Amplifon S p A : Interim Financial Report as at 31 March 2020

May 13, 2020 at 03:35 am EDT

Interim Financial

Report as at

31 March 2020

Interim Report as at March 2020

INDEX

PREFACE ....................................................................................................................................	4
INTERIM MANAGEMENT REPORT AS AT 31 MARCH 2020...........................................................	5
HIGHLIGHTS ...............................................................................................................................	6
MAIN ECONOMIC AND FINANCIAL DATA ....................................................................................	8
INDICATORS.............................................................................................................................	10
SHAREHOLDER INFORMATION .................................................................................................	12
RECLASSIFIED CONSOLIDATED INCOME STATEMENT ................................................................	14
RECLASSIFIED CONSOLIDATED BALANCE SHEET ........................................................................	16
CONDENSED RECLASSIFIED CONSOLIDATED CASH FLOW STATEMENT.......................................	18
INCOME STATEMENT REVIEW ..................................................................................................	19
BALANCE SHEET REVIEW ..........................................................................................................	29
ACQUISITION OF COMPANIES AND BUSINESSES .......................................................................	39
COVID-19 EMERGENCY MEASURES...........................................................................................	39
OUTLOOK ................................................................................................................................	41
CONDENSED INTERIM CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 MARCH 2020 ...........	43
CONSOLIDATED STATEMENT OF FINANCIAL POSITION..............................................................	44
CONSOLIDATED INCOME STATEMENT ......................................................................................	46
STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME .....................................................	47
STATEMENT OF CHANGES IN CONSOLIDATED EQUITY...............................................................	48
STATEMENT OF CONSOLIDATED CASH FLOWS ..........................................................................	50
SUPPLEMENTARY INFORMATION TO THE STATEMENT OF CONSOLIDATED CASH FLOWS ..........	51
NOTES......................................................................................................................................	52
2

Interim Report as at March 2020

1.	General information.............................................................................................................	52
2.	Acquisitions and goodwill ....................................................................................................	53
3.	Intangible assets...................................................................................................................	53
4.	Tangible fixed assets ............................................................................................................	55
5.	Right-of-use assets ...............................................................................................................	56
6.	Share capital.........................................................................................................................	56
7.	Net financial position ...........................................................................................................	57
8.	Financial liabilities ................................................................................................................	59
9.	Lease liabilities .....................................................................................................................	62
10.	Revenues from Sales and Services .......................................................................................	63
11.	Taxes.....................................................................................................................................	63
12.	Non-recurring significant events..........................................................................................	63
13.	Earnings (loss) per share ......................................................................................................	63
14.	Transactions with parent companies and related parties ...................................................	64
15.	Contingent liabilities ............................................................................................................	65
16.	Translation of foreign companies' financial statements......................................................	66
17.	Segment reporting ...............................................................................................................	67
18.	Accounting policies ..............................................................................................................	72
19.	Subsequent events...............................................................................................................	75
ANNEXES .................................................................................................................................	76
Consolidation scope .......................................................................................................................	76
Declaration of the Executive Responsible for Corporate Accounting Information pursuant to
Article 154-bis of Legislative Decree 58/1998 (Consolidated finance act) ....................................	80

Disclaimer

This report contains forward looking statements ("Outlook") relating to future events and the Amplifon Group's operating, economic and financial results. These forecasts, by definition, contain elements of risk and uncertainty, insofar as they are linked to the occurrence of future events and developments. The actual results may be very different with respect to the original forecast due to a number of factors, the majority of which are out of the Group's control.

Interim Report as at March 2020

PREFACE

This Interim Financial Report for the period has been prepared in accordance with the requirements of the International Financial Reporting Standards (IFRS) issued by the International Accounting Standards Board (IASB) adopted by the European Union and must be read together with the financial statements of the Group at 31 December 2019 that includes additional information on the risks and uncertainties that could impact the Group's operative results or its financial position.

INTERIM MANAGEMENT REPORT

AS AT 31 MARCH 2020

Interim Financial Report as at 31 March 2020 > Interim Management Report

HIGHLIGHTS

Beginning in March the Covid-19 outbreak significantly impacted the results for first quarter 2020 which the Amplifon Group, after having recorded further revenue growth in the first two months of the year, closed with consolidated revenues down with respect to the prior year, reversing the solid growth trend that has characterized quarters in recent years.

The performances of the different geographic areas in which the Group operates varied based on the timing of the outbreak, as well as the gradual adoption of various restrictive measures by the governmental authorities of each Country. More in detail, in EMEA, Italy was the first country, as well as the one that was the most affected by the crisis and the relative containment measures, followed by Spain and France. Even though hearing care services are considered essential in these countries, the lockdown measures caused a strong reduction in both traffic and the hours of store operation. In other EMEA countries, like Germany, the Netherlands, Switzerland and Belgium-Luxembourg, the containment measures implemented were less severe and were largely felt as of the end of March.

In Americas the negative effects of the pandemic became apparent only toward the end of the quarter. In the United States, the situation varied noticeably including as a result of measures that, at least initially, differed from state to state. In a large part of the USA hearing care is considered an essential service but, at the same time, the restrictive measures implemented in almost all the states as of the end of March caused business to slow. In Latin America there were mandatory store closures toward the end of the quarter: all stores were closed in Ecuador and Argentina, while in Chile closures were limited to a few zones in the country. In Columbia, the strong drop in customer traffic basically brought commercial activity to a standstill. Lastly, in APAC, the first area to be struck by the pandemic resulting in the closure of stores in China in January and February, there were mandatory closures of all stores New Zealand and India toward the end of March. In Australia, while the governmental authorities did not implement any specific lockdown measures, the business was also affected by the devastating bushfires that plagued the country for a large part of the first quarter.

The first three months of the year closed with:

turnover of €363,476 thousand, a drop of -7.3% compared to the same period of the prior year (-7.2% at constant exchange rates). This result reflects the strong growth recorded in the first two months of the year, during which organic growth reached +7.4%, impacted subsequently by the Covid-19 crisis in March;
a gross operating margin (EBITDA) of €64,855 thousand, -17.8% lower on a recurring basis compared to the first three months of 2019, with an EBITDA margin of 17.8% (-2.3 p.p. against the comparison period). This result reflects the drop in revenues referred to above which did not yet benefit from the different measures adopted by the Group to limit the negative impact of Covid-19. While implemented in a timely manner, the effects of these measures will materialize beginning in the second quarter;
Group net profit of €5,143 thousand, a drop of -72.7% against the recurring net profit recorded in the first quarter of 2019.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Despite business seasonality and the negative impact of the Covid-19 outbreak, net financial debt was basically unchanged with respect to the €786,698 thousand recorded at 31 December 2019, coming in at €790,744 thousand, confirming the Group's ability to generate operating cash flow. Free cash flow reached a positive €44,179 thousand (compared to €16,241 thousand in the first three months of the prior year) after absorbing capital expenditure of €16,473 thousand (€18,601 thousand in the comparison period). This result made it possible to finance €41,475 thousand in acquisitions. In order, however, to protect cash flow from the impact of the Covid-19 outbreak, beginning in March capex were limited solely to activities deemed essential to the Group's operations (roughly 20-25% of the average annual capex) while acquisitions were suspended temporarily.

At the beginning of February Amplifon successfully placed a 7-yearnon-convertible bond for a total nominal amount of €350 million which further strengthened its financial structure and extended the average debt maturity.

Interim Financial Report as at 31 March 2020 > Interim Management Report

MAIN ECONOMIC AND FINANCIAL DATA

(€ thousands)		First quarter 2020			First quarter 2019


									Change %
		Non-		% on		Non-		% on	on
	Recurring	recurring	Total	recurring	Recurring	recurring	Total	recurring	recurring

Economic figures:

Revenues from sales and services

Gross operating profit (loss) (EBITDA)

Operating profit (loss) before the depreciation and amortization of PPA related assets (EBITA)


363,476	-	363,476	100.0%	391,973	-	391,973	100.0%	-7.3%

64,855	-	64,855	17.8%	78,942	(1,425)	77,517	20.1%	-17.8%



24,167	-	24,167	6.6%	42,661	(1,425)	41,236	10.9%	-43.4%

Operating profit (loss) (EBIT)	14,490	-	14,490	4.0%	34,299	(1,425)	32,874	8.8%	-57.8%


Profit (loss) before tax	7,499	-	7,499	2.1%	27,717	(1,425)	26,292	7.1%	-72.9%


Group net profit (loss)	5,143	-	5,143	1.4%	18,810	(1,062)	17,748	4.8%	-72.7%

(€ thousands)	03/31/2020	12/31/2019	Change

Financial figures:
Non-current assets	2,268,041	2,275,196	(7,155)

Net invested capital	1,885,085	1,907,438	(22,353)

Group net equity	665,319	695,031	(29,712)

Total net equity	666,269	696,115	(29,846)

Net financial indebtedness	790,744	786,698	4,046

Lease liabilities	428,072	424,625	3,447

Total lease liabilities and net financial indebtedness	1,218,816	1,211,323	7,493

(€ thousands)	First quarter 2020	First quarter 2019


Free cash flow	44,179	16,241

Cash flow generated from (absorbed by) business combinations	(41,745)	(14,364)

(Purchase) sale of other investments and securities	-	-

Cash flow provided by (used in) financing activities	(4,909)	1,089

Net cash flow from the period	(2,475)	2,966

Effect of discontinued operations on the net financial position	-	-

Effect of exchange rate fluctuations on the net financial position	(1,571)	(93)

Net cash flow from the period with changes for exchange rate fluctuations and	(4,046)	2,873
discontinued operations

Interim Financial Report as at 31 March 2020 > Interim Management Report

EBITDA is the operating result before charging amortization, depreciation, impairment of both tangible and intangible fixed assets and the right of use depreciation.
EBITA is the operating result before amortization and impairment of customer lists, trademarks, non-competition agreements and other fixed assets arising from business combinations.
EBIT is the operating result before ﬁnancial income and charges and taxes.
Free cash flow represents the cash flow of operating and investing activities before the cash flows used in acquisitions and payment of dividends and the cash flows from or used in other financing activities.

Interim Financial Report as at 31 March 2020 > Interim Management Report

INDICATORS

		03/31/2020		12/31/2019	03/31/2019
Net ﬁnancial indebtedness (€ thousands)		790,744		786,698	837,983

Lease liabilities		428,072		424,625	436,084

Total lease liabilities & net financial debt		1,218,816		1,211,323	1,274,067

Net Equity (€ thousands)		666,269		696,115	628,348

Group Net Equity (€ thousands)		665,319		695,031	627,185
Net ﬁnancial indebtedness/Net Equity			1.13	1.33
	1.19
Net ﬁnancial indebtedness/Group Net Equity			1.13	1.34
	1.19
Net ﬁnancial indebtedness/EBITDA			1.90	2.36
	1.99
EBITDA/Net financial expenses			28.81	29.52
	27.22

Earnings per share (EPS) (€)		0.02305		0.48979	0.08043

Diluted EPS (€)		0.02272		0.48135	0.07898
EPS (€) adjusted for non-recurring transactions and amortization/depreciation
	0.05273		0.70691	0.11246
related to purchase price allocations to tangible and intangible assets

Group Net Equity per share (€)		2.981		3.115	2.842

Period-end price (€)		18.720		25.640	17.350

Highest price in period (€)		30.400		26.800	17.770

Lowest price in period (€)		14.830		13.610	13.610

Share price/net equity per share		6.281		8.231	6.105

Market capitalization (€ millions)		4,178.54		5,720.78	3,829.00

Number of shares outstanding		223,212,593		223,119,533	220,691,875

Net ﬁnancial indebtedness/net equity is the ratio of net ﬁnancial indebtedness to total net equity.
Net financial indebtedness/Group net equity is the ratio of the net ﬁnancial indebtedness to the Group's net equity.
Net financial indebtedness/EBITDA is the ratio of net ﬁnancial indebtedness to EBITDA for the last four quarters (determined with reference to recurring operations only, based on pro forma ﬁgures in case of signiﬁcant changes to the structure of the Group).
EBITDA/net financial expenses ratio is the ratio of EBITDA for the last four quarters (determined with reference to recurring operations only, based on restated ﬁgures in case of signiﬁcant changes to the structure of the Group) to net interest payable and receivable of the same last four quarters.
Earnings per share (EPS) (€) is the net profit for the period attributable to the parent's ordinary shareholders divided by the weighted average number of shares outstanding during the period, considering purchases and sales of treasury shares as cancellations or issues of shares, respectively.
Diluted earnings per share (EPS) (€) is the net profit for the period attributable to the parent's ordinary shareholders divided by the weighted average number of shares outstanding during the period adjusted for the dilution effect of potential shares. In the calculation of outstanding shares, purchases and sales of treasury shares are considered as cancellations and issues of shares, respectively.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Earnings per share (EPS) adjusted for non-recurring transactions and amortization/depreciation related to purchase price allocations to tangible and intangible assets (€) is the profit for the year from recurring operations attributable to the parent's ordinary shareholders divided by the weighted average number of outstanding shares in the period adjusted to reflect the amortization of purchase price allocations. When calculating the number of outstanding shares, the purchases and sales of treasury shares are considered cancellations and share issues, respectively.
Net Equity per share (€) is the ratio of Group equity to the number of outstanding shares.
Period-endprice (€) is the closing price on the last stock exchange trading day of the period.
Highest price (€) and lowest price (€) are the highest and lowest prices from 1 January to the end of the period.
Share price/Net equity per share is the ratio of the share closing price on the last stock exchange trading day of the period to net equity per share.
Market capitalization is the closing price on the last stock exchange trading day of the period multiplied by the number of outstanding shares.
The number of shares outstanding is the number of shares issued less treasury shares.

Interim Financial Report as at 31 March 2020 > Interim Management Report

SHAREHOLDER INFORMATION

Main Shareholders

The main Shareholders of Amplifon S.p.A. as at 31 March 2020 are:

44.9

53.7

			1.4
Ampliter S.r.l.	Treasury shares	Market

		No. of ordinary		% of the total
Shareholder		% held	share capital in
		shares
				voting right

Ampliter S.r.l.			101,715,003	44.9%	61.9%


Treasury shares			3,176,027	1.4%	1,0%


Market			121,497,590	53.7%	37.1%

Total		226,388,620 (*)	100,0%	100,0%

(*) Number of shares related to the share capital registered with the Company registrar on 31 March 2020.

Pursuant to article 2497 of the Italian Civil Code, Amplifon S.p.A. is not subject to management and coordination either by its direct parent Ampliter S.r.l. or other indirect parents.

The shares of the parent Amplifon S.p.A. have been listed on the screen based Mercato Telematico Azionario (MTA) since 27 June 2001 and since 10 September 2008 in the STAR segment. Amplifon is also included in the FTSE Italy Mid Cap index since 27 December 2018.

The chart shows the performance of the Amplifon share price and its trading volumes from 2 January 2020 to 31 March 2020.

Interim Financial Report as at 31 March 2020 > Interim Management Report

10%
5%
0%
-5%
-10%
-15%
-20%
-25%	-28.5%

-30%
-35%
-40%
4,000,000
3,000,000
2,000,000
1,000,000
0

As at 31 March 2020 market capitalization was € 4,178.54 million.

Dealings in Amplifon shares in the screen-based stock market Mercato Telematico Azionario during the period 2 January 2020 - 31 March 2020, showed:

average daily value: € 27,048,227.44;
average daily volume: 1,099,081 shares;
total volume traded of 70,341,225 shares, or 31.5% of the total number of shares comprising the share capital, net of treasury shares.

Interim Financial Report as at 31 March 2020 > Interim Management Report

RECLASSIFIED CONSOLIDATED INCOME STATEMENT

			First quarter 2020			First quarter 2019
(€ thousands)
												Change %
			Non-				% on		Non-recurring		% on	on
	Recurring		recurring (*)		Total		recurring	Recurring	(*)	Total	recurring	recurring
Revenues from sales and
363,476		-		363,476		100.0%	391,973	-	391,973	100.0%	-7.3%
services


Operating costs	(299,902)		-		(299,902)		-82.5%	(313,334)	(1,425)	(314,759)	-79.9%	4.3%

Other income and costs	1,281		-		1,281		0.3%	303	-	303	0.1%	322.8%
Gross operating profit
64,855		-		64,855		17.8%	78,942	(1,425)	77,517	20.1%	-17.8%
(EBITDA)

Depreciation, amortization
and impairment of non-	(17,183)		-		(17,183)		-4.7%	(15,086)	-	(15,086)	-3.8%	-13.9%
current assets

Right-of-use depreciation	(23,505)		-		(23,505)		-6.5%	(21,195)	-	(21,195)	-5.4%	-10.9%

Operating result before the
amortization and
24,167		-		24,167		6.6%	42,661	(1,425)	41,236	10.9%	-43.4%
impairment of PPA related

assets (EBITA)
PPA related depreciation,
(9,677)		-		(9,677)		-2.6%	(8,362)	-	(8,362)	-2.1%	-15.7%
amortization and impairment


Operating profit (EBIT)	14,490		-		14,490		4.0%	34,299	(1,425)	32,874	8.8%	-57.8%
Income, expenses, valuation
and adjustments of ﬁnancial	23		-		23		0.0%	72	-	72	0.0%	-68.1%
assets
Net ﬁnancial expenses	(6,760)		-		(6,760)		-1.8%	(6,495)	-	(6,495)	-1.7%	-4.1%
Exchange differences and
non-hedge accounting	(254)		-		(254)		-0.1%	(159)	-	(159)	0.0%	-59.7%
instruments
Profit (loss) before tax	7,499		-		7,499		2.1%	27,717	(1,425)	26,292	7.1%	-72.9%
Tax	(2,428)		-		(2,428)		-0.7%	(8,918)	363	(8,555)	-2.3%	72.8%

Net profit (loss)	5,071		-		5,071		1.4%	18,799	(1,062)	17,737	4.8%	-73.0%

Profit (loss) of minority
(72)		-		(72)		0.0%	(11)	-	(11)	0.0%	-554.5%
interests

Net profit (loss) attributable
5,143		-		5,143		1.4%	18,810	(1,062)	17,748	4.8%	-72.7%
to the Group

(*) See table at page 15 for details of non-recurring transactions.

