(CFO) (Supervisory Board Member)

Transcription

1 Final Minutes of the Annual General Meeting (the General Meeting ) of GrandVision N.V. ("GrandVision" or the Company ) held at the Hilton Amsterdam Airport Schiphol, Schiphol Boulevard 701,1118 BN Schiphol, the Netherlands on May 2, 2017, at 10:30 hours (CET). In accordance with Article of the articles of association of the Company, Mr. Kees van der Graaf, Chairman of the Supervisory Board, acts as Chairman of the General Meeting. 1. Opening and announcements The Chairman opens the General Meeting and welcomes all shareholders who are present at the General Meeting. The Chairman introduces the following persons: Mr. Theo Kiesselbach Mr. Paulo de Castro Fernandes Mr. Melchert Groot Mr. Peter Bolliger Mr. Jeffrey Cole Mr. Willem Eelman (CEO) (CFO) (Supervisory Board Member) (Supervisory Board Member) (Supervisory Board Member) (Supervisory Board Member) Furthermore, the Chairman introduces Axel Viaene, Company Secretary of GrandVision, and appoints Mr. Viaene as Secretary of the General Meeting in accordance with article of the articles of association and requests Mr. Viaene to keep minutes of the General Meeting. Finally, the Chairman introduces the Investor Relations Director, Ms. Thelke Gerdes, and the accountant of PricewaterhouseCoopers Accountants N.V. ("PwC"), Mr. Bram Verhoeven, who are present at the General Meeting. Press Releases GrandVision has published two press releases this morning and they have been made available to all participants at the registration desk. GrandVision has published its First Quarter 2017 press release this morning, which was discussed in the analyst conference call. GrandVision also announced the launch of a CEO succession process following Mr. Kiesselbach's decision to resign as Chief Executive Officer next year 1

2 Formalities The Chairman informs the shareholders that the official language of the General Meeting will be English. Headphones can be used to listen to the Dutch translation. The Chairman also informs the participants that it is possible to ask questions in Dutch. The translators will then translate the questions into English. Dutch Corporate Governance Code The Chairman states that on December 8, 2016 the revised Dutch Corporate Governance Code was presented by the Monitoring Committee Corporate Governance Code. The Supervisory Board and Management Board of GrandVision will implement the revised Dutch Corporate Governance Code in 2017 and will report on it in the annual report 2017 and in its annual general meeting Any further reference made in today's General Meeting is made to the Dutch Corporate Governance Code 2008 that is currently applicable to publicly listed companies. Convocation, agenda and annexes The General Meeting has been convened with due observance of all mandatory provisions of the articles of association and Dutch law. The notice to attend the General Meeting was placed on the website of the Company ( on March 17, The following documents have been made available for the shareholders of the Company, on the website of the Company: the agenda of this meeting; copies of the Management Board's report and Supervisory Board's report for the financial year of 2016; the annual accounts for the financial year of 2016, as signed by all Managing Directors and Supervisory Directors of the Company; the curriculum vitae of Mr. Bolliger, in relation to his proposed re-appointment as Supervisory Board director; the curriculum vitae of Mr. Cole, in relation to his proposed re-appointment as Supervisory Board director; and the proposed amended Remuneration Policy. The Chairman informs the shareholders that these documents have also been available for inspection at the offices of the Company in Schiphol (Haarlemmermeer) since the date of convocation and will remain to be available for inspection until the end of the General Meeting. 2

3 Shareholders present or represented The Chairman states that the total issued share capital of the Company at the record date, being April 4, 2017, of the General Meeting amounted to 5,088,876.80, consisting of 254,443,840 ordinary shares, each share with a nominal value of Each share entitles the holder thereof to cast one vote. GrandVision N.V. currently holds 1,659,232 shares. As a result, the aggregate number of votes that can be cast in this meeting amounts to 252,784,608. The Chairman informs the shareholders that according to the attendance list, the holders of 230,754,093 ordinary shares are present or represented at this meeting, who in total cast 230,754,093 votes. The Chairman informs the shareholders that according to the Company s shareholders register there are no usufructuaries or pledgees that are entitled to vote on any shares or have the right to attend the General Meeting. Furthermore, the Chairman states that no depositary receipts of shares have been issued which would entitle the holders thereof to attend the General Meeting. Voting procedure With respect to the voting procedure during the General Meeting, the Chairman states that publically listed companies are obligated to publish voting results on their website within 15 days after the annual general meeting. However, experience shows that the number of shareholders present or represented at the meeting may fluctuate, i.e. due to shareholders leaving the meeting before it has ended. This may affect the final voting results. As it is not practical to process all fluctuations during the General Meeting, the Chairman informs the shareholders that for purposes of determining the final voting results, all shareholders present or represented at the beginning of the General Meeting shall be deemed to be present or represented during the entire meeting. 2. Annual report 2016; corporate governance; annual accounts 2a. Discussion of the annual report 2016 including corporate governance The Chairman requests Mr. Theo Kiesselbach and Mr. Paulo de Castro Fernandes to give their presentation on the Company s Management Board's report and Supervisory Board's report for the financial year of Mr. Kiesselbach GrandVision published this morning the First Quarter 2017 trading update - as well as a separate update regarding Mr. Kiesselbach's personal succession planning, as already mentioned by the Chairman. Mr. Kiesselbach states that his plan to resign from his position in 2018 and after 16 years with the Company, is for purely personal reasons. Until the actual transition he will remain fully 3

