Moncler Group | Annual Report 2024 466 Moncler Group | Annual Report 2024 467
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Impairment test on the brand and the goodwill related to Stone Island CGU
Description of the
key audit matter
The consolidated financial statements of the Group as at December 31,
2024 show “Brands and other intangible assets – net” amounting to
Euro 1,107 million and “Goodwill” amounting to Euro 603 million. These
captions include the brand and goodwill allocated to the Stone Island
cash generating unit (“CGU”) for the Euro 775 million and Euro 448
million respectively. These assets are considered intangibles with an
indefinite useful life and are therefore not amortized; nevertheless, as
required by the International Accounting Standard “IAS 36 - impairment
of assets”, those are tested for impairment at least annually comparing
the recoverable amount of the CGU - determined according to the value
in use methodology - and the book value of its net invested capital,
which includes the above-mentioned brand and goodwill among fixed
assets.
Management evaluation process is articulated and is based on
assumptions regarding, among other things, forecasting CGU’s
expected cash flows and determining an appropriate discount rate
(WACC) and long-term growth rate (g-rate). These assumptions are
influenced by future expectations about the Stone Island business as
well as by market conditions.
In light of the magnitude of the goodwill and brand value recorded in the
consolidated financial statements pertaining to the Stone Island CGU,
the level of judgement involved in the estimates pertaining to the
determination of CGU future cashflows and the key parameters of the
impairment model, we considered the impairment test a key audit
matter of the consolidated financial statements.
Note 5.2 of the consolidated financial statements provides information
on the tests carried out in respect of intangible assets, including a
sensitivity analysis which illustrates the effects of changes in key
parameters used for the impairment test.
Audit procedures
performed
We have examined how management determined the CGU’s value in
use, analyzing methods and assumptions used in developing the
impairment test.
As part of our audit, we have, among others, carried out the following
procedures also with the support of experts
detection and understanding of the process adopted by Moncler
Group in executing the impairment test
analysis of the reasonableness of main assumptions adopted in
forecasting cashflows also with analysis of sector data and
information obtained from management
comparison of actual results with management forecasts in order to
assess the nature of deviations and the reliability of the planning
process
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assessment of the reasonableness of the discount rate (WACC) and
long-term growth rate (g-rate);
verification of the clerical accuracy of the model used to determine
the CGU’s value in use;
verification of the correct determination of the CGU’s carrying
amount;
verification of the sensitivity analysis prepared by management.
We have also examined the adequacy and compliance of the disclosure
provided by the Group on the impairment test with respect to IAS 36
provisions.
Responsibilities of the Directors and the Board of Statutory Auditors for the Consolidated
Financial Statements
The Directors are responsible for the preparation of consolidated financial statements that give a
true and fair view in accordance with IFRS Accounting Standards as issued by the International
Accounting Standards Board and adopted by the European Union and the requirements of national
regulations issued pursuant to art. 9 of Italian Legislative Decree no. 38/05, and, within the terms
established by law, for such internal control as the Directors determine is necessary to enable the
preparation of consolidated financial statements that are free from material misstatement,
whether due to fraud or error.
In preparing the consolidated financial statements, the Directors are responsible for assessing the
Group’s ability to continue as a going concern, disclosing, as applicable, matters related to going
concern and using the going concern basis of accounting unless they have identified the existence
of the conditions for the liquidation of the Company or the termination of the business or have no
realistic alternatives to such choices.
The Board of Statutory Auditors is responsible for overseeing, within the terms established by law,
the Group’s financial reporting process.
Auditor’s Responsibilities for the Audit of the Consolidated Financial Statements
Our objectives are to obtain reasonable assurance about whether the consolidated financial
statements as a whole are free from material misstatement, whether due to fraud or error, and to
issue an auditor’s report that includes our opinion. Reasonable assurance is a high level of
assurance, but is not a guarantee that an audit conducted in accordance with International
Standards on Auditing ISA Italia will always detect a material misstatement when it exists
Misstatements can arise from fraud or error and are considered material if individually or in the
aggregate they could reasonably be expected to influence the economic decisions of users taken
on the basis of these consolidated financial statements