2.2 TRANSLATION OF THE RESULTS OF OVERSEAS BUSINESSES

Assets and liabilities of overseas subsidiaries included in the Consolidated Financial Statements are transla- ted into the Group s reporting currency of Euros at the exchange rate ruling at the reporting date. Income and expenses are translated at the average exchange rate for the reporting period, as it is considered to approxima- te at best the actual exchange rate at the transaction date. Differences arising on the adoption of this method are recognised separately in other comprehensive income and are presented in a separate component of equity as translation reserve until disposal of the foreign operation. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the exchange rate ruling at the reporting date.

The main exchange rates used to convert into Euro the Consoli- dated Financial Statements of foreign subsidiaries as at and for the years ended 31 December 2021 and 31 December 2020 are as follows:

Average rate Rate at the end of the period Year 2021 Year 2020 As at As at 31 December 2021 31 December 2020 AED 4.343610 4.194720 4.159500 4.506500 AUD 1.574940 1.654920 1.561500 1.589600 BRL 6.377890 5.894260 6.310100 6.373500 CAD 1.482600 1.530000 1.439300 1.563300 CHF 1.081150 1.070520 1.033100 1.080200 CNY 7.628230 7.874700 7.194700 8.022500 CZK 25.640500 26.455100 24.858000 26.242000 DKK 7.437030 7.454210 7.436400 7.440900 GBP 0.859604 0.889704 0.840280 0.899030 HKD 9.193180 8.858700 8.833300 9.514200 HUF 358.516000 351.249000 369.190000 363.890000 JPY 129.877000 121.846000 130.380000 126.490000 KRW 1,354.060000 1,345.580000 1,346.380000 1,336.000000 KZT 504.428000 472.998000 492.750000 517.040000 MOP 9.468970 9.124460 9.098300 9.799600 MXN 23.985200 24.519400 23.143800 24.416000 NOK 10.163330 10.722790 9.988800 10.470300 NZD 1.672400 1.756100 1.657900 1.698400 PLN 4.565200 4.443000 4.596900 4.559700 RON 4.921480 4.838280 4.949000 4.868300 RUB 87.152700 82.724800 85.300400 91.467100 SEK 10.146500 10.484800 10.250300 10.034300 SGD 1.589100 1.574240 1.527900 1.621800 TRY 10.512370 8.054720 15.233500 9.113100 TWD 33.036100 33.622700 31.367100 34.480700 UAH 32.259200 30.850600 30.921900 34.768900 USD 1.182740 1.142200 1.132600 1.227100

2.3 BUSINESS COMBINATIONS

Business combinations are accounted under the acquisition method. Under this method, the identifiable assets acquired and the liabil- ities assumed are measured initially at their acquisition-date fair values. The costs incurred in a business combination are account- ed as expenses in the periods in which the services are rendered.

Goodwill is determined as the excess of the aggregate of the considerations transferred, of any non-controlling interests and, in a business combination achieved in stages, the fair value of previously held equity interest in the acquiree compared to the net amounts of fair value of assets transferred and liabilities assumed at the acquisition date. If the fair value of the net assets acquired is greater than the acquisition cost, the difference is recognised di- rectly in the statement of income at the acquisition date. Non-con- trolling interests could be measured either at their fair value at the acquisition date or at the non-controlling interests proportionate share of the identifiable net assets. The election of either method is done for each single business combination.

If the initial accounting for a business combination is incom- plete by the end of the reporting period in which the combination occurred, the Group shall report in the financial statements pro- visional amounts for the items for which the accounting is incom- plete. During the measurement period, that shall not exceed one year from the acquisition date, the provisional amounts are ret-

rospectively adjusted to reflect new information obtained about facts and circumstances that existed at the acquisition date and, if known, would have affected the measurement of assets and lia- bilities recognised at that date.

2.4 NON-CURRENT ASSETS AVAILABLE FOR SALE AND DISCONTINUED OPERATIONS

Non-current assets available for sale and discontinued operations are classifi ed as available for sale when their values are recoverable mainly through a probable sale transaction. In such conditions, they are valued at the lower of their carrying value or fair value, net of cost to sell if their value is mainly recoverable through a sale transaction instead of continued use.

Discontinued operations are operations that: include a separate line of business or a different geograph-

ical area; are part of a single coordinated plan for the disposal of a

separate major line of business or geographical area of ac- tivity;

consist of subsidiaries acquired exclusively for the purpose of being sold.

In the consolidated income statement, non-current assets held for sale and disposal groups that meet the requirements of IFRS 5 to be defined as discontinued operations , are presented in a single caption that includes both gains and losses, as well as losses or gains on disposal and the related tax effect. The comparative pe- riod is subsequently restated in accordance with IFRS 5.

As far as the financial position is concerned, non-current assets held for sale and disposal groups that meet the require- ments of IFRS 5 are reclassified as current assets and liabilities in the period in which such requirements arise. The comparative financial statements are not restated or reclassified.

2.5 PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at acquisition or manufacturing cost, not revalued net of accumulated depreciation and impairment losses ( impairment ). Cost includes original purchase price and all costs directly attributable to bringing the asset to its working condition for its intended use.

DEPRECIATION Depreciation of property, plant and equipment is calculated and recognised in the consolidated income statement on a straight- line basis over the estimated useful lives as reported in the fol- lowing table:

Category Depreciation period Land No depreciation Buildings From 25 to 33 years Plant and equipment From 8 to 12 years Fixtures and fittings From 5 to 10 years Electronic machinery and equipment From 3 to 5 years Leasehold improvements Lower between lease period and useful life of improvements Rights of use Lease period Other fixed assets Depending on market conditions generally within the expected utility to the entity

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will take ownership of the asset by the end of the lease term.

Depreciation methods, useful lives and residual value are reviewed at each reporting period and adjusted if appropriate.

GAIN/LOSSES ON THE DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT Gains and losses on the disposal of property, plant and equipment represent the difference between the net proceeds and net book value at the date of sale. Disposals are accounted when the rele- vant transaction becomes unconditional.

CONSOLIDATED FINANCIAL STATEMENTS110 111CONSOLIDATED FINANCIAL STATEMENTS MONCLER GROUP

2021