COURTESY TRANSLATION FROM THE ITALIAN TEXT

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1 2014 ANNUAL REPORT COURTESY TRANSLATION FROM THE ITALIAN TEXT Sorin S.p.A. Headquarters and Registered offices: Tel Share capital 478,738,144 euros Milan Tax no Via Benigno 1 Crespi, 17 VAT No Milan Register of Companies, Economic Administrative Register (REA) no

2 Disclaimer This document contains forward-looking statements, particularly in the section entitled Business Outlook. By their very nature, forwardlooking statements entail a certain degree of risk and uncertainty because they are predicated on the occurrence of future events and developments. Actual results could differ, even to a significant extent, from those projected, due to a number of factors, such as general macroeconomic conditions, changes in economic and regulatory framework in many of the countries in which the Sorin Group operates, success in developing and implementing new technologies and other changes in business conditions, including activities by the competition. 2 Sorin Group Financial Statements 2014

3 CONTENTS THE SORIN GROUP AT A GLANCE... 4 Corporate bodies and Committees... 5 Letter to Shareholders... 7 Highlights... 9 Summary data Mission and values Management Group Activities Report for Investors Sustainability in the Sorin Group REPORT ON OPERATIONS AT 31 DECEMBER Foreword Alternative performance indicators Operating performance Operating performance of the main Group companies Sorin Group's operating and financial results Operating and Financial Results of Sorin S.p.A Research and Development Human Resources and Industrial Relations Intra-Group Transactions and Transactions with Related Parties Main risks and uncertainties to which Sorin S.p.A. and the Group are exposed Report on corporate governance and the company's ownership structure Compensation Report Significant events that occurred after the end of the financial year Business outlook Proposal to approve the financial statements and allocation of the 2014 net profit NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER ANNEX (Pursuant Article 149-duodecies of the Consob Issuer Regulations) STATEMENT ON THE CONSOLIDATED FINANCIAL STATEMENTS AT 31 DECEMBER 2014 PURSUANT TO ARTICLE 154 BIS OF LEGISLATIVE DECREE N. 58/ SORIN SPA SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER STATEMENT ON THE SEPARATE FINANCIAL STATEMENTS AT 31 DECEMBER 2014 PURSUANT TO ARTICLE 154 BIS OF LEGISLATIVE DECREE N. 58/ THE BOARD OF STATUTORY AUDITORS REPORT AUDITORS REPORT Sorin Group Financial Statements 2014

4 THE SORIN GROUP AT A GLANCE 4 Sorin Group Financial Statements 2014

5 Corporate bodies and Committees Board of Directors Chairman Vice Chairman Chief Executive Officer Rosario Bifulco Giovanni Pavese André-Michel Ballester Directors Francesco Bianchi (1)(3) Andrea Bovone Giuseppe Carteni (1) Luciano Cattani (1) Sergio Gianfranco Luigi Maria Dompé (1) Roberto Ferri (1) Laura Iris Ferro (1) Roberto Giay (2) Ugo Ortelli (1) Gino Santini (1) Ugo Smiraglia (2) Maurizia Squinzi Massimo Tononi Michela Zeme (3) Board of Statutory Auditors Chairman Standing auditors Cesare Piovene Porto Godi Claudia Costanza Paolo Gualtieri Auditors PricewaterhouseCoopers S.p.A. (1) Independent Director (2) Until 17 October 2014 (3) From 25 Nov ember Sorin Group Financial Statements 2014

6 Executive Committee Provides support to the Chairman and the Board of Directors in connection with major decisions involving the Group. Its members are: Rosario Bifulco André-Michel Ballester Andrea Bovone Maurizia Squinzi Chairman Control and Risks Committee Provides consulting support and makes recommendations regarding internal control. I ts members are: Giuseppe Carteni Laura Iris Ferro Maurizia Squinzi Chairman Compensation Committee Provides consulting support with regard to the fees received by Directors, the remunerat ion of top management and the Company s remuneration policies; it also f ormulates opinions on the size, composition and prof essionalism of the Board of Direct ors, and propos es c andidates f or the of fice of Director in case of co-opt ion, where independent Directors need to be replaced. Its members are: Giovanni Pavese Giuseppe Carteni Luciano Cattani Chairman Related-party Transaction Committee Expresses it s opinion on the procedure adopted by the Committee bef ore it s adoption and issues reasoned opinions on each individual related-party transaction. I ts members are: Sergio Gianfranco Luigi Maria Dompé Giuseppe Carteni Gino Santini Chairman 6 Sorin Group Financial Statements 2014

