International Financial Reporting StandardsDer 16. IFRS Kongress 2017 in Berlin

E-Commerce im Handel und inder Konsumgüterindustrie

7. September 2017

2

Today with you…

Dr. Ulrich C. KalkVice PresidentAccounting & Taxation

Phone +49 30 20968 1754Mobil +49 176 12759418Email Ulrich.Kalk@zalando.de

Sebastian HaasPartnerAssurance - Consumer Products and Retail

Phone +49 211 9352 18413Mobil +49 160 939 18413Email sebastian.haas@de.ey.com

Katharina HerzogDirectorGroup Finance & Tax

Phone +49 7123 94 86433Mobil +49 151 16265724Email katharina_herzog@hugoboss.com

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Our agenda

Total Time = 90 min.

25 min.

How digitalizationand e-commerce

change thebusiness modelsof retailers and

consumer productscompanies

15 min.

Impact onorganizationalstructures and

processes withinthe financedepartment

35 min.

IFRS accountingchallenges –

e-commerce andomni-channel

15 min.

Questions andanswers

12

3

4

How digitalization and e-commerce change the businessmodels of retailers and consumer products companies

Dr. Ulrich KalkReimagine fashion for the good

of all

Katharina HerzogHow is a traditional brandaffected by digitalization?

1

5

1

6

WHAT WE DO

7

W E L O V E F AS H I O N

8

We offer a successful and curated assortment

860

FREE DELIVERIES& RETURNS and

100-DAY RETURNPOLICY>350

stylists & fashion advisors

~250,000articles from

>2,000international brands

privatelabels17

15

fashion productsactivated every day

countries served

95% new to theassortmentevery season

9

W E D R E S S C O D E

10

We are constantly innovating technology

HOME-BREWED,CUTTING-EDGE,SCALABLEtechnology solutions

7 tech locations+ HQs in Berlin

help our brands to

WIN ONLINE

>1,800employees

77nations

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W E L I V EO P E R AT I O N ALE X C E L L E N C E

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We operate fashion

>20payment methodsadapted to eachmarket

42,1 mn

ordershandled ytd

2017

~6,900employees

6fulfillmentcenters

~10,000,000items stored by hub

~130,000square meters for logistics

hubs

Free customer care in

12languages

13

W E B E L I E V E I N T H EP O W E R O F T H ET E AM

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We are young and diverse

* excluding logistics

>13,000employees from

119nationalities ~4,600

employees hired in 2016

47%53%

58%42%

years as averageage of employees*

female employees

male employees

female employees taking maternity leave

males employees taking parental leave

32

15

L E T S T AK E A L O OK ATF AC T S & F I G U R E S …

1

16

Zalando at a glance

~3.6billion EURO

revenue 2016

70%>21millionactivecustomers*

238 €GMV per active customer

65 €= averagebasket size

female customers

35% young customers(<29)

3.7orders per

activecustomer in

average

>2.5 billionsite visitswith a

mobile visit share~70%

return rate

~50%

= annual average fashionspending in Western Europe

~1,100 EURO

= size of theEuropeanfashionmarket**

425billion EURO

= Zalandomarket share

~1%

1

17

1

REIMAGINE FASHIONFOR THE GOOD OF ALL

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We connect people and fashion

O T H ERFASHI O N

P L AY E R S *

Consum er s

BRAN DS M ARKETI NGAFFI L I ATE S

L O G I S T I CPROV I DE RS

CONSUM E R S

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* designers, stylists, influencer, blogger, etc.

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How we connect people and fashion

CUSTOMER

‘I JUST SPOTTED THISAMAZING BAG ON

CHIARA FERRAGNI’SINSTAGRAMACCOUNT.’

ZALANDO

‘WELL, LET ME SEEWHICH ONE IT IS.’

1

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ZALANDO

‘IT’S THE DREWBAG FROM CHLOÉ,

SNAKE LEATHER AT ACOST OF 2,200€’

CUSTOMER

‘THIS IS NICE. CANYOU SHOW ME SOME

DIFFERENTVERSIONS.’

How we connect people and fashion

1

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How we connect people and fashion

ZALANDO

‘THE ICONIC DREWBAG COMES IN ALL

KINDS OF DIFFERENTCOMBINATIONS –

HAVE A LOOK HERE.’

CUSTOMER

‘I LIKE THE RED ONE.– BUT UHH…I NEED IT

IN 20 MINUTES.’

