2016 Social Responsibility Report

(Hong Kong Stock Code: 1913)

INDEXLETTER TO THE STAKEHOLDERS 3

� THE pRADA GROup 4 �.� History 4 �.� 2016highlights 9 �.� Valuechain 9 �.� Ethics,governance,complianceandriskmanagement 13

� STRIVING FOR EXCELLENCE 16 �.� Know-how 16 �.� Customerexperience 28

� WORKpLACE ETHICS 32 �.� Theworkforce 32 �.� Employeerelations 33 �.� Diversityandequalopportunity 34 �.� Workersafetythroughoutthesupplychain 35

� THE pRADA uNIVERSE 37 �.� FondazionePrada 37 �.� GruppoPradaandFAI 39 �.� Otherspecialprojects 40

� AT ONE WITH THE COMMuNITY 41 �.� Environmentalprotection 41 �.� Preservationofthelocalterritory 43

� NOTES ON THE METHODOLOGY 46 �.� Thematerialaspectsidentification 46 �.� Thereportingprocess 49 � GRI CONTENT INDEX FOR IN ACCORDANCE CORE OpTION 50

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LETTERTOTHESTAKEHOLDERS

Contemporary society finds itself facing profound, rapid changes in every part oftheworld,where theboundariesofnationsandcultures,whichonceconstitutedaprotectivebarrier,havebeenknockeddownbynewtechnologies.

As inallgreat revolutionsthroughouthistory,suchtransformationsaccentuate thecontradictionsoftoday'sworld,withthesocioeconomicmodelsofthepastcenturybeingundermined,wideninginequality,erodingvaluesthatarebecomingdistortedtothepointofinstigatingviolentconflict.

Everyone,andespeciallythoseresponsibleforguidinglargeorganizations,inwhichweincludethePradaGroup,hasthedutytoquestionthevalueofone'sworkintermsofpurposeandprospective.Nolessimportant,apositiveresultofouradvancementisthewidespread,sharedawarenessofsustainability,whichembracesallaspectsofsociety:economic,politicalandethical.

Allshouldprovideacontribution, totheextentpossible: thePradaGroupinterpretsthis responsibility by aiming to continue to evolve itswork in terms of increasingcooperativeness,usingatbest itstalents:creativity,understoodasanexpressionofthe harmony underlying beauty, quality, innovation and passion transfused by allthosewhowork,alongwiththefruitsoftheirlabor.

In 2016 the Prada Group embarked onmany business initiatives, where importantinvestmentswerededicated toquality,strengtheningcontrolsover thevaluechainandreductionofitsenvironmentalimpact.

TheGroupinvestedinthegrowthpotentialofitsresources,afundamentalsourceofinnovationandexcellence,whiledesigningnewwaystodevelopprofessionalskills.

Thetraditionalinclinationtowardtheworldofartcontinuestorepresenttheprimarysource of inspiration; at the same time the Group considers it fundamental tocontributetothepromotionofvariousartisticexpressions,dedicatingcommitmentand resources to such purpose. It renewed its support to the Fondazione Prada,whichusedtheresourcesmadeavailablefornewinitiativesinMilanandVenice,ofinternationalrelevance.Importantculturalprojectswerefinanced,mostimportantlytocompletetherestorationoftheLastSupperbyGiorgioVasari,whichreturnedtoitsoriginalsplendorforpublicviewinginFlorence.

In perspective, the Prada Group intends to continue along its growth path to offeritsemployees theachievementof theiraspirations in theworkplace, itscustomersproductsofexcellentquality,andthecommunityacontributionequalingatleastthatwhichPradahasreceivedfromcivilsociety.

Carlo MazziMilan,June29,2017 Chairman of PRADA S.p.A.

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1.THEPRADAGROUP

ThePradaGroup is one of theworld leaders inthe luxury goods sector where it operateswiththePrada,MiuMiu,Church’sandCarShoebrandsin the design, production and distribution ofluxuryhandbags,leathergoods,footwear,apparelandaccessories.TheGroupalsooperates intheeyewearandfragranceindustriesunderspecificlicensing agreements stipulated with industryleaders,andwiththerecentacquisition(2014)ofPasticceriaMarchesi1824, ithasmadeitsentryinto the food industry,where it is positioned atthehighestlevelsofquality.

At January 31, 2017, products are sold in 70countries worldwide through 620 DirectlyOperatedStores(DOS)andaselectednetworkofluxurydepartmentstores, independent retailersandfranchisestores.

�.� HISTORY

ThePradabranddatesbackto thebeginningofthe last century. In 1913, Mario Prada opened aluxurystoreintheGalleriaVittorioEmanueleIIinMilan,sellingleatherhandbags,travellingtrunks,beauty cases, refined luxury accessories, jewelsand articles of value. Thanks to its exclusivelydesignedgoods,handcraftedusingfinematerialsand sophisticated techniques, Prada rapidlybecameareferencepointforaristocracyandthemostelegantmembersofthehaute-bourgeoisieinEurope.

In 1919,Pradabecameanofficialsupplier to theItalianRoyalFamily.Sincethen,Pradahasbeenable todisplaytheHouseofSavoycoatofarmsandknottedropedesignonitstrademarklogo.

Overtheyears,thePradanamegainedincreasingrenownandprestige.

5

TheGroupsawaturningpointinthedevelopmentofitsactivitiesattheendoftheSeventies,whenMiucciaPrada,MarioPrada’sgranddaughter,launchedapartnershipwithTuscanbusinessmanPatrizioBertelli.Thispartnershipcombinedcreativityandbusinessideaslayingthefoundationsoftheinternationalexpansionthatwastocome.PatrizioBertellibrokenewgroundintheluxurygoodssector,introducingabusinessmodelinwhichhekeptdirect,internalcontroloverallprocesses,applyingexcellentqualitycriteriaacrosstheentireproductioncycle.MiucciaPrada'screativetalentandavant-gardeapproachattractedtheattentionoftheglobalfashionindustry,whileherabilitytolookattheworldfromanunconventionalvantagepointallowedhernotonlytoanticipatebut,quiteoften,tosetnewtrends.

In 1977,PatrizioBertelliconsolidated theproductionresources thathehadbuiltupovertheprevioustenyearsintheleathergoodssegmentandobtainedanexclusivelicensefromMiucciaPradatoproduceanddistributeleathergoodsbearingthePradabrandname.Inthefollowingyears,theactivitiesofthetwofamiliesweregraduallybroughttogetherwithinasingleGroup.

In 1983,thePradafamilyopenedasecondstoreintheprestigiousViadellaSpigainMilan,oneofEurope’skeyshoppingdestinations.Thenewstoreshowcasedthenewbrandimageasitblendedtraditionalelementswithamodernarchitecturalsetting:arevolutionandatruebenchmarkforluxuryretail.

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Commencingin1986,newstoreswereopenedinNewYorkandMadrid,followedbyLondon,ParisandTokyo.

In response to the growingappreciation for theofferofPradaproducts, thewomen’s rangewasextendedfromleathergoodsto includethefirstfootwearcollection in1979andthefirstapparelcollectionaspresentedinMilanin1988.

In 1993 Prada made its debut in the men’ssegmentwithitsfirstmen’sapparelandfootwearcollection. That same year, Miuccia Prada’screativeinspirationledtotheestablishmentofanewbrand―MiuMiu―designedforwomenwhoaretrendy,sophisticatedandparticularlyfashion-forwardandawareofavant-garde.MiuMiunowoffers women’s ready-to-wear, bags, accessories,footwear, eyewear and fragrances and is animportantcomponentoftheGroup’ssales.

Also in 1993, alongside their entrepreneurialactivity, Miuccia Prada and Patrizio Bertellicreated “Milano Prada Arte”, then become“Fondazione Prada”, to pursue their interests inartandcultureingeneral.

In 1997,inspiredbyhispassionforsports,PatrizioBertelli created the “Prada Challenge for theAmerica’sCup2000”sailingteam.Prada’sleisureproducts,withthedistinctive“LineaRossa”("redline"),werealsolaunchedin1997.

In 1999, the prestigious Church’s brand,establishedin1873inNorthampton,becamepartofthePradaGroup;theinvestmentwasinitiallysharedwithaprivateequityfirm,andthenPradacompletedtheacquisitionin2007.

7

Thebrand, specialized inhandmadehigh-end footwear, is aworldwide recognizedsymboloftopqualityBritishtraditionandsophisticatedelegance.

In 2001, the Prada “Epicenter” store, designed in collaborationwith RemKoolhaas,openedonBroadway,NewYork.Thiswas thefirst store of the “Epicenters” projectwhosepurposewastorethinktheshoppingconceptwithanewapproachandtotryoutinnovativeinteractionswithcustomers.Asecond“Epicenter”storewasopenedinAoyama,Tokyo,followedbyathird,onRodeoDrive,BeverlyHillsin2004.

During thesameyear,PradaacquiredcontrolofCarShoe,anhistoric Italianbrandrenownedforitsexclusivedrivingmoccasins.

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In 2003, Prada entered into a licensing agreement, then renewed in 2012,with theItalian eyewearmanufacturer Luxottica,world leader in the eyewear industry. TheLuxotticaGroupcurrentlyproducesanddistributeseyewear for thePradaandMiuMiu brands. That same year, the Group also began its partnership with SpanishcosmeticsmanufacturerPuigBeauty&FashionGroupandthefirstfragrance,Amber,waslaunchedattheendof2004.

In 2006,MiuMiuorganizeditsfirstfashionshowinParistobetterrepresentitsownidentity.

ThefirstPradaPhonebyLGwaslaunchedinMarch2007;itwastheworld’sfirsttouchscreencellphone.Thesuccessfulpartnershipwasrenewedin2008andin2011withtwofurtherreleases.

ThePradae-storefirstwentlivein2010whileMiuMiuwaslaunchedin2011.

OnJune24,2011,Pradaspawassuccessfully listedontheMainBoardof theHongKongStockExchange.

InMarch2014,PradaspaannouncedtheacquisitionofcontrolofthecompanyAngeloMarchesisrl,ownerofthehistoricalMilanesepatisseriefoundedin1824,thusmarkingtheentryintothefoodsegment.

In 2015,thePradaGroupcompletedtheacquisitionoftheFrenchTannerieMégisserieHervy to further strengthen its integrated production know-how. That same year,thePradaGroupandCotyInc.launchedthefirstMiuMiufragrance.ThecommercialdevelopmentoftheMarchesibrandbegantotakeshapeinSeptemberwiththeopeningofthefirstpatisserieinviaMontenapoleone,Milan.

2016featuredextensivemanufacturinginvestmentsleadingtothecompletionoftheScandiccileatherproductionsiteandtotherenovationofseveralfactoriesbetweenTuscanyandUmbria,Italy.ThefirstconstructionphaseofthenewlogisticshubforfinishedproductswascompletedinTuscany.Intheretail,thelaunchofnewconceptswereimplementedforPradaandMiuMiustores.

9

BILLION€ 3.2

2016 REVENUES DOS ATJANUARY 31, 2017

620

EMPLOYEES AT JANUARY 31, 2017

12,579RETAIL AND WHOLESALE

DEPARTMENTS

INDUSTRIAL ANDLOGISTIC

RETAIL AND WHOLESALEDEPARTMENTS

• Buying Session• Sales Campaign

CORE BuSINESS

STYLE AND DESIGN

COLLECTIONOF ORDERS

SOuRCING ANDpRODuCTION

• Fashion Show• Showroom Presentation

STYLE AND DESIGN

• Quality Control• Logistic

DISTRIBuTION

18INDUSTRIAL SITES

AT JANUARY 31, 2017

*Economic value distributed to stakeholders in compliance with GRI-G4 indicator EC1 - reference at page 12.

AREA pROCESS

ECONOMIC VALUE DISTRIBUTED TO

STAKEHOLDERS* IN 2016

MILLION€ 252

INVESTMENTSINTO THE COMMUNITY

IN 2016

€ 22MILLION

INVESTMENTSIN 2016

€ 2,926MILLION

�.� value cHaIn

The Group's business model is based on a value creation chain that combinesproductionprocesstechnologieswithartisanalskills.ThankstothisintegrationtheGroup,leveragingonitsstylisticskills,isabletotranslateavant-gardeconceptsintoinnovativeexclusiveproducts,combiningproductioncapacitywithrigorouscontroloverqualitativestandards;atthesametime,Pradadedicatesaspecialcommitmenttowards the development of know-how and the protection of ethical values alongitsentiresupplychain.Thegoalhasalwaysbeentooffercustomersasophisticated,exclusiveandexcellentqualityproductthatexemplifiestheintegrityandprestigeofthePradaworld.

�.� ���� HIgHlIgHTS

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STYle anD DeSIgnCreativityisthefirststepofthevaluecreationprocess.

MiucciaPrada,togetherwithaqualifiedteamofdesigners,hastheabilitytocombineintellectualcuriosity,thepursuitofnewandunconventionalideas,culturalandsocialinterestswithastrongsenseoffashion.ThishasmadeitpossibletoestablishinPradaagenuine“inhouse”designculture,alsobasedonmethodanddiscipline,whichguideseveryoneworkinginthecreativeprocess.

This unique approach enables Prada always to anticipate and, often influence,trends,continuallyexperimentingwithnewdesigns,fabrics,leathersandproductiontechniques.ThisexperimentationandexchangeofideasaretheessentialcomponentsofthedesigncontentfoundineachGroup’sproduct.Thetimespentatthe“drawingboard”andinthe“fittingroom”onresearchandstylisticdevelopmentforthebrandsisfundamentalindefiningeachcollectioninwhichapparel,footwearandaccessoriescomplementoneanotherdefiningaconsistentandrepresentativeimageofthebrands.

Prada’sflairandthestrongappealingpowerexercisedbythetraditionandcompany’sstandards continue to attract talented people fromall over theworldwhowant tosharePrada’sexperienceinmanydifferentcreativefields.Thisresultsinteamsinallaspectsofthecreativeprocess:fromfashiondesigntomanufacture,fromarchitecturetocommunicationandphotography,frominteriordesignofthestorestoalluniqueandspecialprojectsinwhichthePradaGroupisinvolved.

FaSHIOn SHOWS anD cOllecTIOnSThecollectionsareinspiredbythefashionshows,whicharealwaysrichincontentandimpeccablyexecuted,transforminginnovativefashionconceptsintocommercialproducts.

ORDeR cOllecTIOnNewcollectionsareunveiledattheGroup'sbrand-specificshowrooms,whereanumberofpresentationsandanalysesareheldwithin-houseandindependentmerchandisersandbuyersfromallovertheworld.Bysharingtheprocessthatledtotheircreationandproducingvariationsthroughthelensoflocalmarkets,eachconsumerisgivenaccesstotheinnovation,exclusivityandqualitythatarethehallmarksoftheGroup’smerchandise.

SOuRcIngSelecting the right suppliers is fundamental for achieving the highest qualitystandards.Historically,theGrouphasalwaysworkedwiththebestsuppliersofraw

materials,intheirownrightleadersandreferenceintheirsectors.Inmostcases,theseare long-term relationships, initiated followinga rigorous selectionprocess,whosestrictparametersareintendedtoensurethehigheststandardsoftechnical,economicand ethical reliability. ThePradaGrouphas always valued long-term relationshipsbuiltoneverydayinteraction:thesepartnershipsarecrucialnotonlyforthegrowthandimprovementoftheparticipantsbutalsoforsharingasingle,strategicobjectivehingingonquality,excellenceandthecreationofvalueoverthemediumtolong-term.

PRODucTIOnThePradaGroup’s products aremanufactured in the 18 directly owned productionsites (151 in Italy, 1 inEngland, 1 inFranceand1 inRomania), inaddition toawidenetworkofsuppliers.MostoftheGroup’spartnersarecraftartisanworkshopswithextensiveexperienceandastrongsenseoftradition.Theyareprovidedwithcarefullyselectedmaterialsandwithalltechnicalspecifications—frompattern-makingtothedatasheet—neededtoproducefirstthesamplesandthenthemerchandise.The Group’s experienced technicians provide constant support throughout theproductionprocess.

TheproductionsitesrepresentthebestexpressionofthemanufacturingtraditionofthePradaGroup,combiningthepreservationoftraditionalartisanalskillswithstateofthearttechnologicalprocesses,designedtoachieveandmaintainuncompromisedstandardsofexcellence,qualityandworkmanship.

