PRADA(HK:01913)2020-04-22 11:34Financial 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].