iagnostic Speci
Third quarter
2007
The Diagnostic
Specialist
2007
DIASORIN GROUP QUARTERLY REPORT AT SEPTEMBER 30, 2007
DiaSorin S.p.A. Via Crescentino - 13040 Saluggia (VC) - Tax I.D. and Vercelli Company Register N. 13144290155
Third quarter
Contents Governative bodies Consolidated financial highlights
p. 5 p. 6
1.
Report on operations 1.1. Review of the Group’s operating performance and financial position 1.1.1. The foreign exchange market 1.1.2. Operating performance in the Third Quarter of 2007 1.1.3. Analysis of consolidated cash flow 1.1.4. Analysis of consolidated net borrowings 1.1.5. Operating performance in the first nine months of 2007
p. p. p. p. p. p. p.
2.
Transactions with related parties
p. 17
3.
Significant events occurring after september 30, 2007
p. 19
4.
Consolidated financial statements at september 30, 2007 Consolidated income statement Consolidated balance sheet Consolidated statement of cash flow Consolidated statement of changes in shareholders’ equity
p. p. p. p. p.
21 21 22 24 25
p. p. p. p. p. p.
26 26 28 29 29 31
Notes to the consolidated financial statements - Accounting principles and scope of consolidation - Segment information - Description and main changes - Income statement - Balance sheet
7 7 7 7 12 13 14
3
2007
Third quarter
GOVERNATIVE BODIES
Board of directors
(ELECTED ON MARCH 26, 2007)
Chairman Executive Deputy Chairman
Gustavo Denegri Antonio Boniolo
Chief Executive Officer
Carlo Rosa1
Director
Giuseppe Alessandria2 Chen Menachem Even Enrico Mario Amo Ezio Garibaldi2 Michele Denegri Franco Moscetti2
Board of statutory auditors Chairman
Luigi Martino
Statutory auditors
Bruno Marchina Vittorio Moro
Alternates
Alessandro Aimo Boot Maria Carla Bottini
Independent Auditors
Deloitte & Touche S.p.A.
General Manager Independent Director
1 2
5
2007
CONSOLIDATED FINANCIAL HIGHLIGHTS Third quarter as a % of revenues 2006
as a % of revenues
2007
First nine months as a % of revenues 2006
as a % of revenues
(in thousands of Euros) Net revenues
49,003
100.0%
43,514
100.0%
151,163
100.0%
136,656
100.0%
EBITDA
13,452
27.5%
15,480
35.6%
45,093
29.8%
44,014
32.2%
Operating result (EBIT)
10,034
20.5%
11,996
27.6%
34,653
22.9%
33,470
24.5%
5,318
10.9%
6,760
15.5%
19,054
12.6%
18,979
13.9%
15,307
31.2%
13,548
31.1%
49,086
32.5%
42,082
30.8%
11,889
24.3%
10,064
23.1%
38,646
25.6%
31,538
23.1%
6,482
13.2%
5,548
12.7%
21,560
14.3%
17,767
13.0%
Net result Adjusted EBITDA
2007
EBIT before nonrecurring income/expense Net result before nonrecurring income/expense
(in thousands of Euros) Total assets Net borrowings Shareholders’ equity
6
At September 30, 2007
At December 31, 2006
219,961
194,081
15,884
34,730
112,509
87,737
Third quarter
1. Report on operations 1.1. Review of the Group’s operating performance and financial position Pursuant to Article 3 of Legislative Decree No. 38 of February 28, 2005, which governs the selection of the alternatives provided in Article 5 of EC Regulation No. 1606/2002 of the European Parliament and Council dated July 19, 2002 concerning the adoption of the International Financial Reporting Standards, the Company voluntarily elected to adopt the International Financial Reporting Standards (hereinafter also referred to as “IFRS”), as published by the International Accounting Standards Board (“IASB”) and officially approved by the European Union, for the preparation of its consolidated financial statements, starting with the year ended December 31, 2006. This quarterly report was prepared in accordance with the provisions of IAS 34 – Interim Financial Reporting. The data at September 30, 2006 have been restated in accordance with International Financial Reporting Standards (IFRS). With regard to the composition of gross profit, some of the items that were included in last year’s computation have been reclassified in accordance with the presentation criteria adopted this year, which reflect a more accurate allocation of such items, consistent with sound management criteria. Lastly, this quarterly report was not audited.
1.1.1. The foreign exchange market The average exchange rates for the third quarter of 2007 show that the euro appreciated significantly versus the currencies that have an impact on the Group’s operations. The table below provides a comparison between the exchange rates for the third quarter of 2007 and the same period last year (source: Italian Foreign Exchange Office): Currency U.S. dollar (USD) Brazilian real (BRL) British pound (GBP) Swedish kronor (SEK) Mexican peso (MXN) Israeli shekel (ILS)
Third quarter 2007
Third quarter 2006
First nine months 2007
First nine months 2006
1.3745
1.2741
1.3443
1.2442
2.6338
2.7655
2.68979
2.7173
0.6803
0.6799
0.6765
0.6847
9.2636
9.2311
9.2368
9.2942
15.0673
13.952
14.7247
13.5756
5.7525
5.5914
5.5986
5.6238
1.1.2. Operating performance in the Third Quarter of 2007 In the third quarter of 2007, the progress made by the Diasorin Group in implementing its program of geographic and technological expansion enabled it to report a further acceleration in its rate of revenue growth. Specifically, third quarter revenues totaled 49.0 million Euros in 2007, for a gain of 12.6% over the same period last year. The increase over the revenues reported in the third quarter of 2006 would have been even greater, had it not been for the appreciation of the Euro versus the other currencies used by the Diasorin Group, particularly the U.S. dollar. Restated on a comparable foreign exchange translation basis (third quarter of 2006), revenues show an increase of 14.7%. In terms of technology, growth was driven mainly by higher sales of CLIA technology products, which were up 27% in the third quarter of 2007. This improvement reflects a steady expansion of the installed base of LIAISON systems, with about 90 new systems installed during the quarter and about 1,960 units in place at September 30, 2007. As of the same date, sales of CLIA technology reagents accounted for 51.1% of total revenues. All profitability indicators show a further improvement compared with the third quarter of 2006, particularly when the data are restated to eliminate the impact of extraordinary items, which had opposite effects in 2006 and 2007.
