ANNUAL
REPORT
2020
HIGHLIGHTS
2020
€1,958.2 M
NMV
+25.7% yoy
42.0 M
ORDERS
+21.4% yoy
16.3 M
ACTIVE
CUSTOMERS
+24.6% yoy
1.2%
ADJ. EBITDA
MARGIN
First Adjusted EBITDA
positive full year
31%
MARKETPLACE
SHARE OF NMV
+10.3% yoy
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ANNUAL REPORT 2020 | GFG
Highlights 2020
See Financial Definition section 7.1
2020 2019
Financial performance
Revenue (€m) 1,359.7 1,346.0
Growth at constant currency (%) 15.3 17.2
Gross profit (€m) 586.2 539.8
Loss before interest and taxes (EBIT) (€m) (64.8) (125.1)
Loss for the year (€m) (112.4) (144.6)
Adjusted EBITDA (€m) 16.4 (37.1)
Adjusted EBITDA/Revenue (%) 1.2 (2.8)
Capex (€m) 48.7 72.1
Financial position
Net working capital (€m) (1.4) (12.0)
Cash and cash equivalents (€m) 366.1 277.3
Pro-forma cash (€m) 372.4 300.8
Group KPIs
NMV (€m) 1,958.2 1,777.8
Growth at constant currency (%) 25.7 23.0
Active customers (m) 16.3 13.1
NMV/Active Customer (€) 120.3 136.1
Number of orders (m) 42.0 34.6
Order frequency 2.6 2.6
Average order value (€) 46.6 51.3
FINANCIAL SUMMARY
AND KEY
PERFORMANCE
INDICATORS
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ANNUAL REPORT 2020 | GFG
Highlights 2020
FASHION.
WORLDWIDE.
WE ARE THE
LEADING FASHION
AND LIFESTYLE
DESTINATION IN
GROWTH MARKETS.
Our purpose is true self-expression.
From our people, to our customers
and partners, we exist to empower
everyone to express their true selves
through fashion.
We are the leading fashion & lifestyle
destination in Latin America, the CIS,
South East Asia and ANZ, connecting
over 10,000 global, local and own
fashion brands to a market of more
than one billion potential consumers.
LATAM SEA ANZCIS
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ANNUAL REPORT 2020 | GFG
TO OUR SHAREHOLDERS 6
1.1 Letter to our Shareholders 7
1.2 Report of the Supervisory Board 15
1.3 – 1.8 Corporate Governance Report 22
GROUP MANAGEMENT REPORT 54
2.1 – 2.5 Fundamental Information about the Group 56
2.6 – 2.10 Report on Economic Position 66
2.11 Report on Post Balance Sheet Events 75
2.12 – 2.13 Report on Risks and Opportunities 76
2.14 Report on Expected Development and Outlook 84
INDEPENDENT AUDITOR
´
S REPORT 86
CONSOLI DATED FINANCIAL STATE MENTS 94
4.1 Consolidated Statement of Profit or Loss 96
4.2 Consolidated Statement of Comprehensive Income 97
4.3 Consolidated Statement of Financial Position 98
4.4 Consolidated Statement of Changes in Equity 100
4.5 Consolidated Statement of Cash Flows 102
5 Notes to the Consolidated Financial Statements 104
RESPONSIBILITY STATEMENT 168
ADDITIONAL INFORMATION 170
7.1 Financial Definitions 170
7.2 Financial Calendar 172
7.3 Information Resources 172
ANNUAL REPORT 2020 | GFG
Contents
THE
MANAGEMENT
BOARD
Christoph
Barchewitz
Co-CEO
Patrick
Schmidt
Co-CEO
Matthew
Price
CFO
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ANNUAL REPORT 2020 | GFG
Letter to our Shareholders
1.1 LETTER TO OUR SHAREHOLDERS
DEAR SHAREHOLDERS
AND OTHER STAKEHOLDERS,
It now goes without saying that 2020 was an unprecedented year for the world, and it
certainly was a pivotal year for Global Fashion Group. We were not alone in having
the agility and resilience of our people and operations tested like never before, but
the result is a business that is now stronger, more collaborative, and more confident
in accelerating growth via the considerable opportunities available to us. This is in
huge part to the eorts of our colleagues around the world, who
have demonstrated passion, grit and resourcefulness operating the
business in circumstances we could not have imagined a year ago.
Pre-pandemic, our fashion and lifestyle market was large, with one
billion people spending approximately €300 billion annually and
rapidly shifting that spend online. By the end of 2020, ecommerce
penetration in our markets had grown from 7% to nearly 13%, as many consumers tried
online shopping for the first time during the pandemic. While the oine world will
inevitably (and welcomely) reopen, the behaviour shift has been set and we expect
online shopping to become a growing habit for consumers in our markets.
Our platforms are developed to power this habit by delivering the best-in-class
customer experience. The pandemic has thrown up challenges to how we do this, but
we never lost sight of our customer focus or our purpose of enabling their true self-
expression. So when our customers stopped needing dresses and heels for parties
or business shirts for work, we pivoted into lockdown-winning categories such as
loungewear and sport. We rapidly adapted our operations to be COVID-safe, with our
teams working tirelessly to ensure orders continued to be delivered quickly and safely.
We maintained our commitment to sustainability and our long-term vision by rolling
out sustainable shopping edits to all of our regions. As a result of our unwavering
customer focus, we grew our active customer base by 24.6% to 16.3 million customers
− the highest growth we’ve seen for many years.
With over 16 million customers and over 2 billion visits per year, we are the partner of
choice for brands in our markets. In 2020, we strengthened many of our top global
brand partnerships, applying a flexible and innovative approach to partnership
models. Our unique Marketplace capabilities, for example, have created a win-win
outcome by enabling us to drive significant sales growth for ourselves and our brand
partners while maintaining our cash discipline.
One billion
people spending
approximately
€300 billion annually
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ANNUAL REPORT 2020 | GFG
Letter to our Shareholders
As a result, we have achieved a succession of financial milestones this
past year. In terms of results, we have generated our first year of
positive Adjusted EBITDA − one year ahead of schedule. In November,
we placed our first post-IPO equity issuance, raising €120 million to fund the
acceleration of our mid-term strategy. The additional capital materially strengthens
our ability to invest behind new areas of our business such as our Platform Services,
and to pursue other adjacent opportunities that further embed our role in the digital
fashion ecosystem.
To conclude this letter, we return to our opening sentiment − that we have never been
more confident in GFG and its growth prospects. As we look back on the achievements
since our inception ten years ago, and at the immense opportunity ahead, we believe
we can build a €10 billion NMV business in the next seven to nine years. We have the
market leadership, we have the firepower, and most importantly, we have the team to
deliver another decade of exceptional performance.
Thank you for your continued trust and support.
Christoph Barchewitz, Co-CEO
Patrick Schmidt, Co-CEO
Matthew Price, CFO
We have achieved a
succession of
financial milestones
this past year
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ANNUAL REPORT 2020 | GFG
Letter to our Shareholders
9
ANNUAL REPORT 2020 | GFG
Letter to our Shareholders
OUR AMBITION
The #1 fashion and lifestyle destination for customers.
The #1 fashion and lifestyle partner for leading brands.
The #1 in the fashion and lifestyle market.
OUR OPPORTUNITY
GFG operates in a large and growing market where online
penetration is accelerating. By focusing on key growth
levers, such as active customer and order frequency,
combined with an increased focus on adjacent and
opportunistic categories, our ambition is to build a
€10 billion NMV business in the next 7-9 years.
There are one billion people living in our 17 countries of
operation − a growing ~€300 billion fashion and lifestyle
market. COVID-19 has accelerated online adoption across
our markets, which retain attractive long-term potential.
WHO WE ARE
OUR VISION IS TO BE THE #1 FASHION AND LIFESTYLE
DESTINATION IN OUR MARKETS. OUR PURPOSE IS TO
ENABLE TRUE SELF-EXPRESSION.
We are only at the beginning of
reaching our market potential.
RUSSIA
UKRAINE
KAZAKHSTAN
BELARUS
INDONESIA
THE PHILIPPINES
SINGAPORE
MALAYSIA
BRUNEI
TAIWAN
HONG KONG
AUSTRALIA
NEW ZEALAND
BRAZIL
COLOMBIA
ARGENTINA
CHILE
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ANNUAL REPORT 2020 | GFG
WHO WE ARE
WE PROTECT OUR TEAM
AND OUR CUSTOMERS
The COVID-19 pandemic has disrupted business
operations around the world. We focused our response on
rapid adoption of protocols that put the physical and
mental health and wellbeing of our employees, as well as
our customers, as a top priority. Fulfillment centers in
Argentina and the Philippines were the only sites aected
by forced closure for c.30 and 40 days respectively. In CIS,
Lamoda more than doubled courier delivery capacity to
address the increased demand while pick-up points were
temporarily closed.
The Group continued to work closely with its brand
partners to adjust inventory intake and assortment to
reflect the reality of lockdown conditions and customers
spending more time at home. GFG observed and
responded to, a marked shift away from occasion and
business wear, to loungewear, casualwear and sportswear.
In line with rapidly changing customer needs, GFG also
accelerated the roll out of categories including Beauty,
Home and Kids through a combination of the Marketplace
and Retail business models.
Physical and mental health and
wellbeing of our employees, as well
as our customers, is a top priority.
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ANNUAL REPORT 2020 | GFG
WHO WE ARE
OUR STRATEGIC PRIORITIES
HOW WE WIN
TRUE LOCAL EXPERT
Best-in-class customer experience
We create an inspiring and seamless
customer shopping experience for our
customers − from discovery to delivery.
• Large choice of brands
• Inspirational assortment
• Seamless digital experience
• Well invested infrastructure
Partner of choice
for brands
We unlock complex markets for our
brand partners, providing customer
access that leads to eective brand
building. Our market insights and deep
brand relationships allow our brand
partners to position themselves
correctly. We oer global and local
brands access to a highly connected
audience with attractive demographics
who are fashion-conscious and digitally
native.
Platform services enable Marketplace
and drive deeper relationships with
brands. Operations by GFG, Data by
GFG and Marketing by GFG will allow
brand partners to focus on their core
competencies while increasing their own
brand awareness.
We are the leading fashion and lifestyle destination in our markets for three reasons: we combine a global platform
with real local expertise on the ground, we oer a best-in-class customer experience and we are the strategic partner
of choice for brands in our markets.
Our strategic priorities have proven to be strong and we are progressing on them continuously. We are well
positioned for the next phase of growth and to deliver on our ambition.
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ANNUAL REPORT 2020 | GFG
HOW WE WIN
OPERATIONS & PLATFORM POWERED BY ART & SCIENCE
PEOPLE AND PLANET POSITIVE
Our Technology
Our platforms merge the skills of
buyers and merchandisers with
cutting-edge technology while
retaining a responsible approach to
people and to the environment
around us.
Our Customer Base
Our customers are at the heart of
everything we do and we pay close
attention to the quality of their online
experience. We focus on customers
looking for inspiration and oer the
most relevant assortment of global
and local brands to cater for their
needs and tastes.
Our Assortment
Our continuous curation of this
assortment creates a catalogue that
is broad, relevant and increasingly
filled with sustainable brands. We
present our assortment to customers
through a digital experience that is
seamless, personalised and helps to
increase engagement.
Our Operations
Our fulfilment is fast, ecient and
convenient. We shipped more than
80 million items in 2020 from nine
local fulfilment centres, which enable
us to provide a compelling delivery
proposition across all of our regions.
Our Data
Our platform deliver highly relevant
insights, which help us to improve
our customers’ online experience on
a daily basis.
Our People
A responsible workplace,
safe for all of those directly
and indirectly involved in
getting our products to
customers. Equality,
for our people, our
customers and our brands
to express their true self.
Our Supply Chain
Ethical trade, that is fair to
nature and to the people
making our products, all
whilst working collaboratively
with brands to drive
continuous improvement.
Our Operations
Reducing the impact of our
operations on the
environment.
Our Community
Contributing positively to
communities around us.
OUR OPERATIONSOUR PEOPLE
OUR SUPPLY CHAINOUR COMMUNITY
Governance
Risk &
Compliance
We are committed to a
diverse, inclusive and
safe workplace
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ANNUAL REPORT 2020 | GFG
HOW WE WIN
THE SUPERVISORY
BOARD
Cynthia
Gordon
Chairman
Alexis
Babeau
Laura
Weil
Carol
Shen
Georgi
Ganev
Victor
Herrero
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
1.2 REPORT OF THE SUPERVISORY BOARD
DEAR SHAREHOLDERS,
2020 was another year of significant progress for GFG on its journey to becoming
the leading online fashion & lifestyle destination in growth markets, connecting
10,000 global brands to more than one billion consumers around the world.
Our markets continue to see long-term structural growth in online fashion and
lifestyle ecommerce, as they mirror the consumer trends of developed economies.
Businesses have experienced numerous unforeseen challenges due to the COVID-19
pandemic, but our markets have demonstrated continued
resilience and agility in operating through these uncertain times.
Our markets also continued to deliver strong performance
throughout this period. Worldwide, consumers are migrating
towards ecommerce at a faster rate than ever, and growth in each
market has been driven by our well-known consumer platforms,
dedicated local teams, and fashion-specific operational
infrastructure.
In the coming years, GFG will continue to focus on oering unparalleled customer
experiences in every market from discovery to delivery; strengthening our brand
relationships and building new ones; as well as investing further in our best-in-class
fulfilment infrastructure. Sustainability remains an integral part of the business and
its culture, and will continue to be an ongoing driver of how we operate. As our
strong performance during 2020 highlighted, we are utilising our growing
operational leverage to improve margins and advance our path to profitability. In
November 2020, GFG raised €120 million in gross proceeds, enabling us to further
invest in growth and accelerate the execution of our mid-term strategy.
GFG will continue to
focus on offering
unparalleled customer
experiences
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
OVERVIEW OF THE
MANAGEMENT BOARD AND
SUPERVISORY BOARD
Management Oversight and Other Key
Activities of the Supervisory Board and its
Committees
The Supervisory Board and Management Board duly
performed their duties in accordance with:
The Supervisory Board obtained regular and detailed
information, written and verbal, about business policy,
significant financial, investment and personnel planning
matters and the course of business from the Management
Board. In particular, the Management Board discussed
and agreed on the Company’s strategy with the
Supervisory Board. Furthermore, the Supervisory Board
was directly involved in all fundamental decisions.
Before adopting a resolution, any matters that require
Supervisory Board approval according to the Articles of
Association and/or the Management Board Rules of
Procedure were explained by the Management Board and
discussed by the Supervisory Board and the Management
Board. Discussions took place in meetings of the
Supervisory Board or its committees or in informal
communications with the Management Board outside of
Supervisory Board meetings. The Chairman of the Audit
Committee discussed audit-related topics with the auditor
outside the meetings and without the involvement of the
Management Board.
The Management Board and Supervisory Board
cooperated closely for the benefit of GFG in fiscal year
2020. In an ongoing dialogue between the Boards, the
Supervisory Board discussed strategy, planning, business
development, governance and risk management issues
with the Management Board. Cooperation between the
Supervisory Board and Management Board involves the
immediate notification of the Chairman of the Supervisory
Board of important events and the requirement for the
Supervisory Board to approve transactions of fundamental
importance, transactions by members of the Management
Board and related persons with GFG.
The Chairman of the Supervisory Board as well as other
members of the Supervisory Board were in regular contact
with the Management Board outside of Supervisory Board
meetings.
• the statutory requirements;
• the Articles of Association of GFG;
• the Rules of Procedure of the Supervisory
Board dated 7 June 2019 as amended on
19 August 2020 (the “Supervisory Board Rules
of Procedure”);
• the Rules of Procedure of the Management
Board dated 7 June 2019 as amended on
19 August 2020 (the “Management Board
Rules of Procedure”;
• the applicable Luxembourg laws; and
• the German Corporate Governance Code
(until the publication of the new version of the
German Corporate Governance Code dated
December 16, 2019 on 20 March 2020, GFG
complied with the recommendations of the
German Corporate Governance Code in the
version dated 24 April 2017 and from
March 20, 2020 onwards GFG complied with
the new version dated December 16, 2019).
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
The Supervisory Board discussed and reviewed the
following topics during Financial Year 2020:
• Individual and consolidated financial statements
for financial year 2019 and the results for the first
quarter, first half and third quarter of 2020 and
outlook for the change to remainder of the fiscal
year;
• Development of the business during the year
including the impact of the COVID-19 pandemic
and the Company’s response to it;
• Issuance of shares from the authorised
and related capital in relation to the placing in
November 2020;
• Cancellation of the revolving credit facility and
replacement with new facilities;
• The strategic positioning and structure of the
Group and the corporate organisation;
• Periodic investor relations updates;
• The 2021 budget, mid-term plan and liquidity
forecast;
• Capex and investments;
• Strategic priorities for 2021;
• Sustainability;
• Dividend policy;
• Remuneration Policy applicable to the
Management Board members;
• Base remuneration and employment contracts
of the members of the Management Board;
• Short-term incentive compensation for the
Management Board for Financial Year 2019;
• The allocation of 2020 LTIP performance stock
units and determination of related performance
targets in regards to the members of the
Management Board;
• Succession planning for the members of the
Management Board;
• Diversity targets for the members of the
Management Board;
• The issuance of shares for legacy and LTIP equity
plans and the related capital increase;
• The Annual General Meeting of Shareholders
and related agenda;
• Appointment of the members of the Audit
Committee and Sustainability Committee;
• The updated rules of procedure of the
Management Board and Supervisory Board;
• The allocation of responsibilities of each
member of the Management Board under the
updated Management Board Rules of
Procedure;
• The Declaration of compliance with the German
Corporate Governance Code for Financial Year
2020;
• The Corporate Governance Report and
Remuneration Report for Financial Year 2019;
and
• The Non-Financial Report for Financial Year
2019.
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
The Management Board discussed and reviewed the
following topics:
• Individual and consolidated financial statements
for Change to Financial Year for consistency
2019 and the results for the first quarter, first half
and third quarter of 2020 and outlook for the
remaining of the fiscal year, including in relation
to the ad hoc announcements relating to Q1, Q2
and Q3 results;
• Business development during the year, including
the impact of the COVID-19 pandemic and the
Company’s response to it;
• The placing in November 2020;
• Approval of the dividend policy;
• Cancellation of the revolving credit facility
and replacement with new facilities;
• Periodic investor relations updates;
• The strategic positioning and structure of the
Group and the corporate organisation;
• Strategic Priorities for 2021;
• The 2021 budget, mid-term planning and
liquidity forecast;
• Capex and investments;
• Gross margins, inventories and provisions;
• Sustainability;
• Diversity Targets for the Management Board;
• Short-term incentive compensation for the
executive team for Financial Year 2019;
• Allocation of 2020 LTIP restricted stock units and
performance stock units to eligible participants
and determination of related performance
targets;
• Issuance of shares for legacy and LTIP equity
plans and the related capital increase;
• The Annual General Meeting and its agenda;
• Allocation of responsibilities of each member of
the Management Board under the Rules of
Procedure;
• Declaration of compliance with the German
Corporate Governance Code for Financial Year
2020; and
• The Management Board Report and the
Non-Financial Report for Financial Year 2019.
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
Composition of the Supervisory Board and
Committees
According to the Articles of Association of GFG, the
Supervisory Board shall be composed of at least three
members. For Financial Year 2020 the Supervisory Board
had six members and the Management Board had three
members. All members of the Supervisory Board are
elected by the Annual General Meeting as shareholder
representatives, while members of the Management
Board are appointed by the Supervisory Board. The
members of the Supervisory Board are selected according
to their knowledge, capabilities, professional aptitude and
competence. The Supervisory Board acknowledges and
appreciates the importance of diversity. In Financial Year
2020, the Supervisory Board had two committees, the
Audit Committee and the Sustainability Committee.
The table below summarises the composition of the
Supervisory Board and its Committees:
Board
Member
Supervisory
Board
Audit
Committee
Sustainability
Committee
Cynthia
Gordon Chairman - Member
Georgi
Ganev
Vice
Chairman - -
Alexis
Babeau Member Chairman -
Victor
Herrero Member Member Chairman
Laura Weil Member Member -
Carol Shen Member - Member
Meetings of the Supervisory Board and its
Committees during Financial Year 2020:
•
The Supervisory Board met 11 times in Financial Year
2020 in person or by telephone/video conference, and
passed five written resolutions;
•
A committee appointed by the Supervisory Board on
16 November 2020, passed two written resolutions in
connection with the issuance of 16,500,000 new shares
of the Company and their private placement to
institutional investors;
•
The Audit Committee held a total of seven meetings.
All members of the Audit Committee attended the
Supervisory Board committee meetings; and
•
The Sustainability Committee held a total of four
meetings.
In addition to holding formal meetings, the Supervisory
Board and its Committees discussed specific topics
during ad-hoc telephone/video meetings outside of the
regular board cycle.
Members of the Management Board attended Supervisory
Board meetings, reporting to the Supervisory Board in
detail on the course of the Group’s business, including on
the impact of the COVID-19 pandemic on the Company
and its response, the development of the Company’s
revenue and profitability, and execution of its strategy. The
reports by the Management Board were also made
available to any absent members. The content of the
reports by the Management Board were discussed in
depth with the Supervisory Board. The topics addressed,
and the scope of the reports met the legal requirements,
the principles of good corporate governance, the Rules of
Procedure and the requirements of the Supervisory Board.
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
During its meeting in 2020, the Audit Committee covered
the following topics:
Area of Focus Actions taken in 2020
Financial reporting • Reviewed key accounting and reporting issues at each meeting
• Reviewed and approved quarterly financial statements for Q1 and Q3 and 2020
interim financial statements
• Reviewed gross margins, inventories and provisions
• Reviewed the Financial Controls status and progress
• Review of FY 2019 Consolidated and Standalone Financial Statements
• Review of H1 2020 Consolidated Financial Statements
External auditor • Received reports from the external auditor at each meeting covering financial reporting,
accounting and audit issues
• Received reports from external auditor in compliance with EU regulations
• Reviewed and pre-approved all audit and non-audit services rendered by the external auditor
• Approved the 2020 external audit strategy
• Conducted the Annual Review of Independence and Quality of the External Auditors
Internal audit activities • Approved the annual internal audit plan for 2020 and provided direction to risk coverage
• Followed up on high priority actions requiring escalation with the Management Board
• Reviewed results of independent validation over internal controls
Risk management • Reviewed periodic updates in relation to the bi-annual risk assessment process
and associated actions
• Reviewed summary updates in relation to the refreshed enterprise risk management
framework
• Informed of risk transfer strategy with regard to central insurance buying
Internal Controls • Reviewed the annual internal controls self assessment programme plan and methodology
• Reviewed summary updates on programme progress
The significant issues considered by the Audit Committee
in relation to the financial statements for the year ended
31 December 2020 were:
• Impairment testing;
• Tax provisions and contingencies;
• Revenue recognition and returns allowance;
and
• Inventory and inventory allowances.
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
The Supervisory Board satisfied itself of the auditor’s
independence and obtained a written declaration in this
respect. The financial statements and the auditor’s reports
were sent to the members of the Supervisory Board, who
reviewed the separate and consolidated financial
statements and the management report of GFG.
The results of the review by the Audit Committee and the
results of its own review are fully consistent with the results
of the audit. Having completed its review, the Supervisory
Board has no reason to raise any objections to the audit of
the financial statements. The Supervisory Board has
therefore approved the separate and consolidated
financial statements of GFG for fiscal year 2020.
The Supervisory Board would like to thank the
Management Board and all employees of GFG for the
business success achieved, their hard work and their high
level of commitment in fiscal year 2020, especially given
the extraordinary backdrop of a global pandemic.
Luxembourg, 28 February 2021
On behalf of the Supervisory Board
Cynthia Gordon
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ANNUAL REPORT 2020 | GFG
Report of the Supervisory Board
CORPORATE
GOVERNANCE REPORT
CORPORATE GOVERNANCE
Both the Management Board and Supervisory Board are
committed to upholding the principles of good corporate
governance, in accordance with the recommendations of
the Federal German Government Commission on the
German Corporate Governance Code, which GFG has
voluntarily decided to comply with.
In August 2020, the Supervisory Board and Management
Board issued a declaration of compliance for GFG as part
of its reporting on fiscal year 2020. This is published within
the Investor Relations section on our website ir.global-
fashion-group.com/websites/globalfashion/English/1052/
declaration-of-compliance.html. The few deviations from
the German Corporate Governance Code are described
in the declaration.
1.3 DECLARATION
OF COMPLIANCE
In this statement, GFG reports in accordance with Article
68 ter of the Law of 19 December 2002 on the business and
companies’ register as well as the companies’ accounting
and annual accounts (the “2002 Law”). The Company is a
Luxembourg société anonyme (S.A.), which is listed solely
on the Frankfurt Stock Exchange in Germany. The Company
is not subject to the “Ten Principles of Corporate
Governance” applicable to companies listed in
Luxembourg. In addition, as a company incorporated and
existing under the laws of Luxembourg, the Company is not
required to comply with the respective German Corporate
Governance Code (the “Code”) applicable to German
stock corporations. However, as the Company’s shares are
listed on the Frankfurt Stock Exchange, the Management
Board and Supervisory Board have decided to follow, on a
voluntary basis and to the extent consistent with applicable
Luxembourg corporate law and Global Fashion Group’s
corporate structure, the recommendations of the Code
regarding the principles of good corporate governance.
Compliance with the
Corporate Governance Code
The corporate governance rules of the Company are
based on applicable Luxembourg laws, the Company’s
Articles of Association and its internal regulations, and the
rules of procedure of the Management Board and
Supervisory Board.
The Management Board and the Supervisory Board
diligently addressed compliance with the guidance of the
Code in fiscal year 2020. From the submission of the
previous declaration of conformity in August 2019 until the
publication of the new version of the Code dated
December 16, 2019 and which was published by the
Federal Ministry of Justice in the ocial section of the
Federal Gazette on March 20, 2020 GFG complied with
the recommendations of the Code in the version dated
24 April 2017 and from March 20, 2020 onwards GFG
complied with the recommendations of the new version
of the Code dated December 16, 2019. The Management
Board and Supervisory Board applied the Code, on a
voluntary basis, decided to issue a statement to a certain
extent comparable to that required for stock corporations
organised in Germany pursuant to Section 161 of the
German Stock Corporation Act (Aktiengesetz) and
commented on the limited number of exceptions. The
declaration is published on the Company’s website
ir.global-fashion-group.com.
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ANNUAL REPORT 2020 | GFG
Corporate Governance Report
DECLARATION OF CONFORMITY
The Management Board and Supervisory Board of the
Company issued the following joint declaration of
conformity in August 2020:
Declaration of Compliance with the German
Corporate Governance Code
Global Fashion Group S.A. (“GFG” or the “Company”) is a
Luxembourg société anonyme (S.A.), which is listed solely
on the Frankfurt Stock Exchange in Germany. GFG is not
subject to the “Ten Principles of Corporate Governance”
applicable to companies listed in Luxembourg. Furthermore,
as a company incorporated and existing under the laws of
Luxembourg, GFG is not required to report on compliance
with the German Corporate Governance Code (the “Code”)
applicable to listed German stock corporations.
Nevertheless, as GFG regards the Code to be an important
foundation for responsible corporate governance, the
Management Board and Supervisory Board of GFG have
decided to follow, on a voluntary basis and to the extent
consistent with applicable Luxembourg corporate law and
GFG’s corporate structure, the recommendations of the
Code regarding the principles of good corporate
governance.
The Management Board and Supervisory Board of the
Company declare that GFG has decided to comply with the
recommendations of the Code in its version dated
December 16, 2019, published by the Federal Ministry of
Justice in the ocial section of the Federal Gazette on
March 20, 2020, with the following deviations since their
announcement and will continue to comply with them to the
same extent in the future:
•
Recommendation B.3 of the Code: The current
members of the Management Board were appointed
for a maximum period of five (5) years in line with the
previous version of the Code which was in eect when
they were appointed in May 2019. We have amended
our rules of procedures to ensure that future first-time
appointments shall be for a period of not more than
three (3) years.
•
Recommendation C.5 of the Code: One of the
members of the Management Board is also the
chairman of the Supervisory Board of a non-group listed
company. The appointment of the member to the
Management Board of GFG and the non-group listed
company supervisory board were made before the
Code came into eect on March 20, 2020, in line with
the former Code. The appointment as both a member
of the Management Board and chairman of a non-group
listed company’s supervisory board has not given rise
to any conflicts or work management issues to date. The
Supervisory Board of GFG considers the case-by-case
assessment of the compatibility of both roles to be more
appropriate.
• Recommendation D.5 of the Code: Due to its relatively
small size of six members, the Supervisory Board does
not find it necessary to form a nomination committee as
decisions that would normally be charged to a
nomination committee can be made quickly and
eciently by the entire Supervisory Board.
•
Recommendation F.2 of the Code: In order to ensure
high-quality financial reporting, the recommended
publication periods may not in all cases be complied
with. However, we are constantly seeking to improve our
reporting system and intend to comply with the
reporting periods of the Code in the near future.
•
Recommendation G.1 bullet point 1 and 3 of the Code:
While annual bonuses and the size of grants under the
2019 LTIP are capped at certain percentages of base
salary, there is no cap with regard to the Company’s
share price once restricted stock units (“RSUs”) or
Performance Stock Units (“PSUs”) or Call Options are
vested and delivered. In the opinion of the Supervisory
Board, such a cap would not be appropriate as it would
interrupt the intended alignment of interests between
the shareholders and the Management Board members.
The Supervisory Board believes that the Management
Board members should, in this regard, participate in any
increase in the value of the Company to the same extent
as any other shareholder would participate.
The
Supervisory Board has also not set a maximum
total remuneration for the overall fixed and/or variable
compensation. In addition, certain components of the
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Management Board variable compensation granted
before the IPO and after the IPO as a one-o grant are
linked to continuous employment with no financial and
non-financial performance criteria attached to it. All
long-term variable compensation granted since
1 January 2020 has performance criteria attached to it.
•
Recommendation G.3 of the Code: The Supervisory
Board uses an appropriate peer group of other relevant
entities to compare the remuneration of the
Management Board, however such peer group has not
been disclosed as representatives of the common
market in which GFG operates evolve at a fast pace and
as such, the peer group is periodically reviewed and
updated by the Supervisory Board. Consequently, at
present the Supervisory Board does not intend to
disclose the peer group.
•
Recommendation G.4 of the Code: The diversified
footprint where GFG operates, combined with the
large number of employees and its localised market
approach to defining remuneration, makes it dicult
for GFG to establish an average remuneration for GFG
for the purposes of comparing the remuneration of the
Management Board. GFG targets to provide
remuneration packages that are both competitive
externally and proportionate internally.
•
Recommendation G.7. of the Code: Certain
components of the Management Board variable
compensation granted before the IPO and after the
IPO as a one-o grant are linked to continuous
employment with no financial and non-financial
performance criteria attached to it. All long-term
variable compensation granted since 1 January 2020
has performance criteria attached to it.
•
Recommendation G.11 of the Code: The Supervisory
Board can retain a payment under the short term
incentive plan but there is no ability to reclaim any
amounts paid since applicable laws regulating the
employment agreements of the Management Board
members prevent reclaiming earnings already paid.
•
Recommendation G.12 of the Code: The 2019 LTIP
gives the Supervisory Board the discretion to accelerate
vesting of a portion of granted RSUs and PSUs in the
case of early termination without cause or a change of
control, redundancy, retirement, death, illness and
other similar circumstances. The Supervisory Board
believes this to be an adequate element of the
Management Board members’ variable compensation.
•
Recommendation G.13 of the Code: The employment
agreements of the Management Board members (which
govern their remuneration) have an indefinite term and
can be terminated without cause with a six- or nine-
month notice period or, with immediate eect, if the
respective Management Board member is paid the
pro-rata portion of his base salary and contractual
benefits (excluding any bonus) for the relevant notice
period (“Payment in Lieu of Notice”). In the case of
Payment in Lieu of Notice, the payment to the respective
Management Board member is limited to the pro-rata
portion of his base salary and contractual benefits
(excluding any bonus) for the relevant notice period.
Given this contractual set-up, the Supervisory Board
believes that no further cap is required. The 2019 LTIP
provides for accelerated vesting of a portion of granted
RSUs and PSUs in the case of early termination without
cause or a change of control, the value of which –
depending on the Company’s share price – can exceed
the caps recommended by the Code. The Supervisory
Board believes this to be an adequate element of the
Management Board members’ variable compensation.
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Since the submission of the declaration of conformity in
August 2019 and until the publication of the new version
of the German Corporate Governance Code on
20 March 2020, GFG complied with the recommendations
of the German Corporate Governance Code in the version
dated 24 April 2017 with the following exceptions:
•
No. 3.8 para. 3 of the Code: The D&O policy for the
members of the Management Board and the
Supervisory Board does not provide for any deductible.
The Company takes the view that such deductible itself
is generally not suitable to increase the performance
and sense of responsibility of the Management Board
and the Supervisory Board members.
•
No. 4.2.1 sentence 1 of the Code: The current
Management Board does not have a chair or
spokesperson. The Supervisory Board believes that the
three members of the Management Board can work
together eciently and collegially without any member
performing such a function.
• No. 4.2.3 para. 2 sentences 3, 4, 7 and 8 of the Code:
Not all variable components of the Management Board
compensation follow the recommendations of the
Code. For example, forward-looking performance
targets apply to the annual bonuses and vesting of
performance stock units (“PSUs”) under the Company’s
new long-term incentive plan (the “2019 LTIP”), but
these targets are determined at the beginning of each
year for the relevant fiscal year (sentence 3). The
Supervisory Board deems the annual assessment
adequate, since the Company is still a young enterprise
operating in growth markets whose business
performance is therefore dicult to predict. Further,
the annual bonus scheme, the 2019 LTIP and the
Company’s current long-term incentive plan (the
“Current Plan”) do not contain explicit rules requiring
the consideration of negative developments (i.e.
negative developments are only taken into account in
the sense that the relevant targets may not be
achieved), and vesting of awards partly occurs based
solely upon continuous employment (sentence 4).
Additionally, applicable performance targets and
comparison parameters may not in all cases be as
demanding and relevant as required by the Code
(sentence 7), and the number of vesting awards can
partly, in exceptional cases, be adjusted when the level
of target achievement would not adequately reflect
relevant performance (in either a positive or negative
sense) due to extraordinary influences (sentence 8). The
Supervisory Board believes the overall compensation
for the Management Board members to be appropriate
and well-balanced, and that further consideration of
positive or negative developments is not required.
Ex-post amendments in exceptional circumstances
seem reasonable to ensure adequate and equitable
compensation.
•
No. 4.2.3 para. 2 sentence 6 of the Code: While annual
bonuses and the size of grants under the 2019 LTIP are
capped at certain percentages of base salary, there is
no cap with regard to the Company’s share price once
restricted stock units RSUs or PSUs vest or vested call
options (granted under the Current Plan) are exercised.
In the opinion of the Supervisory Board, such a cap
would not be appropriate as it would interrupt the
intended alignment of interests between the
shareholders and the Management Board members.
The Supervisory Board believes that the Management
Board members should, in this regard, participate in
any increase in the value of the Company to the same
extent as any other shareholder would participate.
There is also no cap for the overall fixed and/or variable
compensation.
• No. 4.2.3 para. 4 and 5 of the Code: The employment
agreements of the Management Board members
(which govern their remuneration) have an indefinite
term and can be terminated without cause with a six- or
nine-month notice period or, with immediate eect, if
the respective Management Board member is paid the
pro-rata portion of his base salary and contractual
benefits (excluding any bonus) for the relevant notice
period (“Payment in Lieu of Notice”). In the case of
Payment in Lieu of Notice, the payment to the
respective Management Board member is limited to
the pro-rata portion of his base salary and contractual
benefits (excluding any bonus) for the relevant notice
period. Given this contractual set-up, the Supervisory
Board believes that no further cap is required. The 2019
LTIP provides for the Supervisory Board with the
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discretion to accelerate vesting of a portion of granted
RSUs and PSUs in the case of early termination without
cause or a change of control, the value of which –
depending on the Company’s share price – can exceed
the caps recommended by the Code. The Supervisory
Board believes this to be an adequate element of the
Management Board members’ variable compensation.
• No. 5.3.3 of the Code: Due to its relatively small size of
six members, the Supervisory Board does not find it
necessary to form a nomination committee as decisions
that would normally be charged to a nomination
committee can be made quickly and eciently by the
entire Supervisory Board.
•
No. 7.1.2 sentence 3 of the Code: In order to ensure
high-quality financial reporting, the recommended
publication periods may not in all cases be complied.
However, we are constantly seeking to improve our
reporting system and intend to comply with the
reporting periods of the Code in the near future.
Luxembourg, August 2020
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1.4 BOARD COMPOSITION
AND GOVERNANCE
STRUCTURE
The governance structure of the Company consists of the
Management Board and the Supervisory Board.
The Management Board is responsible for managing the
Company, and the Supervisory Board is responsible for
carrying out the permanent supervision and control of the
Management Board without being authorised to interfere
with such management. The Management Board is vested
with the broadest powers to act in the name of the
Company and to take any actions necessary or desirable
to fulfil the Company’s corporate purpose with the
exception of certain matters set out in the Articles of
Association and the Supervisory Board Rules of Procedure
which require approval of the Supervisory Board or the
Company’s shareholders. The Management Board and
Supervisory Board cooperate closely for the benefit of the
Company. The Chairman of the Supervisory Board has
regular contact with the Management Board and advises
it on strategy, planning, business development, and the
Management Board informs the Chairman of the
Supervisory Board without delay of matters of fundamental
importance for the Company.
The corporate governance rules of the Company that
govern the Management Board and Supervisory Board
are based on applicable Luxembourg laws, GFG’s Articles
of Association and its internal regulations, in particular the
Management Board Rules of Procedure, the Supervisory
Board Rules of Procedure and the German Code of
Corporate Governance.
The Company’s Business Conduct and Ethics Policy
applies to all employees, directors and ocers worldwide
and contains ethical and legal standards that employees,
directors and ocers must adhere to. Under the Business
Conduct and Ethics Policy, employees, directors and
ocers are required to comply with all laws and policies
including but not limited to, the Anti-Bribery and Anti-
Corruption Policy, the Gifts & Hospitality Policy, the
Sanctions Policy and the Insider Trading Compliance
Policy. The details are set out in internal policies and
guidelines.
Working Practices of the Management Board
The Management Board is responsible for managing the
Company in accordance with the applicable legal
provisions, the Articles of Association of the Company (the
“Articles of Association”) and the Management Board
Rules of Procedure. It is obligated to act in the Company’s
corporate interest and to increase its long-term business
value. The Management Board develops the Company’s
strategy, discusses and agrees on it with the Supervisory
Board and ensures that it is implemented. It is also
responsible for appropriate risk management and control.
The Management Board provides the Supervisory Board
with timely and comprehensive information about all
issues of relevance to the Company and must inform the
Chairman of the Supervisory Board of any important event
or business matter that might have a significant impact on
the situation of the Company without undue delay. The
age limit for the Management Board is set as 69 years in
the Management Board Rules of Procedure.
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The Management Board performs its management
function as a collective body. Notwithstanding their overall
responsibility for management, the individual members of
the Management Board manage the areas assigned to
them on their own responsibility within the framework of
the Management Board’s resolutions. For fiscal year 2020,
the allocation of responsibilities among the members of
the Management Board is defined in the Management
Board Rules of Procedure, according to which the
members of the Company’s Management Board are
responsible for the following areas:
The Management Board takes joint responsibility for the
overall management of the Company irrespective of the
split of business areas. Its members work collaboratively
and inform each other regularly about any significant
measures and events within their areas of responsibility. The
Management Board meets at least once per calendar
quarter, and additional meetings are convened, if required.
