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The Diagnostic Specialist Diagnostic Specia Third quarter 2007
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The Diagnostic Specialist
Dia
gnos
tic
Spec
iaThird
quarter 2007
2007DIASORIN GROUP QUARTERLY REPORT AT SEPTEMBER 30, 2007
DiaSorin S.p.A.Via Crescentino - 13040 Saluggia (VC) - Tax I.D. and Vercelli Company Register N. 13144290155
Governative bodies p. 5Consolidated financial highlights p. 6
1. Report on operations p. 71.1. Review of the Group’s operating performance and financial position p. 7
1.1.1. The foreign exchange market p. 71.1.2. Operating performance in the Third Quarter of 2007 p. 71.1.3. Analysis of consolidated cash flow p. 121.1.4. Analysis of consolidated net borrowings p. 131.1.5. Operating performance in the first nine months of 2007 p. 14
2. Transactions with related parties p. 17
3. Significant events occurring after september 30, 2007 p. 19
4. Consolidated financial statements at september 30, 2007 p. 21Consolidated income statement p. 21Consolidated balance sheet p. 22Consolidated statement of cash flow p. 24Consolidated statement of changes in shareholders’ equity p. 25
Notes to the consolidated financial statements p. 26- Accounting principles and scope of consolidation p. 26- Segment information p. 28- Description and main changes p. 29
- Income statement p. 29- Balance sheet p. 31
Contents
3
2007Third
quarter
Board of directors (ELECTED ON MARCH 26, 2007)
Chairman Gustavo Denegri
Executive Deputy Chairman Antonio Boniolo
Chief Executive Officer Carlo Rosa1
Director Giuseppe Alessandria2
Chen Menachem Even
Enrico Mario Amo
Ezio Garibaldi2
Michele Denegri
Franco Moscetti2
Board of statutory auditors
Chairman Luigi Martino
Statutory auditors Bruno Marchina
Vittorio Moro
Alternates Alessandro Aimo Boot
Maria Carla Bottini
Independent Auditors Deloitte & Touche S.p.A.
1General Manager2Independent Director
5
2007Third
quarter
GOVERNATIVE BODIES
6
Third quarter First nine monthsas a % of as a % of as a % of as a % of
(in thousands of Euros) 2007 revenues 2006 revenues 2007 revenues 2006 revenues
Net revenues 49,003 100.0% 43,514 100.0% 151,163 100.0% 136,656 100.0%
EBITDA 13,452 27.5% 15,480 35.6% 45,093 29.8% 44,014 32.2%
Operating result (EBIT) 10,034 20.5% 11,996 27.6% 34,653 22.9% 33,470 24.5%
Net result 5,318 10.9% 6,760 15.5% 19,054 12.6% 18,979 13.9%
Adjusted EBITDA 15,307 31.2% 13,548 31.1% 49,086 32.5% 42,082 30.8%
EBIT before
nonrecurring
income/expense 11,889 24.3% 10,064 23.1% 38,646 25.6% 31,538 23.1%
Net result before
nonrecurring
income/expense 6,482 13.2% 5,548 12.7% 21,560 14.3% 17,767 13.0%
(in thousands of Euros) At September 30, 2007 At December 31, 2006
Total assets 219,961 194,081
Net borrowings 15,884 34,730
Shareholders’ equity 112,509 87,737
CONSOLIDATED FINANCIAL HIGHLIGHTS
1.1. Review of the Group’s operating performance and financial position
Pursuant to Article 3 of Legislative Decree No. 38 of February 28, 2005, which governs the selection of the alternatives provided in Article 5 of EC Regulation No. 1606/2002 of the European Parliament and Council dated July19, 2002 concerning the adoption of the International Financial Reporting Standards, the Company voluntarily elected to adopt the International Financial Reporting Standards (hereinafter also referred to as “IFRS”), as publishedby the International Accounting Standards Board (“IASB”) and officially approved by the European Union, for the preparation of its consolidated financial statements, starting with the year ended December 31, 2006.
This quarterly report was prepared in accordance with the provisions of IAS 34 – Interim Financial Reporting. The dataat September 30, 2006 have been restated in accordance with International Financial Reporting Standards (IFRS).
With regard to the composition of gross profit, some of the items that were included in last year’s computation have been reclassified in accordance with the presentation criteria adopted this year, which reflect a more accurate allocation of such items, consistent with sound management criteria.
Lastly, this quarterly report was not audited.
1.1.1. The foreign exchange market
The average exchange rates for the third quarter of 2007 show that the euro appreciated significantly versus the currencies that have an impact on the Group’s operations. The table below provides a comparison between the exchange rates for the third quarter of 2007 and the same period last year (source: Italian Foreign Exchange Office):
Currency Third quarter 2007 Third quarter 2006 First nine months 2007 First nine months 2006
U.S. dollar (USD) 1.3745 1.2741 1.3443 1.2442
Brazilian real (BRL) 2.6338 2.7655 2.68979 2.7173
British pound (GBP) 0.6803 0.6799 0.6765 0.6847
Swedish kronor (SEK) 9.2636 9.2311 9.2368 9.2942
Mexican peso (MXN) 15.0673 13.952 14.7247 13.5756
Israeli shekel (ILS) 5.7525 5.5914 5.5986 5.6238
1.1.2. Operating performance in the Third Quarter of 2007
In the third quarter of 2007, the progress made by the Diasorin Group in implementing its program of geographic and technological expansion enabled it to report a further acceleration in its rate of revenue growth. Specifically, thirdquarter revenues totaled 49.0 million Euros in 2007, for a gain of 12.6% over the same period last year. The increaseover the revenues reported in the third quarter of 2006 would have been even greater, had it not been for the appreciation of the Euro versus the other currencies used by the Diasorin Group, particularly the U.S. dollar. Restatedon a comparable foreign exchange translation basis (third quarter of 2006), revenues show an increase of 14.7%.
In terms of technology, growth was driven mainly by higher sales of CLIA technology products, which were up 27%in the third quarter of 2007. This improvement reflects a steady expansion of the installed base of LIAISON systems,with about 90 new systems installed during the quarter and about 1,960 units in place at September 30, 2007. As ofthe same date, sales of CLIA technology reagents accounted for 51.1% of total revenues.
All profitability indicators show a further improvement compared with the third quarter of 2006, particularly when the data are restated to eliminate the impact of extraordinary items, which had opposite effects in 2006 and 2007.
7
1. Report on operations
Third quarter 2007
8
In the third quarter of 2007, EBIT and EBITDA totaled 10.0 million Euros and 13.5 million Euros, respectively. If they arerestated to eliminate the impact of extraordinary items (in 2006, extraordinary income recognized in connection withthe receipt of a government grant for research projects covered by Law No. 346/1998, in 2007, extraordinary chargesincurred by the Group’s Parent Company to list its shares on the STAR Segment of the online stock market in Milan),consolidated EBIT amount to 11.9 million Euros, or 18.1% more than the previous year, and EBITDA amount to 15.3million Euros, for a gain of 13% compared with 2006.
