2019 ANNUAL REPORT HIGHLIGHTS 2019 1 € 1,778 M 34.6 M NMV ORDERS +23% yoy +23% yoy 13.1 M (2.8)% € 301 M GFG ACTIVE ADJ. EBITDA PRO-FORMA 2019 | CUSTOMERS MARGIN CASH +17% yoy profitable in Q4/19 Including restricted cash eport R nnual A Highlights 2019 GFG 2019 | Highlights 2019 eport R nnual A KEY PERFORMANCE INDICATORS AND FINANCIAL SUMMARY 2019 2018 Group KPIs Active customers (m) 13.1 11.2 NMV (€m) 1,777.8 1,453.5 Growth at constant currency (%) 23.0 22.5 2 NMV/Active Customer (€) 136.1 130.2 Number of orders (m) 34.6 28.2 Order frequency 2.6 2.5 Average order value (€) 51.3 51.6 Financial performance Revenue (€m) 1,346.0 1,155.9 Growth at constant currency (%) 17.2 18.7 Gross profit (€m) 539.8 449.7 Gross profit margin (%) 40.1% 38.9% Adjusted EBITDA (€m) (37.1) (49.8) Adjusted EBITDA/Revenue (%) (2.8) (4.3) Capex (€m) 72.1 41.9 Financial position Net working capital (€m) (12.0) (10.3) Cash and cash equivalents (€m) 277.3 105.0 Pro-forma cash (€m) 300.8 139.9 See Financial Definition section 7.1 OUR VISION IS TO BE THE #1 FASHION & LIFESTYLE DESTINATION 3 IN GROWTH MARKETS Our Purpose is True Self Expression. As the leading fashion & lifestyle destination in Asia Pacific, Latin America and the Commonwealth of Independent States, we connect over 10,000 global, local and own fashion brands to a market of more than one billion consumers who are moving online. We do this through four established ecommerce platforms, each tailored to local market needs and individual customer preferences through our own technology innovations. GFG 2019 | eport APAC LATAM CIS R nnual A GFG Contents 2019 | eport R nnual A TO OUR SHAREHOLDERS 3 1.1 Letter to our Shareholders 6 1.2 GFG Initial Public Offering 9 1.3 Report of the Supervisory Board 15 1.4– 1.9 Corporate Governance Report 25 1.10 – 1.12 Non- financial report 53 GROUP MANAGEMENT REPORT 81 2.1– 2.5 Fundamental Information about the Group 83 2.6– 2.10 Report on Economic Position 89 2.11 Report on Post Balance Sheet Events 98 2.12–2.13 Report on Risks and Opportunities 99 2.14 Report on Expected Developments and Outlook 110 INDEPENDENT AUDITOR´S REPORT 111 CONSOLI DATED FINANCIAL STATE MENTS 119 4.1 Consolidated Statement of Profit or Loss 121 4.2 Consolidated Statement of Comprehensive Income 122 4.3 Consolidated Statement of Financial Position 123 4.4 Consolidated Statement of Changes in Equity 125 4.5 Consolidated Statement of Cash Flows 127 5. Notes to the Consolidated Financial Statements 129 RESPONSIBILITY STATEMENT 193 ADDITIONAL INFORMATION 7.1 Financial Definitions 195 7.2 Financial Calendar 196 7.3 Information Resources 196 THE MANAGEMENT BOARD 5 Christoph Barchewitz Co-CEO Matthew Price CFO Patrick Schmidt Co-CEO GFG 2019 | eport R nnual A Letter to our Shareholders GFG 2019 | eport R Letter to our Shareholders nnual A 1.1 LETTER TO OUR SHAREHOLDERS DEAR SHAREHOLDERS AND OTHER STAKEHOLDERS, 2019 was a remarkable year for Global Fashion Group. Almost 10 years since its founding, today GFG is a global business that has changed the way consumers buy fashion online in our markets. The Group serves the fashion needs of our 13.1 million Active Customers across four continents, and employs an incredible, global and diverse team of over 12,500 GFG has changed people. Last year we proudly delivered more than 34 million the way consumers orders to customers across 17 markets, generating a Net buy fashion online in Merchandise Value (“NMV”) of € 1.8 billion. our markets around the world. At the same time, looking at the potential in our regions, we 6 believe we have only scratched the surface: the 1 billion consum- ers in our markets spend a total of € 320 billion on fashion & life- style products annually, a market that is forecasted to grow with a CAGR of 6% until 2023. Our regions currently have an Average ecommerce penetration of just 7%, compared to much higher levels of maturity in Western markets (23% in the US, 19 to 22% in Western Europe) and China (27%). The opportunity ahead of us is consider- able, and we will focus on setting the right priorities to connect our diverse customer base to an ever-evolving great assortment of fashion & lifestyle products. Our customers are at the very heart of our business. We constantly focus our efforts on offering them inspiring and seamless experiences, from discovery to delivery. We have already defined what a best-in-class shopping experience looks like in our mar- kets, but we continue to evolve in line with what inspires consumers on our platforms. The key for building these relationships with our customers lies in providing them the greatest choice of relevant fashion & lifestyle products, and inspiring them through great discovery, relevant recommendations and personalised digital experiences. We understand that one size does not fit all when it comes to