BRACCO IMAGING S.p.A. a sole shareholder company subject to management and coordination by Bracco S.p.A.

Registered office - Via Folli, 50, Milan Share capital Euro 102,900,000 wholly paid Milan Register of Companies and Tax Number: 007785990156 Milan Business Database/R.E.A. no 1182274

NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS AT DECEMBER 31, 2012

1 COMPANY INFORMATION

Bracco Imaging S.p.A. is a joint stock company (“società per azioni”) incorporated in Italy and registered with the Milan Register of Companies. Its registered office is at Via Folli, 50 – Milan. The Company is wholly owned by its parent company Bracco S.p.A.

The main activities of the company and its subsidiaries are described in the Directors’ Report.

The consolidated financial statements are expressed in thousands of Euro. Foreign activities are included in the consolidated financial statements based on the accounting principles described in these Notes.

2 ADOPTION OF INTERNATIONAL ACCOUNTING STANDARDS

Following the introduction of Legislative Decree 38/2005 – regulating the possibility to prepare stand alone and consolidated financial statements in compliance with International Accounting Standards on the basis of the options set out by Article 5 of Regulation (EC) no 1606/2002, issued by the European Parliament and the Council of Europe in July 2002 – the Bracco Imaging S.p.A. Group (hereafter the Group) voluntarily adopted these accounting standards with effect from preparation of the consolidated financial statements at December 31, 2006. Therefore, effective from January 1, 2006, the Group applied International Accounting Standards (“IAS/IFRS) and the relevant interpretations by the IFRIC, previously called the Committee (“SIC”), as approved by the European Commission and considered applicable to the transactions entered into by the Group.

The Group has decided not to adopt IFRS 8 “Operating Segments” and IAS 33 “Earnings per Share” as holding company Bracco Imaging S.p.A. does not fall within the parameters that make application of said standards obligatory (company with listed shares or company filing its financial statements with a Stock Exchange Commission for the purposes of issuing ordinary shares on a regulated public market).

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 1 The financial statements and information contained in these consolidated financial statements have been prepared in accordance with IAS 1. International Accounting Standards and the relevant interpretations in force as at December 31, 2012 have been applied.

The amounts reported in these financial statements are accompanied by comparative amounts from the prior year financial statements as prepared and disclosed on a consistent basis.

The consolidated financial statements comprise the obligatory schedules (statement of profit and loss, statement of comprehensive income, statement of financial position, statement of changes in equity and statement of cash flows) and are accompanied by these notes.

The consolidated financial statements have been prepared on a going concern basis.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 2 3 CHANGES TO SCOPE OF CONSOLIDATION

The changes in the Group scope of consolidation in 2012 and 2011 are summarised below:

2012 reporting period

On April 19, 2012, the Group completed the acquisition from the Justesa Group of 100% of the share capital of three commercial companies in Latin America (in Brazil, Argentina and Mexico):

Justesa Imagen Do Brasil S.A.

Through subsidiary Bracco Imaging do Brasil Importacao e Distribucao de Medicamentos Ltda., the Group completed the acquisition of 100% of Brazilian company Justesa Imagen Do Brasil S.A. (registered office in Rio de Janeiro), distributor of imaging agents on the Brazilian market, for Euro 11.5 million.

In accordance with IAS/IFRS, the balance sheet assets and liabilities of the companies acquired were recorded in the consolidated financial statements at fair value, as determined based on an independent appraisal.

The fair value amounts of the assets and liabilities acquired by the Group are shown in the following table:

Valori Valori Allocazione Patrimoniali Patrimoniali plusvalore acquisiti al 19 aprile 2012

Purchase Price €/thousand at April 19th 2012 Net Book Value Fair Value Allocation

Inventories 701 0 701 Trade receivables and other assets 954 0 954 Trade payables and other liabilities (1,089) 0 (1,089)

Net Working Capital (A) 566 0 566

Tangible assets 441 0 441 Intangible assets 66 2,204 2,270 Goodwill 0 8,608 8,608 Other non current assets 145 0 145

Total fixed assets (B) 652 10,812 11,465

Deferred tax assets (liabilities) 0 (749) (749) Other non current liabilities (76) 0 (76)

Provision and Other liabilit ies (C) (76) (749) (825)

Cash and cash equivalents (D) 144 0 144 Loans and other financial liabilities (E) 130 0 130

Total Equity (A+B+C+D+E) 1,416 10,063 11,479

Purchase price paid by Bracco Imaging do Brasil 11,479

In accordance with IAS/IFRS, the acquisition date exchange rate (Real / Euro) of BRL 2.469:€1 was used for the first time consolidation of the balance sheet amounts.

As required by IAS/IFRS, the financial statements of Justesa Imagen Do Brasil S.A. were consolidated on a line-by-line basis from the date of acquisition and, therefore, contributed to the results of the Group for a period of around eight months in 2012.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 3 We also note that, on December 31, 2012, Justesa Imagen Do Brasil S.A. merged with parent company Bracco Imaging do Brasil Importacao e Distribucao de Medicamentos Ltda.

Justesa Imagen Argentina S.A.

Through holding company Bracco Imaging S.p.A. and subsidiary Bracco Imaging Holding B.V., the Group completed the acquisition of 100% of the share capital of Argentine company Justesa Imagen Argentina S.A. (registered office in Buenos Aires), distributor of imaging agents on the Argentine market, for a total price of Euro 1.4 million.

In accordance with IAS/IFRS, the balance sheet assets and liabilities of the companies acquired were recorded in the consolidated financial statements at fair value, as determined based on an independent appraisal. Fair value is the same as net carrying amount at the date of acquisition.

The fair value amounts of the assets and liabilities acquired by the Group are shown in the following table:

€/thousand at April 19th 2012 Fair Value

Inventories 321 Trade receivables and other assets 1,341 Trade payables and other liabilities (1,925)

Net Working Capital (A) (264)

Tangible assets 1,397

Total fixed assets (B) 1,397

Deferred tax assets (liabilities) 252 Other non current liabilities (142)

Provision and Other liabilit ies (C) 110

Cash and cash equivalents (D) 154 Loans and other financial liabilities (E) (61)

Total Equity (A+B+C+D+E) 1,336

In accordance with IAS/IFRS, the acquisition date exchange rate (ARS / Euro) of ARS 5.753:€1 was used for the first time consolidation of the balance sheet amounts.

As required by IAS/IFRS, the financial statements of Justesa Imagen Argentina S.A. were consolidated on a line-by-line basis from the date of acquisition and, therefore, contributed to the results of the Group for a period of around eight months in 2012.

Justesa Imagen Mexicana S.A. DE C.V.

Through holding company Bracco Imaging S.p.A. and subsidiary Bracco Imaging Holding B.V., the Group completed the acquisition of 100% of Mexican company Justesa Imagen Mexicana S.A. (registered office in Mexico City), distributor of imaging agents for the Mexican market, for a price of Euro 3.4 million.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 4 In accordance with IAS/IFRS, the balance sheet assets and liabilities of the companies acquired were recorded in the consolidated financial statements at fair value, as determined based on an independent appraisal.

The fair value amounts of the assets and liabilities acquired by the Group are shown in the following table:

Purchase Price €/thousand at April 19th 2012 Net Book Value Fair Value Allocation

Inventories 905 0 905 Trade receivables and other assets 814 0 814 Trade payables and other liabilities (1,289) 0 (1,289)

Net Working Capital (A) 430 0 430

Tangible assets 278 0 278 Intangible assets 5 664 669 Goodwill 0 2,248 2,248

Total fixed assets (B) 284 2,912 3,196

Deferred tax assets (liabilities) 112 (199) (87) Other non current liabilities (136) 0 (136)

Provision and Other liabilit ies (C) (24) (199) (223)

Cash and cash equivalents (D) 11 0 11

Total Equity (A+B+C+D) 700 2,713 3,413

Purchase price paid by Bracco Imaging Holding BV and 3,413 Bracco Imaging Spa

In accordance with IAS/IFRS, the acquisition date exchange rate (MXN / Euro) of ARS 17,275:€1 was used for the first time consolidation of the balance sheet amounts.

As required by IAS/IFRS, the financial statements of Justesa Imagen Mexicana S.A. were consolidated on a line-by-line basis from the date of acquisition and, therefore, contributed to the results of the Group for a period of around eight months in 2012.

2011 reporting period

Dafri G.m.b.H.

On May 10, 2011, through subsidiary Bracco Imaging Holding B.V., the Group completed the acquisition from associated company Bracco R.E. S.r.l. of 100% of German company Dafri G.m.b.H., for a price of Euro 250 thousand, equal to the nominal amount of the share capital of that company.

BIPSO G.m.b.H.

On August 31, 2011, through subsidiary Dafri G.m.b.H., the Group completed the acquisition of 100% of German company BIPSO G.m.b.H. for a total price of Euro 44.3 million. The company manufactures finished products at its factory in Singen (German). It was set up on May 3, 2011 by Nycomed G.m.b.H. with which the Group had a “sub-contract agreement” for Bracco products. On July 1, 2011, Nycomed its manufacturing licence, plant and personnel for the production of “Bracco” contrast agents to BIPSO G.m.b.H. at Fair Value.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 5 We also note that the sub-contract agreement for production of Contrast Agents at the factory owned by Nycomed G.m.b.H. in Singen (Germany) was terminated in advance by the parties on August 31, 2011, following the acquisition from Nycomed of the Singen manufacturing facility. Consequently, the production plant and equipment – accounted for in prior years in accordance with IAS 17 – were purchased outright on September 1, 2011 at fair value supported by an independent appraisal.

In accordance with IAS/IFRS, the balance sheet amounts were recorded at the fair value of the assets and liabilities acquired, as determined based on appraisals performed by independent experts.

The Fair Value of the assets and liabilities acquired by the Group is shown in the following table:

Balance sheet at August 31st, 2011

€/thousand August 31st , 2011 Fair Value

Inventories 6,699 Trade receivables and other assets 1,244 Trade Payables and other liabilities (1,212)

Net Working Capital (A) 6,731

Tangible assets 10,578 Intangible assets 12,704 Goodwill 17,551 Other non current assets 382

Total fixed assets (B) 41,215

Deferred tax assets (liabilities) 0 Other non current liabilities (4,048)

Provision and Other liabilities (C) (4,048)

Cash and cash equivalents (D) 358

Total Equity (A+B+C+D) 44,256

Purchase price paid by Dafri G.m.b.H. 44,256

Pursuant to IAS/IFRS, the financial statements of BIPSO G.m.b.H. were consolidated on a line-by-line basis from the date of acquisition and, therefore, are included in the Group’s income statement results for 2011 for a period of four months.

Bracco Injeneering S.A. (formerly Swiss Medical Care S.A.)

On July 26, 2011, through subsidiary Bracco Imaging Holding B.V., the Group completed the acquisition of 100% of Swiss company Swiss Medical Care S.A. (registered office in Lausanne) which develops, manufactures and distributes automatic delivery systems for contrast agents for CAT diagnostic imaging. The acquisition price was CHF 34.7 million and included a loan granted by the Holding Company upon signature of the sale and purchase agreement (CHF 13.1 million).

The contract also provided for deferred payment of an earn-out in future years subject to certain conditions arising and business targets being achieved. In accordance with IFRS 3, the variable components of the price were accounted for at fair value based on the plans defined by Group management.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 6 In accordance with IAS/IFRS, the balance sheet amounts were recorded at the fair value of the assets and liabilities acquired, as determined based on appraisals performed by independent experts.

The Fair Value of the assets and liabilities acquired by the Group is shown in the following table:

Net Book Value Fair Value Purchase Price CHF/000 at July 26th, 2011 at July 26th, at July 26th, Allocation 2011 2011

Inventory 881 0 881 Trade receivables and other assets 1,862 0 1,862 Trade Payables and other liabilities (1,858) 0 (1,858)

Net Working Capital (A) 885 0 885

Tangible assets 564 0 564 Intangible assets 0 29,300 29,300 Goodwill 0 29,111 29,111 Other non current assets 0 0 0

Total fixed assets (B) 564 58,411 58,975

Deferred tax assets (liabilities) (8,790) (8,790)

Provision and Other liabilit ies (C) 0 (8,790) (8,790)

Cash and cash equivalents (D) 30 0 30 Financial liabilities (vs B.Imaging Spa) (E) (13,117) 0 (13,117)

Total Equity (A+B+C+D+E) (11,638) 37,983

Earn/out (16,388) (16,388)

Purchase price paid by Bracco Imaging Holding Bv. 21,595

In compliance with IAS/IFRS, the exchange rate (CHF/Euro) used for the first-time consolidation of the balance sheet amounts shown above was the July 26, 2011 rate of CHF 1.163: € 1.

Pursuant to IAS/IFRS, the financial statements of Swiss Medical Care S.A. were consolidated on a line-by-line basis from the date of acquisition and, therefore, are included in the Group’s income statement results for 2011 for a period of five months.

Bracco Imaging Slovakia s.r.o.

Bracco Imaging Slovakia s.r.o., a 100% subsidiary of the Group, was incorporated on April 5, 2011 with its registered office in Bratislava (Slovakia). The company’s main activities are the distribution of Group products in Slovakia. Bracco Imaging Slovakia has share capital of Euro 100 thousand and began to sell Bracco products early in 2012.

Bracco Imaging Czech s.r.o

Bracco Imaging Czech s.r.o., a 100% subsidiary of the Group, was incorporated on April 6, 2011 with its registered office in Prague (Czech Republic). The company’s main activities are the distribution of Group products in the Czech Republic. Bracco Imaging Czech s.r.o. has share capital of CZK 3,700 thousand and began to sell Bracco products early in 2012.

Bracco Imaging Polska Sp. z o.o

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 7 Bracco Imaging Polska Sp. Z o.o., a 100% subsidiary of the Group, was incorporated on April 7, 2011 with its registered office in Warsaw (Poland). The company’s main activities are the distribution of Group products in Poland. Bracco Imaging Polska has share capital of PLN 700 thousand and began to sell Bracco products early in 2012.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 8 4 SUMMARY OF ACCOUNTING POLICIES AND VALUATION CRITERIA

General principles

The criterion generally adopted when accounting for assets and liabilities (after the date of transition to IAS/IFRS when certain assets were recorded at fair value rather than at cost) is historical cost, except for financial instruments which are recorded at fair value in accordance with IAS 39. Details of the structure and content of the financial statements adopted in accordance with IAS 1 are provided below. Details of the key accounting principles and valuation criteria applied when preparing these financial statements are also provided.

Financial statements: structure and content

The Consolidated Income Statement has been prepared with revenues and costs classified by type. It shows the operating profit and profit before taxation so as to provide a better representation of the performance of ordinary operating activities.

The “Consolidated Statement of Comprehensive Income” has been prepared starting from the net profit and highlights the other items relating to comprehensive income net of the related tax effects. These items include changes in:

. The reserve for the effective portion of gains and losses on cash flow hedges (Hedging reserve); . The reserve relating to the Employee Severance Indemnity for actuarial gains and losses from defined benefit plans; . The reserve for gains and losses resulting from restatement at fair value of financial instruments classified as available for sale; . The reserve for translation into Euro of financial statements of foreign companies.

The Consolidated Statement of Financial Position has been prepared based on a split between "current/non- current" assets and liabilities. Assets/liabilities are classified as current when they meet any of the following criteria: . they are expected to be realised or settled, sold or utilised during ordinary business activities; or . they are held mainly for trading purposes; or . they are expected to be realised or settled within twelve months of the reporting date.

If none of the three conditions are met, the assets/liabilities are classified as non-current.

The Consolidated Statement of Cash Flows has been prepared using the indirect method.

The Statement of Movements on Shareholders’ Equity shows the changes in shareholders’ equity items in relation to: . the allocation of net profit for the year of the parent company and the subsidiaries to minority shareholders; . amounts relating to transactions with shareholders (sale and purchase of treasury shares); . as required by IAS/IFRS, each profit and loss item, net of any tax effect, is allocated directly to shareholders’ equity (actuarial gains or losses on valuation of defined benefit plans) or is covered by a shareholders’ equity reserve (effect of transactions under common control whose impact is reflected directly under Group shareholders’ equity); . the restatement at fair value of financial instruments classified as available for sale; . the effect of any changes in accounting principles.

For each significant item included in the above schedules, references should be made to the subsequent notes which provide information thereon and details of their make-up and changes compared to prior year.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 9 Consolidation principles

Subsidiaries

Subsidiaries are entities controlled by the Group as defined in IAS 27 – Consolidated Financial Statements and Separate Financial Statements. Control exists when the Group has the power, directly or indirectly, to determine the financial and operating policies of an entity in order to obtain benefits from its activities. The financial statements of subsidiaries are included in the consolidated financial statements from the date on which control is transferred to the Group and are deconsolidated from the date that control ends. The portion of shareholders’ equity and net profit/loss pertaining to non-controlling interests are disclosed separately in the consolidated statement of financial position and consolidated income statement, respectively.

Associated companies

Associated companies are companies over which the Group exercises significant influence on financial and operational policy, as defined in IAS 28 – Investments in Associates but without their being subsidiary companies or companies subject to joint control. The consolidated financial statements includes the Group share of the results of associated companies, accounted for under the equity method, from the date the significant influence began until the date that it ends. When the Group’s share in the losses of an associate exceeds the carrying amount of the investment, the amount of the investment is written down in full and the amount of any additional losses is not recognised except insofar as the Group is required to cover them.

Transactions eliminated during the consolidation process

When the consolidated financial statements are prepared, all significant balances and transactions between Group companies are eliminated, as are unrealised gains and losses on intra-Group transactions. Unrealised gains and losses on transactions with associated companies or companies under common control are eliminated on the basis of the percentage interest held by the Group in such companies.

Transactions in foreign currency

Transactions denominated in foreign currency are recorded at the exchange rate as at the date of the transaction. At the reporting date, assets and liabilities denominated in foreign currency are translated using the exchange rate as at that date. Gains and losses arising from the settlement of receivables and payables or from their translation at different rates than those at which they were translated when they were first recorded during the period or in prior year financial statements are reflected in the income statement.

Consolidation of foreign entities

All of the assets and liabilities of foreign entities in currencies other than the Euro which form part of the scope of consolidation are translated using the exchange rates in force as at the reporting date. Revenue and costs are translated at the average exchange rate for the year. Translation differences resulting from the application of this method are classified as equity items until the investment is sold. Goodwill and restatements at fair value resulting from the acquisition of a foreign entity are recorded in the relevant currency and translated into Euro using the reporting date exchange rate. Upon first-time adoption of IFRS, the cumulative translation differences generated by the consolidation of foreign entities outside the Eurozone were eliminated, as permitted by IFRS 1. The gains or losses arising from the subsequent disposal of said entities shall include only the translation differences accumulated after 1 January 2005.

The main exchange rates to translate into Euro the 2012 and 2011 financial statements of foreign entities are shown in the following table.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 10 December 31, 2012 December 31, 2011

Average Closing Average Closing USD 1.285 1.319 1.392 1.294

CHF 1.205 1.207 1.233 1.216

JPY 102.492 113.610 110.959 100.200

GBP 0.811 0.816 0.868 0.835

CAD 1.284 1.314 1.376 1.322

CNY 8.105 8.221 8.996 8.159

HKD 9.966 10.226 10.836 10.051

BRL 2.508 2.704 2.327 2.416

KRW 1,447.69 1,406.23 1,541.23 1,498.69

SGD 1.606 1.611 1.749 1.682

SEK 8.704 8.582 9.030 8.912

CZK 25.149 25.151 24.664 25.787

PLN 4.185 4.074 4.182 4.458

ARS 5.901 6.486 n/a n/a

MXN 16.850 17.185 n/a n/a

Business combinations and goodwill

Business combinations are accounted for in accordance with IFRS 3. Under said standard, the consideration transferred in a business combination is measured at fair value, calculated as the sum of the fair value of the assets transferred and the liabilities taken on by the Group at the acquisition date and the equity instruments issued in exchange for control of the entity acquired. Incidental expenses relating to the transaction are recorded in the income statement when they are incurred At the date of acquisition, the identifiable assets acquired and liabilities taken on are recognised at fair value. This is except for Deferred tax assets and liabilities, Assets and liabilities for employee benefits. Liabilities or equity instruments relating to payments based on shares in the entity acquired or payments based on shares in the Group issued in replacement for contracts of the entity acquired and Assets destined for sale and Discontinued Operations, all of which are measured in accordance with the applicable accounting standard. Goodwill is determined as the excess of the sum of the consideration transferred upon the business combination, the value of shareholders’ equity pertaining to non-controlling interests and the fair value of any investment previously held in the entity acquired over the fair value of the net assets acquired and liabilities taken on at the date of acquisition. If the value of the net assets acquired and liabilities taken on at the date of acquisition exceeds the amount of the consideration transferred, the value of shareholders’ equity pertaining to non-controlling interests and the fair value of any investment previously held in the entity acquired, that excess is recorded immediately in the income statement as income from the transaction. The portion of shareholders’ equity pertaining to non-controlling interests at the date of acquisition may be measured at fair value or as a percentage of the value of the net assets recognised for the entity acquired. The choice of valuation method is made on a transaction by transaction basis. Any conditional consideration in the business combination agreement is measured at fair value at the date of acquisition and included in the amount of the consideration transferred as part of the business combination for the purposes of determining goodwill. Any subsequent changes in said fair value, which may be classed as adjustments arising in the measurement period, are included in the goodwill on a retrospective basis. Changes in fair value that may be classed as adjustments arising in the measurement period are those resulting from additional information about facts and circumstances which existed at the date of acquisition

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 11 but which came to light during the measurement period (which cannot exceed one year from the business combination). In the case of a business combination achieved in stages, the investment previously held by the Group in the entity acquired is restated at fair value at the date of acquisition of control and any gain or loss arising is recorded in the income statement. Any amounts resulting from the investment previously held and recorded under other comprehensive income are reclassified in the income statement as if the investment had been disposed of. If the opening balances of a business combination are incomplete at the reporting date of the period in which the business combination took place, in its consolidated financial statements, the Group reports the provisional amount of the items which are incomplete. These provisional amounts are adjusted during the measurement period to take account of new information obtained about facts and circumstances existing at the date of acquisition which, if known, would have had an effect on the amount of the assets and liabilities recognised at that date. Goodwill is subsequently reduced only for impairment of value. Once a year – or more frequently if specific events or altered circumstances suggest the possibility of an impairment of value – the goodwill undergoes an impairment test in accordance with IAS 36 (Impairment of Assets); the original value is not restored if the reasons that led to the impairment cease to apply. Goodwill is never revalued, not even under specific legislation, and any impairment adjustments are never reversed. Business combinations which took place prior to January 1, 2009 were accounted for in accordance with the previous version of IFRS 3 as the Group adopted in advance the revised version of the standard which became obligatory for the accounting treatment of business combinations after January 1, 2010. For the purposes of the first-time application of IFRS, the acquisition method required by IFRS 3 was applied retrospectively to all business combinations commencing from January 1, 2001.

Non-controlling shareholders The portion of shareholders equity pertaining to non-controlling shareholders in consolidated subsidiaries and the portion of the net profit or loss for the year of consolidated subsidiaries pertaining to non-controlling shareholders are disclosed separately in the consolidated statement of financial position and in the consolidated income statement. Changes in percentage interests in subsidiaries that do not lead to the acquisition/loss of control are recorded as changes in equity.

Acquisition of non-controlling interests Once control of an entity has been obtained, any transactions in which the parent company acquires or sells minority interests without affecting its control over the subsidiary are transactions with shareholders and must be recognised in equity. It follows that the carrying amount of the controlling investment and non- controlling interests must be adjusted to reflect the change in the interest in the subsidiary and any difference between the amount of the adjustment to non-controlling interests and the fair value of the consideration paid or received for the transaction is recorded directly in equity and allocated to the shareholders of the parent company. There are no adjustments to the amount of goodwill and to profits or losses recorded in the income statement. Charges relating to such transactions must be recorded in equity in accordance with Paragraph 35 of IAS 32.

Intercompany dividends Dividends distributed between Group companies are eliminated from the consolidated income statement.

