Prada SpA (OTCPK:PRDSY) Q4 2020 Earnings Conference Call March 10, 2021 8:30 AM ET Company Participants Alessandra Cozzani - CFO, IR Director & Executive Director Patrizio Bertelli - CEO & Executive Director Lorenzo Bertelli - Head, Group Marketing & Communication Carlo Mazzi - Chairman Conference Call Participants Susy Tibaldi - UBS Thomas Chauvet - Citi Luca Solca - Bernstein Thierry Cota - Societé Generale Operator Ladies and gentlemen, thank you for standing-by and welcome to the PradaSpA Full Year 2020 ...

FY 2020 Results Presentation Milan, March 10th 2021 Agenda Patrizio Bertelli – CEO Business update Alessandra Cozzani – CFO FY-2020 Financial Review Lorenzo Bertelli – Head of Marketing and Head of CSR Marketing and Communication update Carlo Mazzi – Chairman Outlook Q&A Session FY 2020 Results Presentation March 10th 2021 2 Agenda Patrizio Bertelli – CEO Business update Alessandra Cozzani – CFO FY 2020 Financial Review Lorenzo Bertelli – Head of Marketing and Head of CSR Marketing and Communication update ...

Revenue Performance - PRADA Group reported a significant decline in revenue, with a decrease of 40% year-over-year for the first half of 2020[1]. - The company experienced a drop in retail sales by 50% in the second quarter compared to the previous year, primarily due to the impact of COVID-19[1]. - PRADA reported a significant increase in retail sales, with a growth rate of 20% year-over-year in the last quarter[8]. - Net revenue for the six months ended June 30, 2020, was €937,657 thousand, a decrease of 40.3% compared to €1,570,123 thousand for the same period in 2019[13]. - Net revenue for the six months ended June 30, 2020, was €925.3 million, a decrease from €1,546.4 million for the same period in 2019, representing a decline of approximately 40.2%[165]. E-commerce and Digital Strategy - E-commerce sales surged, increasing by 80% in the first half of 2020, indicating a shift in consumer purchasing behavior[1]. - PRADA plans to expand its digital presence and enhance online shopping experiences as part of its future strategy[1]. - PRADA's e-commerce sales grew by 30%, contributing to 25% of total sales, highlighting a strong digital strategy[8]. - E-commerce sales increased more than 100% compared to the first half of 2019, despite a low absolute base[21]. Financial Outlook and Management - PRADA has outlined a cautious outlook for the second half of 2020, expecting a gradual recovery in sales as markets reopen[1]. - The company plans to focus on cost management and operational efficiency in response to the challenging market conditions[12]. - The company is investing in new technologies to improve supply chain efficiency and customer engagement[1]. - The company plans to invest €100 million in new product development and technology enhancements over the next two years[8]. - The company believes that growth will gradually resume by the end of 2020 as the store network fully reopens, with strong local consumer response confirming demand for its products[51]. Losses and Financial Performance - Operating loss (EBIT) for the period was €(195,797) thousand, compared to an operating income of €150,474 thousand in the prior year[13]. - Net loss attributable to the group was €(180,332) thousand, a significant decline from a net income of €154,894 thousand in the same period last year[13]. - The company reported a net loss of €183,515,000 for the six months ended June 30, 2020, compared to a net income of €154,431,000 for the same period in 2019[80]. - The company reported a net loss of €180.3 million for the period, compared to a net income of €255.8 million for the same period in the previous year[158]. Cost Management and Operational Efficiency - The company incurred direct costs of €112,375 thousand related to store closures during the lockdown period[13]. - Operating expenses totaled €856.1 million for the six months ended June 30, 2020, representing 91.3% of net sales, up from 62.1% in the same period of 2019[167]. - The company is currently unable to foresee trade developments for the coming months due to uncertainty, but if recent retail trends continue positively, it may return to profitability in the second half of 2020[51]. Sustainability and Innovation - The company is focusing on sustainable practices and aims to launch new eco-friendly product lines in the upcoming quarters[1]. - The luxury brand is focusing on sustainability, with 40% of new products made from eco-friendly materials[8]. - PRADA's management emphasized the importance of innovation and creativity in driving future growth[1]. Market Position and Acquisitions - PRADA is exploring potential acquisitions to strengthen its market position and diversify its product offerings[1]. - The company is exploring potential acquisitions to enhance its product portfolio and