Moncler Group | Annual Report 2024 Consolidated Financial Statements 356 Moncler Group | Annual Report 2024 Consolidated Financial Statements 357
On initial recognition of a security not held for trading, the Group
may make an irrevocable choice to present subsequent
changes in fair value in the other components of the comprehensive
income statement. This choice is made for each asset.
At the time of subsequent measurement, the measurement
made at the time of recognition is updated and any changes
in fair value are recognised in the statement of comprehensive
income. As for the category above, these assets are subject
to the impairment model described in the paragraph Trade
receivables, f inancial assets and other current and
non-current receivables.
All f inancial assets not classif ied as valued at amortised
cost or at FVOCI, as indicated above, are valued at FVTPL.
All derivative f inancial instruments are included.
On initial recognition, the Group may irrevocably designate
the f inancial asset as measured at fair value through
prof it/(loss) for the period if this eliminates or signif icantly reduces
a misalignment in accounting that would otherwise result from
measuring the f inancial asset at amortised cost or at FVOCI.
At the time of subsequent measurement, f inancial
assets measured at FVTPL are valued at fair value. Gains
or losses arising from changes in fair value are recognised
in the consolidated income statement in the period in which they
are recognised under f inancial income/expenses.
Financial assets are derecognised from the f inancial
statements when the contractual rights to receive cash f lows
from them expire, when the contractual rights to receive
cash f lows from a transaction in which all the risks and rewards
of ownership of the f inancial asset are materially transferred
or when the Group neither transfers nor retains materially all
the risks and rewards of ownership of the f inancial asset and
does not retain control of the f inancial asset.
Financial liabilities are classif ied as valued at amortised cost
or at FVTPL. A f inancial liability is classif ied at FVTPL when
it is held for trading, it represents a derivative or is designated
as such on initial recognition. Financial liabilities at FVTPL
are measured at fair value and any changes including interest
expense are recognised in prof it or loss for the period
Other f inancial liabilities are measured at amortised cost using
the ef fective interest method Interest expense and exchange
rate gainslosses are recognised in prof itloss for
the period
as are any gains or losses from derecognition
The Groups f inancial instruments consist primarily o
f cash
and cash equivalents accounts receivable accounts
payable
other current and noncurrent assets and liabilities
investments
borrowings and derivative f inancial instruments
Cash and cash equivalents
Cash and cash equivalents include cash and shortterm
deposits held with banks and most liquid assets that are readily
convertible into cash and that have insignif icant risk of change
in value. Bank overdrafts are recorded under current liabilities
on the Group’s consolidated statement of f inancial position.
Trade receivables, f inancial assets and other current
and non-current receivables
Trade and other receivables, generated when the Group provides
money, goods or services directly to a third party, are classif ied
as current assets, except for items with maturity dates greater
than twelve months after the reporting date.
Current and non-current f inancial assets, other current
and non-current assets, trade receivables, excluding derivatives,
with f ixed maturity or determinable payment terms, are
recognised at amortised cost calculated using the ef fective interest
method. When f inancial assets do not have a f ixed maturity,
they are valued at cost. Notes receivable (due date greater than
a year) with interest rate below that of
the market rate are
valued using the current market rate.
The f inancial assets listed above are valued based
on the impairment model introduced by IFRS 9 or by adopting
an expected loss model, replacing the IAS 39 framework,
which is typically based on the valuation of the incurred loss.
For trade receivables, the Group adopts the so-called
simplif ied approach, which does not require the recognition
of periodic changes in credit risk, but rather the accounting
of an Expected Credit Loss (“ECL") calculated over the entire life
of the credit (so-called lifetime ECL).
In particular, the policy implemented by the Group provides
for the stratif ication of trade receivables based on the days
past due and an assessment of the solvency of the counterparty
and applies dif ferent write-down rates that ref lect the relative
expectations of recovery. The Group then applies an analytical
valuation of impaired receivables based on a debtor’s reliability
and ability to pay the due amounts.
The value of receivables is shown in the statement of f inancial
position net of the related bad debt provision. Write-downs,
made in accordance with IFRS 9 are recognised in the consolidated
income statement net of any positive ef fects associated with
reversals of impairment
Financial liabilities trade payables and other current
and noncurrent payables
Trade and other payables arise when the Group acquires money
goods or services directly from a supplier They are included
within current liabilities except for items with maturity dates
greater than twelve months after the reporting date
Financial liabilities excluding derivatives are recognised
initially at fair value which represents the amount at which
the asset was bought in a current transaction between willing
parties and subsequently measured at amortised cost
using the ef fective interest method. Financial liabilities that
are designated as hedged items are subject to the hedge
accounting requirements.