7 Letter to Shareholders Dear shareholders, We are pleased to present the Annual Report of the Sorin Group for the 2014 financial year, which reports revenues of approximately 747 million euros and adjusted net profit of approximately 55 million euros, both in line with the guidance issued to the market at the start of the financial year. These results were achieved in a complex and challenging market context. On the one hand, the macroeconomic framework remained weak, which affected our industry in terms of pricing pressure, particularly in the Cardiac Rhythm Management area, and on the other, the unfavourable impact of exchange rates, particularly versus the U.S. dollar and the Japanese yen. This trend had a negative impact on our revenues, mainly in the first half of the year, partially offset by the strengthening of the U.S. dollar in the second half of the year. However, thanks to the exchange risk arbitrage policies put in place during 2013, the negative impact of the exchange rates on earnings was limited to around 14 million euros on EBITDA and approximately 10 million on adjusted net profit. In this market environment, Sorin pursued important objectives in terms of revenue growth and profit margin improvement. Revenues, which grew 3.4%, at constant exchange rates compared to 2013, were driven by the excellent sales of cardiopulmonary products and the constant improvement in the Cardiac Rhythm Management sector. During the year, the Company continued to roll out major new products such as the Inspire TM Heartlink TM Connect perfusion system, which is the first to integrate into a single system hardware components, disposables and data management; the innovative suture-less Perceval valve; the SonR TM cardiac optimisation system and, finally the new KORA pacemaker, which is MRI compatible in automatic mode, for which the Company obtained approval for the Japanese market, as well, in February In addition, there were commercial launches - in Europe, the CROWN PRT TM, a new stented aortic bioprosthesis and in the United States, the Mitroflow valves with the phospholipid reduction treatment (PRT) and the Solo Smart TM. Finally, and ahead of schedule, the Company completed recruitment of patients to the Respond CRT IDE clinical trial. The purpose of the clinical trial, designed to assess the safety and efficacy of the innovative SonR CRT optimisation system in patients with severe heart failure, is to obtain Pre-Market Approval from the FDA. Major initiatives for the future development of the Group were also undertaken in In particular, Sorin made significant progress in the development of its New Ventures, investments in start-ups and internal research projects to develop innovative therapeutic solutions to treat heart failure and its co-morbidities through neuromodulation, and mitral valve regurgitation through percutaneous procedures. In October 2014, the company acquired a minority stake in Respicardia, a U.S. company specialised in the treatment of Central Sleep Apnoea (CSA). According to the terms of the agreement, Sorin has also acquired the exclusive right to distribute the innovative remedē device in a selected group of European countries, and an option to acquire the whole of the company in the future. Furthermore, one of the events that occurred after the end of 2014 included not only the first commercial sales of the remedē system in Europe, but also the first implants of Equilia TM, the Sorin neurostimulation system for patients with heart failure, and further investments in HighLife and Caisson, companies focused on the development of innovative systems for mitral valve repair, to achieve major development objectives. Finally, 2014 featured some major strategic investments. In January 2014, the Company announced a joint venture with MicroPort Scientific Corporation for the sale and development of Cardiac Rhythm Management devices in China. This agreement, completed in June, represents a major step forward in Sorin's strategy, allowing the Company to enter the CRM market in China, which is growing fast, and to create a direct local presence. 7 Sorin Group Financial Statements 2014

8 In February 2014, Sorin acquired the Cardiac Rhythm Management lead business of Oscor Inc., which includes a production plant in the Dominican Republic. This transaction also strengthens Sorin's CRM product portfolio with magnetic resonance-compatible systems. During 2014, the Company continued its project for the local production of disposable cardiopulmonary devices in Suzhou, in China. With this transaction, Sorin, which is already present in China with a leadership position in the major devices segment, intends to become one of the major players in the locally produced oxygenators segment as well. In February 2015, after the end of the financial year, the Company announced its intention to proceed to merge with U.S. company Cyberonics Inc. with the intention of creating a new global reality that is a leader in medical technologies. We believe that this major transaction will enable both companies to maximise their strengths and leadership positions, to the benefit of all our stakeholders: generating significant value for our shareholders, developing new therapeutic solutions and state-of-the-art technologies for our patients and for the medical community, and creating an opportunity to enrich our employees, who will be able to share technical skills, for continuous and even faster development of innovation. We are confident that the completion of this major transaction will allow us to accelerate our growth strategy further, and to face the future with even greater optimism. Finally, we would like to thank the management and all Group employees for their high level of professionalism and the strong determination they demonstrated in 2014, as well as all our shareholders for their support and their renewed trust in the Sorin Group. Milan, 16 March 2015 Chairman Rosario Bifulco Chief Executive Officer André-Michel Ballester 8 Sorin Group Financial Statements 2014

9 Highlights SORIN'S LEADERSHIP IN THE WORLD million patients countries - 5,000 hospitals - 3,900 + employees. COMMITMENT TO RESEARCH & DEVELOPMENT million invested employees involved REVENUES Pie chart of revenues by geographical area - Pie chart of revenues by business unit 9 Sorin Group Financial Statements 2014

10 Summary data ,9 Revenues ,5 73,4 82,8 Earnings (EBIT) before special items 55,1 60,8 Adjusted net profit * 124,4 68,7 Net indebtedness *Net profit before charges and non-recurring income (special items), not of their fiscal effect 10 Sorin Group Financial Statements 2014

11 Mission and values IMPROVING HEALTH QUALITY THROUGHOUT THE WORLD Sorin products are life-saving devices. We are focused on achieving the highest performance and quality standards, and on complying with the strictest ethical standards. Working closely with medical professionals in the field of cardiac surgery and cardiac rhythm management, we develop innovative therapeutic solutions that meet their needs, pursuing our mission to: Improve our patients' quality of life Increase the skills and capabilities of healthcare professionals Optimise healthcare costs. In the Sorin Group, we live innovation, constantly engaged in improving our business and the lives of people affected by cardiovascular diseases. QUALITY CULTURE When patients' lives depend on our devices and on the solutions we design, quality is not just important, it is fundamental. ETHICS AND COMPLIANCE We apply the strictest legal, ethical and operational standards in all the Countries we operate in, and our compliance programme is recognised as sector best practice. SORIN PEOPLE We believe in our most precious asset: our Employees. For us, working means team, partnership, communication, transparency and respect. 11 Sorin Group Annual report 2014 Report on operations

12 Management The Management of Sorin Group is composed of multicultural leaders with international experience in the biomedical sector. 12 Sorin Group Annual report 2014 Report on operations