In the framework of the Group's industrial development strategy, aimed atmaintaining and enhancing the most delicate and specific production processesinsidetheCompany,2016hasbeencharacterizedbyanintenseactivitythatledtothecompletionofseveralindustrialre-qualificationprojects,andespeciallyinItalyduringthe year, aimed at strengthening control over the production cycle and improvingenvironmental performance. In addition, the first construction phase of the newlogisticshubforfinishedproductsoftheGroupwascompleted.

cOnTROlTheGroupemploysconsiderableresourcestoensureexcellenceinthequalityofrawmaterialsanditsproductsprocessingmaterials,alsoprotectingthehealthandsafetyoffinalconsumers.Eachindustrialdivisionemploystechniciansthathavethetasktoensuretheachievementofthesegoalsthroughstrictchecksonincomingandoutgoingmaterialsanddailyvisitstoexternalproductionsites.Productandprocesscontrolnotonlyensuresthatstandardsarebeingmet,butcontributestoongoingimprovement.

1 The15industrialsitesdonotinclude3facilitiesthatcoordinateandsupportproduction.

11

PradahassetupanIndustrialComplianceCommitteetoensurethattheproductionanddistributionofitsproductsworldwidealwayscomplieswithapplicablelaws.TheCommitteehas the tasknotonly to respect local legislationbutalso todevelopingstandardsandproceduresthatareoftenmorestringentthanthoserequiredbylaw.Theultimate goal is to be proactivewith respect to the entire system,madeup ofconsumers,manufacturersandtheoutsideenvironmentasawhole.

DISTRIBuTIOnTherecipeofthePradaGroup’ssuccessliesinitsabilitytoinnovatealongeverystepofthevaluechain,includingdistribution.

Overtheyears,theGrouphasexpandeditsdistributionnetworkto620storesoperateddirectly(DOS-DirectlyOperatedStore)inthemostprestigiouslocationofthemaindestinations for international shopping, consistentlywith the image, heritage andexclusivityofeachbrand.ThisextensivenetworkisarealassetfortheGroup,thusprovidinganimportantshowcaseforthelaunchofcollectionsandanessentialvehicleof contactwith the client. The shops transcend their primary functionof sale andarealsoanimportanttoolofcommunication;trueambassadorsofthebrand,conveytheimageofeachbrandinaconsistentanduniqueway.ThedirectlyoperatedstoresalsoallowtheGrouptomonitorinrealtimetheprogressofsalesperformancesinthevariousmarketsforeachbrandandeachsingleproduct.

The wholesale channel (department stores, multi-brand stores, franchisees ande-tailers)providesanumberofadditionalstoresselectedaccordingtotheprestigeofthelocationonthedifferentmarketsandallowsadirectandimmediatecomparisonwith the competitors. In recent years, this channelhas been the subject of carefulreview,aimedatfurtherselectionofthenetworkofshops,greatlyreducedinnumber,soastobemoreconsistentwiththeretailnetworkexpansionandtorespecttherightpositionandtheinternationalbrandimage.Atthesametime,theGroup'sevolutionin thedigitalworldhas led to launchingnewpartnershipswithmajoronlinesalesoperators(e-tailers).

TRaDeMaRK PROTecTIOnThe IntellectualPropertyDepartment iscommitted intheprotectionof trademarksandinthefightagainstcounterfeitingandintellectualpropertyinfringement.Ithassystematicpreventive anddefensivemeasures inplaceworldwide, andconstantlymonitorstheregistrationbythirdpartiesoftrademarks,patternsordesignsthatareidentical to or likely to be confusedwith the Prada Group's distinguishingmarks.Any infringement of Prada’s intellectual property rights is contested by opposingregistrationorpetitioningforcancellationbeforethecompetentauthorities.

The Group is constantly on the lookout for illegal appropriation of its trademarks,patternsanddesignsandmonitorboththetraditionalandonlineretailandwholesalechannels.Pradacollaboratesonadailybasiswithnationalandinternationalcustomsagenciesandwith Italy'sGuardiadiFinanza (RevenueGuardCorps) andPolice, sothey can intercept and confiscate illegal merchandise and assess progress in thebattleagainst counterfeiting.Wealsoworkwithorganizations including theWorldIntellectual Property Organization, the International Anti-Counterfeiting Coalition,France's Union des Fabriquants, and the Istituto di Centromarca per la Lotta allaContraffazione.

Over time, these control activities have enabled the Group to make an importantcontributiontotacklingawiderangeofcriminalactivitiesthatareoftenassociatedwithcasesofcounterfeiting,suchaschildlabor,forcedlabor,taxevasionandmoneylaundering.

Through close cooperation with the authorities, over the past three years Prada'santi-counterfeitingmeasureshaveledgloballytotheseizureof1.2millionfakes,thecontestationofmorethan360,000e-commerceads(ofwhich327,000havebeentakendown),andtheremovalofillegalcontentfrommorethan4,845websites.

SPecIal PROJecTS Convincedoftheneedtocombinearangeofvariedcreativeexperiencestoensurethat its style, image and communications activities are renewed and updatedconstantly,thePradaGrouphasalwayshadstronglinkswithotherfields,especiallyartandculture.Interactionwiththeseapparentlydistantenvironmentshasledtotherealizationofarchitectural,artisticandculturalprojectsandsponsorshipsofsportsevents.Alltheseinitiativeshave,overtheyears,helpeddefinethemanyfacetsofthePradauniverse.

�.�.� ecOnOMIc PeRFORMance anD BuSIneSS STRaTegY

2016wasachallengingyearforthePradaGroup,asitmadeconcreteplansforbranddevelopmentandlaunchedanoverhaulofitsmainoperatingprocesses.

This transition phase coincideswith the completion of the long-term plan for thegeographicalexpansionofitsretailnetworkandthebeginningofeffortstostreamlineoperationsandachievean innovative formof integrationwiththedigitaluniverse.Thebusinessclimatewasmiredinuncertainty,duetoongoinggeopoliticaltensionsofglobalimpact,aswellasneweventsthathavesuddenlyalteredeconomicbalancesaroundtheworld.

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EC1 INDICATOR - DIRECT ECONOMIC VALUE GENERATED AND DISTRIBUTED

2014 2015 2016Euro/1000 Euro/1000 Euro/1000

Economic Value Generated 3,555,465 3,553,898 3,190,896

Economic Value Distributed 3,157,435 3,207,289 2,925,740

Operating costs 1,941,045 2,014,073 1,831,423

Value distributed to Employees 638,947 702,543 677,144

Value distributed to Banks and Bond Holders 16,427 19,420 17,293

Value distributed to Government Authorities 254,468 159,367 95,647

Value distributed to Investors 290,849 284,699 282,180

Value distributed to the Community 15,699 27,187 22,053

Economic Value Retained 398,030 346,609 265,155

Meanwhile,thestabilizationofsomecurrencytrendspavedthewayforarecoveryindomesticconsumption,asinChinaandRussia,althoughgrowthinthesemarketshasnotyetcompensatedforthedecreaseincross-bordertourism.

Against this backdrop, the Group took the initiative on several fronts, starting asalwaysfromthedevelopmentofnewproductsthatstandoutfortheirinnovativestyleandoutstandingquality.New itemsweredesigned forPradaandMiuMiu ineverycategory,particularlyleathergoods,withthecreationofnew,iconichandbagdesignsaswellasspecialeditions.Withthesamededication,theGroupalsofocusedonstorerenovationwithaviewtoenhancingtheshoppingexperience.Themassiverestylingprogram launched during the year has begun to create more intimate, exclusiveenvironments,updatedtomeetPrada'sandMiuMiu'snewaestheticguidelines,wherefeaturesofthevariouslocalcultureshavebeengiven.

TherecentredefinitionoftheGroup'sdigitalstrategy,withtheformationofahighlyqualified team, is the foundation of a new global vision whereby brands will beempoweredtoexpresstheirfullpotential.Theseeffortswillgenerateorganicgrowthbasedonproductquality,stronginnovation,anddistribution/communicationchannelsthatpermanentlyevolveinlinewiththehabitsofnewgenerationsofconsumers.

Moreover,in2016theGroupmadesomeindustrialchangesunderathree-yearplanlaunched in2015,whichaimstostrengthencontrolover theproductionprocessbyinsourcingsomeofthemostdelicatephases.Theseinvestmentswillhelppreservethe craftsmanship at the heart of the Group's businessmodel, while underscoringits ties especially to the Italian community and thewill to responsibly control itsmanufacturingcycle.

Finally,effortstostreamlinefacilitiesandsimplifyprocessestooktheformofnew,transversal projects involving every unit and department while strengthening thecostreductiontargetsidentifiedin2015.

Asforperformance,cost-cuttingprogramsmanagedtokeepprofitabilityfrombeingfurtherdilutedbythedeclineinretailsales.TheyearclosedwithEBIT(EarningsBeforeInterestandTaxes)ofEuro431.2million,13.5%ofnetrevenues,whiletheGroup'sshareofnetincomecametoEuro278.3million(8.7%ofnetrevenues).

ThefinancialobjectivessetbytheGrouphelpedoptimizeworkingcapitalmanagement;the resulting increase in operating cash flow brought the net financial position topositiveterritorybytheendoftheyear.

Theconsolidatedincomestatementfor2016,presentedaccordingtotheGRImodeloftheeconomicvaluegeneratedanddistributed,showsaneconomicvalueretainedamounting toEuro 265.2million, downbyEuro 81.5million compared to 2015. Thecontractionintheeconomicvaluegenerated(-10.2%),essentiallyduetotheretailsalescontraction,causedaslightlylowerdecrease(-8.8%)intheeconomicvaluedistributedwhereas the most significant reduction was recorded towards the GovernmentAuthoritiesfollowingthecontractionoftaxableincome.

The table below gives a representation of the economic value distributed to thestakeholders:

63%

23%

9%1%

SUPPLIERS

GOVERNMENT AUTHORITHIES

EMPLOYEES

INVESTORS

COMMUNITY

3%

10%

13

SHAREHOLDER’S MEETING

EXTERNALAUDITORS

BOARD OF STATUTORY AUDITORS

SUPERVISORY BOARD

CHIEF EXECUTIVE OFFICERS

MANAGEMENT

AUDIT COMMITEE

NOMINATION COMMITEE

REMUNERATION COMMITEE

CORPORATE AFFAIRS

INTERNAL AUDIT

INVESTOR RELATIONS

COMMITTEESBOARD OF

DIRECTORSINSTITUTIONAL

AREA

1.4 eTHIcS, gOveRnance, cOMPlIance anD RISK ManageMenT

�.�.� cODe OF eTHIcS

ThePradaGroupconsidersrespectforethicalprinciplestobeabasicpillarofitsvaluesandsuccess.TheGroupbelievesandactin:

• compliancewithlegislativeandregulatoryprovisionsinallcountries inwhichitoperates;• legitimacy,loyalty,correctnessandtransparency;• respectoftheprivacy;• respectforthevalueofthepersonandhumanresources;• respectforcompetition,asacrucialinstrumentinthedevelopmentofthe economicsystem;• respectfortheenvironmentandraisingawarenessaboutitsprotection.

Since2007,theseprincipleshavebeengivenformalexpressioninthePradaGroup’sCodeofEthics.TheCodesetsouttheguidingprinciplesoftheOrganization,beingoneofthemainpillarsoftheGroup’sgovernancemodel,andisalsosupportedbyasetofproceduresinordertoturnthesevaluesintodailyactions.

TheadoptionandapplicationoftheCodeofEthicsisessentialfortheachievementoftheCompany’sprimaryobjective,consistinginthecreationofvalueforshareholders,employees,customersandforthecommunityasawhole.

The Code is shared by all employees and parties who support in developing,manufacturing,promoting,distributingandsellingtheOrganization’sproductsofthebrands in the portfolio. TheGroup promotes its awareness through variousmeanssuchasonlinepublications,directcommunicationsandaspartofthesupplycontractwithmostofthepartners,asitisconsideredaprerequisitefortheestablishmentofthecontractualrelationship.

�.�.� gOveRnance MODel

The corporate governance model adopted by the Company consists in a set ofrules, regulations, practices and procedures aimed toward establishing efficientandtransparentoperationswithintheGroup,toprotecttherightsoftheCompany’sshareholders and to enhance shareholder value. The corporate governancemodeladopted by the Company is in compliancewith the applicable regulations, and inparticularwiththeprinciplesoftheCorporateGovernanceCodecontainedinAppendix14oftheListingRulesoftheHongKongStockExchange.

TheCompanyhasadopteda"traditional"governancesystem,incompliancewiththeItalianCivilCode,consistingofamanagementbody,theBoardofDirectors,aninternalsupervisorybody,theBoardofStatutoryAuditors,andanexternalone,theAuditfirm,inadditiontotheabove-mentionedcommittees,andasystemofproxiesandpowers,organizedbylevelofaccountabilityanddesignatedtoensurethatthebusinessisrunaccordingtothebusinessprocedureslaiddownbytheCompany.

Withaviewtoachievingasustainableandbalanceddevelopment,theCompanyhasvieweddiversityattheBoardlevelasanessentialelementinsupportingtheattainmentofitsstrategicobjectivesanditsdevelopment.AllBoardappointmentsarebasedonmeritocracy and candidates are proposed and selected based on objective criteria,with due regard for the benefits of diversitywithin the Board. The Board diversitypolicyhasbeenconsideredandadoptedbytheBoardsince2013andencompassesawiderangeoffactors,includingbutnotlimitedtogender,age,culturalandeducationalbackground,professionalexperience,skills,knowledgeandnationality.

AttheShareholders'meetingheldonMay26,2015,theBoardofDirectors,consistingofninemembers,wasappointedforatermofthreefiscalyears(2015-2017).FollowingtheresignationoftwoDirectorsinthefirstmonthsof2016,theShareholders'meetingheldonMay24,2016,hasappointedtwonewDirectorsfortheperiodcorrespondingtothedurationoftheotherDirectorsinofficeatpresent.

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BOARD OF DIRECTORS

EXECUTIVE DIRECTORS Role Gender Age

Carlo Mazzi Chairman Male > 50

Miuccia Prada Bianchi Chief Executive Officer Female > 50

Patrizio Bertelli Chief Executive Officer Male > 50

Alessandra Cozzani (1) Chief Financial Officer Female > 50

Donatello Galli (2) Male > 50

NON-EXECUTIVE DIRECTORS Role Gender Age

Stefano Simontacchi (3) Male 30 - 50

Maurizio Cereda (4) Male > 50

Gaetano Micchichè (5) Male > 50INDEPENDENT NON-EXECUTIVE DIRECTORS Role Gender Age

Gian Franco Oliviero Mattei Male > 50

Giancarlo Forestieri Male > 50

Sing Cheong Liu Male > 50

(1) Appointed as CFO on February 19, 2016; (2) Resigned on February 19, 2016; (3) Appointed on April 8, 2016 and re-elected on May 24, 2016; (4) Appointed on May 24, 2016; (5) Resigned on April 15, 2016;

REMUNERATION COMMITTEE Role Gender Age

Gian Franco Oliviero Mattei Chairman Male > 50

Giancarlo Forestieri Male > 50

Carlo Mazzi Male > 50

AUDIT COMMITTE Role Gender Age

Gian Franco Oliviero Mattei Chairman Male > 50

Giancarlo Forestieri Male > 50

Sing Cheong Liu Male > 50

NOMINATION COMMITTEE Role Gender Age

Gian Franco Oliviero Mattei Chairman Male > 50

Sing Cheong Liu Male > 50

Carlo Mazzi Male > 50

Specifically, the Board of Directors is composed of four executive Directors, twonon-executive and three independent non-executive Directors. All Directors havedistinguished themselves in their respective areas of expertise and have providedsupporttotheBoardofDirectorsintheirrespectivefunctions.

TheBoardofDirectorsisresponsiblefortheordinaryandextraordinarymanagementoftheCompany.TheBoardhasthepowertocarryoutallactsitdeemsadvisabletoimplementandattaintheCompany’scorporatepurpose,exceptforthoseactsreservedbylawsorbytheBy-lawsforresolutionataShareholders'generalmeeting.

Inparticular,theBoardofDirectorsisresponsiblefordefiningtheoverallstrategyoftheGroupandforapprovingannualbudgets,extraordinarytransactions,transactionswithrelatedpartiesandallother initiativeswithasignificantfinancial impact.TheBoard is also responsible for constantly reviewing the operational and financialperformanceoftheCompanyandtheGroup.

