Operator: Good afternoon. This is the Chorus Call conference operator. Welcome and thank you for joining the Amplifon’s Full Year 2021 Results Conference Call. As a reminder, all participants are in listen-only mode. [Operator Instructions] At this time, I would like to turn the conference over to Ms.

Francesca Rambaudi, Investor Relations and Sustainability and Senior Director of Amplifon. Please go ahead, madam.

Francesca Rambaudi: Thank you. Good afternoon, and welcome to Amplifon’s conference call on full year 2021 results. Before we start, few logistic comments.

This morning, we issued a press release related to our results and this presentation is posted on our website. The call can be accessed also via website and dial-in details are on Amplifon’s website as well as on our press release. I have to bring your attention to the disclaimer on Slide 2 as some of the statements made during this call maybe considered forward-looking statements. Please also let me drive your attention that in light of the wind down of Elite completed and effective in Q4 2021 and treated as discontinued operations following IFRS 5 application, Elite P&L is excluded from full year ‘21 consolidated results as well as from full year 2020 and full year 2019, which have been fully restated up to the line profit from continuing operations. In addition, in light of the relevant impact of the COVID-19 pandemic on 2020 financials, this presentation also reports 2019 income statement data for greater comparability purposes.

With that, I am now pleased to turn the call over to Amplifon’s CEO, Enrico Vita.

Enrico Vita: Thank you, Francesca. Good afternoon, everyone and thank you for joining us. Today, I am pleased to comment with you another very successful year for our company. In 2021, we achieved excellent financial results and also, we initiated and delivered many important projects and initiatives.

I am very pleased about what we have achieved in 2021, also because I know very well that behind all these accomplishments, there was a massive amount of work done by the whole team. So, I would like to start by going over some of the key achievements for the year. First, the acquisition of Bay Audio, another key milestone in our growth story, that’s allowed us to gain a clear leadership in one of the key markets in our industry. I am also happy to share that since the closing of the deal, our teams have been working well together to exploit the full potential of the new combined business. Then we progressed perfectly in line with our plan with the rollout of the Amplifon Product Experience, finally, implementing it in an important market such as Spain.

Finally, I will talk later during the presentation about the acceleration of our sustainability and innovation plans. So, let’s look now at our main numbers for the year. 2021 was an excellent year across all the key financial metrics. Revenues were up by nearly 20% at constant exchange rates versus 2019. And once again, the composition of the growth was very active.

In fact, the organic growth was double-digit at 12%. Regarding the EBITDA recurring, we delivered €483 million, thanks to a material step change in profitability, which increased by 190 basis points versus 2019 at 24.8%. Then we posted an all-time high net profit recurring of €175 million, increasing by a remarkable 50% versus 2019. Finally, the net profit as reported was €156 million, allowing us to propose a dividend increase of nearly 20% at the next shareholders’ meeting to €0.26 from the €0.22 of the previous year. With this, I now hand over to Gabriele to give you more colors about our financials.

Gabriele Galli: Thanks, Enrico and good afternoon to everybody. Moving to Chart #4, we have a look at the group financial performance in Q4, which as already commented by Enrico, posted a very strong finish of the year. In the quarter, revenues at constant ForEx increased by over 17% versus 2019 despite the December picking COVID contagious and a very challenging comparable basis, with an excellent organic growth at over 8% and around 9% M&A contribution, primarily for Bay Audio consolidation from October 1. EBITDA recurring came in at around €157 million with a margin at 27.6%, up 180 basis points versus 2019. Thanks to the strong revenue performance, coupled with the structural efficiencies and the productivity enhancements and the scale reach in core countries.

This strong EBITDA increase was achieved even after sizable investment in the business, including marketing and several strategic initiatives ongoing. The outstanding profitability was also reflected at the net result level with record net profit recurring at over €70 million, up 47% versus ‘19. Moving to Slide #5, we have a look at our financial performance in the full year. Revenues at constant ForEx were up around 19% versus 2019 with a well above market organic growth at around 12%. M&A contribution at around 7% and ForEx impact at minus 1.5%.

