MONCLER ANNUAL REPORT AT 31 DECEMBER 2020CONSOLIDATED FINANCIAL STATEMENTS 111110

5.4. DEFERRED TAX ASSETS AND DEFERRED TAX LIABILITIES

Deferred tax assets and deferred tax liabilities are offset only when there is a law within a given tax jurisdiction that provides for such right to offset. The balances were as follows as at 31 December 2020 and 31 December 2019:

The decrease in deferred tax liabilities derives from the release resulting from the realignment of the Moncler trademark s tax value to the statutory value. The change in deferred tax assets and liabilities, without taking into consideration the right of offset of a given tax jurisdiction, is detailed in the following table:

Deferred taxation (Euro/000) 31 December 2020 31 December 2019

Deferred tax assets 150,832 129,134

Deferred tax liabilities (6,396) (68,710)

Net amount 144,436 60,424

Deferred tax assets (liabilities) (Euro/000)

Opening balance - 1 January

2020

Taxes charged to the income

statement

Taxes accounted for

in Equity

Effect of currency

translation

First time adoption

IFRS16 Other

movements

Closing balance -

31 December 2020

Tangible and intangible assets 18,768 3,603 0 (743) 0 (587) 21,041

Inventories 84,787 15,758 0 (3,966) 0 564 97,143

Trade receivables 3,858 (538) 0 (85) 0 0 3,235

Derivatives 427 0 (43) 0 0 0 384

Employee benefits 3,105 (1,012) 25 (89) 0 0 2,029

Provisions 11,487 4,814 0 (712) 0 0 15,589

Trade payables 3,921 968 0 (32) 0 0 4,857

Other temporary items 2,740 2,084 0 193 0 22 5,039

Tax loss carried forward 41 1,471 0 3 0 0 1,515

Tax assets 129,134 27,148 (18) (5,431) 0 (1) 150,832

Tangible and intangible assets (65,640) 61,810 0 233 0 1 (3,596)

Financial assets 52 (352) 0 0 0 0 (300)

Inventories (753) (312) 0 0 0 0 (1,065)

Derivatives (120) 0 (759) 0 0 0 (879)

Trade payables 3 (3) 0 7 0 0 7

Other temporary items (2,252) (2,451) (118) 4,306 0 0 (515)

Tax loss carried forward 0 5 0 (53) 0 0 (48)

Tax liabilities (68,710) 58,697 (877) 4,493 0 1 (6,396)

Net deferred tax assets (liabilities) 60,424 85,845 (895) (938) 0 0 144,436

The changes related to the right of use assets arising from the application of the IFRS 16 are reported here below:

In addition to the above mentioned effect arising from the application of the IFRS 16, the changes in property plant and equip- ment in 2020 showed an increase in the captions plant and equipment, fixture and fittings, leasehold improvements and assets in progress and advances: all of these captions are mainly related to the development of the retail network, the relocation/ expansion of some important stores and the expansion/automation of the italian logistic hub. Please refer to the Directors report for an analysis of investments made during the year. In light of the significance of the actual and possible future impacts of the Covid-19 pandemic, the Group has performed an im- pairment test as described in paragraph 2.7.

For each Cash Generating Unit (CGU), the recoverable value was verified with an asset side approach by comparing the value in use of the relevant 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, the average duration of rental contracts and the assessments of independent external consultants.

The discount rate used for discounting cash flows is equal to the Group WACC (7.8%) disaggregated for each CGU, while the Group G rate is equal to 2.90% maintained for each CGU, as shown below:

The results of the sensitivity analysis showed that recoverable values were significantly higher than carrying values, even in the presence of large variations in the parameters.

Right of use assets (Euro/000)

Land and buildings

Other fixed assets Total

1 January 2020 592,408 1,215 593,623

Acquisitions 139,923 850 140,773

Disposals (6,061) (8) (6,069)

Depreciation (121,117) (767) (121,884)

Translation adjustement (15,646) 1 (15,645)

31 December 2020 589,507 1,291 590,798

EMEA APAC AMERICAS JAPAN KOREA GROUP

WACC 7.20% 9.00% 7.70% 7.60% 7.80% 7.80%

g rate 2.90% 2.90% 2.90% 2.90% 2.90% 2.90%