CONSOLIDATED FINANCIAL STATEMENTS 2020

1 I am extremely proud of the work OTB has done in a year as difficult as 2020.

We managed an unprecedented situation, reviewed the group’s cost structure, re-organized the different companies, at the same time giving a strong digital push and opening to new ways of working that will continue in the future.

All this closing the year with overall financial results substantially better than the industry average.

Only The Brave.

RENZO ROSSO Chairman, OTB

2 3 INDEX

7 Board of Directors and Statutory Auditors

11 Directors’ Report on the Consolidated Financial

Statements

27 Report of the Board of Statutory Auditors

31 Consolidated Financial Statements

43 Notes to the Consolidated Financial Statements

107 Auditors’ Report

4 5 BOARDS OF DIRECTORS AND STATUTORY AUDITORS

Maison Margiela Fall - Winter 2019 CO-ED Défilé Collection 7 BOARDS OF DIRECTORS AND STATUTORY AUDITORS

Board of Directors of OTB S.p.A. Mandate for the three year period 2018 – 2020 (up to approval of 2020 Financial Statements)

Chairman: Renzo Rosso

CEO: Ubaldo Minelli

Directors: Stefano Rosso Marco Costaguta Secondina Giulia Ravera

Board of Statutory Auditors of OTB S.p.A. Mandate for the three year period 2019 – 2021 (up to approval of 2021 Financial Statements)

Chairman: Yuri Zugolaro

Statutory Auditors: Luigi Bocca Ivana Zamperetti

Alternate Auditors: Daniela Gobbo Paolo Masotti

Independent Auditing Firm Mandate for the three year period 2019 – 2021 (up to approval of 2021 Financial Statements) EY S.p.A.

8 9 CONSOLIDATED FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020 DIRECTORS’ REPORT

Marni Spring - Summer 2020 Collection 11 - The Marni Group, operating in the luxury sector, focuses its digital shopping experience. activity in the core business of women’s and men’s clothing - During the year, the merger of the subsidiaries Margiela and related accessories; production is entrusted to Staff France S.a.r.l. and Neuf S.a.r.l. with Margiela S.a.s.u. took International S.p.A.; through its investee Marni USA Ltd., effect; the extraordinary operation responds to the objective the Marni Group holds 20% of the shares of Atelier Luxury of pursuing greater efficiency through the simplification of Group LLC, a U.S. company that owns the luxury brand the Group’s corporate chain. CONSOLIDATED FINANCIAL AMIRI, founded in Los Angeles in 2014 by Mike Amiri; with - During 2020, Marni Group S.r.l. was subjected to a a modern vision of luxury, AMIRI sits alongside the brands of partial simplified spin-off by means of the transfer to STATEMENTS FOR THE YEAR the most established designers in the world’s best stores. Staff International S.p.A. of the business unit consisting - The Margiela Group, established in 2017, operates in of the design and development, production and logistics the pret-à-porter sector and distributes “Maison Margiela” coordination of the finished product of the “Marni” brand ENDED 31 DECEMBER 2020 brand products, the production of which is entrusted to women’s clothing and costume jewellery collections. Staff International S.p.A.; - At the end of 2020, the liquidation procedure of P C S.r.l. DIRECTORS’ REPORT - Viktor & Rolf B.V., the owner of that brand; was completed. - On 10 November 2020, the transfer of the retail and and of which your company is the parent, closed 2020 with wholesale business of Diesel Hellas S.A. to a third party was particularly significant results, despite the difficult global finalised. socio-economic context. Based on a long-term strategic - On 15 September 2020, the sale of 2% of the share vision, during the year just ended, the Group implemented capital of the subsidiary L.R. Vicenza Virtus S.p.A. was timely actions in response to the emergency and put in place completed. The shareholding of the Parent Company, OTB important structural interventions and key projects which, S.p.A., decreased from 66.49% to 64.49%. on the one hand, minimised the impact of the pandemic - The production and distribution activities relating to Shareholders, year. Companies want to leave the critical issues of 2020 on revenues and, on the other, strengthened the Group’s the Vivienne Westwood brand products, covered by the The contraction of the global economy caused by behind and turn the page by investing in digitisation and fundamental stability and solidity parameters. Total turnover licensing agreement terminated with Vivienne Westwood the COVID-19 pandemic has affected almost all environmental and social sustainability. (Source: Bank of amounted to Euro 1,316.6 million, down 14% from the S.r.l., were concluded with the activities referring to the global economic activities and, in this context of Italy). previous year (Euro 1,530.3 million in 2019), consolidated 2020 Spring/Summer season. profound uncertainty, the timid signs of recovery Turning to the analysis of the Italian fashion sector in which profit to Euro 0.9 million (profit of Euro 1.6 million in 2019) - The investee company Diesel S.p.A. revalued the Diesel are, however, still largely dependent on the exceptional your company operates, a report recently prepared by and negative net financial position of Euro 233.2 million, Brand as allowed by art. 110 of Decree Law no. 104 stimulus measures introduced in all major economies by the the National Chamber of Fashion estimated a decrease which becomes positive at Euro 174.7 million if the assets of 14 August 2020, converted into law by Law no. 126 governments of individual countries. in turnover of 27.5% to Euro 65.42 billion for the Italian and liabilities relating to the accounting treatment of so- of 13 October 2020, opting for tax recognition of such According to the IMF, the U.S. and Japan will return to late fashion industry (clothing, textiles, leather goods, footwear, called rights of use (IFRS 16) are excluded (negative at Euro revaluation, via payment of a substitute tax of 3% of 2019 activity levels in the second half of 2021, while the jewellery, eyewear, cosmetics) in 2020. During the period, 320.1 million in 2019, positive at Euro 123.7 million if the the revaluation value. This revaluation is supported by a Eurozone and U.K. will re-emerge in 2022. Only China exports are expected to amount to 53.66 billion (-25%), assets and liabilities for leases are excluded). specific appraisal drawn up by an independent expert; the already restarted at the end of 2020 with a growing GDP. while imports are expected to fall by 11.8% to 34.64 billion. It should be noted that the consolidated financial statements revaluation does not exceed the limit of the value actually The U.S. economy, with a GDP contraction of 3.4% in If we consider the fashion sector alone (textiles, leather were prepared in accordance with IFRS standards, while attributed to the trademark with regard to its entity, actual 2020, is projected to grow 5.1% in 2021 due to a recovery goods, clothing, footwear), turnover is expected to be 50.47 the financial statements of your company continue to be possibility of economic use in the company, as well as in consumer spending and the major support measures billion (-25%) (Source: National Chamber of Fashion). prepared in accordance with the provisions of the Italian current values. It should be noted that in order to determine launched. Forecasts for 2021 in the textile-clothing sector are heavily civil code and the OIC accounting standards. the value attributable to the trademark, a model linked to the For Japan, the estimated decrease in 2020 GDP is 5.1%, affected by the uncertainty caused by the continuing royalty rate was used, estimating a useful life of 20 years. followed by 3.1% growth in 2021, again with the support pandemic; the risk estimated by the National Chamber of 2020 was characterised by the following significant events: The book value of the trademark entered in the financial measures introduced by the government being fundamental. Fashion is the loss of 75,000 jobs in the next three years in statements of the subsidiary Diesel S.p.A. was adjusted in Despite the pandemic and international tensions, China will the absence of government intervention. - At the beginning of the emergency, a Group work team, the consolidated financial statements by simultaneously be the only major economy to avoid recession in 2020, with called the ‘War Room’, was set up to manage the crisis recognising a portion of deferred tax assets, on the basis of growth estimated by the IMF at 2.3%. Within this context, the OTB Group, which owns: situation, implementing actions to protect turnover, “one off” the explicit forecast of their use. For the Eurozone countries, 2020 will end with an estimated actions to minimise the economic impact of the pandemic, - On 7 February 2020, Massimo Piombini took office as GDP decrease of 7.2%, while recovery in 2021 is expected - the Diesel Group, which produces and distributes clothing but, above all, accelerating structural interventions CEO of Diesel S.p.A., in the role previously held by Ubaldo to reach only 4.2%. Expectations are high on the Next and accessories under the Diesel brand in the premium already planned, which will have a positive impact on the Minelli, former CEO of OTB S.p.A., Marni Group and Staff Generation EU programme and the impact it could have on casual wear segment and under the Diesel Black Gold years to come. Among the most important are the Digital International S.p.A. Massimo Piombini has acquired the European economy. brand in the contemporary segment; Transformation project, which involves the application of extensive strategic and managerial experience mainly in For Italy, the estimated contraction in 2020 will be 9.2%, a - Brave Kid S.r.l., which manages under licence the new technologies and innovative solutions to many of the fashion and luxury brands (Bulgari, Gucci, Bally, Valentino). very significant downturn followed by modest growth of 3% production and distribution of clothing and accessories Group’s processes and activities, as well as a radical change His latest experience was in Balmain as CEO. in 2021 (Source: Il Sole 24 Ore). The higher than expected under the John Galliano, Marni, Dsquared, Trussardi Junior in the mindset of the entire organisation, and the launch of - On 8 October 2020, Glenn Martens was appointed as economic growth in our country in the third quarter and N 21 brands, as well as under the Diesel brand for the Group’s Sustainability Plan, with actions on social and Creative Director to oversee style, communications, interior generated moderate recovery, but the second pandemic children’s collections; environmental issues and responsible product innovation. design and global creativity for the Diesel brand. wave nevertheless led to a new contraction in the fourth - Staff International S.p.A. operating in the pret-à-porter The holistic approach to this issue includes internal training - Finally, your Company’s attention to niche brands with a quarter of 2020. sector, managing the production and distribution of the at various levels of the organisation and support to the supply strong growth potential, that could be subject to acquisition, In this last quarter, the decline in activity was greater in Dsquared, Just Cavalli, Kochè and Vivienne Westwood (up chain to promote awareness of all aspects of sustainability, continued, in line with one of the OTB S.p.A. missions as the services than in manufacturing. In the surveys conducted by to the 2020 spring/summer season) brands under license; from product performance to climate commitments and Group Holding Company and consistent with the vision of the Bank of Italy, business expectations are not favourable it also deals with the design and production of shoes and from socio-economic aspects to the circular economy. the reference shareholder. due to the decrease in domestic demand and exports, but bags for the entire OTB group and the design and production - During the year, the omni-channel platform went live for the remain far from the pessimism reached in the first half of last of the collections for the Maison Margiela brand and Marni; Diesel brand, enabling a complete, fluid and personalised

12 13 GROUP

OPERATIONS

OPERATING SITUATION

The statement of profit or loss, reclassified to a management accounts format, together with prior year comparative figures, is summarised below (in millions of euro):

2020 2019 Change Description Amount % Amount % Amount % Net sales 1,237.6 94.0% 1,468.7 96.0% (231.1) (15.7)% Royalties and other revenue 79.0 6.0% 61.6 4.0% 17.4 28.3% Revenues 1,316.6 100.0% 1,530.3 100.0% (213.7) (14.0)% Cost of sales (480.2) (36.5)% (575.7) (37.6)% 95.5 (16.6)% Gross margin 836.4 63.5% 954.6 62.4% (118.2) (12.4)% Royalties and other costs (20.7) (1.6)% (23.0) (1.5)% 2.3 (10.0)% Advertising costs (63.5) (4.8)% (80.1) (5.2)% 16.6 (20.7)% Sales commission (27.0) (2.1)% (31.1) (2.0)% 4.1 (13.2)% Transport costs (41.8) (3.2)% (44.1) (2.9)% 2.3 (5.2)% Cost of labour (276.0) (21.0)% (311.5) (20.4)% 35.5 (11.4)% General expenses (222.3) (16.9)% (269.0) (17.6)% 46.7 (17.4)% Writedown of receivables (9.6) (0.7)% (5.3) (0.3)% (4.3) 81.1% EBITDA 175.5 13.3% 190.5 12.4% (15.0) (7.9)% Amortisation and depreciation (40.6) (3.1)% (41.7) (2.7)% 1.1 (2.6)% Amortisation of right of use assets (116.1) (8.8)% (125.8) (8.2)% 9.7 (7.7)% Amortisation of trademark (5.3) (0.4)% (5.3) (0.3)% 0.0 0.0% Operating profit (EBIT) 13.5 1.0% 17.7 1.2% (4.2) (23.6)% Finance income (costs) (5.2) (0.4)% (4.9) (0.3)% (0.3) 6.1% Valuation of investments in associates 2.3 0.2% 1.3 0.1% 1.0 76.9% Interest on lease liabilities (9.3) (0.7)% (10.2) (0.7)% 0.9 (8.8)% Exchange gains (losses) 0.6 0.0% 0.3 0.0% 0.3 100.0% Result before tax 1.9 0.1% 4.2 0.3% (2.3) (54.4)% Taxes (1.0) (0.1)% (2.6) (0.2)% 1.6 (61.5)% Net result 0.9 0.1% 1.6 0.1% (0.7) (42.7)% Group net result 1.5 0.1% 1.7 0.1% (0.2) (11.8)%

Marni Fall - Winter 2019 Collection 15 Diesel Fall - Winter 2020 Collection 17 Net sales of Euro 1,237.6 million consist of Euro 647.0 Revenue from sales of goods and services, consisting of the million of wholesale channel sales and Euro 590.6 million sum of net sales of Euro 1,237.6 million and royalty income of retail channel sales. In 2019 net sales amounted to Euro of Euro 30.5 million, coming to a total of Euro 1,268.1 1,468.7 million, of which Euro 705.1 million related to the million, breaks down as follows (in millions of Euro): wholesale channel and Euro 763.6 million related to the retail channel.

Italy E.U. Other European countries The Americas Rest of the world Total

244.3 378.2 50.5 126.2 468.9 1,268.1

19.3% 29.8% 4.0% 10.0% 37.0% 100.0%

Net sales decreased by 15.7% compared with the previous would have amounted to Euro 34.6 million. year. Sales through retail channels, including outlet and Operating profit amounted to Euro 0.9 million (Euro 1.6 online sales, accounted for 47.7% of total sales compared million in 2019). Profit before tax came to 0.1% of revenue, to 52.0% in the previous year. Online sales were up 26.2% in line with the prior year. Net profit attributable to the Group compared to the previous year. Revenues from royalties came to Euro 1.5 million. amounted to Euro 30.5 million, an increase compared to the previous year (Euro 28.8 million in 2019). EBITDA amounted to Euro 175.5 million (Euro 190.5 million in 2019) equal to 13.3% of sales, compared to 12.4% in the previous year. EBIT amounted to Euro 13.5 million (Euro 17.7 million in 2019) equal a 1.0% of sales, compared to 1.2% in the previous year. EBIT was affected by extraordinary and non- recurring allocations of Euro 21.1 million, without which it

FINANCIAL POSITION

The Group’s statement of financial position at 31 December 2020 is summarised below (in millions of euro):

Description 31.12.20 % 31.12.19 % Change % Current assets 1,010.0 51.5% 823.7 44.9% 186.3 22.6% Non-current assets 952.4 48.5% 1,010.2 55.1% (57.8) (5.7)% Total assets 1,962.4 100.0% 1,833.9 100.0% 128.5 7.0% Current liabilities 519.2 26.5% 549.9 30.0% (30.7) (5.6)% Non-current liabilities 565.1 28.8% 399.6 21.8% 165.5 41.4% Group shareholders’ equity 874.5 44.6% 880.0 48.0% (5.5) (0.6)% Shareholders’ equity attributable to minority interests 3.6 0.2% 4.4 0.2% (0.8) (18.2)% Shareholders’ equity 878.1 44.7% 884.4 48.2% (6.3) (0.7)% Total liabilities 1,962.4 100.0% 1,833.9 100.0% 128.5 7.0%

Shareholders’ equity amounted to Euro 878.1 million against Euro 884.4 million in 2019. Details of changes in shareholders’ equity are presented in the Notes to the consolidated financial statements.

