Annual Report 2016 - Fielmann

1 Annual Report 2016 20162015201420132012 Sales in m External sales 1)incl. VAT 1, , , , , in %+ + + + + sales excl. VAT1, , , , , in %+ + + + + sales (glasses) 000s7,9907,8127,5907,3207,070 Change in % + + + + + %+ + + + + profit (EBT)in in %+ + + + + income in in %+ + + + + flow from current business activity 2)in in %+ + + + assets in %+ + + + + ratio in % in in % + + of stores 704695 687 679671 Employees as at 31. ,87317,28716,73216,15815,494of which apprentices 3,1903,0652,9222,8742,779 Key data per share 3) Earnings per share (EPS) in flow per share 2)in per sharein ) Sales including VAT and inventory changes2) The main change to the previous years is due to a regrouping of the investments in the years 2016 , 2014 and 2013 3) Previous year s figures have been adjusted due to the stock split on 22 August 2014 Fielmann at a glanceKEY DATAF ielmann stands for fashionable eyewear at fair prices.

2 90% of all German citizens know Fielmann . Today, over 23 million people wear Fielmann glasses. In Germany we are the market leader in optical retail. We sell 50% of all new glasses. Fielmann is deeply rooted in the optical industry. Fielmann is a designer, manufacturer, distributor and optician. Fielmann has shaped the optical industry. In Germany, Fielmann ended the discrimi-nation against people wearing statutory health insurance glasses, made them socially acceptable, and democratised the world of fashionable and again, Fielmann has pioneered customer-friendly services in optical retail. Examples include fashionable eyewear free of charge (Nulltarif), an open display of thousands of frames, the Best-Price Guarantee, the Three-Year Warranty and the Satisfaction guiding principle is You are the customer . We identify with our customers and endeavour to fulfil their wishes and desires. We advise every customer the way that we ourselves would wish to be advised: fairly, competently and in a friendly manner.

3 Our opticians are not under pressure to talk customers into buying expensive glasses. Contents 2 Introduction 6 Management Board 8 Supervisory Board 12 Strategy 20 Shares 22 Industry 28 Management Report 58 Annual Accounts 65 Notes to the Accounts 131 Auditor s Report 132 StoresGlasses: Fielmann2 Annual Report 2016 FOREWORD Annual Report 2016 3 FOREWORD You are the customer is our guiding principle. Customer satisfaction is our strategic priority. Time and time again, Fielmann has introduced pioneering customer-oriented services to the market in ways that had not previously existed in the optical industry. Our achievements include fashionable eyeware free of charge, a selection of several thousand frames on open display, a Best-Price Guarantee, a Three-Year Warranty on all glasses and the Satisfaction Guarantee. Our strict customer orientation also made us successful in 2016 . Fielmann increased the number of units sold to 8 million pairs of glasses (previous year: million).

4 External sales includ-ing VAT grew to billion (previous year: billion) and consolidated sales rose to billion (previous year: billion). We increased our pre-tax result to mil-lion (previous year: million) and the net income for the year went up to million (previous year: million). The pre-tax profit margin on sales amounted to company s development is positive and sustainable. Fielmann AG is virtually debt-free, with liquidity in the hundreds of millions. We include our shareholders in our success. The Management and the Supervisory Board will therefore recommend a dividend payout of per share to the Annual General Meeting (previous year: ). This represents a divi-dend yield of based on the year-end clos-ing price. The total dividend payout amounts to million (previous year: million).For several decades now, Fielmann shares have proved to be a sound and stable invest-ment. The share price closed the year at The company has a stock market valua-tion of billion.

5 Over 80% of our 17,873 employees are shareholders of Fielmann AG. Their personal investment not only displays their trust in the company but also acts as motiva-tional factor. Our customers benefit as a Shareholders, Dear Friends of the Company,G nther Fielmann4 Annual Report 2016 FOREWORDF ielmann owes its success to a clear and stringent customer focus. Our employees em-pathize with their customers. They provide a standard of service that they would wish to receive themselves. Fielmann employees have the satisfying task of finding the best possi-ble solution for everyone, irrespective of the budget. Fielmann invests tens of millions in train-ing and continued professional development every year. Our apprentices undertake three years of optical training. Afterwards, they find a wide range of career opportunities at Fiel-mann. Whether at one of the 704 stores in Germany or abroad, at the Fielmann Acad-emy at Pl n Castle, at the production centre in Rathenow, the design studio in Munich or the company headquarters in Hamburg Fiel-mann offers exciting challenges in many recognizes elites.