13 Group Activities AT THE HEART OF MEDICAL TECHNOLOGY Every year over one million patients in over 100 Countries are treated with Sorin Group devices. With the aim of maintaining the commitments made to patients and healthcare professionals, our teams work constantly on the research, development and supply of reliable treatment solutions to meet the cardiovascular needs and improve the health of patients. The business of the Sorin Group is composed of two business units, Cardiac Surgery and Cardiac Rhythm Management, which correspond to its two principal areas of activity. There is also a New Ventures division, dedicated to research programmes and projects for investment in new growth platforms for innovative treatments for patients with heart failure and mitral valve regurgitation. CARDIAC SURGERY We are world leaders in the cardiac surgery segment, supplying a vast range of innovative treatment solutions both for open heart surgery and for less invasive procedures. Our products are used internationally in 50% of heart operations that require extracorporeal circulation systems. CARDIAC RHYTHM MANAGEMENT As one of the leading players in the cardiac rhythm management segment, our offer comprises innovative solutions for patients and healthcare professionals: from implantable cardiac defibrillators and pacemakers to systems for cardiac resynchronisation treatment (CRT), patient management and cardiac arrhythmia assessment. The global network of collaborations we have created with specialists in cardiology, heart surgery and electrophysiology, as well as with the most renowned universities and most important research centres, ensure that our Research and Development programmes are as innovative as our products. This close collaboration allows our teams to better understand the needs of doctors and patients, and thus to create solutions based on a strong technical-scientific expertise. Through our training and development programmes, we offer doctors and healthcare professionals the possibility of sharing best practice relating to technical and clinical progress in cardiovascular disease and treatment solutions. 13 Sorin Group Annual report 2014 Report on operations

14 Our history, decades of innovation 1956 Sorin is founded by Fiat and Montecatini as a scientific research company Sorin becomes Sorin Biomedica and enters the medical technologies sector The first Sorin/Stoeckert modular heart-lung machine 1981 The first microcomputer in the world inside a Sorin / Ela Medical pacemaker Mitroflow: the first implantation of a stented biological valve Sorin Biomedica floated on the Milan Stock Exchange Sorin Biomedica taken over by Snia S.p.A Sorin Biomedica acquired Shiley, which includes Dideco S.p.A. (cardiopulmonary products) and Stöckert Instrumente GmbH (heart-lung machines) First implantation of biventricular synchronisation system in the world (Ela Medical) Dideco AVANT: the first dual chamber oxygenator for adults Acquisition of Cobe Cardiovascular, a U.S. cardiopulmonary products company Sorin Biomedica is absorbed by Snia S.p.A Acquisition of Ela Medical, a company operating in the cardiac rhythm management sector, by Sanofi Synthélabo Sorin Synthesis: the first oxygenator with an integrated arterial filter Acquisition of CarboMedics, U.S. manufacturer of mechanical heart valves. Acquisition of Mitroflow, Canadian producer of tissue valves Sorin Group listed on the Milan Stock Exchange after partial demerger from Snia Launch of OVATIO, the smallest ICD device in the world. 14 Sorin Group Annual report 2014 Report on operations

15 2007 Launch of REPLY, the smallest dual chamber pacemaker Launch of PARADYM SonR, the first CRT-D in the world with haemodynamic sensors Acquisition of the range of devices for endoscopic vascular harvesting (EVH) from Datascope, Inc Acquisition of Gish Biomedical, U.S. manufacturer of oxygenators Acquisition of Estech's portfolio of cannulae for minimally invasive cardiac surgery. Launch of PARADYM RF SonR CRT-D, the first device with automatic weekly optimisation. Launch of PERCEVAL, the first suture-free self-anchoring aortic valve for minimally invasive surgery Acquisition of CalMed (cannulae for cardiac surgery). Acquisition of Neurotech (neuromodulation system for heart failure) Acquisition of Alcard, a Brazilian company that manufactures heart-lung machines. Start of a greenfield project in Suzhou, China, to produce disposable cardiopulmonary products. Launch of INSPIRE-HEARTLINK-CONNECT, a unique and innovative perfusion system. Launch of KORA 100, the only pacemaker automatically compatible with magnetic resonance Joint venture agreement with MicroPort Scientific, to enter the CRM market in China. Acquisition of Oscor's CRM business, which includes a production plant in the Dominican Republic. Acquisition of the cardiovascular cannula branch of Bioengineering Laboratories S.p.A. (BEL). Launch of CROWN PRT stented aortic bioprosthetic valve. Minority investment in Respicardia, a U.S. company specialised in the treatment of Central Sleep Apnoea (CSA). 15 Sorin Group Annual report 2014 Report on operations

16 Global presence SORIN IS PRESENT WITH RESEARCH & DEVELOPMENT AND PRODUCTION CENTRES IN BELGIUM, BRAZIL, CANADA, CHINA, DOMINICAN REPUBLIC, FRANCE, GERMANY, ITALY AND THE UNITED STATES. 16 Sorin Group Annual report 2014 Report on operations