1

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How we connect people and fashion

ZALANDO

‘YOU CAN GET IT ATTHIS SHOP. THEY HAVE

ONE MOREIN STOCK.’

CUSTOMER

‘THAT‘S GREAT, BUT IDON‘T HAVE TIME

NOW, CAN YOUDELIVER IT TO ME?’

1

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How we connect people and fashion

ZALANDO

‘SURE, WE CAN SENDA BIKE MESSENGERAND IT WILL BE WITHYOU IN 19 MINUTES.’

CUSTOMER

‘PERFECT, GO AHEAD.AND

THANK YOU!’

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We offer more than fashion

Fu l f i l l me nt byZa l ando

S m a r t L o g i s t i c sO f f l i neI n te gr a t i on

Za l on Fash i onA d v i c e

P a ym e n t S e r v i c e s

Ret ur nsP i c k - U pD a t a

“ THE NEXT B I G THI NG” …

1

25

HUGO BOSS

How is the traditional brandaffected by digitalization?

How is the traditional brand affected by digitalization?

1

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A short history of the HUGO BOSS Group…

1924 - Company founded by Hugo Ferdinand Boss

1970 - Focus on fashionable menswear under the BOSS brand

1985 - Listing on the German stock exchange

1993 - Launch of a three brand strategy: BOSS | HUGO | Baldessarini

2000 - Launch of the website www.hugoboss.com

2001 - Group sales exceed EUR 1 billion

2008 - Launch of first HUGO BOSS Online Store in the UK

2009 - HUGO BOSS Online Store launch in the Netherlands, Germany and France

2010 - HUGO BOSS Online Store launch in the U.S. and Austria

2011 - Launch of the website hugoboss.cn in Mandarin

2012 - First fashion show with livestream in 3D- 3 million fans follow HUGO BOSS on Facebook- Retail net sales reach Wholesale net sales

2016 - Start of the first Omnichannel Services

1

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Attribute „digital“ deeply integrated into our Group strategy2016

C U S T O M E R -C E N T R I C

III. DRIVE THEDIGITAL TRANS-

FORMATION

IV. INNOVATETHE WAY

WE OPERATE

I. REFOCUSTHE BRAND

II. REFINE THEWAY

WE SELL

S U S T A I N A B L E

G L O B A LG L O B A L A G I L E

D I G I T A L

1

28

Increasing share of retail requires increase in digital salesactivities

Wholesale

Retail

Licenses

1

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In-store sales influenced by digital

Source: “Navigating the new digital divide 2015”, Deloitte Digital, 2015

HUGO BOSS customers researching onlinebefore purchase

Source: HUGO BOSS Customer Survey 2015, n = 15,003

24%

73%

Digital influenceprojection

20132009 2010 2011 2012

10%

20%

30%

40%

50%

60%

70%

80%

90%

100%

2014 2015 2016 2017 2018 2019 2020

14%

49%

36%

64%

Physical and digital retailing are growing together

1

30

OMNICHANNEL

RETAILEXECUTION

► Digital storelocator

► ‘Find in store’ tool(in-store inventoryavailability)

► Ship from store

► Click and reserve

► Same day delivery

► Smartmerchandise

► Mobile in-storecheck-outs

► Digital receipts

► Online in-storeappointment

► Order from store

► Click & collect

► Convenientreturns

► Next-generationPOS system

► Free in-store WIFI

► Integrated CRM

2015 and before 2016 2017 and beyond

The impact of omnichannel on physical retailing

1

31

New store concepts create strong link between physical anddigital retailing

1

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Use of online platforms and social commerce to exploit thefull potential of online

C U S T O M E R

onlinepureplay.com

hugoboss.com

departmentstore.com

Social commerce

FulfillmentPartner

(insourcedin 2016)

1

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Digital transformation comprises the entire value chain

1

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How the retail and consumer products universe is changing

Old reality2005

► Productscentricbusinessmodels

► Role modelcustomer =“der Otto-Normal-Verbraucher”

► Slow andinflexiblesupply chain –“not reallyconnected”

► “We do it aswe always didit”

2025

We will see aeven more

transformed‘new reality’

The universe of a modern fashion retailer in the year 2017

Selectedstore of aselected

brandcompany

Connects

Orders Pics

Pics

Store A Supplies

Returns

Con

nect

s

Shops

Shop inshop

Ord

ers

Orders

Con

nect

s

Producer ofbrandedproducts

Orders

Delivery

Asked for curated shoppingOmni-Channel world

Website App/IT

DeliveryWarehouse

Showroom

Returns

Orders

Same daydelivery Warehouse

Store B

Delivery

1

35

How we see the future in 2025 for retailers and consumerproducts companies

New Reality2025

► Client Centric Business Modelfocusing on data generation andanalytics

► Creation of omni-channel customerjourney focusing customerindividuality and providing situationand need adopted solutions