7
2007
In the third quarter of 2007, EBIT and EBITDA totaled 10.0 million Euros and 13.5 million Euros, respectively. If they are restated to eliminate the impact of extraordinary items (in 2006, extraordinary income recognized in connection with the receipt of a government grant for research projects covered by Law No. 346/1998, in 2007, extraordinary charges incurred by the Group’s Parent Company to list its shares on the STAR Segment of the online stock market in Milan), consolidated EBIT amount to 11.9 million Euros, or 18.1% more than the previous year, and EBITDA amount to 15.3 million Euros, for a gain of 13% compared with 2006. In addition, due to the listing of the Company’s shares on the online stock market, the options granted under the 2004-2008 Stock Option Plan became exercisable. As a result of Group employees exercising their stock options, the remaining cost of the abovementioned option plan (600,000 Euros) was recognized in the income statement for the third quarter. Lastly, the net result reported by the Diasorin Group, as reduced by the abovementioned nonrecurring items, totaled 5.3 million Euros, compared with 6.8 million Euros in the third quarter of 2006. Restated to eliminate the impact of extraordinary items, the net result for the third quarter of 2007 amounts to 6.5 million Euros, up from 5.5 million Euros in the same period last year. The table below shows the consolidated income statement for the quarters ended September 30, 2006 and 2007.
CONSOLIDATED INCOME STATEMENT(*)
(in thousands of Euros) Net revenues Cost of sales Gross profit Sales and marketing expenses
Third quarter 2007
Third quarter 2006
49,003
43,514
(18,623)
(16,749)
30,380
26,765
62.0%
61.5%
(10,269)
(9,273)
Research and development costs
(2,736)
(2,164)
General and administrative expenses
(6,166)
(5,151) -38.1% 1,819 1,932 11,996 27.6% (854) 11,142 (4,382) 6,760 15,480
Other operating income (expenses)
out of which nonrecurring Operating result (EBIT) Net financial expense Result before taxes Income taxes Net result EBITDA(1)
-39.1% (1,175) (1,855) 10,034 20.5% (750) 9,284 (3,966) 5,318 13,452
(*)
Unaudited data
(1)
The Board of Directors defines EBITDA as the “result from operations” before amortization of intangibles and depreciation of property, plant
and equipment.
8
Third quarter
1.1.2.1. Breakdown of revenues by geographic region The table below provides a breakdown of the consolidated revenues of the Diasorin Group by geographic region of destination: Third quarter
(in thousands of Euros) Italy Rest of Europe North America (United States and Canada) Rest of the world Total
2007
2006
10,356
9,765
% change 6.1%
18,352
15,957
15.0%
11,645
9,865
18.0%
8,650
7,927
9.1%
49,003
43,514
12.6%
Italy In the third quarter of 2007, the revenues generated in Italy totaled 10,356,000 Euros, or 6.1% more than in the same period a year ago, accounting for 21.1% of the Group’s total revenues.
Rest of Europe In the three months ended September 30, 2007, business volume in other European countries showed a similar acceleration of the growth rate with revenues rising from 15,957,000 Euros in 2006 to 18,352,000 Euros in 2007 (+15.0%). As a result of the growth described above, the rest of Europe (excluding the Italian market) raised to 37.5% its contribution to the consolidated revenues of the Diasorin Group.
North America In the third quarter of 2007, the sales in North America continued to grow at a significantly faster rate than the average for the whole Group, even though the gains achieved during the period under review are not fully reflected in the consolidated revenues due to the change in foreign exchange rates discussed earlier in this Report. Stated at current exchange rates, the revenues booked in North America in the third quarter show an increase of 18.0%, rising from 9,865,000 Euros in 2006 to 11,645,000 Euros in 2007. However, when the data for the third quarter of 2007 are compared with those in the same period in 2006 using amounts stated in local currencies, unaffected by fluctuations in foreign exchange rates, revenues show increases of 27.7%. 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 third quarter of 2007, North American sales accounted for 23.8% of the Diasorin Group’s total revenues.
9
2007
Rest of the World Outside Europe and North America, the Group’s revenues increased by 9.1% compared with the third quarter of 2006, despite lower sales in Brazil, where the local subsidiary, after a period of sustained growth, is going through a consolidation process in preparation for a new phase of expansion. In the other regions, where the Group operates through independent distributors, revenues were up 10% compared with 2006. Particularly strong results were reported in the Chinese market, where the Group has operated since 2006 through a joint venture with a local partner. Revenues booked in this market in the third quarter of 2007 totaled 855,000 Euros, or 30% more than in the same period last year.
1.1.2.1.1. Breakdown of revenues by technology Concurrently with its geographic expansion, the Group increased the revenues generated by the LIAISON closed platform. The table below, which is provided merely for information purposes, shows the percentage of consolidated revenues contributed by each technology in the third quarter of 2006 and 2007.
% of total revenues RIA ELISA CLIA Equipment and other revenues Total
Third quarter 2007
Third quarter 2006
11.5
13.1
26.3
33.4
51.1
45.3
11.1
8.2
100.0
100.0
In the third quarter of 2007, revenues generated by LIAISON products were up 27% compared with the same period a year ago. Sales of products based on CLIA technology accounted for 51.1% of total revenues in the third quarter of 2007 (5.8 percentage points more than in 2006). At September 30, 2007, about 1,960 automated LIAISON analyzers had been installed at facilities operated by direct and indirect customers of the Group. Seven new LIAISON products have been launched since the beginning of 2007. Six of these products were specialty items that helped differentiate the LIAISON product line even further compared with the products offered by the Group’s competitors.
