Amplifon: Revenue growth of over 27% and strong profitability improvement in the first nine months of 2019, also fostered by an excellent third quarter and the continued outstanding performance of Spain

Main results for the first nine months of 20191:

• Consolidated revenues of 1,224.7 million euros, up 26.1% at constant exchange rates and 27.2% at current exchange rates compared to the same period of 2018
• Recurring EBITDA rose 29.3% to 194.6 million euros or 15.9% of revenues, with a margin increase of 30 basis points compared to the same period of 2018, even after the consolidation of GAES. EBITDA as reported reached 176.1 million euros or 14.4% of revenues
• Recurring net profit amounted to 79.6 million euros, an increase of 28.3% compared to the first nine months of 2018. Net profit as reported rose 13.7% to 65.5 million euros
• Net financial debt was 856.8 million euros, slightly higher than the 840.9 million euros posted at December 31st, 2018, due to seasonality
• Recurring free cash flow reached 78.1 million euros, an increase of 27.1 million euros or 53.2% compared to the same period of 2018

Milan, October 30th, 2019 - Today the Board of Directors of Amplifon S.p.A. (MTA; Bloomberg ticker: AMP:IM), global leader in hearing solutions and services, approved the Interim Financial Report as at September 30th, 2019 during a meeting chaired by Susan Carol Holland.

For the sake of effective comparison with the same period of 2018, key figures for the first nine months and third quarter of 2019 in the following tables were prepared without applying the accounting standard IFRS 16. The following comments are, therefore, based on these figures, unless stated otherwise.

1 For the sake of effective comparison with the as reported figures for the first nine months and third quarter of 2018, figures for the first nine months and third quarter of 2019 commented in this press release refer to figures without the application of the accounting standard IFRS16 ("9M 2019 w/o IFRS 16" and "Q3 2019 w/o IFRS 16"), unless stated otherwise.

MAIN CONSOLIDATED ECONOMICAL AND FINANCIAL FIGURES - FIRST NINE MONTHS 2019

	(Euro millions)	First nine months 2019 w/o IFRS 16 (**)			First nine months 2018
		Recurring	Non-	Total		Recurring	Non-	Total		Recurring
		recurring		recurring
	Net revenues	1,224.7	-	1,224.7	100.0%	962.8	-	962.8	100.0%	27.2%
	EBITDA	194.6	(18.6)	176.1	15.9%	150.6	(6.0)	144.6	15.6%	29.3%
	EBIT	121.1	(18.8)	102.4	9.9%	98.8	(6.0)	92.8	10.3%	22.6%
	Net income	79.6	(14.0)	65.5	6.5%	62.0	(4.4)	57.6	6.4%	28.3%
	EPS adjusted (*, in Euro)		0.450				0.333
	Free cash flow		68.6				50.8
			09/30/2019				12/31/2018			Change %
	Net Financial Position		856.8				840.9			1.9%

1. Net income adjusted for the non-recurring items and for the amortization of the intangible assets as per the Purchase Price Allocation accounting treatment. (**) For the sake of comparison, 2019 data are shown without the application of IFRS 16.

MAIN CONSOLIDATED ECONOMICAL AND FINANCIAL FIGURES - THIRD QUARTER 2019

(Euro millions)		Q3 2019 w/o IFRS 16 (**)			Q3 2018
	Recurring	Non-	Total		Recurring	Non-	Total		Recurring
	recurring		recurring
Net revenues	392.7	-	392.7	100.0%	303.2	-	303.2	100.0%	29.5%
EBITDA	53.4	(12.7)	40.7	13.6%	40.6	(6.0)	34.6	13.4%	31.6%
EBIT	28.4	(12.9)	15.5	7.2%	22.8	(6.0)	16.7	7.5%	24.7%
Net income	17.7	(9.2)	8.5	4.5%	15.0	(4.4)	10.6	4.9%	18.0%
EPS adjusted (*, in Euro)		0.109				0.085

1. Net income adjusted for the non-recurring items and for the amortization of the intangible assets as per the Purchase Price Allocation accounting treatment. (**) For the sake of comparison, 2019 data are shown without the application of IFRS 16.

"We are extremely satisfied with the outstanding third quarter results, driven by an excellent organic growth, about two times higher than the market, the extraordinary contribution of acquisitions, particularly GAES, and the continuous profitability improvement. We are also moving forward successfully with the progressive roll-out of the Amplifon Product Experience which today is present in six core markets (Italy, Germany, the Netherlands, France Australia and the United States). The results recorded in the first nine months allow us to look ahead to closing the year with record results for the fifth time in a row", said Enrico Vita, Amplifon's Chief Executive "The GAES integration is also proceeding very well: synergies at EBITDA level are now estimated at around 25 million euros from 2021, at the high end of the range previously disclosed. Finally, the results achieved as of to date in Spain, both in terms of organic growth and profitability, are well above initial expectations."

