EDITED TRANSCRIPT EI.PA - Full Year 2015 Essilor International Compagnie Generale D'optique SA Earnings Presentation

THOMSON REUTERS STREETEVENTS EDITED TRANSCRIPT EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

EVENT DATE/TIME: FEBRUARY 19, 2016 / 09:00AM GMT

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

CORPORATE PARTICIPAN TS Hubert Sagnieres Essilor International - Chairman & CEO Laurent Vacherot Essilor International - COO Jayanth Bhuvaraghan Essilor International - Chief Corporate Mission Officer Paul du Saillant Essilor International - COO

CONFERENCE CALL PART ICIPANTS Nicolas Langlet UBS - Analyst Veronika Dubajova Goldman Sachs - Analyst Antoine Belge HSBC Global Research - Analyst Claude BollierAnalyst Delphine Le Louet Societe Generale - Analyst

PRESENTATION

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Good morning to all of you this morning. Thank you for coming to listen to the presentation of our results 2015. I hope that you've all received the beautiful sunglasses, Osse, that is our flagship brand in Turkey.

This morning, you also saw that we've been doing some advertising for west France that is studying at the Brand Institute in Australia on the evolution of myopia in the world. That's one of the major topics. You must have seen it in full details, and you can go on their site. There will be more than 5 billion myopic people by 2050.

So this morning, what we would like to do with Laurent and Paul is to analyze all the results, of course. You see, we're smiling; all the teams, our Executive Committee, they're all here, they're all smiling. Of course, we've had a very good year, as you've seen. The coming year will be even better. The past years were also excellent, and I think that there is a reason for that; with Veronique, Ariel, Vivien and Sebastien, we wanted to structure this meeting.

Of course, we wanted to focus on the results, and you'll receive all the answers to your questions on these results, but on the reasons too. Why is it that, year after year, that Essilor is doing so well? Why is it that Essilor is having such a good performance? What we need to understand is that, behind this performance, there are 61,000 people around the world who are motivated, who have a real purpose, a real mission that is to improve vision in the world.

And when we compare the companies, the performances of all the different companies, we're lucky because we're in an industry that helps the world. We have found our path as a Company. And this corporate mission must be the proof of a commitment of all our stakeholders and 60,000 people in the world who, day after day, hour after hour, consider this as a real personal objective.

For all of us, that is the main reason why we are successful. Of course, we have fantastic products, we have wonderful brands; of course, the market is also there. But this really differentiates us from the other companies.

So now the figures. You have been looking at them since you've arrived so you know them by heart. Growth of 18.4%. What has increased most in 2015 is our margin contribution from operations, and this in spite of the fact that in 2015 we spent EUR40 million more for advertising so as to be able to keep explaining about our products to all the consumers. So EUR40 million, when you know that 1/10th of 1 point of our margin is roughly EUR7 million, you realize what we can do in terms of our margins.

Laurent will go into the details; he'll talk about 2016. We have a target. We're close to 2018 we'll have a margin of 19% roughly. But right now, we are growing, we are conquering and we will continue, as we told you in 2013, we will keep investing in advertising.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

Our earnings per share, 17% growth, and in 2015 we did very well at the stock exchange, 22% to 23%. But we've decided to increase the dividend a little more than what we do usually, and tell our shareholders that we trust them and we're happy that they trust us and they're loyal to us.

So why the success now in 2015? This is what we'll try to explain to you with Laurent and Paul.

The first thing is that there is a great balance between developed markets and the fast-growing markets, and it's thanks to this balance that we can become stronger. Demand is also very high in mature countries today, just as in other developing countries and we're going to explain to you why. This is due to demographic reasons and [genetical] reasons.

The second thing that also explains our performance in 2015 is that we are continuing, of course, to invest more than ever in innovation, but we're doing it over an even wider spectrum. For years, we've spent hundreds of millions of euros to innovate in lenses. Now, we're continuing our pace of some EUR200 million per year, not only in lenses but also protection and prevention, and the new product lines to new markets, where we have been deploying for a certain number of years now.

That is sunglasses, sunwear, and all that is related to online, Internet, whether it's examining your eyes. That will facilitate access for consumers to Internet and all the software and systems for a better consumer experience when the consumer buys sunglasses, contact lenses, readers, or glasses on Internet.

The second thing is that our lens market, our basic market is driven by two major things; brands and services. And it's in those two areas that we are investing year after year.

In this area, we've seen some remarkable performances; I would say unexpected, because when we operated this change we realized that we had a huge momentum. But I'd like to underline the performance in Europe, the performance of France under the leadership of Bernhard, who is here in the front row, since 1.5 years.

We were at a meeting on Tuesday morning to set up the plan for 2016, and we have teams that are really highly motivated. I've never seen that for the last 25 years in Europe, and this is a wonderful performance. Remember in 2013 when we told you, Europe, we believe it'll be between 0% and 1% and actually, they have multiplied this forecast by nearly 3. So I'd like to congratulate our European teams.

The American market, they are catching up their delay; in terms of the quality of their products they're always 15 years behind, compared to the rest of the world.

So one of the major growth vectors are, of course, our acquisitions, whether they are strategic, bolt-on small/average/medium. We have a highly fragmented industry, and especially in strong or fast-growing markets. And in all those countries we've had some remarkable performances. You see all these flags here, these are those countries that have grown between 10% and 15% last year.

But our growth today, which is greater than that of the market, and these fast-growing markets, well this is also due to the fact that we are planting our flag in new countries. Now we are present in most of the countries in Asia, apart from North Korea, and we are present in most of the African countries, north to south, east to west, in the whole African continent.

Now, the two new activities that we've been developing for the last three/four years, solar and online activities, this has strongly contributed to our organic growth, like- for-like growth. These two businesses are growing faster than the rest, and it is thanks to this lever that we will slowly reach this like-for-like growth above 6% from 2018 onwards.

So acquisitions, I've covered that area. This is the second engine; it covers all the Group's business, whether it's geographical, lenses, solar, sunwear or online. We carried out 19 acquisitions in 2015. We've announced and closed a certain number of these at the beginning of the year.

The pipeline is growing with the opening of new markets, with new deployments. And thanks to all our success, around the world we see owners of small businesses, whether it's 5 million, 20 million, 30 million or 50 million, they have developed wonderful stores in their countries. They have decided to join us. They love our mission to improve vision, and they love this momentum represented by 61,000 people round the world.

So 61,000, I can tell you they're all motivated. They're all aligned; they're all focusing on two major things. The first is our corporate vision, and the second is performance, because one goes hand-in-hand with the other. We can improve sight, vision in the world, because we have a very good performance every quarter.

Now I'm going to give the floor to Laurent, and then I'll talk about some other topics. I'll talk about our strategy, and we will end with a presentation, I hope you'll love it, a presentation from Jayanth on our activities, business-inclusive social initiatives round the world. Thank you.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

Laurent Vacherot - Essilor International - COO

(interpreted) Thank you, Hubert. Good morning. We're here to review what we did this year from the financial point of view, and we would like to see what the teams have done throughout the year.

The first message is that this guidance that we've maintained throughout the quarters, we have reached or even gone past this, performed better than this guidance. So we have delivered what we had promised, and this confirms the robustness of our growth, and our trust for 2016, our ambitions; we want to satisfy our ambitions in 2018.

This is the description of our revenue. What's most important is the 4.6% of like-for-like growth, so we've done better than 2013 and 2014.

The currency effect is very important. When we sum up all the gains and losses in percentage since 2000, 16 years, we reach a certain equilibrium. So this EUR556 million (sic - see slide 14, "EUR566 million"), this is all the work carried out in the past 10 years in the major countries of Essilor, especially the United States. And we'd like to thank you for all this work, thanks to this currency effect that was neutralized over the past 10 years.

The fourth quarter we had an organic growth of 5.3%, so you see the growth in each and every quarter, and we are, therefore, executing our strategy. It is bearing fruit, and this proves that our strategy is the right one, the one that we presented to you in June, 2014.

Now what do we on this slide? You see that all the divisions and regions have contributed to this growth. Small exception are equipment, but each and every year, on every quarterly basis, we tell you that the market for this business is becoming smaller and smaller, because we, Essilor, we are buying a great number of laboratories and plants.

So the part outside of the Group for this business has trouble growing; there are some years that are better than others. But we're not concerned about this figure. What is important is all the rest that is growing, and sunglasses and readers have reached 33.9% growth.

Hubert said this was a year rich in acquisitions, 19 acquisitions, throughout the world in all our activities, and especially our traditional activity, which is the prescription glasses, sunglasses, online.

Two small acquisitions in Brazil, we will tell you more on this later on, and spend some time on two different acquisitions, new acquisitions in our landscape. And here we're in the US, we're talking about two companies, one is Vision Source and PERC/IVA, and these are the doctor alliances, as the Americans say.

So why is it buoyant for us, these two acquisitions? Look on the right here; here you see the momentum over the next 10 years. This is the value, the breakdown of the market. You see the independent optometrist and the more structured organizations; the chains, specialists, retailers, or other retailers in the United States.

So those who are winning in terms of market value are the independent eye care professionals, because they provide good quality services; they provide sophisticate products for their clients with the adapted services. This is also true in other countries, but it is striking, especially in the United States, and you know that, in the past 15 years, Essilor has started this acquisition strategy.

We've acquired laboratories in the United States, so we have gone closer to the eye care professionals. We've put the technology at their service, so they have access to all the high technology products of Essilor; they have Crizal, Varilux, that are dedicated to them. So we've helped them, in a way, to gain these market shares.

So here we're going a step further, and I think two-thirds of these independent eye care professionals, there are 26,000 of them, and two-thirds of them are affiliated to what they call doctor alliances. These are platforms, so there are various forms of platforms, we can call them buying groups. These are organizations, they're quite modest in size, and they provide these doctors all kinds of services and products, so that these doctors might be more efficient, and might be closer to their consumers.

