Essilor: Buoyant Market, Clear Strategy, Strong Revenue and Earnings Growth

  Essilor: Buoyant Market, Clear Strategy, Strong Revenue and Earnings Growth

  *Revenue up 19.1%
  *Contribution Margin at 17.9%, Including Strategic Acquisitions^1
  *Strong Demand for the New Crizal^® UV and Varilux^® S Series Lenses
  *Ramp-up in the Mid-Range Segment and in Fast-Growing Countries
  *Signature of 24 Partnerships and Successful Integration of Stylemark

Business Wire

CHARENTON-LE-PONT, France -- February 28, 2013

Regulatory News:

The Board of Directors of Essilor International (Paris:EI)met yesterday to
approve the 2012 financial statements. These financial statements have been
audited and the auditors are currently preparing their report.

Key figures                                                  
                                                           
€ millions                                  2012     2011     Change
Revenue                                     4,989    4,190    + 19.1%
Contribution from operations                   894         748         + 19.5%
(% of revenue)                              17.9%    17.9%    -
Operating profit                            832      683      + 21.8%
Profit attributable to Group equity         584      506      + 15.5%
holders
Earnings per share (in €)                   2.80     2.44     + 14.7%
Free cash flow^2                            597      463      + 28.9%
                                                                       

Commenting on these results, Hubert Sagnières, Chairman and Chief Executive
Officer, said:

“In light of these robust 2012 results, Essilor is looking to the future with
confidence and enthusiasm, inspired by the importance of its corporate mission
to improve vision worldwide, for all and wherever they are. Of the 4.2 billion
people worldwide who have a vision problem, 2.5 billion don’t have corrective
eyewear yet. Essilor is deploying a powerful strategy based on innovation,
partnerships and development in the mid-range segment and in fast-growing
markets. With our many strengths, we are confident in our ability to deliver
in 2013 another year of revenue growth and high operating margins.”

Highlights

In 2012, revenue increased by 8.0% including like-for-like growth and organic
acquisitions, while contribution margin held firm at 17.9% of revenue
including strategic acquisitions. These performances exceeded the average
annual targets announced by the Company at the start of the year.

Highlights of the year included:

  *Continued innovation, with the launch of 232 new products spanning all
    market segments.
  *Success of the new Crizal^® UV anti-reflective lens and Varilux^® S series
    progressive lens.
  *Ongoing implementation of the acquisition and partnership program, with 24
    partnership agreements signed during the year, including 14 in
    fast-growing markets, representing full-year revenues of €171 million.
  *Penetration of five new high-potential geographic markets.
  *Successful integration of Stylemark into FGX International, the North
    American leader in non-prescription glasses.
  *Continuous optimization of the Company’s manufacturing resources.

Dividend

At the Annual General Meeting of Shareholders on May 16, 2013, the Board of
Directors will recommend paying a dividend of €0.88 per share. The dividend
will be paid as from June 4, 2013.

Outlook

The ophthalmic optics market is continuing to experience structural growth,
led by global demographic trends, changing lifestyles and the rapid growth of
middle classes, particularly in fast-growing countries. The market remains
highly fragmented and penetration rates are still low – of the 4.2 billion
people worldwide with a vision problem, 2.5 billion do not have corrective
eyewear yet.

In 2013, despite an uncertain economic environment, these factors will help to
sustain demand for vision correction in all regions of the world and will
allow the Group to continue its value creation strategy. As a result, Essilor
is confident in its ability to deliver another year of revenue growth and high
operating margins.

^1 Shamir in Lenses and Optical Instruments and Stylemark in Readers
^2 Net cash from operating activities less change in working capital
requirements and less net capital expenditure

                      EXTRACT FROM THE MANAGEMENT REPORT

                               REVENUE UP 19.1%


Consolidated Revenue by Operating Segment and by Region

                                                      Change           Change           Contribution
€ millions             2012       2011       (reported)    (like-for-    from
                                                                       like)            acquisitions
Lenses and Optical     4,445.2    3,795.8    + 17.1%       + 5.3%        + 7.4%
Instruments
North America^a        1,735.9    1,503.1    + 15.5%       + 4.0%        + 2.9%
Europe                 1,558.7    1,471.2    + 5.9%        + 2.6%        + 2.5%
Asia-Pacific/Middle    828.6      551.2      + 50.3%       + 12.3%       + 30.9%
East/Africa^b
Latin America^a        322.0      270.3      + 19.2%       + 13.0%       + 12.1%
Equipment              199.2      184.6      + 7.9%        + 1.4%        + 0.5%
Readers                344.4      209.1      + 64.7%       + 5.9%        + 50.4%
TOTAL                  4,988.8    4,189.5    + 19.1%       + 5.2%        + 9.3%
(a) Mexico, representing revenue of €15.9 million in 2011, is now included in the Latin America
region.
(b) The full consolidation of Nikon-Essilor and Essilor Korea (previously consolidated on a 50%
basis) added €101.3 million to
2012 revenue, representing a 2.4% impact reported under “Contribution from acquisitions”.


In 2012, consolidated revenue totaled €4,988.8 million, an increase of 19.1%
over the previous year.