TheChairmanof theBoardofDirectors is theCompany’s legal representative. TheChairman coordinates the Board of Directors’ activities and verifies the properapplicationof corporategovernancepracticesandprocedures.TheChiefExecutiveOfficers are responsible for managing the Company’s business, including theimplementationofmajorstrategiesandotherinitiativesadoptedbytheBoard.

ThetablebelowshowsthedataonthecompositionoftheBoardofDirectors.

TheBoard of Directors is supported by themainly consultative activity conductedbythecommitteesestablishedbythesame, inparticular, theAuditCommittee, theRemunerationCommitteeandtheNominationCommittee.EachCommitteeischairedbyanIndependentNon-ExecutiveDirector.

TheprimarydutiesoftheRemunerationCommitteearetomakerecommendationstotheBoardonthepolicyfortheremunerationoftheCompany’sDirectorsandseniormanagement.

TheNominationCommitteehastheprimarydutiestodetermineandrevisethepolicyfor the nomination of Directors, to assess the independence of Independent Non-ExecutiveDirectorsonanannualbasis,andtomakerecommendationstotheBoardregardingthestructure,sizeandcompositionoftheBoarditself.

TherecommendationsmadebytheadvisorycommitteesareperiodicallypresentedtotheBoardofDirectorsfordiscussionandpossibleadoption.

The Board of statutory auditors is the supervisory body in charge of verifyingcompliancewithapplicablelaws,regulationsandtheBy-laws,aswellascompliancewiththeprinciplesofsoundmanagementand,inparticular,ontheadequacyoftheorganizational,administrativeandaccountingstructureadoptedbytheCompanyanditsproperfunctioning.

The Shareholders' meeting held on May 26, 2015 appointed the current Board ofstatutoryauditorsthatconsistsofthreestatutoryauditorsandtwoalternatestatutoryauditorsforatermofthreefiscalyears(2015-2017).

Theprimarydutiesof theAuditCommitteeare toassist theBoard inprovidinganindependentviewoftheeffectivenessoftheCompany’sfinancialreportingprocessanditsinternalcontrolandriskmanagementsystems.

BOARD OF STATUTORY AUDITORS Role Gender Age

Antonino Parisi Chairman Male > 50

Roberto Spada Male > 50

David Terracina Male 30 - 50

15

SUPERVISORY BODY Role Gender Age

David Terracina Chairman Male 30 - 50

Paolo De Paoli Male 30 - 50

Gian Franco Oliviero Mattei Male > 50

Incompliancewith ItalianLegislativeDecreeno.231ofJune8, 2001, theCompanyhasestablishedasupervisorybodywhoseprimarydutyistoensurethefunctioning,effectivenessandenforcementoftheCompany’sModelofOrganization,adoptedbytheCompanypursuanttotheDecree.TheSupervisoryBodyconsistsofthreemembersselected among qualified and experienced people and nominated by the Board ofDirectors.

In 2016, the Corporate Social Responsibility Committee was set up to promoteinitiativesandprojectsinthesocialresponsibilityareaandthesharingwithseniormanagement of the guidelines for its implementation. The Committee met twiceduring2016andstartedasystematicdialoguewiththevariousdepartmentsonthosesocialresponsibilityissuesconsideredmorestrategicfortheGroup.

More detailed information on corporate governance is provided in the CorporateGovernancesectioncontainedintheAnnualReport2016.

�.�.�.cOMPlIance anD RISK ManageMenT

Given the complex regulatory environment, the Prada Group assigns variousdepartments and hires external specialists to keep abreast of changing laws andregulationssothatitcanadaptitsproceduresinatimelymannerandreducenon-complianceriskstoanacceptablelevel.

TheGrouphasstructuredtheinternalcontrolsystemasaprocesscarriedoutbythegoverningbodiesoftheGroup’ssubsidiaries,bymanagementandbythecorporationingeneral,withaviewtoprovidingreasonablecertaintythatcontrolobjectiveswillbemet.

More specifically, the Board of Directors of Prada spa, referring to internationallyrecognizedmodelssuchastheCoSOReport(CommitteeofSponsoringOrganizationsoftheTreadwayCommission-internationalbestpractice),isengagedinthecontinuousrefinement of the Internal Control system and RiskManagement by verifying theoperationofitsmaincomponentsconsistingof:

• controlenvironment;• riskassessment;• controlactivities;• informationandcommunication;• controlsystem.

The internal control system helps ensure protection of the company's assets, theefficiencyandeffectivenessofitsprocesses,thereliabilityoftheinformationprovidedtoitsgoverningbodiesandthemarket,andcompliancewithlawsandregulationsaswellasby-lawsandinternalprocedures.

ThebodiesinvolvedininternalcontrolandriskmanagementaretheBoardofDirectors,theAuditCommittee, theSupervisoryBodyand theBoardofStatutoryAuditors,aswellasallthemanagement,thathastheprimarytasktoimplementallthenecessaryprocesses and procedures to achieve the Company’s goals through an appropriatesystemofcontrolsthatminimizestherisksfortheorganization.

Moreover, the Internal Auditing department works in close collaboration with theaforementionedbodies,which,inadditiontothetypicalassuranceactivities,currentlysupportstheBoardofDirectorsandtheInternalAuditCommitteeforriskmanagementactivitiesalso.Furthermore,theIndustrialComplianceCommitteesetsguidelinesforimplementinglawsandregulationsthataffecttheimportandexportofrawmaterialsandfinishedgoods,whileprovidingvariousformsofindustrialcomplianceassistancetothemanufacturingdivisions.

Riskassessmentconsistsofidentifyingandanalyzingthefactorsthatmightmakeitdifficulttoreachbusinessgoals,andiscompletedwiththeprocessthatdetermineshowtheserisksshouldbeavoided,accepted,mitigatedorshared.Thefact that theeconomic,regulatoryandoperatingenvironmentisinconstantfluxraisestheneedformechanismsthathelpidentifyanddealwiththespecificrisksposedbysuchchanges.ForthePradaGroup,riskscanbegroupedasfollows:

1. risks relating to the international luxurygoodsmarket or related to thegeneralstateoftheeconomy,theprotectionofintellectualpropertyrights,imageandbrandrecognition,andtheabilitytoanticipatetrendsandrespondtothechangingtastesofconsumers;2. risksspecifictothePradaGrouprelatedtotheimportanceofkeypersonnel,strategyimplementation,outsourcing,legalandregulatorycomplianceandprocessingofdataandinformation;3. financialriskfactorsspecifictothePradaGrouprelatedtofluctuationsinexchangerates,interestratefluctuations,creditriskandliquidityrisk.

Further information is provided in the financial review and corporate governancesectionsoftheAnnualReport2016.InadditiontotheinformationpresentedintheAnnualReport2016inparticularwithrespecttoNote26("Provisionsforrisksandcharges")onthesubjectoftaxauditsanddisputes,nosignificantfinesornon-monetarypenaltieswereimposedonthePradaGroupduringtheyear.

16

�.� KnOW-HOW

Prada'sdefiningasset,know-howcreatescontinuityandbalancebetweencreativityand discipline, tradition and technological progress, craftsmanship and industrialproduction.

Allmanufacturingactivitiespreservetheartisanalspiritofqualitycareineverydetail,withinanindustrialorganizationmadeupof18proprietaryplants(152inItaly,1intheUnitedKingdom,1inFranceand1inRomania)andanexternalnetworkofsuppliersthatarecarefullyselectedandmonitored.

Coexistencebetweendesign,productdevelopment,directandoutsourcedproduction,allows Prada to maintain strong control over its know-how, quality standardsthroughoutthemanufacturingprocess,andtheplanningofproductionactivities.

The vastmajority of prototypes and samples, and a portion of finished goods, areproducedattheGroup'sownfacilities.

�.�.� SOuRcIng anD uSe OF RaW MaTeRIalS

The quality of raw materials is fundamental to the Prada product and a toppriority for theGroup.This iswhy theGroup’s apparel, footwearand leathergoodsmanufacturingdivisionsselecttheirownsuppliersdirectly,coordinateandsupervisethemanufacturingprocessrightthroughtothefinishedproduct.Sincetheoutset,thisapproachhasbeenadefiningelementofPrada'sindustrialstrategyandensuresfullcontrolofacruciallinkinthevaluechain.

Themainrawmaterialsusedareleathers,fabricsandyarns.Onehundredpercentoftheleatherscomewithacertificateoforigin,adatasheetguaranteeingqualityandcompliancewithstandards,andcertificationregardingtheparametersstatedontheGroup'sRestrictedSubstancesList(RSL).

The Group scrupulously complies with local and international regulations onthe procurement, importation, use and exportation of raw materials, such as theConventiononInternationalTradeinEndangeredSpecies(CITES).

ForPrada,sustainablemanagementofrawmaterialsissynonymousofoptimizationin the use of resources, following an approach that aims to eliminate waste andtherefore minimizing the consumption of leather and fabrics. Investments inindustrial development realized in recent years have led to the internalization of

2 The15industrialsitesdonotinclude3facilitiesthatcoordinateandsupportproduction.

2.STRIVINGFOREXCELLENCE

17

RAW MATERIAL Units AMOUNTS

2014 2015 2016

LEATHER Feet 56,218,606 36,245,611 20,319,996

FABRICS Meter 3,866,650 2,862,145 2,427,903

YARNS Kilo 98,059 90,984 91,995

SHOES' SOLES Pair 1,104,471 940,641 941,903

The strategy of reduction of the finished products inventories adopted during theyearresultedinlowerconsumptionofrawmaterials,especiallyfortheproductionofleathergoods.Overall,purchasesoftheaforementionedrawmaterialsaccountedforapproximately60%oftheeconomicvalueofallrawandsemi-finishedpurchasesoftheyear2016.

�.�.� TIeS WITH THe cOMMunITY DuRIng THe ManuFacTuRIng PROceSS

The international success of the Prada Group is deeply rooted in Italy, also withrespect to thesupplychain. In2016 theGrouppurchasedmaterials fromabout500suppliers3,about81%ofthemlocatedinItaly,10%inotherEuropeanUnioncountriesandtheremaining9%inotherNon-U.E.countries.InmanycasesthesearematerialsproducedexpresslyforPrada,accordingtostricttechnicalanddesignspecifications,bylong-establishedpartners:57%ofthemhavebeenworkingwiththeGroupformorethan10years,and19%for5to10years.

Thefocusonthisoriginofrawmaterials isdemonstratedbytheprocurementdataregardingleatherforfootwearandaccessories.

differentproductionphaseswiththeaimofmaintainingqualityatthehighestlevelsof excellence, while improving control on consumption at the same time (refer tochapter5forfurtherdetails).

Thematerials Prada uses in themanufacturing process can be broken down intoprimarymaterials,suchasleathers,fabricsandyarns,andancillarymaterialssuchassoles,heels,zippers,buttons,yarnsandribbon.Theirtransformationintoleathergoods,apparelandfootwearalsoinvolvestheuseofsemi-finishedproductsfromthirdparties,whichmayincludebuckles,clasps,straps,nameplates,etc.

Themostrelevantinformationrelatingtomaterialsfrom2014to2016arelistedbelow,eachshowninitstypicalunitofmeasure.

3Forthepurposesofthisanalysis,suppliersofrawmaterialswithpurchasesofmorethanEuro30thousandin2016havebeenconsidered.Overall,thesesuppliersaccountformorethan98%ofthetotalvalueoftheGrouprawmaterials’purchases.

18

4Forthepurposesofthisanalysis,manufacturingsupplierswithpurchasesofmorethanEuro30thousandin2016havebeenconsidered.Overall,thesesuppliersaccountformorethan99%ofthetotalvalueoftheGroupsemi-finishedgoods’purchases.

Italy

Europe

Italy-Arzignano

Italy-Solofra

Italy Other

Italy-Santa Croce

LEATHER (q.ty)

Rest of the world

LEATHER ITALY (q.ty)

Intermsofquantity,in2016,88%oftheleathercamefromItaliantanneriesrenownedfortheirqualityandoldtradition.Another9%camefromEuropeansuppliers,whiletheremaining3%fromoutsideEurope.

TheclustersofSantaCroce(Tuscany)andArzignano(Veneto)accounted,respectively,for49%and19%ofallleatherpurchasedbythePradaGroupinItaly.Thesearespecializedleather districts that set the standards for the production of high-quality leathersaroundtheworld.SantaCroceinparticularisanorganizedclusteroftraditionalsmallandmedium-sizebusinessesknown for their excellentwork,whose sharedvalues

includeenvironmentalsustainability,giventheheavyimpactofthetanningprocessespeciallyintermsofwaterconsumptionandemissions.

Inoutsourcing,too,thePradaGroupstandsoutforitsstrongtieswiththeartisanalcraftexperiencetypicaloftheItaliantradition.In2016theGroupworkedwithabout400suppliers4thatarejoinedbytheaforementioned500suppliersofrawmaterials.79%ofmanufacturingsuppliersareItalian,10%fromEuropeanUnioncountriesand10%fromotherNon-U.E.countries.38%ofthesuppliershavebeencollaboratingwiththeGroupformorethan10yearsand25%for5to10years.Thesearerelationshipsbuiltonmutualtrust,byworkingtogetheronadailybasiswithaviewtoconstantlyimprovingandlearning.

�.�.� gROuP’S QualIFIeD venDOR lIST PROceDuRe

In 2016 the Group started to renew the "Group’s qualified vendor list" procedureto redefine the responsibilities and operational behaviors required to evaluateethical, technical and economic reliability.Moreover, further controls to start andcontinueasupplyrelationshiparealsosetoutby theprocurementpolicyasrisksof non-compliance are mitigated through additional checks and assumptions ofresponsibility.

Specifically for ethical issues, the accreditation and maintenance of a supplier'squalificationisbasedonthecollectionofdocuments,attestationsandself-certificationsthatensurecompliancewiththelawonremuneration,socialsecurity,taxation,healthandsafety,environment,privacyandgovernancemodel.Finally,thesubscriptiontotheCodeofEthicsisafundamentalprerequisiteforworkingwithPrada.

This information is subject to periodic updates and systematic checks to ensureveracity and consistency. Such controls, operated by purchasing structures orbusiness areas focused on various topics aremade on a sample basis orwhen aproblemisencountered.Theproceduremayincludefurtherinquiriesincaseoflackof self-certification of compliancewith labour, safety in theworkplace and socialsecuritycontributionlaws.Thistypeofcontrolsiscoupledwithvisitsbyindustrialdivisions to suppliers (almost daily for themost important ones) that, other thanensuringcompliancewithtechnicalandcommercialagreements,providesadditionalcomfortregardingworkingconditions.

Inthecaseofnon-compliancewhichcanberemedied,thesuppliermaybetemporarilysuspended,whileformoreseriouscasesofnon-compliancewithethical,technicalandeconomicrequirements,contractresolutionmightbeimmediate.

88%

9%

3% 49%

19%

11%

21%

19

�.�.� PRODucT ReSPOnSIBIlITY

ProductqualityandthehealthandsafetyofcustomersarecentraltothePradaGroup'smanufacturing processes. The productsmustmeet uniform quality standards andsatisfyallcurrentregulationsinthemorethan70countrieswheretheyaresold.

Toachievethesegoals,theGroupemployssome290technicians,eachwithatleasttenyears’experience,whorunstrictqualitycontrolsoneverymaterialused intheproductionprocess,fromsourcingtothefinishingtouches.Theymakeperiodicvisitsto themanufacturing sites of rawmaterial suppliers and subcontractors to assesstheirprocesses,thequalityoftheirgoodsandthegeneralworkplaceconditions.

In2010theGroupformedaCommitteetoassistthemanufacturingdivisionsinmattersoflegalcompliance.Comprisedofmanagersfromtheindustrialarea,theCommitteesetsguidelinesregardingallaspectsofcompliancewithnationalandinternationallegislationonthenatureandproofoforiginofrawmaterials,creationofthefinishedproduct,andconsumerhealthandsafetyingeneral.

