MONCLER ANNUAL REPORT AT 31 DECEMBER 2020BOARD OF DIRECTORS REPORT 3130

MONCLER'S BUSINESS MODEL

Moncler s integrated and flexible business model is geared towards having direct control of the phases that add the greatest value, putting the pursuit of ever-increasing quality and the satisfaction of consumers at the heart of all its work.

MONCLER COLLECTIONS

Moncler s success is based on a unique and consistent brand strategy, which also depends on the ability to develop innovative products that are strongly anchored to the history of the Brand. The journey, which began in 2003 when Remo Ruffini acquired the Group, has always been coherent and pursued without compromise. Heritage, uniqueness, quality, creativity and innovation are the terms used in Moncler to define the concept of luxury .

The Moncler Man and Moncler Woman collections are at the core of the Brand, responding to the needs of different consumers and to multiple uses. The Archive is made up of products inspired by Brand s first collections that follow two different developments: one more focused on the development of models that reflect the iconic styles ( DNA Archive ), the other with a more creative approach that has the goal of acquiring a younger and more trend-driven clientele ( Creative Archive ). The Sport Chic/Edit line is intended at a more sophisticated client, less concerned with fashion trends. The Matt Black line is inspired by a cosmopolitan consumer looking for a more contemporary style.

Moncler also has collections for boys and girls, Moncler Enfant , set for young consumers (0-14 years) divided into Baby (0-3 years) and Kid (4-14 years).

Moncler Genius One House, Different Voices collections take on a strategic relevance. They bring together different interpretations and visions of the Brand under the same roof , generating a new synergetic creative energy, while always remaining true to the Brand s uniqueness.

The Moncler Man, Moncler Woman and Moncler Genius collections are completed by Moncler Grenoble, representing the brand s DNA even more strongly. Moncler Grenoble has

become a technology and style innovation lab for the sporty consumer with an interest in performance, design and innovation. The Moncler Grenoble collections are split into High Performance, products guaranteeing maximum performance, Performance & Style, for the sporty consumer who also cares about design, and Après-Ski for the consumer who is looking for style with a sporting edge.

The Moncler collections are rounded off with footwear and leather goods (bags, backpacks and accessories) lines and a sunglasses and eyeglasses line (Moncler Lunettes).

Moncler s team of fashion designers is subdivided by collection and works under the close supervision of Remo Ruffini, who sets design guidelines and oversees their consistent implementation across all collections and product categories. The Moncler Style Department is assisted by the Merchandising and Product Development teams, which help create the collections and transform the designers creative ideas into the final product.

DOWN

Throughout its history, down has been at the heart of Moncler outerwear, and has gradually come to be identified with the Brand itself.

A combination of lengthy experience and continuous re - search and development has enabled the Company to gain uni- que expertise in this area, both in terms of knowledge of down as a raw material and of the garment manufacturing process.

Moncler ensures that all its suppliers comply with the highest quality standards. Over the years, these standards have been and indeed remain a key point of product

differentiation: only the best fine white goose down is used in the Brand s garments.

Fine-down content and fill power are the main indicators of down quality. Moncler down contains at least 90% fine- down and boasts a fill power equal to or greater than 710 (cubic inches per 30 grams of down), resulting in a warm, soft, light and uniquely comfortable garment.

Each batch of down is subjected to a two-step checking procedure to assess its compliance with 11 key parameters, set in accordance with the strictest international standards and the stringent quality requirements imposed by the Company. In 2020, a total of around 1,100 tests were performed.

But for the Company, quality is more than this: the origin of its down and the respect for animal welfare are also fundamental for Moncler. When sourcing and purchasing raw materials, Moncler considers these aspects as important as the quality of the material itself.

ANIMAL WELFARE AND TRACEABILITY: THE DIST PROTOCOL

As part of its commitment to ensuring animal welfare and the full traceability of the down, Moncler requires and ensures that all its down suppliers comply with the strict standards of the Down Integrity System & Traceability (DIST) Protocol. Applied by the Group since 2015, the DIST Protocol sets out standards for farming and animal welfare, traceability and the technical quality of down. Moncler only purchases down that is DIST-certified. Key requirements that must be met at all levels of the supply chain include: down must be derived exclusively from farmed geese and

as a by-product of the food chain; no live-plucking or force-feeding of animals is permitted. Moncler s down supply chain is particularly vertically integrated, and includes various types of entities: geese farms, slaughterhouses, the companies responsible for washing, cleaning, sorting and processing the raw materials. Moreover, the supply chain includes façon manufacturers, which, using

the down, manufacture finished products. All suppliers must comply scrupulously with the Protocol, to ensure the tracea- bility of the raw material, respect for animal welfare and the highest possible quality throughout the down supply chain: from the farm to the down injection into the garments.

The DIST Protocol, defined taking into consideration the peculiarities of the supply chain structure, was the outcome of open, constructive engagement with a multi-stakeholder forum, established in 2014 that meets annually to review and reinforce the protocol. The forum considered the expectations of all the various stakeholders and ensured a scientific and comprehensive approach to the issue of animal welfare and product traceability.

The Protocol assesses animal welfare in an innovative way. Alongside a traditional approach that focuses on the farming environment, the DIST, following the latest European Union guidelines, also evaluates animal welfare through careful observation of Animal-Based Measures (ABM4). Moncler is constantly involved in the on-site auditing process to certify compliance with the DIST Protocol. To ensure maximum audit impartiality: audits are commissioned and paid directly by Moncler

and not by the supplier; certification is conducted by a qualified third-party

organisation whose auditors are trained by veterinarians and animal husbandry experts from the Department of Veterinary Medicine at the University of Milan;

the certification body s work is in turn audited by an accredited external organisation.

The presence of certified down in Moncler garments is guaranteed by the DIST down certified label. In 2020, 159 audits were conducted by third-parties along the entire supply chain.

As another important step towards a more circular economy, Moncler will start recycling DIST-certified down through an innovative mechanical process that requires 70% less water compared to traditional down recycling processes.

PRODUCTION

Moncler s products are designed, manufactured and distri- buted according to a business model featuring direct control of all phases where the greatest value is added.

Moncler directly manages the creative phase, the purchase of raw materials, as well as the development of prototypes, while the cut-make-trim phase of the production stage is

4. The Animal-Based Measures are indicators of the real welfare of an animal, determined through the direct observation of its capacity to adapt to specific farming environments. The measures include physiological, pathological and behavioural indicators.