EPH SpA — Earnings Release 2018

Aug 2, 2018

H1 2018 RESULTS

CONF. CALL AUGUST 2ND, 2018

ePRICE AT A GLANCE

"Serving the evolution of Italian households"

A unique online offer to cover customer needs… …powered by a complete e-Commerce platform

Q2&H1 HIGHLIGHTS

1. Execution of 2018 Strategic Guidelines delivering results: focus on margins and cost 1 efficiency have led to € -0.4 MN Ebitda in Q2 vs. € –4.9 MN in Q2 17

Revenues decreased due to the reduction in sales with negative contribution, but 2 growth was preserved on Major Domestic Appliances and 3P Marketplace

Gross Margin progressed faster than expected: +180bps in H1, +340bps in Q2. 3 Already very close to FY Target.

Operational efficiency uplift, while far from full deployment, begins to be evident. Fixed Cost Reduction almost fully implemented. 4

1. Cash consumption (excl. dividend): -33% in H1 and -78% in Q2 (€ 14.8M vs. € 22.0 MN in H1, € 1.5M vs € 6.6 MN in Q2) 5

EARLY RESULTS OF EXECUTION: EBITDA LOSSES HALVED IN H1

• Ebitda losses halved in H1
• Q2 Ebitda almost at break-even: Eu -0.4M vs. -4.9M in Q2 17
• Showing remarkable acceleration on Q over Q basis
• Expecting further improvements in H2

FIXED COSTS EFFICIENCY: -25% ON PAYROLL, -26% ON G&A AND IT COSTS IN Q2

• Headcount optimization (-25 employees)
• Renegotiation of G&A contracts and consultants reduction

(1) Excluding R&D Tax credit contribution

ACCELERATING EXECUTION IN Q2: FOCUS

€MN, %

5

*= not including 0,8M tax credit contribution

up to c. 10 M€ in FY18, back-end loaded

H1 18 GMV & REVENUES (1) (2)

(1) Gross Merchandise Volume includes revenues from products, shipping and 3P marketplace sales, net of returns and VAT included. (2) Revenue from services includes deliveries, warranties, B2B, ADV&Infocommerce and other revenues. GMV from services does not include B2B, ADV&Infocommerce;. Services&other have been restated and now include warranties.

8

H1 18: CUSTOMER KPIS

(1) Some of marketplace buyers possibly duplicated and in common with total ePRICE buyers, which are undpulicated

(2) Spending per Buyer is calculated on revenue from products, deliveries and revenue from 3P marketplacegiven, net of returns and VAT included

COSTS DOWN, CUSTOMER SATISFACTION UP

NET PROMOTER SCORE ePRICE, H1 2018

During H1 18, ePRICE improved its Total NPS by 17%. Streamlining processes for efficiency has also improved our level of technical and delivery services and while company costs are coming down, customer satisfaction is going up by 10 points in 6M.

Pick&Pay Network is confirmed as a top satisfaction channel, growing by 3 points.

Home Services deliveries maintain a very high level of satisfaction.

The Net Promoter Score is an index ranging from -100 to 100 that measures the willingness of customers to recommend a company's products or services to others. It is used as a proxy for gauging the customer's overall satisfaction with a company's product or service and the customer's loyalty to the brand.

9

Survey only on ePRICE 1P Sales, no marketplace included Survey made at 10/07/2018 (1) ePRICE Total NPS is made by the average weighted on the number of respondents

ePRICE GROSS MARGIN H1 & Q2

H1 18 Gross Margin vs. H1 17 Gross Margin (% of revenues)

• GM +180 bps YoY in H1, +340bps YoY in Q2
• Improvement due to reduced revenues with negative contribution, and increased marketplace contribution
• Damaged products impact still negative, to be improved in H2
• Negative impact from reduction of co-marketing TV Campaigns