Inthecontextofthesecontrolandguidanceactivities,since2014thePradaGrouphaskeptaRestrictedSubstancesList("RSL"),aprocedurethatsetslimitsonthepresenceof chemicals in its products. In 2016, Prada took the additional step of aligning itsRSLlimitswiththemorestringent,proactiveapproachoutlinedinthe"Guidelinesonecotoxicologicalrequirementsforclothing,leathergoods,footwearandaccessories"endorsedbytheCameraNazionaledellaModaItaliana(“CNMI”).These limits are the most virtuous in international practice and aim to ensurehigher chemical safety standards than those prescribed by the strictest nationalandinternationallaws.Prada's1,000orsosuppliersofrawmaterials,packagingandmanufacturingservices,whichrepresentPrada'sproductionchain,haveallreceivedtheGroup'sRSLandthosethatasofJanuary31,2017hadformallyacceptedandsignedtheprocedureaccountedfor72%ofpurchasingbyvolume.Theaimistoincreasethatpercentage throughoutreachactivities aimedat encouraging its other suppliers tosignon.ExtendingthereachoftheRSLisimportanttoimprovingthesustainabilityoftheGroup'sproductioncycle,asisPrada'songoingcommitmenttoCNMIprogramsonchemicals,forwhichin-depthstudieshavebeeninitiatedontheapplicationoftheguidelinestomanufacturingprocesses,andothermatters.

ToensuretheRSLisbeingfollowed,inadditiontorequiringcertificationandtestingfromeverysupplier,thePradaGroupverifiesthesestandardsinternallybyconductingspotchecksonallsourcedmaterialsthroughaccreditedlaboratories.

In 2016 there were 2 cases (3 in 2015) of non-compliance with health and safetyregulations concerning products sold in China, which resulted in total fines ofapproximatelyEuro7,000.Therewere2casesofnon-compliancewithinformationand/orlabelingrequirements,alsoinChina,leadingtofinesofapproximatelyEuro3,500.

20

�.�.� cReaTIvITY anD PRODucT eXcellence

“ForPrada,fashion,luxuryandstylehavealwaysbeencoreaspectsofawiderprojectthanasimpleand large production of clothes, footwear andhandbags.

Careful observation and interest in the world,society, and culture are at the core of Prada’screativityandmodernity.ThishaspushedPradabeyondthephysicallimitationsofboutiquesandshowrooms, leadingus to interactwithdiverse,seemingly distant worlds, and introduce, verynaturally,anewwayofcreatingfashion.”(MiucciaPradaandPatrizioBertelli)

Outstanding quality, innovation respecting acentury-old history, and values rooted in finecraftsmanshipare the foundationsof thePradaGroup’svaluechainandof theefforts thatovertime have turned a family-run business intoone of theworld's leading luxury powerhouses:fromthecreativeideatodesign,manufacturing,distribution and communication. Prada is andwillalwaysbeaworldofinfiniteexplorationandexperimentation.

GuidedbythestyleinspirationofMiucciaPrada,universally acknowledged as a pioneer of thefashion industry, the team of designers andcraftspeople keep theGroup’s values and brandidentitiesalive,yetconstantlyre-interpretthemina contemporary lightwithout forsaking theiruniqueconcept.

Hereisaselectionofthemosticonicproductsofthelatestcollectionsthattestifytothespiritwithwhich they were designed, inspired by valuesthatgobeyondthesimpleaestheticpurpose.

22

PRaDa eSPlanaDeTheEsplanade represents thenatural evolutionof the timeless Galleria model, of which someof aspectshavebeen takenanddeveloped.Theclassicdesignwithazipfastening,doublehandleand shoulder strap stands out thanks to theway the leather on the quadrants is broken up,highlightedbythejuxtapositionoftwomaterials,andisavailableinfoursizesandawidevarietyofcolorsandcombinations.

PRaDa caHIeR The Cahier bag symbolizes a notebook withdetails referring to ancient books. The bronzemetal elements recall the protective corners ofoldvolumes,whiletheuseofthe“saffiano”leatherandthetopoftheflapareaclearreferencetothebook'shardcoversandcoast.

PRaDa BIBlIOTHèQue Withitsfive-pleatsidesthatrecallthespinesofvolumesona libraryshelf, thisPrada’s totebagisavailableintwosizes,bothwithdoublehandleand adjustable shoulder strap, and in differentmaterialsalwaysmatchedtothesoftesthidesofthehipsthatallowsperfectfolding.

PRaDa cORSaIRe The name evokes dynamicity and adventureand the shape is reminiscent of travels withgamebagsandsaddlebags.Thissportypracticalbag with balanced proportions is perfect for adynamic, active woman who exudes unfailingelegancewith a touchof irony, providedby thesequenceofrings.

23

24

MIulaDYRealizedwith some of theMiuMiu’s iconic type of leather, its classic closure isembellishedwith a handmade jewel backlemade of precious stoneswith brightcolors.

MIu MIu BalleT laceSThenewBalletLacesarefeaturedbysuede,wovenmadrasleather,denim,laminatednappaleather,cheetahprintandplaidprint.MiuMiuballerinacomeswithstraps,metalhardware,andankleribbonsandrevealunexpectedcombinationsofmaterials.

MIu MIu SlIPPeRSMiuMiuslippermadeinsoftecoshearlingrealizedinpastelcolorsandembellishedwithanembroideryofpearls,swarovskiandstudstypicalforthebrand.

cHuRcH’S SHangHaIIn2009at theNorthampton factory in theUK,Church's foundanoriginalmodelofa1929style thathadredefinedmen's footwear.This innovativeshoewasthenrecreatedforcontemporarytastes.Itisdeliberately"aged"byhand,andreproducingthetypicalrubbersolewithlogotookmorethanayeartoaccomplish.

25

ARCHIVE OF FINISHED pRODuCT

(number of models)

50,285Ready-to-wear

44,815Shoes

12,355Leather goods

30,641Other

138,096TOTAL

24%

5%PRADA

MIU MIU

71%

OTHER

HISTORIcal aRcHIve FInISHeD PRODucTSThe historical archive of finished products is one of the best expressions of thebalance that Prada has always promoted between creativity and innovationrepresentingarealstrategicassetfortheGroupaswellasatangibleevidenceofthehistoryofitsbrandsandofacenturyofItalianfashion.Everchangingatthehandsof the style department to serve as a constant source of inspiration, the archivereconstructsPrada'scomplexandoftenelaborate reflectionsandexperiments intheworldoffashionandcultureingeneral.Thearchive,constantlyupdatedwiththeproductsofnewcollections,islocatedat5warehousesbetweenTuscanyandMilanand,atthedateofthisReport,consistsofabout138,000itemsatthereportingdate.Thecontentsofthearchivearesummarizedbelow.

HISTORIcal aRcHIve OF FaBRIcSThe archive dedicated to fabrics represents another distinctive excellence of theknow-howofthePradaGroupandislocatedinoneofthewarehousesinTuscany.Thearchiveismadeupofatotalof23,130samplesoforiginalfabrics,representingover5,000differentdesigns,coveringavolumeofover300m3:uniqueandexclusiveprints,lace,macramèandmore.

AllthePradaandMiuMiufabricshavebeenfiledin1.5meterrolls,eachofthemwiththeir respective variants of color, and catalogedwith all the information about themanufacturerandthetechnicalcharacteristics.Thetotalityofthearchive,constantlyexpandingasitisconstantlyintegratedwiththefabricsofthenewcollections,hasbeenphotographedand inserted intoacomputersystemtospeedup researchandvisualization.

26

TECHNICAL AND PROFESSIONAL

UPDATING

CRAFTMANSHIpSCHOOL

CORpORATETRAINING

RETAILTRAINING

pRADA ACADEMY

MANAGEMENT AND BEHAVIOUR

MANAGEMENT TRAINING

SPECIALIZEDTRAINING

BUSINESS PLACEMENT AND POSITION

�.�.� PReSeRvIng TRaDITIOnal eXPeRTISe anD DevelOPIng SKIllSThepreservationandadvancementofexpertiseisfundamentaltothePradaGroup,whichpridesitselfontransmittingskillsfromgenerationtogeneration.

Back in the 1990s, the Group began to codify all its industrial and handcraftingprocessesinmanualsandwrittenproceduressotheywouldbeaccessiblewithintheGroup.Evennow,detailsareconstantlyaddedtothesedocuments,whichensurethecontinuityandconsistencyoftheknow-howandserveasinspirationforthecorporateactivities.

PRaDa acaDeMYPradaAcademyaimstosharewithtoday'semployees,andpassdowntotomorrow'snew ones, a corporate culture built on combining creativity and innovation withmethodanddiscipline.Foundedasatrainingcenter,theAcademyoffersdiversifiedcontentandteachingmethodsforeachofPrada'sthreemacro-areas:Craftsmanship,CorporateandRetail.

At the Craftsmanship School, the first three courses were designed in 2016 onfootwear,leathergoodsandclothing,whichbeganinthespringof2017.WithaviewtosafeguardingandpassingdownPrada'sdistinctiveheritageofknowledgeandartistry,thecourseswill beoffered to35-40youngpeopleaged 18 to24whoare interestedin becoming leather cutters, shoemakers, hemmers and dressmakers. The coursesincludeboththeory(rawmaterials,manufacturingprocessesandtechniques,businessprocesses,andbasicskillssuchastechnology,computersandEnglish)andpracticaltraininginthefield,includingvisitstorawmaterialsuppliers.

The first course to be offered is for future leather cutters andwill take place oversevenweeks.Next,thefootwearcoursewilllasttwelveweeksandwilltrainstudentsin cutting, sewing, assembly (footwear production line) and finishing. Finally, thedressmakingcoursewillcovercuttingandtailoringskills.BecausePradawishestopreserveandtransmitnotonlyjobskills,butalsocraftsmanshipandcorporateculture,allinstructorswillcomefromthePradaGroup'sworkshopsandmanufacturingsites.

27

With respect to internal training, over the past three years Prada Academy hasdeveloped retail training programs that reinforce store management techniquesandhelpguideandservetheGroup’sinternationalclientele.In2016retailpersonnelalsobenefitedfrominvestmentsindigitaltechnologyforcustomerrelations,whichprovidesquickandeasyupdatesonindividualproducts,newcollections,andmajormarketindicators.Meanwhile,corporateemployeesenjoyedawiderangeofcoursesonbehaviorandinterpersonalskills,aimedateffectivelyhandlingthecomplexityofthebusinessenvironment.

Inadditiontotraditionalclassroomteaching,thePradaGroupisdevelopingquicklyandeasilyaccessibledigitaltoolsforcontinuous,permanentlearning.Theseincludethe Learning Management System, an online platform where all Prada Groupemployees canmanage their courses, consult coursematerials, andaccess awiderangeofcontentontheGroup'smanufacturingandbusinessprocesses.

To develop skills, broaden knowledge, and thereby increase employees' value asprofessionals,44,734traininghours5wereprovidedin2016to5,899participants.Belowisasummaryoftraininghoursbygender.

WORLDWIDE TRAINING TOTAL WOMEN MEN

NUMBER OF PARTICIPANTS 5,899 3,421 2,478

NUMBER OF TRANING HOURS 44,734 25,946 18,788

AVERAGE NUMBER OF HOURS PER EMPLOYEEIN THE YEAR 3.60 3.30 3.90

NUMBER OF EMPLOYEES 12,579 7,799 4,780

Fromthecomparisonwith2015,anincreaseof5.6%inthenumberofhoursoftrainingwasrecorded.

Twoimportantinitiativeswerelaunchedwithinthetrainingprogramsin2016:thefirstfornewhiresinthecorporateandmanufacturingdivisionsinItaly,andthesecondforthosewhoalreadyworkfortheGroupinItalybutinacapacitythathasdeniedthemthechancetosharethecreativeandproductionprocessesbehindeverynewproduct.

The program for new hires envisions three "Induction Days" spent partly in theclassroom and partly on-site at the Group's industrial facilities, the goal being tohelp new employees integratewith the company through an understanding of itsphilosophyandorganization.ThereisaspecificsectiononthePradaGroup'svaluesthatguideitseffortsintermsofcorporatesocialresponsibility.

TheprogramfortheGroup'sexistingemployeesinItalylaststwodaysandpromotesdeeperknowledgeofPrada'sbusinessbydemonstratingthecomplexprocessesusedtomakeclothing,footwearandleathergoodsandthemasterybehindeachproduct.

Duringtheyear,39employeestookpartintheInductioncourseand44intheknow-your-companyprogram.Bothareevolvingconstantlyandarelikelytobeextendedtoemployeesinothercountries.

5Hoursoftrainingdonotincludehealthandsafetytraining.

28

�.� cuSTOMeR eXPeRIenceProduct value is enhanced by targetedcommunication, which is crucial to buildingand transmitting a strong, consistent brandimage. From fashion shows to advertisingcampaigns, Prada and all the brands of thePrada Group continue to create an attractive,trendy image, which is most appreciated by ahigh-end, international clientele and the mostinfluential critics and observers. Ultimately itbuilds exclusive, personal relationships withcustomers,whounderstandhowtheelementsoftheluxuryitemscanhelpdefinetheirownimageandidentity.

�.�.� ReTaIl neTWORKThe Prada Group owns 620 directly operatedstores, in exclusive locations selected on thebasis of its growth strategies. About 84% ofnet consolidated sales take place through thischannel.

Much more than simple points of sale, thestores are important communication tools as"ambassadors" of the brand, its identity andthe latest collections. All shops are run bymeticulously selected personnel who take partinperiodictrainingactivities,designednotonlyto provide customers with the best shoppingexperienceandinsight intothestylecontentofthe collections, but to communicate the values,culture and heritage the products represent.Salespersonnelprovideclearinformationontheproductsandtheircare,aswellasrepairservices,whichenhancesPradamerchandisebyensuringitsqualityanddurabilityovertime.

Every shop is designed, built and managedaccording to highly detailed internal policies,which highlight innovative concepts of

29

distribution and communication and ensure theuniquepositioning of each brand.TheirinteriordesignandtheirlayoutintermsoffurnishingsandfittingsaredefinedbytheEngineeringdivision,inclosecollaborationwithinternationalarchitecturefirms.Storewindowsanddisplaysarecreatedinternallybyretailandvisualmerchandisingteams, so that products are always represented effectively, fashionably, andconsistentlywiththevisionbehindthecollectionandthecorrespondingadvertisingcampaign.

Since 2016, the Prada Group has begun implementing an integrated and synergicdesign process called Building Information Modeling (BIM). This process allowspursuinghighlevelsofsustainabilitybyavoiding,orreducing,possiblewasteofbothmaterialsandcosts.

BIMisnotaproductorsoftwarebuta"containerofbuildinginformation".Bornfromthedesiretogotowardstheintegrationbetweenprocessesandsustainability,itisinfacta"collaborative"designmethodthatcollectstheusefulinformationofarchitectural,structural,plant,energyormanagementplanningintoonetool.

ABIMprojectalsooffersthepossibilitytovirtuallyprocessabuilding'slifecyclesothatitiseasiertomonitorthematerialsthathavebeenusedandplaninthebestwaytheirmaintenance.

Sofar,thistechnologyisconsideredtobeanexcellenceandanimportantinnovationinbuildingprocessesandfacilitymanagement. In2016arestylingplanwaslaunchedforPradaandMiuMiustores,inlinewiththebrands'newaestheticguidelines.

Prada has unveiled its new image following renovations or reopenings, such asinPlaza66inShanghaiandCantonRoadinHongKong,twooftheGroup'siconicflagshipstores.Thedesign,materialsusedandcomplexdetailsthatrepresentthenewimagereflectPrada'slongstandingcommitmenttoaestheticsandluxury.The stores' highly personal atmosphere underlines the importance the Groupattributesto thegrowingsophisticationof the luxuryconsumer,especially intheChinesemarket.

30

INFORMATION ABOuTSOCIAL NETWORKS

(AT JANUARY 31, 2017)

For Miu Miu, a fresh interpretation of the "Minimal-Aristocratic" theme that hasdefinedthestoreconceptsince2006radicallytransformeditsappearancein2016intermsof colorsused, lighting, and interior layout.Someof theearliest stores tobeconvertedtothisnewimagearetheonesinViaSant'AndreainMilan,CantonRoadinHongKong,andNewBondStreetinLondon.

In2016,Marchesi1824openedathirdpatisserieintheheartofMilan,insidetheiconicGalleriaVittorioEmanueleIIthatsymbolizesthecity.Thenewspacereinterpretstheatmosphereandallureof theoriginal location, inamagnificentsetting lookingoutontotheGalleria’sextraordinaryfrescoesandfloor.