So the two companies we've acquired, they bring together -- well, it's difficult to say, but the best, the best optometrists in the United States; those who appreciate the products, the technologies, especially the innovative ones of Essilor. So through these two acquisitions, which are iconic, which are emblematic, we're going to get closer to these organizations and we'll be able to accelerate the development of these categories in the United States.

We keep recalling that the United States is an underdeveloped market in our world, so it will be a way to accelerate our development. It will allow us to increase the categories of products, solar, frames, the distribution of contact lenses.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

We will provide services, integrated logistics where these doctors might become more efficient in the United States. The delivery of a product takes six to eight days, and by storing frames in our labs and by integrating this entire supply chain, we can improve it, and we can deliver in three days. So we will offer all this to these doctors.

These are profitable acquisitions, and they are accretive, they will be accretive right from 2016 onwards; accretive to EPS. This is something that we will have to keep developing so as to accelerate the growth of Essilor in the coming years.

Now since the last half-year, we have developed quite a lot in the different regions; let's look at the different regions.

We have online, sun, and lenses, of course. Now I won't got into the details, but North America to start off. What's striking is that in different products and business lines, everything [saw] growth with sunwear, Costa and FGX, Coastal, EyeBuyDirect, FramesDirect, and, of course, lenses too. So all told, comes together as being a very productive year, up7.6%.

In Europe, the return to growth is something that is to be noted, return to growth this year. We've gone into acquisitions that were closed in 2016, but nonetheless, there's a momentum there. So the media working where they need to see where the customer is going for the new technology on offer, and also we've done some in- depth work in integrating with the large European chains. That's pursuing well; well I would say, yes, it's continuing well.

In Asia, what's important is, of course, in the big Asian countries, in India for example, we've posted growth greater than 20%, in China greater than 10%, domestic that is, domestic China. So things are functioning well there.

Of course, there's a growth in the need to see well in these big geographies for us. Things are faring very well for us, and we have our leading brand which is Bolon, of course, in China in sunwear, which is posting very satisfactory growth indeed.

Latin America; this is a region where there was faster growth really in 2015, plus 17.5%. Lots of acquisitions there, lots of growth everywhere outside of Brazil, and it took place in spite of a slowdown in the second half of growth in Brazil. In the first half we were round 8% to 9%, and so with only 2% or 3% growth in the second half.

Our teams are organizing themselves so as to come to terms with this new softer growth in the second half, and they will be working on mid-tier, more affordable products that will post growth for us, going forward. And we're investing so as to have more local production in Brazil, so as to be less penalized by the drop in the real and high import costs. So we will have new weapons in our arsenal, so to speak, so as to go out and fight more in Brazil.

Now this is a new chart we've put together for this time. There are some strategic initiatives that have been taken that we want to flag up here.

Fast-growing markets that are growing very fast, sunwear and online too, all of this enhancing the Group's like-for-like growth acceleration. We wanted to flag up these strategic initiatives. You know we have very clearly stated objectives for 2018, and fast-growing markets, EUR1.5 billion worth of revenue in 2015, 14% combined growth; that's acquisitions and bolt-on. And then you have Russia, AMERA, you have eight new countries we've got to locate in, so all adding up to a lot of future growth somewhere.

This is a division that's generating almost EUR900 million worth of revenues at this point, so it's fast tracking its development, especially thanks to Costa and Bolon which are our sunwear brands, availing in the past year in the second half in particular of a return to growth for FGX in the US.

And we've also integrated two acquisitions, one in the UK and another one in Turkey, Merve, whose products, the Osse brand, you've got to actually wear today. Then we have, of course, sun lenses that are growing in double digits, as you see as well in sunwear.

So online, around EUR220 million worth of revenues; situations that vary, of course, with EyeBuyDirect and FramesDirect posting strong growth in the US. Coastal, which is now continuing its turnaround. After the acquisition, we totally revamped the marketing and so on in that company, we stopped the development of stores, closed down certain stores. So it took a while to actually start to turnaround the company and get back to growth, and that's happening now and it will be speeding up in 2016.

Then good momentum, too, for our sunwear sold under the Costa and Bolon brands on the websites.

Now in Brazil two acquisitions, small companies which are just really at the start of e-tailing in that country. We want to ride the crest of the wave and capture the potential there, and its two companies, therefore, in Brazil that should develop faster than in other markets.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

Of course, the figures are what you're mostly interested in I'm sure. Here you see the strong growth on the next slide. What's substantial here is a new increase in the contribution from operations, 18.6% up to 18.8%, so we're ahead of our own roadmap.

Now there were expectations, people say we missed by 0.-something-%, this or that, but Hubert talked a bit about that, and we'll talk about it afterwards too. But we're ahead of ourselves because, if you recall, we said we would have 100 basis points better in performance by 2018, but we've got better as of 2015.

So we've started to improve our performance faster than planned, and we'll be able to continue to plough back resources into media, into market developments, even more so than what we put into our initial plan.

What's fundamental is the gross margin, almost 60% and that was the proof that all of the product mixes, industrial efficiency, and so on, all of those were working well. And EBITDA high quality, posting growth of almost 21%. So all of the parameters are there to really point to good growth.

This is the traditional waterfall slide showing you how we achieved these improvements in the contribution year in, year out. On the left-hand side, you have the impact of acquisitions; there's an additional quarter of transitions that came into our scope in April, 2014. And then we have the dilution as usual, of bolt-on acquisitions, minus 0.3%. And in respect of that year, of course, the acquisitions have improved the situation thanks to transitions.

Then operationally speaking, in the core business on like-for-like you have the other side of the chart, you have an improvement of 0.6% thanks to all the good things we've been doing; operational efficiencies, synergies, operating leverage and synergies in general, what we can draw out of our acquisitions.

And then we're investing in the future, of course, so we're structuring our teams especially in high growth areas, the fast-growing markets, in the sunwear division, in the ecommerce division, so as to support that fine growth there.

We're also investing, Jayanth will talk about this, we're doing very good things with just a few million euro actually investment-wise, that's in the P&L of course, that you'll hear about later on. Given the amount of money we are spending there, the leverage is absolutely huge; he will talk about that later on, our Corporate Mission Officer.

But all of these efficiency improvements, we've ploughed back about EUR40 million into consumer media spending, so incremental media spend, as you see here on the slide, and we're going to continue, of course, in 2016.

Another item that we usually give you too, I won't dwell on it, but you can see it here in front of you, you're familiar with this presentation, it's the IFRS changes that came up in 2007/2008.

The idea is that, year in year out, we've got to amortize some of the acquisitions costs. We're a Company that makes acquisitions, so we've got to amortize them over time. And in the acquisition costs we've got to identify the goodwill, the brand equity, technology, and so on. All of this must be amortized and, over time, it's EUR86 million. This is the PPA item here, non-cash of course. That weighed on us this year and you've seen the previous year's figures.

So when you look at the change in our contribution from operations, don't forget that, year in year out, non-cash this weight is increased. But we feel comfortable with this; it's just to help you to look into our accounts and understand what's going on. Of course, the EPS then, you see the full EPS impact as well.

So otherwise, not a huge amount to say on this slide. But there is an alignment between the growth in the revenues and the growth in the bottom of the P&L. You see the financial income going up, of course. There is an increase in our debt because of the end of the acquisition period for Coastal, Transitions, and the other acquisitions.

Tax, well, it's gone up, the effective tax rate; we hope it will level off at this level. We've succeeded very well, of course, in the US and that accounts for that too. And there was a ForEx effect between the dollar and the euro.

We've continued to do capital expenditure and invest. We're in a growing market. The Company's faring well, so you've got to continue preparing for the future and that's what we're doing, investing in customer contracts and so on.

Then generation of cash flow, this is really sound. You see the figure here, EUR867 million, and it's growing faster than the revenues. You see the results in terms of the working capital. They kept a tight rein on it; all of our teams they were really, really spurred on, Geraldine, to do a very good job. They did a very good job and, as financial people, we've got to get that right.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

You see the capital expenditures for acquisitions, net financial investments EUR805 million. It's a bit more than you might have had in your plans yourselves, but it's because of Vision Source and PERC, those two acquisitions, the doctor alliances in the US that came in at the end of last year.

So all of this taken together gives us net debt that's gone down a bit, compared with June, very contained. The positives here; very strong cash flow generation and the tight rein on the working capital.

We have a negative impact in the debt. This is the second year it's happened, well, it was 2014 and 2015, both years. So you have the EUR320 million of negative ForEx effect, because of the parity between the euro and the dollar. It happened in 2014 and it happened again in 2015.

And acquisitions more substantial ones here that are listed on the screen that were done in the last quarter of 2015. So all of this comes out at a ratio of debt to EBITDA, which is really contained, 1.3. And we hope to maintain the ratio so as to obtain high quality ratings. Of course, when you make acquisitions, well, we're going to continue making acquisitions, you need a good rating. And that's why it's important to keep a good rating, of course, for us.

The dividend, well, it's another year when we're going to increase our dividend; Hubert talked about that. It's a year when the total shareholder return is 24.2% for the share, and 1% more with a dividend of EUR1.11. So what was approved yesterday by the Board, there's a resolution to be put to the AGM in May, to give us the option, the possibility for shareholders to have a scrip dividend instead of a cash dividend. It'll be a choice, of course, for the shareholders. They may take a stock dividend instead. So that will be put to the AGM.

We've put together here a non-IFRS, or non-accounting, slide, just to show you the acquisition momentum. 13 acquisitions made in the last four months, since October, 2015, so there's good momentum for the acquisitions. And what we plan to do for 2016 will be positive, too, in that respect. So it's happened all over the place, as you see, in different parts of the world. It's quite a good lead in to 2016. And we'll come on to the objectives and the guidance, of course, at the end of the session, with Hubert.

What can we talk about, going forward? We can say that we can confirm our strategy, no major change really. We're going to actually bolster the media spend. We're going to ramp up the doctor alliances' partnerships in the US. We're going to continue the positive dynamics in our key sunwear brands, and accelerate our online platforms. And no major change; you don't make a change when the recipe is working well, do you? You keep on using the same recipe.