In addition, due to the listing of the Company’s shares on the online stock market, the options granted under the 2004-2008 Stock Option Plan became exercisable. As a result of Group employees exercising their stock options,the remaining cost of the abovementioned option plan (600,000 Euros) was recognized in the income statement forthe third quarter.
Lastly, the net result reported by the Diasorin Group, as reduced by the abovementioned nonrecurring items, totaled5.3 million Euros, compared with 6.8 million Euros in the third quarter of 2006. Restated to eliminate the impact ofextraordinary items, the net result for the third quarter of 2007 amounts to 6.5 million Euros, up from 5.5 million Eurosin the same period last year.
The table below shows the consolidated income statement for the quarters ended September 30, 2006 and 2007.
CONSOLIDATED INCOME STATEMENT(*)
(in thousands of Euros) Third quarter 2007 Third quarter 2006
Net revenues 49,003 43,514
Cost of sales (18,623) (16,749)
Gross profit 30,380 26,765
62.0% 61.5%
Sales and marketing expenses (10,269) (9,273)
Research and development costs (2,736) (2,164)
General and administrative expenses (6,166) (5,151)
-39.1% -38.1%
Other operating income (expenses) (1,175) 1,819
out of which nonrecurring (1,855) 1,932
Operating result (EBIT) 10,034 11,996
20.5% 27.6%
Net financial expense (750) (854)
Result before taxes 9,284 11,142
Income taxes (3,966) (4,382)
Net result 5,318 6,760
EBITDA(1) 13,452 15,480
(*) Unaudited data(1) The Board of Directors defines EBITDA as the “result from operations” before amortization of intangibles and depreciation of property, plant
and equipment.
1.1.2.1. Breakdown of revenues by geographic region
The table below provides a breakdown of the consolidated revenues of the Diasorin Group by geographic region of destination:
Third quarter
(in thousands of Euros) 2007 2006 % change
Italy 10,356 9,765 6.1%
Rest of Europe 18,352 15,957 15.0%
North America (United States and Canada) 11,645 9,865 18.0%
Rest of the world 8,650 7,927 9.1%
Total 49,003 43,514 12.6%
Italy
In the third quarter of 2007, the revenues generated in Italy totaled 10,356,000 Euros, or 6.1% more than in the sameperiod a year ago, accounting for 21.1% of the Group’s total revenues.
Rest of Europe
In the three months ended September 30, 2007, business volume in other European countries showed a similar acceleration of the growth rate with revenues rising from 15,957,000 Euros in 2006 to 18,352,000 Euros in 2007(+15.0%).
As a result of the growth described above, the rest of Europe (excluding the Italian market) raised to 37.5% its contribution to the consolidated revenues of the Diasorin Group.
North America
In the third quarter of 2007, the sales in North America continued to grow at a significantly faster rate than the average for the whole Group, even though the gains achieved during the period under review are not fully reflectedin the consolidated revenues due to the change in foreign exchange rates discussed earlier in this Report.
Stated at current exchange rates, the revenues booked in North America in the third quarter show an increase of18.0%, rising from 9,865,000 Euros in 2006 to 11,645,000 Euros in 2007.
However, when the data for the third quarter of 2007 are compared with those in the same period in 2006 usingamounts stated in local currencies, unaffected by fluctuations in foreign exchange rates, revenues show increases of27.7%.
Even though the growth of CLIA technology products and the expansion of the installed base of LIAISON systems inthe United States lagged compared with the European markets due to the time needed to secure registration from theFood and Drug Administration (FDA), sales based on this technology platform have quickly become the engine drivinggrowth in the North American market.
In the third quarter of 2007, North American sales accounted for 23.8% of the Diasorin Group’s total revenues.
9
Third quarter 2007
10
Rest of the World
Outside Europe and North America, the Group’s revenues increased by 9.1% compared with the third quarter of 2006,despite lower sales in Brazil, where the local subsidiary, after a period of sustained growth, is going through a consolidation process in preparation for a new phase of expansion.
In the other regions, where the Group operates through independent distributors, revenues were up 10% comparedwith 2006. Particularly strong results were reported in the Chinese market, where the Group has operated since 2006through a joint venture with a local partner. Revenues booked in this market in the third quarter of 2007 totaled855,000 Euros, or 30% more than in the same period last year.
1.1.2.1.1. Breakdown of revenues by technology
Concurrently with its geographic expansion, the Group increased the revenues generated by the LIAISON closed platform.
The table below, which is provided merely for information purposes, shows the percentage of consolidated revenuescontributed by each technology in the third quarter of 2006 and 2007.
Third quarter 2007 Third quarter 2006
% of total revenues
RIA 11.5 13.1
ELISA 26.3 33.4
CLIA 51.1 45.3
Equipment and other revenues 11.1 8.2
Total 100.0 100.0
In the third quarter of 2007, revenues generated by LIAISON products were up 27% compared with the same period a year ago.
Sales of products based on CLIA technology accounted for 51.1% of total revenues in the third quarter of 2007 (5.8 percentage points more than in 2006). At September 30, 2007, about 1,960 automated LIAISON analyzers had been installed at facilities operated by direct and indirect customers of the Group. Seven new LIAISON productshave been launched since the beginning of 2007. Six of these products were specialty items that helped differentiatethe LIAISON product line even further compared with the products offered by the Group’s competitors.
2007Third
quarter
11
1.1.2.2. Operating result (EBIT)
In the third quarter of 2007, the Group’s gross profit was higher than in the same period last year, but the rate of growth was lower than in the previous two quarters. The increase in the contribution provided to total revenues byLIAISON products, which have higher margins than those based on the RIA and ELISA technologies, continues to drivethis improvement in profitability, which also benefited from a decrease in the percentage of revenues absorbed by thedepreciation of systems installed at customer facilities. These positive developments were offset in part by an increasein the percentage of revenues generated by sales of systems to distributors, which generate smaller margins than sales of reagents, and a lower coverage of fixed production costs caused by the seasonal patterns that affect the manufacturing operations. The net result of these factors was a gross profit that, at 30.4 million Euros (equal to 62.0%of total revenues), was 13.5% higher than in the third quarter of 2006.
In the three months ended September 30, 2007, operating expenses increased to 19.2 million Euros (equal to 39.1%of revenues), or 15.6% more than in the same period last year. A contributing factor was the vesting of the optionsheld by the beneficiaries of the 2004-2008 Stock Option Plan, which was consequently closed. The resulting impacton the income statement amounted to 0.6 million Euros, or 0.4 million Euros more than in the same period last year.