Transactions under common control

A business combination involving entities or groups under common control (a transaction under common control) is a combination in which all of the entities or businesses are, ultimately, controlled by the same party both before and after the business combination and the control is not temporary in nature.

If a significant impact on future cash flows after the transfer of the interested parties can be demonstrated, these transactions are treated in accordance with the “Business combinations and goodwill” paragraph”.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 12 If, rather, this cannot be demonstrated, these transactions are accounted for in accordance with the principle of continuity of values.

Specifically, the accounting method, in application of the principle of continuity of values, falling within the scope of IAS 8.10 and consistent with international practice and the approach of the Italian accounting profession on the issue of business combinations under common control, provides that the buyer shall recognise the assets acquired based on their historical carrying amounts as determined on a cost basis. Where the transfer values are higher than the historical amounts, the excess is eliminated by adjusting the shareholders’ equity of the purchase Group, with a specific entry to a reserve. Similarly, in the seller Group’s financial statements, the accounting principle adopted requires that any difference between the transaction price and the carrying amount of the assets transferred shall not be recorded in the income statement but, rather, in a shareholders’ equity reserve.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 13 Accounting principles

Investments in other entities

Investments in other entities that constitute non-current financial assets not held for trading (i.e. equity investments available for sale) are initially recognised at fair value, if determinable, and gains and losses from changes in fair value are directly allocated to equity until the investments are transferred or their value is impaired. At that time, all of the gains or losses previously recorded under shareholders’ equity are posted in the income statement for the period. Investments in other entities whose fair value is not available are recorded at cost, as written down for any impairment through the income statement. Dividends received from such entities are included in the line item profits (losses) from equity investments.

Intangible assets

Intangible assets with a determinate useful life, purchased or produced internally, are capitalised, in accordance with IAS 38 (Intangible assets), when it is probable that use of the asset shall generate future benefits and the cost of the asset may be reliably determined. Intangible assets with a determinate useful life are amortised on a straight line basis over their expected useful life i.e. the estimated period over which the assets will be used by the entity. Intangible assets with a determinate useful life are also tested for impairment of value once a year or whenever there are indicators of impairment. Other intangible assets with an indefinite useful life are not amortised but subjected to an impairment test at least on an annual basis. The test performed is described in the “Impairment of assets” paragraph.

Research and development costs

Research costs are charged in full to the income statement for the year in which they are incurred, in accordance with IAS 38. IAS 38 also provides that development costs shall be capitalised if the technical feasibility of the related asset so that it will become available for sale can be demonstrated. The inherent uncertainty involved in the research and development of pharmaceutical products, together with external regulatory and legal uncertainties, are so significant that, in the Group’s opinion, the capitalisation criteria are not fully satisfied. Consequently, development costs are charged to the income statement for the year in which they are incurred.

Property, plant and equipment

Property, plant and equipment owned by the Group is recognised at purchase or production cost. The land, buildings and equipment used for production or for the supply of goods and services (primarily relating to Bracco Imaging S.p.A. and Spin S.p.A.) were recorded upon transition to IFRS at deemed cost at the date of transition (January 1, 2005) i.e. fair value based on their state of use at the date in question less subsequent depreciation and accumulated writedowns. The amount was determined based on specific appraisals commissioned from a leading independent appraisal firm. The additional amount was allocated, upon transition to IAS/IFRS, directly to an equity reserve, net of the related tax effect.

Costs incurred after the purchase of the asset are capitalised only if they lead to an increase in the future economic benefits obtainable from said asset. All other costs (including financial expenses directly attributable to the purchase, construction or production of the asset) are recorded in the income statement as incurred.

After the transition date, the Group chose to adopt the cost method.

Assets consisting of components of significant amounts and with different useful lives are considered separately when determining depreciation.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 14 Depreciation is determined, on a straight-line basis, over the estimated useful lives of the assets, applying percentage rates determined with the support of an independent expert which, for the main asset categories, provided the Group with assistance in determining the value – as previously described – and the remaining useful lives of tangible assets at the date of transition.

The useful lives utilised are as follows:

Buildings 38 years Plant and machinery from 10 to 20 years Equipment 3 years Other tangible assets from 4 to 9 years

Land is not depreciated.

Assets held under finance lease agreements whereby all of the risks and benefits of ownership of the asset are substantially transferred to the Group are recorded at the lower of their current value and the present value of the minimum finance lease payments due, including any amount payable to exercise the final purchase option. The corresponding liability towards the leasing company is recorded under financial liabilities. Assets held under finance leases are depreciated, like owned assets, over their estimated useful life or, if shorter, over the remaining period of the finance lease agreement.

If a contract entered into by the Group does not have the legal form of a finance lease but provides for the right to use certain assets and other specific conditions laid down by IFRIC 4, it shall be considered akin to a finance lease and accounted for in accordance with IAS 17.

Operating lease costs are recorded on an accrual basis in the income statement.

Gains and losses arising on the sale or disposal of fixed assets shall be determined as the difference between the sale proceeds and the net carrying amount of the asset and recorded in the income statement for the period.

If there are indicators of impairment, tangible assets are subjected to an impairment test. The test performed is described in the “Impairment of assets” paragraph. Impairment adjustments recorded may be subsequently reversed. Pursuant to revised IAS 23 “Borrowing costs”, borrowing costs are directly attributable to the acquisition, construction or production of a qualifying asset in relation to which the Group has commenced an investment, incurred borrowing costs or begun preparing the asset for its intended use or sale are capitalised as from 1 January 2009. The changes to this accounting standard have not had a significant effect on the consolidated financial statements of the Group.

Investment property

Investment property was recorded upon transition to IFRS at deemed cost at the date of transition (January 1, 2005) i.e. fair value based on their state of use at the date in question i.e. fair value based on their state of use at the valuation date, less subsequent depreciation and accumulated writedowns. The amount was determined based on specific appraisals commissioned from a leading independent appraisal firm. The additional amount was allocated, upon transition to IAS/IFRS, directly to an equity reserve, net of the related tax effect.

Costs incurred after the purchase of the asset are capitalised only if they lead to an increase in the future economic benefits obtainable from said asset. All other costs (including financial expenses directly attributable to the purchase, construction or production of the asset) are recorded in the income statement as incurred. After the transition date, the Group chose to adopt the cost method.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 15 Depreciation is determined on a straight-line basis over the estimated useful life of the property (38 years), as per the appraisal performed by the independent firm mentioned above.

Land is not depreciated.

Impairment of assets

At every reporting date, the Group reviews the carrying amount of its tangible assets and intangible assets to ascertain if there are any signs that they have been impaired. If there are indicators of impairment, the recoverable value of the assets is estimated so as to determine the amount of any writedown. Where it is not possible to estimate the recoverable value of an individual asset, the Group estimates the recoverable value of the cash generating unit to which the asset belongs.

The recoverable amount is the higher of the asset’s fair value less costs to sell and its value in use. When determining the value in use, the estimated future cash flow is discounted to present value at a rate that reflects current market valuations of the value of money and the specific risks relating to the asset.

If the estimated recoverable amount of an asset (or a cash generating unit) is lower than its book value, book value is reduced to bring it into line with the recoverable value. Any impairment is recorded immediately in the income statement.

When an impairment adjustment need no longer be maintained, the carrying amount of the asset (or cash generating unit) – except for goodwill – is increased to a new valuation based on an estimate of its recoverable value; this cannot be greater than the net carrying amount the asset would have had if the impairment adjustment had never been made. The write-back is recorded in the income statement unless the asset is stated at revalued amount in which case the write-back is allocated to the revaluation reserve.

Financial instruments

Principle

IFRS 7 requires a description of the objectives, policies and procedures implemented by the Group for each category of financial risk (liquidity, market and credit risks) to which it is exposed, including sensitivity analysis for each type of market risk (exchange rate, interest rate, equity and commodity risks) and information on the concentration and average, minimum and maximum exposures to the various types of risk during the reporting period, when the reporting date exposure is not sufficiently representative of the typical situation. IAS 1 regulates disclosure requirements on objectives, policy and capital management processes. When capital requirements have been imposed by third parties, it sets out the nature, management methods and possible consequences of non-compliance. For qualitative and quantitative analysis, see note 26 “Financial instruments”

Presentation

The financial instruments held by the Group are included in the following balance sheet items:

- Non-current assets: Non-consolidated equity investments and Other financial assets. - Current assets: Trade receivables, Current financial assets, Other receivables and current assets and Cash and cash equivalents. - Non-current liabilities: Bank borrowing, Financial payables and liabilities and Other non-current liabilities. - Current liabilities: Trade payables, Bank borrowing, Current financial liabilities and Other current liabilities.

Cash and cash equivalents includes bank accounts, fund units and other securities that may be converted into cash very quickly and are not subject to a significant risk of a change in value.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 16 Financial assets consisting of debt or equity securities are initially recognised at the date of settlement while derivative contracts are recognised on the date of signature.

Financial assets held for trading purposes are initially recognised at fair value, not including transaction costs or income relating to the instrument which are recorded in the income statement.

Derivative contracts incorporated or embedded in financial instruments or other forms of contract which have economic characteristics and risks not related to the host instruments or which have features qualifying them to be classed as derivative contracts are accounted for separately in the category of financial assets held for trading purposes. This is except in cases where the instrument containing them is measured at fair value through profit and loss.

Measurement

Equity investments included in non-current financial assets are accounted for as described in the consolidation principles section.

Other financial assets, intended to be held to maturity, are initially measured at acquisition cost (representative of fair value) including – except for assets held for trading purposes – costs relating to the transaction. Subsequently, these assets are measured at amortised cost determined using the effective interest method.

Trade receivables, Current financial assets, Other receivables and current assets, Cash and cash equivalents, except for assets resulting from derivative financial instruments and all financial assets for which no listed value is available on an active market and whose fair value cannot be reliably determined, are measured, if they have a pre-determined maturity date, at amortised cost determined using the effective interest method. When financial assets do not have a pre-determined maturity date, they are measured at cost. Receivables falling due after more than a year and which are interest-free or mature interest at less than the market rate are discounted using market rates of interest. Tests are performed regularly to check if there is objective evidence that financial assets considered individually or as part of a group of assets might have suffered an impairment of value. If such evidence exists, the impairment of value is recorded as a cost in the income statement for the period.

Current financial assets and securities intended to be held to maturity are accounted for based on the date of settlement and, upon first-time recording, are measured at purchase cost, including expenses relating to the transaction. After initial recognition, financial instruments available for sale and those for trading are measured at fair value. If market price is not available, the fair value of financial instruments available for sale is measured using the most appropriate valuation method e.g. analysis of discounted cash flows, performed using market information available at the reporting date. Gains and losses on financial assets available for sale are recorded directly under equity until the financial asset is sold or written down. At that time, the gains or losses accumulating, including those previously recorded under equity, are included in the income statement for the period. Gains and losses generated by changes in the fair value of financial assets classed as held for trading are recorded in the income statement for the period. Current assets denominated in foreign currency for which hedging transactions have been arranged using derivative instruments are measured based on the hedge accounting method, where applicable.

Trade payables, Bank borrowing, Current and non-current financial liabilities and Current and non-current other liabilities are recorded, upon first time recognition, at fair value (normally represented by the cost of the transaction), including expenses relating to the transaction. Subsequently, except for derivative financial instruments, financial liabilities are stated at amortised cost using the effective interest method.

Derivative financial instruments

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 17 Derivative financial instruments are primarily utilised for hedging purposes to reduce the exchange rate risk and the interest rate risk. In compliance with IAS 39, derivative financial instruments are accounted for under the hedge accounting method only when: a) At the inception of the hedge, there is formal designation and documentation of the hedging relationship; b) The hedge is expected to be highly effective; c) The effectiveness of the hedge can be reliably measured; d) The hedge is actually highly effective throughout the financial reporting periods for which it was designated.

All derivative financial instruments are measured at fair value, as established by IAS 39.

When financial instruments qualify to be treated based on the hedge accounting method and the Group decides to act in this manner, the accounting treatment provided for by the cash flow hedge method is applied as follows: if a derivative financial instrument is designated as a hedge of the risk of changes in future cash flows relating to an asset or a liability recorded in the financial statements or to a highly probable expected transaction and it could have an effect on the income statement, the effective portion of the gains or losses (intrinsic value) on the derivative financial instrument is recorded under equity. Gains or losses associated with a hedge that has become ineffective are recorded in the income statement under financial income / expenses. If a hedging instrument or a hedging relationship is closed at the same time as the hedged transaction, cumulative gains and losses, until then recorded in equity, are recorded in the income statement under Other income / Other operating expenses. If, however, a hedging instrument or a hedging relationship is closed but the hedged transaction has not yet taken place, cumulative gains and losses until then recorded under equity are recorded in the income statement under Financial income/expenses at the time the related transaction does take place. If the hedged transaction is no longer considered probable, gains or losses not yet realised and suspended under equity are recorded immediately in the income statement as Financial income / expenses.

If the hedge accounting method is not applied, gains and losses arising from the fair value measurement of the derivative financial instrument are recorded in the income statement.

The foreign exchange risk regarding intercompany balances (e.g. a receivable/payable between two subsidiaries) is classed as a hedged risk in these consolidated financial statements if it leads to a risk of exchange gains or losses that are not completely eliminated upon consolidation as provided for by IAS 21 – The Effects of Changes in Foreign Exchange Rates.

Inventories

Inventories are recorded at the lower of purchase or production cost and estimated realisable value. Cost is determined based on the weighted average cost method and includes direct materials and, where applicable, directly labour, general production expenses and other expenses incurred to bring the inventories to their current location and condition. Net realisable value represents the best estimate of selling price less costs to completion and costs to sell.

Factoring of receivables

Factored receivables are derecognised from the statement of financial position only if the related risks and benefits of ownership have been transferred to the factor. Receivables factored with recourse and without recourse which do not meet this requirement remain in the Group’s financial statements even though they have been legally transferred. In such cases, a financial liability for the same amount is recorded in relation to the advance payment received.

Non-current assets held for sale (discontinued operations)

Non-current assets (and groups of assets) classified as held for sale are measured at the lower of their

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 18 previous carrying amount and market value less costs to sell. Non-current assets (and groups of assets) are classified as held for sale when it is expected that their carrying amount will be recovered through their sale rather than through their utilisation in the operating activities of the business. This condition is satisfied only when the sale is considered highly probable and the asset (or group of assets) is available for immediate sale in its current state. The former condition is met when the Group has made a commitment to make the sale which should take place within twelve months from the date of classification under this caption. In accordance with IAS/IFRS, amounts relating to discontinued operations are presented as follows: - under two specific statement of financial position captions: Assets destined for sale and Liabilities relating to assets destined for sale; - under a specific income statement caption: Net profit/loss from discontinued operations.

Post-employment benefits

Group employees benefit from defined benefit and/or defined contribution pension plans depending on local conditions and practice in the countries where the Group operates. Defined benefit pension plans are based on the working life of the employees and on the remuneration received by the employee during a pre- determined period of service.

The employee severance indemnity provision (Fondo Trattamento di Fine Rapporto -TFR), compulsory for Italian companies under Article 2120 of the Italian Civil Code, constitutes a form of deferred remuneration and depends on the duration of the working life of the employees and the remuneration received during the period of service.

The rules on the TFR were amended by Law no 296 of December 27, 2006 (“Finance Act 2007”) and the subsequent Decrees and Regulations issued early in 2007. As a result of the supplementary pension reform contained in said Decrees, the TFR entitlement accruing up to December 31, 2006 shall remain with the company and shall be classed as a defined benefit plan (obligation for benefits accruing subject to actuarial valuation).

Following the actuarial valuation, the current service cost i.e. the amount accruing in favour of employees during the period is recorded in the income statement under “Personnel costs” while the amount representing the theoretical amount the entity would incur to raise a loan on the market for the same amount as the TFR provision is recorded under financial income and expenses. Actuarial gains and losses which reflect the effects of changes in the actuarial assumptions used are recorded directly under equity.

Amounts accruing after January 1, 2007 as a result of decisions made by employees during the first half of 2007 are allocated to supplementary pensions or transferred by the entity to the treasury fund managed by Italian social security and pensions institution INPS. From the moment the decisions were made by the employees, these funds are classed as defined contribution plans (no longer subject to actuarial valuation).

As “Defined contribution plans”, these plans involve the recording on an accrual basis of contributions to the supplementary pension funds in relation to the services of the employees. If, at the annual or internal reporting date, these contributions have already been paid by the entity, no liability is recorded in the statement of financial position.

Provisions for risks and charges

The Group records provisions for risks and charges when it has a legal or constructive obligation as a result of past events, it is probable that an outflow of resources will be required to settle the obligation and a reliable estimate of the amount can be made based on available information. Changes in estimates are reflected in the income statement for the period in which the change took place.

Revenue recognition

Revenue is recognised insofar as it is probable that the Group will obtain economic benefits and their

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 19 amount can be reliably determined. Revenues are stated net of any adjusting items. Sales of goods are recognised when the Group has transferred to the customer all significant risks and benefits connected with ownership of the goods (generally upon shipment of the goods).

Financial income and expenses

Financial income and expenses are recorded in the income statement on an accrual basis. Interest income and expenses are recorded on an accrual basis, on the basis of the amount financed and the effective rate of interest applicable, which represents the rate which discounts future receipts/payments estimated along the estimated life of the financial asset/liability in order to bring them into line with the carrying amount of the asset.

Government grants

Government research grants are recognised in the income statement upon approval by the disbursing entity. Government grants received for the construction/purchase of tangible assets are recognised as income in the income statement, based on a straight-line depreciation method over the same period as the useful life of the relevant tangible assets. Grants are recorded as deferred income on the liabilities side of the statement of financial position.

Taxes on income

Taxes on income for the reporting period represent the sum of current and deferred taxation.

Current taxation for the year is calculated based on taxable income. Taxable income may differ from the result reported in the income statement as a result of income and expense items that will be taxable or deductible in other periods and also excludes items that will never be taxable or deductible. The liability for current taxation is calculated using the rates in force at the reporting date. Provision for taxation that could arise from the transfer of undistributed earnings of the subsidiaries is only made if there is genuine intent to transfer such earnings.

Deferred taxes are taxes expected to be paid or recovered on temporary differences between the book value of assets and liabilities and the corresponding fiscal value used to calculate taxable income. They are determined at the tax rates expected to be applicable in the various jurisdictions where the Group operates in the years when the temporary differences shall be realised or extinguished.

Deferred taxes are recorded based on the global recognition of liabilities method. They are calculated on all temporary differences emerging between the fiscal value of an asset or liability and its carrying amount in the consolidated financial statements, except for goodwill not deductible for tax purposes and those differences resulting from investments in subsidiaries that are not expected to be reversed in the foreseeable future. Meanwhile, deferred tax assets are recognised insofar as it is considered probable that there will be future taxable income to enable utilisation of deductible temporary differences.

The carrying amount of deferred tax assets is revised at every reporting date and reduced to the extent that it is no longer likely that there will be sufficient taxable income to enable all or part of the assets to be recovered.

Deferred taxes are recorded directly in the income statement, except for those relating to items recorded directly under equity; in that case, the related direct taxes are also booked under equity.

Deferred tax assets and liabilities are offset when there is a legal right to offset current tax assets and liabilities and when they refer to taxes due to the same tax authority and the company intends to liquidate current tax assets and liabilities on a net basis.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 20 For the three years 2010-2012, Bracco Imaging S.p.A., Spin S.p.A., Bracco Imaging Italia S.r.l. and Tofin S.p.A. have renewed their participation in the consolidated taxation arrangement set up by parent company Bracco S.p.A. in terms of Article 117/129 of the Consolidated Income Taxes Act (T.U.I.R.).

Companies participating in the consolidated taxation arrangement transfer their taxable income or tax loss to the consolidating company. The consolidating company records a receivable from companies which transfer taxable income equal to the IRES (national corporate income tax) due. Meanwhile, it records a liability towards companies transferring tax losses equal to the IRES on the portion of such losses actual offset at group level.

Dividends distributed

Dividends payable are shown as movements on equity in the reporting period in which they are approved by a General Meeting.

Use of estimates

The preparation of the financial statements and the accompanying notes in accordance with IFRS involves the use by Management of estimates and assumptions which have an effect on the amount of the assets and liabilities reported and on information regarding contingent assets and liabilities at the reporting date. The estimates and assumptions used are based on experience and on other factors deemed relevant. Therefore, actual results may differ from the estimates. The estimates and assumptions are revised periodically and the effects of any change are reflected in the income statement for the period in which the estimate adjustment takes place if the change only regards that period or also in subsequent periods if the adjustment will affect both the current year and future periods. We summarise below the valuation processes and the key assumptions used by the Group when applying the accounting principles with regard to future events that may have a significant impact on the figures reported in the consolidated financial statements or which may lead to the need for significant adjustments to assets and liabilities in the financial year following the current one.

Provision for doubtful debts

The provision for doubtful debts reflects the Group’s estimate of likely losses on trade receivables. The provision for doubtful debts is estimated based on losses expected, as determined bearing in mind past experience for similar receivables, overdue receivables, losses and collections, careful monitoring of receivables quality and projected economic and market conditions.

Recoverable amount of non-current assets

Non-current assets include property, plant and machinery, investment property, intangible assets, equity investments and other financial assets. The Group periodically reviews the carrying amount of non-current assets held and utilised and of those destined for sale, when circumstances require such a review. This review is performed based on estimates of the cash flows expected from utilisation or sale of the asset and applying appropriate discount rates to calculate present value. When the carrying amount of a non-current asset has been impaired, the Group records an impairment adjustment for the difference between the carrying amount of the asset and its recoverable value through use or sale, as determined with reference to the Group’s most recent plans. Further information on the method adopted is provided in the note “Impairment of assets”.

Deferred tax assets

The Group records current taxation and deferred taxation/deferred tax income in accordance with the law in the countries where it operates. Accounting for taxation requires the use of estimates and assumptions regarding the interpretation (with reference to transactions during the period) of the applicable rules and their effect on the tax situation of the individual companies and the Group. Moreover, accounting for deferred tax assets / liabilities requires the use of estimates of the prospective taxable income of each Group company and estimates of the tax rates that will be applicable. These activities are performed through

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 21 analysis of transactions taking place and their tax profile, also with the support, as necessary, of external advisors for the various issues covered. Simulations of prospective income are performed together with sensitivity analysis.

Pension plans

The Group companies participate in pension plans in several different countries. The Group’s main pension plans are in the United States and Germany while, in Italy, the TFR/Employee Severance Indemnity provision is a defined benefit plan (except for TFR accruing since January 1, 2007 which takes the form of a defined contribution plan). The Group uses a range of statistical assumptions and valuation factors with the aim of anticipating future events in order to calculate the expenses, liabilities and assets relating to these plans. The assumptions regard the discount rate, the expected return on plan assets and future remuneration increases. Also, the Group’s actuarial advisors use subjective factors e.g. mortality and resignation rates and assumptions regarding expected return on plan assets.

Contingent liabilities

The Group is involved in a number of legal and tax disputes regarding various issues under the jurisdiction of several different countries. Given the inherent uncertainty regarding these issues, it is difficult to predict if an to what extent they will lead to any expense for the Group. The litigation and claims against the Group can be the result of difficult and complicated legal problems, possibly subject to varying degrees of uncertainty, including the facts and circumstances of each case, jurisdiction and the different laws applicable. In the ordinary course of its business, the Group consults as necessary with its legal and tax advisors. The Group recognises a contingent liability for legal and tax disputes when it considers a future cash outflow probable and the amount involved can be reasonably estimated. When there is the possibility of a future cash outflow but its amount cannot be determined, this amount is disclosed in the notes to the financial statements.

Risk management

Liquidity risk

The liquidity risk is the risk that the Group might have difficulty in raising – at reasonable conditions – the funds needed to support its operating activities. Cash flows, funding requirements and the liquidity of the Group are constantly monitored with the aim of ensuring the efficient and effective management of financial resources in order to meet the requirements resulting from operations and investment and to settle liabilities as they fall due.

