Annual Financial Report December 31, 2018

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Annual Financial Report December 31, 2018 ANNUAL FINANCIAL REPORT DECEMBER 31, 2018 DiaSorin S.p.A. Via Crescentino (no building No.) - 13040 Saluggia (VC) Tax I. D. and Vercelli Company Register no. 13144290155 1 WorldReginfo - 7c03bfce-0ba7-4e87-87f6-eb8b8820e180 TABLE OF CONTENTS REPORT ON OPERATIONS............................................................................................................................................................3 LETTER TO SHAREHOLDERS ......................................................................................................................................................3 BOARD OF DIRECTORS & CONTROL BODIES ...........................................................................................................................5 STRUCTURE OF THE GROUP AT DECEMBER 31, 2018 .............................................................................................................7 OUR BUSINESS ................................................................................................................................................................................8 RESEARCH AND DEVELOPMENT.............................................................................................................................................. 10 FOCUS ON OUR PLATFORMS ................................................................................................................................................ 10 FOCUS ON MOLECULAR DIAGNOSTICS............................................................................................................................. 11 RESEARCH AND DEVELOPMENT COSTS AND INVESTMENTS ...................................................................................... 13 PUTTING PEOPLE AT THE HEARTH .......................................................................................................................................... 14 STOCK OWNERSHIP ..................................................................................................................................................................... 15 HIGHLIGHTS.................................................................................................................................................................................. 17 REVIEW OF THE GROUP’S OPERATING PERFORMANCE AND FINANCIAL POSITION ................................................... 22 NON-RECURRING MATERIAL TRANSACTIONS AND ATYPICAL AND/OR UNUSUAL TRANSACTIONS ..................... 30 MAIN RISKS AND UNCERTAINTIES TO WHICH DIASORIN S.P.A. AND THE GROUP ARE EXPOSED ............................ 31 SIGNIFICANT EVENTS OCCURRING AFTER DECEMBER 31, 2018 AND BUSINESS OUTLOOK .................................... 33 REVIEW OF THE OPERATING PERFORMANCE AND FINANCIAL POSITION OF DIASORIN S.P.A. .............................. 34 RELATED-PARTY TRANSACTIONS .......................................................................................................................................... 41 REPORT ON CORPORATE GOVERNANCE AND OWNERSHIP STRUCTURE ....................................................................... 42 CONSOLIDATED NON-FINANCIAL DISCLOSURE AT DECEMBER 31, 2018 ..................................................................... 84 INDEPENDENT REPORT ON THE LIMITED AUDIT OF THE CONSOLIDATED NON-FINANCIAL STATEMENTS OF THE DIASORIN GROUP ................................................................................................................................................................ 127 MOTION TO APPROVE THE FINANCIAL STATEMENTS AND APPROPRIATE THE 2018 NET PROFIT ........................ 131 CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2018 AND DECEMBER 31, 2017 OF THE DIASORIN GROUP ............................................................................................................................................................................................ 132 ANNEX I: LIST OF EQUITY INVESTMENTS WITH THE SUPPLEMENTAL DISCLOSURES REQUIRED BY CONSOB COMMUNICATION NO. DEM/6064293 ....................................................................................................................................... 189 ANNEX II: DISCLOSURE REQUIRED PURSUANT TO ARTICLE 149-DUODECIES OF THE CONSOB ISSUERS’ REGULATIONS .............................................................................................................................................................................. 191 CERTIFICATION OF THE STATUTORY FINANCIAL STATEMENTS ................................................................................. 