Annual Report 2021
PRADA spa
(Hong Kong Stock code: 1913)
A N N U A L R E P O R T 2 0 2 1
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T A B L E O F C O N T E N T S
The PRADA Group
Financial Review
Directors and Senior Management
Directors’ Repor t
Corporate Governance
Consolidated Financial Statements
PRADA spa Separate Financial Statements
Notes to the Consolidated Financial Statements
Independent Auditors’ Repor ts
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The first Prada store
Galleria Vittorio Emanuele II, Milan
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T H E P R A D A G R O U P
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PRADA Group Annual Report 2021 - The PRADA Group Miuccia Prada and Patrizio Ber telli
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P R E S E N T A T I O N
“ Thorough observation and curiosity for the world
around us have always been at the hear t of
the creativity and modernity of the Prada Group.
In society, and thus in fashion, which is somehow
a reflection of it, the only constant is change.
The transformation and innovation of references,
at the core of any evolution, lead us to interact with
different cultural disciplines, at times apparently
far from our own, allowing us to capture and
anticipate the spirit of the times.
Today this is no longer enough: we must be the
Drivers of Change, with the flexibility required
to translate the demands of the market and
society into tangible actions that inform our way
of doing business.”
Miuccia Prada and Patrizio Ber telli
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The Group is a contemporary interpreter of changing scenarios. In a dialogue that
combines the identity of the past with current dynamics and future prospectives,
creativity molds ideas that go beyond the ordinary and offer an innovative vision
of tomorrow. A fluid perspective that becomes the Group’s manifesto, suggesting
a unique approach to doing business.
Re-think the rules.
Synonymous with innovation, transformation and independence, the Prada Group
offers its brands a shared vision in which they can express their essence. This
concept has broadened the horizons of luxury, without fear of facing contradictions.
Innovative tradition.
The Group has been driven by a spirit of constant experimentation and innovation
for more than a century.
Spirit of excellence.
Gearing toward excellence is a mental attitude for the people of the Prada Group,
who constantly seek per fection, continuously refining and surpassing their previous
achievements.
Uniqueness of talents.
Passion, curiosity, attention to detail and exper tise are the distinctive qualities of
each person in Prada. The promotion of an inclusive work environment stimulates
intellectual vitality and the ability to interpret how society is evolving.
Beyond boundaries.
Ar t, philosophy and cinema are just some of the cultural disciplines that represent
constant sources of inspiration for the Group. A network of connections that
broaden the horizon to boldly challenge expectations and create scenarios that
trascend boundaries.
Sustainable paths.
The value creation model is implemented in harmony with the places and people
within the entire sphere of influence of the Group’s activities. Interest in the world
of culture and the contribution to the contemporary debate complete Prada’s
vision of sustainability.
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PRADA Group Annual Report 2021 - The PRADA Group Mario Prada
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P R A D A G R O U P H I S T O R Y
The Prada brand dates back to the beginning of the last century: in 1913, Mario
Prada opened an exclusive store in the Galleria Vittorio Emanuele II, Milan, selling
handbags, travel trunks, beauty cases, tasteful accessories, jewelry and other
luxury items. Thanks to the innovative design of its goods, created using fine
materials and sophisticated techniques, Prada rapidly acquired wide popularity
across Europe.
In 1919 Prada became an official supplier to the Italian royal family; since then
Prada has been able to display the House of Savoy coat of arms and knotted rope
design in its trademark logo.
The turning point for the Group came at the end of the 1970s when Miuccia
Prada, Mario Prada’s granddaughter, par tnered with Tuscan entrepreneur Patrizio
Ber telli to combine creativity with business acumen and lay the foundations for
the ensuing international expansion.
Patrizio Ber telli broke new ground in the luxury goods sector by introducing a
business model based on direct control over all processes and applying strict
quality standards to the entire production cycle. Miuccia Prada’s creative talent
attracted international attention due to her innovative approach, inspired by an
unconventional outlook on society, enabling her to anticipate and often influence
new fashion and design trends.
In 1977 Patrizio Ber telli founded IPI spa, where he concentrated the production
resources he had built up over ten years in the leather goods industry. In the same
year, IPI spa obtained a license from Miuccia Prada for the exclusive production
and distribution of Prada brand leather goods. In the following years the two
family businesses gradually merged into a single Group.
In 1983 the Prada family opened a second store in prestigious Via della Spiga in
Milan, one of Europe’s key shopping destinations. The store showcased the new
brand image by pairing traditional elements with modern, innovative architecture,
thereby revolutionizing and setting a new standard for luxury retail.
In response to the growing appreciation of the products, the Prada leather goods
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PRADA Group Annual Report 2021 - The PRADA Group range was expanded to include the first women’s footwear collection in 1979. The
first women’s clothing collection was launched in Milan in 1988. At the same time,
the internationalization process began, with stores opening first in New York and
Madrid, and then in London, Paris and Tokyo.
In 1993 Prada made its debut in menswear with its first men’s clothing and
footwear collection. That same year, Miuccia Prada’s creative inspiration led to
the establishment of a new brand, Miu Miu, conceived for sophisticated, stylish
women who love to stay ahead of fashion trends. Miu Miu now creates women’s
ready-to-wear apparel, handbags, accessories, footwear, eyewear and fragrances,
and accounts for a significant share of the Group’s sales.
In 1993 Miuccia Prada and Patrizio Ber telli created “Milano Prada Ar te”, which
subsequently became “Fondazione Prada”, to pursue their interests and passions
in the world of ar t and culture.
In 1997 Patrizio Ber telli organized the Prada Challenge sailing team to compete
for the 2000 America’s Cup, and Prada launched its leisurewear range featuring
the “Linea Rossa” (red line).
In 1999, the Prada Group acquired the classic brand Church’s, founded in 1873 in
Nor thampton, England. The brand, specialized in high-end handcrafted footwear,
is a universally recognized symbol of British tradition and sophisticated elegance.
In 2001, the Prada “Epicenter ” store, designed by Rem Koolhaas, was opened
on Broadway in New York City. This was the first store of the Epicenters project,
whose purpose was to redefine the shopping concept and try out inventive ways to
interact with customers. A second Epicenter store was opened in Aoyama, Tokyo,
followed by a third one on Rodeo Drive, Beverly Hills, in 2004. During the same
year, Prada acquired control of Car Shoe, a classic Italian brand renowned for its
exclusive driving moccasins.
In 2003 Prada entered into a licensing agreement with Italian eyewear manufacturer
Luxottica, a global industry leader which currently produces and distributes
eyewear with the Prada and Miu Miu brands. Also in 2003, a new par tnership was
established that led to the release of the first fragrance, Amber, in 2004.
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PRADA Group Annual Report 2021 - The PRADA Group Prada Epicenter concept store Broadway, New York
by architect Rem Koolhaas and Studio OMA
Prada Epicenter concept store Los Angeles, Beverly Hills
by architect Rem Koolhaas and Studio OMA
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Prada Epicenter concept store
Aoyama, Tokyo by architects Herzog & de Meuron
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In 2006, Miu Miu moved its fashion show venue to Paris to better represent its
brand identity.
The Prada phone by LG, the world’s first touchscreen cellphone, made its debut in
March 2007. The LG/Prada par tnership achieved fur ther success with new releases
in 2008 and 2011.
On June 24, 2011, Prada was successfully listed on the Main Board of the Hong
Kong Stock Exchange.
In March 2014, Prada spa acquired control of Angelo Marchesi srl, the historical
Milanese patisserie founded in 1824, thus entering the food industry.
In 2015 the Prada Group and Coty Inc. introduced the first Miu Miu fragrance.
In September of that year the Marchesi 1824 brand was developed on the market
with the opening of a patisserie in via Montenapoleone, Milan.
2016 featured impor tant manufacturing investments, all of which were made
to achieve sustainable production growth respectful of the environment: a new
leather goods factory was inaugurated and five factories in Tuscany and Umbria
were renovated. The first construction phase of the new logistics hub for finished
products was completed in Tuscany. The second phase was completed in 2018.
In 2017, the impor tant restyling plan for Prada and Miu Miu stores was coupled
with an extensive program of pop-up events to fur ther suppor t retail activities.
In the same year, the Prada Group was admitted to the Cooperative Compliance
regime with the Italian tax authorities, introduced with Italian Law Decree 128 of
2015.
In 2018 the Group added to its customary Milan and Paris fashion shows two
impor tant events to present pre-collections: Miu Miu Croisière in Paris and Prada
Resor t in New York.
In 2019 the Diversity & Inclusion Advisory Council was established; assisted by
leading exper ts from impor tant international academic and cultural institutions, it
guides the Group on matters of social sustainability. In October of the same year,
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PRADA Group Annual Report 2021 - The PRADA Group the Prada Group obtained full control of the retail network by acquiring Fratelli
Prada spa, the long-standing franchisee of Prada monobrand stores in Milan.
In 2020, the year when the beginning of the Covid-19 pandemic wreaked havoc
across the globe, Raf Simons became the Creative Co-Director of Prada and other
impor tant managers joined the team, with a view to fostering long-term growth
even with the uncer tainties arising from the public health emergency. In July of
the same year Prada spa obtained “AEO Full” (Authorized Economic Operator)
cer tification from the Italian Customs Agency, becoming one of very few taxpayers
in Italy to hold simultaneously this qualification and par ticipate in the Cooperative
Compliance regime with the Italian Revenue Agency.
In 2021 the 36th edition of America’s Cup presented by Prada became the most
viewed one ever, and the Luna Rossa sailing team won the Prada Cup Challenger
Selection Series for the second time in history. During the year, the Prada Group
founded the Aura Blockchain Consor tium with LVMH and Car tier and purchased a
stake in Filati Biagioli Modesto S.p.A. with the Zegna Group; it also bought out the
remaining stakes in the Travel Retail Shop companies dealing with duty-free store
activities, and acquired the ownership of Luna Rossa Challenge Srl so as to fully
develop the commercial value of the Luna Rossa brand. In addition, a long-term
licensing agreement with L’Oréal for the creation, development and distribution of
Prada brand luxury cosmetics entered into effect.
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PRADA Group Annual Report 2021 - The PRADA Group T H E G R O U P ' S B R A N D S
The Prada Group owns and manages some of the most prestigious luxury brands in
the world and works constantly to enhance their value by increasing their visibility,
recognition and appeal. The Group’s brands are one of its most impor tant assets.
PRADA
Prada is at the forefront of Italy’s design and manufacturing tradition, sophisticated
style and outstanding quality. As one of the most innovative fashion brands,
intrinsically linked to acumen and intellectual curiosity, it is capable of redefining
the norm by anticipating and setting new trends. Prada is radicalism, authenticity
and duality. Its essence transcends the creativity of its design process to encompass
the most novel forms of production, communication and distribution.
Miuccia Prada has always been a refined interpreter of her times who has stayed
ahead of styles and trends. The Prada brand, with its collections of men’s and
women’s leather goods, clothing, footwear, eyewear, and fragrances, targets an
international clientele that is urbane, modern, and culturally and socially active.
In addition, the prestige of the Luna Rossa collection captures the interest of
spor ts enthusiasts.
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Prada advertising campaign S/S 2022
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Prada advertising campaign S/S 2022
Talent: Tom Holland
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MIU MIU
Miu Miu is the most free-spirited representation of Miuccia Prada’s creativity.
Intentionally distant from classic aesthetic expressions, and with a nonconformist
perspective, the brand reflects an emancipated and discerning woman.
Miu Miu was created in 1993 from Miuccia Prada’s independent and unconventional
spirit. It soon evolved into one of the leading fashion brands in the world by
successfully embodying the same quality and culture of innovation behind all the
Group’s activities. Miu Miu is irreverently sophisticated and characterized by a
cutting-edge style that evokes a sense of freedom and intimacy. Miu Miu targets
women driven by a modern spirit of exploration and experimentation in their
fashion choices. The independent identity of the Miu Miu brand is enhanced by
its ties with Paris, where the fashion shows have been held for several years now.
Right page
Miu Miu adver tising campaign S/S 2022
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CHURCH’S
Church’s has challenged the most formal rules of style throughout its history.
Church’s expresses contemporary luxury, upholding a centuries-old tradition. It
began its distinctive journey when, thanks to a family heritage of handcrafted
shoemaking experience dating back to 1675, the first Church’s brand shoe factory
was opened in 1873 at 30 Maple Street in Nor thampton, England.
Over time, Church’s turned a small cordwainer ’s workshop into a leading luxury
footwear company.
With its creations, Church’s has become synonymous with an impeccable style that
remains faithful to the British look yet explores new design areas, playing with the
combination of three primary elements: the finest leather, classic style and superb
craftsmanship. Church’s dedicates meticulous attention and care to every detail:
its takes approximately 250 manual steps and 8 weeks of labor to make a single
pair of shoes.
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Church’s adver tising campaign S/S 2022
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CAR SHOE
Small rubber studs set on a deconstructed sole have characterized the iconic
Car Shoe loafer since 1963. Originating from a passion for race cars and fine
shoes, this timeless accessory has become par t of the imagery involving travel and
motors. The Car Shoe brand is a symbol of an exclusive, relaxed lifestyle, inspired
by luxury. Par ticularly suited for leisure time and informal occasions, the Car Shoe
collections are targeted to a casual, well-dressed male and female clientele.
MARCHESI 1824
With a strong history and tradition, Marchesi 1824 is one of the oldest and
most famous pastry shops in Milan, renowned for the excellence of its products,
par ticularly chocolate and Panettone, the typical Milanese cake.
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Car Shoe adver tising campaign S/S 2021
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Pasticceria Marchesi 1824
Galleria Vittorio Emanuele II, Milan
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B U S I N E S S M O D E L
The success of the Prada Group’s brands is based on a business model that
combines skilled craftsmanship with industrial manufacturing processes. This
integration enables the Group to translate its innovative fashion concepts into
viable commercial products. It also help retaining flexible capacity, as well as
control over know-how, quality and sustainability standards and production costs.
Fashi on
Shows
Showroom
Presentation
SOURCING
STYLE & DESIGN
AND PRODUCT DEVELOPMENT
COLLECTION
OF ORDERS
Quality Control
DISTRIBUTION
Buying
Session
(Ret ai l)
Sales
Campaign
( W ho l e sal e)
PRODUCTION
AND LOGISTICS
CREATIVIT Y
Creativity is at the hear t of the manufacturing process.
Miuccia Prada has the talent to combine 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 in 2020 of Raf Simons as Creative Co-Director of the Prada brand
alongside Miuccia Prada produced a new creative authorship model, reiterating
the impor tance and power of dialogue.
With this unique approach Prada anticipates and often influences trends, while
constantly experimenting with new designs, fabrics and production techniques.
Experimentation and idea-sharing are the essential components of the design
process throughout the Group. The time spent at the drawing board and in the
testing room on design research and development is fundamental to formulating
each collection so that the clothing, footwear and accessories complement each
other and create a well-defined image reflecting the brands.
Prada’s flair and the strong appeal of its tradition and quality standards continue
to attract talented people from all over the world who want to share the creative
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PRADA Group Annual Report 2021 - The PRADA Group experience. This results in teams in all stages of the creative process: from fashion
design to manufacture, from architecture to communication and photography,
from store interior design to all the unique and special projects in which the Prada
Group is involved.
In 2021 the American magazine WWD awarded Miuccia Prada the John B. Fairchild
Honor for Lifetime Achievement to celebrate her enduring influence on fashion.
RAW MATERIALS AND THE PRODUCTION PROCESS
Know-how is the Group’s historical asset and represents an element of continuity
and balance between creativity and precision. The manufacturing vision is based
on two key principles: constant innovation, which ensures the evolution of skills
and exper tise, and a vocation for craftsmanship, which is an essential asset for the
production and value of each brand.
Raw materials are an essential par t of product quality and are of primary impor tance
for all the Prada Group’s brands. In many cases the fabrics and leather are made
especially for the Group, according to stringent technical and style specifications
that guarantee excellence.
Prada products are made at the 23 manufacturing facilities owned (20 in Italy, 1 in
the United Kingdom, 1 in France and 1 in Romania) and by a network of selected
and strictly monitored contract manufacturers that are supplied with internally
made raw materials and internally made patterns and prototypes. This system,
which enables close oversight of each step of the process and ensures high-quality
workmanship, emphasizes the manufacturing excellence of each facility and
ensures significant flexibility in the organization of production.
The outstanding quality of the production operations gives the Group a competitive
advantage, enhanced by continuous research and experimentation on production
materials and techniques, and by investments in structures, supply chain and,
not least of all, people. Most of the production employees have been working for
the Prada Group for an average of 20 years; this ensures an extremely high level
of specialization as well as in-depth knowledge and harmony with the Group’s
unique concept. For years Prada has been investing heavily in the transmission of
manufacturing techniques and core values to younger generations, both with the
Prada Academy and by honing its employees’ technical skills.
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PRADA Group Annual Report 2021 - The PRADA Group Prada store
La Samaritaine, Paris
Prada store
Seoul The Hyundai, Seoul
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Miu Miu store
Sant’Andrea, Milan
Miu Miu store
Taipei Breeze Nanshan, Taipei
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DISTRIBUTION
Over the years, the Group has expanded its distribution network to include 635
directly operated stores (“DOS”) in the most prestigious locations of the major
international shopping destinations, consistent with the image, heritage and
exclusivity of each brand. This extensive network, the object of ongoing research
and renovation, is a true asset for the Group as it showcases the new collections and
is the fulcrum of the omnichannel strategy. The Group’s own e-commerce websites
complete the direct customer journey, offering a constantly evolving shopping
experience integrated with the physical stores. The DOS serve as more than a
primary sales function as they are also an impor tant means of communication: they
are the true brand ambassadors, conveying the image of each brand consistently
and categorically. The DOS are integrated with the e-commerce strategy and allow
the Group to monitor in real time the sales per formance of the various markets for
each brand and product category.
The wholesale channel (depar tment stores, multi-brand stores and franchisees)
provides additional venues selected on the basis of location prestige in the
various markets, and enables direct, immediate comparison with the competition.
Developments in the ominichannel strategy have led to impor tant par tnerships
with top online retailers (“e-tailers”).
IMAGE AND COMMUNICATIONS
Sharing information with stakeholders enables being involved in the brands’ value
system, which transcends purely commercial goals. Effective communications are
key to building and transmitting a strong image for the brands that is consistent
with their identity.
From impeccably executed fashion shows rich in content to award-winning
adver tising campaigns, Prada and all the Group’s brands continue to create a
captivating, stylish image that is valued par ticularly by a high-end, international
clientele and by the strictest, most demanding observers and critics.
The fluid content, embodying creative freedom and intellectual curiosity, makes it
possible to implement the omnichannel strategy effectively.
Through social media accounts, brand e-commerce websites, the corporate website
and digital platforms in general, the Group fosters direct and immediate contact
with the audience to enhance the interest in its brands and initiatives. In parallel,
the vast editorial coverage given on hundreds of covers of the world’s leading
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PRADA Group Annual Report 2021 - The PRADA Group fashion magazines and in the most influential dailies and weeklies heightens the
visibility of the Group’s brands.
Special events also promote brand profiles and boost awareness of the most recent
collections in local markets, especially in large cosmopolitan cities.
SOCIAL AND ENVIRONMENTAL SUSTAINABILIT Y
On November 11, 2021, Prada spa’s Board of Directors approved the strategic
guidelines for sustainable growth, formalized on the basis of the principles and
priorities that have always moved the Prada Group, identified in three pillars:
people, the environment and culture.
Along with defining the social and environmental sustainability strategy, the
Group strengthened the related governance by arranging for three Board members
to have specific ESG (environmental, social and governance) capabilities. This
organizational structure, made official on January 28, 2022 through the resolution
of the PRADA spa general meeting, ensures that the processes for creating the
Group’s long-term value develop in harmony with the sustainability objectives.
PEOPLE
The Prada Group puts the human factor and the universe of cultures, talents
and identities that compose it at the center of its work. This variety is a source
of inspiration for creativity and innovation, and an essential tool for rapidly
understanding changes in society and in the market.
At December 31, 2021 the Group has 13,140 employees from 107 countries, with
women making up 62% of the total workforce.
The Group, which works in a constantly evolving global market, encourages a
culture of diversity, equity and inclusion within its own ranks and along its entire
sphere of influence. The Board of Directors’ capabilities, the Diversity, Equity and
Inclusion management and the par tnerships with authoritative universities and
monitoring centers make it possible for Prada’s strategies to evolve in tune with the
most recent societal shifts. Moreover, the Diversity & Inclusion Advisory Council
in the U.S.A., which brings together illustrious activists and exper ts, educates
management fur ther about the social aspects of sustainability, autonomously and
independently from any form of Group governance.
In 2021 the Prada Group joined The Valuable 500, an international association
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PRADA Group Annual Report 2021 - The PRADA Group that promotes the inclusion of people with disabilities in company organizations.
In this context, the Prada Group prepared a long-term disability integration plan
that has taken off with the hiring of individuals affected by Trisomy 21 (Down
syndrome) at its Italian stores.
From the outset, Prada has encouraged and rewarded workplace skills, results
orientation and teamwork. The passion and skills of the employees, and of the
ar tisans in par ticular, are essential for product innovation and quality, for which
the Group pursues excellence in all its endeavors and relationships. It cultivates a
mindset that leads people to strive for per fection in their work.
Prada Academy is the Group’s training hub designed to cultivate talent and ensure
the Group’s future through the sharing of knowledge, techniques, and ideas. The
Academy has a global digital platform and a team dedicated to the implementation
and continuous updating of projects, content and training plans. It is split up into
three macro areas: Industrial, Learning & Development and Stores.
The Industrial area holds courses dedicated to learning craftsmanship in the
clothing, footwear and leather goods categories. A substantial structure completely
behind the Group’s productive strategy, the Industrial Academy’s goal is to preserve
and pass on to young generations the heritage of knowledge and exper tise typical
of the organization and of the fashion industry. The Learning & Development area,
effectively the Group’s corporate area, focuses on courses geared toward the
enhancement of relational and behavioral skills, aimed at achieving more effective
management of operational complexities.
In the Stores area, store staff are mentored by experienced personnel, and
institutional training courses are held for store staff to strengthen relational skills,
in par t through the use of technology, and product knowledge.
The extensive, merit-based compensation and benefits system ensures equal
treatment in terms of gender, seniority and role, and makes the Prada Group
a true equal oppor tunity employer. The Group’s remuneration policy seeks to
attract, reward and retain skilled personnel and exper t managers, while bringing
the interests of management into line with the primary objective of creating value
for the long-term future.
The Remuneration Committee oversees the compensation packages of top
management, taking into consideration roles and responsibilities as well as market
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PRADA Group Annual Report 2021 - The PRADA Group standards for similar positions in a panel of companies comparable to Prada in
terms of size and complexity.
The Group is committed to demonstrating its full respect for the value of the
individual and of the human rights, especially of workers, recognized in Italian
and international agreements and statements such as the United Nations Universal
Declaration of Human Rights, the ILO Declaration on Fundamental Principles and
Rights at Work and the OECD Guidelines for Multinational Enterprises, as noted
in the Sustainability Policy approved by the Board of Directors on March 15, 2019.
Internal policies safeguard the health and safety of the employees at all the
premises in accordance with the highest standards and in full compliance with local
and international regulations and the strictest public health emergency protocols.
In most locations (offices, warehouses and stores), these risks are limited.
Manufacturing facilities present the greatest health and safety risk, although
such risk is still low. Safety training and refresher courses, with an emphasis on
industrial facilities, helped keep the number of accidents very low in 2021, as well
as in previous years.
The Prada Group collaborates with trade unions to continuously improve the
working conditions of its employees and to foster the long-term well-being of
its employees and the respective communities. During the Covid-19 pandemic,
the Group was among the first businesses in Italy to establish stringent employee
safety protocols, allowing it to reopen production facilities in 2020 during the
most acute phase of the lockdown.
Over the years the Group has stipulated many supplementary agreements in Italy,
the United Kingdom and France whereby it offers better benefits than those
already contained in the local collective bargaining agreements. Thanks to respect,
dialogue and cooperation with trade unions, no labor strikes occurred in the year
or in recent years.
With regard to the working conditions of employees throughout the supply
chain, the Company has identified some industrial supplier risks, for which it
has adopted specific policies and has set up dedicated structures. This control
system defines the responsibilities and operational behaviors needed to assess
the ethical, technical and financial reliability of the suppliers. Specifically for
ethical issues, the accreditation and subsequent maintenance of a supplier ’s
qualification requires compliance with the Group’s Code of Ethics and the collection
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PRADA Group Annual Report 2021 - The PRADA Group of documents, statements and self-cer tifications that ensure compliance with
laws on remuneration, social security, taxation, occupational health and safety,
the environment, privacy and the governance model. Audits carried out at the
manufacturing locations of suppliers in recent years, intended to maintain a high
level of control over risks of human rights violations and inadequate working
conditions, led to the formulation of action plans at some locations. Some audits
resulted in the termination of the supply contract.
ENVIRONMENT AND TERRITORY
The Prada Group believes it has a responsibility to engage in and cultivate
vir tuous behaviors that contribute to the sustainable growth of its business and
are examples of good practice within its industry. Prada is committed to reducing
its environmental impact not only within the organization but also by raising the
awareness of its stakeholders and par tnering with qualified third par ties.
Fighting climate change and conserving the places where it operates are ways the
Group intends reduce its environmental footprint with the greatest priority.
In 2021 the Prada Group completed the measurement of its carbon footprint
and then successfully presented greenhouse gas emission reduction targets in
accordance with the Science Based Targets Initiative, a best international practice
and protocol. Such targets envision a 29% reduction of Scope 1 and Scope 2
emissions (from those of 2019) by 2026, and a 42% reduction of Scope 3 emissions
(from those of 2019) by 2029. The first target will be met through an intensive
energy-efficiency action plan that has in recent years made the Group one of the
industry leaders in this area: by the end of 2026, electric heating and air conditioning
systems will be installed in five other plants, the propor tion of renewable energy
obtained and self-produced will be doubled and new LEED cer tificates will be
obtained for stores; about the latter, the Prada Group has achieved a leadership
position having already secured n. 141 LEED cer tifications (3 for Building Design
and Construction, 57 v4. Interior Design and Construction and 81 v4.1 Operations
and Maintenance O + M) The second target, cutting emissions along the supply
chain, requires the involvement of the suppliers and the formulation of a joint
action plan. The Group plans to reach net zero emissions by 2050.
Respect for the places where its facilities are located has been a guiding principle
for the Prada Group from the star t. Reducing land take, renovating existing
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PRADA Group Annual Report 2021 - The PRADA Group structures and working toward building requalification have inspired the decisions
made in more than thir ty years of industrial development.
Prada’s manufacturing and storage facilities are an excellent example of its
responsible relationship with the environment. These buildings occupy more than
200,000 m2, and are almost all located in Italy. Five of them are new constructions,
three are the products of industrial archeology projects, and many more have been
conver ted from sites long abandoned and in obvious disrepair.
For four of its largest industrial projects, Prada hired architect Guido Canali,
Italy’s leading proponent of sustainable architecture. This relationship, initiated
in the 1990s and still underway in a new, impor tant phase, was developed while
business ethics were being introduced voluntarily and spontaneously at a time in
history in which the significance of adopting such values had not been realized
yet. The Prada Valvigna factory, as well as the new logistic hub in Levanella,
both in Tuscany, represent the synthesis of these principles: structures capable of
generating sustainable efficiency and obtaining harmony between the architectural
intervention and the natural surroundings.
With respect to protecting biodiversity, the Prada Group is constantly seeking
ways to make footwear, clothing and leather goods increasingly more sustainable,
in keeping with its characteristically innovative spirit. The exper tise acquired over
decades of product research and development made it possible to successfully
launch the “Re-Nylon” campaign to completely transition from virgin nylon to
regenerated nylon, by now nearly accomplished, and to introduce many new
solutions with a smaller carbon footprint, from the catwalks to the collections
and, obviously, packaging. Prada became fur free with the 2020 Spring-Summer
Women’s collection.
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Prada industrial Headquar ter
Valvigna, Terranuova Bracciolini (AR)
by architect Guido Canali
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In 2020, for World Oceans Day, Prada and UNESCO inaugurated the “Sea Beyond”
project, embarking on an enduring par tnership aimed at spreading awareness
about the impor tance of ocean preservation through the research and repor ting
activities of the Intergovernmental Oceanographic Commission. Sea Beyond,
conceived as an ocean literacy project dedicated to secondary school students
in ten cities across the globe, has become par t of Prada’s narrative describing
the commitment to publicizing this topic. New initiatives are planned for this
awareness campaign involving the Group’s employees and a new, more extensive
project with the schools.
Last but not least, joining the Fashion Pact on August 23, 2019 at the G7 Meeting
in France created a unique oppor tunity to accelerate environmental sustainability
initiatives. Active par ticipation in the coalition’s projects has enabled the Group
to acquire exper tise, forge new relationships and expand its own knowledge of the
actions needed to achieve the objectives of contrasting climate change, restoring
biodiversity and protecting the oceans.
Left page
Prada Group and UNESCO educational programme “Sea Beyond”
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PRADA Group Annual Report 2021 - The PRADA Group CULTURE
Ar t, philosophy, architecture, literature and film are the main cultural disciplines
that represent continuous sources of inspiration for the Group. The network
of connections made broadens horizons, subver ting norms, boldly challenging
expectations and shaping scenarios that deviate from the ordinary. Interaction with
these apparently distant cultural spheres has led to a number of special projects
that, over the years, have helped define the many facets of the Prada world.
Prada’s interest in architecture has always been evident in its aforementioned
cutting-edge manufacturing sites, with the requalification and conversion of former
factories into showrooms and offices, and the development of revolutionary retail
concepts thanks to prestigious par tnerships with some of the most influential
architectural firms in the world.
In 2015 Herzog & de Meuron, winners of the Prit zker Architecture Prize, worked
with the Group on the Miu Miu flagship store in the Aoyama district of Tokyo,
core of the brand’s Japanese operations. A few years earlier, from 2000 to 2004,
Herzog & de Meuron and another Prit zker Prize winner, Rem Koolhaas, had
par tnered with Prada on the Epicenter Concept Stores in New York, Los Angeles
and Tokyo. These Epicenters, still essential for the Group’s image, are the result
of innovative thinking about the shopping concept, revisited and reinvented to
create unique places, where luxury goods, technology, design and architecture
combine seamlessly with a vast range of exclusive services and sensory and digital
experiences. On occasion, the Epicenters host movie screenings, exhibitions,
debates and other cultural events.
The restoration of Rong Zhai, a historic residence in downtown Shanghai, was
completed in 2017 after a scrupulous, six-year refurbishment. Rong Zhai, yet
another example of the Prada Group’s interest in the restoration of historical
landmarks, is the result of a fruitful par tnership with architects, historians, and
ar tisans and is now the hub of the Group’s cultural events in China.
The interests and passions of Miuccia Prada and Patrizio Ber telli have inspired the
Prada Group to suppor t the ar tistic and cultural activities of Fondazione Prada
since 1993.
Fondazione Prada was created in Milan to develop contemporary ar t exhibitions
along with architectural, cinematic, philosophical, science and per forming ar ts
projects. The cultural activities of Fondazione Prada make it possible for the Group
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PRADA Group Annual Report 2021 - The PRADA Group to proactively contribute to current debates and observe the changes taking place
in society. This collaboration, active in the form of sponsorship, is an impor tant
source of inspiration for the creative process and enables the Group to associate
the success of Fondazione Prada with its image and share the related value with
its stakeholders.
Since 2010, Fondazione Prada has presented twenty-four exhibitions in Milan
dedicated to impor tant international ar tists, as well as other activities in the field
of cinema, architecture and philosophy in Italy and abroad.
Since 2011, the Fondazione has also been operating at its Venetian venue, Ca’
Corner della Regina, an eighteenth-century building that has so far hosted nine
research exhibitions and an experimental platform dedicated to cinema.
The exhibition program of Fondazione Prada’s headquar ters in Milan, inaugurated
in 2015 and designed by the architectural firm OMA, included in 2021 the site-
specific project “Who the Bær ”conceived by contemporary ar tist Simon Fujiwara,
and the retrospective exhibition “Domenico Gnoli” conceived by Germano Celant
and dedicated to the eponymous twentieth-century ar tist.
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PRADA Group Annual Report 2021 - The PRADA Group Exhibition view of “Domenico Gnoli”
Fondazione Prada, Milano.
Photo: Rober to Marossi
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The multifunctional space of the Deposito, within the Milan venue, hosted for the
first time in December 2021 “Riccardo Muti Italian Opera Academy”, a training
project under taken by Maestro Muti targeted to five young orchestra conductors
and five répétiteurs under the age of 35 from all over the world. Also at the Milan
venue, the “Multiple Canvases” and “Proof. Incorporated” film series took place
at the Cinema in 2021.
The Venetian venue hosted the “Stop Painting” exhibition, conceived by ar tist
Peter Fischli, and the “AURA | SUL TOCCARE LE COSE” choreographic project,
conceived by Virgilio Sieni and presented in collaboration with Fondazione Archivio
Luigi Nono.
Osservatorio, the Fondazione’s exhibition space dedicated to photography since
2016, is located on the 5th and 6th floors of one of the central buildings in
Galleria Vittorio Emanuele II, in Milan.
The “Sturm&Drang” exhibition project, a collaboration between Fondazione Prada
and gta exhibitions, ETH Zurich, was held in 2021. Curated by Luigi Alber to
Cippini, Fredi Fischli and Niels Olsen, “Sturm&Drang” explored the applications,
experiences and environments related to computer-generated imagery (CGI) with
the aim of revealing the complexity of computer modeling and analyzing the current
production of images. In spring 2021, with the suppor t of Fondazione Prada, the
Prada Group presented a different version called “Sturm&Drang Preview Services”
on a floor of the Prada Aoyama Tokyo Epicenter in Japan. The entire project was
integrated with a program of online lectures on the subjects of the exhibitions,
with ar tists, designers and creatives exper t on these technologies, published on
the Fondazione’s website.
In 2021, “Human Brains,” a global project of exhibitions, scientific debates, public
meetings and publishing activities dedicated to brain studies, was developed
fur ther. The project, which will run until 2022, aims to attract public interest
in neuroscience and create a forum to facilitate exchanges among scientists,
philosophers and scholars.
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PRADA Group Annual Report 2021 - The PRADA Group Exhibition view of “Stop Painting”
Fondazione Prada, Venezia.
Photo: Marco Cappelletti
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Miuccia Prada’s personal interest in cinema as a contemporary form of ar t has
led to other invaluable collaborations such as the shor t films entitled “Miu Miu
Women’s Tales”, of which the last two episodes – “Shangri-La”, directed by Isabel
Sandoval and “I and the Stupid Boy”, directed by Kaouther Ben Hania – were shown
at the 2021 Venice Film Festival as par t of the Giornate degli Autori program. The
film series, which consists of twenty-two films produced up to December 2021,
calls upon directors of international fame and diverse intellectual backgrounds to
explore the world of women.
Interaction with the world of cinema has created various other par tnerships with
internationally renowned film directors, such as “ The Delivery Man” (2018),
created and directed by Ryan Hope and interpreted by Academy Award winner J.K.
Simmons, “Past Forward” (2016) by Academy Award winner David O. Russell, and
“ Thunder Per fect Mind” (2006) by Jordan and Ridley Scott.
Left page
Miu Miu Women’s tales n.22 “I and The Stupid Boy”
Directed by Kaouther Ben Hania
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LUNA ROSSA
In addition to engaging with the world of ar t, cinema, architecture and culture
in general, the Prada Group, driven by the same spirit of constant pursuit of
inspiration, has shown for more than twenty years fervent interest in the world
of sailing and the America’s Cup race, the most prestigious competition for this
spor t. Prada sponsors the Luna Rossa team, which was a challenger in the sailing
yacht races of 2000, 2003, 2007, 2013 and 2021, won the challenger selection
regattas in 2000 and 2021, and reached the finals in 2007 and 2013.
Having thrived from this experience, which increased the Prada brand’s visibility
and made a huge contribution to the commercial success of the activewear lines,
in November 2021 the Group purchased Luna Rossa Challenge Srl, the firm that
manages the sailing team and possesses unique and advanced technological and
spor ts know-how in the sector. With this acquisition, the Group has combined the
ownership of the Luna Rossa brand with the competitive capability of the team in
view of par ticipating in the upcoming 37th America’s Cup and fully benefiting from
the commercial potential of the Luna Rossa brand.
Left page
Luna Rossa Prada Pirelli Team
Winner of the Prada Cup
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PRADA Group Annual Report 2021 - The PRADA Group P R A D A G R O U P S T R U C T U R E
PRADA spa
Milan
Holding/Manufacturing/distribution/services
100%
Church & Co ltd
Northampton
Manufacturing/
distribution/services
100%
IPI Logistica srl
Milan
services
100%
PRADA Canada Corp
Toronto
distribution/retail
100%
PRADA Australia pty ltd
Sydney
retail
100%
Church & Co (Footwear) ltd
Northampton
tradeMarks
100% Pelletteria Ennepi srl
Figline e
Incisa Valdarno
Production
100%
Post Development Corp
New York
real estate
100%
PRADA Korea llc
Seoul
retail
60%
PRADA Middle East fzco
Jebel Ali Free Zone-Dubai
distribution/services
100%
PRADA Retail France sas
100%
Marchesi 1824 srl
Milan
food&beverage
100%
PRADA sa
Luxembourg
tradeMark
49%
PRADA Emirates llc
100%
PRADA Monte-Carlo sam
Dubai
retail
UK Branch
London
Swiss Branch
Lugano
services
100%
Church UK Retail ltd
Northampton
retail
100% Hipic Prod Impex srl
Sibiu
Production
100%
PRADA USA Corp
New York
distribution/services/retail
100%
PRADA Singapore pte ltd
Singapore
retail
49%
PRADA Kuwait wll
Kuwait City
retail
100%
PRADA Belgium sprl
100% Luna Rossa Challenge srl
100%
PRADA Company sa
Grosseto
ManageMent sailing teaM
Luxembourg
services
100%
Church’s English Shoes sa
Brussels
retail
100%
Figline srl
Milan
Production
PRADA Guam llc
Guam
retail
100%
100%
PRADA Retail
Malaysia sdn bhd
Kuala Lumpur
retail
100%
100%
Church France sas
Paris
retail
100%
Pelletteria Figline srl
Figline Incisa
Valdarno
Production
PRADA Retail Mexico
S. de R.L. de C.V.
Mexico City
retail
100%
100%
PRADA Japan Co ltd
Tokyo
retail
Church Spain sl
Madrid
retail
66.7% Artisans Shoes srl
Montegranaro
Production
100%
100%
PRADA Brasil
Importação e Comércio
de Artigos de Luxo ltda
São Paulo
retail
PRADA Panama sa
Panama
retail
100%
PRADA Retail Aruba nv
Aruba
retail
100%
PRADA Saint
Barthelemy sarl
Gustavia
retail
100%
PRADA (Thailand) Co ltd
Bangkok
retail
100%
PRADA New Zealand ltd
Wellington
retail
100%
100%
PRADA Vietnam Limited
Liability Company
Hanoi
retail
PRADA Saipan llc
Saipan
retail
100%
PRADA Asia Pacific ltd
Hong Kong
services/retail
PRADA Taiwan ltd
Hong Kong
retail
100%
Taipei Branch
Taipei
retail
PRADA Trading
(Shanghai) Co ltd
Shanghai
dorMant
100%
PRADA Fashion Commerce
(Shanghai) Co ltd
Shanghai
retail
100%
PRADA Macau Co ltd
Macau
retail
100%
PRADA Dongguan
Trading Co ltd
Dongguan
services
100%
100%
Church Ireland Retail ltd
Dublin
retail
60% Tannerie Limoges sas
Isle
Production
100%
Church Austria gmbh
Vienna
retail
40%
Les Femmes srl
Porto S. Elpidio
Production
100%
Church Netherlands bv
Amsterdam
retail
40% Filati Biagioli Modesto srl
Montale
Production
100%
Church Footwear ab
Stockholm
retail
100%
Church Denmark aps
Copenhagen
retail
100%
Church Germany gmbh
Münich
retail
100%
100%
Church’s English Shoes
Switzerland sa
Lugano
retail
Church Italia srl
Milan
retail
100%
Church & Co (USA) ltd
New York
retail
100%
Church Hong Kong
Retail ltd
Hong Kong
retail
100%
Church Japan Company ltd
Tokyo
retail
100%
Church Singapore pte ltd
Singapore
retail
100%
100%
Church Footwear
(Shanghai) Co ltd
Shanghai
retail
Church Korea llc
Seoul
retail
52
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100%
PRADA Retail wll
100%
PRADA Germany gmbh
Munich
retail/services
75%
PRADA Saudi Arabia ltd
100%
PRADA Austria gmbh
100%
PRADA Rus llc
100%
PRADA Czech Republic sro
100%
PRADA Ukraine llc
100%
PRADA Netherlands bv
Amsterdam
retail
100%
PRADA Kazakhstan llp
100%
PRADA Switzerland sa
Doha
retail
Jeddah
retail
Moscow
retail
Kiev
retail
Almaty
retail
Paris
retail
Monaco
retail
Brussels
retail
Vienna
retail
Prague
retail
Lugano
retail
Madrid
retail
Lisbon
retail
Istanbul
retail
London
retail
100%
PRADA Spain sl
100%
PRADA Portugal
Unipessoal lda
100%
PRADA Hellas
Sole Partner llc
Athens
retail
100%
PRADA Bosphorus Deri
Mamüller ltd Sirketi
100%
PRADA Retail UK ltd
Ireland Branch
Dublin
retail
100%
PRADA Denmark aps
Copenhagen
retail
100%
PRADA Sweden ab
Stockholm
retail
100% PRADA San Marino srl
San Marino
retail
100%
Kenon ltd
London
real estate
PRADA Group Annual Report 2021 - The PRADA Group PRADA spa
Milan
Holding/Manufacturing/distribution/services
100%
IPI Logistica srl
Milan
services
100%
PRADA Canada Corp
Toronto
distribution/retail
100%
PRADA Australia pty ltd
100% Pelletteria Ennepi srl
Figline e
Incisa Valdarno
Production
100% Hipic Prod Impex srl
Sibiu
Production
Figline srl
Milan
Production
100%
Post Development Corp
100%
PRADA Korea llc
New York
real estate
100%
PRADA USA Corp
New York
distribution/services/retail
100%
PRADA Singapore pte ltd
Singapore
retail
PRADA Guam llc
100%
100%
Guam
retail
PRADA Retail
Malaysia sdn bhd
Kuala Lumpur
retail
100%
Pelletteria Figline srl
Figline Incisa
Valdarno
Production
PRADA Retail Mexico
S. de R.L. de C.V.
Mexico City
retail
100%
100%
PRADA Japan Co ltd
Tokyo
retail
Sydney
retail
Seoul
retail
100%
Church’s English Shoes sa
100%
100%
Church Ireland Retail ltd
60% Tannerie Limoges sas
100%
PRADA (Thailand) Co ltd
100%
Church Austria gmbh
40%
100%
PRADA New Zealand ltd
66.7% Artisans Shoes srl
Montegranaro
Production
Isle
Production
Les Femmes srl
Porto S. Elpidio
Production
100%
PRADA Brasil
Importação e Comércio
de Artigos de Luxo ltda
São Paulo
retail
100%
PRADA Panama sa
Panama
retail
100%
Church Netherlands bv
40% Filati Biagioli Modesto srl
Amsterdam
retail
Montale
Production
100%
PRADA Retail Aruba nv
Aruba
retail
100%
PRADA Saint
Barthelemy sarl
Gustavia
retail
100%
Church & Co ltd
Northampton
Manufacturing/
distribution/services
100%
Church & Co (Footwear) ltd
Northampton
tradeMarks
100%
Church UK Retail ltd
Northampton
retail
100%
Church France sas
100%
Church Spain sl
Brussels
retail
Paris
retail
Madrid
retail
Dublin
retail
Vienna
retail
100%
Church Footwear ab
Stockholm
retail
100%
Church Denmark aps
Copenhagen
retail
100%
Church Germany gmbh
100%
Church’s English Shoes
Switzerland sa
100%
Church Italia srl
100%
Church & Co (USA) ltd
100%
Church Hong Kong
Münich
retail
Lugano
retail
Milan
retail
New York
retail
Retail ltd
Hong Kong
retail
Tokyo
retail
100%
Church Japan Company ltd
100%
Church Singapore pte ltd
Singapore
retail
100%
Church Footwear
(Shanghai) Co ltd
Shanghai
retail
100%
Church Korea llc
Seoul
retail
Bangkok
retail
Wellington
retail
Hanoi
retail
Saipan
retail
100%
PRADA Vietnam Limited
Liability Company
100%
PRADA Saipan llc
100%
PRADA Asia Pacific ltd
Hong Kong
services/retail
PRADA Taiwan ltd
Hong Kong
retail
100%
Taipei Branch
Taipei
retail
PRADA Trading
(Shanghai) Co ltd
Shanghai
dorMant
100%
PRADA Fashion Commerce
(Shanghai) Co ltd
100%
Shanghai
retail
Macau
retail
PRADA Macau Co ltd
100%
PRADA Dongguan
Trading Co ltd
Dongguan
services
100%
60%
PRADA Middle East fzco
Jebel Ali Free Zone-Dubai
distribution/services
100%
PRADA Retail France sas
Paris
retail
100%
Marchesi 1824 srl
Milan
food&beverage
100%
PRADA sa
Luxembourg
tradeMark
49%
49%
PRADA Emirates llc
Dubai
retail
100%
PRADA Monte-Carlo sam
Monaco
retail
UK Branch
London
Swiss Branch
Lugano
services
PRADA Kuwait wll
Kuwait City
retail
100%
PRADA Belgium sprl
Brussels
retail
100% Luna Rossa Challenge srl
Grosseto
ManageMent sailing 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%
100%
PRADA Rus llc
Moscow
retail
100%
PRADA Czech Republic sro
Prague
retail
PRADA Ukraine llc
Kiev
retail
100%
PRADA Netherlands bv
Amsterdam
retail
100%
PRADA Kazakhstan llp
Almaty
retail
100%
PRADA Switzerland sa
Lugano
retail
100%
100%
100%
100%
PRADA Spain sl
Madrid
retail
PRADA Portugal
Unipessoal lda
Lisbon
retail
PRADA Hellas
Sole Partner llc
Athens
retail
PRADA Bosphorus Deri
Mamüller ltd Sirketi
Istanbul
retail
100%
PRADA Retail UK ltd
London
retail
Ireland Branch
Dublin
retail
100%
PRADA Denmark aps
Copenhagen
retail
100%
PRADA Sweden ab
Stockholm
retail
100% PRADA San Marino srl
San Marino
retail
100%
Kenon ltd
London
real estate
Note:
PRM Services S. de R.L. de C.V.; Prada Maroc Sarlau; Prada Retail South Africa (pty) ltd; Cor 36 S.r.l.