our consumers across the globe: customer needs vary according to their personal taste, local culture and climate, as well as different price points. We therefore constantly enhance our assortment to cater to their preferences. We provide access to global brands and offer exclusive collaborations with our brand partners. At the same time, we fulfil the great demand for locally relevant labels and cater to our regions’ particular fashion needs. In South East Asia, we had another great Hari Raya season in 2019, the #1 fashion event for our modest wear customers. We brought together over 50 designers and brands to participate under our own branded umbrella campaign, ZALORAYA2019. Over the last year, we continued to demonstrate that we are the strategic partner of choice and a gateway to growth markets for fashion & lifestyle brands. Through facilitating market entry and access to our loyal customer base, we support them in capturing an exciting market opportunity through our platforms. Today we collab- orate with over 10,000 fashion & lifestyle brands, and continue to strengthen our partnerships. In 2019 we launched prominent international brands in new markets, such as Tommy Hilfiger Denim and Ralph Lauren in Latin America (“LATAM”), The Kooples and Hugo Boss in Russia and the Commonwealth of Independent States (“CIS”), as well as Versace and Mango Kids in Asia Pacific (“APAC”). We further cater to our brand partners’ diverse business needs through our distinct Fashion Services like fulfilment solutions, media solutions and data analytics. The share of our partner business through marketplace across our platforms continued to grow, representing 21% of NMV. Apps are our clear #1 channel today, have been downloaded over 34 million times and generated 50% of NMV in 2019. Innovation in our app experiences has contin- ued to drive step-changes in customer engagement, convenience and service, 7 which we will further dedicate our efforts to in the future. We continued to scale our operations to connect our customers to great assort- ments, and to support our future growth. In South East Asia, we enhanced the delivery experience to a geographically dispersed customer base by offering a new subscription service called ‘Zalora Now’. This service allows for next day delivery for all orders, and already has over 63,000 subscribers across the region. In CIS, pick- up-points have become an increasingly important delivery method, used for over 40% of shipped orders in 2019. We expanded our pick-up-point network in the region, which now spans over 12,000 locations. We acknowledge the sustainability challenges our industry faces, deeply care about it and are committed to turning this into an opportunity: by understanding and reducing our impact, working collaboratively with our brand partners to drive con- tinuous improvement, and exceeding customer expec- tations to lead this conversation in our markets. In 2019 we launched new ways for our customers to shop con- We are the strategic sciously: In Australia, ‘Considered’ at THE ICONIC now partner of choice and allows customers to filter and shop according to their a gateway to growth personal sustainability values. GFG’s first resale model markets for fashion & in partnership with Style Tribute now lists pre-loved lifestyle brands. items on the ZALORA platform – giving over 200 million ecommerce consumers across South East Asia the GFG option to shop consciously. We further launched our first own sustainable brand, 2019 | AERE, and appointed GFG’s first Chief Sustainability Officer to ensure sustainability is integrated into every part of the business. Rolling out further sustainability initia- eport R tives across our Group will continue to be a key priority for us. nnual A Letter to our Shareholders GFG 2019 | eport R Letter to our Shareholders nnual A We appointed a new Supervisory Board in 2019, whose combined wealth of expe- rience in fashion, ecommerce and growth markets will support us on our journey as the leading fashion & lifestyle destination across our regions. As an organisation with operations in markets across four continents, diversity — including gender diversity — is fundamental to the success of our business. We recognise the importance and benefit of ensuring our workforce fully represents the communities in which we operate, as well as Diversity is funda- the customers who shop with us. The Supervisory Board and mental to the success Executive Leadership team now have equal representation of of our business. men and women (50%) — a milestone we are very proud of. Finally, in July 2019, GFG began trading on the Frankfurt Stock Exchange, securing € 186.1 million in new capital to invest into our platforms and infrastructure and in turn, benefit from the tremendous growth opportunities in our markets.