10
Third quarter
1.1.2.2. Operating result (EBIT) In the third quarter of 2007, the Group’s gross profit was higher than in the same period last year, but the rate of growth was lower than in the previous two quarters. The increase in the contribution provided to total revenues by LIAISON products, which have higher margins than those based on the RIA and ELISA technologies, continues to drive this improvement in profitability, which also benefited from a decrease in the percentage of revenues absorbed by the depreciation of systems installed at customer facilities. These positive developments were offset in part by an increase in the percentage of revenues generated by sales of systems to distributors, which generate smaller margins than sales of reagents, and a lower coverage of fixed production costs caused by the seasonal patterns that affect the manufacturing operations. The net result of these factors was a gross profit that, at 30.4 million Euros (equal to 62.0% of total revenues), was 13.5% higher than in the third quarter of 2006. In the three months ended September 30, 2007, operating expenses increased to 19.2 million Euros (equal to 39.1% of revenues), or 15.6% more than in the same period last year. A contributing factor was the vesting of the options held by the beneficiaries of the 2004-2008 Stock Option Plan, which was consequently closed. The resulting impact on the income statement amounted to 0.6 million Euros, or 0.4 million Euros more than in the same period last year. Research and development costs incurred in the first quarter of 2007 amounted to 2.7 million Euros, for an increase of 26.4% compared with the same period in 2006. In the third quarter of 2007, the consolidated operating result (EBIT) totaled 10 million Euros, equal to 20.5% of revenues. EBITDA for the same period were 13.5 million Euros, or 27.5% of revenues. As mentioned earlier in this Report, nonrecurring items continued to have an impact on these gauges of the Group’s profitability: in the third quarter of 2007, the Group’s Parent Company incurred extraordinary charges of 1,855,000 Euros to list its shares on the STAR Segment of the online stock market in Milan; in the same period last year, the Group recognized extraordinary income of 1,932,000 Euros in connection with the receipt of a government grant for research projects covered by Law No. 346/1998. If the data for the third quarter are restated to eliminate the impact of these items, consolidated EBIT amount to 11.9 million Euros, or 18.1% more than the previous year, and EBITDA total 15.3 million Euros, for a gain of 13% compared with 2006.
1.1.2.3. Financial transactions Stated in absolute terms, the impact of financial transactions on the Group’s reported result was smaller than in the third quarter of 2006. In the three months ended September 30, 2007, net financial expense totaled 750,000 Euros, down from 854,000 Euros in the same period last year.
1.1.2.4. Result before taxes and net result In the third quarter of 2007, the Group’s result before taxes amounted to 9,284,000 Euros (tax liability of 3,966,000 Euros), down from 11,142,000 Euros (tax liability of 4,382,000 Euros) in the three months ended September 30, 2006. The consolidated net result for the third quarter of 2007 amounted to 5,318,000 Euros, compared with 6,760,000 Euros in the same period in 2006. If the data are restated to eliminate the impact of nonrecurring items (net of the applicable tax effect), the net result for the third quarter amounts to 6,482,000 Euros in 2007 and 5,548,000 Euros in 2006.
11
2007
1.1.3. Analysis of consolidated cash flow The table below shows the highlights of the consolidated cash flow statement and the changes that occurred compared with the previous year. Third quarter
(in thousands of Euros) CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD Net cash from operating activities Cash used for investing activities Cash from (used for) financing activities Net change in cash and cash equivalents CASH AND CASH EQUIVALENTS AT END OF PERIOD (*)
(*)
First nine months
2007
2006
2007
2006
9,574
2,716
8,718
6,116
11,442
15,953
23,759
26,763
(3,150)
(3,420)
(11,207)
(12,233)
4,617 12,909 22,483
1,204 13,737 16,453
1,213 13,765 22,483
(4,193) 10,337 16,453
Unaudited data.
In the third quarter of 2007, cash flow from operating activities totaled 11,442,000 Euros, down from 15,953,000 Euros in the same period in 2006, owing in part to the opposing effect of nonrecurring charges in 2007 and nonrecurring income in 2006. In the first nine months of 2007, cash flow from operating activities amounted to 23,759,000 Euros, compared with 26,763,000 Euros in the same period a year ago. In the third quarter of 2007, cash used in investing activities totaled 3,150,000 Euros, down from 3,420,000 Euros in the same period in 2006. Specifically, investments in property, plant and equipment and intangible assets increased slightly in the third quarter of 2007, while retirements of property, plant and equipment were significantly higher than in the same period last year. In the first nine months of 2007, the cash used for investing activities decreased to 11,207,000 Euros, compared with 12,233,000 Euros in the same period last year. The reduction in capital expenditures reflects primarily a rise in the percentage of LIAISON systems that are sold to independent distributors compared with the systems that are loaned to customers free of charge and are capitalized by the Group, which contributed to the increase of the installed base during the reporting period. While investments in property, plant and equipment were lower, those in intangible assets increased, due mainly to the capitalization of the costs incurred to develop the new LIAISON XL analyzer. Cash from financing activities increased to 4,617,000 Euros in the third quarter of 2007, up from 1,204,000 Euros in the three months ended September 30, 2006, reflecting the impact of the share capital increase reserved for the exercise of stock options and a reduced use of finance leases to purchase equipment. Due to these developments, financing activities generated a net cash flow of 1,213,000 Euros in the first nine months of 2007 and absorbed 4,193,000 Euros in the same period in 2006. As the net result of the changes discussed above, the third quarter of 2007 ended with an increase of 12,909,000 Euros in the liquid assets available to the Group, which totaled 22,483,000 Euros at September 30, 2007.
12
Third quarter
1.1.4. Analysis of consolidated net borrowings At September 30, 2007
At December 31, 2006
Cash and cash equivalents
(22,483)
(8,718)
Liquid assets
(22,483)
(8,718)
-
(28)
Current financial receivables Current bank debt
6,921
7,224
Other current financial obligations
2,040
2,696
Current indebtedness
8,961
9,920
(13,522)
1,174
26,287
29,715
Net current indebtedness Non-current bank debt Other non-current financial obligations
3,119
3,841
Non-current indebtedness
29,406
33,556
Net borrowings
15,884
34,730
13
2007
1.1.5. Operating performance in the first nine months of 2007 CONSOLIDATED INCOME STATEMENT(*)
(in thousands of Euros)
First nine months 2007
2006
Net revenues
151,163
136,656
Cost of sales
(54,856)
(53,625)
Gross profit
96,307
83,031
63.7% (31,769) (8,144) (17,691) -38.1% (4,050)
Sales and marketing expenses Research and development costs General and administrative expenses Other operating income (expenses)
out of which nonrecurring Operating result (EBIT)
(4,508) 34,653 22.9%
Net financial expense
(2,864)
Result before taxes
31,789
Income taxes
(12,735)
Net result
19,054
EBITDA(1)
45,093
60.8% (29,401) (6,691) (14,596)
-37.1% 1,127 1,932 33,470 24.5% (2,807) 30,663 (11,684) 18,979 44,014
(*)
Unaudited data.
