Amplifon : Strong revenue growth and profitability improvement in the first nine months of 2018, supported by an excellent third quarter

STRONG REVENUE GROWTH AND PROFITABILITY IMPROVEMENT IN THE FIRST NINE MONTHS OF 2018, SUPPORTED BY AN EXCELLENT THIRD QUARTER

DOUBLE DIGIT REVENUE GROWTH (+10.4% AT CONSTANT EXCHANGE RATES), DRIVEN BY STRONG ORGANIC GROWTH AND ACQUISITIONS MAINLY IN FRANCE AND GERMANY

CONTINUOUS IMPROVEMENT IN PROFITABILITY: RECURRING EBITDA MARGIN INCREASES OF ~40 BPS AND RECURRING NET PROFIT UP 28.1%

SUCCESSFUL ONGOING ROLL-OUT OF AMPLIFON PRODUCT LINE AND DIGITAL ECOSYSTEM IN ITALY

CLOSING OF THE GAES ACQUISITION ON TRACK, AFTER RECEIVING THE UNCONDITIONAL APPROVALS FROM THE SPANISH AND PORTUGUESE ANTI-TRUST AUTHORITIES

Main results for the first nine months of 20181:

• • Consolidated REVENUES of 967.6 million euros, up 10.4% at constant exchange rates and 7.3% at current exchange rates compared to the same period of 2017

• • EBITDA net of non-recurring expenses reached 154.4 million euros, an increase of 9.6% at current exchange rates, with the margin coming in at 16.0% of revenues, showing an improvement of around 40 basis points compared to the same period of 2017. EBITDA as reported reached 148.4 million euros, or 15.3% of revenues

• • Recurring NET PROFIT amounted to 65.3 million euros, an increase of 28.1% compared to the first nine months of 2017. Net profit as reported rose 26.4% from the 48.2 million euros recorded in the first nine months of 2017 to the current 60.9 million euros

• • NET FINANCIAL DEBT was 348.6 million euros, higher than the 320.7 million euros posted at September 30th, 2017 and the 296.3 million euros reported at December 31st, 2017

• • FREE CASH FLOW was positive for 50.8 million euros, showing an improvement of 49.5%, or approximately 16.8 million euros, compared to the same period of 2017

Milan, October 30th, 2018 - Today the Board of Directors of Amplifon S.p.A. (MTA; Bloomberg ticker: AMP:IM), global leader in hearing solutions and services, approved the Interim Financial Report as at September 30th, 2018 during a meeting chaired by Susan Carol Holland.

For the sake of effective comparison with the same period of 2017, the income statement figures for the first nine months of 2018 and the third quarter of 2018 in the following tables were prepared without applying the accounting standard IFRS 15. The following comments are, therefore, based on these figures, unless stated otherwise.

1 For the sake of effective comparison with the figures for the first nine months of 2017, the data commented on in this press release refer to the first nine months of 2018 without the application of IFRS 15 ("@ IFRS 2017"), unless stated otherwise

MAIN CONSOLIDATED ECONOMICAL AND FINANCIAL FIGURES

First nine months 2018 @ IFRS 2017 (*)

First nine months 2017 @ IFRS 2017 (**)

(Euro millions)

RecurringNon recurringTotal

% on recurring

RecurringNet revenues

967.6

-

967.6

100.0%

901.8

EBITDA

154.4

(6.0)

148.4

EBIT

102.6

(6.0)

96.6

16.0% 10.6%

140.8

95.3

Net income

65.3

(4.4)

60.9

6.7%

50.9

30/09/2018 @ IFRS 2018

Net Financial Position

348.6

Q3 2018 @ IFRS 2017 (*)

(Euro millions)

RecurringNon recurringTotal

% on recurring

RecurringNet revenues

304.8

-

304.8

100.0%

278.0

EBITDA

42.1

(6.0)

36.1

13.8%

37.4

EBIT

24.3

(6.0)

18.3

Net income

16.1

(4.4)

