Amplifon — Investor Presentation 2018

Mar 26, 2018

2018 Capital Markets Day

Reshaping the hearing care retail around the customer

Milan | March 26th , 2018

Disclaimer

This presentation contains management preliminary estimates and forward-looking statements, including estimates on Amplifon's future financial performance and the expected development of the hearing aids industry. These information and statements are based on estimates and assumptions made by management of the company and are believed to be reasonable, as of this date, though by their nature future estimates are uncertain and difficult to predict. Actual results or experience could differ materially from the information contained herein.

Any reference to past performance of Amplifon shall not be taken as an indication of future performance.

This document, provided to you solely for information purposes may not be reproduced or redistributed – in whole or in part – to any other person.

All investment decisions must not rely on this presentation.

This presentation does not constitute an offer to sell or the solicitation of an offer to buy the securities discussed herein.

In compliance with Article 154-bis of the "Uniform Financial Services Act" (Italian Legislative Decree 58/1998), the Financial Report Officer, Gabriele Galli, declares that the accounting information reported in this presentation corresponds to the underlying documentary reports, books of account and accounting entries.

Today's agenda

11:00 – 11:30	Reshaping the hearing care retail around the customer	Enrico Vita Chief Executive Officer
11:30 – 12:00	An attractive industry with long-term growth ahead	Giulio Pizzini Chief Strategic Development Officer
12:00 – 13:00	Fast forward in the age of costumer	Alessandro Bonacina Chief Marketing Officer
13:00 – 13:40	Lunch break
13:40 – 14:10	Execution on a solid strategy: 2020 financial targets	Gabriele Galli Chief Financial Officer
14:10 – 14:15	Closing remarks	Enrico Vita Chief Executive Officer
14:15 – 15:15	Q&A session

Reshaping the hearing care retail around the customer

Enrico Vita Chief Executive Officer

2018 Capital Markets Day

Today's objectives

Introduce our new Leadership Team

Share our vision of reshaping the hearing care retail

Provide guidance on our increasing financial targets

Our new Leadership Team

Corporate Officers

Alessandro Bonacina Chief Marketing Officer

Cristian Finotti Chief Procurement Officer

Francesca Morichini Chief HR Officer

Gabriele Chiesa Chief Information Officer

Gabriele Galli Chief Financial Officer

Giulio Pizzini Chief Strategic Development Officer

EVP Regions

Marc Lundeberg EVP AMERICAS

Iacopo Pazzi EVP EMEA

Craig Stevens EVP APAC

Joined after 2016 CMD

Amplifon today

Delivery on our 2016 promises

Strategic pillars

STRENGTHEN LEADERSHIP IN CORE MARKETS	▪ Delivered total growth > 2x vs. market ▪ Significantly expanded network coverage in Germany, France, Spain and Portugal (~430 shops)1 ▪ Strongly invested in the US to accelerate organic growth
MARKETING EXCELLENCE	▪ Rolled out the global brand identity, improving all brand KPI customers)1 ▪ Enhanced CRM capabilities and performance (+20% revenues from returning ▪ Accelerating on the digital agenda (3x revenues from digital marketing)1 ▪ Advertising effectiveness (established global partnerships with creative and media agencies)
INNOVATIVE SERVICE MODEL	▪ Rolled out proprietary, best-in-class Amplifon 360 program in key markets ▪ Significant investments to launch Amplifon product line and multi-channel ecosystem in 2018
EFFECTIVE EXECUTION CAPABILITIES	▪ Unmatched recruiting, training and retention platform for hearing care professionals ▪ Effective, talented and aligned organization ▪ Best integrated IT platform in the industry to support continuous innovation in customer experience and internal processes

1. 2017 vs. 2015

Delivery on our 2016 promises

Key targets

	2016 Plan targets	2016 actual vs. 2015	2017 actual vs. 2016
SALES GROWTH in local currencies	Mid-to-high single digit CAGR 2015-2018	+10.4%	+12.5%
PROFITABILITY INCREASE recurring	>150bps EBITDA margin 2018 vs.2015	+50bps	+50bps
NETWORK EXPANSION	+600 Stores 2018 vs.2015	+230 Stores	+345 Stores