(all 100%, directly or indirectly, owned by Prada S.p.A.) are currently under liquidation process
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PRADA Group Annual Report 2021 - The PRADA Group P R A D A S . P. A . C O R P O R A T E I N F O R M A T I O N
Registered Office
Head Office
Via A. Fogazzaro, 28
20135 Milan, Italy
Via A. Fogazzaro, 28
20135 Milan, Italy
Place of business in Hong Kong
registered under Par t 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 web site
www.pradagroup.com
Hong Kong Stock Exchange
Identification Number
1913
Share Capital
Board of Directors
Audit Committee
54
Euro 255,882,400
(represented by 2,558,824,000
shares of Euro 0.10 each)
Paolo Zannoni
(Chairman & Executive Director)
Miuccia Prada Bianchi (Chief Executive
Officer & Executive Director)
Patrizio Ber telli (Chief Executive Officer &
Executive Director)
Alessandra Cozzani (Chief Financial Officer
& Executive Director)
Lorenzo Ber telli
(Executive Director)
Stefano Simontacchi
(Non-Executive Director)
Marina Sylvia Caprotti
(Independent Non-Executive Director)
Maurizio Cereda
(Independent Non-Executive Director)
Yoël Zaoui
(Independent Non-Executive Director)
Pamela Yvonne Culpepper
(Independent Non-Executive Director)
Anna Maria Rugarli
(Independent Non-Executive Director)
Yoël Zaoui (Chairman)
Marina Sylvia Caprotti
Maurizio Cereda
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PRADA Group Annual Report 2021 - The PRADA Group Remuneration Committee
Nomination Committee
Board of Statutor y Auditors
Marina Sylvia Caprotti (Chairwoman)
Paolo Zannoni
Yoël Zaoui
Maurizio Cereda (Chairman)
Lorenzo Ber telli
Marina Sylvia Caprotti
Antonino Parisi (Chairman)
Rober to Spada
David Terracina
Organismo di Vigilanza
(Supervisor y Body)
(Italian Leg. Decr. 231/2001)
Stefania Chiaruttini (Chairwoman)
Yoël Zaoui
Gianluca Andriani
Main Shareholder
Joint Company Secretaries
PRADA Holding S.p.A.
Via A. Fogazzaro, 28
20135 Milan, Italy
Stefania Cane
Via A. Fogazzaro, 28
20135 Milan, Italy
Ying Kwai Yuen
8th Floor, One Taikoo Place
979 King’s Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
Authorized Representatives
in Hong Kong S.A.R.
Patrizio Ber telli
Via A. Fogazzaro, 28
20135 Milan, Italy
Alternate Authorized Representative to
Patrizio Ber telli in Hong Kong S.A.R.
Hong Kong Share Registrar
Auditor
Ying Kwai Yuen
8th Floor, One Taikoo Place
979 King’s Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
Wendy Pui-Ting Tong
8th Floor, One Taikoo Place
979 King’s Road
Quarry Bay, Hong Kong S.A.R. (P.R.C.)
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.)
Deloitte & Touche S.p.A.
Via Tor tona, 25
20144 Milan, Italy
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F I N A N C I A L R E V I E W
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PRADA Group Annual Report 2021 - Financial Review F I N A N C I A L R E V I E W B A S I S O F P R E P A R A T I O N
The Board of Director ’s Financial Review refers to the group of companies controlled
by PRADA spa (“Prada” or the “Company”), the parent company of the PRADA
Group (the “Group” or “Prada Group”). This Financial Review should be read in
conjunction with the Consolidated Financial Statements and related explanatory
Notes, which are an integral par t thereof.
The tables repor ted in the Financial Review have been prepared in accordance
with the International Financial Repor ting Standards (“IFRSs”) issued by the
International Accounting Standards Board (“IASB”) and endorsed by the European
Union. Some “non-IFRS measures” are also used in the Financial Review in order
to represent some financial aspects of the period from a management perspective.
58
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PRADA Group Annual Report 2021 - Financial Review CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(amounts in thousands of Euro)
twelve months
period ended
December
31, 2021
%
on net
revenues
twelve months
period ended
December
31, 2020
%
on net
revenues
twelve months
period ended
December
31, 2019
Net Sales
Royalties
Net revenues
3,316,620
49,047
3,365,667
98.5%
1.5%
100%
2,390,866
31,873
2,422,739
98.7%
1.3%
100%
3,183,339
42,255
3,225,594
%
on net
revenues
98.7%
1.3%
100%
Cost of goods sold
(818,309)
-24.3%
(679,361)
-28.0%
(905,982)
-28.1%
Gross margin
2,547,358
75.7%
1,743,378
72.0%
2,319,612
71.9%
Product design and development costs
Advertising and promotion expenses
(115,319)
(294,251)
-3.4%
-8.8%
(102,232)
(206,848)
-4.2%
-8.5%
(127,378)
(231,011)
Selling costs
(1,421,169)
-42.2%
(1,259,827)
-52.0%
(1,470,101)
General and administrative expenses
Total operating expenses
(227,135)
(2,057,874)
-6.7%
(154,410)
-6.4%
(184,343)
-61.1%
(1,723,317)
-71.1%
(2,012,833)
-3.9%
-7.2%
-45.6%
-5.7%
-62.4%
EBIT
489,484
14.5%
20,061
0.8%
306,779
9.5%
Interest and other financial income / (expenses),
net
Interest expenses on Lease Liability
Dividends from investments
Total financial income/(expenses)
(31,216)
(36,773)
160
(67,829)
-0.9%
-1.1%
0.0%
-2.0%
(29,480)
(42,670)
277
(71,873)
-1.2%
-1.8%
0.0%
-3.0%
(25,174)
(48,980)
2,135
(72,019)
Income / (loss) before taxation
421,655
12.5%
(51,812)
-2.1%
234,760
Taxation
(126,552)
-3.8%
(2,556)
-0.1%
22,964
Net income / (loss) for the period
295,103
8.8%
(54,368)
-2.2%
257,724
Net income / (loss) - Non-controlling interests
849
0.0%
(229)
0.0%
1,936
Net income / (loss) - Group
294,254
8.8%
(54,139)
-2.2%
255,788
-0.8%
-1.5%
0.1%
-2.2%
7.3%
0.7%
8.0%
0.1%
7.9%
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PRADA Group Annual Report 2021 - Financial Review
KEY FINANCIAL INFORMATION
Key economic figures
(amounts in thousands of Euro)
Net revenues
Operating income/(loss) - EBIT
% Incidence on net revenues
Net income / (loss) of the Group
Earnings / (losses) per share (Euro)
Net Operating Cash Flows (*)
twelve months
ended
December 31
2021
twelve months
ended
December 31
2020
twelve months
ended
December 31
2019
3,365,667
2,422,739
489,484
14.5%
294,254
0.115
750,723
20,061
0.8%
(54,139)
(0.021)
262,100
3,225,594
306,779
9.5%
255,788
0.100
362,365
(*) Non- IFRS measure equal to Net Cash Flows from operating activities less repayments of lease liability
Key indicators
(amounts in thousands of Euro)
December 31
2021
December 31
2020
December 31
2019
Net operating working capital
Net invested capital (Right of Use assets included)
Net financial surplus / (deficit)
Group shareholders’ equity
2 0 2 1 H I G H L I G H T S
602,038
4,936,402
237,653
3,113,894
667,024
5,296,489
(311,357)
2,832,057
702,835
5,809,417
(405,544)
2,967,158
The Covid-19 pandemic continued to fuel a transformation process in the luxury
goods market in 2021, making it truly evolve. The share of consumers belonging
to young generations increased considerably, as did the input of the digital sales
channels and local consumers. Ethical products, the social responsibility of the
brands and the significance of human beings in the buying experience, even in
the new physical-digital ecosystem, have become of paramount impor tance to the
industry’s value proposition.
Focusing on being relevant, sustainable and impactful, the Prada Group has
succeeded in evolving with the market in this scenario of mutations. The
combination of its unique creative prowess and a transformational omnichannel
strategy has enhanced the perceived value of the brands and products, paving the
way for revenue growth and putting the Group back on the path of long-term value
creation.
The commercial strategy was behind this growth with a more profitable sales mix,
the elimination of markdowns, and a fully streamlined wholesale distribution
channel. The increase in the Group’s own e-commerce sites also contributed to
the growth, mainly with new customers.
Investments in retail space and processes raised store productivity rates and were
critical to strengthening the brand identities. In 2021 alone, 120 store renovations
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PRADA Group Annual Report 2021 - Financial Review were completed and 80 pop-up installations were set up, leading to increased
footfall in stores and a continuously evolving retail image. The Prada Outdoor,
Prada Holiday, Miu Miu Upcycled and Miu Miu Nuit pop-up shops resonated the
most, traveling around to some of the most prestigious depar tment stores and
malls.
Investments in content and in traditional and digital communication channels led to
excellent results even in the online brand visibility metrics. Effective communication
campaigns made it possible to expand the involvement of the digital community
during successful events, such as the Prada 2022 Spring/Summer fashion show,
the first be to presented simultaneously in two cities (Milan and Shanghai), and the
36th America’s Cup presented by Prada, the most viewed edition ever.
The omnichannel growth strategy included new investments that will soon lead
to additional optimization of back end retail operations and greater use of
data, making the customer relationship management (CRM) activities even more
effective. Last but not least, having joined the Aura consor tium as a founding
member enables the Group to fur ther enrich the customer journey: through
blockchain technology, the Group’s brands will guarantee to customers enhanced
transparency and traceability. Moreover, a digital evolution roadmap was approved
during the year that will lead to a cutting-edge information system for the Group
in terms of engineering and technology, giving another competitive advantage in
the per formance of all distribution and communication channels and indeed the
entire business operation.
The industrial area benefited from impor tant reduction of complexity as well as
investments in the ver ticalization of the production process to enhance ar tisanal
know-how and fur ther boost the high quality standards of the products. Use of
operating capacity was optimized at the Levanella logistic hub, a forerunner of
technology and sustainability in the industry and a crucial site for integrating
manufacturing processes with store procurement ones. Manufacturing activities
were also strengthened through the acquisition of the remaining minority stakes in
two subsidiaries, and the acquisition of a stake in Filati Biagioli spa, renowned for
Italian excellence in the production of cashmere and other noble yarns.
For Capital Markets Day in November, the strategic guidelines for the Group’s
sustainable growth were communicated as formalized based on the principles and
priorities that have always motivated the Prada Group, organized into three pillars:
people, environment and culture.
The Group’s operating results improved considerably from those of the pre-
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PRADA Group Annual Report 2021 - Financial Review pandemic levels, showing increases in both amounts and as a percentage of net
revenues. The consequential cash generation, net of investments and resumed
dividend payments, enabled the Group to accumulate enough cash assets to face
confidently the impor tant shor t and medium investments.
ANALYSIS OF NET REVENUES
(amounts in thousands of Euro)
Net Sales by geographical area
Europe
Asia Pacific
Americas
Japan
Middle East and Other countries
Total Net Sales
Net Sales by brand
Prada
Miu Miu
Church's
Other
Total Net Sales
Net Sales by product line
Leather goods
Clothing
Footwear
Other
Total Net Sales
Net Sales by channel
Net Sales of direct operated stores (DOS)
Sales to independent customers and franchisees
Total Net Sales
Net Revenues
Net Sales
Royalties
Total Net Revenues
twelve months
ended
December 31
2021
twelve months
ended
December 31
2020
twelve months
ended
December 31
2019
970,637
1,272,534
636,963
309,704
126,782
3,316,620
2,857,693
401,219
39,551
18,157
3,316,620
1,698,470
908,041
655,798
54,311
3,316,620
29.3%
38.4%
19.2%
9.3%
3.8%
100%
86.2%
12.1%
1.2%
0.5%
100%
51.2%
27.4%
19.8%
1.6%
100%
741,131
963,845
324,479
280,232
81,179
2,390,866
2,012,620
329,497
36,964
11,785
2,390,866
1,310,938
604,571
442,792
32,565
2,390,866
31.0%
40.3%
13.6%
11.7%
3.4%
100%
84.2%
13.8%
1.5%
0.5%
100%
54.8%
25.3%
18.5%
1.4%
100%
1,228,437
1,017,593
455,402
386,066
95,841
3,183,339
2,643,348
450,491
69,801
19,699
3,183,339
1,765,799
729,350
627,576
60,614
3,183,339
38.6%
32.0%
14.3%
12.1%
3.0%
100%
83.0%
14.2%
2.2%
0.6%
100%
55.5%
22.9%
19.7%
1.9%
100%
2,930,856
385,764
3,316,620
88.4%
11.6%
100%
2,115,370
275,496
2,390,866
88.5%
11.5%
100%
2,636,097
547,242
3,183,339
82.8%
17.2%
100%
3,316,620
98.5%
2,390,866
98.7%
3,183,339
98.7%
49,047
3,365,667
1.5%
100%
31,873
2,422,739
1.3%
100%
42,255
3,225,594
1.3%
100%
During the year the Prada Group obtained net revenues of Euro 3,365.7 million,
an increase at constant exchange rates of 7.8% against those of 2019 and 40.6%
against those of 2020. Except for the Chinese renminbi and a few other currencies,
the foreign exchange rates of the main currencies weakened against the Euro, and
reduced the increase against 2019 by 3.4% and against 2020 by 1.7%.
62
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PRADA Group Annual Report 2021 - Financial Review DISTRIBUTION CHANNELS
Over the twelve-month period, the net sales of the retail channel rose constantly
and progressively, thanks to the per formance of full-price sales and local
customers. Sales of directly operated stores increased by 15.2% at constant
exchange rates compared with 2019 (+11.2% at current exchange rates) and by
40.4% compared with 2020 (+38.6% at current exchange rates). Such results need
to be contextualized in an economic and operational scenario still characterized
by store closures ensuing from the restrictions adopted by governments to combat
the pandemic: during the year the Group operated with 10% fewer stores on
average (mainly in Europe and Japan).
There were 635 stores at December 31, 2021, after 2 additions net.
Direct e-commerce sales continued to benefit from impor tant growth: 61% from
2020, and more than fivefold from 2019; they account for approximately 7% of the
total 2021 retail sales.
The wholesale channel continued to be streamlined, in accordance with the Group’s
strategies.
MARKETS
The retail sales in Asia Pacific of the twelve months ended December 31, 2021
rose at constant exchange rates by 30.1% from those of 2019 (+28.9% at current
exchange rates), with a remarkable growth in the Chinese Mainland, South Korea
and Taiwan (P.R.C.). Compared to 2020, the region grew by 29.1% (+30.4% at
current exchange rates).
Retail sales in Europe showed a contraction of 11.5% at constant exchange rates
compared with 2019 (-15% at current exchange rates), although they resumed
growth in the second half of the year; set against the twelve months of 2020, the
region showed an increase of 35.1% (+33.4% at current exchange rates). It should
be noted that in most of the first half of the year this region was severely affected
by restrictions, which forced it to operate with 19% fewer stores on an annual
basis.
Retail sales in the American market showed a surge compared to both 2019
(+68.8% at constant exchange rates and +57.8% at current exchange rates) and
2020 (nearly double at constant and current exchange rates). The growth was
achieved across all countries in the region.
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PRADA Group Annual Report 2021 - Financial Review The Japanese market was especially penalized by the persistent restrictive
measures in place. However, the region began to recover in the second half of the
year, and its four th-quar ter retail sales were substantially in line with those of
the same period of 2019. Set against full year 2019, the region showed a decline
of 16.6% at constant exchange rates (-21.5% at current exchange rates), whereas
compared with 2020 it repor ted an increase of 16.3% at constant exchange rates
(+9.2% at current exchange rates).
Retail sales in the Middle East were considerably higher than those of 2019
(+42.7% at constant exchange rates and +35.2% at current exchange rates) and
2020 (+61.8% at constant exchange rates and +56.5% at current exchange rates).
PRODUCTS
The Group’s retail growth involved all the product categories.
Clothing, the product category that best expresses the Group’s design leadership,
had 35.5% growth over 2019 in retail net sales and 52.8% over 2020. Footwear,
building on the success of lifestyle and new collections, had 15.7% growth over
2019 and 49% over 2020. Leather goods, benefiting from both new products and
iconic ones, increased by 7.3% over 2019 and 31.2% over 2020.
BRANDS
Prada retail net sales increased by 20.6% at constant exchange rates versus 2019
(+16.2% at current exchange rates), with 29.2% growth in the last quar ter. Miu
Miu fell by 6.7%, with the four th quar ter of 2021 almost in line against the same
three-month period of 2019. Church’s, affected by the geographical exposure in
Europe, fell by 41.4%. In contrast, compared with 2020, all the brands repor ted
gains: Prada +44% (+42% at current exchange rates), Miu Miu +19.8% (+18.9% at
current exchange rates) and Church’s +11.4% (+11.7% at current exchange rates).
ROYALTIES
Royalty income rose by 16.1% from that of 2019 and by 53.9% from that of 2020.
The new agreement with L’Oréal gave an impor tant boost to the fragrance segment,
whereas the increase for eyewear followed the trend with the long-standing par tner,
Luxottica.
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PRADA Group Annual Report 2021 - Financial Review NUMBER OF STORES
Prada
Miu Miu
Church's
Car Shoe
Marchesi 1824 and others
Total
Europe
Americas
Asia Pacific
Japan
Middle East
Total
December 31, 2021
December 31, 2020
December 31, 2019
Owned
Franchises
Owned
Franchises
Owned
Franchises
420
146
61
2
6
635
21
5
-
-
-
26
410
152
62
3
6
633
20
6
-
-
-
26
410
160
62
3
6
641
19
6
-
-
-
25
December 31, 2021
December 31, 2020
December 31, 2019
Owned
Franchises
Owned
Franchises
Owned
Franchises
228
105
193
88
21
635
-
-
21
-
5
26
222
108
194
88
21
633
-
-
21
-
5
26
229
107
198
85
22
641
-
-
20
-
5
25
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PRADA Group Annual Report 2021 - Financial Review
O P E R A T I N G R E S U L T S
The gross margin of the twelve months ended December 31, 2021 corresponded
to 75.7% of the net revenues, up substantially from the 72% of 2020 as a result of
a better product, channel and country mix. It should also be considered that the
2020 margin had been affected by less absorption of production overheads due
to the sales contraction. In the second half of 2021 the gross margin was 76.8%.
The total operating expenses were Euro 2,057.9 million, up by Euro 334.6 million
from those of 2020. The increase is attributable to the normalization of expenditure
levels, which in 2020 had benefited more from rent discounts and government
incentives. Compared with 2019, the increase is reduced to Euro 45.1 million, due
essentially to greater communication activities and the purchase of traditional and
digital media space.
The operating result (EBIT) was Euro 489.5 million (14.5% of net revenues), versus
Euro 20.1 million for 2020. The EBIT was also much higher than for 2019 (Euro
306.8 million, 9.5% of net revenues).
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PRADA Group Annual Report 2021 - Financial Review F I N A N C I A L E X P E N S E S A N D T A X A T I O N
The net financial expenses were Euro 67.8 million, down by Euro 4 million from
those 2020. The decrease was due to less interest expenses, due to a smaller
amount and time horizon, and less net bank borrowings. Higher foreign exchange
net losses par tially offset the overall decrease of financial charges.
The income tax expense, net was Euro 126.6 million, corresponding to 30% of the
pre-tax income.
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PRADA Group Annual Report 2021 - Financial Review A N A L Y S I S O F T H E S T A T E M E N T O F F I N A N C I A L P O S I T I O N
NET INVESTED CAPITAL
The following table reclassifies the Statement of Financial Position to provide a
better view of net invested capital:
(amounts in thousands of Euro)
Right of Use assets
Non-current assets (excluding deferred tax assets), net
Trade receivables, net
Inventories, net
Trade payables
Net operating working capital
Other current assets (excluding items of financial position)
Other current liabilities (excluding items of financial position)
Other current assets/(liabilities), net
Provision for risks
Post-employment benefits
Other long-term liabilities
Deferred taxation, net
Other non-current assets/(liabilities), net
Net invested capital
Shareholder's equity – Group
Shareholder's equity – Non-controlling interests
Total Consolidated shareholders' equity
Long-term financial, net surplus/(deficit)
Short-term financial, net surplus/(deficit)
Net financial surplus / (deficit)
Net financial deficit to Consolidated shareholders' equity ratio
Long-term Lease Liability
Short-term Lease Liability
Total Lease Liability
Net financial surplus / (deficit), including Lease Liability
Shareholders’ equity and Net financial surplus / (deficit), including Lease Liability
December 31
2021
December 31
2020
1,956,289
2,490,047
329,547
662,654
(390,163)
602,038
186,866
(349,915)
(163,049)
(59,201)
(73,819)
(73,559)
257,656
51,077
2,054,338
2,507,244
290,380
666,222
(289,578)
667,024
246,914
(221,421)
25,493
(45,416)
(73,256)
(61,576)
222,638
42,390
4,936,402
5,296,489
(3,113,894)
(14,749)
(3,128,643)
(491,676)
729,329
237,653
-7.6%
(1,627,197)
(418,215)
(2,045,412)
(1,807,759)
(4,936,402)
(2,832,057)
(19,663)
(2,851,720)
(450,075)
138,718
(311,357)
10.9%
(1,729,819)
(403,593)
(2,133,412)
(2,444,769)
(5,296,489)
The net invested capital at December 31, 2021 amounts to Euro 4,936 million,
financed by net equity of Euro 3,129 million and lease liability of Euro 2,045
million; the financial position at December 31, 2021 is positive and amounting to
Euro 237.7 million.
The right of use assets decreased by Euro 98 million on account of the
depreciation charge of Euro 426.2 million, net of the increase due to new leases
and remeasurements of existing ones, equal to Euro 27 7.3 million, and foreign
exchange appreciation of Euro 50.8 million.
The non-current assets (net) have remained consistent (Euro 2,490 million at
December 31, 2021 against Euro 2,507 million at December 31, 2020) because
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PRADA Group Annual Report 2021 - Financial Review
the increase in fixed assets (Euro 55.8 million) was offset nearly entirely by the
decrease in non-current equity instruments (Euro 60.5 million), due mainly to the
disposal of financial investments. The capital expenditures of the year amounted
to Euro 216.7 million, against depreciation, amor tization and write-downs of Euro
204.5 million. The increase in the item was also affected by foreign exchange
gains of Euro 33.4 million, as a result of the main currencies in which the Group’s
assets are denominated appreciating against the Euro, as well as the acquisition of
Luna Rossa for Euro 10.6 million.
(amounts in thousands of Euro)
Retail
Real estate
Production, Logistics and Corporate
Total
twelve months ended
December 31
2021
twelve months ended
December 31
2020
85,742
59,453
71,549
61,056
-
60,686
216,744
121,742
The capital expenditures regarded primarily store restyling and relocation
projects, as well as many technological and digital evolution projects in the retail,
manufacturing and corporate areas. In addition, to have greater control over its
real estate space, the Group purchased two prestigious buildings in impor tant
shopping destination in Europe where Prada stores are located.
The net operating working capital at December 31, 2021 is Euro 602 million,
down by approximately Euro 65 million from that of 2020. The contraction was
substantially attributable to higher payables resulting from the intensification of
the production, commercial and communication activities in the final months of
2021.
The other current liabilities (net) are Euro 163 million at December 31, 2021,
turning around from an asset balance of December 31, 2020 as a result of the
current taxes due for the year.
The other non-current assets (net) show an increase of Euro 8.7 million from the
prior year: deferred tax assets referring to larger temporary differences on the tax
bases of inventory were offset in par t by liabilities recognized for deferring over
the long term royalty income collected during the year.
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PRADA Group Annual Report 2021 - Financial Review NET FINANCIAL POSITION
The following table provides details of the net financial position:
(amounts in thousands of Euro)
Bank borrowing – non-current
Financial payables and bank overdrafts - current
Payables to related parties - current
Total financial payables – current
Total Financial payables
Cash and cash equivalents
Financial receivables from related parties - non-current
Financial receivables from related parties - current
December 31
2021
December 31
2020
(492,801)
(451,200)
(249,103)
(3,360)
(252,463)
(300,577)
(3,097)
(303,674)
(745,264)
(754,874)
981,786
1,125
6
442,392
1,125
-
Total Financial receivables and Cash and cash equivalents
982,917
443,517
Net financial surplus / (deficit)
237,653
(311,357)
The net operating cash flow for the twelve-month period, after the payment of
lease liabilities (Euro 392.8 million), was cash generation of Euro 750.7 million,
which enabled to finance the cash outflows for investing activities (Euro 137.3
million), pay dividends (Euro 91.2 million), and conver t the initial net financial
deficit of Euro 311.4 million into a net financial surplus of Euro 237.7 million.
The total amount of undrawn lines of credit as at December 31, 2021 is Euro 808
million, consisting of Euro 400 million of committed lines and Euro 408 million of
uncommitted lines.
All financial covenants were fully complied with at December 31, 2021.
The following table sets for th the Lease Liability:
(amounts in thousands of Euro)
Short-term Lease Liability
Long-term Lease Liability
Total Lease Liability
December 31
2021
December 31
2020
418,215
1,627,197
403,593
1,729,819
2,045,412
2,133,412
The Lease liability decreased by Euro 88 million from that of December 31, 2020.
This is the result of decreases for the payments of the period (Euro 393 million), as
well as rent discounts and foreign exchange differences, and increases (Euro 273
million) for new leases and re-measurements (net of the closures of the period).
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PRADA Group Annual Report 2021 - Financial Review The lease liability is concentrated mainly in Japan, the U.S.A. and Italy.
The net financial indebtedness, including the lease liability, is Euro 1,808 million
at December 31, 2021 (Euro 2,445 million at December 31, 2020).
Fur ther information on the Group’s debt maturities and obligations, currency and
interest rate management, commitments and contingent liabilities is provided in
Notes 21, 26 and 28 of the Notes to the Consolidated Financial Statements.
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PRADA Group Annual Report 2021 - Financial Review R I S K F A C T O R S
RISK FACTORS REGARDING THE INTERNATIONAL LUXURY GOODS MARKET
ECONOMIC RISKS AND INTERNATIONAL BUSINESS RISKS
The per formance of the luxury goods market is influenced by individuals’ propensity
to consume and by the general economy. Accordingly, the Group’s financial and
business per formance is exposed to global social and macroeconomic risks due
to its international scale. An unfavorable economy in one or more of the main
countries where the Group operates, 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 por tion of sales originates from purchases of products by
customers on trips abroad. Therefore, unfavorable economic conditions, social,
health or geopolitical situations leading to instability, adverse natural events or
government restrictions on movement could negatively affect the Group’s sales
operations, results, cash flows and general financial condition.
The Group believes that full control over the value chain, a well-balanced physical
retail presence in the global market accompanied by an omnichannel strategy with
closely integrated sales and communication channels, and a sufficiently diversified
product range enable it to mitigate the risk that adverse conditions such as these
could influence significantly the business per formance.
RISKS REGARDING IMAGE AND BRAND RECOGNITION
The Group’s success in the international luxury goods business is linked to the image
and distinct character of its brands. These features depend on many factors, such
as the style and design of the products, the quality of materials and production
techniques, the image and locations of DOS, the careful selection of licensees, 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 monitoring constantly the changes in society,
including through close collaboration with the world of ar t and culture, and by
continuously seeking innovation in styles, products and communications in order
to convey messages that are always consistent with the strong brand identities.
Meanwhile, monitoring meticulously each internal and external phase of the value
chain reduces considerably the risk that inappropriate per formance could affect
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PRADA Group Annual Report 2021 - Financial Review the image and therefore the value of the brands.
RISKS REGARDING ABILIT Y TO ANTICIPATE TRENDS AND REACT TO SHIF TS IN
CONSUMER TASTES
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 recent appointment
of a Creative Co-Director for the Prada brand enables the Group to benefit from
cooperation between two designers widely acknowledged as among the most
impor tant and influential of our times – Miuccia Prada and Raf Simons – emphasizing
the impor tance and power of creativity.
Approximately one thousand individuals work in the design depar tment and in the
development depar tment. 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.
INTELLECTUAL PROPERT Y RISKS
The Prada Group’s brands have always been associated with beauty, creativity,
tradition and excellent quality. Prada’s ability to protect its brands and other
intellectual proper ty 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 counter feiting and intellectual
proper ty 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.
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PRADA Group Annual Report 2021 - Financial Review RISKS SPECIFIC TO THE PRADA GROUP
STRATEGIC RISKS
The possibility for the Group to improve its financial and business per formance
depends on successful implementation of its commercial strategy for each brand,
which is achieved through the continuous suppor t and development of retail sales
and the constant recognition of the brands as reference points in the industry.
The Group provides suppor t 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 as well as constant enrichment of customer services. The
per formance of the retail channel is suppor ted 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.
RISKS REGARDING THE IMPORTANCE OF KEY PERSONNEL
The Group’s success depends on the contribution of key individuals who have played
an essential role in the Group’s expansion and who have substantial experience
in the fashion and luxury goods business. Its success also depends on Prada’s
ability to train new generations of ar tisans and to attract and retain people who
are qualified in the design, product development, marketing, merchandising and
corporate functions.
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 itself.
RISKS REGARDING THE OUTSOURCING OF MANUFACTURING ACTIVITIES
The Prada Group’s products are made at 23 manufacturing facilities owned in
Europe (20 in Italy, 1 in France, 1 in the United Kingdom and 1 in Romania) and
by contract manufacturers carefully selected on the basis of competence, quality
and reliability. Nearly all the prototypes and samples and some finished products
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PRADA Group Annual Report 2021 - Financial Review 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 semi-finished
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 Spa’s Code of Ethics, which must be signed
before any business relationship is entered into.
A key par t of the strategy is to establish long-term business relationships with
suppliers based on mutual trust and transparency. The Prada Group works with
approximately 1,000 raw material suppliers and contract manufacturers, 80% of
which are located in Italy. The Group has implemented a strict quality control
process for all outsourced production, and contractually requires its contract
manufacturers to comply with all regulations on brand ownership and other
intellectual proper ty 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, since 2019, audits conducted at the suppliers’ premises.
CREDIT RISK
Credit risk is defined as the risk of financial loss caused by the failure of a
counterpar ty to meet its contractual obligations. The maximum risk to which
an entity is exposed is represented by all the financial assets recognized in the
financial statements. The Group considers its credit risk to involve primarily trade
receivables generated from the wholesale channel and liquid assets. The Group
manages credit risk and mitigates the related effects through its business and
financial strategies, which are based on the monitoring of the creditwor thiness
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 counterpar ties (always
investment grade), country and currency, and by the consistently shor t-term
period. The residual por tion of liquid assets consists of cash and bank accounts.
The Group considers no significant risk to exist on these kinds of liquid assets
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PRADA Group Annual Report 2021 - Financial Review given that they are used for operating activities and business processes and,
consequently, the number of independent par ties involved is fragmented.
LIQUIDIT Y RISK
Cash flow 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 repor ts 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.
TAX RISKS
The Prada Group’s tax strategy is based on the prevention of tax risks and on tax
cer tainty, 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, formalized into the tax control framework.
The effectiveness of the tax risk management system has made Prada spa eligible
to par ticipate in the Cooperative Compliance Tax Regime in Italy (under Italian
Legislative Decree 128/2015), enhancing its tax risks internal control system.
Within such regime, the Group has expanded a systematic, open communication
channel with both the Italian and the most impor tant foreign tax authorities of the
countries where it operates, based on reciprocal transparency and trust, with the
purpose of minimizing the level of uncer tainty about potentially risky situations.
LEGAL AND REGUL ATORY RISKS
The Prada Group uses centralized models to comply with the rules and regulations
ensuing from the complexity of the global context in which it operates. The
guidelines, policies and practices established by Prada spa ensure unequivocal
compliance with processes and conduct in order to manage the following legal and
regulatory risks:
― risks associated with non-compliance with the Rules Governing the Listing of
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PRADA Group Annual Report 2021 - Financial Review Securities on the Stock Exchange of Hong Kong or with other laws or regulations
in force in Hong Kong S.A.R. that the Company must observe as it is listed on
the Stock Exchange of Hong Kong Limited;
― risks associated with occupational health and safety under Italian Legislative
Decree 81/08 and equivalent regulations in force in other countries;
― possible legal penalties for wrongful acts pursuant to Italian Law 231/2001, as
subsequently amended;
― possible events that could adversely affect the accuracy of the annual financial
statements and the protection of assets;
― possible manufacturing compliance risks with respect to Italian and international
laws and regulations regarding finished goods distributed and raw materials and
consumables used. In 2020 Prada spa obtained “AEO Full” (Authorized Economic
Operator) cer tification from the Italian Customs Agency for its handling of
goods, becoming one of very few taxpayers in Italy to simultaneously hold this
qualification and par ticipate in the Cooperative Compliance regime with the
Italian Revenue Agency.
The Group involves various divisions and uses external exper ts 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 per formed
by divisional managers, auditors, special entities and committees such as the
Supervisory Board and the Internal Control Committee.
FOREIGN EXCHANGE RISK
The Group has a vast international presence, and therefore is exposed to the risk
that changes in currency exchange rates could adversely impact revenue, expenses,
margins and profit. In order to hedge foreign exchange risk, the Group enters
into derivative contracts designed to fix the value in Euro (or other functional
currency) of identified future cash flows. The future cash flows consist primarily
of inflows of trade and financial receivables and outflows of trade payables. They
refer mainly to Prada spa, the Group’s parent company and worldwide distributor
of Prada and Miu Miu brand products.
The management of foreign exchange risk is described in more detail in the Notes
to the Consolidated Financial Statements.
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PRADA Group Annual Report 2021 - Financial Review INTEREST RATE RISK
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 spa, the
Group uses derivatives (such as interest rate swaps) to conver t 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 Consolidated Financial Statements.
DATA PROTECTION
The Prada Group is aware of the impor tance of ensuring adequate safeguards to its
stakeholders on the processing of data and personal information that each of the
companies belonging to the Group per forms in the course of its business activities.
In order to guarantee the right to protection of personal data and minimize the
risks associated with their processing – including risks of non-compliance and
cyber attacks - the Prada Group has developed policies and implemented technical
and organizational security measures and transparency requirements towards data
subjects.
Taking into account the state of technological and regulatory evolution, as well as
the risk of varying likelihood and severity for the rights and freedoms of individuals
underlying each processing activity, the Prada Group has set up an organizational
and operational control system, consisting inter alia of operating procedures,
training sessions, periodic risk assessments capable of ensuring that:
• personal data are processed in compliance with the European General Data
Protection Regulation (GDPR) and any other applicable privacy law and regulation
of the jurisdictions in which the Group operates;
• 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 par ties except in cases and in the
manner permitted by applicable law;
• any service provider engaged in processing personal data on behalf of the Prada
Group, processes such personal data only to the extent necessary for the purposes
of the service provided under a contractual obligation of confidentiality and ensures
an adequate level of protection of the data subjects’ rights and compliance with
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PRADA Group Annual Report 2021 - Financial Review the applicable legislation.
As par t of the measures adopted, the Prada Group has designated a Data Protection
Officer
(DPO), whose functions
include supervising regulatory compliance,
repor ting activities and advising on personal data protection matters.
With respect to cybersecurity, considering the growing risk of cyber attacks
repor ted by European Union financial market regulators, at the time of approval of
the consolidated financial statements the Prada Group raised the security levels of
its information systems, reinforcing the lines of defense and taking the measures
necessary to ensure business continuity.
OTHER INFORMATION
INFORMATION ON REL ATED-PART Y TRANSACTIONS
Information on the Group’s transactions and balances with related par ties is
provided in the Notes to the Consolidated Financial Statements, insofar as required
by IFRS, and in the Directors’ Repor t and Corporate Governance Repor t, insofar as
required by the Hong Kong Stock Exchange rules.
NON-IFRS MEASURES
The Group uses cer tain financial measures (“non-IFRS measures”) to measure its
business per formance and to help readers understand and analyze the results of
its operations and 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 these Consolidated Financial Statements.
O ther companies operating in the luxury goods industry might use the same
measures, but with different calculation criteria. For this reason, non-IFRS
measures should always be read in conjunction with the related notes, and may
not be directly comparable with those used by other companies.
In this Annual Repor t the Prada Group used the following non-IFRS measures:
EBIT: Earnings before Interest and Taxation, i.e. “Consolidated net result for the
period” adjusted to exclude “ Total financial income/(expenses)” and “ Taxation”.
EBITDA: Earnings before Interest, Taxation, Depreciation and Amor tization, i.e.
“Consolidated net result for the period”, adjusted to exclude “ Total financial
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PRADA Group Annual Report 2021 - Financial Review income/(expenses)”, “ Taxation” and “ Total depreciation, amor tization and
impairment (included the Depreciation and write-downs of Right of Use assets)”.
Markdown sales: Net sales of Group’s Directly Operated Stores of end of season
products at promotional prices.
Full-price sales (or “regular sales”): Net sales of Group’s Directly Operated Stores
excluding Markdown sales.
Selling expenses of the closed stores during the lockdowns: as a result of the
public health crisis, in 2020 the Group introduced a new non-IFRS measure,
“Selling expenses of the closed stores during the lockdowns” regarding the amount
of operating expenses directly related to stores that could not generate revenues
due to the restrictions imposed during the pandemic. The Group includes this
non-IFRS measure to provide additional quantitative information to improve the
reader ’s understanding of the impacts of the Covid-19 pandemic on the business.
The Prada Group’s EBIT and EBITDA are repor ted below:
(amounts in thousands of Euro)
twelve months
ended
December 31
2021
(unaudited)
%
on net
revenues
twelve months
ended
December 31
2020
(unaudited
%
on net
revenues
twelve months
ended
December 31
2019
(unaudited
%
on net
revenues
Operating income / (loss) - EBIT
489,484
14.5%
20,061
0.8%
306,779
9.5%
Selling expenses of the closed stores during the lockdowns
43,602
1.3%
115,833
4.8%
-
-
Operating income/(loss) - EBIT excluding Selling expenses of the
closed stores during the lockdowns
533,086
15.8%
135,894
5.6%
306,779
9.5%
Depreciation, amortization and impairment on tangible and
intangible fixed assets
Depreciation and write-downs of the Right of Use assets (*)
Total depreciation, amortization and impairment
204,510
6.1%
225,014
9.3%
233,759
7.2%
426,221
630,731
12.7%
18.8%
443,910
668,924
18.3%
27.6%
456,310
690,069
14.1%
21.3%
EBITDA
1,120,215
33.3%
688,985
28.4%
996,848
30.8%
(*) shown without the impact of Covid-related discounts
The caption “Selling expenses of the closed stores during the lockdowns”, Euro 43.6
million for 2021, included the main direct costs per taining to the retail network
during the closure periods related to the pandemic (Euro 115.8 million for 2020).
The most significant captions were for Euro 16.3 million the depreciation of rights
of use assets net of Covid-related lease discounts obtained from lessors (Euro
45.5 million at December 31, 2020), for Euro 11.8 million the labor costs net of
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PRADA Group Annual Report 2021 - Financial Review
government subsidies (Euro 35.4 million at December 31, 2020), and for Euro 12.6
million the depreciation of tangible fixed assets (Euro 27.7 million at December
31, 2020).
Net financial position surplus/(deficit): Shor t-term and
long-term financial
payables due to third par ties and related par ties, net of cash and cash equivalents
and shor t-term and long-term financial receivables due from third par ties and
related par ties.
Net financial position surplus/(deficit), including Lease Liability: Net Financial
Position including Lease Liability.
(amounts in thousands of Euro)
December 31
2021
December 31
2020
Net financial position surplus/(deficit)
237,653
(311,357)
Short-term Lease Liability
Long-term Lease Liability
Total Lease Liability
(418,215)
(1,627,197)
(403,593)
(1,729,819)
(2,045,412)
(2,133,412)
Net financial position surplus/(deficit), including Lease Liability
(1,807,759)
(2,444,769)
Net Operating Cash Flow: Net Cash Flow generated by operating activities, less
the repayment of Lease Liability.
Free cash flow: Net Operating Cash Flow after the net cash flows used for the
investing activities.
(amounts in thousands of Euro)
December 31
2021
December 31
2020
December 31
2019
Cash Flow from operating activities
1,226,018
691,013
895,573
Cost of net financial debt: interest paid
Lease Liability: interest paid
Tax Paid
(8,556)
(36,773)
(37,161)
(11,704)
(42,670)
(44,220)
(10,338)
(49,214)
(26,126)
Net Cash Flow from operating activities
1,143,528
592,419
809,895
Repayment of Lease Liability
(392,805)
(330,319)
(447,530)
Net Operating Cash Flow
750,723
262,100
362,365
Net cash flow utilized by investing activities
(137,265)
(149,910)
(302,261)
Free Cash Flow
613,458
112,190
60,104
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PRADA Group Annual Report 2021 - Financial Review RESEARCH AND DEVELOPMENT ACTIVITIES
The research and development activities are described in the introductory (“ The
Prada Group”) section of this Annual Repor t, in the paragraph regarding creativity.
The design and product development costs for the twelve months ended December
31, 2021 amount to Euro 115.3 million, as repor ted in the Consolidated Profit or
Loss Statement by destination prepared in accordance with IFRSs.
TREASURY SHARES
As at December 31, 2021 the Group did not own any treasury shares, as repor ted
in the “Corporate Governance” section.
EVENTS AF TER THE REPORTING DATE
At the date of approval of these Consolidated Financial Statements, the Group has
suspended its retail operations in Russia.
At December 31, 2021 the Group had assets of approximately RUB 7 billion in
Russia (Euro 81 million at the year-end exchange rate), consisting mainly of
tangible assets at 13 stores (10 Prada and 3 Miu Miu), working capital and cash
assets. The net revenues realized in Russia in 2021 accounted for approximately
2% of the consolidated net revenues.
The ongoing conflict in Ukraine has resulted in a high volatility of the financial
markets, a significant devaluation of the Ruble and a context of high uncer tainty
whose future potential effects on the Group’s consolidated financial statements
cannot be determined so far.The Management will continue to closely monitor
the evolution of the business and legal scenario in order to ensure the correct
valuation of the assets recognized in the consolidated financial statements of the
Group.
Chora S.r.l. initiated a lawsuit in January 2022 against Prada spa; more details are
provided in Note 28.