Of course, we think the tax rate will stabilize at about the 2015 level. CapEx between 4% and 5%; we'll try and be as efficient as possible in that respect. And also, we're expecting to continue with the strong free cash flow generation in 2016 as well.

Now my last message to you is to do with our ambition that we set ourselves for 2018. You remember is was 2013 figures and then we talked about in June, 2014. We said, at the time, that these new initiatives and this new strategy were put together aiming at speeding up organic growth by more than 6% in 2018. And we've got this 4.6% now in 2015.

Our ambition was to have EUR2 billion of EBITDA and we're at EUR1.65 billion. And free cash flow of EUR1 billion per annum; it's EUR0.87 billion. And net debt that we should be deleveraged and the net debt without strategic acquisitions, no major new initiatives, that we would be stable compared with 2013. I explained the two main things that support that; the acquisition of the doctor alliances, and the ForEx effects. That's what accounts for the figure you have on the screen here for the net debt.

So all of this taken together means that 2015 has us tooled up to go forward serenely into 2016 to achieve the objectives that we set ourselves for 2018. Thank you.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Thank you, Laurent. So basically, it's like a highway to happiness, Essilor. That's the gist of it. So, yes, we're going in to 2016, therefore, with a lot of optimism, sound optimism, shared optimism with real fundamentals [subtending] us, because Essilor is now even sounder and stronger and more bolstered than it ever was before in the world.

We have 7.2 billion people in the world now and they need to see well. They need to improve their eyesight, get it corrected when needed. They need to protect their eyes, wear sunglasses, like you are here today. This is the industry we're in; we're serving those needs and that's the world we're operating in. There's 7.2 billion people that need us to protect and keep their visual equity, so to speak. There will be 8.2 billion of them by 2030.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

To go into some details, poor vision is the world's biggest disability, and there are solutions, however, for these disabilities at all sorts of prices, at affordable prices. And our strategy, our mission, is to make sure that we deliver, everywhere around the world, the right products to the people who need them.

So we've entered a mode where, out of the 7.2 billion people, there are 63% of them that need vision correction and 100% of them should protect their eyes with sunwear. There is an imbalance because there are 5.8 billion people who are unequipped in terms of sunwear, and 2.5 billion people are uncorrected, who would need vision correction. They're living in a world where they can't see well. And this market, this industry, has fundamentals driving growth that are fairly strong, as you see them here.

I won't go into the 5 billion myopic people because we all, these days, are living in confined spaces. We're using our eyes much too much to see things close up, be it between four walls, be it by using smartphones, tablets, computers, screens of all sorts. That's the main reason for this speeding up of myopia. And there's also the whole set of genetic reasons. There are Asian genes to do with myopia and then there are India genes to do with hypermetropia.

So we're in an industry that is highly fragmented. And the more we cover our field towards sunglasses, readers, etc., the more the market is fragmented. And this market fragmentation, on this market that we are deploying week after week, month after month, all our acquisitions. Laurent explained this to you.

Our M&A teams are here in the front row, and they're extremely busy in France and the rest of the world, because this momentum today around the poor eyesight, but also this project that we are trying to provide to all the players in this industry, there are a lot of companies, men and women, who want to join us in this great adventure.

This slide, I think that it's terrible, because all these people are wearing glasses, and you have the case of those who are wearing glasses who can't see well because it's not right prescription. This is the 1.8 billion who are corrected, it's not the 9.5 billion. Those who are not wearing glasses they're the worst, they have their glasses in their pockets. They don't wear them, they wear out, they open them, they close them, they break, so in the meantime, their eyesight is getting worse.

You have people with foggy glasses, people who have two glasses, others who have readers who are playing with them. We are developing our mix thanks to this, so Jayanth will explain this, we have 2.5 billion people who can't see well, but even though 1.8 billion today who are wearing glasses the don't know how to wear them correctly, or they do not have the right glasses for themselves.

Yes, Laurent, you're looking at your glasses and you're correct to do so, but at least you should wear them because, if you don't wear them, it's great for us because you're going to buy more glasses. But you're not protecting your vision, especially if you don't wear what I'm doing right now with my beautiful anti-blue reflection. Congratulations to you, you're also wearing those, and that's how you will be protected; you will protect your retina, eyes, and prevention.

It's true that today, by improving our mix, this is done by people who are not wearing their glasses properly, and the growth in volume is based on those who are not correcting their eyesight.

Essilor in 2016, what will it be? We're in an industry of EUR85 billion. For the moment our field is this oval you see here, spectacles, readers, sunglasses, a little bit of frames, a little bit of contact lenses, and in this way we can cover the 7.2 billions of people.

In this market today who are we? Well, I think you didn't know this but we only have 25% of this market share. Remember, I'm not going to ask you to raise your hands, but when we were only in glasses, in spectacles, which year did have 25% of the market share, and what was our capitalization at that time? That was in 2008, if you remember, and our capitalization is one-third of what we're worth today.

I suppose you've understood our entire strategy in just one single word. We had 25% market share in a market of 12 billion, and today we have 25% in a market of 30 billion. In eight years we have multiplied by three this capitalization, and our entire growth and like-for-like growth strategy, our acquisition strategy actually, will be there to keep growing step-by-step so that we'll go from 25% market share, over a greater market, we'll reach 30%, 35%, 40% of this market share on this market of 30 to 40 billion.

All this in an industry, in a playing field, that we have grown [2018] more than 6% like-for-like growth. And we're doing the step by step, all this, by making sure that our margin is increasing at the right pace. As we told you last year, we are reinvesting all the surplus in advertising, innovation, or we're opening up in new countries so as to guarantee this growth of Essilor, that Essilor has had in the past 10, 20 years, for us to guarantee this year after year for the coming 10, 20 years.

Now I would like to go into the details of why this performance. I shall cover two topics; first of all, our competitive advantage, and then you will see the five major growth levers that we have. Why is it that, year after year, Essilor can bolster its leadership? Well, the first reason is very important, it's innovation, thanks to innovation.

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You have Norbert Gorny at the back of the room, he's our new manager in innovation, you can talk to him later on, Alain Riveline, who is the manager of marketing, they talk to each other every day, 10 times a day; I hope they don't talk to each other at night. But these are the two people who are aligning the entire Group innovation. And this innovation is really wide; all kinds of different pathologies, the software, machinery, all the equipment required, so as to improve the examination, measuring.

When you go to the optometrist, the eye professional, he measures our eyes and the machine software used, I'm not going to tell you when it was developed, but it was something like 150 years ago and hasn't changed. We're doing all kinds of things, not only in spectacles but in all kinds of other areas, and the objective is to improve visual accuracy and accessibility around the world. Thanks to prescription that's becoming less expensive, so the 7.2 billion people who need to see better might be able to have access to this better vision.

The second major competitive edge is our brand portfolio, and this is very important. We need to understand our strategy, because we're not in just one or two major flagship brands that we're trying to bolster in the whole world, especially if they're distributed only by one or two players.

There are dozens of very powerful regional brands that we're trying to develop regionally and this is what is providing us with this critical mass. It's thanks to this regional critical mass that we'll be able to develop in each and every country, and that's how we can become more international. Bolon, which is a Chinese brand, with designs for frames for Chinese faces, we're trying to do this outside of China where we have the same kinds of faces.

Our brand strategy is to deploy to acquire and develop regional brands at price that is affordable and to do this in a maximum number of geographies for lenses or spectacles, sunwear and online. Of course, we are still building on our major brands, that is Varilux and Crizal.

Now the third point that is differentiating us from the rest of the world, and this is why we have markets everywhere, this is our supply chain. That is our ability to serve all our small clients or the major clients in all our geographies. Bernhard, the success that you had in Europe it was based in our supply chain to serve Europe from India, from Poland, from Thailand, and to serve them all in a very short time period, thanks to IT, thanks to the way we place orders. You can deliver the frames, readymade frames, in just a few days, one or two days, from these countries that I've just mentioned.

The other major point, of course, is the [granulometry] of our businesses. We're close to our customers whether these are consumers, all of you, or professionals, we are closer and closer to all of them. Jayanth later on will talk about India, and China, and the way in which we are dealing with low cost systems, how we are creating small, tiny sales outlets, but dozens of thousands of these, or just the 3,000 or 4,000 customer services that we have.

Our clients are in touch with us three, four, five, six times per day, and we deliver all these messages to them, messages on innovation. Our business online, of course we're even more present; we try to explain about our products, so that's a major element. At the pace at which we're innovating we need to explain, in full details, the performances of all our products to all the consumers.

And the last major point today, in terms of our performance and our difference compared to the others, it's our ability not to identify all the partners who will join us, because we have known them for generations now. But we want to make sure that they feel good when they join the Essilor family, and we've developed three types of acquisition models.

100%, whenever it's necessary; acquisitions where we take a major stake but we always leave 10%, 20% of equity in the hands of the managers, former owners, those who owned the company and who will keep on this adventure with us as marketing manager, financial manager or general manager of the entity.

And the third section of our acquisition strategy is a 50/50 partnership, or a 49/59 (sic) partnership strategy. This is to guarantee a long-term success by having a good share, by creating value when we associate ourselves with owners that have very high performance businesses in some complex areas in the world. So these are the three points that differentiate us from the rest of the world.

And so for the entire value chain, we are present, we are different from the others and we can create value with all our stakeholders. So this is why, by moving on, we have this degree of performance that we have today.

Now, the second thing I'd like to see with you are the five key levers that will help us create more value for Essilor in the coming years. I think this is important. First, we need to understand what makes us so different, and to understand where this value creation will come from in the coming years.

The first thing, well, it is very important, and very few companies can say so, this growth potential, geographically, is beautifully distributed. This growth potential today in the emerging countries, developing countries, fast-growing countries, is the same in terms of value as the creation of value in more developed countries or more mature countries.

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Because, on the one hand, you have the volume, 10% to 15% of growth today with a middle class that can have access to better vision that is protecting themselves with sunglasses. And then you have the mature countries, as showed to you on that slide, where people don't use their glasses properly. They should have antireflective lenses; they shouldn't wear bifocals. They should use Prevencia or Eyezen glasses to protect their retina. It is this major balance that allows us to feel positive about our future growth potential in all these geographies.

