The options are earned by one-third a year over a three-year period. The first portion could be exercised in August 2000. The right to exercise all the granted options expires in September 2004. The exercise price has been fixed at the initial offering price of the shares on 17 June 1999 (DKK 175 per share) plus a yield element of 10% per annum. The company has authorisation to grant 500,000 options. On 31 December 2000, 484,917 options had been granted compared to 470,333 at 31 December 1999. In 2000, the number of options granted was 14,584 net. After 66,000 options had been exercised in 2000, corresponding to 35% of the exercisable number, there were 418,917 options outstanding at 31 December 2000. The companys holding of treasury shares has in this connection been correspondingly reduced by 66,000 shares. In 1999, the company purchased 500,000 treasury shares to secure and implement the share option plan. This holding included 434,000 shares at 31 December 2000. The value of the shares is fixed at the market price at the balance sheet date, and the shares are accounted for as a current asset. The difference between the calculated exercise price of the share options and the market price of the underlying shares is accounted for as a provision in the balance sheet. The increase in the estimated option obligation corresponds to the increase of the companys treasury shares at market value, and is therefore profit neutral, apart from the annual yield element of 10%, totalling DKK 8 million, which is included in finance income in the income statement. Share price based plan for the employees of foreign companies The employees of Lundbecks foreign companies were offered a share price based plan, which was a reflection of the Danish employee share plan. It was offered according to the same principles as those used for the offering of employee shares in Denmark. For employees employed in the Group throughout the period from 1 September 1999 to 3 January 2005, the plan will trigger an amount calculated as the difference between the special price, DKK 52.50 per share, of the employee shares issued in 1999 and the market price of the shares at 3 January 2005. The value of the plan at the time of subscription was equivalent to 167,300 shares exclusive of amounts added to cover the social security costs connected with the plan. To cover the increase in this obligation and the associated social security costs connected with the share based plan, the company purchased 185,000 treasury shares at a total cost of DKK 50.4 million in 1999. As a result of the conditions relating to the plan, the value of the plan inclusive of the associated social security costs corresponded to 168,907 shares at 31 December 2000. The holding of treasury shares to secure the companys obligation relating to the plan has not been reduced in line with the reduction in the equivalent value of the plan. The part of the holding of treasury shares that exceeds the necessary number of shares to secure the plan (30,657 shares in total) is not regarded as a hedging instrument and has therefore been deducted from capital and reserves. The years unrealised gain on these shares is not included in the income statement. The resulting effect on capital and reserves in 2000 is DKK -9 million. The rest of the shares are carried at the market price at the balance sheet date and accounted for as a current asset. The obligation, stated as the difference between the special price and the market price of the underlying shares, including amounts added to cover social security costs, is recorded as a provision in the balance sheet. Both the increase in the value of the holding of treasury shares to secure the companys obligations relating to the Group management option and share price based plans and the increase in the obligations are included in the income sta- tement as a staff cost. However, the increase in the value of the shares attributable to the 10% yield element relating to Group management options is included under finance income. The effect on the profit for 2000 is DKK 8 million net, equivalent to the 10% yield element. The table on page 61 gives a summary of the effect of the plans on the companys balance sheet and income statement. Lundbeck GmbH & Co. In 1994, H. Lundbeck A/S made an agreement with Byk Gulden Lomberg Chemische Fabrik GmbH to establish the 50/50 owned company Lundbeck GmbH & Co. - formerly Promonta Lundbeck Arzneimittel GmbH & Co. Lundbeck GmbH & Co. is marketing Lundbecks and Byk Guldens CNS products on the German market. Due to Lundbecks desire to optimise the strategic and financial possibilities on the German market in connection with launches of new products, Byk Gulden has agreed to sell its share of Lundbeck GmbH & Co. to Lundbeck. The acquisition was published on 1 February 2000 and took place on 1 March 2001. The purchase has no effect on the profit for 2000. The purchase price for Byk Guldens share of Lundbeck GmbH was DEM 210 million, or approx. DKK 800 million, which is within the range estimated in the 1999 comments on the accounts. The purchase will be financed by drawing on the companys cash. As the