  *Like-for-like revenue growth was 5.2%.  The increase reflected vibrant
    sales by the Lenses and Optical Instruments business across all regions
    and the good performance of the Readers business.
  *Acquisitions lifted revenue by 9.3%. The inclusion of Shamir Optical’s
    first-half revenue and the impact of consolidating StyleMark from January
    1, 2012 added 4.1%, the partnerships and bolt-on acquisitions signed in
    2011 and 2012 contributed 2.8% and the consolidation of Nikon-Essilor and
    Essilor Korea on a 100% basis (versus 50% previously) contributed 2.4%.
  *The currency effect was a positive 4.6%, reflecting primarily the US
    dollar’s appreciation against the euro, but also the appreciation of the
    Canadian and Australian dollars, the British pound and the Chinese yuan.
    Conversely, the depreciation of the Brazilian real had a negative impact
    on revenue.

Activity by region and by division

LENSES AND OPTICAL INSTRUMENTS

North America

Essilor had an excellent year in North America. Revenue was up 4.0%
like-for-like, lifted by the combined impact of successful product launches,
favorable market conditions and initiatives undertaken in prior years.

In the United States, revenue grew 5.0% like-for-like. Growth was led by
value-added products, with independent eyecare professionals enthusiastically
welcoming the deployment of Crizal^® UV throughout the entire Crizal^® range.
Coinciding with the Crizal^® advertising campaign that began in 2012, Crizal^®
UV's launch drove a sharp rise in volumes together with better differentiation
and a positive price effect. The new Varilux^® S series was introduced in the
United States in the second half, along with the Definity 3 progressive lens.

Concerning distribution channels, 2012 saw very strong activity levels with
the major optical chains. The contract for the supply of anti-reflective
solutions signed with one of the country’s leading chains, LensCrafters, was
renewed and extended, and a new lens supply contract was signed with another
major national chain.

Sales via eyeglass and contact lens distributors grew at a healthy rate.

In Canada, the success of the multi-network distribution strategy helped to
offset a mixed performance by Nikon Essilor in the independent optician
segment and the decision by a major national chain to in-source part of its
lens production.

Europe

Revenue in Europe grew 2.6% like-for-like, despite a challenging economic
environment particularly in Southern Europe. Activity was strong during the
first three quarters. However the fourth quarter growth rate was adversely
affected by the high basis of comparison in the same period of 2011, which saw
the ramp up of a major supply contract in the United Kingdom, and a sales
uplift due to the production problems experienced by a major competitor. The
negative impact of high prior year comparatives was nonetheless partly offset
by strong initial sales of the new Crizal^® UV lenses launched in the second
quarter and the Varilux^® S series introduced in stages as from September.

The business in France continued to perform well, thanks to the group’s own
marketing efforts that included extending the distribution networks,
successfully launching new products such as Varilux^® S series, optimizing
BBGR’s positioning with national chains and leveraging the appeal of Shamir
products in certain regions. Revenues were up strongly in the United Kingdom,
lifted by the full-year impact of a supply contract with a leading optical
chain, Boots Opticians, and solid sales to independent opticians. In Central
Europe, Northern Europe and Eastern Europe, revenue grew modestly, reflecting
differing situations from one country to another. In Germany, Essilor
performed well in the optical chain segment and demonstrated good potential in
the independent optician segment. Revenue in Benelux and Southern Europe was
affected by difficult local economic environments. Nonetheless, the business
in Spain benefited from a very significant increase in BBGR's penetration rate
with a national optical chain.

Asia-Pacific/Middle East/Africa

Revenue in the Asia-Pacific/Middle East/Africa region was up by a strong 12.3%
like-for-like, reflecting increased momentum in fast-growing markets and firm
sales in the region’s developed markets. Varilux^® and Crizal^® enjoyed
vibrant demand throughout the region.

In China, sales of mid-range products continued to expand very rapidly, helped
by the good positioning of the Company’s partners. Wanxin’s distribution of
Kodak^® lenses in the domestic market delivered very good results, while
premium lens sales continued to be lifted by Varilux^® and Crizal^® lenses.

In India, strong gains were recorded in all market segments, thanks to new
products and sustained efforts to expand coverage of the customer base. All of
the Company’s partners turned in very good performances.

In Indonesia and the Asean countries, revenue continued to grow at a rapid
pace and the product mix improved.

Operations in Japan had a good year, even before taking into account the
positive effect of the change in the competitive environment. In particular,
the group increased its sales to two optical chains.

In Australia/New Zealand, the network of independent eyecare professionals
performed very well. In the optical chain segment, the Eyebiz partnership
improved product mix.

During 2012, the Company also entered several countries for the first time
(Sri Lanka, Tunisia and Togo).

Latin America

In a less favorable economic environment than in 2011, Essilor reported
revenue up 13.0% like-for-like.

In Brazil, Essilor continued to deploy its multi-network strategy. Leveraging
partnerships with independent laboratories to speed distribution of
value-added lenses, the Company secured a rapid increase in sales of
progressive lenses, anti-reflective coatings and photochromic lenses. In
particular, anti-reflective coating centers were deployed at two partner
laboratories. The Crizal^® UV lens was launched in Brazil’s major cities at
the end of the year.

It was another year of very strong growth in Mexico, where Essilor continued
to take advantage of the opportunities created by the under-penetration of the
main value-added lens categories. The Varilux^® progressive lens and Crizal^®
anti-reflective lens ranges increased their market shares. A new laboratory
was opened in Mexico City to improve service quality, while the signature of a
major partnership agreement with an independent distributor, Crystal y
Plastico, will allow the Company to deepen its geographic coverage and
strengthen its position in the mid-range segment.

In Colombia, a marketing subsidiary was set up during the year to speed
deployment of the Company’s various brands. After a good start to the year in
Argentina, performance was affected by slower economic growth and import
restrictions.

