PRESS RELEASE

APPROVAL OF HALF-YEAR REPORT AT JUNE 30, 2019

UPDATE OF THE COMPANY'S BUSINESS PLAN

PROPOSAL OF CAPITAL INCREASE IN OPTION FOR MAXIMUM EURO 20 MILLION

COMMITMENTS SUBSCRIBED FOR EURO 10 MILLION BY SOME CURRENT

SHAREHOLDERS

CALL OF EXTRAORDINARY SHAREHOLDERS 'MEETING

Approval of the half-year report at 30 June 2019, drawn up on the basis of the going concern assumption, subject to limited audit:

  • Revenues of Euro 63.0M (-15.8% compared with H1 18) and GMV1 of Euro 88.9M (- 16.7% compared with H1 18), as anticipated in the Press Release of 1 August 2019
  • Adjusted EBITDA at Euro -4.5M compared with -4,3M in H1 18
  • Net Profit of Euro -23.8M (Euro -5.7M in H1 18). In Q2 at Euro -20.8M compared with Euro -0,9M in Q2 18
  • Improvement of 170 bps in the Gross Profit as a % of revenues (18.1% of revenues compared with 16.4% in H1 18)
  • Net Financial Position, net of effects of IFRS 16, positive at Euro 13.0M (debt) while net of IFRS 16 effect at Euro -0,5M (net liquidity)
  • Significant effect of impairment, depreciation and amortisation on EBIT, which worsened from Euro -8.1M to Euro -19.9M in H1 19

Approval of updated guidelines of the 2019-2024 Business Plan, calling for:

  • Downward revision of 2019 guidelines: the company confirms that the deviation with respect to the targets announced in March 2019 and the events that took place in the second quarter, projected over total results for the year 2019, will not make it possible to reach the objective of high single digit growth in GMV and revenues, or the objective of EBITDA around the break-even point, as previously communicated on 1 August 2019.
  • Considerable focus on margins through the plan's years, even to the detriment of low-mid single digit average annual growth, reduced compared with the previous plan but with a boosting effect on 2020 and 2021, thanks to new B2B revenue lines and the strengthening of the ePRICE marketplace on a European scale (International Marketplace Network project)
  • Break-EvenEBITDA from FY 2020
  • Overall cash requirement to support the execution of the plan of around Euro 10M by the end of 2020.

Capital increase and call of the Extraordinary Shareholders' Meeting

  • In support of the Plan, a share capital increase will be proposed in option to the Shareholders for a maximum of Euro 20 million
  • Commitments to subscribe the capital increase already collected for Euro 10 million
  • Gross Merchandise Volume: includes revenues from the sale of products, deliveries and the volume generated by the 3P Marketplace, net of returns and VAT included. Infocommerce and B2B are not included.

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  • Extraordinary Shareholders' Meeting scheduled for November 12, 2019 at the Company's offices in Via San Marco 29, Milan

Milan, September 30, 2019

The Board of Directors of ePRICE, the first national e-Commerce platform listed on the STAR segment of the Italian Stock Exchange, met today, examined and approved: i) the consolidated half-year financial statements as at 30 June 2019, ii) the updates of the guidelines for the 2019-2024 Business Plan, iii) the proposal of a capital increase in option for a maximum of Euro 20 million (including any premium).

The Board of Directors also resolved to call the Shareholders' Meeting, in extraordinary session, for November 12, 2019, at 4.00 pm, on single call at the Company's offices in Via San Marco 29, Milan.

Approval of Results at 30 June 2019

The directors carefully examined the causes of the results achieved in the half-year, and in particular in the second quarter of 2019, the remedial actions taken and the first effects shown in the moderate recovery trends in the months following June 30, the financial situation at end of September and existing relationships with suppliers and banks.

On the basis of the analysis carried out, the directors, despite the presence of significant uncertainties that may give rise to significant doubts about the Company's ability to continue to operate as an operating entity relating to (i) the completion of the operation of recapitalization of the Group, necessary for the prosecution of operating activities, (ii) the manifestation of one or more of the resolutive conditions described below regarding the effectiveness of the commitments undertaken by some shareholders, as well as (ii) the Group's capacity to implement the forecasts contained in the updated business plan updated for the period 2019-2024, characterized by the typical uncertainties of each forecasting activity based on future events for which the effects of the programmed actions could concretely manifest themselves in different ways and times compared to the current forecasts, prepared the consolidated half-year financial statements as at 30 June 2019 on the basis of the going concern assumption.