(1)
The Board of Directors defines EBITDA as the “result from operations� before amortization of intangibles and depreciation of property, plant and equipment.
The Diasorin Group performed particularly well during the first nine months of 2007. Revenues were up significantly compared with the same period last year, despite the dampening effect of the appreciation of the Euro versus other currencies, particularly the U.S. dollar. Specifically, consolidated revenues totaled 151.2 million Euros in the first nine months of 2007, or 10.6% more than the 136.7 million Euros booked in the same period last year. When the data are restated on a comparable exchange rate basis, the revenues increase is 12.8%.
14
Third quarter
All profitability indicators improved compared with the first nine months of 2006, particularly when the impact of extraordinary items, which had opposite effects in 2006 and 2007, is eliminated. The gross profit earned in the third quarter of 2007 was higher than in the same period last year but decreased by 2.5 percentage points when compared with the first six months of the current year. As mentioned earlier in this report, this negative change is due to an increase in the percentage of revenues generated by sales of systems to distributors and a lower coverage of fixed production costs caused by the seasonal patterns that affect the manufacturing operations. The cumulative gross profit for the first nine months of 2009 totaled 96.3 million Euros, or 16.0% more than in the same period last year. Consolidated EBIT and EBITDA totaled 34.7 million Euros and 45.1 million Euros, respectively, in the first nine months of 2007. If the data for the first nine months of the year are restated to eliminate the impact of these items, consolidated EBIT amount to 38.6 million Euros, or 22.5% more than the previous year, and EBITDA total 49.1 million Euros, for a gain of 16.6% compared with 2006. In the first nine months of 2007, extraordinary items included charges of 4.5 million Euros incurred to list the Company’s shares and a gain of 0.5 million Euros generated by the impact of legislative changes on the Parent Company’s provision for employee severance indemnities. Lastly, the Group reported a net result of 19.1 million Euros (21.6 million Euros, restated to eliminate the impact of nonrecurring items, net of the applicable tax effect), compared with 19 million Euros at September 30, 2006 (17.8 million Euros, restated to eliminate the impact of nonrecurring items, net of the applicable tax effect).
15
2007
Third quarter
2. 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. Transactions with Diasorin LTD, an unconsolidated Chinese subsidiary, at September 30, 2007 are summarized below: • payables of 58,000 Euros; • receivables of 21,000 Euros; • costs totaling 494,000 Euros for sales and technical support services provided to local distributors. The Group provides additional benefits to a certain number of eligible employees of Diasorin S.p.A. and other Group companies through a stock option plan. Due to the listing of the Company’s shares on the online stock market, the options granted under the 2004-2008 Stock Option Plan became exercisable. The costs recognized in the income statement for the first nine months of 2007 in connection with this stock option plan amounted to 1,200,000 Euros. At September 30, 2007, the share capital increase reserved for the exercise of stock options had been fully subscribed. Moreover, within the context of the 2007-2012 Stock Option Plan approved by the Ordinary Shareholders’ Meeting of March 26, 2007, the Board of Directors designated a first batch of beneficiaries that includes key executives and employees of Diasorin S.p.A. and its subsidiaries, awarding a total of 745,000 options (out of a maximum 1,000,000 available options). These options can be exercised to purchase an equal number of newly issued Diasorin S.p.A. common shares, par value 1.00 euro each. The exercise price of the options was set at 12.193 Euros, which is equal to the simple average of the closing prices for the shares of Diasorin S.p.A. on the online stock market for the period between the date of award of the options and the same day in the previous calendar month (fair value). 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.
17
2007
Third quarter
3. Significant events occurring after september 30, 2007 and business outlook Subsequent to the end of the third quarter of 2007, the Diasorin Group continued to generate positive operating results. No other significant events occurred after September 30, 2007.
Saluggia (VC), November 12, 2007
The Board of Directors By: Carlo Rosa Chief Executive Officer
19
2007
Third quarter
4. Consolidated financial statements of the Diasorin Group at september 30, 2007 INCOME STATEMENT(*) (in thousands of Euros)
Notes
Third Quarter 2007
First nine months 2006
2007
2006
Net revenues
(1)
49,003
43,514
151,163
136,656
Cost of sales
(2)
(18,623)
(16,749)
(54,856)
(53,625)
30,380
26,765
96,307
83,031
62.0% (10,269) (2,736) (6,166) -39.1% (1,175) (1,855) 10,034 20.5% (750) 9,284 (3,966) 5,318 0.10 0.10
61.5% (9,273) (2,164) (5,151) -38.1% 1,819 1,932 11,996 27.6% (854) 11,142 (4,382) 6,760 0.14 0.14
63.7% (31,769) (8,144) (17,691) -38.1% (4,050) (4,508) 34,653 22.9% (2,864) 31,789 (12,735) 19,054 0.35 0.35
60.8% (29,401) (6,691) (14,596) -37.1% 1,127 1,932 33,470 24.5% (2,807) 30,663 (11,684) 18,979 0.38 0.38
Gross Profit Sales and marketing expenses
(3)
Research and development costs
(4)
General and administrative expenses
(5)
Other operating income (expenses)
(6)
out of which nonrecurring Operating result (EBIT) Net financial income (expense)
(7)
Result before taxes Income taxes
(8)
Net Result Earnings per share (basic) (in Euros)
(9)
Earnings per share (diluted) (in Euros)
(9)
(*)
Unaudited data.
21
2007
BALANCE SHEET(*) (in thousands of Euros) 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 (*)
Unaudited data.