17 Report for Investors SORIN SHARES PRINCIPAL DATA AT 31 DECEMBER 2014 Price: Borsa Italiana MTA (Telematic Stock Market), health sector Ticker: Reuters SORN.MI, Bloomberg SRN IM ISIN No.: IT Share capital: 478,738,144 euros No. shares 478,738,144 Par value: Performance last 12 months Mean price last 12 months: Mean volumes last 12 months: Earnings per share (diluted) 2014: Dividend per share 2014: 1.00 euro each -10% euros 1,003,143 shares euros Nil COMPARISON WITH ALL SHARES FTSE ITALIA On 30 April 2014, the shareholders' meeting approved a new programme to purchase treasury shares. Subject to revocation of the plan approved by the preceding shareholders' meeting on 30 April 2013, this programme is aimed at purchasing, in one or more tranches, on a rotating basis, a maximum of 17,500,000 new treasury shares. The authorisation to make these purchases has a maximum duration of 18 months from the resolution of the shareholders' meeting, and hence to 30 October The Company, in execution of the resolutions of the shareholders' meeting, started this programme to purchase treasury shares and at 31 December 2014 Sorin S.p.A. held 2,722,145 treasury shares, representing % of the share capital. It should also be noted that on 3 June 2014, 11,503,680 treasury shares were used for the assignment of the " Long Term Incentive" bonus plan. OWNERSHIP STRUCTURE At 31 December 2014, the principal shareholders (with holdings of more than 2% of the share capital), based on information received, were: Declaring Party Name Direct Shareholder % share of Voting Capital BIOS S.p.A BI OS S.p.A EQUINOX TWO S.c.a. TOWER 6 BIS S.a.r.l FINSOE S.p.A. UNIPOL ASSICURAZIONI S.p.A THREADNEEDLE ASSET MANAGEMENT THREADNEEDLE ASSET MANAGEMENT Sorin Group Annual report 2014 Report on operations

18 RELATIONS WITH THE FINANCIAL COMMUNITY Sorin Group maintains a constant dialogue with the financial community to ensure a steady flow of information between the Group and its shareholders, institutional investors, financial analysts and the financial markets more generally, guaranteeing full compliance with the principles of transparency and equality of treatment of all parties. Sorin Group uses all the most typical tools for financial communication and dialogue with financial operators through one-to-one meetings and group presentations, roadshows, meetings with financial analysts, company visits for institutional investors and analysts, conference calls, attendance at sector conferences, press releases and through the Company website as well as the economic-financial press. The unit responsible for financial communications is the Investor Relations department. At 31 December 2014, twelve brokers covered the shares, with numerous notes published on the Group, and all generally maintained a positive recommendation. The meeting events organised with the financial community during the 2014 financial year are listed below. THE ROADSHOWS In the course of 2014, the Sorin Group organised many roadshows on the main world financial markets. In addition to Milan, New York, Toronto, Amsterdam, Brussels, the Hague and Dublin, the management also opened new financial markets such as Salt Lake City, Denver and San Francisco, with the aim of broadening and diversifying its institutional shareholder base. THE CONFERENCES The management of the Company -- CEO or CFO - and Investor Relator also attended many international conferences for the biomedical and healthcare sector, principally in London, organised by primary institutions such as Goldman Sachs, Citi, Jefferies and Berenberg Bank, and a similar number of conferences for medium sized European or Italian companies, principally in Paris, Milan and Frankfurt, organised by Exane, Bryan Garnier, Unicredit and Kepler Cheuvreux and Intesa San Paolo. THE CONFERENCE CALLS Finally, when its annual and quarterly figures are released, Sorin organises conference calls with analysts and institutional investors. In these conference calls, to maintain the expectations of the financial markets as close as possible to the results achieved, the Company communicates its expected economic-financial results (guidance) on both an annual and a quarterly basis. 18 Sorin Group Annual report 2014 Report on operations

19 Sustainability in the Sorin Group ABSTRACT: ADHERING TO THE HIGHEST ETHICAL PRINCIPLES, WE DEVELOP, PRODUCE AND DISTRIBUTE HIGH QUALITY AND HIGHLY RELIABLE MEDICAL DEVICES. Sorin Group has always been committed to responsible management practices, not only economically, but also in ethical, social, environmental and governance terms. Our medical devices are highly innovative and are used throughout the world to save human lives. We are therefore fully aware of our great responsibilities to our customers, patients, employees, shareholders, healthcare professionals, partners and professional bodies, and thus our mission is to develop, produce and distribute highly reliable high quality products. ETHICAL RESPONSIBILITY AND GOVERNANCE ABSTRACT: HIGH ETHICAL STANDARDS, PROMPT ACCESS OF PATIENTS TO EFFECTIVE PRODUCTS AND ECONOMIC POLICIES THAT REWARD VALUE CREATION: THESE ARE THE DISTINGUISHING FEATURES OF THE SORIN GROUP Sorin Group operates in a particularly complex and strict compliance environment that reflects the specific regulatory framework of its industry globally and particularly in the United States. Sorin Group s compliance activity, which is managed and coordinated by the Compliance function and Compliance Committees, is extremely structured, so as to meet the industry s requirements, which vary according to the various geographic areas. It should be noted that Sorin Group is an active member of the main trade associations, including ADVAMED (United States), Eucomed (Europe), Assobiomedica (Italy) and Mecomed (Middle East), which promote the most stringent ethical standards, timely access by patients to effective products and economic policies that reward value creation. In Italy, it should be noted that back in 2004 the Group adopted an Organisation, Management and Control Model ("Model") in accordance with the requirements of Legislative Decree No. 231 of 8 June, 2001 ("Decree"), which introduced into the Italian legal system the principle of corporate administrative liability for certain types of crimes committed by directors, executives or employees in the interest and/or for the benefit of a company. During 2014, the Supervisory Body ("SB"), the body responsible for overseeing the effectiveness and adequacy of the Model, with the support of the Internal Audit Corporate department, monitored the efficacy of the Model of Sorin S.p.A. and its Italian subsidiaries, where necessary recommending specific audits of processes deemed sensitive for the purposes of the Decree. The SB was also engaged in activities to structure a reference framework, developing a (web-based) IT platform that integrates all the features necessary to build, manage and review the Models of the Group's Italian companies pursuant to Legislative Decree 231/2001. Sorin Group s Code of Conduct sets out the principles and guidelines that must be followed by anyone, worldwide, acting on the Company s behalf and by parties who engage in commercial and/or financial transactions with Sorin. The Code of Conduct is a fundamental element of the compliance and control system within the Group, and for this reason it must be adhered to anywhere in the world Sorin operates. To date, the Code of Conduct has been translated into 10 languages and is available on the company s website Our relations with healthcare professionals are regulated by specific policies and procedures, and are designed to foster the achievement of lawfulness, transparency, independence and adequacy objectives. 19 Sorin Group Annual report 2014 Report on operations

