ANNOUNCEMENT OF THE CONSOLIDATED RESULTS FOR THE YEAR ENDED JANUARY - PDF document

Hong Kong Exchanges and Clearing Limit ed and The S t ock Exchange of Hong Kong Limit ed t ake no responsibilit y for t he cont ent s of t his announcement , make no represent at ion as t o it s accuracy or complet eness and expressly disclaim any liabilit y what soever f or any loss howsoever arising f rom or in reliance upon t he whole or any part of t he cont ent s of t his announcement . PRADA spa (Stock Code: 1913) ANNOUNCEMENT OF THE CONSOLIDATED RESULTS FOR THE YEAR ENDED JANUARY 31, 2014 - Net revenues were Euro 3,587.3 million, recording an increase of 8.8% compared with the year ended January 31, 2013 - Retail net sales were Euro 2,996.6 million, up by 12.5% compared wit h the year ended January 31, 2013 (+17.8% at constant exchange rat es) - Retail S ame S tore S ales Growth was 7% compared wit h t he year ended January 31, 2013 - EBITDA was Euro 1,143.2 million, up by 8.6% compared wit h t he year ended January 31, 2013, and representing a margin of 31.9% on net revenues - Group’ s net income amounted t o Euro 627.8 million, up by 0.3% compared to Euro 625.7 million for t he year ended January 31, 2013 - Positive net financial position at Euro 295.9 million as at January 31, 2014 - Net operating cash flow for the year ended January 31, 2014, was Euro 769.4 million 1

Consolidated results for the year ended January 31, 2014 The Board of Direct ors (t he “ Board” ) of PRADA S .p.A. (the “ Company” or “ PRADA spa” ) is pleased to announce t he audited Consolidat ed results of t he Company and its subsidiaries (collect ively, the “ Group” ) for the year ended January 31, 2014, t ogether with the audited comparat ive figures for t he year ended January 31, 2013. The following financial information was prepared in accordance with the Int ernational Financial Reporting S tandards (“ IFRS ” ) as adopt ed by the European Union. The consolidat ed result s of t he Group for t he year ended January 31, 2014, and January 31, 2013, were audited by Deloit te & Touche spa. Scope of work of Messrs. Deloitte & Touche spa The figures in respect of t he Group’ s consolidated stat ement of financial position, consolidated st at ement of comprehensive income and t he related notes theret o for t he year ended January 31, 2014, as set out in t his preliminary announcement have been agreed by the Group's auditors, Messrs. Deloit te & Touche spa, to t he amount s set out in t he Group’ s audited consolidated financial st at ement s for the year. The work performed by Messrs. Deloit te & Touche spa in this respect did not constitute an assurance engagement in accordance with Auditing Standards issued by t he It alian Account ing Profession (CNDCEC) and recommended by Consob, the It alian Commission for listed Companies and t he S tock Exchange and consequently no assurance has been expressed by Messrs. Deloitte & Touche spa on the preliminary announcement . 2

Key financial information twelve twelve twelve % months months months Key information from the Income change vs ended ended ended statement Jan 31 Jan 31 Jan 31 Jan 31 (amounts in thousands of Euro) 2013 2014 2013 2012 (audited) (audited) (audited) Net revenues 3,587,347 3,297,219 2,555,606 8.8% EBITDA 1,143,186 1,052,469 759,252 8.6% EBITDA % 31.9% 31.9% 29.7% - EBIT 939,237 889,781 628,935 5.6% EBIT % 26.2% 27.0% 24.6% - Income before tax 922,896 883,616 602,908 4.4% Net income of the Group 627,785 625,681 431,929 0.3% Earnings per share (Euro) 0.245 0.245 0.170 0% Capital expenditure 611,227 351,129 278,856 - Net operating cash flows 769,437 759,272 479,954 - Average headcount (persons) 10,816 9,427 8,067 14.7% as at as at as at Key information from the Statement of change vs Jan 31 Jan 31 Jan 31 financial position Jan 31 2014 2013 2012 (amounts in thousands of Euro) 2013 (audited) audited (audited) Net operating working capital 409,774 317,714 357,648 92,060 Net invested capital 2,405,650 2,017,844 1,817,327 387,806 Net financial position surplus/(deficit) 295,890 312,648 13,640 (16,758) Group shareholders’ equity 2,687,554 2,320,022 1,822,743 367,532 Highlights for the year ended January 31, 2014 In 2013, the PRADA Group pursued wit h convict ion its strategic plan of expansion in the global luxury goods market, achieving one of the highest rat es of growth in the segment. The results achieved were all t he more sat isfying considering the ongoing uncertaint y of the economic environment, especially in some part s of Europe, and the related exchange rat e volatility. For the fourth consecutive year, significant net revenue growth was recorded. Commercial growt h was driven by the retail network thanks to both the solid contribution of existing stores and the impact of newly opened st ores. Retail net work expansion led to the opening of 79 net new Directly Operated Stores (DOS) during t he year. The total number of DOS hit 500 in August 2013 and reached 540 at January 31, 2014. The Group now covers wit h its own stores 40 out of the 70 countries where Prada, Miu Miu, Church’ s and Car S hoe finished product s are distributed and these st ores generate 84.5% of consolidated net sales. At t he same time, leat her goods generate around two t hirds of consolidat ed net sales with t he remainder coming from clothing and foot wear. This is consistent with the strategy of retail growth and the ongoing policy of selective reduction of t he independent customer base. The revenue growt h has been accompanied by a communications strategy focused on sustaining and developing brand identity and ranging from unique advertising campaigns to sponsorship of events and initiat ives with global visibility as the participation by Luna Rossa in the XXXIV edit ion of t he America’ s Cup or the cultural and art istic initiatives of the Fondazione Prada. 3