EBITDA recurring reached all-time high level of €483 million, up 27% versus ‘19. EBITDA margin ended up in line with guidance at 24.8%, up 190 basis points versus 2019. Net profit recurring came in at a record level of over €175 million, up around 50% versus ‘19. Cash flow indicators also came in very strong with free cash flow up 70% versus ‘19 and NFP at year-end at around €870 million, with financial leverage at 1.68 after over €600 million investment in CapEx, M&A, dividends and share buybacks. As anticipated by Enrico, the truly outstanding results achieved this year allow us to propose at the next shareholders’ meeting a strong dividend of €0.26 with a payout at 37%.

Moving to Slide 6, we have a look at EMEA’s strong top line performance despite the challenging comparison basis and the December peak in COVID contagions and also the record profitability. In Q4, revenue growth at constant ForEx was around 8% versus ‘19, with an organic growth at 5.5%. M&A contribution was 2.2%. Excellent organic growth was reported in France, also driven by the regulatory change; in Spain, supported by the successful APE rollout. Solid performance was also reported in Italy, Switzerland and Poland.

EBITDA amounted to around €134 million, up 14.5% versus ‘19, with margin at 33%, up 190 basis points versus Q4 ‘19, thanks to the improved efficiency and productivity as well as to the outstanding performance of Spain and the scale reach in core countries. In full year ‘21, revenue growth versus ‘19 at constant ForEx was around 11% with a strong organic growth at 8%. EBITDA amounted to around €480 million, up around 27% versus ‘19 with margin at 29.4%, up 370 basis points. Moving to Slide #7, we have a look at the Q4 continued impressive performance of Americas. Revenue growth was 41% at constant ForEx versus Q4 ‘19 with an excellent organic performance in the U.S.

at around 22% over 2x the market performance, primarily driven by the outstanding growth of Miracle-Ear, Elite wind-down was also completed and effective during the quarter. Very strong performance was reported both in Canada and LatAm. M&A contribution was 19% versus Q4 ‘19 primarily reflecting PJC acquisition. Total ForEx effect was negative for around 11% versus ‘19 due to the euro appreciation versus dollar and LatAm currencies. EBITDA amounted to €22.4 million with margin at 27.1% up 210 basis points versus Q4 ‘19.

In full year ‘21, revenues at constant ForEx were up around 57% versus ‘19 driven by an excellent organic growth of around 36%. EBITDA amounted to over €80 million with margin of 26.2%, up 180 basis points versus ‘19. Moving to Slide #8, we have a look at Asia-Pacific performance, which reported an outstanding finish of the year boosted by Bay Audio consolidation and despite local lockdown in the period in both Australia and New Zealand. In Q4, revenues were up around 65% at constant ForEx versus ‘19, driven by an organic growth of around 18%. M&A contribution related to Bay Audio and China accounted for around 47% versus ‘19, ForEx was positive by 3.9%.

Australia posted an excellent performance further boosted by Bay Audio consolidation. New Zealand reported an impressive acceleration at the year-end despite lockdowns ongoing until December 3. Also, China reported an excellent performance, thanks to an outstanding organic growth and to the contribution of the Sound Bridge joint venture. EBITDA amounted to over €22 million with margin at 27.6%, contracting 40 basis points versus Q4 ‘19 due to the strong investments in marketing, primarily in Australia. In full year ‘21, revenues were up 32% at constant ForEx versus ‘19, driven by a very strong organic growth of around 13%.

EBITDA amounted to €71 million, with margin of 28.4%, contracting by around 90 basis points versus ‘19 reflecting the continued strong investment in marketing in Australia and the lower revenue reported in the July-October period for lockdown in both Australia and New Zealand. The comparison with the previous year profitability is not meaningful given the significant extraordinary income related to COVID-19 reported in 2020. Moving to Slide #9, we appreciate the Q4 profit and loss. In the quarter, total revenues increased by 16.3% to €568 million, with a strong 8.4% organic growth versus ‘19. The excellent top line growth, together with the structural efficiencies and productivity enhancements derived by the measures implanted in 2020 led the EBITDA recurring margin at 27.6% with an improvement of 180 basis points versus Q4 ‘19.