► New ways of ordering viaFacebook, Google, Alexa, Siri…

► Agile and flexible business modeltailored towards immediatecustomer response andsatisfaction

► Emerging dominance ofretail/platform brands

► Virtual realities and digitalassistance

► Stronger focus on core competenciesleading to buy rather than make-decisions

► For more information visit the EYPoint of View „Digitalisierung trifftRechnungslegung“

Integrated Data Warehouse

Situ

atio

nan

dne

edad

opte

dso

lutio

nsAs

set&

Serv

ices

Plat

form

s

Onl

ine

Offl

ine

Integrated Data Warehouse

SmartFactory

3DPrinting @Home Crowd

sourced

Apps Analytics

Advertising Merchandising Stores

RFIDIoT

CuratedBig Data11001010111001010110101001010100010110100110010110100101

EcosystemBasics

EcosystemHuntsSitusumer

EcosystemSpoils

8.5bn times

Engagement

Managed Services

MarketResearch

Testing

f

Prototype

Logistics

Production

R&D

Udo’s Ecosystems

1

36

The impact on organizational structures and processes offinance department

Dr. Ulrich KalkHow we report

Katharina HerzogWhat does digitalization mean

for Finance?

2

37

H O W W E R E P O R T

2

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Our Key Finance Dimensions

2

Individual empowerment,responsibility and learning. (“Mean”)specialists with business know-howwho can have an impact (“Lean”).

As central as possible, asdecentral as necessary in order toallow for diversity while leveraging

experience whenever possible.

Enable our stakeholders to maketheir daily life easier, while being

driving force on financial steering,structure and governance.

Standardize where possible in orderto free capacity for customizedsolutions in a highly agileenvironment.

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We love Centralization in Reporting

0 Reporting Packages

Companies in 8 countries for the FashionStore, Logistics, Customer Care, Techplus initiatives related to the platform

Zalando SE as parent and most relevantoperating company

Accounting Team

Financial Reporting Team

Tax Team

Financial System (SAP FI)

Chart of Accounts

Consolidation Solution (SAP ECCS)

2

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Within 4 days we generate final Financials

A C C O U N T I N G S E R V I C E S

T A X A T I O N

Fixed Assets

Accounts Receivable

General Ledger

Inventories

Cash&Banks

Accounts Payable

E N T I T Y 1

E N T I T Y 2

E N T I T Y 3

…

ZalandoGroup

day 2 day 4

E N T I T YR E P O R T I N G

G R O U PR E P O R T I N G

FINANCIALREP ORTING

INVESTORRELATIONS

ACCOUNTING

CONTROLLING

A C C O U N T I N G& T A X

2

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What does digitalization mean for Finance?

What does

digitalization mean

for Finance?

2

42

Decentralised finance organizations require a lot ofcommunication

~ 340Finance employees

New York19

London16 Metzingen

113

Shanghai15

Honkong7

Izmir12

Zug/Ticino34

Paris12

2

~ 60Subsidiaries

~ 30Countries

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Our responsibility – Ensure Accounting, Tax and TreasuryGovernance

Group Finance and Tax

► Group and regional consolidation andreporting function

► Define global reporting and accountingstandards including process and systemgovernance

► Oversee and manage global tax reportingand transfer pricing projects and defineglobal guidelines

► Define HUGO BOSS financing strategy andmanage all financial risks

► Support and training of subsidiaries in allrelevant Accounting, Tax and Treasurymatters

Local Finance and Tax

► Manage and oversee the outputs of theAccounting and Reporting function

► Prepare annual financial statements andcoordinate the annual audit

► Ensure general financial governance,compliance and adherence to local taxregulations of subsidiary

► Preparation of VAT and CIT calculation anddeclaration

► Ensure compliance of transfer pricingrequirements, double tax treaties andprepare relevant documentation

► Manage and supervise all cashmanagement and liquidity matters

Group functions located in Metzingen Local Finance Managers

2

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Focusing on People, Processes and Technology enables us toget prepared for the digital era and achieve our overall objectives

People

Process

Technology

2

45

Success story: insourcing of Financial services of Onlineoperations in 2016

► Restructuring of financial services: Insourcing of receivables management, new risk service solution

► Insourcing of IT backend important foundation for omnichannel fulfillment

► Integration of previously stand-alone teams into omnichannel customer service

Sourcing

Financialservices/

payment/risk/tax

BackendIT/ordermgmt.