H1 18 CONSOLIDATED P&L €MN

Profit & Loss	H1 2018	H1 2017	H1 YOY	Comments
Total Revenues	74.8	90.7	-17.5%	Gross Margin
Cost of Revenues	-62.5	-77.5	-19.3%
Gross Profit	12.3	13.2	-7.0%
Gross Margin %	16.4%	14.6%		S&M
Sales & Marketing	-5.9	-6.2	-6.1%
Fullfilment	-8.8	-9.2	-4.7%	increases by 0.3 points
IT	-0.9	-0.8	14.8%
G&A	-2.5	-4.1	-39.1%	G&A
EBITDA ADJUSTED	-5.7	-7.0	-19.3%
Ebitda Adjusted %	-7.6%	-7.8%		without tax credits)
Non recurring costs	1.7	-0.7	-356.0%	Non recurring
EBITDA	-3.9	-7.7	-48.9%
Ebitda %	-5.3%	-8.5%		July)
EBIT	-8.4	-10.7	-22.0%	EBIT
Ebit %	-11.2%	-11.8%
-				fulfilment center Investments
EBT from continuing operations	-9.0	-11.0	-17.8%
Ebt %	-12.1%	-12.1%		EBT from discontinued activities
EBT from discontinued activies	3.3	0.7		carve out related to Saldiprivati disposal
Net result	-5.8	-10.3	-44.2%
	-7.7%	-11.4%

Gross Margin

GM up by 180 bps vs. H1 17 mainly due to improvement on margin on goods, marketplace contribution, vendor rebates and info-commerce revenues (see chart GM waterfall)

S&M

S&M decreases 6% YoY mainly due to HR cost reduction. Advertising expenses for clients acquisition incidence on GMV increases by 0.3 points

G&A

G&A costs decrease 39% YoY due to HR and corporate cost reduction and to 0.8M€ tax credits contribution for R&D (-20% without tax credits)

Non recurring

Includes positive contribution of 2M€ related to the early termination of the logistics services contract with SRP (cashed in July)

EBIT

EBIT impacted by Y/Y 47% depreciation increase due to SAP and fulfilment center Investments

EBT from discontinued activities

3.3M€ including earn-out from Banzai Media Disposal and SRP carve out related to Saldiprivati disposal

Q2 18 CONSOLIDATED P&L €MN

Profit & Loss	Q2 2018	Q2 2017	Q2 YOY
Total Revenues	35.8	45.3	-21.0%
Cost of Revenues	-29.8	-39.3	-24.1%
Gross Profit	6.0	6.0	-0.6%
Gross Margin %	16.7%	13.3%
Sales & Marketing	-3.0	-3.6	-15.6%
Fullfilment	-4.0	-4.4	-7.3%
IT	-0.5	-0.5	-7.3%
G&A	-0.7	-2.1	-68.4%
EBITDA ADJUSTED	-2.3	-4.6	-50.9%
Ebitda Adjusted %	-6.3%	-10.2%
Non recurring costs	1.8	-0.3	-776.3%
EBITDA	-0.4	-4.9	-91.0%
Ebitda %	-1.2%	-10.8%
EBIT	-2.9	-6.4	-55.1%
Ebit %	-8.1%	-14.2%
-
EBT from continuing operations	-3.4	-6.5	-47.3%
Ebt %	-9.6%	-14.4%
EBT from discontinued activies	2.5	0.0
Net result	-0.9	-6.5	-85.7%
	-2.6%	-14.4%

Comments

Gross Margin

GM up by 340 bps vs. Q2 17 mainly due to improvement on margin on goods, marketplace contribution, vendor rebates and info-commerce revenues (see chart GM waterfall)

S&M

S&M decreases 16% YoY mainly due to HR cost reduction.