Recurring EBITDA increased by 24%, around €15 million to around €157 million. Reported figure include around €9 million one-off cost primarily related to the transaction costs for the Bay Audio acquisition. Following the strong investment plan during the past quarter, D&A increased by over €5 million leading the recurring EBIT to around €95 million with a growth of 31% versus Q4 ‘19. Following a decrease of around €5 million in net financial expenses primarily benefited from €4.5 million income according to IFRS 9 related to the accounting of a change to the fair value of the financing for the acquisition of GAES, which was refinanced at the end of December and the lower – and a lower tax rate, net profit recurring came at over €70 million, plus 47% versus Q4 ‘19. The net result profit reported about €57 million, again, up 47% versus ‘19.

Moving to Slide #10, we appreciate the full year ‘21 profit and loss. In the full year, total revenues increased by 17.2% to €1,948 million, with an excellent 12% organic growth versus ‘19. EBITDA recurring margin came in at 24.8%, perfectly in line with our guidance with an improvement of 190 basis points versus ‘19. Recurring EBITDA increased by 27%, around €117 million to €483 million. Reported figures include €14.5 million one-off cost primarily related to Bay Audio, GAES integration and the redefinition of the corporate structure of Amplifon S.p.A.

D&A increased by €29 million, leading recurring EBIT to around €262 million with the growth of around 38% or €73 million versus ‘19. Net financial expenses accounted to €22.6 million also thanks to the change to the fair value of the financing for the acquisition of GAES as previously commented, leading to the recurring EBIT of €239 million from around €162 million in ‘19 of a 48% increase. Tax rate ended at 26.8% leading net profit recurring at over €175 million with a 50% increase versus ‘19. Net results from discontinued operation accounted to negative €5.8 million, leading net profit reported to around €158 million as well up 50% versus ‘19. Moving to Slide #11, we appreciated the cash flow evolution.

Operating cash flow after lease liabilities was in the period equal to €366 million, posting an improvement of over €50 million or 16.5% versus 2020. The comparison versus ‘19 shows an outstanding improvement of €127 million, leading to an increase of over 50% versus ‘19, reflecting the measures implemented during the pandemic to mitigate COVID-19 impact. Net CapEx increased by around €54 million, to around €111 million, leading free cash at €255 million, up by €105 million or 70% versus ‘19 and flat versus the 2020 highly comparative figure. Net cash-out for M&A was €415 million driven by Bay Audio transformational M&A as well as by bolt-on acquisition in EMEA, China, U.S. The sum of the share buyback program and the dividend distribution amounted to €81 million, leading net cash flow for the period to negative €240 million versus positive €160 million in 2020 and €55 million in 2019.

NFP ended at €870 million. Moving to Slide 14, we have a look at the debt profile trend and the key financial ratios. As mentioned in the previous chart, the net financial debt closed at €870 million, with liquidity accounting for positive €270 million, short-term debt accounting for around €160 million and medium long-term debt accounting for around €1.20 million. This confirms the very strong financial profile of the group with a financial headroom of around €500 million after Bay is out including the undrawn revolving credit facilities. Following the IFRS 16 application, lease liabilities amounted to €450 million, leading the sum of net financial debt and lease liabilities to €1.32 billion.

Equity ended up at €927 million with an increase of around €125 million versus December last year. Looking at financial ratios. Net debt over EBITDA ended at 1.68 unchanged versus 2020 after a strong investment, impressive M&A and a robust shareholders return. Net debt over equity ended at 0.94 versus 0.80 at the end of 2020. Lastly, let me highlight the importance step up further in integrating sustainability in our financial strategy and performance.

After the €100 million sustainability-linked revolving credit facilities time in September, in December, we signed with a pool of three banks at €210 million ESG-linked term loan, mainly aimed at the refinancing the GAES acquisition facility, which was outstanding for sum €118 million. This 5-year terminal closed with very favorable terms and pricing condition and is linked to certain ESG indicators part of our sustainability plan which is achieved will activate the margin adjustment. I will now hand over to Enrico for a further deep dive for our development in the sustainability area.

Enrico Vita: Yes. Thank you, Gabriele.

