SEPARATE FINANCIAL STATEMENTS178 179SEPARATE FINANCIAL STATEMENTS MONCLER GROUP

2021

on the amounts recognised for assets and liabilities in the period immediately after the reporting date, the following notes will in- clude the relevant information. The estimates pertain mainly to the following captions of the Con- solidated Financial Statements: impairment of non-current assets with indefinite useful

lives and investments; provision for losses and contingent liabilities. Incentive systems and variable remuneration.

RECOVERABLE AMOUNT OF NON-CURRENT ASSETS WITH INDEFINITE USEFUL LIVES AND INVESTMENTS ( IMPAIRMENT ) Management periodically reviews non-current assets, assets held for sale and investments in subsidiaries for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is estimated based on the present value of future cash flows expected to derive from the as- set or from the sale of the asset itself, at a suitable discount rate.

When the recoverable amount of a non-current asset is less than its carrying amount, an impairment loss is recognised im- mediately in the income statement and the carrying amount is reduced to its recoverable amount determined based on value-in- use calculation or its sale s value in an arm s length transaction, with reference to the most recent Group business plan.

PROVISION FOR LOSSES AND CONTINGENT LIABILITIES The Group could be subject to legal and tax litigations arising in the countries where it operates. Litigation is inevitably subject to risk and uncertainties surrounding the events and circumstanc- es associated with the claims and associated with local legislation and jurisdiction. In the normal course of business, management requests advice from the Group legal consultants and tax ex- perts. The recognition of a provision is based on management s best estimate when an outflow of resources is probable to settle the obligation and the amount can be reliably estimated. In those circumstances where the outflow of resources is possible or the amount of the obligation cannot be reliably measured, the contin- gent liabilities are disclosed in the notes to Consolidated Finan- cial Statements.

INCENTIVE SYSTEMS AND VARIABLE REMUNERATION For the description of the determination of the fair value of share- based incentive payments for the Moncler Group management, please see paragraph 2.9.

2. SIGNIFICANT ACCOUNTING PRINCIPLES

The accounting principles set out below have been applied consistently for fi scal year 2021 and the prior year.

2.1 PROPERTY, PLANT AND EQUIPMENT Property, plant and equipment are stated at acquisition or manu- facturing cost, not revalued net of accumulated depreciation and impairment losses ( impairment ). Cost includes original pur- chase price and all costs directly attributable to bringing the as- set to its working condition for its intended use.

DEPRECIATION Depreciation of property, plant and equipment is calculated and recognised in the income statement on a straight-line basis over the estimated useful lives as reported in the following 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.

2.2 INTANGIBLE ASSETS

BRANDS Separately acquired brands are shown at historical cost. Brands acquired in a business combination are recognised at fair value at the acquisition date.

Brands have a indefinite useful life and are carried at cost less accumulated impairment. Brands are not amortised but sub- ject to impairment test performed annually or more frequently if events or changes in circumstances indicate that the carrying val- ue may not be recoverable.

For further details please refer to note 2.5 "Impairment of non-financial assets".

INTANGIBLE ASSETS WITH A DEFINITE USEFUL LIFE Software (including licenses and separately identifiable external development costs) is capitalised as intangible asset at purchase price, plus any directly attributable cost of preparing that asset for its intended use. Software and other intangible assets that are acquired by the Group and have definite useful lives are meas- ured at cost less accumulated amortisation and accumulated im- pairment losses.

AMMORTISATION OF INTANGIBLE ASSETS WITH A DEFINITE USEFUL LIFE Intangible assets with a definite useful life are amortised on a straight line basis over their estimated useful lives as described in the following table:

Category Depreciation period License rights Based on market conditions within the licence period or legal limits to use the assets Software From 3 to 5 years Other intangible assets Based on market conditions generally within the period of control over the asset