ANNUAL REPORT 2018 - FNG Group€¦ · ANNUAL REPORT 2018 6 2018 definitely was a challenging year...

ANNUAL REPORT 2018 WWW.FNG.EU

ANNUAL REPORT — 2018 2

The 2018 annual report of FNG NV has been drawn up in Dutch. This is an informal English translation, provided for the comfort of the reader. In the event of any discrepancy between the Dutch text of the annual report and any translation thereof, the Dutch version shall prevail.

Contact For clarifications about the data in this annual report, please contact:Dieter Penninckx | CEO+32 15 293 444

Publisher FNG NVBautersemstraat 68a2800 MechelenBelgium0697.824.730

www.fng.eu


ANNUAL REPORT 2018


MESSAGE FROM THE CEO AND THE FOUNDERS 6FAST FACTS 11REPORT OF THE BOARD OF DIRECTORS 12

1. ABOUT FNG 122 . KEY FIGURES 143. MAJOR EVENTS OF 2018 164. SIGNIFICANT EVENTS AFTER THE CLOSE OF THE FINANCIAL YEAR 195. BUSINESS STRATEGY 206. MARKET POSITION AND MARKET DEVELOPMENT 247. REVIEW OF BUSINESS 308. MAIN RISKS AND RISK MANAGEMENT 339. RESEARCH AND DEVELOPMENT 3610. EXCEPTIONAL CIRCUMSTANCES 3911. BRANCHES 39

CORPORATE GOVERNANCE STATEMENT 411. BOARD OF DIRECTORS 422. EXECUTIVE COMMITTEE AND CEO 453. BOARD COMMITTEES 484. GENDER DIVERSITY 535. MAJOR SHAREHOLDERS 536. INTERNAL CONTROL AND RISK MANAGEMENT RELATING TO FINANCIAL REPORTING 547. DISCLOSURE STATEMENT IN ACCORDANCE WITH ARTICLE 34 OF THE ROYAL DECREE OF 14 NOVEMBER 2007 54

REMUNERATION REPORT 611. REMUNERATION OF DIRECTORS 612. REMUNERATION OF THE CEO AND MEMBERS OF THE EXECUTIVE COMMITTEE 62

NON-FINANCIAL INFORMATION STATEMENT 651. HOW FNG INCORPORATES CSR INTO ITS ORGANISATION 652. HOW FNG IMPLEMENTS ITS CSR POLICY IN PRACTICE AND THE RESULTS THEREOF 703. GRI CONTENT INDEX 93

FINANCIAL STATEMENTS 96


2018 definitely was a challenging year for fashion retail. Even when bad news about the sector kept popping up, FNG unwaveringly remained on course. Concentrating fully on the further expansion of the local heroes in its brand portfolio, with a sharp focus on vertical integration and realisation of deep synergies and with a clear digital plan combined with ‘brick’ shops, FNG reaches remarkable results.

MESSAGE FROM THE CEO AND THE FOUNDERS


While the spending pattern for fashion and shoes in the Benelux remains more or less stable, the sector faces major challenges. Digitalisation continues at a breath-taking pace and fashion retailers are struggling to find the ideal (read: viable) mix of sales channels (optichannel) for clothing and shoes.

Disappointing weather conditions, such as a wet spring and a long Indian summer, had the whole sector on edge. And the impact was not limited to the traditional stores. Online players were also forced to take a big reality check. At the end of the day the million dollar question is whether the business model of free delivery and unlimited shopping and returning might be coming to an end.

During the final quarter of 2018, shareholders of online players clearly indicated that a world where everything is free is no longer sustainable. Conquering a share of the market without any positive results is not viable in the long run. It is time to start making real money.

Was 2018 the end or only a preview of the relentless shakeout in the sector? Consolidation is happening at full speed and will continue in the future. More than ever, economies of scale are important and significant investments in digitalisation are being carried out. It is a world of eat or be eaten.

FNG achieves success in this complicated market by steadfastly continuing its strategy.

First of all, FNG further expands its local retail and fashion brands, the local heroes. Going against the market, FNG achieved success with the development of new Brantano concepts.

FNG further developed its flagship Brantano into a strong showcase for brand fashion and shoes. With the roll-out of the complementary shopping formulas and a new online platform, Brantano is taking important steps to realise its ambition to become the number one online and offline choice for clothing and shoes in Belgium.

Focus on digital growth is another cornerstone of FNG. The continued development of online sales via own platforms as well as via alliances is high on the agenda. The new online platform was further developed by Brantano and is ready to make a difference in tomorrow’s world. In 2019 the other brands will be launched on this platform as well. This new platform opens up possibilities to integrate artificial intelligence algorithms and thus offer a personalised shopping experience. Shopping will become faster, easier and tailored to the consumer. Examples include personal styling, rich product information, intelligent marketing communication and optimisation of the available stock.


The third, and maybe most important cornerstone of FNG is its focus on vertical integration and development of deep synergies. The acquisition of Henkelman Schoenen allowed FNG to add the knowhow of shoe manufacturing to its buying platform. FNG moreover strives for maximal synergies in its back office and further rationalises the number of physical shops in smaller cities.

Finally FNG is committed to corporate social responsibility. FNG strives for sustainability in all its processes and has taken major steps to realise this goal. While this work will never be truly finished, FNG, with a clear focus, wants to make a difference.

FNG is confident in the future. FNG is flexible enough to adapt to fickle market conditions, and has grown big enough to fully exploit economies of scale. The possibilities and opportunities are endless.

Because size does matter. After a couple of years of expansion and internal consolidation of the companies acquired in 2016, Miss Etam and Brantano, it is time to play a role in the consolidation wave, which will undoubtedly continue on the sector for the near future.

In the coming years, FNG wants to keep a look out for further acquisition opportunities of “local heroes”, which will strengthen and expand the group both on a local and an international level.

Interesting times are ahead.

Dieter Penninckx | CEOAnja Maes | DirectorManu Bracke | Director

FNG headquarters

CKS



Company name: FNG NV

Legal form: Public limited liability company under the laws of Belgium

Registered office: Bautersemstraat 68A, 2800 Mechelen, Belgium

Trade register number:0697.824.730 (Crossroads Bank of Enterprises)

Date of incorporation: 29/12/1953

Country of incorporation: The Netherlands

Home Member State: Belgium

Financial year:1 January – 31 December

Quotation market: Euronext Brussels – Euronext Amsterdam (“FNG”)

Share capital: EUR 60,679,208.36

Shares outstanding: 11,200,663 shares

Shares ISIN Code:BE0974332646– Euronext Symbol: FNG

FNG founders:Dieter PenninckxAnja MaesEmmanuel Bracke

Members of the Board of Directors:Eric Verbaere Gino Van Ossel Emiel Lathouwers Philippe Vandeurzen Roald Borré Elke Kestens Anja Maes Emmanuel Bracke

Members of the Executive Committee:Dieter PenninckxAnja MaesEmmanuel Bracke

FAST FACTS


REPORT OF THE BOARD OF DIRECTORS

1. ABOUT FNG

The FNG group is a strong growing Benelux-fashion group with activities in Belgium, the Netherlands, Luxembourg, France, Spain and Germany. The FNG group designs and distributes clothing and shoes for women, children and men through its own concept stores at top locations in Belgium and the Netherlands and through a network of multi-brand stores on the domestic markets as well as in foreign countries. FNG has more than 3,000 employees, realising a turnover exceeding EUR 500,000,000.

FNG’s growth figures prove that fashion and quality go hand in hand with success. The Benelux fashion group has built a strong diversified brand portfolio with brands such as Fred & Ginger, CKS, Claudia Sträter, Miss Etam, Expresso, Ginger, Promiss, Baker Bridge, Brantano and Steps. The brands are sold internationally in more than 500 concept stores, shop-in-shop corners and in more than 1,500 multi-brand stores.


FNG’S BRAND PORTFOLIO


> 500employees own concept stores

> 3,000

> 10multi-brand storesbrands

> 1,500Benelux customers

turnover

≈ 5,000,000

≈ 510,000,000

2 . KEY FIGURES

2018 (kEUR)

Revenue 511,794

Ebitda 54,879

Total assets as of year-end 834,902

Equity attributable to equity holders of the company 342,734

Number of shares as of year-end 11,200,663

CKS



3. MAJOR EVENTS OF 2018

BRANTANO BECOMES THE FLAGSHIP FOR CLOTHING AND SHOES FOR EVERYONEBrantano has become a synonym for brand fashion and shoes and wants to become the number one choice for a wide audience. The idea is to cover the market with its three complementary retail formulas and a new online platform. Apart from the well-known, recently refurbished Brantano stores, two new retail concepts were launched in the course of 2018: high-end fashion boutiques under the name boutik by brantano, with a focus on fashion brands from the middle and upper market segments, complemented by a selection of high-quality shoes, and large fashion and shoe stores under the name Brantano Market. The well-known stores with a wide range of shoes and clothing corners offering a nice selection of brand fashion still carry the name Brantano. In Brantano Market, one can find the full selection: the wide range of shoes from Brantano as well as the high-quality offer of brand fashion from boutik by brantano. In other words, the Brantano brand has expanded, in terms of range as well as price positioning. The expanded Brantano range was accompanied by a new state of the art online platform.

FNG ENTERED INTO A SUBSTANTIAL BANK LOAN ON BEHALF OF THE WHOLE GROUPIn the context of the (re)financing of the whole group, on Wednesday 28 February 2018, FNG Holding NV, a direct subsidiary of FNG, entered into a new credit facility with BNP Paribas Fortis as Coordinator, Agent and Security Agent and BNP Paribas Fortis, ING Belgium, ABN Amro Bank and Belfius Bank as Original Lenders (the “Club Deal”). The Total Commitments under the Club Deal amount to maximum EUR 240,000,000. With the financial means available under the Club Deal, a number of existing credit facilities were repaid in order to consolidate all bank loans under the umbrella of one credit facility.

EARLY REDEMPTION BOND LOANThe bond loan issued by FNG Group NV, an indirect subsidiary of FNG, for a total amount of EUR 25,000,000, with an interest rate of 4.625% and maturity date on 15 April 2021 (the “Bond Loan”), was fully redeemed by FNG Group NV on 15 April 2018, before reaching its maturity date, in accordance with the Terms & Conditions, as provided for in the Offering Memorandum of 23 December 2014.

EMTN PROGRAMMEVia its subsidiary FNG Benelux Holding NV, FNG set up a 100 million Medium Term Note Programme. This programme allows FNG to issue notes in a flexible manner. Initially a medium term is envisaged. The programme started on 13 August 2018 and the first series of notes was issued on 17 August 2018 for an amount of EUR 10 million.

TRANSFER OF THE REGISTERED SEAT FROM THE NETHERLANDS TO BELGIUMThe Extraordinary General Meeting of shareholders of 22 May 2018 resolved to transfer FNG’s real seat and statutory seat to Mechelen. Following a decision of the Board of Directors of 4 June 2018 the centre of effective management was transferred to Belgium as well. As a result of this decision, FNG had dual nationality (Dutch and Belgian) for a short period of time until the crossborder conversion was finalised. The transfer of the registered seat to Belgium and FNG’s conversion from a public limited liability company under the laws of the Netherlands into a public limited liability company under the laws of Belgium became effective on 22 June 2018.

Brantano


PUBLIC OFFER AND DUAL LISTINGOn 26 June 2018 the Board of Directors resolved to conditionally increase FNG’s share capital with maximum EUR 254,702.08 (excluding issue premium and including increase option), with suspension of the existing shareholders’ preferential right, but granting a priority allocation right, by issuing maximum 3,183,776 new shares (including increase option), at a price per share ranging from EUR 26.25 to EUR 29.75. The issue of 2,220,771 new shares subscribed on 9 July 2018 was enacted by notarial deed. The increase of FNG’s share capital by EUR 177,661.68 (EUR 168,184.96 of which by means of contribution in cash and EUR 9,476.72 of which by means of contribution in kind) and the booking of a total issue premium of EUR 59,783,155.32 (EUR 56,594,239.04 of which by means of contribution in cash and EUR 3,188,916.28 of which by contribution on kind) on a non-disposable reserve account were enacted in the same notarial deed.

In addition an application was made for the admission to trading and listing of FNG’s shares on Euronext Brussels, as a result of which FNG’s shares are now listed on Euronext Brussels and Euronext Amsterdam. The market of reference was changed from Euronext Amsterdam to Euronext Brussels.

ACQUISITION OF THE HENKELMAN GROUPOn 28 December 2018 the acquisition of the Henkelman group, which was announced on 25 September 2018, was finalised. The Henkelman group is active in the design and production of shoes. This acquisition allows FNG to quickly strengthen its strategically important buying platform for clothing with years of shoe-related knowhow.

Brantano


4. SIGNIFICANT EVENTS AFTER THE CLOSE OF THE FINANCIAL YEAR

BRANTANO SETS UP SHOP ON THE ANTWERP MEIR AND LAUNCHES A MEDIA CAMPAIGNIn 2018 Brantano invested substantially in new retail formulas and a new web platform. On 1 March 2019 an important media campaign with the slogan “Dream. Dare. Change.” was launched, and this summer Brantano opens its doors on the Antwerp shopping street Meir.

The tests of the two new retail formulas boutik by brantano and Brantano Market launched in the final quarter of 2018 yielded very positive results. In 2019 the boutik by brantano and Brantano Market formulas will each be rolled out in three additional stores.

Brantano is also stepping up its efforts online. The new web platform driven by artificial intelligence brings online shoppers to the checkout 25% faster than before: shoppers now finalise their purchase with an average of 9 clicks compared to 12. Everything goes more smoothly, which leads to a higher conversion rate. During the sales month of January brantano.be achieved a turn-over which was three times higher than in 2018.

The investments in a web platform driven by artificial intelligence are paying off. The brantano.be web shop now also offers personalised styling advice under the name Hellow.me. This is a translation of the curated shopping concept used by Suitcase, the online retailer which was acquired by FNG in 2017. Women and men wishing to use this service can register, select products to their taste and receive styling advice tailored to their profile, supported by artificial intelligence. They can then order recommended items or choose to try them on in a store. Tests show that two-thirds of customers choose to visit a store. This fits within the optichannel principle which combines online shopping with offline services. Customers who visit a boutik by brantano store will moreover have a personal style advisor at their disposal.


FNG’s strategy focuses on:

I creating value by managing a complementary brand portfolio via buy-and-build,

II omnichannel sales driven by data and supported by artifical intelligence (AI),

III optimising corporate processes and achieving synergies, and

IV a lean result-focused organisation with a unique corporate culture.

In a time when some traditional (mostly mono-brand) fashion retailers are struggling, due to increased international competition, pressure on the margins and strong growth of online sales, FNG is striving to deliver value in line with its strategy.

5.1. BUY-AND-BUILD: BRAND VALUE AND BRAND PORTFOLIO MANAGEMENTEvery brand has a unique and strong identity tailored to its target consumer group. Value is created by investing wisely in strong brand building by marketing and retail concept development.

FNG’s brand portfolio is very diversified in terms of style groups, sizes and price points. Some brands are primarily retail brands (Brantano, Miss Etam), while others are mostly product brands (Fred & Ginger, CKS, Expresso, Claudia Sträter).

FNG optimises its brands and retail formulas to best serve the customer. Brands also cross-sell internally and can for instance be sold in another brand store (e.g. Miss Etam products are sold in Brantano’s fashion department).

Brand portfolio management is key in FNG’s risk management. Fashion cannot be approached as pure science. Therefore, to minimise collection risk, FNG’s fashion brands release between ten and fifteen collections a year. Moreover, the complementary brand portfolio gives FNG the advantage to manage its “store liabilities” (lease, social and other contractual liabilities).

Running two, three or more different brand stores in one single city, gives FNG the flexibility to change smoothly from one concept to another if necessary.

The pricing and style strategy ensure a solid market coverage.

All FNG brands have their own specific and well defined position in the market: they are designed for a specific target group. Customers mainly consider two parameters in their purchase decisions: price and style. Based on their preferences, customers can be segmented and identified as a target group.

5.2. OMNICHANNEL SALES DRIVEN BY DATA AND SUPPORTED BY AIThe digital revolution is happening at a very strong pace. FNG keeps up by investing in its digital platforms for sales and marketing as well as in a flexible and integrated organisation and supply chain. These investments help the brands to market and sell their products according to the consumer’s behaviour and preference. Consumer behaviour data plays an increasingly crucial role in all aspects of the fashion value chain.

Knowing your customer is critical to being successful as a fashion retailer. FNG puts a lot of energy and effort in knowing its customer and managing ‘big data’, which results in a better and more personal service to the customer. Examples include segmented marketing campaigns (up to one-on-one segmentation), individual web page merchandising, individual styling services, virtual stock that can be sold via different channels, individual delivery options for online sales, etc.

‘Big data’ is also used to optimise the collections. For example, information from the 3D scans of customers’ feet is compared to scans of shoes and their sales results in order to better tailor the fit of the shoes to customers’ feet.

5. BUSINESS STRATEGY


In addition, artificial intelligence algorithms are increasingly used to perform specific predictive tasks based on a large amount of data. The more data, the more accurate and relevant certain AI algorithms become which helps increase conversion rates or reduce the serving cost. This means that retailers who have access to a lot of data from a large number of customers have a strong competitive advantage. The art of maximising relevance for any given customer, starts as early as in the design process, where all possible data insights are used to drive line and collection planning processes.

In order to anticipate specific consumer demands, which can potentially be predicted by algorithms, an efficient design cycle and supply chain are needed. FNG applies a mixed approach where coordinated collections for a longer term are combined with short term and fast time collections in order to market items. These items are sourced through the group’s own vertically integrated buying organisation. The main time mix leads to an optimum between fashion level, product quality, margins and coordinated collections.

5.3. BUSINESS PROCESS OPTIMISATION, SYNERGIES AND KNOW-HOW SHARINGThe three founders of FNG have a Master in Engineering. Therefore process optimisation has always been a key point during the development of FNG.

FNG focuses on business process optimisation, realising synergies and sharing of know-how.

It all starts with a determined focus on efficiency with regard to the back office: inventory accuracy, intelligent allocation of the products, and cost efficient logistics supported by excellent ICT are key. Moreover, FNG’s ICT platform is developed in such a way that it can support future acquired retail chains.

FNG realises hard synergies by sharing services such as finance, HR, logistics and IT across brands. HQ (headquarter) and DC (the state-of-the-art Distribution Centre) resources are shared as well.

Moreover, the purchase of services and non-trading goods in the area of IT, HR, administration and “other costs” (utilities, licenses, rent, maintenance, etc…) are grouped and optimised. This leads to economies of scale, creating purchase benefits and hence lower costs.

More hard synergies are realised in purchasing and sales. FNG has a buying platform with its own offices in Turkey, India and Hong Kong supporting the brands to source their products in an efficient way. The group’s buying platform purchases goods directly from production sites. Higher combined volumes typically lead to a stronger negotiation position towards suppliers and to a substantial improvement of the gross margin.

Sales management for larger accounts is coordinated at group level and creates a unique position for these accounts, i.e. Wehkamp, Zalando, Bol.com, Inno, Bijenkorf, … In retail sales, the focus on in-store productivity results in a maximum impact of the sales force at minimal cost. As store leases are under pressure in a lot of Benelux cities, FNG focuses on negotiating the optimal leases, ensuring that each store will provide a healthy contribution to the group.

As far as corporate financing is concerned, FNG centralises the group’s financing, from classic bank financing, to bond issue and equity funding. The listing of the shares of FNG NV provides opportunities to attract external capital to finance the growth of the group. In addition, acquisitions can be paid in full by shares, or new issues can be placed to finance acquisitions.

fred + ginger


5.4. A LEAN RESULT-FOCUSED ORGANISATION WITH A UNIQUE CORPORATE CULTUREFNG believes in inspiring the group’s 3,000 employees. Corporate DNA includes key values such as respect, a “can do” mentality, no-nonsense management and out-of-the-box thinking.

FNG is organised in business units. Each business unit focuses on the core value chain of one brand, including styling, buying, merchandising, sales and marketing.

Important soft synergies between brands can be identified, such as sharing know-how and best practices, human resource management and talent pooling. This approach results in a lean staff at the headquarters, servicing the stores in an efficient and well-organised manner.

The FNG values provide a strong driver to observe corporate social responsibility (CSR). The CSR idea can be found throughout the whole organisation and is supported by specific policies with regard to the people who are responsible for the manufacturing of goods, the products which will be introduced to the market, the ecological impact and the social and economic impact on society.

Baker Bridge



6.1. GLOBAL FASHION AND FOOTWEAR MARKETIn a world where geopolitical turmoil, economic uncertainty, and unpredictability are the new reality, the fashion market is expected to continue its growth in 2019, albeit at a slightly slower pace than in 2018. The McKinsey Global Fashion Index projects the global fashion industry sales to grow by 3.5 to 4.5% in 2019, which is barely 0.5% less than in 2018.1

But the growth is not evenly spread:

• First of all, growth prospects for 2019 are globally higher for emerging markets. The highest growth is expected in upcoming Asian markets (+6.5 to 7.5%); which is more than double of the growth projections for mature Asian countries (2 to 3% growth). In up-coming European markets too, the expected growth of 4.5 to 5.5% is much higher than the expected growth for mature markets (only 1.5 to 2.5%).2

• Secondly, the polarisation in the market will continue. The luxury and discount segments will grow by 3.5 to 5.5% respectively 4 to 6% in 2019 versus 1.5 to 2.5% by the mid-market segment.3

• Thirdly, it is believed that sportswear will continue to outpace overall market growth (6 to 7%), while growth expectations for shoes are much lower (2.5 to 3.5%).4

• Finally, the shift towards an online market continues to accelerate. It is expected that in 2022 e-commerce would represent 38% of global fashion revenue, compared to 27% in 2018 and only 14% in 2014.5 The clear winners are the leading pure players, either generalists like Amazon and Alibaba, or fashion specialists like Zalando, Asos, Net-a-Porter and Farfetch. With a market share of 8%, Amazon is well on the way to becoming the biggest fashion retailer in the United States.6 Also remarkable is the fast growth of market places, which allow e-commerce companies to operate without having to purchase and sell goods, and thus without stock risks, by authorising third parties to sell on their platform, in exchange for a commission. Consequently, in their search for growth, fashion brands have to collaborate with these leading online platforms.

FNG is also witnessing the following important market trends:

• The growth of e-commerce is slowing down. Consequently, leading European e-commerce players in the fashion world are, for the first time, confronted with lower sales results than expected. Asos7, as well as Zalando8, just like other fashion retailers, have explicitly made reference to the warm summer and autumn. This has never happened before, and might be an indication that e-commerce pure players can no longer escape the economic patterns of traditional fashion retailers. This also explains why they are scaling back their efforts to develop own collections and brands9, and invest instead in the further growth of their market places: this allows them to decrease the stock risks.

• At the same time, the rapid growth of e-commerce goes hand in hand with the declining foot traffic in physical stores. Retailers respond by investing heavily in their omnichannel strategies. The winners see their online sales grow rapidly, while rightsizing their store network, reinventing the role of the store and seamlessly integrating the online and offline experience. Weaker players on the other hand, are unable to carry the necessary investments. Consequently, there is a market of winners and losers, in which the winners benefit from the losers’ failure.

• Sustainability has become more and more important. From a mere focus on working conditions in manufacturing facilities, the market is evolving towards a more integral view. As such sustainability becomes part of the planning system that tries to adopt the principles of the circular economy. Moreover, there is a growing social tendency to buy less (new) clothes, especially low quality clothes. It is symbolic that the British Parliament published a report on this topic.10 Second-hand clothing is being presented as a sustainable alternative to fast fashion. Renting clothes by means of a subscription formula is also becoming increasingly popular.

6. MARKET POSITION AND MARKET DEVELOPMENT

Miss Etam


• Big data, artificial intelligence and personalisation are key trends for the years ahead. The rapid proliferation of data has allowed businesses to personalise their marketing communication. Artificial intelligence is making its way into the fashion industry, allowing true one-to-one marketing, with automated customer interactions, resulting in cost savings and incremental sales. The ultimate goal is curated commerce, whereby a tailor-made selection of the full product range is presented to the consumer.

6.2. FNG’S MAIN MARKETS: BENELUXThe main geographies are the Netherlands (45.6% of FNG sales) and Belgium (52.1% of FNG sales). FNG is also active on the business to business market in Spain, France and Germany. The flagships are Miss Etam (women outerwear in the Netherlands) and Brantano (footwear complemented with outerwear for the whole family in Belgium). They both are omnichannel retailers, operating stores as well as a web shop.

GeneralBelgium and the Netherlands are both mature European fashion markets, following global trends, including a slower growth than upcoming markets.

First of all, the Eurozone is experiencing an important slowdown in economic growth, with a GDP growth of 1.9% in 2018 and a forecasted GDP growth of 1.3% in 2019.11 While the Belgian economy underperformed in 2018, with a GDP growth of only 1.4%, in 2019 a growth of 1.3% is expected, in line with the Eurozone average. Overall the deceleration of growth in Belgium will remain very limited.12 The Dutch economy on the other hand is performing better than the Eurozone average, but will therefore be confronted with a bigger slowdown, with a GDP growth of 2.5% in 2018 and a forecasted growth of 1.7% in 2019.13

BELGIUM NETHERLANDS EU EUROZONE

GDP growth '18 +1.4% +2.5% +1.9%

GDP growth '19 +1.3% +1.7% +1.3%

Retail trade '18 -0.6% +3.3% +1,3%

Fashion retail trade '18 -2.6% +1.0% n.a.

Turnover percentage generated by online sales of clothes '18

17% 30% n.a.

Turnover percentage generated by online shoes and lifestyle '18

20% 38% n.a.

This is also reflected in the performance of the retail trade. While in 2018 the Dutch retail trade grew by 3.3%,14 more than double of the European average (+1.3%),15 the Belgian retail trade shrunk slightly.16

The same difference is reflected in the evolution of turnover in fashion sales: the Belgian fashion retail trade shrunk by -2.6% in 2018,17 while the Dutch fashion retail trade grew by +1%.18 In both countries, the fashion retail trade performed worse than retail trade in general.

CKS


E-commerce is more developed in the Netherlands than in Belgium: 26% of all expenditure in the Netherlands is done online19 compared to only 18% in Belgium.20 The same goes for the turnover percentage of online sales of clothes (30%21 versus 17%22) and shoes & lifestyle 38%23 vs. 20%24). In addition, e-commerce keeps growing faster in the Netherlands (+10%25) than in Belgium (+6%26), which, however, represents a slowdown of growth in both countries. Online growth percentages for the fashion segment are unfortunately not available, since the barometer methodology in both countries has been modified. Despite a slowdown of online sales, it is expected that e-commerce will continue to grow in importance, and that Belgium will not be able to catch up, at least not immediately.

The shift to online is reflected in the declining foot traffic in physical stores. In 2018, the busiest areas in important shopping districts in the Netherlands saw a decrease of more than 20% in foot traffic compared to 10 years ago, while in Belgium the decrease in foot traffic was just under 10%. In both countries both the number of stores as the surface of retail space has declined.27

The NetherlandsI Retail tradeFNG is active in the retail trade. This sector comprises companies offering products to consumers. The overall economic climate is therefore very important for the retail trade.

Due to the economic boom, the Dutch retail trade grew by 3.3% in 2018. While this represents a decline compared to the growth of 4.2% in 2017, it is, with the exception of 2017, still the strongest growth pace since 2006.28 Nevertheless, this average is the result of big differences, which confirms the image of a market of winners and losers:

• Shopping districts: in addition to a continuing shift to online, physical shopping districts are marked by polarisation. In 70% of shopping districts, foot traffic keeps declining, while increasing in other places.

The steepest decline occurs in medium-sized districts, which lose out to smaller as well as larger districts.29 At the same time, the number of vacant shopping premises has decreased, since more and more retail space is being used for other purposes.

• Sectors: the increase of the number of establishments in some service sectors - for example hairdressers, beauty salons and shops where clothing and other products can be repaired - as well as the increase of the number of second-hand stores (by 46% in a 5-year period) point to changing consumer behaviour.30 The number of sports shops (-25% in a 5-year period) and shoe shops (-22% in a 5 year period) on the other hand, are in free fall. The turnover in the shoe retail trade decreased by 9% in the same period.31

• Companies and brands: turnover in the clothing sector increased by 9% in the past 5 years, but remains 8% under the pre-financial crisis level. In the meantime, retail space has increased by 7%. Fierce competition is the result, which is only exacerbated by the number of web stores, which doubled in the last 6 years.32 A further shakeout, in which winners benefit from the disappearance of weaker players, seems unavoidable.

The slowdown of the e-commerce growth, and the fact that each quarter of 2017 and 2018 showed a faster growth of the online turnover of physical retailers compared to that of pure players, is therefore good news to physical retailers.33 In 2018, physical retailers grew with 26% more than twice as quickly as pure web retailers.34 This confirms the importance and the potential of a strong optichannel strategy (see further). It also means that the worldwide consolidation movement, as a result of which a certain number of pure players conquer the whole market, is not necessarily applicable to the Netherlands.

II Fashion & footwearIn the Netherlands FNG is mostly active in women’s clothing. Shoe retail is still in an embryonic stage and happens mostly via own clothing stores and web shops.

As mentioned before, according to CBS, the turnover for clothing has increased by 9% in the past 5 years,35 but growth has slowed down (+1.2% in 2017 and +1.0% in 2018).36

fred + ginger


For 2019 and 2020 ABN Amro predicts a slightly increased growth (in volume) by 1.5% for each year.37

Turnover in women’s outerwear has remained stable, according to GfK, the decrease of volume by -1% being compensated by an increase of +1%.38

Comparing figures from different sources is a dangerous exercise. However, a clear general trend can be identified: the fashion market in general and the women’s fashion market specifically are stagnating or only experience a very limited growth. With 30%39 of clothing turnover coming from online sales, a percentage that keeps rising, market competition is at an all-time high. The number of physical stores will inevitably decrease.

BelgiumI Retail tradeWith a GDP growth of 1.4% in 2018, the Belgian economy underperformed compared to the Eurozone average. The predicted slowdown of growth for 2019 is expected to hit Belgium less hard than the rest of the Eurozone, the predicted economic growth of 1.3% coinciding with the Eurozone average.40

The less than favourable economic conjuncture translated into a slight shrink of the retail trade during the past year.41 A number of indicators suggest that a further reorganisation of the physical store network is inevitable:

• Vacancy rates have increased to 10.3% compared to only 6.7% in the Netherlands.42

• There are 18 sales points per 1,000 people in Belgium, compared to 12.9 in the Netherlands.43

• On the other hand, Belgian sales points are smaller on average, resulting in a smaller difference in sales surface per person: respectively 1.88m² compared to 1.79m² per person.44

• This is connected with a lower presence of branches in Belgium: 18.1% of sales points are part of a chain, compared to 23.5 in the Netherlands.45

In other words, the consolidation movement is less advanced in Belgium, creating ample opportunity for chains to increase their market share at the expense of independent entrepreneurs.

The continued growth of e-commerce moreover increases pressure on physical stores. The extent and speed of the shift to online are hard to estimate. It has been predicted for years that Belgium would catch up compared to the Netherlands, but the growth of e-commerce in 2018 was still lower in Belgium than in the Netherlands. The divide between both countries increases, rather than diminishes.

Finally, compared to the Netherlands, Belgium does not have its own dominant e-commerce players, like bol.com, Wehkamp and Coolblue.

II Fashion & footwearIn Belgium FNG is active in both the fashion and the footwear sector.

In Belgium too fashion retail is underperforming compared to retail trade in general: in 2018 the shrink even amounted to 2.6%. The largest shrink occurred in shoe sales (-5.1%). Unfortunately all segments are in decline. The total sales of outerwear for example decreases by -2.0%.46

The percentage of turnover generated online of 17%47 is much smaller than in the Netherlands (30%).48 For shoes and lifestyle the difference is even bigger: 20%49 in Belgium versus 38%50 in the Netherlands.

The Belgian fashion market moreover lacks a leading local online retailer. This is not the case in the Netherlands, where a large local pure player (Wehkamp – fourth largest web shop in the Netherlands) as well as a strong omnichannel retailer (De Bijenkorf – tenth largest web shop of the Netherlands) are operating.51 In Belgium on the other hand, Galeria Inno even closed its web shop. Plenty of opportunities remain.

Brantano


6.3. FROM OMNICHANNEL TO OPTICHANNELThe steady growth of online sales increases the pressure on turnover in physical stores. At the same time e-commerce requires a certain scale, due to the significant investments in technology. Delivery at home and returns require strict follow-up of the costs of online sales.

Successful players do not emulate e-commerce pure players, but develop their own smart business model in which the physical store network reinforces online activities and vice versa. They define the optimal role of each channel within the customer journey, analyse how to keep down costs and responsibly use data to create value.

FNG therefore believes in the evolution from omnichannel to optichannel. It is important to provide the critical consumer in the store with expertise, entertainment and service. Incrementing the services level will be crucial. Strict cost management and efficiency on the other hand are absolute necessities online.

The combination of bricks and clicks opens up new opportunities:

• Web-2-store, or click & reserve: customers make their selection online and make a reservation when they will visit their favourite store to fit the selected clothes and/or shoes. Once the customer visits the store, additional personal services will be offered.

• Store-2-Web: when shopping in the store, customers choose a product that may not be available in the right size or colour at that time. The customer gets the product in the right size or colour delivered at home.

Tomorrow’s winners:

• direct investments towards reinventing the physical store;• right-size their store network, by aligning store locations

with turnover generated in the different shopping districts;• optimise online turnover (marketing, conversion and

fulfilment, including returns);• manage to grow their online turnover at least as fast as the

entire online market, using their own web shops as well as web shops and market places of third parties.