Composition of the Management Board
According to the Articles of Association of the Company,
the Management Board shall be composed of at least two
members. The Supervisory Board determines the number
of Management Board members and appoints the
members of the Management Board for a maximum term
of oce of five years (which has been appended for future
appointments to three years). The Management Board
currently consists of the two Co-CEO’s and the CFO. The
Management Board does not currently have a chairman.
The Supervisory Board acknowledges and appreciates the
importance of diversity. A diverse composition of
management and supervisory bodies can promote new
perspectives in decision-making processes and
discussions and help to further improve performance. The
Supervisory Board and Management Board did not apply
a specific diversity concept with respect to the
Management Board and executive management team for
Financial Year 2020. The Supervisory Board and
Management Board considers that the executive
management team and employee base globally is highly
diverse. The Supervisory Board has defined a diversity
target for at least one female representative to be
appointed to the Management Board to be achieved by
1 January 2025. In addition, the Management Board
defined a diversity target of maintaining a 50/50 gender
balance on the GFG Executive team (which it currently
meets) until 1 January 2025. The Supervisory Board has
concluded a first succession plan for the replacement of
the Management Board during Financial Year 2020. The
Supervisory Board and Management Board will work
together on further refining the succession plan during
Financial Year 2021.
Co-CEO: Christoph Barchewitz
• Commonwealth of Independent States
− Lamoda
• Latin America − Dafiti
• Communications
• International Brand Partnerships
• Legal & Governance, Risk & Compliance
(“GRC”)
Co-CEO: Patrick Schmidt
• Australia and New Zealand − THE ICONIC
• South East Asia − ZALORA
• People & Culture
• Sustainability
• Technology
CFO: Matthew Price
• Accounting
• Financial Reporting
• Financial Planning & Analysis
• Internal Audit
• Investor Relations
• Tax & Treasury
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Working practices of the Supervisory Board
The Supervisory Board advises and supervises the
Management Board in its management of the Company.
It is responsible for the permanent supervision and
control of the Management Board. It works closely with
the Management Board for the benefit of the Company
and is involved in all decisions of fundamental importance
to the Company.
The rights and duties of the Supervisory Board are
governed by legal requirements, the Articles of
Association, the Supervisory Board Rules of Procedure
and the Management Board Rules of Procedure. It
appoints and removes the members of the Management
Board and is responsible for ensuring that long-term
succession planning is undertaken by the Management
Board.
The work of the Supervisory Board takes place in meetings
as well as separate committee meetings whose chairs
provide the entire Supervisory Board with regular updates
on the committee’s activities. Pursuant to the Supervisory
Board Rules of Procedure, the Supervisory Board shall
hold at least one meeting in each calendar quarter and
additional meetings should be convened as necessary.
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Composition of the Supervisory Board
The Supervisory Board must consist of at least three
members in accordance with the Articles of Association.
The members of the Supervisory Board are appointed and
removed at the general meeting of shareholders which
determine the term and compensation. Members of the
Supervisory Board can only be appointed for a term that
doesn’t exceed five years but can be reappointed for
successive terms.
The Supervisory Board Rules of Procedure sets targets for
its composition and sets a profile of skills that are required
for members of the Supervisory Board. According to this
profile, members of the Supervisory Board shall have the
required knowledge, abilities and expert experience to
fulfil his/her duties properly and they must be familiar with
the sector in which the Company operates. At least one
member must have knowledge in the field of auditing and
accounting. Each member shall ensure that they have
enough time to perform their mandate. At least three
members of the Supervisory Board must have reasonable
international experience and diversity shall be considered
- an appropriate number of women shall be considered.
In addition, the Supervisory Board has defined a diversity
target of maintaining a 50/50 gender balance on the
Supervisory Board until 1 January 2025. At least three
members must not have a board position, consulting or
representation duties with main suppliers, lenders or other
business partners of the Company, and Supervisory Board
members shall not exercise directorships or similar
positions or advisory tasks for material competitors of the
Company. In addition, no fewer than two members shall
be independent, and no more than two former members
of the Management Board shall be members of the
Supervisory Board. In addition to their Supervisory Board
mandate with the Company, members of the Supervisory
Board who are members of the Management Board of a
listed company, or equivalent, should not hold more than
two further Supervisory Board mandates in listed non-
group entities that make similar requirements. The age
limit for members of the Supervisory Board is set as
69years.
At the extraordinary meeting of the shareholders held on
31 May 2019, shareholders appointed the following six
members to the Supervisory Board subject to approval of
the prospectus by the Commission de Surveillance du
Secteur Financier (the “CSSF”), which took place on
17 June 2019 for a period ending at the expiration of the
general meeting of shareholders approving the 2021
financial results:
The Chairman of the Supervisory Board is an independent
supervisory chair in line with the recommendations of the
Code. During Financial Year 2020, the Supervisory Board
has acted amongst others through the Audit Committee
and the Sustainability Committee. The Company deviated
from the recommendations of the Code as the Supervisory
Board due to its relatively small size of six members did not
find it necessary to form a nominations committee.
• Cynthia Gordon − Chairman of the
Supervisory Board and member of the
Sustainability Committee;
• Georgi Ganev − Vice Chairman of the
Supervisory Board;
• Alexis Babeau − Member of the Supervisory
Board and Chairman of the Audit Committee;
• Victor Herrero − Member of the Supervisory
Board, Chairman of the Sustainability
Committee and Member of the Audit
Committee;
• Carol Shen − Member of the Supervisory
Board and the Sustainability Committee; and
• Laura Weil − Member of the Supervisory
Board and the Audit Committee.
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Working practices of the Audit Committee
The Chairman of the Audit Committee has specific
knowledge and experience in applying accounting
principles and internal control procedures. Neither the
Chairman of the Supervisory Board nor former members
of the Company’s Management Board whose term ended
less than two years ago are eligible to be appointed as
Chairman of the Audit Committee. All members of the
Audit Committee are financially literate and at least two
members have in-depth knowledge of accounting and the
financial reporting principles required. All of the members
of the Audit Committee are independent.
The Audit Committee oversees the accounting and
financial reporting processes of the Company and the
integrity of the financial statements and publicly reported
results, the adequacy and eectiveness of the risk
management and internal control frameworks and the
choice, eectiveness, performance and independence of
the internal and external auditors.
The Audit Committee also monitors the process of
preparing financial information, reviews and discusses the
audited financial statements with the Management Board
members and the Independent Auditor, and provides a
recommendation to the Supervisory Board regarding
whether audited financial statements should be included
in the annual report. In addition, the Audit Committee
reviews the half yearly and quarterly financial statements
and prepares a recommendation for the appointment of
the Independent Auditor to the Supervisory Board. The
Audit Committee also reviews the performance of the
Independent Auditor.
Composition of the Audit Committee
For Financial Year 2020, the members of the Audit
Committee were:
Working practices of the Sustainability Committee
The Sustainability Committee assists the Supervisory
Board with oversight of its responsibilities in connection
with the Company’s sustainability policies and practices.
In particular, it makes recommendations to the Supervisory
Board regarding the Company’s policy and performance
in relation to health & safety, diversity and inclusion and
compliance with laws concerning environmental and
social matters and review their implementation. In
addition, the Sustainability Committee reviews and
approves the Company’s sustainability strategy,
objectives, key results and policies and approves for
submission to the Supervisory Board the Company’s
annual sustainability report submitted to it by the
Management Board. All of the members of the
Sustainability Committee are independent.
Composition of the Sustainability Committee
For Financial Year 2020, the members of the Sustainability
Committee were:
• Alexis Babeau (Chairman);
• Victor Herrero; and
• Laura Weil.
• Victor Herrero (Chairman);
• Carol Shen; and
• Cynthia Gordon.
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1.5 ANNUAL GENERAL
MEETING AND
SHAREHO LDERS
The shareholders of GFG exercise their rights, including
their right to vote, at an Annual General Meeting (“AGM”).
Each share in the Company grants one vote.
The AGM is required to be held within the first six months
of the fiscal year, and the agenda along with the reports
and documents required for the AGM are to be published
on the Company’s website ir.global-fashion-group.com.
Certain matters set out in the Articles of Association
require the approval of shareholders. Resolutions on
matters that require shareholder approval are adopted at
the AGM, including, increasing/reducing the Company’s
share capital or authorised capital, appointment and
removal of members of the Supervisory Board and the
independent auditors, resolutions on allocation of the
remainder of any annual net profit.
To facilitate the personal exercise of their voting rights,
GFG makes available a proxy who is bound by instructions
and who may also be contacted during the AGM. The
invitation to the AGM explains how instructions may be
given ahead of the meeting. In addition, shareholders may
arrange to be represented at the Annual General Meeting
by a proxy of their choice.
1.6 TAKEOVER LAW
Composition of subscribed capital
As of 31 December 2020, the share capital of the Company
amounts to €2,138,367.16, and is divided into 213,836,716
common shares with a nominal value of €0.01 each. The
common shares are fully paid-up. The Company holds
common shares in dematerialised form and all future
common shares to be issued by the Company will be
issued in dematerialised form.
Restrictions on voting rights
or the transfer of shares
The Company’s common shares in dematerialised form are
freely transferable through book entry transfers in
accordance with the legal requirements for dematerialised
shares.
Each common share carries identical rights and obligations,
save for the common shares held by the Company in
treasury, from which the Company derives no rights. As of
31 December 2020
, the Company held 182,378 common
shares in treasury.
As part of the Company’s IPO in 2019, the Company's pre-
IPO shareholders had previously entered into lock-up
agreements with the underwriters that supported the IPO.
In these lock-up agreements, the pre-IPO shareholders
agreed they will not, either directly or indirectly, oer,
pledge, allot, distribute, sell, contract to sell, sell any option
or contract to purchase, purchase any option to sell, grant
any option, right or warrant to purchase, transfer or
otherwise dispose of, directly or indirectly, any common
shares of the Company for a period of 12 months after the
first day on which the Company’s shares traded on the
Frankfurt Stock Exchange without the prior consent of the
Company and the underwriters. However, during the
period starting on the 180
th
day following the first day of
trading of the Company’s Shares on the Frankfurt Stock
Exchange and ending twelve months after the first day of
trading of the Company’s Shares on the Frankfurt Stock
Exchange, the pre-IPO shareholders were permitted to sell
in aggregate up to 20% of their pre-IPO shareholding. This
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restriction was subject to limited exceptions. The same
lock-up requirement applied to common shares purchased
by certain members of the Supervisory Board as part of the
IPO. Members of the Management Board had agreed to
substantially similar lock-up provisions in respect of their
stock options over common shares in the Company and
similar instruments. The lock-up restrictions relating to the
Company’s IPO expired on 2 July 2020.
Equity Interests in the Company
That Exceed 5% of Voting Rights
On the basis of the voting rights notifications received by
the Company during the financial ended 31 December 2020
in accordance with Article 11, Section 6 of the Luxembourg
Transparency Law and Section 40, Paragraph 1 of the
German Securities Trading Act (WpHG), the following
direct or indirect shareholders in the capital of the
Company reach or exceed 5% of the voting rights:
Name of
Shareholder Details
Percentage
of holding
Date of
declaration
Kinnevik AB Indirectly holds 36.99% of the voting rights in the Company through
Invik S.A. who directly holds 36.99%. 36.99% 21 Dec 2020
Baillie
Giord & Co
Indirectly holds 6.38% of the voting rights of the Company through
Baillie Giord Overseas Ltd who directly holds 6.38%. 6.38% 23 Nov 2020
Zerena GmbH Indirectly holds 14.82% of the voting rights of the Company, through
Rocket Internet SE who directly hold 14.57% and a further 0.25%
through the holdings of Rocket Middle East GmbH, MKC Brillant
Services GmbH and Bambino 53. V V GmbH. 14.82% 19 Nov 2020
Zerena GmbH Indirectly holds 16.06% of the voting rights of the Company, through
Rocket Internet SE who directly hold 15.79% and a further 0.27%
through the holdings of Rocket Middle East GmbH, MKC Brillant
Services GmbH and Bambino 53. V V GmbH. 16.06% 16 Nov 2020
Tengelmann
Verwaltungs-
und
Beteiligungs
GmbH
Indirectly holds 5.30% of the voting rights of the Company,
through Tengelmann Ventures GmbH and TEV Global Invest II GmbH
5.30%
1
2 Sep 2020
1
The Company received a subsequent notification on 2 September 2020 from Tengelmann Verwaltungs und Beteiligungs GmbH which
confirmed that it indirectly held 4.85% of the voting rights of the Company, through Tengelmann Ventures GmbH and TEV Global Invest II
GmbH.
The Company was not notified of any other direct or
indirect capital investments that reach or exceed 5% of the
voting rights of the Company during the financial year
ended 31 December 2020. Further, the distribution of
voting rights included above may have changed within the
reportable thresholds.
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Legal Requirements and Provisions of the
Articles of Association Governing the
Appointment and Dismissal of Members of the
Management Board, and Amendments to the
Articles of Association
The Management Board must consist of at least two
persons in accordance with Article 13.1 of the Articles of
Association. In all other respects, the Supervisory Board
determines the number of Management Board members.
The Supervisory Board appoints the members of the
Management Board on the basis of Luxembourg Company
Law and Article 15 of the Articles of Association for a term
of oce lasting no longer than five years. Reappointments
for successive years are permitted. To ensure compliance
with the Code, the Supervisory Board Rules of Procedure
were amended to ensure that future appointments of
members of the Management Board are for a maximum
term of three years. The Supervisory Board is entitled to
revoke the appointment of a Management Board member
for cause (pursuant to Article 15.3 of the Articles of
Association).
Changes to the Articles of Association must be agreed at
a general meeting of shareholders. Unless a higher
majority is required by binding legal requirements or the
Articles of Association, resolutions proposed at the AGM
are passed by a simple majority of votes cast in accordance
with Article 11.2 of the Articles of Association. According
to Article 11.5 of the Articles of Association, a vote passed
by a majority of at least two thirds of the votes validly cast
at a general meeting at which a quorum of more than half
of the Company’s capital is represented is required in order
to amend the Articles of Association. Abstentions and nil
votes shall not be taken into account.
The Company is authorised to amend the wording of the
Articles of Association after carrying out capital increases
from authorised capital or after the expiry of the
corresponding authorisation, option, or conversion period.
Authority of the Management Board
to Issue and Buy Back Shares
Authorised Capital
As at
31 December 2020
, pursuant to Article 6.1 of the
Articles of the Association, the Company’s authorised
capital, excluding the issued share capital, is €1,648,687.01
represented by 164,868,701 common shares with a
nominal value of €0.01 each. Pursuant to Article 6.2 of the
Articles of Association, during a period of five years from
the date of any resolutions to create, renew or increase the
authorised capital pursuant to Article 6.2, the Management
Board, with the consent of the Supervisory Board, is
authorised to issue shares, to grant options to subscribe for
shares and to issue any other instruments giving access to
shares within the limits of the authorised capital to such
persons and on such terms and subject to the limitations
set out in the Special Report of the Management Board of
the Company with respect to the authorised share capital
dated 19 May 2020 (the “Special Board Report”). The issue
of such instruments will reduce the available authorised
capital accordingly.
The Special Board Report also sets out circumstances in
which the powers under the authorised capital could be
used if convening a general shareholders’ meeting would
be undesirable or not appropriate. For example, such
circumstances could arise when there is a financing need
or if the convening of a shareholders’ meeting would lead
to an untimely announcement of a transaction, which could
be disadvantageous to the Company.
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As at 1 January 2020, the issued share capital of the
Company amounted to €2,147,655.17, and was divided into
214,765,517 common shares with a nominal value of €0.01
each, with 193,288,579 common shares being held in
dematerialised form and 21,476,938 common shares being
held in registered form. Only common shares in
dematerialised form were admitted to trading on the
Frankfurt Stock Exchange.
On 30 March 2020, the Company:
•
issued 76,310 new common shares to pre-IPO
shareholders in connection with the Share
Redistribution carried out by the Company prior to its
IPO in 2019
1
; and
•
converted 1,422,377 common shares held in registered
form to dematerialised form on behalf of a pre-IPO
shareholder that was incapable of holding shares in
dematerialised form at the time of the Company’s IPO.
On 26 June 2020, following the conclusion of the
Company’s 2020 AGM, the Company cancelled 20,054,561
of its treasury shares that were held in registered form.
Following the cancellation, the Company held 182,378
common shares in treasury, each in dematerialised form.
Following 26 June 2020, the Company no longer had any
common shares in registered form in issue.
On 3 July 2020, the Company issued:
•
226,888 new common shares in connection with the
roll-up of existing and former managers, founders,
employees, business angels and supporters of the
Group in connection with a legacy long-term incentive
program;
•
486,294 new common shares in connection with
various legacy call option agreements with certain
former or current senior management members, key
employees and supporters of the Group; and
•
1,836,268 new common shares to satisfy the Company’s
legacy and existing long-term incentive programs.
On 18 Novemer 2020, the Company issued 16,500,000
new common shares in connection with a private
placement of shares to institutional investors.
As at 31 December 2020, the issued share capital of the
Company amounts to €2,138,367.16, and is divided into
213,836,716 common shares with a nominal value of €0.01
each. All of the Company’s common shares are held in
dematerialised form and are admitted to trading on the
Frankfurt Stock Exchange.
Pursuant to Article 6.3 of the Articles of Association, the
Company’s authorised capital may be increased or
reduced by a resolution of a general meeting of
shareholders adopted in the manner required for an
amendment to the Articles of Association. The
authorisations in Articles 6.2 and 6.3 of the Articles of
Association may be renewed through a resolution of a
general meeting of shareholders adopted in the manner
required for an amendment of the Articles of Association
and subject to the provisions of the Luxembourg Company
Law, each time for a period not exceeding five years.
Treasury Shares
According to Article 7.1 of the Articles of Association, the
Company may, to the extent and under the terms
permitted by law, repurchase its own shares and hold
them in treasury. Prior to the Company’s 2020 AGM, the
Company held 20,236,939 common shares in treasury,
20,054,561 of which were being held for cancellation. At
the Company’s 2020 AGM, the Company’s shareholders
resolved to cancel the 20,054,561 common shares that
were being held in treasury. Following the conclusion of
the 2020 AGM, and as at 31 December 2020, the Company
held 182,378 common shares in treasury. In line with
Luxembourg Company Law, the voting rights attached to
the common shares held in treasury by the Company are
suspended.
1
Issued to those pre-IPO shareholders that were not capable of
holding common shares in dematerialised form on 1 July 2019.
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Without prejudice to the principle of equal treatment of
shareholders in the same situation and the provisions of
the Luxembourg Market Abuse Law, pursuant to Article
430-15 of the Luxembourg Company Law, the Company
may acquire its own shares either itself or through a person
acting in its own name but on the Company’s behalf
subject to the following statutory conditions:
• The authorisation to acquire shares is to be given by a
general shareholders’ meeting, which determines the
terms and conditions of the proposed acquisition and
in particular the maximum number of shares to be
acquired, the duration of the period for which the
authorisation is given,which may not exceed five years,
and in the case of acquisition for value, the maximum
and minimum consideration;
•
The acquisitions must not have the eect of reducing
the net assets of the Company below the aggregate of
the subscribed capital and the reserves, which may not
be distributed under the law or the Articles of
Association; and
•
Only fully paid-up shares may be included in the
transaction.
At the time each authorised acquisition is carried out, the
Management Board must ensure that the statutory
conditions set out above are complied with.
Where the acquisition of the Company’s own shares is
necessary in order to prevent serious and imminent harm
to the Company, no authorisation will be required from a
general shareholders’ meeting. In such a case, the next
general shareholders’ meeting must be informed by the
Management Board of the reasons for and the purpose of
the acquisitions made, the number and nominal values, or
in the absence thereof, the accounting par value of the
shares acquired, the proportion of the subscribed capital
which they represent and the consideration paid for them.
No authorisation will likewise be required from a general
shareholders’ meeting in the case of shares acquired
either by the Company itself or by a person acting in his/
her own name but on behalf of the Company for the
distribution thereof to employees. The distribution of any
such shares must take place within twelve months from the
date of their acquisition.
Pursuant to Article 430-16 of the Luxembourg Company
Law, the acquisition of shares is also permitted in the
following circumstances if such an acquisition would not
have the eect of reducing the net assets of the Company
below the aggregate of the subscribed capital and the
Company’s non-distributable reserves:
•
Shares acquired pursuant to a decision to reduce the
capital or in connection with the issue of redeemable
shares;
•
Shares acquired as a result of a universal transfer of
assets;
•
Fully paid-up shares acquired free of charge or acquired
by banks and other financial institutions pursuant to a
purchase commission contract;
•
Shares acquired by reason of a legal obligation or a
court order for the protection of minority shareholders,
in particular, in the event of a merger, the division of the
Company, a change in the Company’s object or form,
the transfer abroad of its registered oce or the
introduction of restrictions on the transfer of shares;
•
Shares acquired from a shareholder in the event of
failure to pay them up; and
• Fully paid-up shares acquired pursuant to an allotment
by court order for the payment of a debt owed to the
Company by the owner of the shares.
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Generally, such acquired shares must be disposed of
within a maximum period of three years after their
acquisition or they must be cancelled. There are some
statutory exceptions to this.
Material Agreements Entered into by the
Company Providing for a Change of Control
upon a Takeover Bid
The Company has not entered into any agreements of this
kind.
Compensation Arrangements Agreed by
the Company with the Members of the
Management Board or Employees in the Event
of a Takeover Bid
The Company has not entered into any agreements of this
kind.
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1.7 REMUNERATION
REPORT AND OTHER
DISCLOSURES
1.7.1 Remuneration of the Management Board
General Introduction
The remuneration report presents the principles of the
remuneration system of the Management Board and
Supervisory Board and provides the benefits granted
and received during financial year 2020. As a company
incorporated and existing under the laws of Luxembourg,
the remuneration report of the Company has been
prepared in accordance with the Luxembourg’s 'Law of
24 May 2011 (as amended from time to time)' and the
recommendations of the German Corporate Governance
Code 2019 (the “Code”) which the Company has decided
to follow, on a voluntary basis and to the extent consistent
with applicable Luxembourg corporate law and Global
Fashion Group’s corporate structure. Consequently, the
appropriateness of the Company’s remuneration for its
directors follows the recommendation of the Code,
except where the Company has declared a deviation in
its declaration of conformity published jointly by the
Supervisory Board and Management Board in
August 2020. The Company has also adopted a
remuneration policy during the 2020 financial year as
discussed below.
Remuneration Policy
During the year, GFG shareholders approved the
remuneration policy, which defines the remuneration
system applicable to the members of the Management
Board and Supervisory Board (“Remuneration Policy”).
The remuneration system distinguishes between
Management Board members and Supervisory Board
members. Consistent with the Code, the criteria for
determining the appropriateness of the remuneration of
the directors of each body consist of the directors’
individual responsibilities, performance, and usual level of
remuneration for similar roles as well as the Company’s
economic conditions and future perspectives
.
Remuneration Policy Components
The total remuneration of the Management Board
members consists of a fixed component and benefits, a
variable component that consists of a short-term incentive
(i.e. an annual bonus) and a long-term incentive (i.e. in the
form of share-based long term incentive plans “LTIP”), as
well as fringe benefits and pension contributions.
Overall, the remuneration policy places an emphasis on
the importance of variable remuneration, with a specific
focus on long-term incentive, given that a positive outlook
of the Company is synonymous with building a sustainable
organisation for the long term as well as establishing an
alignment of interest between the Management Board
and the Company’s shareholders.
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Fixed Remuneration Components
Component Purpose Details Performance Metrics
Fixed Annual
Base Salary
Rewards for the
Management Board
member’s individual
responsibilities, skills,
experience, performance
and role to attract and
retain talent.
The Supervisory Board considers a variety of
factors including the Management Board
members’ individual responsibilities and
performance, the usual level of remuneration for
similar roles compared to the market, the
Company’s economic conditions and any other
internal and external factors that the Supervisory
Board determines relevant to achieve an
appropriate base salary.
Reviewed annually with eect generally from
1January unless the Supervisory Board or
contractual arrangements determine a dierent
frequency or eectiveness.
Non-performance based remuneration payable in
twelve equal installments, in arrears.
Performance of the
member of the
Management Board in
the preceding
performance period is
taken into account when
salary is reviewed.
Pension
Contributions
To contribute financially
towards retirement
benefits.
Defined contribution arrangement of a cash
supplement paid with the monthly base salary.
The level of pension contribution is above the
minimum statutory requirements under applicable
employment laws.
The Supervisory Board retains the discretion to
contribute the pension directly into a pension
fund and to reduce contribution amounts to
statutory requirements.
Not applicable.
Other benefits To provide market-level
benefits, to reflect and
support the health and
wellbeing initiatives of
GFG.
Benefits include insurance policies (health, life
and income protection, directors and ocers
(“D&O”) without deductible payable by the
Management Board member.
Other standard benefits include the
reimbursement of travel expenses.
Not applicable.
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Variable Remuneration Components
Component Purpose Details Performance Metrics
Annual
Performance
Bonus Plan
Aligns
remuneration to
Company
strategy through
rewarding the
achievement of
annual financial
and strategic
business targets
and individual
performance.
The annual performance bonus earned is based on
performance results against predefined targets for the
respective financial year, in line with the short-term
development of the Company.
Bonus payments are normally delivered in cash.
Measured over a one-year
performance period based on
company financial targets i.e.
NMV, adjusted EBITDA, and
cash flow, with a split of
25%/50%/25% as determined
by the Supervisory Board for
the 2020 Financial Year for
consistency and individual
performance objectives, which
are predefined with the
Supervisory Board at the
beginning of the financial year
taking into account the
Company’s financial and
strategic objectives for the
performance period.
The weighting between
company and individual
performance is determined by
contractual arrangements and
the responsibilities of each
position, currently 80% for
company performance related
measures and 20% for
individual performance
criteria.
The short-term incentive
bonus is capped as a
percentage of the base salary,
which the Supervisory Board
may derogate from in
exceptional circumstances
pursuant and in compliance
with the procedure set out in
the remuneration policy.
2019 GFG Share
Plan (“2019
LTIP”)
To motivate
long-term
performance
through the
delivery of
longer-term
business plans,
sustainable long-
term returns for
stakeholders and
strategic
priorities
The implementation of the 2019 LTIP was approved by
the Supervisory Board on 20 August 2019 following
the Company’s IPO on 2 July 2019.
Grants are awarded to the members of the
Management Board in the form of Restricted stock
Units (“RSUs”) and Performance Stock Units (“PSUs”).
The awards usually vest over a three year period and
are subject to a holding period of four years from
grant, in addition to being subject to malus and
clawback provisions until the expiry of the holding
period.
Upon vesting of these awards and expiry of the
holding period, the Management Board members
willacquire either shares in the Company (one unit
representing one share) which may be freely traded,
subject to any required closed periods, or a cash
payment of equivalent value at the election of the
Supervisory Board. There is currently no policy or
intention to settle in cash.
The vesting of PSUs is subject
to the achievement of
performance conditions
determined by the
Supervisory Board for the
respective performance
period.
For 2020, PSU awards are
subject to performance
conditions of Net
Merchandise Value (“NMV”)
growth year on year on a
constant currency basis (for
50% of PSUs) and adjusted
EBITDA margin (as a
percentage of NMV) (for
50%of PSUs).
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Component Purpose Details Performance Metrics
2016 Long-Term
Incentive Plan
(“2016 LTIP”)
Served as a tool
to attract,
motivate, and
retain employees
of the Company,
pre-IPO
On 30 January 2015 the Company adopted its initial
share incentive plan which was subsequently
amended from time to time.
Under the 2016 LTIP, grants are awarded in the form of
synthetic stock options over shares or in the form of
cash awards, in each case vesting or maturing, as
applicable, in equal tranches on a quarterly basis.
The 2016 LTIP also includes the right to participate in
an internal liquidity event for the financial years 2018
and 2019 allowing the cash settlement of a limited
number of vested awards under the 2016 LTIP and
Legacy LTIP (as defined below).
All synthetic stock options were converted into stock
options at the level of GFG upon the IPO on the
2July 2019.
Each vested stock option entitles the holder to acquire
one share in the Company upon payment of the
exercise price. Options may only be exercised during
prescribed exercise windows, subject to the
observance of closed periods.
As for the vested regional cash awards, these are
awarded as Management Performance Score (MPS)
units which convert into cash upon meeting the
relevant performance criteria which were set pre-IPO.
The MPS convert into cash based on the scores
achieved. The scores are primarily based on NMV
performance from 2015 to 2018.
The synthetic stock options and regional cash awards
are subject to forfeiture including in case of
termination for serious grounds or serious fault.
However, as the 2016 LTIP is a pre-IPO plan, vested
awards are not subject to holding period.
As at the end of the 2020 reporting period, all stock
options and regional cash awards granted under the
2016 LTIP to the members of the Management Board
pre-IPO are fully vested.
No further grants will be made under the 2016 LTIP
other than those already allocated to the Management
Board members, as described above.
Not applicable.
Individual Call
Options
(“Legacy LTIP”)
Incentive LTIP
issued to the
founders of the
Company in line
with the initial
risk and
commitment
involved
In the time between 2011 and 2014, certain managers,
employees, ocers, supporters or their respective
investment vehicles as trustors have entered into
certain trust agreements relating to the trust
participations in various entities, that are now
subsidiaries of GFG, through certain entities acting as
trustees (the “Subsidiary Trust Arrangements”).
Following the IPO of 2 July 2019, these Subsidiary
Trust Arrangements with GFG subsidiaries have been
exchanged for fully vested participations on the level
of GFG in the form of call options where each
individual call option allows the holder to acquire one
share in GFG upon payment of the nominal value.
Consequently, a Management Board member has
entered into an individual call option agreement and
further exercised his right to liquidate the individual
call options pursuant to the above-mentioned pre-IPO
internal liquidity event relating to financial years 2019
and 2018. The Individual Call Options are subject to
forfeiture including in case of termination for serious
grounds or serious fault. However, as the Legacy LTIP
is a pre-IPO plan, vested call options are not subject to
holding period.
No further grants will be made under the Legacy LTIP .
Not applicable.
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Management Board Remuneration for the
Financial year 2020
This section describes the remuneration of the Management
Board in relation to their contribution and performance in
financial year 2020.
In line with the Company’s measure to mitigate the impact
of COVID-19 on the business, the Supervisory Board, in
agreement with the Management Board, determined that
the salary review conducted for the 2020 financial year
should not lead to a change in remuneration of the
Management Board members during the reporting
period.
The short-term incentive of the Management Board is
assessed at the end of the reporting period based on the
Company’s financial targets (i.e. NMV, adjusted EBITDA
and cash flow) and individual targets. Based on the
financial and individual performance the Supervisory
Board has determined the achievement to be 100% for
financial year 2020.
As for the long-term variable remuneration, the number of
units outstanding under the 2019 LTIP developed as
follows during the 2020 reporting period.
Each component of the total remuneration of each
member of the Management Board is reported below,
presenting both benefits granted, and benefits received
at the minimum and maximum remuneration achievable
during the 2020 financial year, as well as the relative
proportion of fixed and variable remuneration.
All components of the remuneration of the Management
Board awarded during the reporting period are in line with
the Company’s Remuneration Policy and no derogation
was applied pursuant to the policy. Further, the Company
did not reduce or claw back in regards to the awards of the
Management Board members during 2020.
2019 LTIP
Christoph Barchewitz
1
Patrick Schmidt
1
Matthew Price
1
RSUs PSUs RSUs PSUs RSUs PSUs
Outstanding at the
beginning of the reporting
period 310,800 207,198 310,800 207,198 188,160 94.080
Granted during the
reporting period - 276,267
2
- 276,267
2
- 107,520
2
Vested during the reporting
period 103,600 47,378
3
103,600 47,378
3
62,720 21,513
3
Forfeited/expired during the
reporting period
- 21,688
4
- 21,688
4
- 9,847
4
Exercised during the
reporting period
- - - - - -
Outstanding at the end of
the reporting period 310,800 461,777 310,800 461,777 188,160 191,753
Exercisable at the end of
the reporting period - - - - - -
1
Appointment to the Management Board in June 2019.
2
The final number of units to be released will depend on the achievement of the pre-defined Performance Conditions over a one-year
performance period.
3
Based on PSU performance conditions achievement at “on-target” level (i.e. 68.60%) during the performance period.
4
Represents the non-vested portion of the PSUs resulting from the performance conditions achieved versus maximum potential.
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The total individual compensation of the Management
Board in relation to financial year 2020 is set out below.
Christoph Barchewitz (Co-Chief Executive Officer)
1
Year of Appointment to the Management Board: 2019
In €
2
Benefits Granted Benefits Received
2020 (Min.) 2020 (Max.) 2019 2020 2019
Fixed Remuneration 610,500 610,500 666,000 610,500 666,000
Fringe Benefits 30,958 30,958 25,848 30,958 25,848
Total (fixed components) 641,458 641,458 691,848 641,458 691,848
Short-Term Incentive - 305,250 333,000 305,250
3
317,744
Long-Term Incentive
4
(2019) - 1,905,321 1,118,185 - -
Total (variable components) - 2,210,571 2,143,033 305,250 317,744
Pension Expense 61,050 61,050 66,600 61,050 66,600
Total Remuneration 702,508 2,913,080 2,209,633 1,007,758 1,076,192
1
Mr. Christoph Barchewitz was appointed as Co-CEO on the 01 February 2018
2
As the remuneration for Mr. Christoph Barchewitz is denominated in British pounds, exchange rates of 1£/1.1€ and 1£/1.2€ have been used
for 2020 and 2019 respectively. The dierence between 2019 and 2020 benefits received and benefits granted is due to the £/EUR
exchange rate.
3
Based on a company performance achievement of 122% and a individual performance of 100% for 2020, resulting in an overall achievement of
100%.
4
The value of Long-Term Incentives are based on the fair value determined at the grant date. The first tranche of the grant under the 2019
LTIP which was made during the reporting period will vest on 30 April 2021 and remains subject to the holding period. The remaining
tranches will vest on 30 April 2022 and 30 April 2023 and are subject to the holding period.
Patrick Schmidt (Co-Chief Executive Officer)
1
Year of Appointment to the Management Board: 2019
In €
Benefits Granted Benefits Received
2020 (Min.)
2
2020 (Max.)
2
2019 2020
2
2019
Fixed Remuneration 575,000 575,000 575,000 575,000 575,000
Fringe Benefits 21,948 21,948 60,620 21,948 60,620
Total (fixed components) 596,948 596,948 635,620 596,948 635,620
Short-Term Incentive - 287,500 287,500 287,500
3
275,281
Long-Term Incentive
4
(2019) - 1,905,321 1,118,185 - -
Total (variable components) - 2,192,821 1,405,685 287,500 275,281
Pension Expense - - - - -
Total Remuneration 596,948 2,789,770 2,041,305 884,448 910,901
1
Mr. Patrick Schmidt was appointed as Co-CEO on the 01 February 2018.
2
The amounts disclosed in this column relate only to the benefits received in 2020 for financial year 2020. Any benefits received in 2020
relating to prior years where Mr. Patrick Schmidt was the Chief Executive Ocer of The Iconic are reported in section “ Benefits granted
and received in 2020 for previous financial years”. Such benefits received for prior years equate to €4,591,205 under the 2016 LTIP relating
to Cash Awards and €1,100,984 under the Legacy LTIP.
3
Based on a company performance achievement of 122% and a individual performance of 100% for 2020, resulting in an overall
achievement of 100%.
4
The value of Long-Term Incentives are based on the fair value determined at the grant date. The first tranche of the grant under the 2019
LTIP which was made during the reporting period will vest on 30 April 2021 and remains subject to the holding period. The remaining
tranches will vest on 30 April 2022 and 30 April 2023 and are subject to the holding period.
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Matthew Price (Chief Financial Officer)
1
Year of Appointment to the Management Board: 2019
In €
2
Benefits Granted Benefits Received
2020 (Min.) 2020 (Max.) 2019 2020 2019
Fixed Remuneration 462,000 462,000 339,879 462,000 339,879
3
Fringe Benefits 46,200 46,200 33,988 46,200 33,988
Total (fixed components) 508,200 508,200 373,867 508,200 373,867
Short-Term Incentive - 231,000 177,663 231,000
4
158,476
Long-Term Incentive
5
(2019) - 741,530 606,502 - -
Total (variable components) - 972,530 784,166 231,000 158,476
Pension Expense - - - - -
Total Remuneration 508,200 1,480,730 1,158,033 739,200 532,343
1
Mr. Matthew Price was appointed as CFO on the 09 April 2019.
2
As the remuneration for Mr. Matthew Price is denominated in British pounds, exchange rates of 1£/1.1€ and 1£/1.2€ have been used for
2020 and 2019 respectively. The dierence between 2019 and 2020 benefits received and benefits granted is due to the £/EUR exchange
rate.
3
Mr. Matthew Price was appointed as the Group Chief Financial Ocer eective 9 April 2019. His fixed remuneration for 2019 is therefore
prorated accordingly. Further, following his appointment to the Management Board in 2019, the fixed remuneration of Mr. Matthew Price
was increased eective 1 September 2019 and is prorated accordingly.
4
Based on a company performance achievement of 122% and a individual performance of 100% for 2020, resulting in an overall
achievement of 100%
5
The value of Long-Term Incentives are based on the fair value determined at the grant date. The first tranche of the grant under the 2019
LTIP which was made during the reporting period will vest on 30 April 2021 and remains subject to the holding period. The remaining
tranches will vest on 30 April 2022 and 30 April 2023 and are subject to the holding period.
.
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Included below is a breakdown of the pay-mix for the
Management Board members for actual total
remuneration received in the Financial Year 2020 as a
relative proportion of fixed and variable remuneration
displayed as comparison over the minimum and maximum
granted benefit and the actual benefits received during
the reporting period:
Management Board Remuneration Mix
Benefits Granted
Benefits
Received
2020 (Min.) 2020 (Max.) 2020
Christoph
Barchewitz
Fixed
Remuneration 100% 24% 70%
Variable
Remuneration 0% 76% 30%
Patrick
Schmidt
1
Fixed
Remuneration 100% 21% 67%
Variable
Remuneration 0% 79% 33%
Matthew Price
Fixed
Remuneration 100% 34% 69%
Variable
Remuneration 0% 66% 31%
1
The benefits granted under the 2016 LTIP and Legacy LTIP and
received by Mr. Patrick Schmidt during the reporting period are
not included in the Management Board Remuneration Mix for
2020 as such benefits relate to the period of 2013-2018,
inclusively, and are associated with Mr. Patrick Schmidt's role as
Chief Executive Ocer of The Iconic and not as the GFG
Co-CEO or Management Board member (see section "Benefits
granted and received in 2020 for previous financial years"). Such
grants are not recurring events and no further grants will be
made under the 2016 LTIP and Legacy LTIP. If the benefits
granted and received under the 2016 LTIP and Legacy LTIP
during the reporting period would be included, the
remuneration mix for Mr. Patrick Schmidt will consist of 9% fixed
remuneration and 91% variable remuneration.
The diverse footprint over which GFG operates, combined
with more than 13,700 employees and its decentralised
approach to defining appropriate remuneration, makes it
dicult for the Company to establish an average
remuneration for GFG for the purpose of comparing the
remuneration of the Management Board. GFG strives to
provide remuneration packages that are both competitive
externally and proportionate internally. For comparison
externally against peers that are comparable and
representative of the common market in which GFG
operates, the remuneration of the Management Board is
in line with market median total cash levels.