So let’s talk now about our commitment to sustainability. As you know, in 2020, we have undertaken a step further in sustainability, shifting our focus from the past to the future with listening ahead our sustainability plan focused on listening to our main stakeholders. Today, I’m happy to share with you some of the significant advancements in our plan and strategy in 2021. First, we promoted awareness on hearing prevention among young people. We supported the ramp-up of the Amplifon Foundation both financially and also thanks to our employees’ involvement as volunteers in different initiatives focused on promoting social inclusion among young and elderly.

Then we continued to fight the stigma reach over 170 million seniors via awareness raising the campaigns. We also continued the focusing on enhancing all our employees worldwide delivering over 3 days of training and promoting equal opportunities. We have seen an increase of women in our total management from 27% to 30% and maintaining the minimum of 50% threshold on female representation in our global back-office population. The 2022 top employer recognition for the EMEA region recognized our firm commitment to our people. We have also released a new supplier code of conduct, and designed a global ESG-based supplier evaluation framework, which we will implement as a pilot in a core country already this year.

Let me finally add that in 2021, we subscribed to the United Nation Global Compact, the world’s largest voluntary corporate citizenship initiative, personally commitment to 10 universal sustainability principles, and we were included both in the ESG index dedicated to the top 40 Italian blue chips with the most robust ESG practices and in the highly recognized Standard & Poor’s year book for the healthcare providers and services sector. Lastly, I’m very pleased to share with you that today, during today’s meeting, the Board of Directors resolved to donate €1 million in favor of the United Nations High Commissioner for Refugees, to support the people constrained by the contingency of the current emergency in Ukraine. In addition to sustainability, this year, we also strongly accelerated in innovation. So let’s now move to the following chart. Here, I’m very excited to share with you our latest step to accelerate our digital innovation journey further.

In fact, we have just launched Amplifon X, a new organizational structure to reshape the audiological care experience, boosting our Ampli-care strategy. Amplifon X is made by more than 50 digital talents coming from Auto Hub with full end-to-end accountability from design to the final product development. Auto Hub and the digital Amplifon team have already delivered innovative proprietary products such as AutoPod for the ecosystem control center. Now with the combination of the two teams, we aim even higher. Already in H2 this year, leveraging internal software development capabilities, Amplifon X will deliver a new version of the Amplifon 360, our patented protocol, providing a more immersive and personalized experience to our customers.

Amplifon X will operate in a top-notch ecosystem working, for example, alongside the Bocconi University Chair in Customer Science. The overall accumulated resources falling Amplifon X for ‘22, ‘24 will be above €150 million, making it one of the most significant investments in software and digital in the industry. So let’s move now to the next chart for the outlook. This is the last chart of today’s presentation. And we can say that we are extremely satisfied with our performance and about the quarter that we have done in 2021, which make us feel even stronger about the years to come.

We are very confident about our journey of sustainable profitable growth. We are very confident about our target to ‘23 already shared with you during our Capital Market Day last September. We are also very confident about this year. Numbers for 2022 with regards to the top line, we expect the revenues of Amplifon X, excluding Bay, growing high single digit and above market. Regarding profitability, we expect our margin to further improve by at least 40 basis points.

Finally, I can also share that in the first 2 months of the year. So in January, February, our global revenue growth was healthy and strong, especially in consideration of the last tale of COVID infections in Europe mainly in January and also the still ongoing one in New Zealand. And you know that starting the year well is also very important from a psychological point of view for the team. With this, I would like to thank you all for your attention, and we look forward to taking your questions. Francesca, over to you.

Francesca Rambaudi: Thanks, Enrico. I kindly ask operator to open today’s Q&A session. [Operator Instructions] Now I turn the call over to the operator in order to open for Q&A.

Operator: [Operator Instructions] The first question is from Julien Ouaddour with BNP Paribas. Please go ahead.

Julien Ouaddour: Good afternoon and thank you very for taking my question. I have two. First one on EMEA. So just looking at the region in Q4, could you share with us how much of your French business grew organically? Just I mean, let’s say that we assume like 20% growth boosted by the residual impact from the reform, and this would just imply that the rest of the region grew, let’s say, 1% organically like at best. So just a little bit of color about where you saw growth and decline in the quarter? And a very quick follow-up, just what are your internal assumptions, sorry, for EMEA growth this year in 2022, assuming a negative development in France? Second question is about the 2022 outlook.

