109 CONSOLIDATED FINANCIAL STATEMENTS108 CONSOLIDATED FINANCIAL STATEMENTS MONCLER GROUP 2022
the inception of the hedge. The ineffective portion of changes in fair value of the derivative financial instrument is recognised immedi- ately in the profit/(loss) for the period.
If the hedge ceases to meet the eligibility criteria or the hedg- ing instrument is sold, matures or is exercised, hedge accounting ceases prospectively. When hedge accounting for cash flow hedg- es ceases, the accrued amount in the cash flow hedge reserve re- mains in equity until, in the case of a hedge of a transaction that results in the recognition of a non-financial asset or non-financial li- ability, it is included in the cost of the non-financial asset or non-fi- nancial liability on initial recognition or, in the case of other cash flow hedges, it is reclassified in profit or loss for the period in the same period or periods in which the hedged expected future cash flows affects profit/(loss) for the period.
If no more hedged future cash flows are expected, the amount shall be reclassified immediately from the cash flow hedge reserve and the reserve for hedging costs to profit/(loss) for the period.
If hedge accounting cannot be applied, gains or losses, aris- ing from the fair value measurement of a derivative financial instru- ment, are immediately recognised in income statement.
Following the hedging relationships put in place, revenues in foreign currencies are translated in the consolidated finan- cial statements at the corresponding forward rate for the relative hedged volume.
2.11 EMPLOYEE BENEFITS
Short-term employee benefits, such as wages, salaries, social se- curity contributions, paid leave and annual leave due within twelve months of the consolidated statement of financial position date and all other fringe benefits are recognised in the year in which the ser- vice is rendered by the employee.
Benefits granted to employees, which are payable on or after the termination of employment through defined benefit and contri- bution plans, are recognised over the vesting period.
DEFINED BENEFIT SCHEMES Defined benefit schemes are retirement plans determined based on employees remuneration and years of service.
The Group obligation to contribute to employees benefit plans and the related current service cost are determined by using an actuarial valuation defined as the projected unit credit method. The cumulative net amount of all actuarial gains and losses are rec- ognised in equity within other comprehensive income.
The amount recognised as a liability under the defined ben- efit plans is the present value of the related obligation, taking into consideration expenses to be recognised in future periods for em- ployee service in prior periods.
DEFINED CONTRIBUTION SCHEMES Contribution made to a defined contribution plan is recognised as an expense in the income statement in the period in which the em- ployees render the related service.
Up to 31 December 2006 Italian employees were eligible to defined benefit schemes referred as post-employment benefit ( TFR ). With the act n. 296 as of 27 December 2006 and subse- quent decrees ( Pension Reform ) issued in early 2007, the rules and the treatment of TFR scheme were changed. Starting from con- tribution vested on or after 1 January 2007 and not yet paid at the reporting date, referring to entities with more than 50 employees, Italian post-employment benefits is recognised as a defined con- tribution plan. The contribution vested up to 31 December 2006 is still recognised as a defined benefit plan and accounted for using actuarial assumptions.
2.12 PROVISION FOR RISKS AND CHARGES
Provisions are recognised when the Group has a present legal or constructive obligation as a result of past events, for which it is probable that an outflow of economic resources will be required to settle the obligation and where the amount of the obligation can be reliably estimated.
Restructuring provision is recognised when the Group has a de- tailed formal restructuring plan and the plan has been implemented or the restructuring plan has been publicly announced. Identifiable future operating losses up to the date of a restructuring are not in- cluded in the provision.
Changes in estimates are recognised in the income state- ment in the period in which they occur.
2.13 SHARE-BASED PAYMENTS
The fair value at grant date of the incentives granted to employees in the form of share-based payments, that are equity settled, is usu- ally included in expenses with a matching increase in equity over the period during which the employees obtain the incentives rights. The amount recognised as an expense is adjusted to reflect the ac- tual number of incentives for which the continued service condi- tions are met and the achievement of non-market conditions, so that the final amount recognised as an expense, is based on the number of incentives that fulfil these conditions at the vesting date. In case the incentives granted as share-based payments whose conditions are not to be considered to maturity, the fair value at the grant date of the share-based payment is measured to reflect such conditions. With reference to the non-vesting conditions, any dif- ference between amounts at the grant date and the actual amounts will not have any impact on the Consolidated Financial 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.
2.14 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 enti- tled 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).
Wholesale sales are recognised when goods are dispatched to trade customers, reflecting the transfer of risks and rewards. The provision for returns and discounts, recorded as a revenue adjust- ment, is estimated and accounted based on future expectation, tak- ing into consideration historical return trends and is recorded as a variable component of the contractual consideration with the con- current recognition of a liability for returns and of the correspond- ing asset in the statement of financial position.
Variable components of the consideration (for example, the effect of returns) are recognised in the financial statements only when it is highly probable that there will be no significant adjust- ment to the amount of revenue recognised in the future.
Retail sales are recognised at the date of transactions with fi- nal customers.
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.
Upon receipt of an advance payment from a client, the Group recognises the amount of the advance payment for the obligation to transfer assets in the future under Other current liabilities and derecognises this liability by recognising the revenue when the as- sets are transferred.
The Group recognises the amounts paid to customers as a reduction in revenues when the costs for services cannot be reli- ably estimated or in costs when the costs for services can reliably be estimated.