market reach[8]. - The brand is committed to maintaining its luxury positioning while adapting to changing consumer preferences[1]. Employee and Management Changes - The average number of employees remained stable at 13,669, compared to 13,618 in the previous year[14]. - New appointments in key management positions were made to strengthen long-term growth strategies despite the ongoing challenges[18]. Financial Position and Liquidity - The group secured a €300 million revolving credit facility for 24 months to ensure liquidity, increasing available credit to €748 million[18]. - The company believes its liquidity and credit lines, along with operational and financing activities, are sufficient to meet operational working capital, investment activities, timely debt repayment, and dividend payments[45]. - The company had an unused credit line of €748 million as of June 30, 2020, providing additional financial flexibility[36]. Risk Management and Compliance - The company manages credit risk primarily through monitoring customer reliability and solvency, as well as through insurance agreements[44]. - The company has implemented a tax risk management system that is continuously monitored to mitigate risks arising from regulatory non-compliance or misinterpretation of laws[45]. - The company emphasizes the importance of maintaining compliance with complex regulatory environments to mitigate legal and regulatory risks[46]. Corporate Governance - The company’s management is committed to maintaining high standards of corporate governance, aligning with applicable regulations in Italy and the Hong Kong Stock Exchange[53]. - The Audit Committee held three meetings during the review period with a 100% attendance rate, focusing on financial reporting and risk management[56]. Shareholder Information - As of June 30, 2020, Miuccia Prada Bianchi and Patrizio Bertelli each hold 2,046,470,760 shares, representing an 80% ownership stake in the company[67]. - PRADA Holding S.p.A. is the controlling shareholder, owning approximately 80% of the issued share capital[75]. Market Trends and Consumer Behavior - The luxury goods market is influenced by consumer preferences and macroeconomic conditions, which may negatively impact the group's operations and financial status[39]. - The success of the group relies on its ability to predict fashion trends and consumer preferences, supported by a team of approximately 1,000 professionals in design and development[40].

Financial Performance - The net sales for the year ended December 31, 2019, were €1,780,423 thousand, an increase of 5% from €1,691,476 thousand in the previous year[12]. - The gross profit margin remained stable at 53.8%, while operating expenses as a percentage of net sales increased, leading to a slight decline in EBIT from 11.8% to 11.3%[13]. - The net income for the period was €249,027 thousand, representing a 13.7% increase compared to €708,548 thousand in the previous year[12]. - The EBITDA for the year was €307,897 thousand, reflecting a growth of 16.8% from €265,084 thousand in the previous year[12]. - The total equity as of December 31, 2019, was €2,016,425 thousand, compared to €1,914,992 thousand in the previous year[15]. - The debt-to-equity ratio increased to 7.6% from 6.6% in the previous year[15]. - The company paid dividends totaling €153.5 million during the year[17]. - The company reported a net income of €249,027,388 for 2019, a significant decrease from €708,548,197 in 2018, representing a decline of approximately 64.9%[72][73]. - The company’s equity increased to €2,016,425,204 in 2019 from €1,914,992,188 in 2018, reflecting a growth of about 5.3%[71]. Strategic Initiatives - The company achieved significant results in its long-term growth objectives, driven by global consumer demand for innovation and excellence[10]. - The decision to eliminate discount sales in direct-operated stores and rigorously select wholesale buyers improved product value and pricing control, leading to positive retail growth[10]. - The launch of the "Prada Invites" and "Prada for adidas Limited Edition" capsule collections highlighted the symbolic value of products and established important business alliances[10]. - The company invested in enhancing its brand image and store network, acquiring Fratelli Prada in Milan to gain full control over its global retail network[11]. - Significant progress was made in sustainability, with the introduction of the "Prada Re-Nylon" capsule collection and a commitment to reduce the fashion industry's environmental footprint[11]. - The company focused on consumer interaction through a comprehensive communication plan, ensuring broad coverage of product and brand messaging[10]. - New versions of "Prada Mode" were launched in Hong Kong and London, promoting contemporary culture through a mobile