Research and development costs incurred in the first quarter of 2007 amounted to 2.7 million Euros, for an increaseof 26.4% compared with the same period in 2006.
In the third quarter of 2007, the consolidated operating result (EBIT) totaled 10 million Euros, equal to 20.5% of revenues. EBITDA for the same period were 13.5 million Euros, or 27.5% of revenues.
As mentioned earlier in this Report, nonrecurring items continued to have an impact on these gauges of the Group’sprofitability: in the third quarter of 2007, the Group’s Parent Company incurred extraordinary charges of 1,855,000Euros to list its shares on the STAR Segment of the online stock market in Milan; in the same period last year, the Grouprecognized extraordinary income of 1,932,000 Euros in connection with the receipt of a government grant for research projects covered by Law No. 346/1998. If the data for the third quarter are restated to eliminate the impactof these items, consolidated EBIT amount to 11.9 million Euros, or 18.1% more than the previous year, and EBITDAtotal 15.3 million Euros, for a gain of 13% compared with 2006.
1.1.2.3. Financial transactions
Stated in absolute terms, the impact of financial transactions on the Group’s reported result was smaller than in thethird quarter of 2006. In the three months ended September 30, 2007, net financial expense totaled 750,000 Euros,down from 854,000 Euros in the same period last year.
1.1.2.4. Result before taxes and net result
In the third quarter of 2007, the Group’s result before taxes amounted to 9,284,000 Euros (tax liability of 3,966,000Euros), down from 11,142,000 Euros (tax liability of 4,382,000 Euros) in the three months ended September 30, 2006.
The consolidated net result for the third quarter of 2007 amounted to 5,318,000 Euros, compared with 6,760,000 Eurosin the same period in 2006. If the data are restated to eliminate the impact of nonrecurring items (net of the applicable tax effect), the net result for the third quarter amounts to 6,482,000 Euros in 2007 and 5,548,000 Eurosin 2006.
12
1.1.3. Analysis of consolidated cash flow
The table below shows the highlights of the consolidated cash flow statement and the changes that occurred compared with the previous year.
Third quarter First nine months
(in thousands of Euros) (*) 2007 2006 2007 2006
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,574 2,716 8,718 6,116
Net cash from operating activities 11,442 15,953 23,759 26,763
Cash used for investing activities (3,150) (3,420) (11,207) (12,233)
Cash from (used for) financing activities 4,617 1,204 1,213 (4,193)
Net change in cash and cash equivalents 12,909 13,737 13,765 10,337
CASH AND CASH EQUIVALENTS AT END OF PERIOD 22,483 16,453 22,483 16,453
(*) Unaudited data.
In the third quarter of 2007, cash flow from operating activities totaled 11,442,000 Euros, down from 15,953,000 Eurosin the same period in 2006, owing in part to the opposing effect of nonrecurring charges in 2007 and nonrecurringincome in 2006. In the first nine months of 2007, cash flow from operating activities amounted to 23,759,000 Euros,compared with 26,763,000 Euros in the same period a year ago.
In the third quarter of 2007, cash used in investing activities totaled 3,150,000 Euros, down from 3,420,000 Euros in the same period in 2006. Specifically, investments in property, plant and equipment and intangible assets increasedslightly in the third quarter of 2007, while retirements of property, plant and equipment were significantly higher thanin the same period last year. In the first nine months of 2007, the cash used for investing activities decreased to 11,207,000 Euros, compared with 12,233,000 Euros in the same period last year. The reduction in capital expenditures reflects primarily a rise in the percentage of LIAISON systems that are sold to independent distributors compared with the systems that are loaned to customers free of charge and are capitalized by the Group, which contributed to the increase of the installed base during the reporting period.
While investments in property, plant and equipment were lower, those in intangible assets increased, due mainly to thecapitalization of the costs incurred to develop the new LIAISON XL analyzer.
Cash from financing activities increased to 4,617,000 Euros in the third quarter of 2007, up from 1,204,000 Euros in the three months ended September 30, 2006, reflecting the impact of the share capital increase reserved for the exercise of stock options and a reduced use of finance leases to purchase equipment. Due to these developments, financing activities generated a net cash flow of 1,213,000 Euros in the first nine months of 2007 and absorbed4,193,000 Euros in the same period in 2006.
As the net result of the changes discussed above, the third quarter of 2007 ended with an increase of 12,909,000 Eurosin the liquid assets available to the Group, which totaled 22,483,000 Euros at September 30, 2007.
2007Third
quarter
13
1.1.4. Analysis of consolidated net borrowings
At September 30, 2007 At December 31, 2006
Cash and cash equivalents (22,483) (8,718)
Liquid assets (22,483) (8,718)
Current financial receivables - (28)
Current bank debt 6,921 7,224
Other current financial obligations 2,040 2,696
Current indebtedness 8,961 9,920
Net current indebtedness (13,522) 1,174
Non-current bank debt 26,287 29,715
Other non-current financial obligations 3,119 3,841
Non-current indebtedness 29,406 33,556
Net borrowings 15,884 34,730
1.1.5. Operating performance in the first nine months of 2007
CONSOLIDATED INCOME STATEMENT(*)
(in thousands of Euros) First nine months
2007 2006
Net revenues 151,163 136,656
Cost of sales (54,856) (53,625)
Gross profit 96,307 83,031
63.7% 60.8%
Sales and marketing expenses (31,769) (29,401)
Research and development costs (8,144) (6,691)
General and administrative expenses (17,691) (14,596)
-38.1% -37.1%
Other operating income (expenses) (4,050) 1,127
out of which nonrecurring (4,508) 1,932
Operating result (EBIT) 34,653 33,470
22.9% 24.5%
Net financial expense (2,864) (2,807)
Result before taxes 31,789 30,663
Income taxes (12,735) (11,684)
Net result 19,054 18,979
EBITDA(1) 45,093 44,014
(*) Unaudited data.(1) The Board of Directors defines EBITDA as the “result from operations” before amortization of intangibles and depreciation of property, plant and
equipment.
The Diasorin Group performed particularly well during the first nine months of 2007. Revenues were up significantlycompared with the same period last year, despite the dampening effect of the appreciation of the Euro versus othercurrencies, particularly the U.S. dollar.
Specifically, consolidated revenues totaled 151.2 million Euros in the first nine months of 2007, or 10.6% more thanthe 136.7 million Euros booked in the same period last year.
When the data are restated on a comparable exchange rate basis, the revenues increase is 12.8%.
14
All profitability indicators improved compared with the first nine months of 2006, particularly when the impact of extraordinary items, which had opposite effects in 2006 and 2007, is eliminated.
