H1'07 - Interim Report

iagnostic Speci

Half Year Report

2007

The Diagnostic

Specialist

2007

DIASORIN GROUP SEMIANNUAL REPORT AT JUNE 30, 2007

DiaSorin S.p.A Via Crescentino - 13040 Saluggia (VC) - Tax I.D. and Vercelli Company Register No. 13144290155

Half Year Report

Contents Board of Directors, board of statutory auditors and independent auditors Consolidated financial highlights

p. p.

5 6

1.

Report on operations 1.1. Review of the Group’s operating performance and financial position 1.1.1. Operating performance in the first half of 2007 and comparison with the first half of 2006 1.1.2. Analysis of consolidated cash flow 1.1.3. Analysis of consolidated net borrowings 1.2. Other information 1.2.1. The foreign exchange market 1.2.2. Human resources

p. p. p. p. p. p. p. p.

7 7 7 13 14 14 14 14

2.

Consolidated financial statements of the DiaSorin Group at June 30, 2007 Consolidated income statement Consolidated balance sheet Consolidated statement of cash flow Consolidated statement of changes in shareholders’ equity

p. p. p. p. p.

15 15 15 17 18

Notes to the consolidated financial statements - General information - Principles for the preparation of the semiannual report - Financial statement presentation formats - Scope of consolidation - Other information - Segment information

p. p. p. p. p. p. p.

19 19 19 20 20 21 22

Description and main changes - Consolidated income statement - Consolidated balance sheet

p. 23 p. 23 p. 25

3.

Significant events occurring after June 30, 2007 and business outlook

p. 31

4.

Annex: the companies of the DiaSorin Group at June 30, 2007

p. 33

5.

Financial statements of DiaSorin S.p.A. at June 30, 2007

p. 35

6.

Annex: transition to the International Accounting Principles (IFRSs)

by DiaSorin S.p.A., the group’s parent company

p. 41

3

2007

Half Year Report

GOVERNATIVE BODIES

Board of directors (ELECTED ON MARCH 26, 2007) Chairman Executive deputy chairman

Gustavo Denegri Antonio Boniolo

Chief executive officer

Carlo Rosa1

Directors

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.

General manager Independent director

1 2

5

2007

CONSOLIDATED FINANCIAL HIGHLIGHTS In thousands of euros Net revenues

First half 2007

as a % of revenues

First half 2006

as a % of revenues

102,160

100.0%

93,142

100.0%

EBITDA

31,641

31.0%

28,534

30.6%

Operating result (EBIT)

24,619

24.1%

21,474

23.1%

Net result

13,736

13.4%

12,219

13.1%

At June 30, 2007

At December 31, 2006

209,123

194,081

30,191

34,730

101,809

87,737

In thousands of euros Total assets Net borrowings Shareholders’ equity

6

Half Year Report

1. Report on operations 1.1. Review of the group’s operating performance and financial position 1.1.1. Operating performance in the first half of 2007 and comparison with the first half of 2006 The progress made by the DiaSorin Group in implementing its program of geographic and technological expansion enabled it to report higher sales revenues in the first half of 2007. Revenues for the first six months of 2007 were 9.7% higher than in the same period last year. However, the rate of revenue increase was affected by the appreciation of the euro versus the other currencies used by the DiaSorin Group, particularly the U.S. dollar. Restated on a comparable foreign exchange translation basis (first half of 2006), revenues show an increase of 11.9% compared with the first half of 2006.

Sales growth was driven mainly by higher sales of CLIA technology products, which were up 29.1% in the first half of 2007. This improvement reflects a steady expansion of the installed base of LIAISON systems, with about 1,870 units in place at June 30, 2007 (up from 1,672 units at December 31, 2006). At June 30, 2007, sales of CLIA technology reagents accounted for 49.1% of total revenues.

The increase in revenues produced an improvement in all profitability indicators. The gross margin grew by 17.2%, rising from 56,266,000 euros in the first half of 2006 to 65,927,000 euros in the same period this year, with the return on sales improving from 60.4% to 64.5%.

EBITDA for the first half of 2007 totaled 31,641,000 euros, or 10.9% more than the 28,534,000 euros in the first six months of 2006. The ratio of EBITDA to revenues was 30.6% in 2006 and 31% in 2007.

EBIT for the first half of the year rose from 21,474,000 euros in 2006 to 24,619,000 euros in 2007 (+14.6%), with the ratio of EBIT to revenues improving from 23.1% to 24.1%.

Both EBITDA and EBIT were reduced by nonrecurring costs incurred in connection with a program implemented by the Group’s Parent Company to secure stock market listing for its shares. On July 19, 2007, trading in the Group’s Parent Company’s shares began on the STAR segment of the Italian online stock market.

The nonrecurring costs incurred in the first half of 2007 to list the shares totaled 2,653,000 euros. They were offset in part by a nonrecurring gain of 515,000 euros recognized during the same period by the Group’s Parent Company as a result of a reform of the rules that govern the provision for employee severance indemnities. Restated excluding these extraordinary items, EBITDA amount to 33,779,000 euros (33.1% of revenues) and EBIT total 26,757,000 euros (26.2% of revenues).

The net result totaled 13,736,000 euros in the first half of 2007 (+12.4% compared with the same period last year) and was equal to 13.4% of revenues, up from 13.1% in the same period in 2006.

7

2007

The table below shows the consolidated income statement for the periods ended June 30, 2006 and 2007.

CONSOLIDATED INCOME STATEMENT

(in thousands of euros)

First half

as a % of

First half

as a % of

2007

revenues

2006

revenues

Net revenues

102,160

100.0%

93,142

100.0%

Cost of sales

(36,233)

-35.5%

(36,876)

-39.6%

Gross profit

65,927

64.5%

56,266

60.4%

(21,500)

-21.0%

(20,128)

-21.6%

(5,408)

-5.3%

(4,527)

-4.9%

(11,525)

-11.3%

(9,445)

-10.1%

Other operating income (expenses)

(2,875)

-2.8%

(692)

-0.7%

amount for nonrecurring costs

Net result

(2,653) 24,619 (2,114) 22,505 (8,769) 13,736

EBITDA (1)

31,641

Sales and marketing expenses Research and development costs General and administrative expenses

Operating result (EBIT) Net financial expense Result before taxes Income taxes

(1)

-2.6%

-

-

24.1%

21,474

23.1%

-2.1%

(1,953)

-2.1%

22.0%

19,521

21.0%

-8.6%

(7,302)

-7.8%

13.4%

12,219

13.1%

31.0%

28,534

30.6%

The Board of Directors defines EBITDA as the “result from operations� before amortization of intangibles and depreciation of property, plant and

equipment.

1.1.1.1. Net revenues For the first half of the year, net revenues totaled 102,160,000 euros, up from 93,142,000 euros in the first six months of 2006. The increase of 9,018,000 euros was equal to a 9.7% year-over-year gain, when restated on a comparable foreign exchange translation basis.

The revenue improvement reported in the first half of 2007 would have been 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. Restated on a comparable foreign exchange translation basis (first six months of 2006), the improvement in first half revenues would be 11.9%. The negative impact of unfavorable interest rates diminished in the second quarter of 2007 compared with the first three months of the year due to the steady loss in value that the U.S. dollar had already suffered in 2006.

8

Half Year Report

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: First half

(in thousands of euros) Italy Rest of Europe North America (United States and Canada) Rest of the world Total

2007

as a % of the total

2006

as a % of the total

change

% change

23,997

23.5%

21,573

23.2%

2,424

11.20%

37,724

36.9%

34,234

36.8%

3,490

10.20%

22,015

21.5%

20,896

22.4%

1,119

5.40%

18,424

18.0%

16,439

17.6%

1,985

12.10%

102,160

100.0%

93,142

100.0%

9,018

9.70%

Italy In the first half of 2007, revenues generated in Italy totaled 23,997,000 euros, or 11.2% more than in the same period a year ago, accounting for 23.5% of consolidated revenues (about the same as a year ago).

Higher sales of CLIA products for the installed base of LIAISON systems account for the higher revenues reported in Italy.

Rest of Europe In the other European countries, first half revenues increased from 34,234,000 euros in 2006 to 37,724,000 euros in 2007 (+10.2%). In the first six months of 2007, the best gains were recorded in Spain (+12.4%), Belgium (+11.7%) and Germany (+10%). The smaller European subsidiaries (in Sweden and the UK) continued to provide a significant contribution to the growth of their geographic regions, posting revenue increases that, at 42.7% and 23.3%, respectively, were significantly above average. The main factor driving sales growth was an expansion of the installed base of LIAISON systems and the resulting increase in the sales of CLIA reagents.

In the European markets where the Group lacks a direct presence, operating instead through independent distributors, revenues for the first half of 2007 were 4.1% higher than in the same period in 2006.

As a result of the growth described above, the rest of Europe (excluding the Italian market) raised to 36.9% its contribution to the consolidated revenues of the DiaSorin Group.

9

2007

North America The North American market continued to be a key strategic market for the Group. However, the gains achieved during the period under review are not fully reflected in the consolidated revenues due to the change in foreign exchange rates discussed earlier in this Report.

For the first half of the year, revenues totaled 22,015,000 euros, up from 20,896,000 euros in the first six months of 2006 (+5.4%).

However, when the data for the first six months of 2007 are compared with those in the same period in 2006 using amounts stated in local currencies, unaffected by fluctuations in foreign exchange rates, revenues show increases of 14.0%.

Even though the growth of CLIA technology products and the expansion of the installed base of LIAISON systems in the United States lagged compared with the European markets due to the time needed to secure registration from the Food and Drug Administration (FDA), sales based on this technology platform have quickly become the engine driving growth in the North American market.

In the first half of 2007, North American sales accounted for 21.5% of the DiaSorin Group’s total revenues.

Rest of the World In markets other than Europe and North America, Group sales grew by 12.1%, with cumulative first-half revenues rising from 16,439,000 euros in 2006 to 18,424,000 euros in 2007. These markets accounted for 18% of consolidated revenues, up slightly compared with the first six months of 2006.

The results reported by the recently established Mexican and Israeli subsidiaries are evidence of the Group’s ability to establish itself in markets with growth opportunities for its line of LIAISON products.

The Mexican subsidiary, which began direct distribution in 2005, increased revenues for the first half of 2007 to 1,078,000 euros, for a gain of 53.1 percentage points compared with the same period last year. The Israeli subsidiary boosted revenues to 1,010,000 euros, or 245.9% more than in the first six months of 2006.

In the other regions, where the Group lacks a direct presence, operating instead through independent distributors, revenues were up 9.5% compared with 2006. Particularly strong results were reported in the Chinese market, where the Group has been operating since the end of 2006 through a joint venture with a local partner. Revenues booked in this market in the first half of 2007 totaled 1,956,000 euros, almost double the amount reported in the first six months of 2006.

10

Half Year Report

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 revenues contributed by each technology in the first half of 2006 and 2007.

% of revenues contributed RIA ELISA CLIA Equipment and other revenues Total

First half 2007

First half 2006

12.0

14.1

28.8

33.5

49.1

41.8

10.1

10.6

100.0

100.0

For the first half of the year, the LIAISON revenues booked in 2007 were 29.1% higher than in 2006.