Instruments

The Instruments Division experienced a limited decline in business during
2012, in a particularly tight market environment in Europe which accounts for
a significant proportion of its revenue.

Essilor strengthened its overall positions in the edging tool segment, but
performances were uneven depending on the country. In Europe, the fall-off in
sales concerned Southern Europe, particularly Italy and Spain, and Central
Europe. In France, sales were higher, helped by the ongoing success of the Mr.
Orange^® edger. Outside Europe, the Division performed well in the United
States, Canada, Asia and Brazil.

The growing number of opticians choosing to install optometric equipment
helped to drive expansion in this segment of the European market. Essilor’s
revamped product line-up contributed to market share gains among independent
opticians and stronger positions with the optical chains.

Lastly, during 2012, Essilor began marketing its M’Eye Fit^® range of
measuring tools that are designed as aids for the sale of individualized
lenses by eyecare professionals. The Company has considerably strengthened its
position in the measuring device segment by acquiring a majority stake in
Interactive Visuel System (IVS), a global leader in technological sales
support solutions for opticians. IVS’s products include the Visioffice
measuring column that allows eyecare professionals to dispense premium lenses
in the Varilux^® range.

EQUIPMENT

The Equipment Division reported a 1.4% increase in like-for-like revenue
despite high prior-year comparatives and a less favorable climate for capital
expenditure. This good performance reflects ongoing laboratory investment in
digital surfacing machines, primarily in the United States and Latin America,
as well as firm demand in the Consumables division. Satisloh’s overall volumes
were also lifted by the extension of a contract to supply one-hour
anti-reflective lens machines to LensCrafters, a large optical chain in the
United States.

The Division’s capacity for innovation enabled it to selectively increase
market share via a more flexible deployment of its technological solutions, a
more global services network and the introduction of new business models.
Satisloh launched the Box-Coater 1200-MPX, a high-output anti-reflective lens
machine for mass manufacturers. MicroLab was introduced for smaller
laboratories interested in digital surfacing. The modular system offers wide
manufacturing flexibility for digital surfacing processes, as well as new
On-Block Manufacturing processes.

The Division also continued to expand internationally, led by its many
successes in Latin America and the opening of a new 2,000-sq.m showroom in Dan
Yang, China to showcase its technology to Asian customers.

READERS

The Readers Division had a good year, with like-for-like revenue gaining 5.9%.
Growth was mainly fueled by the sunglasses segment, which benefited from the
ramp-up of a new contract with a major nationwide chain and the introduction
of new collections at several key accounts at the end of the year.

Performance in the non-prescription glasses segment was more mixed, due to
ongoing inventory drawdown at the start of the year. In the United States,
FGXI was helped by the launch of a revamped line-up for a major retailer and
the ramp-up of a new supply contract with a fast-growing variety store chain.
These efforts were backed by a television ad campaign featuring Brooke
Shields, the new face of Foster Grant^® eyewear products.

FGXI also continued its development outside the United States, posting strong
sales growth in the United Kingdom and Latin America. In Latin America, the
Division launched business operations in South America (Ecuador, Bolivia and
Peru) and a certain number of Central American countries, while expanding in
Mexico and Chile alongside existing or new customers. In Italy, Polinelli
reported market share gains in a difficult economic climate.

The integration of Stylemark and the implementation of the resulting synergies
are in line with expectations. Following the transaction, distribution
operations are gradually being merged at the FGXI site in Rhode Island. The
acquisition has also allowed Essilor to accelerate its growth in the
department store segment, increasing its sales to various fast-growing key
accounts.

Fourth quarter revenue: up 10.5% excluding the currency effect

                                                Change           Change           Contribution
€ millions       Q4 2012    Q4 2011    (reported)    (like-for-    from
                                                                 like)            acquisitions
Lenses and
Optical          1,090.9    979.3      + 11.4%       + 3.5%        + 5.8%
Instruments
North ^          410.1      374.6      + 9.5%        + 3.0%        + 2.1%
America^a
Europe           390.1      382.0      + 2.1%        + 1.1%        0%
Asia-Pacific/
Middle           209.6      149.7      + 40.0%       + 7.0%        + 29.1%
East/Africa^b
Latin ^          81.1       72.9       + 11.3%       + 11.9%       + 6.7%
America^a
Equipment        55.6       52.8       + 5.3%        + 1.7%        + 0%
Readers          83.2       58.1       + 43.3%       + 6.5%        + 31.5%
TOTAL            1,229.7    1,090.2    + 12.8%       + 3.6%        + 6.9%
(a) Mexico, representing revenue of €4.3 million in fourth quarter 2011, is now included in
the Latin America region.
(b) The full consolidation of Nikon-Essilor and Essilor Korea (previously consolidated on a
50% basis) added €23.5 million,
representing a 2.2% impact reported under “Contribution from acquisitions”


Revenue grew 12.8% in the fourth quarter, including a 3.6% like-for-like
increase despite the high prior-period comparatives. The 6.9% contribution to
growth from acquisitions breaks down as follows: 3.0% from bolt-on
acquisitions, 1.7% from Stylemark, and the remaining 2.2% from the change in
the method of consolidation for Nikon-Essilor and Essilor Korea. The currency
effect was a positive 2.3%.