For H1 19, ePRICE revenues amount to Euro 63.0 million compared with Euro 74.8 million in H1 18. Revenues therefore declined by 16% in H1 19.

The GMV1 - which represents customers' spending on our e-Commerce sites and on the Marketplace - declined by 17% compared with the previous year, amounting to Euro 88.9 million compared with Euro 106.6 million in H1 18. The weight and contribution on volumes increased for the Marketplace which was launched in Q2 15 and now accounts for almost 20% of the GMV as compared to 13.6% of the GMV1 for H1 17 and 10% for H1 16.

Revenues and GMV

(Euro million)

H1 18

H1 17

% Change

Revenues

63.0

74.8

-15.8%

GMV1

88.9

106.6

-16.6%

Revenues and GMV by product type

Revenues (Euro million)

Q2 19

Q2 18

%

GMV2 (Euro million)

Q2 19

Q2 18

%

Electronic goods,

Change

Electronic goods, domestic

Change

domestic appliances and

24.1

32.1

-24.7%

appliances and other

36.6

50.0

-26.6%

other products

products

  • Gross Merchandise Volume: includes revenues from the sale of products, deliveries and the volume generated by the 3P Marketplace, net of returns and VAT included.

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Services / other

3.4

3.7

-9.6%

revenues3

Revenues

27.5

35.8

-23.1%

%

Revenues (Euro million)

H119

H118

Change

Electronic goods,

domestic appliances and

56.0

67.8

-17.3%

other products

Services / other

7.0

7.0

-1.0%

revenues3

Revenues

63.0

74.8

-15.8%

Services/other revenues3

1.7

1.7

3.2%

GMV

38.4

51.7

-25.6%

%

GMV2 (Euro million)

H119

H118

Chang

Electronic goods, domestic

e

appliances and other

85.7

103.2

-17.1%

products

Services/other revenues4

3.2

3.4

-4.6%

GMV

88.9

106.6

-16.7%

Revenues from product sales, in particular electronics and household appliances, fell by 17.3% compared with the first half of 2018 due to the effects described above. Revenues from the core category of large domestic appliances (a sub-group of the domestic appliances category) recorded a decline of just 7% in the first half of the year compared with the same period of last year, significantly lower than the overall decrease in revenues in the first half of the year.

Revenues from the sale of Services and Other were basically stable compared to the same period of the previous year, this being due in particular to the development of "premium" services (delivery, installation and collection of used equipment), which increasingly represent a distinctive factor in ePRICE's offerings; in addition, there was a positive contribution generated by Infocommerce and Advertising services.

At 30 June 2019, the Pick&Pay and Lockers network was optimised to 116 Pick&Pays and 313 automatic lockers. Pick&Pay delivery services have been extended to all Marketplace merchants.

The GMV shrank by 17.1% in H1 19, impacted by the decrease in Marketplace volumes which in any event reached no. 2,100 merchants in the half-yearperiod.

(Key Performance Indicators)

Key Performance Indicators5

Q2 19

Q2 18

% Change

Orders (thousands)

117.7

168.9

-27.9%

AOV (Euro)6

263

250

+5.2%

Buyers (thousands)7

94.1

131

-28.2%

Key Performance Indicators5

H1 19

H1 18

% Change

Orders (thousands)

259

360

-28.2%

AOV (Euro)

273

242

+15.0%

Buyers (thousands)

229

310

-26.4%

Over the course of the first half of the year, 259 thousand orders were managed with an average value (AOV5) of Euro 273, up 15%, mainly driven by the mix towards high-ticketcategories for large domestic appliances and the switch of long-tailcategories to the Marketplace. Lastly, the number of buyers came to 228 thousand, down by 12% as compared to the previous half-year,due to more limited marketing investments.

