FINANCIAL REVIEW The companys cash and cash equivalents at 31 December 2001 were DKK 1,031 million against DKK 1,503 million at the end of 2000. Borrowing portfolio Lundbeck has a variety of credit facilities and committed loan facilities which are reviewed continuously and which, in combination with the companys cash and cash equivalents and bond portfolio, constitute Lundbecks short-term financial resources. In 2001, the Groups borrowings fluctuated as a result of the substantial investments in Byk Guldens share of Lundbeck GmbH & Co. and in the expansion of the production capacity in Seal Sands. In 2001, repo transactions were entered into in respect of the companys bond holding. Borrowings at the end of 2001 amounted to DKK 156 million compared to DKK 76 million at the end of 2000. The nominal outstanding debt was DKK 155 million, and the market value of the loan at 31 December 2001 was DKK 156 million. The difference is recognised in the income statement. In 2001, Lundbeck supplemented its guaranteed committed loan facility with a non-terminable 364-day credit facility of DKK 500 million in addition to the existing committed mortgage loan facility of DKK 346 million, i.e. DKK 295 million for 20-year loans and DKK 51 million for 10year loans, as well as an unsecured committed loan facility of DKK 750 million for a 9-year term, non-terminable by the lender. Foreign currency risks The foreign currency management is handled centrally by the parent. The company aims to hedge the Groups anticipated cash flows for any future 12-month period. Currency management focuses on risk minimisation and is carried out in conformity with the foreign currency policy approved by the Supervisory Board. The hedging consist partly of a fixed minimum hedge and partly of a variable part. The fixed part is hedged by forward contracts classified as hedging instruments and meeting the accounting criteria for hedging future cash flows. Changes in the fair value of these contracts are taken to capital and reserves as they arise and ­ on realisation of the hedged cash flow ­ transferred from capital and reserves for inclusion in the same item as the hedged cash flow. The variable part, which is hedged partly by forward contracts and partly by option contracts, is used to hedge the remaining foreign currency risks in the short term. These contracts are not classified as hedging contracts, and changes in the fair Currency indekx Indeks 1988 = 100 120 115 110 105 100 95 90 Jan Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec Dec 88 88 89 90 91 92 93 94 95 96 97 98 99 00 01 62 A N N UA L R E P O RT 2 0 01 COMPETENCE COMMITMENT INNOVATION CIPRALEX® GROWTH Lundbecks mission is to improve the quality of life for people suffering from psychiatric and neurol S U P E RV I S O RY B OA R D Arne V. Jensen Lars Bruhn Peter Kürstein Sven Dyrløv Madsen Bent J B OA R D O F M A N A G E M E N T Erik Sprunk-Jansen Lars Bang Harald Conradi-Larsen Stig Løkke P CONTENTS Report The CNS market Lundbecks core competencies Lundbecks growth potential Competent and R E P O RT GROUP FINANCIAL HIGHLIGHTS 1997-2001 1997 DKKm 1998 DKKm 1999 DKKm 2000 DKKm 2001 DK Revenue and profit Lundbeck had a very satisfactory year, the Group achieving its best-ever financia R E P O RT Investments Investments in 2001 were affected partly by the purchase of Byk Gulden Lombe well as other movements in capital and reserves of DKK -63 million. As a result, capital and reserve R E P O RT Suspension of Serdolect® lifted The Groups drug for treatment of schizophrenia, Serdolec Poland, Slovakia, the Czech Republic, Hungary, Slovenia, Croatia, Bulgaria, Ukraine and Russia. The R E P O RT Lundbeck expects to introduce Ebixa® for treatment of moderately severe to severe Alzhei The exercise price of the option is determined on the basis of a tradeweighted average share price f THE CNS MARKET 10 Diseases of the central nervous system affect millions of people all over the world 450 million peo THE CNS MARKET The CNS market In 2000, the total world market for pharmaceuticals amounted to USD 3 Depression is the single disease that causes the highest number of years of life with disability CNS T H E C N S M A R K E T ­ P S Y