The value in use discounted cash flow is based on a

10-year

cash flow model.

The Group uses a

10-year

rather than a

5-year

model as this accords with the Group’s long-term planning and business acquisition valuation methodology. The key judgments, estimates and assumptions used in the value in use discounted cash flow calculations are generally as follows:

•

In the first three years of the model, free cash flows are based on the Group’s strategic plan as approved by key management. The Group’s strategic plan is prepared per cash-generating unit and is based on external sources in respect of macro-economic assumptions, industry, inflation and foreign exchange rates, past experience and identified initiatives in terms of market share, revenue, variable and fixed cost, capital expenditure and working capital assumptions;

•

For the subsequent seven years of the model, data from the strategic plan is extrapolated generally using simplified assumptions such as macro-economic and industry assumptions, variable cost and fixed cost linked to inflation, as obtained from external sources;

•

Cash flows after the first

ten-year

period are extrapolated generally using expected annual long-term GDP growth rates, based on external sources, in order to calculate the terminal value, considering sensitivities on this metric; and

•

Projections are discounted at the unit’s

post-tax

weighted average cost of capital (“WACC”). Calculations are corroborated by valuation multiples, quoted share prices for publicly-traded subsidiaries or other available fair value indicators (i.e. recent market transactions from peers). The WACC was calculated for each CGU subject to impairment, considering the parameters specific to the geographical area, market risk premium and sovereign bond yield.

Although the Group believes that its judgments, assumptions and estimates are appropriate, actual results may differ from these estimates under different assumptions or market or macro-economic conditions.

The Group believes that all of its estimates are reasonable: they are consistent with the Group’s internal reporting and reflect management’s best estimates. However, inherent uncertainties exist that management may not be able to control. As of December 31, 2022, the intangible assets with indefinite useful lives that are the most significant in terms of their carrying amounts and the criteria used for impairment testing are as follows:


	Goodwill				Brands						Long-term growth rate (bps)

December 31, 2022 (Euro thousands)	Net carrying amount		WACC (bps)		Net carrying amount		WACC (bps)		Royalty rate (bps)

Lanvin		45,931		1,445		100,906		1,645		518		129
Wolford		11,701		1,434		37,856		1,634		250		237
St. John		11,691		1,436		30,271		1,636		344		248
Sergio Rossi		—		N.A.		3,301		2,001		125		143

Total		69,323				172,334


	Goodwill				Brands						Long-term growth rate (bps)

December 31, 2021 (Euro thousands)	Net carrying amount		WACC (bps)		Net carrying amount		WACC (bps)		Royalty rate (bps)

Lanvin		45,931		1,370		100,906		1,570		518		97
Wolford		11,701		1,330		37,856		1,530		250		176
St. John		11,691		1,346		30,271		1,546		344		188
Sergio Rossi		—		N.A.		3,301		1,567		125		109

Total		69,323				172,334

The following table details the sensitivity of the impairment testing to reasonably possible changes in key assumptions:


	At December 31, 2022 impairment loss due to										At December 31, 2021 impairment loss due to

	Goodwill				Brand						Goodwill				Brand

(Euro thousands)	WACC +10 bps		Long-term growth rate - 10 bps		WACC +10 bps		Long-term growth rate - 10 bps		Royalty Rate -10 bps		WACC +10 bps		Long-term growth rate - 10 bps		WACC +10 bps		Long-term growth rate - 10 bps		Royalty Rate -10 bps

Lanvin		3,810		1,522		1,002		310		2,236		4,002		1,563		1,035		330		2,178
Wolford		5,904		2,507		491		172		2,053		5,356		2,888		476		219		2,004
St. John		1,928		782		330		110		1,118		1,331		642		245		87		924
Sergio Rossi		N.A.		N.A.		23		6		334		N.A.		N.A.		31		10		351

Based on events foreseeable within reason at the date of this report, the Group considers that any changes impacting the key assumptions described above would not lead to the recognition of material impairment loss against other CGUs. The Group cannot predict whether an event that triggers impairment will occur, when it will occur or how it will affect the value of the asset reported.