4 committed as the CEO of GrandVision and to the execution of the company's strategy which will not change. Also the management and governance structures will not change. Mr. Kiesselbach starts his presentation with the Company s First Quarter 2017 Trading Update. In the first quarter 2017, revenue grew by 5.2% at constant exchange rates to 845 million and 6.2% at constant exchange rates. Comparable growth for the quarter was 4.1%, compared to 0.9% in the first quarter of last year. As always, the quarterly comparable growth is influenced by a range of factors. These include the previous year comparable figure, the variation of the number of trading days of which there were more in some countries in Q12017 compared to last year, and holidays such as Easter which this year was in the second quarter while it was in the first quarter last year. Also, the different timing of commercial activities and campaigns have influence on the quarterly comparable growth. The comparable growth figure in the first quarter benefited from these factors, while GrandVision expects them to challenge the comparable growth in the second quarter. Adjusted EBITDA which is the EBITDA before non-recurring items grew by 10.7% to 136 million in Q The growth was 12.6% at constant exchange rates. The total adjusted EBITDA margin increased by 79 bps to 16.1% in Q compared to 15.3% in Q Adjusted EBITDA growth benefited from the topline growth, the further leverage of its global capabilities such as in the supply chain organization, including a higher share of Exclusive Brands and procurement savings, as well as the effectiveness of its commercial campaigns. Revenue in the G4 segment, which is GrandVision's largest segment, increased by 0.7% to 498 million in Q The devaluation of the British pound had a negative impact on revenue of 2.3%, so that the growth at constant exchange rates was 3.1%. Comparable growth was 1.5%. Within the segment, Germany and Austria showed the strongest comparable growth due to the performance of commercial activities and the impact of the increasing omni-channel functionalities. Also, strong sunglass sales were achieved throughout the segment. In the Other Europe segment, revenue increased by 9.9% to 228 million or 9.4% at constant exchange rates with comparable growth of 8.0%. This segment saw a stronger performance across all regions in Northern, Eastern and Southern Europe, stronger sunglass sales in Italy and Portugal, as well as the benefit of additional selling days related to the timing of the mentioned Easter holiday. Revenue in the Americas and Asia segment increased by 17.4% to 119 million or 15.2% at constant exchange rates. The acquisitions in Mexico and Uruguay added 3.1% to revenue growth. Comparable growth of 7.6% was driven by a strong performance in Mexico and Turkey. Also, the US saw positive comparable growth. Organic growth of 12.1% also reflects the further store network expansion particularly in Colombia, Mexico and Turkey. Mr. Kiesselbach moves on to the Full Year 2016 results. 4

5 In the full year 2016, GrandVision achieved revenue growth of 6.5% at constant exchange rates. The underlying organic growth was 3.5%, which was driven mostly by a comparable growth of 2.2% and also store openings across all areas of its business. In 2016, organic and comparable growth was achieved in all three geographic segments as well as in all three product categories: prescription eyeglasses, contact lenses and sunglasses. Among these categories, contact lenses showed the highest growth rate during the year, benefiting from increasing consumer demand for daily disposable contact lenses. The proportion of sunglasses in the overall revenue mix continued to increase in 2016 as we further expanded the sunglass category through the Solaris concept. Sales of prescription glasses grew as GrandVision's commercial proposition proved to be successful also during GrandVision saw higher conversion rates in its stores as the benefits of its global scale and category management were shared its customers. Adjusted EBITDA increased by 6.7% at constant exchange rates to 537 million in the full year The adjusted EBITDA margin increased by 24 bps to 16.2%. Excluding the dilutive effect of acquisitions, the EBITDA margin would have increased by 80 bps to 16.8%. Adjusted EBITDA growth and margin expansion were driven by comparable growth, further efficiency gains across and a higher share of Exclusive Brand frames in the sales mix. Net result attributable to equity holders increased by 8.8% to 231 million in This increase is mainly due to higher underlying EBITDA and lower net financing costs. Adjusted earnings per share, which excludes nonrecurring items, increased by 11.3% to 0.96 in 2016, up from 0.87 in Reported earnings per share increased by 8.7% to 0.92 in 2016 up from 0.84 in the previous year. Mr. Kiesselbach moves on to the example of Solaris. In 2016, GrandVision made further progress in achieving its strategic ambitions, as the company continued to develop and leverage its global capabilities. This also enabled GrandVision to further strengthen its customer promise to provide high quality and affordable eye care to more and more people around the world. The expansion of the Solaris retail banner, for example, continued in 2016 to almost 2,200 Solaris points-of-sales at the end of 2016, compared to 1,200 at the end of The expansion was mainly focused on the store-in-store concept, which places Solaris corners into the existing optical retail stores. This allows GrandVision to combine leading sunglass fashion and technology with optical prescription and real eye care expertise. GrandVision gives customers who buy a new pair of prescription glasses the opportunity to also choose a pair of sunglasses that fully meet their needs and of course also the other way around. In addition to these store-in-store points-of-sale, Solaris also operates approximately 200 stand-alone stores, smaller kiosks stores, and is present online. GrandVision also made changes to the organization by integrating all Solaris activities into its Schiphol office. This allows for more effective performance of the concept development as well as the supporting operations. The ongoing 5