The Management Board focuses on driving the long-term
sustainable growth of the company aligning the interest
with those of its stakeholders, including shareholders. The
remuneration granted to the Management Board during
the reporting period relating to financial year 2020
(excluding the remuneration relating to previous financial
years granted to one member) aligned with our
Remuneration Policy with a fixed remuneration component
representing one third of compensation and two thirds in
variable pay consisting of STI and LTI for benefits granted.
Our approach aims to ensure that annual compensation is
competitive with the market whilst placing stronger
emphasis on long term compensation components to
enable our ongoing ability to attract, retain and motivate
the members of the Management Board. The sucient
emphasis in long term compensation focuses the eorts of
the Management Board on the achievement of objectives
culminating in sustainable value creation and delivery of
long-term returns for shareholders and other stakeholders.
Our pay-out structure aligns fixed remuneration and
performance-related remuneration with short- and long-
term focuses of the company through deferred
compensation and clawback and malus arrangements. The
remuneration policy also ensures alignment to our
company stance on upholding our vision, values and
behaviours expected and supports a progressive and
inclusive workplace.
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Benefits granted and received in 2020
for previous financial years
As previously disclosed in the 2019 Annual Report
1
the
Company intended to make certain awards to a member
of the Management Board under pre-IPO long-term
incentive plans. Such awards were made to Mr. Patrick
Schmidt during the reporting period and the vast majority
relate to previous financial years 2013 to 2018 during which
he held the role of Chief Executive Ocer of our ANZ
business THE ICONIC. A smaller portion relates to his role
of Co-CEO of Global Fashion Group during financial years
2018, 2019 and 2020.
The afore-mentioned awards include Synthetic Stock
Options under the 2016 LTIP with strike prices ranging
from €0.01 to €7.99, Regional Cash Awards under the 2016
LTIP converting into cash based on an achieved level of a
Management Performance Score (MPS) and Individual
Call Options under the Legacy LTIP.
The number of Synthetic Stock Options granted during the
reporting period under the 2016 LTIP relating to financial
years 2018, 2019 and 2020 are set out in the table below. As
the Synthetic Stock Options relate largely to previous
financial years and to quarters already elapsed, they have
been granted fully vested with the exception of 77,055
options which completed vesting by 31 December 2020.
2016 LTIP: Synthetic Stock Options
1
Patrick Schmidt (Co-Chief Executive Officer)
2
Exercise Price ( in € )
2020
Outstanding Number of Options at the
beginning of the reporting period € 0.01 € 1.00 € 5.99 € 6.15 € 7.99
Granted during the reporting period - 553
3
- - -
Vested during the reporting period 157,565 0 62,825 250,899 199,675
Forfeited/expired during the reporting period 157,565 0 62,825 250,899 199,675
Exercised during the reporting period - - - - -
Outstanding at the end of the reporting period - - - - -
Exercisable at the end of the reporting period 157,565 553 62,825 250,899 199,675
Total Remuneration 157,565 553 62,825 250,899 199,675
1
All stock options reported in this table are “synthetic” options by definition except the 553 stock options outstanding at the beginning and
at the end of the reporting period. Post IPO, all “synthetic” options have ceased to be synthetic and therefore the distinction between
synthetic and non-synthetic has ceased to exist. Consequently, for simplicity, the table refers to Synthetic Stock Options but this invariably
covers both.
2
The Synthetic Stock Options granted to Mr. Patrick Schmidt bring his remuneration in line with the one of Co-CEO
Mr. Christoph
Barchewitz who was granted a similar grant in size and value prior to the IPO .
3
This relates to stock options granted to Mr. Patrick Schmidt in 2015 relating to 2015-2018 inclusively when he was Chief Executive Ocer of
THE ICONIC. The stock options were fully vested at the start of the reporting period.
1
On Page 45 and 46
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The Synthetic Stock Options reported above hold a
maximum benefit of €3,008,316 based on fair market value
at time of grant which is similar to the maximum benefit
applicable to Mr. Christoph Barchewitz relating to the
same financial years of 2018, 2019 and 2020 as reported
in page 206 the Company’s IPO prospectus.
During the reporting period, 409,199 matured Regional
Cash Awards with a minimum value of €1 each were granted
and received by
Mr. Patrick Schmidt
in relation to his role as
CEO of THE ICONIC which he held during financial years
2015 to 2018. The Regional Cash Award units converted to a
value of €4,591,205 as a result of the application of the pre-
IPO defined management performance scores (MPS) of
12.48 and 2.75 which in turns are largely based on
THE ICONIC NMV performance during 2015-2018.
Mr.
Patrick Schmidt
received the value of €4,591,205 during the
reporting period in connection with such Regional Cash
Awards.
During 2020, Mr. Patrick Schmidt was granted 125,644
fully vested Individual Call Options relating to Mr. Patrick
Schmidt’s role as CEO of THE ICONIC for the years 2013
to 2015.
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The options were exercised by Mr. Patrick Schmidt during
the reporting period pursuant to his participation in the
pre-IPO Internal Liquidity Events resulting in a value of
€1,100,984 received by Mr. Patrick Schmidt in 2020.
The table below represents all the afore-mentioned
benefits granted and received by Mr. Patrick Schmidt in
2020 relating to previous financial years.
All the afore-mentioned benefits granted under the 2016
LTIP and Legacy LTIP received by
Mr. Patrick Schmidt
during
the reporting period are excluded from the Management
Board Remuneration Mix for 2020 presented in the previous
section “
Management Board Remuneration for Financial
Year
2020” as such benefits were granted in 2020 but were
intended already prior to the IPO as reported in the
Company’s prospectus and 2019 Annual Report. Such
grants are not recurring events and no further grants will be
made under the 2016 LTIP and Legacy LTIP. If we include the
benefits granted and received under the 2016 LTIP and
Legacy LTIP during the reporting period, the remuneration
mix for
Mr. Patrick Schmidt
will consist of 9% fixed
remuneration and 91% variable remuneration.
Patrick Schmidt (Co-Chief Executive Officer)
1
Year of Appointment to the Management Board: 2019
In €
Benefits Granted Benefits Received
2020 (Min.) 2020 (Max.) 2019 2020 2019
Long-Term Incentive
2
409,199 8,697,253 - 5,692,189 -
2016 LTIP 409,199 7,596,269 - 4,591,205 -
Synthetic Stock Options
3
- 3,005,064 - 0 -
Cash Awards
4
409,199 4,591,205 - 4,591,205 -
Legacy LTIP
5
- 1,100,984 - 1,100,984 -
Total (Long-Term Incentive) 409,199 8,697,253 - 5,692,189 -
1
Mr. Patrick Schmidt was appointed as Co-CEO on the 01 February 2018.Prior to that, he held the role of CEO of THE ICONIC from 2013
until January 2018.
2
The numbers disclosed under the Long Term Incentive relate to the contribution of Mr. Patrick Schmidt to prior financial years but for which
the grants and their receipt took place during the reporting period 2020.
3
The value of 2016 LTIP Synthetic Stock Options are based on the fair value determined at the grant date. The grant which was made during
the reporting period relates in large part to previous financial years 2018 and 2019 and a small portion relates to 2020. Such grant brings
the remuneration of Mr. Patrick Schmidt for such financial years in line with the one of Mr. Christoph Barchewitz who received a similar
grant prior to the IPO. All synthetic stock options are fully vested at 31 December 2020.
4
This Cash Award was granted and received during the reporting period but relates entirely to the contribution of Mr. Patrick Schmidt to
prior financial years 2015-2018 as Chief Executive Ocer of THE ICONIC.
5
This Legacy LTIP award was granted and received during the reporting period but relates entirely to the contribution of Mr. Patrick Schmidt to
prior financial years 2013-2015 as Chief Executive Ocer of THE ICONIC. During the reporting period these vested award was liquidated in full
by Mr. Patrick Schmidt following his participation in the pre-IPO Internal Liquidity Events.
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1.7.2
Supervisory Board Remuneration for
Financial Year 2020
The remuneration of the members of the Supervisory
board is established by the Shareholders of the Company
in accordance with its Articles of Association.
The remuneration of the Supervisory Board members was
approved at the Annual General Assembly of Shareholders
held on 26 June 2020, in which it was approved:
•
that each member of the Supervisory Board shall
receive an annual compensation of €35,000;
•
the Chairman of the Supervisory Board shall receive an
additional annual compensation of €45,000;
•
the Vice Chairman of the Supervisory Board shall
receive an additional annual compensation of €25,000;
•
the Chair of the Audit Committee shall receive an
additional annual compensation of € 40,000;
• the members of the Audit Committee shall receive an
additional annual compensation of €10,000;
• the Chair of the Sustainability Committee shall receive
an additional annual compensation of €35,000; and
•
the members of the Sustainability Committee shall
receive an annual compensation of €10,000.
The remuneration is payable in monthly installments
through the reporting period. The table below sets out the
total remuneration paid to each Supervisory Board
member individually for the 2020 financial year.
Supervisory Board member individually for the Financial Year 2020
Board
Member
Supervisory
Board
Audit
Committee
Sustainability
Committee
Total Remuneration
for Financial Year 2020
Cynthia Gordon Chairman - Member €90,000. Cynthia Gordon has waived her
entitlement to remuneration for the reporting
period. However, this waiver can be removed
for future reporting periods.
Georgi Ganev Vice
Chairman
- - €60,000. Georgi Ganev has waived his
entitlement to remuneration for the reporting
period. However, this waiver can be removed
for future reporting periods.
Alexis Babeau Member Chairman - €75,000
Victor Herrero Member Member Chairman €80,000
Carol Shen Member - Member €45,000
Laura Weil Member Member - €45,000
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Additionally, GFG reimburses the Supervisory Board
members their expenses related to their Supervisory
Board mandate. GFG also provides directors and ocers
insurance coverage for the Supervisory Board members
without any deductible payable by the Supervisory Board
member.
1.8 FINANCIAL REPORTING
At the AGM on 26 June 2020, Ernst & Young (“EY”) were
re-elected as the independent auditor of the separate and
consolidated financial statements. In preparation, Ernst &
Young presented a statement of compliance with the
relevant ethical requirements on independence and
disclosed that there are no business, financial, personal or
other relationships between the auditor, its governing
bodies and audit managers, on the one hand, and the
Company and its directors, on the other, which could give
cause to doubt the auditor’s independence.
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GROUP
MANAGEMENT
REPORT
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GROUP MANAGEMENT
REPORT
FUNDAMENTAL INFORMATION
ABOUT THE GROUP
2.1 BUSINESS MODEL AND
GROUP STRUCTURE
•
Leading fashion and lifestyle destination
in our 17 countries of operation.
•
Global business with deep local roots.
•
Connecting one billion potential consumers with
thousands of global, local and own brands via four
well established ecommerce platforms.
Business model
Global Fashion Group is the leading fashion and lifestyle
destination across its 17 countries of operation and four
main geographic regions: Latin America (LATAM), the
Commonwealth of Independent States (CIS), South East
Asia (SEA) and Australia and New Zealand (ANZ). As a
global business with deep local roots in markets with
diverse cultures and lifestyles, this diversity is at the heart
of the customer proposition and gives real meaning to the
Company’s Purpose of ‘True Self-Expression’. From its
people to customers and partners, the Company exists to
empower everyone to express their true selves. Covering
the entire value chain of an online retailer, GFG provides
customers with an inspiring and seamless shopping
experience from discovery to delivery.
GFG connects a population of one billion potential
consumers with thousands of global, local and own brands
via four well-established ecommerce platforms, each
operated under an individual brand name: Dafiti (in Brazil,
Argentina, Chile and Colombia), Lamoda (in Russia,
Belarus, Kazakhstan and Ukraine), ZALORA (in Singapore,
Hong Kong, Indonesia, the Philippines, Malaysia, Taiwan
and Brunei) and THE ICONIC (in Australia and New
Zealand). In markets with low online penetration and high
growth opportunities, GFG sets the benchmark in online
fashion and lifestyle, with the Vision “To be the #1
destination for fashion & lifestyle in growth markets”. The
Group’s deeply rooted local insights help to provide
inspiring and seamless customer experiences and the
Company is committed to doing this responsibly by being
people and planet positive across everything it does.
The Group’s customers are young, diverse, highly
engaged and digitally native. They are predominantly
female, and aged between 18 and 45 years. This customer
segment demonstrates an openness to purchasing
products online, their high level of engagement, their high
rate of mobile adoption, and their expected brand loyalty
as they mature and their purchasing power grows. With
approximately 47 million social media followers across the
top-five social media platforms in our markets, GFG’s
customers love interacting with its content and apps.
GFG oers customers an assortment that is both expansive
and relevant, reflecting the scale and diversity of its
markets. Covering all key fashion and lifestyle categories
such as apparel, footwear, accessories, kids and
sportswear, across a mix of thousands of global, local and
own brands, tailored to meet the aesthetic, cultural, sizing
and price preferences of its diverse customer base, the
Group’s assortment includes high-profile product lines
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that are co-developed with celebrities and local
influencers, and exclusive merchandise from some of the
world’s biggest fashion brands.
Products are sourced from brand partners via two
business models: Retail, where the inventory of products
sold to customers is owned by the Group, and
Marketplace, where brand partners list their products on
GFG’s apps and websites. During FY20, Marketplace
share grew by 10.3 percentage points, achieving a 31%
share of NMV. As the only online fashion and lifestyle
platform of scale across its markets, GFG facilitates
market entry for these brands and helps them overcome
the traditional challenges of customer acquisition,
logistics, infrastructure, geography and regulatory
processes. GFG assists its brand partners in developing
their overall ecommerce capabilities by providing distinct
Platform Services. These include: ‘Operations by GFG’
(fulfilment services for products that brands sell via
Marketplace or on their own online channels), ‘Marketing
by GFG’ (marketing services paid for by brands to
promote their product) and ‘Data by GFG’ (data analytics
with respect to customers, trac and product).
The Group’s operational infrastructure is fashion-specific,
highly ecient and scaled for growth. GFG operates nine
regional fulfilment centres with a total storage capacity
of over 36million items. Fulfilment practices are locally
tailored to each market and include a mix of own and
third-party last mile delivery, as well as local value-added
services such as try-on in Russia. Payment options are
also tailored to local customer preferences, with over 40
options available across GFG markets. Customer support
is provided in house 24/7 in the majority of markets and
in eleven dierent languages. This commitment to
delivering an outstanding shopping experience to
customers has yielded a consistently high net promoter
score (“NPS”) of around 80 over the last three years.
While the entire business is underpinned by technology,
it is the highly diverse team of more than 13,700 people —
with a passion for fashion and lifestyle and strong
capabilities across all of the disciplines needed to execute
the business model — with a unique combination of art and
science that brings about GFG’s compelling customer
proposition.
GFG’s data science teams are at the forefront of innovation,
creating smart solutions from deep and relevant insights.
The Group’s technology teams then use these insights to
build apps that leverage these insights to help improve
decision-making across the business on a daily basis.
Based on these foundations, GFG’s buying and
merchandising teams can plan, schedule and trade
assortments to match consumer preferences and oer
new impulses for style discovery. This proposition is then
delivered to customers via apps that oer inspiration and
style at your fingertips, through personalised browsing,
engaging content and relevant product recommendation.
Once an order is placed, flexible and fast end-to-end
delivery solutions track it from the moment of purchase
until arrival into the customer’s hands, supported by 24/7
customer service teams.
GFG’s teams also combine strong global expertise with
deep local know-how, with more than 99% of colleagues
based in countries of operation.
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Group structure
Global Fashion Group S.A. is a stock corporation (société
anonyme) under the laws of the Grand Duchy of
Luxembourg and registered in the Luxembourg Trade and
Companies Register (RCS B 190.907). GFG is domiciled in
Luxembourg with its registered oce located at 5,
Heienha L-1736 Senningerberg. Please refer to section
1.6 of the Group Annual Report for composition of
subscribed capital and own shares and refer to section 1.7
for shares awarded to employees.
The Company is the parent company of the Group. The
Group comprises all subsidiaries whose financial and
business policies can be controlled by the Company,
either directly or indirectly. The Group’s business is
conducted by the Company and its various subsidiaries.
As at 31 December 2020, 76 entities were consolidated in
the consolidated financial statements of the Group. See
note 7 in the notes to the consolidated financial statements
for more information.
Global Fashion Group S.A. (Luxembourg)
THE ICONIC
5
(Australia, New Zealand)
ZALORA
4
(Philippines)
Dafiti
1
(Brazil, Argentina,
Chile, Colombia)
Lamoda
2
(Russia, Belarus,
Kazakhstan, Ukraine)
ZALORA
3
(Hong Kong, Indonesia, Malaysia,
Singapore, Taiwan, Brunei)
100 % 100 % 100 % 100 %51 %
LATIN AMERICA CIS SOUTH EAST ASIA ANZ
1
Dafiti operations are conducted by GFG Comercio Digital Ltda. in Brazil, BFOOT S.R.L. in Argentina, Bigfoot ChileSpA in Chile
and Bigfoot Colombia SAS in Colombia.
2
Lamoda opertions are conducted by Kupishoes LLC in Russia, Belarus and Kazakhstan and Fashion Delivered LLC in Ukraine.
3
ZALORA operations are conducted by ZALORA (Hong Kong) Ltd. in Hong Kong, PT Fashion Eservices Indonesia in Indonesia,
Jade E-Services Malanysia SDN BHD in Malaysia and Brunei and Jade E-Services Singapore Pte. Ltd. in Singapore and Taiwan.
4
ZALORA Philippines operations are conducted by BF Jade E-Services Philippines Inc.
5
THE ICONIC operations are conducted by Internet Services Australia 1 Pty Ltd. in Australia and New Zealand.
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Business segments
The Group consists of four operating segments, which
also comprise its reportable segments: LATAM, CIS, SEA
and ANZ.
Management reporting was changed in Q2 2020 to include
a more granular view of the previous APAC segment, and
is now reported under two segments: SEA, representing
the operating activities of the ZALORA business and ANZ,
which represents the operating activities of THE ICONIC.
The respective results for 2019 have been re-presented
accordingly. Each operating business of the Group is the
leading online fashion retailer in its respective region
1
.
1
Source: Euromonitor International
LATAM
GFG operates under the Dafiti brand, launched in 2011, in
Brazil, Argentina, Chile and Colombia.
CIS
GFG operates under the Lamoda brand, launched in 2011,
in Russia, Belarus, Kazakhstan and Ukraine.
SEA
GFG operates under the ZALORA brand, launched in
2012, in Singapore, Hong Kong, Indonesia, the Philippines,
Malaysia, Taiwan and Brunei.
ANZ
GFG operates under THE ICONIC banner, which was
launched in late 2011, in Australia and New Zealand.
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2.2 CORPORATE STRATEGY
AND TARGETS
Guided by its purpose of ‘True Self-Expression’ and vision
of being the #1 fashion and lifestyle destination in its
markets, GFG is the leading player in 17 high-growth
markets, where fashion and lifestyle
spending is expected to benefit from
positive demographic changes and an
accelerating shift from oine to online.
COVID-19 has had a significant impact on the global fashion
and lifestyle sector. The latest data from Euromonitor
indicates that in 2020 these 17 markets accounted for
€251 billion of the global market for fashion and lifestyle
(online and oine combined), down from €320 billion in
2019. Ecommerce has benefited from changes in customer
behaviour with the online fashion and lifestyle market in
GFG served regions growing over 40% in 2020 to €32 billion.
The Company’s experience during 2020 demonstrates that
the online fashion and lifestyle market provides the market
leaders with significant competitive advantages.
GFG intends to leverage its market-leading positions, scale,
local know-how and operational excellence through four
strategic priorities:
1. Inspiring and seamless
customer experience
Category expansion is a source
of penetration upside
The primary driver for category expansion is an
improvement in the customer experience, listening
carefully to customers and expanding into categories that
they indicate are in demand. In addition, GFG leverages
its existing technology, fulfilment and customer service
infrastructure to expand into adjacent product categories
and segments, such as accessories, beauty, kids and
home, where penetration remains significantly below that
of apparel or footwear. The Group is also broadening its
sportswear oering by adding additional merchandise to
grow this rapidly evolving category.
Enhancing the customer experience by
leveraging technology and innovation
GFG creates an inspiring and seamless shopping
experience for its customers, oering an unparalleled,
relevant and broad assortment across fashion and lifestyle
categories. Based on its vast and rich data, the Group
provides customers with a highly personalised and
inspiring shopping experience. As more data is collected,
products can be further tailored to optimise the
assortment oered, including private label, and improve
the personalisation, convenience and presentation of
products.
The Group sees opportunities to improve customer
convenience by enhancing its operational infrastructure.
For example, in Brazil, most returns are currently handled
by the local mail service, which requires customers to
queue at a local post oce to post the items to be
returned. GFG believes that the lack of a more convenient
return service negatively aects conversion rates.
Accordingly, Dafiti is working with delivery partners to
establish drop-o points that provide customers with a
more convenient way of returning products.
GFG benefits from strong customer and brand partner
flywheel eects. Its assortment and customer experience
attract a growing number of new customers and has the
opportunity to increase repeated orders by existing
customers, which helps the Group benefit from economies
of scale. In turn, it can make more investments into
selection, which increases relevance with key brands.
Increased relevance with brands enables the Group to
include better products in its assortment and achieve
higher margins. These eects are reinforced by the
utilisation of technology and investments in data analytics.
Our purpose
is "True Self-
Expression"
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GFG creates an
inspiring and
seamless shopping
experience for its
customers
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2. Strategic partner of choice
for brands
Partnership models enhance
business scalability
For brand partners, GFG oers instant access to highly
engaged audiences in large and growing fashion markets,
along with flexible and tailored support in selling their
products to customers. The Group purchases products
from them in the anticipation they will enjoy strong
demand across markets, but also give brands access to the
GFG Marketplace, where they act as third-party sellers via
GFG’s apps and websites.
Third-party Marketplace sellers are supported with
additional services, such as content production,
warehousing, delivery and customer service. Marketplace
allows GFG to provide a broader assortment of products,
including new products with an unpredictable sell through
rate. The Group earns commission, set as a percentage of
the relevant sales price, which increases with the level of
services provided. In 2020, the average Marketplace
commission was 31% (2019: 32%).
As products sold through Marketplace are not purchased
in advance, GFG incurs insignificant costs of sales and
does not bear inventory risk. Depending on what services
are provided to the respective brand e.g. warehousing
and/or delivery, the Group may incur fulfilment expenses.
Reported revenue from the sale of products is significantly
lower in Marketplace. Accordingly, shifts in the relative
proportion of sales to Marketplace would lead to a
decrease in revenue as a percentage of NMV, but an
increase in gross margin. In order to eliminate the impact
of shifts between Retail and Marketplace sales, the Group
regards the development of NMV, which reflects the value
of goods sold over its platform, as a key performance
metric, irrespective of which model those sales came from.
3. Scalable operations and
proprietary technology
Grow the Platform Services business
The Group leverages its infrastructure to support brands
that sell products through their own websites but are
unable to fulfil those customer orders, by providing
ancillary services such as storage or delivery, or media
solutions to market their brands, derived from the trac
coming to GFG’s platforms. GFG intends to deepen the
services oered, enabling stronger relationships with
current brand partners and to attract new brand partners
to join the GFG ecosystem. Increased participation of
Platform Services allows the Group to better utilise its
existing resources, and generate additional revenue
without incurring significant additional expenses.
Potential to expand and adapt the
Group’s geographic footprint
Changes in the various regional markets in which the
Group operates are closely monitored, as are geographic
expansion opportunities, though they are not core to the
Company’s growth strategy. However, with operations
built for scale and capable of expansion, entry into
adjacent or nearby markets within an existing region could
be a possibility at some point in the future.
Growth through technology
Advances in technology, including app innovation and
proprietary machine-learning algorithms, drive continued
growth by increasing eciency and automation in digital
marketing, product, shipping, pricing, catalogue, sorting
and inventory reordering. Management believes that key
trends in fashion ecommerce include warehouse
automation, seamless partner integration, customer
experience improvements and artificial-intelligence based
optimisation. New technology will reduce friction and
drive loyalty through improved size and fit guidance and
will further facilitate shopping and delivery, thus enhancing
operational eciency.
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Technology drives greater personalisation, more engaging
customer front-ends, modular solutions for brands and
ecient operations in the back-end. The Group’s scalable,
custom-built technology platforms are integrated across
regional operations and reflect the global and local nature
of GFG. A predominantly in-house technology platform
was developed in a localised manner with technology
stacks tailored to each major market. This enhances
flexibility and enables the business to quickly respond to
local expectations and regulatory requirements. A growing
global toolkit of advanced centralised solutions, including
our global Marketplace platform for brands (SellerCenter),
pricing tools and business intelligence tools works with the
Group’s localised technology stacks.
Further enhance our financial profile
Over time, the Company intends to further improve its
financial profile, including driving market share with a long-
term target for organic annual NMV growth of 25% on a
constant currency basis. The Group continues to increase
the share of Marketplace to expand selection and reduce
inventory risk, with an additional benefit of an increased
gross margin. The Group also focuses on further improving
unit economics, increasing customer loyalty and driving
customer order frequency. Further drivers include
operating leverage of administrative expenses, as well as
investments into technology and fulfilment infrastructure
to improve the customer experience and operating
eciency, improving the Company’s profitability.
4. People and Planet Positive.
Worldwide.
The implementation of the Group’s People and Planet
Positive commitments has remained a key priority during
the year and in the GFG People & Planet Positive Report
2020, released alongside this report, the Group
significantly steps up its transparency of its activities in this
area.
The Group’s ethical trade framework has continued to be
implemented despite the physical limitations created by
COVID-19, with supplier training on the Group's standards
also continuing and the own-brand factory lists of each
region now available online. Significant progress has been
made across the Group on the transition to environmentally
preferred packaging, mapping the Group’s carbon
footprint and increasing the volume of waste recycled.
Own-brand ranges made of more sustainable materials are
now available in SEA, complementing those already
available in ANZ. A sustainable shopping edit, which
curates products with a benefit to humans, animals or the
environment when compared with conventional products,
is now available in all regions and there has been a
significant increase in the assortment available that meet
these specific criteria. The Group formalises its Diversity,
Inclusion and Belonging framework for the first time and
releases associated targets. More information on GFG’s
commitments are reported separately in the Group’s
People & Planet Positive Report, which is published
alongside this report and covers:
• Our approach to our People & Planet Positive agenda,
including strategy and materiality;
• Our People, including diversity, inclusion and
belonging and responsible workplace;
• Our Supply Chain, including Ethical Trade;
• Our Operations;
• Our Community; and
• Governance, Risk & Compliance.
OTHER NON-FINANCIAL
INFORMATION
Other non-financial information, such as environmental,
social, human rights and the fight against corruption, is also
contained in the Group’s People & Planet Positive Report
which is available on our website.
2.3 INTERNAL MANAGEMENT
SYSTEM
The Management Board is responsible for steering the
Group both on a segmental level (i.e. LATAM, CIS, SEA and
ANZ) and at a consolidated Group level.
The Group’s key performance indicators include NMV,
Revenue, Adjusted EBITDA and Capex along with the
number of Active Customers, NMV per Active Customer, the
number of Orders, Order Frequency and the Average Order
Value.
2.4 EMPLOYEES
At the end of 2020, the GFG team consisted of 13,751
employees (2019: 12,828), representing a year-on-year
increase of 7%. The average headcount increased to 13,291
employees, driven mainly by the development of
warehouse, fulfilment and delivery capabilities across the
Group.
2.5 RESEARCH AND
DEVELOPMENT
An experienced global team of more than 900 engineers,
product managers and data scientists develop, operate
and maintain a scalable, custom-built technology platform
that is integrated across the operations within each region,
and reflects both the global and local nature of the Group’s
business. Technology stacks are tailored to each major
market, and provide substantial flexibility, enabling GFG
to eciently respond to local business expectations and
regulatory requirements.
In order to continuously strengthen the team’s presence in
each region, a global technology talent pool is maintained.
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An experienced global
team of more than 900
engineers, product
managers and data
scientists develop,
operate and maintain
a scalable,
custom-built
technology platform.
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REPORT ON ECONOMIC POSITION
2.6 MACROECONOMIC
AND SECTOR-SPECIFIC
ENVIRON MENT
GFG operates in the online fashion and lifestyle market in
17 countries. The Group’s revenue and profitability depend
on the conditions and outlook of these markets, including
macroeconomic conditions, the overall fashion and
lifestyle sector, and within this sector, development of the
online channel.
The COVID-19 pandemic has had a significant impact on
global activity. A notable eect to general economic
activity during 2020 was a reduction in productivity as
surviving businesses increased necessary workplace
safety and hygiene practices. For economies that had less
success in controlling the virus, strict lockdown measures
imposed further strains on economic activity. The impact
of government interventions aected macroeconomic
conditions across our markets at dierent times and with
dierent consequences throughout 2020. According to
IMF estimates, real GDP experienced negative growth in
all four of our geographic reporting segments. In Australia,
Brazil and Russia, the largest countries by revenue in the
Group, GDP contracted by 2.5%, 4.5% and 3.6%
respectively
1
. The economic outlook for 2021 suggests
multiple vaccine approvals and the launch of vaccination
programmes in some countries will support a recovery,
but this optimistic outlook has been softened by surges in
virus cases, increased transmissibility from new strains and
further national lockdowns in late 2020. Positive real GDP
growth is expected for every country of operation in 2021.
Since GFG’s operations are predominantly in countries
outside of the eurozone, the majority of its revenues and
costs are denominated in currencies other than the euro
(EUR). GFG is therefore exposed to fluctuations in the
values of these currencies relative to the euro. In 2020,
GFG’s largest net foreign currency exposures were to
the United States dollar (USD), pound sterling (GBP),
Russian ruble (RUB), Australian dollar (AUD) and the
Brazilian real (BRL).
While GFG’s reported revenues and NMV are impacted
by changes in the value of foreign currencies relative to the
euro, in 2020 more than 86% of our cash flows in our four
operating segments were naturally hedged, as local
currency revenues are typically matched against a local
currency cost base.
Within GFG’s footprint, online sales in the fashion and
lifestyle sector are expected to outperform the overall
sector, with an annual growth rate of 13% from 2020 to
2024. With a market volume of €32 billion in 2020, online
sales comprised only 13% of total spend in the fashion and
lifestyle sector. Given online penetration of the fashion and
lifestyle sector was 31% in the US, 30% in China and 22% in
Western Europe in 2020, we believe this indicates significant
headroom to grow online penetration in our markets
2
.
1
Source: IMF World Economic Outlook Update, January 2021.
2
Source: Euromonitor International.
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The overall fashion and lifestyle sector in GFG’s geographic
footprint is expected to develop favourably with an
estimated annual growth rate of 10% from 2020 to 2024.
This growth rate is considerably higher than the annual
growth rate forecast of 6% over the same period for
developed markets such as the United States (“US”) and
Western Europe
3
. This growth rate dierential is driven by
the demographic trends in our regions, which include a
relatively fast growing population and an expanding
middle class with growing purchasing power.
GFG’s markets are at an earlier stage in the structural shift
of fashion and lifestyle spend from oine to online than
either the US and Western Europe, and there are several
factors in our markets that support this ongoing shift:
• A population that is on average younger than that in
the US and Western Europe, and has favourable
smartphone and online shopping habits;
• A significantly smaller bricks-and-mortar fashion retail
oering in our markets;
• The demonstration that other verticals have already
reached higher online penetration levels, with
consumer electronics and appliances achieving good
growth in their categories; and
• The ongoing dismantling of traditional barriers to
ecommerce adoption such as: low consumer trust in
online shopping, underdeveloped delivery
infrastructure, and the lack of online presence by
international brands.
Given GFG’s early entry into its markets, it has the
opportunity to be one of the major beneficiaries of these
developments. GFG is the market leader in its sector and
footprint, and will continue to focus on growth and gaining
further market share.
3
Source: Euromonitor International.
2.7 SIGNIFICANT EVENTS IN
THE REPORTING PERIOD
While the Group was trading in line with management
expectations until mid-March, results were negatively
impacted across each of the regions at
dierent times by the COVID-19
pandemic and currency headwinds. GFG
then experienced a strong recovery in
sales from late April, which was driven by
strong performance in CIS and LATAM
and increased Marketplace participation.
Initially, ANZ saw soft trading but this recovered significantly
over the balance of the year and ANZ delivered positive
growth for FY20. GFG’s major fulfilment centres in Australia,
Malaysia, Brazil and Russia operated without interruptions.
Only fulfilment centres in Argentina and the Philippines
were temporarily closed, for around c.70 days in aggregate,
resulting in a minor financial impact as order deliveries were
delayed until the re-openings in late April.
The Group rapidly adapted by focussing on the health and
safety of its employees and customers, working closely
with brand partners to maximise the relevance of the
assortment oered, pivoting toward "lockdown"
categories, driving increased Marketplace adoption and
accelerating customer acquisition, with 7.7 million new
customers shopping on GFG platforms for the first time in
2020. As a result, Active Customers increased by c.50%
more in 2020 than they did in 2019 to 16.3 million.
Customers made 42 million orders, which were fulfilled
under stringent health & safety measures often surpassing
those imposed by local authorities.
There were no material rental concessions or lease
modifications during the year and there was no significant
increase in credit risk linked to trade receivables despite
the backdrop of economic uncertainty in GFG markets.
On 18 November 2020, the Group increased its issued
share capital, with 16.5 million new common shares being
placed with institutional investors at a placement price of
€7.30 per share.
A Year of
operating in
a world with
COVID-19
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The Group received net proceeds of €119.4 million from
the share issue. The net proceeds are intended to be used
to further accelerate the delivery of the Group’s mid-term
growth strategy by additional investments in its customer
value proposition, technology platform, delivery
infrastructure and for general corporate purposes.
2.8 FINANCIAL
PERFORMANCE
The variance in revenue and margin over the course of the
year reflects the seasonality of fashion sales and the variable
impact of COVID-19 across the year. The Group’s presence
in the northern hemisphere (CIS), southern hemisphere
(Australia, New Zealand and Brazil)
and also countries that cross the
equator including South East Asia and
Colombia, smooth out the seasonal
risks of being concentrated in one
geography. New season collections
drive most sales in the second and
fourth quarters, with the first and third quarters focusing on
end-of-season sales and stock clearance.
The results for the year ended 31 December 2020 show
continued strong revenue growth and the Group’s first full
year of Adjusted EBITDA profit. Please refer to section 4
for the Group consolidated financial statements.
Results of operations
In €m
For the year
ended 31 Dec % change
2020 2019
Revenue
1,359.7 1,346.0 1.0
Cost of sales
(773.5) (806.2) 4.1
Gross profit 586.2 539.8 8.6
Selling and distribution
expenses (447.7) (455.2) 1.6
Administrative expenses
(194.4) (193.4) (0.5)
Other operating income
7.2 15.1
Other operating
expenses (14.4) (27.5)
Net impairment losses of
financial assets (1.7) (3.9)
Loss before interest
and taxes (64.8) (125.1) 48.2
Result from investment
in associate (0.1) 3.2
Finance income
2.1 18.5
Finance costs
(46.3) (14.7)
Result from indexation
of IAS 29 Hyperinflation 1.2 1.6
Loss before tax (107.9) (116.5) 7.4
Income taxes
(4.5) (28.1)
Loss for the year (112.4) (144.6) 22.3
The Group's first
full year of
Adjusted EBITDA
profit
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Adjusted EBITDA bridge
In €m
For the year
ended 31 Dec % change
2020 2019
Earnings before interest
and taxes (64.8) (125.1) 48.2
Depreciation and
amortisation
1
66.3 61.6
EBITDA 1.5 (63.5) 102.4
Share-based payment
expenses 14.9 5.2
One-o costs
and income
2
- 21.2
Adjusted EBITDA 16.4 (37.1) 144.2
1
Including depreciation on IFRS 16 right-of-use assets.
2
One-o costs and income include costs relating to the IPO,
historical tax adjustments, costs relating to the wind-down of
Lost Ink Limited and non-trading income.
Key Group Figures
GFG’s key performance indicators include NMV, Revenue,
Adjusted EBITDA, Capex, along with the number of Active
Customers, the NMV per Active Customer, number of
Orders, Order Frequency and Average Order Value. See
section 7.1 Financial Definitions for key performance
indicator definitions.
Financial summary and key
performance indicators
For the year
ended 31 Dec
2020 2019
Financial performance
Revenue (€m)
1,359.7 1,346.0
Growth at constant currency (%)
15.3% 17.2%
Gross Profit (€m)
586.2 539.8
Loss before interest and taxes
(EBIT) (€m) (64.8) (125.1)
Loss for the year (€m)
(112.4) (144.6)
Adjusted EBITDA (€m)
16.4 (37.1)
Adjusted EBITDA
(as % of revenue) 1.2% (2.8%)
Capex (€m)
48.7 72.1
Financial position and cash flow
Net working capital (€m)
(1.4) (12.0)
Cash and cash equivalents (€m)
366.1 277.3
Pro-forma cash (€m)
372.4 300.8
Group KPIs
NMV (€m)
1,958.2 1,777.8
Growth at constant currency (%)
25.7% 23.0%
Active Customers (in millions)
16.3 13.1
NMV / Active Customer (€)
120.3 136.1
Number of Orders (in millions)
42.0 34.6
Order Frequency
2.6 2.6
Average Order Value (€)
46.6 51.3
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Growth of Revenue
The strong growth in NMV delivered solid revenue growth.
In 2020, revenue grew by 15.3% on a constant currency
basis, increasing by €13.7 million to €1,359.7 million (2019:
€1,346.0 million).
GFG continues to be at the forefront of defining what an
inspiring customer experience looks like in its markets. In
2020, GFG’s strategy of oering a broad assortment
evolved with a significant increase in Marketplace
participation, more exclusive global brand collaborations
and continuing to oer customers increasing ways of
shopping sustainability.
GFG benefited from lower return rates during the year as a
result of lockdown measures introduced by governments
across the markets in which GFG operates and as a result of
a mix shift into categories less likely to be returned e.g., from
occasion wear to sports and homewares. The approximate
benefit to fulfillment costs from these lower return rates
during the year was €5-6 million.
Technology innovations focused on app functionality
continue to deliver new levels of customer engagement
and strengthen GFG’s app-first approach. Apps generated
59% of NMV in the year, up 8 percentage points compared
to 2019.
Growth of revenue
1
(€m)
2019 2020
1,346.0
1,359.7
15.3 %
1
Constant currency basis
Improvements to Adjusted EBITDA
While not statutory measures under IFRS, management
considers Adjusted EBITDA and Adjusted EBITDA margin
as key performance indicators to assess the underlying
operating performance of the business. See the Financial
Definitions in Section 7.1 for further details.
In 2020, the Group generated Adjusted EBITDA of
€16.4 million (2019: €37.1 million loss). Adjusted EBITDA
margin was 1.2% (2019: (2.8)%), as a result of increased
Marketplace participation, a small improvement to the
retail gross margin, sales to newly acquired customers,
reduced marketing costs during the pandemic and further
leverage of technology and administrative costs as the
business continues to grow.
Adjusted EBITDA excludes an expense for share-based
payments of €14.9 million (2019: €5.2 million). The increase
in the share-based payment expense for the year relates
to the awards being linked to the Group share price which
improved by 340% over 2020.
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Loss for the year
In 2020, loss for the year decreased by 22% to €112.4 million
(2019: loss €144.6 million). Within loss for the year, finance
costs were €46.3 million (2019: €14.7 million) driven mainly
by foreign currency exchange losses of €31.9 million (2019:
foreign currency exchange gain of €13.3 million). Losses
before interest and taxes of €64.8 million improved by
48% compared to 2019.
Analysis of Adjusted EBITDA (€m)
2019 2020
(37.1)
16.4
Growth of NMV
In 2020, NMV grew by 25.7% on a constant currency basis,
to €1,958.2 million (2019: €1,777.8 million).