22
Notes
(10) (11)
9/30/07
12/31/06
34,370
35,502
48,055
48,055
16,397
14,750
123
123
8,791
8,357
392
245
108,128
107,032
(12)
34,027
30,891
(13)
51,010
44,671
21 4,292
2,769
22,483
8,718
111,833
87,049
219,961
194,081
Third quarter
BALANCE SHEET(*) (continue) (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 result for the year 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 (*)
Notes
(14)
9/30/07
12/31/06
55,000
50,000
5,925
4,425
639
207
2,072
2,854
29,819
7,957
19,054
22,294
112,509
87,737
(15)
29,406
33,556
(16)
19,011
19,154
641
672
(17)
2,024
3,047
51,082
56,429
24,260
22,854
58
(15)
14,123
12,508
8,968
4,633
8,961
9,920
56,370
49,915
107,452
106,344
219,961
194,081
Unaudited data.
23
2007
CASH FLOW STATEMENT(*) (in thousands of Euros)
Third quarter
First nine months
2007
2006
2007
2006
5,318
6,760
19,054
18,979
- Income taxes
3,966
4,382
12,735
11,684
- Depreciation and amortization
3,418
3,484
10,440
10,544 2,807
Cash flow from operating activities Net result for the period Adjustments for:
- Financial expense - Additions to/Utilizations of provisions and reserves - (Gains)/Losses on sales of non-current assets
750
854
2,864
(290)
117
(214)
561
(36)
(7)
(111)
(14)
367
(162)
-
(77) (515)
677
600
200
1.200
600
- Contributions to/Utilizations of provisions for employee severance indemnities and other employee benefits
out of which nonrecurring - 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 (Increase) Decrease in current receivables (Increase) Decrease in inventories Increase (Decrease) in trade payables (Increase) Decrease in other current items Cash from operating activities Income taxes paid Interest paid Net cash from operating activities Investments in intangibles Investments in property, plant and equipment Proceeds from the sale of non-current assets Cash used in investing activities Repayment of loans Repayment of other financial obligations Proceeds from new borrowings Share capital increase Foreign exchange translation differences Cash used in financing activities Change in net cash and cash equivalents CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD CASH AND CASH EQUIVALENTS AT END OF PERIOD (*)
Unaudited data.
24
-
(284)
19
(459)
(141)
(1,390)
(1,230)
(1,368)
(721)
12,419
14,417
44,064
44,976
2,382
3,820
(6,577)
(5,587)
(520)
(1,635)
(3,673)
(3,128)
(3,192)
(505)
1,499
2,558
1,387
1,533
(185)
914
12,476
17,630
35,128
39,733 (10,833)
(271)
(1,503)
(8,844)
(763)
(174)
(2,525)
(2,137)
11,442
15,953
23,759
26,763
(652)
(726)
(3,060)
(2,401)
(3,051)
(2,944)
(9,155)
(10,304)
553
250
1,008
472
(3,150)
(3,420)
(11,207)
(12,233)
(223)
(270)
(3,248)
(5,640)
(900)
(711)
(2,920)
(1,919)
53
2,059
1,559
4,228
6,500
-
6,500
-
(813)
126
(678)
(862)
4,617
1,204
1,213
(4,193)
12,909
13,737
13,765
10,337
9,574
2,716
8,718
6,116
22,483
16,453
22,483
16,453
Third quarter
STATEMENT OF CHANGES IN SHAREHOLDERS’ EQUITY (in thousands of Euros)
Share capital
Additional paid-in capital
Shareholders’ equity at 12/31/05
50,000
4,425
Appropriation of previous year’s profit
Statutory reserve
Cumulative translation reserve
Stock option reserve
Retained earnings (Accumulated deficit)
79
3,175
1,402
128
Stock options
Net result for the year
Group interest in share-holders’ equity
(2,270)
10,355
67,166
10,227
(10,355)
600
Translation adjustment
(1,491)
(1,491)
Net result for the period Shareholders’ equity at 9/30/06(*)
50,000
4,425
207
1,684
2,002
Shareholders’ equity at 12/31/06
50,000
4,425
207
652
2,202
Appropriation of previous year’s profit Share capital increase
432 5000
18,979
18,979
18,979
85,254
7,957
22,294
87,737
21,862
(22,294)
7,957
1,500 1,200
Translation adjustment
1,200
(1,982)
(1,982)
Net result for the period
(*)
55,000
5,925
6,500
Stock options
Shareholders’ equity at 9/30/07(*)
600
639
(1,330)
3,402
29.819
19,054
19,054
19,054
112,509
Unaudited data.
25
2007
NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT SEPTEMBER 30, 2007 ACCOUNTING PRINCIPLES AND SCOPE OF CONSOLIDATION General information
The Diasorin Group is specialized in the development, manufacture and distribution of products in the immunochemistry and infectious immunology product groups. These product classes can also be grouped into a single family called immunodiagnostics. Diasorin S.p.A., the Group’s Parent Company, has its headquarters at Via Crescentino, in Saluggia (VC) 13040. Principles for the preparation of the quarterly report Pursuant to Article 3 of Legislative Decree No. 38 of February 28, 2005, which governs the selection of options available under Article 5 of EC Regulation No. 1606/2002, issued by the European Parliament and Council on July 19, 2002 in connection with the adoption of the International Financial Reporting Standards, the Company has chosen to adopt voluntarily the International Financial Reporting Standards (hereinafter also referred to as the “IFRS”), as issued by the International Accounting Standards Board (“IASB”) and adopted by the European Union, for the preparation of its consolidated financial statements beginning with the year ended December 31, 2006. Consequently, the consolidated quarterly report of the Diasorin Group at September 30, 2007 was prepared in accordance with the requirements of the relevant international accounting standard (IAS 34 – Interim Financial Reporting). In order to provide a comparison between homogeneous data, the amounts at September 30, 2006 have been restated in accordance with IFRS rules. These notes provide information in summary form, in order to avoid duplicating information published previously, as required by IAS 34. Specifically, these notes discuss only those components of the income statement and balance sheet the composition or change in amount of which require comment (due to the amount involved or the type of transaction or because an unusual transaction is involved) in order to understand the Group’s operating performance, financial performance and financial position. The accounting principles applied to prepare the consolidated quarterly report are consistent with those used for the annual consolidated financial statements at December 31, 2006, since it has been determined that the revisions and interpretations published by the IASB and 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. 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. Some of the data in the balance sheet at December 31, 2006, which is included in this report for comparison purposes, have been reclassified to make them consistent with the data at September 30, 2007. These reclassifications did not have an impact on the shareholders’ equity and the 2006 result. With regard to the composition of gross profit, some of the items that were included in last year’s computation have been reclassified in accordance with the presentation criteria adopted this year, which reflect a more accurate allocation of such items, consistent with sound management criteria.