Interim Financial Report as at 31 March 2020 > Interim Management Report

The following table shows the details of the non-recurring transactions included in the previous statements.

(€ thousands)	Q1 2020	Q1 2019


GAES integration costs	-	(1,425)


Impact of the non-recurring items on EBITDA	-	(1,425)


Impact of the non-recurring items on EBIT	-	(1,425)


Impact of the non-recurring items on profit before tax	-	(1,425)


Impact of the above items on the tax burden for the period	-	363


Impact of the non-recurring items on net profit	-	(1,062)

Interim Financial Report as at 31 March 2020 > Interim Management Report

RECLASSIFIED CONSOLIDATED BALANCE SHEET

The reclassiﬁed Consolidated Balance Sheet aggregates assets and liabilities according to operating functionality criteria, subdivided by convention into the following three key functions: investments, operations and ﬁnance.


(€ thousands)	03/31/2020	12/31/2019	Change

Goodwill	1,221,875	1,215,511	6,364
Customer lists, non-compete agreements, trademarks and location rights	268,237	270,307	(2,070)

Software, licenses, other int.ass., wip and advances	98,235	97,201	1,034

Tangible assets	192,533	196,579	(4,046)

Right of use assets	417,297	418,429	(1,132)

Fixed financial assets (1)	38,591	44,887	(6,296)

Other non-current financial assets (1)	31,273	32,282	(1,009)

Total fixed assets	2,268,041	2,275,196	(7,155)

Inventories	70,873	64,592	6,281

Trade receivables	153,215	205,219	(52,004)

Other receivables	86,546	75,998	10,548

Current assets (A)	310,634	345,809	(35,175)

Total assets	2,578,675	2,621,005	(42,330)

Trade payables	(189,582)	(177,390)	(12,192)

Other payables (2)	(270,347)	(284,827)	14,480

Provisions for risks (current portion)	(4,700)	(4,242)	(458)

Short term liabilities (B)	(464,629)	(466,459)	1,830

Working capital (A) - (B)	(153,995)	(120,650)	(33,345)

Derivative instruments (3)	(3,726)	(8,763)	5,037

Deferred tax assets	78,774	81,427	(2,653)

Deferred tax liabilities	(100,222)	(102,111)	1,889

Provisions for risks (non-current portion)	(43,145)	(50,290)	7,145

Employee benefits (non-current portion)	(24,763)	(25,281)	518

Loan fees (4)	6,655	1,611	5,044

Other long-term payables	(142,534)	(143,701)	1,167

NET INVESTED CAPITAL	1,885,085	1,907,438	(22,353)

Shareholders' equity	665,319	695,031	(29,712)

Third parties' equity	950	1,084	(134)

Net equity	666,269	696,115	(29,846)

Long term net financial debt (4)	838,944	752,648	86,296

Short term net financial debt (4)	(48,200)	34,050	(82,250)

Total net financial debt	790,744	786,698	4,046

Lease liabilities	428,072	424,625	3,447

Total lease liabilities & net financial debt	1,218,816	1,211,323	7,493

NET EQUITY, LEASE LIABILITIES AND NET FINANCIAL DEBT	1,885,085	1,907,438	(22,353)

Interim Financial Report as at 31 March 2020 > Interim Management Report

Notes for reconciling the condensed balance sheet with the statutory balance sheet:

"Financial ﬁxed assets" and "Other non-current ﬁnancial assets" include equity interests valued by using the net equity method, ﬁnancial assets at fair value through proﬁt and loss and other non-current assets;
"Other payables" includes other liabilities, accrued liabilities and deferred income, current portion of liabilities for employees' benefits and tax liabilities;
"Derivative instruments" includes cash flow hedging instruments not comprised in the item "Net financial indebtedness".
The item "loan fees" is presented in the balance sheet as a direct reduction of the short-term and medium/long-term components of the items "financial payables" and "financial liabilities" for the short-term and long-term portions, respectively.

Interim Financial Report as at 31 March 2020 > Interim Management Report

CONDENSED RECLASSIFIED CONSOLIDATED CASH FLOW STATEMENT

The condensed consolidated cash ﬂow statement is a summarized version of the reclassiﬁed statement of cash ﬂows set out in the following pages and its purpose is, starting from the EBIT, to detail the cash ﬂows from or used in operating, investing and ﬁnancing activities.

(€ thousands)	First quarter 2020	First quarter 2019

EBIT	14,490	32,874


Amortization, depreciation and write-downs	50,365	44,643

Provisions, other non-monetary items and gain/losses from disposals	2,420	7,760

Net ﬁnancial expenses	(5,863)	(5,733)

Taxes paid	(3,487)	(6,395)

Changes in net working capital	22,850	(18,673)
Cash flow provided by (used in) operating activities before repayment of lease	80,775	54,476
liabilities

Repayment of lease liabilities	(20,123)	(19,634)
Cash flow provided by (used in) operating activities (A)	60,652	34,842
Cash flow provided by (used in) operating investing activities (B)	(16,473)	(18,601)
Free Cash Flow (A) + (B)	44,179	16,241
Net cash flow provided by (used in) acquisitions (C)	(41,745)	(14,364)

(Purchase) sale of other investment and securities (D)	-	-
Cash flow provided by (used in) investing activities (B+C+D)	(58,218)	(32,965)
Cash flow provided by (used in) operating activities and investing activities	2,434	1,877

Fees paid on medium/long-term financing	(5,043)	-

Hedging instruments and other changes in non-current assets	134	1,089
Net cash flow from the period	(2,475)	2,966

Net financial indebtedness as of period opening date	(786,698)	(840,856)

Effect of exchange rate fluctuations on financial position	(1,571)	(93)

Change in net financial position	(2,475)	2,966

Net financial indebtedness as of period closing date	(790,744)	(837,983)

The impact of non-recurring transactions on free cash flow in the period is shown in the following table.

(€ thousands)	First quarter 2020	First quarter 2019
Free cash flow	44,179	16,241

Free cash flow generated by non-recurring transactions (see page 38 for details)	(777)	(3,053)

Free cash flow generated by recurring transactions	44,956	19,294

Interim Financial Report as at 31 March 2020 > Interim Management Report

INCOME STATEMENT REVIEW

Consolidated income statement by segment and geographic area (*)

(€ thousands)			First quarter 2020


	EMEA	Americas		Asia Pacific	Corporate	Total

Revenues from sales and services	258,266	64,355		40,855	-	363,476



Operating costs	(208,602)	(52,967)		(30,670)	(7,663)	(299,902)

Other income and costs	857	488		(75)	11	1,281

Gross operating profit (loss) (EBITDA)	50,521	11,876		10,110	(7,652)	64,855

Depreciation, amortization and impairment of	(10,249)	(1,899)		(2,824)	(2,211)	(17,183)

non-current assets


Right-of-use depreciation	(19,664)	(1,037)		(2,697)	(107)	(23,505)

Operating profit (loss) before the depreciation	20,608	8,940		4,589	(9,970)	24,167

and amortization of PPA related assets (EBITA)


PPA related depreciation, amortization and	(7,822)	(322)		(1,533)	-	(9,677)

impairment



Operating profit (loss) (EBIT)	12,786	8,618		3,056	(9,970)	14,490

Income, expenses, revaluation and adjustments of ﬁnancial assets

Net ﬁnancial expenses

Exchange differences and non-hedge accounting instruments

(6,760)

(254)

Profit (loss) before tax									7,499

Tax									(2,428)


Net profit (loss)									5,071
Profit (loss) of minority interests									(72)

Net profit (loss) attributable to the Group									5,143



(€ thousands)			First quarter 2020 - Only recurring operations


	EMEA		Americas		Asia Pacific		Corporate		Total


Revenues from sales and services	258,266		64,355		40,855		-		363,476

Gross operating profit (loss) (EBITDA)	50,521		11,876		10,110		(7,652)		64,855

Operating profit (loss) before the depreciation
20,608		8,940		4,589		(9,970)		24,167

and amortization of PPA related assets (EBITA)


Operating profit (loss) (EBIT)	12,786		8,618		3,056		(9,970)		14,490


Profit (loss) before tax									7,499

Net profit (loss) attributable to the Group									5,143

For the purposes of reporting on income statement figures by geographic area, please note that the Corporate structures are included in EMEA.

Interim Financial Report as at 31 March 2020 > Interim Management Report

(€ thousands)			First quarter 2019

	EMEA	Americas	Asia Pacific	Corporate	Total

Revenues from sales and services	283,763	63,102	44,415	693	391,973
Operating costs	(223,567)	(50,517)	(30,374)	(10,301)	(314,759)
Other income and costs	255	132	(74)	(10)	303

Gross operating profit (loss) (EBITDA)	60,451	12,717	13,967	(9,618)	77,517

Depreciation, amortization and impairment	(10,095)	(1,244)	(1,729)	(2,018)	(15,086)
of non-current assets

Right-of-use depreciation	(17,961)	(867)	(2,367)	-	(21,195)

Operating profit (loss) before the
depreciation and amortization of PPA	32,395	10,606	9,871	(11,636)	41,236
related assets (EBITA)

PPA related depreciation, amortization and	(6,569)	(261)	(1,470)	(62)	(8,362)
impairment


Operating profit (loss) (EBIT)	25,826	10,345	8,401	(11,698)	32,874

Income, expenses, revaluation and					72
adjustments of ﬁnancial assets

Net ﬁnancial expenses					(6,495)
Exchange differences and non-hedge					(159)
accounting instruments

Profit (loss) before tax					26,292

Tax					(8,555)

Net profit (loss)					17,737

Profit (loss) of minority interests					(11)

Net profit (loss) attributable to the Group					17,748


(€ thousands)		First quarter 2019 - Only recurring operations

	EMEA	Americas	Asia Pacific	Corporate	Total

Revenues from sales and services	283,763	63,102	44,415	693	391,973
Gross operating profit (loss) (EBITDA)	61,876	12,717	13,967	(9,618)	78,942
Operating profit (loss) before the
depreciation and amortization of PPA	33,819	10,606	9,871	(11,635)	42,661
related assets (EBITA)
Operating profit (loss) (EBIT)	27,251	10,345	8,401	(11,698)	34,299
Profit (loss) before tax					27,717
Net profit (loss) attributable to the Group					18,810

Interim Financial Report as at 31 March 2020 > Interim Management Report

Revenues from sales and services

(€ thousands)	First quarter 2020	First quarter 2019	Change	Change %



Revenues from sales and	363,476	391,973	(28,497)	-7.3%

services

Consolidated revenues from sales and services amounted to €363,476 thousand in the first three months of 2020, down €28,497 thousand (-7.3%) against the comparison period. This decline is attributable entirely to the Covid-19 outbreak, which started in China at the end of January, and then spread to Italy in March, followed by the other markets in which the Group operates. The containment measures put into place by the governmental authorities, which refer mainly to social distancing and mandatory closure of stores in countries like China, India and New Zealand, resulted in a decided decrease in store hours and, consequently, commercial activity which caused revenues to fall considerably in March. The quarter, therefore, closed with organic growth that was negative for €37,244 thousand (-9.5%), while at the end of February it was 7.4% higher than in the first two months of 2019. The contribution of acquisitions was positive for €8,945 thousand (+2.3%), net of the disposal of Makstone (Turkey) completed in the fourth quarter of 2019, driven by the bolt-on acquisitions made in France and Germany and the Attune Hearing Pty Ltd acquisition (Australia). The foreign exchange differences had a negative impact of €198 thousand (-0.1%).

The following table shows the breakdown of revenues from sales and services by segment.

								Change %
								in local
(€ thousands)	Q1 2020	% on Total	Q1 2019	% on Total	Change	Change %	Exchange diff.	currency
EMEA	258,266	71.1%	283,763	72.4%	(25,497)	-9.0%	1,103	-9.4%


Americas	64,355	17.7%	63,102	16.1%	1,253	2.0%	448	1.3%

Asia Pacific	40,855	11.2%	44,415	11.3%	(3,560)	-8.0%	(1,749)	-4.1%


Corporate	-	0.0%	693	0.2%	(693)	-100.0%	-	-100.0%


Total	363,476	100.0%	391,973	100.0%	(28,497)	-7.3%	(198)	-7.2%

Interim Financial Report as at 31 March 2020 > Interim Management Report

Europe, Middle East and Africa

(€ thousands)	First quarter 2020	First quarter 2019	Change	Change %



Revenues from sales and	258,266	283,763	(25,497)	-9.0%

services

Revenues from sales and services amounted to €258,266 thousand in the first three months of 2020, down €25,497 thousand (-9.0%) against the comparison period. The decline is attributable entirely to Covid-19 which, in this area, had already begun to spread at the end of February. The quarter closed with organic growth that was negative for €32,384 thousand (- 11.4%), while at the end of February it was 7.5% higher than in the first two months of 2019. The contribution of acquisitions, made mainly in France and Germany and net of the disposal of Makstone (Turkey) completed in the fourth quarter of 2019, was positive for €5,784 thousand (+2.0%). The foreign exchange differences had a positive impact of €1,103 thousand (+0.4%) due to the strengthening of the Swiss Franc and the British Pound against the Euro.

Italy, Spain and France were affected the most by the pandemic as the shelter-in-place measures were enacted first and were also more restrictive compared to countries like Germany, the Netherlands, Switzerland, Belgium and Luxembourg where the impact was more contained, at least in March.

Americas

(€ thousands)	First quarter 2020	First quarter 2019	Change	Change %



Revenues from sales and	64,355	63,102	1,253	2.0%

services

Revenues from sales and services amounted to €64,355 thousand in the first three months of 2020, an increase, despite Covid-19 restrictions, of €1,253 thousand (+2.0%) against the comparison period. The quarter closed with organic growth of €412 thousand (+0.7%), while at the end of February an increase of +15.3% against the first two months of 2019 was recorded. The contribution of acquisitions, mainly in Canada, was positive for €393 thousand (+0.6%). The foreign exchange differences had a positive impact of €448 thousand (+0.7%) due to the strengthening of the USD against the Euro.

Despite the negative impact of Covid-19 in the second half of March, the United State reported revenue growth of +1.3% thanks to the solid performances of Miracle-Ear and AHHC recorded up until this time.Canada benefitted from the contribution of acquisitions, while double-digit growth was recorded in Latin America as the Covid outbreak only started to affect sales in the latter part of March resulting in the mandatory closure of points of sale in Ecuador, Argentina

Interim Financial Report as at 31 March 2020 > Interim Management Report

and a few zones in Chile, while the closures in Columbia were voluntary given the lack of customer traffic.

Asia Pacific

(€ thousands)	First quarter 2020	First quarter 2019	Change	Change %



Revenues from sales and	40,855	44,415	(3,560)	-8.0%

services

Revenues from sales and services amounted to €40,855 thousand in the first three months of year, down €3,560 thousand (-8.0%) against the comparison period explained primarily by Covid-19. The quarter closed with organic growth that was negative for €4,579 thousand (- 10.3%), noticeably higher than the drop of 2.5% recorded in the first two months of 2019. Acquisitions made a positive contribution of €2,768 thousand (+6.2%) thanks to the Attune Hearing Pty Ltd acquisition completed in the first part of February. The foreign exchange differences were negative for €1,749 thousand (-3.9%).

Revenues in local currency fell by -4.1%. In Australia the negative performance is attributable to the bushfires, which continued throughout January and were only definitively extinguished at the beginning of March, as well as the Covid-19 containment measures enacted at the end of the quarter which were less stringent than in other markets. The containment ordinances in New Zealand, China and India resulted in the closure of all the network stores, albeit at different times.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Gross operating profit (EBITDA)

(€ thousands)		First quarter 2020			First quarter 2019

	Recurring	Non-recurring	Total	Recurring	Non-recurring	Total

Gross operating profit (EBITDA)	64,855	-	64,855	78,942	(1,425)	77,517

Gross operating profit (EBITDA) amounted to €64,855 thousand in the first three months of 2020, a drop of €12,662 thousand (-16.3%) with respect to the comparison period. The impact of the positive exchange differences was immaterial (€9 thousand). This decrease reflects the lower absorption of fixed costs attributable to the decline in revenues caused by the Covid-19 outbreak and the costs associated directly with the crisis which totaled roughly €1.3 million.

The EBITDA margin was -2.0 p.p. lower than in the comparison period, coming in at 17.8%.

No non-recurring expenses were incurred in the reporting period, while non-recurring expenses relating to the GAES integration of €1,425 thousand were incurred in the prior year. Net of this item, EBITDA was down €14,087 thousand (-17.8%) in the first three months of the year, with an EBITDA margin that was -2.3 p.p. lower than in the first three months of 2019.

The following table shows a breakdown of EBITDA by segment.

	Q1 2020		EBITDA		Q1 2019	EBITDA	Change	Change %

(€ thousands)		Margin		Margin

EMEA	50,521		19.6%		60,451	21.3%	(9,930)	-16.4%


Americas	11,876		18.5%		12,717	20.2%	(841)	-6.6%


Asia Pacific	10,110		24.7%		13,967	31.4%	(3,857)	-27.6%


Corporate (*)	(7,652)		-2.1%		(9,618)	-2.5%	1,966	20.4%
Total	64,855		17.8%		77,517	19.8%	(12,662)	-16.3%

The table below shows the breakdown of the EBITDA by segment with reference to the recurring operations.

