MONCLER ANNUAL REPORT AT 31 DECEMBER 2020CONSOLIDATED FINANCIAL STATEMENTS 8786

1.

GENERAL INFORMATION ABOUT THE GROUP

1.1. THE GROUP AND ITS CORE BUSINESS

The parent company Moncler S.p.A. is a company established and domiciled in Italy, with its registered office located at Via Stendhal 47 Milan, Italy, and registration number of 04642290961.

Moreover, the parent Company Moncler S.p.A. is de facto indirectly controlled by Remo Ruffini through Ruffini Parteci- pazioni Holding S.r.l., a company incorporated under the Ital- ian law, wholly owned by Remo Ruffini. Ruffini Partecipazioni Holding S.r.l. controls Ruffini Partecipazioni S.r.l., a company incorporated under the Italian law, which, as at 31 December 2020, holds 22.5% of the share capital of Moncler S.p.A.

The Consolidated Financial Statements as at and for the year ended 31 December 2020 include the Parent Company and its subsidiaries (hereafter referred to as the Group ).

To date, the Group s core businesses are the creation, production and distribution of clothing for men, women and children, shoes, leather goods and other accessories under the Moncler brand name.

1.2. BASIS FOR THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

1.2.1. RELEVANT ACCOUNTING PRINCIPLES

The 2020 Consolidated Financial Statements have been pre- pared in accordance with International Financial Reporting

Standards ( IFRS ) issued by the International Accounting Standards Board ( IASB ) and endorsed by the European Un- ion. IFRS also includes all International Accounting Stand- ards ( IAS ) and interpretations of the International Financial Reporting Interpretations Committee ( IFRIC ), previously known as the Standing Interpretations Committee ( SIC ).

The Consolidated Financial Statements include the con- solidated income statement, the consolidated statement of comprehensive income, the consolidated statement of finan- cial position, the consolidated statement of changes in equity, the consolidated statement of cash flows and the explanatory notes to the Consolidated Financial Statements.

1.2.2. PRESENTATION OF THE FINANCIAL STATEMENTS

The Group presents its consolidated income statement by des- tination, the method that is considered most representative for the business at hand. This method is in fact consistent with the internal reporting and management of the business.

With reference to the consolidated statement of finan- cial position, a basis of presentation has been chosen which makes a distinction between current and non-current assets and liabilities, in accordance with the provisions of paragraph 60 and thereafter of IAS 1. The consolidated statement of cash flows is prepared under the indirect method.

In accordance with the provisions of IAS 24, related-party transactions with the Group and their impact, if significant, on the consolidated statement of financial position, consoli- dated income statement and consolidated statement of cash flows are reported below.

1.2.3. BASIS FOR MEASUREMENT

The Consolidated Financial Statements have been prepared on the historical cost basis except for the measurement of certain financial instruments (i.e. derivatives measured at fair value in accordance with IFRS 9) and on a going concern basis.

The Consolidated Financial Statements are presented in thousand euros, which is the functional currency of the mar- kets where the Group mainly operates.

1.2.4. DIRECTORS ASSESSMENT ON THE ASSUMPTION OF BUSINESS CONTINUITY

Based on the results of the current year and forecasts for fu- ture years, the management believes that there are no factors rendering business continuity uncertain. In particular, the Group s financial strength and its cash and cash equivalents at the end of the year guarantee a high level of financial inde- pendence to support Moncler s operational needs and devel- opment programmes. For 2021, business operations are fully guaranteed, both in terms of product offerings across the var- ious markets and distribution channels and in the ability to manage and organise business activities.

1.2.5. USE OF ESTIMATES AND VALUATIONS

The preparation of the Consolidated Financial Statements and the related explanatory notes in conformity with IFRS requires that management makes estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the report- ing date. The estimates and related assumptions are based on historical experience and other relevant factors. The ac- tual results could differ from those estimates. The estimates and underlying assumptions are reviewed periodically and any variation is reflected in the consolidated income statement in the period in which the estimate is revised if the revision affects only that period or even in subsequent periods if the revision affects both current and future periods.

In the event that management s estimate and judgment have a significant impact on the amounts recognised in the Consolidated Financial Statements or in case that there is a risk of future adjustments on the amounts recognised for assets and liabilities in the period immediately after the re- porting date, the following notes will include the relevant in- formation. The estimates pertain mainly to the following captions of the Consolidated Financial Statements: impairment of non-current assets and goodwill; impairment of trade receivables (bad debt provision); allowance for returns; impairment of inventories (obsolescence provision); recoverability of deferred tax assets; provision for losses and contingent liabilities; lease liabilities and right of use assets; incentive systems and variable remuneration; financial liabilities for the purchase of minority inter-

ests; IFRIC 23: uncertainty over income tax treatments.

IMPAIRMENT OF NON-CURRENT ASSETS AND GOODWILL

Non-current assets include property, plant and equipment, intangible assets with indefinite useful life and goodwill, in- vestments and other financial assets.

Management periodically reviews non-current assets for impairment if events or changes in circumstances indicate that the carrying amount may not be recoverable. When a review for impairment is conducted, the recoverable amount is estimated based on the present value of future cash flows expected to derive from the asset or from the sale of the asset itself, at a suitable discount rate.

When the recoverable amount of a non-current asset is less than its carrying amount, an impairment loss is recognised immediately in profit or loss and the carrying amount is re- duced to its recoverable amount determined based on value- in-use calculation or its sale s value in an arm s-length transac- tion, with reference to the most recent Group business plan.

IMPAIRMENT OF TRADE RECEIVABLES

The bad debt provision represents management s best esti- mate of the probable loss for unrecoverable trade receivables. For the description of the criteria applied to estimate the bad debt provision, please refer to paragraph 2.10 Financial instru- ments Trade receivables, financial assets and other current and non-current receivables.

ALLOWANCE FOR RETURNS

The allowance for returns reflects management s best esti- mate of the asset arising from expected product returns and the associated liability for future refunds.

IMPAIRMENT OF INVENTORY

The Group manufactures and sells mainly clothing goods that are subject to changing consumer needs and fashion trends. As a result, it is necessary to consider the recoverability of the cost of inventories and the related required provision. Inventory impairment represents management s best estimate for losses arising from the sales of aged products, taking into considera- tion their saleability through the Group s distribution channels.

RECOVERABILITY OF DEFERRED TAX ASSETS

The Group is subject to income taxes in numerous jurisdic- tions. Judgment is required in determining the provision for income taxes in each territory. The Group recognises deferred tax assets when it is expected that they will be realised within a period that is consistent with management estimates and business plans.

PROVISION FOR LOSSES AND CONTINGENT LIABILITIES

The Group could be subject to legal and tax litigations aris- ing in the countries where it operates. Litigation is inevita- bly subject to risk and uncertainties surrounding the events and circumstances associated with the claims and associated with local legislation and jurisdiction. In the normal course of business, management requests advice from the Group legal consultants and tax experts. The recognition of a provision is based on management s best estimate when an outflow of resources is probable to settle the obligation and the amount can be reliably estimated. In those circumstances where the outflow of resources is possible or the amount of the obliga- tion cannot be reliably measured, the contingent liabilities are disclosed in the notes to Consolidated Financial Statements.