Exchange rate risk

The exchange rate risks arises in relation to both commercial and financial operations. As regards commercial operations, a significant portion of turnover is denominated in currencies other than the Euro, in particular, the US Dollar and the Japanese Yen. On the costs side too, some purchases of raw materials, finished products and services are denominated in currencies other than the Euro. For this reason, the Group has decided to use derivative financial instruments to manage the risks resulting from its ordinary activities. The objective is to reduce the potential negative impact on cash flows resulting from unfavourable exchange rate fluctuation. Hedging activities concentrate on risks which, given their size or inherent risk (volatility), could have a significant impact on profitability. Risks relating to transactions denominated in US Dollars are managed by hedging budget cash flows. The economic hedging objective is measured against the budget exchange rate. For transactions denominated in other currencies, the exchange risk is hedged for each transaction except for transactions in foreign currency with a limited impact on profitability.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 22 When managing the exchange risk, the Group uses both options and forward sales/purchases. These instruments, intended to hedge the risk of exchange rate fluctuation, are easy to manage and their fair value can be readily determined ( “Plain Vanilla” instruments).

The counterparties to these contracts are leading financial institutions and the Group does not engage in any speculative activities. Information on the fair value of derivative financial instruments at the reporting date is provided in note 27 “Derivative financial instruments”

Interest rate risk

The risk management objective is to reduce the impact that any variation in the interest rate curve could have on Group cash flow. In particular, the aim is to achieve the right mix between fixed rate borrowing and variable rate borrowing, in order to reduce the effect of interest rate fluctuation while, at the same time, minimising the cost of protecting against such events through the selected hedging instruments. For interest rate risk management purposes, the Group may use options, interest rate swaps (IRS) or forward rate agreements (FRA). The counterparties to these contracts are leading financial institutions and the Group does not engage in any speculative activities. Information on the fair value of derivative financial instruments at the reporting date is provided in note 27 “Derivative financial instruments”.

Credit risk

The credit risk represents the Group’s exposure to potential losses due to non-fulfilment of commercial and financial obligations taken on by counterparties. This risk is primarily the result of economic and financial factors i.e. the possibility that a counterparty might default and of more technical/commercial or legal/administrative factors (i.e. complaints about the nature/quality of goods, the interpretation of contractual terms and conditions, supporting invoices, etc). In order to manage this risk, the Group has adopted appropriate means of monitoring constantly the status of collections and undertaking prompt recovery measures.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 23 Scope of consolidation

We provide below a list of the subsidiaries, controlled directly or indirectly by Bracco Imaging S.p.A., included in the scope of consolidation on a line-by-line basis as at December 31, 2012:

 Bracco Imaging B.V. – approved share capital Euro 2,269 thousand, share capital subscribed and paid Euro 453,780, registered office: Amsterdam (Netherlands) –100% subsidiary.

 Spin S.p.A. – share capital Euro 25,000 thousand, registered office: Milan –100% subsidiary.

 Bracco International B.V. – approved share capital Euro 454 thousand, share capital subscribed and paid Euro 107 thousand, registered office: Amsterdam (Netherlands) - 100% subsidiary.

 Bracco Diagnostics Inc. - share-premium USD 44,496 thousand, registered office: Delaware (USA) - 100% subsidiary.

 Bracco Imaging Italia S.r.l. – quota capital Euro 10,000 thousand, registered office: Milan –100% subsidiary.

 Bracco U.K. Ltd. – share capital GBP 2, registered office: High Wycombe (UK) - 100% subsidiary.

 Bracco Suisse S.A. – share capital CHF 45,000 thousand, registered office: Manno (Switzerland) - 100% subsidiary.

 Bracco Osterreich GmbH – share capital Euro 1,200 thousand, registered office: Vienna (Austria) - 100% subsidiary.

 Bracco Far East Ltd. – share capital and share premium HK$ 6,240 thousand: Hong Kong –100% subsidiary.

 Bracco Imaging Europe B.V. – approved share capital Euro 100 thousand, share capital subscribed and paid Euro 20 thousand, registered office: Amsterdam (Netherlands) –100% subsidiary.

 Bracco Imaging France S.A.S. – share capital Euro 2,000 thousand, registered office: Courcouronnes (France) - 100% subsidiary.

 Bracco Imaging Deutschland GmbH – share capital Euro 2,000 thousand, registered office: Costanza (Germany) - 100% subsidiary.

 Bracco-Eisai Co. Ltd. – share capital Yen 340,000 thousand, registered office: Tokyo (Japan) - 51% subsidiary.

 Shanghai Bracco Sine Pharmaceutical Corp. Ltd. – share capital and share premium USD 13,260 thousand, registered office: Shanghai (China) - 70% subsidiary.

 Bracco Research USA Inc. - share-premium USD 6,633 thousand, registered office: Delaware (USA) - 100% subsidiary.

 Bracco Imaging Holding B.V. – approved share capital Euro 100 thousand, share capital subscribed and paid Euro 20 thousand, registered office: Amsterdam (Netherlands) – 100% subsidiary.

 Bracco Diagnostics Asia Ltd – share capital S$ 20,916 thousand, registered office: Singapore - 100% subsidiary.

 Bracco Holding B.V. – approved share capital Euro 454 thousand, share capital subscribed and paid Euro 228 thousand, registered office: Amsterdam (Netherlands) - 100% subsidiary.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 24  Bracco USA Inc. - share-premium USD 162,448 thousand, registered office: Delaware (USA) - 100% subsidiary.

 Tofin S.p.A. – share capital Euro 15,000 thousand, registered office: Milan - 100% subsidiary.

* American Husky III S.r.l. – quota capital Euro 50,000, registered office: Milano – 100% subsidiary.

* E-Z-EM Inc. – share premium USD 58,787 thousand, registered office: Delaware (USA) – 100% subsidiary.

* E-Z-EM Canada Inc. – share capital CAD 5,459 thousand, registered office: Anjou (Quebec – Canada) – 100% subsidiary.

* E-Z-EM Nederland B.V. – approved share capital Euro 397 thousand, share capital subscribed and paid Euro 137 thousand, registered office: Dordrecht (Netherlands) –100% subsidiary.

* Bracco Imaging Korea Ltd. – share capital and share premium KRW 773,200 thousand, registered office: Seoul (Korea) – 100% subsidiary.

* Bracco Imaging do Brasil Importacao e Distribucao de Medicamentos Ltda. – share capital BRL 39,000 thousand, registered office: Sao Paulo (Brazil) – 100% subsidiary.

 Heart Leaflet Technologies Inc. – share capital USD 25,413 thousand – registered office Minnesota (United States) – 100% subsidiary.

 Bracco Imaging Scandinavia AB – share capital SEK 100 thousand – registered office: Gothenburg (Sweden) –100% subsidiary.

 Bracco Imaging Baltics OU – share capital Euro 2,556 – registered office: Tallin (Estonia) – 100% subsidiary.

 Bracco Imaging Czech s.r.o – share capital CZK 3,700 thousand – registered office: Prague (Czech Republic) – 100% subsidiary.

* Bracco Imaging Polska Sp. z o.o – share capital PLN 700 thousand – registered office: Warsaw (Poland) – 100% subsidiary.

 Bracco Imaging Slovakia s.r.o – share capital Euro 100 thousand – registered office: Bratislava (Slovakia) –100% subsidiary.

 Dafri G.m.b.H. – share capital Euro 1,250 thousand – registered office: Munich (Germany) – 100% subsidiary.

 BIPSO G.m.b.H. – share capital Euro 26 thousand – registered office: Singen (Germany) – 100% subsidiary.

 Bracco Injeneering S.A. (formerly Swiss Medical Care S.A.) – share capital CHF 6,000 thousand – registered office: Lausanne (Switzerland) – 100% subsidiary.

 Justesa Imagen Argentina S.A. – share capital ARS 22,535 thousand – registered office: Buenos Aires (Argentina) – 100% subsidiary.

* Justesa Imagen Mexicana S.A. DE C.V. – share capital MXN 15,960 thousand – registered office: Tlalpan (Mexico) – 100% subsidiary.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 25 The investments in Bracco PTY Ltd (Australia, share capital and share premium US$ 12- 100% subsidiary) and Parco della Bassa Friulana S.r.l. (Italy, quota capital Euro 10 thousand – 100% subsidiary) are valued at cost as they are not material.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 26 The Bracco Imaging Group organisation chart at December 31, 2012 is shown below:

BRACCO IMAGING S.p.A.

It alia

100% 100% 100% 100% 100% 100%

Bracco Imaging Italia Bracco Imaging American Husky III Bracco Imaging Tofin S.p.A. Bracco Holding B.V. S.r.l. Europe B.V. S.r.l. Holding B.V.

Italia Olanda Italia Olanda Italia Olanda 80% 100%

20% 100% 100% Bracco International Spin S.p.A. Bracco Usa Inc. Bracco Suisse S.A. B.V.

Italia Stati Uniti Svizzera Olanda

100% 100% 100% Bracco Imaging 100% 100% Bracco Imaging B.V. Deutschland G.m.b.H. Bracco Diagnostics HLT - Heart Leaflet Bracco Research Usa Inc. Technologies Inc. Inc. Germania Olanda Stati Uniti Stati Uniti Stati Uniti 100% 100% 100% Bracco Uk Ltd. Bracco PTY E-Z-EM Inc. Regno Unito Australia Stati Uniti

51% 100% Bracco Diagnostic Asia Bracco Eisai Co. Ltd. Ltd. 100% 100% Giappone Singapore E-Z-EM Canada Inc. E-Z-EM Ne therland B.V. 70% Shanghai Bracco Sine Canada Olanda 100% Bracco Far East Ltd. Pharmaceutical Corp. Ltd. Hong Kong Cina

Bracco Osterreich 100% 100% Bracco Imaging Korea G.m.b.H. Ltd.

Austria Corea del Sud 1% Bracco Imaging S.p.A.

Bracco Imaging 100% Bracco Imaging 100% 99% Bracco Imaging Baltics OU Scandinavia AB do Brasil L.t.d.a.

Estonia Svezia Brasile

1% Bracco Imaging S.p.A. Bracco Imaging 99% 100% Bracco Imaging Polska Sp. Zo.O France S.A.S.

Polonia Francia

1% Bracco Imaging S.p.A. Bracco Imaging Czech 99% 99% Bracco Imaging 1% Bracco Imaging S.p.A. S.R.O. Slovakia S.R.O

Repubblica Ceca Slovacchia

Bracco Injeenering 100% 100% Dafri G.m.b.H. S.A.

Svizzera Germania 100%

2% Bracco Imaging S.p.A. Justesa Imagen 98% BIPSO G.m.b.H. Argentina S.A.

Argentina Germania

5% Bracco Imaging S.p.A. Justesa Imagen 95% Mexicana S.A.

Messico

Accounting standards, amendments and interpretations applied in 2012

On October 7, 2010, the IASB published a number of amendments to IFRS 7 – Financial instruments: Disclosures, for application by the Company from January 1, 2012. The amendments were issued with the aim of increasing understanding of the derecognition of financial assets, including understanding the possible effects of any risk remaining with the entity that has transferred the assets. The amendments also require further disclosures where a disproportionate amount of such transactions takes place at the end of a reporting period. Adoption of this amendment had no effect on the information provided in the financial statements.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 27 Interpretations applicable from January 1, 2012 but not significant

The following amendment, effective from January 1, 2012, regulates matters and circumstances not present within the Company at the reporting date but which could have accounting effects on future transactions or agreements:

- On 20 December 2010, the IASB issued a minor amendment to IAS 12 – Income taxes clarifying how to determine deferred taxes on investment property measured at fair value. The amendment establishes a presumption whereby the deferred tax relating to investment property measured at fair value in accordance with IAS 40 shall be determined taking account of the fact that the carrying amount will be recovered through the sale. As a result of this amendment, SIC – 21 – Income Taxes – Recovery of Revalued Non-Depreciable Assets shall no longer be applicable. The amendment must be applied retrospectively from January 1, 2012.

Accounting principles, amendments and interpretations not yet applicable and not adopted in advance by the Group

- On May 12, 2011, the IASB issued IFRS 10 – Consolidated Financial Statements which will replace SIC- 12 Consolidation – Special purpose entities and parts of IAS 27 – Consolidated and separate financial statements which will be renamed Separate financial statements and will regulate the accounting treatment of investments in Separate financial statements. The main changes introduced by the new standard are as follows. The new standard moves on from existing standards, identifying the concept of control as the determining factor for the consolidation of a company in the consolidated financial statements of the parent company. The new IAS 27 confirms that investments in subsidiaries, associated companies and Joint Ventures shall be accounted for at cost or, alternatively, in accordance with IFRS 9; the entity must apply a uniform criterion for each category of investments. Moreover, if an entity decides to measure investments in associated companies or Joint Ventures at fair value (applying IFRS 9) in its consolidated financial statements, it must use the same method in its separate financial statements. The standard is applicable retrospectively not later than from reporting periods commencing on or after January 1, 2014. Based on ongoing analysis, adoption of the new standard is not expected to produce any significant effects on the financial statements of the Company.

- On May 12, 2011, the IASB issued IFRS 11 – Joint arrangements, which will replace IAS 31 – Interests in Joint Ventures and SIC-13 –Jointly controlled entities – Non-monetary contributions by venturers. The new standard provides criteria for use in identifying joint arrangements based on rights and obligations arising from such arrangements rather than on their legal form. It also establishes the equity method as the sole method for use in accounting for interests in jointly controlled entities in consolidated financial statements. The new standard is applicable retrospectively not later than from annual reporting periods commencing on or after January 1, 2014. Since the issue of IFRS 11, IAS 28 – Investments in associates has been amended to include interests in jointly controlled entities in its scope of application from the effective date of the standard.

- On May 12, 2011, the IASB issued IFRS 12 – Disclosure of interests in other entities which is a new and complete standard on disclosures required in consolidated financial statements on all types of interest, including those in subsidiaries, joint arrangements, associates and unconsolidated special purpose entities and other vehicle entities. The standard is applicable retrospectively not later than from annual reporting periods commencing on or after January 1, 2014.

- On May 12, 2011, the IASB issued IFRS 13 – Fair value measurement which clarifies how fair value must be determined for financial reporting purposes and applies to all circumstances where IFRS require or permit fair value measurement or the presentation of information based on fair value, with some limited exceptions. The standard is applicable prospectively from January 1, 2013. Adoption of the new standard is not expected to produce any significant effects on the financial statements of the company.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 28 - On June 16, 2011, the IASB issued an amendment to IAS 1 – Presentation of financial statements which requires entities to group together all items presented as Other comprehensive income/(losses) based on whether or not they can subsequently be reclassified to the income statement. The amendment is applicable to periods commencing on or after 1 July 2012. Adoption of this amendment will not produce any effect in terms of measurement of the items reported in the financial statements.

- On June 16, 2011, the IASB issued an amendment to IAS 19 – Employee benefits applicable retrospectively from the reporting period commencing on January 1, 2013. The amendment changes the rules on recognition of defined benefit plans and termination benefits. The main changes involving defined benefit plans regard the recognition of the plan deficit or surplus in the statement of financial position, the introduction of the net financial expense and the classification of net financial expenses on defined benefit plans. In more detail:

- Recognition of plan deficit or surplus: The amendment eliminates the option to defer recognition of actuarial gains and losses under the corridor method, requiring that all actuarial gains and losses must be recorded directly in Other Comprehensive Income. The amendment also requires the immediate recognition in the income statement of costs relating to previous employee service. - Net financial expense: The replacement of the concepts of financial expense and expected return on defined benefit plans with a concept of net financial expense on defined benefit plans which is composed of:

- Financial expenses calculated on the present value of liabilities for defined benefit plans, - Financial income resulting from the valuation of plan assets and - The financial income or expense resulting from any limits on recognition of the plan surplus.

The net financial expense is determined using for all components the discount rate used to measure the defined benefit plan obligation at the start of the period. In accordance with the current version of IAS 19, the expected return on the assets is determined based on the long-term expected rate of return.

- Classification of net financial expenses: in accordance with the new definition of net financial expense outlined by the standard, all net financial expenses on defined benefit plans are recognised under Financial income (expenses) in the Income Statement.

Adoption of the new standard is not expected to produce significant effects on the financial statements of the company.

- On December 16, 2011, the IASB issued several amendments to IAS 32 – Financial instruments: presentation, to clarify the application of certain criteria for the offsetting of financial assets and liabilities included in IAS 32, effectively making it more difficult. The amendments are applicable retrospectively for periods commencing on or after 1 January 2014.

- On December 16, 2011, the IASB issued several amendments to IFRS 7 – Financial instruments: disclosures. The amendments require further information on the effects or potential effects of the offsetting of financial assets and liabilities on the statement of financial position of an entity. The amendments are applicable to annual periods commencing on or after 1 January 2013 and to interim periods after that date. Information must be provided retrospectively. Adoption of this amendment is not expected to produce significant effects on the financial statements of the company.

At the reporting date, the relevant European Union bodies had not yet completed the approval process required for application of the following accounting standards and amendments:

- On 12 November 2009, the IASB published IFRS 9 – Financial instruments: the standard was later amended. The standard is applicable retrospectively from 1 January 2015 and represents the first part of a step-by-step process that aims to replace IAS 39 entirely and introduce new criteria for the classification and measurement of financial assets and liabilities. For financial assets, the new standard uses an approach based on the methods of managing financial instruments and on the

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 29 characteristics of the contractual cash flows of financial assets to determine the valuation method, replacing the different rules provided for by IAS 39. Meanwhile, for financial liabilities, the main change regards the accounting treatment of changes in the fair value of a financial liability designated as a financial liability at fair value through profit and loss if they are due to changes in the creditworthiness of the liability itself.. Under the new standard such changes must be recorded in the Statement of Comprehensive Income and will no longer pass through the Income Statement.

- On 17 May 2012, the IASB published a series of amendments to IFRS (“ Annual Improvements to IFRSs: 2009-2011 Cycle”) which will be applicable retrospectively from January 1, 2013. Details of those amendments that will lead to a change in the presentation, recognition and measurement of items reported are described below while those that will merely lead to changes of terminology or editorial differences with a minimal effect in accounting terms have been omitted, as have those that affect standards or interpretations not applicable by the Group:

- IAS 1 Presentation of financial statements: clarifies the method presentation of comparative information when an entity changes its accounting policies or makes retrospective restatements or reclassifications and when an entity provides additional balance sheet information on top of that required by the standard;

- IAS 16 – Property, plant and equipment: clarifies that spare parts and replacement equipment shall be capitalised only if they respect the definition of Property, plant and equipment, otherwise they shall be classified as Inventory.

- IAS 32 – Financial instruments: Presentation: the amendment eliminates an inconsistency between IAS 12 – Taxes on income and IAS 32 on accounting for taxes resulting from distributions to shareholders, establishing that they must be recorded in the income statement insofar as the distribution refers to income generated by operations originally recorded in the income statement.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 30 NOTES TO THE CONSOLIDATED FINANCIAL STATEMENTS

Consolidated Income Statement

5 REVENUE

Revenue for the year ended December 31, 2012 totalled Euro 848,504 thousand, a net increase of Euro 73,013 thousand on the year ended December 31, 2011.

2012 % 2011 % Change

North America 396,544 46.7% 361,809 46.7% 34,735 Europe 272,173 32.1% 250,787 32.3% 21,386 Rest of the World 179,787 21.2% 162,895 21.0% 16,892 Total 848,504 100% 775,491 100% 73,013

The year 2012 ended with revenue of Euro 848.5 million, representing significant growth on prior year (+9.4%).

The strong performance for the year was thanks to:

 A significant increase in volumes in the Imaging Agents Core Business, especially on emerging markets like Eastern Europe and Latin America but also on some European markets (Germany and France) and in North America;  A good performance by the “Injectors” business, especially in the radiology segment, with regard to the recently acquired products of Bracco Injeneering (formerly Swiss Medical Care) and products forming part of the existing business;  A general increase across all lines forming part of the “Other” category.

Revenue may be broken down by business segment as follows: 2012 % 2011 % Change

Imaging Agents 755,981 89.1% 698,980 90.1% 57,001 Injectors 34,610 4.1% 25,779 3.3% 8,831 Pharmaceutical products 3,089 0.4% 15,529 2.0% (12,440) Other 54,824 6.5% 35,203 4.5% 19,621 Total 848,504 100% 775,491 100% 73,013

Revenue includes sales to parent company Bracco S.p.A. and to associated companies as follows:

2012 2011 Change

Imaging Agents Centro Diagnostico Italiano 209 232 (23) Total 209 232 (23) Pharmaceutical Products Bracco S.p.A. 2,999 15,529 (12,530) Total 3,208 15,761 (12,553)

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 31 6 OTHER INCOME

Other income amounts to Euro 19,208 thousand and has decreased by Euro 9,369 thousand compared to 2011. It may be analysed as follows:

2012 2011 Change

Cash flow hedging 0 5,121 (5,121) Royalties income 3,877 3,539 338 Contingent assets 3,445 2,550 895 Billback of miscellaneous services 1,432 1,554 (122) Billback of research costs 1,048 206 842 Grants received 1,796 4 1,792 Other income 7,610 15,603 (7,993) Total 19,208 28,577 (9,369)

In 2011, “Cash Flow hedging” referred to the treatment of hedging instruments and the exchange on the underlying USD receivables in accordance with the hedge accounting method. In 2012, this item was classified under “other operating expenses”.

“Billback of research costs” mainly refers to the recharge of costs for research, medical services and regulatory matters to parent company Bracco S.p.A.

“Grants towards research costs” refers to various research projects carried out by the holding company in respect of which grants have been received.

“Sundry revenue” amounted to Euro 7,610 thousand in 2012 (Euro 15,603 thousand in 2011). In 2011, it included non-recurring income relating to settlement of a dispute with US insurance company XL Select Insurance Company.

The following table summarises “Other income” from parent company Bracco S.p.A. and other associated companies:

2012 2011 Change

Billback of miscellaneous services: Bracco S.p.A. 1,432 1,510 (78) Billback of research costs: Bracco S.p.A. 917 44 873 Other income: Acist Medical System Inc. 602 497 105 Centro Diagnostico Italiano 64 23 41 Bracco Real Estate S.r.l. 117 92 25 Total 3,132 2,166 966

7 PURCHASES OF RAW MATERIALS AND GOODS FOR PRODUCTION AND RESALE, SERVICES AND LEASE/RENTAL COSTS

These amount to a total of Euro 536,798 thousand, a 20.3% increase on prior year (Euro 446,107 thousand in 2011). The balance may be analysed as follows:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 32 2012 2011 Change

Purchases of raw ma terials and goods for production and resale: - Raw materials and goods 140,916 101,954 38,962 - Finished products 63,309 48,632 14,677 - Packaging and wrapping material 33,964 19,862 14,102 - Ancillary and consumable material 8,216 7,900 316 - Other purchases and accessory charges 3,127 3,472 (345) (A) 249,531 181,820 67,711 Services and lease/rental costs: - Outsourced production 55,668 63,260 (7,592) - Consultancy 41,373 36,047 5,326 - Promotional, advertising and marketing expenses 31,893 27,876 4,017 - Experime nts, scientific consultancy and research 16,718 19,659 (2,941) - Transports 22,272 14,303 7,969 - Utilities 20,405 17,062 3,343 - Maintenance 17,343 12,554 4,789 - Travel 13,488 12,381 1,107 - Rents 11,997 9,144 2,853 - Canteen and other employee-related expenses 7,065 6,722 343 - Insurance 4,917 4,649 268 - Royalties expense 1,938 2,377 (439) - Fees to Directors and Statutory Auditors 1,666 1,855 (189) - Fees, contributions and reimbursements of agent expenses 1,262 1,347 (85) - Other costs 39,264 35,051 4,213 (B) 287,267 264,287 22,980 Total (A)+(B) 536,798 446,107 90,691

“Purchases of raw materials and goods for production and resale” and “Services and lease/rental costs” include costs relating to parent company Bracco S.p.A. and associated companies, as shown in the following table:

2012 2011 Change

Purchases of raw ma terials and goods for production and resale: Bracco S.p.A. 0 1 (1) Acist Medical System Inc. 18,795 15,535 3,260 Services and use of third-party assets: Bracco S.p.A. 3,124 2,945 179 Acist Medical System Inc. 351 514 (163) Bracco Advance Medical Technologies Inc. 40 88 (48) Centro Diagnostico Italiano 308 278 30 Total 22,618 19,361 3,257

8 PERSONNEL COSTS

Personnel costs are analysed as follows:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 33 2012 2011 Change

Wages and salaries 149,712 130,356 19,356 Social security contributions 33,668 28,989 4,679 Defined benefit plan cost 4,731 4,343 388 Other employee-related costs 9,524 5,354 4,170 Total 197,634 169,042 28,592

The actual number of employees at December 31, 2012 and December 31, 2011 may be broken down as follows:

Units Units Change 2012 2011 Executives 159 149 10 Middle Managers 495 456 39 White-collar 1132 1045 87 Blue-collar 734 720 14 Total 2,520 2,370 150

The headcount increase in 2012 is mainly due to the change in scope of consolidation following the acquisition of commercial companies in Latin America, the strengthening of the workforce of the commercial companies in China and Eastern Europe and additional personnel hired at the pharmaceuticals factory in Singen (Germany).