Creating value for Shareholders

Outperformed all indexes

1. March 20th, 2018

Growth drivers supporting our proven business model

New mega-trends supporting secular drivers

SECULAR TRENDS EMERGING TRENDS

Demographic

Population growth of over 65 years old is >3% globally and >2% in developed world¹

Consumer behaviors

Active ageing is a strong megatrend, consumers are living way longer than previous generations, are more dynamic and want to continue living life to the fullest

Penetration

Continued increase in penetration worth ~2% annual growth

Digital

Digital penetration is growing quickly among senior consumers (i.e. ~75% of customers will use internet weekly by 2020) 2

1. YoY growth 2015-2030 estimated by UN 2. Over 55 in Amplifon footprint using internet at least once a week in 2020 , estimated by Eurostat, US Census Bureau and Australian Bureau of Statistics

Strategic pillars to 2020

Evolution to reshape the hearing care retail around the customer

STRENGTHEN LEADERSHIP IN CORE MARKETS

INNOVATIVE AND DISTINCTIVE CUSTOMER EXPERIENCE

EFFECTIVE EXECUTION CAPABILITIES

Fast forward in the age of the customer

Solid strengths and plans to deliver 2018-20 ambition and step-change in innovation to drive the next wave of growth

I N N O V A T I O N

Innovation in product and customer experience

Accelerate innovation, launching Amplifon product line and multi-channel ecosystem

2020 Key financial targets

Further increasing our ambitions

SALES GROWTH in local currency	High-single digit CAGR1 2017-2020
EBITDA Margin recurring	~18.5% in 2020
CUMULATED OPERATING CASH FLOW	~€600 million 2018 - 2020

1. Compound Annual Growth Rate

An attractive industry with long-term growth ahead

Giulio Pizzini Chief Strategic Development Officer

An attractive industry

Update on key trends

MARKET	Long-term sustained growth supported by secular trends (demographics, penetration)
PRODUCTS	Enhancing user experience beyond audiological features
COMPETITION	Fragmented retail market with few international chains
CONSUMERS	Low consumer awareness and knowledge concerning brands and customer journey

Long-term sustained growth driven by secular trends

Demographics

• Aging population especially in developed countries
• Increasing exposure to noise pollution

Penetration

• Increasing awareness
• Improving technology
• Growing wellness relevance

Note: Private market only Source: Amplifon estimates

Penetration will continue to improve

• In the developed world penetration is improving both for disabling losses and (more slowly) for mild losses
• In emerging markets penetration is still negligible (<5%)
• Overall, we estimate the penetration rate to be increasing by ~50 bps per year

Source: Amplifon estimates

Global retail market concentrated in developed countries

Developed countries

• US alone represents ~40% of global retail market value
• Following 5 countries (Germany, France, Japan, Canada, Italy) account for additional ~30%

Emerging countries

• Growing faster than developed countries but still not relevant, in particular for premium segment
• Among emerging countries, China represents a sizeable opportunity for long-term growth

Note: Private market only Source: Amplifon estimates

China is a sizeable opportunity for Amplifon

Chinese market key insights

• >1M units by 2020E growing at >10% per year
• Very low penetration (~5%)
• ASP over 500€ for premium segment (~30% of units)
• Specialist retailers channel represent ~70% of total market
• Fragmented market of small regional players

Amplifon plan for China

• Market entry through Joint Venture with local partner in 2018
• Consolidation of Amplifon presence in 2019-2020
• Full-bore expansion to build at scale business from 2020 onwards

Source: Amplifon estimates

Current innovation cycle focused on enhancing user experience beyond audiological features

RECHARGEABILITY	▪ Rechargeable products launches in 2017 have been markedly successful ▪ Proof that innovation in delivering real benefit to customers can be very valuable
CONNECTIVITY	▪ Phone connectivity becoming a standard feature ▪ Many opportunities for innovation and development of future use cases
SERVICE	▪ Manufactures developing service platforms around hearing aids focusing on remote care ▪ Fertile experimentation ground for improving customer experience and enrich customer offer

