Financial Results of Prestige Bidco Gmbh for the Year Ended December 31, 2019

FINANCIAL RESULTS OF PRESTIGE BIDCO GMBH FOR THE YEAR ENDED DECEMBER 31, 2019

TABLE OF CONTENTS

Section Page

FORWARD-LOOKING STATEMENTS ...... I PRESENTATION OF FINANCIAL INFORMATION ...... I DEFINITIONS ...... II SUMMARY OVERVIEW OF RESULTS ...... 1 BUSINESS ...... 6 MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS ...... 13 RISK FACTORS ...... 19 MANAGEMENT ...... 28 SHAREHOLDERS ...... 29 DESCRIPTION OF CERTAIN FINANCING ARRANGEMENTS ...... 30 ATTACHMENT: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PRESTIGEBIDCO GMBH ...... 31 FORWARD-LOOKING STATEMENTS

This Report includes forward-looking statements. These forward-looking statements include, but are not limited to, all statements other than statements of historical facts contained in this Report, including, without limitation, those regarding our future financial position and results of operations, our strategy, plans, objectives, goals and targets, future developments in the markets in which we participate or are seeking to participate or anticipated regulatory changes in the markets in which we operate or intend to operate. In some cases, you can identify forward-looking statements by terminology such as “aim,” “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “forecast,” “guidance,” “intend,” “may,” “plan,” “potential,” “predict,” “projected,” “should,” or “will” or the negative of such terms or other comparable terminology. By their nature, forward-looking statements involve known and unknown risks, uncertainties and other factors because they relate to events and depend on circumstances that may or may not occur in the future. We caution you that forward-looking statements are not guarantees of future performance and are based on numerous assumptions and that our actual results of operations, including our financial condition and liquidity and the development of the industry in which we operate, may differ materially from (and be more negative than) those made in, or suggested by, the forward-looking statements contained in this Report. In addition, even if our results of operations, including our financial condition and liquidity and the development of the industry in which we operate, are consistent with the forward-looking statements contained in this Report, those results or developments may not be indicative of results or developments in subsequent periods.

PRESENTATION OF FINANCIAL INFORMATION

Financial Information The consolidated financial statements included in this Report have been prepared in accordance with International Financial Reporting Standards (IFRS). The financial information in this Report is based on that of PrestigeBidCo GmbH. In particular, this Report includes the audited consolidated financial statements of PrestigeBidCo GmbH, Aschheim and its subsidiaries (the Group), which comprise the consolidated statements of comprehensive income for the fiscal year from January 1 to December 31, 2019, the consolidated balance sheet as at December 31, 2019, the consolidated statements of cash flows and the consolidated statements of changes in equity for the fiscal year from January 1 to December 31, 2019 and notes to the consolidated financial statements, including a summary of significant accounting policies; and in addition the group management report of PrestigeBiCo GmbH for the fiscal year from January 1 to December 31, 2019. The Audited Consolidated Financial Statements have been audited by Ernst & Young Wirtschaftsprüfungsgesellschaft GmbH (“EY”), in accordance with Section 317 German Commercial Code (Handelsgesetzbuch) (“HGB”), and German generally accepted standards for the audit of financial statements promulgated by the German Institute of Public Auditors (Institut der Wirtschaftsprüfer).

Non-GAAP Financial Measures This Report contains non-GAAP measures and ratios, including EBITDA and Adjusted EBITDA that are not required by, or presented in accordance with, IFRS. Our non-GAAP measures are defined by us as set out below. We define “EBITDA” as net income/loss for the period before income taxes, interest and similar expenses, other interest and similar income and amortization, depreciation and write-downs. We define “Adjusted EBITDA” as EBITDA (i) excluding non-recurring or extraordinary items, (ii) excluding certain non-cash, non-operational items and (iii) adjusting for the pro forma effects of certain cost-savings initiatives undertaken during the period. Non-recurring or extraordinary items include a number of one-off, exceptional items that have been excluded from EBITDA. We present non-GAAP measures because we believe that they are widely used by certain investors, securities analysts and other interested parties as supplemental measures of performance and liquidity. The non-GAAP measures may not be comparable to other similarly titled measures of other companies and should not be considered in isolation or be used as a substitute for an analysis of our earnings after taxes as reported under IFRS. Non-GAAP measures and ratios are not measurements of our performance or liquidity under IFRS and should not be considered as alternatives to net income/loss for the period or any other performance measures derived in accordance with IFRS or any other generally accepted accounting principles or as alternatives to cash flow from operating, investing or financing activities.

Rounding Certain numerical figures set out in this Report, including financial information presented in millions or thousands and percentages, have been subject to rounding adjustments and, as a result, the totals of the data in this Report may vary from the actual arithmetic totals of such information. Percentages and amounts reflecting changes over time periods relating to financial and other information are calculated using the rounded numerical data included in this Report and not the numerical data in each of the Consolidated Financial Statements or PrestigeBidCo’s internal accounting system. With respect to financial information set out in this Report, a dash (“—”) signifies that the relevant figure is not available, while a zero (“0.0”) signifies that the relevant figure is available but is or has been rounded to zero.

DEFINITIONS

Unless otherwise specified or the context requires otherwise in this Report:  “BS GmbH” means BestSecret GmbH, an operating subsidiary of the Issuer;  “Group,” “we,” “us” or “our” refer to the Issuer (PrestigeBidco) including S&B Group with respect to the information as of and for the year ended December 31, 2019;  “S&B Group” includes the following entities: S&B Holding, S&B GmbH, BS GmbH, S&B Logistik, S&B Outlet, S&B Wien and SOS;  “Holdco” means PrestigeBidCo Holding GmbH, a company with limited liability (Gesellschaft mit beschränkter Haftung) incorporated and existing under the laws of Germany with its registered office at Margaretha-Ley-Ring 27, 85609 Aschheim, Germany and registered with the commercial register at the local court (Amtsgericht) of Munich under number HRB 227203;  “Issuer” means PrestigeBidCo GmbH, a company with limited liability (Gesellschaft mit beschränkter Haftung) incorporated and existing under the laws of Germany with its registered office at Margaretha- Ley-Ring 27, 85609 Aschheim, Germany and registered with the commercial register at the local court (Amtsgericht) of Munich under number HRB 227078;  “Notes” means €260,000,000 6.25% senior secured notes due 2023 and issued pursuant to the offering memorandum dated December 8, 2016;  ‘’PPA” means purchase price allocation;  “Revolving Credit Facility” means the €50.0 million Revolving Credit Facility, of which €35.0 million were made available under the Revolving Credit Facility Agreement dated on or prior December 8, 2016 and an additional €15.0 million were established on December 20, 2018, by way of increase of the existing Facility;  “Revolving Credit Facility Agreement” means the revolving credit facility agreement dated on or prior December 8, 2016 among, inter alios, the Issuer, as borrower, and Barclays Bank PLC, Goldman Sachs Bank USA and UniCredit Bank AG, London Branch, as lenders, as the same may be further amended from time to time. On December 20, 2018, the Issuer established an additional revolving credit facility of €15.0 million by way of increase of the existing facility to €50.0 million. On January 02, 2019, the lender confirmed the granting of the additional facility. The additional facility lender is UniCredit Bank AG, London Branch;  “S&B GmbH” means Schustermann & Borenstein GmbH, an operating subsidiary of the Issuer;  “S&B Holding” means Schustermann & Borenstein Holding GmbH, a company with limited liability (Gesellschaft mit beschränkter Haftung) incorporated and existing under the laws of Germany with its registered office at Margaretha-Ley-Ring 27, 85609 Aschheim, Germany and registered with the commercial register at the local court (Amtsgericht) of Munich under number HRB 199965;  “S&B Logistik” means Schustermann & Borenstein Logistik GmbH, an operating subsidiary of the Issuer;  “S&B Outlet” means S&B Outlet GmbH, an operating subsidiary of the Issuer;  “S&B Wien” means Schustermann & Borenstein Wien GmbH, an operating subsidiary of the Issuer; and  “SOS” means Swiss Online Shopping AG, a subsidiary of the Issuer.

SUMMARY OVERVIEW OF RESULTS

Results summary Schustermann & Borenstein Group (S&B Group - bond issuer: PrestigeBidCo GmbH - ISIN: XS1533933039, XS1533933112), the leading members-only omni-channel retailer for off-price premium fashion, continued its strong revenue and earnings growth in 2019. S&B Group achieved €571.3 million of revenues in 2019, thereby recording a strong year-on-year sales growth of 17.0% over the prior year’s figure of €488.3 million. While the main growth driver again was an outstanding online business, the in-store business also contributed to the positive performance.

The e-commerce segment BestSecret saw a 21.8% sales growth in 2019 and contributed €440.7 million to Group revenue (FY 2018: €361.9 million). Online now represents a compelling 77.1% of the Group’s total business volume. Both the continued strong performance in Germany and the over proportional international growth were carried especially by a clear expansion in the customer base. The offline segment, which is the in- store business of the S&B retail sites in Munich, Frankfurt and Vienna, generated €130.6 million or 22.9% of Group revenue in 2019 which was 3.3% above the previous year’s figure of €126.4 million.

Earnings before interest, taxes, depreciation and amortization before exceptional items (Adjusted EBITDA) reached €100.0 million in 2019, thereby recording an increase of 15.5% over the €86.6 million reported in 2018. The accelerated earnings growth versus prior year underlines the profitable scaling of the business based on strong revenue growth and an industry-leading gross margin. The Adjusted EBITDA margin stood at 17.5% for 2019 (FY 2018: 17.7%).

The Group’s net financial debt amounted to €275.3 million as of December 31, 2019 (FY 2018: €272.5 million). The leverage ratio, calculated as net financial debt to LTM Adjusted EBITDA, improved from 3.1x on December 31, 2018 to 2.8x at the end of 2019.

Key Financial and Operating Data For the year ended Decem 2019 201 (in € million) (in € m Revenue ...... 571.3 thereof from online operations ...... 440.7 thereof from offline operations ...... 130.6 Gross profit ...... 275.2 Gross profit margin ...... 48.2% Adjusted EBITDA(1) ...... 100.0 Adjusted EBITDA margin ...... 17.5%

(1) EBITDA is calculated as net income/loss for the period before income taxes, other interest and similar income, interest and similar expenses and amortization, depreciation and write‐downs. Adjusted EBITDA is defined as EBITDA (i) excluding non‐recurring or extraordinary items, (ii) excluding certain non‐cash, non‐operational items and (iii) adjusting for the pro forma effects of certain cost‐savings initiatives undertaken during the period. Non‐recurring or extraordinary items include a number of one‐off, exceptional items that have been excluded from EBITDA. We use Adjusted EBITDA as a measure of our operating cash flow generation and the liquidity of our business. Neither EBITDA nor Adjusted EBITDA is a measure of financial performance calculated in accordance with IFRS and should each be viewed as a supplement to, not a substitute for, our results of operations presented in accordance with IFRS. EBITDA and Adjusted EBITDA should not be considered as alternatives to other indicators of our operating performance, cash flows or any other measure of performance derived in accordance with IFRS. EBITDA and Adjusted EBITDA as presented in this Report may differ from and may not be comparable to similarly titled measures used by other companies. We present EBITDA and Adjusted EBITDA for informational purposes only.

Subsequent events

As COVID-19 continues to impact the global community and, in particular, the retail offline industry, the negative impacts on our Group are not fully visible and predictable. In the current environment, the health and safety of our employees, customers and partners are paramount. The implementation of extended restrictions on the freedom of movement by the German and Austrian governments in mid-March resulted in the closure of non-systemically relevant shops. S&B Group therefore announced the temporary closure of its Vienna store on March 15 and of the two retail sites in Munich and the store in Frankfurt on March 18. On April 14, Austria began gradually easing its lockdown measures and we are planning to open our store in Vienna on May 2. The S&B Group’s online business BestSecret and the central warehouse near Munich so far remain operational in order to serve the BestSecret customers.

The Group has launched several actions in order to protect the health of its employees and to meintain business continuity. These measures include the implementation of a dedicated prevention team, the adaptation of the warehouse shift organisation to reduce and/or avoid contact amongst employees, health checks, restrictions on business travel and the significant expansion of mobile working. Furthermore, prudent cash management especially with regards to merchandise purchasing and CAPEX spending including logistics are at the centre of all business decisions. The Group applied for short-time work for the employees in the German retail stores in March as well as for the headquarter in Aschheim and for the Austrian Store in Vienna in April. Other business areas may be affected in the second quarter as well. The right of customers to return merchandise was extended to 30 days (previously 14 days). The Group also actively monitors any opportunities arising from more favourable buying offers due to increased overstock on the supply side, as well as an accelerated shift towards e-commerce on the customer side. Subsequent to the year-end, the Group drew down €24.5 million (cash transfer) from its revolving credit facility in March in order to increase the financial latitude. No other events occurred between January 1, 2020, and April 29, 2019, that would require adjustments to the amounts recognized in the consolidated financial statements or would need to be disclosed under this heading.

Consolidated Income Statement Information

01.01.2019 - 01.01.2018 – Change 31.12.2019 31.12.2018 (in € million) (in € million) %

Revenue ...... 571.3 488.3 17.0 Cost of sales ...... (296.0) (259.5) 14.1 Gross profit ...... 275.2 228.8 20.3 Selling and distribution costs ...... (193.4) (159.3) 21.4 Administrative expenses ...... (51.6) (43.2) 19.4 Other operating income ...... 1.5 1.5 0.0 Other operating expenses ...... (3.5) (2.1) 66.7 Earnings before interest and taxes (EBIT) .. 28.2 25.7 9.7 Interest and similar income……………………. 0.0 0.0 - Interest and similar expenses ...... (24.2) (23.8) 1.7 Earnings before taxes (EBT) ...... 4.0 1.9 >100.0 Income taxes ...... (0.2) 4.9 - Net income/loss for the period ...... 3.8 6.8 (44.1)

Consolidated Balance Sheet Information

31.12.2019 31.12.2018 Change (in € million) (in € million) %

Assets Non-current assets Property, plant and equipment ...... 151.9 125.6 20.9 Goodwill ...... 254.4 254.4 0.0 Other intangible assets ...... 376.3 417 (9.8) Non-current financial assets ...... 0.6 0.5 20.0 Total non-current assets ...... 783.2 797.5 (1.8)

Current assets Inventories...... 160.2 122.3 31.0 Prepayments for inventories ...... 6.2 4.7 31.9 Trade and other receivables ...... 0.7 1.6 (56.3) Other current finacial assets ...... 3.9 2.0 95.0 Income tax receivables ...... 2.8 2.8 0.0 Other current non-finacial assets ...... 12.1 13.6 (11.0) Cash and cash equivalents ...... 76.0 67.0 13.4 Total current assets ...... 262.1 214.0 22.5 Total assets ...... 1,045.3 1,011.5 3.3

Equity Issued capital ...... 0.03 0.03 0.0 Other capital reserves ...... 474.2 474.2 0.0 Foreign currency translation reserve ...... 0.3 0.1 >100.0 Retained earnings ...... (4.9) (8.8) (44.3) Total equity ...... 469.6 465.5 0.9

Non-current liabilities Non-current interest-bearing loans and borrowings ...... 254.7 253.8 0.4 Other non-current financial liabilities ...... 90.4 80.6 12.2 Deferred tax liabilities ...... 103.4 114.6 (9.8) Provisions...... 0.5 0.5 0.0 Total non-current liabilities ...... 449.0 449.5 (0.1)

Current liabilities Trade and other payables ...... 27.5 14.8 85.8 Other current financial liabilities ...... 5.3 4.3 23.3 Income tax payable* ...... 20.0 14.3 39.9 Current interest-bearing loans and borrowings ...... 0.9 0.8 12.5 Current non-financial liabilities ...... 73.1 62.3 17.3 Total current liabilities ...... 126.7 96.5 31.3 Total equity and liabilities ...... 1,045.3 1,011.5 3.3

*In the year 2019, a clarification regarding the presentation of income taxes in the statement of financial position was published by the IFRIC. As a result of this clarification, the former provisions for income taxes now have to be shown as income tax liabilities. As a result, the current provisions for income taxes recognized at December 31, 2018 (€5.6 million) were reclassified from provisions to income tax liabilities. The reclassification has no impact on the Group’s profitability or liquidity and capital resources.

Cash Flow Statement Information

01.01.2019 – 01.01.2018- Change 31.12.2019 31.12.2018 (in € million) (in € million) %

EBITDA ...... 94.6 79.5 19.0 Adjustments to reconcile EBITDA to net cash flow ...... 7.7 1.1 >100.0 Change in operating working capital ...... (23.2) (2.2) >100.0 Income tax paid ...... (5.7) (10.0) (43.0) Cash flow from operating activities ...... 73.4 68.4 7.3 CAPEX ...... (36.7) (20.3) 80.8 Cash flow from investing activities ...... (36.7) (20.3) 80.8 Payment of lease liabilities* ...... (4.2) (3.6) 16.7 Interests paid* ...... (23.0) (22.6) 1.8 Others ...... (0.4) 0.1 - Cash flow from financing activities ...... (27.6) (26.1) 5.7 Net foreign exchange differences……………………………… 0.0 0.1 (100.0) Change in cash and cash equivalents ...... 9.1 22.0 (58.6) Cash and cash equivalents at the end of the period* ...... 76.0 67.0 13.4

* The presentation of interest paid for lease liabilities has been adjusted and included in “interest paid”. In the annual report December 31, 2018 interest paid for lease liabilities was however included with an amount of €5.8 million in the line “Payment of lease liabilities”

BUSINESS

Overview

Founded in 1924 and headquartered in Munich, Schustermann & Borenstein is the leading members-only omni- channel fashion retailer in the off-price fashion retail market. With a strong focus on premium fashion, the Group offers over 3,000 designer brands at attractive discounts for men, women and children through online and in- store sales channels. The BestSecret online shop is available in five languages and provides shipping to around 30 European countries. The in-store business includes four large-scale retail sites in Munich, Frankfurt and Vienna with a total net sales area of around 21,000 square meters.

Competitive Strengths

Distinctive business model with compelling customer and supplier propositions resulting in highly attractive customer base as well as large and diversified supplier portfolio.

We have a distinctive omni-channel, closed membership business model offering customers off-price premium and affordable luxury fashion merchandise. Our omni-channel proposition provides customers with the convenience of multi-device online shopping and an exclusive and stylish shopping experience in our stores that is similar to high-street retailers. Customers gain access to our products through an exclusive invitation- only membership model, creating high desirability for both customers and suppliers. We offer a permanent, full assortment of merchandise with in-season and off-season merchandise from premium and affordable luxury fashion brands at discounts ranging from 20% to 80% of the recommended retail price which is complemented by merchandise from our private labels.

Our unique business model differentiates us from other players in the industry both from the perspective of the customers and the suppliers. Our retail proposition makes us a trusted fashion partner for our suppliers by giving them a channel to manage their overstock in a manner that is consistent with their brand strategy. At the same time, our relationships with suppliers allow us to provide a more consistent and relevant assortment compared to other off-price retailers, thereby making us a trusted fashion companion for our customers.

With regards to our customers, our unique business model and customer centric approach results in a very loyal, engaged and affluent customer base. We have a very high referral rate among our members which contributes significantly to our ability to grow our customer base without incurring substantial marketing expenses. For the year ended December 31, 2019, our advertising costs as percentage of revenue were 1.9%.

We actively manage and control access to our online and offline shopping platforms and incentivize spending and customer engagement via an exclusive membership system and attractive loyalty program. The acceptance of new members, or customers, is by invitation only either through referral from an existing member or from a waitlist of individuals that fulfil certain criteria and have submitted a membership application. The desirability of a membership is further increased by the limitation on the number of invitations a member can extend. In addition, we also have relationships with corporate customers to whom we extend memberships.

Our loyalty program was recently revised in order to strengthen our omni-channel proposition and to increase the exclusitivity and attractiveness for our customers. Due to the current COVID-19 crisis, the launch of the revised system is currently on hold. Our membership categories according to the new system are Silver (from 300 points), Gold (from 1,500 points) and Diamond (from 3,000 points). Membership status is primarily attained on the basis of the amount that a customer spends online and offline. Based on their status, our members enjoy an increasing amount of benefits, including commissions for referrals of new active customers, free priority shipping, sneak previews of new merchandise before other active customers and a 30-day free return period. The revised loyalty program will also include the introduction of our new VIP CLUB. Depending on their loyalty status, members will be able to enjoy additional attractive partner benefits from the categories such as travel, entertainment, gourmet or sports & leisure. The engagement of our customers is further enhanced by our policy that customers only gain acces to the stores when they have achieved at least the Silver membership status. Online members do not have a minimum spend requirement, although online membership may be deactivated after a prolonged period of inactivity if reactivation measures, such as vouchers, are not successful. In this way, we are able to control the volume and quality of members in our sales channels to ensure a discreet in-store shopping experience and retain customer desirability of our online platform.

We use various tools, such as daily e-mail newsletters, social media and in-store events to support the positioning of our brand, acquire new members and retain existing customers, as well as increase the number of customer visits to our websites, the number of their orders and their basket size per order. Managing and maintaining the relationship that we have with our customers is an important part of our business. In this regard, we view our customer service as an important part of our strategy, as it provides direct feedback from our customer base and helps to interpret customers’ satisfaction with our merchandise and service and customers’ needs. A systematic customer lifecycle management with dedicated measures to first win new customers, secondly activate, retain and develop existing customers, and, if necessary, re-activate and win back former customers is the key aspect of our customer relationship management strategy. We also inceasingly use enhanced data analytics, including analyzing customer data on purchases, products viewed and items on a wish list, to further customize and tailor displayed content in line with our customers’ individual shopping behavior and brand preferences. In addition, through personalization of our online platform for customers, we intend to connect customers with the most relevant assortment categories and brands for them.

With regards to suppliers, our ability to clearly distinguish ourselves from other fashion clearance channels such as online shopping clubs, factory outlet centers or other retail wholesalers has made us an attractive and preferred partner and facilitates our early and direct access to high quality inventory at favourable prices. Our exclusive, invitation-only membership model creates the opportunity for suppliers to ensure that their overstock is sold in a discreet and controlled environment, protecting their retail pricing strategies and the desirability of their brands and allowing them to maximize value for their overstock. We have the ability to purchase large quantities of merchandise, including mixed lots, which are lots that do not contain a typical distribution of sizes and colors, increasing our value as counterparty to our suppliers, often making us the port of first call and at the same time reinforcing our customer proposition by giving us access to desirable merchandise.

We currently sell merchandise from a large and diversified supplier base of around 3,000 suppliers. This has contributed to the breadth of our product portfolio and ensures that we are not reliant on any single supplier, brand or fashion trend. In 2019, no single supplier accounted for more than 4% of our sales with nearly all other suppliers accounting for less than 1% and our top 10 suppliers together accounting for under 20% of our sales. We experience limited supplier attrition and we actively manage our growing supplier base in order to focus on the most profitable suppliers with the most popular merchandise.

We offer a broad assortment, with good size availability, of menswear, womenswear, young fashion, shoes, sportswear and accessories. For the twelve months ended December 31, 2019, our revenue by product category were 30% womenswear, 17% menswear, 17% young fashion, 15% shoes, 7% sportswear and 14% accessories and other merchandise (including children’s clothes, bags, jewelry and scarves, among others). In addition, to ensure certain product categories are generally available and kept in stock, we offer a portfolio of around 30 private label brands (including fashion, decorative home merchandise and various supplementary products).

We source our merchandise through a centralized and joint procurement process. We employ a mixed sourcing strategy for our online and offline businesses. When purchasing large unsorted lots, we benefit from our multi- channel approach. While pure online retailers cannot sell certain merchandise if only limited size and color options are available, we have the flexibility of selling these at our offline sites. Our merchandising team, which was introduced in 2016, provides crucial support to our procurement with the aim of driving sales and profit by managing inventory investment and driving efficiency in the purchasing process. Key elements of this integrated approach are financial planning, assortment planning, open-to-buy-management, merchandise allocation to our online and offline distribution channels and management of initial and markdown pricing to enhance gross margin and improve inventory quality.

Distinctive omni-channel distribution capabilities driving industry leading sell-through rates and increasing customer satisfaction.

We offer privileged access to a broad and permanent assortment of off-price premium and affordable luxury fashion merchandise through our online platform BestSecret and our four offline stores.

Our BestSecret online shop was launched in 2007 and meant the transition from a pure offline player to a multi- channel fashion retailer. Today, BestSecret is available in five languages and provides shipping to around 30 European countries. Our online customers enjoy access to a multi-device shopping experience from their desktop computers, tablet or mobile phone to allow for high convenience and an on-the-go shopping experience. Our technology supports all major online and mobile platforms, including dedicated iOS and Android applications for both smartphones and tablets. We update our applications regularly to offer customers new features in addition to the daily new themes and product offerings we share through our individualized newsletters.

Our store portfolio primarily comprises four free-standing sites with a total net selling area of around 21,000 square meters. Two sites are located in Munich, one in Frankfurt and a fourth site is located in Vienna, Austria. Each of our sites is situated on the periphery of the city center (i.e., off high street locations) which translates into higher sales density, significantly lower rent expenses and attractive cost-margin advantages.

Our fashion stores in Munich, Frankfurt and Vienna offer primarily in-season premium and affordable luxury brand collections at attractive discounts, with products typically arranged by key brands and presented, in some cases, in dedicated brand areas. Our second season stores or areas in Munich and Vienna offer discounted merchandise from prior seasons and unsold merchandise from our premium and affordable luxury fashion stores and from the BestSecret online platform with a more economical retail layout and product presentation as compared to the higher end premium layout and product presentation in our premium fashion stores.

Our Munich sites also offer temporary sales events, such as sportswear sales, traditional costume sales days and family and friends days. The family and friends sales events, which is also open to non-members, take place twice each year for a four-week period and offer unsold merchandise from our online platform and stores at discounts of up to 90% off the recommended retail price. The traditional costumes special event sale is organized around the annual Oktoberfest in Munich and features a large selection of traditional costumes.

The table below shows an overview of our four main retail sites:

Gross sales floor space Net sales floor space Member store location (sqm rounded) (sqm rounded) –––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––––– Munich, Germany 8,000 6,400

Aschheim-Dornach, Germany (in the vicinity of Munich) 7,000 5,400

Frankfurt Gateway Gardens, Germany 3,700 2,800

Vösendorf, Austria (in the vicinity of Vienna) 8,100 6,500

––––––––––––––––––– ––––––––––––––––––– Total 26,800 21,100 ––––––––––––––––––– –––––––––––––––––––

Our multi-channel distribution capabilities positively influence our sell-through rates. We sell in-season and off- season merchandise, in a full range of sizes and category assortments, through our first clearance level both online (typically offering discounts in a range of 20% to 80% of RRP) and in our fashion stores (typically offering discounts in a range of 20% to 55% of RRP). Unsold merchandise is subsequently sold through the second clearance level in our second season areas, which are focused on a value-centric proposition with typically greater discount levels of 40% to 80% of RRP. Special events (including our semi-annual family and friends events) at our offline stores allow us to sell further stock and increase our sell-through rates by clearing off- season merchandise at larger discounts of typically 30% to 90% of RRP depending on the event. Our combination of different sales channels allows us to optimize our gross margin by testing different pricing levels for each product at each clearance level. Our ability to achieve high sell-through rates of approximately 90 to 95% also enhances our purchasing abilities as it gives us more flexibility to acquire unsorted lots and negotiate more attractive pricing or assortments of merchandise.

With customer centricity in mind, our omni-channel distribution capabilities offer a range of benefits for customers. We are able to achieve synergies in the interplay between our online and offline channels, such as our service points through which we offer our omni-channel customers in-store pick-up for online orders and allow returns of merchandise ordered online by our customers in our stores. Customers are offered a tailored user experience through the opportunity to choose delivery times and payment methods and also through receiving personalized suggestions for clothes and editorial content. Our online channel offers convenience by providing our customers with a multi-device platform to shop from and a 1-3-day delivery time whereas our offline channel provides a destination for our customers that offers a premium, exclusive shopping experience. The combination of our online and offline expertise has resulted in an increase of omni-channel customers, which benefits our overall financial performance as omni-channel customers have an above average spend.

We offer different payment methods tailored to meet our members’ payment preferences, both online and in our stores including cash, cards, PayPal, Direct Debit, instant bank transfer and purchase by invoice. Cards are a preferred payment option by many of our customers and, as a result, accounts for a significant portion of our sales. Offering a wide array of payment methods enhances customer satisfaction and improves our check-out conversion with respect to our online sales.

Proprietary and scalable IT and logistics infrastructure.