ThehistoryoftheGroup'sretaildevelopmentincludespartnershipswithsomeoftheworld'smostinfluentialarchitecturefirms.In2015Herzog&deMeuron,winnersofthePritzkerArchitecturePrize,workedwiththeGroupontheMiuMiuflagshipstoreintheAoyamadistrictinTokyo,thecoreofthebrand'sJapaneseoperations.Afewyearsearlier,from2000to2004,Herzog&deMeuronandanotherPritzkerPrizewinner,RemKoolhaas,hadpartneredwithPradaontheEpicenterConceptStoresinNewYork,LosAngelesandTokyo.Stillcentral to theGroup'sretailstrategy, theEpicentersreflectprofound insight into theconceptof shopping,which is revisited to inspireuniquestoreswhereluxurygoods,technology,designandarchitecturecombineseamlesslywithanextensiverangeofexclusiveservicesandsensoryandaudiovisualexperiences.Every so often, the Epicenters transcend their primary function to host moviescreenings,exhibitions,debatesandotherculturalevents.

In recent years the Prada Group hasredefined its digital communicationsstrategy. The traditional approach toretailhasbeenenrichedbytheincreasingavailabilityofGroupbrandsonline. Inthenear future, e-commerce will extend tomoreproducts,countriesandbrands,andthe Prada and Miu Miu retail websiteswill be revamped. Meanwhile, additionalinvestments have been made in thecreation and dissemination of digitalcontenttokeepupwiththeconstantfluxof consumer behavior and technologicalplatforms.Withthisstrategy,socialmediachannelshavebecomean importantwaytointeractwithcustomersandfans.

InSTagRaM

14.6MILLION

FOLLOWERS

FaceBOOK

7.2MILLION

FOLLOWERS

TWITTeRAROUND

1MILLION

FOLLOWERS

31

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EMPLOYEES BY GENDER

2015

61% 39%

2014

62% 38%

2016

62% 38%

EUROPE

AMERICA

ASIAPACIFIC

ITALY

38%

10%20%

22%

8% 2%

EMPLOYEES PER GEOGRAFICAL AREA

JAPAN

MIDDLE EAST

EMPLOYEES PER AGE RANGE

< 30 30-50 > 50

2014 36% 54% 10%

2015 33% 56% 11%

2016 25% 56% 19%

NUMBER OF EMPLOYEES

201620152014

12,173

12,46712,579

3.WORKPLACEETHICS

ThePradaGroup’sbusinessapproachisbasedinthepromotionofdiversity,protectionof employment and treatment of staff with care and respect. Prada has alwaysconsideredhumancapitaltobekeytoitscompetitiveedgeandmakeseveryefforttopromoteandrewardproductivity,professionalskills,teamwork,withanemphasisonresults.Theemployees’enthusiasm,craftsmanshipandintellectualcuriosityaretheelementsthatunderpintheinnovationandqualityoftheGroup’sproducts.Overtime,thegoalhasbeen tobuildand fortifyanopenworkingenvironmentwherehumanrelationshipsareinspiredbyempathyandmutualunderstanding,includingbywayofspeciallydesignedcommunicationchannels.

Atthebeginningof2016,inordertostrengthenthesenseofbelongingtothePradaGroup,acorporatesystemofnewsletterwasinaugurated.Theinitiativeisaddressed

atallstaffandisdraftedsimultaneouslyinfourlanguages-Italian,English,Chinese/MandarinandJapanese-andupdatesabouttheactivitiesundertakenbytheGroup,alsoprovidingselectednewsabouttheluxuryindustry.Duringtheyear,21newslettersweresentout.

�.� THe WORKFORceAsofJanuary31,2017, theGrouphad12,579employees,ofwhom38%workinItaly.Aslightgrowth (+0.9%)was recordedcompared topreviousyearmainlydue to thestrategyofstrengtheningoftheorganizationintheindustrialarea.

OutsideItaly,themostsizablepartoftheworkforceisinAsia-Pacific(22%)followedbytherestofEurope(20%).

In Italy, where 15 of the 18 productionfacilities are located, most employees(66%)work in the industrialdivision,whilein other countries, where 567 out of 620directly operated stores are located, 88%ofemployeesareinretail.

Abreakdownoftheworkforcebyageshowsthatin2016,25%ofPradaemployeeswereunder30yearsoldand56%wereaged30to50.A furtheranalysisreports that34%

oftheretailworkforcewereunder30yearsold,whileintheindustrialdivision,whereatleast tenyearsofexperience inproductionandcraftsmanshipisparticularlyimportant,59%oftheworkforcebelongedtotherangebetween30and50yearsold.

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PERMANENT EMPLOYEES

2015

61% 39%

2014

62% 38%

2016

61% 39%

YEAR LABOR STAFF EXECUTIVES AND MANAGERS

FEMALE MALE FEMALE MALE FEMALE MALE

< 30 30 - 50 > 50 < 30 30 - 50 > 50 < 30 30 - 50 > 50 < 30 30 - 50 > 50 < 30 30 - 50 > 50 < 30 30 - 50 > 50

2014 0.3% 5.2% 5.3% 1.1% 4.3% 3.0% 13.2% 23.8% 6.8% 7.3% 12.2% 4.1% 0.3% 6.0% 1.0% 0.3% 4.6% 1.2%

2015 0.4% 5.6% 5.7% 1.2% 4.4% 3.2% 11.7% 23.8% 7.1% 6.6% 12.8% 4.3% 0.2% 5.9% 1.1% 0.2% 4.5% 1.3%

2016 0.9% 5.8% 4.5% 1.8% 4.5% 2.5% 13.8% 23.4% 6.3% 7.9% 12.6% 3.5% 0.2% 5.5% 1.0% 0.2% 4.3% 1.2%

In2016,thebreakdownofemployeesbyageandgenderremainedquitestable,withagreaterpresenceofwomeninthe30-50agegroup,mainlyin"Staff"and"ExecutivesandManagers".Inthesecategories,womenaccountedfor23.4%(vs.12.6%ofmen)and5.5%(vs.4.3%ofmen)ofthetotalworkforcerespectively.

Intermsofcontracttype,88%ofinternationalemployeesarepermanenthires,provingtheGroup's commitment to stability and long-terminvestmentinhumanresources.

Most of the fixed-term contracts concernyounger (under 30) staff in the retail area.63%ofthecontractsareforwomen.

98%ofemployeesworkfulltime.In2016therewerenodifferencesinbenefitsbetweenfull-timeandpart-timecontracts.

�.� eMPlOYee RelaTIOnS

Torecruitandattracttalent,theGroupcollaborateswithuniversitiesandentitiesthatorganizepost-graduateprogramsfocusingonmarketingandretail.Pradaalsooffersinternshipstonewgraduatestoenablethemtoobtainexperienceanddemonstratetheirskills,andhavetheopportunitytoworkinthebusinessafterward.

Theselectionprocess,whichconsistsofvariousevaluationapproachesaccordingtothepositionofferedandexperienceofthecandidates,isbasedontransparentinternalpoliciesandensuresequalopportunity.

New college or high-school graduates and candidates with up to three years ofexperiencearescreenedthroughindividualandcollectivetesting,whereasthosewithstrongexperienceundergoanindividualscreeningprocess.

ThePradaGroup'sremunerationandretentionpolicyisdesignedtorewardandretainhighly professional staff and skilled managers, with the conviction that value iscreatedinthemediumandlong-term,throughconstantorganizationallearningandconsolidationofexperienceandcompetence.

Thepolicyfeaturesabalancedcombinationoffixedandvariable,directanddeferredcomponents, tailored to thepositionandprofessionalqualificationsandconsistentwiththeneedsofthevariousgeographicalareas.

TheremunerationsystemisformulatedbytheHumanResourceManagementusingconstantcomparisonsofthecentralandperipheralstaff,andbyexternalfirmsthatcarryoutsalarysurveysoninternationalmarketsandarespecializedinthefashionandluxuryindustry.

TheGroup'sremunerationpolicyisbasedon:

• a periodic salary review that takes into consideration the overall marketcompetitiveness with respect to company positions and internal remunerationfairness;

• anannualincentiveplanlinkingremunerationtotheCompany'searningsandtoindividualperformance;

• long-termincentiveplans,forkeymanagers,linkedtothethree-yearprofitgrowth,aligningindividualtargetstothoseoftheshareholders;

• specific incentive plans for the sales team; similarly, bonuses relating to thedevelopmentofseasonalcollectionsareawardedtotechnicalspecialists;

• specificbenefitplansforeachcountry,whichsupplementinwholeorinpartthemandatoryentitlements(healthcare,insurance,etc.),andbenefitsincludingsocialservicesandassistancetofamilies (publictransportation,cars,schoolsubsidies,subsistenceallowances,etc.).

ThePradaGroupcollaborateswithtradeunionsto improvetheworkingconditionsof its employees and to foster themedium/long-termwell-being of its employeesand thus its surrounding communities. Over the years the Group has stipulatedmanysupplementaryagreementsespecially in Italy, in theUnitedKingdomand inFrance,wherebyitoffersbetterbenefitsthanthoseinthelocalcollectivebargainingagreements.Forinstance,82%oftheemployeesinItalyand100%inFrancecanbenefitfromthesupplementaryagreements.IntheUK,employeesoftheindustrialdivisionbenefitfromsupplementaryagreements.

34

Themostsignificantbenefitsofsuchagreementsforthisyearareasfollows:

• performancebonus:variablebonuslinkedtoproduction,salesandprofittargets;• vacation bonus: fixed amount equivalent to onemonth's pay as defined in the

collectivebargainingagreement;• easyaccesstoseverancepayadvances;• flexibleworkinghoursenablingemployeestoachieveamoreproductivework-life

balance;• SupplementaryHealthcareFund:supplementaryhealthinsurancewithanoption

toincludeimmediatefamilyataspecialrate;• specialleaveofabsenceforillnessesofemployee'schildren(upto12yearsofage)

inFrance;• regulations, employment protection and better conditions in terms of Sunday

premiumpayinthestoresinFrance.

Thankstotherespect,dialogueandcooperationinplacewithItaliantradeunions(ofwhich29%oftheGroup’semployeesweremembersin2016),nolaborstrikesoccurredintheyear(nolaborstrikesalsoin2015).

TheBoardofDirectors,togetherwiththeRemunerationCommittee,isactivelyinvolvedindeterminingthetopmanagementremunerationtakingintoaccounttherolesandresponsibilities assigned, and considering the market compensation applicable tosimilarpositionsinbusinessesofcomparablesizeandcomplexitytothePradaGroup.

�.� DIveRSITY anD eQual OPPORTunITY

ThevastglobalpresenceofthePradaGroupreflectsamultitudeofdifferentcultures,skills,nationalitiesandreligions.Thecommunitiesandareasinwhichitoperatesareaconstantsourceofinspirationandgrowth.

TheGroupfirmlybelievesinthevalueofdiversityasinspirationforthebusinessandasaformofculturalrichness,well-being,creativity,innovationandprogress,whichenablesittoforgecloserelationshipswithadiversified,globalcustomerbase.

The statistics on employee origin are evidence of the various backgrounds of theworkforce.Infact,personsof101differentnationalities(109in2015)workfortheGroup.

Thestrongfemalepresenceisdemonstratedbytheratiobetweenmalesandfemalesforeachjobcategory:womennotonlyrepresentthemajorityofLabor(56%)andStaffworkers(64%);theyarealsothelargestcomponent(54%)ofExecutivesandManagers.

35

YEAR LABOR STAFF EXECUTIVES AND MANAGERS

FEMALE MALE FEMALE MALE FEMALE MALE

2014 53% 47% 65% 35% 55% 45%

2015 54% 46% 64% 36% 54% 46%

2016 56% 44% 64% 36% 54% 46%

YEAR INDUSTRIAL CORPORATE RETAIL

FEMALE MALE FEMALE MALE FEMALE MALE

2014 57% 43% 55% 45% 55% 45%

2015 65% 35% 64% 36% 64% 36%

2016 59% 41% 54% 46% 64% 36%

EMPLOYEES PER GENDER AND GEOGRAFICAL AREA

ITALY AMERICA EUROPE ASIA PACIFIC JAPAN MIDDLE EAST

FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE FEMALE MALE

58% 42% 55% 45% 60% 40% 67% 33% 74% 26% 50% 50%

PAY GAP (with the median as 100% )

YEAR LABOR STAFF EXECUTIVES AND MANAGERSFEMALE MALE FEMALE MALE FEMALE MALE

2014 99% 102% 99% 100% 100% 103%

2015 101% 98% 102% 106% 102% 98%

2016 102% 95% 101% 97% 100% 97%

Anotherdistinctivecharacteristicistheprevalenceofwomeninalldivisions.

Evenatageographicallevel:womenrepresentmorethanhalfofworkersinallareasinwhichtheGroupoperates,withpeaksinJapanandtheAsiaPacific,wherefemalesaccountfor74%and67%ofemployeesrespectively.

Equalopportunityisreflectedinthecompensationandbenefitsystem,basedontheenhancementofskillsandonmerit,whichensuresconsistenttreatmentofgenders,seniorityandpositions.

Thegenderpaygapwith respect tomen's andwomen's average salaries is shownbelow. In linewiththedataonthefemalepresencebyqualification,thesubstantialequalityintheremunerationtreatmenttypicalofthePradaGroupisevident,witharatioalmostalwaysequalto100%foralltypesofqualification.

�.� WORKeR SaFeTY THROugHOuT THe SuPPlY cHaIn

Personal protection is of key significance to theGroup: internal policies safeguardthehealthandsafetyofemployeesatallCompanylocationsaccordingtothehigheststandardsandinfullcompliancewithlocalandinternationalregulations.In most locations (offices, warehouses and boutiques), risks associated with theGroup'soperationsare limited.Manufacturing facilitiespresent thegreatest risk intermsofhealthandsafety,butstilltoalowextent.

YEARINJURY RATE

(number of accidents/hours worked)*1,000,000GRAVITY RATE

(days lost for accidents/hours worked)*1,000

2014 12.96 0.27

2015 11.08 0.19

2016 11.02 0.21

Inthethree-yearperiod,theinjuryindicatorsforItaliancompaniesdeclinedsteadily:theinjuryratedeclinedby15%(from12.96in2014to11.02in2016),whilethegravityratedecreasedby22%(from0.27in2014to0.21in2016).Asaresultoftrainingandupdatedsafetymeasures,especiallyimplementedintheindustrialareas,theinjuryrateremainedatverylowlevelin2016.InItalytherewere80incidents,70%ofwhichinvolvedfemales.51%occurredduringcommutingand49%attheCompany(46%duetotripping/slipping).TherewerenocasesofoccupationaldiseaseinItaly.

Inordertopromoteandraisewidespreadsafetyawareness,theCompany,alsothankstothelegislationevolutiononthismatter,useson-linesafetycourseswithspecificITplatformsthatareeasyandsimpletouse.In2016trainingwasprovidedtomorethan1,020peopleinItaly.

TherearenocommitteeswithintheGroupresponsibleforcreatingandmonitoringoccupational health and safety programs, whereas the positions and internalorganizationstructures requiredby the local legislationof thevariouscountries inwhichPradaispresentdoexist.

Moreover, safety of the manufacturing facilities is the focus of targeted projects.FollowingthetragicearthquakethatstruckItaly'sEmiliaRomagnaregionin2012,thePradaGroupengagedateamofprofessionalstoassesstheseismicvulnerabilityofallitsownedproductionfacilitiesinItaly.Afterward,voluntaryimprovementstosafetystandardsbeyondthoseprescribedbytheBuildingCodeweremadetoallstructuresbuiltbeforeseismiclawswereineffect.Totheinitiativesalreadyundertaken,someofwhichcompleted,in2016theimprovementworksofthefactoryinMontone,Umbriatookplace.

36

Theindustrialinvestmentsmadein2016tookintoaccounttheneedtoassureworkershigh safety standards and high environmental quality in the work environmentthroughtheupgradingofallthespacesinsideandoutsidethebuildings.

The Group is engaged in guaranteeing that its products are created in conditionsreflectingitscommitmentfortherespectofhumanrightsintheworkplaceandoftheinternationalrulesforthesafetyandwell-beingofworkers.

TheGroup'sbusinesspartnersareencouragedtogobeyondtheminimumregulatoryrequirements and foster dialogue among all parties involved to facilitate the

implementation of and compliance with the standards in order to create positivework relationships. In relationshipswithsuppliers, socialawareness isencouragedand regulatory knowledge and the adoption of environmental, social and qualitycertificationsarepromoted.

Prada'scommitmentisrealizedinpartbythepromotion,disseminationandsigningoftheGroup'sCodeofEthics,whichisoftenincludedwithinbusinessagreements.