	Q1 2020		EBITDA		Q1 2019	EBITDA	Change	Change %

(€ thousands)		Margin		Margin


EMEA	50,521		19.6%		61,876	21.8%	(11,355)	-18.4%

Americas	11,876		18.5%		12,717	20.2%	(841)	-6.6%



Asia Pacific	10,110		24.7%		13,967	31.4%	(3,857)	-27.6%

Corporate (*)	(7,652)		-2.1%		(9,618)	-2.5%	1,966	20.4%

Total	64,855		17.8%		78,942	20.1%	(14,087)	-17.8%

(*) Centralized costs are shown as a percentage of the Group's total sales.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Europe, Middle East and Africa

Gross operating profit (EBITDA) amounted to €50,521 thousand in the first three months of the year, a decrease of €9,930 thousand (-16.4%) against the comparison period explained by the drop in revenues, resulting in lower absorption of fixed costs, and the costs associated directly with the health crisis of €1.1 million. The foreign exchange differences had a positive impact of €278 thousand.

The EBITDA margin came to 19.6%, a decrease of -1.7 p.p. compared to the first quarter of 2019.

Non-recurring expenses relating to the GAES integration of €1,425 thousand were incurred in the comparison period. Net of this item, EBITDA was down €11,355 thousand (-18.4%) in the first three months of the year, with an EBITDA margin that was -2.2 p.p. lower than in the first three months of 2019.

Americas

Gross operating profit (EBITDA) amounted to €11,876 thousand in the first three months of the year, a decrease of €841 thousand (-6.6%) with respect to the comparison period attributable to the slowdown in revenue growth and the costs directly associated with the health crisis of €0.1 million. The decline was mitigated by a positive foreign exchange difference of €206 thousand. The EBITDA margin came to 18.5%, a decrease of -1.7 p.p. compared to the first three months of 2019.

Asia Pacific

Gross operating profit (EBITDA) amounted to €10,110 thousand in the first three months of the year, a decrease of €3,857 thousand (-27.6%) with respect to the comparison period explained by the drop in revenues, resulting in lower absorption of fixed costs, and the costs associated directly with the health crisis of €0.1 million. The result also reflects negative exchange differences of €476 thousand. The EBITDA margin came to 24.7%, -6.7 p.p lower than in the first three months of 2019.

Corporate

The net cost of centralized Corporate functions (corporate bodies, general management, business development, procurement, treasury, legal affairs, human resources, IT systems, global marketing and internal audit) which do not qualify as operating segments under IFRS 8 amounted to €7,652 thousand in the first three months of 2020 (2.1% of the revenues generated by the Group's sales and services), a decrease of €1,966 thousand with respect to the same period of the prior year. The figure also reflects the revised estimated cost of the company management incentive plans due to the decline in the number of assignable rights given the impact that the health crisis will have on the Group's results.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Operating profit (EBIT)

(€ thousands)		First quarter 2020			First quarter 2019
	Recurring		Non-recurring	Total		Recurring	Non-	Total

				recurring


Operating profit (EBIT)	14,490		-	14,490		34,299	(1,425)	32,874

Operating profit (EBIT) amounted to €14,490 thousand in the first three months of 2020, a decrease of €18,384 thousand (-55.9%) with respect to the comparison period, offset slightly by the positive foreign exchange differences of €159 thousand.

The EBIT margin came to 4.0%, a decrease of -4.4 p.p. against the comparison period.

No non-recurring expenses were incurred in the reporting period while in the first quarter of 2019 EBIT was impacted by the same non-recurring costs of €1,425 thousand commented on in the section relating to EBITDA. Net of this item EBIT would have come to €19,809 thousand (- 57.8%), with an EBIT margin that was -4.8 p.p. lower than in the comparison period.

With respect to the gross operating profit (EBITDA), EBIT was also influenced by higher depreciation and amortization as a result of the opening of new stores, investments in IT systems, as well as higher amortization for right-of-use assets.

The following table shows a breakdown of EBIT by segment.

	Q1 2020		EBITDA		Q1 2019	EBITDA	Change	Change %

(€ thousands)		Margin		Margin

EMEA	12,786		5.0%		25,826	9.1%	(13,040)	-50.5%


Americas	8,618		13.4%		10,345	16.4%	(1,727)	-16.7%


Asia Pacific	3,056		7.5%		8,401	18.9%	(5,345)	-63.6%


Corporate (*)	(9,970)		-2.7%		(11,698)	-3.0%	1,728	14.8%

Total	14,490		4.0%		32,874	8.4%	(18,384)	-55.9%

The following table shows the breakdown of EBIT by segment with reference to the recurring transactions:

	Q1 2020		EBITDA		Q1 2019	EBITDA	Change	Change %

(€ thousands)		Margin		Margin


EMEA	12,786		5.0%		27,251	9.6%	(14,465)	-53.1%


Americas	8,618		13.4%		10,345	16.4%	(1,727)	-16.7%

Asia Pacific	3,056		7.5%		8,401	18.9%	(5,345)	-63.6%


Corporate (*)	(9,970)		-2.7%		(11,698)	-3.0%	1,728	14.8%

Total	14,490		4.0%		34,299	8.8%	(19,809)	-57.8%

(*) Centralized costs are shown as a percentage of the Group's total sales.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Europe, Middle East and Africa

In the first three months of 2020 operating profit (EBIT) amounted to €12,786 thousand, a decrease of €13,040 thousand (-50.5%), including the positive foreign exchange differences of €154 thousand. The EBIT margin came to 5.0% (-4.1 p.p. against the first three months of 2019).

In the comparison period EBIT was impacted by the same non-recurring costs of €1,425 thousand commented on in the section relating to EBITDA. Net of this item EBIT would have come to €14,465 thousand (-53.1%), with an EBIT margin that was -4.6 p.p. lower than in the comparison period.

Americas

In the first three months of 2020 operating profit (EBIT) benefitted from positive foreign exchange differences of €260 thousand but fell €1,727 thousand (-16.7%) against the comparison period to €8,618 thousand. The EBIT margin came to 13.4%, down -3.0 p.p. against the first quarter of 2019.

Asia Pacific

In the first three months of 2020 operating profit (EBIT) fell €5,345 thousand (-63.6%) to €3,056 thousand due also to the negative foreign exchange differences of €257 thousand. The EBIT margin came to 7.5%, a decrease of -11.4 p.p. compared to the first quarter of 2019.

Corporate

The net costs of centralized Corporate functions at the EBIT level amounted to €9,970 thousand in the first three months of 2020 (2.7% of the revenues generated by the Group's sales and services), a decrease of €1,728 thousand with respect to the comparison period.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Profit before tax

(€ thousands)		First quarter 2020			First quarter 2019

	Recurring	Non-recurring	Total	Recurring	Non-recurring	Total

Profit before tax	7,499	-	7,499	27,717	(1,425)	26,292

Profit before tax amounted to €7,499 thousand in the first three months of 2020, a drop of €18,793 thousand (-71.5%) with respect to the comparison period which reflects the decrease in EBIT described above net of the slight increase in financial expenses stemming from the increase in gross debt following the Eurobond issued in mid-February. The gross profit margin came to 2.1% (-4.6 p.p. against the comparison period).

The result for first quarter 2019 was impacted by the same non-recurring costs of €1,425 thousand commented on in the section relating to EBITDA. Net of this item profit before tax would have been €20,218 thousand lower (-72.9%), while the gross profit margin would have been down by -5.0 p.p. against the comparison period.

Group net profit

(€ thousands)		First quarter 2020			First quarter 2019
	Recurring		Non-recurring	Total		Recurring	Non-	Total

				recurring


Group net profit	5,143		-	5,143		18,810	(1,062)	17,748

The Group's net profit came to €5,143 thousand in the first three months of 2020, down €12,605 thousand (-71.0%) against the comparison period, with a profit margin of 1.4% (-3.1 p.p. compared to the comparison period).

The result posted in the comparison period was impacted for €1,062 thousand by the same non-recurring costs commented on in the section relating to EBITDA, net of the tax effect. The decrease in recurring net profit reached €16,667 thousand (-72.7%), with a profit margin that was down -3.4 p.p. compared to the comparison period. This decrease is largely in line with the profit before tax commented on above. The period tax rate was 32.4% compared to 32.5% in the comparison period.

Interim Financial Report as at 31 March 2020 > Interim Management Report

BALANCE SHEET REVIEW

Consolidated balance sheet by geographical area (*)

(€ thousands)					03/31/2020


		EMEA		Americas		Asia Pacific		Eliminations		Total
Goodwill		848,693		124,421		248,761		-		1,221,875

Non-competition agreements, trademarks,
	221,939		9,613		36,685		-		268,237

customer lists and lease rights

Software, licenses, other intangible fixed
assets, fixed assets in progress and		69,668		20,352		8,215		-		98,235
advances
Tangible assets		156,322		9,730		26,481		-		192,533


Right-of-use assets		362,673		17,249		37,375		-		417,297



Financial ﬁxed assets		4,353		34,238		-		-		38,591

Other non-current ﬁnancial assets		29,779		416		1,078		-		31,273

Non-current assets		1,693,427		216,019		358,595		-		2,268,041

Inventories		62,377		4,368		4,128		-		70,873


Trade receivables		111,753		41,383		15,333		(15,254)		153,215


Other receivables		70,222		7,745		8,586		(7)		86,546
Current assets (A)		244,352		53,496		28,047		(15,261)		310,634

Operating assets		1,937,779		269,515		386,642		(15,261)		2,578,675

Trade payables		(142,220)		(43,387)		(19,229)		15,254		(189,582)


Other payables		(234,479)		(14,637)		(21,238)		7		(270,347)

Provisions for risks and charges (current
	(4,162)		(538)		-		-		(4,700)

portion)

Current liabilities (B)		(380,861)		(58,562)		(40,467)		15,261		(464,629)

Net working capital (A) - (B)		(136,509)		(5,066)		(12,420)		-		(153,995)

Derivative instruments		(3,726)		-		-		-		(3,726)


Deferred tax assets		72,953		682		5,139		-		78,774

Deferred tax liabilities		(70,607)		(18,869)		(10,746)		-		(100,222)

Provisions for risks and charges (non-
	(15,990)		(26,404)		(751)		-		(43,145)

current portion)

Liabilities for employees' beneﬁts (non-		(24,222)		(129)		(412)		-		(24,763)

current portion)

Loan fees		6,655		-		-		-		6,655



Other non-current liabilities		(131,870)		(8,617)		(2,047)		-		(142,534)
NET INVESTED CAPITAL		1,390,111		157,616		337,358		-		1,885,085

Group net equity										665,319



Minority interests										950
Total net equity										666,269

Net medium and long-term financial
									838,944
indebtedness

Net short-term financial indebtedness										(48,200)

Total net ﬁnancial indebtedness										790,744

Lease liabilities										428,072

Total lease liabilities & net financial

indebtedness	1,218,816

NET EQUITY, LEASE LIABILITIES AND NET		1,885,085

FINANCIAL INDEBTEDNESS

Interim Financial Report as at 31 March 2020 > Interim Management Report

The balance sheet items are analyzed by the Chief Executive Officer and the Top Management by geographical area without separation of the Corporate structures that are natively included in EMEA.

(€ thousands)			12/31/2019

	EMEA	Americas	Asia Pacific	Eliminations	Total

Goodwill	839,802	126,418	249,291	-	1,215,511
Non-competition agreements, trademarks,	224,288	10,189	35,830	-	270,307
customer lists and lease rights

Software, licenses, other intangible fixed
assets, fixed assets in progress and	67,386	20,068	9,747	-	97,201
advances
Tangible assets	158,390	10,450	27,739	-	196,579
Right-of-use assets	361,739	18,300	38,390	-	418,429
Financial ﬁxed assets	3,797	41,090		-	44,887
Other non-current ﬁnancial assets	30,833	389	1,060	-	32,282

Non-current assets	1,686,235	226,904	362,057	-	2,275,196

Inventories	55,834	4,433	4,325	-	64,592
Trade receivables	156,933	44,125	19,179	(15,018)	205,219
Other receivables	64,690	6,811	7,631	(3,134)	75,998

Current assets (A)	277,457	55,369	31,135	(18,152)	345,809

Operating assets	1,963,692	282,273	393,192	(18,152)	2,621,005

Trade payables	(127,909)	(40,928)	(23,571)	15,018	(177,390)
Other payables	(247,315)	(18,056)	(22,590)	3,134	(284,827)
Provisions for risks and charges (current	(3,650)	(592)		-	(4,242)
portion)

Current liabilities (B)	(378,874)	(59,576)	(46,161)	18,152	(466,459)

Net working capital (A) - (B)	(101,417)	(4,207)	(15,026)	-	(120,650)

Derivative instruments	(8,763)	-	-	-	(8,763)
Deferred tax assets	73,434	3,400	4,593	-	81,427
Deferred tax liabilities	(70,398)	(21,265)	(10,448)	-	(102,111)
Provisions for risks and charges (non-	(17,620)	(32,406)	(264)	-	(50,290)
current portion)

Liabilities for employees' beneﬁts (non-	(24,143)	(130)	(1,008)	-	(25,281)
current portion)

Loan fees	1,611	-	-	-	1,611
Other non-current liabilities	(133,005)	(8,714)	(1,982)	-	(143,701)

NET INVESTED CAPITAL	1,405,934	163,582	337,922	-	1,907,438

Group net equity					695,031
Minority interests					1,084

Total net equity					696,115

Net medium and long-term financial					752,648
indebtedness

Net short-term financial indebtedness					34,050

Total net ﬁnancial indebtedness					786,698

Lease liabilities

Total lease liabilities & net financial indebtedness

NET EQUITY, LEASE LIABILITIES AND NET FINANCIAL INDEBTEDNESS

424,625

1,211,323

1,907,438

Interim Financial Report as at 31 March 2020 > Interim Management Report

Non-current assets

Non-current assets amounted to €2,268,041 thousand at 31 March 2020, a decrease of €7,155 thousand against the €2,275,196 thousand recorded at 31 December 2019.

The changes in the period are explained (i) for €17,803 thousand by capital expenditure; (ii) for €22,557 thousand by right-of-use assets; (iii) for €54,013 thousand by acquisitions; (iv) for €50,365 thousand by depreciation, amortization and impairment which includes the amortization of the above right-of-use assets; (v) for €51,163 thousand by other net decreases relating primarily to foreign exchange losses.

The following table shows the breakdown of non-current assets by geographical region:

(€ thousands)			03/31/2020		12/31/2019	Change
	Goodwill		848,693		839,802	8,891
	Non-competition agreements, trademarks, customer lists and lease
		221,939		224,288	(2,349)
	rights

	Software, licenses, other intangible fixed assets, fixed assets in
		69,668		67,386	2,282
	progress and advances

EMEA	Tangible assets		156,322		158,390	(2,068)

	Right-of-use assets		362,673		361,739	934

	Financial ﬁxed assets		4,353		3,797	556

	Other non-current ﬁnancial assets		29,779		30,833	(1,054)

	Non-current assets		1,693,427		1,686,235	7,192
	Goodwill		124,421		126,418	(1,997)
	Non-competition agreements, trademarks, customer lists and lease
		9,613		10,189	(576)
	rights

	Software, licenses, other intangible fixed assets, fixed assets in
		20,352		20,068	284
	progress and advances

Americas	Tangible assets		9,730		10,450	(720)

	Right-of-use assets		17,249		18,300	(1,051)

	Financial ﬁxed assets		34,236		41,090	(6,854)

	Other non-current ﬁnancial assets		418		389	29

	Non-current assets		216,019		226,904	(10,885)
	Goodwill		248,761		249,291	(530)
	Non-competition agreements, trademarks, customer lists and lease
		36,685		35,830	855
	rights

	Software, licenses, other intangible fixed assets, fixed assets in
		8,215		9,747	(1,532)
	progress and advances

Asia Pacific	Tangible assets		26,481		27,739	(1,258)

	Right-of-use assets		37,375		38,390	(1,015)

	Financial ﬁxed assets		-		-	-

	Other non-current ﬁnancial assets		1,078		1,060	18
	Non-current assets		358,595		362,057	(3,462)

Interim Financial Report as at 31 March 2020 > Interim Management Report

Europe, Middle East and Africa

Non-current assets amounted to €1,693,427 thousand at 31 March 2020, an increase of €7,192 thousand against the €1,686,235 thousand recorded at 31 December 2019.

The increase is explained:

for €13,939 thousand, by acquisitions;
for €7,289 thousand, by investments in plant, property and equipment, relating primarily to the opening of new and renewal of existing stores;
for €6,833 thousand, by investments in intangible assets, relating primarily to further improvements of the CRM systems, digital marketing and a new business transformation system for back office functions (Human Resources, Procurement, Administration and Finance);
for €20,958 thousand, by right-of-use assets;
for €40,053 thousand, by amortization, depreciation and impairment which includes the amortization and depreciation of the right-of-use assets referred to above;
for €1,774 thousand, by other net decreases.

Americas

Non-current assets amounted to €216,019 thousand at 31 March 2020, a decrease of €10,885 thousand against the €226,904 thousand recorded at 31 December 2019.

The decrease is explained:

for €258 thousand, by investments in plant, property and equipment;
for €1,789 thousand, by investments in intangible assets;
for €736 thousand, by right-of-use assets;
for €110 thousand, by acquisitions;
for €3,258 thousand, by amortization and depreciation which includes the amortization and depreciation of the right-of-use assets referred to above;
for €10,520 thousand, by other net decreases relating primarily to foreign exchange losses.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Asia Pacific

Non-current assets amounted to €358,595 thousand at 31 March 2020, a decrease of €3,462 thousand against the €362,057 thousand recorded at 31 December 2019.

The decrease is explained:

for €1,530 thousand, by investments in plant, property and equipment;
for €104 thousand, by investments in intangible assets;
for €863 thousand, by right-of-use assets;
for €7,054 thousand, by amortization and depreciation which includes the amortization and depreciation of the right-of-use assets referred to above;
for €39,964 thousand, by acquisitions;
for €38,869 thousand, by other net decreases relating primarily to foreign exchange losses.