The gross profit earned in the third quarter of 2007 was higher than in the same period last year but decreased by 2.5 percentage points when compared with the first six months of the current year. As mentioned earlier in this report,this negative change is due to an increase in the percentage of revenues generated by sales of systems to distributorsand a lower coverage of fixed production costs caused by the seasonal patterns that affect the manufacturing operations. The cumulative gross profit for the first nine months of 2009 totaled 96.3 million Euros, or 16.0% morethan in the same period last year.
Consolidated EBIT and EBITDA totaled 34.7 million Euros and 45.1 million Euros, respectively, in the first nine monthsof 2007.
If the data for the first nine months of the year are restated to eliminate the impact of these items, consolidated EBITamount to 38.6 million Euros, or 22.5% more than the previous year, and EBITDA total 49.1 million Euros, for a gainof 16.6% compared with 2006. In the first nine months of 2007, extraordinary items included charges of 4.5 millionEuros incurred to list the Company’s shares and a gain of 0.5 million Euros generated by the impact of legislative changes on the Parent Company’s provision for employee severance indemnities.
Lastly, the Group reported a net result of 19.1 million Euros (21.6 million Euros, restated to eliminate the impact of nonrecurring items, net of the applicable tax effect), compared with 19 million Euros at September 30, 2006 (17.8 million Euros, restated to eliminate the impact of nonrecurring items, net of the applicable tax effect).
15
Third quarter 2007
2007Third
quarter
2. Transactions with related parties
17
In the normal course of business, Diasorin S.p.A. engages on a regular basis in commercial and financial transactionswith its subsidiaries, which are also Group companies. These transactions, which are executed on standard marketterms, consist of the supply of goods and services, including administrative, information technology, personnel management, technical support and consulting services, which produce receivables and payables at the end of theyear, and financing and cash management transactions, which produce income and expenses.
These transactions are eliminated in the consolidation process and, consequently, are not discussed in this section ofthe Report.
Transactions with Diasorin LTD, an unconsolidated Chinese subsidiary, at September 30, 2007 are summarized below:
• payables of 58,000 Euros;
• receivables of 21,000 Euros;
• costs totaling 494,000 Euros for sales and technical support services provided to local distributors.
The Group provides additional benefits to a certain number of eligible employees of Diasorin S.p.A. and other Group companies through a stock option plan.Due to the listing of the Company’s shares on the online stock market, the options granted under the 2004-2008Stock Option Plan became exercisable. The costs recognized in the income statement for the first nine months of 2007in connection with this stock option plan amounted to 1,200,000 Euros. At September 30, 2007, the share capital increase reserved for the exercise of stock options had been fully subscribed.
Moreover, within the context of the 2007-2012 Stock Option Plan approved by the Ordinary Shareholders’ Meeting of March 26, 2007, the Board of Directors designated a first batch of beneficiaries that includes key executives and employees of Diasorin S.p.A. and its subsidiaries, awarding a total of 745,000 options (out of a maximum 1,000,000available options). These options can be exercised to purchase an equal number of newly issued Diasorin S.p.A. common shares, par value 1.00 euro each. The exercise price of the options was set at 12.193 Euros, which is equal to the simple average of the closing pricesfor the shares of Diasorin S.p.A. on the online stock market for the period between the date of award of the optionsand the same day in the previous calendar month (fair value).
The compensation payable to senior managers and eligible employees (key management) is consistent with standardmarket terms for compensation offered to employees with a similar status.Employees are also awarded incentive payments tied to the achievement of corporate or personal targets and bonuses predicated on the achievement of a predetermined length of service.
2007Third
quarter
3. Significant events occurring after september 30, 2007and business outlook
19
Subsequent to the end of the third quarter of 2007, the Diasorin Group continued to generate positive operating results.
No other significant events occurred after September 30, 2007.
Saluggia (VC), November 12, 2007
The Board of DirectorsBy: Carlo Rosa
Chief Executive Officer
INCOME STATEMENT(*)
(in thousands of Euros) Notes Third Quarter First nine months
2007 2006 2007 2006
Net revenues (1) 49,003 43,514 151,163 136,656
Cost of sales (2) (18,623) (16,749) (54,856) (53,625)
Gross Profit 30,380 26,765 96,307 83,031
62.0% 61.5% 63.7% 60.8%
Sales and marketing expenses (3) (10,269) (9,273) (31,769) (29,401)
Research and development costs (4) (2,736) (2,164) (8,144) (6,691)
General and administrative expenses (5) (6,166) (5,151) (17,691) (14,596)
-39.1% -38.1% -38.1% -37.1%
Other operating income (expenses) (6) (1,175) 1,819 (4,050) 1,127
out of which nonrecurring (1,855) 1,932 (4,508) 1,932
Operating result (EBIT) 10,034 11,996 34,653 33,470
20.5% 27.6% 22.9% 24.5%
Net financial income (expense) (7) (750) (854) (2,864) (2,807)
Result before taxes 9,284 11,142 31,789 30,663
Income taxes (8) (3,966) (4,382) (12,735) (11,684)
Net Result 5,318 6,760 19,054 18,979
Earnings per share (basic) (in Euros) (9) 0.10 0.14 0.35 0.38
Earnings per share (diluted) (in Euros) (9) 0.10 0.14 0.35 0.38
(*) Unaudited data.
21
Third quarter 2007
4. Consolidated financial statements of the Diasorin Group at september 30, 2007
BALANCE SHEET(*)
(in thousands of Euros) Notes 9/30/07 12/31/06
ASSETS
Non-current assets
Property, plant and equipment (10) 34,370 35,502
Goodwill 48,055 48,055
Other intangibles (11) 16,397 14,750
Equity investments 123 123
Deferred-tax assets 8,791 8,357
Other non-current assets 392 245
Total non-current assets 108,128 107,032
Current assets
Inventories (12) 34,027 30,891
Trade receivables (13) 51,010 44,671
Accounts receivable from Group companies 21
Other current assets 4,292 2,769
Cash and cash equivalents 22,483 8,718
Total current assets 111,833 87,049
TOTAL ASSETS 219,961 194,081
(*) Unaudited data.
22
BALANCE SHEET(*) (continue)
(in thousands of Euros) Notes 9/30/07 12/31/06
LIABILITIES AND SHAREHOLDERS’ EQUITY
Shareholders’ equity
Share capital 55,000 50,000
Additional paid-in capital 5,925 4,425
Statutory reserve 639 207
Other reserves 2,072 2,854
Retained earnings (Accumulated deficit) 29,819 7,957
Net result for the year 19,054 22,294
Total shareholders’ equity (14) 112,509 87,737
Non-current liabilities
Long-term borrowings (15) 29,406 33,556
Provisions for employee severance indemnities and other employee benefits (16) 19,011 19,154
Deferred-tax liabilities 641 672
Other non-current liabilities (17) 2,024 3,047
Total non-current liabilities 51,082 56,429
Current liabilities
Trade payables 24,260 22,854
Accounts payable to Group companies 58
Other current liabilities 14,123 12,508
Income taxes payable 8,968 4,633
Current portion of long-term debt (15) 8,961 9,920
Total current liabilities 56,370 49,915
Total liabilities 107,452 106,344
TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY 219,961 194,081
(*) Unaudited data.