TheCodeofEthicssetsminimumstandardsforsuppliersregarding:

• rightsofemployeesandworkingconditions(includingnumberofregular/overtime/vacationhours,salariesandzerotoleranceforchildlaborandforcedlabor);

• thesafety,healthandwell-beingofemployees;• equalopportunitiesforemployees;• freedomofassociation;• healthinsuranceforemployees;• environmental protection in the sourcing of materials and in manufacturing

activities;• theprotectionofintellectualpropertyandthefightagainstcounterfeiting.

Factories and external suppliers are required to assure that any third party thatprovidesthemwithmaterialsand/orlaborformakingtheproductsisauthorizedandcomplieswiththeCodeofEthics.

Duringtheyear,theGroupstartedtorenewthe"Group’squalifiedvendorlist"procedurealso with the aim of defining responsibilities and operational behaviors to ensureethicalreliabilityofthesuppliers(paragraph2.1.3).

Finally, for the 2016 fiscal period, the Prada Group published its first statement inaccordancewithUKMSA–ModernSlaveryAct–describingitscommitmenttothemanagementandcontroloftheriskofforcedlabour,humantraffickingandslaveryalongitssupplychain.

37

The Prada Group’s close ties with the fields ofartandcultureareanintegralpartofthebrandvalues.Interactionwiththeseseeminglydistantworlds has led to the realization of specialprojects thatover theyearshavecontributed tothemakingofthemultifacetedworldofPrada.

�.� FOnDaZIOne PRaDa

Since1993,theinterestsandpassionsofMiucciaPrada and Patrizio Bertelli have led the Groupto sponsor Fondazione Prada’s activities in thefieldsofartandculture.

FondazionePradawassetupinMilanasaspacefor contemporary art exhibitions as well asprojectsinarchitecture,cinemaandphilosophy.By 2010 it had staged 24 solo shows in Milandevoted to important Italian and internationalartists. Since 2011 the Fondazionehashosted 5groupshowsatitsvenueinaneighteenth-centuryVenetianpalaceinCa’CornerdellaRegina,andin2016ithosted“BelligerentEyes”,anexperimentalprojectdedicatedtocinema.

In May 2015 Fondazione Prada inaugurated itsnewpermanentfacilityinMilan,designedbytheOMA architects led by Rem Koolhaas. Situatedin the southern part ofMilan, itwas convertedfromadistillery dating back to the early 1900s.The complex has a surface area of 19,000 m²capableofholdingmanyexhibitionsandculturalevents, enabling the foundation to develop itsmultidisciplinaryvocation.

In 2016 it hosted important anthological andretrospectiveexhibitionsdedicatedtointernationalartists, a choreographic performance, and a filmfestivalcuratedbyAlejandroGonzálezIñárritu.

4.THEPRADAUNIVERSE

38

During the year it also continued its educational program for Children's Academyactivitiesandbeganthefirstpartofthesite-specificproject, “SlightAgitation”,withartistTobiasPutrih.

TheOsservatorio,FondazionePrada’snewphotographyexhibitioncenterinGalleriaVittorioEmanueleIIinMilan,openedinDecember2016.

39

�.� PRaDa gROuP anD FaI

Knowledge,concreteness,consistency,independence,quality:thesearethefiveinspirationalprinciplesthatledPradatofindinFAI(FondoAmbienteItaliano:Italian National Trust) a sensitive and attentiveinterlocutor with which to design and developinitiativesforthecommongood.

The two players began a long-term, continuouspartnershipconsistingofinitiativeschosenwithgreatcare:fromtherestorationofthreearchesinthePalazzooftheArchiginnasioinBologna,andthedonationofanewcurtaintotheTeatroRegioinTurin,totherenovationofthelightingsystemfor the Shrine of Prosdocimus Abbey of SantaGiustinainPadua.

From2014 and2016 thePradaGroup supportedthe Laboratorio at Opificio delle Pietre Dure inFlorenceduringthecompletionoftherestorationofGiorgioVasari'sLastSupper,overrunwithwaterand mud during the flood of Florence in 1966and long considered to be virtually impossiblerecovery.

Indetails,GiorgioVasari’sLastSupper,paintedonawoodenpanelanddated1546,wassoseverelydamaged by the Arno river flooding in 1966that itwas leftuntouchedandshifted fromonewarehousetoanotherforalmostfortyyears.

The Laboratorio dell’Opificio delle Pietre Dure,inFlorence,startedin2004thedelicateworkofrestoration,originallysponsoredbytheordinaryplanning of the Ministry for Cultural andEnvironmentalHeritage, througha special fundofProtezioneCivileandalsobyafundmanagedby the Getty Foundation as part of the PanelPaintingsInitiative.

40

Since2014,thePradaGroupandFAIhavecontributedtoreachingthefinalstagesoftheskillfulandpatientrestorationofthepainting,thatrepresentsnotonlyanimportantactionforthesafeguardoftheartisticheritage,butalsoanopportunitytodeviseandimplementinnovativepreservationtechniques.

OnNovember4,2016,ontheoccasionofthefiftiethanniversaryoftheFlorenceflood,thePresidentoftheItalianRepublic,accompaniedbytheMinisterforCulturalHeritageandtheMayorofFlorence,celebratedthereturnoftheLastSuppertotheCenacleatSantaCroceinFlorence,whereitonceagaintookupitsoriginalpositioninsidetherefectory.

This circumstance represented the occasion to emphasize the importance andexceptional nature of this achievement, an extraordinary story of studies, hopes,restorationandtechnologicaldevelopmentwhichmadethereturnofamasterpiecetotheworldpossible.

�.� OTHeR SPecIal PROJecTS

Cinema, as a contemporary formof art, has led to creative collaborationsofPradawithfilmdirectorsofinternationalcaliberthroughwhichnumerousfilmsweremade,includingThunderPerfectMinddirectedbyJordanandRidleyScottin2006,ATherapydirectedbyRomanPolanskiin2012,CastelloCavalcantibyWesAndersonin2013and,lastinorderoftime,PastForwardbytheOscar-winningdirectorDavidO.Russellin2016.MiucciaPrada'sinteresthasalsoresultedintheproductionofaseriesofshortfilms-"TheMiuMiuWomen'sTales"-bydirectorsofinternationalfamewithdifferentintellectualbackgroundswhichexploredtheworldofwomen.

InNovember2016,Pradapresentedthe"PastForward"multi-platformfilmprojectbornfromauniquecollaborationbetweenMiucciaPradaandtheAmericandirectorDavidO.Russell.Intheirpresence,onNovember15,thefilmwasscreenedforthefirsttimeatthenewHauserWirth&SchimmelGalleryinLosAngelesandinthefollowingtwodaysthefilmwassimultaneouslyscreenedforaselectedaudienceinTokyo,London,Beijing,Moscow,Istanbul,Berlin,Milan,Paris,NewYorkandSydney.

41

ENERGY CONSUMPTION 2014 2015 2016

GAS1 m3 2,043,513 2,283,624 2,361,125

DIESEL AND KEROSENE l 1,025,337 1,403,059 1,230,361

ELECTRIC ENERGY1 KWh 132,324,893 153,502,779 153,049,412

5. AT ONE WITH THE COMMUNITY

�.� envIROnMenTal PROTecTIOn

Environment isoneof the interestsof thePradaGroup,whichfeelsresponsibleforengaging in and cultivating virtuous behaviors that contribute to its sustainablegrowthandareexamplesofgoodpracticewithintheentireindustry.

CommitmenttoenvironmentalrespectisakeyelementoftheCodeofEthics,appliedwithoutdistinctionbothwithintheorganization,byconstantlyraisingstaffawareness,andtothirdpartiesworkingwiththeGroup.

1. The figures for electricity and gas consumption for 2014 and 2015 are different from those published in the previous edition of the Prada Group's Social Responsibility Report as data and information were made available after its publication.

TheCO2emissionsfromelectricity,naturalgasandfuelconsumptionarereportedinthefollowingtable:directemissions(scope1),i.e.thosederivingfromtheconsumptionofnaturalgasandfuelforvehiclesowned,amountedto5,431tons,upby1%from2015dueprimarilytogreaterfuelconsumption; indirectemissions(scope2)were75,300tons,slightlydownfrom2015;theotherindirectemissions(scope3),relatingtothefuelconsumptionoftheleasedfleet,amountedto2,443tonsofCO2,down13%from2015.

CO2 EMISSIONS 2014 2015 2016

DIRECT EMISSIONS(scope 1) ton CO2 4,327 5,381 5,431

Buildings ton CO2 3,997 4,464 4,616

Means of transport (owned) ton CO2 329 917 815

ENERGY - INDIRECT EMISSIONS (scope 2) ton CO2 65,104 75,523 75,300

OTHER INDIRECT EMISSIONSMEANS OF TRANSPORT(Leasing) (scope 3)

ton CO2 2,403 2,799 2,443

ThemaindirectimpactoftheGroup'sbusinessoriginatesfromtheuseofenergyforoffices, factories, logisticscentersandstores in thevariouspartsof theworld.Theobjectiveistoreacheverhigherlevelsofenergyefficiencyandcontinuouslypursuenewwaystoreducewaste.

�.�.� eneRgY cOnSuMPTIOn anD cO2 eMISSIOnSIn 2016, the Prada Group recorded electricity consumption of 153,049 MWh, upcomparedto2014(+16%)andslightlydowncomparedto2015(-0.3%).However,intheperiodof3yearsconsidered,thereisagrowingtrendingasconsumption,whichgoesfrom2,043,513m3 in2014 to2,361,125m3 in2016 (+16%).GasolineandKerosene fuelconsumption,mainlyusedforfuel(ownedandleased),amountedto1,230,361litersin2016,down12%comparedto2015.

In thepast fewyears, energyconsumptioncontrols and testinghavebeenused todesignalong-termplantoimproveenergyefficiencybothintheindustrialandretailenvironment.

42

Theinitiativesoftheplaninclude:

• developmentofprojectsfocusingonphotovoltaicsandevaluationoftheinstallationofcogenerationand/ortrigenerationsystems;

• gradual replacement of all air conditioners and cooling machines with latest-generationsystems;

• astrongcampaigntodefinitivelyandcompletelylightareaswithlow-consumptionLEDbulbs;

• gradual replacementof all heat enginesandpumpswithonesof ahighenergyefficiencyclass;

• gradualinstallationofinvertersontheelectricmotorsthatlackthem;• installationofdigitalmultimeterstomeasureelectricity;• purchasing100%renewableenergy.

TheGroupalsoembarkedonanewenergypolicyaimedatmaximizingself-generatedenergyandthenewplant inScandicci isanexampleof thisapproach. In2016thisindustrial site consumed around 1,439MWh annually out of which approximately1,099MWhannuallywerepurchasedfromthenetwork(100%comingfromrenewablesources)andabout340MWhannuallywasself-generated.Theremainingpartofself-generatedenergy(76MWkannually)wasputintothenetwork.

FacTORY HeaTIng anD aIR cOnDITIOnIng SYSTeMSAfterreplacingtheheatingandairconditioningequipmentatAncona,Montegranaro,Buresta, Carducci, San Zeno and Amiata factories with new machinery grantinga reduction in energy consumption, in 2016 air conditioning was upgraded in theArezzoandMontonefactories.NewmachinerieswerethenplacedonthesiteofCittàdiCastellowhich, after beingclosed formanyyearsandusedasa simpledeposit,returnedtobeacompleteproductioncyclefactoryfortheproductionofshirts.

Inaddition to these investments,during theyearcorrectiveactionswere takenontheremainingequipmenttooptimizethehoursofoperation.Personneltrainingwascarriedoutfocusingonappropriate,rationalelectricityuse.

leDSince2014theGroupispursuinganimportantprojecttoreplacestore6lightingsystemswithLEDtechnology("Relamping"project)whichattheendof2015alreadyinvolved81stores,mainlyinEurope,wheremostoftheGroup'shistoricstoresarelocated,andinNorthAmerica.Replacementoperationscontinuedin2016byextendingLEDlightingtoother34stores,mainlyinChina.Inmostcasesthereplacementoflightfixturesregardedfurnishingsanddisplayswith

fluorescentlights,whereasinsomestoresitalsoregardedhalogenandmastercolorlampsintheceilinglighting.Approximately10%directenergysavingswereobtainedforfurnishingsand70%forceilings.Indirectenergysavingsresultfromthereducedheatproducedbythelamps,whichenablesPradatouselessairconditioninginthesummer,andfromthereducedwastebecauseLEDlampslastmuchlongeronaveragethanfluorescentlamps,andincontrasttothelatterdonotcontainanymercury.

leeD (Leadership in Energy and Environmetal Design)In2016thePradaGroupachievedLEEDGoldcertificationon7stores:6PradastoresbetweenChina,AustraliaandSwitzerlandand1MiuMiustore inChina.TheGroupestimatestoachieveothercertificationsin2017.

PHOTOvOlTaIc SYSTeMDuring2016activephotovoltaicplantsareasfollows:

• Scandicci,activefromOctober2015,producedabout415MWhfor2016;• ThefirstbuildingoftheLogisticHubhasbeenactivefromMarch2017andwillself-

produceabout1,490MWhannually;• ArezzoplanthasbeenactivefromMarch2017andwillself-produceabout95MWh

annually;• Arezzo(SanZenowarehouse)hasbeenactivefromApril2017andwillself-produce

about65MWhannually.Furtherfacilitiesareplannedfor2017.

�.�.� WaSTe

TheGrouprecognizestheimportanceofresponsiblenaturalresourceuseandwastemanagement.TheCompanyconductedananalysisoftheprocessescarriedoutandwasteproducedin each manufacturing phase of the factories, and subsequently set up a systemtomanage the internal cycle ofwaste transport, collection, temporary storage anddisposal.Theanalysisenabledtooptimizetheavailableresources,therebyreducingwaste production and increasing waste recycling. Moreover, the new proceduresimplementedenabledthePradaGrouptorecyclemorepaper,plastic,glassandprintercartridgesnotjustatthefactoriesbutalsoattheGroup'soffices.

Since 2016, the Prada Group has further focused on promoting internal industrialwastecollectionmethodsandstandardsthatcanensuretheirreuseandrecyclingordisposalinaccordancewiththebestpractices.Themainmaterialsinvolvedarepaper,cardboard,plasticandwood.

6The"Relamping"projectreferstothestoresopenedbefore2013,asthosethatwereinauguratedafterwardalreadyusedLEDlightingsystems.

43

3,460

18%

82%

Other paper

Recycled or certified paper

PACKAGING CONSUMPTION (tons)

4,731

5,812

201620152014

26%

74%

23%

77%

�.�.� uSe OF RecYcleD anD ceRTIFIeD PaPeRIn2016thePradaGroupused3,460tonsofmaterialtopackageproductsworldwide,downby27%from2015mainlyasaresultof thereductionofthevolumesandtherationalizingandoptimizingofthepackagingusedforcertaintypesofproducts.

Theuseofpapercertifiedby theForestStewardshipCouncil (FSC)andof recycledpaperinpackaginggrewby5%in2016,from77%to82%ofthetotal.

�.� PReSeRvaTIOn OF THe TeRRITORY

Therespectfortheplaceswhereitsoperationsarelocatedhasbeenaguidingprinciplefor the Prada Group since its beginnings.Reducing land take, renovating existingstructuresandworking towardbuilding requalificationhave inspired thedecisionsmadeinmorethanthirtyyearsoftheindustrialdevelopment.

The Prada Group, in agreementwith local authorities and the Superintendence ofArtistic and Cultural Heritage, has directed its utmost efforts and abilities towardrecoveringwhathadpreviouslyexisted.

Withthebeliefthatnewconstructioncanimpactanareaconsiderably,andthatsuchadecisionmustbetakenonlywhennecessary,thePradaGrouppreferstopurchaseandsalvageexistingbuildings.Eveninthecasethatthisoptionisunavailable,theGroupensuresthattheconstructionworkplanneddoesnottaketheland,butratherbuildsthelandscape,withthehelpofmasterarchitectsthatitisusedtoworkwith.Indeed,the fewnewly constructed buildings fit harmoniously into the local areas,withoutcausingdisruption.

44

ThePradaGrouphasmore than 192,000m2 of production facilities andwarehousespace,including175,000m2inItaly.Amongthese,4arenewbuildings,3arerecoveriesofindustrialarchaeologyandseveralarethecasesofreuseofdegradedsitesabandonedformanyyears.Indetails,4ofthemostimportantprojectsintheindustrialareawereassignedtoarchitectGuidoCanali,masterinItalyofasustainablearchitecture.

