than the changes disclosed in other paragraphs of this Interim Report, are set out below:
| Name of Director | Change |
|---|---|
| Paolo Zannoni | Mr. Zannoni was appointed as the Chairman of Prada Holding S.p.A. on June 28, 2023. |
| Lorenzo Bertelli | With effect from May 11, 2023, Mr. Lorenzo Bertelli's annual remuneration as a member of the Nomination Committee was increased to Euro 15,000. He waived the said remuneration, with an increase of the same amount in his annual salary. |
| Yoël Zaoui | With effect from April 27, 2023, Mr. Zaoui's annual remuneration as an Independent Non-Executive Director was increased to Euro 100,000. As of May 11, 2023, Mr. Zaoui's annual remuneration as a member of Remuneration Committee was increased to Euro 15,000. Mr. Zaoui has ceased to act as a member of "Organismo di Vigilanza" (Supervisory Body) on July 26, 2023. |
| Marina Sylvia Caprotti | With effect from April 27, 2023, Ms. Caprotti's annual remuneration as an Independent Non-Executive Director was increased to Euro 100,000. As of May 11, 2023, Ms. Caprotti's annual remuneration as the Chairwoman of Remuneration Committee, a member of Audit and Risk Committee and a member of Nomination Committee were increased to Euro 30,000, Euro 30,000 and Euro 15,000 respectively. |
| Maurizio Cereda | With effect from April 27, 2023, Mr. Cereda's annual remuneration as an Independent Non-Executive Director was increased to Euro 100,000. As of May 11, 2023, Mr. Cereda's annual remuneration as the Chairman of Nomination Committee and a member of Audit and Risk Committee were increased to Euro 30,000, and Euro 30,000 respectively. |
| Pamela Yvonne Culpepper | With effect from April 27, 2023, Ms. Culpepper's annual remuneration as an Independent Non-Executive Director was increased to Euro 100,000. Ms. Culpepper joined Hanold Associates, LLC as Managing Partner of their Leadership Advisory Practice in January 2023 and was appointed to Cambia Health Solutions Inc.'s Board of Directors as an Independent Director in March 2023. |
| Anna Maria Rugarli | With effect from April 27, 2023, Ms. Rugarli's annual remuneration as an Independent Non-Executive Director was increased to Euro 100,000. Ms. Rugarli was appointed as an Independent Non-Executive Director and the Chair of the ESG Committee of ASOS plc, a company listed on the London Stock Exchange, in June 2023. |
DIRECTORS' SECURITIES TRANSACTIONS
The Company has adopted a set of written procedures governing Directors' securities transactions on terms no less exacting than those 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"). In response to specific enquiries by the Company, all Directors confirmed that they complied with the required standard set out in the Model Code and the Company's procedures at all applicable times during the Reviewed Period. There was no incident of non-compliance during the Reviewed Period.
The Company has also adopted a set of written procedures governing securities transactions carried out by the relevant employees who are likely to possess inside information in relation to the Company and its securities. This set of procedures is on terms no less exacting than those set out in the Model Code.
PRADA Group
2023 Interim Financial Report - Corporate Governance
PURCHASE, SALE, OR REDEMPTION OF THE COMPANY'S LISTED SECURITIES
Neither the Company nor any of its subsidiaries 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, 2023, 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:
1. Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company and, therefore, is the holding company of the Company.
2. 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..
3. Mr. Patrizio Bertelli controls, indirectly through PA BE 1 S.p.A., 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. Patrizio Bertelli is also a director of PA BE 1 S.p.A..
PRADA Group
2023 Interim Financial Report - Corporate Governance
The deemed interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Bertelli in the shares of the Company as at June 30, 2023 are summarized in the following chart:
(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% | |||
| PH-RE LLC | Capital Contribution (JPY) | 1,000,000 | Controlled Corporation | 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% | |
| PH-RE LLC | Capital Contribution (JPY) | 1,000,000 | As above | 100% |
Save as disclosed above, as at June 30, 2023, none of the Directors of the Company or their associates held any interest or short position in the shares, underlying
PRADA Group
2023 Interim Financial Report - Corporate Governance
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.
SUBSTANTIAL SHAREHOLDERS' INTERESTS AND SHORT POSITIONS IN SECURITIES
As at June 30, 2023, 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 were recorded in the register required to be kept by 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.p.A. | 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.p.A. owns 35% of Prada Holding S.p.A., Bellatrix S.p.A., Ludo S.p.A. and PA BE 1 S.p.A. are all deemed to be interested in the 2,046,470,760 shares held by Prada Holding S.p.A..
PRADA Group
2023 Interim Financial Report - Corporate Governance
INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PRADA Group
2023 Interim Financial Report - Interim condensed consolidated financial statements
49
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
| (amounts in thousands of Euro) | Notes | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- | --- |
| Assets | | | |
| Current assets | | | |
| Cash and cash equivalents | 6 | 766,271 | 1,091,622 |
| Trade receivables, net | 7 | 325,296 | 331,915 |
| Inventories, net | 8 | 784,525 | 760,457 |
| Derivative financial instruments - current | 9 | 34,268 | 22,483 |
| Receivables due from, and advance payments to, related parties - current | 10 | 2,358 | 2,373 |
| Other current assets | 11 | 254,573 | 215,917 |
| Total current assets | | 2,167,291 | 2,424,767 |
| Non-current assets | | | |
| Property, plant and equipment | 12 | 1,590,172 | 1,577,125 |
| Intangible assets | 13 | 827,069 | 817,809 |
| Right of use assets | 14 | 2,082,146 | 2,011,474 |
| Investments in equity instruments | 15 | 32,782 | 26,974 |
| Deferred tax assets | 33 | 379,917 | 373,090 |
| Other non-current assets | 16 | 136,981 | 139,402 |
| Derivative financial instruments - non-current | 9 | 5,585 | 5,812 |
| Receivables due from, and advance payments to, related parties - non-current | 10 | 1,125 | 1,125 |
| Total non-current assets | | 5,055,777 | 4,952,811 |
| Total assets | | 7,223,068 | 7,377,578 |
| Liabilities and shareholders' equity | | | |
| Current liabilities | | | |
| Short-term lease liability | 17 | 420,389 | 392,126 |
| Short-term financial payables and bank overdrafts | 18 | 131,991 | 160,847 |
| Payables due to related parties - current | 19 | 5,045 | 3,568 |
| Trade payables | 20 | 386,559 | 401,799 |
| Tax payables | 21 | 133,002 | 277,656 |
| Derivative financial instruments - current | 9 | 5,946 | 11,565 |
| Other current liabilities | 22 | 244,428 | 242,306 |
| Total current liabilities | | 1,327,360 | 1,489,867 |
| Non-current liabilities | | | |
| Long-term lease liability | 17 | 1,768,803 | 1,715,451 |
| Long-term financial payables | 23 | 349,714 | 395,656 |
| Long-term employee benefits | 24 | 56,323 | 67,571 |
| Provision for risks and charges | 25 | 47,024 | 51,486 |
| Deferred tax liabilities | 33 | 43,168 | 40,855 |
| Other non-current liabilities | 26 | 109,435 | 115,670 |
| Total non-current liabilities | | 2,374,467 | 2,386,689 |
| Total liabilities | | 3,701,827 | 3,876,556 |
| Share capital | | 255,882 | 255,882 |
| Total other reserves | | 2,843,377 | 2,648,496 |
| Translation reserve | | 96,989 | 112,646 |
| Net income / (loss) for the period | | 305,168 | 465,193 |
| Net equity attributable to owners of the Group | 27 | 3,501,416 | 3,482,217 |
| Net equity attributable to Non-controlling interests | 28 | 19,825 | 18,805 |
| Total net equity | | 3,521,241 | 3,501,022 |
| Total liabilities and total net equity | | 7,223,068 | 7,377,578 |
| Net current assets | | 839,931 | 934,900 |
| Total assets less current liabilities | | 5,895,708 | 5,887,711 |
PRADA Group
2023 Interim Financial Report - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE SIX MONTHS ENDED JUNE 30, 2023
| (amounts in thousands of Euro) | Notes | six months ended June 30 2023 (unaudited) | % | six months ended June 30 2022 (unaudited) | % |
|---|---|---|---|---|---|
| Net revenues | 29 | 2,232,379 | 100.0% | 1,900,942 | 100.0% |
| Cost of goods sold | 30 | (438,984) | -19.7% | (423,451) | -22.3% |
| Gross margin | 1,793,395 | 80.3% | 1,477,491 | 77.7% | |
| Operating expenses | 31 | (1,301,976) | -58.3% | (1,172,689) | -61.7% |
| Operating income / (loss) - EBIT | 491,419 | 22.0% | 304,802 | 16.0% | |
| Interest and other financial income / (expenses), net | (19,292) | -0.9% | (8,584) | -0.5% | |
| Interest expenses on lease liability | (27,342) | -1.2% | (18,887) | -1.0% | |
| Dividends from investments | 226 | 0.0% | 119 | 0.0% | |
| Total financial income / (expenses) | 32 | (46,408) | -2.1% | (27,352) | -1.4% |
| Income / (loss) before taxation | 445,011 | 19.9% | 277,450 | 14.6% | |
| Taxation | 33 | (138,381) | -6.2% | (88,033) | -4.6% |
| Net income / (loss) for the period | 306,630 | 13.7% | 189,417 | 10.0% | |
| Net income / (loss) - Non-controlling interests | 28 | 1,462 | 0.1% | 1,153 | 0.1% |
| Net income / (loss) - Group | 27 | 305,168 | 13.7% | 188,264 | 9.9% |
| Basic and diluted earnings / (losses) per share (in Euro per share) | 34 | 0.119 | 0.074 |
PRADA Group
2023 Interim Financial Report - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE SIX MONTHS ENDED JUNE 30, 2023
| amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Income / (loss) before taxation | 445,011 | 277,450 |
| Profit or loss adjustments | ||
| Depreciation of the right of use assets | 221,203 | 221,466 |
| Depreciation and amortization of property, plant and equipment and intangible assets | 108,869 | 102,981 |
| Impairment of the right of use assets | 3,917 | 8,000 |
| Impairment of property, plant and equipment and intangible assets | 2,510 | 19,844 |
| Non-monetary financial (income) / expenses | 35,662 | (13,699) |
| Interest expenses on lease liability | 27,342 | 18,887 |
| Other non-monetary (income) / expenses | 17,298 | 18,017 |
| Balance sheet changes | ||
| Other non-current assets and liabilities | (26,038) | (8,595) |
| Trade receivables, net | (2,179) | 16,092 |
| Inventories, net | (56,615) | (62,917) |
| Trade payables | (7,591) | (24,291) |
| Other current assets and liabilities | (49,045) | (35,493) |
| Cash flows from operating activities | 720,344 | 537,742 |
| Interest paid (net), including interest paid on lease liability - third parties | (21,918) | (23,572) |
| Taxes paid | (304,922) | (139,495) |