Net invested capital

Net invested capital came to €1,885,085 thousand at 31 March 2020, a decrease of €22,353 thousand against the €1,907,438 thousand recorded at 31 December 2019.

This decrease is attributable to the change in non-current assets described above and to the worsening in working capital.

The following table shows the breakdown of net invested capital by geographical area.

(€ thousands)	03/31/2020	12/31/2019	Change

EMEA	1,390,111	1,405,934	(15,823)

Americas	157,616	163,582	(5,966)

Asia Pacific	337,358	337,922	(564)
Total	1,885,085	1,907,438	(22,353)

Interim Financial Report as at 31 March 2020 > Interim Management Report

Europe, Middle East and Africa

Net invested capital came to €1,390,111 thousand at 31 March 2020, a decrease of €15,823 thousand against the €1,405,934 thousand recorded at 31 December 2019.

This decrease is attributable to the change in non-current assets described above and to the worsening in working capital.

Factoring without recourse in the period involved trade receivables with a face value of €18,905 thousand (€18,738 thousand in the same period of the prior year).

Americas

Net invested capital came to €157,616 thousand at 31 March 2020, a decrease of €5,966 thousand against the €163,582 thousand recorded at 31 December 2019.

This decrease is attributable to the change in non-current assets described above partially offset by the decrease of medium-long term liabilities and of deferred taxes.

Asia Pacific

Net invested capital came to €337,358 thousand at 31 March 2020, a decrease of €564 thousand against the €337,922 thousand recorded at 31 December 2019.

The decrease is attributable to the change in non-current assets described largely offset by the positive change in working capital.

Interim Financial Report as at 31 March 2020 > Interim Management Report

Net Financial Position

(€ thousands)	03/31/2020	12/31/2019	Change

Net medium and long-term financial indebtedness	838,944	752,648	86,296

Net short-term financial indebtedness	223,932	172,421	51,511

Cash and cash equivalents	(272,132)	(138,371)	(133,761)

Net financial indebtedness	790,744	786,698	4,046

Group net equity	665,319	695,031	(29,712)

Minority interests	950	1,084	(134)

Net Equity	666,269	696,115	(29,846)

Financial indebtedness/Group net equity	1.19	1.13

Financial indebtedness/net equity	1.19	1.13
Financial indebtedness/EBITDA	1.99	1.90

Net financial indebtedness, excluding lease liabilities, amounted to €790,744 thousand at 31 March 2020 reporting an increase of €4,046 thousand with respect to the amount at 31 December 2019.

The ability of ordinary operations to generate excellent cash flow was confirmed with free cash flow coming in at a positive €44,179 thousand (€16,241 thousand in the first three months of the prior year) after absorbing capital expenditure of €16,473 thousand (€18,601 thousand in the first quarter of 2019) and made it possible to sustain the net cash-outs made in the period for acquisitions (€41,745 thousand).

At 31 March 2020 the Group's total financial indebtedness, excluding lease liabilities, amounted to €790,744 thousand net of cash and cash equivalents totaling €272,132 thousand.

Long-term debt amounts to €838,944 thousand, €18,155 thousand of which reflects the long- term portion of deferred payments for acquisitions. The increase of €86,296 thousand is attributable to the issue of a €350,000 thousand bond (Eurobond 2020-2027) which made it possible to noticeably extend the average debt maturity and was used largely to repay a portion of the syndicated loan used for the GAES acquisition (€265,000 thousand).

Short-term debt amounts to €223,932 thousand, reporting an increase of €51,511 thousand with respect to the amount at 31 December 2019.

In addition to the hot money (140,000 thousand), drawn on in light of the Covid-19 health crisis to ensure that the company has a liquidity reserve, the short-term portion of debt includes the short-term portion of the syndicated loan used to finance the GAES acquisition (of which €39,750 thousand was repaid in April with the proceeds of the Eurobond issue), the short-term portion of the private placement (€18,255 thousand), the short-term portion of other long- term bank loans (€6,666 thousand), interest payable on bank loans and the private placement (€2,972 thousand) and the best estimate of the deferred payments for acquisitions (€10,672 thousand).

Interim Financial Report as at 31 March 2020 > Interim Management Report

The chart below shows debt maturities comparing them with the available cash and cash equivalents of €272.132 million and the unutilized portions of irrevocable credit lines which amount to €195 million. The others available credit lines amount to €102.8 million.

Debt Maturity & Cash Equivalents at 03.31.2020			350,0	1.062,9

(€ million)

		Eurobond

		Other bank loans


		Private placement					38,8

		Bilateral revolving committed medium-term lines				46,6



		Bank loans for GAES acquisition				58,3	79,5



		Hot money, bank overdraft and accrued interest

		Debt for acquisition and Others			128,3		79,5


		Gross debt


		Cash				17,3
		3,3	15,5	3,3	39,8
39,8
		0,8
150,5	0,5	1,3	0,7


1,7
7,3

-272,1

-195,0

In April 2020 the Group further strengthened its financial structure by signing/receiving irrevocable commitments with banks to sign new long-term loan agreements and committed credit lines for a total of €278 million and to extend the maturity of €210 million in existing committed credit lines to 2024 and 2025.

Interest expense on financial indebtedness amounted to €3,734 thousand at 31 March 2020, compared to €3,632 thousand at 31 March 2019.

The interest expense on leases accounted for in accordance with IFRS 16 amounted to €2,708 thousand compared to €2,842 thousand at 31 March 2019.

Interest income on bank deposits came to €36 thousand at 31 March 2020, compared to €30 thousand at 31 March 2019.

The reasons for the changes in net financial indebtedness are described in the next section on the statement of cash flows.

Interim Financial Report as at 31 March 2020 > Interim Management Report

CASH FLOW

The reclassified statement of cash flows shows the change in net financial indebtedness from the beginning to the end of the period.

Pursuant to IAS 7 the financial statements include a statement of cash flows that shows the change in cash and cash equivalents from the beginning to the end of the period.

(€ thousands)	First quarter 2020	First quarter 2019
OPERATING ACTIVITIES
Net profit (loss) attributable to the Group	5,143	17,748

Minority interests	(72)	(11)
Amortization, depreciation and impairment:


- Intangible fixed assets	15,204	13,610

- Tangible fixed assets	11,656	9,839

- Right-of-use assets	23,505	21,194
Total amortization, depreciation and impairment	50,365	44,643
Provisions, other non-monetary items and gain/losses from disposals	2,420	7,760

Group's share of the result of associated companies	(23)	(72)

Financial income and charges	7,014	6,654

Current and deferred income taxes	2,428	8,555
Change in assets and liabilities:


- Utilization of provisions	(2,748)	(1,150)

- (Increase) decrease in inventories	(8,406)	(6,903)

- Decrease (increase) in trade receivables	51,869	(757)

- Increase (decrease) in trade payables	12,324	(20,380)

- Changes in other receivables and other payables	(30,189)	10,517
Total change in assets and liabilities	22,850	(18,673)
Dividends received	-	-
Net interest charges	(5,863)	(5,733)
Taxes paid	(3,487)	(6,395)

Cash flow provided by (used in) operating activities before repayment of lease liabilities	80,775	54,476
Repayment of lease liabilities	(20,123)	(19,634)
Cash ﬂow generated from (absorbed) by operating activities	60,652	34,842
INVESTING ACTIVITIES:
Purchase of intangible ﬁxed assets	(8,726)	(5,843)

Purchase of tangible ﬁxed assets	(9,077)	(13,140)

Consideration from sale of tangible ﬁxed assets and businesses	1,330	382
Cash ﬂow generated from (absorbed) by investing activities	(16,473)	(18,601)
Cash ﬂow generated from operating and investing activities (Free cash ﬂow)	44,179	16,241
Business combinations (*)	(41,745)	(14,364)

(Purchase) sale of other investments and securities	-	-
Net cash ﬂow generated from acquisitions	(41,745)	(14,364)
Cash ﬂow generated from (absorbed) by investing activities	(58,218)	(32,965)

Interim Financial Report as at 31 March 2020 > Interim Management Report

(€ thousands)	First quarter 2020	First quarter 2019
FINANCING ACTIVITIES:

Fees paid on medium/long-term financing	(5,043)	-

Other non-current assets	134	1,089

Cash ﬂow generated from (absorbed) by ﬁnancing activities	(4,909)	1,089
Changes in net ﬁnancial indebtedness	(2,475)	2,966
Net ﬁnancial indebtedness at the beginning of the period	(786,698)	(840,856)

Effect of discontinued operations on net ﬁnancial indebtedness	-	-

Effect of exchange rate ﬂuctuations on net ﬁnancial indebtedness	(1,571)	(93)

Changes in net indebtedness	(2,475)	2,966
Net ﬁnancial indebtedness at the end of the period	(790,744)	(837,983)

(*) The item refers to the net cash flows used in the acquisition of businesses and equity investments.

The change in net financial debt of €2,475 thousand is attributable to:

Investing activities:
- capital expenditure on property, plant and equipment and intangible assets of €17,803 thousand relating primarily to the opening, renewal and repositioning of stores consistent with Amplifon's new brand image, CRM systems, digital marketing, as well as a new ERP system for back office functions (Human Resources, Procurement, Administration and Finance);
  Beginning, however, in March and in light of the Covid-19 outbreak, capex was limited to property, plant and equipment and intangible assets deemed essential to the Group's operations and which represent roughly 20-25% of the average annual capex;
- acquisitions amounting to €41,745 thousand, including the impact of the acquired companies' debt and the best estimate of the earn-out linked to sales and profitability targets payable over the next few years. Acquisitions were also suspended temporarily beginning in March;
- net proceeds from the disposal of assets of €1,330 thousand.
Operating activities:
- interest expense on financial indebtedness and other net financial expenses of €5,863 thousand;
- payment of taxes amounting to €3,487 thousand;
- payment of principle on lease obligations of €20,123 thousand;
- cash flow generated by operations of €90,125 thousand.
Financing activities which show a negative balance of €4,909 thousand, attributable mainly to the payment of fees relating to a bond issue (Eurobond 2020-2027).

Net debt was also impacted by negative foreign exchange differences of €1,571 thousand. During the first quarter of 2020 the cash flow has been negatively impacted by non-recurring transactions related to the GAES integration costs occurred during 2019 for €777 thousand.

Interim Financial Report as at 31 March 2020 > Interim Management Report

ACQUISITION OF COMPANIES AND BUSINESSES

Prior to the temporary suspension of acquisitions beginning in March in order to protect cash flow from the financial impact of the Covid-19 outbreak, the Group's external growth had continued. In the first three months of 2020, 75 points of sale were acquired for a total investment of €41,745 thousand, including the debt consolidated and the best estimate of the earn-out linked to sales and profitability targets payable over the next few years.

More in detail during the first three months of 2020:

5 points of sale were acquired in France;
10 points of sale were acquired in Germany;
6 points of sale were acquired in Belgium;
54 new points of sale were added to the Group as a result of the acquisition of Attune Hearing Pty Ltd in Australia.

COVID-19 EMERGENCY MEASURES

The Company is monitoring the evolution of the Covid-19 outbreak daily with the utmost attention and promptly implemented an effective plan of action to ensure the health and safety of all its people and customers, as well as limit any financial impact.

Measures taken to protect the Company's stakeholders during the Covid-19 crisis

Since the start of the Covid-19 outbreak, the Company's priority has been the health of its people, while ensuring the complete safety of its customers. Amplifon, therefore, instituted a task force at both a Group and country level in order to coordinate and implement immediately all the preventive measures needed to ensure the health of its employees, customers and other stakeholders, in line with the security measures and recommendations indicated by the governmental authorities in the different countries. These measures include the development and adoption of a new Group-widein-store protocol (use of personal protective equipment by hearing care professionals and client advisers, visits on an appointment-only basis following an in-depth telephone medical consultation in order to assess the customers' health conditions, strict social distancing and hygiene procedures, etc.), smart working practices for back-office personnel and other safety measures.

Measures to mitigate the financial impact of the Covid-19 crisis

Given the negative impact on demand in the hearing care retail market due to the restrictive or even general lockdown measures adopted by the governmental authorities in various countries as a result of the Covid-19 crisis, the Company moved very quickly and decisively to implement

Interim Financial Report as at 31 March 2020 > Interim Management Report

a series of measures to limit the effects. More in detail, the Company adopted the following cost cutting measures:

Labor costs: activation of the social safety nets provided for in the Countries where the Group operates, proportional reduction in variable compensation, voluntary pay cuts by management and a hiring freeze
Marketing costs: significant reduction of these costs
Other costs: suspension of all discretionary costs and renegotiation of contracts with several suppliers and landlords.

Furthermore, with a view to safeguarding its net financial position, the Company also temporarily suspended all non-essential capex and M&A cash-outs, as well as, as previously announced and approved during the Shareholders' Meeting held on April 24th, 2020, allocated the year's earnings as retained earnings.

Lastly, as described in the section relating to events subsequent to the close of the quarter, in March the Company began refinancing its credit lines in order to increase the availability of financing and irrevocable credit lines by a total of roughly 300 million euros, as well as extend maturities of the loans and the existing irrevocable credit lines. More in detail, in April:

new loan agreements were signed for a total of €243 million and new irrevocable credit lines amounting to €15 million, while an additional €20 million in irrevocable credit lines was approved by the banks;
the maturities of €180 million in existing loans which expired originally in 2021-2022

were extended to 2024-2025 and the extension through 2025 of an additional €30 million in irrevocable credit lines was approved.

Once the refinancing is completed, the average maturity of Amplifon's debt will be around 5 years and the Company will benefit from a strong liquidity position totaling €550 million including cash on balance sheet and undrawn committed revolving facilities.

Interim Financial Report as at 31 March 2020 > Interim Management Report

OUTLOOK

Given the current uncertainty as to the duration and intensity of the health and socio- economic, crisis caused by Covid-19, and the timing of a possible waning of the crisis and the consequent return to normalcy, the Company feels that it is still not possible to estimate the impact that the epidemic will have on the current year.

Consequently, the Company thinks it opportune to withdraw the guidance issued in March 2018 and updated subsequently in March 2019 to reflect the GAES acquisition. The Company will provide updates in this regard as visibility of the conditions increases and it becomes possible to make more accurate estimates as to the impact of the Covid-19 outbreak.

As mentioned above, the Company took immediate and effective action to identify and implement a series of measures designed to limit the financial impact of Covid-19 focused on, specifically, strong cost cutting, protection of the net financial position and strengthening the Company's already solid financial profile. The results of these measures, though activated in March, will be realized mainly in the second quarter during which, given the lockdowns adopted in a majority of countries worldwide, we believe the negative effects stemming from Covid-19 will be more intense, even though to what degree is still uncertain given the lack of visibility as to when the crisis might subside and there will be a return to normalcy.

Lastly, despite the negative impact that Covid-19 will have on hearing care market demand in the short-term, the Company still expects to out-perform the market and, above all, is confident that its unique competitive positioning, along with the strong fundamentals of its market, will allow the Company to deliver renewed strong growth over the medium-term.

CONDENSED INTERIM CONSOLIDATED FINANCIAL

STATEMENTS AS AT 31 MARCH 2020

Interim Report as at 31 March 2020 > Consolidated Financial Statements

CONSOLIDATED STATEMENT OF FINANCIAL POSITION

(€ thousands)		03/31/2020	12/31/2019	Change
ASSETS
Non-current assets
Goodwill	Note 2	1,221,875	1,215,511	6,364

Intangible fixed assets with ﬁnite useful life	Note 3	366,472	367,508	(1,036)

Tangible fixed assets	Note 4	192,533	196,579	(4,046)

Right-of-use assets	Note 5	417,297	418,429	(1,132)
Equity-accounted investments		2,337	2,314	23

Hedging instruments		16,123	8,153	7,970

Deferred tax assets		78,774	81,427	(2,653)

Contract costs		7,065	7,339	(274)

Other assets		60,462	67,516	(7,054)
Total non-current assets		2,362,938	2,364,776	(1,838)
Current assets
Inventories		70,873	64,592	6,281

Trade receivables		153,215	205,219	(52,004)

Contract costs		4,674	4,386	288

Other receivables		81,812	71,553	10,259

Hedging instruments		2,732	2,201	531

Other financial assets		177	240	(63)

Cash and cash equivalents		272,132	138,371	133,761
Total current assets		585,615	486,562	99,053
TOTAL ASSETS		2,948,553	2,851,338	97,215

Interim Report as at 31 March 2020 > Consolidated Financial Statements

(€ thousands)		03/31/2020	12/31/2019	Change
LIABILITIES
Net Equity
Share capital	Note 6	4,528	4,528	-
Share premium reserve		202,712	202,712	-

Treasury shares		(28,302)	(29,131)	829

Other reserves		(59,871)	(24,669)	(35,202)

Retained earnings		541,109	432,925	108,184

Profit (loss) for the period		5,143	108,666	(103,523)
Group net equity		665,319	695,031	(29,712)
Minority interests		950	1,084	(134)
Total net equity		666,269	696,115	(29,846)
Non-current liabilities
Medium/long-term financial liabilities	Note 8	830,817	750,719	80,098

Lease liabilities	Note 9	328,964	343,040	(14,076)
Provisions for risks and charges		43,145	50,290	(7,145)

Liabilities for employees' beneﬁts		24,763	25,281	(518)

Hedging instruments		4,817	4,290	527

Deferred tax liabilities		100,222	102,111	(1,889)

Payables for business acquisitions		18,155	13,527	4,628

Contract liabilities		133,850	135,052	(1,202)

Other long-term liabilities		8,685	8,649	36
Total non-current liabilities		1,493,418	1,432,959	60,459
Current liabilities
Trade payables		189,582	177,390	12,192

Payables for business acquisitions		10,672	10,245	427

Contract liabilities		95,046	97,725	(2,679)

Tax liabilities		44,523	40,334	4,189

Other payables		130,142	146,223	(16,081)