�.�.� valORIZaTIOn In THe InDuSTRIal DevelOPMenTLast year a three-year investment plan started to re-qualify and reorganize theGroup'smanufacturing structure in order to preserve artisanal know-how, supportthe technical development of production processes and improve the quality ofworkenvironments.Specifically,in2015theGroupfinalizedtherestructuringofthelaboratoriesinTerranuova,theconstructionofamechanizedplantinLevanellaandacuttingcenteratValvigna,thecompleterenovationofthenewplantinScandicci,therenovationoftwofactoriesnearSienaandArezzo,therenovationofawarehousenearArezzoandtheacquisitionofatanneryinFrance.During2016theprojectscontinuedandarereportedbelow.

InDuSTRIal SITe: cITTa’ DI caSTellO (PeRugIa), ITalYInMay2016 the industrialsite inCittàdiCastello,which incorporatesall stagesofthedesignandproductionofmen’sshirts,reopenedfollowingmajorrenovationandrestructuringwork.

Acquiredin2001,afterbeingasimplesupplierandpartnerformanyyears,theplant,whichboastsalongtraditionandofferstheveryhighestquality,hasbeendevelopedtoincreaseitsproductioncapacityfortheMade-To-Measuredemand,andexpandedtocoveranareaofover2,000m2.

Space rationalization also allowed optimizing production processes, creating anefficientanddynamicflow.Thewholestructurehasalsobeenupgradedbothinindoorandoutdoorspaces.

AtJanuary31,2017thefactoryemployed50shirt-makingspecialists.

InDuSTRIal SITe: MOnTOne (PeRugIa), ITalYInNovember2016,themajorrenovationofPrada’shistoricplantinMontone,centralItaly,whichspecializedinproducingmen’strousers,wascompleted.Builtonatotal10,000m²site,thetrouserfactoryhasafloorspaceof2,900m².

The recentwork involved all areas of the plant andhas significantly improved itsinsidespaces,restructuringworkflowsandoptimizingthemanufacturingprocesses.AtJanuary31,2017thefactoryhadatotalof50employees.

InDuSTRIal SITe: aReZZO, ITalYThis historic plant, founded in the 1960s by Patrizio Bertelli under the name ‘SirRobert”,hasrecentlyundergonemajorrestructuringworkwithalterationsmadetothelogistics,technologyandproduction.TheworkwascompletedinSeptember2016.Theprojectinvolvedtheentire1,600m²complex,andfocusedonmodernizingthecuttingmachinery,introducingLEDlightingandenergy-efficientairconditioning,aswellasupdatingthefurnishingsandcompletelyrelayingthefloor.

Operations have also been made more efficient, with production now dedicatedexclusivelytosamplingandtotheproductionofbelts-theplant’shistoricspecialism-andsmallleathergoods.

AtJanuary31,2017theplantemployed30people.

45

In addition to the above-mentioned projects, in 2016 the Prada Group continued the renovation of a warehouse in Arezzo, completed the renovation of the Scandicci plant, launched the ambitious reorganization of its logistics (see next paragraph for more information) and acquired 3 production sites within the broader vertical integration strategy and consequent shortening of its value creation chain.

In 2016 the design of the Prada Headquarters – located in Valvigna, Arezzo, Tuscany – by architect Guido Canali has been awarded the “Brand&Landscape Award 2016”, promoted by the National Council of Architects, Planners, Landscape Architects and Conservators and the international magazine PAYSAGE TOPSCAPE. The jury noted the industrial complex’s “special quality in the relationship between corporate image and landscape design that promotes harmony and development in the working environment. Indeed, the work expresses equal respect for nature, which is looked after and preserved, as it does for work, with both afforded dignity and value”.

�.�.� lOgISTIc HuBThenew102,000m2 logisticshubinLevanella(outsideArezzo)wasdesignedbyrenownedindustrialarchitectGuidoCanali,whoalsodesignedPrada'sheadquartersinValvignaanditsshoefactoriesinBurestaandMontegranaro.

Thehubispartofamajorplantoreorganizethewarehousinganddistributionoffinishedproducts,whichwillultimatelyallowtheGrouptohavethecontroloverallphasesofthelogisticsprocess.

Thecomplexinitiallyincludetherealizationoftwowarehouses,anofficebuildingandan employee cafeteria, aswell as equipment and service rooms, for a totalindoorareaof28,000m2.Ifneeded,athirdstructuremaybebuiltinthefuture.

Like all of Canali's designs, the complex is environmentally friendly, workerfriendly,andresponsiblyintegratedintothecommunitythankstoborderplantings,roofgardens,waterfeatures,picturewindowsandnaturepaths.Greenareascovermorethan70%ofthetotalsurfaceofthisfacility.

Thecomplexhasbeendesignedwiththefollowingenergy-efficiencyfeatures:• solarroofpanels(expectedtogeneratesome561MWh/year);• LEDlighting;• energy-savingsmarthomesystem;• low-losstransformers;• high-efficiencygenerators;• geothermalplant.

ConstructionbeganinFebruary2016andreachedthecompletionofPhase1duringtheyear.Thefirstofthetwowarehousesthathasbeenrealizedhasasurfaceareaof11,000m2andisalreadyopenforshipping(5,500m2)andservices(300m2).

46

CUSTOMERS

UNIVERSITIES

ASSOCIATIONS

TAX AUTHORITIES

AUTHORITIES AND REGULATORY BODIES

COMMUNITY

DISTRIBUTORS

MEDIA AND INFLUENCERS

COMPETITORS

LENDERS AND FINANCIAL COMMUNITY

SHAREHOLDERS

TRADE UNIONS

EMPLOYEES

SUPPLIERS

LANDLORDSLICENSEES ANDBUSINESS PARTNERS

6. NOTES ON THE METHODOLOGY

�.� THe MaTeRIal aSPecTS IDenTIFIcaTIOn

THe PRaDa gROuP'S STaKeHOlDeRS

InconductingitsbusinessthePradaGroupinteractswithmanystakeholders,allofwhich can directly or indirectly influence or be influenced by the achievement ofbusinessobjectives.

Aftermappingourstakeholdersfrombeginningtoendofthevaluechain,theGroupdeterminedwhicharemostimportantonthebasisoftheir:

• influenceonPrada:abilitytoaffectthecompany'sstrategicoroperationaldecisions;• dependenceonPrada:extenttowhichthestakeholdersdependsonthecompany's

decisions,productsandactivities.

Thisprocessidentifiedmanykeystakeholdersinthefollowingcategories:

To identify thematerial aspects that favor the achievement of long-term goals –whichforthePradaGroupconsistofbusinessgrowthwithcontinuousimprovementin product quality and work organization - while satisfying the interests of our

47

SIG

NIF

ICA

NC

E F

OR

TH

E S

TAK

EH

OLD

ER

S

SIGNIFICANCE FOR PRADA GROUP-

+

+

MATERIAL ASpECTS

• PRODUCT CREATIVITY AND EXCELLENCE

• PRODUCT RESPONSIBILITY

• KNOW-HOW PRESERVATION AND SKILLS

DEVELOPMENT

• RELATIONSHIP WITH THE TERRITORY

• ATTRACTION AND RETENTION OF TALENTS

• RAW MATERIALS SOURCING

• TRADEMARK PROTECTION

• BUSINESS STRATEGY AND ECONOMIC

PERFORMANCE

• HUMAN RIGHTS AND EMPLOYEES

WELLBEING IN THE SUPPLY CHAIN

• OCCUPATIONAL HEALTH AND SAFETY

• ENERGY AND CLIMATE CHANGE

• TRACEABILITY AND RESPONSIBLE SUPPLY

CHAIN MANAGEMENT - SOCIAL IMPACTS

• QUALITY OF THE WORKING ENVIRONMENT

• COMPLIANCE AND RISK PREVENTION

• DIVERSITY AND EQUAL OPPORTUNITY

• PROTECTION AND ENHANCEMENT OF THE

ARTISTIC AND CULTURAL HERITAGE

• CUSTOMER EXPERIENCE

stakeholders,Pradagatheredperspectives fromthevariousdepartmentheadswhointeractwith stakeholders on a daily basis. Togetherwith themateriality analysis(please refer to the following paragraph), this helped determine the sustainabilityissuesofrelevancebothfortheCompanyanditsstakeholders.

MaTeRIalITY analYSIS ThePradaGrouphaswrittenthe2016SocialResponsibilityReportaccordingtothelatestsustainability reportingguidelinesof theGlobalReporting Initiative (GRI-G4).Moreover,thisyear,forthepreparationoftheReport,theGroupalsofollowedthe"ESGReportingGuide"oftheHongKongStockExchange.

Thedepthanddetailgiventothevarioustopicsreflecttheoutcomeofamaterialityanalysiscarriedout in the lastmonthsof2015:aprocessof identifying,evaluatingandrankingthesustainabilityaspectsthatarerelevanttoourstakeholdersandthatinfluenceourabilitytocreatevalueintheshort,mediumandlong-term.

Thematerialityanalysisisatwo-phaseprocessthatinvolves:

1. Identifyingsustainabilityissues:determiningwhichissuesarekeytounderstandingPrada'sbusinessandstrategiccontextandtodescribingitsmainenvironmental,economicandsocialimpacts;

2. Ranking:puttingtheseaspectsinorderonthebasisoftheirrelevanceforachievingbusiness goals (internal materiality) and concern to stakeholders (externalmateriality).

AcomprehensivelistofsustainabilityissuesforthePradaGroupwasidentifiedby:

• mappingthekeystakeholdersandanalyzingtheirconcerns;• performing a benchmark analysis against Italian and international fashion and

luxury firms, producing a list of themost common sustainability issues in theindustry;

• conducting a press review to present the perception of public opinion for eachsustainabilityissue.Theanalysiswasperformedsothateachissuecouldalsobeassessedintermsofitsimpactoutsidethecompany;

• reviewing internal documents (Annual Report, Code of Ethics, policies andprocedures) to understand the business point of view with respect to varioussustainabilityissues;

• analyzingthesustainabilityissuesincludedintheGRI-G4guidelines.

Once sustainability issues were defined, they were ranked for materiality so thatthemoresignificantofthemwouldbeincludedinthisreport.Thiswasachievedbyinterviewing key department heads, who assigned priority rankings to the issuesaccordingtotheirsignificanceforPradaanditsstakeholders.

InaccordancewiththeGRI-G4guidelines,theaspectswererankedintermsoftheirimpact bothwithinandoutside theorganization, i.e. extending theanalysis to theentirevaluechain.

The input fromthedepartmentheadswasthen integratedwithothercriteria fromoutsidethemanagementteam'sperspective.Inparticular:

• internalmaterialitywasalsoassessedconsideringthePradaGroup’scommitmenttotheindividualissuesandtheirimpactonitsvariousformsof“capital”,asdefinedintheIntegratedReporting(financial,manufactured,natural,human,intellectualandsocialandrelationshipcapital);

• in assessing external materiality (significance for stakeholders), the analysisfocusedonthevariousaspectsrelevanttothePradaGroup’sspecificsector.

The material aspects for the Prada Group were defined as the intersection ofsignificancefortheCompanyandsignificanceforthestakeholders,asshowninthefollowingmatrix.

48

Ofthemorenotableresults:

• themostsignificantaspectprovedtobeproductcreativityandexcellence,whichdemonstrates the fundamental importance—for the Group and its stakeholdersalike—ofthehighstandardsofqualityandstylethataccompanyPradamerchandisealongtheentirevaluechain;

• aspects relating to long-term value creation are among the most significant(business strategy and economic performance, trademark protection), as is themanagementofhumancapital (know-howpreservationandskillsdevelopment,quality of theworking environment, attraction and retention of talent) and thecustomerexperience;

• aspects associated with the production process and its impact throughout thesupply chain are the most important for stakeholders (product responsibility,human rights and employee well-being along the supply chain, occupationalhealth and safety, raw materials sourcing, traceability and responsible supplychainmanagement).

Theabovementionedmaterialaspectshavebeenalsoconfirmedforthe2016financialperiodtowhichthisreportrefers.

BasedonthecurrentcoverageoftheGRI’sGeneralStandardDisclosuresandSpecificStandardDisclosuresrelatedtomaterialaspects,wehavechosentoimplementtheGRI-G4standardusingthe"Inaccordance-Core"option.ReferencestotheHongKongStockExchange'sESGReportingGuide(MainBoardListingRules-Appendix27)arelistedintheContentIndex7(page50).

The following table sets forth thematerial aspects defined in theGlobalReportingInitiative(GRI)G4SustainabilityReportingGuidelines(StandardSpecificDisclosures):itreportsthematerialaspectsforPradawiththerelatedaspectboundariesandanylimitationsregardingnon-extensionofthedisclosurestooutsidetheorganization.

GRI - G4 MATERIAL ASPECTS

ASPECT BOUNDARIES ASPECT BOUNDARIESLIMITATION

WITHIN THEORGANIZATION

OUTSIDE THEORGANIZATION

WITHIN THEORGANIZATION

OUTSIDE THEORGANIZATION

Economic Performance Group - - -

Procurement practices Group - - -

Materials Group - - -

Emissions GroupIndependent clients (*) and Suppliers

-Not extended toIndependent clients (*) and Suppliers

Energy GroupIndependent clients (*) and Suppliers

-Not extended toIndependent clients (*) and Suppliers

Employment Group - - -

Diversity and equal opportunity Group - - -

Equal remuneration for women and men Group - - -

Training and education Group Industrial Suppliers - Not extended to Industrial Suppliers

Occupational health and safety Group

Independent clients (*) and Suppliers

-Not extended toIndependent clients (*) and Suppliers

Supplier assessment for labor practices Group - - -

Supplier human rights assessment Group - - -

Non - discrimination - Industrial Suppliers - Not extended to Industrial Suppliers

Freedom of association and collective bargaining - Industrial Suppliers - Not extended to

Industrial Suppliers

Child labor - Industrial Suppliers - Not extended to Industrial Suppliers

Forced or compulsory labor - Industrial Suppliers - Not extended to

Industrial Suppliers

Compliance - product responsibility Group - - -

Product and service labelling Group - - -

Customer health and safety Group - - -

Compliance - society Group - - -

(*) Independent clients mean Department stores, multi-brand stores and Franchisees7 No reference toGeneralDisclosureA3 - theEnvironment andNaturalResources - of theESGReportingGuideof theHongKongStockExchangeas,currently,thistopichasnotbeenclassifiedasmaterialfortheOrganizationaccordingtoGRI–G4materialityassessment.

49

�.� THe RePORTIng PROceSS

ScOPeThisdocumentisthePradaGroup'sfourthSocialResponsibilityReportandprovidesadescriptionofthemaininitiativesundertakeninfiscalyear2016,i.e.fromFebruary1,2016,toJanuary31,2017,andthe2014-2016performancetrends;particularlysignificantinitiativesandeventsoffiscalyear2017alreadyknownatthereportingdatearealsoincluded(seepages26and42).

Theperformanceindicatorswereobtainedonanannualbasis;thereportingcycleisannual.Thereportingboundaryistheperimeterreferredtointhe2016AnnualReport,i.e.Pradaspaanditssubsidiaries,excludingthedataspecifiedinthetext.

Prada spa, together with its subsidiaries collectively the “Prada Group”, is a joint-stockcompanyincorporatedanddomiciledinItalywithheadquartersinViaAntonioFogazzaro28,20135Milan,whosesharecapitalis80%-ownedbyPradaHoldingspa,acompanydomiciledinItaly,whiletheremainingshares(20%)arelistedontheMainBoardoftheHongKongStockExchange.

PRIncIPleS FOR enSuRIng SuSTaInaBIlITY RePORTIng QualITY ThisdocumentwasdrawnupwiththepurposeofreportingboththesuccessfulaspectsandtheweaknessesofthePradaGroup,withaviewtowardprospectiveimprovement.TheinformationandindicatorsincludedaimtoprovideabalancedportrayaloftheGroup'ssustainabilityperformanceandinitiatives.

The process of reporting, collecting and aggregating the datawas structuredwiththeultimatepurposeofenablingstakeholderstocompareandcomprehendfullytheinformationcontainedherein.

calculaTIOn MeTHODOlOgY ThePradaGroupinvolvedallcorporatefunctionsandengagedErnst&YoungItaly'sClimate Change and Sustainability Service team to determine the contents of thesustainabilityreport.