The second thing is that the American teams are absolutely wonderful, and they can benefit from this leadership position that we have in United States. Laurent told you about the acquisition of Vision Source and PERC, and maybe that is the most important acquisition we've carried out since 1995 when we were in the United States with Laurent we started buying laboratories.

We have privileged relations with some 8,000 American optometrists. All our clients are, of course, very good but that is the top of the range out of the 25 sales outlets in the United States. And this American market, well, there's a high demand in progressive additional lenses and antireflective lenses.

And the third growth lever, it's innovation, marketing, marketing, innovation, Alain Riveline, Norbert Gorny and all their teams, that is driving the entire Group. And this is what allows us to accomplish our mission; our corporate mission and our performance mission. And here it is [EUR200 million to EUR210 million] that we invest in innovation this year, 2016, therefore.

We will spend EUR14 million more in advertising. It's not the extra EUR14 million, 2/10ths of a margin that we put in marketing, but I think it's just the efficiency that we can draw from this. And Alain's teams proved to us in 2015 that we have made another quantum leap in the use of these funds to optimize the effect on growth.

The fourth point, well, this is another major competitive edge; this is a major growth lever. It's the interconnections between all our businesses. Laurent earlier on was showing you the growth in our Costa sunwear in the United States, especially on the East Coast, although now we've opened several offices with the same model in San Francisco. But since we have made acquisitions online, on Internet, I was there, actually, early in February. I went to Vancouver; we had a major meeting with all the Internet teams from all our divisions.

The Internet growth of the Costa brand in the United States was something like 50%. Today, this accounts for 15% of the sales of Costa in the United States. And, of course, they are sold at the same price on Internet and in the stores, so you know what that means in terms of the brands, if I may say so.

In China, it's the same thing. Bolon, Internet, roughly 18%; growth of 30%. And now they've opened a line of prescription glasses, spectacles, and to deploy this they have leveraged themselves on the forces of Essilor China. All these interconnections are very important because this is what will allow us to optimize all the assets that we have.

And, of course, the fifth point, these are the acquisitions, so this is like-for-like growth, but especially the new business models. We are always inventing or we are going into new business models. This allows us to do these two things; mission and performance. And we're doing this in all the segments, whether it's in our core business, prescription lenses, but also sunwear, online and on all the geographies.

Vision Source and PERC, I already talked to you about that. Opticas Vision, this is a concept that we've deployed. Laurent invented this in Costa Rica with all his teams. Here we have a country where we were not present. There is a chain of shops, a laboratory. We acquire, we innovate and we deploy all our innovations on the entire market, and then we have an Internet offer for the consumers with all the prices, all the different prices.

We're on a market where we sell to the entire network, where we sell all our innovations. We do not keep our innovations for ourselves; we put them at the disposal of the consumers, the opticians, independent laboratories, who are all the different players in Costa Rica.

And we have other projects of this type in other countries where it would be justified to have totally integrated business models. This is what I wanted to share with you. All this is based on a corporate culture, which is very powerful. We have a growing number of people, 25,000 people, who are all shareholders of Essilor. There's a perfect alignment between the employees and the shareholders. The value created between the capital and labor is shared. All this based on our corporate mission, which is to improve eyesight, to improve vision.

I'd like to end with a short story. What you can see here on the screen, this young girl and this more mature woman, her name is Ming. Ming represents all that we do. She represents why we're here, but she also represents the performance of Essilor. Ming was five when she became myopic so she bought glasses. Then she went to school, she changed her spectacles, her myopia evolved, then she became a big girl. She got married and now she's enjoying life with her progressive glasses.

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Throughout her life Essilor supported her, even during the years when she changed her glasses. She wanted to wear contact lenses, she bought Bolon sunglasses to protect her eyes, but never did she go back to a world where she could not see well because what is important to understand; this is what Veronique explained to me.

What did you tell them? This is very important. Good vision is an addiction; when you start seeing well you'll never go back in your steps and I think it's Veronique who has the last word here. So I'd like to thank you all for your attention.

I'd now like to introduce you to Jayanth who will speak to you in English and who will explain to you one of the main blocks of what's been done in our corporate mission department which I set up three years ago now. It's important to take care of the needs of those who have poor vision and it's a huge, huge need out there.

Three years ago we took one of our best people in Asia, he was in charge of India, and we asked Jayanth to set up a team around him; good people to be harbingers of this message to do with our corporate mission. So here's the person heading up our corporate mission department.

We have two major types of program that we roll out. The first one has to do with charities; that is when we give sunwear free of charge, or prescription lenses, or readers, for example, to people who need them, who are needy. And then we have social business activities as well; inclusive business, social business activities. And what Jayanth will talk to you about today is what we've been doing over the last three years in terms of our corporate mission.

In social business around the world, and why it's so important to be involved with charities, but also with social businesses. The floor is all yours, Jayanth; you have the floor. .

Jayanth Bhuvaraghan - Essilor International - Chief Corporate Mission Officer

Thank you, Hubert. I'm really very happy to be here with you to share our experiences and our success in creating new markets, creating new wearers for our long-term sustainable growth, and also in the [bag in] fighting poor vision.

Just like to spend a little bit of time on this slide. Hubert just mentioned that poor vision is the world's biggest disability. It affects more than 2.5 billion people today, which is one-third of the world population. There are 2.5 billion people in the world who have poor vision and who don't have access to simple things like spectacles.

We also know that, out of the 2.5 billion people today who suffer from poor vision, 95% of them live in emerging countries in developing markets. There was also a study by the World Health Organization which estimated that the loss of productivity which the world suffers every year due to poor vision is about [$275 billion]. So it's a no brainer there are strong reasons why one should be fighting poor vision.

On top of it, like Hubert mentioned some time back, poor vision can be easily corrected with a simple pair of spectacles and, today, you do have products at various price points; basic, simple corrections can be done by a simple pair of spectacles. So you don't really need to go around inventing a new molecule or put money on research and development to actually find a solution for poor vision.

And affordability is really not a problem, because you do have the products at the right price point. So really, there are two key things which actually are important in addressing poor vision; one is awareness. Many of the people, when we go and talk to them, don't know that they have poor vision.

The second most important thing is creating primary eye care centers and access for people to get access to simple things like spectacles which, most often than not, we take it for granted in the developed countries of the world. So it's clearly about creating awareness and creating access is what we believe are the two main barriers in terms of connecting the dots and fighting poor vision, and creating new wearers.

If you just see that -- again this goes to prove that vision actually not only has an economic impact, it also has an impact on the quality of life of individuals. We did recently a study with a social impact firm, Dalberg Consultants, to see the impact on the wearers on the spectacles that we gave them.

There was a marked impact in their productivity and the wellbeing of the spectacle wearers. 65% of them increased independence, 59% of them improved their productivity and, importantly, many of them saved 1.5 hours in one day; because they could see better, they were able to do things faster.

But the other two graphs are actually extremely important for us. We see that, at the base of the pyramid, [when you create a new] wearer, the frequency at which he changes his spectacle is far, far higher then what you see in a [developing world]. If it's three years more or less, on average, of change your spectacle in a developed country, in the base of the pyramid, they change faster. They change in 1.8 years, so that means they're going to be actually replacing their spectacles much more faster than what we see.

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And the second thing is, the moment they wear the spectacles, when they start enjoying good vision and they start enjoying betterment in their life, actually when they come back the second time, and we have data to prove that, they end up paying a premium of over 40% on their second pair of spectacles.

By improving the frame and improving the kind of lenses, moving some glass to plastic, and more the more adventurous want more a little bit to coated lenses they really enjoy because, again, these are people who actually have access to smartphones in all these parts of the world. They have the money; they have the purchasing power to buy products at the right price level.

So clearly, there is a strong case for us to actually go and address these needs. So what we did, and I was with you guys about three years back when we talked about launching the corporate mission department and all the initiatives in terms of accelerating our fight against poor vision. And we actually, at that point of time, set up the whole department under the premise, under the mission, of improving lives of all the people in the world, and creating a long-term sustainable organic growth for the Group by creating new wearers.

And we actually organized ourselves in three boxes, like Hubert mentioned in the introduction. There's the strategic giving part, the philanthropic part which was one part of it, we said at the social impact fund in 2014, December. But the main part is the inclusive business; the business for profit, the business selling at the base of the pyramid by inventing new business models and new innovations.

And all this on a strong foundation about creating awareness through various methods that we do by the Vision Impact Institute, by thinkaboutyoureyes in the US, UK and other parts of the world, and similar initiatives that we do.

For the sake of this presentation, I'm going to actually dive deep on the inclusive business, the business for profit, selling at the base of the pyramid, which is our 2.5 New Vision Generation and the BoP innovation lab.

Obviously, as we know that each of these models and each of these countries are unique, and that you can't cut and paste business models from one place and go to another. It's all about innovation; it's all about finding solutions, the right solutions at the right markets.

So between the 2.5 New Vision Generation and the BoP innovation lab, both of which reports to me directly, their search is constantly to innovate, to innovate on two fronts; innovation on the business model and innovation on the product and service. When you talk about innovation on business models, we just look at three key things for it to qualify, for it to actually implement on the field.

The first one, the models being adapted to different countries and, within countries in different provinces, the models which have the potential to scale. And the scale is absolutely important when we are talking about 2.5 billion people who really are looking at models which can reach that kind of scale. And thirdly, of course creating an impact by actually creating new wearers.

So these are three touchstones that we have in terms of business model innovation. And in terms of product innovation it's about empowerment; it's about training people with the right ways to find solutions themselves; it's about product range because we know that a rural consumer has the same aspiration as all of us. He wants choices, he wants new products and he wants instant gratification.

It's all about satisfying consumer insights and consumer needs of the rural consumers and, of course, creating merchandising and awareness adapted to the local needs. So that's another way we look at it.

So in this presentation, I will touch about access and how do we create touch points and how do we create last mile connectivity with every single consumer in the world by providing him service.