26
Third quarter
The Group engages in activities that, taken as a whole, are not subject to significant seasonal or cyclical shifts in revenue generation during the year. The income tax liability is recognized using the best estimate of the weighted average tax rate projected for the entire year. In the consolidated quarterly report, all amounts are in thousands of Euros unless otherwise stated. This quarterly report was not audited. Scope of consolidation
The consolidated quarterly report includes the financial statements of Diasorin S.p.A., the Group’s Parent Company, 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.
Other information
Information about significant events occurring after September 30, 2007, the Group’s business outlook and its transactions with related parties is provided in separate sections of this Report. The table below shows the exchange rates used to translate amounts reported by companies that operate outside the euro zone: First nine months of 2007
At December 31, 2006
First nine months of 2006
Average
At 9/30
At 9/30
Average
At 9/30
U.S. dollar
1.3443
1.4179
1.317
1.2442
1.266
British pound
0.6765
0.6968
0.6715
0.6847
0.6777
Brazilian real
2.6898
2.6148
2.8133
2.7173
2.7429
Swedish kronor
9.2368
9.2147
9.0404
9.2942
9.2797
Mexican peso
14.7247
15.4879
14.2937
13.5756
13.94
Israeli shekel
5.5986
5.6948
5.5501
5.6238
5.449
27
2007
28
ITALY
-
-
-
-
-
Other income (expense), net
Financial income (expense)
Result before taxes
Income taxes
Net result
Total amortization and depreciation
59.181
-
Shareholders’ equity
Total liabilities and shareholders’ equity 53.163
-
59.181
111.306
-
111.306
-
53.163
103.369
-
103.369
9/30/07
(4,819)
(3,856)
(963)
-
-
-
-
-
-
-
15,540
87,630
34,566
53,064
9/30/07
Unallocated liabilities
Segment liabilities
Total assets
Unallocated assets
Segment assets
BALANCE SHEET
12/31/06
ITALY
(4,054)
(4,898)
Depreciation
(in thousands of euros)
(844)
Amortization
OTHER INFORMATION
-
EBIT
Segment result
-
16,870
Total revenues
Unallocated common costs
32,920
81,834
Inter-segment revenues
48,914
9/30/06
Revenues from outsiders
INCOME STATEMENT
(in thousands of euros)
SEGMENT INFORMATION
(3,309)
(3,173)
24.695
-
-
24.695
49.625
-
49.625
12/31/06
(136)
-
-
-
-
-
-
-
6,200
54,257
6,678
47,579
28.038
-
-
28.038
56.250
-
56.250
9/30/07
EUROPE
(3,366)
(3,242)
(124)
-
-
-
-
-
-
-
5,090
49,892
6,589
43,303
9/30/07
EUROPE 9/30/06
(1,306)
(1,148)
(158)
3.961
-
-
3.961
48.256
-
48.256
12/31/06
-
-
-
-
-
-
-
13,379
44,182
6,264
37,918
4.800
-
-
4.800
53.000
-
53.000
9/30/07
UNITED STATES
(1,282)
(1,134)
(148)
-
-
-
-
-
-
-
10,967
40,898
6,211
34,687
9/30/07
UNITED STATES 9/30/06
(1,828)
(1,758)
(70)
-
-
-
-
-
-
-
951
14,019
-
14,019
9/30/07
8.248
-
-
8.248
14.856
-
14.856
12/31/06
8.109
-
-
8.109
15.475
-
15.475
9/30/07
REST OF THE WORLD
(1,534)
(1,476)
(58)
-
-
-
-
-
-
-
2.044
12.821
-
12.821
9/30/06
REST OF THE WORLD
822
(32.294)
-
-
(32.294)
(39.949)
-
(39.949)
12/31/06
822
-
-
-
-
-
-
-
-
(1,417)
(48,925)
(47,508)
(1,417)
(40.652)
-
-
(40.652)
(47.466)
-
(47.466)
9/30/07
ELIMINATIONS
536
536
-
-
-
-
-
-
-
-
(1,501)
(48,789)
(45,720)
(3,069)
9/30/07
ELIMINATIONS 9/30/06
(10,440)
(9,113)
(1,327)
19,054
(12,735)
31,789
(2,864)
194.081
87.737
48.571
57.773
194.081
17.924
176.157
12/31/06
-
34,653
-
34,653
151,163
-
151,163
219.961
112.509
47.976
59.476
219.961
31.396
188.565
9/30/07
CONSOLIDATED
(10,544)
(9,370)
(1,174)
18,979
(11,684)
30,663
(2,807)
-
33,470
-
33,470
136,656
-
136,656
9/30/07
CONSOLIDATED 9/30/06
Third quarter
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. (1) Net revenues In the third quarter of 2007, net revenues, which are generated mainly through the sale of diagnostic kits, totaled 49,003,000 Euros, or 12.6% more than in the same period last year, boosting revenues for the first nine months of 2007 to 151,163,000 Euros (136,656,000 Euros at September 30, 2006). Revenues for the third quarter of 2007 include equipment rentals and technical support revenues totaling 1,111,000 Euros, compared with 596,000 Euros in the same period last year. (2) Cost of sales In the third quarter of 2007, the cost of sales amounted to 18,623,000 Euros, compared with 16,749,000 Euros in the three months ended September 30, 2006. The cost of sales for the first nine months of 2007 amounted to 54,856,000 Euros (53,625,000 Euros in 2006). The cost of sales for the third quarter of 2007 includes 1,070,000 Euros paid for royalties (958,000 Euros in 2006) and 900,000 Euros in costs incurred to distribute products to end customers (822,000 Euros in 2006). (3) Sales and marketing expenses Sales and marketing expenses increased to 10,269,000 Euros in the third quarter of 2007, up from 9,273,000 Euros in the same period last year, bringing the total for the first nine months of the year to 31,769,000 Euros (29,401,000 Euros in 2006). 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 In the third quarter of 2007, research and development costs, which totaled 2,736,000 Euros (2,164,000 Euros in the same period in 2006), included all of the research and development outlays (including the costs incurred to register the products offered for sale and meet quality requirements) that were not capitalized. This item also includes the amortization of capitalized development costs (136,000 Euros, compared with 115,000 Euros in the third quarter of 2006). During the third quarter of 2007, the Group capitalized new development costs amounting to 559,000 Euros, compared with 653,000 Euros in the same period last year. (5) General and administrative expenses General and administrative expenses, which totaled 6,166,000 Euros in the third quarter of 2007 (5,151,000 Euros in 2006) and 17,691,000 Euros in the first nine months of 2007 (14,596,000 Euros in 2006), include expenses incurred for corporate management activities, Group administration, finance and control, information technology, corporate organization, and insurance. Due to the listing of the Company’s shares on the online stock market, all of the options granted under the 2004-2008 Stock Option Plan were exercised. As a result, general and administrative expenses include the entire remaining cost of the plan (600,000 Euros).
