109 COnSOLIdATed FInAnCIAL STATeMenTS108 COnSOLIdATed FInAnCIAL STATeMenTS MONCLER GROUP 2023

FInAnCIAL LIABILITIeS, TRAde PAYABLeS And OTHeR CURRenT And nOn-CURRenT PAYABLeS Trade and other payables arise when the Group acquires money, goods or services directly from a supplier. They are included within current liabilities, except for items with maturity dates greater than twelve months after the reporting date.

Financial liabilities, excluding derivatives, are recognised ini- tially at fair value which represents the amount at which the asset was bought in a current transaction between willing parties, and subsequently measured at amortised cost using the effective in- terest method. Financial liabilities that are designated as hedged items are subject to the hedge accounting requirements.

deRIVATIVeS 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 Group s risk management objectives and the hedging 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 Group.

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 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 for- eign currencies are translated in the consolidated financial 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 detailed formal restructuring plan and the plan has been imple- mented or the restructuring plan has been publicly announced. Identifiable future operating losses up to the date of a restructuring are not included 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.