ANNUAL
REPORT
2021
HIGHLIGHTS
2021
€2,390.5 M
NMV
+ 23.9% yoy
47.8 M
ORDERS
+ 13.8% yoy
17.0 M
ACTIVE
CUSTOMERS
+ 4.5% yoy
0.9%
ADJ. EBITDA
MARGIN
2
ANNUAL REPORT 2021 | GFG
Highlights 2021
See Financial Definition section9.1
2021 2020
Financial performance
Revenue (€m) 1,559.5 1,359.7
Growth at constant currency (%) 17.2 15.3
Gross profit (€m) 711.5 586.2
Loss before interest and taxes (EBIT) (€m) (104.7) (64.8)
Loss for the year (€m) (124.8) (112.4)
Adjusted EBITDA (€m) 13.6 16.4
Adjusted EBITDA / Revenue (%) 0.9 1.2
Capex (€m) 60.2 48.7
Financial position
Net working capital (€m) 18.1 (1.4)
Cash and cash equivalents (€m) 400.5 366.1
Pro-forma cash (€m) 642.5 372.4
Group KPIs
NMV (€m) 2,390.5 1,958.2
Growth at constant currency (%) 23.9 25.7
Active customers (m) 17.0 16.3
NMV / Active Customer (€m) 140.5 120.3
Number of orders (m) 47.8 42.0
Order frequency 2.8 2.6
Average order value (€) 50.0 46.6
FINANCIAL SUMMARY
AND KEY
PERFORMANCE
INDICATORS
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ANNUAL REPORT 2021 | GFG
Highlights 2021
FASHION AND
LIFESTYLE.
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
4
ANNUAL REPORT 2021 | GFG
TO OUR SHAREHOLDERS 6
1.1 Letter to our Shareholders 7
1.2 Report of the Supervisory Board 15
1.3 Corporate Governance Report 24
GROUP MANAGEMENT REPORT 62
2.1 – 2.5 Fundamental Information about the Group 64
2.6 – 2.10 Report on Economic Position 74
2.11 Report on Post Balance Sheet Events 83
2.12 – 2.13 Report on Risks and Opportunities 84
2.14 Report on Expected Development and Outlook 92
INDEPENDENT AUDITOR’S REPORT ON
CONSOLIDATEDFINANCIAL STATEMENTS 94
CONSOLI DATED FINANCIAL STATE MENTS 102
4.1 Consolidated Statement of Profit or Loss 104
4.3 Consolidated Statement of Financial Position 106
4.4 Consolidated Statement of Changes in Equity 108
5 Notes to the Consolidated Financial Statements 112
INDEPENDENT AUDITOR'S REPORT ON
PARENTFINANCIAL STATEMENTS 184
PARENT FINANCIAL STATEMENTS 188
RESPONSIBILITY STATEMENT 214
ADDITIONAL INFORMATION 216
9.1 Financial Definitions 216
9.2 Financial calendar 218
9.3 Information Resources 218
ANNUAL REPORT 2021 | GFG
Contents
THE
MANAGEMENT
BOARD
Christoph
Barchewitz
Co-CEO
Patrick
Schmidt
Co-CEO
Matthew
Price
CFO
6
ANNUAL REPORT 2021 | GFG
Letter to our Shareholders
1.1 LETTER TO OUR SHAREHOLDERS
DEAR SHAREHOLDERS,
The past year played out dierently to what we expected at the end of 2020. Following the
introduction of vaccines, the world was optimistic about an end to the pandemic during 2021. The
industry was also optimistic for a fashion recovery by the second half of 2021. However, with a
relatively slow roll-out of vaccines in many of GFG’s markets and new variants, we continued to
experience an unpredictable and volatile environment.
Despite all of this, looking back on 2021 we are proud of what we have achieved as a business in
many respects. 2021 was a year in which we celebrated our 10
th
anniversary and as a young
business, we have reached many milestones, while continuing to face one of the biggest challenges
the world has seen in decades.
We continued to deliver the best of global and local fashion to our customers,
and we did this in a meaningful way – by staying true to our localised expertise
from discovery to delivery. This includes supporting our 15,480 strong workforce
to continue working safely and securely and adapting our business model to
ensure our brand partners maintain the strong connection they have with
customers in our markets – and vice versa.
As Ecommerce adoption continued at pace throughout 2021, we benefited from a broad view of
how customers are responding across four very diverse markets and at dierent stages of the
pandemic. So we focused on sharpening our position as the online destination for all of our
customers’ fashion & lifestyle needs. This means delivering the most relevant assortment, while
ensuring an unwavering and inspiring customer experience. We are proud to have made further
progress here in 2021.
Today we work with 40 of the top 50 global fashion and lifestyle brands and in 2021, we rolled out
new, high growth categories such as beauty. We on-boarded over 200 beauty brands onto our
platform and work with almost 50% of the top 100 global beauty brands. We also focussed on the
continued premiumisation of our assortment, deepening relationships with existing and
onboarding new brands across the premium and luxury segments, which contributed to 13% of
NMV in 2021.
We continued to accelerate our unique Marketplace capabilities, which in 2021 represented a
significant 38% of our business, up from just 16% three years ago. This is a true testament to the
adaptability of our business. GFG’s Platform Services complement Marketplace and the locally
tailored business models we oer by further enabling brands to build a deeper connection with
the consumer.
We continued to deliver
the best of global and local
fashion to our customers
7
ANNUAL REPORT 2021 | GFG
Letter to our Shareholders
With 17 million Active Customers and 48 million Orders, we delivered NMV of
€2.4 billion and our customer metrics remain strong including order frequency
which was up 9%.
One of the things we are most proud of, are our 2021 sustainability achievements. We continued
to drive progress against our People & Planet Positive agenda towards a more inclusive, accessible
and empowering experience for our customers. Conducting business responsibly has become an
industry-wide duty and last year, we joined Global Fashion Agenda - the leading non-profit for
industry collaboration on sustainability in fashion. As the only strategic partner operating across
growth markets, we are in a strong position to help drive meaningful change together with our
peers and industry influencers. We also announced achieving carbon neutrality across all of GFG’s
operations which includes the use of 100% green energy across 9 fulfillment centers and five times
as many orders are now delivered by low emission methods.
Following another year of achievements, we wouldn’t be here without our people, our customers,
brand partners and you – our shareholders. We are proud of what we have achieved together and
excited about what we will achieve in the years ahead.
Looking ahead, the opportunity in our markets is as big as ever and we have a clear
vision and strategy to capture it. Fashion & Lifestyle Ecommerce penetration in GFG’s
markets grew from 7% at pre-pandemic levels, to 16% in 2021. This vast and
maintained increase combined with a population of over one billion people in our
markets, makes us confident about the future growth opportunity. As we continue to
build a €10 billion NMV business, GFG’s strategy and vision to be the leading fashion & lifestyle
destination in growth markets remain unchanged.
Thank you for continuing to be a part of our journey.
Christoph Barchewitz, Co-CEO
Patrick Schmidt, Co-CEO
Matthew Price, CFO
Continued progress
against our
People & Planet
Positive agenda
The opportunity
in our markets
is as big as ever
8
ANNUAL REPORT 2021 | GFG
Letter to our Shareholders
9
ANNUAL REPORT 2021 | 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 markets.
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 categories,
our ambition is to build a €10 billion NMV business in the
next 6– 8 years.
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 2021 | GFG
WHO WE ARE
WE PROTECT OUR TEAM
AND OUR CUSTOMERS
Our markets remained disrupted by Covid-19 through
most of 2021. We continued to place the physical and
mental health and wellbeing of our employees, as well as
our customers, as a top priority. Our fulfilment centres
remained fully operational and we have recruited more
people this year to accommodate the additional demand
and safety measures.
The Group continued to work closely with its brand
partners to adjust inventory intake and assortment to
reflect the changing lockdown demand. GFG has seen a
partial recovery in occasion and business wear and
demand for Covid-19 categories such as loungewear,
casualwear and sportswear has remained strong. GFG also
accelerated the roll out of adjacent categories including
beauty, home and kids through a combination of both the
Marketplace and Retail business models.
Physical and mental health and
wellbeing of our employees,
as well as our customers,
will always be a top priority
11
ANNUAL REPORT 2021 | GFG
WHO WE ARE
HOW
WE
WIN
OUR OPPORTUNITY
WE are the leading fashion and
lifestyle destination in our markets for
three reasons:
• We combine a global platform
with 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.
We do this by striving to be People
and Planet Positive ensuring that we
are managing the impact on our
people, environment, industry and
communities. These strategic priorities
are central to our decision making and
we are continually progressing them
to ensure that we deliver our ambition.
12
ANNUAl RePORT 2021 | GFG
HOW WE WIN
Our vision is to be People & Planet
Positive, Worldwide. We seek to
operate our business within
planetary boundaries, and to apply
the highest duty of care to people
within our business and supply
chain. To GFG, People & Planet
Positive means to understand
every element of our business
responsibility for people and
planet and, through six
strategic priorities – Climate
Action, Circularity & Conscious
Consumption, Fair & Ethical
Sourcing, Diversity, Inclusion &
Belonging, Responsible Workplace
and Responsible Business – to
deliver the most positive impact
possible. Integration of our People &
Planet Positive agenda throughout our
business is a fundamental component of our
long-term success.
TRUe lOCAl eXPeRT
WE unlock complex markets for our brand partners
and help them to build positions and brands in our
markets. We oer both our global and local brand
partners access to a highly engaged audience with
attractive demographics who are fashion-conscious
and digitally native.
Platform services create deeper relationships with
our brand partners. We oer flexible models and
unrivalled platform service capability which we
tailor to the brands depending on their capability
and the individual market characteristics. Whether
that’s Operations by GFG, Data by GFG and
Marketing by GFG, together these services allow
brand partners to focus on their core competencies
while creating new value across new markets.
Our fulfilment is fast, ecient and convenient. Our
customers purchased more than 100 million items
in 2021 from nine local fulfilment centres, which
enable us to provide a compelling delivery
proposition across all of our regions.
PARTNER
OF CHOICE
FOR
BRANDS
WE
create an inspiring and seamless shopping
experience for our customers - from discovery to
delivery.
• Large choice of global and local brands
• Unparalleled assortment
that is broad and relevant
• Seamless digital experience that
is personalised and inspiring
• Localised payment and financing options
• Fulfilment and returns that are fast,
ecient and convenient
BEST-IN-
CLASS
CUSTOMER
EXPERIENCE
PEOPLE &
PLANET
POSITIVE,
WORLDWIDE
13
ANNUAl RePORT 2021 | GFG
HOW WE WIN
THE SUPERVISORY
BOARD
Cynthia
Gordon
Chairman
Philipp
Povel
1
Laura
Weil
Carol
Shen
Georgi
Ganev
Victor
Herrero
1
Philipp Povel was appointed a member of the Supervisory Board on 26 May 2021.
Alexis Babeau resigned on 26 May 2021.
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
1.2 REPORT OF THE SUPERVISORY BOARD
DEAR SHAREHOLDERS,
2021 was another significant year for GFG.
Fashion demand is still recovering to pre-pandemic levels in GFG’s
markets and consumer sentiment continues to fluctuate. GFG continued
to deliver against its vision to be the leading online fashion & lifestyle
destination in growth markets.
2021 saw the ongoing acceleration of Ecommerce as consumers worldwide
continue to shop online more than ever before. GFG customers continued to
choose GFG for its seamless and inspiring proposition, and current and new brand
partners chose GFG for its adaptable and localised business models. 90% of the
top 20 brands by NMV can today be accessed via both GFG’s Marketplace and
Retail business models, while customer frequency is at 9%.
GFG also increased its commitment to sustainability, delivering against all of the
Group’s sustainability targets at the end of 2021 including ensuring a sustainability
edit exists in all regions by the end of 2021 – an industry first in some markets.
Looking to the future GFG has set the goal to achieve 10 billion Euro NMV within
6 – 8 years. With the immense number of achievements to date, we are thankful to
all of our existing and new shareholders and GFG’s customers and brand partners
who continue to support the business. Most of all, a huge thank you to the GFG
team, particularly front line sta in our customer, warehouse and delivery teams,
who continue to ensure customers receive a seamless service.
Together with our team, customers and shareholders, GFG looks forward to the
future.
GFG continued to
deliver against its
vision to be the
leading online fashion
& lifestyle destination
in growth markets
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ANNUAL REPORT 2021 | 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, personnel matters and the
course of business from the Management Board.
Furthermore, the Supervisory Board was directly involved
in all fundamental decisions impacting Global Fashion
Group S.A. (“the Company”).
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 Chairperson 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 Financial Year 2021. In an
ongoing dialogue between the Boards, the Supervisory
Board discussed strategy, planning, capital allocation,
business development, sustainability, governance and risk
management issues with the Management Board.
Cooperation between the Supervisory Board and
Management Board involves the immediate notification of
the Chairperson of the Supervisory Board of important
events and the requirement for the Supervisory Board to
approve transactions of fundamental importance and
transactions by members of the Management Board and
related persons with GFG.
The Chairperson 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 19 August 2020 (the “Supervisory Board
Rules of Procedure”);
• the Rules of Procedure of the Management Board
dated 19 August 2020 as amended (the
“Management Board Rules of Procedure”);
• the applicable Luxembourg laws; and
• the German Corporate Governance Code dated
16 December 2019 (the “Code”).
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
The Supervisory Board and / or its committees discussed
and reviewed the following topics during Financial Year
2021:
• Individual and consolidated financial statements for
Financial Year 2020 and the results for the first
quarter, first half and third quarter of 2021 and
outlook for the remaining of the Financial Year;
• Development of the business during the year
including the ongoing impact of the Covid-19
pandemic and the Company’s response to it;
• The strategic positioning and structure of
Global Fashion Group S.A. and its subsidiaries
(“the Group”) and the corporate organisation;
• 2021 strategic priorities;
• 2022 strategic priorities;
• the 2021 budget and reforecasts, mid-term plan
and liquidity forecast;
• The 2022 budget, mid-term plan and liquidity
forecast;
• Issuance of €375million Convertible bonds due
2028;
• Capex and investments;
• Periodic capital market and investor relations
updates;
• Sustainability;
• Annual review of the dividend policy;
• Diversity Policy applicable to the Management
Board and Supervisory Board;
• Amendments to the 2019 — 2021 Long Term
Incentive Plan (“2019 LTIP”) applicable to the
Management Board members;
• Adoption of new 2021 Long Term Incentive Plan
(“2021 LTIP”) applicable to Management Board
members;
• Remuneration Policy applicable to the Management
Board members;
• Base remuneration and employment contracts of
the members of the Management Board;
• Assessment of target achievement related to the
short-term incentive of the Management Board for
Financial Year 2020;
• Setting of short-term incentive compensation
targets for the Management Board for Financial
Year 2021;
• Assessment of target achievement related to
Performance Stock Units allocated to the
Management Board under the 2019 LTIP as part of
the grants made in Financial Year 2019 and 2020;
• The allocation Performance Stock Units under the
2021 LTIP for Financial Year 2021 and
determination of related performance targets for
the members of the Management Board;
• Succession planning for the members of the
Management Board;
• The issuance of shares for legacy participations
and equity plans and the related capital increase;
• The Annual General Meeting of Shareholders and
related agenda;
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
The Management Board discussed and reviewed the The
The Management Board discussed and reviewed the
following topics:
• Appointment of new members of the Audit
Committee;
• Appointment of a new Chairperson of the Audit
Committee;
• Periodic Legal & Governance, Risk & Compliance
updates;
• The update to the declaration of compliance with
the German Corporate Governance Code for
Financial Year 2020;
• The Declaration of compliance with the German
Corporate Governance Code for Financial Year
2021;
•
Acknowledgement of the satisfaction of the Share
Conversion Condition and the approval of an
increase of the share capital in connection with the
future conversion of the Convertible bonds into
common shares of the Company;
• The Corporate Governance Report and
Remuneration Report for Financial Year 2020;
• The Non-Financial Report (“People & Planet
Positive Report”) for Financial Year 2020;
• Annual Self-Review of Eciency of the Supervisory
Board;
• Adoption of two new committees of the
Supervisory Board named the ’Nominations
Committee’ and the ’Remuneration Committee’;
and
• The update to the declaration of compliance with
the German Corporate Governance Code for
Financial Year 2021 dated 14 December 2021.
• Individual and consolidated financial statements for
Financial Year 2020 and the results for the first
quarter, first half and third quarter of 2021 and
outlook for the remaining of the Financial Year;
• Business development during the year, including
the ongoing impact of the Covid-19 pandemic and
the Company’s response to it;
• The issuance of €375million Convertible bonds
due 2028;
• Acknowledgement of the satisfaction of the Share
Conversion Condition and the approval of an
increase of the share capital in connection with the
future conversion of the Convertible bonds into
common shares of the Company;
• Annual review of the dividend policy;
• Periodic capital market and investor relations
updates;
• The strategic positioning and structure of the
Group and the corporate organisation;
• 2021 strategic priorities;
• Strategic priorities for 2022;
• The 2021 budget and reforecasts, mid-term plan
and liquidity forecast;
• The 2022 budget, mid-term planning and liquidity
forecast;
• Capex and investments;
• Gross margins, inventories and provisions;
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
Composition of the Supervisory Board
and Committees
According to the Articles of Association of GFG (the
“Articles of Association”), the Supervisory Board shall be
composed of at least three members. For Financial Year
2021 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, while members of the Management
Board are appointed by the Supervisory Board. In
Financial Year 2021, Alexis Babeau resigned as a member
of the Supervisory Board with eect from the end of the
Company’s Annual General Meeting on 26 May 2021.
The Company’s Annual General Meeting on 26 May 2021
elected Philipp Povel as a member of the Supervisory
Board for a term ending at the expiration of the General
Meeting of Shareholders approving the financial
statements for the year ending 31 December 2021. The
members of the Supervisory Board are selected according
to their knowledge, capabilities, professional aptitude and
competence. The Supervisory Board acknowledges and
• Sustainability;
• Health & Safety and Wellness updates;
• Diversity Policy applicable to the Management
Board and Supervisory Board;
• Succession planning for the key leaders of the
Group;
• Amendments to the 2019 LTIP applicable to
eligible employees of the Group;
• Adoption of the new 2021 LTIP applicable to
eligible employees of the Group;
• Remuneration system for employees of the Group;
• Assessment of target achievement in relation to
the short-term incentive compensation for
employees of the Group for Financial Year 2020;
• Short-term incentive compensation target
determination for the employees of the Group for
Financial Year 2021;
• Assessment of targets achievement in relation to
Performance Stock Units allocated to eligible
employees under the 2019 LTIP for Financial Year
2020;
• Allocation of restricted stock units and
Performance Stock Units to eligible participants
under 2019 LTIP and 2021 LTIP for Financial Year
2021 and determination of related performance
targets;
• Issuance of shares for legacy participations and
equity plans and the related capital increase;
• The Annual General Meeting and its agenda;
• Periodic Governance, Legal & Regulatory and
Compliance updates;
• Review of the Risk Registry;
• The update to the declaration of compliance with
the German Corporate Governance Code for
Financial Year 2020;
• Declaration of compliance with the German
Corporate Governance Code for Financial Year
2021;
• The update to the declaration of compliance with
the German Corporate Governance Code for
Financial Year 2021 dated 14 December 2021; and
• The Management Board report and the
People & Planet Positive Report.
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
appreciates the importance of diversity. In Financial Year
2021, 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
Chairperson Member
(since close
of the AGM
on 26
May 2021)
Member
Georgi
Ganev
Vice
Chairperson
- -
Alexis
Babeau
(Until 26
May 2021)
Member
(until closer
of the AGM
on 26
May 2021)
Chairperson
(until 26
May 2021)
-
Victor
Herrero
Member Member Chairperson
Laura Weil Member Chairperson
(since close
of the AGM
on 26
May 2021)
-
Carol Shen Member - Member
Philipp
Povel
(Since 26
May 2021)
Member
(since close
of the AGM
on 26
May 2021)
- -
Meetings of the Supervisory Board and its
Committees during Financial Year 2021:
• The Supervisory Board met 8 times in Financial Year
2021 by telephone / video conference (due to travel
restrictions generally in place throughout the year),
and passed fourteen written resolutions;
• A sub-committee appointed by the Supervisory
Board on 25 February 2021, passed two written
resolutions in connection with the issuance of
€375million Convertible bonds of the Company;
• A sub-committee appointed by the Supervisory
Board on 25 February 2021, passed one written
resolution in connection with the creation of the
2021 LTIP, the approval of the terms of the 2021 LTIP,
including all related documents and the approval
of the amendments to the 2019 — 2021 LTIP and all
related documentation;
• A sub-committee appointed by the Supervisory
Board on 18 March 2021, passed one written
resolution in connection with the convening of the
Annual General Meeting by the Management Board;
• A sub-committee appointed by the Supervisory
Board on 17 April 2021, passed one written resolution
in connection with the amendments to the
Remuneration Policy. The amended Remuneration
Policy was included in the agenda of the Annual
General Meeting which occured on 26 May 2021;
• A committee appointed by the Supervisory Board on
25 May 2021, passed one written resolution in
connection with the issuance of shares for legacy
participations and equity plans and the related capital
increase;
• The Audit Committee held a total of six meetings;
and
• The Sustainability Committee held a total of four
meetings.
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
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 all
Supervisory Board meetings, reporting to the Supervisory
Board in detail on the course of the Group’s business, the
development of the Company’s revenue and profitability,
and execution of its strategy. 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 and the requirements of
the Supervisory Board Rules of Procedure.
The attendance level of the Supervisory Board members,
the Audit Committee members and the Sustainability
Committee members at their respective meetings was
100% for the Financial Year 2021. The table below contains
the individualised attendance of the Supervisory Board
members.
Name
1
Supervisory Board Audit Committee Sustainability Committee
No. % No. % No. %
Cynthia Gordon
(independent)
9 100 2
2
33.33%
(100% of
meetings
since
appointment)
4 100
Georgi Ganev
(independent) 9 100 - - - -
Alexis Babeau
(Until his resignation from
close of the AGM on
26May 2021)
(independent) 5
3
62.5% 4 66.67% - -
Victor Herrero
(independent) 9 100 6 100 4 100
Laura Weil
(independent) 9 100 6 100 - -
Carol Shen
(independent) 9 100 - - 4 100
Philipp Povel
(from his appointment
eective from close of the
AGM on 26 May 2021)
(independent) 5
55.56%
(100% of
meetings
since
appointment)
- - - -
1
I ndependence assessment is based on German Corporate Governance Code criteria.
2
Cynthia Gordon was appointed as member of the Audit Committee eective 26 May 2021.
3
Alexis Babeau was a member of the Audit Committee and its Chair until 26 May 2021.
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ANNUAL REPORT 2021 | GFG
Report of the Supervisory Board
During its meetings in Financial Year 2021, the Audit Committee covered the following topics:
Area of Focus Actions taken in 2021
Financial reporting • Reviewed key accounting and reporting issues at each meeting
• Reviewed and approved quarterly financial statements for Q1 and Q3
and 2021 interim condensed consolidated financial statements
• Reviewed gross margins, inventories and provisions
• Reviewed the financial controls status and progress
• Review of FY 2020 consolidated and standalone financial statements
• Review of H1 2021 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 2021 external audit strategy
• Reviewed the assessment from the external auditor regarding the design and operating
eectiveness of the internal control environment including the Group’s main financial
processes
• Conducted the annual review of independence and quality of the external auditors
Internal audit activities • Approved the annual internal audit plan for 2021 and provided direction to risk coverage
• Followed up on high priority actions requiring escalation with the Management Board
• Reviewed results of an independent strategic assessment of the Group internal audit function
Risk management • Reviewed updates in relation to the risk assessment process, risk registers and associated
actions including:
• Cyber and Technology Maturity
• Treasury Risk Strategy
• Reviewed summary updates in relation to the refreshed enterprise risk management
framework
• Reviewed updates in relation to information security including cyber security
• Informed of risk transfer strategy with regard to central insurance buying
Internal Controls • Reviewed the annual internal controls self assessment programmes plan and methodology
• Reviewed summary updates on programmes progress
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Report of the Supervisory Board
The significant issues considered by the Audit Committee
in relation to the financial statements for the Financial Year
2021 were:
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 Financial Year 2021.
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 Financial Year 2021.
The Supervisory Board would also like to thank Alexis
Babeau for his valuable contributions to the work of the
Supervisory Board and the Audit Committee.
Luxembourg, 7 March 2022
On behalf of the Supervisory Board
Cynthia Gordon
• Impairment testing of goodwill and intangible
assets;
• Tax provisions and contingencies;
• Revenue recognition and returns allowance;
and
• Inventory and inventory allowances.
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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.
On 26 May 2021, the Supervisory Board and Management
Board issued an update to the 2020 declaration of
compliance for GFG. In August 2021, the Supervisory
Board and Management Board issued a declaration of
compliance for GFG as part of its reporting on Financial
Year 2021. This is published within the Investor Relations
section on our website (https://ir.global-fashion-group.
com/websites/globalfashion/English/1052/declaration-
of-compliance.html). On 14 December 2021, the
Supervisory Board and Management Board issued an
update to the 2021 declaration of compliance for GFG
which is also published within the Investor Relations
section on our website (https://ir.global-fashion-group.
com/download/companies/globalfashion/
CorporateGovernance/Update_Declaration_of_
Compliance_Dec_2021.pdf). The few deviations from the
German Corporate Governance Code are described in
the declaration and the update.
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 German Corporate Governance Code dated
16December 2019 (the “Code”) in Financial Year 2021.
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 (https://ir.global-fashion-group.com).
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Corporate Governance Report
Declaration of Conformity
The Management Board and Supervisory Board of the
Company issued the following joint declaration of
conformity in August 2021:
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
16 December 2019, published by the Federal Ministry of
Justice in the ocial section of the Federal Gazette on
20 March 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 20 March 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 currently 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 and 2021 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.
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Corporate Governance Report
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
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.
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Corporate Governance Report
• 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.10 of the Code: Due to
taxation at vesting for one of the members of the
Management Board, a portion of their vested shares
will not be subject to a holding period of four years.
Instead, such portion will be sold by our share plan
operator upon the vesting and subsequent issuance
of the shares (on behalf of the member of the
Management Board but without his or the Company’s
involvement) to cover such tax liability. The sale will
occur during the Company’s open trading window.
• 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
and 2021 LTIP give the Supervisory Board the
discretion to accelerate vesting and / or the holding
period 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 contracts of the Management Board
provide for (i) payment in lieu of notice (at the
discretion of the Supervisory Board); (ii) payment of
pro rata short term incentive bonus; and (iii) vesting of
granted RSU and PSUs (as applicable) that are
scheduled to vest within the 12 months following the
early termination by the Company in case of a good
leaver event. The combined aforementioned
payments are subject to the severance cap
recommended by the Code, except in case of a
change of control where the payment could in certain
situations exceed the recommended cap mainly
driven by the value of the Company’s share price at
the time of the early termination.
• Recommendation G.14 of the Code: The
employment agreements of the Management Board
Members provide for a partial acceleration of 75% of
unvested equity in the event of a change of control,
regardless of whether such change of control would
lead to an early termination of their employment
agreement.
Luxembourg, August 2021
Global Fashion Group S.A.
The Management Board
Christoph Barchewitz, Patrick Schmidt, Matthew Price
On behalf of the Supervisory Board
Cynthia Gordon
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Corporate Governance Report
Update to the Declaration of Compliance with the
German Corporate Governance Code of the
Management Board and Supervisory Board of Global
Fashion Group S.A.
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 Global
Fashion Group S.A. issued their annual declaration of
conformity in August 2021 (https://ir.global-fashion-group.
com/download/companies/globalfashion/
CorporateGovernance/20210820_DECLARATION_
COMPLIANCE.pdf). This declaration is updated as follows:
• On 14 December 2021, GFG’s Supervisory Board has
appointed a nominations committee eective
1 January 2022. Accordingly, it is GFG’s intention to
comply with Recommendation D.5 of the Code (The
Supervisory Board shall form a Nomination Committee,
composed exclusively of shareholder representatives,
which names suitable candidates to the Supervisory
Board for its proposals to the General Meeting) as from
1 January 2022 and the corresponding deviation
regarding GFG’s intention to comply with this
recommendation going forward shall be deleted.
• 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 20 March 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. In addition,
eective from 1 January 2022, one of the members of the
Supervisory Board who holds positions as non-executive
director in four publicly listed companies (including,
in one case outside of GFG, as the non-executive
Chair man of the board of directors) will be appointed
Chief Executive Ocer of a publicly listed company. The
Supervisory Board of GFG considers the case-by-case
assessment of the compatibility of these roles and the
necessary time commitment to be more appropriate and
does therefore not intend to comply with the general
incompatibilities and limitations recommended in C.5 of
the Code.
• Recommendation G.12 of the Code: The 2019 LTIP and
2021 LTIP give the Supervisory Board the discretion
to accelerate vesting and/or the holding period 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. In addition, the employment agreements
of the Management Board Members, which are being
updated in December 2021, provide for a partial
acceleration of 75% of unvested equity in the event of
a change of control, regardless of originally agreed
targets and comparison parameters. The Supervisory
Board believes these to be an adequate element of the
Management Board members’ variable compensation.
