2 0 2 2 A N N U A L R E P O R T
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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 S.p.A. Separate Financial Statements
Notes to the Consolidated Financial Statements
Independent Auditors’ Repor ts
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59
87
105
125
149
155
161
241
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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 2022 Annual Report - 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
With an authoritative voice in the luxury industry and as a pioneer of constant
dialogue with a contemporary society that spans over different cultural spheres,
the Prada Group bases its identity on fundamental values such as creativity,
transformation and sustainable growth. In accordance with such principles, it
offers its brands a shared vision in which they can interpret and express their
essence.
The Group owns some of the most prestigious luxury brands: Prada, Miu Miu,
Church’s, Car Shoe, Marchesi 1824 and Luna Rossa, and it aims to enhance their
value while increasing their visibility and appeal over time.
The clothing, leather goods and footwear collections - designed, produced and
distributed by the Prada Group - are available in more than 70 countries through
612 owned stores, the direct e-commerce channel, and selected e-tailers and
depar tment stores across the globe. The Group, which also operates in the eyewear
and fragrance sectors through licensing agreements, has 24 production facilities
and more than thir teen thousand seven hundred employees worldwide.
Prada S.p.A. is listed on the Hong Kong Stock Exchange (HKSE code: 1913).
T H E G R O U P ’ S P U R P O S E A N D V A L U E S
“ 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’s purpose is to be “DRIVERS OF CHANGE” for the PLANET, PEOPLE
and CULTURE.
The values:
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 vision has broadened the horizons of
luxury, without fear of facing contradictions.
Innovative tradition. The Group, driven by a
spirit of research and innovation, is rooted in
more than a century of history. Its heritage is
completed with the organization’s production
know-how and exper tise.
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. Bold connections are made that
broaden perspectives and enable to propose
unexpected solutions.
Sustainable paths. The Group places
sustainability at the core of its corporate
strategy. The value creation model is
implemented in harmony with the places and
people within the entire sphere of influence
of its activities. The Group also contributes to
contemporary cultural debate.
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PRADA Group 2022 Annual Report - 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 was founded in 1913 by Mario Prada, who opened a store in
the Galleria Vittorio Emanuele II, Milan, selling handbags, travel trunks, tasteful
accessories, jewelry and other luxury items. Thanks to its goods, created using fine
materials and sophisticated techniques, Prada rapidly acquired wide popularity
across Europe.
In 1919 Prada obtained the title of 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 S.p.A. to concentrate the production resources
built up over the previous ten years of business in the leather goods industry. In
the same year, IPI S.p.A. 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 Prada opened a second store in Via della Spiga in Milan, one of Europe’s
key shopping destinations. The store showcased the new brand image, a concept
dominated by a special shade of light green, which soon became known as “Prada
green”. It was the first Green Store, which will be followed by stores in New York,
Madrid, London, Paris and Tokyo, in an aesthetic revolution in the retail world and
a new standard for the industry.
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PRADA Group 2022 Annual Report - The Prada Group In response to the growing appreciation of the products, the Prada leather goods
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.
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, characterized by a strong, carefree and
at times provocative identity. In 1993 Miuccia Prada and Patrizio Ber telli created
“Milano Prada Ar te”, which subsequently became “Fondazione Prada”, a place to
analyze the present using intensive cultural events as an effective learning tool.
In 1997 the Prada Challenge sailing team was founded to compete for the 2000
America’s Cup, and Prada launched its activewear collection featuring the “Linea
Rossa” (red line).
In 1999, the Prada Group acquired the classic brand Church’s, founded in 1873 in
Nor thampton, England, a symbol of British handcraft 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 of a series of stores created
to redefine the shopping concept and try out inventive ways to interact with
customers. A second Epicenter store was inaugurated 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 Luxottica, the world’s
leading eyewear company, which currently produces and distributes Prada, Miu
Miu and Luna Rossa eyewear. Also in 2003, Prada entered the beauty industry and
launched, in 2004, its first fragrance, Amber.
In 2006, Miu Miu moved its fashion show venue to Paris, after its experiences in
New York and London.
In 2007, the Prada phone by LG, the world’s first touchscreen cellphone, made
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PRADA Group 2022 Annual Report - 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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its debut. The LG/Prada par tnership achieved fur ther success with new models in
2008 and 2011.
On June 24, 2011, Prada S.p.A. was successfully listed on the Main Board of the
Hong Kong Stock Exchange.
In 2014, the Group acquired control of Angelo Marchesi S.r.l., 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 second location in via Montenapoleone, Milan. In 2015
the Prada Group began to implement an investment plan for the industrial area
intended to redevelop and reorganise the Group’s manufacturing structure in
order to preserve ar tisanal know-how, suppor t the technical advancement of the
production processes and improve the quality of the work environments.
In 2017, the impor tant restyling plan for Prada and Miu Miu stores was coupled
with an extensive program of pop-ups 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 128/2015.
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. On June 8, 2018, Prada officially unveiled its factory in
Valvigna, designed by Guido Canali, architect of the Group’s “garden factories”.
In 2019 the Group announced the adoption of a fur free policy for all its brands,
it joined The Fashion Pact, and it set up the Diversity & Inclusion Advisory Council
which, with the consultancy of leading exper ts from impor tant international
academic and cultural institutions, helps to bring out a tapestry of voices from
within the Group’s creative processes and projects. Prada also launched the first
collection made of recycled nylon, Prada Re-Nylon. In October of the same year,
the Prada Group obtained full control of the retail network by acquiring Fratelli
Prada S.p.A., the long-standing franchisee of Prada monobrand stores in Milan.
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PRADA Group 2022 Annual Report - The Prada Group In 2020, the year marked by the outburst of the Covid-19 pandemic, 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 S.p.A.
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.r.l. with the Zegna Group; it also bought out
the remaining stakes in the Travel Retail Shop companies dealing with duty-free
retail activities, and acquired the ownership of Luna Rossa Challenge S.r.l. so as to
fully develop the commercial value of the Luna Rossa brand. In 2021, a long-term
licensing agreement with L’Oréal for the creation, development and distribution of
Prada brand luxury cosmetics entered into effect. Moreover, the Group conver ted
the entire production of nylon from virgin nylon to recycled nylon.
In 2022, thanks to the work per formed by the newly formed Sustainability
Committee, impor tant documents were completed such as the new Group-wide
Code of Ethics and Human Rights Policy. With a view to increasing manufacturing
exper tise and controlling quality at every phase of the process, the Group acquired
a 43.65% stake in Conceria Superior S.p.A., a firm known for its superior calf
leather tanning. In 2022, Prada presented Paradoxe, the first fragrance created
from the par tnership with L’Oréal. Prada also launched Eternal Gold, the first
jewelry collection made of 100% cer tified recycled gold. The year ended with the
announcement of the appointment of Andrea Guerra as the new Group CEO, with
the aim to help the Group evolve while easing the generational transition.
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PRADA Group 2022 Annual Report - The Prada Group T H E G R O U P ' S B R A N D S
The Prada Group works constantly to enhance the value of its brands by increasing
their visibility, recognition and appeal.
PRADA
Prada is at the forefront of international creative talent. As one of the most
innovative fashion brands, it is intrinsically linked to the intellectual curiosity of
Miuccia Prada who, with her collections, has redefined fashion norms by anticipating
and setting new trends. The Prada brand, with its collections of leather goods,
clothing, footwear, eyewear and fragrances, targets an urbane clientele that is
culturally and socially active, and with the Linea Rossa collection it is present in
the activewear world.
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PRADA Group 2022 Annual Report - The Prada Group Prada advertising campaign S/S 2023
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Prada advertising campaign S/S 2023
Talent: Vincent Cassel
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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, and the brand soon evolved into a reference point for an international
audience. Miu Miu’s direct force fluctuates between
ingenuous spirit and
iridescent subversion, and expresses the most rebellious and seductive attitude of
contemporary femininity.
Right page
Miu Miu adver tising campaign S/S 2023
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CHURCH’S
Church’s is distinguished by timeless elegance and ar tisanal quality, and 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: it
takes approximately 250 manual steps and 8 weeks of work to make a single pair
of shoes.
Left page
Church’s Royal Collection
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CAR SHOE
Small rubber studs set on a deconstructed sole have characterized the iconic Car
Shoe loafer since 1963. Footwear originating from a passion for race cars. Star ting
with that iconic loafer, Car Shoe has succeeded in displaying its identity with a
wide range of products that interpret its casual style.
MARCHESI 1824
Pasticceria Marchesi has been a symbol of Milanese style since 1824. With its
excellent preparations, elegant ambiance and impeccable service, it accompanies
times of conviviality featuring ar tisanal taste and refined creativity. In addition to
its historic location at Via Santa Maria alla Por ta are the locations at via Monte
Napoleone and Galleria Vittorio Emanuele II in Milan, and a shop in the hear t of
London, in the prestigious Mayfair neighborhood.
Left page
Car Shoe Driving Shoes Collection
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PRADA Group 2022 Annual Report - The Prada Group Pasticceria Marchesi 1824
Galleria Vittorio Emanuele II, Milan
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Pasticceria Marchesi 1824
117 Mount Street, London - external view
Pasticceria Marchesi 1824
117 Mount Street, London - internal view
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LUNA ROSSA
Luna Rossa is the Italian sailing team representing the Circolo della Vela Sicilia
in the 37th America’s Cup competition, which will take place in 2024. The
team is infused with vision, competence and passion, which are guiding it in its
determination to win the prestigious trophy. A project that has entered into the
hear ts of Italians and of all sailing enthusiasts in the world.
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PRADA Group 2022 Annual Report - The Prada Group 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 enables the
Group to translate innovative ideas into successful products, while retaining
flexibility and control over know-how, quality and sustainability standards, and
production costs.
CREATIVIT Y
Miuccia Prada’s intellectual curiosity, the constant pursuit of new styles, and her
interpretation of culture and society underpin the creative process. This vision
has made it possible to establish a genuine design culture, based on method and
discipline, which guides everyone who contributes to the creative development.
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.
Constant experimentation and idea-sharing are the essential components of the
design process. The time spent at the drawing board, in the testing room, and on
research and development is fundamental to creating each collection.
The Prada Group’s creative spirit continues to attract talented people from all over
the world.
RAW MATERIALS AND THE PRODUCTION PROCESS
Know-how is Prada Group’s historical asset and represents an element of continuity
and balance between creativity and precision. The manufacturing activity 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
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PRADA Group 2022 Annual Report - The Prada Group production and value of each brand.
Raw materials are an essential par t of product quality. In many cases the fabrics
and leather are made especially for the Group’s brands, according to stringent
technical and style specifications that guarantee excellence.
The products are made at the 24 manufacturing facilities owned (21 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, patterns and prototypes. This system, which enables close
oversight of each step of the process and ensures high-quality workmanship,
emphasizes manufacturing excellence 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, the supply chain and
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 of the organization. With the Prada Academy and by
honing its employees’ skills, for years the Prada Group has been investing heavily
in the transmission of the manufacturing techniques and craft skills to younger
generations, values on which the Group’s heritage rely.
DISTRIBUTION
Over the years, the Prada Group has expanded its distribution network to include
612 directly operated stores (“DOS”) in the most prestigious locations of the major
international shopping destinations, consistent with the image of each brand. The
DOS serve as more than a primary sales function, and they are an impor tant
means of communication: they are brand ambassadors, conveying the image of
each brand consistently and categorically and enabling the Group to monitor in
real time the sales per formance in various markets. This extensive network, the
object of ongoing renovation, is a strategic asset for the Group, as it showcases
the new collections and is the fulcrum of the omnichannel strategy. The Group’s
e-commerce websites complete the customer journey, offering a constantly
evolving shopping experience integrated with the physical stores.
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PRADA Group 2022 Annual Report - The Prada Group Prada store
Place Vendôme, Doha (external view) - New Opening
Prada store
Place Vendôme, Doha (internal view)- New Opening
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Miu Miu store
Place Vendôme, Doha - New Opening
Miu Miu store
Seoul Galleria West, Seoul - New Opening
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The wholesale channel (depar tment stores, multi-brand stores, franchisees and
e-tailers) has been gradually streamlined in the past few years, using a very
selective approach.
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 consistent with the brands’ identity.
The fashion shows and adver tising campaigns are prime occasions for the Group
to present the image of its brands, which is valued par ticularly by an international
clientele and by industry critics.
Through social media accounts, brand e-commerce websites, the corporate
website and digital platforms, each brand offers an oppor tunity for direct dialogue
and immediate contact with its audience. In parallel, the vast editorial coverage
heightens the visibility of the Group’s products.
The Group’s special events, known for their many innovative formats, are avenues
for communicating the values of the brands beyond the products and for establishing
direct contact with consumers in the various local markets.
SOCIAL AND ENVIRONMENTAL SUSTAINABILIT Y
After Prada S.p.A.’s Board of Directors approved the strategic guidelines
for sustainable growth in 2021, great progress was made in 2022 in terms of
governance with the creation of the Sustainability Committee at the beginning of
the year, demonstrating the Group’s commitment to integrating environmental and
social sustainability into its business strategies. The Committee assists the Board
of Directors, in a proactive and advisory capacity, in the evaluation and decision-
making about sustainability-related issues, overseeing the Company’s commitment
to sustainable development throughout the value chain.
Impor tant documents were completed, such as the new Group-wide Code of Ethics
and Human Rights Policy. Everything was formalized on the basis of the principles
and priorities that have always motivated the Prada Group, identified in three
pillars: people, the environment and culture.
Lastly, a Whistleblowing process was approved in order to have a secure, private
communication and whistleblowing channel for all the Group’s internal and external
stakeholders, thanks to the adoption of an external digital whistleblowing platform
accessible from both the corporate intranet and the Group’s corporate website.
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PRADA Group 2022 Annual Report - The Prada Group 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, 2022, the Group had 13,768 employees (headcount) from 113
countries, with women making up 63% 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 Human Resources
Depar tment and the par tnerships with worldwide authoritative universities and
monitoring centers make it possible for Prada’s strategies to evolve in tune with
the most recent societal shifts.
In 2022 the engagement with diversity, equity and inclusion proceeded according
to plan thanks to the implementation of numerous initiatives, including the first
edition of Dorchester Industries Experimental Design Lab (a three-year program
developed by Theaster Gates and the Prada Group to suppor t and celebrate
talented designers of color working in various design industries) and the pilot
program “Fashion Expressions: The Stories She Wears”, a project par tnered with
UNFPA (the United Nations sexual and reproductive health agency) that aims to
harness fashion’s social and economic power as a vehicle to promote women’s
empowerment, sexual health and reproductive health, with a six-month training
program for 45 young women in Ghana and Kenya. In addition, the collaboration
with the Fashion Institute of Technology (FIT) continued to suppor t talented
creative youths with the granting of scholarships.
The Group has embarked on a very ambitious path of DE&I commitment that aims
to produce a genuine cultural evolution within the organization. With “Drivers
of Change”, its internal communication and employee engagement program,
the Group pursued a work plan intended to fur ther expand, in the more than
40 countries where the Group operates directly, its employees’ awareness about
social responsibility and environmental protection, fostering greater dialogue
among employees and an understanding of the Group’s initiatives and objectives.
From the outset, Prada has encouraged and rewarded workplace skills, results
orientation and teamwork. The passion and skills of the employees, and of the
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PRADA Group 2022 Annual Report - The Prada Group 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 for each of the
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 strong structure suppor ting
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 par t, 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 designed
to strengthen their relational skills, including 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
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.
During 2022, the processes and strategies of the compensation and benefits system
were reviewed, which led to the granting of welfare initiatives to help employees
deal with the considerable increase in the cost of living.
The Remuneration Committee oversees the compensation packages of top
management, taking into consideration roles and responsibilities as well as market
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
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PRADA Group 2022 Annual Report - The Prada Group 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 Human Rights Policy approved by the Board of Directors on July 28, 2022.
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 with the strictest public health emergency
protocols. Manufacturing facilities present the greatest health and safety risk,
although to a limited degree. Safety training and refresher courses, with an
emphasis on industrial facilities, helped keep the number of accidents very low in
2022, 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 their long-term well-being as
well as that of their respective communities.
Over the years the Group has stipulated many supplementary agreements in Italy,
France and the United Kingdom 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 Group has identified some industrial supplier risks, for which it has adopted
specific policies and set up control 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 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
implementation plans at some locations. In a few cases, the audit resulted in the
termination of the supply contract.
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PRADA Group 2022 Annual Report - The Prada Group 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 ecological footprint with the greatest priority.
Joining The Fashion Pact on August 23, 2019 when it was formed at the G7 Meeting
in France created a unique oppor tunity to accelerate environmental sustainability
initiatives. Active par ticipation in the coalition’s activities 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.
In 2021 the Prada Group finished measuring its carbon footprint and then
successfully presented greenhouse gas emission reduction targets in accordance
with the Science Based Targets Initiative best international practice and protocol.
The 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 with the completion of an intensive energy-
efficiency action plan that has in recent years characterized the Group for its
strong commitment in this area: for example switching from gas to electric heating
and air conditioning, increasing the number of e-vehicles in the car fleet, and
expanding the propor tion of renewable energy obtained and self-produced. 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.
On this front, in 2022 the Prada Group announced its par ticipation in the The
Fashion Pact initiative, “Collective Vir tual Power Purchase Agreement (CVPPA)”,
aimed at accelerating renewable electricity adoption by investing in new clean
energy infrastructure in Europe. First of its kind involving numerous players in the
fashion industry, the CVPPA seeks to add over 100,000 MWh per year of renewable
electricity generation to the European grid, accelerating from 2023 the transition
to clean energy while contributing to the achievement of the targets.
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PRADA Group 2022 Annual Report - The Prada Group 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
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 m 2, and are almost all located in Italy. Among manufacturing and storage
facilities, five 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, 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 Valvigna factory and the logistic hub in
Levanella, both in Tuscany, represent the synthesis of these principles: structures
capable of generating sustainable efficiency while harmonising the architectural
intervention with the natural surroundings.
With respect to protecting biodiversity, the Prada Group is constantly seeking
ways to make footwear, clothing and leather goods increasingly sustainable, in
keeping with its characteristically innovative spirit. The exper tise acquired over
decades of product research and development led to the successful launch and
completion of the campaign to fully transition from virgin nylon to regenerated
nylon (“Re-Nylon”), and to the introduction of many new solutions with a smaller
carbon footprint used in areas ranging from catwalks to collections and, obviously,
packaging. The Group brands became fur free with the 2020 Spring-Summer
Women’s collection.
In 2022, the Group was among the founders of the Re.Crea Consor tium, formed to
manage end-of-life textile and fashion products, and to promote the research and
development of innovative recycling solutions.
In 2019, “Sea Beyond” made its debut. Sea Beyond is an educational program
that aims to raise awareness about sustainability and ocean preservation issues,
promoted by the Prada Group and by UNESCO’s Intergovernmental Oceanographic
Commission (IOC). The project is funded by a percentage of sales of the Prada
Re-Nylon collection, and in January 2021 it was officially associated with the
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Prada industrial Headquar ter
Valvigna, Terranuova Bracciolini (AR)
by architect Guido Canali
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United Nations Decade of Ocean Science for Sustainable Development. The
project consists of three main initiatives: an educational module for secondary
school students worldwide, the “Asilo della Laguna” (a program of outdoor lessons
for preschool students in Venice), and a training program formulated specifically
for the more than 13,000 employees of the Prada Group. In 2022 Sea Beyond
won the Oceans Award at the “Sustainable Fashion Awards 2022” organized by
the National Chamber of Italian Fashion in collaboration with the United Nations
Ethical Fashion Initiative (EFI).
In 2022, the Prada Group announced its par ticipation in Forestami, the urban
forestation project of the Metropolitan City of Milan, which plans to plant 3 million
trees in the city by 2030: its contribution will commence next year.
Left page
Prada Group and UNESCO-IOC “Kindergar ten of the Lagoon” outdoor education programme
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PRADA Group 2022 Annual Report - 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 key for Prada’s image, are the result of innovative thinking about
the shopping concept, revisited and reinvented in order to create unique stores,
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
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PRADA Group 2022 Annual Report - The Prada Group projects. The cultural activities of Fondazione Prada make it possible for the 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 2011, the Fondazione has also been operating at its Venetian venue, Ca’
Corner della Regina, an eighteenth-century building that has so far hosted ten
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 2022 “Useless
Bodies?” by the ar tist duo Elmgreen & Dragset, one of the most extensive thematic
exhibitions ever realized by Fondazione Prada, which explored the condition of
the body in the post-industrial age, and “Recycling Beauty”, a project curated
by Salvatore Settis and Anna Anguissola and designed by Rem Koolhaas, which
investigates the subject of reusing Greek and Roman antiquities in post-antique
contexts, from Medieval to Baroque times.
At the Venetian venue, the second collaboration with the Fondazione Archivio
Luigi Nono was presented. The “Luigi Nono, Contrappunto dialettico alla mente”
encounter included the par ticipation of philosopher Massimo Cacciari, neurologist
Daniela Perani and sound director Alvise Vidolin.
Another musical project was developed with Threes Productions and MMT Creative
Lab, for the musical per formance of Dies Irae by Swedish composer Maria W Horn.
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. In 2022, this space hosted the “Role Play” exhibition
curated by Melissa Harris. The project explored the processes of searching
for, projecting and inventing possible alternative identities, teetering between
authentic, idealized, and universal selves through a selection of photographic,
video and per forming works by eleven international ar tists.
More projects were presented at the historic Rong Zhai residence in Shanghai and
at the Prada Aoyama Tokyo epicenter with the suppor t of Fondazione Prada. In
Shanghai “Lake Tai” was offered, a project by American ar tist Michael Wang, who
created a series of works focused on the natural and cultural heritage of the Tai
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PRADA Group 2022 Annual Report - The Prada Group Exhibition view of “Lake Tai” by Michael Wang
Prada Rong Zhai, Shanghai - 2022
Photo: JJYPHOTO - Cour tesy Prada
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Exhibition view of “Who the Bær ” by Simon Fujiwara
Prada Aoyama Tokyo - 2022
Photo: Yasushi Ichikawa - Cour tesy Prada
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Lake region and on the tradition of Chinese landscape ar t. In Tokyo, new versions
of two exhibitions previously realized by the Fondazione in Milan were organized:
“Role Play” and “Who the Bær ”. “Role Play” included photographs, videos and
audio works of five international ar tists who explore the theme of role playing
and the manipulation of identity and public image. “Who the Bær ”, conceived by
ar tist Simon Fujiwara, explored a plurality of topics: from the climate crisis to
cultural appropriation, from plastic surgery to pop ar t, through the experiences of
a fictitious character created by the ar tist.
Three steps were taken in 2022 for the “Human Brains” project, dedicated to
neuroscience: the “Conversations” series of online appointments, the “Preserving
the Brain” forum and the “It Begins with an Idea” exhibition. The three initiatives
are the result of an in-depth research process under taken by Fondazione Prada in
2018 with the suppor t of a scientific committee to understand the human brain,
the complexity of its functions, and its centrality to human history.
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Miuccia Prada’s 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 – “House Comes With a Bird”, directed by Janicza
Bravo and “Car ta a mi madre para mi hijo”, directed by Carla Simon – were shown
at the 2022 Venice Film Festival as par t of the Giornate degli Autori program. The
film series, which consists of twenty-four films produced up to December 2022,
calls upon directors of international fame and diverse intellectual backgrounds to
explore the world of women.
The special initiatives organized by Fondazione Prada at the Milan venue in 2022
included: the “Soggettiva Ava DuVernay” film selection conceived by the American
writer, director, screenwriter and producer; the screening of the complete
television series “Small Axe”, unprecedented in Italy, introduced by its director and
co-screenwriter Steve McQueen; the outdoor film program “Multiple Canvases”;
and “Soggettiva Bernardo Ber tolucci – Doppia Autobiografia”, an analysis of the
director ’s films in the 1960s and the 1970s associated with nine feature films that
influenced his imagination and his language.
Left page
Miu Miu Women’s tales #23 “House comes with a bird”
Directed by Janicza Bravo
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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 fervent interest in the world of sailing and the America’s
Cup race, the most prestigious competition for this spor t, for more than twenty
years. 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 benefited from this experience, which increased the Prada brand’s global
visibility and made a huge contribution to the commercial success of the activewear
lines, in November 2021 the Group purchased Luna Rossa Challenge S.r.l., 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 combined
the ownership of the Luna Rossa brand with the competitive capability of the
team in view of par ticipating in the 37th America’s Cup and fully unleashing the
commercial potential of the Luna Rossa brand.
Left page
Luna Rossa Prada Pirelli Team
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PRADA Group 2022 Annual Report - The Prada Group P R A D A G R O U P S T R U C T U R E
Prada S.p.A.
Milan
Holding/manuFacTuring/diSTriBuTion/ServiceS
IPI Logistica S.r.l.