| Net cash flows from operating activities | 393,504 | 374,675 |
| Purchases of property, plant and equipment and intangible assets | (149,204) | (88,597) |
| Disposals of property, plant and equipment and intangible assets | - | 411 |
| Earn-out paid to a related party | - | (5,000) |
| Dividends from investments | 229 | 119 |
| Net cash flow utilised by investing activities | (148,975) | (93,067) |
| Dividends paid to shareholders of Prada S.p.A. | (266,818) | (169,793) |
| Dividends paid to Non-controlling shareholders | (250) | - |
| Repayment of lease liability | (211,751) | (216,473) |
| Loans to related parties | - | (2,200) |
| Loans from related parties | 1,500 | - |
| Repayment of short-term portion of long-term borrowings - third parties | (47,335) | (136,519) |
| Change in short-term borrowings - third parties | (24,032) | 4,383 |
| Capital injection to associates | (4,509) | - |
| Net cash flows utilised by financing activities | (553,195) | (520,602) |
| Change in cash and cash equivalents, net of bank overdrafts | (308,666) | (238,994) |
| Foreign exchange differences | (16,620) | 40,878 |
| Opening cash and cash equivalents, net of bank overdrafts | 1,091,557 | 981,786 |
| Closing cash and cash equivalents, net of bank overdrafts | 766,271 | 783,670 |
PRADA Group
2023 Interim Financial Report - Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE SIX MONTHS ENDED JUNE 30, 2023
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Net income / (loss) for the period | 306,630 | 189,417 |
| A) Items recyclable to P&L: | ||
| Change in translation reserve | (15,849) | 91,899 |
| Tax impact | - | - |
| Change in translation reserve less tax impact | (15,849) | 91,899 |
| Change in cash flow hedge reserve | 9,820 | 4,756 |
| Tax impact | (2,369) | (1,088) |
| Change in cash flow hedge reserve less tax impact | 7,451 | 3,668 |
| B) Items not recyclable to P&L: | ||
| Change in fair value in equity instruments reserve | 1,299 | (273) |
| Tax impact | - | - |
| Change in fair value in equity instruments reserve less tax impact | 1,299 | (273) |
| Change in actuarial reserve | - | - |
| Tax impact | - | - |
| Change in actuarial reserve less tax impact | - | - |
| Comprehensive income / (loss) for the period - Consolidated | 299,531 | 284,711 |
| Comprehensive income / (loss) for the period - Non-controlling Interests | 1,270 | 1,993 |
| Comprehensive income / (loss) for the period - Group | 298,261 | 282,718 |
PRADA Group
2023 Interim Financial Report - 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, 2021 (audited) | 2,558,824,000 | 255,882 | 67,434 | 410,047 | (15,878) | (5,708) | (10,992) | 2,118,855 | 2,496,324 | 294,254 | 3,113,894 | 14,749 | 3,128,643 |
| Allocation of 2021 net result | - | - | - | - | - | - | - | 294,254 | 294,254 | (294,254) | - | - | - |
| Dividends | - | - | - | - | - | - | - | (179,118) | (179,118) | - | (179,118) | - | (179,118) |
| Monetary revaluation IAS 29 | - | - | - | - | - | - | - | 9,044 | 9,044 | - | 9,044 | - | 9,044 |
| Comprehensive income/(loss) for the period (recyclable to P&L) | - | - | 91,059 | - | 3,668 | - | - | - | 3,668 | 188,264 | 282,991 | 1,993 | 284,984 |
| Comprehensive income/(loss) for the period (not recyclable to P&L) | - | - | - | - | - | - | (273) | - | (273) | - | (273) | - | (273) |
| Balance at June 30, 2022 (unaudited) | 2,558,824,000 | 255,882 | 158,493 | 410,047 | (12,210) | (5,708) | (11,265) | 2,243,035 | 2,623,899 | 188,264 | 3,226,538 | 16,742 | 3,243,280 |
| Dividends | - | - | - | - | - | - | - | - | - | - | - | (599) | (599) |
| Monetary revaluation IAS 29 | - | - | - | - | - | - | - | 2,866 | 2,866 | - | 2,866 | - | 2,866 |
| Comprehensive income/(loss) for the period (recyclable to P&L) | - | - | (45,847) | - | 22,270 | - | - | - | 22,270 | 276,929 | 253,352 | 2,633 | 255,985 |
| Comprehensive income/(loss) for the period (not recyclable to P&L) | - | - | - | - | - | (1,399) | 860 | - | (539) | - | (539) | 29 | (510) |
| Balance at December 31, 2022 (audited) | 2,558,824,000 | 255,882 | 112,646 | 410,047 | 10,060 | (7,107) | (10,405) | 2,245,901 | 2,648,496 | 465,193 | 3,482,217 | 18,805 | 3,501,022 |
| Allocation of 2022 net result | - | - | - | - | - | - | - | 465,193 | 465,193 | (465,193) | - | - | - |
| Dividends | - | - | - | - | - | - | - | (281,471) | (281,471) | - | (281,471) | (250) | (281,721) |
| Monetary revaluation IAS 29 | - | - | - | - | - | - | - | 2,409 | 2,409 | - | 2,409 | - | 2,409 |
| Comprehensive income/(loss) for the period (recyclable to P&L) | - | - | (15,657) | - | 7,451 | - | - | - | 7,451 | 305,168 | 296,962 | 1,270 | 298,232 |
| Comprehensive income/(loss) for the period (not recyclable to P&L) | - | - | - | - | - | - | 1,299 | - | 1,299 | - | 1,299 | - | 1,299 |
| Balance at June 30, 2023 (unaudited) | 2,558,824,000 | 255,882 | 96,989 | 410,047 | 17,511 | (7,107) | (9,106) | 2,432,032 | 2,843,377 | 305,168 | 3,501,416 | 19,825 | 3,521,241 |
PRADA Group
2023 Interim Financial Report - Interim condensed consolidated financial statements
NOTES TO THE INTERIM CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
55
1. GENERAL INFORMATION
Prada S.p.A. ("Prada" or the "Company"), together with its subsidiaries (collectively the "Group" or the "Prada 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 sector with the Marchesi 1824 brand, in the most prestigious sailing races with Luna Rossa and in the eyewear and fragrance industries under licensing agreements.
The Group owns 25 production facilities (22 in Italy, 1 in the United Kingdom, 1 in France and 1 in Romania) and its products are sold in 70 countries worldwide primarily through 603 directly operated stores at June 30, 2023. The Prada Group's products are also sold directly through the brands' e-commerce activity and indirectly in selected high-end department stores, by independent retailers in very exclusive locations and by important e-tailers.
The Company is a joint-stock company with limited liability, registered and domiciled in Italy. Its registered office is at via Fogazzaro 28, Milan. At June 30, 2023 (the reporting date of these Interim Condensed Consolidated Financial Statements), 79.98% of the share capital was owned by Prada Holding S.p.A., a company domiciled in Italy, and the remainder consisted of floating shares listed 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 S.p.A. on July 27, 2023.
2. BASIS OF PREPARATION
The unaudited Interim Condensed Consolidated Financial Statements of the Prada Group for the six months ended June 30, 2023, consisting of the "Consolidated Statement of Financial Position", the "Consolidated Statement of Profit or Loss for the six months ended June 30, 2023", the "Consolidated Statement of Cash Flows for the six months ended June 30, 2023", the "Consolidated Statement of Comprehensive Income for the six months ended June 30, 2023", the "Consolidated
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
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 read together with the Consolidated Financial Statements of the Prada Group for the twelve months ended December 31, 2022, which were prepared in accordance with the International Financial Reporting Standards ("IFRSs") issued by the International Accounting Standards Board ("IASB") and endorsed by the European Union.
At the date of presentation of this unaudited Interim Condensed Consolidated Financial Statements, there were no differences between the IFRSs endorsed by the European Union and applicable to the Prada Group and those issued by the IASB, excluding the amendments not endorsed yet as explained in the Note 3.
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 Consolidated Statement of Financial Position presenting separately the current and non-current assets and liabilities. All details needed for accurate and complete disclosure are provided in the Notes to the Interim Condensed Consolidated Financial Statements. Consolidated Statement of Profit or Loss items are classified by destination. The Consolidated Statement of Cash Flows has been prepared with the indirect method. The Interim Condensed Consolidated Financial Statements are presented in Euro, the functional currency of Prada S.p.A..
The unaudited Interim Condensed Consolidated Financial Statements have been prepared on a going concern basis.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
57
3. NEW IFRS AND AMENDMENTS TO IFRS
New standards and amendments to existing standards issued by the IASB, endorsed by the European Union and applicable to the Prada Group from January 1, 2023
| New standards and Amendments to existing standards | Effective date for Prada Group | EU endorsement dates |
|---|---|---|
| IFRS 17 Insurance contracts | January 1, 2023 | Endorsed in November 2021 |
| Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2: Disclosure of Accounting policies | January 1, 2023 | Endorsed in March 2022 |
| Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors: Definition of Accounting Estimates | January 1, 2023 | Endorsed in March 2022 |
| Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising from a single transaction | January 1, 2023 | Endorsed in August 2022 |
| Amendments to IFRS 17 Insurance contracts: Initial application of IFRS 17 and IFRS 9 - Comparative information (issued on 9 December 2021) | January 1, 2023 | Endorsed in September 2022 |
Amendments to existing standards issued by the IASB, but not yet endorsed by the European Union as of June 30, 2023
| Amendments to existing standards | Date of possible application | EU endorsement dates |
|---|---|---|
| Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules | January 1, 2023 | Not endorsed yet |
| Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 September 2022) | January 1, 2024 | Not endorsed yet |
| Amendments to IAS 7 Statement of Cash Flows and IFRS 7 Financial Instruments: Disclosures: Supplier Finance Arrangements (issued on 25 May 2023) | January 1, 2024 | Not endorsed yet |
| Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as Current or Non-current - Deferral of Effective Date - Non-current Liabilities with Covenants | January 1, 2024 | Not endorsed yet |
On 23 May 2023, the IASB issued the "Amendments to IAS 12 Income taxes: International Tax Reform - Pillar Two Model Rules" with the objective to introduce a mandatory temporary exception to the requirements in IAS 12 Income Taxes ("IAS 12") to recognise and disclose information about deferred tax assets and liabilities arising from the OECD's Pillar Two Model Rules. The temporary exception will be applicable immediately upon the issue of the Amendments and retrospectively in accordance with IAS 8 from January 1, 2023. EFRAG assessed that the Amendments meet the technical endorsement criteria of the IAS Regulation and recommended its endorsement but the endorsement process by the European Union is not formally complete.