In all other respects, the declaration of compliance of
August 2021 remains unaected.
Luxembourg, 14 December 2021
Global Fashion Group S.A.
The Management Board
Christoph Barchewitz, Patrick Schmidt, Matthew Price
On behalf of the Supervisory Board
Cynthia Gordon
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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 Management 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 Chairperson of the
Supervisory Board has regular contact with the
Management Board and advises it on strategy, planning
and business development, and the Management Board
informs the Chairperson 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, the Articles of
Association and its internal regulations, in particular the
Management Board Rules of Procedure, the Supervisory
Board Rules of Procedure and the German Corporate
Governance Code 2019.
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 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 Chairperson 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
Financial Year 2021, 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, 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 amended 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 as the three
Management Board members rotate the role of 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.
In August 2021, the Supervisory Board formalised the
previously disclosed diversity targets by the adoption of
a Diversity Policy which confirms the Group’s approach
to diversity within the composition of the Management
Board and the Supervisory Board. The Diversity Policy
is published on our website at https://ir.global-fashion-
group.com/download/companies/globalfashion/
CorporateGovernance/2021_GFG_Diversity_Policy_SB_
MB.pdf. The Supervisory Board reconfirmed a diversity
target for at least one female representative to be
appointed to the Management Board to be achieved by
1 January 2025. The Supervisory Board and Management
Board considers that the executive management team and
employee base globally is highly diverse. The Management
Board also defined a diversity target of maintaining a 50 /
50 gender balance on the GFG Executive team (which it
Co-CEO: Christoph Barchewitz
• Commonwealth of Independent States
− Lamoda
• Latin America − Dafiti
• Communications
• International Brand Partnerships
• Legal & Governance, Risk & Compliance
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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Corporate Governance Report
currently meets) until 1 January 2025. During the Financial
Year 2021, the Supervisory Board approved a succession
plan for the members of the Management Board. The
Supervisory Board and Management Board will work
together on keeping the succession plan up to date.
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.
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.
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 which has been
formalised in the Diversity Policy adopted by the
Supervisory Board on 18 August 2021. 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. 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
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17 June 2019 for a period ending at the expiration of the
General Meeting of Shareholders approving the 2021
financial results:
At the Company’s 2021 AGM, which took place on
26 May 2021, Alexis Babeau’s resignation as a member of
the Supervisory Board became eective and Philipp Povel
was appointed as a member of the Supervisory Board for
a period ending at the expiration of the General Meeting
of Shareholders approving the financial statements for the
year ending 31 December 2021.
The Chairperson of the Supervisory Board is an
independent supervisory chair in line with the
recommendations of the German Corporate Governance
Code 2019. During Financial Year 2021, 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.
Working practices of the Audit Committee
Both Chairpersons of the Audit Committee (Alexis Babeau
until 26 May 2021 and Laura Weil from close of the AGM
on 26 May 2021 onwards) have specific knowledge and
experience in applying accounting principles and internal
control procedures. Neither the Chairperson 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 Chairperson of
the Audit Committee. All members of the Audit Committee
are financially literate and the Chairperson has in-depth
knowledge of accounting and the financial reporting
principles required. All of the members of the Audit
Committee are independent in accordance with the
German Corporate Governance Code 2019.
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.
• Cynthia Gordon – Chairperson of the
Supervisory Board and member of the
Sustainability Committee. Cynthia was
appointed as a member of the Audit
Committee by the members of the
Supervisory Board eective from close of
the AGM on 26 May 2021;
• Georgi Ganev – Vice Chairperson of the
Supervisory Board;
• Alexis Babeau – Member of the Supervisory
Board and Chairperson of the Audit
Committee, Alexis Babeau resigned as a
member of the Supervisory Board and
Chairperson of the Audit Committee with
eect from close of the Company’s Annual
General Meeting on 26 May 2021;
• Victor Herrero – Member of the Supervisory
Board, Chairperson 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. Laura was
appointed as Chairperson of the Audit
Committee eective from the close of the
AGM on 26 May 2021.
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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, 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 2021, the members of the Audit Committee
were:
Until 26 May 2021:
From close of the AGM on 26 May 2021 onwards:
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 reviews 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 2021, the members of the Sustainability
Committee were:
• Alexis Babeau (Chairperson) (independent);
• Victor Herrero (independent); and
• Laura Weil (independent).
• Laura Weil (Chairperson) (independent);
• Cynthia Gordon (independent); and
• Victor Herrero (independent).
• Victor Herrero (Chairperson) (independent);
• Carol Chen (independent); and
• Cynthia Gordon (independent).
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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 Financial Year, and the agenda along with the
reports and documents required for the AGM are to be
published on the Company’s website (http://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 and 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.
1.6 TAKEOVER LAW
Composition of subscribed capital
As of 31 December 2021, the share capital of the Company
amounts to €2,172,929.12, and is divided into 217,292,912
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 2021, the Company held 182,378 common
shares in treasury.
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Equity Interests in the Company
That Exceed 5% of Voting Rights
On the basis of the voting rights notifications received
by the Company in accordance with Article11, Section6
of the Luxembourg Transparency Law and Section 40,
Paragraph 1 of the German Securities Trading Act (WpHG),
as at 31 December 2021 we have been notified that the
following direct or indirect shareholders in the capital of
the Company have reached or exceeded 5% of the voting
rights in the Company:
Name of
Shareholder Details
Percentage
of holding
Date of
most recent
declaration
Zerena GmbH Indirectly holds 15.17% of the voting rights of the Company,
through Rocket Internet SE who directly hold 14.93% and a
further 0.24% through the holdings of Rocket Middle East GmbH,
MKC Brillant Services GmbH and Bambino 53. V V GmbH. 15.17% 12 March 2021
Kinnevik A.B. Indirectly holds 36.99% of the voting rights in the Company
through Invik S.A. who directly hold 36.99%. 36.99% 21 December 2020
Baillie
Giord & Co
Indirectly holds 6.38% of the voting rights of the Company
through Baillie Giord Overseas Ltd who directly hold 6.38%. 6.38% 23 November 2020
Crestbridge
Management
Company S.A.
Indirectly holds 9.44% of the voting rights of the Company,
through Rocket Internet Capital Partners SCS who directly holds
6.00% of the voting rights of the Company, and Rocket Internet
Capital Partners (Euro) SCS who directly holds 3.45% of the voting
rights of the Company. 9.44% 4 July 2019
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 2021. Further, the distribution of
voting rights included above may have changed within the
reportable thresholds.
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 Article15 of the Articles of Association
for a term of oce lasting no longer than five years. The
Supervisory Board Rules of Procedure notes that all
future appointments to the Management Board will be
for a maximum term of three years to ensure compliance
with the Code. Reappointments for successive years are
permitted. The Supervisory Board is entitled to revoke the
appointment of a Management Board member for cause
(pursuant to Article15.3 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 Article11.2 of the Articles of Association. According
to Article11.5 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.
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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 2021, pursuant to Article6.1 of the
Articles of the Association, the Company’s authorised
capital, excluding the issued share capital, is €2,141,423.39
represented by 214,142,339 common shares with a nominal
value of €0.01 each. Pursuant to Article6.2 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 Article6.2, 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 20 April 2021 (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.
As at 1 January 2021, the issued share capital of the
Company amounted to €2,138,367.16, and was 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.
On 24 March 2021, the Company issued 1,262,593
common shares as follows:
• 449,994 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 programmes;
• 5,305 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
• 807,294 new common shares to satisfy the Company’s
legacy and existing long-term incentive programmes.
On 29 April 2021, the Company issued 1,335,942 new
common shares in connection with the Company’s long-
term incentive programmes.
On 27 May 2021, the Company issued 364,157 common
shares as follows:
• 539 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
• 363,618 new common shares to satisfy the Company’s
legacy and existing long-term incentive programmes.
On 2 August 2021, the Company issued 437,461 common
shares in connectio
n with the Company’s long-term
incentive programmes.
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On 2 September 2021,
the Company issued 56,043 new
common shares as follows:
• 1,509 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 programme;
• 1,318 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
• 53,216 new common shares to satisfy the Company’s
legacy and existing long-term incentive programmes.
As at 31 December 2021, the issued share capital of the
Company amounts to €2,172,929.12, and is divided into
217,292,912 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 Article6.3 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.
On 15 March 2021, the Company issued Convertible bonds
in the aggregate principal amount of €375,000,000, due
2028 (the “Convertible bonds”). Upon exercise of the
conversion rights by any holders of the Convertible bonds
and subject to completion of the conversion steps, new
common shares may be issued by the Company following
the conversion of the Convertible bonds pursuant to
the German law governed terms and conditions of
the Convertible bonds as adopted by the Company’s
Management Board on 3 March 2021. Pursuant to the
resolutions of the Company’s Management Board dated
20 August 2021 which were approved by the resolutions of
the Company’s Supervisory Board dated 25 October 2021,
the Management Board has approved the conditional
increase of the share capital of the Company under its
authorised capital by an amount of up to €297,619.05 as
settlement of the potential conversion of the Convertible
bonds into 29,761,905 new common shares. A portion of up
to 29,761,905 common shares under the authorised share
capital remains reserved for the conditional issuance of
shares under the Convertible bonds and may not be used
for any other purposes.
Treasury Shares
According to Article7.1 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. As at 31 December 2021, 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. The Company’s Annual General Meeting
2021 authorised the Management Board to repurchase up
to 20% of the total number of common shares of the
Company until 26 May 2026. No use was made of this
authorisation for Financial Year 2021.
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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 Article430-16 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.
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.
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Material Agreements Entered into by the
Company Providing for a Change of Control
upon a Takeover Bid
The convertible bond is subject to the condition of a
change of control. In the event of a change of control, each
bondholder is entitled to convert their bonds at a
preferential conversion price on the control acquisition
date.
Compensation Arrangements Agreed by
the Company with the Members of the
Management Board or Employees in the Event
of a Takeover Bid
In the event of a change of control, certain unvested
awards granted to the Management Board under the 2019
LTIP and 2021 LTIP will vest at the time of the change of
control.
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1.7 REMUNERATION
REPORT AND OTHER
DISCLOSURES
1.7.1 Introduction
This report provides information about the structure of
the remuneration framework and how it is operated at
Global Fashion Group S.A. and its subsidiaries (“GFG”).
The report comprises two sections:
Management Board remuneration report
The Management Board remuneration report itself
comprises three parts:
A. Letter from the Chair of the Supervisory Board –
The first part of the report is intended to provide
shareholders with a helpful summary of the key
determinations and outcomes for Management Board
remuneration in respect of 2021.
B. Management Board remuneration framework –
The second part sets out the structure and design
of the remuneration framework for members of
the Management Board, including details of the
Remuneration Policy (as approved by shareholders at
our 2021 Annual General Meeting (“AGM”)).
C. Management Board remuneration for 2021 – The third
and final part provides further detail on the actual
remuneration and benefits granted to Management
Board members during the Financial Year 2021.
Supervisory Board remuneration report
This section provides information on the structure and
level of remuneration for members of the Supervisory
Board of GFG.
Our Approach to reporting
The approach to how we structure and report
remuneration at GFG reflects the following considerations:
• As a Company incorporated and existing under
the laws of Luxembourg, the remuneration report
has primarily been prepared in accordance with
Luxembourg’s Law of 24 May 2011 (as amended from
time to time).
• Recognising that it is an important foundation for
responsible corporate governance, the Company
also voluntarily follows the recommendations of
the German Corporate Governance Code 2019
(the “Code”). To the extent that it is consistent with
Luxembourg corporate law and GFG’s corporate
structure and particular circumstances, GFG’s
remuneration for the Management Board members
therefore follows the recommendations of the Code
(with certain exemptions, as set out in our Declaration
of Compliance, 14
th
December 2021).
• Given that our global shareholder base continues to
grow, the Company considers that it is important to
keep under review shareholders’ expectations for
how we report on the Management Board and
Supervisory Board’s pay. Therefore, while satisfying
relevant Luxembourg and German practice, in places
we have also sought to provide additional disclosure
where appropriate, which we hope shareholders find
helpful.
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A. LETTER FROM THE
CHAIR OF THE
SUPERVISORY BOARD
On behalf of the Supervisory Board, I am pleased to
present the 2021 GFG Remuneration Report.
Approach to Management Board
remuneration
The Supervisory Board considers it critical that GFG’s
remuneration policy aligns with the Company’s long-term
growth ambitions and strategic objectives. We put our
policy to shareholders at our 2021 AGM and are pleased
with the overall support received. The policy sets out a
remuneration framework for the Management Board
which is intended to encourage and reward them for
performance that will lead to long-term and sustainable
delivery of shareholder value. We consider that the overall
package provides an appropriate balance between fixed
and variable pay, and between short- and long-term
elements, while also remaining mindful of the competitive
pressures within the Ecommerce industry.
Specifically, the framework consists of fixed elements –
base salary, fringe benefits and pension – and short- and
long-term variable elements. A greater weighting is
placed on the variable elements, meaning that the
Management Board will only receive significant levels of
remuneration for out-performing stretching performance
targets. Similarly, the balance of the variable elements is
heavily tilted towards the long-term incentive, reflecting
the objective of delivering long-term, sustainable
shareholder value, while still retaining some focus on
short-term economic performance.
In particular, the assessment framework for the short-
term incentive (“STI”) captures key one-year financial
and individual performance targets, ensuring that
management is focused on delivering critical short-term
business targets. For 2021, in line with our commitment
to become a more sustainable company, we introduced
a sustainability objective into the individual element of all
members of the Management Board . The objective was
aligned with the annual milestones required to deliver our
publicly communicated Sustainability Commitments.
Meanwhile the long-term incentive (“LTI”) is awarded as
performance-based grants, with stretching targets set
against key long-term financial metrics focused on high
growth and increasing profitability (NMV Growth and
Adjusted EBITDA). In a fast-growing industry like online
retail, these financial metrics remain a key priority for the
Management Board, delivery of which will be critical for
enabling shareholder return and building a sustainable
long-term business.
During the year, the Supervisory Board approved the 2021
Share Plan for future long-term incentive (“LTI”) awards,
which has the same rules and mechanics as the 2019 Share
Plan. The collective of both is referred to as the “GFG
Share Plan”.
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2021 performance and incentive outcomes
The Supervisory Board has assessed GFG’s performance
against the targets set at the start of the year under the
2021 STI and outstanding LTI PSU awards.
• 2021 STI – The financial metrics for this award, which
comprised 80% of the total opportunity, were NMW
Growth, Adjusted EBITDA and Cash-flow. The
performance against these metrics generated a
combined performance result of all 3 metrics of 42.9%
weighted performance of target for these elements.
The remaining 20% of the total opportunity was
based on individual performance objectives focused
on specific geographical or functional responsibility
and this included an assessment of progress against
specific sustainability goals. The Supervisory Board
is delighted with the progress of our sustainability
agenda, particularly in achieving carbon neutrality for
our own operations and outbound deliveries. 10% of
NMV now comes from a more sustainable assortment
and more sustainable order satchels being sent in
100% of GFG countries as key highlights. As a result,
the total payout achievement for 2021 resulted
in60.4%.
• 2021 LTI Vesting – Two separate tranches from LTI
grants made in 2019 and 2020 vested in April 2021.
The level of vesting was determined based on
achievement of NMV Growth and Adjusted EBITDA
targets for FY2020, both equally weighted. GFG’s
performance resulted in overall vesting of 92.7% of
maximum opportunity, with all vested shares being
subject to the 4-year holding period from grant.
Additional changes
During the Financial Year 2021, the Supervisory Board
made use of the special derogation procedure contained
within the GFG Remuneration Policy , as it was determined
necessary to serve the long-term interest and the
sustainability of the Company or to assure its viability. We
invite you to read the details of the rationale and which
aspect of the remuneration policy it applies as per the
Special Derogation Procedure on page 60 of the report.
Looking ahead to 2022
As we head into 2022, the Supervisory Board would like to
highlight several changes which we are intending to make
as regards the application of the GFG Remuneration Policy
and its oversight:
• Continued focus on sustainability – We have
ambitious plans to be at the forefront of progress
as the fashion industry moves to a more sustainable
future. Aligned with the launch of our sustainability
strategy for 2025-2030, we have incorporated a new
sustainability-related performance measure into the
2022 STI, that will comprise of up to 20% of the overall
incentive opportunity.
• Introduction of a Remuneration Committee from
1 January 2022 – In keeping with our commitment to
robust and eective corporate governance, we have
put in place a formal Remuneration Committee
although this is not an explicit recommendation of the
German Corporate Governance Code 2019. The
Committee will report into the Supervisory Board and
its remit will cover all elements of Management Board
remuneration, ensuring rigorous oversight. The
committee will seek external advisory support from
time to time and as appropriate in order to support its
work.
On behalf of the Supervisory Board
Cynthia Gordon
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B. REMUNERATION
FRAMEWORK
FOR THE MANAGEMENT
BOARD
GFG shareholders approved the revised Remuneration
Policy at our 2021 AGM, which includes the remuneration
framework applicable to members of the Management
Board.
Our Remuneration Principles
The remuneration framework at GFG is designed to
incentivise and reward performance that will lead to long-
term and sustainable growth in shareholder value. To this
end, the remuneration framework has been built around
the following key principles.
Balanced
package
Appropriate balance
between fixed and
variable and short-
and long-term
elements of pay
Strategic
alignment
Framework aligned
with GFG’s key
strategic objectives
and overall economic
performance
Long-term
alignment
Variable components
align with and
incentivise the
delivery of long-term
sustainable
performance
Competitiveness
Allows GFG to
compete for talent in
the key markets and
industry in which it
operates
Remuneration Framework – Summary
With these principles in mind, the Management Board
remuneration framework is shown in more detail below.
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The framework is intended to place appropriate balance
between fixed and variable remuneration, and particular
emphasis on the long-term element. We invite you to read
the details of the actual remuneration mix for FY2021 on
page 54. A long-term focus helps ensure that Management
Board members should only receive significant reward for
delivering strong and sustainable performance, while
reducing the risk of payment for failure. It also clearly aligns
the interests of the Management Board with those of
GFG’s shareholders.
Further information on each element of remuneration is
provided in the table below, while our Remuneration
Policy Report (as approved by shareholders at our 2021
AGM) provides further technical details.
Element Purpose Delivery
Salary
Fringe Benefits
Pension
Contributions
For performing
day-to-day
role & saving
towards
retirement
Paid
Monthly
Paid in
cash
Annual Bonus
Paid in
cash
Performance
measured
over
one year
Incentivises and
rewards the
delivery of key
annual
performance
objectives
Share-based
Long-Term
Incentive
Released -
Paid in
Shares
Tranche 1 (1/3rd)
Vested after 1 yr
Holding Period
Holding Period
Holding
Period
Tranche 2 (1/3rd)
Vested after 2 yrs
Tranche 3 (1/3rd)
Vested after 3 yrs
Incentivises and
rewards the
delivery of
longer-term
goals aligned
with shareholder
value creation
Fixed Remuneration Variable Remuneration
year 0 year 1 year 2 year 3 year 4 year 5
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Remuneration Framework – Further details
Fixed Pay
Details
Fixed Annual
Base Salary
• The Supervisory Board considers various factors in setting an appropriate salary for the role, including
the Management Board members’ individual responsibilities and performance, the usual level of
remuneration for similar roles compared to the market, the Company’s current economic conditions
and pay ratios within the GFG employee base.
• Generally reviewed annually with any increase typically taking eect from 1 January.
• Payable in arrears in twelve equal installments.
Pension
Contributions
• Structured as 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.
• No performance-based element
Other benefits
• May include insurance policies (health, life and income protection, directors and ocers (“D&O”))
without deductible payable by the Management Board member.
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Variable Pay – (i) Current framework
The table below sets out details of the incentive plans
under which future grants may be made. Legacy plans (i.e.
those under which there is no intention to make further
grants) are set out in section (ii).
Variable Pay – Current framework
Element Details
Short Term
Incentive Plan
(“STI”)
• Incentivise and reward for the delivery of pre-defined one-year financial and strategic business
targets, and individual performance.
• Normally delivered in cash.
• Management Board members have an on-target opportunity of up to 50% of base salary for on-target
performance and an opportunity of 75% for maximum performance, although the Supervisory Board
may change these in exceptional circumstances (see Remuneration Policy for further details).
• Weighting between company and individual performance is determined by contractual arrangements
and the responsibilities of each position.
• Measures for the 2021 Financial Year were Financial Metrics (80%) and Non-Financial objectives (20%)
which consist of individual performance contributions focused on their specific areas of responsibility,
their geographical or functional responsibilities. In 2021 progress against specific sustainability goals
has attributed at least half of the 20% individual performance outcomes.
GFG Share Plan
(“LTIP”)
• Used to attract, motivate, and retain employees of the Company since the IPO.
• Incentivise and reward for the delivery of longer-term financial and non-financial business objectives
and generation of sustainable long-term returns for shareholders.
• Management Board members may receive grants in the form of Restricted Stock Units (“RSUs”) and /
or Performance Stock Units (“PSUs”), although since 2020 only PSUs have been granted.
• Awards typically vest in equal tranches over 3 years, with all tranches subject to a holding period of
four years from grant.
• Vesting of PSUs is subject to the achievement of annual performance conditions as determined by the
Supervisory Board.
• Malus and clawback provisions apply up to the end of the holding period.
• Following the holding period, awards may be settled in shares or an equivalent amount in cash at the
election of the Supervisory Board (although there is currently no intention to use the latter).
• Measures for the 2021 Financial Year were NMV Growth in Constant Currency (50%) and Adjusted
EBITDA as a percentage of Revenue (50%).
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Variable Pay – (ii) Legacy plans
The table below sets out details of incentive plans under
which there is no current intention to make future grants.
Variable Pay – Legacy plans
Element Details
2016 Long-Term
Incentive Plan
(“2016 LTIP”)
No further grants will be made under the 2016 LTIP
• Used to attract, motivate, and retain employees of the Company prior to IPO.
• Grants were 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.
• Also provided a 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 (see below).
• All synthetic stock options were converted into stock options over GFG shares upon IPO.
• 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 closed periods.
• Synthetic stock options are subject to forfeiture including in case of termination for serious grounds or
serious fault.
• As a pre-IPO plan, awards are not subject to a holding period.
• As at the end of 2021, all stock options awards held by members of the Management Board under
this plan are fully vested.
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C. MANAGEMENT BOARD
REMUNERATION FOR 2021
This section describes the remuneration of the
Management Board in relation to their contribution and
performance during the Financial Year 2021. All
remuneration awarded to the Management Board during
2021 was in line with the Company’s Remuneration Policy.
i) Management Board − Individual total remuneration
The tables below set out (i) each individual’s total
remuneration in relation to 2021 and other relevant
information, and (ii) their resulting balance of fixed and
variable pay. The remainder of the section provides further
information on the figures shown.
Christoph Barchewitz (Co-Chief Executive Officer)
1
year of Appointment to the Management Board: 2019
In€m
2
Benefits Granted Benefits Received
2021 (Min.) 2021 (Max.) 2020 2021 2020
Fixed Remuneration 642,021 642,021 610,500 642,021 610,500
Fringe Benefits 36,462 36,462 30,958 36,462 30,958
Total (fixed components) 678,483 678,483 641,458 678,483 641,458
Short-Term Incentive - 481,516 305,250 193,900
3
317,744
Long-Term Incentive
4
-
5
1,727,100
5
1,905,321 1,559,589
6
-
Total (variable components) - 2,208,616 2,210,571 1,753,489 317,744
Pension Supplement 64,202 64,202 61,050 64,202 61,050
Total Remuneration 742,685 2,951,301 2,913,080 2,496,174 1,020,252
1
Mr. Barchewitz was appointed as Co-CEO on the 1 February 2018.
2
As the remuneration for Mr. Barchewitz is denominated in British pounds, exchange rates of 1£/€1.16 and 1£/€1.1 have been used for 2021
and 2020 respectively. The dierence between 2021 and 2020 benefits received and benefits granted is due to the £/€ exchange rate.
3
Reflects an overall performance outcome of 60.4% of target – further information is shown on page 56.
4
The value of Long-Term Incentives are based on the fair value determined at the grant date.
5
The first tranche of the grant under the 2019 LTIP which was made during the reporting period grant date of 30 March 2021 will
vest on 30April 2022 and remains subject to the holding period until 1 April 2025. The remaining tranches will vest on 30 April 2023
and 30April 2024 and remain subject to the same holding period.
6
This figure includes the exercise of share options in March 2021 which were granted under legacy arrangements, further details of which are
provided on page 60.
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Patrick Schmidt (Co-Chief Executive Officer)
1
year of Appointment to the Management Board: 2019
In€m
Benefits Granted Benefits Received
2021 (Min.) 2021 (Max.) 2020 2021 2020
Fixed Remuneration
2
575,000 575,000 575,000 575,000 575,000
Fringe Benefits 20,288 20,288 21,948 20,288 21,948
Total (fixed components) 595,288 595,288 596,948 595,288 596,948
Short-Term Incentive - 431,250 287,500 173,659
3
287,500
Long-Term Incentive
4
-
5
1,727,100
5
1,905,321 3,020,880
6
-
Total (variable components) - 2,158,350 2,192,821 3,194,538 287,500
Pension Supplement 15,846 15,846 - 15,846 -
Total Remuneration 611,133 2,769,483 2,789,770 3,805,672 884,448
1
Mr. Schmidt was appointed as Co-CEO on the 1 February 2018.
2
Fixed Remuneration includes salary and any cash pension supplement (paid in lieu of participating in a defined contribution pension plan).
3
Reflects an overall performance outcome of 60.4% of target – further information is shown on page 56.
4
The value of Long-Term Incentives are based on the fair value determined at the grant date.
5
The first tranche of the grant under the 2019 LTIP which was made during the reporting period grant date of 30 March 2021
will vest on 30 April 2022 and remains subject to the holding period until 1 April 2025. The remaining tranches will vest on
30 April 2023 and 30April 2024 and remain subject to the same holding period.
6
Shares were delivered at Fair Market Value at the vestind date to cover the tax liability that crystalised upon vesting, further details of which
are provided on page 60. The proceeds remain under holding.
Matthew Price (Chief Financial Officer)
1
year of Appointment to the Management Board: 2019
In€m
2
Benefits Granted Benefits Received
2021 (Min.) 2021 (Max.) 2020 2021 2020
Fixed Remuneration 507,643 507,643 462,000 507,643 462,000
Fringe Benefits 572 572 46,200 572 46,200
Total (fixed components) 508,215 508,215 508,200 508,215 508,200
Short-Term Incentive - 380,732 231,000 153,316
3
231,000
Long-Term Incentive
4
(Total) -
5
1,114,920
5
741,530 - -
Total (variable components) - 1,495,652 972,530 153,316 231,000
Pension Supplement 50,764 50,764 - 50,764 -
Total Remuneration 558,980 2,054,632 1,480,730 712,295 739,200
1
Mr. Price was appointed as CFO on the 9 April 2019
2
As the remuneration for Mr. Price is denominated in British pounds, exchange rates of 1£/€1.16 and 1£/€1.1 have been used for 2021 and
2020 respectively. The dierence between 2021 and 2020 benefits received and benefits granted is due to the £/€ exchange rate.
3
Reflects an overall performance outcome of 60.4% of target – further information is shown on page 56.
4
The value of Long-Term Incentives are based on the fair value determined at the grant date.
5
The first tranche of the grant under the 2019 LTIP which was made during the reporting period grant date of 30 March 2021
will vest on 30April 2022 and remains subject to the holding period until 1 April 2025. The remaining tranches will vest on 30 April 2023 and
30 April 2024 and remain subject to the same holding period.
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ii) Management Board – Individual remuneration mix
Management Board Remuneration Mix
Benefits Granted
Benefits
Received
2021 (Min.) 2021 (Max.) 2021
Christoph Barchewitz
Fixed Remuneration 100% 25% 30%
Variable Remuneration 0% 75% 70%
Patrick Schmidt
Fixed Remuneration 100% 22% 16%
Variable Remuneration 0% 78% 84%
Matthew Price
Fixed Remuneration 100% 27% 78%
Variable Remuneration 0% 73% 22%
Salary
In December 2020, we undertook an industry peer
benchmarking exercise with our external independent
advisers Willis Towers Watson, for the Management
Board members. The results indicated that the base
salaries for our Management Board members are in line
with the peer group median. However, a salary
adjustment of 6% increase to base salary was applied for
Mr. Matthew Price. This reflects the broader ongoing
contribution and seniority of the CFO role and as a
member of the Management Board.
Finge Benefits
Benefits which the Management Board members
received during 2021 and which are captured in the
figure shown above include health insurance, life &
income protection insurance.
Pension Contributions
For 2021, the pension contributions for Mr. Christoph
Barchewitz, Mr. Patrick Schmidt and Mr. Matthew Price
were provided with a cash supplement in lieu of pension
participation, paid with the monthly base salary.
