Moncler Group | Annual Report 2024 Consolidated Financial Statements 354 Moncler Group | Annual Report 2024 Consolidated Financial Statements 355

that ref lects market time value of money and the risks inherent

to the asset. An impairment loss is recognised 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 consolidated income statement.

For impairment testing purposes, the goodwill and brand

of Moncler and Stone Island are measured with respect

to the

group of CGUs that compose the entire business.

As of 2019, IFRS 16 requires the recognition of a right

of

use asset and a liability for the obligation to pay rent in

the f inancial statements. Any impairment of the asset for the right

of use must be calculated and recognised in accordance with

the provisions of IAS 36.

For the purpose of the rights-of-use impairment test related

to Moncler and Stone Island business, the following CGUs

have been def ined, which coincide with the organisational units

responsible for monitoring individual markets (“Regions”):

•EMEA Region;

•Americas Region;

•APAC Region;

•Mainland China Region;

•Japan Region;

•Korea Region.

The “rights-of-use” of each individual CGU is subject to

impairment tests in the presence of triggering events

(for the individual CGU) identif ied by a possible impairment

and signalled by the following key performance indicators:

•divestment plans;

•below expectation performance indicators;

•operational losses.

The impairment test is carried out with the following methods

calculation of the CGUs gross value in use excluding

that related to the lease liability from cash f lows

calculation of the CGUs recoverable amount

by deducting the carrying value of the lease liability

from the gross value in use

comparison of the CGUs recoverable value

with the carrying value the latter calculated net

of the carrying value of the lease liability

In calculating the value in use the discount rate used is the

WACC for the geographical area to which it belongs

the aggregate value of which determines the Group WACC

2.8 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 ef fective for f inancial statements commencing

on or after 1 January 2019. The new standard eliminates

the dif ference in the recognition of operating and f inance leases,

even despite elements that simplify its adoption, and introduces

the concept of control in the def inition 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 identif ied asset

for a given period of time.

At the lease commencement date, the Group recognises

the right of use asset and lease liability. The right of use asset

is initially valued at cost, including the amount of the initial

measurement of the lease liability, adjusted for the rent

payments made on or before the commencement date, increased by

the initial direct costs incurred and an estimate of costs

to be incurred by the lessee in dismantling and removing

the underlying asset, restoring the site on which it is located or

restoring the underlying asset to the condition required

by the terms and conditions of the lease, net of the received

lease incentives.

The right of use asset is amortised on a straight-line basis

from the commencement date to the end of the lease term, unless

the lease transfers ownership of the underlying asset to the Group

at the end of the lease term. In this case, the right of use asset

will be amortised over the useful life of the underlying asset,

determined on the same basis as that of property and machinery.

In addition, the right of use asset is regularly decreased

for any impairment losses and adjusted to ref lect any changes

deriving from subsequent remeasurement of the lease liability.

The Group values the lease liability at the present value

of the payments due for unpaid leases at the commencement date,

discounting them using the interest rate implicit in the lease.

The payments due for the lease included in the measurement

of the lease liability include

f ixed payments including substantially f ixed payments

payments due for lease which depend on an index or rate

initially measured using an index or rate on the

commencement date

amounts that are expected to be paid as a residual value

guarantee and

the payments due for the lease in an optional renewal period

if the Group is reasonably certain to exercise the renewal

option and early termination cancellation penalties unless

the Group is reasonably certain not to terminate the lease

in advance

The lease liability is measured at amortised cost using

the ef fective interest criterion and remeasured in the event

of a change in the future payments due for the lease deriving

from a change in the index or rate, in the event of a change

in the amount that the Group expects to pay as a guarantee

on

the residual value or when the Group changes its measurement

with reference to the exercise or otherwise of a purchase,

extension or cancellation option or in the event of revision

of in-substance f ixed payments due.

When the lease liability is remeasured, the lessee makes

a corresponding change in right of use asset. If the right

of use asset carrying value is reduced to zero, the lessee

recognises the change in prof it/(loss) for the year.

In the statement of f inancial position, the Group reports

right of use assets that do not meet the def inition of real

estate investments in the item Property, plant and equipment

and lease liabilities in the item Borrowings.

The Group recognises the related payments due for leases as

a cost on a straight-line basis over the lease term.

For contracts signed before 1 January 2019, the Group

establishes whether the agreement was or contained a lease

by checking if:

•fulf ilment of the agreement depended on the use

of one or more specif ic assets; and

•the agreement transferred the right to use the asset.

Other assets subject to leases is classif ied as operating leases

and is not recognised in the Group's statement of f inancial

position. Payments relating to operating leases were recognised

as a straight-line cost over the lease term, while incentives

granted to the lessee were recognised as an integral part

of the overall lease cost over the lease term.

2.9 Inventory

Raw materials and work in progress are valued at the lower of

purchase or manufacturing cost calculated using the weighted

average cost method and net realisable value The weighted

average cost includes directly attributable expenditures for raw

material inventories and labour cost and an appropriate portion

of production overhead based on normal operating capacity

Provisions are recorded to reduce cost to net realisable value

taking into consideration the age and condition of inventory

the likelihood to use raw materials in the production cycle

as well as the saleability of f inished products through the Groups

distribution channels outlet and stock

2.10 Financial instruments

Trade receivables and debt securities issued are recognised when

they are originated. All other f inancial assets and liabilities

are initially recognised at the trade date, i.e., when the Group

becomes a contractual party to the f inancial instrument.

Except for trade receivables that do not comprise a signif icant

f inancing component, f inancial assets are initially measured

at fair value plus or minus, in the case of f inancial assets

or liabilities not measured at FVTPL, the transaction costs

directly attributable to the acquisition or issue of the f inancial

asset. At the time of initial recognition, trade receivables that

do not have a signif icant f inancing component are valued at their

transaction price.

On initial recognition, a f inancial asset is classif ied based

on its valuation: at amortised cost, at fair value through

other comprehensive income (FVOCI) and at fair value through

prof it/(loss) for the period (FVTPL).

Financial assets are not reclassif ied after initial recognition,

unless the Group changes its business model for managing

f inancial assets. In that case, all the f inancial assets concerned are

reclassif ied on the f irst day of the f irst reporting period following

the change in business model.

A f inancial asset shall be measured at amortised cost

if both of the following conditions are met and if it is not

designated at FVTPL:

•the f inancial asset is held as part of a business model whose

objective is to hold the f inancial assets in order to collect

the related contractual cash f lows; and

•the contractual terms of the f inancial asset provide

for cash f lows at certain dates consisting solely of payments

of principal and interest on the amount of principal

to be repaid.

At the time of subsequent measurement, assets belonging

to this

category are valued at amortised cost, using the ef fective

interest

rate. The ef fects of measurement are recognised among

the f inancial income components These assets are also

subject

to the impairment model described in the paragraph

Trade

receivables f inancial assets and other current and

noncurrent receivables

A f inancial asset shall be measured at FVOCI if both of the

following conditions are met and if it is not designated at FVTPL

the f inancial asset is held as part of a business model

whose objective is achieved both through the collection

of the contractual cash f lows and through the sale

of the f inancial assets and

the contractual terms of the f inancial asset provide

for cash f lows at certain dates consisting solely of payments

of principal and interest on the amount of principal

to be repaid