press release board of directors approves...

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PRESS RELEASE

BOARD OF DIRECTORS APPROVES CONSOLIDATED FINANCIAL STATEMENTS

AND STATUTORY FINANCIAL STATEMENTS OF THE PARENT AT DECEMBER 31, 2018

FULL-YEAR RESULTS BEAT EXPECTATIONS: EBITDA MARGIN OF 44.5%

PROPOSED DIVIDEND OF EURO 0.020 PER SHARE

• Revenues of Euro 73.0 million, up 11.6% on Euro 65.4 million in 2017

• EBITDA1 of Euro 32.4 million from Euro 26.9 million in 2017 - EBITDA margin of 44.5% (41.2% in 2017)

• Cash EBITDA2 : at €28.2 million from €53.1 million in 2017, which gained benefits from the cash in of a important order received on AAE-1 cable system and several not repeatable IRU agreements for total €28.9 million in addition vs 2018. Net of these effects the Cash EBITDA growth is 16%. Independently from the accounting principles adopted, the Cash EBITDA metric allows comparability among period results

• EBIT of Euro 12.3 million vs Euro 12.2 million in 2017

• Net profit of Euro 10.1 million (Euro 11.4 million in 2017

• Starting from FY2018, Retelit adopted new accounting principles IFRS 9 and 15, and has adopted in advance the accounting principle IFRS 16. Such adoptions had a positive impact on the Revenues for €4.1 million, on the EBITDA of €7.8 million, on the EBIT for €3.5 million and a on the Net Earnings of €3.2 million.

• Net Cash Position of Euro 12.7 million, net of Euro 18.1 million due to the early adoption of IFRS 16, which did not result in any cash outflow. Excluding this effect, Net Cash Position of Euro 30.8 million, compared to Euro 33.4 million at December 31, 2017

• Orders at Total Contract Value (TCV) of Euro 77.8 million (Euro 72.0 million in 2017), net of a significant order of Euro 34 million on the AAE-1 cable.

• Proposed ordinary dividend of Euro 0.020 per share, pay-out of approx. 73% on Retelit S.p.A. net profit

• Approval of 2019-2023 Industrial Plan based on organic growth.

• Target to 2023: o Forecast revenues of Euro 104-109 million o EBITDA Euro 55-58 million o Cumulative investments Euro 78-83 million o NFP (net cash) of Euro 117-122 million

• 2019 Guidance: revenues Euro 76-80 million, EBITDA Euro 29-33 million, investments Euro 22-28

million and NFP (net cash) Euro 17-21 million

• Assessment of potential M&A growth opportunities continues

1Alternative Performance Indicators: EBITDA (Earnings Before Interest Taxes Depreciation and Amortization) is an alternative performance indicator

not defined under IFRS but used by company management to monitor and assess the operating performance as not impacted by the effects of differing criteria in determining taxable income, the amount and types of capital employed, in addition to the relative amortisation and depreciation policies. Retelit defines this indicator as the profit/(loss) for the period before amortisation, depreciation and write-downs, financial charges and income and income taxes. 22Cash EBITDA, a metric used by Retelit expressing the effective capacity to generate operating cash net of working capital effects, calculated by

subtracting from consolidated EBITDA items not producing currently or in the future cash flows and adding items which have produced or may produce additional cash flow over reported EBITDA

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Milan, March 15, 2019 – the Board of Directors of Retelit S.p.A. (“Retelit” or the “Company”) today reviewed and

approved the Group’s consolidated results and the 2018 statutory financial statements of Retelit.

Retelit’s Chairman Dario Pardi, stated: “2018 was undoubtedly a strong year for the company, with the delivery

of both revenue and earnings growth, which comfortably beat in fact the set objectives and despite a break in

Governance, which however has not distracted Management from their core activities. A targeted strategy

focusing on infrastructure and services business diversification is behind these results, as we offer our clients and

partners complete solutions which truly support their operations. Finally, we approach the coming years with

confidence, with the company having attained a very solid market positioning, and having an opportunity to play

a key role in the sector consolidation.

“This year’s results – continued Federico Protto, CEO and General Manager of Retelit - are extremely positive,

although above all I should highlight that the company is laser-focused on the future. As announced at the end of

December, we today approved also the business plan until 2023 which lays the basis for major revenue and key

financial indicator growth, thanks to the expansion of our divisions - Domestic wholesale and international - and

particularly the Business division for enterprises. Retelit has built up over recent years a considerable store of

know-how, alongside solid and comprehensive infrastructure and added value services for medium and large

enterprises and the public sector. The goal is to play a key role as a service provider in Italy and the results delivered

demonstrate that we hold all of the cards to achieve this”. We are also seriously considering M&A’s to tap into

market opportunities and to copperfasten our central position on the domestic and international ICT market. We

expect to finalise the initial transactions by the end of this year”.