Gross Profit was Euro 11,391 thousand, down Euro 892 thousand, equal to 7.3% compared with the corresponding period of the previous year (Euro 12,283 thousand), presenting a significantly lower decline than that of revenues. In percentage terms, the ratio of Gross Profit to Revenues is equal to 18.1%, a considerable improvement of 170 bps compared to the 16.4% recorded in the first half of 2018, confirming the application of the new strategy announced last year aimed at the continual recovery of margins, also to the detriment of revenue growth. In particular, the percentage profits increased significantly in the first half of the year due to the greater contribution by margins on sales of products including premiums granted by suppliers,

  • Service revenues include transport services, warranties, B2B revenues and other revenues. Services GMV does not include B2B, advertising/Infocommerce. Revenues from guarantees were reclassified among service revenues for the entire year.
    4 Service revenues include transport services, warranties, B2B revenues and other revenues. Services GMV does not include B2B, advertising/Infocommerce. Revenues from guarantees were reclassified among service revenues for the entire year.
    5 Including the 3P marketplace.
    6 Average order value (excluding VAT).
    7 Customers with at least 1 order in the period.

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the reduction in the impact of returned and damaged products and lastly to the contribution by the services rendered by Installo Srl.

The marked improvement in gross profit is especially obvious in the second quarter where, in percentage terms, the Gross Profit to Revenues ratio came to 19.8%, an additional and significant improvement (310 bps) as compared to 16.7% recorded in the second quarter of 2018. This confirms the increasing effectiveness of the improvement actions highlighted in the previous paragraph.

The Adjusted EBITDA amounted to Euro -4,483thousand8, basically aligned with the recalculated effect for the first half of 2018 (Euro 4,343 thousand restated in accordance with the IFRS 16 standard). Note that net of the consolidation of the Installo equity investment (not included in the scope of consolidation in the first half of last year, as it has been a subsidiary since August 2018), the Adjusted EBITDA is Euro -4,339 thousand. The performance of Adjusted EBITDA in the first half of 2019 compared to the first half of 2018 was negatively influenced by the decrease in Gross Profit of Euro 892 thousand as described above, partially offset by a contraction in operating costs of Euro 752 thousand, equal to 4.5% of total operating costs in the first half of last year.

In terms of operating costs, there was a significant drop in sales and marketing costs by about -23.1% compared to the first half of 2018, mainly due to the significant reduction in spending for customer acquisition.

Logistics costs were substantially stable as compared to the first half of 20189. This cost item is particularly linked to the performance of sale and revenue volumes in household-appliancecategories which showed a decline in the first half of the year significantly lower than the general decline in revenues, as described above. In addition, fixed warehouse costs increased in the first half of 2019 due to the failure to renew the agreement with Saldiprivati, the effect of which is estimated at around 400k in higher costs in the half-year.

IT costs grew by around Euro 230 thousand compared to the first half of 2018, especially due to the effect of certain reclassifications of costs relating to platforms previously considered to be among logistics costs. General and administrative costs experienced an increase compared to the first half of 2018 equal to 41.4% due to the impact of the consolidation of the equity investment in Installo Srl.

Net of the higher costs deriving from the consolidation of Installo, equal to Euro 449 thousand, the decline in general and administrative costs came to roughly Euro 180 thousand compared to the first half of the previous year, representing -7.8%. In addition, during the half-year this cost item recorded a contribution for research and development activities of Euro 770 thousand, down by roughly Euro 90 thousand compared to what was recorded for the same contribution in the first half of 2018. Also net of this effect, the reduction in general and administrative costs amounted to around 11.7%, confirming the continual cost limitation process started last financial year.

The EBITDA for the first half of 2017 come to Euro -4,972 thousand as compared to Euro -2,610thousand in 2018, and includes non-recurringcosts relating to stock option and stock grant plans of € 241 thousand and reorganization charges of € 248 thousand. The first half of 2018 included the non-recurringincome of € 2,000 thousand relating to the agreement signed with the SRP group (Showroomprivè) relating to the early termination for the logistics activities carried out in favor of Bnk4-Saldiprivatiand also included the costs relating to stock option plans amounting to € 51 thousand and other non-recurringcosts equal to € 216 thousand