Maison Margiela 18 Fall - Winter 2019 CO-ED Défilé Collection 19 INVESTMENTS

Capital investment by the Group totalled Euro 41.4 million, FINANCIAL SITUATION as analysed below: - Intangible assets: Euro 14.4 million; - Property, plant and equipment: Euro 27.0 million; The change in the Group’s net cash/debt is summarised below (in millions of euro): Investment in intangible assets and property, plant and equipment mainly relate to costs incurred for investments in the new omni-channel direct e-commerce platform and in digital transformation, leasehold improvements to retail property and the purchase of furniture and electronic office Description 2020 2019 Change % equipment. Net cash and cash equivalents at beginning of year 128.7 118.4 10.3 8.7% There were no equity investments during the year. Self-financing 184.3 204.5 (20.2) (9.9)% Changes in working capital (20.3) 9.5 (29.8) (312.8)% Changes in financial instruments (6.8) 2.5 (9.3) (374.2)% Income tax and interest 23.5 2.6 21.0 822.0% RESEARCH AND DEVELOPMENT Net investments (37.6) (69.2) 31.5 (45.6)% Dividends paid 0.0 (0.9) 0.9 (100.0)% Research activity is focused on styling and technology. Cash flow from IFRS16 (104.8) (131.0) 26.3 (20.0)% With regard to styling, constant attention is paid to Cash flow from other financing activities 198.4 (7.3) 205.6 (2836.1)% changing tastes and customs to ensure early recognition Net foreign exchange difference (1.3) (0.5) (0.8) 166.0% of trends in what is now a global market and with consumers who are more attentive and aware. On the Net change in cash and cash equivalents 235.5 10.3 225.2 2190.7% technology front, the emphasis is on the search for new Cash and cash equivalents at end of year 364,1 128,7 235,5 183,0% materials and a new way of treating fabrics and raw materials, in general, with the aim of obtaining a finished product with features that combine quality and style so as to guarantee brand recognition for each label.

RATIOS

The key financial ratios are summarised as follows:

Description 2020 2019 Change R.O.I. 0.69% 0.96% (0.27)% R.O.E. 0.10% 0.18% (0.08)% R.O.S. 1.03% 1.15% (0.12)% Liquidity ratio 1.95 1.50 0.45

Diesel 20 Fall - Winter 2019 Collection 21 OTHER INFORMATION

Personnel and organisation Information on the environment

The Group had 5,473 employees at 31 December 2020 During the year: against 6,280 at 31 December 2019. Particular attention is paid to professional training and - no damage was caused to the environment for which any management development, with projects and work-groups Group company was found responsible; involving various companies and Group functions. - no sanctions or penalties were levied against any Group companies for environmental protection offences or Objectives and policies concerning the management damage to the environment; of financial risk - no greenhouse gas emissions as defined by Law 316/2004 were caused by Group companies. As already described in the Notes to the consolidated financial statements, OTB Group, operating in an Information relating to personnel international context, is exposed, to a varying extent, to various financial risks linked to the conduct of its business, During the year: especially market risks, that can be broken down as follows: - no fatal accidents took place involving employees for - interest rate risk, which is linked to the impact of changes which any Group company was found to be responsible; in market interest rates; - no accidents causing serious injuries took place involving - foreign exchange risk, which is a consequence of employees for which any Group company was found to be transactions denominated in currencies other than the responsible; functional currency; - no liability vis-à-vis employees or former employees - liquidity risk, which arises from the need to have adequate for illnesses caused by occupational hazards, nor for access to capital markets and sources of funding to cover harassment charges, took place for which any Group the needs arising from operating activities, investment company was found to be responsible. activities and the maturities of financial liabilities; - credit (or counterparty) risk, which represents the risk of Treasury shares default on commercial or financial obligations assumed by the various counterparties and resulting from normal It should be noted that the Group does not hold any shares commercial transactions or financing activities, employment in the parent company, not even through trust companies or of funds and hedging of risks. third parties. The methods used for financial risk management are described in detail in the Notes to which reference should be made.

Viktor & Rolf 22 Spring - Summer 2020 Tulle Collection in its power to continue to manage the crisis: - adopt safety protocols in order to ensure the best health standards for its workforce; - adopt as many smart working solutions as possible that SIGNIFICANT SUBSEQUENT are compatible with the company’s organisation; - enter into negotiations with the owners of the properties EVENTS in which the sales activity of its subsidiaries is carried out, aimed at obtaining a discount for the months affected by the forced closure and/or the social distancing measures provided for by current legislation. - verify the possibility of accessing the support measures provided by the governments of the countries in which the On 5 March 2021, the Group finalised the agreement Group operates. to acquire 100% of Jil Sander from the Japanese group Confirmed orders for SS21 and orders for FW21 mean that Onward Holdings. Founded in 1968 by the German we can look forward to the year with stable expectations designer of the same name, the brand has been creatively compared to the previous year. directed by Lucie and Luke Meier since 2017 and is a At the balance sheet level, the Group intends to continue to symbol of modernity and sophistication, a timeless diamond optimise its net financial position, thanks to the centralised added to the Group’s portfolio of unique and unconventional treasury management activities carried out by the Parent maisons. Company, OTB S.p.A., and to greater efficiency in working capital, in order to effectively support the levels of 2021 is expected to be a year full of sustainability activities investment planned for the year that has just begun. for the Group. In particular, through its For Responsible Living strategy, the Diesel brand is committed to increasing the brand’s reputation for acting more responsibly towards the environment, as well as respecting present and future generations and the Group’s various stakeholders.

During 2021, the Group will continue its commitment to the Digital Transformation project, which involves the application of new technologies and innovative solutions to many of the Group’s processes and activities.

In 2021, the parent company OTB S.p.A. will continue its commitment to identifying and assessing potential new acquisitions, in line with the development strategies that are already under way.

BUSINESS OUTLOOK

The context continues to be very challenging at the beginning of this financial year, also due to the continuing global Covid-19 health emergency. The outlook for global economic growth shows significant vulnerabilities, mainly related to uncertainty over the recovery of global trade and manufacturing and the still significant geopolitical tensions. In the current state of uncertainty, given the differentiation in the global evolution of the pandemic in the various areas of the world and the measures that the governments of the different countries will adopt to contain the contagion and for the recovery phase, it is difficult to make quantitative Breganze, 12 Aprile 2021 forecasts regarding the Group’s operating and financial results, both in the short and medium term. The Group continues to monitor events very carefully and THE BOARD OF DIRECTORS is ready to continue to manage this situation with a view THE CHAIRMAN to the future and the long-term approach that has always RENZO ROSSO characterised it. The Group is focused on doing everything

Marni 24 Spring - Summer 2020 Collection REPORT OF THE BOARD OF STATUTORY AUDITORS ON THE FINANCIAL STATEMENTS FOR THE YEAR ENDED 31 DECEMBER 2020

Maison Margiela Spring - Summer 2020 CO-ED Défilé Collection 27 would require disclosure in this report. pursuant to art. 14 of Italian Legislative Decree no. 39 of No shareholder declarations were received pursuant to art. 27 January 2010, on the consolidated financial statements 2408 of the Italian Civil Code. of the OTB Group containing no findings or requests for During the financial year, the board of auditors issued no information. opinions established by the law. During the supervisory activities as described above, no 4) Observations and proposals with regard to approval REPORT OF THE BOARD OF STATUTORY other significant events emerged such as to be worthy of of the financial statements note in this report. Considering the results of our activities, the board of AUDITORS ON THE FINANCIAL STATEMENTS statutory auditors proposes that the shareholders approve 2) Observations on the financial statements the financial statements for the year ended 31 December FOR THE YEAR ENDED 31 DECEMBER 2020 To the best of our knowledge, the Directors, when preparing 2020 as prepared by the directors. the Financial Statements, did not derogate from the The Board agrees with the proposal made by the Directors pursuant to art. 2429, paragraph 2, provisions of the law pursuant to art. 2423, paragraph 5 of in the Notes to the Financial Statements to allocate the profit of the Italian Civil Code the Italian Civil Code. for the year equal to € 17,877,497.00 to the Extraordinary Pursuant to art. 2426, no. 5 of the Italian Civil Code, the board Reserve. The board also agrees with the proposal made by of statutory auditors has noted that there is no recorded value the Directors, in accordance with art. 2426, no. 8bis of the for the Start-up and expansion costs referred to in item B) I-1 Italian Civil Code, to adjust the Undistributable reserve for ) of balance sheet assets and for Development costs under unrealised net exchange gains to € 6,379.00, allocating the item B) I-2 ) of balance sheet assets. remaining € 43,259.00 to the Extraordinary Reserve. Pursuant to art. 2426, no. 6 of the Italian Civil Code, the board of statutory auditors noted that there was no goodwill entered under item B) I-5) of balance sheet assets. To the Shareholders’ Meeting of the 1) Supervisory activities performed pursuant to Article We verified compliance with legal requirements concerning company OTB S.p.A. 2403 et seq. of the Italian Civil Code the preparation and presentation of the directors’ report and We monitored compliance with the law and the articles do not have any particular comments to make. As a preliminary point, we wish to remind you of association and application of the principles of correct The board of statutory auditors acknowledged that today, that, on 30 April 2019, the shareholders in administration. 14 April 2021, the auditing firm EY S.p.A. issued the report general meeting appointed EY S.p.A. as independent auditors We attended the meetings of shareholders and the Board pursuant to art. 14 of Italian Legislative Decree no. 39 of for the three years 2019, 2020 and 2021. Accordingly, the of Directors. On the basis of the information available and 27 January 2010 containing no findings or requests for independent audit of the financial statements for the year in relation to this, we noted no breach of the law and the information. ended 31 December 2020 was performed by EY S.p.A. articles of association, nor any transactions that were clearly During the year ended 31 December 2020 our activity was imprudent, risky, in potential conflict of interests or such as to 3) Observations on the consolidated financial guided by the provisions of the law and the Rules of Conduct affect the integrity of the shareholders’ equity. statements of the Board of Statutory Auditors issued by the National During the meetings held, we obtained from the directors We also examined the draft consolidated financial statements Council of Chartered Accountants and Accounting Experts, information on the general performance of operations and at 31 December 2020, made available to us in conjunction in respect of which we carried out the self-assessment on the outlook, in particular on the impact of the Covid-19 with the financial statements of the parent company and the for each member of the board of statutory auditors, with a health emergency and on the risk factors and significant related report on operations. positive result. uncertainties regarding the company’s ability to continue as a The reference date of the consolidated financial statements going concern, as well as on the company’s plans for dealing coincides with the year end date of the parent company and of with such risks and uncertainties, and on the most significant all the other companies included in the area of consolidation, transactions, in terms of size or characteristics, put in place with the exception of Diesel Fashion India Reliance PVT. Ltd. by the company and, based on the information obtained, we and K-Bit Brave Sourcing Ltd., which drew up interim financial have no particular observations to report. statements as at 31 December 2020 for the purposes of We acquired information from and read the reports of the the consolidated financial statements, considering that their Supervisory Body relating to 2020 and no critical issues financial year ends on 31 March. emerged that should be highlighted in this report regarding The consolidated financial statements were prepared in the correct implementation of the Organisational Model. accordance with International Financial Reporting Standards Padua, 14 April 2021 We gained awareness of and monitored, insofar as we (IFRS) as issued by the International Accounting Standards are competent to do so, the suitability and function of Board (IASB) and as endorsed by the European Union and THE BOARD OF STATUTORY AUDITORS the company’s organisational structure, also through the which were in force at the date of the preparation thereof. collection of information from the department managers. On The notes to the consolidated financial statements disclose YURI ZUGOLARO this regard, we have no particular comments to make. the basis and scope of consolidation in accordance with CHAIRMAN We acquired information and supervised, to the extent within international accounting principles. The consolidation was our power, the adequacy and operation of the company’s carried out on a line-by-line basis. LUIGI BOCCA administrative and accounting set-up and its reliability for As regards the Directors’ Report on the consolidated STATUTORY AUDITOR accurately representing events in company management by financial statements, we hereby confirm that it provides obtaining information from the people in charge of company comprehensive disclosures and that the figures reported IVANA ZAMPERETTI departments and examining company documents, and we therein are consistent with those presented in the STATUTORY AUDITOR have no particular comments to make in this regard. consolidated financial statements. We discussed with the independent auditors and no The board of statutory auditors acknowledged that today, significant data or information came to our attention that 14 April 2021, the auditing firm EY S.p.A. issued the report

28 29 CONSOLIDATED FINANCIAL STATEMENTS

Maison Margiela Fall - Winter 2020 CO-ED Défilé Collection 31 CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(in thousands of euro) note 2020 2019 Assets Non-current assets Goodwill 1 68,234 68,340 CONSOLIDATED FINANCIAL Intangible assets with a finite useful life 1 144,144 148,122 Right of use assets 2 391,983 432,558 STATEMENTS Property, plant and machinery 3 151,477 157,937 Investments in associates 4 24,563 25,647 Non-current lease assets 5 929 752 Non-current financial assets 6 53 71 Other non-current assets 7 35,161 39,697 Deferred tax assets 8 135,881 137,056 Total non-current assets 952,425 1,010,180

Current assets Inventories 9 310,000 360,461 Trade receivables 10 221,369 230,483 Tax receivables 11 7,368 20,317 Current lease assets 5 281 200 Current financial assets 12 13,773 687 Other current assets 13 92,447 82,583 Cash and cash equivalents 14 364,718 128,974 Total current assets 1,009,956 823,705 Total assets 1,962,381 1,833,885

Equity and liabilities Shareholders’ equity Equity attributable to the Group 15 874,458 879,965 Minority interest 16 3,609 4,391 Total shareholders’ equity 878,067 884,356

Non-current liabilities Non-current lease liabilities 17 309,050 344,738 Non-current financial liabilities 18 199,838 126 Provisions for risks and charges 19 11,314 9,052 Post-employment benefit plan liabilities 20 9,644 9,310 Other non-current liabilities 21 408 493 Deferred tax liabilities 22 34,863 35,927 Total non-current liabilities 565,117 399,646

Current liabilities Trade payables 23 228,038 265,909 Other current liabilities 24 87,810 98,129 Current tax liabilities 25 8,810 8,205 Provisions for risks and charges 19 90,489 71,700 Current lease liabilities 17 99,999 99,995 Current financial liabilities 26 4,051 5,945 Total current liabilities 519,197 549,883 Total liabilities 1,084,314 949,529 Total equity and liabilities 1,962,381 1,833,885

Marni 32 Fall - Winter 2020 Collection 33 CONSOLIDATED INCOME STATEMENT CONSOLIDATED STATEMENT OF OTHER COMPREHENSIVE INCOME

(in thousands of euro) Note 2020 2019 (in thousands of euro) 2020 2019

Revenues from sales and services 29 1,268,134 1,497,501 Operating profit 922 1,586 Other operating income 30 48,437 32,800 Revenues 1,316,571 1,530,301 Other comprehensive income Change in inventories 31 44,068 17,211 Purchases 32 340,974 432,968 Other comprehensive income to be reclassified to profit or loss in subsequent Lease and rental costs 33 82,785 97,407 periods (net of tax): Cost of services 34 335,508 409,153 Personnel costs 35 276,026 311,497 Exchange differences on translation of foreign operations (13,327) 6,659 Other operating expenses 36 39,579 46,511 Net (loss)/gain on cash flow hedges: Amortisation and depreciation 37 161,955 172,843 Gross (loss)/gain on cash flow hedges 8,043 (826) Provisions and impairment losses 38 22,141 25,045 Tax effect of cash flow hedges (1,927) 198 Operating profit 13,535 17,666 Net (loss)/gain on cash flow hedges 6,116 (628) Financial income 39 2,824 2,748 Measurement of equity investments in associated companies using the equity method 40 2,330 1,306 Net other comprehensive income to be reclassified to profit or loss in Financial expense 41 17,307 17,824 subsequent periods Exchange gains (losses) 42 581 257 (7,211) 6,031 Profit before tax 1,963 4,153 Income tax 43 1,041 2,567 Total comprehensive profit/(loss) for the year, net of tax (6,289) 7,617 Operating profit/(loss) 922 1,586 Operating profit/(loss) attributable to the Group 1,554 1,707 Attributable to: Operating profit/(loss) attributable to minority interests (632) (121) Group (5,481) 7,738 Non-controlling interests (808) (121)

Maison Margiela Maison Margiela 34 Spring - Summer 2020 CO-ED Défilé Collection Spring - Summer 2020 CO-ED Défilé Collection 35 CONSOLIDATED CASH FLOW STATEMENT