20 With regard to Compliance, the main projects carried out in 2014 are listed below: Training programmes provided to employees, both online and in the Group s main geographic areas, on several compliance issues (Anti-Corruption Policy, Ethics Committee Compliance Policy, Speaking Up! Policy, etc.); Inclusion of a Performance Management Objective (PMO) on compliance in the computation of management s annual variable remuneration; Implementation of a new on-line process for Donation requests and education grants with pilot testing in France and Spain Continuation of the due diligence and compliance programme for all current and new sales and marketing intermediaries; In February 2015, Sorin Group received the 231 Prize for its Business Compliance. This prize, sponsored by the Italian Ministry for Economic Development and the Ministry of the Interior, represents further recognition for the unique compliance programme that features innovative solutions, and for the high standard of the Company s business ethics. The rules of operation of Sorin s management and oversight bodies are defined in the Corporate Governance Model, which complies with the recommendations of the Corporate Governance Code for Listed Companies promoted by Borsa Italiana S.p.A. and, more in general, is consistent with best international practices. Additional information about the Corporate Governance Model is available in the Report on Corporate Governance and the Company s Ownership Structure, which is available on Sorin Group s website, at the following address: Lastly, consistent with sound corporate governance and the protection of stakeholders, a company is required to adopt an adequate risk management system. This area is under the jurisdiction of the Corporate Internal Auditing function, which periodically performs a risk assessment activity. The results of these activities are used to develop Audit Plans that are then submitted for approval to the Internal Control and Risk Committee. The results of these activities are used to develop Audit Plans that are then submitted for approval to the Internal Control and Risk Committee. ENVIRONMENTAL RESPONSIBILITY ABSTRACT: CARING FOR THE ENVIRONMENT REPRESENTS ONE OF THE GROUP S BUSINESS PRIORITIES Environmental impact is a fundamental aspect for the Sorin Group, and for this reason it has adopted specific procedures for soil and water treatment, waste disposal and atmospheric emissions. Our aim is to safeguard the environment, through a rational use of resources and energy sources, to contribute to the protection of the ecosystem and to continually improve the efficiency of the Group in the areas of health, safety and the environment. The Group sites are regularly visited and certified by biomedical industry institutions, such as the Food & Drug Administration (FDA), Groupment pour l évaluation des dispositifs médicaux, (G-MED) and by the independent certification organisation (TUV). In addition, the site in Clamart, France, holds ISO and OHSAS certification, which was renewed for a further three years in the 2014 financial year, and the HQE (Haute qualité environnementale) certificate. All the Italian sites have been adapted to meet the new SISTRI Regulation, the new system to monitor the traceability of waste, while in the European sites, the Company has proceeded to register, manage and re-assess 20 Sorin Group Annual report 2014 Report on operations

21 the chemical substances used in production in accordance with REACH (Registration Evaluation Authorisation and Restriction of Chemicals). Sorin Group has also implemented initiatives to reduce energy consumption, for example, replacing conventional light bulbs with neon or led fixtures in many Group sites. Finally, to preserve and maintain the natural resources of the environment, separate collection of paper, plastic and glass has been introduced in all Group sites, and the use of paper cut down thanks to the transition to electronic format for instructions on the use of certain categories of devices for some geographical zones, for example, in the United States. The main environmental and safety initiatives taken in 2014 are listed below. Mirandola Site Fulfilment of compliance with the updated environmental regulations (as required by Legislative Decree 152/2006 and the Presidential Decree of March 2013). All the pertinent regulations (on atmospheric emissions, sound pollution, discharge of industrial wastewaters, etc.) were collected in a new authorisation provision entitled "Integrated Environmental Authorisation", with which the site complies; Design and start of the first phase of implementation of a new system for the distillation and recovery of dichloromethane from the white chambers dedicated to the production of Inspire and Avant oxygenators; the second phase will be completed during Thanks to this process, there will be an estimated fall in atmospheric emissions of dichloromethane of approximately 70% in 2015; Completion of construction of the new sterilisation plant (100% insourced), with validation planned for 2015, reduced emissions and consumption levels of ethylene oxide (ETO) into the atmosphere, CO2 almost eliminated (reduction of 100 tons), lower use of methane gas, etc., resulting in less pollution. Saluggia Site Completion of mapping of building structures, all heating and cooling pipework checked for the presence of asbestos and made safe. In 2015 the structures of buildings in which asbestos is present will be made safe; Creation of the closed circuit cooling system for the CPHV ovens, part of the energy efficiency programme activated with the installation of total heat recovery refrigeration units. Currently no longer used for cooling wastewater. Clamart Site Preparation of greenhouse gas (GHG) balance sheet; Three-year renewal of ISO and OHSAS certifications obtained; Analysis and control of leased vehicle pool applying safety and environmental indicators: CO2 emissions, costs and accident claims; Organisation of an awareness and training week ("EHS week") on several environmental-health and safety issues (for example, road risks, ergonomics, fire safety, etc.) for approximately 200 employees. 21 Sorin Group Annual report 2014 Report on operations