The growth in NMV was as a result of an increase of 25% in
Active Customers to 16.3 million, and NMV per Active
Customer rising by 1% on a constant currency basis to €120,
underpinned by our leading customer experience.
Customer orders were up by 21% to 42.0 million (2019:
34.6 million) in FY 2020, and on average customers
purchased 2.6 times per year (2019: 2.6 times), a decrease
of 3%.
Technology innovations focused on app
functionality have delivered new levels of
customer engagement and strengthened
GFG’s app-first approach. 59% of NMV in
2020 was generated through our apps
(2019: 50%), an increase of 8 percentage points compared
to last year.
Marketplace continues to show strong growth, and now
represents 31% of NMV, an increase of 10 percentage
points compared to last year.
Marketplace
now 31% of
NMV
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2.8.1 Report by Segment
The Group is organised into four main business segments;
LATAM (Dafiti), CIS (Lamoda), SEA (ZALORA) and ANZ
(THE ICONIC). The column ‘Other’ includes headquarter
and other business activities.
Segment Growth for the Year
NMV growth was strong across all regions. CIS and LATAM
delivered strongest NMV growth of 32.3% and 30.9%
respectively. SEA and ANZ delivered 27.0% and 4.8%
growth on a constant currency basis.
The highest revenue growth was seen in SEA and LATAM,
at 21.2% and 20.8%, respectively, on a constant currency
basis. CIS and ANZ also delivered revenue growth of 17.4%
and 0.5%, respectively. Revenue growth was lower than
NMV growth for the year in all segments due to the
acceleration of Marketplace participation, driven mainly
by LATAM, CIS and ANZ.
CIS delivered the highest growth in gross margin,
increasing 4.7 percentage points year-on-year, driven
by a 4.1 percentage point improvement due to
Marketplace share. LATAM gross margin increased by
3.2 percentage points also as a result of increased
Marketplace participation, with retail margin neutral
compared to last year. SEA gross margin improvement
of 0.8 percentage point was split equally between
Retail and Marketplace. ANZ gross margin improved
by 1.3 percentage points with 0.8 percentage points
due to increased Marketplace share.
Segment Results of the Group Year 2020
In €m LATAM CIS SEA ANZ
Total Fashion
Business Other Reconciliation Total
Revenue 372.7 453.3 274.9 259.2 1,360.1 23.3 (23.7) 1,359.7
Gross profit 164.7 213.2 88.8 121.2 587.9 21.9 (23.6) 586.2
% Margin 44.2 47.0 32.3 46.8 43.1
Net Merchandise
Value 575.3 686.9 342.2 353.8 1,958.2 1,958.2
Segment Results of the Group Year 2019
In €m LATAM CIS SEA ANZ
Total Fashion
Business Other Reconciliation Total
Revenue 401.4 442.9 237.6 263.8 1,345.7 27.8 (27.5) 1,346.0
Gross profit 164.6 187.2 74.9 120.2 546.9 19.7 (26.8) 539.8
% Margin 41.0 42.3 31.5 45.5 40.1
Net Merchandise
Value 557.8 598.7 276.3 345.1 1,777.8 - - 1,777.8
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2.8.2 Cash flows
The liquidity and cash position of the Group is presented
in the following summary consolidated statement of cash
flows:
In €m
For the year
ended 31 Dec
2020 2019
Net cash generated from /
(used in) operating activities 30.3 (68.9)
Net cash (used in) / from
investing activities (33.5) 63.5
Net cash from
financing activities 106.5 169.5
Change in cash and
cash equivalents 103.3 164.1
Exchange-rate related
and other changes in cash
and cash equivalents (14.5) 8.2
Cash and cash equivalents at the
beginning of the year 277.3 105.0
Cash and cash equivalents
at the end of the year 366.1 277.3
In 2020, GFG generated cash flow from operating activities
of €30.3 million (2019: used €68.9 million). The
improvement on cash used in operations was mainly
driven by the cash benefit of the first full year of EBITDA
profitability, movements in VAT and other tax receivables,
deferred income and liabilities from store credit and the
reduction of inventory intake, partially oset by changes
in foreign currency exchange rates.
Net cash outflow from investing activities is due to the
additions made during the year to property, plant and
equipment and intangible assets, partially oset by
movements in restricted cash. Similar investments In 2019
were partially oset by the net cash inflow from the
disposal of the Middle East business. During the year, the
Group acquired property, plant and equipment with a
total cost of €28.9 million (2019: €45.8 million). These
investments primarily relate to assets in the course of
construction and oce and IT equipment. The Group
acquired intangible assets with a total cost of €20.6 million
(2019: €20.9 million) of which €13.7 million (2019:
€19.9 million) were internally developed intangible assets
capitalised in accordance with the recognition criteria of
IAS 38, Intangible Assets.
Net cash from financing activities relates primarily to
inflows from the share placement in November of
€119.4 million. This was partially oset by IFRS 16 lease
payments of €22.5 million (2019: €20.5 million).
Cash flow benefit from
first full year of EBITDA
profitability
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2.8.3 Financial position
The Group’s financial position is shown in the following
interim condensed consolidated statement of financial
position.
Assets
In €m
For the year
ended 31 Dec Change
2020 2019
Non-current assets
468.5 552.3 (15.2)%
Current assets
704.6 652.2 8.0%
Total assets 1,173.1 1,204.5 (2.6)%
Equity and Liabilities
In €m
For the year
ended 31 Dec Change
2020 2019
Equity
619.4 649.5 (4.6)%
Non-current liabilities
104.8 98.9 6.0%
Current liabilities
448.9 456.1 (1.6)
Total equity and
liabilities 1,173.1 1,204.5 (2.6)%
Total assets of the Group decreased by €31.4 million when
compared with 31 December 2019, primarily due to
unfavourable changes to foreign currency exchange rates.
Right of use assets relating to leases entered into by the
Group increased compared to the prior year due to lease
additions across fulfillment centres, oce space and
pick-up points.
The net book value of right-of-use assets as at
31 December 2020 was €104.3 million (2019: €95.2 million).
Total lease liabilities of €113.7 million (2019: €106.1 million),
net of lease repayments and interest, are split between
non-current and current lease liabilities on the
consolidated statement of financial position.
In 2020, Capex additions were €48.7 million (2019:
€72.1 million) and primarily related to the Group’s
continuous investment in its delivery and fulfilment
infrastructure, assets in the course of construction, and
oce and IT equipment along with intangible assets.
Inventories decreased by €38.1 million to €195.9 million
(2019: €234.0 million), €37.7 million of which relates to the
devaluation of key trading currencies.
Pro-forma cash increased from €300.8 million to
€372.4 million as a result of proceeds from the November
capital raise. Net proceeds of €119.4 million were partially
oset by capital expenditure and operational outflows
during the year. Included within the year end pro-forma
cash balance is €6.3 million (2019: €23.5 million) of
restricted cash related to the Group’s debt facilities. Equity
decreased by €30.1 million, primarily as a result of losses
incurred for 2020 and negative translation adjustments.
This was partially oset by increased share premium
following the capital raise in November.
Non-current liabilities increased to €104.8 million (2019:
€98.9 million), €94.2 million (2019: €82.9 million) of which
represents the non-current portion of lease contracts
under IFRS 16, discounted to present value.
At 31 December 2020, current liabilities were €448.9 million
(2019: €456.1 million), a decrease of €7.2 million. Trade
payables and other financial liabilities decreased by
€27.8 million, reflecting the impact of seasonality on the
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Group’s working capital, partially oset by an increase in
non-financial liabilities of €18.9 million. The eect of
foreign currency exchange rate changes on trade payables
and other financial liabilities during the year was a decrease
of €46.6 million.
2.9 COMPARISON OF
ORIGINAL GROUP
GUIDANCE AND
ACTUAL 2020 FIGURES
2020 has been a strong year for the Group, as it has
delivered on its market guidance for the year, which was
upgraded twice, on all key performance metrics. The table
below summarises the actual results versus guidance.
FY 2020
In €m FY 2020 Guidance
Revenue (€m) 1,359.7 €1.3bn
NMV (€m) 1,958.2 Over €1.9bn
Growth (%) 26% Around 25%
Adj. EBITDA (€m)
16.4 At least €10 million
Adj. EBITDA
margin (%)
1.2%
Capex (€m)
48.7
Around €45
million
2.10 OVERALL ASSESSMENT
OF THE ECONOMIC
POSITION BY THE
MANAGEMENT BOARD
The Management Board is pleased with the positive
business developments in the 2020 financial year, and the
adaptability of our teams during the pandemic. The Group
increased its Revenue and NMV in line with management
guidance and the Group became profitable at an Adjusted
EBITDA level for the first time on a full year basis.
2.11 REPORT ON POST
BALANCE SHEET EVENTS
On 3 March 2021, Global Fashion Group S.A. launched an
oering of approximately €375 million Convertible Bonds.
The Convertible Bonds are expected to be issued by the
Company on or around 15 March 2021, at 100% of their
principal amount with a denomination of €100,000 each
and will be redeemed at their principal amount on
15 March 2028, unless previously converted, redeemed or
repurchased and cancelled. The bonds were successfully
placed on 4 March 2021.
There are no other events subsequent to the year end that
would require a disclosure in the consolidated financial
statements.
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REPORT ON RISKS
AND OPPORTUNITIES
GFG acknowledges that risks are an ordinary and inherent
part of conducting business and the realisation of
shareholder value. GFG seeks to identify, understand and
proactively manage risks in order to realise its business
objectives and minimise volatility.
GFG recognises that risk management is an integral part
of good corporate governance and business practice, and
that it underpins good decision making, the ecient
allocation of resources and ultimately the successful
execution of its strategy.
Following the IPO in July 2019, GFG is currently
rationalising and optimising its risk management
approach. Periodic reviews of the Risk Management
strategy are undertaken to ensure that the Management
Board are comfortable that the approach continues to be
in line with expectations.
•
GFG operates a risk management approach
anchored to the ISO 31000 standard. Through this
approach risks are identified, evaluated, treated
and monitored in accordance with the Group's risk
appetite and objectives.
•
GFG has implemented a range of controls over
financial reporting which are reviewed through an
annual programme of self-assessment, with further
independent validation conducted by the Internal
Audit team.
•
In addition to areas that present a risk to the Group
achieving its objectives, GFG seeks to identify,
through its risk management process, areas that
may present business opportunities.
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2.12 RISK MANAGEMENT
GFG Risk Management Framework
GFG adopts the ISO 31000:2018 methodology for
Enterprise Risk Management. This risk management
system can be broadly characterised into three parts:
1. Principles of Risk Management;
2. Risk Management Framework; and
3. Risk Management Process.
1. Principles of Risk Management
The purpose of risk management is the creation and
protection of value.
It improves performance, encourages innovation and
supports the achievement of our objectives. This is the
benchmark for risk management that GFG has set for itself
and will be referred back to at every step of the process.
GFG’s risk management principles align with this
benchmark and provide guidance on the characteristics
of eective and ecient risk management, communicating
its value and explaining its intention and purpose across
the Group.
At their essence the principles allow GFG to manage the
eect of uncertainty on its objectives.
2. Risk Management Framework
The purpose of the framework is to assist GFG in
integrating risk management into its significant activities
and functions.
The components of the framework and the way in which
they interact are customised to the needs of the Group
and driven to success through leadership and
commitment. This can take many forms but is best
described as a dedication to implementing all
components of the framework supported by the
provision of adequate resources.
The framework emphasises that risk management is a core
responsibility and articulates a PDCA risk management
cycle:
P – Plan (Design)
D – Do (Implement)
C - Check (Evaluate)
A - Act (Improve/Integrate)
This establishes a simple but eective motion for risk
management that emphasises its on-going nature and the
need for continuous adaptation and improvement.
3. Risk Management Process
The risk management process involves the systematic
application of the risk management approach i.e.
identifying, analysing, evaluating, treating, monitoring and
recording risk. This is completed annually.
Risk Identification
In order to identify risks and opportunities, a range of
techniques are employed to uncover uncertainties that
may aect one or more objectives. These include, but are
not limited to threats & opportunities, changes in internal
or external context, indicators of emerging risks, limitations
and biases.
When identifying risk, GFG looks at the cause, risk and
consequence in order to form a complete understanding
of the nature of risk before factoring in any control
measures that may already be in place. In this way the
identification phase provides a holistic view on each and
every risk.
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Risk Analysis
Once identified, risks are then analysed to provide a
meaningful comprehension of the nature and
characteristics of said risks, including an analysis of the
level of risk. This is achieved by plotting each risk on a
matrix applied consistently across the Group.
Risk Evaluation
Following prudent analysis, risks are then evaluated in
order to support decision making with regard to any
actions that need to be taken. Evaluation will identify what
actions are required, if any, and initiate the formulation of
a treatment plan.
Risk Treatment
Risk treatment follows an iterative process described
below:
– Selecting adequate risk treatment options
– Implementing risk treatment
– Assessing the eectiveness of risk treatment
– Adjusting risk treatment, as required
Selecting the most appropriate risk treatment option(s) is
achieved by balancing the benefit of the treatment against
the cost and eort of implementation whilst maintaining
line of sight to the Group's objectives.
Risk Monitoring & Recording
The risk management process is underpinned by
monitoring and reporting, which ensures adequate
oversight, transparency and the provision of best available
information in the decision making process.
It is for these reasons that GFG is committed to monitoring
and recording its risk management activities at every level
of the Group.
GFG employs a risk management platform in which all
risks, risk sponsors, risk owners and treatments are
recorded and tracked. This ensures operational eciency
while also allowing for the measurement and review of
progress against objectives.
The Group adopts a GRC (Governance, Risk & Compliance)
committee structure both regionally and centrally, which
oversees the risk management process and its outputs
while also driving reporting upstream and downstream.
These committees meet quarterly at a minimum, are
chaired by the relevant CEO and assume responsibility for
the output of the risk reviews.
This structure is further supported by the Group’s Internal
Audit function, which provides independent, objective
assurance over the approach to and outputs of the risk
management process. This additional layer of control
ensures GFG is engaged in a cycle of continuous
improvement and alleviates its biases and subjectivities
from its risk management practices.
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2.13 RISKS AND
OPPORTUNITIES
REPORT
GFG is committed to the management of material risks.
This section outlines the principal uncertainties identified
through the most recent risk review process in 2020. These
are not set out in any particular order and GFG recognises
that risks can and will evolve over time.
.
Strategic and external risks
Country risk:
Geopolitical and
Macro-economic
The Group’s businesses are concentrated across several emerging markets, that GFG
considers as having the greatest potential for growth in fashion ecommerce. With this
comes exposure to a certain degree of country risk, as each territory has its own unique
geo-political, socio-economic, and legislative/regulatory environment.
Key mitigating activities/ initiatives
• Continuous monitoring of the geo-political, socio-economic, and regulatory
regimes within each territory
• Proactive engagement with thought leaders, industry peers, legal and regulatory
authorities and other relevant bodies
• Remaining abreast of and having a voice in material developments impacting
in country operations
Competition
The fashion ecommerce industry is characterised by intense competition, and GFG’s
regions face increasing competitive pressure from local and established global online
players.
Key mitigating activities/ initiatives
• Continuous assessment and evaluation of the competitive environment,
remaining abreast of competitor performance and aspirations
• Continued focus on protecting the current position and unique selling points
of the regional businesses
• Pooling of experience and sharing of best practice across the Group
• Building and developing strong long-term relationships with brands and
partners to unlock strong commercial exchange
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Operational risks
Health, Safety
and Wellbeing
Operating in diverse and geographically dispersed locations, GFG recognises and
prioritises the health, safety and wellbeing of all its people in fulfilling their duties,
particularly those operating in our fulfilment and delivery operations.
Key mitigating activities/ initiatives
• Governance and reporting of health & safety matters with clear leadership
accountabilities
• Investment in health & safety capability in local operations to provide practical and
applicable procedure and policy
• Networked global response team to the COVID-19 pandemic with policies, tools
and resources
• Establishment of wellbeing initiatives and safe working from home procedures
Major disruption to
critical infrastructure
There is a risk of interruption to one or more business processes due to disruption to
a fulfilment center or critical technology infrastructure which impacts operational
performance.
Key mitigating activities/ initiatives
• Cloud infrastructure to minimise risk and impact of outages
• Development of business continuity and crisis management plans, stress and scenario
testing and periodic review of exposures and controls at critical sites
• Risk transfer via insurance programmes
Cyber and information
security
Cyber and information security risk continues to be an increasingly ubiquitous risk. GFG
relies on leveraging its customer data to better understand and serve its customers.
Cyber security attacks are increasing in both number and sophistication. GFG intends
to develop its defence mechanisms to reflect this.
Key mitigating activities/ initiatives
• GFG’s operating regions run systems and applications on physically segmented
infrastructure with role-based access control and region-level isolation, providing
natural risk isolation should there be a breach in one system
• Investment in information security systems, capability and resources
• Continual improvement with respect to security practices and policies
• Periodic penetration testing to identify strengths and weaknesses
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Social & Environmental
Sustainability
GFG develops and manufactures products for its private label brands in a number of
emerging markets where there is a risk that social and environmental conditions in the
factories, mills or farms in our supply chain do not align with GFG’s ethical trade
standards. Specific risks include modern slavery, inadequate health and building safety
standards, high levels of overtime and non-payment of wages and benefits. There is
also the risk that the development of the materials which make up our private label
products have a negative impact on the environment in terms of water and energy
usage, carbon emissions and chemical run o.
Third party brands carried on GFG’s platforms may have similar risks present in their
supply chain of which GFG has lower visibility. Finally, a transparent ethical and
sustainable supply chain is a positive dierentiator in the market, and aligns to the
values and expectations of our customers and employees.
In some markets, a proportion of our workforce is sourced via third-party labour
agencies who are responsible for the ongoing management of the terms and conditions
of employment. Hence there is a risk that these agencies do not meet GFG Group
standards in terms of the treatment of workers. Specific risks noted in relation to agency
workers include non-payment of wages and benefits, retention of passports, payment
of recruitment fees and poor accommodation standards.
Lastly, environmental risks exist in GFG’s own operations, including a risk that they
breach environmental regulations. The increasing impact of climate volatility and rising
frequency and severity of extreme weather events, such as floods, hurricanes or fires,
may pose a risk to our operations or that of our suppliers and therefore have an impact
on business continuity. In the long term, the broader impacts of climate change may
impact the cost and accessibility of materials used to manufacture products or other
resources needed to operate GFG’s business.
Key mitigating activities/ initiatives
• Comprehensive GFG Corporate Sustainability governance and standards by the
GFG Supervisory Board Sustainability Committee and quarterly reporting to this
forum on performance
• Clear management accountability and responsibility for implementation of the
group sustainability strategy and appropriate resourcing of these programmes in
each operating market
• Rigorous ethical trade standards in place for the private label supply chain,
including auditing of all factories and adopting improvement plans or termination
where applicable; standards reviewed and updated on an annual basis
• Assessments of third party brand performance on sustainability and ESG and
engagement with poorer performers to address gaps identified
• Audits of third party labour agencies routinely carried out, adopting improvement
plans or termination where applicable; standards reviewed and updated on an
annual basis
• Comprehensive environmental management programmes, which measure
and mitigate GFG’s impacts, and transition of operations, private label
products and packaging to have a lower environmental footprint
The full and extensive list of work carried out in this space is captured in the GFG
Sustainability Report released in parallel with this report.
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Financial risks
Budget and planning The fashion ecommerce business in the developing markets in which GFG operates is
highly volatile and subject to influence by a variety of variables and external factors. As
such, business performance can be challenging to anticipate and accurately budget
for. GFG recognises that a budget and forecast must continually evolve with the
business.
Mitigating activities/ initiatives
• Strong budgeting disciplines and continuous process improvement
• Robust control framework and recourse mechanisms
• Focus on monitoring of key budget inputs and establishing output KPIs coupled
with periodic review of performance
Funding and liquidity
The Group has historically been in a loss making position and as such has had to inject
capital at regular intervals into the regional businesses. The Group successfully raised
€120 million in additional capital through a share placement in November 2020 and
continues to work towards becoming cash flow neutral.
Mitigating activities/ initiatives
• Close monitoring of the utilisation of cash and cash forecasts as part of the financial
management reporting process
• Secure project based financing for major capital expenditure
• Execute local working capital facilities to manage local cash and forex
• Focus on strong cost controls, to improve operating cash position
Compliance and Regulatory risks
Compliance with laws,
regulations, and standards
As a Group that operates across twenty countries, each with a unique regulatory and
legislative regime, GFG is continually subject to the risk of non-compliance with local
laws and regulations.
In addition, many of our territories have legislative systems which are at varying levels
of maturity.
Mitigating activities/ initiatives
• Investment in legal and compliance capability in each region, with monitoring via
Regional and Group GRC Committees and centralised Global Legal and GRC
Function
• Periodic in-depth review of material compliance obligations
• Continuous review of changes to international and domestic legislation and
assessment of the impact on the Group’s business model
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Management is satisfied that no risk, individual or
collective, is currently considered to threaten the Group
or Company as a going concern. Management believes
that it has taken all necessary precautions to address
existing risks and reduce their possible impact.
Management have not identified any material uncertainties
that cast a significant doubt on the Group’s or Company’s
ability to continue as a going concern over a period of at
least 12 months.
Opportunities
While GFG faces several risks, there are also many
opportunities for the Group. The primary opportunities
identified are:
Macroeconomic developments: Management believe
that growth opportunities in GFG’s markets will be driven
by several macroeconomic, demographic and operational
tailwinds that will increase customer’s online purchasing
for fashion and lifestyle, including urbanisation, growing
disposable incomes, increasing customer engagement
with mobile and other digital devices, and improved last-
mile delivery capabilities. These tailwinds increase both
the demand for fashion and lifestyle products, and grow
the share of ecommerce within this sector.
Moreover, the prevalence of COVID-19 has seen a shift in
consumer spend from oine to online. As a pure play
ecommerce business, GFG is well positioned to benefit
from this pattern of activity.
Category and segment expansion: Significant scope
exists for GFG to continue rolling out all fashion and
lifestyle categories across its regions and grow its market
share. Adding relevant brands and growing assortment
width is expected to increase NMV/Active Customer as
GFG becomes a one-stop destination for fashion and
lifestyle. Additionally, GFG has the opportunity to expand
its coverage across price levels and other market-specific
white spots.
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Furthermore, changes in customer purchasing behaviour
in light of shifting priorities and necessities, as influenced
by responses to COVID-19, have been internalised to
ensure categories remain relevant and reflect emerging
customer wants and needs. This has seen an acceleration
of expansion into categories such as home, kids and
beauty.
Technology: Further innovation in technology will enable
GFG to create an even more engaging shopping
experience. Data analytics can be used to create an
assortment catalogue that is increasingly curated and
personalised for each customer. A localised approach to
front-end technology, which allows us to be closer to the
customer, creates an eective environment for innovation
to be developed locally and then shared across the Group,
once proven and successful. There are also opportunities
for GFG to further centralise certain tools or platforms,
thereby simplifying the IT landscape and reducing
maintenance and costs, although over dependence is
acknowledged as an associated risk.
Geographic expansion: GFG’s platforms have been built
for scale and could support a potential expansion into new
markets. In particular, there are opportunities for GFG to
expand into countries that are adjacent to its existing
footprint in SEA and LATAM. Any potential geographic
expansion would be focused on markets that oer similar
growth opportunities to GFG’s existing regions. These
include markets that are relatively nascent in terms of
ecommerce penetration, that oer an early mover
advantage, have sizable populations with attractive
demographics and that could be served by GFG’s existing
operating infrastructure.
2.14 REPORT ON EXPECTED
DEVELOPMENTS AND OUTLOOK
In 2021, GFG aims to grow NMV by over 25 per cent,
delivering between €2.3-2.4 billion in NMV and in the
region of €1.5 billion revenue at 31 December 2020
exchange rates.
GFG also plans to make a modest improvement on
profitability in 2021. Capex investment will be in the region
of €60 million.
Luxembourg, 28 February 2021
On behalf of the Supervisory Board
Cynthia Gordon
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3. INDEPENDENT AUDITOR'S REPORT
To the Shareholders of
Global Fashion Group S.A.
5, Heienhaff
L-1736 Senningerberg
Report on the audit of the
consolidated financial statements
Opinion
We have audited the consolidated financial statements of
Global Fashion Group S.A. and its subsidiaries (the
“Group” or “GFG”) from section 4.1 to section 5, which
comprise the consolidated statement of financial position
as at 31 December 2020, the consolidated statement of
profit or loss, the consolidated statement of comprehensive
income, the consolidated statement of changes in equity
and consolidated statement of cash flows for the year then
ended, and the notes to the consolidated financial
statements, including a summary of significant accounting
policies.
In our opinion, the accompanying consolidated financial
statements give a true and fair view of the consolidated
financial position of the Group as at 31 December 2020,
and of its consolidated financial performance and its
consolidated cash flows for the year then ended in
accordance with International Financial Reporting
Standards (“IFRS”) as adopted by the European Union.
Basis for Opinion
We conducted our audit in accordance with EU Regulation
N° 537/2014, the Law of 23 July 2016 on the audit
profession (the “Law of 23 July 2016”) and with International
Standards on Auditing (“ISAs”) as adopted for Luxembourg
by the “Commission de Surveillance du Secteur Financier”
(“CSSF”). Our responsibilities under the EU Regulation
Nº537/2014, the Law of 23 July 2016 and ISAs are further
described in the “Responsibilities of the “réviseur
d’entreprises agréé” for the audit of the consolidated
financial statements” section of our report. We are also
independent of the Group in accordance with the
International Code of Ethics for Professional Accountants,
including International Independence Standards, issued
by the International Ethics Standards Board for
Accountants (“IESBA Code”) as adopted for Luxembourg
by the CSSF together with the ethical requirements that
are relevant to our audit of the consolidated financial
statements, and have fulfilled our other ethical
responsibilities under those ethical requirements. We
believe that the audit evidence we have obtained is
sucient and appropriate to provide a basis for our
opinion.
Key audit matters
Key audit matters are those matters that, in our professional
judgment, were of most significance in our audit of the
consolidated financial statements of the current period.
These matters were addressed in the context of the audit
of the consolidated financial statements as a whole, and in
forming our opinion thereon, and we do not provide a
separate opinion on these matters.
1. Revenue recognition
and returns allowances
Risk Identified
The Group’s revenue is mainly generated from retail sales
of fashion products to direct customers through GFG’s
applications and websites. For retail sales, revenue
corresponds to the amount of the consideration GFG
expects to receive as exchange for transferring the
promised goods or services net of sales deductions
including returns, taxes and duties. Historical rejections
and returns rates are used to anticipate future rejections
and returns in order to deduct such anticipated returns
from revenue leading to net revenue. The customers have
the option to return merchandise free of charge within the
revocation period granted in the various countries in
which GFG operates.
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GFG’s management estimates expected returns based on
assumptions and judgments in particular based on
customer demographics by country, timing and method of
payments, product category and service level, taking into
consideration the seasonal eects and historical trend.
Due to the high transaction volume of the sales of
merchandise, the generally possible risk of fictitious
revenue and the uncertain estimate of expected returns,
we consider the occurrence and measurement of revenue
from the delivery of merchandise to be a key audit matter.
Our answer
Our audit procedures over revenue and related returns
allowances included, among others:
•
We documented our understanding of the revenue
recognition process, performed walkthroughs over
each class of revenue transactions and evaluated the
design and implementation of the related controls. We
have further proceeded to test the operating
eectiveness of the controls where it was concluded
that the related controls are adequately designed and
implemented.
•
We understood and assessed IT controls in place for
the systems in scope, assisted by our information
technology specialists. We tested the operating
eectiveness of controls around management of access
rights, and evaluated respective ISAE reports from the
respective service providers. The aggregate IT
conclusion was such that evaluated systems support
revenue recognition process.
•
We tested the end-to-end reconciliation from the
e-commerce platform to the general ledger.
•
We reviewed the appropriateness and proper
accounting treatment of revenue recognition in
accordance with IFRS 15.
•
We tested on a sample basis the credit notes issued
during the year, in addition to these issued subsequent
to year end and validated that the reversal of revenue
is appropriate and supported by adequate evidence.
•
We performed sales cut o testing and checked that
the revenue is recognised when goods have been
delivered to customers.
•
We read the terms of coupons issued and discounts
allowed and we tested the allocation of cash received
from the customers between the fair value of goods
sold and coupons.
•
We tested the arithmetical accuracy of the computation
of the provision on sales returns.
•
We tested the reasonableness of the assumptions of
the provision on sales returns based on historical fact
patterns and trends in each of the significant locations.
• We tested the accuracy of customer bill generation on
a sample basis and tested a sample of the credits and
discounts applied to customer bills.
•
We traced cash receipts for a sample of customers back
to the customer invoices and to the general ledger to
cover the completeness assertion over the revenue and
related returns.
•
We vouched from general ledger a sample of
transactions to the related customer invoices and
delivery slips in order to cover the existence assertion
over revenue and related returns.
•
We performed correlation testing and we obtained
audit supporting evidence (delivery slips, invoices,
payment receipts) for a test of sales based on
mathematical statistical assumptions regarding the
existence of revenue.
•
We performed substantive analytical procedures on
revenue based on our industry knowledge, forming an
expectation of revenue based on key performance
indicators.
•
We assessed the adequacy of the provision for
impairment of trade receivables, including the
reasonableness of the methodology used to compute
the provision, and analyzing individual significant long
outstanding balances.
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• We assessed the adequacy of the Group’s disclosures
in respect of the accounting policies on revenue
recognition, revenue and receivables disclosures as
disclosed in Note 3 and Note 25 to the consolidated
financial statements.
2. Inventories and
inventory allowances
Risk Identified
The merchandise inventory of GFG is continuously subject
to risks associated with existing and potential future excess
stocks, which are sold with high discounts through
distance retail or are disposed of outside of distance retail.
Write downs on estimated future excess stocks as well as
existing excess stocks are calculated at the end of the
reporting period and recognised in the consolidated
financial statements.
Significant judgement is required in assessing the
appropriate level of the provision for slow moving and/or
obsolete inventory. Such judgements include
management’s expectations of forecast inventory
demand, supply chain, fulfilment, plans to dispose of
inventories at a lower cost. As a result, we consider the
measurement of inventories and inventory allowances to
be a key audit matter.
Our answer
Our audit procedures over inventories and inventory
allowances included, amongst others:
•
We assessed the compliance of GFG’s accounting
policies in relation to inventory and inventory
allowances with International Financial Reporting
Standards as adopted by the EU.
•
We observed physical inventory counts at major
locations to ascertain the condition of inventory and
performed testing on a sample of items to assess the
cost basis and net realisable value of inventory.
•
We checked the clerical accuracy of the computation
and the reasonableness of the assumptions of provision
for slow moving and obsolete inventories as at
31 December 2020.
•
We have also read inventory management report to
identify slow moving or obsolete inventories.
•
We obtained a detailed analysis by category of
inventory provision and checked its reasonableness
based on past historical experience and data.
•
Within the scope of the inventory valuation, GFG’s
management considers the expected sell through of
merchandise for various sales channels and seasons.
We compared the timing of the sell through using past
data with actual sales and examined any significant
deviations or irregularities in detail.
• We assessed the adequacy of the Group’s disclosures
in respect of the accounting policies on inventories and
the inventory allowances in Note 3 and Note 16 to the
consolidated financial statements.
3. Non identification of impairment on
Goodwill and other intangible assets
Risk Identified
GFG accounted for a material amount of goodwill
generated from business combinations on its statement
of financial position. Goodwill is carried at cost less
accumulated impairment losses, if any and is allocated to
cash-generating units (CGUs). In addition, GFG accounted
for a material amount of intangible assets consisting of
trademarks and customer relationships arising from
business combinations.
As of 31 December 2020, goodwill amounts to
€147. 6 million and intangible assets to €120.3 million.
These amounts are material to the consolidated financial
statements. In addition, the impairment assessment
process includes significant judgements and is based on
assumptions derived from the Group’s business plan
which are aected by expected future market or economic
conditions. As a result, we consider the measurement of
goodwill and intangibles assets to be a key audit matter.
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Our answer
Our audit procedures over non-identification of impairment
on Goodwill and other intangible assets included, amongst
others:
•
We assessed the Group’s determination of CGUs based
on our understanding of the nature of the Group and
its operations, and assessed whether this was consistent
with the internal reporting of the business.
• We assessed the historical accuracy of management’s
estimates and budget.
•
We assessed the reasonableness of the cash flow
forecasts from the business plan, taking into account
our knowledge of the business and relevant external
information.
• We involved our valuation experts to assist us with our
assessment of the WACC, expected inflation rates and
terminal growth rates and the appropriateness of the
model used.
•
We recomputed the value in use of each CGU prepared
by Management and compared with the carrying value
in order to determine whether an impairment exists.
When applicable we tested the clerical accuracy of the
computation of the impairment.
•
We assessed the Group’s sensitivity analysis on the
CGUs in two main areas being the discount rate and
growth rate assumptions.
• We assessed the adequacy of the Group’s disclosures
in respect of the accounting policies on goodwill and
intangible assets in Note 3 and Note 14 to the
consolidated financial statements.
4. Recognition of direct and indirect tax
contingencies and tax positions
Risk Identified
Income and indirect tax positions were significant to our
audit because the assessment process is complex and
involves a high degree of judgment and the amounts
involved are material to the consolidated financial
statements as a whole. Legislators and tax authorities may
change territoriality rules or their interpretation for the
application of value-added tax (“VAT”) or similar indirect
taxes on transactions, which may lead to significant
additional payments for past and future periods. In
addition, court decisions are sometimes ignored by
competent tax authorities or overruled by higher courts,
which could lead to higher legal and tax advisory costs
and create significant uncertainty.
Moreover, the nature of the Group’s business model,
involving delivering goods and services to customers in
territories where the Group may have limited physical
presence, could lead to tax authorities challenging the
allocation of taxable income resulting in a higher tax
burden for the Group.
Management exercises judgment in assessing the level of
provision required for both indirect and income taxation
when such taxes are based on the interpretation of
complex tax laws. The future actual outcome of the
decisions concerning these tax exposures may result in
materially higher or lower amounts than the amounts
included in the accompanying Consolidated Financial
Statements.
Our answer
Our audit procedures over recognition of direct and
indirect tax contingencies and tax positions included,
amongst others:
•
We assessed the appropriateness of management’s
assumptions and estimates in relation to uncertain tax
positions, and we considered the advice received by
management from external parties to support their
position. We have involved our tax specialists, where
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relevant, to consider management’s assessment of the
tax positions and related provision/liability accruals
when necessary.
•
We further assessed the recoverability of indirect tax
receivables and the completeness of indirect tax
payables in light of current laws and regulations and
their related interpretations.
•
We also assessed the adequacy of the Group’s
disclosures in respect of the Tax contingencies and Tax
positions as set out in Notes 30 and 31 of the
accompanying Consolidated Financial Statements.
Other information
The Supervisory Board is responsible for the other
information. The other information comprises the
information included in the consolidated management
report on section 2 and the corporate governance
statement on section 1.3 to section 1.8 but does not
include the consolidated financial statements and our
report of “réviseur d’entreprises agréé” thereon.
Our opinion on the consolidated financial statements
does not cover the other information and we do not
express any form of assurance conclusion thereon.
In connection with our audit of the consolidated financial
statements, our responsibility is to read the other
information and, in doing so, consider whether the other
information is materially inconsistent with the consolidated
financial statements or our knowledge obtained in the
audit or otherwise appears to be materially misstated. If,
based on the work we have performed, we conclude that
there is a material misstatement of this other information,
we are required to report this fact. We have nothing to
report in this regard.
Responsibilities of the Supervisory Board
and those charged with governance for the
consolidated financial statements
The Supervisory Board is responsible for the preparation
and fair presentation of these consolidated financial
statements in accordance with IFRS as adopted by the
European Union, and for such internal control as the
Supervisory Board determines is necessary to enable the
preparation of consolidated financial statements that are
free from material misstatement, whether due to fraud or
error.
In preparing the consolidated financial statements, the
Supervisory Board is responsible for assessing the Group’s
ability to continue as a going concern, disclosing, as
applicable, matters related to going concern and using
the going concern basis of accounting unless the
Supervisory Board either intends to liquidate the Group
or to cease operations, or has no realistic alternative but
to do so.
The Supervisory Board is responsible for presenting and
marking up the consolidated financial statements in
compliance with the requirements set out in the Delegated
Regulation 2019/815 on European Single Electronic
Format (“ESEF Regulation”).
Those charged with governance are responsible for
overseeing the Group’s financial reporting process.
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Responsibilities of the “réviseur d’entreprises
agréé” for the audit of the consolidated
financial statements
The objectives of our audit are to obtain reasonable
assurance about whether the consolidated financial
statements as a whole are free from material misstatement,
whether due to fraud or error, and to issue a report of the
“réviseur d’entreprises agréé” that includes our opinion.
Reasonable assurance is a high level of assurance, but is
not a guarantee that an audit conducted in accordance
with EU Regulation N° 537/2014, the Law of 23 July 2016
and with the ISAs as adopted for Luxembourg by the CSSF
will always detect a material misstatement when it exists.
Misstatements can arise from fraud or error and are
considered material if, individually or in the aggregate,
they could reasonably be expected to influence the
economic decisions of users taken on the basis of these
consolidated financial statements.
As part of an audit in accordance with EU Regulation N°
537/2014, the Law of 23 July 2016 and with ISAs as adopted
for Luxembourg by the CSSF, we exercise professional
judgment and maintain professional skepticism
throughout the audit. We also:
•
Identify and assess the risks of material misstatement
of the consolidated financial statements, whether due
to fraud or error, design and perform audit procedures
responsive to those risks, and obtain audit evidence
that is sucient and appropriate to provide a basis for
our opinion. The risk of not detecting a material
misstatement resulting from fraud is higher than for
one resulting from error, as fraud may involve collusion,
forgery, intentional omissions, misrepresentations, or
the override of internal control.
•
Obtain an understanding of internal control relevant to
the audit in order to design audit procedures that are
appropriate in the circumstances, but not for the
purpose of expressing an opinion on the eectiveness
of the Group’s internal control.
•
Evaluate the appropriateness of accounting policies
used and the reasonableness of accounting estimates
and related disclosures made by the Supervisory
Board.
•
Conclude on the appropriateness of Supervisory
Board’s use of the going concern basis of accounting
and, based on the audit evidence obtained, whether a
material uncertainty exists related to events or
conditions that may cast significant doubt on the
Group’s ability to continue as a going concern. If we
conclude that a material uncertainty exists, we are
required to draw attention in our report of the “réviseur
d’entreprises agréé” to the related disclosures in the
consolidated financial statements or, if such disclosures
are inadequate, to modify our opinion. Our conclusions
are based on the audit evidence obtained up to the
date of our report of the “réviseur d’entreprises agréé”.
However, future events or conditions may cause the
Group to cease to continue as a going concern.
•
Evaluate the overall presentation, structure and content
of the consolidated financial statements, including the
disclosures, and whether the consolidated financial
statements represent the underlying transactions and
events in a manner that achieves fair presentation.
•
Obtain sucient appropriate audit evidence regarding
the financial information of the entities and business
activities within the Group to express an opinion on the
consolidated financial statements. We are responsible
for the direction, supervision and performance of the
Group audit. We remain solely responsible for our audit
opinion.
We communicate with those charged with governance
regarding, among other matters, the planned scope and
timing of the audit and significant audit findings, including
any significant deficiencies in internal control that we
identify during our audit.
We also provide those charged with governance with a
statement that we have complied with relevant ethical
requirements regarding independence, and communicate
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Independent Auditor´s Report
to them all relationships and other matters that may
reasonably be thought to bear on our independence, and
where applicable, related safeguards.