Over the period, Essilor generated results in line with its objectives by
continuing to deliver innovative products and expand in high-growth markets.
By region and business:

  *Demand remained strong in the United States.
  *The Varilux S series was successfully launched in Europe, where
    period-on-period growth was weakened by very high prior-period
    comparatives and ongoing difficulties in Southern Europe and in the
    Instruments business.
  *Sales were strong in the fast-growing markets of Asia-Pacific, the Middle
    East and Latin America.
  *The Readers business enjoyed a good fourth quarter.
  *Equipment Division sales stabilized at a high level.

Twenty-four new partnerships forged worldwide in 2012

During the year, the Company finalized 24 partnerships or bolt-on acquisitions
representing €171 million in additional revenue on a full-year basis. These
transactions involved all regions (nine in North America, one in Europe, ten
in Asia-Pacific/Middle East/Africa and four in Latin America).

                               INCOME STATEMENT

                                                           
€ millions                    2012             2011           Change
Revenue                       4,988.8          4,189.5        + 19.1%
Gross profit                  2,783.6          2,321.5        + 19.9%
(% of revenue)                55.8%            55.4%          
Contribution from                894.1               748.2             + 19.5%
operations((a))
(% of revenue)                17.9%            17.9%          
Other income                  (62.4)           (65.1)         
(expenses), net
Operating profit              831.7            683.1          + 21.8%
Cost of gross debt
and other financial           (18.0)           (13.4)         
income
and expenses, net
Income tax expense               (207.1)             (179.4)
Effective tax rate            25.5%            26.8%          
(%)
Share of profit of            23.8             27.9           
associates
Attributable to               (46.4)           (12.6)         
minority interests
Profit attributable
to Group equity                  584.0               505.6             + 15.5%
holders
% of revenue                  11.7%            12.1%          
Earnings per share            2.80             2.44           + 14.7%
(in €)
^(a) Operating profit before compensation costs for share-based payment plans,
restructuring costs, other income
and expense, and goodwill impairment

Gross margin

In 2012, gross margin (revenue less cost of sales as a percentage of revenue)
rose by 40 basis points to 55.8%. The improvement reflected manufacturing
productivity gains, generated by the sharp rise in volumes, and the success of
new products, particularly the Crizal^® UV anti-reflective lens.

Operating expenses

Operating expenses represented 37.9% of revenue. The 30-basis point increase
compared with 2011 was due to:

  *Significantly higher marketing, sales and distribution costs.
  *An increase in corporate costs, notably to strengthen support structures
    in fast-growing regions.
  *An uplift in research and development spending to €161.9 million (before
    deducting research tax credits of €12.9 million) from €151.5 million in
    2011.

In all, the contribution from operations amounted to €894.1 million, up 19.5%
on 2011. Contribution margin was stable at 17.9% of revenue. Excluding the
impact of purchase price allocations and the application of IFRS 3 (revised),
contribution margin stood at 18.6%.

Earnings per share up 14.7% to €2.80

Other income and expenses from operations

This item represented net income of €62.4 million, down €2.7 million from
2011.

The total includes:

  *€28.4 million in compensation costs for share-based payment plans (versus
    €23.2 million in 2011), of which €27.7 million for stock option and
    performance share plans (including €5 million in employer contributions),
    with the balance corresponding to the cost of the discount offered to
    employees participating in the Employee Stock Ownership Plan.
  *€25.3 million in restructuring costs, representing slightly more than in
    2011. The 2012 figure mainly concerned the rationalization of the
    prescription laboratory network and the transfer of R&D operations from
    Florida to the new innovation and technology center opened on the Dallas
    campus in 2012.
  *€21.2 million in legal costs, notably for the agreement with Carl Zeiss
    Vision, and transaction costs on strategic acquisitions.
  *A €15.6 million net gain on asset disposals, arising mainly from the full
    consolidation of the Nikon-Essilor and Essilor Korea joint ventures that
    were previously consolidated on a 50% basis.

Operating profit

In 2012, operating profit (corresponding to contribution from operations plus
or minus other income and expenses from operations and gains and losses on
asset disposals) totaled €831.7million, representing 16.7% of revenue versus
16.3% in 2011.

Cost of gross debt and other financial income and expenses

Cost of gross debt and other financial income and expenses represented a net
expense of €18.0million, versus €13.4million in 2011. The increase is mainly
explained by the fact that the average maturity of debt was longer in 2012
than in 2011, leading to a rise in interest costs. Unfavorable exchange rates
were also a factor.

Income tax expense

Income tax expense rose by 15.5% to €207.1 million. However, the effective tax
rate declined to 25.5% of pre-tax profit from 26.8%, due mainly to the
non-recurring items included in other operating income and expenses.

Share of profits of associates

This item corresponds to Essilor’s share of the profit derived from sales by
49%-owned Transitions to third-party lens casters. The decline to €23.8
million from €27.9 million in 2011 was due to the fall-off in Transitions
sales to these external customers.

Profit attributable to equity holders of the parent and earnings per share

Minority interests in profit rose sharply to €46.4 million, reflecting dynamic
implementation of Essilor’s partnership strategy. The main reasons for the
increase were as follows:

  *The change of consolidation method applied to Nikon-Essilor and Essilor
    Korea.
  *Consolidation of 50%-owned Shamir over the full year in 2012 versus only
    part of the year in 2011.
  *Recognition of minority interests in the new partnerships signed in 2011
    and 2012.
  *Growth in the profits of existing partnerships, notably as a result of the
    implementation of programs to unleash synergies.

Profit attributable to equity holders of the parent rose 15.5% to €584.0
million, representing 11.7% of revenue.