Withrespecttothecalculationmethodology:

- theinjuryrateistheratiobetweenthetotalnumberofhourslostduetoinjuriesandthetotalnumberofworkinghours;

- whereenvironmentaldatawasunavailable,conservativeestimateswereusedthatresulted inchoosingassumptionsassociatedwith the leastpositiveenvironmentalperformancefortheCompany;

- greenhousegasemissionswerecalculatedusingthefollowingemissionfactors:• emissions scope 1: emission factors taken from the list of Italian standard

parameterspublishedby theMinistryofEnvironmentandProtectionofLandandSea;

• emissions scope 2: emission factors taken from the Terna InternationalComparisonon2014Enerdatadata;

• emissions scope 3: emission factor taken from the list of Italian standardparameterspublishedby theMinistryofEnvironmentandProtectionofLandandSea.

Finally,carbondioxideistheonlygreenhousegasconsidered.The2014and2015datamaydifferslightlyfromthedatapublishedinthe2014/2015SocialResponsibilityReports due to the aggregationof data that becameavailableaftersuchReportswerepublished.Forthesamereason,the2016datareflectsthebestpossibleestimateusingthedataavailablewhenthe2016SocialResponsibilityReportwaspublished.

50

7. GRI CONTENT INDEX FOR “IN ACCORDANCE” CORE OPTION

GENERAL STANDARD DISCLOSURE

STRATEGY AND ANALYSIS

G4-1Statement from the most senior decision-maker about the relevance of sustainability to the organization and the organization's strategy

Pag. 3

ORGANIZATIONAL PROFILE

G4-3 Name of organization Pag. 49

G4-4 Primary brands, products and/or services Pag. 4; 9-11; 20-24

G4-5 Location of the organization’s headquarters Pag. 49

G4-6

Number of countries where the organization operates, and names of countries where either the organization has significant operations or that are specifically relevant to the sustainability topics covered in the Social Responsibility Report

Pag. 4; 16-18

G4-7 Nature of ownership and legal form Pag. 49

G4-8 Markets served Pag. 4; 9-11

G4-9 Scale of the organization Pag. 9; 11-12; 16; 28; 32

G4-10 KPI B1.1 Total number of employees by employment contract, employment type, region and gender

Pag. 9; 32-33; 34-35

G4-11 Percentage of total employees covered by collective bargaining agreements Pag. 33

G4-12 KPI B5.1 Describe the organization’s supply chain (number of suppliers, volumes and sourcing markets)

Pag. 9-11; 16-18

G4-13 Significant changes during the reporting period regarding the organization’s size, structure, ownership, or its supply chain Pag. 4; 8; 49

G4-14 Explanation of whether and how the precautionary approach or principle is addressed by the organization Pag. 15

G4-15Externally developed economic, social and environmental codes of conduct, principles and charters to which the organization subscribes or which it endorses

Pag. 13; 19

G4-16 Memberships of national and/or international trade associations

The Group's main partnerships are with: Assonime, Camera Nazionale della Moda Italiana, Assolombarda and Confindustria Toscana

IDENTIFIED MATERIAL ASPECTS AND BOUNDARIES

G4-17 List of all entities included in the consolidated financial statements and those not covered by the Social Responsibility Report Pag. 49

G4-18 Explanation of the process for defining the report content and how the organization has implemented the related reporting principles Pag. 46-48

G4-19 List of all the material aspects identified Pag. 47-48

G4-20 Aspect boundary within the organization for each material aspect Pag. 47-48

G4-21 Aspect boundary outside the organization for each material aspect Pag. 47-48

G4-22 Effect of any restatements of information provided in previous reports, and the reasons for such restatements Pag. 49

G4-23 Significant changes in the scope and aspect boundaries Pag. 4; 8; 41; 49

STAKEHOLDER ENGAGEMENT

G4-24 List of stakeholders groups engaged by the organization Pag. 46

G4-25 Basis for identification and selection of stakeholders with whom to engage Pag. 46-47

G4-26 Approach to stakeholders engagement Pag. 46-48

G4-27

Key topics and concerns that have been raised through stakeholders engagement, and how the organization has responded to those key topics and concerns, including through its reporting

Pag. 46-48

REPORT PROFILE

G4-28 Reporting period for information provided Pag. 49

G4-29 Date of most recent previous Social Responsibility Report Pag. 49

G4-30 Reporting cycle Pag. 49

G4-31 Contact points and useful information for questions regarding the Social Responsibility Report and its contents Pag. 52

G4-32 Choice of "in accordance" option and GRI Content Index for the chosen option Pag. 50-52

G4-33 Policy and current practice with regard to seeking external assurance for the report

Pag. 49This document is not submitted to external assurance

GOVERNANCE

G4-34Governance structure of the organization, including committees of the highest governance body Committees responsible for decision-making on economic, environmental and social impacts

Pag. 13-15

ETHICS AND INTEGRITY

G4-56Internally developed mission, values, codes of conduct, significant principles for the economic, environmental and social performance, and progress of their implementation

Pag. 13

INDICATORREFERENCES TO

HKEX ESGREPORTING GUIDE

DESCRIPTION REFERENCES OMISSIONS INDICATORREFERENCES TO

HKEX ESGREPORTING GUIDE

DESCRIPTION REFERENCES OMISSIONS

51

SPECIFIC STANDARD DISCLOSURES

ECONOMIC PERFORMANCE INDICATORS

ECONOMIC PERFORMANCE

G4-DMA G.D. B8 Disclosures on Management Approach Pag. 11-12; 37-40

G4-EC1 KPI B8.2 Direct economic value generated and distributed Pag. 12

PROCUREMENT PRACTICES

G4-DMA Disclosures on Management Approach Pag. 9-11; 18

G4-EC9 KPI B5.1 Percentage of the procurement budget used for significant locations of operation spent on suppliers local to that operation Pag. 18

ENVIRONMETAL PERFORMANCE INDICATORS

RAW MATERIALS

G4-DMA G.D. A2 Disclosures on Management Approach Pag. 16-18; 42-43

G4- EN1 KPI A2.5 Total weight or volume of raw materials used Pag. 17; 43

ENERGY

G4-DMA G.D. A2 Disclosures on Management Approach Pag. 41-45

G4-EN3 KPI A2.1 Energy consumption within the organization Pag. 41

G4-EN6 KPI A2.3 Reduction of energy consumption Pag. 41

EMISSIONS

G4-DMA G.D. A1 Disclosures on Management Approach Pag. 41-45

G4-EN15 KPI A1.1KPI A1.2 Direct greenhouse gas emissions (scope 1) Pag. 41

G4-EN16 KPI A1.1KPI A1.2 Energy indirect greenhouse gas emissions (scope 2) Pag. 41

G4-EN17 KPI A1.1KPI A1.2 Other indirect greenhouse gas emissions (scope 3) Pag. 41

SOCIAL PERFORMANCE INDICATORS

LABOR PRACTICES

EMPLOYMENT

G4-DMA G.D. B1 Disclosures on Management Approach Pag. 32-35

G4-LA2 G.D. B1Benefits provided to full-time employees that are not provided to temporary or part-time employees, by significant locations of operation

Pag. 33-34

OCCUPATIONAL HEATH AND SAFETY

G4-DMA G.D. B2KPI B2.3 Disclosures on Management Approach Pag. 35-36

G4-LA5 KPI B2.3Percentage of total workforce represented in formal joint management–worker health and safety committees that help monitor and advise on occupational health and safety ograms

Pag. 35

G4-LA6 KPI B2.1KPI B2.2

Rate of injury, occupational diseases, lost days, absenteeism, and total number of work-related fatalities, by region and by gender Pag. 35

MaTeRIal aSPecTS

INDICATORREFERENCES TO

HKEX ESGREPORTING GUIDE

DESCRIPTION REFERENCES OMISSIONS

TRAINING AND EDUCATION

G4-DMA G.D. B3 Disclosures on Management Approach Pag. 26-27

G4-LA9 KPI B3.1KPI B3.2

Average hours of training per year per employee, by employee category and by gender Pag. 27

At the moment the information on the average number of training hours by category is not available. Prada is committed to collect the information for the future.

DIVERSITY AND EQUAL OPPORTUNITY

G4-DMA G.D. B1 Disclosures on Management Approach Pag. 13-15; 32-35

G4-LA12 KPI B1.1Composition of governance bodies and breakdown of employees per employee category according to gender, age group, minority group membership, and other indicators of diversity

Pag. 14-15; 33-35.

EQUAL REMUNERATION FOR WOMEN AND MEN

G4-DMA G.D. B1 Disclosures on Management Approach Pag. 34-35

G4-LA13 Ratio of basic salary and remuneration of women to men by employee category, by significant locations of operation Pag. 35

SUPPLIER ASSESSMENT FOR LABOR PRACTICES

G4-DMA G.D. B5KPI B5.2 Disclosures on Management Approach Pag. 18-19; 36

G4-LA14 KPI B5.2 Percentage of new suppliers that were screened using labor practices criteria

In 2016 the Prada Group started to renew a procedure to qualify and evaluate its suppliers according to criteria including work practices. At the moment the number of suppliers that have been evaluated is not available.

HUMAN RIGHTS

NON-DISCRIMINATION

G4-DMA Disclosures on Management Approach Pag. 13; 18; 35-36

G4-HR3 Total number of incidents of discrimination and corrective actions taken

At this time the information needed to cover the indicator (aspect boundary outside the organization) is unavailable

FREEDOM OF ASSOCIATION

G4-DMA Disclosures on Management Approach Pag. 13; 18; 35-36

G4-HR4

Operations and main suppliers identified in which the right to exercise freedom of association and collective bargaining may be violated or at significant risk, and measures taken to support these rights

At this time the information needed to cover the indicator (aspect boundary outside the organization) is unavailable

INDICATORREFERENCES TO

HKEX ESGREPORTING GUIDE

DESCRIPTION REFERENCES OMISSIONS

52

CHILD LABOR

G4-DMAG.D. B4KPI B4.1KPI B4.2

Disclosures on Management Approach Pag. 13; 18; 35-36

G4-HR5 KPI B4.1KPI B4.2

Operations and main suppliers identified as having significant risk for incidents of child labor, and measures taken to contribute to the effective abolition of child labor

At this time the information needed to cover the indicator (aspect boundary outside the organization) is unavailable

FORCED OR COMPULSORY LABOR

G4-DMAG.D. B4KPI B4.1KPI B4.2

Disclosures on Management Approach Pag. 13; 18; 35-36

G4-HR6 KPI B4.1KPI B4.2

Operations identified as having significant risk for incidents of forced or compulsory labor, and measures to contribute to their elimination

For the 2016 fiscal period the Prada Group published its first statement in accordance with UK MSA – Modern Slavery Act – committing to the management and control the risk of forced labour, human trafficking and slavery along its supply chain.Currently the information needed to satisfy the indicator (outside the organization) are not available.

SUPPLIER HUMAN RIGHTS ASSESSMENT

G4-DMA G.D. B5KPI B5.2 Disclosures on Management Approach Pag. 18; 35-36

G4- HR10 KPI B5.2 Percentage of new suppliers that were screened using human rights criteria

In 2016 the Prada Group started to renew a procedure to qualify and evaluate its suppliers according to criteria including work practices. At the moment the number of suppliers that have been evaluated is not available.

SOCIETY

COMPLIANCE

G4-DMA Disclosures on Management Approach Pag. 15

G4-SO8

G.D. B1G.D. B2G.D. B4G.D. B7

Monetary value of significant fines and total number of non-monetary sanctions for non-compliance with laws and regulations Pag. 15

PRODUCT RESPONSIBILITY

CONSUMER HEALTH AND SAFETY

G4-DMA G.D. B6 Disclosures on Management Approach Pag. 19

G4-PR2 G.D. B6Total number of incidents of non-compliance with regulations and voluntary codes concerning the health and safety impacts of products and services during their life cycle, by type of outcomes

Pag. 19

PRODUCT AND SERVICE LABELING

G4-DMA G.D. B6 Disclosures on Management Approach Pag. 19

G4-PR4 G.D. B6Total number of incidents of non-compliance with regulations and voluntary codes concerning product and service information and labeling, by type of outcomes

Pag. 19

COMPLIANCE

G4-DMA Disclosures on Management Approach Pag. 19

G4-PR9 G.D. B6Monetary value of significant fines for non-compliance with laws and regulations concerning the provision and use of products and services

Pag. 19

INDICATORREFERENCES TO

HKEX ESGREPORTING GUIDE

DESCRIPTION REFERENCES OMISSIONS

AdditionalinformationonthisSocialResponsibilityReportmayberequestedto:PRADAS.p.A.ViaAntonioFogazzaro,2820135MilanItalye-mail:csr@pradagroup.com

53

CREDITS

Cover/Backcover:GuestsattendingPradaMen’sSpring/Summer2010FashionShow

CourtesyPrada

Index: Paperpatterns.Ph.creditBrigitteLacombe/CourtesyPrada

Pag.3: Pradacraftsmanreadytocuttheskin.Ph.creditBirgitteLacombe/CourtesyPrada

Pag.4: HistoricPradastoreinGalleriaVittorioEmanueleIIMilan.

Ph.creditAgostinoOsio /CourtesyPrada

Pag.5: AbriefhistoryofPrada.

Ph.creditAlfredoAlbertone/MonicaFeudi,Baganz/DieterBaganz,

AdrianoBiondo,AntonioCalabrese,MikioMatsuo,PatrickMcMullan,

Nacasa&Partners,FrancoRossi,AlbertWatson,RobertWyatt/CourtesyPrada

Pag.6: MiuMiuDhaliabag/CourtesyMiuMiu

Pag.7: (left)DrivingshoesCarShoe

(right)Church'sShannonderby/CourtesyPrada-Church’s

Pag.8: CourtesyMarchesi1824

Pag.16:Church'scraftsman/CourtesyChurch’s

Pag.17:LacesforPrada/CourtesyPrada

Pag.18: PradaMen’saccessoriesinsaffianoleather/CourtesyPrada

Pag.19:CourtesyPrada

Pag.20:PradaCorsairehandbag/CourtesyPrada

Pag.21:Pradahandbags:PradaEsplanade,PradaBibliothèque/CourtesyPrada

Pag.22:PradaCahierhandbag/CourtesyPrada

Pag.23:MiuMiuBalletLaces/CourtesyMiuMiu

Pag.24:(left)MiuLadybagandMiuMiuSlippers/CourtesyMiuMiu

(right)Church'sShanghai/CourtesyChurch's

Pag.25:Pradalooks/courtesyPrada

Pag.26:PradaGroupfabricarchive/CourtesyPrada

Pag.28:PradaSt.Barthstore/CourtesyPrada

Pag.29:Pradanewstoreconcept/CourtesyPrada

Pag.30:PradaShanghaiPlaza66andPradaMoscowGum/CourtesyPrada

Pag.31:NewMiuMiustoreHongKongCantonRoad/CourtesyMiuMiu

Pag.32:SeamstressembroideringaPradadress.Ph.creditBirgitteLacombe/CourtesyPrada

Pag.34:PradaGroupLevanellaQualityControlCentre,Arezzo(Italy)/CourtesyPrada.

Pag.36:PradaGrouptrousersplantinMontone,Italy/CourtesyPrada

Pag.37:BillyCowie:Attraversoimuridibruma,Imagesoftheperformances.

Ph.creditOKNOstudio/CourtesyFondazionePrada

Pag.38: (left)Edward&NancyReddinKienholz:TheCaddyCourt,1986–87.

Ph.creditDelfinoSistoLegnaniStudio/CourtesyFondazionePrada

(right)GoshkaMacuga:TotheSonofManWhoAtetheScroll,2016

Ph.creditDelfinoSistoLegnaniStudio/CourtesyFondazionePrada

Pag.39: GiorgioVasari’sLastSupperpainting/CourtesyPrada

Pag.40: StillsfromPastForwardbyDavidO.Russell/CourtesyPrada

Pag.41:PradafactoryinValvigna,Arezzo.ProjectbyGuidoCanali.

Ph.creditGabrieleCroppi/CourtesyPrada

Pag.43:PradafactoryinValvigna,Arezzo.ProjectbyGuidoCanali.

Ph.creditFrancescoCastagna/CourtesyPrada

Pag.44:PradaArezzoplant/CourtesyPrada

Pag.45:PradafactoryinValvigna,Arezzo.ProjectbyGuidoCanali.

Ph.CreditFrancescoCastagna/CourtesyPrada

Pag.46:CourtesyChurch's

Pag.49:CourtesyPrada

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