Milan
ServiceS
100%
Prada Canada Corp
Toronto
diSTriBuTion/reTail
100%
Prada Australia pty ltd
Sydney
reTail
Pelletteria Ennepi S.r.l.
Figline e
Incisa Valdarno
ProducTion
100%
Post Development Corp
New York
real eSTaTe
100%
Prada Korea llc
Seoul
reTail
Hipic Prod Impex S.r.l.
Sibiu
ProducTion
100%
Prada USA Corp
New York
diSTriBuTion/ServiceS/reTail
100%
Prada Singapore pte ltd
Singapore
reTail
60%
Prada Middle East fzco
Jebel Ali Free Zone-Dubai
diSTriBuTion/ServiceS
100%
Prada Retail France sas
100%
Marchesi 1824 S.r.l.
100%
49%
Prada Emirates llc
100%
Prada Monte-Carlo sam
Prada sa
Luxembourg
Trademark
Swiss Branch
Lugano
ServiceS
49%
Prada Kuwait wll
Kuwait City
reTail
100%
Prada Belgium sprl
100% Luna Rossa Challenge S.r.l.
100%
Prada Company sa
Grosseto
managemenT Sailing Team
Luxembourg
ServiceS
100%
Church & Co ltd
Northampton
manuFacTuring/
diSTriBuTion/ServiceS
100%
Church & Co (Footwear) ltd
Northampton
TrademarkS
100%
100%
Church UK Retail ltd
Northampton
reTail
Church Spain sl
Madrid
reTail
100%
100%
100%
100%
Figline S.r.l.
Milan
ProducTion
100%
Church Ireland Retail ltd
Dublin
under liquidaTion
100%
Pelletteria Figline S.r.l.
Figline Incisa
Valdarno
ProducTion
100%
Church Austria gmbh
Vienna
reTail
66.7%
Artisans Shoes S.r.l.
Montegranaro
ProducTion
100%
Church Netherlands bv
Amsterdam
reTail
100%
Church Footwear ab
Stockholm
reTail
100%
Church Denmark aps
Copenhagen
reTail
60%
40%
Tannerie Limoges sas
Isle
ProducTion
Les Femmes S.r.l.
Porto S. Elpidio
ProducTion
39.88%
Filati Biagioli Modesto
S.r.l.
Montale
ProducTion
100%
Church Germany gmbh
Münich
reTail
46.65%
Conceria Superior S.p.A.
Santa Croce sull’Arno
ProducTion
100%
Church Italia S.r.l.
Milan
reTail
100%
Church & Co (USA) ltd
New York
reTail
100%
Church Hong Kong
Retail ltd
Hong Kong
reTail
100%
Church Singapore pte ltd
Singapore
reTail
100%
100%
Church Footwear (Shang-
hai) Co ltd
Shanghai
reTail
Church Korea llc
Seoul
reTail
Prada Guam llc
Guam
reTail
Prada Retail Mexico
S. de R.L. de C.V.
Mexico City
reTail
100%
100%
100%
100%
Prada Retail
Malaysia sdn bhd
Kuala Lumpur
reTail
Prada Japan Co ltd
Tokyo
reTail
100%
100%
100%
Prada Brasil
Importação e Comércio de
Artigos de Luxo ltda
São Paulo
reTail
PRM Services
S. de R.L. de C.V.
Mexico City
dormanT
Prada Panama sa
Panama
dormanT
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
Prada Fashion Commerce
(Shanghai) Co ltd
Shanghai
reTail
Prada Macau Co ltd
Macau
reTail
Prada Dongguan
Trading Co ltd
Dongguan
ServiceS
100%
100%
100%
100%
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
54
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Milan
Food&Beverage
UK Branch
London
COR 36 S.r.l.
Milano
under liquidaTion
Caffè Principe S.r.l.
Forte dei Marmi
Food&Beverage
100%
Prada Retail wll
100%
Prada Germany gmbh
100%
Munich
reTail/ServiceS
75%
Prada Saudi Arabia ltd
100%
Prada Austria gmbh
100%
100%
Prada Czech Republic sro
100%
Prada Rus llc
Moscow
reTail
100%
Prada Netherlands bv
Amsterdam
reTail
100%
Prada Ukraine llc
100%
Prada Switzerland sa
100%
Prada Kazakhstan llp
100%
Prada Spain sl
100%
Prada Retail
South Africa (pty) ltd
Sandton
dormanT
100%
Prada Maroc Sarlau
Casablanca
under liquidaTion
100%
Church’s English Shoes sa
100%
100%
Church France sas
100%
100%
Church’s English Shoes
Switzerland sa
100%
Prada Norway as
Oslo
reTail
100%
Church Japan Company ltd
100% Prada San Marino S.r.l.
Paris
reTail
Monaco
reTail
Brussels
reTail
Vienna
reTail
Prague
reTail
Lugano
reTail
Madrid
reTail
Istanbul
reTail
London
reTail
100%
100%
Prada Portugal
Unipessoal lda
Lisbon
reTail
Prada Hellas
Sole Partner llc
Athens
reTail
100%
Prada Bosphorus Deri
Mamüller ltd Sirketi
100%
Prada Retail UK ltd
Ireland Branch
Dublin
reTail
Prada Denmark aps
Copenhagen
reTail
Prada Sweden ab
Stockholm
reTail
San Marino
reTail
Kenon ltd
London
real eSTaTe
100%
Dubai
reTail
Doha
reTail
Jeddah
reTail
Kiev
reTail
Almaty
reTail
Brussels
reTail
Paris
reTail
Lugano
reTail
Tokyo
reTail
PRADA Group 2022 Annual Report - The Prada Group Prada S.p.A.
Milan
Holding/manuFacTuring/diSTriBuTion/ServiceS
100%
Church & Co (Footwear) ltd
100%
100%
Post Development Corp
100%
Prada Korea llc
Pelletteria Ennepi S.r.l.
Figline e
Incisa Valdarno
ProducTion
New York
real eSTaTe
100%
Church UK Retail ltd
Northampton
100%
Hipic Prod Impex S.r.l.
100%
Prada USA Corp
New York
diSTriBuTion/ServiceS/reTail
100%
Prada Singapore pte ltd
Singapore
reTail
100%
Church Spain sl
100%
Prada Guam llc
100%
100%
Guam
reTail
Prada Retail
Malaysia sdn bhd
Kuala Lumpur
reTail
100%
100%
Prada Japan Co ltd
100%
Church Ireland Retail ltd
100%
Dublin
under liquidaTion
Pelletteria Figline S.r.l.
Figline Incisa
Valdarno
ProducTion
Prada Retail Mexico
S. de R.L. de C.V.
Mexico City
reTail
100%
Church Austria gmbh
66.7%
Artisans Shoes S.r.l.
100%
Prada (Thailand) Co ltd
Sibiu
ProducTion
Figline S.r.l.
Milan
ProducTion
Montegranaro
ProducTion
Isle
ProducTion
100%
Church Netherlands bv
60%
Tannerie Limoges sas
100%
Church Footwear ab
40%
Les Femmes S.r.l.
Porto S. Elpidio
ProducTion
100%
100%
Church Denmark aps
39.88%
Filati Biagioli Modesto
S.r.l.
Montale
ProducTion
100%
Church Germany gmbh
46.65%
Conceria Superior S.p.A.
Santa Croce sull’Arno
ProducTion
Prada Brasil
100%
Importação e Comércio de
Artigos de Luxo ltda
São Paulo
reTail
PRM Services
S. de R.L. de C.V.
Mexico City
dormanT
100%
Prada Panama sa
Panama
dormanT
Aruba
reTail
Prada Retail Aruba nv
100%
100%
Prada Saint
Barthelemy sarl
Gustavia
reTail
Sydney
reTail
Seoul
reTail
Tokyo
reTail
Bangkok
reTail
Hanoi
reTail
Saipan
reTail
100%
Church & Co ltd
Northampton
manuFacTuring/
diSTriBuTion/ServiceS
Northampton
TrademarkS
reTail
Madrid
reTail
Vienna
reTail
Amsterdam
reTail
Stockholm
reTail
Copenhagen
reTail
Münich
reTail
Milan
reTail
New York
reTail
Retail ltd
Hong Kong
reTail
Singapore
reTail
hai) Co ltd
Shanghai
reTail
Seoul
reTail
100%
Church Italia S.r.l.
100%
Church & Co (USA) ltd
100%
Church Hong Kong
100%
Church Singapore pte ltd
100%
Church Footwear (Shang-
100%
Church Korea llc
100%
Prada New Zealand ltd
Wellington
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%
100%
IPI Logistica S.r.l.
100%
Milan
ServiceS
Prada Canada Corp
Toronto
diSTriBuTion/reTail
100%
Prada Australia pty ltd
60%
Prada Middle East fzco
Jebel Ali Free Zone-Dubai
diSTriBuTion/ServiceS
100%
Prada Retail France sas
Paris
reTail
100%
Marchesi 1824 S.r.l.
Milan
Food&Beverage
100%
Prada sa
Luxembourg
Trademark
49%
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 S.r.l.
Grosseto
managemenT Sailing Team
100%
Prada Company sa
Luxembourg
ServiceS
100%
Prada Retail wll
Doha
reTail
100%
Prada Germany gmbh
Munich
reTail/ServiceS
100%
COR 36 S.r.l.
Milano
under liquidaTion
75%
Prada Saudi Arabia ltd
Jeddah
reTail
100%
Prada Austria gmbh
Vienna
reTail
100%
Caffè Principe S.r.l.
Forte dei Marmi
Food&Beverage
100%
100%
100%
Prada Rus llc
Moscow
reTail
Prada Ukraine llc
Kiev
reTail
Prada Kazakhstan llp
Almaty
reTail
100%
100%
Prada Retail
South Africa (pty) ltd
Sandton
dormanT
Prada Maroc Sarlau
Casablanca
under liquidaTion
100%
Church’s English Shoes sa
Brussels
reTail
100%
100%
Church France sas
Paris
reTail
Church’s English Shoes
Switzerland sa
Lugano
reTail
100%
Prada Czech Republic sro
Prague
reTail
100%
Prada Netherlands bv
Amsterdam
reTail
100%
100%
100%
100%
100%
100%
100%
100%
100%
Prada Switzerland sa
Lugano
reTail
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
Prada Retail UK ltd
London
reTail
Ireland Branch
Dublin
reTail
Prada Denmark aps
Copenhagen
reTail
Prada Sweden ab
Stockholm
reTail
Prada Norway as
Oslo
reTail
100%
Church Japan Company ltd
Tokyo
reTail
100% Prada San Marino S.r.l.
San Marino
reTail
100%
Kenon ltd
London
real eSTaTe
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PRADA Group 2022 Annual Report - 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 and Risk Committee
56
Euro 255,882,400
(represented by 2,558,824,000
shares of Euro 0.10 each)
Paolo Zannoni
(Chairman & Executive Director)
Andrea Guerra (Chief Executive Officer &
Executive Director)
Miuccia Prada Bianchi (Executive Director)
Patrizio Ber telli (Executive Director)
Andrea Bonini (Chief Financial Officer &
Executive Director)
Lorenzo Ber telli
(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 2022 Annual Report - The Prada Group Remuneration Committee
Nomination Committee
Sustainability Committee
Board of Statutor y Auditors
Marina Sylvia Caprotti (Chairwoman)
Paolo Zannoni
Yoël Zaoui
Maurizio Cereda (Chairman)
Lorenzo Ber telli
Marina Sylvia Caprotti
Pamela Yvonne Culpepper (Chairwoman)
Lorenzo Ber telli
Anna Maria Rugarli
Antonino Parisi (Chairman)
Rober to Spada
David Terracina
Organismo di Vigilanza
(Supervisor y Body)
(Italian Leg. Decr. 231/2001)
Stefania Chiaruttini (Chairwoman)
Yoël Zaoui
Rober to Spada
Main Shareholder
Company Secretar y
Prada Holding S.p.A.
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 2022 Annual Report - Financial Review 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 S.p.A. (“Prada” or the “Company”), the operating 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 measurement and classification criteria of the International Financial
Repor ting Standards (“IFRSs”) issued by the International Accounting Standards
Board (“IASB”) and adopted by the European Union. Some “non-IFRS measures”
are also used within the Financial Review in order to represent some financial
aspects of the period from a management perspective.
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PRADA Group 2022 Annual Report - Financial Review CONSOLIDATED STATEMENT OF PROFIT OR LOSS
(INCLUDES NON-IFRS
MEASURES)
(amounts in thousands of Euro)
Net sales
Royalties
Net revenues
Cost of goods sold
Gross margin
twelve months
ended
December 31
2022
%
on net
revenues
twelve months
ended
December 31
2021
%
on net
revenues
change
%
change
4,124,592
76,082
98.2%
1.8%
3,316,620
49,047
4,200,674
100.0%
3,365,667
98.5%
1.5%
100%
807,972
27,035
835,007
24.4%
55.1%
24.8%
(888,580)
-21.2%
(818,309)
-24.3%
(70,271)
8.6%
3,312,094
78.8%
2,547,358
75.7%
764,736
30.0%
Product design and development costs
Advertising and communications costs
Selling costs
General and administrative costs
Total operating expenses
(137,469)
(359,114)
-3.3%
-8.5%
(115,319)
(294,251)
-3.4%
-8.7%
(22,150)
(64,863)
(1,704,363)
-40.6%
(1,421,169)
-42.2%
(283,194)
(265,972)
-6.3%
(217,135)
-6.5%
(48,837)
(2,466,918)
-58.7%
(2,047,874)
-60.8%
(419,044)
19.2%
22.0%
19.9%
22.5%
20.5%
Recurring operating income / (loss) – EBIT Adjusted
845,176
20.1%
499,484
14.8%
345,692
69.2%
Other non-recurring income / (expenses)
(69,186)
-1.6%
(10,000)
-0.3%
(59,186)
591.9%
Operating income / (loss) - EBIT
775,990
18.5%
489,484
14.5%
286,506
58.5%
Interest and other financial income / (expenses), net
Interest expenses on lease liability
Dividends from investments
Total financial income / (expenses)
(24,498)
(40,990)
473
(65,015)
-0.6%
-1.0%
0.0%
-1.5%
(31,216)
(36,773)
160
(67,829)
-0.9%
-1.1%
0.0%
-2.0%
6,718
(4,217)
313
2,814
-21.5%
11.5%
195.6%
-4.1%
Income / (loss) before taxation
710,975
16.9%
421,655
12.5%
289,320
68.6%
Taxation
(241,820)
-5.8%
(126,552)
-3.8%
(115,268)
91.1%
Net income / (loss) for the period
469,155
11.2%
295,103
8.8%
174,052
59.0%
Net income / (loss) - Non-controlling interests
3,962
0.1%
849
0.0%
3,113
366.7%
Net income / (loss) - Group
465,193
11.1%
294,254
8.8%
170,939
58.1%
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PRADA Group 2022 Annual Report - Financial Review
KEY FINANCIAL INFORMATION
Key economic figures
(amounts in thousands of Euro)
Net Revenues
EBIT Adjusted (*)
% Incidence on net revenues
EBIT (**)
% Incidence on net revenues
Net Income / (Loss) of the Group
Earnings / (Losses) per share (Euro)
Net operating cash flow (***)
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
4,200,674
3,365,667
845,176
20.1%
775,990
18.5%
465,193
0.182
695,527
499,484
14.8%
489,484
14.5%
294,254
0.115
750,723
(*) Non-IFRS measure equal to EBIT less O ther non-recurring income / (expenses)
(**) Non-IFRS measure equal to Earnings before Interest and Taxation
(***) Non- IFRS measure equal to net cash flow from operating activities less repayment of lease liability
Key indicators
(amounts in thousands of Euro)
Net operating working capital
Net invested capital (right of use assets included)
Net financial surplus / (deficit) (*)
Group shareholders’ equity
December 31
2022
December 31
2021
690,573
5,073,699
534,900
3,482,217
602,038
4,936,402
237,653
3,113,894
(*) Non-IFRS measure equal to 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
2 0 2 2 H I G H L I G H T S
2022 was characterised by challenging macroeconomic conditions following the
outbreak of war in Ukraine, interest rate hikes, and the continued impact of the
Covid-19 public health emergency in some countries, par ticularly China. However,
the luxury goods sector, bolstered by strong local demand and some recovery
in global tourism flows, demonstrated resilience and provided oppor tunities for
growth.
The Prada Group repor ted strong growth in net revenues (+21.3% at constant
exchange rates compared with 2021), with double-digit growth for both Prada and
Miu Miu, and in profitability (EBIT Adjusted +69.2% against 2021, corresponding
to 20.1% of net revenues), capitalising on its investments in creative talent,
innovation, supply chain and stores. In addition, the Group increased the focus on
client centrality and retail productivity, and continued to optimise manufacturing
processes, delivering a substantial profitability improvement.
In Interbrand’s “Best Global Brands 2022” rankings, Prada registered more than
62
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PRADA Group 2022 Annual Report - Financial Review 20% year-on-year value growth for the second year in a row, and ranked among
the 15 fastest-growing brands.
Prada also topped the Lyst rankings for the October-December 2022 period; Miu
Miu ranked four th in the same period. Lyst is a data analysis tool that each quar ter
explores the purchasing habits of more than 200 million consumers worldwide,
providing a snapshot of the most loved brands and products of the moment.
According to Lyst, Miu Miu was the “2022 Brand of the Year ”: the successful
2022 Fall/Winter fashion show, highly appreciated by both critics and the public,
together with the launch of iconic products, increased the popularity of the brand
on social media, also due to the suppor t of celebrities and influencers.
The Group achieved double-digit growth in all the main product categories, i.e.
leather goods, ready to wear and footwear. For Prada, Prada Paradoxe, the first
women’s fragrance created from the Prada-L’Oréal par tnership, was launched in
August; in October, Prada presented ETERNAL GOLD, its first sustainable fine
jewelry collection, made of 100% cer tified recycled gold. Both Paradoxe, with its
refillable bottle, and ETERNAL GOLD embed sustainable practices reflected in
every aspect of the Group’s business.
At Church’s, the focus has been an internal reorganisation process with the aim of
repositioning the brand and improving its profitability. As par t of this process, 24
stores were closed as they were deemed non-strategic.
The investments in retail proceeded at accelerated pace with 191 projects completed
over the year, concentrated on renovations and improvements of existing stores and
selective new store openings. The client experience was enhanced with numerous
special installations, nearly 130 pop-in and pop-up shops. Prada Tropico was one
of the most successful ones: the colors and atmospheres of whimsical distant
lands inspired a fresh new landscape, reinterpreting Prada’s visual identity with a
contemporary pop vocabulary.
The client experience was also the focus, at the beginning of the year, for the
rollout of “client journey”, a global project intended to reinforce client centrality
through the lens of empathy, warmth, passion, and energy.
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PRADA Group 2022 Annual Report - Financial Review In the digital arena, star ting in June and with a launch per month, Prada
Timecapsule gained a new format: each month’s exclusive, limited-edition item
was sold together with a non-fungible token (NF T), marking the Group’s Web
3.0 debut. Simultaneously, Prada released Prada Crypted, the new Discord server
for the brand community, where users exchange ideas and draw inspiration from
connecting the fashion universe with the worlds of ar t, architecture, cinema,
music, Web3, and more. Prada also debuted in the Meta Avatars Store, the digital
fashion store where Facebook, Instagram, and Messenger users can buy fashion
items for their vir tual alter-egos.
On the manufacturing front, the Group continued to invest in its factories and
in the ver tical integration of the supply chain, to fur ther improve manufacturing
exper tise and quality control at every step of the process. To this end, in August,
the Group acquired a 43.65% stake in Conceria Superior S.p.A., a company with
60 years of experience in exceptional calfskin tanning techniques.
The organisation continued to be strengthened at all levels. The appointment of
Andrea Guerra as Prada Group CEO, in January 2023, represents a fundamental
governance change aimed at fur ther evolving Prada Group and easing the
generational transition. Equally significant is the appointment of Gianfranco
D’Attis as CEO of the Prada brand in December 2022.
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PRADA Group 2022 Annual Report - Financial Review ANALYSIS OF NET REVENUES
(amounts in thousands of Euro)
Net revenues
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
% change
current
exc. rate
% change
constant
exc. rate
Retail net sales (Directly Operated Stores and e-commerce)
3,736,971
89.0%
2,930,856
Wholesale net sales (independent customers and franchisees)
Royalties
Total net revenues
Retail net sales by geographical area
Asia Pacific
Europe
Americas
Japan
Middle East and other countries
Total retail net sales
Retail net sales by brand
Prada
Miu Miu
Church's
Other
Total retail net sales
Retail net sales by product category
Leather goods
Clothing
Footwear
Other
Total retail net sales
387,621
76,082
9.2%
1.8%
385,764
49,047
4,200,674
100%
3,365,667
1,231,659
1,187,466
781,825
368,739
167,282
33.0%
31.8%
20.9%
9.9%
4.4%
1,192,109
748,833
571,692
296,735
121,487
3,736,971
100%
2,930,856
3,252,025
431,768
29,403
23,775
87.0%
11.6%
0.8%
0.6%
2,537,061
346,874
29,835
17,086
3,736,971
100%
2,930,856
1,862,453
1,085,660
690,707
98,151
3,736,971
49.8%
29.1%
18.5%
2.6%
100%
1,530,418
825,587
520,892
53,959
2,930,856
87.1%
11.4%
1.5%
100%
40.7%
25.5%
19.5%
10.1%
4.2%
100%
86.6%
11.8%
1.0%
0.6%
100%
52.2%
28.2%
17.8%
1.8%
100%
27.5%
0.5%
55.1%
24.8%
3.3%
58.6%
36.8%
24.3%
37.7%
27.5%
28.2%
24.5%
-1.4%
39.1%
27.5%
21.7%
31.5%
32.6%
81.9%
27.5%
23.8%
-2.0%
55.1%
21.3%
-1.7%
63.4%
22.1%
30.5%
23.0%
23.8%
24.5%
20.3%
-2.3%
38.9%
23.8%
18.5%
27.0%
28.9%
77.1%
23.8%
For fiscal year 2022, the Prada Group registered net revenues of Euro 4,200.7
million, an increase at constant exchange rates of 21.3% on 2021. Foreign exchange
rates contributed positively for an additional 3.5%, for an increase of 24.8% on
2021, at current exchange rates.
DISTRIBUTION CHANNELS
Over the twelve-month period, retail net sales experienced double-digit growth
compared with 2021, with an increase of 23.8% at constant exchange rates (+27.5%
at current exchange rates).
There were 612 stores at December 31, 2022 following 17 store openings and 40
closures, including 24 Church’s stores as a result of the reorganisation process.
Direct e-commerce sales accounted for approximately 7% of total retail sales, in
line with annual 2021 data. For the twelve-month period, retail net sales accounted
for approximately 89% of net revenues.
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Wholesale net sales contracted by 2% at constant exchange rates compared with
2021, consistently with the Group’s selective strategies for this channel and the
impact of Covid-19 restrictions on the duty free customers.
NUMBER OF STORES
December 31, 2022
December 31, 2021
December 31, 2020
Owned
Franchises
Owned
Franchises
Owned
Franchises
422
145
37
2
6
612
21
5
-
-
-
26
420
146
61
2
6
635
21
5
-
-
-
26
410
152
62
3
6
633
20
6
-
-
-
26
December 31, 2022
December 31, 2021
December 31, 2020
Owned
Franchises
Owned
Franchises
Owned
Franchises
209
190
104
86
23
612
-
21
-
-
5
26
228
193
105
88
21
635
-
21
-
-
5
26
222
194
108
88
21
633
-
21
-
-
5
26
Prada
Miu Miu
Church's
Car Shoe
Marchesi 1824
Total
Europe
Asia Pacific
Americas
Japan
Middle East
Total
MARKETS
In Asia Pacific, retail net sales for the twelve months ended December 31, 2022
slightly contracted by 1.7% at constant exchange rates from those of 2021 (+3.3%
at current exchange rates), with a return to growth in the second half of the year.
Asia Pacific sales were adversely affected by continuous restrictions imposed by
authorities in China following the ongoing Covid-19 emergency. Excluding China,
all the other countries in the Asia Pacific region registered double-digit growth,
with par ticularly buoyant markets in South East Asia.
Retail net sales in Europe, driven by domestic consumption and tourism recovery,
surged by 63.4% at constant exchange rates against those of 2021 (+58.6% at
current exchange rates), with all areas showing double-digit growth except for
Russia and Ukraine.
Retail net sales in the Americas increased by 22.1% at constant exchange rates
(+36.8% at current exchange rates), compared to 2021.
The Japanese market rebounded mainly due to domestic consumption, with retail
net sales up by 30.5% at constant exchange rates (+24.3% at current exchange
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PRADA Group 2022 Annual Report - Financial Review
rates).
Retail net sales in the Middle East increased by 23% at constant exchange rates
(+37.7% at current exchange rates), compared to 2021.