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2021 Annual Short Term Incentive
At the start of 2021, stretching financial performance
targets and individual objectives were set under the
short-term incentive of the Management Board.
Performance against these targets was subsequently
assessed by the Supervisory Board following year-end.
Financial Performance Payout
Financial metrics (80%) Weighting % Performance
Range
Achievement Pay-out % Weighted
Payout %
NMV 40
20.8%
to 31.2% 23.9% 80.0 25.5
Adjusted EBITDA
Margin (% Revenue) 30
0.3%
to 2.9% 0.87% 72.5 17.4
Cash-flow (€m) 30
(€106m)
to (€78m) (157.4) - -
Final FY2021 Financial Performance Payout
42.9
Individual Performance Payout
Individual Objectives
(20%)
Weighting % Target % Achievement % Weighted Payout %
Agreed objectives for each Management Board member focused on three areas - (i) the individual’s area of responsibility,
(ii) geographical and functional responsibilities, and (iii) GFG’s non – financial and strategic priorities
Individual
Objectives 50 100 93 9.3
Sustainability
Objectives 50 100 82 8.2
Final FY2021 Individual Performance Payout 17.5
Total 2021 STI Payout 60.4
As above, based on overall financial and individual
performance during 2021, the Supervisory Board has
determined that the annual STI was achieved at 60.4% of
target.
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Long Term Incentive (’LTIP’) − Awards granted
during 2021
During the financial year 2021, Management Board
members received awards under the GFG Share Plan. As
was the case for 2020, awards were granted in the form of
PSUs, reflecting GFG’s pay for performance ethos.
PSU awards are divided into three equal tranches, vesting
after 1, 2 and 3 years respectively. The metrics and targets
for each tranche are set annually at the start of each
financial year. The extent to which the targets are achieved
determines the vesting level for the associated tranche. All
tranches are subject to a holding period of 4 years from
grant.
2021 Grant Tranches Applicable Financial
Performance period
Tranche 1 -
vesting 2022 1 Jan -31 Dec 2021
Tranche 2 -
vesting 2023 1 Jan - 31 Dec 2022
Tranche 3 -
vesting 2024 1 Jan - 31 Dec 2023
The performance conditions attached to Tranche 1 of the
2021 Grant – NMV Growth in Constant Currency and
Adjusted EBITDA as a percentage of Revenue – remain
aligned with GFG’s key strategic areas of focus and
incorporate realistic yet stretching organisational targets.
Number of PSUs granted (2021 Grant)
Management Board
Member
’On target’ ’At Maximum’
Christoph Barchewitz 106,050 151,500
Patrick Schmidt 106,050 151,500
Matthew Price 68,460 97,800
Awards are subject to malus and clawback provisions
for four years from grant, with trigger conditions which
include material misstatement, an error in assessing
the performance condition, serious misconduct or
material error on behalf of the participant, as well as
other circumstances as considered appropriate by the
Supervisory Board.
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Long Term Incentive − Outstanding awards
The table below provides further information as to the
number of units outstanding under the GFG Share Plan
and the 2016 LTIP legacy plan. The Awards made during
2021 (as described above) can be seen under the line
“Granted during the reporting period”.
LTIP
(Unless otherwise stated this table refers to the GFG Share Plan)
Christoph Barchewitz
1
Patrick Schmidt
1
Matthew Price
1
RSUs PSUs
Stock
Options RSUs PSUs
Stock
Options RSUs PSUs
Outstanding at
the beginning of the
reporting period 310,800 461,777 736,115 310,800 461.777 671,517 188,160 191,753
Granted during the
reporting period - 151,500
2
- - 151,500
2
- - 97,800
2
Vested during the
reporting period 103,600 149,403
3
- 103,600 149,403
3
- 62,720 62,299
3
Delivered during the
reporting period
- - - 103,600
4
149,403
4
- - 0
Forfeited / expired
during the reporting
period - 11,752
5
- - 11,752
5
- 0 4,901
5
Exercised during
the reporting period
(2016 LTIP)
- - 127,940 - 0 - - 0
Outstanding at
the end of the
reporting period
(including 2016 LTIP)
8
310,800 601,525 - 207,200 452,122 - 188,160 284,652
Exercisable at
the end of the
reporting period - -
608.175
6
-
-
671,517
7
- -
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 during the performance period (i.e. 92.70% of maximum opportunity).
4
The 253,005 shares were delivered to cover the tax liability that crystalised upon vesting. Out of this, 142,110 were sold by to cover
the tax liability and the remaining 110,895 are blocked and remain under the holding period.
5
Represents the non-vested portion of the PSUs resulting from the performance conditions achieved vs. maximum potential.
6
Options with strike prices ranging from €5.37 to €7.99. No more options will be granted under this program.
7
Options with strike prices ranging from €0.01 to €7.99. No more options will be granted under this program.
8
Including all units under holding.
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Below provides more detailed information in relation to
the 2016 LTIP exercise and GFG Share Plan delivery
reported in the above.
Patrick Schmidt
On 27 May 2021, 253,005 shares were delivered to Patrick
Schmidt as a result of the release of vested restricted stock
units and performance stock units. The fair market value
on the date of release was € 11.94.
The release of such vested units is due to the vesting date
being the point of taxation in the jurisdiction applicable to
Patrick Schmidt. To cover this liability, 142,110 shares were
sold on behalf of Patrick Schmidt on 1 June 2021 at a price
of € 11.94, with the remainder of the delivered vested units
continuing under the holding period.
Christoph Barchewitz
During the year, Christoph Barchewitz exercised 127,940
synthetic stock options on 23 March 2021 at a strike price
of € 0.01. The fair market value on the date of exercise was
€ 12.20. The exercise was net settled and as a result 67,752
shares were released to Christoph Barchewitz, while
60,188 shares were withheld to settle tax and social
security liabilities.
The Company did not apply malus or clawback with
respect to any awards held by Management Board
members during the financial year 2021.
Change in pay of Management Board
Members
The diverse footprint over which GFG operates, combined
with 15,480 employees and its decentralised approach to
defining appropriate remuneration, makes it dicult for
the Company to establish an average remuneration for
GFG for past Financial Years 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 the
markets in which we operate. 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 level.
Use of the Special Derogation Procedure
under the Remuneration Policy in 2021
In the ordinary course of events, the remuneration policy
approved at the 2021 AGM allows GFG to contractually
agree a severance package that is compliant with the
German Corporate Governance Code (which contains a cap
of twice the individual’s total annual remuneration) and to
contractually agree to a change of control provision
provided it remains within the severance cap. During the
year, following the annual sector benchmarking review, the
Supervisory Board determined that the Management
Board’s non-existing provision for the treatment of
remuneration in case of change of control significantly
departs from the practice reflected in the sector.
The special derogation procedure set out in the
remuneration policy allows the Supervisory Board to
temporarily derogate from the policy in exceptional
circumstances where the derogation is necessary to serve
the long-term interest and the sustainability of the Company
or to assure its viability. The derogations include the
determination of the payout caps of the variable
remuneration, the payment of severance pay beyond the
contractually agreed provisions and caps and the
acceleration of the Vesting schedule. A resolution of the
Supervisory Board assessing the exceptional circumstances
and making a determination is required.
The Supervisory Board determined it was in the best
interests of GFG and our shareholders that Management
Board members’ contractual provisions better align with
our sector such that they should not be unduly influenced
or risk suering a possible conflict of interest in connection
with their remuneration during a potential change of
control event and to ensure their contractual treatment
contributes to the retention of an experienced and
qualified Management Board to lead the Company to
deliver its ambitious goals. The Supervisory Board
determined that this constituted an exceptional
circumstance and the derogation from the policy was
considered appropriate and necessary to serve the long-
term interest and the sustainability of the Company or to
assure its viability in the best interests of GFG and our
shareholders. As such, the Supervisory Board passed a
resolution approving the use of the special derogation
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procedure contained within the policy. The following was
agreed under the derogation procedure as reported in
our Declaration of Compliance with the German Corporate
Governance Code:
• That upon termination in connection with a change of
control event, the severance cap recommended by
the Code may be exceeded, although this will
primarily depend on the GFG share price at the time.
• Upon a change of control event, the employment
agreements of Management Board members provide
for a partial acceleration of 75% of unvested equity,
independently of whether the event leads to early
termination. In the case of early termination, there is a
possibility that this would lead to the severance cap
being exceeded.
1.8 FINANCIAL REPORTING
At the AGM on 26 May 2021, 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 brands, representing the
global and local brands as well as their own brands via four
well-established Ecommerce platforms. Each platform
is operated under an individual brand name: Dafiti (in
Argentina, Brazil, Chile and Colombia), Lamoda (in Belarus,
Kazakhstan, Russia, and Ukraine), ZALORA (in Hong Kong,
Indonesia, Malaysia, the Philippines Singapore, Brunei and
Taiwan) 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 local
expertise provides inspiring and seamless customer
experiences and the Company is committed to doing this
responsibly by striving to be 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 16 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 49 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
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and price preferences of its diverse customer base. The
Group’s assortment includes high-profile product lines
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 FY21, Marketplace share grew by
7percentage points, achieving a 38% 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 36 million 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 45
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 15,480 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 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
section1.6 of the Group Annual Report for composition of
subscribed capital and own shares and refer to section1.7
for shares awarded to the Management Board.
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 2021, 71 entities are 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 Philippines
4
(Philippines)
Dafiti
1
(Brazil, Argentina,
Chile, Colombia)
Lamoda
2
(Russia, Belarus,
Kazakhstan, Ukraine)
ZALORA
3
(Hong Kong, Indonesia, Malaysia,
Singapore, Brunei, Taiwan)
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
Malaysia SDN BHD in Malaysia and Jade E-Services Singapore Pte. Ltd. in Singapore, Brunei 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.
Business segments
The Group consists of four operating segments, which also
comprise its reportable segments: LATAM, CIS, SEA and
ANZ. Each operating business of the Group is the leading
online fashion retailer in its respective region
1
.
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, Brunei and Taiwan.
ANZ
GFG operates under THE ICONIC banner, which was
launched in late 2011, in Australia and New Zealand.
1
Source: Euromonitor International
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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 continues to be an important consideration across
our markets which have not yet recovered to pre-pandemic
levels. The latest data from Euromonitor indicates that in
2021 these 17 markets accounted for €270 billion of the
global market for fashion and lifestyle (online and oine
combined), down from €280 billion in 2019. However,
Ecommerce has benefitted from changes in customer
behaviour as more customers have shifted to the online
fashion and lifestyle market in GFG. Online penetration
across our target markets has increased from an average of
9% to 16% over the same period.
GFG intends to leverage its market-leading positions, scale,
local know-how and operational excellence through three
strategic priorities:
1. Best in class customer
experience.
An unparalleled, broad and relevant
assortment across fashion and lifestyle
categories
During 2021, GFG further increased the breadth of
its assortment, broadening into new complementary
categories such as Beauty and Home, as well as growing
the share of its premium and luxury oering to reach 13%
of NMV.
Partnering with 40 of the top 50 global fashion brands,
GFG oers the most relevant assortment to its customer
base. GFG is able to further expand its assortment oering
by leveraging its Marketplace business model, which
allows it to oer customers more options without taking
on inventory risk. 90% of GFG’s top 30 global brands have
adopted a hybrid partnership model by moving some of
their product onto Marketplace.
An inspiring and seamless
digital experience for customers
GFG’s shopping app is best-in-class, with 63% of 2021
NMV now generated from app. GFG’s app creates a more
personalised experience for customers, with sophisticated
search and recommendation, visual search, virtual try on
and other discovery capabilities.
Leveraging the vast and rich data generated by its app,
GFG provides customers with a personalised and inspiring
shopping experience. As more data is collected, products
can be further tailored to optimise the assortment oered,
and improve the personalisation, convenience and
presentation of products.
First-class operational infrastructure
The Group is focused on improving customer convenience
by enhancing its operational infrastructure. For example,
in Russia, GFG has added 200 pick
up points and extended
its delivery network to include 120 more cities. This means
that over 90% of customers now use GFG’s try-on service,
with customers able to choose home delivery or pick-up
point collection within an hour of their choice. In Brazil,
GFG sees significant opportunity to boost Ecommerce
demand by developing a more convenient return service.
Accordingly, Dafiti has materially increased the number of
drop-o points to which customers can return items. Dafiti
has also doubled the number of orders eligible for a home
return service ensuring returns are more convenient.
Overall, providing a best-in-class customer experience
feeds into GFG’s customer and brand partner flywheel.
Attracting more new customers and increasing repeat
orders by existing customers helps the Group benefit from
economies of scale. In turn, it can make more investments
into selection, which strengthens GFG’s partnerships with
key brands. Stronger partnerships with brands enables the
Group to include better products in its assortment and
achieve higher margins, thus reinforcing the flywheel.
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2. Partner of choice
for brands.
Unlocking complex markets
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. These markets are typically not
straightforward for brands to access directly due to
complexities related to infrastructure, geography, regulation
and cultural dierences. By connecting to GFG’s best-in-
class Ecommerce platform, global and local brands are able
to connect directly with GFG’s growing base of 17 million
active customers.
Offering flexible business models
GFG oers multiple partnership models tailored to
brands’ needs. Under the ’Retail’ model (62% of 2021
NMV), the Group owns, holds and fulfils stock – this is
ideally suited for low-risk, fast-moving inventory. Under the
’Marketplace’ model (38% of 2021 NMV), GFG connects
brands to its platform, where they act as sellers on GFG’s
apps and websites. Marketplace allows GFG to provide a
broader assortment of products, including new products
with an unproven sell-through rate, without inventory risk.
There are multiple initiatives in place to further scale GFG’s
Marketplace business, including Size Refill functionality
which will leverage Marketplace to increase assortment
depth as well as width. Overall, GFG’s top global brand
partners are increasingly adopting hybrid models across
Retail and Marketplace, reflecting the flexibility that GFG’s
platform oers.
Unrivalled Platform Services
Having developed leading Ecommerce capabilities for its
core business, GFG also extends these capabilities as
’Platform Services’ to its brand partners. With regards to its
Operations, the Group leverages its infrastructure to
support brands that sell products
through either GFG’s Marketplace
platform or via their own websites,
by oering them value-added
services such as content production,
warehousing, delivery and customer
service. With regards to Marketing
and Data Analytics, GFG leverages the expertise, insights
and access it has to its large audience to help brands
increase their reach and make data-driven commercial
decisions. 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.
Over time, GFG intends to continue making significant
progress towards becoming a platform business that is the
undisputed partner of choice for brands and deeply
embedded in the broader fashion ecosystem. GFG’s
target is to grow the NMV share of Marketplace towards
50% to expand selection and reduce inventory risk, and to
scale Platform Services to 5-10% of Revenue.
Enabling stronger
relationships with
current and future
brand partners
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3. People &
Planet Positive.
In line with our vision to be People &Planet Positive
worldwide, sustainability continues to be at the core of our
strategy and during 2021 we continued to invest heavily in
all aspects of this agenda.
Our comprehensive auditing programme of factories in
our own-brand supply chain has continued, as has our
investment in training for suppliers on our expectations
in relation to key ethical trade topics such as wages and
subcontracting. We became carbon neutral for our own
operations and outbound deliveries during 2021 and
our rigorous assessment of our carbon footprint across
all scopes informed the development of our Science
Based Targets. Now submitted, we await approval
of these by the Science Based Targets Initiative. Our
transition of own-brand products to be made from less
environmentally harmful materials is ongoing and with
sustainable shopping edits live in all GFG markets, we have
significantly increased the proportion of
NMV from the sale of products meeting
GFG’s sustainable product criteria. GFG’s
preloved oering was extended beyond
SEA to also include LATAM and amongst
other circularity initiatives, in ANZ we
partnered with AirRobe, a second-hand
fashion marketplace, which enabled customers to list their
items for future resale with one click. Our waste tracking
and management practices and the proportion of waste
which is able to be recycled has continued to improve and
all our regions are using customer delivery packaging that
incorporate more sustainable materials.
We continue to make progress in building a diverse and
inclusive workplace with our focus in 2021 on developing
a deep understanding of the Group Framework & Principles
and how to bring these to life through practical actions
and initiatives. Each of our GFG markets has now mapped
the baseline goals and targets and established a
diversity & inclusion plan that supports the overall Group
commitments. We also made good progress with creating
a workplace where our employees agree they ’feel a sense
of belonging where they can be their true authentic selves
at work’ and we continued to attract and retain a healthy
balance of men and women across all levels of the
company.
Our Responsible Workplace programme continues our
commitment to providing a workplace where people are
free from harm, where the environment enriches their
work, and allows them to be their best self. Our focus in
2021 has been establishing our Health, Safety & Wellbeing
management system with an aligned culture maturity
assessment model that supports the identification of
strategic priorities. We established a consistent Group
wide Risk Assessment for our Operations and finalised the
Group wide Responsible Workplace Commitment
statement that provides all employees a clear commitment
from our management teams globally.
2021 saw GFG’s Business Conduct & Ethics Programme
reach a new level of maturity with developments across a
number of strategic policy matters, including a refresh of
the Business Conduct & Ethics Code and maturing the
Speak Up! & Non-Retaliation Programme to reflect the new
requirements of EU Directive 2019 / 1937. Further, all GFG
Regions and oces now have a Governance Manual,
which codifies best practices and we finalised the
implementation of ISO 31000 as part of our GRC 2.0
Programme, in addition to appointing Money Laundering
ocers in two additional countries.
A full summary of our progress and performance in delivery
of our People & Planet Positive agenda will be published in
our People & Planet Positive Report on 7April 2022.
Key drivers
identified
to increase
profitability
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In addition, with the delivery of our current strategy and
targets we invested this year in the development of a new
set of long term People & Planet Positive commitments. The
strategic design process has been both comprehensive
and collaborative, involving
:
1. Desktop research: Reviewing ’global perspectives’
on sustainability in fashion and Ecommerce, the
issues that stakeholders deem material, the activity
of peers and competitors and the broad
expectations of a listed business in Europe.
2. Initial draft of strategic priorities: Informed by this
research an initial draft of the strategic priorities was
developed by our internal sustainability experts
including the key focus areas for each strategic
priority and a suite of potential targets for adoption.
3. Regional feedback and engagement: Engaged
extensively with internal and external stakeholders
in our operating regions to test and refine the draft
strategic priorities and targets, ultimately ensuring
their suitability for our operations and unique
footprint.
4. Group-wide materiality process: Concurrently
engaged 30+ internal and external group
stakeholders on their perspective of the most
material issues to GFG. Incorporated findings from
research conducted with customers in all our
operating markets.
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Combining all inputs above, the draft strategy was updated
and approved by the GFG Executive, the Management
Board and Supervisory Boards. The resulting output covers
six strategic priorities: Climate Action, Circularity & Conscious
Consumption, Fair & Ethical Sourcing, Responsible Work-
place, Diversity, Inclusion & Belonging and Responsible
Business. Supported by a suite of Group-wide targets up to
2025 or 2030 depending on the topic, each strategic priority
addresses a number of key material issues that are relevant
to GFG as well as the wider fashion and Ecommerce industry,
explained in detail below:
Climate Action
We prioritise the transition to lower-
carbon ways of working to mitigate
our climate impacts and adapt to a low
carbon economy in both our
operations and our supply chain.
Building on our science-based
emission reduction targets and
carbon neutrality in our operations and customer delivery,
GFG is committed to
:
1. Transitioning our assortment from both our own and
third-party brands, to be made from lower carbon
materials and processes;
2. Embracing renewable energy alternatives and
improving the energy eciency of our operations,
innovating in lower carbon logistic alternatives for
our inbound and outbound logistics and rolling
them out at scale across our markets;
3. Preserving and promoting responsible use of
natural resources, particularly in our supply chain;
and
4. Harnessing the power of employees to have a
positive impact through community engagement.
Circulatory & Conscious Consumption
We pursue a comprehensive approach to contribute to a
circular fashion ecosystem and engage with and educate
our customers by going beyond the basics and embedding
circular thinking throughout the business. With all Regions
now oering either recycled or composted delivery
packaging and sustainable shopping edits to enable our
customers to shop by their values, GFG is committed to:
1. Continuing to pursue reduction of its waste and
packaging footprints while also improving the
circularity outcomes of what remains;
2. Investing in responsible production systems to
extend product life and the circularity of product;
and
3. Building our customers capacity to support
sustainable and circular fashion through
information, education and circularity solutions.
Fair & Ethical Sourcing
We go beyond basic systems for compliance to ensure
decent working conditions and human rights in our
product supply chain and work with brands who share
our commitment to decent working conditions and
verify the existence of those. Building on our established
ethical sourcing programme in our own-brand supply
chain ethical trade programme in Tier 1 factories, GFG is
committed to:
1. Investing in traceability and worker dialogue to
ensure fair and ethical working conditions and
wages for people throughout our supply chain;
2. Assessing our own purchasing practices and
ensuring responsible purchasing principles are
embedded in the way we trade; and
3.
Demonstrating our commitment to decent work by
actively seeking to improve livelihoods in our supply
chain.
Sustainable
packaging and
shopping edits
offered by all
Regions
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Diversity, Inclusion & Belonging
Diversity, Inclusion and Belonging (“DIB”) is more than
just a strategy, it’s what we believe and how we lead. It’s
how we improve our business performance and build on
GFG’s reputation in the industry. At GFG we describe the
power of inclusion as “true self expression”, where everyone
can be their authentic self and express the best version of
themselves.
Building on the establishment of the Group DIB
Framework, GFG is committed to:
1. Inclusive leadership training & awareness to ensure
we recognise and remove bias;
2. Assessing and reviewing our hiring practises to
ensure inclusive and accessible to all candidates;
and
3.
Ensuring we are actively listening and working with
our employees through Allyships and other diversity
employee forums to improve our workplace practises.
Responsible Workplace
A responsible workplace, safe for all of those directly and
indirectly involved in getting our products to customers.
We commit to a workplace free from harm and proactively
work to prevent injury through visible leadership
supported by a clear management system and policies.
GFG is committed to:
1. Visible and felt leadership, role modelling with
shared accountability for ensuring a workplace free
from harm;
2. Proactive compliance with authority and legislation
with eective and timely investigation and
remediation; and
3. Clear and simple measurement that creates
transparency with reporting to drive proactive
investment to improve and reduce risk of harm.
Responsible Business
We conduct our business with intention, integrity and
transparency to drive success and benefit our stakeholders,
globally. To ensure the highest standards of ethical
corporate behaviour, good governance and doing
business responsibly, GFG is committed to:
1. Eective & transparent Corporate Governance;
2. Business Ethics training & awareness;
3. Social Governance in the manner we bring
products to market; and
4. Responsible use & safeguarding of
customer data.
More information on GFG’s progress and the strategic
priorities and targets will be reported in the Group’s
People & Planet Positive Report, published on 7 April 2022.
OTHER NON-FINANCIAL
INFORMATION
Other non-financial information, such as environmental,
social, human rights and the fight against corruption, along
with the introduction of reporting against the newly
introduced EU Taxonomy is contained in the Group’s
People & Planet Positive Report which will be available on
our website on 7 April 2022.
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 2021, the GFG team consisted of 15,480
employees inclusive of all hourly paid employees (2020:
13,751), representing a year-on-year increase of 13%. The
average headcount increased to 14,127 (2020: 13,291)
employees, driven mainly by the development of warehouse,
fulfilment and delivery capabilities across the Group along
with strategic investments in our Technology teams.
2.5 RESEARCH AND
DEVELOPMENT
An experienced global team of more than 1,200 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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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 continued to have a significant
impact across our markets during 2021. Our markets have
not seen the benefit of vaccinations to the same extent as
the USA / EU and our regions are less well protected by
social benefits. Together this means we have seen more
impacts from Covid-19 and experienced restrictions across
every region. The impact of government interventions
aected macroeconomic conditions across our markets at
dierent times and with dierent consequences. According
to IMF estimates, real GDP experienced growth in all four
of our geographic reporting segments. In Australia, Brazil
and Russia, the largest countries by revenue in the Group,
GDP grew by 3.6%, 4.7% and 4.5% respectively
1
. The
economic outlook for 2022 suggests a continued recovery,
but in LATAM, especially Brazil, secondary Covid-19
impacts are expected to continue and the macroeconomic
outlook has worsened. Brazil’s GDP growth forecast for
2022 is just 0.3% and the country is facing high levels of
unemployment and inflation. Positive real GDP growth is
expected for every country of operation in 2022.
Since GFG’s operations are predominantly in countries
outside of the eurozone, practically all of its revenues and
costs are denominated in currencies other than the
Euro(€). GFG is therefore exposed to fluctuations in the
values of these currencies relative to the Euro. In 2021
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 2021 83% 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 14% from
2021 to 2025. With a market volume of €298 billion in
2021, online sales comprised only 16% of total spend in
the fashion and lifestyle sector. Given online penetration
of the fashion and lifestyle sector was 33% in the US, and
19% in Western Europe in 2021, we believe this indicates
significant headroom to grow online penetration in our
markets.
The overall fashion and lifestyle sector in GFG’s geographic
footprint is expected to develop favourably with an
estimated annual growth rate of 9% from 2021 to 2025.
This growth rate is considerably higher than the annual
growth rate forecast for developed markets as 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.
1
Source: IMF World Economic Outlook Update, January 2022.
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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.
2.7 SIGNIFICANT EVENTS IN
THE REPORTING PERIOD
Since the outbreak of the Covid-19 pandemic, GFG has
learnt to work closely with their brand partners to adapt
the assortment, launch new initiatives and maintain a
keen focus on customer experience. During the first half
of 2021 the Group has continued to deliver strong NMV
growth of 34% supported by channel shift, a continued
strong performance from “lockdown” categories and the
continuing expansion into categories such as Premium
and Beauty.
The second half of the year was more complex to navigate.
Australia, Indonesia, Philippines and Russia were all under
some form of Covid-19 restriction and in LATAM, second-
order impacts from the pandemic significantly weakened
consumer sentiment. As a consequence LATAM NMV
declined by 10% in H2 and the lack of event based demand
softened results in SEA. Together, this meant that NMV
growth in the second half of the year was 16%. The majority
of our markets have yet to see the recovery in
fashion & lifestyle spend, which typically follows their
reopening.
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 15 March 2021, the Group issued Convertible bonds
for net proceeds of €369.1million. This additional capital
supports GFG’s ambition of becoming a €10 billion NMV
business in the next 6 – 8 years. Alongside investment in
core growth areas, GFG also intends to accelerate the
execution of the Group strategy, in particular the expansion
of Marketplace and Platform Service capabilities.
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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 that Covid-19 continued to have throughout 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 2021 show
continued strong revenue growth and a marginal decrease
in 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
2021 2020
Revenue
1,559.5 1,359.7 14.7
Cost of sales
(848.0) (773.5) (9.6)
Gross profit 711.5 586.2 21.4
Selling and distribution
expenses (561.6) (447.7) (25.4)
Administrative expenses
(218.7) (194.4) (12.5)
Other operating income
2.3 7.2
Other operating
expenses (15.0) (14.4)
Net impairment losses of
financial assets (1.1) (1.7)
Impairment of goodwill
(22.1) -
Loss before interest
and taxes (104.7) (64.8) (61.6)
Result from investment
in associate - (0.1)
Finance income
1.7 2.1
Finance costs
(34.5) (46.3)
Result from indexation
of IAS 29 Hyperinflation 3.2 1.2
Loss before tax (134.3) (107.9) (24.5)
Income taxes
9.5 (4.5)
Loss for the year (124.8) (112.4) (11.0)
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Adjusted EBITDA bridge
In €m
For the year
ended 31 Dec % change
2021 2020
Loss before interest
and taxes (104.7) (64.8) (61.6)
Depreciation and
amortisation 70.8 66.3
EBITDA (33.9) 1.5
Share-based
payment expenses 22.1 14.9
Impairment of goodwill
22.1 -
One o costs
and income
1
3.3 -
Adjusted EBITDA 13.6 16.4 (17.1)
1
One-o costs and income include Group recharges, changes to
estimates for prior year tax, fulfilment centre closure costs and
continuity incentives, and changes in legal provisions and
project costs.
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 9.1 Financial Definitions for key performance
indicator definitions.
Key performance indicators
and financial information
For the year
ended 31 Dec
2021 2020
Financial performance
Revenue (€m)
1,559.5 1,359.7
Growth at constant currency (%)
17.2 15.3
Gross Profit (€m)
711.5 586.2
Loss before interest and taxes
(EBIT) (€m) (104.7) (64.8)
Loss for the year (€m)
(124.8) (112.4)
Adjusted EBITDA (€m)
13.6 16.4
Adjusted EBITDA
(as % of revenue) 0.9 1.2
Capex (€m)
60.2 48.7
Financial position and cash flow
Net working capital (€m)
18.1 (1.4)
Cash and cash equivalents (€m)
400.5 366.1
Pro-forma cash (€m)
642.5 372.4
Group KPIs
NMV (€m)
2,390.5 1,958.2
Growth at constant currency (%)
23.9 25.7
Active Customers (inmillions)
17.0 16.3
NMV / Active Customer (€)
140.5 120.3
Number of Orders (inmillions)
47.8 42.0
Order Frequency
2.8 2.6
Average Order Value (€)
50.0 46.6
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Growth of Revenue
The growth in NMV delivered positive revenue growth year
on year. In 2021, revenue grew by 17.2% on a constant
currency basis, increasing by €199.8 million to €1,559.5 million
(2020: €1,359.7 million).