Sales of products based on CLIA technology accounted for 49.2% of total revenues in the first half of 2007, or 7.5 percentage points more than in the same period last year. At June 30, 2007, about 1,870 automated LIAISON analyzers had been installed at facilities operated by direct and indirect customers of the Group. In addition, seven new LIAISON products were launched during the first six months of 2007. Six of these products were specialty items that will help differentiate the LIAISON product line even further compared with the products offered by the Group’s competitors.

The contribution to total revenues provided by the other technologies (RIA and ELISA) decreased by 6.2% and 5.7%, respectively, compared with the first half of 2006, but the reduction was less than originally anticipated.

1.1.1.2. Operating result (EBIT) The reduction in the percentage impact of the cost of sales continued to have a positive effect on the Groups’ operating performance, boosting the gross profit for the second half of the year by 4.1 percentage points compared with the first six months of 2006.

This improvement is the result of the following structural factors: •

A change in the mix of the product portfolio, shifting away from more widely used technology platforms (RIA, ELISA) toward closed platforms (CLIA), which, by providing end users with greater valued added, enabled the Company to pursue more lucrative pricing policies;

•

A steady increase in production volumes, which, thanks to the positive impact of economies of scale, resulted in a further decrease in direct costs;

•

A more efficient use of the base of installed systems, as a result of which depreciation absorbed a smaller percentage of the Group’s revenues.

The beneficial impact of these positive developments was offset in part by a rise in overhead, which increased from 36.6% of revenues in the first half of 2006 to 37.6% of revenues in the same period this year.

11

2007

Specifically: • Research and development costs increased (+0.4% of revenues) due to the implementation of a program to develop 20 new products over three years, from 2007 to 2009; •

General and administrative expenses were up (+1.2% of revenues) due mainly to investments made by the Group at the corporate level to secure stock market listing for the Company’s shares and strengthen the Human Resources Department;

•

Selling and marketing expenses decreased (-0.6%) as a percentage of revenues.

Lastly, as mentioned earlier in this report, the operating result was reduced by nonrecurring costs. These charges, which were incurred in connection with the project to list the Company’s shares, totaled 2,653,000 euros (2.6% of revenues) in the first six months of 2007. The nonrecurring gain recognized by the Group’s Parent Company in the second quarter of 2007 as a result of a reform of the rules that govern the provision for employee severance indemnities amounted to 515,000 euros (0.5% of revenues in the first half of 2007).

In the first half of 2007, EBITDA grew to 31,641,000 euros, or 10.9% more than the 28,534,000 euros reported at June 30, 2006. The ratio of EBITDA to revenues improved from 30.6% in 2006 to 31% in 2007.

Consolidated EBIT for the six months of the year grew from 21,474,000 euros in 2006 to 24,619,000 euros in 2007 (+14.6%), with the ratio of EBIT to revenues improving from 23.1% to 24.1%.

Restated to eliminate the impact of nonrecurring items, EBITDA for the first half amount to 33,779,000 euros (equal to 33.1% of revenues) for a year-over-year gain of 18.4%. EBIT total 26,757,000 euros (equal to 26.2% of revenues) for a year-over-year gain of 24.6%.

1.1.1.3. Financial transactions Stated in absolute terms, the impact of financial transactions on the Group’s reported result was about the same as in the first half of 2006. In the six months ended June 30, 2007, net financial expense totaled 2,114,000 euros, compared with 1,953,000 euros in the same period last year. Higher fees paid in connection with the assignment of receivables with recourse to factoring companies are the main reason for this increase.

1.1.1.4. Result before taxes and net result The result before taxes for the first half of 2007 was 22,505,000 euros compared with 19,521,000 euros in the same period last year. The corresponding tax liability was 8,769,000 euros in 2007 and 7,302,000 euros in 2006.

12

Half Year Report

1.1.2. Analysis of consolidated cash flow A table showing the consolidated cash flow statement, followed by a review of the main statement items and the changes that occurred compared with the first half of 2006, is provided below: (in thousands of euros) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD Net cash from operating activities Cash used for investing activities Cash used for financing activities Net change in cash and cash equivalents CASH AND CASH EQUIVALENTS AT END OF PERIOD

First half 2007

First half 2006

8,718

6,116

12,317

10,810

(8,057)

(8,813)

(3,404)

856

(5,397) (3,400)

9,574

2,716

The higher cash flow generated in the first half of 2007 compared with the same period a year ago reflects an increase in the Group’s operating results described earlier in this Report, a reduction in taxes paid compared with 2006 and a slower growth of working capital requirements. The cash flow generated by operating activities in the first half of 2007 rose to 12,317,000 euros, up from 10,810,000 euros in the first six months of 2006.

In the first six months of 2007, cash used in investing activities totaled 8,057,000 euros, down from 8,813,000 euros in the same period last year. Specifically, investments in property, plant and equipment decreased to 6,104,000 euros, compared with 7,360,000 euros in the first half of 2006. The reduction in capital expenditures reflects primarily a rise in the percentage of LIAISON systems 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 the capitalization of the costs incurred to develop the new LIAISON XL analyzer.

Cash used for financing activities decreased to 3,404,000 euros in the first half of 2007, down from 5,397,000 euros in the same period a year ago, reflecting a reduction in repayments made possible by a decrease in the Group’s indebtedness, offset in part by a reduced use of finance leases to purchase equipment.

As the net result of the changes discussed above, the first half of 2007 ended with an increase of 856,000 euros in the liquid assets available to the Group, which totaled 9,574,000 euros at June 30, 2007.

13

2007

1.1.3. Analysis of consolidated net borrowings (in thousands of euros)

At June 30, 2007

At December 31,2006

Cash and cash equivalents

(9,574)

(8,718)

Liquid assets (a)

(9,574)

(8,718)

-

(28)

Current bank debt

7,102

7,224

Other current financial obligations

2,820

2,696

Current indebtedness (c)

9,922

9,920

348

1,174

26,589

29,715

Current financial receivables (b)

Net current indebtedness (d)=(a)+(b)+(c) Non-current bank debt Other non-current financial obligations

3,254

3,841

Non-current indebtedness (e)

29,843

33,556

Net borrowings (f)=(d)+(e)

30,191

34,730

At June 30, 2007, consolidated net borrowings totaled 30,191,000 euros, or 4,539,000 euros less than at December 31, 2006. The changes in cash flow discussed above account for this improvement.

1.2. Other information 1.2.1. The foreign exchange market The table below provides a list of average foreign exchange rates: Currency U.S. dollar (USD) Brazilian real (BRL) British pound (GBP) Swedish kronor (SEK) Mexican peso (MXN) Israeli shekel (ILS)

First half 2007

First half 2006

1.3291

1.2296

2.7186

2.6965

0.6746

0.6870

9.2228

9.3259

14.5523

13.3925

5.5179

5.6410

(Source: Italian Foreign Exchange Office)

1.2.2. Human resources At June 30, 2007, the Group had 903 employees, or 66 more than at the beginning of the year, when 837 employees were on its payroll.

14

Half Year Report

2. Consolidated financial statements of the DiaSorin group at June 30, 2007 CONSOLIDATED INCOME STATEMENT (in thousands of euros) Net revenues Cost of sales Gross profit Sales and marketing expenses Research and development costs General and administrative expenses Other operating income (expenses) amount for nonrecurring costs Operating result (EBIT) Net financial income (expense) Result before taxes Income taxes Net Result Earnings per share (basic) Earnings per share (diluted) (*)

Notes

First half 2006(*)

First half 2007

(1)

102,160

93,142

(2)

(36,233)

(36,876)

65,927

56,266

(3)

(21,500)

(20,128)

(4)

(5,408)

(4,527)

(5)

(11,525)

(9,445)

(6)

(2,875)

(692)

(2,653) 24,619 (2,114) 22,505 (8,769) 13,736 0.27 0.25

21,474 (1,953) 19,521 (7,302) 12,219 0.24 0.24

(7) (8) (9) (9)

Unaudited data.

CONSOLIDATED BALANCE SHEET (in thousands of euros)

Notes

At 6/30/07

At 12/31/06

(10)

35,110

35,502

(11)

48,055

48,055

(11)

16,252

14,750

123

123

7,989

8,357

ASSETS

Non-current assets Property, plant and equipment Goodwill Other intangibles Equity investments Deferred-tax assets Other non-current assets Total non-current assets Current assets Inventories Trade receivables Accounts receivable from Group companies Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS

161

245

107,690

107,032

(12)

34,026

30,891

(13)

53,627

44,671

21

-

4,185

2,769

9,574

8,718

101,433

87,049

209,123

194,081

15

2007

CONSOLIDATED BALANCE SHEET (continued) (in thousands of euros)

Notes

At 6/30/07

At 12/31/06

50,000

50,000

4,425

4,425

639

207

3,190

2,854

LIABILITIES AND SHAREHOLDERS’ EQUITY

Shareholders’ equity Share capital Additional paid-in capital Statutory reserve Other reserves Retained earnings (Accumulated deficit) Net result Total shareholders’ equity Non-current liabilities Long-term borrowings Provisions for employee severance indemnities and other employee benefits Deferred-tax liabilities Other non-current liabilities Total non-current liabilities Current liabilities Trade payables Accounts payable to Group companies Other current liabilities Income taxes payable Current portion of long-term debt Total current liabilities Total liabilities TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

16

29,819

7,957

13,736

22,294

101,809

87.737

(14)

29,843

33,556

(15)

18,626

19,154

634

672

(16)

2,876

3,047

51,979

56,429

27,512

22,854

66

(14)

12,814

12,508

5,021

4,633

9,922

9,920

55,335

49,915

107,314

106,344

209,123

194,081

Half Year Report

CASH FLOW STATEMENT (in thousands of euros) Cash flow from operating activities Net result for the period Adjustments for: - Income taxes - Depreciation and amortization - Financial expense - Additions to/Utilizations of provisions and reserves - (Gains)/Losses on sales of non-current assets - Contributions to/Reversals of provisions for employee severance indemnities and other employee benefits amount from nonrecurring transactions - Changes in shareholders’ equity reserves - Stock option reserve - Cumulative translation adjustment from operating activities - Change in other non-current assets/liabilities Cash flow from operating activities before changes in working capital

First half 2007

First half 2006 (*)

13,736

12,219

8,769

7,302

7,022

7,060

2,114

1,953

76

444

(75)

(7)

(444)

839

(515)

-

600

400

(175)

(160)

22

509

31,645

30,559

(Increase) Decrease in current receivables

(8,959)

(9,407)

(Increase) Decrease in inventories

(3,153)

(1,493)

4,691

3,063

Increase (Decrease) in trade payables (Increase) Decrease in other current items

(1,572)

(619)

Cash from operating activities

22,652

22,103

Income taxes paid

(8,573)

(9,330)

Interest paid

(1,762)

(1,963)

Net cash from operating activities

12,317

10,810

Investments in intangibles

(2,408)

(1,675)

Investments in property, plant and equipment

(6,104)

(7,360)

Proceeds from the sale of non-current assets Cash used in investing activities

455

222

(8,057)

(8,813)

Repayment of loans

(3,025)

(5,370)

Repayment of other financial obligations

(2,020)

(1,208)

1,506

2,169

Proceeds from new borrowings Foreign exchange translation differences Cash used in financing activities Net change in cash and cash equivalents

135

(988)

(3,404)

(5,397)

856

(3,400)

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

8,718

6,116

CASH AND CASH EQUIVALENTS AT END OF PERIOD

9,574

2,716

(*)

Unaudited data.