BRANDS
Compared with 2021, Prada retail net sales increased by 24.5% at constant
exchange rates (+28.2% at current exchange rates). Miu Miu retail net sales rose by
20.3% at constant exchange rates (+24.5% at current exchange rates). At constant
exchange rate Church’s retail net sales fell by 2.3% (-1.4% at current exchange
rate) impacted by the reorganisation process and store closures.
The net revenues by brand amounted to Euro 3,647.8 million for Prada, Euro
488.9 million for Miu Miu, Euro 36.8 million for Church’s and Euro 27.2 million
for the other brands.
The breakdown of net revenues by brand is shown below:
(amounts in thousands of Euro)
Net revenues by brand
Prada
Miu Miu
Church's
Other
Total net revenues
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
% change
current
exc. rate
% change
constant
exc. rate
3,647,841
488,915
36,750
27,168
86.8%
11.6%
0.9%
0.7%
2,901,887
406,040
39,582
18,158
4,200,674
100%
3,365,667
86.2%
12.1%
1.2%
0.5%
100%
25.7%
20.4%
-7.2%
49.6%
24.8%
22.2%
16.7%
-7.9%
49.4%
21.3%
PRODUCT CATEGORIES
The Group repor ted double-digit growth across all product categories. Retail net
sales of leather goods, which benefitted from growth of both new and classic
products, increased at constant exchange rate by 18.5% on 2021 (+21.7% at
current exchange rates). Sales of ready to wear, with new Prada and Miu Miu
collections highly appreciated by the clientele, showed an increase of 27% versus
2021 (+31.5% at current exchange rates). Thanks to both lifestyle and formal
products, sales of footwear rose by 28.9% at constant exchange rates on 2021
(+32.6% at current exchange rates).
ROYALTIES
Royalty income rose by 55.1% on 2021. Both eyewear and fragrances showed
double-digit growth: eyewear continued the solid trend experienced in the first
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PRADA Group 2022 Annual Report - Financial Review half of the year, and fragrances were also suppor ted by the launch of the new
fragrance, Prada Paradoxe.
O P E R A T I N G R E S U L T S
Gross margin for the twelve months ended December 31, 2022 was 78.8% on net
revenues, up substantially from the 75.7% of 2021. Higher average prices, greater
absorption of production overheads, and a better sales mix in terms of distribution
channels are behind the improvement, despite the increase in production costs
caused by inflationary pressures.
Operating expenses, excluding non-recurring income / (expenses), were Euro
2,467 million, up by Euro 419 million from those of 2021. The increase is
primarily attributable to higher variable costs ensuing from higher sales, greater
communication activities, higher personnel and other general and administrative
expenses, and reduced benefits in terms of rent discounts and subsidies that had
been available in 2021 due to Covid-19 emergency.
Recurring operating income for the period, or EBIT Adjusted, was Euro 845.2
million (20.1% of net revenues), compared to Euro 499.5 million (14.8%) in 2021.
For the twelve months ended December 31, 2022, other non-recurring income /
(expenses) include a Euro 42 million writedown of tangible fixed assets and right of
use assets as a result of the extraordinary market conditions in Russia, a Euro 19.4
million writedown of the Church’s brand in context of the reorganisation process,
and Euro 7.8 million for settlement of a litigation that can be considered of a non-
recurring nature.
The operating income for the period, or EBIT, amounted to Euro 7 76 million
(18.5% of net revenues), compared to Euro 489.5 million (14.5%) in 2021.
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
Net financial expenses amounted to Euro 65 million, a decrease of Euro 2.8 million
on 2021 (Euro 67.8 million). The decrease is largely attributable to lower interest
costs associated with the net financial position, which improved from the previous
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PRADA Group 2022 Annual Report - Financial Review year, and reduced foreign exchange losses, offset in par t by higher interest on new
(and renewed) leases.
Tax expenses totaled Euro 241.8 million, corresponding to 34% of the pre-tax
income; the increase incidence compared to 2021 (30%) results from a different
geographical distribution of profits, the prudential non-recognition of the deferred
taxes on writedowns of fixed assets in Russia, and the retroactive effects of a
bilateral agreement between tax authorities signed during the year.
N E T I N C O M E
Net income for the period amounted to Euro 469.2 million (11.2% of net revenues),
compared to Euro 295.1 million (8.8%) in 2021.
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PRADA Group 2022 Annual Report - 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
information on the composition of the 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 surplus / (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
2022
December 31
2021
2,011,474
2,517,042
331,915
760,457
(401,799)
690,573
229,575
(522,553)
(292,978)
(51,486)
(67,571)
(65,590)
332,235
147,588
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
5,073,699
4,936,402
(3,482,217)
(18,805)
(3,501,022)
(394,531)
929,431
534,900
-15.3%
(1,715,451)
(392,126)
(2,107,577)
(1,572,677)
(5,073,699)
(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)
Net invested capital as at December 31, 2022 was Euro 5,074 million, with equity
of Euro 3,501 million and lease liability of Euro 2,108 million; the net financial
position at the end of the period registered a surplus of Euro 534.9 million.
Right of use assets increased by Euro 55.2 million, mainly as a result of increases
for new leases, remeasurements of existing leases, and consolidation perimeter
changes totaling Euro 504 million, net of depreciation of Euro 451.5 million and
writedowns of Euro 12.3 million regarding leases in Russia.
The non-current assets (net) rose by Euro 27 million (Euro 2,517 million at
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PRADA Group 2022 Annual Report - Financial Review December 31, 2022 versus Euro 2,490 million at December 31, 2021).
The capital expenditures of the year amounted to Euro 276.1 million, against
depreciation, amor tisation and writedowns of Euro 275.4 million, including the
Euro 29.7 million writedown of assets in Russia and the Euro 19.4 million writedown
of the Church’s brand.
(amounts in thousands of Euro)
Retail
Real estate
Production, Logistics and Corporate
Total
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
168,935
-
107,161
85,742
59,453
71,549
276,096
216,744
Capital expenditures primarily relate to store restyling and relocation projects,
as well as the advancement of the technological and digital roadmap in the retail,
manufacturing and corporate areas and continued investments in the manufacturing
facilities to strengthen the supply chain.
In addition to the capital expenditures, there was an investment of Euro 19.8
million for the 43.65% stake in Conceria Superior S.p.A., a long-standing supplier
of the Group. The acquisition represents another impor tant step towards ver tical
integration of the Prada Group’s supply chain, with the aim of fur ther increasing
industrial know-how and quality control along all manufacturing stages. In addition,
the investment will accelerate progress on impor tant issues such as traceability of
raw materials and transparency of supply chain.
The net operating working capital at December 31, 2022 totaled Euro 690.6
million, up by approximately Euro 88.5 million from that of 2021. The increase is
largely attributable to higher inventories.
The other current liabilities (net) amounted to Euro 293 million at December 31,
2022, up by Euro 130 million from December 31, 2021, essentially due to the
higher current tax liability.
The other non-current assets (net) of Euro 147.6 million at December 31, 2022
showed an increase of Euro 96.5 million from the prior year, attributable mainly
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PRADA Group 2022 Annual Report - Financial Review to the increase in deferred tax assets referring to greater temporary differences
on the inventory values.
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
2022
December 31
2021
(395,656)
(492,801)
(160,847)
(3,568)
(164,415)
(249,103)
(3,360)
(252,463)
(560,071)
(745,264)
1,091,622
1,125
2,224
981,786
1,125
6
Total financial receivables and cash and cash equivalents
1,094,971
982,917
Net financial surplus / (deficit)
534,900
237,653
The net operating cash flow for the twelve-month period, after the payment of the
lease liability (Euro 428.2 million), was positive for Euro 695.5 million. After the
cash outflows for investing activities (Euro 250.2 million), dividend payments (Euro
179.7 million), and net of the revaluation of the items of the net financial position
(Euro 31.6 million) due to the strengthening of the main currencies against the
Euro, the net financial surplus reached Euro 534.9 million at the end of the period.
(amounts in thousands of Euro)
December 31
2022
December 31
2021
Cash flow from operating activities
1,392,805
1,226,018
Cost of net financial debt: interest paid
Lease liability: interest paid
Tax paid
(8,533)
(40,989)
(219,586)
(8,556)
(36,773)
(37,161)
Net cash flow from operating activities
1,123,697
1,143,528
Repayment of lease liability
Net operating cash flow
(428,170)
(392,805)
695,527
750,723
Net cash flow utilized by investing activities
(250,209)
(137,265)
Free cash flow
445,318
613,458
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PRADA Group 2022 Annual Report - Financial Review The total amount of undrawn lines of credit at December 31, 2022 is Euro 807
million, consisting of Euro 400 million of committed lines and Euro 407 million of
uncommitted lines.
All financial covenants were fully complied with at December 31, 2022 and they
are expected to be complied within the next 12 months as well.
The following table sets for th the lease liability:
(amounts in thousands of Euro)
Long-term lease liability
Short-term lease liability
Total lease liability
December 31
2022
December 31
2021
1,715,451
392,126
1,627,197
418,215
2,107,577
2,045,412
The lease liability increased from Euro 2,045 million at December 31, 2021 to
Euro 2,108 million at December 31, 2022, primarily as a result of remeasurements
for lease extensions or modifications (Euro 496.2 million), net of the payments of
the period (Euro 428.2 million).
The lease liability was concentrated mainly in Japan, the U.S.A. and Italy.
The net financial indebtedness, including the lease liability, amounted to Euro
1,573 million at December 31, 2022 (Euro 1,808 million at December 31, 2021).
Fur ther information on the Group’s debt maturities and obligations, currency and
interest rate risk management, commitments and contingent liabilities is provided
in Notes 21, 26 and 28 of the Notes to the Consolidated Financial Statements.
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
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PRADA Group 2022 Annual Report - Financial Review 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,
economic, health or geopolitical situations leading to instability, social conflicts
at home and with other countries, as well as adverse natural events or government
restrictions on movement could negatively affect the Group’s sales operations,
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 the materials used
and production techniques, the image and locations of DOS, the careful selection
of business par tners, the communications activities and the corporate profile in
general.
Preserving the image and prestige acquired by its brands is a primary objective of
the Prada Group. This is pursued by constantly observing society and the changes
therein, in par t through close collaborations 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 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.
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PRADA Group 2022 Annual Report - Financial Review Miuccia Prada, assisted by a qualified team of stylists and designers, is capable
of combining intellectual curiosity, the pursuit of new and unconventional ideas,
and cultural and social interests with a strong sense of fashion. This has made it
possible to establish a genuine design culture, based on method and discipline,
which guides everyone who works in the creative process. The appointment of
a Creative Co-Director for the Prada brand enables the Group to benefit from
cooperation between two 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.
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
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PRADA Group 2022 Annual Report - Financial Review and footwear that reflect the brand position, accompanied by a unique buying
experience featuring a careful revisiting of the physical and digital store concepts
and layouts and constant enrichment of customer services. The 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 retain people who are qualified in the design, product development, marketing,
merchandising and corporate functions, and to train new generations of ar tisans.
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 24 manufacturing facilities owned in
Europe (21 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
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 S.p.A.’s Code of Ethics, which must be signed
before any business relationship is entered into.
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PRADA Group 2022 Annual Report - Financial Review 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 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 a control system
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 given that
they are used for operating activities and business processes and, consequently,
the number of independent par ties involved is fragmented. However, there is a
potential risk related to cash shor tages at stores. The Group has equipped itself
with various control tools, preventive and deterrent, aimed at improving the
efficiency of cash management activities.
LIQUIDIT Y RISK
Cash flow risk refers to difficulty that the Group could have in meeting its financial
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PRADA Group 2022 Annual Report - Financial Review 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 S.p.A.
eligible to par ticipate in the Cooperative Compliance Tax Regime in Italy (under
Italian Legislative Decree 128/2015), enhancing its tax control framework.
Within such regime, the Group has expanded a systematic, open communication
channel with the Italian and the foreign tax authorities of the most strategically
impor tant 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 S.p.A. 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
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
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PRADA Group 2022 Annual Report - Financial Review Decree 81/2008 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 S.p.A. 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 hold simultaneously 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 Body and the Audit and Risk 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 S.p.A., the Group’s parent company and worldwide distributor of Prada
and Miu Miu brand products.
The management of foreign exchange risk is described in more detail in the Notes
to the Consolidated Financial Statements.
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 S.p.A.,
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.
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PRADA Group 2022 Annual Report - Financial Review The management of interest rate risk is described in more detail in the Notes to
the Consolidated Financial Statements.
DATA PROTECTION RISKS
The Prada Group is aware of the impor tance of ensuring adequate safeguards to
its stakeholders on the processing of the personal data and information that each
Group company carries out in the course of its business activities.
In order to guarantee the right to personal data protection and minimize the risks
associated with data processing, the Prada Group has adopted policies, technical
and organizational security measures and transparency obligations for data
subjects.
Taking into account the technological and regulatory developments and the
underlying risk of different probabilities and severity for the rights and freedoms
of individuals in each processing activity, the Prada Group has set up an
organizational and operational control system consisting of operating procedures,
training sessions and periodic risk assessments capable of ensuring that:
― the data are adequately protected against the risk of accidental or unlawful
destruction, loss, alteration, unauthorized disclosure or access;
― personal data collected and processed by the Group’s companies are handled
with the utmost confidentiality and secrecy, may not be used for purposes other
than those that justify and permit their collection, processing and storage, and
may not be disclosed or transferred to third par ties, except in cases and in the
manner permitted by applicable law;
― personal data are processed in compliance with the European General Data
Protection Regulation (GDPR) and all other applicable privacy laws and
regulations of the jurisdictions in which the Group operates.
As par t of the measures adopted, the Prada Group has designated a Data Protection
Officer
(DPO), whose functions
include supervising regulatory compliance,
repor ting and advising on personal data protection matters.
BUSINESS INTERRUPTION RISKS
Business interruption can occur due to a variety of factors, including: proper ty
damage caused by an extreme weather event, machinery breakdowns, labor
disputes, and cyber attacks (“Cyber attacks”). The resulting losses can be economic
(e.g., decreased sales, increased labor costs due to the loss of a key supplier,
decreased possible future revenues due to natural disasters) and reputational to
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PRADA Group 2022 Annual Report - Financial Review the Group’s image.
The Group has an insurance program that includes Business Interruption coverage
related to proper ty damages occurring in the sales network.
With reference to cyber security, organizations are becoming more vulnerable to
cyber threats due to their increasing reliance on computers, networks, programs,
social media and data. An external cyberattack, insider threat or supplier breach
could cause service interruption, confidential data breaches and incapacity to
per form daily operations, thus affecting the Group and potentially the stakeholders
involved. In light of the recent increased threats of cyber security attacks worldwide,
the Prada Group has raised the security levels of its information systems while
reinforcing the lines of defense and taking the measures needed to ensure business
continuity.
The Group recently conducted a testing campaign aimed at simulating dangerous
external attacks, which led to setting up a milestone IT security program based
on recurring extensive campaigns of cyber-attack simulation and cyber-security
training through massive e-learning courses and specific programs for those most
exposed.
The Group has planned significant organizational changes to make sure that cyber
security risks are addressed and managed effectively across all operations and
sites.
ESG (ENVIRONMENTAL, SOCIAL, GOVERNANCE) RISKS
The Prada Group is mindful of the transparency and accountability demanded
by its stakeholders in the rapidly evolving environmental, social and regulatory
landscape in which it operates, and it intends to strengthen its control system to
ensure more pervasive integration of the ESG aspects into its business strategy
and model.
In the past few years, the Group’s main ESG risks relating to material sustainability
impacts were identified, associated with the Prada Group’s value chain. The
most significant environmental, social and governance topics that emerged were
climate change, human rights, occupational health and safety, diversity and equal
oppor tunity. Strategic, operational, financial and compliance risks are present in
such areas, and their assessment is currently underway.
ESG risks were only identified, and an initial assessment (impact and probability)
was done in January 2023. This analysis did not reveal any relevant risks for the
Group.
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PRADA Group 2022 Annual Report - Financial Review HEALTH AND SAFET Y RISKS
The Group is exposed to risks related to workers’ health and safety, such as injuries,
occupational diseases and accidents that could lead to physical harm to people,
the environment, litigation, as well as damage to the Group’s image.
In order to mitigate these risks, the Group conducts periodic safety training and
refresher courses, implemented with a focus on industrial areas.
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 analyse its financial
situation. Although they are used by the Group’s management, such measures
are not universally or legally defined and are not regulated by the IFRS adopted
to prepare 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, it is impor tant for non-IFRS measures to
always be read in conjunction with the related explanatory notes, and for readers
to be aware that such measures may not be directly comparable with those used
by other companies.
The Prada Group uses the following non-IFRS measures in this Annual Repor t:
EBIT: Earnings before Interest and Taxation, i.e. “Consolidated net result for the
period” adjusted to exclude “ Total financial income/(expenses)” and “ Taxation”.
Within the scope of the Prada Group’s activities, which consist of the management
and development of the brands owned, some transactions may be qualified by the
Directors as non-recurring when their nature, materiality or frequency requires
separate disclosure in order to give readers additional information of the Group’s
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PRADA Group 2022 Annual Report - Financial Review operating results. In par ticular, other non-recurring transactions could include,
for example, impairment losses or reversal of impairment losses of fixed assets,
restructuring costs, litigation costs, and gains and losses on disposals of fixed
assets only when they are related to unusual material transactions considered
outside the normal course of business.
For this purpose, in 2022 the Group introduced the use of a new non-IFRS
measure, “O ther non-recurring income / (expenses)”, to identify the Non-recurring
transactions as defined above. Accordingly, the difference between the “Operating
income/(loss) - EBIT ” and the “O ther non-recurring income / (expenses)” is defined
as the “Recurring operating income/(loss) - EBIT Adjusted” and represents the
metric with which the Prada Group intends to measure the results of the operating
activities. This non-IFRS measure, adopted with consistency and stability over
time, will allow to maintain continuity for understanding the business per formance.
For the twelve months ended December 31, 2022, the “O ther non-recurring income
/ (expenses)” include a Euro 42 million writedown of tangible fixed assets and right
of use assets as a result of the extraordinary market conditions in Russia, a Euro
19.4 million writedown of the Church’s brand in context of the reorganisation
process, and Euro 7.8 million for settlement of a litigation that can be considered
of a non-recurring nature (for more details see the Notes to the Consolidated
Financial Statements, Note 16 on Impairment and Note 28 on Provision for risks
and charges).
For better comparability, the amount of Euro 10 million in 2021, related to the
provision for a legal dispute, has been reclassified in the item “O ther non-recurring
income / (expenses)”.
ALTERNATIVE PERFORMANCE MEASURE NOT FURTHER PRESENTED
In previous period the Group adopted an Alternative Per formance Measure
(“APM”) related to “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. Due
to the reduction of the impacts of the lockdowns in the financial per formance, the
Group evaluated that this measure no longer provides relevant information and
consequently this APM is no longer disclosed.
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PRADA Group 2022 Annual Report - Financial Review The reconciliation of Prada Group’s EBIT Adjusted and EBIT with the nearest IFRS
measure (Net Income/(Loss) for the period) is repor ted below:
(amounts in thousands of Euro)
twelve months
ended
December 31
2022
%
on net
revenues
twelve months
ended
December 31
2021
%
on net
revenues
Net Income / (Loss) for the period
469,155
11.2%
295,103
8.8%
Taxation
241,820
5.8%
126,552
3.8%
Total Financial income / (expenses)
65,015
1.5%
67,829
2.0%
Operating Income / (Loss) - EBIT
775,990
18.5%
489,484
14.5%
Other non-recurring income / (expenses)
69,186
1.6%
10,000
0.3%
Recurring Operating Income / (Loss) – EBIT Adjusted
845,176
20.1%
499,484
14.8%
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
2022
December 31
2021
Net financial position surplus/(deficit)
534,900
237,653
Short-term lease liability
Long-term lease liability
Total lease liability
(392,126)
(1,715,451)
(418,215)
(1,627,197)
(2,107,577)
(2,045,412)
Net financial position surplus/(deficit), including lease liability
(1,572,677)
(1,807,759)
Net Operating Cash Flow: Net Cash Flow generated by operating activities, less
the repayment of lease liability.
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PRADA Group 2022 Annual Report - Financial Review Free cash flow: Net Operating Cash Flow after the net cash flows used for the
investing activities.
(amounts in thousands of Euro)
December 31
2022
December 31
2021
Cash Flow from operating activities
1,392,805
1,226,018
Cost of net financial debt: interest paid
Lease Liability: interest paid
Tax Paid
(8,533)
(40,989)
(219,586)
(8,556)
(36,773)
(37,161)
Net Cash Flow from operating activities
1,123,697
1,143,528
Repayment of Lease Liability
Net Operating Cash Flow
(428,170)
(392,805)
695,527
750,723
Net cash flow utilized by investing activities
(250,209)
(137,265)
Free Cash Flow
445,318
613,458
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, 2022 amount to Euro 137.5 million, as repor ted in the Consolidated Profit or
Loss Statement by destination prepared in accordance with IFRSs.
TREASURY SHARES
As at December 31, 2022 the Group did not own any treasury shares, as repor ted
in the “Corporate Governance” section.
EVENTS AF TER THE REPORTING DATE
No significant events to be repor ted.
OUTLOOK
The Group’s ambition for 2023 is to continue on a path of solid and above-
market growth, investing behind brand desirability, in the renovation of the store
network, and in the industrial and technological infrastructure. However, the
macroeconomic and geopolitical environment remain uncer tain. China, among
other factors, will play an impor tant role with respect to the Group’s ambition,
and notwithstanding encouraging developments since the star t of the year, the
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PRADA Group 2022 Annual Report - Financial Review evolution is unpredictable. Therefore, the Group remains vigilant and maintains a
disciplined approach to costs and capital allocation.
Milan, March 9, 2023
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PRADA Group 2022 Annual Report - Financial Review 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 2022 Annual Report - Directors and Senior Management DIRECTORS
Our Board consists of eleven Directors, of whom six are executive Directors, and
five are independent non-executive Directors. The Board of Directors is appointed
for a term of three years.
CHAIRMAN
ZANNONI, Paolo, aged 74, was appointed 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 secretary of the Board of
Directors of Beretta Holding S.p.A. He served as Chairman of the Board of Autogrill
S.p.A., listed on the Italian Stock Exchange, from 2019 to 2022, 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. He
continues to be an executive fellow at the Yale School of Management, an advisory
board member of International Center for Finance (ICF ) and a board member of
the Jackson Institute for Global Affairs. Mr Zannoni earned an MA and an MPhil
in Political Science from Yale University. He also earned a BA from the University
of Bologna.
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
GUERRA, Andrea, aged 57, has been appointed as an Executive Director and the
Chief Executive Officer of the Company on January 26, 2023. Prior to joining
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PRADA Group 2022 Annual Report - Directors and Senior Management Prada, Mr. Guerra was the strategic advisor of LVMH, the chief executive officer of
Hospitality Excellence at LVMH Moët Hennessy Louis Vuitton SE (September 2020
to May 2022), executive chairman of the high-end food emporium Eataly (September
2015 to May 2019), the chief executive officer of the eyewear giant Luxottica
Group S.p.A. (July 2004 to September 2014), and was the chief executive officer
of Merloni Elettrodomestici (now Indesit Company) (2000 to 2004). Mr. Guerra
obtained a degree in Business Administration from Sapienza University of Rome in
1989. From December 2014 through October 2015, he was appointed as senior
strategic advisor for business, finance and industry to the Italian Government’s
Prime Minister. He was a member of the boards of directors of Bocconi University
(November 2014 – October 2018) and Save the Children Italy, and is a shareholder
of online newspaper Linkiesta. Over the years, Mr. Guerra was a member of the
strategic committee of Italian Strategic Fund (Fondo Strategico Italiano S.p.A.).
He was also a member of the board of directors of Amplifon S.p.A., and a member
of the strategic committee of Ariston Thermo S.p.A., both companies listed on the
Italian Stock Exchange. He held the position of director on the boards of Parmalat
S.p.A., and DeA Capital S.p.A., both companies listed on Italian Stock Exchange,
and Banca Nazionale del Lavoro S.p.A..
Save as disclosed herein, Mr. Guerra has not held any directorship in any other
listed companies in Hong Kong or overseas in the last three years.
PRADA BIANCHI, Miuccia, aged 74, is Executive Director of the Company 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 later on as Co-
chief Executive Officer along her husband Patrizio Ber telli, until January 26, 2023.
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.
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
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PRADA Group 2022 Annual Report - Directors and Senior Management 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,
Executive Director, 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 76, is Executive Director of the Company. He was first
appointed to the Board in 2003 and held the role of Co-Chief Executive Officer
along with Ms. Miuccia Prada until January 26, 2023. 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, Executive Director, 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.
