During 2021, the Group put in place a policy to hedge the ex- change rates risk on transactions with reference to the major cur- rencies to which it is exposed: USD, JPY, CNY, HKD, GBP, KRW, CAD, CHF, TWD, SGD and AUD. The decrease in volumes due to Covid-19 did not have a significant impact on hedging policies and did not lead to over-hedging.

The instruments used for these hedges are mainly Currency Forward Contracts and Currency Option Contracts.

The Group uses derivative financial instruments as cash flow hedges for the purpose of redetermining the exchange rate at which forecasted transactions denominated in foreign currencies will be accounted for.

Counterparties to these agreements are major and diverse financial institutions.

The exposure of contingent assets and liabilities denom- inated in currencies is detailed in the following table (the Euro amount of each currency):

DETAILS OF THE BALANCES EXPRESSED IN FOREIGN CURRENCY

(Euro/000) 31 December 2021 Euro JP Yen US Dollar CN Yuan HK Dollar CH Franc GB Pound KR Won CA Dollar Other Total Cash and cash equivalent 559,819 56,422 51,010 118,885 18,462 3,427 27,001 45,485 5,131 47,076 932,718 Financial assets 530 0 0 0 192 0 0 0 0 0 722 Trade receivable 70,589 46,456 17,319 64,433 520 (18) 7,721 19,973 2,901 4,380 234,274 Other current assets 14,929 1,993 707 5,429 165 39 1,570 162 445 2,319 27,758 Other non-current assets 4,928 10,485 2,166 7,488 6,513 598 701 723 931 2,549 37,082 Total assets 650,795 115,356 71,202 196,235 25,852 4,046 36,993 66,343 9,408 56,324 1,232,554 Trade payables (264,236) (23,617) (18,900) (23,938) 567 (469) (5,533) (2,070) (1,702) (9,055) (348,953) Borrowings (578,134) (45,096) (122,188) (32,917) (39,526) (10,079) (23,170) (3,622) (9,265) (49,926) (913,923) Other current payables (69,494) (8,380) (19,274) (5,948) (1,260) (1,065) (8,645) (6,076) (1,080) (4,057) (125,279) Other non-current payables (161) 0 0 0 0 0 (2) 0 0 0 (163) Total liabilities (912,025) (77,093) (160,362) (62,803) (40,219) (11,613) (37,350) (11,768) (12,047) (63,038) (1,388,318) Total, net foreign positions (261,230) 38,263 (89,160) 133,432 (14,367) (7,567) (357) 54,575 (2,639) (6,714) (155,764)

DETAILS OF THE BALANCES EXPRESSED IN FOREIGN CURRENCY

(Euro/000) 31 December 2020 Euro JP Yen US Dollar CN Yuan HK Dollar CH Franc GB Pound KR Won CA Dollar Other Total Cash and cash equivalent 555,687 69,614 84,190 95,984 10,276 6,552 19,081 32,999 4,442 44,673 923,498 Financial assets 4,793 0 0 0 0 0 0 0 0 0 4,793 Trade receivable 33,222 43,356 4,125 65,248 694 245 5,554 15,364 2,824 3,512 174,144 Other current assets 9,308 2,455 1,872 697 2,036 34 1,143 65 452 3,024 21,086 Other non-current assets 4,144 9,329 3,539 5,438 6,028 507 701 727 929 2,181 33,523 Total assets 607,154 124,754 93,726 167,367 19,034 7,338 26,479 49,155 8,647 53,390 1,157,044 Trade payables (150,364) (24,187) (14,494) (13,241) 635 (1,118) (1,744) (1,084) (1,551) (4,755) (211,903) Borrowings (392,544) (44,192) (118,139) (15,959) (42,708) (11,287) (27,563) (4,509) (9,747) (46,619) (713,267) Other current payables (34,319) (8,372) (10,931) (11,138) (1,005) (482) (5,714) (7,356) (1,269) (3,424) (84,010) Other non-current payables (140) 0 0 0 0 0 (2) 0 0 0 (142) Total liabilities (577,367) (76,751) (143,564) (40,338) (43,078) (12,887) (35,023) (12,949) (12,567) (54,798) (1,009,322) Total, net foreign positions 29,787 48,003 (49,838) 127,029 (24,044) (5,549) (8,544) 36,206 (3,920) (1,408) 147,722

