175 SePARATe FInAnCIAL STATeMenTS174 SePARATe FInAnCIAL STATeMenTS MONCLER GROUP 2023

rates that have been enacted by the reporting date and are expect- ed to be enforced when the related deferred income tax asset is re- alised or the deferred tax liability is settled. deferred tax assets and liabilities are not discounted.

deferred tax assets recognised on tax losses and on deduct- ible differences are recognised to the extent that it is probable that future 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 uncertain- ties 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 denominat- ed 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 recorded in the in- come 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 required 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 addition, the new standard replaces and provides for additional disclosures required in relation to fair value measurements by other accounting stan- dards, including IFRS 7.

IFRS 13 establishes a hierarchy that classifies within different 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 (unadjust- ed) 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).

ty, over the period during which the employees obtain the incen- tives rights. The amount recognised as an expense is adjusted to reflect the actual number of incentives for which the continued ser- vice conditions are met and the achievement of non-market condi- tions, so that the final amount recognised as an expense is based on the number of incentives that fulfill these conditions at the vest- ing date. In case the incentives granted as share-based payments whose conditions are not to be considered to maturity, the fair val- ue at the grant date of the share-based payment is measured to re- flect 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 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.

2.10 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 rec- ognises revenues after identifying the contracts with its clients and the related services to be provided (transfer of goods and/or ser- vices), determining the consideration which it believes it is entitled to in exchange for the provision of each of these services and as- sessing the manner in which these services are provided (at a giv- en time or over time). Variable components of the consideration are recognised in the financial statements only when it is highly proba- ble that there will be no significant adjustment to the amount of rev- enue 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 into consideration interest accrued on the net carrying amount of finan- cial assets and liabilities using the effective interest rate method.

2.13 TAXATION

Tax expense recognised in the consolidated income statement rep- resents the aggregate amount related to current tax and deferred 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 ex- tent that the tax arises from transactions or events which are rec- ognised directly either in equity or in other comprehensive income.

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 assets and liabilities are offset when income taxes are levied by the same tax authority and when there is a legally enforceable right to off- set the amounts.

deferred tax liabilities and assets are determined using tax