17

2007

18

(10,355)

10,355

the period

(*)

Unaudited data.

388

2,802

600

2,202

7,957

29,819

21,862

22,294 (22,294)

13,736 639

(264)

652

13,736

4,425

432

207

Shareholders’ equity at 6/30/07

50,000

4,425

Net result for the period

Translation adjustment

Share-based payment

Appropriation of previous year’s profit

50,000

7,957

10,227

(2,270)

deficit)

(Accum-lated

Net result for

Shareholders’ equity at 12/31/06

1,802

400

1,402

reserve

earnings

Retained

12,219

1,559

(1,616)

Stock option

50,000

207

128

3,175

reserve

translation

Cumulative

Shareholders’ equity at 6/30/06 (*)

4,425

4,425

79

reserve

paid-in capital

Statutory

Additional

12,219

50,000

Share capital

Net result for the period

Translation adjustment

Share-based payment

Appropriation of previous year’s profit

Shareholders’ equity at 12/31/05

(in thousands of euros)

CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY Group

101,809

13,736

(264)

600

-

87,737

78,169

12,219

(1,616)

400

-

67,166

equity

shareholders’

interest in

Half Year Report

NOTES TO THE SEMIANNUAL CONSOLIDATED FINANCIAL STATEMENTS AT JUNE 30, 2007 GENERAL INFORMATION 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 on Via Crescentino, in Saluggia (VC) snc.

Principles for the preparation of the semiannual report This Semiannual Report and the consolidated financial statements at June 30, 2007 were prepared in accordance with the guidelines of Consob Regulation No. 11971 of May 14, 1999, as amended, and are consistent with the provisions of legislation enacted to implement Article 9 of Legislative Decree No. 38/2005.

The semiannual report of the DiaSorin Group was prepared in compliance with the International Financial Reporting Standards (“IFRSs”), as issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union. The designation IFRSs also includes the International Accounting Standards (“IASs”) that are still in effect and all of the interpretations of the International Financial Reporting Interpretations Committee (“IFRIC”).

This semiannual report 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 June 30, 2006 have been restated in accordance with IFRS requirements.

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 semiannual report are consistent with those used for the annual consolidated financial statements at December 31, 2006, since it has been determined that the revisions and interpretations published by the IASB that were applicable as of January 1, 2007 did not require any material changes in the accounting 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 disclosures provided 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, they will be modified appropriately when the relevant events produce the abovementioned differences.

Moreover, 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 that require an immediate evaluation of any impairment losses that may have occurred.

19

2007

The process of preparing the report for the first half of 2007 included developing the actuarial valuation required to compute the provisions for employee benefits. In connection with this process, the Group recognized in its income statement the accounting impact of the changes made to the rules that govern the provisions for employee severance indemnities as a result of the enactment of Law No. 296 of December 27, 2006 (2007 Budget Law) and related decrees and regulations published in the first quarter of 2007. Specifically, the Group’s Parent Company recomputed the present value of the vested benefits at December 31, 2006 and the resulting curtailment, as required by Paragraph 109 of IAS 19, which was recognized in its entirety in the income statement for the six months subject of this Report.

Lastly, 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 June 30, 2007. These reclassifications did not have an impact on the shareholders’ equity and the 2006 result.

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 this consolidated semiannual report, all amounts are in thousands of euros unless otherwise stated.

Financial statement presentation formats The financial statements are presented in accordance with the following formats: •

In the income statement, costs are broken down by function. This income statement format, also known as a “cost of sales” income statement, is more representative of the Group’s business than a presentation with expenses broken down by nature because it is consistent with internal reporting and business management methods and is consistent with international practice in the diagnostic industry.

•

In the balance sheet, current and non-current assets and current and non-current liabilities are shown separately.

•

The cash flow statement is presented in accordance with the indirect method.

Scope of consolidation The consolidated semiannual financial statements include the financial statements of DiaSorin S.p.A., the Group’s Parent Company, and those 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 locations and the percentage interest held by the Group, is provided in Annex I.

20

Half Year Report

Other information Information about significant events occurring after June 30, 2007, the Group’s business outlook and its transactions with related parties is provided in separate sections of this semiannual report.

The table below shows the exchange rates used to translate amounts reported by companies that operate outside the euro zone: First half 2007

At December 31, 2006

First half 2006

Average

At 6/30

Puntuali

Average

At 6/30

U.S. dollar

1.3291

1.3505

1.3170

1.2296

1.2713

British pound

0.6746

0.6740

0.6715

0.6870

0.6921

Brazilian real

2.7186

2.5972

2.8133

2.6965

2.7575

Swedish kronor

9.2228

9.2525

9.0404

9.3259

9.2385

Mexican peso

14.5523

14.5706

14.2937

13.3926

14.3723

Israeli shekel

5.5179

5.7416

5.5501

5.6410

5.6523

21

2007

22

-

Financial income ( expense)

Result before taxes

Income taxes

Net result

Total ammortiz. and depreciation

BALANCE SHEET

Total liabil. and sharehold. equity

53,163

-

Shareholders’ equity

53,163

103,369

-

103,369

Unallocated liabilities

Segment liabilities

Total assets

Unallocated assets

Segment assets

12/31/06

36,917

(3,236)

(2,622)

(614)

-

-

-

-

-

-

-

11,448

60,521

23,604

60,187

-

-

60,187

112,961

-

112,961

6/30/07

ITALY

(3,309)

Depreciation

(in thousands of euros)

(560)

(2,749)

Amortization

OTHER INFORMATION

-

Other income (expense), net

-

EBIT

Segment result -

55,745

10,091

Total revenues

Unallocated common costs

34,212

21,533

2007

2006

Inter-segment revenues

1st half

ITALY

1st half

Revenues from outsiders

INCOME STATEMENT

(in thousands of euros)

Segment information

24,695

-

-

24,695

49,625

-

49,625

12/31/06

2007

(2,226)

(2,135)

(91)

-

-

-

-

-

-

-

4,231

36,707

4,625

32,082

28,303

-

-

28,303

55,460

-

55,460

6/30/07

EUROPE

(2,237)

(2,152)

(85)

-

-

-

-

-

-

-

3,441

33,756

4,626

29,130

2006

1st half

EUROPE 1st half

(915)

(811)

(104)

3,961

-

-

3,961

48,256

-

48,256

12/31/06

-

-

-

-

-

-

-

8,772

29,226

4,247

24,979

2007

6,075

-

-

6,075

54,568

-

54,568

6/30/07

UNITED STATES

(846)

(746)

(100)

-

-

-

-

-

-

-

7,627

27,789

4,232

23,557

2006

1st half

UNITED STATES 1st half

(1,174)

(1,128)

(46)

-

-

-

-

-

-

-

977

9,347

-

9,347

2007

1st half

8,248

-

-

8,248

14,856

-

14,856

12/31/06

8,416

-

-

8,416

16,287

-

16,287

6/30/07

REST OF THE WORLD

(993)

(957)

(36)

-

-

-

-

-

-

-

1,265

8,511

-

8,511

2006

1st half

REST OF THE WORLD

529

(32,294)

-

-

(32,294)

(39,949)

-

(39,949)

12/31/06

529

-

-

-

-

-

-

-

-

(809)

(33,641)

(32,476)

(1,165)

2007

(41,087)

-

-

(41,087)

(47,839)

-

(47,839)

6/30/07

ELIMINATIONS

325

325

-

-

-

-

-

-

-

-

(950)

(32,659)

(30,391)

(2,268)

2006

1st half

ELIMINATIONS 1st half

(7,022)

(6,167)

(855)

13,736

(8,769)

22,505

(2,114)

194,081

87,737

48,571

57,773

194,081

17,924

176,157

12/31/06

-

24,619

-

24,619

102,160

-

102,160

2007

209,123

101,809

45,420

61,894

209,123

17,686

191,437

6/30/07

CONSOLIDATED

(7,060)

(6,279)

(781)

12,219

(7,302)

19,521

(1,953)

-

21,474

-

21,474

93,142

-

93,142

2006

1st half

CONSOLIDATED 1st half

Half Year Report

DESCRIPTION AND MAIN CHANGES CONSOLIDATED INCOME STATEMENT The notes to the consolidated income statement are provided below. More detailed information about the components of the income statement is provided in the Report on Operations.

The results for the first half of 2007 benefited from a nonrecurring gain of 515,000 euros recognized by the Group’s Parent Company as a result of a reform of the rules that govern the provision for employee severance indemnities.

A breakdown of this item is as follows: (in thousands of euros) Cost of sales Sales and marketing expenses Research and development costs General and administrative expenses

First half 2007

216 139 46 114 515

During the first six months of 2007, stock option costs totaled 600,000 euros, compared with 400,000 euros in the same period last year. A change in the vesting period, which became shorter than originally anticipated, accounts for this increase.

(1) Net revenues In the first half of 2007, net revenues, which are generated mainly through the sale of diagnostic kits, totaled 102,160,000 euros, or 9.7% more than in the same period last year. These revenues include equipment rentals and technical support revenues totaling 1,785,000 euros, compared with 1,746,000 euros in the same period last year.

(2) Cost of sales In the first half of 2007, the cost of sales amounted to 36,233,000 euros, compared with 36,876,000 euros in the six months ended June 30, 2006. The cost of sales includes 2,230,000 euros paid for royalties and 1,708,000 euros in costs incurred to distribute products to end customers.

(3) Sales and marketing expenses Sales and marketing expenses increased to 21,500,000 euros in the first half of 2007, up from 20,128,000 euros in the same period last year. This item consists mainly of marketing costs incurred to promote and distribute DiaSorin products, costs attributable to the direct and indirect sales force and the cost of the technical support offered together with the Group-owned equipment provided to customers in accordance with gratuitous loan contracts.

(4) Research and development costs The research and development costs incurred during the first six months of 2007, which totaled 5,408,000 euros (4,527,000 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 (5,157,000 euros, compared with 4,294,000 euros in the first half of 2006) and the amortization of capitalized development costs (251,000 euros, compared with 233,000 euros in the first six months of 2006). During the first half of 2007, the Group capitalized new development costs amounting to 1,471,000 euros, up from 1,234,000 euros in the same period last year.

23

2007

(5) General and administrative expenses General and administrative expenses, which totaled 11,525,000 euros in the first half of 2007 (9,445,000 euros in the same period last year), include expenses incurred for corporate management activities, Group administration, finance and control, information technology, corporate organization, and insurance.

(6) Other operating income (expenses) Net other operating expenses totaled 2,875,000 euros, compared with net other operating expenses of 692,000 euros in the first half of 2006. This item includes operating income and expenses that cannot be allocated to specific functional areas, as well as the pro rata portion attributable to the first six months of 2007 of the costs incurred in connection with an ongoing effort to list the Company’s shares on the online stock market, which amounted to 2,653,000 euros.

(7) Net financial income (expense) The table below provides a breakdown of financial income and expense: (in thousands of euros) Interest and other financial expense Interest and other financial income Net translation adjustment Net financial income (expense)

First half 2007

First half 2006

(2,692)

(2,555)

183

190

395

412

(2,114)

(1,953)

In the first six months of 2007, net financial expense totaled 2,114,000 euros, as against net financial expense of 1,953,000 euros in the same period last year. Interest and other financial expense includes 1,084,000 euros in interest on loans (1,371,000 euros in the first half of 2006), 850,000 euros in fees on factoring transactions (565,000 euros in the first half of 2006) and 392,000 euros in finance charges related to employee benefit plans (374,000 euros in the first half of 2006).