GFG continues to be at the forefront of defining what an
inspiring customer experience looks like in its markets. In
2021, 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 sustainably.
Marketplace share of NMV was 38% in 2021, up 7 percentage
points compared to 2020. The Group also increased focus
on its Platform Services, generating increased revenue from
its Marketing by GFG, Operations by GFG and Data by GFG
business models.
GFG continued to benefit from the lower return rates
experienced in 2020, as customers shifted into categories
less likely to be returned e.g. from occasion wear to sports
and homewares.
Growth of revenue
1
(€m)
0.00
0.39
0.78
1.17
1.56
2020 2021
1,359.7
1,559.5
+17. 2%
1
Constant currency basis
Technology innovations focused on app functionality
continue to deliver new levels of customer engagement
and strengthen GFG’s app-first approach. Apps generated
63% of NMV in the year, up 4 percentage points compared
to2020.
Stable Adjusted EBITDA
Whilst they are 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 9.1 for further
details.
In 2021, the Group generated Adjusted EBITDA of
€13.6 million (2020: €16.4 million) with an Adjusted EBITDA
margin of 0.9% (2020: 1.2%). Despite improvements in
Gross margin, driven by increased Marketplace and
Platform Services participation, higher Fulfilment costs
and investments in Marketing drove a net decrease in
Adjusted EBITDA. After unusually low levels of Marketing
spend in 2020, with much of the physical retail estate
closed, in the second half of 2021 we started to reinvest
into Marketing, returning to pre-pandemic 2019 levels.
Fulfilment costs were impacted as a result of additional
Covid-19 safety measures implemented across the
regions, most notably in ANZ.
Adjusted EBITDA excludes an expense for share-based
payments of €22.1 million (2020: €14.9 million). The
increase in the share-based payment expense for the year
relates to the awards being linked to the Group share price
at the time when units were granted to employees, the
majority of which are granted in April each year. Non-
recurring items of €25.4 million (2020: €nil) were also
excluded from the Adjusted EBITDA measure, which
included an impairment of goodwill of €22.1 million in
respect of the LATAM cash generating unit (“CGU”). Other
non-recurring items of €3.3 million included changes to
estimates of prior year tax, fulfilment centre closure costs
and continuity incentives, and changes in legal provisions
and project costs.
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Loss for the year
In 2021, the loss for the year increased by 11.0% to
€124.8 million (2020: €112.4 million). Within loss for the
year, finance costs decreased by €11.8 million to
€34.5 million (2020: €46.3 million) driven by a decrease in
foreign currency losses of €29.2 million, partially oset by
an increase in interest expense of €17.2 million, largely as
a result of interest accrued on the convertible bond
liability. Losses before interest and taxes as a margin of
revenue increased by 1.9 percentage points as a result of
impairment of goodwill, increased investment in marketing
and higher fulfilment costs.
As part of the Group’s annual impairment assessment,
management estimated that the enterprise value of the
LATAM CGU, which is based on company business plans,
was lower than the net asset value and therefore recognised
an impairment of goodwill of €22.1 million. This reflects the
macroeconomic changes and market conditions as a result
of the second-order impacts of the pandemic in the LATAM
region.
Analysis of Adjusted EBITDA (€m)
0.0
4.1
8.2
12.3
16.4
2020 2021
16.4
13.6
Growth of NMV
In 2021, NMV grew by 23.9% on a constant currency basis,
to €2,390.5 million (2020: €1,958.2 million).
The growth in NMV was as a result of an
increase of 4.5% in Active Customers to
17.0 million, and NMV per Active
Customer rising by 18.5% on a constant
currency basis to €140.5, underpinned
by our leading customer experience.
Customer orders were up by 13.8% to 47.8 million (2020:
42.0 million) in 2021, and on average customers purchased
2.8 times per year (2020: 2.6 times), an increase of 8.8%.
Technology innovations focused on app functionality have
delivered new levels of customer engagement and
strengthened GFG’s app-first approach. 63% of NMV (excl.
VAT) in 2021 was generated through our apps (2020: 59%),
an increase of 4 percentage points compared to last year.
Marketplace continues to show strong growth, and now
represents 38% of NMV, an increase of 7 percentage
points compared to last year.
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 in ANZ was impacted by the Australian bushfires at
the start of 2020 and was the region most impacted by the
onset of Covid-19, hence the strong NMV growth year on
year of 45.3%, annualising over a relatively low base. CIS
and SEA delivered strong growth of 30.7% and 21.0%
respectively on a constant currency basis. LATAM suered
from the second-order impacts of the pandemic which
weakened customer sentiment, resulting in NMV growth
of 3.9%.
Growth
underpinned
by leading
customer
experience
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The highest revenue growth was seen in ANZ, at 45.5%,
on a constant currency basis. CIS and SEA also delivered
positive revenue growth of 20.5% and 7.1%, respectively.
LATAM revenue remained broadly flat with a 0.4%
decrease year on year on a constant currency basis
reflecting its lower NMV growth. Revenue growth
continued to be lower than NMV growth in all segments,
except ANZ, due to the acceleration of Marketplace
participation.
Despite slower revenue growth during the year than ANZ
and CIS, SEA delivered the highest growth in gross margin,
increasing 5.6 percentage points year on year, driven
significantly by Marketplace share. LATAM gross margin
increased by a modest 0.9 percentage points, whilst CIS
gross margin increased by 3.3 percentage points year on
year. The gross margin in ANZ decreased by 1.1 percentage
points driven by an increase in retail discounting and
changing product mix year on year.
Segment Results of the Group year 2021
In €m LATAM CIS SEA ANZ
Total Fashion
Business Other Reconciliation Total
Revenue 352.1 523.6 289.0 394.8 1,559.5 25.9 (25.9) 1,559.5
% YoY Revenue
constant currency
growth rate (0.4) 20.5 7.1 45.5 17.2
Net Merchandise
Value 583.2 861.9 407.2 538.2 2,390.5
% YoY NMV constant
currency growth rate 3.9 30.7 21.0 45.3 23.9
Gross profit 158.8 263.2 109.6 180.2 711.8 25.4 (25.7) 711.5
% Margin 45.1 50.3 37.9 45.7 45.6 45.6
Adjusted EBITDA (12.0) 31.4 - 15.6 35.0 (21.4) - 13.6
% Margin (3.4) 6.0 0.0 4.0 2.2 0.9
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
% YoY Revenue
constant currency
growth rate 20.8 17.4 21.2 0.5 15.3
Net Merchandise
Value 575.3 686.9 342.2 353.8 1,958.2 1,958.2
% YoY NMV constant
currency growth rate 30.9 32.3 27.0 4.8 25.7
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
Adjusted EBITDA 11.9 27.0 (6.9) 13.2 45.2 (28.5) (0.3) 16.4
% Margin 3.2 6.0 (2.5) 5.1 3.3 1.2
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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
2021 2020
Net cash (used in) / generated
from operating activities (51.2) 30.3
Net cash used in
investing activities (293.1) (33.5)
Net cash from
financing activities 370.1 106.5
Change in cash and
cash equivalents 25.8 103.3
Exchange-rate related
and other changes in cash
and cash equivalents 8.6 (14.5)
Cash and cash equivalents at the
beginning of the year 366.1 277.3
Cash and cash equivalents
at the end of the year 400.5 366.1
In 2021, GFG generated negative cash flow from operating
activities of €51.2 million (2020: income of €30.3 million).
The movement was mainly driven by changes in working
capital cash flows as the Group actively increased
inventory levels to a more normalised level, after the initial
pull back of inventory in 2020 with the onset of Covid-19.
Net cash outflow from investing activities of €293.1 million
was driven by investments of €234.5 million into Money
Market Funds during the year, which are classified as
current Other Financial Assets instead of Cash and cash
equivalents on the Group Statement of Financial Position.
Please refer to section 9.1 for definition of pro-forma cash.
Cash outflows from investing activities also includes
additions to property, plant and equipment of €25.8 million
(2020: €28.9 million), of which €12.3 million was related to
assets in the course of construction, largely related to the
construction of the new fulfilment centre in Moscow.
Additions to intangible assets were €30.8 million (2020:
€20.6 million). These investments primarily relate to
internally developed intangible assets of €22.2 million
(2020: €13.7 million) and were capitalised in accordance
with the recognition criteria of IAS 38, intangible assets.
Net cash from financing activities relates primarily to
€375m raised from the issuance of a convertible bond,
with redemption date of March 2026. This was partially
oset by principal IFRS 16 lease payments of €22.8 million
(2020: €22.5 million).
Inventory returned
to more
normalised levels
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2.8.3 Financial position
The Group financial position is shown in the following
condensed consolidated statement of financial position.
Assets
In €m
For the year
ended 31 Dec Change
2021 2020
Non-current assets
506.5 468.5 8.1%
Current assets
1,038.2 704.6 47.3%
Total assets 1,544.7 1,173.1 31.7%
Equity and Liabilities
In €m
For the year
ended 31 Dec Change
2021 2020
Equity
573.3 619.4 (7.4)%
Non-current liabilities
448.4 104.8 327.9%
Current liabilities
523.0 448.9 16.5%
Total equity and
liabilities 1,544.7 1,173.1 31.7%
Total assets of the Group increased by €371.6 million
million when compared with 31 December 2020, primarily
due to the proceeds received from the issuance of the
Convertible Bond in March 2021, with net proceeds of
€369.1 million. Property, Plant and Equipment increased
year on year and right of use assets relating to leases
entered into by the Group increased compared to the
prior year due to lease additions across fulfilment centres,
oce space and pick-up points.
The net book value of right-of-use assets as at
31 December 2021 was €122.6 million (2020: €104.3 million).
Total lease liabilities of €133.2 million (2020: €113.7 million),
net of lease repayments and interest, are split between non-
current and current lease liabilities on the consolidated
statement of financial position.
In 2021, Capex additions were €60.2 million (2020:
€48.7 million) and primarily related to the Group’s
continuous investment in its delivery and fulfilment
infrastructure, including the construction of our additional
fulfilment centre in Moscow, assets in the course of
construction, and oce and IT equipment along with
intangible assets.
The net book value of Goodwill decreased by €20.1 million
to €127.5 million (2020: €147.6 million) mainly as a result of
the impairment to the LATAM CGU, partly oset by positive
translation adjustments.
Inventories increased by €87.8 million to €283.7 million
(2020: €195.9 million), as the Group actively increased
inventory levels to a more normalised level, after the initial
pull back of inventory in 2020 with the onset of Covid-19.
Other current financial assets increased by €241.1 million to
€260.6 million relating to investments into short term
duration bonds and securitised funds, but this had no
impact on net current assets as the balance was reclassified
from cash and cash equivalents during the year.
Pro-forma cash increased from €372.4 million to €642.5 million
as a result of proceeds from the issuance of the convertible
bond in March. Net proceeds of €369.1 million were partially
oset by capital expenditure and operational outflows during
the year. Included within the year end pro-forma cash balance
is €8.0 million (2020: €6.3 million) of restricted cash related to
the Group’s debt facilities.
Equity decreased by €46.1 million, primarily as a result of
losses incurred for 2021 partially oset by the recognition of
€48.6 million of reserves for the convertible bond equity
component, which will be reversed upon redemption.
Non-current liabilities increased to €448.4 million (2020:
€104.8 million), €318.4 million (2020: €nil) of which
represents the non-current portion of the convertible bond
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liability, discounted to present value. Non-current lease
liabilities increased by €13.8 million to €108.0 million (2020:
€94.2 million).
At 31 December 2021, current liabilities were €523.0 million
(2020: €448.9 million), an increase of €74.1 million. Trade
payables and other financial liabilities increased by
€37.9 million, and third party borrowings increased by
€13.0 million as new local working capital facilities were
utilised.
2.9 COMPARISON OF
ORIGINAL GROUP
GUIDANCE AND ACTUAL
2021 FIGURES
The table below summarises the actual results versus
guidance.
FY 2021
In €m FY 2021
Guidance
(9 Dec 21)
Guidance
(11 Mar 21)
Revenue (€m) 1,559.5 €1.5bn €1.5bn
NMV (€m) 2,390.5 €2.3 −
€2.4bn €2.3 − €2.4bn
Growth (%) 23.9 Around 23% Over 25%
Adj.
EBITDA (€m)
€13.6m
Around
€10million
Modest
improvement
on FY 2020
Capex (€m)
60.2
Around
€60million
Around
€60million
2.10 OVERALL ASSESSMENT
OF THE ECONOMIC
POSITION BY THE
MANAGEMENT BOARD
The Management Board is pleased with the business
developments in the 2021 Financial Year, and the continued
adaptability of our teams during the ongoing pandemic.
The Group delivered NMV and Revenue growth, positive
adjusted EBITDA margin and strong CAPEX investment.
Despite the Covid-19 volatility which was a factor in all
regions throughout 2021, management are pleased with the
Group’s performance.
2.11 REPORT ON POST
BALANCE SHEET EVENTS
GFG’s Operations in CIS
In February 2022, certain countries announced new
packages of sanctions against the public debt of the Russian
Federation and a number of Russian banks, as well as
personal sanctions against a number of individuals.
Due to the growing geopolitical tensions, since
February 2022, there has been a significant increase in
volatility on the securities and currency markets, as well as a
significant depreciation of the Ruble against the US Dollar
and the Euro. From 1 January 2022 to 7 March 2022, the
Ruble devalued by 36%.
It is expected that these events may aect the activities of
our Russian business which represents 34% of our Group
revenues.
The Group regards these events as non-adjusting events
after the reporting period, the quantitative eect of which
cannot be estimated at the moment with a sucient degree
of confidence.
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Currently, the Group’s management is analysing the
possible impact of changing micro- and macroeconomic
conditions on the Group’s financial position and results of
operations.
Additional lease commitment
Subsequent to 31 December 2021, the Group entered into
a lease agreement for use of an extended area in the new
Moscow fulfilment centre. This will result in the recognition
of an IFRS 16 Right-of-use asset and lease liability of
approximately €32.9 million on the consolidated statement
of financial position, with subsequent interest and
depreciation charges to the consolidated statement of
profit or loss.
There are no other events subsequent to the period end
that would require a disclosure in the consolidated
financial statements.
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 uncertainty associated with those
objectives.
GFG recognises that risk management is an integral part
of good corporate assurance 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 maturing
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 meet expectations and be fit for purpose.
•
GFG operates a risk management approach
anchored to the ISO 31000 standard. Through this
approach risks are identified, analysed, evaluated
and controlled 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 Methodology
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
at every level. 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
capability and 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 iterative 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 and current 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 and underlying risk
appetite.
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 maintains risk management oversight in which all
risks, risk sponsors, risk owners and treatments and
treatment owners 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 Co-CEO and assume responsibility
for delivering on 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 biases and subjectivities from
its risk management practices.
The output of the annual risk assessment is also presented
and approved by the GFG Management Board and the
GFG Audit Committee, a committee of the Supervisory
Board, thereby ensuring executive oversight and a
commitment from leadership to deliver against the
assessment’s recommendations.
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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 risk review process in 2021. 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:
Geo-political 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
• Prudent assessment of supply chain stability and overdependence
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, especially
following the acceleration in the oine to online shift in response to the Covid-19 pandemic.
Key mitigating activities / initiatives
• Continuous assessment and evaluation of the competitive environment, remaining abreast
of new market entrants, competitor performance and aspirations
• Continued focus on protecting the current position and unique selling points oftheregional
businesses
• Pooling of experience and sharing of best practice across the Group
• Growth of the GFG marketplace offering
• 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 (Responsible Workplace) of all its people in completing their work
activities. Additionally we work closely with our operations teams in our fulfilment and delivery fleet
to ensure optimal health & safety practices.
Key mitigating activities / initiatives
• Formal assessment & development of the Health & Safety Culture, aligning leadership
commitment, policy, roles and responsibilities as well as consultation of staff for H&S related
matters
• Adoption and implementation of a Health & Safety management System guided bythe ISO
45001 standard
• Governance and reporting of health & safety matters with clear leadership accountabilities
• Investment in health & safety capability, resources and tools across the group to provide
practical and applicable procedures and policy
• Integrated management and controls for infectious diseases (including Covid-19) to our
policy and procedures
Major disruption to
critical infrastructure
There is a risk of interruption to one or more business processes due to disruption to a fulfilment
centre or critical technology infrastructure which impacts operational performance.
Key mitigating activities / initiatives
• Cloud infrastructure to minimise risk and impact of outages
• Business continuity and crisis management plans, as part of a wider Business Continuity
Management System, stress and scenario testing and periodic review ofexposures and
controls at critical physical 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 its customer data to better understand and serve its customers. Cyber security attacks are
increasing in both number and sophistication. GFG develops 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
• Cyber self-assessment and objective validation
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Social & Environmental
Sustainability
GFG acknowledges that the continuing advancement of man-made climate change poses both
physical and transition risks to our business over short, medium and long term. The physical risk
associated with the increasing impact of climate volatility and rising frequency and severity of extreme
weather events, such as floods, hurricanes or fires poses a risk to our or our suppliers’ ability to operate
and therefore may have an impact on business continuity. On the other hand, transition risk, associated
with the move toward a lower carbon economy, may impact GFG’s cost of compliance, accessibility
to the materials used to manufacture our products or other resources needed to operate our business.
In the medium and long term, the broader impacts of climate change and the transition required to
operate a climate sensitive business and meet emerging reporting requirements must be considered
in the evolution of our business.
GFG develops and manufactures products for its own 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. Unauthorised subcontracting to facilities not a part of our traceability programme also
poses a risk as we are unable to assess and influence the working conditions in those locations. Finally,
there is also the risk that the development of the materials which make up our own products have a
negative impact on the environment in terms of water and energy usage and chemical run o. Third
party brands carried on GFG’s platforms may have similar risks present in their supply chain, however
GFG has much lower visibility of these supply chains and therefore control over the standards in place.
Across both own and third party brands, despite the presence of relevant verification processes, there
is increasing legislative and reputational risk associated with the making of sustainability claims at the
point of sale. 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 and services delivered via third-party
labour service providers - for example temporary warehouse labour, drivers, cleaners or security sta.
As the third party retains direct responsibility for ongoing management of the terms and conditions
of employment, 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.
Key mitigating activities / initiatives
• Comprehensive Group Sustainability Strategy, covering both environmental and social factors
including climate change and fair and ethical sourcing
• 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
• Climate risk assessment in line with Task Force on Climate-Related Financial Disclosures
(“TCFD”) recommendations identifying the physical and transitions risks and opportunities
GFG will encounter as it navigates the evolving landscape and delivers its sustainability strategy
• Comprehensive environmental management programmes, which measure and mitigate GFG’s
impacts, and transition of operations, own-brand products and packaging to have a lower
environmental footprint
• Rigorous ethical trade standards in place for the own-brand supply chain, including auditing of
all factories before order placement 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; introduction of ESG risk assessment of
brands before onboarding in progress
•
Risk assessment framework for labour service providers and auditing of those determined
high risk, adoption of improvement plans or termination where applicable; standards
reviewed and updated on an annual basis
The full and extensive list of work carried out in this space is captured in the People & Planet Positive
Report which will be released on the 7 April 2022.
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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 €375million in
2021 in additional capital through the issuance of Convertible bonds due 2028 in March 2021
and €120million in November 2020 through a share placement 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
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Compliance and Regulatory risks
Compliance with laws,
regulations, and standards
As a Group that operates across 17 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 Group
General Counsel, 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.
• A process in place to identify and assess tax positions ensuring remote, possible and
probable risks are appropriately managed
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 has 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: 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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Report on Risks and Opportunities
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
The elevated level of uncertainty in CIS on both future
customer demand and potential operational constraints from
sanctions in Russia means we are currently unable to provide
guidance for 2022. We continue to monitor the situation very
closely and are focused on supporting our people, customers,
and brand partners to the best of our ability.
For our remaining regions, we expect the demand environment
in H2 2021 to continue into H1 2022 and progressively improve
into H2 2022.
Luxembourg, 7 March 2022
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 2021, 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 2021,
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 Nº
537/2014, 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 Ethics Standards Board for Accountants’
Code of Ethics for Professional 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
trends.
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, and
tested their operating eectiveness
•
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.
•
We tested the end-to-end reconciliation from the
e-commerce platform to the general ledger.
•
We assessed the compliance requirements and
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 those issued subsequent
to year end and assessed the reversal of revenue and
whether it is supported by adequate evidence.
•
We performed sales cuto 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 issued.
•
We tested the arithmetical accuracy of the computation
of the provision on sales returns.
•
We tested the assumptions associated with the
provision for 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 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 of revenue
and related returns.
•
We performed a correlation testing between sales,
receivables and cash 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 expected credit loss
of trade receivables, its computation methodology,
and analyzed 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 24 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. 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
of provision for slow moving and obsolete inventories
as at 31 December 2021 and we assessed the
assumptions used.
•
We have also read the inventory management report
to identify slow moving or obsolete inventories.
•
We obtained a detailed analysis by category of the
inventory provision and checked its clerical accuracy
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 15 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 2021, goodwill amounts to
€127.5 million and intangible assets to €126.7 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 cash
generating units (“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 evaluated the key assumptions 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 other management
assumptions used in the model by comparing to the
relevant assumptions to the relevant industry trends
and economic forecast.
•
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 13 to the
consolidated financial statements.
4. Recognition of income and indirect tax
contingencies, tax positions and deferred
tax assets
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 are considered as uncertain
tax positions and 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.
The Group has significant unrecognised deferred tax assets
in respect of tax loss carryforwards due to its history of
losses. As the Group evolves, certain Group entities are
presenting taxable income which led to a first time
recognition of net deferred tax assets amounting to
€ 8 million as of December 31, 2021. Under IFRS, the Group
is required to periodically determine the valuation of
deferred tax asset positions. This area was significant to our
audit because of the related complexity of the valuation
process which involves significant management judgment
given it is based on assumptions that are aected by
expected future market or economic conditions.
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Our answer
Our audit procedures over recognition of direct and
indirect tax contingencies, tax positions and deferred tax
assets arising from tax loss carryforwards included,
amongst others:
•
We assessed the 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 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.
•
In respect of deferred tax assets arising from tax loss
carryforwards, we evaluated the key assumptions from
the business plan, taking into account relevant external
information as well as involving our valuation experts in
order to determine the appropriateness of
management assessment of recognized deferred tax
assets arising from tax loss carryforwards based on
future taxable profits derived from the business plan.
We also evaluated management assessment of the
time horizon used for recognition of deferred tax
assets.
•
We also assessed the adequacy of the Group’s
disclosures in respect of the tax contingencies, tax
positions and deferred taxes as set out in Notes 29 and
30 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 from section 2.1 to section 2.15 and the corporate
governance statement from 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.
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”).
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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.
Those charged with governance are responsible for
overseeing the Group’s financial reporting process.
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.
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•
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.
•
Assess whether the consolidated financial statements
have been prepared, in all material respects, in
compliance with the requirements laid down in the
ESEF Regulation.
•
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
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.
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 May 2021
and the duration of our uninterrupted engagement,
including previous renewals and reappointments, is 8
years.
The consolidated management report is consistent with
the consolidated financial statements and has been
prepared in accordance with applicable legal requirements.
The accompanying corporate governance statement on
sections 1.3 to 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.
The accompanying corporate governance statement on
section 2 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.
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We have checked the compliance of the consolidated
financial statements of the Group as at 31 December 2021
with relevant statutory requirements set out in the ESEF
Regulation that are applicable to the financial statements.
For the Group, it relates to:
• Financial statements prepared in 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 the
Group as at 31 December 2021, identified as
“
5493001035L29EQRO222-2021-12-31-en”, have been prepared,
in all material respects, in compliance with the
requirements
l
aid down in the ESEF Regulation.
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.