23
Third quarter 2007
24
CASH FLOW STATEMENT(*)
(in thousands of Euros) Third quarter First nine months
2007 2006 2007 2006
Cash flow from operating activities
Net result for the period 5,318 6,760 19,054 18,979
Adjustments for:
- Income taxes 3,966 4,382 12,735 11,684
- Depreciation and amortization 3,418 3,484 10,440 10,544
- Financial expense 750 854 2,864 2,807
- Additions to/Utilizations of provisions and reserves (290) 117 (214) 561
- (Gains)/Losses on sales of non-current assets (36) (7) (111) (14)
- Contributions to/Utilizations of provisions for employee severance indemnities
and other employee benefits 367 (162) (77) 677
out of which nonrecurring - - (515) -
- Changes in shareholders’ equity reserves:
- Stock option reserve 600 200 1.200 600
- Cumulative translation adjustment from operating activities (284) 19 (459) (141)
- Change in other non-current assets/liabilities (1,390) (1,230) (1,368) (721)
Cash flow from operating activities before changes in working capital 12,419 14,417 44,064 44,976
(Increase) Decrease in current receivables 2,382 3,820 (6,577) (5,587)
(Increase) Decrease in inventories (520) (1,635) (3,673) (3,128)
Increase (Decrease) in trade payables (3,192) (505) 1,499 2,558
(Increase) Decrease in other current items 1,387 1,533 (185) 914
Cash from operating activities 12,476 17,630 35,128 39,733
Income taxes paid (271) (1,503) (8,844) (10,833)
Interest paid (763) (174) (2,525) (2,137)
Net cash from operating activities 11,442 15,953 23,759 26,763
Investments in intangibles (652) (726) (3,060) (2,401)
Investments in property, plant and equipment (3,051) (2,944) (9,155) (10,304)
Proceeds from the sale of non-current assets 553 250 1,008 472
Cash used in investing activities (3,150) (3,420) (11,207) (12,233)
Repayment of loans (223) (270) (3,248) (5,640)
Repayment of other financial obligations (900) (711) (2,920) (1,919)
Proceeds from new borrowings 53 2,059 1,559 4,228
Share capital increase 6,500 - 6,500 -
Foreign exchange translation differences (813) 126 (678) (862)
Cash used in financing activities 4,617 1,204 1,213 (4,193)
Change in net cash and cash equivalents 12,909 13,737 13,765 10,337
CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD 9,574 2,716 8,718 6,116
CASH AND CASH EQUIVALENTS AT END OF PERIOD 22,483 16,453 22,483 16,453
(*) Unaudited data.
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY
(in thousands of Euros) Share Additional Statutory Cumulative Stock Retained Net Groupcapital paid-in reserve translation option earnings result for interest in
capital reserve reserve (Accumulated the year share-holders’deficit) equity
Shareholders’ equity at 12/31/05 50,000 4,425 79 3,175 1,402 (2,270) 10,355 67,166
Appropriation of previous year’s profit 128 10,227 (10,355) -
Stock options 600 600
Translation adjustment (1,491) (1,491)
Net result for the period 18,979 18,979
Shareholders’ equity at 9/30/06(*) 50,000 4,425 207 1,684 2,002 7,957 18,979 85,254
Shareholders’ equity at 12/31/06 50,000 4,425 207 652 2,202 7,957 22,294 87,737
Appropriation of previous year’s profit 432 21,862 (22,294) -
Share capital increase 5000 1,500 6,500
Stock options 1,200 1,200
Translation adjustment (1,982) (1,982)
Net result for the period 19,054 19,054
Shareholders’ equity at 9/30/07(*) 55,000 5,925 639 (1,330) 3,402 29.819 19,054 112,509
(*) Unaudited data.
25
Third quarter 2007
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT SEPTEMBER 30, 2007
ACCOUNTING PRINCIPLES AND SCOPE OF CONSOLIDATION
General information
The Diasorin Group is specialized in the development, manufacture and distribution of products in the immunochemistry and infectious immunology product groups. These product classes can also be grouped into a single family called immunodiagnostics. Diasorin S.p.A., the Group’s Parent Company, has its headquarters at Via Crescentino, in Saluggia (VC) 13040.
Principles for the preparation of the quarterly report
Pursuant to Article 3 of Legislative Decree No. 38 of February 28, 2005, which governs the selection of options available under Article 5 of EC Regulation No. 1606/2002, issued by the European Parliament and Council on July 19,2002 in connection with the adoption of the International Financial Reporting Standards, the Company has chosen toadopt voluntarily the International Financial Reporting Standards (hereinafter also referred to as the “IFRS”), as issuedby the International Accounting Standards Board (“IASB”) and adopted by the European Union, for the preparation of its consolidated financial statements beginning with the year ended December 31, 2006.
Consequently, the consolidated quarterly report of the Diasorin Group at September 30, 2007 was prepared in accordance with the requirements of the relevant international accounting standard (IAS 34 – Interim Financial Reporting). In order to provide a comparison between homogeneous data, the amounts at September 30, 2006 havebeen restated in accordance with IFRS rules. These notes provide information in summary form, in order to avoid duplicating information published previously, as required by IAS 34. Specifically, these notes discuss only those components of the income statement and balance sheet the composition or change in amount of which require comment (due to the amount involved or the type of transaction or because an unusual transaction is involved) in order to understand the Group’s operating performance, financial performance and financial position.
The accounting principles applied to prepare the consolidated quarterly report are consistent with those used for theannual consolidated financial statements at December 31, 2006, since it has been determined that the revisions andinterpretations published by the IASB and applicable as of January 1, 2007 did not require any material changes in theaccounting principles adopted by the Group the previous year.
When preparing interim financial statements, management is required to develop estimates and assumptions that affect the amounts shown for revenues, expenses, assets and liabilities in the financial statements and the disclosuresprovided with regard to contingent assets and liabilities on the date of the interim financial statements. If such estimates and assumptions, which were based on management’s best projections, should differ from actual events, theywill be modified appropriately when the relevant events produce the abovementioned differences.Certain evaluation processes, particularly the more complex processes such as determining whether the value of non-current assets has been impaired, are carried out fully only in connection with the preparation of the annual financial statements, when all the necessary information is available, except when there are impairment indicators thatrequire an immediate evaluation of any impairment losses that may have occurred.
