Kedrion Group Consolidated Financial Statements As at December 31, 2019

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Kedrion Group Consolidated Financial Statements As at December 31, 2019 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT DECEMBER 31, 2019 Kedrion S.p.A. Joint-stock company Fully paid-up share capital Euro 60,453,901 Registered office: Località Ai Conti - 55051 BARGA (LU), fraz. Castelvecchio Pascoli, Production facility: 55027 GALLICANO (LU) – frazione Bolognana 80029 S. ANTIMO (NA) Tax Code – VAT No. – Reg. Of Companies of Lucca No. 01779530466 – Economic & Administrative Index No. 170535. KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 2 INDEX 1. GROUP STRUCTURE 4 2. CORPORATE BODIES 5 3. REPORT OF THE INDEPENDENT AUDITOR 7 3.1. INDEPENDENT AUDITOR'S REPORTREPORT ON CONSOLIDATED FINANCIAL STATEMENTS 7 3.2. REPORT ON CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION IN ACCORDANCE WITH D. LGS. 254/2016 13 4. REPORT ON OPERATIONS 17 4.1. SEGMENT PERFORMANCE 18 4.2. BUSINESS OPERATIONS 22 4.3. SIGNIFICANT EVENTS DURING THE YEAR 22 4.4. BUSINESS PERFORMANCE 24 4.5. STATEMENT OF FINANCIAL POSITION 30 4.6. MAIN RISKS AND UNCERTAINTIES TO WHICH THE GROUP IS EXPOSED 35 4.7. DIVIDEND POLICY 38 4.8. PERSONAL DATA PROCESSING 38 4.9. MAIN FEATURES OF THE INTERNAL RISK MANAGEMENT AND CONTROL SYSTEM IN RELATION TO THE FINANCIAL RE-PORTING PROCESS, ALSO CONSOLIDATED (INFORMATION PURSUANT TO ARTICLE 123-BIS, PARAGRAPH 2. B) OF LEGISLATIVE DECREE 58/98) 39 4.10. PARENT COMPANY AND CONSOLIDATED SUBSIDIARIES/ASSOCIATES 42 4.11. SIGNIFICANT EVENTS AFTER YEAR END 47 4.12. NON-RECURRING TRANSACTIONS 49 4.13. TRANSACTIONS WITH RELATED PARTIES 50 4.14. RECONCILIATION OF NET PROFIT AND GROUP EQUITY WITH THE ANALOGOUS VALUES OF THE PARENT COMPANY 51 4.15. CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION IN ACCORDANCE WITH LEGISLATIVE DECREE 254/2016 52 5. FINANCIAL STATEMENTS 93 5.1. CONSOLIDATED STATEMENT OF FINANCIAL POSITION 93 5.2. STATEMENT OF PROFIT OR LOSS FOR THE YEAR 95 5.3. STATEMENT OF PROFIT OR LOSS AND OTHER COMPREHENSIVE INCOME 96 5.4. STATEMENT OF CHANGES IN CONSOLIDATED SHAREHOLDERS’ EQUITY (NOTE 6.4.18) 97 5.5. CONSOLIDATED STATEMENT OF CASH FLOW 98 6. EXPLANATORY NOTES 100 6.1. INTRODUCTION 100 6.2. PERIOD’S SIGNIFICANT EVENTS 102 6.3. ACCOUNTING STANDARDS AND MEASUREMENT CRITERIA 104 6.4. COMMENTS ON THE MAIN ITEMS IN THE CONSOLIDATED STATEMENT OF FINANCIAL POSITION 129 6.5. COMMENT ON THE MAIN ITEMS OF THE CONSOLIDATED STATEMENT OF PROFIT OR LOSS 153 6.6. OTHER INFORMATION 161 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 3 1. GROUP STRUCTURE 30thDecember 2019 Kedrion S.p.A. - Corporate Structure Sestant S.p.A. 100% FSI Investimenti FSI S.G.R. Sestant Internazionale REFIN PIPS S.p.A. S.p.A. S.p.A. S.r.l. S.r.l. 25,06% 19,59% 50,27% 4,02% 0,56% 0,50% Kedrion S.p.A. 100% 100% 100% 100% 100% 100% 60% 60% 51% 100% Kedrion HUMAN KEDPLASMA Kedrion Kedrion Swiss Kedrion Portugal Kedrion Betaphar Kedrion Kedrion Brasil Kedrion de Distribução Biyofarmasötik İlaç Distribuidora de Biopharma Inc. BioPlazmaKft. GmbH International Sarl de Produtos Mexicana Produtos Colombia GmbH Sanayi ve Ticaret S.A. de C.V. S.A.S. Farmacêuticos Anonim Şirketi Hospitalares LTDA. Unipessoal Lda. % 100 100% 20% 20% 60% KEDPLASMA Kedrion KEDPLASMA LLC Biopharma Kft. India Private Limited 4,3% Entegrion Inc. On November 15, 2019, the closing of the agreement regarding the entry of a new shareholder into Kedrion S.p.A., FSI SGR S.p.A. took place, which took over 19.59% of the shareholding structure. Following the stipulation of an "Investment Contract" between Kedrion S.p.A., Sestant Internazionale S.p.A., Sestant S.p.A., FSI Investimenti S.p.A. and FSI SGR S.p.A., the share capital of Kedrion S.p.A. is now 50.27% owned by Sestant Internazionale S.p.A, 25.06% by FSI Investimenti S.p.A, 19.59% by FSI SGR S.p.A, 4.02% by Sestant S.p.A, for 0.56% by Refin Srl and 0.50% from PIPS S.r.l. The entry of the new shareholder and the simultaneous strengthening of capital through a capital increase of Euro 50.0 million by FSI SGR S.p.A. and equal to Euro 16.7 million by CDP Equity, represent for Kedrion S.p.A. a strong contribution to create growth and face with new challenges both in the national and international markets. KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 4 2. CORPORATE BODIES BOARD OF DIRECTORS Paolo Marcucci Chairman and Managing Director In office until approval of the financial Umberto della Sala Deputy Chairman statements for the year ended 31 December 2020 Maria Lina Marcucci Director Andrea Marcucci Director Remo Grassi Director Luca Ungarelli Director Fabrizio Redaelli Director Matteo Fanciullacci Director Giovanni Zetti Director Barnaba Ravanne Director Giacomo Tofani Director Massimo Perpoli Secretary REMUNERATION Paolo Marcucci Chairman COMMITTEE