As a result of a small increase in the number of outstanding shares, earnings
per share grew at a faster rate, rising 14.7% to €2.80.

                           FREE CASH FLOW^3: 28.9%

Goodwill and other intangible assets

Goodwill increased by €204 million to €2,087 million at December 31, 2012,
reflecting the acquisitions made during the year.

Inventories

Inventories amounted to €830 million at December 31, 2012, an increase of €77
million over the year-earlier figure that was also mainly due to acquisitions
for the year. The underlying increase in inventory was consistent with
like-for-like sales growth for the year.

Investments

Capital expenditure net of disposals totaled €232.3million or 4.7% of
consolidated revenue for the year. Most of the expenditure concerned
prescription laboratories, with increases recorded in all regions of the
world, while around 20% was committed to series production. In addition, the
2012 total included expenditure for the construction of the Dallas (USA) and
Créteil (France) innovation and technology centers.

Free cash flow

Essilor’s business model continued to demonstrate its ability to generate
strong cash flow^4 in 2012. Net cash from operating activities (before change
in working capital) amounted to €848 million, an increase of 17.3% compared
with 2011. This amount more than covered the €241 million growth in capital
expenditure, and the more modest €10 million increase in working capital,
driving a 28.9% rise in free cash flow to €597 million, that helped to
finance:

  *Net financial investments of €193 million.
  *A €201 million increase in dividends paid to Essilor shareholders and the
    Company's minority partners in joint ventures.
  *Purchases of treasury stock for a total of €112 million, corresponding to
    more than two million shares purchased on the market for employee
    share-based payment plans.

Equity

Consolidated equity amounted to €3,921 million at end-2012, up 13.4% from the
year-earlier figure.

Net debt was cut from €506 million at end-2011 to €237 million, reducing
gearing to less than 10%.

Change in net debt
€ millions                                                      
Operating cash flow (before    848    Purchases of property,      241
WCR^b)                                      plant and equipment
Change in the method of        48     Change in WCR               10
consolidation^c
Share issues                   118    Dividends                   201
                                            Acquisition of
Other                          12     investments, net of         193
                                            disposals^a
                                    Purchases of treasury       112
                                            stock
                                    Reduction in net debt       269
^a. Financial investments net of cash acquired, plus debt of newly acquired
companies.
^b. Working Capital Requirements
^c. Change in the method of consolidation of Nikon-Essilor and Essilor Korea


^3 Net cash from operating activities less change in working capital
requirements and less net capital expenditure
^4 Net cash from operating activities before change in working capital
requirement

                              SUBSEQUENT EVENTS

Acquisitions

Since the beginning of 2013, partnership agreements have been signed with
local companies in two countries:

  *In Chile, Essilor has signed an agreement for the acquisition of a
    majority stake in Megalux, the country’s leading independent prescription
    laboratory. Based in Santiago, Megalux has five branches and generates
    annual revenue of €7 million. The partnership marks Essilor’s entry into
    Chile, a country with a population of around 17 million. It is a
    fast-growing market, with progressive lenses accounting for less than one
    in 20 lenses sold each year.
  *In Israel, Essilor has acquired the production and distribution assets of
    Optiplas, its local distributor which has annual revenue of some €5
    million. The new company, Essilor Laboratories of Israel, will take over
    distribution of Essilor brands (Essilor^®, Varilux^®, Crizal^® and
    Nikon^®) in Israel. Combined with Shamir’s local presence, this
    partnership will allow Essilor to build a credible multi-network offer in
    a competitive market where demand for innovations is strong among eyecare
    professionals.
  *In Russia, the Company acquired a majority stake in MOC BBGR, a joint
    venture that owns Marketing Optical Company, the long-standing distributor
    of BBGR lenses in the Russian market. MOK has annual revenue of some €3.7
    million.
  *Essilor also announced two agreements to acquire majority stakes in Servi
    Optica and Isbir Optik. Servi Optica is the leading distributor in
    Colombia with revenue of €29 million, while Isbir Optik is the
    distribution leader in Turkey with €15 million in revenue. These two
    transactions are still subject to approval by the competition authorities.

Transitions Optical Inc.

In January, Essilor announced that it was in discussions with PPG Industries
concerning the future of their joint subsidiary, Transitions Optical, Inc.,
which is 49%-owned by Essilor.

Renewal of the Kodak license

Signet Armorlite, a subsidiary of Essilor, has renewed the Kodak^® lens
manufacturing and distribution license signed with Eastman Kodak. The US$30.5
million investment will allow Signet Armorlite, the Company’s subsidiaries and
some of their partners, to use the Kodak^® brand throughout the world until
2029.

Share buybacks

Essilor pursued its share buyback program intended to offset potential
dilution from the issuance of shares under employee share-based payment plans.
Between December 31, 2012 and February 26, 2013, more than 309,000 shares were
bought back on the market for a total investment of approximately €22.5
million.

Practical information
A meeting with analysts will be held in Paris today, February 28, at 10:00
a.m.

The meeting will be available live and recorded for later listening at:
http://hosting.3sens.com/Essilor/20130228-DA00CBA8/en/

The presentation will be webcast at:
http://www.essilor.com/en/Investors/Pages/PublicationsDownloads.aspx

Forthcoming investor events
April 25, 2013: First-quarter 2013 revenue announcement
May 16, 2013: Annual Shareholders’ Meeting

About Essilor

The world’s leading ophthalmic optics company, Essilor designs, manufactures
and markets a wide range of lenses to improve and protect eyesight. Its
corporate mission is to enable everyone around the world to access lenses that
meet his or her unique vision requirements. To support this mission, the
Company allocates around €150 million to research and development every year,
in a commitment to continuously bring new, more effective products to market.
Essilor’s flagship brands are Varilux^®, Crizal^®, Definity^®, Xperio^®,
Optifog^TM and Foster Grant^®. It also develops and markets equipment,
instruments and services for eyecare professionals.