Our business depends significantly on our ability to process transactions on secure information systems and to store, retrieve, process and manage information. Also, our membership-based business model provides us with significant volumes of customer information and buying patterns that allow us to take an analytical approach to managing the business. To ensure this, we continuously invest in our back-end and front-end IT capabilities and in our state-of-the-art and scalable IT platform, which consists of e-commerce, retail, logistics, enterprise resource planning (ERP), and business intelligence systems. Through the combination of leading commercial solutions and proprietary in-house developed software, we own and control our business processes and the value-chain from end to end. Our IT organization consisting of software engineering, product management and operations support teams is based in our Munich headquarter as well as in our IT branch office in Granada (Spain).

Our primary front-office IT systems are used to market products to end customers, and to manage, track and deliver orders, monitor stock and interface with suppliers and other business relations. For example, we developed a family of applications for our e-commerce platform, with special versions of iPad, iPhone and Android devices. We have significantly invested in the overall user-experience of our customer-facing systems, as well as in marketing and analytics capabilities to boost the acquisition of new customers, increase sales conversion, and manage churn. The online platform supports multiple currencies and is available in multiple languages, and we have expanded the platform’s payment capabilities to provide better and more flexible options for different customer needs. In addition, we have made significant investments into the scalability of the IT architecture across systems and processes, to support future growth of the business and to manage orders more efficiently. We also rely on licensed software for back-office operations, including managing financial and human resources activities.

We operate a modern centralized warehouse and logistics center in Poing near Munich. At this facility, we currently have approximately 107,000 square meters of warehouse space and 78 packing stations, which enables us to process approximately 10,000 items per hour. Our warehouse combines multi-channel logistics and order fulfillment processes for both our offline and online business. It also allows us to accelerate our process of receiving merchandise through increased automation (and shorter lead times with respect to deliveries through enhanced software), which reduces the time until stock is available for sale. Our growing business has led to increasing levels of utilization and we therefore started to expand the center in 2019 by approximately 60% to over 170,000 square meters to provide us with additional flexibility and to address further future growth. The planned expansion, the completion of which currently depends on the further COVID-19 related developments, includes an additional conveyor system, two extra bag sorters, a further shelving system as well as 90 additional packing stations.

Leading player in a growing market with attractive characteristics and well-positioned to capture further growth in online sales.

We operate in the off-price fashion retail market, which is a segment of the broader fashion market, and focus primarily on the premium and affordable luxury segments of that market. We believe that we are the market leader in the premium off-price fashion market in Germany and that our relevant market is sizable and has substantial potential for growth.

Our revenue from online operations experienced 21.8% growth in the year ended December 31, 2019 and accounted for 77.1% of revenue. We expect that there will continue to be a shift to purchasing merchandise through online channels and, as the German market leader in the online off-price fashion market, we believe that we are particularly well-positioned to benefit from this trend. We believe that potential new entrants to the market would have to invest substantially to build comparable clearance channels that protect the integrity of the brands that they sell, whereas we already have mature, developed sales channels and established relationships with high-quality suppliers. Further, we believe that the German off-price fashion market is underpenetrated in comparison to other Western European countries, and that this offers further room for growth. We believe that our addressable customer base will increase as penetration increases based on our referral system.

From a supplier’s perspective, our addressable market is premium and affordable luxury overstock, which excludes unbranded apparel in the mass/value segment and carry-over items that full price retailers can continue to sell for multiple seasons. One of the growth drivers in this market is the prevalence of a “buy-now” concept, where brands sell merchandise immediately after introducing it to the market at fashion shows, which removes the chance to receive feedback from the market and results in production planning inefficiencies that contribute to the supply of overstock. Other structural trends driving the growth of supply in the off-price fashion segment include a shorter collection cycle, resulting in supply of overstock as suppliers have to change collections more frequently, and increasing customer affinity for off-price merchandise.

Strategy

Further strengthen our online and offline presence in our home market.

We plan to continue to expand our market leading online position by way of targeted membership growth in Germany through viral marketing and continued incentive programs for customer referrals from existing customers. We aim to utilize our online channel to establish a footprint in other regions in Germany where we are currently underrepresented. We can then leverage that footprint to open additional offline site locations with an intention to convert online customers to omni-channel customers similar to our achievements in Frankfurt and Vienna. We believe there is still significant growth potential within Germany based on the regional distribution of our current customer base.

Potential initiatives for continuing to build our online business include developing strategies to improve basket sizes by an optimized omni-channel experience, data-driven customer insights and continuing to personalize our customer experience. Further, we will continue to improve CRM systems and loyalty programs with targeted treatment of high-value customers in order to maximize revenue and to develop value-based customer segmentation with personalized communication strategies. We will also continue to expand on our existing offering and provide a wider assortment, such as home accessories and plus size apparel, to appeal to a wider customer audience.

In the offline channel, we opened a new store in Frankfurt in August 2019 under the “BestSecret” brand, which offers a full assortment and operates across two floors and 2,800 square metres. We see the Frankfurt region as a prime offline location, as it has one of the highest concentrations of BestSecret members in Germany. Looking forward, we continuously monitor market opportunities with an eye to open additional stores in Germany in locations where they can provide accretive value.

Expand our online and offline presence in existing international markets and pursue selective acquisitions.

We have expanded our international presence in recent years and now have a strong online and offline foothold in Austria as well as a significant online presence in Switzerland following the acquisition of SOS in 2016. Our other international focus countries include Sweden, France and the Netherlands, which have delivered strong growth. With our local country managers as well as our localized language services, sales and marketing activities, we intend to significantly expand our footprint outside Germany.

The successful development of our Vienna store serves as a case study for future international store expansion. Such international expansion via physical stores offers us the opportunity to expand our customer base and growth prospects for the business in both the offline and online channels.

In addition to our organic development, we continue to selectively assess inorganic opportunities for international expansion on a case-by-case basis and to target opportunities in high growth markets that do not have a dominant incumbent player. We believe that our expertise in fashion procurement and sales can be successfully adapted to address local markets. We also consider general market and economic conditions and whether we believe that our product mix will be attractive in the country. Our acquisition of SOS has strengthened and accelerated our growth in Switzerland and aim to selectively replicate this success in other international markets.

Further strengthen our omni-channel capabilities and customer experience

We plan to further strengthen our omni-channel proposition through various initiatives that ultimately ensure the shopping journey is a single customer-focused experience. We have enhanced integration of the offline shopping experience with our online channel, including store delivery of online orders, the introduction of online terminals to our stores, the creation of in-store app features and virtual shelf extension, which is the ability to scan items in a store and check availability across our entire online and offline platform. Additionally, we have introduced a voluntary-paid premium membership program that offers enhanced benefits, including discounts, concierge services, gift wrapping and personal shopping. Further initiatives include the possibility for customers to try on their online order in a store with an immediate return option and the instant refund of online returns.

We have also increased the revenue generated by our online channel through the introduction of targeted marketing campaigns to drive buyer activity among existing customers and provided a payment by invoice option to our customers as a convenient payment method that enhances the overall shopping experience.

Going forward, we plan to have one clear brand and marketing strategy resulting in combined goals for the company as a whole (versus the historically individual goals of store-based and online channels). By uniting the in-store and online shopping experiences, we transmit a clear value proposition to customers and encourage them to share and refer in all channels. Also, the revised unified loyalty program will be an important step towards the strengthening of our omni-channel proposition.

We also intend to use enhanced data analytics, including analyzing customer data on purchases, products viewed and items on a wish list, to further customize and tailor displayed content in line with our customers’ individual shopping behavior and brand preferences. Our partnership with a strong player in predictive intelligence will improve our machine learning technology and expand these digital capabilities and our operational excellence. In addition, through personalization of our online platform for customers, we intend to connect customers with the most relevant assortment categories and brands for them. Furthermore, we are always looking to expand our product offering to broaden the customer experience. For example, the home accessories category was recently introduced and has been very successful. We continue to look for further growth opportunities by evaluating new assortments (e.g. plus size apparel, beauty). Finally, we aim to use experience gained from our successful ramp-up of our stores in Vienna and Frankfurt to strengthen and improve the performance of our other physical stores.

Focusing on operational excellence and efficiency gains.

While we currently achieve strong gross margins, we intend to continue to focus on operational excellence and efficiency gains through ongoing initiatives in order to maintain and increase our profitability. We are investing in the expansion of our centralized warehouse and logistics center in order to meet the demands of our growing business. We have also invested in administration, IT and procurement personnel in order to enable us to scale our business and we have implemented a system architecture that provides management with more transparent data to aid in steering the business. We believe that the personnel we have added and the system architecture we have put in place will allow for future growth with an underlying cost structure that will grow more slowly than revenue.

MANAGEMENT DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Macroeconomic and Sector-Specific Environment The euro zone economy recorded further growth in 2019. GDP rose by 1.2%, compared with 1.9% in the previous year. This represented a marked slowdown in economic growth compared to the prior year. Less private consumption, lower industrial production overall, a further slowdown in the Italian economy and the impact of the protracted protests in France mainly contributed to this development (Eurostat). The European fashion retail sector increased by 3.2% in 2019. Offline retail fashion contributed 2.0% to the sector growth. Online fashion retail achieved a strong increase of 11.4%, driven by a continuing consumer inclination towards online shopping (Statista; combined data for apparel, footwer and accessories). The main sales market for the Group is Germany, Austria and Switzerland (DACH). While the German economy expanded for the tenth consecutive year, growth slowed markedly. With a GDP increase of 0.6%, the economic growth rate declined in 2019 compared to previous year’s rate of 1.5% (Statista). In the German fashion retail sector stationary sales decreased by 2% in 2019 due to continuing low customer store visit frequency. Online fashion retail sales, however, grew strongly and managed to record an increase of 11.4% over prior year (Textilwirtschaft, Bundesverband E-Commerce und Versandhandel Deutschland e.V.).

Segments IFRS 8 requires that operating segments be defined on the basis of the internal reports of corporate divisions that are regularly reviewed by the chief operating decision maker (CODM) of the Group for the purpose of making decisions about the allocation of resources and assessing the financial performance of the given segments “Offline” and “Online”. Thus, the internal organizational and management structure and the internal reports submitted to the Management Board form the basis for determining the segment reporting format of the Group. Primary emphasis is placed on the indicators gross profit and gross profit margin. Reporting on the business segments is in line with the internal reporting. There are no intersegment transactions in the internal reporting structure. No information on segment assets or liabilities is available or relevant for decision-making.

Sales channel Online Offline Total

01.01.2019 – 01.01.2018 – 01.01.2019 – 01.01.2018 – 01.01.2019 – 01.01.2018 – 31.12.2019 31.12.2018 31.12.2019 31.12.2018 31.12.2019 31.12.2018 (in € million) (in € million) (in € million) (in € million) (in € million) (in € million)

Revenue 440.7 361.9 130.6 126.4 571.3 488.3 Cost of sales (222.3) (186.5) (73.7) (73.0) (296.0) (259.5) Gross profit 218.4 175.4 56.8 53.4 275.2 228.8 Gross margin in % 49.6% 48.5% 43.5% 42.2% 48.2% 46.9% EBIT 40.9 26.8 -12.7 -1.1 28.2 25.7

Results of Operations

01.01.2019 - 01.01.2018 – Change 31.12.2019 31.12.2018 (in € million) (in € million) %

Revenue ...... 571.3 488.3 17.0 Cost of sales ...... (296.0) (259.5) 14.1 Gross profit ...... 275.2 228.8 20.3 Selling and distribution costs ...... (193.4) (159.3) 21.4 Administrative expenses ...... (51.6) (43.2) 19.4 Other operating income ...... 1.5 1.5 0.0 Other operating expenses ...... (3.5) (2.1) 66.7 Earnings before interest and taxes (EBIT) .. 28.2 25.7 9.7 Interest and similar income……………………. 0.0 0.0 - Interest and similar expenses ...... (24.2) (23.8) 1.7 Earnings before taxes (EBT) ...... 4.0 1.9 >100 Income taxes ...... (0.2) 4.9 - Net income/loss for the period ...... 3.8 6.8 (44.1)

Revenue Our revenue increased by €83.0 million, or 17.0%, from €488.3 million for the year ended December 31, 2018 to €571.3 million for the year ended December 31, 2019. The positive development was mainly driven by an expanded customer base and continued a geographically strong performance in Germany. Our online revenue increased by €78.8 million, or 21.8%, from €361.9 million for the year ended December 31, 2018 to €440.7 million for the year ended December 31, 2019. Our offline revenue increased by €4.2 million, or 3.3%, from €126.4 million for the year ended December 31, 2018 to €130.6 million for the year ended December 31, 2019. For the year ended December 31, 2019, 81.3% of the Group’s revenue was generated in Germany, a decrease from 83.9% in the prior year period, confirming further internationalization trend.

Cost of sales Cost of sales increased by €36.5 million, or 14.1%, from €259.5 million for the year ended December 31, 2018 to €296.0 million for the year ended December 31, 2019. The increase was primarily due to the overall business growth. Cost of sales as a percentage of revenue were 51.8% which is 1.3 percentage points lower than in the year ended December 31, 2018 (53.1%) reflecting value creation initiatives, advantageous buying opportunities and a more favorable inventory structure. Expenses for depreciation of €1.0 million (2018: €1.0 million) and costs for the storage of goods of €3.1 million (2018: €2.9 million) are reported in cost of sales for the year ended December 31, 2019.

Selling and distribution costs Selling and distribution costs increased by €34.1 million, or 21.4%, from €159.3 million for the year ended December 31, 2018 to €193.4 million for the year ended December 31, 2019. The increase is mainly driven by the higher business volume, resulting in higher personnel expenses, shipping costs, costs for payment service providers, utility costs as well as higher amortization for intangible assets (in particular the trademark and the customer relationship “Schustermann & Borenstein”). Due to the strategic Group-wide rebranding to BestSecret, the remaining useful lifetime of the trademark “Schustermann & Borenstein” was reduced from a remaining 28 years to 3 years. As a result, the yearly amortization for the trademark “Schustermann & Borenstein” increased from €0.9 million to €8.7 million. The remaining useful lifetime of the customer relationship “Schustermann & Borenstein” was reduced from remaining 18 years to 12 years. The amortization increased from €4.4 million to €6.6 million on a yearly basis. Selling and distribution expenses consist of marketing expenses of €10.8 million (2018: €8.8 million), sales expenses of €33.0 million (2018: €29.7 million), fulfillment expenses of €88.3 million (2018: €70.9 million), depreciation and amortization expenses of €61.3 million (2018: €49.8 million).

Amortization in the amount of €47.5 million (2018: €37.5 million) relates to intangible assets step-ups resulting from PPA.

Administrative expenses Administrative expenses increased by €8.4 million, or 19.4%, from €43.2 million for the year ended December 31, 2018 to €51.6 million for the year ended December 31, 2019. The increase of administrative expenses is primarily due to a higher number of employees and higher general administrative expenses such as IT-licenses and maintenance to support our growth. Administrative expenses consist of technology expenses of €10.4 million (2018: €7.4 million), general and administrative expenses of €37.1 (2018: €32.8 million) million and depreciation of €4.1 million (2018: €2.9 million). Other operating income Other operating income stood at €1.5 million for the year ended December 31, 2019 (2018: €1.5 million). Other operating income mainly consists of compensations from insurances as well as income from foreign currency exchange differences.

Other operating expenses Other operating expenses increased by €1.4 million from €2.1 for the year ended December 31, 2018 to €3.5 million for the year ended December 31, 2019. Other operating expenses mainly consist of bad debt losses and foreign exchange losses.

Interest and similar expenses Interest and similar expenses increased by €0.4 million, or 1.7%, from €23.8 million for the year ended December 31, 2018 to €24.2 million for the year ended December 31, 20189. Interest and similar expenses mainly consist of interest for the Bond and expenses relating to IFRS 16.

Income taxes Income taxes changed by €5.1 million from €4.9 million tax income for the year ended December 31, 2018 to €0.2 million tax expense for the year ended December 31, 2019. The change is primarily due to increased taxable income as well as a lowered dissolution of total deferred tax liablitities mainly based on stock evaluation.

Net loss for the period Net income for the period amounted to €3.8 million for the year ended December 31, 2019 compared to €6.8 million for the year ended December 31, 2018, representing a decrease of €3.0 million. The decrease is primarily due to higher amortization for intangible assets due to reduced remaining useful lives as part of the strategic Group-wide rebranding to BestSecret.

EBITDA / Adjusted EBITDA

01.01.2019 – 01.01.2018 – 30.12.2019 30.12.2018 (in € million) (in € million)

Net loss for the period ...... ………………………………………………… 3.8 6.8 Income taxes ...... ……………………………………………...... 0.2 (4.9) Other interest and similar income ...... ………………………………………………… (0.0) (0.0) Interest and similar expenses ...... ………………………………………………… 24.2 23.8 Amortization, depreciation and write-downs ...... ………………………………………………… 66.4 53.8 EBITDA ...... ………………………………………………… 94.6 79.5 Reorganization (a) ...... ………………………………………………… 3.2 2.5 New store opening/ store extension and logistics/warehouse extension/ improvements(b)…. 1.7 2.4 Introduction/ improvement of tools and processes(c)……………………………………………. 0.5 1.8 Transaction costs(d)…………………………………………………………………………………. - 0.4 Adjusted EBITDA ...... ………………………………...... 100.0 86.6 ______(a) Represents costs for retail optimization, consulting fees for strategy project and other process optimizations, severance payments, headhunter services. (b) Represents expenses incurred in connection with a new store opening in Frankfurt (marketing costs, agency fees, recruiting, legal and consultancy expenses and additional personnel expenses), the extension of the Vienna store, expenses in connection with additional storage requirements, expenses in connection with the reorganization of processes for the outsourcing of returns as well as expenses in connection with the expansion of our warehouse. (c) Represents costs for the introduction of a CRM tool, the implementation of a merchandise management system as well as financial reporting advancements. (d) Represents pre-transaction costs related to international acquisitions.

Depreciation, amortization and write-downs costs increased by €12.6 million from €53.8 million for the year ended December 31, 2018 to €66.4 million for the year ended December 31, 2019. The increase was primarily due to higher amortization for intangible assets . Due to the strategic Group-wide rebranding to BestSecret, the remaining useful lifetime of the trademark “Schustermann & Borenstein” was reduced from remaining 28 years to 3 years. As a result, the yearly amortization for the trademark “Schustermann & Borenstein” increased from €0.9 million to €8.7 million. The remaining useful lifetime of the customer relationship “Schustermann & Borenstein” was reduced from remaining 18 years to 12 years. The amortization increased from €4.4 million to €6.6 million on a yearly basis. EBITDA increased by €15.1 million, from €79.5 million for the year ended December 31, 2018 to €94.6 million for the year ended December 31, 2019. The EBITDA development was mainly driven by strong revenue growth and higher gross profit. The one-off costs decreased by €1.7 million, from €7.1 million for the year ended December 31, 2018 to €5.4 million for the year ended December 31, 2019. The decrease is mainly due to expenses in connection improvements and extensions of our warehouse in previous year partially offset by higher expenses for the outsourcing of returns. Adjusted EBITDA for the year increased by €13.4 million, from €86.6 million for the year ended December 31, 2018 to €100.0 million for the year ended December 31, 2019.

Cash Flows The following table sets forth the principal components of our cash flows for the year ended December 31, 2019 and 2018.

01.01.2019 – 01.01.2018- Change 31.12.2019 31.12.2018 (in € million) (in € million) %

Cash flow from operating activities Cash flow from operating activities changed by €5.0 million from €68.4 million for the year ended December 31, 2018 to €73.4 million for the year ended December 31, 2019. Cash flow from operating activities was primarily affected by the increase of EBITDA in accordance with the business development.

Cash flow from investing activities Cash flow used for investing activities increased by €16.4 million from a net outflow of €(20.3) million for the year ended December 31, 2018 to a net outflow of €(36.7) million for the year ended December 31, 2019. The increase in cash outflow for investing activities was primarily affected investments in the extension of the warehouse as well as new store opening in Frankfurt.

Cash flow from financing activities Cash flow used in financing activities increased by €1.5 million from €(26.1) million for the year ended December 31, 2018 to €(27.6) million for the year ended December 31, 2019. The increase in cash flow used in financing activities was primarily due to a higher amount of interest paid for lease contracts.

Operating Net Working Capital

We define our operating net working capital as the sum of the line items (i) inventory, (ii) prepayments for inventory, (iii) trade accounts receivable, (iv) trade accounts payable, (v) accruals for outstanding invoices (inventories), (vi) refund liabilities and assets for the right to recover possession for expected returns as well as liabilities for processed returns. Our operating net working capital shows seasonal patterns with investments in inventory generally reaching a peak in August and September due to purchase of winter merchandise. The development of our operating net working capital is a key factor for our operating cash flow. The following table summarizes our net working capital as at the dates indicated:

31.12.2019 31.12.2018 Change (in € million) (in € million) % Inventories and prepayments for inventories ...... 166.5 127.0 31.1. Trade receivables...... 0.7 1.6 (56.3) Trade payables and similar obligations ...... (39.4) (21.7) 81.6 Others ...... (9.7) (11.7) (17.1) Operating Net Working Capital ...... 118.1 95.2 24.1

Operating net working capital increased by €22.9 million to €118.1 million to support the growth of business volume.

Net debt and Other Information As of December 31, 2019 Net debt(1) ...... 275.3 LTM interest expense(2) ...... 24.2 Ratio of net debt to LTM Adjusted EBITDA(3) ...... 2.8x Ratio of LTM Adjusted EBITDA to interest expense (fixed charge) ...... 4.1x

(1) Net debt consists of the Notes, accrued interest on the Notes and interest-bearing liabilities which also include recognized lease liabilities less cash and cash equivalents at the balance sheet date.

(2) Interest expense represents the interest expense for the 12 months period ended December 31, 2019. Interest expense has been presented for illustrative purposes only and does not purport to project our interest expense for any future period or our financial condition at any future date.

(3) Under IFRS, the net debt and the corresponding leverage ratio are higher due to the inclusion of the lease liabilities according to IFRS 16. The ratio of net debt to LTM Adjusted EBITDA according to the OM definition (German GAAP) is 2.0x on December 31, 2019.

Employees

2019

Offline sales channel 669 Online sales channel 132 Enabling services (logistics, IT, purchasing and administration) 1,060 Total 1,861

The average number of employees in 2019 was 1,861.

RISK FACTORS

The risks and uncertainties we describe below are not the only ones we face. Additional risks and uncertainties of which we are not aware or that we currently believe are immaterial may also adversely affect our business, financial condition and results of operations. If any of the possible events described below were to occur, our business, results of operations and financial condition could be materially and adversely affected. The order in which these risks are presented is not intended to provide an indication of the likelihood of their occurrence or their severity or significance. This Report also contains forward-looking statements that involve risks and uncertainties. See “Forward-Looking Statements.” Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including, but not limited to, the risks described below and elsewhere in this Report. Risks related to the COVID-19 crisis The impact of COVID-19 may have a negative effect on our business. In December 2019, a novel strain of coronavirus (“COVID-19”) surfaced in Wuhan, China. Through March and April 2020, the spread of this virus has globally caused significant business disruption, including closure of our offline stores in Germany and Austria, significant volatility in international debt and equity markets and significant disruption to the economy, all of which can negatively impact consumer confidence and, in turn, our ability to generate revenue and cash flows. There is significant uncertainty around the breadth and duration of business disruptions related to COVID-19, including, but not limited to, store closures, as well as its impact on the global economy and consumer confidence. The extent to which COVID-19 impacts our results will depend on future developments, which are highly uncertain and cannot be predicted, including new information which may emerge concerning the severity of COVID-19 and the actions taken or being continued to contain it or treat its impact. We cannot rule out that COVID-19 could have a material adverse effect on our business, financial condition and results of operations. Risks related to our business and industry Our business depends on our ability to continuously source a variety and quantity of attractive products from various popular brands at attractive prices that will satisfy our customers’ preferences and demands. The success of our business depends on our ability to continuously source attractive merchandise from a broad selection of high-quality brands at attractive prices. If we are unable to maintain our existing relationships or build new relationships with brands on acceptable commercial terms, we may be unable to offer an appropriate selection or quantity of merchandise at discounted prices, which would reduce the appeal of our offering. Only a few of the brand suppliers we work with have a continuing obligation to provide us with merchandise at historical levels or at all. Additionally, our suppliers may not be willing or able to fulfill our product requests due to lack of stock, a change in their supply chain model or aggressive competition from other industry participants, including other off-price retailers bidding against us for the same merchandise. Finally, brand suppliers may decide to prevent us from offering particular merchandise for sale through a particular sales channel. As a result, we may be unable to attract new customers and retain existing customers and consequently increase or maintain sales, which could also diminish the attractiveness of our proposition for suppliers, limiting access to merchandise, any one of which could have a material adverse effect on our business, results of operations and financial condition. We face strong competition in our markets and such competition may intensify further. The markets in which we operate are highly competitive. Our primary competitors are online retailers, including those devoted solely to fashion as well as other types of online retailers, and offline retailers, such as traditional retail stores, brand outlet stores and off-price fashion stores. New competitors who enter our markets may be successful in attracting customers, including our customers, and thereby capturing market share from us, particularly in Germany, our core market. Some of our competitors may have greater financial, distribution, marketing and other resources than we do. Our competitors may secure more favorable terms from brand suppliers, out-bid us for merchandise we would like to access, acquire more attractive merchandise in greater quantities, adopt more aggressive pricing policies, deliver merchandise more rapidly, or devote more resources to technology, order fulfillment and marketing than we can. The internet facilitates competitive entry and comparison-shopping and renders e-commerce inherently more competitive than other retail platforms. In

19 addition, new and enhanced technologies, including search services, may favor our competition. Also, alternative business models may emerge that would compete with us or diminish the attractiveness or utility of our business model. If we are unable to compete effectively by attracting our target customers to purchase our merchandise, we could lose market share to our competitors. Furthermore, our plans to expand our business operations into new markets and markets in which we have a relatively small presence may be adversely affected by strong competition. Competitive pressures we face may have a material adverse effect on our business, results of operations and financial condition. Our business may be impacted by negative economic and geopolitical developments in Germany and other countries where our customers are from. Our business may be impacted by reductions in discretionary consumer spending, which is affected by, among other factors, negative economic conditions and monetary policy in the Eurozone in connection with the European debt and economic crisis. For example, economic contraction, economic uncertainty and the perception by our customers of weak or weakening economic conditions could cause a decline in the demand for the merchandise we sell. In addition, changes in discretionary consumer spending may be influenced by factors such as unemployment levels, inflation, interest rates, increases in taxes or perceived or actual declines in disposable consumer income and wealth. We currently operate our store sites in Germany and Austria and distribute our merchandise to around 30 European countries. Therefore, we may be more affected by economic weakness or uncertainty in these countries and, to a lesser extent, by neighboring countries than some of our competitors with more diversified international operations. A negative development, contraction or lack of growth in the economies where we operate or may operate in the future, and overall macroeconomic conditions could materially adversely affect our business, results of operations and financial condition.

In addition, our offline stores sell to international tourists (e.g., from Russia, China and the Middle East) visiting the Munich, Frankfurt and Vienna sites to whom we offer day passes. Economic weakness, currency devaluation, pandemics (including COVID-19), VAT regulations or uncertainty in the home countries of these tourist customers may lead to fewer tourists arriving or a lower willingness to purchase our merchandise among those that do visit our stores.

Geopolitical tensions could negatively affect the demand for our merchandise. As terrorist assaults increase globally we may be affected indirectly due to their negative impact on consumer confidence and consumer shopping behavior which may have a decrease in footfall resulting in lower sales and results of operation. Moreover, the instability of the general security-situation could materially negatively affect our business.

Sales of our products are subject to seasonal fluctuations and unfavorable weather. The industry in which we operate is seasonal by nature, and our revenue, profits, liquidity and inventory levels are therefore subject to seasonal fluctuations. For example, we typically experience an increase in sales in the fourth quarter of the year due to the Cyber Week and Christmas shopping seasons. Any factors that harm our operating results during these periods, including unfavorable economic or geopolitical conditions affecting consumer spending levels or inclement weather that deters customers from visiting our stores, could have a disproportionate effect on our results of operations for the entire fiscal year. In addition, when the weather is warmer than expected in the autumn and winter months, our customers tend to purchase fewer winter collection items. Similarly, when the weather is cooler than expected in the summer months, our customers tend to purchase fewer summer collection items. During times of such unfavorable weather we may be required to lower our prices, negatively impacting our margins and our profit. If we cannot offset the lower-sales seasons with those having stronger sales, our business, financial condition and results of operations may be adversely affected.

Seasonal fluctuations also impact our working capital, liquidity levels and inventory. We incur additional expenses in the preparation for the increased demand we typically expect leading up to, and around, the Cyber Week and Christmas seasons and other peak selling periods and must carry a significant amount of inventory before such periods, which is also reflected in our liquidity.