(in thousands of euro) 2020 2019

Operating activities

Operating profit/(loss) 922 1,586 Non-cash items: Depreciation of property, plant and equipment 29,949 32,232 Amortisation of intangible fixed assets 15,939 14,828 Amortisation of rights of use 116,067 125,783 Gain (loss) on disposal of property, plant and equipment and intangible assets 828 2,097 Capital losses/(gains) on disposal of rights of use (328) (2,821) Write-down/(Write-back) of equity investments (2,330) (1,306) Writedown of trade receivables 9,587 5,309 Provisions 29,158 26,818 Other non-cash items (15,461) 0 Total non-cash items 183,409 202,940 Taxes 1,041 2,568 Interest 1,385 2,150 IFRS16 interest 9,291 10,217 Dividends 0 0 Changes in working capital: Change in inventories 45,503 18,033 Change in current and non-current receivables and other assets (10,330) 21,864 Change in current and non-current payables and other liabilities (55,469) (30,356) Total changes in working capital (20,296) 9,541 Net change in derivative financial instruments (6,796) 2,482 Income tax paid 11,788 (12,386) Total cash flow from operating activities 180,744 219,098 Cash flow from investing activities: Payments for intangible assets (14,381) (14,293) Purchase of property, plant and equipment (26,970) (22,869) Proceeds from sale of intangible assets 1,933 478 Proceeds from sale of property, plant and equipment 1,151 (713) Other changes in property, plant and equipment and intangible assets (101) (767) Purchase of minority interests 0 (24,430) Proceeds from sale of equity investments 0 0 Other changes in equity investments 1,166 0 Change in the scope of consolidation 0 (6,650) Proceeds from sale of financial investments (428) 70 Dividends received 0 0 Total cash flow from investing activities (37,630) (69,174) Cash flow from financing activities Other changes in Shareholders’ Equity (41) (81) Dividends paid 0 (919) Change in non-current financial liabilities 199,715 69 Change in current financial liabilities 53 (5,804) Reimbursement of lease liabilities (104,746) (131,014) Interest paid (1,395) (2,139) Change in minority interests 41 702 Total cash flow from financing activities 93,627 (139,186)

Net change in cash and cash equivalents 236,741 10,738 Net foreign exchange difference (1,254) (469) Cash and cash equivalents at beginning of year 128,652 118,383 Cash and cash equivalents at end of year 364,139 128,652

Dsquared2 36 Spring - Summer 2020 Collection 37 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Share Legal Other Cash Flow Foreign currency Period Shareholders’ Shareholders’ equity Total capital reserve reserves hedge translation profit equity attributable attributable to shareholders’ reserve reserve to the Group minority interests equity

Balance as at 31.12.2018 25,000 5,000 914,454 (482) (6,706) (56,982) 880,284 3,400 883,684 Allocation of 2018 profit 0 0 (56,982) - 0 56,982 0 0 0 Dividend payments 0 0 0 0 0 0 0 (919) (919) Increases 0 0 (123) 0 0 0 (123) 745 622 Other changes 0 0 (7,932) 0 0 0 (7,932) 1,284 (6,648) Operating profit 0 0 0 1,707 1,707 (121) 1,586 Translation differences 0 0 0 0 6,651 0 6,651 8 6,659 Hedge accounting 0 0 0 (622) 0 0 (622) (6) (628) Balance as at 31.12.2019 25,000 5,000 849,417 (1,104) (55) 1,707 879,965 4,391 884,356 Allocation of 2019 profit 0 0 1,707 0 0 (1,707) 0 0 0 Dividend payments 0 0 0 0 0 0 0 0 0 Increases 0 0 0 0 0 0 0 0 0 Other changes 0 0 (54) 0 27 0 (27) 27 0 Operating profit 1,554 1,554 (632) 922 Translation differences 0 0 0 0 (13,168) 0 (13,168) (159) (13,327) Hedge accounting 0 0 0 6,134 0 0 6,134 (18) 6,116 Balance as at 31.12.2020 25,000 5,000 851,070 5,030 (13,196) 1,554 874,458 3,609 878,067

38 39 Viktor & Rolf Fall - Winter 2020 Haute Couture Collection NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Diesel Spring - Summer 2020 Collection 43 ACCOUNTING PRINCIPLES that its omission, misstatement, or concealment could influence the decisions that the primary users of general General notes purpose financial statements make based on those financial statements, which provide financial information about the The financial statements have been prepared on a going specific reporting entity. Materiality depends on the nature concern basis, as well as on a historical cost basis, except or extent of the information, or both. An entity assesses NOTES TO THE CONSOLIDATED for the measurement of financial instruments. whether the information, individually or in combination with other information, is material in the context of the financial FINANCIAL STATEMENTS The consolidated financial statements have been prepared statements, taken as a whole. Information is concealed if from the financial statements of the individual subsidiary it is disclosed in a manner that has the same effect on the companies. The financial statements of the companies primary users of financial statements as the omission or consolidated have been adjusted, where necessary, to misstatement of such information. These changes had no bring them into line with the accounting policies used by the impact on the consolidated financial statements and no GENERAL INFORMATION Parent Company, which comply with IFRS as adopted by the future impact is expected for the Group. European Union. Amendment to IFRS 16 Covid-19 Related Rent The consolidated financial statements provide comparative Concessions information in respect of the previous period. On 28 May 2020, the IASB published an amendment to IFRS 16. The amendment allows a lessee not to apply Adoption of IFRS the requirements in IFRS 16 on the accounting effects of contractual changes for lease reductions granted by The consolidated financial statements of OTB Group lessors that are a direct result of the Covid-19 epidemic. OTB S.p.A. is an Italian company limited by - non-current assets consist of assets not expected (hereinafter “the Group”) for the year ended 31 December The amendment introduces a practical expedient whereby a shares and is located at:Via Dell’Industria 2, to be realised within twelve months of the balance sheet date 2020 were prepared in accordance with IFRS. lessee may choose not to evaluate whether lease reductions Breganze (VI). Together with its subsidiaries, and include intangible assets, property, plant and equipment represent contractual changes. A lessee that chooses to the group operates primarily in the ready- and financial assets; New accounting standards, interpretations and use this expedient accounts for these reductions as if the to-wear apparel sector as well as clothing - current assets consist of assets expected to be amendments adopted by the Group reductions were not contractual modifications within the and accessories in the casual/leisure-wear sector. realised within twelve months of the balance sheet date; scope of IFRS 16. - non-current liabilities consist of liabilities not For the first time, the Group applied certain standards or More in detail, this amendment is only applicable if the new BASIS OF PREPARATION expected to be settled within twelve months of the balance amendments that are effective as of 1 January 2020. The agreements are a direct result of COVID-19 and only if the sheet date and include financial liabilities, provisions and Group has not opted for early adoption of any new standards, following conditions are met: Accordance with IFRS employment benefit liabilities; interpretations or amendments issued but not yet effective. - current liabilities consist of liabilities expected to - the change in lease payments results in a revised fee that is be settled within twelve months of the balance sheet date The consolidated financial statements of OTB Group have Amendments to IFRS 3: Definition of a business substantially equal to or less than the lease fee immediately been prepared in accordance with International Financial and include the current portion of non-current loans and The amendments to IFRS 3 clarify that to be considered preceding the change; Reporting Standards (IFRS) as issued by the International borrowings, provisions and employment benefit liabilities. a business, an integrated set of activities and assets must - any reduction in lease fees only affects payments originally Accounting Standards Board (IASB) and as endorsed by The consolidated statement of profit or loss is presented include at least one input and one underlying process that due by 30 June 2021; the European Union and which were in force at the date of with an analysis of expenses by nature. together contribute significantly to the ability to create an - there are no material changes to any other terms and preparation of this document. The term “IFRS” encompasses The Group presents its cash flows using the indirect method output. In addition, it has been made clear that a business conditions of the lease. International Accounting Standards (IAS) that are still in in accordance with IAS 7 and has classified its cash flows can exist without including all the inputs and processes force, as well as all interpretations of the International as operating activities, investing activities and financing needed to create an output. These amendments had no These changes, which have had an impact on the Group’s Financial Interpretations Committee, which was formerly activities. impact on the Group’s consolidated financial statements but consolidated financial statements, are described in named the International Financial Reporting Interpretations A description of the methods used by the Group for could have an impact on future periods should the Group paragraphs (2) and (30). Committee (“IFRIC”), and of the Standing Interpretations financial risk management is provided in these notes to the make business combinations. Committee (“SIC”). consolidated financial statements in the paragraph entitled International accounting standards issued but not “Financial risk management”. Amendments to IFRS 7, IFRS 9 and IAS 39: Reform of yet in force Form and content of the consolidated financial the interest rate benchmark statements The explanatory notes include the information normally The amendments to IFRS 9 and IAS 39 provide a number The standards and interpretations which, at the date required by current regulations and accounting standards, of practical expedients that apply to hedging contracts that of preparation of the Group’s consolidated financial The consolidated financial statements are presented in appropriately presented for each of the primary financial are directly impacted by benchmark interest rate reform. A statements had already been issued but were not yet in euros and all values are rounded to the nearest thousand, statements. hedging contract that is impacted by the reform is subject to force, are illustrated below. The Group intends to adopt except when otherwise indicated. uncertainties about the timing and magnitude of rate-based these standards and interpretations, if applicable, when they The consolidated financial statements comprise the cash flows with respect to the hedged instrument. These come into force. consolidated statement of financial position, the consolidated amendments have no impact on the Group’s consolidated statement of profit or loss, the consolidated statement of financial statements as there are no interest rate hedges. Amendments to IAS 1: Classification of Liabilities as comprehensive income, the consolidated statement of cash Current or Non-current flows, the consolidated statement of changes in equity and Amendments to IAS 1 and IAS 8 – definition of In January 2020, the IASB published amendments to these notes to the consolidated financial statements. material paragraphs 69 to 76 of IAS 1 to specify the requirements The Group presents assets and liabilities in the statement The amendments provide a new definition of materiality for classifying liabilities as current or non-current. The of financial position based on a current/non-current stating that information is material if it is reasonable to assume amendments clarify: classification, whereby:

44 45 - What is meant by the right to postponement of maturity Onerous Contracts – Costs of Fulfilling a Contract – MEASUREMENT CRITERIA Where capitalisation criteria have been met, cost also - That the right to postponement must exist at the close of Amendments to IAS 37 includes borrowing costs directly attributable to the the financial year In May 2020, the IASB published amendments to IAS 37 to The consolidated financial statements of OTB Group for acquisition, construction or production of an asset. Costs - The classification is not impacted by the likelihood that the specify what costs should be considered by an entity when the year ended 31 December 2020 have been prepared incurred subsequent to the purchase of an asset are entity will exercise its postponement right assessing whether a contract is onerous or loss-making. on a historical cost basis, except for financial assets and capitalised only if they increase the future economic benefits - Only if a derivative implicit in a convertible liability is itself The amendment envisages application of the “directly derivative financial instruments that have been measured at inherent in the asset to which they relate. Costs incurred for an equity instrument does the maturity of the liability have no related cost approach”. Costs that refer directly to a contract fair value. maintenance or repairs of an ordinary or cyclical nature are impact on its classification. for the supply of goods or services include both incremental charged directly to profit or loss in the year they are incurred. The amendments will be effective for financial years costs and costs directly attributed to contractual activities. Tangible fixed assets The capitalisation of costs related to attachment expansion, beginning on or after 1 January 2023, and must be applied General and administrative expenses are not directly related modernisation or improvement of facilities owned or leased retrospectively. The Group is currently assessing the impact to a contract and are excluded unless they are explicitly Land, property, plant and equipment by the Group is carried out to the extent that they meet the the amendments will have on the current situation and chargeable to the other party based on the contract. requirements for being classified separately as an asset whether it will be necessary to renegotiate existing loan The amendments will be effective for financial years Buildings, plant and machinery owned by the Group are or part of an asset, applying the component approach, agreements. beginning on or after 1 January 2022. The Group will apply stated at purchase or production cost and are depreciated according to which, each component with an independent such amendments to contracts for which it has not yet systematically over the estimated useful lives of the assets. assessment of the useful life and its value must be treated Reference to the Conceptual Framework – satisfied all of its obligations at the beginning of the financial Land, whether free of constructions or annexed to civil and individually. All other costs are recognised in profit or loss as Amendments to IFRS 3 year in which it first applies such amendments. industrial buildings, is accounted for separately and is not incurred. In May 2020, the IASB published amendments to IFRS depreciated, since it is deemed to have an indefinite useful 3 Business Combinations - Reference to the Conceptual IFRS 9 Financial Instruments – Fees in the ’10 per life. The indicative useful lives, estimated by the Group for each Framework. The amendments are intended to replace cent’ test for derecognition of financial liabilities asset category, are as follows: references to the Framework for the Preparation and As part of the 2018-2020 annual improvements process Presentation of Financial Statements, published in 1989, for IFRS standards, the IASB published an amendment to with references to the Conceptual Framework for Financial IFRS 9. This amendment clarifies the fees an entity includes Useful life Reporting published in March 2018 without a significant in determining whether the terms of a new or modified change in the standard’s requirements. financial liability are materially different from the terms of the The Board also added an exception to the measurement original financial liability. These fees include only those paid Buildings 33 years standards of IFRS 3 to avoid the risk of potential “day- or received between the borrower and the lender, including Plants and machinery 4-10 years after” losses or gains arising from liabilities and contingent fees paid or received by the borrower or lender on behalf of Computers and office equipment 2-10 years liabilities that would fall within the scope of IAS 37 or IFRIC others. An entity must apply such amendment to financial 21 Levies, if contracted separately. liabilities that are modified or exchanged after the date of Furniture and fittings 3-10 years At the same time, the Board decided to clarify that the the first annual period in which the entity first applies the Industrial and commercial equipment 3-8 years existing guidance in IFRS 3 for contingent assets will not be amendment. impacted by the updated references to the Framework for The amendment will be effective for financial years the Preparation and Presentation of Financial Statements. beginning on or after 1 January 2022, and early application Improvements to third party goods Over the residual lease term The amendments will be effective for financial years is allowed. The Group will apply such amendment to financial up to a maximum of 10 years beginning on or after 1 January 2022, and must be applied liabilities that are modified or exchanged after the date of Other assets: retrospectively. the first annual period in which the entity first applies such amendment. No material impact for the Group is expected - Motor vehicles 4-5 years Property, Plant and Equipment: Proceeds before with regard to this amendment. - Other vehicles 5 years Intended Use – Amendments to IAS 16 In May 2020, the IASB published Property, Plant and Equipment — Proceeds before Intended Use, prohibiting With respect to leased stores, where the Group has entities from deducting from the cost of an item of property, undertaken to restore premises to their original condition plant and equipment any proceeds from the sale of products upon their return to the lessor, premises restoration costs sold during the period in which such asset is brought to the are charged to the income statement over the residual lease location or in the conditions necessary for it to be capable term. of operating in the manner for which it was designed by the management. An entity mus instead account revenues from Intangible fixed assets the sale of those products, and the costs of producing those products, in the income statement. Intangible assets acquired separately are measured on initial Intangible assets with finite lives are amortised systematically The amendment will be effective for financial years recognition at cost inclusive of directly attributable ancillary over the useful economic life of the assets concerned. The beginning on or after 1 January 2022 and must be applied costs. The cost of intangible assets acquired in a business residual carrying amount at the end of the useful lives of retrospectively to items of Property, Plant and Equipment combination is their fair value at the acquisition date. the assets is assumed to be zero unless third parties have made available for use on or after the start date of the prior Internally generated intangibles are not capitalised and the committed to purchase the assets at the end of their useful period with respect to the period in which the entity first related expenditure is reflected in profit or loss in the period lives or where an active market exists for the assets. applies such amendment. No material impact for the Group in which the expenditure is incurred. The Group does not The estimated future useful lives of the assets are reviewed is expected with regard to these amendments. incur any development costs that qualify for capitalisation in by the Directors at the end of each reporting period. The accordance with IAS 38. useful lives of intangible assets, as estimated by the Group, are as follows: The useful lives of intangible assets are assessed as either finite or indefinite.