6 expansion of Solaris within its existing network of optical retail stores allows for improved customer service and further expansion while at the same time leveraging the existing cost base. Mr. Kiesselbach moves on to the example of GrandVision Italy: Following the acquisition of Randazzo in Italy in late 2014, GrandVision became the market leader in Italy with close to 9% market share. Italy is now its 5th largest market. After an extensive phase of customer and market research, the rebranding of its Avanzi and Optissimo stores in Italy to GrandVision was carefully started. This process was accelerated in GrandVision is now promoting a single retail banner, leading to an increase in customer awareness and communication with a unified brand identity through national channels. GrandVision is expecting to complete the rebranding process in the middle of this year. Despite the post-merger restructuring and re-branding activities, which caused a volatile performance in 2016, GrandVision is satisfied with the progress. The full year 2016 saw positive revenue and comparable growth in Italy. The GrandVision retail brand is increasing traction with consumers supported by an increased presence both in the store network and on national media. These are benefits of now being able to operate with one national retail banner instead of two regional ones. In 2016, GrandVision also combined its support activities in Italy and moved from two separate companies with two different teams to one organization with one team. The business is now fully integrated and the new structure is more cost effective and gives the opportunity to build a scalable growth platform for the future. GrandVision has begun to expand its network in the still very fragmented Italian market. The Company believes Italy provides an attractive opportunity for future growth. Mr. Kiesselbach moves on to the example of the US integration update. Another priority in 2016 was the begin of restructuring and integration of the For Eyes business in the US, which was acquired in December Immediately after the acquisition GrandVision started to put in place a new and experienced leadership team with a combination of GrandVision managers and US American retail experts. One of the first initiatives was to improve and integrate the local supply chain. This allowed GrandVision to introduce its differentiating, high quality at affordable prices Exclusive Brand portfolio for frames and lenses. GrandVision also aligned the local commercial proposition by introducing GrandVision's 'simple, safe and honest' customer journey, supported by ongoing training for store staff across its network. In addition, GrandVision is refurbishing and modernizing the For Eyes stores. GrandVision is rebuilding the support functions following and is building the expansion platform for the future. These steps allowed GrandVision to turn the performance of the business - achieving revenue and comparable growth in the second half of

7 After taking these important first steps in 2016, GrandVision is now shifting its focus towards delivering stable comparable growth and also upgrading its marketing activities. GrandVision will further strengthen the local supply chain and IT capabilities and start to test its expansion platform. Mr. Kiesselbach moves on to the example of the market expansion Mexico. In Mexico GrandVision doubled its store network during 2016 and at the same time achieved solid comparable growth. The opportunity in Mexico with a population of more than 120 million is large. According to a recent study of the Mexican Optometrists Association only approximately 30% of the Mexicans who require eye sight correction, are actually using it today. GrandVision entered the market in 2010 through the acquisition of a stake in Opticas Lux. In 2012, GrandVision introduced the MasVision retail banner. GrandVision continues to operate with these two retail banners in the Mexican market. In 2016, GrandVision opened nearly 80 MasVision stores and acquired over 180 small store-in-store points of sale within the Walmart network in Mexico. GrandVision is now in the process of rebranding these Walmart optical store-in-stores to MasVision and integrating them with its existing business. Mr. Kiesselbach moves on to the strategic priorities. GrandVision's vision is to provide high quality and at the same time affordable eye care to more and more people around the world. For this purpose, GrandVision has established a set of five strategic priorities. The first priority is the continuous strengthening and deployment of its global capabilities. GrandVision has developed, tested and is internationally deploying a set of global capabilities based on detailed customer insights across all markets. These are targeted at better serving its customers in a differentiated way. One important global capability is the development of digitally empowered omnichannel functionalities. The global capabilities also have the objective to realize group wide synergies and to leverage skills, resources, and investments and therefore its cost base on a global level. The second priority is to drive comparable growth. This is the most sustainable and most profitable source of growth, its first growth pillar. It fully leverages its existing operating cost base. It also proves the strength of its retail banners and retail offering. The third priority is the optimization of its existing store network. This includes targeted store openings, relocations, refurbishments and also store closures, when and where customer traffic patterns have changed. The continuous optimization supports its second important revenue growth pillar: the expansion of its network including omni-channel and online. It also continuously optimizes the management of the operating cost. 7