Our quarterly results of operations may also fluctuate significantly as a result of a variety of other factors, including the timing of new store openings and the revenue contributed by new stores and the age and quantity of inventory at period end.

Natural disasters, such as storms, tornadoes, floods, earthquakes or other major weather disasters may also have a negative impact on our business. Our inability to compensate for seasonal fluctuations and adapt to weather conditions may have a material adverse effect on our business, financial condition and results of operations. If we are unable to manage our inventory or our store network and online presence in line with customer demand, our sales levels and profitability may decline. The merchandise we sell is subject to changing consumer demands and preferences. Our success depends in large part on our ability to gauge, react and adapt to changing consumer demands in a timely manner. Our merchandise must appeal to a broad range of customers whose preferences cannot always be predicted with certainty. To be responsive to shifting customer tastes, we must manage our inventory levels closely. If we misjudge, fail to identify or fail to react swiftly to changes in consumer preferences, our sales could decrease and we could see a significant increase in our inventory levels. If we are left with high levels of unsold stock, or if our inventory provisions are inadequate, we could be required to mark down some of our merchandise, which could lower our operating profits and have a significant negative impact on our business, financial condition, results of operations and prospects. Conversely, if we underestimate consumer interest in our merchandise, we may experience inventory shortages, unfulfilled orders, increased distribution costs and lower revenue and profitability than we could otherwise have achieved. Inventory shortages could lead to customer dissatisfaction and adversely impact our reputation and brand image. In addition, certain of our online customers, including online customers in Germany, have statutory rights with respect to the return of merchandise. We offer our online customers free return shipping, depending on their location and membership status. In addition, we may have to bear the risk for damage or loss of the merchandise. As a result, any increase in customer returns of merchandise, particularly from our online business, could result in increasing costs and higher levels of unsold stock. Furthermore, we may not be able to manage our store network and make strategic decisions relating to store openings, closings, refurbishments and our online presence quickly enough or in line with changing customer shopping habits and preferences. Additionally, our store concepts and layouts as well as our online presence may not correspond to customers’ needs and tastes. Failures and delays in optimizing our store network, designs and marketing channels may prevent us from meeting consumer demand and have an adverse effect on our business, results of operations, financial condition and prospects. We depend on a reliable and efficient supply chain, which includes third-party carriers to deliver merchandise to our warehouse, stores and online customers. Capacity constraints, interruptions or other failures in our supply chain could materially and adversely affect our business, results of operations and financial condition. The profitability of our business depends on our ability to accurately and timely process and deliver our customers’ orders. This depends on the efficient, uninterrupted operation of our leased warehouse and logistics center in Poing, Germany, our automated warehouse management systems as well as on third-party delivery companies in each of the countries in which we operate. A number of factors, many of which are beyond our control, could disrupt the operation of our supply chain and jeopardize our ability to receive, process and deliver our customers’ orders. System interruptions in any of our technology platforms could delay or prevent our receipt of customer orders. Fire, flood, earthquake, power loss, telecommunications failure, break-in, human error, strikes, pandemics, work stoppages and other events could interrupt the operation of our warehouse and warehouse management system, jeopardizing our ability to fulfill orders. We also rely on third-party carriers for the delivery of merchandise to our warehouse and logistics center as well as for delivery to online customers. We are therefore exposed to any failures or shortcomings by these carriers, including delivery delays or the loss or theft of goods. Any breakdown or disruption of the activities of these carriers resulting from, among other things, inclement weather, natural disasters, transportation interruptions, labor shortages, oil price increases, epidemics or unrest could impair our ability to supply our warehouse and logistics center at current cost levels or at all, make timely deliveries to customers or maintain an appropriate logistics chain and level of inventory, all of which could adversely affect our reputation, business, results of operations and financial condition. Additionally, we may be unable to maintain relationships with our current carriers, and we may at any point be required to contract with other carriers at a greater cost. Finally, we may face price increases by the third-party carriers we use which could result higher fulfillment costs which we might only partially be able to pass on to our customers. As our operations expand in size and scope, we will need to continually improve and upgrade the systems and infrastructure that support our supply chain. If the traffic volume on our websites or the number of purchases made by customers substantially increases, our current transaction processing systems, network infrastructure,

21 storage facilities and delivery systems may be unable to accommodate the increased volume. Additionally, we may be unable to accurately forecast these increases or to upgrade our supply chain systems in time to accommodate them. If the manufacturing, delivery or supply chain management processes relating to our merchandise are disrupted for any reason, we may be delayed in restoring our inventory of the affected products and we may experience a significant increase in our cost of sales. Any failure to adequately manage and improve our supply chain could reduce our transaction volume, undermine customer satisfaction, damage our business reputation, limit our competitiveness or otherwise materially and adversely affect our business, results of operations and financial condition. Operational disruptions at our centralized warehouse and logistics center and risks arising from the planned expansion of the warehouse center could have a material adverse effect on our business, results of operations and financial condition. We currently operate one main warehouse in Poing, Germany, where we store nearly all our inventory. We have an additional warehouse for shoes in Asccheim, Germany and since the third quarter 2019 we have outsourced our returns to a third-party provider in Poland. Our main warehouse is critical to our business. If operations at our warehouse were interrupted due to factors including, but not limited to, pandemics (such as the current COVID-19 pandemic), natural disasters (such as flooding or fire), man-made disruptions (such as labor strikes), technical defects, accidents, epidemics or for any other reason, it would have a material adverse effect on our business, results of operations and financial position. In addition, due to the high level of integration between our warehouse and points of sale, any interruption of logistics at our warehouse would also have a significant adverse effect on our ability to supply our customers and could result in customer dissatisfaction and harm to our reputation. Any disruptions at our sites, either because of problems with our supply of merchandise or for any of the other reasons listed above, could also have a material adverse effect on our business, results of operations and financial condition. An expansion of our warehouse to meet the demands of our growing business was started in 2019. The timing of the completion currently depends on the COVID-19 related developments. Any risks arising from the expansion such as unexpected cost overruns, substantial delays or other unforeseen factors could have a material adverse effect on our business, results of operations and financial condition. We are subject to risks in connection with the quality and timely delivery of our private label merchandise and our relationships with the manufacturers of such merchandise. A single-digit share of our sales relate to our private label merchandise, which we source, for example, from suppliers in Turkey, Spain, Potugal, India, China and Hong Kong. Our agreements with the manufacturers of our private label merchandise are typically based on an order-by-order concept for each private label brand rather than long-term supply agreements. Since we only have limited control over manufacturers of our private label merchandise, there is no guarantee that this merchandise will continue to meet our specifications. Furthermore, any breach or perceived breach of relevant laws, regulations, permits or licenses relating to the private label merchandise sold by us, or failure to achieve or maintain particular ethical business practices and standards could also lead to adverse publicity, which could materially adversely affect the reputation of our private label brands, damage our customer relationships and lead to a decline in our sales. As we are the “responsible person” for our private label merchandise within the context of the applicable regulations on product safety applicable to our merchandise, any quality defect could lead (on the basis of EU law or similar applicable national laws) to customer claims, administrative or criminal proceedings and penalties. We could also face damage to our own private label brands’ reputation. In addition, if the manufacturing, delivery or supply chain management processes relating to our private label or other merchandise are disrupted for any reason, we may be delayed in restoring our inventory of the affected private label or other products. In case an agreement with a private label supplier is terminated, we need to find another supplier that can produce the merchandise at competitive prices and quality. We face certain risks in relation to our e-commerce business. We generate a majority of our revenue from sales of merchandise over the internet via our e-commerce platform, BestSecret. Our e-commerce operations are subject to numerous risks, including:  reliance on third parties for computer hardware and software, the need to keep up with rapid technological change and the implementation of new systems and platforms;  the risk that our e-commerce platform may become unstable or unavailable due to necessary upgrades or the failure of our computer systems or the related IT support systems or that customer data may be

misappropriated as a result of computer viruses, telecommunication failures, electronic break-ins and similar disruptions, or disruption of internet service, whether for technical reasons or for other causes;  online applications not being compatible with certain electronic devices, customers finding our e- commerce websites difficult to use, being less willing to use our websites than we expect, being unwilling to share personal information online or via our mobile applications, or not being confident that they are secure;  the incurrence of unexpected costs in connection with the maintenance and future development of our e-commerce platform;  liability for online content, security breaches and consumer privacy concerns;  lack of ability to honor our usual delivery terms in case of an unexpected or a higher than expected spike in customer orders or for other reasons that may cause negative reputational consequences;  negative online reviews (including social media posts) from dissatisfied customers which may deter other potential customers from using our e-commerce platform and that may also affect our brands’ reputation and sales in our offline stores;  lack of ability to communicate with our customers using e-mail or other means due to failed or delayed delivery of such e-mails for technical reasons, lack of interest by customers or marking as “spam” or “junk”; in addition, certain customers may be dissatisfied when exposed to too many advertising campaigns or newsletters and to what they may consider to be e-mail or text message “flooding”;  actions by third parties to block, impose restrictions on or charge for the delivery of e-mails or other messages, as well as legal or regulatory changes limiting our right to send such messages or imposing additional requirements on us in connection with them, could impair our ability to communicate with customers. Our failure to respond appropriately to these risks and uncertainties could reduce our revenue (in particular, our revenue from our e-commerce operations) as well as damage our reputation and brands, especially since e- commerce is a significant part of our growth strategy. The realization of any of these risks could have a material adverse effect on our business, results of operations and financial condition. Our operations may be interrupted or otherwise adversely affected as a result of failures in our IT systems. Our success depends on the continuous and uninterrupted availability of our IT systems, particularly to process customer transactions and to manage inventory levels, purchases and deliveries of our merchandise. Over the past few years, we have developed a sophisticated IT system which supports our websites and apps, customer service, supplier connectivity, communications, fraud detection and the monitoring of customer sales and improved management of inventories. As our operations grow in size, scope and complexity, we need to continuously improve and upgrade our systems and infrastructure to offer an increasing number of user- enhanced services, features and functionalities, while maintaining or improving the reliability and integrity of our systems and infrastructure. A range of factors beyond our control, such as telecommunication problems, software errors, inadequate capacity at IT centers, fire, power outages or damage, attacks by third parties, computer viruses and the delayed or failed implementation of new computer systems, could interfere with the availability of our IT systems. Any material disruption or slowdown of our systems could cause information, including data related to purchases of merchandise, to be lost or delayed which could result in delays in the delivery of products to customers or lost sales or impair our ability to manage our inventories. Our existing safety systems, data backup, access protection, user management and IT emergency planning may not be sufficient to prevent information loss or disruptions to our IT systems. In addition, if changes in technology cause our IT systems to become obsolete, or if our IT systems are inadequate to handle our growth, our reputation among our customers may be damaged. Any failure to properly guard against the interruption or malfunctioning of our IT systems could have a material adverse effect on our business, financial condition and results of operations. A failure to adopt and apply technological advances in a timely manner and to successfully expand our omni-channel capabilities could limit our growth and prevent us from maintaining profitability. We face risks in connection with continuous technological development and the shift from traditional sales channels, such as offline stores, to online and mobile-based channels and multi-channel models, both of which can increase competitive pressure. For example, our online and mobile offerings must keep pace with the technological development of the devices used by our customers, the technological progress of our competitors and any consequential new shopping behaviors and trends.

Furthermore, our success, in particular with respect to our online sales, depends on our ability to continuously improve our technological platform and to develop new applications in line with the technological development and trends in order to remain competitive. For example, the introduction of new payment solutions may entail substantial costs and effort, and there is no guarantee that such new solutions will be accepted by customers, which may result in fewer purchases from customers and, in turn, lower sales. We may fail to adopt and apply new technological advances in a timely manner, or experience difficulties or compatibility issues. Any such failure to adopt and apply technological advances in a timely and effective manner and to further invest into multi-channel strategies and their implementation could have a material adverse effect on our business, financial position and results of operations. Our strategy to continue to expand our business in Germany and internationally may fail or advance at a slower pace than planned. Part of our growth strategy includes increasing the number of our stores on a low and controlled level through new store openings in Germany. However, we may not be able to implement our growth strategy successfully or at the envisaged pace if we fail to identify and lease attractive store locations on acceptable terms, attract and hire skilled sales staff or implement the required infrastructure. Consequently, the intended increase of our store business may fail to materialize. The success of new stores may also be affected by our failure to correctly estimate customer demand for store sales.

The success of our online expansion in and into new countries may be affected if we fail to correctly estimate customer demand in local markets or are unable to successfully establish our brands. This risk may be higher in new markets in which we operate, where our less established position makes it more difficult to assess customer demand and the appeal of our product offering. Our capital and other expenditures may also be higher than expected due to cost overruns, unexpected delay or other unforeseen factors. In addition, if we fail to execute our expansion strategy in a discreet manner, our supplier relationships may deteriorate and we may lose certain of our suppliers. If our expansion strategy is not successful or advances at a slower pace than planned, our competitive position and our profitability and growth may be negatively affected. In addition, any failure by us to anticipate or respond to market demand, control our operating costs or otherwise effectively address any challenges that arise as we attempt to implement our strategy, could have a material adverse effect on our business, financial condition and results of operations.

We may be unable to manage our growing business activities effectively

Our business grew significantly over the last decade and continues to be further expand. Our operating complexity will increase as we implement our growth strategy and will require a continuous expansion and improvement of our operating capabilities and the training and management of our employee base. Developing and refining the appropriate internal management, accounting and book-keeping processes, organizational compliance and risk monitoring structures required for this growth and the complex group structure places high demands on us and our management, as well as on our operational and financial infrastructure, with no assurance that sales and profitability will increase accordingly. As our operations grow further, we will need to continue to improve and upgrade our systems and infrastructure to deal with the greater scale and complexity of operations. Delays in improving these systems and in reaching an appropriate level of staffing may result in business and administrative oversights and errors, which may also lead to higher operating expenses.

In addition, our growth could make it difficult for us to adequately predict the expenditures we will need to make in the future. This growth could also impact the operational flexibility of the supply chain organization and impair our ability to react promptly to changing customer demands and new market trends. If we do not make the necessary capital or other expenditures to accommodate our future growth, we may not be successful in our growth strategy. Continued growth could also strain our ability to maintain reliable service levels for our customers and to develop and improve our internal controls.

We may be unable to accurately anticipate all the demands that our expanding operations will impose on our business, personnel, systems and controls and procedures, and the failure to appropriately address such demands, or the realization of any of the above-mentioned risks, could have a material adverse effect on our business, results of operations and financial position.

Our risk management and internal controls may not prevent or detect violations of law or other inadequate business practices. Our compliance function is carried out by our legal department and our managing directors and is complemented by external law firms. We have introduced a Group-wide Code of Coduct which outlines the rules of behavior for our management and employees.

Our compliance monitoring and internal controls are performed on a case-by-case basis only and our existing compliance processes and internal controls may not be sufficient to prevent or detect inadequate practices, mistakes in our financial reporting and controlling systems, fraud, merchandise theft, misappropriation of funds and other violations of law. Due to our business operations, we are subject to a number of laws and regulations in various European countries. These include, among others, regulations concerning consumer protection, data protection, unsolicited commercial communications, general terms and conditions of contract, tax, child protection and telecommunications. In the event that we or any intermediaries, consultants, sales agents or employees with whom we cooperate either receive or grant inappropriate benefits or generally use corrupt, fraudulent or other unfair business practices, we could be confronted with legal sanctions, penalties and loss of orders and harm to our reputation. Inability to adequately identify or prevent such practices or violations could have a material adverse effect on our results of operations and financial condition. We are subject to numerous laws and regulations with respect to personal data protection and failure to comply with such laws and regulations, may result in litigation and administrative or arbitration proceedings and/or significantly damage our relationship with our customers.

We process sensitive personal customer data as part of our members-only business model. A fundamental requirement for online commerce and communications is the secure handling and transmission of confidential information, including credit card information, over public networks. Advances in computer capabilities, new discoveries in the field of cryptography or other developments might compromise or breach the systems we use to protect transactional and personal data.

Both local and international laws and regulations govern our collection, use, retention, sharing and security of this personal data, including the General Data Protection Regulation which came into effect on May 25, 2018. In order to comply with this regulation, we have installed a dedicated data protection officer who is supported by an external consultant. Together they oversee the implementation and monitoring of all measures associated with data protection, including Group-wide training for existing and new employees. A failure to comply with applicable laws or regulations could have an adverse impact on our reputation and could lead to us becoming subject to penalties or claims, which could have a material adverse effect on our business and results of operations. The need to comply with data protection legislation is a significant controlling, operational and reputational risk which can affect us in a number of ways including, for example, making it more difficult to maintain and expand our marketing data and also through potential litigation relating to the alleged misuse of personal data. Regulation regarding data collection and data protection may also become stricter in the future. New laws, regulations or developments in this field and changes in consumer behavior could interfere with our strategies to use privacy-related information for our omni-channel marketing efforts and could also have an adverse effect on our business and results of operations.

Significant modifications in laws or regulations in countries in which we operate may consequently lead to us incurring higher costs or having to change our business practices. Also, compliance will become more complex and involve higher costs and the increasing risk of noncompliance may give rise to civil liability, administrative orders (including injunctive relief), fines or even criminal charges.

Unauthorized data disclosure could occur through cyber security breaches as a result of human error, external hacking, malware infection, malicious or accidental user activity, internal security breaches or physical security breaches due to unauthorized personnel gaining physical access. If we or any third-party service providers on which we may rely fail to transmit customer information in a secure manner, or if any such loss of personal customer data were otherwise to occur, we could face liability under data protection laws. Any such disclosure could cause consumers to lose confidence in the security of our websites and deter future purchases.

Any failure to comply with local and international laws governing personal data or to protect our data from being misappropriated could have a material adverse effect on our business, financial position and results of operations.

We are exposed to risks associated to the payment options we offer. We aim for an ideal balance between minimizing bad debt and maximizing payment acceptance rates. A high payment acceptance rate indicates that customers can check out successfully, and this can be achieved by providing a frictionless customer experience. Hence, in most cases, we do not require customers to strongly authenticate themselves during a card payment checkout as this might lead to drop-offs. Instead, we consciously elect to take the risk and liability.

On the other hand, bad debt can occur because of unsecured payments that usually result from fraudulent threats (e.g. account takeovers, invalid accounts, no cardholder authorization). In case of excessive chargebacks which are related to fraudulent card payments, we could enter a chargeback monitoring program managed by the card schemes. If we are not able to reduce chargeback rates while being monitored, there will be fines. The risk of not being allowed to accept card payments at all is associated with excessive chargebacks as well. Besides that, unsecured direct debits which are only offered to existing customers, have no authorization mechanism by design, so the risk is always with us.

Overall, a certain risk exposure exists, and this could have a material adverse effect on the business, the financial position and the performance of operations. Therefore, we have a fraud prevention system in place to reduce the risk exposure. Customers with a high-risk profile have to go through a more stringent authentication process. Also, new customers who opt to pay by direct debit can only do so in a secured way.

We depend on qualified personnel, including certain key personnel such as our senior management, and may not be able to retain or replace such personnel. Our success and future growth depend significantly on the performance of our senior management, purchasing managers and qualified personnel in certain functions, including IT and logistics. In the event of departure of one or more of these key and qualified personnel, we may not be able to replace them quickly, which could affect our operational performance. More generally, we may be unable to recruit new personnel whose skills and industry experience are equivalent to those of our key and qualified personnel, or could fail to attract and retain experienced personnel in the future. In addition, should our executives or key employees join a competitor, it could have a negative impact on our operations. Furthermore, many of our procurement employees have good relationships with suppliers, many of which have developed over decades. If we are not able to retain these employees, we may fail to maintain or further develop these relationships with suppliers. These circumstances could have a material adverse effect on our business, financial condition and results of operations. We are exposed to the risk of rising labor costs as well as work stoppages, strikes or other collective actions. Personnel expenses represent a significant part of our cost base. We may face considerable wage increases in the future, as a result of generally rising wages. In addition, since the business is labor intensive, maintaining good relationships with our employees is crucial to our operations. Any deterioration of such relationships in the future or any material work stoppages, strikes or other types of conflicts with our employees, could have a material adverse effect on our business, results of operations and financial position. While currently no supervisory board (Aufsichtsrat) has been established at Prestige BidCo GmbH and subsidiaries to date, this may change in the future and we may be required to implement supervisory boards. As a consequence, we would be required, inter alia, to involve such a body in certain decision-making processes, which may limit our operational flexibility and our ability to react to corporate developments in a timely manner. Our intangible assets, such as goodwill and trademarks, are subject to the risk of impairment. Our intangible assets, primarily consisting of goodwill, customer relationships, trademarks, licenses and software, are regularly reviewed on the basis of certain assumptions, including cash-flow and growth rate estimates. As of December 31, 2019, our goodwill amounted to €254.4 million and our other intangible assets (mainly customer relationships and trademarks) amounted to €376.3 million. Many of our suppliers rely on credit insurance to protect their receivables, and any changes to, or slow adjustments or withdrawals of, such credit insurance might cause suppliers to seek to reduce their credit exposure to us

We believe that many of our suppliers have traditionally taken out credit insurance to protect their receivables against the risk of bad debt, insolvency or protracted default of their buyers, including us. Credit levels available to us from our suppliers remain dependent on the general economic environment and our financial position. If

26 there is a significant decrease in the availability of credit insurance to our suppliers, or if an increase in credit levels is administered too slowly or such insurance is withdrawn in its entirety, and if such suppliers are unwilling or unable to take credit risk themselves or find alternative credit sources, they may choose to reduce their credit exposure to us, for example by seeking to change their credit terms vis-à-vis our Group. Any such actions could have a material adverse effect on our cash position, lead to an increase in our indebtedness or have a negative impact on our product offerings and, thus, on our sales. This could have a material adverse effect on our business, financial position and results of operations.

We are exposed to risks related to conducting operations in several different countries. We are an international business and have incurred, and expect to continue to incur, significant expenses in developing operations in the markets in which we operate. We face a variety of risks generally associated with doing business in multiple markets. Such risks relate to the following matters, among others:  multiple, conflicting and changing consumer, tax and other laws and regulations, including potential complications due to unexpected changes in legal and regulatory requirements;  the need to adapt our websites and the merchandise we sell to local tastes;  difficulties enforcing our existing intellectual property rights and obtaining necessary third-party intellectual property rights;  difficulties in maintaining a system of effective internal controls and managing the accounting and tax complexities of an international business;  foreign tax consequences;  foreign exchange issues that may make repatriating income costly or impossible;  fluctuations in currency exchange rates;  economic, legal and political instability;  increased transportation and shipping costs;  staffing difficulties, regional or national labor strikes or other labor disputes;  tariffs, quotas, taxes, price controls and other market barriers. Our failure to successfully manage any of such risks could materially and adversely affect our business, financial condition and results of operations.

Future tax audits within our Group and changes in fiscal regulations could lead to additional tax liabilities. We are subject to routine tax audits by local tax authorities. As of December 31, 2019, no tax audits have been scheduled in Germany or abroad. If we undergo a tax audit, the actual tax payment obligation arising from the tax audit may exceed the amount reflected in our financial statements. Although we have specifically accounted for potential tax exposure for the respective financial years, our business, financial condition and results of operations may be adversely affected if the accruals and provisions made in our financial statements are lower than the actual tax burden. Furthermore, tax audits for periods or jurisdictions not yet subject to a tax audit may lead to higher taxation in the future. Any additional tax payments could have a material adverse effect on our business, financial condition and results of operations.

We may seek to retire or purchase our outstanding debt We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

MANAGEMENT

PrestigeBidCo

PrestigeBidCo GmbH, as the Issuer of the Senior Secured Notes is a company with limited liability (Gesellschaft mit beschränkter Haftung). The current managing directors (Geschäftsführer) of the Issuer are Daniel Schustermann, Amir Borenstein, Marian Gradl-Schikora and Thomas Helmreich.

The business address of the managing directors is Margaretha-Ley-Ring 27, 85609 Achheim, Germany.

Prestige BidCo GmbH

The managing directors of PrestigeBidCo are responsible for managing the day-to-day business of PrestigeBidCo in accordance with applicable German law and its articles of association (Satzung) (the “Articles of Association”). In addition, the managing directors must ensure appropriate control of risk within PrestigeBidCo and its subsidiaries so that any developments jeopardizing its future as a going concern may be identified at an early stage. The managing directors legally represent PrestigeBidCo in dealings with third parties and in court. Currently, PrestigeBidCo has also established an advisory board (Beirat) (the “Advisory Board”) in accordance with its Articles of Association. The Advisory Board may not exercise management functions, it advises the managing directors on the management of PrestigeBidCo and monitors its conduct of business.

The managing directors are responsible for managing the business of PrestigeBidCo in accordance with the German Limited Liability Companies Act (Gesetz betreffend die Gesellschaften mit beschränkter Haftung, GmbHG), its Articles of Association and the rules of procedure (Geschäftsordnung) for the board of managing directors of PrestigeBidCo. Members of the managing directors are usually appointed for an indefinite period, but the Advisory Board may revoke the appointment of each managing director at any time.

The managing directors have overall responsibility for PrestigeBidCo’s business. Managing directors may not deal with, or vote on, measures relating to proposals, arrangements or contracts between himself or herself and PrestigeBidCo.

PrestigeBidCo’s Articles of Association provide that it can only be legally represented by two managing directors or by one managing director in conjunction with an authorized signatory who holds a power of attorney (Prokurist).

Managing Directors of the Group

Daniel Schustermann joined the S&B Group in 2011 and is responsible for procurement, merchandise management and value creation at the S&B Group. Prior to joining the S&B Group, he worked as a consultant for CMI Munich. Mr. Schustermann holds a bachelor degree from the European Business School. Marian Gradl-Schikora joined the S&B Group in 2000 and is responsible for stationary retail, online operations, marketing, CRM, data, customer service, content creation and international business. He is responsible for the management of BestSecret since 2007, the establishment of which he led within the S&B Group. Prior to joining the S&B Group, Mr. Gradl-Schikora worked with DataDesign AG as project manager. Josef Amir Borenstein joined the S&B Group in 1987. He has been part of the management team since 1992 and is responsible for the private label and home operations. Prior to joining the S&B Group, he worked for the import and fashion agency Horvath&Maille (Toronto). Thomas Helmreich joined the S&B Group in 2019 and is responsible for finance, legal & compliance, commercial management, business analysis, controlling, payment and investor relations. He previously served as CFO of TAKKO Fashion from 2015 to 2018. Mr. Helmreich began his career as a tax consultant and certified public accountant at Arthur Andersen, with appointments in Italy and Germany. Later he held the position of a Chief Financial Officer at a number of international retail companies and private equity backed companies. Thomas Perlitz joined the S&B Group in 2019. He is responsible for human resources, people & organizational development and internal communications. Prior to joining the S&B Group, he was Global Senior Vice President of Human Resources and Executive Advisor of Global Human Resources at Gerresheimer AG. Before that he held various human resources positions at Henkel, Ingram Micro Holding GmbH and Siemens Nixdorf.

Frank Stehle joined the S&B Group in 2018 from Zalando, where he was Head of Logisitcs Operations. He has overall responsibility for the entire Supply Chain and Logistics of S&B Group, especially logistics strategy, including transport of goods, inbound and outbound of goods, shipment and return of deliveries. Ralph Goedecke joined the S&B Group in 2019 and is responsible for Group IT. He was most recently employed as CEO at The Software Fanatics GmbH in Munich. Prior to this, he served as Managing Director as well as Chief Digital Officer and later as Chief Commercial Officer at A.T.U. GmbH. He has also held positions at the ARP Group (as CEO) in Switzerland and at KSB AG (as Vice President for Standard Business / E- Commerce / Corporate Pricing) in Frankenthal.

Advisory Board

The Advisory Board may comprise up to ten members, which are appointed by the shareholders of PrestigeBidCo Shareholders’ Meeting.

The current members of the Advisory Board are:

• David Haines (Chairman of the Advisory Board), Luzern, Switzerland; • Jörg Rockenhäuser, c/o Permira Beteiligungsberatung GmbH, Frankfurt a.M., Germany; • Kim Felixmüller, c/o Permira Beteiligungsberatung GmbH, Frankfurt a.M., Germany; • Michala Rudorfer, c/o Permira Beteiligungsberatung GmbH, Frankfurt a.M., Germany; • Cheryl Potter, London, United Kingdom; • Anat Fuchs-Borenstein, Munich, Germany

Unless otherwise required by its rules of procedure, resolutions of the Advisory Board are passed by a simple majority of the members of the Advisory Board. In order to constitute a quorum, at least three Permira-Members of the Advisory Board must participate in the voting. The Advisory Board is required to meet at least once per month.