Ernst & Young
Société anonyme
Cabinet de révision agréé
Olivier Lemaire
Luxembourg, 7 March 2022
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CONSOLI DATED
FINANCIAL
STATE MENTS
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Consoli dated financial state ments
CONTENTS
SECTION 4
4.1 CONSOLIDATED STATEMENT OF PROFIT OR LOSS 104
4.2 CONSOLIDATED STATEMENT OF COMPREHENSIVE
INCOME 105
4.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION 106
4.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 108
4.5 CONSOLIDATED STATEMENT OF CASH FLOWS 110
5 NOTES TO THE CONSOLIDATED FINANCIAL
STATEMENTS 112
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Consoli dated financial state ments
4.1 CONSOLIDATED STATEMENT OF PROFIT OR LOSS
For the year ended 31 December 2021
In €m Note 2021 2020
Revenue 24 1,559.5 1,359.7
Cost of sales (848.0 ) (773.5 )
Gross profit 711.5 586.2
Operating (expenses) / income
Selling and distribution expenses 25,26 (561.6 ) (447.7 )
Administrative expenses 25,26 (218.7 ) (194.4 )
Other operating income 27 2.3 7.2
Other operating expenses 27 (15.0 ) (14.4 )
Net impairment losses on financial assets
1
(1.1 ) (1.7 )
Impairment of goodwill 13 (22.1 ) -
Loss before interest and tax (EBIT)
2
(104.7 ) (64.8 )
Result from investment in associates - (0.1 )
Finance Income 28 1.7 2.1
Finance Costs 28 (34.5 ) (46.3 )
Result from indexation of IAS 29 Hyperinflation 33 3.2 1.2
Loss before tax (134.3 ) (107.9 )
Income tax benefit / (expense) 29 9.5 (4.5 )
Loss for the year (124.8 ) (112.4 )
Loss for the year attributable to:
Equity holders of the parent (124.2 ) (107.2 )
Non-controlling interests (0.6 ) (5.2 )
Loss for the year (124.8 ) (112.4 )
Loss per share (€)
Basic and diluted, loss for the year attributable to ordinary equity holders of the parent (€) 10 (0.6 ) (0.5 )
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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Consolidated Statement of Profit or Loss
4.2 CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME
For the year ended 31 December 2021
In €m 2021 2020
Loss for the year (124.8 ) (112.4 )
Other comprehensive income / (loss)
Items that will be subsequently reclassified to profit or loss
Exchange dierences on translation to presentation currency net of tax 10.8 (51.8 )
Net other comprehensive income / (loss) for the year, net of tax 10.8 (51.8 )
Total comprehensive loss for the year, net of tax (114.0 ) (164.2 )
Total comprehensive loss for the year attributable to:
Equity holders of the parent (113.4 ) (156.4 )
Non-controlling interests (0.6 ) (7.8 )
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Consolidated Statement of Comprehensive Income
4.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021
ASSETS
In €m Note 31 Dec 2021 31 Dec 2020
Non-current assets
Property, Plant and Equipment 11 100.2 89.1
Right of Use Asset 12 122.6 104.3
Goodwill 13 127.5 147.6
Other intangible assets 13 126.7 120.3
Other financial assets 16 20.6 6.6
Income tax receivables 0.4 0.3
Other non-financial assets
14 0.5 0.3
Deferred tax assets
29 8.0 -
Total non-current assets 506.5 468.5
Current assets
Inventories 15 283.7 195.9
Trade and other receivables 16 52.3 80.2
Other financial assets 16 260.6 19.5
Income tax receivables 3.3 3.1
Other non-financial assets 14 37.8 39.8
Cash and cash equivalents 17 400.5 366.1
Total current assets 1,038.2 704.6
Total assets 1,544.7 1,173.1
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Consolidated Statement of Financial Position
EQUITY AND LIABILITIES
In €m Note 31 Dec 2021 31 Dec 2020
Equity
Common share capital
18 2.2 2.1
Share premium
18 303.6 303.6
Treasury shares
18 (7.5 ) (7.5 )
Capital reserves
18 2,102.2 2,102.2
Other reserves
Share-based payments reserves
18,19 146.3 128.3
Convertible bond equity component
18,22 48.6 -
Accumulated Deficit
(1,945.9 ) (1,822.9 )
Foreign currency translation reserve
(80.1 ) (90.9 )
Equity attributable to holders of the parent 569.7 615.2
Non-controlling interests 18 3.6 4.2
Total equity 573.3 619.4
Non-current liabilities
Borrowings 20 12.2 -
Lease liabilities 12 108.0 94.2
Other financial liabilities – Convertible bonds 22 318.4 -
Provisions 21 2.7 2.5
Deferred tax liabilities 29 5.3 7.5
Non-financial liabilities 23 1.8 0.6
Total non-current liabilities 448.4 104.8
Current liabilities
Borrowings 20 23.2 10.2
Lease liabilities 12 25.2 19.5
Trade payables and other financial liabilities 22 321.7 283.8
Other financial liabilities - Convertible bonds 22 10.2 -
Provisions 21 23.9 22.9
Income tax liabilities 23,29 21.3 31.1
Non-financial liabilities 23 97.5 81.4
Total current liabilities
Total liabilities
Total equity and liabilities 1,544.7 1,173.1
4.3 CONSOLIDATED STATEMENT OF FINANCIAL POSITION
As at 31 December 2021 (continued)
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ANNUAL REPORT 2021 | GFG
Consolidated Statement of Financial Position
4.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2021
In €m
Attributable to Shareholders of the Company
Non-
con-
trolling
interests
Total
equityNote
Common
share
capital
Share
premium
Treasury
shares
Capital
reserves
Other
reserves
Share-
based
payments
reserves
Con-
vertible
bonds
equity
com-
ponent
Accumu-
lated
deficit
Foreign
currency
trans-
lation
reserve Total
As at
1 January
2021 2.1 303.6 (7.5 ) 2,102.2 0.3 128.3 - (1,822.9 ) (90.9 ) 615.2 4.2 619.4
Loss
for the year - - - - - - - (124.2 ) - (124.2 ) (0.6 ) (124.8 )
Other com-
prehensive
loss - - - - - - - - 10.8 10.8 - 10.8
Total compre-
hensive loss
for the year - - - - - - - (124.2 ) 10.8 (113.4 ) (0.6 ) (114.0 )
Share-based
payment
expenses 19 - - - - - 18.0 - - - 18.0 - 18.0
Adjustment
for
Hyper inflation 33 - - - - - - - 1.2 - 1.2 - 1.2
Issuance of
Convertible
bonds 18,22 - - - - - - 48.6 - - 48.6 - 48.6
Proceeds
from issued
share capital 18 0.1 - - - - - - - - 0.1 - 0.1
Balance at
31 December
2021 2.2 303.6 (7.5 ) 2,102.2 0.3 146.3 48.6
(1,945.9 )
(80.1 ) 569.7 3.6 573.3
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ANNUAL REPORT 2021 | GFG
Consolidated Statement of Changes in Equity
4.4 CONSOLIDATED STATEMENT OF CHANGES IN EQUITY
For the year ended 31 December 2020
In €m
Attributable to Shareholders of the Company
Non-
con-
trolling
interests Total equityNote
Common
share
capital
Share
premium
Treasury
shares
Capital
reserves
Other
reserves
Share-
based
payments
reserves
Accumu-
lated
deficit
Foreign
currency
trans-
lation
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 com-
prehensive
loss - - - - - - - (49.2 ) (49.2 ) (2.6 ) (51.8 )
Total compre-
hensive loss
for the year - - - - - - (107.2 ) (49.2 ) (156.4 ) (7.8 ) (164.2 )
Share-based
payments
expenses 19 - - - - - 11.2 - - 11.2 - 11.2
Adjustment
for
Hyperinflation 33 - - - - - - (0.3 ) - (0.3 ) - (0.3 )
Proceeds
from issued
share capital 18 0.2 120.2 - - - - - - 120.4 - 120.4
Transaction
costs on issue
of shares - (1.0 ) - - - - - - (1.0 ) - (1.0 )
Treasury share
cancellation 18 (0.2 ) - 0.2 - - - - - - - -
Capital
contributions 18 - - - - - - - - - 3.9 3.9
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 2021 | GFG
Consolidated Statement of Changes in Equity
4.5 CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021
In €m Note 2021 2020
Cash flows from operating activities
Loss for the year before tax
(134.3 ) (107.9 )
Adjustments for:
Depreciation of property, plant and equipment and right-of-use assets
26 43.0
Amortisation of intangible assets
26 27.8
Impairment of goodwill
13 22.1
Impairment losses on other financial assets
Share based payment expense
19 22.1
Fair value remeasurement
Interest income
28 (1.6 )
(2.1 )
Interest costs
28 31.2
Foreign currency (gains) / losses
(5.4 )
Other non-cash transactions
Gains from disposal of property, plant and equipment and intangible assets
(0.2 )
Changes in Provisions
(0.6 )
Cash from operations before changes in working capital 5.4 16.3
(Increase) / decrease in inventories
(79.9 ) 0.5
Decrease / (increase) in trade receivables
Increase in trade payables
Changes in other receivables and other payables
(6.6 ) 50.5
Cash flows (used in) / from operations (19.4 ) 54.3
Cash outflow from share-based payments arrangements (4.9 ) (10.4 )
Income tax paid
29 (9.2 ) (2.7 )
Interest received 1.6 2.2
Interest paid (19.3 ) (13.1 )
Net cash flow (used in) / from operating activities (51.2 ) 30.3
Cash flows from investing activities
Purchase of property, plant and equipment (25.8 ) (28.9 )
Proceeds from sale of property, plant and equipment 0.5 2.1
Acquisition of intangible assets and capitalised development expenditures (30.8 ) (20.6 )
Proceeds from disposal of intangible assets - 0.2
Cash (outflow) / inflow from other securities, deposits and transfer of restricted cash (2.5 ) 13.7
Purchase of investment funds 16 (234.5 ) -
Net cash flow used in investing activities (293.1 ) (33.5 )
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ANNUAL REPORT 2021 | GFG
Consolidated Statement of Cash Flows
In €m Note 2021 2020
Cash flows from financing activities
Proceeds from borrowings and other financial liabilities
20 47.3 8.2
Repayment of borrowings
20 (21.3 ) (2.5 )
Coupon payments on Convertible bonds
22 (2.3 ) -
Proceeds from issuance of Convertible bonds
22 375.0 -
Transaction costs on issuance of Convertible bonds
22 (5.9 ) -
Capital contributions from shareholders (net of transaction costs)
Proceeds from issuance of common shares
Transaction costs on issuance of shares
Payments under lease liabilities
(22.8 ) (22.5 )
Net cash flow from financing activities 370.1 106.5
Cash and cash equivalents at the beginning of the year 366.1 277.3
Eect of exchange rate changes on cash and cash equivalents
Cash and cash equivalents at the end of the year 17 400.5 366.1
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ANNUAL REPORT 2021 | GFG
Consolidated Statement of Cash Flows
4.5 CONSOLIDATED STATEMENT OF CASH FLOWS
For the year ended 31 December 2021 (continued)
NOTES TO THE CONSOLIDATED
FINANCIAL STATEMENTS
1. CO
RPORATE INFORMATION
General information
The consolidated financial statements present the
operations of Global Fashion Group S.A. (‘GFG S.A.’).
GFGS.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
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
7 March 2022. The shareholders will ratify the approval
of the financial statements at the annual general meeting.
Business activities
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 Ecommerce platforms across
four regions in 17 countries under the following labels:
Dafiti ( LATAM), L amoda ( CIS), Z alora ( SEA) a nd THE
ICONIC (ANZ). Please refer to note 6 for more details on
our segmental disclosures.
Since the outbreak of the Covid-19 pandemic, GFG has
learnt to work closely with their brand partners to adapt
the assortment, launch new initiatives and maintain a keen
focus on customer experience. During the first half of 2021
the Group has continued to deliver strong growth. Growth
in the first half of the year was supported by channel shift
and a strong performance from “lockdown” categories as
well as the continuing expansion into categories, such as
premium and beauty.
The second half of the year was more complex to navigate.
Australia, Indonesia, Philippines and Russia were under
some form of restrictions. In LATAM, second-order
impacts from the pandemic significantly weakened
consumer sentiment. The majority of our market has yet to
see the recovery and the balance in fashion and lifestyle
spend, which typically follows their reopening.
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.
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.
On 15 March 2021, the Group issued Convertible bonds
for net proceeds of €369.1million. This additional capital
supports GFG’s ambition of becoming a €10 billion Net
Merchandise Value (“NMV”) business in the next 6-8 years.
Alongside investment in core growth areas, GFG also
intends to accelerate the execution of the Group strategy,
in particular the expansion of Marketplace and Platform
Service capabilities.
112
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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. IAS 29 has been applied since
2018 as Argentina is in hyperinflation.
The consolidated financial statements are prepared
on a historical cost basis, unless otherwise stated. The
consolidated 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 nearestmillion 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 not
exactly reflecting the absolute figures they relate to.
3
. SUMMARY OF SIGNIFICANT
Basis of consolidation
The consolidated financial statements comprise the
financial statements of the Company and its subsidiaries
as of 31 December 2021 and 2020. 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.
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 t he
113
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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.
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 a ll t he a ssets acquired a nd a ll
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.
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.
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.
114
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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.
Items included in the financial s tatements o f e ach o f
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 t ypically
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 p osition o f a ll t he G roup
entities that have a functional currency dierent from the
presentation 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).
115
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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.
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 33 for further
information.
A financial instrument is any contract that gives rise to a
financial a sset o f o ne e ntity a nd a fi nancial li ability or
equity instrumen
t of another entity.
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 a sset i s m easured
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 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
116
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
117
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
of unobservable inputs. In the measurement of financial
assets and liabilities, the credit default risk is taken into
account.
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:
Level1: Fair values based on quoted prices in active
markets.
Level2: Fair values that are determined on the basis of
valuation techniques which use inputs that are
substantially based on observable market data.
Level3: 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.
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Notes to the Consolidated Financial Statements
Financial assets with cash flows that do not meet the Soley
Payments of Principal and Interest test (“SPPI”) are
classified and measured at fair value through profit or loss,
irrespective of the business model. Any changes in fair
value is recognised in profit or loss as “finance gain” or
“finance loss”.
Within the Group, such financial assets are represented by
investment funds.
All financial a ssets t o w hich i mpairment r equirements
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.
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 cash 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 31 for further information.
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Notes to the Consolidated Financial Statements
De-recognition
A financial asset (or, where applicable, a part of a financial
asset or part of a group of similar financial assets) is
primarily derecognised (i.e., removed from the Group’s
consolidated statement of financial position) when:
• The rights to receive cash flows from the asset have
expired; or
• The Group has transferred its rights to receive cash
flows from the asset or has assumed an obligation to
pay the received cash flows in full without material
delay to a third party under a ‘pass-through’
arrangement; and either (a) the Group has transferred
substantially all the risks and rewards of the asset, or
(b) the Group has neither transferred nor retained
substantially all the risks and rewards of the asset, but
has transferred control of the asset.
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.
The Group’s financial l iabilities i nclude t rade a nd o ther
liabilities and loans and borrowings. All financial liabilities of
the Group are classified a t i nitial r ecognition a s o ther
financial liabilities.
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.
Please see note20 and 22 for further details.
Subsequent measurement
All financial l iabilities o f t he G roup a re s ubsequently
measured at amortised cost using the EIR method, as
described below:
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
12months 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 20 for
further details.
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
subsequently 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 i s t reated a s t he
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 22 for details.
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In accordance with IAS 7, 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
and that are held for the purpose of meeting short-term
cash commitments. See note 17 for details.
To establish whether an investment instrument or
investment fund holding debt instruments is classified
under IAS 7 as “Cash and cash equivalents”, the Group
assesses if:
• the period taken to redeem an investment from the
trade date is 2 days or less;
• no restrictions or penalty charges on redemption
apply;
• the weighted average life or weighted average
maturity of the fund is less than or equal to 90 days
or 0.25 years respectively; and
• volatility of returns over historic 12 months is capped
by 1% limit.
Investment instruments which exceed the limits above,
do not meet the criteria for IAS 7 classification per the
professional judgement of the Group management, and
will be accounted
for under IFRS 9 as an “Other financial
asset” and classified as a financial asset measured at fair
value through profit or loss. See note 16 for details.
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.
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 11 for details.
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 a sset f or a p eriod o f t ime i n e xchange f or
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;
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• 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.
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;
• the exercise price under a purchase option that is
reasonably certain to be exercised;
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• 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 12 for details.
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 Group 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 13 for details.
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.
Development costs that are directly attributable to the
design and testing of identifiable a nd u nique s oftware
products controlled by the Group are recognised as
intangible assets when the following criteria are met:
• it is technically feasible to complete the software
product so that it will be available for use;
• management intends to complete the software
product 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.
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Gains or losses arising from de-recognition of an intangible
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 13 for details.
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.
When the circumstances that previously caused inventory
to be written down below cost no longer exist, the write
down is reversed. See note 15 for details.
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 t hat a re
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
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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 13 for further details.
Prepayments
Prepayments are carried at cost less provision for
impairment. A prepayment is classified a s n on-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.
Own equity instruments that are reacquired (treasury
shares) are recognised at cost and deducted from equity.
No gain or loss is recognised in profit o r l oss o n t he
purchase, sale, issue or cancellation of the Group’s own
equity instruments. Please see note 18 for further details.
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 21 for more details.
The Group operates equity-settled and cash-settled
share-based payment plans, under which Group
companies 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 19 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.
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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
12months after such an event and under the condition
the employee is still employed with the Group. 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.
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 19 for further details.
Convertible bonds
The Group has identified s eparate d ebt a nd e quity
components to the convertible bonds compound
instrument. As a financial liability, the debt component is
initially valued based on the present value of future cash
flows, net of directly attributable transaction costs. The
financial liability is subsequently measured at amortised
cost using the EIR method.
The equity component is recognised as the dierence
between gross proceeds from the convertible bond
issuance and the fair value of the debt component and any
bifurcated derivatives.
The Group also identified several embedded derivates
within the Convertible bonds. These financial assets are
initially measured at fair value with subsequent changes in
fair value recognised in profit or loss as “finance gain” or
“finance loss”. Please refer to note 22 for further details.
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.
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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 24). Such
amounts earned are determined using a fixed percentage
of the transaction value, a fixed-payment schedule, or a
combination of thetwo.
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 programme (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.
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.
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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 include fulfilment and
marketing costs.
Fulfilment c osts r epresent c osts i ncurred i n o perating
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 c osts a lso i nclude
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 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.
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 a nd s ubject t o s ocial s ecurity
and tax contributions. The Group 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 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 r elevant t ax
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.
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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 n either a ccounting n or
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 a rising f rom i nvestments i n
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 ta xable pr ofit ava ilable aga inst whi ch the
temporary dierence can be utilised.
Deferred tax assets and liabilities are oset when there is
a l egally enforceable right to oset c urrent t ax a ssets
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 t axable entities, where there is an intention to
settle the balances on a net basis.
4. CRITICAL ACCOUNTING
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.
The Group updates its assessment of expected returns
regularly and the refund liabilities are adjusted accordingly.
Estimates of expected returns are sensitive to changes in
circumstances and the Group’s past experience regarding
returns may not be representative of the customer’s actual
returns in the future.
132
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Notes to the Consolidated Financial Statements
133
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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
Group, 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 15.
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 29.
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.
134
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Notes to the Consolidated Financial Statements
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.
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 30 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.
Group-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).
135
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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 (“CGU”) 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 cash flow projections covering a detailed three-year
forecast, followed by an extrapolation of expected cash
flows over an additional seven year-period using fading
annual growth rates that converge towards PGRs in the
long term, 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. Cash flow forecasts include significant future
investments (including the commitments disclosed in
note 30) 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.
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 13.
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 grant
date. The options are then not remeasured at the end of
each reporting period.
Since GFG became listed the share price input in those
models are 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 19.
136
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
Climate change
In preparing the Consolidated Financial Statements
management has considered the impact of climate
change, particularly in the context of the disclosures
included in section 2.13 Risks and Opportunities report
in the Annual Report and the stated 2030 sustainability
targets. Management is working to align our assessment
on the financial impact of climate change risks and
opportunities with recommendations of the Task Force
on Climate-related Financial Disclosures (TCFD) and will
make relevant disclosures in future reports.
Sources of estimation uncertainty and significant
judgements
The consideration of future climate change impacts did
not have a material impact on the financial reporting
judgements and estimates made, consistent with the
assessment that there are currently no known climate
change risks expected to have a significant impact on the
Group’s going concern assessment.
The full list of 2030 sustainability targets were considered,
including the following points:
• Carbon osetting and long-term carbon emission
reduction targets, including reducing emissions from
logistics and fulfilment activities
• More sustainable assortment and lower carbon
logistics alternatives - working with our supply chain
to increase the proportion of products oered to
customers that are made from lower impact materials
and to deliver our products via zero or low emissions
methods
• Renewables and energy eciency of our operations -
continued investment in LED lighting, onsite
renewable energy generation solutions where
possible and the purchase of Renewable Energy
Certificates where not possible.
Management has considered the impact of climate change
on the estimates of future cash flows used in impairment
assessments of the carrying value of goodwill. Whilst the
impact of climate change on future cash flow projections
is not known, the Group’s strategies and priorities will
adapt in line with changing customer sentiments, macro-
environmental changes and regulatory requirements,
such that we do not expect a material impact on the CGU’s
recoverable amount. The Group’s Sustainability strategies
aim to position the Group ahead of the market, helping to
create an active consumer response to climate change,
which could ultimately become a competitive advantage
to our business.
Income taxes
There are currently no known environmental taxes that
are expected to have a significant financial impact. The
Group will continue to monitor its forecasted future
taxable profits, and how they are likely to be impacted by
climate-related developments, in addition to following
any climate-related changes to tax legislation across the
regions that could significantly impact income taxes.
PPE, Intangible assets
and Goodwill
The Group has considered the physical risks to our
business over the short, medium and long term posed
by climate change and has deemed that no impairment
is required. Management will continue to review these
eects as possible impairment triggers.
Other matters
The Group does not currently foresee material financial
impacts to the value of inventories, the measurement
and recognition of financial instruments, or the fair value
measurement of financial assets as a result of climate
change. Management will continue to assess the impact
of climate changes on the balance sheet going forward.
137
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
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 2020, with the exception of the
following.
The following standards and interpretations were eective
1 January 2021 but do not have a significant eect on the
or financial position of the Group:
Standard Effective date
Interest Rate Benchmark Reform − Phase 2 1 January 2021
Amendments to IFRS 16- Covid-19-Related Rent Concessions 30 June 2021
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
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
Amendments to IAS 8 Accounting Policies, Changes in Accounting Estimates
andErrors
1 January 2023 No eect
expected
Amendments to IAS 12 Deferred tax related to Assets and Liabilities
arising from a Single Transaction
1 January 2023 No eect
expected
The Group plans to adopt new standards once eective.
138
ANNUAL REPORT 2021 | 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’s-
length basis.
The 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
financial statements.
Group segments generate external revenue from fashion
and lifestyle Ecommerce products. Products are not
disaggregated in CODM reporting.
139
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
Reportable segment information for the year ended 31 December 2021 is set out below:
In €m LATAM CIS SEA ANZ
Total Fashion
Business Other
Reconci-
liation
1
Total
Revenues from
external customers 352.1 523.6 289.0 394.8 1,559.5 - - 1,559.5
Intersegment Revenue - - - - - 25.9 (25.9) -
Total Revenue 352.1 523.6 289.0 394.8 1,559.5 25.9 (25.9) 1,559.5
Cost of sales (193.3) (260.4) (179.4) (214.6) (847.7) (0.5) 0.2 (848.0)
Gross profit 158.8 263.2 109.6 180.2 711.8 25.4 (25.7) 711.5
Operating (expenses) / income
Selling and distribution expenses (133.5) (212.0) (86.2) (130.6) (562.3) (0.2) 0.9 (561.6)
Administrative expenses (51.3) (39.7) (37.1) (49.6) (177.7) (36.1) (4.9) (218.7)
Other (expenses) / income (28.8) (6.3) 0.9 (2.9) (37.1) (18.0) 19.2 (35.9)
EBIT (54.8) 5.2 (12.8) (2.9) (65.3) (28.9) (10.5) (104.7)
Depreciation and Amortisation 14.7 24.0 7.7 10.9 57.3 3.0 10.5 70.8
EBITDA
2
(40.1) 29.2 (5.1) 8.0 (8.0) (25.9) - (33.9)
Recurring items (see below) 22.1
Non-recurring items (see below) 25.4
Adjusted EBITDA
3
(12.0) 31.4 - 15.6 35.0 (21.4) - 13.6
Reconciliation to loss before tax:
Finance income 1.7
Finance costs (34.5)
Share-based payment expense (22.1)
Depreciation and amortisation (70.8)
IAS 29 Hyperinflation result 3.2
Change in estimate of
prior year tax provision (0.9)
Fulfilment centre closure costs
and continuity incentives (0.6)
Change in legal provisions
and project costs (1.8)
Impairment of goodwill (22.1)
Loss before tax (134.3)
Recurring items
Share-based payment expense 5.1 2.2 3.3 2.9 13.5 8.6 - 22.1
Group recharges - - 1.2 3.0 4.2 (4.2) - -
Non-recurring items
Change in estimate of prior year
tax provision 0.3 - 0.6 - 0.9 - - 0.9
Fulfilment centre closure costs
and continuity incentives 0.6 - - - 0.6 - - 0.6
Change in legal provisions
and project costs - - - 1.7 1.7 0.1 - 1.8
Impairment of goodwill 22.1 - - - 22.1 - - 22.1
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, impairment of goodwill, Group recharges, changes to
estimates for prior year tax, fulfilment centre closure costs and continuity incentives, and change in legal provisions and project costs.
140
ANNUAL REPORT 2021 | 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, impairment of goodwill, Group recharges, changes to
estimates for prior year tax, fulfilment centre closure costs and continuity incentives, and change in legal provisions and project costs.
141
ANNUAL REPORT 2021 | 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 €216.0 million
(2020: €257.9 million) in Brazil, €487.6 million (2020:
€422.2 million) in Russia and €394.8 million (2020:
€259.3million) in Australia.
During 2021 and 2020 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 2021 2020
LATAM 155.7 166.9
CIS 130.4 107.3
ANZ 133.3 135.9
SEA 50.1 46.8
Other 16.0 4.7
Total 485.5 461.6
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 r esults o f t he C ompany a nd i ts
subsidiaries.
The table below presents the list of the Company’s
subsidiaries.
142
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
Principal activity Registered office
Ownership
1
31 Dec 2021 31 Dec 2020
Bigfoot GmbH, Berlin, Germany Investment Holding Berlin 100% 100%
Juwel 198. GmbH, 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, 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
8
Finance Holding Dublin 0% 100%
GFG Luxembourg One S.à r.l,
Senningerberg, Luxembourg Finance Holding Senningerberg 100% 100%
Lost Ink Ltd, London, UK Wholesale London 0% 100%
Dafiti Latam GmbH & Co. Beteiligungs KG,
Berlin, Germany Holding Berlin 99.14% 99.35%
VRB GmbH & Co. B-126
(Einhundertsechsundzwanzig) KG,
Berlin, Germany Holding Berlin 95.91% 96.11%
BFOOT S.R.L. (Arg), Buenos Aires, Argentina Online Retail Buenos Aires 95.77% 95.98%
VRB GmbH & Co. B-127
(Einhundertsiebenundzwanzig) KG,
Berlin, Germany Holding Berlin 95.84% 95.78%
Bigfoot Chile SpA, Santiago, Chile Online Retail Santiago 95.31% 95.78%
VRB GmbH & Co. B-128
(Einhundertachtundzwanzig) KG,
Berlin, Germany Holding Berlin 96.79% 97.00%
Bigfoot Colombia SAS, Bogota, Colombia Online Retail Bogota 96.79% 97.00%
VRB GmbH & Co. B-182 KG, Berlin, Germany
6
Holding Berlin 0% 96.81%
GFG Comercio Digital Ltda (formerly
Comercio Digital BF Ltda), Sao Paulo, Brazil Online Retail Sao Paulo 99.13% 99.34%
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,
Ukraine, Kiev
Call centre Kiev 100% 100%
Kupishoes LLC, Moscow, Russia Online Retail Moscow 100% 100%
Lamoda Service TOO, Almaty, Kazakhstan Online Retail Almaty 100% 100%
143
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
Principal activity Registered office
Ownership
1
31 Dec 2021 31 Dec 2020
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 100% 100%
Lamoda Management GmbH & Co KG, Berlin,
Germany
4
Trustee Berlin 0% 100%
BGN Brilliant Services GmbH, Berlin,
Germany
3
Holding Berlin 0% 100%
Juwel 145 V V UG (haftungsbeschränkt),
Berlin, Germany Trustee Berlin 100% 100%
New BGN Zalora GmbH, Berlin Germany
3
Holding Berlin 0% 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% 97.86%
Brillant 1257 GmbH & Co. Verwaltungs KG,
Berlin, Germany Holding Berlin 90.99% 90.99%
Brillant 1257. GmbH & Co.
Zweite Verwaltungs KG, Berlin, Germany Holding Berlin 91.77% 91.77%
Brillant Vietnam Co., Ltd, Ho Chi Minh City,
Vietnam Holding Ho Chi Minh City 91.77% 91.77%
R-SC Vietnam Co., Ltd., Ho Chi Minh City,
Vietnam Consultancy Services Ho Chi Minh City 100% 91.77%
Brillant 1257. GmbH & Co. Dritte
Verwaltungs KG, Berlin, Germany Holding Berlin 94.49% 94.49%
Brillant 1257. GmbH & Co. Zehnte
Verwaltungs KG, Berlin, Germany
4
Holding Berlin 0% 100%
PT Fashion Eservices, Jakarta, Indonesia Online Retail Jakarta 94.48% 94.48%
PT Fashion Marketplace, Jakarta, Indonesia Online Retail Jakarta 94.40% 94.40%
Brillant 1257. GmbH & Co.
Vierte Verwaltungs KG, Berlin, Germany Holding Berlin 91.73% 91.73%
BF Jade E-Services Philippines Inc.,
Makati City, Philippines
2
Online Retail Makati City 46.77% 46.77%
Brillant 1257. GmbH & Co.
Fünfte Verwaltungs KG, Berlin, Germany Holding Berlin 92.92% 92.92%
Jade E-Services Malaysia Sdn Bhd,
Kuala Lumpur, Malaysia Online Retail Kuala Lumpur 91.99% 91.99%
Brillant 1257. GmbH & Co.
Sechste Verwaltungs KG, Berlin, Germany Holding Berlin 94.77% 94.77%
Jade E-Services Singapore Pte Ltd,
Singapore, Singapore Online Retail Singapore 94.77% 94.77%
Brillant 1257. GmbH & Co.
Achte Verwaltungs KG, Berlin, Germany
4
Holding Berlin 0% 90%
Zalora South East Asia Pte Ltd, Singapore,
Singapore Online Retail Singapore 94.77% 94.77%
RPL Fashion Trading Gungzhou Co., Ltd
(China), Guangzhou, China Online Retail Guangzhou 94.77% 94.77%
1
Ownership percentage excluding shareholdings by Trustee companies.
2
For the years ended 31 December 2020 and 2021, 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.
3
Entity eliminated from the Groups at 30 June 2021.
4
Entity eliminated from the Groups at 30 September 2021.
5
Zalora eFulfilment Services Sdn. Bhd. (held 70% by Jade E Service Malaysia and 30% by E-Kilau) was incorporated on 3 June 2021. E-Kilau
Sdn. Bhd. (held 2% Jade E Service Malaysia) was incorporated on 6 July 2021. Jade E Services Malaysia is deemed to have control.
6
Entity eliminated from the Group at 31 December 2021.
7
Entity is a branch, not a legal subsidiary.
8
Liquidated on 7 May 2021.
144
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
Principal activity Registered office
Ownership
1
31 Dec 2021 31 Dec 2020
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 94.77% 94.77%
VRB GmbH & Co. B-129. KG, Berlin, Germany Holding Berlin 93.70% 93.70%
Jade 1249 GmbH, Berlin, Germany General Partner Berlin 100% 100%
Jade 1250. GmbH, Berlin, Germany
3
General Partner Berlin 0% 100%
Internet Services Australia 1 Pty Ltd,
Sydney, Australia Online Retail Sydney 93.70% 93.70%
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% 100%
Jade 1411. GmbH (Komplementär), Berlin,
Germany General Partner Berlin 100% 100%
Bambino 77. V V UG (haftungsbeschränkt),
Berlin, Germany Trustee Berlin 0% 100%
VRB GmbH & Co. B-196 KG, Berlin, Germany Holding Berlin 100% 95.92%
Tricae Comercio Varejista Ltda,
Sao Paulo, Brazil Online Retail Sao Paulo 99.91% 95.83%
Jade 1159. GmbH, Berlin, Germany Holding Berlin 100% 100.00%
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 100% 96.79%
Kanui Comercio Varejista Ltda,
Sao Paulo, Brazil Online Retail Sao Paulo 99.91% 96.70%
Zalora eFulfilment Services Sdn Bhd,
Singapore, Singapore
5
Holding Malaysia 64.95% 0%
E-Kilau Sdn Bhd, Singapore, Singapore
5
Holding Malaysia 1.84% 0%
GFG Denmark, filial af Global Fashion Group
S.A., Luxembourg
7
Branch Denmark 100% 0%
Changes to the percentage ownership during the year have
not had a material financial impact. At 31 December 2020
and 2021 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.
1
Ownership percentage excluding shareholdings by Trustee companies.
2
For the years ended 31 December 2020 and 2021, 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.
3
Entity eliminated from the Groups at 30 June 2021.
4
Entity eliminated from the Groups at 30 September 2021.