8 The fourth priority is to expand in current markets also through bolt-on acquisitions. The optical retail market is still highly fragmented. A high market share is still held by small chains and single or multistore independent retailers. GrandVision will continue to grow by acquiring and then integrating these. This is its third important growth pillar. And finally, the fifth strategic priority is to enter new markets. GrandVision has a strong track record in this area and will continue it. Mr. de Castro Mr. de Castro starts his presentation. In the G4 segment, revenue increased by 0.1% in 2016 including a negative effect of 2.5% from a weaker British pound against the euro. At constant exchange rates, revenue growth was plus 2.6% with organic growth of 2.1%. Comparable growth for the segment was 1.5%. Adjusted EBITDA in the G4 segment increased by 6.8% when excluding the devaluation of the British pound and 5.0% at reporting rates. The adjusted EBITDA margin increased by 100 basis points to 21.5%, benefiting from efficiency gains from the continued roll-out of its global capabilities, as well as a higher share of Exclusive Brand frames in the sales mix. Mr. de Castro moves on to the segment review of Other Europe. In the Other Europe segment, revenue increased by 2.7% to 907 million or 3.5% at constant exchange rates. Organic revenue growth was 2.6% and comparable growth was 1.6%. Adjusted EBITDA increased by 4.0% to 138 million or 4.9% at constant exchange rates. The adjusted EBITDA margin increased by 18 basis points to 15.3%. The business in Italy showed solid performance in the fourth quarter as the impacts of the post-merger process of Avanzi and Optissimo started to recede and although the rebranding process is still ongoing. The business also faced easier comparables in the quarter. Mr. de Castro moves on to the Americas and Asia segment. In 2016, revenue increased 36.2% at constant exchange rates, or 13% organically to 440 million. Underlying comparable growth came in at 7.4% with strong performances in most markets, particularly in Mexico and Turkey, but lower comparable growth levels in Brazil, Peru and Uruguay than in the past years. Adjusted EBITDA increased by 41.6% at constant exchange rates to 11 million and the adjusted EBITDA margin increased by 9 basis points to 2.4%. Mr. de Castro moves on to adjusted EBITDA and margin development. In 2016, EBITDA margin increased to 16.2%, but would have expanded by 80 basis points to 16.8%, when excluding the impact from acquisitions. Over the last years, GrandVision has grown its EBITDA 8

9 from 348 million in 2011 to 537 in 2016, representing a CAGR of 9.0%, while continuing to absorb the initially dilutive acquisitions. Mr. de Castro moves on to the cash flow generation in Cash flow from operating activities increased by 12.7% to 431 million in 2016; and free cash flow increased by 15.7% to 255 million in The increase in free cash flow was driven by higher cash flows from operating activities including improved working capital positions. The strong cash flow generation enabled further deleverage. During 2016, the net debt reduced from 941 million at yearend 2015 to 750 million; and the net debt leverage ratio improved to 1.4 times adjusted EBITDA, compared to 1.8 times in Mr. de Castro moves on to capital expenditure. Over the past years, capex has increased in-line with the growing business, but has stayed relatively stable as a percentage of revenue, fluctuating around 5% depending on the business needs in any specific year. Capex of 176 million in 2016 was mainly invested in the ongoing optimization and expansion of the store network, as was also the case in previous years. In 2016, store capex increased to 124 million from 122 million in Store capex remained relatively stable despite an acceleration in store openings in 2016 and costs related to the rebranding projects that took place in Italy, Brazil and other markets. GrandVision has achieved a lower capex per store through the continued implementation of a harmonized store format, which is itself helped by the harmonization of its assortment and commercial policies. In addition, these harmonizations continue to allow the reduction of the average store size. Non-store capital expenditure increased to 52 million from 40 million in the previous year, and was mostly related to investments in IT systems, including the ongoing deployment of the global ERP system and its new omnichannel solutions. Mr. de Castro moves on to the financial objectives and dividend policy. GrandVision has a medium-term objective of achieving at least 5% revenue growth at constant exchange rates, and adjusted EBITDA growth of high single digits, again at constant exchange rates. These numbers exclude the impact of larger sized acquisitions, such as For Eyes, which when they happen, further impact the top line in a significant way. The revenue growth objective of at least 5% is delivered through 3 levers: comparable growth, store openings, and smaller, so called, bolt-on acquisitions. Over the past years, store openings have contributed between 1 to 2% to revenue growth, and acquisitions of single stores and small chains have added another 1 to 2% on average. Comparable growth is the most sustainable and profitable source of growth, as it leverages its existing operating 9