2018 CONSOLIDATED KEY FINANCIAL HIGHLIGHTS

INCOME STATEMENT

Retelit Group 2018 Consolidated revenues for 2018 were Euro 73.0 million, up 11.6% on Euro 65.4 million in the

previous year, mainly thanks to increased telecommunication services and the sale of infrastructure under IRU

contracts. Net of the IFRS effects, revenues and other income would have amounted to Euro 68.9 million.

Core revenues amounted to Euro 71.4 million and comprise: National Wholesale Euro 28.5 million (40%),

International Wholesale Euro 32.6 million (45%), including AAE-1 Cable revenue for Euro 7.4 million, and Business

Euro 10.3 million (15%).

Commercial operations generated new orders of Euro 77.8 million, compared to Euro 106.3 million generated in

2017, including - as indicated - a major order received on the AAE-1 cable system for approx. Euro 34 million.

Excluding this amount, new orders increased approx. 8%. New orders for Euro 20.3 million (26% of the total)

derive from the Domestic Wholesale segment, with Euro 32.4 million (42%) from the International Wholesale

segment, of which Euro 19.2 million concerning the AAE-1 Cable, and Euro 25.2 million (32%) the Business

segment.

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CONSOLIDATED KEY FINANCIAL HIGHLIGHTS

(1) difference between value of production and purchases of raw materials, external services and other operating costs

(2) Net profit/(loss)/value of production

2018 EBITDA was Euro 32.4 million, up 20.6% on 2017 (Euro 26.9 million), with an EBITDA margin of 44.5%,

increasing on 41.2% in 2017. This growth was possible also thanks to increased revenues and the improved

product mix, also due to the commercialisation of the AAE-1 submarine cable system. Operating costs include

the monetary penalty of Euro 0.14 million imposed against the company by the President of the Council of

Ministers, in accordance with Article 2, paragraph 4 of Legislative Decree No. 21 of March 15, 2012, in addition to

increased costs over 2017 of approx. Euro 0.1 million due to Board of Statutory Auditor activities. EBITDA

excluding the IFRS 15 and IFRS 16 effects would amount to Euro 24.6 million.

2018 2017 var.

(in Euro thousands)

Value of production 72,957 65,374 11.60%

Value added (1) 39,675 33,385 18.84%

EBITDA 32,433 26,904 20.55%

EBIT 12,304 12,228 0.62%

Pre-tax profit 10,509 11,771 -10.72%

Profit in the year 10,123 11,375 -11.01%

Net margin (2) 13.9% 17.4%

Parent company shareholders net equity 167,376 146,474 14.27%

n. n.

Average workforce 86.0 76.8 11.98%

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Cash EBITDA3, decreased to Euro 28.2 million from Euro 53.1 million, which benefitted from the receipt of a major

order on the AAE-1 cable and other IRU contracts pursued to a lesser extent in 2018, with a favouring of lease

contracts featuring recurring revenues and receipts.

EBIT was Euro 12.3 million (in line with Euro 12.2 million for 2017), despite higher depreciation on the AAE-1

submarine cable system of approx. Euro 2.1 million (from the second half of 2017). EBIT, excluding the IFRS 15

and IFRS 16 effects would amount to Euro 8.8 million.

The verification of the recoverable asset values at December 31, 2018 based on their value in use estimate for the

impairment test, did not highlight any loss in value. Specifically, the recoverable value of the network

infrastructure and the value of the investment in the AAE-1 submarine cable were separately verified and the

company utilised the support of a leading advisory company for this process.

Financial charges were Euro 2.0 million (Euro 0.9 million in 2017) and principally concerned for Euro 0.7 million

interest on loans which until the entry into use of the AAE-1 cable system were capitalized and Euro 0.6 million of

exchange losses on the conversion of liquidity in US Dollars impacted by adverse Euro/Dollar movements, in

addition to Euro 0.3 million due to the adoption of IFRS 16.

As a result of these developments, the net profit was Euro 10.1 million, compared to Euro 11.4 million for 2017.

At income statement level, the adoption of IFRS 9 and 15, and IFRS 16 in advance, resulted in higher revenues of

Euro 4.1 million, increased EBITDA of Euro 7.8 million and higher net profit of Euro 3.2 million.

