169 SEPARATE FINANCIAL STATEMENTS168 SEPARATE FINANCIAL STATEMENTS MONCLER GROUP 2022

uation of impaired receivables based on a debtor s reliability and ability to pay the due amounts.

The value of receivables is shown in the statement of finan- cial position net of the related bad debt provision. Write-downs made in accordance with IFRS 9 are recognised in the consolidat- ed income statement net of any positive effects associated with re- versals of impairment.

TRADE PAYABLES AND OTHER CURRENT AND NON-CURRENT PAYABLES Trade and other payables arise when the Company acquires mon- ey, goods or services directly from a supplier. They are included in current liabilities, except for items with maturity dates greater than twelve months after the reporting date.

Payables are stated, at initial recognition, at fair value, which usually comprises the cost of the transaction, inclusive of transac- tion costs. Subsequently, they are stated at amortised cost using the effective interest method.

FINANCIAL LIABILITIES The classification of financial liabilities has not changed since the introduction of IFRS 9. Amounts due to banks and other lenders are initially recognised at fair value, net of directly attributable in- cidental costs, and are subsequently measured at amortised cost, applying the effective interest rate method. If there is a change in the expected cash flows, the value of the liabilities is recalculated to reflect this change on the basis of the present value of the new expected cash flows and the internal rate of return initially deter- mined. Amounts due to banks and other lenders are classified as current liabilities, unless the Company has an unconditional right to defer their payment for at least 12 months after the reference date. Loans are classified as non-current when the company has an un- conditional right to defer payments for at least twelve months from the reporting date.

DERIVATIVE INSTRUMENTS Consistent with the provisions of IFRS 9, derivative financial instru- ments may be accounted for using hedge accounting only when:

the hedged items and the hedging instruments meet the eli- gibility requirements;

at the beginning of the hedging relationship, there is a formal designation and documentation of the hedging relationship, of the Company s risk management objectives and the hedg- ing strategy;

the hedging relationship meets all of the following effective- ness requirements:

there is an economic relationship between the hedged item and the hedging instrument;

the effect of credit risk is not dominant with respect to the changes associated with the hedged risk;

the hedge ratio defined in the hedging relationship is met, including through rebalancing actions, and is con- sistent with the risk management strategy adopted by the Company.

FAIR VALUE HEDGE A derivative instrument is designated as fair value hedge when it hedges the exposure to changes in fair value of a recognised as- set or liability, that is attributable to a particular risk and could af- fect profit or loss. The gain or loss on the hedged item, attributable to the hedged risk, adjusts the carrying amount of the hedged item and is recognised in the consolidated income statement.

CASH FLOW HEDGE When a derivative financial instrument is designated as a hedging instrument for exposure to variability in cash flows, the effective portion of changes in fair value of the derivative financial instrument is recognised among the other components of the comprehensive income statement and stated in the cash flow hedge reserve. The effective portion of changes in fair value of the derivative financial instrument that is recognised in the other components of the com- prehensive income statement is limited to the cumulative change in the fair value of the hedged instrument (at present value) since the inception of the hedge. The ineffective portion of changes in fair

At the time of subsequent measurement, the measurement made at the time of recognition is updated and any changes in fair val- ue are recognised in the statement of comprehensive income. As for the category above, these assets are subject to the impairment model described in the paragraph Trade receivables, financial as- sets and other current and non-current receivables.

All financial assets not classified as valued at amortised cost or at FVOCI, as indicated above, are valued at FVTPL. All derivative financial instruments are included. On initial recognition, the Com- pany may irrevocably designate the financial asset as measured at fair value through profit/(loss) for the period if this eliminates or sig- nificantly reduces a misalignment in accounting that would other- wise result from measuring the financial asset at amortised cost or at FVOCI.

At the time of subsequent measurement, financial assets measured at FVTPL are valued at fair value. Gains or losses aris- ing from changes in fair value are recognised in the consolidated in- come statement in the period in which they are recognised under financial income/expenses.

Financial assets are derecognised from the financial state- ments when the contractual rights to receive cash flows from them expire, when the contractual rights to receive cash flows from a transaction in which all the risks and rewards of ownership of the financial asset are materially transferred or when the Company neither transfers nor retains materially all the risks and rewards of ownership of the financial asset and does not retain control of the financial asset.

Financial liabilities are classified as valued at amortised cost or at FVTPL. A financial liability is classified at FVTPL when it is held for trading, it represents a derivative or is designated as such on initial recognition. Financial liabilities at FVTPL are measured at fair value and any changes, including interest expense, are recognised in profit or loss for the period. Other financial liabilities are measured at amortised cost using the effective interest method. Interest ex- pense and exchange rate gains/(losses) are recognised in profit or loss for the period, as are any gains or losses from derecognition.

The Company s financial instruments consist primarily of cash and cash equivalents, accounts receivable, accounts payable, other current and non-current assets and liabilities, investments, borrowings and derivative financial instruments.

CASH AND CASH EQUIVALENTS Cash and cash equivalents include cash and short-term deposits held with banks and most liquid assets that are readily convertible into cash and that have insignificant risk of change in value. Bank overdrafts are recorded under current liabilities on the Company s statement of financial position.

TRADE RECEIVABLES AND OTHER CURRENT AND NON-CURRENT RECEIVABLES Trade and other receivables generated when the Company pro- vides money, goods or services directly to a third party are classi- fied as current assets, except for items with maturity dates greater than twelve months after the reporting date.

Receivables are valued if they have a fixed maturity, at amor- tised cost calculated using the effective interest method. When fi- nancial assets do not have a fixed maturity, they are valued at cost. Receivables with a maturity of over one year, which are non-interest bearing or which accrue interest below market rates, are discount- ed using market rates.

The financial assets listed above are valued based on the im- pairment model introduced by IFRS 9 or by adopting an expect- ed loss model, replacing the IAS 39 framework, which is typically based on the valuation of the incurred loss.

For trade receivables, the Company adopts the so-called simplified approach, which does not require the recognition of peri- odic changes in credit risk, but rather the accounting of an Expect- ed Credit Loss ( ECL ) calculated over the entire life of the credit (so-called lifetime ECL).

In particular, the policy implemented by the Company pro- vides for the stratification of trade receivables based on the days past due and an assessment of the solvency of the counterparty and applies different write-down rates that reflect the relative ex- pectations of recovery. The Company then applies an analytical val-