10 cost base. However, the two other levers - store openings and small acquisitions, are also very important to the growth. In general, and as a reminder, the performance on a quarterly basis is impacted by internal and external factors, such as the timing of commercial campaigns, which varies by intention, the level of the previous year comparables, changing traffic patterns which are dependent on local economic circumstances, as well as the number of selling days, which can differ across the markets. In terms of the financial structure, GrandVision is targeting a net debt/ebitda ratio of maximum 2.0 times, which is comfortably below the covenant of 3.25 times. At year-end 2016, GrandVision's net debt/ebitda ratio was at 1.4 times. GrandVision expects its strong cash flow generation to enable further acquisitions without significantly altering its capital structure, and this while paying a dividend. As previously communicated, GrandVision intends to pay an ordinary dividend annually in line with its medium to long term financial performance, and expects to increase the dividend-per-share over time. As a result of this policy, the Company is targeting a dividend pay-out ratio of 25-50%. For the year 2016, the Supervisory Board proposes a dividend of 31 cents per share, subject to shareholder approval at this General Meeting, corresponding to a payout ratio of 33.9%. The increase of the dividend from 28 cents per share in 2015 to 31 cents in 2016 is in-line with its target to increase dividend per share over time." Mr. de Castro ends his presentation. Questions and Answers At this time, the Chairman provides the opportunity to discuss and ask questions. Questions Mr. Rinks Question 1: Mr. Rinks notes that GrandVision made an acquisition in North-America but the market share there is still very low, compared to the market share of GrandVision in other markets. That would create a great opportunity for growth there. Can GrandVision simply open a thousand stores in the US? What is its strategy towards expansion in the US? Question 2: Idem for China. Mr. Rinks wonders if GrandVision is already present in China, because there are more people living in China than in the US. What is GrandVision's strategy in China? Question 3: In the Netherlands there are chains which offer cheap glasses: SpecSavers, Hans Anders. In other European countries there is a comparable situation. Mr. Rinks has the impression that in most countries GrandVision is not trying to compete on prices with for example SpecSavers. Why does GrandVision not try to invade the lower segment of the market? 10

11 Question 4: Mr. Rinks wonders if it would be an option for GrandVision to raise the prices of spectacles every year by a couple of percentage points in certain countries. Would GrandVision then lose its customers to for example Hans Anders? Mr. Kiesselbach With respect to GrandVision's strategy in the US, Mr. Kiesselbach notes the market of the US is the largest optical retail market of the world showing further growth. It is also a still fragmented market. In Western Europe about 30% to 40% of the market are independent opticians. In the US over 50% of the market consists of independent optical doctors so there is opportunity for consolidation. GrandVision made an acquisition of 116 stores of For Eyes in the US at the end of The acquisition was made because GrandVision believes that the US market is attractive. GrandVision believes there is a serious growth opportunity there. GrandVision is not only improving the performance of these 116 stores but it is building a platform for future growth. Regarding China, Mr. Kiesselbach explains that GrandVision is already present in China. While there are many people living in China, many cannot yet afford eye care products. GrandVision has the ambition to make eye care affordable to more and more people. According to Mr. Kiesselbach, GrandVision is committed to growth in all markets, including the US and China. Regarding the third question on pricing, Mr. Kiesselbach notes that in general, the commercial proposition of GrandVision is to provide high quality, affordable eye care to more and more people around the world. Therefore, GrandVision is making sure that it has a price positioning that, in general, should be about 30% under the market average. An exception are markets where GrandVision operates two retail banners as, for example, in The Netherlands,in Mexico, or in France. With the second brand, GrandVision usually addresses the midhigh market segments. With regard to the fourth question, GrandVision looks at price increases in terms of inflation but it is GrandVision's goal to share the benefits it derives from its supply chain and efficiency gains with customers. Questions Mr. Jorna on behalf of the Dutch Investors Association (Vereniaina van Effectenbezitters) Mr. Jorna informs the General Meeting that he represents many shareholders. Question 1: Mr. Jorna notes that Luxottica and Essilor are going to merge and they will be five times as big as GrandVision. Vertically speaking they have a chain from the frames to the glasses which 11

12 ; contributes a lot to their profitability. How will GrandVision deal with this competition in the same markets? And why is there such a difference in growth? Question 2: Furthermore Mr. Jorna notes that for 90 million British pounds in turn-over GrandVision has bought Tesco in-store stores with sales of 90 million British Pounds in the UK. How will the Brexit impact GrandVision? And how will the money spent on Tesco affect expansion plans elsewhere? Question 3: Mr. Jorna points out that the Chairman is also closely involved with other companies. He is interested to know how the positions of the Chairman held with other companies influence his position at GrandVision. Question 4: Mr. Jorna notes there are lots of new developments in the market place, especially with regard to online business. How is GrandVision going to combat online sales or the alternative for glasses, for example eye surgery? Are those developments a threat or are they an opportunity for GrandVision? Question 5: Mr. Jorna also asks about independent opticians. He notes that independent opticians are disappearing because of low priced glasses from for example China. What is the future of independent opticians in the Netherlands? Question 6: Mr. Jorna inquires about a sale of shares by Mr. de Castro. He states that it would be very helpful for the shareholders to know the reason behind the sale. He also inquires about an increase of Mr. Castro's loan. Mr. Kiesselbach With respect to the merger between Luxottica and Essilor, Mr. Kiesselbach notes that the size of both companies and therefore the competition has already been significant. Furthermore, these companies have a strong focus on supply chain and retail activities mostly in the US. GrandVision will continue to observe the situation very carefully. GrandVision does not yet see specific threats arise from this particular merger. These companies are mostly suppliers of frames and lenses to GrandVision and in this areas synergies were announced. With respect to growth and profitability, Mr. Kiesselbach notes that GrandVision sees in its segment different performances. The performances are mostly driven by the level of maturity of markets and what GrandVision is doing in such markets. For example, the profitability in the Americas/Asia segment, which is the lowest, is driven by the fact that GrandVision is growing the strongest there. GrandVision is opening the most stores there in relation to the existing stores. When looking at the performance of stores with the same level of maturity, GrandVision sees a similar level of profitability in store contribution across all of the regions. 12