Again, there are two plains on which we work in terms of the access; one is really empowerment, is training. We give the power in the hands of the people by training them to find the solutions which is good for them to wear spectacles. And this is really what we really lay a lot of emphasis on, in terms of training.

And the second one is simultaneously helping in developing infrastructure, which is absolutely critical through partnership with public and private hospitals, with the governments, there are a few governments in the world which we work with already very closely, and the non-governmental organizations, by creating permanent infrastructure for delivering primary vision care. So these are really the two access in which we work.

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I'll touch a little bit more on the empowerment and training and how do we create access to the people. There are two examples which I'd like to give; one of them is the Vision Ambassador and the second is the Eye Mitra. These two address different needs but, ultimately, serve the same consumer, connecting him at his doorstep in the last mile.

If you look at the Vision Ambassador model which we have launched a few years back, the main target of the Vision Ambassador model is the presbyopic segment, a segment which is quite huge, which is unmet and people don't really know they have a problem with presbyopia, through simple solutions.

We do buy readers in department store in this part of the world but in many part of the world you don't have access even to that. And here, we have solutions to actually provide to the people by training them for one day. It's a part-time work. They also sell sunglasses, which is more than fashion, extremely important for protection when they actually work in agriculture and outdoors, which most of the rural people do.

So in order to give you a little bit of flavor about how it works in China, which is one of our most successful markets for the Vision Ambassador, I'd like to show you a quick short video.

(video playing)

You can see the smiles on the customers' faces; it's worth more than a million dollars, when you see them just wearing their first pair of readers and they discover the world when we actually give them these products.

In China, this is something which we launched this year and we believe that we, today, have the silver bullet to reach the rural Chinese with simple solutions of reading glasses. There is a huge number of presbyopes in China, 250 million presbyopes. Most of them, many of them, are in rural areas, because we do know that the young people in rural areas actually end up migrating to the cities, leaving their children along with the grandparents to take care of the grandchildren.

And these people, they don't have access to primary eye care and most of them are presbyopic and they really need reading glasses. They can't even see their mobile phone. They actually use it like a landline when somebody calls them; they can't see who's calling because they simply have a problem of presbyopia. And this presbyopic population, with the aging, is set to increase to 300 million by 2020 in China.

So what we have simply done is that we work with hospitals which have a kind of hub and spoke model. The hospitals recruit Vision Ambassadors in the different villages, and the Vision Ambassadors then act as ambassadors of vision by actually selling them glasses. And when they find a problem which is beyond their comprehension, could be cataract or glaucoma or something, they simply direct them to the hospitals. And the hospitals have mobile vans which actually go and meet these Vision Ambassadors regularly.

There is also another thing in China, which is absolutely brilliant and unique, is the concept of village doctors. Now this has already been in existence in China for a long time. These village doctors are not allopathic doctors, but they're doctors who can cure simple illness for older people; they are like the head man of the village. And there are 1.2 million village doctors in China.

What the hospitals does is, connects with these village doctors who don't provide ophthalmology today and helps them to actually provide ophthalmology services through the main hospital.

So we are actually in -- as we go, we are operating in three big provinces and actually we have a footprint in eight provinces. And in 2016, we will go to 18 provinces in China and we'll expand as Vision Ambassador in a bigger way.

The example of adaptability which I mentioned is Brazil. In Brazil again we have the Vision Ambassador, but the problem is different, in a sense. With 200 million inhabitants in Brazil there are about 40 million people who are not corrected and 3/4th of them live in urban areas and they are poor and they live in the favelas mainly.

The problem in there is that, also in Brazil because of the regulations, it's only the ophthalmologists who can do an eye correction; it cannot be done by anybody. Reading glasses are not possible to sell in Brazil. So while people go to public hospitals to get their eye examination, they have the prescription, they have no means to get glasses because they don't go to an optical shop. So most of the time the prescription goes into the bin and then people remain uncorrected.

What we saw was that there was a unique model where we would create a Vision Ambassador through the direct selling sales people. The direct sales, like consumer product companies, is quite strong in Brazil. Most of the consumer product companies have direct sales people. We decided to associate with them and then connect our Internet platform where the Internet platform serves, in terms of supply chain, to these Vision Ambassadors.

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So the direct sales reps when they visit houses to sell customers the products, encourage the patients to go to government hospitals to get a prescription. When they have the prescription through their tablets, through glasses4you, our Brazilian company they manage, they sell the product, they order the product, the product reaches them, and these Vision Ambassadors go and deliver online or to the people door to door.

I'm very proud of this model because this is, again, leveraging technology, the latest technology, but addressing a simple problem through click and mortar kind of model. This was a beautiful innovation which came up from our Brazilian team, Sandra, and we have just launched it in six months back. We have just 30 people today and we believe that this has a great potential to scale to address the 30 million to 40 million people living in the favelas in Sao Paulo, Rio and various other parts and give them the right vision they deserve. This was another example of adaptability.

The second one is the Eye Mitra, which some of you probably know when we talked about it sometime back. This is a full time career. It's about creating a point of sale, shops inside in the villages, which can give complete eye care with a full range of products, of prescription, eyewear and sunglasses. And this a 12-months training where we actually take people, train them for two months and give them 10 months of in-store experience.

Instead of me explaining, I'll show you a very short video on what the Eye Mitra is and what it does. Video, please.

(video playing)

This is a program which has received a lot of acclaim and also a lot of support, including financial support from some of our many stakeholders around the world, who find this as a unique model in terms of skilled development, craving prosperity and micro enterprises and micro entrepreneurs creation, which also helps us in solving the last mile connectivity.

As of 2015 we have created 1,088 Eye Mitras in India. We have created also 180,000 new consumers only through Eye Mitra; we have other models in India as well, and 75% of them have bought their glasses for the first time, so it is really new people entering into the market. And of course, 64% of them showed an increase in income from what they were doing before, before they become Eye Mitra.

India also leverages the Vision Ambassador model, which has just launched learning from China, and we have got about 155 Vision Ambassadors in 2015. We are, today, presenting over 13 states all over the country with these two programs.

So essentially, what we believe today because, from the time we talked to you about two years or three years back, and when we have come back with a lot of experiences, we are quite confident and we believe that we today have strong models, strong models which can be replicated and which can be scaled up and create new markets and new consumers for us.

We are at about 1,088 today in 2015, our goal is to reach 12,000, 10,000 Indian and 2,000 in other parts of the world with Eye Mitra, 500 Vision Ambassadors going up to 32,000 in 2020, so this is really the big goals which we have.

What we believe is that, through the inclusive business models and by creating customers in a sustainable profitable way, we are sowing the seeds for long-term sustainable growth for Essilor's organic growth in times to come. We are creating tomorrow's customers today. We know vision is [addiction], we create a virtual cycle, we have people actually coming back and buying from us, so really that's what we are creating.

When we do a simulation of what can we achieve over the medium term of, say, 15 years, 2030 is the year for the UN sustainable development goal, and our commitment to that is that we would be able to expand the market of the globe by bringing in 500 million new wearers by 2030, through all these programs, and we have a roadmap to actually reach that.

So while we are actually bringing good vision to everybody, I believe we are playing a strong role in expanding the market, in creating a competitive edge for Essilor, because today we are the only company in the optical side, which is actually putting this kind of effort, which is a clear competitive advantage for us. And of course, at the end of the day contributing to the Group's long-term sustainable growth. Thank you very much.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Thank you very much, Jayanth. You see the passion that animates this Group in this corporate mission to improve vision. Now before we go on to the questions, I would just like to make a few comments on our guidance for 2016.

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As you've seen we are confident, at peace with our roadmap, on our path that will lead us to like-for-like growth of 5%. You've already understood this, so in 2016 will be around 5%. The acquisitions is just a question of time, so it's difficult to assess but we'll be above. [Chances tell me] much above 8%, so I'm just going to say much above 8%, but will be above 8%; it's a question of time for our acquisitions.

And our contribution from operations, well, it will be close to 18.8%. Laurent talked to you about this, it will be 18% or 19% minimum in 2018. We're not monitoring this, not exactly, but we are spending the right amounts in advertising so as to deliver growth and have an incremental margin so that we can peacefully reach 19% on the day and the year in which we would want to do this.

So that's the guidance, and now let's go on straight to the questions and there are a lot of hands raised, that's great, that shows that you're interested. QUESTION AND ANSWER

Unidentified Audience Member

Could you clarify potentially the FX impact on top line at current rates? Just the one number question.

Second on the acquisitions, you mentioned phasing is always an issue depending on when you can close, but I also want to ask about pricing on deals, particularly in emerging markets but also developed markets. Given that we've seen some decline in the asset market thus far in the year, is that pressure with slower growth rates in some emerging countries, is that bringing the prices down for you a little bit? And are you finding them reluctant to sell still, which I think you've mentioned at the Q3?

And then one is just the last one, maybe a bit longer term, but on the online business. We see that there are barriers to online growing from 5% of total category of online sales in optical to 30% or 40% like we see in other categories. How do you see those barriers in terms, are they really technological, are they consumer behavior and what can you do to tackle those and stimulate greater online penetration in the coming years? Thanks.

Laurent Vacherot - Essilor International - COO

End of January ForEx [action] rate, we anticipate the minus 1%/minus 2% maybe, so now we don't monitor, we monitor a lot of things net margin growth but ForEx action we don't. So that's the information you want.

Hubert Sagnieres - Essilor International - Chairman & CEO

Now pricing on acquisitions, you remember the rules typically, we acquire a lab or a normal business runs 5 to 6 times EBITDA. This is true everywhere in the world; everyone knows this is actually the starting point. When we enter into new business, like sometimes and mainly sun, with leaders in some countries, of course it's a higher price. Sometimes we have paid in the past up to 18%/20% EBITDA, when typically we know we have to do these acquisitions in some countries.

No, we don't see any decrease so far. We see a decrease in the expectations from the sellers, due to the stock markets in China or in other countries, but at the end, we always make the deal as the same amount. When you have been your own business you always have a huge -- you see yourself having a huge value with what you have built. So expectations has dropped.

