Chapters
Annual Report 2019

5. Segments

An operating segment is defined as a component of the Group that engages in business activities from which it may earn revenues and incur expenses, whose operating results are regularly reviewed by the Group’s chief operating decision maker (‘CODM’) to make decisions about resources to be allocated to the segment, assess its performance and for which discrete financial information is available. The CEO and CFO (the Management Board) forms the CODM. Operating segments are reported in a manner consistent with the internal reporting provided to the CODM. These operating segments were defined based on geographic markets in line with their maturity, operating characteristics, scale and market presence. The operating segments’ operating result is reviewed regularly by the Management Board – together, the CODM – which makes decisions as to the resources to be allocated to the segments and assesses their performance, based on discrete financial information available. All geographic segments are involved in the optical retail industry, and there are no other significant product lines or sources of revenue for the Group.

There has been no aggregation of operating segments into reportable segments.

The Group’s reportable segments are defined as follows:

  • G4, consisting of the Netherlands & Belgium, the United Kingdom & Ireland, France, Monaco & Luxembourg and Germany & Austria
  • Other Europe, consisting of Bulgaria, Cyprus, the Czech Republic, Denmark, Estonia, Finland, Greece, Hungary, Italy, Norway, Poland, Portugal, Slovakia, Spain, Sweden and Switzerland
  • Americas & Asia, consisting of Argentina, Brazil, Chile, China, Colombia, India, Mexico, Peru, Russia, Turkey, the United States and Uruguay

The most important measures assessed by the CODM and used to make decisions about resources to be allocated are total net revenue and adjusted EBITDA. Measures of assets and liabilities by segment are not reported to the CODM.

The following table presents total net revenue and adjusted EBITDA and EBITA for the operating segments for 2019 and 2018. The adjusted EBIT(D)A is defined as EBIT(D)A excluding non-recurring items. Non-recurring items are defined as significant items that are not included in the performance of the segments based on their exceptional nature. For 2019 these items amount to €63 million and are related to impairment of software (€21 million), expenses related to the announced acquisition of GrandVision shares by EssilorLuxottica (€9 million), restructuring costs (€9 million), discontinuation of activities in China (€4 million) and costs related to acquisitions and to prior year. For 2018 these items mainly related to restructuring, legal provisions, VAT risks, software impairment as well as costs related to prior years. A reconciliation from adjusted EBIT(D)A to earnings before taxes is presented within each table below. Other reconciling items represent corporate costs that are not allocated to a specific segment.

in thousands of EUR

G4

Other Europe

Americas & Asia

Other reconciling items

Total

2019

Total net revenue

2,265,947

1,268,782

504,577

-

4,039,306

Adjusted EBITDA

616,028

314,537

99,657

- 40,184

990,038

Depreciation and amortization software

- 514,843

Adjusted EBITA

346,922

151,990

21,707

- 45,424

475,195

Non-recurring items

- 62,632

Amortization and impairments (excl. software)

- 88,594

Operating income

323,969

Non-operating items:

Net financial result

- 49,421

Earnings before tax

274,548

2018

Total net revenue

2,131,381

1,130,209

459,386

-

3,720,976

Adjusted EBITDA

411,473

175,641

19,836

- 30,527

576,423

Depreciation and amortization software

- 150,177

Adjusted EBITA

331,191

128,562

- 1,995

- 31,512

426,246

Non-recurring items

- 19,847

Amortization and impairments (excl. software)

- 69,075

Operating income

337,324

Non-operating items:

Net financial result

- 18,356

Earnings before tax

318,968

The breakdown of revenue from external customers by geographical area is shown as follows:

in thousands of EUR

2019

2018

France

645,683

616,568

Germany

566,524

527,012

United Kingdom

498,665

477,465

Other countries

2,328,434

2,099,931

4,039,306

3,720,976

Revenue in the Netherlands, the Group’s country of domicile, is €293,142 (2018: €250,449). There are no customers that comprise 10% or more of revenue in any year presented.

Refer to note 6 for details on the disaggregation of the Group’s revenue from contracts with customers per reportable segment.

The breakdown of non-current assets by geographical area is shown as follows:

in thousands of EUR

31 December 2019

31 December 2018

France

635,307

500,209

United Kingdom

465,253

282,895

Switzerland

394,733

221,673

Germany

382,051

125,761

Netherlands

286,571

164,761

Other countries

1,457,434

887,230

3,621,349

2,182,529

The non-current assets by geographical area are disclosed based on the location of the assets. This disclosure includes all non-current assets except financial instruments and deferred tax assets. In 2019, increase in non-current assets caused by recognition of right-of-use assets following adoption of IFRS 16 (refer to note 2.7.1 for more details).