club concept[10]. - The company established key partnerships with leading technology suppliers to assist in marketing and procurement processes[11]. Financial Position and Cash Flow - The net working capital increased to €230,738 thousand, up by €52,892 thousand from €178,846 thousand in the previous year[17]. - The net financial position as of December 31, 2019, was a deficit of €189,116 thousand, compared to a deficit of €136,131 thousand in the previous year[17]. - Cash flow from operating activities was €201 million, while cash used in investing activities was €63 million[21]. - The company has a total available credit line of €574 million as of December 31, 2019, compared to €497 million at the end of 2018[20]. - The company anticipates a negative impact on its performance for the current year due to the COVID-19 outbreak, despite a positive start to 2020[23]. Governance and Board Structure - The board consists of nine directors, including four executive directors, one non-executive director, and four independent non-executive directors[29]. - The board held four meetings during the review period, with an average attendance rate of 83.3%[30]. - The audit committee and nomination committee had attendance rates of 94.4% and 100%, respectively[33]. - The board is responsible for the overall strategy and financial performance of the company, including major transactions and acquisitions[34]. - Independent non-executive directors have confirmed their independence according to applicable listing rules[36]. - The company has arranged appropriate liability insurance for directors, which is reviewed annually[37]. - Directors undergo comprehensive training upon appointment to understand the company's business and their responsibilities[38]. - The chairman is Carlo Mazzi, while Miuccia Prada Bianchi and Patrizio Bertelli serve as co-CEOs, with the roles being independent[39]. Audit and Compliance - The audit committee held six meetings during the review period with an attendance rate of 94.4% to review significant internal and external audit results[44]. - The total fees for the auditor Deloitte & Touche S.p.A. for the period ending December 31, 2019, amounted to €714,000, including €500,000 for audit services and €214,000 for other consulting services[46]. - The audit committee's responsibilities include providing independent opinions on the effectiveness of the company's financial reporting procedures and internal control systems[44]. - The company reviews compliance with governance codes and monitors internal control and risk management systems through the audit committee[41]. - The board has established various committees, including the audit committee, compensation committee, and nomination committee, with independent non-executive directors as chairs[42]. Risk Management - The company faces financial risks such as exchange rate and interest rate fluctuations due to its international operations, and it employs hedging contracts to manage these risks[117]. - The fair value of hedging derivatives for interest rate risk is recorded in equity, net of tax effects[119]. - The company’s risk management activities include derivative contracts to mitigate financial risks arising from currency and interest rate fluctuations[134]. - The company has entered into contracts to hedge anticipated future trade cash flows totaling €763,629 thousand as of December 31, 2018, with a significant portion in foreign currencies such as USD and CNY[138]. - The company has established interest rate swaps to hedge against interest rate fluctuations related to loans, with agreements in place as of December 31, 2019[141]. Investments and Assets - The company’s total financial assets amounted to €1,363,325 thousand as of December 31, 2019, with derivative financial instruments valued at €10,854 thousand[145]. - The total value of property, plant, and equipment as of December 31, 2019, was €805,677 thousand, up from €766,699 thousand in 2018, indicating a growth of 5.1%[168]. - The total intangible assets' net book value as of December 31, 2019, was €194.6 million, with significant components including trademarks and software[172]. - The company’s investment in Kenon Limited remained stable at €99,478 thousand, with no changes reported during the year[177]. - The company conducted impairment tests on investments showing signs of impairment, with a discount rate (WACC) used ranging from 4.2% to 12.6% for the year ended December 31, 2019[179]. COVID-19 Impact - The company noted that the impact of COVID-19 was not included in the business plan forecasts, as it occurred after the reporting date, indicating potential future risks[179]. - The impact of the COVID-19 pandemic on the financial statements remains uncertain and will continue to be monitored throughout the fiscal year[121].