From the matters communicated with those charged with
governance, we determine those matters that were of
most significance in the audit of the consolidated financial
statements of the current period and are therefore the key
audit matters. We describe these matters in our report
unless law or regulation precludes public disclosure about
the matter.
Our responsibility is to assess whether the consolidated
financial statements have been prepared in all material
respects with the requirements laid down in the ESEF
Regulation.
Report on other legal and regulatory
requirements
We have been appointed as “réviseur d’entreprises agréé”
by the General Meeting of the Shareholders on
26 June 2020 and the duration of our uninterrupted
engagement, including previous renewals and
reappointments, is 7 years.
The consolidated management report on section 2 is
consistent with the consolidated financial statements and
has been prepared in accordance with applicable legal
requirements. The accompanying corporate governance
statement on section 1.3 to section 1.8 is the responsibility
of the Supervisory Board. The information required by
article 68ter paragraph (1) letters c) and d) of the law of
19 December 2002 on the commercial and companies
register and on the accounting records and annual
accounts of undertakings, as amended, is consistent with
the consolidated financial statements and has been
prepared in accordance with applicable legal requirements.
We confirm that the audit opinion is consistent with the
additional report to the audit committee or equivalent.
We confirm that the prohibited non-audit services referred
to in EU Regulation No 537/2014 were not provided and
that we remained independent of the Group in conducting
the audit.
We have checked the compliance of the consolidated
financial statements of the Group as at 31 December 2020
with relevant statutory requirements set out in the ESEF
Regulation that are applicable to financial statements. For
the Group it relates to:
• Financial statements prepared in a valid xHTML
format;
• The XBRL markup of the consolidated financial
statements using the core taxonomy and the common
rules on markups specified in the ESEF Regulation.
In our opinion, the consolidated financial statements of
Global Fashion Group S.A. as at 31 December 2020,
identified as “annual report”, have been prepared, in all
material respects, in compliance with the requirements laid
down in the ESEF Regulation.”
Other matter
The corporate governance statement includes, when
applicable, the information required by article 68ter
paragraph (1) points a), b), e), f) and g) of the law of
19 December 2002 on the commercial and companies
register and on the accounting records and annual
accounts of undertakings, as amended.
Ernst & Young
Société anonyme
Cabinet de révision agréé
Olivier Lemaire
Luxembourg, 11 March 2021
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ANNUAL REPORT 2020 | GFG
Independent Auditor´s Report
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ANNUAL REPORT 2019 | GFG
CONSOLI DATED
FINANCIAL
STATE MENTS
94
ANNUAL REPORT 2020 | GFG
Consoli dated financial state ments
CONTENTS
SECTION 4
96 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
97 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
98 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
100 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
102 CONSOLIDATED STATEMENT OF CASH FLOWS
104 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS
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ANNUAL REPORT 2020 | GFG
Consoli dated financial state ments
CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 31 December 2020
In €m Note 2020 2019
Revenue 25 1,359.7 1,346.0
Cost of sales (773.5 ) (806.2 )
Gross profit 586.2 539.8
Operating (expenses)/income
Selling and distribution expenses 26,27 (447.7 ) (455.2 )
Administrative expenses 26,27 (194.4 ) (193.4 )
Other operating income 28 7.2 15.1
Other operating expenses 28 (14.4 ) (27.5 )
Net impairment losses on financial assets
1
(1.7 ) (3.9 )
Loss before interest and tax (EBIT)
2
(64.8 ) (125.1 )
Result from investment in associates 9 (0.1 ) 3.2
Finance Income 29 2.1 18.5
Finance Costs 29 (46.3 ) (14.7 )
Result from indexation of IAS 29 Hyperinflation 34 1.2 1.6
Loss before tax (107.9 ) (116.5 )
Income taxes 30 (4.5 ) (28.1 )
Loss for the year (112.4 ) (144.6 )
Loss for the year attributable to:
Equity holders of the parent (107.2 ) (137.0 )
Non-controlling interests (5.2 ) (7.6 )
Loss for the year (112.4 ) (144.6 )
Loss per share (€)
Basic and diluted, loss for the year attributable to ordinary equity holders of the parent (€) 11 (0.5 ) (1.0 )
1
Net impairment losses of financial assets are calculated by considering expected credit losses of financial assets
and include write-os, additions to provisions, usage of provisions and income from the reversal of provisions.
2
EBIT is calculated as loss for the year before income taxes, finance income, finance costs, result from indexation
of IAS 29 hyperinflation as well as before results from investment in associates.
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Profit or Loss
CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2020
In €m 2020 2019
Loss for the year (112.4 ) (144.6 )
Other comprehensive loss
Item that will be subsequently reclassified to profit or loss
Exchange dierences on translation to presentation currency net of tax (51.8 ) (2.9 )
Net other comprehensive (loss)/income for the year, net of tax (51.8 ) (2.9 )
Total comprehensive loss for the year, net of tax (164.2 ) (147.5 )
Total comprehensive loss for the year attributable to:
Equity holders of the parent (156.4 ) (139.2 )
Non-controlling interests (7.8 ) (8.3 )
Total (164.2 ) (147.5 )
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Comprehensive Income
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020
ASSETS
In €m Note 31 Dec 2020 31 Dec 2019
Non-current assets
Property, Plant and Equipment 12 89.1 106.7
Right of Use Asset 13 104.3 95.2
Goodwill 14 147.6 184.4
Other Intangible Assets 14 120.3 141.2
Investments in associates 9 - 0.1
Other financial assets 17 6.6 24.1
Income tax receivables
Other non-financial assets
15 0.3 0.4
Total non-current assets 468.5 552.3
Current assets
Inventories 16 195.9 234.0
Trade and other receivables 17 80.2 52.1
Other financial assets 17 19.5 16.7
Income tax receivables 3.1 2.2
Other non-financial assets 15 39.8 69.9
Cash and cash equivalents 18 366.1 277.3
Total current assets 704.6 652.2
Total assets 1,173.1 1,204.5
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Financial Position
EQUITY AND LIABILITIES
In €m Note 31 Dec 2020 31 Dec 2019
Equity
Common share capital
19 2.1 2.1
Share premium
19 303.6 184.4
Treasury shares
19 (7.5 ) (7.7 )
Capital reserves
19 2,102.2 2,102.2
Other reserves
Share-based payment reserves
19,20 128.3 117.1
Accumulated Deficit
(1,822.9 ) (1,715.4 )
Foreign currency translation reserve
(90.9 ) (41.7 )
Equity attributable to holders of the parent 615.2 641.3
Non-controlling interests 19 4.2 8.2
Total equity 619.4 649.5
Non-current liabilities
Lease liabilities 13 94.2 82.9
Provisions 22 2.5 3.4
Deferred tax liabilities 30 7.5 12.2
Non-financial liabilities 24 0.6 0.4
Total non-current liabilities 104.8 98.9
Current liabilities
Borrowings 21 10.2 5.4
Lease liabilities 13 19.5 23.2
Trade payables and other financial liabilities 23 283.8 311.6
Provisions 22 22.9 24.3
Income tax liabilities 24, 30 31.1 29.1
Non-financial liabilities 24 81.4 62.5
Total current liabilities
Total liabilities
Total equity and liabilities 1,173.1 1,204.5
CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2020 (continued)
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Financial Position
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2019
In €m
Attributable to Shareholders of the Company Attributable to Shareholders of the Company
Non-
controlling
interest Total equityNote
Common
share
capital
Share
premium
Convertible
preference
shares
Treasury
shares
Capital
reserves
Other
reserves
Share-based
payments
reserves
Accumulated
deficit
Foreign
currency
translation
reserve Total
As at 1 January 2019 0.7 - 0.8 (7.5 ) 2,102.2 0.3 111.3 (1,581.0 ) (39.5 ) 587.3 16.5 603.8
Loss for the year - - - - - - - (137.0 ) - (137.0 ) (7.6 ) (144.6 )
Other comprehensive loss - - - - - - - - (2.2 ) (2.2 ) (0.7 ) (2.9 )
Total comprehensive loss for the year - - - - - - - (137.0 ) (2.2 ) (139.2 ) (8.3 ) (147.5 )
Share-based payments 20 - - - - - - 5.8 - - 5.8 - 5.8
Adjustment for Hyperinflation 34 - - - - - - - 3.4 - 3.4 - 3.4
Share conversion
1
19 0.8 - (0.8 ) - - - - - - - - -
Proceeds from issued share capital 19 0.6 188.6 - - - - - - 189.2 - 189.2
Transaction costs on issue of shares 19 - (4.2 ) - - - - - - (4.2 ) - (4.2 )
Acquisition of treasury shares 19 - - - (0.2 )
Other adjustment - - - -
Balance at 31 December 2019 2.1 184.4 - (7.7 ) 2,102.2 0.3 117.1 (1,715.4 ) (41.7 ) 641.3 8.2 649.5
1 Conversion of convertible preference shares to common share capital. See note 19.
In €m
Attributable to Shareholders of the Company Attributable to Shareholders of the Company
Non-
controlling
interest Total equityNote
Common
share
capital
Share
premium
Convertible
preference
shares
Treasury
shares
Capital
reserves
Other
reserves
Share-based
payments
reserves
Accumulated
deficit
Foreign
currency
translation
reserve Total
As at 1 January 2020 2.1 184.4 - (7.7 ) 2,102.2 0.3 117.1 (1,715.4 ) (41.7 ) 641.3 8.2 649.5
Loss for the year - - - - - - - (107.2 ) - (107.2 ) (5.2 ) (112.4 )
Other comprehensive loss - - - - - - - - (49.2 ) (49.2 ) (2.6 ) (51.8 )
Total comprehensive loss for the year - - - - - - - (107.2 ) (49.2 ) (156.4 ) (7.8 ) (164.2 )
Share-based payments 20 - - - - - - 11.2 - - 11.2 - 11.2
Adjustment for Hyperinflation 34 - - - - - - - (0.3 ) - (0.3 ) - (0.3 )
Proceeds from issued share capital 19 0.2 120.2 - - - - - - - 120.4 - 120.4
Transaction costs on issue of shares 19 - (1.0 ) - - - - - - - (1.0 ) - (1.0 )
Treasury share cancellation 19 (0.2 ) - - 0.2 - - - - - - - -
Capital contributions - - - -
Balance at 31 December 2020 2.1 303.6 - (7.5 ) 2,102.2 0.3 128.3 (1,822.9 ) (90.9 ) 615.2 4.2 619.4
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Changes in Equity
In €m
Attributable to Shareholders of the Company Attributable to Shareholders of the Company
Non-
controlling
interest Total equityNote
Common
share
capital
Share
premium
Convertible
preference
shares
Treasury
shares
Capital
reserves
Other
reserves
Share-based
payments
reserves
Accumulated
deficit
Foreign
currency
translation
reserve Total
As at 1 January 2019 0.7 - 0.8 (7.5 ) 2,102.2 0.3 111.3 (1,581.0 ) (39.5 ) 587.3 16.5 603.8
Loss for the year - - - - - - - (137.0 ) - (137.0 ) (7.6 ) (144.6 )
Other comprehensive loss - - - - - - - - (2.2 ) (2.2 ) (0.7 ) (2.9 )
Total comprehensive loss for the year - - - - - - - (137.0 ) (2.2 ) (139.2 ) (8.3 ) (147.5 )
Share-based payments 20 - - - - - - 5.8 - - 5.8 - 5.8
Adjustment for Hyperinflation 34 - - - - - - - 3.4 - 3.4 - 3.4
Share conversion
1
19 0.8 - (0.8 ) - - - - - - - - -
Proceeds from issued share capital 19 0.6 188.6 - - - - - - 189.2 - 189.2
Transaction costs on issue of shares 19 - (4.2 ) - - - - - - (4.2 ) - (4.2 )
Acquisition of treasury shares 19 - - - (0.2 )
Other adjustment - - - -
Balance at 31 December 2019 2.1 184.4 - (7.7 ) 2,102.2 0.3 117.1 (1,715.4 ) (41.7 ) 641.3 8.2 649.5
1 Conversion of convertible preference shares to common share capital. See note 19.
In €m
Attributable to Shareholders of the Company Attributable to Shareholders of the Company
Non-
controlling
interest Total equityNote
Common
share
capital
Share
premium
Convertible
preference
shares
Treasury
shares
Capital
reserves
Other
reserves
Share-based
payments
reserves
Accumulated
deficit
Foreign
currency
translation
reserve Total
As at 1 January 2020 2.1 184.4 - (7.7 ) 2,102.2 0.3 117.1 (1,715.4 ) (41.7 ) 641.3 8.2 649.5
Loss for the year - - - - - - - (107.2 ) - (107.2 ) (5.2 ) (112.4 )
Other comprehensive loss - - - - - - - - (49.2 ) (49.2 ) (2.6 ) (51.8 )
Total comprehensive loss for the year - - - - - - - (107.2 ) (49.2 ) (156.4 ) (7.8 ) (164.2 )
Share-based payments 20 - - - - - - 11.2 - - 11.2 - 11.2
Adjustment for Hyperinflation 34 - - - - - - - (0.3 ) - (0.3 ) - (0.3 )
Proceeds from issued share capital 19 0.2 120.2 - - - - - - - 120.4 - 120.4
Transaction costs on issue of shares 19 - (1.0 ) - - - - - - - (1.0 ) - (1.0 )
Treasury share cancellation 19 (0.2 ) - - 0.2 - - - - - - - -
Capital contributions - - - -
Balance at 31 December 2020 2.1 303.6 - (7.5 ) 2,102.2 0.3 128.3 (1,822.9 ) (90.9 ) 615.2 4.2 619.4
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Changes in Equity
CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2020
In €m Note 2020 2019
Cash flows from operating activities
Loss for the year before tax
(107.9 ) (116.5 )
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets
27 42.2
Amortisation of intangible assets
27 24.1
Share-based payment expense
20 14.9
Interest income
29 (2.1 )
(5.2 )
Interest costs
29 14.0
Share of losses of investments accounted for using equity method
9 -
Foreign currency losses/(gains)
(14.3 )
Other non-cash transactions
Changes in Provisions
Gains from disposal of associated entities
9
(4.9 )
Cash from/(used in) operations before changes in working capital 16.3 (40.6 )
Decrease/(increase) in inventories
(Increase)/decrease in trade receivables
(39.3 ) 3.9
Increase in trade payables
Changes in other receivables and other payables
Cash flows from/(used in) operations 54.3 (52.9 )
Cash outflow from share-based payments arrangements 20 (10.4 ) (3.3 )
Income taxes paid
30 (2.7 ) (2.5 )
Interest received 2.2 5.3
Interest paid (13.1 ) (15.5 )
Net cash flow from/(used in) operating activities 30.3 (68.9 )
Cash flows from investing activities
Purchase of property, plant and equipment (28.9 ) (45.8 )
Proceeds from sale of property, plant and equipment 2.1 0.7
Cash inflow from disposal of subsidiaries and associated companies 9 - 114.3
Acquisition of intangible assets and capitalised development expenditures (20.6 ) (20.9 )
Disposal of Intangibles 0.2 -
Cash inflow from other securities, deposits and transfer of restricted cash 13.7 15.2
Net cash flow (used in)/from investing activities (33.5 ) 63.5
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Cash Flows
In €m Note 2020 2019
Cash flows from financing activities
Proceeds from borrowings and other financial liabilities
21 8.2 5.6
Repayment of borrowings
21 (2.5 ) (0.4 )
Capital contributions from shareholders (net of transaction costs)
Proceeds from issuance of common shares
19 120.4 189.0
Transaction costs on issuance of shares
19 (1.0 ) (4.2 )
Payments under lease liabilities
13 (22.5 ) (20.5 )
Net cash flow from financing activities 106.5 169.5
Cash and cash equivalents at the beginning of the year 277.3 105.0
Eect of exchange rate changes on cash and cash equivalents
(14.5 ) 8.2
Cash and cash equivalents at the end of the year 18 366.1 277.3
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ANNUAL REPORT 2020 | GFG
Consolidated Statement of Cash Flows
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. CORPORATE INFORMATION
General information
The consolidated financial statements present the
operations of Global Fashion Group S.A. (‘GFG S.A.’). GFG
S.A. is hereinafter referred as the ‘Company’. The
Company and its subsidiaries are referred to as ‘Global
Fashion Group’, the ‘Group’ or ‘GFG’.
GFG S.A. is a stock corporation (société anonyme) under
the laws of the Grand Duchy of Luxembourg and is
registered in the Luxembourg Trade and Companies
Register: RCS B 190.907. GFG is domiciled in Luxembourg
with its registered oce located at 5, Heienha L-1736
Senningerberg. Since 2 July 2019, the shares of the
Company are traded on the regulated market (Prime
Standard) of the Frankfurt Stock Exchange.
The consolidated financial statements were approved and
authorised for issue by the supervisory board on
28 February 2021. The shareholders will ratify the approval
of the financial statements at the annual general meeting.
Business activities
The Group’s principal business activity is fashion and
lifestyle e-commerce and associated ancillary services
such as marketing, technology, payment, warehousing,
and logistics services. The Group oers a wide assortment
of leading international and local fashion brands, as well
as a selection of own label brands. The Group operates in
growth markets through four e-commerce platforms
across four regions in 17 countries under the following
labels: Dafiti (LATAM), Lamoda (CIS), ZALORA (SEA) and
THE ICONIC (ANZ). Please refer to note 6 for more details
on our segmental disclosures.
While the Group was trading in line with management
expectations until mid-March, results were negatively
impacted across each of the regions at dierent times by
the COVID-19 pandemic and currency headwinds. GFG
then experienced a strong recovery in sales from late April,
which was driven by strong performance in CIS and
LATAM and increased Marketplace participation. Initially,
ANZ saw soft trading but this recovered significantly over
the balance of the year and ANZ delivered positive growth
for FY20. GFG’s major fulfilment centres in Australia,
Malaysia, Brazil and Russia operated without interruptions.
Only fulfilment centres in Argentina and the Philippines
were temporarily closed, for around 30 and 40 days
respectively, resulting in a minor financial impact as order
deliveries were delayed until the re-openings in late April.
The Group rapidly adapted by focussing on the
health & safety of its employees and customers, working
closely with brand partners to maximise the relevance of
the assortment oered, pivoting toward ‘lockdown’
categories, driving increased Marketplace adoption and
accelerating customer acquisition, with 7.7 million new
customers shopping on GFG platforms for the first time
in 2020.
There were no material rental concessions or lease
modifications during the period and there was no
significant increase in credit risk linked to trade receivables
despite the backdrop of economic uncertainty in our
markets.
On 18 November 2020, the Group increased its common
share capital, by the partial utilisation of its authorised
capital. Shareholders’ subscription rights were excluded.
16,500,000 new common shares, each with a nominal
value of €0.01, were placed with institutional investors at a
placement price of €7.30 per share. The shares carry full
dividend rights for the financial year 2020.
The Group received net proceeds of €119.4 million from
the share issue. The proceeds are intended to be used to
further accelerate the delivery of the Group’s mid-term
growth strategy by additional investments in its customer
value proposition, technology platform, delivery
infrastructure and for general corporate purposes.
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ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The variance in revenue and margin over the course of the
year reflects the seasonality of fashion sales and the
variable impact of COVID-19 across the year. The Group’s
presence in the northern hemisphere (CIS); southern
hemisphere (Australia, New Zealand and Brazil) and also
countries that cross the equator including South East Asia
and Colombia, smooths out the seasonal risks of being
concentrated in one geography. New season collections
drive most sales in the second and fourth quarter, with the
first and third quarter focusing on end of season sales.
2. BASIS OF PREPARATION
Statement of compliance
These consolidated financial statements have been
prepared in accordance with International Financial
Reporting Standards (“IFRS”) as issued by the International
Accounting Standards Board (“IASB”) and adopted by the
European Union (“EU”). The principal accounting policies
applied in the preparation of these consolidated financial
statements are set out below. These policies have been
consistently applied to all the periods presented except as
further explained in note 5. As Argentina became a
hyperinflationary economy in 2018, IAS 29 has been
applied since then.
The consolidated financial statements are prepared on a
historical cost basis, unless otherwise stated. The
consolidated and company financial statements have
been prepared on a going concern basis of accounting.
The consolidated financial statements are presented in
euro (“€”), unless otherwise stated and all values are
rounded to the nearest million with a fractional digit in
accordance with a commercial rounding approach, except
when otherwise indicated. This may result in rounding
dierences as well as percentage figures presented may
not exactly reflect the absolute figures they relate to.
3. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries
as of 31 December 2020 and 2019. Subsidiaries are those
investees that the Company controls because (i) it has
power to direct relevant activities of the investees that
significantly aect their returns, (ii) has exposure, or rights,
to variable returns from its involvement with the investees,
and (iii) has the ability to use its power over the investees
to aect the amount of investor’s returns.
Non-controlling interest represents the equity in
subsidiaries not attributable, directly or indirectly, to the
Company. Non-controlling interests form a separate
component of the Group’s equity.
Subsidiaries are consolidated from the date on which
control is transferred to the Group (acquisition date) and
are deconsolidated from the date on which control ceases.
Profit or loss and each component of other comprehensive
income (“OCI”) are attributed to the owners of the Group
and to the non-controlling interests.
The Company reassesses whether or not it controls an
investee if facts and circumstances indicate that there are
changes to one or more of the three elements of control.
When necessary, adjustments are made to the financial
statements of subsidiaries to bring their accounting
policies in line with the Group’s accounting policies. All
intra-group receivables, liabilities, and results relating to
transactions between members of the Group are
eliminated in full on consolidation.
105
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
A change in the ownership interest of a subsidiary, without
a loss of control, is accounted for as an equity transaction.
In such a case, the carrying amounts of the shares
attributable to the owners of the parent and the non-
controlling interests are adjusted to reflect the changes in
their relative interests in the subsidiary. The dierence
between this adjustment and the fair value of the
consideration paid or received is recognised directly in
equity and attributed to the owners of the parent.
In case a change in the ownership interest of a subsidiary
results in a loss of control, the net assets and the non-
controlling interests have to be derecognised. At this time,
the gain or loss is derived from the dierence between the
sum of proceeds from the divestment, the fair value of any
retained interest in the former subsidiary and the non-
controlling interest to be derecognised, and the divested
net assets of the subsidiary. Additionally, any amounts
recognised in other comprehensive income in relation to
the divested subsidiary are reclassified to profit or loss in
case the respective standard on which basis they were
initially recognised requires such a recycling. The resulting
gains or losses are recognised in the income statement.
Business combinations
The acquisition method is used to account for business
combinations. Identifiable assets acquired and liabilities
and contingent liabilities assumed in a business
combination are generally measured at their fair values at
the acquisition date, irrespective of the extent attributable
to non-controlling interests.
The Group measures non-controlling interests that
represent present ownership interest and entitles the
holder to a proportionate share of net assets in the event
of liquidation on a transaction by transaction basis, either
at: (a) fair value, or (b) the non-controlling interest’s
proportionate share of net assets of the acquiree.
Goodwill is calculated by deducting the net assets of the
acquiree from the aggregate of the consideration
transferred for the acquiree, the amount of non-controlling
interests in the acquiree, and fair value of an interest in the
acquiree held immediately before the acquisition date.
Any remaining excess of the acquisition cost over the fair
value of the net assets is recognised as goodwill. Any
negative amount from the calculation explained before
(“negative goodwill” or “bargain purchase”) is recognised
in the income statement, after management reassesses
whether it has identified all the assets acquired and all
liabilities and contingent liabilities assumed and reviews
appropriateness of their measurement.
The consideration transferred for the acquiree is
measured at the fair value of the assets given up, equity
instruments issued and liabilities incurred to former
owners, including fair value of assets or liabilities from
contingent consideration arrangements. The
consideration excludes acquisition related costs such as
advisory, legal, valuation, and similar professional
services. Transaction costs associated with the
acquisition are recognised as expenses within general
administration costs unless incurred for issuing equity
or debt instruments. Costs of issuing equity instruments
are recognised in equity and costs of issuing debt
instruments are included in the carrying amount of the
debt instrument and recognised in profit or loss as part
of the interest expense over the life of the debt
instrument.
Investments in associates
An associate is an entity over which the Group has
significant influence. Significant influence is the power to
participate in the financial and operating policy decisions
of the investee, but is not control or joint control over those
policies.
The Group’s investments in its associates are accounted
for using the equity method.
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Notes to the consolidated financial statements
Under the equity method, the investment in an associate
is initially recognised at cost. Subsequently, the carrying
amount of the investment is adjusted to recognise the
investor’s share of profit or loss and its share of changes in
the investee’s other comprehensive income. The statement
of profit or loss reflects the Group’s share of the results of
operations of the associate. Any change in OCI of those
investees is presented as part of the Group’s OCI.
Distributions received from the investee reduce the
carrying amount of the investment.
Goodwill relating to the associate is included in the
carrying amount of the investment and is not tested for
impairment separately.
Unrealised gains and losses resulting from transactions
between the Group and the associate are eliminated to
the extent of the interest in the associate.
The aggregate of the Group’s share of profit or loss of an
associate is shown on the face of the statement of profit or
loss outside operating profit.
The financial statements of the associates are prepared for
the same reporting period as the Group. When necessary,
adjustments are made to bring the accounting policies in
line with those of the Group.
After application of the equity method, the Group
determines whether it is necessary to recognise an
impairment loss on its investment in its associate. At each
reporting date, the Group determines whether there is
objective evidence that the investment in the associate is
impaired. If there is such evidence, the Group calculates
the amount of impairment as the dierence between the
recoverable amount of the associate and its carrying value,
and then recognises the loss within ‘Share of profit of an
associate’ in the statement of profit or loss.
Upon loss of significant influence over the associate, the
Group measures and recognises any retained investment
at its fair value. Any dierence between the carrying
amount of the associate upon loss of significant influence
or joint control and the fair value of the retained investment
and proceeds from disposal is recognised in profit or loss.
See note 9 for details.
Foreign currency translation
Items included in the financial statements of each of the
Group’s entities are measured using the currency of the
primary economic environment in which the entity
operates (‘the functional currency’). The functional
currency of the Company as well as the reporting currency
of the Group is the euro (“€”). In selecting the functional
currencies of the entities in the Group, judgement is
required to determine the currency that has the biggest
influence on the sales prices for goods. This is typically
determined by assessing which country’s competitive
forces and regulations impact the sales prices the most.
Foreign currency transactions are translated into the
functional currency using the exchange rates prevailing at
the transaction date. Foreign exchange gains and losses
resulting from the settlement of such transactions as well
as from the translation of monetary assets and liabilities
denominated in foreign currencies at year-end exchange
rates are recognised in the statement of profit or loss.
The results and financial position of all the Group entities
that have a functional currency dierent from the presen-
tation currency are translated into the presentation
currency as follows:
• assets and liabilities for each statement of financial
position presented are translated at the closing rate
on the date of that statement of financial position;
• income and expenses for each income statement are
translated at average exchange rates; and
• all resulting exchange dierences are recognised in
other comprehensive income (foreign currency
translation reserve).
Application of IAS 29 Financial Reporting
in Hyperinflationary Economies
The Argentinian economy has been considered to be
hyperinflationary as of Q3 2018, as its cumulative inflation
rate over three years has exceeded 100 per cent.
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Notes to the consolidated financial statements
The carrying amounts of non-monetary assets and
liabilities have been adjusted to reflect the change in
the general price index from the date of acquisition to
the end of the reporting period. The price index used
at the reporting date was Instituto de Capacitación
Profesional (“ICP”).
All items recognised in the income statement have been
restated by applying the change in the general price index
from the dates when the items of income and expenses
were initially earned or incurred to the end of the reporting
period.
At the beginning of the first period of application
(1 January 2018), the components of equity, except
retained earnings, have been restated by applying a
general price index from the dates the components were
contributed or otherwise arose.
These restatements have been recognised directly in
equity as an adjustment to opening retained earnings.
Restated retained earnings have been derived from all
other amounts in the restated statement of financial
position. At the end of the first period and in subsequent
periods, all components of equity, have been and will be,
restated by applying a general price index.
As the presentation currency of the Group is that of a
non-hyperinflationary economy, comparative amounts
have not been adjusted for changes in the price level or
exchange rates in the current year. Dierence between
the closing equity of the previous year and the opening
equity of the current year is recognised in other
comprehensive income as a translation adjustment. See
note 34 for further information.
Financial instruments
A financial instrument is any contract that gives rise to a
financial asset of one entity and a financial liability or
equity instrument of another entity.
Financial assets
A financial asset is recognised at the date when the Group
becomes a party to the contractual provisions of the
instrument. The Group’s financial assets comprise of loans
and trade and other receivables and financial assets at fair
value through profit and loss.
Purchases or sales of financial assets that require delivery
of assets within a time frame established by regulation or
convention in the market place (regular way trades), are
recognised on the trade date, i.e., the date that the Group
commits to purchase or sell the asset.
At initial recognition, all financial assets are measured at
fair value plus, unless the financial asset is measured
subsequently at fair value through profit or loss,
transaction costs that are attributable to the acquisition
of the financial asset.
Financial assets are included in current assets, except for
those which maturities are greater than 12 months after
the end of the reporting period. These are classified as
non-current assets.
Fair value measurement
Fair value is the price that would be received to sell an
asset or is paid to transfer a liability in an orderly transaction
between market participants at the measurement date.
Transaction costs are not included in the fair value. They
are accounted for as prescribed by the applicable
accounting standard. The fair value of non-financial assets
is determined as the best use from a market perspective
which may dier from current use of the asset.
The Group uses measurement techniques that are
appropriate in the circumstances and for which sucient
data are available to measure fair value, maximising the
use of relevant observable inputs and minimising the
use of unobservable inputs. In the measurement of
financial assets and liabilities, the credit default risk is
taken into account.
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Notes to the consolidated financial statements
The fair values for assets and liabilities included in the
consolidated financial statements are classified based on
a three-level hierarchy. The classification is based on the
input parameters of the lowest category that is material to
the fair value measurement:
Level 1: Fair values based on quoted prices in active
markets.
Level 2: Fair values that are determined on the basis of
valuation techniques which use inputs that are
substantially based on observable market data.
Level 3: Fair values that are determined on the basis of
valuation techniques which use inputs that are
not based on observable market data.
Unobservable inputs are used to measure fair value to the
extent that relevant observable inputs are not available,
thereby allowing for situations in which there is little, if any,
market activity for the asset or liability at the measurement
date. An entity develops unobservable inputs using the
best information available in the circumstances, which
might include the entity’s own data, taking into account all
information about market participant assumptions that is
reasonably available.
Management has assessed that the carrying amounts of
trade and other receivables, trade and other payables,
other current financial assets and other current financial
liabilities approximate fair value due to the short-term
maturities of these instruments.
Initial classification and subsequent measurement
The Group classifies financial assets at initial recognition
as financial assets measured at amortised cost, or financial
assets measured at fair value through profit or loss.
Financial assets measured at amortised cost
A financial asset that meets both of the following
conditions is classified as a financial asset measured at
amortised cost.
a) The financial asset is held within the Group’s
business model whose objective is to hold assets in
order to collect contractual cash flows.
b) The contractual terms of the financial asset give rise
on specified dates to cash flows that are solely
payments of principal and interest on the principal
amount outstanding.
‘Principal’ is the fair value of the financial asset on
initial recognition and ‘interest’ is consideration for
the time value of money and for the credit risk
associated with the principal amount outstanding
during a particular period of time and for other basic
lending risks and costs (e.g. liquidity risk and
administrative costs), as well as a profit margin. When
assessing the contractual terms, the Group considers
contingent events that would change the amount or
timing of cash flows; terms that may adjust the
contractual interest rate, including variable-rate
features; prepayment and extension features; and
terms that limit the Group’s claim to cash flows from
specified assets (e.g.non-recourse features).
After initial recognition, the carrying amount of the
financial asset measured at amortised cost is determined
using the eective interest method, net of impairment
loss.
Within the Group, such financial assets are represented by
receivables against payment service providers, trade
receivables, security deposits and other receivables.
Fair value through profit or loss financial assets
(FVTPL)
When a financial asset does not fall in the above-
mentioned category, a financial asset is classified as “at fair
value through profit or loss” and measured at fair value
with changes in fair value recognised in profit or loss as
“finance gain” or “finance loss”.
The put option on the investment in an associate in Namshi
Holding Limited, which was disposed of in 2019, was the
only instrument classified as FVTPL (see note 9 for details).
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Notes to the consolidated financial statements
Impairment of financial assets
All financial assets to which impairment requirements
apply carry a loss allowance estimated based on expected
credit losses (“ECLs”). ECLs are a probability-weighted
estimate of the present value of cash shortfall over the
expected life of the financial instrument.
In the Group, the impairment requirements apply to
financial assets measured at amortised cost.
Trade receivables and contract assets
The Group uses a practical expedient to calculate the
expected credit losses on its trade receivables and
contract assets using a provision matrix. The Group uses
historical credit loss experience (adjusted if necessary for
changes in macroeconomic conditions) to estimate the
lifetime expected credit losses.
The impairment provisions calculated using the above
provision matrix shall be recorded on a separate allowance
account.
All trade receivables, which are longer than 345 days
overdue, or specifically impaired (e.g. insolvency of the
customer), are deemed not recoverable. Such trade
receivables are recognised as fully impaired and written o.
These balances were immaterial for the current and prior
financial year. The write-o constitutes a derecognition
event whereby the gross carrying amount of such trade
receivables is reduced against the corresponding amount
previously recorded on the allowance account
.
Other financial assets
The ECLs for all other financial assets are recognised in
two stages:
• For financial assets for which there has not been a
significant increase in credit risk since initial
recognition, the Group recognises credit losses which
represent the life time shortfalls that would result if a
default occurs in the 12 months after the reporting
date or a shorter period if the expected life of a
financial instrument is less than 12 months.
• For those financial assets for which there has been a
significant increase in credit risk since initial
recognition, a loss allowance reflects credit losses
expected over the remaining life of the financial asset.
The Group considers a financial asset in default when
contractual payments are 90 days past due. However, in
certain cases, the Group may also consider a financial
asset to be in default when internal or external information
indicates that the Group is unlikely to receive the
outstanding contractual amounts in full before taking into
account any credit enhancements held by the Group. A
financial asset is written o when there is no reasonable
expectation of recovering the contractual cash flows.
Financial assets of the Group to which the general
approach applies are low credit risk as no significant
increases in credit risk have occurred. Low credit risk only
applies to cash, cash equivalents and restricted cash,
which is presented within other financial assets. This
exposure is addressed by distributing its financial assets
over multiple financial institutions with good credit ratings
and investing in money market funds with a AAA rating
(according to Fitch).
The Group recognises in profit or loss, as an impairment
gain or loss, the amount of expected credit losses (or
reversal) that is required to adjust the loss allowance at the
reporting date to the amount that is required to be
recognised. See note 32 for further information.
De-recognition
A financial asset is derecognised when the rights to receive
cash flows from the asset have expired or the Group has
transferred substantially all the risks and rewards of the
asset.
Financial liabilities
A financial liability is recognised when the Group becomes
a party to the contractual provisions of the instrument. All
financial liabilities are measured on initial recognition at fair
value net of directly attributable transaction costs.
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Notes to the consolidated financial statements
The Group’s financial liabilities include trade and other
liabilities and loans and borrowings. All financial liabilities of
the Group are classified at initial recognition as other
financial liabilities. Please see notes 21 and 23 for further
details.
The Group analysed the terms and conditions of financial
instruments that were convertible into common shares of
the Group to determine its appropriate classification under
IAS 32 Financial Instruments: Presentation as equity, a
financial liability or as a compound instrument that contains
both a liability and an equity component.
Subsequent measurement
All financial liabilities of the Group are subsequently
measured at amortised cost using the EIR method, as
described below:
Loans and borrowings
After initial recognition, interest-bearing loans and
borrowings are measured at amortised cost using the EIR
method. Gains and losses are recognised in profit or loss
when the liabilities are derecognised as well as through
the EIR amortisation process. Amortised cost is calculated
by taking into account any discount or premium on
acquisition and fees or costs that are an integral part of the
EIR. The EIR amortisation is included as finance expense
in the statement of profit or loss. Borrowings are classified
as current liabilities unless the Group has an unconditional
right to defer settlement of the liability for at least 12
months after the reporting date. Fees paid to establish
loan facilities are deferred and recognised as transaction
costs of the loan to the extent that it is probable that some
or all of the facility will be drawn down. In this case, the fee
is deferred until the draw-down occurs. To the extent there
is no evidence that it is probable that some or all of the
facility will be drawn down, the fee is capitalised as a pre-
payment for liquidity services and amortised over the
period of the facility to which it relates. See note 21 for
further details.
Trade and other payables
Trade payables are obligations to pay for goods or services
that have been acquired in the ordinary course of business
from suppliers. Trade payables are classified as current
liabilities if payment is due within one year or less. If not,
they are presented as non-current liabilities. Trade
payables are recognised initially at fair value and sub-
sequently measured at amortised cost using the EIR.
De-recognition
A financial liability is derecognised when the obligation
under the liability is settled, cancelled, or expired.
When an existing financial liability is replaced by another
from the same lender on substantially dierent terms, or
the terms of an existing liability are substantially modified,
such an exchange or modification is treated as the
derecognition of the original liability and the recognition
of a new liability. The dierence in the respective carrying
amounts is recognised in the statement of profit or loss.
See note 23 for details.
Cash and cash equivalents
Cash and cash equivalents include cash in hand, demand
deposits held with banks and other short-term highly
liquid investments with original maturities of three months
or less, for which the risk of changes in value is considered
to be insignificant. See note 18 for details.
Property, plant and equipment
Items of property, plant and equipment are measured at
cost less accumulated depreciation and any accumulated
impairment losses, where required. Costs of minor repairs
and maintenance are expensed when incurred.
An item of property, plant and equipment is derecognised
upon disposal or when no future economic benefits are
expected from its use or disposal. Gains and losses on
disposals, determined by comparing the net disposal
proceeds with the carrying amount are recognised in
profit or loss for the year within other operating income
or expenses.
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Notes to the consolidated financial statements
Depreciation on items of property, plant and equipment
is calculated using the straight-line method to allocate
their cost to their residual values over their estimated
useful lives. Leased assets are depreciated over the shorter
of the lease term and their useful lives unless it is
reasonably certain that the Group will obtain ownership
by the end of the lease term.
The assets’ residual values, methods of depreciation and
useful lives are reviewed at the end of each reporting
period and adjusted prospectively, if appropriate.
Depreciation is calculated on a straight-line basis over the
estimated useful lives of the assets, as follows:
Classes of tangible assets
Useful lives in years
Oce/IT equipment 3–5
Warehouse 10
Motor Vehicles 5–8
Please refer to note 12 for details.
Leases
At inception of a contract, the Group assesses whether a
contract is, or contains, a lease. A contract is, or contains, a
lease if the contract conveys the right to control the use of
an identified asset for a period of time in exchange for
consideration. To assess whether a contract conveys the
right to control the use of an identified asset, the Group
assesses whether:
• the contract involves the use of an identified asset–
this may be specified explicitly or implicitly and
should be physically distinct or represent substantially
all of the capacity of a physically distinct asset. If the
supplier has a substantive substitution right, then the
asset is not identified;
• the Group has the right to obtain substantially all of
the economic benefits from use of the asset
throughout the period of use; and
• the Group has the right to direct the use of the asset.
The Group has this right when it has the decision-
making rights that are most relevant to changing how
and for what purpose the asset is used. In rare cases
where the decision about how and for what purpose
the asset is used is predetermined, the Group has the
right to direct the use of the asset if either:
– the Group has the right to operate the asset; or
– the Group designed the asset in a way that
predetermines how and for what purpose it will be
used.