Hedging instruments		-	28	(28)

Provisions for risks and charges		4,699	4,242	457

Liabilities for employees' beneﬁts		636	545	91
Short-term financial liabilities	Nota 8	214,458	163,947	50,511

Lease liabilities	Note 9	99,108	81,585	17,523
Total current liabilities		788,866	722,264	66,602
TOTAL LIABILITIES		2,948,553	2,851,338	97,215

Interim Report as at 31 March 2020 > Consolidated Financial Statements

CONSOLIDATED INCOME STATEMENT

(€ thousands)		First quarter 2020		First quarter 2019

				Non-				Non-
		Recurring		recurring		Total	Recurring	recurring	Total	Change
Revenues from sales and services		363,476		-		363,476	391,973	-	391,973	(28,497)

Operating costs		(299,902)		-		(299,902)	(313,334)	(1,425)	(314,759)	14,857

Other income and costs		1,281		-		1,281	303	-	303	978
Gross operating profit (EBITDA)		64,855		-		64,855	78,942	(1,425)	77,517	(12,662)

Amortization, depreciation and

impairment

Amortization of intangible fixed assets	Note 3	(15,206)		-		(15,206)	(13,610)	-	(13,610)	(1,596)


Depreciation of tangible fixed assets	Note 4	(11,269)		-		(11,269)	(9,743)	-	(9,743)	(1,526)

Right-of-use depreciation	Note 5	(23,505)		-		(23,505)	(21,195)	-	(21,195)	(2,309)
Impairment losses and reversals of
	(385)		-		(385)	(95)	-	(95)	(290)
non-current assets

		(50,365)		-		(50,365)	(44,643)	-	(44,643)	(5,722)
Operating result		14,490		-		14,490	34,299	(1,425)	32,874	(18,384)

Financial income, expenses and value

adjustments to ﬁnancial assets

Group's share of the result of

associated companies valued at equity
	23		-		23	72	-	72	(49)
and gains/losses on disposals of equity

investments
Other income and expenses,
impairment and revaluations of		-		-		-	-	-	-	-
ﬁnancial assets
Interest income and expenses		(3,697)		-		(3,697)	(3,602)	-	(3,602)	(95)

Interest expenses on lease liabilities		(2,708)		-		(2,708)	-	-	-	134

Other ﬁnancial income and expenses		(355)		-		(355)	(2,892)	-	(2,892)	(305)

Exchange gains and losses		(260)		-		(260)	185	-	185	(445)
Gain (loss) on assets accounted at fair
	6		-		6	(345)	-	(345)	351
value

		(6,991)		-		(6,991)	(6,582)	-	(6,582)	(409)
Profit (loss) before tax		7,499		-		7,499	27,717	(1,425)	26,292	(18,793)

Current and deferred income tax	Note

10

Current tax		(5,249)		-		(5,249)	(11,448)	(363)	(11,085)	5,836

Deferred tax		2,821		-		2,821	(2,530)	-	(2,530)	291
		(2,428)		-		(2,428)	(8,918)	363	(8,555)	6,127

Total net profit (loss)		5,071		-		5,071	18,799	(1,062)	17,737	(12,666)

Net profit (loss) attributable to		(72)		-		(72)	(11)	-	(11)	(61)
Minority interests

Net profit (loss) attributable to the		5,143		-		5,143	18,810	(1,062)	17,748	(12,605)
Group

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Earnings per share (€ per share)	Note 12	First quarter 2020		First quarter 2019

Earnings per share
-	Basic		0.02305		0.08043
-	Diluted		0.02272		0.07898

STATEMENT OF CONSOLIDATED COMPREHENSIVE INCOME


(€ thousands)		03/31/2020		03/31/2019

Net income (loss) for the period		5,071		17,737

Other comprehensive income (loss) that will not be reclassified subsequently to profit or
loss:
Remeasurement of defined benefit plans		691		974
Tax effect on components of other comprehensive income that will not be reclassified
	(218)		(320)
subsequently to profit or loss

Total other comprehensive income (loss) that will not be reclassified subsequently to profit		473		654
or loss after the tax effect (A)

Other comprehensive income (loss) that will be reclassified subsequently to profit or loss

Gains/(losses) on cash flow hedging instruments		5,354		(892)

Gains/(losses) from Foreign Currency Basis Spread on hedging instruments		(64)		73
Gains/(losses) on exchange differences from translation of financial statements of foreign
	(38,488)		10,994
entities

Tax effect on components of other comprehensive income that will be reclassified
	(1,270)		196
subsequently to profit or loss

Total other comprehensive income (loss) that will be reclassified subsequently to profit or		(34,468)		10,371
loss after the tax effect (B)

Total other comprehensive income (loss) (A)+(B)		(33,995)		11,025

Comprehensive income (loss) for the period		(28,924)		28,762


Attributable to the Group		(28,790)		28,713

Attributable to Minority interests		(134)		49

Interim Report as at 31 March 2020 > Consolidated Financial Statements

STATEMENT OF CHANGES IN CONSOLIDATED EQUITY

						Stock
	Share	Share	Legal	Other	Treasury	option
(€ thousands)	premium	shares	and stock
capital	reserve	reserves
	reserve	reserve	grant

						reserve
Balance at 01/01/2019	4,527	202,565	934	3,636	(50,933)	34,569

Allocation of profit (loss) for 2018
Share capital increase
Treasury shares
Dividend distribution
Notional cost of stock options and stock grants						3,747
Other changes					482	(303)
Total comprehensive income (loss) for the period

Hedge accounting
Actuarial gains (losses)
Translation differences
Result of the period 2019

Balance at 03/31/2019

4,527

202,565

934

3,636

(50,451)

38,013

Stock

Legal

Other

Treasury

option

(€ thousands)

premium

and stock

capital

reserve

reserves

reserve

grant

reserve

Balance at 01/01/2020

4,528

202,712

934

3,636

(29,131)

34,963

Allocation of profit (loss) for 2019

Share capital increase

Treasury shares

Dividend distribution

Notional cost of stock options and stock grants Other changes

Stock Grant
Inflation accounting
Other changes

Total comprehensive income (loss) for the period

Hedge accounting
Actuarial gains (losses)
Translation differences
Result of the period 2020

	(610)
829	(659)
829	(659)

Balance at 03/31/2020	4,528	202,712	934	3,636	(28,302)	33,694

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Cash flow	Foreign					Total
Curr. Basis	Actuarial gains	Retained	Translation	Profit (loss)	Minority	Total net
hedge	Shareholders'
Spread	and losses	earnings	differences	for the period	interests	equity
reserve	equity
Reserve

(8,012)	-	(7,123)	362,503	(48,190)	100,443	594,919	1,028	595,947
			100,443		(100,443)	-		-
						-		-
						-		-
						-		-
						3,747		3,747
843	(843)		(373)			(194)	86	(108)
(678)	55	654		10,934	17,748	28,713	49	28,762
(678)	55					(623)		(623)
		654				654		654
				10,934		10,934	60	10,994
					17,748	17,748	(11)	17,737
(7,847)	(788)	(6,469)	462,573	(37,256)	17,748	627,185	1,163	628,348

Cash flow	Foreign					Total
Curr. Basis	Actuarial gains	Retained	Translation	Profit (loss)	Minority	Total net
hedge	Shareholders'
Spread	and losses	earnings	differences	for the period	interests	equity
reserve	equity
Reserve

(5,462)	(748)	(11,048)	432,925	(46,944)	108,666	695,031	1,084	696,115
			108,666		(108,666)	-		-
						-		-
						-		-
						-		-
						(610)		(610)
			(482)			(312)		(312)
			(170)			-		-
						-		-
			(312)			(312)		(312)
4,068	(48)	473	-	(38,426)	5,143	(28,790)	(134)	(28,924)
4,068	(48)					4,020		4,020
		473				473		473
				(38,426)		(38,426)	(62)	(38,488)
					5,143	5,143	(72)	5,071
(1,394)	(796)	(10,575)	541,109	(85,370)	5,143	665,319	950	666,269

Interim Report as at 31 March 2020 > Consolidated Financial Statements

STATEMENT OF CONSOLIDATED CASH FLOWS

		First quarter		First quarter
(€ thousands)		2020		2019
OPERATING ACTIVITIES
Net profit (loss)		5,071		17,737
Amortization, depreciation and impairment:


- intangible fixed assets		15,204		13,610

- tangible fixed assets		11,656		9,839

- right-of-use assets		23,505		21,194

- goodwill		-		-

Provisions, other non-monetary items and gain/losses from disposals		2,420		7,760

Group's share of the result of associated companies		(23)		(72)

Financial income and expenses		7,014		6,654

Current and deferred taxes		2,428		8,555

Cash ﬂow from operating activities before change in working capital		67,275		85,277

Utilization of provisions		(2,748)		(1,150)

(Increase) decrease in inventories		(8,406)		(6,903)

Decrease (increase) in trade receivables		51,869		(757)

Increase (decrease) in trade payables		12,324		(20,380)

Changes in other receivables and other payables		(30,189)		10,517

Total change in assets and liabilities		22,850		(18,673)

Dividends received		-		-

Interest received (paid)		(5,264)		(5,344)

Taxes paid		(3,487)		(6,395)
Cash ﬂow generated from (absorbed by) operating activities (A)		81,374		54,865
INVESTING ACTIVITIES:
Purchase of intangible fixed assets		(8,726)		(5,843)

Purchase of tangible ﬁxed assets		(9,077)		(13,140)

Consideration from sale of non-current assets		1,330		382
Cash ﬂow generated from (absorbed by) operating investing activities (B)		(16,473)		(18,601)
Purchase of subsidiaries and business units		(44,519)		(14,633)

Increase (decrease) in payables for business acquisitions		5,160		(5,084)

(Purchase) sale of other investments and securities		-		-
Cash ﬂow generated from (absorbed by) acquisition activities (C)		(39,359)		(19,717)
Cash ﬂow generated from (absorbed by) investing activities (B+C)		(55,832)		(38,318)
FINANCING ACTIVITIES:
Increase (decrease) in financial payables		132,529		3,015

(Increase) decrease in ﬁnancial receivables		-		(169)

Derivative instruments and other non-current assets		-		-

Commissions paid for medium/long-term financing		(5,043)		-

Principal portion of lease payments		(20,123)		(19,634)

Other non-current assets and liabilities		134		1,089

Treasury shares purchase		-		-

Dividends distributed		-		-
Capital increases and minority shareholders' contributions and dividends paid to third
	-		-
parties by subsidiaries

Cash ﬂow generated from (absorbed by) ﬁnancing activities (D)		107,497		(15,699)

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Net increase in cash and cash equivalents (A+B+C+D)	133,039	848

	First quarter	First quarter
(€ thousands)	2020	2019
Cash and cash equivalents at beginning of period	138,371	89,915

Effect of exchange rate ﬂuctuations on cash & cash equivalents	(2,052)	745

Liquid assets acquired	2,774	269

Flows of cash and cash equivalents	133,039	848
Cash and cash equivalents at end of period	272,132	91,777

Related-party transactions relate to lease of the main office and certain stores, to recharges of maintenance costs and general services of the above-mentioned buildings and to commercial transactions, personnel costs and loans. Such transactions are detailed in Note 14 and do not have a material impact on the Group's financial flows.

SUPPLEMENTARY INFORMATION TO THE STATEMENT OF

CONSOLIDATED CASH FLOWS

The fair values of the assets and liabilities acquired are summarized in the table below:

	First quarter	First quarter
(€ thousands)	2020	2019
- Goodwill	35,957	10,636

- Customer lists	5,477	6,749

- Trademarks and non-competition agreements	5,110	-

- Other intangible fixed assets	370	62

- Tangible ﬁxed assets	2,200	527

- Right-of-use assets	4,741	356

- Current assets	4,680	1,810


- Provisions for risks and charges	(742)	(4)

- Current liabilities	(6,537)	(2,365)

- Other non-current assets and liabilities	(6,712)	(3,728)

- Minority interests	-	-
Total investments	44,544	14,043
Net financial debt acquired	(25)	590
Total business combinations	44,519	14,633
(Increase) decrease in payables through business acquisition	(5,160)	5,084
Purchase (sale) of other investments and securities		-
-
Cash ﬂow absorbed by (generated from) acquisitions	39,359	19,717
(Cash and cash equivalents acquired)	(2,774)	(269)
Net cash flow absorbed by (generated from) acquisitions	36,585	19,448

Interim Report as at 31 March 2020 > Consolidated Financial Statements

NOTES

1. General information

The Amplifon Group is a global leader in the distribution of hearing solutions and the fitting of customized products.

The parent company, Amplifon S.p.A. is based in Milan, in Via Ripamonti 133. The Group is controlled directly by Ampliter S.r.l. which is owned through a majority stake (93.82% as at 03/31/2020) by Amplifin S.p.A. which is fully controlled by Susan Carol Holland.

The condensed interim consolidated ﬁnancial statements at 31 March 2020 have been prepared in accordance with Article 154-bis of Legislative Decree 58/1998 (Consolidated finance act) and subsequent amendments and with International Accounting Standards and the implementation regulations set out in Article 9 of legislative decree no. 38 of 28 February 2005. These standards include the IAS and IFRS issued by the International Accounting Standard Board, as well as the SIC and IFRIC interpretations issued by the International Financial Reporting Interpretations Committee, which were endorsed in accordance with the procedure set out in Article 6 of Regulation (EC) no. 1606 of 19 July 2002 by 31 March 2020. The International Accounting Standards endorsed after that date and before the preparation of these condensed interim consolidated ﬁnancial statements are adopted in the preparation of the condensed interim consolidated ﬁnancial statements only if early adoption is allowed by the Endorsing Regulation and the standard itself and if the Group has elected to do so.

The condensed interim consolidated financial statements at 31 March 2020 do not include all the additional information required by the annual financial statements, and must be read together with the annual consolidated financial statements of the Group at 31 December 2019.

The publication of the condensed interim consolidated ﬁnancial statements of the Amplifon Group at 31 March 2020 was authorized by a resolution of the Board of Directors of 29 April 2020 which approved their publication.

Pursuant to the Consob Communication of 28 July 2006, it is specified that during the first three months of 2020 the Group did not carry out atypical and/or unusual transactions, as defined by the Communication itself.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

2. Acquisitions and goodwill

During the first three months of 2020 the Group continued its external growth and finalized many acquisitions with the aim of increasing the coverage: specifically, 21 points of sale were purchased in the EMEA region and 54 in the APAC region.

The total investment, including the debt consolidated and the best estimate of the net change in the earn-out linked to sales and profitability targets payable over the next few years, amounted to €41,745 thousand.

The variations of goodwill and of the amounts recognized as such, stemming from the acquisitions performed during the period, are reported in the table below and shown by cash generating unit.

	Value at	Business				Net carrying
	Disposals	Impairment	Other net changes		value at
	12/31/2019	combinations
(€ thousands)					03/31/2020

EMEA	839,802	8,994	-	-	(103)	848,693

AMERICAS	126,418	110	-	-	(2,107)	124,421

APAC	249,291	26,853	-	-	(27,383)	248,761
Total	1,215,511	35,957	-	-	(29,593)	1,221,875

"Business combinations" refers to the temporary allocation to goodwill relating to the portion of the purchase price paid which is not directly attributable to the fair value of assets and liabilities but is rather based on the positive contribution to cash flow that is expected to be made for an indefinite period of time.

The item "Other net changes" is almost entirely related to differences in exchange rates.

3. Intangible assets

The following tables show the changes in intangible fixed assets.

		Accumulated					Accumulated
		amortization					amortization
		and write-	Net book				and write-
	Historical cost	downs at	value at		Historical cost at		downs at		Net book value at
(€ thousands)	at 12/31/2019	12/31/2019	12/31/2019		03/31/2020		03/31/2020		03/31/2020
Software	151,863	(100,820)	51,043		161,746		(105,152)		56,594


Licenses	21,836	(14,762)	7,074		22,022		(15,633)		6,389



Non-competition agreements	7,342	(6,693)	649		7,761		(6,941)		820

Customer lists	378,407	(167,075)	211,332		376,782		(169,870)		206,912

Trademarks and concessions	82,052	(24,599)	57,453		83,473		(23,718)		59,755



Other	28,423	(12,022)	16,401		27,942		(12,680)		15,262
Fixed assets in progress and
23,556	-	23,556		20,740		-		20,740


advances

Total	693,479	(325,971)	367,508		700,466		(333,994)		366,472

Interim Report as at 31 March 2020 > Consolidated Financial Statements

	Net book value				Business		Other		Net book
	Investments	Disposals	Amortization	Impairment	net		value at
	at 12/31/2019	combinations
(€ thousands)					changes		03/31/2020

Software	51,043	819	-	(4,881)	23	2	9,588		56,594

Licenses	7,074	11	-	(924)	-	-	228		6,389
Non-competition
649	-	-	(163)	-	-	334		820
agreements

Customer lists	211,332	-	-	(7,100)	5,477	-	(2,797)		206,912
Trademarks and
57,453	-	-	(1,418)	5,110	-	(1,390)		59,755
concessions

Other	16,401	29	(135)	(720)	-	-	(313)		15,262
Fixed assets in

progress and	23,556	7,867	-	-	347	-	(11,030)		20,740
advances
Total	367,508	8,726	(135)	(15,206)	10,957	2	(5,380)		366,472

The variation of the item "Business combinations" is detailed as follows:

For €4,255 thousand to the temporary allocation of the considerations paid for the acquisitions made in the EMEA region;
For €6,702 thousand to the temporary allocation of the consideration paid for the acquisitions made in the APAC region.

The increase in intangible assets in the period is attributable primarily to investments in CRM systems, in digital marketing and in the new system of business transformation for the back- office functions (HR, Procurement and Administration and Finance).

"Other net changes" refers primarily to exchange rate fluctuations during the period and to the recognition of work in progress completed in the period and relating to the specific items in the financial statements.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

4. Tangible fixed assets

The following tables show the changes in tangible fixed assets.