(8) Income taxes The income tax expense recognized in the consolidated income statement for the first half of 2007 amounted to 8,769,000 euros, an amount equal to 39% of the result before taxes. In the six months ended June 30, 2006, the tax liability was 7,302,000 euros, for a tax rate of 37.4%.

(9) Earnings per share Basic earnings per share, which are computed by dividing the net result attributable to shareholders by the average number of shares outstanding, amounted to 0.27 euros in the first half of 2007, compared with 0.24 euros in the same period last year.

Diluted earnings per share for the first six months of 2007 amounted to 0.25 euros. As required by IAS 33, this amount reflects the expected impact of the exercise of options, including in the computation the resulting change in the average number of shares outstanding and the full cost of the stock option plan.

24

Half Year Report

CONSOLIDATED BALANCE SHEET (10) Property, plant and equipment The table below shows the changes that occurred in this account as of June 30, 2007: Net carrying value at 12/31/06

Additions

Translation

Retirements and

Net carrying

Depreciation

adjustment

other changes

value at 6/30/07

Land and buildings

9,755

388

(347)

(81)

93

9,808

Plant and machinery

6,948

1,346

(1,164)

(51)

(152)

6,927

Equipment held by outsiders

18,799

4,370

(4,656)

183

(321)

18,375

Total prop., plant and equipment

35,502

6,104

(6,167)

51

(380)

35,110

(11) Intangible assets A breakdown of intangible assets at June 30, 2007 is as follows: Translation Net carrying

adjustment and

Net carrying

at 12/31/06

Additions

Amortization

other changes

value at 6/30/07

48,055

-

-

-

48,055

Development costs

6,517

1,471

(251)

10

7,747

Other intangibles

8,233

900

(604)

(24)

8,505

62,805

2,371

(855)

(14)

64,307

Goodwill

Total intangible assets

The increase in development costs reflects the ongoing investment in the project for the new LIAISON XL analyzer, which amounted to 1,092,000 euros in the first half of 2007.

The increase in other intangibles refers primarily to the costs incurred to expand the SAP R/3 information system used by the Group and to purchase licenses.

Intangible assets with an indefinite useful life were not tested for impairment, since there were no indications of impairment.

25

2007

(12) Inventories A breakdown of inventories at June 30, 2007 and a comparison with the data at December 31, 2006 is as follows: At 6/30/07 Gross amount

Provisions for

At 12/31/06

Net amount

Gross amount

writedowns Raw materials and supplies

Provisions for

Net amount

writedowns

9,176

(1,178)

7,998

8,290

(1,162)

7,128

Work in progress

16,551

(1,240)

15,311

13,262

(1,375)

11,887

Finished goods

11,725

(1,008)

10,717

12,846

(970)

11,876

Total

37,452

(3,426)

34,026

34,398

(3,507)

30,891

The rise in inventories compared with December 31, 2006 reflects a corresponding increase in the Group’s business activity.

(13) Trade receivables Trade receivables totaled 53,627,000 euros at June 30, 2007. The increase compared with December 31, 2006 is consistent with the higher sales volume reported by the Group. At June 30, 2007, the allowance for doubtful accounts amounted to 6,235,000 euros.

The table below shows the changes that occurred in the allowance for doubtful accounts:

Opening balance Addition for the period Utilizations for the period Currency translation differences and other changes Closing balance

26

At June 30, 2007

At December 31, 2006

5,934

5,644

176

532

(121)

(175)

246

(67)

6,235

5,934

Half Year Report

(14) Borrowings The table below lists the borrowings outstanding at June 30, 2007 and provides a comparison with the data at December 31, 2006 (amounts in thousands of euros): Lender institution

At June 30, 2007

At December 31, 2006

Change in the first half of 2007

Interbanca 2006 USD

6,761

7,563

(802)

Interbanca 2006 Euro

23,235

25,342

(2,107)

IMI/Italian Ministry of Education CRT Unicredit for 2000 Flood

941

889

52

1,505

1,634

(129)

Wells Fargo Bank (U.S. mortgage)

1,309

1,511

(202)

Lessors

5,482

5,801

(319)

Factors

477

736

(259)

55

-

55

39,765

43,476

(3,711)

Derivatives at fair value Total

During the first half of 2007, borrowings decreased by 3,711,000 euros as a result of reimbursements, translation differences on borrowings in foreign currencies and the amortization of capitalized borrowing costs. Specifically, 2,118,000 euros and $833,000 (equal to 619,000 euros) were repaid on the Interbanca euro loan and Interbanca U.S. dollar loan, respectively. In addition, 164,000 euros were repaid on the CRT Unicredit for 2000 Flood facility and indebtedness owed to lessors was reduced by 2,020,000 euros. New finance leases totaling 1,701,000 euros were executed during the first six months of 2007.

A breakdown of borrowings by maturity is as follows (amounts in thousands of euros): Lender institution Interbanca 2006 USD Interbanca 2006 Euro

Currency USD

Long-term

Amount due

portion

portion

after 5 years

1,666

7,465

833

Total 9,131

Amount in EUR

1,234

5,527

626

6,761

EUR

4,237

18,998

2,097

23,235

941

703

941

323

1,182

206

1,505

IMI/Italian Ministry of Education

EUR

CRT Unicredit for 2000 Flood

EUR

Wells Fargo Bank (U.S. mortgage)

Short-term

USD

1,768

-

-

1,768

Amount in EUR

1,309

-

-

1,309

Lessors

EUR

2,287

3,195

-

5,482

Factors

EUR

477

-

-

477

Derivatives at fair value

EUR

Total

55

-

-

55

9,922

29,843

3,632

39,765

There were no changes in contract terms compared with December 31, 2006 and all of the covenants of the loan agreements in force were complied with.

27

2007

A breakdown of net borrowings at June 30, 2007 is as follows: (in thousands of euros) Cash and cash equivalents Liquid assets (a) Current financial receivables (b) Current bank debt Other current financial obligations Current indebtedness (c) Net current indebtedness (d)=(a)+(b)+(c) Non-current bank debt Other non-current financial obligations Non-current indebtedness (e) Net borrowings (f)=(d)+(e)

At June 30, 2007

At December 31, 2006

(9,574)

(8,718)

(9,574)

(8,718)

-

(28)

7,102

7,224

2,820

2,696

9,922

9,920

348

1,174

26,589

29,715

3,254

3,841

29,843

33,556

30,191

34,730

(15) Provisions for employee severance indemnities and other employee benefits These provisions totaled 18,626,000 euros at June 30, 2007. The table below shows the changes that occurred in these provisions. (in thousands of euros) Balance at December 31, 2006 Financial expense/(income) Actuarial losses/(gains) Additions for employee benefit costs Contributions/Benefits paid Currency translation differences Impact of the reform of the provision for severance benefits broken down as follows: - Impact of the reform on defined-benefit obligations at 12/31/06 - Recognition of actuarial losses not recorded at 12/31/06 Balance at June 30, 2007

Total employee benefits 19,154 391 (59) 130 (433) (42) (515)

(832) 317 18,626

Additional information about the accounting treatment of the reform of the provision for severance benefits is provided in the accounting principles section of this Report.

28

Half Year Report

(16) Other non-current liabilities Other non-current liabilities totaled 2,876,000 euros at June 30, 2007. They include provisions for risks and charges amounting to 2,641,000 euros.

The table below shows the changes that occurred in the provisions for risks and charges and provides a comparison with the data for the first half of 2006: At June 30, 2007

At December 31, 2006

2,818

2,072

47

198

(290)

(283)

Opening balance Additions for the period Utilizations for the period Currency translation differences and other changes Ending balance

66

27

2,641

2,014

The utilizations for the period, which amounted to 290,000 euros, refer to a provision for taxes of the Brazilian subsidiary, which settled and paid a tax liability related to cost-sharing during the first half of 2007.

(17) Commitments and contingent liabilities Other significant commitments and contractual obligations At June 30, 2007, contractual commitments include the forward obligation to repurchase US$5 million under a reverse repurchase agreement denominated in U.S. dollars that was executed in June 2007 and expires in September of this year. During the first half of 2007, the Group closed out a currency option in the amount of US$6 million U.S. dollars that originated in December 2006.

Significant contractual obligations include the agreements executed by DiaSorin S.p.A., the Group’s Parent Company, and Stratec in connection with the development and production of a chemiluminescence diagnostic system (called LIAISON XL). The supply contract signed by DiaSorin and Stratec calls for the latter to manufacture and supply exclusively to DiaSorin the LIAISON XL analyzer. The projected commitment is deemed to be significantly lower than the normal level of capital investment that would be required for current or future equipment production. As a result, net invested capital is not expected to undergo significant structural changes in the future as a result of this commitment.

Contingent liabilities

The DiaSorin Group operates globally. As a result, it is exposed to the risks that arise from the complex laws and regulations that apply to its commercial and manufacturing activities.

The Group believes that, overall, the amounts set aside, for pending legal disputes, in the corresponding provision for risks are adequate.

(18) Entries resulting from atypical and/or unusual transactions

As required by Consob Communication No. DEM/6064296 of July 28, 2006, the Company declares that, in the first half of 2007, it did not execute atypical and/or unusual transactions, as defined in the abovementioned Communication, which defines atypical and/or unusual transactions as those transactions that, because of their significance/material amount, type of counterpart, subject of the transaction, method of determining the transfer price and timing of the event (proximity to the end of a reporting period), could create doubts with regard to: the fairness/completeness of the financial statement disclosures, the existence of a conflict of interest, the safety of the corporate assets and the protection of minority shareholders.

29

2007

(19) Transactions with related parties

In the normal course of business, DiaSorin S.p.A. engages on a regular basis in commercial and financial transactions with its subsidiaries, which are also Group companies. These transactions, which are executed on standard market terms, 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 the year, 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 of the Report.

At June 30, 2007, the following transactions had been executed with DiaSorin LTD, an unconsolidated Chinese subsidiary: • liabilities of 66,000 euros; • costs totaling 324,000 euros for sales and technical support 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. In the first half of 2007, the cost recognized in the income statement in connection with this plan amounted to 600,000 euros.

The compensation payable to senior managers and eligible employees (key management) is consistent with standard market 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.

30

Half Year Report

3. Significant events occurring after June 30, 2007 and business outlook Subsequent to June 30, 2007, the DiaSorin Group continued to generate positive operating results.

Following a resolution adopted by Borsa Italiana on June 24, 2007 accepting the listing of the Company’s shares and pursuant to an authorization issued by the Consob on June 28, 2007, the common shares of DiaSorin S.p.A. began trading on the STAR segment of the Italian online stock market on July 19, 2007.

As a result of the abovementioned listing of the Company’s shares, the options awarded to 17 Directors and employees of the Group under the 2004-2008 Stock Option Plan approved by the Board of Directors on March 25, 2004 for up to 5,000,000 shares became exercisable. The option exercise price was set at 1.30 euros.

As of the date of this Report, the capital increase reserved for the abovementioned Plan had been fully subscribed.

Moreover, with regard to the 2007-2012 Stock Option Plan, which was approved by an Ordinary Shareholders’ Meeting on March 26, 2007, by a resolution adopted on August 10, 2007, the Board of Directors approved a first batch of beneficiaries consisting of executives and key employees of DiaSorin S.p.A. and subsidiaries.