29
2007
(6) Other operating income (expenses) Net other operating expense totaled 1,175,000 Euros, compared with net other operating income of 1,819,000 Euros in the third quarter of 2006. This item includes operating income and expenses that cannot be allocated to specific functional areas, as well as the pro rata portion of the costs incurred in connection with an ongoing effort to list the Company’s shares on the online stock market attributable to the third quarter of 2007, which amounted to 1,855,000 Euros (4,508,000 Euros in the first nine months of the year). (7) Net financial income (expense) The table below provides a breakdown of financial income and expense: (in thousands of Euros) Interest and other financial expense Interest and other financial income Net translation adjustment Net financial income (expense)
Third quarter 2007 Third quarter 2006 First nine months 2007 First nine months 2006 (1,336)
(1,078)
(4,028)
(3,633)
174
127
357
317
412
97
807
509
(750)
(854)
(2,864)
(2,807)
In the third quarter of 2007, net financial expense totaled 750,000 Euros, compared with net financial expense of 854,000 Euros in the same period last year. Interest and other financial expense includes 516,000 Euros in interest on loans (755,000 Euros in the third quarter of 2006), 474,000 Euros in fees on factoring transactions (361,000 Euros in the third quarter of 2006) and 203,000 Euros in finance charges related to employee benefit plans (188,000 Euros in the third quarter of 2006). (8) Income taxes The income tax expense recognized in the consolidated income statement for the third quarter of 2007 amounted to 3,966,000 Euros, compared with 4,382,000 Euros in the same period last year, as the tax rate increased from 39.3% to 42.7%. The income taxes recognized in the income statement for the first nine months of 2007 amounted to 12,735,000 Euros (11,684,000 Euros in 2006). (9) Earnings per share Basic and diluted earnings per share, which were computed by dividing the net result attributable to shareholders by the average number of shares outstanding, amounted to 0.10 Euros in the third quarter of 2007, compared with 0.14 Euros in the same period last year. The corresponding figures for the first nine months of the year are 0.35 Euros in 2007 and 0.38 Euros in 2006.
30
Third quarter
Consolidated balance sheet (10) Property, plant and equipment The table below shows the changes that occurred in this account as of September 30, 2007: Net carrying
(in thousands of Euros) value at 12/31/06 Land and buildings 9,755 Plant and machinery 6,948 Equipment held by outsiders 18,799 Total prop., plant and equipment 35,502
Additions Depreciation
Translation
Retirements and
Net carrying value at 9/30/07
adjustment
other changes
416
(527)
(131)
(4)
9,509
2,489
(1,671)
(172)
(240)
7,354
6,250
(6,916)
27
(653)
17,507
9,155
(9,114)
(276)
(897)
34,370
(11) Intangible assets A breakdown of intangible assets at September 30, 2007 is as follows: Translation Net carrying
(in thousands of Euros) Goodwill Development costs Other intangibles Total intangible assets
value at 12/31/06
Additions
Amortization
adjustment and
Net carrying
other changes
value at 9/30/07
48,055
-
-
-
48,055
6,517
2,030
(386)
(23)
8,138
8,233
1,030
(940)
(64)
8,259
62,805
3,060
(1,326)
(87)
64,452
Additions to development costs reflect the investments made in the project for the new analyzer, Liaison XL, which amounted to 566,000 Euros in the third quarter of 2007 and 1,658,000 Euros in the first nine months of the year. The increase in other intangibles refers primarily to the costs incurred to expand the SAP R/3 information system used by the Group and to purchase licenses. Intangible assets with an intangible useful life were not tested for impairment, as no indicators of potential impairment were detected.
31
2007
(12) Inventories A breakdown of inventories at September 30, 2007 and a comparison with the data at December 31, 2006 is as follows: at 9/30/07
(in thousands of Euros)
Gross amount
Provisions for
at 12/31/06 Net amount
Gross amount
writedowns Raw materials and supplies Work in progress
Provisions for
Net amount
writedowns
9,958
(1,204)
8,754
8,290
(1,162)
7,128
15,406
(1,416)
13,990
13,262
(1,375)
11,887
Finished goods
12,336
(1,053)
11,283
12,846
(970)
11,876
Total inventories
37,700
(3,673)
34,027
34,398
(3,507)
30,891
(13) Trade receivables Trade receivables totaled 51,010,000 Euros at September 30, 2007. As of the same date, the allowance for doubtful accounts amounted to 5,902,000 Euros. The table below shows the changes that occurred in the allowance during the period: (in thousands of Euros) Opening balance Additions for the period Utilizations/Reversals during the period Currency translation differences and other changes Closing balance
32
at 9/30/07
at 12/31/06
5,934
5,644
373
532
(604)
(175)
199
(67)
5,902
5,934
Third quarter
(14) Shareholders’ equity Shareholders’ equity totaled 112,509,000 Euros at September 30, 2007. The table below shows the changes that occurred in the first nine months of 2007: (in thousands of Euros)
Share capital
Additional paid-in capital
Statutory reserve
Cumulative translation reserve
Stock option reserve
Shareholders’ equity at 12/31/06
50,000
4,425
207
652
2,202
Appropriation of previous year’s profit Share capital increase
432 5,000
Retained earnings (Accumulated deficit)
Net result for the year
Group interest in share-holders’ equity
7,957
22,294
87,737
21,862
(22,294)
1,500
Stock options
1,200
Translation adjustment
1,200
(1,982)
(1,982)
Net result for the period Shareholders’ equity at 9/30/07(*) (*)
55,000
5,925
6,500
639
(1,330)
3,402
29,819
19,054
19,054
19,054
112,509
Unaudited data.
