MONCLER ANNUAL REPORT AT 31 DECEMBER 2020CONSOLIDATED FINANCIAL STATEMENTS 125124

8.

CONTINGENT LIABILITIES As the Group operates globally, it is subject to legal and tax risks which may arise during the performance of its ordinary activi- ties. Based on information available to date, the Group believes that at the date of preparation of this document there are no fur- ther potential liabilities in addition to those already recorded in the provisions accrued in the Consolidated Financial Statements.

Counterparties to these agreements are major and diverse financial institutions. The exposure of contingent assets and liabilities denominated in currencies is detailed in the following table (the Euro amount of each currency):

At the reporting date, the Group had outstanding hedges for 77.8 million euros (91.0 million euros as at 31 December 2019) against receivables still to be collected and outstanding hedges for 226.6 million euros (317.6 million euros as at 31 December 2019) against future revenues. As far as the currency transactions are concerned, it should be noted that a + / -1% change in their exchange rates would have the following effects:

Details of the balances expressed in foreign currency (Euro/000)

31 December 2020

Euro JP

Yen US

Dollar CN

Yuan HK

Dollar CH

Franc GB

Pound KR

Won CA

Dollar Other Total

Cash and cash equivalent 555,687 69,614 84,190 95,984 10,276 6,552 19,081 32,999 4,442 44,673 923,498

Financial assets 4,793 0 0 0 0 0 0 0 0 0 4,793

Trade receivable 33,222 43,356 4,125 65,248 694 245 5,554 15,364 2,824 3,512 174,144

Other current assets 9,308 2,455 1,872 697 2,036 34 1,143 65 452 3,024 21,086

Other non-current assets 4,144 9,329 3,539 5,438 6,028 507 701 727 929 2,181 33,523

Total assets 607,154 124,754 93,726 167,367 19,034 7,338 26,479 49,155 8,647 53,390 1,157,044

Trade payables (150,364) (24,187) (14,494) (13,241) 635 (1,118) (1,744) (1,084) (1,551) (4,755) (211,903)

Borrowings (392,544) (44,192) (118,139) (15,959) (42,708) (11,287) (27,563) (4,509) (9,747) (46,619) (713,267)

Other current payables (34,319) (8,372) (10,931) (11,138) (1,005) (482) (5,714) (7,356) (1,269) (3,424) (84,010)

Other non-current payables (140) 0 0 0 0 0 (2) 0 0 0 (142)

Total liabilities (577,367) (76,751) (143,564) (40,338) (43,078) (12,887) (35,023) (12,949) (12,567) (54,798) (1,009,322)

Total, net foreign positions 29,787 48,003 (49,838) 127,029 (24,044) (5,549) (8,544) 36,206 (3,920) (1,408) 147,722

Details of the balances expressed in foreign currency (Euro/000)

31 December 2019

Euro JP

Yen US

Dollar CN

Yuan HK

Dollar CH

Franc GB

Pound KR

Won CA

Dollar Other Total

Cash and cash equivalent 504,999 50,839 53,622 31,584 16,705 5,582 15,266 28,648 4,882 46,946 759,073

Financial assets 3,120 0 0 0 0 0 0 0 0 0 3,120

Trade receivable 36,096 49,401 15,300 43,704 849 91 4,383 12,031 1,770 4,294 167,919

Other current assets 11,651 3,980 655 1,169 201 21 1,659 84 101 4,237 23,758

Other non-current assets 3,911 9,192 1,688 3,688 6,854 503 509 750 618 2,744 30,457

Total assets 559,777 113,412 71,265 80,145 24,609 6,197 21,817 41,513 7,371 58,221 984,327

Trade payables (171,836) (39,954) (13,729) (9,234) (2,545) (489) (2,245) (1,782) (1,202) (5,605) (248,621)

Borrowings (400,662) (49,473) (117,782) (21,242) (40,846) (9,106) (27,237) (5,451) (9,570) (57,409) (738,778)

Other current payables (46,952) (4,178) (9,763) (4,217) (1,211) (872) (4,223) (11,418) (732) (3,568) (87,134)

Other non-current payables (70) 0 30 0 0 4 (2) 0 (185) 0 (223)

Total liabilities (619,520) (93,605) (141,244) (34,693) (44,602) (10,463) (33,707) (18,651) (11,689) (66,582) (1,074,756)

Total, net foreign positions (59,743) 19,807 (69,979) 45,452 (19,993) (4,266) (11,890) 22,862 (4,318) (8,361) (90,429)

Details of the transactions expressed in foreign currency (Euro/000)

JP Yen

US Dollar

CN Yuan

HK Dollar

KR Won

GB Pound Other

Effect of an exchange rate increase amounting to +1%

Revenue 2.267 2.244 2.807 195 1.179 664 285

Operating profit 1.195 1.106 1.874 (33) 701 464 58

Effect of an exchange rate decrease amounting to -1%

Revenue (2.313) (2.289) (2.864) (199) (1.203) (678) (291)

Operating profit (1.219) (1.129) (1.912) 34 (715) (473) (59)

9.

INFORMATION ABOUT FINANCIAL RISKS The Group s financial instruments include cash and cash equivalents, loans, receivables and trade payables and other current receivables and payables and non-current assets as well as derivatives.

The Group is exposed to financial risks related to its op- erations: market risk (mainly related to exchange rates and interest rates), credit risk (associated with both regular cli- ent relations and financing activities), liquidity risk (with par- ticular reference to the availability of financial resources and access to the credit market and financial instruments) and capital risk.

Financial risk management is carried out by Headquar- ters, which ensures primarily that there are sufficient finan- cial resources to meet the needs of business development and that resources are properly invested in income-generating activities.

The Group uses derivative instruments to hedge its expo- sure to specific market risks, such as the risk associated with fluctuations in exchange rates and interest rates, on the basis of the policies established by the Board of Directors.

9.1. MARKET RISK

FOREIGN EXCHANGE RATE RISK

The Group operates internationally and is exposed to foreign exchange rate risk primarily related to the U.S. Dollar, the Jap- anese Yen and the Chinese Renminbi and to a lesser extent to the Hong Kong Dollar, the British Pound, Korean Won, Ca- nadian Dollars, the Swiss Franc, Taiwan Dollars and Singapor Dollars.

The Group regularly assesses its exposure to financial market risks and manages these risks through the use of de- rivative financial instruments, in accordance with its estab- lished risk management policies.

The Group s policy permits derivatives to be used only for managing the exposure to fluctuations in exchange rates con- nected with future cash flows and not for speculative purposes.

During 2020, the Group put in place a policy to hedge the exchange rates risk on transactions with reference to the major currencies to which it is exposed: USD, JPY, CNY, HKD, GBP, KRW, CAD, CHF, TWD and SGD. The decrease in volumes due to Covid-19 did not have a significant impact on hedging policies and did not lead to over-hedging. The instruments used for these hedges are mainly Currency Forward Contracts and Currency Option Contracts.

The Group uses derivative financial instruments as cash flow hedges for the purpose of redetermining the exchange rate at which forecasted transactions denominated in foreign currencies will be accounted for.