SEPARATE FINANCIAL STATEMENTS186 187SEPARATE FINANCIAL STATEMENTS MONCLER GROUP

2021

ue at the grant date of the share-based payment is measured to re- fl ect such conditions. With reference to the non-vesting conditions, any differences between amounts at the grant date and the actual amounts will not have any impact on the fi nancial statements.

The fair value of the amount payable to employees related to share appreciation rights, settled in cash, is recognised as an ex- pense with a corresponding increase in liabilities over the period during which the employees unconditionally become entitled to receive the payment. The liability is measured at year-end and the settlement date based on the fair value of the share appreciation rights. Any changes in the fair value of the liability are recognised in profit or loss for the year.

2.10 PROVISIONS FOR RISKS AND CHARGES

Provisions for risks and charges are recognised when the Compa- ny has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of resources will be required to settle the obligation and where the amount of the obli- gation can be reliably estimated.

Changes in estimates are recognised in the income state- ment in the period in which they occur.

2.11 REVENUE RECOGNITION

Based on the five-step model introduced by IFRS 15, the Group recognises revenues after identifying the contracts with its clients and the related services to be provided (transfer of goods and/or services), determining the consideration which it believes it is en- titled to in exchange for the provision of each of these services and assessing the manner in which these services are provided (at a given time or over time). Variable components of the consid- eration are recognised in the financial statements only when it is highly probable that there will be no significant adjustment to the amount of revenue recognised in the future.

Royalties received from licensee are accrued as earned on the basis of the terms of the relevant royalty agreement which is typically based on sales volumes.

2.12 BORROWING COSTS

Borrowing costs are recognised on an accrual basis taking in- to consideration interest accrued on the net carrying amount of financial assets and liabilities using the effective interest rate method.

2.13 TAXATION

Tax expense recognised in the consolidated income statement represents the aggregate amount related to current tax and de- ferred tax.

Current tax is determined in accordance with enforced rules established by local tax authorities. Current taxes are recognised in the consolidated income statement for the period, except to the extent that the tax arises from transactions or events which are recognised directly either in equity or in other comprehensive in- come.

Deferred tax liabilities and assets are determined based on temporary taxable or deductible differences arising between the tax bases of assets and liabilities and their carrying amounts in the Company s financial statements. Current and deferred tax as- sets and liabilities are offset when income taxes are levied by the same tax authority and when there is a legally enforceable right to offset the amounts.

Deferred tax liabilities and assets are determined using tax rates that have been enacted by the reporting date and are ex- pected to be enforced when the related deferred income tax asset is realised or the deferred tax liability is settled. Deferred tax as- sets and liabilities are not discounted. Deferred tax assets recognised on tax losses and on deductible

differences are recognised to the extent that it is probable that fu- ture taxable profits will be available against which the temporary differences can be utilised.

Tax liabilities include the estimate of risks associated with uncertainties on the tax treatments adopted for determining in- come taxes in accordance with the new IFRIC 23. These uncer- tainties can arise from: i) unclear or complex tax rules; ii) changes in tax regulations or clarifications by tax authorities; iii) ongoing tax audits and/or disputes; iv) public information on ongoing tax assessments and/or disputes involving other entities.

2.14 FOREIGN CURRENCY

The amounts included in the financial statements of each Group company are prepared using the currency of the country in which the company conducts its business.

FOREIGN CURRENCY TRANSACTIONS Foreign currency transactions are recorded at the exchange rate in effect at the transaction date. The assets and liabilities denom- inated in foreign currencies at the reporting date are translated at the exchange rate prevailing at that date. Exchange differences arising from the conversion or settlement of these items due to different rates used from the time of initial recognition are record- ed in the income statement.

2.15 FAIR VALUE

IFRS 13 is the only point of reference for the fair value measure- ment and related disclosures when such an assessment is re- quired or permitted by other standards. Specifically, the principle defines fair value as the consideration received for the sale of an asset or the amount paid to settle a liability in a regular transaction between market participants at the measurement date. In addi- tion, the new standard replaces and provides for additional dis- closures required in relation to fair value measurements by other accounting standards, including IFRS 7.

IFRS 13 establishes a hierarchy that classifies within differ- ent levels the inputs used in the valuation techniques necessary to measure fair value. The levels, presented in a hierarchical order, are as follows: level 1: Fair values measured using quoted prices (unad-

justed) in active markets for identical assets or liabilities; level 2: it Fair values measured using inputs other than quot-

ed prices included within Level 1 that are observable for the asset or liability, either directly (i.e. as prices) or indirectly (i.e. derived from prices);

level 3: Fair values measured using inputs for the asset or li- ability that are not based on observable market data (i.e. un- observable inputs).

2.16 ACCOUNTING STANDARDS AND RECENTLY PUBLISHED INTERPRETATIONS

ACCOUNTING STANDARDS, AMENDMENTS AND INTERPRETATIONS EFFECTIVE FROM 1 JANUARY 2021

Document Title Issued Date Effective Date Approval date EU Regulation and date of publication Interest rate benchmark August 2020 1 January 2021 13 January 2021 (UE) 2021/25 reform - Phase 2 14 January 2021 (Amendments to IFRS 9, IAS 39, IFRS 7, IFRS 4 and IFRS 16) COVID-19-Related Rent March 2021 1 April 2021 30 August 2021 (UE) 2021/1421 Concessions beyond 31 August 2021 30 June 2021 (Amendment to IFRS 16) Extension of the temporary June 2020 1 January 2021 15 December 2020 (UE) 2020/2097 exemption from applying 16 December 2020 IFRS 9 (Amendments to IFRS 4)