At the reporting date, the Group had outstanding hedges for EUR 108.1 million (EUR 77.8 million as at 31 December 2020) against receivables still to be collected and outstanding hedges for EUR 477.7 million (EUR 226.6 million as at 31 December 2020) against future revenues. As far as the currency transactions are con- cerned, it should be noted that a + / -1% change in their exchange rates would have the following effects:

DETAILS OF THE TRANSACTIONS EXPRESSED IN FOREIGN CURRENCY

(Euro/000) JP Yen US Dollar CN Yuan HK Dollar KR Won GB Pound Other Effect of an exchange rate increase amounting to +1% Revenue 2,488 3,317 3,808 199 1,656 905 1,330 Operating profit 1,515 1,985 2,402 (15) 1,062 615 498 Effect of an exchange rate decrease amounting to -1% Revenue (2,538) (3,376) (3,882) (203) (1,690) (923) (1,357) Operating profit (1,545) (2,025) (2,450) 15 (1,083) (628) (508)

With reference to the provisions of IFRS 13, it should be pointed out that the category of financial instruments measured at fair val- ue are mainly attributable to the hedging of exchange rates risk. The valuation of these instruments is based on the discounting of future cash flows considering the exchange rates at the reporting date (level 2 as explained in the section related to principles).

INTEREST RATE RISK The Group s exposure to interest-rate risk is mainly related to cash, cash equivalents and bank loans and it is centrally managed.

As at 31 December 2021, there was no hedging on interest rates, given the limited exposure to financial institutions.

9.2 CREDIT RISK

The Group has no signifi cant concentrations of fi nancial assets (trade receivables and other current assets) wi- th a high credit risk. The Group s policies related to the management of fi nancial assets are intended to reduce the risks arising from non solvency of wholesale customers. Sales in the retail channel are made through cash and credit cards. In addition, the amount of loans outstanding is constantly monitored, so that the Group s expo- sure to bad debts is not signifi cant and the percentage of writeoffs remains low. The maximum exposure to cre- dit risk for the Group at 31 December 2021 is represented by the carrying amount of trade receivables reported in the Consolidated Financial Statements.

As far as the credit risk arising from other financial assets other than trade receivables (including cash and short-term bank de- posits) is concerned, the theoretical credit risk for the Group aris- es from default of the counterparty with a maximum exposure equal to the carrying amount of financial assets recorded in the Consolidated Financial Statements, as well as the nominal value of guarantees given for third parties debts or commitments indi- cated in note 7 of the Explanatory Notes. The Group s policies limit the amount of credit exposure in different banks.

9.3 LIQUIDITY RISK

Liquidity risk arises from the ability to obtain fi nancial resources at a sustainable cost in order for the Group to conduct its daily business operations. The factors that infl uence this risk are related to the resources genera- ted/absorbed by operating activities, by investing and fi nancing activities and by availability of funds in the fi - nancial market.

Following the dynamic nature of the business, the Group has cen- tralised its treasury functions in order to maintain the flexibility in finding financial sources and maintain the availability of credit lines. The procedures in place to mitigate the liquidity risk are as follows: centralised treasury management and financial planning.

Use of a centralised control system to manage the net finan- cial position of the Group and its subsidiaries;

obtaining adequate credit lines to create an adequate debt structure to better use the liquidity provided by the credit system;

continuous monitoring of future cash flows based on the Group budget.

Management believes that the financial resources available to- day, along with those that are generated by the current operations will enable the Group to achieve its objectives and to meet its in- vestment needs and the repayment of its debt at the agreed upon maturity date.

It should also be noted that, with reference to the provisions of IFRS 13, financial liabilities relating to commitment to purchase minority interests are accounted for at fair value based on valua- tion models primarily attributable to level 3, as explained in the section related to principles.

CONSOLIDATED FINANCIAL STATEMENTS144 145CONSOLIDATED FINANCIAL STATEMENTS MONCLER GROUP

2021