Since it is unclear whether the application of the current requirement of IAS 12 to Pillar Two income taxes create additional temporary differences, whether to
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
remeasure deferred taxes and which tax rate to use to measure deferred taxes, the Group applied judgment and concluded, in accordance with IAS 8, that not accounting for deferred taxes related to Pillar Two income taxes represents the most relevant and reliable accounting policy. This policy results in accounting that is consistent with the above Amendments whose endorsement process is still on going.
4. MERGERS AND ACQUISITIONS
Nothing significant to mention.
5. OPERATING SEGMENTS
IFRS 8, "Operating Segments", requires detailed information to 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 adopt decisions 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 provided with the financial performance chiefly 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 the net revenues by distribution channel, brand, geographical area and product are provided in the Financial Review together with the related comments.
GEOGRAPHICAL INFORMATION
The following table reports the carrying amount of the Group's Non-current assets by geographical area, as required by IFRS 8, "Operating Segments", for entities,
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
like the Prada Group, that have a single reportable segment:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Europe | 3,016,709 | 3,008,806 |
| Americas | 629,992 | 628,828 |
| Asia Pacific | 577,149 | 504,942 |
| Japan | 299,130 | 349,099 |
| Middle East and Africa | 146,240 | 81,617 |
| Total | 4,669,220 | 4,573,292 |
The total amount of Euro 4,669 million (Euro 4,573 million at December 31, 2022) relates to the Group's non-current assets excluding, as per IFRS 8, those relating to derivatives, 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
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Cash on hand and other cash equivalents | 41,067 | 53,804 |
| Bank deposit accounts | 570,829 | 781,358 |
| Bank current accounts | 154,375 | 256,460 |
| Total | 766,271 | 1,091,622 |
Bank deposits accounts are broken down by currency as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Currency | | |
| Euro | 318,897 | 473,021 |
| US Dollar | 72,926 | 131,258 |
| Hong Kong Dollar | 122,225 | 123,010 |
| Other Currencies | 56,781 | 54,069 |
| Total bank deposit accounts | 570,829 | 781,358 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
Bank current accounts are broken down by currency as follows:
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Currency | ||
| US Dollar | 31,440 | 65,427 |
| Euro | 30,261 | 56,977 |
| GB Pound | 10,076 | 14,299 |
| Korean Won | 4,301 | 5,136 |
| Hong Kong Dollar | 5,072 | 3,615 |
| Other Currencies | 73,225 | 111,006 |
| Total bank current accounts | 154,375 | 256,460 |
At June 30, 2023, bank current accounts and bank deposit accounts generated interest income of between 0% and 18% annually (between 0.1% and 12% at December 31, 2022).
The management considers no significant risk to exist on bank accounts given that their use is strictly related to operating activities and business processes and they are present in a large number of countries.
7. TRADE RECEIVABLES, NET
The trade receivables are detailed as follows:
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Trade receivables - third parties | 332,964 | 342,110 |
| Allowance for bad and doubtful debts | (9,197) | (11,595) |
| Trade receivables - related parties | 1,529 | 1,400 |
| Total | 325,296 | 331,915 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The change in the allowance for bad and doubtful debts is set forth below:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Opening balance (audited) | 11,595 | 10,990 |
| Exchange differences | (242) | 90 |
| Increases | 767 | 741 |
| Reversals | (339) | (136) |
| Utilisation | (2,584) | (90) |
| Closing balance | 9,197 | 11,595 |
The following table contains a summary, by due date, of total receivables before the allowance for bad and doubtful debts at the reporting date:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables | 334,493 | 274,671 | 29,578 | 5,896 | 3,584 | 3,156 | 17,608 |
| Total | 334,493 | 274,671 | 29,578 | 5,896 | 3,584 | 3,156 | 17,608 |
| (amounts in thousands of Euro) | December 31
2022
(audited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables | 343,510 | 272,142 | 39,132 | 6,297 | 4,459 | 1,211 | 20,269 |
| Total | 343,510 | 272,142 | 39,132 | 6,297 | 4,459 | 1,211 | 20,269 |
The following table contains a summary, by due date, of trade receivables less the allowance for bad and doubtful debts at the reporting date:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables less allowance for bad and doubtful debts | 325,296 | 273,342 | 29,488 | 5,871 | 3,551 | 3,102 | 9,942 |
| Total | 325,296 | 273,342 | 29,488 | 5,871 | 3,551 | 3,102 | 9,942 |
| (amounts in thousands of Euro) | December 31
2022
(audited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade receivables less allowance for bad and doubtful debts | 331,915 | 270,542 | 39,060 | 5,833 | 4,453 | 1,209 | 10,818 |
| Total | 331,915 | 270,542 | 39,060 | 5,833 | 4,453 | 1,209 | 10,818 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
8. INVENTORIES, NET
Inventories are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Raw materials | 111,551 | 108,450 |
| Work in progress | 38,872 | 30,109 |
| Finished products | 724,365 | 699,849 |
| Return assets | 10,959 | 10,493 |
| Allowance for obsolete and slow-moving inventories | (101,222) | (88,444) |
| Total | 784,525 | 760,457 |
The inventories increased from Euro 760.5 million at December 31, 2022 to Euro 784.5 million at June 30, 2023, to support the sales growth.
The changes in the allowance for obsolete and slow-moving inventories are as follows:
| (amounts in thousands of Euro) | Raw materials | Finished products | Total allowance for obsolete and slow-moving inventories |
|---|---|---|---|
| Opening balance (audited) | 32,222 | 56,222 | 88,444 |
| Exchange differences | 1 | (63) | (62) |
| Increases | 6,000 | 7,167 | 13,167 |
| Utilisation | - | (327) | (327) |
| Closing balance (unaudited) | 38,223 | 62,999 | 101,222 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
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
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Financial assets regarding derivative instruments - current | 34,268 | 22,483 |
| Financial assets regarding derivative instruments - non-current | 5,585 | 5,812 |
| Total financial assets - Derivative financial instruments | 39,853 | 28,295 |
| Financial liabilities regarding derivative instruments - current | (5,946) | (11,565) |
| Total financial liabilities - Derivative financial instruments | (5,946) | (11,565) |
| Net carrying amount - current and non-current | 33,907 | 16,730 |
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
2023
(unaudited) | December 31
2022
(audited) | IFRS7
Category |
| --- | --- | --- | --- |
| Forward contracts | 26,580 | 12,673 | Level II |
| Options | 2,120 | 6,361 | Level II |
| Interest rate swaps | 11,153 | 9,261 | Level II |
| Positive fair value | 39,853 | 28,295 | |
| Forward contracts | (5,851) | (10,425) | Level II |
| Options | (95) | (1,140) | Level II |
| Negative fair value | (5,946) | (11,565) | |
| Net carrying amount - current and non-current | 33,907 | 16,730 | |
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
PRADA Group 2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
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 fluctuations.
FOREIGN EXCHANGE RATE TRANSACTIONS
The cash flows of the Group are exposed to exchange rate volatility because it operates on an international scale. 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.
The notional amounts of the derivative contracts (translated at the European Central Bank exchange rate at June 30, 2023) designated as foreign exchange risk hedges are as stated below.
Contracts in effect as of June 30, 2023 to hedge projected future trade cash flows:
| (amounts in thousands of Euro) | Options | Forward sale contracts | Forward purchase contracts | June 30 2023 (unaudited) |
|---|---|---|---|---|
| Currency | ||||
| Chinese Renminbi | - | 91,792 | (3,798) | 87,994 |
| US Dollar | - | 203,755 | - | 203,755 |
| Japanese Yen | 3,818 | 48,358 | - | 52,176 |
| GB Pound | - | 46,022 | - | 46,022 |
| Korean Won | 29,250 | 47,253 | (11,143) | 65,360 |
| Canadian Dollar | 6,243 | 7,562 | - | 13,805 |
| Hong Kong Dollar | - | 9,571 | - | 9,571 |
| Swiss Franc | - | 16,347 | - | 16,347 |
| Taiwan Dollar | - | 11,355 | (355) | 11,000 |
| Malaysian Ringgit | - | 5,422 | - | 5,422 |
| Other currencies | 3,122 | 57,088 | (353) | 59,857 |
| Total | 42,433 | 544,525 | (15,649) | 571,309 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
Contracts in effect as of June 30, 2023 to hedge projected future financial cash flows:
| (amounts in thousands of Euro) | Forward sale contracts | June 30 2023 (unaudited) |
|---|---|---|
| Currency | ||
| Swiss Franc | 31,365 | 31,365 |
| GB Pound | 36,119 | 36,119 |
| Malaysian Ringgit | 4,929 | 4,929 |
| US Dollar | 34,684 | 34,684 |
| Other currencies | 30,298 | 30,298 |
| Total | 137,395 | 137,395 |
All contracts in place as at June 30, 2023 will mature within 12 months, except for some forward contracts to hedge future trade and financial cash flows which mature after June 30, 2024 and whose notional net amount is Euro 19.7 million (referring entirely to forward sale contracts).