11.8

8.0% 5.3%

22.3

11.2

% on	Change % on
recurring	recurring
100.0%	7.3%
15.6%	9.6%
10.6%	7.7%
5.6%	28.1%
31/12/2017 @ IFRS 2017 (**)	Change %
296.3	17.7%
Q3 2017 @ IFRS 2017 (**)
% on	Change % on
recurring	recurring
100.0%	9.7%
13.5%	12.6%
8.0%	8.7%
4.0%	44.6%

Non recurring

Total

-

901.8

(3.9)

136.9

(3.9)

91.4

(2.8)

48.2

Non recurringTotal

-

278.0

(1.4)

36.0

(1.4)

20.9

(1.1)

10.1

(*) 2018 figures without the application of IFRS 15 accounting principle in order to allow comparability with 2017 as reported figures (**) 2017 as reported figures

"We are extremely satisfied with the strong growth and continuous improvement in profitability reported in the third quarter. Altogether, the results achieved in first nine months allow us to prepare to close the year with record results for the fourth year in a row", said Enrico Vita, Amplifon's Chief Executive Officer "The strong revenue growth, which largely outpaced the market, reflects an excellent organic growth and our continuous focus on acquisitions. The strong top line growth, the improved operational efficiency and the greater scale reached in core countries, enabled us to further increase profitability. In addition, the significant reduction in financial expenses, due to the refinancing of the bond with new credit lines at more favorable conditions, along with the improved tax rate brought recurring net profit to around 65 million euros in the first nine months, up 28% compared to the same period of last year. Finally, we are extremely satisfied with the excellent response of Italian consumers to the launch of the new Amplifon product line and digital ecosystem. These outstanding results allow us to be very confident of achieving our medium-long term objectives, which will be further strengthened by the unique opportunity related to the acquisition and integration of GAES, to be closed by the end of the year as planned."

Overview

Consolidated revenues amounted to 967.6 million euros in the first nine months of 2018, an increase of 10.4% at constant exchange rates and of 7.3% at current exchange rates compared to the same period of the prior year. This result was mainly driven by strong organic growth (+6.9%) and acquisitions (+3.5%), while the foreign exchange effect was negative for 3.1%.

EBITDA net of non-recurring expenses for the first nine months rose 9.6% at current exchange rates to 154.4 million euros, with the margin increasing by around 40 basis points despite the adverse foreign exchange effect, although progressively improving in the period. EBITDA as reported reached 148.4 million euros, up 8.4%. Recurring net profit rose 28.1% to 65.3 million euros, while the as reported figure increased 26.4%. The strong net profit increase, both as reported as well as recurring, is attributable to the significant decrease in financial expenses and the improved tax rate, on top of a higher EBITDA. The balance sheet and financial indicators continue to demonstrate the Company's solidity: free cash flow reached 50.8 million euros, rising 49.5% or 16.8 million euros compared to the same period of the prior year thanks to strong operating cash flow; net debt was 348.6 million euros, about 52 million euros higher than the 296.3 million euros recorded at December 31st, 2017, compared to an increase of around 96 million euros reported in the same period of the prior year (from 224.4 million euros on December 31st, 2016 to 320.7 million euros on September 30th, 2017).

Amplifon reported revenues of 304.8 million euros in the third quarter of 2018, an increase of 10.9% at constant exchange rates and of 9.7% at current exchange rates compared to the third quarter of 2017. The increase was driven by excellent organic growth (+7.8%) and acquisitions (+3.1%), while the foreign exchange effect was negative for 1.2%, mainly as a result of the strengthening of the Euro against the Australian dollar. Recurring EBITDA rose 12.6% at current exchange rates compared to the third quarter of 2017 to 42.1 million euros, with the margin increasing of about 35 bps thanks to the improved operating leverage, while EBITDA as reported was basically unchanged due to the 6.0 million euros in non-recurring expenses recorded in the quarter related to the GAES acquisition. Recurring net profit rose 44.6% to 16.1 million euros, while net profit as reported was up 16.3%, both reflecting the strong reduction in financial expenses, thanks to the refinancing of the bond with new credit lines at more favorable conditions, and the improved tax rate.