OUTLOOK
The Prada Group’s star t to 2022 has been strong. The long-term strategy is on
track, focused on distinctive brand identity, product quality and industrial know-
how, direct distribution and sustainability at the core of corporate values. Decisive
actions to evolve the business and navigate the changing luxury market drove
outstanding growth and increased profitability in 2021.
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PRADA Group Annual Report 2021 - Financial Review These results give the Group confidence to achieve its medium-term targets, even
though it is difficult to predict the impact of the Ukraine conflict on the global
economy. The concern is for all the colleagues and their families affected by the
war, as well as the local communities and all people suffering, to whom the Group
will continue to provide suppor t.
Milan, March 14, 2022
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D I R E C T O R S A N D S E N I O R M A N A G E M E N T
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PRADA Group Annual Report 2021 - Directors and Senior Management DIRECTORS
Our Board consists of eleven Directors, of whom five are executive Directors, one
is a non-executive Director and five are independent non-executive Directors. The
Board of Directors is appointed for a term of three years.
CHAIRMAN
ZANNONI, Paolo, aged 73, was elected as the Chairman of the Board on May 27,
2021 and conferred executive role on June 4, 2021. He has been international
advisor at Goldman Sachs since 2019, providing advice to the firm’s business
across Italy and the rest of Europe. He is currently member of the Board of Autogrill
S.p.A., listed on the Italian Stock Exchange and secretary of the Board of Directors
of Beretta Holding S.p.A. He served as Chairman of Dolce & Gabbana Holding S.r.l.
from 2007 to 2021 and Chairman of the Italian energy and telecommunications
Prysmian Group from 2005 to 2012. Prior to this, Mr. Zannoni spent a number
of years enhancing the Goldman Sachs investment banking franchise in Italy. He
joined Goldman Sachs in 1994, was named managing director in 1997, par tner
in 2000 and was Chairman of the Italian investment banking business between
2000 and 2013. He also spent a period as co-chief executive officer of Goldman
Sachs Russia. Prior to joining Goldman Sachs, Mr. Zannoni was a vice president
at Fiat S.p.A. and a lecturer at Yale University. Mr. Zannoni holds directorships
in subsidiaries of the Company. Mr. Zannoni is member of the Remuneration
Committee. Save as disclosed herein, Mr. Zannoni has not held any directorship
in any other listed companies in Hong Kong or overseas in the last three years.
EXECUTIVE DIRECTORS
PRADA BIANCHI, Miuccia, aged 73, is Chief Executive Officer of the Company
along with Mr. Patrizio Ber telli as well as Prada Co-Creative Director along with
Raf Simons and Miu Miu Creative Director. She served as Chairperson of the Board
from 2003 to 2014 and was most recently re-elected to the Board in May 2021.
After obtaining a degree in Political Science from Milan University, Miuccia Prada
began designing for the exclusive family business, founded by her grandfather in
1913. At the end of the ‘70s, she formed a par tnership with Patrizio Ber telli, an
entrepreneur and owner of two high quality leather goods companies at the time.
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PRADA Group Annual Report 2021 - Directors and Senior Management The combination of the two minds made it possible for Prada to become one of the
leading luxury companies worldwide.
Miuccia Prada has received several awards for her original vision, innovation,
and contribution to international fashion. In 2000, she received an Honorary
Doctorate from the Royal College of Ar t in London. In 2006, Ms. Prada was named
Officier dans l’Ordre des Ar ts et des Lettres by the French Ministry of Culture. In
2015, she was granted the title of Knight of the Grand Cross, the highest Order
of Merit of the Italian Republic, in recognition of her international success and
contribution on behalf of Italy to the fields of creativity, fashion and style. Ms.
Prada is the wife of Mr. Ber telli, one of the Chief Executive Officers, and is the
mother of Mr. Lorenzo Ber telli, Executive Director and Group Marketing Director
Ms. Prada holds directorships in Prada Holding S.p.A., Bellatrix S.p.A. and Ludo
S.p.A., which are substantial shareholders of the Company. Ms. Prada is not and
has not been a director of any other listed companies in Hong Kong or overseas in
the past three years
BERTELLI, Patrizio, aged 75, is Chief Executive Officer of the Company along
with Ms. Miuccia Prada. He was first appointed to the Board in 2003 and was most
recently re-elected to the Board in May 2021.
His par tnership with Miuccia Prada began at the end of the ‘70s. To his
entrepreneurial activity, he combines cultural and spor ting interests that he
shares with Miuccia Prada. Mr. Ber telli received an honorary degree in Business
Economics from the University of Florence in 2000 and the “University Seal” from
the University of Bologna in 2021.
In 2006, Time Magazine cited him together with Miuccia Prada among the 100 most
influential couples in the world and in 2012 he became the first Italian in history to
be inducted into the America’s Cup Hall of Fame. Mr. Ber telli holds directorships
in subsidiaries of the Company. He holds directorship in PA BE 1 S.r.l., which is a
substantial shareholder of the Company. Mr. Ber telli is the husband of Ms. Prada,
one of the Chief Executive Officers, and is the father of Mr. Lorenzo Ber telli,
Executive Director and Group Marketing Director. Mr. Ber telli is not and has not
been a director of any other listed companies in Hong Kong or overseas in the past
three years.
COZZANI, Alessandra, aged 59, is the Chief Financial Officer of the Company.
She was first appointed to the Board as Executive Director on December 20, 2013
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PRADA Group Annual Report 2021 - Directors and Senior Management and she was most recently re-elected on May 27, 2021. She has been Group
Investor Relations Director since July 2010, responsible for managing financial
communication and for relationships with investment community, and was fur ther
appointed as Chief Financial Officer on February 19, 2016. Ms. Cozzani holds
directorships in subsidiaries of the Company. Ms. Cozzani joined our Group in
2000 and has covered different managerial roles within the Finance depar tment.
In 2003, she was appointed as Group Financial Repor ts Director. Ms. Cozzani
obtained a degree “cum laude” (with praise) in Business Administration from
the University of Genoa (Italy) in 1988. She star ted her career as an auditor at
Coopers & Lybrand (1989 to 1995). Prior to joining our Group, she worked in
Castelletti International Transpor ts, the Italian subsidiary of an international
logistic company (now Schenker Group) for five years, most of the time as Finance
and Control Director. Ms. Cozzani is not and has not been a director of any other
listed companies in Hong Kong or overseas in the past three years.
BERTELLI, Lorenzo, aged 33, joined the Board of Directors as Executive Director
in May 2021. Mr. Ber telli has been Group Marketing Director since 2019 and, from
2020, has been appointed Group’s Head of Corporate Social Responsibility. He is
responsible, on one side, for the Group’s Marketing and Communication strategy
and, on the other, for the Group’s overall approach to sustainability strategy and
initiatives. He joined the Group in 2017 as Head of Digital Communication.
Lorenzo Ber telli obtained a degree in Philosophy at San Raffaele University in
Milan in 2008.
He is the son of Ms. Miuccia Prada Bianchi and Mr. Patrizio Ber telli, the Chief
Executive Officers of the Company. He holds directorship in Prada Holding S.p.A.,
which is a substantial shareholder of the Company, as well as directorships in
subsidiaries of the Company. Mr. Lorenzo Ber telli is a member of the Nomination
Committee and the Sustainability Committee. Mr. Ber telli is not and has not been
a director of any other listed companies in Hong Kong or overseas in the past three
years.
NON-EXECUTIVE DIRECTORS
SIMONTACCHI, Stefano, aged 51, has been appointed as Non-Executive Director
of the Company on April 8, 2016 and most recently re-elected on May 27, 2021.
Mr. Simontacchi has been appointed as President of BonelliErede Law Firm, a
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PRADA Group Annual Report 2021 - Directors and Senior Management leading law firm in Italy, since December 2018 and has been re-appointed for a
fur ther three-year term mandate on May 2021. He was the Managing Par tner from
2013 to 2018 and has been on the firm’s board since 2010. His practice focuses
on international taxation, transfer pricing, tax planning, private equity, and tax
aspects related to real-estate transactions, real-estate and equity funds, M&A
and reorganizations. In addition, Mr. Simontacchi was a member of the EU Joint
Transfer Pricing Forum (which assists and advises the European Commission on
transfer pricing tax matters) and has authored widely on tax law, including for Il
Sole 24 Ore (a leading, daily business newspaper). Mr. Simontacchi obtained a
degree with praise (cum laude) in business administration from L. Bocconi University
of Milan in 1995. In 2000, he obtained an Adv. LLM with praise (cum laude) in
International Taxation from Leiden University. In January 2007, Mr. Simontacchi
obtained his PhD in International Taxation from the Faculty of Law of Leiden
University. In April 2015, Mr. Simontacchi was appointed as board member of RCS
MediaGroup S.p.A., an Italian listed company, leader in the newspaper sector. In
addition, he has been serving as board member of Cabara Insurance Broker S.r.l.
since 2010, as Chairman of the Fondazione Ospedale Buzzi since July 2015 and
as board member of Assoedilizia Servizi S.r.l. since 2017. On November 2018 he
has been appointed as board member of Fattorie Osella S.p.A. and in 2020 as
board member of Cordusio Sim S.p.A. In February 2022 he has been appointed as
member of Strategic Advisory Board of Nextalia SGR. Save as disclosed herein, Mr.
Simontacchi has not held any directorship in other listed companies in Hong Kong
or overseas in the last three years.
INDEPENDENT NON-EXECUTIVE DIRECTORS
CAPROT TI, Marina Sylvia, aged 44, was elected as Independent Non-Executive
Director on May 27, 2021. She has been Executive Chairperson of Esselunga
S.p.A. since 2019. Prior to this, she was a member of its Board of Directors
star ting from June 1998 and Vice President from 2016 to 2019. She is currently
a director in the Board of Fondazione Accademia Teatro alla Scala of Milan. Ms.
Marina Sylvia Caprotti obtained a degree in Law at Università Cattolica del Sacro
Cuore in Milan in 2004. Ms. Caprotti is the Chairwoman of the Remuneration
Committee and member of the Audit Committee and Nomination Committee. Ms.
Caprotti is not and has not been a director of any other listed companies in Hong
Kong or overseas in the past three years.
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PRADA Group Annual Report 2021 - Directors and Senior Management CEREDA, Maurizio, aged 58, has been appointed as Independent Non-Executive
Director of the Company first on April 27, 2018 and previously has been a Non-
Executive Director. Mr. Cereda’s practice focuses on providing consultancy
services to entrepreneurs, family offices, companies and financial institutions.
Since 2015, he has also been founding par tner and board member of FIEE (Fondo
Italiano per l’Efficienza Energetica) Sgr S.p.A.. Mr. Cereda obtained a degree in
business economics from L. Bocconi University of Milan in 1989. Mr. Cereda has
been serving as board member of various companies listed on the Italian Stock
Exchange including NEXI S.p.A. (since December 2021), Technogym S.p.A. (since
2016), and Enervit S.p.A. (since 2007). Mr. Cereda star ted his career as an analyst
in the equity capital markets division in Rasfin S.p.A. and then he worked fifteen
years at Mediobanca S.p.A., until his appointment as deputy general manager and
head of corporate finance covering large corporate clients, a role that he covered
from 2007 to 2015. From 2007 to 2014, he was a board member of Mediobanca
S.p.A., and from 2006 to 2014, he was also a board member of Ansaldo STS
S.p.A., both companies listed on the Italian Stock Exchange. Mr. Cereda is the
Chairman of the Remuneration Committee and a member of the Audit Committee.
Save as disclosed herein, Mr. Maurizio Cereda has not held any directorship in any
other listed companies in Hong Kong or overseas in the last three years.
ZAOUI, Yoël, aged 61, was elected as an Independent Non-Executive Director
on May 27, 2021. He is a co-founder of Zaoui & Co., a firm established in
2013 to advise select clients on mergers, acquisitions and other strategic and
financial transactions, as well as major investment decisions. Mr. Zaoui began
his investment banking career at Goldman Sachs in 1988, and, over a 24-year
career at Goldman Sachs, was responsible for some of Europe’s largest and more
defining corporate transactions in a period of unprecedented growth. Mr. Zaoui
was the first European investment banker to have joined Goldman Sachs’s top
governing body, the management committee, a position he held from 2008 until
his retirement in 2012. Prior to Goldman Sachs, Mr. Zaoui worked at Ar thur
Andersen in Paris (1983-1986). Mr. Zaoui was educated in France and the US; he
obtained a diploma from the Ecole des Hautes Etudes Commerciales (HEC, 1982),
a DEA doctoral degree in Finance from Universite Paris-Dauphine (1983) and an
MBA from Stanford University (1988). Mr. Zaoui continues to be actively involved
with his alma maters, serving as a member of the Cercle des Grands Donateurs
de la Fondation HEC. Mr. Zaoui is decorated by His Majesty the King of Morocco
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PRADA Group Annual Report 2021 - Directors and Senior Management Mohamed VI of the Order of Wissam. Mr. Zaoui is the Chairman of the Audit
committee and a member of the Remuneration Committee. Mr. Zaoui is not and
has not been a director of any other listed companies in Hong Kong or overseas in
the past three years.
CULPEPPER, Pamela Yvonne, aged 57, was elected as Independent Non-Executive
Director on January 28, 2022. Ms. Culpepper is one of three co-founders of
Have Her Back, LLC., a female-owned, female led culture consultancy focused on
advancing equity for all. Before that, Ms. Culpepper was the Chief Human Resources
Officer at Cboe Global Markets, Inc., one of the world’s largest exchange holding
companies, offering cutting-edge trading and investment solutions to investors
around the world. At Cboe, Ms. Culpepper served as a trusted advisor to the
executive team and Board of Directors on talent management, compensation and
benefits and Cboe’s recent M&A of a global exchange. As a veteran HR executive,
Ms. Culpepper has over 25 years of experience. She joined Cboe from Golin, where
she was the company’s Chief People Officer. For more than 14 years prior, Ms.
Culpepper held various leadership roles with PepsiCo, Inc., including Chief Global
Diversity and Inclusion Officer, Vice President, Human Resources for Quaker
Foods and Snacks; Vice President, Human Resources for PepsiCo’s Beverages
Supply Chain; and Vice President, Talent Management and Diversity for Quaker,
Tropicana and Gatorade. Before PepsiCo, Ms. Culpepper held progressive roles
with McKesson Corporation, Clorox and Wells Fargo. Ms. Culpepper is a former
Board Trustee of VSO International, based in the United Kingdom and was a Board
member for Navy Pier of Chicago. Ms. Culpepper has a B.A. in Psychology from
the University of Arkansas at Little Rock and a Masters of Public Administration in
Organizational Change, from California State University, Eastbay. Ms. Culpepper
is member of the Sustainability Committee. Ms. Culpepper is not and has not been
a director of any other listed companies in Hong Kong or overseas in the past three
years.
RUGARLI, Anna Maria, aged 49, was elected as Independent Non-Executive Director
on January 28, 2022. Ms. Rugarli is the Corporate Sustainability Vice President of
Japan Tobacco International and she is responsible to develop business-integrated
strategy at a global level. Ms. Rugarli is a Sustainability & CSR exper t with more
than twenty years’ experience specializing in designing innovative programs and
in developing strategies. She initiated and launched Nike’s Sustainability & CSR
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PRADA Group Annual Report 2021 - Directors and Senior Management programs in the Europe, Middle East & Africa regions and was with the company
for 12 years pioneering this work at industry level. Ms. Rugarli then led VF’s
Circular Economy strategy at global level as well as Sustainability, Purpose, and
I&D strategy at regional level for 10 years. During this time, she managed broad
networks of stakeholders and cross-sector par tners and led Sustainability & CSR
programs integration across the business. While at VF she was a Board member
and then President of European Outdoor Conservation Association for a total of
seven years. Ms. Rugarli graduated in Political Sciences and is a cer tified broker
in Cross-Sector Par tnerships at Cambridge University. Ms. Rugarli is member of
the Sustainability Committee. Ms. Rugarli is not and has not been a director of any
other listed companies in Hong Kong or overseas in the past three years.
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PRADA Group Annual Report 2021 - Directors and Senior Management SENIOR MANAGEMENT
Our senior management is responsible for the day-to-day management of the
business of the Group.
AGOSTINI, Cristiano, aged 48, has been Group IT Director since July 2021. He
is primarily responsible for overseeing worldwide Transformation and Innovation
Technology of IT Depar tment. Mr. Agostini, after earning a degree in Communication
Sciences at the University of Turin, has gained many years of experience in the
Information Technology sector at prestigious companies and consulting firms. He
has managed complex projects of transformation and technological innovation in
international contexts, first at the Telecom Italia Research Center and subsequently
at Deloitte and Accenture. In 2006 he joined Accenture to cover the role of
Managing Director in the Technology Strategy & Advisory area.
ANDRIANI, Gianluca, aged 47, has been appointed as Group Internal Audit and
Risk Management Director in February 2020. He is primarily responsible for the
appropriateness of the control systems and the application of procedures, to
ensure protection against risks at Group level. Mr. Andriani obtained a degree in
Economics and Management. He joined our Group in 2008, first as Fiscal Manager,
then as Latin America and Caribbean Accounting, Finance and Controlling Director.
Prior to joining Prada, he worked in Ernst & Young as Senior Auditor and in Erg
Group as Financial Statement Senior Analyst.
BERTONCINI, Francesca, aged 51, has been appointed as Nor th Europe Regional
Director in December 2019. Ms. Ber toncini is primarily responsible for overseeing
the Group’s operations in United Kingdom, Ireland, Denmark and Sweden, where
she covers several managerial roles at the Company’s subsidiaries. She joined
the Group in 2001 and covered, until 2018, different managerial roles in product
development, collection and retail merchandising, until being appointed as
Worldwide Prada Woman Shoes Collection/Retail Merchandising Director. From
2018 to 2019, she worked as Senior Vice President Global Merchandising and
Product Development for Stuar t Weit zman in New York.
BUGG, Christopher Aaron, aged 38, has been appointed Group Communication
Director in 2021. During 2020 he had a strategic communication role in the Asia
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PRADA Group Annual Report 2021 - Directors and Senior Management region. He is responsible for media and communication strategies, public relations
and promotional activities of all the Group brands. Mr. Bugg obtained a Bachelor
Degree in Mass Communication at University of Evansville in 2004. After the
graduation, he worked as Account Executive in different media communication
agencies based in New York. From 2008 to 2016, he was Vice President Global
Digital Marketing at Calvin Klein. Prior to joining the Prada Group he was Director
of Global Digital Communication at Louis Vuitton.
CAROLA, Pablo, aged 54, has been Regional Director Middle East since 2017. Mr.
Carola is primarily responsible for overseeing the Group’s commercial operations
in the Middle East area, where he covers several managerial roles at the Company’s
subsidiaries. Mr. Carola obtained a University degree in Business Administration
at Universidad de Politecnica de Catalunya (Spain). He joined the Group in 2011
to manage human resources of both Miu Miu and Prada stores worldwide and from
2013 to 2017, he was Regional Director for Iberian Peninsula and Nor th Africa.
Prior to joining our Group, he worked for almost twelve years as human resources
director at Louis Vuitton.
CHAN, Li Sa, aged 50, has been South East Asia General Manager since 2017.
She is primarily responsible for overseeing the Group’s commercial operations in
Singapore, Malaysia and Thailand. Ms. Chan obtained a Master degree in Business
Administration at the University of Stirling (UK). She joined Prada first in 2008
as Retail Merchandising Manager for Prada after spending a few years as Brand
Manager in a number of brands in Singapore. In 2013, she was appointed as Retail
Director for Miu Miu responsible for the retail merchandising, retail operations
and visual merchandising of the brand in the South East Asia. From 2016 to 2017,
she worked for Valentino as General Manager in Singapore.
CHOI, Moonyoung, aged 59, has been Prada Korea General Manager since 2007.
She is primarily responsible for overseeing the Group’s commercial operations in
Korea. She star ted her career at Louis Vuitton, as the first Louis Vuitton Store
Manager in Korea (1991 – 1999). From 1999 to 2007, Ms. Choi worked at Celine
Korea, LVMH Group, as Retail Manager, subsequently becoming Country Manager
for Korea.
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PRADA Group Annual Report 2021 - Directors and Senior Management CLARK, Sophie, aged 49, has been Prada Australia General Manager since 2016.
She is primarily responsible for overseeing the Group’s commercial operations in
Australia and New Zealand. Ms. Clark graduated from Sydney’s exclusive Kincoppal-
Rose Bay School. Ms. Clark had an extensive career at leading Depar tment store
David Jones in Sydney (1999 – 2016) where she most recently held the position of
General Manager Womenswear. Ms. Clark was elected as a judge for the prestigious
International Woolmark Fashion Awards in Milan 2014, Beijing 2015 and New York
2016.
COVIELLO, Letizia, aged 54, has been Group Tax Director since 2016. She is
primarily responsible for overseeing all Group strategic tax matters. Ms. Coviello
obtained a Degree in Economics from the University La Sapienza in Rome in 1991
followed by a Tax Specialization Master at Ipsoa in Milan. Before joining the Group
in 1998, she worked for a Legal Firm, Studio Simonelli e Associati in Milan and
afterwards as Tax Senior Assistant in the Fiscal Depar tment at Eni Spa, in Milan.
CROSO, Carlo, aged 41, joined the Group in July 2019 as Retail Innovation and
E-Commerce Director. Mr. Croso is responsible for the Group’s customer strategy,
digital transformation and omnichannel initiatives while also overseeing the
development of the e-commerce channels. After obtaining a Bachelor ’s Degree in
Industrial Engineering and a Master ’s Degree in Business Administration from the
Politecnico of Milan, Mr. Croso worked several years covering different industries
for Bain & Company. Before joining the Group, since 2014 Mr. Croso has been
globally in charge of business-to-consumer distribution and digital, holding the
position of Senior Vice President of Direct Business for Royal Caribbean Group’s
luxury cruise company Silversea.
IWATA, Timothy, aged 50, has been Prada Jewellery Director since September
2021. He is primarily responsible for overseeing worldwide operations and
strategy of Prada Jewellery sector. After gaining his professional experience in
the Investment Banking sector in Asia, Timothy Iwata moved to New York where he
founded his Consulting agency and innovation studio serving the luxury industry,
working for clients such as Car tier, Tiffany and L’Oreal. He returned to Europe in
2018, where he most recently covered the role of Innovation Director at Car tier,
Richemont Group.
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PRADA Group Annual Report 2021 - Directors and Senior Management MANZAT TO, Denni, aged 37, has been appointed as Managing Director of the
Church Group on January 2022. He is responsible for overseeing the Church
brand operations worldwide. Prior to this appointment Mr. Manzatto has been
Group Commercial Director with responsibility of the commercial development
of the wholesale and marketplace channels of the Prada, Miu Miu and Car Shoe
brands. He directly managed Prada wholesale channel as well as the eyewear and
fragrance licenses for both Prada and Miu Miu. Moreover, he was also responsible
for leading Group and brand-level business development oppor tunities, strategic
par tnerships and collaborations. Mr. Manzatto obtained an Executive Master in
Business Administration at INSEAD and Tsinghua University in 2018. He joined
our Group in 2013 and, before being appointed to his current position, he covered
different roles in retail/collection merchandising, marketing and e-commerce.
MARSICOLA, Alessandra, aged 62, has been appointed as Prada Retail Director
in January 2020. She is primarily responsible for overseeing worldwide Prada
retail functions and strategy of Prada Brand. Ms. Marsicola joined our Group in
1991 and before being appointed to her current position she covered different
managerial roles in the commercial area, including Regional Director Nor th West
Europe, Retail Development Director for Japan and Asia, Chief Executive Officer
of Prada Fashion Commerce (Shanghai), Prada Worldwide Store Operation Director
and Prada Retail Director for Prada Japan. From 2006 to 2009, she worked first
as Sales Director for La Rinascente then as Asia Pacific Retail Director for Fendi.
NOSCHESE, Marcelo, aged 57, has been Latin America Regional Director since
2017 and has been appointed as Nor th America Regional Director in 2020. He
is primarily responsible for overseeing the Group’s operations in Nor th America,
Central America, South America and Caribbean area. Mr. Noschese obtained a
master ’s degree in Business Administration from INSEAD, Fontainebleau, France,
in 1992 and graduated in Business Administration in Getúlio Vargas Foundation
São Paulo, Brazil. He star ted his career at L’Oréal, as International Development
Manager for the Fine Fragrances Division, and then was appointed as General
Manager for the Travel Retail Division in Nor th and South America (1992 – 1998).
Prior to joining our Group in 2011 as Regional Director for South America, he
worked for LVMH – Moët Hennessy Louis Vuitton as Country Manager for Brazil
(2001 – 2004) and for Salvatore Ferragamo S.p.A., as Regional Development
Director for South America (2007 – 2011).
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PRADA Group Annual Report 2021 - Directors and Senior Management PETRUZZO, Benedetta, aged 36, has been appointed Miu Miu General Manager in
February 2020. She is responsible for overseeing the worldwide retail and wholesale
operations of the brand and for the overall strategy and development of Miu Miu.
Before joining the Prada Group, she was Executive Vice President for the Nor th
America at Kering Eyewear, where she worked for five years, holding different
management positions. After obtaining a degree in Business Administration and a
Master of Science in Management at Bocconi University, she star ted her career first
in the finance sector. Afterwards, she joined Bain & Company, where she worked
several years in the retail and luxury practices of the management-consulting firm.
RASTRELLI, Stefano, aged 59, has been Group Human Resources Director since
2013. Mr. Rastrelli obtained a degree in Law, from the University of Naples. He first
joined the PRADA Group in 2007 to manage the human resources of the Industrial
Depar tments and subsequently extended to the Commercial Depar tments. Prior to
joining our Group, he worked for almost twenty years for the Fiat Group, covering
different managerial roles within the Fiat Group for different branches in Italy
and abroad (Argentina, Brazil). From 2005 to 2007, Mr. Rastrelli was in Spain as
Human Resources Director for GKN Driveline.
SESIA, Davide, aged 54, has been Regional Director Japan and Islands since
February 2004. He is primarily responsible for overseeing the Group’s operations
in Japan, Guam, Saipan and Hawaii area, where he covers several managerial
roles at the Company’s subsidiaries. Mr. Sesia obtained a degree in Business
Administration from the University Cattolica del Sacro Cuore of Milan in 1991. He
joined our Group in 2000 as Representative Director and Chief Financial Officer
of Prada Japan. Prior to that, he was Chief Financial Officer and Director of
Benetton Japan and Managing Director of Benetton Korea Ltd (1997 - 2000).
SIMONS, Raf, aged 54, has been appointed as Prada Co-Creative Director in April
2020, working in par tnership with Mrs Miuccia Prada Bianchi. He launched his own
menswear label in 1995. He was creative director at Jil Sander from 2005 to 2012,
in Christian Dior from 2012 to 2015 and in Calvin Klein from 2016 to 2018. He
contributes to the conception, preparation and development of the Prada brand
products, coordinating also the image. He par ticipates in the development of
creative strategies of marketing, adver tising and branding campaigns. Mr. Simons
graduated in Industrial Design at SHIVKV in Genk in 1991.
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PRADA Group Annual Report 2021 - Directors and Senior Management TAO, Yu Hua Irene, aged 55, has been Prada Taiwan General Manager since 2017.
She is primarily responsible for overseeing the Group’s commercial operations
in Taiwan. Ms. Tao obtained the degree in Japanese Language at the Soochow
University (Taiwan). Prior to joining the Group, she worked for almost 11 years at
Louis Vuitton in Taiwan. Then she held the Retail Operations positions in Fendi
and Car tier from 2007 to 2013 and became the General Manager at Chloe Taiwan
from 2014 to 2017.
TOLOMELLI, Armando, aged 55, has been Regional Director Asia Pacific since
2012. Mr. Tolomelli is primarily responsible for overseeing the Group’s operations
in the Asia Pacific region, where he covers several managerial roles at the
Company’s subsidiaries. Prior to this appointment Mr. Tolomelli has been our
Group Controlling Director since joining our Group in July 2005. Prior to joining
our Group, he spent four teen years working for the Barilla Group, covering various
roles including Financing Office Manager, Divisional Business Controller, Business
Controller for South Eastern Europe, Group Controller of Wasa in Stockholm,
Sweden (1999 to 2001), Finance Manager International Business Development
of the Bakery Division (2001) and Corporate Controlling Director of Kamps in
Düsseldor f, Germany (2002 to 2005). He graduated in business economics from
University of Parma (Italy) in 1989.
VIAN, Massimo, aged 49, has been appointed Industrial Director in 2020. He is
responsible for industrial divisions. Mr. Vian obtained a degree in Engineering
Management from the University of Padua in 1999 and an Executive Development
Program in 2008 from the Kellogg Business School, Nor th-Western University of
Chicago. He gained his professional experience first in the automotive sector, and
then he joined the Luxottica Group in 2005 covering several managerial roles, in
Italy and abroad (China), where he became C.E.O. Product and Operations. In
March 2019, he joined the Calzedonia Group as C.E.O. of the Falconeri brand.
WANG, Chen-Chen, aged 49, has been China General Manager since 2019. She
is primarily responsible for overseeing the Group’s commercial operations in
China, where she covers several managerial roles at the Company’s subsidiaries.
She joined our Group in 2015 as Miu Miu Retail Director. Ms. Wang obtained a
Master ’s Degree in Science from Auburn University. She star ted her career at
Guilford Mills New York (1 997–2000); then she worked at SilverStream Software
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PRADA Group Annual Report 2021 - Directors and Senior Management New York (2000– 2002). Before joining our Group, she was Merchandising Director
at Christian Dior China (2011 -2015).
ZAMBERNARDI, Fabio, aged 59, has been Group Design Director since November
2002. He is responsible for the collection concept development, overseeing all
the strategic activities related to the coherence between image and product
development of the collection, as well as suppor ting the strategic brands image
communication of both Prada and Miu Miu brands. He has been collaborating with
the Group since 1981. He was promoted Shoe Design Director in 1997 and Design
Fashion Coordinator in 1999.
ZENKOVSKAYA, Vera, aged 45, has been Russian area Regional Director since 2013.
Ms. Zenkovskaya is primarily responsible for overseeing the Group operations in
Russia, Kazakhstan and Ukraine, where she covers several managerial roles at the
Company’s subsidiaries. Ms. Zenkovskaya obtained a Foreign Languages Degree at
Language University of Kazakhstan. Prior to joining our Group in 2011 as Russia
Country Manager, she worked within the beauty sector (L’Oreal, Temtrade) in
marketing and retail areas. From 2006 to 2011, she covered several managerial
roles in Russia and Ukraine for Louis Vuitton.
None of the Group’s senior management listed above is or has been a director of
any listed companies in Hong Kong or overseas in the past three years.
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PRADA Group Annual Report 2021 - Directors and Senior Management COMPANY SECRETARY
CANE, Stefania, aged 43, is the joint company secretary of the Company and the
secretary of the Board of Directors. Ms. Cane has been appointed as Director of
Group Corporate Affairs in October 2021. She is responsible for the governance
matters of the Company and its subsidiaries worldwide (around 90 companies).
Prior to joining the Company in 2011 as Corporate Affairs Counsel, she worked
as an associate at the banking and finance depar tment of BonelliErede Law Firm
from September 2006 to January 2009 and then worked as a senior associate at
the corporate depar tment of Paul Hastings, Janofsky & Walker (Europe) LLP Law
Firm from January 2009 to June 2011. Ms. Cane graduated from Università degli
Studi di Milano (The University of Milan) in 2003 with a Master ’s degree cum laude
(with praise) in Law and has been a qualified lawyer in Italy since 2006. Ms. Cane
is not and has not been a director of any other listed companies in Hong Kong or
overseas in the past three years.
YUEN, Ying Kwai, aged 55, has joined the Company as a joint company secretary
since May 2011 and is responsible for corporate secretarial duties. Ms. Yuen has
over 25 years of experience in the corporate secretariat and compliance areas of
listed companies and professional firms. Prior to joining our Group, she worked
with Li & Fung group for 15 years. She first joined in 1995 as company secretary
of Li & Fung (1937) Limited until 1999 when she was transferred to Li & Fung
Distribution (Management) Limited and appointed as group company secretary in
2000. Ms. Yuen was the company secretary of Integrated Distribution Services
Group Limited (member of Li & Fung Group) between 2004 and 2011. Ms. Yuen
received an Honours Diploma in Company Secretaryship and Administration from
Lingnan College (now Lingnan University) in 1988. Ms. Yuen obtained a Master ’s
degree in Business Administration (Executive) from City University of Hong Kong in
2003. Ms. Yuen has been a fellow of both The Hong Kong Char tered Governance
Institute (formerly known as “ The Hong Kong Institute of Char tered Secretaries”
(HKICS)) and The Char tered Governance Institute in the United Kingdom since
2001. Ms. Yuen was the past member of each of the Membership Committee of
HKICS (2016 – 2019) and the Company Secretaries Panel of HKICS (2012 – 2015).
Ms. Yuen is not and has not been a director of any other listed companies in Hong
Kong or overseas in the past three years.
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PRADA Group Annual Report 2021 - Directors and Senior Management D I R E C T O R S ’ R E P O R T
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PRADA Group Annual Report 2021 - Directors’ Report PRINCIPAL ACTIVITIES AND BUSINESS REVIEW
PRADA S.p.A. (the “Company”), together with its subsidiaries (the “Group”), is a
leading global luxury group in the design, production and distribution of high-end
leather goods, handbags, footwear, apparel and accessories, as well as operates,
under licensing agreements, in the eyewear and fragrance sectors. Through its
Directly Operated Stores network, franchise stores, and a selected number of
luxury depar tment stores and independent retailers, the Group operates in all
major international markets worldwide.
The Company is a joint-stock company with limited liability, incorporated and
domiciled in Italy. Its registered office is at Via A. Fogazzaro 28, 20135 Milan (MI),
Italy.
Fur ther discussion and analysis of these activities, as required by section 388(2)
and Schedule 5 to the Hong Kong Companies Ordinance, including a review of the
business of the Company, a discussion and analysis of the Group’s per formance
during the year ended December 31, 2021 (the “2021 Year ”), and the material
factors underlying its economic results and financial position, a description of
the risks and uncer tainties facing the Group, and the future development of the
business of the Company, is set out in the Financial Review section of this annual
repor t. Details of material events affecting the Group that have occurred since
the end of the repor ting period are set out in note 44 to the 2021 Year Group’s
consolidated financial statements (the “Consolidated Financial Statement”). These
discussions form par t of this directors’ repor t.
COMPLIANCE WITH THE RELEVANT LAWS AND REGULATIONS
The Group has adopted specific compliance procedures aimed at ensuring
compliance with all applicable laws, rules and regulations, in par ticular those
that have a significant impact at a worldwide level, as the Group’s products are
distributed and sold across more than 70 countries.
To properly address this matter, in 2010 the Group established an Industrial
Compliance Committee to oversee the compliance of the Group’s products with the
international and local legal standards and requirements of all the manufacturing
and distribution processes at a worldwide level. A detailed analysis of the legal
and regulatory risks to which the Group is exposed is set out in the paragraph
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PRADA Group Annual Report 2021 - Directors’ Report headed “Legal and regulatory risks” of the Financial Review section of this annual
repor t, which forms par t of this directors’ repor t.
ENVIRONMENTAL POLICIES AND PERFORMANCE
The Group aims to enhance value creation for its stakeholders by combining
economic profitability with employee and customer satisfaction, respecting ethical
and environmental values, and ensuring sustainability.
Environmental protection is one of main commitments of the Group, which is
engaged in implementing and enforcing vir tuous behaviors that contribute to its
sustainable growth, and that represent examples of good practices within the
entire luxury industry.
Commitment to environmental respect is a key element of the Code of Ethics,
applied both within the Group’s organization, by implementing staff awareness,
and to the third par ties working with the Group.
The main direct impact of the Group’s business originates from the use of energy
for offices, factories, logistics centers and stores worldwide. The objective is to
reach ever-higher levels of energy efficiency, waste reduction and responsible use
of natural resources.
Fur ther analysis on the environmental policies and per formances is set out in “ The
PRADA Group” section to this annual repor t.
RELATIONSHIPS WITH KEY STAKEHOLDERS
The Group’s success also depends on the suppor t from key stakeholders, such as
employees, customers, suppliers and shareholders.
EMPLOYEES
The Group is built on people. The Group has always considered human capital to
be the key to its competitive edge, and makes every effor t to promote and reward
productivity, professional skills and teamwork, with an emphasis on results. The
employees’ enthusiasm, craft skills and intellectual curiosity are the indispensable
elements, which underpin the innovation and quality of the Group’s products. The
Company searches for people that can combine these outstanding qualities with
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PRADA Group Annual Report 2021 - Directors’ Report the values of the Group.
As of December 31, 2021 the Group had 13,140 employees (headcount), of whom
38.7% working in Italy and with women making up 62% of the total workforce.
The Group’s remuneration policy aims to attract, reward, and retain skilled
personnel and exper t managers, while bringing the interests of the management
in line with the primary objective of creating value for the Group over the medium
and long term.
Fur ther analysis on the value of human resources of the Group is set out in the
“ The PRADA Group” section to this annual repor t, while fur ther analysis on the
remuneration policy of the Group is set out in the “Corporate Governance” section
of this annual repor t, both of which form par t of this directors’ repor t.
CUSTOMERS
The Group is a leader in style, maker of outstanding products, and provides
excellent customer service.
The distinctive features and the prestige of the Group, which derived from an
original management of the creative and industrial processes, places the Group in a
position to offer customers worldwide unique products, representing an inimitable
synthesis of creativity, quality and exclusivity. In addition, the Group believes that
an effective communication with customers is crucial to build and convey an image
of strong and consistent brand identity.
The result of the Group’s approach to its customers is the unique relationship
between each customer and the Group’s brands, its products and its stores.
SUPPLIERS
The Group regards its relationship with its suppliers, built through years of day-to-
day collaboration and directed towards continuous improvement, as fundamental
to it. The Group has a diverse range of raw materials suppliers and external
manufacturers. About 92% of them are located in the European Union, the vast
majority of which are in Italy.
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PRADA Group Annual Report 2021 - Directors’ Report Raw materials are a key component of the quality of the Group’s products, and
therefore constitute a primary focus for the Group. The procurement process,
impor t, use, and expor t of raw materials, are carried out in full compliance with
all the applicable international and local laws, rules, and regulations. Every raw
material used in the manufacturing process has a cer tificate of origin that attests
its geographical origin. In addition, raw materials are subject to strict quality
controls by the Group’s inspectors and exper ts.
The Group has always intended to act as a stimulus for its suppliers, not only in
terms of the excellent quality standards required, but also through the promotion
of a culture and a “modus operandi”, which comply with the highest ethical
standards. The Group thus requires that its suppliers act responsibly, and that
each of them under takes and acknowledges the Group’s Code of Ethics, which sets
for th the inalienable rights of employees, such as proper working conditions, equal
oppor tunities, freedom of association, health insurance coverage, and protection
of the environment in the collection of materials and during the production
processes.
In order to achieve the highest quality standards, the Group carries out a strict
process for the selection and retention of its suppliers, with the aim to establish
long-term business relationships.
SHAREHOLDERS
One of the main corporate goals of the Group is to enhance corporate value to
its shareholders by granting dividends payouts, taking into account the liquidity
positions and business expansion needs of the Group. Details of the Group’s
communication with its shareholders are set out in the “Corporate Governance”
section of this annual repor t, which forms par t of this directors’ repor t.
An analysis of the Group’s environmental policies and per formance, as well as of
the relationships with the key stakeholders (employees, customers, suppliers and
shareholders), will be included in the Group’s Social Responsibility Repor t 2021,
which will be published in due course.
RESULTS AND DIVIDENDS
The results of the Group for the 2021 Year are set out in the Consolidated Statement
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PRADA Group Annual Report 2021 - Directors’ Report of Profit and Loss.
The Board recommends for the 2021 Year the distribution of final dividends of
Euro 179,117,680 (Euro 0.07 per share).
The final dividends will be subject to the shareholders’ approval at the for thcoming
shareholders’ general meeting of the Company to be held on Thursday, April 28,
2022.
Subject to the shareholders’ approval of the recommended final dividends, such
dividend will be paid on Friday, May 27, 2022.
The final dividend will be paid to the shareholders recorded on the Company’s
shareholders register on Friday, May 6, 2022 only, net of Italian withholding tax,
where applicable. The current rate of Italian withholding tax applied to applicable
dividend payments is equal to 26%.
FIVE-YEAR FINANCIAL SUMMARY
The five-year financial summary of the Group is set out in Note 41 to the
Consolidated Financial Statements.
RESERVES
Details of the movements in the reserves of both the Group and the Company
during the 2021 Year are set out in the Consolidated Statement of Changes in
Shareholders’ Equity and in the Statement of Changes in the Company’s Equity.
DISTRIBUTABLE RESERVES
As at December 31, 2021, the Company’s reserves available for distribution to the
shareholders in accordance with the Company’s by-laws amounted to Euro 1,523
million.
PROPERT Y, PLANT AND EQUIPMENT
Details of the movements in the proper ty, plant and equipment of the Group during
the 2021 Year are set out in Note 15 to the Consolidated Financial Statements.
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PRADA Group Annual Report 2021 - Directors’ Report PRE-EMPTIVE RIGHTS
The Company’s by-laws do not provide for shareholders’ pre-emptive rights.
PURCHASE, SALE OR REDEMPTION OF THE COMPANY’S LISTED SECURITIES
During the 2021 Year, neither the Company nor any of its subsidiaries purchased,
sold or redeemed any of the Company’s listed securities.
CAPITAL GAINS TAX IN ITALY
Capital gains realized from the sale of securities in an Italian company by
shareholders resident in Hong Kong are not subject to taxation in Italy.
SUBSIDIARIES
Details of the Company’s subsidiaries as at December 31, 2021, are set out in
Note 42 to the Consolidated Financial Statements.
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PRADA Group Annual Report 2021 - Directors’ Report DIRECTORS
The current Directors of the Company as of the date of this director ’s repor t are:
EXECUTIVE DIRECTORS
Mr. Paolo ZANNONI (Chairman of the Board, elected on May 27, 2021)
Ms. Miuccia PRADA BIANCHI (Chief Executive Officer, re-elected on May 27, 2021)
Mr. Patrizio BERTELLI (Chief Executive Officer, re-elected on May 27, 2021)
Ms. Alessandra COZZANI (Chief Financial Officer, re-elected on May 27, 2021)
Mr. Lorenzo BERTELLI (elected on May 27, 2021)
NON-EXECUTIVE DIRECTOR
Mr. Stefano SIMONTACCHI (re-elected on May 27, 2021)
INDEPENDENT NON-EXECUTIVE DIRECTORS
Ms. Marina Sylvia CAPROTTI (elected on May 27, 2021)
Mr. Yoël ZAOUI (elected on May 27, 2021)
Mr. Maurizio CEREDA (re-elected on May 27, 2021)
Ms. Pamela Yvonne CULPEPPER (elected on January 28, 2022)
Ms. Anna Maria RUGARLI (elected on January 28, 2022)
CEASED DIRECTORS
The Directors of the Company ceased during 2021 Year are:
Mr. Carlo MAZZI (former Chairman of the Board and Executive Director, mandate
expired on May 27, 2021)
Mr. Gian Franco Oliviero MATTEI (Independent Non-Executive Director, mandate
expired on May 27, 2021)
Mr. Giancarlo FORESTIERI (Independent Non-Executive Director, mandate expired
on May 27, 2021)
Mr. Sing Cheong LIU (Independent Non-Executive Director, mandate expired on
May 27, 2021)
BIOGRAPHICAL INFORMATION OF DIRECTORS
A brief biography of each current Director of the Company is set out in the
“Directors and Senior Management” section of this annual repor t.
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PRADA Group Annual Report 2021 - Directors’ Report
DIRECTORS’ PERMIT TED INDEMNIT Y
There is no permitted indemnity provision in any contract entered into by the
Company or any of its associated corporation (within the meaning of Par t XV of
the Securities and Futures Ordinance, the “SFO”) that is or was in force during the
2021 Year and until the date when this directors’ repor t is approved by the Board,
which is required to be disclosed under section 470 of the Hong Kong Companies
Ordinance.
MANAGEMENT CONTRACT
No contract, other than employment contracts and directors’ service contracts,
concerning the management and administration of the whole or any substantial
par t of the Company’s business was entered into, or was effective, during the
2021 Year.
DIRECTORS’ SERVICE CONTRACTS
None of the Directors of the Company has a service contract with any member
of the Group that cannot be terminated within one year without payment of
compensation, other than statutory compensation.
DIRECTORS’ INTERESTS IN COMPETING BUSINESS
During the 2021 Year, none of the Directors of the Company held any interest in
a business that competes, or is likely to compete, directly or indirectly, with the
business of the Company or the Group.