5
Zalora eFulfilment Services Sdn. Bhd. (held 70% by Jade E Service Malaysia and 30% by E-Kilau) was incorporated on 3 June 2021. E-Kilau
Sdn. Bhd. (held 2% Jade E Service Malaysia) was incorporated on 6 July 2021. Jade E Services Malaysia is deemed to have control.
6
Entity eliminated from the Group at 31 December 2021.
7
Entity is a branch, not a legal subsidiary.
145
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
8. BALANCES AND
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 only as they have the
ability to exercise significant influence as shareholders of
the Group as well as their subsidiaries and joint ventures.
No transactions have been entered into with related parties
during the twelve months ended 31 December 2021 and
2020 respectively.
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 an d Ch ief
Financial Ocer) pl us th e me mbers of th e ex ecutive
committee of the Group, was as follows:
In €m
For the year
ended 31 Dec
2021 2020
Short-term employee
benefits 2.5 2.8
Share-based payments
charge 4.8 4.2
Total 7.3 7.0
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.
146
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
9.
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
2021 2020
Audit and audit-related
services:
Audit of the parent
Company and
consolidated financial
statements 1.4 1.2
Audit of the Company’s
subsidiaries 1.5 1.2
Non-audit services:
Other services relating
to taxation - 0.1
Total fees 2.9 2.5
1
0. 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
2021 2020
Loss attributable to
ordinary equity holders of
the parent for basic
earnings: (124.2) (107.2)
Weighted average
number of ordinary shares
for basic and diluted EPS
(m)
1
216.1 198.0
Basic and diluted EPS from
continuing operations (€) (0.6) (0.5)
1
The weighted average number of shares takes into account
the weighted average eect of any changes in treasury shares
during the year.
Please see note 18 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.
147
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
11. PROPERTY, PLANT AND EQ
In €m
Office / IT
equipment / Leasehold
improvements
Warehouse / Motor
vehicles
Assets in the course of
construction Total
Cost
At 1 January 2020 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
Additions 7.7 5.5 16.0 29.2
Disposals (1.7) (5.6) (0.7) (8.0)
Reclassifications 0.1 1.3 (1.4) -
Currency translation
dierences 2.0 3.7 0.3 6.0
At 31 December 2021 52.1 105.5 16.2 173.8
Depreciation and impairment
At 1 January 2020 (21.2) (28.4) (0.7) (50.3)
Depreciation charge
for the year (5.7) (13.4) - (19.1)
Disposals 1.9 - - 1.9
Reclassifications (1.3) 1.3 - -
Currency translation
dierences 3.2 6.0 0.8 10.0
At 31 December 2020 (23.1) (34.5) 0.1 (57.5)
Depreciation charge
for the year (5.9) (13.5) (0.1) (19.5)
Disposals 2.3 3.9 - 6.2
Reclassifications (1.6) 1.6 - -
Currency translation
dierences (1.0) (1.8) - (2.8)
At 31 December 2021 (29.3) (44.3) - (73.6)
Net book value
At 31 December 2021 22.8 61.2 16.2 100.2
At 31 December 2020 20.9 66.1 2.1 89.1
As of 31 December 2021 and 2020, there were no assets held for sale.
148
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
149
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
1
2. LEASES
T
his 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
2021 2020
Right of-use assets
Property 45.4 39.0
Warehouse 74.5 65.2
Motor vehicles 2.5 -
Oce equipment
and other 0.2 0.1
122.6 104.3
Lease Liabilities
Current 25.2 19.5
Non-current 108.0 94.2
133.2 113.7
Please refer to note 4 for critical judgements related to
leases.
Additions to right-of-use assets during the year were
€33.0million (2020: € 55.9million).
(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
2021 2020
Depreciation charge of
right of use assets
Property 12.9 12.1
Warehouse 10.2 7.9
Oce equipment
and other 0.4 3.2
23.5 23.1
Interest expense
(included in finance costs) 9.4 8.8
Expense relating to
short-term leases 0.7 0.4
Expense relating to leases
of low-value assets that are
not shown above as short
term leases 0.1 -
10.2 9.3
The total cash outflow for leases in 2021, including interest
and payments, was €32.0 million (2020: €31.3 million)
150
ANNUAL REPORT 2021 | 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 2021, there were no balances excluded from
lease liabilities, which were not expected to be payable
(2020: nil).
(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 2021, 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) (2020: nil).
(vii) Lease not yet commenced to which
the lessee is committed
As at 31 December 2021 and 2020, the Group was not
committed to any leases, which had not yet commenced,
apart from the one relating to the new Moscow fulfilment
centre (note 34).
Please refer to note 31 for maturity analysis of lease
liabilities.
151
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
1
3. 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 2020 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
Additions - 22.8 8.1 0.1 - - 31.0
Reclassifications - 0.1 - - - (0.1) -
Disposals - (0.2) (0.1) - - - (0.3)
Currency translation
dierences 35.9 1.9 1.2 14.7 7.9 0.1 25.8
At 31 December 2021 702.3 67.8 37.6 370.6 142.2 0.9 619.1
152
ANNUAL REPORT 2021 | 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 2020 (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)
Amortisation charge
for the year - (11.3) (5.9) (6.2) (4.4) - (27.8)
Impairment loss (22.1) - - - - - -
Reclassifications - 1.6 (1.6) - - - -
Currency translation
dierences (33.9) (0.7) (1.1) (14.0) (6.4) (0.1) (22.3)
At 31 December 2021 (574.8) (28.5) (29.5) (319.8) (113.7) (0.9) (492.4)
Net book amount
At 31 December 2021 127.5 39.3 8.1 50.8 28.5 0.1 126.7
At 31 December 2020 147.6 25.1 7.5 56.2 31.4 0.1 120.3
See note 26 for breakdown of amortisation expenses
between cost of sales and general administration.
As of 31 December 2021 and 2020, there were no
intangible assets in which title was restricted.
153
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
The Group performed the impairment test for its CGUs as
at 31 December 2021 and 31 December 2020. For the year
ended 31 December 2021, the Group recorded impairment
charges of €22.1 million (2020: nil) in respect of the Group’s
investments in LATAM.
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 amount of goodwill allocated to each CGU after the
impairment testing was as follows:
In €m 31 Dec 2021 31 Dec 2020
LATAM 68.8 90.0
CIS 0.5 0.5
SEA - -
ANZ 58.2 57.1
Total 127.5 147.6
Impairment approach for the year ended
31 December 2021
As part of the 2021 annual impairment assessment of
goodwill, 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 over an additional seven year period using fading
annual growth rates that converge towards PGRs in the
long term, as determine 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.
LATAM CGU
The recoverable amount of the LATAM CGU of
€113.9 million as at 31 December 2021 has been
determined based on a value in use of the cash-generating
unit calculated using the CGU’s business plan and
approved by the Management Board. The projected cash
flows reflect the impact of the macroeconomic changes
and market conditions after the second-order impacts
of the pandemic in the LATAM regions, including GDP,
rising unemployment and inflation, particularly in Brazil.
As a result of this analysis, management has recognised
an impairment charge of €22.1 million in the current year
against goodwill with a carrying amount of €90.0 million as
at 31 December 2020. The carrying value of the goodwill
after the recognition of the impairment was €68.8 million
as at 31 December 2021. The impairment charge is
presented as a separate line item in the Consolidated
statement of profit or loss.
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.
154
ANNUAL REPORT 2021 | 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 2021 were as follows:
CGU
Discount
Rate
Perpetual
Growth Rate
LATAM 15.9% 3.7%
CIS 13.0% 1.9%
SEA 11.6% 4.0%
ANZ 11.6% 2.6%
GFG Group-level test 13.2% 3.0%
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%
The key assumptions used in the estimation of the
recoverable amounts of all four CGUs are:
• 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 its weighted average
cost of capital (“WACC”). The WACC represents a
weighted average of the cost of equity and cost of
debt. 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 to extrapolate cash flows beyond
the forecast period – Rates are based on published
industry research.
• Increased Marketplace participation in each region
will continue to boost EBITDA over the forecast
period as the business attracts new customers to its
platform and the revenue stream generates higher
margins.
• Adjusted EBITDA margin (pre-IFRS 16, excluding
corporate costs) is expected to gradually increase
over the forecast period to reach between 8.5% and
10.7% of revenues by 2031.
• 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 is 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 for the CIS, SEA
and ANZ CGUs. If the discount rates were 1% higher than
management’s estimates, significant headroom remains
across the CGUs and there would have been no
requirement for the Group to recognise any impairment
charge in 2021. 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 headroom, the Group did not identify
any reasonably possible change in key assumptions which
could cause an impairment loss to be recognised in CIS,
SEA and ANZ.
155
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
14. OTHER NON-FINANCIAL
ASSETS
In €m 31 Dec 2021 31 Dec 2020
Non-current
Other non-financial assets 0.5 0.3
Other non-financial assets
(non-current) 0.5 0.3
Current
Prepayments 19.5 20.1
VAT and Tax refunds 9.7 9.1
Other non-financial assets 0.2 0.3
Right to recover
returned goods 8.5 10.4
Less: Provision for
impairment (0.1) (0.1)
Other non-financial assets
(current) 37.8 39.8
Total non-financial assets 38.3 40.1
15. INV
Inventories net of provision are as follows:
In €m 31 Dec 2021 31 Dec 2020
Raw materials and supplies 3.5 2.2
Finished goods and
merchandise 303.1 209.9
Less: Provisions on finished
goods and merchandise (22.9) (16.2)
Total inventories 283.7 195.9
During 2021, €8.9 million (2020: €5.7 million) was
recognised as an expense write-o for inventories carried
at net realisable value. This is recognised in cost of sales.
156
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
16. T
OTHER FINANCIAL ASSETS
Trade receivables and other financial assets are as follows:
In €m 31 Dec 2021 31 Dec 2020
Non-current
Receivables from
deposits / restricted cash 20.6 6.6
Other financial assets
(non-current) 20.6 6.6
Current
Trade receivables before
impairments 52.8 80.5
Less: loss allowance
(note 31) (0.5) (0.3)
Trade and other
receivables (current) 52.3 80.2
Other financial assets
Investment funds at fair
value through profit or loss 234.0 -
Receivable from
deposit / restricted cash
(current) 8.5 7.1
Receivables from loans 0.4 0.8
Receivables from
employees 0.1 0.1
Contract assets 6.0 3.3
Other financial receivables 12.3 8.9
Less: loss allowance (0.7) (0.7)
Other financial assets
(current) 260.6 19.5
Non-current and current receivables from deposits /
restricted cash include guarantees to banks, suppliers
and leasing partners.
During the year, the Group acquired €234.5 million
of investment funds accounted for as Financial assets
at fair value through profit or loss in accordance with
IFRS 9. Fair values of these funds are determined by the
market value at reporting date obtained from the fund
administrators (level 2 of the fair value measurement
hierarchy as disclosed in note 3). As at 31 December 2021,
the fair value of these funds amounted to €234.0 million
and the loss in fair value of €0.5 million was recognised
under “Fair value changes to investment funds” (refer
to note28). These funds are mainly short term duration
bonds, with low volatility and a high credit score and have
been acquired to reduce the Group’s exposure to negative
interest rates and manage counterparty exposure. Funds
were held with Morgan Stanley, HSBC and Santander as
at 31 December 2021.
Note 3 explains the 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
note31.
157
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
1
7. CASH
EQUIVALENTS
In €m
As at
31 Dec 2021
As at
31 Dec 2020
Short term deposits 2.8 46.5
Cash at bank 397.7 319.6
Cash and cash equivalents 400.5 366.1
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. No loss allowance was recognised as of
31 December 2021 (2020: € 0.1million).
1
8. EQUITY
As at 31 December 2021, the issued share capital was
217,292,912 common shares (2020: 213,836,716 ), with a
nominal value of €0.01 per share. Each common share
entitles the holder to one vote at Global Fashion Group’s
A nnual 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 2020 214,765,517 0.01 2.1 184.4
Treasury share cancellation (20,054,561) 0.01 (0.2) -
Common Share Capital issued 76,310 0.01 - -
Common Share Capital issued 2,549,450 0.01 - -
Common Share Capital issued 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
Common Share Capital issued 3,456,196 0.01 0.1 -
Balance as at 31 December 2021 217,292,912 0.01 2.2 303.6
158
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
During the year, 3,456,196 common shares were used to
facilitate the units being exercised under the share-based
payment plans. Please see note 19 for more details.
In 2020, several equity transactions took place:
• 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.
• In July 2020, 2,549,450 common shares were issued
to facilitate units being exercised under the share-
based payment plans. Please see note 19 for more
details.
• On 17 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 €119.4million.
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 2021 and 31 December 2020.
There was no movement in treasury shares in the current
year.
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ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
Authorised Capital
In the context of the new Share Plan in note 19, 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
2021 2020
No. Par Value €m No. Par Value €m
Authorised
Common shares 431,435,251 0.01 4.3 378,705,417 0.01 3.8
Issued
Common shares 217, 292,912 0.01 2.2 213,836,716 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
€146.3 million as at 31 December 2021 (2020: €128.3million).
The share-based payment reserve is used to recognise the
value of equity settled share-based payments provided to
directors and employees (note 19).
Convertible bond equity component
On 15 March 2021, the Group issued Convertible bonds
for net proceeds of €369.1million. The equity component
was valued at €48.6million being the residual between the
net proceeds and value of the debt component at initial
recognition (note 22).
Non-controlling interest
As of 31 December 2021 and 2020 non-controlling interests
mainly consisted of management participations. During
2020, a subsidiary in which the Group has a non-controlling
interest, received capital contributions from a third party
shareholder of €3.9 million. There was no such contribution
made in 2021.
160
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
19.
As at 31 December 2021, the Group’s share-based
payment arrangements are primarily composed of:
a) Long Term Incentive Plan (previously referred to as 2019
share plan);
b) 2018 employee share option plan (ESOP 2018);
The total share-based payment expense of €22.1 million
(2020: €14.9million) is comprised of:
– €22.8 million (2020: €8.8million) relating to the
Long Term Incentive Plan;
– €(0.7) million (2020: €5.8million) relating to the
2018 employee share option plan; and
– €nil (2020: €0.3million) relating to former plans.
(a) Long Term Incentive 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 1 year 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 initial 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.
161
ANNUAL REPORT 2021 | 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 awards
Number
of Shares
Number
of Shares
2021 2020
Outstanding at the
beginning of the year 5,275,862 3,732,570
Granted during the
period 3,449,888 4,198,937
Forfeited during the
period (525,170) (1,482,509)
Exercised during the
period (2,269,264) (1,173,136)
Outstanding at 31
December 5,931,316 5,275,862
Total Awards vested
and therefore exer-
cisable as at
31December 931,722 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 2021.
The weighted average share price for units exercised in the
year was €2.18 (2020: €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 € 10.25 (2020: €2.22). The number of awards
due to vest in 2022 is 2,614,058.
As at 31 December 2021, liabilities arising from applicable
employer social charges of €2.5 million (2020: €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 IAS19 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.
162
ANNUAL REPORT 2021 | 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 12
month 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 2021 2020
€ €
Weighted average
fair values at
measurement date 4.45 9.65
The expected life
(years) - -
Risk Free Rate 0.01% 0.01%
Expected Volatility
(%) 37.80% 44.41%
Exercise Price 0.01 − 12.96 0.01 − 12.96
Expected Dividends Nil Nil
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.
163
ANNUAL REPORT 2021 | 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 2021:
Share option awards
Weighted
Average
Exercise Price
Number of
Options
2021 2021
Outstanding at the
beginning of the year 6.99 8,956,057
Granted during the year 2.28 71,340
Forfeited during the year - -
Exercised during the
year 1.41 (2,778,226)
Outstanding at
31 December 1.71 6,249,171
Total Awards vested
as at 31 December 2.00 6,224,039
In-the-money awards
vested as at 31
December 7.33 212,142
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 weighted average fair value of options granted during
the year was €nil (2020: €0.66).
164
ANNUAL REPORT 2021 | 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 2021 2020
Expense arising from
equity-settled
share-based payment
transactions - 3.6
Expense arising from
cash-settled share-based
payment transactions 1.0 2.5
Expenses arising from
applicable employer
social charges (0.4) (0.2)
Liability arising from cash-
settled portion of share-
based payments 0.5 2.8
Liability arising from
applicable employer
social charges 0.7 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 prior 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 reporting date. The
fair value of the liability is close to the carrying amount.
165
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
2
0. B
The Group has the following borrowings:
In €m 31 Dec 2021 31 Dec 2020
Non-Current
Borrowings 12.2 -
Current
Borrowings 23.2 10.2
Total borrowings 35.4 10.2
The tables below summarise the changes in the Group’s
borrowings arising from financing:
In €m 1 Jan 2021
Repayments
(cash
outflow) FX movement
New
borrowings
(cash inflow) Other 31 Dec 2021
Interest bearing bank
borrowings (current and
non-current) 10.2 (21.3) (0.8) 47.3 - 35.4
In €m 1 Jan 2020
Repayments
(cash
outflow) FX movement
New
borrowings
(cash inflow) Other 31 Dec 2020
Interest bearing bank
borrowings (current) 5.4 (2.5) (0.9) 8.2 - 10.2
On 25 June 2020, the Group entered into a new USD 5 million
(€4.4 million using FX rate as at 31 December 2021) trade
guarantee facility with Citibank. Eective on 25 June 2021, the
Group renewed and increased this trade guarantee facility.
The facility has been renewed to expiry in 12 months and the
facility has been increased from USD 5 million (€4.4 million
using FX rate as at 31 December 2021) to USD10 million
(€8.8 million using FX rate as at 31 December 2021). Under
the terms of this facility restricted cash held against this
facility represents 50% of the value of guarantees issued,
which is included within Other Financial Assets (non-
current). As at 31 December 2021, the Group had utilised
€5.7 million (31 December 2020: nil) of this facility.
166
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
On 17 July 2020, the Group entered into 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.
Eective on 17 July 2021, the Group renewed the buyer
loan facility and renewed the guarantee facility. The buyer
loan facility has been extended for a further 12 months. The
buyer loan facility continues to provide supplier financing
to improve local capital profiles. The security package
remains unchanged. As at 31 December 2021, the Group
had utilised €9.2 million (31 December 2020: €7.7 million)
of the buyer loan facility. As at 31 December 2021, the
Group had utilised €19.8 million (31 December 2020:
€17.9 million) of the guarantee facility.
On 21 October 2020, the Group entered into a new
committed facility for RUB2 billion (approximately
€21.6 million at the date the facility was entered), 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% to
3.0% for loan tenures up to 12 months. The floating rate
will be based on the Russian central bank rate, currently
8.50%, plus credit spread. The Group is under no
obligation to hold restricted cash for this facility.
As at
31 December 2021, the Group had utilised €3.7 million of
this facility.
On 30 March 2021, the Group entered into a RUB1 billion
(approximately €11.3 million at the date the facility was
entered), 5 year uncommitted term loan facility to fund
local capex costs for the new Lamoda facilities centre. The
indicative credit spread based on current market interest
rates, is approximately 3.0%. Applicable credit spread to
be based on the term of each loan drawdown and market
conditions. Lamoda on each loan drawdown has an option
to agree to a floating rate loan or a fixed rate loan. The
floating rate is based on the Russian central bank rate,
currently 8.5%. The fixed rate is based on the Russian
government bond zero coupon yield curve. The Group
is required to ensure operational cash flows representing
100% of the outstanding drawn balance under facility
passes through the accounts held with the lender. As at
31 December 2021, the Group had utilised €2.9 million
of this facility.
On 31 March 2021, the Group entered into a €20.7 million
5 year committed export guarantee facility to fund the
import costs for the new Lamoda facilities centre. Including
the credit insurance premium the indicative credit spread
based on current market interest rates is calculated at
approximately 2.7%. As at 31 December 2021, the Group
had utilised €10.7 million of this facility.
Eective on 27 August 2021, the Group entered into a
BRL29.7 million (approximately €4.7 million), 1 year term
loan facility to fund Dafiti’s working capital requirements.
As at 31 December 2021, the Group had utilised
€4.7 million of this facility.
167
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
21. P
Movements in provisions for liabilities and charges are as
follows:
In €m
Tax risks
Litigation
risks Other Total
Carrying amount as 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 as at 1 January 2021 21.3 1.1 3.0 25.4
Additions 0.4 - - 0.4
Used 0.4 (0.2) (0.8) (0.6)
Reclassifications 0.6 - (0.6) -
Currency translation dierences 0.8 - 0.6 1.4
Carrying amount as at 31 December 2021 23.5 0.9 2.2 26.6
Provisions amounted to €26.6 million as of 31 December 2021
(2020: €25.4 million) where of €2.7 million are classified as
non-current (2020: €2.5 million) mostly relating to restoration
obligations and provisions for gratuity and anniversary, and
€23.9 million as current (2020: €22.9 million).
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 and the provision has
been classified as current. Please see note 30 for further
information.
Litigation risk. The amounts represent a provision for
certain legal claims brought against the Group 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 as at 31 December 2021. The provision has been
classified as current.
168
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
22. T
AND OTHER FINANCIAL
LIABILITIES
In €m 31 Dec 2021 31 Dec 2020
Non-current
Convertible
bonds debt
component 318.4 -
Trade
and other
financial
liabilities
(non-current) 318.4 -
In €m 31 Dec 2021 31 Dec 2020
Current
Trade payables 285.5 252.1
Other financial
liabilities 20.7 14.5
Other financial
liabilities -
Convertible
bonds 10.2 -
Refund
liabilities 15.5 17.2
Trade and
other financial
liabilities
(current) 331.9 283.8
Total trade
and other
financial
liabilities 650.3 283.8
Refund liabilities, included in current other financial
liabilities reflect the Group’s obligation to refund its
customers for 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
2021
Cash
flows
1
FX
move-
ment
Other
2
31 Dec
2021
Convertible
bonds debt
component - 369.1 - (50.7) 318.4
Total trade
and other
financial
liabilties
(non-current) -
369.1
-
(50.7)
318.4
1
Gross proceeds of €375.0 million were received net of €5.9
million of transaction costs.
2
Includes reclassification impact of a portion of the liability to
equity, discounting to net present value and reclassification of
aportion of the liability between non-current and current.
In €m
1 Jan
2021
Cash
flows
FX
move-
ment Other
31 Dec
2021
Trade payables 252.1 29.1 4.4 (0.1) 285.5
Other financial
liabilities 14.5 7.8 0.7 (2.3) 20.7
Other financial
liabilities -
Convertible
bonds - (2.3) - 12.5 10.2
Refund
liabilities 17.2 (1.9) 0.2 - 15.5
Total trade
and other
financial
liabilities
(current)
283.8
32.7 5.3 10.1 331.9
169
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
The table below summarises the changes in the Group’s
trade payables and other financial liabilities during 2020:
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
liabilities
(current)
311.6
16.3
(46.6)
2.5 283.8
As at 31 December 2021, current other financial liabilities
included €10.2 million and non-current other financial
liabilities included €318.4 million related to the debt
component of Convertible bonds.
On 15 March 2021, the Group issued Convertible bonds
for net proceeds of €369.1 million, with a fixed coupon
rate of 1.25%. Unless previously converted, redeemed or
repurchased and cancelled, the Convertible bonds will be
redeemed at their principal amount on 15 March 2028.
The bondholders also have the right to convert the
Convertible bonds into new and / or existing (at the
discretion of the Company) no-par value common shares
in dematerialised form of GFG. The bondholders also have
the right to redeem the options early, on 15 March 2026,
for the principal amount plus accrued interest. The Group
has valued the debt and equity components separately.
The liability is measured at amortised cost. The fair value of
the convertible bond as at 31 December 2021 was 78.69%
of the nominal value, approximately €295.1 million (Level
1 as the bonds are traded on Frankfurt Stock Exchange).
The equity component was valued at €48.6 million being
the residual between the net proceeds and value of the
debt component at initial recognition (note 18). Interest
expenses of €11.5 million were recognised during the year
(note 28).
There are several embedded derivatives which would
result in the options being redeemed for a variable
amount of cash or variable number of shares. These
options are accounted for as at fair value with gains / losses
reflected in the income statement. However, the
valuation of these options was nil at date of issue as well
as at 31 December 2021 due to there either being a low
probability of relevant contingent events occurring, or the
options always being ‘out-of-the-money’ for the Group.
The nature of these contingent events includes change
in control and significant rise in share price over a 30-day
period.
170
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
23.
LIABILITIES
In €m 31 Dec 2021 31 Dec 2020
Non-Current
Other non-financial
liabilities 1.8 0.6
Other non-financial
liabilities (non-current) 1.8 0.6
Current
Liabilities from taxes 27.4 15.8
Accruals for personnel
related expenses 21.5 22.9
Liabilities to employees 3.6 2.7
Liabilities from social
security 5.3 3.8
Contract liabilities 38.0 34.9
Other non-financial liabilities
1.7 1.3
Other non-financial
liabilities (current) 97.5 81.4
Income tax liabilities 21.3 31.1
Total non-finanical
liabilities 120.6 113.1
As of 31 December 2021, liabilities from taxes relate
primarily to VAT obligations and amounted to €22.0 million
(2020: €10.8million).
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.
24. R
Revenues for the year are as follows:
In €m
2021 2020
Sale of goods 1,309.2 1,180.9
Marketplace 210.2 153.8
Other 40.1 25.0
Total Revenue 1,559.5 1,359.7
Other revenues include platform services revenue
generated from providing ancillary advertising ,data and
supply chain services and wholesale revenue. Breakdowns
of revenues by each segment and by geographical areas
are disclosed in the tables in note 6.
171
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
2
5. E
EXPENSES
Employee benefit expenses for the year are as follows:
In €m 2021 2020
Wages and salaries
1
241.6 204.5
Social security costs
2
31.5 28.0
Share-based payment
expense 22.1 14.9
Total 295.2 247.4
1
Wages and salaries included in Cost of sales amounts to €0.9m
(2020: €1.5m) and amounts included within Selling and
Distribution expenses and Administrative expenses were €240.7 m
(2020: €203.0m).
2
Social security contributions included in Cost of sales amounts to
€0.1 m (2020: €0.1m) and amounts included within Selling and
D
istribution expenses and Administrative expenses were €31.4 m
(2020: €27.9m).
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 2021 was:
2021 LATAM CIS SEA ANZ
Other
1
Total
Average
number
of em-
ployees 3,281
7,933 1,818
934 161 14,127
1
“Other” includes employees of headquarters and other business
activities.
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
1
“Other” includes employees of headquarters and other business
activities.
2
6. D
AMORTISATION EXPENSES
During the Financial Year, depreciation and amortisation
expenses were categorised in expenses per function, as
follows:
In €m 2021 2020
Included in selling and
distribution expenses
Depreciation of property,
plant & equipment 15.7 14.1
Depreciation of
right-of-use assets 18.5 17.8
Amortisation of
intangible assets 0.8 0.6
Included in general and
administrative expenses
Depreciation of property,
plant & equipment 3.8 5.0
Depreciation of
right-of-use assets 5.0 5.3
Amortisation of
intangible assets 27.0 23.5
Total 70.8 66.3
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Notes to the Consolidated Financial Statements
27.
INCOME AND EXPENSES
Other operating income for the year was
€
2.3million (2020:
€
7.2million), 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 2021 31 Dec 2020
Other operating expenses
Loss from disposal of
intangible assets 0.3 -
Loss from disposal of PPE 0.5 0.9
Write-o of receivables 1.2 1.1
Other taxes 6.7 4.8
Other expenses 6.3 7.6
Total other operating
expenses 15.0 14.4
28. FINANCIAL RESULT
The financial result for the year is as follows:
In €m Note 31 Dec 2021 31 Dec 2020
Financial Result
Interest income 1.6 2.1
Interest expenses (10.3) (5.2)
Interest expense on
lease liabilities 12 (9.4) (8.8)
Interest expense on
convertible bond 22 (11.5) -
Depreciation of
financial assets 0.1 (0.4)
Foreign exchange
(losses) / gains (2.7) (31.9)
Fair value changes to
investment funds (0.6) -
Total financial result
(32.8) (44.2)
2
9. INCOME
Income tax benefit/(expense) is as follows:
In €m 2021 2020
Current tax expense (0.9) (8.0)
Thereof prior period 1.2 (0.8)
Deferred tax 10.4 3.5
Income tax expense
for the year 9.5 (4.5)
Income tax paid in 2021 amounts to €9.2 million (2020:
€2.7million).
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Notes to the Consolidated Financial Statements
Reconciliation between the tax expense and profit
orloss multiplied by applicable tax rate
The tax on the Group’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 2021 2020
Loss before tax (134.3) (107.9)
Weighted average
applicable tax rate (in %) 11.79% 21.61%
Tax calculated at domestic
tax rates applicable to
profits in the respective
countries 15.8 23.3
Tax eect of items which are
not deductible or
assessable for taxation
purposes:
Share-based payment
expenses (0.3) (0.2)
Other permanent
dierences (10.0) (11.1)
Income which is exempt
from taxation 13.6 0.5
Expenses not deductible
for tax purposes (7.9) (9.3)
Utilisation of previous
unrecognised tax losses 11.7 7.4
Unrecognised tax
loss carry forwards
for the year
(17.5) (12.5)
Adjustments in
respect of prior years 3.3 (2.2)
Other 0.8 (0.4)
Income tax expense
for the year 9.5 (4.5)
Deferred tax effects relating to each component
ofother comprehensive income
In 2021 and 2020 the Group did not recognise any
deferred tax (charge) / credit relating to components of
other comprehensive income.
