MONCLER ANNUAL REPORT AT 31 DECEMBER 2020SEPARATE FINANCIAL STATEMENTS 151150

For further details please refer to note 2.5 Impairment of non-financial assets .

INTANGIBLE ASSETS WITH A DEFINITE USEFUL LIFE

Software (including licenses and separately identifiable ex- ternal development costs) is capitalised as intangible asset at purchase price, plus any directly attributable cost of preparing that asset for its intended use. Software and other intangible assets that are acquired by the Group and have definite useful lives are measured at cost less accumulated amortisation and accumulated impairment losses.

AMMORTISATION OF INTANGIBLE ASSETS WITH A DEFINITE USEFUL LIFE

Intangible assets with a definite useful life are amortised on a straight line basis over their estimated useful lives as de- scribed in the following table:

2.3. NON-CURRENT ASSETS AVAILABLE FOR SALE AND DISCONTINUED OPERATIONS

Non-current assets available for sale and discontinued opera- tions are classified as available for sale when their values are recoverable mainly through a probable sale transaction. In such conditions, they are valued at the lower of their carrying value or fair value, net of cost to sell if their value is mainly re- coverable through a sale transaction instead of continued use. Discontinued operations are operations that: include a separate line of business or a different geo-

graphical area; are part of a single coordinated plan for the disposal of

a separate major line of business or geographical area of activity;

consist of subsidiaries acquired exclusively for the pur- pose of being sold.

In the income statement, non-current assets held for sale and disposal groups that meet the requirements of IFRS 5 to be defined as «discontinued operations», are presented in a single caption that includes both gains and losses, as well as losses or gains on disposal and the related tax effect. The comparative period is subsequently restated in accordance with IFRS 5.

As far as the financial position is concerned, non-current assets held for sale and disposal groups that meet the require- ments of IFRS 5 are reclassified as current assets and liabilities in the period in which such requirements arise. The compar- ative financial statements are not restated nor reclassified.

2.4. INVESTMENTS

Investments in subsidiaries, associates and others are account- ed for as follows: at cost, inclusive of any additional charges; or in accordance with IFRS 9. The Company recognises dividends from subsidiaries, asso- ciates and others in its income statement when the right to receive such dividends has materialised.

2.5. IMPAIRMENT OF NON-FINANCIAL ASSETS

On an annual basis, the Company tests for impairment prop- erty, plant and equipment and intangible assets with a defi- nite useful life. Whenever events or changes in circumstance indicate that the carrying amount may not be recoverable, an impairment loss is recognised for the amount by which the carrying amount exceeds its recoverable amount.

Assets with an indefinite useful life are not subject to amortisation and are tested annually or more frequently for impairment, whenever events or changes in circumstance in- dicate that the carrying amount may not be recoverable.

When the recoverable amount for individual asset cannot be reliably estimated, the Company determines the recover- able amount of the cash-generating unit to which the asset belongs. The recoverable amount is the higher of an asset s fair value less costs to sell and value-in-use. The Group deter- mines the value in use as the present value of future cash flows expected to be derived from the asset or from the cash-gen- erating unit, gross of tax effects, by applying an appropriate discount rate that reflects market time value of money and the risks inherent to the asset. An impairment loss is recog- nised for the amount by which the carrying amount exceeds its recoverable amount.

With the exception of impairment losses recognised on goodwill, when the circumstances that led to the loss no longer exist, the carrying amount of the asset is increased to its recoverable amount and cannot exceed the carrying amount that would have been determined had there been no loss in value. The reversal of an impairment loss is recognised immediately in the income statement.

2.6. LEASED ASSETS

On 13 January 2016, the IASB published the new standard IFRS 16 Leases, which replaces IAS 17. This standard was endorsed by the European Union, with its publication on 9 November 2017. IFRS 16 is effective for financial statements commencing on or after 1 January 2019. The new standard eliminates the difference in the recognition of operating and finance leases, even despite elements that simplify its adoption, and intro- duces the concept of control in the definition of a lease. To determine whether a contract is a lease, IFRS 16 establishes that the contract must convey the right to control the use of an identified asset for a given period of time.

At the lease commencement date, the Company recog- nises the right of use asset and lease liability. The right of

Category Depreciation period

License rights Based on market conditions within the licence period or legal limits to use the assets

Software From 3 to 5 years

Other intangible assets

Based on market conditions generally within the period of control over the asset

2.1. PROPERTY, PLANT AND EQUIPMENT

Property, plant and equipment are stated at acquisition or manufacturing cost, not revalued net of accumulated depre- ciation and impairment losses («impairment»). Cost includes original purchase price and all costs directly attributable to bringing the asset to its working condition for its intended use.

DEPRECIATION

Depreciation of property, plant and equipment is calculated and recognised in the income statement on a straight-line ba- sis over the estimated useful lives as reported in the following table:

Leased assets are depreciated over the shorter of the lease term and their useful lives unless it is reasonably certain that the Group will take ownership of the asset by the end of the lease term.

Depreciation methods, useful lives and residual value are reviewed at each reporting period and adjusted if appropriate.

GAIN/LOSSES ON THE DISPOSAL OF PROPERTY, PLANT AND EQUIPMENT

Gains and losses on the disposal of property, plant and equip- ment represent the difference between the net proceeds and net book value at the date of sale. Disposals are accounted when the relevant transaction becomes unconditional.

2.2. INTANGIBLE ASSETS

BRANDS

Separately acquired brands are shown at historical cost. Brands acquired in a business combination are recognised at fair value at the acquisition date.

Brands have a indefinite useful life and are carried at cost less accumulated impairment. Brands are not amortised but subject to impairment test performed annually or more fre- quently if events or changes in circumstances indicate that the carrying value may not be recoverable.

Category Depreciation period

Land No depreciation

Buildings From 25 to 33 years

Plant and equipment From 8 to 12 years

Fixtures and fittings From 5 to 10 years

Electronic machinery and equipment

From 3 to 5 years

Leasehold improvements Lower between lease period and useful life of improvements

Rights of use Lease period

Other fixed assets Depending on market conditions generally within the expected utility to the entity

2.

SIGNIFICANT ACCOUNTING PRINCIPLES

The accounting principles set out below have been applied consistently for fiscal year 2020 and the prior year.