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, 2023 are summarized as follows:
| Interest Rate Swap (IRS) Agreement | Hedged loan | ||||||||
|---|---|---|---|---|---|---|---|---|---|
| Contract | Currency | Notional amount | Interest rate | Maturity date | June 30, 2023 (unaudited) | Currency | Type of debt | Amount | Expiry |
| IRS | Euro/000 | 25,667 | 1.46% | May-2030 | 1,626 | EUR | Term Loan | 25,667 | May-2030 |
| IRS | Euro/000 | 100,000 | 1.33% | Apr-2025 | 4,326 | EUR | Term Loan | 100,000 | Apr-2025 |
| IRS | Euro/000 | 64,800 | 2.65% | Feb-2026 | 1,015 | EUR | Term Loan | 64,800 | Feb-2026 |
| IRS | GBP/000 | 41,100 | 2.78% | Jan-2029 | 4,186 | GBP | Term Loan | 41,100 | Jan-2029 |
| Total fair value (amounts in thousands of Euro) | 11,153 |
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.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
10. RECEIVABLES DUE FROM, AND ADVANCE PAYMENTS TO, RELATED PARTIES - CURRENT AND NON-CURRENT
The current receivables due from, and advances payments to, related parties are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Financial receivables | 2,200 | 2,200 |
| Other receivables and advances | 158 | 173 |
| Receivables due from, and advance payments to, related parties - current | 2,358 | 2,373 |
The non-current receivables due from, and advances payments to, related parties are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Financial receivables | 1,125 | 1,125 |
| Receivables due from, and advance payments to, related parties - non-current | 1,125 | 1,125 |
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
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| VAT | 43,620 | 39,627 |
| Taxation and other tax receivables | 61,068 | 70,775 |
| Other assets | 16,085 | 9,230 |
| Prepayments | 128,677 | 86,617 |
| Guarantee deposits | 5,123 | 9,668 |
| Total | 254,573 | 215,917 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
OTHER ASSETS
The other assets are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Advances to suppliers | 5,177 | 4,079 |
| Incentives for retail investments | 1,974 | 1,204 |
| Other receivables | 8,934 | 3,947 |
| Total | 16,085 | 9,230 |
PREPAYMENTS
The prepayments are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Rental costs | 6,987 | 3,031 |
| Insurance | 3,615 | 2,831 |
| Design costs | 37,991 | 29,210 |
| Fashion shows and advances on advertising campaigns | 41,341 | 26,013 |
| Other | 38,743 | 25,532 |
| Total | 128,677 | 86,617 |
The prepaid design costs mainly consist of costs incurred to design collections that will generate revenue after the reporting period.
GUARANTEE DEPOSITS
The guarantee deposits refer primarily to security deposits paid under retail leases.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
12. PROPERTY, PLANT AND EQUIPMENT
The 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 | 1,008,485 | 254,845 | 1,388,822 | 683,552 | 221,358 | 61,981 | 3,619,043 |
| Accumulated depreciation | (196,886) | (194,367) | (1,095,843) | (394,854) | (159,968) | - | (2,041,918) |
| Net carrying amount at December 31, 2022 (audited) | 811,599 | 60,478 | 292,979 | 288,698 | 61,390 | 61,981 | 1,577,125 |
| (amounts in thousands of Euro) | Land and buildings | Production plant and machinery | Leasehold improvements | Furniture & fittings | Other tangibles | Assets under construction | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Historical cost | 1,009,088 | 265,426 | 1,373,630 | 689,114 | 222,406 | 76,047 | 3,635,711 |
| Accumulated depreciation | (204,764) | (200,328) | (1,079,898) | (398,394) | (162,155) | - | (2,045,539) |
| Net carrying amount at June 30, 2023 (unaudited) | 804,324 | 65,098 | 293,732 | 290,720 | 60,251 | 76,047 | 1,590,172 |
The changes in the net carrying amount during the six months ended June 30, 2023 are 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) | 811,599 | 60,478 | 292,979 | 288,698 | 61,390 | 61,981 | 1,577,125 |
| Additions | 946 | 5,681 | 47,173 | 18,750 | 4,326 | 44,710 | 121,586 |
| Depreciation | (9,677) | (6,147) | (46,974) | (20,509) | (5,121) | - | (88,428) |
| Disposals | (1,228) | (52) | (949) | (94) | (181) | (1,326) | (3,830) |
| Exchange differences | (310) | 43 | (10,037) | (2,340) | (239) | (1,753) | (14,636) |
| Other movements | 3,161 | 5,098 | 11,939 | 6,441 | 36 | (26,538) | 137 |
| Impairment | (167) | (3) | (956) | (221) | (3) | (1,029) | (2,379) |
| Revaluation IAS 29 | - | - | 557 | (5) | 43 | 2 | 597 |
| Closing balance (unaudited) | 804,324 | 65,098 | 293,732 | 290,720 | 60,251 | 76,047 | 1,590,172 |
The capital expenditures regarded primarily restyling and relocation projects, investments in manufacturing structures, and technological and digital evolution in all the business areas.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
13. INTANGIBLE ASSETS
The 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 | 405,287 | 578,003 | 49,637 | 252,227 | 65,415 | 30,799 | 1,381,368 |
| Accumulated amortization | (219,544) | (64,322) | (49,502) | (166,424) | (63,767) | - | (563,559) |
| Net carrying amount at December 31, 2022 (audited) | 185,743 | 513,681 | 135 | 85,803 | 1,648 | 30,799 | 817,809 |
| (amounts in thousands of Euro) | Trademarks and other intellectual property rights | Goodwill | Store lease acquisitions | Software | Other intangibles | Assets in progress | Total |
| --- | --- | --- | --- | --- | --- | --- | --- |
| Historical cost | 408,139 | 579,755 | 50,045 | 264,842 | 65,400 | 46,232 | 1,414,413 |
| Accumulated amortization | (226,151) | (66,074) | (49,959) | (180,207) | (64,953) | - | (587,344) |
| Net carrying amount at June 30, 2023 (unaudited) | 181,988 | 513,681 | 86 | 84,635 | 447 | 46,232 | 827,069 |
The changes in the net carrying amount during the six months ended June 30, 2023 are 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) | 185,743 | 513,681 | 135 | 85,803 | 1,648 | 30,799 | 817,809 |
| Additions | 398 | - | 122 | 1,750 | - | 26,650 | 28,920 |
| Amortisation | (5,225) | - | (173) | (13,842) | (1,201) | - | (20,441) |
| Disposals | - | - | - | (92) | - | (20) | (112) |
| Exchange differences | 1,072 | - | 3 | (25) | - | (7) | 1,043 |
| Other movements | - | - | (1) | 11,172 | - | (11,190) | (19) |
| Impairment | - | - | - | (131) | - | - | (131) |
| Closing balance (unaudited) | 181,988 | 513,681 | 86 | 84,635 | 447 | 46,232 | 827,069 |
The net carrying amount of trademarks and other intellectual property rights at the reporting date is broken down as follows:
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Miu Miu | 113,364 | 116,160 |
| Church's | 44,012 | 44,270 |
| Prada | 5,239 | 5,336 |
| Other trademarks and other intellectual property rights | 19,373 | 19,977 |
| Total | 181,988 | 185,743 |
No impairment was recognized for the Group's trademarks during the period.
The total capital expenditure for tangible and intangible assets in the six months ended June 30, 2023 was Euro 150.5 million, as broken down below:
| (amounts in thousands of Euro) | six months
ended June 30
2023
(unaudited) | six months
ended June 30
2022
(unaudited) |
| --- | --- | --- |
| Retail | 94,650 | 62,051 |
| Production, logistics and corporate | 55,856 | 35,145 |
| Total | 150,506 | 97,196 |
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 does not report intangible assets with indefinite useful lives apart from goodwill. At June 30, 2023, the goodwill recognised in the consolidated financial statements is Euro 513.7 million, and it is allocated to the following cash generating units ("CGUs"):
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Italy Wholesale | 78,355 | 78,355 |
| Asia Pacific and Japan Retail | 311,936 | 311,936 |
| Italy Retail and Pasticceria Marchesi 1824 | 33,825 | 33,825 |
| 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 | 14,101 | 14,101 |
| Total | 513,681 | 513,681 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
No indications of impairment emerged during the reporting period. However, since values in use and fair values are measured on the basis of estimates and assumptions, management cannot guarantee that the value of goodwill or other tangible or intangible assets will not be subject to impairment in the future.
For the Church's CGU, in 2022 the identification of a trigger event related to the beginning of the reorganization process has led to the partial writedown of the brand. As a result of this and in relation to the business performance in the first part of 2023, a monitoring activity was carried out in order to identify any further potential impairment on the CGU. Based on the activities carried out, no further impairment losses were identified.
For the Russia CGU, the review of the estimated recoverable amount of the properties owned, which in substance represents the residual value of the non-current assets allocated to the CGU, was updated since the trigger events that at December 31, 2022 had resulted in a Euro 43.5 million writedown of the CGU's fixed assets are still ongoing. The assessment was updated by a leading independent firm of the sector, which estimated the fair value of the two buildings using the Comparative Method of valuation, based on a comparison of the real estate being appraised to other comparable assets recently sold or offered on the same market.
The carrying amount recognized at June 30, 2023 is consistent with the related fair value. Translated at the June 30, 2023 exchange rate, the net invested capital of the CGU is Euro 19.9 million, of which Euro 21.9 million refers to the two buildings owned and the remainder to items of net working capital. The reduction in value of the net invested capital compared to the previous period (Euro 29.9 million, translated at the December 31, 2022 exchange rate) is attributable to the depreciation for the period and, largely, to the impact of the exchange rate. With respect to the estimated recoverable amount of the buildings, the current volatility in the Russian financial system has created significant uncertainty in the real estate industry. The scarce liquidity in capital markets means more difficulties than those present in normal market conditions in the event of selling assets in the short term. This circumstance entailed using a high level of judgment to estimate the recoverable amount of the assets tested. Therefore, management cannot guarantee that the value of the buildings owned in Russia will not be subject to additional fluctuations (impairment losses or writedown reversals) in the future.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
14. RIGHT OF USE ASSETS
The changes in the net carrying amount of the right of use assets for the period ended June 30, 2023 are shown below:
| (amounts in thousands of Euro) | Real Estate | Other | Total net carrying amount |
|---|---|---|---|
| Opening balance (audited) | 2,007,660 | 3,814 | 2,011,474 |
| New contracts, initial direct costs and remeasurements | 347,482 | 1,875 | 349,357 |
| Depreciation | (220,129) | (1,074) | (221,203) |
| Contracts termination | 23 | (74) | (51) |
| Exchange differences | (55,818) | (5) | (55,823) |
| Impairment | (3,917) | - | (3,917) |
| Revaluation IAS 29 | 2,309 | - | 2,309 |
| Closing balance (unaudited) | 2,077,610 | 4,536 | 2,082,146 |
The increase in "new contracts, initial direct costs and remeasurements" is attributable to lease renewals (primarily in Asia and Europe) and the remeasurement of lease liabilities to adjust them to the indexes typically used in the real estate industry (mainly the consumer price index).
The foreign exchange differences for the period affected the change in the right of use assets considerably, as a result of the appreciation of the Euro against the main currencies of the countries in which the Group operates.
The "other" right of use assets of Euro 4.5 million include plant, machinery, vehicles and hardware.