1 Source: McKinsey Global Fashion Index as cited in: Business of Fashion & McKinsey Company, The State of Fashion 2019, November 2018, p. 98;2 Source: McKinsey Global Fashion Index as cited in: Business of Fashion & McKinsey Company, The State of Fashion 2019, November 2018, p. 98;3 Source: McKinsey Global Fashion Index as cited in: Business of Fashion & McKinsey Company, The State of Fashion 2019, November 2018, p. 98;4 Source: McKinsey Global Fashion Index as cited in: Business of Fashion & McKinsey Company, The State of Fashion 2019, November 2018, p. 98;5 Source: Forrester Analytics: Online Fashion Retail Forecast, 2017 To 2022 (Global), November 2018, as cited in: https://www.marketingcharts.com/

industries/retail-and-e-commerce-106623 (accessed on 19 March 2019)6 Source: Business of Fashion & McKinsey Company, The State of Fashion 2019, November 2018, p. 77;7 Source: BBC, https://www.bbc.com/news/business-46590130, accessed on 20 March 20198 Source: Reuters, https://www.reuters.com/article/us-zalando-outlook/zalando-blames-it-on-the-sunshine-as-cuts-forecasts-again-idUSKCN1LY0HJ,

accessed on 20 March 20199 Source: RetailDetail, “Zalando zet zijn huismerken-poot stop,” 15 March 2019, https://www.retaildetail.be/nl/news/mode/zalando-zet-zijn-huismerken-

poot-stop, accessed on 22 March 201910 House of Commons, Environmental Audit Committee, ‘Fixing Fashion: clothin consumption & sustainability’, 19 February 201911 Source: European Commission, European Economic Forecast, Winter 2019 (Interim), https://ec.europa.eu/info/sites/info/files/economy-finance/ip096_

en.pdf (accessed on 19 March 2019), p. 112 Source: European Commission, European Economic Forecast, Winter 2019 (Interim), https://ec.europa.eu/info/sites/info/files/economy-finance/ip096_

en.pdf (accessed on 19 March 2019), p. 1213 Source: European Commission, European Economic Forecast, Winter 2019 (Interim), https://ec.europa.eu/info/sites/info/files/economy-finance/ip096_

en.pdf (accessed on 19 March 2019), p. 2314 Source: CBS, Omzet detailhandel ruim 3 procent hoger in 2018, februari 2019, https://www.cbs.nl/nl-nl/nieuws/2019/07/omzet-detailhandel-ruim-3-

procent-hoger-in-2018, geraadpleegd op 20 maart 201915 Source: Eurostat Newsrelease 24/2019, https://ec.europa.eu/eurostat/documents/2995521/9550051/4-05022019-AP-EN.pdf/712bc085-6408-4a5d-b88c-

4c64d6436e99, accessed on 20 March 201916 Source: eigen berekening op basis van Eurostat, Turnover and volume of sales in wholesale and retail trade - annual data (update 19/3/2019),

http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sts_trtu_a&lang=en, accessed on 20 March 201917 Source: GfK Fashion Monitor Belgium, December 2018, ordered by FNG, p. 618 Source: CBS, Omzet detailhandel ruim 3 procent hoger in 2018, February 2019, https://www.cbs.nl/nl-nl/nieuws/2019/07/omzet-detailhandel-ruim-3-

procent-hoger-in-2018, accessed on 20 March 201919 Source: Thuiswinkel Marktmonitor, Q4 2018, p.920 Source: BeCommerce Marktmonitor, Q4 2018, p.721 Source: Thuiswinkel Marktmonitor, Q4 2018, p.3322 Source: BeCommerce Marktmonitor, Q4 2018, p.4823 Source: Thuiswinkel Marktmonitor, Q4 2018, p.3324 Source: BeCommerce Marktmonitor, Q4 2018, p.4925 Source: Thuiswinkel Marktmonitor, Q4 2018, p.926 Source: BeCommerce Marktmonitor, Q4 2018, p.727 Source: Locatus, Factsheet Retaildata Benelux 2019, all dates per 1 January 201928 Source: CBS, Omzet detailhandel ruim 3 procent hoger in 2018, February 2019, https://www.cbs.nl/nl-nl/nieuws/2019/07/omzet-detailhandel-ruim-3-

procent-hoger-in-2018, accessed on 20 March 201929 Source: ABN Amro, Visie op Sectoren – Retail, February 2019, p. 230 Source: ABN Amro, Visie op Sectoren – Retail, February 2019, p. 331 Source: ABN Amro, Visie op Sectoren – Retail, February 2019, p. 432 Source: ABN Amro, Visie op Sectoren – Retail, February 2019, p. 533 Source: CBS, Internetverkopen detailhandel stijgen minder hard, 6 March 2019, https://www.cbs.nl/nl-nl/nieuws/2019/10/internetverkopen-detailhandel-

stijgen-minder-hard, accessed on 21 March 2019.34 Source: Twinkle, CBS over 2018: ‘Kwart meer omzet voor multichannelers’, 15 February 2019, https://twinklemagazine.nl/2019/02/omzet-december/index.

xml, accessed on 21 March 2019 35 Source: ABN Amro, Visie op Sectoren – Retail, February 2019, p. 536 Source: CBS, Omzet detailhandel ruim 3 procent hoger in 2018, February 2019, https://www.cbs.nl/nl-nl/nieuws/2019/07/omzet-detailhandel-ruim-3-

procent-hoger-in-2018, accessed on 20 March 201937 Source: ABN Amro, Visie op Sectoren – Retail, February 2019, p. 638 Source: GfK Retal Audit Fashionscan Nederland, December 2018, ordered by FNG39 Source: Thuiswinkel Marktmonitor, Q4 2018, p.3340 Source: European Commission, European Economic Forecast, Winter 2019 (Interim), https://ec.europa.eu/info/sites/info/files/economy-finance/ip096_

en.pdf (accessed on 19 March 2019), p. 1241 Source: eigen berekening op basis van Eurostat, Turnover and volume of sales in wholesale and retail trade - annual data (update 19/3/2019),

http://appsso.eurostat.ec.europa.eu/nui/show.do?dataset=sts_trtu_a&lang=en, accessed on 20 March 2019.42 Source: Locatus, Factsheet Retaildata Benelux 2019, all dates per 1 January 2019, p. 143 Source: Locatus, De Benelux in retailcijfers, February 2019, https://locatus.com/blog/de-benelux-in-retailcijfers/, accessed on 22 March 201944 Source: Locatus, De Benelux in retailcijfers, February 2019, https://locatus.com/blog/de-benelux-in-retailcijfers/, accessed on 22 March 201945 Source: Locatus, De Benelux in retailcijfers, February 2019, https://locatus.com/blog/de-benelux-in-retailcijfers/, accessed on 22 March 201946 Source: GfK Fashion Monitor Belgium, December 2018, ordered by FNG, p. 647 Source: BeCommerce Marktmonitor, Q4 2018, p.4848 Source: Thuiswinkel Marktmonitor, Q4 2018, p.3349 Source: BeCommerce Marktmonitor, Q4 2018, p.4950 Source: Thuiswinkel Marktmonitor, Q4 2018, p.3351 Source: Twinkle, ‘Bol.com, Coolblue en Zalando bovenaan de Twinkle100’, September 2018, https://twinkle100.nl/bol-com-coolblue-en-zalando-

bovenaan-de-twinkle100/ , accessed on 22 March 2019


The consolidated financial accounts for the financial years ended 31 December 2017 and 31 December 2018 were prepared in accordance with the International Financial Reporting Standards, as prescribed by the European Union (‘IFRS’) and were audited by Mazars Bedrijfsrevisoren, hereinafter referred to as ‘Mazars’.

Statement of comprehensive income

(In thousands of euros) 2018 2017

Revenue 511,794 482,402

Cost of merchandise (231,571) (215,329)

Gross profit 280,223 267,074

Employee benefit expense (89,365) (90,861)

Other operating expenses (138,459) (130,832)

Adjusted operating profit/(loss) before amortisation and depreciation expense (Adjusted EBITDA)

52,398 45,381

Non-recurring items 2,482 (7,516)

Operating profit/(loss) before amortisation and depreciation expense (EBITDA)

54,879 37,865

Amortisation and depreciation expenses (22,543) (18,777)

Operating profit/(loss) (EBIT) 32,337 19,087

Financial result (17,617) (11,315)

Profit/(loss) before taxes 14,720 7,772

Income taxes (3,181) (459)

Profit/(loss) for the period 11,538 7,313

STATEMENT OF COMPREHENSIVE INCOMEThe 2018 results show a revenue of EUR 511.8 million, an adjusted EBITDA of EUR 52.4 million, an EBITDA of EUR 54.9 million and a net profit of EUR 11.5 million. Compared to the 2017 results, this represents an increase of revenue of 6.1%, an increase of the adjusted EBITDA of 15.5%, an increase of the EBITDA of 44.9% and an increase of the net profits of 57.8%.

RevenueIn 2018 revenue increased by 6.1%, from EUR 482.4 million to EUR 511.8 million. With 50.9%, sales of FNG Roots (the brand portfolio of FNG) account for slightly more than half of total sales. Brantano accounts for 29.7% of total sales and Miss Etam for 19.4%.

Miss Etam (re)opened a few crucial stores a little later than foreseen and focused on profitable sales.

Revenue split

Of the total revenue of EUR 511.8 million, EUR 63.3 million was generated online, being 12.4%. In the graph below, the online revenue only represents net revenue for goods ordered online (via own web shops or via online platforms) and delivered to the customer’s home. Goods reserved and paid for in a store are not included.

FNG Roots 50.9% Brantano 29.7%

Miss Etam 19.4%

2017 2018

63.3

448.5

58.8

423.6 Online

Offline

7. REVIEW OF BUSINESS


Online revenue increased significantly, for FNG as well as for Brantano. Miss Etam’s revenue increased via its own (more profitable) web shop, but declined via other platforms.

Adjusted EBITDA1

The adjusted EBITDA of 2018 amounts to EUR 52.4 million. This represents an increase of 15.5% compared to 2017. With its adjusted EBITDA of EUR 35.3 million FNG Roots accounts for 67.5% of the total adjusted EBITDA, while Brantano with EUR 12.2 million accounts for 23.2% of the total and Miss Etam with EUR 4.9 million for 9.3%.

FNG and Brantano managed to significantly increase the adjusted EBITDA, while Miss Etam only experienced a limited increase. Miss Etam chose to focus on profitable revenue in 2018.

Adjusted EBITDA Split

FNG Roots remains the most profitable business unit, but Brantano’s profitability increased significantly in 2018.

All business units increased their adjusted EBITDA margins, and the total adjusted EBITDA margin exceeded 10%.

EBITDAThe EBITDA for 2018 amounts to EUR 54.9 million. Compared to 2017, this is an increase of 44.9%.

Net resultsNet results increased from EUR 7.3 million to EUR 11.5 million.

FinancingAt the end of December 2018 the net financial debt amounted to EUR 167.4 million. This represents a factor 3.0 in relation to the EBITDA. If only the senior bank debt is taken into account, this ratio is lower than 2.0, which is significantly lower than the bank covenant for senior bank debt (<3.25). For junior debt, the covenant is 4.5 or higher. The net financial debt already takes into account the financing of the acquisition of the Henkelman group at the end of December.

TaxationAs FNG is present in multiple countries, the group is confronted with different tax regimes. FNG organises its tax affaires in a conservative manner, taking into account what is fiscally permitted under national and international legislation and legal precedents. The effective tax burden for 2018 amounts to 21.6%.

FNG has a number of tax losses carried forward for an amount of EUR 18.6 million. They are recognised as it is expected that they will be realised in the coming years.

FNG Roots 2017

FNG Roots 2018

Miss Etam 2017

Miss Etam 2018

Brantano 2017

Brantano 2018

37.3

24.1

2.3223.3

75.2

149.9

32.0

25.2

124.4

222.5

76.7

1.6

Online

Offline

FNG Roots 67.5%Brantano 23.2%

Miss Etam 9.3%

34.0

4.5 6.9

45.435.3

4.912.2

52.4

FNG Roots Miss Etam Brantano Totaal

20182017

13.4%

4.4% 5.5%

9.4%

13.6%

4.9%8.0%

10.2%

FNG Roots Miss Etam Brantano Totaal

20182017

1 EBITDA was adjusted in 2018 for the following non-recurring items: gain on transaction of external business funds and other elements. In 2017 the adjustment relates to the loss on a disposal of business activities, loss on sale of property, plant and equipment and others. See note 6.5 in the financial overview for more information.

Claudia Sträter


Value creation and taking risks go hand in hand. FNG manages its strategic, operational, financial and reputational risks by carefully weighing the risks and returns against each other.

Effective risk management is integrated into FNG’s daily operations. FNG deploys a top-down risk management policy in which strategic risk management is executed at corporate level and operational risk management by the operational units, with the Board of Directors being responsible for reviewing the FNG’s risk management and control systems in relation to the financial reporting by FNG. Responsibility for operational risk management lies primarily with brand and functional management. The Executive Committee however bears the ultimate responsibility for managing the risks the company faces.

RISK MANAGEMENT AND INTERNAL CONTROLThe success as a business depends on FNG’s ability to identify opportunities while assessing and maintaining an appropriate risk appetite. FNG’s risk management considers a variety of risks, including those related to the industry and business, those related to the ongoing relationship with FNG’s shareholders and those related to FNG’s trademarks. FNG’s approach to risk management is designed to provide reasonable, but not absolute, assurance that the assets are safeguarded, the risks facing the business are being assessed and mitigated and all information that may be required to be disclosed is reported to the Executive Committee and, where appropriate, to the Board of Directors. Ongoing identification and assessment of risks is part of FNG’s governance. The Executive Committee and the Board of Directors provide complementary insights into existing and emerging risks that are subsequently included in the policies. FNG’s policies influences the formation of controls and procedures, and the focus of business planning and performance process.

RISK APPETITEFactors which determine FNG’s risk appetite include the international spread of its business, the robustness of its balance sheet, strength of cash flows, and a commitment to conservative financial management. FNG’s risk appetite varies per objective and risk category:

• Strategic: Taking strategic risks is an inherent part of how FNG does business. In pursuing growth as a strategic ambition, FNG is prepared to take risks in a responsible way taking account of the stakeholders’ interests.

• Operational: Depending on the type of operational risk, FNG takes a cautious to averse approach. FNG gives the highest priority to ensuring the safety of its employees and customers, delivering the highest level of service and protecting the company’s reputation.

• Financial: FNG pursues a conservative financial strategy, including a balanced combination of self-insurance and commercial insurance coverage.

• Compliance: FNG is averse to the risk of noncompliance with relevant laws or regulations, or noncompliance with own codes, contractual agreements, and covenants.

• Fraudulent and unethical behaviour: FNG and all associates are committed to acting with honesty, integrity, and respect. FNG is fully averse to risks relating to fraudulent behaviour and applies a zero-tolerance policy.

8. MAIN RISKS AND RISK MANAGEMENT


MAIN RISKSThe following risk overview highlights the main risks which might prevent FNG achieving its strategic, operational, and financial objectives. The risks described are not an exhaustive list of the risks FNG faces. There may be

additional risks which do not constitute a direct threat in the short-term, or risks which management deems immaterial or otherwise common to most companies, but which could at some time have a material adverse effect on FNG’s financial position, results, operations, or liquidity.

STRATEGIC RISKS

RISK DESCRIPTION RISK MANAGEMENT

Competitive environment and economic conditions

The environment and economic conditions in the fashion retail market are characterised by intense competition between existing players. Moreover, competition from online retailing companies are also disrupting the current retail market.

• Invest extensively in online retail platforms• Ensure geographic and brand diversification• Buy-and-build strategy to obtain synergies and lower the base costs

Political environment

The majority of the fabrication and purchases are done in foreign countries, such as Bulgaria, Turkey, China, India and Bangladesh. Changes in the political environment of these countries could impact the business of FNG.

• Ensure geographic and brand diversification• The use of own purchasing platforms in Turkey, India and Hong Kong

FINANCIAL RISKS


Financing and liquidity

Access to external financing is crucial for continuity. A liquidity risk could arise if external financing is not available to FNG when refinancing is required.

• Agree long-term loans• Enable early refinancing and a spread with different expiration dates

for external loans• Consult regularly with external debt providers to discuss the ongoing

business, results, and strategy

Interest rate risksFNG has a significant external debt subject to variable interest rates, thereby exposing the company to fluctuations in interest rates. A significant increase in variable interest rates would have a negative impact on results.

• Seek a mix of fixed and variable interest rates for financing operations, combined with the use of interest rate instruments

• Attempt to have at least half of the bank debt covered by interest rate derivatives with a maximum volatility per annum


OPERATIONAL RISKS


Safety and liability

Safety of FNG’s clients and employees are one of the top priorities of FNG. The risk exists that an employee or a client of FNG get harmed during the performance of his work or while visiting one of FNG’s stores.

• Adhere to health and safety procedures relating to employees and customers

• Invest in maintenance to ensure clean and secured stores• Training and development to focus on personal safety and

safety measures

Obsolete stockThe products of FNG are highly depending on trends in the market resulting in a risk of a high level of inventory which can’t be sold anymore.

• Ensure geographic and brand diversification• FNG wide exchange system of inventory• Own purchasing platforms in Turkey, India and Hong Kong• Stock take procedures and value assessments• Customer oriented marketing and discount campaigns

Interruptions and business continuityGiven the increasing use of mobile communication and the professionalism of cybercriminals, the company must focus constantly on continuity of ICT systems and on ensuring the security of crucial information and sensitive customer data (e.g. payment card details, passwords). The theft of crucial or sensitive data could result in reputation damage, information leakage to competitors, as well as claims against the company.

• Comply with PCI DSS (Payment Card Industry Data Security Standard)• Invest in ICT platform and related security policy• Centralise ICT systems allowing central enforcement of security measures• Take multiple measures to secure confidentiality and integrity of data

Fraud and integrityEthics and integrity are important conditions for confidence. The risk exists that unethical behaviour will result in loss of money and more-over in the loss of reputation.

• Implement code of ethics and whistle-blower policy• Ensure Executive Board and Board of Directors demonstrate

‘tone at the top’• Implement a zero tolerance strategy• Encourage non-cash payments

COMPLIANCE REPORTING RISKS


Financial statements do not give a true and fair view

If misstatements are made such that the financial statements do not give a true and fair view of the company’s financial position, financial performance, and cash flows, users of the financial statements would be incorrectly informed.

• Maintaining common accounting policies, reporting processes, and standard chart of accounts

• Monitor critical access and segregation of duties

Non-compliance with European and national lawsChanges in the legal and regulatory environment tend to increase the risk of non-compliance with local, national, and international laws and regulations, as well as tax legislation. Failure to comply with applicable regulations could lead to fines, claims, and reputational damage.

• Involve local external specialists where necessary (e.g. tax)


As a result of the swift technological advancement, the retail market is changing faster than initially expected. FNG focusses on innovation by investing in the improvement of technology, designing fashion and footwear and the branding and conceptual design of its stores.

FNG invested many of its financial means in the online platforms of the different concepts, artificial intelligence tools and efficient solutions, including the automated logistics platform. These investments give FNG a definite edge on the market.

Thanks to these investments, FNG can focus fully on knowing its customers and managing ‘big data’, which allows it to provide better and personalised services to its customers, such as segmented marketing campaigns (up to one-on-one segmentation), individual advertisements via websites, individual styling services, virtual stock which can be sold via different sales channels, individual delivery options for online sales, …

In addition, artificial intelligence algorithms are increasingly used to perform specific predictive tasks based on a large amount of data. The more data, the more accurate and relevant certain AI algorithms become which helps increase conversion rates or reduce the serving cost.

Initially data is converted into information. The data is used as information to support the design process and work methods in order to create the right product at the right moment, minimise discounts and maximise margins.

In the next phase, the information is converted into knowledge, when the data is analysed in real time. In recent years, FNG has used self-learning algorithms to profile customers during the shopping process in order to improve conversion rates. After a few clicks customers are being profiled or even recognised based on their “clicking behaviour”. This allows FNG to show or add relevant items during the shopping process.

9. RESEARCH AND DEVELOPMENT


Steps

fred + ginger


FNG does not have any branches.

11. BRANCHES

At the date of this report there are no exceptional circumstances capable of significantly influencing FNG’s development.

10. EXCEPTIONAL CIRCUMSTANCES


boutik by brantano


CORPORATE GOVERNANCE STATEMENT

FNG aims at high standards of corporate governance and uses as its reference code, the Belgian Corporate Governance Code of 12 March 2009.

On 22 June 2018, FNG has approved a new Corporate Governance Charter in order to describe the main aspects of its corporate governance policy. This Corporate Governance Charter shall be updated from time to time.

The Corporate Governance Charter deviates from the Corporate Governance Code on specific items. However, the Board of Directors is of the opinion that it is justified that the company does not adhere to certain principles of the Belgian Code on Corporate Governance, considering the nature and size of the company. Such deviations include:

• directors are appointed for a duration of 6 years instead of 4 years (principle 4.6);

• the Nomination and Remuneration Committee is currently composed of two non-executive directors and the CEO (principle 5.5);

• the Audit Committee is currently composed of two non-executive directors (principle 5.5);

• the Audit Committee should meet at least 2 times a year instead of 4 times a year (principle 5.2/28).

The Corporate Governance Charter is available on FNG’s website: www.fng.eu.

FNG has opted for a two-tier governance structure. The principal governance structure is based on a distinction between:

• the Executive Committee within the meaning of Article 524bis of the Belgian Company Code, which is in charge of the management (including daily management) of FNG, within the framework of the general strategy defined by, and under the supervision of, the Board of Directors;

• the Board of Directors, which is in charge of the definition of the general strategy of FNG, the supervision of the Executive Committee and the exercise of the specific powers attributed to it by the Belgian Company Code, the Articles of Association and the Corporate Governance Charter.

In addition, the Board of Directors has established an Audit Committee and a Nomination and Remuneration Committee. These committees have an advisory function. They assist the Board of Directors in specific situations, it being understood that the final decision making power remains with the Board of Directors.

The Board of Directors has delegated the daily management of FNG to a managing director (algemeen directeur), who is also referred to as the CEO.


1.1. POWERS AND RESPONSIBILITIESThe Board of Directors has the power to do all that is necessary or useful for the accomplishment of the purpose of FNG, except with respect to such matters which are reserved to the Shareholders’ Meeting or other competent corporate body by law or by the Articles of Association.

In particular, the Board of Directors is responsible for:

• approving and overseeing the principal objectives and strategy of FNG, as recommended by the CEO;

• appointing and dismissing the managing director(s), the CEO, the CFO and the Company Secretary and the members of the Executive Committee;

• determining the powers and responsibilities of the managing director(s), the CEO and the CFO;

• appointing and dismissing members of the board committees and their chair person;

• reviewing and approving the annual and half-yearly and consolidated financial statements, and where required by law, presenting those to the Shareholders’ Meeting;

• reviewing, evaluating and approving the budget, forecasts, major resource allocation and capital investments of FNG;

• monitoring and evaluating the performance of FNG against the strategic goals, plans and budgets, etc.;

• determining the structure, the powers and duties of the Executive Committee and to supervise and evaluate the Executive Committee’s performance;

• convening the Shareholders’ Meetings and submit resolutions for approval; and

• overseeing FNG’s policies with respect to corporate communications, it being understood that communication on behalf of the FNG to the outside world is reserved to the Chairman of the Board of Directors and the CEO, with the right of delegation.

With respect to its monitoring responsibilities the Board of Directors shall:

• review executive management performance and the realisation of the strategy of FNG;

• monitor and review the effectiveness of the board committees;

• take all necessary measures to ensure the integrity and timely disclosure of the financial statements and other material financial and non-financial information of FNG disclosed to the shareholders and potential shareholders;

• approve a framework of internal control and risk management set up by the executive management;

• review the implementation of this framework, taking into account the review made by the Audit Committee;

• supervise the performance of the external auditor and supervise the internal audit function, taking into account the review made by the Audit Committee; and

• describe the main features of the internal control and risk management systems of FNG.

1.2. COMPOSITION OF THE BOARD OF DIRECTORSIn accordance with the Articles of Association, the Board of Directors shall consist of a minimum of 3 directors.

In accordance with the provision of the Belgian Company Code, the directors are appointed for a term of no more than 6 years. The appointment and reappointment of directors is based on the Nomination and Remuneration Committee’s recommendation to the Board of Directors and subject to the approval of the Shareholders’ Meeting.

The majority of the directors is appointed amongst the candidates proposed by the Principal Shareholders (i.e. Mr Dieter Penninckx, Ms Anja Maes and Mr Emmanuel Bracke), for as long as they, individually or jointly, directly or indirectly through affiliated persons or companies within the meaning of Article 11 of the Belgian Company Code, hold at least 15% of the shares in FNG.

1. BOARD OF DIRECTORS

CKS


If the Principal Shareholders, individually or jointly, directly or indirectly through affiliated persons or companies within the meaning of Article 11 of the Belgian Company Code, hold less than 15% of the shares in the FNG, but more than 5%, they shall have the right to propose candidates for at least three directorships.

In accordance with the Corporate Governance Code, at least half of the directors must be non-executive directors and at least 3 directors must be independent, in accordance with the criteria for independence set out in the Belgian Company Code and Corporate Governance Code.

At the date of this report, the Board of Directors is composed as follows:

NAME ROLE INDEPENDENT EXECUTIVE TERM

Eric Verbaere Chair Yes No 2018 - 2023

Anja Maes Member No Yes 2018 - 2023

Emmanuel Bracke

Member No Yes 2018 - 2023

Roald Borré Member No No 2018 - 2023

Emiel Lathouwers

Member No No 2018 - 2023

Philippe Vandeurzen

Member Yes No 2018 - 2023

Gino Van Ossel Member Yes No 2018 - 2023

Elke Kestens Member Yes No 2018 - 2023

1.3. BIOGRAPHIES OF THE MEMBERS OF THE BOARD OF DIRECTORSMr Eric VerbaereMr Eric Verbaere (Belgian nationality) has a degree in economics (UG). For several years he was active in the corporate finance department of the University of Ghent (UG) and the Vlerick Management School in Ghent. After a stint at the National Investment Company and Leasinvest, he found his way to Investco, the investment company of the KBC Group, in the late ‘80. In 1993 he started his own independent consultancy firm, and in 1995 together with Guy De Clercq, he founded VD&P Corporate Finance. He is currently administrator of several companies in Belgium and abroad. Mr Eric Verbaere is the chair of the Board of Directors.

Mr Roald BorréMr Roald Borré (Belgian nationality) obtained a Master in Commercial and Financial Sciences, with a specialisation in Accountancy at the EHSAL Management School. He started his professional career in the investment world as a financial analyst at De Belegger NV and Mignon Hanaert Declerck. Three years later, he became Senior Fund Manager at Puilaeteco Dewaay Private Bankers (1999-2006). In the meantime, he co-founded a company active in e-commerce relating to sports and leisure (2004-2011). Mr Roald Borré is currently Head of Equity Investments for ParticipatieMaatschappij Vlaanderen (PMV). He holds various board mandates in a.o. Newtec (Innovation ICT), Biocartis (Diagnostica/life Sciences), High Wind NV, Capricorn Cleantech Fund and Kebony (Norway).

Mr Emiel LathouwersMr Emiel Lathouwers (Belgian nationality) is the founder of AS Adventures and reference shareholder of Le Pain Quotidien and Vendis Capital.

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Mr Philippe VandeurzenMr Philippe Vandeurzen (Belgian nationality) obtained a Master of Science in Materials Engineering (KUL) in 1993 followed by a PhD in Applied Sciences in 1998 (KUL). After working for three years in the petrochemical sector as a technical-commercial engineer at Petrofina NV and Total SA (1997-2000), he completed the Chartered Financial Analyst Program administered by CFA Institute in Charlottesville (USA), and followed the CEDEP Personal Development Program in Fontainebleau (France), while working as (senior) equity analyst for Fortis Bank NV. After his stint in the banking sector he turned his attention to the investment world, in which he has been active ever since, working for De Eik NV and its affiliates in various functions. Having started out as investment manager at De Eik NV, Mr Vandeurzen then became managing director at Belreal NV, a company which is part of De Eik Group. In 2012 he became CFO of De Eik NV, and in 2014 he accepted the position of CEO of De Eik NV, which he has held since then. In 2016, Mr Vandeurzen took time to complete the INSEAD Advanced Management Program at Fontainebleau (France) to further develop his leadership skills.

Mr Gino Van OsselMr Gino Van Ossel (Belgian nationality) is professor Retail & Trade Marketing at Vlerick Business School and is considered as an authority on retail management, purchasing behaviour and omnichannel.

In recent years, he has worked for AholdDelhaize, Akzo-Nobel, Bosch, Boulanger, Bpost, Brabantia, Carrefour, CBRE, Daikin, DPD, DS Smith Packaging, Euro Shoe Group, Eurocommerce, Galeria Kaufhof, Hoya, Ikea, ING, JBC, KBC, MediaMarkt, VF Corporation (Kipling, Timberland,...), Philips Avent, PostNL, Proximus, Q8, Steinhoff (Conforama), Shimano, Toyota, Unilever and Visilab.

Gino Van Ossel is non-executive director at FNG and Cryns Carrosserie Center. He is also on the board of the Dutch Trade Marketing Association and member of the advisory board of Sodexo Cards and Tribù, a global leader in high outdoor furniture.

He is a member of the jury of the European Omnichannel Award at the Global E-Commerce Congress in Barcelona. He sits also in the jury of the Mercury award (Comeos), and is chairman the Belgian Omnichannel award (RetailDetail).

In April 2014 he published the book “Omnichannel in retail” on how to deal with the digital retail revolution. It won both the “marketing book of the year” and “management book of the year” awards in the Netherlands.

Ms Elke KestensMs Elke Kestens (Belgian nationality) obtained a Master of Science in Mathematics and Statistics at the KU Leuven. She put her mathematical talents and insight into practice, first during her years as a researcher at the Centre for Statistics at the KUL (1997-2001), then as a statistical analyst at Proximus’ Market Intelligence Service (2002-2006), followed by a transfer into Proximus’ Marketing Division for Private Clients where she was active as a marketing analyst and advisor. Ms Kestens then turned her attention to management, training and coaching, first by managing the Incentive and Fraud Team of Proximus’ and Belgacom’s Indirect Sales Channel (2008-2010), then by leading the training division of Belgacom’s Sales Division, and the department “Commission” at Proximus’ Sales Division, respectively from 2010-2012 and from 2013-2015. Combining her mathematical and leadership training skills, Ms Kestens founded Modifez in 2015, a company specialised in change management, creative coaching and sustainable change.

The biographies of Ms Anja Maes and Mr Emmanuel Bracke have been included in the description of the Executive Committee.


2.1. EXECUTIVE COMMITTEEThe Executive Committee is composed of the CEO, who chairs the Executive Committee, and other members of the Executive Committee. Such other members are appointed and removed by the Board of Directors upon advice of the Nomination and Remuneration Committee.

In general, the role of the Executive Committee is to run FNG in accordance with the values, strategies, policies, plans and budgets endorsed by the Board of Directors. The Executive Committee shall be collectively responsible for the management and the general affairs of the business of FNG. In discharging its duties, the Executive Committee shall be guided by the interests of the FNG and its business; it shall take into account the relevant interests of all those involved in the FNG, including the shareholders. The Executive Committee is responsible for the quality of its own performance.

In the exercise of this role, the Executive Committee is responsible for complying with all relevant legislation and regulations, the Articles of Association and this Corporate Governance Charter.

The Executive Committee of the company consists of the 3 founders of the group:

NAME ROLE TERM

Dieter Penninckx CEO 2018 - 2023

Anja Maes Art Director 2018 - 2023

Emmanuel Bracke Operations Director 2018 - 2023

2.2. BIOGRAPHIES OF THE MEMBERS OF THE EXECUTIVE COMMITTEEMr Dieter PenninckxMr Dieter Penninckx (Belgian nationality) obtained a Master of Science in Civil Engineering, with a major in Mechanical and Electro-Technical Engineering at KU Leuven. During his engineering studies, he was also chairperson of VTK, the engineering students’ association. Mr Penninckx’ entrepreneurial drive manifested early, when he became co-founder of KULeuven spin-off companies in High Tech, until 2002. Deciding to further develop his business skills, he then obtained a second master degree in 2003, in Financial Economics this time (KULeuven). During the same year, he founded FNG, together with Ms Anja Maes and Mr Emmanuel Bracke. As CEO, he is responsible for the general management and administration of the group.

Ms Anja MaesMs Anja Maes (Belgian nationality) obtained a Master of Science in Civil Engineering, with a major in Architecture at KU Leuven. After her studies she completed an apprenticeship of two years and became a certified independent architect in 2002. In 2003, together with Mr Dieter Penninckx and Mr Emmanuel Bracke, she founded FNG, entering the world of fashion. As Art Director, Ms Maes is in charge of the creative side of the business, and oversees the collection development, design and marketing of the group.

Mr Emmanuel BrackeMr Emmanuel Bracke (Belgian nationality) obtained a Master of Science in Civil Engineering, with a major in Mechanical and Electro-Technical Engineering at KU Leuven. After his studies, he was active in the telecom sector and the IT sector for six years. During this period, he also obtained a Postgraduate in Business Management at the Antwerp Management School. In 2003, he founded FNG together with Ms Anja Maes and Mr Dieter Penninckx, changing sectors to the fashion world. In his position of Director of Operations of the group, he is in charge of production and distribution, IT and sales.

2. EXECUTIVE COMMITTEE AND CEO


2.3. CEOThe CEO (Chief Executive Officer), with the assistance of the other members of the Executive Committee, is responsible for the day-to-day management of FNG. He may be granted additional well-defined powers by the Board of Directors and shall in particular be responsible for:

• examining, analysing and proposing to the Board of Directors strategic business opportunities that can contribute to the further growth of the group;

• executing the decisions of the Board of Directors;• preparing proposals to the Nomination and Remuneration

Committee concerning the appointment, remuneration and evaluation of the members of the management team;

• setting up, chairing and leading the management team;• managing the members of the management team as

they discharge of their individual responsibilities, as determined by the CEO(s);

• determining the objectives to be achieved by the management;

• communicating with the outside world;• ensuring the day-to-day management of FNG

and accounting to the Board of Directors for such management at regular intervals;

• maintaining a continuous dialogue and interaction with the members of the Board of Directors in an atmosphere of openness and a climate of trust;

• maintaining excellent relationships with important customers, suppliers and the authorities;

• preparing proposals on topics for which decision-making is the preserve of the Board of Directors;

• meeting the Chairman of the Board of Directors at regular intervals, consulting him/her and involving him/her in strategic projects from the outset;

• providing the Board of Directors with all the possible relevant information it needs to exercise its powers.

The CEO leads the Executive Committee, which reports to him, within the framework established by the Board of Directors and under its ultimate supervision. The CEO chairs the Executive Committee.

The CEO is appointed and removed by the Board of Directors and reports directly to it.

CKS



3.1. AUDIT COMMITTEEThe Audit Committee supervises financial reporting and the observance of administrative, legal and fiscal procedures and the follow-up of financial and operational audits and advises on the choice and remuneration of the external auditor. The Audit Committee, which reports directly to the Board of Directors, has a supervisory and advisory role.

The Audit Committee advises the Board of Directors on accounting, auditing and internal controlling matters, and in particular:

I Informs the Board of Directors of the result of the statutory audit of the (consolidated) annual accounts and explaining how the statutory audit of the (consolidated) annual accounts has contributed to the integrity of the financial reporting and the role of the Audit Committee in such process.

II Monitors the financial reporting process and making recommendations or proposals to ensure the integrity of the process:

• the Audit Committee ensures that financial reporting gives a truthful, honest and clear picture of the situation and prospects of the company, on both an individual and consolidated basis;

• the Audit Committee checks the accuracy, completeness and consistency of financial information before it is announced;

• the Audit Committee assesses the choice of accounting policies and the impact of new accountancy rules;

• the Audit Committee discusses significant matters relating to financial reporting both with the executive managers and the external auditor.

III Monitors the effectiveness of the company’s internal control and risk management systems, as well as, if there is an internal audit, monitoring the internal audit and its effectiveness:

• the Audit Committee evaluates at least once a year the effectiveness of the internal control and risk management system installed by the executive management;

• the Audit Committee also examines the statements relating to internal control and risk management included in the Corporate Governance Statement of FNG;

• the Audit Committee investigates the specific arrangements to enable staff to express concerns in confidence about any irregularities in financial reporting and other areas (whistle-blower arrangements). The Audit Committee ensures that all the staff of FNG and its subsidiaries are aware of such arrangements;

• the Audit Committee decides on the appointment and dismissal of the internal auditor. The Audit Committee approves annual budgets and the internal audit budget. The responsibilities of the Audit Committee also include evaluation of the effectiveness of the internal audit function and the follow-up given by executive management to the findings and recommendations made by the internal auditor.