The Company's network expansion program continued in the first nine months, both organically and through acquisitions, adding 167 stores and 73 shop-in-shops2, of which 66 stores and 20 shop-in-shops in the third quarter alone. The acquisitions, 130 stores and 17 shop-in-shops, were made mainly in core countries such as Germany, France and Canada, while 37 stores and 56 shop-in-shops were opened in the period. The total net cash-out for acquisitions amounted to 72.3 million euros, including the advance payment of 25 million euros made for the GAES acquisition in Spain.

Economic results for the first nine months of 2018

Consolidated revenues amounted to 967.6 million euros in the first nine months of 2018, an increase of 10.4% at constant exchange rates and of 7.3% at current exchange rates compared to the first nine months of the prior year. Revenues were driven by strong organic growth (+6.9%) and acquisitions (+3.5%), while the foreign exchange effect had a negative impact of 3.1% due mainly to the strengthening of the Euro against the US and Australian dollars, although progressively improving in the period. The results for the first nine months of the year were achieved despite an extremely challenging comparison base as in the first nine months of 2017 revenues were 12.2% higher than in the same period of 2016. The strong growth trend was supported by the solid performances posted in all the geographic areas in which the Company operates: excellent growth in revenues was recorded in EMEA thanks to outstanding organic growth, along with the strong impact of acquisitions, mainly in Germany and France; in the AMERICAS the acceleration in top line growth continued driven by strong organic growth thanks to the excellent performance of Miracle-Ear and Amplifon Hearing Health Care; the strong growth in revenues recorded in APAC reflects the solid performance posted in Australia and the continuous organic growth in New Zealand, which almost entirely offset the particularly adverse foreign exchange effect.

Thanks to the significant top-line acceleration and improved operating leverage, recurring EBITDA maintained its solid growth trend in the first nine months of the year, rising 9.6% at current exchange

2 Net of the disposal of Direito de Ouvir's distribution network in Brazil.

rates to 154.4 million euros, with the margin coming in at 16.0% of revenues, about 40 basis points higher than in the same period of 2017 despite the adverse FX translation effect, even though it progressively improved in the period. EBITDA as reported rose 8.4% to 148.4 million euros. Non-recurring expenses of 6.0 million euros relating to the GAES acquisition, announced in July, were incurred in the first nine months.

EBIT, net of non-recurring expenses, amounted to 102.6 million euros or 10.6% of revenues, an increase of 7.7% compared to the same period of 2017. This increase is attributable to the improvement in EBITDA, which was partially offset by higher depreciation and amortization linked to network expansion. EBIT as reported was up 5.7%.

Recurring net profit reached 65.3 million euros, an increase of 28.1% compared to the same period of 2017, while net profit as reported grew 26.4%. This excellent result is attributable to both the strong reduction in financial expenses, thanks to the refinancing of the bond (expired on 18 July 2018) with new credit lines granted at significantly better terms and conditions, and the improved tax rate which went from 37.5% in the first nine months of 2017 to the current 28.0% (as reported figures).

Performance by geographic area

EMEA: rock solid execution delivering outstanding profitable growth

Revenues in Europe, the Middle East and Africa (EMEA) reached 664.9 million euros in the first nine months of 2018, an increase of 12.4% at constant exchange rates and of 11.7% at current exchange rates, compared to the same period of the prior year. This result is explained for 7.3% by excellent organic growth (which peaked at 8.5% in the third quarter), for 5.1% by acquisitions, while the foreign exchange effect had a negative impact of 0.7%.

In Europe, Italy reported a strong performance thanks to the successful roll-out of the new Amplifon product line and digital ecosystem, as well as the effective integrated marketing and communication campaigns. Excellent growth continued in France and Germany, driven by both strong organic growth and significant M&A activity. An outstanding performance was reported in the Iberian Peninsula, supported mainly by double digit organic growth, which was also reported in the Netherlands and Belux.

EMEA continued to show strong improvement in EBITDA which increased 24.0% on a recurring basis, with the margin rising 160 basis points from the 15.2% recorded in the first nine months of 2017 to 16.8% in the same period of 2018, as a result of the strong increase in revenues, greater operational efficiency and the larger scale reached in the core markets, despite the strong marketing investments.