DIRECTORS’ INTERESTS AND SHORT POSITIONS IN SECURITIES
As at December 31, 2021, the Directors (including the Chief Executive Officers)
of the Company held the following interests in the shares, underlying shares and
debentures of the Company and its associated corporations (within the meaning
of Par t XV of the 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 of Hong Kong Limited (the “Stock Exchange”), pursuant
to the Model Code for Securities Transactions by Directors of Listed Companies
(the “Model Code”) contained in Appendix 10 of the Rules Governing the Listing
of Securities on The Stock Exchange of Hong Kong Limited (the “Listing Rules”):
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PRADA Group Annual Report 2021 - Directors’ Report (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
Mr. Patrizio Bertelli
Notes:
2,046,470,760
(Notes 1 and 2)
2,046,470,760
(Notes 1 and 3)
Interest of Controlled
corporation
Interest of Controlled
corporation
80%
80%
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 Ber telli controls, indirectly through PA BE 1 S.r.l., 35% (comprised
of 750 ordinary shares and 300 preference shares) of the capital in Prada
Holding S.p.A.. Mr. Patrizio Ber telli 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 Ber telli is also a director of PA BE 1 S.r.l..
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PRADA Group Annual Report 2021 - Directors’ Report The interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Ber telli in the shares
of the Company as at December 31, 2021 are summarized in the following char t:
Patrizio Bertelli
100%
Miuccia Prada
Bianchi
100%
Ludo S.p.A.
53.8%
PA BE 1 S.r.l.
Bellatrix S.p.A.
35%
65%
Prada Holding S.p.A.
80%
PRADA S.p.A.
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PRADA Group Annual Report 2021 - Directors’ Report (b) Long positions in shares and underlying shares of associated corporations:
Name of Director
Name of associated corporations
Class of shares
Number
of shares
Ms. Miuccia Prada Bianchi
Prada Holding S.p.A.
Ordinary Shares
1,650
Prada Holding S.p.A.
Prapar Corporation
Preference Shares
Common Shares
MFH Munich Fashion Holding GmbH Registered Share
Nature
of Interests
Controlled
Corporation
As above
As above
As above
As above
As above
Approximate
percentage
of Interests
68.75%
50%
100%
100%
49.83%
83.34%
Beneficial Owner 100%
Beneficial Owner 100%
Controlled
Corporation
As above
100%
100%
300
50
1
438,460
100,000
5,066,000
4,965,100
1,000,000
Ordinary Shares
Preference Shares
Class A shares
Class B shares
Capital
Contribution (JPY)
Participation quota (Euro) 1
Bellatrix S.p.A.
Bellatrix S.p.A.
Ludo S.p.A.
Ludo S.p.A.
PH-RE LLC
Orexis S.r.l.
Mr. Patrizio Bertelli
Prada Holding S.p.A.
Ordinary Shares
Prada Holding S.p.A.
Preference Shares
MFH Munich Fashion Holding GmbH Registered Share
750
300
1
Controlled
Corporation
As above
As above
PH-RE LLC
Orexis S.r.l.
Capital
Contribution (JPY)
1,000,000
As above
Participation quota (Euro) 1
As above
31.25%
50%
100%
100%
100%
Save as disclosed above, as at December 31, 2021, none of the Directors of the
Company or their associates held any interest or shor t position in the shares,
underlying shares and/or debentures of the Company or any of its associated
corporations (within the meaning of Par t 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 under the Model Code.
SUBSTANTIAL SHAREHOLDERS’
INTERESTS AND SHORT POSITIONS
IN
SECURITIES
As at December 31, 2021, other than the interests of the Directors of the Company
as disclosed above, the following persons held interests or shor t positions 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.
Bellatrix S.p.A.
Ludo S.p.A.
PA BE 1 S.r.l.
112
Legal and beneficial
owner
Interest of controlled
corporation
Interest of controlled
corporation
Interest of controlled
corporation
2,046,470,760
2,046,470,760
2,046,470,760
2,046,470,760
80%
80%
80%
80%
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PRADA Group Annual Report 2021 - Directors’ Report Note:
Prada Holding S.p.A. owns approximately 80% of the issued capital in the Company.
As Ludo S.p.A. owns 53.8% of Bellatrix S.p.A., which in turn owns 65% of Prada
Holding S.p.A. and PA BE 1 S.r.l. owns 35% of Prada Holding S.p.A., Bellatrix
S.p.A., Ludo S.p.A. and PA BE 1 S.r.l. are all deemed to be interested in the
2,046,470,760 shares of the Company held by Prada Holding S.p.A..
SHARE CAPITAL
Details of the share capital of the Company during the 2021 Year are set out in
the Consolidated Statement of Changes in Shareholders’ Equity and Note 30 to the
Consolidated Financial Statements.
DIRECTORS’ INTERESTS IN TRANSACTIONS, ARRANGEMENTS AND CONTRACTS
Save for those contracts disclosed under the section on Continuing Connected
Transactions below, and in Consolidated Financial Statements Note 40, Transactions
with Related Par ties, and Note 39, Remuneration of the Board of Directors, no
transaction, arrangement, or contract of significance to the Group’s business was
entered into or subsisted at any time during the 2021 Year in which the direct or
indirect interest of a Director, or an entity connected with a Director, was material.
During the 2021 Year, there were no arrangements to which the Company, or any
of the Company’s subsidiaries or holding companies or a subsidiary of any of the
Company’s holding companies is a par ty, to enable the Directors of the Company
to acquire benefits by means of the acquisition of shares in, or debentures of, the
Company.
ISSUANCE OF DEBT SECURITIES
Neither the Company, nor any members of the Group, issued any debt securities
during the 2021 Year.
CONTINUING CONNECTED TRANSACTIONS
During the 2021 Year, the Group had the following non-exempt continuing connected
transactions details of which were disclosed in the Company’s announcements
dated July 15, 2015, May 26, 2017, December 1, 2017, March 1, 2020, and
November 20, 2020, respectively:
(a) Lease Agreement and Guarantee for Prada Aoyama Building in Japan
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PRADA Group Annual Report 2021 - Directors’ Report On July 15, 2015, PH-RE LLC purchased a building in Minami-Aoyama, Tokyo,
Japan (“the Aoyama Building”). Prada Japan Co. Ltd (“Prada Japan”), a wholly
owned subsidiary of the Company, has been leasing the Aoyama Building for use
as its flagship store in Tokyo since 2004.
On May 25, 2015, Prada Japan, as lessee, and the former lessor, renewed the lease
of the Aoyama Building by entering into a lease agreement for a term of 20 years
(the “Lease Agreement”). On the same date, the Company granted a guarantee in
favour of the former lessor to guarantee the full compliance by Prada Japan with
all its obligations under the Lease Agreement (the “Guarantee”).
As a result of the purchase of the Aoyama Building, PH-RE LLC, a connected
person of the Company, has become the lessor under the Lease Agreement and
the beneficiary of the Guarantee granted by the Company in favour of the former
lessor. Accordingly, the Lease Agreement and the Guarantee, which were continuing
transactions of the Group, have become continuing connected transactions of the
Group under Chapter 14A of the Listing Rules.
On April 28, 2017 PH-RE LLC, which was previously a wholly owned subsidiary
of PA BE 1 S.r.l., became a wholly owned subsidiary of Prada Holding S.p.A., a
substantial shareholder of the Company. Both Ms. Miuccia Prada Bianchi and Mr.
Patrizio Ber telli – Chief Executive Officers, Executive Directors and substantial
shareholders (as defined in the Listing Rules) of the Company – are indirect
shareholders of Prada Holding S.p.A..
As a consequence of this transaction, the Lease Agreement and the Guarantee
remained as subsequent continuing connected transaction of the Group with no
variation of their terms.
The annual cap for the 2021 Year for the rent paid to PH-RE LLC, or accrued
by the Company in accordance with applicable accounting rules, under the
Lease Agreement and the Guarantee was JPY 2,040,703,000, as disclosed in the
Company’s announcement dated May 26, 2017.
(b) Lease Agreement and Guarantee for Miu Miu Aoyama Building in Japan
On May 26, 2017, PH-RE LLC purchased a building in Minami-Aoyama, Tokyo,
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PRADA Group Annual Report 2021 - Directors’ Report Japan (“the MM Aoyama Building”). Prada Japan has been leasing the MM Aoyama
Building for use as flagship store for the Miu Miu brand in Tokyo since 2015
under a lease agreement entered into with the former owner of the MM Aoyama
Building (the “MM Lease Agreement”). In the context of the MM Lease Agreement,
the Company granted a guarantee in favour of the former owner to secure the
punctual per formance by Prada Japan of all its obligations under the MM Lease
Agreement (the “MM Guarantee”).
As a result of the purchase of the MM Aoyama Building, PH-RE LLC has become the
lessor under the MM Lease Agreement and the beneficiary of the MM Guarantee
granted by the Company in favour of the former owner.
PH-RE LLC is a wholly owned subsidiary of Prada Holding S.p.A., a substantial
shareholder (as defined in the Listing Rules) of the Company. Both Ms. Miuccia
Prada Bianchi and Mr. Patrizio Ber telli - Chief Executive Officers, Executive
Directors and substantial shareholders (as defined in the Listing Rules) of the
Company – are indirect shareholders of Prada Holding S.p.A..
In this context, the MM Lease Agreement and the MM Guarantee, being continuing
transactions of the Group, have become subsequent continuing connected
transactions of the Group under Chapter 14A of the Listing Rules.
The annual cap for the 2021 Year for the rent paid to PH-RE LLC, or accrued
by the Company in accordance with applicable accounting rules, under the MM
Lease Agreement and the MM Guarantee was JPY 630,000,000, as disclosed in the
Company’s announcement dated May 26, 2017.
(c) Luna Rossa Sponsorship Agreement
On December 1, 2017, the Company entered into a sponsorship agreement with
Luna Rossa Challenge S.r.l., a company at that time indirectly controlled by Mr.
Patrizio Ber telli, who is a Chief Executive Officer, an Executive Director and a
substantial shareholder of the Company, for the par ticipation of the Luna Rossa
sailing team in the XXXVI edition of the America’s Cup, which was held in New
Zealand in 2021. The payment to be made by the Company to Luna Rossa Challenge
S.r.l., according to the terms of the sponsorship agreement, was due for the period
from January 2018 to June 2021, as disclosed in the Company’s announcement
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PRADA Group Annual Report 2021 - Directors’ Report dated December 1, 2017 (the “Luna Rossa Sponsorship Agreement”).
As disclosed in the Company’s announcement dated November 20, 2020, the Luna
Rossa Sponsorship Agreement was amended to grant an additional sponsorship
payment of Euro 10 million to Luna Rossa Challenge S.r.l. (the “Amended
Sponsorship Agreement”) for the period from November 20, 2020 to June 30,
2021.
The total annual cap of the sponsorship contribution paid by the Company to
Luna Rossa Challenge S.r.l. under the Luna Rossa Sponsorship Agreement and as
amended by the Amended Sponsorship Agreement for the 2021 Year was Euro 17
million.
The Luna Rossa Sponsorship Agreement expired on June 30, 2021.
(d) COR 36 Sponsorship Agreement
As disclosed in the Company’s announcement dated March 1, 2020, the Company
entered into a sponsorship agreement (“COR36 Sponsorship Agreement”) with
Challenger of Record 36 S.r.l. (“COR36”), a company owned by Luna Rossa
Challenge S.r.l., thus at that time indirectly controlled by Mr. Patrizio Ber telli, who
is a Chief Executive Officer, an Executive Director and a substantial shareholder of
the Company, for the sponsorship of the management and organization by COR36
of the preliminary regattas, the related event, and the selection of the challenger
to the 36th edition of the America’s Cup, named “Prada Cup”. The term of COR36
Sponsorship Agreement was from March 1, 2020 to June 30, 2021.
The annual cap of this sponsorship contribution paid by the Company to COR36
under the COR36 Sponsorship Agreement for the 2021 Year was Euro 5 million.
The COR 36 Sponsorship Agreement expired on June 30, 2021.
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PRADA Group Annual Report 2021 - Directors’ Report Below is a table setting out the aggregate value for each of the non-exempt
continuing connected transactions for the 2021 Year:
Continuing
Connected
Transaction
(“CCT”)
Accounting adjustment
to the CCT following
the application of “IAS 1
Presentation of Financial
Statements”
Impact on the profit or
loss for the year ended
December 31, 2021
(a) Lease Agreement and Guarantee for Prada Aoyama Building
Depreciation of the Right of Use assets and Interest expenses on
Lease Liability
Japanese Yen
million
Japanese Yen
million
Japanese Yen
million
2,040.7
101.5
2,142.2
(b) Lease Agreement and Guarantee for Miu Miu Aoyama Building
Depreciation of the Right of Use assets and Interest expenses on
Lease Liability
Japanese Yen
million
Japanese Yen
million
Japanese Yen
million
630
(12)
618
(c) Luna Rossa Sponsorship Agreement
Sponsorship contribution
(d) COR 36 Sponsorship Agreement
Sponsorship contribution
Euro million
21.23
Euro million
(18.53)
Euro million
2.7
Euro million
Euro million
Euro million
11.5
(6.5)
5.0
The Independent Non-Executive Directors have reviewed the above non-exempt
continuing connected transactions and confirmed that these have been entered
into:
(i)
in the ordinary and usual course of business of the Group;
(ii) on normal commercial terms or better; and
(iii) according to the agreements governing them on terms that are fair and
reasonable, and in the interests of the shareholders of the Company as a
whole.
The Directors of the Company have engaged the auditors to review the above
non-exempt continuing connected transactions. Based on the work per formed, the
auditors have provided a letter to the Directors of the Company (with a copy to the
Stock Exchange) to confirm that nothing has come to their attention causing them
to believe that the continuing connected transactions:
(i)
have not been approved by the Company’s Board of Directors;
(ii) were not, in all material respects, in accordance with the pricing policies of
the Group if the transaction involved the provision of goods or services by the
Group;
(iii) were not entered into, in all material respects, in accordance with the terms
of the relevant agreements governing such transactions; and
(iv) have exceeded the relevant annual cap.
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PRADA Group Annual Report 2021 - Directors’ Report Save as disclosed above, none of the transactions disclosed as related par ty
transaction in Note 40 to the Consolidated Financial Statements is a connected
transaction or continuing connected transaction, which is subject to the repor ting
or disclosure requirements under the Listing Rules. The Company has complied
with the disclosure requirements governing “connected transactions” or “continuing
connected transactions” in accordance with Chapter 14A of the Listing Rules.
CONNECTED TRANSACTION
On November 30, 2021, the Company acquired the entire capital of Luna Rossa
Challenge S.r.l. from PA BE 1 S.r.l. at a purchase price Euro 12 million plus an
earn-out of up to Euro 5 million, details of which were disclosed in the Company’s
announcement dated November 30, 2021. PA BE 1 S.r.l. is a company 100% owned
by Mr. Patrizio Ber telli, a Chief Executive Officer, an Executive Director, and a
substantial shareholder (as defined in the Listing Rules) of the Company.
As a result of this acquisition, Luna Rossa Challenge S.r.l. ceased to be a connected
person of the Company.
BANK LOANS AND OTHER BORROWINGS
Details of the Group’s bank loans and other borrowings as at December 31, 2021
are set out in Notes 21 and 26 to the Consolidated Financial Statements.
MAJOR CUSTOMERS AND SUPPLIERS
The nature of the Group’s activities are such that the percentage of sales or
purchases attributable to the Group’s five largest customers or suppliers is less
than 30% of the total sales or purchases and the Directors do not consider any one
customer or supplier to have an influence on the Group.
RETIREMENT BENEFIT SCHEMES
Details of the retirement benefit schemes of the Group are set out in Note 27 to
the Consolidated Financial Statements.
MODEL CODE FOR SECURITIES TRANSACTIONS
The Company has adopted the Model Code. Having made specific enquiries to all
Directors, all of them have confirmed that they have complied with the standard
set out in the Model Code throughout the 2021 Year.
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PRADA Group Annual Report 2021 - Directors’ Report EVENTS AF TER THE REPORTING PERIOD – IF APPLICABLE
Details of significant events occurring after the repor ting date – if any – are set out
in Note 44 to the Consolidated Financial Statements.
COMMITMENTS AND CONTINGENCIES
Details of capital commitments and contingent liabilities of the Group as at
December 31, 2021 are set out in Note 28 to the Consolidated Financial Statements.
SUFFICIENCY OF PUBLIC FLOAT
At the time the Company was listed, the Stock Exchange granted a waiver from
strict compliance with Rule 8.08(1) of the Listing Rules (the “Public Float Waiver ”).
Pursuant to the Public Float Waiver, the Company must at all times maintain a
minimum public float of 20%. Based on the information available to the Company
and within the knowledge of the Directors, the Company has maintained such
minimum public float as at the date of this annual repor t.
DIRECTORS’ RESPONSIBILITIES FOR THE CONSOLIDATED FINANCIAL
STATEMENTS
The Directors are responsible for the preparation of the Consolidated Financial
Statements for the year ended December 31, 2021, to ensure such Consolidated
financial statements give a true and fair view of the state of affairs of the Group.
In preparing these Consolidated Financial Statements, the Directors have selected
suitable accounting policies, made judgments and estimates that are prudent
and reasonable, and prepared the Consolidated Financial Statements on a going
concern basis and in accordance with International Financial Repor ting Standards
issued by the International Accounting Standards Board as adopted by the European
Union. The Directors are responsible for keeping proper accounting records for
safeguarding the assets of the Company and the Group.
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PRADA Group Annual Report 2021 - Directors’ Report AUDITOR
The Consolidated Financial Statements and the Separate financial statements of
the Company are audited by Deloitte & Touche S.p.A. Under Italian company law,
the auditor is appointed and its remuneration is resolved every three years by the
shareholders’ general meeting of the Company, on the basis of a proposal made by
the Board of statutory auditors.
On April 13, 2012, the Stock Exchange granted to the Company a waiver from
strict compliance with Rule 13.88 of the Listing Rules, which requires the
appointment of an auditor at each annual general meeting to hold office until
the next annual general meeting. Therefore, the Company’s auditor is appointed
and its remuneration is determined every three years at the shareholders’ general
meeting of the Company under the applicable Italian laws.
On March 14, 2022, the Board resolved, in accordance with the recommendations
received from the Board of statutory auditors and the Audit Committee, to propose
a resolution at the shareholders’ general meeting of the Company on April 28, 2022
to reappoint Deloitte & Touche S.p.A. as the auditor of the Company for a term of
three financial years ending December 31, 2024, and to fix its remuneration.
By order of the Board
Paolo Zannoni
Chairman
March 14, 2022
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PRADA Group Annual Report 2021 - Directors’ Report C O R P O R A T E G O V E R N A N C E
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PRADA Group Annual Report 2021 - Corporate Governance 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 and standards aimed at establishing efficient and transparent operations
within the Group, to protect the rights of the Company’s shareholders, to enhance
shareholder 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 set out in the Corporate Governance Code (the “Code”) in Appendix 14
of the Listing Rules.
COMPLIANCE WITH THE CODE
The Board has reviewed the Company’s corporate governance practices and is
satisfied that such practices have complied with the code provisions set out in
the Code, for the year ended December 31, 2021 (“2021 Year ”). This Corporate
Governance repor t summarizes how the Company has applied the principles and
implemented the code provisions contained in the Code for the 2021 Year.
DIRECTORS’ SECURITIES TRANSACTIONS
The Company has adopted a written procedure governing Directors’ securities
transactions on terms no less exacting than those set out in the Model Code. In
response to specific enquiry by the Company, all Directors confirmed that they
complied with the required standard set out in the Model Code and the Company’s
procedure at all applicable times during the 2021 Year. There were no incidents of
non-compliance during the 2021 Year.
The Company has also adopted a written procedure 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 procedure is on terms no less
exacting than those set out in the Model Code.
Directors’ interests as at December 31, 2021, in the shares of the Company and
its associated corporations (within the meaning of Par t XV of the SFO) are set out
in the Directors’ Repor t.
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PRADA Group Annual Report 2021 - Corporate Governance BOARD OF DIRECTORS
A. BOARD COMPOSITION
The Board is currently made up of eleven Directors, of which five are Executive
Directors, one is Non-Executive Director and five are Independent Non-Executive
Directors. The Board has an appropriate mix of skills and experience that is
relevant to the Company’s strategy, governance and business, and underpins its
management effectiveness and efficiency. Its approach to achieving diversity is set
out in the Board Diversity Policy, which is discussed in more detail in the paragraph
headed Nomination Committee.
Biographical details of the Directors and their relationships, where applicable, are
set out in the Directors and Senior Management section of this annual repor t. The
Company has maintained both on its own website and on the website of the Stock
Exchange an updated list of its Directors, identifying their respective roles and
functions.
B. BOARD MEETINGS
During the 2021 Year, the Board held eight meetings to discuss the Group’s overall
corporate strategic direction and objectives, assess its operational and financial
per formance (including the annual budget and the annual and interim results),
and to approve connected transactions and the Group’s main investments and
corporate reorganization plans. The average attendance rate of the Directors for
these eight meetings (all held through electronic means) was 88.9%.
Minutes of the Board meetings are kept by the Group Corporate Affairs Director and
Joint Company Secretary, Ms. Stefania Cane. Minutes of the Board meetings and
all Board Committees meetings are sent to the relevant Directors and are available
for inspection by any Director by giving reasonable notice to the Company.
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PRADA Group Annual Report 2021 - Corporate Governance C. BOARD AT TENDANCE
The details of attendance at Board meetings, Board Committees meetings and
shareholders’ general meeting held during the 2021 Year are set out in the following
table:
Directors
Executive Directors
Mr. Paolo ZANNONI 1
(Chairman)
Ms. Miuccia PRADA BIANCHI
(Chief Executive Officer)
Mr. Patrizio BERTELLI
(Chief Executive Officer)
Ms. Alessandra COZZANI
(Chief Financial Officer)
Mr. Lorenzo BERTELLI 2
Non-Executive Director
Mr. Stefano SIMONTACCHI
Independent Non-Executive Directors
Ms. Marina Sylvia CAPROTTI 3
Mr. Maurizio CEREDA 4
Mr. Yoël ZAOUI 5
Statutory Auditors
Mr. Antonino PARISI (Chairman)
Mr. Roberto SPADA
Mr. David TERRACINA
Board
Audit
Committee
Remuneration
Committee
Nomination
Committee
Shareholders’
Meeting
2/2
1/2
2/2
2/2
4/4
9/9
4/4
2/2
1/1
2/2
5/5
3/8
8/8
8/8
4/5
6/8
5/5
8/8
5/5
8/8
7/8
8/8
0/1
1/1
1/1
1/1
1/1
1/1
1/1
1/1
Date(s) of Meeting
Jan 5, 2021
Jan 29, 2021
Mar 31, 2021
Feb 26, 2021
May 27, 2021
Mar 10, 2021
Feb 25, 2021
Jun 28, 2021
Apr 1, 2021
Apr 16, 2021
Mar 8, 2021
Dec 17, 2021
July 29, 2021
Jun 4, 2021
Apr 8, 2021
Jun 28, 2021
May 18, 2021
Jul 29, 2021
July 16, 2021
Nov 11, 2021
July 28, 2021
Dec 17, 2021
Nov 11, 2021
Dec 2, 2021
Dec 17, 2021
Average Attendance Rate of Directors
88.9%
100%
100%
91.7%
77.8%
Notes:
1. Member of Remuneration Committee
2. Member of Nomination Committee
3. Chairwoman of Remuneration Committee and Member of Audit Committee and Nomination Committee
4. Chairman of Nomination Committee and Member of Audit Committee and Former Chairman of Remuneration Committee
5. Chairman of Audit Committee and Member of Remuneration Committee
* Mr. Carlo MAZZI, former Chairman of the Board (3/3 attendance); former Member of Remuneration Committee (1/1 attendance) and former
Member of Nomination Committee (2/2 attendance); Shareholders’ Meeting (1/1 attendance)
* Mr. Gian Franco Oliviero MATTEI, former member of the Board (3/3 attendance); former Chairman of Audit Committee (5/5 attendance) and
Nomination Committee (2/2 attendance), former Member of Remuneration Committee (1/1 attendance); Shareholders’ Meeting (1/1 attendance)
* Mr. Giancarlo FORESTIERI, former member of the Board (3/3 attendance); former member of Audit Committee (5/5 attendance); Shareholders’
Meeting (0/1 attendance)
* Mr. Sing Cheong LIU, former member of the Board (3/3 attendance); former member of Nomination Committee (2/2 attendance); Shareholders’
Meeting (1/1 attendance)
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PRADA Group Annual Report 2021 - Corporate Governance D. ROLES AND RESPONSIBILITIES
The Board is the highest decision making body of the Company vested with the
power to manage all ordinary and extraordinary matters of the Company. The
Board has the power to per form all acts it deems necessary or useful to the pursuit
of the Company’s corporate purposes, except for those acts specifically reserved
for approval by the shareholders by relevant laws or the By-laws. In par ticular,
the Board is responsible for setting the overall strategy, as well as reviewing the
operational and financial per formance of the Company and the Group. Therefore,
the Board considers and decides on all matters concerning the overall Group
strategy, including the sustainability strategy, the Group’s strategic objectives,
annual budgets, annual and interim results, approval of major transactions,
connected transactions and any other significant operational and financial matters.
The Board is also responsible for evaluating on an ongoing basis the effectiveness
of the internal control and risk management system.
During the 2021 Year, all Board members were provided with monthly updates,
prepared by the Executive Directors with the suppor t of the management. The
purpose of such updates were to provide a balanced and comprehensive assessment
of the per formance, position and prospects of the Group in sufficient detail, in
order to enable each Director to discharge his/her duties. In addition, due to the
continued uncer tainty at a worldwide level caused by the Covid-19 pandemic, the
Board devoted additional time in meetings held during the 2021 Year to discuss the
actual impact of such uncer tainty on the Group’s business as well as the measures
adopted by the Group to boost its business.
The Executive Directors are responsible for the day-to-day management of the
Company and to make operational and business decisions within the control and
delegation framework of the Company.
The types of decisions delegated by the Board to the management include:
― the preparation of annual and interim results for the Board’s approval;
― the execution of business strategies and other initiatives adopted by the Board;
― the monitoring of operating budgets adopted by the Board;
― the design, implementation and monitoring of the internal control and risk
management system; and
― the compliance with relevant statutory requirements, rules and regulations.
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PRADA Group Annual Report 2021 - Corporate Governance E. NON-EXECUTIVE DIRECTORS
The Non-Executive Directors, including the Independent Non-Executive Directors,
provide the Company with diversified skills, exper tise, qualifications as well as
varied backgrounds and perspectives. They par ticipate in the Board and Board
Committees meetings to provide independent and objective opinions, advice
and judgment on impor tant issues relating to the Company’s strategy, policy,
financial per formance, and take the lead on matters where conflicts of interests
may arise. They also attend the shareholders’ general meetings of the Company
to understand the views of the shareholders. They make a positive contribution
to the development of the Company’s strategy and policy through independent,
constructive and informed comments.
F.
INDEPENDENT NON-EXECUTIVE DIRECTORS
Independent Non-Executive Directors enhance the effectiveness and decision-
making of the Board by providing objective judgement and constructive challenge.
Their independence is assessed upon appointment, annually, and whenever the
circumstances warrant reconsideration.
All of the Independent Non-Executive Directors meet the independence guidelines
set out in Rule 3.13 of the Listing Rules and have, as required by the Listing Rules,
provided the Company with the written confirmations as to their independence.
The independence of the Independent Non-Executive Directors was fur ther
confirmed following the review by the Nomination Committee conducted on March
14, 2022. None of the Independent Non-Executive Directors of the Company has
any business or financial interest in the Company or its subsidiaries.
G. LIABILIT Y INSURANCE FOR THE DIRECTORS
The Company has arranged appropriate liability insurance to indemnify its Directors
for their liabilities arising out of corporate activities. The insurance coverage is
reviewed on an annual basis.
H. DIRECTORS’ TRAINING
Upon appointment to the Board, Directors are provided with a comprehensive
induction program to ensure that they have a thorough understanding of the key
areas of business operations and practices of the Company, as well as their role
and responsibilities under the relevant laws, rules and regulations.
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PRADA Group Annual Report 2021 - Corporate Governance During the 2021 Year, Mr. Paolo Zannoni, Ms. Miuccia Prada Bianchi, Mr. Patrizio
Ber telli, Ms. Alessandra Cozzani, Mr. Lorenzo Ber telli, Mr. Stefano Simontacchi,
Ms. Marina Sylvia Caprotti, Mr. Maurizio Cereda and Mr. Yoël Zaoui par ticipated in
continuous professional training to develop and refresh their knowledge and skills
and received regular updates on development of the laws, rules and/or regulations
relating to Directors’ duties and responsibilities. Ongoing training helps Directors
keep abreast of current trends and issues facing the Group, while enabling them to
update and refresh their skills and knowledge necessary to per form their duties.
Directors were required to provide the Company with their training records during
the 2021 Year. The records are maintained by the Joint Company Secretaries, Ms.
Stefania Cane and Ms. Yuen Ying Kwai.
CHAIRMAN AND CHIEF EXECUTIVE OFFICERS
The Chairman is Mr. Paolo Zannoni and the Chief Executive Officers are Ms.
Miuccia Prada Bianchi and Mr. Patrizio Ber telli. The role of the Chairman is
separate from that of the Chief Executive Officers. The Chairman is vested with
the power to represent the Company and provides leadership to the Board. He is
responsible for ensuring that the Board is functioning effectively and adhering
to good corporate governance practices and procedures. The Chief Executive
Officers, suppor ted by the other Executive Directors and senior management, are
responsible for managing the Company’s business, including the implementation
of major strategies and other initiatives adopted by the Board.
RELATIONSHIPS BET WEEN DIRECTORS
The Chief Executive Officers are husband and wife. Mr. Lorenzo Ber telli (an
Executive Director of the Company) is the son of Ms. Miuccia Prada Bianchi and
Mr. Patrizio Ber telli.
APPOINTMENT OF THE BOARD MEMBERS
At the shareholders’ general meeting of the Company held on May 27, 2021 (“2021
AGM”), the Board (consisting of nine Directors) was appointed for a term of three
financial years. The mandate of the Board will lapse on the date of the shareholders’
general meeting to approve the financial statements of the Company for the year
ending December 31, 2023. Two additional Independent Non-Executive Directors
were appointed at the shareholders’ general meeting of the Company held on
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PRADA Group Annual Report 2021 - Corporate Governance January 28, 2022 for the remaining term of the current Board’s mandate.
Under the Company’s By-laws, the Directors may be re-appointed.
CORPORATE GOVERNANCE FUNCTIONS OF THE BOARD
The Board is responsible for determining and supervising the implementation of
the Company’s corporate governance policies and ensuring its compliance with the
provisions of the Code. The Board’s role in this regard is:
(i)
to develop and review the Company’s policies and practices on corporate
governance;
(ii)
to review and monitor the training and continuous professional development
of directors and senior management;
(iii) to review and monitor the Company’s policies and practices regarding
compliance with legal and regulatory requirements;
(iv) to develop, review and monitor the Code of Ethics, the Organisation,
Management and Control Model (adopted pursuant to Italian Legislative
Decree no. 231 of June 8, 2001) and the Company’s procedures applicable to
directors and employees;
(v)
to review relevant Environmental, Social and Governance (“ESG”) matters;
(vi) to review the Company’s compliance with the Code and the disclosure of such
in the Corporate Governance repor t; and
(vii) to per form any other corporate governance duties and functions set out
by the Listing Rules or other applicable rules, for which the Board shall be
responsible.
During the 2021 Year, the Board completed the following with respect to corporate
governance matters:
(i)
reviewed and approved connected transactions of the Company;
(ii)
reviewed the level of compliance with the Code;
(iii) reviewed the effectiveness of the internal control and risk management
system of the Company through the Internal Audit Depar tment and the Audit
Committee;
(iv) reviewed and approved the corporate social responsibility repor t; and
(v) approved the Group’s main transactions and corporate reorganization plans.
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PRADA Group Annual Report 2021 - Corporate Governance BOARD COMMIT TEES
The Board has established the Audit Committee, the Remuneration Committee
and the Nomination Committee, each chaired by an Independent Non-Executive
Director, in compliance with the Code. The Regulation and membership of all
Board Committees are disclosed on the websites of the Company and the Stock
Exchange. The Regulation of the Committees are no less exacting than those set
out in the Code.
The Board has established a Sustainability Committee on February 4, 2022.
A. AUDIT COMMIT TEE
The Company has established an Audit Committee in compliance with Rule 3.21
of the Listing Rules, where at least one member possesses related financial
management exper tise to discharge the responsibility of the Audit Committee. The
membership of the Audit 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 Committee are to assist the
Board in providing an independent view on the effectiveness of the Company’s
financial repor ting process and its internal control and risk management system,
to oversee the external audit process, the internal audit process, to implement
the Company’s risk management functions and to per form any other duties and
responsibilities assigned to it by the Board.
During the 2021 Year, the Audit Committee held nine meetings (with an attendance
rate of 100%) mainly to review with senior management, the Group’s internal
and external auditor and the Board of Statutory Auditors, the significant internal
and external audit findings and financial matters as required under the Audit
Committee’s Regulation and to make relevant recommendations to the Board. The
Audit Committee’s review covered the audit plan for the 2021 Year, the findings
of both the internal and the external auditors, internal controls, risk assessment,
annual review of the continuing connected transactions of the Group for 2020, tax
and legal updates and the financial repor ting matters (including the annual results
for the year ended December 31, 2020 and the interim financial results as at June
30, 2021), before recommending them to the Board for approval.
The Audit Committee also held two meetings on February 23, 2022 and March 9,
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PRADA Group Annual Report 2021 - Corporate Governance 2022, to review the Group results for the 2021 Year, before recommending them
to the Board for approval.
AUDITOR’S COMPENSATION
The total fees and expenses accrued in favor of Deloitte & Touche S.p.A. and its
network for the audit of the financial statements for the 2021 Year and for the
year ended December 31, 2020, together with non-audit services, are illustrated
below (amounts in thousands of Euro):
Type of service
Audit Firm
Provided to
Audit services
Audit services
Audit services
Deloitte & Touche spa
PRADA spa
Deloitte & Touche spa
Subsidiaries
Deloitte Network
Subsidiaries
Total audit fees to Deloitte Network
Other advisory services
Other advisory services
Deloitte & Touche spa
PRADA spa
Deloitte Network
Subsidiaries
Total non-audit fees to Deloitte Network
twelve months
ended
December 31
2021
twelve months
ended
December 31
2020
508
136
1,129
1,773
24
69
93
450
106
1,066
1,622
31
111
142
Total compensation to Deloitte Network
1,866
1,764
B. REMUNERATION COMMIT TEE
The primary duties of the Remuneration Committee are to make recommendations
to the Board on the Company’s policy and structure for the remuneration package of
Directors and senior management and the establishment of a formal and transparent
procedure for developing policies on such remuneration. The recommendations of
the Remuneration Committee are then put forward to the Board for consideration
and adoption, where appropriate. The Remuneration Committee consists of two
Independent Non-Executive Directors, Ms. Marina Sylvia Caprotti (Chairwoman)
and Mr. Yoël Zaoui and of the Chairman of the Board, Mr. Paolo Zannoni.
During the 2021 Year, the Remuneration Committee held three meetings (with
an attendance rate of 100%) to recommend the aggregate basic remuneration of
the Board for each year of its three-year term, to appoint its Chairwoman, to
review and recommend the remuneration package for directors vested with special
authorities, to review and recommend cer tain updates to the long term incentive
plan and to the management through objective plan for executives and Directors.
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PRADA Group Annual Report 2021 - Corporate Governance REMUNERATION POLICY
The Group’s remuneration policy is aimed at attracting, rewarding and retaining
its personnel, who is considered as the key to the success of the Group’s business.
This ‘Human Capital’ is preserved through constant monitoring in order to maintain
engagement with the Company and a remuneration policy that is in line with the
market. To ensure the Company’s ability to attract and retain talent, the Company’s
remuneration policy is built upon the principles of providing an equitable and
market-competitive remuneration package that suppor ts the per formance culture
and enable the achievement of strategic business goals.
The Group’s remuneration policy is designed to reward and retain highly professional
staff and skilled managers, new graduates and workers, with the cer tainty that
the creation of value is achieved in the medium and long term through constant
organizational learning and the consolidation of collaborators’ experiences and
skills.
The policy comprises fixed and variable, direct and deferred, components tailored
for the relevant position and professional qualifications, and is consistent with the
needs of the various geographical areas.
The Group has an incentive system that links compensation with the annual
per formance of the Group, taking into account the Group’s objectives in net sales,
as well as the objectives of each depar tment.
The Group has adopted long term cash incentive plans for executive directors,
senior managers and key managers for retention purposes. Entitlement to benefits
under such plans would vest in the eligible executive director, senior manager or
key manager subject to the achievement by the Group of one or more economic
objectives and his/her presence within the Group at the end of a three-year period.
O ther incentive schemes specific to sales staff are also in place, and technicians of
the Group may receive a collection bonus following the development of a seasonal
collection.
The aggregate basic remuneration of the Board is approved by the shareholders in a
general meeting. The additional remuneration of each Director vested with special
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PRADA Group Annual Report 2021 - Corporate Governance authorities (that is, the Executive Directors and members of the Board Committees)
is determined by the Board after having considered the recommendation of the
Remuneration Committee and the opinion of the Board of Statutory Auditors.
Under the current remuneration package, the Executive Directors receive
remuneration in the form of fees, salaries and other benefits, discretionary bonuses
and/or other incentives, including non-monetary benefits and other allowances
and contributions such as contributions to retirement benefits schemes. The
Non-Executive Directors (including Independent Non-Executive Directors) receive
remuneration in the form of fees and contributions to retirement benefits scheme,
as the case may be. No Director is allowed to approve his/her own remuneration.
C. NOMINATION COMMIT TEE
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. The Nomination Committee consists of two
Independent Non-Executive Directors, Mr. Maurizio Cereda (Chairman) and
Ms. Marina Sylvia Caprotti and one Executive Director, Mr. Lorenzo Ber telli.
During the 2021 Year, the Nomination Committee held four meetings (with an average
attendance rate of 91.7%) to per form the annual review of the independence of
the Independent Non-Executive Directors for the 2020 year, to recommend to the
shareholders the structure and composition of the Board which was to be elected
at the 2021 AGM for a term of three financial years, to appoint its new Chairman,
to recommend the proposal of the change of number of Directors from nine to
eleven and to recommend the appointment of Ms. Pamela Yvonne Culpepper and
Ms. Anna Maria Rugarli, both being exper ts in the ESG fields, as Independent
Non-Executive Directors of the Company.
The Nomination Committee held one meeting on March 14, 2022 to assess and
confirm the independence of the Independent Non-Executive Directors of the
Company for the 2021 Year.
In the discharge of its duties, the Nomination Committee has recommended and
proposed to the Board for adoption, the Board diversity policy in 2013 and the
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PRADA Group Annual Report 2021 - Corporate Governance Director nomination policy in 2019.
With a view to achieving a sustainable and balanced development, the Company
has viewed diversity at the Board level as an essential element to attain its strategic
objectives and its development. The Board diversity policy was adopted by the
Board in September 2013 (the “Board Diversity Policy”). According to the principles
set out in the Board Diversity Policy, all Board appointments are based on merit
and candidates are proposed and selected based on objective criteria, with due
regard for diversity within the Board. Diversity in this sense encompasses a wide
range of factors, including but not limited to gender, age, cultural and educational
background, professional experience, skills and knowledge. The final selection
is based on merit and the contribution which the candidates can bring to the
Board. The Nomination Committee has been delegated the overall responsibility
for implementing and monitoring the implementation of the Board Diversity Policy.
The Nomination Committee will discuss any revisions that may be required to
ensure the effectiveness of the Board Diversity Policy and will recommend any
such revisions to the Board for its approval.
On March 15, 2019, the Board adopted the nomination policy for directors
(“Director Nomination Policy”), which provides guidance on the proposal for the
appointment or re-appointment of Directors or to fill casual vacancies and sets
out the processes and criteria for the nomination of a candidate for directorship
in the Company. The Company adopted the Director Nomination Policy to regulate
the nomination process of directors so as to ensure that all nominations of
Board members are made in a fair and transparent manner in order to maintain
an appropriate balance of skills, experience and diversity within the Board that
are relevant to the Company’s strategy, governance and business, and which can
contribute to the effectiveness and efficiency of the Board’s management.
The Director Nomination Policy contains a number of factors for assessing
the suitability of a proposed candidate, including the high ethical character
and reputation for integrity, professional qualifications, skills, knowledge and
experience, available time commitment, merit and potential contributions to
the Board, as well as the independence criteria under the Listing Rules (where
applicable).
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PRADA Group Annual Report 2021 - Corporate Governance The Nomination Committee will consider the candidates proposed by shareholders
for new directorship or for re-election and make recommendations for the Board’s
consideration. The Board will then decide whether the proposed candidate shall
be eligible to be appointed or re-appointed, as the case may be, as a director of
the Company and will in turn recommend to shareholders to vote in favor of the
relevant resolutions to be proposed at the shareholders general meeting of the
Company.
D. SUSTAINABILIT Y COMMIT TEE
The Sustainability Committee comprises two Independent Non-Executive Directors,
Ms. Pamela Yvonne Culpepper and Ms. Anna Maria Rugarli, and one Executive
Director, Mr. Lorenzo Ber telli.
The Sustainability Committee assists and suppor ts 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. Moreover, the
Committee suppor ts the preparation and review of non-financial repor ts, including
the annual Sustainability Repor t, and communications concerning sustainability to
be submitted to the Board for approval.
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 laws,
regulations, its By-laws, the principles of proper management and, in par ticular, on
the adequacy and functioning of the organizational, administrative and accounting
structure adopted by the Company.
At the shareholders’ general meeting of the Company held on May 27, 2021, the
Board of Statutory Auditors was appointed for a term of three financial years. The
mandate of the current Board of Statutory Auditors will expire at the shareholders’
general meeting to approve the financial statements of the Company for the year
ending December 31, 2023.
The Board of Statutory Auditors of the Company consists of Mr. Antonino Parisi
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PRADA Group Annual Report 2021 - Corporate Governance (Chairman), Mr. Rober to Spada and Mr. David Terracina. The alternate statutory
auditors are Ms. Stefania Bettoni and Ms. Fioranna Negri.
DIRECTORS’ RESPONSIBILIT Y AND AUDITORS’ RESPONSIBILIT Y FOR
CONSOLIDATED FINANCIAL STATEMENTS
The Directors are responsible for preparing the Consolidated Financial Statements
of the Company for the 2021 Year to ensure such Consolidated Financial
Statements give a true and fair view of the state of affairs of the Group. In preparing
these Consolidated Financial Statements, the Directors have selected suitable
accounting policies and made prudent and reasonable judgments and estimates.
The Consolidated Financial Statements have been prepared on a going concern
basis and in accordance with International Financial Repor ting Standards issued by
the International Accounting Standards Board as adopted by the European Union.
In addition, the Board is generally satisfied of the adequacy of resources, staff
qualifications and experience, training program and budget of the Company’s
accounting and financial repor ting function during the 2021 Year.
With respect to the auditor of the Company, its responsibilities are stated in the
auditor ’s repor ts on the Consolidated Financial Statements.
INTERNAL CONTROL AND RISK MANAGEMENT
The Group’s internal control system has mainly been designed to safeguard the
assets of the Group, to maintain proper accounting standards, to ensure that
appropriate authority has been given for the per formance of acts by the Company,
and to comply with the relevant laws and regulations.
To better control its activities in achieving the established objectives, the Group has
adopted procedures to identify, evaluate and manage the specific risks arising out
of the continuous changes which affect the Group’s operations and the regulatory
framework to which it is subject.
The Board places great impor tance on maintaining a sound and effective internal
control and risk management system to safeguard the shareholders’ investment
and the Company’s assets.
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PRADA Group Annual Report 2021 - Corporate Governance The Board has acknowledged its responsibility for the internal control and risk
management system - including financial, operational and compliance controls
functions - and for the ongoing monitoring and review of its effectiveness. Such
system is designed to manage rather than eliminate risks and is aimed at providing
reasonable and not absolute assurance against material misstatement or loss.
The management, with the suppor t of the Internal Audit Depar tment, has the
responsibility, as delegated by the Board, to identify, evaluate and manage the risk
factors that may affect the Group’s operations and to resolve any material internal
control defects that arise.
In par ticular, the measures, which were adopted by the Group to contain the
effects of the spread of the Covid-19 pandemic on the Company’s activities and
mitigating the health and safety risk at work, have been continuously assessed
during the 2021 Year.