		Accumulated						Accumulated
		amortization						amortization
		and write-	Net book					and write-
	Historical cost		downs at	value at		Historical cost at			downs at		Net book value
(€ thousands)	at 12/31/2019	12/31/2019	12/31/2019		03/31/2020			03/31/2020		at 03/31/2020
Land	209		-	209		206				-			206

Buildings, constructions and

239,688		(150,402)	89,286		237,868			(152,112)			85,756
leasehold improvements

Plant and machines	59,788		(42,305)	17,483		60,990			(43,581)			17,409

Industrial and commercial
50,506		(36,523)	13,983		49,994			(36,897)			13,097

equipment


Motor vehicles	3,127		(2,185)	942		3,168			(2,293)			875

Computers and office machinery	62,500		(46,956)	15,544		64,268			(48,910)			15,358


Furniture and fittings	125,814		(79,300)	46,514		126,361			(81,941)			44,420


Other tangible fixed assets	3,364		(889)	2,475		3,316				(940)			2,376
Fixed assets in progress and
10,143		-	10,143		13,036				-			13,036

advances

Total	555,139		(358,560)	196,579		559,207			(366,674)			192,533


	Net book					Business			Other		Net book
	value at Investments	Disposals	Amortization	Impairment			net		value at
(€ thousands)	12/31/2019					combinations			changes		03/31/2020

Land	209	-	-	-	-		-		(3)		206
Buildings, constructions and
89,286	2,686	(14)	(4,729)	53		(281)	(1,245)		85,756
leasehold improvements

Plant and machines	17,483	702	(30)	(1,001)	448		(31)	(162)		17,409
Industrial and commercial
13,983	128	(20)	(834)	57		(4)	(213)		13,097
equipment

Motor vehicles	942	-	(49)	(63)	62		-		(17)		875
Computers and office
15,544	890	(695)	(1,905)	778		(3)		749		15,358
machinery

Furniture and fittings	46,514	1,106	(8)	(2,668)	689		(59)	(1,154)		44,420

Other tangible fixed assets	2,475	20	(18)	(69)	-		(9)		(23)		2,376
Fixed assets in progress and

10,143	3,545	(6)	-	113		-	(759)		13,036
advances

Total	196,579	9,077	(840)	(11,269)	2,200		(387)	(2,827)		192,533

The investments made in the period refer primarily to network expansion with the opening of new stores and renewal of existing ones based on the Group's new brand image.

The variation of the item "Business combinations" is related:

for €405 thousand, is related to the temporary allocation of the price related to the acquisitions made in the EMEA region;
for €1,795 thousand, is related to the temporary allocation of the price related to the acquisitions made in the APAC region.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

5. Right-of-use assets

Right-of-use assets are reported here below:

			Accumulated								Accumulated
			amortization								amortization
			and write-								and write-
		Historical cost	downs at	Net book value		Historical cost			downs at		Net book value
(€ thousands)		at 12/31/2019	12/31/2019	at 12/31/2019		at 03/31/2020			03/31/2020			at 03/31/2020
Shops and offices		490,070	(82,424)	407,646		508,387			(101,878)			406,509



Motor vehicles		16,875	(6,625)	10,250		17,516				(7,184)			10,332


Electronic machinery		694		(161)		533			638				(182)		456

Total		507,639	(89,210)	418,429		526,541			(109,244)			417,297


	Net book							Business					Other		Net book
	value at	Investments	Disposals	Amortization			Impairment	net			value at
	combinations
(€ thousands)	12/31/2019									changes			03/31/2020

Shops and offices	407,646	22,932	(1,063)		(22,170)		4,741			-	(5,577)			406,509

Motor vehicles	10,250	1,646	(108)		(1,298)		-			-	(158)			10,332
Electronic
533	3	(3)		(37)		-			-	(40)			456
machinery

Total	418,429	24,581	(1,174)		(23,505)		4,741			-	(5,775)			417,297

6. Share capital

At 31 March 2020 the share capital comprised 226,388,620 ordinary shares with a par value of €0.02 fully paid in and subscribed. The share capital is unchanged with respect to 31 December 2019.

A total of 93,060 of the performance stock grant rights were exercised in the period, as a result of which the Company transferred the same number of treasury shares to the beneficiaries.

In the period there were no purchases of treasury shares.

The total amount of treasury shares held at 31 March 2020 equals 3,176,027 or 1.403% of the parent's share capital.

Information relating to the treasury shares held is shown below.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

		Average purchase price (Euro)		Total amount
	N. of shares		(€ thousands)

	FV of transferred rights (Euro)




Held at 12/31/2019	3.269.087	8,911		29.131

Purchases



Transfers due to exercise of performance stock grants	(93.060)	8,911		(829)


Held at 03/31/2020	3.176.027	8,911		28.302

7. Net financial position

In accordance with the requirements of the Consob communication dated 28 July 2006 and in compliance with the CESR (now ESMA) recommendation of 10 February 2005 "Recommendations for the consistent implementation of the European Commission's Regulation on Prospectuses", the Group's net ﬁnancial position at 31 March 2020 was as follows:


(€ thousands)		03/31/2020		12/31/2019	Change

Cash and cash equivalents		(272,132)		(138,371)	(133,761)
Private placement 2013-2025		18,255		17,803	452

Payables for business acquisitions		10,672		10,245	427
Bank overdraft and other short-term loans from third parties
	194,024		141,032	52,992
(including current portion of medium/long-term debt)

Other net financial payables		3,714		5,594	(1,880)

Hedging derivatives		(2,733)		(2,253)	(480)
Short-term ﬁnancial position		(48,200)		34,050	(82,250)

Private placement 2013-2025		100,402		97,917	2,485

Eurobond 2020-2027		350,000		-	350,000

Other medium/long-term debt		385,418		653,751	(268,333)

Hedging derivatives		(15,031)		(12,547)	(2,484)

Medium/long-term acquisition payables		18,155		13,527	4,628

Net medium and long-term financial position		838,944		752,648	86,296

Net financial position		790,744		786,698	4,046

Lease liabilities - current portion		99,108		81,585	17,523

Lease liabilities - non-current portion		328,964		343,040	(14,076)

Lease liabilities		428,072		424,625	3,447

Total lease liabilities & net financial debt		1,218,816		1,211,323	7,493

The medium/long-term portion of the net financial position, excluding the lease liabilities, reached €838,944 thousand at March 31st, 2020 compared to €752,648 thousand at 31 December 2019, a difference of €86,296 thousand. The increase in the period relates primarily to a €350,000 thousand bond issue (Eurobond 2020-2027)which was used largely to repay a portion of the syndicated loan used for the GAES acquisition (€265,000 thousand).

Interim Report as at 31 March 2020 > Consolidated Financial Statements

The short-term portion of the net financial position, excluding the lease liabilities, rose €82,250 thousand, going from a negative €34,050 thousand at 31 December 2019 to a positive €48,200 thousand at 31 March 2020, The short-termportion refers primarily to hot money of €140,000 thousand (drawn on in light of the Covid-19health crisis to ensure that the company has a liquidity reserve), the short-termportion of the syndicated loan (€39,750 thousand), the short-termportion of the private placement (€18,255 thousand), the short term portion of other long-termbank loans (€6,666 thousand), interest payable on bank loans and the private placement (€2,972 thousand), the best estimate of the deferred payments for acquisitions (€10,672 thousand), as well as cash and cash equivalents of €272,132 thousand.

In order to reconcile the above items with the statement of financial position, a breakdown of the following items is provided.

Bank loans, Eurobond 2020-2027 and the private placement 2013-2025 are shown in the statutory statement of financial position:

under the caption "Medium/long-term financial liabilities" for the non-current portion.

(€ thousands)		03/31/2020


Private placement 2013-2025		100,402


Eurobond 2020-2027		350,000



Syndicated loan for GAES acquisition		198,750


Other medium/long-term bank loans		186,668
Fees for Eurobond 2020-2027, fees for bank loans, private placement 2013-2025 and Syndicated loan for
	(5,003)

GAES acquisition


Medium/long-term financial liabilities		830,817

under the caption "Short-term financial liabilities" for the current portion.

(€ thousands)		03/31/2020


Bank overdraft and other short-term debt (including current portion of other long-term debt)		194,024


Private placement 2013-2025		18,255

Other financial payables		3,831
Fees for Eurobond 2020-2027, fees for bank loans, private placement 2013-2025 and Syndicated loan for
	(1,652)

GAES acquisition


Short-term financial liabilities		214,458

All the other items in the net financial indebtedness table correspond to items in the statement of financial position.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

8.	Financial liabilities
Financial liabilities breakdown is as follows:

(€ thousands)		03/31/2020		12/31/2019	Change
Private placement 2013-2025		100,402		97,917	2,485

Eurobond 2020-2027		350,000		-	350,000

Syndicated loan for GAES acquisition		198,750		463,750	(265,000)
Other medium long-term bank loans			190,001	(3,333)
	186,668
Fees for Eurobond 2020-2027, fees for bank loans, private placement 2013-2025 and
	(5,003)		(949)	(4,054)
syndicated loan for GAES acquisition

Total medium/long-term financial liabilities		830,817		750,719	80,098
Short term debt		214,458		163,947	50,511
- of which current portion for the financing for GAES acquisition			39,750	-
	39,750
- of which current portion for the private placement 2013-2025			17,803	452
	18,255
- of which current portion of other short-term bank loans			6,666	-
	6,666
- of which fees for bank loans, private placement 2013-2025 and syndicated loan for GAES
	(1,652)		(663)	(989)
acquisition

Total short-term financial liabilities		214,458		163,947	50,511
Total financial liabilities		1,045,275		914,666	130,609

The main financial liabilities are detailed below.

Eurobond 2020-2027
In February Amplifon issued a 7-year €350 million non-convertible bond with a fixed annual coupon of 1.125%.

					Nominal	Euro
			Nominal value	Fair Value	interest
Issue Date	Debtor	Maturity	interest
(€/000)	(€/000)	rate after
			rate (*)
					hedging

02/13/2020	Amplifon S.p.A.	02/13/2027	350.000	313.404	1,125%	N/A

	Total in Euro		350.000	313.404

1. The nominal interest rate is equal to the mid swap plus a spread.
Syndicated loan for the GAES acquisition
An unsecured syndicated bank loan negotiated with five top-tier banks for the acquisition of GAES comprised of two tranches:
- a 5-year amortizing loan of €265 million (Facility A);
- a €265 million 18-month bullet loan (Facility B) with an option to extend it to 5 years which may be exercised at Amplifon's discretion before the expiration date. This tranche has been paid back in February 2020 thanks to the proceeds of the Eurobond issue above mentioned.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

							Euro
			Nominal value	Outstanding	Fair Value	Nominal	interest
Issue Date	Debtor	Maturity	interest	rate after
(€/000)	debt	(€/000)
			rate (*)	hedging
				(€/000
						(**)

12/18/2018	Amplifon S.p.A.	09/28/2023	265,000	238,500	216,921	0.925%	1.382%

	Total in Euro		265,000	238,500	216,921

(*) The nominal interest rate is equal to Euribor plus a spread.

(**) The floating Euribor rate has been converted into a fixed rate of 0.132%.

The applicable rates depend on the ratio of net financial position over Group EBITDA.

The following table shows the applicable rates:

Ratio between net financial position and Group EBITDA	Facility A

Higher than 2.85x	1.65%
Less or equal than 2.84x but higher than 2.44x	1.45%
Less or equal than 2.44x but higher than 2.04x	1.25%
Less or equal than 2.04x but higher than 1.63x	1.10%
Less or equal than 1.63x	0.95%

The margin recognized, based on the ratio between the net financial position and Group EBITDA, is applicable starting from the interest period following the one when the ratios is determined.

The margin at 03.31.2020 is equal to 1.10% for Facility A.

Private placement 2013-2025
It is a USD 130 million private placement made in the US by Amplifon USA.

					Outstanding			Euro
Issue Date	Issuer	Maturity	Currency	Face Value	Fair value	Nominal interest	interest rate
(USD/000)	debt	(USD/000)	rate USD (*)	after
				(USD/000)
							hedging (**)

05/30/2013	Amplifon USA	07/31/2020	US$	7,000	7,000	5,543	3.85%	3.39%
05/30/2013	Amplifon USA	07/31/2023	US$	8,000	8,000	7,230	4.46%	3.90%
07/31/2013	Amplifon USA	07/31/2020	US$	13,000	13,000	10,296	3.90%	3.42%
07/31/2013	Amplifon USA	07/31/2023	US$	52,000	52,000	47,013	4.51%	3.90%-3.94%
07/31/2013	Amplifon USA	07/31/2025	US$	50,000	50,000	48,941	4.66%	4.00%-4.05%

	Total			130,000	130,000	119,023

(*) Refers to the nominal interest rate at the issue.

The hedging instruments that determine the interest rate as detailed above, are also fixing the exchange rate at

1.2885, the total equivalent of the bond resulting in €100,892 thousand.

Bank loans
4 medium/long-term unsecured bank loans totaling €200 million as shown in the following table.

Issue Date	Issuer	Type	Maturity	Face Value	Outstanding	Fair value	Nominal	Interest rate
(€/000)	debt	(€/000)	interest rate	after
				(€/000)	in Euro (*)	hedging (**)

09/28/2017	Amplifon S.p.A.	Bullet	09/28/2021	100.000	100.000	100.881	0.413%	0,987%
financing

10/24/2017	Amplifon S.p.A.	Amortizing	10/31/2022	50.000	50.000	50.817	0.850%	1,329%
financing

03/23/2018	Amplifon S.p.A.	Bullet	03/22/2022	30.000	30.000	30.394	0.369%	1,00%
financing

01/11/2018	Amplifon S.p.A.	Amortizing	01/11/2022	20.000	13.334	13.435	0.70%	1,04%
financing

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Total in Euro

200.000

193.334

195.527

The nominal interest rate shown for the fixed rate loans comprises the fixed rate plus the applicable spread. (**) All the loans shown were converted to fixed rate using Interest Rate Swaps.

The following loans:

the USD 130 million private placement 2013-2025 (equal to €100.9 million including the fair value of the currency hedges which set the Euro/USD exchange rate at 1.2885);
the EUR 193.3 million medium/long-term bilateral loans with top-tier banking institutions;
the EUR 195 million in irrevocable credit lines with top-tier banking institutions

are subject to the covenants listed below:

the ratio of Group net financial indebtedness to Group shareholders' equity must not exceed 1.65;
the ratio of net financial indebtedness to EBITDA recorded in the last four quarters
(determined based solely on recurring business and restated if the Group's structure should change significantly) must not exceed 2.85.

In the event of relevant acquisitions, the above ratios may be increased to 2.20 and 3.26, respectively, for a period of not more than 12 months, twice over the life of the respective loans.

The syndicated loan granted for the GAES acquisition, which was originally amounting to €530 million while it currently has an outstanding debt of 238,500 thousand as at March 2020, is subject to the following covenants:

the ratio of net financial indebtedness to EBITDA recorded in the last four quarters (determined excluding the fair value of the share-based payments and based solely on recurring business and restated if the Group's structure should change significantly) must not exceed 2.85;
the ratio of EBITDA recorded in the last four quarters (determined excluding the fair value of the share-based payments and based solely on recurring business and restated if the
Group's structure should change significantly) and net interest paid in the last 4 quarters must exceed 4.9. As this last covenant was granted in favor of the lender, it is also applied to the private placement.

As at March 31st, 2020 these ratios were as follows:

		Value as at
		03/31/2020

Net financial indebtedness/Group net equity		1.19
Net financial position/EBITDA for the last 4 quarters

	1.99
EBITDA for the last 4 quarters/Net financial expenses


	27.22

Interim Report as at 31 March 2020 > Consolidated Financial Statements

The above-mentioned ratios were determined based on an EBITDA which was restated, in order to reflect the main changes in the Group structure.

(€ thousands)		Value as at 03/31/2020


Group EBITDA first quarter 2020		64,855



EBITDA April-December 2019		293,073



Fair value of stock grant assignment		12,137



EBITDA normalized (from acquisitions and disposals)		5,616



Acquisitions and non-recurring costs		22,184



EBITDA for the covenant calculation		397,865

The same agreements are also subject to other covenants applied in current international practice which limit the ability to issue guarantees and complete sales and lease backs, as well as extraordinary transactions involving the sale of assets.

9. Lease liabilities

The lease liabilities stem from long-term leases and rental agreements. These liabilities are equal to the present value of future installments payable over the lease term.

The liabilities for finance leases are shown in the statement of financial position as follows:

	03/31/2020	12/31/2019	Change
Short term lease liabilities	99,108	81,585	17,523

Long term lease liabilities	328,964	343,040	(14,076)

Total lease liabilities	428,072	424,625	3,447

The following charges were recognized in the income statement during the reporting period:

		03/31/2020



Interest charges on leased assets		(2,708)


Right-of-use depreciation		(23,505)




Costs for short-term leases and leases for low value assets		(2,295)

Interim Report as at 31 March 2020 > Consolidated Financial Statements

10. Revenues from Sales and Services

(€ thousands)	First quarter 2020		First quarter 2019	Change

Revenues from sale of products	314,438	348,001	(33,563)


Revenues from services	49,038	43,972	5,067

Total revenues from sales and services	363,476	391,973	(28,497)

Consolidated revenues from sales and services amounted to €363,476 thousand in the first three months of 2020, a decrease of €28,497 thousand (-7.3%) attributable entirely to revenues from the sale of goods which were down by €33,563 thousand. Revenues for services rendered were up by €5,067 thousand as they relate to the portion of post sales services recognized over time and are, therefore, less influenced by fluctuations in hearing aid sales.

11. Taxes

The Group's tax rate came to 32.4% compared to 32.5% at 31 March 2019.