6 We offer talented young people clear objectives and compelling values. Fielmann places great de-mands on its employees. Our stores generate between five and ten times the sales revenues of the average optician, and our bigger stores record up to fifty times the sales of an aver-age optician. Our flagship stores in big cities achieve turnovers of between 4 m and 20 m. Since stores of this size are unique in the industry, we have to train store manag-ers ourselves. The Fielmann Academy at Pl n Castle prepares the next generation of opti-cians for Europe. In Pl n, we train more than 7,000 opticians every year. The Academy is also available to external opticians for master craftsman s courses and continuously strives to be better and more productive than the competition. We offer higher quality at lower prices. Based on our fundamental understanding of the market, we have developed the most modern optical stores of their kind. Fielmann stores feature state-of-the-art technology in eyesight testing, contact lens fitting and workshops, and also make use of the very latest in IT.

7 The stores showcase the whole world of fashion eyewear, including major brands, international designers and the fashionable Fielmann Collection. Fielmann combines eye-wear fashion with reasonable prices. 90% of our customers say they intend to come back to Fielmann for their next pair of glasses. The Fielmann brand is synonymous with fashion eyewear at the best price: With only 5% of all optical stores in Germany ( Fielmann : 589 stores; the industry: 11,850 shops), Fiel-mann has a sales market share of 21% and 53% in terms of unit sales. This is proof of the value for money we offer. If Fielmann were to sell glasses at the average retail price, the sales market share and the unit market share would be the is continuing its expansion at a sustainable pace. We focus on the German-speaking region as well as the adjacent Eu-ropean countries. When we open new stores in our home market of Germany, we tend to achieve unit market shares of between 40% and 50% straight from the beginning.

8 Further to our expansion, we can realise significant growth by enlarging existing shops and mov-ing to more attractive locations. Modernisation and increasing floor space generally lead to double-digit improvements in sales. In the mid-term, our plan is to operate more than 600 stores in Germany and to sell more than mil-lion pairs of glasses. In the German-speaking countries of Austria, Germany and Switzerland, our medium-term goal is to operate around 700 stores and sell more than million pairs of glasses with sales revenues of billion. We are rapidly driving our expansion in Italy. In 2015, Fielmann opened its first store in Italy, in Bolzano. In 2016 we opened stores Stores 5 %Sales 21 %Unit sales 53 % Fielmann Other storesMarket shares in Germany, 2016 Annual Report 2016 5 FOREWORDand competence over the past year. Thanks are also due to our customers, associates, friends and to you, the shareholders, for re-maining loyal to the nther Fielmannin Bressanone and Merano.

9 Encouraging feed-back from customers support our optimistic ex-pectations regarding this market. In 2017 we will speed up our expansion pace in North-ern Italy. Our mid-term goal is to operate 20 stores, selling 275,000 pairs of glasses with sales revenues of 35 million. Our success abroad is attributable to the fact that we have been able to export the prin-ciples of our success into the neighbouring countries. We offer consumers the certainty of reasonable prices and stand out from our competitors even more than in Germany when it comes to location, size, equipment, selec-tion, price and expert advice. Fielmann has identified additional growth opportunities in many areas. Our customer base offers considerable potential: On aver-age, our customers are younger than those of our traditional competitors. They remain loyal to us over many years. Consequently, even without gaining any new customers, we will be significantly increasing our share of high-value progressive glasses over the coming years, as people need such glasses in the second half of their lives.

10 Sunglasses, contact lenses and hearing aids also offer additional potential. Customers want to have a provider that takes care of their needs and whom they can trust. They buy products where they know they will get guaranteed quality at the best prices. In the optical industry, they place their trust in Fielmann . In 2017 we expect to increase our market shares once again. We will open new stores, expand and modernise existing locations and recruit more personnel. Fielmann is a family business, thinks across the generations and invests in organic growth. We thank all our employees who have con-tributed to the success of the company with their dedication, passion, conscientiousness 6 Annual Report 2016 MANAGEMENT BOARD Annual Report 2016 7 MANAGEMENT BOARDDr. Stefan ThiesG nther FielmannG nter SchmidDr. Bastian K rberManagement BoardGeorg Alexander Zeiss Marc Fielmann G nther Fielmann Chairman of the Management Board Corporate Strategy Marc Fielmann MarketingDr. Bastian K rber SalesG nter Schmid Materials Management and ProductionDr.