While the Shareholder’s Meeting of PrestigeBidCo may resolve to shift further responsibilities to or to withdraw single or all competencies from the Advisory Board, the Advisory Board is, subject to certain exceptions, responsible for (i) advising the board of managing directors of PrestigeBidCo; (ii) appointment, dismissal and discharge of the managing directors of PrestigeBidCo; (iii) granting and withdrawal of proxies (Prokuren) and general powers of attorney (General- und Handlungsvollmachten); (iv) review and approval of annual budgets or business plans; (v) determination and appointment of the auditor for the financial statements and the group financial statements and (vi) approval of the annual financial statements and of the consolidated financial statements.

SHAREHOLDERS

Funds managed by Permira, management and family investors have beneficial ownership, directly or indirectly through intermediate holding companies of the Issuer.

DESCRIPTION OF CERTAIN FINANCING ARRANGEMENTS

Senior Secured Notes due 2023 PrestigeBidCo GmbH, a company with limited liability (Gesellschaft mit beschränkter Haftung) incorporated and existing under the laws of Germany (the “Issuer”), offered €260,000,000 aggregate principal amount of 6.250% Senior Secured Notes due 2023 (the “Notes”) as part of the financing for the acquisition of Schustermann & Borenstein Holding GmbH by funds managed by Permira.

The Notes will mature on December 15, 2023. The Issuer pays interest on the Notes semi-annually on each June 15 and December 15. Prior to December 15, 2019, the Issuer will be entitled, at its option, to redeem all or a portion of the Notes by paying the relevant applicable premium. Some or all of the Notes may also be redeemed at any time on or after December 15, 2019 at certain redemption prices. In addition, prior to December 15, 2019, the Issuer may redeem at its option up to 40% of the aggregate principal amount of the Notes with the net proceeds from certain equity offerings at a certain redemption price, provided that at least 60% of the aggregate principal amount of the Notes remains outstanding. Upon the occurrence of certain events constituting a change of control, the Issuer may be required to make an offer to repurchase all of the Notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any. However, a change of control will not be deemed to have occurred if the Issuer’s consolidated net leverage ratio is less than certain specified levels at the time of such event. In addition, the Issuer may redeem all, but not less than all, of the Notes upon the occurrence of certain changes in applicable tax law.

Revolving Credit Facility Agreement In December 2016, PrestigeBidCo GmbH (as original borrower and original guarantor), Barclays Bank PLC, Goldman Sachs Bank USA and UniCredit Bank AG, London Branch (as lenders), UniCredit Bank AG, London Branch (as facility agent) and UniCredit Bank AG, London Branch (as security agent), among others, entered into a revolving credit facility agreement providing for borrowings up to an aggregate principal amount of €35.0 million on a committed basis (the “Revolving Credit Facility”). The Revolving Credit Facility may be utilized by any current or future borrower under the Revolving Credit Facility in euro, Swiss francs, US dollars, Pounds Sterling or certain other currencies (if agreed) by the drawing of cash advances, the issue of Letters of Credit (upon the appointment of an Issuing Bank) and by way of any Ancillary Facilities that may be made available thereunder (each as defined in the Revolving Credit Facility Agreement). Subject to certain exceptions, loans may be borrowed, repaid and re-borrowed at any time. Borrowings are available to be used for (i) general corporate and working capital purposes of the Group (as defined in the Revolving Credit Facility Agreement) including, without limitation, for payment of interest under the Notes.

PrestigeBidCo GmbH established an additional revolving credit facility of €15.0 million by way of increase of the existing facility to €50.0 million. The additional facility lender is UniCredit Bank AG, London branch. On January 02, 2019 the lender confirmed the granting of the additional facility. Utilizations under the Additional Facility may only be used for financing or refinancing the working capital requirements and/or general corporate purposes of PrestigeBidCo GmbH and its Restricted Subsidiaries. The term of the Additional Facility is valid until further notice. The additional facility ranks pari passu with the existing facility.

ATTACHMENT: AUDITED CONSOLIDATED FINANCIAL STATEMENTS OF PRESTIGEBIDCO GMBH

Audited IFRS Consolidated Financial Statements of PrestigeBidCo GmbH for the financial year from January 1 to December 31, 2019

PrestigeBidCo GmbH Aschheim

Consolidated Financial statements and group management report 31 December 2019

Translation from the German language

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

These Consolidated Financial Statements have been prepared from the company’s books and records after making all necessary adjustments thereto, and they represent the financial statements for the periods under examination. The notes to the Consolidated Financial Statements are factually correct and contain all disclosures necessary for a clear understanding of the financial statements.

(Signature/date)

Translation from the German language

Consolidated statement of comprehensive income

KEUR Notes 2019 2018

Revenue 4.1, 6.3 571,261 488,289 Cost of sales 4.2, 6.3 -296,033 -259,542 Gross profit 6.3 275,228 228,747

Selling and distribution costs 4.2 -193,438 -159,261 Administrative expenses 4.2 -51,617 -43,185 Other operating income 4.3 1,544 1,536 Other operating expenses 4.4 -3,482 -2,050

Earnings before interest and taxes (EBIT) 28,235 25,787

Financial income 4.6 29 33 Financial expenses 4.5 -24,236 -23,828

Earnings before taxes (EBT) 4,028 1,992

Income taxes 5.15 -191 4,864

Net income for the period 3,837 6,856

Other comprehensive income

Currency translation difference (will eventually be reclassified subsequently to profit or loss) 229 231

Comprehensive profit/loss 4,066 7,087

Translation from the German language

Consolidated statement of financial position

KEUR ASSETS Notes 31-Dec-19 31-Dec-18*

Non-current assets Property, plant and equipment 5.1 151,901 125,565 Goodwill 5.2 254,394 254,394 Other intangible assets 5.3 376,294 416,998 Non-current financial assets 5.4 592 491 Total non-current assets 783,181 797,448

Current assets Inventories 5.5 160,235 122,256 Prepayments for inventories 5.5 6,238 4,724 Trade and other receivables 5.6 711 1,576 Income tax receivable 5.15 2,820 2,822 Other current financial assets 5.4 3,932 2,045 Other current non-financial assets 5.7 12,122 13,573 Cash and cash equivalents 5.9 76,033 66,951 Total current assets 262,091 213,947

TOTAL ASSETS 1,045,272 1,011,395

KEUR EQUITY AND LIABILITIES Notes 31-Dec-19 31-Dec-18

Equity Issued capital 5.10 25 25 Other capital reserves 5.10 474,177 474,177 Foreign currency translation reserve 305 76 Retained earnings -4,937 -8,774 Total equity 469,570 465,504

Non-current liabilities Non-current interest bearing loans and borrowings 5.12 254,721 253,762 Other non-current financial liabilities 5.8 90,400 80,614 Deferred tax liabilities 5.15 103,396 114,556 Provisions 5.11 498 465 Total non-current liabilities 449,015 449,397

Current liabilities Trade and other payables 5.13 27,527 14,763 Other current financial liabilities 5.8 5,257 4,308 Income tax payable 5.15 19,982 14,342 Current interest bearing loans and borrowings 5.12 852 810 Current non-financial liabilities 5.14 73,069 62,271 Total current liabilities 126,687 96,494

TOTAL EQUITY AND LIABILITIES 1,045,272 1,011,395

*restated (see Note 2.2.1)

Translation from the German language

Consolidated statement of cash flows

KEUR Notes 2019 2018

Earnings before tax 4,028 1,992 Adjustments to reconcile profit before tax to net cash flows: Depreciation of property, plant and equipment 5.1 12,758 11,837 Amortisation and impairment of intangible assets 5.3 53,630 41,927 Net foreign exchange differences 4.2, 4.3 317 399 Gain on disposal of property, plant and equipment -4 -19 Financial income 4.6 -29 -33 Financial expenses 4.5 24,236 23,828 Movements in other liabilities 9,385 3,351 Movements in other assets -1,971 -555 Release of other provisions 0 -2,100 Working capital adjustments: -/+ Increase/ decrease in trade and other receivables 865 -217 Increase in inventories, prepayments made for inventories and similar assets -37,752 -195 +/- Increase/decrease in trade and similar liabilities 13,648 -1,801 79,111 78,414

Income tax paid -5,740 -10,038 Net cash flows from operating activities 73,371 68,376

Investing activities Purchase of property, plant and equipment -23,800 -10,670 Purchase of intangible assets -7,918 -6,226 Development expenditures -5,008 -3,368 Net cash flows used in investing activities -36,726 -20,264

Financing activities Proceeds from lease receivables 111 111 Payment of lease liabilities* -4,173 -3,590 Payment of transaction costs on revolving credit facility (RCF) -300 0 Interest received 0 2 Interest paid* -23,040 -22,627 Other financing activities -163 0 Net cash flow from/(used in) financing activities -27,565 -26,104 Net change in cash and cash equivalents 9,080 22,008 Net foreign exchange differences 2 55 Cash and cash equivalents at January 01 5.9 66,951 44,888 Cash and cash equivalents at December 31 5.9 76,033 66,951

* The presentation of interest paid for lease liabilities has been adjusted and included in “interest paid”. In the annual report December 31, 2018 interest paid for lease liabilities was however included with an amount of KEUR 5,809 in the line “Payment of lease liabilities”

Translation from the German language

Reconciliation of financial liabilities*: January Cash Changes in December 01, 2019 Flows lease contracts Other** 31, 2019

Current interest-bearing loans and 810 0 0 42 852 borrowings 4,308 -4,173 329 4,793 5,257 Current lease liabilities Non-current interest-bearing loans and 253,762 0 0 959 254,721 borrowings 80,614 0 14,510 -4,724 90,400 Non-current lease liabilities Total liabilities from financing activities 339,494 -4,173 14,839 1,070 351,230

January Cash Changes in December 01, 2018 Flows lease contracts Other** 31, 2018

Current interest-bearing loans and 804 0 0 6 810 borrowings 3,342 -3,590 927 3,629 4,308 Current lease liabilities Non-current interest-bearing loans and 252,864 0 0 898 253,762 borrowings 79,511 0 4,723 -3,620 80,614 Non-current lease liabilities Total liabilities from financing activities 336,521 -3,590 5,650 913 339,494

* Compared to prior year, the format of the reconciliation has been adapted to the now predominant practice that has developed since the first application date.

**The ‘Other’ column includes the effect of reclassification of non-current portion of interest-bearing loans and borrowings, including lease liabilities to current due to the passage of time and the effect of accrued but not yet paid interest on interest-bearing loans and borrowings, including lease liabilities. The Group classifies interest paid as cash flows from financing activities.

Translation from the German language

Consolidated statement of changes in equity

Foreign Issued Capital currency Retained Total capital reserves translation earnings reserve KEUR (Note 5.10) (Note 5.10)

As at January 01, 2019 25 474,177 76 -8,774 465,504

Profit for the period 0 0 0 3,837 3,837

Other comprehensive income 0 0 229 0 229

As at December 31, 2019 25 474,177 305 -4,937 469,570

Foreign Issued Capital currency Retained Total capital reserves translation earnings reserve KEUR (Note 5.10) (Note 5.10)

As at January 01, 2018 25 474,177 -155 -15,630 458,417

Profit for the period 0 0 0 6,856 6,856

Other comprehensive income 0 0 231 0 231

As at December 31, 2018 25 474,177 76 -8,774 465,504

Translation from the German language

Content 1. Company information ...... 1 2. General principles ...... 2 2.1 General information and application of IFRS ...... 2 2.2 New accounting standards ...... 3 2.2.1 Transition to IFRIC 23 ...... 3 2.2.2. New or amended IFRS not yet applied ...... 4 2.3 Principles of consolidation ...... 5 2.3.1 Basis of consolidation and Group information ...... 5 2.3.2 Methods of consolidation ...... 6 2.4. Use of estimates and assumptions ...... 7 2.4.1 Impairment of non-financial assets (including forecasts and COVID impact) ...... 7 2.4.2 Assessment of realizability of deferred tax assets on loss carryforwards and income tax 8 2.4.3 Determination of provisions for restorations expenses and other provisions ...... 8 2.4.4 Calculation of returns and unredeemed gift vouchers ...... 8 2.4.5 Inventory valuation ...... 9 2.4.6 Segment reporting ...... 9 2.4.7 Assessment of the necessity and amount of allowances on receivables ...... 9 2.4.8 Interest rate in connection with IFRS 16 ...... 9 2.4.9. Assumptions with regard to making use of termination or extension options in connection with IFRS 16 ...... 10 2.4.10. Assumptions with regard to useful lives of trademark “Schustermann & Borenstein” and customer relationship “Schustermann & Borenstein” due to rebranding ...... 10 2.5 Business combinations and goodwill ...... 10 2.6 Current and non-current portions ...... 11 2.7 Fair value measurement ...... 11 2.8 Revenue recognition ...... 12 2.9 Taxes ...... 13 2.10 Foreign currencies ...... 15 2.11 Intangible assets ...... 16 2.12 Property, plant and equipment ...... 17 2.13 Inventory ...... 17 2.14 Impairment of non-financial assets ...... 18 2.15 Cash and cash equivalents ...... 18 2.16 Lease ...... 18

Translation from the German language

2.17 Trade receivables ...... 19 2.18 Other financial assets ...... 19 2.19 Financial liabilities ...... 20 2.20 Provisions ...... 21 2.21 Share-based payment ...... 21 2.22 Significant events after the reporting date ...... 21 3. Capital management...... 22 4. Notes to the statement of comprehensive income ...... 23 4.1 Revenue ...... 23 4.2 Operating expenses ...... 24 4.3 Other operating income ...... 25 4.4 Other operating expenses ...... 25 4.5 Financial expenses ...... 26 4.6 Financial income ...... 26 5. Notes to the consolidated statement of financial position ...... 27 5.1 Property, plant and equipment ...... 27 5.2 Goodwill ...... 29 5.3 Intangible assets ...... 31 5.4 Financial assets ...... 32 5.5 Inventories and prepayments ...... 33 5.6 Trade receivables ...... 33 5.7 Non-Financial assets ...... 34 5.8. Leases ...... 35 5.9 Cash and cash equivalents ...... 36 5.10 Equity ...... 36 5.11 Other provisions ...... 37 5.12 Loans and borrowings ...... 38 5.13 Trade and other payables ...... 40 5.14 Other non-financial liabilities ...... 40 5.15 Taxes ...... 40 5.16 Additional disclosures regarding financial instruments and risk management ...... 44 6. Other explanatory notes ...... 49 6.1 Contingencies and other financial obligations ...... 49 6.2 Related party disclosures ...... 49 6.3 Additional disclosures on the consolidated statement of comprehensive income ...... 50

Translation from the German language

Notes to the consolidated financial statements as of December 31, 2019

1. Company information

The consolidated financial statements for the period ended December 31, 2019 of PrestigeBidCo GmbH and its subsidiaries (collectively, the Group) were authorized by the Management Board by the signed financials dated April 17, 2020. The registered office of PrestigeBidCo GmbH (the parent) is located at Margaretha-Ley-Ring 27, Aschheim, Germany. The company is registered with the Munich Registry Court (record HRB 227078).

Based on a frame agreement signed October 24, 2016, PrestigeBidCo GmbH acquired Schustermann & Borenstein Holding GmbH and all its subsidiaries (S&B Group) with an effective date as basis for consolidation as of January 19, 2017.

Prior to the acquisition of Schustermann & Borenstein Holding GmbH, PrestigeBidCo GmbH issued a Bond as of December 20, 2016 in the amount of KEUR 260,000 with a maturity of seven years.

Schustermann & Borenstein Holding GmbH is the parent of the Schustermann & Borenstein Group, which is a members-only, online and offline, off-price fashion retailer with a strong focus on selling premium and luxury brands.

PrestigeBidCo GmbH is a wholly owned subsidiary of PrestigeBidCo Holding GmbH. PrestigeBidCo GmbH publishes consolidated financial statements in accordance with Section 291 HGB and voluntarily in accordance with International Financial Reporting Standards (IFRS).

Translation from the German language

2. General principles

2.1 General information and application of IFRS

The consolidated financial statements of the Group have been prepared in accordance with International Financial Reporting Standards (IFRS) and the interpretations of the IFRS Interpretations Committee (IFRS IC) as adopted in the European Union (EU). A Group management report and the obligatory disclosures to be made under German commercial law pursuant to Section 315e (1) HGB were added to the consolidated financial statements.

To improve the clarity of presentation, various items in the consolidated statement of financial position and consolidated statement of comprehensive income have been summarized. These items are shown separately and explained in the notes to the consolidated financial statements.

The presentation and the components of the consolidated financial statements is conformant with the provisions of IAS 1.10. The consolidated statement of comprehensive income is prepared based on the nature of expense method. The consolidated statement of cash flows is prepared based on IAS 7.

The consolidated financial statements are prepared based on historical cost on the reporting date, December 31, 2019. Historical costs are generally based on the fair value of the consideration paid in exchange for the asset. The fair value is the price that would be received in orderly transactions between market participants on the measurement date for the sale of an asset or paid for the transfer of liabilities. This applies regardless of whether the price can be directly observed or is estimated using a measurement method.

The consolidated financial statements are presented in euros (EUR) and all values are rounded to the nearest thousand (KEUR), except when otherwise indicated. Rounding differences may occur.

The financial year corresponds to the calendar year. The separate financial statements of the companies included in the scope of consolidation are prepared as of the same reporting date as the consolidated financial statements.

The preparation of consolidated financial statements in conformity with IFRS requires the use of certain critical accounting estimates. It also requires Management to exercise its judgment in the process of applying the Group’s accounting policies. Areas involving a higher degree of judgment or complexity, or areas where assumptions and estimates are significant to the consolidated financial statements are disclosed in section 2.4 of the Notes.

The management prepared the consolidated financial statements on a going concern basis.

Translation from the German language

2.2 New accounting standards

The Group applied all standards and interpretations (including amendments) as adopted by the EU in its consolidated financial statements, which are mandatory for financial years starting on or after January 1, 2019.

A new interpretation standard mandatory as of January 01, 2019 is IFRIC 23 Uncertainties over Income Tax Treatments. For details about the transition to IFRIC 23 see Note 2.2.1. Amendments that are mandatory as of January 01, 2019 relate to minor amendments of IFRS 9 Prepayment Features with Negative Compensation, IAS 19 Plan Amendment, Curtailment or Settlement and IAS 28 Long-term interests in associates and joint ventures as well as changes due to the annual IFRS Improvements 2015-2017 Cycle of IFRS 11, IFRS 3, IAS 12 and IAS 23.

For further details to the introduction of IFRIC 23 see Note 2.2.1. The other amendments had no significant impact on the financial statements.

Furthermore, the Group respectively the parent entity has early adopted IFRS 16 “Leases” which is mandatory as of January 01, 2019. The standard was adopted in 2017.

2.2.1 Transition to IFRIC 23

In the year 2019, a clarification regarding the presentation of income taxes in the statement of financial position was published by the IFRIC. As a result of this clarification, the former provisions for income taxes now have to be shown as income tax liabilities. As a result, the current provisions for income taxes recognized at December 31, 2018 (5,596 KEUR) were reclassified from provisions to income tax liabilities. The reclassification has no impact on the Group’s profitability or liquidity and capital resources.

Translation from the German language

2.2.2. New or amended IFRS not yet applied

The following accounting standards, relevant for the Group, had already been issued by the IASB as of the time of the consolidated financial statements were authorized for issue, but their adoption is not yet mandatory and they have not yet been adopted by the Group and do not have any material impact on the Group’s financial performance and position.

Standard / Impending change Effective Date / Anticipated Effects Interpretation EU Endorsed Amendments to Affects only the presentation of liabilities 01/01/2022 No significant impact on IAS 1- in statement of financial position. the consolidated financial Classification of liabilities as current or statements expected Classification of No Liabilities as non-current should be based on rights Current or Non- that are in existence at the end of the Current reporting period. Amendments to Addresses the definition of a business 01/01/2020 No significant impact on IFRS 3- aimed at resolving the difficulties that the consolidated financial arise when an entity determines whether statements expected Business No Combinations it has acquired a business or a group of assets. Amendments to Following the issue of the revised 01/01/2020 No significant impact on References to Conceptual Framework for Financial the consolidated financial the Conceptual statements expected Reporting in 2018 the amendments Yes framework in revise footnotes or references in several IFRS Standards standards to quote the revised or newly added definitions from the 2018 Conceptual Framework. IFRS 17 - The standard establishes principles for 01/01/2021 No significant impact on Insurance the recognition, measurement, the consolidated financial Contracts presentation and disclosure of Insurance statements expected No contracts.

Amendments to Definition of material was changed 01/01/2020 No significant impact on IAS 1 and IAS 8 considering new aspects such as the consolidated financial obscuring material information that could statements expected reasonably be expected to influence decisions that primary users make. Yes

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2.3 Principles of consolidation 2.3.1 Basis of consolidation and Group information

The consolidated financial statements comprise the financial statements of the Group and its subsidiaries as at December 31, 2019. Control is achieved when the Group is exposed, or has rights, to variable returns from its involvement with the investee and has the ability to affect those returns through its power over the investee. Specifically, the Group controls an investee if, and only if, the Group has:

• Power over the investee (i.e., existing rights that give it the current ability to direct the relevant activities of the investee),

• Exposure, or rights, to variable returns from its involvement with the investee,

• The ability to use its power over the investee to affect its returns.

Generally, there is a presumption that a majority of voting rights result in control. To support this presumption and when the Group has less than a majority of the voting or similar rights of an investee, the Group considers all relevant facts and circumstances in assessing whether it has power over an investee, including:

• The contractual arrangement with the other vote holders of the investee,

• Rights arising from other contractual arrangements,

• The Group’s voting rights and potential voting rights.

The Group 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. Consolidation of a subsidiary begins when the Group obtains control over the subsidiary and ceases when the Group loses control of the subsidiary. Assets, liabilities, income and expenses of a subsidiary acquired or disposed of during the year are included in the consolidated financial statements from the date the Group gains control until the date the Group ceases to control the subsidiary.

Profit or loss and each component of other comprehensive income (OCI) are attributed to the equity holders of the parent of the Group and to the non-controlling interests, even if this results in the non- controlling interests having a deficit balance. When necessary, adjustments are made to the financial statements of subsidiaries to bring their accounting policies into line with the Group’s accounting policies. All intra-group assets and liabilities, equity, income, expenses and cash flows relating to transactions between members of the Group are eliminated in full on consolidation.

As a general rule, subsidiaries are included in the consolidated financial statements by way of full consolidation from the time when the Group obtained control over or the ability to control the subsidiary. A change in the ownership interest of a subsidiary, without a loss of control, is accounted for as an equity transaction. If the Group loses control over a subsidiary, it derecognizes the related assets (including goodwill), liabilities, non-controlling interest and other components of equity while any resultant gain or loss is recognized in profit or loss. Any investment retained is recognized at fair value.

Translation from the German language

The consolidated financial statements of the Group include:

Company name Business Location Equity stake activity in % as of December 31, 2019

PrestigeBidCo GmbH Parent Company Aschheim Schustermann & Borenstein Holding GmbH Holding Aschheim 100 Schustermann & Borenstein GmbH Retail Aschheim 100 Best Secret GmbH Retail Aschheim 100 S&B Outlet GmbH Retail Aschheim 100 Schustermann & Borenstein Logistik GmbH Logistic Poing 100 Swiss Online Shopping AG (Switzerland) Retail Langenthal 100 Schustermann & Borenstein Wien GmbH (Austria) Retail Vienna 100

The equity stakes did not change compared to 2018.

The holding company

The next senior holding companies of PrestigeBidCo GmbH is PrestigeBidCo Holding GmbH (Aschheim). The consolidated financial statements of PrestigeBidCo Holding GmbH (smallest and largest consolidation group) are published in the online edition of the electronic German Federal Gazette (Bundesanzeiger). The ultimate holding company of PrestigeBidCo GmbH is Permira Holdings Limited (St Peter Port, Guernsey).

2.3.2 Methods of consolidation

Capital consolidation is performed by offsetting the acquisition costs against the Group share of the fair value of the net assets of the consolidated subsidiaries at the time of acquisition. At this juncture the purchase method is used. Receivables and corresponding liabilities of consolidated companies were offset against each other. Significant interim results from intra-Group service transactions were eliminated in the consolidated financial statements. Sales and other income from intragroup supply and service relationships were offset against the corresponding expenses. The financial statements of all subsidiaries included in the consolidated financial statements are prepared as of December 31, 2019.

Translation from the German language

2.4. Use of estimates and assumptions

The preparation of consolidated financial statements in accordance with IFRS requires management to make assumptions and estimates that have effects on the amounts carried and the related disclosures. Although these estimates, to the best of management’s knowledge, are based on the current events and measures, there may be deviations between estimated and actual results. Significant estimates and assumptions have been used for the following matters in particular:

➢ Impairment of non-financial assets (including forecasts and COVID impact)

➢ Determination and assessment of the realizability of deferred tax assets (DTA) on loss carryforwards and income tax

➢ The determination of provisions for restoration expenses and other provisions

➢ Assumptions for the calculation of returns and unredeemed coupons

➢ Inventory valuation

➢ Segment reporting

➢ Assessment of the necessity and amount of allowances on receivables

➢ Interest rate in connection with IFRS 16

➢ Assumptions with regard to making use of termination or extension options in connection with IFRS 16

➢ Assumptions with regard to useful lives of trademark “Schustermann & Borenstein” and customer relationship “Schustermann & Borenstein” due to rebranding

These key forward-looking assumptions and estimates, which involve a significant risk of changing the carrying amounts of assets and liabilities within the next financial year, are discussed below.

2.4.1 Impairment of non-financial assets (including forecasts and COVID impact)

At the end of each reporting period the Group assesses whether there is any indication that an asset may be impaired. This assessment implies significant judgment and estimates in particular the uncertainties in connection with the COVID outbreak. Impairment exists when the carrying value of an asset or cash generating unit exceeds its recoverable amount, which is the higher of its fair value less costs of disposal and its value in use. The recoverable amount is sensitive to the discount rate used for the DCF model that is the basis for the calculation of the fair value less costs of disposal used as well as the expected future cash flows and the growth rate used for extrapolation purposes. These estimates are most relevant to goodwill. The key assumptions used to determine the recoverable amount for the goodwill, including a sensitivity analysis, are disclosed and further explained in note 5.2.

Translation from the German language

2.4.2 Assessment of realizability of deferred tax assets on loss carryforwards and income tax

Uncertainties exist with respect to the interpretation of complex tax regulations and the amount and timing of future taxable income. Different interpretations of tax laws may result in additional tax payments for prior years and are taken into account based on management’s considerations. Various factors like experiences in past with external tax audits and different treatment of tax regulations by tax authorities are considered.

Deferred tax assets are recognized to the extent that it is probable that they will be recovered, which is dependent on the generation of sufficient future taxable profit. Assumptions about the generation of future taxable profits depend on management’s estimates of future cash flows. These judgments and estimates are subject to risks and uncertainty, hence there is a possibility that changes in circumstances will alter expectations, which may impact the amount of deferred tax assets recognized at the reporting date. In such circumstances, some, or all, of the carrying amount of recognized deferred tax assets and liabilities may require adjustment, resulting in corresponding credit or charge to the income statement.

2.4.3 Determination of provisions for restorations expenses and other provisions

The determination of provisions for restoration expenses requires assumptions and estimates regarding the discount rates, expected costs and timing of these costs. If the interest effect resulting from the discounting is significant, provisions are discounted at a pre-tax interest rate that reflects the risks specific to the liability.

Provisions mainly comprise provisions for restoration expenses and provisions for tax risks. Whether a present obligation is probable or not requires judgement. The nature and type of risks for these provisions differ and management’s judgement is applied regarding the nature and extent of obligations in deciding if an outflow of resources is probable or not.

As at December 31, 2019, long-term provisions were discounted at an interest rate of 7.3% (previous year: 7.3%). In the case of discounting, timing-related interest effects are recognized as finance costs. Further details are described in Note 5.11.

2.4.4 Calculation of returns and unredeemed gift vouchers Returns

For transactions which do have a legal 14-day refund policy, the company calculates the amount of the expected returns as of the balance sheet date based on historical return rates under consideration of the actual returns until the date of preparing the consolidated financial statements, which are taken into account in order to reduce revenue. As of December 31, 2019, deferred sales amounted to KEUR 18,973 (previous year: KEUR 22,709). The right to recover possession of expected returns is reported under other non-financial assets.

Unredeemed gift vouchers

From the sale of vouchers, the acquiring customer arises a claim for fulfillment up to a limitation period of 3 years. If vouchers sold are not redeemed within this limitation period, the Group realizes the revenue from the voucher sale. Liabilities from the sale of gift vouchers are recognized under other non- financial liabilities and amounted as of December 31, 2019 to KEUR 1,698 (previous year: KEUR 1,628).

Translation from the German language

2.4.5 Inventory valuation

As part of the inventory valuation, the net selling price must be determined for testing inventories of lower of cost or market value. Net realizable value is the estimated selling price in the ordinary course of business less the estimated necessary selling expenses. Estimates are necessary to determine the sales proceeds that can be achieved in the normal course of business. Further details are given in Note 5.5.