The average number of employees is shown below:

Units Units Change 2012 2011 Executives 158 149 9 Middle Managers 485 439 46 White-collar 1139 1040 99 Blue-collar 731 707 24 f Total 2,513 2,335 178

9 OTHER OPERATING EXPENSES

In 2012, other operating expenses amounted to Euro 28,987 thousand, compared to Euro 18,940 thousand in 2011 and are analysed as follows:

2012 2011 Change

Taxes and indirect duties 8,479 5,412 3,067 Contingent liabilities 4,076 1,313 2,763 Cash flow hedge 7,024 0 7,024 Other charges 9,408 12,215 (2,807) Total 28,987 18,940 10,047

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 34 “Cash flow hedge” refers to derivative hedging instruments and the exchange differences realised on the underlying USD receivables and to forward contracts for currency purchases arranged to hedge USD payables, as recorded on a hedge accounting basis.

10 DEPRECIATION AND AMORTISATION

Depreciation and amortisation amount to Euro 50,619 thousand, an increase of Euro 8,423 thousand compared to 2011. Depreciation and amortisation are broken down by asset category in the following table:

2012 2011 Change

Amortization of intangible assets with a definite useful life: - Patents and intellectual property rights (note 21) 2,022 1,236 786 - Concessions, licenses, trademarks and similar rights (note 21) 5,374 4,620 754 - Customers List (nota 21) 8,828 7,005 1,823 - Other intangible assets (note 21) 1,242 500 742 (A) 17,466 13,361 4,105 Depreciation of owned property, plant and equipment: - Industrial buildings (note 18) 2,982 2,410 572 - Plant (note 18) 17,295 15,780 1,515 - Machinery and industrial equipment (note 18) 7,852 6,009 1,843 - Other assets (note 18) 2,307 1,970 337 Depreciation of investment property: - Non-industrial buildings (note 19) 225 225 0 (B) 30,661 26,394 4,267 Depreciation of property, plant and equipment under finance lease and leasehold improvements: - Industrial buildings (note 18) 1,536 1,052 484 - Plant (note 18) 831 1,285 (454) - Machinery and industrial equipment (note 18) 51 56 (5) - Other assets (note 18) 74 48 26 (C) 2,492 2,441 51 Total (A)+(B)+(C) 50,619 42,195 8,423

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 35 11 PROVISIONS AND WRITEDOWNS

In 2012, this caption amounted to Euro 3,477 thousand (Euro 7,533 thousand in 2011) and may be broken down as shown in the following table:

2012 2011 Change

Provisions 97 6,415 (6,318) Writedowns of equity investments 15 0 15 Impairme nt of intangible assets and property, plant and equipment 3,365 1,118 2,247 Total 3,477 7,533 (4,056)

“Impairment of intangible assets and property, plant and equipment” mainly refers to the combined effect of impairment adjustments made during the period to certain intangible assets owned by the Group and to the restatement of the earn-out liability relating to the acquisition of Bracco Injeneering S.A. in 2011. For more details, see “Impairment of Assets” note.

12 FINANCIAL INCOME

Financial income amounts to Euro 12,313 thousand, Euro 12,406 thousand less than in 2011, and is analysed as follows:

2012 2011 Change

Other financial income Interest income from current securities 413 413 0 Interest income from receivables from associated companies 525 353 172 Interest from bank deposits 209 504 (295) Income from fair value hedge derivatives 853 3,409 (2,556) Other financial income 711 518 193 (A) 2,711 5,197 (2,486) Exchange gains Exchange gains 9,590 18,134 (8,544) Net unrealized exchange gains 0 1,069 (1,069) (B) 9,590 19,203 (9,613) Fair value of derivatives Positive adjustment to fair value of hedging derivatives 12 162 (150) Mark-to-market valuation of currency derivatives 0 157 (157) (C) 12 319 (307) Total (A)+(B)+(C) 12,312 24,719 (12,406)

“Financial income” includes amounts relating to derivative contracts to hedge risks relating to loans (exchange rate and interest rate risks) while income and expenses relating to hedging contracts for commercial transactions are recorded under “Other financial income”.

“Income from fair value hedge derivative instruments” refers to forward contracts for the sale of currency, arranged to hedge loans granted by holding company Bracco Imaging S.p.A to Group companies Bracco Diagnostics Inc. and Bracco Imaging Korea Ltd.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 36 13 FINANCIAL EXPENSES

Financial expenses amount to Euro 29,075 thousand, Euro 7,319 thousand less than in 2011, and are analysed as follows:

2012 2011 Change

Interest expense and other financial charges Interest expenses on loans and borrowings 9,094 6,791 2,303 Interest expenses with banks 118 98 20 Other interest expenses 0 0 Commissions 2,476 1,520 956 Charges from ineffective financial instruments 0 569 (569) other than currency hedging Charges from interest rate hedging derivatives 1,375 2,487 (1,112) Charges from discounting employee benefits 1,210 483 727 Losses on swap-FRA 872 3,407 (2,535) Other financial charges 2,885 2,164 721 (A) 18,030 17,519 511 Exchange losses Exchange losses 9,704 15,897 (6,193) Unrealized exchange losses 734 0 734 (B) 10,438 15,897 (5,459) Fair value of derivatives Negative adjustme nt to fair value of 369 0 369 derivatives hedging currency receivables Negative adjustme nt to fair value of 238 2,798 (2,560) derivatives hedging currency loans

(C) 607 2,798 (2,191) Net losses on disposal of current securities 0 0 0 (D) 0 0 0 Total (A)+(B)+C+(D) 29,075 36,214 (7,139)

“Interest expenses on loans and borrowing” mainly refers to interest expenses on loans arranged by the holding company with Unicredit Banca d’Impresa S.p.A. (Euro 1,586 thousand), Mediobanca (Euro 2,286 thousand), Centrobanca (Euro 1,007 thousand) and Banca Intesa San Paolo (Euro 1,972 thousand). The increase in 2012 was mainly due to new bank loans arranged during the year and to a rise in the average rate of interest applied to borrowing.

“Expenses from derivative instruments to hedge interest rate risk” essentially regards hedging of the interest rate risk on loans arranged by the holding company.

“Restatement of fair value of derivative instruments to hedge foreign currency loans” refers to the valuation of derivative contracts (forward currency contracts) relating to loans.

The amount of Euro 872 thousand refers to forward contracts for the sale of currency in relation to foreign currency loans.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 37 14 TAXES ON INCOME

Taxes on income for the years ended December 31, 2012 and 2011 may be analysed as follows:

2012 2011 Change

Provisions for taxes for the year IRES/IRAP 20,287 21,682 (1,395) Other direct taxes 50,093 14,770 35,323

Total taxes (A) 70,380 36,452 33,928

Provisions for deferred tax liabilities 729 98 631 Reversal of deferred tax liabilities (7,998) (6,745) (1,253)

Total deferred tax liabilities (B) (7,269) (6,647) (622)

Deferred tax assets (2,307) (10,794) 8,487 Reversal of deferred tax assets (1,808) 3,334 (5,142)

Total deferred tax assets (C) (4,115) (7,460) 3,345 Total (A)+(B)+(C) 58,996 22,344 36,652

“Other direct taxes” includes tax expenses relating to the tax dispute settled by holding company Bracco Imaging S.p.A. with the Lombardy Regional Head Office of the Italian Tax Authorities.

Deferred taxes relating to items recorded in the statement of financial position amount to Euro 104 thousand (Euro 2,928 thousand in 2011). For more details, see Note 28 “Deferred tax assets/liabilities”. The following table contains a reconciliation between the theoretical tax rate and the effective rate per the financial statements and the corresponding theoretical and effective tax charges:

2012 2011 Value % Value %

Income before taxes 68,793 109,751 Tax calculated based on the current tax rates 18,918 27.5% 30,182 27.5%

Permanent differences: Different rates of foreign companies (5,117) -7.4% (4,247) -3.9% Companies closing with a loss 127 0.2% (434) -0.4% Taxes from previous years 41,600 60.5% 0 0.0% Other net changes (431) -0.6% (7,216) -6.6%

IRAP calculated based on results other than income before taxes 3,898 5.7% 4,060 3.7%

Total effective taxes charged to the income statement 58,996 85.8% 22,344 20.4%

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 38 Consolidated Statement of Financial Position

15 PROPERTY, PLANT AND EQUIPMENT

The following tables provide a breakdown of this caption and movements thereon in 2012 and 2011:

December 31, 2012 December 31, 2011 (Net value) Historical Accumulated Historical Accumulated Ne t value Ne t value cost depreciation cost depreciation Land 20,567 0 20,567 20,382 0 20,382 Leased land 0 0 0 0 0 0 Total land 20,567 0 20,567 20,382 0 20,382

Owned industrial buildings 67,206 (23,120) 44,086 62,971 (19,022) 43,949 Industrial buildings under finance lease and leasehold 3,841 (2,997) 844 7,547 (4,270) 3,277 improvements Total industrial buildings 71,047 (26,117) 44,930 70,518 (23,292) 47,226

Owned plant 196,551 (107,939) 88,612 189,565 (90,658) 98,907 Plant under finance lease and leasehold improvements 8,680 (6,967) 1,713 8,576 (6,136) 2,440 Total plant 205,231 (114,906) 90,325 198,141 (96,794) 101,347

Owned machinery and industrial equipment 65,171 (49,403) 15,768 60,530 (44,377) 16,153 Machinery and industrial equipment under finance lease 616 (192) 424 396 (338) 58 and leasehold imrpovements Total machinery and industrial equipment 65,787 (49,595) 16,192 60,926 (44,715) 16,211

Other owned assets 21,665 (14,579) 7,086 18,500 (12,300) 6,200 Other assets under finance lease and leasehold 788 (489) 299 455 (416) 39 improvements Total other assets 22,453 (15,068) 7,385 18,955 (12,716) 6,239

Advance payments and fixed assets in progress 22,305 0 22,305 11,083 0 11,083

Total 407,389 (205,687) 201,702 380,005 (177,517) 202,488

The following table provides details of historical cost and accumulated depreciation for each item in the reporting periods ended December 31, 2012 and December 31, 2011.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 39 Change in Exchange December Write December (Historical cost) scope of Increases Decreases Reclass. gains 31, 2011 downs 31, 2012 consolidation (losses)

Land 20,382 0 162 0 0 0 23 20,567 Leased land 0 0 0 0 0 0 0 0 Total land 20,382 0 162 0 0 0 23 20,567

Owned industrial buildings 62,971 14 1,440 0 0 2,591 190 67,206 Industrial buildings under finance lease and leasehold 7,547 0 361 (3,725) 0 (366) 24 3,841 improvements Total industrial buildings 70,518 14 1,801 (3,725) 0 2,225 214 71,047

Owned plant 189,565 0 4,689 (361) (95) 2,639 114 196,551 Plant under finance lease and leasehold 8,576 0 44 0 0 60 0 8,680 improvements Total plant 198,141 0 4,733 (361) (95) 2,699 114 205,231

Owned machinery and industrial equipment 60,530 447 6,470 (607) 0 (941) (728) 65,171 Machinery and industrial equipment under finance 396 0 132 (207) 0 327 (32) 616 lease and leasehold improvements Total machinery and industrial equipment 60,926 447 6,602 (814) 0 (614) (760) 65,787

Other owned assets 18,500 172 3,581 (9,639) 0 9,369 (318) 21,665 Other leased assets and leasehold improvements 455 280 101 (14) 0 0 (34) 788 Total other assets 18,955 452 3,682 (9,653) 0 9,369 (353) 22,452

Advance payments and fixed assets in progress 11,083 1,204 18,084 (2,040) (149) (5,672) (205) 22,305

Total original cost 380,005 2,117 35,064 (16,593) (244) 8,007 (967) 407,389

Change in Exchange December Write December (Accumulated depreciation) scope of Amortization Decreases Reclass. gains 31, 2011 downs 31, 2012 consolidation (losses)

Owned industrial buildings 19,022 0 2,982 0 0 995 121 23,120 Industrial buildings under finance lease and leasehold 4,270 0 1,536 (3,716) 0 919 (12) 2,997 improvements Total industrial buildings 23,292 0 4,518 (3,716) 0 1,914 109 26,117

Owned plant 90,658 0 17,362 (275) 0 81 113 107,939 Plant under finance lease and leasehold 6,136 0 831 0 0 0 0 6,967 improvements Total plant 96,794 0 18,193 (275) 0 81 113 114,906

Owned machinery and industrial equipment 44,377 0 7,852 (551) 0 (1,908) (367) 49,403 Machinery and industrial equipment under finance 338 0 51 (207) 0 0 10 192 lease and leasehold improvements Total machinery and industrial equipment 44,715 0 7,903 (758) 0 (1,908) (357) 49,595

Other owned assets 12,300 0 2,239 (9,574) 0 9,793 (179) 14,579 Other assets under finance lease and leasehold 416 0 74 (6) 0 0 5 489 improvements Total other assets 12,716 0 2,313 (9,580) 0 9,793 (174) 15,068

Payments on account and fixed assets in progress 0 0 0 0 0 0 0 0

Total accumulated depreciation 177,517 0 32,927 (14,329) 0 9,880 (309) 205,686

(Net value) 202,488 2,117 2,137 (2,264) (244) (1,873) (658) 201,702

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 40 Change in Exchange December December (Historical cost) scope of Increases Decreases Write downs Reclass. gains 31, 2010 31, 2011 consolidation (losses)

Land 18,299 2,000 0 0 0 0 83 20,382 Leased land 0 0 0 0 0 0 0 0 Total land 18,299 2,000 0 0 0 0 83 20,382

Owned industrial buildings 59,460 4,715 112 0 0 (1,939) 623 62,971 Industrial buildings under finance lease and leasehold 4,844 0 866 0 0 1,599 238 7,547 improvements Total industrial buildings 64,304 4,715 978 0 0 (340) 861 70,518

Owned plant 172,722 2,276 8,706 0 (270) 5,564 567 189,565 Plant under finance lease and leasehold 15,482 0 82 0 0 (6,988) 0 8,576 improvements Total plant 188,204 2,276 8,788 0 (270) (1,424) 567 198,141

Owned machinery and industrial equipment 51,531 444 6,474 (401) (436) 1,358 1,560 60,530 Machinery and industrial equipment under finance 396 0 0 0 0 0 0 396 lease and leasehold improvements Total machinery and industrial equipment 51,927 444 6,474 (401) (436) 1,358 1,560 60,926

Other owned assets 16,136 1,626 1,713 (243) 0 (1,266) 534 18,500 Other leased assets and leasehold improvements 487 0 13 0 0 (40) (5) 455 Total other assets 16,623 1,626 1,726 (243) 0 (1,306) 529 18,955

Advance payments and fixed assets in progress 7,548 0 7,486 (176) (682) (3,194) 101 11,083

Total original cost 346,905 11,061 25,452 (820) (1,388) (4,906) 3,701 380,005

Change in Exchange December December (Accumulated depreciation) scope of Amortization Decreases Write downs Reclass. gains 31, 2010 31, 2011 consolidation (losses)

Owned industrial buildings 17,142 0 2,407 0 0 (806) 279 19,022 Industrial buildings under finance lease and leasehold 2,224 0 1,052 0 0 828 166 4,270 improvements Total industrial buildings 19,366 0 3,459 0 0 22 445 23,292

Owned plant 74,560 0 15,780 0 0 0 318 90,658 Plant under finance lease and leasehold 9,522 0 1,284 0 0 (4,670) 0 6,136 improvements Total plant 84,082 0 17,064 0 0 (4,670) 318 96,794

Owned machinery and industrial equipment 37,330 0 6,012 (371) 0 316 1,090 44,377 Machinery and industrial equipment under finance 282 0 56 0 0 0 0 338 lease and leasehold improvements Total machinery and industrial equipment 37,612 0 6,068 (371) 0 316 1,090 44,715

Other owned assets 10,407 0 1,970 (200) 0 (308) 431 12,300 Other assets under finance lease and leasehold 391 0 48 0 0 (22) (1) 416 improvements Total other assets 10,798 0 2,018 (200) 0 (330) 430 12,716

Payments on account and fixed assets in progress 0 0 0 0 0 0 0 0

Total accumulated depreciation 151,858 0 28,609 (571) 0 (4,662) 2,283 177,517

(Net value) 195,047 11,061 (3,157) (249) (1,388) (244) 1,418 202,488

The increase in Property, plant and equipment of Euro 35,064 thousand in 2012 (Euro 25,452 thousand in 2011) mainly regards capex on increasing production capacity and making the Group’s manufacturing facilities more efficient.

In 2012, the “change in scope of consolidation” of Euro 2,117 thousand referred to the inclusion of the property, plant and equipment of Justesa Imagen Argentina S.A., Justesa Imagen Mexicana S.A. DE C.V. and Justesa Imagen do Brasil S.A. which were acquired on April 19, 2012.

The amount recognised for these assets represents their fair value at the date of inclusion in the Group scope of consolidation, as required by IAS / IFRS.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 41 Fair value was determined in accordance with generally accepted valuation methods and principles. The following table shows the fair value of the assets at the date of acquisition:

Fair Value/ Deemed cost

Land 0 Owned industrial buildings 14 Owned plant 0 Owned machinery and industrial equipment 447 Other owned assets 452 Payments on account and fixed assets in progress 1,204

Total 2,117

As already stated in prior year financial statements, effective from the date of transition to IAS/IFRS (January 1, 2005), the value of certain land, buildings and plant (recorded under “Property, plant and equipment” of Bracco Imaging S.p.A. and Spin S.p.A.) was recalculated, in application of the option available under IFRS 1 which allowed for the adoption of the fair value of land, buildings, plant and machinery in place of their historical cost, as under the previous accounting principles. In particular, the fair value (fair value as deemed cost) of the manufacturing facilities in Ceriano Laghetto (the main manufacturing facility of Bracco Imaging S.p.A.) and Torviscosa (manufacturing facility of Spin S.p.A.) was determined with the value of the relevant assets appraised by an independent firm.

Fair value was determined using generally accepted valuation methods and principles, also in this case using valuation criteria based on the “Comparative method” and the “Cost method”.

The reserves created upon first-time application of IAS/IFRS are subject to the rules under Article 7 (6) of Legislative Decree no. 38 of February 25, 2005 which provides that equity increases due to the recognition of tangible assets at fair value (fair value as deemed cost) in place of cost shall be allocated to capital or to a specific reserve. When not allocated to capital, the reserve can only be reduced in compliance with Article 2445 (2) and (3) of the Italian Civil Code. If the reserve is used to cover losses, earnings cannot be distributed until such time as the reserve has been restored or reduced to the extent approved by a resolution of the Extraordinary General Meeting, as the provisions of Article 2445(2) and (3) of the Italian Civil Code do not apply. On July 12, 2007, an Extraordinary General Meeting of holding company Bracco Imaging S.p.A. approved the utilisation of the full amount of these reserves (Euro 32,327 thousand) to cover losses recorded under “Prior year accumulated losses”.

The following table shows, for each category of revalued property, plant and equipment, a comparison between net carrying amount in these financial statements and the net carrying amount which would have been reported using the accounting principles in force prior to the transition to IAS/IFRS:

December 31, 2012 December 31, 2011

Ne t book value Ne t book value Deemed Deemed before deemed before deemed Cost Cost cost cost

Land 1,398 9,359 1,398 9,359 Owned industrial buildings 7,849 8,739 8,262 9,199 Plant 22,246 33,432 26,827 41,773

Total 31,493 51,530 36,487 60,331

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 42 The Group also operates through production facilities owned by it and short/medium-term sub-contract agreements with third parties.

The Group is party to several contracts which are similar to finance leases (IFRIC 4) even though they do not have the legal form of finance leases. Such contracts provide for the right to use certain assets and other specific conditions and, as such, are akin to finance leases and must be accounted for accordingly, based on the method required by IAS 17.

In more detail, the Group is party to several contracts with Bioindustry Park Silvano Fumero S.p.A. for the construction of pilot chemical/pharmaceutical plants and for the construction of a pharmaceutical plant to develop and produce specialist injectable medicines, as well as for a Research Centre at the Biopark in Colleretto Giacosa (TO). These contracts provided for payment of regular instalments and the construction of said plants which was completed in prior years. The contracts are for between six and eight years – renewable for similar periods – and are scheduled to expire by 2016.

The Group’s property, plant and equipment is not subject to any ownership restrictions or secured guarantees, except for the Spin S.p.A. facilities in Torviscosa on which a lien has been granted in favour of Mediocredito Friuli Venezia Giulia (see Note 31 “Financial payables and liabilities”).

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 43 16 INVESTMENT PROPERTY

The following tables show movements in the last two reporting periods on historical cost, accumulated depreciation and net carrying amount.

December 31, 2012 December 31, 2011 Historical Historical (Net value) Accumulated Ne t Value Accumulated Ne t Value Cost Cost depreciation depreciation

Land 1,280 0 1,280 1,280 0 1,280 Non-Industrial buildings 6,080 (1,802) 4,278 6,080 (1,575) 4,505

Total 7,360 (1,802) 5,558 7,360 (1,575) 5,785

Exchange December December (Historical cost) Increases Decreases gains 31, 2011 31, 2012 (losses)

Land 1,280 0 0 0 1,280 Non-Industrial buildings 6,080 0 0 0 6,080

Total historical cost 7,360 0 0 0 7,360

Exchange December December (Accumulated depreciation) Amort. Decreases gains 31, 2011 31, 2012 (losses)

Buildings 1,575 227 0 0 1,802

Total accumulated depreciation 1,575 227 0 0 1,802

(Net value) 5,785 (227) 0 0 5,558

Exchange December December (Historical cost) Increases Decreases gains 31, 2010 31, 2011 (losses)

Land 1,280 0 0 0 1,280 Non-Industrial buildings 6,080 0 0 0 6,080

Total historical cost 7,360 0 0 0 7,360

Exchange December December (Accumulated depreciation) Amort. Decreases gains 31, 2010 31, 2011 (losses)

Buildings 1,350 225 0 0 1,575

Total accumulated depreciation 1,350 225 0 0 1,575

(Net value) 6,010 (225) 0 0 5,785

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 44 At the date of transition to IAS/IFRS, the value of certain land and buildings (recorded under “Investment property”) was recalculated, in application of the option available under IFRS 1 which allowed for the adoption of the fair value of land and buildings in place of their historical cost, as under the previous accounting principles. In particular, the fair value (fair value as deemed cost) of the investment property in Cesano Maderno was determined by means of an independent appraisal performed by a leading firm.

Fair value was determined based on generally accepted valuation methods and principles. In particular, the “Comparative (or market) method” was used based on a comparison between the assets in question and other similar assets recently involved in sale and purchase transactions or available for sale on the same or competing markets.