46 47 Marni Marni Fall - Winter 2020 Collection Fall - Winter 2020 Collection Useful life recognised. three months. For the purpose of the consolidated statement of cash flows, cash and cash equivalents consist of cash and Trademarks 20-30 years Goodwill cash equivalents as defined above, net of bank overdrafts. Goodwill is allocated at the acquisition date to one or more Intellectual property rights 3-5 years CGUs, based on the benefits or synergies expected from the Lease assets business combination that generated the goodwill. Lease assets refer exclusively to contracts for subleasing Key money Over the residual lease term up to a maximum of 10 years Goodwill is tested for impairment by assessing the value out assets linked to lease contracts treated in accordance in use of the CGU to which the goodwill relates; when the with IFRS 16. As a result of the sublease income, the right Rights of use assets Based on the duration of the lease contract recoverable amount of the CGU is less than its carrying of use asset inherent in the lease contract cost is totally or Other intangible assets 3-5 years amount, an impairment loss is recognised. Impairment partially reversed, with simultaneous elimination or reduction losses relating to goodwill are not reversed in future of the related depreciation and, at the same time, a financial periods. Goodwill is tested for impairment annually as at 31 lease asset is recognised which generates recognition of December. the interest income. On the other hand, the sublease income does not produce any change in the financial liability of the Intangible assets with indefinite useful lives, which for the Right of use assets Inventories lease contract cost. Group consist solely of goodwill, are not amortised, but are Right of use asset represent the right to use the underlying The Group uses the Incremental Borrowing Rate (IBR) to tested for impairment using the methods indicated in the asset of a lease, measured with reference to the duration of Inventories of raw materials, semi-finished products and calculate the present value of future cash receipts. paragraph which follows. the lease contract. finished products are valued at the lower of cost and market Subsequent to initial recognition, lease assets are Right of use are assets measured at cost, net of accumulated value, whereby cost is determined on a weighted average increased by the interest accrued during the period and Gains or losses arising from derecognition of an intangible depreciation and any accumulated impairment losses, and cost basis. The value of inventories includes direct material decreased by the receipts obtained. In addition, the lease asset are measured as the difference between the net are adjusted during the term of the contract for any re- costs, transport costs, customs costs and a portion of other asset is remeasured to take account of any changes in the disposal proceeds and the carrying amount of the asset and measurements of lease liabilities. The initial cost is equal to direct costs that may be reasonably attributed thereto. contractual terms. are recognised in the statement of profit or loss when the the value of the lease liability, the initial direct costs incurred, A provision is recognised for materials and finished products asset is derecognised. the payments due for the lease and made on or before considered obsolete or slow moving, taking into account their Financial liabilities other than derivatives the date of commencement of the lease, net of the lease expected future use and realisable value. The writedowns The Group has not designated any financial liabilities as held Trademarks incentives received. are eliminated in future accounting periods if the reasons for for trading. Some of the Group’s principal trademarks have been Right of use are assets depreciated on a straight-line basis the same cease to exist. All financial liabilities other than derivatives are initially created and developed internally; accordingly, they have over the term of the contract. As far as finished products are concerned, net realisable recognised at the amount received or due, net of transaction not been capitalised as assets. Any revaluations made in value is the estimated selling price in the ordinary course costs (loan arrangement fees). the past in accordance with specific legislation have not Impairment testing of business, less estimated costs of completion and the Trade payables, the due dates of which fall within normal been recognised in these financial statements. Trademarks estimated costs necessary to make the sale, whereas, for commercial terms, are not discounted, but are stated at cost, acquired directly from third parties or in a business Assets other than goodwill raw materials, net realisable value is based on replacement which is deemed to be representative of their face value. combination are recognised in the same manner as for other At each balance sheet date, the Group assesses whether cost. Financial liabilities are measured at amortised cost using the intangible fixed assets. there are any indicators of asset impairment. Whenever EIR method. All of the Group’s trademarks are deemed to be intangible there are evident internal or external signs that indicate that Financial assets and liabilities assets with a finite useful life and are amortised an asset may be impaired, intangible assets with an indefinite Lease liabilities systematically. useful life are tested at least annually for impairment to Financial assets other than derivatives Lease liabilities are initially recognised as the present value ensure that the carrying amount of the assets does not All financial assets other than derivatives are initially of future payments remaining until the end of the contract. exceed their recoverable amount. recognised at cost, which equates to the amount paid in This includes fixed payments, net of any lease incentives to Key money The test for recoverability of the carrying amount is the form of an advance or loan or to the price agreed for a be received, variable payments that depend on an index or Key money is a payment made to secure a tenancy in a performed via a comparison with an asset’s fair value less specified service. rate and payments of any penalties for early termination of commercially strategic location. It is amortised over the term costs of disposal and its value in use. An asset’s value in use Subsequent measurement of financial assets is based on the lease, if the Group has reasonable assurance that it will of the relevant agreement. equates to the estimated future cash flows from the asset their classification, which is determined by the Group after exercise the early termination option. over its remaining useful life, discounted to their present initial recognition and which is reviewed at the year end. The Group uses the Incremental Borrowing Rate (IBR) to Intellectual property rights value using a discount rate that reflects the time value Specifically: calculate the present value of the payments. These intangible assets, which have been acquired from third of money and market risk. If it is not possible to estimate - Receivables, outstanding loans and investments held Subsequent to initial recognition, lease liabilities are parties, mainly consist of software licences or costs incurred independent cash flows for an individual asset, these are to maturity: these are measured at amortised cost, less increased by the interest accrued during the period and for the implementation of IT systems. Such assets with finite estimated for the smallest identifiable group of assets impairment. Trade receivables are stated at their invoiced decreased by the payments made. In addition, the lease lives are measured at purchase or production cost and are (cash-generating unit or CGU) to which the asset belongs, amount net of the allowance for doubtful accounts, in liability is remeasured to take account of any changes in the amortised on a straight line basis over their estimated useful for which it is possible to estimate independent cash flows, order to approximate their estimated net realisable value. contractual terms. lives, which generally ranges from 3 to 5 years. and a comparison is made between the carrying amount and Allocations to provisions are recognised when there is the value in use of the CGU. objective evidence of irrecoverability or, for the sake of Derivative financial instruments Goodwill When the recoverable amount of an asset or a CGU is lower prudence, by estimating recoverability based on information The Group uses derivative financial instruments to hedge its Goodwill arising from business combinations initially than its carrying amount, the latter is adjusted immediately available at the reporting date. Uncollectible receivables are foreign currency risks. Such derivative financial instruments represents any excess consideration transferred over the by means of the recognition in profit or loss of an impairment reversed from the total receivables balance. are initially recognised at fair value on the date on which a fair value of the net assets acquired at the transaction date. loss within a cost category that is consistent with the nature - Financial assets available for sale: these are measured at derivative contract is entered into; they are subsequently Goodwill is not amortised, but is tested for impairment of the impaired asset. fair value with recognition directly in equity of gains or losses periodically remeasured at fair value. at least annually and whenever circumstances arise that If the reason for the recognition of an impairment loss arising from subsequent measurement. They are carried as financial assets when the fair value is are indicative of potential impairment, in order to verify its ceases to exist, the carrying amount of the asset or of the - Cash and cash equivalents: cash and short-term deposits positive and as financial liabilities when the fair value is recoverability. CGU is reinstated up to the carrying amount that the asset consist of cash on hand and short-term demand deposits, negative. or the CGU would have had if no impairment loss had been with, in the case of the latter, an original term of longer than

50 51 Diesel Spring - Summer 2020 Campaign At the inception of a hedge relationship, the Group relating to the defined benefit plan and the amount thereof and rebates are recognised as a reduction of revenue to relating to items recognised directly in equity is recognised designates and documents the existence of a hedging determined on the basis of actuarial assumptions, the which they relate. in equity and not in the statement of profit or loss. relationship, specifying the identification of the hedging liability in question is stated at face value, thus assuming that Current tax assets and current tax liabilities are offset only if instrument, of the element or transaction subject to hedging, the related actuarial gains and losses are nil. Retail sales there is a legally enforceable right to do so and the intention of the correlation between the two and the nature of the risk. These sales are made in part through stores managed is to settle on a net basis and to realise the asset and settle If derivatives do not qualify as a hedging instrument, changes Other current liabilities directly by the Group. Revenue is recognised on delivery of the liability at the same time. in their fair value are recognised in profit or loss. the goods to the customer, which coincides with the receipt If derivatives qualify as a hedging instrument, then hedge Other current liabilities are stated at face value. of payment in cash or by means of electronic payment. This Deferred taxes accounting is applied; based on this accounting treatment, category also includes sales made through concession or Deferred tax is provided on all temporary differences hedges are classified as: Non-current assets held for sale and discontinued license stores, outlets operated by third parties therefore. In between the tax bases of assets and liabilities and their - fair value hedges when hedging the exposure to changes operations such cases, revenues are recognised at the time of sale of carrying amounts in the consolidated financial statements, in the fair value of an underlying asset or liability. The change the goods to the final consumer while the related collection with the exception of non-tax deductible goodwill. Deferred in the fair value of a hedging instrument is recognised in the Assets and liabilities that can be directly associated with is deferred with respect to recognition of the revenue. tax assets are recognised on the carry forward of any statement of profit or loss; business units held for sale are recognised in the statement unused tax losses and unused tax credits to the extent that it - cash flow hedges when hedging the exposure to variability of financial position as held for sale, separately from other Licenses is probable that future taxable profit will be available against in cash flows that is attributable to a particular risk associated assets and liabilities of the company. Immediately before Revenue is recognised based on the underlying contractual which they can be utilised. Current and deferred tax assets with a recognised asset or liability. The effective portion of the classification as held for sale, the related assets and liabilities provisions, usually as a percentage of sales of branded and tax liabilities are offset if the taxes relate to the same gain or loss on the hedging instrument relating to a change in are measured according to the accounting standards products made by the licensee. Any amount received upon taxation authority and a legally enforceable right exists to fair value is recognised in equity, while any ineffective portion applicable to them. When they are classified as held for sale, renewal of a licence is recognised on an accrual basis over offset them. Deferred tax assets and liabilities are measured is recognised immediately in the statement of profit or loss. net assets are measured at the lower of the book value and the life of the contract. at the tax rates that are expected to apply in the year when Unlike changes in fair value arising from year end the related fair value, reduced by selling costs. Any negative the asset is realised or the liability is settled, based on tax measurement, differentials arising from contracts paid or difference between the previous book value and the fair Provision of services rates (and tax laws) that have been enacted or substantively collected at their established due dates are recognised in value less selling costs is charged to the income statement Revenue from the sale of services is recognised in the enacted in the countries where the Group operates. profit or loss, regardless of the purpose of the derivative. as a write-down. The business units classified as held for period in which the services are rendered by reference to the Deferred tax liabilities are recognised on untaxed reserves sale constitute a discontinued operation if they: (i) represent stage of completion of the service rendered, measured as a when their distribution is deemed possible. Provisions for risks and charges a significant autonomous business unit or a geographical percentage of the total services still to be rendered. area of significant activity; (ii) are part of a single program for Foreign currencies Provisions represent obligations that are certain or probable the disposal of a significant business unit or a geographic Lease and rental income and for which a reliable estimate can be made of the amount area of significant activity; or (iii) refer to a subsidiary This is recognised on an accrual basis, as well as on a straight The consolidated financial statements are presented in thereof, but the timing or the exact amount required to acquired exclusively for the purpose of its sale. The results of line basis over the life of the contracts. euros, which is also OTB Group’s functional currency. settle the obligation could not be determined. Provisions discontinued operations, as well as any capital gains/losses Transactions in foreign currencies are initially recorded by are recognised when the Group has a present obligation realised following the disposal, are indicated separately in Costs and expenses the Group’s entities at their respective functional currency as a result of a past event, it is probable that an outflow of the income statement in a specific item, net of the related spot rates at the date the transaction first qualifies for resources embodying economic benefits will be required to tax effects, also for the years used for comparison. Costs and expenses are accounted for in accordance with recognition. Monetary assets and liabilities denominated in settle the obligation and a reliable estimate can be made of the concepts of prudence and accruals. They are recognised foreign currencies are translated at the functional currency the amount of the obligation. Revenue when they relate to goods and services sold or consumed in spot rates of exchange at the reporting date. Differences the year, on an accrual basis using the same criteria as those arising on settlement or translation of monetary items are Post-employment benefit plan liabilities Revenue is recognised when the significant risks and disclosed for revenue. recognised in profit or loss. rewards of ownership of the goods have passed to the buyer Labour costs consist of remuneration paid, accruals for Non-monetary items that are measured in terms of historical Benefits granted to employees and which become payable and it is probable that the economic benefits will flow to the pension funds and holidays not yet taken and social security cost in a foreign currency are translated using the exchange upon or subsequent to termination of employment via Group. In accordance with this general principle, revenue contributions in compliance with contracts and legislation in rates at the dates of the initial transactions. defined benefit plans (provision for employee termination recognition takes place as follows: force. indemnities) or other long term benefits (retirement benefits) Operating lease instalments: Significant accounting judgements, estimates and are recognised in the vesting period. As regards the provision Wholesale sales - for the fixed or variable part based on an index or a rate, assumptions for employee termination indemnities due by the Italian Revenue from wholesale sales is recognised when the these are recognised in the income statement through Group companies, the benefits payable subsequent to significant risks and rewards of ownership of the goods depreciation of right of use assets on the one hand and The financial statements, which have been prepared in termination of employment may be categorised as follows: have passed to the buyer, usually on delivery of the goods. through interest on the lease liability on the other, in accordance with IFRS, contain estimates and assumptions - defined contribution plans, consisting of the portion Payment is normally deferred until delivery takes place. accordance with IFRS 16; made by the Group related to assets and liabilities, costs accrued as from 1 January 2007; The Group closely monitors the terms of trade and any right - for the variable portion that depends mainly on sales and revenue and contingent liabilities at the reporting date. - defined benefit plans, consisting of the provision for of return granted to customers of its trading subsidiaries. volumes, these are recognised in the income statement on The estimates and associated assumptions are based on employee termination indemnities accrued up to 31 In those rare cases where the conditions do not lead to a an accrual basis. historical experience and other factors that are considered December 2006. transfer to the customer of all the risks of ownership of the to be reasonable and realistic based on the information Under a defined contribution plan, an entity’s legal or goods (such as cases where the conditions amount to sale Income tax available at the time. constructive obligation is limited to the amount it agrees to or return, rather than an outright sale), revenue recognition The assumptions associated with the estimates are reviewed contribute: consequently, the actuarial risk and investment is deferred until such time as the risks are substantially Current taxes periodically and the impact of any change is recognised in risk fall on the employee. Defined benefit plans create transferred (e.g. sell through to the end customer). Any Current income tax assets and liabilities are measured at the profit or loss in the period in which the estimate is revised: an obligation on the entity to provide agreed benefits to residual risks that do not jeopardise correct revenue amount expected to be recovered from or paid to the taxation the actual results could differ from such estimates. employees: consequently, the actuarial risk and investment recognition, such as the concession of a limited right of return, authorities. The tax rates and tax laws used to compute the The critical accounting judgements that have been made, risk fall on the company. are measured and recognised in the financial statements by amount are those that are enacted or substantively enacted in that they are based on estimates of the Group’s future Due to the immaterial difference, which is remeasured at means of specific provisions and a corresponding reduction at the reporting date in the countries where the Group results, relate to the recoverability of deferred tax assets the year end, between the face value of the obligations of revenue. Discounts, including those of a financial nature, operates and generates taxable income. Current income tax recognised in the financial statements and the performance