This policy is applied to contracts entered into, or
changed, on or after 1 January 2019. For contracts entered
into before 1 January 2019, the Group elected to apply the
practical expedient and applied IFRS 16 only to contracts
that were previously identified as leases in accordance
with IAS 17 and IFRIC 4. The Group elected to use the
exemptions proposed by the standard on lease contracts
for which the lease terms ends within 12 months as of the
date of initial application, and lease contracts for which the
underlying asset is of low value. The Group has leases of
certain oce equipment (i.e., personal computers,
printing and photocopying machines) that are considered
low value, being below €5,000.
At inception or on reassessment of a contract that contains
a lease component, the Group allocates the consideration
in the contract to each lease component on the basis of
their relative stand-alone prices.
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Notes to the consolidated financial statements
As a lessee
The Group recognises a right-of-use asset and a lease
liability at the lease commencement date. The right-of-use
asset is initially measured at cost, which comprises the
initial amount of the lease liability adjusted for any lease
payments made at or before the commencement date,
plus any initial direct costs incurred and an estimate of
costs to dismantle and remove the underlying asset or to
restore the underlying asset or the site on which it is
located, less any lease incentives received.
The right-of-use asset is subsequently depreciated using
the straight-line method from the commencement date to
the earlier of the end of the useful life of the right-of-use
asset or the end of the lease term. The estimated useful
lives of right-of-use assets are determined on the same
basis as those of property and equipment. In addition, the
right-of-use asset is periodically reduced by impairment
losses, if any, and adjusted for certain remeasurements of
the lease liability.
The lease liability is initially measured at the present value
of the lease payments that are not paid at the
commencement date, discounted using the interest rate
implicit in the lease or, if that rate cannot be readily
determined, the Group’s incremental borrowing rate.
Generally, the Group uses its incremental borrowing rate
as the discount rate which is a weighted average based on
underlying lease liabilities.
Lease payments included in the measurement of the lease
liability comprise the following:
• fixed payments, including in-substance fixed
payments;
• variable lease payments that depend on consumer
price index or a rate, initially measured using the
index or rate as at the commencement date;
• amounts expected to be payable under a residual
value guarantee; and
• the exercise price under a purchase option that is
reasonably certain to be exercised;
• lease payments in an optional renewal period if the
Group is reasonably certain to exercise an extension
option, and penalties for early termination of a lease
unless the Group is reasonably certain not to
terminate early.
The lease liability is measured at amortised cost using the
eective interest method. It is remeasured when there is a
change in future lease payments arising from a change in
an index or rate, if there is a change in the Group’s estimate
of the amount expected to be payable under a residual
value guarantee, or if the Group changes its assessment
of whether it will exercise a purchase, extension or
termination option.
When the lease liability is remeasured in this way, a
corresponding adjustment is made to the carrying amount
of the right-of-use asset or is recorded in profit or loss if
the carrying amount of the right-of-use asset has been
reduced to zero. Please refer to note 13 for details.
Goodwill
Goodwill is carried at cost less accumulated impairment
losses, if any. Goodwill is allocated to the cash-generating
units (“CGUs”), or Groups of CGUs, that are expected to
benefit from the synergies of the business combination.
The Company tests CGUs to which goodwill has been
allocated for impairment at least annually and whenever
indicators of impairment exist. An impairment loss with
respect to goodwill is not subsequently reversed.
Gains or losses on disposal of an operation within a cash
generating unit to which goodwill has been allocated
include the carrying amount of goodwill associated with
the disposed operation, generally measured on the basis
of the relative values of the disposed operation and the
portion of the cash-generating unit which is retained.
Please refer to note 14 for details.
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Notes to the consolidated financial statements
Other intangible assets
Intangible assets acquired separately are measured on
initial recognition at cost. The cost of intangible assets
(trademarks and customer relationships) acquired in a
business combination is their fair value at the acquisition
date. Following initial recognition, intangible assets are
carried at cost less any accumulated amortisation and any
accumulated impairment losses.
Usually, internally generated intangible assets are not
capitalised and expenditure is reflected in profit or loss for
the period in which the expenditure is incurred.
Development costs that are directly attributable to the
design and testing of identifiable and unique software
products controlled by the Company are recognised as
intangible assets when the following criteria are met:
• it is technically feasible to complete the software
pro duct so that it will be available for use;
• management intends to complete the software
pro duct and use or sell it;
• there is an ability to use or sell the software product;
• it can be demonstrated how the software product will
generate probable future economic benefits;
• adequate technical, financial and other resources to
complete the development and to use or sell the
software product are available; and
• the expenditure attributable to the software product
during its development can be reliably measured.
Other development expenditures that do not meet these
criteria are recognised as an expense as incurred.
Intangible assets are amortised over the useful economic
life and assessed for impairment whenever there is an
indication that the carrying amount may not be recoverable
and the intangible asset may therefore be impaired. The
amortisation period and the amortisation method for an
intangible asset are reviewed at least at the end of each
reporting period. The amortisation expense on intangible
assets is recognised in the consolidated statement of
profit or loss, in the expense category that best suits the
function of the intangible assets.
Gains or losses arising from de-recognition of an intan-
gible asset are measured as the dierence between the
net disposal proceeds and the carrying amount of the
asset and are recognised in the consolidated statement of
profit or loss, when the asset is derecognised.
The Group’s intangible assets have definite useful lives
and primarily include capitalised software, licences and
rights as well as trademarks and customer relationships.
Intangible assets are amortised using the straight-line
method over their useful lives:
Classes of other intangible assets
Useful lives in years
Acquired software licenses 1–5
Internally developed software 3–5
Website Costs 3–5
Trademark 15
Customer relationships 6–16
Please refer to note 14 for details.
Inventories
Inventories comprise raw materials and supplies, finished
goods and merchandise. Inventories are measured at the
lower of cost and net realisable value. Net realisable value
is the estimated selling price in the ordinary course of
business less the estimated costs of completion and the
estimated costs necessary to make the sale. Regionally,
the cost of inventory is calculated using the weighted
average cost method or the first-in-first-out method.
Write-downs to net realisable value are made to allow for
all risks from slow-moving or obsolescent goods and/or
reduced saleability and are included within cost of sales.
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Notes to the consolidated financial statements
When the circumstances that previously caused inventory
to be written down below cost no longer exist, the write
down is reversed. See note 16 for details.
Impairment of non-financial assets
The Group assesses, at each reporting date, whether there
is an indication that any non-financial asset may be
impaired. The Group considers the relationship between
its market capitalisation and its book value, among other
factors, when reviewing for indicators of impairment. If
market capitalisation is lower than the carrying value of
equity, the market considers the Group’s value is less than
the carrying value and an impairment trigger is met.
Assets that are subject to amortisation are reviewed for
impairment whenever events or changes in circumstances
indicate that the carrying amount may not be recoverable.
Goodwill is tested for impairment at least annually and
whenever there are indicators for impairment.
Management has used a two-level impairment testing
approach including (i) a CGU-level test with partial
allocation of corporate overhead costs and (ii) a higher-
level test of the consolidated Group recoverable amount
including a full allocation of corporate overhead costs.
An impairment loss is recognised for the amount by which
the asset’s carrying amount exceeds its recoverable
amount. The recoverable amount is the higher of the
asset’s fair value less costs of disposal and value in use. For
the purposes of impairment testing, assets are grouped
together into CGUs, the smallest identifiable Group of
assets that generates cash inflows that are largely
independent of the cash inflows from other assets or
groups of assets. Goodwill arising from business
combinations is allocated to the CGUs that are expected
to benefit from the synergies of the business combination.
In assessing value in use, the Discounted Cash Flow
(“DCF”) approach is used as the primary valuation method.
The estimated future cash flows are discounted to their
present value using a risk adjusted discount rate that
reflects a current market-based assessment of the time
value of money and the risks specific to the asset and its
forecasts. We derive our discount rates using a capital
asset pricing model.
The Group bases its value-in-use calculations on detailed
budgets and forecasts, which are prepared separately for
each of the Group’s CGUs to which the individual assets
are allocated. Internally developed budgets and forecasts
generally cover a period of three years. These are then
trended over an additional seven years to reflect the early
development stage of the CGUs and their high growth
potential over a full ten-year horizon. To calculate the
terminal value of the CGUs, the terminal year cash flows is
capitalised into perpetuity using CGU-specific perpetual
growth rates (“PGR”).
Impairment losses are recognised in profit or loss. They
are allocated first to reduce the carrying amount of any
goodwill allocated to the CGU, and then to reduce the
carrying amounts of the other assets in the CGU on a pro
rata basis.
A previously recognised impairment loss for non-financial
assets other than goodwill is reversed only if there has
been a change in the assumptions used to determine the
asset’s recoverable amount since the last impairment loss
was recognised. The reversal is limited so that the carrying
amount of the asset does not exceed its recoverable
amount, nor exceed the carrying amount that would have
been determined, net of depreciation, had no impairment
loss been recognised for the asset in prior years. Please
refer to note 14 for further details.
Prepayments
Prepayments are carried at cost less provision for
impairment. A prepayment is classified as non-current
when the goods or services relating to the prepayment are
expected to be obtained after one year, or when the
prepayment relates to an asset which will itself be classified
as non- current upon initial recognition.
Treasury shares
Own equity instruments that are reacquired (treasury
shares) are recognised at cost and deducted from equity.
No gain or loss is recognised in profit or loss on the
purchase, sale, issue or cancellation of the Group’s own
equity instruments. Please see note 19 for further details.
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Notes to the consolidated financial statements
Provisions
Provisions are recognised when the Group has a present
obligation (legal or constructive) as a result of a past event,
if it is probable that an outflow of resources embodying
economic benefits will be required to settle the obligation
and a reliable estimate can be made of the amount of the
obligation. A best estimate is made of the amount of the
provision taking into account all identifiable risks arising
from the obligation. Provisions with a residual term of
more than twelve months are discounted. When the
Group expects some or all of a provision to be reimbursed,
for example, under an insurance contract, the
reimbursement is recognised as a separate asset, but only
when the reimbursement is virtually certain. The expense
relating to a provision is presented in the income
statement, net of any reimbursement. Refer to note 22 for
more details.
Share-based payments
The Group operates equity-settled and cash-settled
share-based payment plans, under which Group com-
panies receive services from directors and employees as
consideration for equity instruments of the Company or
one of its subsidiaries or a right to receive a share-based
cash payment.
Equity-settled share-based payments
The total amount to be expensed for services received is
determined by reference to the grant date fair value of the
share-based payment award made. For share options
granted, the grant date fair value is determined using the
Black-Scholes option valuation formula. For equity settled
restricted stock units issued as part of the 2019 Share Plan
(see note 20 for explanation), the grant date fair value is
determined with reference to the observed publicly
available share price of GFG S.A. on the relevant date.
The fair value determined at the grant date is expensed on
a straight-line basis over the vesting period, based on the
Group’s estimate of the number of awards that will
eventually vest, with a corresponding credit to equity.
Estimated forfeitures are revised if the number of awards
expected to vest dier from previous estimates.
Dierences between the estimated and actual forfeitures
are accounted for in the period it occurs.
For awards with graded-vesting features, each instalment
of the award is treated as a separate grant. This means that
each instalment is separately expensed over the related
vesting period. Some instalments vest only upon the
occurrence of a specified exit event (e.g. IPO) or 12 months
after such an event and under the condition the employee
is still employed with the Company. These instalments are
expensed over the expected time to such vesting event
and recorded in employee benefit expense. Exit
conditions linked with continued service are considered
non-market vesting conditions. No expense is recognised
for awards that do not ultimately vest.
The Group starts recognising a compensation expense
from the beginning of the service period, even when the
grant date is subsequent to the service commencement
date. During the period between service commencement
date and grant date, the share-based payment expense
recognised is based on an estimated grant date fair value
of the award. Once the grant date has been established,
the estimated fair value is revised so that the expense
recognised is based on the actual grant date fair value of
the equity instruments granted.
When the terms of an equity-settled award are modified,
the minimum expense recognised is the expense that
would have resulted had the terms not been modified,
given the original terms of the awards are met. An
additional expense is recognised for any modification
that increases the total fair value of the share-based
payment transaction, or is otherwise beneficial to the
employee as measured at the date of modification.
Expenses for awards that are cancelled are accelerated.
Replacement awards that are not designated as such are
accounted for as new grant.
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Notes to the consolidated financial statements
Cash-settled share-based payments
The fair value of the amount payable to employees with
respect to cash-settled share-based payments are
recognised as an expense over the vesting period. The fair
value is measured initially and at each reporting date until
the settlement date, with changes in fair value recognised
in employee benefits expense. The fair value is determined
using the Black-Scholes model, or revalued using the latest
publicly available share price of GFG S.A. for cash settled
units issued as part of the 2018 Employee share option
plan. The approach used to account for vesting conditions
when measuring equity-settled transactions also applies
to the cash-settled awards. Please refer to note 20 for
further details.
Revenue recognition
The Group generates revenues mainly from the sale of
fashion and lifestyle products online through its retail
websites. Revenue is recognised at a point in time when
control of the asset is transferred to the customer, i.e. on
delivery of the goods or services.
The Group entities generally oer customers a possibility
to return any unused goods within a specified period of
time (usually 30 days) and receive a full refund in form of
cash or store credit. In such cases revenue is recognised
only to the extent that is highly probable that a significant
reversal will not occur when the uncertainty associated
with the right of return is subsequently resolved. The
remaining consideration is recognised as a refund liability.
The Group determines the amount of revenue and the
amount of refund liability using the expected value
method, representing the sum of probability weighted
outcomes. A corresponding right of return asset (and
corresponding adjustment to cost of sales) is also
recognised for the right to recover products from a
customer.
The Group evaluates whether it is principal or agent with
respect to its performance obligations. When the Group
is primarily obligated in a transaction, is subject to
inventory risk, has latitude in establishing prices and
selecting suppliers, the Group acts as principal and
records revenue at the gross sales price. The Group
records the net amounts as commissions earned if it is not
primarily obligated and do not have latitude in establishing
prices namely in its marketplace business (note 25). Such
amounts earned are determined using a fixed percentage
of the transaction value, a fixed-payment schedule, or a
combination of the two.
Coupons and loyalty points, except as those explained
below, and discounts are deducted from the transaction
price.
If as a part of sale transactions, the Group issues coupons
or loyalty points to the customers which can either be used
as an incremental discount to other available discounts in
future transactions or that provide a customer loyalty
status are accounted for as a material right representing
an additional performance obligation. The consideration
received is allocated based on the relative stand-alone
selling prices between the sold goods and the additional
performance obligation.
The stand-alone selling price of the material right is
estimated reflecting:
a) the discount that the customer would be entitled to,
adjusted for any discount that the customer could
receive without using the loyalty program (i.e. any
discount available to any other customer) and
b) the likelihood that the customer will use the loyalty
points.
The amount allocated to the loyalty points is recognised
as revenue when the customer uses the material right or
when they expire.
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ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The Group also issues discount coupons to its employees
on a monthly basis which represent a form of remuneration
for their services and aims to build loyalty. In such cases,
revenue from sales to employees is accounted for on a
gross basis while the amount of discounts provided to
employees is included in employee benefit expenses in
the period the coupons are redeemed.
Refund liabilities
Refund liabilities are estimated on the basis of historical
returns and are recorded so as to allocate them to the
same period in which the original revenue is recorded.
These liabilities are reviewed regularly and updated to
reflect management’s latest best estimates, although
actual returns could vary from these estimates.
Right of return assets
The Group presents the expected returns of goods, based
on historical return rates, on a gross basis in the statement
of profit or loss and reduces revenue by the full amount of
sales that it estimates will be returned. The dispatch of
goods that is recorded in full upon dispatch of the goods
is then corrected by the estimated amount of returns.
The Group also presents expected returns on a gross basis
in the statement of financial position. In this context, a right
to recover possession of goods from expected returns is
recognised in other non-financial assets. The amount of
the asset corresponds to the cost of the goods delivered
for which a return is expected, taking into account the
costs incurred for processing the return and the losses
resulting from disposing of these goods.
Cost of sales
Cost of sales consists of the purchase price of consumer
products, inbound shipping charges and certain
personnel expenses. The inbound shipping charges to
receive products from the suppliers of the Group are
included in inventory, and recognised as cost of sales
upon sale of products to the Group’s customers. The cost
of merchandise sold to the customers is calculated using
the weighted average cost method or the first-in-first-out
method.
Selling and distribution expenses
Selling and distribution expenses include fulfilment and
marketing costs.
Fulfilment costs represent costs incurred in operating and
stang the Group’s fulfilment and customer service
centres, including costs attributable to receiving,
inspecting, and warehousing inventories; picking,
packaging, and preparing customer orders for shipment,
including packaging materials; payment processing and
related transaction costs. Fulfilment costs also include
outbound shipping costs, content and e-production costs,
and amounts paid to third parties that assist the Group in
fulfilment and customer service operations.
Marketing costs consist primarily of targeted online
advertising, television advertising, public relations
expenditures, and payroll and related expenses for
personnel engaged in marketing, business development,
and selling activities.
Administrative expenses
Administrative expenses include technology and buying
expenses, and other administrative expenses.
Technology and content expenses consist principally of
technology infrastructure expenses and payroll and
related expenses for employees involved in application,
product, and platform development, category expansion,
editorial content, buying, merchandising selection,
systems support, and digital initiatives, as well as costs
associated with the computer, storage, and
telecommunications infrastructure used internally.
118
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Notes to the consolidated financial statements
Employee benefits
Wages, salaries, paid annual leave and sick leave, bonuses
and non-monetary benefits (such as health services) are
accrued in the period in which the associated services are
rendered by the employees of the Group. Employees are
eligible for discount coupons provided to them on a
monthly basis. The cost of these coupons is included in
employee benefits and subject to social security and tax
contributions. The Company recognises a liability and an
expense for bonus plans to employees and key
management personnel based on a formula and Group
performance targets when contractually obliged.
Income taxes
Income taxes have been provided for in the consolidated
financial statements in accordance with legislation enacted
or substantively enacted by the end of the reporting
period. The income tax charge comprises current tax and
deferred tax and is recognised in profit or loss for the year,
except if it is recognised in other comprehensive income
or directly in equity because it relates to transactions that
are also recognised, in the same or a dierent period, in
other comprehensive income or directly in equity.
Current tax is the amount expected to be paid to, or
recovered from, the taxation authorities in respect of
taxable profits or losses for the current and prior periods.
Taxable profits or losses are based on estimates if financial
statements are authorised prior to filing relevant tax
returns. Taxes other than on income are recorded within
operating expenses.
Management periodically evaluates positions taken in the
tax returns with respect to situations in which applicable
tax regulations are subject to interpretation and establishes
provisions where appropriate.
Deferred tax
Deferred taxes are recognised on temporary dierences
arising between the tax bases of assets and liabilities and
their carrying amounts in the consolidated financial
statements. However, deferred tax liabilities are not
recognised if they arise from the initial recognition of
goodwill. Deferred taxes are not accounted for if they arise
from the initial recognition of an asset or liability in a
transaction other than a business combination that at the
time of the transaction aects neither accounting nor
taxable profit or loss. Deferred taxes are determined using
tax rates (and laws) that have been enacted or substantively
enacted by the reporting date and are expected to apply
when the related deferred income tax asset is realised or
the deferred income tax liability is settled.
Deferred tax liabilities are recognised on taxable
temporary dierences arising from investments in
subsidiaries, associates and joint arrangements, except
for deferred income tax liability, where the timing of the
reversal of the temporary dierence is controlled by the
Group and it is probable that the temporary dierence
will not reverse in the foreseeable future. Generally, the
Group is unable to control the reversal of the temporary
dierence for associates.
Deferred tax assets are recognised on deductible
temporary dierences and tax loss carry forwards arising
from investments in subsidiaries, associates and joint
arrangements only to the extent that it is probable the
temporary dierence will reverse in the future and there is
sucient taxable profit available against which the
temporary dierence can be utilised.
Deferred tax assets and liabilities are oset when there is
a legally enforceable right to oset current tax assets
against current tax liabilities. The deferred tax assets and
liabilities must relate to income taxes levied by the same
taxation authority on either the same taxable entity or
dierent taxable entities, where there is an intention to
settle the balances on a net basis.
119
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
4. CRITICAL ACCOUNTING
ESTIMATES AND
JUDGEMENTS IN APPLYING
ACCOUNTING POLICIES
Management makes estimates and assumptions that
aect the amounts recognised in the financial statements
and the carrying amounts of assets and liabilities within
the next financial year. Estimates and judgements are
continually evaluated and are based on management’s
experience and other factors, including expectations of
future events that are believed to be reasonable under
the circumstances. Other disclosures to the Group’s
exposure to risk and uncertainties are included in the
Capital Management and Financial Risk Management
sections. Judgements that have the most significant
eect on the amounts recognised in the financial
statements and estimates that can cause a significant
adjustment to the carrying amount of assets and liabilities
within the next financial year include:
Estimating variable consideration for returns
The Group estimates variable considerations to be
included in the transaction price for the sale of goods
with rights of return. The Group determines the amount
of revenue using the expected value method. The
expected value method is the sum of probability
weighted outcomes in a range of possible consideration
amounts. Historical purchasing patterns and the refund
entitlements of customers are used in estimating the
expected consideration amounts.
Determination of the net realisable
value of inventories
The cost of inventories may not be recoverable if those
inventories are damaged, if they have become wholly or
partially obsolete, or if their selling prices have declined.
The provision for obsolete inventories reflects
management’s estimate of losses expected by the
Company, calculated on the basis of experience as well as
past and anticipated market performance. Estimates are
based on information available as of the reporting date
and management judgement about the expected sales
volumes and margins after the reporting date. The
expectation of volumes of loss-making sales and losses to
be incurred is based on historical data adjusted for the
results of management’s analysis of retail industry
developments and expected changes in customers’
behaviour. Customer behaviour is analysed on a seasonal
and geographical basis.
Each reporting date, management makes an assessment
of slow moving inventory/non-moving inventory, based on
inventory which is not sold for a period of six months, and
makes adequate provision for such unsold inventory and
makes adequate impairments for such unsold inventory
reflecting the decline of the net realisable value.
Inventory balance is categorised depending on the season
to which it relates to. The inventory valuation allowance
reflects management’s estimate of losses expected to be
incurred by the Group as a result of sales of stock
belonging to the particular season and sell-through rate.
Net realisable value is calculated as estimated selling price
less the estimated costs necessary to make the sale.
However, the extensive usage of discounts and frequent
changes in prices with respect to market conditions makes
estimation of selling prices on an item by item basis
impracticable. Assessment of net realisable value is
carried out on a product line level and all inventory
balances are categorised as follows: footwear, clothes and
accessories. For further information we refer to note 16.
120
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Taxes
Uncertainties exist with respect to the interpretation of
complex tax regulations, changes in tax laws, and the
amount and timing of future taxable income. Deferred tax
assets are recognised for unused tax losses to the extent
that it is probable that taxable profit will be available
against which the losses can be utilised. Provided the
recognition criteria for deferred tax assets are met, an
asset is only recognised to the extent of existing deferred
tax liabilities. Any excess of deferred tax assets is not
recognised due to the startup phase of the Group and the
related loss history. Significant management judgement
is required to determine the amount of deferred tax assets
that can be recognised, based upon the likely timing and
the level of future taxable profits together with future tax
planning strategies.
Statutory tax and customs legislation, which was enacted
or substantively enacted at the end of the reporting
period, is subject to varying interpretations when being
applied to the transactions and activities of the Group.
Consequently, tax positions taken by management and
the formal documentation supporting the tax positions
may be challenged by tax authorities. We reconsidered
the Group’s tax risks in the context of the application of
IFRIC 23 starting the year ended 31 December 2019. For
further information, we refer to note 31.
The Group operates in certain countries where the tax
systems, regulations and enforcement processes have
varying stages of development creating uncertainty
regarding application of tax law and interpretation of tax
treatments. The Group is also subject to regular tax audits
in the countries where it operates. When there is
uncertainty over whether the taxation authority will accept
a specific tax treatment under the local tax law, that tax
treatment is therefore uncertain. The resolution of tax
positions taken by the Group, through negotiations with
relevant tax authorities or through litigation, can take
several years to complete and, in some cases, it is dicult
to predict the ultimate outcome. Therefore, judgment is
required to determine provisions for taxes.
In assessing whether and how an uncertain tax treatment
aects the determination of taxable profit (tax loss), tax
bases, unused tax losses, unused tax credits and tax rates,
the Group assumes that a taxation authority with the right
to examine amounts reported to it will examine those
amounts and have full knowledge of all relevant
information when making those examinations.
The Group has a process in place to identify its uncertain
tax positions. Management then considers whether or not
it is probable that a taxation authority will accept an
uncertain tax treatment. On that basis, the identified risks
are split into three categories (i) remote risks (risk of
outflow of tax payments are 0% to 20%), (ii) possible risks
(risk of outflow of tax payments are 21% to 49%) and
probable risks (risk of outflow is more than 50%). The
process is repeated regularly by the Group.
If the Group concludes that it is probable or certain that
the taxation authority will accept the tax treatment, the
risks are categorized either as possible or remote, and it
determines the taxable profit (tax loss), tax bases, unused
tax losses, unused tax credits or tax rates consistently with
the tax treatment used or planned to be used in its income
tax filings. The risks considered as possible are not
provisioned but disclosed as tax contingencies in the
Group consolidated financial statements while remote
risks are neither provisioned nor disclosed.
If the Group concludes that it is probable that the taxation
authority will not accept the Group’s interpretation of the
uncertain tax treatment, the risks are categorized as
probable, and it reflects the eect of uncertainty in
determining the related taxable profit (tax loss), tax bases,
unused tax losses, unused tax credits or tax rates by
generally using the most likely amount method– the single
most likely amount in a range of possible outcomes.
121
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
If an uncertain tax treatment aects both deferred tax and
current tax, the Group makes consistent estimates and
judgments for both. For example, an uncertain tax
treatment may aect both taxable profits used to
determine the current tax and tax bases used to determine
deferred tax.
If facts and circumstances change, the Group reassesses
the judgments and estimates regarding the uncertain tax
position taken. Please refer to note 31 for our analysis of
uncertain tax positions.
Estimating the incremental borrowing rate
The Group cannot readily determine the interest rate
implicit in the lease, therefore, it uses its incremental
borrowing rate (“IBR”) to measure lease liabilities. The IBR
is the rate of interest that the Group would have to pay to
borrow over a similar term, and with a similar security, the
funds necessary to obtain an asset of a similar value to the
right-of-use asset in a similar economic environment. The
IBR therefore reflects what the Group ‘would have to pay’,
which requires estimation when no observable rates are
available. The primary inputs into the IBR calculations are
available base rates such as local government bond yields.
Company-specific spreads are overlaid to the base rates,
as well as corporate spreads and security adjustments as
needed.
Critical judgements in determining
the lease term
In determining the lease term, management considers all
facts and circumstances that create an economic incentive
to exercise an extension option, or not exercise a
termination option. Extension options (or periods after
termination options) are only included in the lease term if
the lease is reasonably certain to be extended (or not
terminated).
For leases of warehouses, the following factors are
normally the most relevant:
• If there are significant penalties to terminate (or not
extend), the Group is typically reasonably certain to
extend (or not terminate)
• If any leasehold improvements are expected to have a
significant remaining value, the Group is typically
reasonably certain to extend (or not terminate)
• Otherwise, the Group considers other factors
including historical lease durations and the costs and
business disruption required to replace the lease
assets.
Impairment of non-financial assets
Impairment exists when the carrying value of an asset or
cash generating unit exceeds its recoverable amount,
which is the higher of its fair value less costs of disposal
and its value in use. The fair value less costs of disposal
calculation is based on available data from binding sales
transactions, conducted at arm’s length, for similar assets
or observable market prices less incremental costs of
disposing of the asset. The value in use calculation is
based on a DCF model. The cash flows are derived from
the budget for the next three years and include significant
future investments (including the commitments disclosed
in note 31) that will enhance the performance of the assets
of the CGU being tested. The recoverable amount is
sensitive to the discount rate used for the DCF model as
well as the expected future cash-inflows and the PGR used
for extrapolation purposes. These estimates are most
relevant to goodwill and other intangibles with indefinite
useful lives recognised by the Group. The key assumptions
used to determine the recoverable amount for the
dierent CGUs, including a sensitivity analysis, are
disclosed and further explained in note 14.
122
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Fair value determination of share-based
payment plans
Estimating the fair value for share-based payment
transactions generally requires determination of the most
appropriate valuation model, which depends on the terms
and conditions of the grant. For share options, this
estimate also requires determination of the most
appropriate inputs to the valuation model including the
expected life of the share option, volatility and risk-free
rate. The Group initially measures the cost of cash-settled
transactions with employees using the Black-Scholes
model in order to determine the fair value of the liability
incurred. For cash-settled share-based payment
transactions, the liability needs to be remeasured at the
end of each reporting period up to the date of settlement,
with any changes in fair value recognised in profit or loss.
This requires a reassessment of the estimates used at the
end of each reporting period. For the measurement of the
fair value of equity-settled transactions with employees,
the Group uses the Black-Scholes model to value options
by reference to observable market inputs on the date in
which the grant date is achieved. The options are then not
remeasured at the end of each reporting period.
Since GFG became listed the share price input in those
models will be derived from the Company’s quoted share
price at the reporting date. Measurement is thus subject
to the market driven volatility of the share price. Other
inputs may not be directly observable and therefore still
need to be estimated.
The assumptions and models used for estimating the fair
value for share-based payment transactions are disclosed
in note 20.
5. CHANGES IN SIGNIFICANT
ACCOUNTING POLICIES
The accounting policies applied in these consolidated
financial statements are the same as those applied in the
Group’s consolidated financial statements as at and for the
year ended 31 December 2019, with the exception of the
following.
The following standards and interpretations were eective
1 January 2020 but do not have a significant eect on the
results or financial position of the Group:
Standard Effective date
Amendments to references to the Conceptual Framework in IFRS Standards 1 January 2020
Amendments to IFRS 3: Definition of Business 1 January 2020
Amendments to IAS 1 and IAS 8: Definition of Material 1 January 2020
Amendments to IFRS 9, IAS 39 and IFRS7: Interest Rate Benchmark Reform 1 January 2020
IFRS 16 Covid-19-Related Rent Concessions 1 June 2020
123
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The following standards and interpretations which are not
yet eective are not expected to have a material eect on
the results or financial position of the Group:
Standard Effective date Effects
Interest Rate Benchmark Reform– Phase 2 1 January 2021 No significant
eect expected
Amendments to IAS 16 prohibiting a company from deducting from the cost
of property, plant and equipment amounts received from selling items
produced while the company is preparing the asset for its intended use
1 January 2022 No significant
eect expected
Amendments to IAS 37 regarding the costs to include
when assessing whether a contract is onerous
1 January 2022 No significant
eect expected
Amendments to IFRS 9 resulting from Annual Improvements to IFRS Standards
2018–2020 (fees in the ‘10 per cent’ test for derecognition of financial liabilities)
1 January 2022 No eect
expected
Amendments to IFRS 3 updating a reference to the Conceptual Framework 1 January 2022 No eect
expected
Amendments to IFRS 1 resulting from annual Improvements to
IFRS Standards 2018–2020 (subsidiary as a first-time adopter)
1 January 2022 No eect
expected
IAS 41 Agriculture– Taxation in fair value measurements 1 January 2022 No eect
expected
IFRS 17: Insurance Contracts 1 January 2023 No eect
expected
Amendments to IAS 1 regarding the current or
non-current classification of liabilities
1 January 2023 No significant
eect expected
The Group plans to adopt new standards once eective.
124
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
6. SEGMENT INFORMATION
Operating segments are components that engage in
business activities that may earn revenues or incur
expenses, whose operating results are regularly reviewed
by the chief operating decision maker (“CODM”) and for
which discrete financial information is available. Transfer
prices between operating segments are on an arm’slength
basis.
Previously, the Group has reported to the CODM and
publicly disclosed three operating segments, Latin
America (“LATAM”) which includes Dafiti, Commonwealth
of Independent States (“CIS”) which includes Lamoda, and
Asia-Pacific (“APAC”) which includes the two major trading
businesses for that region being ZALORA and
THEICONIC.
The reporting to the CODM was further developed in Q2
2020 to include a more granular view of the previous
APAC region, based on its geographical split.
Accordingly, APAC is now reported under two operating
segments, South East Asia (“SEA”), the operating
activities of the ZALORA business and Australia & New
Zealand (“ANZ”) which represents the operating activities
of THEICONIC. The column ‘Other’ includes headquarter
and other business activities.
From 30 June 2020, the Group is disclosing four operating
segments, following the guidance set out in IFRS 8. These
segments will represent the geographical areas that the
main fashion ecommerce business units operate and
which are now reported on a monthly basis to the CODM.
Comparative figures for the year ended 31 December 2019
have been restated to align with this change in
presentation. The new segments are as follows:
– Latin America (“LATAM”) including Brazil,
Colombia, Chile and Argentina;
– Commonwealth of Independent States (“CIS”)
including Russia, Belarus, Kazakhstan, and Ukraine;
– South East Asia (“SEA”) including Malaysia,
Indonesia, Singapore, Philippines, Brunei, Taiwan
and Hong Kong; and
– Australia & New Zealand (“ANZ”).
Intercompany consolidation adjustments are included in
the ‘reconciliation’ column, in order to arrive at the GFG
consolidated accounts.
Group segments generate external revenue from fashion
and lifestyle ecommerce products. Products are not
disaggregated in CODM reporting.
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ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Reportable segment information for the year ended 31 December 2020 is set out below:
In €m LATAM CIS SEA ANZ
Total Fashion
Business Other
Reconci-
liation
1
Total
Revenues from
external customers 372.7 453.3 274.5 259.2 1,359.7 - - 1,359.7
Intersegment Revenue - - 0.4 - 0.4 23.3 (23.7) -
Total Revenue 372.7 453.3 274.9 259.2 1,360.1 23.3 (23.7) 1,359.7
Cost of sales (208.0) (240.1) (186.1) (138.0) (772.2) (1.4) 0.1 (773.5)
Gross profit 164.7 213.2 88.8 121.2 587.9 21.9 (23.6) 586.2
Operating (expenses)/income
Selling and distribution expenses (128.3) (170.5) (70.4) (79.3) (448.5) - 0.8 (447.7)
Administrative expenses (38.7) (36.3) (44.2) (39.6) (158.8) (45.9) 10.3 (194.4)
Other (expenses)/income (2.5) (4.4) 5.1 (1.7) (3.5) (6.7) 1.3 (8.9)
EBIT (4.8) 2.0 (20.7) 0.6 (22.9) (30.7) (11.2) (64.8)
Depreciation and Amortisation 13.2 23.9 5.9 10.0 53.0 2.4 10.9 66.3
EBITDA
2
8.4 25.9 (14.8) 10.6 30.1 (28.3) (0.3) 1.5
Recurring items
(see below) 14.9
Adjusted EBITDA
3
11.9 27.0 (6.9) 13.2 45.2 (28.5) (0.3) 16.4
Reconciliation to loss before tax:
Result from investment
in associate (0.1)
Finance income 2.1
Finance costs (46.3)
Share-based payment expense (14.9)
Depreciation and amortisation (66.3)
IAS 29 Hyperinflation result 1.2
Loss before tax (107.9)
Recurring items
Share-based payment expense 3.5 1.1 7.4 0.6 12.6 2.3 - 14.9
Group recharges - - 0.5 2.0 2.5 (2.5) - -
1
The reconciliation column includes consolidation adjustments, including intercompany
eliminations and amortisation of purchase price allocation assets.
2
EBITDA is calculated as loss before interest and tax adjusted for depreciation of property, plant and
equipment and right-of-use assets, amortisation of intangible assets and impairment losses.
3
Adjusted EBITDA is EBITDA adjusted for share-based payment (income)/expenses.
126
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Reportable restated segment information for the year ended 31 December 2019 is set out below:
In €m LATAM CIS SEA ANZ
Total Fashion
Business Other
Reconci-
liation
1
Total
Revenues from
external customers 401.4 442.9 233.0 263.8 1,341.1 4.9 - 1,346.0
Intersegment Revenue - - 4.6 - 4.6 22.9 (27.5) -
Total Revenue 401.4 442.9 237.6 263.8 1,345.7 27.8 (27.5) 1,346.0
Cost of sales (236.8) (255.7) (162.7) (143.6) (798.8) (8.1) 0.7 (806.2)
Gross profit 164.6 187.2 74.9 120.2 546.9 19.7 (26.8) 539.8
Operating (expenses)/income
Selling and distribution expenses (127.1) (171.3) (67.2) (89.2) (454.8) (1.0) 0.6 (455.2)
Administrative expenses (37.8) (39.7) (38.9) (37.8) (154.2) (47.2) 8.0 (193.4)
Other (expenses)/income 0.9 (2.3) (13.3) (2.3) (17.0) (4.2) 4.9 (16.3)
EBIT 0.6 (26.1) (44.5) (9.1) (79.1) (32.7) (13.3) (125.1)
Depreciation and Amortisation 10.5 22.5 6.0 7.6 46.6 2.4 12.6 61.6
EBITDA
2
11.1 (3.6) (38.5) (1.5) (32.5) (30.3) (0.7) (63.5)
Recurring and non- recurring
items (see below) (5.0) 7.9 14.8 3.4 21.1 5.3 - 26.4
Adjusted EBITDA
3
6.1 4.3 (23.7) 1.9 (11.4) (25.0) (0.7) (37.1)
Reconciliation to loss before tax:
Result from investment
in associate 3.2
Finance income 18.5
Finance costs (14.7)
Share-based
payment expense (5.2)
Depreciation and amortisation (61.6)
IAS 29 Hyperinflation result 1.6
IPO related costs (4.9)
Wind-down of Lost Ink Limited (7.5)
One-o tax adjustments
4
(14.8)
Non-trading income
5
6.0
Loss before tax (116.5)
Recurring items
Share-based payment expense - 4.1 0.4 1.1 5.6 (0.4) - 5.2
Group recharges - - 1.3 2.3 3.6 (3.6) - -
Non-recurring items:
IPO related costs 0.2 - - - 0.2 4.7 - 4.9
Wind down of Lost Ink Limited - - - - - 7.5 - 7.5
One-o tax adjustments
4
(5.2) 3.8 13.1 - 11.7 3.1 - 14.8
Non-trading income
5
- - - - - (6.0) - (6.0)
1
The reconciliation column includes consolidation adjustments, including intercompany
eliminations and amortisation of purchase price allocation assets.
2
EBITDA is calculated as loss before interest and tax adjusted for depreciation of property, plant and
equipment and right-of-use assets, amortisation of intangible assets and impairment losses.
3
Adjusted EBITDA is EBITDA adjusted for share-based payment (income)/expenses as well as one-o fees related
to the IPO, one-o tax adjustments, non-trading income and costs relating to the wind-down of Lost Ink Limited.
4
Relates to tax audit provisions for other taxes, VAT refund, irrecoverable indirect taxes and other.
5
Non-trading income relates to the sale of right of use of an intangible asset to a third party.
127
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Information about geographical areas
Revenues from external customers by region are
determined based on the location of the selling business.
Revenues from external customers include €257.9 million
(2019: €302.0 million) in Brazil, €422.2 million
(2019: €409.7 million) in Russia and €259.3 million
(2019:€263.8 million) in Australia.
During 2020 and 2019 no revenues from external
customers were generated in Luxembourg, the domicile
of Global Fashion Group S.A.