15. INVESTMENTS IN EQUITY INSTRUMENTS
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Investments in equity instruments | 4,850 | 3,551 |
| Associates and joint ventures | 27,932 | 23,423 |
| Total | 32,782 | 26,974 |
The investments in equity instruments increased from Euro 27 million at December 31, 2022 to Euro 32.8 million at June 30, 2023 mainly due to the capital injection in associates and for the positive net change in the fair value of the equity assets.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
16. OTHER NON-CURRENT ASSETS
The other non-current assets are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Guarantee deposits | 67,166 | 64,216 |
| Prepayments for commercial agreements | 47,993 | 50,080 |
| Pension fund surplus (Note 24) | 6,640 | 6,426 |
| Deferred rental income | 111 | 231 |
| Other long-term assets | 15,071 | 18,449 |
| Total | 136,981 | 139,402 |
The guarantee deposits are set forth below by nature and maturity:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Nature: | | |
| Stores | 58,805 | 55,130 |
| Offices | 3,843 | 5,669 |
| Warehouses | 156 | 163 |
| Other | 4,362 | 3,254 |
| Total | 67,166 | 64,216 |
| (amounts in thousands of Euro) | June 30
2023
(unaudited) |
| --- | --- |
| Maturity: | |
| Between one to two years | 13,138 |
| Between two to five years | 31,599 |
| After more than five years | 22,429 |
| Total | 67,166 |
The guarantee deposits refer primarily to security deposits paid under retail leases.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
17. LEASE LIABILITY
The following table sets forth the lease liabilities:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Long-term lease liability | 1,768,803 | 1,715,451 |
| Short-term lease liability | 420,389 | 392,126 |
| Total | 2,189,192 | 2,107,577 |
The lease liability increased from Euro 2,108 million at December 31, 2022 to Euro 2,189 million at June 30, 2023, primarily as a result of remeasurements for lease extensions or modifications (Euro 350.3 million) net of the payments of the period (Euro 211.8 million) and the exchange differences for the period (Euro 56.7 million) resulting from the appreciation of the Euro against the main currencies in the countries where the Group operates.
The lease liability is mainly concentrated in Japan, the U.S.A. and Italy.
18. SHORT-TERM FINANCIAL PAYABLES AND BANK OVERDRAFTS
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Short-term bank loans | 37,358 | 66,541 |
| Current portion of long-term loans | 94,982 | 94,704 |
| Deferred costs on loans | (349) | (398) |
| Total | 131,991 | 160,847 |
The short-term bank loans, Euro 37.4 million at June 30, 2023, consist of credit lines of Prada Japan co ltd. Some of these credit lines contain covenants based on the results of its financial statements, all of which were complied with at June 30, 2023.
The current portion of the long-term loans, Euro 95 million, is the result of a reduction for repayments due in the period (Euro 47.4 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.
PRADA Group 2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The short-term loans are broken down by currency below:
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Japanese Yen | 37,358 | 59,081 |
| Other currencies | - | 7,460 |
| Total | 37,358 | 66,541 |
The Group generally borrows at variable interest rates, as explained in Note 23, and manages the risk of interest rate fluctuations by using hedging contracts, as explained in Note 9.
19. PAYABLES DUE TO RELATED PARTIES - CURRENT
The current payables due to related parties are shown below:
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Financial payables | 5,032 | 3,568 |
| Other payables | 13 | - |
| Total | 5,045 | 3,568 |
The current 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
The trade payables are detailed as follows:
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Trade payables - third parties | 383,187 | 396,159 |
| Trade payables - related parties | 3,372 | 5,640 |
| Total | 386,559 | 401,799 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The following table summarizes trade payables by maturity date:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade payables | 386,559 | 343,499 | 16,092 | 4,000 | 5,874 | 1,564 | 15,530 |
| Total | 386,559 | 343,499 | 16,092 | 4,000 | 5,874 | 1,564 | 15,530 |
| (amounts in thousands of Euro) | December 31
2022
(audited) | Not
overdue | Overdue (in days) | | | | |
| --- | --- | --- | --- | --- | --- | --- | --- |
| | | | 1 ≤ 30 | 31 ≤ 60 | 61 ≤ 90 | 91 ≤ 120 | > 120 |
| Trade payables | 401,799 | 330,287 | 47,513 | 6,587 | 436 | 2,538 | 14,438 |
| Total | 401,799 | 330,287 | 47,513 | 6,587 | 436 | 2,538 | 14,438 |
21. TAX PAYABLES
The tax payables are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Current taxation | 35,550 | 192,048 |
| VAT and other taxes | 97,452 | 85,608 |
| Total | 133,002 | 277,656 |
The Group recognizes current tax liabilities of Euro 35.6 million as of June 30, 2023 (Euro 192 million as at December 31, 2022) against tax receivables (shown among the current assets) of Euro 61.1 million (Euro 70.8 million as of December 31, 2022), as reported in Note 11.
22. OTHER CURRENT LIABILITIES
The other current liabilities are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Payables for capital expenditure | 70,766 | 73,249 |
| Accrued expenses and deferred income | 21,946 | 28,971 |
| Other payables | 151,716 | 140,086 |
| Total | 244,428 | 242,306 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The other payables are detailed as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Short-term benefits for employees and other personnel | 90,298 | 91,844 |
| Customer advances | 26,277 | 21,918 |
| Provision for returns from customers | 33,502 | 24,805 |
| Other | 1,639 | 1,519 |
| Total | 151,716 | 140,086 |
23. LONG-TERM FINANCIAL PAYABLES
The long-term financial payables are as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Long-term bank borrowings | 350,107 | 396,242 |
| Deferred costs on loans | (393) | (586) |
| Total | 349,714 | 395,656 |
No new long-term loans were taken out in the period.
All the loan covenants were fully complied with at June 30, 2023.
The long-term bank borrowings as of June 30, 2023, 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 S.p.A. | 25,667 | Term-loan | EUR | May-30 | 2.74% | 3,667 | 22,000 | Mortgage loan |
| Prada S.p.A. | 15,000 | Term-loan | EUR | Oct-24 | 4.22% | 10,000 | 5,000 | - |
| Prada S.p.A. | 100,000 | Term-loan | EUR | Apr-25 | 2.00% | - | 100,000 | - |
| Prada S.p.A. | 100,000 | Term-loan | EUR | Jul-26 | 4.49% | - | 100,000 | - |
| Prada S.p.A. | 64,800 | Term-loan | EUR | Feb-26 | 3.55% | 25,200 | 39,600 | - |
| Prada S.p.A. | 22,222 | Term-loan | EUR | Jun-24 | 4.58% | 22,222 | - | - |
| Prada S.p.A. | 30,000 | Term-loan | EUR | Jan-25 | 3.88% | 18,000 | 12,000 | - |
| Prada S.p.A. | 38,888 | Term-loan | EUR | Nov-26 | 4.23% | 11,111 | 27,777 | - |
| Kenon Ltd | 47,887 | Term-loan | GBP | Jan-29 | 4.48% | 4,282 | 43,605 | Mortgage loan |
| Tannerie Limoges sas | 625 | Term-loan | EUR | Jul-24 | 4.24% | 500 | 125 | Mortgage loan |
| Total | 445,089 | 94,982 | 350,107 | |||||
| (1) the interest rates include the effect of interest rate risk hedges, if any |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
Prada S.p.A.'s mortgage loan is secured by the building in Milan used for the Group's headquarters, and Kenon Ltd's mortgage loan is secured by the building on Old Bond Street, London, used for one of the most prestigious Prada stores in Europe. The mortgage loan to Tannerie Limoges Sas is secured by that company's factory building in France.
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, 2023 (unaudited) | December 31, 2022 (audited) | ||
|---|---|---|---|---|
| variable interest rates | fixed interest rates | variable interest rates | fixed interest rates | |
| Short-term financial payables | 75% | 25% | 80% | 20% |
| Long-term financial payables | 41% | 59% | 44% | 56% |
24. LONG-TERM EMPLOYEE BENEFITS
| (amounts in thousands of Euro) | June 30 2023 (unaudited) | December 31 2022 (audited) |
|---|---|---|
| Post-employment benefits | 39,459 | 41,870 |
| Other long-term employee benefits | 16,864 | 25,701 |
| Total liabilities for long-term benefits | 56,323 | 67,571 |
| Pension plan surplus (Note 16) | (6,640) | (6,426) |
| Net liabilities for long-term benefits | 49,683 | 61,145 |
The net balance of long-term employee benefits as at June 30, 2023 is a liability of Euro 49.7 million (Euro 61.1 million as at December 31, 2022), and all the benefits are classified as defined benefit plans.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The following table shows the changes in long-term employee benefits in the six months ended June 30, 2023:
| (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) | 20,083 | 21,787 | (6,426) | 25,701 | 61,145 |
| Current service cost | 248 | 1,589 | - | 14,403 | 16,240 |
| Benefits paid | (1,194) | (1,135) | - | (23,108) | (25,437) |
| Exchange differences | - | (1,919) | (214) | (132) | (2,265) |
| Closing balance (unaudited) | 19,137 | 20,322 | (6,640) | 16,864 | 49,683 |
The defined benefit obligations are measured in accordance with independent appraisals on a yearly basis.
25. PROVISION FOR RISKS AND CHARGES
The changes in the provisions for risks and charges for the six-month period ended June 30, 2023 are as follows:
| (amounts in thousands of Euro) | Provision for legal disputes | Provision for tax disputes | Other provisions | Total |
|---|---|---|---|---|
| Opening balance (audited) | 884 | 4,601 | 46,001 | 51,486 |
| Exchange differences | 1 | (96) | (2,158) | (2,253) |
| Reversals | (45) | (337) | (450) | (832) |
| Utilised | (70) | (400) | (2,323) | (2,793) |
| Increases | 60 | 646 | 710 | 1,416 |
| Closing balance (unaudited) | 830 | 4,414 | 41,780 | 47,024 |
The provisions for risks and charges represent Directors' best estimate of the maximum outflow of resources needed to settle liabilities deemed to be probable. In the Directors' opinion, based on the information available to them, the total amount accrued for risks and charges at the reporting date is adequate in respect of the liabilities that could arise from them.
Since 2016, Prada Asia Pacific Ltd (a retail subsidiary wholly owned by Prada S.p.A.) has been providing Prada S.p.A. with commercial services to support its wholesale distribution business in Asia Pacific, for remuneration (in place
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
until 2021) disclosed, as early as the 2016 tax year, to the Italian Tax Authority through the submission of an advance pricing agreement application and various explanatory documents.