BONINI, Andrea, aged 43, is the Chief Financial Officer of the Company since
May 2, 2022. He was appointed to the Board as Executive Director on November
8, 2022. He holds directorships in subsidiaries of the Company. Mr. Bonini has
19 years of experience in corporate finance and relevant experience in the luxury
industry. He star ted his professional career in Milan-based M&A boutique firm
Gallo & C. S.p.A. in 2003. In 2005, Mr. Bonini joined the Investment Banking
Division of Goldman Sachs International, based in London, where he held the
position of Managing Director since 2015. At Goldman Sachs, he was par t of
the Italy Coverage team until 2013 and subsequently joined the Consumer Retail
Group, with responsibility for Luxury and Brands in Europe. Mr. Bonini graduated
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PRADA Group 2022 Annual Report - Directors and Senior Management in Business Administration from Bocconi University in Milan in 2003.
Mr. Bonini 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 34, 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,
Executive Directors 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.
INDEPENDENT NON-EXECUTIVE DIRECTORS
CAPROT TI, Marina Sylvia, aged 45, 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 and Risk 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.
CEREDA, Maurizio, aged 59, 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
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PRADA Group 2022 Annual Report - Directors and Senior Management 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 and Risk 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 62, 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
Mohamed VI of the Order of Wissam.
Mr. Zaoui is the Chairman of the Audit and Risk committee and a member of the
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PRADA Group 2022 Annual Report - Directors and Senior Management 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 58, was elected as Independent Non-Executive
Director on January 28, 2022. Ms. Culpepper ’s former name was JORDAN, Pamela
Yvonne. Ms. Culpepper was 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 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 the Chairwoman 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 50, 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
programs in the Europe, Middle East & Africa regions and was with the company for
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PRADA Group 2022 Annual Report - Directors and Senior Management 12 years pioneering this work at industry level. Ms. Rugarli then led VF Corporation’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 Corporation she was a Board
member and then President of European Outdoor Conservation Association for a
total of seven years. Ms. Rugarli is currently a board member of JT International
S.A. since February 2022. 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 2022 Annual Report - 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 49, 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.
BERTONCINI, Francesca, aged 52, 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.
BRINI, Giulio, aged 54, has been Hong Kong, Macau, Taiwan, South Asia, Australia,
New Zealand Regional Director since July 2022. He is primarily responsible for
overseeing the Group’s operations in Asian countries and for the development
of Prada and Miu Miu business within the local markets. He has been appointed
also as Outlets Division Director in October 2017. Mr. Brini joined our Group in
1995 and before being appointed to his current position, he covered different
managerial roles in the commercial and industrial area, including Prada Retail
Director and Miu Miu General Manager. Mr. Brini obtained a degree in Economics
and Banking from the University of Siena, in 1993.
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PRADA Group 2022 Annual Report - Directors and Senior Management BUGG, Christopher Aaron, aged 39, has been appointed Group Communication
Director in 2021. During 2020 he had a strategic communication role in the Asia
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 55, 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.
CHEN, Kate, aged 43, has been Taiwan General Manager since September 2022.
She is primarily responsible for overseeing the Group’s commercial operations in
Taiwan and for the development of Prada and Miu Miu business within the local
market. Ms Chen joined our Group in 2011 and before being appointed to her
current position, she covered different managerial roles in Retail and Merchandising
area for the Taiwan market.
CHOI, Moonyoung, aged 60, 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.
CLARK, Sophie, aged 50, has been Prada Australia General Manager since 2016.
She is primarily responsible for overseeing the Group’s commercial operations in
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PRADA Group 2022 Annual Report - Directors and Senior Management 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 55, 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 S.p.A., in Milan.
CROSO, Carlo, aged 42, joined the Group in July 2019 as Group Retail Innovation
and E-Commerce Director and from July 2022 has been appointed as Group Retail
Innovation and Commarcial 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 and wholesale 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.
D’AT TIS, Gianfranco, aged 46, has been appointed Prada Chief Executive Officer as
of January 2023. In his role, he is primarily responsible for strategic development
of Prada Brand in every market. Gianfranco D’Attis holds a bachelor ’s degree from
Zurich Graduate School of Business Administration and completed his education by
attending the Senior Executive Program at Columbia Business School in New York.
Throughout his career, Gianfranco D’Attis has held senior managerial positions of
increasing responsibility. His last role was President for Christian Dior Americas.
HUET, EMMANUEL, aged 46, has been France, Belgium, Monte Carlo Regional
Director since February 2022. He is primarily responsible for overseeing the
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PRADA Group 2022 Annual Report - Directors and Senior Management Group’s operations in France, Belgium, Monte Carlo and for the development of
Prada and Miu Miu business within the local markets. Emmanuel Huet has gained
a solid professional experience with the Louis Vuitton brand, covering several
international roles, first at corporate level and then in commercial area, as Director
of the Maison Champs Elysées and lately as General Manager BeNeLux & Nordics.
IWATA, Timothy, aged 51, 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.
MALET TO, Diego, aged 44, has been Internal Auditing Director since February
2022. In his role he is responsible for defining and monitoring compliance with
rules, procedures and processes within the Prada Group. Diego Maletto obtained
a Master Degree in Economics and Business from Turin University. After a multi-
faceted experience in consulting, in Italy and USA, at Ernst & Young (2006-2017),
has covered relevant roles in several companies. He covered the role of Head of
Internal Audit for Italy, Greece, Albania and Malta markets at Vodafone (2017-
2020) and of Audit Director at Autostrade per l’Italia (2020-2022).
MALLEY, Katharina, aged 46, has been Central Europe Regional Director
since September 2022. She is primarily responsible for overseeing the Group’s
operations in Germany, Austria, Holland, Czech Republic and for the development
of Prada and Miu Miu business within the local markets. She has solid professional
experience in the Moncler Group in the management and development of the
Wholesale channel for the EMEA market as Wholesale Director. She also held the
role of Nor thern Europe Country Manager for the Theory brand and Wholesale
Manager for Prada Germany.
MANZAT TO, Denni, aged 38, has been appointed as Chief Executive Officer of
Church’s in January 2022. He is responsible for overseeing the Church brand
operations worldwide. Prior to this appointment Mr. Manzatto has been Group
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PRADA Group 2022 Annual Report - Directors and Senior Management Commercial and License 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. 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 degree in Business
Administration from INSEAD and Tsinghua University in 2018. He is a Business and
Management graduate of Bocconi University (2007, 2009) and Fudan University
(2009), and par ticipated in an exchange program with the Whar ton School of the
University of Pennsylvania (2006). Prior to joining our Group in 2013, Mr. Manzatto
worked as an Associate at private equity firm Vision Capital and in the Investment
Banking division of Goldman Sachs.
MARSICOLA, Alessandra, aged 63, has been appointed as Japan, Guam, Saipan and
Hawaii Regional Director in May 2022. She is primarily responsible for overseeing
the 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 Prada Retail
Director, 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.
MASSARDI, Rober to, aged 58, has been Chief Business Development Officer
since May 2022. He is primarily responsible for the Group’s strategic development
through the assessment of new business oppor tunities. He is also responsible for
managing Eyewear and Fragrances licenses. After obtaining a degree in Business
Economics from the Bocconi University in Milan, Rober to Massardi covered several
roles within the Pirelli Group. In 1996 he joined the Prada Group as Business
Development Director and later as General Director for Jil Sander. In 2005 he
joined Spor tswear Company S.p.A. (Stone Island), where he covered the role of
General Manager.
NOSCHESE, Marcelo, aged 58, has been Latin America Regional Director since
2017 and has been appointed as Nor th America Regional Director in 2020. He
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PRADA Group 2022 Annual Report - Directors and Senior Management 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).
PETRUZZO, Benedetta, aged 37, has been appointed as 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 sector of the management-consulting
firm.
RASTRELLI, Stefano, aged 60, 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.
SIMONS, Raf, aged 55, 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
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PRADA Group 2022 Annual Report - Directors and Senior Management 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.
TEO, Elaine Henling, aged 48, has been Singapore, Thailand, Malaysia General
Manager since June 2022. She is primarily responsible for overseeing the Group’s
commercial operations in Singapore, Thailand, Malaysia and for the development
of Prada and Miu Miu business within the local markets. Elaine Teo, after earning
a degree in Science and Commerce at the University of Sydney, has gained many
years of experience in the Fashion and Luxury, covering different roles. She was
Retail Director Singapore & Malaysia at Coach, General Manager Oceania SEA at
Bally (2014-2017) and General Manager SEA at Salvatore Ferragamo (2017-2022).
VIAN, Massimo, aged 50, 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 50, 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 (1997–2000); then she worked at SilverStream Software
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
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PRADA Group 2022 Annual Report - Directors and Senior Management 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 46, has been Russian area Regional Director since
2013. Ms. Zenkovskaya
is primarily responsible for overseeing the Group
operations in Russia and Kazakhstan, 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 2022 Annual Report - Directors and Senior Management COMPANY SECRETARY
YUEN, Ying Kwai, aged 56, first joined the Company as a joint company secretary
in May 2011 and was appointed as the Company Secretary on June 30, 2022 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.
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D I R E C T O R S ’ R E P O R T
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PRADA Group 2022 Annual Report - 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, accessories, and jewelry, and it
operates, under licensing agreements, in the eyewear and fragrance sectors. The
Group operates also in the food and beverage sector. 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 Antonio 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, 2022 (the “2022 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, are 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 2022 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
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PRADA Group 2022 Annual Report - Directors’ Report and regulatory risks to which the Group is exposed is set out in the paragraph
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 the main commitments of the Group, which is
being engaged in implementing and enforcing vir tuous behaviors that contribute
to its sustainable growth, and that represents examples of good practices within
the entire luxury industry.
The Board approved the adoption of the new Code of Ethics of the Group on July
28, 2022, together with the Human Rights Policy of the Group.
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
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PRADA Group 2022 Annual Report - Directors’ Report 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
the values of the Group.
As of December 31, 2022 the Group had 13,768 employees (headcount), of whom
39.3% working in Italy and with women making up 63% 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 were derived from an
original management of the creative and industrial processes, place 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
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PRADA Group 2022 Annual Report - Directors’ Report 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.
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 Sustainability Repor t, which will be
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PRADA Group 2022 Annual Report - Directors’ Report published at the same time of this annual repor t.
RESULTS AND DIVIDENDS
The results of the Group for the 2022 Year are set out in the Consolidated Statement
of Profit and Loss.
The Board recommends the distribution of final dividends of Euro 281,470,640
(Euro 0.11 per share) for the 2022 Year.
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 27,
2023.
Subject to the shareholders’ approval of the recommended final dividends, such
dividend will be paid on Friday, May 19, 2023.
The final dividend will be paid to the shareholders recorded on the Company’s
shareholders register on Friday, May 5, 2023 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 2022 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, 2022, the Company’s reserves available for distribution to the
shareholders in accordance with the Company’s by-laws amounted to Euro 1,652
million.
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PRADA Group 2022 Annual Report - Directors’ Report PROPERT Y, PLANT AND EQUIPMENT
Details of the movements in the proper ty, plant and equipment of the Group during
the 2022 Year are set out in Note 15 to the Consolidated Financial Statements.
DONATION
Donations by the Group mainly related to charities amounted to Euro 3,959,250
(2021: Euro 2,891,906).
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 2022 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, 2022, are set out in
Note 42 to the Consolidated Financial Statements.
DIRECTORS
The current Directors of the Company as of the date of this directors’ repor t are:
EXECUTIVE DIRECTORS
Mr. Paolo ZANNONI (Chairman of the Board, elected on May 27, 2021)
Ms. Miuccia PRADA BIANCHI (Chief Executive Officer until January 26, 2023, re-
elected on May 27, 2021)
Mr. Patrizio BERTELLI (Chief Executive Officer until January 26, 2023, re-elected
on May 27, 2021)
Mr. Andrea Guerra (Chief Executive Officer, appointed on January 26, 2023)
Mr. Andrea BONINI (Chief Financial Officer, appointed on November 8, 2022)
Mr. Lorenzo BERTELLI (elected on May 27, 2021)
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PRADA Group 2022 Annual Report - Directors’ Report 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)
RESIGNED DIRECTORS
The Directors of the Company resigned during 2022 Year and up to the date of this
directors’ repor t are:
Ms. Alessandra COZZANI (former Executive Director and Chief Financial Officer,
resigned on September 30, 2022)
Mr. Stefano SIMONTACCHI (former Non-Executive Director, resigned on January
26, 2023)
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.
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
2022 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 2022
Year.
DIRECTORS’ SERVICE CONTRACTS
Since the Employment Agreement of Mr. Andrea Guerra contains an express term
which provides that, in order to entitle the Company to terminate his Employment
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PRADA Group 2022 Annual Report - Directors’ Report Agreement, the Company may be required to pay compensation or make other
payments equivalent to more than one year ’s emoluments, the Employment
Agreement will require the approval of the shareholders at the for thcoming annual
general meeting pursuant to Rule 13.68 of the Listing Rules.
O ther than the above, 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 2022 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, 2022, 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 2022 Annual Report - 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 2022 Annual Report - Directors’ Report The interests of Ms. Miuccia Prada Bianchi and Mr. Patrizio Ber telli in the shares
of the Company as at December 31, 2022 are summarized in the following char t:
PATRIZIO BERTELLI
100%
MIUCCIA PRADA
BIANCHI
LUDO S.p.A.
100%
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 2022 Annual Report - 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.
Preference Shares
MFH Munich Fashion Holding GmbH Registered Share
Bellatrix S.p.A.
Bellatrix S.p.A.
Ludo S.p.A.
Ludo S.p.A.
PH-RE LLC
Ordinary Shares
Preference Shares
Class A shares
Class B shares
Capital
Contribution (JPY)
Mr. Patrizio Bertelli
Prada Holding S.p.A.
Ordinary Shares
Prada Holding S.p.A.
Preference Shares
MFH Munich Fashion Holding GmbH Registered Share
300
1
438,460
100,000
5,066,000
4,965,100
1,000,000
750
300
1
Nature
of Interests
Controlled
Corporation
As above
As above
As above
As above
Approximate
percentage
of Interests
68.75%
50%
100%
49.83%
83.34%
Beneficial Owner 100%
Beneficial Owner 100%
Controlled
Corporation
100%
Controlled
Corporation
As above
As above
31.25%
50%
100%
100%
PH-RE LLC
Capital
Contribution (JPY)
1,000,000
As above
Save as disclosed above, as at December 31, 2022, 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, 2022, 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.
116
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 2022 Annual Report - 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 2022 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 2022 Year in which the direct or
indirect interest of a Director, or an entity connected with a Director, was material.
During the 2022 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.
DIRECTORS’ WAIVER ON EMOLUMENTS
Mr. Lorenzo Ber telli waived Euro 50,000 in respect of his fees as a Director and
Euro 10,000 in respect of his fees as a member of the Nomination Committee
for the period from January 1, 2022 to December 31, 2022, and Euro 27,500 in
respect of his fees as a member of Sustainability Committee for the period from
his appointment date on February 4, 2022 to December 31, 2022, with an increase
of the same amount in his annual salary.
Ms. Alessandra Cozzani (past director) waived her fee as a Director, in the amount
of Euro 37,500 for the period from January 1, 2022 to September 30, 2022, with
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PRADA Group 2022 Annual Report - Directors’ Report an increase of the same amount in her annual salary.
ISSUANCE OF DEBT SECURITIES
Neither the Company, nor any members of the Group, issued any debt securities
during the 2022 Year.
CONTINUING CONNECTED TRANSACTIONS
During the 2022 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 and May 26, 2017, respectively:
(a) L ease Agreement and Guarantee for Prada Aoyama Building in Japan
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 – former 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..
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PRADA Group 2022 Annual Report - Directors’ Report 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 2022 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) L ease Agreement and Guarantee for Miu Miu Aoyama Building in Japan
On May 26, 2017, PH-RE LLC purchased a building in Minami-Aoyama, Tokyo,
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 guarantee the
full compliance by Prada Japan with 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 - former 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 2022 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
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PRADA Group 2022 Annual Report - Directors’ Report Company’s announcement dated May 26, 2017.
Below is a table setting out the aggregate value for each of the non-exempt
continuing connected transactions for the 2022 Year:
(a) Lease Agreement and Guarantee for Prada Aoyama Building
Depreciation of the right of use assets and interest expenses
on lease liability
(b) Lease Agreement and Guarantee for Miu Miu Aoyama Building
Depreciation of the right of use assets and interest expenses
on lease liability
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, 2022
Japanese Yen
million
Japanese Yen
million
Japanese Yen
million
2,040.7
87.4
2,128.1
Japanese Yen
million
Japanese Yen
million
Japanese Yen
million
630
(17.1)
612.9
The Independent Non-Executive Directors have reviewed the above non-exempt
continuing connected transactions and confirmed that these have been entered
into:
(i)
in t he ordinary and usual course of business of the Group;
(ii) on normal commercial terms or better; and
(iii) ac cording 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) ha ve not been approved by the Company’s Board of Directors;
(ii) w ere 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) w ere not entered into, in all material respects, in accordance with the terms
of the relevant agreements governing such transactions; and
(iv) ha ve exceeded the relevant annual cap.
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
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PRADA Group 2022 Annual Report - Directors’ Report 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.
BANK LOANS AND OTHER BORROWINGS
Details of the Group’s bank loans and other borrowings as at December 31, 2022
are set out in Notes 21 and 26 to the Consolidated Financial Statements.
MAJOR CUSTOMERS AND SUPPLIERS
The nature of the Group’s activities is 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 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 2022 Year.
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, 2022 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
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PRADA Group 2022 Annual Report - Directors’ Report 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, 2022, 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.
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 and Risk Committee,
to propose a resolution at the shareholders’ general meeting of the Company on
April 28, 2022 (the “2022 AGM”) to reappoint Deloitte & Touche S.p.A. as the
auditor of the Company for a term of three financial years ending December 31,
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PRADA Group 2022 Annual Report - Directors’ Report 2024, and to fix its remuneration.
At the 2022 AGM, it was resolved to appoint Deloitte & Touche S.p.A. as the auditor
of the Company for a term of three financial years. Accordingly, the auditor ’s
mandate will expire at the shareholders’ general meeting to be convened for the
approval of the financial statements of the Company for the year ending December
31, 2024.
By order of the Board
Paolo Zannoni
Chairman
March 9, 2023
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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 2022 Annual Report - 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, standards and structured procedures aimed at establishing efficient and
transparent operations within the Group, to protect the rights of the Company’s
shareholders, to enhance shareholders value and to uphold the Group’s credibility
and reputation. The corporate governance model adopted by the Company
complies with the applicable laws and regulations in Italy, where the Company is
incorporated, as well as with 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 it is
satisfied that such practices have complied with the code provisions set out in the
Code, for the year ended December 31, 2022 (the “2022 Year ”). This Corporate
Governance repor t summarizes how the Company applied the principles and
implemented the code provisions contained in the Code for the 2022 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 enquiries 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 2022 Year. There were no incidents of
non-compliance during the 2022 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, 2022, 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 2022 Annual Report - Corporate Governance BBOARD OF DIRECTORS
A. BO ARD COMPOSITION
The Board is currently made up of eleven Directors, of which six are Executive
Directors 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. Currently female representation at Board level is about 36%. Gender
diversity at workforce levels is disclosed in the Annual Repor t and gender diversity
(including Senior Management) is disclosed in Sustainability Repor t. The Board
believes that diversity should not be limited to gender. The table below shows the
structure, skill sets, exper tise and competencies of the Board.
Directors
Mr. Paolo ZANNONI (Chairman of the Board)
Ms. Miuccia PRADA BIANCHI
Mr. Patrizio BERTELLI
Mr. Andrea GUERRA (Chief Executive Officer)
Mr. Andrea BONINI (Chief Financial Officer)
Mr. Lorenzo BERTELLI
Ms. Marina Sylvia CAPROTTI
Mr. Maurizio CEREDA
Mr. Yoël ZAOUI
Ms. Pamela Yvonne CULPEPPER
Ms. Anna Maria RUGARLI
* I refers to Italian and NI refers to Non-Italian
Committees
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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.
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PRADA Group 2022 Annual Report - Corporate Governance
B. BO ARD MEETINGS
During the 2022 Year, the Board held five 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 approve continuing connected transactions and the Group’s main investments,
corporate reorganization plans, and extraordinary transactions, establish the
Sustainability Committee, appoint a new director and grant powers to the same,
adopt the new terms of reference for both the Board and the Board Committees.
The average attendance rate of the Directors for these five meetings (all held
through electronic means) was 90.9%.
Minutes of the Board meetings are kept by the Corporate Affairs Depar tment.
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.
C. BO ARD AT TENDANCE
The details of attendance at Board meetings, Board Committees meetings and
shareholders’ general meeting held during the 2022 Year are set out in the following
table:
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PRADA Group 2022 Annual Report - Corporate Governance Directors
Board
Audit and Risk
Committee
Remuneration
Committee
Nomination
Committee
Sustainability
Committee
Shareholders’
Meeting
Executive Directors
Mr. Paolo ZANNONI 1
(Chairman)
Ms. Miuccia PRADA BIANCHI
(Chief Executive Officer) 2
Mr. Patrizio BERTELLI
(Chief Executive Officer) 3
Ms. Alessandra COZZANI 4
Mr. Andrea BONINI
(Chief Financial Officer) 5
Mr. Lorenzo BERTELLI 6
Non-Executive Director
Mr. Stefano SIMONTACCHI 7
Independent Non-Executive Directors
Mr. Maurizio CEREDA 8
Ms. Marina Sylvia CAPROTTI 9
Mr. Yoël ZAOUI 10
Ms. Pamela Yvonne CULPEPPER 11
Ms. Anna Maria RUGARLI 12
Statutory Auditors
Mr. Antonino PARISI (Chairman)
Mr. David TERRACINA
Mr. Roberto SPADA
5/5
1/5
5/5
4/4
1/1
5/5
5/5
5/5
4/5
5/5
5/5
5/5
5/5
4/5
5/5
2/2
3/3
3/3
4/5
5/5
5/5
2/2
2/2
3/3
3/3
3/3
3/3
2/2
0/2
0/2
2/2
Not Applicable
1/2
2/2
2/2
1/2
0/2
1/2
1/2
1/2
1/2
2/2
Dates of the Meetings
Feb 4, 2022
Feb 23, 2022
Feb 4, 2022
Feb 4, 2022
Apr 22, 2022
Jan 28, 2022
Mar 14, 2022
Mar 9, 2022
Mar 9, 2022
Mar 14, 2022
Jul 13, 2022
Apr 28, 2022
May 3, 2022
May 2, 2022
Jul 28, 2022
Jul 27, 2022
Nov 8, 2022
Nov 7, 2022
Oct 25, 2022
Nov 18, 2022
Average Attendance Rate of the
Directors
Notes:
90.9%
93.3%
100%
100%
100%
54.5%
1. Member of the Remuneration Committee
2. Ceased to serve as Chief Executive Officer from January 26, 2023
3. Ceased to serve as Chief Executive Officer from January 26, 2023
4. Ceased to serve as Chief Financial Officer from May 2, 2022 and as Executive Director on September 30, 2022
5. Started to serve as Chief Financial Officer from May 2, 2022 and as Executive Director from November 8, 2022
6. Member of the Sustainability Committee and Nomination Committee
7. Ceased to serve as Non-Executive Director on January 26, 2023
8. Chairman of the Nomination Committee and Member of the Audit and Risk Committee
9. Chairwoman of the Remuneration Committee and Member of the Audit and Risk Committee and the Nomination Committee
10. Chairman of the Audit and Risk Committee and Member of the Remuneration Committee
11. Appointed as Director on January 28, 2022 and Chairwoman of the Sustainability Committee
12. Appointed as Director on January 28, 2022 and Member of the Sustainability Committee
D. R OLES 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 regulations or the By-laws.
In par ticular, the Board is responsible for setting the overall strategy, as well
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PRADA Group 2022 Annual Report - Corporate Governance 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 2022 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 was 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
and by the conflict between Russia and Ukraine, the Board devoted additional
time in meetings held during the 2022 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 Board believes that corporate culture underpins the long-term business,
economic success and sustainable growth of the group. The Board sets and
promotes company culture and expects and requires employees to follow the
Group’s procedures and policies. For details, please refer to the Directors’ Repor t
and to the Sustainability Repor t.
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
delegated powers 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 2022 Annual Report - 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.
IND EPENDENT NON-EXECUTIVE DIRECTORS
The 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 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
1, 2023. 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. D IRECTORS’ 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 2022 Annual Report - Corporate Governance During the 2022 Year, Mr. Paolo Zannoni, Ms. Miuccia Prada Bianchi, Mr. Patrizio
Ber telli, Ms. Alessandra Cozzani, Mr. Lorenzo Ber telli, Mr. Andrea Bonini, Mr.
Stefano Simontacchi, Ms. Marina Sylvia Caprotti, Mr. Maurizio Cereda, Mr. Yoël
Zaoui, Ms. Pamela Yvonne Culpepper and Ms. Anna Maria Rugarli 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.
Mr. Andrea Guerra also par ticipated in director ’s training upon his appointment
on January 26, 2023.