deal was not concluded until in 2001, the ownership structure was not changed in 2000. Byk Guldens share is therefore accounted for as a minority interest. Lundbeck GmbH & Co. is managed by Lundbeck and its financial statements are fully incorporated into Lundbecks consolidated financial statements. COMMENTS 60 ON THE ACCOUNTS Årsberetning 1999 Annual Report 2000 2000 was a very satisfactory year for H. Lundbeck A/S. In the year 2000 the company achieved its bes Supervisory Board 1 2 3 4 5 6 7 8 9 1 ARNE V. JENSEN (Chairman) Directorships Lundbeckfonden Corporate Management Group 1 3 4 5 2 6 7 8 Board of Management 1 Senior Vice Presidents 3 ER Contents CHANGE REPORT GROUP FINANCIAL 5 6 7 2000 HIGHLIGHTS 1996-2000 MEMORIES OF A PSYCHOPHARMA In Northern Italy, on the boundary between Liguria and Toscana, lies the port of Carrara, neighbour Change To have high goals and establish a creative forum. To combine experience and vision. To coup Report 2000 Changes in accounting policies The years important events In February, Lundbecks UK sub Net profit for the year (DKKm) 1.000 900 800 700 600 500 400 300 200 100 0 1996 Net profit ratio Net Revenue worldwide 11% Revenue by product 18% 21% 20% 62% 68% Europe USA Rest of world Cipramil® Income from Celexa® (DKKm) 1.400 1.200 20% 1.000 800 600 400 5% 200 0 1996 1997 1998 1999 2000 0 15% Number of employees at year-end 3.500 3.000 2.500 2.000 1.500 1.000 500 0 1996 1997 1998 1999 2000 2 Research and development costs (DKKm) 1.600 1.400 1.200 1.000 800 600 400 200 0 1996 1997 1998 1999 Generic competition The production of citalopram is protected by a large number of strong process pa Expectations for 2001 Lundbeck expects sales of citalopram to continue rising in 2001, mainly in the Memories of a Pscyhopharmacologist Changing Minds, Changing Lives By Arvid Carlsson Winning the Nob Carrara is not just marble. Other reasons why thousands of sculptors go to the region is that it imp Changing the World From Sweden So, I struck out on my own and went back to Lund to work with Hillarp It takes knowledge and experience to read the stones reactions when the rough cutting is done with d mine, the other root molecule identified by us in the early series of amine uptake inhibiting agents I am afraid that the very nature of depression will limit the possibility of success in these areas. Look at the long term effects of blocking receptors with neuroleptics. The brain doesnt like it at a The rough shaping is done by removing large and small chunks with modern, special tools. 21 Conjuring the precise, planned shape out of the recalcitrant block of granite is physically hard wor Lundbeck has 735 employees in Research and Development, including about 250 in Drug Discovery. Drug In the summer of 2000, the sequence of the human genome was published. This opened the way for findi A research process Target identification & validation Disease ­ unmet need Assay development H Development Lundbeck aims to be a world leader within the development of pharmaceuticals for the tr Here, the bottom face is adjusted. This is the base from which the sculptor calculates the precise m Lundbeck has also entered into a research and development agreement with the Danish biotechnology co Development pipeline per 31.12.2000 Compound Almotriptan Escitalopram Memantine Etilevodopa Rasagili Escitalopram is the first of the new SSRI* generation Lundbecks new antidepressant, escitalopram, i Escitalopram developed in a short space of time In the summer of 1997, H. Lundbeck A/S and Forest La The clinical development programme The clinical effect of escitalopram has been documented in a numb Here, the block of granite is seen lying down, with the base of the sculpture on the left. Red lines Lundbecks products Antidepressants Cipramil®/Seropram®/Cipram®/Celexa® (citalopram) Indication: dep On the face of it, the preliminary phases of the sculptors work may look rather random, but everythi The modern sculptor naturally makes use of cranes, technical aids and modern tools, but it is still Growth in a good environment It is Lundbecks mission to improve the quality of life of those suffer Raw materials consumption (tonnes) 10,000 Environmental performance Lundbecks environmental initiat Water consumption ( 1,000 m3) 250 Wastewater (1,000 m3) 250 200 200 150 150 100 100 50 50 Energy consumption (MWh) 100,000 Waste (tonnes) 16,000 14,000 80,000 12,000 10,000 8,000 60,000 Statement from Deloitte & Touche We agreed with the Companys management to perform a review of Shareholder information H. Lundbeck A/Ss shares are listed on the Copenhagen Stock Exchange and wer Shares traded and stock performance, 2000 700,000 800 600,000 700 500,000 600 400,000 500 300 Share ratios Ratios per share, DKK Earnings (EPS) Cash flow Net asset value Dividend Dividend as a p Change takes shape 45 Composition of the shareholder group 6% 7% Composition of the shareholder group (excl. LFI A/S) 4% Announcements to the Copenhagen Stock Exchange from H. Lundbeck A/S in 2000 No. 37 36 35 34 33 32 31 The 5-tonne block of granite has been transformed into an exciting sculpture. Its weight is now down Financial calendar 2001 Tentative