The Italian Tax Authority started discussions on the topic on October 2022 and, in order not to have the 2016 fiscal year time barred, on April 28, 2023, it issued two tax notices (IRES and IRAP) in which it challenged in full the deductibility of the remuneration paid to Prada Asia Pacific Ltd in the 2016 fiscal year, setting higher taxes amounting to c. Euro 10.8 million and interest amounting to c. Euro 2.3 million, while recognising (i) the possibility for Prada S.p.A. to deduct the amount that, in the opinion of the Italian Tax Authority, it should have recognised to Prada Asia Pacific Ltd, without however quantifying it, and (ii) the non-application of penalties, by virtue of the correctness of the Transfer pricing contemporaneous documentation prepared by Prada S.p.A..
Prada S.p.A. has filed an appeal against these tax notices within the legal deadlines and discussions with the Italian Tax Authority are still ongoing. The Company, also supported by the opinion of a leading Tax consultancy firm, at this stage believes that there is no basis for recording a tax liability in relation to this case.
The other risk provisions amount to Euro 41.8 million at June 30, 2023 and refer primarily to contractual obligations to restore leased commercial properties to their original condition.
26. OTHER NON-CURRENT LIABILITIES
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Deferred income for commercial agreements | 103,200 | 107,687 |
| Accrued costs for lease payments (out of scope for IFRS 16) | 5,847 | 7,410 |
| Other non-current liabilities | 388 | 573 |
| Total | 109,435 | 115,670 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
27. EQUITY ATTRIBUTABLE TO OWNERS OF THE GROUP
The equity attributable to owners of the Group is as follows:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Share capital | 255,882 | 255,882 |
| Share premium reserve | 410,047 | 410,047 |
| Other reserves | 2,432,032 | 2,245,901 |
| Actuarial reserve | (7,107) | (7,107) |
| Fair value investments in equity instruments reserve | (9,106) | (10,405) |
| Cash flow hedge reserve | 17,511 | 10,060 |
| Translation reserve | 96,989 | 112,646 |
| Net income / (loss) for the period | 305,168 | 465,193 |
| Total | 3,501,416 | 3,482,217 |
SHARE CAPITAL
As at June 30, 2023, approximately 80% of Prada S.p.A.'s share capital was owned by Prada Holding S.p.A. and the remainder is listed on the Main Board of the Hong Kong Stock Exchange.
SHARE PREMIUM RESERVE
The share premium reserve of Euro 410 million is the same as that of December 31, 2022.
OTHER RESERVES
The other reserves increased from Euro 2,246 million at December 31, 2022 to Euro 2,432 million as at June 30, 2023 as a consequence of the allocation of 2022 net profit and the distribution of dividends of Euro 281,470,640, as approved at the General Meeting held on April 27, 2023 for the approval of the financial statements for the year ended December 31, 2022.
The dividends net of withholding taxes (Euro 266.8 million) were paid during the period under review, whereas the withholding tax (Euro 14.7 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 2023.
TRANSLATION RESERVE
The changes in this reserve result from the translation into Euro of the foreign
PRADA Group 2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
currency financial statements of the consolidated companies. The reserve decreased from the Euro 112.6 million at December 31, 2022 to Euro 97 million.
NET INCOME / (LOSS) FOR THE PERIOD
The Group's net result for the six months ended June 30, 2023 was Euro 305.2 million.
28. EQUITY ATTRIBUTABLE TO NON-CONTROLLING INTERESTS
The following table shows the changes in the non-controlling interests during the periods ended June 30, 2023 and December 31, 2022:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Opening balance (audited) | 18,805 | 14,749 |
| Translation differences | (192) | 664 |
| Dividends | (250) | (599) |
| Net income / (loss) for the period | 1,462 | 3,962 |
| Actuarial reserve | - | 29 |
| Closing balance | 19,825 | 18,805 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For a detail explanation of the financial and business performances of the first semester of 2023, refer to the Financial Review.
29. NET REVENUES
The consolidated net revenues are generated primarily from sales of finished products and are stated net of returns and discounts:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Net sales | 2,184,896 | 1,872,418 |
| Royalties | 47,483 | 28,524 |
| Total | 2,232,379 | 1,900,942 |
The Financial Review describes the net sales 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 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Purchases of raw materials and manufacturing services | 296,884 | 289,836 |
| Depreciation, amortization and impairment on tangible and intangible fixed assets | 9,019 | 8,963 |
| Depreciation and write-downs of the right of use assets | 1,993 | 1,670 |
| Labor cost | 80,257 | 73,197 |
| Short-term and low value lease (IFRS 16) | 55 | 33 |
| Logistics costs, duties and insurance | 83,818 | 92,230 |
| Change in inventories | (33,042) | (42,478) |
| Total | 438,984 | 423,451 |
The incidence of the cost of good sold on net revenues for the six months ended June 30, 2023 was equal to $19.7\%$, while in the corresponding period of 2022 stood at $22.3\%$. Higher average prices, a better sales mix in terms of distribution channels and greater absorption of production overheads are the key drivers of
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
this improvement, together with subsiding inflationary pressures.
31. OPERATING EXPENSES
The operating costs are detailed below:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | % of net revenues | six months ended June 30 2022 (unaudited) | % of net revenues |
|---|---|---|---|---|
| Product design and development costs | 72,489 | 3.2% | 68,581 | 3.6% |
| Advertising and communications costs | 187,274 | 8.4% | 155,168 | 8.2% |
| Selling costs | 894,587 | 40.1% | 821,510 | 43.2% |
| General and administrative costs | 147,626 | 6.6% | 127,430 | 6.7% |
| Total | 1,301,976 | 58.3% | 1,172,689 | 61.7% |
Operating expenses totaled Euro 1,302 million, up by Euro 129.3 million versus 2022, which included non-recurring expenses of Euro 26 million. The increase is attributable primarily to higher variable costs ensuing from the sales increase, more communication activities, higher personnel expenses and other general and administrative costs.
The following table sets forth depreciation, amortization, impairment, personnel cost (net of the government subsidies for the Covid-19 pandemic in 2022) 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 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Depreciation, amortization and impairment on tangible and intangible fixed assets | 102,360 | 113,862 |
| Depreciation and write-downs of the right of use assets (*) | 223,127 | 227,796 |
| Labor cost | 400,415 | 359,788 |
| Pure variable lease (IFRS 16) | 119,153 | 103,685 |
| Short term and low value lease (IFRS 16) | 7,297 | 4,753 |
(*) shown without the impact of Covid-related discounts in the first half 2022
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
32. FINANCIAL INCOME/(EXPENSES)
The net interest and other financial income / (expenses) are presented below:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Interest expenses on borrowings | (8,806) | (1,708) |
| Interest income | 13,177 | 1,074 |
| Interest income / (expenses) IAS 19 | - | - |
| Exchange gains / (losses) - realized | (5,563) | (6,734) |
| Exchange gains / (losses) - unrealized | (16,785) | (1,304) |
| Other financial income / (expenses) | (1,315) | 88 |
| Interest and other financial income / (expenses), net | (19,292) | (8,584) |
| Interest expenses on lease liability | (27,342) | (18,887) |
| Dividends from investments | 226 | 119 |
| Total financial expenses | (46,408) | (27,352) |
The net financial expenses of Euro 46.4 million are Euro 19 million higher than in 2022 (Euro 27.4 million). The increase is attributable largely to higher foreign exchange losses and interest expense on lease liabilities, offset in part by lower costs associated with the net financial surplus, which improved from the same period of 2022.
33. TAXATION
Income taxes have the following composition:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Current taxation | 158,516 | 145,142 |
| Deferred taxation | (20,135) | (57,109) |
| Income taxes | 138,381 | 88,033 |
The net income tax for the six months ended June 30, 2023 is Euro 138.4 million, corresponding to $31.1\%$ of the profit before tax.
PRADA Group 2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The changes in deferred tax assets and liabilities are set forth below:
| (amounts in thousands of Euro) | June 30
2023
(unaudited) | December 31
2022
(audited) |
| --- | --- | --- |
| Opening balance | 332,235 | 257,656 |
| Exchange differences | (13,166) | (941) |
| Deferred taxes on acquisition | - | (1,022) |
| Deferred taxes on derivative instruments recorded in equity (cash flow hedges) | (2,369) | (8,283) |
| Deferred taxes on post-employment benefits recorded in equity (reserve for actuarial differences) | - | 667 |
| Deferred taxes on revaluation IAS 29 | 218 | (1,234) |
| Other movements | (86) | 25 |
| Deferred taxes for the period in profit or loss | 19,917 | 85,367 |
| Closing balance | 336,749 | 332,235 |
Deferred tax assets and liabilities are classified by nature hereunder:
| (amounts in thousands of Euro) | June 30, 2023 (unaudited) | December 31, 2022 (audited) | ||
|---|---|---|---|---|
| Deferred tax assets | Deferred tax liabilities | Deferred tax assets | Deferred tax liabilities | |
| Inventories | 248,244 | 4,646 | 242,795 | 4,790 |
| Receivables and other assets | 1,350 | 1,549 | 1,996 | 1,559 |
| Useful life of non-current assets | 28,214 | 8,647 | 29,345 | 8,292 |
| Deferred taxes due to acquisitions | - | 6,588 | - | 6,590 |
| Provision for risks / accrued expenses | 27,930 | 1,312 | 24,123 | 1,111 |
| Non-deductible / taxable charges/income | 7,761 | 6,721 | 7,267 | 6,636 |
| Deferred tax assets on rental contracts | 43,918 | 2,817 | 42,924 | 3,176 |
| Tax loss carryforwards | 9,395 | - | 10,741 | - |
| Derivative financial instruments | - | 5,246 | - | 3,185 |
| Long term employee benefits | 7,623 | 1,660 | 8,811 | 1,606 |
| Other | 5,482 | 3,982 | 5,088 | 3,910 |
| Total | 379,917 | 43,168 | 373,090 | 40,855 |
34. EARNINGS AND DIVIDENDS PER SHARE
EARNINGS PER SHARE BASIC AND DILUTED
Earnings (losses) per share are calculated by dividing the net profit (or net loss) 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 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Group net income / (loss) in Euro | 305,167,809 | 188,264,166 |
| 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 | 0.119 | 0.074 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
DIVIDENDS PAID
During the six-month period ended June 30, 2023, the Company distributed dividends of Euro 281,470,640, as approved at the General Meeting held on April 27, 2023 for the approval of the financial statements for the year ended December 31, 2022.
The dividends net of withholding taxes (Euro 266.8 million) were paid during the period under review, whereas the withholding tax (Euro 14.7 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 2023.