  • As a result of the entry into force of IFRS 16, at 2019 leases were shown in the balance sheets of the companies, with the resulting determination of the relative depreciation and financial expenses. In terms of income statement data, due to the introduction of the international IFRS 16 accounting standard, the reduction in costs for lease payments and rents no longer recognised in the financial statements relating to lease agreements amounted to roughly Euro 1,363 thousand in the first half of 2019 (compared to around Euro 1,337 thousand recalculated for the first half of 2018); at the same time, higher depreciation of around Euro 1,160 thousand was recorded in the first half of 2019 (for comparative purposes the higher depreciation would have been roughly Euro 1,132 thousand in the first half of 2018) and lastly, also in the first half of 2019, higher financial expenses of around Euro 173 thousand were recognised (also for comparative purposes, the higher financial expenses would have equalled Euro 174 thousand in the first half of 2018).
  • Due to the impact of the consolidation of Installo, the decrease was equal to 7.6%, net of higher costs, equal to Euro 588 thousand.

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The EBIT totalled Euro -19,908 thousand compared to Euro -8,146 thousand in the first half of 2018, the change is due, in addition to the aforementioned, to an increase in amortizations, and non-recurringwrite- downs of non-currentassets of € 9.4 million. The tangible fixed assets referring to the Truccazzano warehouse were written down by 4 million to take into account the probable disposal following the early termination of the rental contract in the first quarter of 2020. Goodwill was subject to impairment of Euro 5.4 million following an impairment test, revised based on the new business plans reviewed and approved by the Board of Directors on 30 September 2019.

The EBT totalled Euro -18,006thousand, compared with Euro -9,010 thousand in first half of 2018.

This item reflected an expense for the period of Euro 4,950 thousand representing the partial reversal of deferred tax assets posted in previous years so that total deferred tax assets recorded in the consolidated financial statements would represent the tax benefit that can be recovered during the period of the 2019-2024plan.

The result from assets held for sale and discontinued operations refers to the earn-out share accrued following the occurrence of certain contractually-planned conditions from the sale of the Vertical Content division to the Mondadori Group for Euro 1,597 thousand.

At 30 June 2019, the Group had net financial debt of Euro 13,025 thousand, of which Euro 11,047 thousand relates to non-current financial debt and Euro 2,459 thousand to current financial debt accounted for in 2019 due to the application of the international IFRS 16 accounting standard. Excluding this effect due to the introduction of the new IFRS, the Group would have a Net Cash Flow of Euro 481 thousand at 30 June 2019.

At 30 June 2019, the Group reported liquidity of Euro 3,770 thousand. The difference between this amount and that of 31 December 2018 is mainly due to funds used for operations amounting to Euro 4,892 thousand. The investment activities described previously absorbed resources totalling Euro 1,835 thousand, offset by the collection of the earn-outaccrued following the occurrence of certain contractually-plannedconditions from the sale of the Vertical Content division to the Mondadori Group. During the period, the Group obtained a new financial credit line of Euro 2.5 million, mostly used for the repayment of other expiring credit lines.

Approval of the Updated Guidelines of the Business Plan 2019-2024

The updated guidelines approved by the Company following the negative trend in the first half of 2019 and the strategic options considered in August provide for a return to a prudential growth of GMV and revenues in the years 2019-2024, with a boost effect in particular in 2020 and 2021 thanks to the activation of the new B2B business lines in partnership with some large general retailers, started in April-May, and the internationalization project of the 3rd party merchant marketplace (International Marketplace Network, announced to the markets last 26 September) that ePRICE is activating together with three leading companies in European e-Commerce: Cdiscount, eMAG and Real.de.

B2C revenues are expected to grow to just Tech&Appliances market, to maintain focus on robust cash production.

over half of the growth expected for the whole online margins throughout the period, up to eventually achieving

The update of the Plan is based on a prudential forecast of growth of the online market. B2C revenues are expected to grow just over half of the growth expected for the online market as a whole, as the Plan expects a strong focus on margins.

The growth of the Margin On Goods mainly comes from the focus on the increase of the average ticket and on the integrated installation services to the shopping cart, that will be progressively extended to the regions not already covered.

Over the next few years the company will aim to a further recovery of efficiency on costs and to reduce the level of damaged products, also recovering some value of variable costs related to shipments.

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ePRICE S.p.A published this content on 30 September 2019 and is solely responsible for the information contained therein. Distributed by Public, unedited and unaltered, on 30 September 2019 23:22:04 UTC