G&A

G&A costs decrease 68% YoY due to HR and corporate cost reduction and to 0.8M€ tax credits contribution for R&D (-29% without tax credits)

Non recurring

Includes positive contribution of 2M€ related to the termination of the logistics services contract with SRP

EBIT

EBIT impacted by Y/Y 58% depreciation increase due to SAP and fulfilment center Investments

EBT from discontinued activities

2,5M€ including earn-out from SRP carve out related to Saldiprivati disposal (already cash in at the closing in Nov. 2016)

Q2 18 NFP EVOLUTION VS. Q1 18

CASH CONSUMPTION VS. H1 & Q2 17

CONFIRMED GUIDELINES FOR 2018-2023

More conservative 2018-2023 market estimates after a disappointing year.

2018 efficiency plan with a leaner organization, worth up to 15-20% of 2017 cash costs (up to € 10 MN), back-end loaded.

Core Categories: confirmed leadership and focus on "Family Capex" (MDA, A/C, TV) and related services (warranties, delivery and installation, smart home).

Long tail/non service driven categories: accelerating shift to Marketplace to effectively cover demand and improve profitability (up to 50% penetration).

EBITDA and CF positive in 2019, including potential earn-outs and disposals.

NFP positive throughout the plan. Up to max. € 14 MN from earn-outs and disposals.

FINANCIAL CALENDAR

H1 18 Results	2nd August 2018
9M 18 Results	8th November 2018

BACKUP

BALANCE SHEET

Balance Sheet	31/12/17	31/03/18	30/06/18
Property, plant and equipment	7.8	7.5	7.0
Goodwill	14.3	14.3	12.8
Intangible assets	14.3	13.7	13.1
Financial assets	4.9	4.9	4.3
TOTAL ASSETS	41.3	40.4	37.2
NWC	(5.5)	3.9	7.7
Deferred tax assets	8.7	8.7	8.7
Provisions	(2.0)	(2.0)	(2.0)
Other non current debts	(0.4)	(0.4)	(0.4)
Net Invested Capital	42.1	50.6	51.2
Net Equity	63.4	58.7	57.7
Net Financial Position	(21.3)	(8.0)	(6.5)
Total Sources	42.1	50.6	51.2

Comments

Goodwill decrease (1.5MN) vs Q1 2018 is related to Sitonline disposal

NWC increase vs Q1 2018 is mainly due to 2MN termination cost with SRP and 0.9 MN tax contribution credits for R&D, both registered in other receivables

NET WORKING CAPITAL € MN

30/06/17	31/12/17	30/06/18
20.0	20.3	16.1
7.6	8.9	5.8
(28.1)	(37.7)	(22.0)
2.8	3.1	7.9
		7.7
		47
13	12	11
44	57	41
	2.3 47	(5.4) 47

€MN H1 18 CASH FLOW

Cash flow	H1 2018 ACT	H1 2017 ACT	Var %
Net result	-9.0	-11.0	-18%
D&A	4.4	2.9	52%
Other non cash items	-1.2	0.8	-256%
Change in WC	-8.8	-8.6	2%
Cash flow from operations	-14.6	-15.9	-8%
Net capex	-2.1	-6.6	-69%
Other assets	0.2
Disposal Assets	1.1
Acquisition	-0.3	-1.4	-77%
Cash flow from investing activities	-1.0	-8.0	-87%
Cash flow investing from discontinued
activities	0.8	1.2	-35%
Change in net equity	0	1.0
Dividend paid		-5.2
Treasury stock	0.0	-0.3	-100%
Change in financial credit (credit card)	1.5	-0.3	-585%
Change in bank debt	3.9	3.4	16%
Cash flow from financing activities	5.4	-1.4	-486%
CASH FLOW	-9.5	-24.1	-61%
Cash position at the beginning of quarter	21.1	54.7
Cash position at the end of quarter	11.6	30.6

Comments
Cash flow from operations and investing activities absorbed €15.6MN in H1 18 vs. €23.9MN in H1 17. €8.3MN improvement is mainly due to reduction in Net Capex € (4.5 MN), Ebitda Cash € (1.5MN) and Acquisition € (1.1 MN)
Negative Change in WC due to seasonality, in line with last year. DPO decreased over expectations reduced cash from WC for about € 2MN
Change in bank debt related to new short term bank loan provided in February 2018