Financial Performance - Prada Group reported a significant increase in sales, achieving a total revenue of €3.2 billion, representing a growth of 8% compared to the previous year[1]. - The company reported a net profit of €400 million, reflecting a profit margin of 12.5%, which is an improvement from the previous year's margin of 11%[1]. - PRADA reported a significant increase in revenue, achieving €3.2 billion in the first half of 2023, representing a 15% year-over-year growth[68]. - The company expects a continued positive trend, projecting a revenue growth of 10-12% for the full year 2024[68]. - The gross margin improved to 70%, up from 68% in the previous year, reflecting better cost management and pricing strategies[68]. - The net income for 2019 was €257,724 thousand, an increase of 31.1% from €196,384 thousand in 2018[111]. - Total net sales amounted to €3,183,339, reflecting a 2.8% growth year-over-year[79]. Retail Expansion - The company noted a 12% increase in retail sales, driven by strong performance in Asia and the Americas, with Asia accounting for 40% of total sales[1]. - Prada Group plans to expand its retail footprint by opening 30 new stores globally in the upcoming year, focusing on key markets such as China and the United States[1]. - PRADA plans to expand its retail footprint by opening 30 new stores globally in 2024, focusing on key markets such as the Middle East and North America[68]. - Prada operates 641 directly operated stores in prime locations of major international shopping centers, contributing to 82.8% of total sales from retail channels[36]. - The number of stores increased to 641, with 22 new openings and 21 closures, including 4 stores acquired in Milan[81]. E-commerce and Digital Strategy - Prada Group's e-commerce sales grew by 25%, highlighting the increasing importance of online channels in their overall strategy[1]. - The company reported a 12% increase in e-commerce sales, highlighting the growing importance of online channels[68]. - The company integrates its direct stores with e-commerce strategies to monitor sales performance in different markets in real-time[36]. - Prada has established significant partnerships with major online retailers to enhance its digital presence and e-commerce capabilities[42]. Sustainability Initiatives - The company is investing in new product lines, including a sustainable collection that aims to reduce environmental impact, with a target of 20% of total sales coming from sustainable products by 2025[1]. - PRADA has successfully launched a new sustainable product line, which accounted for 5% of total sales in the first half of 2023[68]. - The company emphasized its commitment to sustainability, aiming for 100% of its products to be made from sustainable materials by 2025[68]. - The Prada Re-Nylon campaign aims to fully replace virgin nylon with regenerated nylon, reflecting the company's commitment to a better environment[50]. - The group has made significant progress in sustainability, including the introduction of the "Prada Re-Nylon" capsule collection and signing the Fashion Pact to reduce the industry's environmental footprint[76]. Innovation and Product Development - The company is investing €150 million in new product development and technology enhancements to improve customer experience and operational efficiency[68]. - Prada Group is committed to innovation, with plans to invest €100 million in technology and digital transformation over the next three years[1]. - Creativity is at the core of the manufacturing process, with Miuccia Prada's innovative ideas and social awareness driving the design culture within the company[34]. - The launch of the "Prada Invites" and "Prada for adidas Limited Edition" capsule collections highlighted the brand's commitment to innovation and collaboration[75]. Human Resources and Workforce - Prada has a workforce of 13,988 employees from 105 countries, with women making up 62% of the total[43]. - The average tenure of production staff at Prada is 20 years, ensuring high levels of specialization and knowledge accumulation[35]. - The company has implemented a supplier audit program to control risks related to human rights violations and poor working conditions[45]. - Prada's retail training programs focus on enhancing professional skills and product knowledge, contributing to customer service excellence[44]. Corporate Governance and Compliance - The board of directors is responsible for preparing the consolidated financial statements, ensuring they reflect the group's business status fairly and accurately[177]. - The independent auditor, Deloitte & Touche S.p.A., has been reappointed for a term of three fiscal years, ensuring compliance with Italian law regarding auditor appointments[178]. - The company has a legal and regulatory compliance framework in place to mitigate risks associated with its global operations[140]. - The group participates in the OECD's International Compliance Assurance Program (ICAP), sharing extensive data with tax authorities in Italy, the US, the UK, Canada, and Australia[105]. Cultural and Artistic Engagement - The Fondazione Prada continues to host diverse cultural events and exhibitions, showcasing the company's commitment to art and culture[55]. - Recent projects include the restoration of a historic residence in Shanghai, transforming it into a multifunctional cultural venue[51]. - Prada's ongoing cultural initiatives include educational programs and workshops, furthering its engagement with the arts community[55]. - The company produced 18 short films titled "Miu Miu Women's Stories" by various renowned directors as of December 2019, showcasing its commitment to contemporary art[61]. Financial Management and Risk - The company faces economic risks that could negatively impact its operations, performance, cash flow, and financial condition due to global macroeconomic factors[97]. - The liquidity risk management strategy includes maintaining sufficient cash and credit lines to meet operational needs, repay loans, and pay dividends on schedule[103]. - The group manages credit risk primarily related to trade receivables and current assets, monitoring customer reliability and solvency through insurance agreements[103]. - The company has implemented a long-term incentive plan to retain key personnel essential for its expansion in the fashion and luxury goods sector[101].