13 With regard to the expansion rate, Mr. Kiesselbach explains that GrandVision experiences growth, driven also by the creation of expansion platforms, new store openings and also acquisitions of relatively weaker performing companies.these usually have a dilutive impact on profitability initially. As GrandVision gains scale in local markets, profitability is strengthened. On Tesco, Mr. Kiesselbach notes that GrandVision has sufficient resources for further acquisitions. The Tesco Opticians acquisition is very well aligned with the positioning of GrandVision and it gives additional coverage in the UK. Regarding the impact of Brexit, Mr. Kiesselbach explains that GrandVision's exposure to foreign exchange rates is, in general, limited because most of the costs (like rental costs, personnel costs) are usually paid in the local currency. Of course there is a risk of exposure with products which are bought in foreign currencies. The overall developments in the UK could have an impact on future consumer behavior. Of course Brexit must be observed but this is not a development that really worries GrandVision on a strategic level. Mr. Kiesselbach summarizes that GrandVision is continuing to look at all areas for further growth. Larger acquisitions will happen when the time and the price is right. With regard to online business, Mr. Kiesselbach notes that this channel is growing and also GrandVision is very focused on it. GrandVision believes strongly in omnichannel but GrandVision also already operates successful and growing pure ecommerce activities. On eye surgery Mr. Kiesselbach notes that that market is stagnating and as many customers who get eye surgery, will need to come back for glasses again later. Also, lasering eyes only works in specific cases like with short- and far- sightedness, but not with presbyopia. Mr. Kiesselbach concludes that GrandVision does not see lasering as a threat at this time. If it would grow in importance GrandVision would be prepared to grow also in this area, as it has the knowledge and experience through its eye clinics in Colombia which are offering eye surgery. Regarding independent opticians, Mr. Kiesselbach notes that it is difficult for them to compete in the market while at the same time they have high competence. GrandVision believes that over time the share of independent opticians in the market will continue to decline. In many countries independent opticians have the option to join GrandVision through its franchise structures. Out of a total of over 6,500 GrandVision stores, about 17% of stores are franchise stores. The Chairman On Mr. Jorna's third question, the Chairman states that everything he is doing is in line with the Dutch Corporate Governance Code. He realizes that his current portfolio of non-executive director positions has grown but he always follows the orderly processes. There may be some changes in the future that 13

14 ; will give him more time. The Chairman states very clearly in this General Meeting that his other positions are not impacting his attention or work for GrandVision. On the sale of shares by Mr. de Castro, the Chairman would like to state first of all that Mr. de Castro is extremely committed to GrandVision and dedicates an enormous amount of time to the health and progress of GrandVision. Secondly, Company policy requires for the top management to hold at least one year of shares in salary. Mr. de Castro has his private reasons for disposing of the shares and the sale of the shares was done completely in line with GrandVision's insider trading policy. The Chairman adds that the loan of Mr. de Castro did not increase. Mr. de Castro Mr. de Castro adds that the increase of his loan at the end of 2016 was only due to the accrued interest in that same loan over that year. He states that the sale of the shares first went into the reimbursement of the complete outstanding loan towards the Company. Thereforeone of the few exceptions to the Dutch Corporate Governance Code that the loan represented is now eliminated. Questions Mr. Spanjer Question 1: Mr. Spanjer would like to know why the agenda and the annual report were not made available in a printed format for the meeting. Question 2: Mr. Spanjer makes a reference to page 12, second paragraph, of the annual report which states that GrandVision merged two brands in Italy. He wonders whether GrandVision intends to create more brand awareness for the brand 'GrandVision' or for the local brands. Question 3: Mr. Spanjer would like to know how GrandVision is able to get a feeling for the local market and determine the needs of US customers. The Chairman On the first question, the Chairman notes that GrandVision is a ecological conscious company and reduces the usage of natural resources where possible. The agenda and annual report have been made easily available on electronic devices as in the previous years Mr. Kiesselbach With respect to the rebranding in Italy, Mr. Kiesselbach notes that it is not an objective to rebrand broadly to GrandVision. GrandVision has about 25 different retail brands and there is high customer loyalty towards them. The objective of GrandVision is to harmonize its customer experience and customer journey but not necessarily its brands In Italy, when the acquisition was made, there were two regional banners, Avanzi and Optissimo. They were very similar in position and about the same size. Avanzi was present in the north and Optissimo 14