C H I AT R I C D I S O R D E R S Antidepressants ­ the largest CNS Antidepressant sales 2000 Brandname Active Ingredient(s) Marketing Corporation(s) Sales 2000 (mUSD) T H E C N S M A R K E T ­ P S Y C H I AT R I C D I S O R D E R S In the American market, where cita antipsychotic drugs. With the development of Serdolect® (sertindole), Lundbeck was once again a fron T H E C N S M A R K E T ­ N E U RO L O G I C A L D I S E A S E S 20 million people suffer from Alzh In 2002, Lundbeck is going to market Ebixa® Anti-Alzheimer products value market share of class USA T H E C N S M A R K E T ­ N E U RO L O G I C A L D I S E A S E S Parkinsons disease affects 1% of t World audited anti-Parkinson market by region in 2000 North America Europe Rest of world 32% 35% LUNDBECKS CORE COMPETENCIES 22 Each year, Lundbeck invests around 20% of turnover in R&D Modern pharmaceutical research In the LUNDBECKS CORE COMPETENCIES Lundbecks drug development organisation has the critical mass needed to Competitive sales force A competitive sales strategy includes developing and optimising a marketing L U N D B E C K S G ROW T H P OT E N T I A L The launch of Cipralex® will strengthen Lundbecks pos Before the end of 2002, Cipralex® is expected to be launched in many European countries and in the U L U N D B E C K S G ROW T H P OT E N T I A L Depression Alzheimers disease Schizophrenia Multiple 2002 2003 2004 2004+ Launch Launch PMS-studies III/NDA* III III II II/III I/II I/II Launch Launc L U N D B E C K S G ROW T H P OT E N T I A L The main purpose in developing CEP-1347 is to slow do Memantine is a non-competitive NMDAantagonist that has proven in clinical trials to be a safe and ef C O M P E T E N T A N D C O M M I T T E D E M P L OY E E S Lundbeck has doubled its staff in the pa Lundbecks many competent and committed employees have been crucial to the success of the company in E N V I RO N M E N TA L P E R F O R M A N C E Environmental Report 2001 Lundbeck has experienced st Lundbeck will certify its environmental management in the chemical production in accordance with ISO E N V I RO N M E N TA L P E R F O R M A N C E Raw materials consumption Tonnes 14,000 12,000 10,000 Facilities in the UK certified In 2001, the facilities in the UK gained certification of its environ E N V I RO N M E N TA L P E R F O R M A N C E equipment, which can be used for all the usual types E N V I RO N M E N TA L S TAT E M E N T F RO M D E L O I T T E & TO U C H E We have been engage L U N D B E C K S P RO D U C T S Antidepressants Cipralex®/LexaproTM (escitalopram) Indication: de 41 S H A R E H O L D E R I N F O R M AT I O N For the 2001 financial year, the companys Supervisory Bo H. Lundbecks shares, which are listed on the Copenhagen Stock Exchange, continued to rise in 2001 wh S H A R E H O L D E R I N F O R M AT I O N The dividend for the year will be paid automatically via Investor Relations contact For enquiries to Investor Relations interested parties should contact: St S H A R E H O L D E R I N F O R M AT I O N Analyst coverage Broker Analyst Contact Financial calen Announcements from H. Lundbeck A/S in 2001 Nr. Date Subject 56 55 54 53 52 51 50 49 48 47 46 45 44 F I N A N C I A L R E P O RT 2 0 0 1 48 49 S U M M A RY F O R T H E G RO U P 1 9 9 3 - 2 0 0 1 Income statement (DKKm) Revenue Profit before r Ratios Net profit ratio (%) Return on assets (%) Return on equity (%) R & D costs as a percentag FINANCIAL REVIEW Changes in accounting policies Lundbeck has implemented the International Accounti and Spain ­ as well as Canada and Australia where increased sales and marketing efforts again result FINANCIAL REVIEW At the end of 2001, forward exchange and option contracts had been entered into to Depreciation and amortisation charges, which are included in the individual cost categories, totalle FINANCIAL REVIEW Investments Lundbecks total net investments amounted to DKK 2,045 million in 2001 In 2001, Lundbeck continued its investments in improvements and expansion of the research facilities FINANCIAL REVIEW Cash flows from financing activities amounted to DKK -119 million net, most of whi At the end of each quarter, the invoiced amount is adjusted according to the actual size of