22 Vancouver Site Climate Smart certification obtained, and membership of a local network of enterprises committed to promoting cleaner and more efficient business by reducing environmental impact and reducing greenhouse gas emissions; Updating and recycling three cooling systems with two new more efficient units. Arvada Site Continued implementation of the recycling programme that has enabled the quantity of waste sent to landfill to be reduced by half (eliminating around 130 tonnes of waste previously sent to landfill, now recycled with our new Streamline Recycle compactor and an increase in material recycled/reused), with consequent cost saving; Change to lighting system for greater energy efficiency (from T12 Fluorescent to T8 lighting). Munich Site Insourcing of FG Warehouse, which enables daily transports between the production plant and the external warehouse to be eliminated, through a more effective logistics process, and a reduction of 14,000 km and 2.8 tonnes of CO2 per year; Investment in new Print-Circuit-Board welding equipment that permits a 20% reduction in energy consumption compared to the preceding technology. HUMAN RESOURCES ABSTRACT: 3,900 PEOPLE: OUR BEATING HEART, WORKING IN A HEALTHY, SAFE AND DISCRIMINATION-FREE ENVIRONMENT The beating heart of Sorin Group is composed of over 3,900 people, worldwide, and for this reason, every year; the Group undertakes to ensure that all our employees work in a healthy, safe and discrimination-free environment. To prevent accidents and guarantee the physical integrity of our personnel, Sorin Group complies with the applicable national regulations and has established Safety Committees responsible for continuously monitoring and improving the work environment at all its main production plants. Involve and motivate people, and foster their growth: these are the objectives that led Sorin to develop specific programmes for training, internal communication and personnel remuneration and incentive systems. The main initiatives implemented in 2014 are listed below: Investments in training Talent Management for Research and Development. Medical-scientific training for the Sales Force. Training for executives and middle managers. Talent management initiatives and behavioural training for interviews. Learning Management System 22 Sorin Group Annual report 2014 Report on operations

23 Internal communication activities CEO conference calls with top and middle managers. Meetings for all staff with a top-down interactive approach. Induction for new recruits. Intranet data sharing system Remuneration and incentive scheme policy Merit-based salary increases Bonuses linked to productivity and profitability Incentive systems for sales and white-collar staff Bonuses and reward schemes for Sales Staff and Experts Annual variable remuneration schemes for middle and top management. Attribution of shares (stock grants and Stock Appreciation Rights) for managers who hold key roles in the Group (long-term incentive plan) Welfare initiatives Personnel policies are defined by the Human Resource department of the parent company, and managed by the human resource managers of the individual business units and main geographical areas. SOCIAL RESPONSIBILITY ABSTRACT: SORIN GROUP IS VERY AWARE OF THE ISSUE OF SOCIAL RESPONSIBILITY, AND DEMONSTRATES THIS WITH THE MANY SOCIAL ACTIVITIES LINKED TO ITS CORE-BUSINESS, AS WELL AS THE PARTNERSHIP WITH "BAMBINI CARDIOPATICI NEL MONDO" In addition to the activities relating to its core-business, such as the development of clinical trials and participation at medical-scientific conferences and conventions, Sorin Group promotes major social initiatives worldwide and, in particular, is one of the main supporters of non-profit association Bambini Cardiopatici nel Mondo, which supports humanitarian missions in developing countries for children with congenital heart diseases. The association, in addition to directly helping and treating children suffering from heart diseases, is involved in establishing the conditions for sustainable healthcare development in the countries in which it operates: it builds healthcare facilities, donates technical and surgical equipment and field trains local physicians directly. In the 20 plus years it has been active, Bambini Cardiopatici nel Mondo has: Performed over 2,500 life-saving operations carried out during missions Undertaken around 350 surgical missions Diagnosed and treated over 8,200 sick children Provided 310 scholarships for foreign doctors Designed and built 2 cardiac surgery centres Built 2 centres for paediatric intensive care In 2014, the Sorin Group devolved 200,000 euros to Bambini Cardiopatici nel Mondo, and employees of the Group have donated 5,000 euros. In addition, Sorin Group donated life-saving devices and incentivised the involvement of its employees as volunteers in activities promoted by the association. 23 Sorin Group Annual report 2014 Report on operations

24 Other social initiatives carried out by Sorin Group included scholarships, contributions to medical associations or hospitals or other non-profit charitable associations, and donations of its own devices and equipment (for information and application procedures, contact: for the United States for activities outside the United States). 24 Sorin Group Annual report 2014 Report on operations

25 REPORT ON OPERATIONS AT 31 DECEMBER Sorin Group Annual report 2014 Report on operations

26 PRINCIPAL CONSOLIDATED ECONOMIC AND FINANCIAL DATA (millions of euros) Profit and loss data Net revenues EBITDA before special items EBIT EBIT before special items Profit (Loss) before taxes Net profit Adjusted net profit Balance Sheet data Net invested capital Net indebtedness (124.4) (68. 7) Shareholders' equity Other data Number of employees at the end of the year 3,911 3,733 Average number of employees during the year 3,815 3,708 Data per Share (in euros) Earnings per share: - basic, based on the net profit for the year diluted, based on the net profit for the year Adjusted net profit per share: - diluted, based on the net profit for the year Dividend per share: Shareholders' equity per share Stock market price (average for the period) Key indicators EBITDA before special items / Net revenues (%) EBIT / Net revenues (%) EBIT before special items / Net revenues (%) EBIT / Average net invested capital (%) Net profit / Net revenues (%) Adjusted net profit / Net revenues (%) Net profit / Average shareholders' equity (%) Net indebtedness / Shareholders' equity Sorin Group Annual report 2014 Report on operations