Directors were required to provide the Company with their training records during
the Year 2022. The records are maintained by the Corporate Affairs Depar tment.
CHAIRMAN AND CHIEF EXECUTIVE OFFICERS
The Chairman is Mr. Paolo Zannoni and, during the Year 2022, the Chief Executive
Officers were Ms. Miuccia Prada Bianchi and Mr. Patrizio Ber telli. Star ting from
January 26, 2023, Ms. Miuccia Prada Bianchi and Mr. Patrizio Ber telli ceased to
be the Chief Executive Officers and Mr. Andrea Guerra was appointed as the new
Chief Executive Officer. The role of the Chairman is separate from that of the
Chief Executive Officer. The Chairman is vested with the powers to represent the
Company and provides leadership to the Board. He is responsible for ensuring that
the Board is functioning effectively and adheres to good corporate governance
practices and procedures. The Chief Executive Officer, suppor ted by the other
Executive Directors and senior management, is responsible for managing the
Company’s business, including the implementation of major strategies and other
initiatives adopted by the Board.
RELATIONSHIPS BET WEEN DIRECTORS
Ms. Miuccia Prada Bianchi and Mr. Patrizio Ber telli (Executive Directors and
former Chief Executive Officers of the Company) are husband and wife. Mr.
Lorenzo Ber telli (Executive Director of the Company) is the son of Ms. Miuccia
Prada Bianchi and Mr. Patrizio Ber telli.
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PRADA Group 2022 Annual Report - Corporate Governance APPOINTMENT OF THE BOARD MEMBERS
At the shareholders’ general meeting of the Company held on May 27, 2021 (the
“2021 AGM”), the Board (at the time 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 approving the financial statements of
the Company for the year ending December 31, 2023. Two additional Independent
Non-Executive Directors, Ms. Pamela Yvonne Culpepper and Ms. Anna Maria
Rugarli, were appointed at the shareholders’ general meeting of the Company
held on January 28, 2022, and shall remain in charge for the remaining term of
the current Board’s mandate. Two Executive Directors, Mr. Andrea Bonini and Mr.
Andrea Guerra, were appointed, respectively on November 8, 2022, and January
26, 2023, and – if confirmed by the for thcoming shareholders’ general meeting –
they shall remain in charge for the remaining term of the current Board’s mandate.
An Executive Director, Alessandra Cozzani, and a Non-Executive Director, Stefano
Simontacchi, resigned, respectively, on September 30, 2022, and January 26,
2023.
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)
t o develop and review the Company’s policies and practices on corporate
governance;
(ii)
t o review and monitor the training and continuous professional development
of directors and senior management;
(iii) t o review and monitor the Company’s policies and practices regarding
compliance with legal and regulatory requirements;
(iv) t o 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)
t o review relevant Environmental, Social and Governance (“ESG”) matters;
(vi) t o review the Company’s compliance with the Code and the disclosure of such
in the Corporate Governance repor t; and
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PRADA Group 2022 Annual Report - Corporate Governance (vii) t o 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 2022 Year, the Board completed the following activities with respect to
corporate governance matters:
(i)
r eviewed and approved continuing connected transactions of the Company;
(ii) r eviewed the level of compliance with the Code;
(iii) r eviewed the effectiveness of the internal control, risk management system
and ESG per formance of the Company through the Internal Audit Depar tment,
the Audit and Risk Committee and the Sustainability Committee;
(iv) r eviewed and approved the Sustainability Repor t;
(v) appr oved the Group’s main transactions, including corporate reorganization
plans;
(vi) adop ted the new terms of reference of the Board and Board Committees and
policies; and
(vii) appointed a new Executive Director in substitution of a resigned Executive
Director, and granted powers to the same.
BOARD COMMIT TEES
The Board has established the Audit and Risk Committee, the Remuneration
Committee, the Nomination Committee and the Sustainability Committee, each
chaired by an Independent Non-Executive Director, in compliance with the Code.
The Terms of Reference and membership of the first three Board Committees are
published on the websites of both the Company and the Stock Exchange. The
Terms of Reference of the Board Committees are no less exacting than those set
out in the Code. The Board Committees are provided with sufficient resources to
discharge their duties and upon reasonable request, are able to seek independent
professional advice in appropriate circumstances at the Company’s expense.
A. A UDIT AND RISK COMMIT TEE
The Company has established an Audit and Risk Committee in compliance with
Rule 3.21 of the Listing Rules, where at least one member possesses related
financial management exper tise to discharge the responsibility of the Audit and
Risk Committee. The membership of the Audit and Risk Committee consists of
three Independent Non-Executive Directors, namely Mr. Yoël Zaoui (Chairman),
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PRADA Group 2022 Annual Report - Corporate Governance Ms. Marina Sylvia Caprotti and Mr. Maurizio Cereda. The primary duties of the
Audit and Risk Committee are to assist the Board in providing an independent
view on the independence, adequacy, effectiveness and efficiency of the internal
audit function, Company’s financial repor ting process and its internal control
and risk management system, to oversee the external audit process, the internal
audit process and financial controls activity, to implement the Company’s risk
management functions, to assess the Company’s business model and strategies,
to examine the work plan of internal audit, to review the relationship with the
external auditors by reference to the work per formed by the external auditors, as
well as their independence, fees and terms of engagement, and to per form any
other duties and responsibilities assigned to it by the Board.
During the 2022 Year, the Audit and Risk committee held five meetings (with an
attendance rate of 93.3%) 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
and Risk Committee’s Terms of Reference and to make relevant recommendations
to the Board. The Audit and Risk Committee’s review covered the audit plan for
the 2022 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 2021, tax and legal updates and the financial repor ting matters
(including the annual results for the year ended December 31, 2021, and the
interim financial results as at June 30, 2022), before recommending them to the
Board for approval.
The Audit and Risk Committee also held three meetings on January 25, 2023,
February 27, and March 8, 2023, to examine and recommend to the Board the
approval of the 2023 budget of the Group, to discuss the audit activities for the
cer tification of the 2022 Year Separate Financial Statements and Annual Repor t of
the Company presented by Deloitte & Touche S.p.A., to evaluate the methodology
applied to the impairment test, to discuss the status of the major pending litigations,
including tax litigations, of the Group, to have an update on the internal audit and
risk management activities, to present the 2023 Audit Plan, and to review, for the
Year 2022, the annual results, the Sustainability Repor t, the continuing connected
transactions, and the Internal Audit Depar tment and Audit and Risk Committee
repor ts.
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PRADA Group 2022 Annual Report - Corporate Governance 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 2022 Year and for the
year ended December 31, 2021, 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 S.p.A. Prada S.p.A.
Deloitte & Touche S.p.A. Subsidiaries
Deloitte Network
Subsidiaries
Total audit fees to Deloitte Network
Other advisory services
Other advisory services
Deloitte & Touche S.p.A. Prada S.p.A.
Deloitte Network
Subsidiaries
Total non-audit fees to Deloitte Network
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
475
133
1,147
1,755
374
124
498
508
136
1,129
1,773
24
69
93
Total compensation to Deloitte Network
2,253
1,866
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 submitted to the Board for consideration
and adoption, where appropriate. The Remuneration Committee consists of two
Independent Non-Executive Directors, Ms. Marina Sylvia Caprotti (Chairwoman)
and Mr. Yoël Zaoui, and of the Executive Director and Chairman of the Board, Mr.
Paolo Zannoni.
During the 2022 Year, the Remuneration Committee held two meetings (with an
attendance rate of 100%) to recommend the remuneration of the Chairperson and
members of the Sustainability Committee and the adoption of the new long-term
incentive plan for the Directors and senior management for the three-year period
2022-2024.
The Remuneration Committee also held two meetings on January 25, 2023, and
on March 6, 2023, to review the remuneration of Mr. Paolo Zannoni, Ms. Miuccia
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PRADA Group 2022 Annual Report - Corporate Governance Prada Bianchi and Mr. Patrizio Ber telli, before recommending to the Board for
approval, as well as to review the overall remuneration for the Board.
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, as well as cer tain ESG targets, 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
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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
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 comprised a majority of Independent
Non-Executive Directors and chaired by an Independent Non-Executive Director,
Mr. Maurizio Cereda, and consists of one Independent Non-Executive Director,
Ms. Marina Sylvia Caprotti and one Executive Director, Mr. Lorenzo Ber telli.
During the 2022 Year, the Nomination Committee held three meetings (with
an average attendance rate of 100%) to per form the annual review of both the
independence of the Independent Non-Executive Directors as well as the structure,
size and composition of the Board for the 2021 year, to recommend to the Board
the establishment of the Sustainability Committee and the membership of the
same, including the appointment of the Chairperson, as well as the adoption of
the Terms of Reference of the same, the appointment of Mr. Andrea Bonini as
Executive Director in replacement of Ms. Alessandra Cozzani, and to per form the
annual review of the Board Diversity Policy of the Company.
With a view to achieving a sustainable and balanced development, the Company
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PRADA Group 2022 Annual Report - Corporate Governance 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”) and reviewed during the
2022 Year. According to the principles set out in the Board Diversity Policy, all
Board members’ 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 discusses any revisions that may be required to ensure the effectiveness
of the Board Diversity Policy with access to independent external consultants and
recommends any such revisions to the Board for its approval.
On March 15, 2019, the Board adopted the nomination policy for the Directors (the
“Director Nomination Policy”), which provides guidance on the proposal for the
appointment or re-appointment of the 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 the
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), including the independence of long serving Independent Non-Executive
Directors (where applicable).
The Nomination Committee considers the candidates proposed by shareholders
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PRADA Group 2022 Annual Report - Corporate Governance 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.
The Nomination Committee also held two meetings on January 18, 2023, and
on March 1, 2023, to recommend to the Board the appointment of Mr. Andrea
Guerra as Executive Director in replacement of Mr. Stefano Simontacchi as Non-
Executive Director, as well as to review the proposal for the appointment of the
new Chairman of the Board, to verify the independence of the Independent Non-
Executive Directors, the composition and the size of the Board for the Year 2022.
D. S USTAINABILIT Y COMMIT TEE
The Sustainability Committee comprises two Independent Non-Executive Directors,
Ms. Pamela Yvonne Culpepper (Chairwoman) 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 and strategy. 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. The Directors’ Repor t includes the
governance of sustainability issues and how the Company approaches and manages
the Group’s material ESG topics.
During the 2022 Year, the Sustainability Committee held three meetings (with an
average attendance rate of 100%) to appoint the Chairwoman, Ms. Pamela Yvonne
Culpepper, to introduce the Group ESG strategy, to examine and discuss the
Sustainability Repor t for the 2021 Year, to recommend to the Board the adoption
of the Human Rights Policy and the new Ethic Code of the Group, to discuss the
new requirements under the Listing Rules for the adoption of the Sustainability
Repor t for the 2022 Year, and to discuss the results of the DE&I survey per formed
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PRADA Group 2022 Annual Report - Corporate Governance in Italy by the Company.
The Sustainability Committee also held one meeting on March 2, 2023, to provide
updates on progresses and achievements in ESG, approve the Sustainability Repor t
for the Year 2022, and the industrial roadmap for suppor ting sustainability in
Group’s operations.
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
(Chairman), Mr. Rober to Spada and Mr. David Terracina. The alternate statutory
auditors are Ms. Stefania Bettoni and Ms. Fioranna Negri.
CHANGE IN INFORMATION OF DIRECTORS DISCLOSED PURSUANT TO LISTING
RULE 13.51B(1)
Pursuant to Rule 13.51B(1) of the Listing Rules, the change of director ’s information
of the Company since the Company’s 2022 Interim Repor t is as follows:
- With effect from January 1, 2023, the annual remuneration of Mr. Paolo Zannoni
has increased to a fixed amount of Euro 2,000,000 gross per year, including fees
as a member of the Board, plus a variable amount of 0.25 percent of the Group’s
consolidated profit before income tax, recorded in the financial year ending
December 31, 2023.
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PRADA Group 2022 Annual Report - Corporate Governance 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 2022 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 2022 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. The Group has adopted a strict
Anti-Corruption Policy and Anti Transactions Policy to suppor t anti-corruption
laws and regulations and monitoring the independence of external auditors.
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.
During the 2022 Year, the Board adopted a Whistleblowing Policy which provides
repor ting channels and guidance for employees and other par ties who deal with
the Group (e.g. contractors and suppliers, etc.) to repor t possible improprieties in
matters of financial repor ting or other matters. The Whistleblowing Policy and the
Anti-Corruption Policy are available on the Company’s website.
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PRADA Group 2022 Annual Report - Corporate Governance 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.
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, during the 2022 year the Internal Audit Depar tment assessed the
Company’s activities and controls to mitigate the health and safety risk at work as
well as the risk of data breach and Cyber attack.
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 and Risk 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 and
Risk 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 2022 Year.
During the 2022 Year, no significant control failings or weaknesses were identified.
The Board, with the suppor t from the Audit and Risk 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
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PRADA Group 2022 Annual Report - Corporate Governance 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 2022
Year.
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 2022 Year.
“ORGANISMO DI VIGIL ANZA”
In compliance with Italian Legislative Decree no. 231 of June 8, 2001 (the
“Decree”), the Company established an “Organismo di Vigilanza” whose primary
duty is to ensure the functioning, effectiveness and enforcement of the Company’s
Organization, Management and Control Model, adopted by the Company pursuant
to the 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. Rober to Spada, Statutory Auditor,
who was been appointed by the Board on the meeting held on May 3, 2022.
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.
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PRADA Group 2022 Annual Report - Corporate Governance In addition, the Board has established an Inside Information Committee, which
comprises the Chairman (Mr. Paolo Zannoni), the Executive Director and former
Chief Executive Officer (Mr. Patrizio Ber telli) and the Executive Director (Mr.
Lorenzo Ber telli). The Inside Information Committee has been delegated with the
power to assess, if necessary any potential inside information, and to keep all
other Directors timely informed about its decisions.
COMPANY SECRETARY
The Company has appointed Ms. Stefania Cane and Ms. Yuen Ying Kwai as joint
company secretaries. Ms. Cane ceased to serve as the joint company secretary
with effect from June 30, 2022 and Ms. Yuen Ying Kwai continues her role as the
sole company secretary with effect from June 30, 2022. During the 2022 Year,
Ms. Yuen Ying Kwai under took over 15 hours of relevant professional training to
update her skills and knowledge. Her biography is set out in the Directors and
Senior Management section of this Annual Repor t.
SHAREHOLDERS’ RIGHTS
A. C ONVENING 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. P UT 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 corporateaffairs@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 corporateaffairs@prada.com. The Company will not normally
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PRADA Group 2022 Annual Report - Corporate Governance deal with verbal or anonymous enquiries.
D. P ROCEDURES 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
During the 2022 year, there was no change to the By-laws of the Company. A copy
of the By-laws are available for viewing on the websites of the Company and the
Hong Kong Stock Exchange.
COMMUNICATION WITH SHAREHOLDERS
A. D IVIDEND 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 2022 AGM, the shareholders approved the distribution of a final dividend of
Euro 0.07 per share for the financial year ended December 31, 2021, representing
a total dividend of Euro 179,117,680, which was paid on May 27, 2022.
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,
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PRADA Group 2022 Annual Report - Corporate Governance fund managers, research analysts and the finance media. Investor/ analysts
briefings and one-to-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. The Board had
adopted a Shareholders Communication Policy and is subject to review annually to
ensure the effectiveness and implementation of the Shareholders Communication
Policy.
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).
The Company held a shareholders’ general meeting on January 28, 2022 to appoint
two additional Independent Non-Executive Directors (the “2022 SGM”).
In light of the continuing risks posed by the Covid-19 pandemic, to ensure the
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PRADA Group 2022 Annual Report - Corporate Governance health and well-being of the shareholders’ meetings attendees, both the SGM 2022
and the shareholders’ general meeting of the Company held on April 28, 2022 (the
“2022 AGM”) were held by way of electronic means only. The Directors, including
the Chairman of the Board, the Chairman of the Board Committees, the Company
Secretary, the auditor of the Company, Deloitte & Touche S.p.A., the statutory
auditors and the scrutineer, attended the 2022 AGM.
All resolutions submitted to the shareholders at the 2022 SGM and 2022 AGM
were duly passed and the voting results of such resolutions were disclosed in
the announcements of the Company dated January 28, 2022 and April 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 2022
SGM and 2022 AGM.
D. C ORPORATE 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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PRADA Group 2022 Annual Report - Corporate Governance 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 2022 Annual Report - 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 due 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
Derivative financial instruments – non-current
Receivables due 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 due 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
2022
December 31
2021
9
10
11
12
13
14
15
16
17
18
36
19
12
13
20
21
22
23
24
12
25
20
26
27
28
36
29
12
30
31
1,091,622
331,915
760,457
22,483
2,373
215,917
2,424,767
1,577,125
817,809
2,011,474
26,974
373,090
139,402
5,812
1,125
4,952,811
7,377,578
392,126
160,847
3,568
401,799
277,656
11,565
242,306
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
1,489,867
1,419,731
1,715,451
395,656
67,571
51,486
40,855
115,670
-
2,386,689
3,876,556
255,882
2,648,496
112,646
465,193
3,482,217
18,805
3,501,022
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
Total liabilities and total net equity
7,377,578
6,959,011
Net current assets
Total assets less current liabilities
934,900
5,887,711
750,104
5,539,280
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PRADA Group 2022 Annual Report - Consolidated Financial Statements CONSOLIDATED STATEMENT OF PROFIT OR LOSS FOR THE T WELVE MONTHS
ENDED DECEMBER 31, 2022
(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
2022
4,200,674
(888,580)
%
on net
revenues
100%
-21.2%
twelve months
ended
December 31
2021
%
on net
revenues
3,365,667
(818,309)
100%
-24.3%
3,312,094
78.8%
2,547,358
75.7%
(2,536,104)
-60.3%
(2,057,874)
-61.1%
775,990
18.5%
489,484
14.5%
(24,498)
(40,990)
473
(65,015)
-0.6%
-1.0%
0.0%
-1.5%
(31,216)
(36,773)
160
(67,829)
-0.9%
-1.1%
0.0%
-2.0%
710,975
16.9%
421,655
12.5%
(241,820)
-5.8%
(126,552)
-3.8%
469,155
11.2%
295,103
3,962
0.1%
849
465,193
11.1%
294,254
8.8%
0.0%
8.8%
0.182
0.115
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PRADA Group 2022 Annual Report - Consolidated Financial Statements CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME FOR THE T WELVE
MONTHS ENDED DECEMBER 31, 2022
(amounts in thousands of Euro)
Net income / (loss) for the period
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) 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
2022
twelve months
ended
December 31
2021
469,155
295,103
45,876
-
45,876
34,221
(8,283)
25,938
587
-
587
(2,027)
657
(1,370)
72,230
-
72,230
(14,331)
4,247
(10,084)
845
-
845
4,248
(1,734)
2,514
Comprehensive income / (loss) for the period - Consolidated
540,186
360,608
Comprehensive income / (loss) for the period - Non-Controlling Interests
4,655
1,717
Comprehensive income / (loss) for the period - Group
535,531
358,891
152
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PRADA Group 2022 Annual Report - Consolidated Financial Statements CONSOLIDATED STATEMENT OF CASH FLOWS FOR THE T WELVE MONTHS
ENDED DECEMBER 31, 2022
(amounts in thousands of Euro)
Income / (loss) before taxation
Profit or loss adjustments
Depreciation of the right of use assets
Depreciation and amortization of property, plant and equipment and intangible assets
Impairment of the right of use assets
Impairment of property, plant and equipment and intangible assets
Non-monetary financial (income) expenses
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 on 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
Cash from real estate sale to related party
Earn-out paid to a related party
Dividends from investments
Disposals of equity instruments
Purchase of equity instruments
Acquisition of additional shares from Non-Controlling Interests
Business combination
Net cash flow utilised by investing activities
Dividends paid to shareholders of Prada S.p.A.
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
Loans to related parties
Net cash flows generated/(utilised) 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
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
710,975
421,655
451,533
210,891
12,342
59,486
24,413
40,990
12,258
(33,142)
(3,578)
(121,826)
13,351
15,112
1,392,805
(49,522)
(219,586)
1,123,697
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
(241,495)
(219,628)
-
18,000
(5,000)
473
-
(19,549)
-
(2,638)
(250,209)
(179,118)
(599)
(428,170)
(187,128)
-
9,837
(2,200)
(787,378)
86,110
23,726
981,786
1,091,622
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
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PRADA Group 2022 Annual Report - Consolidated Financial Statements CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ 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
(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)
-
-
-
-
-
-
-
-
-
-
-
-
-
-
71,367
- (10,084)
(66)
-
-
-
-
-
(54,139)
(54,139)
54,139
-
-
-
-
-
-
-
-
-
(89,559)
(89,559)
-
-
- 13,351
922
14,273
-
(66)
-
-
-
-
(89,559)
(1,674)
(91,233)
-
(141)
(141)
14,273
-
14,273
(640)
(4,816)
(5,456)
(1,128)
(1,128)
-
(1,128)
-
(1,128)
-
(10,084)
294,254
355,537
1,712
357,249
-
-
-
- 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
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
45,212
-
25,938
-
-
-
-
-
-
-
-
-
-
- (1,399)
587
294,254
294,254 (294,254)
-
-
-
(179,118)
(179,118)
11,910
11,910
-
-
(179,118)
(599)
(179,717)
11,910
-
11,910
-
-
25,938
465,193
536,343
4,626
540,969
(812)
-
(812)
29
(783)
2,558,824,000 255,882
112,646
410,047
10,060 (7,107)
(10,405)
2,245,901 2,648,496
465,193 3,482,217
18,805
3,501,022
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 S.r.l.
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
Allocation of
2021 net profit
Dividends
Monetary reva-
luation IAS 29
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,
2022
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PRADA Group 2022 Annual Report - 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 2022 Annual Report - PRADA spa Separate Financial Statements PRADA S.P.A. 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
2022
December 31
2021
520,888
929,699
301,566
22,483
261,736
119,246
2,155,618
796,669
226,335
337,102
797,146
53,705
72,539
5,812
186,301
2,475,609
4,631,227
51,085
90,541
112,570
548,026
208,435
12,318
218,669
1,241,644
305,073
351,200
38,176
3,376
5,054
107,687
1,713
13,878
826,157
2,067,801
255,882
1,735,861
571,683
2,563,426
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
Total liabilities and total net equity
4,631,227
4,298,871
156
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PRADA Group 2022 Annual Report - PRADA spa Separate Financial Statements
PRADA S.P.A. STATEMENT OF PROFIT OR LOSS FOR THE T WELVE MONTHS
ENDED DECEMBER 31, 2022
(amounts in thousands of Euro)
Net revenues
Cost of goods sold
Gross Margin
Operating expenses
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
2,509,323
(829,231)
1,854,692
(719,202)
1,680,092
1,135,490
(711,350)
(675,067)
Operating income / (loss) - EBIT
968,742
460,423
Interest and other financial income / (expenses), net
Interest expenses on lease liability
Dividends from investments
Total financial income/(expenses)
Income / (loss) before taxation
Taxation
(155,333)
(4,125)
49,594
(109,864)
(45,679)
(3,420)
23,785
(25,314)
858,878
435,109
(287,195)
(124,459)
Net income / (loss) for the period
571,683
310,650
PRADA S.P.A. STATEMENT OF COMPREHENSIVE INCOME FOR THE T WELVE
MONTHS ENDED DECEMBER 31, 2022
(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
2022
twelve months
ended
December 31
2021
571,683
310,650
27,200
(6,528)
20,672
587
-
587
2,730
(655)
2,075
(17,695)
4,247
(13,448)
845
-
845
634
(152)
482
Comprehensive income / (loss) for the period
595,017
298,529
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PRADA Group 2022 Annual Report - PRADA spa Separate Financial Statements
PRADA S.P.A. STATEMENT OF CASH FLOWS FOR THE T WELVE MONTHS ENDED
DECEMBER 31, 2022
(amounts in thousands of Euro)
Income / (loss) before taxation
Profit or loss adjustments
Depreciation 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 received/(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
Cash from real estate sale to related party
Investments in subsidiaries and associates
Financial investments
Dividends received from investments
Net cash flow utilised by investing activities
Dividends paid to shareholders
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 utilised by financing activities
Change in 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
twelve months
ended
December 31
2022
twelve months
ended
December 31
2021
858,878
435,109
50,812
76,377
120
256
146,406
4,125
(58,976)
45,875
48,354
71,479
1,030
(18)
39,216
3,420
(27,321)
31,278
(254,823)
(162,624)
(37,039)
(87,755)
(2,036)
(16,720)
725,500
5,363
(183,079)
547,784
(88,904)
18,000
(32,956)
-
49,594
(54,266)
(179,118)
45,068
23,471
(54,799)
(31,983)
(172,044)
-
(369,405)
124,113
396,771
520,884
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
158
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PRADA Group 2022 Annual Report - 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
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
Allocation of 2021
net profit
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 2022
2,558,824,000 255,882 410,047 51,176
234,075 1,028,031
704
(25,188) 1,698,845
(16,176)
1,938,551
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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) 1,595,270
310,650
2,161,802
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
310,650
(14,275)
(179,118)
-
-
-
-
20,671
-
-
-
-
310,650 (310,650)
-
(14,275)
(179,118)
-
-
(14,275)
(179,118)
20,671
571,683
592,354
2,075
-
588
2,663
-
2,663
2,558,824,000 255,882 410,047 51,176
182,899 1,094,216
7,927
(10,404) 1,735,861
571,683
2,563,426
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PRADA Group 2022 Annual Report - 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 2022 Annual Report - Notes to the Consolidated Financial Statements 1. GENERAL INFORMATION
Prada S.p.A. (“Prada” or the “Company”), together with its subsidiaries (collectively
the “Group” or the “Prada Group”), is listed on the Hong Kong Stock Exchange
(HKSE code: 1913). The Prada Group is a leading 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 the Marchesi 1824 brand, in the most prestigious sailing
races with Luna Rossa and in the eyewear and fragrance industries under licensing
agreements.