192 STATUTORY FINANCIAL STATEMENTS OF DIASORIN S.P.A. AT DECEMBER 31, 2018 AND AT DECEMBER 31, 2017 .......................................................................................................................................................................................................... 193 ANNEX III: DISCLOSURE REQUIRED PURSUANT TO ARTICLE 149-DUODECIES OF THE CONSOB’S ISSUERS’ REGULATIONS .............................................................................................................................................................................. 251 CERTIFICATION OF THE STATUTORY FINANCIAL STATEMENTS PURSUANT TO ARTICLE 81-TER OF CONSOB REGULATION NO. 11971 OF MAY 14, 1999, AS AMENDED ................................................................................................... 252 REPORT OF THE BOARD OF STATUTORY AUDITORS 253 INDEPENDENT AUDITOR’S REPORT………………...………………………………………………………………………270 2 WorldReginfo - 7c03bfce-0ba7-4e87-87f6-eb8b8820e180 REPORT ON OPERATIONS LETTER TO SHAREHOLDERS Dear Shareholders, the year 2018 confirmed DiaSorin’s excellent financial results, with increased revenues and profitability along with record net profit and cash generation. We undertook several projects as evidence of our ongoing quest for cutting-edge, reliable products, in order to provide our customers - the diagnostic laboratories- with more effective solutions capable of delivering high-quality and swift answers. Our customers have always been at the hearth of every single initiative and decision related to investment and development, as regards both the consolidated immunodiagnostics framework and the recent molecular diagnostics segment. The year 2018 continued to confirm DiaSorin as the immunodiagnostic Company with the broadest specialty menu available on the global market with over 115 products, including 30 high-specialty tests. We kept on expanding the number of molecular diagnostic tests by launching 4 new kits and 11 new ASRs, increasing our already extensive menu available on LIAISON MDX and laying the foundation for further business growth. It is noteworthy to mention the launch of latent tuberculosis test, following the agreement with QIAGEN on the use of QuantiFERON technology. This diagnostic specialty offers strong growth prospects for both companies, given the spread of Tuberculosis around the world. Furthermore, the successful development of this test opened the way for new diagnostic applications generated by synergy among technologies. The success of LIAISON analyzers placements continued, with an overall installed base exceeding 7,800 units, with LIAISON XL representing more than 50% of analyzers. During the year, we continue to focus on the development of the new LIAISON XS: the analyzer will be launched on the European market in first month of 2019 to serve small-medium sized laboratories. In 2018, we worked on business development, through an important agreement signed with MERIDIAN BIOSCIENCE, a major U.S. diagnostics company, to sell DiaSorin’s FDA-cleared H. Pylori stool antigen test to detect Helicobacter Pylori for use on its automated LIAISON platform. In light of the above, I believe that DiaSorin, once again, represents the excellence standard in the diagnostic sector at global level, laying the foundation for further success to be achieved in the forthcoming years. This success stems from our vision, strategy, passion, ability to adapt to changing market conditions, as well as a corporate talent-oriented culture, which is a necessary and essential condition for an innovative and fast- growing company like DiaSorin. 3 WorldReginfo - 7c03bfce-0ba7-4e87-87f6-eb8b8820e180 I would like to thank our Top Management, all employees and Shareholders for confirming their trust in the Group’s important objectives that are intended to drive our Company towards important results. And, I would also like to mention our commitment to corporate sustainability initiatives that, again this year, have been at the basis of our conduct, especially with respect to local communities where we operate. Our projects range from those to support talent and love for science, like Mad for Science, to those to help athletes facing difficult situations, like Talent Project with FISIP or DiaSorin Sitting Volley Cup, or those to ease hospitalized children’s anxieties, like Pinocchio Project…small acts demonstrating how focus on Individuals has become increasingly important to build up a better future for our Society. Gustavo Denegri Chairman 4 WorldReginfo - 7c03bfce-0ba7-4e87-87f6-eb8b8820e180 BOARD OF DIRECTORS & CONTROL BODIES BOARD OF DIRECTORS (appointed on April 28, 2016) Chairman Gustavo Denegri Deputy Chairman Michele Denegri Chief Executive Officer Carlo Rosa (1) Directors Giancarlo Boschetti Stefano Altara Chen Menachem Even Franco Moscetti (2) Giuseppe Alessandria (2) (3) Roberta Somati (2) Fiorella Altruda (2) (4) Francesca Pasinelli (2) Monica Tardivo
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