54 55 of impairment testing in the previously described manner. SCOPE OF CONSOLIDATION Share held Held Significant estimates have also been made with respect Name Registered Office Currency Share capital Direct Indirect via to the determination of the market value of inventories, The consolidated financial statements comprise the Diesel S.p.A. Breganze (VI) Eur 22,500,000 100% which requires forecasts to be made of the Group’s ability financial statements of the Parent Company OTB S.p.A. and Diesel Italia S.r.l. Marostica (VI) Eur 300,000 100% (1) to dispose of unsold finished products pertaining to past of the companies for which the Parent Company, directly or Brave Kid S.r.l. Marostica (VI) Eur 550,000 90% (1) collections. indirectly, holds the majority of voting rights, or for which it is Diesel France S.A.S. Paris Eur 1,000,000 100% (1) able to govern the financial and operating policies. Diesel USA Inc. New York Usd 110,001,000 100% (1) Other information Diesel Sweden A.B. Stockholm Sek 600,000 100% (1) As required by IAS 27, a list is provided below of the Diesel Swiss S.A. Zurich Chf 1,000,000 100% (1) Segment information and earnings per share companies that have been included in the scope of Diesel Hellas S.A. Athens Eur 300,000 100% (1) The Group does not have any publicly traded securities. consolidation at 31 December 2020 as companies to be Diesel London Ltd. London Gbp 700,000 100% (1) Accordingly, it is exempt from disclosure requirements consolidated on a line-by-line basis: Diesel Denmark A.P.S. Copenhagen Dkk 601,000 100% (1) concerning consolidated segment information as required Diesel Belgium S.A. Antwerp Eur 1,195,000 100% (1) by IFRS 8 and from the disclosure of earnings per share as Diesel Norge A.S. Oslo Nok 225,000 100% (1) required by IAS 33. Diesel Benelux B.V. Eindhoven Eur 18,152 100% (1) Diesel Pacific Ltd. Hong Kong Hkd 982,146,839 100% (1) Diesel Dragon (Shanghai) Trading Co. Ltd. Shanghai Cny 972,336,426 100% (1) K-Bit Ltd. Hong Kong Hkd 10,000 100% (1) K-Bit Brave Sourcing Ltd. Chennai Inr 100,000 100% (1) Diesel Iberia S.A. Barcelona Eur 100,000 100% (1) Diesel Deutschland Gmbh Dusseldorf Eur 1,000,100 100% (1) Diesel Japan Co. Ltd. Osaka Yen 60,000,000 100% (1) Diesel Japan Service Co. Ltd. Osaka Yen 10,000,000 100% (1) Diesel Canada Inc. Montreal Cad 44,642,857 100% (1) Gold Rush S.A. Luxembourg Eur 31,000 100% (1) Diesel Fashion India Reliance Pvt. Ltd Mumbai Inr 1,155,000 51% (1) Universe S.a.r.l. Principality of Monaco Eur 150,000 100% (1) K-Bit Marocco S.a.r.l. Casablanca Mad 230,000 100% (1) Staff International S.p.A. Noventa Vicentina (VI) Eur 1,500,000 100% Staff Usa Inc. New York Usd 1,000 100% (2) Staff International Japan Co.Ltd. Tokyo Yen 440,000,000 100% (2) Props Vigevano S.r.l. Milan Eur 100,000 100% (2) Staff Asia Pacific Ltd. Hong Kong Hkd 7,000,000 100% (2) Viktor & Rolf B.V. Amsterdam Eur 20,000 70% Brand Name Company B.V. Amsterdam Eur 200,000 70% (3) 55DSL A.G. Zurich Chf 100,000 100% Marni Holding S.r.l. Milan Eur 2,500,000 100% Marni Group S.r.l. Milan Eur 1,000,000 100% (4) Marni Retail Espana S.A. Madrid Eur 60,000 65,5% (4) Marni Japan Ltd Tokyo Yen 99,900,000 100% (4) Marni Suisse S.A. Lugano Chf 100,000 100% (4) Marni U.S.A. Corp. New York Usd 100,000 100% (4) Marni France S.a.S. Paris Eur 40,000 100% (4) Marni Retail UK Ltd London Gbp 1,600 100% (4) Marni China Ltd Hong Kong Cny 4,783,171 100% (4) Marni Deutschland Gmbh Munich Eur 25,000 100% (4) Marni Hong Kong Ltd Hong Kong Hkd 100,000 51% (4) Marni Shanghai Ltd Shanghai Cny 8,279,021 100% (4) Margiela S.A.S.U. Paris Eur 300,000 100% Margiela Japan CO. Ltd. Tokyo Yen 100,000,000 100% (5) Margiela Asia Ltd. Hong Kong Hkd 103,000,000 100% (5) Margiela (Shanghai) Trading Co. Ltd Shanghai Cny 15,799,745 100% (5) Margiela USA Inc. New York Usd 1,000 100% (5)

Key: (1) via Diesel S.p.A. (2) via Staff International S.p.A. (3) via Viktor & Rolf B.V. (4) via Marni Holding S.r.l. (5) via Margiela S.A.S.U. Marni 56 Fall - Winter 2020 Backstage Collection 57 The scope of consolidation changed with respect to the The reference date of the consolidated financial statements previous year due to the following extraordinary transactions: coincides with the year end date of the parent company and of - merger of the subsidiaries Margiela France S.a.r.l. and Neuf all the other companies included in the area of consolidation, S.a.r.l. with the parent Margiela S.A.S.U., effective 1 January with the exception of Diesel Fashion India Reliance PVT. 2020; Ltd. and K-Bit Brave Sourcing Ltd., which drew up interim - transfer of the equity investment in Marni Shanghai Ltd, financial statements as at 31 December for the purposes of already 100% owned, from the subsidiary Marni China Ltd the consolidated financial statements, considering that their to the subsidiary Marni Group S.r.l.; financial year ends on 31 March. - conclusion of the liquidation procedure of the wholly- owned subsidiary PC S.r.l..

CONSOLIDATION PRINCIPLES

The scope of consolidation includes the Parent Company controlling interests is recognised in specific captions OTB S.p.A. and subsidiaries as at 31 December 2020 in within equity and the statement of profit or loss. In the event which the Parent Company directly or indirectly owns the of an acquisition of partial control, the portion of equity majority of the share capital or shares with voting rights, or attributable to the non-controlling interest is determined has the power, also through contractual agreements, based on its share of the fair value at the acquisition date of to determine financial and operational policies. the net assets acquired, with the exclusion of any goodwill attributable thereto (partial goodwill method). Subsidiaries The Group did not resort to the alternative method permitted These are companies in which the Group exercises control. for accounting for partial acquisitions and, accordingly, it has Such control exists when the Group has the direct or indirect recognised the entire amount of goodwill arising from the power to determine the financial and operating policies of acquisition by also taking account of the portion attributable a company in order to obtain benefits from its activities. to the non-controlling interest (full goodwill method). The financial statements of subsidiaries are included in the consolidated financial statements from the date on which In the event of the acquisition of interests subsequent to control is taken over. the assumption of control (purchase of a non-controlling Consolidation of a subsidiary begins as of the date of interest), any difference between the purchase consideration acquisition, that is, when the Group obtains control over the and the corresponding share of the net assets acquired is subsidiary and ceases when the Group loses control of the recognised directly in equity; likewise, the impact of the sale subsidiary. of a non-controlling interest, without a loss of control, is accounted for as an equity transaction. The consolidation procedures adopted include: If the value of the consideration transferred exceeds the - the elimination of the parent’s investment in each pro-rata share of the acquired subsidiary’s equity, the subsidiary and the inclusion of the assets and liabilities of positive difference is allocated, where possible, to the net each subsidiary on a line-by-line basis or under the equity assets acquired measured at fair value, while the remainder method; is recognised as goodwill. - the presentation of any portion of equity attributable to non-controlling interests; Goodwill is not amortised, but is tested for impairment at least - the elimination of all transactions between entities of the annually and whenever facts or changes in circumstances group and, thus, intragroup payables, receivables, sales, arise that indicate that the carrying amount may not be purchases and unrealised profits or losses recognised in realisable. Goodwill is stated at cost, net of accumulated assets. impairment losses. If the value of the consideration transferred is lower than Assets and liabilities, costs and income of the entities the pro-rata share of the acquired subsidiary’s equity, the consolidated on a line-by-line basis are included in negative difference is recognised in profit or loss. Acquisition the consolidated financial statements in their entirety; related costs are recognised in profit or loss as incurred. the carrying amount of the parent’s investment in each subsidiary is eliminated against the parent’s portion of equity Associates of each subsidiary. These are companies in which the Group exercises At the acquisition date, the identifiable assets acquired and significant influence, but not control or joint control, over the liabilities assumed are recognised at their fair value. financial and operating policies. The consolidated financial Any excess purchase consideration over the fair value of statements include the Group’s share of the profit or loss of the net assets acquired is recognised as goodwill; if the fair associates, accounted for using the equity method, from the value of the net assets acquired is in excess of the purchase date on which the significant influence begins. consideration transferred, the gain is recognised in profit or loss. The portion of equity and profit attributable to non- Viktor&Rolf 58 Fall - Winter 2020 Mariage Collection 59 TRANSLATION OF FOREIGN - income and expense items are translated at the average and payable are aligned with standard market rates and are exchange rates for the period; commensurate with the Group’s financial soundness. CURRENCY FINANCIAL - exchange differences arising from the translation of income and expense items at an exchange rate that differs In view of the current interest rate levels and the related from that prevailing at the reporting date and arising from dynamics, the income performance of the Group is only STATEMENTS the translation of opening equity balances at an exchange marginally sensitive to changes in the same. rate that differs from that prevailing at the reporting date are The rules applied for the translation of foreign currency recognised in equity (foreign currency translation reserve). Exchange risk financial statements are the following: - the assets and liabilities of foreign operations are translated The exchange rates indicated in the following table were OTB Group is exposed to changes in exchange rates into euros at the rate of exchange prevailing at the reporting used for the translation of foreign currency financial of currencies in which sales to affiliates and third party date; statements (exchange rate for 1 Euro) customers and purchases from certain suppliers are denominated. VALUTA Average exchange rates Period end exchange rates In order to mitigate the exposure to exchange rate risk deriving from its commercial activity, the OTB Group uses 2020 2019 31 DEC 2020 31 DEC 2019 derivative instruments, primarily Forwards and Options in US Dollar USD 1.14220 1.11950 1.22710 1.12340 line with Group policy. Danish Krone DKK 7.45420 7.46610 7.44090 7.47150 This financial policy of the Company aims to minimise the Swedish Krona SEK 10.48480 10.58910 10.03430 10.44680 impact of exchange rate fluctuations on operating results. British Pound GBP 0.88970 0.87777 0.89903 0.85080 Norwegian Krone NOK 10.72280 9.85110 10.47030 9.86380 Liquidity risk Swiss Franc CHF 1.07050 1.11240 1.08020 1.08540 OTB Group manages liquidity risk via close control over the Hong Kong Dollar HKD 8.85870 8.77150 9.51420 8.74730 components of working capital. The tools used to monitor Japanese Yen JPY 121.84580 122.00580 126.49000 121.94000 and optimise cash flow, together with careful and precise Chinese Renminbi CNY 7.87470 7.73550 8.02250 7.82050 debt management, maintain a balanced cash level, limiting Canadian Dollar CAD 1.53000 1.48550 1.56330 1.45980 problems and tensions in current liquidity. Indian Rupee INR 84.63920 78.83610 89.66050 80.18700 Credit risk Moroccan Dirham MAD 10.82400 10.76600 10.91900 10.78100 Credit risk represents the exposure that the Company has to potential losses arising from the failure by counterparties to fulfil their contractual obligations. FINANCIAL RISK MANAGEMENT OTB Group generally focuses on commercial transactions with customers with which it has established relationships. It The OTB Group, operating in an international context, is control, to monitor in a systematic manner the levels of the is Group policy to subject customers that request extended exposed, to a varying extent, to various financial risks linked Group’s financial risks and the effectiveness of treasury payment terms to background checks of their credit to the conduct of its business, especially market risks, that management and to provide input useful for the optimisation standing, based on information obtained from specialised can be broken down as follows: of the management of relationships with the banks. agencies and by observing and analysing data on the In accordance with the guidelines, the Group specifically performance of newly acquired customers. Moreover, trade - interest rate risk, which is linked to the impact of changes monitors the management of individual financial risks and receivables are constantly monitored throughout the year to in market interest rates; intervenes with the objective of minimising the impact ensure timely intervention, if needed, in order to reduce the - foreign exchange risk, which is a consequence of thereof, inclusive of through the use of derivatives. The risk of losses. transactions denominated in currencies other than the derivatives are used solely as hedging instruments. Financial Trade receivables are stated net of an allowance estimated functional currency; liabilities mainly consist of trade payables, amounts due to based on the risk of default by the counterparty, determined - liquidity risk, which arises from the need to have adequate banks and other financial liabilities. The management of with reference to information available on the customer’s access to capital markets and sources of funding to cover these liabilities is aimed at financing the Group’s operations. solvency and by taking account of historical data. the needs arising from operating activities, investment For a brief summary of the quality of the Group’s receivables, activities and the maturities of financial liabilities; Rate risk please refer to note (7), which provides information on trade - credit (or counterparty) risk, which represents the risk of receivables by due date and on writedowns made by the default on commercial or financial obligations assumed The OTB Group’s exposure to the interest rate risk is Group. by the various counterparties and resulting from normal moderate. Therefore, no specific actions are taken, such commercial transactions or financing activities, employment as the use of derivative financial instruments, for the of funds and hedging of risks. management of interest rate risk, although the Group pursues a general policy of optimising financial resources The management of financial risks is performed based on and using the least expensive forms of financing. guidelines laid down by the Parent Company, in compliance with the objectives established centrally by the board of Interest rates receivable and payable on the components of directors. This makes it possible to control and coordinate the Group’s net cash/debt are primarily linked to the Euribor/ the operations of the individual subsidiaries, inclusive Libor rate for the period, increased by a spread that depends of by means of more effective financial planning and on the nature of the relationship. Interest margins receivable Marni 60 Spring - Summer 2020 Collection Goodwill, the nature of which is described in the section of which a terminal value was determined, using a growth rate the notes dedicated to accounting policies, relates to the in perpetuity (“g”) of 0%. following acquisitions: For the purpose of discounting cash flows, a WACC was used, differentiated according to the Cash Generating Unit subject to impairment, considering the intrinsic characteristics of COMMENTARY ON KEY (€ thousands) 31.12.2020 31.12.2019 each. The average discount rate used is 8.6%. Marni 46,175 46,175 The recoverable amounts determined were higher than the carrying amounts and, accordingly, no writedowns were COMPONENTS OF STATEMENT OF Diesel Japan 7,088 7,088 Diesel Canada recognised. 4,337 4,337 The result of the impairment test was subjected to sensitivity Viktor & Rolf FINANCIAL POSITION - ASSETS 5,766 5,766 analysis, aimed at verifying the sensitivity of the results to Other 4,868 4,974 changes in some of the main parameters of the estimate, Total 68,234 68,340 within reasonable intervals and with non-conflicting hypotheses. The variables modified were the discount rate NON-CURRENT ASSETS (between 7% and 12%) and the growth rate of terminal values(in the range 0% - 4%). The sensitivity analysis Other goodwill includes goodwill that arose from acquisitions showed a relative stability of the results. by Group companies of business units, consisting mainly of Note that for the purposes of carrying out the impairment stores. test on goodwill Marni, the invested capital of the related CGU included, in addition to the goodwill, also that of the Trademarks relate to the cost of purchasing and maintaining Marni brand: by virtue of this technicality, also the brand was trademarks. A breakdown of trademarks held by the Group therefore subject to impairment testing, albeit in the absence 31 December 2020 31 December 2019 is provided below: (in thousands of euro) of impairment indicators. As stated above, no critical issues Non-current assets 952,425 1,010,180 arose from the performance of the test. (€ thousands) 31.12.2020 31.12.2019 No impairment indicators were identified relating to other Marni 110,734 115,767 tangible and/or intangible assets: it was therefore not Other 3,037 3,064 necessary to formalise further impairment tests. 1- GOODWILL AND INTANGIBLE ASSETS WITH A FINITE USEFUL LIFE Total 113,771 118,831

Goodwill and intangible assets with a finite useful life, which Movements in intangible assets for the year ended 31 totalled Euro 216,462 thousand at 31 December 2019, December 2020 are summarised in the following table: Other trademarks include Diesel, 55DSL, Martin Margiela amount to Euro 212,378 thousand at 31 December 2020. and Viktor and Rolf.