The Group owns 24 production facilities (21 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 612 at December
31, 2022. The Prada Group’s products are also sold directly through the brands’
e-commerce activity and indirectly 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, 2022 (the repor ting date of these Consolidated Financial Statements), 79.98%
of the share capital was owned by Prada Holding S.p.A., a company domiciled in
Italy, and the remainder consisted of floating shares listed on the Main Board of
the Hong Kong Stock Exchange.
The Consolidated Financial Statements were approved and authorized for issue by
the Board of Directors of Prada S.p.A. on March 9, 2023.
2. B ASIS OF PREPARATION
The Consolidated Financial Statements of the Prada Group as at December 31,
2022, which consist of the “Consolidated Statement of Financial Position”, the
“Consolidated Statement of Profit or Loss for the twelve months ended December
31, 2022”, the “Consolidated Statement of Comprehensive Income for the twelve
months ended December 31, 2022”, the “Consolidated Statement of Cash Flows
for the twelve months ended December 31, 2022”, the “Consolidated Statement
of Changes in Shareholders’ Equity” and the “Notes to the Consolidated Financial
162
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements Statements”, 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.
IAS 29 - Financial Repor ting in Hyperinflationar y Economies
Since June 30, 2022, the Turkish economy has been considered hyperinflationary
according to the definition and criteria set out in “IAS 29 - Financial Repor ting in
Hyperinflationary Economies”. In fact, inflation in Turkey has risen exponentially,
with a cumulative inflation rate over three years that exceeds 100%.
Three-year cumulative CPI
54.2%
53.2%
74.4%
136.4%
156.2%
source: Turkish Statistical Institute
Dec 31, 2020
June 30, 2021
Dec 31, 2021
June 30, 2022
Dec. 31, 2022
This condition is one of the indicators stated in IAS 29, which requires, in order
to take into account the loss of the general purchasing power of the functional
currency, the restatement of the non-monetary items of the Statement of Financial
Position and of all the items of the Statement of Profit or Loss by applying the
change in the general price index (in this case the consumer price index or “CPI”)
from the date of acquisition and/or transaction to the end of the repor ting period.
Monetary items are not restated because they are already presented in the
measuring unit current at the end of the repor ting period. The financial statements
are translated at the closing exchange rate.
The general price index processed from 2009 (when Prada Bosporus Deri Mamuller
Ltd Sirketi was founded) until December 31, 2022 is as follows:
Year
CPI
Year
CPI
Year
CPI
Year
CPI
Year
CPI
2009
2010
2011
170.91
181.85
200.85
2012
2013
2014
213.23
229.01
247.72
2015
2016
2017
269.54
292.54
327.41
2018
2019
2020
393.88
440.50
504.81
2021
2022
686.95
1,128.45
source: Turkish Statistical Institute
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The following table repor ts the main impacts of the restatements of the non-
monetary items at December 31, 2022:
(amounts in thousands of Euro)
Opening restatement
using CPI at
December 31, 2021
Exchange rates
differences
Inflation effect
of the period
December 31, 2022
restated
Fixed assets
Inventories
Right of use assets
Deferred tax liabilities, net
Other reserves
Translation reserve
Net profit / (loss) impact
846
185
4,716
(1,322)
(4,425)
-
-
(191)
(331)
(1,608)
256
293
1,581
-
236
2,260
5,494
(49)
(7,778)
-
163
891
2,114
8,602
(1,115)
(11,910)
1,581
163
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, excluding the two amendments
not endorsed yet as explained in the Note 3.
IFRSs also refer to all International Accounting Standards (“IAS”) and all
interpretations of the International Financial 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 S.p.A..
The Consolidated Financial Statements have been prepared on a going concern
basis.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 3. NE W IFRS AND AMENDMENTS TO IFRS
Amendments to existing standards issued by the IASB, endorsed by the European
Union and applicable to the Prada Group from 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
Effective date for
Prada Group
EU endorsement dates
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
The introduction of these amendments did not have any effect on these Consolidated
Financial Statements.
New standards and 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,
2023.
New standards and amendments to existing standards
Effective date for
Prada Group
EU endorsement status
IFRS 17 Insurance contracts
Amendments to IAS 1 Presentation of Financial Statements and IFRS Practice Statement 2:
Disclosure of Accounting policies
Amendments to IAS 8 Accounting policies, Changes in Accounting Estimates and Errors:
Definition of Accounting Estimates
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
Endorsed in November 2021
January 1, 2023
Endorsed in March 2022
January 1, 2023
Endorsed in March 2022
January 1, 2023
Endorsed in August 2022
January 1, 2023
Endorsed in September 2022
Amendments issued by the IASB, but not yet endorsed by the European Union at
December 31, 2022.
New IFRS Standards and Amendments to existing standards
Date of possible
application
EU endorsement status
Amendments to IAS 1 Presentation of Financial Statements: Classification of Liabilities as
Current or Non-current – Deferral of Effective Date – Non-current Liabilities with Covenants
Amendments to IFRS 16 Leases: Lease Liability in a Sale and Leaseback (issued on 22 Sep-
tember 2022)
January 1, 2024
Not endorsed yet
January 1, 2024
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 2022 Annual Report - Notes to the Consolidated Financial Statements already endorsed by the European Union and those undergoing the endorsement
process.
4. S COPE OF CONSOLIDATION
The consolidated financial information comprises the accounts of Prada S.p.A.
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. B ASIS OF CONSOLIDATION
The main consolidation procedures used to prepare the Consolidated Financial
Statements are explained below:
― the separate financial statements of Prada S.p.A. 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
consolidation method, incorporating the entire amount of the assets, liabilities,
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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 “Net equity attributable to Non-controlling
interests” in the Consolidated Statement of Financial Position and “Net income/
(loss) - 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 2022 Annual Report - 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 2022 Annual Report - 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 2022 Annual Report - 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 2022 Annual Report - 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 2022 Annual Report - 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. Estimated cash flow is based
on budget, forecast and on long-term projections (generally no longer than 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 assets 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 2022 Annual Report - 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 the depreciation of
the right of use star ts. 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 are 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 are 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” represents 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 occurs, 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 2022 Annual Report - 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, ASSOCIATES AND JOINT VENTURES
The initial recognition of Investments in equity instruments (previously “available
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PRADA Group 2022 Annual Report - 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.
Associated under takings (“associates”) are recognised in the Consolidated Financial
Statement 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.
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.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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
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.
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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.
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 through profit or loss rather than through net equity.
Long-term employee benefits in the form of share-based payments (“phantom
shares”) are cash-settled and fall within the scope of IFRS 2. These benefits are
measured at fair value, the estimation of which follows a risk neutral approach.
In the model, the risk free rate curve is deducted from the Euro Area rates at the
valuation date; in addition, the expected dividend rate of the underlying was taken
into account. Until the liability is settled, the fair value is restated at the date of
each year and at the settlement date. Changes in fair value are recognized through
profit or loss.
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
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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
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.
ACCOUNTING IN HYPERINFLATIONARY ECONOMIES
Non-monetary assets and liabilities and gains and losses of entities whose functional
currency is the currency of a hyperinflationary economy are restated to reflect the
changes in the general pricing power of their functional currency, in accordance
with IAS 29, by applying the change in the general price index between the date
those items were acquired or incurred and the end of the repor ting period.
Therefore, for non-monetary items recognized at their historical cost, the opening
Statement of Financial Position is restated to reflect the effect of inflation from
the date on which the assets were acquired and the liabilities were incurred or
assumed to the date of the previous year closing Statement of Financial Position.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements This effect is recognized in equity.
Afterward, all the corresponding restated data in the subsequent financial
statements and the Statement of Profit or Loss items are restated by applying
the change in the general price index for the current repor ting period, thereby
generating a gain or loss, charged to the income statement in a specific item called
“net monetary position gain or loss”.
Moreover, IAS 21 states that the financial statements of a subsidiary whose
functional currency is the currency of a hyperinflationary economy must be
translated into a different presentation currency, i.e., all the amounts (assets,
liabilities, items of equity, income and expenses) must be translated at the closing
rate of the repor ting period, except for comparative amounts that are translated
into a currency of a non-hyperinflationary economy.
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;
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements ― a liability is incurred and no asset has been recognized.
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
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new policy had been applied from the outset. A prospective approach is adopted
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 Group has defined a climate strategy with the objective of reducing greenhouse
gases (GHG) emissions, positively contributing to the global goal of fighting climate
change. The strategy includes medium term carbon reduction targets related to
direct GHG emission (scope 1), indirect GHG energy emissions (scope 2) and other
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements indirect GHG emissions from sources not owned or controlled by the company
itself (scope 3).
The main action on going to reach the targets for scope 1 and scope 2 are:
― electrification of industrial sites heating/cooling systems;
― green company car fleet;
― increase in self-produced energy from owned photovoltaic systems;
― investment in renewable energy procurement and in LEED Gold or Platinum
cer tifications.
The management has evaluated the effects of climate change and of the action in
place to follow the climate strategy on the criteria for the preparation of these
consolidated financial statements, with par ticular reference to the estimates and
assumptions as defined in the above section “Use of Estimates”.
The management has assessed as negligible the effects on the consolidated
financial statements, 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.
IMPACT OF THE OUTBREAK OF WAR IN UKRAINE ON FINANCIAL STATEMENTS
The effects of the ongoing conflict have been considered in the preparation of
the financial statements as of December 31, 2022. In par ticular, the only relevant
impact on the financial statement as of December 31, 2022 is related to the
impairment of assets held in Russia as disclosed in Note 16 Impairment Test.
The net revenues realised in Russia in 2021 accounted for approximately 2% of the
consolidated net revenues as of December 31, 2021.
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 recognised in
the consolidated financial statements of the Group.
7. MER GERS AND ACQUISITIONS
On September 1, 2022, Prada S.p.A. established the company Prada Norway As
with the aim of developing the commercial activities in Norway.
On November 18, 2022, Prada S.p.A. purchased the entire share capital of Caffè
Principe S.r.l., which operates the eponymous “Caffè Principe”, the historic, most
prestigious bar in For te dei Marmi.
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Cash
Right of use assets
Other current assets/(liabilities)
Other non-current assets/(liabilities)
Lease liabilities
Carrying amount of net assets acquired
Consideration paid
Allocation to right of use assets
Allocation to deferred tax liabilities
Fair value of
net assets/(liabilities) acquired
88
1,674
(73)
(355)
(1,591)
(257)
(3,405)
4,684
(1,022)
The inclusion of Caffè Principe S.r.l. in the consolidation perimeter did not have a
material effect on the Group’s consolidated statement of profit or loss for the year
ended December 31, 2022.
8. OP ERATING 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.
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 and brand are
provided in the Financial Review together with the related comments.
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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
2022
December 31
2021
3,008,806
3,005,722
628,828
504,942
349,099
81,617
471,229
536,218
417,887
57,344
4,573,292
4,488,400
The total amount of Euro 4,573 million (Euro 4,488 million at December 31, 2021)
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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CONSOLIDATED STATEMENT OF FINANCIAL POSITION
9. C ASH AND CASH EQUIVALENTS
The cash and cash equivalents are detailed as follow:
(amounts in thousands of Euro)
Cash on hand and other cash equivalents
Bank deposit accounts
Bank current accounts
Total
December 31
2022
December 31
2021
53,804
781,358
256,460
36,636
189,306
755,844
1,091,622
981,786
At December 31, 2022, the bank accounts and deposits accruing interest income
had yields in the range of 0.1% and 12% annually (0% and 5.1% at December 31,
2021). As for bank deposits, interest income has average yields of 2.6%.
10. TRADE RECEIVABLES, NET
The 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
2022
December 31
2021
342,110
(11,595)
1,400
338,931
(10,990)
1,606
331,915
329,547
The change in the allowance for bad and doubtful debts is set for th below:
(amounts in thousands of Euro)
December 31
2022
December 31
2021
Opening balance
Exchange differences
Increases
Reversals
Utilization
Closing balance
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10,990
90
741
(136)
(90)
11,595
11,979
546
581
(1,129)
(987)
10,990
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11. INVENTORIES, NET
The inventories can be broken down as follows:
(amounts in thousands of Euro)
Raw materials
Work in progress
Finished products
Return assets
Allowance for obsolete and slow-moving inventories
December 31
2022
December 31
2021
108,450
30,109
699,849
10,493
(88,444)
99,837
29,938
585,547
7,246
(59,914)
Total
760,457
662,654
The increase is attributable primarily to more products in stock to suppor t the
revenue growth. In 2022, the inventory allowance was increased, net of the
utilisations and reversal, by Euro 28.5 million with allocations mainly for slow-
moving products.
The changes in the allowance for obsolete and slow-moving inventories are as
follows:
(amounts in thousands of Euro)
Opening balance
Exchange differences
Increases
Utilisation
Reversal
Closing balance
Raw
materials
Finished
products
Total
allowance for
obsolete and
slow-moving
inventories
30,735
29,179
59,914
(3)
1,588
(98)
-
135
28,449
(896)
(645)
132
30,037
(994)
(645)
32,222
56,222
88,444
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12. DERIVATIVE FINANCIAL INSTRUMENTS:
A SSETS 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
Financial assets regarding derivative instruments - non-current
Total Financial Assets - Derivative financial instruments
Financial liabilities regarding derivative instruments – current
Financial liabilities regarding derivative instruments – non-current
December 31
2022
December 31
2021
22,483
5,812
28,295
(11,565)
-
1,762
-
1,762
(29,683)
(4,786)
Total Financial Liabilities - Derivative financial instruments
(11,565)
(34,469)
Net carrying amount – current and non-current portion
16,730
(32,707)
The net carrying amount of derivatives, considering both the current and non-
current por tions, has the following composition:
(amounts in thousands of Euro)
December 31
2022
December 31
2021
Forward contracts
Options
Interest rate swaps
Positive fair value
Forward contracts
Options
Interest rate swaps
Negative fair value
12,673
6,361
9,261
28,295
(10,425)
(1,140)
-
1,394
368
-
1,762
(10,139)
(17,486)
(6,844)
(11,565)
(34,469)
IFRS7
Category
Level II
Level II
Level II
Level II
Level II
Level II
Net carrying amount – current and non-current
16,730
(32,707)
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
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used valuation platforms on the financial market and are based on the interest rate
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.
The notional amounts of the derivative contracts (translated at the December 31,
2022 exchange rates repor ted in Note 38) designated as foreign exchange risk
hedges are as stated below.
Contracts in effect at December 31, 2022 to hedge projected future trade cash
flows:
(amounts in thousands of Euro)
Currency
US Dollar
Chinese Renminbi
Korean Won
Japanese Yen
GB Pound
Canadian Dollar
Taiwan Dollar
Swiss Franc
Hong Kong Dollar
Malaysia Ringgit
Other currencies
Total
Options
Forward sale
contracts
December 31
2022
87,193
65,233
74,400
17,062
-
9,972
-
-
5,531
-
6,644
211,888
152,891
77,376
88,156
71,031
18,283
23,712
20,209
10,401
12,877
96,783
299,081
218,124
151,776
105,218
71,031
28,255
23,712
20,209
15,932
12,877
103,427
266,035
783,607
1,049,642
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements Contracts in effect at December 31, 2022 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
2022
75,541
31,177
30,658
5,321
17,913
75,541
31,177
30,658
5,321
17,913
160,610
160,610
Contracts in effect at 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
Contracts in effect at 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
All contracts in place at December 31, 2022 have a maturity shor ter than twelve
months.
All contracts in place at the repor ting date were entered into with major financial
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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 interest rate swaps (“IRS”) in order to hedge the risk of
interest rate fluctuations on bank loans. The key features of the IRS agreements
in place as at December 31, 2022 and December 31, 2021 are summarized below:
Interest Rate Swap (IRS) Agreement
Hedged loan
Contract
Currency
Notional
amount
Interest
rate
Maturity
date
December
31, 2022
Currency
Type of
debt
Amount
Expiry
IRS
IRS
IRS
IRS
Euro/000
27,500
1.46% May-2030
Euro/000
100,000
1.33%
Apr-2025
Euro/000
GBP/000
77,400
42,825
2.65%
Feb-2026
2.78%
Jan-2029
Total fair value (amounts in thousands of Euro)
1,688
4,280
731
2,562
9,261
EUR
EUR
EUR
Term Loan
27,500 May-2030
Term Loan
100,000
Apr-2025
Term Loan
77,400
Feb-2026
GBP
Term Loan
42,825
Jan-2029
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
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.
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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
1,091,622
331,915
-
3,551
23,423
-
-
28,295
-
-
1,091,622
331,915
28,295
3,551
23,423
9
10
12
18
18
Total at December 31, 2022
1,450,511
28,295
1,478,806
(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
FINANCIAL LIABILITIES
(amounts in thousands of Euro)
Financial payables
Trade payables
Derivative financial instruments
Lease liabilities
Loans and
payables
Derivative financial
instruments
Total
Note
560,071
401,799
-
2,107,577
-
-
11,565
-
560,071
401,799
11,565
2,107,577
21,22,26
23
12
20
Total at December 31, 2022
3,069,447
11,565
3,081,012
(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
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PRADA Group 2022 Annual Report - 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 in accordance with IFRS
9, approximates their estimated realizable value and, hence, their fair value.
The amount of the 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 table below provides an aging analysis of the trade receivables before
accounting for the allowance for bad and doubtful debts:
(amounts in thousands of Euro)
December
31, 2022
Not
overdue
Overdue (in days)
1 30
31 60
61 90
91 120
> 120
Trade receivables
343,510
288,400
28,803
4,109
3,902
1,185
17,111
Total at December 31, 2022
343,510
288,400
28,803
4,109
3,902
1,185
17,111
(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
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements
The following table provides an aging analysis of the trade receivables after
accounting the allowance for bad and doubtful debts:
(amounts in thousands of Euro)
December
31, 2022
Not
overdue
Overdue (in days)
1 30
31 60
61 90
91 120
> 120
Trade receivables less allowance
for doubtful accounts
331,915
286,800
28,731
3,645
3,896
1,182
7,661
Total at December 31, 2022
331,915
286,800
28,731
3,645
3,896
1,182
7,661
(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
BANK CURRENT ACCOUNTS AND DEPOSITS
The bank deposits are broken down by currency below:
(amounts in thousands of Euro)
Currency
Euro
US Dollar
Hong Kong Dollar
Other Currencies
December 31
2022
December 31
2021
473,021
131,258
123,010
54,069
-
-
120,469
68,837
Total bank deposit accounts
781,358
189,306
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 2022 Annual Report - Notes to the Consolidated Financial Statements
The bank current accounts are broken down by currency as follows:
(amounts in thousands of Euro)
Currency
US Dollar
Euro
GB Pound
Korean Won
Hong Kong Dollar
Other currencies
December 31
2022
December 31
2021
65,427
56,977
14,299
5,136
3,615
111,006
202,107
404,164
13,965
16,288
4,023
115,297
Total bank current accounts
256,460
755,844
The management considers no significant risk to exist on bank accounts given that
their use is strictly related to operating activities and business processes and they
are present in a large number of countries.
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 Officer (CFO) is in charge of optimizing the management of
financial resources.
According to the Directors, 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 in the foreseeable period.
At December 31, 2022, the Group had undrawn cash credit lines of Euro 807
million available at banks (Euro 808 million at December 31, 2021), of which Euro
400 million were committed credit lines and Euro 407 million were uncommitted
ones.
An aging analysis of the trade payables is set for th below:
(amounts in thousands of Euro)
December
31, 2022
Not
overdue
Overdue (days)
1 30
31 60
61 90
91 120
> 120
Trade payables
401,799
374,150
9,666
5,057
136
1,836
10,954
Total at December 31, 2022
401,799
374,150
9,666
5,057
136
1,836
10,954
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements
(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
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, 2022
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
(10,425)
(4,008)
(6,417)
Net cash flows (outflows/inflows) of options
(1,140)
(427)
(623)
Net amount
(11,565)
(4,435)
(7,040)
-
(12)
(12)
-
(39)
(39)
-
(39)
(39)
-
-
-
(amounts in thousands of Euro)
Net cash flows (outflows/inflows) of
forward contracts
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
(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)
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PRADA Group 2022 Annual Report - 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)
Interest rate swap cash flow hedge
Net amount
Future
contractual
cash flows at
Dec. 31, 2022
6 mths
or less
6 to 12
mths
1 to 2
years
2 to 3
years
3 to 4
years
more than
4 years
-
-
-
-
-
-
-
-
-
-
-
-
-
-
(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)
FINANCIAL LIABILITIES
(amounts in thousands of Euro)
Carrying
amount at
Dec. 31,
2022
Future
contractual
cash flows at
Dec. 31,
2022
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
2,107,577
2,296,740
- 224,801
210,249
378,651 312,037
259,895
911,107
Financial liabilities – third parties
(without deferred costs on loans)
557,487
606,990
- 120,084
56,598
99,558 144,575
140,038
46,137
Financial liabilities – related parties
3,568
3,568
-
-
3,568
-
-
-
-
Total
2,668,632
2,907,298
- 344,885
270,415
478,209 456,612
399,933
957,244
(amounts in thousands of Euro)
Lease Liability
Financial liabilities – third parties
(without deferred costs on loans)
Carrying
amount at
Dec. 31,
2021
Future
contractual
cash flows at
Dec. 31,
2021
2,045,412
2,170,899
742,983
763,745
Financial liabilities – related parties
3,360
3,360
Total
2,791,755
2,938,004
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
-
-
-
-
232,498 217,379 347,633
303,106
246,392
823,891
202,228 51,019 99,175
88,465
138,681
184,177
-
3,360
-
-
-
-
434,726 271,758 446,808
391,571
385,073 1,008,068
Some of the above financial liabilities contain loan covenants, as described in Note
26.
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PRADA Group 2022 Annual Report - 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 S.p.A. and it results from fluctuation of foreign currencies against the Euro.
For Prada S.p.A., 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 British Pound, Hong Kong Dollar, Japanese Yen, US Dollar,
Chinese Renminbi and Korean Won.
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, 2022:
(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
(733)
3,363
(332)
428
(3,986)
(1,656)
(10,214)
(13,130)
1,990
3,937
3,436
11,680
59
2,790
310
24,202
2,028
(3,680)
421
(307)
5,466
1,475
10,028
15,431
(1,022)
(4,249)
(1,919)
(12,161)
885
(2,567)
(4,545)
(25,578)
The total impact on equity (positive for Euro 24.2 million and negative for Euro
25.6 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.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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
S.p.A., 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, 2022:
(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
332
(168)
633
(248)
967
767
961
692
633
(248)
967
767
(395)
168
(633)
248
(967)
(767)
(912)
(717)
(633)
248
(967)
(767)
2,283
3,772
(2,346)
(3,748)
The total impact on equity (positive and negative for Euro 3.7 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.
198
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 13. RE CEIVABLES DUE FROM, AND ADVANCE PAYMENTS TO, RELATED
P ARTIES – CURRENT AND NON-CURRENT
The current receivables due from, and advances payments to, related par ties are
detailed as follows:
(amounts in thousands of Euro)
Financial receivables
Other receivables and advances
Receivables due from, and advance payments to, related parties - current
December 31
2022
December 31
2021
2,200
173
2,373
-
22,866
22,866
The decrease in the amount of other receivables and advances is attributable
mainly to the collection of the receivable due on the 2020 sale of the Via della
Spiga 18, Milan proper ty.
The non-current receivables due from, and advances payments to, related par ties
are detailed as follows:
(amounts in thousands of Euro)
Financial receivables
Receivables due from, and advance payments to, related parties - non-current
December 31
2022
December 31
2021
1,125
1,125
1,125
1,125
Additional information on related par ty transactions is provided in Note 40.