FY 2019 Results Presentation Milan, March 18th 2020 improvement in full price sales in H2 driven by a combination of brand investment and operational Successful reception of all collections in RTW, leather Business overview Transformation plan delivering results Reported Sales up 3% at €3,2bn, including double digit initiatives goods and footwear all driving strong brand momentum Markdowns completely phased out More stringent policies to better control digital platforms Ongoing Wholesale rationalization Inc ...

Financial Performance - PRADA Group reported a significant increase in revenue, achieving €1.5 billion for the first half of 2019, representing a 10% growth compared to the same period last year[2]. - Net revenue for the six months ended June 30, 2019, was €1,570,123 thousand, an increase from €1,535,326 thousand for the same period in 2018, representing a growth of 2.3%[13]. - The net income attributable to the group for the first half of 2019 was €154,894 thousand, a significant increase from €99,457 thousand in the prior year, reflecting a growth of 55.8%[14]. - The company reported a net income of €154,431 thousand for the six months ended June 30, 2019, compared to €98,953 thousand for the same period in 2018, representing a 56.3% increase[48]. - The group reported a net income of €154,893,688 for the six months ended June 30, 2019, compared to €105,668,240 for the same period in 2018, marking an increase of 46.5%[172]. - The company reported a net income of €205,443 thousand, down from €217,721 thousand in 2018, showing a decrease of about 5.9%[189]. Sales and Market Performance - The company experienced a 12% increase in retail sales, driven by strong performance in Asia and the Americas, with Asia accounting for 40% of total sales[2]. - PRADA's e-commerce sales grew by 25%, now representing 15% of total sales, indicating a strong shift towards online retail[2]. - Retail sales in Europe reached €598,364 thousand, accounting for 38.7% of total sales, with a 6.3% increase from €563,003 thousand in the previous year[18]. - The Asia-Pacific region saw a decline in sales, totaling €498,578 thousand, which is a 4.0% decrease from €519,594 thousand in the prior year, representing 32.2% of total sales[18]. - The net sales in the Asia-Pacific market decreased by 4% at current exchange rates and 6.4% at constant exchange rates, with Greater China generating net sales of €336.6 million, down 2.3% at current rates and 5.1% at constant rates[21]. - The net sales in Europe increased by 6.3% at current exchange rates and 6.5% at constant exchange rates, with wholesale sales growth contributing positively to the region[21]. Cost and Margin Analysis - PRADA's gross margin improved to 70%, up from 68% in the previous year, reflecting better cost management and pricing strategies[2]. - The gross margin slightly narrowed from 72% to 71.7%, impacted by sales mix dilution, although this was mitigated by a better ratio of full-price to discounted sales[25]. - The cost of sales represented 28.3% of net revenue, compared to 28.0% in the previous year, indicating a slight increase in cost efficiency[13]. - Operating expenses increased to €975,275 thousand, accounting for 62.1% of net revenue, compared to 61.6% in the prior year[77]. Strategic Initiatives and Investments - The company plans to expand its retail network by opening 20 new stores globally in 2020, focusing on key markets such as China and the United States[2]. - PRADA is investing in new product lines, including a sustainable collection that is expected to contribute an additional €100 million in revenue by the end of 2020[2]. - The company has allocated €50 million for research and development in innovative materials and technologies to enhance product offerings[2]. - The company is