Matteo Fanciullacci Barnaba Ravanne RISKS COMMITTEE Fabrizio Redaelli Chairman Giovanni Zetti Giacomo Tofani OPERATION COMMITTEE Barnaba Ravanne Chairman RELATED PARTIES Remo Grassi Matteo Fanciullacci TECHNICAL COMMITTEE Umberto Della Sala Chairman Giovanni Zetti Giacomo Tofani Luca Ungarelli BOARD OF STATUTORY Giuseppe Galeano Chairman AUDITORS Francesco Cirillo Standing Auditor In office until approval of the financial Marco Miccinesi Standing Auditor statements for the year ended 31 Fabrizio Cerbioni Standing Auditor KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 5 December 2020. Luca Michele Debernardi Standing Auditor Giuseppe Paternò Alternative Auditor Niccolò Poggio Alternative Auditor INDEPENDENT AUDITORS E.Y. S.p.A. The statutory audit assignment was awarded by the ordinary Shareholders' Meeting of 27 April 2015 and expires at the time of the Meeting called to approve the financial statements for the year ending 31 December 2022. THE COMPANY’S BOARD OF DIRECTORS a) Role and functions In compliance with Article 18.1 of the Statute, the Board of Directors is vested with full powers for the ordinary and extraordinary management of the Company, without any exceptions, and may perform all deeds, including provisions, that it deems necessary for achieving the corporate purpose, excluding only those that the law or the Statute specifically reserve to the Shareholders’ Meeting or in any event which require a shareholder decision. b) Composition The Company is managed by a Board of Directors composed of 11 (eleven) members. c) Delegation and powers The Board of Directors has delegated certain powers to individual directors. In particular, the Managing Director is invested with powers relating to ordinary administration for the purposes of achieving the corporate purpose and other specific powers. KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 6 3. REPORT OF THE INDEPENDENT AUDITOR 3.1. INDEPENDENT AUDITOR'S REPORTREPORT ON CONSOLIDATED FINANCIAL STATEMENTS KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 7 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 8 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 9 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 10 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 11 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 12 3.2. REPORT ON CONSOLIDATED DISCLOSURE OF NON-FINANCIAL INFORMATION IN ACCORDANCE WITH D. LGS. 254/2016 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 13 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 14 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 15 KEDRION GROUP CONSOLIDATED FINANCIAL STATEMENTS AS AT 31 DECEMBER 2019 16 4. REPORT ON OPERATIONS Dear Shareholders, the financial year ended 31 December 2019 generated a record turnover for the Kedrion Group of Euro 808.2 million (Euro 687.9 million in 2018), with an increase of 17.5 % compared to the previous year. The strategic investments made in recent years in order to increase access to plasma, were crucial to achieve this result and to obtain a higher efficiency in operations, as well as the great efforts to improve its international positioning, with an export sales share that rose to 80.2 % in 2019. The United States remains the first market thanks to a share of 43.5 % of turnover, followed by the countries of the European Union with 31.5% (among them Italy at 19.8%) and the Rest of the World with the 2 5%. EBITDA reaches Euro 101.3 million, equal to 12.5% of turnover, more than double the value of the previous year. In fact, in addition to the growth in turnover, there was a sharp reduction (-36.6% compared to 2018) in non-recurring costs thanks above all to the increase in volumes processed in the Melville plant. Instead, Adjusted EBITDA (calculated excluding the impact of these non-recurring items) reached Euro 166.1 million (20.6 % of sales), a significant increase compared to 2018 (+11.7%). Finally, Net profit for the year stood at d Euro 38.2 million, equal to 4.7% of the turnover in strong increase compared to Euro 11.6 million for the year 2018. The financial statements for the year ended 31 December 2019 include the statement of financial position, statement of profit or loss, statement of profit or loss and other comprehensive income, cash flow statement, statement of changes in shareholders’ equity and the related explanatory notes, drawn up in compliance with the IFRS adopted by the European Union. The consolidated statement of financial position shows a distinction between current and non-current assets and liabilities. The presentation format for the consolidated statement of profit or loss for the year as at 31 December 2016 is illustrated on a by function basis, the format considered more representative than the presentation by nature of expense.
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