Tax loss carry forwards
The Group has unrecognised potential deferred tax assets
in respect of unused tax loss carry forward of approx.
€2,921.5 million (2020: €2,834.8million). The tax loss carry
forwards expire as follows:
In €m 2021 2020
Tax loss carry forward
expiring by the end of:
Within one year 9.0 8.5
After one year but not
more than five years 57.2 58.1
More than five years 128.1 53.8
Indefinite 2,727.2 2,714.4
Total tax loss
carry forwards 2,921.5 2,834.8
A
substantial proportion of the indefinite tax losses reside
in the Group’s parent company, GFG SA and therefore do
not relate to our operations.
Deferred income tax assets are recognised for tax loss
carryforwards to the extent that the realisation of the
related tax benefit t hrough f uture t axable p rofits is
probable. As of 31 December 2021, the Group recognised
€14.9 million of DTA coming from tax loss carry forward
(2020: nil).
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.
Dierences b etween I FRS a nd s tatutory t axation
regulations give rise to temporary dierences between
the carrying amount of assets and liabilities for financial
reporting purposes and their tax bases.
174
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Notes to the Consolidated Financial Statements
In €m 1 Jan 2021
Exchange
differences
Transferred
to Disposals
Charged /
(credited) to
profit or loss 31 Dec 2021
Tax effect of deductible / (taxable) temporary
differences and tax loss carry forwards
Dierence between tax and
accounting value of:
Trade name (17.2) (0.2) - 1.9 (15.5)
Customer relationship (7.2) (0.3) - 1.0 (6.5)
Technology (1.0) - - (0.1) (1.1)
Tax loss carryforwards 14.3 0.2 - 7.3 21.8
Other 3.6 0.1 - 0.3 4.0
Net deferred tax asset / (liability) (7.5) (0.2) - 10.4 2.7
Recognised deferred tax asset 17.9 0.3 - 7.6 25.8
Recognised deferred tax liability (25.4) (0.5) - 2.8 (23.1)
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)
175
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Notes to the Consolidated Financial Statements
In the context of the Group’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 Group 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 Group had
€214.7 million
(2020:
€
64.4million) of unremitted earnings
of subsidiaries for which no deferred tax liabilities were
recognised.
3
0. CONTINGENCIES AND
COMMITMENTS
Legal proceedings
From time to time and in the normal course of business,
claims against the Group 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 (2020: €7.9million), 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 and as such, the
potential liability has not been included in the consolidated
statement of financial position. 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 20).
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.
176
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Notes to the Consolidated Financial Statements
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.
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 2021, potential tax risks, including
the issues above, estimated by the Group amount to
€126.6 million (2020: €124.8million) including €51.2 million
in relation to income tax and €75.4 million in relation to
indirect tax (2020: €45.2 and €79.7 million), of which
provisions of €43.5 million (2020: €44.2million) including
€19.8million in relation to income tax and €23.7 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 2021, the Group had commitments of
€33.6 million (2020: €22.7million) primarily relating to the
completion of a new fulfilment centre in Russia.
177
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Notes to the Consolidated Financial Statements
31. FIN
MANAGEMENT
In the course of its ordinary business activities, Global
Fashion Group 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, a nalysed a nd e valuated o n
a regular basis. It is the main objective of the Group’s
proactive risk
management to decide on actions to avoid,
co
ntain or limit the defined maximum risk exposure from
such risks. It is the Group’s management responsibility to
ma nage those risks. The management provides written
principles for overall risk management and reviews and
agrees policies for managing each of these risks, of which
the material risks are summarised below.
future cash flows of a fi nancial instrument wi ll 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.
Management has considered that the price risk related to
investment funds is insignificant.
Interest rate risk. The interest rate risk involves the
influence o f p ositive a nd n egative c hanges i n m arket
interest rates on the Group’s financial position and cash
flows. T he G roup d oes n ot h ave f ormal p olicies a nd
procedures in place for management of interest rate
risks as management considers this risk as insignificant
due to the fact that for convertible bonds, which is the
most significant interest expense generating liability, the
interest rate is fixed at 1.25% per annum.
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 2021, 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 €34.0 million (2020:
€25.5 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 2021, there were significant fluctuations in some of
the Group’s key reporting currencies, as follows:
Currency / €
Closing
FX rate
31 Dec 2021
Closing
FX rate
31 Dec 2020 % Variance
RUB 85.3002 91.4671 (6.7)
BRL 6.3103 6.3735 (1.0)
AUD 1.5615 1.5896 (1.8)
178
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
meet its obligations under a financial i nstrument o r
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, other financial assets (which includes
investment funds balance), cash and cash equivalents and
investment funds. In relation to cash and cash equivalents
and investment funds, the Group only deals with highly
rated financial i nstitutions a nd t herefore t he e stimated
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 t he
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 2021, 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 37.8 (0.3)
Logistics companies 4.9 -
Large corporate
clients 7.4 (0.2)
Individual customers 1.4 -
Other 1.3 -
Total 52.8 (0.5)
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)
179
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Notes to the Consolidated Financial Statements
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 following table provides information about the
exposure to credit risk and ECLs for trade receivables as at
31 December 2021:
In €m
Gross
Carrying
Amount
Loss
allow-
ance
Loss
rate
Current (not past due) 50.1 (0.3) (0.6%)
1 − 30 days past due 1.4 - -
31 − 60 days past due 1.0 - (4.6%)
61 − 90 days past due - - -
More than 90 days
past due 0.3 (0.2) (63.9%)
Total 52.8 (0.5) (0.9%)
The carrying amounts best represent the maximum
exposure to credit risk.
The movement in the allowance for impairment in respect
of trade receivables during the year was as follows:
In €m 2021
Balance as at 1 January 2021 0.3
Net remeasurement of loss allowance
(as per income statement) (0.2)
Balance as at 31 December 2021 (0.5)
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 18, banking facilities and reserve
borrowing facilities (see further detail in note
20), and the
issuance of Convertible bonds, 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 2021
and 2020 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.
The liquidity risk for the Convertible bonds is limited due
to the fixed coupon rate of 1.25%.
180
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
The maturity analysis of financial liabilities at
31 December 2021 is as follows:
In €m
Demand and
less than 1 year From 1 to 5 years Over 5 years Total
Liabilities
Undiscounted Borrowings 66.2 13.4 - 79.7
Trade payables and other financial liabilities 316.1 1.0 - 317.1
Other financial liabilities - convertible bond 4.7 393.8 - 398.5
Undiscounted Lease liabilities 31.9 98.6 38.5 168.9
Total future payments, including future
principal and interest payments 418.9 506.8 38.5 964.3
As at 31 December 2021, the carrying value of borrowings,
trade payables and other financial liabilities and lease
liabilities, were €35.4 million, €652.2 million and
€133.2 million respectively.
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
Undiscounted Borrowings 10.6 - - 10.6
Trade payables and other financial liabilities 283.8 - - 283.8
Undiscounted 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
€113.7million respectively.
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Notes to the Consolidated Financial Statements
32. 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
co
ncern 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 2021 31 Dec 2020
Equity attributable
to equity holders of
the parent 569.7 615.2
Total Assets 1,544.7 1,173.1
Equity Ratio 36.9% 52.4%
There were no changes made to the objectives, policies
or processes during the period from incorporation up to
31 December 2021.
3
3. 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 on the net monetary position
due to Hyperinflation for the year ended 31 December 2021
was €3.2 million (2020: €1.2million), recognised within
financial result.
34. E
REPORTING PERIOD
GFG’s Operations in CIS
In February 2022, certain countries announced new
packages of sanctions against the public debt of the
Russian Federation and a number of Russian banks, as
well as personal sanctions against a number of individuals.
Due to the growing geopolitical tensions, since
February 2022, there has been a significant increase in
volatility on the securities and currency markets, as well
as a significant depreciation of the Ruble against the US
Dollar and the Euro. From 1 January 2022 to 7 March 2022,
the Ruble devalued by 36%.
It is expected that these events may aect the activities of
our Russian business which represents 34% of our Group
revenues.
The Group regards these events as non-adjusting events
after the reporting period, the quantitative eect of which
cannot be estimated at the moment with a sucient
degree of confidence.
Currently, the Group’s management is analysing the
possible impact of changing micro- and macroeconomic
conditions on the Group’s financial position and results
of operations.
Additional lease commitment
Subsequent to 31 December 2021, the Group entered
into a lease agreement for use of an extended area in
the new Moscow fulfilment centre. This will result in the
recognition of an IFRS 16 Right-of-use asset and lease
liability of approximately €32.9 million on the consolidated
statement of financial position, with subsequent interest
and depreciation charges to the consolidated statement
of profit or loss.
There are no other events subsequent to the period
end that would require a disclosure in the consolidated
financial statements.
182
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Notes to the Consolidated Financial Statements
183
ANNUAL REPORT 2021 | GFG
Notes to the Consolidated Financial Statements
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of
Global Fashion Group S.A.
5, Heienhaff
L-1736 Senningerberg
Report on the audit of
the financial statements
Opinion
We have audited the financial statements of Global
Fashion Group S.A. (“the Company” or “GFG”), which
comprise the balance sheet as at 31 December 2021, and
the profit and loss account for the year then ended, and
the notes to the financial statements, including a summary
of significant accounting policies.
In our opinion, the accompanying financial statements
give a true and fair view of the financial position of the
Company as at 31 December 2021, and of the results of its
operations for the year then ended in accordance with
Luxembourg legal and regulatory requirements relating
to the preparation and presentation of the financial
statements.
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 Nº
537/2014, 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 financial
statements” section of our report. We are also independent
of the Company in accordance with the International
Ethics Standards Board for Accountants’ Code of Ethics
for Professional Accountants (“IESBA Code”) as adopted
for Luxembourg by the CSSF together with the ethical
requirements that are relevant to our audit of the 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
financial statements of the current period. These matters
were addressed in the context of the audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these
matters.
1. Impairment of Shares in affiliated
undertakings
Risk identified
Global Fashion Group S.A. (“GFG”), as ultimate holding of a
Group holding several aliated entities holds a number of
shares in aliated undertakings, which are operating mainly
in emerging markets in the fashion industry. As described
in Note 2 to the financial statements, the shares in aliated
undertakings are valued at cost less any durable impairment
in value. At least annually, the Company evaluates the
carrying value of the investments. Impairment losses are
measured and recorded based on the dierence between
the estimated recoverable amount and the carrying amount
of the asset. Impairment of shares in aliated undertakings
is considered a key audit matter due to historical impairment,
business industry and locations of these investments.
Impairment is reversed when the existing reasons for which
the value adjustments were made have ceased to apply.
INDEPENDENT AUDITOR’S REPORT
To the Shareholders of
Global Fashion Group S.A.
5, Heienhaff
L-1736 Senningerberg
Report on the audit of
the financial statements
Opinion
We have audited the financial statements of Global
Fashion Group S.A. (“the Company” or “GFG”), which
comprise the balance sheet as at 31 December 2021, and
the profit and loss account for the year then ended, and
the notes to the financial statements, including a summary
of significant accounting policies.
In our opinion, the accompanying financial statements
give a true and fair view of the financial position of the
Company as at 31 December 2021, and of the results of its
operations for the year then ended in accordance with
Luxembourg legal and regulatory requirements relating
to the preparation and presentation of the financial
statements.
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 Nº
537/2014, 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 financial
statements” section of our report. We are also independent
of the Company in accordance with the International
Ethics Standards Board for Accountants’ Code of Ethics
for Professional Accountants (“IESBA Code”) as adopted
for Luxembourg by the CSSF together with the ethical
requirements that are relevant to our audit of the 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
financial statements of the current period. These matters
were addressed in the context of the audit of the financial
statements as a whole, and in forming our opinion thereon,
and we do not provide a separate opinion on these
matters.
1. Impairment of Shares in affiliated
undertakings
Risk identified
Global Fashion Group S.A. (“GFG”), as ultimate holding of a
Group holding several aliated entities holds a number of
shares in aliated undertakings, which are operating mainly
in emerging markets in the fashion industry. As described
in Note 2 to the financial statements, the shares in aliated
undertakings are valued at cost less any durable impairment
in value. At least annually, the Company evaluates the
carrying value of the investments. Impairment losses are
measured and recorded based on the dierence between
the estimated recoverable amount and the carrying amount
of the asset. Impairment of shares in aliated undertakings
is considered a key audit matter due to historical impairment,
business industry and locations of these investments.
Impairment is reversed when the existing reasons for which
the value adjustments were made have ceased to apply.
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Notes to the Consolidated Financial Statements
Our answer
Our audit procedures over the impairment of the shares in
aliated undertakings included, among others:
• Obtaining and reading the latest capital call to which
GFG subscribed or the shareholders’ agreements to
confirm the acquisition cost of each investment and the
movement during the year.
• Obtaining and reading the latest financial statements of
each investment in order to identify whether any going
concern issue or liquidity issue exists at the investment
level and ultimately if the investment is recoverable.
• Assessing the valuation model prepared by
Management and its impairment test for the
determination of the recoverable amount of the
investments.
• Recomputing the fair value of equity interests of the
investments prepared by Management and comparing
the carrying value of the investments to the fair market
value of equity interests in order to determine whether
an impairment or a reversal of impairment exists.
• Assessing the valuation of guarantees provided by the
Company to direct or indirect aliated companies.
We also assessed the adequacy of the Company’s
disclosures in respect of the accounting policies on
impairment as disclosed in Note 2 of the financial statements.
Other information
The Supervisory Board is responsible for the other
information. The other information comprises the
information included in the management report and the
corporate governance statement in section 1.3 to section
1.8 in the annual report but does not include the financial
statements and our report of “réviseur d’entreprises agréé”
thereon.
Our opinion on the 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 financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the 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 of those charged with governance for the
financial statements
The Supervisory Board is responsible for the preparation
and fair presentation of the financial statements in
accordance with Luxembourg legal and regulatory
requirements relating to the preparation and presentation
of the financial statements, and for such internal control as
the Supervisory Board determines is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
The Supervisory Board is also responsible for presenting the
financial statements in compliance with the requirements
set out in the Delegated Regulation 2019/815 on European
Single Electronic Format, as amended (“ESEF Regulation”).
Our answer
Our audit procedures over the impairment of the shares in
aliated undertakings included, among others:
• Obtaining and reading the latest capital call to which
GFG subscribed or the shareholders’ agreements to
confirm the acquisition cost of each investment and the
movement during the year.
• Obtaining and reading the latest financial statements of
each investment in order to identify whether any going
concern issue or liquidity issue exists at the investment
level and ultimately if the investment is recoverable.
• Assessing the valuation model prepared by
Management and its impairment test for the
determination of the recoverable amount of the
investments.
• Recomputing the fair value of equity interests of the
investments prepared by Management and comparing
the carrying value of the investments to the fair market
value of equity interests in order to determine whether
an impairment or a reversal of impairment exists.
• Assessing the valuation of guarantees provided by the
Company to direct or indirect aliated companies.
We also assessed the adequacy of the Company’s
disclosures in respect of the accounting policies on
impairment as disclosed in Note 2 of the financial statements.
Other information
The Supervisory Board is responsible for the other
information. The other information comprises the
information included in the management report and the
corporate governance statement in section 1.3 to section
1.8 in the annual report but does not include the financial
statements and our report of “réviseur d’entreprises agréé”
thereon.
Our opinion on the 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 financial statements, our
responsibility is to read the other information and, in doing
so, consider whether the other information is materially
inconsistent with the 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 of those charged with governance for the
financial statements
The Supervisory Board is responsible for the preparation
and fair presentation of the financial statements in
accordance with Luxembourg legal and regulatory
requirements relating to the preparation and presentation
of the financial statements, and for such internal control as
the Supervisory Board determines is necessary to enable
the preparation of financial statements that are free from
material misstatement, whether due to fraud or error.
The Supervisory Board is also responsible for presenting the
financial statements in compliance with the requirements
set out in the Delegated Regulation 2019/815 on European
Single Electronic Format, as amended (“ESEF Regulation”).
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Notes to the Consolidated Financial Statements
In preparing the financial statements, the Supervisory Board
is responsible for assessing the Company’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 Company or to cease
operations, or has no realistic alternative but to do so.
Those charged with governance are responsible for
overseeing the Company’s financial reporting process.
Responsibilities of the “réviseur d’entreprises
agréé” for the audit of the financial statements
The objectives of our audit are to obtain reasonable
assurance about whether the 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
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 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
re
sulting 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 Company’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
Company’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
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
Company to cease to continue as a going concern.
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Notes to the Consolidated Financial Statements
• Evaluate the overall presentation, structure and content
of the financial statements, including the disclosures,
and whether the financial statements represent the
underlying transactions and events in a manner that
achieves fair presentation.
• Assess whether the financial statements have been
prepared, in all material respects, in compliance with
the requirements laid down in the ESEF Regulation.
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
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 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.
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 May 2021
and the duration of our uninterrupted engagement,
including previous renewals and reappointments, is 8 years.
The management report is consistent with the 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 of the annual report 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 financial statements and has been prepared in
accordance with applicable legal requirements.
We have checked the compliance of the financial statements
of the Company as at 31 December 2021 with relevant
statutory requirements set out in the ESEF Regulation that
are applicable to the financial statements. For the Company,
it relates to:
• Financial statements prepared in a valid xHTML format.
In our opinion, the financial statements of the Company as
at 31 December 2021, identified as
“5493001035L29EQRO222-2021-12-31-en”, have been prepared,
in all material
respects, in compliance with the
requirements laid down in the ESEF Regulation.
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 Company in conducting
the audit.
Ernst & Young
S
ociété anonyme
Cabinet de révision agréé
Olivier Lemaire
Luxembourg, 7 March 2022
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Notes to the Consolidated Financial Statements
PARENT
FINANCIAL
STATEMENTS
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Parent financial statements
ASSETS
In € Note 31 Dec 2021 31 Dec 2020
B. Formation Expenses 3 6,791,691.16 2,942,738.40
C. Fixed Assets
I. Intangible assets 4 15,702.20 32,754.36
2. Concessions, patents, licences, trademarks
and similar rights and assets, if they were 15,702.20 32,754.36
a) acquired for valuable consideration and
need not be shown under C.I.3 15,702.20 32,754.36
b) created by the undertaking itself
III. Financial assets 5 1,544,029,644.78 1,255,608,356.90
1. Shares in aliated undertakings 1,544,029,644.78 1,255,608,356.90
D. Current Assets
II. Debtors 6 22,680,438.85 4,660,476.40
1. Trade debtors 42,538.02 42,538.02
a) becoming due and payable within one year 42,538.02 42,538.02
2. Amounts owed by aliated undertakings 21,759,343.82 3,846,279.92
a) becoming due and payable within one year 21,759,343.82 3,846,279.92
4. Other debtors 878,557.01 771,658.46
a) becoming due and payable within one year 878,557.01 771,658.46
III. Investment
1. Own shares 8 222,571.35 222,571.35
IV. Cash at bank and in hand 7 2,328,947.58 1,242,588.88
25,231,957.78 6,125,636.63
E. Prepayments - 719,867.82
Total Assets
1,576,068,995.92
1,265,429,354.11
BALANCE SHEET
as at 31 December 2021 (continued)
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Balance Sheet
CAPITAL, RESERVES AND LIABILITIES
In € Note 31 Dec 2021 31 Dec 2020
A. Capital and Reserves 8
I. Subscribed capital 2,172,929.14 2,138,367.16
II. Share premium account 3,568,719,053.56 3,568,743,336.57
IV. Reserves 222,571.35 222,571.35
1. Reserve for own shares 222,571.35 222,571.35
V. Profit or loss brought forward (2,316,872,924.18) (2,273,201,248.18)
VI. Profit or loss for the Financial Year (63,464,108.18) (43,671,676.00)
1,190,777,521.69 1,254,231,350.90
C. Creditors 9
1. Debenture loan 375,000,000.00 -
a) Convertible loans 375,000,000.00 -
i) becoming due and payable within one year
ii) becoming due and payable after
more than one year 375,000,000.00 -
b) Non-convertible loans
i) becoming due and payable within one year
ii) becoming due and payable after
more than one year
4. Trade creditors 9 2,676,837.86 1,320,788.91
a) becoming due and payable within one year 2,676,837.86 1,320,788.91
6. Amounts owed to aliated undertakings 9 6,624,202.21 9,850,380.38
a) becoming due and payable within one year 2,000,000.00 1,091,933.86
b) becoming due and payable after more than one year 4,624,202.21 8,758,446.52
8. Other creditors 9 990,434.16 26,833.92
a) Tax authorities
13,153.69 7,694.59
b) Social security authorities
178,924.50 8,405.00
c) Other creditors
798,355.97 10,734.33
i) becoming due and payable within one year
798,355.97 10,734.33
385,291,474.23 11,198,003.21
Total Capital, Reserves and Liabilities
1,576,068,995.92
1,265,429,354.11
BALANCE SHEET
as at 31 December 2021 (continued)
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Balance Sheet
PROFIT AND LOSS ACCOUNT
For the year ended 31 December 2021
In € Note 31 Dec 2021 31 Dec 2020
4. Other operating income 10 4,512,100.83 2,551,485.00
5. Raw materials and consumables and other
external expenses 11 (11,594,276.31) (8,201,455.03)
a) Raw materials and consumables (1,389.34) (1,198.57)
b) Other external expenses (11,592,886.97) (8,200,256.46)
6. Staff costs 12 (842,851.77) (110,294.73)
a) Wages and salaries (829,201.83) (97,400.05)
b) Social security costs (13,649.94) (12,894.68)
ii) other social security costs (13,649.94) (12,894.68)
7. Value adjustments (52,450,584.35) (6,852,364.32)
a) in respect of formation expenses and of
tangible and intangible fixed assets 3, 5 (50,238,726.42) (6,852,364.32)
b) in respect of current assets (2,211,857.93) -
8. Other operating expenses 13 (356,548.50) (292,838.21)
9. Income from participating interests 15 - 146,863,692.73
a) derived from aliated undertakings - 146,863,692.73
11. Other interest receivable and similar income 14 1,414,716.11 725,326.72
a) derived from aliated undertakings 1,413,546.64 672,968.88
b) other interest and similar income 1,169.47 52,357.84
14. Interest payable and similar expenses 16 (4,130,719.99) (178,351,616.91)
a) concerning aliated undertakings (20,715.28) (175,945,809.67)
b) other interest and similar expenses (4,110,004.71) (2,405,807.24)
15. Tax on profit or loss (13,536.70) -
16. Profit or loss after taxation (62,461,700.68) (43,668,064.75)
17. Other taxes not shown under items 1. to 17. 17 (2,407.50) (3,611.25)
18. Profit or loss for the financial Year (63,464,108.18) (43,671,676.00)
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Profit and Loss Account
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Profit and Loss Account
NOTES TO THE
FINANCIAL STATEMENTS
AS AT 31 DECEMBER 2021
1. GENERAL INFORMATION
Global Fashion Group S.A. (hereafter the “Company”
or “GFG” SA) was incorporated on 1 October 2014 and
organised under the laws of Luxembourg as Société
Anonyme for an unlimited period of time.
The registered oce of the Company is established at
5, Heienha, L-1736 Senningerberg, Grand-Duchy of
Luxembourg and the Company is registered with the
Register of Commerce of Luxembourg under B 190907.
The Company is the parent of Group companies (together
the “Group”) which operate in the online fashion business
across four regions being Latin America (LATAM), South
East Asia (SEA), Australia and New Zealand (ANZ) and
Commonwealth of Independent States (CIS) under the
following brand names:
• Dafiti – LATAM
• Lamoda – CIS
• Zalora – SEA
• THE ICONIC – ANZ
The accounting year of the Company begins on 1 January
and terminates on 31 December of each year.
The purpose of the Company is the holding of
participations in any form whatsoever in Luxembourg and
foreign companies and in any other form of investment,
the acquisition by purchase, subscription or in any other
manner as well as the transfer by sale, exchange or
otherwise of securities of any kind and the administration,
management, control, and development of its portfolio.
The Company may further grant any form of security for
the performance of any obligations of the Company or of
any entity in which it holds a direct or indirect participation
or right of any kind or which forms part of the same group
of entities as the Company and lend funds, render services
or otherwise assist any such entity in any other manner.
The Company may further provide all financial management
services, including, but not limited to, treasury management
services, currencies management services, interest rate and
foreign exchange risk management to any entity in which it
holds a direct or indirect controlling interest.
The Company may raise funds, especially through
borrowing in any form, and may issue any kind of notes,
securities or debt instruments, bonds and debentures
and generally issue any securities options to subscribe for
securities of any type.
A further purpose of the Company is the (i) acquisition by
purchase, registration or in any other manner as well as
the transfer by sale, exchange or otherwise of intellectual
and industrial property rights, (ii) the granting of license on
such intellectual and industrial property rights, and (iii) the
holding and the management of intellectual and industrial
property rights.
The Company shall not, and shall not be permitted
to, engage in activities which require any license,
authorisation, or registration under the law of 12 July 2013
on alternative investment fund managers, as amended.
The Company may carry out any commercial, industrial,
financial, real estate, technical, intellectual property,
or other activities which it may deem useful in
accomplishment of these purposes.
The Company has a branch in Denmark whose accounts
are included in this Financial Statements with the exception
of the year ending 31 December 2020 as no movements
have incurred at the branch level.
Since 2 July 2019, the shares of the Company are traded
on the regulated market of the Frankfurt Stock Exchange
(the “Listing”).
The Company also prepares consolidated Financial
statements, which are published according to the
provisions of the Luxembourg law. The consolidated
accounts are available at the registered oce of the
Company.
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Notes to the Financial Statements
The Financial statements were approved and authorised
for issue by the Supervisory Board on 7 March 2022.
The shareholders will ratify the approval of the Financial
statements at the annual general meeting.
2. SUMMARY OF SIGNIFICANT
ACCOUNTING POLICIES
2.1 Basis of preparation
The Financial statements have been prepared in
accordance with the Luxembourg legal and regulatory
requirements and according to generally accepted
accounting principles applicable in Luxembourg.
The accounting policies and valuation principles are,
apart from those enforced by the law, determined and
implemented by the Supervisory Board.
Accounting policies and valuation rules are, besides the
ones laid down by the Law of 19 December 2002 on the
accounting and Financial statements of undertakings
as subsequently amended (“the Law”), determined and
applied by the Supervisory Board.
The Financial statements of the Company are prepared
under the historical cost convention.
The preparation of Financial statements requires the use
of certain accounting estimates. It also requires the
Supervisory Board to exercise their judgment in the
process of applying the accounting policies. Changes in
assumptions may have a significant impact on the Financial
statements in the period in which the assumptions
changed. Management believes that the underlying
assumptions are appropriate and that the Financial
statements therefore present the financial positions and
results fairly.
The Company makes estimates and assumptions that aect
the reported amounts of assets and liabilities in the next
Financial Year. Estimates and judgments are continually
evaluated and are based on historical experience and
other factors, including expectations of future events that
are believed to be reasonable under the circumstances.
2.2 Significant accounting policies
The main valuation rules applied by the Company are the
following:
Formation expenses
Formation expenses, including costs relating to equity
raising are written o on a straight-line basis over a period
of 5 years. The formation expenses relating to issuance
of convertible bonds are amortised during the period
started with the issuance of convertible bonds and ending
on the put option date (note 3).
Intangible assets
Intangible assets are valued at purchase price including
the expenses incidental thereto or at production cost,
less cumulated depreciation, less amounts written o and
after value adjustments. These value adjustments are not
continued if the reasons for which the value adjustments
were made have ceased to apply.
The depreciation rates and methods applied are as
follows:
Category
Depreciation
rate
Depreciation
method
Concessions, patents,
licenses, trademarks
and similar rights and
assets 33.33% Linear
Software 20% Linear
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Notes to the Financial Statements
Financial assets
Shares in aliated undertakings, loans to these
undertakings and securities or other financial instruments
held as fixed assets are valued at acquisition cost nominal
value (loans) including the expenses incidental thereto.
In the case of durable depreciation in value according to
the opinion of the Supervisory Board, value adjustments
are made in respect of financial assets, so that they are
valued at the lower figure to be attributed to them at the
balance sheet date. These value adjustments are not
continued if the reasons for which the value adjustments
were made have ceased to apply.
Own shares
Own shares are initially measured at acquisition cost
and recognised as an asset with a corresponding non-
distributable reserve created from share premium
and retained earnings. Own shares are subsequently
re-measured at the lower of cost or market value using
the average cost. Transferred or cancelled shares are
valued using the average cost method. They are subject to
value adjustments where their recovery is compromised.
These value adjustments are reversed when the reasons
for which the value adjustments were made have ceased
to apply.