35. ADDITIONAL INFORMATION
NUMBER OF EMPLOYEES
The average number of full-time equivalent ("FTE") employees (calculated by dividing the number of actual hours worked by the total number of scheduled hours), by business division, is presented below:
| (number of employees) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Production | 3,300 | 3,022 |
| Product design and development | 968 | 940 |
| Advertising and Communications | 233 | 196 |
| Selling | 8,283 | 7,856 |
| General and administrative services | 1,071 | 971 |
| Total | 13,855 | 12,985 |
EMPLOYEE REMUNERATION
The employee remuneration by business division, net of the government subsidies for the Covid-19 pandemic in the first half of 2022, is presented below:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Production | 80,257 | 73,149 |
| Product design and development | 35,914 | 34,011 |
| Advertising and Communications | 17,418 | 15,212 |
| Selling | 280,408 | 250,044 |
| General and administrative services | 66,675 | 60,521 |
| Total | 480,672 | 432,937 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The classification by type of employee remuneration is presented below:
| (amounts in thousands of Euro) | six months ended June 30 2023 (unaudited) | six months ended June 30 2022 (unaudited) |
|---|---|---|
| Wages and salaries | 360,466 | 325,049 |
| Post-employment benefits and other long-term benefits | 22,411 | 18,174 |
| Social contributions | 76,167 | 66,844 |
| Other | 21,628 | 22,870 |
| Total | 480,672 | 432,937 |
DISTRIBUTABLE RESERVES OF THE PARENT COMPANY, PRADA S.P.A.
| (amounts in thousands of Euro) | June 30, 2023 (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 | 1,384,430 | A, B, C | 1,350,977 | 16,176 | 268,677 |
| Fair value reserve | (9,106) | - | - | - | - |
| Time value reserve | (3,829) | - | - | - | - |
| Intrinsic value reserve | 18,282 | - | - | - | - |
| Distributable amount | 1,943,923 | 16,176 | 268,677 | ||
| 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% of share capital.
Under Italian Legislative Decree 38/2005, Article 7, Euro 20.5 million of the retained earnings is not distributable.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
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, 2023, June 30, 2022 and December 31, 2022 are listed hereunder:
| Currency | Average rate six months ended June 30 2023 | Average rate six months ended June 30 2022 | Closing rate June 30 2023 | Closing rate December 31 2022 |
|---|---|---|---|---|
| UAE Dirham | 3.970 | 4.024 | 3.991 | 3.918 |
| Australian Dollar | 1.597 | 1.522 | 1.640 | 1.569 |
| Brazilian Real | 5.488 | 5.578 | 5.279 | 5.639 |
| Canadian Dollar | 1.456 | 1.392 | 1.442 | 1.444 |
| Swiss Franc | 0.986 | 1.032 | 0.979 | 0.985 |
| Czech Koruna | 23.684 | 24.638 | 23.742 | 24.116 |
| Danish Kronor | 7.446 | 7.440 | 7.447 | 7.437 |
| GB Pound | 0.877 | 0.842 | 0.858 | 0.887 |
| Hong Kong Dollar | 8.473 | 8.571 | 8.516 | 8.316 |
| Japanese Yen | 145.463 | 134.165 | 157.160 | 140.660 |
| Korean Won | 1,399.730 | 1,348.195 | 1,435.880 | 1,344.090 |
| Kuwait Dinar | 0.331 | 0.333 | 0.334 | 0.327 |
| Kazakhstan Tenge | 488.584 | 491.863 | 490.700 | 492.860 |
| Moroccan Dirham | 11.023 | 10.608 | 10.751 | 11.156 |
| Macau Pataca | 8.727 | 8.822 | 8.820 | 8.578 |
| Mexican Peso | 19.688 | 22.208 | 18.561 | 20.856 |
| Malaysian Ringgit | 4.812 | 4.672 | 5.072 | 4.698 |
| New Zealand Dollar | 1.730 | 1.650 | 1.786 | 1.680 |
| Norwegian Krone | 11.301 | 9.974 | 11.704 | 10.514 |
| Qatari Riyal | 3.951 | 4.007 | 3.958 | 3.918 |
| Chinese Renminbi | 7.480 | 7.087 | 7.898 | 7.358 |
| Romanian Leu | 4.933 | 4.946 | 4.964 | 4.950 |
| Russian Ruble | 83.364 | 84.318 | 97.873 | 77.900 |
| Saudi Riyal | 4.056 | 4.109 | 4.072 | 4.012 |
| Swedish Kronor | 11.324 | 10.469 | 11.806 | 11.122 |
| Singapore Dollar | 1.443 | 1.494 | 1.473 | 1.430 |
| Thai Baht | 36.922 | 36.880 | 38.482 | 36.835 |
| Turkish Lira | 21.463 | 16.204 | 28.319 | 19.965 |
| Taiwan Dollar | 33.015 | 31.394 | 33.818 | 32.810 |
| Ukrainian Hryvna | 39.520 | 31.726 | 39.695 | 39.037 |
| US Dollar | 1.081 | 1.096 | 1.087 | 1.067 |
| Vietnamese Dong | 25,552.135 | 25,307.840 | 25,883.000 | 25,171.000 |
| South African Rand | 19.633 | 16.860 | 20.579 | 18.099 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
36. REMUNERATION OF BOARD OF DIRECTORS
Remuneration of Prada S.p.A. Board of Directors for the six months ended June 30, 2023
| (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 2023 (unaudited) |
|---|---|---|---|---|---|---|
| Patrizio Bertelli | 9,348 | - | - | - | 27 | 9,375 |
| Paolo Zannoni | 2,155 | 12 | - | - | 5 | 2,172 |
| Andrea Guerra | - | 842 | 1,392 | 20 | 669 | 2,923 |
| Miuccia Prada Bianchi | 9,348 | - | - | - | 27 | 9,375 |
| Andrea Bonini | - | 551 | 450 | 14 | 44 | 1,059 |
| Lorenzo Bertelli | - | 126 | 100 | 7 | 28 | 261 |
| Marina Sylvia Caprotti | 59 | - | - | - | - | 59 |
| Maurizio Cereda | 53 | - | - | - | 2 | 55 |
| Yoël Zaoui | 64 | 10 | - | - | 17 | 91 |
| Pamela Yvonne Culpepper | 58 | - | - | - | 14 | 72 |
| Anna Maria Rugarli | 48 | - | - | - | 17 | 65 |
| Stefano Simontacchi | 4 | - | - | - | - | 4 |
| Total | 21,137 | 1,541 | 1,942 | 41 | 850 | 25,511 |
Remuneration of Prada S.p.A. Board of Directors for the six months ended June 30, 2022
| (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 2022 (unaudited) |
|---|---|---|---|---|---|---|
| Paolo Zannoni | 750 | 12 | - | - | 4 | 766 |
| Miuccia Prada Bianchi | 8,683 | - | - | - | 25 | 8,708 |
| Patrizio Bertelli | 8,683 | - | - | - | 25 | 8,708 |
| Lorenzo Bertelli | - | 160 | 32 | 2 | 24 | 218 |
| Alessandra Cozzani | - | 195 | - | 7 | 104 | 306 |
| Stefano Simontacchi | 25 | - | - | - | 1 | 26 |
| Maurizio Cereda | 40 | - | - | - | 2 | 42 |
| Marina Sylvia Caprotti | 45 | - | - | - | 7 | 52 |
| Yoël Zaoui | 55 | - | - | - | 9 | 64 |
| Pamela Yvonne Culpepper | 42 | - | - | - | 9 | 51 |
| Anna Maria Rugarli | 33 | - | - | - | 1 | 34 |
| Total | 18,356 | 367 | 32 | 9 | 211 | 18,975 |
37. RELATED PARTY TRANSACTIONS
The Group carries out transactions with companies classifiable as related parties according to IAS 24 "Related Party Disclosures". These transactions referred primarily to the purchase or sale of finished and semi-finished products and raw materials, the supply of services, loans, sponsorships, leases and the sale of real estate property. These transactions take place on an arm's length basis.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
The following tables present the effect of related-party transactions on the Consolidated Financial Statements in terms of Statement of Financial Position balances and total transactions affecting the Statement of Profit or Loss.