Logistics/customs

Customerservice

Global digitalplatform / Online

Store

Digital imaging,copy,

translations

Performancemarketing

Global leadagency

Services formerly outsourced to arvato

Taken over in 2014 Key elements takenover in 2016

2

46

B2C Receivables Team now integrated in Group Finance &Tax division

Director GroupFinance & Tax

Finance Projects Financial & GroupAccounting

Receivables &Invoicing Group Treasury Group Tax

Assistant toDirector

Regional FinanceExperts

B2C Receivables Team with 4HC as a shared service centerfor 9 european countries

2

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E-commerce in the retail and consumer products industry…

…or why accountants love fashion J

3

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IFRS accounting challenges – e-commerce and omni-channel

The universe of a modern fashion retailer in the year 2017

Selectedstore of aselected

brandcompany

Connects

Orders Pics

Pics

Store A Supplies

Returns

Con

nect

s

Shops

Shop inshop

Ord

ers

Orders

Con

nect

s

Producer ofbrandedproducts

Orders

Delivery

Asked for curated shoppingOmni-Channel world

Website App/IT

DeliveryWarehouse

Showroom

Returns

Orders

Same daydelivery

WarehouseStore B

Delivery

1

2

2

2

3

3

4

1

2

4

5

5

5

5

67

7

7

7

7

8 8

3

1Shop @ home

IFRS 15Accounting for returns

IFRS 15

Platforms/connectivity with localpartners/shop-in-shops

Principal vs. agents

3 IFRS 15Define performance obligations

“Even more convenience”: sameday delivery, curated shopping…

IFRS 15“Loyal customer”

Accounting for customer loyaltyprograms

5 IFRS 9

New customers – manage creditrisks (scoring)

Valuation of e-commerce receivables

6 IAS 36Definition of CGUs

“Omni-Channel cash generation”

7 IFRS 16“Brick and mortar roots”

Lease accounting

8 IAS 38“Technology as the backbone”

Capitalization of self generatedsoftware

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IFRS 15 – 5-step-Model

Identifying the contract

Identifying performance obligations

Determining the transaction price

Allocating the transaction price to performanceobligations

Satisfaction of performance obligations

1.

5.

4.

3.

2.

3

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1. Identifying the contract

Click on the BUY NOW button

Customer registration

Acceptance of terms and conditions

Payment Method selection

Fraudulent orders

IFRS 15

Customer?

Contract?

Parties approved the contract and theirrights are identifiable?

Commercial substance?

Probability of collection?

Payment terms?

Z AL AND OP A Y M E NTS E R V I C E S

IFRS 15 Zalando

3

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1. Identifying the contract

Z AL AND OP A Y M E NTS E R V I C E S

ZALANDO PAYMENTS

WE SELL CONVERSION

R i sk S t ee r i n g an dP ay men t O f f er i n g

C h ec ko u t a n d P ay men tProcess i ng

F a ct o r i n g , A R , D u n n i n g& C o l l e ct i o n

Orderplaced

PersonalData Entry

Dunning &collection

CriteriaGeneration

1st RiskAssessment

BlockingDecision

Paymentmethodselected

2nd RiskAssessment

Orderconfirmation Cash In

CUSTOMER VIEW

ZALANDO PAYMENTS

FactoringManualScreening

The Zalando Payments Value Proposition

3

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Excursus to IAS 39/IFRS 9Subsequent Valuation of Customer Receivables

1 . s u b s eq u e n tva lu a t io n

2 . s u b s eq u e n tva lu a t io n

3 . s u b s eq u e n tva lu a t io n

Initially percentage of revenue Subsequently open balance after Xweeks

Subsequently expected recovery incash collection

Portfolio-based valuation ofreceivables:

• Monthly portfolios

• Country of origin (i.e. DE, NL)

• Payment method (i.e. invoice,credit card)

• Scoring factors

Aging-based adjustments Aging-based adjustments

3

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2. Identifying performance obligations

Zalando

Every single ItemFree delivery and return bundle100 days right to returnFree Customer CareExpress Delivery separate obligationNon-contractual warranty no obligation

Zalando Private Labelsvs.Wholesale Businessvs.Partner Program

IFRS 15

Promised Goods or services?

Distinct goods or services?

Customer can benefit?

Significant service of integration?