Essilor reported consolidated revenue of approximately €5 billion in 2012 and
employs around 52,600 people in some 100 countries. It operates 22 plants,
more than 400 prescription laboratories and edging facilities, as well as
several research and development centers around the world.

For more information, please visit www.essilor.com.

The Essilor share trades on the NYSE Euronext Paris market and is included in
the EuroStoxx 50 and CAC 40 indices.

Codes and symbols: ISIN: FR FR0000121667; Reuters: ESSI.PA; Bloomberg: EI:FP.

CONSOLIDATED FINANCIAL STATEMENTS AS OF DECEMBER 31, 2012


CONSOLIDATED INCOME STATEMENT

€ thousands, except per share data            2012           2011
                                                            
Revenue                                          4,988,845         4,189,541
Cost of sales                                    (2,205,278)       (1,868,086)
                                                           
GROSS PROFIT                                     2 783 567         2,321,455
Research and development costs                   (161,877)         (151,490)
Selling and distribution costs                   (1,139,856)       (959,692)
Other operating expenses                         (587,688)         (462,094)
                                                           
CONTRIBUTION FROM OPERATIONS                     894 146           748,179
                                                                   
Restructuring costs, net                         (25,325)          (22,646)
Goodwill impairment losses                       0                 0
Compensation costs on share-based payments       (28,421)          (23,211)
Other income from operations, net                12, 006           3,962
Other expenses from operations, net              (36,319)          (20,722)
Gains and losses on asset disposals, net         15,626            (2,470)
                                                           
OPERATING PROFIT                                 831,713           683,092
                                                                   
Finance costs                                    (24,063)          (13,904)
Income from cash and cash equivalents            17,037            10,507
Net exchange losses                              (6,779)           (85)
Other financial income and expenses, net         (4,173)           (9,917)
Share of profit of associates                    23,811            27,883
                                                           
PROFIT BEFORE TAX                                837,546           697,576
                                                                   
Income tax expense                               (207,122)         (179,396)
                                                                   
                                                           
NET PROFIT                                       630,424           518,180
Attributable to equity holders of Essilor        584,008           505,619
International
Attributable to minority interests            46,416         12,562
                                                                   
Basic earnings per common share (€)              2.80              2.44
Weighted average number of common shares         208,264           207,246
(thousands)
                                                                   
Diluted earnings per common share (€)            2.77              2.41
Diluted weighted average number of common     211,015        209,678
shares (thousands)
                                                                   


CONSOLIDATED STATEMENT OF TOTAL INCOME AND EXPENSES RECOGNIZED IN EQUITY

                2012                                               2011
                   Attributable                                          Attributable
(€                 to               Attributable                   to               Attributable   
thousands)         equity              to minority        Total          equity              to minority        Total
                   holders             interests                         holders             interests
               of Essilor                                   of Essilor                      
                   International                                         International
Profit for
the period      584,008          46,416          630,424     505,619          12,562          518,181
(A)
Valuation
gains and
losses on
derivative
financial
instruments,
net
of tax
Cash flow
hedges,         (244)                           (244)       (4,466)                         (4,466)
effective
portion
Tax             (94)                            (94)        2,494                           2,494
Net of tax      (338)                           (338)       (1,972)                         (1,972)
                                                                                        
Hedges of
net
investments,    836                             836         1,392                           1,392
effective
portion
Tax             (114)                           (114)       (479)                           (479)
Net of tax      (722)                           (722)       913                             913
                                                                                        
Transfers to
profit for
the period,
net of tax:
Cash flow
hedges,         (1,808)                         (1,808)     4,104                           4,104
effective
portion
Tax             239                             239         (1,194)                         (1,194)
Net of tax      (1,569)                         (1,569)     2,910                           2,910
                                                                                        
Hedges of
net
investments,    (246)                           (246)       (199)                           (199)
effective
portion
Tax             11                              11          68                              68
Net of tax      (235)                           (235)       (131)                           (131)
                                                                                        
Valuation
gains and
losses on       2,289                           2,289       (1,279)                         (1,279)
non-current
financial
assets
Tax             (47)                            (47)        (131)                           (131)
Net of tax      2, 242                          2,242       (1,410)                         (1,410)
                                                                                        
Actuarial
gains and
losses on       (31,337)                        (31,337)    (10,535)                        (10,535)
defined
benefit
obligations
Tax             6,376                           6,376       2,632                           2,632
Net of tax      (24,961)                        (24,961)    (7,903)                         (7,903)
                                                                                        
Translation
adjustments
to hedging      62                              62          (978)                           (978)
and
revaluation
reserves
Translation
adjustments
to other        (49,868)         (6 036)         (55,904)    35,738           812             36,550
reserves and
profit for
the period
Other (Tax)     (6,126)                         (6,126)                                    
Total income
and expense
for the
period          (80,071)         (6,036)         (86,107)    27,167           812             27,979
recognized
directly in
equity, net
of tax (B)
                                                                                        
Total
recognized
income and      503,937          40,380          544,317     532,786          13,374          546,160
expense, net
of tax (A) +
(B)
                                                                                                                


