MONCLER ANNUAL REPORT AT 31 DECEMBER 2020CONSOLIDATED FINANCIAL STATEMENTS 9190

2.

SUMMARY OF SIGNIFICANT ACCOUNTING PRINCIPLES USED IN THE PREPARATION OF THE CONSOLIDATED FINANCIAL STATEMENTS

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

2.1. BASIS OF CONSOLIDATION

The Consolidated Financial Statements comprise those of the Parent Company and its subsidiaries, of which the Parent owns, directly or indirectly, a majority of the voting rights and over which it exercises control, or from which it is able to ben- efit by virtue of its power to govern the subsidiaries financial and operating policies.

The financial results of the subsidiaries are prepared for the same reporting period as the Parent Company, using con- sistent accounting policies.

Subsidiaries are consolidated from the date on which control is transferred to the Group and cease to be consol- idated from the date on which control is transferred out of the Group. Where the Group loses control of a subsidiary, the Consolidated Financial Statements include the results for the portion of the reporting period during which the Parent Com- pany had control. In the Consolidated Financial Statements, non-controlling interests are presented separately within eq- uity and in the statement of income. Changes in the parent s ownership interest, that do not result in a loss of control or changes that represent acquisition of non-controlling inter- ests after the control has been obtained, are accounted for as changes in equity.

In preparing the Consolidated Financial Statements, the effects, the balances as well as the unrealised profit or loss recognised in assets resulting from intra-group transactions are fully eliminated.

INVESTMENTS IN ASSOCIATES

Investments in associates are accounted for using the equity method whereas the initial recognition is stated at acquisition cost and adjusted thereafter for the post-acquisition change in the investor s share of net assets. On acquisition of the in- vestment any difference between the cost of the investment and the investor s share of the net fair value of the associate s assets and liabilities is included in the carrying amount of the investment. If the investor s share of losses of the associate equals or exceeds its interest in the associate, the investor s interest is reduced to zero and additional losses are provided for and a liability is recognised to the extent that the investor has incurred a legal obligation or has the intention to make payments on behalf of the associate.

2.2. FOREIGN CURRENCY

Items included in the financial statements of each of the Group s entities are measured using the currency of the pri- mary economic environment in which the entity operates (the functional currency).

TRANSACTIONS IN FOREIGN CURRENCIES

Foreign currency transactions are recorded by applying the spot exchange rate at the date of the transaction. Monetary

assets and liabilities denominated in foreign currencies, which are held at year-end, are translated into the functional curren- cy at the exchange rate ruling at the reporting date. Exchange differences arising on the settlement on the translation of mon- etary transactions at a rate different from those at which they were translated at initial recognition are recognised in the con- solidated income statement in the period in which they arise.

TRANSLATION OF THE RESULTS OF OVERSEAS BUSINESSES

Assets and liabilities of overseas subsidiaries included in the Consolidated Financial Statements are translated into the Group s reporting currency of Euros at the exchange rate rul- ing at the reporting date. Income and expenses are translated at the average exchange rate for the reporting period, as it is considered to approximate at best the actual exchange rate at the transaction date. Differences arising on the adoption of this method are recognised separately in other compre- hensive income and are presented in a separate component of equity as translation reserve until disposal of the foreign operation. Goodwill and fair value adjustments arising on the acquisition of a foreign operation are treated as assets and liabilities of the foreign operation and translated at the ex- change rate ruling at the reporting date.

The main exchange rates used to convert into Euro the Consolidated Financial Statements of foreign subsidiaries as at and for the years ended 31 December 2020 and 31 Decem- ber 2019 are as follows:

Average rate Rate at the end of the period

Year 2020 Year 2019 As at 31 December 2020 As at 31 December 2019

AED 4.194720 4.111270 4.506500 4.125700

AUD 1.654920 1.610880 1.589600 1.599500

BRL 5.894260 4.413430 6.373500 4.515700

CAD 1.530000 1.485500 1.563300 1.459800

CHF 1.070520 1.112450 1.080200 1.085400

CNY 7.874700 7.735490 8.022500 7.820500

CZK 26.455100 25.670500 26.242000 25.408000

DKK 7.454210 7.466060 7.440900 7.471500

GBP 0.889704 0.877771 0.899030 0.850800

HKD 8.858700 8.771500 9.514200 8.747300

HUF 351.249000 325.297000 363.890000 330.530000

JPY 121.846000 122.006000 126.490000 121.940000

KRW 1.345.580000 1.305.320000 1.336.000000 1.296.280000

KZT 472.998000 428.789000 517.040000 429.510000

MOP 9.124460 9.034420 9.799600 9.009700

MXN 24.519400 21.556500 24.416000 21.220200

NOK 10.722790 9.851090 10.470300 9.863800

PLN 4.443000 4.297600 4.559700 4.256800

RON 4.838280 4.745350 4.868300 4.783000

RUB 82.724800 72.455300 91.467100 69.956300

SEK 10.484800 10.589100 10.034300 10.446800

SGD 1.574240 1.527280 1.621800 1.511100

TRY 8.054720 6.357770 9.113100 6.684300

TWD 33.622700 34.605700 34.480700 33.715600

UAH 30.850600 28.922000 34.768900 26.719500

USD 1.142200 1.119470 1.227100 1.123400