Intellectual property rights include costs for the purchase of applications software and unlimited software user licences. Other Intellectual Key intangible (in thousands of euro) Goodwill Trademarks property rights Money assets Assets in progress Total Other intangible assets mainly include capitalised Cost expenditure on IT systems and on the Group’s administrative and commercial infrastructure. The increases refer in part to At 31/12/2019 150,595 162,894 37,005 24,788 81,050 7,390 463,722 investments in the new omni-channel direct e-commerce Increases 0 178 2,259 0 8,594 3,351 14,382 platform and in digital transformation projects. Decreases 0 (3) (1,030) (2,010) (607) (1,519) (5,169) Exchange differences (534) 27 (891) (230) (108) (41) (1,777) The item Assets under construction and advances includes, Other changes 0 32 46 0 5,321 (5,974) (575) almost for its entirety, the investments made by the Group to Impairment develop new IT applications, which at the end of the financial At 31/12/2020 150,061 163,128 37,389 22,548 94,250 3,207 470,583 year were not yet in operation as they were not completed. Accumulated Other changes relate primarily to investments in the new amortisation omni-channel direct e-commerce platform made in 2019 At 31/12/2019 82,255 44,063 34,829 19,264 66,849 0 247,260 and which went live in 2020. Amortisation 0 5,278 1,502 1,010 8,149 0 15,939 The impairment test (in compliance with IAS 36), carried out Decreases 0 (1) (1,024) (2,010) (513) 0 (3,548) at the end of 2020 for all goodwill recognised in the financial Exchange differences (428) 17 (793) (173) (68) 0 (1,445) statements, did not find any significant element that could Other changes 0 0 2 (3) 0 0 (1) lead to believe that these assets could be impaired. This test At 31/12/2020 81,827 49,357 34,516 18,088 74,417 0 258,205 was carried out by determining the recoverable value with reference to the value in use and normally identifying the Net book value company or sub-group the company refers to as a CGU. At 31/12/2019 68,340 118,831 2,176 5,524 14,201 7,390 216,462 The value in use was obtained by discounting the expected At 31/12/2020 68,234 113,771 2,873 4,460 19,833 3,207 212,378 free cash flows of the individual CGUs based on the available forecast data. A conventional period was used, at the end of

Maison Margiela 62 Fall - Winter 2020 CO-ED Défilé Collection 63 Marni 64 Fall - Winter 2020 Backstage Collection 65 2- RIGHT OF USE ASSETS 3- PROPERTY, PLANT AND MACHINERY

The Right of use assets item represents the right to use the Property, plant and equipment amount to Euro 151,477 underlying assets of lease contracts. thousand at 31 December 2020 compared to Euro Changes in right of use assets for the year ended 31 157,937 thousand at 31 December 2019. December 2020 are shown in the following table: Movements in property, plant and equipment for the year ended 31 December 2020 are summarised in the following table: Right of use assets - (in thousands of euro) Buildings Right of use assets - Other Total Cost (in thousands of euro) Land and Plants and Office furniture Improvements to Construction in At 31/12/2019 buildings machinery and equipment third party goods Other assets progress Total 545,600 5,761 551,361 Cost Increases 101,252 3,853 105,105 At 31/12/2019 125,520 57,266 177,567 214,345 34,142 652 609,492 Decreases (30,400) (1,395) (31,795) Increases 5 1,387 7,757 14,742 2,172 907 26,970 Exchange differences (15,935) (6) (15,941) Decreases (9) (316) (9,543) (19,864) (1,738) (268) (31,738) Other changes 0 (27) (27) Exchange differences (2) (64) (6,338) (8,335) (568) (8) (15,315) Impairment 0 0 0 Other changes 0 416 101 576 21 (446) 668 At 31/12/2020 600,517 8,186 608,703 Impairment Accumulated amortisation At 31/12/2020 125,514 58,689 169,544 201,464 34,029 837 590,077 At 31/12/2019 117,673 1,130 118,803 Accumulated Amortisation 113,530 2,537 116,067 amortisation Decreases (10,748) (1,092) (11,840) At 31/12/2019 39,157 53,965 158,757 173,517 26,159 451,555 Exchange differences (6,308) (2) (6,310) Amortisation 3,559 1,393 8,934 13,522 2,541 29,949 Other changes 0 0 0 Decreases (9) (291) (9,044) (18,385) (1,719) (29,448) At 31/12/2020 214,147 2,573 216,720 Exchange differences (3) (64) (5,864) (7,071) (450) (13,452) Net book value Other changes 0 0 (4) 0 0 (4) At 31/12/2019 427,927 4,631 432,558 At 31/12/2020 42,704 55,003 152,779 161,583 26,531 438,600 At 31/12/2020 386,370 5,613 391,983

Net book value At 31/12/2019 86,363 3,301 18,810 40,828 7,983 652 157,937 Buildings refers to rental contracts for shops, offices and 2020 in the income statement for the current year, avoiding At 31/12/2020 82,810 3,686 16,765 39,881 7,498 837 151,477 other spaces. Other refers to rental contracts for vehicles treating them as contractual amendments for the purposes and other assets. of IFRS 16, with the beneficial effects of these being Land and Buildings relate to the purchase and/or indicators of impairment were identified for the above asset Increases during the year mainly refer to the signing of spread over the duration of the contracts. This accounting construction cost of buildings and to the purchase cost of category. new lease rental, while decreases mainly refer to the early allowed for a better correlation of store rental costs to the land owned by certain Group companies. termination of existing rental contracts. related service arising from use (and possibility of use) of Plant and machinery mainly relates to new machinery and The Group made recourse to the option of applying the premises as well as sales, given that during the year the cost of installing general plant. the practical expedient provided for in the amendment almost all stores were temporarily closed due to restrictions Leasehold improvements mostly relate to the restructuring to IFRS16, Covid-19 Related Rent Concessions, for imposed by local governments in response to the pandemic. and alteration of leased premises accommodating the accounting reductions in lease payments granted by Reference should be made to note (30) of these Notes for dedicated stores managed directly by the Group. lessors that are a direct result of the Covid-19 epidemic. further details on the reductions in lease payments. The increases and decreases in the classes Leasehold The adoption of this practical expedient enabled the lessee improvements and Office furniture and equipment mainly to recognise the reductions in lease payments relating to refer to the opening, restructuring and closure of stores located worldwide. Other tangible assets consist mainly of company vehicles and industrial and commercial equipment. Construction in progress and advance payments include capital expenditure by Group companies which had still to be completed at the balance sheet date. As required by the Group’s procedure for the analysis of indicators of impairment, at the year end, an assessment was performed of the potential existence of indicators of impairment with reference to internal and external information sources. Typically, external sources could be changes in the technological, economic and legal environment in which the Group operates, while external sources are corporate strategies that could change the intended use of the assets. From the analysis performed, no

Marni 66 Fall - Winter 2020 Collection 67 4- INVESTMENTS IN ASSOCIATES 6- OTHER NON-CURRENT FINANCIAL ASSETS

Investments in associates as of 31 December 2020 acquired by the subsidiary Marni USA Corp. in 2019. Other non-current financial assets amount to Euro 53 amounted to Euro 24,563 thousand compared to Euro The investment was recognised in the consolidated financial thousand at 31 December 2020 compared to Euro 71 25,647 thousand as of 31 December 2019 and refers to statements using the equity method. The change in the value thousand at 31 December 2019. 20% of the shares of Atelier Luxury Group LLC, owner of of the investment is summarised in the following table: the luxury brand AMIRI founded in Los Angeles in 2014, Please see Note (27) on financial instruments.

Measurement using the equity method at the beginning of the period 25,647 Profit/(Loss) for the period: pro rata 2,714 7- OTHER NON-CURRENT ASSETS Dividends paid during the period (1,086) Trademark amortisation (384) The composition of other non-current assets at 31 Exchange differences (2,328) December 2020 and 31 December 2019 is as follows: Measurement using the equity method at the end of the period 24,563 IS effect of equity method measurement of the investment 2,330 (in thousands of euro) 2020 2019 change Deposits 58 128 (70) The following table summarizes the financial information of the Group’s investment in Amiri: Prepaid rental expenses 0 1 (1)

(in thousands of euro) 31.12.2020 31.12.2019 Other prepaid expenses 668 1,704 (1,036) Current assets 22,110 16,502 Other tax receivables 29 72 (43) Non-current assets 2,315 1,309 Guarantee deposits 32,483 35,982 (3,499) Total assets 24,426 17,811 Other receivables 1,923 1,810 113 Shareholders’ equity (19,505) (13,440) Other non-current assets 35,161 39,697 (4,536) Current liabilities (3,725) (3,952) Non-current liabilities (1,196) (418) Other prepaid expenses mainly include the non-current Guarantee deposits mainly refer to deposits paid as security Total liabilities 24,426 17,811 portion of advance payments made to a licensee to fit out for lease contracts relating to stores. certain flagship stores pending the licence agreement. Statement of profit (loss) for the year of Atelier Luxory Group LLC (summary data): 8- DEFERRED TAX ASSETS (in thousands of euro) 31.12.2020 31.12.2019* Sales 52,096 39,491 These include the allocation of benefits related to the for tax purposes for which it is probable that future taxable Cost of sales (17,477) (13,137) temporary differences between assets and liabilities income will be obtained. The composition of deferred tax Personnel costs (5,334) (3,615) recorded in the financial statements and the corresponding assets at 31 December 2020 and 31 December 2019 is tax values and taxes on losses that can be carried forward as follows: Operating costs (14,570) (13,679) Other expenses (1,146) (1,021) (in thousands of euro) 2020 2019 Net Profit/(loss) 13,570 8,039 Inventories writedown reserve 28,169 26,960 * The 2019 net profit/(loss) refer to the holding period of the investment from 1 April 2019 to 31 December 2019. Risk provisions 21,576 13,755 Bad debt provision 4,530 2,605 5- LEASE ASSETS Amortisation 27,301 28,116 Leases - IFRS16 4,939 3,378 (in thousands of euro) 2020 2019 change Elimination of intercompany profits 20,381 21,799 Non-current lease assets 929 752 177 Deferred tax assets on tax losses 15,693 21,031 Current lease assets 281 200 81 Estimated Patent Box benefit - 7,396 Total lease assets 1.210 952 258 Other temporary differences 13,292 12,016 Total 135,881 137,056 Lease assets refer to subleasing out contracts. Lease assets are broken down by maturity date as follows:

(in thousands of euro) Up to 1 year From 1 to 5 years Beyond 5 years Total Non-current lease assets 0 825 104 929 Current lease assets 281 0 0 281 Total lease assets 281 825 104 1.210

68 69 On 17 July 2020, a Group company signed the “Patent Box” agreement for the period 2015-2019. With this agreement, the methods and criteria to be used to calculate the amount of taxable income, which consists of a facilitated tax regime for companies that generate income through the direct use or licensing to third parties of intellectual property rights, was defined with the competent Tax Authority. The item Amortisation includes Euro 4,185 thousand in tax savings deriving from the revaluation of the Diesel brand carried out during the year. Indeed, the Group revalued the Diesel brand as permitted by art. 110 of Legislative Decree no. 104 of 14 August 2020, converted into law by Law no. 126 of 13 October 2020, opting for tax recognition of the revaluation itself, via payment in subsequent years of a substitute tax of 3% of the revaluation value. This revaluation is supported by a specific appraisal drawn up by an independent expert; the revaluation does not exceed the limit of the value actually attributed to the trademark with regard to its entity, actual possibility of economic use in the company, as well as current values. It should be noted that in order to determine the value attributable to the trademark, a model linked to the royalty rate was used, estimating a useful life of 20 years. The book value of the trademark entered in the financial statements of the subsidiary Diesel SpA was adjusted in the consolidated financial statements by simultaneously recognising a portion of deferred tax assets, on the basis of the explicit forecast of their use.

Viktor & Rolf Maison Margiela 70 Fall - Winter 2020 Haute Couture Collection Fall - Winter 2020 CO-ED Défilé Collection 71 Trade receivables arise from commercial transactions approach of IAS 39 with an Expected Credit Losses - ECL with domestic and foreign customers. They do not include approach. IFRS9 requires the Group to recognise a write- any amounts due beyond 1 year. Writedowns have been down equal to the ECL for all debt instruments not held CURRENT determined on a prudent basis that reflects both a review of at fair value recognised in the income statement and for individual accounts and the general risk of collection losses. contractual assets.

ASSETS The adoption of IFRS 9 as from 2018 substantially changed Details of the gross amount of trade receivables by the accounting for losses due to the reduction in value of geographical area are shown below: the financial assets of the Group, replacing the incurred loss

(in thousands of euro) Italy European Union Rest of Europe America Rest of the world Total

94.121 73,278 11,739 21,065 56,530 256,733

The Group was not subject to any significant concentration As at 31 December 2020 and 31 December 2019, the of credit risk at the reporting date. ageing analysis of trade receivables is, as follows: (in thousands of euro) 31 December 2020 31 December 2019

Current assets 1,009,956 823,705 Past due

(in thousands of euro) Total Not past due 1-60 days 61-120 days 121-180 days 181-360 days beyond 360 days 31.12.2020 256,733 165,142 40,488 11,780 6,238 11,418 21,667 9- INVENTORIES 31.12.2019 259,898 165,405 43,323 8,413 3,628 4,470 34,659

Movements in the allowance for doubtful accounts are summarised in the following table: Inventories amount to Euro 310,000 thousand at 31 The composition of inventories at 31 December 2020 and December 2020 compared to Euro 360,461 thousand at 31 December 2019 is as follows: 31 December 2019. Value as at Difference from Value as at (in thousands of euro) 01.01.2020 translation differences Provisions Utilisations 31.12.2020 Bad debt provision 29,415 (576) 11,710 (5,185) 35,364 2020 2019

(in thousands of euro) Gross Provision Net Gross Provision Net Change

Raw materials 41,445 (18,515) 22,930 40,872 (14,283) 26,589 (3,659) Work in progress 19,697 (1,692) 18,005 19,640 (1,053) 18,587 (582) 11- TAX RECEIVABLES Finished products 373,070 (104,005) 269,065 410,649 (95,364) 315,285 (46,220) Total inventories 434,212 (124,212) 310,000 471,161 (110,700) 360,461 (50,461) Current tax assets amount to Euro 7,368 thousand at 31 The composition of current tax assets receivables at 31 December 2020 (Euro 20,317 thousand at 31 December December 2020 and 31 December 2019 is as follows: 2019). The net value of inventories decreased by Euro 50,461 increase from the previous year, was made based on the thousand (-14) while the related provision increased by Euro margin losses realised in 2020, as well as the unforeseeable 13,512 thousand (+12%). scenarios as a result of the COVID-19 effects. (in thousands of euro) 2020 2019 Change The estimate of the inventory write-down reserve, and the Income tax receivable 7,332 20,205 (12,873) Other tax receivables 36 112 (76) Total current tax assets 7,368 20,317 (12,949) 10- TRADE RECEIVABLES

Trade receivables at 31 December 2020 amount to Euro accounts of Euro 35,364 thousand. Income tax receivables mainly include the following: The remainder relates to amounts due from the tax 221,369 thousand, a decrease compared to the previous - Euro 2,738 thousand consisting of an IRES receivable authorities of the various countries where the subsidiaries year of Euro 9,114 thousand. The composition of trade receivables at 31 December 2020 arising from domestic tax group arrangements; are located. Trade receivables are stated net of an allowance for doubtful and 31 December 2019 is as follows: - Euro 526 thousand consisting of an IRAP receivable; It should be noted that the parent company OTB S.p.A., as - Euro 1,017 thousand consisting of the IRES receivable the parent company, together with its Italian subsidiaries, and Euro 23 thousand of the IRAP receivable, deriving adheres to the group taxation regime called “National (in thousands of euro) 2020 2019 Changes from the recognition of a lower IRES and IRAP taxable base Consolidation” provided for by art. 117 to 129 of the Italian Trade receivables 256,733 259,898 (3,165) following the positive conclusion of the Mutual Agreement Consolidated Law on Income Tax. Bad debt provision (35,364) (29,415) (5,949) Procedures, respectively with Spain for the period from Trade receivables, net 221,369 230,483 (9,114) 2008 to 2010 and with the United States for the period from 2010 to 2014; this receivable decreased by Euro 10,634 thousand compared to the previous year following the sale without recourse of the receivable to Banco BPM.

72 73 12- CURRENT FINANCIAL ASSETS

Current financial assets at 31 December 2020 amount to Euro 13,773 thousand (Euro 687 thousand at 31 December 2019).

Please see Note (27) on financial instruments.