Derivatives instruments
Consistent with the provisions of IFRS 9, derivative f inancial
instruments may be accounted for using hedge accounting
only when:
•the hedged items and the hedging instruments meet
the eligibility requirements;
•at the beginning of the hedging relationship, there
is a formal designation and documentation of the hedging
relationship, of the Group's risk management objectives
and the hedging strategy;
•the hedging relationship meets all of the following
ef fectiveness requirements:
○
there is an economic relationship between the hedged
item and the hedging instrument;
○
the ef fect of credit risk is not dominant with respect
to the changes associated with the hedged risk;
○
the hedge ratio def ined in the hedging relationship
is met, including through rebalancing actions,
and is consistent with the risk management strategy
adopted by the Group.
Fair value hedge
A derivative instrument is designated as fair value hedge when
it
hedges the exposure to changes in fair value of a recognised asset
or liability, that is attributable to a particular risk and could af fect
prof it or loss. The gain or loss on the hedged item, attributable
to the hedged risk, adjusts the carrying amount of the hedged item
and is recognised in the consolidated income statement.
Cash f low hedge
When a derivative f inancial instrument is designated as a hedging
instrument for exposure to variability in cash f lows, the ef fective
portion of changes in fair value of the derivative f inancial
instrument is recognised among the other components of the
comprehensive income statement and stated in the cash f low
hedge reserve The ef fective portion of changes in fair value
of the derivative f inancial instrument that is recognised in the
other components of the comprehensive income statement is
limited to the cumulative change in the fair value of the hedged
instrument at present value since the inception of the hedge
The inef fective portion of changes in fair value of the derivative
f inancial instrument is recognised immediately in the prof itloss
for the period
If the hedge ceases to meet the eligibility criteria
or the hedging instrument is sold matures or is exercised
hedge accounting ceases prospectively When hedge accounting
for cash f low hedges ceases, the accrued amount in the cash f low
hedge reserve remains in equity until, in the case of a hedge
of a transaction that results in the recognition of a non-f inancial
asset or non-f inancial liability, it is included in the cost
of the
non-f inancial asset or non-f inancial liability on initial
recognition
or, in the case of other cash f low hedges, it is reclassif ied in prof it
or loss for the period in the same period or periods in which the
hedged expected future cash f lows af fects prof it/(loss) for the period.
If no more hedged future cash f lows are expected, the amount
shall be reclassif ied immediately from the cash f low hedge reserve
and the reserve for hedging costs to prof it/(loss) for the period.
If hedge accounting cannot be applied, gains or losses,
arising from the fair value measurement of a derivative f inancial
instrument, are immediately recognised in income statement.
Following the hedging relationships put in place, revenues
in foreign currencies are translated in the Consolidated Financial
Statements at the corresponding forward rate for the relative
hedged volume.
2.11 Employee benef its
Short-term employee benef its, such as wages, salaries, social
security contributions, paid leave and annual leave due within
twelve months of the consolidated statement of f inancial position
date and all other fringe benef its are recognised in the year
in which the service is rendered by the employee.
Benef its granted to employees, which are payable on or after
the termination of employment through def ined benef it
and contribution plans, are recognised over the vesting period.
Def ined benef it schemes
Def ined benef it schemes are retirement plans determined based
on employees’ remuneration and years of service.
The Group obligation to contribute to employees’ benef it
plans and the related current service cost are determined by using
an actuarial valuation def ined as the projected unit credit method.
The cumulative net amount of all actuarial gains and losses
are recognised in equity within other comprehensive income
The amount recognised as a liability under the def ined
benef it plans is the present value of the related obligation taking
into consideration expenses to be recognised in future periods
for employee service in prior periods
Def ined contribution schemes
Contribution made to a def ined contribution plan is recognised
as an expense in the income statement in the period in which
the employees render the related service
Up to 31 December 2006 Italian employees were eligible
to def ined benef it schemes referred as postemployment
benef it TFR With the act 296 as of 27 December 2006
and subsequent decrees Pension Reform issued in early 2007