The Internal Audit Depar tment provides an independent review of the adequacy and
effectiveness of the internal control and risk management system. The audit plan
is discussed and agreed every year by the Audit Committee before being submitted
to the Board for approval. In addition to its agreed annual schedule of work, the
Internal Audit Depar tment conducts other special reviews as required. The risk
assessment documents are periodically updated by the Internal Audit Depar tment
with the suppor t of the management, then reviewed by the Audit Committee and
submitted to the Board for approval.
The Board has received specific confirmation from the relevant management
personnel of the Company on the effectiveness of the Group’s internal control and
risk management system throughout the 2021 Year.
During the 2021 Year, no significant control failings or weaknesses were identified.
The Board, with the suppor t from the Audit Committee, has been reviewing the
internal control and risk management system of the Group on an ongoing basis
(with the same frequency as regular Board meetings were held) and is generally
satisfied that the internal control and the risk management system has functioned
effectively and has been adequate for the Group as a whole, throughout the 2021
Year.
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PRADA Group Annual Report 2021 - Corporate Governance Moreover, the Board is generally satisfied of the adequacy of resources, staff
qualifications and experience, training program and budget of the Company’s
internal audit and risk management function during the 2021 Year.
“ORGANISMO DI VIGIL ANZA”
In compliance with Italian Legislative Decree no. 231 of June 8, 2001 (“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 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. Yoël Zaoui,
Independent Non-Executive Director, and Mr. Gianluca Andriani, Head of Internal
Audit Depar tment.
INSIDE INFORMATION
The Company handles and disseminates inside information in accordance with the
requirements of the Securities and Futures Ordinance and the Listing Rules.
With regard to the procedures and internal controls for the handling and
dissemination of inside information, the Company:
― has adopted cer tain policies to ensure potential inside information is identified
and confidentiality is maintained until timely and proper disclosure is made
(the “Policy on Inside Information”);
― has made available on the Company’s intranet the Policy on Inside Information
in order to ensure immediate access to it by the entire Group’s staff;
― has included in the procedures governing Directors and relevant employees a
prohibition on dealing in the Company’s shares whilst in possession of inside
information; and
― has authorized only the Executive Directors and a few selected members of the
management to act as spokespersons and respond to external enquiries.
In addition, the Board has established an Inside Information Committee, which
comprises the Chairman (Mr. Paolo Zannoni), the Chief Executive Officer (Mr.
Patrizio Ber telli) and an Executive Director (Mr. Lorenzo Ber telli). The Inside
Information Committee has been delegated with the power to assess, if necessary,
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PRADA Group Annual Report 2021 - Corporate Governance any potential inside information, and to keep all other Directors timely informed
about its decisions.
JOINT COMPANY SECRETARIES
The Company has appointed Ms. Stefania Cane and Ms. Yuen Ying Kwai as joint
company secretaries. Given that the headquar ter of the Company is located
outside Hong Kong S.A.R., P.R.C. (“Hong Kong”) and the Company is incorporated
in Italy, the Company is of the view that it is in the best interests of the Company
and is of good corporate governance to have Ms. Stefania Cane and Ms. Yuen Ying
Kwai as the joint company secretaries. During the 2021 Year, each of Ms. Stefania
Cane and Ms. Yuen Ying Kwai, respectively, under took over 15 hours of relevant
professional training to update their skills and knowledge. Their biographies are
set out in the Directors and Senior Management section.
SHAREHOLDERS’ RIGHTS
A. CONVENING OF SHAREHOLDERS’ GENERAL MEETING AT SHAREHOLDERS’
REQUEST
Pursuant to Ar ticle 14.2 of the Company’s By-Laws, a shareholders’ general meeting
has to be called by the Board when requested by shareholders representing at least
one-twentieth of the Company’s share capital, provided that the request mentions
the item(s) to be discussed at the meeting. If there is an unjustified delay in calling
the meeting by the Board, action will be taken by the Board of Statutory Auditors.
B. PUT TING FORWARD PROPOSALS AT SHAREHOLDERS’ GENERAL MEETING
Pursuant to Ar ticle 14.5 of the Company’s By-Laws, shareholders who, individually
or jointly, own or control at least one-for tieth of the Company’s share capital may
request in writing for additions to be made to the list of items on the agenda, within
ten days from the notice of call for a shareholders’ general meeting, by setting
out the proposed additions. The proposals should be directed to the Company by
email at corporatesecretary@prada.com.
C. MAKING AN ENQUIRY TO THE BOARD
Enquiries about matters to be put forward to the Board should be directed to
the Company by email at corporatesecretary@prada.com . The Company will not
normally deal with verbal or anonymous enquiries.
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PRADA Group Annual Report 2021 - Corporate Governance D. PROCEDURES FOR SHAREHOLDERS’ TO PROPOSE A PERSON FOR ELECTION
AS DIRECTOR
The procedures for a shareholder to nominate a person for election as a Director
of the Company are set out in Ar ticles 19.3 and 19.4 of the Company’s By-laws,
details of which have been disclosed in the Company’s announcement dated March
30, 2012.
CONSTITUTIONAL DOCUMENTS
On May 27, 2021, the Company has adopted a new set of By-Laws (“Amended By-
Laws”) mainly to provide for the possibility of holding general meetings, Board of
Directors and Board of Statutory Auditors’ meetings by electronic means only, to
inser t the office of an honorary chairperson of the Company to be appointed by
the Board of Directors, to delete references to provisions under the Italian laws
that are not applicable to the Company and to make consequential as well as
other house-keeping amendments to the then By-laws. The Amended By-Laws are
available for viewing on the websites of the Company and the Hong Kong Stock
Exchange.
COMMUNICATION WITH SHAREHOLDERS
A. DIVIDEND POLICY
On March 15, 2019, the Board formalized and adopted a Dividend Policy to set out
the framework that the Company has put in place in relation to dividend payouts to
shareholders. The Company aims to provide its shareholders a sustainable dividend
stream, taking into account financial results, cash flow situation, working capital
requirements, capital expenditures, investment requirements, future operations
and earnings, business conditions and strategies, interests of shareholders and any
statutory or regulatory restrictions (including under Italian law and the Company’s
By-laws) on payment of dividends.
The Board reviews the Dividend Policy from time to time and may adopt changes,
as appropriate, to ensure the effectiveness of the Dividend Policy.
At the 2021 AGM, the shareholders approved the distribution of a final dividend of
Euro 0.035 per share for the financial year ended December 31, 2020, representing
a total dividend of Euro 89,558,840, which was paid on June 30, 2021.
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PRADA Group Annual Report 2021 - Corporate Governance B.
INVESTOR REL ATIONS AND COMMUNICATIONS
The Company endeavors to maintain a high
level of transparency when
communicating with the shareholders and the financial community in general. The
Company has maintained a regular dialogue with and fair disclosure to institutional
shareholders, fund managers, research analysts and the finance media. Investor/
analysts briefings and one-on-one meetings, investor conferences and results
briefings are conducted on a regular basis in order to facilitate communication
between the Company, shareholders and the investment community. The Company
strives to ensure effective and timely dissemination of information to shareholders
and the investment community at all times and will regularly review the arrangements
to ensure its effectiveness.
The Company’s corporate website (www.pradagroup.com) facilitates effective
communications with shareholders, investors and other stakeholders, making
corporate information and other relevant financial and non-financial information
available electronically and on a timely basis. This includes extensive information
about the Group’s per formance and activities via the annual repor t, interim
repor t, social responsibility repor t, press releases, presentations, announcements,
circulars to shareholders and notices of general meetings, etc.
C. SHAREHOLDERS’ MEETINGS
The Company strives to maintain an on-going dialogue with its shareholders.
Shareholders are encouraged to par ticipate in general meetings either in person or
through appointed proxies to attend and vote at meetings for and on their behalf
if they are unable to attend such meetings. The process of the Company’s general
meeting is monitored and reviewed on a regular basis.
The Company uses the shareholders’ general meeting as one of the main channels
for communicating with the shareholders and to ensure that shareholders’ views
are communicated to the Board. At the shareholders’ general meeting, each
substantially separate issue is proposed and considered by a separate resolution
(including the election of individual directors).
In order to mitigate the risks connected with the Covid-19 pandemic, a shareholders’
general meeting of the Company was held on May 27, 2021 exclusively by way of
electronic means (the “2021 AGM”). The Directors, including the Chairman of the
140
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PRADA Group Annual Report 2021 - Corporate Governance Board, the Chairman of the Board Committees, the Joint Company Secretaries,
the auditor of the Company, Deloitte & Touche S.p.A., the statutory auditors and
the scrutineer, attended the 2021 AGM.
The Company has also held a shareholders’ general meeting on January 28, 2022
to appoint two additional Independent Non-Executive Directors (the “2022 SGM”).
All resolutions put to the shareholders at the 2021 AGM and 2022 SGM were
duly passed and the voting results of such resolutions were disclosed in the
announcements of the Company dated May 27, 2021 and January 28, 2022
respectively. Computershare Hong Kong Investor Services Limited, the Company’s
Hong Kong share registrar, acted as scrutineer for the vote taking at the 2021
AGM and 2022 SGM.
D. CORPORATE COMMUNICATIONS
In order to increase the efficiency in communication with shareholders and to
contribute to environmental protection, the Company has made arrangements
from September 2011 to ascer tain how its shareholders wish to receive corporate
communications. Shareholders have the right to choose the language, either
in English or Chinese (or both), and the means of receipt of the corporate
communications, either in printed form or by electronic means through the
Company’s website at www.pradagroup.com.
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C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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PRADA Group Annual Report 2021 - Consolidated Financial Statements CONSOLIDATED STATEMENT OF FINANCIAL POSITION
(amounts in thousands of Euro)
Assets
Current assets
Cash and cash equivalents
Trade receivables, net
Inventories, net
Derivative financial instruments – current
Receivables from, and advance payments to, related parties - current
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of Use assets
Investments in equity instruments
Deferred tax assets
Other non-current assets
Receivables from, and advance payments to, related parties - non-current
Total non-current assets
Total Assets
Liabilities and Shareholders’ Equity
Current liabilities
Short-term lease liability
Short-term financial payables and bank overdraft
Payables to related parties – current
Trade payables
Tax payables
Derivative financial instruments - current
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term lease liability
Long-term financial payables
Long-term employee benefits
Provision for risks and charges
Deferred tax liabilities
Other non-current liabilities
Derivative financial instruments non-current
Total non-current liabilities
Total Liabilities
Share capital
Total other reserves
Translation reserve
Net income / (loss) for the period
Net Equity attributable to owners of the Group
Net Equity attributable to Non-controlling interests
Total Net Equity
Note
December 31
2021
December 31
2020
9
10
11
12
13
14
15
16
17
18
36
19
13
20
21
22
23
24
12
25
20
26
27
28
36
29
12
30
31
981,786
329,547
662,654
1,762
22,866
171,220
2,169,835
1,564,853
829,405
1,956,289
5,696
287,462
144,346
1,125
4,789,176
6,959,011
418,215
249,103
8,360
390,163
144,159
29,683
180,048
1,419,731
1,627,197
492,801
73,819
59,201
29,806
123,027
4,786
2,410,637
3,830,368
255,882
2,496,324
67,434
294,254
3,113,894
14,749
3,128,643
442,392
290,380
666,222
10,691
51,035
194,188
1,654,908
1,506,011
832,445
2,054,338
66,191
251,888
142,712
19,434
4,873,019
6,527,927
403,593
300,577
3,481
289,578
68,863
7,789
153,382
1,227,263
1,729,819
451,200
73,256
45,416
29,250
110,754
9,249
2,448,944
3,676,207
255,882
2,633,673
(3,359)
(54,139)
2,832,057
19,663
2,851,720
Total Liabilities and Total Net Equity
6,959,011
6,527,927
Net current assets
Total Assets less current Liabilities
750,104
5,539,280
427,645
5,300,664
144
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PRADA Group Annual Report 2021 - Consolidated Financial Statements CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(amounts in thousands of Euro)
Note
Net revenues
Cost of goods sold
Gross margin
Operating expenses
Operating income / (loss) - EBIT
Interest and other financial income/(expenses), net
Interest expenses on Lease Liability
Dividends from investments
Total financial income/(expenses)
Income / (loss) before taxation
Taxation
Net income / (loss) for the period
Net income / (loss) - Non-controlling interests
Net income / (loss) - Group
Basic and diluted earnings / (losses) per share
(in Euro per share)
32
33
34
35
36
31
30
37
twelve months
ended
December 31
2021
3,365,667
(818,309)
%
on net
revenues
100%
-24.3%
twelve months
ended
December 31
2020
%
on net
revenues
2,422,739
(679,361)
100%
-28.0%
2,547,358
75.7%
1,743,378
72.0%
(2,057,874)
-61.1%
(1,723,317)
-71.1%
489,484
14.5%
20,061
0.8%
(31,216)
(36,773)
160
(67,829)
-0.9%
-1.1%
0.0%
-2.0%
(29,480)
(42,670)
277
(71,873)
-1.2%
-1.8%
0.0%
-3.0%
421,655
12.5%
(51,812)
-2.1%
(126,552)
-3.8%
(2,556)
-0.1%
295,103
849
294,254
8.8%
0.0%
8.8%
(54,368)
-2.2%
(229)
0.0%
(54,139)
-2.2%
0.115
(0.021)
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145
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PRADA Group Annual Report 2021 - Consolidated Financial Statements
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
(amounts in thousands of Euro)
twelve months
ended
December 31
2021
twelve months
ended
December 31
2020
Net income / (loss) for the period – Consolidated
295,103
(54,368)
A) Items recyclable to P&L:
Change in Translation reserve
Tax impact
Change in Translation reserve less tax impact
Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax impact
B) Item not recyclable to P&L:
Change in Fair Value in equity instruments reserve
Tax impact
Change in Fair Value in equity instruments reserve less tax impact
Change in Actuarial reserve
Tax impact
Change in Actuarial reserve less tax impact
72,230
-
72,230
(14,331)
4,247
(10,084)
845
-
845
4,248
(1,734)
2,514
(66,321)
-
(66,321)
4,402
(1,727)
2,675
(15,206)
-
(15,206)
(4,676)
1,041
(3,635)
Consolidated comprehensive income / (loss) for the period
360,608
(136,855)
Comprehensive income / (loss) for the period - Non-Controlling Interests
1,717
(1,754)
Comprehensive income / (loss) for the period - Group
358,891
(135,101)
146
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PRADA Group Annual Report 2021 - Consolidated Financial Statements
CONSOLIDATED STATEMENT OF CASH FLOWS
(amounts in thousands of Euro)
Income / (loss) before taxation
Profit or loss adjustments
Depreciation and write-downs of the Right of Use assets
Depreciation and amortization of property, plant and equipment and intangible assets
Impairment of property, plant and equipment and intangible assets
Non-monetary financial (income) expenses
Gain on disposal of fixed assets
Interest expenses on Lease Liability
Other non-monetary (income) expenses
Balance Sheet changes
Other non-current assets and liabilities
Trade receivables, net
Inventories, net
Trade payables
Other current assets and liabilities
Cash flows from operating activities
Interest paid (net), including interest paid of Lease Liability
Taxes paid
Net cash flows from operating activities
Purchases of property, plant and equipment and intangible assets
Disposals of property, plant and equipment and intangible assets
Real estate sale to related party
Dividends from investments
Disposals of equity instruments
Acquisition of additional shares from Non-Controlling Interests
Business combination
Net cash flow utilized by investing activities
Dividends paid to shareholders of PRADA spa
Dividends paid to Non-Controlling shareholders
Repayment of Lease Liability
Repayment of current portion of long-term borrowings - third parties
Arrangement of long-term borrowings – third parties
Change in short-term borrowings – third parties
Repayment of loans from related parties
Loans to related parties
Net cash flows generated/(utilized) by financing activities
Change in cash and cash equivalents, net of bank overdrafts
Foreign exchange differences
Opening cash and cash equivalents, net of bank overdraft
Closing cash and cash equivalents, net of bank overdraft
Cash and cash equivalents, net of bank overdraft
Closing cash and cash equivalents, net of bank overdraft
twelve months ended
December 31
2021
twelve months ended
December 31
2020
421,655
(51,812)
426,221
197,997
6,513
25,267
-
36,773
33,848
5,491
(29,790)
11,502
90,297
244
1,226,018
(45,329)
(37,161)
1,143,528
443,910
203,720
21,294
36,700
(36,942)
42,670
(74,598)
59,210
16,186
9,134
(34,894)
56,435
691,013
(54,374)
(44,220)
592,419
(219,628)
(109,557)
364
20,000
103
76,464
(7,827)
(6,741)
(137,265)
(89,559)
(1,674)
(392,805)
(217,277)
240,000
(33,412)
-
-
(494,727)
511,536
27,858
442,392
981,786
981,786
981,786
2,320
-
277
-
-
(42,950)
(149,910)
-
-
(330,319)
(205,593)
175,000
(35,608)
2,000
(750)
(395,270)
47,239
(25,916)
421,069
442,392
442,392
442,392
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PRADA Group Annual Report 2021 - Consolidated Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN EQUIT Y
(AMOUNTS IN THOUSANDS OF EURO, EXCEPT NUMBER OF SHARES)
(amounts in
thousands of
Euro)
Number of
shares
Share
Capital
Tran-
slation
reserve
Share
premium
reserve
Cash
flow
hedge
reserve
Actua-
rial
reser-
ve
Fair Value
Invest-
ments
in equity
instru-
ments
Reserve
Other
reserves
Total other
reserves
Net result
for the
period
Net Equity
attribu-
table to
owners of
the Group
Equity
Net
Equity at-
tributable
Non-con-
trolling
interests
Total
Net
Equity
2,558,824,000 255,882
61,437 410,047 (8,469)
(4,516)
(9,982) 2,006,971 2,394,051
255,788 2,967,158
21,417 2,988,575
-
-
-
-
-
-
-
-
-
-
-
-
- (64,796)
-
2,675
-
-
-
-
-
-
204,612
204,612 (204,612)
51,176
51,176
(51,176)
-
-
-
-
-
-
-
2,675
(54,139)
(116,260)
(1,755)
(118,015)
-
-
-
- (3,635) (15,206)
-
(18,841)
-
(18,841)
1
(18,840)
2,558,824,000 255,882
(3,359) 410,047 (5,794)
(8,151) (25,188) 2,262,759 2,633,673
(54,139) 2,832,057
19,663 2,851,720
-
-
-
-
-
-
-
-
-
-
(574)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(54,139)
(54,139)
54,139
-
-
-
(89,559)
(89,559)
-
-
-
-
(89,559)
(1,674)
(91,233)
-
(141)
(141)
- 13,351
922
14,273
-
14,273
-
14,273
-
(66)
-
-
(66)
-
(640)
(4,816)
(5,456)
-
-
-
-
(1,128)
(1,128)
-
(1,128)
-
(1,128)
-
-
(10,084)
294,254
355,537
1,712
357,249
-
71,367
- (10,084)
-
-
-
- 2,509
845
-
3,354
-
3,354
5
3,359
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
Balance at
December 31,
2019
Allocation of
2019 net income
- retained
earnings
Allocation of
2019 net income
- extraordinary
reserves
Comprehensive
income/(loss)
for the period
(recyclable to
P&L)
Comprehensive
income/(loss)
for the period
(not recyclable
to P&L
Balance at
December 31,
2020
Allocation of
2020 net loss
Dividends
Capital
reduction in
subsidiaries
Gains/(losses)
on sales of
Investments in
equity instru-
ments
Acquisition of
additional shares
from Non-Con-
trolling Interests
Acquisition of
Luna Rossa
Challenge srl
Comprehensive
income/(loss)
for the period
(recyclable to
P&L)
Comprehensive
income/(loss)
for the period
(not recyclable
to P&L
Balance at
December 31,
2021
148
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PRADA Group Annual Report 2021 - Consolidated Financial Statements P R A D A S P A S E P A R A T E F I N A N C I A L S T A T E M E N T S
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PRADA Group Annual Report 2021 - PRADA spa Separate Financial Statements PRADA SPA STATEMENT OF FINANCIAL POSITION
(amounts in thousands of Euro)
Assets
Current assets
Cash and cash equivalents
Trade receivables, net
Inventories, net
Derivative financial instruments - current
Financial receivables and other receivables from parent company,
subsidiaries, associates and related parties - current
Other current assets
Total current assets
Non-current assets
Property, plant and equipment
Intangible assets
Right of Use assets
Investments
Deferred tax assets
Other non-current assets
Derivative financial instruments - non-current
Financial receivables and other receivables from parent company,
subsidiaries, associates and related parties - non-current
Total non-current assets
Total Assets
Liabilities and Shareholders' equity
Current liabilities
Short-term lease liability
Short-term financial payables and bank overdraft
Financial payables and other payables to parent company,
subsidiaries, associates and related parties - current
Trade payables
Tax payables
Derivative financial instruments - current
Other current liabilities
Total current liabilities
Non-current liabilities
Long-term lease liability
Long-term financial payables
Long-term employee benefits
Provisions for risks and charges
Deferred tax liabilities
Other non-current liabilities
Derivative financial instruments - non-current
Financial payables and other payables to parent company,
subsidiaries, associates and related parties - non-current
Total non-current liabilities
Total Liabilities
Share capital
Total other reserves
Net income / (loss) for the period
Total Net Equity
December 31
2021
December 31
2020
396,777
683,087
269,947
3,058
415,146
95,509
1,863,524
788,786
205,587
343,835
907,468
43,324
70,304
3,518
72,525
2,435,347
4,298,871
50,507
171,973
86,000
635,780
84,781
29,683
145,298
1,204,022
312,767
441,013
39,810
16,051
1,960
116,661
4,786
-
933,048
2,137,070
255,882
1,595,269
310,650
2,161,801
103,295
526,652
295,694
12,445
265,627
143,154
1,346,867
791,076
200,497
294,420
903,272
43,923
74,457
6,768
201,298
2,515,711
3,862,578
42,146
177,787
63,801
635,002
24,124
7,789
145,773
1,096,422
275,612
385,868
35,704
1,581
1,711
104,000
9,249
13,878
827,603
1,924,025
255,882
1,698,847
(16,176)
1,938,553
Total Liabilities and Total Net Equity
4,298,871
3,862,578
150
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PRADA Group Annual Report 2021 - PRADA spa Separate Financial Statements
PRADA SPA STATEMENT OF PROFIT OR LOSS
(amounts in thousands of Euro)
Net revenues
Cost of goods sold
Gross Margin
Operating expenses
Operating income / (loss) - EBIT
Interest and other financial income / (expenses), net
Interest expenses on Lease Liability
Dividends from investments
Total financial income/(expenses)
Income / (loss) before taxation
Taxation
twelve months ended
December 31
2021
twelve months ended
December 31
2020
1,854,692
(719,202)
1,188,628
(598,424)
1,135,490
590,204
(675,067)
(595,638)
460,423
(45,679)
(3,420)
23,785
(25,314)
(5,434)
(52,856)
(2,952)
37,014
(18,794)
435,109
(24,228)
(124,459)
8,052
Net income / (loss) for the period
310,650
(16,176)
PRADA SPA STATEMENT OF COMPREHENSIVE INCOME
(amounts in thousands of Euro)
Net income / (loss) for the period
A) Items recyclable to P&L:
Change in Cash Flow Hedge reserve
Tax impact
Change in Cash Flow Hedge reserve less tax impact
B) Items not recyclable to P&L:
Change in Fair Value in equity instruments reserve
Tax impact
Change in Fair Value in equity instruments reserve less tax impact
Change in Actuarial reserve
Tax impact
Change in Actuarial reserve less tax impact
twelve months ended
December 31
2021
twelve months ended
December 31
2020
310,650
(16,176)
(17,695)
4,247
(13,448)
845
-
845
634
(152)
482
5,809
(1,394)
4,415
(15,206)
-
(15,206)
(346)
405
59
Comprehensive income / (loss) for the period
298,529
(26,908)
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PRADA Group Annual Report 2021 - PRADA spa Separate Financial Statements
PRADA SPA STATEMENT OF CASH FLOWS
(amounts in thousands of Euro)
Income / (loss) before taxation
Profit or loss adjustments
Depreciation and write-downs of the Right of Use assets
Depreciation and amortization of property, plant and equipment and intangible assets
Impairment of property, plant and equipment and intangible assets
Losses/(gains) on disposal of non-current assets
Impairment of investments
Interest expenses on Lease Liability
Non-monetary financial (income) expenses
Other non-monetary (income) expenses
Balance sheet changes
Trade receivables, net
Inventories, net
Trade payables
Other current assets and liabilities
Other non-current assets and liabilities
Cash flows from operating activities
Interest paid (net), including interest paid of Lease Liability
Taxes paid
Net cash flows from operating activities
Purchase of property, plant and equipment and intangible assets
Disposal of property, plant and equipment and intangible assets
Investments in subsidiaries
Financial investments
Dividends from investments
Net cash flow utilized by investing activities
Dividends paid to shareholders
Change in short-term borrowing - third parties
Change in intercompany loans
Loans repaid by subsidiaries
Repayment of Lease Liability
Loans made to subsidiaries
Repayment of short-term portion of long-term borrowings - third parties
Arrangement of long-term borrowings - third parties
Net cash flows utilized by financing activities
Change in cash and cash equivalents, net of bank overdraft
Fratelli Prada spa - Opening cash and cash equivalents, net of bank overdraft
Opening cash and cash equivalents, net of bank overdraft
Closing cash and cash equivalents, net of bank overdraft
Cash and cash equivalents, net of bank overdraft
Closing cash and cash equivalents, net of bank overdraft
twelve months ended
December 31
2021
twelve months ended
December 31
2020
435,109
(24,228)
48,354
71,479
1,030
(18)
39,216
3,420
(27,321)
31,278
(162,624)
13,663
1,138
4,628
(6,010)
453,342
(1,714)
8,560
460,187
(74,901)
20,000
(92,826)
76,363
23,785
(47,579)
(89,559)
-
(4,447)
23,537
(56,132)
(42,640)
(189,889)
240,000
(119,130)
293,478
-
103,293
396,771
396,771
396,771
43,561
65,242
515
(36,748)
40,353
2,952
(34,537)
24,087
224,162
31,769
(230,123)
19,222
7,591
133,818
(2,814)
(4,159)
126,845
(49,054)
2,320
(6,614)
-
37,014
(16,334)
-
(45,000)
27,563
14,052
(53,728)
(23,486)
(177,889)
175,000
(83,488)
27,023
5,574
70,696
103,293
103,293
103,293
152
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PRADA Group Annual Report 2021 - PRADA spa Separate Financial Statements PRADA S.P.A. STATEMENT OF CHANGES IN EQUIT Y
(AMOUNTS IN THOUSANDS OF EURO, EXCEPT NUMBER OF SHARES)
(amounts in thousands
of Euro)
Number of
shares
Share
capital
Share
premium
reserve
Legal
reserve
Other
reserves
Retained
earnings
Cash
flow
hedge
reserve
Fair Value
Invest-
ments in
equity in-
struments
Reserve
Total
other
reserves
Net
result
for the
period
Total
equity
2,558,824,000 255,882 410,047 51,176 182,899
881,086 (3,711)
(9,982) 1,511,515 249,027 2,016,425
Balance at December
31 2019
Allocation of 2019 net
income
- retained earnings
Allocation of 2019 net
income - extraordinary
reserves
Merger of
F.lli Prada spa
Comprehensive income/
(loss) for the period
(recyclable to P&L)
Comprehensive income/
(loss) for the period
(not recyclable to P&L)
Balance at December
31 2020
Allocation of 2020
net loss
Other movements
Dividends
Comprehensive income/
(loss) for the period
(recyclable to P&L)
Comprehensive income/
(loss) for the period
(not recyclable to P&L)
Balance at December
31 2021
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
197,851
51,176
-
(50,965)
-
-
-
-
4,415
-
-
-
-
197,851 (197,851)
51,176 (51,176)
-
-
(50,965)
-
(50,965)
4,415 (16,176)
(11,761)
59
-
(15,206)
(15,146)
-
(15,147)
2,558,824,000 255,882 410,047 51,176 234,075 1,028,031
704
(25,188) 1,698,846 (16,176) 1,938,552
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(16,176)
929
(51,176)
(38,382)
-
-
-
-
(16,176)
16,176
-
13,351
14,280
(89,558)
-
-
14,280
(89,558)
- (13,448)
(13,448) 310,650
297,202
-
-
482
-
845
1,327
-
1,327
2,558,824,000 255,882 410,047 51,176 182,899
974,884 (12,744)
(10,992) 1,595,271 310,650 2,161,802
-
-
-
-
-
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PRADA Group Annual Report 2021 - PRADA spa Separate Financial Statements
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N O T E S T O T H E C O N S O L I D A T E D F I N A N C I A L S T A T E M E N T S
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 1. GENERAL INFORMATION
PRADA spa (“Prada” or the “Company”), together with its subsidiaries (collectively
the “Group” or “Prada Group”), is listed on the Hong Kong Stock Exchange (HKSE
code: 1913). The Prada Group is a leading player 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 Marchesi 1824 and in the eyewear and fragrance industries under
licensing agreements.
The Group owns 23 production facilities (20 in Italy, 1 in the United Kingdom, 1
in France and 1 in Romania) and its products are sold in 70 countries worldwide
mainly through its directly operated stores, which numbered 635 at December 31,
2021. The Prada Group’s products are also sold through the brands’ e-commerce
channels, in selected high-end depar tment stores, by independent retailers in very
exclusive locations, and by impor tant 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 December
31, 2021 (the repor ting date of these Consolidated Financial Statements), 79.98%
of the share capital was owned by PRADA Holding spa, a company domiciled in
Italy, and the remainder consisted of floating shares on the Main Board of the
Hong Kong Stock Exchange.
The Consolidated Financial Statements were approved and authorized for issue by
the Board of Directors of PRADA spa on March 14, 2022.
2. BASIS OF PREPARATION
The Consolidated Financial Statements of the Prada Group as at December 31,
2021, which consist of the “Consolidated Statement of Financial Position”, the
“Consolidated Statement of Profit or Loss for the twelve months ended December
31, 2021”, the “Consolidated Statement of Comprehensive Income for the twelve
months ended December 31, 2021”, the “Consolidated Statement of Cash Flows
for the twelve months ended December 31, 2021”, the “Consolidated Statement
of Changes in Shareholders’ Equity” and the “Notes to the Consolidated Financial
Statements”, have been prepared in accordance with the International Financial
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements Repor ting Standards (“IFRSs”) issued by the International Accounting Standards
Board (“IASB”) and endorsed by the European Union.
At the date of presentation of these 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.
IFRS also refers to all International Accounting Standards (“IAS”) and all
interpretations of the International Financial Repor ting 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
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 Consolidated Financial Statements are
presented in Euro, the functional currency of PRADA spa.
The Consolidated Financial Statements have been prepared on a going concern
basis.
3. NEW IFRS AND AMENDMENTS TO IFRS
Amendments to existing standards issued by the International Accounting
Standard Board (“IASB”), endorsed by the European Union and applicable to the
Prada Group from Januar y 1, 2021.
Amendments to existing standards
Effective date for
Prada Group
EU endorsement dates
Amendments to IFRS 4 Insurance Contracts – deferral of IFRS 9
January 1, 2021
Endorsed in December 2020
Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16 Interest Rate Benchmark Reform-
Phase 2
January 1, 2021
Endorsed in January 2021
Amendments to IFRS 16 Leases: Covid-19-Related Rent Concessions beyond 30 June 2021
(issued on 31 March 2021)
April 1, 2021
Endorsed in August 2021
The introduction of these amendments, with the exception of that relating to IFRS
16, did not have any effect on these Consolidated Financial Statements.
AMENDEMENT TO “IFRS 16 LEASES” REGARDING COVID-RELATED RENT
CONCESSIONS
On March 31, 2021, the IASB extended by one year the period of application
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements of the IFRS 16 practical expedient previously approved by the IASB on May 28,
2020. With this amendment, issued in response to the duration of the Covid-19
pandemic, immediate recognition in profit and loss of rent discounts is applicable
if the reduction regards payments originally due on or before June 30, 2022 (and
no longer by the original date of June 30, 2021), whereas the other terms of the
standard and practical expedient adopted in 2020 remain valid.
The amendment is effective for annual repor ting periods beginning on or after
April 1, 2021.
Note that during the annual repor ting period, the Group accounted for Covid-
related concessions of Euro 34.4 million in the Statement of Profit or Loss, basically
none of which regarded the 2021 amendment, as no significant related cases had
emerged at the repor ting date.
Amendments to existing standards issued by the IASB, endorsed by the European
Union, but not yet applicable to the Prada Group because they are effective for
annual periods beginning on or af ter Januar y 1, 2022.
Amendments to existing standards
IFRS 3 Business Combinations
IAS 16 Property, Plant and Equipment
IAS 37 Provisions, Contingent Liabilities and Contingent Assets
Annual Improvements 2018-2020
IFRS 17 Insurance contracts
Effective date for
Prada Group
EU endorsement status
January 1, 2022
Endorsed in June 2021
January 1, 2022
Endorsed in June 2021
January 1, 2022
Endorsed in June 2021
January 1, 2022
Endorsed in June 2021
January 1, 2022
Endorsed in November 2021
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting policies (issued on 12 February 2021)
January 1, 2023
Endorsed in March 2022
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors:
Definition of Accounting Estimates (issued on 12 February 2021)
January 1, 2023
Endorsed in March 2022
New standards and amendments issued by the IASB, but not yet endorsed by the
European Union at December 31, 2021.
New IFRS Standards and Amendments to existing standards
Date of possible
application
EU endorsement status
Amendment to IAS 1 Presentation of Financial Statements (issued on 23 January 2020)
January 1, 2023
Not endorsed yet
Amendments to IAS 12 Income taxes: deferred tax related to assets and liabilities arising
from a single transaction
Amendments to IFRS 17 Insurance contracts: Initial application of IFRS 17 and IFRS 9 -
Comparative information ( issued on 9 December 2021)
January 1, 2023
Not endorsed yet
January 1, 2023
Not endorsed yet
At the date of the Consolidated Financial Statements, the Directors had not yet
completed the analysis necessary to assess the impacts of the new standards and
interpretations not yet applicable to the Prada Group, in terms of both those
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements already endorsed by the European Union and those undergoing the endorsement
process.
4. SCOPE OF CONSOLIDATION
The consolidated financial information comprises the accounts of PRADA spa and
the Italian and foreign companies over which such the Company has the right
to exercise control either directly or indirectly. An investor controls an investee
when it is exposed, or has rights, to variable returns from its involvement with
the investee and has the ability to use that power to affect its returns from the
investee.
The companies in which the Group has more than 50% of the voting rights or that
are controlled by the Group in some other way are consolidated using the full
consolidation method from the date on which the Group gains control until the
date on which that control ceases.
Associated under takings (“associates”) are consolidated using the equity method.
Associates are companies in which the Group has significant influence but does not
exercise control. Significant influence is defined as the power to par ticipate in the
financial and operating policy decisions of the investee without having control or
joint control.
The companies included in the Consolidated Financial Statements are listed in
Note 42.
5. BASIS OF CONSOLIDATION
The main consolidation procedures used to prepare the Consolidated Financial
Statements are explained below:
― the separate financial statements of PRADA spa are prepared in accordance
with IFRS and those of its subsidiaries are adjusted, as necessary, to comply
with IFRS and with the standards applied throughout the Group. The financial
statements used to prepare the consolidated financial information all have the
same repor ting date;
― the financial statements of subsidiaries are consolidated using the full
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements consolidation method, incorporating the entire amount of the assets, liabilities,
revenues and expenses of each company irrespective of the percentage of
ownership held, and eliminating the carrying amount of the consolidated equity
interests owned directly or indirectly by the Company against the corresponding
por tion of the related equity;
― for fully consolidated companies that are not wholly owned by the Parent
Company, the por tions of equity and annual profit or loss belonging to third
par ties are shown separately as “equity attributable to non-controlling interests”
in the Consolidated Statement of Financial Position and “net income/(loss) of
non-controlling interests” in the Consolidated Statement of Profit or Loss;
― for business combinations, the difference between the purchase price of
the equity interest acquired and the corresponding por tion of equity at the
acquisition date is allocated, if positive, to the identifiable assets acquired
and liabilities assumed measured at their fair value. Any residual amount, if
positive, is recognized as goodwill, and if negative is recognized immediately in
the Statement of Profit or Loss. The difference between the cost of acquisition
of an additional controlling interest and the related value of the interest
acquired is recognized directly in equity reserves. If the business combination
is achieved in stages (a step acquisition), the previous held interest owned in
the company acquired is remeasured at fair value at the date on which control is
acquired. Differences identified in this manner are recognized in profit or loss.
In business combinations under common control, the difference between the
purchase price of the equity interest acquired and the corresponding por tion
of equity is recognized directly in equity.
― the acquisition cost of an equity interest or an activity that does not constitute
a business, and which therefore does not originate a business combination, is
allocated to the individual assets acquired and liabilities assumed measured at
their fair value at the acquisition date;
― the resulting profits, losses, assets and liabilities of associates are accounted
for using the equity method. Under such method, the investments in associates
are recognized in the Statement of Financial Position at cost, subsequently
adjusted to reflect post-acquisition changes and any impairment losses. Losses
exceeding the Parent Company’s owners’ interest in the associate are not
recognized, unless the Group has taken on an obligation to cover such losses.
An excess of the cost of acquisition over the Company’s share of the fair value of
the assets acquired and liabilities assumed at the acquisition date is accounted
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements for as goodwill. Goodwill is included in the carrying amount of the investment
and is tested for impairment. A deficit between the cost of acquisition and
the Company’s share of the fair value of the identifiable assets, liabilities and
contingent liabilities at the acquisition date is recognized in the Statement of
Profit or Loss of the period of acquisition;
― during the consolidation process, all payables, receivables, expenses and
revenues deriving from transactions between the consolidated companies are
eliminated in full. Any unrealized profits and losses deriving from transactions
between the Group’s consolidated companies and included in the inventory
valuation at the repor ting date are eliminated. Unrealized losses are eliminated
except where the transaction provides evidence of impairment of the asset
transferred, in which case the value of the transferred asset is written down;
― dividends distributed by the consolidated companies are eliminated from the
Profit or Loss Statement and added to the retained earnings if and to the extent
that they were extracted from them;
― the financial statements of subsidiaries are prepared in their respective local
currency. Assets and liabilities are translated into Euro using the end-of-period
exchange rate, and income and expenses are translated using the average
exchange rate of the period. If translation at the average exchange rate does
not present the transaction fairly, the exchange rate prevailing at the date of
the transaction is used to translate its effect on the consolidated profit or loss.
Differences arising on translating Statement of Financial Position balances at
the beginning and at the end of the period, and differences arising on translating
Statement of Profit or Loss items at the average exchange rate for the period
(or another exchange rate, as mentioned above) and at the end of the period,
are recognized in a translation reserve in consolidated equity until the disposal
of the investee. The translation reserve includes the accumulated translation
differences generated since first-time consolidation (January 1, 2004). In the
preparation of the Consolidated Statement of Cash Flows, the cash flows of
subsidiaries are translated using the average exchange rate for the period.
Exchange differences arising on a monetary item qualified as a net investment
in a foreign operation are initially recognized in the translation reserve and
subsequently released to profit or loss upon disposal of the investment;
― the repor ting currency of the Consolidated Financial Statements is the Euro.
All amounts are expressed in thousands of Euro unless stated otherwise.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 6. MAIN ACCOUNTING POLICIES
CASH AND CASH EQUIVALENTS
Cash and cash equivalents are recognized at their nominal value. Cash equivalents
include all highly liquid investments originally with a shor t-term maturity.
Solely for the purpose of the Statement of Cash Flows, cash and cash equivalents
include cash on hand, bank accounts and deposit accounts. Bank overdrafts and
the current por tions due to banks on medium and long-term loans are recognized
as shor t-term financial payables and bank overdrafts.
TRADE RECEIVABLES AND PAYABLES
Trade receivables are recognized at their nominal value net of the bad debt provision
determined on the basis of the requirements set by IFRS 9. According to this
standard, receivables are written off following the application of the “expected loss”
impairment method together with, if necessary, fur ther impairments recognized
upon specific doubtful conditions on the single credit positions.
Trade accounts payable are recognized at nominal amount.
Transactions denominated in foreign currency are recognized at the exchange rate
as at the date of the transaction. At the repor ting date, transactions denominated in
foreign currencies are translated using the exchange rate as at the repor ting date.
Gains and losses arising from the translation are reflected in the profit or loss.
INVENTORIES
Raw materials, work in progress and finished products are recognized at the lower
of acquisition cost, production cost and net realizable value. Cost comprises
direct production costs and those indirect that have been incurred in bringing the
inventories to their present location and condition. Acquisition or production cost
is determined on a weighted average basis.
Provisions, adjusting the value of the inventories, are made for slow moving,
obsolete inventories or if, in the end, the estimated selling price or realizable
value is reasonably expected to be lower than the cost.
PROPERT Y, PLANT AND EQUIPMENT
Proper ty, plant and equipment are recognized at purchase cost or production cost,
including any charges directly attributable. They are shown net of accumulated
depreciation calculated on the basis of the useful lives of the assets and any
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements impairment losses.
Ordinary maintenance expenses are charged in full to the profit or loss for the
year they are incurred. Extraordinary maintenance expenses are capitalized if they
increase the value or useful life of the related asset.
The costs included under leasehold improvements relate to refurbishment works
carried out on premises, mainly commercial, not owned by the Group.
Depreciation methods, useful lives and net book values are reviewed annually. The
depreciation rates representing the useful lives are listed below:
Category of Property, Plant and Equipment
Depreciation rate or period
Land
Buildings and construction
Production plant and equipment
Improvements to leased retail premises
Improvements to leased industrial and corporate premises
Furniture and fixture retail
Furniture and fixture corporate and industrial
Other tangible fixed assets
not depreciated
2.5% - 10%
4% - 25%
Shorter of lease term (*) and useful life
Shorter of lease term (*) and useful life
Shorter of lease term (*) and useful life
7% - 20%
4% - 50%
(*) the lease term includes the renewal period when the exercise of the option is deemed reasonably certain
When assets are sold or disposed of, their cost and accumulated depreciation are
eliminated from the financial statements and any gains or losses are recognized in
the profit or loss.
If the term of a lease agreement is terminated in advance, the useful life of fixed
assets related to such premise is adjusted consistently.
The value of land is stated separately from the value of buildings. Depreciation is
only charged on the value of buildings.
Every year-end, a valuation aimed at monitoring indications of impairment over
the value of proper ty, plant and equipment is per formed. If any such indications
are found, an impairment test is used to estimate the recoverable amount of the
asset. The impairment loss is determined by comparing the carrying value of the
asset with its recoverable value, which means the higher of the fair value of the
asset less costs to sell and its value in use.
Fair value is determined based on the best information available to reflect the
amount that could be obtained from the disposal of the asset at the repor ting date.
Value in use is an estimate of the present value of future cash flows expected
to derive from the asset tested for impairment. Impairment losses are recorded
immediately in the profit or loss.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements INTANGIBLE ASSETS
Only identifiable assets, controlled by the Group and capable of producing future
economic benefits are included in intangible assets.
Intangible assets include trademarks, licenses, store lease acquisition costs,
software, development costs and goodwill.
Trademarks are recognized at cost or at the value attributed upon acquisition
and include the cost of trademark registration in the various countries in which
the Group operates. The Directors estimate a useful life of between 20 and 40
years for trademarks. This assumes there are no risks or limitations on control
over their use. Every trademark is tested for impairment whenever indicators of
impairment emerge. The useful life of trademark registration costs is estimated
to be 10 years. The caption trademark also includes other intellectual proper ty
rights which useful life is determinated in accordance with the relevant contracts.
Store lease acquisition costs (or key money) represent expenditures incurred to
enter into or take over retail store lease agreements. When the lease contracts
fall under the application of IFRS 16 Leases, the store lease acquisition is included
within the initial direct costs that contribute to the formation of the Right of Use
assets. O therwise, the store lease acquisition is an intangible assets.
Intangible assets with a definite useful life are amor tized on a straight-line basis
at the following rates:
Category of intangible assets
Amortization rate or period
Trademarks and other intellectual property rights
Store lease acquisition costs
Software
Development costs and other intangible assets
Shorter of lease term (*) and useful life
2.5% - 25%
10% - 33%
10% - 33%
(*) the lease term includes the renewal period when the exercise of the option is deemed reasonably certain
Goodwill, an asset that produces future economic benefits, but which is not
individually identified and separately measured, is initially recognized at cost.