Maybe it makes the negotiations, don't want to say more easy, but we are -- it takes less time to actually lend them to the right number we want. Sometimes it took a quarter, sometimes three quarters, but it's all about just managing the expectations. It has helped a lot in managing the expectations, or it is helping a lot also when some of the owners they bluff, saying if you don't acquire us, we'll go on the stock market. Maybe [we're also] willing to do so, but potentially, we are all within the same ballpark.

You had a question on online, too, barrier to growth, and things like this. So we really see a few things. Monobrand activities, monobrands like Bolon.com or selling Bolon frames, selling Costa sunglasses frames on our side, selling the FGX frames, this is booming, booming, booming, booming. Same selling price for the consumers, but the demand is huge.

The sites where we totally, let's say, we own the full supply chains, take EyeBuyDirect as an example, okay, where we have our own brands for generic eyeglasses, typically EyeBuyDirect. This is absolutely booming, booming, booming, booming.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

The tipping point for the demand, actually, for prescription eyeglasses is, on one side, regulations. Some country, it's authorized, some of it's not yet authorized. Step by step, what we do see in the world is regulations moving forwards to, of course, much more freedom for the consumers to purchase online.

The second key point on, let's say, the tipping point for the growth barrier two and three, is technology. And I'm sure you catched when I mentioned that we are working on new ways to do eye exams, how can we capture the prescription on an existing pair.

You purchase this one at a certain price somewhere, and you want the same with sunglasses but you have lost your prescription. And you're living in a country where you don't need, where prescriptions are not regulated. With some little device, you can click, take the prescriptions, send it to us. So those technology are coming up. They are not yet really available, but pretty soon they will be spread out.

And if you're very curious, you go on checking your apps, on Apple store or whatever, and you check where can I get an eye exam on my iPhone, thousands of apps today allow you to do a form of eye exams. None of them are right, as we speak. None of them are legally authorized.

But the magnitude of work being done by young kids around the world, developing apps to improve vision, it's huge. Once this will be really live and, step by step, authorized in some countries, or spread over in countries where there is no regulations, you will see the growth.

Unidentified Audience Member

(interpreted) I have three questions, if I may? The first regarding these last acquisitions in the United States, the significant acquisitions, can you tell us about the metrics? Based on what, can you see that this will have an impact, that it will change your lines? And based on what, can you analyze this return on investment? Can you tell us how, in six months from now, two years, that we've invested so much, we've got so much return on investment, and that it was a good idea?

The second question is, between the 0% and the 4% we have here, what is the midterm figure, the sustainable figure? On what should we bank on? Marketing helped, but it's already taken place. Are there still as many levers? Conventional question.

And the third on the margin equation 2016; between the various impacts, the Transition synergies, are they behind you or not? You've quantified the marketing effect minus 20 bps. Can we quantify, understand the impact of the line development that dilutes mechanically online development? What about the drivers on which you are banking to keep this stability guidance?

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) So I'm going to comment the US. Laurent, Paul, you will have the great pleasure to comment the growth in Europe, which was excellent, you're the best student. And the margins, Laurent and myself, we will answer that question.

You've noted the acquisitions we've begun making in the United States, with the doctor alliances. They are very significant. Now, what are the metrics? I think that the first metric is the growth in actually the number of shops that are a part of these alliances, and the growth that it has had, that it will have in the coming years.

The second metric, the simplest one that you will be following on a quarterly basis, is the pure organic growth, like-for-like growth in the US. We bought a small revenue, very profitable, very normal EBITDA ratio, so it is not the profitability of the business that is significant. It'll keep growing with the same growth in revenue, but it is the growth generated by the fact that we work very closely with 6,000, 8,000 or more sales outlets.

Thanks to IT systems, thanks to our sales forces, we can quickly provide them with all the innovations we're putting on the American market, to work on training directly, work on the education of optometrists, the young eye care professionals who work in the stores, from the moment when we acquired PERC, and now one-third of the shops have our Costa frames, readers, FGX.

So you see, these are all the metrics. But the most important metric is the acceleration of the US like-for-like growth that you're going to observe on a quarterly basis.

Paul du Saillant - Essilor International - COO

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

(interpreted) Now, Europe, well, Europe we've had a wonderful performance in 2015. The Europeans have been fighting for years, our Europeans, to demonstrate their ability to deliver growth within the Group. I think there are two, three very simple ideas that they have executed remarkably.

First, they have located the Group's strategy in each and every country. So they have seen where there are innovations, the programs from the media, large account partnerships, the use of the network. And they do this in a very adapted way in the UK, in France, Spain, Italy, etc.

So this has really created a better growth. And in 2015, there are countries -- I always joke with Bernhard and his teams, there is double-digit growth in the east and the south. There are countries that have great growth, like Germany, the UK, France. We have a complex context, we talked about it here. The French teams were very nimble, they were very efficient on the market, they adapted themselves. And we have a few countries in the north Benelux, where things are more complicated. So those are the ideas.

Now, Bernhard, his ambition is to keep on. We will see what he will do in 2016. But I think that they have demonstrated that, with the slightly growing market, some economies were having difficulties, but they can still come out of this market by doing well. And the teams are very good, they're doing very well. They are very good professionals that know their market very well. So these are the key ideas.

I think we have to stop being pessimistic about Europe or France. Let's be optimistic. Europe today, in our industry, is buoyant; it is moving forward. We have very good teams; they have very good levers with advertising. It's working.

Why is it successful? Well, look around you. People do not know how good it is to use all these products that we have. Consumers do not understand, all around the world, the benefits of all these innovations. And as soon as we explained this with our teams, we have a momentum. This is what happened in 2015 in France, in Europe, and this is what we're having at the beginning of this year in Europe.

Laurent Vacherot - Essilor International - COO

(interpreted) Now the margin; there are two parts in the question. One was the impact of the ecommerce initiatives, and the second was Transitions. Well, Transitions, the mechanical effect, the integration of this company within the Company, well that is over. We've taken the four quarters between 2014 and 2015 and this positive effect is behind us now.

Now how will Transitions contribute to improve the Group's margin? Well, now that it is integrated in the Group it will take part in the efficiency program just as the other companies, just as the other product lines, the other plants, laboratories, with the same potential. And especially, this acquisition, which was made two years ago, the main objective was to develop the photochromic category. And just as the antireflective or progressive line, they are improving our margin in terms of gross profit.

That's the work of Essilor in Latin America, Asia, to drive these categories with transitions and with mid-tier ranges to improve penetration that we had estimated three years ago at 10% of the market, and to increase it by a few percentages each and every year. So that will create more value, of course.

As for online, well, the situation is slightly different. If you look at the figures, roughly today in 2015 there was a dilutive effect in terms of our margin, a few tenths of a point. Now what's going to happen in the future? There are several phenomena.

First, we've integrated. We've decided to create this division to accelerate growth, to acquire a consumer database, and we're going to adjust the profitability speed versus growth according to the right pace for us, the pace that will be the right pace according to our global objectives. And, of course, I have to add that when these Internet, ecommerce, entities sell products that are already within the Group, lenses, frames, there's more profit generated.

So it's difficult to answer, but what we can say is that in the next semesters, this dilutive effect should slow down on a quarterly basis.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted). Thank you, Laurent. I'll take a few questions -- we have a lot of questions put to us on line, so I'm going to take those questions. We have one question on the multiples based on which the acquisitions are made online and the consolidation potential.

We have the same ratios, more or less. A little more for those companies that are leading in some countries, that are more profitable at the beginning, and here the ratios fluctuate.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

And the consolidation potential, well, there are a lot of platforms all around the world. Today we are highly selective. Our strategy is a mix between all the good acquisitions in the good countries and the deployment of our current sites. Therefore, like-for-like growth we're going to build on our brands, on our platforms, so it's a mix between the two.

We have another question on the environment. What is the competitive environment today in terms of lenses?

Well, we have competitors. We do not have global competitors, we have competitors with certain advantages in some countries. Today I think we are seven times or eight times the number two. Of course, we have competitors, that's very important, but I just have to remind you that our business model today is to put our technologies at the disposal of everyone, including our competitors and our brands too, because what is most important is to improve vision round the world for everyone so we do not keep our innovations just for ourselves.

And there's a question on the tenders, the key accounts, therefore large accounts. Are there renewals of tenders in 2016/2017 and what are the new tenders you've won recently?

I'd like to comment the renewals and then I will give you the floor. Just as each and every year, we always have tenders for five year and, as you must have understood, we have our innovations and our supply chain and we are winners almost everywhere.

And in Europe? Well, I think what you said is very important. The Group supply chain is becoming a strategic advantage for us in our Group because we have really bolstered our supply chain with all the export [lines]. And in Europe, the model that we've developed in the past few years with partnerships around the supply chain, innovation, towards these large accounts, as we did with Boots and General Optica in Spain and with others.

But this is still developing. We have set up a new one. We cannot tell you the name, mention the name, we're just beginning. We're deploying from the fourth quarter onwards; it's a good partnership in the supply chain. This is a model that is working well. This is highly appreciated by the large accounts.

Let's go on to the questions from the room and then I'll go back to Internet.

Nicolas Langlet - UBS - Analyst

Nicolas Langlet, UBS. (interpreted) I have a couple of questions, if I may? Firstly, regarding transitions, could you tell us please what was the trend in sales to third parties in Q4 of 2015 and what are the prospects for 2016? A year ago you talked about 50 basis points of contribution on a like-for-like basis coming from Transitions in 2017, or by 2017, is that still an objective you think is within your reach?

And another question on the equipment division which was fairly difficult on a like-for-like basis in the past year. If we look at your order books and the momentum of acquisitions you're going to do in 2016 and 2017, do you think it's going to level off? Do you think it's going to stabilize, the equipment division I mean? Thank you.

Unidentified Company Representative

(interpreted) Okay, well, firstly the sales to third parties in 2015 were relatively flat, give or take a couple of percentage points here or there, but with different kinds of dynamic from one client to another that we can't really speak about here.