Debtors
Debtors are valued at their nominal value. They are subject
to value adjustments where their recovery is compromised.
These value adjustments are not continued if the reasons
for which the value adjustments were made have ceased
to apply.
Foreign currency translation
These Financial statements are expressed in Euro (€).
The transactions expressed in a currency other than € are
translated into € at the exchange rate eective at the time
of the transaction.
The translation at the balance sheet date is made according
to the following principles:
– Cash at bank is translated at the exchange rate
eective at the balance sheet date. Exchange
losses and gains are recorded in the profit and loss
account of the period;
– Other assets and liabilities are translated
separately respectively at the lower or at the higher
of the value converted at the historical exchange
rate or the value determined on the basis of the
exchange rates eective at the balance sheet date.
The unrealised exchange losses are recorded in
the profit and loss account. Solely the exchange
gains are recorded in the profit and loss account at
the moment of their realisation;
– Income and charges expressed in a currency other
than € are translated into € at the exchange rate
prevailing at the transaction date;
– Where there is an economic link between an asset
and a liability, these are valued in total according
to the method described above and the net
unrealised losses are recorded in the profit and
loss account and the net unrealised exchange
gains are not recognised.
Consequently, only realised foreign exchange gains and
losses and unrealised foreign exchange losses are taken
into account in the profit and loss account.
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Notes to the Financial Statements
Prepayments
This asset item includes expenditures incurred during the
Financial Year but relating to a subsequent Financial Year.
Cash at bank and in hand
Highly liquid investments with an original maturity of three
months or less are considered to be cash at bank and in
hand.
Provisions
Provisions are intended to cover losses or debts, the nature
of which is clearly defined and which, at the date of the
balance sheet, are either likely to be incurred or certain to
be incurred but uncertain as to their amount or to the date
on which they will arise.
At the close of business, each year, the Supervisory
Board determines whether provisions should be set up to
cover foreseeable liabilities and charges. Previous year's
provisions are reassessed every year.
Provision for taxation corresponding to the dierence
between the tax liability estimated by the company and
the advance payments for the Financial Years for which
the tax return has not been filed are recorded under “tax
debts”.
Provisions may also be created to cover charges which
originates in the Financial Year under review or in previous
Financial Year.
Debts
Debts are recorded at their reimbursement value. The debt
origination and further amendments costs are included in
formation expenses.
Expense recognition
Expenses are charged in the year they are incurred and they
are stated on an accrual basis.
Other operating income
The Company’s income principally comprises of
consultancy and technical fees charged to aliated
companies. Income is recognised as earned.
Convertible bonds
Convertibles bonds are recorded at their book value and
the relevant portion of issuance costs are recorded under
formation expenses.
197
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
3. FORMATION EXPENSES
The movements for the year were as follows:
In €
Total as at
31 Dec 2021
Total as at
31 Dec 2020
Gross book value –
opening balance 4,203,912.00 -
Additions
for the year 5,569,627.02 4,203,912.00
Gross book value –
closing balance 9,773,539.02 4,203,912.00
Accumulated value
adjustment –
opening balance (1,261,173.60) (420,391.20)
Allocations
for the year (1,720,674.26) (840,782.40)
Accumulated value
adjustment –
closing balance (2,981,847.86) (1,261,173.60)
Net book value –
closing balance 6,791,691.16 2,942,738.40
This item relates to the transaction costs qualifying as IPO
(occurred in July 2019) related costs for a consideration
of €4,203,912.00, and the convertible bonds issuances
expenses (occurred in March 2021) for a consideration
of €5,569,627.02 which have been capitalised under the
caption “Formation expenses” and are amortised over the
period ending 15 March 2026, which is the put option date
of the convertible bonds.
198
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
4. INTANGIBLE ASSETS
The movements for the year are as follows:
In € Software Licenses
Total as at
31 Dec 2021
Gross book value – opening balance 55,419.53 44,827.00 100,246.53
Additions for the year - - -
Gross book value – closing balance 55,419.53 44,827.00 100,246.53
Accumulated value adjustment – opening balance (22,665.17) (44,827.00) (67,492.17)
Allocations for the year (17,052.16) - (17,052.16)
Accumulated value adjustment – closing balance (39,717.33) (44,827.00) (84,544.33)
Net book value – closing balance 15,702.20 - 15,702.20
In € Software Licenses
Total as at
31 Dec 2020
Gross book value – opening balance 55,419.53 39,360.00 94,779.53
Additions for the year
- 5,467.00 5,467.00
Gross book value – closing balance 55,419.53 44,827.00 100,246.53
Accumulated value adjustment – opening balance (11,083.91) (39,360.00) (50,443.91)
Allocations for the year (11,581.26) (5,467.00) (17,048.26)
Accumulated value adjustment – closing balance (22,665.17) (44,827.00) (67,492.17)
Net book value – closing balance 32,754.36 - 32,754.36
199
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
5. SHARES IN AFFILIATED
UNDERTAKINGS
The movements for the year are as follows:
In €
Total as at
31 Dec 2021
Total as at
31 Dec 2020
Gross book value – opening balance
2,611,772,456.25 2,624,018,859.30
Additions for the year
337,032,387.88 217,183,996.41
Disposals for the year
(110,100.23) (229,430,399.46)
Gross book value – closing balance
2,948,694,743.90 2,611,772,456.25
Accumulated value adjustment – opening balance
(1,356,164,099.35) (1,350,164,099.35)
Allocation for the year
(48,501,000.00) (6,000,000.00)
Accumulated value adjustment – closing balance
(1,404,665,099.35) (1,356,164,099.35)
Net book value – closing balance
1,544,029,644.78 1,255,608,356.90
As at 31 December 2021, the investment in Global Fashion
Group SGP Services Pte. Ltd presents an impairment of
€
48,501,000.00.
The additions of the year (
€
337,032,387.88) relate to the
investments in Global Fashion Group UK Finance Limited
(addition of
€
40,831,387.88), Global Fashion Group SGP
Services Pte. Ltd (addition of
€
48,501,000.00), and Bigfoot
GmbH (addition of
€
247,700,000.00).
The disposals of the year (€110,100.23) relate to the sale of
Global Fashion Group Ireland Finance Designated Activity
Company.
200
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
Name Country
Own-
ship
%
Last
balance
sheet
date
Net equity
at the last
balance
sheet date
€
Result for
the last
financial
year
€
Carrying
value as
at 31 Dec
2021
€
Carrying
value as
at 31 Dec
2020
€
Bigfoot
GmbH
Germany 100 31.12.2021
1,646,423,899.73 (810,136.61) 805,840,740.67 558,140,740.67
Jade 1159.
GmbH
Germany 100 31.12.2021
24,048,209.13 16,885.88 16,705,275.74 16,705,275.74
Jade 1218.
GmbH
Germany 100 31.12.2021
20,606,081.19 (56,048.65) 19,724,719.02 19,724,719.02
GFG Ireland
Finance
Designated
Activity
Company
Ireland 0.00 31.12.2021
(5.00) 66,015.11 - 110,100.23
GFG UK
Finance
Limited
United
Kingdom 100 31.12.2021
860,359,675.52 195,947,373.72 697,814,964.69 656,983,576.81
GFG SGP
Services Pte.
Ltd
Singapore 100 31.12.2021
(42,723,629.00) (14,574,880.43) - 0.66
GFG
Luxembourg
One S.A.r.l.
Luxem-
bourg
100 31.12.2021
4,720,706.37 4,354.55 2,000,000.00 2,000,000.00
GFG
eCommerce
Technologies
GmbH
Germany 100 31.12.2021
5,631,225.00 1,062,263.99 1,943,944.43 1,943,944.43
201
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
Name Country Ownership %
Gross
book value
31 Dec 2021
€
Accumulated Value
Adjustments
31 Dec 2021
€
Net
book value
31 Dec 2021
€
Bigfoot GmbH
Germany 100.00
2,087,175,277.38 (1,281,334,536.71) 805,840,740.67
Jade 1159. GmbH
Germany 100.00
53,620,623.60 (36,915,347.86) 16,705,275.74
Jade 1218. GmbH
Germany 100.00
51,638,933.80 (31,914,214.78) 19,724,719.02
Global Fashion
Group UK
Finance Limited United Kingdom 100.00
697,814,964.69 - 697,814,964.69
Global Fashion
Group Ireland
Finance
Designated
Activity Company Ireland 0.00
- - -
Global Fashion
Group SGP
Services Pte. Ltd. Singapore 100.00
54,501,000.00 (54,501,000.00) -
GFG Luxembourg
One S.à r.l. Luxembourg 100.00
2,000,000.00 - 2,000,000.00
GFG eCommerce
Technologies
GmbH Germany 100.00
1,943,944.43 - 1,943,944.43
2,948,694,743.90 (1,404,665,099.35) 1,544,029,644.78
In the opinion of the Supervisory Board, the investments
in the above companies do not present further permanent
impairment as of 31 December 2021.
On 9 June 2021, the Company issued new shares in Bigfoot
GmbH’s capital for a total amount of €247,700,000.00.
On 8 July 2021, the Company allotted and issued new
ordinary shares in Global Fashion Group SGP Services Pte.
Ltd’s capital for a total amount of €48,501,000.00.
On 30 November 2021, the loan of €40,831,387.88
(including accrued interests) granted to Global Fashion
Group UK Finance Limited was converted into equity of
this company.
202
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
Name Country Ownership %
Gross
book value
31 Dec 2020
€
Accumulated Value
Adjustments
31 Dec 2020
€
Net
book value
31 Dec 2020
€
Bigfoot GmbH Germany 100.00
1,839,475,277.38 (1,281,334,536.71) 558,140,740.67
Jade 1159. GmbH Germany 100.00
53,620,623.60 (36,915,347.86) 16,705,275.74
Jade 1218. GmbH Germany 100.00
51,638,933.80 (31,914,214.78) 19,724,719.02
Global Fashion
Group Ireland
Finance
Designated
Activity
Company Ireland 100.00
110,100.23 - 110,100.23
Global Fashion
Group UK Finance
Limited
United
Kingdom 100.00
656,983,576.81 - 656,983,576.81
Global Fashion
Group SGP
Services Pte. Ltd. Singapore 100.00
6,000,000.00 (6,000,000.00) -
GFG Luxembourg
One S.à r.l. Luxembourg 100.00
2,000,000.00 - 2,000,000.00
GFG eCommerce
Technologies
GmbH Germany 100.00
1,943,944.43 - 1,943,944.43
2,611,772,456.25
(1,356,164,099.35)
1,255,608,356.90
203
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
6. DEBTORS
As at 31 December 2021 and 2020, the debtors' balance
were the following:
In €
Within
one year
After
more than
one year
Total
31 Dec 2021
Trade
debtors 42,538.02 - 42,538.02
Amounts
owed by
aliated
under-
takings
1
21,759,343.82 - 21,759,343.82
Other
debtors
2
878,557.01 - 878,557.01
Total
debtors
22,680,438.85
-
22,680,438.85
In €
Within
one year
After
more than
one year
Total
31 Dec 2020
Trade
debtors 42,538.02 - 42,538.02
Amounts
owed by
aliated
under-
takings
1
3,846,279.92 - 3,846,279.92
Other
debtors
2
771,658.46 - 771,658.46
Total
debtors 4,660,476.40 - 4,660,476.40
1
As at 31 December 2021, amounts owed by aliated
undertakings are mainly composed of: Intercompany loan due
within one year granted to Global Fashion Group TRM Limited
and bearing a fixed interest rate of 3.833%, for a total amount of
€16,762,535.63 (2020: nil), and of intercompany receivables for
an amount of €2,230,940.33 (2020: €1,035,128.36).
2
As at 31 December 2021, other debtors are composed of (i) VAT
receivables for an amount of € 4,472,633.72, oset with VAT
payables of €3,328,244.16, and TVA of prior years of €271,852.30
(2020: net receivable of €762,314.75) (ii ) and the advance of the
net worth tax 2021 paid for an amount of €6,018.75 (2020:
€4,815.00).
7. CASH AT BANK
AND IN HAND
As at 31 December 2021, cash at bank and in hand includes
current account balances amounting to €2,328,947.58
(2020: €1,242,588.88).
204
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
8. CAPITAL AND
RESERVES
The movements on the capital and reserves items during
the year were as follows:
In €
Subscribed
capital
Share premium
account
Reserves for
own shares
Profit or loss
brought forward
Profit or loss
for the
Financial Year Total
As at 31
Dec 2020
2,138,367.16 3,568,743,336.57 222,571.35 (2,273,201,248.18) (43,671,676.00) 1,254,231,350.90
Prior
year’s
result
allocation (43,671,676.00) 43,671,676.00 -
Capital
increase
34,561.98 34,561.98
Proceeds
from
issued
share
capital (24,283.01) (24,283.01)
Net profit/
(loss) for
the year (63,464,108.08) (63,464,108.08)
As at 31
Dec 2021
2,172,929.14
3,568,719,053.56
222,571.35
(2,316,872,924.18)
(63,464,108.08)
1,190,777,521.69
205
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
Subscribed capital
As of 31 December 2020, the subscribed capital was
composed of 2,138,367.16 common shares with a par value
of € 0.01 per share.
The following operations have taken place during the year:
On 23 March 2021, the Management Board further
resolved to increase, conditional to the receipt of the
subscription price and the subscription certificates by
the Company, the Company’s share capital by an amount
of twelve thousand six hundred twenty-five Euro and
ninety-three cents (
€
12,625.93) so as to raise it from two
million one hundred thirty eight thousand three hundred
sixty-seven Euro and sixteen cents (
€
2,138,367.16) up to
two million one hundred fifty thousand nine hundred
ninety-three Euro and nine cents (
€
2,150,993.09) through
the issue of one million two hundred sixty-two thousand
five hundred ninety-three (1,262,593) common shares
in dematerialised form with a nominal value of one cent
(
€
0.01) each.
On 30 April 2021, the Management Board further resolved
to increase, conditional to the receipt of the subscription
price and the subscription certificates by the Company,
the Company’s share capital by an amount of thirteen
thousand three hundred fifty-nine Euro and forty two
cents (
€
13,359.42) so as to raise it from its current amount
of two million one hundred fifty thousand nine hundred
ninety-three Euro and nine cents (
€
2,150,993.09) up to two
million one hundred sixty-four thousand three hundred
fifty-two Euro and fifty one cents (
€
2,164,352.51) through
the issue of one million three hundred thirty-five thousand
nine hundred forty-two (1,335,942) common shares in
dematerialised form with a nominal value of one cent
(
€
0.01) each.
On 27 May 2021, the Management Board further resolved
to increase, conditional to the receipt of the subscription
price and the subscription certificates by the Company,
the Company’s share capital by an amount of three
thousand six hundred forty-one Euro and fifty-seven cents
(
€
3,641.57) so as to raise it from two million one hundred
sixty-four thousand three hundred fifty-two Euro and fifty-
one cents (
€
2,164,352.51)
up to two million one hundred sixty-seven thousand nine
hundred ninety-four Euro and eight cents (
€
2,167,9 94.08)
through the issue of three hundred sixty-four thousand
one hundred forty-seven (364,157) common shares in
dematerialised form with a nominal value of one cent
(
€
0.01) each.
On 2 August 2021, the Management Board further
resolved to increase, conditional to the receipt of the
subscription price and the subscription certificates by
the Company, the Company’s share capital by an amount
of four thousand three hundred seventy-four Euro and
sixty-one cents (
€
4,374.61) so as to raise it from its then
current amount of two million one hundred sixty-seven
thousand nine hundred ninety four Euro and eight cents
(
€
2,167,994.08) up to two million one hundred seventy-two
thousand three hundred sixty-eight Euro and sixty-nine
cents (
€
2,172,368.69) through the issue of four hundred
thirty-seven thousand four hundred sixty-one (437,461)
common shares in dematerialised form with a nominal
value of one cent (
€
0.01) each.
On 2 September 2021, the Management Board resolved
to increase, conditional to the receipt of the subscription
price and the subscription certificate by the Company, the
Company’s share capital by an amount of five hundred
sixty Euro and forty-three cents (
€
560.43) so as to raise it
from its then current amount of two million one hundred
seventy-two thousand three hundred sixty-eight Euro and
sixty-nine cents (
€
2,172,368.69) up to two million one
hundred seventy-two thousand nine hundred twenty-nine
Euro and twelve cents (
€
2,172,929.12) through the issue of
fifty six thousand forty-three (56,043) common shares in
dematerialised form with a nominal value of one cent
(
€
0.01) each.
As of 31 December 2021, the subscribed capital is
composed of 217,292,912 common shares with a par value
of €0.01 per share.
206
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
The table below details the share capital movements
during the year:
Number
common of
shares
Nominal
amount in €m
(par value 0.01)
Share Capital
€m
Share premium
€m
At 1January2021 213,836,716 n/a 2.1 3,568
Additions of the year 3,456,196 0.01 - -
Disposals for the year - 0.01 - -
Balance as at 31December2021 217,292,912 n/a 2.1 3,568
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.
Share premium account
As of 31 December 2021, the share premium amounts to
€ 3,568,719,053.56 (2020: €3,568,743,336.57).
Reserves for own shares
Further to the capital decrease which took place on
26 June 2020, the Company has adjusted appropriately
its reserve for own shares with the movements of the year
in the number and value of own shares in accordance with
the Luxembourg law.
Legal reserve
The Company is required to appropriate a minimum of 5%
of its annual net income to a legal reserve, until this reserve
equals 10% of the subscribed share capital. This reserve
may not be distributed.
As at 31 December 2021, no allocation to legal reserve was
done due to the negative financial result.
207
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
9. CREDITORS
As at 31 December 2021 and 2020, amounts due and
payable for the accounts shown under “Creditors” were as
follows:
In €
Within
one year
Within
two and five years After five years
Total
31 Dec 2021
Convertible bonds - - 375,000,000.00 375,000,000.00
Trade creditors 2,676,837.86 - 2,676,837.86
Amounts owed to
aliated undertakings 2,000,000.00 4,624,202.21 6,624,202.21
Tax and social
security debts 192,078.19 - 192,078.19
Other creditors 798,355.97 - 798,355.97
Total creditors 5,667,272.02 4,624,202.21 375,000,000.00 385,291,474.23
In €
Within
one year
Within
two and five years After five years
Total
31 Dec 2020
Trade creditors 1,320,788.91 - 1,320,788.91
Amounts owed to
aliated undertakings 1,091,933.86 8,758,446.52 - 9,850,380.38
Tax and social
security debts 16,099.59 - - 16,099.59
Other creditors 10,734.33 - - 10,734.33
Total creditors 2,439,556.69 8,758,446.52 - 11,198,003.21
On 15 March 2021, the Group issued convertible bonds
for net proceeds of € 369.1 million (nominal value is
€ 375 million), with a fixed coupon rate of 1.25%. Unless
previously converted, redeemed or repurchased and
cancelled, the convertible bonds will be redeemed at their
principal amount on 15 March 2028. The bondholders also
have the right to convert the Convertible Bonds into new
and/or existing (at the discretion of the Company) no-par
value common shares in dematerialised form of GFG. The
bondholders also have the right to redeem the options
early, on 15 March 2026, for the principal amount plus
accrued interest (put option).
As at 31 December 2021, trade creditors mainly included
the provisions for accounting and auditing costs for an
amount of €686,976.24 (2020: €559,848.24) and the
provision of Interests payables relating to convertible
bonds amounted to €1,390,484.45 (2020: nil).
208
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
As at 31 December 2021, amounts owed to aliated
undertakings mainly included the payable to GFG UK
Services Limited, for an amount of €4,522,128.57, and
the intercompany loan granted by Bigfoot GmbH, for an
amount of €2,000,000.00. It bears interest at 3.925% and
matures on 27 September 2022. The interest expense
for the Financial Year 2021 was €20,715.28. (2020:
€489,955.06).
10. OTHER OPERATING
INCOME
The other operating income mainly consists of recharged
legal and consulting costs to Group companies.
11. RAW MATERIALS
AND CONSUMABLES
AND OTHER EXTERNAL
EXPENSES
The raw materials and consumables and other external
expenses were as follows:
In €
Total
31 Dec 2021
Total
31 Dec 2020
Raw materials
and consumables (1,389.34) (1,198.57)
Other external
fees (1,389.34) (1,198.57)
Other external
expenses (11,592,886.97) (8,200,256.46)
Legal fees (1,683,955.31) (2,138,204.18)
Accounting and
audit fees (1,397,359.86) (1,196,382.31)
Share based
compensation - (1,549,680.32)
Other external
fees (597,373.40) (509,689.99)
Other
operational
expenses (7,914,198.40) (2,806,299.66)
Raw materials
and consumables
and other
external
expenses
(11,594,276.31)
(8,201,455.03)
209
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
12. STAFF
The Company employed two employees during the year
(2020: one employee).
13. OTHER OPERATING
EXPENSES
The other operating expenses were as follows:
In €
Total
31 Dec 2021
Total
31 Dec 2020
Director’s fee (266,044.99) (275,252.59)
Software licenses (90,503.51) (17,585.62)
(356,548.50) (292,838.21)
14. OTHER INTEREST AND
SIMILAR INCOME
In 2021, other interest and similar income is mainly related
to realised foreign exchange gains of €20,041.06 (2020:
€203,662.66), other revenues of €42.18 (2020: €6,327.40),
and other interest and similar revenues of €1,394,632.87
(2020: €515,336.66).
15. INCOME FROM
PARTICIPATING
INTERESTS
During the year 2021, the Company did not receive any
dividends or incomes from its aliated undertakings
companies (2020:
€
146,863,692.73).
16. INTEREST PAYABLE AND
SIMILAR EXPENSES
In 2021, other interest and similar expense mainly
included interest on intercompany loans of €85,507.29
(2020: €1,778,664.13), interest on the convertible bonds
of € 3,734,234.45 (2020: €nil), and the foreign exchange
losses of €310,978.25 (2020: €706,486.17). It 2020 other
interest and similar expense mainly included the net of
the cost of sale (€229,430,398.80) and the proceeds on
the sale (€53,974,544.19) of Global Fashion Group TRM
Limited.
17. TAXATION
The Company is subject to all the taxes relevant to
commercial companies in Luxembourg.
210
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
18. AUDITOR'S FEES
Art. 65 paragraph (1) 16º of the Law of 19 December 2002
on the register of commerce and companies and the
accounting and Financial statements of undertakings
(the “law”) requires the disclosure of the independent
auditor fees. In conformity with the law, these details have
been omitted as the Company prepares consolidated
accounts in which this information is disclosed, and these
consolidated accounts and the related consolidated
management report and auditors’ report thereon have
been lodged with the Luxembourg Trade Registry.
19. RELATED PARTIES
TRANSACTIONS
The Company conducts transactions with aliated
entities of GFG Group on normal commercial terms
and conditions. These transactions may include loans
granted /received to / from group entities (Notes 6 and
9), intercompany recharges in connection with delivery /
reception of services and other operations.
20. OFF BALANCE SHEET
COMMITMENTS
a) Guarantees issued
The Company has issued guarantees to suppliers of some
of its direct or indirect subsidiaries, agreeing to provide
support and assistance and secure payment obligations.
Details are as follows of guarantees in place as at
31 December 2021:
Issuance
Date
Beneficiary
name
Amount
(€)
06.07. 21 Coccinelle SPA 100,000
02.02.20
DKH Retail Limited
(Superdry) 1,400,000
26.03.19 Ralph Lauren 130,000
02.04.20
Tendam Retail, S.A
(Springfield) 125,000
01.09.21 Ikonic SRL 400,000
05.10.20
DK COMPANY
VEJLE 90,000
24.08.20 Accent Brands 800,512
29.09.20
Kacoo Fashion Ltd/
Glamourous 297,520
16.07.21 Ralph Lauren 881,679
29.05.20 Banco Pottencial 543,424
16.06.21 Ralph Lauren 881,679
06.08.21
Under Armour
Europe B.V. 2,000,000
01.07.21 PUMA 4,712,112
15.07.21 Adidas 8,835,210
07.07.21 Levis 471,211
14.12.20 BNS Group 765,718
16.02.21 Herry Weber 167,000
04.03.21
Vanderlande
Industries RUS 15,579,336
211
ANNUAL REPORT 2021 | GFG
Notes to the Financial Statements
b) Long Term Incentive Plans
The Company is committed through awards to members of
the management and other employees under terms and
conditions of share based compensation plans to issue
shares of the Company or to settle awards in cash. The
issuance of shares or the settlement in cash is subject to the
achievement of service and conditions as set out in the plans
below:
ESOP 2018
With respect to the existing ESOP (Employee Share
Option Plan) 2018, the Company is committed to issue a
maximum number of 6,249,171 (2020: 8,956,057) shares at
an average exercise price of €1.71 (2020: €6.99), of which
6,224,039 (2020: 8,831,261) options are vested as of
31 December 2021. Exercise requires the payment of the
agreed exercise price.
LTIP 2019
In September 2019, the Company launched a new Long
Term Incentive Plan. All units vest over two to three years
and Performance Stock Units (“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 1 year 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.
In 2021, 3,449,888 (2020: 4,198,937) share units were
granted to participants of the 2019 Share plan. 525,170
(2020: €1,482,509) units were forfeited and 2,269,264
(2020: €1,173,136) units were exercised during the year.
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 €10.25 (2020: €2.22). The number of awards
due to vest in 2022 is 2,614,058.
c) Support Letters
The Company issued several letters of support to its
subsidiaries.
21. ADVANCES AND LOANS
GRANTED TO THE
MEMBERS OF THE
ADMINISTRATIVE
MANAGERIAL AND
SUPERVISORY BODIES
There are no advances, loans or commitments given on
their behalf by way of guarantee of any kind granted to the
members of the management and supervisory bodies
during the Financial Year.
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Notes to the Financial Statements
22. SUBSEQUENT EVENTS
In February 2022, certain countries announced new
packages of sanctions against the public debt of the Russian
Federation and a number of Russian banks, as well as
personal sanctions against a number of individuals.
Due to the growing geopolitical tensions, since
February 2022, there has been a significant increase in
volatility on the securities and currency markets, as well as a
significant depreciation of the Ruble against the US Dollar
and the Euro. From 1 January 2022 to 7 March 2022, the
Ruble devalued by 36%.
It is expected that these events may aect the activities of
the Russian and CIS subsidiaries, which were indirectly
owned and financed by the Company. The indirect
investment of the Company into Russian and CIS subsidiaries
as of December 31, 2021, amounts to EUR 381,057,697.95
(including shares and intergroup financing).
The Company regards these events as non-adjusting
events after the reporting period, the quantitative eect
of which cannot be estimated at the moment with a
sucient degree of confidence.
Currently, the Company’s management is analysing the
possible impact of changing micro- and macroeconomic
conditions on the Company’s financial position and results
of operations.
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Notes to the Financial Statements
8. RESPONSIBILITY STATEMENT
Consolidated Financial Statements
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 consolidated financial
statements give a true and fair view of the financial
position of the Group as at 31 December 2021, 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 the Group, together with a description of
the principal risks and uncertainties that Group faces.
Parent Financial Statements
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 parent financial statements
give a true and fair view of the financial position of the
Company as at 31 December 2021, and of the results of its
operations for the year then ended in accordance with the
Luxembourg legal and regulatory requirements and
according to generally accepted accounting principles
applicable in Luxembourg, 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.
7 March 2022
Christoph Barchewitz, Co-CEO
Patrick Schmidt, Co-CEO
Matthew Price, CFO
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Responsibility Statement
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Responsibility Statement
ADDITIONAL INFORMATION
9.1 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 EBITDA adjusted for share-based
payment (income) / expenses, impairment of goodwill,
Group recharges, changes to estimates for prior year tax,
fulfilment centre closure costs and continuity incentives,
and change in legal provisions and project costs.
Adjusted EBITDA is reconciled in 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 companies 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 IFRS 16 right-of-use assets.
In €m Note FY 2021 FY 2020
Additions
Property,
plant &
equipment 11 29.2 28.4
Goodwill & other
intangibles 13 31.0 20.3
Total Capex 60.2 48.7
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Additional Information
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.
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 2021 FY 2020
Inventory 283.7 195.9
Trade and other receivables
(current) 52.3 80.2
Trade payables and other
financial liabilities (332.0) (283.8)
Convertible bond liability
(note 22) 10.2 -
Liabilities related to SBP 3.9 6.3
Net working capital 18.1 (1.4)
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, short term duration bonds and
securitised funds plus restricted cash and cash on
deposits.
Pro-forma cash reconciliation
In €m FY 2021 FY 2020
Cash and cash
equivalents 400.5 366.1
Investment funds 234.0 -
Restricted cash and
cash on deposit 8.0 6.3
Pro-forma cash 642.5 372.4
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Additional Information
9.2 FINANCIAL
CALENDAR
16 May 2022 Q1 2022 Results
15 June 2022 Annual General Meeting
18 August 2022 Q2 2022 Results
10 November 2022 Q3 2022 Results
9.3 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
Jo Britten, Investor Relations Director
email: investors@global-fashion-group.com
Press / Communications
Jovana Lakcevic, Head of PR & Communications
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