So just to be understood, does your 4% to 5% market growth guidance for this year includes, first, the impact from the pent-up demand and then the negative development in France? So just the question is, is it net-net? And just in your guidance, I think that you assume pent-up demand will be – will more than offset the decline in France, but just if we assume that French market will be down double digits, it lands exactly in your previous pent-up demand assumption of 1% to 1.5% extra growth for the year. So my question here is just have you increased your assumptions for the pent-up demand this year? Thanks a lot.

Enrico Vita: Thank you. Thank you for your questions. So I will start with the second one and therefore, our outlook for the market in 2022.

Our assumption is growth at a global level of between 4% and 5%. This 4%, 5% growth in 2022 is the net result of, let’s say, the historical growth which is in the region of 4%, 4.5%. Plus we assume a positive contribution from the pent-up demand, which will be released this year in the region of 1%, 1.5%. And then also, there will be a negative impact from the French market, which we estimate in the region of 0.5% maximum 1% global level in consideration of the fact that we estimate the French market to go down this year by 5%, mid-single digits, maximum 10%. It’s very difficult actually to predict what will be the French market this year because of the extraordinary growth of last year.

But overall, this impact from the French market will be more than offset by the pent-up demand that we estimate for – to be released for this year. With regards to the first question and therefore, the EMEA performance in Q4, in Q4, I can’t tell you which was the growth of the French market for Amplifon. You know that we do not give this kind of information by market. We think that, however, the market in France was still double-digit up in the last quarter of last year, which, of course, was a bit less – actually, it was, let’s say, a deceleration, let’s say, versus the first three quarters of the year, in which – during which the growth was even higher.

Julien Ouaddour: Thanks a lot, Enrico.

Just maybe like a quick follow-up on the – like on the second one. So I mean, have you – I mean, have you seen like positive growth also like in the countries like Spain, Italy, etcetera, like you mentioned in your press release?

Enrico Vita: Absolutely, absolutely, we have seen growth in those markets. However, also that some market – in some markets like Germany actually, the growth was much less because of the tail of the COVID. Overall, we should not forget that in December, there was quite a significant peak in terms of infections and of course, some markets were affected by this.

Julien Ouaddour: Okay, okay.

Perfect. Thanks a lot, Enrico.

Enrico Vita: Thank you. Thanks for your questions.

Operator: The next question is from Aisyah Noor with Morgan Stanley.

Please go ahead.

Aisyah Noor: Good afternoon. Thanks for taking my questions. My first question is on the revenue guidance of high single digit. Could you provide here your assumptions on FX and M&A, excluding Bay Audio? That’s number one.

And then number two is on labor. We’ve kind of two parts to the question. The first is, have you seen any challenges in securing labor either due to COVID-related quarantines or staffing shortages as we’re seeing in other markets? And then what level of wage inflation are you expecting this year and how that compares to historical trends? Thanks.

Enrico Vita: Thank you. Thank you for your question.

So clearly, if I give you – if I give you ForEx and M&A, then I give you also organic growth. And you know that we do not provide this kind of details in terms of guidance. But as usual, of course, let’s say, I will say that more than two-thirds of the growth historically has been organic, and this is the kind of assumption that you should also take for our revenue guidance for 2022. Of course, this does not include the contribution of Bay Audio. With regards then to our assumptions in terms of inflation, let’s say that we are not envisaging inflation on our purchases, both indirect and direct.

So, not at all on those items. Actually, we are also envisaging some price reductions. So we have also already concluded some important contracts with price reductions, whilst in terms of the other big item of our profit and loss is, of course, labor cost. In terms of labor cost, we see – I think we have already mentioned during our last call, we see some inflation in particular in Australia because of the fact that the borders were closed. And you know very well that in Australia, there is quite a significant flow of audiologists coming from abroad, which was not possible actually last year.