STATEMENT OF FINANCIAL POSITION BALANCES AS OF JUNE 30, 2023 (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 | Lease liabilities | Other liabilities |
|---|---|---|---|---|---|---|---|---|
| Les Femmes S.r.l. | 474 | 5 | 1,125 | - | 966 | - | - | - |
| Filati Biagioli Modesto S.p.A. | 6 | 2,223 | - | - | 1,185 | - | - | - |
| Spelm Sa | - | - | - | 3,524 | - | - | 3,590 | - |
| Rubaiyat Modern Lux.Pr.Co.Ltd | - | - | - | - | 24 | 2,566 | - | - |
| Ludo Due S.r.l. | - | - | - | 8,493 | - | - | 9,408 | - |
| Peschiera Immobiliare S.r.l. | 2 | - | - | 2,613 | 47 | - | 3,194 | - |
| Premiata S.r.l. | 50 | - | - | - | 199 | - | - | - |
| Conceria Superior S.p.A. | - | - | - | - | 657 | - | - | - |
| Perseo S.r.l. | - | - | - | - | 173 | - | - | - |
| Al Tayer Group Llc | - | - | - | - | 20 | - | - | - |
| Al Tayer Insignia Llc | 933 | - | - | - | 37 | 2,466 | - | - |
| Danzas Llc | - | - | - | - | 63 | 13 | - | 46 |
| Al Sanam Rent a Car Llc | - | - | - | - | 1 | - | - | - |
| Prada Holding S.p.A. | 48 | - | - | 49 | - | - | 37 | - |
| PH-RE Llc | - | 130 | - | 168,323 | - | - | 191,291 | - |
| Others | 2 | - | - | - | - | - | - | |
| Members of the Board of Directors of Prada S.p.A. | - | - | - | - | - | - | - | 1,985 |
| Total at June 30, 2023 (unaudited) | 1,515 | 2,358 | 1,125 | 183,002 | 3,372 | 5,045 | 207,520 | 2,031 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
STATEMENT OF FINANCIAL POSITION BALANCES AS OF DECEMBER 31, 2022 (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 S.r.l. | 599 | 6 | 1,125 | - | 1,944 | - | - | - |
| Filati Biagioli Modesto S.r.l. | 27 | 2,218 | - | - | 67 | - | - | - |
| Spelm Sa | - | - | - | 3,795 | - | - | 3,858 | - |
| Rubaiyat Modern Lux.Pr.Co.Ltd | - | - | - | - | - | 1,055 | - | - |
| Ludo Due S.r.l. | - | - | - | 9,282 | - | - | 10,242 | - |
| Peschiera Immobiliare S.r.l. | - | - | - | 2,882 | 45 | - | 3,460 | - |
| Premiata S.r.l. | - | - | - | - | 195 | - | - | - |
| Conceria Superior S.p.A. | - | - | - | - | 3,056 | - | - | - |
| Perseo S.r.l. | - | - | - | - | 225 | - | - | - |
| Al Tayer Insignia Llc | 736 | - | - | - | 12 | 2,513 | - | - |
| Danzas Llc | - | - | - | - | 93 | - | - | 61 |
| Al Sanam Rent a Car Llc | - | - | - | - | 1 | - | - | - |
| Prada Holding S.p.A. | 18 | - | - | 73 | - | - | 73 | - |
| PH-RE Llc | - | 149 | - | 196,766 | - | - | 221,687 | - |
| Others | 2 | - | - | - | 2 | - | - | - |
| Members of the Board of Directors of Prada S.p.A. | - | - | - | - | - | - | - | 4,405 |
| Total at December 31, 2022 (audited) | 1,382 | 2,373 | 1,125 | 212,798 | 5,640 | 3,568 | 239,320 | 4,466 |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2023 (UNAUDITED)
| (amounts in thousands of Euro) | Net revenues | Cost of goods sold | General, admin. & selling costs | Interest incomes | Interest expenses |
|---|---|---|---|---|---|
| Les Femmes S.r.l. | - | 4,149 | (12) | 6 | - |
| Filati Biagioli Modesto S.p.A. | - | 2,684 | 95 | 50 | - |
| Spelm Sa | - | - | 292 | - | 15 |
| Ludo Due S.r.l. | - | - | 562 | - | 61 |
| Peschiera Immobiliare S.r.l. | - | 23 | 282 | - | 14 |
| Premiata S.r.l. | - | 39 | 363 | - | - |
| Conceria Superior S.p.A. | - | 5,608 | 67 | - | - |
| Perseo S.r.l. | - | 344 | - | - | - |
| Rubaiyat Modern Lux.Pr.Co.Ltd | - | - | - | - | 24 |
| Al Tayer Group Llc | - | - | 188 | - | - |
| Al Tayer Insignia Llc | 1,662 | - | 62 | - | 25 |
| Danzas Llc | - | 95 | 51 | - | - |
| Al Sanam Rent a Car Llc | - | - | 6 | - | - |
| Prada Holding S.p.A. | 22 | - | 33 | - | 1 |
| PH-RE Llc | - | - | 8,410 | - | 959 |
| Total at June 30, 2023 (unaudited) | 1,684 | 12,942 | 10,399 | 56 | 1,099 |
STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE SIX MONTHS ENDED JUNE 30, 2022 (UNAUDITED)
| (amounts in thousands of Euro) | Net revenues | Cost of goods sold | General, admin. & selling costs | Interest incomes | Interest expenses |
|---|---|---|---|---|---|
| Les Femmes S.r.l. | - | 3,992 | 48 | 6 | - |
| Filati Biagioli Modesto S.p.A. | - | 2,938 | 30 | 6 | - |
| Spelm Sa | - | - | 278 | - | 17 |
| Ludo Due S.r.l. | - | - | 543 | - | 66 |
| Chora S.r.l. | - | - | 975 | - | - |
| Peschiera Immobiliare S.r.l. | - | 22 | 268 | - | 16 |
| Premiata S.r.l. | - | 97 | 357 | - | - |
| Conceria Superior S.p.A. | - | 6,653 | - | - | - |
| Perseo S.r.l. | - | 455 | - | - | - |
| Al Tayer Group Llc | - | - | 29 | - | - |
| Al Tayer Insignia Llc | 1,429 | - | 67 | - | - |
| Danzas Llc | - | 40 | 87 | - | - |
| Al Sanam Rent a Car Llc | - | - | 5 | - | - |
| Prada Holding S.p.A. | - | - | 35 | - | - |
| PH-RE Llc | - | - | 9,119 | - | 1,115 |
| Total at June 30, 2022 (unaudited) | 1,429 | 14,197 | 11,841 | 12 | 1,214 |
The foregoing tables report information on transactions with related parties in accordance with IAS 24, "Related Party Disclosures", while the following transactions also fall within the scope of application of the Hong Kong Stock Exchange Listing Rules.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
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 of the two buildings in Aoyama, Tokyo for Prada and Miu Miu stores. The transactions reported for the six months ended June 30, 2023 are regulated by Chapter 14A of the Listing Rules because they are considered as 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 S.p.A.'s Announcements dated, respectively, July 15, 2015 ("Prada Aoyama") and May 26, 2017 ("Miu Miu Aoyama").
Apart from the non-exempt continuing connected transactions and non-exempt connected transactions reported above, no other transaction reported in the 2023 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 independent shareholders' approval requirements laid down in Chapter 14A.
38. FINANCIAL TREND
| (amounts in thousands of Euro) | December 31 2022 | December 31 2021 | December 31 2020 | December 31 2019 | December 31 2018 |
|---|---|---|---|---|---|
| Net revenues | 4,200,674 | 3,365,667 | 2,422,739 | 3,225,594 | 3,142,148 |
| Gross margin | 3,312,094 | 2,547,358 | 1,743,378 | 2,319,612 | 2,262,594 |
| Operating income - EBIT | 775,990 | 489,484 | 20,061 | 306,779 | 323,846 |
| Net income/ (loss) - Group | 465,193 | 294,254 | (54,139) | 255,788 | 205,443 |
| Total assets | 7,377,578 | 6,959,011 | 6,527,927 | 7,038,439 | 4,678,812 |
| Total liabilities | 3,876,556 | 3,830,368 | 3,676,207 | 4,049,864 | 1,781,743 |
| Net equity attributable to owners of the Group | 3,482,217 | 3,113,894 | 2,832,057 | 2,967,158 | 2,877,986 |
PRADA Group
2023 Interim Financial Report - 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 S.p.A. | EUR | 255,882 | Milan | Italy | Group Holding/Manufacturing/Distribution/Retail | ||
| Artisans Shoes S.r.l. (*) | EUR | 1,000 | 66.7 | Montegranaro | Italy | 02/09/1977 | Manufacturing |
| IPI Logistica S.r.l. (*) | EUR | 600 | 100 | Milan | Italy | 01/26/1999 | Services |
| Pelletteria Ennepi S.r.l. (*) | EUR | 93 | 100 | Figline e Incisa Valdarno | Italy | 12/01/2016 | Manufacturing |
| Church Italia S.r.l. (*) | EUR | 51 | 100 | Milan | Italy | 01/31/1992 | Retail/Services |
| Marchesi 1824 S.r.l. (*) | EUR | 1,052 | 100 | Milan | Italy | 07/10/2013 | Food&Beverage |
| Figline S.r.l. (*) | EUR | 10 | 100 | Milan | Italy | 07/24/2019 | Manufacturing |
| Pelletteria Figline S.r.l. | EUR | 20 | 100 | Figline e Incisa Valdarno | Italy | 09/30/2020 | Manufacturing |
| Luna Rossa Challenge S.r.l. (*) | EUR | 10 | 100 | Grosseto | Italy | 12/01/2021 | Management sailing team |
| 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 SI (*) | 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 & Co. Ltd (*) | GBP | 2,811 | 100 | Northampton | U.K. | 01/16/1926 | Sub-Holding/Manufacturing |
| 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 SI | EUR | 3 | 100 | Madrid | Spain | 05/06/2009 | Under liquidation |
| 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 | Under liquidation |
| Church Austria GmbH | EUR | 35 | 100 | Wien | Austria | 01/17/2012 | Under liquidation |
| 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 | 25,471 | 100 | Sibiu | Romania | 04/15/2016 | Manufacturing |
| Church Germany GmbH | EUR | 200 | 100 | Munich | Germany | 09/18/2018 | Under liquidation |
| Prada San Marino (*) | EUR | 26 | 100 | Falciano | San.Marino | 04/15/2021 | Retail |
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
| Prada Norway As (*) | NOK | 30 | 100 | Oslo | Norway | 09/01/2022 | Retail |
|---|---|---|---|---|---|---|---|
| Americas | |||||||
| Prada USA Corp. (*) | USD | 152,211 | 100 | New York | U.S.A. | 10/25/1993 | Distribution/ Services/ Retail |
| 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 | Dormant |
| Prada Panama Sa (*) | USD | 30 | 100 | Panama | Panama | 09/15/2014 | Dormant |
| 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 |
| Prada Singapore Pte Ltd (*) | SGD | 1,000 | 100 | Singapore | Singapore | 10/31/1992 | Retail |
| 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 |
| Prada Guam Llc | USD | 0.001 | 100 | Guam | Guam | 02/04/2021 | Retail |
| Prada Saipan Llc (*) | USD | 1,405 | 100 | Northern Marianas Islands | 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 | Dormant |
| 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 |
| 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 | Under liquidation |
| Prada New Zealand Ltd (*) | NZD | 3,500 | 100 | Wellington | New Zealand | 07/05/2013 | Retail |
| Prada Vietnam Limited Liability Company (*) | VND | 146,246,570 | 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 | Under liquidation |
| 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 | Dormant |
() Company owned directly by Prada S.p.A.
() Company consolidated based on definition of control per IFRS 10
(**) Wholly foreign owned enterprises
97
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, 2023 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 | 35,418 | 6,109 | 31,511 | 365 | (250) |
| Prada Emirates Llc | 29.4 | AED | 144,465 | (2,900) | 65,153 | 3,953 | - |
| Prada Middle East Fzco | 60 | AED | 116,900 | 53,850 | 51,245 | 1,147 | - |
| Prada Kuwait Wll | 29.4 | KWD | 40,363 | 4,385 | 10,062 | 164 | - |
| Prada Saudi Arabia Ltd | 75 | SAR | 26,294 | 4,950 | 5,739 | (437) | - |
| Tannerie Limoges Sas | 60 | EUR | 10,122 | 5 | 5,167 | (150) | - |
There were no significant restrictions on the Group's ability to access or use assets or to settle liabilities at the end of the reporting period.
41. EVENTS AFTER THE REPORTING DATE
No significant events to be reported.
PRADA Group
2023 Interim Financial Report - Notes to the Interim condensed consolidated financial statements
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