Income of Euro 291 thousand was recorded in 2012 from the rental of these assets, in line with the 2011 figure.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 45 17 INTANGIBLE ASSETS

These are intangible assets with a determinate useful life and may be analysed as follows:

December 31, December 31, 2012 2011 Patents and intellectual property rights 19,688 22,591 Concessions, licenses, trademarks and similar rights 45,209 50,746 Customer list 70,538 84,888 Other intangible assets 8,236 1,591 Other intangible assets in progress 23,100 25,876 Total 166,771 185,692

Movements on intangible assets in 2012 and 2011 were as follows:

Change in Exchange December December (Historical cost) scope of Increases Decreases Writedowns gains Reclass. 31, 2011 31, 2012 consolidation (losses) Patents and intellectual property rights 130,733 0 0 0 0 (972) (1,585) 128,176 Concessions, licenses, trademarks and similar rights 86,626 68 132 0 (397) (2,091) 926 85,264 Customer list 116,445 2,871 0 0 (4,729) (1,573) (4,594) 108,420 Other intangible assets 12,297 0 4,335 0 0 (238) 4,694 21,088 Intangible assets in progress 25,876 0 1,783 0 (7) (415) (4,137) 23,100 Total 371,977 2,939 6,250 0 (5,133) (5,289) (4,696) 366,048

Change in Exchange December December (Accumulated depreciation) scope of Amort. Decreases Writedowns gains Reclass. 31, 2011 31, 2012 consolidation (losses) Patents and intellectual property rights 108,142 0 2,022 0 0 (922) (754) 108,488 Concessions, licenses, trademarks and similar rights 35,880 0 5,374 0 0 (1,199) 0 40,055 Customer list 31,557 0 8,828 0 0 (685) (1,818) 37,882 Other intangible assets 10,706 0 1,240 0 0 (222) 1,128 12,852 Total 186,285 0 17,464 0 0 (3,028) (1,444) 199,277

(Net value) 185,692 2,939 (11,214) 0 (5,133) (2,261) (3,252) 166,771

Change in Exchange December December (Historical cost) scope of Increases Decreases Writedowns gains Reclass. 31, 2010 31, 2011 consolidation (losses) Patents and intellectual property rights 111,238 16,566 15 0 0 2,914 0 130,733 Concessions, licenses, trademarks and similar rights 81,695 1,548 829 (4) 0 2,558 0 86,626 Customer list 94,558 19,779 0 0 0 2,108 0 116,445 Other intangible assets 10,721 4 1,072 0 0 256 244 12,297 Intangible assets in progress 20,818 0 4,377 0 0 681 0 25,876 Total 319,030 37,897 6,293 (4) 0 8,517 244 371,977

Change in Exchange December December (Accumulated depreciation) scope of Amort. Decreases Writedowns gains Reclass. 31, 2010 31, 2011 consolidation (losses) Patents and intellectual property rights 103,879 0 1,235 0 0 3,028 0 108,142 Concessions, licenses, trademarks and similar rights 30,119 0 4,620 (1) 0 1,142 0 35,880 Customer list 23,387 0 7,005 0 0 1,165 0 31,557 Other intangible assets 9,975 0 500 0 0 231 0 10,706 Total 167,360 0 13,360 (1) 0 5,566 0 186,285

(Net value) 151,670 37,897 (7,067) (3) 0 2,951 244 185,692

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 46 The change in the scope of consolidation – a total of Euro 2,939 thousand – referred to the acquisition of Justesa Imagen Argentina S.A., Justesa Imagen Mexicana S.A. DE C.V. and Justesa Imagen Do Brasil S.A. on April 19, 2012. For more information, see Note 3 “Change in scope of consolidation”.

The increase during the year in “Other intangible assets in progress” and “Other intangible assets” mainly relates to the implementation of information and management systems that were not completed during the year and capex on information systems for the implementation of a new version of a software package.

The intangible assets reported in the financial statements mainly relate to HLT Inc., E-Z-EM Inc., Bracco Diagnostics Inc., Bipso G.m.b.H. and Bracco Injeneering S.A.

For HLT Inc., as at December 31, 2012, “Other intangible assets in progress” represented the valuation of intangible assets under development, at the start-up phase.

For E-Z-EM, the following table provides details of intangible assets with a determinate and indeterminate useful life, relating to the acquisition by the Group in 2008. These amounts were allocated at the date of acquisition based on an appraisal performed by an independent US firm and undergo a specific impairment test every year:

December December December Exchange April 1st December 31, December 31, 31, 31, 31, Amortization Reclass. gains 2008 2011 2012 2008 2009 2010 (losses)

Patents 5,248 5,480 4,931 4,924 4,680 (408) (832) (80) 3,360 Trademarks 7,822 8,201 7,488 7,604 7,369 (487) 0 (130) 6,752 Customer list 34,941 33,043 30,703 30,917 29,065 (2,664) (2,776) (215) 23,410

Total 48,011 46,724 43,122 43,445 41,114 (3,560) (3,608) (424) 33,522

Intangible assets also include the allocation to some intangible assets with a determinate useful life of US company Bracco Diagnostics Inc. of the merger deficit arising in 2006. This allocation process was based on an appraisal commissioned from a US appraisal firm which was confirmed in the fairness opinion issued by another independent expert. The amounts in question undergo a specific annual impairment test.

December December December December December Exchange December 31, 31, 31, 31, 31, Amortization Writedowns gains 31, 2007 2008 2009 2010 2011 (losses) 2012

Patents 2,195 2,031 1,682 1,511 1,249 (314) 0 (16) 919 Trademarks 44,134 44,068 39,825 40,229 38,747 (2,814) (397) (665) 34,870 Customer list 47,500 46,379 41,071 40,254 37,413 (4,187) 0 (613) 32,613

Total 93,829 92,478 82,578 81,993 77,408 (7,316) (397) (1,294) 68,402

Patents refer to ProHance, a product applied in the MRI segment.

Trademarks relate to the following products which are currently sold and distributed in the USA:

Trademark Modality Isovue X-Rays/CAT Gastrografin X-Rays/CAT Prohance MRI Kinevac Nuclear Medicine CardioGen Nuclear Medicine

Trademarks also include several “injectable iodinated products” and “radio-pharmaceutical products”.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 47 Finally, with regard to Bipso G.m.b.H. and Bracco Injeneering S.A., the following table shows the value of intangible assets with a determinate useful life relating to the acquisition by the Group in 2011. These allocations were performed at the date of acquisition on the basis of an independent appraisal and undergo annual impairment tests:

December 31, December 31, BIPSO G.m.b.H. Amortization Writedowns 2011 2012

Patents 8,800 (600) 0 8,200 Customer list 3,453 (743) 0 2,710

Total 12,253 (1,343) 0 10,910

Exchange December 31, December 31, Bracco Injeneering S.A. Amortization Writedowns gains 2011 2012 (losses)

Patents 7,038 (487) 0 50 6,601 Trademarks 1,439 (100) 0 10 1,349 Customer list 14,957 (1,035) (4,729) 113 9,306

Total 23,434 (1,622) (4,729) 173 17,256

Intangible assets also include the following:

Patents and intellectual property rights Rights to patents and production know-how purchased from third parties. These rights are amortised on a straight-line basis over their estimated useful lives which vary from three to eight years.

Concessions, licences, trademarks and similar rights Distribution and marketing rights purchased from third parties. These rights are amortised on a straight-line basis over their estimated useful lives which vary from five to ten years.

Other intangible assets This item mainly consists of document management information systems relating to research and development activities.

In 2012, the Group again confirmed its strong commitment to research and development in the Imaging Agents segment with a total investment of around Euro 69.8 million, all of which was expensed to the income statement for the year in accordance with IAS/IFRS as capitalisation requirements were not met.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 48 18 GOODWILL AND CONSOLIDATION DIFFERENCES

The following tables contains details of these balances at December 31, 2012 and December 31, 2011:

December Change in Exchange December Reclassificati 31, scope of Increases Writedowns gains 31, on 2011 consolidation (losses) 2012

Goodwill 99,669 10,856 1,935 (1,229) (1,632) (1,130) 108,469

Total 99,669 10,856 1,935 (1,229) (1,632) (1,130) 108,469

Change in December December 31, Exchange scope of Increases Writedowns 31, 2010 gains (losses) consolidation 2011

Goodwill 55,887 42,582 688 0 512 99,669

Total 55,887 42,582 688 0 512 99,669

The change in the scope of consolidation in 2012 entirely relates to the acquisition of Justesa Imagen Argentina S.A., Justesa Imagen Mexicana S.A. DE C.V. and Justesa Imagen Do Brasil S.A. on April 19, 2012; for more details see Note 3 “Change in scope of consolidation”.

The reported goodwill totalling Euro 108,469 thousand refers – in addition to the above – to the acquisition of E-Z-EM in 2008, the acquisition of Heart Leaflet Technologies Inc. in 2010 and the acquisitions of BIPSO G.m.b.H. and Bracco Injeneering S.A. in 2011.

Impairment of assets

As required by IAS 36, the Group has performed an impairment test to check the recoverability of the net book value of the tangible and intangible assets recorded in the Group consolidated financial statements at December 31, 2012. In particular, the goodwill recorded in the consolidated financial statements is subjected to an impairment test at least once a year even if there are no indicators of impairment.

Under the method required by IAS 36, the Group has identified CGUs (Cash Generating Units) which represent the smallest identifiable units in the consolidated financial statements that are capable of generating cash flow on a broadly independent basis. The organisational structure, the type of business and the manner in which control is exercised over the operations of the CGUs themselves were taken into account when identifying the CGUs.

The Group operates in various business segments and the CGUs identified by Management based on “modality” are as follows: - X Rays /CAT - X Rays/CAT – EZEM core - MRI - Ultrasuond - Nuclear Medicine - HLT Business - Injectors Business The amounts tested for each CGU are listed below:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 49 €/milion Total tested Goodwill assets CGU

X-Ray/Ct 233.3 29.0 X-Ray/Ct - E-Z-EM core 84.0 45.3 Magnetic Risonance 38.2 3.9 Ultrasound 19.6 - Nuclear 37.5 - HLT Business 29.2 7.3 Injector Business 40.7 22.9 Total 482.5 108.5

Impairment test structure

As in prior years, Management appointed an independent appraisal firm to assist it to test the recoverable amount of some intangible assets included in the consolidated financial statements on which an impairment test was performed. In more detail:

Bracco Diagnostics Inc. - Intangible assets Industrial patents Royalty rate method Trademarks Royalty rate method

E-Z-EM -Intangible assets Industrial patents Royalty rate method Trademarks Royalty rate method Customer list Excess Earnings method

Bracco Injeenering S.A. - Intangible assets Goodwill Value in use - Discounted Cash Flow Industrial patents Royalty rate method Trademarks Royalty rate method Customer list Excess Earnings method

The first level impairment test revealed that the value of some intangible assets of Branco Injeneering S.A. had been impaired. Consequently, impairment adjustments were made to certain intangible assets classified under “Goodwill” and “Customer List” whose value in use was lower than their carrying amount. The impairment adjustment amounted to around Euro 5.9 million and was made in order to bring the carrying amount into line with recoverable amount, an amount revised following delays regarding the five-year plan compared to prior year. The deferred earn-out liability which is subject to certain conditions materialising and certain business targets being achieved also had to be revised.

As required by IAS/IFRS, the impairment adjustments were recorded in the income statement under “Provisions and writedowns of intangible assets”.

Management also performed a second level impairment test to check that the overall recoverable value of intangible and tangible assets was not lower than their carrying amount, in application of IAS 36. This test was performed based on the aforementioned CGUs.

The recoverable amount of the CGUs was determined as the “value in use”. Value in use is the present value of the operating cash flows expected from the continuing use of the assets of the CGU, also at the end of their estimated useful lives (applying the perpetuity method).

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 50 The Group performed the impairment test using the most recent income statement and cash flow forecasts for a period of five years, presuming that assumptions would materialise and targets would be met. When processing the forecast financial information, Management made certain assumptions based on its prior experience and expectations for future developments in the business segments in which it operates.

The Business Plan 2013-2017 prepared and utilised for impairment test purposes includes both variables that can be controlled by Group management and variables not directly controllable or foreseeable by it.

The main assumptions made for the CGU cash flow forecasts included in the plan relate to sales margins, sales volumes, price trends and operating expenses.

Production costs are expected in line with historical trend also thanks to capex forecast and greater economies of scale. Research and development costs are expected to be in line with historical levels and regard the improvement of existing technologies as well as the development of new applications.

General and administrative expenses are expected to decrease in relation to cost containment measures and improvements in related processes and procedures.

Operating cash flow forecasts beyond the Business Plan period were made by extrapolating cash flows from the Business Plan. These projects and the estimated cash flows at the end of the useful life (“terminal value”) were determined using an appropriate rate of growth (“g rate”).

The assumptions used for 2012 and 2011 are summarised in the following table:

2012 2011

Long term growth Long term growth Discount Rate Discount Rate rate rate

X-Ray/Ct (without E-Z-EM products) 1.5% 9.7% 1.5% 10.0% X-Ray/Ct E-Z-EM products 2.5% 9.3% 3.0% 10.6% Magnetic Risonance 1.5% 9.7% 1.5% 10.0% Ultrasound 1.5% 9.7% 1.5% 10.0% Nuclear 1.5% 9.7% 1.5% 10.0% HPPD Business 3.0% 12.8% 3.0% 14.0% HLT Business 2.5% 26.4% 2.5% 26.7% Injector Business 3.0% 14.4% 2.3% 15.5%

We note that, as required by IAS / IFRS, the assets and liabilities relating to the HPPD CGU/Business HPPD have been reclassified to “Assets and liabilities destined for sale” because this business is scheduled for sale in 2013 at a total amount of not less than the net carrying amount of the related assets and liabilities.

As the companies involved in the HLT CGU are still at the start-up phase, revenue has only been forecast in the long-term. Therefore, for impairment test purposes, a Business Plan for a significantly longer period was used and the related uncertainties are reflected in the utilisation of a much higher Weighted Average Cost of Capital (WACC) than for the other CGUs. Moreover, for the Injectors CGU, as the company is still finalising its business model and R&D expenditure on new product development is still underway, for impairment test purposes, we referred to cash flows which incorporate sales forecasts relating to the years beyond the explicit period with the resulting uncertainties reflected in the use of a significantly higher Weighted Average Cost of Capital (WACC) than for the other CGUs. The test performed did not identify any impairment of assets in addition to that identified during the first level test. Nonetheless, given that recoverable amount is determined based on estimates, the Group cannot be certain that the value of goodwill will not be impaired in future years. The continuing difficult market situation means that several factors used to perform the estimates might have to be revised.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 51 The Group has also performed sensitivity analysis considering changes in the underlying assumptions for the impairment tests and, specifically, changes in the variables with the greatest impact on recoverable amount (discount rates, growth rates, terminal value and, where possible, revenue growth rate and resulting costs trend) determining the level of these variables which render value in use equal to carrying amount as shown below:

- X-Ray/CAT Modality, X-Ray/CAT EZEM Core Modality, MRI Modality, Ultrasound Modality, Nuclear Medicine Modality: the sensitivity analysis produced positive results even considering a growth rate of zero and a significantly higher WACC than that used in the impairment test.

- HLT: the recoverable amount of the assets of this CGU is particularly sensitive to the Business Plan variables depending on the outcome of the development phase of products whose market launch is scheduled for 2015. Any significant changes to the Business Plan could make it difficult to recover the assets recorded.

- Injectors: the recoverable amount of the assets of this CGU is particularly sensitive to the Business Plan variables and, especially, to the scheduled timetable for the product launch on the North American market. Any significant changes to the Business Plan could make it difficult to recover the assets recorded.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 52 19 INVESTMENTS

Investments in other entities, carried at cost, are as follows:

December 31, Movements for the year December 31, Writedowns 2011 Increases Decreases 2012

Other entities Bioindustry Park Silvano Fumero S.p.A. 2,130 0 0 0 2,130 Other investments 67 849 0 (15) 901

T O T A L 2,197 849 0 (15) 3,031

December 31, Movements for the year December 31, Writedowns 2010 Increases Decreases 2011

Other entities Bioindustry Park Silvano Fumero S.p.A. 2,130 0 0 0 2,130 Other investments 67 0 0 0 67

T O T A L 2,197 0 0 0 2,197

The increase for the year is mainly due to the acquisition, on October 15, 2012, by subsidiary SPIN S.p.A. of a 15% interest in Halo Industry S.p.A., through subscription of 450,000 ordinary shares with a nominal value of Euro 1.00 each. The objectives of the company include the design, construction and operation of a state of the art chlor alkali membrane plant.

At December 31, 2012 holding company Bracco Imaging’s interest in Bioindustry Park Silvano Fumero S.p.A. stood at 17.34%.

20 OTHER ASSETS AND NON-CURRENT FINANCIAL ASSETS

At December31, 2012, these amounted to Euro 4,760 thousand and were in line with the December 31, 2011 level.

December 31, 2012 December 31, 2011 Between one After five Between one After five Total Total and five years years and five years years Other financial receivables from third parties 59 59 0 263 263 0 Other non-current financial assets 4,701 4,701 0 4,457 4,457 0 Total 4,760 4,760 0 4,720 4,720 0

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 53 21 INVENTORIES

Inventories are analysed as follows:

December 31 December 31 Gross value Provision 2012 2011 Raw materials 66,747 (490) 66,257 55,746 Semi-finished and contract work in progress 23,854 (97) 23,757 18,522 Finished products 125,836 (9,716) 116,120 99,329 Advance payaments 0 0 0 0 Total 216,437 (10,303) 206,134 173,597

The inventory provision is carried to take account of obsolete and slow moving inventories and to reflect commercial risks relating to products.

The following table shows movements on the inventory provision in 2012 and 2011.

December 31 Change in scope Provision Utilization Exchange December 31 2011 of consolidation for the year for the year gains (losses) 2012 Inventory obsolescence provision 10,269 51 614 (611) (20) 10,303

Total 10,269 51 614 (611) (20) 10,303

December 31 Change in scope Provision Utilization Exchange December 31 2010 of consolidation for the year for the year gains (losses) 2011 Inventory obsolescence provision 10,354 168 553 (850) 44 10,269

Total 10,354 168 553 (850) 44 10,269

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 54 22 TRADE RECEIVABLES

At December 31, 2012, trade receivables totalled Euro 120,762 thousand, Euro 9,077 thousand more than at December 31, 2011. They were analysed as follows:

December 31, December 31, 2012 2011 Trade receivables from third parties 120,684 109,787 Trade receivables from parent company 2 1,751 Trade receivables from associated companies 76 147 Total 120,762 111,685

The increase in “Trade receivables – third party” is due to an increase in the volume of business, together with a change in the mix of trade receivables.

Details of trade receivables from the parent company and other associated companies are shown below:

December 31, December 31, Receivables from associated companies & parent company 2012 2011 Bracco S.p.A. 2 1,751 Acist Medical Systems, Inc. 0 26 Bracco Real Estate S.r.l. 0 54 Centro Diagnostico Italiano 76 67 Total 78 1,898

Trade receivables are stated net of the allowance for doubtful debts of Euro 7,658 thousand (Euro 7,994 thousand at December 31, 2011), as determined based on historical bad debt information. During the year, movement on the provision was as follows:

Change in December 31, Provisions Utilizations Exchange December 31, scope of 2011 for the year for the year gains (losses) 2012 consolidation Allowance for doubtful accounts 7,994 13 579 (906) (22) 7,658 Total 7,994 13 579 (906) (22) 7,658

Change in December 31, Provisions Utilizations Exchange December 31, scope of 2010 for the year for the year gains (losses) 2011 consolidation Allowance for doubtful accounts 4,164 0 3,937 (196) 89 7,994 Total 4,164 0 3,937 (196) 89 7,994

In 2012, on the Italian market only, the Group carried out the non-recourse factoring of receivables from hospital companies totalling Euro 31,771 thousand (Euro 34,376 thousand in 2011).

The factoring terms and conditions provide that the credit risk, the late payment risk and the interest rate risk are transferred to the factor. In 2012, IAS/IFRS rules whereby the receivables in question were eliminated from the statement of financial position on the effective date of transfer to the factoring company were applied.

The carrying amount of trade receivables, less the provision for doubtful debts, reflects their fair value.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 55 23 CURRENT FINANCIAL ASSETS

At December 31, 2012, Current financial assets amounted to Euro 51,778 thousand (Euro 30,909 thousand at December 31, 2011) and were detailed as follows:

December 31, December 31, 2012 2011

Financial receivables from associated companies 39,143 19,334 Other financial receivables 12,635 11,575 Total 51,778 30,909

The financial receivable from associated companies refers to a loan agreement with associated company Acist Medical Systems Inc. which will expire within a year.

“Other financial receivables” includes Euro 12,407 thousand regarding an investment in bonds issued by the European Investment Bank (EIB) at a fixed rate of 4.125% and maturing on April 15, 2014.

24 OTHER RECEIVABLES AND CURRENT ASSETS

Other receivables are analysed as follows:

December 31, December 31, 2012 2011 VAT receivables 15,907 18,851 Prepaid expenses 5,274 6,751 Other receivables from tax authorities 4,963 3,053 Receivables from parent company 6,286 2,806 Advance payments to suppliers 1,370 931 Accrued income 36 428 Receivables from associated companies 205 285 Cash Flow Hedge 2,887 0 Other receivables 857 748 Total 37,784 33,852

“VAT receivables” mainly regards holding company Bracco Imaging’s VAT receivable of Euro 11,891 thousand (Euro 12,262 thousand at December 31, 2011) inclusive of interest accruing at the reporting date (Euro 146 thousand).

The receivable from the parent company mainly includes the IRES receivable of the Italian Group companies resulting from their participation in the Consolidated Taxation Arrangement.

Receivables for Cash Flow Hedges regards forward sales with a positive fair value of Euro 2,887 thousand (see Note 27).

“Receivables from associated companies” may be detailed as follows:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 56 December 31, December 31, Receivables from associated companies 2012 2011 Acist Medical Systems, Inc. 91 285 Centro Diagnostico Italiano 58 0 Bracco Real Estate S.r.l. 56 0 Total 205 285

25 CASH AND CASH EQUIVALENTS

At December 31, 2012, cash and cash equivalents were analysed as follows:

December 31, December 31, 2012 2011

Bank and post office accounts 63,426 74,586 Cash 45 52 Time deposit 3,916 6 Total 67,387 74,644

Further information on changes in the Group’s net financial position are provided in Notes 31 “Financial payables and liabilities” and 39 “Net financial position” and reflected in the Consolidated Statement of Cash Flows.

Bank and post office accounts represent amounts held on current accounts. They include Euro 31,037 thousand (Euro 40,581 thousand at December 31, 2011) denominated in currencies other than the Euro (mainly US Dollars).

The carrying amount of cash and cash equivalents was in line with fair value at both December 31, 2012 and December 31, 2011.

The credit risk relating to cash and cash equivalents may be considered limited as it is spread over several banks. Moreover, the amounts in question are held with leading Italian and international banks which are constantly measured using valuation methods specifically adopted by the Group.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 57 26 FINANCIAL INSTRUMENTS

A financial instrument is any contract that gives rise to a financial asset, a financial liability or an instrument represent capital in another entity (any contract representing a stake in the residual assets of an entity following settlement of all of its liabilities). The financial instruments held by the Group are included in the captions listed in the specific paragraph of the section “Summary of accounting principles and valuation methods”.

The following schedules show, separately for 2012 and 2011, the additional disclosures requested by IFRS 7 in order to measure the significance of financial instruments with regard to the Group’s statement of financial position and income statement.