Non-current assets (excluding other financial assets and
income tax receivables) for each region for which it is
material are reported separately as follows:
In €m 2020 2019
LATAM 166.9 218.4
CIS 107.3 133.2
SEA 46.8 31.8
ANZ 135.9 140.4
Other 4.7 4.2
Total 461.6 528.0
No significant non-current assets are located in
Luxembourg, the domicile of GFG S.A. No analysis of the
assets and liabilities of each operating segment is
provided to the Chief Operating Decision Maker in the
monthly management accounts.
7. GROUP INFORMATION
The consolidated financial statements include the assets,
liabilities and financial results of the Company and its
subsidiaries.
The table below presents the list of the Company’s
subsidiaries.
128
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Principal activity Registered office
Ownership
31 Dec 2020 31 Dec 2019
Bigfoot GmbH, Berlin, Germany Investment Holding Berlin 100% 100%
Juwel 198 VV UG (haftungsbeschränkt),
Berlin, Germany Trustee Berlin 100% 100%
Jade 1076. GmbH, Berlin, Germany General Partner Berlin 100% 100%
Bambino 49. VV UG (haftungsbeschränkt),
Berlin, Germany Trustee Berlin 100% 100%
Global Fashion Group SGP Services
PTE Limited, Singapore Consultancy Services Singapore 100% 100%
GFG eCommerce Technologies GmbH,
Berlin, Germany IT Services Berlin 100% 100%
GFG Deutschland Holdings GmbH
(formally Jabong GmbH), Berlin, Germany Holding Berlin 96.96% 96.96%
Global Fashion Group UK
Finance Limited, London, UK Finance Holding London 100% 100%
Global Fashion Group UK
Services Limited, London, UK Consultancy Services London 100% 100%
Global Fashion Group Ireland Finance
Designated Activity Company, Dublin, Ireland Finance Holding Dublin 100% 100%
GFG Luxembourg One S.à r.l,
Senningerberg, Luxembourg Finance Holding Senningerberg 100% 100%
Lost Ink Ltd, London, UK Wholesale London 100% 100%
Dafiti Latam GmbH & Co.
Beteiligungs KG, Berlin, Germany Holding Berlin 99.35% 99.14%
VRB GmbH & Co. B-126
(Einhundertsechsundzwanzig) KG, Berlin,
Germany Holding Berlin 96.74% 96.74%
BFOOT S.R.L. (Arg), Buenos Aires, Argentina Online Retail Buenos Aires 99.86% 99.86%
VRB GmbH & Co. B-127
(Einhundertsiebenundzwanzig) KG, Berlin,
Germany Holding Berlin 96.41% 96.41%
Bigfoot Chile SpA, Santiago, Chile Online Retail Santiago 100% 100%
VRB GmbH & Co. B-128
(Einhundertachtundzwanzig) KG, Berlin,
Germany Holding Berlin 97.63% 97.63%
Bigfoot Colombia SAS, Bogota, Colombia Online Retail Bogota 100% 100%
VRB GmbH & Co. B-182 KG, Berlin, Germany Holding Berlin 96.81% 96.81%
GFG Comercio Digital Ltda (formerly
Comercio Digital BF Ltda), Sao Paulo, Brazil Online Retail Sao Paulo 100% 100%
Lamoda GmbH, (formerly Glamstyle
Central + Eastern Europe GmbH & Co. KG),
Berlin, Germany Holding Berlin 100% 100%
Blanko 20 KG. GmbH & Co. KG,
Berlin, Germany Online retail Berlin 100% 100%
Fashion Delivered LLC,
Kiev, Ukraine Call centre Kiev 100% 100%
Kupishoes LLC, Moscow, Russia Online Retail Moscow 100% 100%
129
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Principal activity Registered office
Ownership
31 Dec 2020 31 Dec 2019
Lamoda Service TOO, Almaty, Kazakhstan Online Retail Almaty 100% 100%
OOO Fashion Delivered, Almaty, Kazakhstan Online Retail Almaty 100% 100%
LLC Ecom Solution, Moscow, Russia Online Retail Moscow 100% 100%
Fashion Delivered OOO, Moscow, Russia Online Retail Moscow 100% 100%
LLC Fashion Delivered, Minsk, Belarus Online Retail Minsk 100% 100%
LLC Pick-up, Moscow, Russia PUP Moscow 99.49% 99.49%
Lamoda Management GmbH & Co KG,
Berlin, Germany Trustee Berlin 100% 100%
BGN Brilliant Services GmbH, Berlin, Germany Holding Berlin 100% 100%
Juwel 145 V V UG (haftungsbeschränkt),
Berlin, Germany Trustee Berlin 100% 100%
New BGN ZALORA GmbH, Berlin Germany Holding Berlin 100% 100%
ZALORA Group GmbH, Berlin, Germany Holding Berlin 100% 100%
Brillant 1257 GmbH, Berlin, Germany General Partner Berlin 100% 100%
VRB GmbH & Co. B-136. KG, Berlin, Germany Holding Berlin 97.86% 92.53%
Brillant 1257 GmbH & Co.
Verwaltungs KG, Berlin, Germany Holding Berlin 90.99% 87.75%
Brillant 1257. GmbH & Co.
Zweite Verwaltungs KG, Berlin, Germany Holding Berlin 91.77% 88.87%
Brillant Vietnam Co., Ltd,
Ho Chi Minh City, Vietnam Holding Ho Chi Minh City 100% 100%
R-SC Vietnam Co., Ltd.,
Ho Chi Minh City, Vietnam Consultancy Services Ho Chi Minh City 100% 100%
Brillant 1257. GmbH & Co.
Dritte Verwaltungs KG, Berlin, Germany Holding Berlin 94.49% 91.90%
Brillant 1257. GmbH & Co.
Zehnte Verwaltungs KG, Berlin, Germany Holding Berlin 100% 100%
PT Fashion Eservices, Jakarta, Indonesia Online Retail Jakarta 99.99% 99.99%
PT Fashion Marketplace, Jakarta, Indonesia Online Retail Jakarta 99.90% 99.90%
Brillant 1257. GmbH & Co.
Vierte Verwaltungs KG, Berlin, Germany, Holding Berlin 91.73% 87.21%
BF Jade E-Services Philippines Inc.,
Makati City, Philippines
1
Online Retail Makati City 50.99% 50.99%
Brillant 1257. GmbH & Co.
Fünfte Verwaltungs KG, Berlin, Germany Holding Berlin 92.92% 89.35%
Jade E-Services Malaysia Sdn Bhd,
Kuala Lumpur, Malaysia Online Retail Kuala Lumpur 99% 99%
Brillant 1257. GmbH & Co.
Sechste Verwaltungs KG, Berlin, Germany Holding Berlin 94.77% 91.29%
Jade E-Services Singapore Pte Ltd,
Singapore Online Retail Singapore 100% 100%
Brillant 1257. GmbH & Co.
Achte Verwaltungs KG, Berlin, Germany Holding Berlin 100% 90%
1
For the years ended 31 December 2019 and 2020, the non-controlling interest element of BF Jade E-Services Philippines Inc.,
was the most significant element of the comprehensive loss for the year attributable to non-controlling interests.
130
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Principal activity Registered office
Ownership
31 Dec 2020 31 Dec 2019
ZALORA South East Asia Pte Ltd,
Singapore Online Retail Singapore 100% 100%
RPL Fashion Trading Gungzhou Co.,
Ltd (China), Guangzhou, China Online Retail Guangzhou 100% 100%
Brillant 1257. GmbH & Co.
Neunte Verwaltungs KG, Berlin, Germany Holding Berlin 100% 90%
ZALORA Hong Kong Ltd, Hong Kong, China Online Retail Hong Kong 100% 100%
ZSEA Technology Services Company Limited,
Ho Chi Minh City, Vietnam Consultancy Services Ho Chi Minh City 100% 100%
VRB GmbH & Co. B-129. KG, Berlin, Germany Holding Berlin 93.70% 91.50%
Jade 1249 GmbH, Berlin, Germany General Partner Berlin 100% 100%
Jade 1250. GmbH, Berlin, Germany General Partner Berlin 100% 100%
Internet Services Australia 1 Pty Ltd,
Sydney, Australia Online Retail Sydney 100% 100%
Mena Style Fashion GmbH & Co. KG,
Berlin, Germany Holding Berlin 91.94% 91.94%
GFG UK 1 Limited, London, UK Holding London 100% 100%
GFG Deutschland 1 GmbH, Berlin, Germany Holding Berlin 100% 100%
Global Fashion Group TRM Limited
(formerly Global Fashion Group Middle
East Holdings (UK) Limited), London, UK Holding London 100% 100%
Jade 1218. GmbH, Berlin, Germany Holding Berlin 100% 94.81%
Jade 1411. GmbH (Komplementär),
Berlin, Germany General Partner Berlin 100% 100%
Bambino 77. V V UG (haftungsbeschränkt),
Berlin, Germany Trustee Berlin 100% 100%
VRB GmbH & Co. B-196 KG, Berlin, Germany Holding Berlin 95.92% 91.01%
Tricae Comercio Varejista Ltda,
Sao Paulo, Brazil Online Retail Sao Paulo 99.90% 99.90%
Jade 1159. GmbH, Berlin, Germany Holding Berlin 100% 94.71%
Jade 1410. GmbH (Komplementär),
Berlin, Germany General Partner Berlin 100% 100%
Juwel 196. VV UG (haftungsbeschränkt) ,
Berlin, Germany Trustee Berlin 100% 100%
VRB GmbH & Co. B-195 KG, Berlin, Germany Holding Berlin 96.79% 91.36%
Kanui Comercio Varejista Ltda,
Sao Paulo, Brazil Online Retail Sao Paulo 99.90% 99.90%
At 31 December 2019 and 2020 the proportion of the voting
rights in the subsidiary undertakings held directly by the
parent company do not dier from the proportion of
ordinary shares held.
131
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
8. BALANCES AND TRANS-
ACTIONS WITH RELATED
PARTIES
Parties are generally considered to be related if the parties
are under common control or if one party has the ability
to control/jointly control the other party or can exercise
significant influence over the other party in making
financial and operational decisions. Apart from the
subsidiaries and associates included in the consolidated
financial statements, the Group maintains relationships to
other related parties as disclosed below.
Related parties to whom the Group maintained business
relationships include Kinnevik Group as they have the
ability to exercise significant influence as shareholders of
the Group as well as their subsidiaries and joint ventures.
Following the IPO on 2 July 2019, Rocket Group does not
have the ability to exercise significant influence over the
Group and as such is no longer a related party.
As detailed in note 9, Namshi Holding Limited was an
associate of the Group until 25 February 2019 when the
Group’s remaining holding was disposed of. Therefore,
following 25 February 2019, Namshi Holding Limited was
no longer a related party of the Group.
The following table provides the total amount of other
transactions that have been entered into with related
parties during the twelve months ended 31 December 2020
and 2019 respectively.
Related party transactions
In €m 2020 2019
Entities with significant
influence over the Group:
Rocket Internet –
Purchases from related
parties - (0.1)
Associates:
Namshi Holding Limited –
Sales to related parties - 0.3
Key management personnel
The aggregate compensation to key management
personnel, being the management board and supervisory
board of the Group (executive and non-executive and
including the Co-Chief Executive Ocers and Chief
Financial Ocer), was as follows:
In €m
For the year
ended 31 Dec
2020 2019
Short-term employee
benefits 2.8 2.8
Share-based payments
charge 4.2 0.1
Total 7.0 2.9
Further details of directors’ remuneration can be found in
the remuneration report in section 1.7, along with
directors’ interest in issued shares and share options.
132
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
9. INVESTMENTS IN
ASSOCIATES
On 25 February 2019, the Group sold its 46.93% share of
Namshi Holding Limited to Emaar Malls for cash
consideration. The following table summarises the gain
that arose on disposal:
In €m
As at
25 Feb 2019
Investment in associate
Carrying amount of investment in
associate disposed of
1
109.3
Consideration
Consideration satisfied by cash 114.3
Less: transaction costs
2
(0.1)
Gain on disposal 4.9
Result of associate
3
(1.7)
Total 3.2
1
In addition to the 46.93% share of net assets, the carrying
amount of the investment in associate disposed of includes
€3.7m in relation to the put option carrying value and
€0.7m of Foreign Currency translation reserve.
2
Transaction costs include legal, tax advisory fees and other
separation costs.
3
Result of associate up until sale of Namshi on February 25, 2019.
As at 31 December 2020, the carrying value of investments
in associates was nil.
10. AUDITORS’
REMUNERATION
Included in administrative expenses is the independent
auditor’s remuneration, included in expenses for audit and
non-audit services, payable to the Company’s auditor
Ernst & Young S.A. and its aliated companies as follows:
Auditor’s remuneration
In €m
For the year
ended 31 Dec
2020 2019
Audit and audit-related
services:
Audit of the parent
Company and
consolidated financial
statements 1.2 1.2
Audit of the Company’s
subsidiaries 1.2 1.6
Non-audit services:
Other assurance
services - 1.1
Other services relating
to taxation 0.1 0.1
Total fees 2.5 4.0
133
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
11. LOSS PER SHARE
Basic EPS is calculated by dividing the loss for the year
attributable to ordinary equity holders of the parent by the
weighted average number of common shares outstanding
during the year.
The following table reflects the income and share data
used in the basic EPS calculations:
Loss per share
In €m
For the year
ended 31 Dec
2020 2019
Loss attributable to
ordinary equity holders of
the parent for basic
earnings: (107.2) (137.0)
Weighted average
number of ordinary shares
for basic and diluted EPS
(m)
1
198.0 132.0
Basic and diluted EPS from
continuing operations (€) (0.5) (1.0)
1
The weighted average number of shares takes into account
the weighted average eect of changes in treasury shares
during the year.
Please see note 19 for details on equity transactions.
For diluted loss per share, the weighted average number
of common shares is equal to the amount used in the basic
EPS calculation, since potential voting rights are not
dilutive due to the loss-making position of the Group
during the current and prior period.
134
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
12. PROPERTY, PLANT AND EQUIPMENT
In €m
Office/IT equipment/
Leasehold improvements
Warehouse/Motor
vehicles
Assets in the course of
construction Total
Cost
At 1 January 2019 30.2 66.3 6.2 102.7
Additions 7.7 5.1 36.1 48.9
Disposals (1.3) (1.1) - (2.4)
Reclassifications 7.0 8.1 (15.1) -
Currency translation
dierences 1.5 6.1 0.2 7.8
At 31 December 2019 45.1 84.5 27.4 157.0
Additions 9.5 14.0 4.9 28.4
Disposals (5.9) - (0.5) (6.4)
Reclassifications 4.0 19.7 (23.7) -
Currency translation
dierences (8.7) (17.6) (6.1) (32.4)
At 31 December 2020 44.0 100.6 2.0 146.6
Depreciation and impairment
At 1 January 2019 (14.8) (17.3) (0.5) (32.6)
Depreciation charge
for the year (6.7) (10.3) (0.2) (17.2)
Disposals 1.0 1.1 - 2.1
Currency translation
dierences (0.7) (1.9) 0.3 (2.3)
Reclassifications - - (0.3) (0.3)
At 31 December 2019 (21.2) (28.4) (0.7) (50.3)
Depreciation charge
for the year (5.7) (13.4) - (19.1)
Disposals 1.9 - - 1.9
Currency translation
dierences 3.2 6.0 0.8 10.0
Reclassifications (1.3) 1.3 - -
At 31 December 2020 (23.1) (34.5) 0.1 (57.5)
Net book amount
At 31 December 2020 20.9 66.1 2.1 89.1
At 31 December 2019 23.9 56.1 26.7 106.7
As of 31 December 2020 and 2019, there were no assets held for sale.
135
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
13. LEASES
This note provides information for leases where the Group
is a lessee. There are no material instances where the
group is a lessor.
(i) Amounts recognised in the statement
of financial position
The statement of financial position shows the following
amounts relating to leases:
In €m
As at 31 Dec 2020
2020 2019
Right of-use assets
Property 39.0 49.6
Warehouse 65.2 45.5
Oce equipment
and other 0.1 0.1
104.3 95.2
Lease Liabilities
Current 19.5 23.2
Non-current 94.2 82.9
113.7 106.1
Please refer to note 4 for critical judgements related to
leases.
Additions to right-of-use assets during the year were
€55.9 million (2019: €47.5 million).
(ii) Amounts recognised in the statement
of profit or loss
The statement of profit or loss shows the following
amounts relating to leases:
In €m
As at 31 Dec 2020
2020 2019
Depreciation charge of
right of use assets
Property 12.1 11.7
Warehouse 7.9 10.3
Oce equipment
and other 3.2 0.1
23.1 22.1
Interest expense
(included in finance costs) 8.8 7.6
Expense relating to
short-term leases 0.4 5.1
Expense relating to leases
of low-value assets that are
not shown above as short
term leases - 0.2
9.3 12.9
The total cash outflow for leases in 2020, including interest
and payments, was €31.3 million (2019: €28.1 million).
136
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
(iii) The Group’s leasing activities and
how these are accounted for
The Group leases various oces, warehouses, equipment
and vehicles. Rental contracts are typically made for fixed
periods, but may have extension options as described
below.
Lease terms are negotiated on an individual basis and
contain a wide range of dierent terms and conditions.
The lease agreements do not impose any covenants other
than the security interests in the leased assets that are held
by the lessor. Lease assets may not be used as security for
borrowing purposes.
Please refer to note 3 for detailed
accounting policies.
(iv) Variable lease payments
Various leases across the Group contain variable lease
payment terms that are linked to an index or a rate,
specific to the country that the lease is in. Variable lease
payments are initially recognised as part of the lease
liability using the index or rate as at the date of
commencement and the lease liability is subsequently
remeasured to reflect the revised lease payments when
there is a change in the cash flows.
(v) Residual value guarantees
To optimise lease costs during the contract period, the
Group sometimes provides residual value guarantees in
relation to property and equipment leases. As at
31 December 2020, there were no balances excluded from
lease liabilities, which were not expected to be payable
(2019: €0.1 million).
(vi) Extension and termination options
Extension and termination options are included in a
number of property and equipment leases across the
Group. These are used to maximise operational flexibility
in terms of managing the assets used in the Group’s
operations. The majority of extension and termination
options held are exercisable only by the Group and not
by the respective lessor.
As at 31 December 2020, there were no potential future
cash outflows that were excluded from the lease liability
because it was not reasonably certain that the leases would
be extended (or not terminated) (2019: €2.7 million).
(vii) Lease not yet commenced to which
the lessee is committed
As at 31 December 2020, the Group was not committed
to any leases, which had not yet commenced. As at
31 December 2019, the Group was committed to several
leases, but the lease has not yet commenced and the
Group estimated future cash outflows of €21.9 million from
these commitments. Please refer to note 32 for maturity
analysis of lease liabilities.
137
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
14. GOODWILL AND OTHER
INTANGIBLE ASSETS
In €m Goodwill
Internally
developed
intangible
assets/
Website
costs
Software/
Licenses/
Rights Trademark
Customer
Relationships Other
Total
other
intangible
assets
Cost
At 1 January 2019 757.4 16.9 24.1 388.9 149.6 0.6 580.1
Additions - 19.9 3.3 - - - 23.2
Reclassifications - 0.5 (0.5) - - - -
Disposals - (0.2) (0.3) - - - (0.5)
Currency translation
dierences 58.1 0.2 1.1 30.4 14.4 0.2 46.3
At 31 December 2019 815.5 37.3 27.7 419.3 164.0 0.8 649.1
Additions - 13.2 6.7 0.3 - 0.1 20.3
Reclassifications - - - - (0.3) 0.3 -
Disposals - (0.5) - 0.1 0.3 - (0.1)
Currency translation
dierences (149.1) (6.8) (6.0) (63.9) (29.7) (0.3) (106.7)
At 31 December 2020 666.4 43.2 28.4 355.8 134.3 0.9 562.6
138
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
In €m Goodwill
Internally
developed
intangible
assets/
Website
costs
Software/
Licenses/
Rights Trademark
Customer
Relationships Other
Total
other
intangible
assets
Depreciation and
impairment
At 1 January 2019 (571.8) (5.1) (18.0) (316.2) (104.4) (0.2) (443.9)
Amortisation charge
for the year - (5.5) (5.0) (6.6) (4.9) - (22.0)
– due from business
combinations - - - - - (0.3) (0.3)
Reclassifications - (3.0) 2.8 - - - (0.2)
Disposals - - 0.2 - - - 0.2
Currency translation
dierences (59.3) (0.1) (0.5) (30.1) (11.0) - (41.7)
Other - - 0.1 - - - 0.1
At 31 December 2019 (631.1) (13.7) (20.5) (352.9) (120.3) (0.5) (507.9)
Amortisation charge
for the year - (9.5) (3.4) (6.3) (4.6) (0.3) (24.1)
Reclassifications - 1.5 (1.8) 0.2 0.2 (0.1) -
Disposals - 0.4 0.2 - (0.2) - 0.4
Currency translation
dierences 112.3 3.2 4.6 59.4 22.0 0.1 89.3
At 31 December 2020 (518.8) (18.1) (20.9) (299.6) (102.9) (0.8) (442.3)
Net book amount
At 31 December 2020 147.6 25.1 7.5 56.2 31.4 0.1 120.3
At 31 December 2019 184.4 23.6 7.2 66.4 43.7 0.3 141.2
See note 27 for breakdown of amortisation expenses
between cost of sales and general administration.
As of 31 December 2020 and 2019, there were no intangible
assets in which title was restricted.
139
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Impairment testing of CGUs
containing goodwill
During the year ended 31 December 2020 and
31 December 2019, the Group tested for impairment in its
CGUs and recognised no impairment losses. The Group’s
net book value for Goodwill decreased from €184.4 million
in 2019 to €147.6 million in 2020 due to the eect of the
translation to presentation currency.
For the purposes of impairment testing, goodwill was
allocated to the Group’s CGUs being the smallest
identifiable Group of assets that generates cash inflows
that are largely independent of the cash inflows from other
assets or Groups. The CGUs are at the Groups regional
operating segments, reported to the CODM.
The amount of goodwill allocated to each CGU after the
impairment testing was as follows:
In €m 31 Dec 2020 31 Dec 2019
LATAM 90.0 127.0
CIS 0.5 0.7
SEA - -
ANZ 57.1 56.7
Total 147.6 184.4
Impairment approach for the year ended
31 December 2020
Management have assessed internal and external
indicators of impairment, covering analyst commentary,
internal budget comparisons, macroeconomic and
industry analysis along with the impact of the COVID-19
pandemic on the business of the Group.
The recoverable amounts of each CGU were based on
value-in-use, estimated using a DCF model. The model
uses cash flow projections covering a detailed three-year
forecast, followed by an extrapolation of expected cash
flows for seven years using PGRs as determined by
management. Cash flows have been extrapolated over a
seven-year period, to reflect the early developmental
stage of the CGUs and their high growth potential over the
full ten-year horizon period. The terminal value of the
CGUs is calculated using the terminal year cash flow which
is capitalised into perpetuity using CGU-specific PGR and
discount rates. These selected growth rates are consistent
with industry and macro-economic forecasts in the regions
where the CGUs operate. The present value of the
expected cash flows of each CGU is determined by
applying a discount rate that is commensurate with the
risks and uncertainty inherent in the CGUs forecasts.
Key assumptions used in the estimation of the discount
rates by CGU included specific risk premiums to account
for inflation and the Group’s size.
The discount rates and growth rates used in deriving the
CGUs recoverable amounts for the year ended
31 December 2020 were as follows:
CGU
Discount
Rate
Perpetual
Growth Rate
LATAM 14.1% 2.8%
CIS 11.4% 1.9%
SEA 11.0% 3.2%
ANZ 10.8% 2.6%
GFG Group-level test 12.0% 3.0%
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ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The discount rates and growth rates used in deriving the
CGUs recoverable amounts for the year ended
31 December 2019 were as follows:
CGU
Discount
Rate
Perpetual
Growth Rate
LATAM 14.9% 2.8%
CIS 14.4% 1.9%
SEA 13.1% 3.1%
ANZ 11.5% 2.6%
GFG Group-level test 14.0% 3.0%
As at 31 December 2020, there was significant headroom
in each CGU and therefore no impairment losses were
recognised. The improvement in headroom year on year
is due to positive trading trends year-to-date and shifts to
online consumption.
The key assumptions used in the impairment analysis of
the CGU’s as at 31 December 2020 were:
• Discount rates– discount rates represent the current
market assessment of the risks specific to each CGU,
taking into consideration the time value of money and
individual risks of the underlying assets that have not
been incorporated in the cash flow estimates. The
discount rate calculation is based on the specific
circumstances of the Group and its operating
segments and is derived from it is weighted average
cost of capital (“WACC”). The WACC represents a
weighted average of the cost of equity and pre-tax
cost of debt. The cost of equity is derived from the
expected return on investment by the Group’s
investors. The pre-tax cost of debt is based on the
interest-bearing borrowings the Group is obliged to
service. Segment-specific risk is incorporated by
applying individual beta factors. The beta factor is
evaluated at each measurement period based on
publicly available market data for the Company and
its industry peers.
• Growth rates used in revenue to extrapolate cash
flows beyond the forecast period– Rates are based
on published research.
• The COVID-19 pandemic has not had a significant
negative impact on the business.
• Increased Marketplace participation in each region
will continue to boost EBITDA over the forecast
period as the business attracts new customers to its
platform.
• EBITDA margin (pre-IFRS 16 including corporate
costs) for the Group is expected to gradually increase
over the forecast period to reach between 9.6% to
12.5% in the terminal value year.
• Capital expenditure (capex) includes the planned
expenditure by each business unit based on their
medium-term plan and estimates for the construction
of new fulfilment centres, once capacity for current
fulfilment centres in reached. Capex outside of the
unit’s medium-term plan, is assumed at a level that
supports continued growth. As revenue growth
tapers o, in the later years of the projections, a
maintenance capex assumption is applied.
Sensitivity Analysis
Sensitivity Analysis has been performed on each CGU. If
the discount rates were 1% higher than managements
estimates, significant headroom remains across the CGUs
and there would have been no requirement for the Group
to recognise any impairment charge in 2020. Similarly, no
impairment charge would be required if the estimated
growth rates were 1% lower than management estimates
or if the estimated cash flows were 5% lower than
management’s estimate in each year. Given the
improvement in business performance, the Group did not
identify any reasonably possible change in key
assumptions which could cause an impairment loss to be
recognised.
141
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
15. OTHER NON-FINANCIAL
ASSETS
In €m 31 Dec 2020 31 Dec 2019
Non-current
Prepayments - 0.1
VAT and Tax refunds - 0.1
Other non-financial assets 0.3 0.2
Other non-financial assets
(non-current) 0.3 0.4
Current
Prepayments 20.1 23.5
VAT and Tax refunds 9.1 38.3
Other non-financial assets 0.3 0.4
Right to recover
returned goods 10.4 10.0
Less: Provision for
impairment (0.1) (2.3)
Other non-financial assets
(current) 39.8 69.9
Total non-financial assets 40.1 70.3
16. INVENTORIES
Inventories net of provision are as follows:
In €m 31 Dec 2020 31 Dec 2019
Raw materials and supplies 2.2 2.2
Finished goods
and merchandise 209.9 252.4
Less: Provisions on finished
goods and merchandise (16.2) (20.6)
Total inventories 195.9 234.0
During 2020, €5.7 m (2019: €13.3 m) was recognised as an
expense write-o for inventories carried at net realisable
value. This is recognised in cost of sales.
142
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
17. TRADE RECEIVABLES AND
OTHER FINANCIAL ASSETS
Trade receivables and other financial assets are as follows:
In €m 31 Dec 2020 31 Dec 2019
Non-current
Receivables from deposits/
restricted cash 6.6 23.5
Other financial receivables - 0.6
Other financial assets
(non-current) 6.6 24.1
Current
Trade and other receivables 80.5 52.5
Less: loss allowance
(note 33) (0.3) (0.4)
Trade and other
receivables (current) 80.2 52.1
Other financial assets
Receivables from deposits/
restricted cash 7.1 5.4
Receivables from loans 0.8 1.4
Receivables from
employees 0.1 0.2
Contract assets 3.3 1.5
Other financial receivables 8.9 8.9
Less: loss allowance (0.7) (0.7)
Other financial assets
(current) 19.5 16.7
As of 31 December 2020 non-current receivables from
deposits, restricted cash and term deposits include
€6.6 million (2019: €23.5 million) restricted cash that
provides guarantees to banks, suppliers and leasing
partners. Please see note 35 for further details on the debt
facilities. Current financial assets include €7.1 million
(2019: €5.4 million) of restricted cash that provides
guarantees to banks, suppliers and leasing partners.
Note 3 explains principles of recognition for impairment
losses on financial assets.
The additions to the provision for impaired receivables
have been included in net impairment losses of financial
assets in the statement of profit or loss. Amounts charged
to the allowance account are generally written o against
the trade receivables, when there is no expectation of
recovery.
Further details about the Group’s impairment policies
and the calculation of the loss allowance are provided in
note 32.
143
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
18. CASH AND CASH
EQUIVALENTS
In €m
As at
31 Dec 2020
As at
31 Dec 2019
Short term deposits 46.5 96.2
Cash at bank and in hand 319.6 181.1
Total cash and short-term
deposits 366.1 277.3
For short-term deposits and cash at bank the Group
applies a general approach in calculating ECLs. Therefore,
the Group does not track changes in credit risk, but instead
recognises a loss allowance based on lifetime ECLs at each
reporting date. A loss allowance of €0.1 million was
recognised as of 31 December 2020 (2019: €0.2million).
19. EQUITY
Common share capital
As at 31 December 2020, the issued share capital
213,836,716 common shares (31 December 2019: is
214,765,517), with a nominal value of €0.01 per share. Each
common share entitles the holder to one vote at Global
Fashion Group’s Annual General Meeting. The nominal
value of all common shares is fully paid.
The table below details the share capital movements during
the current and prior year:
Number common of
shares
Nominal
amount
in €m (par
value 0.01)
Share
Capital (€m)
Share
premium
(€m)
At 1 January 2019 67,861,754 0.01 0.7 -
Conversion of Convertible Preference Shares 84,828,235 0.01 0.8 -
Share Redistribution 20,075,528 0.01 0.2 -
Common share capital issued on IPO 42,000,000 0.01 0.4 188.6
Less: transaction costs arising on share issue n/a n/a n/a (4.2)
Balance as at 31 December 2019 214,765,517 0.01 2.1 184.4
Treasury share cancellation (20,054,561) 0.01 (0.2) -
Common Share Capital Issued (i) 76,310 0.01 - -
Common Share Capital issued (ii) 2,549,450 0.01 - -
Common Share Capital issued (iii) 16,500,000 0.01 0.2 120.2
Less: transaction costs arising on share issue n/a n/a n/a (1.0)
Balance as at 31 December 2020 213,836,716 0.01 2.1 303.6
144
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
(i) On 30 March 2020, the Company issued 76,310 new
common shares to pre-IPO shareholders in connection
with the Share Redistribution carried out by the
Company prior to its IPO in 2019.
(ii) In July 2020, 2,549,450 common shares were issued
to facilitate units being exercised under the share-
based payment plans. Please see note 20 for more
details.
(iii) On 18 November 2020, Global Fashion Group (“the
Group”) issued 16,500,000 new common shares at
subscription price of €7.30 per share which generated
net proceeds of €119.4 million. Please see note 1 for
further details.
In 2019, several equity transactions took place;
• Conversion of convertible preference shares to
common shares: between 2015 and 2017, the
Company raised €480.0 million of capital in the form
of convertible preference shares (“CPS”) from a Group
of existing shareholders. The agreed terms were such
that, upon the pricing of an IPO or corporate trans-
action, the CPS held would convert into common
share based on a 1:1 conversion ratio. The oer price
was agreed at €4.50 on 28 June 2019, which triggered
a conversion of the Company’s 84,828,235 CPS to
common shares.
• Share redistribution: the CPS (with the exception of
certain anti-dilution convertible preference shares)
granted a preferred and annually compounding
return of 20% on their subscription price. Such return
was not payable in cash but was to be satisfied by
issuing a certain number of additional new common
shares to the (former) holders of CPS following the
conversion. Prior to the Company’s IPO, this
settlement mechanism was amended and it was
agreed that the additional return will now be
emulated, in all material respects, through
repurchases of existing common shares by the
Company and the issuance of common shares, in
each case for nil consideration, from or to the
shareholders of the Company following pricing of the
IPO (the “Share Redistribution”). As part of the Share
Redistribution, the Company issued 19,939,285
common shares to and repurchased 20,054,561
common shares from its existing shareholders on
1 July 2019. An additional 136,243 shares were issued
on 5 August 2019 pursuant to the Share
Redistribution.
• Listing on Frankfurt Stock Exchange: since
2 July 2019 the shares of the Company have been
traded on the regulated market (Prime Standard) of
the Frankfurt Stock Exchange. The Company received
net proceeds of €186.1 million after deducting
qualifying fees retained by the underwriters, from its
IPO. The oering consisted of 40,000,000 newly
issued common shares, which were issued on
1 July 2019. A further 2,000,000 common shares were
issued as part of the greenshoe option on
5 August 2019.
Convertible preference shares
As mentioned above, the Company’s 84,828,235
convertible preference shares were converted to common
shares, with a conversion ratio of 1:1, on 28 June 2019.
There was no movement in convertible preference shares
in the current year.
Treasury shares
On July 1, 2019, the Company repurchased 20,054,561 in
connection with the Share Redistribution. These common
shares were held in treasury solely for the purpose of
cancellation. The Company held an additional amount of
182,378 common shares in treasury, for a total number of
20,236,939 common shares in treasury as at
31 December 2019.
On 26 June 2020, 20,054,561 common shares in treasury,
were redeemed and cancelled, reducing the issued share
capital of the Company by an amount of €200,545.61. The
total number of common shares in treasury was 182,378 as
at 31 December 2020.
145
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Authorised Capital
In the context of the new Share Plan in note 20, the Board
approved the future issuance of shares under the terms of
the plan.
The tables below summarise the authorised common
share capital:
Share capital
2020 2019
No. Par Value €m No. Par Value €m
Authorised
Common shares 378,705,417 0.01 3.8 398,759,978 0.01 4.0
Issued
Common shares 213,836,716 0.01 2.1 214,765,517 0.01 2.1
Capital reserves
There were no changes to capital reserves in the current
or prior year.
Share-based payment reserves
Other reserves relate to IFRS 2 reserves and amounted to
€128.3 million as at 31 December 2020 (2019:
€117.1 million). The share-based payment reserve is used
to recognise the value of equity settled share-based
payments provided to directors and employees (note 20).
Non-controlling interest
As of 31 December 2020 and 2019 non-controlling
interests mainly consisted of management participations.
During the year, a subsidiary in which the Group has a
non-controlling interest, received capital contributions
from a third party shareholder of €3.9 million.
146
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
20. SHARE-BASED PAYMENTS/
SHARE-BASED
COMPENSATION
As at 31 December 2020, the Group’s share-based
payment arrangements are primarily composed of:
a) 2019 share plan;
b) 2018 employee share option plan (ESOP 2018);
The total share-based payment expense of €14.9 million
(2019: €5.2 million) is comprised of:
– €8.8 million (2019: €2.0 million) relating to the 2019
share plan;
– €5.8 million (2019: €2.3 million) relating to the 2018
employee share option plan;
– €0.3 million (2019: €0.9 million) relating to former
plans
(a) 2019 Share Plan
Under this plan, the participants have been granted two
dierent types of awards, Restricted Stock Units (RSU) and
Performance Stock Units (PSU). All units represent a share
in Global Fashion Group S.A (‘GFG shares’). The units do
not have an exercise price. All units vest over two to three
years and PSUs are additionally subject to non-market
performance conditions that the Company will set for each
year. Other PSU tranches are subject to rolling
performance goals covering more than one year. Units
that vested in April 2020 were subject to a lock up period
of 1year from the date of the IPO, being 2 July 2019. On
3 July 2020, the lock-up period ended and participants
were entitled to exercise all vested shares. Certain senior
level executives are subject to a holding period of
maximum 4 years after their units are granted. There is no
dividend entitlement on all stock units during the vesting
period.
Upon vesting, and subject to any holding period, legal
ownership of GFG shares is transferred to the participants
except where cash settlement is required by local
regulations. The settlement amount in cash will be equal
to the market price of GFG Shares on the vesting date or,
if applicable, the date when the holding period expires.
Furthermore, the plan rules foresee various discretions for
the Board as well as good and bad leaver provisions.
Under the terms of the Share Plan the Group has a choice
to settle either in shares of the Group or in cash. It is the
intention of GFG to settle in shares therefore these awards
will be classified as equity settled. The grant date for the
Share Plan was 30 September 2019.
If the awards are classified as cash-settled, they will be
remeasured at each reporting period until settlement.
Remeasurements during the vesting period are expensed
immediately to the extent that they relate to past services
and are expensed over the remaining vesting period to
the extent that they relate to future services.
Remeasurements of cash-settled awards after the vesting
date are expensed immediately.
Expenses in relation to RSU tranches will be recognised
based on a graded-vesting approach from the initial grant
date until the respective vesting date of each tranche in
case of equity-settled awards or settlement date in case of
cash-settled awards. In contrast, the expense recognition
period of PSUs will be from the beginning of each year to
which performance targets relate, as performance targets
are set only at the beginning of each year. In addition, the
expense in relation to PSUs will be recognised based on
the estimated (most likely) number of the awards to reflect
expected achievement of the performance targets at each
reporting date until the number of the awards is fixed.
147
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
All awards are subject to applicable employer social
charges based on rates that vary by geographic location
and by participants’ individual tax status. The Group will
recognise a social charge liability on the portion of awards
that have been expensed at period end reflecting the
amount which the Group would be liable to pay.
Share option awards
Number of
Options
Number of
Options
2020 2019
Outstanding at the
beginning of the year 3,732,570 -
Granted during the
period 4,198,937 3,945,410
Forfeited during the
period (1,482,509) (212,840)
Exercised during the
period (1,173,136) -
Outstanding at 31
December 5,275,862 3,732,570
Total Awards vested
and therefore exer-
cisable as at
31December 1,656,067 -
Forfeited shares represent units that an employee is no
longer entitled to when they leave employment, as the
shares are unvested at the leaving date. All vested units
were ‘in-the-money’ as at 31 December 2020.
The weighted average share price for units exercised in the
year, was €3.04.
The fair value of the awards granted is
equal to the GFG share price quoted on the Frankfurt
stock exchange. The weighted average fair value of the
units granted during the period was €2.22 (2019: €2.11).
The number of awards due to vest in 2021 is 2,779,565. The
weighted average remaining contractual life for
outstanding units was 1.84 years.
As at 31 December 2020, liabilities arising from applicable
employer social charges of €1.1 million were included
within other financial liabilities (current).
(b) 2018 Employee share option plan
Awards issued under the 2018 Employee share option
plan originally consisted of dierent types of awards
depending on the Group’s regional businesses that the
awards related to. Some awards of which are classified as
cash-settled or equity-settled, and some are long-term
employee benefits falling under the scope of IAS 19:
Employee Benefits.
Where the Company is required to settle in cash or the
employee has a choice to settle in cash, the awards were
classified as cash-settled. Equity-settled awards are those
where the Company has a choice to settle and intends to
settle in its own equity instruments.
The awards accounted for under IAS 19 relate to cash
units, each with a nominal amount of €1.00, issued to
employees of THE ICONIC. As the number and value of
such awards ultimately paid out to participants does not
depend on the value generated upon exit of that business,
these awards are not considered share-based and are
therefore accounted for under IAS 19. The vesting
conditions of these cash units are substantially similar to
the vesting conditions of the other awards described
above.
The fair values for all options have been valued using the
Black-Scholes model for option pricing, taking into
account the terms and conditions on which the share
options were granted.