Some of the data in the balance sheet at December 31, 2006, which is included in this report for comparison purposes, have been reclassified to make them consistent with the data at September 30, 2007. These reclassificationsdid not have an impact on the shareholders’ equity and the 2006 result.With regard to the composition of gross profit, some of the items that were included in last year’s computation havebeen reclassified in accordance with the presentation criteria adopted this year, which reflect a more accurate allocation of such items, consistent with sound management criteria.
26
The Group engages in activities that, taken as a whole, are not subject to significant seasonal or cyclical shifts in revenue generation during the year.
The income tax liability is recognized using the best estimate of the weighted average tax rate projected for the entire year.
In the consolidated quarterly report, all amounts are in thousands of Euros unless otherwise stated.
This quarterly report was not audited.
Scope of consolidation
The consolidated quarterly report includes the financial statements of Diasorin S.p.A., the Group’s Parent Company, andthose of its subsidiaries.The scope of consolidation did not change compared with December 31, 2006.Subsidiaries are companies over which the Group is able to exercise control, i.e., it has the power to, directly or indirectly, govern their operating and financial powers so as to obtain benefits from the results of their operations.Subsidiaries are consolidated line by line from the date the Group obtains control until the moment when control ceases to exist. Dormant subsidiaries and subsidiaries that generate an insignificant volume of business are not consolidated. Their impact on the Group’s total assets and liabilities, financial position and bottom-line result is not material.
A list of the subsidiaries included in the scope of consolidation, complete with information about head office locationsand the percentage interest held by the Group, is provided in Annex I.
Other information
Information about significant events occurring after September 30, 2007, the Group’s business outlook and its transactions with related parties is provided in separate sections of this Report.
The table below shows the exchange rates used to translate amounts reported by companies that operate outside the euro zone:
First nine months of 2007 At December 31, 2006 First nine months of 2006
Average At 9/30 At 9/30 Average At 9/30
U.S. dollar 1.3443 1.4179 1.317 1.2442 1.266
British pound 0.6765 0.6968 0.6715 0.6847 0.6777
Brazilian real 2.6898 2.6148 2.8133 2.7173 2.7429
Swedish kronor 9.2368 9.2147 9.0404 9.2942 9.2797
Mexican peso 14.7247 15.4879 14.2937 13.5756 13.94
Israeli shekel 5.5986 5.6948 5.5501 5.6238 5.449
27
Third quarter 2007
28
SEG
MEN
T IN
FOR
MA
TIO
N
(in th
ousa
nds
of e
uros
)IT
ALY
EURO
PEU
NIT
ED S
TATE
S RE
ST O
F TH
E W
ORL
DEL
IMIN
ATIO
NS
CON
SOLI
DATE
D
9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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9/30
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INCO
ME
STAT
EMEN
T
Reve
nues
from
out
sider
s48
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53,0
6443
,303
47,5
7934
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37,9
1812
.821
14,0
19(3
,069
)(1
,417
)13
6,65
615
1,16
3
Inte
r-seg
men
t rev
enue
s32
,920
34,5
666,
589
6,67
86,
211
6,26
4-
-(4
5,72
0)(4
7,50
8)-
-
Tota
l rev
enue
s81
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87,6
3049
,892
54,2
5740
,898
44,1
8212
.821
14,0
19(4
8,78
9)(4
8,92
5)13
6,65
615
1,16
3
Segm
ent r
esul
t16
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15,5
405,
090
6,20
010
,967
13,3
792.
044
951
(1,5
01)
(1,4
17)
33,4
7034
,653
Unal
loca
ted
com
mon
cost
s-
--
--
--
--
--
-
EBIT
--
--
--
--
--
33,4
7034
,653
Othe
r inc
ome
(exp
ense
), ne
t-
--
--
--
--
--
-
Finan
cial i
ncom
e (e
xpen
se)
--
--
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(2,8
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Resu
lt be
fore
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--
--
--
--
-30
,663
31,7
89
Inco
me
taxe
s-
--
--
--
--
-(1
1,68
4)(1
2,73
5)
Net
resu
lt-
--
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--
--
-18
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19,0
54
OTH
ER IN
FORM
ATIO
N
Amor
tizat
ion
(844
)(9
63)
(124
)(1
36)
(148
)(1
58)
(58)
(70)
--
(1,1
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(1,3
27)
Depr
ecia
tion
(4,0
54)
(3,8
56)
(3,2
42)
(3,1
73)
(1,1
34)
(1,1
48)
(1,4
76)
(1,7
58)
536
822
(9,3
70)
(9,1
13)
Tota
l am
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d de
prec
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n(4
,898
)(4
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)(3
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)(3
,309
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)(1
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682
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(in th
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TATE
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DATE
D
12/3
1/06
9/30
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12/3
1/06
9/30
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12/3
1/06
9/30
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12/3
1/06
9/30
/07
12/3
1/06
9/30
/07
12/3
1/06
9/30
/07
BALA
NCE
SH
EET
Segm
ent a
sset
s10
3.36
911
1.30
649
.625
56.2
5048
.256
53.0
0014
.856
15.4
75(3
9.94
9)(4
7.46
6)17
6.15
718
8.56
5
Unal
loca
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asse
ts-
--
--
--
--
- 17
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31.3
96
Tota
l ass
ets
103.
369
111.
306
49.6
2556
.250
48.2
5653
.000
14.8
5615
.475
(39.
949)
(47.
466)
194.
081
219.
961
Segm
ent l
iabi
litie
s53
.163
59.1
8124
.695
28.0
383.
961
4.80
08.
248
8.10
9(3
2.29
4)(4
0.65
2)57
.773
59.4
76
Unal
loca
ted
liabi
litie
s-
- -
--
--
--
- 48
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47.9
76
Shar
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ders
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ity-
--
--
--
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-87
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112.
509
Tota
l lia
bilit
ies a
nd sh
areh
olde
rs’ e
quity
53.1
6359
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24.6
9528
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3.96
14.
800
8.24
88.
109
(32.
294)
(40.
652)
194.
081
219.
961
DESCRIPTION AND MAIN CHANGES
Consolidated income statement
The notes to the consolidated income statement are provided below. More detailed information about the componentsof the income statement is provided in the Report on Operations.
(1) Net revenues
In the third quarter of 2007, net revenues, which are generated mainly through the sale of diagnostic kits, totaled49,003,000 Euros, or 12.6% more than in the same period last year, boosting revenues for the first nine months of 2007 to 151,163,000 Euros (136,656,000 Euros at September 30, 2006). Revenues for the third quarter of 2007include equipment rentals and technical support revenues totaling 1,111,000 Euros, compared with 596,000 Euros in the same period last year.