2018 FOURTH QUARTER PERFORMANCE

€000 Q4 2018 Q3 2018 Q2 2018 Q1 2018 Q4 2017 Q3 2017 Q2 2017 Q1 2017

REVENUES 22,498 17,381 18,177 14,900 21,102 14,206 16,505 13,561

EBITDA 10,652 7,552 9,009 5,220 10,997 5,017 6,733 4,157

EBIT 6,927 1,881 1,983 1,513 6,904 1,124 3,210 991

In the fourth quarter of 2018, revenues and operating income totalled approx. Euro 22.5 million, increasing 6.6%

on Euro 21.1 million in Q4 2017. This increase is mainly due to revenues from the sale of infrastructure.

EBITDA and EBIT, respectively amounting to Euro 10.7 million and Euro 6.9 million, were substantially in line with

the previous year.

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BALANCE SHEET

The net cash position was Euro 12.7 million, compared to Euro 33.4 million at December 31, 2017and including

financial liabilities of approx. Euro 18.1 million due to the early adoption at January 1, 2018 of IFRS 16, which did

not result in any cash outflows.

Group cash and cash equivalents and current assets were Euro 47.4 million compared to Euro 66.0 million at

December 31, 2017. In 2018, a total of Euro 15 million was settled regarding the initial capital instalments on Line

A and Line B, respectively for Euro 6 million and Euro 1.3 million, in addition to the mandatory repayment on the

loan and for Euro 7.7 million Excess Cash Flow, in addition to the distribution of a dividend of Euro 3.3 million.

Group shareholders’ equity increased from Euro 146.5 million at December 31, 2017 to Euro 167.4 million at

December 31, 2018, which includes the effect of the initial cumulative application of IFRS 15 and IFRS 16, as

previously described.

In 2018, investments totaled Euro 26.8 million, of which Euro 18.7 million in infrastructure, Euro 8.1 million in the

AAE-1 Strategic Area, with the residual concerning other investments.

Investments in physical infrastructure of Euro 18.7 million mainly concern the construction of client connections,

the acquisition of IT infrastructure and the development of the metropolitan network and the backbone. The

number of sites reached by fiber increased from 3,486 at the end of 2017 to 3,942 at the end of 2018, of which

41 other operator Data Centers, 2,631 client sites, 807 telecommunication towers and 448 cabinets with 15

owned Data Centers. Network infrastructure kilometers were therefore substantially stable at approx. 12,500 KM

(equivalent to approx. 320,000 KM of fiber optic cables, considering all primary and secondary optical cables of

the MAN network and the cables installed on the Long Distance Network).

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OPERATING PERFORMANCE

The International Wholesale segment represents, with 73 active Clients between International carriers and OTT’s

(Over The Top), 45% of Group revenues and 42% of total orders in 2018. Revenues in 2018 were up 14% to Euro

32.6 million, while new orders contracted 49% to Euro 32.4 million on 2017, which featured approx. Euro 34

million on the AAE-1 cable system. This contributed Euro 7.4 million to International Wholesale revenues, with

pending orders of Euro 19.2 million. The technological upgrade of the AAE-1 cable is in progress and new capacity

is expected to be on stream - increasing approx. 65% - by the end of Q2 2019.

The Domestic Wholesale segment, with 133 clients between domestic Carriers, Mobile Operators, OLO’s, xSP’s

and multi-utilities, accounted for 40% of revenues and approx. 26% of total orders. Revenues in the year grew

18% to Euro 28.5 million, with orders reducing 21% to Euro 20.3 million, mainly due to less IRU contracts. This

confirmed its continued focus on mobile network operators (e.g. infrastructure to support 4G and 5G

development, both consolidated Italian market operators and new entrants), fixed networks, ICT (system

integrators) and New Media. In 2018, major contracts were signed, including an agreement with one of the main

domestic players for the fiber optic connection of over 100 base stations.

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With 223 active clients, the Business segment represented 15% of revenues and 32% of total orders. Revenues in

the year remained stable at Euro 10.3 million, with new orders up 45% to Euro 25.2 million. The agreement with

the San Donato Hospital Group for the development of an integrated solution for the upgrade and development

of its ICT systems is highlighted. The six-year contract has a total value of approx. Euro 11 million. The

development of new services based on the Cloud platform - including Cloud cyber security - continued in the

period, in addition to the extension of Data Center services with the “Smart SaaS Partnership Programme” for

companies developing innovative Business market solutions, such as the IoT and Digital Transformation

applications. The market is driven in addition by current ultra-broadband demand.

