FINANCIAL STRUCTURE

Debt and financing

We count on a solid financial structure that allows us to support our ambitious growth projects and to embrace future opportunities thanks to a strong cash flow generation.

Key balance sheet figures

(Thousand euros)

Medium and long-term financial indebtedness

Short-term financial indebtedness

Cash and cash equivalents

Net financial indebtedness

Group net equity

Minority interests

Net equity

Net financial indebtedness/Group net equity2

Net financial indebtedness/EBITDA2

30/09/2019

Medium and long-term financial indebtedness

803,687

Short-term financial indebtedness

178,309

Cash and cash equivalents

-125,245

Net financial indebtedness

856,751

Group net equity

636,737

Minority interests

1,251

Net equity

625,546

Net financial indebtedness/Group net equity2

1.35x

Net financial indebtedness/EBITDA2

2.20x

31/12/20181

Medium and long-term financial indebtedness

877,688

Short-term financial indebtedness

53,083

Cash and cash equivalents

-89,915

Net financial indebtedness

840,856

Group net equity

594,919

Minority interests

1,028

Net equity

595,947

Net financial indebtedness/Group net equity2

1.41x

Net financial indebtedness/EBITDA2

2.46x

1 The 2018 balance sheet figures have been restated following the temporary allocation of the GAES purchase price.
2 Ratio calculated as per the definitions agreed with banks and investors to take into account the effects of the application of the new accounting principles IFRS 15, IFRS 9, and IFRS 16.

Debt composition and maturity

In order to ensure consistency between our financial structure and our strategic objectives, we diversify the composition and maturity of the debt.

Term

Rate

Variable rates are primarily indexed to Euribor (Europe Interbank Offered Rate).

FINANCING

  • Private placement 2013-2025 released onto the US market by Amplifon USA for 130 million dollars;
  • Medium-long-term unsecured bilateral loans with primary banking institutions for a total of 200 million euros;
  • Irrevocable revolving credit lines with top-tier banks for 195 million euros;
  • Unsecured syndicated loan for the acquisition of GAES for 530 million euros and articulated in two lines (Facility A for 265 million euros amortizing due on 28 September 2023 and Facility B for 265 million euros bullet for 18 months but extendable to 28 September 2023).

COVENANTS

The private placement 2013-2025, bilateral loans and revolving lines are subject to the following financial covenants:

  • Net Financial Debt/Group Net Equity ratio must not exceed 1.65x;
  • Net Financial Debt/EBITDA ratio for the last 4 quarters must not exceed 2.85x.

These ratios, in the case of important acquisitions, may be increased to 2.20x and 3.26x, respectively, for a period not longer than 12 months, twice in the life of the respective facilities.

The syndicated loan for the acquisition of GAES is subject to the following financial covenants:

  • Net Financial Debt/EBITDA ratio for the last 4 quarters must not exceed 3.26x until June 30th, 2019 and 2.85x in the following periods;
  • Ratio between EBITDA for the last 4 quarters and the net interest payable of the same 4 quarters must be greater than 4.9x. The latter covenant also extends to private placement.

The covenants outlined above have been redefined with the banks and investors in the first few months of 2019 following introduction of the IFRS 15, IFRS 9 and IFRS 16 accounting principles that resulted in significant adjustments to the amounts recognized in the financial statements.

When calculating the ratios outlined above, please refer to the following financial metrics calculated as:

  • EBITDA as per the Company’s consolidated financial statements net of the cost related to Stock Grants
  • Net Financial Debt as per the Company’s consolidated financial statements net of the financial liabilities for leases
  • Net Equity as per the Company’s consolidated financial statements
  • Net interest payable of financial statement net of interest payable arising from the financial liabilities for leases

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