13- OTHER CURRENT ASSETS

Other current assets consist solely of amounts due within one year and include:

(in thousands of euro) 2020 2019 Change VAT credits 33,242 22,245 10,997 Other tax receivables 3,225 3,987 (762) Amounts due from employees 731 461 270 Amounts due from agents 63 64 (1) Guarantee deposits 215 4 211 Other receivables 32,034 28,601 3,433 Total other receivables 33,043 29,130 3,913 Accrued income 73 113 (40) Deferred lease and rental income 1,274 1,663 (389) Prepaid maintenance expenses 733 979 (246) Prepaid insurance premiums 105 253 (148) Other prepaid expenses 20,752 24,213 (3,461) Total prepaid expenses 22,864 27,108 (4,244) Total other current assets 92,447 82,583 9,864

VAT credits include the VAT credit for the third quarter of advance payments made on royalties and advertising fees 2020 of Euro 4,200 thousand requested as a refund within to licensees by a Group company. The remaining part mainly the scope of the Group VAT. refers to advances paid to service providers. The item Other tax receivables mainly includes: Other prepaid expenses mainly include advance payments - Euro 2,815 thousand consisting of the tax receivable for for services invoiced during the year that relate to the research and development activities whose costs were following accounting period, royalty costs relating to future incurred during the year; during 2020, the Group offset years and the current portion of advance payments made to tax receivables deriving from Research and Development a licensee to fit out corners and flagship stores as provided investments for the year 2019 for an amount of Euro 2,445 for by the licence agreement. thousand.; - Euro 320 thousand for the tax credit for competitiveness and employment (CICE) with the French tax authority. Other receivables include Euro 25,696 thousand of

14- CASH AND CASH EQUIVALENTS

Cash and cash equivalents at 31 December 2020 amount December 2019). to Euro 364,718 thousand (Euro 128,974 thousand at 31 The composition thereof is as follows:

(in thousands of euro) 2020 2019 Change Bank and postal demand deposits 362,524 126,599 235,925 Cash and cash equivalents 2,194 2,375 (181) Total 364,718 128,974 235,744

Kochè 74 Fall - Winter 2020 Collection 75 A reconciliation of equity and profit for the year as reported by OTB S.p.A. to the amounts reported in the consolidated financial statements is provided in the following table: 31.12.2020 31.12.2019 COMMENTARY ON KEY Profit for the Shareholders’ Shareholders’ (in thousands of euro) year equity Profit for the year equity

COMPONENTS OF STATEMENT OF As per the income and financial situation of OTB S.p.A. IFRS compliant 11,084 529,722 13,694 518,638 Results of consolidated companies 14,406 1,572,742 44,951 1,595,604 FINANCIAL POSITION - EQUITY AND Reversal of intercompany dividends received (26,623) 0 (39,612) 0 Elimination of intercompany profits in inventories of consolidated subsidiary LIABILITIES companies, net of taxes 671 (52,668) (17,672) (56,335) Consolidation differences 61,698 61,698 Goodwill arising on consolidation allocated to trademarks (including deferred tax liabilities) (3,629) 79,839 (3,629) 83,468 Book value of equity investments in consolidated companies (1,309,306) (1,324,806) SHAREHOLDERS’ EQUITY Consolidation adjustments to consolidated equity investments 6,010 (10) (2,710) 3,718 Adjustment of reserve for retail channel returns 1,155 5,440 2,531 4,408 Adjustment for the release of deferred tax assets not recognised in the consolidated accounts 0 20,337 0 20,337 Other consolidation adjustments (2,152) (29,727) 4,033 (22,374) As per consolidated financial statements 922 878,067 1,586 884,356 Attributable to non-controlling interests (632) (3,609) (121) (4,391) Profit and equity attributable to the Group 1,554 874,458 1,707 879,965

(in thousands of euro) 31 December 2020 31 December 2019 The changes recorded in net equity items in the financial year Shareholders’ equity 878,067 884,356 2020 and in the previous year are presented in a specific For the purposes of a better representation of the connection attribute the impact of the consolidation entries on the table of the Notes. between the profit for the year and the shareholders’ Result and on the total net equity instead of on the Result equity of the company OTB S.p.A. and the corresponding and net equity attributable to the Group. consolidated values, it was considered appropriate to 15- GROUP SHAREHOLDERS’ EQUITY 16- CAPITAL AND RESERVES Shareholders’ Equity attributable to the Group at 31 December 2020 amount to Euro 874,458 thousand (Euro ATTRIBUTABLE TO NON- 879,965 thousand at 31.12.2019). CONTROLLING INTERESTS The decrease in group equity in 2020 compared to 31 December 2019, amounting to Euro 5,507 thousand, mainly Capital and reserves attributable to non-controlling interests reflects on the one hand, the net profit of the Group (Euro at 31 December 2020 amount to Euro 3,609 thousand 1,554 thousand) and the positive change resulting from (Euro 4,391 thousand at 31.12.2019). the hedge accounting treatment of financial instruments The non-controlling interests in companies consolidated (Euro 6,134) and, on the other, the negative change in the line-by-line as of 31 December 2020 are listed below: translation reserve (Euro 13,168 thousand).

Share Capital 2020 2019 Brave Kid S.r.l. 10% 10% Share capital as of 31 December 2020 is fully subscribed Diesel Fashion India Reliance Pvt. Ltd. 49% 49% and paid-in and totals Euro 25,000 thousand. Brand Name Company B.V. 30% 30%

Viktor & Rolf B.V. 30% 30% Other reserves Marni Retail Espana S.A. 34.5% 34.5%

Other reserves are detailed below: Marni Hong Kong Ltd 49% 49%

(in thousands of euro) 2020 2019 change IFRS first-time adoption reserve (146,389) (146,389) 0 Reserve for future capital increase 148,318 148,318 0 Extraordinary reserve 320,616 310,569 10,047 Consolidation reserve and retained earnings 528,525 536,919 (8,394) Total Other reserves 851,070 849,417 1,653

Maison Margiela 76 Spring - Summer 2020 CO-ED Défilé Collection 77 Diesel Diesel Fall - Winter 2020 Collection Fall - Winter 2020 Collection (in thousands of euro) Residual amount as Due within Due within Due beyond Descrizione at 31 December 2020 12 months 5 years 5 years Loans from third parties 199,838 0 199,838 0 NON-CURRENT Non-current financial liabilities 199,838 0 199,838 0 LIABILITIES The Group’s net cash/debt at 31 December 2020 and 31 December 2019 is summarised below. It should be noted that the net financial position has been determined with ample reference to the “Recommendations for the consistent implementation of the European Commission’s regulation on prospectuses” issued by Consob.

(in thousands of euro) Net financial position 2020 2019 A. Cash 2,194 2,375 (in thousands of euro) 31 December 2020 31 December 2019 B. Other cash equivalents 362,524 126,599 Non-current liabilities 565,117 399,646 C Total cash and cash equivalents (A+B) 364,718 128,974 D. Current lease assets 281 200 E. Current loans receivable 13,773 687 F. Current bank payables (580) (322) 17- LEASE LIABILITIES G. Other current financial payables (3,471) (5,623) H. Current payables (F+G) (4,051) (5,945) (in thousands of euro) 2020 2019 change I. Current lease liabilities (99,999) (99,995) Non-current lease liabilities 309,050 344,738 (35,688) J. Current net financial position (C+D+E+H+I) 274,722 23,921 Current lease liabilities 99,999 99,995 4 K. Non-current lease assets 929 752 Total lease liabilities 409,049 444,733 (35,684) L. Non-current financial receivables 53 71 M. Non-current financial payables (199,838) (126) N. Non-current lease liabilities (309,050) (344,738) Lease liabilities refer to subleasing in contracts. For further Lease liabilities are broken down by maturity date as follows: O. Non-current net financial position (K+L+M+N) (507,906) (344,041) details, please refer sections on the new accounting P. Net financial position (J+O) (233,184) (320,120) standards and on assessment criteria in these Notes.

(in thousands of euro) Up to 1 year From 1 to 5 years Beyond 5 years Total Excluding current and non-current assets and liabilities Non-current lease liabilities 0 225,327 83,723 309,050 related to the recognition of usage rights, according to IFRS16, the Group’s Net Financial Position as of 31 Current lease liabilities 99,999 0 0 99,999 December 2020 and 31 December 2019 would be as Total lease liabilities 99,999 225,327 83,723 409,049 follows:

18- NON-CURRENT FINANCIAL LIABILITIES (in thousands of euro) Net financial position 2020 2019 Details of non-current financial liabilities are provided below: A. Cash 2,194 2,375 B. Other cash equivalents 362,524 126,599 (in thousands of euro) 2020 2019 change C Total cash and cash equivalents (A+B) 364,718 128,974 Loans from third parties 199,838 126 199,712 D. Current loans receivable 13,773 687 Non-current financial liabilities 199,838 126 199,712 E. Current bank payables (579) (321) F Other current financial payables (3,472) (5,624) G. Current loans and borrowings (E+F) (4,051) (5,945) The increase in this item compared to the previous year Ministry of Economic Development), will be repaid in a single H. Current net financial position (C+D+G) 374,440 123,716 is explained by the taking out of bank loans for a total payment at maturity, Euro 120 million of which is due in the I. Non-current financial receivables 53 71 of Euro 200 million. These loans, which form part of the first quarter of 2022 and the remainder in the third quarter J. Non-current financial payables (199,838) (126) programme designed to support Italian mid-cap and large- of 2023. The loans were accounted using the amortised K. Other non-current financial payables 0 0 cap companies that suffered a reduction in turnover due to cost method. L. Non-current net financial position (I+J+K) (199,785) (55) the COVID-19 pandemic (90% of the nominal amount of Financial liabilities summarised by due date are as follows: M. Net financial position (H+L) 174,655 123,661 which is guaranteed by the Central Guarantee Fund of the

80 81 19- PROVISIONS FOR RISKS AND CHARGES 21- OTHER NON-CURRENT LIABILITIES

The composition of provisions at 31 December 2020 and Details of other non current liabilities are shown below: movements therein for the year then ended are set out as follows: (in thousands of euro) 2020 2019 change

Provision Amounts due to social security and Provision Provi- Provision Provision Provision for welfare institutions 27 61 (34) for tax sion for for for legal for agent leasehold Other pro- (in thousands of euro) disputes returns discounts disputes indemnities restoration visions Total Amounts due to employees 21 0 21 277 363 (86) At 01 January 2020 3,979 16,365 2,664 3,292 1,743 8,271 44,438 80,752 Deferred income Increases during year 144 14,964 1,963 1,241 354 2,142 27,314 48,122 Tax liabilities 83 48 35 Uses/Releases (813) (10,616) (1,579) (576) (20) (527) (11,736) (25,867) Other payables 0 21 (21) Reclassifications (196) 0 0 160 0 (382) 36 (382) Other non-current liabilities 408 493 (85) Exchange differences (9) (137) (50) (29) 0 (306) (291) (822) At 31 December 2020 3,105 20,576 2,998 4,088 2,077 9,198 59,761 101,803 Current 2,644 20,576 2,998 4,088 2,077 1,415 56,691 90,489 22- DEFERRED TAX LIABILITIES Non-current 461 7,783 3,070 11,314 The table below provides a breakdown of deferred tax liabilities at 31 December 2015 and 2014: The provision for returns relates to the cost of potential circumstances defined in the relevant legislation. returns by customers subsequent to the year end in respect The provision for leasehold restoration meets contractual of sales made during the financial year. The provision for obligations to return a leased property to the lessor at the (in thousands of euro) 2020 2019 discounts relates to year end discounts and allowances end of the lease term in a specified condition. Fixed assets 31,089 32,533 payable to customers. Other provisions refers to the allocation for certain or Leases - IFRS16 280 250 The provision for legal disputes relates to legal disputes that probable charges whose date of occurrence is indeterminate. Exchange differences 445 589 were still pending as of 31 December 2020. This item also reflects the release of the provision set aside The provision for agent indemnities relates to obligations in previous years for conclusion of the liquidation process of Other 3,049 2,555 of certain Group companies for agent indemnities and P C S.r.l.. Net total 34,863 35,927 represents a prudent estimate of the liability to agents that would arise if agency agreements were terminated under Deferred tax liabilities relating to non-current assets mainly consist of intangible assets, the consolidated carrying 20- POST-EMPLOYMENT BENEFIT PLAN LIABILITIES amount thereof is significantly higher than their tax basis (especially the Marni trademark, the consolidated carrying amount of which reflects a purchase price allocation made subsequent to the business combination). Post-employment benefit plan liabilities relate entirely to the to that for the payment of contributions of a different nature, provision for employee termination indemnities: given that they do not envisage any annual service cost. Due to the immaterial difference, which is remeasured at (in thousands of euro) 2020 2019 change the year end, between the face value of the obligations relating to the defined benefit plan and the amount thereof Employee defined benefit determined on the basis of actuarial assumptions, the liabilities 9,644 9,310 334 “Severance Indemnity” accrued up to 31 December 2006 Other employee benefit is represented at face value, thus assuming that the related liabilities 0 0 0 actuarial gains and losses are nil. Total 9,644 9,310 334

As a result of changes made to the provision for employee termination indemnities by Law 296 of 27 December 2006 (2007 Finance Act) and by subsequent decrees and regulations issued in early 2007, the provision for employee termination indemnities of Group companies accruing from 1 January 2007 onwards, or from the date on which an employee indicated his choice from the options available thereto, is recognised as a defined contribution plan, regardless of whether the employee opted for a supplementary pension scheme or for the INPS Treasury Fund. Accordingly, the accounting treatment accorded to the provision for employee termination indemnities is similar

Maison Margiela 82 Fall - Winter 2020 CO-ED Défilé Collection 83 CURRENT

LIABILITIES

(in thousands of euro) 31 December 2020 31 December 2019 Current liabilities 519,197 549,883

23- TRADE PAYABLES

Trade payables at 31 December 2020 amount to Euro 228,038 thousand, representing a decrease Euro 37,871 thousand compared to 31 December 2019.

(in thousands of euro) 2020 2019 change Trade payables 228,038 265,909 (37,871)

The change in the year is attributable to normal trading activities.

Kochè Just Cavalli 84 Fall - Winter 2020 Collection Spring - Summer 2020 Collection 85 24- OTHER CURRENT LIABILITIES 26- CURRENT FINANCIAL LIABILITIES

Other current liabilities at 31 December 2020 amount Details of current financial liabilities are provided below: to Euro 78,547 thousand, a decrease compared to the previous year of Euro 10,525 thousand. Details thereof are shown below: (in thousands of euro) 2020 2019 change Bank overdrafts 579 321 258 Derivative financial instruments 3,358 5,552 (2,194) (in thousands of euro) 2020 2019 change Other current financial liabilities 114 72 42 Customer advance payments 14,551 13,634 917 Total current financial liabilities 4,051 5,945 (1,894) Amounts due to employees 21,867 30,715 (8,848) Amounts due to social security and Financial liabilities summarised by due date are as follows: welfare institutions 12,424 13,641 (1,217) Due to others 3,191 4,005 (814) Total other payables 52,033 61,995 (9,962) (in thousands of euro) Up to 1 year From 1 to 5 years Beyond 5 years Total VAT payable 12,044 6,840 5,204 Withholding tax payable 7,962 7,705 257 Bank overdrafts 579 0 0 579 Other current tax liabilities 1,301 1,352 (51) Derivative financial instruments 3,358 0 0 3,358 Accrued lease and rental expenses 172 2,415 (2,243) Other current financial liabilities 114 0 0 114 Accrued service expenses 689 462 227 Total financial liabilities 4,051 0 0 4,051 Accrued maintenance expenses 0 28 (28) Other accrued expenses 6,678 7,228 (550) Total accrued expenses 7,539 10,133 (2,594) 27- FINANCIAL INSTRUMENTS Deferred lease and rental income 66 70 (4) Deferred royalty income 6,000 9,000 (3,000) The classification of financial instruments in accordance financial instruments by category together with their fair with IFRS 9 affects various components of the financial value at 31 December 2020 and 31 December 2019. Other prepaid expenses 865 1,034 (169) statements. The table below shows the carrying amount of Total deferred income 6,931 10,104 (3,173) Other current liabilities 87,810 98,129 (10,319)

Financial assets 31 December 2020 31 December 2019 The item Deferred royalty income refers to royalties already Book value Book value paid by the licensees of the DIESEL trademark and covering Current Non-current Current Non-current the period 2021-2022. (in thousands of euro) portion portion Fair Value portion portion Fair Value Financial assets at fair value through profit or loss 25- CURRENT TAX LIABILITIES - Derivatives not designated as hedging instruments Financial assets available for sale Income tax payable may be broken down as follows: Other financial assets 630 53 683 189 71 260 Cash and cash equivalents 364,718 0 364,718 128,974 0 128.974 Derivatives designated as hedging instruments 13,143 0 13,143 498 0 498 Totale 378,491 53 378,544 129,661 71 129.732 (in thousands of euro) 2020 2019 change Income tax payable 8,810 8,205 605 Income tax payable 8,810 8,205 605

Income tax payable is recognised net of current tax receivables, where the offset relates to the same jurisdiction and the same taxation. Income tax payable includes Euro 3,000 thousand in substitute tax due on the 3% revaluation of the Diesel brand, as described in note (8) of these Notes.