IV Monitors the statutory audit of the annual and consolidated accounts, including the follow-up on any questions and recommendations made by the external auditor:

• the Audit Committee supervises the relationship between FNG and the external auditor and makes recommendations to the Board of Directors concerning the selection, appointment, reappointment, dismissal and terms of engagement of the external auditor;

3. BOARD COMMITTEES


• the Audit Committee monitors the external auditor’s schedule and ensures the effectiveness of the external audit process. The Audit Committee examines the extent to which the executive management complies with the recommendations made by the external auditor in its management letter.

V Reviews and monitors the independence of the external auditor, in particular in the light of the provisions of the Belgian Company Code:

• the Audit Committee supervises the independence of the external auditor, in particular in the light of the provisions of the Belgian Company Code;

• the Audit Committee examines which additional (non-audit) services have been entrusted to the external auditor and the scope of such services. The Audit Committee determines and updates a formal policy with regard to the types of additional services that : a) are excluded; b) are permissible after verification by the Audit Committee and c) are permissible without being referred to the Audit Committee, taking account of the specific requirements of the Belgian Company Code.

VI Makes recommendations to the Board of Directors with regard to the appointment of the external auditor in charge of the statutory audit of the consolidated annual accounts:

• the Audit Committee supervises the relationship between FNG and the external auditor in charge of the statutory audit of the consolidated annual accounts and makes recommendations to the Board of Directors concerning the selection, appointment, reappointment, dismissal and terms of engagement of the external auditor in charge of the statutory audit of the consolidated annual accounts.

The Audit Committee reports to the Board of Directors regarding the performance of its duties at regular intervals, and identifies the matters where according to it action or improvement is required, and makes recommendations regarding the steps to be taken.

The Audit Committee consists of at least 2 members, appointed for a duration that may not exceed the duration of his/her directorship. All members of the Audit Committee are non-executive directors, with a majority of independent directors. The Chairman of the Audit Committee shall be appointed by the Audit Committee, but is not the Chairman of the Board of Directors. Executive directors (including the CEO) shall not be part of the Audit Committee.

At the date of this report, the Audit Committee consists of following directors: Mr Gino Van Ossel and Mr Eric Verbaere.

Both members of the Audit Committee have confirmed that they meet the criteria laid down in Article 526ter 1° to 9° of the Belgian Company Code, and that they act as independent directors.

The Audit Committee shall gather at least twice a year and each time it considers it necessary for the performance of its duties.

3.2. NOMINATION AND REMUNERATION COMMITTEEThe Nomination and Remuneration Committee makes recommendations to the Board of Directors on the appointment and remuneration of the members of the Board of Directors, and members of the Executive Committee, and shall in particular:

I for the purpose of appointments and assessments:

• prepare selection criteria and procedures for the appointment of members of the Board of Directors, the CEO(s), and the other members of the Executive Committee;


• review appropriate candidates for vacant directorships as proposed by the CEO(s) or a shareholder in accordance with the Articles of Association;

• review appropriate candidates for vacant top executive management positions as proposed by the CEO(s);

• prepare reappointment proposals;• periodically evaluate the size and composition of

the Board of Directors and, if applicable, prepare recommendations for changes to its size and composition.

II with respect to the remuneration policy :

• prepare proposals to the Board of Directors concerning the remuneration policy for directors, members of the Executive Committee and persons charged with the daily management of FNG, as well as, where appropriate, on the resulting proposals to be submitted by the Board of Directors to the Shareholders’ Meeting;

• prepare proposals to the Board of Directors concerning the remuneration of directors, members of the Executive Committee and persons charged with the daily management of FNG, including, depending on the situation, variable remuneration and long term incentives, whether or not stock related, in the form of stock options or other financial instruments and regarding

the arrangements on early termination, and where applicable on the resulting proposals to be submitted by the Board of Directors to the Shareholders’ Meeting.

The Nomination and Remuneration Committee comprises at least 2 members. All members of the Nomination and Remuneration Committee must be non-executive directors, a majority of whom must be independent, save for the CEO. The Chairman of the Nomination and Remuneration Committee shall be appointed by the Board of Directors and shall either be the Chairman of the Board of Directors or another non-executive director.

At the date of this report, the Nomination and Remuneration Committee consists of following directors: Mr Gino Van Ossel and Mr Eric Verbaere.

The Nomination and Remuneration Committee shall gather at least twice a year and each time it considers it necessary for the performance of its duties.

Brantano

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The Board of Directors attaches great importance to gender diversity within the Board of Directors, as well as within the whole group. The Board of Directors strives to have at least 30% of the directorships exercised by women.

At the date of this report, only two of the eight directors are of the opposite gender. The Nomination and Remuneration Committee strives to select both, men and women for the directorships in order to achieve the objective of having one third of the directorships exercised by women.

Within the Executive Committee, one third of the members are of the opposite gender. In the senior management positions, FNG also wants to achieve the right balance. Supported by the HR policy, a lot of attention goes to the improvement of employees and provide them with new career opportunities. In this way, a lot of woman have the ability to grow to higher management functions (see the declaration of non-financial information).

% women in the Executive Committee 33%

% women in the Corporate Management and Business Unit Management

43%

% women in the Management Teams of the business units 64%

Scope: all entities of the FNG group, except for the Henkelman group, calculated in FTE %, status 31/12/2018

The following table provides an overview of shareholders that have notified the FSMA in accordance with the applicable transparency rules.

NAMENUMBER OF

SHARES

% VOTING RIGHTS RELATED TO THE SHARES

Mr Dieter Penninckx, Ms Anja Maes, Mr Emmanuel Bracke and Mr Emiel Lathouwers, directly and indirectly via Greenway District BVBA, GW2 BVBA, MANco GDM BVBA and 3NG NV

5,100,951 45.54%

Belfius Insurance NV 565,625 5.05%

4. GENDER DIVERSITY

5. MAJOR SHAREHOLDERS


The internal control of the financial reporting shall be primarily performed by the Audit Committee. As set out above in the task description of the Audit Committee, it is their responsibility to monitor the financial reporting, the effectiveness of the internal control and risk management systems and the statutory audit of the (consolidated) annual accounts. The most important tasks entrusted to the Audit Committee related to the internal control and risk management, is to ensure the integrity of the financial reporting, ensure that the information gives a truthful, fair and accurate picture of the situation and prospects of the company and the group, ensure the consistency and completeness of financial information and assess the effectiveness of the internal control mechanism of the company. The Board of Directors supervises these activities.

Per country there is an internal auditor, entrusted with the investigation of potential fraud within the companies and ad hoc projects.

7.1. CAPITAL AND AUTHORISATION OF THE BOARD OF DIRECTORSThe subscribed share capital amounts to EUR 60,679,208.36. It is represented by 11,200,663 shares, without nominal value.

Not-fully paid-up shares are registered shares. Fully paid-up shares and other securities of the company are registered or dematerialised. Holders may at any time and at their own expense request the conversion of their securities into registered or dematerialised securities. Dematerialised securities are represented by recordation in an account, in the name of the owner or the holder, with a clearing house or a certified account holder.

Rights attached to the sharesThe shares shall be indivisible vis-à-vis the company. The company recognises only one owner per share. When a share belongs to bare owners and beneficial owners, all rights, including voting rights, shall be exercised by the beneficial owner(s). If one share has several owners, the company has the right to suspend the exercise of the rights attached to this share until one person is designated to the company as the shareholder. The same rule shall apply in the event of a split of the right of ownership of a share into bare ownership and usufruct (beneficial ownership), for whatever reason. In the event of disagreement between the successors or in urgent cases, the president of the commercial court may, at the request of one of them, appoint a joint mandatary. The heirs, successors and creditors of a shareholder cannot, under any pretext, instigate the sealing of the assets and securities of the company, nor ask for the distribution or auction of the social fund, nor interfere in any way with its management or administration. Voting rights relating to pledged shares shall be exercised by the owner-pledgor, unless the pledge agreement provides otherwise. These provisions shall also apply to any bonds, founder’s shares and warrants issued by the company. The rights and obligations attached to the shares shall remain attached notwithstanding any transfer thereof.

6. INTERNAL CONTROL AND RISK MANAGEMENT RELATING TO FINANCIAL REPORTING

7. DISCLOSURE STATEMENT IN ACCORDANCE WITH ARTICLE 34 OF THE ROYAL DECREE OF 14 NOVEMBER 2007


Authorised capitalThe Board of Directors is authorised for a period of five years from the date of publication in the Annexes to the Belgian State Gazette of the decision of the General Meeting of 20 November 2018, to increase the share capital one or more times up to an amount of EUR 60,679,208.36. This authorisation of the Board of Directors is also valid for capital increases effected through the incorporation of reserves. In addition to the issue of shares, convertible bonds and warrants, the Board of Directors may also decide to increase the capital by issuing non-voting shares, shares with preferential right to dividends and liquidation proceeds, and convertible shares which, under certain conditions, may be converted into a smaller or larger number of ordinary shares. This authorisation of the Board of Directors is renewable.

The Board of Directors is moreover entitled to restrict or cancel, in the company’s interest and provided the requirements of Article 595 et seq. of the Belgian Company Code are observed, the preferential subscription rights granted by law to shareholders, even in favour of one or more designated persons, who need not be employees of the company or of its subsidiaries.

On the occasion of a capital increase within the limits of the authorised capital, the Board of Directors can order the payment of a share premium. In this case, the premium must be booked in a non-distributable reserve which can only be decreased or cancelled pursuant to a decision of the General Meeting at which the quorum and majority required to amend the articles of association are met.

The Board of Directors is authorised to amend the company’s articles of association, in accordance with the capital increases which have been decided upon within the framework of the authorised capital.

In accordance with Article 607, §2, 2° of the Belgian Company Code, the General Meeting of 20 November 2018 has also expressly authorised the Board of Directors to increase the share capital in one or more times, as from the date on which the company receives notification from the Financial Services and Markets Authority that it has been notified of a public takeover bid on the securities of the company, by contributions in cash with the suspension or restriction of the preferential subscription rights of existing shareholders or by contributions in kind, and/or by the issue of securities with voting rights representing the share capital or otherwise, or of securities giving the right to subscribe or acquire such securities, even if such securities or rights are not offered preferentially to shareholders in proportion to the capital represented by their shares. In such cases, the transaction must meet the conditions set out in Article 607, §2, 2° a) to c) of the Belgian Company Code. This authorisation is granted for a period of 3 years from 20 November 2018, and is renewable.

Acquisition of own sharesThe company may acquire or dispose of its own shares or bonus shares or depositary receipts relating thereto in accordance with Articles 620 et seq. of the Belgian Company Code. The General Meeting of 20 November 2018 has expressly authorised the Board of Directors, in accordance with the provisions of Article 620 et seq. of the Belgian Company Code, to acquire its own shares, bonus shares or depositary receipts by purchase or exchange and transfer, without a prior resolution of the General Meeting being required, directly or through a person acting in their own name but on behalf of the company, or through a direct subsidiary within the meaning of Article 627 of the Belgian Company Code, if the acquisition or transfer is necessary to avoid imminent serious harm to the company. This authorisation is valid for a period of 3 years from the publication of this decision in the Annexes to the Belgian State Gazette, and may be renewed.

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The General Meeting of 20 November 2018 has also authorised the Board of Directors, pursuant to Articles 620 §1 and 622 §2 of the Belgian Company Code, to acquire the maximum number of shares by purchase or exchange, and transfer, directly or through a person acting in their own name but on behalf of the company, or by a direct subsidiary within the meaning of Article 627 of the Belgian Company Code, for a fee that may not be lower than 50% of the average closing price of the share during the previous 10 trading days, and that may not be higher than 150% of the average closing price of the share during the previous 10 trading days. The authorisation is valid for a period of 5 years from the date of the General Meeting of 20 November 2018, and may be renewed.

The Board of Directors is also authorised, in accordance with Article 630 §1 of the Belgian Company Code, to proceed, directly or indirectly, by a subsidiary or by a person acting in their own name but on behalf of that subsidiary or the company as defined in Article 630 §1 of the Belgian Company Code, to accept as a pledge the own shares, bonus shares or depositary receipts relating thereto in accordance with the conditions and duration set out above for the purchase and transfer of own shares. In accordance with Article 620 §2 of the Belgian Company Code, the company must, as long as it is listed or as long as its securities are admitted to trading on an MTF as referred to in Article 2, 4° of the Law of 2 August 2002 on the supervision of the financial sector and financial services, and insofar as it operates with at least one daily trade and with a central order book, notify the Financial Services and Markets Authority of acquisitions that it is considering pursuant to Article 620 §1 of the Belgian Company Code. The Board of Directors is also authorised to transfer the company’s shares in accordance with Article 622 §2, 1° of the Belgian Company Code.

7.2. TRANSFER OF SHARES, VOTING RIGHTS AND SHAREHOLDERS’ AGREEMENTSVoting rightsEach share carries one vote. The holders of bonds, convertible bonds and warrants may attend the General Meeting, but only in an advisory capacity.

Except in the cases provided for by law or these Articles of Association, the meeting shall deliberate and decide by a simple majority of votes cast, regardless of the number of shares convened at the meeting. Abstentions shall be deemed to be negative votes. In the event of a tied vote, the proposal shall be rejected.

Transfer of sharesThe shares are freely transferable.


Shareholders’ agreementFNG is not aware of any shareholders’ agreements that may result in a restriction of the exercise of voting rights connected to the shares.

In 2016, a shareholders’ agreement was entered into between Mr Penninckx, Ms Maes, Mr Bracke and Mr Lathouwers and a few companies directly or indirectly controlled by the aforementioned natural persons. This agreement related to their participation in 3NG NV, a company incorporated with the purpose of holding shares in FNG. The most important provisions of this agreement, restricting the transferability of the shares in FNG held by 3NG NV, can be summarised as follows:

• This shareholders’ agreement is concluded for a duration of 10 years and will be automatically renewed for 5 year periods;

• In accordance with the provisions of the shareholders’ agreement, 3NG NV is controlled by a board of directors composed of at most three directors appointed upon binding proposal from Mr Dieter Penninckx, Ms Anja Maes and Mr Emmanuel Bracke and one director appointed upon binding proposal from Mr Emiel Lathouwers;

• Any decision regarding a transfer of shares in FNG held by 3NG NV requires the approval of the majority of the directors, as well as the approval of (i) one director appointed upon proposal from Mr Dieter Penninckx, Ms Anja Maes and Mr Emmanuel Bracke and (ii) the director appointed upon binding proposal from Mr Emiel Lathouwers;

• After a 3 years and 6 months waiting period starting as of the conclusion of the shareholders’ agreement, Mr Emiel Lathouwers will have a put option right to sell the shares he directly or indirectly owns in 3NG NV to Mr Dieter Penninckx, Ms Anja Maes and Mr Emmanuel Bracke. Mr Dieter Penninckx, Ms Anja Maes and Mr Emmanuel Bracke will, as of the passing of Mr Emiel Lathouwers, have a call option right to buy the shares directly or indirectly held by him in 3NG NV.

The purchase price of the shares in 3NG NV will be equal to their fair market value. The average closing price of the company’s shares during a period of ninety trading days prior to the exercise date of the put/call option rights shall be deemed to be a good indication of the fair market value of the shares of 3NG NV.

7.3. AMENDMENT OF THE ARTICLES OF ASSOCIATION AND APPOINTMENT OR REPLACEMENT OF DIRECTORSAmendment of the Articles of AssociationThe General Meeting may only validly deliberate and adopt resolutions with respect to amendments of the Articles of Association, if the proposed amendments are reflected in the convocation and if the members present represent at least half of the share capital.

If the last condition is not fulfilled, a new convocation shall be required and the new meeting shall then validly deliberate and adopt resolutions, irrespective of the share capital represented by present shareholders.

An amendment shall only be adopted, if at least three-fourth votes in favour.

The registered office may be transferred to any other place in Belgium by simple decision of the Board of Directors, published in the annexes to the Belgian State Gazette, without amendment of the Articles of Association.


Appointment or replacement of directorsThe company is managed by a Board of Directors consisting of at least 3 directors, natural persons or legal entities, who need not be shareholders. They are appointed for a maximum term of 6 years by the General Meeting of Shareholders who may remove them at any time. Out-going directors shall be eligible for re-election.

The majority of the directors shall be appointed among the candidates nominated by Mr Dieter Penninckx and/or Ms Anja Maes and/or Mr Emmanuel Bracke (each a “Reference Shareholder”), as long as they hold, individually or jointly, directly or indirectly through persons or companies affiliated with them within the meaning of Article 11 of the Belgian Company Code, at least 15% of the shares in the company.

If the Reference Shareholders (individually or jointly, directly or indirectly through persons or companies affiliated with them within the meaning of Article 11 of the Belgian Company Code) hold less than 15% of the shares in the company, but more than 5%, they shall be entitled to nominate candidates for 3 director’s mandates.

7.4. CHANGE OF CONTROLEMTN ProgrammeFNG has launched, through its subsidiary FNG Benelux Holding NV, a EUR 100 million Medium Term Note Programme to issue notes in a flexible manner. The terms and conditions of the notes provide for the possibility for the holders of the notes to exercise a Change of Control Put Option (as defined in the Offering Memorandum) if the founders no longer control FNG Benelux Holding NV (controlled by FNG). Meaning that FNG Benelux Holding NV shall redeem the notes from the holders for an amount calculated in accordance with the terms and conditions of the notes.

Club DealIn the framework of (re)financing the group, FNG Holding NV, an indirect subsidiary of FNG, entered into a new credit facility with BNP Paribas Fortis as Coordinator, Security Agent and Agent and BNP Paribas Fortis, ING Belgium, ABN AMRO Bank and Belfius Bank as Original Lenders (the “Club Deal”), on Wednesday 28 February 2018. Under this credit facility, credit facilities for an amount of EUR 240,000,000 were made available. This agreement contains a change-of-control clause providing that all credit facilities under this agreement shall be redeemed early.

Mezzanine LoanOn 29 March 2016, R&S Finance B.V. (now named Miss Etam Holding B.V.), as borrower, Mezzanine Partners 1 Comm.VA, as lender, and R&S Retail Group N.V. (now called FNG NV) as the parent company, entered into a subordinated loan for a principal amount of EUR 10,000,000, with a maturity date of 31 December 2020 (the “Mezzanine Loan”). On 17 October 2016, R&S Finance B.V. transferred all of its rights and obligations under the Mezzanine Loan to FNG International Holding NV, pursuant to the provisions set out in the Transfer and Accession Agreement entered into between R&S Finance B.V., FNG International Holding NV, FNG NV and Mezzanine Partners 1 Comm. VA on 17 October 2016. If the loan is not solely used for the purposes agreed with the lender or in case of a change of control over Miss Etam Holding B.V. or FNG NV, the lender will have the right to require an early repayment of the outstanding principal amount of the loan, including interest accrued, until the early repayment date.

Brantano



REMUNERATION REPORT

1. REMUNERATION OF DIRECTORS

Only the non-executive directors shall receive a remuneration for the fulfilment of their office of director.

The non-executive directors (including the independent directors) cannot receive a performance related remuneration in their capacity as director. Upon advice of the Nomination and Remuneration Committee, the Board of Directors may propose to the Shareholders’ Meeting to deviate from the latter principle in case in the reasonable opinion of the Board of Directors the granting of any performance related remuneration would be necessary to attract or retain independent directors with the most relevant experience and expertise.

Notwithstanding the above, all directors (including those who are not independent) may be granted warrants issued by FNG.

The Nomination and Remuneration Committee recommends the level of remuneration for directors, including the Chairman of the Board of Directors, subject to approval by the Board of Directors and, subsequently, by the Shareholders’ Meeting.

The Nomination and Remuneration Committee benchmarks directors’ compensation against peer companies to ensure that it is competitive.

The Board of Directors sets and revises, from time to time, the rules and level of compensation for directors carrying out a special mandate or sitting on one of the Committees and the rules for reimbursement of director’s business related out-of-pocket expenses.

During the financial year ended on 31 December 2018, the remuneration of non-executive directors was determined as follows:

• the remuneration for the Chairman of the Board of Directors was set at 4,000 EUR per meeting

• the remuneration for other members of the Board of Directors was set at 2,000 EUR per meeting

• the remuneration of non-executive directors for the performance of their mandate as member of the Audit Committee was set at 1,000 EUR per meeting, and for the Chairman at 2,000 EUR per meeting

• the remuneration for non-executive directors for the performance of their mandate as member of the Nomination and Remuneration Committee was set at 1,000 EUR per meeting, and for the Chairman at 2,000 EUR per meeting

Directors who are at the same time member of the Executive Committee do not receive any remuneration for their membership in the Board of Directors.


The agreements entered into with the CEO or with members of the Executive Committee should mention the criteria applied to determine the variable remuneration, if any. Unless expressly approved otherwise by the Shareholders’ Meeting, in cases where the variable remuneration relates to more than one-fourth of the annual remuneration, at least one-fourth of the variable remuneration granted to the CEO and the members of the Executive Committee should be based on predetermined and objectively measurable performance criteria over a period of at least 2 years, and at least another one-fourth should be based on predetermined and objectively measurable performance criteria over a period of at least 3 years.

In the management agreements concluded with Mr Dieter Penninckx, Ms Anja Maes and Mr Emmanuel Bracke, no provisions were adopted with respect to a variable remuneration. In case of early termination of the agreements entered into with the aforementioned persons, the severance pay may not exceed twelve (12) months of basic remuneration.

The compensation for directors for the performance of their mandate as member of the Executive Committee was set at 1,000 EUR per meeting, and for the Chairman at 2,000 EUR per meeting.

The total gross remuneration that was paid to the members of the Executive Committee and CEO, including the compensation received by the other companies that are part of the group, can be explained as follows:

Executive Committee and CEO (per person, in EUR)

Basic remuneration 225,000

Variable remuneration 0

Pensions 0

Other benefits 0

It is not expected that the remuneration policy for executive and non-executive directors shall deviate substantially the upcoming years.

2. REMUNERATION OF THE CEO AND MEMBERS OF THE EXECUTIVE COMMITTEE

Promiss



NON-FINANCIAL INFORMATION STATEMENT

1. HOW FNG INCORPORATES CSR INTO ITS ORGANISATION

FNG is aware of the potential impact of the clothing and shoe industry on society and the environment. In this regard, FNG has identified 2 trends in its dialogue with consumers. On the one hand, consumers are more aware of the societal impact of their lifestyle and purchasing behaviour. FNG sees that consumers attribute a portion of the responsibility for encouraging sustainability to the product manufacturer and distributor. On the other hand, consumers also expect the products they wish to acquire to be available faster and with the highest level of service, via their preferred channel.

Faced with this playing field of challenges, FNG has developed a CSR (Corporate Social Responsibility) policy. The policy sets out the company’s ambition of playing a strong role on today’s retail landscape, in which CSR principles are deeply rooted in business processes and corporate culture.

The policy aims to bring products to customers in a correct, fair and environmentally friendly way, with respect for the people who invest their time and energy in the FNG organisation. For example, FNG strives to ensure well-being at work for both direct and indirect employees, focuses on reducing its ecological footprint, and wishes to inspire all actors in the fashion and footwear sector to strive for a more liveable society.

Thanks to FNG’s general business strategy (p.20), the group has a number of cards it can play to strengthen the effects of its CSR policy.

• Its comprehensive optichannel approach provides a unique opportunity for the group to distinguish itself. The combination of innovative web platforms, supported by artificial intelligence technologies, and a vast network of physical sales, pick-up and return locations ensures that FNG can carve out a unique niche for itself on the retail market. In addition, this approach also ensures that FNG can reduce its ecological footprint through lower returns and more efficient delivery procedures. In shops, the customer experience is further enhanced through adherence to heightened service levels.

• A second trump card is the larger percentage invested by FNG in premium segmentation. The company focuses on producing and purchasing higher quality goods. FNG is committed to extending the life of the products it sells to consumers and provides consumers with tips on how they can enjoy the goods they purchase for longer.


1.1. CREATING ADDED VALUE THROUGHOUT THE VALUE CHAINFNG has an extensive portfolio of brands. In order to maximise synergies between the various parts of its organisation, the group has created its own business methodology, known as “the way we work”.

All brands follow the same business processes and measure their results on the basis of the same KPI’s for the styling, buying, production, distribution, merchandising and marketing of products. Each brand or concept is supported by shared services responsible for financial management, logistics, ICT services, HR and facilities.

FNG’s CSR policy is applied throughout the entire value chain, as a result of which FNG is able to firmly embed principles of sustainability within its organisation. These ideas are transmitted by the employees, and FNG can also make a difference in cooperation with its partners at home and abroad.

The CSR policy is based on 5 pillars which can be linked to the UN’s Sustainable Development Goals:

Styling Buying & production Sales Marketing

Shared services (Logistics, Finance, IT, Facilities, HR)

Merchandising

PEOPLE FNG cares about its employees, regardless of whether they work

directly for FNG or indirectly contribute to the creation of its

products.

PRODUCTS FNG guarantees a

quality product which is manufactured, checked

and delivered to consumers in accordance with high

standards.

ECONOMIC LEVERS

FNG seeks out innovations that lead to a better client experience

and greater transparency and consumer protection. These

initiatives and innovations can reduce the negative impact on

people, animals and nature.

SOCIETY Society in Europe and our production countries: FNG

wishes to contribute to a better society through informing and

giving back.

THE ENVIRONMENT FNG strives to reduce its ecological footprint throughout the entire value chain and thus to minimise its impact

on human beings, animals and the environment.


1.2. GOVERNANCE WITH IMPACTIn order to enhance the impact of its CSR policy, in particular in relation to the themes of people and high-quality products, FNG invested in 2018 in a CSR coordination structure. Due to the presence of CSR

coordinators and staff at FNG head offices and local buying offices, FNG maintains physical proximity with the people that make the products and bring them to the market and can thus oversee the quality of the products at close range.

SPAINSALES OFFICE

THE NETHERLANDS(SALES) OFFICE & WAREHOUSE

GERMANYSALES OFFICE & WAREHOUSE

TURKEYLOCAL BUYING

OFFICE

INDIALOCAL BUYING

OFFICE

CHINALOCAL BUYING

OFFICEBELGIUM

(SALES) OFFICE & WAREHOUSE

FNG CORPORATE CSR

CSR CORPORATE POLICY ADVISOR

CSR MANAGER NL CSR MANAGER BE

CSR COORDINATOR BE

CSR LOCAL OFFICE

CSR COORDINATOR EXPRESSO / CLAUDIA

STRÄTER

LOCAL CSR OFFICER TURKEY

CSR COORDINATOR STEPS

LOCAL CSR OFFICER CHINA

CSR COORDINATOR MISS ETAM

LOCAL CSR OFFICER INDIA


1.3. WHAT REALLY MATTERS FOR OUR FUTUREIn October 2018, FNG published its first sustainability report, relating to financial year 2017. For financial year 2018, the CSR report is integrated into the annual report, which covers all FNG brands and concepts. If a concept has not been measured against a specific KPI, this is further explained in the relevant section. The report contains no information about the Henkelman group, which was not taken over by FNG until the end of December.

For its first full-fledged CSR report, FNG applied the reporting standards of the Global Reporting Initiative (GRI). This method makes it possible for stakeholders to gain objective insight into FNG’s sustainability policy. The first integrated annual report was prepared in accordance with the GRI Standards core option. In reporting year 2018, FNG developed new reporting models which it wishes to further expand on in 2019.

FNG has already performed a materiality analysis for 2018. The aspects material for FNG were first determined. To this end, a selection of topics relevant to FNG was made from a general set of topics (GRI, UN SDGs, international sector peers, etc.). Next, the longlist topics were rated based on their importance and influence, from the perspective of both FNG and external stakeholders. The report highlights those topics that received the highest scores and therefore consistently a score above 5 on a scale of 10, from the perspective of stakeholders and with regard to their influence on FNG’s business.

The following GRI reference table can be consulted on page 93 of the report.

FNG 2018 Materiality Matrix

Recruitment, development and retention of employees

Energy consumption

Product design and development

Customer satisfaction

Screening of suppliers (human rights)

Sustainable marketing and consumer communication

Transparency and traceability of the supply chain

Product quality and safety

Relationship with stakeholders

Waste management

Charities

Employee well-being, health and safety

Communication and transparency

Purchasing strategy and policy

Transport emissions

A

B

C

D

E

F

G

I

J

K

L

M

N

O

H

55

6

7

8

9

10

6 7 8 9

IMPO

RTA

NC

E FO

R S

TAK

EHO

LDER

S

INFLUENCE ON THE SUCCESS OF THE BUSINESS

AB

C

D

E

F

GI

J

K

L M

N

O

H


1.4. 2018 HIGHLIGHTS• Positive Fair Wear reports, in which the new affiliated

brands were praised for their in-depth insight at supplier level. Points to be worked on in 2018 were also clearly stated

• Adherence to the Agreement on Sustainable Garments and Textiles

• Communication about our sustainability policy• Opening of new shops with a high sustainability grade• CSR meeting with local CSR staff in Diemen• Start with the development of a CSR label


2.1. FNG RESPECTS THE PEOPLE WHO CONTRIBUTE TO THE VALUE CHAINAs a major player on the Belgian and Dutch retail landscape, with multiple functions throughout our value chain, FNG can offer opportunities to many people but is also responsible for ensuring the safety, satisfaction and wellbeing of the employees and providing them with development opportunities.

In addition, FNG recognises its role as a driving force in the pursuit of better working conditions for the people responsible for making our products, both at home and abroad.

2.1.1. The health, safety and happiness of the employeesEmployee well-being, health and safetyA healthy working environment and conditions and good health care for our employees are paramount for FNG as happy and healthy employees are the engine that drives our organisation. That’s why FNG keeps an eye on the mental and physical well-being of all employees.

First of all, it should be noted that FNG is bound by legislation intended to ensure employee safety at the offices, logistics centres and shops in Belgium and the Netherlands. More specifically, this concerns the occupational health and safety legislation (NL) and the general employee welfare act of 1996 (BE). In the context of these obligations, training for employees is provided in both the Netherlands and Belgium. At the foreign offices as well, local rules and regulations are respected.

The risks to which employees are exposed in the performance of their work are identified, assessed and, in accordance with the hierarchy of control, eliminated or checked as completely as possible. For locations that present the most substantial risks, such as the distribution centres (DC), there is a strong focus on thorough health and safety monitoring in the workplace. At the shops and head offices, the focus is on follow-up of the topics mentioned in the aforementioned legislation. Ad hoc assessments are used for secondary prevention to solve problems as quickly as possible. Continuous improvement of the safety policy is also pursued.

It is important that the policy be actively implemented which is why additional efforts are made at various levels to ensure a people-driven prevention policy, by and for employees.

In 2018, the necessary checks and prevention exercises were carried out at the offices, shops and DCs.

In order to ensure the safety of staff while travelling, FNG entered into a permanent partnership with a travel agency in 2018. Thanks to this cooperation, FNG is always aware of where its employees can be found and can act quickly should assistance be required.

But FNG wants to go a step further which is why, in addition to legally required actions, it has implemented within its organisation supplementary employee welfare-oriented initiatives.

In both Belgium and the Netherlands, employees have the option to discuss stress or other work-related concerns. In Belgium, FNG started self coaching sessions in 2016, aimed at all head office employees. In four half-day sessions, employees learn how to manage stress, think creatively and positively, deal with time constraints, establish a good energy balance, achieve goals and sleep more soundly.

FNG also wishes to involve employees in the general goings on of the organisation. Thus, information sessions are organised several times per year for office staff. These are usually combined with an activity aimed at bringing into contact employees from various departments, brands and concepts.

Following the example of the Dutch offices, a healthy lunch buffet was introduced in 2018 for office staff in Belgium. In both countries, the focus is on fresh food, homemade soup and a wide variety of fruit. The prices of “unhealthy” vending machine products were raised in 2018, in order to encourage employees to drink water and eat fruit, both of which are offered for free.

2. HOW FNG IMPLEMENTS ITS CSR POLICY IN PRACTICE AND THE RESULTS THEREOF

fred + gingerBrantano


In order to boost the physical fitness of employees, various activities are offered such as yoga classes and a fitness boot camp. These were organised for the first time in 2018 and will be continued in 2019.

In Belgium, employees have the possibility to receive the flu vaccine.

Talent development, training and recruitmentMultiple interviews with employees show a great need for personal development and promotion opportunities. FNG therefore focuses on projects that help employees grow. Employees who wish to do so are encouraged to advance in their career or to grow within their current position.

For example, the HR departments organise evaluation sessions for employees. These are prepared by the employees and their managers with the support of HR. In this regard, the practice of talent mapping plays an important role. In this way, the organisation learns about the potential of its personnel, while managers can identify an employee’s growth path. For this reason, FNG encourages continuous learning.

In all countries, there is a strong focus on training shop staff. For all brands, sales training is organised for shop managers and team coordinators. They are trained in sales techniques, conversion marketing, customer approach, etc. Shop staff also receives intensive sales training on location at least twice a year. In addition, they receive continuous training in shops by coaches, shop managers and regional managers. In the Netherlands, an engagement app is used to connect employees and improve internal communication. A multitude of information can be shared via the app which was implemented throughout the entire Dutch network of shops in the course of 2018. In Spain, an English language course is offered to shop staff in order to serve non-Spanish speaking customers more efficiently.

Training is also provided at the DCs. For example, more than 100 employees are enrolled in the 5S training programme at the logistics centre in Zoetermeer.

5S stands for Sort, Set In Order, Shine, Standardise and Sustain. This programme forms part of the lean philosophy; its objective is to enhance efficiency and improve quality within the DC. In addition, it leads to greater safety at work and job satisfaction. In Belgium, a similar programme was organised within the DC and several training sessions were provided on safety and prevention (Sirk Sekuur, learning and encouraging safe behaviour, psychosocial risk analysis, first-aid training, safety walkabouts by the internal and external services for occupational health and safety).

Finally, learning opportunities are also provided at head offices. These occasionally take place externally, but can also be aimed at the sharing of information between various brands and concepts. In this way, the teams working on digital transformation regularly come together to share knowledge and good working practices.

FNG has undergone major changes in recent years, owing to the integration of new brands and concepts. In 2018, the HR teams worked intensively on practices to render flows between different brands and concepts possible. In this way, FNG retains talent within the organisation and prevents the need to continuously recruit new talent externally, with the corresponding costs and exit of knowledge this entails. For example, when a vacancy is posted, it is always discussed whether an internal candidate could have the right profile for the position.

When external employees are recruited, the departments involved use proboarding and onboarding modules and processes so that the new employees quickly feel at home in their new environment. The new employees receive a practical FNG information guide, attend an HR introduction presentation, are given a tour of their new workplace, provided by the IT team with all necessary tools and have a follow-up interview with an HR officer, three months after their start date. In the training process for new employees, additional emphasis is placed on cooperation in shops. As employees of a sales-driven organisation, new co-workers form part of a dynamic corporate culture and are able to familiarise themselves immediately with the work processes.

Brantano


During the recruitment process of new employees, great importance is attached to the applicant’s fit with FNG’s values.

