MONCLER ANNUAL REPORT AT 31 DECEMBER 2020CONSOLIDATED FINANCIAL STATEMENTS 109108

5.2. IMPAIRMENT OF INTANGIBLE ASSETS WITH AN INDEFINITE USEFUL LIFE AND GOODWILL

The captions Brands, Other intangible fixed assets with an indefinite useful life and Goodwill deriving from previous acquisitions have not been amortised, but have been tested for impairment by management.

The impairment test on the brand was performed by comparing its carrying value with that derived from the discounted cash flow method applying the Royalty Relief Method, based on which the cash flows are linked to the recognition of a royalty percentage applied to revenues that the brand is able to generate. The recoverable amount of goodwill has been tested based on the «asset side» approach which compares the value in use of the cash-generating unit with the carrying amount of its net invested capital.

For the 2020 valuation, the expected cash flows and revenues for 2021 are based on the Budget approved by the Board of Directors on 28 January 2021, for 2022, on the 2020-2022 Business Plan approved by the Board of Directors on 11 June 2020 and for 2023 to 2025, on the basis of management estimates consistent with the expected development plans and assessments of independent external consultants. The «g» rate used was 2.9%.

The discount rate was calculated using the Weighted Average Cost of Capital (WACC), by weighting the expected rate of return on invested capital, net of hedging costs from a sample of companies within the same industry. The calculation took into account fluctuation in the market as compared to the previous year and the resulting impact on interest rates. The weighted average cost of capital (WACC) was calculated at 7.8%. The results of the sensitivity analysis indicated that the carrying amount of the Moncler brand is in line with the benchmark with a g rate = 0% and WACC = 69.8%. Similarly, the same sensitivity analysis applied to the entire cash-generating unit shows a full recovery considering changes in parameters still higher than those indicated for the brand, confirming the wide recoverability of goodwill. It is also underlined that the market capitalisation of the Company, based on the average price of Moncler share in 2020, showed a significant positive difference with respect to the Group net equity, confirming again the value of the goodwill.

5.3. NET PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipments (Euro/000)

31 December 2020 31 December 2019

Gross value

Accumulated depreciation

and impairment Net value Net value

Land and buildings 790,863 (192,835) 598,028 597,930

Plant and Equipment 33,273 (12,268) 21,005 14,429

Fixtures and fittings 127,187 (83,671) 43,516 45,464

Leasehold improvements 263,157 (155,703) 107,454 119,932

Other fixed assets 31,079 (21,712) 9,367 9,045

Assets in progress 23,617 0 23,617 19,740

Total 1,269,176 (466,189) 802,987 806,540

The change in property, plant and equipment is included in the following tables: As at 31 December 2020

As at 31 December 2019

Gross value Property, plant and equipment (Euro/000)

Land and buildings

Plant and Equipment

Fixtures and fittings

Leasehold improvements

Other fixed assets

Assets in progress and advances Total

1 January 2020 699,688 22,960 119,019 246,730 26,525 19,740 1,134,662

Acquisitions 141,183 4,357 15,575 25,453 4,739 21,251 212,558

Disposals (12,758) (323) (3,328) (4,385) (200) (409) (21,403)

First time adoption IFRS16 0 0 0 0 0 0 0

Translation adjustement (23,574) (74) (5,016) (9,788) (403) (363) (39,218)

Other movements, including transfers (13,676) 6,353 937 5,147 418 (16,602) (17,423)

31 December 2020 790,863 33,273 127,187 263,157 31,079 23,617 1,269,176

Accumulated depreciation and impairment PPE (Euro/000)

Land and buildings

Plant and Equipment

Fixtures and fittings

Leasehold improvements

Other fixed assets

Assets in progress and advances Total

1 January 2020 (101,758) (8,531) (73,555) (126,798) (17,480) 0 (328,122)

Depreciation (121,643) (3,931) (15,925) (39,230) (4,573) 0 (185,302)

Disposals 6,698 167 2,179 4,297 92 0 13,433

Translation adjustement 7,889 27 3,556 6,102 249 0 17,823

Other movements, including transfers 15,979 0 74 (74) 0 0 15,979

31 December 2020 (192,835) (12,268) (83,671) (155,703) (21,712) 0 (466,189)

Gross value Property, plant and equipment (Euro/000)

Land and buildings

Plant and Equipment

Fixtures and fittings

Leasehold improvements

Other fixed assets

Assets in progress and advances Total

1 January 2019 6,339 14,400 108,088 187,319 18,730 18,530 353,406

Acquisitions 219,198 8,723 16,621 51,913 6,563 8,976 311,994

Disposals (1,643) (171) (3,545) (6,617) (285) 0 (12,261)

First time adoption IFRS16 469,165 0 0 0 1,407 0 470,572

Translation adjustement 6,629 (56) 1,833 3,067 73 124 11,670

Other movements, including transfers 0 64 (3,978) 11,048 37 (7,890) (719)

31 December 2019 699,688 22,960 119,019 246,730 26,525 19,740 1,134,662

Accumulated depreciation and impairment PPE (Euro/000)

Land and buildings

Plant and Equipment

Fixtures and fittings

Leasehold improvements

Other fixed assets

Assets in progress and advances Total

1 January 2019 (863) (6,152) (59,198) (96,855) (13,368) 0 (176,436)

Depreciation (100,854) (2,484) (15,531) (34,373) (4,290) 0 (157,532)

Disposals 202 96 1,927 5,582 216 0 8,023

Translation adjustement (243) 9 (950) (1,542) (38) 0 (2,764)

Other movements, including transfers 0 0 197 390 0 0 587

31 December 2019 (101,758) (8,531) (73,555) (126,798) (17,480) 0 (328,122)