At the same meeting, the Board of Directors awarded 745,000 of the available 1,000,0000 options, which can be used to purchase through subscription an equal number of newly issued common shares of DiaSorin S.p.A., par value 1.00 euro each.

The option exercise price was set at 12.193 euros, which is equal to the simple average of the official prices of the DiaSorin shares on the Online Stock Market during the period between the date of award of the options and the same day in the previous calendar month (fair value).

No other significant events occurred after June 30, 2007.

During the second half of 2007, revenues are expected to grow compared with 2006 in line with the trend experienced during the first six months of 2007. The revenue increase, which is again expected to occur uniformly in all of the regions where the Group operates, will continue to be driven by sales of products based on the LIAISON technology.

During the second half of 2007, the Group’s profitability should increase at the pretax level compared with the same period in 2006 thanks to its ongoing commitment to pursuing lucrative pricing policies for its proprietary technologies and the advantages gained by exploiting the efficiency gains achieved by the manufacturing operations. The Group will continue to invest its increased profitability in research and development programs and in furthering its strategy of geographic expansion.

31

2007

Half Year Report

4. Annex: the companies of the DiaSorin Group at June 30, 2007 Company

Head office

Currency

location DiaSorin S.A.

Brussels (Belgium)

DiaSorin Ltda DiaSorin S.A.

Share

Par value per share

%

capital

or partnership

interest

No. of shares or partnership

interest

held directly

interests held

6.696

99.99%

250 10,011,892

EUR

1,674,000

S達o Paulo (Brazil)

BRL

10,011,893

1

99.99%

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

Mexico City (Mexico)

MXN

100,000

1

99.99%

50,000

DiaSorin SAdeCV 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

EUR

120,000

1

80.00%

-

EUR

5,000

-

20.00%

1

Equity Investments Valued at Cost DiaSorin Ltd

Shanghai (China)

Equity Investments in Other Companies Consorzio Sobedia

Saluggia (Italy)

33

2007

Half Year Report

5. Financial statements of DiaSorin S.p.A. at June 30, 2007 Foreword The financial statements at June 30, 2007 of DiaSorin S.p.A., the Group’s Parent Company, that are presented on this page and on the following pages were prepared in accordance with Consob Regulation No. 11971 of May 14, 1999, as amended.

Specifically, the accounting principles and criteria adopted for the abovementioned financial statements are the same as those that will be used to prepare the annual financial statements at December 31, 2007, insofar as they are compatible. As of January 1, 2007, DiaSorin S.p.A. adopted the International Financial Reporting Standards (“IFRSs�) for the preparation of its annual financial statements. Consequently, the data for the first half of 2007 and those for the first half of 2006 that are provided for comparison purposes are computed in accordance with the IFRSs. Additional information about the content of these accounting principles and the impact of their adoption on the 2006 data originally published in accordance with Italian accounting principles is provided in a separate Annex at the end of this Report.

INCOME STATEMENT (in thousands of euros) Net revenues Cost of sales Gross profit Sales and marketing expenses Research and development costs General and administrative expenses Other operating income (expenses) Operating result (EBIT) Net financial income (expense) Result before taxes Income taxes Net result

First half 2007

First half 2006

60,522

55,745

(28,257)

(29,940)

32,265

25,805

(8,421)

(7,903)

(3,603)

(2,546)

(6,429)

(4,909)

(2,835)

(670)

10,977

9,777

(389)

(1,271)

10,588

8,506

(3,611)

(3,329)

6,977

5,177

Earnings per share (basic)

0.14

0.10

Earnings per share (diluted)

0.13

0.10

35

2007

BALANCE SHEET (in thousands of euros)

6/30/07

12/31/06

12,813

13,451

ASSETS

Non-current assets Property, plant and equipment Goodwill Other intangibles Equity investments Deferred-tax assets Total non-current assets Current assets Inventories Trade receivables Accounts receivable from Group companies Loans receivable from Group companies Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS

36

27,590

27,590

14,142

12,762

52,052

52,052

1,900

2,523

108,497

108,378

22,485

20,003

24,938

22,321

8,067

7,008

8,324

5,402

1,983

1,067

3,960

3,350

69,757

59,151

178,254

167,529

Half Year Report

BALANCE SHEET (continue) (in thousands of euros)

6/30/07

12/31/06

50,000

50,000

4,425

4,425

639

207

2,199

1,728

LIABILITIES AND SHAREHOLDERS’ EQUITY

Shareholders’ equity Share capital Additional paid-in capital Statutory reserve Other reserves Retained earnings (Accumulated deficit) Net result for the year Total shareholders’ equity Non-current liabilities Long-term borrowings Provisions for employee severance indemnities and other employee benefits Other non-current liabilities Total non-current liabilities Current liabilities Trade payables Accounts payable to Group companies Loans payable to Group companies Other current liabilities Income taxes payable Current portion of long-term debt Total current liabilities Total liabilities TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

16,193

6,242

6,977

10,383

80,433

72,985

28,046

31,352

6,089

6,848

1,735

1,715

35,870

39,915

23,112

18,828

3,250

4,140

19,751

15,722

6,272

5,907

3,026

3,645

6,540

6,387

61,951

54,629

97,821

94,544

178,254

167,529

37

2007

CASH FLOW STATEMENT (in thousands of euros) Cash flow from operating activities Net result for the period Adjustments for: - Income taxes - Depreciation and amortization - Financial expense - Additions to/Utilizations of provisions and reserves - (Gains)/Losses on sales of non-current assets - Contributions to/Reversals of provisions for employee severance indemnities and other employee benefits amount from nonrecurring transactions - Changes in shareholders’ equity reserves - Stock option reserve - Change in other non-current assets/liabilities Cash flow from operating activities before changes in working capital

First half 2007

First half 2006

6,977

5,177

3,611

3,330

3,236

3,309

2,297

2,170

71

270

(52)

(33)

(344)

285

(515)

-

471

314

(590)

(406)

15,677

14,415

(Increase) Decrease in current receivables

(3,886)

(4,416)

(Increase) Decrease in inventories

(2,411)

(874)

Increase (Decrease) in trade payables

3,394

3,410

(Increase) Decrease in other current items

(675)

621

Cash from operating activities

12,099

13,156

Income taxes paid

(3,718)

(5,226)

Interest paid

(1,543)

(1,696)

6,838

6,234

Investments in intangibles

(2,163)

(2,340)

Investments in property, plant and equipment

(1,991)

(1,539)

Net cash from operating activities

Proceeds from the sale of non-current assets

228

130

Cash used in investing activities

(3,926)

(3,749)

Repayment of loans

(2,901)

(5,229)

Repayment of other financial obligations

(342)

(432)

Proceeds from new borrowings

965

5,820

Foreign exchange translation differences

(24)

(240)

Cash used in financing activities

(2,302)

(81)

610

2,404

CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD

3,350

2,111

CASH AND CASH EQUIVALENTS AT END OF PERIOD

3,960

4,515

Change in net cash and cash equivalents

38

Stock

2,199

16,193

(10,383)

10,383

6,977 639

9,951

6,242

6,977

4,425

471

1,728

Shareholders’ equity at 6/30/07

50,000

432

207

Net result for the period

Share-based payment

Appropriation of previous year’s profit

4,425

50,000

Shareholders’ equity at 12/31/06

(2,561)

2,561

period

for the

Net result

5,177 6,242

2,433

3,809

(Accum-lated deficit)

earnings

Retained

5,177

1,414

314

1,100

reserve

option

50,000

207

128

79

reserve

Statutory

Shareholders’ equity at 6/30/06

4,425

4,425

capital

paid-in

50,000

Additional

Share capital

Net result for the period

Share-based payment

Appropriation of previous year’s profit

Shareholders’ equity at 12/31/05

(in thousands of euros)

STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY

80,433

6,977

471

-

72,985

67,465

5,177

314

-

61,974

equity

Share-holders’

Half Year Report

39

2007

Half Year Report

6. Annex: transition to the international accounting principles (IFRSs) by DiaSorin S.p.A., the Group’s parent company European Regulation (EC) No. 1606/2002 of July 19, 2002 introduced the requirement, starting with the 2005 reporting year, to adopt the International Financial Reporting Standards (“IFRSs”), as published by the International Accounting Standards Board (“IASB”) and officially approved by the European Commission, for the preparation of consolidated financial statements by companies with equity and/or debt securities that are traded on a regulated market within the European Union. On February 20, 2005, as required by the abovementioned European Regulation, the Italian government published Legislative Decree No. 38 by which it incorporated into the Italian legal system the obligation to adopt the IFRSs and extended this obligation to the preparation of the statutory financial statements (separate financial statements) starting with the 2006 reporting year.

On July 19, 2007, the shares of DiaSorin S.p.A. were accepted for trading on the STAR market. As a result, the Company will prepare its separate financial statements at December 31, 2007 in accordance with International Financial Reporting Standards (IFRSs) published by the International Accounting Standards Board.

Consequently, the date of transition to the IFRSs, as defined in IFRS 1, is January 1, 2006.

As required by CONSOB Communication No. 6064313 of July 28, 2006, the Company has prepared this document, which provides a reconciliation, at the transition date of January 1, 2006, of the shareholders’ equity computed in accordance with Italian accounting principles to the shareholders’ equity computed in accordance with the IFRSs, as well as a reconciliation of the year-end net profit and shareholders’ equity computed in accordance with Italian accounting principles to the net profit and shareholders’ equity computed in accordance with the IFRSs for 2006. In addition, as required by IFRS 1 “First-time Adoption of International Financial Reporting Standards,” it provides a description of material restatements involving the balance sheet and income statements, followed by the accompanying notes.

The information provided in this Annex, which was prepared within the context of the transition to the IFRSs and for the purpose of preparing the statutory financial statements of DiaSorin S.p.A. at December 31, 2007 in accordance with the IFRSs adopted by the European Union, does not include all of the schedules, comparative data and accompanying notes that would have been necessary to provide a complete description of the balance sheet, financial position and operating performance of the Group’s Parent Company at December 31, 2006 in accordance with the IFRSs.

IFRS 1 First-time Adoption of International Financial Reporting Standards As required by IFRS 1, DiaSorin S.p.A. applied retrospectively to all of the periods reflected in its first IFRS financial statements and opening balance sheet at January 1, 2006 the accounting principles in effect on the reference date of its first IFRS financial statements, except for all optional exemptions chosen by the Company in accordance with IFRS 1, as described below. Specifically, DiaSorin S.p.A., having chosen to adopt the IFRSs for its statutory financial statements at a later date than for its consolidated financial statements (which used a January 1, 2005 opening balance sheet), in measuring its assets and liabilities in accordance with the IFRSs used the same values in both sets of financial statements (statutory and consolidated), except for the items included in the consolidation adjustments.

The 2006 financial statements presented in this Annex will provide the data published for comparison purposes in the statutory financial statements at December 31, 2007. Some of these data could be subject to change, should it become necessary to modify them if an international accounting principle is revised or amended in 2007. New versions or interpretations of the IFRSs could be issued before the publication of the statutory financial statements of DiaSorin S.p.A. at December 31, 2007, possibly with retroactive effect. Such an occurrence could have an impact on the 2006 balance sheet and income statement restated in accordance with the IFRSs that are presented in this Annex.