In 2018, the General Data Protection Regulation (GDPR) entered into force. The HR departments adapted their work processes and communication lines for applicants and employees to the stricter privacy rules through the introduction of secure software systems. This also resulted in the more efficient handling of incoming applications.

Gender and diversityWithin its organisation, FNG does not tolerate any form of discrimination based on gender, age, race or religion. Everyone has similar opportunities. Established and reported violations of this policy are dealt with adequately and correctly.

No complaints regarding discrimination by employees or applicants were recorded in 2018.

In 2018, no targets for gender and age distribution were applied. FNG notes that the male-to-female ratio varies within the organisation and attributes these differences to the nature of the activities performed. At management level, the male-to-female ratio is 43%. This includes members of the Corporate Management Team and the Business Unit Managers responsible for daily management of the brands and concepts.

In 2019, FNG will not apply quotas within departments based on gender, age, race or religion but rather focus on the personal development of employees and ensuring equal opportunities for everyone. In recent years, it has been proven that a strong focus on the personal development by employees of their talents has enabled several women to advance and become members of the Management Teams of Business Units or Business Unit Managers.

HEADCOUNT 2017 2018

Number of persons working at FNG offices in Belgium, the Netherlands, Spain and buying offices 640

Number of persons working at shops and shops-in-shops 2,508

Number of persons working at the distribution centres in Zoetermeer and Erembodegem 155

Total number of employees (FTE) 3,298 3,303

FULL-TIME EQUIVALENTS (FTE) 2018

Employees working at FNG offices in Belgium, the Netherlands, Spain and buying offices 559

Employees working at the shops and shops-in-shops 1,649

Employees working at the distribution centres in Zoetermeer and Erembodegem 137

Total number of employees (FTE) 2,345

SOCIAL DIALOGUE 2018

% of the total workforce (FTE) that falls under a collective bargaining agreement 86%

Scope: all employees working for FNG on 31/12/2018, excluding Henkelman


TRAINING 2018

Minimum number of training days for shop staff in 2018 (excluding on-site training in shops) 2

Minimum number of training days for CSR employees 2

Training at DCs: health and safety, first aid, Lean (5S training) 2

GENDER 2018

% of women on the Board of Directors 25%

% of women on the Executive Committee 33%

% of women in Corporate Management and Business Unit Management 43%

% of women in Management Teams of the Business Units 64%

% of women working at FNG offices in Belgium, the Netherlands, Spain and the buying offices 76%

% of women working at FNG's in-house distribution centres 39%

% of women working at shops and FNG managed shops-in-shops 98%

Total % of men (FTE) 11%

Total % of women (FTE) 89%

Scope: all FNG structures, excluding Henkelman, calculated in FTE % as of 31/12/2018

AGE 2018

Distribution by age category <30 years 30-50 years > 50 years

Employees working at FNG offices in Belgium, the Netherlands, Spain and buying offices

25% 57% 18%

Employees working at the shops and shops-in-shops 19% 56% 25%

Employees working at the distribution centres in Zoetermeer and Erembodegem 25% 48% 26%

Scope: all FNG structures, excluding Henkelman, calculated in FTE % as of 31/12/2018

2.1.2. The wellbeing of those who manufacture the productsAs part of FNG’s sustainable purchasing policy, social and environmental factors are taken into account in the decision-making process. Suppliers are thus evaluated using a scorecard that examines their quality, delivery times, craftsmanship and sustainable business practices. It is in part the responsibility of FNG to encourage its suppliers to make improvements to these parameters.

All suppliers with which FNG works are expected to adhere to FNG’s Code of Conduct. To support the Code of Conduct, FNG uses a number of tools to implement, monitor and improve this policy. For example, FNG has entered into multiple commitments with partners such as the Fair Wear Foundation, the Dutch Sustainable Clothing and Textile Agreement, BSCI (Business Social Compliance Initiative) and MODINT (business network for the manufacturers, importers, agents and wholesalers of clothing, fashion accessories, carpets and textiles).

In 2017, FNG launched intensive screening of suppliers at the group level. Previously, FNG brands had already actively audited suppliers. In this regard, social audits are performed by both external and internal auditors in the production countries, where aspects of the FNG Code of Conduct are checked. Where violations are established, corrective actions plans are prepared and implemented by the local CSR officers or external partners. An absolute priority in this regard is the screening of countries where there is a higher risk of violations. The CSR officers share this information with all those involved at the head office and, together with our buyers, act as ambassadors of FNG’s vision and values. They are also responsible for the training of employees at suppliers, creating awareness and working together with factory management to implement cor-rective action plans (CAPs). After the preparation of a CAP, a follow-up visit is always organised.


For example, a partnership may be terminated if it appears that the supplier is not prepared to take action against violations or does not guarantee sufficient transparency. If a supplier is willing to cooperate intensively on improvements, even though the action list is long, it is FNG’s policy to support it with guidance and time investment. This is based on the conviction that, in this way, FNG can bring about positive change, which it regards as its responsibility.

FNG’s recent experience demonstrates that suppliers are becoming significantly more familiar with corporate social responsibility. In 2017, despite the very recent affiliation of Fair Wear Foundation and BSCI, FNG was able to monitor a high percentage of its clothing suppliers. This trend continued in 2018, reaching a total percentage of 85% of own brands, compared to 64% in 2017. In 2018, FNG also succeeded in screening a large percentage of shoe producers falling under the Brantano umbrella. With the launch of Brantano Market and boutik by brantano, more external brands entered the FNG organisation. A policy was developed in this regard and shared with the suppliers of these products, with a focus on the topics covered by the Code of Conduct as well as on the quality of the goods purchased. The audits covered the first-line suppliers of CKS, Fred & Ginger, Ginger, Miss Etam, Claudia Sträter, Baker Bridge, Expresso, Steps, Promiss, Limon and Superstar in Turkey, India, China and Bangladesh. Suppliers for the Brantano private labels, Steps and Miss Etam outside these countries were screened but are not included in the report. Second-line suppliers were monitored by CSR employees, but are not yet included in the report.

2017

2018

Overview of % of social audits carried out in 2017 and 2018

36%

59%

5%

No audit performed

Audits by external auditors

Audits by own CSR auditors

15%

38%

48%

Code of Conduct FNG


Following all legal requirements

No forced labour

Legal work contracts

Freedom to join a union

No child labour

No discrimination

Fair treatment of employees

A safe and healthy workplace

A fair remuneration policy

Environmental and product safety

Animal welfare

CKS


In order to better address potential problems in the supply chain, FNG’s CSR team has developed a country-related risk matrix. This tool is based on various country studies and uses as its starting point all generally known problems at the level of a production country. This information is further supplemented by local CSR officers with audit testimony. Thanks to this matrix, FNG can better detect and measure risks and problems and define actions plans.

The following sections describe the results of the screening for most topics covered by the Code of Conduct. Screening covered all own production suppliers for Miss Etam, Superstar, Limon, Baker Bridge, CKS, Fred & Ginger, Ginger, Steps, Claudia Sträter, Expresso and Promiss. If no information was available for a certain brand, this is indicated. The information is based on internal and external audit reports. The reporting relates to all audits carried out in 2018. If an external audit took place in 2017 but is valid for 2 years, it is also included in the report, provided a follow-up visit took place in 2018.

When screening for discrimination in the workplace, equal opportunities and treatment are monitored regardless of race, colour, gender, religion, etc. with reference to the International Labour Organisation (ILO) Conventions 100 and 111. Specific attention needs to be paid in Turkey to the correct treatment of Syrian refugees. No major incidents of discrimination were reported in 2018. In 2019, the CSR officers wish to focus on better informing suppliers of the substantive significance of the anti-discrimination policy. In this way, they can in turn evaluate their own sub-suppliers.

When screening for violations of the prohibition on child labour, it is first checked whether the factory in question has a policy to check the age of its employees. Factories may not perform background checks of potential employees before they are engaged. Lack of age verification is often a problem in Turkish factories, but fortunately this is also easy to solve. FNG urges its partner factories to request and collect a copy of an identification document prior to hiring a new employee.

By means of these actions, rapid improvements are being made for the benefit of workers. The reported incidents mainly relate to a lack of age screening.

Forced labour is also a subject to which keen attention is paid. No violations were found, but the auditors remain vigilant to the possibilities of such issues arising. For example, suppliers may not be able to submit a clear contract management policy. In China, there are known practices that relate to not paying wages during holiday periods, for fear that the employee could change employer in the meantime. Such practices were not established in 2018.

The rules on trade union representation and collective bargaining differ in the various countries where FNG purchases the largest volumes. Although no major incidents were reported in 2018, the auditors provide specific advice per country. In China, for example, trade unions are prohibited, but the factories are encouraged by the auditors to appoint employee representatives and to provide procedures for communication between employees and the employer. In Turkey, trade unions are not required if fewer than 50 people are employed, but the auditors encourage the establishment of a work committee with a focus on safety at work. In India, trade unions are allowed and suppliers are advised to improve their procedures for the election of employee representatives, to document them properly and to ensure regularity.

The risks also differ when checking payment of the statutory minimum wage. In China in particular, wage calculation and observance of the guarantee that workers receive a correctly calculated minimum wage must be monitored. In the corrective action plans, advice is mainly given on the correct calculation of work per hour, rather than per item, and the correct application of overtime. The CSR teams therefore always investigate whether recourse is had to overtime, caused by a shortage of labour, systematically or only during peak periods. Discussions are also held with factory management on how overtime can be avoided, even during peak times.


The production process for fashion and shoes can involve risks to the health and safety of those who make these products. FNG believes that many problems can be easily resolved and avoided in the long term through mutual support and a commitment to implementing corrective action plans. FNG has learned that many irregularities at production locations are caused by a lack of information and insufficient knowledge of the design. The role of the local CSR officer is therefore to train both local management and employees through regular factory visits and to share experience and expertise in the field of health and safety. Most of the violations, which were found mainly in India in 2018, could therefore be discussed and resolved quickly. These concerned, for example, the blocking of passages, the non-use of safety equipment although present, etc. A serious incident occurred at a supplier whose factory suffered serious damage. During the follow-up visit, the problem was checked and found to be resolved.

% of established violations of the Code of Conduct for which corrective action plans were prepared across all audits and countries.

Scope: CKS, Fred & Ginger, Ginger, Baker Bridge, Expresso, Claudia Sträter, Limon, Superstar in all countries + Miss Etam, Steps & Promiss in India, Turkey, China and Bangladesh

2.2. PURSUIT OF A SUSTAINABLE PRODUCT 2.2.1. Promote the use of sustainable materialsFNG is not only committed to avoiding the adverse effects that can result from the manufacture of its products but goes one step further and focuses on creating a positive social and environmental impact which leads to a cleaner textile industry. For this purpose, FNG provides all suppliers with its product policy, in which the guidelines, requirements and preferences for the ethical procurement of (sustainable) materials are described. This policy is available to the public on FNG’s website (http://www.fng.eu/wp/wp-content/uploads/2017/05/FNG-Corporate-Product-Policy-Dutch-G.pdf).

The policy describes the guidelines, requirements and preferences for the ethical purchase of (sustainable) materials. It contains a list of prohibited materials, including real fur, exotic animal skins (alligator and snake), angora, etc. In addition, recommendations for the use of sustainable materials and accompanying certification (e.g. organic cotton and recycled polyester) are added. At the end of 2018, the Dutch and Belgian teams, partly as a result of adherence to the Dutch Sustainable Clothing and Textile Agreement, developed a roadmap to take even greater steps to exclude and encourage the use of certain materials across the various FNG brands.

Several projects were carried out in 2018 on which the design and purchasing teams worked together to encourage and increase the use of sustainable materials. Thus, the complete basic knitwear collection of Miss Etam is made from organic cotton. In 2018, all Dutch brands agreed to work with the Vision project. The brands brought to market a number of items of clothing made from recycled polyester, made from PET bottles collected along the Chinese coast.

Non-respected working hours

Health and safety

Statutory minimum wage

Trade union representation and collective bargaining

Forced labour

Child labour

Discrimination

16.4%

5.3%

6.2%

0.0%

0.0%

1.5%

0.2%


2.2.2. Include sustainability in the purchasing policy FNG strives to achieve strong, long-term partnerships with its suppliers, based on trust and transparency. The sourcing strategies of FNG’s brands are based on several important pillars. In order to meet consumer demand for quality products at the price and speed they expect, FNG is constantly seeking to optimise its supply chain and abide by the sustainability principle.

Thus, suppliers are continually screened in terms of their policy on social requirements, professional knowledge, quality assurance and financial stability. FNG can rely on extensive knowledge of specialisations per country, as well as the associated risks. The purchasing teams at the head offices and the local buying offices are aware of materials that are harmful to people and the environment and should therefore not be used.

Each new supplier must pass the supplier screening process. A vendor set-up procedure also applies for new suppliers. For existing suppliers, there are external and/or internal audits. If the investigated partner is not prepared to meet the requirements of the FNG Code of Conduct or abide by the list of prohibited substances and materials and FNG’s general product policy or refuses to implement a corrective action plan, cooperation with this partner is ended or not entered into. The CSR officers specialising in local legislation also visit the production sites and conduct an initial audit.

The purchasing department in Europe consists of buyers, product development teams, the styling team and an administrative team which supports the department. Buyers are responsible for selecting the right manufacturers for the right product. Product development determines how products should be manufactured and checks every item of clothing to ensure that the technical requirements are met. The local buying offices in Turkey and Asia ensure close contact with suppliers and buyers. They coordinate production planning, quality control in factories and offer cost analysis to support the buying teams at the head offices.

The products that FNG places on the market must comply with the requirements of the REACH legislation (Regulation (EC) No 1907/2006 of the European Parliament and of the Council of 18 December 2006 on the registration, evaluation, authorisation and restriction of chemicals). This regulation prohibits the use of hazardous substances and chemicals in products sold in Europe. To comply with this legislation, FNG has established its own Restricted Substances List (RSL). This document describes prohibited chemicals (such as carcinogenic dyes, biocides and pesticides, fire accelerators and heavy metals) as well as the types of textiles or materials in which they may be found and the approved testing methods. FNG’s list goes beyond REACH and is regularly updated. Suppliers are obliged to apply these rules.

To monitor compliance, FNG performs random tests on products upon arrival at its distribution centres, as part of its commitment to REACH compliance. Prior thereto, the CSR team performs a scan of all collections in order to gain a better view of the materials used and the processes the articles have gone through before delivery to shops and customers. A selection is made of risky items which are sent to an external lab for testing. Most tests are done for AZO dyes, NPEO, cadmium, plastic and chromium VI. The RSL of FNG is available at www.fng.eu/wp/wp-content/uploads/2017/05/FNG-RSL-4.0.pdf.

2.2.3. Quality controlFNG strives to proactively apply best practices in order to eliminate defects throughout the supply chain. Since 2018, quality control has been brought even closer to production sites. The advantage of this is that there is less pollution and waste. In addition, the delivery process can also be accelerated without putting additional pressure on internal and external production teams.

During the product development phase, the parameters relating to the quality of the fit and fabric are checked by means of an approval process developed at the head office and passed on to the foreign buying offices and suppliers. The requirements are checked by on-site technicians at the production sites during the sample and production phase.

fred + ginger Brantano


The local teams of quality controllers are busy at all times with inline and final quality controls. These audits are based on international AQL (acceptable quality level) standards which ensure that a wide range of samples are taken from the finished materials to assess the product in terms of size, fabric defects, fit, packaging and colour variations. No shipments to the logistics centres are accepted until all detected problems have been resolved.

Auditors also assess the general quality procedures of a factory before production. Suppliers must adhere to certain internal processes in order to produce FNG brands. The standards for testing the quality of fabrics and products are provided to all suppliers for compliance purposes.

It is always possible that after wearing clothing and shoes, consumers experience quality problems. Complaints procedures are provided for all brands and concepts. In this way, customers know where to turn when they experience problems. Every complaint is investigated by the team responsible for the quality of the product, and an internal follow-up procedure is started. Such problems can range from a single damaged item, a one-off case, to a complete recall of the article in the most exceptional cases. Customer experience and safety are paramount and no risks are taken. In the event of serious production errors that appear after the goods have been used, the supplier is informed. The most common types of complaints after delivery relate to knitwear pilling and changes to the fabric quality after multiple washes. Research shows that incorrect handling by the customer is usually the cause of the damage. Therefore, greater efforts are being made to ensure good communication of instructions relating to the correct washing and care of purchased items.

For the entire purchased production for all FNG brands, a claim relating to quality was made with the supplier or producer for only 0.32% of the goods. Lodging a claim does not automatically result in the withdrawal of the goods from the market and mainly means that the delivered goods do not meet the agreed requirements.

Finally, FNG is also responsible for correctly informing consumers. Thus, all brands must respect the labelling guidelines for the brands distributed by FNG. The relevant legislation on textile composition is Directive 1007/2011/EU. In addition to the textile composition, washing and care symbols, the company’s address, the production country and warnings (e.g. the flammability symbol for pyjamas) are also standard.

An indication of the country of production is not required at EU level but is provided as standard. For export, additional rules apply depending on the country of destination. These rules are communicated to the producers each season by the purchasing department and checked. No violations or shortcomings were found in 2018 with regard to the correct labelling of products.

In addition, in 2018, FNG added the Clevercare symbol to its care labels and a special tag for delicate clothing.

No incidents were reported in 2018 relating to the correct labelling of FNG clothing and shoes.

Beehives


2.3. WORKING TOWARDS A MORE LIVEABLE PLANET FOR HUMANS, ANIMALS AND PLANT LIFETo minimise its ecological footprint, FNG has drawn up an energy and climate, water and waste management policy. Further steps were taken in 2018 to achieve improvements in these areas. More initiatives will be launched in 2019 based on an analysis of the ecological footprint throughout the value chain.

Sustainable construction, renovation and relocationFNG’s head office is located in Mechelen, Belgium. The office was built in 2015 and uses the most sustainable materials and energy systems. The position was strategically chosen, just a few minutes’ walk from the train station and next to the cycle path (Antwerp - Mechelen - Leuven). The office has no air conditioning as it was built with concrete core activation, meaning the temperature inside the building remains as constant as possible, regardless of the season. The building also has a rainwater recovery system. Efforts were made in 2018 to reduce the number of office locations. For example, the head office staff moved from Concept Fashion to Mechelen while HR and accounting moved from Zoetermeer to the Dutch head office in Diemen. The latter move was done in the context of the creation of a Shared Service Centre in the Netherlands and after receiving a positive opinion from the works councils.

Extra efforts were made at the distribution centre in Belgium to optimise energy consumption by installing a new condensation boiler and mezzanine LED lighting that works with sensors.

For the renovations of offices and shops, LED lighting is always used to reduce electricity consumption per m². Furthermore, every renovation or new shop design incorporates sustainable or recycled materials. For example, the renewed Brantano Market concept makes use of recycled cardboard. The tables, presentation stands and checkout counters are all made of vertically stacked cardboard elements. The floor covering is constructed from natural raw and recycled materials and is amongst the least harmful raw materials in the carpet industry. Skylights are installed to allow maximum natural light and additional light-maximising measures are implemented.

The Brantano Market in Ternat is part of a retail park with BREEAM certification. The experience gained in this process will be taken into account in the design and construction or renovation of other shop locations.

FNG strongly believes that style and sustainability go hand in hand. FNG’s dedication to the environment goes beyond fashion: beehives have been placed on the green roof of the head office in Mechelen which house more than 80,000 bees. In this way, FNG hopes to contribute to the reversal of the honeybee’s decline.


Energy and Water Consumption

INFO CONSUMPTION TYPE UNIT DCFNG

OFFICES SHOPS

Energy consumption from non-renewable sources 1. Electricity KWH 2,339,495 917,308 21,078,550

2. Heating and cooling GJ 1,420

3. Gas m3 342,390 86,041 1,313,405

4. Steam nvt

5. Diesel / fuel oil Liter 844 67,460

Energy that is reinvoiced 1. Electricity Kwhr 94,600

3. Gas Mwhr 76,220

Total energy consumption within the organisation in Joules or other units 45,970,173 KWh

Methods, standards and assumptions used for the calculations

The calculations are based on the reports provided by the energy suppliers. Converted to total energy consumption by: CO2logic

Scope: All in-house FNG DCs, the head offices excluding the buying offices and the office in Spain, all shops aside from shops-in-shops

INFO CONSUMPTION TYPE UNIT DCFNG

OFFICES SHOPS

Total volume of water consumption Water M³ 2,568 1,383 17,972


The calculations are based on the reports provided by the suppliers. For shops for which no information was provided, an extrapolation was made.

Scope: The Belgian DC, the head offices excluding the buying offices and the office in Spain, all shops aside from shops-in-shops

Ocean Plastic Project


Waste managementIn all offices, DCs and shops, cardboard, glass, plastic, metals and textiles are sorted for recycling. This is done in cooperation with established partners in Belgium and the Netherlands. There is also a clear internal policy regarding the purchase and use of paper, cardboard and plastic. The purchasing and marketing services are hereby encouraged to always purchase recycled paper. For example, the CKS brand switched completely to clothing bags made from recycled paper. The intention is also to extend this test project to other brands. Clothes hangers and boxes are reused and recycled.

FNG creatively seeks new ways of intelligent waste management. At the head office there is a sustainable alternative to disposable plastic bottles: glass bottles and jugs are refilled with filtered tap water. Filtered tap water is also offered in shops. FNG avoids single-use materials, both at the head office and in shops. In 2018, for example, all disposable plastic at the head office was replaced with sustainable alternatives, ranging from teaspoons to non-prepackaged cookies for visitors, stored in glass jars.

TYPE UNIT DC FNG OFFICES SHOPS

Total generated waste kg 700,809 158,299 929,770

Recycled residual waste kg 37,000 52,000 845,077

Recycled paper and cardboard waste kg 538,000 62,400 21,108

Recycled plastic waste kg 20,280 2,964 10,251


Total generated waste calculated on the basis of average weight. Paper and cardboard waste for shops in city centres could not be measured. Further input was provided by partners with which FNG works for the collection and processing of recyclable waste.

Scope: All own FNG DCs, the head offices excluding the buying offices and the office in Spain, all shops aside from shops-in-shops

From the creative angle, window displays and photo shoots often give rise to questions regarding the materials to be purchase and used. First and foremost, the creative teams take into account the sustainability of the materials used. In addition, the materials and objects are recovered and stored centrally for reuse. Newly purchased material should be able to have at least a “second life” before being donated to charities or thrift shops.

When new collections are created, samples are made by suppliers, but unfortunately not all designs make the final cut. Samples that are selected for production may also be produced for showroom sales. For all types of samples, FNG seeks a second life or satisfied owner through in-house sales or locally organised sales in Spain, Turkey and Hong Kong.

With regard to end products, FNG applies a waterfall approach to ensure that inventory reaches a final destination. In addition to own outlets, stock sales are organised at the offices or on location. Items that are not sold on these occasions are sold to retailers in neighbouring countries.

Finally, defective clothing is also brought into the circular economy. Clothing that is still wearable is donated to charities. For clothing that can no longer be worn, partners were sought in a test project in 2018, which incorporated the items into cleaning materials.


TransportThe constant search for opportunities to reduce CO2 emissions is naturally also reflected in the transport of the goods. FNG is responsible for a share of the transport, while another share is ensured by its suppliers or customers through application of the Delivered Duty Paid (DDP) Incoterm.

Pursing the objectives of reducing costs, working more efficiently and reducing the negative impact on the environment, initiatives were started in 2018 regarding FNG’s in-house delivery of goods by water, road and air transport.

For the non-European delivery of goods from the Far East, the preferred option is transport by boat, with air transport further reduced in 2018. In addition, a tender for boat transportation was issued, with emissions an important weighting factor. Goods produced in Europe and Turkey are preferably shipped by road.

In 2019, FNG expects to continue to move towards more efficient and sustainable transport. For example, the management of transport via freight forwarders selected by FNG itself offers additional opportunities to consolidate full container loads and truck loads. In addition, FNG expects the current trend of more local production to continue and lead to shorter transport times in the coming years. This also explains the increased volume of road transport in 2018.

% of transported items by air, water and road. Scope: all shipments, excluding DDP, 2017 versus 2018

With regard to transport from distribution centres to shops or customers, efforts are also being made to reduce emissions. For example, research is being conducted into the best routes for delivering goods. The number of deliveries is closely monitored and planned. Moreover, all brands and concepts are making substantial efforts to reduce the number of online returns. This is done thanks to technological support, provided by artificial intelligence, on which the newest web platforms are built. These platforms help customers order the right size and style of clothing and shoes. For certain concepts, customers can try them on in shops, thereby avoiding “last mile” transportation and returns.

Finally, FNG employees are encouraged to use alternative means of transportation to commute to work. The location of the head office in Mechelen was strategically chosen, just a few minutes’ walk from the train station and next to the cycle path. Employees are encouraged to use public transportation, for which FNG offers a full refund. FNG also makes available to employees a number of company bicycles. Facilities for cyclists include changing rooms, showers and bicycle parking. In 2018, FNG started developing a new mobility policy which will offer flexible mobility solutions to employees and will be rolled out in 2019. A substantial reduction in employee commuter traffic is thus expected in 2019.

15%

40% 45%

14%

52%

34%

Air transport Road transport Boat transport

2017 2018

CKS


Emissions

SCOPE TYPE UNIT DC FNG OFFICES SHOPS

Scope 1 Natural gas Ton of CO² equivalent 620 156 2,377

Fuel oil Ton of CO² equivalent 2 0 177

Diesel and petrol service vehicles Ton of CO² equivalent 7.1 61.18 0

Diesel and petrol transportation to shops and customers Ton of CO² equivalent 432 0 0

Scope 2 Electricity M CO² 880 311 7,177

Heating Ton of CO² equivalent 0 0 29

Scope 3 Natural gas - upstream Ton of CO² equivalent 118 30 453

Fuel oil - upstream Ton of CO² equivalent 0 0 39

Electricity - upstream Ton of CO² equivalent 88 31 718

Heating - upstream Ton of CO² equivalent 0 0 5

Commuter traffic Ton of CO² equivalent 44 652 0

Outsourced diesel and petrol road transport (inbound) Ton of CO² equivalent 2,427 0 0

Outsourced diesel and petrol road transport (outbound) Ton of CO² equivalent 892 0 52

Outsourced air transport (inbound) Ton of CO² equivalent 3,744 0 0

Outsourced boat transport (inbound) Ton of CO² equivalent 216 0 0

Total emissions Ton of CO² equivalent 9,471 1,240 11,027


The calculations are based on the reports provided by the energy and transport providers. Converted to total emissions by: CO2logic.Method: Conversion on the basis of the carbon footprint methodology for calculation of the carbon footprint. This methodology is recognised by BSI PAS 2060 for carbon neutrality. The carbon footprint methodology is also compliant with ISO standard 14064 and closely aligned to the GHG Protocol.

Scope: All in-house transportation from DCs in Belgium and the Netherlands, all inbound in-house transportation from FNG (excluding DDP), own fleet and energy use calculated on the basis of consumption from the KPI consumption table. For energy: all own FNG DCs, the head offices excluding the buying office and the office in Spain, all shops aside from shops-in-shops.


2.4. CONTRIBUTION TO A BETTER SOCIETY THROUGH THE PROVISION OF INFORMATION AND GIVING BACK2.4.1. Charitable contributionsWithin the various brands and concepts that fall under the FNG group, FNG encourages charitable giving and contributions and in doing so wishes to achieve multiple objectives.

• Contribute to initiatives that make efforts to remedy problems caused in part by the business in which FNG is engaged;

• Raise awareness amongst employees of the impact FNG, as an organisation, has on society;

• Encourage and support FNG employees to promote CSR principles in their professional and personal lives;

• Contribute to a better future with a focus on FNG values;• Inspire partners and customers through communication

about the supported charities;• Provide a clearer framework for brands and concepts

to develop a charitable plan;• Work towards a standard policy for charitable initiatives with

the objective of achieving greater impact and synergies.

The brands can decide which charities they wish to support, provided that they take into account certain guidelines. The most important guideline is that the selected charity or cooperation must have a direct link with the brand’s DNA. Specifically, the following types of projects are encouraged:

• Projects that lead to improvements (in working conditions) in production countries, projects related to education and awareness in production countries;

• Projects that contribute to reducing the ecological footprint;• Projects that contribute to communication about and

awareness of CSR with partners and customers;• Projects related to education.

Brand/concept Charitable initiatives

FNG Donation to TadaDonation to TicTac - Akabe Scouts Mechelen

CKS Donation to Red Nose Day/Qmusic BelgiumDonation to Animal Rights, Belgium and the Netherlands

Fred & Ginger, Ginger

Donation to 38 VoltDonation further to the launch of the book WolvenkinderenDonation to “The Empty Shop” in Mechelen

Brantano / Concept Fashion / Suitcase

Old shoes actions: - Donations to the Schoenenfonds- Donations to the Kinderkankerfonds

(Children’s Cancer Fund)School Zonder Pesten (Schools Without Bullying) Dump Your Jeans

Claudia Sträter Clothing donations, including to Stichting Oekraïne, KWF Kankerbestrijding

Expresso Clothing donations to the Food Bank, Bont voor Dieren (Fur for Animals) and Look Good Feel Better

Miss Etam, Steps, Promiss

Clothing donations (Limburg and Zoetermeer clothing banks, Stichting Oekraïne)

Buying offices Donation to a local initiative in Turkey

2.4.2. Dialogue with stakeholdersFNG attaches great importance to involving all organisations and individuals that are directly or indirectly associated with FNG and its brands. For each interest group, the form of dialogue and cooperation were determined and implementing initiatives taken in 2018.

The following overview provides a non-exhaustive list of the groups and initiatives taken in 2018 and the important topics covered.


GROUP OBJECTIVE 2018 INITIATIVES RELATED GOALS

Customers Offer clothing and shoes through customer-preferred channels. Ensure availability to customers through customer-preferred channels.

• Customer centricity project • Update of websites with CSR information • Hello Customer implementation across the group

• Customer satisfaction• Value chain transparency• Marketing and consumer

communication• Product quality

Employees and unions

Ensure employee well-being and welfare at work, through the provision of evaluation opportunities, training and social dialogue.

• Regular social consultation• Evaluation opportunities for all employees• Regular provision of information to office staff• Regular training, mainly for shop staff

• Health, safety and well-being of employees

• Recruitment, talent development and retention

Shareholders and investors

FNG maintains contact with shareholders and investors in accordance with the applicable rules and regulations.

• Information on FNG’s website in accordance with the rules

• Official press releases• Meetings with investors in accordance with

the rules• VFB membership• Regular presentations

• Value chain transparency• Marketing and consumer

communication

Suppliers FNG focuses on intense screening of its suppliers and engages in continuous communication in order to achieve improvements with them.

• Internal and external audits with CAPs and follow-up meetings

• Day-to-day communication• Sharing and follow-up of FNG policies with

suppliers (Code of Conduct, RSL, product policy, anti-fraud, etc.)

• Emulation of Code of Conduct • Use of sustainable materials• Sustainable purchasing• Product quality

Partners, professional associations and NGOs

FNG strives to learn and improve its organisation and seeks good partners in this regard.

• Close the loop project with FFI• Signing of the agreement on sustainable textiles• Membership in Modint• Various charitable projects with NGO partners

• Emulation of Code of Conduct• Use of sustainable materials• Sustainable purchasing• Product quality• Value chain transparency• Marketing and consumer

communication

Press, influencers and opinion makers

Open communication with the press and opinion makers is essential in order to reach other interest groups.

• Organisation of multiple press information sessions• Regular sending of press releases • Cooperation with influencers for several

FNG brands


communication

Schools FNG wishes to contribute to the development of students and is open to opportunities for cooperation and guidance.

• Company visit by Antwerp Management School• Apprenticeships for students from

vocational schools• Contacts and knowledge sharing for

master’s theses


communication• Emulation of Code of Conduct• Use of sustainable materials• Sustainable materials• Product quality

Local environment FNG takes into account the impact it has on the immediate environment of its offices and shops.

• Local purchasing• Support for charitable initiatives• Local sales

• Sustainable purchasing policy• Charitable initiatives

By means of honest dialogue, FNG’s partners share with the organisation their knowledge and expertise. FNG is grateful for their active support of sustainable development and strives to keep all stakeholders motivated to go one step further.

fred + ginger



2.4.3. How FNG wishes to inform and inspire its consumers about sustainabilityFNG considers it its responsibility to inform and inspire the users of its products about sustainability. The focus is first and foremost on the quality of its products regardless of their price point. FNG also tries to inform customers how to properly maintain their purchases, which can extend the life of the goods. This is done in various ways.

In addition to the classic washing and care instructions that appear on clothing labels, in 2018 all labels of the Belgian FNG brands were given the Clevercare symbol. The Clevercare symbol was developed by Ginitex to encourage customers to take care of their clothing in a more environmentally conscious way. The website http://clevercare.org/en gives readers tips on how to wash and care for their clothing with the least possible impact on the environment. For many sustainability actors, this label is an indication that a company wishes to promote environmental awareness with both producers and consumers.

In 2018, articles made of more sensitive materials (such as appliqués and delicate fabrics) were given an additional hang tag to inform consumers about the material in order to extend the life of the article through proper care.

In addition, the CSR page on all websites of FNG brands and concepts was updated in 2018. For some brands, the sustainability tips are integrated into frequently asked questions (for example Brantano). Other brands provide a specific information page for consumers where CSR reports can be found and where detailed tips for product care and sustainable living are provided (for example, Fred & Ginger 10 tips for going back to school in a sustainable way on 1 September: https://www.fredginger.com/nlfg/life/mvo/10-duurzame-back-to-school-tips.html).

Furthermore, in 2018, all FNG brands and concepts were instructed to actively communicate about their sustainability policy on their own web and blog channels as well as on social media and through traditional mailings.

In addition, shop employees were briefed on FNG’s CSR policy at least once during a training session in 2018. For some concepts, two information sessions were held. On these occasions, employees are informed of the initiatives FNG is taking, detailed information about the role of FNG’s CSR employees in the production countries is provided, tips for the proper maintenance of FNG’s products are shared, etc. In this way all shop employees can answer customer questions and provide advice.

CSR employees regularly receive emails from customers, the press and schools regarding various aspects of the organisation’s CSR policy, in particular the sustainable production process. In 2018, several school groups visited FNG’s offices, on which occasion they were provided with an explanation of FNG’s CSR approach.

FNG is committed to helping students in the context of their master’s thesis or with requests for internships with a fashion company. The applications are screened for relevance to ensure that the experience will have added value for the student and fits in with the workings of FNG. In this way, FNG was able to offer several students internships in 2018. There was also a company visit by Master of International Fashion Management students from the Antwerp Management School.


2.5. HOW ECONOMIC LEVERS STRENGTHEN CSR2.5.1. Innovation in the context of the optichannel strategy In 2018, FNG invested heavily in further improving the accessibility of its products in accordance with the optichannel strategy. Many consumers seek direction online for offline purchases. This results in what is known as the omnichannel dilemma in the customer cycle: on the one hand, customers explore the market via their smartphone, tablet or PC. On the other hand, more than 80% of customers need a bricks-and-mortar shop to actually make a purchase. The art lies in the optichannel customer approach.

FNG first determines the function served by the online channel in the formula, how costs can be contained, how data can be used responsibly and how offline and online platforms can optimally reinforce each other.

