Prada Group Streamlined Structure Will Merge The Far East Subsidiary

According to the world clothing shoes and hats net, Italy

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The SpA (1913.HK) Prada group further streamlined its structure. The group announced that the PRADA Far East II S.r.l. subsidiary, which operates the Far East business, will be merged into the parent company. The merger will take effect after the cancellation of the 100% equity interest of the parent company's subsidiary.

The latest streamlining structure of Prada SpA Prada group is to merge Italy subsidiary PRADA Stores S.r.l. into the group.

After being investigated by the Italy tax bureau for tax evasion, in 2014, the group's controlling shareholders, Patrizio Bertelli and Miuccia Prada Bianchi, began to gradually streamline the control structure of the group. At the end of the year, they announced the merger of the group's direct holding company Prada Holding BV with the Prada shareholder Holding BV, the only shareholder of the company, and the merger and cancellation of the company. Meanwhile, the new direct holding company will be renamed "Bertelli", and the other companies in the group control chain will pfer the registered office from Italy to Hong Kong.

The move is considered to be part of the reconciliation between the Patrizio Bertelli and Miuccia Prada Bianchi couples and the Italy Guardia di Finanza, the financial guard, and in 2013, the couple was directed to the Italy authorities to pay a 470 million euro related tax levy.

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The merger of subsidiaries may be less related to taxation, and more often is the group's attempt to reduce costs by streamlining the structure.

As the luxury industry has been slowing down to the recession for the past three years, many companies have been able to offset the decline in profitability by controlling costs. For the Prada SpA Prada group, which has been declining for three consecutive years, it is natural for this group to take the same measure.

In the 2016 fiscal year ended January 31, 2017, the net profit of Prada SpA, Prada group fell by 15.9%, from 330 million 900 thousand euros in fiscal 2016 to 278 million 300 thousand euros, far below the 296 million euro expected by Thomson Reuters, with a 0.129 euro decline to 0.109, and the worst level in the six years since the listing of the company in Hongkong. During the period, the group's gross income was 3 billion 184 million euros, which was more than that in 2015 fiscal year, and the fixed exchange rate also declined.

Despite the sluggish performance, the stock price of Prada Prada SpA was surprisingly strong, mainly due to the rebound in China's luxury market in the second half of 2016, which accounted for 31.6% of China's Asia Pacific market revenue, excluding mainland tourists' overseas consumption.

Before the annual report was released in April 12th, investment banks also raised the rating of the company, of which BNP Paribas, the largest target price of the company increased to HK $38.59, almost two times the original bid price of the bank. Meanwhile, the rating of Italy group was raised from "reduction" to "buy".

However, after the release of the annual report, Prada SpA Prada group shares fell three times, but then rebounded quickly and offset the decline, and hit a new 21 month high of HK $37.40 at the beginning of this month.

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