Financial Instruments – Statement of Financial Position at December 31, 2012

Principles applied in measuring financial instruments (as per IAS 39)

Assets at fair Book value at Investments held Loans and Available-for-sale Financial instruments - Assets at December 31, 2012 value held for December 31, Notes to maturity receivables assets trading 2012

Investments 0 0 0 3,031 3,031 19 Financial assets and other non current assets 0 0 4,760 0 4,760 20 Trade receivables from third parties 0 0 120,684 0 120,684 22 Trade receivables from parent company and affiliated companies 0 0 78 0 78 22 Other receivables and current assets 0 0 37,784 0 37,784 24 Current financial assets 0 39,371 0 12,407 51,778 23 Cash and cash equivalents 0 0 67,387 0 67,387 25 Derivatives designated as hedging derivatives 2,887 0 0 0 2,887 24 Total 2,887 39,371 230,693 15,438 288,389

Principles applied in me asuring financial instruments (as per IAS 39)

Liabilities at fair Book value at Liabilities at Financial instrume nts - Liabilities at December 31, 2012 value held for December 31, Notes amortized cost trading 2012

Financial liabiliteis due to other lenders 0 1,689 1,689 31 Finance leases 0 1,014 1,014 31 Trade payables due to third parties 0 99,581 99,581 33 Trade payables due to parent company and affiliated companies 0 4,585 4,585 33 Other liabilities 0 74,321 74,321 34 Bank debts 0 377,949 377,949 31 Derivatives 3,961 0 3,961 31 Cash flow hedging derivative payables 456 0 456 34 Total 4,417 559,139 563,556

Financial Instruments – Statement of Financial Position at December 31, 2011

Assets at fair Book value at Investments held Loans and Available-for-sale Financial instruments - Assets at December 31, 2011 value held for December 31, Notes to maturity receivables assets trading 2011

Investments 0 0 0 2,197 2,197 19 Financial assets and other non current assets 0 0 4,720 0 4,720 20 Trade receivables from third parties 0 0 109,787 0 109,787 22 Trade receivables from parent company and affiliated companies 0 0 1,898 0 1,898 22 Other receivables and current assets 0 0 33,852 0 33,852 24 Current financial assets 0 19,739 0 11,170 30,909 23 Cash and cash equivalents 0 0 74,644 0 74,644 25 Derivatives designated as non-hedging derivatives 0 0 0 0 0 23 Derivatives designated as hedging derivatives 0 0 0 0 0 23 Total 0 19,739 224,901 13,367 258,007

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 58 Principles applied in me asuring financial instruments (as per IAS 39)

Liabilities at fair Book value at Liabilities at Financial instrume nts - Liabilities at December 31, 2011 value held for December 31, Notes amortized cost trading 2011

Financial liabiliteis due to other lenders 0 202 202 31 Finance leases 0 1,408 1,408 31 Trade payables due to third parties 0 90,963 90,963 33 Trade payables due to parent company and affiliated companies 0 2,782 2,782 33 Other liabilities 0 80,647 80,647 34 Bank debts 0 343,379 343,379 31 Derivatives 5,169 0 5,169 31 Cash flow hedging derivative payables 5,861 0 5,861 34 Total 11,030 519,381 530,411

Income and Expenses generated by Financial Instruments in 2012

Income and Expenses generated by financial Changes in fair From equity Exchange gains From interest Total instrume nts - FY 2012 value reserve (losses)

Derivative Instruments 0 (1,991) 0 0 (1,991) Investments held to maturity 413 0 0 0 413 Loans and receivables/payables 1,445 0 0 (848) 597 Liabilities at amortized cost (14,511) 0 0 (14,511) Total (12,653) (1,991) 0 (848) (15,492)

Other income and expenses (1,271) Total net financial income and expenses (16,763)

Income and Expenses generated by Financial Instruments in 2011

Income and Expenses generated by financial Changes in fair From equity Exchange gains From interest Total instrume nts - FY 2011 value reserve (losses)

Derivative Instruments 0 (5,533) 0 0 (5,533) Investments held to maturity 413 0 0 0 413 Loans and receivables/payables 1,375 0 0 3,514 4,889 Liabilities at amortized cost (10,485) 0 0 (208) (10,693) Total (8,697) (5,533) 0 3,306 (10,924)

Other income and expenses (571) Total net financial income and expenses (11,495)

Liquidity Risk

The liquidity risk is the risk that the Group might have difficulty in raising – at reasonable conditions – the funds needed to support its operating activities. Cash flows, funding requirements and the liquidity of the Group are constantly monitored with the aim of ensuring the efficient and effective management of financial resources in order to meet the requirements resulting from operations and investment and to settle liabilities as they fall due.

The following table shows - by contractual maturity period and considering the Worst case scenario – the undiscounted amounts of the Group’s financial obligations. It takes account of the earliest date on which the Group could be asked to make payment and contains references to the Notes for each type of liability.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 59 December 31, 2012 Between one Between two Between Between four Within one After five Book value and two and three three and and five Total Notes year years years years four years years Bank borrowing 377,949 179,187 58,213 22,083 39,775 21,849 75,731 396,836 31 Due to other lenders 1,689 228 330 329 330 330 164 1,711 31 Finance leases 1,014 414 309 233 60 0 0 1,015 31 Financial liabilities for derivatives 166 166 - - - - - 166 31 instruments Financial liabilities for derivatives 3,793 1,179 1,121 620 346 114 447 3,827 31 instruments IRS Trade payables 98,982 98,982 98,982 33 Total 479,800 280,155 59,972 23,265 40,510 22,293 76,342 502,537

December 31, 2011 Between one Between two Between Between four Within one After five Book value and two and three three and and five Total Notes year years years years four years years Bank borrowing 343,379 305,986 17,436 14,688 8,914 2,296 610 349,930 31 Due to other lenders 202 208 - 208 31 Bonds 0 Finance leases 1,408 585 521 347 255 292 0 2,000 31 Financial liabilities for derivatives 5,169 5,169 - - - - - 5,169 31 instruments Trade payables 93,745 93,745 93,745 33 Total 443,903 405,693 17,957 15,035 9,169 2,588 610 451,052

The Group has sufficient financial resources to cover its current liabilities as it can count on available liquidity, on unutilised committed lines of credit and on cash flows generated by its operating activities.

Credit risk

Receivables are stated net of the provision for doubtful debts. This amount represents the fair value of the trade receivables.

December 31, December 31, Credit risk 2012 2011

Trade receivables from third parties 120,684 109,787 Trade receivables from parent company and associated companies 78 1,898 Non-current financial receivables 114 263 (Current) Financial receivables from subsidiaries and associated companies 39,143 19,334 Current financial receivables 12,635 11,576

Total 173,033 142,858

The following tables show the trade receivables ageing analysis at December 31, 2012 and 2011:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 60 of which: of which: expired Credit risk at December 31, 2012 Amount not expired 1-3 months 3-6 months 6-9 months 9-12 months

Trade receivables Europe 48,792 33,545 6,416 2,381 1,645 4,804

Trade receivables North America 40,761 31,396 8,851 102 282 130

Trade receivables Rest of the world 31,132 25,381 4,498 928 321 2

Total trade receivables from third parties 120,684 90,322 19,766 3,411 2,248 4,936

Trade receivables Europe 78 78 0 0 0 0

Trade receivables North America 0 0 0 0 0 0

Trade receivables Rest of the world 0 0 0 0 0 0

Total trade receivables from Parent company and associated 78 78 0 0 0 0 companies

Total trade receivables 120,762 90,400 19,766 3,411 2,248 4,936

of which: of which: expired Credit risk at December 31, 2011 Amount not expired 1-3 months 3-6 months 6-9 months 9-12 months

Trade receivables Europe 42,545 30,859 6,236 2,454 848 2,146

Trade receivables North America 35,201 31,020 4,809 (296) 0 (332)

Trade receivables Rest of the world 32,042 28,138 2,424 1,305 0 174

Total trade receivables from third parties 109,787 90,017 13,469 3,463 848 1,988

Trade receivables Europe 1,894 1,894 0 0 0 0

Trade receivables North America 0 0 0 0 0 0

Trade receivables Rest of the world 4 4 0 0 0 0

Total trade receivables from Parent company and associated 1,898 1,898 0 0 0 0 companies

Total trade receivables 111,685 91,915 13,469 3,463 848 1,988

Movements on the provision for doubtful debts in 2012 and 2011 are shown below:

Change in December 31, Provisions Utilizations Exchange December 31, scope of 2011 for the year for the year gains (losses) 2012 consolidation Allowance for doubtful accounts 7,994 13 579 (906) (22) 7,658 Total 7,994 13 579 (906) (22) 7,658

Change in December 31, Provisions Utilizations Exchange December 31, scope of 2010 for the year for the year gains (losses) 2011 consolidation Allowance for doubtful accounts 4,164 0 3,937 (196) 89 7,994 Total 4,164 0 3,937 (196) 89 7,994

Fair value of financial assets and liabilities and calculation models utilised

The fair value of financial assets and liabilities are set out below, as divided based on the methods and calculation models used to determine them.

Note that financial assets whose fair value cannot be reasonably determined are not shown.

The fair value of Bank borrowing was calculated based on interest rates at the reporting date without making any assumptions re the credit spread.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 61 The fair value of financial instruments listed on an active market is based on market price at the reporting date. The market prices used are the bid/ask price depending on the position held. The fair value of financial instruments not listed on an active market and of derivative instruments was determined using the valuation models and techniques in most widespread use on the market, considering data available on the market.

Note that we did not calculate the fair value of trade receivables, trade payables and other financial assets as their carrying amount approximates fair value.

Meanwhile, we do not believe that the fair value of payables under finance leases and payables to other lenders differs significantly from their carrying amount.

Net book value Mark to Mark to Total Fair No tes 12.31.2012 Market Model Value

€/thousand Fair Value Fair Value

Financial assets available for 12,113 12,113 12,113 23 sale Due to banks (377,949) - 398,875 398,875 31 Cash flow hedge derivatives: - Forward 2,431 - 2,431 2,431 27 - IRS (3,793) - (3,793) (3,793) 27 Fair value hedge derivatives: - Forward (167) - (167) (167) 31

Ne t book Mark to Mark to Total Fair value No tes Market Model Value 12.31.2011 €/thousand Fair Value Fair Value

Listed financial instruments 11,170 11,170 0 11,170 23 Due to banks 343,379 0 346,331 346,331 31 Derivatives: -Forward purchases 0 0 0 0 27 Cash Flow Hedge derivatives : -Plain vanilla options and forward (5,861) 0 (5,861) (5,861) 27 contracts -Interest Rate Swap (2,531) 0 (2,531) (2,531) 27 Fair value hedge derivatives: -Forward options (2,638) 0 (2,638) (2,638) 31

Exchange rate risk and interest rate risk: sensitivity analysis

This sensitivity analysis was performed in accordance with IFRS 7 as described in the section “Summary of accounting principles and valuation methods”. It applies to all of the financial instruments reported in the financial statements.

The Group performed a sensitivity analysis to measure the impact on the income statement and on the statement of financial position of an exchange rate fluctuation of “+/-10%” and an interest rate fluctuation of “+/-1%” compared to the exchange rates and interest rates applicable at December 31, 2012 to each class of financial instruments, while all other variables remained constant. The analysis is for illustrative

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 62 purposes only given that, in reality, such rate fluctuation rarely occurs in isolation.

As at December 31, 2012, the Group was not exposed to additional risks e.g. an equity risk or a commodity risk.

The sensitivity analysis of the exchange rate took account of the risk that may arise in relation to any financial instrument denominated in a currency other than the Euro. Consequently, the translation risk was also taken into account. Financial instruments whose value could vary as a result of interest rate fluctuation are as follows: - Instruments with a variable rate of interest - Instruments with a fixed rate of interest but measured at fair value

The results of the sensitivity analysis at December 31, 2012 and December 31, 2011 are shown below:

2012

EXCHANG E RATE IMPACT EXCHANGE RATE IMPACT INTEREST RATE IMPACT INTEREST RATE IMPACT

Amounts at December 31, 2012 INCOME STATEMENT BALANCE SHEET INCOME STATEMENT BALANCE SHEET

-10% 10% -10% 10% -1% 1% -1% 1% Ne t effect 5,431 (4,691) (2,556) 5,290 1,932 (1,932) (3,382) 3,382

2011

EXCHANG E RATE IMPACT EXCHANGE RATE IMPACT INTEREST RATE IMPACT INTEREST RATE IMPACT Amounts at December 31, 2011 INCOME STATEMENT BALANCE SHEET INCOME STATEMENT BALANCE SHEET -10% 10% -10% 10% -1% 1% -1% 1% Ne t effect 8,681 (4,799) (13,163) 2,514 1,726 (1,726) - -

Hierarchical levels of Fair Value measurement

IFRS 7 requires that financial instruments stated at fair value in the financial statements be classified based on a hierarchy with three levels that reflect the level of input used in determining the fair value. The following levels must be shown:

− Level 1: quoted prices on an active market for the asset or liability being measured; − Level 2: input other than the quoted prices per level 1 that may be observed directly or indirectly on the market; − Level 3: input not based on observable market data.

In order to determine the fair value of financial instruments, the Group uses various measurement and valuation models, as summarised in the following table for 2012 and 2011:

December 31, 2012 Instrument Level 1 Level 2 Level 3 Total No tes

Financial assets available for sale Bond 12,113 - - 12,113 23 Cash Flow Hedge Derivatives Forward - 2,431 - 2,431 27 Fair Value Hedge Derivatives Forward - (167) - (167) 27 Fair Value Hedge Derivatives Interest Rate Swap - (3,793) - (3,793) 27

December 31, 2011 Instrument Level 1 Level 2 Level 3 Total No tes

Financial assets available for sale Bond 11,170 0 0 11,170 23 Cash Flow Hedge derivatives Options 0 0 0 0 27 Fair value Hedge derivatives Options 0 0 0 0 27 Cash Flow Hedge derivatives Forward 0 (5,861) 0 (5,861) 27 Fair value Hedge derivatives Forward 0 (2,638) 0 (2,638) 27 Fair value Hedge derivatives Interest Rate Swap 0 (2,531) 0 (2,531) 27

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 63 27 DERIVATIVE FINANCIAL INSTRUMENTS

During the year and in line with prior years, holding company Bracco Imaging S.p.A. continued to apply its financial risk management policy, especially for the exchange rate risk and the interest rate risk, in order to minimise the impact of these risks on cash flows. The derivative instruments used are simple in nature and they are entered into for hedging purposes only.

The company operates with leading financial institutions in order to reduce the counterparty risk.

These instruments are recorded under the following captions in the Statement of Financial Position: - derivatives relating to cash flow hedges with a positive fair value: “Other receivables and current assets” and “Current financial assets” - derivatives relating to cash flow hedges with a negative fair value: “Other payables” - derivatives held for trading with a positive fair value: “Current financial assets” - derivatives held for trading with a negative fair value: “Current financial liabilities”

Derivatives at December 31, 2012 and 2011 are analysed as follows:

December 31, 2012 December 31, 2011 No tional value Positive fair Ne gative fair No tional value Positive fair Ne gative fair value value value value

Cash flow hedge Exchange Rate Risk Currency options - Forward contracts (sales) 87,296 2,887 100,779 - (5,861) Forward contracts (purchases) 32,104 (456) Interest rate risk Interest rate swap 130,000 (3,793) 60,000 (2,531)

Total cash flow hedge 249,400 2,887 (4,249) 160,779 - (8,392)

Fair Value hedge Exchange Rate Risk Forward contract (sales) 3,015 (6) 58,226 - (307) Forward contract (purchases) 50,000 (185) 143,750 10 (2,286) Spot contract (sales) 50,000 25 93,750 3 (57)

Total cash flow hedge 103,015 25 (191) 295,726 13 (2,650)

Total financial instruments and derivatives - Assets (liabilities) 352,415 2,912 (4,440) 456,505 13 (11,042)

The fair value of the derivative instruments was calculated considering market parameters at the reporting date and using the valuation provided by the counterparties.

Cash flow hedges

Group policy provides that hedge accounting shall be applied to hedging instruments as follows: - hedging of the exchange rate risk on transactions in US Dollars - hedging of the interest rate risk - hedging of the exchange rate risk on transactions in other foreign currencies.

If a derivative financial instrument is designated as a hedge of the risk of changes in future cash flows relating to an asset or a liability recorded in the financial statements or to a highly probable expected transaction and it could have an effect on the income statement, the effective portion of the gains or losses (intrinsic value) on the derivative financial instrument is recorded under equity. Cumulative gains and losses are reversed out of equity and booked in the income statement for the same period in which the hedged transaction takes place. Gains and losses associated with a hedge that has become ineffective are recorded in the income statement.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 64 If a hedging instrument is closed but the hedged transaction has not yet taken place, cumulative gains and losses until then recorded under equity are recorded in the income statement at the time the related transaction does take place. If the hedged transaction is no longer considered probable, gains or losses not yet realised and suspended under equity are recorded immediately in the income statement.

If hedge accounting is not applied, gains or losses resulting from the fair value measurement of the derivative instrument are recorded immediately in the income statement. The hedging policy in relation to the US Dollar was adopted also taking account of the forecasts of a selected panel of leading international banks.

In terms of the nature of the financial instruments in place at the reporting date, details of the main transactions are provided below:

At December 31, 2012

Cash flow hedge derivatives

Forward contracts (sales) refers to forward contracts for the sale of US Dollars with a notional value of USD 112,520 thousand at a weighted average exchange rate of €1:USD 1.2797, with several maturity dates throughout 2013.

Forward contracts (purchases) refers to forward contracts for the purchase of US Dollars with a notional value of USD 41,840 thousand at a weighted average exchange rate of €1:USD 1.3033, with several maturity dates throughout 2013.

Interest rate swaps includes: - a hedging contract with a notional amount of Euro 10,000 thousand and a maturity date of March 18, 2014 which provides for annual payment of a fixed rate of 0.93% and six-monthly collection (June and December) of a variable rate equal to the Euribor 6 month rate. - a hedging contract with a notional amount of Euro 50,000 thousand and a maturity date of March 2, 2018 which provides for annual payment of a fixed rate of 1.75% and six-monthly collection (June and December) of a variable rate equal to the Euribor 6 month rate. - A hedging contract with a notional amount of Euro 20,000 thousand and a maturity date of March 14, 2014 which provides for annual payment of a fixed rate of 0.91% and six-monthly collection (June and December) of a variable rate equal to the Euribor 6 month rate. - A hedging contract with a notional amount of Euro 50,000 thousand with a maturity date of June 30, 2017 which provides for annual payment of a fixed rate of 0.80% and six-monthly collection (June and December) of a variable rate equal to the Euribor 6 month rate.

These contracts have been entered into to hedge the risk of interest rate fluctuation, given that the loans arranged by the Company are at variable rates of interest (See Note 34 “Financial payables and liabilities”). In line with Company policy, only part of variable rate borrowing is hedged in order to optimise the mix between fixed rate and variable rate.

Fair value hedge derivatives

These include: - A forward contract for the sale of US Dollars with a notional value of USD 4,000 thousand and a forward exchange rate of €1:USD 1.3268 maturing on June 28, 2013; - A forward contract for the sale of Swiss Francs with a notional value of Euro 50,000 thousand and a forward exchange rate of €1:CHF 1.2116, maturing on January 4, 2013 - A forward contract for the purchase of Swiss Francs with a notional forward purchase amount of Euro 50,000 thousand and a forward exchange rate of €1: CHF 1.2078, maturing on January 4, 2013

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 65 At December 31, 2011

Cash flow hedge derivatives

Forward contracts refers to forward contracts for the sale of US Dollars with a notional value of USD 138,500 thousand at a weighted average exchange rate of €1:USD 1.3743, with several maturity dates throughout 2012.

Interest rate swap refers to the hedging contract in place at December 31, 2011 with a notional value of Euro 60,000 thousand, maturing on June 30, 2012, which provides for annual payment of a fixed rate of 4.55% and six-monthly collection (June and December) of a variable rate equal to the Euribor 6-month rate.

Fair value hedge derivatives

These include: - A forward contract for the sale of US Dollars with a notional value of USD 27,000 thousand and a forward exchange rate of €1:USD 1.3067 maturing on March 23, 2012 - A forward contract for the sale of US Dollars with a notional value of USD 6,500 thousand and a forward exchange rate of €1:USD 1.3070 maturing on March 23, 2012 - A forward contract for the sale of US Dollars with a notional value of USD 11,500 thousand and a forward exchange rate of €1:USD 1.3071 maturing on March 23, 2012, arranged to hedge the risk regarding the loan granted to subsidiary Bracco Diagnostics Inc.; - A forward contract for the sale of US Dollars with a notional value of USD 1,200 thousand with a forward exchange rate of €1:USD 1.2975, maturing on June 29, 2012, arranged to hedge intercompany loans - A forward contract for the sale of Swiss Francs with a notional value of Euro 50,000 thousand with a forward exchange rate of €1:CHF 1.2117 maturing on January 4, 2012 - A forward contract for the purchase of Swiss Francs with a notional value of Euro 93,750 thousand with a forward exchange rate of €1:CHF 1.2459 maturing on January 4, 2012 - A forward contract for the purchase of Swiss Francs with a notional spot sale value of Euro 93,750 thousand with a spot exchange rate of €1:CHF 1.2157 maturing on January 4, 2012

28 DEFERRED TAX ASSETS/LIABILITIES

At December 31, 2012, this caption includes deferred tax liabilities of Euro 75,546 thousand (Euro 83,405 thousand at December 31, 2011) less deferred tax assets of Euro 50,696 thousand (Euro 47,229 thousand at December 31, 2011), where offset is possible, as emerging in relation to each consolidated company. The net balance of Deferred tax assets and Deferred tax liabilities is as follows:

December 31, December 31, Change 2012 2011

Deferred tax assets 50,696 47,229 3,467 Deferred tax liabilities (75,546) (83,405) 7,858 Total (24,850) (36,176) 11,325

Each Group company recognised deferred tax assets after performing a critical evaluation of their future recoverability based on current strategic plans, accompanied by the relevant tax plans.

Deferred taxes have not been recorded in relation to earnings not distributed by the subsidiaries as the Group is unable to control the timing of the distribution of these reserves and it is probable that they will not

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 66 be distributed in the foreseeable future.

The following tables show movement in the reporting periods ended December 31, 2012 and December 2011 on deferred tax assets and deferred tax liabilities.