IFRS 1 sets forth the transition procedures that must be followed when the IFRSs are adopted for the first time. An entity's first IFRS financial statements are the first annual financial statements in which the entity adopts the IFRSs with an explicit and unreserved statement in those financial statements of compliance with IFRSs.

41

2007

The opening balance sheet at January 1, 2006 differs from the financial statements at December 31, 2005 prepared in accordance with Italian accounting principles in the treatment of the following items: •

All assets and liabilities the recognition of which is required by the IFRSs, including those for which recognition is not required under Italian accounting principles, have been recognized and measured in accordance with IFRS rules; All assets and liabilities the recognition of which is required by Italian accounting principles but not by the IFRSs have been eliminated; Some financial statement items have been reclassified in accordance with IFRS rules.

• •

As shown in the Company’s statement of changes in shareholders’ equity, the impact of these restatements, net of the corresponding tax effect, was recognized directly in the opening shareholders’ equity on the date of IFRS first-time adoption (January 1, 2006) by means of a special reserve called IFRS transition reserve.

The Company applied retrospectively to all of the periods reflected in its first IFRS financial statements and opening balance sheet the accounting principles in effect at June 30, 2007, except for all mandatory exemptions (“exceptions”) and certain optional exemptions allowed by IFRS 1 and applicable to the Company.

The table that follows provides an overview of the choices made by the Group’s Parent Company with regard to optional exemptions:

Standard

Principle

Exemption

Decision

Accounting treatment

IFRS n. 3 Business Combinations

Restate all business combinations (i.e., acquisitions of subsidiaries, affiliates and joint ventures) executed before the date of the opening balance sheet.

(Retrospective adoption)

An entity that adopts the IFRSs for the first time may elect not to restate business combinations retrospectively.

Exemption adopted

The value allocated to goodwill under Italian accounting principles was retained. However, the value was adjusted downward due to the recognition of development costs that were not reflected on the balance sheet under Italian accounting principles. In addition, goodwill was tested for impairment.

IAS n. 19 Employee Benefits and Actuarial Gains and Losses

Restate all defined-benefit plans in accordance with IAS 19 from plan inception to the transition date.

(Retrospective adoption)

An entity may elect to recognize in its opening balance sheet all cumulative actuarial gains and losses attributable to defined-benefit plans.

Exemption adopted

All cumulative actuarial gains and losses accrued at the transition date were recognized in equity, without prejudice to the option of using the “corridor approach” for later actuarial gains and losses.

IAS n. 16 –n. 38 – n. 40 Property, Plant and Equipment; Intangible Assets; Investment Property

Recognize property, plant and equipment, intangible assets and investment property at cost, less accumulated depreciation, amortization and impairment losses.

There is an option to use fair value on the transition date as deemed cost.

Exemption not adopted

The historical costs, less accumulated depreciation or amortization, were used as carrying amounts on the transition date.

The main choices made by the Company with regard to presentation options, permissible accounting alternatives and new requirements instituted by the IFRSs are discussed below, together with the main differences from the corresponding Italian accounting principles.

42

Half Year Report

IAS n. 1 Presentation of financial statements The presentation format adopted for the Balance Sheet calls for the separate classification of current and non-current assets and liabilities, as allowed by Paragraphs 51 and following of IAS 1.

In the income statement, the items were classified based on the destination of the costs incurred by the Group.

As a result, the data in the IFRS income statement for 2006 cannot be immediately reconciled to those in the income statement prepared in accordance with Italian accounting principles.

The cash flow statement was prepared in accordance with the indirect method (IAS 7).

IAS n. 2 Inventories The adoption of IAS 2 requires that inventories of raw materials, semifinished goods and finished goods be valued by either the FIFO or weighted average cost formula. The Company adopted the FIFO method, abandoning the LIFO method used in the financial statements prepared in accordance with Italian accounting principles.

IAS n. 12 Income taxes The tax effects applicable to the restatements required by the adoption of the IFRSs were recognized.

IAS n. 16 Property, Plant and Equipment; IAS 38 Intangible Assets; IAS 40 Investment Property The Company did the following: • It separated buildings from appurtenant land and restated retrospectively the corresponding accumulated depreciation (IAS n. 16); • It recognized as an asset development costs that met capitalization requirements partly as a reclassification of goodwill (IAS 38) and partly by posting an offsetting entry to shareholders’ equity; • It stopped the amortization of goodwill, which was recognized net of the abovementioned reclassification and is now tested annually for impairment (IFRS 3).

IAS n. 19 Employee benefits The Company elected to use the corridor approach for the defined-benefit plans that allow it.

IAS n. 17 Leases In accordance with IAS 17, the Company recognizes assets acquired under finance leases as assets at their fair value on the date the lease is executed. The corresponding liability toward the lessor is reflected on the balance sheet as a liability under a finance lease. The assets are depreciated by methods and at rates that are consistent with their useful lives.

Lease payments are broken down between principal and interest and borrowing costs are charged directly to income.

43

2007

IAS n. 18 Revenues – dividends Dividends are recognized when shareholders accrue the right to receive payment, which generally occurs when the Shareholders’ Meeting approves a motion to distribute dividends.

IAS n. 20 Accounting for government grants The adoption of IAS 20 requires that government capital grants be recognized in the balance sheet by showing the grant as deferred income or as an item adjusting the carrying value of the corresponding asset.

The Company recognized as deferred income a government capital grant attributable to development costs incurred in previous years that met the requirements of IAS 38 and were capitalized.

IAS n. 32 Financial instruments: presentation and disclosures; ias 39 financial instruments: recognition and measurement The Company adopted the amortized cost method to value financial liabilities. The effective interest rate was determined including transaction costs, which previously were charged to income.

IAS n. 36 Impairment of assets As required by IAS 36, the Company tested the recoverable values of its property, plant equipment, goodwill and equity investments. Specifically, the equity investments recognized in the balance sheet were tested for impairment by comparing the recoverable value (equity value) of the investee company with the carrying value of the corresponding equity investment. Recoverable value was determined based on the best estimate that management could develop of future operating cash flows and business conditions. These estimates were developed taking into account the most recent budgets and industrial plans approved by management and using growth rates that do not exceed the average long-term growth rate for manufacturing in the industries and the countries in which the investee companies operate.

The tests carried out with this method produced no indication that writedowns were required.

IAS n. 38 Intangible assets Development costs may be capitalized if, and only if, they can be measured reliably, the asset that is being developed is clearly identifiable and there is evidence that incurring such costs will produce future economic benefits. Specifically, the process of assessing compliance with capitalization requirements included determining whether it was technically feasible and the Company intended to complete the asset so as to make it available for use or sale, whether sufficient technical and financial resources were available to complete the asset’s development and sell it, and whether the value assigned to the costs allocated to the asset during development was reliable. If all of these requirements were met, development costs are recognized as an asset and amortized on a straight line, starting on the date when commercial production of the relevant products begins. In the first year, their amortization is prorated based on the period of effective use. The useful life of development costs is estimated at 10 years, consistent with the average life of the Company’s products.

Research and development costs that do not meet the requirements listed above are charged directly to income and may not be capitalized in subsequent years.

44

Half Year Report

IFRS 2 Share-based payment Among other issues, IFRS 2 requires that the cost of employee stock option plans be recognized in the income statement as a labor cost, with the offsetting entry posted to a shareholders’ equity reserve. The total cost of a stock option plan, which must be allocated over the vesting period, is determined by measuring option grants at fair value.

Cash flow statement The presentation format required for a cash flow statement prepared in accordance with IAS 17 is the same as the format used under Italian accounting principles, because the Company already used the indirect method, classifying cash flows by operating activities, investing activities and financing activities. As a result, the presentation in accordance with the IFRSs did not produce any significant differences.

Main restatements and effects resulting from the transition from italian accounting principles to the IFRSs The table below lists the main differences between Italian accounting principles and the IFRSs that had an impact on the financial statements of DiaSorin S.p.A. All amounts are in thousands of euros and are shown before the impact of the applicable tax consequences, which is listed separately.

IAS /IFRSs Note Italian accounting principles

SE at

2006

SE changes

SE at

1/1/06

impact

in 2006

12/31/06

58,558

8,637

1)

Inventory valuation

IAS 2

694

(447)

-

67,195 247

2)

Land and buildings

IAS 16

308

36

-

344

3)

Depreciation of assets

IAS 16

-

100

-

100

4)

Costs incurred to recondition medical equipment

IAS 16

161

(2)

-

159

5)

Assets held under finance leases

IAS 17

(7)

(16)

-

(23)

6)

Dividends

IAS 18

(899)

(1,009)

-

(1,908)

7)

Defined-benefit plans

IAS 19

(482)

(31)

-

(513)

8)

Government capital grants

IAS 20

-

(135)

-

(135)

9)

Supplemental severance benefits owed to sales agents

IAS 37

213

42

-

255

10)

Development costs

IAS 38

1,686

2,096

-

3,782

11)

Goodwill

IAS 38 / IFRS 1

2,372

2,372

-

4,744

12)

Amortized cost of borrowings

IAS 39

694

144

-

838

13)

Stock option

IFRS 2

-

(628)

628

-

4,740

2,522

628

7,890

Tax effect

(1,324)

(776)

-

(2,100)

IFRS shareholders’ equity

61,974

10,383

628

72,985

TOTAL

45

2007

Notes to the Main IFRS Restatements Applied to Components of Shareholders’ Equity at January 1, 2006 and December 31, 2006 and to the 2006 Income Statement 1) Inventory valuation The adoption of the FIFO method caused the carrying amount of inventories to increase by 694,000 euros, with a positive impact on the opening shareholders’ equity amounting to 435,000 euros, net of a tax effect of 259,000 euros.

In the 2006 income statement, the valuation by the FIFO method had a negative impact of 280,000 euros, net of a tax effect of 167,000 euros.

2) Land and buildings Under IFRS rules, land may not be depreciated. Consequently, the Group separated the historical costs of land from that of buildings and determined the amount of accumulated depreciation attributable to land at January 1, 2006. This amount was derecognized, causing the carrying amount of land at January 1, 2006 to increase by 308,000 euros, with a positive impact on the opening shareholders’ equity of 193,000 euros, net of a tax effect of 115,000 euros. The impact on the 2006 income statement was positive by 23,000 euros, net of a tax effect of 13,000 euros.

3) Depreciation of assets The IFRSs require that the depreciation of an asset begin when the asset is ready for use, in accordance with management expectations. In the financial statements prepared in accordance with Italian accounting principles, assets were depreciated at rates based on their estimated useful lives. In the first year of use, assets were depreciated at half the regular rate to account for a shorter length of use. The recomputation carried out in accordance with IFRS requirements had a positive impact in the 2006 income statement amounting to 63,000 euros, net of a tax effect of 37,000 euros.

4) Costs incurred to recondition medical equipment The costs incurred to recondition medical equipment that meet the requirements of IAS 16 are capitalized as a component of the corresponding equipment. As required by the IFRSs, the depreciation period was recomputed prospectively based on the estimated useful life of the reconditioned equipment. The impact on the opening shareholders’ equity was positive by 101,000 euros, net of a tax effect of 60,000 euros. The impact on the 2006 income statement was negative by 1,200 euros, net of a tax effect of 1,000 euros.

5) Assets held under finance leases The impact on the opening shareholders’ equity was negative by 5,000 euros, net of a tax effect of 2,000 euros.

The impact on the 2006 income statement was negative by 11,000 euros, net of a tax effect of 5,000 euros.