CONSOLIDATED BALANCE SHEET
ASSETS                                                     
                                               December 31,       December 31,
                                               2012               2011
€ thousands                                                
                                                                  
Goodwill                                       2,086,933          1,883,331
Other intangible assets                        621,622            581,781
Property, plant and equipment                  1 000,558          955,280
                                                          
INTANGIBLE ASSETS AND PROPERTY, PLANT       3,709,113       3,420,392
AND EQUIPMENT, NET
                                                                  
Investments in associates                      109,838            109,915
Other long-term financial investments          119,583            92,743
Deferred tax assets                            116,789            101,689
Long-term receivables                          25,052             3,891
Other non-current assets                       674                892
                                                          
OTHER NON-CURRENT ASSETS, NET               371,936         309,130
                                                          
TOTAL NON-CURRENT ASSETS, NET               4,081,049       3,729,522
                                                                  
Inventories                                    830,478            753,416
Prepayments to suppliers                       15,719             19,671
Short-term receivables                         1,147,525          1,121,746
Current income tax assets                      55,806             48,355
Other receivables                              35,645             30,838
Derivative financial instruments               33,611             15,091
Prepaid expenses                               40,651             41,777
Marketable securities                          5,781              7,450
Cash and cash equivalents                      660,958            390,320
                                                          
CURRENT ASSETS                              2,826,174       2,428,664
                                                                  
Non-current assets held for sale
                                                                  
TOTAL ASSETS                                6,907,223       6,158,186


CONSOLIDATED BALANCE SHEET
EQUITY AND LIABILITIES
                                               December 31,       December 31,
                                               2012               2011
€ thousands                                                
                                                                  
Share capital                                  38,650             38,527
Additional paid-in capital                     311,622            307,401
Retained earnings                              2,940,952          2,629,367
Treasury stock                                 (239,044)          (264,110)
Revaluation and other reserves                 (79,647)           (49,443)
Translation difference                         107,628            157,496
Profit attributable to equity holders of       584,008            505,619
Essilor International
                                                          
EQUITY ATTRIBUTABLE TO EQUITY HOLDERS       3,664,169       3,324,857
OF ESSILOR INTERNATIONAL
                                                                  
Minority interests                             256,571            132,894
                                                          
TOTAL EQUITY                                3,920,740       3,457,751
                                                                  
Provisions for pensions and other              204,652            177,693
post-employment benefit obligations
Long-term borrowings                           526,237            309,152
Deferred tax liabilities                       148,339            148,755
Other non-current liabilities                  232,544            138,168
                                                          
NON-CURRENT LIABILITIES                     1,111,772       773,768
                                                                  
Provisions                                     126,954            141,401
Short-term borrowings                          390,012            606,581
Customer prepayments                           16,944             15,705
Short-term payables                            1,014,675          913,218
Taxes payable                                  75,627             62,172
Other current liabilities                      207,605            161,306
Derivative financial instruments               30,115             14,953
Deferred income                                12,779             11,331
                                                          
CURRENT LIABILITIES                         1,874 711       1,926,667
                                                          
TOTAL EQUITY AND LIABILITIES                6,907,223       6,158,186
                                                                  


CONSOLIDATED CASH FLOW STATEMENT

€ thousands                             December 31,    December 31,
                                               2012               2011
                                                      
NET PROFIT                       (i)     630,424         518,180
                                                        
Share of profit of
associates, net of dividends                   44,796             34,433
received
Depreciation, amortization                     229,629            180,693
and other non-cash items
                                                      
Profit before non-cash items
and share of profit of                  904,849         733,306
associates, net of
dividends received
Provision charges (reversals)                  (24,325)           (2,745)
(Gains) losses on asset             (i)        (14,733)           2,470
disposals, net
Cash flow after income tax
expense and finance costs,              865,791         733,031
net
Finance costs, net                             7,026              8,988
Income tax expense (current      (i)     207,122         179,396
and deferred taxes)
                                                                  
Cash flow before income tax
expense and finance costs,              1,079,939       921,415
net
Income taxes paid                              (224,264)          (183,717)
Interest (paid) and received,                  (5,586)            (14,293)
net
Change in working capital               (10,091)        (55,607)
NET CASH FROM OPERATING                 839,998         667,798
ACTIVITIES
Purchases of property, plant
and equipment and intangible                   (24,207)           (204,717)
assets
Acquisitions of subsidiaries,                  (158,224)          (364,428)
net of the cash acquired
Purchases of
available-for-sale financial                   (12,956)           (15,120)
assets
Purchases of other long-term                   (16,077)           (16,688)
financial investments
Proceeds from the sale of
subsidiaries, net of the cash                  1,368              203
sold
Proceeds from the sale of               10,770          14,412
other non-current assets
NET CASH USED IN INVESTING              (416,326)       (586,338)
ACTIVITIES
Proceeds from the issue of          (ii)       117,899            83,133
share capital
(Purchases) sales of treasury       (ii)       (111,788)          (147,502)
stock, net
Dividends paid to:
- Equity holders of Essilor         (ii)       (176,619)          (171,541)
International
- Minority shareholders of          (ii)       (24,837)           (3,783)
subsidiaries
Increase (decrease) in
borrowings other than finance                  (54,840)           188,590
lease liabilities
Purchases of marketable                        1,724              2,066
securities*
Repayment of finance lease                     (2,614)            (2,866)
liabilities
Other movements                         (1,266)         (6,855)
NET CASH USED IN FINANCING              (252,341)       (58,758)
ACTIVITIES
                                                      
NET INCREASE (DECREASE) IN              171,331         22,702
CASH AND CASH EQUIVALENTS
Cash and cash equivalents at                   363,109            345,888
January 1
Impact of the change of
consolidation method applied                   49,335
to the joint ventures
Effect of changes in exchange           (4,244)         (5,481)
rates
NET CASH AND CASH EQUIVALENTS           579,531         363,109
AT PERIOD-END
Cash and cash equivalents                      660,958            390,320
reported in the balance sheet
Short-term bank loans and               (81,427)        (27,211)
overdrafts
(*) Money market funds not
qualified as cash equivalents
under IAS 7.