15 in the south. GrandVision's objective wasto build a national brand. GrandVision tested this re-branding very carefully which is why the acquisition integration took more time in Italy. The banners are now being branded as 'GrandVision by Avanzi' and 'GrandVision by Optissimo'. The customers still find their familiar banner and GrandVision can communicate on a national level in Italy. Mr. Kiesselbach adds that another area where the brand of GrandVision was used is in China where customers have a preference for international banners. On the third question, Mr. Kiesselbach notes that GrandVision learn about the subtleties of the market and evolution of customer behaviour through cycles of marketing activities. Mr. Kiesselbach concludes that it takes time and several cycles to learn finetune commercial activities. Questions Mr. Rinks Question 1: Mr. Rinks wonders why the dividend was not increased now that the cash flow is good and the debt is down. Why is the distribution percentage not higher? Question 2: With respect to internet sales, Mr. Rinks finds it hard to imagine that people will order spectacles on a mass scale via the internet because they cannot measure their eyes themselves and also because glasses which are ordered online cannot be returned as they cannot be sold to anyone else. In that light, he wonders whether online sales provide an opportunity for GrandVision or a threat to the stores. Mr. Kiesselbach With regard to the first question, Mr. Kiesselbach notes that GrandVision has a dividend policy that is set out to create long term value for the shareholders. The best way to do that is to grow the Company and to grow the profitability of the Company sustainably. Therefore, a significant portion of the cash flow generation is reserved for ongoing investments. Regarding internet sales, Mr. Kiesselbach notes that these develop differently but category based on the customer demands, contact lenses are better destined to be sold via the internet. With glasses, customers still most often prefer a physical instore experience. Also, current regulation often requires personal eye testing. Mr. Kiesselbach concludes that GrandVision will always work towards improving the customer journey within the regulatory and legal boundaries. 2b. Discussion on implementation of the remuneration policy 2016 This agenda item has been included in accordance with article 135 of Book 2 Dutch Civil Code, for the purpose of transparency of the Company's remuneration policy. The current remuneration policy of the Company is set out on pages of the annual report for the financial year of The Chairman invites the shareholders to raise their questions. 15

16 Question Mr. Jorna on behalf of the Dutch Investors Association (Vereniaina van Effectenbezitters) Question 1: Mr. Jorna notes that on page 156 of the annual report it is stated that both members of the Board had equal remuneration in 2015 but this has changed in 2016 for both the short-term and long-term incentive. Mr. Jorna wonders what reason could be given for this deviation. Detailed insight in the parameters that are being used to set the remuneration is lacking and it would be helpful if more information will be given in the annual report of next year. The Chairman of the Remuneration Committee, Mr. Groot According to Mr. Groot, the remuneration policy is strongly structured at GrandVision. There is a base salary, there is a short-term bonus and a long-term incentive plan, and depending on the functional position individual Board members hold, percentages of the salary may or may not be obtained in the short or longer run. The fact that in 2015 a different ratio was devised is not a reflection of the normal course of affairs. In principle differences are connected with the short-term bonus, which is mainly related to the financial performance. The targets are the same for all members of the Management Board. In addition, there are a number of personal targets which usually differ. However, the achievements of these did not differ strongly over the past two years. Mr. Groot adds that GrandVision does not use peer groups to determine remuneration levels. GrandVision believes that it should determine its short-term and long-term objectives and therefore remuneration policy based on its own strategy. Question Mr. Jorna on behalf of the Dutch Investors Association (Vereniaina van Effectenbezitters) Question 2: Mr. Jorna wonders that if GrandVision does not have a peer group, what does it measure against? He notes this is only very briefly described in the annual report, which refers to earnings per share and net turnover/sales. According to Mr. Jorna, all of this raises questions. For example, does the net turnover include acquisitions or not? The parameters that are used to set the remuneration are not clear and the annual report is therefore not transparent on this point. The Chairman mentions they will take that point into account when preparing the annual report for He then refers the question to Mr. Groot. Mr. Groot Mr. Groot replies that the variable remuneration objectives do not take acquisitions or currency effects into account in order to ensure a comparable base. Question Mr. Spanier Question 1: Mr. Spanjer is wondering why there are no peer groups and why GrandVision does not use benchmarks. He believes a stock listed Company must have a peer group. 16