And as a consequence of that, we saw also some inflation cost of audiologists, etcetera. But nothing that I would say should be of concern overall on the global P&L – of the global P&L of the company.

Aisyah Noor: Great. Thank you very much.

Enrico Vita: Thank you.

Operator: The next question is from Veronika Dubajova with Goldman Sachs. Please go ahead.

Veronika Dubajova: Hi, guys. Good afternoon. Hope you can hear me okay.

And thanks for taking my questions. Two for me, please, as well. One, if I can just push you a little bit on the European growth in the fourth quarter, Enrico, I look at the data that we’ve gotten from demand, I think that shows the European market up 11% versus the 2019 levels in unit terms. I think you’re clearly coming below that this quarter. I’m just kind of curious what’s driving that? I mean you have a history of outperforming your end market.

And frankly, you had done that through most of last year. So I’m just kind of curious what changed in the fourth quarter, if you can talk to whether there is a specific region or a specific dynamic that, that might explain that? I’m just a bit surprised by that. And then my second question, obviously, you commented on Jan and Feb, and this is maybe a better question for Gabriele. I don’t know if you can comment on exactly where the growth is shaking out maybe it’s not appropriate at this stage. But just would love to get your thoughts on the phasing of that high single-digit growth that you’ve guided for through the year? And whether you think it’s more back-end loaded or front-end loaded? And if you can help us, think through that at this stage that might be helpful? Thanks.

Enrico Vita: Thank you, Veronika. Thank you for your questions. So let’s say, with regards to the first question, I would say that if we compare our numbers with those provided from manufacturers, I think that the main difference is related to the UK, both because, of course, we do not include in our markets estimation NHS, because we are not playing in that channel, in that part of the market. And second, because as far as – as far as I remember, UK, also in the private part of the market grew quite significantly during the last quarter of last year. As far as I remember, in the region of plus 20%.

You know very well that in the mix of our markets, the UK is quite small. So, I think that we did not benefit from this growth in the total, let’s say, growth of the EMEA region. With regards to the second question, I can answer to that by saying that if we exclude Bay Audio, you may recall in this respect that Bay Audio was consolidated starting from the 1st of October of last year. So, in the perimeter, which does not include the Bay Audio you should expect an even growth across the four quarters of the year. So, not much difference between the different quarters.

Veronika Dubajova: Okay. That’s helpful, Enrico. So, maybe give us a bit of flavor, I guess when you look at your performance within individual markets in Europe, do you still believe you are maintaining that sort of source of outperformance that you have done historically? And then maybe just a quick update on kind of new store openings and how much of those are contributing to growth?

Enrico Vita: No, it’s the same kind of shape the new store opening is very, very limited in comparison with the vast majority of the growth, which is organic. I think that, as I said, looking at the performance, the performance was strong in Italy, was strong in Spain wise, was still slower in Germany where as far as I remember, actually, all the market was slower in the last quarter.

Veronika Dubajova: Fantastic.

Thank you.

Operator: [Operator Instructions] The next question is from Niccolò Storer with Kepler. Please go ahead.

Niccolò Storer: Yes. Good afternoon.

Good afternoon everybody. I have two questions, please. The first one is on your North American performance, which when compared to 2019, strongly decelerated in Q4. So, if you can elaborate a bit on the reasons behind that. And my second one is on CapEx.

We noticed, if I am not wrong, a sharp acceleration in Q4, which accounted for almost maybe sum of the CapEx spent over the previous two quarters? Also in this case, if you can shed some light. Thank you.

Enrico Vita: Sure. Thank you. Thank you, Niccolò, for your questions.

Well, actually, I think that if we are quite happy with our performance in the U.S. in the last quarter, in the fourth quarter, if you compare actually our growth versus the growth of the market. Our growth was more than double the growth of the market in the quarter. So, I wouldn’t say that we are continuing to take share, and we are growing much, much faster than the market. With regards to the second question, I would ask Gabriele.

Gabriele Galli: Yes. Regarding the CapEx, anything particularly strange. So, we should look at the CapEx on an annual basis. This year, we ended up at €111 million with an acceleration compared to an average speed of say, €100 million. But of course, I mean this year is coming after 2020, where CapEx were a little bit contracted to face COVID pandemic.