December 31, Change in scope (Charge) Credit to (Charge) Credit to Exchange December 31, Reclass. 2011 of consolidation income statement balance sheet differences 2012 Deferred tax assets -Provision for inventory obsolescence 1,990 0 0 0 0 0 1,990 - Provisions for risks and charges 4,290 0 (65) 0 0 0 4,225 - Valuation of derivatives 237 0 0 0 598 0 835 - Tax losses carried-forward 2,443 0 (427) 0 (2,151) (36) (172) - Difference between IFRS/Tax depreciation and amortization 1,335 0 189 0 0 (31) 1,493 - Elimination of inter-group margins 10,853 0 4,377 0 0 (202) 15,028 - Defined benefit plans 9,562 0 (404) 0 2,553 (178) 11,533 - Derivatives hedging reserve 1,412 0 0 0 (1,412) 0 0 - Foreign CFC tax 1,005 0 60 0 0 0 1,065 - Restructuring costs 0 0 397 0 0 0 397 - Valuation exchange differences/not realized 0 0 372 0 0 0 372 - Other deferred tax assets 14,102 364 (382) 0 0 (154) 13,929

Total ( A ) 47,229 364 4,116 0 (411) (602) 50,696

Deferred tax liabilities - Accelerated depreciation 1,023 0 (47) 0 0 0 976 - Valuation exchange differences 72 0 (72) 0 0 0 0 - Defined benefit plans 3,086 0 809 0 (1,420) (74) 2,401 - Fair value (deemed cost) 14,427 0 (996) 0 (118) (2) 13,311 - Accounting of finance leases 84 0 (44) 0 0 0 40 - Derivatives hedging reserve 274 0 0 0 1,022 0 1,296 - Merger deficit depreciation 39,256 0 (2,838) 0 0 (685) 35,733 - Allocation of E-Z-EM aquisition 14,631 0 (1,917) (124) 0 (130) 12,460 - Allocation of SMC aquisition 7,030 0 (1,905) 0 0 52 5,177 - Allocation of Justesa aquisition 0 949 (66) 0 0 (60) 823 - Other deferred tax liabilities 3,522 0 (193) 0 0 0 3,328

Total ( B ) 83,405 949 (7,269) (124) (516) (900) 75,546

Total deferred tax assets (net of deferred ( A )-( B ) (36,176) (585) 11,385 124 104 298 (24,850) tax liabilities)

The change in the scope of consolidation in 2012, amounting to Euro 585 thousand, refers to the acquisition of Justesa Imagen Argentina S.A., Justesa Imagen Mexicana S.A. DE C.V. and Justesa Imagen Do Brasil S.A. on April 19, 2012.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 67 December 31, Change in scope (Charge) Credit to (Charge) Credit to Exchange December 31, Reclass. 2010 of consolidation income statement balance sheet differences 2011 Deferred tax assets -Provision for inventory obsolescence 1,990 0 0 0 0 0 1,990 - Provisions for risks and charges 2,978 0 1,312 0 0 0 4,290 - Valuation of derivatives 940 0 0 0 (703) 0 237 - Tax losses carried-forward (1,208) 0 7,004 0 (3,844) 492 2,443 - Difference between IFRS/Tax depreciation and amortization 1,289 0 11 0 (8) 43 1,335 - Elimination of inter-group margins 13,245 0 (2,608) 0 0 216 10,853 - Defined benefit plans 4,468 0 0 0 4,950 145 9,562 - Derivatives hedging reserve 0 0 0 0 1,412 0 1,412 - Foreign CFC tax 0 0 185 0 820 0 1,005 - Other deferred tax assets 12,299 0 1,556 0 0 247 14,102

Total ( A ) 36,001 0 7,460 0 2,627 1,142 47,229

Deferred tax liabilities - Accelerated depreciation 1,071 0 (48) 0 0 0 1,023 - Valuation exchange differences 445 0 (373) 0 0 0 72 - Defined benefit plans 2,737 0 196 0 69 84 3,086 - Fair value (deemed cost) 15,741 0 (1,321) 0 0 7 14,427 - Accounting of finance leases 843 0 (759) 0 0 0 84 - Derivatives hedging reserve 581 0 0 0 (307) 0 274 - Merger deficit depreciation 39,948 0 (1,861) 0 0 1,169 39,256 - Allocation of E-Z-EM aquisition 14,858 0 (518) 0 (73) 365 14,631 - Allocation of SMC aquisition 0 7,558 (198) 0 0 (330) 7,030 - Other deferred tax liabilities 5,158 0 (1,765) 0 10 119 3,522

Total ( B ) 81,382 7,558 (6,647) 0 (301) 1,413 83,405

Total deferred tax assets (net of deferred ( A )-( B ) (45,381) (7,558) 14,106 0 2,928 (271) (36,176) tax liabilities)

The change in the scope of consolidation in 2011, amounting to Euro 7,558 thousand, refers to the acquisition of Bracco Injeneering S.A.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 68 29 SHAREHOLDERS’ EQUITY

Group Shareholders’ Equity at December 31, 2012 and December 31, 2011 and movements thereon in the years then ended are shown in the following table:

Other reserves Available Ne t income Share Legal Other Valuation Exchange Retained Group Minority reserves (loss) for Total Equity capital reserve reserves reserve reserve earnings Equity Interests Fair value the year

Balances at January 1, 2011 102,900 20,580 (17,582) (2,118) 909 (21,786) 64,822 97,763 245,488 5,448 250,936

Allocation of net income (loss) for FY 2010

Ordinary Shareholders' Meeting held on May 24, 2011:

- Retained earnings & reserves 0 0 13,660 0 0 0 84,103 (97,763) 0 0 0

- Dividends 0 0 0 0 0 0 (34,300) 0 (34,300) 0 (34,300)

Comprehensive Income for 2011 0 0 0 (10,034) 298 3,587 0 85,524 79,375 2,530 81,905

Balances at December 31, 2011 102,900 20,580 (3,922) (12,152) 1,207 (18,199) 114,625 85,524 290,563 7,978 298,541

Other reserves Available Ne t income Share Legal Other Valuation Exchange Retained Group Minority reserves (loss) for Total Equity capital reserve reserves reserve reserve earnings Equity Interests Fair value the year

Balances at January 1, 2012 102,900 20,580 (3,922) (12,152) 1,207 (18,199) 114,625 85,524 290,563 7,978 298,541

Allocation of net income (loss) for FY 2011

Ordinary Shareholders' Meeting held on May 22, 2012:

- Retained earnings & reserves 0 0 15,130 0 0 0 70,394 (85,524) 0 0 0

- Dividends 0 0 0 0 0 0 (34,300) 0 (34,300) 0 (34,300)

Other movements 0 0 0 0 0 0 (3,913) 0 (3,913) 0 (3,913)

Comprehensive Income for 2012 0 0 0 (2,464) 881 (2,403) 0 9,183 5,197 115 5,312

Balances at December 31, 2012 102,900 20,580 11,208 (14,616) 2,088 (20,602) 146,806 9,183 257,547 8,093 265,640

The following table provides a reconciliation between the Shareholders’ Equity and Net Profit of holding company Bracco Imaging S.p.A. and the amounts reported in the consolidated financial statements:

December 31, 2012 December 31, 2011

Ne t income Ne t income Ne t Equity Ne t Equity (loss) (loss)

Bracco Imaging S.p.A. 173,385 375 203,451 49,430

Net income for the year / Effect of 149,983 47,370 152,813 68,395 consolidating subsidiaries

Dividends (29,000) (29,000) (38,000) (38,000)

Consolidation differences 0 0 0 0

Unrealised Intra-group margins (32,828) (9,562) (23,706) 5,699

Other consolidation adjustme nts (3,993) 0 (3,995) 0

Consolidated Bracco Imaging Group 257,547 9,183 290,563 85,524

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 69 29.1 NOTE ON SHAREHOLDERS’ EQUITY OF BRACCO IMAGING S.P.A.

On May 22, 2012, an Ordinary General Meeting of holding company Bracco Imaging S.p.A. resolved to allocate the net profit of Euro 49,430 thousand for 2011 as follows: a) Euro 15,130 thousand to extraordinary reserve b) A total of Euro 34,300 thousand in payment of a dividend of Euro 0.14 to each of the 245,000,000 shares.

29.2 SHARE CAPITAL

At December 31, 2012, the share capital of holding company Bracco Imaging S.p.A. amounted to Euro 102,900 thousand, unchanged compared to prior year. It is wholly subscribed and paid and consists of 245,000,000 ordinary shares with a nominal value of Euro 0.42 each.

29.3 LEGAL RESERVE

At December 31, 2012, this reserve stood at Euro 20,580 thousand, unchanged on prior year.

29.4 OTHER RESERVES

Other reserves are analysed as follows:

December 31, December 31, 2012 2011

Other reserves: 11,207 (3,922) Extraordinary reserve 49,519 34,390 Other reserves related to Under Common Control (38,312) (38,312) transactions

Valuation reserve: (14,615) (12,152) Fair value reserve (deemed cost ) 3,514 3,497 Actuarial gains (losses) reserve (17,462) (11,300) Derivatives Hedging Reserve (667) (4,349)

Available fair value reserve 2,088 1,207

Translation reserve (20,602) (18,199)

Total (21,922) (33,066)

Other reserves

At December 31, 2012, the reserves included under this caption totalled Euro 11,208 thousand. Movements thereon followed the aforementioned General Meeting resolution.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 70 Valuation reserves

Movement of December 31, Increases / available fair December 31, Valuation Reserve Deferred taxes 2011 (Decreases) value reserve 2012 (deemed cost)

Fair Value Reserve (deemed cost) 3,497 897 (881) 0 3,513 Actuarial gains (losses) reserve (11,300) (8,983) 0 2,819 (17,464) Derivatives hedging reserve (4,349) 5,367 0 (1,683) (665)

Total (12,152) (2,718) (881) 1,135 (14,616)

Movement of December 31, Increases / available fair December 31, Valuation Reserve Deferred taxes 2010 (Decreases) value reserve 2011 (deemed cost)

Fair Value Reserve (deemed cost) 3,496 299 (298) 0 3,497 Actuarial gains (losses) reserve (4,238) (10,292) 0 3,230 (11,300) Derivatives hedging reserve (1,376) (4,337) 0 1,364 (4,349)

Total (2,118) (14,329) (298) 4,593 (12,152)

Fair value reserve (deemed cost)

This reserve relates to the Fair Value (deemed cost) measurement of Property, plant and machinery and Investment property performed upon first-time application of IAS/IFRS.

The Fair value (deemed cost) reserve arising upon first-time application of IAS/IFRS is subject to regulation by Article 7(1)(6) of Legislative Decree no 38 of February 28, 2005 which provides that equity increases due to accounting for tangible assets at fair value rather than at cost shall be allocated to capital or to a specific reserve. If not allocated to capital, the reserve can only be reduced in compliance with Article 2445(2) and (3) of the Italian Civil Code. If the reserve is used to cover losses, earnings cannot be distributed until such time as the reserve has been restored or reduced to the extent approved by a resolution of the Extraordinary General Meeting, as the provisions of Article 2445(2) and (3) of the Italian Civil Code do not apply.

Reserve for actuarial gains (losses)

The “Reserve for actuarial gains (losses)” at December 31, 2012 includes, net of deferred taxation, actuarial components relating to the valuation of defined benefit plans, as allocated directly to equity.

At December 31, 2012, movements on the reserve mainly refer to the actuarial effects resulting from defined benefit plans, as described in Note 30 “Provisions for employee benefits”.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 71 Hedging reserve derivative instruments

At the end of 2006, the Hedging reserve was created in relation to cash flow hedges. This regards unrealised gains and losses – net of related tax effects – resulting from the restatement at fair value of financial instruments designated as hedging instruments. At December 31, 2012, this reserve decreased by Euro 3,682 thousand, net of the tax effect.

December 31, Adjustme nt of initial December 31, Hedging Reserve Transfers to P&L Change in fair value 2011 hedged value 2012

Hedging Reserve (4,349) 3,723 (41) - (667)

Total (4,349) 3,723 (41) - (667)

December 31, Adjustme nt of initial December 31, Hedging Reserve Transfers to P&L Change in fair value 2010 hedged value 2011

Hedging Reserve (1,374) (1,106) (1,869) - (4,349)

Totale (1,374) (1,106) (1,869) - (4,349)

Available fair value (deemed cost) reserves

These relate to the difference between depreciation calculated on the fair value of tangible assets and depreciation calculated in accordance with Italian GAAP.

Translation reserve

The translation reserve – negative by Euro 20,602 thousand (Euro 18,199 thousand at December 31, 2011) – moved as a result of exchange rate fluctuation regarding currencies other than the Euro when translating the financial statements of Group companies.

29.5 RETAINED EARNINGS

At December 31, 2012, this item amounted to Euro 146,806 thousand. Changes during the year mainly related to the allocation to retained earnings of the net profit for 2011 (Euro 70,394 thousand) and the distribution of dividends to parent company Bracco S.p.A. (Euro 34,300 thousand).

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 72 29.6 SHAREHOLDERS’ EQUITY PERTAINING TO NON-CONTROLLING INTERESTS

Shareholders’ equity pertaining to non-controlling interests is analysed as follows:

December 31, December 31, 2012 2011

Bracco-Eisai Co. Ltd 3,465 3,617 Shanghai Bracco Sine Pharmaceutical Corp. Ltd 4,628 4,361 Total 8,093 7,978

Bracco-Eisai Co. Ltd.

Bracco-Eisai Co. Ltd was incorporated under an agreement signed in November 1990 by the Group and EISAI Co. Ltd. with the objective of promoting and distributing Contrast Agents in Japan. Its share capital is currently owned 49% by EISAI Co. Ltd. and 51% by Bracco Imaging Holding B.V. The Japanese company has a limited duration which is scheduled to end in 2019 although it can be extended. At the end of the scheduled duration of the company, Bracco Imaging Holding B.V. may exercise a call option to acquire the shares held by Eisai Co. Ltd. In turn, Eisai Co. Ltd. has a put option entitling it to ask Bracco Imaging Holding B.V. to purchase its sales. If the shareholders do not exercise their respective options, Bracco-Eisai Co. Ltd shall be put into liquidation, unless its duration is extended. The method for use in calculating the sale and purchase price of the shares is predetermined and is based on the book shareholders’ equity of the company at the option exercise date with no amount payable for goodwill. The company is managed by a Board of Directors with five members, three of them appointed by the Group including the Chairman who also acts as the company’s legal representative in dealings with the non-controlling shareholders. The shareholders have also agreed that the company shares cannot be provided as collateral or disposed of except to companies belong to their respective groups and always subject to notifying the other shareholder in advance.

Shanghai Bracco Sine Pharmaceutical Corp. Ltd.

Shanghai Bracco Sine Pharmaceutical Corp. Ltd was incorporated on December 19, 2001 under a joint venture between Shanghai Sine Laboratories and Bracco Diagnostics Asia Pte. Ltd with the primary objective of manufacturing and distributing Contrast Agents in China. The share capital is currently subscribed 30% by Shanghai Sine Laboratories and 70% by Bracco Diagnostics Asia Pte. Ltd.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 73 30 PROVISIONS FOR EMPLOYEE BENEFITS

The Group companies guarantee post-employment benefits to personnel both in direct form and through contributions to funds external to the Group.

The ways in which these benefits are provided vary depending on the legal, fiscal and economic conditions in the countries where the Group companies operate.

Post-employment benefits are guaranteed through defined contribution plans and defined benefit plans.

In the former case, the Group companies pay contributions to public and/or private pensions institutions based on legal or contractual obligations or on a voluntary basis. In such cases, the companies fulfil all of their obligations upon payment of the contributions. The period cost is recorded on an accrual basis under Personnel costs, in relation to the service rendered by the employee. In 2012, the cost incurred by the Italian companies for contributions to Supplementary Pension Funds (Fonchim – Previndai) was Euro 2,034 thousand (Euro 1,969 thousand in 2011).

Defined benefit plans may be unfunded or wholly or partially funded by the contributions paid by the companies or, in some cases, by the employees to a company or a find, legally separate from the entity providing the benefits to the employees.

In the case of funded or unfunded post-employment benefits, the Group liability, as determined based on actuarial methods using the “unit credit cost” method, is reported net of the fair value of any plan assets under Provisions for employee benefits. Note that actuarial gains and losses are recorded directly under equity.

Details of provisions for employee benefits at December 31, 2012 and December 31, 2011 and movements thereon are shown below:

December Exchange December Increases Decreases 31, 2011 differences 31, 2012 Provision for employee benefits Provision for severance indemnities 10,263 2,246 (565) 0 11,944 Provision for US pension plans 19,804 8,763 (6,367) (288) 21,912 Provision for German pension plans 10,309 5,269 (193) 0 15,385 Provision for Swiss pension plans 0 5,059 0 35 5,094 Other provisions for employee benefits 2,184 2,882 (1,823) (123) 3,120 Total 42,559 24,219 (8,948) (376) 57,454

Change in December Exchange December scope of Increases Decreases Curtailment 31, 2010 differences 31, 2011 consolidation Provision for employee benefit Provision for severance indemnities 10,692 0 532 (961) 0 0 10,263 Provision for US pension plans 7,647 0 16,519 (5,042) 275 405 19,804 Provision for German pension plans 5,383 4,048 878 0 0 0 10,309 Provision for Swiss pension plans 0 0 0 0 0 0 0 Other provisions for employee benefits 2,038 0 1,597 (1,530) 0 79 2,184 Total 25,759 4,048 19,526 (7,533) 275 484 42,559

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 74 “Other personnel related provisions” represents the best estimate, at the reporting date, of the short-term benefits due by the Group to its employees.

TFR/Employee severance indemnity provision

Movements on this caption are summarised in the following table:

Reserve for severance indemnities 2012 2011

Provision at January 1 10,264 10,692 Service cost 13 13 Financial charges (Interest cost) 482 463 Actuarial gains (losses) 1684 (273) Benefit paid (565) (687) Transfers to / from Group companies 66 56 Provision at December 31 11,944 10,264

“Actuarial gains and losses” and “Financial charges (interest cost)” are generated by the actuarial method valuation of the provision and redetermined at January 1, 2007. As previously stated, the Group makes use of the option under IAS 19 of recording actuarial gains and losses directly under equity.

As already stated in the section on accounting principles and valuation methods, as a result of amendments introduced by Law no 296 of December 27, 2006 (“Finance Act 2007”) and the subsequent Decrees and Implementation regulations, only the TFR liability remaining with the company has been valued for IAS 19 purposes because, as a result of decisions made by employees in the first half of 2007, the amounts maturing after January 1, 2007 have been paid to a separate entity (supplementary pension funds or INPS funds). As a result of these payments, Bracco Imaging S.p.A. and Spin S.p.A. will have no more obligations in relation to the future services provided by employees (amounts now paid to defined contribution plans).

The Group expects to incur interest costs of around Euro 2,437 thousand in 2013.

In summary, the assumptions made in relation to the TFR provision are as follows:

Economic assumptions 2012 2011

Increase in the cost of living 2.00% 2.00% Discount rate 2.50% 4.50% Increase in benefit and salaries N/A NA

Demographic assumption

Death probability SIM/SIF 2002 SIM/SIF 2002 Invalidity probability INPS 1998 MF INPS 1998 MF

Personnel dismissal probability 2% - 2,5% 2% - 2,5%

Pension plans

If funded, pension plans provide for the payment of contributions to a separate fund (trust) which administers the plan assets on an independent basis. The funds provide for contributions by the employees and companies based on legislative and regulatory requirements in the various countries.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 75 Provisions for Pension plans - USA

For full information about these plans, we provide the analysis and comparative prior year information required by IAS 19.

The Group’s US companies have a defined benefit plan whose participants include Bracco Research USA Inc., Bracco Diagnostics Inc. (now Group subsidiaries) and, also, associated company Acist Medical Systems Inc. (controlled by Bracco S.p.A. but excluded from the Imaging Group scope of consolidation).

The plan – called the Bracco Retirement Plan –does not provide for the specific allocation of the plan assets to each individual company. Consequently, the Group has always adopted a policy of determining the net liability and costs of the plan using a method of sharing, generally agreed with the actuary, primarily based on the number of persons from each company participating in the plan. The method of sharing is agreed annually by the companies when the Budget is prepared.

The amounts relating to the pension plans of the US companies at December 31, 2012 and December 31, 2011 are as follows:

December 31, 2012 December 31, 2011 Associated Associated US Companies companies Total US Companies companies Total (Acist) (Acist)

Present value of defined benefit obligations (A) 69,080 1,962 71,042 60,295 1,808 62,103 Fair value of plan assets (B) 47,167 1,381 48,548 40,491 1,284 41,775 Funds for US pension plan (A-B) 21,913 582 22,494 19,804 525 20,328

Movements during the year on defined benefit obligations are as follows:

December 31, 2012 December 31, 2011 Associated Associated US Companies companies Total US Companies companies Total (Acist) (Acist)

At January 1 60,295 1,808 62,103 45,156 1,417 46,573 Service cost 2,752 79 2,831 2,229 67 2,296 Interest cost 2,739 79 2,818 2,513 76 2,589 Actuarial gains (losses) 5,700 67 5,767 9,414 223 9,637 Exchange differences (1,286) (39) (1,325) 1,807 57 1,864 Curtailment 0 0 0 275 0 275 Benefit paid (1,120) (32) (1,152) (1,099) (32) (1,131) At December 31 69,080 1,962 71,042 60,295 1,808 62,103

Changes in the fair value of pension plan assets are set out below:

December 31, 2012 December 31, 2011 Associated Associated US Companies companies Total US Companies companies Total (Acist) (Acist)

At January 1 40,491 1,284 41,775 37,509 1,260 38,769 Expected return (interest cost) 3,175 92 3,267 2,833 87 2,920 Actuarial gain (losses) 2,443 (29) 2,414 (2,363) (138) (2,501) Contribution of the year 3,174 95 3,269 2,209 65 2,274 Exchange differences (996) (29) (1,025) 1,402 42 1,444 Curtailment 0 0 0 0 0 0 Payme nts (1,120) (32) (1,152) (1,099) (32) (1,131) At December 31 47,167 1,381 48,548 40,491 1,284 41,775

The pension plan assets mainly consist of equity instruments and bonds issued by third parties as follows at December 31, 2012 and December 31, 2011:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 76 December 31, December 31, 2012 2011

Shares 67% 65% Bonds 28% 30% Buildings 0% 0% Other assets 5% 5% Total 100% 100%

The main assumptions adopted by the actuary when determining the amounts in question were as follows:

December 31, December 31, Calculation assumptions: 2012 2011

Discount rate 3.90% 4.40% Expected long term rate of return on plan asset 7.75% 7.75% Expected rate of increase in benefit and salaries 3.50% 3.50%

The expected rate of return on the plan assets was based on an actuarial analysis of the expected return on each of the underlying assets.

The companies are entirely responsible for the plan and there are no employee contributions.

The amounts recorded under Actuarial gains / (losses) in 2012 had a negative effect of around USD 4.4 million.

The actuary’s best estimate of the expected contribution to these pension funds for the next year is around USD 6 million.

Provisions for pension plans - Switzerland

On January 1, 2013, in order to report its pension commitments under local regulations in accordance with the interpretation generally accepted in Switzerland during the last year for this type of contribution, Swiss subsidiary Bracco Suisse S.A. recorded a defined benefit plan liability of Euro 5.1 million.

At December 31, 2012, the amounts relating to the pension plan of the Swiss company were as follows:

December 31, 2012

Present value of defined benefit obligations (A) 27,332 Fair value of plan assets (B) 22,240 Funds for Swiss pension plan (A-B) 5,092

Movements during the year on defined benefit obligations were as follows:

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 77 December 31, 2012

At January 1 25,814 Service cost 1,652 Interest cost 487 Exchange differences 176 Benefit paid (797) At December 31 27,332

Changes in the fair value of plan assets are shown below:

December 31, 2012

At January 1 20,964 Expected return (interest cost) 363 Contribution of the year 1,567 Exchange differences 143 Payments (797) At December 31 22,240

The main assumptions made by the actuary when determining the amounts reported were as follows:

December 31, Calculation assumptions: 2012

Discount rate 1.90% Expected long term rate of return on plan asset 1.75% Expected rate of increase in benefit and salaries 0.50%

The actuary’s best estimate of the expected contribution to these pension plans for the next year was around CHF 2.4 million, including CHF 1.8 million borne by the company and CHF 0.6 million borne by the employees.

Provision for pension plans - Germany

Total movements during the period on the pension plans relating to Bracco Imaging Deutschland G.m.b.H. and BIPSO G.m.b.H. amounted to Euro 5,076 thousand, mainly as a result of actuarial losses of Euro 4,138 million.

The main assumptions used when determining the reporting date obligation compared with prior year assumptions are as follows:

December 31, December 31, Calculation assumptions: 2012 2011

Discount rate 3.70% 5.00% Expected rate of increase in benefit and salaries 4.50% 4.50% Expected rate of increase in cost of living 2.00% 2.00%

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 78 31 FINANCIAL PAYABLES AND LIABILITIES

At December 31, 2012, these amounted to Euro 384,613 thousand compared to Euro 350,158 thousand at December 31, 2011 and may be analysed as follows:

December 31, 2012 Between one Within one After five Total and five year years years Bank borrowing 377,950 158,629 218,799 522 Due to other lenders 1,688 223 1,465 0 Finance leases 1,014 414 600 0 Financial liabilities for derivative instruments 3,961 3,961 0 0 Total 384,613 163,227 220,864 522

December 31, 2011 Between one Within one After five Total and five year years years Bank borrowing 343,379 301,899 40,809 671 Due to other lenders 202 202 0 0 Finance leases 1,408 510 898 0 Financial liabilities for derivative instruments 5,169 5,169 0 0 Total 350,158 307,780 41,707 671

Bank borrowing

This caption includes the following payables: a) a Euro 100,000 line of credit arranged on March 3, 2011 with Mediobanca for a period of seven years. It was fully utilised as at December 31, 2012. The line of credit is not subject to any secured guarantees but requires compliance with certain covenants (Net Financial Position/EBITDA and EBITDA/Net Financial Expenses) as determined from the Bracco Imaging S.p.A. consolidated financial statements.

If said covenants are not respected, Mediobanca may ask the Company to make early repayment of the full amount of the loan. The covenants were respected as at December 31, 2012. The facility provides for the possibility of early repayment and is subject to a rate of interest consisting of the Euribor rate plus a spread determined based on the Net Financial Position/EBITDA ratio from the Bracco Imaging S.p.A. consolidated financial statements for the period in question. On March 3, 2016, amount available under the line of credit will be reduced to Euro 75,000. Utilisation and non-utilisation fees also apply. b) two lines of credit for a total of Euro 50,000 thousand arranged with Centrobanca on March 18, 2011; at December 31, 2012, these facilities were utilised to the extent of Euro 47,857. One of the lines of credit is for Euro 20,000 thousand and takes the form of a revolving credit facility for a period of three years. The Company can extend the period of the facility by two more years against payment of a fee. The other line of credit is a five-year loan with an initial amount of Euro 30,000 thousand. The loan agreement provides for a repayment plan with fixed quarterly instalments of Euro 2,143 thousand commencing on December 18, 2012.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 79 Neither line of credit is subject to any secured guarantees but both require compliance with covenants (Net Financial Position/EBITDA and EBITDA/Net Financial Expenses) calculated based on the consolidated financial statements of Bracco Imaging S.p.A.