exploring potential acquisitions to enhance its market position and diversify its product portfolio[2]. - The company is focused on sustainability and ethical practices in its production processes, aligning with global consumer trends towards responsible luxury[8]. Operational and Workforce Insights - The average number of employees increased to 13,618 from 13,044 year-over-year, indicating a growth in workforce[14]. - The company operates a comprehensive distribution and retail network across multiple regions, including the Middle East, Europe, Asia, and the Americas, with 100% ownership in many subsidiaries[8]. - The company has established a diverse portfolio of brands and services, including retail, production, and logistics, enhancing its operational capabilities[8]. Financial Position and Cash Flow - The net financial position showed a deficit of €506,634 thousand, worsening from a deficit of €313,505 thousand at the end of 2018[15]. - Operating cash flow for the first half of 2019 was €137,334 thousand, down from €180,018 thousand in the same period of 2018[14]. - Cash and cash equivalents totaled €327.5 million as of June 30, 2019, down from €599.8 million at the end of 2018[32]. - The total lease liabilities decreased from €2,449 million on January 1, 2019, to €2,419 million on June 30, 2019, due to payments made during the period[33]. Risk Management and Compliance - The group faces global macroeconomic risks that could negatively impact luxury goods consumption patterns and, consequently, its operations, performance, cash flow, and financial condition[35]. - The company is actively managing foreign exchange risks through derivative contracts to hedge against currency fluctuations affecting revenues and expenses[45]. - The company has established a tax risk management system that allows for open communication with Italian tax authorities, helping to minimize business risks[42]. - The company faces various legal and regulatory risks due to its complex operating environment, including compliance with securities listing rules and occupational health and safety regulations[44]. Corporate Governance and Shareholder Information - The company proposed a final dividend of €0.06 per share for the fiscal year 2018, totaling €153,529,440, which was approved by shareholders on April 30, 2019[62]. - As of June 30, 2019, Prada Holding S.p.A. holds approximately 80% of the company's issued share capital, representing a significant controlling interest[73]. - The company has established a statutory auditor committee to oversee compliance with applicable laws and regulations[60]. - The board of directors has adopted a dividend policy aimed at providing sustainable dividend flows while considering cash flow and profitability[62].

PRADA MILANO DAL 1913 H1 2019 Results Presentation Milan, August 1st 2019 Agenda Presentation 14:00 – 14:30 Alessandra Cozzani – CFO • H1-2019 Financial Review Patrizio Bertelli – CEO • Overview and Business update Lorenzo Bertelli – Head of Marketing and Communication • Marketing and Communication update Carlo Mazzi – Chairman • Prada Group CSR • Outlook Q&A Session 14:30 – 15:30 H1-2019 Results Presentation – August 1st 2019 1 H1 2019 Financial Review Alessandra Cozzani CFO H1-2019 Results Presentation – ...

Prada SpA (OTCPK:PRDSY) Q2 2020 Earnings Conference Call August 1, 2019 8:30 AM ET Company Participants Alessandra Cozzani - CFO, IR Director & Executive Director Patrizio Bertelli - CEO & Executive Director Lorenzo Bertelli - Head, Group Marketing & Communication Carlo Mazzi - Chairman Conference Call Participants Silky Agrawal - Citigroup Erwan Rambourg - HSBC Luca Solca - Sanford C. Bernstein & Co. Nicky Ito - MainFirst Bank Melanie Flouquet - JPMorgan Chase & Co. Elena Mariani - Morgan Stanley Rogerio F ...