So, this is a normal level of CapEx that we will see also moving forward. And also in terms of mix, so part of them devoted to IT system, I would say, 40%, another 40% devoted to shops and around 20% devoted to innovation also in terms of mix, is something pretty common and something that we will see also moving forward.

Niccolò Storer: Thank you.

Operator: The next question is a follow-up from Veronika Dubajova with Goldman Sachs. Please go ahead.

Veronika Dubajova: Hi. Thanks guys. I figured if you don’t have anyone else asking questions. I can always jump in for a follow-up or two. Maybe just curious, Enrico, obviously, this Amplifon X initiative, how you guys are thinking about it in the context of the OTC legislation in U.S.

and your desire to partake in that market? And then my second question was, you mentioned, I think in response to one of the other questions that your expectation was that your COGS that are product-related or hearing aid related would still come down this year? Just slightly surprised by that comment, because what we hear from the manufacturers is that they are, in fact raising prices this year to try to pass on some of the cost headwinds that they are facing in terms of the higher raw materials and electronic components cost. So, curious if you can give us some insight into how you have managed to get prices down? And any changes in terms of contribution from the different manufacturers that are helping you achieve that?

Enrico Vita: Yes. Well, of course, I can’t comment too much because these are confident – confidential information. But what I can tell you is that we are not envisaging any inflation. And actually, we have already finalized some important contracts with price reduction.

I can’t give you more information than that. In regards to the first question, and therefore, Amplifon X is actually – it has nothing to do with OTC. Actually, Amplifon X aims to further personalize and to further enrich the experience for our customers along all the customer journey. I mentioned some of the products that we have already launched, like the ECC. So, it is nothing related to the OTC.

With regard to our appetite to participate to the OTC market, well, we will take a final decision when the final regulation will be published. For sure, we are not aiming to be a frontrunner in OTC. We are currently evaluating perhaps to give the consumer the option, however, clearly highlighting the limitations of OTC and the benefits of a proper hearing aid. But as I said, definitely will not be our, let’s say, main proposition for our customer much on the contrary. We will clearly highlight to our customers that is a main proposition for our customer much on the contrary, we will clearly highlight to our customers the difference between OTC and proper in gate if we decided to participate in this market.

And again, I say that we are not aiming to be the frontrunner. I don’t think that it’s a matter of being the first in the market. It’s more a matter of providing to our customers’ quality service, quality hearing aids.

Veronika Dubajova: Okay. That’s helpful.

And that contract that you renegotiated, might that be a U.S. supplier contract that you are talking about?

Enrico Vita: I can’t really comment.

Veronika Dubajova: Okay. Alright. Thanks.

Operator: The next question is from Giorgio Tavolini with Intermonte. Please go ahead.

Giorgio Tavolini: Hi, good evening everyone and thanks for taking my questions. I was wondering with respect to your entry in the U.S. Medicare Advantage segment, if you have any update to share with us on your ongoing negotiations with insurance companies? And what I guess progressed in the ending this segment? And the second one is on the corporate costs.

What level should we expect for 2022, considering your progress in many initiatives that are already were advanced? So, if you expect further increase in this corporate cost line? Thank you.

Enrico Vita: Yes. Well, with regards – thank you for your questions. So, with regards to the first question, of course, we are working on getting new contracts with regards to Medicare. And we got some small ones, but we still have a significant pipeline of contracts and accounts which we are working on.

So, positive results so far, still a lot of work to be done, but absolutely in line with our plans. With regards to the second question, Gabriele, maybe…

Gabriele Galli: Yes, in terms of corporate cost, of course, I mean, as you know, Amplifon made a very important change over the last 3 years, 4 years organizing through very strong competence centers, not only in terms of activities managed by back office, but also in terms of activities managed by front office in terms of marketing. And Amplifon X is one of the things that we are, I mean implementing. So, we started with very low corporate cost 4 years, 5 years ago, around 2.5% to 3%. I think that with 2021 with corporate costs a little bit below the 4%, we achieved the kind of speed that can be maintained also moving forward.