2.4.6 Segment reporting

IFRS 8 requires that operating segments be defined on the basis of the internal reports of corporate divisions that are regularly reviewed by the chief operating decision maker (CODM) of the Group for the purpose of making decisions about the allocation of resources and assessing the financial performance of the given segments “Offline” and “Online”. Thus, the internal organizational and management structure and the internal reports submitted to the Management Board form the basis for determining the segment reporting format of the Group. Primary emphasis is placed on the indicator Revenue, Gross Profit and Gross Profit Margin as well as EBITDA. The recognition and measurement methods of the reportable segments correspond to the consolidated recognition and measurement methods described in Note 6.3. The Group applies IFRS 8 voluntarily.

2.4.7 Assessment of the necessity and amount of allowances on receivables

The determination of necessity and allowances on receivables requires assumptions and estimates regarding the credit risk and applied time intervals. In the case of a return debit, the company informs the customer and prolongs the payment term for a week. When the defined time period elapsed written warnings are sent to the customers. Further details are given in Note 5.6 and Note 5.16.

The Group uses a provision matrix to calculate expected credit losses for receivables. The provision rates are based on days past due and Group’s historical observed default rates. The default rates are evaluated based on the expectations regarding the collectability of the receivables.

2.4.8 Interest rate in connection with IFRS 16

The interest rate in connection with IFRS 16 was determined considering the debt structure of the Group and the useful life time of the leased assets.

Translation from the German language

2.4.9. Assumptions with regard to making use of termination or extension options in connection with IFRS 16

The lease term of an asset is determined by considering options to terminate or extend the lease that are reasonably certain to be exercised. The possibility of the use of termination or extension options is appreciated by considering the overall business development as well as considering a relation to the lease term of existing contracts.

2.4.10. Assumptions with regard to useful lives of trademark “Schustermann & Borenstein” and customer relationship “Schustermann & Borenstein” due to rebranding

The rebranding of our Group in 2019 to the uniform BestSecret Brand includes a dual branding and transition period of 3 years for the German and Austrian Schustermann & Borenstein stores. The goal of the rebranding shall emphasize our common identity and validate the business development strategy exclusively under one trademark. Therefore, the remaining useful lifetime of the trademark “Schustermann & Borenstein” was reduced from remaining 28 years to 3 years due to rebranding issues. As a result, the yearly amortization for the trademark “Schustermann & Borenstein” increased from kEUR -933 to kEUR -8,726. As part of the omni-channel strategy the remaining useful lifetime of the customer relationship “Schustermann & Borenstein” was reduced from remaining 18 years to 12 years. The amortization increased from kEUR -4,415 to kEUR -6,640 on a yearly basis.

2.5 Business combinations and goodwill

Business combinations are accounted for using the acquisition method according to IFRS 3. The cost of an acquisition is measured as the aggregate of the consideration transferred measured at acquisition date fair value and the amount of any non-controlling interests in the acquiree. For each business combination, the Group elects whether to measure the non-controlling interests in the acquiree at fair value or at the proportionate share of the acquiree’s identifiable net assets. Acquisition-related costs are expensed as incurred and included in administrative expenses.

When the Group acquires a business, it assesses the financial assets and liabilities assumed for appropriate classification and designation in accordance with the contractual terms, economic circumstances and pertinent conditions as at the acquisition date.

Goodwill is initially measured at cost, being the excess of the aggregate of the consideration transferred and the amount recognized for non-controlling interests over the net identifiable assets acquired and liabilities assumed.

After initial recognition, goodwill is measured at cost less any accumulated impairment losses. For the purpose of impairment testing, goodwill acquired in a business combination is, from the acquisition date, allocated to each of the Group’s cash-generating units that are expected to benefit from the combination, irrespective of whether other assets or liabilities of the acquiree are assigned to those units. More detailed information on impairment testing can be found under 5.2.

Translation from the German language

2.6 Current and non-current portions

The group classifies its assets and liabilities in the statement of financial position as current and non- current assets or liabilities.

An asset is classified as current when:

• it is expected to be realized, or intended to be sold or consumed, within the normal operating cycle,

• it is expected to be realized within 12 months after the reporting period or

• it is cash or a cash equivalent, unless the asset is restricted from being exchanged or used to settle a liability for a period of at least 12 months.

All other assets are classified as non-current.

A liability is classified as current if:

• it is expected to be settled within the normal operating cycle,

• it is expected to be realized within 12 months of the end of the reporting period or

• the company does not have an unconditional right to defer settlement of the liability for at least 12 months after the reporting period.

All other liabilities are classified as non-current. Deferred tax assets and liabilities are always classified as non-current assets or liabilities.

2.7 Fair value measurement

The group applies measurement techniques that are appropriate under the respective circumstances and for which sufficient data is available for fair value measurement. In the process, observable market inputs are to be preferred to non-observable inputs.

Assets and liabilities measured or presented at fair value in the consolidated financial statements are classified on the basis of the following fair value hierarchy. The classification uses the input parameters of the lowest category that is material to the fair value measurement.

• Level 1: Quoted prices (unadjusted) in active markets for identical assets or liabilities

• Level 2: Inputs other than quoted prices included within Level 1 that are observable for the assets or liabilities, either directly or indirectly

• Level 3: Unobservable inputs for the assets and liabilities

Translation from the German language

2.8 Revenue recognition

The Group recognizes revenue according to IFRS 15 at an amount that reflects the consideration to which the entity expects to be entitled in exchange for transferring goods to the customers, net of taxes and duties, and taking into account agreed payment terms. Net sales are reported net of discounts, rebates, taxes and returns. Since the Group has price discretion in its sales transactions and also bears the inventory and credit risk, the Group generally acts as a principal and is therefore the principal party of all sales transactions.

In addition, the Group purchases some products such as jewellery on a commission basis, acts as an agent but the Group is free in formation of the prices. The revenue is recognized net of commissions earned.

The revenue recognition requires the fulfillment of the following recognition criteria:

Sale of goods and products

The Group’s contracts with customers for the sale of merchandise generally include one performance obligation. The Group has concluded that revenue from sale of merchandise should be recognized at the point in time when control of the asset is transferred to the customer. The realization of revenue therefore takes place with handover of the goods in the offline business and with delivery of the goods to the customer in online trading.

Treatment of returns in the online business

Under IFRS 15, the consideration received from the customer is variable because the contract allows the customer to return the products. The Group uses the expected value method to estimate the merchandise that will be returned because this method predicts the best the amount of variable consideration to which the Group will be entitled. The Group applies the requirements in IFRS 15 on constraining estimates of variable consideration such as return rate to determine the amount of variable consideration that can be included in the transaction price. The Group presents a refund liability (other non–financial liabilities) and an asset (other non-financial assets) for the right to recover products from a customer separately in the statement of financial position, taking into account the costs incurred for processing the return and the losses resulting from disposing of these goods. The Group presents the expected returns of goods on a gross basis in the statement of comprehensive income and reduces revenue by the full amount of sales that it estimates to 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. Generally, the Group allows the right to return the goods within a period of 14 days after receipt of the goods.

Friends recommend friends – loyalty program

The Group has implemented a recommendation program for customers. Every time the “new” or recommended customer places an order the “old” customer receives an one-time 10% commission voucher and a 5% voucher based on the total purchases of the “new” customer within a period of 12 months. According to IFRS 15, both vouchers represent a payment to customers and therefore a revenue reduction when exercising by customer.

Translation from the German language

2.9 Taxes

Current income taxes

Current income tax assets and liabilities are measured at the amount expected to be recovered from or paid to the taxation authorities. The tax rates and tax laws used to compute the amount are those that are enacted or substantively enacted, at the reporting date in the countries where the Group operates and generates taxable income.

For the purpose of measuring current German taxes, a uniform corporate income tax rate of 15% is applied to distributed and retained earnings and a solidarity surtax rate of 5.5% is applied to that amount. That yields a tax rate of 15.83%. In addition, the German trade tax is imposed on profits earned in Germany. The trade tax is based on the assessment rates of the various municipalities and the basic federal rate, which is a flat rate of 3.5% according to Section 11 (2) GewStG. The trade tax varies, depending on the different assessment rates of the municipalities, but a flat rate of 11.70% is applied in the consolidated financial statements of the Group.

The profits earned by the non-German Group companies are calculated on the basis of the national tax laws applicable in each country and taxed at the tax rates in effect in those countries. The country- specific tax rates range from 21 to 25%. The Group tax rate is 27.53%. Current tax expenses are calculated on the basis of the taxable income for the year. Taxable income differs from the net profit presented in the consolidated statement of comprehensive income as a result of the expenses and income that will not be taxable or tax-exempt in later years, or ever. The Group’s liability for current taxes is calculated on the basis of the tax rates currently in effect or to be in effect in the near future.

Deferred taxes

Deferred taxes are provided using the liability method on temporary differences between the tax bases of assets and liabilities and their carrying amounts for financial reporting purposes at the reporting date.

Deferred tax liabilities are recognized for all taxable temporary differences, except:

• Where the deferred tax liability arises from the initial recognition of goodwill or of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of taxable temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, where the timing of the reversal of the temporary differences can be controlled and it is probable that the temporary differences will not reverse in the foreseeable future.

Translation from the German language

Deferred income tax assets are recognized for all deductible temporary differences, carry-forward of unused tax credits and unused tax losses, to the extent that it is probable that taxable profit will be available against which the deductible temporary differences, and the carry-forward of unused tax credits and unused tax losses can be utilized except:

• Where the deferred income tax asset relating to the deductible temporary difference arises from the initial recognition of an asset or liability in a transaction that is not a business combination and, at the time of the transaction, affects neither the accounting profit nor taxable profit or loss; and

• In respect of deductible temporary differences associated with investments in subsidiaries, associates and interests in joint ventures, deferred tax assets are recognized only to the extent that it is probable that the temporary differences will reverse in the foreseeable future and taxable profit will be available against which the temporary differences can be utilized.

The carrying amount of deferred income tax assets is reviewed at the end of each reporting period and reduced to the extent that it is no longer probable that sufficient taxable profit will be available to allow all or part of the deferred income tax asset to be utilized. Unrecognized deferred income tax assets are reassessed at the end of each reporting period and are recognized to the extent that it has become probable that future taxable profit will allow the deferred tax asset to be recovered.

Deferred income tax assets and liabilities are measured at the tax rates that are expected to apply to the year when the asset is realized or the liability is settled, based on tax rates (and tax laws) that have been enacted at the end of the reporting period.

Deferred income tax relating to items recognized in other comprehensive income or directly in equity is recognized in other comprehensive income or directly in equity and not in the profit or loss.

Deferred tax assets and deferred tax liabilities are offset if a legally enforceable right exists to set off current tax assets against current tax liabilities and the deferred taxes relate to the same taxable entity and the same taxation authority.

Tax benefits acquired as part of a business combination, but not satisfying the criteria for separate recognition at that date, are recognized subsequently if new information about facts and circumstances change. The adjustment is either treated as a reduction in goodwill (as long as it does not exceed goodwill) if it was incurred during the measurement period or recognized in profit or loss.

Translation from the German language

Value-added taxes

Revenues, expenses and assets are recognized net of the amount of Value-added tax (“VAT”) except:

• If VAT incurred on a purchase of assets or services is not recoverable from the taxation authority, in which case VAT is recognized as part of the cost of acquisition of the asset or as part of expense item as applicable; and

• Where receivables, payables and finance lease liabilities are stated with the amount of VAT included.

The net amount of VAT recoverable from, or payable to, the taxation authority is included as part of receivables or payables in the consolidated statement of financial position.

2.10 Foreign currencies

The Group’s consolidated financial statements are presented in Euros, which is also the parent company’s functional currency. That is the currency of the primary economic environment in which the Group operates. For each entity, the Group determines the functional currency and items included in the financial statements of each entity are measured using that functional currency.

Foreign currency transactions and balances

Transactions in foreign currencies are initially recorded by the Group’s entities at their respective functional currency spot rates at the date of the transaction. In determining the spot exchange rate to use on initial recognition of the related asset, expense or income (or part of it) on the derecognition of a non-monetary asset or non-monetary liability relating to advance consideration, the date of the transaction is the date on which the Group initially recognizes the non-monetary asset or non-monetary liability arising from the advance consideration. If there are multiple payments or receipts in advance, the Group determines the transaction date for each payment or receipt of advance consideration. Monetary assets and liabilities denominated in foreign currencies are translated at the functional currency spot rates of exchange at the reporting date. Differences arising on settlement or translation of monetary items are recognized in profit or loss.

Non-monetary items that are measured in terms of historical cost in a foreign currency are translated using the exchange rates at the dates of the initial transactions.

Foreign operations

The Group has analyzed the group companies and concluded that for each company the currency of origin represents the functional currency. During consolidation, all assets and liabilities of group companies denominated in foreign currencies are translated into Euros at the closing rate. Assets and liabilities are translated at the exchange rate on the respective reporting date, while equity is translated at historical exchange rates. Income and expenses are translated at average exchange rates. The exchange differences arising on the translation are recognized in other comprehensive income. On disposal of a foreign operation, the component of OCI relating to that particular foreign operation is recognized in profit or loss.

Translation from the German language

2.11 Intangible assets

Intangible assets acquired in the context of a business combination under IFRS 3 are recognized separately from goodwill and measured at fair value at the acquisition date. This includes: Customer relationships and trademarks. They are recognized as an intangible asset according to IAS 38, measured at fair value and amortized over their expected useful lives.

An intangible asset is derecognized upon disposal or when no further economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income when the asset is derecognized.

Intangible assets which are not acquired as part of a business combination as purchased licenses are initially recognized at cost.

Intangible assets with a finite useful life are amortized on a straight-line basis over their economic useful life. Intangible assets with finite useful lives are reviewed for possible impairment if there are indications of impairment at the balance sheet date. The remaining useful life and the amortization method for intangible assets with a finite useful life are reviewed at least at the end of a reporting period. If the reasons for impairment have been eliminated, a reversal to a maximum of the historic acquisition or production costs is made as the upper limit. Required changes in amortization period and method are treated as changes in estimates. Impairment losses on intangible assets e.g. customer relationships and trademarks with finite useful lives are included in depreciation within selling expenses.

Useful lives Years Software 3-8 Licenses 3-8 Trademark „Schustermann & Borenstein“ 3 Trademark „BestSecret“ 20 Customer relationship „Schustermann & Borenstein“ 12 Customer relationship „BestSecret“ 8

In the case of internally generated intangible assets, IAS 38 makes a distinction between the research phase and the development phase. Costs incurred during the research phase may not be capitalized but must be charged to expense. On the other hand, costs incurred during the development phase must be capitalized, provided that the reporting entity demonstrably fulfills all six objectification criteria set out in IAS 38.57 ff.

Translation from the German language

2.12 Property, plant and equipment

Property, plant and equipment are recognized at cost and depreciated in accordance with their expected useful life using the straight-line method. The Group treats changes in the residual values or useful lives that arise during use as a change in estimates. Depreciation is charged over the following useful lives.

Useful lives Years Leasehold improvements 6-20 Plant and machinery 5-14 Furniture, fixtures and office equipment 5-23

An item of property, plant and equipment is derecognized upon disposal or when no further economic benefits are expected from its use or disposal. Any gain or loss arising on derecognition of the asset (calculated as the difference between the net disposal proceeds and the carrying amount of the asset) is included in the statement of comprehensive income when the asset is derecognized.

The residual values, useful lives, and methods of depreciation of property, plant and equipment are reviewed at the end of each fiscal year and adjusted prospectively, if appropriate. If the carrying amount of a tangible asset exceeds the recoverable amount, an impairment loss is recognized, in addition to systematic depreciation, in order to lower the carrying amount to the recoverable amount. The recoverable amount is the higher of the fair value less costs to sell (net selling price) and the present value of the net cash flows expected to result from the continued use of the asset. Whenever possible, the net selling price is derived from the most recently observed market transactions.

2.13 Inventory

Merchandise and advance payments on merchandise accounted for as inventories are recognized at cost pursuant to IAS 2. Cost is calculated on the basis of an item-by-item measurement, factoring in the additions from the point of view of the sourcing market or on the basis of the moving average price of the goods. Incidental acquisition costs are measured on a general monthly basis. Supplier payments that are to be classified as a reduction of cost reduce the carrying amount of inventories. Consumption of inventories is recognized within the items of costs of goods sold in the statement of comprehensive income.

Merchandise as of the reporting date is measured at the lower of cost or net realizable value. The net realizable value is the expected selling price less the costs necessary to make the sale. Adequate write- downs to net realizable value were made to allow for all risks from slow-moving goods and / or reduced salability. When the circumstances that previously caused merchandise to be written down below cost no longer exist, the write-down is reversed.

Translation from the German language

2.14 Impairment of non-financial assets

The group assesses at each reporting date whether there is any indication that a non-financial asset reported in the statement of financial position may be impaired. If any indication exists, or when annual impairment testing is required, the group carries out an impairment test. Further details are given in Note 5.2.

2.15 Cash and cash equivalents

Cash and cash equivalents, which include cash accounts and short-term cash deposits at banks, are measured at amortized cost. For the purposes of the cash flow statement, cash and cash equivalents comprise the cash and cash equivalents and short-term deposits less utilized overdrafts.

2.16 Lease The Group as a lessee

The group leases various properties, equipment and cars. Rental contracts are typically made for periods of 2 to 22 years. Lease terms are negotiated on an individual basis and contain a wide range of different terms and conditions. The lease agreements do not impose any covenants, but leased assets may not be used as security for borrowing purposes.

Leases are recognized as a right-of-use asset and corresponding liability at the date of which the leased asset is available for use by the group. Each lease payment is allocated between the liability and finance cost. The finance cost is charged to profit or loss over the lease period so as to produce a constant periodic rate of interest on the remaining balance of the liability for each period. The right-of-use asset is depreciated over the shorter of the asset's useful life and the lease term on a straight-line basis.

Assets and liabilities arising from a lease are initially measured on a present value basis. Lease liabilities include the net present value of the following lease payments:

• fixed payments (including in-substance fixed payments), less any lease incentives receivable

• renewal options

• variable lease payment that are based on an index or a rate

• amounts expected to be payable by the lessee under residual value guarantees

• the exercise price of a purchase option if the lessee is reasonably certain to exercise that option, and

• payments of penalties for terminating the lease, if the lease term reflects the lessee exercising that option.

Translation from the German language

The lease payments are discounted using the interest rate implicit in the lease, if that rate can be determined, or the group’s incremental borrowing rate.

Right-of-use assets are measured at cost comprising the following:

• the amount of the initial measurement of lease liability

• any lease payments made at or before the commencement date

• any initial direct costs, and

• restoration costs.

Payments associated with short-term leases (lease term of 12 months or less) and leases of low-value assets are recognized on a straight-line basis as an expense in profit or loss. The Group recognizes leases which fulfill both conditions within the category low-value asset.

The Group as lessor

The group sub-leases office and retail space. In case of finance leases rental income is recognized on an effective interest method over the term of the sub-leases and reported under interest income. Received payments from operating subleases are recognized within other operating income.

2.17 Trade receivables

Trade receivables are initially recognized at the settlement day at fair value and subsequently measured at amortized cost, which is usually the original invoice value less an allowance for expected impairment losses. The allowance for trade receivables is determined based on lifetime expected credit losses, which are calculated as the present value of expected cash shortfalls. Changes are recognized as other operating expenses in the consolidated statement of comprehensive income.

The Group offers for its online customers the option to purchase on account. In connection with this payment option the Group works with a factoring provider, transferring substantially all risks and rewards resulting from the receivables to the factoring company and derecognizing receivables in the statement of financial position.

2.18 Other financial assets

Other financial assets are initially recognized at the settlement day. The Group classifies its financial assets as “at amortized cost”. No financial assets are held “at fair value through profit or loss” or “at fair value through other comprehensive income (OCI)” on the reporting date. At initial recognition, financial assets are measured at fair value plus transaction costs that are directly attributable to the acquisition of the asset.

Financial assets that are held for collection of contractual cash flows, where those cash flows represent solely repayments of principal and interest on the principal amount, are measured “at amortized cost”. A gain or loss on such instrument subsequently measured at amortized cost is recognized in profit or loss when the asset is sold or impaired. Interest income from this type of financial asset is included in the income statement using the effective interest rate method.

Translation from the German language

Credit risks related to debt instruments at amortized cost held by the Group at the balance sheet date are considered to be low. Therefore, the regular approach in accordance with IFRS 9 requires the Group to determine, at inception as well as on an ongoing basis during the lifetime of the debt instrument, the impairment provision as the credit losses expected in the next twelve months. If the credit risk were to increase and no longer be regarded as low-risk, lifetime expected credit losses would have to be recognized. The Group considers credit risk as significantly increased if debt instruments are past due for more than 30 days. For trade receivables a separate approach is applied for measuring impairment (refer to 5.16).

Other financial assets are included in other current assets, except for maturity dates more than twelve months after the balance sheet date, in which case they are presented as other non-current assets.

2.19 Financial liabilities

Financial liabilities are recognized when a Group company is a contractual party to a financial instrument at the settlement day. Financial liabilities are recognized initially at fair value, net of transaction costs incurred. Financial liabilities are subsequently measured at amortized cost. Any difference between the proceeds (net of transaction costs) and the redemption value is recognized in the income statement over the duration of the obligation using the effective interest rate method. The effective interest method is used to calculate the amortized cost of a financial liability and to allocate interest expenses to the respective periods. The effective interest rate is the interest rate that is necessary to discount the estimated future cash outflows, including all fees and remuneration paid and received that are an integral component of the effective interest rate, transaction costs and other premiums or discounts, through the expected life of the financial instrument, or a shorter period to equal the net carrying amount upon initial recognition.

The embedded prepayment option for the Bond is considered to be closely related to the host contract according to IFRS 9. The Group defines “closely related” up to a 5% difference between amortized cost and redemption price as of redemption date.

Other financial liabilities, for instance loans accepted, trade payables, and other liabilities, are measured at amortized costs. Trade payables are amounts owed as consideration for goods or services provided to the company in the normal course of business. In the normal business cycle, all liabilities are due in one year or less and are therefore classified as current; otherwise, they are presented as non-current liabilities. For current liabilities, that means they are measured at their repayment or settlement amount, while non-current liabilities and long-term debts are measured at amortized cost in accordance with the effective interest method. Non-interest-bearing or low-interest-bearing financial liabilities are measured at their settlement value or nominal value.

The Group derecognizes a financial liability when the related obligation has been paid, cancelled, or has expired. When an existing financial liability is replaced by another from the same lender on substantially different terms, or the terms of an existing liability are substantially modified, such an exchange or modification is treated as the derecognition of the original liability and the recognition of a new liability. The difference in the respective carrying amounts is recognized in the statement of comprehensive income.

Translation from the German language

2.20 Provisions

Provisions are recognized in accordance with IAS 37 when the group has a present obligation (legal or constructive) as a result of a past event, 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 provisions taking into consideration all the discernible risks arising from the obligation. This refers to the amount that is most likely needed to settle the liability. Provisions with a residual term of more than one year are discounted on the reporting date.

Provisions for restoration expenses

The group recognizes provisions for restoration expenses for leasehold improvements in the leased warehouses and office buildings. The provision is recognized at an amount equivalent to the present value of the estimated future restoration obligations. The restoration obligations are recognized as part of the cost of the leasehold improvements for the corresponding amount. The estimated cash flows are discounted using a discount rate that is commensurate to the maturity and risk profile. The unwinding of the discount is expensed as incurred and recognized as an interest expense in the statement of comprehensive income.

2.21 Share-based payment

Certain managers and board members of the Group ("Managers") were given the opportunity to invest in different German limited partnerships which indirectly owns interests of approximately 5% in the group. The subscription price for the partnership interests subscribed by the Managers in the limited partnership corresponded to their fair value at grant date.

The acquisition qualifies as a Share Based Payment under IFRS 2, the manager’s interests in the partnership are recognized as an equity-settled share-based payment arrangement in the financial statements of the Group. As the investments in the partnership were acquired at fair value, no expense will be recognized as a result of this transaction. The participation rights in form of partnership interest were acquired from an entity outside the Group and the Group has no obligation to make any payments on the partnership interests to the Managers. The share-based payment arrangements are fully vested at grant date. The exit constitutes a performance vesting condition which is considered non-market performance condition. If the service condition is met, then the Manager can exercise his option at the market value per share. The investment program provides different industry-standard cancellation and settlement events.

2.22 Significant events after the reporting date

As COVID-19 continued to impact the global community and in particular the retail offline industry the negative impacts on our Group are not fully visible and predictable. In the current environment, the health and safety of our employees, customers and partners are paramount. On March 16, the Free State of Bavaria declared an official case of emergency and the German government and the state premiers announced further serious restrictions on public life, both of which led to the closure of non- systemically relevant shops. As of March 18, 2020 the Group closed the offline stores in Germany. The offline store in Vienna was closed as of March 16, 2020.

Translation from the German language

The Group has launched several actions in order to protect the health of its employees and to ensure business continuity. These measures include the implementation of a dedicated prevention team, restrictions on business travel, the significant expansion of mobile working and virtual meetings as well as the adaptation of the warehouse shift organisation to reduce and/or avoid contact amongst employees. Furthermore, prudent cash management especially with regards to merchandise purchasing and CAPEX spending including logistics are at the centre of all business decisions. The Group applied for short-time work for the employees in the German retail stores in March as well as for the Headquarter in Aschheim and for the Austrian Store in Vienna in April. Other business areas may be affected in the second quarter as well. The Group’s online business BestSecret and the central warehouse near Munich remained fully operational in order to serve the BestSecret customers. The right to return was extended to 30 days (previous 14 days). The Group also actively monitors any opportunities arising from more favourable buying offers due to increased overstock on the supply side, as well as an accelerated shift towards e-commerce on the customer side.

Subsequently to the year end the Group drew down mEUR 24.5 (cash transfer) from its revolving credit facility in March in order to increase the financial latitude.

3. Capital management

The Group analyses its capital based on the equity attributable to the equity holders of the parent, including all components of equity as shown on the face of the consolidated statement of financial position. The primary objective of the Group’s capital management is to maximize the value of the Group.

It is the objective of the capital management of the Group to ensure amongst other things that it meets the financial covenants attached to the Senior Secured Notes (see Note 5.12) that define leverage ratio thresholds. Breaches in meeting the financial covenant would permit the banks to immediately call loans and borrowings. The Group manages its capital structure and makes adjustments in light of changes in economic conditions. The Group monitors capital using both a leverage ratio and an interest ratio, which is Adjusted EBITDA/Net Debt* and EBITDA/interest expense as of particular effective date. According to the Offering Memorandum Agreement, the Group’s policy is to keep the leverage ratio fairly below the level 1:5, the interest ratio fairly above 2:1 and to reduce the leverage ratio over time. The group achieved the targets for fiscal year 2019 and in the prior year.

No changes were made in the objectives, policies or processes for managing capital during the year ended December 31, 2019.

* Net debt consists of the Notes, accrued interest on the Notes and interest-bearing liabilities which also include recognized lease liabilities less cash and cash equivalents at the balance sheet date.

Translation from the German language

4. Notes to the statement of comprehensive income

4.1 Revenue

The amount of revenue which was included in the contract liability at the beginning of the year is KEUR 6.568 (previous year: KEUR 6,746).

Revenue per Segment 2019 KEUR Segments Online Offline Total Type of goods or service Sale of merchandise 440,736 130,525 571,261 Total revenue from contracts with customers 440,736 130,525 571,261 Geographical markets Germany 464,190 Foreign countries 107,071 Total revenue from contracts with customers 440,736 130,525 571,261 Timing of revenue recognition Goods transferred at a point in time 440,736 130,525 571,261 Total revenue from contracts with customers 440,736 130,525 571,261

Revenue per Segment 2018 KEUR Segments Online Offline Total Type of goods or service Sale of merchandise 361,918 126,371 488,289 Total revenue from contracts with customers 361,918 126,371 488,289 Geographical markets Germany 409,828 Foreign countries 78,461 Total revenue from contracts with customers 361,918 126,371 488,289 Timing of revenue recognition Goods transferred at a point in time 361,918 126,371 488,289 Total revenue from contracts with customers 361,918 126,371 488,289

The Group uses the practical expedient provided in IFRS 15.121 not to disclose the amount of the transaction price allocated to remaining performance obligations for contracts with original expected duration of less than one year.