12. Non-recurring significant events

The first quarter of 2020 was not impact by any non-recurring expenses. The non-recurring expenses, related to the GAES integration, incurred in the comparative quarter are shown in the table below:

(€ thousands)		First quarter 2020	First quarter 2019
Operating costs	GAES integration costs	-	(1,425)
Profit before tax		-	(1,425)
Tax	Impact of the above items on the tax burden for the period	-	363
Total		-	(1,062)

13. Earnings (loss) per share

Basic Earnings (loss) per share

Basic earnings (loss) per share is obtained by dividing the net profit for the year attributable to the ordinary shareholders of the parent company by the weighted average number of shares outstanding in the year, considering purchases and disposals of own shares as cancellations and issues of shares.

Earnings per share are determined as follows:

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Earnings per share	First quarter 2020	First quarter 2019

Net profit (loss) attributable to ordinary shareholders (€ thousand)		17,748
5,143
Average number of shares outstanding in the period		220,660,372

223,162,287
Average earnings per share (€ per share)		0.08043

0.02305

Diluted earnings (loss) per share

Diluted earnings (loss) per share is obtained by dividing the net profit for the period attributable to the ordinary shareholders of the parent by the weighted average number of shares outstanding during the year adjusted by the diluting effects of potential shares. In the calculation of shares outstanding, purchases and sales of treasury shares are considered as cancellation or issue of shares.

The 'potential ordinary share' categories refer to the possible conversion of Group employees' stock options and stock grants' attribution. The computation of the average number of outstanding potential shares is based on the average fair value of shares for the period; stock options and stock grants are excluded from the calculation since they have anti-diluting effects.

Weighted average diluted number of shares outstanding	First quarter 2020	First quarter 2019

Average number of shares outstanding in the period		220,660,372
223,162,287
Weighted average of potential and diluting ordinary shares
	4,057,314
3,197,963
Weighted average of shares potentially subject to options in the period
	224,717,686
226,360,250
The diluted earnings per share were determined as follows:

Diluted earnings per share	First quarter 2020	First quarter 2019

Net profit attributable to ordinary shareholders (€ thousand)	5,143	17,748

Average number of shares outstanding in the period		224,717,686

226,360,250
Average diluted earnings per share (€)		0.07898
0.02272

14. Transactions with parent companies and related parties

The parent, Amplifon S.p.A. is based in Milan, in Via Ripamonti 133. The Group is controlled directly by Ampliter S.r.l. which is owned through a majority stake (93.82% as at 31 March 2020) by Amplifin S.p.A. which is fully controlled by Susan Carol Holland.

The transactions with related parties, including intercompany transactions do not qualify as atypical or unusual, and fall within the Group's normal course of business and are conducted at arm's-length as dictated by the nature of the goods and services provided.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

The following table details transactions with related parties:

(€ thousands)			03/31/2020		First three months 2020


					Revenues		Interest
	Trade	Trade	Other	Other	for sales and	Operating	income and
	receivables	payable	receivables	assets	services	costs	expense
Amplifin S.p.A.	107	-	1,577	-	-	-	9

Total - Parent	107	-	1,577	-	-	-	9

Comfoor BV (The Netherlands)	-	341	-	-	99	(770)	-
Comfoor GmbH (Germany)	-	8	-	-	-	-	-
Ruti Levinson Institute Ltd (Israel)	132	-	-	-	39	(4)	-
Afik - Test Diagnosis & Hearing	-	55	-	22	93	-	-
Aids Ltd (Israel)

Total - Other related parties	132	404	-	22	231	(774)	-

Total	239	404	1.577	22	231	(774)	9

Total as per financial statements	153,215	189,582	81,812	60,462	363,476	(299,902)	(3,697)

% of financial statements total	0.16%	0.21%	1.93%	0.04%	0.06%	0.26%	-0.25%

The trade and other receivables, revenues from sales and services and other income with related parties refer primarily to:

the recovery of maintenance costs and building fees and the recharge of personnel expense to Amplifin S.p.A.
the receivables due by Amplifin S.p.A. for the renovation of the headquarters based on modern and efficient standards for the use of workspaces;
the trade receivables due by associates (mainly in Israel) which act as resellers and to which the Group supplies hearing aids.

The trade payables and operating costs refer primarily to commercial transactions with Comfoor BV and Comfoor GmbH and to joint ventures from which hearing protection devices are purchased and then distributed in Group stores.

With the application of IFRS 16, the lease for the Milan headquarters (leased to Amplifon by the parent company Amplifin) is no longer recognized as an operating cost, but is recognized under right-of-use depreciation for €462 thousand, interest on leases for €98 thousand and lease liabilities of €18,422 thousand.

15. Contingent liabilities

Currently the Group is not exposed to any particular risks or uncertainties with the exception of the usual periodic tax audits, which are currently underway in two countries of the Group. These audits are presently in the preliminary phase and no findings have been reported so far.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

16. Translation of foreign companies' financial statements

The exchange rates used to translate non-Euro zone companies' ﬁnancial statements are as follows:

	31 March 2020		2019	31 March 2019
	Average	As at	As at 31	Average	As at
	exchange rate	31 March	December	exchange rate	31 March

Panamanian balboa	1.1027	1.0956	1.1234	1.136	1.124
Australian dollar	1.6791	1.7967	1.5995	1.594	1.582

Canadian dollar	1.4819	1.5617	1.4598	1.510	1.500

New Zealand dollar	1.7394	1.8417	1.6653	1.667	1.650

Singapore dollar	1.5281	1.5633	1.5111	1.539	1.521

US dollar	1.1027	1.0956	1.1234	1.136	1.124

Hungarian florin	339.137	360.02	330.53	317.908	321.050

Swiss franc	1.0668	1.0585	1.0854	1.132	1.118

Egyptian lira	17.3834	17.2687	18.0192	20.011	19.469

New Israeli shekel	3.8605	3.9018	3.8845	4.139	4.076

Argentine peso	70.5388 (*)	70.5388	67.2749	44.225	48.935

Chilean peso	886.05	936.17	844.86	757.94	766.02

Colombian peso	3,903.30	4,451.64	3,688.66	3,560.65	3,570.25

Mexican peso	22.0918	26.1772	21.2202	21.806	21.691

Brazilian real	4.9167	5.7001	4.5157	4.278	4.387

Chinese renminbi	7.6956	7.7784	7.8205	7.664	7.540

Indian rupee	79.9096	82.8985	80.187	80.072	77.719

British pound	0.86225	0.88643	0.8508	0.873	0.858

Polish zloty	4.3241	4.5506	4.2568	4.302	4.301

The average exchange rate is equal to 67,7364. However, because of the high inflation rate, the exchange rate used to translate the income statement is the one as at March 31st.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

17. Segment reporting

In accordance with IFRS 8 "Operating Segments", the schedules related to each operating segment are shown below.

The Amplifon Group's business (distribution and customization of hearing solutions) is organized into three specific geographical areas which comprise the Group's operating segments: Europe, Middle-East and Africa - EMEA - (Italy, France, The Netherlands, Germany, the United Kingdom, Ireland, Spain, Portugal, Switzerland, Belgium, Luxemburg, Hungary, Egypt, Poland and Israel), Americas (USA, Canada, Chile, Argentina, Ecuador, Colombia, Panama and Mexico) and Asia-Pacific (Australia, New Zealand, India and China).

The Group also operates via centralized Corporate functions (Corporate bodies, general management, business development, procurement, treasury, legal affairs, human resources, IT systems, global marketing and internal audit) which do not qualify as operating segments under IFRS 8.

These areas of responsibility, which coincide with the geographical areas (the Corporate functions are recognized under EMEA), represent the organizational structure used by management to run the Group's operations. The reports periodically analyzed by the Chief Executive Officer and Top Management are divided up accordingly, by geographical area.

Performances are monitored and measured for each operating segment/geographical area, through operating profit including amortization and depreciation (EBIT), along with the portion of the results of equity investments in associated companies valued by using the equity method. Financial expenses are not monitored insofar as they are based on corporate decisions regarding the financing of each region (own funds versus borrowings) and, consequently, neither are taxes. Items in the statement of financial position are analyzed by geographical area without being separated from the Corporate functions which remain part of EMEA. All the information relating to the income statement and the statement of financial position is determined using the same criteria and accounting standards used to prepare the consolidated financial statements.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Statement of Financial Position as at 31 March 2020 (*)

(€ thousands)	EMEA	Americas	Asia Pacific	Eliminations	Total

ASSETS

Non-current assets


Goodwill	848,693	124,421	248,761	-	1,221,875

Intangible fixed assets with ﬁnite useful life	291,607	29,965	44,900	-	366,472


Tangible fixed assets	156,322	9,730	26,481	-	192,533

Right-of-use assets	362,673	17,249	37,375	-	417,297


Equity-accounted investments	2,337	-	-	-	2,337


Hedging instruments	16,123	-	-	-	16,123

Deferred tax assets	72,953	682	5,139	-	78,774

Contract costs	6,764	234	67	-	7,065


Other assets	25,030	34,422	1,010	-	60,462

Total non-current assets					2,362,938
Current assets


Inventories	62,377	4,368	4,128	-	70,873

Trade receivables	177,462	48,992	23,834	(15,261)	235,027


Contract costs	4,454	135	85	-	4,674

Hedging instruments	2,732	-	-	-	2,732

Other financial assets					177

Cash and cash equivalents					272,132
Total current assets					585,615

TOTAL ASSETS					2,948,553

LIABILITIES

Total net equity					666,269

Non-current liabilities

Medium/long-term financial liabilities					830,817


Lease liabilities					328,964

Provisions for risks and charges	15,990	26,404	751	-	43,145


Liabilities for employees' beneﬁts	24,222	129	412	-	24,763


Hedging instruments	4,817	-	-	-	4,817


Deferred tax liabilities	70,607	18,869	10,746	-	100,222

Payables for business acquisitions	17,547	608	-	-	18,155

Contract liabilities	123,246	8,557	2,047	-	133,850

Other long-term liabilities	8,625	60	-	-	8,685
Total non-current liabilities					1,493,418

Current liabilities


Trade payables	142,220	43,387	19,229	(15,254)	189,582

Payables for business acquisitions	9,761	911	-	-	10,672


Contract liabilities	78,725	8,210	8,111	-	95,046


Other payables and tax payables	155,187	6,358	13,127	(7)	174,665

Provisions for risks and charges	4,162	537	-	-	4,699


Liabilities for employees' beneﬁts	566	70	-	-	636

Short-term financial liabilities					214,458


Lease liabilities					99,108

Total current liabilities					788,866

TOTAL LIABILITIES					2,948,553

The balance sheet items are analyzed by the Chief Executive Officer and the Top Management by geographical area without separation of the Corporate structures that are natively included in EMEA.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Statement of Financial Position as at 31 December 2019 (*)

(€ thousands)	EMEA	Americas	Asia Pacific	Eliminations	Total

ASSETS
Non-current assets
Goodwill	839,802	126,418	249,291	-	1,215,511
Intangible fixed assets with ﬁnite useful life	291,674	30,257	45,577	-	367,508
Tangible fixed assets	158,390	10,450	27,739	-	196,579
Right-of-use assets	361,739	18,300	38,390	-	418,429
Equity-accounted investments	2,314	-	-	-	2,314
Hedging instruments	8,153	-	-	-	8,153
Deferred tax assets	73,434	3,400	4,593	-	81,427
Contract costs	7,046	222	71	-	7,339
Other assets	25,270	41,256	990	-	67,516

Total non-current assets					2,364,776
Current assets
Inventories	55,834	4,433	4,325	-	64,592
Trade receivables	217,387	50,814	26,722	(18,151)	276,772
Contract costs	4,176	122	88	-	4,386
Hedging instruments	2,201	-	-	-	2,201
Other financial assets					240
Cash and cash equivalents					138,371

Total current assets					486,562

TOTAL ASSETS					2,851,338

LIABILITIES
Total net equity					696,115

Non-current liabilities
Medium/long-term financial liabilities					750,719
Lease liabilities					343,040
Provisions for risks and charges	17,620	32,406	264	-	50,290
Liabilities for employees' beneﬁts	24,143	130	1,008	-	25,281
Hedging instruments	4,290	-	-	-	4,290
Deferred tax liabilities	70,398	21,265	10,448	-	102,111
Payables for business acquisitions	12,876	651	0	-	13,527
Contract liabilities	124,540	8,530	1,982	-	135,052
Other long-term liabilities	8,466	183	-	-	8,649

Total non-current liabilities					1,432,959

Current liabilities
Trade payables	127,909	40,928	23,571	(15,018)	177,390
Payables for business acquisitions	9,257	988	-	-	10,245
Contract liabilities	81,557	8,332	7,836	-	97,725
Tax liabilities	165,279	9,657	14,754	(3,133)	186,557
Other payables	28	-	-	-	28
Hedging instruments	3,650	592	-	-	4,242
Provisions for risks and charges	478	67	-	-	545
Liabilities for employees' beneﬁts					163,947
Short-term financial liabilities					81,585

Lease liabilities					722,264

Total current liabilities					2,851,338

The balance sheet items are analyzed by the Chief Executive Officer and the Top Management by geographical area without separation of the Corporate structures that are natively included in EMEA.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Income Statement - First three months 2020 (*)

(€ thousands)		EMEA		Americas		Asia Pacific		Corporate		Eliminations		Total


Revenues from sales and services		258,266		64,355		40,855		-		-		363,476


Operating costs		(208,602)		(52,967)		(30,670)		(7,663)		-		(299,902)


Other income and costs		857		488		(75)		11		-		1,281
Gross operating profit (loss) by segment
	50,521		11,876		10,110		(7,652)		-		64,855
(EBITDA)

Amortization, depreciation and impairment



Amortization of intangible fixed assets		(9,196)		(1,699)		(2,493)		(1,818)		-		(15,206)


Depreciation of tangible fixed assets		(8,519)		(522)		(1,835)		(393)		-		(11,269)


Right-of-use depreciation		(19,664)		(1,037)		(2,697)		(107)		-		(23,505)

Impairment losses and reversals of non-
	(356)		-		(29)		-		-		(385)

current assets

		(37,735)		(3,258)		(7,054)		(2,318)		-		(50,365)



Operating result		12,786		8,618		3,056		(9,970)		-		14,490

Financial income, expenses and value



adjustments to ﬁnancial assets

Group's share of the result of associated
companies valued at equity and gains/losses		23		-		-		-		-		23
on disposals of equity investments

Other income and expenses, impairment												-

and revaluations of ﬁnancial assets

Interest income and expenses												(3,697)


Interest expenses on lease liabilities												(2,708)

Other ﬁnancial income and expenses												(355)


Exchange gains and losses												(260)


Gain (loss) on assets accounted at fair value												6

												(6,991)



Net profit (loss) before tax												7,499

Current and deferred income tax




Current tax												(5,249)

Deferred tax												2,821

												(2,428)



Total net profit (loss)												5,071

Net profit (loss) attributable to Minority												(72)

interests

Net profit (loss) attributable to the Group												5,143

(*) For the purposes of reporting on economic figures by geographic area, please note that the Corporate structures are included in EMEA.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Income Statement - First three months 2019 (*)

(€ thousands)	EMEA	Americas	Asia Pacific	Corporate	Eliminations

Revenues from sales and services	283,763	63,102	44,415	693	391,973
Operating costs	(223,567)	(50,517)	(30,374)	(10,301)	(314,759)
Other income and costs	255	132	(74)	(10)	303

Gross operating profit (loss) by segment (EBITDA)	60,451	12,717	13,967	(9,618)	77,517

Amortization, depreciation and impairment

Amortization of intangible fixed assets

Depreciation of tangible fixed assets

Right-of-use depreciation

Impairment and impairment reversals of non- current assets

(8,732)	(1,100)	(2,002)	(1,776)	(13,610)
(7,863)	(404)	(1,172)	(304)	(9,743)
(17,961)	(868)	(2,366)	-	(21,195)
(69)	-	(26)	-	(95)

(34,625)	(2,372)	(5,566)	(2,080)	(44,643)

Operating result	25,826	10,345	8,401	(11,698)	32,874

Financial income, expenses and value
adjustments to ﬁnancial assets
Group's share of the result of associated
companies valued at equity and gains/losses on	72	-	-	-	72
disposals of equity investments
Other income and expenses, impairment and					-
revaluations of ﬁnancial assets

Interest income and expenses					(3,602)
Other ﬁnancial income and expenses					(2,892)
Exchange gains and losses					185
Gain (loss) on assets accounted at fair value					(345)

					(6,582)

Net profit (loss) before tax					26,292

Current and deferred income tax					(8,555)

Total net profit (loss)					17,737

Net profit (loss) attributable to Minority interests					(11)

Net profit (loss) attributable to the Group					17,748

(*) For the purposes of reporting on economic figures by geographic area, please note that the Corporate structures are included in EMEA.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

18. Accounting policies

18.1 Presentation of the financial statements

The condensed interim consolidated financial statements at 31 March 2020 were prepared in accordance with the historical cost method with the exception of derivatives, a few financial investments measured at fair value and assets and liabilities hedged against changes in fair value, as explained in more detail in this report, as well as on an ongoing concern basis.

With regard to reporting formats:

in the statement of financial position, the Group distinguishes between non-current and current assets and liabilities;
in the income statement, the Group classifies costs by nature insofar as this is deemed to more accurately represent the primarily commercial and distribution activities carried out by the Group;
in addition to the net profit for the period, the statement of comprehensive income also shows the impact of exchange rate differences, changes in the hedging reserve and actuarial gains and losses that are recognized directly in equity; these items are subdivided based on whether they may subsequently be reclassified to profit or loss;
in the statement of changes in net equity, the Group reports all the changes in net equity, including those deriving from shareholder transactions (payment of dividends and capital increases);
the statement of cash flows is prepared using the indirect method to determine cash flow from operations.