If said covenants are not respected, Centrobanca may ask the Company to make early repayment of the full amount of the loans. The covenants were respected as at December 31, 2012. The facilities provides for the possibility of early repayment and are subject to a rate of interest consisting of the Euribor rate plus a spread determined based on the Net Financial Position/EBITDA ratio from the Bracco Imaging S.p.A. consolidated financial statements for the period in question. A non-utilisation fee is applicable in relation to the facilities. c) An uncommitted loan of Euro 20,000 thousand granted by Credito Emiliano, as arranged on September 30, 2011 for a period of three years. At December 31, 2012, the debt stood at Euro 11,843 thousand. Principal repayments of Euro 6,560 thousand were made during the year. The loan is subject to interest at the Euribor 3 month rate plus a market based spread. This facility is not subject to any secured guarantees nor is compliance with any covenants required. d) a loan of Euro 50,000 thousand signed on June 28, 2012 with Intesa SanPaolo for a period of five years, which provides for a repayment plan commencing on June 30, 2014 with six-monthly repayments of Euro 5,000 thousand and a final repayment of Euro 20,000 thousand; at December 31, 2012, the full amount of the loan was utilised. The loan is not subject to any secured guarantees but requires compliance with covenants (Net Financial Position / EBITDA and EBITDA / Net Financial Expenses) calculated based on the consolidated financial statements of Bracco Imaging S.p.A.. If said covenants are not respected, Intesa SanPaolo may ask the Company to make early repayment of the full amount of the loan. The covenants were respected as at December 31, 2012. There is an early repayment option and the loan is subject to interest at the Euribor rate plus a spread. e) a revolving line of credit of Euro 30,000 thousand signed on August 10, 2012 with Banca Popolare di Milano for a period of three years. The available credit will be reduced gradually based on a plan which provides for six-monthly repayments of Euro 10,000 thousand commencing from the end of the second year. At December 31, 2012, the facility was utilised in the amount of Euro 15,000 thousand. The loan is not subject to any secured guarantees but requires compliance with covenants (Net Financial Position / EBITDA and EBITDA / Net Financial Expenses) calculated based on the consolidated financial statements of Bracco Imaging S.p.A.

If the Company fails to respect at least one of the covenants for two consecutive years, Banca Popolare di Milano may demand early repayment of the entire loan. At December 31, 2012, both covenants were respected. The loan is subject to interest at the Euribor rate plus a spread determined in relation to compliance with either or both of the covenants. A non-utilisation fee applies and early repayment is possible. f) a revolving line of credit of Euro 25,000 thousand signed on November 14, 2012 with Barclays Bank for a period of three years. The agreement provides for the gradual reduction of the facility by Euro 5 million every six months from November 2013. At December 2012, the line of credit was not utilised. The facility is not subject to any secured guarantees but requires compliance with covenants (Net Financial Position / EBITDA and EBITDA / Net Financial Expenses) calculated based on the consolidated financial statements of Bracco Imaging S.p.A.

If the covenants are not respected, the bank may demand early repayment of the full amount of the loan. A non-utilisation fee is payable. At December 31, 2012, both covenants were respected. Early repayment is possible and interest is payable at the Euribor rate plus a spread calculated based on a covenant matrix

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 80 g) Two loans from Mediocredito Friuli Venezia Giulia repayable in six-monthly instalments in arrears – low rate of interest of 80% of Euribor 6-month rate (debt accompanied by bank guarantee) – for a total amount of Euro 1,740 thousand. Principal repayments of Euro 464 thousand were made during the year. The loans are not subject to any guarantees or compliance with covenants. h) A medium/long-term loan from Saitama Reisona Bank to Bracco Eisai, arranged on March 31, 2009 for a period of five years. The loan was disbursed in Yen and is subject to a fixed rate of interest. As at December 31, 2012, it was utilised in its full amount, the equivalent of Euro 814 thousand. The loan is not subject to any guarantees or compliance with covenants. i) A line of credit of CHF 25,000 arranged on November 19, 2012 with Credit Suisse and expiring on January 1, 2018; guaranteed by a surety of the same amount issued by holding company Bracco Imaging S.p.A. As at December 31, 2012, the line was utilised to the extent of CHF 21,000 thousand. The line of credit offers the possibility of early repayment and is subject to an interest rate equal to the CHF LIBOR rate plus a spread. There is a repayment plan, commencing on March 31, 2013, with instalments of CHF 1,250 per quarter. This line of credit is not subject to any guarantees or compliance with covenants.

Pursuant to IAS 39, where applicable, loans have been recorded at amortised cost, determined based on the effective rate of interest method (taking account of market rates of interest and related expenses incurred to arrange the loans) i.e. the rate which discounts future cash flows over the life of the financial instrument in order to arrive at its net carrying amount.

Due to other lenders

Due to other lenders includes Euro 1,626 thousand (Euro 202 thousand at December 31, 2011) relating to loans made by Intesa Sanpaolo S.p.A. to holding company Bracco Imaging S.p.A. out of the Research Assistance Fund (Legislative Decree 297/1999) of the Ministry of Education, the Universities and Research (MIUR) in relation to a research project “Intravascular contrast agents for MRI for cardiology and oncology applications”. The loan is repayable in six-monthly instalments in arrears, the last of them due on January 1, 2018. The applicable rate of interest is 0.25% six-monthly. During the year, funding of Euro 1,946 thousand was received and repayments of Euro 320 thousand were made.

The loan towards the research project for the “development of new highly sensitive paramagnetic probes to show images of cancer cells through MR imaging”, originally amounting to Euro 2,829 thousand, was repaid in full in 2012. At December 31, 2011, the outstanding amount was Euro 202 thousand.

Finance leases

The Group is party to both finance lease agreements and contracts without the legal form of finance leases but which provide the right to use certain assets and include certain other conditions making them akin to finance leases (in terms of IFRIC 4) and which must, therefore, be accounted for in accordance with IAS 17. Finance lease payables include several contracts for the development of production methods and research which fall within the scope of application of the above principles.

Present value of minimum payments due for Minimum payments due for leases leases December 31, December 31, December 31, December 31, 2012 2011 2012 2011 Finance leases: due within one year 450 574 412 510 due within five years 636 967 602 898 due after five years Total 1,086 1,541 1,014 1,408

Less amounts due for future interest expenses 72 133 1,014 1,408 Present value of payables for finance leases 1,014 1,408

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 81 Financial payables for derivative contracts

Payables for derivative contracts amounting to Euro 3,961 thousand (Euro 5,169 thousand at December 31, 2011) mainly refer to a number of contracts arranged to hedge the risk of interest rate fluctuation given that the Company’s loans payable are subject to variable rates of interest. The payables represent the mark to market valuation of the derivatives in question under the hedge accounting method. Fair value is determined using the discounted cash flow method. The effective portion of gains or losses on derivative financial instruments is recorded under Equity. This caption also includes the fair value of a forward contract to hedge the loan granted to subsidiary Bracco Imaging Korea Ltd for a notional amount of USD 4,000 thousand, a forward contract for the sale of Swiss Francs for a notional amount of Euro 50,000 thousand with a forward exchange rate of €1: CHF 1.2116, expiring on January 4, 2013, and a forward contract for the purchase of Swiss Francs with a notional amount of Euro 50,000 thousand with a forward exchange rate of €1: CHF 1.2078, expiring on January 4, 2013.

Bank credit facilities

At December 31, 2012, the Company had the following committed revolving lines of credit:

- A line of Euro 70,000 thousand with Intesa Sanpaolo for a period of 12 months. The line is not subject to any secured guarantees or compliance with any covenants. Early repayment is possible and it is subject to interest at the Euribor rate plus a fixed spread. A non-utilisation fee is also payable. At December 31, 2012, the line of credit was utilised in full.

- A line of Euro 20,000 thousand arranged with Banca di Popolare di Bergamo on October 25, 2012 for a period of 12 months. The line is not subject to any secured guarantees or compliance with any covenants. Early repayment is possible and it is subject to interest at the Euribor rate plus a fixed spread. A non-utilisation fee is also payable. The line of credit was unutilised at December 31, 2012.

- A line of Euro 15,000 thousand arranged with Antonveneta on August 2, 2012 for a period of 17 months. The line is not subject to any secured guarantees or compliance with any covenants. Early repayment is possible and it is subject to interest at the Euribor rate plus a fixed spread. A non- utilisation fee is also payable. The line of credit was unutilised at December 31, 2012.

- A line of Euro 10,000 thousand arranged with Cariparma on August 10, 2012 for a period of 18 months, 1 day. The line is not subject to any secured guarantees or compliance with any covenants. Early repayment is possible and it is subject to interest at the Euribor rate plus a fixed spread. A non-utilisation fee is also payable. The line of credit was unutilised at December 31, 2012. At December 31, 2012, the line of credit was utilised in full.

- A revolving line of credit of Euro 85,000 thousand arranged with Unicredit on March 9, 2012 for a period of 18 months, 1 day. At December 31, 2012, the line of credit was unutilised. The line is not subject to any secured guarantees or compliance with any covenants. Early repayment is possible and it is subject to interest at the Euribor rate plus a fixed spread. A non-utilisation fee is also payable.

- A revolving line of credit of Euro 30,000 thousand arranged with Banca Nazionale del Lavoro/BNP on April 16, 2012 for a period of 18 months, 1 day. At December 31, 2012, the line was utilised to the extent of Euro 10,000 thousand. The line is not subject to any secured guarantees or compliance with any covenants. A non- utilisation fee is payable. Early repayment is possible and it is subject to interest at the Euribor rate plus a spread.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 82 - A revolving line of credit of Euro 15,000 thousand arranged with Banca Popolare di Vicenza on April 2, 2012 for a period of 18 months, 1 day. At December 31, 2012, the line of credit was utilised in full. The line is not subject to any secured guarantees or compliance with any covenants. Early repayment is possible and it is subject to interest at the Euribor rate plus a spread.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 83 32 PROVISIONS FOR RISKS AND CHARGES

At December 31, 2012, provisions for risks and charges amounted to Euro 69,271 thousand, Euro 54,078 thousand more than at December 31, 2011. They are analysed as follows:

December 31, Change in scope Exchange December 31, Increases Decreases Reclassification 2011 of consolidation differences 2012 NON-CURRENT Litigation reserves 0 0 0 0 0 0 Other provisions 0 0 0 0 0 0 Total non-current provisions (A) 0 0 0 0 0 0 0

CURRENT Litigation reserves 0 0 0 0 0 0 Reserves for product and return guarantee 583 (101) 0 (10) 472 Other current provisions 22,828 224 54,078 (11,075) 2,782 (39) 68,798 Total current provisions (B) 23,412 224 54,078 (11,176) 2,782 (49) 69,271

Total provisions for risks and charges (A+B) 23,412 224 54,078 (11,176) 2,782 (49) 69,271

December 31, Exchange December 31, Increases Decreases Reclassification 2010 differences 2011 NON-CURRENT Litigation reserves 0 0 0 0 0 0 Other provisions 0 0 0 0 0 0 Total non-current provisions (A) 0 0 0 0 0 0

CURRENT Litigation reserves 0 0 0 0 0 0 Reserves for product and return guarantee 421 136 0 0 26 583 Other current provisions 16,441 6,418 (34) 0 3 22,828 Total current provisions (B) 16,863 6,554 (34) 0 29 23,412

Total provisions for risks and charges (A+B) 16,863 6,554 (34) 0 29 23,412

At December 31, 2012, “Other current provisions” mainly included expenses relating to commercial and tax disputes and litigation.

The decrease is due to the settlement reached with Bayer Healthcare and the resulting dropping of claims – the subject of arbitration in prior years – in respect of which provision had been made.

The increase in the provision in 2012 mainly includes Euro 51,600 thousand in relation to provision made following the settlement of a tax dispute between holding company Bracco Imaging S.p.A. and the Lombardy Regional Head Office of the Italian Tax Authorities.

In the final months of 2012, holding company Bracco Imaging S.p.A. received two tax demands from the Lombardy Regional Head Office of the Italian Tax Authorities in relation to the 2006 and 2007 tax years. These tax demands were based on the findings contained in the report issued by the Tax Authorities in October 2011 upon completion of their inspections. The findings are all based on legal and economic matters disclosed in the Company’s accounting and tax documentation. The company remains convinced that it has acted correctly but, in light of the risks and uncertainty involved in commencing a formal tax dispute and taking account of the significant amounts involved, the company decided to seek a settlement. A final settlement for 2006 was signed in April 2013 with a settlement for 2007 expected to follow close behind.

The increase for the year also includes Euro 1,944 thousand for non-recurring personnel costs relating to the restructuring plan launched by several Italian Group companies.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 84 33 TRADE PAYABLES

At December 31, 2012, trade payables amounted to Euro 104,166 thousand, Euro 10,421 thousand more than at December 31, 2011. They may be analysed as follows: December 31 December 31 2012 2011 Trade payables due to parent company 790 457 Trade payables due to associated companies 3,795 2,325 Trade payables due to third parties 99,581 90,963 Total 104,166 93,745

Payables to associated companies are analysed as follows:

December 31 December 31 Due to associated companies 2012 2011 Acist Medical Systems, Inc. 3,692 2,229 Centro Diagnostico Italiano S.p.A. 103 96 Total 3,795 2,325

This item is generated by purchases of goods and services.

The carrying amount of trade payables and other payables approximates their amortised cost.

34 OTHER CURRENT AND NON-CURRENT LIABILITIES

At December 31, 2012, this item amounted to Euro 74,777 thousand, Euro 5,870 thousand less than at December 31, 2011. It may be analysed as follows:

December 31, 2012 December 31, 2011 Between Between Within one After Within one After Total one and five Total one and five year five years year five years years years Payables due to employees 24,593 24,593 0 0 27,588 27,588 0 0 Accrued expenses 8,345 7,691 654 0 8,314 7,536 623 155 Income taxes due to tax authorities 7,811 7,811 0 0 6,293 6,293 0 0 Cash Flow Hedge 456 456 0 0 5,861 5,861 0 0 Payables due to social security institutions 3,197 3,197 0 0 2,985 2,985 0 0 Payables due to parent company Bracco 2,451 2,451 0 0 2,081 2,081 0 0 S.p.A. VAT liabilities 1,831 1,831 0 0 1,104 1,104 0 0 Deferred income 378 378 0 0 566 566 0 0 Other liabilities 25,715 14,843 10,872 0 25,855 12,367 13,488 0 Total 74,777 63,251 11,526 0 80,647 66,381 14,111 155

Due to associated companies December 31, 2012 December 31, 2011 Between Between Within one After Within one After Total one and five Total one and five year five years year five years years years Bracco PTY Ltd. 106 106 0 0 79 79 0 0 Bracco Advance Medical Technologies Inc. 0 0 0 0 17 17 0 0 Acist Medical Systems Inc. 185 185 0 0 19 19 0 0 Total 291 291 0 0 115 115 0 0

Payables to employees mainly includes holiday pay and bonuses accruing but not paid.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 85 “Tax payables” includes current income tax liabilities, as well as amounts due to the tax authorities for deductions at source from employees and consultants.

Payables to social security and pensions institutions represents the liability towards such institutions for employer and employee contributions on wages and salaries for the month of December 2012.

“Other payables” includes the deferred earn-out payment on the acquisition of Bracco Injeneering SA which is subject to certain conditions being satisfied and certain business targets achieved. It also includes advances under legal disputes representing the amount received from counterparties after they lost the case at the court of first instance. The dispute in question regards a claim by holding company Bracco Imaging S.p.A. for reimbursement of clean-up costs incurred in relation to land acquired in previous years.

35 ASSETS/LIABILITIES DESTINED FOR SALE

In accordance with IAS/IFRS, the assets and liabilities of the HPPD CGU/Business have been reclassified to this caption as the business is scheduled for disposal in 2013.

The assets and liabilities destined for sale at December 31, 2012 were as follows:

€/000 2012

Goodwill 1,632 Patents and intellectual property rights 832 Customer list 2,776 Plant 1,473 Equipment 45 Net deferred tax assets/liabilities (124)

Total assets/liabilities held for sale 6,634

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 86 36 CONTINGENT LIABILITIES

Holding company Bracco Imaging S.p.A. is party to a dispute with the Italian Tax Authorities over alleged breaches of transfer pricing regulations in relation to subsidiary Bracco Altana GmbH in 2002. The company received an initial tax demand for Euro 4,745 thousand and lost the legal case at the court of first instance. However, IT then successfully appealed on October 12, 2007 to the second tier Regional Tax Commission. On January 13, 2009, the Italian Tax Authorities filed a further appeal to the Supreme Court of Cassation; the Company has filed a cross-appeal of its own. At the date these financial statements were presented to the Board of Directors, the Court of Cassation had not yet scheduled a hearing of the matter.

37 OTHER DISPUTES AND LITIGATION

Commencing in 2007, legal action was taken against all manufacturers of gadolinium based MRI contrast agents – among them the Group’s US company Bracco Diagnostics Inc. in relation to products MultiHance and ProHance.

Specifically, the claim against Bracco was that gadolinium based products, when administered to patients with kidney disease, could cause “Nephrogenic Systemic Fibrosos” – NSF. From a procedural perspective, most of the claims were brought together as part of a Multi-District Litigation (“MDL”).

In 2012, as in prior years, Bracco’s defence agents continued to pursue their goal of having all claims against the company dropped and, in July 2012, all remaining proceedings against the company were duly abandoned and the company absolved.

In 2009, a claim was brought by Bayer Schering (now Bayer Healthcare, hereafter “BHC”) in relation to a licence agreement for the sale and distribution of Iopamidol in Japan and the validity of the patents held by BHC in the MRI field. The dispute involved two separate arbitration proceedings brought by the counterparty before the International Chamber of Commerce in Geneva. The Group was notified on August 11, 2009.

During the year just ended, a new commercial agreement was signed with BHC and the parties decided to discontinue the dispute, dropping their respective claims under the arbitration proceedings before the International Chamber of Commerce in Geneva.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 87 38 RELATED PARTY TRANSACTIONS

Intra-group transactions

The Bracco Imaging Group’s related party transactions mainly involve:

 Commercial relations  Services  Relations under the Bracco Group consolidated tax arrangement and VAT arrangement, for the Italian companies

The following table shows the balance sheet and income statement relations of the Bracco Imaging Group with other entities identified as related parties belonging to the Bracco Group (parent company, associated companies and non-consolidated subsidiaries) at both December 31, 2012 and December 31, 2011:

Balance sheet relations

Current and non- Other Current and non- Trade Other current December 31, 2012 current financial receivables and Trade payables current financial receivables liabilities assets current assets liabilities

Parent company Bracco S.p.A. 2 0 6,286 (790) 0 (2,451)

Associated companies Bracco Real Estate S.r.l. 0 0 56 0 0 0 Bracco Advance Medical Technologies Inc. 0 14,431 0 0 0 0 Acist Medical System Inc. 0 24,713 91 (3,692) 0 (185) Centro Diagnostico Italiano 76 0 58 (103) 0 0 No n consolidated subsidiaries Bracco Pty L.t.d. 0 0 0 0 0 (106)

Total 78 39,144 6,491 (4,585) 0 (2,742)

Current and non- Other Current and non- Trade Other current December 31, 2011 current financial receivables and Trade payables current financial receivables liabilities assets current assets liabilities

Parent company Bracco S.p.A. 1,751 0 2,806 (457) 0 (2,081)

Associated companies Bracco Real Estate S.r.l. 54 0 0 0 0 0 Bracco Advance Medical Technologies Inc. 0 0 0 0 0 (17) Acist Medical System Inc. 26 19,334 285 (2,229) 0 (19) Centro Diagnostico Italiano 67 0 0 (96) 0 0 No n consolidated subsidiaries Bracco Pty L.t.d. 0 0 0 0 0 (79)

Total 1,898 19,334 3,091 (2,782) 0 (2,196)

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 88 Income statement relations

Purchases, Ne t financial Other services and December 31, 2012 Revenues income (charges) income use of third- party assets Parent company Bracco S.p.A. 2,999 1,432 (3,147) 0

Associated companies Bracco RE Srl 0 117 (308) 0 Bracco Real Estate S.r.l. 0 0 1 0 Bracco Advance Medical Technologies Inc. 0 0 (40) 31 Acist Medical System Inc. 0 603 (19,530) 493 Centro Diagnostico Italiano 209 64 0 0

Total 3,208 2,216 (23,024) 524

Purchases, Ne t financial Other services and December 31, 2011 Revenues income (charges) income use of third- party assets Parent company Bracco S.p.A. 15,529 1,554 (2,971) 0

Associated companies Bracco RE Srl 0 92 0 0 Bracco Real Estate S.r.l. Bracco Advance Medical Technologies Inc. 0 0 (88) 0 Acist Medical System Inc. 27 497 (16,049) 353 Centro Diagnostico Italiano 205 23 (278) 0

Total 15,761 2,166 (19,386) 353

Pursuant to Article 2427 (22-bis) of the Italian Civil Code, we note that the related party transactions cannot be classed as atypical or unusual and form part of the ordinary business activities of the Group.

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 89 Remuneration of directors, statutory auditors and key management personnel

In 2012, the emoluments paid to the members of the Board of Directors of holding company Bracco Imaging S.p.A. amounted to Euro 1,000 thousand (Euro 1,000 thousand in 2011) while the emoluments paid to the directors for taking part in the Board of Directors’ meetings of other Group companies amounted to Euro 140 thousand (Euro 129 thousand in 2011).

The members of the holding company Board of Directors are:  Diana Bracco  Fulvio Renoldi Bracco  Pietro Mascherpa  Giordano Righini

The emoluments paid to the members of the Board of Statutory Auditors of holding company Bracco Imaging S.p.A. in 2012 amounted to Euro 146 thousand (Euro 146 thousand in 2011). The members of the Board of Statutory Auditors of Bracco Imaging S.p.A., as appointed by the General Meeting of May 6, 2010 are:  Angelo Casò (Chairman)  Enrico Nicolini  Lorenzo Pozza

The remuneration of key management personnel for 2012 totalled around Euro 4.6 million (Euro 3.6 million in 2011).

Fees of the external auditors The fees of external auditors Deloitte & Touche S.p.A., incurred by holding company Bracco Imaging S.p.A. in 2013, amounted to Euro 284 thousand (Euro 233 thousand in 2011).

Transactions with other related parties

Transactions with other related parties – as defined by IAS 24 and not including the parent company or direct and indirect subsidiaries – regard the legal services rendered by Studio Legale Associato Santa Maria (Euro 4.1 million in 2012 and Euro 3.9 million in 2011).

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 90 39 NET FINANCIAL POSITION

At December 31, 2012, the net financial position was as follows:

December December (€ thousand) 31, 2012 31, 2011

Cash and cash equivalents 67,387 74,644

Current financial receivables - associated companies 39,143 19,334

Current financial receivables - third parties 12,635 11,576

Current financial liabilities - third parties (163,227) (157,779)

Short-term net financial position (44,062) (52,225)

Financial liabilities - third parties (221,385) (192,379)

Net financial position (265,447) (244,604)

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 91 40 SUBSEQUENT EVENTS

Following on from a series of measures within the Group aimed at strengthening and developing the Injectors business, in January 2013, Bracco Injeneering S.A. acquired the radiology contrast agent injectors business from associated company Acist Medical Systems Inc.

These financial statements are submitted to the General Meeting following a resolution by the Board of Directors on April 22, 2013.

For the Board of Directors President and Chief Executive Officer

Diana Bracco

Bracco Imaging Group – Notes to the consolidated financial statements at December 31, 2012 - page 92