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Overview

Amplifon reported consolidated revenues of 1,224.7 million euros in the first nine months of 2019, an increase of 26.1% at constant exchange rates and of 27.2% at current exchange rates compared to the first nine months of 2018. This outstanding performance reflects strong, above market organic growth (+6.2%) and the extraordinary contribution of acquisitions (+19.9%) fueled by the consolidation of GAES and its double-digit organic growth (reported in M&A), as well as the bolt-on acquisitions carried out mainly in France and Germany. The foreign exchange effect was positive for 1.1%.

Recurring EBITDA rose 29.3% in the first nine months of 2019 to 194.6 million euros. The margin came in at 15.9%, an increase of 30 basis points compared to the first nine months of 2018, even after the consolidation of GAES, characterized by a lower initial profitability compared to the rest of the Amplifon group. EBITDA as reported rose 21.8% to 176.1 million euros or 14.4% of revenues. In the first nine months of 2019, non-recurring expenses related to the GAES integration totaled 18.6 million euros at EBITDA level (please also refer to the paragraph "Subsequent events after September 30th, 2019"). Recurring net profit grew 28.3% to 79.6 million euros, while net profit as reported reflects 14.0 million euros of non-recurring expenses previously highlighted, thus rising 13.7% to 65.5 million euros. Adjusted earnings per share (adjusted EPS)2 came in at 45.0 euro cents, 35.3% higher than the 33.3 euro cents reported in the first nine months of 2018.

The balance sheet and financial indicators show a positive trend: free cash flow reached 68.6 million euros, showing strong improvement compared to the 50.8 million euros posted in the first nine months of 2018, after absorbing net capex of 58.7 million euros. Net of non-recurringcash-out, free cash flow reached 78.1 million euros, 27.1 million euros or 53.2% higher than in the first nine months of 2018. Net debt was 856.8 million euros, 15.9 million euros higher than the 840.9 million euros recorded at December 31st, 2018, compared to an increase of 52.4 million euros in the same period of the prior year (from 296.3 million euros on December 31st, 2017 to 348.6 million euros on September 30th, 2018). The net debt/EBITDA ratio fell from the 2.46x3 recorded at December 31st, 2018 to 2.20x3 at September 30th, 2019.

Amplifon recorded excellent results in the third quarter of 2019. Revenues reached 392.7 million euros, an increase of 28.5% at constant exchange rates and of 29.5% at current exchange rates compared to the third quarter of 2018. The increase was driven by an excellent organic growth (+9.2%), in strong acceleration since the beginning of the year and double the market, and the extraordinary contribution of acquisitions (+19.2%), which was fueled by the consolidation of GAES and its double-digit organic growth (reported in M&A) along with the bolt-on acquisitions carried out mainly in France and Germany. The foreign exchange effect was positive for 1.0%. Recurring EBITDA amounted to 53.4 million euros and the margin rose 20 basis points to 13.6%. EBITDA as reported, which reflects non-recurring expenses related to the integration of GAES totaling 12.7 million euros, was 40.7 million euros or 10.4% of revenues. Recurring net profit was 18.0% higher than in the comparison period, coming in at 17.7 million euros, whereas net profit as reported, which reflects the above-mentionedone-offs net of taxes, was 8.5 million euros.

The network expansion program continued in the first nine months of 2019, both organically and through acquisitions, with the addition of 137 stores, of which 54 in the third quarter. The acquisitions, 92 stores, were made mainly in France and Germany for a total net cash-out of 53.0 million euros.

1. Net earnings per share adjusted (adjusted EPS) for non-recurring expenses and amortization linked to acquisitions in accordance with the Purchase Price Allocation accounting treatment
2. The net debt/EBITDA ratio is calculated based on the criteria redefined with banks and investors in the first months of 2019 following the introduction of the new accounting standards IFRS15, IFRS9 and IFRS16

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Economic results for the first nine months of 2019

Consolidated revenues amounted to 1,224.7 million euros in the first nine months of 2019, an increase of 26.1% at constant exchange rates and of 27.2% at current exchange rates compared to the first nine months of the prior year. Revenues were driven by strong, above market organic growth (+6.2%), while acquisitions contributed 19.9%; the foreign exchange effect had a positive impact of 1.1%, attributable mainly to the strengthening of the USD against the Euro. The growth trend was sustained by the solid performances posted in all the geographic areas in which the Company operates: an exceptional performance was recorded in EMEA, with double-digit organic growth strongly accelerating in the third quarter and the extraordinary contribution from GAES; strong revenue growth was posted in AMERICAS, driven by solid organic growth and the significant contribution of acquisitions, thanks to the consolidation as well as the excellent performance of GAES LATAM business; the good revenue growth recorded in APAC reflects solid organic growth, which improved in the third quarter, and the contribution of the acquisitions related to the first Chinese joint venture.

Thanks to the significant acceleration in revenues and operating leverage, recurring EBITDA maintained its solid growth trend increasing 29.3% to 194.6 million euros. The recurring EBITDA margin rose 30 basis points compared to the first nine months of 2018 to 15.9%, even after the consolidation of GAES and the continuous investments in marketing. EBITDA as reported rose 21.8% to 176.1 million euros. Non-recurring expenses related to the GAES integration amounted to 18.6 million euros in the first nine months of 2019 (please also refer to the paragraph "Subsequent events after September 30th, 2019"). Recurring and as reported EBITDA after the application of IFRS 16 came to 262.6 million euros and 244.2 million euros, respectively.