27 Foreword The financial statements at 31 December 2014 were prepared in accordance with the international financial reporting standards (IFRS) published by the International Accounting Standards Board (IASB) and approved by the European Union and comply with the provisions enacted to implement Article 9 of Legislative Decree No. 38/2005. The abbreviation IFRS also refers to the International Accounting Standards (IAS) currently still in force and all of the interpretations issued by the International Financial Reporting Interpretations Committee (IFRIC), including earlier interpretations issued by the Standing Interpretations Committee (SIC). The international accounting principles adopted are the same as those applied to prepare the consolidated financial statements at 31 December 2013, except as described in Note 2 to the Consolidated Financial Statements. The financial statements at 31 December 2014 were prepared on a going concern basis. In fact, the Group concluded that, while the economic and financial environment remains challenging, there were no material uncertainties (as defined in Paragraph 25 of IAS 1) as to the Company's ability to continue as a going concern, owing in part to the actions already taken to address the risks identified and to adapt the operating and financial structure of the Group to the changed economic context. In this annual report, the amounts are stated in millions of euros with one decimal within the Report on Operations, whilst the amounts stated in the consolidated financial statements and the separate financial statements of Sorin S.p.A are in thousands of euros. As a result, some rounding of figures differences may occur in some schedules. Sorin S.p.A. further announces that, pursuant to Article 70, Section 8, and Article 71, Section 1-bis, of Consob Regulation No /99, as amended by Resolution No of 20 January 2012, it is availing itself of the option of non-complying with the obligation to publish the information memoranda required in connection with material transactions involving mergers, demergers, capital increases through conveyances of assets in kind, acquisitions and divestments. 27 Sorin Group Annual report 2014 Report on operations

28 Alternative performance indicators In order to provide a more in-depth assessment of the operating and financial performance of Sorin Group at 31 December 2014, the Report on Operations and the Consolidated Financial Statements include certain economic, equity and financial quantities, which are used as part of the decision-making process, both when reviewing actual data and formulating budgets and plans, and in presentations to financial analysts and investors. These indicators should not be viewed as alternatives to the conventional indicators provided in the international financial reporting standards (IAS, IFRS) and, for all intents and purposes, simply constitute an additional disclosure. Sorin s management measures the performance of the Group and its Business Units without considering the impact of special items on EBIT, EBITDA, net profit and net indebtedness. Material profit and loss and balance sheet items are classified as special items when (i) they arise from events or transactions that are not recurring or from transactions or situations that do not occur frequently in the normal course of business, or (ii) they arise from events or transactions that are not indicative of the Group s regular business activity. The international financial reporting standards (IFRS) do not provide a definition for special items. Consequently, information about special items should be viewed as a supplemental disclosure provided for the purpose of measuring more effectively the actual result from regular operations. Material profit and loss and balance sheet items that arise from non-recurring operations are shown separately in the comments provided by management and in the financial disclosures included in this Report. EBIT (earnings before interest and taxes) and EBITDA (earnings before interest, taxes, depreciation and amortisation) are indicators of operating performance. They are computed as follows: Profit (Loss) before taxes + Financial expenses - Financial income -/+ Currency translation gains/losses -/+ Income from/expenses on investments in associates = EBIT + Depreciation, amortisation and writedowns + Additions to provisions for risks and charges -/+ Gains/Losses from sale of investments in subsidiaries + Restructuring charges and provisions -/+ Impact of non-recurring events (special items) = EBITDA Adjusted net profit is an economic performance indicator computed as follows: Net profit -/+ Impact of non-recurring events (special items) -/+ Estimate of tax effect on non-recurring events (special items) = Adjusted net profit The tax effect is calculated applying an estimated mean rate of 27% to all special items, irrespective of the fiscal relevance of the individual components. Percentage changes in net revenues, EBIT and EBITDA compared with the same items in prior periods provided for comparison purposes are computed on a like-for-like basis, which means using the same area of consolidation and/or the same exchange rate versus the euro. This approach provides a more effective means of depicting the operating performance of the Group and its Business Units. 28 Sorin Group Annual report 2014 Report on operations

29 Net invested capital and Net financial assets/net indebtedness are indicators of financial performance that are computed as follows: + Property, plant and equipment + Intangible assets and goodwill + Equity investments in associates + Investments in other companies (1) = Capital invested in non-current assets + Inventories + Trade accounts receivable - Trade payable + Other assets (2) / Other liabilities (3) = Working capital - Provision for severance indemnities and other employee-benefit provisions - Provisions for risks and charges (4) = Net invested capital (Capital invested in non-current assets + Working capital Provision for severance indemnities and Other employee-benefit provisions Provisions for risks and charges) + Non-current financial assets (5) + Financial derivative assets + Other current financial assets + Cash and cash equivalents - Non-current financial liabilities - Financial derivative liabilities - Other current financial liabilities = Net financial assets (Net indebtedness) (1) Included among Non-current financial assets. (2) This item includes: Deferred tax assets, Miscellaneous non-current assets, Other current receivables and Tax credits. (3) This item includes: Miscellaneous non-current liabilities, Deferred tax liabilities, Other current liabilities, Public grants and Taxes payable. (4) This item is comprised of provisions included among non-current and current liabilities. (5) Excluding Investments in other companies included in Net invested capital. Average Net invested capital and average Shareholders' Equity are computed as the arithmetic mean of the corresponding amounts at the end of the period and the value at 31 December of the previous year. Free cash flow summarises cash generating capacity from operations. It is computed as follows: + Net profit + Depreciation, amortisation and writedowns +/- Change in working capital - Investments - Impact of non-recurring events (cash effect) = Free cash flow 29 Sorin Group Annual report 2014 Report on operations