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RETELIT S.P.A. 2018 KEY FINANCIAL HIGHLIGHTS

Revenues of the parent company Retelit S.p.A. grew 40% to Euro 8.8 million (Euro 6.3 million in 2017). The EBIT

loss increased to Euro 4.2 million, from Euro 2.4 million in 2017. The comprehensive profit was Euro 4.5 million

compared to a loss of Euro 9.6 million in 2017, thanks to the receipt of dividends from subsidiaries for Euro 10.3

million.

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SIGNIFICANT EVENTS IN FINAL QUARTER

On October 9, 2018, Retelit and Huawei presented in Milan an innovative high-performing solution to support

businesses on their Digital Transformation, fully leveraging the multicloud paradigm.

On October 23, 2018, Retelit signed an agreement with a major OTT (Over The Top) for the provision of very high

speed connectivity to connect the customer’s points of presence in Italy to the main Italian and European Internet

eXchanges. The transport and connectivity solution of Retelit was designed to support the continual growth of

the player’s Internet traffic volumes, guaranteeing the complete diversification of network paths and therefore

transmission service continuity and reliability.

On October 29, 2018, the AAE-1 Management Committee approved a technological upgrade for the cable to

increase available capacity by approx. 65%.

On November 6, 2018, Retelit and Tecnoinvestimenti concluded an agreement for the supply of a dedicated

connectivity network. The partnership stipulates that Retelit shall provide and manage a fiber optic Multiprotocol

Label Switching network and ensure the development of connections between the two data centers in Padua and

Modena, and to all Tecnoinvestimenti Group companies.

On November 8, 2018, the Board of Directors of evia S.p.A., following the favourable opinion issued by the Board

of Directors of Retelit S.p.A., submitted to the Shareholders’ Meeting of e-via S.p.A. a proposal to purchase and

utilise Retelit shares, for a number of ordinary shares without nominal value of Retelit of not greater than

3,000,000, equal to 1.8% of the share capital of the company and however for a maximum value of Euro 4,500,000.

On November 22, 2018, Retelit extended its international reach, joining the Next Generation Enterprise Network

Alliance, “ngena”, a global alliance comprising international telecommunications enterprises such as British

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Telecom, Deutsche Telekom, Centurylink and others, based on the principle of sharing network assets among

global partners.

On November 30, 2018, Retelit announced the receipt of notification of the provision by which the President of

the Council of Ministers have imposed upon the Company a monetary sanction, as per Article 2, paragraph 4, of

Legislative Decree No. 21 of March 15, 2012, of Euro 140,137.15, corresponding to 1% of the relevant revenue

(minimum possible sanction under the provision).

On December 13, 2018, the Board of Directors of Retelit approved the guidelines on the shareholdings of

executive directors and senior executives.

On December 17, 2018, the Board of Directors of Retelit approved the 2019 Guidance and reviewed the Industrial

Plan for the 2020-2023 period. Guidance was drawn up in continuity with the 2018-2022 Industrial Plan which

envisages organic growth through further development of the Business segment and acquisition of market share

in the domestic and international wholesale segments, leveraging the AAE-1 cable system and international

partnerships.

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SUBSEQUENT EVENTS

No significant events are reported.

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2019-2023 INDUSTRIAL PLAN

The new 2019-2023 Industrial Plan, drawn up as per the new accounting standards IFRS 9, 15 and 16, in continuity

with the ongoing strategy, envisages organic growth through further development of the Business segment and

acquisition of market share in the domestic and international wholesale segments, leveraging the AAE-1 cable

system and international partnerships. With particular regard to the growth on the Business market, the plan

leverages on the joint offer of infrastructure and services which, although with distinct drivers, are highly

synergetic for solutions on this market. As a further upside to the plan, inorganic growth shall be targeted to

speed up the process.

The new plan envisages the distribution of an ordinary dividend for its duration, with a pay-out estimated at 15-

35% of consolidated net profit.

The organic growth under the Business Plan is set along the following lines:

1. Business segment driven growth The new plan sets out a strategy focused on disrupting the business

market with a proposal of end-to-end ICT services, with Retelit as the only main contractor. The

completion of the Business market offer, also through partnerships, integrated high added-value

(VAS) connectivity services, such as for example APM, Disaster Recovery, ICT as a service, VPN,

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Internet, Security, Data Centers and cloud, and the bolstering of the commercial structure - which

will allow Retelit to position itself as the only supplier and go-to partner for medium and large

enterprises and the public sector, flanking them on the digital development of their businesses. In

particular, Retelit has developed packages for specific Vertical markets, such as Finance, Publishing,

Health and Fashion.