Fragmented global retail market

Global retail share by segment

INDEPENDENTS	~50%	▪ Players with <10 PoS, under gradual consolidation	Still very relevant
SPECIALTY RETAILERS1	~35%	▪ Very few international retail players (~25% of the global retail market, of which almost 10% is represented by Amplifon) ▪ National retail chains accounting for ~10% of the global retail market	Few international players
NON-SPECIALTY RETAILERS	~10%	▪ Scattered presence, focusing on the "price seeking" segment of the market	Limited and country specific
ONLINE PLAYERS	<3%	▪ Limited growth potential due to limitations in service model and customer acceptance	Marginal

1. Including players owned by manufacturers Source: Amplifon estimates

Fast forward in the age of the customer

Alessandro Bonacina Chief Marketing Officer

Reshaping the hearing care retail around the customer

Ready to deliver 2018-20 ambition and accelerating innovation to drive the next wave of growth

Accelerate innovation, launching Amplifon product line and multi-channel ecosystem

Leveraging data to deliver customer-driven strategy

Strengthen our leadership in data, to create a distinctive knowledge to tailor products, services and experiences around needs of customers

Big data collection	Best-in class infrastructure and capabilities	Amplifon 'Consumer Lab'
Collect and manage hearing aid usage big data Unmatched base of 5 million customers Transactional, clinical and behavioral data	New data technology infrastructure New competences in digital and data science	Global consumer panel with top research partners Capture new trends, insights and behaviors Build new propositions with consumers
and inspiring innovation	Data empowers personalized experience

• A unique data asset in the world on the senior segment
• Enriched by our global scale
• Continuously growing with our fast customer base expansion

Amplifon 'Consumer lab' is building a unique customer knowledge in the industry

New powerful insights, outcome of a data project involving thousands of consumers, across 2 continents, for one year

Customer journey	Research & discovery	Hearing assessment & counseling	Living with hearing aids
Customer behaviours and needs	Low awareness, only 1.3 brands known, while average 5-7 in consumer industries Stigma driven by information asymmetry	Information overload concentrated in one hour consultation Need for personalized experience	Low education on adaptation process Limited search for hearing aid adaptation as hearing worsen
Opportunity from data	Increase penetration Lower acquisition cost	Increase conversion Sustain ASP	Improve customer life-time value Shorten repurchase cycle

"Top of mind" brand to drive penetration and share

Amplifon Brand, leader in equity and consideration, is growing at high single digit p.a., with ambition to go further

Scale-up media strategy	Content factory	Digital acceleration
Leverage on scale, optimizing cost Boost performance with global top-notch agencies Media investment portfolio strategy	Step-change in content quantity and quality ‒ Global hero campaigns ‒ 'Amplifon content factory'	Accelerate further digital agenda to become the undisputed leader
	Brand power drives penetration and customer acquisition cost

Global scale and strong partnerships to outperform market growth BRAND

Increase penetration at higher efficiency

First global hero campaign: The new generation

Reach a new untapped customer segment

First strong results from "The new generation" campaign

Become the undisputed leader in digital

Reach a new untapped customer segment

Digital leader	Personalised advertiser	Best-in-class digital technology
Best digital properties SEO leadership	Digital top of mind player Lead generation machine	Website platform service design and technology Data management platform to leverage big data Multi-channel experience digital and in-store

Digital penetration is increasing faster among seniors

Our digital transformation delivered exciting results in 2017 and will accelerate further

2017 achievements	2018-2020 key initiatives
Web-redesign	Start leveraging global partnerships with
in 15 countries	Google and Facebook
Advanced online booking in 5 markets	Become number 1 in SEO
Giant leap in search	Offer to customers new advanced services
engine optimization (SEO)	online
Signed global partnership with	Invest in the most advanced
Google and Facebook	digital technology
2017 digital revenues	Digital revenues expected to
~ 2.5x vs 2016	double by 2020

Become "Partner of choice" for all customers through data and technology

Increase customer life-time value reducing repurchase cycle

Uniqu manag
Evolutio custom based or custome
CRM and d

Unique lifecycle management	Advanced statistical modeling	Top notch technology
Evolution of customer lifecycle based on new customer insights	Big data in action delivering predictive and propensity modeling	New CRM platform fully automated and real time capable Seamless digital and physical CRM experience