Goods or services highly dependent?

Provide or arrange to provide?

IFRS 15 Zalando

P R I N C I P A LV S .

A G E N T

3

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2. Identifying performance obligations

P R I N C I P A LV S .

A G E N T

1. Does the entity act as main obligorfrom the transaction?

2. Does the entity bear inventory risk?

3. Does the entity have latitude overpricing?

All criteria are considered in an overallassessment of the nature of thetransaction

For an entity to act as principal it needs tomaintain control over the asset before thetransaction

AGENTPRINCIPAL

Z A LA N D OPRIVATELAB ELS

Z A LA N D OPARTNERPROGRAM

Z A LA N D OWH OLESA LE

BU SIN ESS

1. Logistic costs, customer data, impact on

product/service, assortment, meeting

customer specifications

2. Before or after ordering

3. Price-setting

EV ALUA TION CR ITE RIA

3

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3. Determining the transaction price

Zalando

Observable from Invoice

Returns

Expected value

Reliable return prediction

Payment term 14 days,30 days in Switzerland

IFRS 15

Amount of consideration?

Variable consideration (rebates, returns)?

Estimation?

Highly probable?

Significant financing component?

Non-Cash consideration?

Consideration payable to a customer?

IFRS 15 Zalando

E X PE CT E DR E T U R NS

3

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3. Determining the transaction price

Dr. Trade Receivables 480 mEUR cr. Revenues 800 mEURDr. Cash and Cash Equivalents 320 mEUR

Dr. Cost of Sales 440 mEUR cr. Inventories 440 mEUR

Dr. Revenues 100 mEUR cr. Trade Receivables 70 mEURcr. Refund Liabi l i ty 030 mEUR

Dr. Non-Financial Asset 050 mEUR cr. Cost of Sales 050 mEUR

Dr. Inventory Al lowance 0 07 mEUR cr. Non-Financial Asset 010 mEURDr. Logist ics Expense 0 03 mEUR

Dr. Revenues 300 mEUR cr. Trade Receivables 210 mEURcr. Financial Liabi l i t ies 090 mEUR

Dr. Inventories 150 mEUR cr. Cost of Sales 150 mEUR

Dr. Financial Liabi l i t ies 090 mEUR cr. Cash and Cash Equivalents 090 mEUR

I n i t i a l Reven ue Revenue before return (Gross margin 45%, Invoice-share 60%)

Return s Rece ive d Collected returns before period end (Invoice-share 70% and Gross margin 50 % for all returns)

Exp ec ted Returns Expected returns and costs to recover at period end (expected total return rate 50%)

E X PE CT E DR E T U R NS

3

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4. Allocating the transaction price to performanceobligations

Zalando

Observable from Invoice per Item-basis

Each parcel with separate invoice

Item-rebate

Rebate-voucher

Gift Card

IFRS 15

To each performance obligationbased on stand-alone selling prices

Observable or estimation?

Allocation of a discount

IFRS 15 Zalando

3

58

5. Satisfaction of performance obligations

Customer receives the parcel at a point in time

Posting of revenues at shipmentdate versus at reception date

IF

Satisfaction of performance obligations?

Over time?

If not: at a point in time!

IFRS 15 Zalando

3

59

Omni-channel cash generation – Definition of CGUs

Technical background – IAS 36

► Retailers determine the “cash-generating unit” (CGU)to which the long-term assets - the retail outlets and/orproperty - are allocated for impairment testing.

► A CGU is defined as the smallest identifiable group ofassets that generates largely independent cashinflows.

► In accordance with IAS 36, a CGU is defined solely onthe basis of cash inflows (i.e. revenue).

► Traditionally, each individual outlet of a retailerrepresents a CGU.

► In accordance with the new standard for leases,IFRS 16, the retailer will be required to recognize theright to use the leased store as an asset and test it forimpairment in accordance with IAS 36.

3

Reality check

► In practice, there are numerous different omni-channelstrategies, e.g., the “click and collect” model where thecustomer orders and pays for goods online and thenpicks them up or returns them in the store.

► Many retailers are deliberately transferring theirrevenue from conventional to online stores. The shopfloor serves increasingly as a display area orshowroom where customers can try out and test theproducts. It is all about inspiration, entertainment andsocial interaction – experiencing the brand world –rather than direct sales.

► For management purposes some retailers alreadytrack the revenue based on zip codes and measureoperating results based on regions/management unitsonly rather than single stores as well as solelyconsidering (for decisions like store openings,closings) the underlying omni-channel strategy.