46

Half Year Report

6) Dividends Under international accounting principles, dividends declared after the date of the financial statements cannot be recognized as an asset. In the opening balance sheet at January 1, 2006, the shareholders’ equity was reduced by 899,000 euros, due to the process of recognizing in accordance with the requirements of the IFRSs dividends accrued in 2005 but declared by the German subsidiary in 2006.

Consistent with this approach, the result for 2006 decreased by 1,009,000 euros as the net result of the recognition of dividends declared by the German subsidiary in 2006 (899,000 euros) and the derecognition of dividends accrued in 2006 but declared in 2007 (1,908,000 euros).

7) Defined-benefit plans The method used to measure and recognize certain benefits in accordance with IAS 19 is different from the one used previously by the Group. Specifically, the valuation of severance benefits and seniority bonuses, carried out on an actuarial basis with the support of an international company specialized in this area produced an increase in liabilities of 482,000 euros at January 1, 2006 and a negative impact on the opening shareholders’ equity at January 1, 2006 amounting to 323,000 euros, net of a tax effect of 159,000 euros.

8) Government capital grants This entry refers to a government capital grant received for previously capitalized development costs.

The impact on the 2006 income statement was negative by 85,000 euros, net of a tax effect of 50,000 euros.

9) Provisions for supplemental severance benefits owed to sales agents The valuation of this provision in accordance with the requirements of IAS 37 was carried out by estimating the present value of the amounts that will be paid upon the termination of agency relationships. The valuation of this liability by means of actuarial methods produced a decrease of 213,000 euros in the provision’s balance with a positive impact of 134,000 euros (net of a tax effect of 79,000 euros) on the shareholders’ equity at January 1, 2006.

The impact on the 2006 income statement was positive by 26,000 euros, net of a tax effect of 16,000 euros.

10) Development costs IAS 38 requires that development costs that meet certain requirements be recognized as an intangible asset. Under the previous accounting principles, research and development costs were charged in full to income when incurred.

The capitalization of development projects in accordance with IFRS rules caused capitalized development costs to increase by 3,657,000 euros at January 1, 2006. Because this amount includes 1,971,000 euros for projects currently being developed by DiaSorin Italia that were not recognized as intangible assets at the time of acquisition, the abovementioned amount was recognized by reducing the value of goodwill at December 31, 2003 (which is the date when the goodwill was generated through an extraordinary acquisition transaction). Development costs incurred in 2004 and 2005 were capitalized, with a positive impact of 1,058,000 euros on shareholders’ equity at January 1, 2006, net of a tax effect of 628,000 euros. The impact on the 2006 income statement was positive by 1,315,000 euros, net of a tax effect of 781,000 euros and amortization of 371,000 euros.

47

2007

11) Goodwill Under IFRS rules, goodwill may not be amortized. Instead, it must be tested for impairment at least once a year.

Under the old accounting principles, goodwill was amortized over 15 years.

This accounting principle difference had a positive impact on the opening balance sheet that amounted to 2,257,000 euros, net of a tax effect of 115,000 euros. The tax effect reflects the derecognition of the amortization of the tax deductible portion of goodwill.

The impact on the 2006 income statement was positive by 2,257,000 euros, net of a tax effect of 115,000 euros.

The impairment test of goodwill carried out in accordance with the requirements of IAS 36 produced no indication that a writedown was required. Specifically, goodwill is deemed to be recoverable, based on forecasts of the earnings and cash flows that are expected in future years, as shown in the multi-year plans prepared by management and approved by the Board of Directors as of the date of the impairment test.

12) Amortized cost of borrowings Under IFRS rules, borrowings are initially recognized at fair value, which is equal to the proceeds collected, less incidental costs. Subsequently, they are valued by the amortized cost method based on the applicable effective yield rate.

Under the old principles, borrowings were recognized at their residual face value and incidental costs were charged directly to income. The computation of the amortized cost had the effect of reducing borrowings by 694,000 euros and increasing shareholders’ equity at January 1, 2006 by 465,000 euros, net of a tax effect of 229,000 euros. In addition, the use of amortized costs increased 2006 earnings by 96,000 euros, net of a tax effect of 48,000 euros.

13) Stock option Among other issues, IFRS 2 requires that the cost of employee stock option plans be recognized in the income statement as a labor cost, with the offsetting entry posted to a shareholders’ equity reserve. The total cost of a stock option plan, which must be allocated over the vesting period, is determined by measuring option grants at fair value.

The recognition of the existing stock option plan had a negative impact of 628,000 euros on the 2006 net profit but had no effect on shareholders’ equity at January 1, 2006.

Consolidated IFRS balance sheets at January 1, 2006 and December 31, 2006, for the year ended December 31, 2006 The balance sheets at January 1, 2006 and December 31, 2006 are being provided below to supplement the information contained in the reconciliation schedules of shareholders’ equity at January 1, 2006 and December 31, 2006 and the 2006 net profit. The following data are being provided for each item in the abovementioned balance sheets: • amounts in accordance with Italian accounting principles, reclassified in accordance with the IFRS presentation format; • restatements required by the adoption of the IFRSs; • amounts restated in accordance with the IFRSs.

48

Half Year Report

MAIN RESTATEMENTS AND EFFECTS OF THE TRANSITION FROM ITALIAN ACCOUNTING PRINCIPLES TO THE IFRSs The schedules that follow provide a reconciliation of amounts under Italian accounting principles to amounts under the IFRSs and show the impact on the financial statements of first-time adoption of the IFRSs.

BALANCE SHEET

1/1/06

1/1/06

1/1/06

Note Italian accounting

IFRS

IFRS

principles

restatements

(1)

12,680

1,220

(2)

26,455

1,135

27,590

(3)

7,011

3,657

10,668

51,956

-

51,956

5,526

(2,058)

3,468

103,628

3,954

107,582

16,938

694

17,632

22,718

-

22,718

14,025

(899)

13,126

3,378

-

3,378

2,279

-

2,279

2,111

-

2,111

(in thousands of euros) ASSETS

Non-current assets Property, plant and equipment Goodwill Other intangible assets Equity investments Deferred-tax assets Total non-current assets Current assets Inventories Trade accounts receivable Accounts receivable from Group companies Loans receivable from Group companies Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS

(4)

(5) (6)

13,900

61,449

(205)

61,244

165,077

3,749

168,826

49

2007

BALANCE SHEET

(in thousands of euros) LIABILITIES AND SHAREHOLDERS’ EQUITY Shareholders’ equity Share capital Additional paid-in capital Statutory reserve Other reserves Retained earnings (Accumulated deficit) Net profit for the year Total shareholders’ equity Non-current liabilities Non-current financial liabilities Provision for employee severance indemnities and other employee benefits Deferred-tax liabilities Other non-current liabilities Total non-current liabilities Current liabilities Trade accounts payable Accounts payable to Group companies Loans payable to Group companies Other current liabilities Taxes payable Current portion of non-current indebtedness Total current liabilities TOTAL LIABILITIES TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

50

1/1/06

1/1/06

1/1/06

Note Italian accounting

IFRS

IFRS

principles

restatements

50,000

-

50,000

4,425

-

4,425

79

-

79

-

1,100

1,100

(7) (8)

1,493

2,316

3,809

2,561

-

2,561

58,558

3,416

61,974

(9)

38,499

(13)

38,486

(10)

6,176

482

6,658

-

-

-

(11)

(9)

1,607

(213)

1,394

46,282

256

46,538

16,695

-

16,695

3,521

-

3,521

16,345

-

16,345

5,018

-

5,018

5,654

-

5,654

13,004

77

13,081

60,237

77

60,314

106,519

333

106,852

165,077

3,749

168,826

Half Year Report

1. Property, plant and equipment The restatements applied to this item had a positive effect of 1,220,000 euros, as the net result of the following items: • An increase of 308,000 euros, due to the derecognition of a portion of the accumulated depreciation of land and buildings at January 1, 2006 that had been recognized in accordance with Italian accounting principles; • An increase of 161,000 euros due to the prospective recomputation of the depreciation of reconditioned medical equipment consistent with the equipment’s estimated useful life, as required by the international accounting principles; • The recognition on the asset side of the balance sheet of assets held/acquired under finance leases valued at 751,000 euros, offset by a corresponding increase in loans payable, as required by IAS 17.

2. Goodwill The restatements applied to goodwill, which, on balance, were positive by 1,135,000 euros, included the following: • A positive restatement of 2,372,000 euros, due to the elimination of the amortization of goodwill booked in accordance with Italian accounting principles but not allowed under the IFRSs. • A negative restatement of 1,971,000 euros, due to a reclassification from “Goodwill” to “Other intangible assets” carried out to recognize the net carrying amount of development costs attributable to DiaSorin Italia at December 31, 2003 (date when the goodwill was generated by an extraordinary acquisition transaction). Under the old accounting principles, these costs, which meet the IFRS requirements for capitalization, were charged to income when incurred.

• A positive restatement of 734,000 euros to recognize the tax effect of the development costs.

3. Other intangible assets The restatement applied to this item, which was positive by 3,657,000 euros, is due to the recognition of capitalizable development costs, which included 1,971,000 euros for the net carrying amount at December 31, 2003 (as discussed in Item 2 above), 422,000 euros for the net carrying amount of the 2004 development costs and 1,264,000 euros for the net carrying amount of the 2005 development costs.

4. Deferred-tax assets The purpose of this restatement is to recognize the tax effect of the restatements made to carry out the transition from financial statements prepared in accordance with Italian accounting principles to financial statements prepared in accordance with the IFRSs.

5. Rimanenze La rettifica relativa alla voce in oggetto, il cui saldo netto è positivo e pari ad Euro 694 migliaia, è relativa al passaggio dal metodo LIFO al metodo FIFO per la valorizzazione delle rimanenze di materie prime, semilavorati e prodotti finiti.

6. Crediti verso società del gruppo La voce in oggetto subisce una rettifica negativa per Euro 899 migliaia per la corretta contabilizzazione ai fini IFRS dei dividendi maturati nell’anno 2005, ma deliberati dalla controllata tedesca nell’anno 2006.

7. Inventories This restatement, which, on balance, is positive by 694,000 euros, was required by the change from the LIFO to the FIFO method to value inventories of raw materials, finished goods and semifinished goods.

51

2007

8. Retained earnings (accumulated deficit) The positive restatement of 2,316,000 euros is due to the recognition of an “IFRS transition reserve,” which represents the offset of restatements made upon transition to the international accounting principles (January 1, 2006) discussed in these notes.

9. Non-current financial liabilities The restatement of 64,000 euros reflects the following: • The recognition of a liability amounting to 758,000 euros (177,000 euros short term and 581,000 euros long term) for derivatives held in connection with finance leases and accounted for in accordance with IAS 17; • The recognition of non-current borrowing costs, which are deducted from non-current liabilities, and the valuation of indebtedness by the amortized cost method, as required by IAS 39, in the amount of 694,000 euros (including 100,000 euros short term).

10. Provision for employee severance indemnities and other employee benefits The provision for employee severance indemnities and other employee benefits were recomputed in accordance with the actuarial method required by the IFRSs. The use of this method caused the liability recognized in the financial statements to increase by 482,000 euros.

11. Other non-current liabilities The estimate of the present value of the provision for supplemental severance benefits owed to sales agents carried

by DiaSorin Italia had a positive impact, reducing the liability by 213,000 euros.