2. Moderate Domestic wholesale and international growth Consolidation of the position on the

international wholesale market for telecommunication services through development for

multinationals (B-end), client access (IP Transit) and international network development (Backbone

and Pops) and the acquisition of direct competitor market shares by way of leveraging major clients,

such as leading mobile telecommunications operators, greater product and service competitiveness

and widespread presence in areas where significant investments are planned (BUL, FTTN). The new

business plan reflects also the extension of the scope of international services offered by the AAE-1

Business Unit, thanks to Southern network investments (fiber optic network infrastructure and OHM

Data Center in Carini (PA)) and the extension of the POP fiber network of Marseilles in 2018, in

addition to investments on new international sections acquired under IRU contracts for the

development of added-value network services and to complete the portfolio of wet services on

systems other than the AAE-1. Leveraging on the AAE-1 submarine cable system and thanks to the

European Backhaul system, in partnership with BICS, and participation in the “Open Hub Med”

(OHM) project and - also for the international market - the global “ngena” (Next Generation

Enterprise Network Alliance), Retelit is exclusively placed to offer state-of-the-art connectivity.

The 2019-2023 Plan, on an organic basis, sets the following targets to 2023:

- Revenues of between Euro 104-109 million - EBITDA of between Euro 55-58 million - NFP (net cash) of between Euro 117-122 million - Cumulative investment over the 2019-2023 five-year period of between Euro 78-83 million

Thanks to these performances, sustained EBIT and net profit growth is forecasted.

In particular, revenues and EBITDA by segment are expected to grow as follows under the plan:

- Business: revenues forecast to grow from Euro 10 million in 2018 to a range of Euro 31-33 million

in 2023, with a CAGR of approx. 25%.

- Domestic Wholesale: revenues forecast to grow from approx. Euro 28.5 million in 2018 to a range

between Euro 30-32 million in 2023, with a CAGR of approx. 2% in the period.

- International Wholesale: revenues expected to grow from approx. Euro 32.6 million in 2018 to a

range of Euro 42-44 million in 2023, with a CAGR of approx. 6% in the period.

For 2019, Guidance, applying IFRS 9, 15 and 16, as for 2018, indicates revenues of between Euro 76 and Euro 80

million, with EBITDA of between Euro 29 and Euro 33 million, investments in the range of Euro 22 and Euro 28

million and capex of between Euro 22 and Euro 28 million. The NFP target for 2019 announced on December 17,

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2018, in a range of Euro 23-27 million, and calculated on the basis of the 2018 closing estimates, changed into

Euro 17 million to Euro 21 million. The modification is due to a more conservative approach to the calculation of

the financial debt under IFRS 16.

Note: adoption of new accounting standards

IFRS 15 – Revenue from contracts with customers: the company opted to apply the Modified Retrospective

Approach, on the basis of which cumulative effects due to application of the new standard were recognised as an

adjustment to the opening shareholders’ equity reserves. This effect is quantified as Euro 17.4 million, reflecting

the negative adjustment to opening shareholders’ equity (First time adoption from January 1, 2018), and as an

increase in deferred tax payables of Euro 0.7 million, against higher deferred revenues of Euro 18.1 million.

IFRS 9 – Financial instruments: the adoption of this standard did not have significant impacts on 2018.

IFRS 16 – Leases: Retelit adopted in advance to the January 1, 2019 obligation IFRS 16 from June 30, 2018 with

the Modified Retrospective Approach, on the basis of which cumulative effects due to the retrospective

application of the new standard were recognised as an adjustment to the opening shareholders’ equity reserves.

This effect is quantified as Euro 31.4 million in terms of a positive adjustment on opening shareholders’ equity

(First time adoption from January 1, 2018), against a decrease in deferred revenues of Euro 33.8 million, payables

for deferred tax liabilities of Euro 1.3 million and a decrease in fixed assets of Euro 1.1 million.

Therefore, the combined effect from adoption of IFRS 9, 15 and 16 on opening shareholders’ equity reserves was

Euro 14.0 million in terms of a positive adjustment on opening shareholders’ equity (First time adoption from

January 1, 2018), while on the 2018 income statement having a positive impact on the net profit of Euro 3.2

million.

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The Board of Directors will propose to the Shareholders’ Meeting, scheduled for April 24, 2019 in single call, the

distribution of an ordinary dividend from the 2018 net profit, gross of statutory withholdings, equal to Euro 0.020 per

share, for a total amount of Euro 3.28 million, with dividend coupon No. 3 of May 6, 2019 and payment on May 8,

2019. The shareholders of Retelit S.p.A. on May 7, 2019 (record date) have the right to receive a dividend.

The call notice and the relative documentation required by applicable regulations, including the 2018 Annual Accounts,

the Directors’ Report, the Directors’ Report on matters on the Agenda of the Shareholders’ AGM, the Board of

Statutory Auditors’ Report, the Independent Audit Firm Report, the Corporate Governance and Ownership Structure

Report and the Remuneration Report, will be made available to the public, in accordance with the established terms

and means, at the registered office of the company at Milan, Viale Francesco Restelii No. 3/7 and on the Company

website www.retelit.it, as well as on the authorised 1Info storage mechanism at www.1Info.it.