AMERICAS: solid sales momentum, consistently accelerating since beginning of the year

In the first nine months of 2018 revenues in AMERICAS amounted to 169.4 million euros, an increase of 5.7% in local currency compared to the same period of the prior year. This solid result is explained by good organic growth (+5.0%), which further accelerated in the third quarter (+6.8%), and by acquisitions (+0.7%). Revenues continue to be heavily penalized by the unfavorable USD/EUR exchange rate (-7.0%, although progressively improving in the period) that caused a 1.3% contraction in revenues at current exchange rates. In the United States both Amplifon Hearing Health Care and Miracle-Ear reported strong growth with respect to the first nine months of 2017. Canada also contributed to the Region's result, thanks mainly to the solid acquisition-driven growth.

EBITDA in AMERICAS was basically unchanged (-1.1%) compared to the first nine months of 2017 due to the adverse FX translation effect. The margin rose slightly (10 basis points), despite the particularly challenging comparison base, particularly in the third quarter, as the margin in the third quarter of 2017 was more than 400 basis points higher than in the same period of 2016.

ASIA-PACIFIC: strong sales performance affected by FX headwind, profitability reflecting significant marketing investments and FX translative effect

Revenues in ASIA-PACIFIC amounted to 131.5 million euros in the first nine months of 2018, an increase of 6.9% at constant exchange rates despite the challenging comparison with the first nine months of the prior year. The unfavorable foreign exchange effect continued, negatively impacting revenues for 8.8%. The result for the Region is attributable to the solid performance posted in Australia, supported by the launch of the new National Hearing Care marketing campaign in the third quarter, and the strong organic growth recorded in New Zealand and India.

In ASIA-PACIFIC EBITDA reached 34.8 million euros, down compared to the same period of 2017 as a result of strong marketing investments, that increased about 40% in the first nine months of 2018 compared to the same period in 2017, due to the launch of the new brand image of National Hearing Care in Australia. EBITDA also reflects the significant adverse FX translative effect. The Region's EBITDA margin is still among the highest levels of profitability within the Company.

Balance sheet figures as at September 30th, 2018

The balance sheet and financial indicators continue to demonstrate the Company's solidity and ability to sustain future growth opportunities. According to the new accounting standards, net equity amounted to 560.9 million euros at September 30th, 2018, showing an increase compared to 535.8 million euros of net equity at start of the year and a decrease of 52.6 million euros compared to 588.4 million euros posted at September 30th, 2017 as effect of the application of the new IFRS accounting standards.

Operating cash flow amounted to 93.0 million euros, 16.2 million euros higher (+21.1%) than the 76.8 million euros reported in the same period of the prior year. The free cash flow, positive for 50.8 million euros, also increased 49.5% compared to the 34.0 million euros generated in the same period of 2017, after investments (net of disposals) of 42.2 million euros compared to 42.8 million euros in the same period of 2017. The net cash-out for acquisitions (72.3 million euros, approximately 25 million euros of which explained by the advance payment for the GAES acquisition), along with the investments in financial activities of 30.8 million euros, bring the net cash flow for the period to negative 52.3 million euros compared to negative 93.0 million euros in the 2017 comparison period.

Net financial debt amounted to 348.6 million euros at September 30th, 2018 compared to 296.3 million euros at December 31st, 2017, with the net debt/EBITDA ratio coming to 1.49x.

Subsequent events after September 30th, 2018

After the end of the first nine months of 2018, as announced on October 8th, Amplifon obtained all antitrust clearances for the GAES acquisition, announced on July 24th. Both the Spanish and Portuguese antitrust authorities approved the transaction with no conditions. On the same date, Amplifon also announced the completion of the syndication of the financing facility for the acquisition. The Company confirms, therefore, the expected closing of the transaction by the end of fourth quarter 2018, following some minor activities related to completing the transaction.

Outlook

The Company expects the favorable growth trend, both organic and external, to continue in the last quarter of 2018 in all the geographic areas. This performance will support the continuous increase in profitability, thanks also to the ongoing improvement in operational efficiency and the greater scale reached in core markets. The increase in profitability will more than offset the investments in marketing and communication, network expansion and people, supporting sustainable long-term growth. Amplifon, as announced during the Capital Markets Day held in March 2018, also expects to enter the Chinese