Annual Report 2017

35. Contingencies

35.1 Contingent Liabilities

The Group has been in dispute with a lens manufacturer, Zeiss, who participated in, but did not win, the lens tender organized by the Group in 2012. Consequently Zeiss’ existing lens-supply contract expired on the contractual expiration date of 31 October 2013. Zeiss subsequently claimed that GrandVision’s termination of the agreement was unlawful. Zeiss formally sued GrandVision France before the Paris Commercial Court on 10 April 2014, claiming damages of approximately €57 million on the ground of unlawful termination of the lens purchase agreement. A number of hearings took place in 2015 and the Paris Commercial Court declared itself not competent to hear this matter in its 25 January 2016 decision. Zeiss appealed this decision and the French Court of Appeal confirmed the decision of the Paris Commercial Court in its 17 June 2016 decision. No additional procedural steps have been taken by Zeiss since 2016. As GrandVision is confident to sustain its legal position in this dispute, no provision was recognized in the consolidated financial statements. GrandVision is of the opinion that the probability of any further developments on this matter is remote and therefore deems this matter to be closed.

As a multinational company being present in many jurisdictions the Group is involved in a number of tax proceedings. In November 2015 the Group received a report from the German tax authorities following their tax audit covering Apollo-Optik in the years 2008-2012. This report included findings and viewpoints of the tax authorities on German VAT aspects. The Group is contesting the viewpoints of the German tax authorities on the tax position and will defend its position vigorously, if needed in court. As the Group is sufficiently confident to sustain its position on this matter, no provision has been recognized in the consolidated financial statements. If the Group is unsuccessful in resolving this matter, the exposure, including the period after 2012, is €22 million. Formalities are proceeding at this stage and did not result in changes in 2017.

35.2 Operating Lease Commitments

The future aggregate minimum lease payments under non-cancellable operating leases are as follows:

in thousands of EUR

31 December 2017

31 December 2016

Not later than 1 year

312,280

298,183

Later than 1 year and not later than 5 years

630,462

574,296

Later than 5 years

198,024

131,039

1,140,766

1,003,518

The lease commitments relate mainly to the lease of stores, offices and vehicles. The Group has the option, under some of its leases, to lease the assets for an additional period. Some leases include a clause to increase the annual rental charge based on achieved revenue targets. The increase in 2017 mainly relates to the acquisitions of Visilab and Tesco Opticians.