(2) Cost of sales
In the third quarter of 2007, the cost of sales amounted to 18,623,000 Euros, compared with 16,749,000 Euros in thethree months ended September 30, 2006. The cost of sales for the first nine months of 2007 amounted to 54,856,000Euros (53,625,000 Euros in 2006).The cost of sales for the third quarter of 2007 includes 1,070,000 Euros paid for royalties (958,000 Euros in 2006) and900,000 Euros in costs incurred to distribute products to end customers (822,000 Euros in 2006).
(3) Sales and marketing expenses
Sales and marketing expenses increased to 10,269,000 Euros in the third quarter of 2007, up from 9,273,000 Eurosin the same period last year, bringing the total for the first nine months of the year to 31,769,000 Euros (29,401,000Euros in 2006).This item consists mainly of marketing costs incurred to promote and distribute Diasorin products, costs attributableto the direct and indirect sales force and the cost of the technical support offered together with the Group-ownedequipment provided to customers in accordance with gratuitous loan contracts.
(4) Research and development costs
In the third quarter of 2007, research and development costs, which totaled 2,736,000 Euros (2,164,000 Euros in the same period in 2006), included all of the research and development outlays (including the costs incurred to register the products offered for sale and meet quality requirements) that were not capitalized. This item also includesthe amortization of capitalized development costs (136,000 Euros, compared with 115,000 Euros in the third quarterof 2006). During the third quarter of 2007, the Group capitalized new development costs amounting to 559,000 Euros,compared with 653,000 Euros in the same period last year.
(5) General and administrative expenses
General and administrative expenses, which totaled 6,166,000 Euros in the third quarter of 2007 (5,151,000 Euros in 2006) and 17,691,000 Euros in the first nine months of 2007 (14,596,000 Euros in 2006), include expenses incurred for corporate management activities, Group administration, finance and control, information technology, corporate organization, and insurance.
Due to the listing of the Company’s shares on the online stock market, all of the options granted under the 2004-2008Stock Option Plan were exercised. As a result, general and administrative expenses include the entire remaining costof the plan (600,000 Euros).
29
Third quarter 2007
30
(6) Other operating income (expenses)
Net other operating expense totaled 1,175,000 Euros, compared with net other operating income of 1,819,000 Eurosin the third quarter of 2006. This item includes operating income and expenses that cannot be allocated to specific functional areas, as well as the pro rata portion of the costs incurred in connection with an ongoing effort to list the Company’s shares on the online stock market attributable to the third quarter of 2007, which amounted to1,855,000 Euros (4,508,000 Euros in the first nine months of the year).
(7) Net financial income (expense)
The table below provides a breakdown of financial income and expense:
(in thousands of Euros) Third quarter 2007 Third quarter 2006 First nine months 2007 First nine months 2006
Interest and other financial expense (1,336) (1,078) (4,028) (3,633)
Interest and other financial income 174 127 357 317
Net translation adjustment 412 97 807 509
Net financial income (expense) (750) (854) (2,864) (2,807)
In the third quarter of 2007, net financial expense totaled 750,000 Euros, compared with net financial expense of854,000 Euros in the same period last year. Interest and other financial expense includes 516,000 Euros in interest onloans (755,000 Euros in the third quarter of 2006), 474,000 Euros in fees on factoring transactions (361,000 Euros inthe third quarter of 2006) and 203,000 Euros in finance charges related to employee benefit plans (188,000 Euros inthe third quarter of 2006).
(8) Income taxes
The income tax expense recognized in the consolidated income statement for the third quarter of 2007 amounted to3,966,000 Euros, compared with 4,382,000 Euros in the same period last year, as the tax rate increased from 39.3%to 42.7%. The income taxes recognized in the income statement for the first nine months of 2007 amounted to12,735,000 Euros (11,684,000 Euros in 2006).
(9) Earnings per share
Basic and diluted earnings per share, which were computed by dividing the net result attributable to shareholders bythe average number of shares outstanding, amounted to 0.10 Euros in the third quarter of 2007, compared with 0.14Euros in the same period last year. The corresponding figures for the first nine months of the year are 0.35 Euros in 2007and 0.38 Euros in 2006.
2007Third
quarter
31
Consolidated balance sheet
(10) Property, plant and equipment
The table below shows the changes that occurred in this account as of September 30, 2007:
Net carrying Translation Retirements and Net carrying
(in thousands of Euros) value at 12/31/06 Additions Depreciation adjustment other changes value at 9/30/07
Land and buildings 9,755 416 (527) (131) (4) 9,509
Plant and machinery 6,948 2,489 (1,671) (172) (240) 7,354
Equipment held by outsiders 18,799 6,250 (6,916) 27 (653) 17,507
Total prop., plant and equipment 35,502 9,155 (9,114) (276) (897) 34,370
(11) Intangible assets
A breakdown of intangible assets at September 30, 2007 is as follows:
Translation
Net carrying adjustment and Net carrying
(in thousands of Euros) value at 12/31/06 Additions Amortization other changes value at 9/30/07
Goodwill 48,055 - - - 48,055
Development costs 6,517 2,030 (386) (23) 8,138
Other intangibles 8,233 1,030 (940) (64) 8,259
Total intangible assets 62,805 3,060 (1,326) (87) 64,452
Additions to development costs reflect the investments made in the project for the new analyzer, Liaison XL, whichamounted to 566,000 Euros in the third quarter of 2007 and 1,658,000 Euros in the first nine months of the year.
The increase in other intangibles refers primarily to the costs incurred to expand the SAP R/3 information system usedby the Group and to purchase licenses.
Intangible assets with an intangible useful life were not tested for impairment, as no indicators of potential impairmentwere detected.
(12) Inventories
A breakdown of inventories at September 30, 2007 and a comparison with the data at December 31, 2006 is as follows:
at 9/30/07 at 12/31/06
(in thousands of Euros) Gross amount Provisions for Net amount Gross amount Provisions for Net amount
writedowns writedowns
Raw materials and supplies 9,958 (1,204) 8,754 8,290 (1,162) 7,128
Work in progress 15,406 (1,416) 13,990 13,262 (1,375) 11,887
Finished goods 12,336 (1,053) 11,283 12,846 (970) 11,876
Total inventories 37,700 (3,673) 34,027 34,398 (3,507) 30,891
(13) Trade receivables
Trade receivables totaled 51,010,000 Euros at September 30, 2007. As of the same date, the allowance for doubtfulaccounts amounted to 5,902,000 Euros. The table below shows the changes that occurred in the allowance during theperiod:
(in thousands of Euros) at 9/30/07 at 12/31/06
Opening balance 5,934 5,644
Additions for the period 373 532
Utilizations/Reversals during the period (604) (175)
Currency translation differences and other changes 199 (67)
Closing balance 5,902 5,934
32
(14) Shareholders’ equity
Shareholders’ equity totaled 112,509,000 Euros at September 30, 2007. The table below shows the changes that occurred in the first nine months of 2007:
(in thousands of Euros) Share Additional Statutory Cumulative Stock Retained Net result Group capital paid-in reserve translation option earnings for the year interest in
capital reserve reserve (Accumulated share-holders’ deficit) equity
Shareholders’ equity at 12/31/06 50,000 4,425 207 652 2,202 7,957 22,294 87,737
Appropriation of previous year’s profit 432 21,862 (22,294) -
Share capital increase 5,000 1,500 6,500
Stock options 1,200 1,200
Translation adjustment (1,982) (1,982)
Net result for the period 19,054 19,054
Shareholders’ equity at 9/30/07(*) 55,000 5,925 639 (1,330) 3,402 29,819 19,054 112,509
(*) Unaudited data.