In this regard, the service level in shops is of the utmost importance, and in 2018 the focus was on recruiting and training staff who are sensitive to customers. FNG invested in its web platforms so that customers can find products in their size. Artificial intelligence techniques are used to improve ease of use and reduce the cost of the logistics process. This is done, amongst other things, through initiatives to reduce the percentage of returns.

2.5.2. Customer centricity and the consequences thereof Although the various FNG brands and concepts have been building teams responsible for customer service for years, a project was launched in 2018 with the objective of making the customer even more central to the organisation. This is achieved through a reorganisation of the departments and services involved, in accordance with a vision whereby customer experience is focused on two pillars, namely “customer centricity” and “omnichannel CX”.

With regard to “customer centricity”, it is important that every department within the various brands play a role in the customer’s journey through participation in workflow processes, starting from customer demand, with the departments involved continuously elaborating on and overhauling them.

For the “omnichannel CX” position, it is important that the customer experience the same service level at all contact points, regardless of the preferred channel, such as social media, e-mail, chat, in shops, etc.

Customer centricity is measured by analysing and categorising customer questions per department responsible for achieving customer solutions, using KPIs, SLAs and NPS scores. If the NPS score is not satisfactory, the process for the relevant customer question is reviewed. In this way, every department is involved in the customer process and customer-conscious thinking reaches deep into the internal organisation.

The omnichannel CX is measured by asking customers who have made a purchase about their experience with the FNG brand, on a scale of 1 to 10. The customer can also leave comments in an open field. For the brands and concepts for which the customer survey is already used, 20% of customers answer the survey, of which 50% leave a comment. This information is categorised via AI into topics that can be traced to a specific department. For example, it is possible to focus on topics that receive a lower NPS score to improve the customer experience.

In this way, the NPS score of Brantano improved in 2018 by three NPS points in the last quarter compared to the three preceding quarters, after actions in September were taken based on customer comments.

This method of measuring customer satisfaction was extended to all Dutch brands and concepts at the end of 2018.


2.5.3. Privacy and GDPR2018 saw the entry into force of the General Data Protection Regulation (GDPR), the new European regulation which standardised the rules on the processing of personal data by companies such as FNG at European level and strengthened the rights of data subjects. With the help of specialised consultants, FNG started analysing, planning and implementing in 2017 the steps to be taken to comply with the GDPR.

FNG’s policy of transparently informing customers, staff and other persons who provide data and adequately protecting these data is based on six pillars: the necessary governance structure, clear policy guidelines, clear procedures, a clear and precise data processing register, contracts with the external parties with which FNG works for data processing, and training and education of employees.

The implementation of the GDPR has required not only significant efforts by the Marketing, IT & HR departments but also greater attention by the entire organisation with regard to the collection, processing and securing of data and has resulted in operational improvements.

Prior to the GDPR, privacy law provided that customers should be able to exercise their rights. This is nothing new. However, the GDPR has created greater awareness amongst customers of their rights.

Consequently, FNG offers its customers the possibility to exercise the additional rights provided for by the GDPR in a simple manner online. Examples of the impact of the GDPR include:

• Appointment of a data protection officer• GDPR training for all head office and shop employees


2.5.4. Transparency and traceability in the supply chainThe production of FNG brands is completely outsourced to partner factories around the world. In order to allow efficient oversight of the supply chain, FNG has shared a complete list of its production sites (with names,

addresses and production processes) with the Fair Wear Foundation. In its three largest production countries - Turkey, India and China - production is supported by local buying offices. In Europe, the countries are classified into high risk or low risk categories for control purposes.

% Buying volumes (EUR) per country in 2017 en 2018

2.5.5. Fraud and the fight against corruption Although the countries where FNG produces goods are increasingly monitoring fraud and anti-corruption, it remains important for FNG to be vigilant. On the basis of the aforementioned country risk matrix, local employees as well as employees at the European offices can make a good risk analysis per country and take the necessary measures. The matrix specifically addresses corruption and/or fraud risks per country.

FNG’s code of conduct for external manufacturers, suppliers, contractors, subcontractors and other workplaces expressly refers to an obligation to comply with ethical business practices, which means they must not be involved in any act of corruption, extortion or embezzlement or in any form of bribery - including but not limited to - promising, offering, giving or accepting an inappropriate monetary or other incentive.

FNG employees are trained in how to identify such conduct and via the risk matrix can obtain advice on how to deal with such matters.

At all offices worldwide, the employment contracts, be they permanent or temporary, mention an obligation to comply with the applicable rules and regulations. To supervise compliance, approval and control systems have been set up within the organisation.

2017 2018

India

8%6%

Tunisia

3% 4%

Morocco

1% 2%

Other

1% 1%

Turkey

28%32%

China

29% 30%

EU

25%

17%

Bangladesh

6% 7%

Suitcase


3. GRI CONTENT INDEX

GRI STANDARD GRI NUMBER DESCRIPTION SOURCE/INFO

General publications

Organisation profile 102-1 Name of the organisation P. 11

102-2 Activities, brands, products and services P. 12

102-3 Location of headquarters P. 11

102-4 Location of operations P. 11, 67

102-5 Ownership and legal form P. 11, 53

102-6 Markets served P. 25

102-7 Scale of the organisation P. 14

102-8 Information on employees and other workers P. 72

102-9 Supply chain P. 21, 78, 83, 91

102-10 Significant changes to the organisation and its supply chain P. 16

102-11 Application of the precautionary principle or approach by the organisation P. 78, 79

102-12 Description of external charters or other initiatives endorsed by the organisation P. 73, 85

102-13 Membership in associations including interest groups P. 73, 85

Strategy 102-14 CSR statement by senior decision-maker P. 6

102-15 Key impacts, risks and opportunities P. 19, 20, 24, 33

Ethics and integrity 102-16 Values, principles, standards and norms of behaviour P. 22, 41, 65

Governance 102-18 Governance structure P. 41, 67

Stakeholder engagement

102-40 List of stakeholder groups P. 85

102-41 Collective bargaining agreements P. 70, 72

102-42 Basis for the identification and selection of stakeholders P. 85

102-43 Overview of stakeholder engagement activities P. 85

102-44 Key topics and concerns raised by stakeholders P. 68, 85

Reporting practice

102-45 Entities included in the consolidated financial statements P. 134

102-46 Defining report content and topic boundaries P. 68

102-47 List of material topics P. 68

102-48 Restatements of information Not applicable

102-49 Changes in reporting1 P. 68

102-50 Reporting period Financial Year 2018

102 -51 Date of most recent report October 18

102 -52 Reporting cycle Yearly


102 -53 Contact point for questions about the CSR report Ms Anja Maes

102 -54 Claims of reporting in accordance with the GRI Standards Core

102 -55 GRI content index P. 93

102 -56 External assurance (validation of the report by external persons) P. 142

Selection of material topics

PEOPLE

Wellbeing, health and safety of our employees

103 - 1/3 Explanation of the material topic and its boundaryManagement approach and its componentsEvaluation of the management approach

P. 70

403 -1 Management system for health and safety at work P. 70

404 -1 Training and education: explanation of material aspects and scope of application, management approach and evaluation + average number of training days per employee

P. 71, 73

Employee recruitment, development and retention

103 - 1/3 Explanation of material aspects and scope of application Management approach and componentsEvaluation of management approach

P. 71

405 - 1 Diversity of governance bodies and employees P. 72

406 - 1 Incidents of discrimination and corrective actions taken P. 72

Screening of suppliers (human rights)

103 - 1/3 Explanation of material aspects and scope of applicationManagement approach and componentsEvaluation of management approach

P. 73, 77

414 - 2 Negative social impacts in the supply chain and actions taken P. 73

408 - 1 Operations and suppliers at significant risk for incidents of child labour P. 76, 77

406 - 1 Incidents of discrimination and corrective actions taken P. 76, 77

409 - 1 Operations and suppliers at significant risk for incidents of forced or compulsory labour P. 76, 77

407 - 1 Freedom of association and collective bargaining P. 76, 77

Own indicator

Statutory minimum wage P. 76, 77

Own indicator

Health and safety at suppliers P. 77

PRODUCTS

Product quality and safety


P. 77, 78

Product design and development

103 - 1/3 Management approach - sustainable purchasing policy P. 77, 78

Own indicator

Use of sustainable materials - management approach2 P. 77

417 - 1 Requirements for product and service information and labelling P. 78

417 - 2 Incidents of noncompliance concerning product and service information and labelling P. 78

Purchasing strategy and policy

103 - 1/3 Management approach P. 73, 77, 83, 91


THE ENVIRONMENT

Energy consumption


P. 80

302 - 1 Energy consumption within the organisation P. 81

305 - 1 Direct GHG emissions (GHG - scope 1) P. 84

305 - 2 Indirect GHG emissions (GHG - scope 2) P. 84

305 - 3 Other GHG emissions (GHG - scope 3) P. 84

Transport emissions


P. 83

305 - 1 Direct GHG emissions (GHG - scope 1) P. 84

305 - 3 Other GHG emissions (GHG - scope 3) P. 84

Waste management


P. 82

303 - 5 Water consumption P. 81

306 - 2 Waste by type and disposal method P. 82

COOPERATION

Relations with stakeholders


P. 85

Sustainable marketing and consumer communication


P. 85

Charitable initiatives

Own indicator

Explanation of material aspects and scope of applicationManagement approach and componentsEvaluation of management approach

P. 88

ECONOMIC LEVERS

Innovation Own indicator


P. 89

Customer satisfaction

Own indicator


P. 89

Communication and transparency (GRI 418: customer privacy)

103 1/3 Explanation of material aspects and scope of applicationManagement approach and componentsEvaluation of management approach

P. 90

Transparency and traceability of the supply chain

Own indicator


P. 91

Fraud and anti-corruption (GRI 205: anti-corruption)

103 1/3 Explanation of material aspects and scope of applicationManagement approach and componentsEvaluation of management approach

P. 91

1 The 2018 report contains more KPIs than 2017. This exercise is being continued with a view to the future. For the first time, a standard was also applied, being GRI.2 Data not fully available for reporting in accordance with the GRI standard.


FINANCIAL STATEMENTS

STATEMENT OF THE BOARD OF DIRECTORS 98CONSOLIDATED STATEMENT OF FINANCIAL POSITION 100CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 101CONSOLIDATED STATEMENT OF CASH FLOWS 102CONSOLIDATED STATEMENT OF CHANGES IN EQUITY 103NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS 104

1. GENERAL INFORMATION 104

2. GROUP ACCOUNTING POLICIES 104

2.1. STATEMENT OF COMPLIANCE AND BASIS FOR PREPARATION 104

2.2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES 105

3. OPERATING SEGMENTS 112

3.1. SEGMENT REVENUE AND RESULTS 112

3.2. GEOGRAPHICAL INFORMATION 113

3.3. OTHER INFORMATION 113

4. BUSINESS COMBINATIONS AND CHANGES IN CONSOLIDATION SCOPE 113

4.1. 2018 ACQUISITIONS 113

4.2. 2017 ACQUISITIONS 114

4.3. DISPOSAL OF SUBSIDIARIES 115

5. NOTES RELATING TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION 116

5.1. GOODWILL 116

5.2. INTANGIBLE ASSETS 117

5.3. PROPERTY, PLANT AND EQUIPMENT 118

5.4. INVENTORIES 119

5.5. TRADE AND OTHER RECEIVABLES 119

5.6. OTHER FINANCIAL ASSETS AND OTHER ASSETS 120

5.7. CASH AND CASH EQUIVALENTS 120

5.8. DEFERRED TAXES 120

5.9. SHARE CAPITAL 121

5.10. PROVISIONS 122

5.11. POST-EMPLOYMENT BENEFIT OBLIGATIONS 123

For the year ended 31 December 2018


5.12. BORROWINGS 123

5.13. OTHER FINANCIAL LIABILITIES 125

5.14. TRADE AND OTHER PAYABLES 126

5.15. OTHER CURRENT LIABILITIES 126

5.16. DERIVATIVE INSTRUMENTS 126

6. NOTES RELATING TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME 127

6.1. REVENUE 127

6.2. EMPLOYEE BENEFIT EXPENSE 127

6.3. OTHER OPERATING EXPENSES 127

6.4. NON-RECURRING ITEMS 128

6.5. AMORTISATION AND DEPRECIATION EXPENSES 128

6.6. FINANCIAL RESULT 128

6.7. INCOME TAXES 128

6.8. EARNINGS PER SHARE 129

7. FINANCIAL INSTRUMENTS AND FINANCIAL RISKS 130

7.1. OVERVIEW OF FINANCIAL INSTRUMENTS AND FAIR VALUES 130

7.2. FINANCIAL RISK MANAGEMENT 132

8. OTHER DISCLOSURES 134

8.1. CONSOLIDATION SCOPE 134

8.2. RELATED PARTY TRANSACTIONS 135

8.3. CONTINGENT ASSETS AND LIABILITIES 136

8.4. COMMITMENTS 136

8.5. AUDIT FEES 137

8.6. EVENTS AFTER THE REPORTING PERIOD 137

FNG NV STATUTORY FINANCIAL STATEMENTS 1381. CONDENSED BALANCE SHEET AFTER RESULT APPROPRIATION 138

2. CONDENSED INCOME STATEMENT 139

3. SUMMARY OF THE REPORT OF THE BOARD OF DIRECTORS 139

ALTERNATIVE PERFORMANCE MEASURES – GLOSSARY 140


STATEMENT OF THE BOARD OF DIRECTORS

The Board of Directors of FNG NV certifies in the name and on behalf of FNG NV, that to the best of their knowledge,

I the consolidated financial statements, established in accordance with International Financial Reporting Standards (“IFRS”) as adopted by the European Union, give a true and fair view of the assets, financial position and results of FNG NV and of the entities included in the consolidation;

II the annual review presents a fair overview of the development and the results of the business and the position of FNG NV and of the entities included in the consolidation, as well as a description of the principal risks and uncertainties facing them pursuant Article 12, paragraph 2 of the Royal Decree of November 14, 2007.

CKS



ASSETS (in thousands of euros) Note 31/12/2018 31/12/2017

Non-current assets 514,070 441,971

Goodwill 5.1. 86,158 80,162

Intangible assets 5.2. 333,102 275,313

Property, plant and equipment 5.3. 76,173 70,175

Deferred tax assets 5.8. 18,636 16,321

Current assets 320,832 255,947

Inventories 5.4. 108,082 82,787

Trade and other receivables 5.5. 72,173 69,601

Income tax receivables 131 0

Other financial assets 5.6. 18,718 9,035

Other current assets 5.6. 3,585 4,053

Cash and cash equivalents 5.7. 118,143 90,470

TOTAL ASSETS 834,902 697,918

EQUITY AND LIABILITIES (in thousands of euros) Note 31/12/2018 31/12/2017

Equity attributable to owners of the parent 342,734 272,096

Share capital 5.9. 60,679 718

Share premium 264,408 265,304

Retained earnings and other reserves 17,646 6,074

Total equity 342,734 272,096

Non-current liabilities 347,804 243,703

Provisions 5.10. 0 357

Post-employment benefit obligations 5.11. 101 154

Borrowings 5.12. 273,763 178,750

Other financial liabilities 5.13. 17,147 17,208

Deferred tax liabilities 5.8. 56,793 47,235

Current liabilities 144,365 182,119

Provisions 5.10. 1,949 1,316

Borrowings 5.12. 11,605 56,596

Trade and other payables 5.14. 113,826 96,287

Current tax liabilities 4,336 1,142

Other financial liabilities 5.13. 5,839 19,877

Other current liabilities 5.15. 6,810 6,901

Total liabilities 492,168 425,822

TOTAL EQUITY AND LIABILITIES 834,902 697,918

CONSOLIDATED STATEMENT OF FINANCIAL POSITION


(in thousands of euros) Note 2018 2017

Revenue 3.1./6.1. 511,794 482,402

Cost of merchandise (231,571) (215,329)

Gross profit 280,223 267,074

Employee benefit expense 6.2. (89,365) (90,861)

Other operating expenses 6.3. (138,459) (130,832)

Adjusted operating profit/(loss) before amortisation and depreciation expense (Adjusted EBITDA) 52,398 45,381

Non-recurring items1 6.5. 2,482 (7,516)

Operating profit/(loss) before amortisation and depreciation expense (EBITDA) 54,879 37,865

Amortisation and depreciation expenses 6.4. (22,543) (18,777)

Operating profit/(loss) (EBIT) 32,337 19,087

Financial income 6.6. 729 2,548

Financial expenses 6.6. (18,303) (13,216)

Exchange gains/(losses) (43) (647)

Profit/(loss) before taxes 14,720 7,772

Income taxes 6.7. (3,181) (459)

PROFIT/(LOSS) FOR THE PERIOD 11,538 7,313

Other comprehensive income (OCI)

Items of OCI which will never be recycled to P&L

Remeasurement of post-employment benefit plans 29 255

Items of OCI which will be recycled to P&L

Exchange differences upon translation of foreign operations 12 (180)

Income tax relating to components of OCI (-) (7) (64)

Other comprehensive income 34 11

TOTAL COMPREHENSIVE INCOME OF THE PERIOD 11,573 7,324

Basic and diluted earnings/(loss) per share (in €) 6.8. 1.15 0.91

Profit/(loss) for the period attributable to the owners of the Company 11,538 7,313

Profit/(loss) for the period attributable to the non-controlling interests 0 0

Total comprehensive income for the period attributable to the owners of the Company 11,573 7,324

Total comprehensive income for the period attributable to the non-controlling interests 0 0

CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

1 Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature.


(in thousands of euros) Note 2018 2017

CASH FLOW FROM OPERATING ACTIVITIES

Operating result 32,337 19,087

Adjustments to reconcile net loss to net cash provided by operating activities:

Depreciation and amortisation expenses 6.4. 22,543 18,776

Provisions 253 (502)

Loss on disposal 4. 0 4,407

Exchange (gains)/losses 43 647

Other (399) 338

Changes in working capital:

Inventories (6,948) 10,643

Trade and other receivables (5,503) (69,135)

Other financial assets 0 70

Other current assets 571 (780)

Trade and other payables 312 10,113

Other current liabilities (1,394) (2,032)

Cash generated from operations 41,815 (8,369)

Taxes received (80) 217

Net cash generated from operating activities 41,735 (8,152)

CASH FLOW FROM INVESTING ACTIVITIES

Interest received 729 2,548

Purchases of PP&E (23,175) (30,938)

Purchases of Intangible assets (3,747) (13,059)

Proceeds from disposal of PPE 3,088 2,629

Proceeds from disposal of intangible assets 21 591

Loans granted (18,718) 0

Disposal of subsidiaries 4.3. (1,351) 17,243

Acquisition of subsidiaries, Deferred consideration 4.2. (19,250) 0

Acquisition of subsidiaries, net of cash acquired 4.1. (37,317) (20,629)

Net cash provided by/(used in) investing activities (99,720) (41,615)

CASH FLOW FROM FINANCING ACTIVITIES

Proceeds from issue of equity instruments of the Company (net of issue costs) 5.9. 54,867 29,784

Proceeds from borrowings 206,080 83,200

Reimbursements of borrowings (164,559) (26,480)

Reimbursements of financial lease liabilities (888) 0

Interests paid (9,841) (13,174)

Net cash provided by/(used in) financing activities 85,658 73,330

NET INCREASE IN CASH AND CASH EQUIVALENTS 27,673 23,563

Cash and cash equivalents at beginning of year 90,470 66,907

Cash and cash equivalents at end of year 118,143 90,470

CONSOLIDATED STATEMENT OF CASH FLOWS


CONSOLIDATED STATEMENT OF CHANGES IN EQUITY

Attributable to owners of the parent

TOTAL EQUITY

Reserves

Share capital

Share premium

Retained earnings

Currency translation

reserveOther

reserves

(In thousands of euros)

Balance at 31 December 2016 643 235,595 (5,178) 0 3,927 234,988

Total comprehensive income of the period 0 0 7,504 (180) 0 7,324

Issue of share capital 75 29,925 0 0 0 30,000

Transaction costs for equity issue 0 (216) 0 0 0 (216)

Balance at 31 December 2017 718 265,304 2,326 (180) 3,927 272,096

Total comprehensive income of the period 0 0 11,561 12 0 11,573

Issue of share capital 169 57,594 0 0 0 57,762

Transaction costs for equity issue 0 (1,896) 0 0 0 (1,896)

Contribution in kind 9 3,189 0 0 0 3,198

Contribution of share premium into share capital 59,783 (59,783) 0 0 0 0

Balance at 31 December 2018 60,679 264,408 13,887 (168) 3,927 342,734


NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

1. GENERAL INFORMATION

FNG NV (the “Company”) is a public limited liability company (naamloze vennootschap) created in the Netherlands and established in Belgium. The registered office is located at Bautersemstraat 68A, 2800 Mechelen, Belgium. The principal place of business is located in Belgium and the Netherlands. The Company’s shares are listed on Euronext Brussels and Euronext Amsterdam and the Group has more than 3,000 employees (in headcounts).

The Company’s consolidated financial statements include:

• the accounts of companies directly or indirectly controlled by the Company, which are fully consolidated; and

• its investments in associates, which are accounted for under the equity method.

All these economic entities are collectively referred to as the “Group”.

FNG is a strong growing Benelux-fashion group with activities all over Europe. The Group designs and distributes clothing and shoes for women, children and men through own concept-stores at top locations in Belgium and the Netherlands and through a network of multi-trademark stores in domestic and foreign countries.

The Group’s consolidated financial statements at 31 December 2018 were prepared under the responsibility of the Board of Directors and authorised for issue by the Directors at the Board meeting held on 16 April 2019.

2. GROUP ACCOUNTING POLICIES

2.1. Statement of compliance and basis for preparation

The Group’s consolidated financial statements for the year ended 31 December 2018 have been prepared in accordance with International Financial Reporting Standards as endorsed by the European Union (“IFRS”).

The consolidated financial statements have been prepared on the basis of the historical cost method. Any exceptions to the historical cost method are disclosed in the accounting policies described hereafter.

The Group’s consolidated financial statements are presented in thousands of Euros, unless stated otherwise. Euro is also the functional currency of the company and all other entities of the Group.

These consolidated financial statements do not include any information or disclosures that, not requiring presentation due to their qualitative significance, have been determined as immaterial or of no relevance pursuant to the concepts of materiality or relevance defined in the IFRS conceptual framework, insofar as the Group’s consolidated financial statements, taken as a whole, are concerned.

Furthermore, the consolidated financial statements include “Alternative Performance Measures” (APM) which are not defined as such under IFRS. The Group uses the Adjusted EBITDA measure in its decision-making, because it provides information useful to assess the Group’s performance, solvency and liquidity. This measure should not be viewed in isolation or as an alternative to the measures presented according to the IFRS.

Adjusted EBITDA (adjusted earnings before interest and depreciation and amortisation) is calculated by excluding from the profit/loss for the year before taxes the financial results (detailed in note 6.6.), the depreciation and amortisation expenses and impairment losses on assets and the non-recurring items. Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature.

2.1.1. Relevant standards and amendments issued and applicable for the year ended 31 December 2018

The following IFRS standards, interpretations and amendments became effective for the first time for the year ended 31 December 2018:

• IFRS 9 Financial instruments

• IFRS 9 replaces IAS 39 Financial Instruments: Recognition and Measurement and brings together the following aspects of accounting for financial instruments: classification and measurement, impairment, and hedge accounting. IFRS 9 changes the classification and measurement of financial assets and includes a new model for assessing the impairment of the financial assets based on expected credit losses. The first application of IFRS 9 did not have a significant impact on the consolidated financial statements. For a detailed analysis of the potential impact of IFRS 9 is refered to the 2017 consolidated financial statements. IFRS 9 was applied according to the modified retrospective approach, i.e. without restating the comparative period.

• IFRS 15 Revenue from Contracts with Customers

• IFRS 15 supersedes IAS 18 Revenue and IAS 11 Construction Contracts and establishes a comprehensive framework for determining when to recognize revenue and how much revenue to recognize for all contracts with customers, except for revenue from leases, financial instruments and insurance contracts. The timing of the revenue recognition can take place over time or at a point in time, depending on the transfer of control. The standard also introduces new guidance on costs of fulfilling and obtaining a contract, specifying the circumstances in which such costs should be capitalized or expensed when incurred. Furthermore, the new disclosures included in IFRS 15 are more detailed than those applicable under IAS 18. IFRS 15 was applied according to the modified retrospective approach, i.e. without restating the comparative period.

• Improvements to IFRS (2014-2016)

• This set of amendments impacts: IFRS 1 First-time adoption of IFRS, regarding the deletion of short-term exemptions for first-time adopters regarding IFRS 7, IAS 19, and IFRS 10; and IAS 28 Investments in Associates and Joint Ventures regarding measuring an associate or joint venture at fair value.

• Amendments to IFRS 2 Classification and Measurement of Share-based Payment Transactions

• The amendment clarifies the measurement basis for cash-settled payments and the accounting for modifications that change an award from cash settled to equity settled. It also introduces an exception to the principles in IFRS 2 that will require an award to be treated as if it was wholly equity-settled, where an employer is obliged to withhold an amount for the employee’s tax obligation associated with a share-based payment and pay the amount to the tax authorities.

• IFRIC 22 Foreign Currency Transactions and Advance Consideration

• This interpretation addresses foreign currency transactions or parts of transactions where there is consideration that is denominated or priced in a foreign currency.

The above-mentioned standards did not have an impact on the financial statements.


2.1.2. Relevant standards and amendments issued but not yet effective

IFRS standards, interpretations and amendments that have been issued but that are not yet effective, have not been applied to the consolidated IFRS financial statements for the year ended 31 December 2018.

• IFRS 16 Leases

• IFRS 16 supersedes IAS 17 Leases and related interpretations. For lessees, IFRS 16 requires most leases to be recognized on balance (under a single model), eliminating the distinction between operating and finance leases. In accordance with the new standard, the lessee will recognize assets and liabilities for the rights and obligations created by leases. The standard increases interest-bearing liabilities and non-current assets (new class “Right-of-use assets”) in the consolidated financial statements. In addition, the rental expenses recognized in profit or loss will decrease and depreciation and amortization as well as interest expenses will increase. As a result of these impacts, adjusted EBITDA will be impacted significantly. However, net result (profit of the period) will only be impacted to a limited extent. IFRS 16 is effective for the reporting periods beginning on January 1, 2019. The Group applies the new guidelines for lease accounting retrospectively with the cumulative effect of initially applying the standard recognized on January 1, 2019 (modified retrospective approach) in accordance with the transition requirements of IFRS 16. The comparative statements will not be restated. Upon transition, the Group uses practical expedients authorized by the standard, such as: using a single discount rate to a portfolio of leases with reasonably similar characteristics and not reassessing whether a contract is, or contains, a lease at the date of initial application, for contracts entered into before January 1, 2019. Furthermore, the Group will use the exemptions not to apply the recognition requirements of the standard for short-term leases and low-value assets. Upon transition, the Group measures the lease liability at the present value of the remaining lease payments, discounted using the lessee’s incremental borrowing rate at the date of initial application. The related right-of-use assets are measured at an amount equal to the lease liability, adjusted by the amount of any prepaid or accrued lease payments relating to that lease recognised in the statement of financial position per December 31, 2018. Upon transition date, the right-of-use assets consist mainly of stores and other buildings and vehicles. As at December 31, 2018, the Group has non-cancellable undiscounted operating lease commitments of € 136,661 thousands, which are detailed in note 8.4.

• The following new relevant standards, amendments to standards and annual improvement cycles have been issued, but are not mandatory for the first time for the financial periods beginning January 1, 2019 and are expected not to have a significant impact on the consolidated financial statements:

• Amendments to IFRS 3 Definition of a Business (effective January 1, 2020, but not yet endorsed in EU)

• Amendments to IAS 1 and IAS 8 Definition of Material (effective January 1, 2020, but not yet endorsed in EU)

• Amendments to IAS 19 Employee Benefits (effective January 1, 2019, but not yet endorsed in EU)

• Annual improvements 2015-2017 (effective January 1, 2019, but not yet endorsed in EU)

• IFRIC 23 Uncertainty over Income Tax Treatments (effective January 1, 2019)

2.2. Summary of significant accounting policies

The following accounting methods have been applied consistently through all the periods presented in the consolidated financial statements.

2.2.1. Significant management judgments and estimates

The preparation of the consolidated financial statements requires the use of judgments, best estimates and assumptions in recognising and measuring assets and liabilities, income and expenses, considering positive and negative contingencies existing at year-end. Amounts reported by the Group in future financial statements could differ significantly from current estimates due to changes in these assumptions or economic conditions.

The most significant management judgements and estimates are described below.

2.2.1.1. Going concern

As at 31 December 2018, the Group had a liquidity position of € 118,143 thousands consisting of cash and cash equivalents. Considering this liquidity position as well as the refinancing facility of € 240,000 thousands entered in February 2018, the Board of Directors is of the opinion that the liquidity position is sufficient to continue the current operations at least for the next reporting periods.

2.2.1.2. Impairment of assets

The Group reviews the carrying amount of goodwill and intangible assets with indefinite lives for potential impairment on an annual basis and also whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Group reviews the carrying value of tangible assets and intangible assets with definitive lives for potential impairment whenever events or changes in circumstances indicate the carrying value of an asset may not be recoverable. The Group determines impairment by comparing the recoverable amount to its carrying value. If impairment is identified, a loss is recorded equal to the excess of the asset’s carrying amount over its recoverable amount.

For impaired assets, the Group recognizes a loss equal to the difference between the carrying amount of the asset and its recoverable amount. The recoverable amount, being the higher of the fair value less costs to sell and value in use, is based on discounted future cash flows of the asset using a discounted rate commensurate with the risk. Estimates of future cost savings, based on what we believe to be reasonable and supportable assumptions and projections, require management’s judgement. Actual results could vary from these estimates. When it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash generating unit to which the asset belongs.

2.2.1.3. Pensions and other long-term and post-employment benefits

The value of pensions and other long-term and post-employment benefit obligations is based on actuarial valuations that are sensitive to all the actuarial assumptions used, particularly concerning discount rates, inflation rates and wage increase rates. These assumptions are updated annually. The Group considers the actuarial assumptions used at 31 December 2018 appropriate and well-founded, but future changes in these assumptions could have a significant effect on the amount of the obligations and the Group’s equity and net profit. However, as the impact on the financial statements is not significant, the Company has decided not to include all the disclosures in accordance with IAS 19 Employee Benefits (see also note 5.11.).

2.2.1.4. Deferred tax assets

Deferred tax assets are recognized for unused tax losses to the extent that it is probable that taxable profit will be available against which the losses can be utilized. Significant management judgement is required to determine the amount of deferred tax assets that can be recognized, based upon the likely timing and the level of future taxable profits together with future tax planning strategies.


2.2.1.5. Fair value of financial instruments

The fair value of financial instruments that are not traded in an active market (for example, over-the-counter derivatives) is determined by using valuation techniques. The Group uses its judgment to select a variety of methods and make assumptions that are mainly based on market conditions existing at the end of each reporting period. All derivative financial instruments are, in accordance with IFRS 7, classified as level 2. This means valuation methods are used for which all inputs that have a significant effect on the recorded fair value are observable in the market, either directly or indirectly.

2.2.1.6 Measurement of inventories

Inventories are measured at the lower of cost and net realisable value. The net realisable value is monitored continuously, and impairment losses are recognised when the cost of inventories exceed the net realisable value.

2.2.2. Consolidation methods

A list of subsidiaries and associates is presented in note 8.1.

2.2.2.1. Subsidiaries

Subsidiaries are companies in which the Group exercises exclusive control and are fully consolidated. The Group controls an entity when the three following conditions are fulfilled:

• it holds power over the entity;• it is exposed, or has rights, to variable returns from its involvement with

the entity;• it has the ability to use its power over the investee to affect the amount

of the investor’s returns.

The Group considers all facts and circumstances when assessing control. All substantive potential voting rights exercisable, including by another party, are also taken into consideration. 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. Specifically, income and expenses of a subsidiary acquired or disposed of during the period are included in the consolidated statement of profit or loss and other comprehensive income from the date the Group gains control until the date when the Group ceases to control the subsidiary.

When the Group gains control of a subsidiary, the transaction is a business combination treated in accordance with the policy described in note 2.2.3.

When the Group loses control of a subsidiary, the Group derecognises the assets and liabilities of the former subsidiary from the consolidated statement of financial position with a gain or loss recognised in the statement of profit or loss. The Group recognises any investment retained in the former subsidiary when control is lost and subsequently accounts for it under the equity method if the former subsidiary qualifies as an associate or a joint venture, or at fair value if the investment in the former subsidiary qualifies as a financial asset.

Any acquisition or disposal of an investment that does not affect control over a subsidiary is considered as a transaction between shareholders with any impacts recognised in equity.

All intragroup assets and liabilities, income, expenses and cash flows relating to transactions and balances between entities of the Group are eliminated in full in the consolidated financial statements.

2.2.3. Business combinations and goodwill

In accordance with IFRS 3, business combinations are measured and recognised under the acquisition method.

At the date of acquisition, the identifiable assets acquired and liabilities assumed, measured at fair value, and any non-controlling interests (minority interest) in the company acquired (“acquiree”) are recorded separately from goodwill.

Goodwill is measured as the difference between:

• the sum of the following items:

• the acquisition-date fair value of the consideration transferred to acquire control, including any contingent consideration (e.g. earn-outs) that is measured at fair value at acquisition date,

• the value of non-controlling interests in the acquiree being measured either at fair value (full goodwill method) or at their share in the fair value of the net assets of the acquiree (partial goodwill method) on a case-by-case basis, and

• for acquisitions achieved in stages, the acquisition-date fair value of the Group’s share in the acquired entity before it acquired control; and

• the net value of the assets acquired and liabilities assumed, measured at fair value at the acquisition date.

When this difference is negative, it is immediately recognised as a gain in the statement of profit or loss.

After initial recognition, goodwill is measured at cost less any impairment losses. Goodwill is not amortised, but impairment tests are carried out as soon as there is an indication of possible impairment, and at least annually (including in the year of acquisition), as described in note 2.2.8.

Costs incurred by the Group to effect a business combination (acquisition-related costs) are immediately expensed, except with respect to issuance costs of debt or equity securities that are recognised in compliance with IAS 32 and IFRS 9.

The accounting for a business combination, including the fair value measurement of assets acquired and liabilities assumed, is finalised within twelve months from the acquisition date.

IFRS 3 does not apply to business combinations under common control, which are examined on a case-by-case basis to determine the appropriate accounting treatment.

2.2.4. Foreign currencies

In preparing the financial statements of each individual group entity, transactions in currencies other than the entity’s functional currency (foreign currencies) are recognised at the rates of exchange prevailing at the dates of the transactions. At the end of each reporting period, monetary items denominated in foreign currencies are retranslated at the rates prevailing at that date. Non-monetary items carried at fair value that are denominated in foreign currencies are retranslated at the rates prevailing at the date when the fair value was determined. Non-monetary items that are measured in terms of historical cost in a foreign currency are not retranslated. Exchange differences on monetary items are recognised in profit or loss in the period in which they arise.