Of course, I mean this is – I mean due to further innovate to further leverage on scale economies because I mean the more you put together effective you are. And so we believe this kind of centralization is the right choice to push for the future. But 4% is a reasonable number also for the next years.

Giorgio Tavolini: Thank you. Just a follow-up on the tax rate, what tax rate should we imagine for the next few years to 27%?

Gabriele Galli: This is a reasonable number.

Of course, I mean it will depend if there will be some change in reform in the U.S., which is, for example, today is still under discussion. The number we achieved this year was very good, but it’s something reasonable.

Giorgio Tavolini: Okay. Thank you.

Enrico Vita: Thank you.

Operator: The next question is a follow-up from Julien Ouaddour with BNP Paribas. Please go ahead.

Julien Ouaddour: Yes. Thanks for taking my follow-up. So, on the ‘22 outlook, could you give us maybe just a bit of more clarity on where you expect growth from original perspective? I mean is it fair to assume that EMEA delivered like the lower growth due to France, let’s say, America might also suffer from tough comps and APAC likely to get like the faster growth? That’s the first follow-up.

And then a follow-up to Veronika’s question on OTC. You – we are probably, let’s say, the most concerned company about the proposed rule, especially when we read your, let’s say, longer report that you addressed to the FDA during the comment period. So, like first of all, if the rule remains unchanged, I mean are you still interested into – like into the OTC? And then GN launched recently the Jabra Enhance Plus device in the U.S. So, would you maybe be interested to sell it through your own Miracle-Ear franchise, for example? Thanks.

Enrico Vita: Well, no, no.

At the moment, we are not planning to do that. As I said, by the way, we are not – we have not taken a final decision also even if we wanted to launch it or not. But no, we will not launch the GN product. At least, I mean for now. As I said, we are not – we are not planning to be the frontrunner on the OTC.

We do not see any reason why we should rush for that also because if we decided to do something, we wanted to do it right, which means we want that we will do something that that ensures safety and also ensures quality of the solution for our customers. With regards to the first – for the first – with the first question and the more colors about the region’s performance in 2022, I would say that we expect a positive contribution from all the different regions. So, perhaps maybe in the U.S., a bit higher than the others, but in general terms, good contribution from all the regions, it is true that for the EMEA, they are going to have, let’s say, a negative impact from the French market. But on the other side, you may recall that last year, some markets – the beginning in the first half, some important markets like Italy and Spain suffered from the COVID situation. Also, Germany was not very, very strong last year in the second half.

So, I would say that in general terms, we expect a positive contribution from all the three regions.

Julien Ouaddour: Thanks a lot Enrico.

Enrico Vita: Thank you.

Operator: The next question is a follow-up from Aisyah Noor with Morgan Stanley. Please go ahead.

Aisyah Noor: Thanks so much for fitting me at the end. I just have one quick follow-up question. One of your competitors we are talking about a weaker ASP outlook for 2022. What’s your outlook for mix and ASP? And do you see customers trending towards lower ASP products or opting to use more government reimbursement schemes versus previous? And could you remind us what proportion of the customer base is currently private versus covered by social insurance today? Thank you.

Enrico Vita: Yes.

Well, in terms of ASP, no, we do not envisage a reduction in terms of ASP going forward. You know very well that usually our assumption is an assumption of a stable ASP. I can tell you, this is also actually – I mean, in the last few months, actually, our ASP has grown a bit. So no, we do not see this kind of trend in terms of ASP decrease at least for us. With regards to the split between social market and private market in our sales, the vast majority of our sales are private in the private market, I would say, in the region of 75%, 80% is private.

Aisyah Noor: Okay. Thanks so much.

Enrico Vita: Thank you.

Operator: [Operator Instructions] Ms. Rambaudi, there are no more questions registered at this time.

Francesca Rambaudi: Thank you. Thanks, everybody, for your interest and attendance, and we look forward to meeting you at one of our upcoming roadshows or conferences hopefully in-person, which are outlined in the last slide. We kindly ask operator to disconnect. And thank you again. Bye-bye.

Operator: Ladies and gentlemen, thank you for joining. The conference is now over, and you may disconnect your telephones.