MONCLER ANNUAL REPORT AT 31 DECEMBER 2020CONSOLIDATED FINANCIAL STATEMENTS 127126
With reference to the provisions of IFRS 13, it should be point- ed out that the category of financial instruments measured at fair value are mainly attributable to the hedging of ex- change rates risk. The valuation of these instruments is based on the discounting of future cash flows considering the ex- change rates at the reporting date (level 2 as explained in the section related to principles).
INTEREST RATE RISK
The Group s exposure to interest-rate risk is mainly related to cash, cash equivalents and bank loans and it is centrally managed. As at 31 December 2020, there was no hedging on interest rates, given the limited exposure to financial institutions.
9.2. CREDIT RISK
The Group has no significant concentrations of financial as- sets (trade receivables and other current assets) with a high credit risk. The Group s policies related to the management of financial assets are intended to reduce the risks arising from non solvency of wholesale customers. Sales in the retail chan- nel are made through cash and credit cards. In addition, the amount of loans outstanding is constantly monitored, so that the Group s exposure to bad debts is not significant and the percentage of writeoffs remains low. The maximum exposure to credit risk for the Group at 31 December 2020 is represent- ed by the carrying amount of trade receivables reported in the Consolidated Financial Statements.
As far as the credit risk arising from other financial as- sets other than trade receivables (including cash and short- term bank deposits) is concerned, the theoretical credit risk for the Group arises from default of the counterparty with a maximum exposure equal to the carrying amount of financial assets recorded in the Consolidated Financial Statements, as well as the nominal value of guarantees given for third parties debts or commitments indicated in note 7 of the Explanatory Notes. The Group s policies limit the amount of credit expo- sure in different banks.
9.3. LIQUIDITY RISK
Liquidity risk arises from the ability to obtain financial re- sources at a sustainable cost in order for the Group to con- duct its daily business operations. The factors that influence this risk are related to the resources generated/absorbed by operating activities, by investing and financing activities and by availability of funds in the financial market. Following the dynamic nature of the business, the Group has centralised its treasury functions in order to maintain the flexibility in finding financial sources and maintain the avail- ability of credit lines. The procedures in place to mitigate the liquidity risk are as follows: centralised treasury management and financial planning.
Use of a centralised control system to manage the net financial position of the Group and its subsidiaries;
obtaining adequate credit lines to create an adequate debt structure to better use the liquidity provided by the credit system;
continuous monitoring of future cash flows based on the Group budget.
Management believes that the financial resources available today, along with those that are generated by the current op- erations will enable the Group to achieve its objectives and to meet its investment needs and the repayment of its debt at the agreed upon maturity date.
It should also be noted that, with reference to the provi- sions of IFRS 13, financial liabilities relating to commitment to purchase minority interests are accounted for at fair value based on valuation models primarily attributable to level 3, as explained in the section related to principles.
It is reported in the following table an analysis of the contractual maturities (including interests), for financial liabilities.
9.4. OPERATING AND CAPITAL MANAGEMENT RISKS
In the management of operating risk, the Group s main objec- tive is to manage the risks associated with the development of business in foreign markets that are subject to specific laws and regulations. The Group has implemented guidelines in the following areas: appropriate level of segregation of duties; reconciliation and constant monitoring of significant
transactions; documentation of controls and procedures; technical and professional training of employees; periodic assessment of corporate risks and identification
of corrective actions. As far as the capital management risk is concerned, the Group s objectives are aimed at the going concern issue in order to ensure a fair economic return to shareholders and other stakeholders while maintaining a good rating in the cap- ital debt market. The Group manages its capital structure and makes adjustments in line with changes in general economic conditions and with the strategic objectives.
Non derivative financial liabilities (Euro/000)
Total book value
Contractual cash flows
Total within 1 year 1-2 years 2-5 years more than 5 years
Bank overdraft 0 0 0 0 0 0
Self-liquidating loans 0 0 0 0 0 0
Financial debt to third parties 0 0 0 0 0 0
Unsecured loans 0 0 0 0 0 0
Financial lease liabilities 640,297 640,297 102,791 94,381 244,831 198,294
Non derivative financial liabilities (Euro/000)
Total book value
Contractual cash flows
Total within 1 year 1-2 years 2-5 years more than 5 years
Interest rate swap hedging 0 0 0 0 0 0
Forward contracts on exchange rate hedging (4,029) (4,029) (4,029) 0 0 0
- Outflows 764 764 764 0 0 0
- Inflows (4,793) (4,793) (4,793) 0 0 0