2.2.5. Intangible assets

Intangible assets are recognised only if it is probable that the expected future economic benefits that are attributable to the asset will flow to the Group and if the cost of the asset can be measured reliably. The probability of expected future economic benefits represent management’s best estimate of the set of economic conditions that will exist over the useful life of the asset using reasonable and supportable assumptions.

Intangible assets are measured initially at cost. The cost of a separately acquired intangible asset comprises its purchase price, including import duties and non-refundable purchase taxes, after deducting trade discounts, rebates and any directly attributable cost of preparing the asset for its intended use.


If an intangible asset is acquired in a business combination, the cost of that intangible asset is its fair value at the acquisition date. Intangible assets under construction are carried at cost, less any recognised impairment losses.

After initial recognition, intangible assets are measured at cost less accumulated amortisation and any accumulated impairment losses. Intangible assets are amortised on a straight-line basis over their estimated useful life. Amortisation begins when the asset is capable of operating in the manner intended by management.

The estimated useful life and amortisation method are reviewed at the end of each reporting period, with the effect of any changes in estimate being accounted for on a prospective basis. Intangible assets with indefinite useful lives that are acquired separately are carried at cost less accumulated impairment losses. Recognition of costs in the carrying amount of an intangible asset ceases when the asset is in the condition necessary for it to be capable of operating in the manner intended by the Group.

Subsequent expenditure on intangible assets is capitalised only if it increases the future economic benefits associated with the specific asset. Other expenditure is expensed as incurred.

Intangible assets are derecognised on disposal, or when no future economic benefits are expected from their use or disposal. Gains or losses arising from derecognition, measured as the difference between the net disposal proceeds and the carrying amount of the asset, are recognised in profit or loss when the asset is derecognised.

Intangible assets mainly comprise:

• software;• tradenames and trademarks acquired separately or in the context of

business combinations; • customer and supplier lists;• key money; and• intangible assets under construction.

The expected useful lives for the main intangible assets are as follows:

Software 3 to 5 years

Key money 5 to 10 years

Tradenames and trademarks indefinite

Customer and supplier lists indefinite

2.2.6. Property, plant and equipment

2.2.6.1. Initial measurement

Property, plant and equipment are recognised as assets at acquisition or construction cost if and only if it is probable that future economic benefits associated with the asset will flow to the Group and the cost of the asset can be measured reliably.

The cost of an item of property, plant and equipment comprises its purchase or construction price and any costs directly attributable to bringing the asset to the location and condition necessary for it to be capable of operating in the manner intended by management.

The cost of facilities developed in-house includes all labour and materials costs, and all other production costs attributable to the construction of the asset.

When a part of an asset has a different useful life from the overall asset’s useful life, it is identified as an asset component and depreciated over a specific period.

Borrowing costs attributable to the financing of an asset incurred during the construction period are included in the cost of the asset provided it is a qualifying asset as defined by IAS 23 Borrowing costs.

2.2.6.2. Subsequent measurement

After initial recognition, property, plant and equipment owned by the Group are depreciated using the straight-line method and are carried on the statement of financial position at cost less accumulated depreciation and impairment. Depreciation begins when the asset is capable of operating in the manner intended by management and is charged to profit or loss, unless it is included in the carrying amount of another asset. The components of an item of property, plant and equipment with a significant cost and different useful lives are recognised separately. The residual value and the useful life of property, plant and equipment are reviewed at least at the end of each reporting period. The depreciation method is also reviewed annually.

The expected useful lives for the main facilities are as follows:

Buildings 10 to 20 years

Lease improvements based on underlying lease terms

Machinery and installations 5 to 10 years

Store and other furniture, fixture and fittings 5 to 10 years

Motor vehicles 2 to 5 years

An item of property, plant and equipment is derecognised upon disposal or when no future economic benefits are expected to arise from the continued use of the asset. Any gain or loss arising on the disposal or retirement of an item of property, plant and equipment is determined as the difference between the proceeds and the carrying amount of the asset and is recognised in profit or loss.

2.2.7. Leases

In the course of its business, the Group uses assets made available to it under lease contracts. These contracts are analysed in the light of the situations described and indicators supplied in IAS 17 Leases in order to determine whether they are finance leases or operating leases.

2.2.7.1. Finance leases

Contracts that effectively transfer to the lessee substantially all risks and rewards inherent to ownership of the leased item are classified as finance leases. The main indicators examined in determining whether substantially all the risks and rewards are transferred by an agreement are the following:

• the ratio of the lease term to the leased asset’s economic life; • total discounted future minimum lease payments as a ratio of the fair value

of the leased asset;• whether ownership is transferred to the lessee by the end of the lease;• whether a purchase option is bargain;• the features specific to the leased asset.

Assets held under finance leases are derecognised from the lessor’s statement of financial position and included in the relevant category of property, plant and equipment in the lessee’s financial statements. Such assets are depreciated over their useful life, or the term of the lease contract when this is shorter and it is not expected that the lessee will obtain ownership of the asset. A corresponding financial liability is recognised by the lessee, and a financial asset by the lessor.

If the Group enters into a sale and leaseback agreement resulting in a finance lease, this is recognised in accordance with the principles described above. If the transfer price is higher than the asset’s book value, the surplus is deferred and recognised as income on straight-line basis over the lease term.

2.2.7.2. Operating leases

Lease agreements that do not qualify as finance leases are classified and recognised as operating leases. Rental charges are recognised over the lease term on a straight-line basis.


In the event that lease incentives are received to enter into operating leases, such incentives are recognised as a liability. The aggregate benefit of incentives is recognised as a reduction of rental expense on a straight-line basis.

2.2.8. Impairment of goodwill, intangible assets and property, plant and equipment

At the year-end and at each interim reporting date, in accordance with IAS 36 Impairment of Assets, the Group assesses whether there is an indication that an asset could have been impaired. If any such indication exists, the recoverable amount of the asset is estimated in order to determine the extent of the impairment loss (if any). Where it is not possible to estimate the recoverable amount of an individual asset, the Group estimates the recoverable amount of the cash-generating unit (CGU) to which the asset belongs. A CGU represents the smallest identifiable group of assets that generates cash inflows that are largely independent of the cash inflows generated from other assets.

Where a reasonable and consistent basis of allocation can be identified, corporate assets are also allocated to individual CGUs, or otherwise they are allocated to the smallest group of CGUs for which a reasonable and consistent allocation can be identified.

Recoverable amount is the higher of the fair value less costs of disposal and value in use. In assessing value in use, the estimated future cash flows are discounted to their present value using a pre-tax discount rate that reflects current market assessments of the time value of money and the risks specific to the asset for which the estimates of future cash flows have not been adjusted. If the recoverable amount of an asset (or CGU) is estimated to be less than its carrying amount, an impairment loss is immediately recognised for the difference in the statement of profit or loss.

An impairment test is also carried out at least once a year on CGUs or groups of CGUs to which goodwill or an intangible asset with an indefinite useful life has been allocated. In such case, the impairment test is carried out as follows:

• The Group measures impairment by comparing the carrying amount of the CGU(s), including goodwill, with their recoverable amount. The recoverable amount of the CGU is the higher of fair value less costs of disposal and value in use.

• Value in use is calculated based on projected future cash flows:• over a horizon that is coherent with the CGU’s useful life and/or

operating life; and• discounted at a rate that reflects the risk profile of the CGU –

the discount rate(s) used are based on the weighted average cost of capital (WACC) for each CGU.

• Fair value is calculated as the asset’s potential selling price less costs necessary for its sale.

• When the recoverable amount of a CGU is lower than its carrying amount, an amount equal to the difference is recognised as an impairment loss. This loss is allocated first to goodwill, and any surplus is allocated to the other assets of the related CGU.

These calculations may be influenced by several variables:

• changes in regulations and market prices;• changes in interest rates and market risk premiums;• market levels and the Group’s market share;• the useful lives of facilities;• the growth rates used beyond the medium-term plans and the terminal

values taken into consideration.

When an impairment loss subsequently reverses, the carrying amount of the asset (or CGU) is increased to the revised estimate of its recoverable amount, but so that the increased carrying amount does not exceed the carrying amount that would have been determined had no impairment loss been recognised for the asset (or CGU) in prior years. A reversal of an impairment loss is recognised immediately in the statement of profit or loss. An impairment loss allocated to goodwill is irreversible.

2.2.9. Financial assets and liabilities

Financial assets of the Group mainly include cash, trade and other receivables, loans, and the positive fair value of derivatives. Financial assets are treated consistently with the category to which they belong in accordance with IFRS 9 Financial Instruments: financial assets at fair value and financial assets at amortised cost.

Financial liabilities of the Group comprise loans and other financial liabilities, trade and other payables, and the negative fair value of financial derivatives. Financial liabilities are classified as financial liabilities at fair value through profit or loss (including derivatives with a negative fair value, except if the derivative is designated as a hedging instrument) and other financial liabilities (including loans and other financial liabilities and trade and other payables).

Financial assets and liabilities are presented in the statement of financial position as current if they mature within one year and non-current if they mature after one year.

2.2.9.1. Financial assets

The classification depends on the entity’s business model for managing the financial assets and the contractual terms of the cash flows. Management determines the classification of its financial assets at initial recognition.

Regular purchases and sales of financial assets are recognised on the trade date – the date on which the Group commits to purchase or sell an asset.

At initial recognition, the group measures a financial asset at its fair value plus, in the case of a financial asset not at fair value through profit or loss, transaction costs that are directly attributable to the acquisition of the financial asset. Transaction costs of financial assets carried at fair value through profit or loss are expensed in profit or loss.

Financial assets (such as loans, trade and other receivables, cash and cash equivalents) are subsequently measured at amortised cost using the effective interest method, less any impairment if they are held for collection of contractual cash flows where those cash flows represent solely payments of principal and interest.

The effective interest method is a method of calculating the amortized cost of a debt instrument and of allocating interest income over the relevant period. The effective interest rate is the rate that exactly discounts estimated future cash receipts (including all fees and points paid or received that form an integral part of the effective interest rate, transaction costs and other premiums or discounts) through the expected life of the debt instrument, or, where appropriate, a shorter period, to the net carrying amount on initial recognition.

Trade and other receivables after and within one year are recognized initially at fair value and subsequently measured at amortised cost, i.e. at the net present value of the receivable amount, using the effective interest rate method, less allowances for impairment.

Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction on the principal or the most advantageous market at the measurement date.

In accordance with IFRS 13, the hierarchy of fair values reflecting the importance of data used in valuations comprises the following levels:

• level 1 (unadjusted quoted prices): prices accessible to the entity at the measurement date on active markets, for identical assets or liabilities;

• level 2 (observable data): data concerning the asset or liability, other than the market prices included in initial level 1 input, which are directly observable (such as a price) or indirectly observable (i.e. deducted from observable prices);

• level 3 (non-observable data): data that are not observable on a market, including observable data that have been significantly adjusted (e.g. extrapolation of interest rate curves over long non-observable periods).


In compliance with IFRS 9, the Group analyses all its contracts, of both a financial and non-financial nature, to identify the existence of any “embedded” derivatives. Any component of a contract that affects the cash flows of that contract in the same way as a stand-alone derivative corresponds to the definition of an embedded derivative. If they cannot be considered to be closely related to the host contract, embedded derivatives are accounted for separately from the host contract at inception date.

Derivatives are measured at fair value based on quoted prices and market data available from external sources. If no quoted prices are available, the Group may refer to recent comparable transactions or if no such transactions exist base its valuation on internal models that are recognised by market participants, giving priority to information directly derived from observable data, such as over-the-counter listings.

Changes in the fair value of these derivatives are recognised in profit or loss, unless they are designated as cash flow hedges. Changes in the fair value of such hedging instruments are recognised directly in equity (other comprehensive income), excluding the ineffective portion of the hedge.

The Group assesses on a forward-looking basis the expected credit losses associated with its financial assets carried at amortised cost. For trade receivables, the group applies the simplified approach permitted by IFRS 9, which requires expected lifetime losses to be recognized from initial recognition of the receivables.

The amount of the allowance is deducted from the carrying amount of the asset and is recognised in the income statement.

The Group derecognises a financial asset when the contractual rights to the cash flows generated by the asset expire; or the Group transfers the rights to receive contractual cash flows related to the financial asset through the transfer of substantially all of the risks and rewards associated with ownership of the asset. Any interest created or retained by the Group in transferred financial assets is recorded as a separate asset or liability.

Financial liabilities are derecognised when, and only when, it is extinguished, that is, when the obligation specified in the contract is either discharged, cancelled or expires.

Where there has been an exchange between an existing borrower and lender of debt instruments with substantially different terms, or there has been a substantial modification of the terms of an existing financial liability, this transaction is accounted for as an extinguishment of the original financial liability and the recognition of a new financial liability. A gain or loss from extinguishment of the original financial liability is recognised in the statement of profit or loss.

2.2.10. Inventories

Inventories are stated at the lower of cost and net realisable value. Costs of inventories are determined on a first-in-first-out basis. Net realisable value represents the estimated selling price for inventories less all estimated costs of completion and costs necessary to make the sale.

2.2.11. Equity

2.2.11.1. Share issue expenses

Share issue expenses correspond exclusively to external costs expressly related to the capital increase. They are charged against the issue premium at their net-of-tax value.

Other expenses are classified as expenses of the period.

2.2.11.2. Non-controlling interests

Non-controlling interests represent the shares of non-controlling shareholders (minority interests) in the equity of subsidiaries that are not fully owned by the Group.

On the acquisition date, non-controlling interests are either measured at fair value (full goodwill method) or in proportion to share of non-controlling interests in the identifiable assets acquired and liabilities assumed in the business combination (partial goodwill method). Subsequently, non-controlling interests are adjusted for the appropriate proportion of subsequent profits and losses.

2.2.12. Provisions other than employee benefits

The Group recognises provisions if the Group has a present obligation (legal or constructive) towards a third party that arises from an event prior to the reporting date; it is probable that an outflow of resources embodying economic benefits will be required to settle the obligation; and the amount of the obligation can be estimated reliably.

Provisions are determined based on the Group’s best estimate of the expected cost necessary to settle the obligation. Estimates are based on management data from the information system, assumptions adopted by the Group, and if necessary experience of similar transactions, or in some cases based on independent expert reports. The various assumptions are reviewed for each closing of the accounts. When a provision is measured using the cash flows estimated to settle the present obligation, its carrying amount is the present value of those cash flows (when the effect of the time value of money is material).

Present obligations arising under onerous contracts are recognised and measured as provisions. An onerous contract is considered to exist where the Group has a contract under which the unavoidable costs of meeting the obligations under the contract exceed the economic benefits expected to be received from the contract.

A restructuring provision is recognised when the Group has developed a detailed formal plan for the restructuring and has raised a valid expectation in those affected that it will carry out the restructuring by starting to implement the plan or announcing its main features to those affected by it. The measurement of a restructuring provision includes only the direct expenditures arising from the restructuring, which are those amounts that are both necessarily entailed by the restructuring and not associated with the ongoing activities of the entity.

2.2.13. Employee benefits

The Group grants its employees post-employment benefits (pension plans, retirement indemnities, etc.) and other long-term benefits.

For post-employment benefits, a distinction is made between defined benefit plans and defined contribution plans.

2.2.13.1. Post-employment benefits – Defined benefit plans

The obligations under defined-benefit plans are calculated by the projected unit credit method, which determines the present value of entitlements earned by employees at year-end under all types of plan, taking into consideration estimated future salary increases.

Such post-employment benefit obligations are measured using the following methods and main assumptions:

• retirement age, determined on the basis of the applicable rules for each plan, and the requirements to qualify for a full pension;

• career-end salary levels, with reference to employee seniority, projected salary levels at the time of retirement based on the expected effects of career advancement, and estimated trends in pension levels;

• forecast numbers of pensioners, determined based on employee turnover rates and applicable mortality tables;

• a discount rate that depends on the duration of the obligations, determined at the year-end date by reference to the market yield on high-quality corporate bonds or the rate on government bonds whose duration is coherent with the Group’s commitments to employees.


The amount of the provision corresponds to the value of obligations less the fair value of the plan assets that cover those obligations.

The net expense recognised during the year for employee benefit obligations includes:

• in the statement of profit or loss:• the current service cost, corresponding to additional benefit

entitlements earned during the year;• the net interest expense, corresponding to interest on obligations net of

the return on plan assets, which is calculated using the same discount rate as for the obligations;

• the past service cost, including the income or expense related to amendments or settlements of benefit plans or introduction of new plans;

• the remeasurement gains and losses relating to long-term benefits.• in the statement of other comprehensive income:

• the remeasurement gains and losses relating to post-employment benefits;

• the effect of the limitation to the asset ceiling if any.

2.2.13.2. Post-employment benefits – Defined contribution plans

With respect to defined contribution plans, the contributions payable are recognised when employees have rendered the related services.

According to legal requirements applicable in Belgium, defined contribution pension plans are subject to minimum guaranteed rates of return. As such, these plans meet the conditions for classification as defined benefit plan in accordance with IAS 19 and they are accounted for as such.

2.2.13.3. Other long-term benefits

Other long-term employee benefits, such as service awards, are also accounted for using the projected unit credit method. The accounting treatment differs however from the method applied for post-employment benefits, as actuarial gains and losses are recognised immediately in the statement of profit or loss.

2.2.13.4. Termination benefits

A liability for a termination benefit is recognised at the earlier of when the entity can no longer withdraw the offer of the termination benefit and when the entity recognises any related restructuring costs.

2.2.14. Assets classified as held for sale and related liabilities, and discontinued operation

Assets and disposal groups are classified as held for sale if their carrying amount will be recovered principally through a sale transaction rather than through continuing use. This condition is regarded as met only when the sale is highly probable and the asset (or disposal group) is available for immediate sale in its present condition. For a sale to be highly probable, Company management should be committed to a plan to sell the asset (or disposal group), an active program to locate a buyer and complete the plan should be initiated, the asset (or disposal group) should be actively marketed at a price which is reasonable in relation to its current fair value, the sale should be expected to be completed within one year from the date of classification, and actions required to complete the plan should indicate that it is unlikely that significant changes to the plan will be made or that the plan will be withdrawn.

A discontinued operation is a component of the Group which either has been disposed of or is classified as held for sale, and: represents a separate major line of business or geographical area of operations; is part of a single co-ordinated plan to dispose of a separate major line of business or geographical area of operations; or is a subsidiary acquired exclusively with a view to resale.

Assets that qualify as held for sale and related liabilities are presented separately from other assets and liabilities in the statement of financial position. Assets (and disposal groups) classified as held for sale are measured at the lower of their previous carrying amount and fair value less costs to sell. Any excess of the carrying amount over the fair value less costs to sell is recognised as an impairment loss. Depreciation of such assets is discontinued as from their classification as held for sale. Prior period statements of financial position are not restated to reflect the classification of a non-current asset (or disposal groups) as held for sale.

For discontinued operations, a single net amount after taxes is presented in the statement of profit or loss and the comparative period is restated consistently.

2.2.15. Revenue

The Group generates and recognises revenue from the sale of goods to customers and satisfies its performance obligations at a point in time in its stores and on delivery of the goods in case of online sales.

Next to the sale of goods, the Group also generates revenue through the render of services for which the group receives a commission or a fee. For such services, revenue is recognised over the service period (over time recognition). Furthermore, revenue is also generated from the sale of data.

2.2.16. Income taxes

Income taxes include the current tax expense (income) and the deferred tax expense (income), calculated in accordance with the applicable tax legislation.

In compliance with IAS 12 Income Taxes, current and deferred taxes are recognised in the statement of profit or loss, other comprehensive income or directly in equity consistently with the accounting for the underlying transaction.

The current tax expense (income) is the estimated amount of tax due on the taxable income for the period, calculated using the tax rates enacted at reporting date.

Deferred taxes result from temporary differences between the carrying amount of assets and liabilities and their tax basis. No deferred taxes are recognised for temporary differences generated by:

• the initial recognition of goodwill which is not tax deductible;• the initial recognition of an asset or liability in a transaction which is

not a business combination and does not affect the accounting profit or taxable profit (tax loss) at the transaction date;

• investments in subsidiaries and associates, investments in branches and interests in joint arrangements, when the Group controls the timing of reversal of the temporary differences, and it is probable that the temporary differences will not reverse in the foreseeable future.

Deferred tax assets and liabilities are measured at the expected tax rate for the period in which the asset will be realised or the liability settled, based on tax rates (substantively) enacted at reporting date. If the tax rate changes, deferred taxes are adjusted to the new rate and the adjustment is recorded in the statement of profit or loss, unless it relates to an underlying for which changes in value are recognised in other comprehensive income or directly in equity.

Deferred tax liabilities are generally recognised for all taxable temporary differences. Deferred tax assets are only recognised when it is probable that the Group will have sufficient taxable profit to utilise the benefit of the asset in the foreseeable future, or beyond that horizon, if there are deferred tax liabilities with the same maturity.


2.2.17. Non-recurring items

Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature.

The non-recurring items include the following components:

• gain on a bargain purchase (negative goodwill) in the context of a business combination;

• gains and losses on the sale of subsidiaries, joint operations, joint ventures, and associates that do not qualify as discontinued operations;

• acquisition costs of new businesses;• major restructuring charges;• impairment losses resulting from the shutdown of an activity;• impairment losses resulting from testing of cash-generating

units (‘CGUs’) for impairment (a CGU includes tangible assets, intangible assets and allocated goodwill, if any).

2.2.18. Statement of cash flows

The statement of cash flows is prepared according to the indirect method to reconcile the cash flows from operating activities. The cash items disclosed in the cash flow statement comprise cash at banks and in hand except for deposits with a maturity longer than three months. Cash flows denominated in foreign currencies have been translated at average estimated exchange rates. Exchange differences affecting cash items are shown separately in the cash flow statement. Interest paid is presented as cash used in financing activities, while interest received and dividends received are presented as cash from investing activities. Income taxes are included in cash from operating activities. Dividends paid are recognised as cash used in financing activities. The purchase consideration paid for the acquired group company has been recognised as cash used in investing activities where it was settled in cash. Any cash at banks and in hand in the acquired group company have been deducted from the purchase consideration. Transactions not resulting in inflow or outflow of cash, including finance leases, are not recognised in the cash flow statement. Payments of finance lease instalments qualify as repayments of borrowings under cash used in financing activities and as interest paid under cash generated from operating activities.


3. OPERATING SEGMENTS

Information reported to the chief operating decision maker (CODM) for the purposes of resource allocation and assessment of segment performance focuses on the different classes of customers. No operating segments have been aggregated in arriving at the reportable segments of the Group. Specifically, the Group’s reportable segments under IFRS 8 – Operating Segments are as follows:

• FNG Roots (the brand portfolio of FNG);• Brantano; and• Miss Etam.

3.1. Segment revenue and results

31/12/2018

(in thousands of euros) FNG Roots Miss Etam Brantano

Inter-segment revenue between

FNG Roots and Miss Etam


FNG Roots and Brantano Total Group

Revenue 358,373 99,297 151,887 (48,646) (49,117) 511,794Cost of merchandise (214,548) (37,890) (75,231) 48,628 47,469 (231,571)Gross profit 143,825 61,407 76,656 (18) (1,648) 280,223Employee benefit expense (39,661) (23,309) (28,699) 0 2,303 (89,365)Other operating expenses (68,816) (33,206) (35,800) 18 (655) (138,459)Adjusted operating profit/(loss) before amortisation and depreciation expense (Adjusted EBITDA) 35,349 4,892 12,157 52,398

Non-recurring items 3,000 0 (519) (2,481)Operating profit/(loss) before amortisation and depreciation expense (EBITDA) 38,349 4,892 11,638 54,879

Amortisation and depreciation expenses (11,199) (3,096) (8,248) (22,543)Operating profit/(loss) (EBIT) 27,150 1,796 3,390 32,337Financial income 729Financial expenses (18,303)Exchange gains/(losses) (43)Profit/(loss) before taxes 14,720Income taxes (3,181)PROFIT/(LOSS) FOR THE PERIOD 11,538

31/12/2017

(in thousands of euros) FNG Roots Miss Etam Brantano


FNG Roots and Miss Etam


FNG Roots and Brantano Total Group

Revenue 363,894 101,888 125,980 (42,304) (67,056) 482,402Cost of merchandise (220,295) (40,454) (63,940) 42,304 67,056 (215,329)Gross profit 143,599 61,434 62,041 0 0 267,074Employee benefit expense (39,421) (22,356) (29,084) (90,861)Other operating expenses (70,167) (34,613) (26,052) (130,832)Adjusted operating profit/(loss) before amortisation and depreciation expense (Adjusted EBITDA) 34,011 4,465 6,904 45,381

Non-recurring items (4,986) 0 (2,530) (7,516)Operating profit/(loss) before amortisation and depreciation expense (EBITDA) 29,025 4,465 4,374 37,864

Amortisation and depreciation expenses (8,858) (2,179) (7,740) (18,777)Operating profit/(loss) (EBIT) 20,167 2,286 (3,366) 19,087Financial income 2,548Financial expenses (13,216)Exchange gains/(losses) (647)Profit/(loss) before taxes 7,772Income taxes (459)PROFIT/(LOSS) FOR THE PERIOD 7,313


The accounting policies of the reportable segments are the same as the Group’s accounting policies described above. The revenue presented above is at year-end 2018 the only measure reported to the chief operating decision maker for the purposes of resource allocation and assessment of segment performance. No other detail is reviewed currently by the CODM, which are the Executive Committee.

Information regarding revenue from major products is not relevant as all sales are generated from the same nature of products, being clothing and shoes.

3.2. Geographical information

The Group operates in two principal geographical areas – Belgium (country of domicile) and the Netherlands.The Group’s revenue by location of operations and information about its non-current assets (i.e. property, plant and equipment, intangible assets and goodwill) by location of assets are detailed below.

Revenue Non-current assets

(in thousands of euros) 31/12/2018 31/12/2017 31/12/2018 31/12/2017

Belgium 264,962 209,629 217,045 236,066

The Netherlands 234,671 230,219 268,157 179,731

Other 12,161 42,554 10,232 9,852

Total 511,794 482,402 495,434 425,649

The above-mentioned revenue has been detailed based on the location where revenue is generated and not based on the location of the legal entity. As a result of a more detailed review of the revenue, the 2017 information has been adjusted.

Non-current assets exclude non-current assets classified as held for sale, financial instruments and deferred taxes.

3.3. Other information

Segment revenue includes one customer contributing more than 10% to the Group’s revenue for 2018 (2017: nil).

4. BUSINESS COMBINATIONS AND CHANGES IN CONSOLIDATION SCOPE

4.1. 2018 acquisitions

On 28 December 2017, the Company acquired 100% of the voting rights in Henkelman Group (“Henkelman”). Henkelman is a group operating in the development and production of shoes. As a result of this acquisition, FNG can strengthen its strategic important purchasing platform of clothing with experienced shoe know-how.

The acquirees’ assets acquired and liabilities assumed recognised in the consolidated statement of financial position at acquisition date, the amount of goodwill, as well as the net effect on the statement of cash flows are presented in the table below:

(in thousands of euros)Intangible assets 36,921Property, plant and equipment 5,578Deferred tax assets 1,241Inventories 18,347Trade and other receivables 22,920Other current assets 123Cash and cash equivalents 183Financial liabilities (7,474)Deferred tax liabilities (8,806)Trade and other payables (33,313)Other current liabilities (167)Net assets acquired 35,553Total consideration (41,550)Goodwill 5,996

Total consideration 41,550Financed in cash 37,500Deferred consideration 4,050

Cash and cash equivalent acquired (183)

Net cash outflow in investing activities 183

The amounts above with respect to fair value of net assets acquired and goodwill are provisional as not all fair value measurements have been finalised.


As a result of the acquisition accounting, the Company has allocated the purchase price (consideration paid) and has calculated the fair values of the assets acquired and liabilities assumed, in accordance with generally applied valuation rules. The purchase price was mainly allocated to intangible assets (tradenames, supplier list and key-money) and deferred taxes.

Goodwill arose because the consideration for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market development. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. The resulting goodwill is not tax deductible.

The gross contractual amount of the trade receivables and other receivables amounts to € 22,920 thousands.

There were no significant costs related to the business combinations amount.

4.2. 2017 acquisitions

On 31 December 2017, the Company acquired 100% of the voting rights in Mirus Group, a Belgian based retail group consisting of the following subsidiaries: GBO, Concept Fashion and Suitcase. The fair value of the total consideration transferred amounted to € 40,150 thousands, which was determined using a discounted cash flow model based on the expected cash flows to be generated in the new group.

These companies were acquired so as to continue the expansion of the Group’s activities in the fashion retail industry.

The acquirees’ assets acquired and liabilities assumed recognised in the consolidated statement of financial position at acquisition date, the amount of goodwill, as well as the net effect on the statement of cash flows are presented in the table below:

(in thousands of euros)Intangible assets 20,350Property, plant and equipment 2,103Deferred tax assets 1,632Inventories 6,674Trade and other receivables 561Current financial assets 56Other current assets 306Cash and cash equivalents 271Provisions 0Non-current financial liabilities (225)Deferred tax liabilities (5,144)Current financial liabilities (3,184)Trade and other payables (8,921)Other current liabilities (148)Net assets acquired 14,330Non-controlling interests 0Total consideration (40,150)Goodwill 25,820

Total consideration 40,150Financed in cash 20,900Deferred consideration 19,250

Cash and cash equivalent acquired (271)

Net cash outflow in investing activities 20,629

As a result of the acquisition accounting, the Group has allocated the purchase price (consideration paid) and has calculated the fair values of the assets acquired and liabilities assumed, in accordance with generally applied valuation rules. The purchase price was mainly allocated to intangible assets (tradenames, supplier list and key-money).

Goodwill arose because the consideration for the combination effectively included amounts in relation to the benefit of expected synergies, revenue growth and future market development. These benefits are not recognised separately from goodwill because they do not meet the recognition criteria for identifiable intangible assets. The resulting goodwill is not tax deductible.

The gross contractual amount of the trade receivables and other receivables amounts to € 56 thousands.

There were no significant costs related to the business combinations amount.


4.3. Disposal of subsidiaries

In the course of 2018, the Group disposed of its 100% interest in Fashion Buying Platform Holding, including the underlying 100% interest in Colveta AG.

The following table details the assets and liabilities over which control was lost, the consideration received, the result on disposal and the net cashflow on disposal:

(in thousands of euros)Fashion Buying

Platform Holding

Property, plant and equipment 9

Trade and other receivables 4,472

Other current assets 20

Cash and cash equivalents 1,351

Other financial liabilities (5)

Trade and other payables (16,461)

Other current liabilities (171)

Net assets disposed of (10,784)

Total consideration 10,784

Gain on disposal 0

(in thousands of euros) Fashion Buying Platform Holding


Received in cash 0

Financed through outstanding liability 10,784

Cash and cash equivalent disposed of (1,351)

Net cashflow in investing activities (1,351)

Considering that no goodwill has been allocated to Fashion Buying Platform Holding, there was no impact on the goodwill as a result of this disposal.

In the course of 2017, the Group disposed of Rainbow Garment.

The following table details the assets and liabilities over which control was lost, the consideration received, the loss on disposal and the net cash inflow on disposal:

(in thousands of euros) Rainbow Garment

Goodwill 5,489

Trade and other receivables 25,070

Other current assets 146

Trade and other payables (20)

Net assets disposed of 30,685

Total consideration (26,278)

Loss on disposal (4,407)

(in thousands of euros) Rainbow Garment


Received in cash 17,243

Deferred consideration 9,035

Cash and cash equivalent disposed of 0

Net cash inflow in investing activities 17,243

The consideration transferred has been determined based on the net asset (mainly consisting of receivables), excluding the goodwill allocated to the business.

The loss on disposal is included in the non-recurring items in the consolidated income statement (see note 6.5.).


5. NOTES RELATING TO THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION

5.1. Goodwill

(in thousands of euros) 31/12/2018 31/12/2017

Cost 86,158 80,162

Accumulated impairment losses 0 0

Goodwill 86,158 80,162

(in thousands of euros)

Balance at 31 December 2016 59,831

Additions through business combinations 25,820

Derecognised on disposal (5,489)


Additions through business combinations 5,996


The additions in 2018 relate to the acquisition of the Henkelman Group (see note 4.1.), which was allocated to the cash-generating unit FNG Roots.

The additions in 2017 relate to the acquisition of Mirus (see note 4.2.), which was allocated to the cash-generating unit Brantano.

The derecognised component on disposal in 2017 relates to the disposal of Rainbow Garment (see note 4.3.).

Goodwill has been allocated for impairment testing purposes to the following cash-generating units:

• FNG Roots: Fashion clothes and purchasing platforms; and• Brantano: Footwear and fashion clothes for internal and external brands.

The carrying amount of goodwill was allocated to cash-generating units as follows:


FNG Roots 60,338 54,342

Brantano 25,820 25,820

Goodwill 86,158 80,162

The recoverable amount of the cash-generating units is determined based on a value in use calculation which uses cash flow projections based on financial budgets approved by the directors covering a five-year period.

The key assumptions used in the computation of the recoverable amount are as follows:

• FNG Roots• Discount rate (WACC): 9.76%• Growth rate 2019 - 2022: 3.4%• LT growth rate: 1.5%

• Brantano• Discount rate (WACC): 9.76%• Growth rate 2019 - 2022: 6.4%• LT growth rate: 1%

The directors believe that any reasonably possible change in the key assumptions on which recoverable amount is based would not cause the aggregate carrying amount to exceed the aggregate recoverable amount of the cash-generating unit. The sensitivity analysis performed by management consist of following changes to the key assumptions:

• Discount rate: +/- 1.0%• LT Growth rate: +/- 1.0%• LT Growth rate: 0/- 1.0% and discount rate: +/- 0.5%

LT growth rate +/- 1.0% Discount rate +/- 1.0% LT growth rate +/- 0.5% and discount rate +/- 0.5%

FNG Roots No impairment No impairment No impairment

Brantano No impairment No impairment No impairment

As such, management assesses that no impairment risk exists.


5.2. Intangible assets


Acquisition cost 340,377 279,560

Accumulated amortisation and impairment (7,275) (4,248)

Intangible assets 333,102 275,313

of which:

Software 18,343 7,562

Tradenames and trademarks 248,211 233,970

Customer lists and suppliers lists 63,784 30,942

Key money 2,763 2,838

(in thousands of euros)Software Tradenames and

trademarksCustomer lists

and supplier lists Key money Total

Balance at 31 December 2016 5,858 233,225 2,500 2,673 244,256

Additions 2,965 561 9,533 0 13,059

Additions through business combinations 49 303 18,909 1,089 20,350

Disposals 0 (179) 0 (412) (591)

Amortisation expense (2,279) 0 0 (185) (2,464)

Impairment losses 0 0 0 (327) (327)

Other 969 61 0 0 1,030


Additions 13,505 9,750 0 122 23,377

Additions through business combinations 0 4,491 32,430 0 36,921

Disposals (21) 0 0 0 (21)

Amortisation expense (2,693) 0 0 (197) (2,889)

Exchange differences 0 0 412 0 412

Other (11) 0 0 0 (11)


(in thousands of euros) Software Tradenames and trademarks

Customer lists and supplier lists Key money Total

Cost at 31 December 2017 11,022 233,970 30,942 3,626 279,560

Accumulated amortisation and impairments (3,460) 0 0 (788) (4,248)

Carrying amount at 31 December 2017 7,562 233,970 30,942 2,838 275,313

Cost at 31 December 2018 24,571 248,211 63,784 3,810 340,377

Accumulated amortisation and impairments (6,228) 0 0 (1,047) (7,275)

Carrying amount at 31 December 2018 18,343 248,211 63,784 2,763 333,102

“Software” includes software acquired or developed by external suppliers and capitalised internal development costs.