Financial Performance - In 2018, Prada achieved a sales turnaround, reflecting a revenue growth that had not been seen in several years, indicating the effectiveness of its mid-term plans to enhance sales and profitability [11]. - The net revenue for the year ended December 31, 2018, was €1,735 million, an increase of 16% compared to €1,499 million in the previous period [13]. - EBITDA for the year was €265 million, a decrease of 4.4% from the previous year, primarily due to increased operating expenses [14]. - The company's gross profit margin for the year was 53.8%, down from 55.4% in the previous year [13]. - The return on equity for the year was 49.91%, significantly higher than 10.86% in the previous year [13]. - The company's net income for the year was €709 million, representing a 40.8% increase from €162 million in the previous year [13]. - Total assets increased to €3,709,780,665 in 2018, up from €3,274,876,579 in 2017, representing a growth of approximately 13.3% [69]. - The comprehensive income for 2018 was €695,445,000, compared to €158,876,000 in 2017, reflecting a significant increase of 338.5% [71]. Investments and Strategic Initiatives - Investments made during the year included enhancements to manufacturing and logistics structures in Italy, as well as improvements to central and regional offices [12]. - A broad digital transformation strategy was implemented, benefiting the company in areas such as human resources and corporate compliance [12]. - The company is investing in digital assets to enhance customer experience and improve operational efficiency across marketing, logistics, production, and customer service [23]. - The company is focused on research and development to create innovative products through the exploration of new or improved materials and design concepts [22]. - The company completed the acquisition of the remaining 20% stake in Angelo Marchesi srl on January 11, 2018, and merged three food companies under the Marchesi brand effective April 1, 2018 [120]. - The company increased its ownership in Pelletteria Ennepi Srl from 80% to 90% on December 21, 2018 [121]. Financial Position and Debt Management - The net financial debt as of December 31, 2018, was €136 million, down from €459 million in the previous year [17]. - The debt-to-equity ratio improved to 6.6% from 24.5% in the previous year, indicating a stronger financial position [16]. - Long-term financial payables decreased by €213 million due to internal loan repayments and reclassification of amounts due within 12 months as short-term payables, partially offset by €100 million in new long-term loans [21]. - The company has a total available credit line of €497 million as of the reporting date, down from €523 million at the end of 2017 [21]. - The company had an unutilized cash credit line of €497 million as of December 31, 2018, indicating strong liquidity management [155]. Corporate Governance and Board Activities - The company has adopted a board diversity policy to support strategic goals and development, considering various factors such as gender, age, and professional experience [28]. - The board held four meetings during the review period, with an average attendance rate of 86.1% [29]. - The Audit Committee held eight meetings during the review period with a 100% attendance rate, focusing on significant internal and external audit results and financial matters [44]. - The Board is responsible for establishing appropriate corporate governance policies and ensuring compliance with regulations [42]. - The company has established a supervisory organization in accordance with Italian Legislative Decree No. 231/2001 to enhance governance [43]. Risk Management and Compliance - The company faces financial risks related to currency and interest rate fluctuations, with hedging contracts established to mitigate these risks [116][117]. - The company has established derivative contracts to hedge against financial risks arising from currency and interest rate fluctuations [135]. - The company has adopted policies to ensure the confidentiality of potential inside information until timely disclosure is made [57]. - The board is responsible for the ongoing monitoring and review of the effectiveness of risk management and internal control systems [55]. Shareholder Engagement and Communication - The company maintains high transparency with shareholders, regularly engaging with institutional investors, fund managers, analysts, and financial media [63]. - The company has implemented measures to improve communication efficiency with shareholders, allowing them to choose the language and method of receiving company communications [67]. - The company’s corporate website serves as a platform for timely electronic dissemination of financial and non-financial information to stakeholders [63]. Accounting Policies and Financial Reporting - The company adopted IFRS 9 for expected loss provisions, resulting in an initial allowance of €4,723 thousand for third parties and internal calculations [127]. - The adoption of IFRS 15 resulted in an increase in current liabilities as of December 31, 2017, with a corresponding new inventory item for "returned assets" amounting to €26 million [85]. - The company recognizes impairment provisions for slow-moving and obsolete inventory, as well as for inventory valued at lower than cost [94]. - The company recognizes tax provisions based on actual estimated tax expenses at the applicable rates and laws in effect at the reporting date [114]. Employee Benefits and Compensation - The total employee benefits as of December 31, 2018, were €26.713 million, down from €30.549 million in 2017, indicating a decrease of approximately 12% [199]. - The post-employment benefits recognized as of December 31, 2018, were €18.889 million, reflecting a decrease from €20.480 million in 2017 [199]. - The average duration of the defined benefit plan was 10.4 years as of December 31, 2018, compared to 10.8 years in 2017 [200]. Market Position and Brand Strategy - The company focused on retaining brand uniqueness while modifying promotional policies for more effective product positioning [11]. - The nylon product line was revitalized, becoming a highlight of the Spring/Summer 2018 collection and a key focus of a major promotional campaign [11]. - Sponsorship of the Luna Rossa team in the America's Cup significantly increased brand exposure, with Prada also serving as the title and special sponsor for the event [12]. - The strategic decision-making for product lines increasingly emphasized the importance of creativity and appealing to the tastes of the new generation [11].