Diesel 86 Spring - Summer 2020 Collection 87 Financial liabilities 31 December 2020 31 December 2019 28- GUARANTEES PROVIDED AND OTHER COMMITMENTS

Book value Book value Guarantees provided and guarantees received are shown Current Non-current Current Non-current below: (in thousands of euro) portion portion Fair Value portion portion Fair Value

Other financial liabilities 114 199,838 199,952 72 126 198 Bank overdrafts 579 0 579 321 0 321 (in thousands of euro) Description Beneficiaries 31.12.2020 31.12.2019 Financial liabilities at fair value through profit or loss Guarantees provided: Bank guarantees Third parties 21,511 26,139 - Derivatives not designated as hedging instruments Other guarantees Third parties 1,648 2,246 Total guarantees granted 23,159 28,385 Derivatives designated as hedging instruments 3,358 0 3,358 5,552 0 5,552 Guarantees received: Total 4,051 199,838 203,889 5,945 126 6,071 Bank guarantees Third parties 8,905 6,268 Other guarantees Third parties 1,261 590 Letters of credit Clients 14,869 19,817 The carrying amount of financial assets and liabilities Total guarantees received 25,035 26,675 outstanding at 31 December 2020 is considered a reasonable approximation of the fair value, given their nature. In certain other cases, determination of the fair values is carried out according to methodologies that can be The guarantees provided include Euro 17,585 thousand classified as Level 12 of the hierarchy of levels of significance of the data used in determining the fair value, as determined of bank guarantees issued in favour of the Tax Office of the by IFRS 7. Provincial Administration of Vicenza for: The Group uses internal valuation models, which are - Diesel Italia S.r.l., as collateral for a VAT refund requested generally used for financial modelling in practice, based for the year 2019 for Euro 827 thousand; on prices provided by market operators or by quoted - Diesel S.p.A, as collateral for a VAT refund requested for market prices in active markets obtained from leading info- 2017 of Euro 2,305 thousand and for 2019 of Euro 2,418 providers. thousand; For the determination of the fair value of derivatives, a pricing - Margiela S.a.s.u. Italian Branch, as collateral for a VAT model is used based on market interest rates and exchange refund requested for 2018 of Euro 7,755 thousand and for rates prevailing at the measurement date. 2019 of Euro 3,502 thousand; - P C S.r.l., as collateral for a VAT refund requested for 2018 of Euro 471 thousand and fore 2019 of Euro 307 thousand; these guarantees remain in place until their natural expiry, despite the fact that the company ceased trading at the end of 2020. The other guarantees given, on the other hand, refer, for the amount of Euro 1,577 thousand, to guarantees issued in favour of Agencia Estatal de la Administratiòn Tributaria, for an ongoing dispute with the subsidiary Diesel Iberia S.A. relating to the years 2008-2010 and 2011-2014.

Diesel Kid Fall - Winter 2020 Collection

1 As indicated by IFRS 7, the hierarchy used consists of the following levels: - level 1: quoted market prices in active markets for identical assets or liabilities; - level 2: inputs other than quoted prices (level 1) that are directly or indirectly observable for the asset or liability; - level 3: input relating to assets and liabilities that is not based on observable market data.

88 89 Maison Margiela Maison Margiela Fall - Winter 2020 CO-ED Défilé Collection Fall - Winter 2020 CO-ED Défilé Collection to reductions in lease payments granted by lessors as a direct consequence of the Covid-19 epidemic, which were COMMENTARY ON KEY COMPONENTS accounted for with impact on the income statement for the full value, as allowed by the Amendment to IFRS16 Covid-19 OF CONSOLIDATED STATEMENT OF Related Rent Concession discussed in the section on new accounting standards of these Notes. As required by Law no. 124/2017, as amended, the PROFIT OR LOSS following table shows the payments received by the Group during the year:

The main changes in the components of the consolidated Disbursing entity Area of intervention 2020 statement of profit or loss are shown in the notes which (in thousands of euro) follow. More comprehensive comments on trends in the Fondimpresa Training 27 Group’s results are contained in the directors’ report. Ministry of Education, Educational Services 7 Universities and Research and Preschools Veneto Region Educational Services 26 29- REVENUE and Preschools Total 60 Revenue from sales of goods and services amount to Euro 1,268,134 thousand (Euro 1,497,501 thousand in 2019), down 15.3% on the prior year. Sales revenue is stated net of 31- CHANGE IN INVENTORIES returns and discounts. Revenue from sales of goods and services consists of the The change in inventories of raw materials, semi-finished following: products and finished products went from Euro 17,211 thousand in 2019 to Euro 44,068 thousand in 2020. (in thousands of euro) 2020 2019 change Revenue from sales of products and services 1,232,069 1,461,706 (229,637) 32- PURCHASES Revenue from sales of other materials 5,534 7,038 (1,504) Revenues from sales 1,237,603 1,468,744 (231,141) The composition of purchases for the years ended 31 Royalties 30,531 28,757 1,774 December 2020 and 31 December 2019 is as follows: Revenues from sales and services 1,268,134 1,497,501 (229,367) (in thousands of euro) 2020 2019 change The breakdown of Revenue by geographical area is shown below: Finished products 267,711 332,843 (65,132) Raw materials 70,487 96,391 (25,904) (million euros) Italy European Union Rest of Europe The Americas Rest of the world Total Consumable materials 2,776 3,734 (958) Revenue 244.3 378.2 50.5 126.2 468.9 1.268.13 Total Purchases 340,974 432,968 (91,994) % of revenue 19.3% 29.8% 4.0% 10.0% 37.0% 100.0%

33- LEASE AND RENTAL COSTS 30- OTHER OPERATING INCOME

Other operating income amounts to Euro 48,437 thousand and consists of the following: The composition of lease and rental costs for the years ended 31 December 2020 and 31 December 2019 is as follows: (in thousands of euro) 2020 2019 change Sundry revenues and income 13,830 15,070 (1,240) (in thousands of euro) 2020 2019 change Recoveries of costs and compensation for damages 17,230 14,165 3,065 Royalties on trademarks and licences 19,329 21,246 (1,917) Lease income 15,795 463 15,332 Rental expense 56,954 70,654 (13,700) Gains on disposals of non-current assets 1,582 3,102 (1,520) Hire and rental costs 6,502 5,507 995 Total other operating income 48,437 32,800 15,637 Lease and rental costs 82,785 97,407 (14,622)

The item Recoveries of costs and compensation for the year, pursuant to art. 1 paragraph 35 of Law no. 190 The decrease in the item Rental expense mainly refers to the damages refers, for the amount of Euro 2,286 thousand of 23/12/14, as amended, implemented with Ministerial reduction in the variable component of store lease payments (Euro 2,551 thousand in 2019), to the tax credit for Decree of 05/27/15. and is explained by lower sales due to lockdown periods and research and development activities carried out during Euro 15,461 thousand of the item Lease income refers Marni 92 Fall - Winter 2020 Collection 93 restrictive measures imposed by local governments in the 36- OTHER OPERATING EXPENSES various countries in which the Group operates in response to the pandemic. The composition of other operating expenses for the years ended 31 December 2020 and 31 December 2019 is as follows: 34- COST OF SERVICES (in thousands of euro) 2020 2019 change The composition of cost of services received for the year Advertising material 7,892 13,604 (5,712) ended 31 December 2020 compared to the situation at 31 Consumable materials 7,435 8,002 (567) December 2019 is as follows: Taxation on rental costs 4,264 5,249 (985) Other tax and duties 4,872 4,560 312 (in thousands of euro) 2020 2019 change Contributions for corners and flagship stores 2,632 2,633 (1) Industrial and technical services 104,866 139,504 (34,638) Loss on disposal of non-current assets 214 389 (175) Logistics and distribution 43,642 46,043 (2,401) Other costs 12,270 12,074 196 Sales commissions 26,972 31,077 (4,105) Total other operating expenses 39,579 46,511 (6,932) Commercial services 4,058 4,336 (278) Advertising and communication services 53,310 63,591 (10,281) Legal, tax and administrative consultants 4,886 4,487 399 37- DEPRECIATION Maintenance services 11,251 11,177 74 The composition of depreciation and amortisation expenses Financial services 9,504 11,233 (1,729) for the years ended 31 December 2020 and 31 December Insurance services 1,866 1,802 64 2019 is as follows: General services 14,528 17,023 (2,495) Employee services 10,086 21,879 (11,793) (in thousands of euro) 2020 2019 change Emoluments of company officers 7,388 11,721 (4,333) Depreciation of tangible fixed assets 29,949 32,232 (2,283) Other services 43,151 45,280 (2,129) Amortisation of intangible fixed assets 15,939 14,828 1,111 Total cost of services received 335,508 409,153 (73,645) Amortisation of rights of use 116,067 125,783 (9,716) Total depreciation and amortisation 161,955 172,843 (10,888)

Emoluments of company officers include Directors’ Euro 899 thousand. Directors’ emoluments decreased remuneration of Euro 6,361 thousand., Statutory Auditors’ compared to the previous year as a result of the waiver of a For details of depreciation and amortisation expenses, the right of use the underlying assets of lease contracts. For remuneration of Euro 128 thousand and auditing fees of portion of 2020 amounts due. please see notes (1) and (3) of these Notes which analyse further details, please refer to note (2) and to the sections on the changes in these two classes in detail. the new accounting standards in these Notes. Amortisation of rights of use refers to the amortisation of 35- PERSONNEL COSTS

The composition of Personnel costs for the years ended 31 December 2020 and 31 December 2019 is as follows: 38- PROVISIONS AND IMPAIRMENT LOSSES

The composition of provisions and impairment losses for the years ended 31 December 2020 and 31 December 2019 (in thousands of euro) 2020 2019 change is as follows: Wages and salaries 208,003 240,688 (32,685) Social security contributions 44,452 51,865 (7,413) (in thousands of euro) 2020 2019 change Pension costs 2,365 1,565 800 Provisions for risks and charges 11,794 18,350 (6,556) Severance payments and employee termination indemnities 16,005 11,908 4,097 Writedown of receivables 8,586 4,707 3,879 Other personnel costs 5,201 5,471 (270) Writedown of non-current assets 1,761 1,988 (227) Personnel costs 276,026 311,497 (35,471) Total provisions and impairment losses 22,141 25,045 (2,904)

Provisions for risks and charges relate to provisions made Employee numbers at 31.12.2020 and 31.12.2019 are set by some Group companies for contingencies as of 31 out below. December 2020 for future charges.

31.12.2020 31.12.2019 change number of employees 5,473 6,280 (807)

94 95 Viktor & Rolf Viktor & Rolf Spring - Summer 2020 Haute Couture Collection Spring - Summer 2020 Haute Couture Collection 97 39- FINANCIAL INCOME 43- ICOME TAX

The composition of finance income for the years ended 31 The composition of income tax expense for the years ended December 2020 and 31 December 2019 is as follows: 31 December 2020 and 31 December 2019 is as follows:

(in thousands of euro) 2020 2019 change (in thousands of euro) 2020 2019 change IRES 18,966 1,286 17,680 Bank interest 200 190 10 IRAP 4,652 2,628 2,024 Other interest income 351 538 (187) Other income taxes 6,121 19,564 (13,443) Interest on lease assets 9 9 0 Total current taxes 29,739 23,478 6,261 Other financial income 2,264 2,011 253 Deferred tax liabilities (22,754) (7,970) (14,784) Total financial income 2,824 2,748 76 Prior year taxation (5,944) (12,941) 6,997 Total deferred and prior year taxation (28,698) (20,911) (7,787) Total income tax expense 1,041 2,567 (1,526) 40- MEASUREMENT OF EQUITY INVESTMENTS IN ASSOCIATED COMPANIES USING THE EQUITY METHOD

The composition of Measurement of equity investments in ended 31 December 2020 compared to the situation as at The IRES item relates to the taxes resulting from the tax the accounting values of the assets and liabilities and the associated companies using the equity method for the year 31 December 2019 is as follows: consolidation referred to in note (11). corresponding tax values and on the tax losses resulting Other income taxes includes Euro 3,000 thousand in from the national tax consolidation illustrated in note (11) of (in thousands of euro) 2020 2019 change substitute tax calculated on the revaluation of the Diesel these Notes. brand, as described in notes (8) and (25) of these Notes. Measurement of equity investments in associated com- 2,330 1,306 1,024 The item “Deferred tax liabilities” includes the taxes Set out below is a reconciliation of the tax charge: panies using the equity method calculated on the temporary differences emerging between Total Measurement of equity investments in asso- 2,330 1,306 1,024 ciated companies using the equity method (in thousands of euro) 2020 % 2019 % Profit before tax 1,963 100.0% 4,153 100.00% For further details, see note (4) in these Notes. Theoretical taxes 471 24.0% 997 24.0% Effect of different rates in force in other countries (3,581) (182.4%) 1,004 24.18% 41- FINANCIAL COSTS IRAP (REGIONAL BUSINESS TAX) 4,151 211.5% 566 13.63% Actual tax charge 1,041 53.0% 2,567 61.81% The composition of finance costs for the years ended 31 December 2020 and 31 December 2019 is as follows:

(in thousands of euro) 2020 2019 change Bank interest expense 1,416 957 459 Interest on lease liabilities 9,300 10,226 (926) Other interest expense 52 9 43 Other financial expense 6,539 6,632 (93) Total financial expense 17,307 17,824 (517)

Interest on lease liabilities refers to interest accruing on lease liabilities. For further details, please refer to the sections on assessment criteria and the new accounting standards in these Notes.

42- EXCHANGE GAINS (LOSSES)

Exchange Gains (Losses) of Euro 581 thousand (Euro 257 thousand at 31 December 2019) include realised gains and losses on foreign exchange, as well as unrealised gains and losses.

Maison Margiela 98 Spring - Summer 2020 CO-ED Défilé Collection 99 Dsquared2 Dsquared2 100 Spring - Summer 2020 Campaign Spring - Summer 2020 Campaign 101 44- RELATED PARTY TRANSACTIONS

The table below provides details of related party transactions and balances. The companies indicated have been identified as related parties because they are linked directly or indirectly to the majority shareholders of OTB Group. Details of OTB Group’s balances with related parties at 31 December 2020 and transactions for the year then ended are provided below.

Purchases of goods Receivables at Payables at (in thousands of euro) Name/Role Fee Sales and services Rents 31/12/2020 31/12/2020 Members of the Board of Directors Total directors 6,361 Directors (Viktor & Rolf BV) - 1,595 - - 797 Companies related to the majority shareholders of OTB: BREBIS MADRID SLU - 30 - - - BBSVR - 20 - - - Red Circle S.r.l. 51 1,673 5,577 7 1,915 Red Circle NY - 1,061 1,136 - -

Totale 51 4,379 6,713 7 2,712

45- SIGNIFICANT EVENTS SUBSEQUENT TO 31 DECEMBER 2020

Details of significant events subsequent to the reporting date for these consolidated financial statements are disclosed in the directors’ report.

Dsquared2 102 Fall - Winter 2020 Kid Collection 103 46- COVID-19

In December 2019, a new strain of Coronavirus, known as the forced closure and/or the social distancing measures COVID-19, was reported. The World Health Organization provided for by current legislation. declared COVID-19 a “public health emergency of - verifying the possibility of accessing the support measures international concern” on 30 January 2020, and a global provided by the governments of the countries in which pandemic on 11 March 2020. the Group operates, such as recourse to unemployment COVID-19 negatively affected global economic conditions benefits, suspension of business rates on rented premises, in 2020 and the Group expects this to continue in FY2021 deferred payment of VAT payables and social security and perhaps longer. Since COVID-19 has an impact on contributions and obtaining grants regarding certain types the domestic economy and other countries worldwide, the of expenditure. Group has put in place appropriate measures to effectively We continue to closely monitor the impact of COVID-19 on deal with the effects of the ongoing emergency: our business and geographies; however, the future impact it - adopting safety protocols in order to ensure the best health will have on our financial position and net profit/(loss) could standards for its workforce; be affected by numerous variables, including a worsening - adopting as many smart working solutions as possible that of infections, continuation of the epidemic, government are compatible with the company’s organisation; actions, impacts on our supply chain and effects on the - entering into negotiations with the owners of the properties demand of our consumers. in which the sales activity of its subsidiaries is carried out, aimed at obtaining a discount for the months affected by

47- BUSINESS CONTINUITY

The directors of the OTB Group holding company have reviewed future performance expectations. Group sales are expected to stabilise, in line with historical margins and a stable cost base. After examining all areas of activity for 2020, the Group’s positive net financial position (equal to Euro 175 thousand net of IFRS 16 effects) and the 2021 budget, both operating and financial, are such that the directors believe that there are no elements of uncertainty regarding the business continuity assumption, on the basis of which these draft financial statements have been prepared.

48- OTHER INFORMATION

In compliance with the regulations on the transparency of public funding introduced by article 1, paragraphs 125-129 of Law no. 124/2017 and subsequently supplemented by the ‘security’ decree law (no. 113/2018) and the ‘simplification’ decree law (no. 135/2018), express reference is made to the national register of state aid for more details on the public funding which the Italian companies of the OTB Group benefited from during the year.

Breganze, 12 April 2021

OTB S.p.A. The Chairman of the Board of Directors Renzo Rosso Marni 104 Spring - Summer 2020 Kid Collection 105 AUDITOR’S REPORT

106 107 108 109 110 OTB S.p.A.

Registered Offices: Via Dell’Industria 2, Breganze (Vicenza), Italy Share capital: Euro 25,000,000 fully paid Vicenza Company Register No. 01242510269 Vicenza Chamber of Commerce Ref. 170.761 Tax Code 01242510269 VAT No. 01571110244

www.otb.net

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