52

Half Year Report

RECONCILIATION OF THE CONSOLIDATED BALANCE SHEET AT DECEMBER 31, 2006 BALANCE SHEET

(in thousands of euros) ASSETS Non-current assets Property, plant and equipment Goodwill Other intangible assets Equity investments Deferred-tax assets Total non-current assets Current assets Inventories Trade accounts receivable Accounts receivable from Group companies Loans receivable from Group companies Other current assets Cash and cash equivalents Total current assets TOTAL ASSETS

12/31/06

12/31/06

12/31/06

Note Italian accounting

IFRS

IFRS

principles

restatements

(1)

10,619

2,832

(2)

24,083

3,507

27,590

(3)

6,943

5,819

12,762

52,052

-

52,052

(4)

(5) (6)

13,451

5,357

(2,834)

2,523

99,054

9,324

108,378

19,756

247

20,003

22,321

-

22,321

8,916

(1,908)

7,008

5,402

-

5,402

1,067

-

1,067

3,350

-

3,350

60,812

(1,661)

59,151

159,866

7,663

167,529

53

2007

BALANCE SHEET

12/31/06 Note

(in thousands of euros) LIABILITIES AND SHAREHOLDERS’ EQUITY Shareholders’ equity Share capital Additional paid-in capital Statutory reserve Other reserves Retained earnings (Accumulated deficit) Net profit for the year Total shareholders’ equity Non-current liabilities Non-current financial liabilities Provision for employee severance indemnities and other employee benefits Deferred-tax liabilities Other non-current liabilities Total non-current liabilities Current liabilities Trade accounts payable Accounts payable to Group companies Loans payable to Group companies Other current liabilities Taxes payable Current portion of non-current indebtedness Total current liabilities TOTAL LIABILITIES TOTAL LIABILITIES AND SHAREHOLDERS’ EQUITY

(7) (8)

12/31/06

12/31/06

Italian accounting

IFRS

IFRS

principles

restatements

50,000

-

50,000

4,425

-

4,425

207

-

207

-

1,728

1,728

3,926

2,316

6,242

8,637

1,746

10,383

67,195

5,790

72,985

(9)

30,443

909

31,352

(10)

6,335

513

6,848

-

-

-

(11)

(12) (9)

1,970

(255)

1,715

38,748

1,167

39,915

18,828

-

18,828

4,140

-

4,140

15,722

-

15,722

5,772

135

5,907

3,645

-

3,645

5,816

571

6,387

53,923

706

54,629

92,671

1,873

94,544

159,866

7,663

167,529

The restatement of the Balance Sheet at December 31, 2006 was carried out with the same presentation approach and was based on the same accounting principles as the opening balance sheet.

1. Property, plant and equipment The restatements applied to this item, which had a net positive effect of 2,832,000 euros, include the following: • An increase of 344,000 euros due to the elimination of accumulated depreciation of land and building at December 31, 2006 that had been recognized in accordance with Italian principles; • The recognition of 34,000 euros stemming from the recomputation of depreciation at December 31, 2006 in accordance with the IFRSs, according to which the depreciation of assets must begin when the assets are ready for use; • An increase of 159,000 euros generated by recomputing prospectively the depreciation of reconditioned medical equipment based on the equipment’s estimated useful life, as required by the IFRSs; • Inclusion of assets held/acquired under finance leases among the balance sheet assets for a net amount of 2,295,000 euros, offset by a corresponding increase in financial liabilities, in accordance with the requirements of IAS 17

54

Half Year Report

2. Goodwill A breakdown of the restatements applied to goodwill, which produced a net positive balance of 3,507,000 euros, is as follows: • A positive change of 4,744,000 euros for the elimination of the amortization of goodwill recognized in the financial statements prepared in accordance with Italian accounting principles but not allowed by the IFRSs. • A negative change of 1,971,000 euros, due to a reclassification from “Goodwill” to “Other intangible assets” carried out to recognize the net carrying amount of development costs attributable to DiaSorin Italia at December 31, 2003 (date when the goodwill was generated by an extraordinary acquisition transaction). Under the old accounting principles, these costs, which meet the IFRS requirements for recognition, were charged to income when incurred.

• A positive change of 734,000 euros to recognize the tax effect of the development costs.

3. . Other intangible assets The restatements applied to this item, which, on balance, were positive by 5,819,000 euros, included the following: • Recognition of capitalizable development costs of 5,753,000 euros, which included 1,971,000 euros for the net carrying amount at December 31, 2003 (as discussed in Item 2 above), 422,000 euros for the net carrying amount of the 2004 development costs, 1,264,000 for the net carrying amount of the 2005 development costs and 2,096,000 euros for 2006.

• A positive restatement of 66,000 euros resulting from a recomputation of the amortization of intangibles in accordance with IFRS requirements, according to which amortization must begin when an asset is ready for use.

4. Deferred-tax assets The purpose of this restatement is to recognize the tax effect of the restatements made to carry out the transition from financial statements prepared in accordance with Italian accounting principles to financial statements prepared in a ccordance with the IFRSs.

5. Inventories This restatement, which, on balance, is positive by 247,000 euros, was required by the change from the LIFO to the FIFO method to value inventories of raw materials, finished goods and semifinished goods.

6. Accounts receivable from group companies The negative restatement of 1,908,000 euros applied to this item is due to the accounting in accordance with the IFRSs of dividends accrued in 2006 but declared in 2007 by a German subsidiary.

7. Other reserves The positive restatement of 1,728,000 euros is due to the recognition of the stock option reserve.

8. Retained earnings (accumulated deficit) The positive restatement of 2,316,000 euros is due to the recognition of an “IFRS transition reserve,” which represents the offset of restatements made upon transition to the international accounting principles (January 1, 2006) discussed in these notes.

55

2007

9. Borrowings The restatement, which increased liabilities by 1,480,000 euros (including 909,000 euros applicable to the long-term portion and 571,000 euros applicable to the current portion) reflects the following: • Valuation of indebtedness by the amortized cost method, as required by IAS 39. The impact at December 31, 2006 was a reduction of the amount at which borrowings were carried by 838,000 euros (103,000 euros short term).

The impact at January 1, 2006 was a reduction of 694,000 euros. A further reduction of 144,000 euros was recognized in 2006, causing the net result to improve by 96,000 euros, net of a tax effect of 48,000 euros.

• Recognition of indebtedness amounting to 2,318,000 euros (674,000 euros short term and 1,644,000 euros long term) for instruments held in connection with finance leases, as required by IAS 17.

10. Provision for employee severance indemnities and other employee benefits The provision for employee severance indemnities and other employee benefits were recomputed in accordance with the actuarial method required by the IFRSs. The use of this method had the following effect: • The liability recognized in the financial statements at January 1, 2006 increased by 482,000 euros; • A further increase of 31,000 euros in the liability during 2006. The resulting negative impact on the 2006 income statement was 21,000 euros, net of a tax effect of 10,000 euros

11. Other non-current liabilities The estimate of the present value of the provision for supplemental severance benefits owed to sales agents had a positive impact, reducing the liability by 255,000 euros.

The following entries were made: • The provision for supplemental severance benefits owed to sales agents was decreased by 213,000 euros at January 1, 2006; • In 2006, the same provision was decreased by a further 42,000 euros, with a positive impact on the income statement amounting to 26,000 euros, net of a tax effect of 16,000 euros.

12. Other current liabilities The restatement of 135,000 euros refers to the recognition as deferred income of a government capital grant attributable to capitalized development costs.

The negative impact on the income statement was 85,000 euros, net of a tax effect of 50,000 euros.

56

Half Year Report

RECONCILIATION OF THE INCOME STATEMENT AT DECEMBER 31, 2006 In the income statement, costs are broken down by destination. This income statement format, also known as a “cost of sales” income statement, is more representative of the Group’s business than a presentation with expenses broken down by type.

As a result, the data in the IFRS income statement for 2006 cannot be immediately reconciled to those in the income statement prepared in accordance with Italian accounting principles.

The income statement items that were affected by the restatements carried out upon transition to the international accounting principles, with costs classified by type, are reviewed below:

Change in Inventories The valuation of inventories by the FIFO method had a negative impact on the 2006 income statement because it increased the cost of sales by 447,000 euros.

Additions to Company-produced Non-current Assets The restatement applied to this item reflects the recognition of capitalizable development costs totaling 2,467,000 euros.

Labor Costs The changes that affected labor costs as a result of the adoption of the international accounting principles included the following: • A decrease of 229,000 euros caused by the discounting to the present value the provision for employee severance indemnities and other employee benefits, as required by IAS 19; • Recognition of general and administrative expenses totaling 628,000 euros due to the recognition of the stock option plan.

Depreciation and Amortization The restatements involving depreciation and amortization included the following: • Derecognition of depreciation of land and buildings totaling 36,000 euros, which had been recognized in accordance with Italian accounting principles but is not permissible under the international accounting principles; • Elimination of amortization of goodwill totaling 2,372,000 euros; • Derecognition of depreciation of property, plant and equipment and intangibles amounting to 100,000 euros, due to the obligation to recognize it in proportion to the time the assets in question were available for use; • Decrease of 2,000 euros in the depreciation of reconditioned medical equipment as a result of recomputing it prospectively, based on the equipment’s estimated useful life; • Recognition of amortization of development costs in the amount of 371,000 euros.

Sundry Operating Expenses and Income This restatement is the net result of the following entries: • Recognition of income totaling 49,000 euros generated by the process of discounting to its present value the provision for supplemental severance benefits owed to sales agents. In the income statement by destination, this amount is deducted from sales and marketing expenses • Derecognition of 135,000 euros in income in connection with recording as deferred income the government capital grants received for capitalized development costs.

57

2007

Financial Income (Expense) The restatements applied to this item included the following: • Recognition of financial income amounting to 144,000 euros due to the valuation of borrowings by the amortized cost method; • Recognition of financial expense amounting to 260,000 euros for interest charges generated by the process of discounting to the present value the provision for employee severance indemnities and other pension benefits; • Recognition of financial expense amounting to 7,000 euros for interest charges generated by the process of discounting to the present value the provision for supplemental severance benefits owed to sales agents.

• Recognition of financial expense amounting to 1,009,000 euros due to the accounting for dividends in accordance with international accounting principles, broken down as follows: recognition of dividends declared by the German subsidiary in 2006 (899,000 euros) and derecognition of dividends accrued in 2006 but declared in 2007 (1,908,000 euros).

Income taxes The amount of the restatement reflects the tax effect of the accounting entries required to carry out the transition from financial statements prepared in accordance with Italian accounting principles to financial statements prepared in accordance with the IFRSs.

____________ Carlo Rosa Chief Executive Officer

58

Half Year Report

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., 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,

ATTEST that the Semiannual Report at June 30, 2007: a) is consistent with the data in the supporting documents and accounting records; b) was prepared in accordance with the provisions of Consob Regulation No. 11971 of May 14, 1999 as amended, and the legislation enacted to implement Article 9 of Legislative Decree No. 38/2005 and is suitable for the purpose of providing a truthful and fair representation of the balance sheet, operating performance and financial position of the issuer and of the companies included in the scope of consolidation.

Saluggia, September 28, 2007

____________ Andrea Senaldi Accounting Documents Officer DiaSorin S.p.A.

59

2007

The Diagnostic Via Crescentino - 13040 Saluggia (VC)

Specialist