14. O THER CURRENT ASSETS
The other current assets are set for th below:
(amounts in thousands of Euro)
VAT
Taxation and other tax receivables
Other assets
Prepayments
Guarantee deposits
Total
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December 31
2022
December 31
2021
39,627
70,775
9,230
86,617
9,668
31,121
56,864
11,937
63,068
8,230
215,917
171,220
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements
OTHER ASSETS
The other 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 below:
(amounts in thousands of Euro)
Rental costs
Insurance
Design costs
Fashion shows and advances on advertising campaigns
Other
Total
December 31
2022
December 31
2021
4,079
1,204
3,947
9,230
3,005
5,804
3,128
11,937
December 31
2022
December 31
2021
3,031
2,831
29,210
26,013
25,532
86,617
3,394
2,199
25,836
15,063
16,576
63,068
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.
200
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 15. P ROPERT 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
improvements
Furniture
& fittings
Other
tangibles
Assets under
construction
Total
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
Historical cost
Accumulated depreciation
1,008,485
254,845
1,388,822
683,552
221,358
61,981
3,619,043
(196,886)
(194,367)
(1,095,843)
(394,854)
(159,968)
-
(2,041,918)
Net carrying amount at December 31, 2022
811,599
60,478
292,979
288,698
61,390
61,981
1,577,125
The changes in the net carrying amount 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
830,284
56,709
290,156
268,920
67,757
51,027
1,564,853
Additions
Depreciation
Disposals
Exchange differences
Other movements
Impairment
Revaluation IAS 29
15,553
11,727
77,202
58,892
12,294
48,844
224,512
(19,765)
(12,058)
(82,363)
(40,393)
(15,611)
-
(170,190)
(3,132)
(1,267)
(161)
(2,825)
12,885
(24,372)
-
(97)
(100)
4,373
(76)
-
658
15,328
(6,038)
1,168
2,441
3,232
499
24
100
(311)
588
(36,020)
(4,469)
786
(102)
(3,439)
(3,796)
(2,147)
(39,868)
312
123
-
1,603
Closing balance
811,599
60,478
292,979
288,698
61,390
61,981
1,577,125
The increase in leasehold improvements and furniture & fittings regarded primarily
restyling and relocation projects for the retail premises.
The impairment for the period refers substantially to the writedown of assets
allocated to stores closed early or renovated in the period, and includes the
impairment loss of Euro 29.7 million ensuing from the exceptional market
conditions in Russia (see Note 16 – Impairment).
The assets under construction at the end of the period concern retail and industrial
projects that are nearly completed.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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
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
Historical cost
Accumulated amortization
405,287
(219,544)
578,003
(64,322)
49,637
252,227
65,415
30,799
1,381,368
(49,502)
(166,424)
(63,767)
-
(563,559)
Net carrying amount at December 31, 2022
185,743
513,681
135
85,803
1,648
30,799
817,809
The changes in the net carrying amount 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
217,230
513,486
469
79,474
4,810
13,936
829,405
Additions
Amortization
Disposals
Exchange differences
Other movements
Impairment
Revaluation IAS 29
1,398
(11,639)
-
(1,846)
-
(19,400)
-
195
17
19,953
75
29,946
-
-
-
-
-
-
(343)
(25,572)
(3,147)
-
4
90
(102)
-
(284)
(13)
12,269
(29)
5
-
-
(73)
(17)
-
-
(5)
1
(13,009)
(70)
-
51,584
(40,701)
(289)
(1,854)
(723)
(19,618)
5
Closing balance
185,743
513,681
135
85,803
1,648
30,799
817,809
The net carrying amount 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
202
December 31
2022
December 31
2021
116,160
44,270
5,336
19,977
121,789
69,385
5,095
20,961
185,743
217,230
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements No impairment was recognized during the year for the Group’s trademarks, except
for Church’s; more information thereon is provided in the section on Impairment
Test.
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, 2022 was Euro 276.1 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
2022
twelve months
ended
December 31
2021
168,935
-
107,161
85,742
59,453
71,549
276,096
216,744
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, 2022, the goodwill recognised in the consolidated
financial statements is Euro 513.7 million, and it is allocated to the following cash
generating units (“CGUs”):
(amounts in thousands of Euro)
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
2022
December 31
2021
78,355
311,936
33,825
5,064
9,300
1,400
11,700
48,000
14,101
78,355
311,936
33,825
5,064
9,300
1,400
11,700
48,000
13,906
Total
513,681
513,486
The impairment tests did not identify any impairment losses for the CGUs listed
above or for other CGUs of the Group, except for the Russia and Church’s CGUs,
as described herein.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The Discounted Cash Flow method used to identify the recoverable amount (value
in use) of the CGUs consists of discounting the projected cash flows 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 the 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 2023 budget prepared by management. The
business plans do not take into account either significant improvements in the
per formance of the assets existing at December 31, 2022 or future developments
of new activities, except for the investments planned in the 2023 budget for the
retail premises’ restyling and renovation projects and any new openings that the
Group has already substantially committed to make.
For each CGU tested, the weighted average cost of capital (“WACC”) was determined
by 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, i.e. the
market risk premium and the sovereign bond yield.
The “g” rate of growth used to calculate the terminal value ranged between 1.5%
(Asia Pacific) and 11.8% (Turkey), in light of the diverging inflation prospects
and GDP growth outlooks of the various countries and of the long-term growth
expected for the luxury goods market. 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 sector in general, as backed up by industry studies
and other external sources.
The WACC and g-rates used for impairment tests of CGUs that include significant
goodwill (accounting for approximately 90% of the entire goodwill recognized) are
repor ted below (compared with the same parameters used for the impairment tests
conducted at the close of the previous year):
CGU
Italy Wholesale
Asia Pacific and Japan Retail
Italy Retail and Pasticceria Marchesi 1824
North America Retail and wholesale
2022
2021
WACC
g-rate
WACC
g-rate
8.3%
10.5%
8.3%
8.2%
1.5%
1.5%
1.5%
1.5%
6.2%
5.4%
6.2%
4.9%
1.5%
1.5%
1.5%
1.5%
204
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements Concerning such CGUs, management believes that any reasonable change in the
main assumptions used for the impairment tests would not generate a reduction
in the recoverable amount to the extent of constituting an impairment loss.
However, since value in use is measured on the basis of estimates and assumptions,
management cannot guarantee that the value of goodwill or other tangible and
intangible assets will not be subject to impairment in the future.
IAS 36 requires an entity to assess at each annual repor ting date whether there are
indications of impairment for any other asset (excluding goodwill) recognized in
the Statement of Financial Position. In this respect, the impairment testing of the
Russia and Church’s CGUs revealed impairment losses, as described hereunder.
Prada Russia CGU
In view of the extraordinary market conditions in Russia, the Prada Russia CGU was
tested for impairment at December 31, 2022 (as it had been at June 30, 2022).
The method used to estimate the recoverable amount of the Prada Russia CGU
consisted of a multi-scenario approach based on two hypothetical cases that were
each assigned a likelihood of occurrence calibrated according to the assumptions
made by the Directors, taking into account the information available at the
repor ting date.
The first scenario assumes the recovery of business in mid-2024, whereas the
second one assumes the impossibility of returning to normal market conditions in
the medium term and the consequential realisation of the assets through liquidation
of the subsidiary.
The business plan used for the impairment test in the scenario of business recovery
in 2024 covers an explicit period of five years. The rate used to discount the cash
flows is the weighted average cost of capital (WACC). For the year ended December
31, 2022, the WACC used to discount the future cash flows of the Russia CGU was
21%, and it was determined by taking into due consideration the risk profile of the
CGU’s activities. The “g” rate of growth used to calculate the terminal value was
6%, in light of the inflation and GDP growth outlooks in the local market.
In the second scenario (impossibility of returning to normal market conditions),
precise assumptions were made for each of the assets recognised, and an
independent exper t was employed to assist in estimating the fair values of the
buildings owned by the Russian subsidiary.
The results of the impairment test, using the multi-scenario approach, led Directors
to write down the fixed assets of the CGU by Euro 43.5 million. Euro 29.7 million
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements of the impairment loss was allocated to reduce the value of the proper ties owned
in Moscow and St. Petersburg, Euro 12.3 million to fully write down the value of
the right of use assets referring to leases, and Euro 1.5 million to fully write down
the deferred tax assets. The impairment loss of the proper ties owned was backed
up by an appraisal conducted by a leading independent firm of the sector, which
estimated the fair value of the two buildings using the Comparative Method of
valuation, which compares the real estate being appraised to other comparable
assets recently sold or offered on the same market.
The net invested capital of the CGU following the writedown was Euro 29.9 million
(translated at the December 31, 2022 exchange rate), of which Euro 27.9 million
refers to the two buildings owned and the remainder to items of net working
capital.
With respect to the estimated recoverable amount of the buildings, the current
volatility characterising the Russian financial system has created significant
uncer tainty in the real estate industry; in par ticular, the scarce liquidity in capital
markets means, in the case of realising assets through a sale in the shor t term,
more difficulties than those present in normal market conditions. This circumstance
entailed using a high level of judgment to estimate the recoverable amount of
the assets tested; therefore, management cannot guarantee that the value of the
buildings owned in Russia will not be subject to additional fluctuations (impairment
losses or writedown reversals) in the future.
Church’s CGU
The impairment test of the Church’s CGU - taking into account the reorganisation
process that led to the closure of 24 stores deemed no longer strategic by
management – revealed the presence of impairment losses.
The Discounted Cash Flow method used to identify the recoverable amount (value
in use) of the CGU consisted of discounting the projected cash flows generated
by the net invested capital of the Church’s Group. The recoverable amount was
estimated with the assistance of a leading consulting firm and with reference to
key valuation parameters. The cash flow projections used for the impairment
test were based on the business plan drawn up by management, which covers
an explicit period of five years. The rate used to discount the cash flows is the
weighted average cost of capital (WACC). For the year ended December 31, 2022,
the WACC used to discount the cash flows generated by the Church’s CGU was
10.6%, and it was determined taking into due consideration the risk profile of the
206
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements CGU’s activities. The “g” rate of growth used to calculate the terminal value was
2.5%, in light of the prospective inflation in the main countries where the Church’s
Group operates and of the growth outlook for the luxury goods market.
The results of the impairment test led Directors to write down the assets of the
CGU by Euro 19.4 million. The impairment loss was allocated entirely to the value
of the brand, which was accordingly written down to Euro 44.3 million at December
31, 2022. The brand is amor tised and the remaining useful life is 17 years.
Given the high sensitivity of the CGU’s recoverable amount to potential changes in
the main assumptions used, the potential effects on the carrying amount (in terms
of larger or smaller writedowns) that could result from the increase and decrease
(up to 100 basis points) in the discount rate (WACC) and from the reduction (up
to 100 basis points) of the (g) growth rate are set for th below (amounts in Euro/
million):
g-rate
1.5%
2.0%
2.5%
(base case)
9.6%
3.7
7.6
12.0
WACC
10.1%
10.6% (base case)
(1.5)
1.8
5.6
(6.1)
(3.2)
-
11.1%
(10.2)
(7.7)
(4.9)
11.6%
(13.9)
(11.7)
(9.3)
17. RIGHT OF USE ASSETS
The changes in the net carrying amount of the right of use assets for the year
ended December 31, 2022 are shown below:
(amounts in thousands of Euro)
Real Estate
Other
Total net
carrying amount
Opening balance
1,952,834
3,455
1,956,289
Change in the consolidation area
New contracts, initial direct costs and remeasurements
Depreciation
Contracts termination
Exchange differences
Impairment
Revaluation IAS 29
Closing balance
6,293
495,069
(449,532)
(1,596)
4,999
(12,342)
11,935
-
2,671
(2,001)
(316)
5
-
-
6,293
497,740
(451,533)
(1,912)
5,004
(12,342)
11,935
2,007,660
3,814
2,011,474
Right of use assets increased by Euro 55.2 million, mainly as a result of increases
for new leases, remeasurements of existing leases, and consolidation perimeter
changes totaling Euro 504 million, net of depreciation of Euro 451.5 million and
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements writedowns of Euro 12.3 million regarding leases in Russia as disclosed in Note 16.
The increase for new leases, initial direct costs and remeasurements is attributable
to lease renewals (largely in America and Europe) and the remeasurement of the
liability to adjust it to indexes commonly used in the real estate industry (mainly
the consumer price index).
“O ther ”, amounting to Euro 3.8 million, includes plant, machinery, vehicles and
hardware.
18. INVESTMENTS IN EQUIT Y INSTRUMENTS, ASSOCIATES AND
JOINT VENTURES
(amounts in thousands of Euro)
Investments in equity instruments
Associates and joint ventures
Total
December 31
2022
December 31
2021
3,551
23,423
26,974
2,964
2,732
5,696
The increase in “Associates and joint ventures” refers prevalently to the acquisition
of a 43.65% stake in Conceria Superior S.p.A. for Euro 19.8 million.
19. O THER NON-CURRENT ASSETS
The other non-current assets are detailed as follows:
(amounts in thousands of Euro)
Guarantee deposits
Prepayments for commercial agreements
Pension fund surplus (Note 27)
Deferred rental income
Other long-term assets
Total
December 31
2022
December 31
2021
64,216
50,080
6,426
231
18,449
61,842
54,253
13,309
383
14,559
139,402
144,346
208
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The guarantee deposits are set for th below by nature and maturity:
(amounts in thousands of Euro)
December 31
2022
December 31
2021
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
55,130
5,669
163
3,254
64,216
56,003
3,982
158
1,699
61,842
December 31
2022
December 31
2021
8,593
26,971
28,652
64,216
13,417
23,251
25,174
61,842
The guarantee deposits refer primarily to security deposits paid under retail leases.
20. LEASE LIABILIT Y
The following table sets for th the lease liability:
(amounts in thousands of Euro)
Long-term Lease Liability
Short-term Lease Liability
Total
December 31
2022
December 31
2021
1,715,451
392,126
1,627,197
418,215
2,107,577
2,045,412
The lease liability increased from Euro 2,045 million at December 31, 2021 to
Euro 2,108 million at December 31, 2022, primarily as a result of remeasurements
for lease extensions or modifications (Euro 496.2 million) net of the payments of
the period (Euro 428.2 million).
The lease liability is mainly concentrated in Japan, the U.S.A. and Italy.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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
2022
December 31
2021
66,541
94,704
(398)
61,578
187,887
(362)
160,847
249,103
In the second half of 2022, Prada Japan co ltd stipulated a revolving line of credit
with a bank syndicate for a total amount of JPY 10 billion, of which JPY 8.2 billion
(Euro 58.3 million) had been used at December 31, 2022. The credit line is subject
to financial covenants based on the financial statements of Prada Japan co ltd,
which were fully complied with at December 31, 2022.
The remaining shor t-term financial payables at December 31, 2022 consist of
the use of uncommitted credit lines by Prada Japan co ltd and Prada Fashion
(Shanghai) ltd.
The shor t-term bank loans are broken down by currency below:
(amounts in thousands of Euro)
Japanese Yen
Other currencies
Total
December 31
2022
December 31
2021
59,081
7,460
66,541
61,578
-
61,578
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. P AYABLES DUE TO RELATED PARTIES – CURRENT
The current payables due to related par ties are shown below:
(amounts in thousands of Euro)
Financial payables
Other payables
Payables to related parties - current
210
December 31
2022
December 31
2021
3,568
-
3,568
3,360
5,000
8,360
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The current financial payables due to related par ties 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
24. TAX PAYABLES
The tax payables are detailed hereunder:
(amounts in thousands of Euro)
Current taxation
VAT and other taxes
Total
December 31
2022
December 31
2021
396,159
5,640
382,208
7,955
401,799
390,163
December 31
2022
December 31
2021
192,048
85,608
77,466
66,693
277,656
144,159
The Group recognizes current tax liabilities of Euro 192 million at December 31,
2022 (Euro 7 7.5 million at December 31, 2021) against tax receivables (shown
among the current assets) of Euro 70.8 million (Euro 56.9 million at December 31,
2021), as repor ted in Note 14.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 25. O THER CURRENT LIABILITIES
The other current liabilities are as follows:
(amounts in thousands of Euro)
Payables for capital expenditure
Accrued expenses and deferred income
Other payables
Total
The other payables are detailed below:
(amounts in thousands of Euro)
Short-term benefits for employees and other personnel
Customer advances
Provision for returns from customers
Other
Total
26. L ONG-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
2022
December 31
2021
73,249
28,971
140,086
43,575
30,308
106,165
242,306
180,048
December 31
2022
December 31
2021
91,844
21,918
24,805
1,519
70,397
17,290
16,118
2,360
140,086
106,165
December 31
2022
December 31
2021
396,242
(586)
493,518
(717)
395,656
492,801
Prada S.p.A.’s loan covenants were fully complied with at December 31, 2022 and
they are expected to be complied within the next 12 months as well.
212
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The long-term bank borrowings at December 31, 2022, excluding amor tized costs,
are set for th below:
Borrower
Prada S.p.A.
Prada S.p.A.
Prada S.p.A.
Prada S.p.A.
Prada S.p.A.
Prada S.p.A.
Prada S.p.A.
Prada S.p.A.
Kenon Ltd
Tannerie Limoges Sas
Caffè Principe S.r.l.
Total
Amount in
thousands
of Euro
Type
of loan
Currency
Expiry
date
Interest
rate (1)
Current
Portion
(Euro
thousands)
Non-current
Portion
(Euro
thousands)
Pledge
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
Term-loan
EUR
EUR
EUR
EUR
EUR
EUR
EUR
EUR
GBP
EUR
EUR
05/2030
10/2024
04/2025
07/2026
02/2026
06/2024
01/2025
11/2026
01/2029
07/2024
12/2026
2.737%
2.718%
2.000%
3.332%
3.599%
3.402%
2.332%
2.704%
4.477%
2.373%
1.750%
27,500
20,000
100,000
100,000
77,400
33,333
39,000
44,444
48,285
875
109
490,946
3,667
10,000
-
-
25,200
22,222
18,000
11,111
3,974
500
30
23,833
10,000
-
-
100,000 Mortgage loan
100,000
52,200
11,111
21,000
33,333
-
-
-
-
-
44,311 Mortgage loan
375 Mortgage loan
79
-
94,704
396,242
(1) the interest rates include the effect of any interest rate risk hedges
In 2022, the current por tions of long-term loans were repaid for a total amount of
Euro 187.2 million; no new medium/long-term loans were stipulated.
Prada S.p.A.’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 mor tgage loan to Tannerie Limoges Sas is secured by that company’s
factory building in France.
The Group generally borrows at variable interest rates and manages the risk of
interest rate fluctuations through hedging agreements, as described in Note 12.
The financial payables are set for th hereunder by their por tions with fixed and
variable interest rates:
December 31, 2022
December 31, 2021
variable
interest rates
fixed
interest rates
variable
interest rates
fixed
interest rates
Short-term financial payables
Long-term financial payables
80%
44%
20%
56%
77%
84%
23%
16%
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 27. L ONG-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
2022
December 31
2021
41,870
25,701
67,571
(6,426)
61,145
49,293
24,526
73,819
(13,309)
60,510
POST-EMPLOYMENT BENEFITS
The net balance of long-term employee benefits as at December 31, 2022 is a
liability of Euro 61.1 million (Euro 60.5 million at December 31, 2021) and all the
benefits fall within the scope of defined benefit plans.
The post-employment benefits consist of Euro 20.1 million (Euro 25.8 million at
December 31, 2021) in liabilities accounted for by Italian companies and Euro
21.8 million by the foreign subsidiaries (Euro 23.4 million at December 31, 2021).
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 salary. The
present value of the liability recognized was determined by projecting the amount
accrued at December 31, 2022 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, 2022:
(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
25,845
23,448
(13,309)
24,526
60,510
Current service cost
Financial charges (income)
Actuarial (gains)/losses
Benefits paid
Contributions
Exchange differences
(70)
(107)
(3,847)
(1,738)
-
-
3,265
88
(611)
(3,050)
-
(1,353)
337
(239)
6,486
-
(149)
448
7,281
(29)
(107)
(6,023)
-
53
10,813
(287)
1,921
(10,811)
(149)
(852)
Closing balance
20,083
21,787
(6,426)
25,701
61,145
214
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements
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
(5,637)
1,790
(719)
108
26,562
(20,076)
Actuarial (gains)/losses
(3,847)
(611)
6,486
The current service cost and financial charges/(income) are recognized in the
statement of profit or loss. For the item other 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
expiration; leaving indemnity advances; and supplementary pension schemes.
In the Consolidated Statement of Financial Position the post-employment benefits
are stated gross of the pension plan surplus for the Group companies operating in
the United Kingdom that supply pension services to their employees. At December
31, 2022, the fair value of such pension plans was a surplus of Euro 6.4 million
(Euro 13.3 million as of December 31, 2021). 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
2022
December 31
2021
44,064
(37,638)
73,190
(59,881)
6,426
13,309
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The composition of the main plan assets on the repor ting date is as follows:
(amounts in thousands of Euro)
Equities
Alternatives
Bonds
Cash
Total
December 31
2022
December 31
2021
8,966
10,277
18,081
6,740
44,064
21,385
15,967
27,318
8,520
73,190
The main actuarial assumptions used as at December 31, 2022 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
10.1
1.10%
2.5%
11
2.76%
2.76%
10.6
2.61%
N/A
The main actuarial assumptions used as of 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 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, 2022 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 approximately Euro 4
million (or 4% of the current debt on the balance sheet).
OTHER LONG-TERM EMPLOYEE BENEFITS
The other long-term employee benefits meet the IAS 19 and IFRS 2 definition of
long-term employee benefits for the Group’s key management personnel. Their
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements actuarial valuation at December 31, 2022, calculated using PUCM and fair value
methodologies, resulted in Euro 25.7 million (Euro 24.5 million as at December
31, 2021), according to an independent actuarial appraisal.
28. P ROVISIONS FOR RISKS AND CHARGES
The changes in the provisions for risks and charges are as follows:
(amounts in thousands of Euro)
Provision for
legal disputes
Provision for
tax disputes
Other
provisions
Opening balance
Exchange differences
Reversals
Utilised
Increases
Closing balance
10,899
(8)
(232)
(10,067)
292
884
2,306
80
(112)
(68)
2,395
4,601
45,996
82
(414)
(2,390)
2,727
46,001
Total
59,201
154
(758)
(12,525)
5,414
51,486
The provisions for risks and charges represent Directors’ best estimate of the
maximum outflow of resources needed to settle liabilities deemed to be probable.
In the Directors’ opinion, based on the information available to them, the total
amount accrued for risks and charges at the repor ting date is adequate in respect
of the liabilities that could arise from them.
LEGAL DISPUTES
In relation to the provision for litigation, considering the execution on November
15, 2022, of a settlement agreement between the par ties to terminate the dispute,
Prada S.p.A. paid to Chora S.r.l. an all-inclusive amount of Euro 17.8 million.
Prada S.p.A. utilised the Euro 10 million provision allocated in 2021 and recognised
costs for Euro 7.8 million in the profit or loss.
TAX DISPUTES
The Group’s main tax disputes at the repor ting date are described hereunder.
The dispute filed by Prada S.p.A. 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, and for which the Company has already paid
the amount due while the cases are pending.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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 0.4 million.
O ther liabilities for customs duty risks are recognized at the repor ting date in an
amount of Euro 3.2 million, consisting of Euro 1 million for a mistaken customs
classification of footwear impor ted into the United States and Euro 2.2 million
for risks of assessments regarding price adjustments, split among various non-EU
countries.
OTHER RISK PROVISIONS
The O ther risk provisions amount to Euro 46 million as at December 31, 2022 and
refer primarily to contractual obligations to restore leased commercial proper ties
to their original condition.
29. O THER NON-CURRENT LIABILITIES
(amounts in thousands of Euro)
Deferred income for commercial agreements
Accrued costs for lease payments (out of scope for IFRS 16)
Other non-current liabilities
Total
December 31
2022
December 31
2021
107,687
7,410
573
116,661
6,143
223
115,670
123,027
30. E QUIT 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
218
December 31
2022
December 31
2021
255,882
410,047
2,245,901
(7,107)
(10,405)
10,060
112,646
465,193
255,882
410,047
2,118,855
(5,708)
(10,992)
(15,878)
67,434
294,254
3,482,217
3,113,894
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements SHARE CAPITAL
At December 31, 2022, approximately 80% of Prada S.p.A.’s share capital was
owned by Prada Holding S.p.A. and the remainder is listed on the Main Board of
the Hong Kong Stock Exchange.
SHARE PREMIUM RESERVE
The share premium reserve of Euro 410 million is the same as that of December
31, 2021.
OTHER RESERVES
The other reserves amount to Euro 2,245.9 million at December 31, 2022, up
by Euro 127 million compared to December 31, 2021. Euro 294.3 million of the
increase is attributable to the allocation of the previous year ’s profit, offset in
par t by the distribution of dividends totaling Euro 179.1 million to Prada S.p.A.
shareholders.