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The audit of the statutory financial statements has not yet been completed and the Auditors’ Report should be made available in accordance with the legally applicable deadlines. Finally, the income statement and the balance sheet annexed are reclassified and as such have not been audited.

http://www.retelit.it/

http://www.retelit.it/

http://www.1info.it/

http://www.1info.it/

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**** Mr. Fabio Bortolotti, as Executive Officer for Financial Reporting, declares, in accordance with paragraph 2 of Article 154-bis of the CFA, that the accounting information contained in this press release corresponds to the underlying accounting documents, records and accounting entries.

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The 2018 results and the 2018-2022 Industrial Plan will be illustrated on March 15, 2019 at 3PM in a conference call involving the Chairman of the Company, Dario Pardi and the Chief Executive Officer, Federico Protto. The details for participation in the conference call are as follows: - for Italy: +39 02 805 88 11 - for the United Kingdom: +44 1 212818003 - for the United States (local number): +1 718 7058794 - for the United States (green number): +1 855 2656959 The support documents will be made available on the website at the beginning of the conference call.

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This press release contains forward-looking statements concerning plans, opinions or current Group expectations

in relation to results and other aspects of the activities and strategies of the Group. Readers of this press release

should not place an undue reliance on such forward-looking statements as results may differ significantly from

such forecasts due to a number of factors, most of which are outside of the Group’s control. The forward looking

statements constitute in fact true and proper forecasts or strategic objectives established under company plans.

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Retelit Group

Retelit is a major Italian provider of digital and infrastructure services to the telecommunications market and has been listed on the Milan Stock Exchange since 2000, joining the STAR segment on September 26, 2016. The company’s fiber optic infrastructure covers over 12,500 kilometres (equivalent to approx. 320,000 km of fiber-optic cables), connecting 10 Metropolitan Networks and 15 Data Centers across Italy. With 4,000 on-net sites and 41 Data Centers reached, Retelit’s network extends also overseas, leveraging a Pan-European ring with PoP’s in Europe’s major cities, including Frankfurt, London, Amsterdam and Paris. Retelit is member of AAE-1 (Africa-Asia-Europe-1), the submarine cable system connecting Europe to Asia through the Middle East, reaching 19 Countries, from Marseille to Hong Kong, owning a landing station in Bari and the Open Hub Med Consortium, a digital telecommunications hub in the Mediterranean, with a proprietary Data Center in Carini (PA). The company has been part of NGENA (Next Generation Enterprise Network Alliance) since November 2018, a global alliance of telecommunications players created to share the proprietary networks of members and provide a stable and scalable global data connectivity network. These assets make Retelit a perfect technological partner for operators and businesses, providing a complete range of high-quality, reliable and safe infrastructure. The services range from fiber optic Internet connectivity to the Multicloud, from Cyber Security services to Application Performance Monitoring and to SD-WAN technology based network services. Finally, Retelit offers Colocation solutions with over 10,500 square meters of equipped and secure fibre optic connected spaces, for the outsourcing of Data Center services and the satisfaction of Disaster Recovery and Business Continuity needs. Retelit’s Carrier Ethernet services are in addition Metro Ethernet Forum (MEF) certified. The technological certifications ISO 27000 for the design and supply of network services, Colocation and Cloud and ALLA/NALLA for the provision of military services are added to the MEF CE 2.0 certification. .

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Investor Relations Dario Pardi Tel. +39 02 2020451 [email protected] CDR Communication Vincenza Colucci Mob. +39 335 690954 [email protected]

Retelit Communication Letizia Cilente Mob. +39 342 9645801 [email protected] [email protected]

Institutional Media Relations CDR Communication Angelo Brunello Mob. +39 329 2117752 [email protected]

mailto:[email protected]










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The Income Statement, Balance Sheet and Cash Flow Statement of the Retelit Group and Retelit S.p.A at

December 31, 20181 are attached.

Consolidated Income Statement

The audit by the independent audit firm is in the process of completion.

Starting from the 2018 financial year, the Company has adopted the new accounting standards IFRS 9 and IFRS 15, and, in advance, the new IFRS 16 principle. For the sake of clarity, it should be emphasized that the 2017 values shown here do not contain the effects of new Principles.