Translation from the German language

4.2 Operating expenses

KEUR 2019

Selling and Cost of Administrative distribution Total sales expenses expenses

Material expenses -291,941 -4,065 0 -296,006

Personnel expense -3,128 -70,126 -27,771 -101,025 Depreciation and -964 -13,784 -4,106 -18,854 Amortization

Amortization of PPA Assets 0 -47,534 0 -47,534 Other expenses 0 -57,929 -19,740 -77,667 Total expenses -296,033 -193,438 -51,617 -541,088

KEUR 2018

Selling and Cost of Administrative distribution Total sales expenses expenses

Material expenses -255,623 -4,209 0 -259,832

Personnel expense -2,896 -60,992 -23,577 -87,465 Depreciation and Amortization -1,023 -12,280 -2,945 -16,248

Amortization of PPA Assets 0 -37,516 0 -37,516 Other expenses 0 -44,264 -16,663 -60,927 Total expenses -259,542 -159,261 -43,185 -461,988

Selling and distribution costs mainly consist of fulfillment costs in the amount of KEUR 93,063 (previous year: KEUR 75,580), selling costs in the amount of KEUR 89,564 (previous year: KEUR 74,836) which include the amortization of trademarks and customer relationships and marketing costs of KEUR 10,812 (previous year: KEUR 8,845).

The Group carried out development work to create software and app solutions. All non-capitalizable development costs are recognized as expenses under Administrative expenses in the reporting period they incurred. In 2019, this expense amounted to KEUR 5,678 (previous year: KEUR 4,943).

Translation from the German language

4.3 Other operating income

KEUR 2019 2018

Damage compensation 618 251 Foreign exchange gains 235 244 Income from sublease 135 102 Reimbursement of legal costs 118 141 Income relating to other periods 24 364 Reversal of provisions 8 0 Miscellaneous other 406 434 Total 1,544 1,536

4.4 Other operating expenses

KEUR 2019 2018 Credit loss -2,123 -492 Foreign exchange losses -552 -643 Expenses from other periods -329 -305 Restructuring expense 0 -177 Miscellaneous others -478 -433

Total -3,482 -2,050

The increase of credit losses is resulted from measures to clean up bad debt portfolio. Miscellaneous other expenses mainly comprise charges for severely handicapped persons and charitable donations.

Translation from the German language

4.5 Financial expenses KEUR 2019 2018

Interest expense financial liabilities non-current -17,300 -17,158 Interest expense financial liabilities current -681 -851

Total interest expenses -17,981 -18,009

Interest relating to IFRS 16 leasing liabilities -6,255 -5,819

Total financial expenses -24,236 -23,828

4.6 Financial income

KEUR 2019 2018

Sublease 27 31 Other 2 2 Total financial income 29 33

Translation from the German language

5. Notes to the consolidated statement of financial position

5.1 Property, plant and equipment

Statement of Movements of Property, Plant and Equipment 2019

Other Right-of- KEUR Plant and equipment, Prepayments use Total machinery furniture assets* and fixtures Cost At January 01, 2019 43,836 11,363 1,245 90,420 146,864 Additions 1,028 2,269 20,954 15,059 39,310 Disposals 0 -2 0 -518 -520 Transfer 821 3,990 -4,811 0 0 At December 31, 2019 45,685 17,620 17,388 104,961 185,654

Depreciation / Impairment At January 01, 2019 6,543 3,674 0 11,082 21,299 Depreciation for the year 3,757 2,497 0 6,504 12,758 Disposals 0 -1 0 -303 -304 At December 31, 2019 10,300 6,170 0 17,283 33,753

Net book value At January 01, 2019 37,293 7,689 1,245 79,338 125,565 At December 31, 2019 35,385 11,450 17,388 87,678 151,901

* The right-of-use assets refer to leased assets recognized in the balance sheet according to IFRS 16. Please refer to Note 2.16 for the lease accounting policy. The right-of-use assets mainly arises from leases of rented space (KEUR 87,020) and leased company cars (KEUR 658) as of December 31, 2019.

All property, plant and equipment assets are pledged as security for the Senior Secured Notes as of balance sheet date at their respective carrying amounts.

Prepayments as of December 31, 2019 mainly consist of prepayments in connection with the warehouse extension.

Translation from the German language

Statement of Movements of Property, Plant and Equipment 2018

Other Right-of- KEUR Plant and equipment, Prepayments use Total machinery furniture assets* and fixtures Cost At January 01, 2018 38,482 7,196 96 85,016 130,790 Additions 1,091 2,262 7,317 5,933 16,603 Disposals 0 0 0 -529 -529 Transfer 4,263 1,905 -6,168 0 0 At December 31, 2018 43,836 11,363 1,245 90,420 146,864

Depreciation / Impairment At January 01, 2018 2,996 1,675 0 5,055 9,726 Depreciation for the year 3,547 1,999 0 6,291 11,837 Disposals 0 0 0 -264 -264 At December 31, 2018 6,543 3,674 0 11,082 21,299

Net book value At January 01, 2018 35,486 5,521 96 79,961 121,064 At December 31, 2018 37,293 7,689 1,245 79,338 125,565

* The right-of-use assets refer to leased assets recognized in the balance sheet according to IFRS 16. Please refer to Note 2.16 for the lease accounting policy. The right-of-use assets mainly arises from leases of rented space (KEUR 78,690) and leased company cars (KEUR 648) as of December 31, 2018.

Translation from the German language

5.2 Goodwill

2019 in KEUR Goodwill

Cost At January 01, 2019 254,394

Impairment 0

At December 31, 2019 254,394

2018 in KEUR Goodwill

Cost At January 01, 2018 254,394 Impairment 0 At December 31, 2018 254,394

In previous year, the Goodwill acquired through business combinations was allocated to the cash generating units (CGUs) online and the offline. Due to the implementation of store profit or loss statements (EBITDA monitoring) in 2019 the respective stores constituted within the offline segment the level at which goodwill impairment testing was performed.

Goodwill allocation in 2018:

KEUR Online Offline Total

Goodwill 203,548 50,846 254,394

Goodwill allocated in 2019:

Online Store Store Store Store Total KEUR Munich Dornach Vienna Frankfurt

Goodwill 203,548 21,209 21,209 7,355 1,073 254,394

Translation from the German language

Goodwill is tested for impairment at least once a year by comparing the carrying amounts of the CGUs to which goodwill is allocated with their fair value less cost to sell (2% of fair value), applying level 3 measurement. Fair value less cost to sell is determined using the discounted cash flow method based on the current five year planning for the CGU concerned.

The major planning assumptions are:

• Revenue/EBITDA Margin

• Discount Rates

• Growth rate, which was used for the extrapolation of the cash-flow forecasts outside the financial planning period

Revenue/EBITDA-Margin – The budgeted revenues and results for each CGU are based on freely available economic and industry specific data and take into account past trends and occurrences alongside current market forecasts.

Discount Rates – The underlying discount rates reflect the current market forecasts with regards to the CGU specific risks, including interest rate and asset specific risks, for which no adjustments regarding the forecasted future cash flows were done.

The applied assumptions of the impairment test performed are stated for each CGU in the table below.

Online Offline stores

Post-tax WACC 7,2% (PY: 8.8%) 4.0% (PY: 4.6%)

Long-term growth 2.0% (PY:2.0%) 1.0% (PY:1.5%) Revenue Growth Solid Growth Moderate Growth EBIT Growth Solid Growth Moderate Growth

For conducting the Impairment test, the total carrying amount of the cash-generating units is checked against the recoverable amount. The recoverable amount is calculated as the fair value less costs to sell, based on discounted future cash flows. Expected cash flows are based on a qualified planning process, with due consideration given to internal experience values and external macroeconomic data. The detailed planning period covers five years, as a general rule. Generally, a growth rate between 1.0% and 2.0% is applied for the time after the five-year period. As a general rule, the discount factor is calculated as the weighted average cost of capital (WACC) by application of the capital asset pricing model. For this purpose, an individual group of comparison companies (“peer group”) is applied for all groups of cash-generating units operating in the same business segment. The individual business risk is reflected through the use of specific beta-factor. The beta-factor is calculated annually based on freely available market data.

Furthermore, the discount factors are determined on the basis of the following exemplary assumptions: a base interest rate of 0,3% (PY: 1.0%) and a market risk premium of 7.50% (PY: 6.50%) at December 31, 2019 for a term of 25 years in Germany. Country-typical risk premiums are applied to both the equity capital cost rate and the debt capital cost rate, based on the credit rating of the respective country.

Translation from the German language

For purposes of estimating the development of revenues, EBIT and the EBIT margin, specific growth rates were assumed in conducting the Impairment test of the respective CGUs. The calculation of sustainably attainable earnings is based on assumptions regarding various cost reduction measures. Furthermore, customary market EBIT margins were assumed for calculating the sustainably attainable earnings. In addition to the Impairment test, three sensitivity analyses were conducted. For the first sensitivity analysis, the discount factor was increased by 0.5 percentage points (PY: 0.5 ppt) for each cash-generating unit. For the second sensitivity analysis, a flat-rate deduction of 10% (PY: 10%) was applied to the assumed EBITDA Margin in perpetuity. The third sensitivity analysis included a reduction of the growth rate in terminal value by 0.5 percentage points.

The increase in WACC by 0.5 percentage points in the underlying assumptions would result in an impairment loss for the CGU Store Munich in an amount of -4.819 KEUR and the CGU Store Dornach in an amount of -4,861 KEUR. A flat-rate deduction of 10% in perpetuity from an EBITDA Margin of 11.9% to an EBITDA Margin of 10.7% would result in an impairment loss for the CGU Store Munich in an amount of -3,792 KEUR and the CGU Store Dornach in an amount of -3.969 KEUR. A reduction of the growth rate in terminal value by 0.5 percentage points would cause an impairment loss for the CGU Store Munich in an amount of -3.599 KEUR and the CGU Store Dornach in an amount of -3.801 KEUR.

5.3 Intangible assets

Statement of Movements of Intangible Assets 2019 Purchased KEUR Internally franchises, generated industrial and industrial and similar rights and Prepayments Total similar rights assets, and and assets licenses in such rights and assets Cost At January 01, 2019 5,659 491,846 426 497,931 Additions (internal) 5,008 0 0 5,008 Additions (acquired) 0 4,509 3,409 7,918 Reclassifications 0 147 -147 0 At December 31, 2019 10,667 496,502 3,688 510,857

Amortisation / Impairment At January 01, 2019 1,293 79,640 0 80,933 Amortisation for the year 2,090 51,540 0 53,630 At December 31, 2019 3,383 131,180 0 134,563

Net book value At January 01, 2019 4,366 412,206 426 416,998 At December 31, 2019 7,284 365,322 3,688 376,294

Translation from the German language

Statement of Movements of Intangible Assets 2018 Purchased KEUR Internally franchises, generated industrial and industrial and similar rights and Prepayments Total similar rights assets, and and assets licenses in such rights and assets Cost At January 01, 2018 2,291 486,037 9 488,337 Additions (internal) 3,368 3,368 Additions (acquired) 5,778 448 6,226 Reclassifications 0 31 -31 0 At December 31, 2018 5,659 491,846 426 497,931

Amortisation / Impairment At January 01, 2018 329 38,677 0 39,006 Amortisation for the year 964 40,963 0 41,927 At December 31, 2018 1,293 79,640 0 80,933

Net book value At January 01, 2018 1,962 447,360 9 449,331 At December 31, 2018 4,366 412,206 426 416,998

The purchased franchises, industrial and similar rights and assets mainly relate to PPA assets acquired via business combination. Further details with regard to the useful lives are given in Note 2.11. As of December 31, 2019 the carrying amount for the Schustermann & Borenstein trademark is KEUR 17,452 (previous year: KEUR 26,178), for the BestSecret trademark KEUR 145,423 (previous year: KEUR 153,953), for the Offline customer relationship KEUR 73,043 (previous year: KEUR 79,684) and for the Online customer relationship KEUR 119,331 (previous year: KEUR 142,969).

5.4 Financial assets

December 31, December 31, KEUR 2019 2018 Non-current Receivables from subleases 394 482 Financing Fees revolving credit facility 174 0 Rental deposits 24 9 592 491

Current Receivables from subleases 88 84 Creditors with debit accounts 3,593 1,869 Financing Fees revolving credit facility 63 0 Other 188 92 Total 3,932 2,045

The amount of the sublease receivables (>5 years) is KEUR 0 (previous year: KEUR 99).

Translation from the German language

5.5 Inventories and prepayments

Inventories of merchandise, mainly consisting of the product groups textiles and shoes, are recognized at an amount of KEUR 160,235 (previous year: KEUR 122,256).

As of December 31, 2019, allowances of KEUR 5,866 (previous year: KEUR 4,290) were recognized on inventories. Change in inventory allowance came to KEUR 1,576 (previous year: KEUR 479) in the reporting year within cost of sales. Further details on material expenses are given in Note 4.2.

All inventory is pledged as security for the Senior Secured Notes as of balance sheet date at its respective carrying amount.

Prepayments pertain to prepayments for merchandise and amounted to KEUR 6,238 (previous year: KEUR 4,724).

5.6 Trade receivables

Trade receivables amounted KEUR 711 (previous year: KEUR 1,576) as at December 31, 2019.

Trade receivables are non-interest bearing and are generally due for immediate payment.

As at December 31, 2019 trade receivables of an initial value of KEUR 504 (previous year: KEUR 1,050) (including VAT) were subject to enforcement measures and were fully impaired. See below for the movements in the provision for impairment of receivables.

December 31, December 31,

KEUR 2019 2018

At January 01 883 1,991 Charge for the year 2,123 471

Utilized -1,963 -1,579 At December 31 1,043 883

Translation from the German language

The increase of credit losses is resulted from measures to clean up bad debt portfolio. A provision matrix to calculate expected credit losses for receivables was adjusted respectively.

Aging Analysis as at December 31, 2019 KEUR Days past due

< 30 30-60 60-90 90-120 >120 Total Current days days days days days

Expected credit loss rate 32,2% 33,6% 32,3% 70,7% 74,0% Estimated total gross carrying 1,754 148 90 125 127 123 1,141 amount at default Expected credit loss 1,043 0 29 42 41 87 844

Aging Analysis as at December 31, 2018 KEUR Days past due

< 30 30-60 60-90 90-120 >120 Total Current days days days days days

Expected credit loss rate 0,0% 0,0% 0,0% 78,1% 81,8% Estimated total gross carrying 2,459 449 470 296 158 137 949 amount at default Expected credit loss 883 0 0 0 0 107 776

See Note 5.16 on credit risk of trade receivables, which explains how the Group manages and measures credit quality of trade receivables. All trade receivables are pledged as security for the Senior Secured Notes as of balance sheet date at their respective carrying amounts.

5.7 Non-Financial assets

KEUR December 31, December 31, 2019 2018 Current Right to recover possession of inventory 9,235 10,977 Other 2,887 2,596 12,122 13,573

Translation from the German language

5.8. Leases December 31, December 31, KEUR 2019 2018

Income Statement Disclosures Depreciation of ROU assets 6,504 6,291 Interest on lease liabilities 6,255 5,819 Short term lease expense 319 417 Low-value asset lease expense 1,179 1,345

December 31, December 31, KEUR 2019 2018

Cash Flow Statement Disclosures Total cash outflows for leases 11,857 11,161 Balance Sheet Disclosures Carrying amount of Property ROU assets 87,678 79,338 Lease Liabilities 95,657 84,921

KEUR Maturity as of December 31, 2019

Less than 1 to 5 5 to 10 10 to 15 More than 15 Lease Liability 12 months years years years years

5,257 15,826 22,566 27,946 24,062

KEUR Maturity as of December 31, 2018

Less than 1 to 5 5 to 10 10 to 15 More than 15 Lease Liability 12 months years years years years

4,308 15,526 20,450 26,585 18,052

Leases not yet commenced to which the Group is committed amounted as of December 31, 2019 to KEUR 39,200 (previous year: KEUR 10,048) and comprise the agreement in connection with the warehouse extension (previous year: new store opening).

Translation from the German language

5.9 Cash and cash equivalents

Cash and cash equivalents comprise the categories as presented in the following table:

December 31, December 31, KEUR 2019 2018

Cash in bank 57,697 37,652 Cash in transit 17,796 29,220 Cash on hand 540 79 Total 76,033 66,951

The maximum default risk corresponded to the carrying value as of the balance sheet date.

As of December 31, 2019, the Group had unutilized credit lines with banks in the amount of KEUR 50,000 (previous year: KEUR 35,000).

5.10 Equity

Capital stock

PrestigeBidCo GmbH was founded with a capital stock of KEUR 25 paid in cash. Fully paid ordinary shares carry one vote per share and carry a right to dividends as and when declared by the Group. At the reporting date PrestigeBidCo Holding GmbH holds 100% of the shares of the PrestigeBidCo GmbH.

Capital reserves

The capital reserves of KEUR 474,177 (previous year: KEUR 474,177) consist of the contribution performed by the parent PrestigeBidCo Holding GmbH. Thereof KEUR 39,906 relate to a non-cash contribution of Schustermann & Borenstein Holding GmbH shareholders as part of the purchase price.

Retained earnings

The legal and contractual obligations of the Group - mainly based on the Senior Secured Notes - include restrictions with regards to dividend distributions by several ratios, thresholds and preconditions. The Group is monitoring all existing and agreed ratios, thresholds and required qualifications prior to distributing any profits.

Translation from the German language

5.11 Other provisions

Movements in other provisions in 2019 KEUR Provisions for Miscellaneous

restoration other Total expenses provisions At January 01, 2019 358 107 465

Compound interest effects 33 0 33 At December 31, 2019 391 107 498

Movements in other provisions in 2018 Provisions for Miscellaneous KEUR restoration other Total expenses provisions

At January 01, 2018 347 7,557 7,904 Effects of adoption IFRIC 23 -7,450 -7,450 At January 01, 2018 347 107 454

Compound interest effects 11 0 11

At December 31, 2018 358 107 465

Provisions for restoration expenses are recognized for the leasehold improvements in the leased warehouse in Poing. The provisions for tax risks included in miscellaneous other provisions were reclassified to income tax payable according to IFRIC 23.

Translation from the German language

5.12 Loans and borrowings

The Group’s debt financing at December 31, 2019 is based on the following components:

Carrying amounts of loans and borrowings at December 31, 2019

Non- Effective current Current Total Component interest rate Maturity (KEUR) (KEUR) (KEUR)

6.76% 15/12/2023 254,721 852 255,573 Senior Secured Notes

Total 254,572 852 255,573

Carrying amounts of loans and borrowings at December 31, 2018

Non- Effective current Current Total Component interest rate Maturity (KEUR) (KEUR) (KEUR)

6.76% 15/12/2023 253,762 810 254,572 Senior Secured Notes

Total 253,762 810 254,572

Translation from the German language

Senior Secured Notes

PrestigeBidCo GmbH has issued KEUR 260,000 aggregate principal amount of 6.250% Senior Secured Notes due 2023 (the “Notes”) as of December 15, 2016 as part of the financing for the acquisition of Schustermann & Borenstein Holding. The Notes are measured at amortized cost and will mature on December 15, 2023. The Issuer pays interest on the Notes semi-annually on each June 15 and December 15. Prior to December 15, 2019, the Issuer will be entitled, at its option, to redeem all or a portion of the Notes by paying the relevant applicable premium. Some or all of the Notes may also be redeemed at any time on or after December 15, 2019 at certain redemption prices. In addition, prior to December 15, 2019, the Issuer may redeem at its option up to 40% of the aggregate principal amount of the Notes with the net proceeds from certain equity offerings at a certain redemption price, provided that at least 60% of the aggregate principal amount of the Notes remains outstanding. Upon the occurrence of certain events constituting a change of control, the Issuer may be required to make an offer to repurchase all of the Notes at a redemption price equal to 101% of the principal amount thereof, plus accrued and unpaid interest and additional amounts, if any. However, a change of control will not be deemed to have occurred if the Issuer’s consolidated net leverage ratio is less than certain specified levels at the time of such event. In addition, the Issuer may redeem all, but not less than all, of the Notes upon the occurrence of certain changes in applicable tax law.

Revolving Credit Facility Agreement

In December 2016, PrestigeBidCo GmbH (as original borrower and original guarantor), Barclays Bank PLC, Goldman Sachs Bank USA and UniCredit Bank AG, London Branch (as lenders), UniCredit Bank AG, London Branch (as facility agent) and UniCredit Bank AG, London Branch (as security agent), among others, entered into a revolving credit facility agreement providing for borrowings up to an aggregate principal amount of KEUR 35,000 on a committed basis (the “Revolving Credit Facility”). The Revolving Credit Facility may be utilized by any current or future borrower under the Revolving Credit Facility in euro, Swiss francs, US dollars, Pounds Sterling or certain other currencies (if agreed) by the drawing of cash advances, the issue of Letters of Credit (upon the appointment of an Issuing Bank) and by way of any Ancillary Facilities that may be made available thereunder (each as defined in the Revolving Credit Facility Agreement). Subject to certain exceptions, loans may be borrowed, repaid and re-borrowed at any time. Borrowings are available to be used for general corporate and working capital purposes of the Group (as defined in the Revolving Credit Facility Agreement) including, without limitation, for payment of interest under the Notes. On December 20, 2018, PrestigeBidCo GmbH established an additional revolving credit facility of KEUR 15,000 by way of increase of the existing facility to KEUR 50,000. The additional facility lender is UniCredit Bank AG, London branch. On January 02, 2019 the lender confirmed the granting of the additional facility. Utilizations under the Additional Facility may only be used for financing or refinancing the working capital requirements and/or general corporate purposes of PrestigeBidCo GmbH and its Restricted Subsidiaries. The term of the Additional Facility is valid until further notice. The additional facility ranks pari passu with the existing facility.

Translation from the German language

5.13 Trade and other payables

December 31, December 31, KEUR 2019 2018

Trade payables 24,251 14,763 Liabilities for processed returns 3,276 0 Total 27,527 14,763

For explanations on the Group’s liquidity risk management processes refer to Note 5.16.

5.14 Other non-financial liabilities

December 31, December 31, KEUR 2019 2018 Current Contract liability (Prepayments received) 9,765 6,568 Refund liability (Accrual for returns) 18,973 22,709 Accrual for outstanding invoices 19,727 12,289 Accrual for personnel expenses 6,416 5,383 VAT liability 14,263 11,560 Other 3,925 3,762 Total 73,069 62,271

5.15 Taxes

The major components of income tax expense for the period ended December 31, are:

KEUR 2019 2018

Current income tax expense -11,351 -10,540 Deferred tax income 11,160 15,404

Income tax expense reported in profit or loss -191 4,864

Translation from the German language

Reconciliation of tax expense and the accounting profit for the period ended December 31, 2019:

2019 Profit/ loss before income tax 4,028

Anticipated tax (tax rate 27.53%) - 1,109

Effects resulting from Trade tax -629 Tax rate changes 867

Non-deductible expenses -17 Primary formation deferred taxes 97 Taxes prior periods 618 Prepayments Austria -106 Other events 88

Tax income reported in profit or loss 4,74% -191

Reconciliation of tax expense and the accounting profit for the period ended December 31, 2018: 2018 Profit/loss before income tax 1,992

Anticipated tax (tax rate of 27,74%) - 552

Effects resulting from Trade tax -615 Tax rate changes 3,554 Non-deductible expenses - 104 Dividend taxation in group - 13 Primary formation deferred taxes 1,318 Taxes prior periods 1,075 Other events 201 Tax income reported in profit or loss -244.24% 4,864

The Group tax rate of 27.53% (previous year: 27.74%) reflects corporate income tax plus surcharges as follows: 2019 Corporate income tax rate 15.00% Solidarity surtax rate (5.5% on 15.0%) 0.83% Trade tax rate 11.70% Total group income tax rate 27.53%

Translation from the German language

The Groups deferred tax assets and liabilities at December 31, 2019 are based on the following components:

Deferred Tax Assets and Liabilities 2019 Deferred tax Deferred tax KEUR Net balance assets liabilities At December 31, 2019 2019 2019 2019

Intangible assets 785 -99,807 -99.022 Property, plant and equipment 0 -24,138 -24,138 Inventories 0 -4,959 -4,959

Other non-current financial assets 0 -155 -155 Other current finacial assets 0 -40 -40

Other non-current financial liabilities 24,887 0 24,887 Other current financial liabilities 1,447 0 1,447

Non-current interest bearing loans and 0 -1,453 -1,453 borrowings Current non financial liabilities 37 0 37

Total 27,156 -130,552 -103,396

Offset DTA/DTL -27,156 0 27,156 Total recognized deferred tax 0 -103,396 -103,396 liabilities

The Groups deferred tax assets and liabilities at December 31, 2018 are based on the following components:

Deferred Tax Assets and Liabilities 2018 Deferred tax Deferred tax KEUR Net balance assets liabilities At December 31, 2018 2018 2018 2018

Intangible assets 1,318 -112,943 -111,625 Property, plant and equipment 0 -22,008 -22,008 Inventories 28 -2,657 -2,629

Other non-current financial assets 0 -134 -134 Other current finacial assets 0 -23 -23

Other non-current financial liabilities 22,362 0 22,362 Other current financial liabilities 1,195 0 1,195

Non-current interest bearing loans and 0 -1,731 -1,731 borrowings Current non financial liabilities 37 0 37

Total deferred taxes 24,940 -139,496 -114,556

Offset DTA/DTL -24,940 24,940 0

Total recognized deferred tax assets 0 -114,556 -114,556 and liabilities

Translation from the German language

Change in 2019 in KEUR deferred tax liability

At January 01, 2019 114,556

Temporary differences -11,160

At December 31, 2019 103,396

Change in 2018 in KEUR deferred tax liability

At January 01, 2018 129,960

Temporary differences -15,404

At December 31, 2018 114,556

No deferred taxes were established on tax loss carryforwards of KEUR 17,610 (previous adjusted year: KEUR 16,910) as well as on further tax loss carryforwards of low extent. During the preparation of financial statements for the period ended December 31, 2019 a data entry error has been discovered in the Note 6.3 to the consolidated financial statements for the period ended December 31, 2018. The error correction doesn’t have any impact on the consolidated statements of comprehensive income for the fiscal year from January 1 to December 31, 2018, the consolidated balance sheet as at December 31, 2018, the consolidated statements of cash flows and the consolidated statements of changes in equity for the fiscal year from January 1 to December 31, 2018.

The Group offsets tax assets and liabilities if, and only if, it has a legally enforceable right to set off current tax assets and current tax liabilities and the deferred tax assets and deferred tax liabilities related to income taxes levied by the same tax authority.

Deferred tax assets have not been recognized in case it is not likely that the company will be able to create enough taxable profits during the planning period and in case of implementation of a tax group with a freeze of tax loss carry-forwards.

There are no temporary differences associated with investments in subsidiaries. Accordingly, no deferred tax liability has been recognized.

Translation from the German language

5.16 Additional disclosures regarding financial instruments and risk management

The following table shows the carrying amounts of all financial instruments recognized in the consolidated statement of financial position by category:

KEUR Financial instruments as of December 31, 2019

Reported on Carrying amount balance sheet at on balance sheet amortized cost ASSETS Trade receivables 711 711 Financial assets 4,524 4,524 Cash at bank and in hand 76,033 76,033 Total of financial assets 81,268 81,268

LIABILITIES Trade and other payables 27,527 27,527 Senior Secured Note 255,573 255,573 Lease liabilities 95,657 95,657 Total of financial liabilities 378,757 378,757

KEUR Financial instruments as of December 31, 2018

Reported on Carrying amount balance sheet at on balance sheet amortized cost ASSETS Trade receivables 1,576 1,576 Financial assets 2,536 2,536 Cash at bank and in hand 66,951 66,951 Total of financial assets 71,063 71,063

LIABILITIES Trade and other payables 14,763 14,763 Senior Secured Note 254,572 254,572 Lease liabilities 84,921 84,921 Total of financial liabilities 354,256 354,256

The carrying amounts of trade receivables, financial assets and cash and cash equivalents as well as trade payables equal their fair values as they are mainly short term. The fair value of the Senior Secured Notes is disclosed separately in the table below.

Translation from the German language

The fair value hierarchy reflects the significance of the inputs used to determine fair values. Financial instruments with fair value measurement based on quoted prices in active markets are disclosed in Level 1. In Level 2 determination of fair values is based on observable inputs, e.g. foreign exchange rates. Level 3 comprises financial instruments for which the fair value measurement is based on unobservable inputs.

2019 in KEUR Fair value measurement using Quoted Significant Significant prices in active observable unobservable Total markets inputs inputs (Level 1) (Level 2) (Level 3)

Senior Secured Notes 269,464 269,464 - -

2018 in KEUR Fair value measurement using Quoted Significant Significant prices in active observable unobservable Total markets inputs inputs (Level 1) (Level 2) (Level 3)

Senior Secured Notes 267,202 267,202 - -

No financial instruments were set off and no enforceable master netting arrangements or similar agreements are in place as of December 2019.