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 67.4 million at December 31, 2021 to Euro 112.6 million.
NET INCOME / (LOSS) FOR THE PERIOD
The Group’s net result for the twelve months ended December 31, 2022 is a profit
of Euro 465.2 million (versus a profit of Euro 294.3 million for the twelve months
ended December 31, 2021).
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 31. E QUIT Y AT TRIBUTABLE TO NON-CONTROLLING INTERESTS
The following table shows the changes in the non-controlling interests during the
years ended December 31, 2022 and December 31, 2021:
(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
2022
December 31
2021
14,749
664
(599)
3,962
29
-
-
18,805
19,663
863
(1,674)
849
5
(141)
(4,816)
14,749
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For a detail explanation of the financial and business per formances of 2022, refer
to the Financial Review.
32. NET REVENUES
The consolidated net revenues are generated primarily from sales of finished
products and are stated net of returns and discounts.
(amounts in thousands of Euro)
Net sales
Royalties
Total
twelve months ended
December 31
2022
twelve months ended
December 31
2021
4,124,592
76,082
3,316,620
49,047
4,200,674
3,365,667
The Financial Review describes the net sales by distribution channel, geographical
area, brand and product.
220
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements
33. C OST OF GOODS SOLD
The cost of goods sold has the following composition:
(amounts in thousands of Euro)
twelve months ended
December 31
2022
twelve months ended
December 31
2021
Purchases of raw materials and manufactoring services
Depreciation, amortization and impairment on tangible and intangible fixed assets
Depreciation and writedowns of the right of use assets
Labor cost
Short-term and low value lease (IFRS 16)
Logistics costs, duties and insurance
Change in inventories
624,787
18,138
3,398
145,536
130
190,997
(94,406)
497,841
17,967
3,178
131,219
58
154,966
13,080
Total
888,580
818,309
The incidence of the cost of goods sold on net revenues for the twelve months
ended December 31, 2022 was 21.2%, a substantial decrease from the 24.3% of
2021. Higher average price, greater absorption of production overheads, and a
better sales mix in terms of distribution channels are behind the improvement,
despite the increase in production costs caused by inflationary pressures.
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
Total
twelve months ended
December 31
2022
% of net revenues
twelve months ended
December 31
2021
% of net revenues
137,469
359,114
1,746,349
293,172
2,536,104
3.3%
8.5%
41.6%
7.0%
60.4%
115,319
294,251
1,421,169
227,135
2,057,874
3.4%
8.8%
42.2%
6.7%
61.1%
The total operating expenses were Euro 2,536.1 million, up by Euro 478.2 million
from those of 2021. The increase is primarily attributable to higher variable costs
ensuing from higher sales, greater communication activities, higher personnel and
other general and administrative expenses, and reduced benefits in terms of the
rent discounts and subsidies that had been available in 2021 due to Covid-19
emergency.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements The following table sets forth depreciation, amortization, impairment, personnel
cost (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 writedowns 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
35. FINANCIAL INCOME / (EXPENSE)
twelve months ended
December 31
2022
twelve months ended
December 31
2021
252,239
460,477
739,574
223,787
12,708
186,543
423,043
617,862
173,730
12,676
The net interest and other financial income / (expenses) 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
2022
twelve months ended
December 31
2021
(6,116)
6,625
271
(18,274)
(1,414)
(5,590)
(24,498)
(9,239)
2,591
151
(4,117)
(18,696)
(1,906)
(31,216)
(40,990)
(36,773)
473
160
(65,015)
(67,829)
Net financial expenses amounted to Euro 65 million, a decrease of Euro 2.8 million
on 2021 (Euro 67.8 million). The decrease is largely attributable to lower interest
costs associated with the net financial position, which improved from the previous
year, and reduced foreign exchange losses, offset in par t by higher interest on new
(and renewed) leases.
222
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 36. TAXATION
Income taxes have the following composition:
(amounts in thousands of Euro)
Current taxation
Deferred taxation
Total
twelve months ended
December 31
2022
twelve months ended
December 31
2021
327,187
(85,367)
151,210
(24,658)
241,820
126,552
Tax expenses totaled Euro 241.8 million, corresponding to 34% of the pre-tax
income; the increase incidence compared to 2021 (30%) results from a different
geographical distribution of profits, the prudential non-recognition of the deferred
taxes on writedowns of fixed assets in Russia, and the retroactive effects of a
bilateral agreement between tax authorities signed during the year.
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)
Group’s weighted theoretical tax rate (calculated in absolute values on the basis of subsidiaries’ pre-taxable income/loss)
Non deductible expenses, net of not taxable income
Tax losses generated in the year on which no deferred tax assets were recognized
Prior years taxes adjustments
Withholding and other income taxes
Effective tax rate of the Group
twelve months ended
December 31
2022
28.1%
4.2%
-0.1%
1.4%
0.4%
34.0%
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)
Deferred taxes on revaluation IAS 29
Other movements
Deferred taxes for the period in profit or loss
twelve months ended
December 31
2022
twelve months ended
December 31
2021
257,656
222,638
(941)
(1,022)
(8,283)
667
(1,234)
25
85,367
8,185
-
4,247
(1,740)
-
(331)
24,657
Closing balance
332,235
257,656
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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, 2022
December 31, 2021
Deferred tax
assets
Deferred tax
liabilities
Deferred tax
assets
Deferred tax
liabilities
242,795
1,996
29,345
-
24,123
7,267
42,924
10,741
-
8,811
5,088
4,790
1,559
8,292
6,590
1,111
6,636
3,176
-
3,185
1,606
3,910
159,548
1,767
36,832
-
16,465
5,394
43,515
4,961
5,095
10,421
3,464
373,090
40,855
287,462
-
1,510
7,587
12,462
394
2,246
423
-
-
3,327
1,857
29,806
The tax loss carryforwards as of December 31, 2022, 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
2022
9,856
11,635
139,508
160,999
The Directors 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.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 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
Basic and diluted earnings / (losses) per share in Euro,
calculated on weighted average number of shares
DIVIDENDS PER SHARE
twelve months ended
December 31
2022
twelve months ended
December 31
2021
465,192,638
294,253,615
2,558,824,000
2,558,824,000
0.182
0.115
The Board of Directors of the Company has proposed a final dividend of Euro
281,470,640 (Euro 0.11 per share) for the twelve months ended December 31,
2022.
During 2022, the Company distributed dividends of Euro 179,117,680 (Euro 0.07
per share), as approved at the General Meeting held on April 28, 2022 to approve
the December 31, 2021 financial statements.
The dividends and the related Italian withholding tax due (Euro 9.3 million),
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:
Total dividends paid (Euro)
Dividends per Share (Euro)
Date of approval by Shareholders’ Meeting
Date of payment
Financial statements
ended
December 31
2021
Financial statements
ended
December 31
2020
Financial statements
ended
December 31
2019
179,117,680
89,558,840
0.070
28/04/2022
May 2022
0.035
27/05/2021
June 2021
-
-
26/05/2020
-
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 38. ADDITIONAL INFORMATION
NUMBER OF EMPLOYEES
The average number of full-time equivalent (“F TE”) employees (calculated by
dividing the number of actual hours worked by the total number of scheduled
hours), by business division, is presented below:
(number of employees)
Production
Product design and development
Advertising and Communications
Selling
General and administrative services
Total
twelve months ended
December 31
2022
twelve months ended
December 31
2021
3,074
945
207
7,969
991
2,829
936
180
7,696
931
13,186
12,572
EMPLOYEE REMUNERATION
The employee remuneration by business division, net of the government subsidies
for the 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
2022
twelve months ended
December 31
2021
145,411
66,362
31,146
524,062
118,004
126,692
60,618
19,682
440,189
97,373
884,985
744,554
The classification by type of employee remuneration is 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
2022
twelve months ended
December 31
2021
668,356
37,801
135,934
42,894
558,616
37,804
116,067
32,067
884,985
744,554
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements DISTRIBUTABLE RESERVES OF THE PARENT COMPANY, PRADA S.P.A.
(amounts in thousands of Euro)
December 31
2022
Possible
utilization
Distributable
amount
255,882
410,047
51,176
182,899
1,094,216
(10,404)
(4,035)
11,962
-
A, B, C
B
A, B, C
A, B, C
-
-
-
-
410,047
-
182,899
1,059,261
-
-
-
Summary of utilization
in the last three years
Coverage of
losses
Distribution of
dividends
-
-
-
-
-
-
-
-
16,176
243,088
-
-
-
-
-
-
1,652,207
16,176
243,088
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
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
the share capital.
Under Italian Legislative Decree 38/2005, Ar ticle 7, Euro 20.5 million of the
retained earnings is not distributable.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements EXCHANGE RATES
The exchange rates against the Euro used for consolidation of the Statements of
Financial Position and Statements of Profit or Loss whose presentation currency
differed from that of the Consolidated Financial Statements as at December 31,
2022 and December 31, 2021 are listed hereunder.
(amounts in thousands of Euro)
Average rate
December 31
2022
Average rate
December 31
2021
Closing rate
December 31
2022
Closing rate
December 31
2021
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
Norwegian Krone
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
3.873
1.518
5.450
1.370
1.005
24.563
7.440
0.852
8.255
137.935
1,358.078
0.323
484.949
10.679
8.499
21.221
4.629
1.659
10.100
3.867
7.077
4.931
73.258
3.959
10.623
1.453
36.860
17.350
31.325
33.902
1.054
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
10.164
4.363
7.637
4.921
87.248
4.440
10.144
1.590
37.802
10.421
33.070
32.294
1.184
3.918
1.569
5.639
1.444
0.985
24.116
7.437
0.887
8.316
140.660
1,344.090
0.327
492.860
11.156
8.578
20.856
4.698
1.680
10.514
3.918
7.358
4.950
77.900
4.012
11.122
1.430
36.835
19.965
32.810
39.037
1.067
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
9.989
4.158
7.195
4.949
85.300
4.254
10.250
1.528
37.653
15.234
31.342
30.923
1.133
24,525.672
27,415.961
25,171.000
26,212.000
17.209
17.463
18.099
18.063
228
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements AUDITOR’S COMPENSATION
The total fees and expenses recognized to Deloitte & Touche S.p.A. and its network
for auditing the financial statements of the years ended December 31, 2022 and
December 31, 2021 and for providing non-audit services are presented below
(amounts in thousands of Euro):
Type of service
Audit Firm
Provided to
twelve months ended
December 31
2022
twelve months ended
December 31
2021
Audit services
Audit services
Audit services
Deloitte & Touche S.p.A.
Prada S.p.A.
Deloitte & Touche S.p.A.
Deloitte Network
Subsidiaries
Subsidiaries
Total audit fees to Deloitte Network
Other advisory services
Other advisory services
Deloitte & Touche S.p.A.
Prada S.p.A.
Deloitte Network
Subsidiaries
Total non-audit fees to Deloitte Network
475
133
1,147
1,755
374
124
498
508
136
1,129
1,773
24
69
93
Total compensation to Deloitte Network
2,253
1,866
39. REMUNERATION OF BOARD OF DIRECTORS, FIVE HIGHEST
P AID INDIVIDUALS AND SENIOR MANAGERS
Remuneration of Prada S.p.A. Board of Directors for the year ended December 31, 2022
(amounts in thousands of Euro)
Directors’ fees
Remuneration
Bonuses and
other incentives
Benefits
in kind
Paolo Zannoni
Miuccia Prada Bianchi
Patrizio Bertelli
Lorenzo Bertelli
Andrea Bonini
Stefano Simontacchi
Marina Sylvia Caprotti
Yoël Zaoui
Maurizio Cereda
Pamela Yvonne Culpepper
Anna Maria Rugarli
1,500
18,120
18,120
-
8
54
89
110
80
92
73
24
-
-
236
1,176
-
-
-
-
-
-
-
-
-
141
682
-
-
-
-
-
-
-
-
-
11
14
-
-
-
-
-
-
Pension,
healthcare
and TFR
contributions
4
25
25
61
234
2
(8)
13
3
21
12
Total
1,528
18,145
18,145
449
2,114
56
81
123
83
113
85
Total
38,246
1,436
823
25
392
40,922
The Board remuneration includes the allocation of the amounts decided at the
General Meetings held on May 27, 2021 and January 28, 2022, and the additional
remuneration approved by the Board of Directors, with the agreement of the Board
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements
of Statutory Auditors, in view of the specific duties carried out by each Director.
During the year, Ms. Alessandra Cozzani, past Director of the Company, received a
remuneration of Euro 1,565,426, benefits in kind of Euro 20,406, pension, healthcare
and TFR contribution of Euro 75,828. Bonuses and other incentives for the year 2021
were over-accrued for the amount of Euro 102,600.
Remuneration of Prada S.p.A. Board of Directors for fiscal year 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
14,975
14,975
-
-
50
53
64
70
33
-
-
388
216
-
-
-
-
-
-
-
452
99
-
-
-
-
-
-
-
13
3
-
-
-
-
Total
31,062
637
551
16
Pension,
healthcare
and TFR
contributions
-
24
24
262
70
2
8
10
3
403
Total
908
14,999
14,999
1,115
388
52
61
74
73
32,669
REMUNERATION OF FIVE HIGHEST PAID INDIVIDUALS
The Group’s five highest paid individuals included two Board of Director members
for 2022 and two Board Members for 2021. The total remuneration of the remaining
three highest paid individuals for the twelve months ended December 31, 2022
and the remaining three highest paid individuals for the twelve months ended
December 31, 2021 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
2022
twelve months ended
December 31
2021
21,230
8,205
263
137
29,835
20,916
12,099
593
63
33,671
230
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements Excluding the remuneration of the Board of Directors’ members, the remuneration
of the highest paid individuals by range of amount 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
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
2022
twelve months ended
December 31
2021
-
1
-
2
3
-
1
-
2
3
twelve months ended
December 31
2022
twelve months ended
December 31
2021
28,629
13,395
1,985
2,874
46,883
27,290
16,978
2,197
1,980
48,445
There were 26 Senior Managers as of December 31, 2022, and 24 Senior Managers
as of December 31, 2021.
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
2022
twelve months ended
December 31
2021
6
12
5
1
2
26
9
6
5
2
2
24
The amounts repor ted in the tables setting for th the remuneration of the Board of
Directors, five highest paid individuals and Senior Managers are those recognized
in the Statement of Profit or Loss.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements 40. REL ATED 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, 2022, 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 end-of-year Statement of Financial
Position balances and total transactions affecting the Statement of Profit or Loss.
STATEMENT OF FINANCIAL POSITION BALANCES AS OF DECEMBER 31, 2022
(amounts in thousands of Euro)
Les Femmes S.r.l.
Filati Biagioli Modesto S.r.l.
Spelm Sa
Rubaiyat Modern Lux.Pr.Co.Ltd
Ludo Due S.r.l.
Peschiera Immobiliare S.r.l.
Premiata S.r.l.
Conceria Superior S.p.A.
Perseo S.r.l.
Al Tayer Insignia Llc
Danzas Llc
Al Sanam Rent a Car Llc
Prada Holding S.p.A.
PH-RE
Others
Members of the Board of Directors
of Prada S.p.A.
Trade
receivable,
net
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
599
27
6
2,218
-
-
-
-
-
-
-
736
-
-
18
-
2
-
-
-
-
-
-
-
-
-
-
-
-
149
-
-
1,125
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
1,944
67
3,795
-
9,282
2,882
-
-
-
-
-
-
73
196,766
-
-
-
-
-
45
195
3,056
225
12
93
1
-
-
2
-
-
-
-
1,055
-
-
-
-
-
2,513
-
-
-
-
-
-
-
-
3,858
-
10,242
3,460
-
-
-
-
-
-
73
221,687
-
-
-
-
-
-
-
-
-
-
-
-
61
-
-
-
-
4,405
Total at December 31, 2022
1,382
2,373
1,125
212,798
5,640
3,568
239,320
4,466
232
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements STATEMENT OF FINANCIAL POSITION BALANCES AS OF DECEMBER 31, 2021
(amounts in thousands of Euro)
Les Femmes S.r.l.
Filati Biagioli Modesto S.r.l.
Spelm Sa
Rubaiyat Modern Lux.Pr.Co.Ltd
Ludo Due S.r.l.
Chora S.r.l.
Peschiera Immobiliare S.r.l.
Premiata S.r.l.
Conceria Superior S.p.A.
Perseo S.r.l.
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 S.p.A.
Trade
receivable,
net
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
569
-
-
-
-
-
-
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
STATEMENT OF PROFIT OR LOSS TRANSACTIONS FOR THE T WELVE MONTHS
ENDED DECEMBER 31, 2022
(amounts in thousands of Euro)
Les Femmes S.r.l.
Filati Biagioli Modesto S.r.l.
Spelm Sa
Ludo Due S.r.l.
Peschiera Immobiliare S.r.l.
Premiata S.r.l.
Conceria Superior S.p.A.
Perseo S.r.l.
Al Tayer Group Llc
Al Tayer Insignia Llc
Danzas Llc
Al Sanam Rent a Car Llc
Prada Holding S.p.A.
PH-RE
Net
revenues
Cost of
goods sold
General,
admin.
& selling costs
(income)
Interest
income
Interest
expenses
-
-
-
-
-
-
-
-
-
2,523
-
-
-
-
7,479
4,150
-
-
44
131
14,837
817
-
-
116
-
-
-
47
48
572
1,119
559
724
39
-
92
135
142
11
68
17,739
11
36
-
-
-
-
-
-
-
-
-
-
-
-
-
-
34
131
31
-
-
-
-
-
-
-
1
2,133
Total at December 31, 2022
2,523
27,574
21,295
47
2,330
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PRADA Group 2022 Annual Report - 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 S.r.l.
Cecco Bruna 2011 S.r.l.
Filati Biagioli Modesto S.r.l.
Spelm Sa
Ludo Due S.r.l.
Ludo Tre S.r.l.
Chora S.r.l.
Peschiera Immobiliare S.r.l.
Premiata S.r.l.
Conceria Superior S.p.A.
Perseo S.r.l.
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 S.r.l.
Luna Rossa Challenge S.r.l. (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
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, 2022
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
234
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements contained in Prada S.p.A.’s Announcements dated, respectively, July 15, 2015
(“Prada Aoyama”) and May 26, 2017 (“Miu Miu Aoyama”).
Apar t from the non-exempt continuing connected transactions and non-exempt
connected transactions repor ted above, no other transaction repor ted in the 2022
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
2022
December 31
2021
December 31
2020
December 31
2019
December 31
2018
Net revenues
Gross margin
Operating income / (loss) - (EBIT)
Net income / (loss) - Group
Total assets
Total liabilities
Net equity attributable to owners of the Group
4,200,674
3,312,094
775,990
465,193
7,377,578
3,876,556
3,482,217
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
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PRADA Group 2022 Annual Report - 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 S.p.A.
EUR
255,882
Milan
Artisans Shoes S.r.l. (*)
IPI Logistica S.r.l. (*)
Pelletteria Ennepì S.r.l. (*)
Church Italia S.r.l.
Marchesi 1824 S.r.l. (*)
Figline S.r.l. (*)
Pelletteria Figline S.r.l.
Luna Rossa Challenge S.r.l. (*)
COR 36 S.r.l.
Caffè Principe S.r.l. (*)
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
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
10
10
52
100
100
100
100
100
Figline e Incisa
Valdarno
Milan
Milan
Milan
Figline e Incisa
Valdarno
100
Grosseto
100
100
Milan
Forte dei Marmi
Italy
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
Management
sailing team
12/01/2021 Under liquidation
12/01/2022 Food&Bevrage
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
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
100
100
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 Under liquidation
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
236
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements Company
Prada Denmark Aps (*)
Prada Belgium Sprl (*)
Hipic Prod Impex Srl (*)
Church Germany Gmbh
Prada San Marino (*)
Prada Norway As (*)
Americas
Local
currency
Share
capital
(000s of local
currency)
%
Interest
Registered
office
Principal place
of operation
DKK
EUR
RON
EUR
EUR
NOK
26,000
4,000
25,471
200
26
30
100
100
100
100
100
100
Copenhagen
Brussels
Sibiu
Munich
Falciano
Oslo
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
Norway
09/01/2022 Retail
Prada USA Corp. (*)
USD
152,211
100
New York
U.S.A.
10/25/1993
Prada Canada Corp. (*)
Church & Co. (USA) Ltd
Post Development Corp (*)
CAD
USD
USD
Prada Retail Mexico, S. de R.L. de C.V.
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 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
269,140
100
100
100
New York
New York
Mexico City
340,000
100
Sao Paulo
7,203
30
2,011
1,600
100
100
100
100
Mexico City
Panama
Oranjestad
Gustavia
Canada
U.S.A.
U.S.A.
Mexico
Brazil
Mexico
Panama
Aruba
Distribution/
Services/
Retail
Distribution/
Retail
05/01/1998
09/08/1930 Retail
02/18/1997 Real Estate
07/12/2011 Retail
04/12/2011 Retail
02/27/2014 Dormant
09/15/2014 Dormant
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 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 2022 Annual Report - 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 Dormant
(*) Company owned directly by Prada S.p.A.
(**) Company consolidated based on definition of control per IFRS 10
(***) Wholly foreign owned enterprises
43. DIS CLOSURES 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, 2022 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 Sas
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
28,256
92,773
128,875
34,537
25,600
9,051
6,494
(6,960)
53,698
4,315
5,467
155
61,781
109,213
104,884
22,760
14,301
8,927
425
6,650
6,914
1,241
54
34
(599)
-
-
-
-
-
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 Sas
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)
-
-
-
-
-
-
There were no significant restrictions on the Group’s ability to access or use assets
or to settle liabilities at the end of the repor ting period.
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PRADA Group 2022 Annual Report - Notes to the Consolidated Financial Statements In 2011, Prada S.p.A. 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
19% of the shares owned by Al Tayer, bringing the stake in Prada Middle East to
79%, upon the payment of an amount that does not exceed the corresponding non-
controlling interest in equity stated in the financial statements.
44. E VENTS AF TER THE REPORTING DATE
No significant events to be repor ted.
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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 2022 Annual Report - 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.
242
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PRADA Group 2022 Annual Report - 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, 2022, 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 shareholders’ 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, 2022, 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’ International 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
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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 2022 Annual Report - 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 513.7 million, 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, considering the requirement of IAS 36 to
assess at each reporting date the presence of any impairment indicator,
some 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,
based on estimates and assumptions using, among other, projected cash
flows of the CGUs, appropriate discount rates (“WACC”) and long-term
growth rates (“g-rate”).
For all the CGUs which include goodwill, no impairment losses have been
identified and Management believes that such conclusion would be
confirmed for any reasonable change in the main assumptions used for the
purpose of the impairment tests.
Despite the absence of any allocated goodwill, also the Prada Russia and
Church’s CGUs have been tested for impairment, in light respectively of the
extraordinary market conditions in Russia and of the reorganization process
underway involving the Church’s Group.
For the Prada Russia CGU, the recoverable amount has been estimated
based on two hypothetical scenarios to which Management assigned a
likelihood of occurrence: the first one assumes the recovery of business in
Russia in mid-2024, whereas the second one assumes the impossibility of
returning to normal market conditions in the medium term and the
realisation of the assets through liquidation of the subsidiary. In the latter
scenario, the recoverable amount mainly relates to the buildings owned in
Russia whose related fair value was estimated with the support of an
independent expert, also considering the significant uncertainty currently
characterizing the real estate industry in Russia and the Russian financial
system in general. As a result of the test performed, the Group recognized an
impairment loss for the Prada Russia CGU for a total amount of Euro 43.5
million; the net invested capital of the Russia CGU following the write down
is Euro 29.9 million, mainly related to the estimated fair value of the
buildings.
244
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3
Also for the Church’s CGU, for which the recoverable amount was estimated
with the support of an independent expert, the test performed resulted in
the recognition of an impairment loss of Euro 19.4 million, allocated to the
Church’s brand. Furthermore, Management performed a sensitivity analysis
for the Church’s CGU, in order to disclose the effects of changes to the main
assumptions (WACC and g-rate) on the impairment test result.
Given the materiality of the carrying amount 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.
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 the CGUs;
• Analysis of the reasonableness of the main assumptions used to develop
cash flow forecasts, through sector data analysis (luxury goods market
studies) 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 correct determination of the carrying amount of each
tested CGU;
• Analysis of the reasonableness of the approach and assumptions used for
the estimate of the Prada Russia CGU’s recoverable amount;
• Verification of the mathematical accuracy of the models used to
determine the recoverable amount of each tested CGU;
• 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 2022 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.
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4
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.
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.
246
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5
• 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.
• 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, action
taken to eliminate threats and safeguards applied.
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 9, 2023
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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, 2022, 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, 2022, 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
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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
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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, 2022, 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, 2022 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, 2022 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 9, 2023
This report has been translated into the English language solely for the convenience of international readers.
Accordingly, only the original text in Italian language is authoritative.
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