(in thousands of Euro) 2018 2017

Revenues 59,516 59,994

Other income 13,441 5,381

of which non-recurring 1,709

Total revenues and operating income 72,957 65,374

Purchase of raw materials and services (31,680) (26,789)

Personnel costs (7,242) (6,482)

Other operating costs (1,602) (5,200)

EBITDA 32,433 26,904

Amortisation, depreciation and write-downs of tangible and intangible

assets (18,806) (14,117)

Other provisions and write-downs (1,323) (558)

EBIT 12,304 12,228

Financial income 205 479

Financial charges (1,981) (911)

Adjustment investment measured at equity (19) (25)

PRE-TAX PROFIT 10,509 11,771

Income taxes (437) (395)

Deferred taxes 50 -

Net profit for the year 10,123 11,375

Profit/(loss) recognised to Net Equity to be recognised to the Income

Statement 48 (270)

Profit/(loss) recognised to Net Equity not to be recognised to the Income

Statement 34 12

Comprehensive profit for the year 10,206 11,117

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Consolidated balance sheet

Starting from the 2018 financial year, the Company has adopted the new accounting standards IFRS 9 and

IFRS 15, and, in advance, the new IFRS 16 principle. For the sake of clarity, it should be emphasized that the

2017 values shown here do not contain the effects of new Principles.

(in thousands of Euro)31/12/2018 31/12/2017

Network infrastructure 122,513 114,905

Other fixed assets 1,120 1,096

Concessions, licenses, trademarks & similar rights 1,602 49,802

Usage rights 64,518

Investments valued at equity 81 100

Deferred tax assets 11,943 7,200

Other non-current assets 493 516

TOTAL NON-CURRENT ASSETS 202,270 173,619

Trade receivables, other receivables and other current assets 33,887 34,877

Tax receivables, VAT receivables and current direct taxes 1,036 538

Cash and cash equivalents 47,355 65,953

TOTAL CURRENT ASSETS 82,277 101,368

TOTAL ASSETS 284,547 274,988

Share capital issued 144,209 144,209

Net equity reserves and net result 23,167 2,265

TOTAL NET EQUITY 167,376 146,474

Non-current financial liabilities 9,618 15,122

Financial payables for assets under non-current leases 13,393

Post-employment benefits and employee provisions 1,522 1,482

Provisions for risks and future charges 2,051 1,513

Deferred tax provision 5,312 -

Deferred non-current revenues 23,165 43,517

TOTAL NON-CURRENT LIABILITIES 55,061 61,633

Current financial liabilities 6,911 17,412

Current future risks and charges 383

Financial payables for assets under current leases 4,692

Trade and payables and other financial liabilities 42,598 44,397

Tax payables, VAT payables and current direct taxes 325 1,056

Deferred current revenues 7,586 3,633

TOTAL CURRENT LIABILITIES 62,111 66,880

TOTAL LIABILITIES 284,547 274,987

14

Consolidated cash flow statement




(thousands of Euro)31/12/2018 31/12/2017

CASH FLOW FROM OPERATING ACTIVITIES:

Net profit 10,123 11,375

Adjustments for:

Amortisation & Depreciation 18,806 14,117

Other provisions and write-downs 1,323 431

Changes in post-employment benefit provisions 74 101

Release/util isation of provision for risks and charges (318) (794)

Interest and financial charges matured 1,776 913

Interest and other financial charges received/(paid) (752) (426)

Income taxes 543 395

Adjustment of investments valued at equity 19 25

(Gains)/losses for divestments 0 (2,902)

CASH FLOW GENERATED FROM OPERATING ACTIVITIES 31,595 23,235

(Increase)/Decrease trade receivables and other financial assets 127 (13,426)

(Increase)/Decrease tax receivables, VAT receivables and direct taxes (498) 597

Increase/(Decrease) trade payables and deferred revenues (2,779) 20,021

Increase/(Decrease) tax payables, VAT payables and current direct taxes (1,324) 643

NET CHANGES IN CURRENT ASSETS AND LIABILITIES AND OTHER CHANGES (4,474) 7,834

CASH FLOW GENERATED FROM OPERATING ACTIVITIES 27,120 31,070

CASH FLOW FROM INVESTING ACTIVITIES

(Investments) in tangible assets (18,995) (13,898)

Divestments from tangible assets 265 1,315

(Investments) in intangible assets (5,287) (18,388)

Divestments from intangible assets 1,581 21,894

of which non-recurring 21,894

Investments valued under equity method (0) (125)

Change due to monetary effects of investments 872 (955)

Net investments in other non-current assets 23 (59)