Each award contains portions that vest immediately. Other
portions vest based on service conditions or additional
performance conditions. Awards vest either by the end of
2018 or quarterly covering a maximum period of 4 years
until the end of 2022. In addition, the terms provide for a
right of the Group to claw back the awards in case of
defined acts to the detriment of the Group. The share
options generally have a life of up to 10 years.
148
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The initial public oering and listing of shares on the
regulated market (Prime Standard) of the Frankfurt Stock
Exchange made vested share options exercisable and has
prompted a modification to the 2018 Employee Share
Option Plan. As a result, all the regional share-based
payments awards accounted for in accordance with IFRS 2
were been converted into Group awards, i.e. share options
that represent an entitlement to a share of GFG S.A., that
are based on the fair value of the publicly traded GFG S.A
shares on the first day of trading. The conversion took
place upon IPO, being 2 July 2019, and was performed
using fixed conversion ratios determined by the GFG
Board. The share options were initially subject to a
12month lock-up period from the date of the IPO, being
2 July 2019. On 3 July 2020, the lock-up period ended and
participants were entitled to exercise all vested shares.
The awards accounted for in accordance with IAS 19 are
not aected by the conversion and continue to be
accounted for as a liability until settlement.
The conversion of the share options was accounted for as
a modification in accordance with IFRS 2. The conversion
has neither resulted in an increase in the fair value of the
awards nor any changes to other terms and conditions.
Therefore:
• GFG will continue to recognise expenses based on the
respective grant date fair values of the equity-settled
awards which grant date was in Q2 2019 or earlier.
• The liability and the expenses in relation to the
converted cash-settled awards are measured based
on the fair values of the Group awards as of Q4 2019
while keeping all other measurements as before.
All 2018 ESOP awards issued upon conversion in Q3 2019
are accounted for as Group awards.
The terms of the plan require the use of a graded-vesting
approach to expense recognition in accounting for the
various tranches of each award resulting.
All awards are subject to applicable employer social
charges based on rates that vary by geographic location
and by each relevant participants’ individual tax status.
The Group has accounted for this by recognising a social
charge liability on the portion of awards that have been
expensed at period end and which the Group would be
liable to pay upon exercise.
The share-based payments expense in any given period
therefore represents the value of all vested awards
(remeasured at the latest applicable value for cash-settled
instruments), the value of the graded portion of each
award due to vest in the future and recognised in current
accounting periods, and the applicable social charges
attached to those awards.
The following table lists the inputs to the models used to
value the options during the period:
Inputs 2020 2019
1
€ €
Weighted average
fair values at
measurement date 9.65 2.32
The expected life
(years) - 0.50
Risk Free Rate 0.01% 0.01%
Expected Volatility
(%) 44.41% 37.45%
Exercise Price 0.01 – 12.96 0.01 – 12.96
Expected Dividends Nil Nil
1
Where relevant, comparative inputs are expressed at a regional
level prior to the conversion of units to a Group level.
The expected life of the share options is based on the
weighted average number of periods to exercise. The
expected volatility has been calculated by observing a
range of publicly listed peer companies and looking at the
standard deviation of a range of historic share prices for a
length of time equal to the number of periods to exercise.
149
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The balance of the number of converted options
outstanding and their related weighted average exercise
prices are as follows for the year ended 31 December 2020:
Share option awards
Weighted
Average
Exercise Price
Number of
Options
2020 2020
Outstanding at the
beginning of the year 7.18 9,243,382
Granted during the year 3.76 1,574,545
Forfeited during the year 6.94 (1,048,707)
Exercised during the
year 3.02 (813,163)
Outstanding at
31 December 6.99 8,956,057
Total Awards vested
as at 31 December 7.10 8,831,261
In-the-money awards
vested as at 31
December 5.79 6,913,990
The balance of the number of converted options
outstanding and their related weighted average exercise
prices are as follows for the year ended 31 December 2019:
Share option awards
Weighted
Average
Exercise Price
Number of
Options
2019 2019
Outstanding at the
beginning of the year 7.42 7,401,456
Granted during the year 5.99 2,880,028
Forfeited during the year 7.71 (746,794)
Exercised during the
year 0.01 (291,307)
Outstanding at
31 December 7.18 9,243,382
Total Awards vested
as at 31 December 7.37 7,804,909
In-the-money
awards vested as
at 31 December 0.01 1,198,625
The weighted average fair value of options granted during
the year was €0.66 (2019: €1.63).
150
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The expenses broken down for employee services in
relation to the new ESOP (post conversion to Group
awards) is shown on the below table:
In €m 2020 2019
Expense arising from
equity-settled share-
based payment
transactions 3.6 3.8
Expense arising from
cash-settled share-based
payment transactions 2.5 (1.9)
Expenses arising from
long-term employee
benefits (IAS 19) - (0.1)
Expenses arising from
applicable employer
social charges (0.2) 0.5
Liability arising from cash-
settled portion of share-
based payments 2.8 9.4
Liability arising from long-
term employee benefits
(IAS 19) - 1.2
Liability arising from
applicable employer
social charges 2.7 2.7
Liabilities are included within Trade payables and other
financial liabilities and were classified as current in the
previous financial year. Liabilities of €10.4 million were
settled in the current financial year, after the expiry of the
lock-up period ended on 3 July 2020. In the current year,
liabilities are classified as non-current as they are expected
to be settled at least one year from the balance sheet date.
The intrinsic value of the liability is close to the carrying
amount.
151
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
21. BORROWINGS
The Group has the following borrowings:
In €m 31 Dec 2020 31 Dec 2019
Current
Borrowings 10.2 5.4
Total borrowings 10.2 5.4
Interest on the bank loans is charged at either a fixed rate
(with a floating element), or a floating rate.
The tables below summarise the changes in the Group’s
borrowings arising from financing:
In €m 1 Jan 2020 Cash flows FX movement
New
borrowings Other 31 Dec 2020
Interest bearing bank
borrowings (current) 5.4 (2.5) (0.9) 8.2 - 10.2
In €m 1 Jan 2019 Cash flows FX movement
New
borrowings Other 31 Dec 2019
Interest bearing bank
borrowings (current) 0.6 (0.4) (0.4) 5.6 - 5.4
For information relating to credit facilities and terms
available to the Group please refer to note 35.
152
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
22. PROVISIONS
Movements in provisions for liabilities and charges are as
follows:
In €m Tax risks
Litigation
risks Other Total
Carrying amount at 1 January 2019 9.3 2.2 1.1 12.6
Additions 14.4 1.0 2.2 17.6
Reversals - (0.4) (0.9) (1.3)
Used (0.3) (0.9) (0.2) (1.4)
Reclassifications (2.7) - 0.9 (1.8)
Currency translation dierences 2.0 - - 2.0
Carrying amount at 1 January 2020 22.7 1.9 3.1 27.7
Additions 1.0 (0.4) 1.0 1.6
Used (1.2) - - (1.2)
Reclassifications 1.1 - (1.1) -
Currency translation dierences (2.3) (0.4) - (2.7)
Carrying amount at 31 December 2020 21.3 1.1 3.0 25.4
Provisions amounted to €25.4 million as of
31 December 2020 (2019: €27.7 million) where of
€2.5 million are classified as non-current (2019: €3.4 million)
mostly relating to restoration obligations and provisions
for gratuity and anniversary, and €22.9 million as current
(2019: €24.3million)
Provision for tax risks relate to provisions for VAT, import
duties (including penalties) and withholding tax. The
provision mainly represents management’s estimate of the
amount payable in connection with a tax review relating to
prior purchases of inventory and professional services
invoices. Management currently estimates that the tax
outflow is more likely than not. Please see note 31 for
further information.
Litigation risk. The amounts represent a provision for
certain legal claims brought against the Company by
customers and ex-employees. The provision charge is
recognised in profit or loss within administrative expenses.
In the managements’ opinion, after taking appropriate
legal advice, the outcome of these legal claims will not
give rise to any significant loss beyond the amounts
provided at 31 December 2020. The provision has been
classified as current.
153
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
23. TRADE PAYABLES AND
OTHER FINANCIAL
LIABILITIES
In €m
Output
31 Dec 2020
Output
31. Dez 19
Current
Trade payables 252.1 274.1
Other financial
liabilities
1
14.5 21.9
Refund
liabilities 17.2 15.6
Total trade
and other
financial
liabilties
(current) 283.8 311.6
1
In 2019 the liabilities relating to share-based payment
programmes in the amount of €13.5m have been reclassified to
current in order to align to the timing of the financial obligations.
Refer to note 20 for details of payment during the current
financial year.
Refund liabilities, included in current other financial
liabilities reflect the Group’s obligation to refund its
customersf or returned goods.
The table below summarises the changes in the Group’s
trade payables and other financial liabilities during the
year:
In €m
1 Jan
2020
Cash
flows
FX
move-
ment Other
31 Dec
2020
Trade payables 274.1 21.5 (43.4) (0.1) 252.1
Other financial
liabilities 21.9 (7.7) (2.3) 2.6 14.5
Refund
liabilities 15.6 2.5 (0.9) - 17.2
Total trade
and other
financial
liabilties
(current)
311.6
16.3
(46.6)
2.5 283.8
24. OTHER NON-FINANCIAL
LIABILITIES
In €m 31 Dec 2020 31 Dec 2019
Non-Current
Other non-financial
liabilities 0.6 0.4
Other non-financial
liabilities (non-current) 0.6 0.4
Current
Liabilities from taxes 15.8 10.8
Accruals for personnel
related expenses 22.9 17.8
Liabilities to employees 2.7 2.7
Liabilities from social
security 3.8 4.0
Contract liabilities 34.9 26.5
Other non-financial liabilities
1.3 0.7
Other non-financial
liabilities (current) 81.4 62.5
Income tax liabilities 31.1 29.1
Total non-finanical
liabilities 113.1 92.0
As at 31 December 2020, liabilities from taxes relate
primarily to VAT obligations and amounted to €10.8 million
(2019: € 7.6 million).
Liabilities to employees/accruals for personnel related
expenses comprise bonus obligations, accrued vacation
and salaries.
Contract liabilities represents advance payments for
orders received but not shipped, liabilities from store
credit balances and unredeemed customer loyalty points.
154
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
25. REVENUE
Revenues for the year are as follows:
In €m 2020 2019
Sale of goods 1,180.9 1,221.6
Marketplace 153.8 97.2
Other 25.0 27.2
Total Revenue 1,359.7 1,346.0
Other revenues include platform services revenue
generated from wholesale revenue and by providing
ancillary advertising and supply chain services. Breakdowns
of revenues by each segment and by geographical areas are
disclosed in the tables in note 6.
26. EMPLOYEE BENEFIT
EXPENSES
Employee benefit expenses for the year are as follows:
In €m 2020 2019
Wages and salaries
1
204.5 193.4
Social security costs
2
28.0 36.2
Share-based payment
expense 14.9 5.2
Total 247.4 234.8
1
Wages and salaries included in Cost of sales amounts to
€1.5
million
(2019: €2.5
million
) and amounts included within
Selling and Distri bution expenses and Administrative expenses
were €203.0million (2019: €190.9
million
).
2
Social security contributions included in Cost of sales amounts to
€0.1
million
(2019: €0.3
million
) and amounts included within
Selling and Distribution expenses and Administrative expenses
were €27.9 million (2019: €35.9
million
).
Wages, salaries, paid annual leave and sick leave, bonuses,
and non-monetary benefits (such as health services) are
accrued in the year in which the employees render the
associated services.
The average monthly number of employees in 2020 was:
2020 LATAM CIS SEA ANZ
Other
1
Total
Average
number
of em-
ployees 3,107
7,692 1,551
807 134 13,291
The average monthly number of employees in 2019 was:
2019 LATAM CIS SEA ANZ
Other
1
Total
Average
number
of em-
ployees 2,696
6,834 1,515
980 136 12,161
1
“Other” includes employees of headquarters and other business
activities.
155
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
27. DEPRECIATION AND
AMORTISATION EXPENSES
During the financial year, depreciation and amortisation
expenses were categorised in expenses per function, as
follows:
In €m 2020 2019
Included in selling and
distribution expenses
Depreciation of property,
plant and equipment 14.1 13.5
Depreciation of
right-of-use assets 17.8 15.6
Amortisation of
intangible assets
1
0.6 0.7
Included in general and
administrative expenses
Depreciation of property,
plant and equipment 5.0 3.7
Depreciation of
right-of-use assets 5.3 6.5
Amortisation of
intangible assets
1
23.5 21.6
Total 66.3 61.6
1
The comparative figures are restated to align classification
between selling and distribution expenses and general and
administration expenses to the classification as per the
consolidated statement of profit or loss.
28. OTHER OPERATING
INCOME AND EXPENSES
Other operating income for the year was €7.2 million (2019:
€15.1 million), which consisted of income from the disposal
of property, plant and equipment, VAT refunds, rental and
other income.
Other operating expenses for the year are as follows:
In €m 31 Dec 2020 31 Dec 2019
Other operating expenses
Loss from disposal
of property, plant and
equipment 0.9 0.3
Write-o of receivables 1.1 1.3
Other taxes 4.8 17.9
Other expenses 7.6 8.0
Total other operating
expenses 14.4 27.5
29. FINANCIAL RESULT
The financial result for the year is as follows:
In €m Note 31 Dec 2020 31 Dec 2019
Financial Result
Interest income 2.1 5.2
Interest expenses (5.2) (6.7)
Interest expense on
lease liabilities 13 (8.8) (7.7)
Depreciation of
financial assets (0.4) (0.3)
Foreign exchange
(losses)/gains (31.9) 13.3
Total financial result
(44.2) 3.8
156
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
30. INCOME TAXES
Income tax expense is as follows:
In €m 2020 2019
Current tax expense (8.0) (24.9)
Thereof prior period (0.8) 1.2
Deferred tax 3.5 (3.2)
Income tax expense
for the year (4.5) (28.1)
Income tax paid in 2020 amounts to €2.7 million (2019:
€2.5million).
Reconciliation between the tax expense and profit
or loss multiplied by applicable tax rate
The tax on the Company’s profit before tax diers from the
theoretical amount that would arise using the weighted
average tax rate applicable to profits of the consolidated
entities as follows:
In €m 2020 2019
Profit/(loss) before tax (107.9) (116.5)
Weighted average
applicable tax rate (in %) 21.61% 22.98%
Tax calculated at domestic
tax rates applicable to
profits in the respective
countries 23.3 26.8
Tax eect of items which are
not deductible or
assessable for taxation
purposes:
Share-based payment
expenses (0.2) (1.1)
Other permanent
dierences (11.1) (9.1)
Income which is exempt
from taxation 0.5 13.6
Expenses not deductible
for tax purposes (9.3) (20.4)
Utilisation of previous
unrecognised tax losses 7.4 0.9
Unrecognised tax
loss carry forwards
for the year
(12.5) (14.7)
Adjustments in
respect of prior years (2.2) (22.0)
Other (0.4) (2.1)
Income tax expense
for the year (4.5) (28.1)
157
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Deferred tax effects relating to each component
of other comprehensive income
In 2020 and 2019 the Group did not recognise any
deferred tax (charge)/credit relating to components of
other comprehensive income.
Tax loss carry forwards
The Company has unrecognised potential deferred tax
assets in respect of unused tax loss carry forward of
approx. €2,834.8 million (2019: €3,033.8 million). The tax
loss carry forwards expire as follows:
In €m 2020 2019
Tax loss carry forward
expiring by the end of:
Within one year 8.5 10.4
After one year but not
more than five years 58.1 52.0
More than five years 53.8 86.2
Indefinite 2,714.4 2,885.2
Total tax loss
carry forwards 2,834.8 3,033.8
Deferred income tax assets are recognised for tax loss
carryforwards to the extent that the realisation of the
related tax benefit through future taxable profits is
probable.
Tax authorities in the countries in which we operate could
challenge the Group’s tax losses significantly reducing the
availability of the tax losses in future periods.
Deferred Taxes
Dierences between IFRS and statutory taxation
regulations give rise to temporary dierences between the
carrying amount of assets and liabilities for financial
reporting purposes and their tax bases.
158
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
In €m 1 Jan 2020
Exchange
differences
Transferred
to Disposals
Charged/
(credited) to
profit or loss 31 Dec 2020
Tax effect of deductible/(taxable) temporary
differences and tax loss carry forwards
Dierence between tax and
accounting value of:
Trade name (20.6) 1.5 - 1.9 (17.2)
Customer relationship (10.2) 1.8 - 1.2 (7.2)
Technology (0.7) (0.1) - (0.2) (1,0)
Tax loss carryforwards 18.6 (1.1) - (3.2) 14.3
Other 0.7 (0.9) - 3.8 3.6
Net deferred tax asset/(liability) (12.2) 1.2 - 3.5 (7.5)
Recognised deferred tax asset 22.6 (2.0) (3.3) 0.6 17.9
Recognised deferred tax liability (34.8) 3.2 3.3 2.9 (25.4)
In €m 1 Jan 2019
Exchange
differences
Transferred
to Disposals
Charged/
(credited) to
profit or loss 31 Dec 2019
Tax effect of deductible/(taxable) temporary
differences and tax loss carry forwards
Dierence between tax and
accounting value of:
Trade name (22.5) 0.1 - 1.8 (20.6)
Customer relationship (10.8) - - 0.6 (10.2)
Technology (0.7) - - - (0.7)
Tax loss carryforwards 19.2 - - (0.6) 18.6
Other 5.5 0.2 - (5.0) 0.7
Net deferred tax asset/(liability) (9.3) 0.3 - (3.2) (12.2)
Recognised deferred tax asset 24.6 0.4 - (2.4) 22.6
Recognised deferred tax liability (33.9) (0.1) - (0.8) (34.8)
159
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
In the context of the Company’s current structure, tax
losses and current tax assets of dierent Group companies
may not be oset against current tax liabilities and taxable
profits of other Group companies and, accordingly, taxes
may accrue even where there is a consolidated tax loss.
Therefore, deferred tax assets and liabilities are oset only
when they relate to the same taxable entity.
The Company controls the reversal of temporary
dierences relating to taxes chargeable on dividends from
subsidiaries or on gains upon their disposal (“outside basis
dierences”). Hence, for temporary dierences the
Company had €64.4 million (2019: €45.1 million) of
unremitted earnings of subsidiaries for which no deferred
tax liabilities were recognised.
31. CONTINGENCIES AND
COMMITMENTS
Legal proceedings
From time to time and in the normal course of business,
claims against the Company may be received. On the
basis of its own estimates, management is of the opinion
that no material losses will be incurred in respect of claims
in excess of provisions that have been made in these
consolidated financial statements.
In addition, in line with standard business practice, various
Group companies have given guarantees, indemnities and
warranties in connection with disposals in recent years of
subsidiaries and associates to parties outside the Group.
The Group currently estimates that potential exposure
related to such guarantees, indemnities and warranties
could be up to €7.9 million (2019: €7.9 million), however,
the ultimate liability for legal claims may vary from the
amounts provided and is dependent upon the outcome
of any potential litigation proceedings, investigations and/
or possible settlement negotiations. There are also a
number of charges registered over the assets of Group
companies in favour of third parties in connection with the
Group’s banking facilities (note 35).
Tax contingencies
Our business is subject to the general tax environments in
the countries in which we currently operate. Changes in
tax legislation, administrative practices or case law– which
might be applied retroactively– could increase our tax
burden. Additionally, tax laws may be interpreted
dierently by the competent tax authorities and courts,
and their interpretations may change at any time, which
could lead to an increase of our tax burden. In some of the
countries in which we currently operate, tax authorities
may also use the tax system to advance their agenda.
Accordingly, we may face unfounded claims in such
countries. We have been audited several times by tax
ocials in various jurisdictions in which we operate. We
believe that we are in compliance with applicable tax laws.
160
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Legislators and tax authorities may change territoriality
rules or their interpretation for the application of value-
added tax (“VAT”) or similar indirect taxes on transactions,
which may lead to significant additional payments for past
and future periods. In addition, court decisions are
sometimes ignored by competent tax authorities or
overruled by higher courts, which could lead to higher
legal and tax advisory costs and create significant
uncertainty. New taxes could also result in additional costs
necessary to collect the data required to assess these
taxes and to remit them to the relevant tax authorities.
Besides this, the documentation obligations under
applicable VAT and VAT-related laws are considerable.
While we believe that we are in compliance with applicable
tax laws it cannot be ruled out that tax authorities may take
the position that certain of our companies may not fully
comply, or, as the case may be, may have not fully complied
with applicable tax regulations throughout all phases of
their development.
Several of the Group’s German entities rendered services
in the past to their foreign subsidiaries, to support them
with building their online businesses. The German tax
authorities are challenging the input VAT recovery of some
of these entities when costs have not yet been fully
recharged to the other Group entities to which they are
providing the services. In 2018, the German tax authorities
generally agreed to the VAT position of the Group’s
German entities assuming the costs are recharged out
within a reasonable time. The Group is continuing to
review the execution of this proposal having regard to (i)
any current tax disputes with the German tax authorities
that could lead to double taxation from the recharges and
(ii) commercial reasons for not undertaking the recharges.
The nature of the Group’s business model, involving
delivering goods and services to customers in territories
where the Group may have limited physical presence,
could lead to tax authorities challenging the allocation of
taxable income resulting in a higher tax burden for the
Group.
At 31 December 2020, potential tax risks, including the
issues above, estimated by the Group amount to
€124.8 million (2019: €137.2 million) including €45.2 million
in relation to income tax and €79.7 million in relation to
indirect tax (2019: €54.4 and €82.7 million), of which
provisions of €44.2 million (2019: €47.2 million) including
€22.9 million in relation to income tax and €21.3 million in
relation to indirect tax have been recorded representing
the probable amount of eventual claims and required
payments related to those risks. Provisions in relation to
income tax are recorded under ’Income tax liabilities’ while
provisions in relation to indirect tax are recorded under
‘Provisions’ on the statement of financial position.
Capital commitments
As at 31 December 2020, the Group had commitments of
€22.7 million (2019: €5.3 million) primarily relating to the
completion of a new fulfillment centre in Russia (prior year
capital commitments related to completion of a new
fulfillment center in Brazil).
161
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
32. FINANCIAL RISK
MANAGEMENT
In the course of its ordinary business activities, GFG is
exposed to market risk (primarily interest rate risk, foreign
currency risk), credit risk and liquidity risk. In accordance
with the Group’s financial risk management these risks are
identified, analysed and evaluated on a regular basis. It is
the main objective of the Group’s proactive risk
management to decide on actions to avoid, contain or
limit the defined maximum risk exposure from such risks.
It is the Group’s management responsibility to manage
those risks. The management provides written principles
for overall risk management and reviews and agrees
policies for managing each of these risks which are
summarised below.
Market risk. Market risk is the risk that the fair value of
future cash flows of a financial instrument will fluctuate
because of changes in market prices. Market risks
comprise interest rate risk, currency risk, and other price
risk. Market risks arise from open positions in (a) foreign
currencies, (b) interest bearing assets and liabilities, and
(c) assets and liabilities measured at fair value, all of which
are exposed to general and specific market movements.
Refer to note 3 for further information regarding price risk.
Interest rate risk. The interest rate risk involves the
influence of positive and negative changes in market
interest rates on the Group’s financial position and cash
flows. The Group does not have formal policies and
procedures in place for management of interest rate risks
as management considers this risk as insignificant due to
the limited debt financing operations of GFG.
F
oreign currency risk.
Currency risk is the risk that the fair
value of financial assets or financial liabilities held in foreign
currency or future cash flows of a financial instrument will
fluctuate because of changes in foreign exchange rates.
Due to its international business activities, the Group is
exposed to the risk of changes in foreign exchange rates
in connection with trade payables and trade receivables
resulting from purchase and sales transactions
denominated in a dierent currency from the functional
currency of the respective operation as well as
intercompany financing. However, the Group maintains an
eective natural hedge over 80% across most of the
Group’s cash flows as the Group’s revenue streams are
generated in local currencies matched by Group’s costs
mostly incurred in the respective local currencies.
In respect of currency risk, management sets limits on the
level of exposure by currency and in total. The positions
are monitored monthly. The Group does not use
derivatives as hedging instruments to limit its exposure
from foreign currency risks. At 31 December 2020, if the
EUR had strengthened/weakened by +/–10% against all
other currencies with all other variables held constant, the
hypothetical impact on profit for the year would have been
€25.5 million (2019: €3.9 million) higher/lower, mainly as a
result of foreign exchange gains/losses on translation of
trade and other receivables, cash as well as trade and
other payables and loan liabilities denominated in EUR.
During 2020, there were significant fluctuations in some of
the Group’s key reporting currencies, as follows:
Currency/EUR
Closing
FX rate
31 Dec 2020
Closing
FX rate
31 Dec 2019 % Variance
RUB 91.4671 69.9563 30.7%
BRL 6.3735 4.5157 41.1%
AUD 1.5896 1.5995 (0.6%)
162
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
Credit risk. Credit risk is the risk that counterparty will not
meet its obligations under a financial instrument or
customer contract, leading to a financial loss. The Group
takes on exposure to credit risk, which is the risk that one
party to a financial instrument will cause a financial loss for
the other party by failing to discharge an obligation.
The Group is exposed to credit risk primarily from trade
receivables and cash and cash equivalents. In relation to
cash and cash equivalents, the Group only deals with
highly rated financial institutions and therefore the
estimated credit loss is not material.
Customer credit risk is managed by each fashion venture
subject to the Group’s established policy, procedures and
control relating to customer credit risk management. The
Group structures the levels of credit risk it undertakes by
placing limits on the amount of risk accepted in relation to
counterparties or groups of counterparties. Limits on the
level of credit risk are approved regularly by management.
Such risks are monitored on a revolving basis and are
subject to an annual, or more frequent, review. The
Group’s management reviews ageing analysis of
outstanding trade receivables and follows up on past due
balances.
An impairment analysis is performed at each reporting
date based on groupings of various customer segments
with similar loss patterns. The calculation reflects the
probability-weighted outcome, the time value of money
and the reasonable and supportable information that is
available at the reporting date about past events, current
conditions and forecasts of future economic conditions.
The Group evaluates the concentration of risk with respect
to trade receivables as low, as its customers are located in
several jurisdictions and operate in largely independent
markets.
At 31 December 2020, the exposure to credit risk for trade
receivables by type of counterparty was as follows:
In €m
Gross
Carrying
Amount Loss allowance
From online payment
providers 63.1 (0.2)
Logistics companies 7.5 -
Large corporate
clients 6.4 -
Individual customers 0.2 -
Other 3.3 (0.1)
Total 80.5 (0.3)
At 31 December 2019, the exposure to credit risk for trade
receivables by type of counterparty was as follows:
In €m
Gross
Carrying
Amount Loss allowance
From online payment
providers 39.2 (0.1)
Logistics companies 6.4 (0.1)
Large corporate
clients 4.9 (0.2)
Other 2.0 -
Total 52.5 (0.4)
The Group uses an allowance matrix to measure the ECLs
of all types trade receivables, with the exception of the
Indonesian operation who use specific identification for
loss allowance. The expected loss rates are based on the
payment profiles of sales and the corresponding historical
credit losses experienced. The historical loss rates are
adjusted to reflect current and forward-looking
information on macroeconomic factors, such as monetary
policy and economic growth factors which vary region to
region and aect the ability of the customer to settle the
receivables.
163
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The following table provides information about the
exposure to credit risk and ECLs for trade receivables as
at 31 December 2020:
In €m
Gross
Carrying
Amount
Loss
allow-
ance
Loss
rate
Current (not past due) 73.9 (0.3) 0.4%
1–30 days past due 3.3 0.0 0.0%
31–60 days past due 1.1 0.0 0.0%
61–90 days past due 0.9 0.0 0.0%
More than 90 days
past due 1.3 (0.0) 2.5%
Total 80.5 (0.3) 0.4%
The movement in the allowance for impairment in respect
of trade receivables during the year was as follows:
In €m 2020
Balance at 1 January 2020 0.4
Net remeasurement of loss allowance
(as per income statement) (0.1)
Balance at 31 December 2020 0.3
Liquidity risk. Liquidity risk is the risk that an entity will
encounter diculty in meeting obligations associated with
financial liabilities.
The Group manages liquidity by maintaining adequate
reserves, capital funding (for example, the issued share
capital as detailed in note 19), banking facilities and
reserve borrowing facilities (see further detail in note 35),
by continuously monitoring forecast and actual cash flows.
The Group seeks to maintain a stable funding base
primarily consisting of shareholders´ issues of capital, then
borrowing, trade and other payables.
The table below shows liabilities at 31 December 2020 and
2019 by their remaining contractual maturity. The amounts
disclosed in the maturity table are the contractual
undiscounted cash flows. When the amount payable is not
fixed, the amount disclosed is determined by reference to
the conditions existing at the end of the reporting period.
Foreign currency payments are translated using the spot
exchange rate at the end of the respective reporting
period.
164
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
The maturity analysis of financial liabilities at 31 December 2020 is as follows:
In €m
Demand and
less than 1 year From 1 to 5 years Over 5 years Total
Liabilities
Borrowings 10.6 - - 10.6
Trade payables and other financial liabilities 283.8 - - 283.8
Lease liabilities 29.5 89.0 7.9 126.4
Total future payments, including future
principal and interest payments 323.9 89.0 7.9 420.8
As at 31 December 2020, the carrying value of borrowings,
trade payables and other financial liabilities and lease
liabilities, were €10.2 million, €283.8 million and
€113.7 million respectively.
The maturity analysis of financial liabilities at 31 December 2019 is as follows:
In €m
Demand and
less than 1 year From 1 to 5 years Over 5 years Total
Liabilities
Borrowings 5.4 - - 5.4
Trade payables and other financial liabilities 311.6 - - 311.6
Lease liabilities 28.9 87.6 14.4 130.9
Total future payments, including future
principal and interest payments 345.9 87.6 14.4 447.9
As at 31 December 2019, the carrying value of borrowings,
trade payables and other financial liabilities and lease
liabilities, were €5.4 million, €311.6 million and
€106.1 million respectively.
165
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
33. CAPITAL MANAGEMENT
For the purpose of the Group’s capital management,
capital includes issued capital and all other equity reserves
attributable to the equity holders of the parent. It is the
primary objective of the Group’s capital management to
ensure that all the Group entities can operate on a going
concern basis and maintain a sucient capital structure to
provide a long-term growth of the Group’s value. The
Group decides on adjustments of the capital in light of
changes in economic and trading conditions. In order to
maintain or adjust the capital structure, the Group may
return capital to shareholders, issue new shares or sell
assets to reduce debt.
In €m 31 Dec 2020 31 Dec 2019
Equity attributable
to equity holders of
the parent 615.2 641.3
Total Assets 1,173.1 1,204.5
Equity Ratio 52.4% 53.2%
There were no changes made to the objectives, policies
or processes during the period from incorporation up to
31 December 2020.
34. HYPERINFLATIONARY
ECONOMIES
IAS 29 Financial Reporting in Hyperinflationary Economies
was adopted during the second half of 2018 in Argentina,
where the three-year cumulative inflation rate for consumer
prices and wholesale prices reached levels of 123% and
119% respectively. The gain/loss on the net monetary
position due to Hyperinflation for the year ended
31 December 2020 was €1.2m (2019: €1.6m).
35. DEBT FACILITIES
The Company entered into an amended revolving credit
facility (‘the amended facility’) on 9 July 2019. The total
facility amount remains unchanged at €70.0 million, with
the allocation between Facility A and Facility B remaining
unchanged at €50.0 million and €20.0 million respectively
with Facility A permitted to increase by up to €30.0 million
(to a total of €80.0 million) by way of an accordion option.
€50.0 million that was classified as restricted under the
previous Facility A was released to the Company on
11 July 2019.
There will be no obligation to hold restricted cash as part
of the amended facility unless the market capitalisation
falls below €600 million. If market capitalisation falls below
€600 million then the Group will have to restrict cash equal
to any draw downs. As at 31 December 2019 as market
capitalisation was below €600 million, €20 million was
restricted under the facility within other financial assets
(non-current). On 31 July 2020 the RCF was cancelled.
Restricted cash of €20 million was released on cancellation.
The loan origination fees of the original facility of
€1.0 million, that were capitalised and not fully amortised
as at 30 June 2020, were expensed in full when the facility
was cancelled.
166
ANNUAL REPORT 2020 | GFG
Notes to the consolidated financial statements
On 17 July 2020, the Group entered new bi-lateral
revolving credit facilities consisting of two elements:
€20 million of bank guarantees equivalent to the former
Facility B; and €10 million of buyer loan facilities for
supplier financing, to improve local working capital
profiles. The new facilities have a less onerous security
package than the previous arrangements. Under the
guarantee facility, the Group is required to hold €6 million
of restricted cash, which is included within Other Financial
Assets (non-current). As at 31 December 2020, the Group
had utilised €26.4 million of these facilities.
On 21 October 2020, the Group also entered into a new
committed facility for RUB 2 billion, which grants the ability
to issue bank guarantees and similar instruments and draw
bank loans to fund working capital requirements. The
indicative credit spread, based on current market interest
rates is in the range of 1.7% for up to one month loans to
2.3% for 12 month loans. The floating rate will be based on
the Russian central bank rate, currently 4.25%, plus credit
spread. The Group is under no obligation to hold
restricted cash for this facility.
36. EVENTS AFTER THE
REPORTING PERIOD
On 3 March 2021, Global Fashion Group S.A. launched an
oering of approximately €375 million Convertible Bonds.
The Convertible Bonds are expected to be issued by the
Company on or around 15 March 2021, at 100% of their
principal amount with a denomination of €100,000 each
and will be redeemed at their principal amount on
15 March 2028, unless previously converted, redeemed or
repurchased and cancelled. The bonds were successfully
placed on 4 March 2021.
There are no other events subsequent to the year end that
would require a disclosure in the consolidated financial
statements.
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Notes to the consolidated financial statements
6. RESPONSIBILITY STATEMENT
We, Christoph Barchewitz, Co-Chief Executive Ocer,
Patrick Schmidt, Co-Chief Executive Ocer, and Matthew
Price, Chief Financial Ocer, confirm to the best of our
knowledge, the accompanying financial statements give
a true and fair view of the financial position of the Company
as at 31 December 2020, and of the results of its operations
for the year then ended in accordance with IFRS as
adopted by the EU and that the Management Report
(section 2) includes a fair review of the development and
performance of the business and the position of Global
Fashion Group S.A., together with a description of the
principal risks and uncertainties that Global Fashion Group
S.A. faces.
Christoph Barchewitz, Co-CEO
Patrick Schmidt, Co-CEO
Matthew Price, CFO
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Responsibility Statement
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Responsibility Statement
7.1 FINANCIAL DEFINITIONS
Active Customers
Active Customers are the number of customers who have
purchased at least one item after cancellations, rejections
and returns in the last twelve months.
Adjusted EBITDA
Adjusted EBITDA is calculated as loss before interest and
tax adjusted for depreciation of property, plant and
equipment and right-of-use assets, amortisation of
intangible assets and impairment losses, and adjusted for
share-based payment (income)/expenses as well as one-o
fees related to the capital raise, and in 2019 included IPO,
one-o tax adjustments, non-trading income and costs
relating to the wind-down of Lost Ink Limited.
Adjusted EBITDA is reconciled in the note 6 to the
consolidated financial statements and in section 2.8
Financial Performance.
Adjusted EBITDA is a supplemental non-IFRS measure of
our operating performance that is not required by, or
presented in accordance with, IFRS. Adjusted EBITDA is not
a measurement of our financial performance under IFRS
and should not be considered as an alternative to loss for
the year, loss before income tax or any other performance
measure derived from IFRS. We caution investors that
amounts presented in accordance with our definition of
Adjusted EBITDA may not be comparable to similar
measures disclosed by other companies, because not all
com panies and analysts calculate Adjusted EBITDA in the
same manner. We present Adjusted EBITDA because
management considers it to be an important supplemental
measure of the Group’s operating performance.
Management believes that investors’ understanding of our
performance is enhanced by including non-IFRS financial
measures as a reasonable basis for understanding the
Group’s ongoing results of operations. By providing this
non-IFRS financial measure, together with a reconciliation
to the nearest IFRS financial measure, management believes
that investors’ understanding of the business and its results
of operations are enhanced, as well as assisting investors in
evaluating how well the business is executing its strategic
initiatives.
Adjusted EBITDA provides a basis for comparison of
business operations between current, past and future
periods by excluding items that management does not
believe are indicative of core operating performance.
Adjusted EBITDA, a non-IFRS measure, may not be
comparable to other similarly titled measures used by other
companies.
Average order value
Average order value is defined as the NMV (see below for
definition) per order.
Capex
Capital expenditure shows additions to intangible assets
and additions to property, plant and equipment, including
those due from business combinations, excluding
additions to IFRS16 right-of-use assets.
In €m Note FY 2020 FY 2019
Additions
Property,
plant &
equipment 12 28.4 48.9
Goodwill & other
intangibles 14 20.3 23.2
Total Capex 48.7 72.1
EBITDA
EBITDA is calculated as loss before interest and tax
adjusted for depreciation of property, plant and
equipment and right-of-use assets, amortisation of
intangible assets and impairment losses.
EBITDA is reconciled with the note 6 to the consolidated
financial statements and in section 2.8 Financial
Performance.
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Additional Information
EBITDA provides a basis for comparison of our business
operations between current, past and future periods by
excluding items that management does not believe are
indicative of core operating performance. EBITDA, a non-
IFRS measure, may not be comparable to other similarly
titled measures used by other companies.
Net Merchandise Value
Net Merchandise Value (“NMV”) is defined as the value of
goods sold including value-added tax (“VAT”)/goods and
services tax (“GST”) and delivery fees, after actual or
provisioned rejections and returns.
NMV is used as a complete measure of the merchandise
volumes being sold on GFG’s platforms through both
Retail and Marketplace business models. Revenue, on the
same basis, only takes into account the commission on a
marketplace transaction and is therefore disconnected
from true volume. As Retail and Marketplace volumes
carry similar levels of profitability, management believes it
is important to allow users of the Annual Report to
understand the Group’s progress on this measure.
NMV is a non-financial measure, as it includes sales taxes
not recorded in revenue and Marketplace price information
that can not be reconciled to the financial statements.
Net working capital
Net working capital is calculated as inventories plus
current trade and other receivables less current trade
payables and other financial liabilities.
In €m FY 2020 FY 2019
Inventory 195.9 234.0
Trade and other receivables
(current) 80.2 52.1
Trade payables and other
financial liabilities (283.8) (311.6)
Liabilities related to SBP
(note 20) 6.3 13.5
Net working capital (1.4) (12.0)
Order frequency
Order frequency is defined as the average number of
orders per customer per year (calculated as the last twelve
month’s orders divided by active customers).
Pro-forma cash
Pro-forma cash is defined as cash and cash equivalents at
the end of the year plus restricted cash and cash on
deposits.
Pro-forma cash reconciliation
In €m FY 2020 FY 2019
Cash and cash
equivalents 366.1 277.3
Restricted cash and
cash on deposit 6.3 23.5
Pro-forma cash 372.4 300.8
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Additional Information
7.2 FINANCIAL CALENDAR
19 May 2021 Q1 2021 Results
29 June 2021 Annual General Meeting
19 August 2021 Q2 2021 Results
17 November 2021 Q3 2021 Results
7.3 INFORMATION
RESOURCES
Further information including corporate news,
reports and publications can be found in the
Investor Relations section of our website at
https://ir.global-fashion-group.com
Investor Relations
Adam Kay, Investor Relations Director
email: investors@global-fashion-group.com
Press/Communications
Christina Song, Strategy Director
email: press@global-fashion-group.com
Concept/Consulting/Design
Silvester Group
www.silvestergroup.com
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Additional Information
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Additional Information
global-fashion-group.com