The following table shows net losses from financial instruments by measurement categories:

December 31, December 31, KEUR 2019 2018

Financial assets measured at amortized cost (Trade receivables) -2,123 -471 Financial liabilities measured at amortized cost -1,001 -904

Net losses under “financial assets measured at amortized cost” and “financial liabilities measured at amortized cost” mainly comprise allowance and interest based on effective interest method.

Translation from the German language

Nature and extent of risks arising from financial instruments

The Group’s principal financial liabilities comprise Senior Secured Notes, trade and other payables. The main purpose of these financial liabilities is to finance the Group’s operations and to provide guarantees to support its operations. The Group’s principal financial assets include trade and other receivables as well as cash and cash equivalents that derive directly from its operations.

The Group is exposed to market risk, credit risk and liquidity risk. The group treasury oversees these risks. The Group’s senior management is supported by group treasury that advises on financial risks for the Group. The Management Board reviews and agrees policies for managing each of these risks, which are summarized below.

Market risk

Market risk is the risk that the fair value or the future cash flows of a financial instrument will fluctuate because of changes in market prices. Market risk comprises three types of risk: interest rate risk, currency risk and other price risk, such as equity price risk.

The sensitivity analyses in the following sections relate to the position as at December 31, 2019. The sensitivity analyses have been prepared on the basis that the amount of net liabilities, the ratio of fixed to floating interest rates of the liabilities and the proportion of financial instruments in foreign currencies are all constant. The analyses exclude the impact of movements in market variables on: the carrying values of pension and other post-retirement obligations; provisions; and the non-financial assets and liabilities of foreign operations.

The sensitivity analyses demonstrate how profit or loss items are affected by the assumed changes in respective market risks. Based on the position as at December 31, 2019, there is no sensitivity of equity.

Interest rate risk

Interest rate risk is the risk that the fair value or future cash flows of a financial instrument will fluctuate because of changes in market interest rates. As of December 31, 2019, there are no financial instruments affected by floating interest rates. The Group does not enter into interest rate derivatives.

Foreign currency risk

Foreign currency risk is the risk that the fair value or future cash flows of an exposure will fluctuate because of changes in foreign exchange rates. The Group’s exposure to the risk of changes in foreign exchange rates is insignificant.

Translation from the German language

Credit risk & risk concentration

Credit risk is the risk that a counterparty will not meet its obligations under a financial instrument or customer contract, leading to a financial loss.

Concentration risks arising from the delivery of goods to major customers are subject to a special credit watch. In the case of a return debit, the Group has implemented a dunning process operated by an external service provide. The maximum exposure to credit risk of financial assets, without taking account of any collateral, is represented by their carrying amount. The Group offers under certain conditions purchase on account. Due to the introduction of non-recourse factoring, there is no exposure to credit risk.

The Group is exposed to credit risk from its operating activities (primarily trade receivables) and from its financing activities, including deposits with banks and financial institutions. The Group does not hold collateral as security. There were no significant credit risks or concentration risk as of December 31, 2019.

Financial instruments and cash deposits

Credit risk from balances with banks and financial institutions is managed by the Group’s treasury department in accordance with the Group’s policy. Investments of surplus funds are made only with approved counterparties and within credit limits assigned to each counterparty. Counterparty credit limits are reviewed by the Group’s Management Board on an annual basis and may be updated throughout the year subject to approval of the Group’s Finance Committee. The limits are set to minimize the concentration of risks and therefore mitigate financial loss through a counterparty’s potential failure to make payments.

Liquidity risk

The Group provides sufficient liquidity for each individual entity by cash pooling. The Group’s objective is to maintain a balance between continuity of funding and flexibility through the use of bank overdrafts and bank loans. Approximately 10.0% (previous year: 8.0%) of the Group’s debt will mature in less than one year at December 31, 2019 based on the carrying value of borrowings reflected in the consolidated financial statements. The Group assessed the concentration of risk with respect to refinancing its debt and concluded it to be low. The Group has access to a sufficient variety of sources of funding and debt maturing within 12 months can be rolled over with existing lenders. The Group has access to take up a short-term loan with an amount of KEUR 50,000, of which KEUR 50,000 are undrawn at the reporting date.

Translation from the German language

The following table shows future undiscounted cash outflows from financial liabilities based on contractual agreements:

At December 31, 2019 Less than 1 to More than KEUR 12 months 5 years 5 years Senior Secured Notes 16,250 308,750 - Trade and other payables 27,527 - - Lease liability 11,166 39,142 115,358 Total 54,943 364,142 115,358

At December 31, 2018 Less than 1 to More than KEUR 12 months 5 years 5 years Senior Secured Notes 16,250 325,000 - Trade and other payables 14,763 - - Lease liability 9,987 35,616 97,482 Total 41,000 360,616 97,482

As of December 31, 2019, KEUR 104,405 (previous year: KEUR 93,218) of contractual lease liabilities relate to related parties.

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6. Other explanatory notes

6.1 Contingencies and other financial obligations

Short-term lease payments

As of December 31, 2019, the Group has short-term obligations not recognized as liabilities on balance sheet amounting KEUR 103 (previous year: KEUR 153).

Pending disputes

As of December 31, 2019, the Group is not involved in any significant court cases or threatened legal disputes.

Contingent liabilities

As of December 31, 2019, the Group has a contingent liability to third parties in the amount of KEUR 0 (previous year: KEUR 25) resulting from a rent guarantee.

6.2 Related party disclosures

The Group identified related parties (key management personnel, members of the board and parent companies) in accordance with IAS 24. The Group had transactions with related parties in the reporting period in the ordinary course of business. The transactions were carried out in accordance with the arm’s length principle. Following business transactions have been identified as related party transactions. Further details on the share-based payment are given in Note 2.21.

Lease Agreements

The Group has entered into several lease agreements regarding the renting of business premises from external parties. Some of the lease agreements entered into by the Group are concluded with private partnerships in which certain Sellers from the Schustermann and Borenstein families as well as certain members of the board or close family members of those related parties are partners. Further details on outstanding lease payments are given in Note 5.16.

In fiscal year 2019 total expenses amounted to KEUR 6,518 (previous year: KEUR 6,330).

Commission Agreement

For US Brands the Group entered into a commission agreement with the US Brands Agency which beneficiary is a related family member of one member of key management personnel. In 2019 total expenses amounted to KEUR 0 (previous year: KEUR 11). The agreement was terminated.

Management remuneration

Expenses for remuneration to corporate management in 2019 amounted to KEUR 3,365 (previous year: KEUR 2,053) and for termination benefits KEUR 153 (previous year: KEUR 321). Expenses for the coverage of travel expenses for the management of parent companies amounted to KEUR 36 (previous year: KEUR 134).

During the period ended December 31, 2019 no related party was indebted to the Group. During the period ended December 31, 2019, the Group has not been a party to any other material transaction, or proposed transactions, in which any related party had or was to have a direct or indirect material interest.

Translation from the German language

6.3 Additional disclosures on the consolidated statement of comprehensive income

Segment reporting

Reporting on the business segments is in line with the internal management reporting. The reporting to the top body of management of the Group for purposes of internal control fundamentally corresponds to the principles of financial reporting described in Note 2.4.7 in accordance with IFRS.

As of 31.12.2019, non-current assets of KEUR 744,234 are located in Germany and KEUR 38,947 are located in foreign countries. For information about the geographical location of revenues refer to Note 4.1.

The Group’s internal reporting structure is based on a sales channel-related perspective of online and offline sales.

The Management Board measures the performance of the segments on the basis of the Gross Profit, Gross Profit Margin as well as EBITDA calculated in accordance with IFRS. There are no intersegment transactions in the internal reporting structure. No information on segment assets or liabilities is available or relevant for decision-making.

Segment Reporting 2019 Offline Online Total KEUR Sales Channel Sales Channel 2019

Revenue 130,525 440,736 571,261

Cost of sales -73,717 -222,316 -296,033

Gross profit 56,808 218,420 275,228

Gross profit margin in % 43,5% 49,6% 48,2% Earnings before interest, taxes, depreciation and amortisation (EBITDA) 9,437 85,186 94,623

Earnings before interest and taxes (EBIT) -12,665 40,900 28,235

Segment Reporting 2018 Offline Online Total KEUR Sales Channel Sales Channel 2018

Revenue 126,371 361,918 488,289

Cost of sales -73,093 -186,449 -259,542

Gross profit 53,278 175,469 228,747

Gross profit margin in % 42.2% 48.5% 46.9% Earnings before interest, taxes, depreciation and amortisation (EBITDA) 10,067 69,484 79,551

Earnings before interest and taxes (EBIT) -1,062 26,849 25,787

Translation from the German language

Additional information on the personnel expenses

2019 2018 KEUR

Wages and salaries 69,169 57,266 Social security taxes 12,334 10,447

Total 81,503 67,713

The contributions to statutory pension insurance amounted to KEUR 4,928 in 2019 (previous year adjusted: KEUR 4,195). During the preparation of financial statements for the period ended December 31, 2019 a data entry error has been discovered in the Note 6.3 to the consolidated financial statements for the period ended December 31, 2018. The error correction doesn’t have any impact on the consolidated statements of comprehensive income for the fiscal year from January 1 to December 31, 2018, the consolidated balance sheet as at December 31, 2018, the consolidated statements of cash flows and the consolidated statements of changes in equity for the fiscal year from January 1 to December 31, 2018.

Annual average number of employees

2019 2018

Offline sales channel 669 658 Online sales channel 132 114 Enabling Services (logistics, IT, purchasing and administration) 1,060 901 Total 1,861 1,673

Auditor’s services Auditors’ fees and services recognized as expense are categorized as follows:

2019 2018 KEUR

Audit services 585 340 Tax services 20 102 Other services 0 412

Total 605 854

During the year ended December 31, 2019 expenses in the amount to KEUR 237 were recognized for audit of previous year financial statements.

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Disclosure exemption

In accordance with Section 264 (3) HGB, the following subsidiaries are exempt from the requirement to disclose their financial statements and to prepare notes to the financial statements and a management report: Schustermann & Borenstein Holding GmbH, Schustermann & Borenstein GmbH, Best Secret GmbH, S&B Outlet GmbH and Schustermann & Borenstein Logistik GmbH.

Aschheim, April 17, 2020 PrestigeBidCo GmbH

______Daniel Schustermann Amir Borenstein

______Marian Gradl-Schikora Thomas Helmreich

Translation from the German language

PrestigeBidCo GmbH, Aschheim Group management report for the fiscal year 2019

1. Background to the Group and business model Headquartered in Aschheim, Schustermann & Borenstein is a members only omni‐ channel retailer in the off‐price fashion retail market. With its online brand “BestSecret”, the company has a presence in several European countries. The offline business mainly includes four largescale retail sites (two in Munich and one in Frankfurt and Vienna).

1.1 Group companies and organizational structure of the Group PrestigeBidCo GmbH, Aschheim has acquired the Schustermann & Borenstein Group (comprising the seven companies mentioned below) on January 19, 2017. The consolidated financial statements of PrestigeBidCo GmbH include the following companies:

- PrestigeBidCo GmbH, Aschheim - Schustermann & Borenstein Holding GmbH, Aschheim - Schustermann & Borenstein GmbH, Aschheim - Best Secret GmbH, Aschheim - S&B Outlet GmbH, Aschheim - Schustermann & Borenstein Wien GmbH, Vienna, Austria - Schustermann & Borenstein Logistik GmbH, Poing - Swiss Online Shopping AG, Langenthal, Switzerland

PrestigeBidCo was the acquisition vehicle of the Schustermann & Borenstein Group.

The management of the PrestigeBidCo GmbH has the overall responsibility for the Schustermann & Borenstein Holding GmbH and subsidiaries. Furthermore, PrestigeBidCo has an advisory board that exercises both an advisory and a control function.

Schustermann & Borenstein GmbH, Best Secret GmbH, S&B Outlet GmbH, Schustermann & Borenstein Wien GmbH and Schustermann & Borenstein Logistik GmbH all have active business operations. The business operations of Swiss Online Shopping AG in Switzerland were taken over by Best Secret GmbH as of July 1, 2018.

Translation from the German language

The Group has decided not to prolong the rental agreement for the shop premises in Zweibrücken. Our store in Zweibrücken operated by S&B Outlet GmbH was closed on January 31, 2019.

1.2 Group activities Schustermann & Borenstein GmbH has sales permises in Munich and Frankfurt. Moreover, the Group operates internet portals via its subsidiaries at the Dornach location (Best Secret) and a store in Vienna (Schustermann & Borenstein Wien GmbH).

1.3 Group objectives The principal objective of the Group’s entrepreneurial activity is profitable growth. The implemented planning and management systems are coordinated to manage the online and offline business segments. The Group analyzes current business performance at the level of the individual segments as well as the overall Group level. Furthermore, the Offline segment is monitored at store level.

1.4 Development activities The development area mainly comprises capitalizable development costs for the BestSecret website and mobile app software for services that are rendered by both Group employees based in Aschheim, Germany and Granada, Spain as well as by external services providers. The capitalization ratio in 2019 was 68.1% (previous year: 61.9%).

2. Economic developments 2.1 Macroeconomic and sector-specific environment The German economy experienced a lower growth in 2019. GDP rose by 0.6%, compared with 1.5% in the previous year. All countries in the currency area achieved positive growth rates, although regional differences remained very pronounced.1 The German economy development was divided into a robust consumer spending and dynamic governments spending on the one hand and weaker export trade on the other hand.2

1 https://ec.europa.eu/eurostat/databrowser/view/tec00115/default/table?lang=de 2 https://www.bmwi.de/Redaktion/DE/Dossier/wirtschaftliche-entwicklung.html

Translation from the German language

The overall macro situation was also challenging for the retail industry with continuing consumer inclination towards online shopping reaching 21% of total sales.3 The German offline retail sector decreased by 2% in 2019 compared to previous year due to low store frequencies and ongoing online shopping trend.4 In contrast, German online fashion retail sector increased by 11% in 2019, continuing its growth track..5

The main sales markets for the Group are Germany, Austria and Switzerland (DACH).

Financial performance indicators

In the fiscal year 2019 revenues reached mEUR 571.3 (previous year: mEUR 488.3), which was mainly driven by viral growth of the online customer base. The performance of the online segment was complemented by the development of the stationary store in Vienna.

Revenue growth was driven by the performance of the e-commerce segment BestSecret which continued to benefit from a further increase in the customer base. The online business sales grew by 22% amounted to mEUR 440.7 (previous year: mEUR 361.9). The offline segment contributed mEUR 130.5 (previous year: mEUR 126.4) to the overall 2019 Group. A combination of revenue growth and higher gross profit margin resulted in a group EBITDA of mEUR 94.6 which increased by 19.0% compared to the previous year with mEUR 79.5. Our targets for 2019 were met in terms of increase of the revenue and EBITDA growth and stable Gross Profit margin.

The Group monitors capital using both a leverage ratio and an interest ratio, which is Adjusted EBITDA/Net Debt and EBITDA/interest expense as of a particular effective date.

3 https://www2.deloitte.com/uk/en/pages/consumer-business/articles/retail-trends.html 4https://www.textilwirtschaft.de/business/umsaetze/tw-testclub-die-umsaetze-2019-minus-2-223318 5 https://de.statista.com/statistik/daten/studie/164515/umfrage/umsatz-im-online-modehandel-in-deutschland- seit-2006/

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Financial position

The following table shows a condensed statement of the financial position of the Group.

Assets In mEUR 31 Dec 2019 31 Dec 2018 Non-current assets 783.2 74.9% 797.5 78.9% Current assets 262.1 25,1% 213.9 21.1% Total assets 1,045.3 100.0% 1,011.4 100.0%

Equity and Liabilities In mEUR 31 Dec 2019 31 Dec 2018 Equity 469.6 44.9% 465.5 46.0% Non-current liabilities 449.0 43.0% 449.4 44.4% Current liabilities 126.7 12.1% 96.5 9.6% Total equity and liabilities 1,045.3 100.0% 1,011.4 100.0%

In fiscal year 2019, total assets amounted to mEUR 1,045.3 (previous year: mEUR 1,011.4). The statement of financial position is dominated by the Goodwill in the amount of mEUR 254.4 (previous year: mEUR 254.4).

Furthermore, the statement of financial position mainly includes other intangible assets (trademark, customer relationship), the right of use assets under IFRS 16 in the amount of mEUR 87.7 (previous year: mEUR 79.3) as well as working capital, cash and cash equivalents, equity and the senior secured notes of mEUR 254.7 (previous year: mEUR 253.8). Goodwill and other intangible assets relate to the acquisition of the Schustermann & Borenstein Group on January 19, 2017. The intangible assets as of yearend mainly represent the trademark BestSecret of mEUR 145.4 (previous year: mEUR 154.0) and trademark Schustermann & Borenstein of mEUR 17.5 (previous year: mEUR 26.2) as well as the online and offline customer relationship of mEUR 119.3 (previous year: mEUR 143) and mEUR 73.0 (previous year mEUR 79.7) respectively. The change in intangible assets relates to annual amortization and amounted to mEUR 47.5 (previous year: mEUR 37.5).

Translation from the German language

The increase of amortization is related to the reduction of useful life of the trademark “Schustermann & Borenstein” from remaining 28 to 3 years and the “Schustermann & Borenstein” customer relationship from remaining 18 to 12 years respectively in conjunction with rebranding. The right of use assets increased by mEUR 8.4 mainly due to recognition of additional lease contract in connection with new store opening in Frankfurt as well as modification of lease contract for our warehouse partially offset by annual deprecation.

In the year under review, investments in intangible assets amounted to mEUR 12.9 (previous year: mEUR 9.6), mainly for capitalizable development costs and purchases of software to support our business development. Investments in property, plant and equipment totaled mEUR 39.3 (previous year: mEUR 16.6), primarily for the extension of the warehouse as well as new store opening in Frankfurt in August 2019.

Our IT department enables us to develop key components of the software (Homepage and App) used by the Group. This gives us a strategic advantage and enables us to align the software with the operating processes. In 2019, the Group recognized development costs (capitalized assets) of mEUR 5.0 (previous year: mEUR 3.4). Development costs contributed mEUR 2.1 (previous year: mEUR 1.0) to the Group’s amortization in fiscal year 2019.

Inventories on stock in the amount of mEUR 160.2 (previous year: mEUR 122.3) represent goods for the online and offline business. The Group performs a write-down on inventories to a sufficient extent. The level of inventories is attributable to overall business growth as well as lower level of inventories at the end of previous year due to sales through rates in fourth quarter resulting from price reductions according to market demands.

Trade and other receivables as reported on December 31, 2019 in the amount of mEUR 0.7 (previous year: mEUR 1.6) are all current.

The equity ratio as of December 31, 2019 was 44.9% (previous year: 46.0%).

Translation from the German language

The non-current liabilities mainly include the senior secured notes of mEUR 254.7 (previous year: mEUR 253.8, mEUR 260.0 nominal value), financial liabilities from leasing contracts under IFRS 16 of mEUR 90.4 (previous year: mEUR 80.6) which mainly increased due to the store opening in Frankfurt as well as modification of lease contract for our warehouse and deferred tax liabilities of mEUR 103.4 (previous year: mEUR 114.6) mainly belonging to the acquired intangible assets in connection with the purchase price allocation (trademark and customer relationship) and the right of use assets from leasing contracts. The deferred tax liabilities decreased due to the amortization of the PPA assets. They were recognized based on a Group tax rate of 28% (previous year: 28%)

The bond was issued on December 19, 2016 with a 6.250% coupon and a maturity date of 2023. It was part of the financing structure within the acquisition of Schustermann & Borenstein Holding GmbH and its subsidiaries.

The finance lease liabilities under IFRS 16 mainly represent rental contracts for the two stores in Munich, the store in Vienna and the store in Frankfurt, as well as the logistics center in Poing and the office areas.

Current non-financial liabilities of mEUR 73.1 (previous year: mEUR 62.3) mainly include liabilities for outstanding invoices of mEUR 19.7 (previous year: mEUR 12.3) which increased due to higher business volume as well as a refund liability of mEUR 19.0 (previous year: mEUR 22.7). In spite of growth of our online business the refund liability decreased by mEUR 3.7 mainly resulting from faster processing of returns.

Net working capital amounted to mEUR 78.7 (previous year: mEUR 65.1) as of December 31, 2019 and consists of inventories and trade and other receivables less trade payables and similar liabilities.

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Liquidity

Management focuses on ensuring adequate liquidity due to the Group’s business model (lot purchasing) and the required flexibility with respect to the purchase of attractive merchandise. Given its liquidity situation, the Group can procure merchandise using its operating cash flow, providing it with the necessary flexibility. Together with the bond issued on December 19, 2016 the Group has implemented a Revolving Credit Facility (RCF) as a flexible financing possibility up to an aggregate principal amount of mEUR 35. On December 20, 2018, PrestigeBidCo GmbH established an additional revolving credit facility of €15.0 million by way of increase of the existing facility to €50.0 million. The RCF enables the company to finance working capital needs. The RCF was partly drawn during the fiscal year 2019 to finance the stock for autumn/winter. At year end 2019 the RCF was fully repaid.

The following table shows the financial development in liquidity of the Group:

Consolidated Statement of Cash Flow In mEUR Jan 1- Dec 31, Jan 1- Dec 31, 2019 2018 Cash flow from operating activities 73.4 68.4 Cash flow from investing activities -36.7 -20.3 Cash flow from financing activities -27.6 -26.1 Change in Cash and Cash equivalents 9.1 22.0 Cash and cash equivalents at the beginning 66.9 44.9 of the period Cash and cash equivalents as of 76.0 66.9 December, 31

Translation from the German language

The cash flow from operating activities increased by mEUR 5.0, from mEUR 68.4 to mEUR 73.4 as a consequence of the positive development of the Group’s operating business.

The cash outflow for investing activities of mEUR -36.7 (previous year: mEUR -20.3) is mainly driven by investments in the extension of the warehouse new store opening in Frankfurt. The total investment volume for the warehouse extension is between mEUR 40 – mEUR 50, the financing is secured. Investments in intangible assets mostly comprise capitalizable development costs to support our business development and purchases of software in connection with the implementation of a new ERP system. The investing range is between mEUR 4.5 and mEUR 5.0.

Cash from financing activities of mEUR -27.6 (previous year: mEUR -26.1) mainly represents interests for the senior secured notes, the RCF and interest for lease liabilities. The interest paid amounted to mEUR 23.0 (previous year: mEUR 22.6). Furthermore, the cash flow for financing activities included mEUR 4.2 (previous year mEUR 3.6) for the payment of lease liabilities.

As a result, cash and cash equivalents increased by mEUR 9.1 (previous year: increase of mEUR 22.0) in fiscal year 2019.

For further details, see the cash flow statement (exhibit 3).

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Financial Performance of the Group

The consolidated income statement for 2019 shows the revenue performance with improved Gross Profit Margin.

Consolidated Income Statement 2019 Jan 1 - As % of Jan 1 - As % of In mEUR Dec 31, revenues Dec 31, revenues 2019 2018 Revenue 571.3 100.0% 488.3 100.0% Cost of sales -296.0 -51.8% -259.5 -53.1% Gross Profit 275.2 48.2% 228.7 46.8% Selling and distribution costs -193.4 -33.9% -159.3 -32.6% Administrative expenses -51.6 -9.0% -43.2 -8.8% Other operating income 1.5 0.3% 1.6 0.3% Other operating expenses -3.5 -0.6% -2.0 -0.4% Earnings before interest and 28.2 4.9% 25.8 5.3% taxes (EBIT)

Our most important performance indicators are revenue, Gross Profit, Gross Profit Margin and EBITDA followed by capital expenditures (CAPEX) and cash.

Other Consolidated Financial Information Jan 1 - Jan 1 - In kEUR Dec 31, Dec 31, 2019 2018 EBIT margin (as % of revenue) 4.9% 5.3% EBITDA margin (as % of revenue) 16.6% 16.3%

The Group is an online and offline fashion retailer. Whilst the online platform BestSecret has a presence in several European countries, the vast majority of the online revenues are made in the DACH region. The offline business comprises two stores in Munich, one in Frankfurt and one in Vienna. In fiscal year 2019, the Group realized revenues of mEUR 571.3 (previous year: mEUR 488.3) of which mEUR 440.7 (previous year: mEUR 361.9) were online and mEUR 130.5 (previous year: mEUR 126.4) offline. The development was mainly driven by an expanded customer base and continued a geographically performance in Germany.

Translation from the German language

In 2019, the Group recorded an EBITDA of mEUR 94.6 (previous year: mEUR 79.5), representing an EBITDA margin of 16.6% (previous year: 16.3%). The EBITDA development was mainly driven by revenue growth and higher gross profit.

The cost of sales amounted to mEUR 296.0 (previous year: mEUR 259.5), which represents 51,8% (previous year: 53.1%) of the Group revenues, reflecting advantageous buying opportunities and a more favorable inventory structure.

Selling and distribution costs came to mEUR 193.4 (previous year: mEUR 159.3). Selling and distribution costs mainly consist of fulfillment of mEUR 93.1 (previous year: mEUR 75.6), marketing of mEUR 10.8 (previous year: mEUR 8.8) and rental costs, personnel costs of the stores and payments costs in total of mEUR 31.0 (previous year: mEUR 28.2). Depreciation and amortization amounted to mEUR 61.3 (previous year: mEUR 49.8) and comprised mainly amortization of trademark and customer relationship of mEUR 47.5 (previous year: mEUR 37.5). Marketing costs of fiscal year 2019 represent 1,9% (previous year 1.8%) of revenues. Marketing costs remained stable due to the viral growth which generally allows an increase in customer base at low cost. The increase of selling and distribution costs is mainly driven by the higher business volume, resulting in higher personnel expenses, shipping costs, costs for payment service providers, utility costs as well as higher amortization for intangible assets step-ups resulting from the purchase price allocation in connection with reduction of useful lifetime of the trademark and customer relationship “Schustermann & Borenstein” due to rebranding issues.

The fulfillment cost ratio before depreciation as a percentage of revenues was 15.5% (previous year: 14.5%). The ratio increased mainly due to increased share of international shipping as well as temporarily higher return rate in Q1 driven by a larger share of payment by invoice.

Administration costs amounted to mEUR 51.6 (previous year: mEUR 43.2) for fiscal year 2019 and included costs for the administrative as well as the purchase and IT department. Administration costs increased by mEUR 8.4 mainly due to higher consulting costs, costs for IT-services as well as an increasing number of employees in the Group resulting in higher personnel expenses.

Translation from the German language

The EBIT margin of 4.9% (previous year: 5.3%) of revenues is affected by amortization costs for the trademarks and customer relationships resulting from the purchase price allocation for the acquisition on January 19, 2017. In 2019, the amortization costs increased due to the reduction of the remaining useful lives for the trademark “Schustermann & Borenstein” and the customer relationship “Schustermann & Borenstein” as part of the Rebranding strategy. Eliminating these effects, the operative EBIT margin represents 13.3% (previous year: 13.0%) of revenues.

The financial expenses amounted to mEUR 24.2 (previous year: mEUR 23.8) and mainly included interest expenses in connection with the Senior Secured Notes and lease liabilities.

The tax expense in 2019 amounted to mEUR 0.2 compared to the tax income in previous year which amounted mEUR 4.8. The net income for the period amounted mEUR 3.8 compared to mEUR 6.9 in previous year. The net income mainly decreased due to additional amortizations for PPA assets due to reduced remaining useful lives as part of the Rebranding strategy.

Translation from the German language

Results by segment

As an omni-channel fashion retailer, the Group operates both an online e-commerce website and offline retail stores. The results of the two segments can be summarized as follows:

Consolidated Segment Results Jan 1 - Jan 1 - In mEUR Dec 31, Dec 31, 2019 2018 Revenues 571.3 488.3 Online 440.7 361.9 Offline 130.5 126.4 Gross Profit 275.2 228.7 Online 218.4 175.4 Offline 56.8 53.3 Gross Profit Margin 48.2% 46.8% Online 49.6% 48.5% Offline 43.5% 42.2% EBITDA 94.6 79.5 Online 85.2 69.5 Offline 9.4 10.1 EBIT 28.2 25.8 Online 40.9 26.8 Offline -12.7 -1.1

Overall Assessment

The management of the Group views the business development in 2019 as positive taking into account the general business development in the industry. The Group focused on profitable customer growth and made further strategic investments in people and processes.

Translation from the German language

3. Subsequent events As COVID-19 continued to impact the global community and in particular the retail offline industry the negative impacts on our Group are not fully visible and predictable. In the current environment, the health and safety of our employees, customers and partners are paramount. On March 16, the Free State of Bavaria declared an official case of emergency and the German government and the state premiers announced further serious restrictions on public life, both of which led to the closure of non-systemically relevant shops. As of March 18, 2020 the Group closed the offline stores in Germany. The offline store in Vienna was closed as of March 16, 2020.