Goodwill is not amor tized but tested for impairment every year to check if its
value has been impaired. If specific events or altered circumstances indicate the
possibility that goodwill has been impaired, the impairment test is per formed more
frequently.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements For impairment test purposes, goodwill acquired in a business combination shall
be, from the acquisition date, allocated to each of the acquirer ’s cash generating
units that are expected to benefit from the synergies of the combination. Cash
Generating Units are determined based on the organizational structure of the
Group and represent groups of assets that generate independent cash inflows from
continuing use of the relevant assets. The Prada Group’s Cash Generating Units
include trademarks, sales channels and geographical areas.
The cash generating units to which goodwill has been allocated are tested for
impairment annually and, whenever there is an indication of impairment, the
carrying value of the cash generating unit is compared with their recoverable
amount.
The carrying amount of CGUs tested for impairment for consolidation purposes is
represented by the net invested capital, which means the net equity adjusted by
the net financial position including the lease liability.
Recoverable amount is the higher of fair value less costs to sell and value in use, as
calculated based on an estimate of the future cash flows expected to derive from
the cash generating unit tested for impairment. Cash flow projections are based
on budget, forecast and on long-term predictions (generally five years) prepared
by the management.
An impairment loss is recognized in the profit or loss for the period whenever the
recoverable amount of the cash generating unit is lower than its book value. An
impairment loss recognized for goodwill is never reversed in subsequent years.
RIGHT OF USE ASSETS AND LEASE LIABILIT Y
Right of Use and Lease Liabilities are regulated by IFRS 16 Leases which apply to
all lease contracts that provide for the payment of fixed rents, including those
indexed and those that set a guaranteed minimum.
The Group recognize the Right of Use assets and the Lease Liability at the
commencement date of the lease and based on the lease term.
The identification of a lease term is very impor tant, especially in the field of
real estate, because the form, legislation and common business practice can vary
considerably from one jurisdiction to another. The Group determines the lease
term as the non-cancellable period of a lease, together with the periods covered
by an option to extend or to terminate the lease under the control of the Company.
The management evaluates the exercise of the option if it’s considered “reasonably
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements cer tain” based on several factors and circumstances that create an incentive for the
lessee to exercise, or not to exercise the option, including any expected changes
in facts and circumstances from the commencement date until the exercise date
of the option.
The lease term begins on the ‘commencement date’ of the lease. This is defined
as the date on which the lessor makes an underlying asset available for use by a
lessee. It is the date on which the lessee initially recognises and measures Right of
Use assets and lease liabilities.
The commencement date is not necessarily the date on which star t the depreciation
of the Right of Use. For retail premises, the asset leased is ready for use when
works on premises are completed and, therefore, the depreciation of Right of Use
shall begin after the completion of works necessary to bring a store to its working
condition according to the management instructions (consistently with the IAS 16
requirements).
The Right of Use assets is measured at cost, identified as the initial measurement
of the lease liability, increased by any initial direct costs incurred by the lessee
(key money, legal fees, agent fees or other incremental costs incurred to conclude
the contract) or by any dismantling cost necessary to bring back the premises to
its original condition. The Right of use Assets is depreciated over the Lease term.
The Lease Liability is measured at the present value of the lease payments that
are not paid at that date. The lease payments are discounted using an incremental
borrowing rate calculated at Group level. The profit or loss caption “Interest
expenses IFRS 16” represent the adjustment to the present value of the Lease
Liability. Since most leases stipulated by the Group do not have an interest rate
implicit in the lease, the discount rate applicable to future lease payments is
determined as the risk-free rate of each contract currency in which the leases are
stipulated, with payment dates based on the terms of the specific lease, increased
by the parent company’s credit spread.
A lease modification occurs when there is a change in the scope of a lease, or the
consideration for a lease, that was not par t of the original terms and conditions
of the lease (for example, adding or terminating the right to use one or more
underlying assets, or extending or shor tening the contractual lease term). The
effective date of the modification is defined as “the date when both par ties agree
to a lease modification”. When this occur, the Right of use and the lease liability
are updated accordingly. If a lease is terminated before the original lease term
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements date defined at the commencement date, both Right of Use assets and the lease
liability are remeasured, impacting also the profit or loss statement.
In addition, the options for the extension and early termination of the lease
agreements are re-evaluated and re-considered when a significant event or a change
occurs in the circumstances that are under the control of the Group and this will
influence the assessment of the reasonable cer tainty of the exercise options.
Low value contracts (the price of the asset, when new and recognized on a single-
component basis approach, is less than Euro 5,000) and leases whose lease term
is shor ter than 12 months are not in the scope of “IFRS 16 Leases”, so they are
recognized through profit or loss on a straight-line basis over the lease term.
Purely variable rent, typically linked to sales without a guaranteed minimum, are
excluded too from the scope of application of such standard.
Based on the practical expedient set by the “Amendment to IFRS16: Covid-Related
Rent Concession”, a lessee is not required to assess whether the Covid-related
rent reductions obtained by the lessors are lease modifications. Therefore, the
lessee can book such rent reduction as if they were not lease modifications, thus
recognizing the entire economic benefit of such discounts immediately through
profit or loss. Rent discounts are eligible for the practical expedient if they occur
as a direct consequence of the Covid-19 pandemic and if all of the following
criteria are met:
― any rent reduction affects only payments originally due on or before June 30,
2022;
― there is no substantive change to the other terms and conditions of the lease;
― the change in lease payments results in revised consideration for the lease
that is substantially the same as, or less than, the consideration for the lease
immediately preceding the change.
A lessee is expected to make judgement about whether other changes are
substantive based on its understanding of those changes and based on how
they were historically managed by the Group. As a result, in the Group’s view a
modification of the contract such as a renewal or the extension of the lease term is
to be considered substantive only when it is not consistent with the usual practices
applied by the Group and in the industry as a whole.
INVESTMENTS IN EQUIT Y INSTRUMENTS
The initial recognition of Investments in equity instruments (previously “available
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements for sale”) is at purchase cost, increased by any directly attributable transaction
costs. The Group evaluates these instruments at fair value and the related changes
are recognized in a specific equity reserve. This change (Fair Value through O ther
Comprehensive Income) is also included in the statement of comprehensive income
as “items not recyclable to profit or loss”, therefore only dividends received will be
recorded in the statement of profit or loss of the Group. IFRS 9 also provides for
an alternative treatment that allows the recognition of fair value changes directly
to profit or loss (Fair Value Through Profit or Loss). The choice of this accounting
treatment (FV TPL or FVOCI) has to be done for each investment and has to be
considered irrevocable once adopted. Any exceptions to the initial recognition will
be repor ted in the Notes to the Consolidated financial statements.
In the case of securities listed on active markets, the fair value is the price
recorded at the end of the trading day of the period under review. For investments
for which there is no an active market, the fair value is determined based on the
price of recent transactions between independent par ts of substantially similar
instruments, or by using other valuation techniques such as, for example, income
assessments or based on flow analysis discounted financial figures.
DEFERRED TAX ASSETS
Deferred tax assets are amounts of income taxes recoverable in future periods
in relation to deductible temporary differences and carryforward of unused tax
losses.
Deductible temporary differences are differences between the carrying amount of
an asset or liability in the statement of financial position and its tax value which,
in determining taxable income for future years, will result in deductible amounts
when the carrying amount of the asset or liability is realized or settled.
Deferred tax assets are recognized for all deductible temporary differences, tax
losses carried-forward and unused tax credits only to the extent that is probable
that taxable income will be available in future years against which the deductible
temporary differences can be used. Recoverability is reviewed at every year end.
Deferred tax assets are measured at the tax rates which are expected to apply to
the period when the asset is realized based on tax rates (and tax laws) that have
been enacted or substantively enacted at the repor ting date.
Deferred tax assets are not discounted.
Deferred tax assets are recognized through the profit or loss unless the tax amount
is generated from a transaction or an event directly recognized in equity or from
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements a business combination.
DERIVATIVE FINANCIAL INSTRUMENTS
Derivative financial instruments that hedge interest rate risk and exchange rate
risk exposure are recognized at the fair value based on hedge accounting rules.
According to these rules, within the framework of IFRS 9, future cash flow hedging
contracts such as those listed above are qualified as cash flow hedges. Hedge
accounting treatment is allowed if derivative financial instruments are designated
as a hedge of the exposure to changes in future cash flows of a recognized asset
or liability or a highly probable transaction which could affect profit or loss. In
this case, the change in fair value of the hedging instrument is recognized in
shareholders’ equity. Accumulated gains or losses are reversed from shareholders’
equity and recognized in the profit or loss for the period in which the profit or loss
effect of the hedged operation is recognized.
Any gain or loss on a hedging instrument (or por tion thereof ) which is no longer
effective as a cash flow hedge is immediately recognized in the profit or loss. If
the hedged transaction is no longer expected to take place, any related cumulative
gain or loss outstanding in equity will be recognized in the profit or loss.
NON-CURRENT FINANCIAL LIABILITIES
Non-current financial liabilities include payables to banks for medium and long-
term loans.
Non-current financial liabilities are initially recognized at fair value on the
transaction date less transaction costs which are directly attributable to the
acquisition. After initial recognition, non-current financial liabilities are valued
at amor tized cost, which means at the initial amount less principal repayments
already made, plus or minus the amor tization (using the effective interest method)
of any difference between that initial amount and the maturity amount.
POST-EMPLOYMENT BENEFITS
Defined benefit plans are recognized using actuarial techniques to estimate the
amount of the obligations resulting from employee service in the current and
past periods and discounting it to determine the present value of the Group’s
obligations.
The present value of the obligations is determined by an independent actuary
using the Projected Unit Credit Method.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements Actuarial gains and losses are recognized directly in equity, net of the tax effect.
O ther long-term employee benefits are recognized among non-current liabilities
and their value corresponds to the present value of the defined benefit obligation
at the repor ting date, adjusted according to the period of the underlying
agreement. The recognition of these benefits is usually subject to the attainment
of specific earnings by the Group, and their payment, deferred over time to keep
the beneficiaries in the organization, is remeasured using indices relating to the
Group’s profitability or market value. Like defined benefit plans, other long-term
benefits are also valued using the Projected Unit Credit Method. Unlike defined
benefits plans, the actuarial gains and losses of other long-term benefits are
recognized though profit or loss rather then through net equity.
PROVISIONS FOR RISKS AND CHARGES AND CONTINGENT ASSETS
The Prada Group is mainly involved in civil and tax disputes and the related
provisions for risks and charges are booked in the financial statements both on
the basis of historical experience and on the basis of assumptions concerning
future events that are difficult to predict as also depending on factors that are not
under the full control of the Group. Therefore it is possible that after the repor ting
period, depar tures between the estimates made and the actual results materialize
so that it might be necessary to make adjustments to the values of the liabilities
recognized.
Application of exemptions to some or all of the disclosures required by IAS 37 are
applied when these could prejudice seriously the position the Group in a dispute
with other par ties on the on the subject matter of the provision, contingent liability
or contingent asset.
DEFERRED TAX LIABILITIES
Deferred tax liabilities are amounts of income taxes due in future periods in respect
of taxable temporary differences.
Taxable temporary differences are differences between the carrying amount of
an asset or liability in the statement of financial position and its tax base which,
in determining the taxable income for future years, will result in taxable amounts
when the carrying amount of the asset or liability is recovered or settled.
Deferred tax liabilities are recognized for all taxable timing differences except when
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements liability is generated by the initial recognition of goodwill or the initial recognition
of an asset or liability in a transaction other than a business combination that does
not affect the accounting result or the tax result at the transaction date.
Deferred tax liabilities are measured at the tax rates which are expected to apply
to the period when the liability is settled, based on tax rates (and tax laws) that
have been enacted or substantively enacted at the repor ting date.
Deferred tax liabilities are not discounted.
Deferred tax liabilities are recognized through the profit or loss unless the tax
amount is generated from a transaction or an event directly recognized in equity
or from a business combination.
REVENUE RECOGNITION AND COST RECOGNITION
Revenues from the sale of goods are recognized in the profit or loss when all of the
following criteria have been satisfied:
― identification of the contract (in writing, orally or in accordance with other
customary business practices) with a customer;
― identification of the per formance obligations in the contract;
― determination of the transaction selling price for each per formance obligations;
― the amount of revenue (transaction selling price) can be measured reliably;
― the significant risks and rewards of ownership are transferred to the buyer;
― all control over the goods sold has ceased;
― the economic benefits generated by the transaction will probably be enjoyed
by the Group;
― the costs per taining to the transaction can be reliably measured;
― each per formance obligation has been satisfied.
Royalties are accounted for based on sales made by the licensees and the terms of
the contracts.
Financial discounts are recognized as financial expenses.
Costs are recognized on an accrual basis. In par ticular, a cost is immediately
recognized in the profit or loss when:
― an expense does not generate any future economic benefit;
― the future economic benefits do not qualify or cease to qualify as assets for
recognition in the statement of financial position;
― a liability is incurred and no asset has been recognized.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements PRE-OPENING RENTS
Costs incurred during the pre-opening period of new or refurbished retail stores
are charged to the profit or loss when incurred, except for the suspension of the
depreciation of the Right of Use assets.
INTEREST EXPENSES
Interest expenses might include interest on bank overdrafts and on shor t and long
term loans, financial charges related to the adjustments of the present value of the
Lease Liability, amor tization of initial costs of loan operations, changes in the fair
value of derivatives – insofar as chargeable to the profit or loss –, annual interest
maturing on the present value of post-employment benefits and interests on late
payments.
TAXATION
The provision for taxation is determined based on a realistic estimate of the tax
charge of each consolidated entity, in accordance with the tax rates (and tax laws)
that have been enacted or substantially enacted in each country at the repor ting
date.
Current taxes are recognized in the profit or loss as an expense. This is except for
taxes deriving from transactions or events directly recognized through shareholders’
equity which are directly charged to equity.
EARNINGS OR LOSSES PER SHARE
Earnings or losses per share are calculated by dividing the net result attributable
to the holding company by the weighted average number of ordinary shares in
issue.
CHANGES OF ACCOUNTING POLICIES, ERRORS AND CHANGES OF ESTIMATES
The accounting policies adopted change from one year to the next only if the
change is required by an accounting standard or if it helps provide more reliable
and meaningful information on the impact of operations on the entity’s statement
of financial position, profit or loss or cash flows.
Changes of accounting policy are accounted for retroactively with the effect
allocated to the opening equity of the earliest of the periods presented. The other
comparative amounts repor ted for each prior period are also adjusted as if the
new policy had been applied from the outset. A prospective approach is adopted
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements only when it would be impracticable to restate the comparative information.
The application of a new or amended accounting standard is accounted for as
requested by the standard itself. If the standard does not regulate the transition
method, the change is accounted for on a retroactive basis or, if impracticable, on
a prospective basis.
Material errors are treated on the same basis as changes of accounting policy as
described above. Non-material errors are corrected through the profit or loss for
the period in which the error was identified.
Changes of accounting estimates are accounted for prospectively in the profit or
loss for the year in which the change is made if it only affects the profit or loss for
that year, or in the profit or loss for the year in which the change is made and in
subsequent periods if they are also affected by the change.
USE OF ESTIMATES
In accordance with IFRS, preparation of these Consolidated financial statements
requires the use of estimates and assumptions when determining cer tain types of
assets, liabilities, revenues and costs and when assessing contingent assets and
liabilities.
These assumptions refer, first of all, to operations and events not settled at the
end of the period. Therefore, upon payment, the actual outcome may differ from
the estimated amounts. Estimates and assumptions are reviewed periodically and
the effects of each change are immediately recognized in the profit or loss.
Estimates are used also for impairment tests, for equity method accounting,
when determining provisions for risks and charges, the provision for bad debts,
the inventory obsolescence provision, the post-employment benefits, the tax
computation, the measurement of derivatives, the lease term of contracts with
renewal or early termination options (in accordance with IFRS 16) and the useful
life of proper ty, plant and equipment and intangible assets.
IMPACT OF CLIMATE CHANGE-RELATED MAT TERS ON FINANCIAL STATEMENTS
The management estimates that the effects of climate change on the criteria for
the preparation of these consolidated financial statements are negligible, as at the
repor ting date it does not identify par ticular items of assets and liabilities subject
to estimation processes that can be significantly influenced by climate change
matters.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 7. MERGERS AND ACQUISITIONS
On January 29, 2021, the Prada Group signed an agreement with DFS Group L.P.
to purchase the residual minority stake in the “ Travel Retail Shop” companies,
managed together with the latter group on the basis of a joint venture agreement
that expired on January 31, 2021.
Pursuant to this transaction, since February 1, 2021 Prada Group has wholly owned
TRS Hong Kong ltd, TRS Saipan llc, TRS Hawaii llc, TRS Okinawa kk and TRS Guam
ltd; TRS Singapore pte ltd, for which a liquidation process had already initiated
and finished in November 2021, was not par t of the acquisition. The consideration
for the share purchase was Euro 6 million.
After the acquisition, in order to simplify the Group structure, some extraordinary
transactions were carried out.
On April 15, 2021, PRADA spa established the company PRADA S.M. srl with the
aim of expanding commercial activities in the area of central Italy.
On April 23, 2021, PRADA spa exercised the purchase option on the remaining
10% of the share capital of Pelletteria Ennepì srl. As a result of such agreement,
the Prada Group wholly owns that company.
On May 26, 2021, PRADA spa exercised the purchase option on the remaining 20%
of the share capital of Hipic Prod Impex Srl. As a result of such agreement, the
Prada Group wholly owns that company.
On June 22, 2021, the Prada Group and the Ermenegildo Zegna Group signed an
agreement to acquire share capital of Filati Biagioli Modesto S.p.A., a company
renowned for Italian excellence in the production of cashmere and other noble
yarns located in Tuscany (Montale, Pistoia). In July, the two new shareholders
subscribed the respective 40% stakes in the company.
On November 30, 2021, the Prada Group acquired from a related par ty, PA BE
1 S.r.l., the entire share capital of Luna Rossa Challenge S.r.l., the company
that organizes and manages the Luna Rossa sailing team for the par ticipation
in America’s Cup and other high-profile sailing events. Luna Rossa Challenge
S.r.l. also wholly owns COR 36 S.r.l., whose activities are about to be liquidated
since they relate exclusively solely to the organization of the 36th edition of the
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements America’s Cup race.
As a result of this acquisition, the Group has combined the title over the Luna
Rossa brand, which it had already owned, with the activity of the sailing team, in
view of maximizing the economic value of the brand.
The acquisition is outside the scope of IFRS 3 – Business Combination, as it is
considered a transaction “under common control”, because Prada spa and Luna
Rossa Challenge srl are ultimately controlled by the same group of individuals.
For this reason, the excess amount of Euro 1.1 million paid by Prada spa, i.e. the
difference between the consideration paid (Euro 12 million) and accrued (Euro
5 million) and the net assets acquired at their acquisition–date carrying amount
(Euro 15.9 million), was deducted from the Group’s equity.
The cash-out for the acquisition was equal to Euro 6.7 million, corresponding to
the agreed consideration of Euro 12 million net of the cash of Euro 5.3 million
included in the net assets acquired.
(amounts in thousands of Euro)
Cash
Property, plant and equipment/intangible assets
Other current assets/(liabilities)
Tax credits
Carrying amount of net assets acquired
Consideration paid at November 30, 2021
Earn-out accrued at December 31, 2021
Reduction of Group equity
December 31
2021
5,255
10,649
(12,621)
12,589
15,872
12,000
5,000
1,128
The consolidation of Luna Rossa Challenge srl from December 1, 2021 did not
have a material effect on the Group’s Consolidated Statement of Profit or Loss for
the year ended at December 31, 2021.
8. 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 per formance.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
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 per formance solely on a
Group-wide level. For this reason, the business is considered a single operating
segment, as it better represents the specific characteristics of the Prada Group
business model.
NET REVENUES
Detailed
information on 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 repor ts the carrying amount of the Group’s non-current assets
by geographical area, as required by IFRS 8, “Operating Segments”, for entities,
like the Prada Group, that have a single repor table segment:
(amounts in thousands of Euro)
Europe
Americas
Asia Pacific
Japan
Middle East and Africa
Total
December 31
2021
December 31
2020
3,005,722
3,016,375
471,229
536,218
417,887
57,344
515,662
533,832
477,799
66,181
4,488,400
4,609,849
The total amount of Euro 4,488 million (Euro 4,610 million at December 31, 2020)
refers to the Group’s non-current assets excluding, as per IFRS 8, those relating to
derivatives, deferred tax assets and the pension fund surplus.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
9. CASH AND CASH EQUIVALENTS
Cash and cash equivalents are detailed as follow:
(amounts in thousands of Euro)
Cash on hand
Bank deposit accounts
Bank current accounts
Total
December 31
2021
December 31
2020
36,636
189,306
755,844
25,818
120,563
296,011
981,786
442,392
At December 31, 2021, the bank accounts and deposits accruing interest income
had yields in the range of 0% and 5.1% annually (0% and 2.1% at December 31,
2020).
10. TRADE RECEIVABLES, NET
Trade receivables, net are detailed below:
(amounts in thousands of Euro)
Trade receivables – third parties
Allowance for bad and doubtful debts
Trade receivables – related parties
Total
December 31
2021
December 31
2020
338,931
(10,990)
1,606
297,953
(11,979)
4,406
329,547
290,380
The change in the Allowance for doubtful debts is set for th below:
(amounts in thousands of Euro)
December 31
2021
December 31
2020
Opening balance
Exchange differences
Increases
Reversals
Utilization
Closing balance
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11,979
546
581
(1,129)
(987)
10,990
9,354
(317)
4,135
(109)
(1,084)
11,979
17 7
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
11. INVENTORIES, NET
Inventories can be broken down as follows:
(amounts in thousands of Euro)
Raw materials
Work in progress
Finished products
Return assets
Allowance for obsolete, slow-moving inventories and return assets
December 31
2021
December 31
2020
99,837
29,938
585,547
7,246
(59,914)
99,827
20,386
586,917
6,974
(47,882)
Total
662,654
666,222
The net inventories are consistent with the prior year ’s balance, mainly as a result
of the streamlining of the production and logistics processes.
The changes in the Allowance for obsolete, slow-moving inventories and return
assets are as follows:
(amounts in thousands of Euro)
Opening balance
Exchange differences
Increases
Utilization
Reversal
Closing balance
Raw
materials
Finished
products and
return assets
Total
allowance for
obsolete, slow-
moving inventories
and return assets
24,449
23,433
47,882
9
6,300
(23)
-
251
6,740
(784)
(461)
260
13,040
(807)
(461)
30,735
29,179
59,914
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
12. DERIVATIVE FINANCIAL INSTRUMENTS:
ASSETS AND LIABILITIES
Derivative financial instruments: assets and liabilities, current and non-current
por tions:
(amounts in thousands of Euro)
Financial assets regarding derivative instruments - current
Total Financial Assets - Derivative financial instruments
Financial liabilities regarding derivative instruments – current
Financial liabilities regarding derivative instruments – non-current
December 31
2021
December 31
2020
1,762
1,762
(29,683)
(4,786)
10,691
10,691
(7,789)
(9,249)
Total Financial Liabilities - Derivative financial instruments
(34,469)
(17,038)
Net carrying amount – current and non-current portion
(32,707)
(6,347)
The net carrying amount of derivatives, both the current and the non-current
por tion, has the following composition:
(amounts in thousands of Euro)
December 31
2021
December 31
2020
Forward contracts
Options
Positive fair value
Forward contracts
Options
Interest rate swaps
Negative fair value
1,394
368
1,762
(10,139)
(17,486)
(6,844)
7,770
2,921
10,691
(3,006)
(2,030)
(12,002)
(34,469)
(17,038)
IFRS7
Category
Level II
Level II
Level II
Level II
Level II
Net carrying amount – current and non-current
(32,707)
(6,347)
All the above derivative instruments are classified 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 or “IRS”) and of derivatives arranged to hedge foreign exchange risks
(forward contracts and options) were determined by using one of the most widely
used valuation platforms on the financial market and are based on the interest rate
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
curves and on spot and forward exchange rates at the repor ting 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 rate 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
expected future cash flows mainly regard the collection of trade receivables, the
settlement of trade payables and financial cash flows.
At the repor ting date, the notional amounts of the derivative contracts designated
as foreign exchange risk hedges (translated at the European Central Bank exchange
rate as at December 31, 2021, repor ted in Note 38) are as stated below.
Contracts in effect as of December 31, 2021 to hedge projected future trade cash
flows:
(amounts in thousands of Euro)
Currency
Chinese Renminbi
US Dollar
Korean Won
Japanese Yen
GB Pound
Russian Ruble
Taiwan Dollar
Canadian Dollar
Other currencies
Total
Options
Forward sale
contracts
December 31
2021
280,762
150,980
133,692
46,019
42,962
9,203
19,144
18,481
27,686
37,528
42,380
-
37,966
5,355
14,537
-
-
44,970
318,290
193,360
133,692
83,985
48,317
23,740
19,144
18,481
72,656
728,929
182,736
911,665
180
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
Contracts in effect as of December 31, 2021 to hedge projected future financial
cash flows:
(amounts in thousands of Euro)
Currency
GB Pound
Swiss Franc
US Dollar
Malaysia Ringgit
Other currencies
Total
Forward sale
contracts
December 31
2021
73,785
29,716
13,597
5,298
28,919
73,785
29,716
13,597
5,298
28,919
151,315
151,315
Contracts in effect as of December 31, 2020 to hedge projected future trade cash
flows.
(amounts in thousands of Euro)
Currency
Chinese Renminbi
US Dollar
Japanese Yen
Korean Won
GB Pound
Canadian Dollar
Hong Kong Dollar
Taiwan Dollar
Swiss Franc
Russian Ruble
Malaysia Ringgit
Other currencies
Total
Options
Forward sale
contracts
December 31
2020
64,319
53,133
39,608
37,912
24,660
-
3,857
4,294
-
-
-
16,347
181,739
61,527
58,661
48,353
45,571
20,585
15,006
10,981
14,229
12,174
10,022
30,016
246,058
114,660
98,269
86,265
70,231
20,585
18,863
15,275
14,229
12,174
10,022
46,363
244,130
508,864
752,994
Contracts in effect as of December 31, 2020 to hedge projected future financial
cash flows.
(amounts in thousands of Euro)
Currency
Swiss Franc
GB Pound
Malaysia Ringgit
US Dollar
Other currencies
Total
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Forward sale
contracts
December 31
2020
49,528
24,193
5,067
2,445
5,217
86,450
49,528
24,193
5,067
2,445
5,217
86,450
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
All contracts in place at December 31, 2021 have a maturity shor ter than twelve
months.
All contracts in place at the repor ting date were entered into with major financial
institutions, and no counterpar ties are expected to default. A liquidity analysis
of the derivative contracts maturities is provided in the financial risks section of
these Notes.
INTEREST RATE TRANSACTIONS
The Group enters into IRS contracts in order to hedge the risk of interest rate
fluctuations on bank loans. The key features of the IRS agreements in place as at
December 31, 2021 and December 31, 2020 are summarized below:
Interest Rate Swap (IRS) Agreement
Hedged loan
Contract
Currency
Notional
amount
Interest
rate
Maturity
date
December
31, 2021
Currency
Type of
debt
Amount
Expiry
IRS
IRS
IRS
Euro/000
Euro/000
GBP/000
31,167
50,000
46,050
1.457% May-2030
-0.094%
Feb-2022
2.778%
Jan-2029
Total fair value (amounts in thousands of Euro)
(2,015)
(153)
(4,676)
(6,844)
Euro/000
Term Loan
31,167 May-2030
Euro/000
Term Loan
50,000
Feb-2022
GBP/000
Term Loan
46,050
Jan-2029
Interest Rate Swap (IRS) Agreement
Hedged loan
Contract
Currency
Notional
amount
Interest
rate
Maturity
date
December
31, 2020
Currency
Type of
debt
Amount
Expiry
IRS
IRS
IRS
IRS
IRS
1.457% May-2030
(3,197)
Euro/000
Term Loan
34,833 May-2030
Euro/000
Euro/000
Euro/000
34,833
58,500
90,000
-0.094%
Feb-2022
0.013%
Feb-2021
Euro/000
100,000
0.252%
Jun-2021
(313)
(3)
(125)
Euro/000
Term Loan
58,500
Feb-2022
Euro/000
Term Loan
90,000
Feb-2021
Euro/000
Term Loan
100,000
Jun-2024
GBP/000
48,975
2.778%
Jan-2029
(8,364)
GBP/000
Term Loan
51,600
Jan-2029
Total fair value (amounts in thousands of Euro)
(12,002)
The IRS conver t variable interest rates on bank loans into fixed interest rates.
They have been arranged with major financial institutions, and no counterpar ties
are expected to default.
INFORMATION ON FINANCIAL RISKS
CAPITAL MANAGEMENT
The Group’s capital management strategy is intended to safeguard its ability to
guarantee a return to shareholders, protect the interests of other stakeholders and
comply with loan covenants, while maintaining a viable and balanced capital structure.
182
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements CATEGORIES OF FINANCIAL ASSETS AND LIABILITIES ACCORDING TO IFRS 7
FINANCIAL ASSETS
(amounts in thousands of Euro)
Cash and cash equivalents
Trade receivables, net
Derivative financial instruments
Investments in equity instruments
Other Investments
Financial receivables,
trade receivables and
financial investments
Derivative financial
instruments
Total
Note
981,786
329,547
-
2,964
2,732
-
-
1,762
-
-
981,786
329,547
1,762
2,964
2,732
9
10
12
18
18
Total at December 31, 2021
1,317,029
1,762
1,318,791
(amounts in thousands of Euro)
Cash and cash equivalents
Trade receivables, net
Derivative financial instruments
Investments in equity instruments
Other Investments
Financial receivables,
trade receivables and
financial investments
Derivative financial
instruments
Total
Note
442,392
290,380
-
64,203
1,988
-
-
10,691
-
-
442,392
290,380
10,691
64,203
1,988
9
10
12
18
18
Total at December 31, 2020
798,963
10,691
809,654
FINANCIAL LIABILITIES
(amounts in thousands of Euro)
Financial payables
Trade payables
Derivative financial instruments
Lease liabilities
Loans and
payables
Derivative financial
instruments
Total
Note
745,264
390,163
-
2,045,412
-
-
34,469
-
745,264
390,163
34,469
2,045,412
21,22,26
23
12
20
Total at December 31, 2021
3,180,839
34,469
3,215,308
(amounts in thousands of Euro)
Financial payables
Trade payables
Derivative financial instruments
Lease liabilities
Loans and
payables
Derivative financial
instruments
Total
Note
754,878
289,578
-
2,133,412
-
-
17,038
-
754,878
289,578
17,038
2,133,412
21,22,26
23
12
20
Total at December 31, 2020
3,177,868
17,038
3,194,906
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements FAIR VALUE
The repor ted amount of derivative instruments, whether assets or liabilities,
reflects their fair value, as explained in this Note 12.
The carrying amount of Cash and cash equivalents, Financial receivables and Trade
receivables, as adjusted for impairment where necessary as required by IFRS 9,
approximates their estimated realizable value and, hence, their fair value.
The amount of Investments in equity instruments corresponds to its fair value
(Level I), as explained in Note 18.
The Lease liability is repor ted at its present value, while all other financial liabilities
are stated at approximately their fair value.
CREDIT RISK
Credit risk is defined as the risk of financial loss caused by the failure of a
counterpar ty 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. However, according to management, the Group’s credit risk regards
essentially the trade receivables generated in the wholesale channel and the cash
holdings. The Group has implemented specific control systems to manage such
risk, as explained in the section describing risk factors in the Financial Review.
TRADE RECEIVABLES
The following table contains an aging analysis of Trade receivables before
accounting the Allowance for bad and doubtful debts:
(amounts in thousands of Euro)
December
31, 2021
Not
overdue
Overdue (in days)
1 30
31 60
61 90
91 120
> 120
Trade receivables
340,537
284,762
11,103
15,126
4,187
3,759
21,600
Total at December 31, 2021
340,537
284,762
11,103
15,126
4,187
3,759
21,600
(amounts in thousands of Euro)
December
31, 2020
Not
overdue
Overdue (in days)
1 30
31 60
61 90
91 120
> 120
Trade receivables
302,359
265,763
6,157
12,724
1,492
895
15,328
Total at December 31, 2020
302,359
265,763
6,157
12,724
1,492
895
15,328
The increase in the aging of receivables compared to 2020 is mainly due to open
positions for outstanding retail collections with depar tment stores and malls.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements With reference to these delays, the management does not expect any losses also
considering that the payments have been settled in the first months of 2022.
The following table contains an aging analysis of Trade receivables after accounting
the Allowance for bad and doubtful debts at the repor ting date:
(amounts in thousands of Euro)
December
31, 2021
Not
overdue
Overdue (in days)
1 30
31 60
61 90
91 120
> 120
Trade receivables less allowance
for doubtful accounts
329,547
283,363
10,968
15,045
4,146
3,751
12,274
Total at December 31, 2021
329,547
283,363
10,968
15,045
4,146
3,751
12,274
(amounts in thousands of Euro)
December
31, 2020
Not
overdue
Overdue (in days)
1 30
31 60
61 90
91 120
> 120
Trade receivables less allowance
for doubtful accounts
290,380
263,358
6,094
12,720
1,492
854
5,862
Total at December 31, 2020
290,380
263,358
6,094
12,720
1,492
854
5,862
BANK CURRENT ACCOUNTS AND DEPOSITS
Bank deposits accounts are broken down by currency as follows:
(amounts in thousands of Euro)
Hong Kong Dollar
Chinese Renmimbi
Korean Won
Other Currencies
December 31
2021
December 31
2020
120,469
29,073
8,912
30,852
62,305
37,606
-
20,652
Total bank deposit accounts
189,306
120,563
The Group aims to reduce the default risk on bank deposits by allocating the
available funds to multiple accounts that differ by currency, country and bank
(always investment grade); such investments are always shor t-term.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
Bank current accounts are broken down by currency as follows:
(amounts in thousands of Euro)
Euro
US Dollar
GB Pound
Hong Kong Dollar
Korean Won
Other Currencies
December 31
2021
December 31
2020
404,164
202,107
13,965
4,023
16,288
115,297
108,877
76,925
10,953
6,439
5,027
87,790
Total bank current accounts
755,844
296,011
The Group considers no significant risk to exist on bank accounts given that their
use is strictly related to operating activities and business processes and, therefore,
they are present in a large number of countries.
LIQUIDIT Y RISK
Liquidity risk refers to the difficulty the Group could have in meeting its financial
obligations. The Directors are responsible for managing liquidity risk, while the
Chief Financial Office (“CFO”) is in charge of optimizing the management of
financial resources.
According to management, the funds and credit lines currently available, in addition
to those that will be generated by operating and financing activities, will enable the
Group to meet its financial requirements arising from investing activities, working
capital management, punctual loan repayment and dividend payment.
At December 31, 2021, the Group has undrawn cash credit lines of Euro 808
million available at banks (Euro 1,009 million as of December 31, 2020), of which
Euro 400 million of committed loans and Euro 408 million of uncommitted ones.
An aging analysis of the Trade payables is set for th below:
(amounts in thousands of Euro)
December
31, 2021
Not
overdue
Overdue (days)
1 30
31 60
61 90
91 120
> 120
Trade payables
390,163
348,256
14,226
5,854
3,450
2,580
15,797
Total at December 31, 2021
390,163
348,256
14,226
5,854
3,450
2,580
15,797
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
(amounts in thousands of Euro)
December
31, 2020
Not
overdue
Overdue (days)
1 30
31 60
61 90
91 120
> 120
Trade payables
289,578
262,158
10,830
2,725
1,139
652
12,074
Total at December 31, 2020
289,578
262,158
10,830
2,725
1,139
652
12,074
FINANCIAL LIABILITIES UNDER DERIVATIVE FINANCIAL
INSTRUMENTS
(FORWARD CONTRACTS AND OPTIONS)
The maturities of the financial liabilities according to the earliest date on which
the Group could be required to pay (worst-case scenario) are presented in the
following tables.
As required by IFRS 7, the following tables show the financial liabilities under
forward contracts and options designated as cash flow hedges where a negative
cash flow is expected at the repor ting date:
(amounts in thousands of Euro)
Future
contractual
cash flows at
Dec. 31, 2021
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more than
4 years
Net cash flows (outflows/inflows) of forward
contracts
(10,139)
(5,492)
(4,647)
-
-
-
-
Net cash flows (outflows/inflows) of options
(17,486)
(9,783)
(6,851)
(305)
(214)
(187)
(146)
Net amount
(27,625)
(15,275)
(11,498)
(305)
(214)
(187)
(146)
(amounts in thousands of Euro)
Future
contractual
cash flows at
Dec. 31, 2020
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more than
4 years
Net cash flows (outflows/inflows) of forward
contracts
(2,931)
(2,351)
Net cash flows (outflows/inflows) of options
(2,045)
(860)
(580)
(619)
-
-
(355)
(135)
-
(70)
Net amount
(4,976)
(3,211)
(1,199)
(355)
(135)
(70)
-
(6)
(6)
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements FINANCIAL LIABILITIES UNDER DERIVATIVE FINANCIAL
INSTRUMENTS
(INTEREST RATE SWAPS)
As required by IFRS 7, the following tables show interest rate swaps where a
negative cash flow is expected at the repor ting date:
(amounts in thousands of Euro)
Future
contractual
cash flows at
Dec. 31, 2021
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more than
4 years
Interest rate swap cash flow hedge
(6,844)
(1,123)
(756)
(1,132)
(946)
(850)
(2,037)
Net amount
(6,844)
(1,123)
(756)
(1,132)
(946)
(850)
(2,037)
(amounts in thousands of Euro)
Future
contractual
cash flows at
Dec. 31, 2020
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more than
4 years
Interest rate swap cash flow hedge
(12,002)
(1,095)
(1,063)
(2,347)
(1,783)
(1,565)
(4,149)
Net amount
(12,002)
(1,095)
(1,063)
(2,347)
(1,783)
(1,565)
(4,149)
FINANCIAL LIABILITIES
(amounts in thousands of Euro)
Carrying
amount at
Dec. 31,
2021
Future
contractual
cash flows at
Dec. 31,
2021
on
demand
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more
than 4
years
Lease Liability (IFRS 16)
2,045,412
2,170,899
- 232,498
217,379
347,633 303,106
246,392
823,891
Financial liabilities – third parties
(without deferred costs on loans)
742,983
763,745
- 202,228
51,019
99,175 88,465
138,681
184,177
Financial liabilities – related parties
3,360
3,360
-
-
3,360
-
-
-
-
Total
2,791,755
2,938,004
- 434,726
271,758
446,808 391,571
385,073 1,008,068
(amounts in thousands of Euro)
Carrying
amount at
Dec. 31,
2020
Future
contractual
cash flows at
Dec. 31,
2020
on
demand
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more
than 4
years
Lease Liability (IFRS 16)
2,133,412
2,271,858
-
227,342 204,518 370,768
294,191
257,501
917,538
Financial liabilities – third parties
(without deferred costs on loans)
752,673
763,809
-
248,205
55,265 185,442
59,984
48,891
166,022
Financial liabilities – related parties
3,097
3,097
-
-
3,097
-
-
-
-
Total
2,889,182
3,038,764
475,547 262,880 556,210
354,175
306,392 1,083,560
Some of the above financial liabilities contain loan covenants, as described in Note
26.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements SENSITIVIT Y ON EXCHANGE RATE RISK
The exchange rate risk to which the Group is exposed is concentrated largely with
PRADA spa and it results from fluctuation of foreign currencies against the Euro.
For PRADA spa, the foreign exchange risk substantially consists of the risk that
cash flows from retail and distribution activities could fluctuate as a result of
changes in exchange rates. In terms of exposure, the most impor tant currencies
for the Group are the U.S. Dollar, Hong Kong Dollar, Japanese Yen, British Pound
and Chinese Renminbi.
The following table shows the sensitivity of the consolidated net income and equity
to a range of hypothetical fluctuations in the main foreign currencies against the
Euro, based on the statement of financial position of the Group’s companies as of
December 31, 2021:
(amounts in thousands of Euro)
Euro strengthens by 5%
Euro weakens by 5%
Impact on net result
Impact on net equity
Impact on net result
Impact on net equity
GP Pound
Hong Kong Dollar
Japanese Yen
US Dollar
Chinese Renminbi
Korean Won
Other currencies
Total
(977)
3,689
434
1,206
(3,629)
(2,647)
(5,973)
(7,897)
246
4,143
3,656
7,917
6,481
1,439
(2,086)
21,796
548
(4,101)
(451)
(1,506)
4,324
2,449
6,356
(1,431)
(4,639)
(4,044)
(10,381)
(9,199)
(3,786)
1,115
7,619
(32,365)
The total impact on equity (positive for Euro 21.8 million and negative for Euro
32.4 million) is the sum of the theoretical effect on the statement of profit or loss
and on the cash flow hedge reserve of a hypothetical strengthening or weakening
of the Euro against the other currencies.
The effects on the financial statement items are presented above before taxes. The
sensitivity analysis is based on currency exposure at the end of the period, which
might not reflect the actual exposure during the period. For this reason it is purely
indicative.
With par ticular reference to the Russian Ruble, a sensitivity analysis was carried
out with a range of hypothetical fluctuation towards Euro of 20% which led to the
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements results of the table below:
(amounts in thousands of Euro)
Euro strengthens by 20%
Euro weakens by 20%
Impact on net result
Impact on net equity
Impact on net result
Impact on net equity
Russian Ruble
(7,094)
(4,457)
10,642
6,225
SENSITIVIT Y ON INTEREST RATE RISK
The Prada Group is exposed to interest rate fluctuations mainly with regard to
interest expense on the medium/long-term debt of the parent company, PRADA
spa, and of some of its subsidiaries. Managing this risk falls within the scope of
the risk management activities carried out by the CFO.
The following table shows the sensitivity of the consolidated net income and equity
to a hypothetical shift in the interest rate curve based on the financial position of
the Group’s companies at December 31, 2021:
(amounts in thousands of Euro)
+0.50%
-0.50%
Impact on net result
Impact on net equity
Impact on net result
Impact on net equity
Interest rate curve shift
Euro
GB Pound
Hong Kong Dollar
Japanese Yen
US Dollar
Other currencies
Total
(1,053)
(204)
622
(338)
996
974
997
(338)
1,164
622
(338)
996
974
3,080
1,053
204
(622)
338
(996)
(974)
(997)
312
(1,164)
(622)
338
(996)
(974)
(3,106)
The total impact on equity (positive and negative for Euro 3 million) is the sum of
the theoretical effect on the statement of profit or loss and on the cash flow hedge
reserve of a hypothetical shift in the interest rate curve.
The effects on the financial statement items are presented above before taxes. The
sensitivity analysis is based on the net financial position at the end of the period,
which might not reflect the actual exposure to interest rate risk during the period.
For this reason it is purely indicative.
OTHER RISKS
Risks factors affecting the international luxury goods market and those specific to
the Prada Group are described in the Financial Review.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 13. RECEIVABLES FROM, AND ADVANCE PAYMENTS TO, RELATED
PARTIES – CURRENT AND NON-CURRENT
The current Receivables from and advances to related par ties are detailed as
follows:
(amounts in thousands of Euro)
Prepaid sponsorship
Other receivables and advances
Receivables from and advances to related parties - current
December 31
2021
December 31
2020
-
22,866
22,866
25,032
26,003
51,035
Euro 18 million of the amount of other receivables and advances refers to the
shor t-term por tion of the receivable due from the 2020 sale of the Via della Spiga
18 proper ty in Milan.
The prepaid sponsorship were for the 36th America’s Cup race and were entirely
released in the period due to the expiration of the contracts and the completion
of the spor ting event.
The non-current Receivables from and advances to related par ties are detailed as
follows:
(amounts in thousands of Euro)
Other receivables and advances
Financial receivables
Receivables from and advances to related parties - non-current
December 31
2021
December 31
2020
-
1,125
1,125
18,309
1,125
19,434
Additional information on related par ty transactions is provided in Note 40.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
14. OTHER CURRENT ASSETS
The O ther current assets are set for th below:
(amounts in thousands of Euro)
VAT
Taxation and other tax receivables
Other assets
Prepayments
Deposits
Total
OTHER ASSETS
The O ther assets are detailed as follows:
(amounts in thousands of Euro)
Advances to suppliers
Incentives for retail investments
Other receivables
Total
PREPAYMENTS
The Prepayments are detailed as follows:
(amounts in thousands of Euro)
Rental costs
Insurance
Design costs
Fashion shows and advances on advertising campaigns
Other
Total
December 31
2021
December 31
2020
31,121
56,864
11,937
63,068
8,230
34,677
100,406
4,605
48,319
6,181
171,220
194,188
December 31
2021
December 31
2020
3,005
5,804
3,128
11,937
1,250
20
3,335
4,605
December 31
2021
December 31
2020
3,394
2,199
25,836
15,063
16,576
63,068
1,689
1,957
21,198
6,911
16,564
48,319
The prepaid design costs consist primarily of costs incurred to design collections
that will generate revenue after the repor ting period.