But the growth of 50% it wasn't so much Group sales to third parties. We said that that, in the long term, would go down for some of those sales. It wasn't that we were talking about, it was the fact that the Essilor Company, with all of its regions, would be able to embrace this objective of developing the category and, hence, grow our own like-for-like growth by improving the penetration of transitions in our sales. And that fast tracked in 2015 and no doubt will continue in 2016.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) On the equipment, as Laurent said, it's a division we have that we're keeping, that we're developing, but it's especially an internal machine maker for ourselves. And as we make acquisitions we're reducing the number of clients as such, and so on.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

So you shouldn't expect huge growth levels there for equipment because, year in year out, we're reducing the potential market of the Company because when we use the machines, the industrial potential of Satisloh, we're using it in terms of transfer prices and CapEx within our own assets.

However, having said that, it's also connected with innovation. It so happens that -- but don't get carried away. It so happens that there are new products that came out the start of the year that are of great interest to certain clients but we don't know yet. We'll see. It'll fluctuate apace with the acquisitions we make, really. That's the main thing to be borne in mind there.

Veronika Dubajova - Goldman Sachs - Analyst

Veronika Dubajova, Goldman Sachs. I have three questions, please. The first one is just on Coastal and you have mentioned that you have now gone through the difficult transition period and you're expecting growth acceleration. I'd love to get more on your expectations for 2016 and beyond.

My second question is on the US Vision Source and PERC/IVA acquisitions. Do you see other networks like that in the US that you're thinking about and what's your capacity to integrate those short term?

And I guess, a bigger question is, I presume the answer is no, but does this potentially mean that you are becoming more open to actually directly being involved in mortar retail?

And my last question is just for Laurent, very quickly, on FX and I appreciate your guidance on the top line, but any impact you'd be expecting from a margin perspective, especially in emerging markets where we've seen very big moves in currencies? Thank you very much.

Hubert Sagnieres - Essilor International - Chairman & CEO

So I will take the first two and then you will take the others, Laurent? On Coastal, you remember, this is actually a company did own stores and also sites in the Nordics and partially Canada and US. We decided to close the stores in the first wave. We have closed also other stores last year. It's also a competitor which was selling a big portion of contact lenses, maybe a little less sunglasses and prescriptions. So we do continue selling both, but obviously, we are pushing a little more sunglasses and eye glasses.

In Norway, which is a big portion of the Nordics with lens wear, sorry, which is a big portion of the business, early last year, let's say the transition of the management was not optimum. We now have a full team in place as of last May and we do see, month after month, a recovery.

And on Coastal, we are launching this year, but it's a little delay for reasons of IT, a totally new website rebranded. It was supposed to be March. It will be July. So all this actually is moving up the growth of coastal.com or clearly in a very high, positive single digit, double digit, step by step. This is what we will see during the year, maybe more in the second semester than the first one because of the change of the website that will occur maybe in May or June.

Your question of Vision Source, yes, there are others and yes, as you know, we have a policy of acquisition. We have a strategy of acquisitions that actually we'll implement everywhere in many areas.

Retail; if you assume no, I should say no, but at the same time, yes, we are selling more and more online of our product to the consumers. We have done this acquisition in Costa Rica. We have announced today an acquisition in Chile with store. So no, we are not going into retail. We are just and really, sincerely, making sure that we are developing strategies, local strategies to deliver the best eye glasses to the consumers country by country. And if, in some countries, to do so we have to acquire a leader and he has 50 stores, then we will keep the stores.

Laurent Vacherot - Essilor International - COO

A question on FX. There was a last question from madam. Complex question. To make the answer very simple, because there is different level of effect, obviously, and so on, overall, in 2015, with all the change in many, many, many currencies around the world, I think the effect has been a translation effect obviously, 9.9% on the top and all the way down, almost all the day down. So many translation effects, maybe a few 10 basis points here and there, plus or minus depending on the level of the P&L.

Obviously, an effect on the increase of the debt, as I mentioned, I think it's EUR170 million this year. It was EUR150 million last year.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Thank you, Laurent. I think we've taken the questions that were put online regarding ForEx and so on, and the question by David Adlington on ForEx impact.

However, we have another question here from David on Transitions and the margins contributed by Transitions. It was [19.5%] when we made the Transitions acquisition, that was the objective I mean, and it's [18.8% or 19%]; that's the online impact isn't it, Laurent? Laurent will answer that.

Laurent Vacherot - Essilor International - COO

(interpreted) Yes, when we announced the acquisition of Transitions, it wasn't known that we were developing this online strategy, in particular the acquisition of Coastal. And we hadn't explicitly defined the amount of consumer media spending that we would entertain. So those are the two main reasons that explain the difference between the 19.5% figure for 2016 and greater than or equal to 18.8% in the guidance right now. So that's the difference that accounts for that.

Unidentified Company Representative

(interpreted) And then is there a lot of pressure on prices and margins going down, you're investing more in SG&A and is there a product mix effect?

Unidentified Company Representative

(interpreted) No, on prices, no more pressure than before. Our innovation is such that 50% of our sales are with products that weren't on the market four years ago. There's no more pressure on prices now than before.

We're investing more in SG&A, yes, because we're opening in lots of countries; we've infrastructures; we're structuring ourselves so as to be able to address those markets to have profitable growth there.

Now, questions from the room next.

Antoine Belge - HSBC Global Research - Analyst

(interpreted) I have three questions. Firstly, could you share with us please your thoughts about the US market in 2016? There are certain segments in the consumer market that it slowed down towards the end of last year, especially consumer discretionary spending.

Unidentified Company Representative

(interpreted) Antoine, we can't hear you. Could you speak perhaps --?

Antoine Belge - HSBC Global Research - Analyst

(interpreted) So on the US market, therefore, I was saying that there were certain consumer segments that slowed down towards the end of the year. Is your segment affected by that?

And also, we've seen that LensCrafters slowed down a bit; what's your vision of the market in the US, and what are your ambitions, the grand vision ambitions in that market?

And then on the sunglasses segment, 15% growth in Q4; could we expect the same figures in 2016?

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

And then, last question, we've seen changes in management in Luxottica and Leonardo Del Vecchio has been kind of taking the rein over things. Will it affect your relations as suppliers to the company sometimes competitor in certain acquisitions I mean?

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Well, these are extraordinary questions you always ask, Antoine. Do you want the short version or the full unabridged version? Okay. I'll try and give you an answer, but Eric will perhaps help us to answer the point about the double-digit growth in sunglasses in the future. So, Eric, you can get ready to answer that question from Antoine.

So okay, in the US, right. It's still a good market; it's still growing for us. The market is growing; the demand is there. Obviously, Laurent has shown you some figures who's earned market shares in the US in the last years, it's the independents. The chains engage in all sorts of wars and so their market share, though, with the US consumers, the big winner is the independents, the independent optometrists and so on, because they're excellent.

First off, they do a very good job. The service they render is very good. The second thing is that they've got access to the whole range of products. Usually, they've two or three suppliers. They jump on any piece of innovation that comes their way and we innovate a lot, of course. And the chains, I won't name any ones like you named, but the chains, including the ones you mentioned, their strategies are more so moving.

Some years ago, some US chains were lagging three or four years behind in terms of the products sold in the stores, in the independent stores I mean. And they're still lagging some years behind in terms of certain chains anyway, because they're slower to move in terms of innovation and they don't want to pay the price of innovation always either; whereas consumers are looking for innovation, they want innovation.

And you asked a very straightforward question then about Luxottica. Well, it's a fine company; they've got fine brands. Now the independents have taken more market share, as I said, in the US, so life is more complicated for them, but they're an extraordinary partner. We do a lot of things together. We've had several joint ventures together around the world and in Australia, for example, in the US, managed care and in technology, with the antireflective machines, SP200 that we're equipping some LensCrafters stores with.

Each Board or corporate management entity's chairman organize his company and manages it as he sees fit, so we work in the continuum. We're here to share. We're here to create value for the employees, the shareholders. We're all imbued with one objective, which is to improve people's vision in the world. And with this objective, we can deploy strategies that are highly performing and efficient that will create value too. And that's all I can say really, Antoine, on that.

Another question from the room -- I'm sorry, Eric was supposed to answer your other question. I do apologize.

Unidentified Company Representative

(interpreted) Yes, the question on sunwear. We had a fine fourth quarter, 15% growth all right, so what does the 15% figure mean? It symbolizes satisfaction by retailers about the past year, regarding the performance we had and the confidence they have, going forward, for the following year on the base of the collections and innovations they've seen.

Because in the fourth quarter we've started to look into the upcoming collections for the following year and the sun and readers division has growth rates that vary from the first half to the second half. Good growth in the second half means that the year went well, and that what we provided was exciting.

So to answer your question about the full year, what will be the growth? Well, I can't give you a precise figure, apart from the fact that we're working on high single digits on a pure like-for-like basis. And naturally, we talked of double-digit growth between pure like for like and bolt-on acquisitions.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) So what Antoine wanted was like-for-like double digit. It think that's what he was looking for. I think that's really what he wanted to hear.

Unidentified Audience Member

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

(interpreted) A question about France regarding the reform that goes back a year now, what's our gut feeling? Is it a total non-event, a non-starter, or has it had a positive or a negative effect on you?

And secondly, that you probably won't answer, but on retail, are you going to go into retail some day?

I have noted that in the field of what's possible you have a circle that touches frames and contact lenses. Is this subliminal? Should I read something into it? Is there a subliminal message there?

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Well, I'll give Paul the floor for the question on France.

Paul du Saillant - Essilor International - COO

(interpreted) Well, France put in a good year in 2015. our French market that is. There were two major Acts of Parliament passed that gradually were implemented. With Miss Touren's Act, the minimum/maximum levels, and then Deputy Le Roux's Member of Parliament, Le Roux's Act. And then in the Touren Act there was renewal once every two years only if you're to be refunded and so on.

But that's good news for us because in France, people renew every three years, on average, their eye glasses. So for us, it's an opportunity rather than anything else, if it's to go to two years. So then we've got to activate the right levers and so on.