(i) Please refer to the consolidated income statement
(ii) Please refer to the statement of changes in equity



STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
• Full-year 2012

                                                                                                                       Profit              Equity
                                                                                                                       attributable        attributable
                    Share         Additional       Revaluation       Retained        Translation       Treasury        to                  to                  Minority        Total
(€ thousands)    capital    paid-in       reserves       earnings     reserve        stock        equity           equity           interests    equity
                                  capital                                                                              holders of          holders of
                                                                                                                       Essilor             Essilor
                                                                                                                       International       International
Equity at                                                                                              (264,
January 1,       3,527      307,401       (49,443)       2,629,367    157,496        110)         505,619          3,324,857        132,894      3,457,751
2012
Issue of                                                                                                                                        
share capital
- To the
corporate           69            21,927                                                                                                   21,996                              21,996
mutual funds
- On exercise
of stock            486           95,417                                                                                                   95,903                              95,903
options
- Paid up by
capitalizing
reserves
Issue of
share capital
for minority
shareholders
Cancellation
of treasury         (432)         (113,123)                                                            113,555
stock
Share-based                                                          23, 444                                                               23,444                              23,444
payments
Purchases and
sales of                                                             (23,299)                          (88,489)                            (111,788)                           (111,788)
treasury
stock, net
Appropriation                                                        505,619                                           (505,619)
of profit
Effect of
changes in                                                           (8,103)                                                               (8,103)             108,134         100,031
scope of
consolidation
Dividends                                             (176,619)                                              (176,619)        (24,837)     (201,456)
Transactions
with             123        4,221                       321,042                    25,066       (505,619)        (155 ,167)       83,297       (71,870)
shareholders
Total income
(expense) for
the period                                         (30,266)                                                                                (30,266)                            (30,266)
recognized
directly
in equity
Profit for                                                                                                             584,008             584,008             46 416          630 424
the period
Exchange
differences
on                                      62             (9,457)      (49,868)                                   (59,263)         (6,036)      (65,299)
translating
foreign
operations
Total
recognized                              (30,204)       (9,457)      (49,868)                   584,008          494,479          40,380       534,859
income and
expense
Equity at
December 31,     38,650     311,622       (79,647)       2,940,952    107,628        (239,044)    584,008          3,664,169        256,571      3,920,740
2012


STATEMENT OF CHANGES IN CONSOLIDATED EQUITY
• Full-year 2011

                                                                                                                       Profit              Equity
                                                                                                                       attributable        attributable
                    Share         Additional       Revaluation       Retained        Translation       Treasury        to                  to                  Minority        Total
(€ thousands)    capital    paid-in       reserves       earnings     reserve        stock        equity           equity           interests    equity
                                  capital                                                                              holders of          holders of
                                                                                                                       Essilor             Essilor
                                                                                                                       International       International
Equity at
January 1,       38,098     224,697       (40,872)       2,331,494    121,865        (136,258)    461,969          3,000,993        43,186       3,044,179
2011
Issue of
share capital
- To the
corporate           94            21,708                                                                                                   21,802                              21,802
mutual funds
- On exercise
of stock            335           60,996                                                                                                   61,331                              61,331
options
- Paid up by
capitalizing                                                         1,018                                                                 1,018                               1,018
reserves
Issue of
share capital                                                                                                                                                  4,845           4,845
for minority
shareholders
Cancellation
of treasury
stock
Share-based                                                          21,577                                                                21,577                              21,577
payments
Purchases and
sales of                                                             (19,650)                          (127,852)                           (147,502)                           (147,502)
treasury
stock, net
Appropriation                                                        461,969                                           (461,969)
of profit
Effect of
changes in                                                           3,941           452                                                   4,393               75,272          79,665
scope of
consolidation
Dividends                                             (171,541)                                              (171,541)        (3,783)      (175,324)
Transactions
with             429        82,704                      297,314      452            (127,852)    (461,969)        (208,922)        76,334       (132,588)
shareholders
Total income
(expense) for
the period                                         (7,593)                                                                                 (7,593)                             (7,593)
recognized
directly
in equity
Profit for                                                                                                             505,619             505,619             12,562          518,181
the period
Exchange
differences
on                                      (978)          559          35,179                                     34,760           812          35,572
translating
foreign
operations
Total
recognized                              (8,571)        559          35,179                     505,619          532,786          13,374       546,160
income and
expense
Equity at
December 31,     38,527     307,401       (49,443)       2,629,367    157,496        (264,110)    505,619          3,324,857        132,894      3,457,751
2011

Contact:

Essilor
Investor Relations and Financial Communications
Véronique Gillet / Sébastien Leroy / Ariel Bauer, +33 (0) 1 49 77 42 16
or
Corporate Communication and Press
Maïlis Thiercelin, +33 (0) 1 49 77 45 02
 
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