DEPOSITS
The guarantee deposit refers primarily to security deposits paid under retail leases.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
15. PROPERT Y, PLANT AND EQUIPMENT
The Historical cost and Accumulated depreciation of the past two years are set
for th below:
(amounts in thousands of Euro)
Land and
buildings
Production
plant and
machinery
Leasehold
improve-
ments
Furniture
& fittings
Other
tangibles
Assets
under
construction
Total
Historical cost
Accumulated depreciation
917,519
230,663
1,309,080
599,787
178,915
38,332
3,274,296
(155,018)
(171,987)
(991,399)
(333,605)
(116,276)
-
(1,768,285)
Net carrying amount at December 31, 2020
762,501
58,676
317,681
266,182
62,639
38,332
1,506,011
Historical cost
Accumulated depreciation
1,006,801
241,686
1,355,364
639,481
212,361
51,027
3,506,720
(176,517)
(184,977)
(1,065,208)
(370,561)
(144,604)
-
(1,941,867)
Net carrying amount at December 31, 2021
830,284
56,709
290,156
268,920
67,757
51,027
1,564,853
The changes in the Net book value for the year are as follows:
(amounts in thousands of Euro)
Land and
buildings
Production
plant and
machinery
Leasehold
improve-
ments
Furniture
& fittings
Other
tangibles
Assets
under
construction
Total net
carrying
amount
Opening balance
762,501
58,676
317,681
266,182
62,639
38,332
1,506,011
Change in the consolidation area
Additions
Depreciation
Disposals
Exchange differences
Other movements
Impairment
-
61,094
508
5,885
224
252
44,665
33,568
9,669
4,406
-
10,653
35,241
184,859
(18,328)
(11,993)
(83,831)
(36,891)
(10,035)
-
13,332
11,685
-
(21)
111
3,557
(14)
(249)
11,620
3,221
(3,175)
(70)
5,315
3,784
(3,220)
(24)
241
949
(88)
-
-
321
(22,851)
(161,078)
(364)
30,940
345
(16)
(6,513)
Closing balance
830,284
56,709
290,156
268,920
67,757
51,027
1,564,853
The change in the consolidation area regarded the acquisition of Luna Rossa
Challenge S.r.l. and its subsidiary COR 36 S.r.l., as described in Note 7. The
amount for other tangibles refers to the net value of the AC75 hulls.
The additions to Land and buildings referred to the purchase of two prestigious
buildings where Prada stores are located in Athens and Moscow, conducted to have
greater control over the real estate space.
The increases in Furniture and fittings and in Leasehold improvements regarded
primarily store restyling and relocation projects.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements Assets under construction at the end of the period concern retail and industrial
projects that are nearly completed.
The Euro 6.5 million impairment for the period referred substantially to the
writedown of store assets due to early closures or renovations in the period.
16. INTANGIBLE ASSETS
The Historical cost and Accumulated amor tization of the past two years are set
for th below:
(amounts in thousands of Euro)
Trade-
marks and
intellectual
property
rightss
Goodwill
Store Lease
Acquisitions
Software
Other
intangibles
Assets in
progress
Total
Historical cost
Accumulated amortization
404,261
(193,856)
551,217
(37,731)
54,445
201,677
63,620
20,985
1,296,205
(53,675)
(120,709)
(57,789)
-
(463,760)
Net carrying amount at December 31, 2020
210,405
513,486
770
80,968
5,831
20,985
832,445
Historical cost
Accumulated amortization
427,371
(210,141)
580,721
(67,235)
49,793
220,958
65,968
13,936
1,358,747
(49,324)
(141,484)
(61,158)
-
(529,342)
Net carrying amount at December 31, 2021
217,230
513,486
469
79,474
4,810
13,936
829,405
The changes in the Net book value for the year are as follows:
(amounts in thousands of Euro)
Trade-
marks and
intellectual
property
rights
Goodwill
Store Lease
Acquisitions
Software
Other
intangibles
Assets in
progress
Total net
carrying
amount
Opening balance
210,405
513,486
770
80,968
5,831
20,985
832,445
Change in the consolidation area
Additions
Amortization
Exchange differences
Other movements
-
637
(13,693)
2,481
17,400
-
-
-
-
-
-
7
2
16,387
(351)
(19,982)
(1)
44
31
2,068
66
1,019
(2,893)
4
783
-
13,835
-
-
(20,884)
68
31,885
(36,919)
2,515
(589)
Closing balance
217,230
513,486
469
79,474
4,810
13,936
829,405
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The Net book value of Trademarks and intellectual proper ty rights at the repor ting
date is broken down in the following table:
(amounts in thousands of Euro)
Miu Miu
Church's
Prada
Other trademarks and other intellectual property rights
Total
December 31
2021
December 31
2020
121,789
69,385
5,095
20,961
127,362
70,757
5,141
7,145
217,230
210,405
No impairment was recognized for the Group’s trademarks during the year.
The capital expenditures for software refer to technological and digital evolution
projects in the retail, manufacturing and corporate areas.
The total capital expenditure for Tangible and Intangible assets in the twelve
months ended December 31, 2021 was Euro 216.7 million, as broken down below:
(amounts in thousands of Euro)
Retail
Real Estate
Production, Logistics and Corporate
Total
IMPAIRMENT TEST
twelve months
ended December 31
2021
twelve months
ended December 31
2020
85,742
59,453
71,549
61,056
-
60,686
216,744
121,742
As required by IAS 36, “Impairment of Assets,” intangible assets with indefinite
useful lives are not amor tized, but they are tested for impairment at least once per
year. The Group does not repor t intangible assets with indefinite useful lives other
than goodwill. At December 31, 2021, goodwill amounted to Euro 513.5 million,
detailed by cash generating unit (“CGU”) as shown below:
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
(amounts in thousands of Euro)
Italy Wholesale
Asia Pacific and Japan Retail
Italy Retail and Pasticceria Marchesi 1824
Germany and Austria Retail
United Kingdom Retail
Spain Retail
France and Montecarlo Retail
North America Retail and wholesale
Production Division
December 31
2021
December 31
2020
78,355
311,936
33,825
5,064
9,300
1,400
11,700
48,000
13,906
78,355
311,936
33,825
5,064
9,300
1,400
11,700
48,000
13,906
Total
513,486
513,486
IAS 36 requires an entity to assess at each annual repor ting date whether there
are indications of impairment for any other asset recognized in the Statement of
Financial Position. In light of the per formance of cer tain retail businesses during
the period, CGUs other than those shown above were also tested for impairment.
The method used to identify the recoverable amount (value in use) of the CGUs
consists of discounting the projected cash flows (Discounted Cash Flow) generated
by the activities directly attributable to the segment to which the intangible asset
or net invested capital has been assigned. Value in use is the sum of the present
value of future cash flows expected from the business plan projections prepared
for each CGU and the present value of the related operating activities at the end
of the period (terminal value).
The business plans used for the impairment tests cover a period of five years and
were constructed on the basis of the 2022 budget prepared by management. The
plans do not take into account either significant improvements in the per formance
of the assets existing at December 31, 2021 or future developments of new
activities, except for the investments planned in the 2022 budget for the retail
premises’ restyling and renovation projects.
The rate used to discount cash flows was calculated using the weighted average
cost of capital (WACC). For the year ended December 31, 2021, the weighted
average WACC (based on the enterprise value of the CGUs) used for discounting
purposes is 5.2%. Each WACC was determined taking into due consideration
the risk profile of the CGU’s activities, as well as the parameters specific to the
geographical area to which it belongs: market risk premium and sovereign bond
yield. For the latter data, the observation period for determining the risk-free rate
was extended in some cases to five years to minimize the dilutive effect on rates
of the expansionary monetary policies adopted by central banks.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The “g” rate of growth used to calculate the terminal value ranged between 1.5%
(Asia Pacific) and 20% (Turkey), in light of the diverging inflation prospects and
GDP growth outlooks of the various countries. However, the prevalent growth rate
was 1.5%, which can be considered prudent given the average growth expected in
the long term for the luxury goods market in general.
For the Church’s Group, classified as a single CGU, the impairment test did not
identify any impairment loss. This CGU was measured, consistently with last year,
by comparing the carrying amount of net invested capital items with their fair
value (less costs to sell), deemed the best approach for expressing the value of
the Group. In the specific case of the trademark (Euro 69.5 million at December
31, 2021), the fair value was measured by using the royalty relief method, i.e. by
estimating the cash flows obtainable from a hypothetical licensing of the asset,
assuming to earn a gross 9% royalty, in line with observable comparable market
transactions. The remaining par t of the net invested capital, Euro 66 million
(including Euro 42 million for right-of-use assets and Euro 10.2 million for net
operating working capital), was considered to approximate its fair value.
In order to ensure that the potential changes in the main assumptions did not
significantly affect the results of the impairment tests, sensitivity analysis were
conducted on 90% of the goodwill recognized in the Statement of Financial
Position. These stress tests, in which the “g” growth rate for the terminal period
was reduced by up to 50 basis points and the WACC rate was increased by up to 50
basis points, continued to show significant headrooms. Fur ther sensitivity analysis
were fur thermore as carried out on the WAAC, using par ticularly conservative
parameters to determine the market risk premium and risk-free rates. In this
sensitivity analysis the weighted average WACC (based on the enterprise value of
the CGUs) was equal to 6.8%. These additional stress tests did not indicate any
impairment loss either. Finally, the “break-even” weighted average WACC was set
at 14%, the threshold above which write-off for impairment test occur.
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.
In accordance with IAS 10, Management considered the potential impacts deriving
from the Ukrain conflict which began in February 2022 as non adjusting events
that occurred after the end of the financial year (Note 44) and consequently did
not take them into consideration for the impairment test per formed as at 31
December 2021.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 17. RIGHT OF USE ASSETS
The changes in the Net book value of the Right of Use assets for the year ended
December 31, 2021 are shown below:
(amounts in thousands of Euro)
Opening balance
New contracts, initial direct costs and remeasurements
Depreciation
Contracts termination
Exchange differences
Closing balance
Real Estate
2,050,768
304,325
(424,352)
(28,740)
50,833
Other
3,570
2,582
(1,851)
(862)
16
Total net
carrying amount
2,054,338
306,907
(426,203)
(29,602)
50,849
1,952,834
3,455
1,956,289
The increase for New leases, initial direct costs and remeasurements is attributable
to lease renewals (mainly in Asia Pacific and Europe) and the remeasurement of the
liability to adjust to indexes commonly used in the real estate industry (primarily
the consumer price index).
Lease terminations amounted to Euro 30 million for the period and referred mainly
to leases in Europe.
The exchange differences of the period impacted the Right to Use assets
considerably, as a result of Euro depreciation versus the main currencies of the
countries where the Group operates.
The caption “O ther ”, amounting to Euro 3.5 million, includes plant and machinery,
vehicles and hardware.
18. INVESTMENTS IN EQUIT Y INSTRUMENTS
(amounts in thousands of Euro)
Investments in equity instruments
Other investments
Total
December 31
2021
December 31
2020
2,964
2,732
5,696
64,203
1,988
66,191
The decrease for the year in the caption Investments in equity instruments referred
to the disposal of securities.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 19. OTHER NON-CURRENT ASSETS
The O ther non-current assets are detailed as follows:
(amounts in thousands of Euro)
Guarantee Deposits
Deferred rental income
Pension fund surplus (Note 27)
Prepayments for commercial agreements
Other long-term assets
December 31
2021
December 31
2020
61,842
383
13,309
54,253
14,559
60,051
533
11,277
58,427
12,424
Total
144,346
142,712
The Guarantee deposits are set for th below by nature and maturity:
(amounts in thousands of Euro)
December 31
2021
December 31
2020
Nature:
Stores
Offices
Warehouses
Other
Total
(amounts in thousands of Euro)
Maturity
between one to two years
between two to five years
After more than five years
Total
56,003
3,982
158
1,699
61,842
53,637
3,847
123
2,444
60,051
December 31
2021
13,417
23,251
25,174
61,842
The guarantee deposits refer primarily to security deposits paid under retail leases.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 20. LEASE LIABILIT Y
The following table sets for th the Lease Liability:
(amounts in thousands of Euro)
Short-term Lease Liability
Long-term Lease Liability
Total
December 31
2021
December 31
2020
418,215
1,627,197
403,593
1,729,819
2,045,412
2,133,412
The Lease liability decreased by Euro 88 million from that of December 31, 2020.
This is the result of decreases for the payments of the period (Euro 393 million), as
well as rent discounts and foreign exchange differences, and increases (Euro 273
million) for new leases and re-measurements (net of the closures of the period).
The Lease liability is concentrated mainly with Japan, the U.S.A. and Italy.
21. SHORT-TERM FINANCIAL PAYABLES AND BANK OVERDRAF TS
(amounts in thousands of Euro)
Short-term bank loans
Current portion of long-term loans
Deferred costs on loans
Total
December 31
2021
December 31
2020
61,578
187,887
(362)
97,115
203,861
(399)
249,103
300,577
The shor t-term bank loans at December 31, 2021 consist of the use of credit lines
by PRADA Japan co ltd. Some of these credit lines contain covenants based on the
financial statement results of PRADA Japan co ltd, all of which were satisfied at
December 31, 2021.
Shor t-term bank loans are broken down by currency below:
(amounts in thousands of Euro)
Euro
Japanese Yen
Other currencies
Total
200
December 31
2021
December 31
2020
-
61,578
-
61,578
576
96,462
77
97,115
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The Group generally borrows at variable interest rates, as explained in Note 26,
and manages the risk of interest rate fluctuations by using hedging contracts, as
explained in Note 12.
22. PAYABLES TO RELATED PARTIES – CURRENT
The current Payables to related par ties are shown below:
(amounts in thousands of Euro)
Financial payables
Other payables
Payables to related parties - current
December 31
2021
December 31
2020
3,360
5,000
8,360
3,101
380
3,481
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.
Additional information on related par ty transactions is provided in Note 40.
23. TRADE PAYABLES
The Trade payables are detailed as follows:
(amounts in thousands of Euro)
Trade payables – third parties
Trade payables – related parties
Total
December 31
2021
December 31
2020
382,208
7,955
286,653
2,925
390,163
289,578
The increase is attributable to the intensification of production, commercial and
communication activities in the final months of 2021.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 24. TAX PAYABLES
The tax payables are detailed hereunder:
(amounts in thousands of Euro)
Current taxation
VAT and other taxes
Total
December 31
2021
December 31
2020
77,466
66,693
144,159
15,691
53,172
68,863
The Group recognizes current tax liabilities of Euro 7 7.5 million at December 31,
2021 (Euro 15.7 million at December 31, 2020) against tax receivables shown
within the current assets of Euro 56.9 million (Euro 100.4 million at December 31,
2020), as repor ted in Note 14.
25. OTHER CURRENT LIABILITIES
The O ther current liabilities are detailed as follows:
(amounts in thousands of Euro)
Payables for capital expenditure
Accrued expenses and deferred income
Other payables
Total
The O ther payables are detailed as follows:
(amounts in thousands of Euro)
Short-term benefits for employees and other personnel
Customer advances
Returns from customers
Other
Total
December 31
2021
December 31
2020
43,575
30,308
106,165
39,958
24,944
88,480
180,048
153,382
December 31
2021
December 31
2020
70,397
17,290
16,118
2,360
106,165
55,525
16,980
14,006
1,969
88,480
202
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 26. LONG-TERM FINANCIAL PAYABLES
The Long-term financial payables are as follows:
(amounts in thousands of Euro)
Long-term bank borrowings
Deferred costs on loans
Total
December 31
2021
December 31
2020
493,518
(717)
451,695
(495)
492,801
451,200
In 2021 PRADA spa took out three new bank loans totaling Euro 240 million, two
of which are sustainability-linked loans; in fact, both have a mechanism to adjust
the annual interest based on the achievement of sustainability goals regarding
the quantity of scrap regenerated and reintroduced into new operating cycles and
energy production from new photovoltaic plants. There were 4 ESG-linked loans
in place, accounting for 37% of the total bank debt.
PRADA spa’s loans covenants were fully satisfied at December 31, 2021 and are
expected to be met in the next 12 months as well.
In 2021, the Parent Company and the other Group companies repaid current
por tions of long-term loans for an amount of Euro 217.3 million.
The long-term bank borrowings at December 31, 2021, excluding amor tized costs,
are set for th below:
Borrower
PRADA spa
PRADA spa
PRADA spa
PRADA spa
PRADA spa
PRADA spa
PRADA spa
PRADA spa
PRADA spa
PRADA spa
Amount in
thousands
of Euro
50,000
50,000
31,167
30,000
100,000
100,000
90,000
55,555
57,000
50,000
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
PRADA Japan Co.Ltd
5,752
Syndicate loan
PRADA Japan Co.Ltd
5,752
Syndicate loan
Kenon Ltd
Tannerie Limoges sas
54,804
1,375
Term-loan
Term-loan
Type
of loan
Currency
Expiry
date
Interest
rate (1)
Current
Portion
(Euro
thousands)
Non-current
Portion
(Euro
thousands)
Pledge
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
JPY
JPY
GBP
EUR
02/2022
06/2022
05/2030
10/2024
04/2025
07/2026
02/2026
06/2024
01/2025
11/2026
09/2022
09/2022
01/2029
07/2024
0.406%
0.179%
2.737%
0.600%
0.157%
0.069%
1.250%
0.137%
0.232%
0.184%
0.457%
0.457%
4.477%
1.200%
50,000
50,000
3,667
10,000
-
-
12,600
22,222
18,000
5,556
5,752
5,752
3,838
500
-
-
-
-
27,500 Mortgage ioan
20,000
100,000
100,000
77,400
33,333
39,000
44,444
-
-
-
-
-
-
-
-
-
-
-
50,966 Mortgage ioan
875 Mortgage ioan
Total
681,405
187,887
493,518
(1) the interest rates include the effect of any interest rate risk hedges
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements PRADA spa’s mor tgage loan is secured by the building in Milan used for the Group’s
headquar ters, and Kenon ltd’s mor tgage loan is secured by the building on Old
Bond Street, London, used for one of the most prestigious Prada stores in Europe.
The loan to Tannerie Limoges sas is secured by such company’s factory building.
The Group generally borrows at variable interest rates and manages the risk of
interest rate fluctuations through hedging agreements, as described in Note 12.
The financial payables are set for th hereunder by their por tions with fixed and
variable interest rates:
December 31, 2021
December 31, 2020
variable
interest rates
fixed
interest rates
variable
interest rates
fixed
interest rates
Short-term financial payables
Long-term financial payables
77%
84%
23%
16%
65%
71%
35%
29%
27. LONG-TERM EMPLOYEE BENEFITS
(amounts in thousands of Euro)
Post-employment benefits
Other long-term employee benefits
Total liabilities for long-term benefits
Pension plan surplus (note 19)
Net liabilities for long-term benefits
December 31
2021
December 31
2020
49,293
24,526
73,819
54,160
19,096
73,256
(13,309)
(11,277)
60,510
61,979
POST-EMPLOYMENT BENEFITS
The net balance of Long-term employee benefits as at December 31, 2021 is a
liability of Euro 60.5 million (Euro 62 million as of December 31, 2020) and all the
benefits fall within the scope of defined benefit plans.
The Post-employment benefits consist of Euro 25.8 million (Euro 28.1 million at
December 31, 2020) in liabilities accounted for by Italian companies and Euro 23.4
million by the foreign subsidiaries (Euro 26.1 million in at December 31, 2020).
The Italian liabilities regard the “ Trattamento di Fine Rappor to” (“ TFR”, or staff
leaving indemnities), a deferred benefit for employees that is mandatory for
Italian businesses and is based on the employees’ length of service and pay. The
204
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present value of the liability recognized was determined by projecting the amount
accrued at December 31, 2021 as per Italian law to the estimated future date of
employment termination, and then discounting it to the present value at the same
repor ting date using the projected unit credit method (“PUCM”).
The following table presents the changes in long-term employee benefits as at
December 31, 2021:
(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
28,050
26,111
(11,277)
19,095
61,979
Current service cost
Financial charges (income)
Actuarial (gains)/losses
Benefits paid
Contributions
Exchange differences
698
(123)
(505)
(2,275)
-
-
5,243
129
(2,488)
(5,040)
-
(507)
355
(142)
(1,242)
-
(186)
(817)
15,090
(254)
(1,706)
(7,924)
-
225
21,386
(390)
(5,941)
(15,239)
(186)
(1,099)
Closing balance
25,845
23,448
(13,309)
24,526
60,510
The actuarial gains and losses are as follows:
(amounts in thousands of Euro)
Actuarial adjustments due to
(a) Changes in financial assumptions
(b) Changes in other assumptions
(e.g. demographic assumptions, remuneration increases)
Defined
Benefit Plans in
Italy (TFR)
Defined Benefit
Plans in Other
Countries
(including Japan)
Pension
Funds in UK
(1,045)
540
(867)
(1,621)
(2,712)
1,470
Actuarial (gains)/losses
(505)
(2,488)
(1,242)
The current service cost and financial charges/(income) are recognized in the
statement of profit or loss. For O ther long-term employee benefits only, the
actuarial differences are also recognized in the statement of profit or loss.
The TFR liability was measured on the basis of an independent appraisal by
Federica Zappari, an Italian actuary, member (n. 1134) of the Ordine Nazionale
degli Attuari (Italian Society of Actuaries). The technical basis was processed using
statistical data, whereas the demographic assumptions involved variables such
as the probabilities of death, retirement, resignations and dismissals; contract
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expiration; leaving indemnity advances; and supplementary pension schemes.
The Post-employment benefits are stated net of the pension plan surplus for the
Group companies operating in the United Kingdom that supply pension services to
their employees. As at December 31, 2021, the fair value of such pension plans was
a surplus of Euro 13.3 million (Euro 11.3 million as of December 31, 2020). The
fair value of the plan assets was determined by the independent actuary Mercer
Limited. It is detailed below:
(amounts in thousands of Euro)
Fair value of plan assets
Fair value of plan liabilities
Pension plan surplus
December 31
2021
December 31
2020
73,190
(59,881)
72,009
(60,732)
13,309
11,277
The composition of the main plan assets on the repor ting date is as follows:
(amounts in thousands of Euro)
Equities
Alternatives
Bonds
Cash
Other
Total
December 31
2021
December 31
2020
21,385
15,967
27,318
8,520
-
73,190
24,819
5,860
34,515
5,919
896
72,009
The main actuarial assumptions used as at December 31, 2021 are as follows:
Average duration of plan (years)
Average increase in remuneration
Rate of inflation
Defined Benefit
Plans in Italy (TFR)
Pension
Funds in UK
Defined Benefit Plans
in Japan
11.7
1.10%
1.50%
15
3.07%
3.07%
11
2.61%
N/A
The main actuarial assumptions used as of December 31, 2020 were as follows:
Average duration of plan (years)
Average increase in remuneration
Rate of inflation
206
Defined Benefit
Plans in Italy (TFR)
Pension
Funds in UK
Defined Benefit Plans
in Japan
11.8
1.30%
1.50%
15
2.60%
2.60%
13.8
3.37%
N/A
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The discount rate used to measure defined benefit plans was determined on the
basis of yields on bonds with an AA rating and a maturity date similar to that of
the plans.
With respect to the December 31, 2021 liability, a sensitivity analysis was per formed
on the main actuarial variables such as the discount rate, salary changes and
inflation rate. The analysis did not lead to significant changes in the liability,
except for the sensitivity analysis conducted on the interest rate curve, according
to which a 50 basis point increase or decrease would cause an increase or decrease
in the Group’s total defined benefit obligation (“DBO”) up to Euro 6 million.
OTHER LONG-TERM EMPLOYEE BENEFITS
The O ther long-term employee benefits meet the IAS 19 definition of long-term
employee benefits and refer to retention and per formance-based programs for the
Group’s key-figures. Their actuarial valuation at December 31, 2021, calculated
using PUC methodology, resulted in Euro 24.5 million (Euro 19.1 million as at
December 31, 2020), according to an independent actuarial appraisal.
28. PROVISIONS FOR RISKS AND CHARGES
The changes in the Provisions for risks and charges are as follows:
(amounts in thousands of Euro)
Provision
for litigation
Provision for
tax disputes
Other
provisions
Opening balance
Exchange differences
Reversals
Utilized
Increases
Closing balance
389
4
-
(120)
10,626
10,899
1,858
78
-
(656)
1,026
2,306
43,169
3,119
(491)
(2,978)
3,177
45,996
Total
45,416
3,201
(491)
(3,754)
14,829
59,201
The Provisions for risks and charges represent management’s best estimate of the
maximum amount of possible liabilities. In the Directors’ opinion, based on the
information available to them and , the total amount accrued for risks and charges
at the repor ting date is adequate in respect of the liabilities that could arise from
them.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements TAX DISPUTES
The Group’s main tax disputes at the repor ting date are described hereunder.
The dispute filed by PRADA spa following an audit initiated in 2012 by the Italian
Customs Agency for the tax years from 2007 to 2011 to determine the customs
value of the products consists of three legal actions regarding the 2010 tax year,
all of which are currently pending at the Supreme Cour t pursuant to appeals filed
by the Company in 2019 and 2020. The Company has already paid the related
amount due and is awaiting the notice of the hearing for all three cases.
Meanwhile, the Company established an appropriate method for measuring the
value of impor ted products star ting from May 2020, with retroactive effectiveness
for the assessable years, in agreement with the Italian Customs Agency. The
application of such method led to the estimate, for the previous years, of an end-
of-period liability of approximately Euro 0.5 million.
O ther liabilities for customs duty risks are recognized at the repor ting date in an
amount of Euro 1.4 million, consisting of Euro 0.8 million for a mistaken customs
classification of footwear impor ted into the United States and Euro 0.6 million
for risks of assessments regarding price adjustments, split among various non-EU
countries.
LEGAL DISPUTES
Chora S.r.l., a company controlled by Prada’s former Board Chairman, Carlo Mazzi,
initiated a lawsuit in January 2022 against Prada in the Cour t of Milan claiming
for a one-off compensation following the non-renewal of the strategic consulting
agreement with Chora S.r.l..
Prada, taking into consideration the independent opinion of its legal counsels,
considered reasonable a provision of Euro 10 million, which represents the best
estimate at this time of the contingent liability. The Company will continue to
monitor this case and will adjust the amount allocated for it at December 31,
2021, as necessary, in view of any new facts and/or circumstances.
OTHER RISK PROVISIONS
The O ther risk provisions amount to Euro 46 million as at December 31, 2021 and
refer primarily to contractual obligations to restore leased commercial proper ties
208
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements to their original condition.
29. OTHER NON-CURRENT LIABILITIES
(amounts in thousands of Euro)
Deferred costs for lease payments
Deferred income for commercial agreements
Other non-current liabilities
Total
December 31
2021
December 31
2020
6,143
116,661
223
4,362
104,000
2,392
123,027
110,754
Deferred income for commercial agreements increased by Euro 12 million
compared to December 31, 2020 as a result of amounts collected under commercial
agreements whose effects on income are expected for more than 12 months.
30. EQUIT Y AT TRIBUTABLE TO THE OWNERS OF THE GROUP
The equity attributable to the owners of the Group is set for th below:
(amounts in thousands of Euro)
Share Capital
Share premium reserve
Other reserves
Actuarial reserve
Fair value Investments in equity instruments reserve
Cash flow hedge reserve
Translation reserve
Net income/(loss) for the period
Total
SHARE CAPITAL
December 31
2021
December 31
2020
255,882
410,047
2,118,855
(5,708)
(10,992)
(15,878)
67,434
294,254
255,882
410,047
2,262,759
(8,151)
(25,188)
(5,794)
(3,359)
(54,139)
3,113,894
2,832,057
As at December 31, 2021, approximately 80% of PRADA spa’s Share capital was
owned by PRADA Holding spa 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 did not change from that of
December 31, 2020.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements TRANSLATION RESERVE
Changes in this reserve result from the translation into Euro of the foreign currency
financial statements of the consolidated companies. The reserve increased from
Euro -3.4 million at December 31, 2020 to Euro 67.4 million.
OTHER RESERVES
The O ther reserves amount to Euro 2,118.9 million as at December 31, 2021,
down by Euro 143.9 million compared to December 31, 2020 mainly as a result of
the 2020 loss and the distribution of dividends.
NET RESULT FOR THE PERIOD
The Group’s net result for the twelve months ended December 31, 2021 is a profit
of Euro 294.3 million (versus a loss of Euro 54.1 million for the twelve months
ended December 31, 2020).
31. EQUIT Y AT TRIBUTABLE TO NON-CONTROLLING INTERESTS
The following table shows the changes in the Non-controlling interests during the
years ended December 31, 2021 and December 31, 2020:
(amounts in thousands of Euro)
Opening balance
Translation differences
Dividends
Net income/(loss) for the period
Actuarial reserve
Capital reduction in subsidiaries
Sale of shares to the Group
Closing balance
December 31
2021
December 31
2020
19,663
863
(1,674)
849
5
(141)
(4,816)
14,749
21,417
(1,526)
-
(229)
1
-
-
19,663
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For a better understanding of the economical and operating per formances of
2021, reference is made to the Financial Review.
32. NET REVENUES
The consolidated Net revenues are produced primarily by sales of finished products
and are stated net of returns and discounts.
(amounts in thousands of Euro)
Net sales
Royalties
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
3,316,620
49,047
2,390,866
31,873
3,365,667
2,422,739
The Financial Review describes the Net sales by distribution channel, geographical
area, brand and product.
33. COST OF GOODS SOLD
The Cost of goods sold has the following composition:
(amounts in thousands of Euro)
Purchases of raw materials and manufactoring services
Depreciation, amortization and impairment on tangible and intangible fixed assets
Depreciation and write-downs of the Right of Use assets
Labor cost
Short-term and low value lease (IFRS 16)
Logistics costs, duties and insurance
Change in inventories
twelve months
ended December 31
2021
twelve months
ended December 31
2020
497,841
17,967
3,178
131,219
58
154,966
13,080
417,119
17,025
3,035
117,702
597
103,808
20,075
Total
818,309
679,361
The incidence of the cost of goods sold on net revenues for the twelve months
ended December 31, 2021 was 24.3%, a substantial decrease from the 28% of
2020. The improvement was due largely to economies of scale in the manufacturing
division facilitated by the sales acceleration in 2021.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 34. OPERATING EXPENSES
The Operating expenses are detailed below:
(amounts in thousands of Euro)
Product design and development costs
Advertising and communications costs
Selling costs
General and administrative costs
twelve months
ended December 31
2021
% of net revenues
twelve months
ended December 31
2020
% of net revenues
115,319
294,251
1,421,169
227,135
3.4%
8.8%
42.2%
6.70%
102,232
206,848
1,259,827
154,410
4.2%
8.5%
52.0%
6.4%
71.1%
Total
2,057,874
61.10%
1,723,317
The total operating expenses were Euro 2,057.9 million, up by Euro 334.6
million from those of 2020. The increase was attributable to the normalization
of expenditure levels, which in 2020 had benefited to a greater extent from rent
discounts and government incentives, and more communication activities.
The following table sets for th depreciation, amor tization, impairment, cost of labor
(net of the government subsidies for the Covid-19 pandemic) and rent expense
included within the operating expenses in accordance with the requirements of
IAS 1.
(amounts in thousands of Euro)
Depreciation, amortization and impairment on tangible and intangible fixed assets
Depreciation and write-downs of the Right of Use assets (*)
Labor cost
Pure variable lease (IFRS 16)
Short term and low value lease (IFRS 16)
(*) shown without the impact of Covid-related discounts
twelve months
ended December 31
2021
twelve months
ended December 31
2020
186,543
423,043
617,862
173,730
12,676
207,989
440,875
548,056
127,830
9,028
212
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 35. FINANCIAL INCOME / (EXPENSE)
The Net financial income/(expense) are presented below:
(amounts in thousands of Euro)
Interest expenses on borrowings
Interest income
Interest income / (expenses) IAS 19
Exchange gains / (losses) – realized
Exchange gains / (losses) – unrealized
Other financial income / (expenses)
Interest and other financial income / (expenses), net
Interest expenses on Lease Liability
Dividends from investments
Total financial expenses
twelve months
ended December 31
2021
twelve months
ended December 31
2020
(9,239)
2,591
151
(4,117)
(18,696)
(1,906)
(31,216)
(10,239)
1,954
212
(2,501)
(16,318)
(2,588)
(29,480)
(36,773)
(42,670)
160
277
(67,829)
(71,873)
The net financial expenses were Euro 67.8 million, down by Euro 4 million from
those 2020. The decrease was due to less interest expenses, due to a smaller
amount and time horizon, and less net bank borrowings. Higher foreign exchange
net losses par tially offset the overall decrease of financial charges.
36. TAXATION
Income taxes have the following composition:
(amounts in thousands of Euro)
Current taxation
Deferred taxation
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
151,210
(24,658)
22,636
(20,080)
126,552
2,556
The income tax expense, net was Euro 126.6 million, corresponding to 30% of the
pre-tax income.
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The reconciliation between the Group’s theoretical tax rate and its effective tax
rate is presented in the table below:
(amounts in thousands of Euro)
twelve months
ended December 31
2021
Group’s weighted theoretical tax rate (calculated in absolute values on the basis of subsidiaries’ pre-taxable income/loss)
26.7 %
Non deductible expenses, net of not taxable income
Write-off of the deferred tax asset and utilization of tax losses carried forward
Tax losses generated in the year on which no deferred tax assets were recognized
Prior year taxes adjustments
Withholding and other income taxes
Effective tax rate of the Group
2.2%
0.0%
0.0%
0.1%
1.0%
30.0%
The changes in Deferred tax assets and liabilities are set for th below:
(amounts in thousands of Euro)
Opening balance
Exchange differences
Deferred taxes on acquisition
Deferred taxes on derivative instruments recorded in equity (cash flow hedges)
Deferred taxes on post-employment benefits recorded in equity (reserve for actuarial differences)
Other movements
Deferred taxes for the period in profit or loss
twelve months
ended December 31
2021
twelve months
ended December 31
2020
222,638
214,869
8,185
-
4,247
(1,740)
(331)
24,657
(10,889)
(1,318)
(1,727)
1,034
590
20,079
Closing balance
257,656
222,638
The Deferred tax assets and liabilities are classified by nature hereunder:
(amounts in thousands of Euro)
Inventories
Receivables and other assets
Useful life of non-current assets
Deferred taxes due to acquisitions
Provision for risks / accrued expenses
Non-deductible / taxable charges/income
Deferred tax assets on rental contracts
Tax loss carryforwards
Derivative financial instruments
Long term employee benefits
Other
Total
December 31, 2021
December 31, 2020
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
159,548
1,767
36,832
-
16,465
5,394
43,515
4,961
5,095
10,421
3,464
-
1,510
7,587
12,462
394
2,246
423
-
-
3,327
1,857
123.078
1.177
34.975
-
13.135
6.148
40.630
12.189
1.508
10.911
8.137
-
1.548
8.447
12.699
429
1.639
504
-
222
2.262
1.500
287,462
29,806
251.888
29.250
214
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The Tax loss carryforwards as of December 31, 2021, including those already
recognized in the Group’s financial statements, are detailed below:
(amounts in thousands of Euro)
Expiring within 5 years
Expiring after 5 years
Available for carryforward with no time limit
Total tax loss carryforwards
December 31
2021
15,542
10,340
98,810
124,692
The Group’s management updated the deferred tax assets recognized on tax loss
carryforwards taking into consideration, for their recoverability, the macroeconomic
scenario and the business developments of each of the Group’s companies.
37. 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.
Group net income / (loss) in Euro
Weighted average number of ordinary shares in issue
twelve months
ended December 31
2021
twelve months
ended December 31
2020
294,253,615
(54,138,620)
2,558,824,000
2,558,824,000
Basic and diluted earnings / (losses) per share in Euro, calculated on weighted average number of
shares
0.115
(0.021)
DIVIDENDS PER SHARE
The Board of Directors of the Company has proposed a final dividend of Euro
179,117,680 for the twelve months ended December 31, 2021 (Euro 0.07 per
share).
During 2021, the Company distributed dividends of Euro 89,558,840 (Euro 0.035
per share), as approved at the General Meeting held on May 27, 2021 to approve
the December 31, 2020 financial statements.
The dividends and the related Italian withholding tax due (Euro 4.7 million),
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
determined 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, were fully paid
during the year.
The dividends paid in the past three years are detailed hereunder:
Financial statements
ended December 31
2020
Financial statements
ended December 31
2019
Financial statements
ended December 31
2018
89,558,840
0.035
27/05/2021
June 2021
-
-
26/05/2020
-
153,529,440
0.06
30/04/2019
May 2019
Total dividends paid (Euro)
Dividends per Share (Euro)
Date of approval by Shareholders’ Meeting
Date of payment
38. ADDITIONAL INFORMATION
NUMBER OF EMPLOYEES
The average F TE (calculated through ratio between effective working hours and
standard working hours) of the employees, by business division, is presented below:
(number of employees)
Production
Product design and development
Advertising and Communications
Selling
General and administrative services
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
2,829
936
180
7,696
931
2,838
946
161
7,669
934
12,572
12,548
In 2021 new criteria for determining Full-Time Equivalents were adopted, which
entailed revision of those published in 2020 in order to ensure correct comparison
between the two periods.
216
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements EMPLOYEE REMUNERATION
The employee remuneration by business division, net of government subsidies for
Covid-19 pandemic, is presented below:
(amounts in thousands of Euro)
Production
Product design and development
Advertising and Communications
Selling
General and administrative services
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
126,692
60,618
19,682
440,189
97,373
109,481
56,384
15,456
390,248
85,968
744,554
657,537
The types of employee remuneration are presented below:
(amounts in thousands of Euro)
Wages and salaries
Post-employment benefits and other long-term benefits
Social contributions
Other
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
558,616
37,804
116,067
32,067
492,529
34,368
102,828
27,812
744,554
657,537
DISTRIBUTABLE RESERVES OF THE PARENT COMPANY, PRADA SPA
(amounts in thousands of Euro)
December 31
2021
Possible
utilization
Distributable
amount
Share Capital
Share premium reserve
Legal reserve
Other reserves
Retained earnings
Fair Value reserve
Time Value reserve
Intrinsic Value reserve
Distributable amount
A share capital increase
B coverage of losses
C distributable to shareholders
255,882
410,047
51,176
182,899
974,885
(10,992)
618
(13,363)
-
-
A, B, C
B
A, B, C
A, B, C
-
-
-
-
-
410,047
-
182,899
930,013
-
-
-
1,522,959
Summary of utilization
in the last three years
Coverage of
losses
Distribution of
dividends
-
-
-
-
-
-
-
-
-
-
-
-
-
345,441
-
-
-
345,441
Under Italian Civil Code Ar ticle 2431, the share premium reserve is fully
distributable since the amount of the legal reserve is equal to or exceeds 20% of
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements share capital.
Under Italian Legislative Decree 38/2005, Ar ticle 7, Euro 20.5 million of the
retained earnings is not distributable.
Reserves for Euro 85 million are restricted under tax suspension in accordance
with Decree Law 104/2020, Ar t. 110, subsection 8. These reserves are subject
to taxation in the event of distribution, on which deferred taxes had not been
allocated as their distribution is not foreseen.
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 December 31,
2021 and December 31, 2020 are listed hereunder.
(amounts in thousands of Euro)
Average rate
December 31
2021
Average rate
December 31
2020
Closing rate
December 31
2021
Closing rate
December 31
2020
UAE Dirham
Australian Dollar
Brazilian Real
Canadian Dollar
Swiss Franc
Czech Koruna
Danish Kronor
GB Pound
Hong Kong Dollar
Japanese Yen
Korean Won
Kuwait Dinar
Kazakhstani Tenge
Moroccan Dirham
Macau Pataca
Mexican Peso
Malaysian Ringgit
New Zealand Dollar
Qatari Riyal
Chinese Renminbi
Romanian Leu
Russian Ruble
Saudi Riyal
Swedish Kronor
Singapore Dollar
Thai Baht
Turkish Lira
Taiwan Dollar
Ukrainian Hryvna
US Dollar
Vietnamese Dong
South African Rand
218
4.348
1.575
6.379
1.484
1.082
25.646
7.437
0.860
9.200
129.837
1,353.833
0.357
503.806
10.626
9.471
23.987
4.903
1.673
4.363
7.637
4.921
87.248
4.440
10.144
1.590
37.802
10.421
33.070
32.294
1.184
4.191
1.656
5.882
1.529
1.070
26.451
7.455
0.889
8.850
121.773
1,344.894
0.350
469.976
10.822
9.117
24.513
4.792
1.756
4.192
7.870
4.838
82.598
4.282
10.491
1.573
35.686
8.033
33.605
30.808
1.141
4.160
1.562
6.310
1.439
1.033
24.858
7.436
0.840
8.833
130.380
1,346.380
0.343
489.100
10.518
9.113
23.144
4.718
1.658
4.158
7.195
4.949
85.300
4.254
10.250
1.528
37.653
15.234
31.342
30.923
1.133
4.507
1.590
6.374
1.563
1.080
26.242
7.441
0.899
9.514
126.490
1,336.000
0.373
516.790
10.882
9.792
24.416
4.934
1.698
4.535
8.023
4.868
91.467
4.603
10.034
1.622
36.727
9.113
34.468
34.740
1.227
27,415.961
26,478.377
26,212.000
28,469.000
17.463
18.758
18.063
18.022
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements AUDITOR’S COMPENSATION
The total fees and expenses recognized to Deloitte & Touche spa and its network
for auditing the financial statements of the periods ended December 31, 2021
and December 31, 2020 and providing non-audit services, are presented below
(amounts in thousands of Euro):
Type of service
Audit Firm
Provided to
twelve months
ended December 31
2021
twelve months
ended December 31
2020
Audit services
Audit services
Audit services
Deloitte & Touche spa
Deloitte & Touche spa
Deloitte Network
PRADA spa
Subsidiaries
Subsidiaries
Total audit fees to Deloitte Network
Other advisory services
Other advisory services
Deloitte Network
Deloitte Network
PRADA spa
Subsidiaries
Total non-audit fees to Deloitte Network
508
136
1,129
1,773
24
69
93
450
106
1,066
1,622
31
111
142
Total compensation to Deloitte Network
1,866
1,764
39. REMUNERATION OF BOARD OF DIRECTORS, FIVE HIGHEST
PAID INDIVIDUALS AND SENIOR MANAGERS
Remuneration of PRADA spa Board of Directors for period ended December 31, 2021
(amounts in thousands of Euro)
Directors’ fees
Remuneration
Bonuses and
other incentives
Benefits
in kind
Paolo Zannoni
Miuccia Prada Bianchi
Patrizio Bertelli
Alessandra Cozzani
Lorenzo Bertelli
Stefano Simontacchi
Marina Sylvia Caprotti
Yoël Zaoui
Maurizio Cereda
875
14,830
14,830
-
-
50
53
64
70
-
-
-
388
64
-
-
-
-
33
144
144
453
252
-
-
-
-
Total
30,772
452
1,026
-
-
1
13
3
-
-
-
-
17
Pension,
healthcare
and TFR
contributions
-
24
24
261
69
2
8
10
3
401
Total
908
14,998
14,999
1,115
388
52
61
74
73
32,668
The Director ’s fees include the allocation of what was resolved by the Shareholders’
Meeting on May 27, 2021 as well as the additional emoluments approved by the
Board of Statutory Auditors due to the specific activities carried out by the Directors.
During the year, remuneration was also paid to two former directors of the Group
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements
(Carlo Mazzi for Euro 481,000 and Gian Franco Oliviero Mattei for Euro 7 7,000).