“Tradenames and trademarks” have been either acquired or resulting from business combinations.

The additions in “Customer lists and supplier lists” relate to customer and supplier lists acquired in 2018 and 2017.

“Key money” have been acquired through business combinations and represents the favourable lease conditions of secured store locations.

The additions through business combinations relate to the acquisition of Henkelman Group (see note 4.1.) and Mirus (see note 4.2.).


The tradenames, trademarks, customer lists and supplier lists have an indefinite useful life, due to their nature. As such, they are subject to an annual impairment test. The key assumptions were as follows:

• FNG Roots• Discount rate (WACC): 9.76%• Growth rate 2019 - 2022: 3.4%• LT growth rate: 1.5%

• Brantano• Discount rate (WACC): 9.76%• Growth rate 2019 - 2022: 6.4%• LT growth rate: 1%

5.3. Property, plant and equipment


Acquisition cost 124,848 106,119

Accumulated depreciation and impairment (48,675) (35,944)

Property, plant and equipment 76,173 70,175

of which:

Buildings 28,916 20,304

Leasehold improvements and other store furniture 34,760 34,703

Machinery and installations 11,881 13,011

Assets under construction 616 2,157

(in thousands of euros)Buildings

Leasehold improvements

and other store furniture

Machinery and installations

Assets under construction Total


Additions 3,281 23,936 2,456 1,265 30,938

Additions through business combinations 0 2,096 7 0 2,103

Disposals (427) (2,130) (72) 0 (2,629)

Depreciation expense (2,619) (10,856) (2,837) 0 (16,312)

Exchange differences 0 (3) (2) 0 (5)

Other 160 5,592 (6,458) (311) (1,017)


Additions 6,332 14,654 1,822 366 23,175

Additions through business combinations 4,978 214 386 0 5,578

Disposals (219) (1,430) (45) (1,402) (3,097)

Depreciation expense (2,736) (13,377) (3,541) 0 (19,654)

Exchange differences 0 0 1 0 1

Other 258 (6) 247 (506) (6)

Balance at 31 December 2018 28,916 34,760 11,881 616 76,173

(in thousands of euros)Buildings

Leasehold improvements

and other store furniture

Machinery and installations

Assets under construction Total

Cost at 31 December 2017 24,742 55,166 24,054 2,157 106,119Accumulated amortisation and impairments (4,438) (20,463) (11,044) 0 (35,944)Carrying amount at 31 December 2017 20,304 34,703 13,011 2,157 70,175

Cost at 31 December 2018 35,788 62,833 25,610 616 124,848Accumulated amortisation and impairments (6,872) (28,073) (13,729) 0 (48,675)Carrying amount at 31 December 2018 28,916 34,760 11,881 616 76,173


The carrying amount of assets held under finance leases is presented in the following table:




These assets held under finance lease relate to the corporate building in Mechelen, Belgium. The lease term of this building is 15 years and includes a purchase option. The related lease commitments are disclosed in note 5.12. on borrowings.

5.4. Inventories


Raw materials and furniture 1,123 1,184

Work in progress 4,370 2,464

Goods for resale 104,230 82,071

Gross carrying amount 109,724 85,719

Write-downs (impairment) (1,641) (2,932)

Net carrying amount 108,082 82,787

The cost of inventories recognised as an expense during the year was € 231,571 thousands (2017: € 215,329 thousands).

The increase in inventories results from the business combination with Henkelman Group and the launch of the online platform.

The cost of inventories recognised as an expense in 2018 includes € 1,924 thousands of additional write-downs, € 1,859 thousands of reversals of write-downs of inventory in 2017 as they became recoverable and € 1,357 thousands of write-offs.

The cost of inventories recognised as an expense in 2017 includes € 1,318 thousands of additional write-downs and € 3,217 thousands of reversals of write-downs of inventory in 2017 as they became recoverable.

No inventories are expected to be recovered after 12 months.

5.5. Trade and other receivables


Trade receivables

Trade receivables from third parties 67,457 65,429

Write-downs on trade receivables (1,068) (1,140)

Total trade receivables 66,390 64,290

Other receivables

Receivable from third parties 2,643 4,732

Receivables from related parties 3,141 579

Total other receivables 5,784 5,312

Total trade and other receivables 72,174 69,601

All the trade receivables mentioned above are denominated in euros.

The Group has entered into a Group non-recourse syndicate factoring agreement. The Agreement provides the Group with a maximum credit facility of up to 90% of the amount of the approved outstanding receivables on all debtors transfered to the Factor. The remaining 10% of the relevant receivables is paid by the Factor to us upon receipt of payment from the relevant debtor, upon which also the remaining balance of the receivable is derecognised.

Trade receivables disclosed above include amounts that are past due at the end of the reporting period for which the Group has not recognised an allowance for doubtful debts because there has not been a significant change in credit quality and the amounts are still considered recoverable. The aged analysis of receivables past due but not impaired is presented below:

(in thousands of euros) 31/12/2018 31/12/2017Not yet due 62,605 60,768Up to 60 days 1,755 55661 to 90 days 697 316> 90 days 1,334 2,650Total 66,390 64,290


The recoverability of the receivables outstanding for more than 90 days should be viewed together with the payables with the same customer or parties related to the customer, which are exceeding these receivables.

For an analysis of the credit risk, see note 7.2.2. below.

The movement in the allowance for doubtful debts can be detailed as follows:


At 1 January (1,140) 0

Impairment write downs (79) (1,140)

Non-recoverable receivables 33 0

Reversal of write downs 29 0

Amounts recovered during the period 89 0

At 31 December (1,068) (1,140)

5.6. Other financial assets and Other assets

The other financial assets for an amount of € 18,718 thousands in 2018 consist of a loan granted to FIPH B.V., which has been transferred to the foundation established by FNG. The objective of the foundation is to, amongst other, grant incentives to employees and independent contractors of the Group.

The other financial assets of € 9,035 thousands in 2017 consist of the remaining amount receivable from the sale of the previous subsidiary of the Group, Rainbow Garment. The consideration for this sale amounts to € 26,278 thousands, of which € 17,243 thousands was already received in cash in 2017. The sale generated a loss on disposal recognised in non-recurring items, see note 6.5.

The other assets (non-current and current) can be detailed as follows:


Rental accruals 956 1,269

Other 2,629 2,784

Total other assets 3,585 4,053

of which:

Non-current 0 0

Current 3,585 4,053

The caption “Other” consists mainly of prepaid expenses relating to the operating activities of the Group.

5.7. Cash and cash equivalents

Cash and cash equivalents include following components:


Cash at bank and in hand 118,143 90,470

Total cash and cash equivalents 118,143 90,470

The credit risk on liquid funds is limited because the counterparties are banks with high credit-ratings assigned by international credit-rating agencies.

5.8. Deferred taxes

The deferred taxes recognised in the consolidated statement of financial position are as follows:


Deferred tax assets 18,636 16,321

Deferred tax liabilities (56,793) (47,235)


The nature of the sources of deferred tax assets and liabilities recognised in the statement of financial position are detailed in the following table:

Assets Liabilities


Property, plant and equipment 0 859 (5,458) (3,848)

Intangible assets 527 0 (54,616) (45,943)

Inventories 254 293 (659) (1,447)

Other financial assets 530 565 (77) (196)

Employee Benefits 11 16 0 0

Financial liabilities 3,689 3,152 (995) (685)

Deferred taxes relating to temporary differences 5,011 4,885 (61,804) (52,119)

Tax losses carried forward 18,636 16,321 0 0

Deferred taxes relating to tax losses and tax credits 18,636 16,321 0 0

Total recognised deferred taxes 23,647 21,205 (61,804) (52,119)

Offsetting (5,011) (4,885) 5,011 4,885

Total, net 18,636 16,321 (56,793) (47,234)

The movements in deferred tax assets and liabilities have been recognised as follows:

(in thousands of euros) 2018 2017



Balance at 1 January (30,914) (27,681)

Changes:

Recognised in income statement 337 181

Recognised in other comprehensive income (7) (64)

Acquisitions through business combinations (7,566) (3,512)

Other (9) 162

Balance at 31 December (38,158) (30,914)

Of which:



At closing 2018, the Group has unused tax losses for which no deferred taxes are recognised for a total amount of € 13,429 thousands (2017: € 4,762 thousands). These tax losses do not have an expiry date.

5.9. Share capital

5.9.1. Capital management

The Company manages its capital to maintain a strong level of capital in order to sustain development of the business and confidence of creditors while optimising return on capital for shareholders. This ensures that entities in the Group will be able to continue as going concerns while maximising the return to stakeholders through the optimisation of its debt and equity balance and its EBITDA (as defined in note 2.1.).

The Group is not subject to any externally imposed capital requirements except those provided for by law. The Group’s management reviews the capital structure of the Group on a regular basis. As part of this review, management considers the cost of capital and the risks associated with each class of capital. The Group’s objectives, policies and processes for managing capital have remained unchanged over the past few years.


5.9.2. Capital transactions

Number of shares

Balance at 31 December 2016 8,042,392

Share issue through contribution in cash 19/12/2017 937,500


Share issue through contribution in cash 9/07/2018 2,220,771


Since January 1, 2017, the following alterations to the Company’s issued capital took place:

• On 9 October 2017, FNG NV converted 1,208,353 class A shares into ordinary shares. As a result of this, FNG N.V. has placed (i) 7,250,119 ordinary shares, (ii) 792,272 class A shares and (ii) 1 Priority Share.

• On 19 December 2017, FNG issued 937,500 class A shares and 5 Warrants through a private placement for a total amount of € 30,000 thousands. As a result of this issuance, FNG has placed (i) 7,250,119 ordinary shares, (ii) 1,729,772 class A shares (iii) 1 Priority Share and (iv) 5 Warrants. Each investor who subscribed to the private placement of € 30,000 thousands in December 2017 received 1 Warrant. The Warrants could be exercised by such investors if the highest average closing price of an ordinary share listed on Euronext Amsterdam was lower than EUR 35.20 during any period of five consecutive trading days on Euronext Amsterdam within a specific period. In such case, the investors would have had the right to subscribe to an additional number of class A shares, to be determined in accordance with the terms and conditions of the Warrants. Upon exercise, these warrants could potentially result in 151,429 additional shares.

• In January 2018, shares were issued for a total amount of € 1,000 thousands to FIPH, which were paid at the end of December 2017.• On 4 June 2018, at the time of the move of the registered office of the Company to Belgium, resulting in a double nationality of the Company (Dutch and

Belgian), the General Meeting of Shareholders decided to convert the Priority share in a class A share and the management board decided to purchase 5 Warrants, as a consequence of which the 5 Warrants ceased to exist and ceased to be exercisable. As a result, FNG has placed (i) 7,250,119 ordinary shares and (ii) 1,729,773 class A shares. The repurchase price amounted to € 4,172 thousands, presented as financial expenses.

• On 26 June 2018, the Board of Directors decided to increase conditionally the share capital of FNG to a maximum amount of € 254,702.08 (excluding the share premium and including the increase option), with the cancellation of the preferential rights of the existing shareholders, but with the grant of priority allocation rights, through the issue of maximum 3,183,776 new shares (including increase option), at a price per share between € 26.25 and € 29.75. The issue of the 2,220,771 new shares was underwritten on 9 July 2018 through a notary deed. It was also established that the share capital of FNG was increased by € 177,661.68 (of which € 168,184.96 through a contribution in cash and € 9,476.72 through a contribution in kind) and that a total share premium of € 59,783,155.32 (of which € 56,594,239.04 through a contribution in cash and € 3,188,916.28 through a contribution in kind) was recognised on an unavailable reserve account. Furthermore, the listing of the shares of FNG on Euronext Brussels was requested, which resulted in a dual listing on Euronext Amsterdam and Euronext Brussels. The reference market was also changed from Euronext Amsterdam to Euronext Brussels.

5.9.3. Shareholders

The share capital of the Company amounts to € 60,679 thousands and is represented by 11,200,663 shares.

The shareholders of the Company are detailed as follows:

Shareholder Participatie

Mr. Dieter Penninckx, Mrs. Anja Maes, Mr. Emmanuel Bracke and Mr. Emiel Lathouwers, directly and indirectly through Greenway District BVBA, GW2 BVBA, MANco GDM BVBA and 3NG NV 45.54%

Belfius Insurance NV 5.05%

5.10. Provisions

The provisions presented in the consolidated statement of financial position can be detailed as follows:

(in thousands of euros) Restructuring Other provisions Total

Balance at 31 December 2017 428 1,244 1,672

Additions 0 1,044 1,044

Additions through business combinations 0 455 455

Reversals (12) (534) (547)

Uses (416) (259) (675)

Balance at 31 December 2018 0 1,949 1,949

Of which current provisions 0 1,949 1,949

Of which non-current provisions 0 0 0


The other provisions relate mainly to claims from employees, individual termination benefits and a provision for expected returns of goods.

5.11. Post-employment benefit obligations

The Group operates defined contribution plans and defined benefit plans.

For the defined contribution plans, see note 6.2. on employee benefit expenses.

The defined contribution plans in Belgium are legally subject to minimum guaranteed returns. As such, these plans meet the conditions for classification as defined benefit plan and are recognised as such in the consolidated statement of financial position. However, due to the insignificant amount, the Group has decided not to disclose all the disclosures as required by IAS 19 Employee Benefits.

The senior employees and management have access to these schemes. The death, disability and healthcare benefits granted to employees of the Company are covered by external insurance companies, where premiums are paid annually and charged to the income statement as they were incurred.

As a consequence of the (Belgian) Law of 18 December 2015, minimum returns are guaranteed by the employer as follows:

• for the contributions paid as from 1 January 2016, a new variable minimum return based on rates of the Belgian government bonds, with a minimum of 1.75% and a maximum of 3.75%. In view of the low rates of the Belgian government bonds in the last years, the return has been initially set to 1.75;

• for the contributions paid until end December 2015, the previously applicable legal returns (3.25% and 3.75% respectively on the employer and employee contributions) continue to apply until retirement date of the participants.

5.12. Borrowings

The borrowings as presented in the consolidated statement of financial position consist of the following items:


Bonds 73,758 93,305

Bank debts 201,610 131,904

Other borrowings 10,000 10,138

Total borrowings 285,368 235,346

of which:

Non-current 273,763 178,750

Current 11,605 56,596

The Group’s bonds can be detailed as follows:

• On 1 March 2012 FNG Group NV issued 289 senior unsecured and dematerialised bonds with a nominal value of € 50 thousands each (for a total amount of € 14,450 thousands) offered for subscription through a private placement. The general meeting of bondholders of 20 December 2014 decided on several amendments to the bonds, among which amendments to the financial covenants. These bonds are not listed on any market and bear an annual interest rate of 7.45%.

• The board of directors of FNG Group NV decided on 29 December 2014 to issue 250 unsubordinated and dematerialised bonds with a nominal value of € 100 thousands each (for a total nominal amount of € 25,000 thousands). The bonds were issued through a private placement and were listed on Euronext Growth Brussels and bear an annual interest rate of 4.625%. These bonds have been reimbursed on 15 April 2018 by FNG Group NV.

• The board of directors of FNG Group NV decided on 26 January 2015 to issue 100 subordinated registered bonds with a nominal value of € 50 thousands each (for a total nominal amount of € 5,000 thousands). The bonds were issued through a private placement and are not listed on any market and bear an annual interest rate of 7.45%. On 16 July 2018, 87 of the 100 bonds have been reimbursed.

• The board of directors of FNG Group NV decided on 20 March 2015 to issue 1,000 subordinated dematerialised bonds with a nominal value of € 5 thousands each (for a total nominal amount of € 5,000 thousands). The bonds were issued through a private placement and are not listed on any market and bear an annual interest rate of 7.45%.

• The board of directors of FNG Benelux Holding NV decided on 7 July 2016 to issue 200 senior unsecured bonds with a nominal value of € 100 thousands each (for a total nominal amount of € 20,000 thousands. The maturity date of those bonds is 17 July 2023 and the bonds bear an annual interest rate of 5.50%.

• Next to the previous issue of bonds, the board of directors of FNG Benelux Holding decided on 19 June 2017 to issue additional senior unsecured bonds for a total nominal value of € 25,000 thousands. The bonds issued have the same characteristics as the ones issued in July 2016 (a so-called “tap” under the existing bonds issued on 7 July 2016). The bonds represent a total amount of € 45,000 thousands. The bonds were issued through a private placement and are listed on Euronext Growth Brussels.

• In June 2018, FNG Benelux Holding NV launched a Euro Medium Term Note program (the “EMTN Program”) with FNG Benelux Holding NV as Issuer and Belfius as Arranger, Dealer and Agent. Under the EMTN Program, Euro Medium Term Notes (“Notes”) can be issued up to an aggregate nominal amount of € 100,000 thousands (the maximum size of the EMTN Program). The Notes will have a nominal value of € 100 thousands each and will be issued in series. The program started on 13 August 2018 and the first series of notes was issued on 17 August 2018 for an amount of € 10,000 thousands. The notes have a duration of 5 years and grant a gross actuarial return of 5%.


The bank debts consist mainly of the Club Deal:

• FNG Group NV and other members of the Group entered into a € 131,000 thousands facilities agreement, originally dated 28 July 2014 and as amended and restated on 19 June 2015 and as further amended on 24 March 2016 and as further amended and restated on 29 March 2017 with ING Belgium NV/SA, Rabobank, BNP Paribas Fortis NV/SA, Belfius Bank NV/SA and ING Bank N.V. In 2018, this facility has been refinanced in the context of the Club Deal (see below).

• Brantano had a credit facility with BNP Paribas Fortis for a maximal amount of € 37,000 thousands, Miss Etam had a credit facility with ABN Amro Bank and ING Netherlands for an amount of € 22,500 thousands and Concept Fashion Group had a credit facility of € 2,452 thousands. In 2018, these credit facilities have been refinanced in the framework of the Club Deal (see below).

At the end of February 2018, FNG Holding NV, an indirect subsidiary of FNG NV, entered into a credit facility (the Club Deal) with BNP Paribas Fortis as Coordinator, Security Agent and Agent and BNP Paribas Fortis, ING Belgium, ABN AMRO Bank and Belfius Bank as Original Lenders. Under this credit facility, facilities for an amount of € 240,000 thousands were made available. Following this credit facility, (i) certain existing financial indebtedness of the Group has been refinanced, (ii) the payment of the transaction costs in relation to the Club Deal transaction has been financed, and (iii) additional financing has been provided for general corporate and working capital purposes and future capital expenditure of FNG Holding NV and its subsidiaries. On 15 April 2018, the facilities of the Club Deal (capex) were used to finance the early redemption of the € 25,000 thousands, 4.625% bonds issued by FNG Group NV, which were in principle due on 15 April 2021.

The financing of the early redemption of these bonds with funds drawn under the Club Deal is temporarily, since the early redemption of this bond will be (re)financed with the proceeds of the future EMTN program. Nevertheless, the capex facility drawn under the Club Deal will not be repaid and used for the Company’s investment program.

Other borrowings consist mainly of the following loans:

• In October 2016, the Group entered into mezzanine loan for a total amount of € 10,000 thousands with external partners carrying a floating interest rate (EURIBOR 3M + margin) and with a maturity date in December 2020.

For additional information on liquidity risk, see note 7.2.3.

For information regarding the pledges, see note 8.4.2.

Reconciliation to statement of cash flows:

31/12/2018(in thousands of euros)

Opening carrying amount

Cash flows

Other movementsClosing carrying amount

Business combination Reclasses Other

Non-current borrowings

Bonds 93,305 (19,547) 0 0 0 73,758

Bank debts 75,308 114,002 0 (52) 747 190,005

Other borrowings 10,138 (225) 0 87 0 10,000

Current borrowings

Bonds 0 0 0 0 0 0

Bank debts 56,596 (52,709) 7,474 (35) 279 11,605

Other borrowings 0 0 0 0 0 0

Total liabilities from financing activities 235,346 41,521 7,474 0 1,025 285,368

31/12/2017(in thousands of euros)

Opening carrying amount

Cash flows

Other movementsClosing carrying amount

Business combination Reclasses Other


Bonds 68,137 25,000 0 0 168 93,305

Bank debts 58,273 16,809 225 0 0 75,308

Other borrowings 16,004 (3,138) 0 (2,729) 0 10,138

Current borrowings

Bank debts 35,363 18,049 3,184 0 0 56,596

Total liabilities from financing activities 177,777 56,720 3,409 (2,729) 168 235,346


5.13. Other financial liabilities

The other financial liabilities as presented in the consolidated statement of financial position consist of the following items:


Finance lease liabilities 14,528 12,431

Deferred consideration business combination 4,050 19,250

Other loans 2,128 4,453

Derivative instruments 1,307 951

Total other financial liabilities 972 0

of which: 22,986 37,085

Non-current

Current 17,147 17,208

Finance lease liabilities 5,839 19,877

The deferred consideration related to business combination relates to the acquisition of Henkelman in 2018, see also note 4.1., and Mirus in 2017, see also note 4.2.

The other loans comprise a carrying amount of € 2,128 thousands with a maturity of 5 years and an initial nominal amount of € 5,000 thousands, of which € 2,500 thousands has been reimbursed in 2018 (Coltaparte loan). This loan carries an embedded derivative relating to the return on the loan, which is separated and measured at fair value through profit or loss (see note 5.16.). The main conditions of this loan are as follows:

• The loan is subordinated to all existing and future non-subordinated debt obligations of Miss Etam Holding B.V., subject to certain conditions.• The return payable to the debtor depends on the realised EBITDA of the Company in the financial year prior to loan repayment. Payment of the return is done

only if the EBITDA exceeds € 5,000 thousands in the previous financial year. The return is equal to the realised EBITDA less € 5,000 thousands, multiplied by 1.4. The maximum return will be no more than € 7,000 thousands.

• The loan has a maturity of 5 years until 31 May 2020 and must be repaid at maturity. The shareholder can as from 1 June 2018 (up to no more than 3 months after the annual financial statements of the Company are made available for the previous financial year) as well as from 1 June 2019 (up to no more than 3 months after the annual financial statements of the Company are made available for the previous financial year) ask for repayment of up to 50% of the loan (and the pro rata return).

• In certain exceptional circumstances, the debtor can choose to convert its loan (principal plus return) to shares in the Company, which will apply (i) if the Company realises a negative EBITDA in the second year (2016/2017) or in a subsequent year; (ii) if the management of the Company does not fulfil its task in a way that can reasonably be expected from it; or (iii) if there is failure to comply with the information obligation contained in the agreement (after notice of default and a recovery period). The conversion into shares would occur in such a way that the share interest of the debtor in the Company resulting from the conversion, will by 33.3% of the total interest in the Company.

For more details regarding the derivative instruments, see note 5.16.

The finance lease commitments, which includes the bargain purchase option, relating to the building in Mechelen are disclosed in the following table:


Not later than 1 year 1,095 894

Later than 1 year and not later than 5 years 4,518 4,472

Later than 5 years 11,046 9,368

Less: future finance charges (2,131) (2,304)

Present value of minimum lease payments 14,528 12,431


Not later than 1 year 874 627



Present value of minimum lease payments 14,528 12,431

For additional information on liquidity risk, see note 7.2.3.


5.14. Trade and other payables

The trade and other payables can be detailed as follows:


Trade payables 92,904 77,486

Payables relating to fixed assets 108 240

Other payables relating to employees 9,866 8,359

Tax payables, other than income tax 9,966 5,737

Customer loyalty liabilities 982 565

Other payables to related parties 0 1,922

Other 0 1,978

Total trade and other payables 113,826 96,287

The customer loyalty liabilities relate to the estimate of awards granted to customers.

The increase in trade payables is mainly a result of the business combination with the Henkelman Group and favourable credit terms obtained from suppliers.

5.15. Other current liabilities

The other current liabilities consist of the following components:


Accrued expenses and deferred income 6,810 6,901

Other 0 0

Total other liabilities 6,810 6,901

5.16. Derivative instruments

The derivative instruments recognised in the consolidated statement of financial position under “Other financial assets” and “Other financial liabilities” can be detailed as follows:

Fair value Notional amounts


Embedded derivative - Coltaparte 1,075 775 2,500 5,000

Interest rate swap 232 176 22,603 26,328

Total other financial liabilities 1,307 951 25,103 31,328

of which:

Non-current 1,303 951 23,353 31,328

Current 4 0 1,750 0

The embedded derivative relates to the shareholder’s loan disclosed in note 5.13.

These derivative instruments are used to hedge the interest rate risk of the borrowings presented in note 5.12. As these instruments do not exactly meet the conditions for hedge accounting in accordance with IFRS 9 Financial Instruments, they are classified as instruments at fair value through profit or loss.


6. NOTES RELATING TO THE CONSOLIDATED STATEMENT OF COMPREHENSIVE INCOME

6.1. Revenue

Revenue increased from € 482,402 thousands at year-end 2017 to € 511,794 thousands at year-end 2018 as a result of the continued integration of all the business and the continuing development of online sales, the roll-out of the remodelling programme and the increase in revenue from fees and sales from data.

6.2. Employee benefit expense

Employee benefit expense can be detailed as follows:


Short-term benefits 86,746 88,514

Defined contribution plans 2,619 2,347

Total employee benefit expense 89,365 90,861

The majority of the employees of the Group are covered by defined contribution pension plans. The contributions are calculated based on the annual salary or, the annual salary up to a ceiling and the annual salary in excess of this ceiling.

The defined contribution plans in Belgium are legally subject to minimum guaranteed returns. As such, these plans meet the conditions for classification as defined benefit plan in accordance with IAS 19 – Employee Benefits (see note 5.11.).

The number of full-time equivalents is detailed below:

31/12/2018 31/12/2017

Belgium 1,010 1,082

The Netherlands 1,152 1,189

Other 60 72

Total FTE 2,222 2,343

6.3. Other operating expenses

Other operating expenses can be detailed as follows:


Rental expenses 45,201 44,541

Expenses related to sales 33,220 32,191

Marketing expenses 14,858 13,309

Logistics 13,489 12,254

Maintenance expenses 1,986 1,842

IT expenses 4,437 4,227

Office expense 5,448 4,200

Consultancy and advisory fees 7,263 4,973

Housing expenses 7,679 8,622

Other expenses 4,877 4,674

Total other operating expenses 138,459 130,832

Rental expenses mainly relate to rent of buildings in which the individual stores are located. See note 8.4.1. for more information the operating lease commitments.

The expenses relating to sales refers to fixed and variable fees in the context of shop-in-shop systems. The Company enters into strategic alliances which enables the Company to optimize its position in all the markets in which it operates.


6.4. Non-recurring items

Non-recurring items can be detailed as follows:


Loss on disposal of business 0 (4,407)

Loss on disposal of fixed assets 0 (2,712)

Gain on transaction of external business funds 3,000 0

Other (519) (397)

Total non-recurring items 2,482 (7,516)

The gain on transaction of external business funds relates to the realisation of the Group through the sale of an external business fund which mainly consists of inventories and other assets. An amount of € 3,850 thousands is considered as non-recurring relating to the share of the gain realised on inventories and an amount of € 3,000 thousands as recurring relating to the share of the gain realised on a combination of inventories and other assets.

In 2017, the loss on disposal of business related to the disposal of the subsidiary Rainbow Garment, see note 4.3. for more information.

6.5. Amortisation and depreciation expenses


Amortisation of intangible assets 2,889 2,464

Depreciation of property, plant and equipment 19,654 16,312

Total amortisation and depreciation expenses 22,543 18,777

6.6. Financial result


Interest income 1 2,452

Fair value changes related to derivative instruments 26 0

Other financial income 702 96

Total financial income 729 2,548

Interest income in 2017 relate to a one-time release of interests due which was recognised as liability in the statement of financial position.


Interest expenses on bonds (4,868) (3,021)

Interest expenses on bank debts (5,053) (5,996)

Interest expenses on finance lease liabilities (299) (450)

Fair value changes related to derivative instruments (124) (126)

Expenses related to warrants (4,172) 0

Other financial expenses (3,786) (3,623)

Total financial expenses (18,303) (13,216)

In 2018 , the expenses related to warrants concern the repurchase of warrants issued at the end of 2017, see also note 5.9.2. for additional information.

6.7. Income taxes

Income tax recognised in the statement of comprehensive income can be detailed as follows:


Current taxes in respect of the current year (3,468) (1,063)

Current taxes in respect of prior years (51) 423

Deferred taxes 337 181

Total income taxes (3,181) (459)


The income tax expense for the year can be reconciled to the accounting profit as follows:


Profit/(Loss) before taxes 14,720 7,772

Income tax expense calculated at 25% (3,680) (1,943)

Adjustments recognised in the current year in relation to the current tax of prior years (51) 423

Effect of expenses that are not deductible (1,043) (273)

Effect of unused tax losses and tax offsets not recognised as deferred tax assets 0 (4,708)

Effect of different tax rates in foreign jurisdictions 1,923 4,604

Effect of change in tax rates on deferred tax balances 0 1,238

Other (331) 200

Total income taxes (3,181) (459)

6.8. Earnings per share

The earnings and weighted average number of ordinary shares used in the calculation of basic earnings per share are as follows:


Net profit attributable to ordinary shares - Basic earnings per share 11,538 7,313

Effect of dilutive instruments 0 0

Net profit attributable to ordinary shares - Diluted earnings per share 11,538 7,313

Weighted average number of ordinary shares outstanding during the year - Basic earnings per share 10,044,645 8,073,214

Effect of dilutive instruments 0 4,978

Weighted average number of ordinary shares outstanding during the year - Dilutive earnings per share 10,044,645 8,078,192

Earnings per share (in Euros):

Basic earnings per share 1.15 0.91

Diluted earnings per share 1.15 0.91

At closing 2017, the Company issued 5 warrants in the context of the share issue effected in December 2017 (see note 5.9.). However, these warrants have been cancelled in the context of the IPO in Brussels in June 2018.


7. FINANCIAL INSTRUMENTS AND FINANCIAL RISKS

7.1. Overview of financial instruments and fair values

7.1.1. Categories of financial instruments

The following table provides the category in which financial assets and financial liabilities are classified in accordance with IAS 39 Financial Instruments.

(in thousands of euros) IFRS 9 category 31/12/2018 31/12/2017

Trade receivables At amortised cost 66,390 64,290

Other financial assets

Deferred consideration - Sale of business At amortised cost 0 9,035

Derivative instruments At amortised cost 18,718 0

Cash and cash equivalents At amortised cost 118,015 90,470

Total financial assets 203,122 163,795


Bonds At amortised cost 73,758 93,305

Bank debts At amortised cost 190,005 75,308

Other borrowings At amortised cost 10,000 10,138

Current borrowings

Bank debts At amortised cost 11,605 56,596

Trade and other payables

Trade payables At amortised cost 92,806 77,486

Payables relating to fixed assets At amortised cost 108 240

Other financial liabilities

Finance lease liabilities At amortised cost 14,528 12,431

Deferred consideration - business combination At fair value through P&L 4,050 19,250

Other loans At amortised cost 2,128 4,453

Derivative instruments At fair value through P&L 1,307 951

Total financial liabilities 400,294 350,158

7.1.2. Fair value of financial instruments

The only financial instruments carried at fair value in the statement of financial position are the derivative instruments, measured at fair value through profit or loss (see note 5.15.) and the deferred consideration upon acquisition of the Henkelman Group (see note 4).

The derivative instruments recognised as financial liabilities in the statement of financial position consist of interest rate swaps and an embedded derivative instrument relating to the Coltaparte loan (as mentioned in note 5.16.).

The fair value of the interest rate swaps is categorised as a level 2 fair value measurement and is computed using a discounted cash flow analysis. Future cash flows are estimated based on forward rates and yield curves derived from quoted rates matching the characteristics of the contracts (quoted forward exchange rates and/or quoted interest rates), discounted at a rate that reflects the credit risk of the counterparties, which meet the criteria for classifications as level 2 inputs (directly or indirectly observable inputs).

The fair value of the embedded derivative instrument is a level 3 fair value measurement as the main inputs used in the valuation are not observable. A 1% increase/decrease in the probability-adjusted revenues and profits while holding all other variables constant would increase/decrease the carrying amount of the derivative liability by € 76 thousands.

The fair value of the deferred consideration upon acquisitions is considered to approximate its nominal amount as the consideration is payable within the next twelve months.


Except as detailed in the following table, the Group considers that the carrying amounts of financial assets and financial liabilities recognised in the consolidated financial statements approximate their fair values:

31/12/2018

(in thousands of euros) Carrying amount Fair value Fair value level

Non-current financial liabilities

Bonds 73,758 69,883 niveau 2

Bank debts 190,005 190,005 niveau 2

Other borrowings 10,000 10,000 niveau 2

Finance lease liabilities 13,717 10,517 niveau 2

Other loans 2,128 2,128 niveau 2

Current financial liabilities


Finance lease liabilities 811 1,789 niveau 2

Total 302,024 295,927

31/12/2017

(in thousands of euros) Carrying amount Fair value Fair value level

Non-current financial liabilities

Bonds 93,305 95,959 niveau 2


Other borrowings 10,138 10,138 niveau 2

Finance lease liabilities 11,804 11,597 niveau 2

Other loans 4,453 4,453 niveau 2

Current financial liabilities


Finance lease liabilities 627 627 niveau 2

Total 252,231 254,678

The fair values of the financial liabilities included in the level 2 categories above have been determined in accordance with generally accepted pricing models based on a discounted cash flow analysis, with the most significant inputs being the discount rate that reflects the credit risk of counterparties.

Reconciliation of Level 3 fair value measurements:


Balance at 1 January 2016 475

Change in fair value 300

Balance at 31 December 2017 775

Change in fair value 300



7.2. Financial risk management

7.2.1. Market risk

7.2.1.1. Interest rate risk

The Group is exposed to interest rate risk because entities in the Group borrow funds at both fixed and floating interest rates. The risk is managed by the Group by maintaining an appropriate mix between fixed and floating rate borrowings, and by the use of interest rate swap contracts and floor contracts. Hedging activities are evaluated regularly to align with interest rate views and defined risk appetite, ensuring the most cost-effective hedging strategies are applied.

The following table presents a breakdown of the financial liabilities based on the nature of the interest rate:


Fixed rate 100,414 120,327

Floating rate 201,610 131,904

Total financial liabilities 302,024 252,231

The sensitivity analyses below have been determined based on the exposure to interest rates at the end of the reporting period. For floating rate liabilities, the analysis is prepared assuming the amount of the liability outstanding at the end of the reporting period was outstanding for the whole year. A 50 basis point increase or decrease represents management’s assessment of the reasonably possible change in interest rates.

If interest rates had been 50 basis points higher/lower and all other variables were held constant, the Group’s profit and equity for the year ended 31 December 2018 would decrease/increase by € 1,008 thousands (2017: € 409 thousands). This is mainly attributable to the Group’s exposure to interest rates on its variable rate borrowings.