On July 19, 2007, pursuant to a resolution issued by Borsa Italiana S.p.A. on June 24, 2007 accepting the Company’s shares for stock market listing and the approval issued by the CONSOB on June 28, 2007, trading in the common shares of Diasorin S.p.A. began on the STAR Segment of the Online Stock Market organized and operated by Borsa Italiana S.p.A. As a result of the abovementioned listing of the Company’s shares, the options awarded under the 2004-2008 Stock Option Plan approved by the Board of Directors on March 25, 2004, which covered up to 5,000,000 shares awarded to 17 Group Directors and employees, became exercisable. The exercise price was 1.30 Euros. At September 30, 2007, the share capital increase reserved for the exercise of options had been fully subscribed.
33
2007
(15) Borrowings The table below lists the borrowings outstanding at September 30, 2007 and provides a comparison with the data at December 31, 2006 (amounts in thousands of Euros): Lender institution
At September 30, 2007
At December 31, 2006
Change in the first nine months of 2007
Interbanca 2006 USD
6,440
7,563
(1,123)
Interbanca 2006 Euro
23,242
25,342
(2,100)
IMI/Italian Ministry of Education
942
889
53
CRT Unicredit for 2000 Flood
1,358
1,634
(276)
Wells Fargo Bank (U.S. mortgage)
1,176
1,511
(335)
Lessors
5,032
5,801
(769)
Factors
177
736
(559)
38,367
43,476
(5,109)
Total
A breakdown of borrowings by maturity is as follows (amounts in thousands of Euros): Lender institution Interbanca 2006 USD
Currency
Short-term
Long-term
Amount due
portion
portion
after 5 years
Total
USD
1,666
7,466
833
Amount in EUR
1,175
5,265
626
9,132 6,440
Interbanca 2006 Euro
EUR
4,237
19,005
2,097
23,242
IMI/Italian Ministry of Education
EUR
942
703
942 1,358
CRT Unicredit for 2000 Flood
EUR
333
1,025
206
Wells Fargo Bank (U.S. mortgage)
USD
1,668
-
-
1,668
Amount in EUR
1,176
-
-
1,176
Lessors
EUR
1,863
3,169
-
5,032
Factors
EUR
Total
34
177
-
-
177
8,961
29,406
3,632
38,367
Third quarter
(16) Provisions for employee severance indemnities and other employee benefits These provisions totaled 19,011,000 Euros at September 30, 2007. The table that follows shows the changes that occurred in these provisions in the first nine months of 2007. (in thousands of Euros) 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 reforms 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 Other changes Balance at September 30, 2007
Total employee benefits 19,154 595 (56) 265 (627) (34) (515)
(832) 317 229 19,011
(17) Other non-current liabilities Other non-current liabilities totaled 2,024,000 Euros at September 30, 2007. They include provisions for risks and charges. The table below shows the changes that occurred in these provisions: (in thousands of Euros) Opening balance Additions for the year Utilizations for the year Currency translation differences and other changes Ending balance
at 9/30/07
at 9/30/06
2,818
2,072
108
286
(681)
(283)
(221)
1
2,024
2,076
Utilizations in 2007 refer mainly to Diasorin S.p.A. and refer to a tax audit and settlement that took place in 2006 and concerned income taxes for 2004. The assessment amounted to 393,000 Euros, while the corresponding provision was 671,000 Euros. The excess was reversed and a gain of 278,000 Euros was reflected in the income statement for the third quarter of 2007.
35
2007
Annex I LIST OF EQUITY INVESTMENTS
Company
Head office
Currency
location
Share
Par value pershare
% interest
No. of shares
capital
partnership or
held directly
or partnership
interest
interests held
Diasorin S.A.
Brussels (Belgium)
EUR
1,674,000
6,696
99.99%
250
Diasorin Ltda
S達o Paulo (Brazil)
BRL
10,011,893
1
99.99%
10,011,892
Diasorin S.A.
Antony (France)
EUR
960,000
15
99.99%
62,494
Diasorin S.A.
Madrid (Spain)
EUR
1,453,687
6
99.99%
241,878
Diasorin Ltd
Wokingham (Great Britain)
GBP
500
1
100.00%
500
Diasorin Inc.
Stillwater (United States)
USD
1
0.01
100.00%
100
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
Equity investments valued at cost Diasorin Ltd
Shanghai (China)
Equity investments in other companies Consorzio Sobedia
36
Saluggia (Italy)
20.00%
1
Third quarter
Declaration Required Pursuant to Article 154/bis, Paragraph 2 – Part IV, Title III, Chapter II, Section V-bis, of Legislative Decree No. 58 of February 24, 1998: “Uniform Law on Financial Intermediation Enacted Pursuant to Articles 8 and 21 of Law No. 52 of February 6, 1996”
I, the undersigned, Andrea Senaldi, Corporate Accounting Documents Officer of DIASORIN S.p.A.
ATTEST as required by Paragraph 2 of Article 154/bis, Part IV, Title III, Chapter II, Section V-bis, of Legislative Decree No. 58 of February 24, 1998, that, to the best of my knowledge, this Quarterly Report is consistent with the data in the supporting documents and in the Company’s other documents and accounting records.
_____________ Andrea Senaldi Accounting Documents Officer DIASORIN S.p.A.
37
2007
The Diagnostic
Specialist
Via Crescentino snc - 13040 Saluggia (VC)