Finally, in t he industrial area, in 2013 management commit ted to improving further processes in order to optimize the syst em of procurement for t he retail network and maintain high quality gross margins without affect ing a t radition of craftsmanship t hat has now lasted a hundred years. The Group’ s net revenue for t he t welve months ended January 31, 2014, t otaled Euro 3,587.3 million, 8.8% more t han in 2012 (+13.3% at constant exchange rates). An improvement in gross margin helped limit the impact of an increase in operat ing expenses due to retail network expansion and EBITDA remained in line with prior year at 31.9% of net revenue. In absolut e terms, EBITDA totaled Euro 1,143.2 million, 8.6% more than the figure of Euro 1,052.5 million achieved in 2012. The Group’ s net income totaled Euro 627.8 million, slightly higher t han the figure of Euro 625.7 million for the twelve mont hs ended January 31, 2013. In addition to reasons above explained, the Group’ s net income, as a percentage of net revenue, decreased from 19% to 17.5% because the increase in t he direct t ax burden. The capital expenditure incurred during the twelve months ended January 31, 2014, amounted to Euro 611.2 million and was mainly focused on the retail area. Capital expenditure was mainly used t o sustain t he plan to open new st ores and t o acquire a prestigious building on Old Bond S treet in London which the Group has already part ially deployed to open one of the most st rategic Prada st ores in the world. Free cash flows for the year enabled t he Group t o report a positive net financial posit ion of Euro 295.9 million at January 31, 2014, after distributing dividends of Euro 230.3 million to the shareholders of PRADA spa. In terms of durat ion, the debt structure is more favorable than at January 31, 2013, as it has shifted more towards a longer term profile. During the year, t he Group made loan repayment s falling due of Euro 162.5 million, issued a five year bond of Euro 130 million and arranged new long-t erm bank loans of Euro 46.8 million. 4

Consolidated income statement for the year ended January 31, 2014 twelve twelve months months % on % on ended ended (amounts in thousands of Euro) Note Net Net January 31 January 31 revenues revenues 2014 2013 (audited) (audited) Net revenues 3 3,587,347 100.0% 3,297,219 100.0% Cost of goods sold (938,698) -26.2% (920,678) -27.9% Gross margin 2,648,649 73.8% 2,376,541 72.1% Operating expenses 4 (1,709,412) -47.7% (1,486,760) -45.1% EBIT 939,237 26.2% 889,781 27.0% Interest and other financial 5 (17,357) -0.5% (7,131) -0.2% income/(expenses), net Dividends received from third parties 1,016 - 966 - Income before taxes 922,896 25.7% 883,616 26.8% Taxation 6 (285,091) -7.9% (250,339) -7.6% Net income from continuing operations 637,805 17.8% 633,277 19.2% Net income for the period 637,805 17.8% 633,277 19.2% Net income – Non-controlling interests 10,020 0.3% 7,596 0.2% Net income – Group 627,785 17.5% 625,681 19.0% Depreciation, amortization and 203,949 5.7% 162,688 4.9% impairment EBITDA 1,143,186 31.9% 1,052,469 31.9% Basic and diluted earnings per share 7 0.245 0.245 (in Euro per share) 5