7.2.1.2. Foreign exchange risk

The Company is currently only exposed to limited foreign currency risk, mainly the USD (less than 10% of total purchases of materials).

At December 31, 2018, if the EUR had weakened 1% against the USD with all other variables held constant, the impact on the consolidated statement of comprehensive income would not be significant.

7.2.2. Credit risk

Credit risk is the risk that one party to an agreement will cause a financial loss to another party by failing to discharge its obligation. Credit risk covers trade receivables, cash and cash equivalents, short-term deposits and derivative instruments.

The Company believes that the credit risk relating to retail is limited because sales in the stores are immediately settled in cash. Credit risk is limited to wholesale operations from which the majority of the accounts receivable is insured (with a credit insurer). Furthermore, the company is not exposed to any material credit risk with regard to any individual customer of counterparty, as no single customer claims a dominant part of total revenue. As such, no impairment is recognised for these receivables.

Cash and cash equivalent and short-term deposits are invested with highly reputable banks and financial institutions.

The maximum credit risk to which the Group is theoretically exposed as at the balance sheet date is the carrying amount of the financial assets.

For an analysis of the ageing of the receivables, see note 5.5.

7.2.3. Liquidity risk

The Company manages liquidity risk by maintaining adequate reserves and reserve borrowing facilities, by continuously monitoring forecast and actual cash flows, and by matching the maturity profiles of financial assets and liabilities.

The Company’s main sources of cash inflows are currently obtained through capital increases and external financing through bond issues and bank debts.


The following table details the Company’s remaining contractual maturity of its non-derivative financial liabilities with agreed repayment periods. The tables have been drawn up based on the undiscounted cash flows of financial liabilities based on the earliest date on which the Company can be required to pay. The tables include both interest and principal cash flows.

31/12/2018

(in thousands of euros) Bonds Bank debts Finance lease liabilities

Other borrowingsOther loans Total

Within one year 4,297 16,141 1,095 0 21,533

>1 and <5 years 82,183 201,380 4,518 12,500 300,581

>5 and <10 years 197 0 11,046 11,243

31/12/2017

(in thousands of euros) Bonds Bank debts Finance lease liabilities

Other borrowingsOther loans Total

Within one year 5,453 51,096 894 0 57,444

>1 and <5 years 66,402 15,101 3,578 15,138 100,218

>5 and <10 years 46,435 60,433 3,578 0 110,445

>10 and <15 years 0 0 6,685 0 6,685

The Group has access to financing facilities as described in note 5.13. Furthermore, the Group has access to undrawn facilities for a total amount € 24,144 thousands for working capital financing.

All liabilities mentioned in the tables above are secured liabilities.

The bonds and the bank debts are subject to covenants, mainly relating to financial ratios such as net senior debt to EBITDA, leverage ratio, interest cover ratio and the level of equity. At closing 2018, there was no breach of covenants (nor in 2017).


8. OTHER DISCLOSURES

8.1. Consolidation scope

The companies included in the consolidation scope at the end of the reporting period are presented in the following table based on the operating segments to which they relate:

% equity interest

Name Country 31/12/2018 31/12/2017

FNG Roots

FNG NV Belgium 100% 100%

FNG Finance Belgium BVBA Belgium 100% 100%

FNG Beheer NL BVBA Belgium 100% 100%

FNG Beheer BE B.V. The Netherlands 100% 100%

FNG International Holding NV Belgium 100% 100%

FNG Benelux Holding NV Belgium 100% 100%

FNG Group NV Belgium 100% 100%

FNG Holding NV Belgium 100% 100%

FNG SH BVBA Belgium 100% 100%

FNG Roots NV Belgium 100% 100%

NS Development NV Belgium 100% 100%

FNG Finance B.V. The Netherlands 100% 100%

Fashion IP B.V. The Netherlands 100% 100%

FNG International NV Belgium 100% 100%

Van Hassels BVBA Belgium 100% 100%

Fred & Ginger Retail Belgium NV Belgium 100% 100%

Claudia Sträter Belgium BVBA Belgium 100% 100%

CKS Retail Belgium NV Belgium 100% 100%

CKS Brand Stores BVBA Belgium 100% 100%

CKS SIS BVBA Belgium 100% 100%

CKS TZ BVBA Belgium 100% 100%

M.A.D. Collections NV Belgium 100% 100%

Expresso Belgium BVBA Belgium 100% 100%

Steps Retail Belgium BVBA Belgium 100% 100%

FNG Spain SL Spain 100% 100%

2BUY CS B.V. The Netherlands 100% 100%

CS Modehuizen B.V. The Netherlands 100% 100%

CKS Retail NL B.V. The Netherlands 100% 100%

CS Luxembourg S.A. Luxemburg 100% 100%

FNG Group Nederland NV Belgium 100% 100%

Steps Nederland B.V. The Netherlands 100% 100%

Steps Onroerend Goed B.V. The Netherlands 100% 100%

Steps Huur B.V. The Netherlands 100% 100%

Superstar B.V. The Netherlands 100% 100%

FNG Group Nederland B.V. The Netherlands 100% 100%

Expresso Fashion B.V. The Netherlands 100% 100%

New Fashions B.V. The Netherlands 100% 100%

Expresso Fashion Web B.V. The Netherlands 100% 100%

Fashion Buying Platform Holding BVBA Belgium 0% 100%

Colveta AG Switzerland 0% 100%

Colveta Ltd Hong Kong 100% 100%

Apparel Buying Platform Holding BVBA Belgium 100% 0%

Shoe Buying Platform Holding BVBA Belgium 100% 0%

THS Outlet BVBA Belgium 100% 0%

Beheermaatschappij Marith Weert B.V. The Netherlands 100% 0%

Theo Henkelman Schoenen B.V. The Netherlands 100% 0%

Only a Shoes B.V. The Netherlands 100% 0%


% equity interest

Name Country 31/12/2018 31/12/2017

Miss Etam

Miss Etam Holding B.V. The Netherlands 100% 100%

Miss Etam Group B.V. The Netherlands 100% 100%

Miss Etam Services B.V. The Netherlands 100% 100%

Miss Etam Operations B.V. The Netherlands 100% 100%

ME&P Retail Rent B.V. The Netherlands 100% 100%

ME&P Retail IP B.V. The Netherlands 100% 100%

FNG Retail Services B.V. The Netherlands 100% 100%

Brantano

Brantnew BVBA Belgium 100% 100%

Brantano NV Belgium 100% 100%

Market Retail Belgium BVBA Belgium 100% 0%

FNG Boutique Holding NV Belgium 100% 100%

Suitcase NV Belgium 100% 100%

Concept Fashion Group NV Belgium 100% 100%

Concept Fashion Store BVBA Belgium 100% 100%

Concept Fashion Store XL BVBA Belgium 100% 100%

Fashion Buying Services Ltd Hong Kong 100% 100%

8.2. Related party transactions

FNG NV is the parent of the Group (“the Company”).

Balances and transactions between the Company and its subsidiaries, which are related parties of the Company, have been eliminated on consolidation and are not disclosed in this note. Details of transactions between the Group and other related parties are disclosed below. The amounts payable to, and receivable from, related parties are based on market conditions.

The related parties presented below are identified as:

• The shareholders of the Company;• Other related parties, i.e. companies (jointly) controlled by the parent or a member of key management; and• Key management personnel.

8.2.1. Trading transactions

The following transactions occurred during the reporting periods:

Purchase of services


Shareholders 0 568

Other related parties 1,023 821

Total 1,023 1,388

These services mainly relate to consulting services and rental payments.

The following balances with related parties were outstanding at the end of the reporting period:

Amounts owed by related parties Amounts owed to related parties


Shareholders 0 579 0 1,905

Other related parties 3,141 0 0 17

Total 3,141 579 0 1,922


The amounts outstanding are unsecured and will be settled in cash. No guarantees have been given or received. No expense has been recognised in the current or prior years for bad or doubtful debts in respect of the amounts owed by related parties.

8.2.2. Loans from and to related parties

Loans to related parties Loans from related parties


Shareholders 0 0 14,528 12,431

Other related parties 0 0 0 0

Key Management 0 0 0 0

Total 0 0 14,528 12,431

The shareholder’s loan relates to the finance lease of the building in Mechelen. See note 5.13. for more detailed information on the finance lease liability.

8.2.3. Compensation of key management personnel

Key management personnel of the Group include all members of the Board of Directors of the Company, as well as the Executive Committee.

The members of the Executive Committee are responsible for the management, the organisation and the control of their respective department, within the limits of the budget and the strategy approved by the Board of Directors. The Executive Committee is also in charge of the preparation of the strategic planning. The Executive Committee is entrusted with the management of the Company and the execution of the Board of Director’s decisions. The Executive Committee is composed of 3 members and includes the chief executive officer (CEO), the art director and the operations director.

The table below presents the compensation of all members of key management personnel by type of compensation:


Short-term benefits 675 573

Post-employment benefits 0 0

Total 675 573

8.3. Contingent assets and liabilities

At 31 December 2018 and 2017, there were no material contingent assets or liabilities. Total exposure does not exceed € 500 thousands.

8.4. Commitments

8.4.1. Operating lease commitments

Operating leases relate to leases of stores (average lease term of 6 years), company cars (average lease term of 4 years) and IT equipment. The Company does not have an option to purchase the leased assets at the expiry of the lease periods. For the period ended 31 December 2018, minimum lease payments for a total amount of € 45,201 thousands have been recognised in the statement of comprehensive income (2017: € 44,541 thousands). There were no significant contingent rentals, nor sub-lease payments received.

The following table presents the non-cancellable operating lease commitments:


Not later than 1 year 47,818 53,263



Total 136,661 168,983


8.4.2. Facilities and guarantees

The Group has access to facilities for bank guarantees and financing of working capital with a maximum of € 25,000 thousands. As per reporting date, bank guarantees relating to the lease of real estate (mainly stores) had been issued at the request of the Group for a total amount of € 23,251 thousands.

Furthermore, in the context of the borrowings, following elements are pledged for a total amount of € 131,686 thousands:

• Shares in subsidiaries;• Inventories;• Receivables;• Property, plant and equipment;• IP rights;• Bank deposits.

8.4.3. Other commitment

There were no other commitments at year-end 2018, nor 2017.

8.5. Audit fees


Audit Fees 140 265

Additional Services rendered by the auditor's mandate:

Audit related fees 0 0

Tax advisory & compliance services 0 11

Due diligence fees 0 0

Other Services 36 0

Total 176 276

8.6. Events after the reporting period

In 2018, Brantano invested heavily in the new store concepts and a new internet platform. On March 1, 2019, a major marketing campaign “Dream. Dare. Change.” was launched to emphasise this. Furthermore, Brantano announced the opening of a new store on the Antwerp Meir (first store in the centre city).


FNG NV STATUTORY FINANCIAL STATEMENTS

EXTRACT FROM THE SEPARATE (NON-CONSOLIDATED) FINANCIAL STATEMENTS OF FNG NV

The following information is extracted from the separate Belgian GAAP financial statements of FNG NV and is included as required by article 105 of the Belgian Company Code. The separate financial statements, together with the annual report of the Board of Directors to the General Meeting of Shareholders as well as the auditors’ report, will be filed with the National Bank of Belgium within the legally foreseen time limits.

The statutory auditor’s report is unqualified and certifies that the non-consolidated financial statements of FNG NV prepared in accordance with Belgian GAAP for the year ended December 31, 2018 give a true and fair view of the financial position and results of FNG NV in accordance with the legal and regulatory dispositions applicable in Belgium.

1. CONDENSED BALANCE SHEET AFTER RESULT APPROPRIATION

ASSETS (in thousands of euros) 31/12/2018 31/12/2017

Fixed assets 313,688 260,013

Formation expenses

Intangible assets

Tangible assets

Financial fixed assets 313,688 260,013

Participating interests 185,849 185,849

Amounts receivable 127,839 74,169

Current assets 27,985 25,167

Amounts receivable after one year 25,000 25,000

Amounts receivable within one year 2,943 154

Cash at bank and in hand 42 13

TOTAL ASSETS 341,673 285,180

EQUITY AND LIABILITIES(in thousands of euros) 31/12/2018 31/12/2017

Equity 338,718 282,298

Capital 60,679 718

Share premium 266,356 266,356

Retained earnings 11,683 15,224

Amounts payable 2,955 2,882

Amounts payable after more than one year 380 0

Financial debt 380 0

Other debts 2,575 2,857

Amounts payable within one year 668 1,098

Trade debts 223 947

Taxes, remunerations and social security 1,684 812

Other liabilities 0 25

TOTAL EQUITY AND LIABILITIES 341,673 285,180

As a result of the change in nationality of FNG NV in 2018, the accounting rules have also changed. The 2017 figures are therefore restated from Dutch GAAP to Belgian GAAP.


The impact of this change on 2017 is presented below:

Financial fixed assets – Participating interests - Dutch GAAP 176,788

Cumulative results of the investments (7,786)Result from the restructuring of shares 16,847

Financial fixed assets – Participating interests - Belgian GAAP 185,849

2. CONDENSED INCOME STATEMENT

(in thousands of euros) 2018 2017

Operating income 0 0

Operating charges (1,408) (981)

Services and other goods (1,354) (981)

Other operating charges (53) 0

Operating loss (1,408) (981)

Financial income 2,670 4,662Financial charges (4,815) (55)

Profit/(loss) for the period before taxes (3,553) 3,626

Income taxes 13 (955)Profit/(loss) for the period (3,541) 2,670

3. SUMMARY OF THE REPORT OF THE BOARD OF DIRECTORS

3.1. Results of the Company

Considering the holding activities of the Company, no commercial revenue has been realised during the accounting period ended on 31 December 2018. Total balance sheet for the year ended on 31 December 2018 amounts to € 341,673 thousands compared € 285,180 thousands for 2017. The year ended with a loss of € 3,541 thousands compared to a profit of € 2,670 thousands last year. A profit of € 15,224 thousands was carried forward to the current year. As such, the profit to be appropriated amounts to € 11,683 thousands.

3.2. Analysis and discussion of the development of the Company

The Company is a consolidating entity. The development of the Group is discussed in the consolidated annual report.

Specifically to the statutory financial statements of the Company, a non-recurring financial charge of € 4,171 thousands was recognised. As a result of the private placement on 19 December 2017, FNG issued 937,500 class A shares and 5 warrants for a total amount of € 30,000 thousands. Considering that the warrants were not allowed according to the Belgian Company Law, the Company has repurchased these 5 warrants on 4 June 2018, preceding the move of the registered office of the Company from the Netherlands to Belgium on 5 June 2018. As a consequence, the 5 warrants ceased to exist and ceased to be exercisable. The repurchase price amounted to € 4,171 thousands.

3.3. Appropriation of the result

The Board of Directors propose to allocate the result as follows:

• Result to be appropriated• Loss of the year: € 3,540,613.59• Profit carried forward from preceding years: € 15,223,590.04

• Result to be carried over to the next year: € 11,682,976.45


ALTERNATIVE PERFORMANCE MEASURES – GLOSSARY

Terminology Definition

Adjusted EBIT Earnings before interest and taxes and before non-recurring items, also called adjusted operating result

Adjusted EBIT as a % of revenue Adjusted EBIT divided by total revenue

Adjusted EBITDA Earnings before interest, taxes, depreciations and amortisations and non-recurring items, also called adjusted operating cash flow

Adjusted EBITDA as a % of revenue Adjusted EBITDA divided by total revenue

EBIT Earnings before interest and taxes, also called operating result

EBIT as a % of revenue EBIT divided by total revenue

EBITDA Earnings before interest, taxes, depreciations and amortisations, also called operating cash flow

EBITDA as a % of revenue Adjusted EBITDA divided by total revenue

Gross profit The difference between revenue and cost of goods sold

Gross profit margin The Gross profit divided by total revenue

Leverage ratio Net financial debt divided by Adjusted EBITDA

Net financial debt The sum of current and non-current borrowings minus cash and cash equivalents. Other financial liabilities are not included in this KPI.

Non-recurring items Non-recurring items are either income or expenses which do not occur regularly as part of the normal activities of the company. They are presented separately because they are important for the understanding of the underlying sustainable performance of the Company due to their size or nature.

fred + ginger



Ondernemingsnummer BE0697.824.730

VERSLAG VAN DE COMMISSARIS AAN DE ALGEMENE VERGADERING VAN DE VENNOOTSCHAP FNG NV

OVER HET BOEKJAAR AFGESLOTEN OP 31 DECEMBER 2018 In het kader van de wettelijke controle van de geconsolideerde jaarrekening van de vennootschap FNG NV (de “vennootschap”) en haar filialen (samen “de Groep”), leggen wij u ons commissarisverslag voor. Dit bevat ons verslag over de geconsolideerde jaarrekening en de overige door wet- en regelgeving gestelde eisen. Dit vormt een geheel en is ondeelbaar. Wij werden benoemd in onze hoedanigheid van commissaris door de algemene vergadering van 5 juni 2018, overeenkomstig het voorstel van het bestuursorgaan. Ons mandaat loopt af op de datum van de algemene vergadering die beraadslaagt over de jaarrekening afgesloten op 31 december 2020. Wij rapporteren thans voor het eerst over de wettelijke controle van de geconsolideerde jaarrekening van de vennootschap. Verslag over de geconsolideerde jaarrekening Oordeel zonder voorbehoud Wij hebben de wettelijke controle uitgevoerd van de geconsolideerde jaarrekening van de Groep, die de geconsolideerde balans op 31 december 2018 omvat, alsook het geconsolideerd overzicht van het totaalresultaat, het geconsolideerd mutatieoverzicht van het eigen vermogen en het geconsolideerd kasstroomoverzicht over het boekjaar afgesloten op die datum en de toelichting, met de belangrijkste gehanteerde grondslagen voor financiële verslaggeving en overige informatieverschaffing, waarvan het totaal van de geconsolideerde balans KEUR 834.902 bedraagt en waarvan het geconsolideerd overzicht van het totaalresultaat afsluit met een winst van het boekjaar (aandeel van de Groep) van KEUR 11.538. Naar ons oordeel geeft de geconsolideerde jaarrekening een getrouw beeld van het vermogen en van de financiële toestand van de Groep op 31 december 2018 alsook van zijn geconsolideerde resultaten en van zijn geconsolideerde kasstromen over het boekjaar dat op die datum is afgesloten, in overeenstemming met de International Financial Reporting Standards (IFRS) zoals goedgekeurd door de Europese Unie en met de in België van toepassing zijnde wettelijke en reglementaire voorschriften. Basis voor het oordeel zonder voorbehoud Wij hebben onze controle uitgevoerd volgens de internationale controlestandaarden (ISA’s) zoals van toepassing in België. Onze verantwoordelijkheden op grond van deze standaarden zijn verder beschreven in de sectie “Verantwoordelijkheden van de commissaris voor de controle van de geconsolideerde jaarrekening” van ons verslag. Wij hebben alle deontologische vereisten die relevant zijn voor de controle van de geconsolideerde jaarrekening in België nageleefd, met inbegrip van deze met betrekking tot de onafhankelijkheid. Wij hebben van het bestuursorgaan en van de aangestelden van de vennootschap de voor onze controle vereiste ophelderingen en inlichtingen verkregen. Wij zijn van mening dat de door ons verkregen controle-informatie voldoende en geschikt is als basis voor ons oordeel.



Benadrukking van bepaalde aangelegenheden Zonder afbreuk te doen aan het hierboven tot uitdrukking gebracht oordeel , vestigen we de aandacht op

(i) de geconsolideerde jaarrekening per 31 december 2018 die Goodwill voor KEUR 86.158 en Immateriële vaste activa met een onbeperkte gebruiksduur voor KEUR 302.245 vertoont. In punt toelichting 5.1 en 5.2 van de geconsolideerde jaarrekening worden door het bestuursorgaan de assumpties van de impairment analyse en de resultaten van de sensitiviteitsoefening inzake voormelde posten uiteengezet. Voormelde assumpties en boekhoudkundige ramingen bevatten elementen van beoordeling die inherent onzekerheden bevatten.

(ii) toelichting 6.5 “Niet-recurrente elementen” waarin de transactie met betrekking tot een

extern handelsfonds dewelke voornamelijk voorraden alsook andere activa betreft, wordt toegelicht. De winst op deze transactie van KEUR 6.850, werd voor het gedeelte gerelateerd aan voorraden opgenomen onder omzet voor een bedrag van KEUR 3.850 en voor het gedeelte gerelateerd aan voorraden en andere activa opgenomen als niet-recurrente elementen voor een bedrag van KEUR 3.000.

Overige aangelegenheid

De jaarrekening van de vennootschap voor het boekjaar afgesloten op 31 december 2017 werd door een andere commissaris gecontroleerd die op 30 april 2018 een oordeel zonder voorbehoud over deze jaarrekening tot uitdrukking heeft gebracht.

Kernpunten van de controle Kernpunten van onze controle betreffen die aangelegenheden die naar ons professioneel oordeel het meest significant waren bij de controle van de geconsolideerde jaarrekening van de huidige verslagperiode. Deze aangelegenheden zijn behandeld in de context van onze controle van de geconsolideerde jaarrekening als geheel en bij het vormen van ons oordeel hierover, en wij verschaffen geen afzonderlijk oordeel over deze aangelegenheden.

▪ Verwerving van groepsentiteiten Verwijzging naar de toelichtingen van de geconsolideerde jaarrekening: punt 4.1 Beschrijving van het kernpunt van de controle Per 31 december 2018 heeft FNG NV de Theo Henkelman groep overgenomen, een Nederlandse retailgroep bestaande uit de volgende dochterondernemingen: Theo Henkelman Schoenen BV, Only A Shoes BV en Beheersmaatschappij Marith Weert BV. De beoordeling van de overname is van groot belang voor onze controle gezien de aard en omvang van de bedragen, alsook de beoordeling van het management omtrent datum waarop de controle over de voormelde entiteiten werd verworven. Het management heeft de purchase price allocation (PPA) per entiteit voorbereid, waarbij subjectieve elementen zijn betrokken om de reële waarden te bepalen van de onderliggende activa zoals onder meer de handelsnamen, leverancierslijst en de actualisatievoet van de ingeschatte toekomstige kasstromen (gewogen gemiddelde kosten van kapitaal - WACC).



Hoe het kernpunt werd aangepakt tijdens de controle We hebben de onderliggende overeenkomsten van de acquisitie beoordeeld om de datum van verwerving van de controle vast te stellen, rekening houdend met alle bekende feiten en omstandigheden. Voor de PPA hebben we de redelijkheid van de veronderstellingen die door het management worden gebruikt, beoordeeld. Ons werk omvatte onder meer het instrueren van de auditor van het groepsonderdeel om auditcomfort te bieden op de beginsaldo (boekwaarde) per acquisitiedatum (inclusief de IFRS-conversie) en we hebben het uitgevoerde werk beoordeeld. Verder hebben we geëvalueerd of de acquisitie op de juiste wijze is weergegeven en in de jaarrekening is opgenomen in overeenstemming met IFRS.

▪ Waardering van immateriële vaste activa inclusief goodwill

Verwijzging naar de toelichtingen van de geconsolideerde jaarrekening: toelichting 5.1 en 5.2

Beschrijving van het kernpunt van de controle

De bedragen aan goodwill en immateriële vaste activa met een onbepaalde gebruiksduur worden onderworpen aan een jaarlijkse impairment test onder IFRS die is opgenomen in de toelichtingen betreffende goodwill (toelichting 5.1) en immateriële vaste activa (toelichting 5.2). We zijn van mening dat de waardering van immateriële vaste activa (incl. goodwill) een kernpunt is van onze controle gezien de belangrijkheid van de bedragen en de complexiteit van het beoordelingsproces, dewelke ook inschatting van het management over de onderliggende hypotheses omvat. Hoe het kernpunt werd aangepakt tijdens de controle

We hebben onder andere de juiste allocatie van de immateriële activa aan de kasstroomgenererende eenheden beoordeeld, de vergelijking gemaakt met de veronderstellingen die vorig jaar werden gebruikt met de actuele resultaten (de zogenaamde 'backtesting'), de redelijkheid van de door het management gehanteerde veronderstellingen en de volatiliteit ervan in de sensitiviteitsanalyse beoordeeld.

Verantwoordelijkheden van het bestuursorgaan voor het opstellen van de geconsolideerde jaarrekening Het bestuursorgaan is verantwoordelijk voor het opstellen van de geconsolideerde jaarrekening die een getrouw beeld geeft in overeenstemming met de International Financial Reporting Standards (IFRS) zoals goedgekeurd door de Europese Unie en met de in België van toepassing zijnde wettelijke en reglementaire voorschriften, alsook voor de interne beheersing die het bestuursorgaan noodzakelijk acht voor het opstellen van de geconsolideerde jaarrekening die geen afwijking van materieel belang bevat die het gevolg is van fraude of van fouten. Bij het opstellen van de geconsolideerde jaarrekening is het bestuursorgaan verantwoordelijk voor het inschatten van de mogelijkheid van de Groep om zijn continuïteit te handhaven, het toelichten, indien van toepassing, van aangelegenheden die met continuïteit verband houden en het gebruiken van de continuïteitsveronderstelling, tenzij het bestuursorgaan het voornemen heeft om de Groep te liquideren of om de bedrijfsactiviteiten te beëindigen of geen realistisch alternatief heeft dan dit te doen. Verantwoordelijkheden van de commissaris voor de controle van de geconsolideerde jaarrekening Onze doelstellingen zijn het verkrijgen van een redelijke mate van zekerheid over de vraag of de geconsolideerde jaarrekening als geheel geen afwijking van materieel belang bevat die het gevolg is



van fraude of van fouten en het uitbrengen van een commissarisverslag waarin ons oordeel is opgenomen. Een redelijke mate van zekerheid is een hoog niveau van zekerheid, maar is geen garantie dat een controle die overeenkomstig de ISA’s is uitgevoerd altijd een afwijking van materieel belang ontdekt wanneer die bestaat. Afwijkingen kunnen zich voordoen als gevolg van fraude of fouten en worden als van materieel belang beschouwd indien redelijkerwijs kan worden verwacht dat zij, individueel of gezamenlijk, de economische beslissingen genomen door gebruikers op basis van deze geconsolideerde jaarrekening, beïnvloeden. Bij de uitvoering van onze controle leven wij het wettelijk, reglementair en normatief kader dat van toepassing is op de controle van de jaarrekening in België na. Als deel van een controle uitgevoerd overeenkomstig de ISA’s, passen wij professionele oordeelsvorming toe en handhaven wij een professioneel-kritische instelling gedurende de controle. We voeren tevens de volgende werkzaamheden uit: • het identificeren en inschatten van de risico’s dat de geconsolideerde jaarrekening een afwijking

van materieel belang bevat die het gevolg is van fraude of van fouten, het bepalen en uitvoeren van controlewerkzaamheden die op deze risico’s inspelen en het verkrijgen van controle-informatie die voldoende en geschikt is als basis voor ons oordeel. Het risico van het niet detecteren van een van materieel belang zijnde afwijking is groter indien die afwijking het gevolg is van fraude dan indien zij het gevolg is van fouten, omdat bij fraude sprake kan zijn van samenspanning, valsheid in geschrifte, het opzettelijk nalaten om transacties vast te leggen, het opzettelijk verkeerd voorstellen van zaken of het doorbreken van de interne beheersing;

• het verkrijgen van inzicht in de interne beheersing die relevant is voor de controle, met als doel controlewerkzaamheden op te zetten die in de gegeven omstandigheden geschikt zijn maar die niet zijn gericht op het geven van een oordeel over de effectiviteit van de interne beheersing van de Groep;

• het evalueren van de geschiktheid van de gehanteerde grondslagen voor financiële verslaggeving en het evalueren van de redelijkheid van de door het bestuursorgaan gemaakte schattingen en van de daarop betrekking hebbende toelichtingen ;

• het concluderen of de door het bestuursorgaan gehanteerde continuïteitsveronderstelling aanvaardbaar is, en het concluderen, op basis van de verkregen controle-informatie, of er een onzekerheid van materieel belang bestaat met betrekking tot gebeurtenissen of omstandigheden die significante twijfel kunnen doen ontstaan over de mogelijkheid van de Groep om zijn continuïteit te handhaven. Indien wij concluderen dat er een onzekerheid van materieel belang bestaat, zijn wij ertoe gehouden om de aandacht in ons commissarisverslag te vestigen op de daarop betrekking hebbende toelichtingen in de geconsolideerde jaarrekening, of, indien deze toelichtingen inadequaat zijn, om ons oordeel aan te passen. Onze conclusies zijn gebaseerd op de controle-informatie die verkregen is tot de datum van ons commissarisverslag. Toekomstige gebeurtenissen of omstandigheden kunnen er echter toe leiden dat de Groep zijn continuïteit niet langer kan handhaven. De wettelijke controle biedt geen zekerheid omtrent de toekomstige levensvatbaarheid van de vennootschap, noch van de efficiëntie of de doeltreffendheid waarmee het bestuursorgaan de bedrijfsvoering van de vennootschap ter hand heeft genomen of zal nemen ;

• het evalueren van de algehele presentatie, structuur en inhoud van de geconsolideerde jaarrekening, en van de vraag of de geconsolideerde jaarrekening de onderliggende transacties en gebeurtenissen weergeeft op een wijze die leidt tot een getrouw beeld;

• het verkrijgen van voldoende en geschikte controle-informatie met betrekking tot de financiële informatie van de entiteiten of bedrijfsactiviteiten binnen de Groep gericht op het tot uitdrukking brengen van een oordeel over de geconsolideerde jaarrekening. Wij zijn verantwoordelijk voor de aansturing van, het toezicht op en de uitvoering van de groepscontrole. Wij blijven ongedeeld verantwoordelijk voor ons oordeel.

Wij communiceren met het bestuursorgaan onder meer over de geplande reikwijdte en timing van de controle en over de significante controlebevindingen, waaronder eventuele significante tekortkomingen in de interne beheersing die wij identificeren gedurende onze controle.



Wij verschaffen aan het bestuursorgaan tevens een verklaring dat wij de relevante deontologische voorschriften over onafhankelijkheid hebben nageleefd, en wij communiceren met hen over alle relaties en andere zaken die redelijkerwijs onze onafhankelijkheid kunnen beïnvloeden en, waar van toepassing, over de daarmee verband houdende maatregelen om onze onafhankelijkheid te waarborgen. Uit de aangelegenheden die met het bestuursorgaan zijn gecommuniceerd bepalen wij die zaken die het meest significant waren bij de controle van de geconsolideerde jaarrekening van de huidige verslagperiode, en die derhalve de kernpunten van onze controle uitmaken. Wij beschrijven deze aangelegenheden in ons verslag, tenzij het openbaar maken van deze aangelegenheden is verboden door wet- of regelgeving. Overige door wet- en regelgeving gestelde eisen Verantwoordelijkheden van het bestuursorgaan Het bestuursorgaan is verantwoordelijk voor het opstellen en de inhoud van het jaarverslag over de geconsolideerde jaarrekening, de verklaring van niet-financiële informatie gehecht aan dit jaarverslag en de andere informatie opgenomen in het jaarrapport over de geconsolideerde jaarrekening. Verantwoordelijkheden van de commissaris In het kader van ons mandaat en overeenkomstig de Belgische bijkomende norm (herzien in 2018) bij de in België van toepassing zijnde internationale controlestandaarden (ISA’s), is het onze verantwoordelijkheid om, in alle van materieel belang zijnde opzichten, het jaarverslag over de geconsolideerde jaarrekening, de verklaring van niet-financiële informatie gehecht aan dit jaarverslag en de andere informatie opgenomen in het jaarrapport te verifiëren, alsook verslag over deze aangelegenheden uit te brengen. Aspecten betreffende het jaarverslag over de geconsolideerde jaarrekening en andere informatie opgenomen in het jaarrapport over de geconsolideerde jaarrekening Na het uitvoeren van specifieke werkzaamheden op het jaarverslag over de geconsolideerde jaarrekening, zijn wij van oordeel dat dit jaarverslag overeenstemt met de geconsolideerde jaarrekening voor hetzelfde boekjaar en is opgesteld overeenkomstig het artikel 119 van het Wetboek van vennootschappen. In de context van onze controle van de geconsolideerde jaarrekening zijn wij tevens verantwoordelijk voor het overwegen, in het bijzonder op basis van de kennis verkregen in de controle, of het jaarverslag over de geconsolideerde jaarrekening en de andere informatie opgenomen in het jaarrapport over de geconsolideerde jaarrekening, zijnde: - Verklaring inzake deugdelijk bestuur - Remuneratieverslag een afwijking van materieel belang bevatten, hetzij informatie die onjuist vermeld is of anderszins misleidend is. In het licht van de werkzaamheden die wij hebben uitgevoerd, hebben wij geen afwijking van materieel belang te melden. Wij drukken geen enkele mate van zekerheid uit over het jaarverslag. De niet-financiële informatie zoals vereist op grond van artikel 119, § 2 van het Wetboek van vennootschappen, werd opgenomen in een afzonderlijk verslag gevoegd bij het jaarverslag over de geconsolideerde jaarrekening dat deel uitmaakt van het jaarrapport. Dit verslag van niet-financiële



informatie bevat de door artikel 119, § 2 van het Wetboek van vennootschappen vereiste inlichtingen en is in overeenstemming met de geconsolideerde jaarrekening voor hetzelfde boekjaar. De vennootschap heeft zich bij het opstellen van deze niet-financiële informatie gebaseerd op het Global Reporting Initiative. Overeenkomstig artikel 148, § 1, 5° van het Wetboek van vennootschapen spreken wij ons niet uit over de vraag of deze niet-financiële informatie is opgesteld in overeenstemming met het in het jaarverslag over de geconsolideerde jaarrekening vermelde Global Reporting Initiative. Verder drukken wij geen enkele mate van zekerheid uit over individuele elementen opgenomen in deze niet-financiële informatie.

Vermeldingen betreffende de onafhankelijkheid

− Ons bedrijfsrevisorenkantoor en ons netwerk hebben geen opdrachten verricht die onverenigbaar zijn met de wettelijke controle van de geconsolideerde jaarrekening en is in de loop van ons mandaat onafhankelijk gebleven tegenover de Groep.

− De honoraria voor de bijkomende opdrachten die verenigbaar zijn met de wettelijke controle bedoeld in artikel 134 van het Wetboek van vennootschappen werden correct vermeld en uitgesplitst in de toelichting bij de geconsolideerde jaarrekening.

Andere vermeldingen

− Huidig verslag is consistent met onze aanvullende verklaring aan het bestuursorgaan bedoeld

in artikel 11 van de verordening (EU) nr. 537/2014. − Wij werden ingelicht dat bepaalde ondernemingen binnen de groep geen gebruik maken van

orderrekeningen. Ten aanzien van de volledigheid en de beoordeling van de verplichtingen buiten balans, wordt daarom door de betrokken revisoren gesteund op de bevestiging van de bedrijfsleiding en derden terzake.

Antwerpen, 30 april 2019 Mazars Bedrijfsrevisoren Commissaris Vertegenwoordigd door Anton Nuttens Bedrijfsrevisor

ANNUAL REPORT 2018 - FNG Group€¦ · ANNUAL REPORT 2018 6 2018 definitely was a challenging year...

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