60

Omni-channel cash generation – Definition of CGUs

3

► Can we ignore the fact thatin the new integratedbusiness models therevenue in a store is nolonger generatedindependently of the onlineshop and the online shopin turn feeds off the workof the stores on theground?

► The rigid (but easy toapply) rule, “Every store isa CGU,” might no longeraccurately reflect thereality of the omni-channelworld we are now living in.

► For more information visitthe EY Point of View„Digitalisierung trifftRechnungslegung“

61

Physical retail will still be important in the future

3

62

Starting point of our journey towards IFRS 16implementation

3

~ 1,120 POS worldwide

~ 1,820 Lease contracts~ EUR 1,433 Mill. Future Lease

Obligations

~ EUR 405 Mill. Lease costsp.a.

thereof EUR 135 Mill. variable rent

No global leasemanagement

No global leasemanagement

No complete centraldatabase

No complete centraldatabase

No full datatransparencyNo full data

transparency

63

A joint project was started with our Real Estate team to beIFRS 16 ready

3

Early alignment withexternal auditor

64

First results of impact analysis highlight importance ofRetail real estate portfolio

3

=

Lease portfolioHUGO BOSS

Amount Book value(units) (in %)

Intangible Assets 27 0,2%Real Estate 824 99,4%Techn. and office equipment 156 0,1%IT 473 0,1%Vehicles 340 0,2%

TOTAL 1.820 100,0%

Lease portfolioReal Estate HUGO BOSS

Amount Book value(units) (in %)

Land 4 0,3%Parking space 46 0,0%Stores 382 72,8%Shops 122 0,9%Concession / Commission 19 1,2%Outlet 115 6,4%Warehouse 30 11,3%Showroom 40 1,5%Offices 55 5,6%Appartments 11 0,0%

TOTAL 824 100,0%

65

Challenges with regard to Retail portfolio require in-depthanalysis of relevant contracts

3

Extension options Variable lease componentsIFRS 16 guidance An entity shall determine the lease term

as the non-cancellable period of alease, together with both:

(a) periods covered by an option toextend the lease if the lessee isreasonably certain to exercise thisoption

(b) periods covered by an option toterminate the lease if the lessee isreasonably certain not to exercisethat option

Variable lease payments that

• do not depend on an index rate

• and are not in-substance fixed,

• such as those based on performance orusage of the underlying asset,

are not included as lease payments

Impact for

HUGO BOSS

• Strong cross-departmentcooperation

• Underlining group guidelines onhow to evaluate extension options

• Highlight processes of monitoringlease data

• Evaluate contracts lease-by-lease

• Workshops with group wide finance teamsregarding the definition of variable and fixedpayments

• Implementing a lease paymentdocumentation

66

Impact of optional lessee exemptions and practicalexpedients

3

Short term leases Low value assets Non-lease componentsIFRS 16 guidance • Lease term < 12 months

• Considering extensionoptions, if the lessee isreasonably certain toexercise this option

• The lease does not includean option to purchase theunderlying asset

• The short term exemptioncan be made by class ofunderlying asset of similarnature and use in an entity´soperations

• An underlying asset can beof low value only if:

(a) the lessee can benefitfrom use of theunderlying asset on itsown or together withother resources that arereadily available to thelessee

(b) the underlying asset isnot highly dependenton other assets

• The Basis for Conclusionstates a reference value of5.000 US-Dollar

• As a practicalexpedient, a lesseemay elect, by class ofunderlying asset, not toseparate non-lease-components from leasecomponents andinstead account for allcomponents as a lease

Impact for

HUGO BOSS

• Low relevance as Retaillease contracts generally >12 months

• Low relevance as impactof IT or office equipment isminor

• High relevance giventhe service componentsincluded in Retailleases

67

Our view: Pro´s and Con´s of different transition methods

3

Full retrospective approach Modified retrospective approach –retrospectively RoU

Modified retrospective approach –RoU = Lease Liability

• Expected higher discount rates forlong term leases

• Higher one-off equity loss(compared to MRA)

• High workload

• Disclosure of prior year figures

• Preferable external and internalreporting

• Expected lower discount rates forlong term leases

• One-off equity loss

• Medium workload

• No disclosure of prior year figures

• Expected lower discount rates forlong term leases

• Equity loss (in future)

• Lower workload

• No disclosure of prior year figuresV

…we have not yet decided which transition method will be applied

68

Significant impact of IFRS 16 for HUGO BOSS Groupexpected

3

69

Q&A