dates 6 27 15 14 6 March 2001 March 2001 May 2001 August 2001 Nove It is not without reason that artists seek inspiration in the Tuscan landscape around Carrara. In th Summary for the Group 1993-2000 The comparative figures have been adjusted for changes in accounting Ratios Net profit ratio (%) Return on assets (%) Return on equity (%) R&D costs as a percentage Financial review Changes in accounting policies Comparative figures and financial highlights and r Tax on the policy changes increases net profit for the year by DKK 167 million and reduces deferred Lundbecks sales of other antidepressants and antipsychotics were DKK 798 million in 2000, a decline Net exchange gain relating to finance income was DKK 39 million in 2000 compared to DKK 41 million i In 2000, Lundbecks interest-bearing net cash (the companys holding of cash and cash equivalents less million. Capital and reserves exclusive of the proposed dividend will amount to DKK 3,560 million af The options are earned by one-third a year over a three-year period. The first portion could be exer Effect of incentive plans Treasury shares/current assets DKKm Obligation/ provisions DKKm Staff cost Employees In 2000, the average number of full-time employees totalled 3,002, an increase of 349 comp 1999 Currencies of the cash inflows of H. Lundbeck A/S and its Danish subsidiaries in 1999 og 2000 Accounting Policies General The parent financial statements and the consolidated financial statemen Forward contracts and other derivative financial instruments are stated at market value. Both realis Other operating income and expenses Other operating income and expenses comprise, among other things Gains and losses are included in the income statement under the same items as the associated depreci Obligations relating to employees of foreign companies under the share price based plan are included Income statement for the year ended 31 December 2000 PARENT 1999 DKKm 2,712.7 759.4 420.5 328.9 1,20 Balance sheet at 31 December 2000 Assets PARENT 1999 DKKm 8.2 55.0 63.2 644.7 228.8 144.4 133.5 1,15 Balance sheet at 31 December 2000 Liabilities PARENT 1999 DKKm 1,165.5 448.2 269.9 202.8 695.2 129.6 Cash flow statement for the year ended at 31 December 2000 KONCERN 2000 DKKm 1,004.0 189.7 455.4 1,6 Signatures Copenhagen, 6 March 2001 The Supervisory Board and the Board of Management have today co Notes 1. Revenue PARENT 1999 DKKm 308.8 1,750.1 533.7 120.1 2,712.7 23.0 141.5 2000 DKKm 295.6 2,30 2. Staff costs ­ continued Incentive plans: In 1999, the company introduced a share option plan for Notes 3. Depreciation and amortisation PARENT 1999 DKKm 2000 DKKm Depreciation and amortisation in 6. Income tax expense PARENT 1999 DKKm 154.0 1.4 2000 DKKm 498.7 (0.5) Current tax Prior year adjust Notes 7. Intangible and tangible assets GROUP Goodwill Product rights DKKm 40.1 18.4 58.5 31.9 7.2 GROUP Land and buildings DKKm 878.2 22.2 261.8 30.5 4.7 1,188.0 211.5 9.8 10.4 46.1 2.0 275.8 912.2 Notes 8. Investments in subsidiaries Total DKKm Carrying amount at 1.1.2000 Capital contribution Di 8. Investments in subsidiaries ­ continued Currency Nominel capital `000 200 1,000 200 400 5 60 500 Notes 9. Other investments and other receivables PARENT Other investments DKKm 103.2 Receivables fr 12. Capital and reserves GROUP Share capital DKKm 1999 Capital and reserves at 1.1.1999 Adjustment d Notes 12. Capital and reserves ­ continued PARENT Share capital Share premium Reserve for net reval 13. Retirement benefit obligations GROUP The majority of the employees of the Group are covered by r Notes 14. Deferred tax liabilities GROUP Temporary differences between assets and liabilities as st 14. Deferred tax liabilities ­ continued PARENT Temporary differences between assets and liabilities Notes 15. Other provisions GROUP Share options for Group management and key employees DKKm Provisio 16. Non-current liabilities PARENT 1999 DKKm 15.9 2000 DKKm 14.2 Mortgage debt due after 5 years 200 Notes 17. Contractural obligations Rental and leasing obligations Lundbeck has obligations amountin 18. Contingent liabilities Letters of intent The parent has issued letters of intent to subsidiaries Notes 19. Financial instruments ­ continued Credit risks The primary financial instruments shown in 20. Related parties Lundbeck defines related parties as: ­ the companys principal shareholder, LFI A Notes 22. Earnings per share (EPS) Earnings per share (EPS) are calculated as: (profit after tax an 25. Acquisition of companies In 2000, Lundbeck acquired 78.29% of the share capital of VIS Farmaceut Summary for 1999-2000 by quarter The tables show financial highlights by quarter according to the ne New accounting policies (DKKm) Financial highlights by quarter: Q1 - 1999 Revenue Profit from operat Lundbeck Worldwide For further information please see our homepage: www.lundbeck.com Parent Company On its way to its final position between Lundbecks coming canteen and the new head office, which are Photos Thomas Grøndahl, Steen Vedel Design og production Creavision A/S Reproduction Highlight Grafi Annual Report 2000 H. Lundbeck A/S 9 Ottiliavej DK-2500 Copenhagen ­ Valby Denmark Tel.: +45 3630