the elem FINANCIAL REVIEW Obligations Board of Management Other executives Options not granted Total options January 2005. The value of the plan at the time of subscription was equivalent to 669,200 shares exc FINANCIAL REVIEW The companys cash and cash equivalents at 31 December 2001 were DKK 1,031 million value are recorded as financial items as they arise. The companys USD income derives primarily from AC C O U N T I N G P O L I C I E S General The parent financial statements and the consolidated fin Newly acquired subsidiaries are included in the income statement from the date of acquisition. Subsi AC C O U N T I N G P O L I C I E S of raw materials, consumables and goods for resale, direct labou Deferred tax on investments is provided depending on the companys intention of holding them. The tax AC C O U N T I N G P O L I C I E S Financial assets Investments in subsidiaries are recognised in t Obligations relating to the Management share option plan and other employee plans Obligations relati 70 I N C O M E S TAT E M E N T for the year ended 31 December 2001 PARENT 2000 DKKm 2001 DKKm Notes G B A L A N C E S H E E T AT 3 1 D E C E M B E R 2 0 0 1 ASSETS PARENT 2000 DKKm 2001 DKKm Notes GRO B A L A N C E S H E E T AT 3 1 D E C E M B E R 2 0 0 1 LIABILITIES PARENT 2000 DKKm 2001 DKKm Notes C A S H F L OW S TAT E M E N T for the year ended 31 December 2001 GROUP Notes 2001 DKKm 2000 DKKm S I G N AT U R E S Statement of the Supervisory Board and the Board of Management The Supervisory B 76 N OT E S 1. Revenue PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 295.6 2,304.7 1,167.3 28 N OT E S 2. Staff costs - continued In 2001, the company granted an additional 84,000 share options 2. Staff costs - continued Employees information: PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 D N OT E S 5. Finance income, net PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 73.9 14.3 81 6. Income tax expense PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 498.7 (0.5) (12.3) 85.7 N OT E S 7. Intangible and tangible assets GROUP Goodwill DKKm Product rights DKKm Other rights DKK 7. Intangible and tangible assets - continued GROUP Land and buildings DKKm Plant and machinery DKKm N OT E S 8. Investments in subsidiaries Accumulated impairment loss DKKm Total DKKm Accumulated C 8. Investments in subsidiaries - continued Currency Nominal capital 000 Ownership H. Lundbeck AS, N N OT E S 9. Other investments and other receivables PARENT Receivables from subsidiaries DKKm Other 12. Capital and reserves GROUP Share capital DKKm Share premium DKKm Reserve for treasury shares DKK N OT E S 12. Capital and reserves - continued PARENT Share capital DKKm Reserve for net revaluation 13. Retirement benefit obligations Group The majority of the employees of the Group are covered by r N OT E S 14. Deferred tax liabilities GROUP Temporary differences between assets and liabilities as 14. Deferred tax liabilities - continued PARENT Temporary differences between assets and liabilities N OT E S 15. Non-current liabilities PARENT 2000 DKKm 2001 DKKm GROUP 2001 DKKm 2000 DKKm 14.2 1 17. Contingent liabilities Incentive plans The Group has an obligation relating to share options gra N OT E S 18. Financial instruments Curency risk Net forward exchange contracts and currency options 18. Financial instruments - continued Currency options (zero-cost options): Contract amount calculat N OT E S 18. Financial instruments - continued Interest rate risk The interest rate risk has been c 19. Related parties Lundbeck defines related parties as: - The companys principal shareholder, LFI A N OT E S 21. Adjustments GROUP 2001 DKKm 2000 DKKm Depreciation and amortisation Unrealised value 23. Acquisitions of companies 2001 DKKm 2000 DKKm Acquisitions of companies: Intangible assets Tang L U N D B E C K WO R L D W I D E For further information please see our homepage www.lundbeck.com P Representative offices Bulgaria Hong Kong Iceland India Israel Malaysia P.R. China Russia Saudi Arab Our vision is to become a world leader in the development of pharmaceuticals for psychiatric and neu H. Lundbeck A/S Ottiliavej 9 DK-2500 Valby Copenhagen Tlf.: +45 3630 1311 Fax: +45 3630 1940 www.lu