18.2 Use of estimates in preparing the financial statements

The preparation of the financial statements and explanatory notes requires the use of estimates and assumptions particularly with regard to the following items:

revenues from services rendered over time recognized based on the effort or the input expended to satisfy the performance obligation;
allowances for impairment made based on the asset's estimated realizable value;
provisions for risks and charges made based on a reasonable estimate of the amount of the potential liability, including with regard to any counterparty claims;
provisions for obsolete inventory in order to align the carrying value of inventory with the estimated realizable value;
provisions for employee benefits, calculated based on actuarial valuations;
amortization and depreciation of intangible and tangible fixed assets recognized based on the estimated remaining useful life and the recoverable amount;
income tax recognized based on the best estimate of the tax rate for the full year;
IRSs and currency swaps (instruments not traded on regulated markets), marked to market at the reporting date based on the yield curve and market exchange rates, which are subject to credit/debit valuation adjustments based on market prices;
the lease term duration was determined on a lease-by-lease basis and is comprised of the
"non-cancellable" period along with the impact of any extension or early termination clauses if exercise of that clause is reasonably certain. This property valuation took into

account circumstances and facts specific to each asset;

Interim Report as at 31 March 2020 > Consolidated Financial Statements

the discount rate (incremental borrowing rate) applied to future rent payments was determined using the risk-free rate in the country where the agreement was executed, with expirations consistent with the term of the specific lease agreement plus the parent's credit spread and any costs for additional guarantees.

Estimates and assumptions are periodically reviewed, and any changes made, following the change of the circumstances or the availability of better information, are recognized in the income statement. The use of reasonable estimates is essential to the preparation of the financial statements and does not affect their overall reliability.

The Group tests goodwill for impairment at least once a year. The impairment test is done based on the groups of cash generating units to which the goodwill is allocated and based on which the Group assesses, directly or indirectly, the return on investment which includes this goodwill.

With regard to the first quarter of 2020 and the impact of the Covid-19 crisis on the estimates used, in light of the current uncertainty as to the duration and intensity of the health and socio-economic crisis the Company feels that it is both premature and impossible to assess the impact on goodwill and, more in general, the recoverability of asset value in the long-term.

A more detailed analysis will be provided in the half-year report when there is greater visibility as to the timing of the re-opening process and the speed of the recovery.

International accounting standards and interpretations approved by the IASB and endorsed in Europe

The following table lists the IFRS/interpretations approved by the IASB, endorsed in Europe and applied for the first time this year.

Description	Endorsement	Publication	Effective date	Effective date for
date	Amplifon

Amendments to IFRS 9, IAS 39 and IFRS 7: "Interest Rate Benchmark Reform"

Revised version of the IFRS Conceptual Framework Amendments to IAS 1 and IAS 8: "Definition of Material"

15 Jan 2020	16 Jan 2020	1 Jan 20	1 Jan 20
29 Nov 2019	6 Dec 2019	1 Jan 20	1 Jan 20
29 Nov 2019	10 Dec 2019	1 Jan 20	1 Jan 20

The adoption of the standards and interpretations above is not expected to have a material impact on the valuation of the Group's assets, liabilities, costs and revenues.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Future accounting standards and interpretations

International Financial Reporting Standards and interpretations approved by the IASB but not yet endorsed in Europe

The International Financial Reporting Standards, interpretations and amendments to existing standards and interpretations approved by IASB, but not yet endorsed for adoption in Europe at 27 April 2020 are listed below:

Description	Effective date

IFRS 17 "Insurance Contracts" (issued on 18 May 2017)	Periods beginning on or after 1 Jan '21
Amendments to IFRS 3: "Business Combinations" (issued on 22 October	Periods beginning on or after 1 Jan '20
2018)

Amendments to IAS 1: "Presentation of Financial Statements -
Classification of liabilities as current or non-current" (issued on 23	Periods beginning on or after 1 Jan '22
January 2020)

The adoption of the standards and interpretations above is not expected to have a material impact on the valuation of the Group's assets, liabilities, costs and revenues.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

19. Subsequent events

The Covid-19 crisis persisted after the close of the quarter and in April the restrictive measures adopted by the different governmental authorities intensified which caused many countries worldwide to go on lockdown. Even though hearing care services are considered essential in many countries and stores remained opened, the gradual adoption of increasingly more restrictive measures in April caused a generalized, significant drop in the Group's store traffic and, consequently, in revenues

In response to this situation, beginning in March the Company adopted a plan of action focused on limiting the financial impact of Covid-19 (for more information refer to the section "Covid-19 emergency measures"). The different measures undertaken by the Company in March include the refinancing of its credit lines in order to increase the availability of financing and irrevocable credit lines by a total of roughly 300 million euros, as well as extend maturities of the loans and the existing irrevocable credit lines. More in detail, in April:

new loan agreements were signed for a total of €243 million and new irrevocable credit lines amounting to €15 million, while an additional €20 million in irrevocable credit lines was approved by the banks.
the maturities of €180 million in existing loans which expired originally in 2021-2022 were extended to 2024-2025 and the extension through 2025 of an additional €30

million in irrevocable credit lines was approved.

After 31 March 2020 the company continued its stock grant remuneration program and granted 18,100 treasury shares as at 29 April 2020. As at the date of the above financial statements, the total of treasury shares in portfolio is 3,157,927, corresponding to 1.395% of the company share capital.

Milan, 29 April 2020

On behalf of the Board of Directors

CEO

Enrico Vita

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Annexes

Consolidation scope

As required by articles 38 and 39 of Law 127/91 and article 126 of Consob's resolution 11971 dated 14 May 1999, as amended by resolution 12475 dated 6 April 2000, the following is the list of companies included in the consolidation scope of Amplifon S.p.A. at 31 March 2020.

Parent company:

Company name	Head ofﬁce	Currency	Share capital
Amplifon S.p.A.	Milan (Italy)	EUR	4,527,772

Subsidiaries consolidated using the line-by-line method:

Company name	Registered head ofﬁce	Direct/Indirect	Currency	Share	% held as at
ownership	Capital	03/31/2020


Amplifon Rete	Milan (Italy)	D	EUR	11,750	4.35%
Otohub S.r.l.	Naples (Italy)	D	EUR	28,571	100.0%
Amplifon France SAS	Arcueil (France)	D	EUR	98,550,898	100.0%
SCI Eliot Leslie	Lyon (France)	I	EUR	610	100.0%
Conversons Paris 19 Sarl	Paris (France)	I	EUR	1,000	100.0%
Conversons Couëron SAS	Paris (France)	I	EUR	1,000	100.0%
Audiosons Nantes SAS	Paris (France)	I	EUR	16,000	100.0%
Amplifon France Holding	Arcueil (France)	D	EUR	1	100.0%
OLM SAS	Paris (France)	I	EUR	5,000	100.0%
Conversons 93 Sarl	Paris (France)	I	EUR	10,000	100.0%
Conversons Lyon SAS	Paris (France)	I	EUR	1,000	100.0%
Entendre - Blandine Lannee SAS	Dax (France)	I	EUR	4,000	100.0%
Cap Audition SAS	La Rochelle (France)	I	EUR	10,000	100.0%
Laboratoire d'Audiologie Eric Hans SAS	Belfort (France)	I	EUR	380,000	100.0%
Audition Paca SAS	Thionville (France)	I	EUR	5,000	100.0%
Acovoux SAS	Paris (France)	I	EUR	50,000	100.0%
Audition-Assas.com Sarl	Paris (France)	I	EUR	201,000	100.0%
Espace de Correction Auditive SAS	Thionville (France)	I	EUR	7,500	100.0%
N France SAS	Mulhouse (France)	I	EUR	30,000	100.0%
Audiness SAS	Mulhouse (France)	I	EUR	30,000	100.0%
Correction Auditive Michèle HUC Sarl	Lyon (France)	I	EUR	5,000	100.0%
T.S.P SAS	Nantes (France)	I	EUR	20,000	100.0%
OA1 Sarl	Nantes (France)	I	EUR	3,000	100.0%
OA2 Eurl	Carquefou (France)	I	EUR	3,000	100.0%
OA3 Eurl	Orvault (France)	I	EUR	3,000	100.0%
Amplifon Iberica SA	Zaragoza (Spain)	D	EUR	26,578,809	100.0%
Fundación Amplifon Iberica	Madrid (Spain)	I	EUR	30,000	100.0%

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Microson S.A.	Barcelona (Spain)	D	EUR	61,752	100.0%

Company name	Registered head ofﬁce	Direct/Indirect	Currency	Share	% held as at
ownership	Capital	03/31/2020

Instituto Médico Auditivo S.L.U.	Valencia (Spain)	I	EUR	46,188	100.0%
Amplifon LATAM Holding S.L.	Barcelona (Spain)	I	EUR	3,000	100.0%
Auditiva 2014 S.A.	Andorra la Vella (Andorra)	I	EUR	3,000	100.0%
Amplifon Portugal SA	Lisboa (Portugal)	I	EUR	15,520,187	100.0%
Amplifon Magyarország Kft	Budapest (Hungary)	D	HUF	3,500,000	100.0%
Amplibus Magyarország Kft	Budaörs (Hungary)	I	HUF	3,000,000	100.0%
Amplifon AG	Baar (Switzerland)	D	CHF	1,000,000	100.0%
Amplifon Nederland BV	Doesburg (The	D	EUR	74,212,052	100.0%
Netherlands)

Auditech BV	Doesburg (The	I	EUR	22,500	100.0%
Netherlands)

Electro Medical Instruments BV	Doesburg (The	I	EUR	16,650	100.0%
Netherlands)

Beter Horen BV	Doesburg (The	I	EUR	18,000	100.0%
Netherlands)

Amplifon Customer Care Service BV	Elst (The Netherlands)	I	EUR	18,000	100.0%
Amplifon Belgium NV	Bruxelles (Belgium)	D	EUR	495,800	100.0%
579 BVBA	Bruxelles (Belgium)	I	EUR	120,216	100.0%
Amplifon Luxemburg Sarl	Luxembourg (Luxembourg)	I	EUR	50,000	100.0%
Amplifon RE SA	Luxembourg (Luxembourg)	D	EUR	3,700,000	100.0%
Amplifon Deutschland GmbH	Hamburg (Germany)	D	EUR	6,026,000	100.0%
Focus Hören AG	Willroth (Germany)	I	EUR	485,555	100.0%
Focus Hören Deutschland GmbH	Willroth (Germany)	I	EUR	25,000	100.0%
Amplifon Poland Sp. z o.o.	Lodz (Poland)	D	PLN	3,344,520	100.0%
Amplifon UK Ltd	Manchester (UK)	D	GBP	130,951,168	100.0%
Amplifon Ltd	Manchester (UK)	I	GBP	1,800,000	100.0%
Ultra Finance Ltd	Manchester (UK)	I	GBP	75	100.0%
Amplifon Ireland Ltd	Wexford (Ireland)	I	EUR	1,000	100.0%
Amplifon Cell	Ta' Xbiex (Malta)	D	EUR	1,000,125	100.0%
Medtechnica Ortophone Ltd (*)	Tel Aviv (Israel)	D	ILS	1,100	80.0%
Amplifon Middle East SAE	Cairo (Egypt)	D	EGP	3,000,000	51.0%
Miracle Ear Inc.	St. Paul (USA)	I	USD	5	100.0%
Elite Hearing, LLC	Minneapolis (USA)	I	USD	0	100.0%
Amplifon USA Inc.	Dover (USA)	D	USD	52,500,010	100.0%
Amplifon Hearing Health Care, Inc.	St. Paul (USA)	I	USD	0	100.0%
Ampifon IPA, LLC	New York (USA)	I	USD	0	100.0%
ME Pivot Holdings LLC	Minneapolis (USA)	I	USD	2,000,000	100.0%
Miracle Ear Canada Ltd.	Vancouver (Canada)	I	CAD	54,915,200	100.0%
Sound Authority, Inc.	Orangeville (Canada)	I	CAD	0	100.0%
2332325 Ontario Ltd.	Strathroy (Canada)	I	CAD	0	100.0%
6793798 Manitoba Ltd	Winnipeg (Canada)	I	CAD	0	100.0%
Grand River Tinnitus and Hearing Centre	Kitchener (Canada)	I	CAD	0	100.0%
Ltd

Cobourg Hearing Ltd.	Cobourg (Canada)	I	CAD	0	100.0%
Ossicle Hearing Ltd.	Kelowna (Canada)	I	CAD	0	100.0%

Interim Report as at 31 March 2020 > Consolidated Financial Statements

2076748 Alberta Ltd.	Edmonton (Canada)	I	CAD	0	100.0%

Company name	Registered head ofﬁce	Direct/Indirect	Currency	Share	% held as at
ownership	Capital	03/31/2020

2063047 Alberta Ltd.	Edmonton (Canada)	I	CAD	0	100.0%
Amplifon South America Holding LTDA	São Paulo (Brasil)	D	BRL	3,636,348	100.0%
GAES S.A.	Santiago de Chile (Chile)	D	CLP	1,901,686,034	100.0%
GAES Servicios Corporativo de	Santiago de Chile (Chile)	I	CLP	10,000,000	100.0%
Latinoamerica Spa

Audiosonic Chile S.A.	Santiago de Chile (Chile)	I	CLP	1,000,000	100.0%
GAES S.A.	Buenos Aires (Argentina)	D	ARS	133,476,452	100.0%
GAES Colombia SAS	Bogota (Colombia)	I	COP	21,803,953,043	100.0%
Soluciones Audiologicas de Colombia	Bogota (Colombia)	I	COP	45,000,000	100.0%
SAS

Audiovital S.A.	Quito (Ecuador)	I	USD	430,337	100.0%
Centros Auditivos GAES Mexico sa de cv	Ciudad de México (Mexico)	I	MXN	164,838,568	100.0%
Compañía de Audiologia y Servicios	Aguascalientes (Mexico)	I	MXN	43,306,212	66.4%
Medicos sa de cv

GAES Panama S.A.	Panama (Panama)	I	PAB	510,000	100.0%
Amplifon Australia Holding Pty Ltd	Sydney (Australia)	D	AUD	392,000,000	100.0%
National Hearing Centres Pty Ltd	Sydney (Australia)	I	AUD	100	100.0%
National Hearing Centres Unit Trust	Sydney (Australia)	I	AUD	0	100.0%
Attune Hearing Pty Ltd	Brisbane (Australia)	D	AUD	14,771,093	100.0%
Attune Workplace Hearing Pty Ltd	Brisbane (Australia)	I	AUD	1	100.0%
Ear Deals Pty Ltd	Brisbane (Australia)	I	AUD	300,000	100.0%
Otohub Unit Trust (in liquidation)	Brisbane (Australia)	D	AUD	0	100.0%
Otohub Australasia Pty Ltd	Brisbane (Australia)	D	AUD	10	100.0%
Amplifon Asia Pacific Pte Limited	Singapore (Singapore)	I	SGD	1,000,000	100.0%
Amplifon NZ Ltd	Takapuna (New Zealand)	I	NZD	130,411,317	100.0%
Bay Audiology Ltd	Takapuna (New Zealand)	I	NZD	0	100.0%
Dilworth Hearing Ltd	Auckland (New Zealand)	I	NZD	0	100.0%
Amplifon India Pvt Ltd	Gurgaon (India)	I	INR	1,400,000,000	100.0%
Beijing Cohesion Hearing Science	Běijīng (China)	D	CNY	2,143,685	100.0%
&Technology Co. Ltd (**)

Tianjin Cohesion Hearing Science	Tianjin (China)	I	CNY	3,200,000	100.0%
&Technology Co. Ltd (**)

Shijiazhuang Cohesion Hearing Science	Shijiazhuang (China)	I	CNY	100,000	100.0%
&Technology Co. Ltd (**)

Medtechnica Ortophone Ltd, despite being owned by Amplifon at 80%, is consolidated at 100% without exposure of non-controlling interest due to the put-call option exercisable from 2019 and related to the purchase of the remaining 20%.
(**) Beijing Cohesion Hearing Science &Technology Co. Ltd. and its subsidiaries (Tianjin Cohesion Hearing Science &Technology Co. Ltd and Shijiazhuang Cohesion Hearing Science &Technology Co. Ltd), despite being owned by Amplifon at 51%, are consolidated at 100% without exposure of non-controlling interest due to the put-call option exercisable from 2022 and related to the purchase of the remaining 49%.

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Companies valued using the equity method:

Company name	Registered head ofﬁce	Direct/Indirect	Currency	Share	% held as at
ownership	Capital	03/31/2020


Comfoor BV (*)	Doesburg (The	I	EUR	18,000	50,0%
Netherlands)

Comfoor GmbH (*)	Emmerich am Rhein	I	EUR	25,000	50,0%
(Germany)

Ruti Levinson Institute Ltd (**)	Ramat HaSharon (Israel)	I	ILS	105	12,0%
Afik - Test Diagnosis & Hearing Aids Ltd (**)	Jerusalem (Israel)	I	ILS	100	12,0%
Lakeside Specialist Centre Ltd (**)	Mairangi Bay (New	I	NZD	0	50,0%
Zealand)

(*) Joint Venture

(**) Related companies

Interim Report as at 31 March 2020 > Consolidated Financial Statements

Declaration of the Executive Responsible for Corporate Accounting Information pursuant to Article 154-bis of Legislative Decree 58/1998 (Consolidated finance act)

The undersigned Gabriele Galli, Chief Financial Officer of the Amplifon Group, as Executive Responsible for Corporate Accounting Information hereby declares that the quarterly report at 31 March 2020 corresponds to the results documented in the books, accounting and other records of the Company.

Milan, 29 April 2020

Executive Responsible for Corporate

Accounting Information

Gabriele Galli

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Amplifon S.p.A. published this content on 13 May 2020 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 13 May 2020 07:34:09 UTC

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Amplifon S.p.A.

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AMP

IT0004056880

Medical Equipment, Supplies & Distribution

Amplifon S p A : Interim Financial Report as at 31 March 2020

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