17 Mr. Groot Mr. Groot states that it is the Supervisory Boards belief that with regard to remuneration, peer groups do not give better results. GrandVision wishes to determine its future, its remuneration and its policies by itself. It does not necessarily follow the rest of the market. For example, if Specsavers increases salaries by 10% that does not mean that GrandVision should also increase salaries by 10%. 2c. Adoption of the annual accounts 2016 (voting item) The next item on the agenda is the adoption of the annual accounts for the financial year ended 31 December With due observance of the mandatory provisions of the articles of association and Dutch law, the Management Board has prepared the annual accounts for the financial year The Supervisory Board has reviewed and approved the annual accounts. The annual accounts have been signed by all members of the Management Board and Supervisory Board, as required by Dutch law. Mr. Hans Bod of PricewaterhouseCoopers Accountants N.V. has audited the annual accounts and has issued an auditor's report thereon. Unfortunately, Mr. Bod could not attend today's General Meeting due to family circumstances. He is represented by Mr. Bram Verhoeven of PwC. The Chairman invites Mr. Verhoeven, today's representative of PwC, to give a short presentation on the audit of the annual accounts for the financial year of Presentation by Mr, Verhoeven, PwC Mr. Verhoeven informs the Chairman that he is pleased to have the opportunity to provide the shareholders with some background on the audit work performed by PwC and its audit opinion on GrandVision. Mr. Verhoeven notes that the Management and Supervisory Board will comment on topics that concern the Company, amongst others the content of the annual accounts and the quality of the internal controls. He would like to take the shareholders through the main topics of PwC's Independent Auditor's Report, which is included in the financial statements as from page 170. Mr. Verhoeven starts with PwC's conclusion. On 17 February 2017, PwC issued an unqualified audit opinion on the 2016 financial statements. In its Independent Auditor's Report, a clear overview is presented of its audit approach. PwC highlights its focus on those areas where management estimates are involved and also where there is a risk of management override of controls, or a risk of material misstatement due to fraud. PwC selects its audit activities based on a risk assessment for the financial statements as a whole. In doing this, PwC reflects on the internal control mechanisms that the Company has in place. To the extent that PwC decides to rely on those internal controls, PwC tests the proper working of them. Before PwC starts its audit, PwC discusses its audit plan with the Audit Committee. 17

18 With respect to materiality, set for the group at 17.4 million euro, PwC has noted that both quantitative as qualitative considerations are taken into account. The materiality at components where audit work is performed is at a much lower level. Qualitative factors are, as mentioned, relevant also. This depends on the item in the financial statements and the relevance of disclosure. With respect to management remuneration for example only rounding differences can be accepted. PwC included a scoping paragraph with the base of its audit work: - geographic structure of the group; - the significance and risk profile of group entities or activities; - the accounting processes and controls; and - the industry in which the group operates. As a result, PwC conducted a full scope audit in 13 locations covering 15 countries. The group audit focused on the significant components Apollo in Germany and Austria, GrandVision in France, GrandVision Benelux, and Vision Express in the UK. In those audits, PwC as group audit team works in close cooperation with its component auditors of the PwC network. The group engagement team visited the closing meetings of the main operating companies. Other operating companies are visited by the group team on a rotational basis. For 2016 this concerns Synoptic in Denmark, GrandVision in Italy and For Eyes in the US. Furthermore, the group team attended all other closing meetings by video conference. Mr. Verhoeven would like to highlight which were the most significant matters in its audit of the financial statements, the so called key audit matters. They are included as from page 174 of the financial statements. PwC have identified the following three matters: impairment assessment of goodwill evaluation; accounting for uncertain tax and legal positions; and the assessment of the devaluation of the intangible fixed assets as part of the final purchase price allocation of For Eyes. The impairment assessment of goodwill is considered relevant as following the acquisitive strategy by the Company, a high amount of goodwill is capitalized and a high level of management judgement is involved. PwC has challenged management's estimates both from an operational performance perspective as from the calculation model used. The accounting for acquisitions is complex and includes the purchase price allocation to amongst others identifiable intangible assets. As this involves significant judgement in relation to the valuation 18

19 of trademarks and customer databases for example, PwC evaluated timing and accounting based on the individual contracts. Accounting for uncertain tax and legal positions is considered a key audit matter as it involves a complex evaluation of reasonableness of management's assessment of where these legal cases could lead to, both from a valuation aspect as from a disclosure point of view. PwC's audit work encompasses an understanding of process management by the Company and the tax and legal opinions of management's experts both internal and external. The valuation of intangible fixed assets (trademarks and customer data bases, as part of the purchase price allocations of the For Eyes acquisition) comprises significant judgement from the Management Board. Given the high level of management judgement this area is a further important area for the audit. PwC tested the consistent application of general accepted valuation method including assumptions for this valuation. Last year PwC considered the accounting for the LTIP a key audit matter related to the expected listing of the Company. Following the listing and payment of a significant part of the incentive liability, this is not considered a key audit matter anymore. Mr. Verhoeven moves on to the report of the Board of Directors. PwC considers the tone of the Board reasonable. PwC tested in detail that the numbers mentioned in the Board report do reconcile to the numbers in the financial statements and the notes thereto, its detailed audit test work, and internal management reporting. PwC involved its specialists on corporate governance and remuneration to review the report of the Board and shared its observations with management. The description of risk management and internal controls does not deviate from its audit findings. The main risks which PwC considers relevant from a financial statement perspective for GrandVision are disclosed in the risk paragraphs. PwC concludes that the report of the board of directors is consistent with the financial statements. The Chairman asks if there are any questions. Questions Mr. Jorna on behalf of the Dutch Investors Association (Verenigina van Effectenbezitters) Question 1: Mr. Jorna asks if the management letter of last year has been finalized to satisfaction by the Board and whether the management letter that is issued now contains any material issues that the shareholders should know about. Question 2: Mr. Jorna notes that 16% of the audit was not done by PwC but was hopefully checked by other accountants. He would like to know how the quality of the work done by these other accountants is verified. Question 3: Mr. Jorna asks about the team composition and the amount of time a partner spends on the audit. He prefers not to have trainees work on an audit. 19