Remuneration of PRADA spa Board of Directors for fiscal year ended December 31, 2020
(amounts in thousands of Euro)
Directors’ fees
Remuneration
Bonuses and
other incentives
Benefits
in kind
Carlo Mazzi
Miuccia Prada Bianchi
Patrizio Bertelli
Alessandra Cozzani
Stefano Simontacchi
Maurizio Cereda
Gian Franco Oliviero Mattei
Giancarlo Forestieri
Sing Cheong Liu
766
9,088
9,088
50
35
72
98
42
42
-
-
-
294
-
-
-
-
-
-
27
27
204
-
-
-
-
-
73
-
-
12
-
-
-
-
-
Pension,
healthcare
and TFR
contributions
21
24
24
181
1
2
13
10
14
Total
860
9,139
9,139
741
36
74
111
52
56
Total
19,281
294
258
85
290
20,208
REMUNERATION OF FIVE HIGHEST PAID INDIVIDUALS
The Group’s five highest paid individuals included two Board of Director members
for 2021 and three Board Members for 2020. The total remuneration of the
remaining three highest paid individuals in the twelve months ended December 31,
2021 and the remaining two highest paid individuals in the twelve months ended
December 31, 2020 is set for th below:
(amounts in thousands of Euro)
Remuneration and other benefits
Bonuses and other incentives
Non-monetary benefits
Pension/social security, healthcare and TFR contributions
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
20,916
12,099
593
63
33,671
19,800
8,250
-
28
28,078
Excluding the remuneration of the Board of Directors’ members the remuneration
range of the highest paid individuals is as follows:
Less than HKD 8,000,000
Between HKD 8,000,000 and HKD 20,000,000
Between HKD 20,000,000 and HKD 50,000,000
More than HKD 50,000,000
Total individuals
220
twelve months
ended December 31
2021
twelve months
ended December 31
2020
-
1
-
2
3
-
-
-
2
2
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements SENIOR MANAGERS REMUNERATION
The remuneration of the Senior Managers is as follows:
(amounts in thousands of Euro)
Remuneration and other benefits
Bonuses and other incentives
Non-monetary benefits
Pension/social security, healthcare and TFR contributions
Total
twelve months
ended December 31
2021
twelve months
ended December 31
2020
27,290
16,978
2,197
1,980
48,445
27,018
9,894
1,976
1,600
40,488
There were 24 Senior Managers as of December 31, 2021, and 25 Senior Managers
as of December 31, 2020.
The remuneration range of the Senior Managers is as follows:
Less than HKD 4,000,000
between HKD 4,000,000 and HKD 8,000,000
between HKD 8,000,000 and HKD 16,000,000
between HKD 16,000,000 and HKD 50,000,000
more than HKD 50,000,000
Total individuals
twelve months
ended December 31
2021
twelve months
ended December 31
2020
9
6
5
2
2
24
13
7
3
-
2
25
The amounts included in the tables Remuneration of Board of Directors, Five
Highest Paid Individuals and Senior Managers represent the amounts recognized
in the profit or loss.
40. RELATED PART Y TRANSACTIONS
The Group carries out transactions with companies classifiable as related par ties
according to IAS 24, “Related Par ty Disclosures”. In the twelve months ended
December 31, 2021, 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 proper ty.
The following tables present the effect of related-par ty transactions on the
Consolidated Financial Statements in terms of Statement of Financial Position
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements balances at the repor ting date and total transactions affecting the Statement of
Profit or Loss.
STATEMENT OF FINANCIAL POSITION BALANCES AS OF DECEMBER 31, 2021
(amounts in thousands of Euro)
Trade
receivables
Receivables
from, and
advances to,
related parties
– current
Receivables
from, and
advances to,
related parties
– non-current
Right of
Use assets
Trade
payables
Payables to
related parties
– current
Lease
Liability
Other
Liabilities
Les Femmes Srl
569
FILATI BIAGIOLI MODESTO S.P.A
SPELM SA
Rubaiyat Modern Lux.Pr.Co.Ltd
LUDO DUE S.R.L.
Chora Srl
Peschiera Immobiliare srl
Premiata Srl
Conceria Superior S.p.A.
Perseo srl
PA BE 1 S.r.l.
Al Tayer Group LLC
Al Tayer Insignia LLC
Danzas LLC
Al Sanam Rent a Car LLC
PRADA HOLDING S.P.A.
Orexis S.r.l.
PH-RE
Others
Members of the Board of Directors
of PRADA spa
-
-
-
-
-
-
2
1
2
-
-
995
-
-
11
-
-
3
-
6
-
-
-
-
4,711
-
-
-
-
-
-
-
-
-
-
18,000
149
-
-
1,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
2,676
2,877
4,174
-
9,972
-
3,294
-
-
-
-
-
-
-
-
-
74
231,046
-
-
-
-
-
433
41
234
1,351
288
-
2
12
38
1
-
-
-
2
-
-
-
-
994
-
-
-
-
-
-
5,000
-
2,366
-
-
-
-
-
-
-
-
-
4,225
-
10,942
-
3,869
-
-
-
-
-
-
-
-
-
81
256,219
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
133
-
-
-
-
-
1,702
Total at December 31, 2021
1,583
22,866
1,125
248,560
7,955
8,360
275,336
1,835
222
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements STATEMENT OF FINANCIAL POSITION BALANCES AS OF DECEMBER 31, 2020
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
(amounts in thousands of Euro)
Les Femmes srl
CECCO BRUNA 2011 srl
Luna Rossa Challenge 2013 NZ ltd
COR 36 srl New Zeland Branch
DFS Hawaii
DFS Cotai limitada
DFS Guam LP
DFS Saipan Ltd
DFS Okinawa
SPELM SA
Rubaiyat Modern Lux.Pr.Co.Ltd
LUDO DUE S.R.L.
Orexis S.r.l.
Progetto Prada Arte srl
331
-
228
856
-
188
-
-
-
-
-
-
-
3
Luna Rossa Challenge 2013 srl
2,152
-
-
-
1
-
46
-
596
-
-
5
-
-
Chora Srl
Peschiera Immobiliare srl
Premiata srl
Conceria Superior spa
Perseo srl
COR 36 srl
Al Tayer Group llc
Al Tayer Insignia llc
Danzas llc
Al Sanam Rent a Car llc
PRADA HOLDING spa
BELLATRIX spa
PH-RE
Members of the Board of Directors
of PRADA spa
Relatives of members of the Board
of Directors
-
-
-
-
-
-
-
-
-
-
-
-
1,125
-
-
-
-
-
-
-
-
-
-
-
20,000
18,000
-
18,532
5,848
-
-
-
-
6,500
-
-
-
-
-
-
155
-
-
-
-
-
-
-
-
-
-
309
-
-
-
-
-
10
-
-
-
960
(54)
-
-
3
5,673
355
87
12
31
4,524
-
4,671
-
-
-
-
3,820
-
-
-
-
-
-
-
-
-
-
257,496
-
-
-
-
-
-
-
-
-
403
38
125
661
330
-
8
45
50
1
-
-
-
-
6
-
-
-
7,347
144
24
92
4,560
-
5,154
-
-
-
-
4,384
-
-
-
-
-
-
-
-
-
-
280,168
-
-
-
-
-
-
-
-
-
-
917
-
-
-
-
-
-
-
-
-
-
-
2,184
-
-
-
-
-
380 (*)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
234
-
-
-
-
2,206
471
Total at December 31, 2020
4,406
51,035
19,434
276,324
2,925
3,481
301,879
2,911
(*) Payables for the acquisition of Fratelli Prada spa
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE T WELVE MONTHS
ENDED DECEMBER 31, 2021
(amounts in thousands of Euro)
Les Femmes Srl
CECCO BRUNA 2011 SRL
FILATI BIAGIOLI MODESTO S.P.A
SPELM SA
LUDO DUE S.R.L.
Ludo Tre S.r.l.
Chora Srl
Peschiera Immobiliare srl
Premiata Srl
Conceria Superior S.p.A.
Perseo srl
Al Tayer Group LLC
Al Tayer Insignia LLC
Danzas LLC
Al Sanam Rent a Car LLC
Luna Rossa Challenge NZ LTD
COR 36 New Zeland Branch Ltd
Luna Rossa Challenge Srl
Luna Rossa Challenge Srl (sponsorship)
COR 36 S.r.l.
COR 36 S.r.l. (sponsorship)
PRADA HOLDING S.P.A.
Orexis S.r.l.
PH-RE
Others
Net
revenues
Cost of
goods sold
General,
admin.
& selling costs
(income)
Interest
income
Interest
expenses
-
-
-
-
-
-
-
-
-
-
-
-
1,956
-
-
-
(275)
4
-
1
-
-
-
-
(10)
5,455
2
3,777
-
-
-
-
42
70
11,972
723
-
-
44
-
-
-
-
-
13
-
-
-
-
-
-
-
36
531
1,121
(1)
856
530
707
64
-
32
136
64
10
(12)
189
(4)
21,232
(2)
11,500
(4)
74
18,845
79
11
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
36
56
-
-
35
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1
2,414
-
Total at December 31, 2021
1,676
22,098
55,983
11
2,542
224
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE T WELVE MONTHS
ENDED DECEMBER 31, 2020
(amounts in thousands of Euro)
Les Femmes srl
CECCO BRUNA 2011 srl
Luna Rossa Challenge 2013 NZ ltd
COR 36 S.r.l. New Zeland Branch
DFS Hawaii
DFS Venture Singapore (Pte) Limited
DFS Cotai limitada
SPELM SA
LUDO DUE srl
Orexis S.r.l.
Net
revenues
Cost of
goods sold
General,
admin.
& selling costs
(income)
Interest
income
Interest
expenses
-
-
-
197
-
-
-
-
-
-
2,960
99
-
-
-
-
-
-
-
-
114
294
6,807
836
-
-
(228)
(383)
587
22
1,581
537
1,123
(36,942)
21,143
1,711
530
521
82
-
-
11,414
65
85
137
125
1
10
(14)
(3)
1
-
20,093
1,041
9
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
9
-
-
-
-
-
-
122
-
-
-
-
-
-
-
-
321
41
49
-
-
(1)
47
-
-
-
-
-
-
-
-
-
-
-
2,724
Luna Rossa Challenge 2013 srl
455
(1)
Chora Srl
Peschiera Immobiliare srl
Premiata srl
Conceria Superior spa
Perseo srl
COR 36 srl
Al Tayer Group LLC
Al Tayer Insignia LLC
Danzas LLC
Al Tayer Motors
Al Sanam Rent a Car LLC
PRADA HOLDING spa
BELLATRIX S.P.A.
LUDO Spa
PH - RE
Relatives of members of the Board of Directors
-
-
-
284
-
25
-
1,217
-
-
-
-
-
-
-
Total at December 31, 2020
2,178
11,174
23,174
140
3,181
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements The foregoing tables repor t information on transactions with related par ties
in accordance with IAS 24, “Related Par ty Disclosures”, while the following
transactions also fall within the scope of application of the Hong Kong Stock
Exchange Listing Rules.
The transactions with related par ty 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 two buildings in Aoyama, Tokyo for Prada and Miu Miu stores.
The transactions repor ted for the twelve months ended December 31, 2021
are regulated by Chapter 14A of the Listing Rules because they are considered
continuing connected transactions subject to disclosure, but they are exempt from
the independent shareholders’ approval requirement. As required by the Listing
Rules, comprehensive disclosure of those continuing connected transactions is
contained in PRADA spa’s Announcements dated, respectively, July 15, 2015
(“Prada Aoyama”) and May 26, 2017 (“Miu Miu Aoyama”).
The transactions with related par ty Luna Rossa Challenge srl for the twelve
months ended December 31, 2021 are regulated by Chapter 14A of the Listing
Rules because they are considered continuing connected transactions subject
to disclosure, but they are exempt from the independent shareholders’ approval
requirement. As required by the Listing Rules, comprehensive disclosure of those
continuing connected transactions is contained in PRADA spa’s Announcements
dated, respectively, December 1, 2017 (“Sponsorship Agreement”) and November
20, 2020 (“Amendment to Sponsorship Agreement”).
The sponsorship agreement with related par ty Challenger of Record 36 srl, effective
from March 1, 2020, is regulated by Chapter 14A of the Listing Rules because it
is considered a continuing connected transaction subject to disclosure, but it is
exempt from the independent shareholders’ approval requirement. As required by
the Listing Rules, comprehensive disclosure of the continuing connected transaction
is contained in PRADA spa’s Announcement dated March 1, 2020.
The transactions with related par ty Orexis srl refer to the 2020 transaction in
which PRADA spa sold and Orexis srl purchased the building at Via della Spiga 18
in Milan. This transaction is regulated by Chapter 14A of the Listing Rules because
it is considered a connected transaction subject to disclosure, but it is exempt
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements from the independent shareholders’ approval requirement. As required by the
Listing Rules, comprehensive disclosure of the connected transaction is contained
in PRADA spa’s Announcement dated December 29, 2020.
Apar t from the non-exempt continuing connected transactions and non-exempt
connected transactions repor ted above, no other transaction repor ted in the 2021
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.
41. FINANCIAL TREND
(amounts in thousands of Euro)
December 31
2021
December 31
2020
December 31
2019
December 31
2018
December 31
2017 (*)
Net revenues
Gross margin
Operating income (EBIT)
Group net income
Total assets
Total liabilities
Total Group shareholders’ equity
(*) eleven-month statement of profit or loss
3,365,667
2,547,358
489,484
294,254
6,959,011
3,830,368
3,113,894
2,422,739
1,743,378
20,061
(54,139)
6,527,927
3,676,207
2,832,057
3,225,594
2,319,612
306,779
255,788
7,038,439
4,049,864
2,967,158
3,142,148
2,262,594
323,846
205,443
4,678,812
1,781,743
2,877,986
2,741,095
2,030,696
315,878
217,721
4,739,375
1,873,204
2,844,652
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements 42. CONSOLIDATED COMPANIES
Company
Italy
Local
currency
Share
capital
(000s of local
currency)
%
Interest
Registered
office
Principal place
of operation
Date of
incorporation/
establishment
(MM/DD/YYYY)
Main Business
PRADA Spa
EUR
255,882
Milan
Artisans Shoes Srl (*)
IPI Logistica Srl (*)
Pelletteria Ennepì Srl (*)
Church Italia Srl
Marchesi 1824 Srl (*)
Figline Srl (*)
Pelletteria Figline Srl
Luna Rossa Challenge Srl (*)
COR 36 Srl
Europe
PRADA Retail UK Ltd (*)
PRADA Germany Gmbh (*)
PRADA Austria Gmbh (*)
PRADA Spain Sl (*)
PRADA Retail France Sas (*)
PRADA Hellas Sole Partner Llc (*)
PRADA Monte-Carlo Sam (*)
PRADA Sa (*)
PRADA Company Sa
PRADA Netherlands Bv (*)
Church Denmark Aps
Church France Sas
Church UK Retail Ltd
Church’s English Shoes Switzerland Sa
Church & Co. Ltd (*)
Church & Co. (Footwear) Ltd
Church English Shoes Sa
PRADA Czech Republic Sro (*)
PRADA Portugal Unipessoal Lda (*)
PRADA Rus Llc (*)
Church Spain Sl
PRADA Bosphorus Deri Mamuller Ltd
Sirketi (*)
PRADA Ukraine Llc (*)
Church Netherlands Bv
Church Ireland Retail Ltd
Church Austria Gmbh
Prada Sweden Ab (*)
Church Footwear Ab
Prada Switzerland Sa (*)
Prada Kazakhstan Llp (*)
Kenon Ltd (*)
Tannerie Limoges Sas (*)
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
GBP
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
DKK
EUR
GBP
CHF
GBP
GBP
EUR
CZK
EUR
RUB
EUR
TRY
UAH
EUR
EUR
EUR
SEK
SEK
CHF
KZT
GBP
EUR
1,000 66.7
Montegranaro
600
100
Milan
93
51
1,000
10
20
100
100
100
100
100
Figline e Incisa
Valdarno
Milan
Milan
Milan
Figline e Incisa
Valdarno
10
100
Grosseto
10
100
Milan
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Italy
Group Holding/
Manufacturing/
Distribution/
Retail
02/09/1977 Manufacturing
01/26/1999 Services
12/01/2016 Manufacturing
01/31/1992 Retail/Services
07/10/2013 Food&Beverage
07/24/2019 Manufacturing
09/30/2020 Manufacturing
12/01/2021
12/01/2021
Management
sailing team
Event mana-
gement 36th
America’s Cup
5,000
215
100
100
London
Munich
40
100 Wien
240
4,000
4,350
2,000
100
100
100
100
Madrid
Paris
Athens
Monaco
U.K.
Germany
Austria
Spain
France
Greece
01/07/1997 Retail
03/20/1995 Retail/Services
03/14/1996 Retail
05/14/1986 Retail
10/10/1984 Retail
12/19/2007 Retail
Principality of Monaco
05/25/1999 Retail
31
100
Luxembourg
Switzerland
07/29/1994
Trademarks/
Services
3,204
20
50
2,856
1,021
100
100
100
100
100
100
100
Luxembourg
Amsterdam
Luxembourg
Netherlands
04/12/1999 Services
03/27/2000 Retail
Copenhagen
Denmark
03/13/2014 Retail
Paris
Northampton
France
U.K.
06/01/1955 Retail
07/16/1987 Retail
Lugano
Switzerland
12/29/2000 Retail
2,811
100
Northampton
U.K.
01/16/1926
Sub-Holding/
Manufacturing/
Distribution
Northampton
U.K.
03/06/1954 Trademarks
44
75
2,500
5
250
3
100
100
100
100
100
100
Brussels
Prague
Lisbon
Moscow
Madrid
73,000
100
Istanbul
240,000
18
50
35
500
100
24,000
500,000
84,000
600
100
100
100
Kiev
Dublin
100 Wien
100
100
100
100
100
60
Stockholm
Stockholm
Lugano
Almaty
London
Isle
Belgium
02/25/1963 Retail
Czech Republic
06/25/2008 Retail
Portugal
08/07/2008 Retail
Russian Federation
11/07/2008 Retail
Spain
Turkey
Ukraine
05/06/2009 Retail
02/26/2009 Retail
10/14/2011 Retail
Ireland
Austria
Sweden
Sweden
Switzerland
Kazakhstan
U.K.
France
11/20/2011 Retail
01/17/2012 Retail
12/18/2012 Retail
12/18/2012 Retail
09/28/2012 Retail
06/24/2013 Retail
02/07/2013 Real Estate
08/19/2014 Manufacturing
Amsterdam
Netherlands
07/07/2011 Retail
228
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements Company
Prada Denmark Aps (*)
Prada Belgium Sprl (*)
Hipic Prod Impex Srl (*)
Church Germany Gmbh
Prada San Marino (*)
Americas
Local
currency
Share
capital
(000s of local
currency)
%
Interest
Registered
office
Principal place
of operation
DKK
EUR
RON
EUR
EUR
26,000
4,000
32,124
200
26
100
100
100
100
100
Copenhagen
Brussels
Sibiu
Munich
Falciano
Denmark
Belgium
Romania
Germany
Date of
incorporation/
establishment
(MM/DD/YYYY)
Main Business
05/19/2015 Retail
12/04/2015 Retail
04/15/2016 Manufacturing
09/18/2018 Retail
San.Marino
04/15/2021 Retail
PRADA USA Corp. (*)
USD
152,211
100
New York
U.S.A.
10/25/1993
CAD
USD
USD
MXN
BRL
MXN
USD
USD
EUR
HKD
TWD
MYR
SGD
KRW
THB
JPY
USD
USD
AUD
RMB
RMB
JPY
HKD
SGD
RMB
RMB
NZD
PRADA Canada Corp. (*)
Church & Co. (USA) Ltd
Post Development Corp (*)
PRADA Retail Mexico, S. de R.L. de
C.V.
PRADA Brasil Importação e Comércio
de Artigos de Luxo Ltda (*)
PRM Services S. de R.L. de C.V. (*)
PRADA Panama Sa (*)
PRADA Retail Aruba Nv (*)
PRADA St. Barthelemy Sarl (*)
Asia-Pacific and Japan
PRADA Asia Pacific Ltd (*)
PRADA Taiwan Ltd
PRADA Retail Malaysia Sdn. Bhd. (*)
PRADA Singapore Pte Ltd (*)
PRADA Korea Llc (*)
PRADA (Thailand) Co. Ltd (*)
PRADA Japan Co. Ltd (*)
Prada Guam Llc
Prada Saipan Llc (*)
PRADA Australia Pty Ltd (*)
PRADA Trading (Shanghai) Co. Ltd (***)
PRADA Fashion Commerce (Shanghai)
Co. Ltd (***)
Church Japan Company Ltd
Church Hong Kong Retail Ltd
Church Singapore Pte Ltd
Prada Dongguan Trading Co. Ltd (***)
Church Footwear (Shanghai) Co. Ltd (***)
Prada New Zealand Ltd (*)
PRADA Vietnam Limited Liability
Company (*)
PRADA Macau Co. Ltd
Church Korea Llc
Middle East
PRADA Middle East Fzco (*)
PRADA Emirates Llc (**)
PRADA Kuwait Wll (**)
PRADA Retail Wll (*)
PRADA Saudi Arabia Ltd (*)
300
100
Toronto
85
86,592
100
100
New York
New York
Canada
U.S.A.
U.S.A.
Distribution/
Services/
Retail
Distribution/
Retail
05/01/1998
09/08/1930 Retail
02/18/1997 Real Estate
269,140
100
Mexico City
Mexico
07/12/2011 Retail
340,000
100
Sao Paulo
Brazil
04/12/2011 Retail
7,203
30
2,011
1,600
100
100
100
100
Mexico City
Panama
Oranjestad
Gustavia
Mexico
Panama
Aruba
02/27/2014 Services
09/15/2014 Retail
09/25/2014 Retail
St. Barthelemy
04/01/2016 Retail
3,000
100
Hong Kong
Hong Kong S.A.R.,
P.R.C.
09/12/1997 Retail/Services
3,800
1,000
1,000
8,125,000
372,000
1,200,000
0.001
100
100
100
100
100
100
100
Hong Kong
Taiwan P.R.C.
09/16/1993 Retail
Kuala Lumpur
Malaysia
01/23/2002 Retail
Singapore
Seoul
Bangkok
Tokyo
Guam
Singapore
10/31/1992 Retail
South Korea
11/27/1995 Retail
Thailand
Japan
Guam
06/19/1997 Retail
03/01/1991 Retail
02/04/2021 Retail
1,405
100
Northern Marianas
Islands
Saipan
01/20/2021
Duty-Free
Stores
13,500
1,653
100
100
Sydney
Shanghai
624,950
100
Shanghai
100,000
100
Tokyo
29,004
100
Hong Kong
7,752
8,500
31,900
100
100
100
Singapore
Dongguan
Shanghai
Australia
04/21/1997 Retail
P.R.C.
P.R.C.
Japan
Hong Kong S.A.R.,
P.R.C.
02/09/2004 Retail/Dormant
10/31/2005 Retail
04/17/1992 Retail
06/04/2004 Retail
Singapore
08/18/2009 Retail
P.R.C.
P.R.C.
11/28/2012 Services
12/05/2012 Retail
3,500
100 Wellington
New Zealand
07/05/2013 Retail
VND
146,246,570
100
Hanoi
Vietnam
09/09/2014 Retail
MOP
KRW
AED
AED
KWD
QAR
SAR
25
100
Macau
650,000
100
Seoul
Macau S.A.R.,
P.R.C.
South Korea
01/22/2015 Retail
09/03/2018 Retail
18,000
60
Jebel Ali Free
Zone
300 29.4
Dubai
50 29.4
Kuwait City
15,000
100
Doha
U.A.E.
U.A.E.
Kuwait
Qatar
05/25/2011
Distribution/
Services
08/04/2011 Retail
09/18/2012 Retail
02/03/2013 Retail
26,666
75
Jeddah
Saudi Arabia
07/02/2014 Retail
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements Company
Local
currency
Share
capital
(000s of local
currency)
%
Interest
Registered
office
Principal place
of operation
Date of
incorporation/
establishment
(MM/DD/YYYY)
Main Business
Other countries
PRADA Maroc Sarlau (*)
PRADA Retail South Africa (pty) ltd (*)
MAD
ZAR
95,000
50,000
100
100
Casablanca
Morocco
11/11/2011 Under liquidation
Sandton
South Africa
06/09/2014 Under liquidation
(*) Company owned directly by PRADA spa
(**) Company consolidated based on definition of control per IFRS 10
(***) Wholly foreign owned enterprises
43. 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.
December 31, 2021 financial statements (amounts in thousands of Euro):
Company
Artisans Shoes S.r.l.
Prada Emirates Llc
Prada Middle East Fzco
Prada Kuwait Wll
Prada Saudi Arabia Ltd
Tannerie Limoges S.A.S.
Group's
percentage
interest
Local
currency
Total
assets
Total
equity
Net
revenues
Net
income/ (loss)
Dividends
paid to non-
controlling
shareholders
66.7
29.4
60
29.4
75
60
EUR
AED
AED
KWD
SAR
EUR
38,215
74,096
102,841
17,919
18,832
9,158
7,869
(12,746)
44,133
2,945
5,106
123
53,720
68,296
66,641
23,314
14,832
5,926
118
2,771
724
993
351
(23)
-
-
-
-
-
-
December 31, 2020 financial statements (amounts in thousands of Euro):
Company
Artisans Shoes srl
TRS Hawaii llc
TRS Hong Kong
TRS Singapore
TRS Guam Partnership
TRS Saipan Partnership
TRS Okinawa KK
TRS Hong Kong branch in Macau S.A.R.
PRADA Emirates llc
PRADA Middle East fzco
Prada Kuwait Wll
PRADA Saudi Arabia ltd
Tannerie Limoges sas
Hipic Prod Impex srl
Pelletteria Ennepì srl
Group's
percentage
interest
Local
currency
Total
assets
Total
equity
Net
revenues
Net
income/ (loss)
Dividends
paid to non-
controlling
shareholders
66.7
55
55
55
55
55
55
55
29.4
60
29.4
75
60
80
90
EUR
USD
HKD
SGD
USD
USD
JPY
MOP
AED
AED
KWD
SAR
EUR
RON
EUR
26,530
1,875
53
778
3,125
2,528
6,812
18,498
75,426
75,658
14,778
16,262
9,410
4,644
5,771
7,751
(1,151)
44
716
2,504
2,427
5,336
7,864
(14,437)
40,035
1,754
4,380
146
(1,333)
1,898
48,879
1,824
-
153
2,041
356
4,677
7,594
35,141
7,160
19,557
12,330
4,961
400
-
1
(3,399)
(7)
(306)
(1,158)
(508)
(972)
(3,897)
577
(43)
529
(451)
(331)
(1,410)
(615)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
230
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PRADA Group Annual Report 2021 - Notes to the Consolidated Financial Statements There were no significant restrictions on the Group’s ability to access or use assets
and settle liabilities as at the repor ting period.
In 2011, PRADA spa and Al Tayer Insignia llc (“Al Tayer ”) stipulated an agreement
expiring on December 31, 2021 to develop the Prada and Miu Miu brands in the
Middle East retail business (the “joint venture”). That agreement resulted in the
establishment of subsidiary Prada Middle East fzco, followed by Prada Emirates
llc and Prada Kuwait llc. At the date of approval of these Consolidated Financial
Statements, Prada and Al Tayer were managing the joint venture under principles
of ordinary administration while negotiating the expired contractual terms.
Management is confident that through the negotiations the Prada Group can
acquire full control of such companies upon the payment of an amount that does
not differ significantly from the corresponding non-controlling interest in equity
stated in the financial statements.
44. EVENTS AF TER THE REPORTING DATE
At the date of approval of these Consolidated Financial Statements, the Group has
suspended its retail operations in Russia.
At December 31, 2021 the Group had assets of approximately RUB 7 billion in
Russia (Euro 81 million at the year-end exchange rate), consisting mainly of
tangible assets at 13 stores (10 Prada and 3 Miu Miu), working capital and cash
assets. The net revenues realized in Russia in 2021 accounted for approximately
2% of the consolidated net revenues.
The ongoing conflict in Ukraine has resulted in a high volatility of the financial
markets, a significant devaluation of the Ruble and a context of high uncer tainty
whose future potential effects on the Group’s consolidated financial statements
cannot be determined so far.The Management will continue to closely monitor
the evolution of the business and legal scenario in order to ensure the correct
valuation of the assets recognized in the consolidated financial statements of the
Group.
Chora S.r.l. initiated a lawsuit in January 2022 against Prada spa; more details are
provided in Note 28.
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I N D E P E N D E N T A U D I T O R S ’ R E P O R T S
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PRADA Group Annual Report 2021 - Independent Auditors’ Reports INDEPENDENT AUDITORS’ REPORTS
The Independent Auditor ’s Repor ts included in this Annual Repor t are in two different
formats taking into account the differences between the International Auditing
Standards (ISAs) issued by the International Auditing and Assurance Standard
Boards (IAASB) and the auditing standards adopted in the Italian jurisdiction (ISA
Italia). Specifically, in accordance to the regulations applicable in Hong Kong,
where the Company’s shares are listed on the Main Board of the Hong Kong Stock
Exchange, the Independent Auditors’ repor t is issued in accordance with ISAs,
while in Italy, where the Company is domiciled, the Independent Auditor ’s repor t
is issued for statutory purposes in accordance with ISA Italia pursuant to ar t. 14
of Italian Legislative Decree no 39 of January 27, 2010.
234
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PRADA Group Annual Report 2021 - Independent Auditors’ Reports Deloitte & Touche S.p.A.
Via Tortona, 25
20144 Milano
Italia
Tel: +39 02 83322111
Fax: +39 02 83322112
www deloitte.it
IINNDDEEPPEENNDDEENNTT AAUUDDIITTOORR’’SS RREEPPOORRTT
TToo tthhee SShhaarreehhoollddeerrss ooff
PPrraaddaa SS..pp..AA..
OOppiinniioonn
We have audited the consolidated financial statements of Prada S.p.A. and its subsidiaries (the “Group”),
which comprise the consolidated statement of financial position as at December 31, 2021, the
consolidated statement of profit or loss, the consolidated statement of comprehensive income, the
consolidated statement of cash flows and the consolidated statement of changes in equity for the year
then ended, and the notes to the consolidated financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at December 31, 2021, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
BBaassiiss ffoorr OOppiinniioonn
We conducted our audit in accordance with International Standards on Auditing (ISAs). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of the Group in
accordance with the International Ethics Standards Board for Accountants’ Code of Ethics for Professional
Accountants (IESBA Code), and we have fulfilled our other ethical responsibilities in accordance with the
IESBA Code. We believe that the audit evidence we have obtained is sufficient and appropriate to
provide a basis for our opinion.
KKeeyy AAuuddiitt MMaatttteerrss
Key audit matters are those matters that, in our professional judgment, were of most significance in our
audit of the consolidated financial statements of the current period. These matters were addressed in
the context of our audit of the consolidated financial statements as a whole, and in forming our opinion
thereon, and we do not provide a separate opinion on these matters.
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona
Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v.
Codice Fiscale/Registro delle Imprese di Milano Monza Brianza Lodi n. 03049560166 - R.E.A. n. MI-1720239 | Partita IVA: IT 03049560166
Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata (“DTTL”), le member firm aderenti al suo network e
le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche “Deloitte Global”) non fornisce servizi ai
clienti. Si invita a leggere l’informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo
www deloitte com/about.
© Deloitte & Touche S.p.A.
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PRADA Group Annual Report 2021 - Independent Auditors’ Reports
IImmppaaiirrmmeenntt tteesstt
DDeessccrriippttiioonn ooff tthhee kkeeyy
aauuddiitt mmaatttteerr
2
As described in Note 16 to the consolidated financial statements, the Group
accounts for goodwill of Euro 513.5 million, which is unchanged compared to
the previous year, allocated to the cash generating units (“CGUs”) identified
by Management. In accordance with IAS 36 - Impairment of assets, goodwill
is not amortized, but tested for impairment at least annually by comparing
the recoverable amount of the CGUs to their carrying amount. Furthermore,
in light of the performance of certain retail businesses during the period,
CGUs other than those which include goodwill were also tested for
impairment.
In order to measure the recoverable amount of the tested CGUs,
Management determined the “value in use” using present value techniques,
whilst the “fair value less costs of disposal” method has been used for the
impairment test carried out on the Church’s CGU, deemed by Management
as the best approach for expressing the value of the tested assets. In this
context, the fair value of the Church’s brand has been estimated by using the
relief royalty method. No impairment losses have been identified as a result
of the tests performed.
The determination of the recoverable amount of each CGU is based on
estimates and assumptions made by Management using, among other,
projected cash flows of the CGUs, appropriate discount rates (WACC), long-
term growth rates (g-rate) and royalty rates for the Church’s brand fair value
assessment.
Management also performed sensitivity analysis (some of which specifically
related to the CGUs to which a significant amount of goodwill has been
allocated), in order to verify and disclose the effects of changes to the main
assumptions (WACC and g-rate) on the impairment tests result.
In accordance with IAS 10 Management has considered the potential impacts
arising from the Russia - Ukraine conflict commenced on February 24, 2022
as non-adjusting events occurred after the reporting period and has not
accordingly taken them in account for the impairment test.
Given the materiality of the value of goodwill and other assets allocated to
the CGUs, the complexity of the estimates of the CGUs cash flows
projections and of the other estimates and assumptions used in the
impairment model, we considered the impairment test as a key audit matter.
AAuuddiitt pprroocceedduurreess
ppeerrffoorrmmeedd
For our audit, we have evaluated the methods used by Management to
determine the recoverable amount of the CGUs and analyzed these
methods and the related assumptions used by Management in the
impairment test.
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Our audit procedures included, among others, the following, which were
performed along with the support of our internal valuation specialists:
• Evaluation of the appropriateness of the methodologies used by
Management to test CGUs;
• Analysis of the reasonableness of the main assumptions used to develop
cash flow forecasts, through sector data analysis (reports on the fashion
and luxury industry) as well as of supporting data and information
obtained from Management;
• Evaluation of the reasonableness of the discount rates (WACC) and long-
term growths (g-rate) used by Management;
• Verification of the mathematical accuracy of the model used to
determine the recoverable amount of each tested CGU;
• Verification of the correct determination of the carrying amount of each
tested CGU;
• Analysis of the reasonableness of the main assumptions for the
determination of Church’s brand fair value less costs of disposal and of
the mathematical accuracy of the model used;
• Evaluation of the sensitivity analysis performed by Management and
development of an independent sensitivity analysis;
• Analysis of the information disclosed in the notes to the consolidated
financial statements.
OOtthheerr IInnffoorrmmaattiioonn
Management is responsible for the other information. The other information comprises the information
included in the Annual Report 2021 but does not include the consolidated financial statements and our
auditor’s report thereon.
Our opinion on the consolidated financial statements does not cover the other information and we do
not express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial statements, our responsibility is to read the
other information and, in doing so, consider whether the other information is materially inconsistent
with the consolidated financial statements or our knowledge obtained in the audit or otherwise appears
to be materially misstated. If, based on the work we have performed, we conclude that there is a
material misstatement of this other information, we are required to report that fact. We have nothing to
report in this regard.
RReessppoonnssiibbiilliittiieess ooff MMaannaaggeemmeenntt aanndd TThhoossee CChhaarrggeedd wwiitthh GGoovveerrnnaannccee ffoorr tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall
SSttaatteemmeennttss
Management is responsible for the preparation and fair presentation of the consolidated financial
statements in accordance with International Financial Reporting Standards as adopted by the European
Union, and for such internal control as Management determines is necessary to enable the preparation
of consolidated financial statements that are free from material misstatement, whether due to fraud or
error.
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4
In preparing the consolidated financial statements, Management is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as applicable, matters related to going concern and
using the going concern basis of accounting unless Management either intends to liquidate the Group or
to cease operations, or has no realistic alternative but to do so.
Those Charged with Governance are responsible for overseeing the Group’s financial reporting process.
AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with ISAs will always detect a material misstatement
when it exists.
Misstatements can arise from fraud or error and are considered material if, individually or in the
aggregate, they could reasonably be expected to influence the economic decisions of users taken on the
basis of these consolidated financial statements.
As part of an audit in accordance with ISAs, we exercise professional judgment and maintain professional
skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion.
The risk of not detecting a material misstatement resulting from fraud is higher than for one resulting
from error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control.
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by Management.
• Conclude on the appropriateness of Management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern.
If we conclude that a material uncertainty exists, we are required to draw attention in our auditor’s
report to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
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• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with Those Charged with Governance regarding, among other matters, the planned
scope and timing of the audit and significant audit findings, including any significant deficiencies in
internal control that we identify during our audit.
We also provide Those Charged with Governance with a statement that we have complied with relevant
ethical requirements regarding independence, and to communicate with them all relationships and other
matters that may reasonably be thought to bear on our independence, and where applicable, related
safeguards.
From the matters communicated with Those Charged with Governance, we determine those matters
that were of most significance in the audit of the consolidated financial statements of the current period
and are therefore the key audit matters. We describe these matters in our auditor’s report unless law or
regulation precludes public disclosure about the matter or when, in extremely rare circumstances, we
determine that a matter should not be communicated in our report because the adverse consequences
of doing so would reasonably be expected to outweigh the public interest benefits of such
communication.
DELOITTE & TOUCHE S.p.A.
MMaarrccoo RRiiccccii
Partner
Milan, Italy
March 14, 2022
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Deloitte & Touche S.p.A.
Via Tortona, 25
20144 Milano
Italia
Tel: +39 02 83322111
Fax: +39 02 83322112
www deloitte.it
IINNDDEEPPEENNDDEENNTT AAUUDDIITTOORR’’SS RREEPPOORRTT
PPUURRSSUUAANNTT TTOO AARRTTIICCLLEE 1144 OOFF LLEEGGIISSLLAATTIIVVEE DDEECCRREEEE NNoo.. 3399 OOFF JJAANNUUAARRYY 2277,, 22001100
TToo tthhee SShhaarreehhoollddeerrss ooff
PPrraaddaa SS..pp..AA..
RREEPPOORRTT OONN TTHHEE AAUUDDIITT OOFF TTHHEE CCOONNSSOOLLIIDDAATTEEDD FFIINNAANNCCIIAALL SSTTAATTEEMMEENNTTSS
OOppiinniioonn
We have audited the consolidated financial statements of Prada S.p.A. and its subsidiaries (the “Group”),
which comprise the consolidated statement of financial position as at December 31, 2021, the
consolidated statement of profit or loss, the consolidated statement of comprehensive income, the
consolidated statement of cash flows and the consolidated statement of changes in equity for the year
then ended, and the notes to the consolidated financial statements, including a summary of significant
accounting policies.
In our opinion, the accompanying consolidated financial statements give a true and fair view of the
consolidated financial position of the Group as at December 31, 2021, and of its consolidated financial
performance and its consolidated cash flows for the year then ended in accordance with International
Financial Reporting Standards as adopted by the European Union.
BBaassiiss ffoorr OOppiinniioonn
We conducted our audit in accordance with International Standards on Auditing (ISA Italia). Our
responsibilities under those standards are further described in the Auditor’s Responsibilities for the Audit
of the Consolidated Financial Statements section of our report. We are independent of Prada S.p.A. (the
“Company”) in accordance with the ethical requirements applicable under Italian law to the audit of the
financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate
to provide a basis for our opinion.
RReessppoonnssiibbiilliittiieess ooff tthhee DDiirreeccttoorrss aanndd tthhee BBooaarrdd ooff SSttaattuuttoorryy AAuuddiittoorrss ffoorr tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall
SSttaatteemmeennttss
The Directors are responsible for the preparation of consolidated financial statements that give a true
and fair view in accordance with International Financial Reporting Standards as adopted by the European
Union, and, within the terms established by law, for such internal control as the Directors determine is
necessary to enable the preparation of consolidated financial statements that are free from material
misstatement, whether due to fraud or error.
Ancona Bari Bergamo Bologna Brescia Cagliari Firenze Genova Milano Napoli Padova Parma Roma Torino Treviso Udine Verona
Sede Legale: Via Tortona, 25 - 20144 Milano | Capitale Sociale: Euro 10.328.220,00 i.v.
Codice Fiscale/Registro delle Imprese di Milano Monza Brianza Lodi n. 03049560166 - R.E.A. n. MI-1720239 | Partita IVA: IT 03049560166
Il nome Deloitte si riferisce a una o più delle seguenti entità: Deloitte Touche Tohmatsu Limited, una società inglese a responsabilità limitata (“DTTL”), le member firm aderenti al suo network e
le entità a esse correlate. DTTL e ciascuna delle sue member firm sono entità giuridicamente separate e indipendenti tra loro. DTTL (denominata anche “Deloitte Global”) non fornisce servizi ai
clienti. Si invita a leggere l’informativa completa relativa alla descrizione della struttura legale di Deloitte Touche Tohmatsu Limited e delle sue member firm all’indirizzo
www deloitte com/about.
© Deloitte & Touche S.p.A.
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In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going concern
and using the going concern basis of accounting unless they have identified the existence of the
conditions for the liquidation of the Company or the termination of the business or have no realistic
alternatives to such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law, the
Group’s financial reporting process.
AAuuddiittoorr’’ss RReessppoonnssiibbiilliittiieess ffoorr tthhee AAuuddiitt ooff tthhee CCoonnssoolliiddaatteedd FFiinnaanncciiaall SSttaatteemmeennttss
Our objectives are to obtain reasonable assurance about whether the consolidated financial statements
as a whole are free from material misstatement, whether due to fraud or error, and to issue an auditor’s
report that includes our opinion. Reasonable assurance is a high level of assurance, but is not a
guarantee that an audit conducted in accordance with International Standards on Auditing (ISA Italia) will
always detect a material misstatement when it exists. Misstatements can arise from fraud or error and
are considered material if, individually or in the aggregate, they could reasonably be expected to
influence the economic decisions of users taken on the basis of these consolidated financial statements.
As part of an audit in accordance with International Standards on Auditing (ISA Italia), we exercise
professional judgment and maintain professional skepticism throughout the audit. We also:
• Identify and assess the risks of material misstatement of the consolidated financial statements,
whether due to fraud or error, design and perform audit procedures responsive to those risks, and
obtain audit evidence that is sufficient and appropriate to provide a basis for our opinion. The risk of
not detecting a material misstatement resulting from fraud is higher than for one resulting from
error, as fraud may involve collusion, forgery, intentional omissions, misrepresentations, or the
override of internal control.
• Obtain an understanding of internal control relevant to the audit in order to design audit procedures
that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the
effectiveness of the Group’s internal control;
• Evaluate the appropriateness of accounting policies used and the reasonableness of accounting
estimates and related disclosures made by the Directors.
• Conclude on the appropriateness of management’s use of the going concern basis of accounting and,
based on the audit evidence obtained, whether a material uncertainty exists related to events or
conditions that may cast significant doubt on the Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are required to draw attention in our auditor’s report
to the related disclosures in the consolidated financial statements or, if such disclosures are
inadequate, to modify our opinion. Our conclusions are based on the audit evidence obtained up to
the date of our auditor’s report. However, future events or conditions may cause the Group to cease
to continue as a going concern.
• Evaluate the overall presentation, structure and content of the consolidated financial statements,
including the disclosures, and whether the consolidated financial statements represent the underlying
transactions and events in a manner that achieves fair presentation.
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• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or
business activities within the Group to express an opinion on the consolidated financial statements.
We are responsible for the direction, supervision and performance of the group audit. We remain
solely responsible for our audit opinion.
We communicate with those charged with governance, identified at an appropriate level as required by
ISA Italia, regarding, among other matters, the planned scope and timing of the audit and significant
audit findings, including any significant deficiencies in internal control that we identify during our audit.
RREEPPOORRTT OONN OOTTHHEERR LLEEGGAALL AANNDD RREEGGUULLAATTOORRYY RREEQQUUIIRREEMMEENNTTSS
OOppiinniioonn ppuurrssuuaanntt ttoo aarrtt.. 1144 ppaarraaggrraapphh 22 ((ee)) ooff LLeeggiissllaattiivvee DDeeccrreeee 3399//1100
The Directors of Prada S.p.A. are responsible for the preparation of the financial review of the Group as
at December 31, 2021, including its consistency with the related consolidated financial statements and
its compliance with the law.
We have carried out the procedures set forth in the Auditing Standard (SA Italia) n. 720B in order to
express an opinion on the consistency of the financial review, with the consolidated financial statements
of the Group as at December 31, 2021 and on its compliance with the law, as well as to make a
statement about any material misstatement.
In our opinion, the above-mentioned financial review is consistent with the consolidated financial
statements of the Group as at December 31, 2021 and is prepared in accordance with the law.
With reference to the statement referred to in art. 14, paragraph 2 (e), of Legislative Decree 39/10,
made on the basis of the knowledge and understanding of the entity and of the related context acquired
during the audit, we have nothing to report.
DELOITTE & TOUCHE S.p.A.
Signed by
MMaarrccoo RRiiccccii
Partner
Milan, Italy
March 14, 2022
This report has been translated into the English language solely for the convenience of international readers.
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