CRM is key to foster repurchase and drive organic growth

Introducing Amplifon product line

A new 'product-as-a-platform' strategy to own product category and get long lasting competitive advantage

Amplifon product line to reinvent the way hearing aids are perceived

We have reimagined our world by placing customers first

Amplifon product line to own hearing care innovation and consumerize hearing aids

Amplifon product line to access hearing aid usage data to offer personalized experiences

	In-store Experience personalization, via Amplifon 360	At home Real time messages via CRM
	Everywhere and every time Tailored services and support according to usage	Medical community Proprietary studies for broader interest of medical community

Innovation to foster customer experience beyond product and store

Macro journey from the Amplifon 'Consumer lab'

Introducing HIVE: the Amplifon multi-channel ecosystem

HIVE

Is the very first ecosystem in the hearing care industry

A pervasive, pioneering environment able to complete and enhance Amplifon's brand experience seamlessly for all stakeholders on all existing touchpoint, creating new ones thanks to advanced digital services

HIVE: a future proof innovative proprietary platform

Our R&D engine going forward, leading to solid long-lasting competitive advantage

I N N O V A T I O N

Introducing MyAmplifon APP: the very first HIVE touchpoint I N N O V A T I O N

Our ecosystem is a platform to offer continuous innovative services along the full customer journey

Macro journey

New Services that will enhance the experience of the customer across touch points, enabled by the ecosystem

Introducing Amplifon Companion

Amplifon proprietary differentiator: the Companion I N N O V A T I O N

First digital companion based on a triggered event algorithm that understands customer's needs and provides useful advice to support the on boarding journey

Artificial Intelligence ready

The Companion Companion proprietary algorithm

A trigged event algorithm based on:

• Time
• Hearing aid data
• Appointments
• APP usage

Designed to be integrated with additional data when available and to be powered by Artificial Intelligence

Multi-channel ecosystem: short-term services agenda, only the starting point

Macro journey

Multi-channel ecosystem: our open innovation platform going forward

Life changing and growth driving innovation

Amplifon 2020: fast forward in the age of the customer

Solid strengths and plans to deliver our 2018-20 ambition Step-change in innovation and R&D to support the next growth wave

Execution on a solid strategy: 2020 financial targets

Gabriele Galli Chief Financial Officer

2017: another set of record results

Successfully executing on a solid strategy

RECORD REVENUES	▪ €1.27bn; +12.5% in LC vs. 2016 ‒ Outpacing the global hearing care retail market • +6.6% organic growth vs. 3.5% market (~2x market growth) • Increased contribution from M&A (+5.9%) ‒ Balanced growth across Regions
ALL-TIME HIGH PROFITABILITY	EBITDA1 ▪ : €218m; +14.9% vs. 2016, corresponding to 17.2% margin (+50bps) ▪ Net profit: €101m; +58.1% vs. 2016 (€95.0; +34.2% on a recurring basis)
STRONG OPERATING CASH FLOW GENERATION	▪ €169m, +17.3% vs. 2016, with a strong ~80% EBITDA conversion supporting increased investments, primarily for openings & acquisitions, to foster future growth
SOLID CAPITAL STRUCTURE	▪ Net Debt at €296m (1.35x Net Debt/EBITDA), after cash-out for acquisitions of €111m and increased dividends & buy-back for €51m ▪ Successful debt refinancing crystalizing better terms and conditions from 2018 onwards

1. Recurring

Clearly defined set of financial priorities

Increasing ambitions on Sales & EBITDA, with additional strong focus on EPS and Cash Flow

Deliver great shareholder returns

Three key components fueling top-line growth

Consistent, reliable and diversified drivers

1. Main FX assumptions used for 2018-2020: €/USD at 1.20; €/AUD at 1.55

Continued EBITDA expansion while investing to drive long-term sustainable growth

Scale and optimization activities more than compensate high investments for growth

	PROFITABILITY DRIVERS		INVESTMENTS TO SUSTAIN GROWTH
SCALE	Scale effect on fix-cost base	MARKETING	~8% of revenues in 2017 Expected ~15% CAGR in 2017-2020
COGS	Central direct procurement	CORPORATE	Global centers of excellence IT backbone transformation
SG&A	Central indirect procurement
	Group processes & back-end optimization (Finance, HR, IT, Procurement)	PEOPLE	High performing organization People excellence Winning culture