On July 19, 2007, pursuant to a resolution issued by Borsa Italiana S.p.A. on June 24, 2007 accepting the Company’sshares for stock market listing and the approval issued by the CONSOB on June 28, 2007, trading in the common shares of Diasorin S.p.A. began on the STAR Segment of the Online Stock Market organized and operated by BorsaItaliana S.p.A.
As a result of the abovementioned listing of the Company’s shares, the options awarded under the 2004-2008 Stock Option Plan approved by the Board of Directors on March 25, 2004, which covered up to 5,000,000 sharesawarded to 17 Group Directors and employees, became exercisable. The exercise price was 1.30 Euros.
At September 30, 2007, the share capital increase reserved for the exercise of options had been fully subscribed.
33
Third quarter 2007
(15) Borrowings
The table below lists the borrowings outstanding at September 30, 2007 and provides a comparison with the data atDecember 31, 2006 (amounts in thousands of Euros):
Lender institution At September 30, 2007 At December 31, 2006 Change in the first nine months of 2007
Interbanca 2006 USD 6,440 7,563 (1,123)
Interbanca 2006 Euro 23,242 25,342 (2,100)
IMI/Italian Ministry of Education 942 889 53
CRT Unicredit for 2000 Flood 1,358 1,634 (276)
Wells Fargo Bank (U.S. mortgage) 1,176 1,511 (335)
Lessors 5,032 5,801 (769)
Factors 177 736 (559)
Total 38,367 43,476 (5,109)
A breakdown of borrowings by maturity is as follows (amounts in thousands of Euros):
Lender institution Currency Short-term Long-term Amount due Total
portion portion after 5 years
Interbanca 2006 USD USD 1,666 7,466 833 9,132
Amount in EUR 1,175 5,265 626 6,440
Interbanca 2006 Euro EUR 4,237 19,005 2,097 23,242
IMI/Italian Ministry of Education EUR 942 703 942
CRT Unicredit for 2000 Flood EUR 333 1,025 206 1,358
Wells Fargo Bank (U.S. mortgage) USD 1,668 - - 1,668
Amount in EUR 1,176 - - 1,176
Lessors EUR 1,863 3,169 - 5,032
Factors EUR 177 - - 177
Total 8,961 29,406 3,632 38,367
34
(16) Provisions for employee severance indemnities and other employee benefits
These provisions totaled 19,011,000 Euros at September 30, 2007. The table that follows shows the changes that occurred in these provisions in the first nine months of 2007.
(in thousands of Euros) Total employee benefits
Balance at December 31, 2006 19,154
Financial expense/(income) 595
Actuarial losses/(gains) (56)
Additions for employee benefit costs 265
Contributions/Benefits paid (627)
Currency translation differences (34)
Impact of the reforms of the provision for severance benefits (515)
broken down as follows:
- Impact of the reform on defined-benefit obligations at 12/31/06 (832)
- Recognition of actuarial losses not recorded at 12/31/06 317
Other changes 229
Balance at September 30, 2007 19,011
(17) Other non-current liabilities
Other non-current liabilities totaled 2,024,000 Euros at September 30, 2007. They include provisions for risks and char-ges. The table below shows the changes that occurred in these provisions:
(in thousands of Euros) at 9/30/07 at 9/30/06
Opening balance 2,818 2,072
Additions for the year 108 286
Utilizations for the year (681) (283)
Currency translation differences and other changes (221) 1
Ending balance 2,024 2,076
Utilizations in 2007 refer mainly to Diasorin S.p.A. and refer to a tax audit and settlement that took place in 2006 and concerned income taxes for 2004. The assessment amounted to 393,000 Euros, while the corresponding provision was 671,000 Euros. The excess was reversed and a gain of 278,000 Euros was reflected in the income statement for the third quarter of 2007.
35
Third quarter 2007
36
Annex I
LIST OF EQUITY INVESTMENTS
Company Head office Currency Share Par value pershare % interest No. of shares
location capital partnership or held directly or partnership
interest interests held
Diasorin S.A. Brussels (Belgium) EUR 1,674,000 6,696 99.99% 250
Diasorin Ltda São Paulo (Brazil) BRL 10,011,893 1 99.99% 10,011,892
Diasorin S.A. Antony (France) EUR 960,000 15 99.99% 62,494
Diasorin S.A. Madrid (Spain) EUR 1,453,687 6 99.99% 241,878
Diasorin Ltd Wokingham (Great Britain) GBP 500 1 100.00% 500
Diasorin Inc. Stillwater (United States) USD 1 0.01 100.00% 100
Diasorin SAdeCV Mexico City (Mexico) MXN 100,000 1 99.99% 50,000
Diasorin GmbH Dietzenbach (Germany) EUR 275,000 1 100.00% 1
Diasorin AB Bromma (Sweden) SEK 5,000,000 1 100.00% 1
Diasorin Ltd Rosh Haayin (Israel) ILS 100 1 100.00% 100
Equity investments valued at cost
Diasorin Ltd Shanghai (China) EUR 120,000 1 80.00%
Equity investments in other companies
Consorzio Sobedia Saluggia (Italy) EUR 5,000 20.00% 1
2007Third
quarter
37
Declaration Required Pursuant to Article 154/bis, Paragraph 2 – Part IV, Title III, Chapter II, Section V-bis, of Legislative Decree No. 58 of February 24, 1998: “Uniform Law on Financial Intermediation Enacted Pursuant to Articles 8 and 21 of Law No. 52 of February 6, 1996”
I, the undersigned, Andrea Senaldi, Corporate Accounting Documents Officer of DIASORIN S.p.A.
ATTEST
as required by Paragraph 2 of Article 154/bis, Part IV, Title III, Chapter II, Section V-bis, of Legislative Decree No. 58 of February 24, 1998, that, to the best of my knowledge, this Quarterly Report is consistent with the data in the supporting documents and in the Company’s other documents and accounting records.
_____________Andrea SenaldiAccounting Documents Officer DIASORIN S.p.A.
Via Crescentino snc - 13040 Saluggia (VC)
The Diagnostic Specialist