But then otherwise in France, we have a real need for high quality visual healthcare. In France, our teams have really activated all the levers and used the media to talk about the importance of visual health. And the feedback from consumers is that they're taking care of their visual health.

So Essilor and Essilor's brands in France performed well, which is quite remarkable. And a bit counterintuitive to what we might have expected, compared with what we would have expected a year ago, maybe. So there is a real need there and Essilor has all the solutions available. And this multi-network strategy we've explained to you, rather often, does show you how we can gradually espouse the gradual transformations of this market and evolve apace.

Well, the government did a good thing; I'm quite serious. They enacted laws that will enable French people to see better and have access, in a kind of managed framework, to good products, so that the mutual health insurance companies, the complementary health insurance companies can, as everybody else, can deliver the best possible products to the French population. I think it's a very good idea myself. They made a good move.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) And what was your second question, I've forgotten. It was retail, yes. Is it a subliminal message or what? That's what you asked. If there's one thing to be borne in mind, it's the [life motif] of our strategy. We want to do everything everywhere, so as to make sure that 7.2 billion people can see well and protect their eyes and we're not ruling anything out.

Claude Bollier Analyst

(interpreted) [Claude Bollier]. I would like you to kindly do some stocktaking on blue light, AMD and so on, and health problems and the solutions you can provide in respect of those.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Well, Paul and myself will answer this together. Perhaps visual health is a very complex thing, of course. Vision is the eye, of course, and the brain as well. The eye is the mechanical part and you can see well because your brain is doing its part of the job.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

So there's visual health that encompasses all, that you've got correction, vision correction to help you to see well. You also have the protection of your visual health and prevention. It's all part of seeing well the whole time. And for people in this world to continue to have a comfortable life and quality of life and see well, they've got to protect their cornea and the retina. And all of the visual mechanics there between the eye and the brain.

So we've got to encompass all of those phases. And we research into three main aspects; you have correction, you have protection and prevention. And you've the new products that you've seen advertising for here in the room, which is Eyezen.

Eyezen, it's a flexural product for us for 2016 because it allies protection of the retina with the little addition into the lens to make seeing more comfortable for people, so they won't have too much eye strain when they're living a connected life. So we've got to continue, year in year out, to with our research programs to research into all of these three major strands.

Paul, have you got something to add?

Paul du Saillant - Essilor International - COO

(interpreted) Not a lot, but just to build on what you said a little bit. We've enriched our innovation platform that [Lombard] and [Alain] are working on. And you will recall that three or four years ago with Eric Thoreux we rolled out the whole UV protection using clear lenses. You'll remember that.

This innovation is being transformed towards protection now. Two years ago we rolled out Prevencia, which is a big technological breakthrough, a major breakthrough. We want to protect the eyes of people from the UV rays, the harmful rays, that can lead to AMD, and age related macular disease.

So, slowly but surely, the Group is going to be launching products of all sorts, so to address those protection needs, prevention and protection for clear lenses and to improve sunwear as well, sunglasses. And our sun glasses division is working on improving sun lenses.

Delphine Le Louet - Societe Generale - Analyst

(interpreted) Delphine Le Louet, Societe Generale. I have three questions. Would it be possible to have a [chronometry] in Europe in terms of product mix between the eastern countries, France, the southern countries and better understand the underlying dynamics?

And to go back to the presentation on the corporate mission, would it be possible to have an idea of the budget, the phasing of this budget during the next five to 10 years?

And I would like to go back to the announcement that was made this morning, with the two new directors that will be proposed at the shareholders' meeting. Could you tell us more about their professional achievements, what was their background, their careers, and how will that serve Essilor's interests?

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) I will give you the floor later on, you talk about Europe. So the budget of corporate mission is double. We have a budget that is quite modest, between EUR5 million and EUR10 million and we have a lot of funds that are raised. We are raising funds everywhere.

We have support from all kinds of governments, NGOs, famous German bank that regularly gives us important amounts. Singapore Government is funding some dozens of jobs. So it's a mix of both.

Sorry, I can't hear you without a microphone.

Delphine Le Louet - Societe Generale - Analyst

(interpreted) Now this fund, is it an open fund, can we know how much? Is it a philanthropic structure?

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) No, not at all. It's in our P&L, it impacts our P&L's margin between EUR5 million and EUR10 million this year and more or less the same next year.

And in addition to that, the actions for a country are actions supported by donations. In India with the Eye Mitras, the Rajasthan Government gave us some thousand Eye Mitras more for the coming years. So this is direct billing, direct payments made by some governments.

When the Singaporean Government gives us 10 jobs for three years full time, just for the corporate mission, this is deducted from our expenses. So that's how it works.

Your third question, it was on the directors, yes, the new directors at our Board. Actually, we'll be renewing two lady directors and two new lady directors will be joining us; Mrs. Annette Messemer and Mrs. Henrietta Fore. Mrs. Annette Messemer, since she's here I will let you maybe answer the question in private later on. I'll just say a few words and I will comment the application of Mrs. Henrietta Fore.

That was one of my objectives, one of my missions in the past 18 months. We received a lot of applications from all around the world to come and join the ranks of our Board of Essilor, and we were very highly selective so as to have directors that can be with us over the long term, and who can help us in all these major areas.

Mrs. Messsemer is from the banking sector. When she'll join the Board we will ask her to help us, if she's elected and if the Board decides to, she'll help us in the audit committee. She's a support; she will help us financially in the Group.

Henrietta has a different profile. For 12 or 14 years she was the Chairman of USAID, that is development in emerging countries, the development of all the Americas, and she's the co-Chairman of the [Asia] Society which is the arm between Asia and the US.

Of course, Henrietta, what we've started doing with her is to support us and developed all the elements regarding the corporate mission around the world so that we can hinge on the governments, NGOs round the world, thanks to her diary and her knowledge. She knows a lot of people.

Paul du Saillant - Essilor International - COO

(interpreted) And yes, the mix in Europe. The mix in Europe, well, it's quite simple. The mix in Europe these are the major Group brands, Varilux, Crizal, Experio, Polarized, Transitions, they've done very well this year thanks to the media plan, thanks to all the innovation in these brands. The trade was also very active and this was managed by the sales forces.

I'm not talking about the geographies because I mentioned this when we talked about the different countries and how they perform, but our major brands performed well. And the other networks, PPGI, our networks in Germany, etc., they're also doing some trade up at different price levels with different products, so it's a major mix job.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) I'm taking an Internet question. I cannot leave this aside. You're going to say I have invented it or we have put this question, but that is not true. It comes from [Ivan Bieri], and he says, don't increase your profit margins any more, and he's explaining why, because his fear apparently is that if we increase our margins too much, this will open the floor to competitive strategies better value. So please contain your margins and develop growth.

I have not invented this. This is what's coming out on the networks today. Are there any other questions?

Unidentified Audience Member

(interpreted) I have three questions. The first is on Europe. You were saying this morning that you had streamlined the park of all the prescription labs in Europe; is this the consequence of the greater power of the labs offshore? What is the share of these offshore labs in the total percentage?

And second question on Brazil. You are going to launch Chinese partners there; is it the first time you're doing it or are you plan to do this in Africa too? And as for Brazil, what do you expect for 2016? Do you think that applying the strategy there will allow you to offset the difficult macroeconomic situation?

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

Paul du Saillant - Essilor International - COO

(interpreted) Okay, so Europe and Brazil. Europe; well there are no target ratios between the export labs and the local labs. There's a very clear strategy of good quality local service, high performance local services that deliver Varilux glasses very quickly, thanks to all the opticians, Varilux opticians in Europe.

So you have some local labs, and then you have all the jobs from the laboratories that we have set up in the past five years, as Laurent recalled, and these are extremely competitive platforms with a full service offer. They can do the full job. They can edge and they can prepare the glasses, so we have a very robust system and very resilient when there is more volume change in the loads and disruptions.

Unidentified Audience Member

(interpreted) Thank you, Paul. Brazil?

Paul du Saillant - Essilor International - COO

(interpreted) There was a question on the Chinese partners, how do we use these Chinese partners in Brazil and elsewhere? And these Chinese partners they provide good quality products for the entry range and especially for the myopic round the world.

In China, we produce half of the world's production in lenses and our partners are taking part in this movement in the past four, five years. Well, gradually we could supply our distributors in the different countries and this is true in Brazil too, by being supplied by the Chinese.

Now, what's going to happen in Brazil in the next two quarters? Well, we have a budget that's growth of 5%, so this is an ambitious target considering the situation. We know what they do and we can master what we're doing, so we're going to extend our range towards more accessible products, mid-tier, and we're going to invest to have more local production.

We want to be less expensive so that the products that we would import, there has been a drop in the real. [Generally] it was a good year. Now in Brazil they're having their summer holidays right now so it's always very difficult to compare. February looks good and if they reach 5% that would be great. And in terms of 2017 a lot of things will have happened in the country by then, and this should be positive for the country in the future.

Hubert Sagnieres - Essilor International - Chairman & CEO

(interpreted) Well, I didn't really answer Ivan's question on the margins. Actually, yes, our margins are going up but our sales prices are not going up; our prices are not going up. That's what you need to understand. We are pulled by the mix in mature countries and by the volumes in growing countries. We offer our products at all prices. You can buy Essilor lenses at $2 and at $800 in the 500 million lenses that we manufacture.

So the risk that someone might say they're introducing themselves they will sell cheaper than at a lower price than Essilor, we are there in all the price ranges. We have structured offers, different brands, within all price segments. And, of course, it's because of the volume effect we amortize our fixed costs more rapidly.

Any more questions? No more questions?

Okay then, thank you. I will conclude with what Veronique said, don't forget good vision is an addiction. Thank you very much.

Editor

Portions of this transcript that are marked (interpreted) were spoken by an interpreter present on the live call. The interpreter was provided by the Company sponsoring this Event.

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FEBRUARY 19, 2016 / 09:00AM GMT, EI.PA - Full Year 2015 Essilor International Compagnie Generale D'Optique SA Earnings Presentation

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