Delivering an EBITDA Margin recurring of ~18.5% in 2020

Steady EPS growth also via financial expenses reduction

Building value through debt refinancing

• Net Financial Position containment and optimization
• Reduction of available cash on Balance Sheet also via Revolving Credit Facilities
• Refinancing of Bond with Bank and Revolving Credit Facilities
• ~€10 million¹ yearly financial expenses reduction
• Fix rate to benefit of historically low interest rates
• Debt maturity extension

CURRENT BOND

Amount: €275 million

Maturity: July 2018

Cost: ~€13.5 million (@ ~4.875%)

BANK & REVOLVING CREDIT FACILITIES²

Amount: €395 million

Maturity: 2020-21-22

Cost: <€4.0 million

1. On a full-year basis (starting from 2019) 2. Partially drawn

Tax rate reduction contributing as well to EPS acceleration

• Utilization of non-accrued tax assets following improved financial performance in selected markets
• 5 years (2015-2019) tax benefit related to Patent Box in Italy for Amplifon trademark
• Opportunity from 2018 Italian Budget Law¹to frank goodwill arising from share deals via payment of a substitute tax to benefit from tax deduction in the following five years (16% vs 28%)
• Positive impact from tax reforms in the US (from 35% to 21%), France and Belgium

Expected tax rate < 30% in 2018-2020

1. Art. 1, comma 81 & 83

Strong Operating Cash Flow will support increasing Capex & M&A to foster Company's growth

OPERATING CASH FLOW	CAPEX	CASH-OUT FOR M&A
Conversion1 ▪ High Cash Flow – ~80% in 2017 ▪ Improvement of NWC via ad-hoc initiatives	▪ Network expansion and upgrade ‒ ~200 openings in 2018-2020 ‒ Relocations and refurbishments ▪ Investments for customer experience innovation ▪ Investment to enhance customer data infrastructure ▪ Backbone transformation	▪ Continued sustained pace of piecemeal acquisitions in selected core countries ‒ France ‒ Germany ‒ Canada stores2 ▪ ~500 in 2018-2020
~€600 million Cumulated 2018-2020	~€240 million Cumulated 2018-2020	~€240 million Cumulated 2018-2020

Further deleverage also after attractive shareholder returns and ensuring significant financial flexibility

1 Calculated as Operating Cash Flow/EBITDA 2. Refers to Corporate Stores only

IFRS 15 will have a marginal accounting impact on revenues and profitability

IFRS 15¹- MAIN CHANGES IMPACT ON KEY METRICS

• IFRS 15 establishes more in detail when and how much revenue to recognize
• Main changes:
• ‒ Pricing of each Performance Obligation, also if not sold separately
• ‒ Revenue deferral vs prior cost accruals

• ‒ Capitalization of contract costs (i.e. sales commissions)

• For a growing business, revenues deferral higher than revenues reversal

• ‒ Marginal decrease in revenue growth: ~€10m
• ‒ Marginal decrease in EBITDA growth: ~€5m

No change at all in cash flow

1 Effective from January 1st 2018

2020 Key financial targets

Further increasing our ambitions

SALES GROWTH in local currency	High-single digit CAGR1 2017-2020
EBITDA Margin recurring2	~18.5% in 2020
CUMULATED OPERATING CASH FLOW	~€600 million 2018 - 2020

1. Compound Annual Growth Rate 2. Excludes IFRS 15 & 16

Capital Markets Day | March 26th, 2018 59

Closing remarks

Enrico Vita Chief Executive Officer

A long way to grow

Closing remarks

Q&A session

FRANCESCA RAMBAUDI Director Investor Relations Contacts

Tel: +39 02 5747 2261 francesca.rambaudi@amplifon.com

PAOLA BEZZI Junior specialist Tel: +39 02 5747 2310 paola.bezzi@amplifon.com

ELISA GUIDOTTI Stagiaire

Tel: +39 02 5747 2317 elisa.guidotti@amplifon.com

OLGA LEPECHKINA Assistant Tel: +39 02 5747 2542 olga.lepechkina@amplifon.com