30 The Group presents its income statement in accordance with a format with expenses broken down by type. In addition, it has developed and uses for internal reporting and business management purposes a income statement format in which costs are broken down by function (also known as cost of sales or by destination income statement). The Group s management believes that the disclosure of additional information in accordance with such a function-based presentation format provides an additional element to better assess its economic and financial performance. Moreover, this reclassified format, which was not reviewed by the Auditors, is more consistent with the data presentation format used by the principal operators in the global market for medical devices in which the Group operates. The two profit and loss presentation formats (by type and by function/destination) show the same data for net revenues and EBIT. The economic indicators provided by the income statement presentation format by function/destination include the following: Change in revenues at comparable exchange rates and scope of consolidation, which represents the change in revenues for two comparable periods, at constant exchange rates, and neutralising the effect of revenues generated by investments in new product lines or discontinued product lines; gross profit, which is an indicator of performance at the industrial level and is computed by deducting the cost of sales from net revenues; research and development (R&D) operating expenses which represent the amount corresponding to the operating costs (personnel expense, cost of materials and services used, depreciation and amortisation) incurred by the departments responsible for research and development (net of costs capitalised as development costs); selling, general and administrative (SG&A) operating expenses, which represent the amount corresponding to the operating costs (personnel expense, cost of materials and services used, depreciation and amortisation) incurred by the departments responsible for sales, marketing, administration and management and the other operating costs and revenues and additions to provisions that are not included in cost of sales or research and development expenditures. Because the breakdown of the alternative performance indicators described above is not governed by generally accepted accounting principles, the computation criteria adopted by the Sorin Group could be different from those adopted by other companies and, consequently, not comparable. 30 Sorin Group Annual report 2014 Report on operations

31 Operating performance The context in which the Group operated in 2014 was substantially the same as in 2013, with a weak macroeconomic environment, particularly in the mature markets of Western Europe, although there were signs of recovery from the U.S. Market. Pricing pressure continued, due also to policies to limit healthcare spending, which had a significant impact on the Cardiac Rhythm Management sector in particular. Despite the persistence of this negative macro-scenario, the Group continued to pursue its growth and development plans, with investments in technology and new markets. Of the salient facts of the financial year for the Sorin Group, the following are of particular note: The agreement with MicroPort Scientific Corporation to create a joint venture in China for the marketing and development of Sorin's CRM devices and of devices produced locally for the Chinese market. In May 2014 the company was officially constituted, and started operations in June The acquisition of the cardiovascular cannula production branch of the business of Bioengineering Laboratories S.p.A. ("BEL"), based in Cantù (Como). These devices are part of the Sorin Group's cannula offer and in 2013 generated revenues of around 4 million euros. After the acquisitions of Estech's range of cannulae for minimally invasive cardiac surgery, in 2011, and of CalMed in 2012, this transaction represents another major step forward in Sorin's strategy to strengthen its competitive position in this segment. The acquisition of the leads business of Oscor Inc. ("Oscor") in the Dominican Republic, in a deal worth a total of around 20 million U.S. dollars (15.4 million euros). With this agreement, Sorin Group acquired: i) Oscor s OEM business of leads for bradycardia; ii) one of Oscor's production plants, fully equipped, ISO certified and registered with the FDA, based in the Dominican Republic, and iii) access to the designs and development resources of Oscor, to accelerate development of a complete portfolio of stimulation, defibrillation and left ventricle leads compatible with magnetic resonance. A further investment in a minority holding in Cardiosolutions Inc. for 5.1 million U.S. dollars. Award of the CE (Conformité Européenne) mark, which extends the clinical indication of the Perceval suturefree biological valve to all adult patients under 65 years of age with aortic stenosis and/or steno-insufficiency. FDA approval for Mitroflow TM, the aortic valve in bovine pericardium, with phospholipid reduction treatment (PRT), which enables the potential calcification process to be reduced and further increases the life of the valve. Approval by the Shareholders' Meeting on 30 April 2014 of the proposal to authorise a new plan to purchase and dispose of treasury shares. The new authorisation was granted for a period of 18 months from the date it was approved by the Shareholders' Meeting, and the goal is to enable the purchase of a number of new treasury shares, up to a maximum of 17,500,000. Approval by the same Shareholders' Meeting of a new " Long-Term Incentive Plan" share allocation plan reserved to Directors and employees of Sorin S.p.A. and/or its subsidiaries. The granting of a new 100 million euro medium/long-term loan by the European Investment Bank (EIB) to support Research and Development projects in Italy and France. The announcement, at the 94 th Annual Meeting of the American Association for Thoracic Surgery (AATS) in Toronto, Canada, of the results of the clinical trial of the Freedom Solo valve, for U.S. market approval (FDA). The outcomes confirmed the safety and efficacy of the stentless Freedom Solo aortic valve. The announcement, at the world s electrophysiology conference in Nice, of the results of the Sorin Group's Answer long-term randomised clinical trial. The trial demonstrated that Safer safely reduces right ventricular 31 Sorin Group Annual report 2014 Report on operations