171 SePARATe FInAnCIAL STATeMenTS170 SePARATe FInAnCIAL STATeMenTS MONCLER GROUP 2023

On initial recognition of a security not held for trading, the Compa- ny may make an irrevocable choice to present subsequent changes in fair value in the other components of the comprehensive income statement. This choice is made for each asset.

At the time of subsequent measurement, the measurement made at the time of recognition is updated and any changes in fair value are recognised in the statement of comprehensive income. As for the category above, these assets are subject to the impair- ment model described in the paragraph Trade receivables, financial assets 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 fi- nancial instruments are included. On initial recognition, the Company may irrevocably designate the financial asset as measured at fair val- ue through profit/(loss) for the period if this eliminates or significant- ly reduces a misalignment in accounting that would otherwise 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 trans- action in which all the risks and rewards of ownership of the financial asset are materially transferred or when the Company neither trans- fers 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

In the statement of financial position, the Company reports right of use assets that do not meet the definition of real estate invest- ments in the item Property, plant and equipment and lease liabilities in the item Borrowings.

The Company recognises the related payments due for leas- es as a cost on a straight-line basis over the lease term.

For contracts signed before 1 January 2019, the Company establish- ed whether the agreement was or contained a lease by checking if:

fulfilment of the agreement depended on the use of one or more specific assets; and

the agreement transferred the right to use the asset.

Other assets subject to leases are classified as operating leases and are not recognised in the Company s statement of financial po- sition. Payments relating to operating leases are recognised as a straight-line cost over the lease term, while incentives granted to the lessee are recognised as an integral part of the overall lease cost over the lease term.

2.7 FINANCIAL INSTRUMENTS

Trade receivables and debt securities issued are recognised when they are originated. All other financial assets and liabilities are ini- tially recognised at the trade date, i.e., when the Company becomes a contractual party to the financial instrument.

except for trade receivables that do not comprise a signifi- cant financing component, financial assets are initially measured at fair value plus or minus, in the case of financial assets or liabilities not measured at FVTPL, the transaction costs directly attributable to the acquisition or issue of the financial asset. At the time of initial recognition, trade receivables that do not have a significant financ- ing component are valued at their transaction price.

On initial recognition, a financial asset is classified based on its valuation: at amortised cost, at fair value through other compre- hensive income (FVOCI) and at fair value through profit/(loss) for the period (FVTPL).

Financial assets are not reclassified after initial recognition, unless the Company changes its business model for managing fi- nancial assets. In that case, all the financial assets concerned are reclassified on the first day of the first reporting period following the change in business model.

A financial asset shall be measured at amortised cost if both of the following conditions are met and if it is not designated at FVTPL:

the financial asset is held as part of a business model whose objective is to hold the financial assets in order to collect the related contractual cash flows; and

the contractual terms of the financial asset provide for cash flows at certain dates consisting solely of payments of princi- pal and interest on the amount of principal to be repaid.

At the time of subsequent measurement, assets belonging to this category are valued at amortised cost, using the effective inter- est rate. The effects of measurement are recognised among the fi- nancial income components. These assets are also subject to the impairment model described in the paragraph Trade receivables, fi- nancial assets and other current and non-current receivables.

A financial asset shall be measured at FVOCI if both of the following conditions are met and if it is not designated at FVTPL:

the financial asset is held as part of a business model whose objective is achieved both through the collec- tion of the contractual cash flows and through the sale of the financial assets; and

the contractual terms of the financial asset provide for cash flows at certain dates consisting solely of pay- ments of principal and interest on the amount of prin- cipal to be repaid.