CASH FLOW ABSORBED BY INVESTING ACTIVITIES (21,541) (10,216)

CASH FLOW FROM FINANCING ACTIVITIES

(Increase)/Decrease financial assets 0 5,500

Repayment of financial payables for leases (4,843)

Granting of loans 0 20,947

(Repayment) of loans (16,050) (805)

Distribution of dividends (3,285)

CASH FLOW GENERATED FROM FINANCING ACTIVITIES (24,178) 25,642

TOTAL CASH FLOWS (18,599) 46,494

CASH & CASH EQUIVALENTS AT BEGINNING OF YEAR 65,953 19,459

CASH AND CASH EQUIVALENTS AT END OF YEAR 47,355 65,953

15

Consolidated Net Financial Position




2018 2017

Financial liabilities

- current 11,602 17,412

- non-current 23,010 15,122

Financial assets

- current (0) (0)

- other cash and cash equivalents (47,355) (65,953)

Net debt ( A ) (12,742) (33,420)

Total Shareholders' equity ( B ) 167,376 146,474

Total capital employed ( C ) 154,634 113,054

(in thousands of Euro)

16

Balance Sheet Retelit S.p.a

31/12/2018 31/12/2017

Other fixed assets 2,429,295 149,653

Concessions, licenses, trademarks & similar rights 598,927 25,346,695

Usage rights 23,738,298

Equity investments 149,534,209 149,534,209

Investments valued at equity 81,369 100,000

Other non-current assets 510 510

TOTAL NON-CURRENT ASSETS 176,382,607 175,131,067

Current assets:

Current financial assets - -

Trade receivables, other receivables and other current assets 7,071,674 9,859,305

of which related parties 2,465,205 3,325,737

Tax receivables, VAT receivables and current direct taxes 83,092 72,336

Cash and cash equivalents 7,036,548 23,398,196

TOTAL CURRENT ASSETS 14,191,313 33,329,837

TOTAL ASSETS 190,573,920 208,460,904

Shareholders' equity:

Share capital issued 144,208,619 144,208,619

Net equity reserves and net result 5,764,448 5,846,604

Net equity and net result 149,973,067 150,055,222

TOTAL NET EQUITY 149,973,067 150,055,222

Non-current liabilities:

Non-current financial liabilities 0 -

Financial payables for assets under non-current leases 122,586

Post-employment benefits and employee provisions 608,546 590,005

Provisions for risks and future charges 967,557 111,206

Liabilities from non-current contracts 5,058,242 4,123,219

Non-current liabilities from Group companies 26,453,270 41,204,494

TOTAL NON-CURRENT LIABILITIES 33,210,203 46,028,924

Current liabilities:

Current financial liabilities (0)

Financial payables for assets under current leases 261,266

Provisions for risks and future charges - 383,241

Trade and payables and other financial liabilities 6,621,869 11,022,379

dof which related parties 536,659 2,238,268

Tax payables, VAT payables and current direct taxes 85,483 660,133

Deferred current revenues 422,033 311,004

TOTAL CURRENT LIABILITIES 7,390,651 12,376,757

TOTAL LIABILITIES 190,573,920 208,460,903

17




18

Comprehensive Income Statement Retelit S.p.a.




2018 2017

Revenues 1,817,898 1,637,957

Other income 6,967,117 4,700,967

of which non-recurring 1,709,045

of which related parties 2,949,583 2,847,789

Total revenues and operating income 8,785,015 6,338,924

Purchase of raw materials and services (7,406,083) (4,386,918)

Personnel costs (3,027,119) (2,732,116)

Other operating costs (317,324) (391,996)

EBITDA (1,965,510) (1,172,106)

Amortisation, depreciation and write-downs of tangible and intangible assets (1,728,018) (1,137,768)

Other provisions and write-downs (551,226) (127,777)

EBIT (4,244,755) (2,437,651)

Financial income 41,368 6,565,102

Dividends from subsidiaries 10,342,000 -

(Write-downs)/Recovery of value of investments at historic cost - 6,916,000

Financial charges (1,638,285) (1,382,924)

of which related parties 1,001,680 (1,067,742)

Adjustment of investments valued at equity (18,631) (25,000)

PRE-TAX PROFIT 4,481,698 9,635,527

Income taxes - -

Deferred taxes - -

Net profit for the year 4,481,698 9,635,527

Profit/(loss) recognised to Net Equity to be recognised to the Income

Statement - (121,000)

Profit/(loss) recognised to Net Equity not to be recognised to the Income

Statement 6,122 (37,471)

Comprehensive profit for the year 4,487,820 9,477,055

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