Subsequently to the year end the Group drew down mEUR 24.5 (cash transfer) from its revolving credit facility in March in order to increase the financial latitude.

Translation from the German language

Going concern and risk management

The management of the Group has implemented controls as part of its corporate planning in order to identify significant risks in the Group. These are high-level controls, such as monthly reports and business analyses.

According to the information currently available, all known risks are adequately accounted for by means of allowances on the relevant assets and the recognition of respective provisions. There are currently no discernible risks including the COVID-19 that would jeopardize the Company’s ability to continue as a going concern due to the fact that the online business remained fully operational. However, due to the uncertainty with respect to COVID-19 a material impact on the Group’s financial statements cannot be excluded.

Given the wide scope and complexity of the Group’s business, the risks were not quantified.

Economic risks

Our business may be affected by negative economic and political developments in Germany and other European countries where our customers are from. Furthermore, the competition in our markets may intensify further. To counteract, we have established proven processes to evaluate, prepare and manage our expansion proactively.

Earnings/financing risks and opportunities

The fashion industry is generally characterized by rapidly changing customer preferences and quickly emerging and dissipating fashion trends. In this environment, the Group has demonstrated operational earnings power and is financed by equity and long term debt. Apart from the customary risk that merchandise may be ordered that does not satisfy the customers’ fashion tastes and the described COVID-19 outbreak, there are to the best of our knowledge no further (apart from the above mentioned ones) identifiable risks that could significantly impact earnings and financing.

In addition to conventional fashion retailing, online shopping in particular offers significant growth opportunities owing to the shift in consumer behaviour away from traditional stationary retail to online purchasing seen in the last few years.

Translation from the German language

To safeguard growth opportunities in the online segment, we continually invest in the appropriate technology.

Market price risk, credit risk and liquidity risk

The Group is not exposed to market price or credit risk since it has not concluded any short- or long-term contract manufacturing or medium- or long-term supply agreements, nor does it sell merchandise on credit terms. The risk of bad debts is therefore low.

The Group continually monitors the risk of potential liquidity shortfalls in particular the COVID-19 impact using a liquidity planning. A short-term statement is also prepared every week for a forecasting period of generally 13 weeks. We may from time to time seek to retire or purchase our outstanding debt through cash purchases and/or exchanges, in open market purchases, privately negotiated transactions or otherwise. Such repurchases or exchanges, if any, will depend on prevailing market conditions, our liquidity requirements, contractual restrictions and other factors. The amounts involved may be material.

Currency risk

On the procurement side, the Group is exposed to the risk that the euro may depreciate against the US dollar or other currencies, resulting in higher procurement prices. This is an industry risk facing all fashion retailers. The Group expects to pass on the increased procurement prices to customers.

Translation from the German language

IT risks

To ensure effective and efficient business processes in our operations, we make use of IT systems which may be interrupted or otherwise adversely affected as a result of failures or outside attacks. To ensure a minimum of down time and a high degree of data security and reliability, we permanently monitor and further develop our IT systems and have implemented monitoring controls and continuity measures. To avoid the failure of any IT implementations, we have established a close project monitoring. Due to the COVID-19 outbreak the Group’s IT department has successfully launched different activities such as inter-divisional mobile working in order to protect the health of its employees and support business continuity.

Personnel-related risks and opportunities

The Group’s employees are a success factor. The Group therefore invests in employee training and development and offers training to junior employees to counter the risk of employee turnover.

Key roles are held by employees who have worked in the Group for many years. Which contributes to relationships with suppliers, many of which have been developed over decades. If the Group retains these employees, it will be able to further develop these contacts. To achieve this, it offers incentives, such as company cars and bonuses. In this way it endeavours to keep employee turnover as low as possible, which in turn means that employee know-how remains in the Group.

Weather-related risks and opportunities

Weather-related risk is a key factor in retail trading. If a winter is too warm, fewer winter garments, e.g., coats and hats, are sold. If there is little snow, sales of winter sports goods, such as ski jackets, are slow. Generally, the number of store visitors also closely correlates with weather conditions. Fewer customers visit our sales premises on hot summer days. By contrast, bad weather encourages purchases of affordable sales stock. To ensure that write-offs and price reductions are in line with our operational strategy, we monitor the respective KPIs on a regular basis and ensure that countermeasures are initiated.

Translation from the German language

Expansion risks and opportunities

The Group will expand further in the future. However, in doing so, it faces the risk that the individual measures (e.g., advertising, direct marketing) do not have the desired impact.

The Group also plans to continue to expand in the international online business. Online sales will be expanded on the basis of the BestSecret platform. In this context, the image and customers’ acceptance of the concept and safeguarding exclusivity play a decisive role.

Tax risks

In the reporting period, the Group recognized appropriate tax provisions for tax risks.

Given the complexity of tax rules and regulations, the Group is exposed to risks that may nonetheless affect its net assets, financial position and results of operations.

Risk relating to financial covenants

We are subject to covenants that may limit to a certain extent our ability to finance future operations and capital needs and to pursue business opportunities and activities. We cannot incur any indebtedness if on the date of such incurrence, after giving pro forma effect to the incurrence of such indebtedness, (1) the fixed charge coverage ratio (the ratio of (x) the aggregate amount of Consolidated EBITDA for the period of the four most recent fiscal quarters to (y) the Fixed Charges for such four fiscal quarters) would not have been at least 2.0 to 1.0 and (2) to the extent that the indebtedness is senior secured indebtedness, the consolidated senior secured net leverage ratio (the ratio of (x) the Consolidated Senior Secured Net Leverage at such date to (y) the aggregate amount of Consolidated EBITDA for the period of the four most recent fiscal quarters ending prior to the date of such determination for which internal consolidated financial statements are available) would have been no greater than 5.0 to 1.0.

Translation from the German language

Overall risk and opportunities

The overall risk for 2020 largely relates to the impacts of the COVID-19 on the retail industry and possibility that the planned expansion (new online customers in the DACH region and the internationalization of BestSecret) will not materialize. As a result, revenue, EBITDA and cash would not develop as forecasted. Another risk is inappropriate merchandise management, i.e., whether customers will still be able to order high-quality merchandise.

Forecast

Prior to the outbreak of COVID-19, the management of the Group expected for 2020 further low double digit revenue growth (mostly driven by the online segment) followed by a stable Gross Profit Margin and a corresponding EBITDA growth. Based on the actual negative macroeconomic impacts of the COVID-19, the industry expects major changes in the business environment. The Group remains highly focused on the management of the situation as it unfolds and the implementation of all the necessary measures to ensure the protection of the health of its employees, as well as business continuity. While it is not possible for management to make a statement on the financial impact of COVID-19 due to the evolving situation and given all the unknowns, we do not expect it to change our longer-term growth path. For the short term, the Group will do everything in its power to minimize the economic impact and to continue to serve its customers as effectively as possible during the pandemic. However, the current closing of our stores as well as the deteriorated market environment may have significant impact on managements initial forecast. Should the offline segment be impacted by COVID-19 for a longer period, it cannot be excluded that the allocated goodwill will be negatively affected.

Translation from the German language

Group cash and cash equivalents stood at mEUR 71.4 on March 31, 2020, including a mEUR 24.5 drawing of the revolving credit facility (which has a total size of mEUR 50). Management has implemented multiple measures to secure the Group’s cash position and reduce costs, especially with regards to merchandise purchasing and CAPEX spending including logistics. Measures taken to keep personnel costs down include the implementation of short-time working in Germany and Austria, the reduction of overtime, and the taking of remaining and/or current holiday leave.

Aschheim, April 17, 2020

Daniel Schustermann Marian Gradl-Schikora

Amir Borenstein Thomas Helmreich

19 Bestätigungsvermerk des unabhängigen Abschlussprüfers

An die PrestigeBidCo GmbH

Prüfungsurteile

Wir haben den Konzernabschluss der PrestigeBidCo GmbH, Aschheim, und ihrer Tochtergesellschaften (der Konzern) – bestehend aus der Konzerngesamtergebnis‐rechnung für das Geschäftsjahr vom 1. Januar 2019 bis zum 31. Dezember 2019, der Konzernbilanz zum 31. Dezember 2019, der Konzernkapitalflussrechnung und der Konzerneigenkapitalveränderungs‐ rechnung für das Geschäftsjahr vom 1. Januar 2019 bis zum 31. Dezember 2019 sowie dem Konzernanhang, einschließlich einer Zusammenfassung bedeutsamer Rechnungslegungs‐ methoden – geprüft. Darüber hinaus haben wir den Konzernlagebericht der PrestigeBidCo GmbH für das Geschäftsjahr vom 1. Januar 2019 bis zum 31. Dezember 2019 geprüft.

Nach unserer Beurteilung aufgrund der bei der Prüfung gewonnenen Erkenntnisse

• entspricht der beigefügte Konzernabschluss in allen wesentlichen Belangen den IFRS, wie sie in der EU anzuwenden sind, und den ergänzend nach § 315e Abs. 1 HGB anzuwendenden deutschen gesetzlichen Vorschriften und vermittelt unter Beachtung dieser Vorschriften ein den tatsächlichen Verhältnissen entsprechendes Bild der Vermögens‐ und Finanzlage des Konzerns zum 31. Dezember 2019 sowie seiner Ertragslage für das Geschäftsjahr vom 1. Januar 2019 bis zum 31. Dezember 2019 und

• vermittelt der beigefügte Konzernlagebericht insgesamt ein zutreffendes Bild von der Lage des Konzerns. In allen wesentlichen Belangen steht dieser Konzernlagebericht in Einklang mit dem Konzernabschluss, entspricht den deutschen gesetzlichen Vorschriften und stellt die Chancen und Risiken der zukünftigen Entwicklung zutreffend dar.

Gemäß § 322 Abs. 3 Satz 1 HGB erklären wir, dass unsere Prüfung zu keinen Einwendungen gegen die Ordnungsmäßigkeit des Konzernabschlusses und des Konzernlageberichts geführt hat.

1 Grundlage für die Prüfungsurteile

Wir haben unsere Prüfung des Konzernabschlusses und des Konzernlageberichts in Über‐ einstimmung mit § 317 HGB unter Beachtung der vom Institut der Wirtschaftsprüfer (IDW) festgestellten deutschen Grundsätze ordnungsmäßiger Abschlussprüfung durchgeführt. Unsere Verantwortung nach diesen Vorschriften und Grundsätzen ist im Abschnitt „Verantwortung des Abschlussprüfers für die Prüfung des Konzernabschlusses und des Konzernlageberichts“ unseres Bestätigungsvermerks weitergehend beschrieben. Wir sind von den Konzernunternehmen unabhängig in Übereinstimmung mit den deutschen handelsrechtlichen und berufsrechtlichen Vorschriften und haben unsere sonstigen deutschen Berufspflichten in Übereinstimmung mit diesen Anforderungen erfüllt. Wir sind der Auffassung, dass die von uns erlangten Prüfungs‐ nachweise ausreichend und geeignet sind, um als Grundlage für unsere Prüfungsurteile zum Konzernabschluss und zum Konzernlagebericht zu dienen.

Sonstige Informationen

Die gesetzlichen Vertreter sind für die sonstigen Informationen verantwortlich. Die sonstigen Informationen, die uns nach Erteilung des Bestätigungsvermerks voraussichtlich zur Verfügung gestellt werden, umfassen den Annual Bond Report 2019, aber nicht den Konzernabschluss, nicht die in die inhaltliche Prüfung einbezogenen Konzernlageberichtsangaben und nicht unseren dazugehörigen Bestätigungsvermerk.

Unsere Prüfungsurteile zum Konzernabschluss und zum Konzernlagebericht erstrecken sich nicht auf die sonstigen Informationen, und dementsprechend geben wir weder ein Prüfungsurteil noch irgendeine andere Form von Prüfungsschlussfolgerung hierzu ab.

In Zusammenhang mit unserer Prüfung haben wir die Verantwortung, die sonstigen Informationen zu lesen und dabei zu würdigen, ob die sonstigen Informationen

• wesentliche Unstimmigkeiten zum Konzernabschluss, zum Konzernlagebericht oder zu unseren bei der Prüfung erlangten Kenntnissen aufweisen oder

• anderweitig wesentlich falsch dargestellt erscheinen.

2 Verantwortung der gesetzlichen Vertreter für den Konzernabschluss und den Konzernlagebericht

Die gesetzlichen Vertreter sind verantwortlich für die Aufstellung des Konzernabschlusses, der den IFRS, wie sie in der EU anzuwenden sind, und den ergänzend nach § 315e Abs. 1 HGB anzuwendenden deutschen gesetzlichen Vorschriften in allen wesentlichen Belangen entspricht, und dafür, dass der Konzernabschluss unter Beachtung dieser Vorschriften ein den tatsächlichen Verhältnissen entsprechendes Bild der Vermögens‐, Finanz‐ und Ertragslage des Konzerns vermittelt. Ferner sind die gesetzlichen Vertreter verantwortlich für die internen Kontrollen, die sie als notwendig bestimmt haben, um die Aufstellung eines Konzernabschlusses zu ermöglichen, der frei von wesentlichen – beabsichtigten oder unbeabsichtigten – falschen Darstellungen ist.

Bei der Aufstellung des Konzernabschlusses sind die gesetzlichen Vertreter dafür verantwortlich, die Fähigkeit des Konzerns zur Fortführung der Unternehmenstätigkeit zu beurteilen. Des Weiteren haben sie die Verantwortung, Sachverhalte in Zusammenhang mit der Fortführung der Unternehmenstätigkeit, sofern einschlägig, anzugeben. Darüber hinaus sind sie dafür verantwortlich, auf der Grundlage des Rechnungslegungsgrundsatzes der Fortführung der Unternehmenstätigkeit zu bilanzieren, es sei denn, es besteht die Absicht den Konzern zu liquidieren oder der Einstellung des Geschäftsbetriebs oder es besteht keine realistische Alternative dazu.

Außerdem sind die gesetzlichen Vertreter verantwortlich für die Aufstellung des Konzernlageberichts, der insgesamt ein zutreffendes Bild von der Lage des Konzerns vermittelt sowie in allen wesentlichen Belangen mit dem Konzernabschluss in Einklang steht, den deutschen gesetzlichen Vorschriften entspricht und die Chancen und Risiken der zukünftigen Entwicklung zutreffend darstellt. Ferner sind die gesetzlichen Vertreter verantwortlich für die Vorkehrungen und Maßnahmen (Systeme), die sie als notwendig erachtet haben, um die Aufstellung eines Konzernlageberichts in Übereinstimmung mit den anzuwendenden deutschen gesetzlichen Vorschriften zu ermöglichen, und um ausreichende geeignete Nachweise für die Aussagen im Konzernlagebericht erbringen zu können.

3 Verantwortung des Abschlussprüfers für die Prüfung des Konzernabschlusses und des Konzernlageberichts

Unsere Zielsetzung ist, hinreichende Sicherheit darüber zu erlangen, ob der Konzernabschluss als Ganzes frei von wesentlichen – beabsichtigten oder unbeabsichtigten – falschen Darstellungen ist, und ob der Konzernlagebericht insgesamt ein zutreffendes Bild von der Lage des Konzerns vermittelt sowie in allen wesentlichen Belangen mit dem Konzernabschluss sowie mit den bei der Prüfung gewonnenen Erkenntnissen in Einklang steht, den deutschen gesetzlichen Vorschriften entspricht und die Chancen und Risiken der zukünftigen Entwicklung zutreffend darstellt, sowie einen Bestätigungsvermerk zu erteilen, der unsere Prüfungsurteile zum Konzernabschluss und zum Konzernlagebericht beinhaltet.

Hinreichende Sicherheit ist ein hohes Maß an Sicherheit, aber keine Garantie dafür, dass eine in Übereinstimmung mit § 317 HGB unter Beachtung der vom Institut der Wirtschaftsprüfer (IDW) festgestellten deutschen Grundsätze ordnungsmäßiger Abschlussprüfung durchgeführte Prüfung eine wesentliche falsche Darstellung stets aufdeckt. Falsche Darstellungen können aus Verstößen oder Unrichtigkeiten resultieren und werden als wesentlich angesehen, wenn vernünftigerweise erwartet werden könnte, dass sie einzeln oder insgesamt die auf der Grundlage dieses Konzernabschlusses und Konzernlageberichts getroffenen wirtschaftlichen Entscheidungen von Adressaten beeinflussen.

Während der Prüfung üben wir pflichtgemäßes Ermessen aus und bewahren eine kritische Grundhaltung. Darüber hinaus

• identifizieren und beurteilen wir die Risiken wesentlicher – beabsichtigter oder unbeabsichtigter – falscher Darstellungen im Konzernabschluss und im Konzern‐ lagebericht, planen und führen Prüfungshandlungen als Reaktion auf diese Risiken durch sowie erlangen Prüfungsnachweise, die ausreichend und geeignet sind, um als Grundlage für unsere Prüfungsurteile zu dienen. Das Risiko, dass wesentliche falsche Darstellungen nicht aufgedeckt werden, ist bei Verstößen höher als bei Unrichtigkeiten, da Verstöße betrügerisches Zusammenwirken, Fälschungen, beabsichtigte Unvollständigkeiten, irre‐ führende Darstellungen bzw. das Außerkraftsetzen interner Kontrollen beinhalten können;

• gewinnen wir ein Verständnis von dem für die Prüfung des Konzernabschlusses relevanten internen Kontrollsystem und den für die Prüfung des Konzernlageberichts relevanten Vorkehrungen und Maßnahmen, um Prüfungshandlungen zu planen, die unter den gegebenen Umständen angemessen sind, jedoch nicht mit dem Ziel, ein Prüfungsurteil zur Wirksamkeit dieser Systeme abzugeben;

4 • beurteilen wir die Angemessenheit der von den gesetzlichen Vertretern angewandten Rechnungslegungsmethoden sowie die Vertretbarkeit der von den gesetzlichen Vertretern dargestellten geschätzten Werte und damit zusammenhängenden Angaben;

• ziehen wir Schlussfolgerungen über die Angemessenheit des von den gesetzlichen Vertretern angewandten Rechnungslegungsgrundsatzes der Fortführung der Unternehmenstätigkeit sowie, auf der Grundlage der erlangten Prüfungsnachweise, ob eine wesentliche Unsicherheit im Zusammenhang mit Ereignissen oder Gegebenheiten besteht, die bedeutsame Zweifel an der Fähigkeit des Konzerns zur Fortführung der Unternehmenstätigkeit aufwerfen können. Falls wir zu dem Schluss kommen, dass eine wesentliche Unsicherheit besteht, sind wir verpflichtet, im Bestätigungsvermerk auf die dazugehörigen Angaben im Konzernabschluss und im Konzernlagebericht aufmerksam zu machen oder, falls diese Angaben unangemessen sind, unser jeweiliges Prüfungsurteil zu modifizieren. Wir ziehen unsere Schlussfolgerungen auf der Grundlage der bis zum Datum unseres Bestätigungsvermerks erlangten Prüfungsnachweise. Zukünftige Ereignisse oder Gegebenheiten können jedoch dazu führen, dass der Konzern seine Unternehmenstätigkeit nicht mehr fortführen kann;

• beurteilen wir die Gesamtdarstellung, den Aufbau und den Inhalt des Konzernabschlusses einschließlich der Angaben sowie ob der Konzernabschluss die zugrunde liegenden Geschäftsvorfälle und Ereignisse so darstellt, dass der Konzernabschluss unter Beachtung der IFRS, wie sie in der EU anzuwenden sind, und der ergänzend nach § 315e Abs. 1 HGB anzuwendenden deutschen gesetzlichen Vorschriften ein den tatsächlichen Verhältnissen entsprechendes Bild der Vermögens‐, Finanz‐ und Ertragslage des Konzerns vermittelt;

• holen wir ausreichende, geeignete Prüfungsnachweise für die Rechnungslegungs‐ informationen der Unternehmen oder Geschäftstätigkeiten innerhalb des Konzerns ein, um Prüfungsurteile zum Konzernabschluss und zum Konzernlagebericht abzugeben. Wir sind verantwortlich für die Anleitung, Überwachung und Durchführung der Konzernabschlussprüfung. Wir tragen die alleinige Verantwortung für unsere Prüfungsurteile;

• beurteilen wir den Einklang des Konzernlageberichts mit dem Konzernabschluss, seine Gesetzesentsprechung und das von ihm vermittelte Bild von der Lage des Konzerns;

• führen wir Prüfungshandlungen zu den von den gesetzlichen Vertretern dargestellten zukunftsorientierten Angaben im Konzernlagebericht durch. Auf Basis ausreichender geeigneter Prüfungsnachweise vollziehen wir dabei insbesondere die den zukunftsorientierten Angaben von den gesetzlichen Vertretern zugrunde gelegten bedeutsamen Annahmen nach und beurteilen die sachgerechte Ableitung der zukunftsorientierten Angaben aus diesen Annahmen. Ein eigenständiges Prüfungsurteil zu den zukunftsorientierten Angaben sowie zu den zugrunde liegenden Annahmen geben wir nicht ab. Es besteht ein erhebliches unvermeidbares Risiko, dass künftige Ereignisse wesentlich von den zukunftsorientierten Angaben abweichen.

Wir erörtern mit den für die Überwachung Verantwortlichen unter anderem den geplanten Umfang und die Zeitplanung der Prüfung sowie bedeutsame Prüfungsfeststellungen, einschließlich etwaiger Mängel im internen Kontrollsystem, die wir während unserer Prüfung feststellen.

München, den 17. April 2020

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Räpple Hohenegg Wirtschaftsprüfer Wirtschaftsprüfer

Translation of the German audit opinion concerning the audit of the consolidated financial statements and of the group management report prepared in German

Independent auditor’s report

To PrestigeBidCo GmbH

Opinions

We have audited the consolidated financial statements of PrestigeBidCo GmbH, Aschheim and its subsidiaries (the Group), which comprise the consolidated statements of comprehensive income for the fiscal year from January 1, 2019 to December 31, 2019, the consolidated balance sheet as at December 31, 2019, the consolidated statements of cash flows and the consolidated statements of changes in equity for the fiscal year from January 1, 2019 to December 31, 2019 and notes to the consolidated financial statements, including a summary of significant accounting policies. In addition, we have audited the group management report of PrestigeBidCo GmbH for the fiscal year from January 1, 2019 to December 31, 2019.

In our opinion, on the basis of the knowledge obtained in the audit,

• the accompanying consolidated financial statements comply, in all material respects, with the IFRSs as adopted by the EU, and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB [“Handelsgesetzbuch”: German Commercial Code] and, in compliance with these requirements, give a true and fair view of the assets, liabilities and financial position of the Group as at December 31, 2019 and of its financial performance for the fiscal year from January 1, 2019 to December 31, 2019, and

• the accompanying group management report as a whole provides an appropriate view of the Group’s position. In all material respects, this group management report is consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development.

Pursuant to Sec. 322 (3) Sentence 1 HGB, we declare that our audit has not led to any reservations relating to the legal compliance of the consolidated financial statements and of the group management report.

Translation of the German audit opinion concerning the audit of the consolidated financial statements and of the group management report prepared in German

Basis for the opinions

We conducted our audit of the consolidated financial statements and of the group management report in accordance with Sec. 317 HGB and in compliance with German Generally Accepted Standards for Financial Statement Audits promulgated by the Institut der Wirtschaftsprüfer [Institute of Public Auditors in Germany] (IDW). Our responsibilities under those requirements and principles are further described in the “Auditor’s responsibilities for the audit of the consolidated financial statements and of the group management report” section of our auditor’s report. We are independent of the Group entities in accordance with the requirements of German commercial and professional law, and we have fulfilled our other German professional responsibilities in accordance with these requirements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our opinions on the consolidated financial statements and on the group management report.

Other information

The executive directors are responsible for the other information, which propably will be provided after the issuance of our audit opinion. The other information comprises the Annual Bond Report 2019, but not the consolidated financial statements, not the audited parts of the group management report and not our audit opinion.

Our opinions on the consolidated financial statements and on the group management report do not cover the other information, and consequently we do not express an opinion or any other form of assurance conclusion thereon.

In connection with our audit, our responsibility is to read the other information and, in so doing, to consider whether the other information

• is materially inconsistent with the consolidated financial statements, with the group management report or our knowledge obtained in the audit, or

• otherwise appears to be materially misstated.

Translation of the German audit opinion concerning the audit of the consolidated financial statements and of the group management report prepared in German

Responsibilities of the executive directors for the consolidated financial statements and the group management report

The executive directors are responsible for the preparation of the consolidated financial statements that comply, in all material respects, with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB [“Handelsgesetzbuch”: German Commercial Code] and, that the consolidated financial statements, in compliance with these requirements, give a true and fair view of the assets, liabilities, financial position and financial performance of the Group. In addition, the executive directors are responsible for such internal control as they have determined necessary to enable the preparation of consolidated financial statements that are free from material misstatement, whether due to fraud or error.

In preparing the consolidated financial statements, the executive directors are responsible for assessing the Group’s ability to continue as a going concern. They also have the responsibility for disclosing, as applicable, matters related to going concern. In addition, they are responsible for financial reporting based on the going concern basis of accounting, unless there is an intention to liquidate the Group or to cease operations, or there is no realistic alternative but to do so.

Furthermore, the executive directors are responsible for the preparation of the group management report that, as a whole, provides an appropriate view of the Group’s position and is, in all material respects, consistent with the consolidated financial statements, complies with German legal requirements and appropriately presents the opportunities and risks of future development. In addition, the executive directors are responsible for such arrangements and measures (systems) as they have considered necessary to enable the preparation of a group management report that is in accordance with the applicable German legal requirements, and to be able to provide sufficient appropriate evidence for the assertions in the group management report.

Translation of the German audit opinion concerning the audit of the consolidated financial statements and of the group management report prepared in German

Auditor’s responsibilities for the audit of the consolidated financial statements and of the group management report

Our objectives are to obtain reasonable assurance about whether the consolidated financial statements as a whole are free from material misstatement, whether due to fraud or error, and whether the group management report as a whole provides an appropriate view of the Group’s position and, in all material respects, is consistent with the consolidated financial statements and the knowledge obtained in the audit, complies with the German legal requirements and appropriately presents the opportunities and risks of future development, as well as to issue an auditor’s report that includes our opinions on the consolidated financial statements and on the group management report.

Reasonable assurance is a high level of assurance, but is not a guarantee that an audit conducted in accordance with Sec. 317 HGB will always detect a material misstatement. 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 and this group management report.

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 and of the group management report, whether due to fraud or error, design and perform audit procedures responsive to those risks, and obtain audit evidence that is sufficient and appropriate to provide a basis for our opinions. 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 of the consolidated financial statements and of arrangements and measures (systems) relevant to the audit of the group management report in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of these systems.

Translation of the German audit opinion concerning the audit of the consolidated financial statements and of the group management report prepared in German

• Evaluate the appropriateness of accounting policies used by the executive directors and the reasonableness of estimates made by the executive directors and related disclosures.

• Conclude on the appropriateness of the executive directors’ 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 the auditor’s report to the related disclosures in the consolidated financial statements and in the group management report or, if such disclosures are inadequate, to modify our respective opinions. Our conclusions are based on the audit evidence obtained up to the date of our auditor’s report. However, future events or conditions may cause the Group to cease to be able to continue as a going concern.

• Evaluate the overall presentation, structure and content of the consolidated financial statements, including the disclosures, and whether the consolidated financial statements present the underlying transactions and events in a manner that the consolidated financial statements give a true and fair view of the assets, liabilities, financial position and financial performance of the Group in compliance with IFRSs as adopted by the EU and the additional requirements of German commercial law pursuant to Sec. 315e (1) HGB [“Handelsgesetzbuch”: German Commercial Code].

• Obtain sufficient appropriate audit evidence regarding the financial information of the entities or business activities within the Group to express opinions on the consolidated financial statements and on the group management report. We are responsible for the direction, supervision and performance of the group audit. We remain solely responsible for our opinions.

Translation of the German audit opinion concerning the audit of the consolidated financial statements and of the group management report prepared in German

• Evaluate the consistency of the group management report with the consolidated financial statements, its conformity with German law, and the view of the Group’s position it provides.

• Perform audit procedures on the prospective information presented by the executive directors in the group management report. On the basis of sufficient appropriate audit evidence we evaluate, in particular, the significant assumptions used by the executive directors as a basis for the prospective information, and evaluate the proper derivation of the prospective information from these assumptions. We do not express a separate opinion on the prospective information and on the assumptions used as a basis. There is a substantial unavoidable risk that future events will differ materially from the prospective information.

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.

Munich, April 17, 2020

Ernst & Young GmbH Wirtschaftsprüfungsgesellschaft

Räpple Hohenegg Wirtschaftsprüfer Wirtschaftsprüfer [German Public Auditor] [German Public Auditor]