Recurring EBIT rose 22.6% compared to the same period of 2018 to 121.1 million euros or 9.9% of revenues. This increase is attributable to the improvement in EBITDA, which was partially offset by higher depreciation and amortization related to network expansion, innovation, and IT infrastructure, as well as the impact of the 27.7 million euros in amortization recognized for acquisitions in accordance with Purchase Price Allocation accounting treatment. EBIT as reported rose 10.3% to 102.4 million euros.

Recurring Net profit (NP) reached 79.6 million euros, an increase of 28.3% compared to the first nine months of 2018, with a tax rate of 27.6%. This excellent result is attributable to greater operating leverage. Net financial expenses also improved, falling 0.8 million euros or 6.7% in the first nine months, despite the increase reported in third quarter 2019 (compared to the same quarter of 2018) attributable mainly to the new facility for the GAES acquisition. Net profit as reported, which reflects the above-mentioned 14- million-euroone-offs, rose 13.7% in the first nine months of 2019 to 65.5 million euros, with a tax rate of 28.1%. Adjusted earnings per share (adjusted EPS)4 came in at 45.0 euro cents, 35.3% higher than the 33.3 euro cents reported in the first nine months of 2018.

Performance by geographic area

EMEA: outstanding performance boosted by double-digit organic growth in the third quarter and by the unrelenting excellent results of Spain

Revenues in Europe, the Middle East and Africa (EMEA) reached 877.8 million euros in the first nine months of 2019, an increase of 32.4% at constant exchange rates and of 32.7% at current exchange rates. This result was driven for 7.3% by an excellent organic growth, thanks also to the further acceleration recorded in the third quarter which reached the record level of 11.4%, and for 25.1% by acquisitions. The latter reflect the combined effect of the consolidation of GAES as of January 1st, 2019, GAES double-digit organic growth (reported in M&A) and the bolt-on acquisitions made in Germany and France. The foreign exchange effect was positive for 0.3%.

4 Net earnings per share adjusted (adjusted EPS) for non-recurring expenses and amortization linked to acquisitions in accordance with the Purchase Price Allocation accounting treatment

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In Europe, Italy recorded outstanding organic growth thanks to the Amplifon Product Experience and the success of the new marketing campaign. In Spain the excellent, above expectations, double-digit growth trend was confirmed for both GAES and Amplifon businesses. Excellent growth continued in France and Germany, driven by strong organic growth and significant M&A activity. The roll-out of the Amplifon Product Experience continued and in the first nine months it was also launched in the Netherlands, Germany and France with very positive results.

The contribution of EMEA to the Group's profitability continues to be very significant, with recurring EBITDA rising 36.3% to 148.4 million euros. The margin showed a strong improvement, increasing 40 basis points (with a peak of 100 basis points in the third quarter) to 16.9% even after the consolidation of GAES.

AMERICA: robust top-line growth and strong profitability expansion

Revenues in AMERICAS reached 203.4 million euros in the first nine months of 2019, an increase of 14.9% in local currencies and 21.0% at current exchange rates. The performance was driven by the strong contribution of acquisitions (+12.0%), explained mainly by the consolidation and growth of GAES LATAM business. Organic growth, which reached 2.9%, improving to 4.0% in the third quarter alone, is attributable to the good performance of Miracle-Ear and Amplifon Hearing Healthcare. The foreign exchange effect was positive for 6.1%.

Recurring EBITDA in AMERICAS grew from the 32.3 million euros recorded in the first nine months of 2018 to 41.6 million euros in the first nine months of 2019 (+28.8%). The margin rose 120 basis points to 20.4% of revenues thanks to the strong operating leverage, which more than offset the dilutive effect stemming from the consolidation of GAES LATAM business.

ASIA-PACIFIC: solid and improving performance since the beginning of the year

Revenues in ASIA-PACIFIC amounted to 140.2 million euros in the first nine months of 2019, an increase of 7.5% in local currencies and 6.6% at current exchange rates. Revenues were penalized by the unfavorable foreign exchange effect which had a negative impact of 0.9%. The region's performance is explained for 4.0% by solid organic growth, which outpaced the market and improved in the third quarter (+5.1%) despite a still soft market environment. Acquisitions, related to the Chinese joint venture, contributed for 3.5%. A good, above market performance driven by solid organic growth was reported in Australia, while revenues in New Zealand improved despite the continued impact of the anniversary of the regulatory change that took place in 2013.

In ASIA-PACIFIC, EBITDA was 33.9 million euros, 2.9% below the same period in 2018 due primarily to lower absorption of the increased investments, mainly related to the organizational strengthening in a still soft market environment, as well as the dilutive effect stemming from the consolidation of the Chinese joint venture. The margin came in at 24.2% and is expected to improve in the fourth quarter.

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