The company has authorisation to grant 500,000 options. On 17 June 1999, the company purchased 500,000 of its own shares to secure and implement the share option plan. The cost of the shares was DKK 87.5 million. At 31 December 1999, the number of granted options was 470,333. The value of the shares is fixed at the stock market price ruling at the balance sheet date, and they 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 stated as a provision in the balance sheet. The increase in the estimated option commitment corresponds to the increase of the companys own shares to stock market value, and is therefore profit neutral, apart from the annual yield element of 10%, totalling DKK 4.7 million, which is included in financial income in the profit and loss account. the plan will trigger an amount calculated as the difference between the special price of DKK 52.50 per share and the stock market price of the shares at 3 January 2005. The value of the plan is equivalent to 167,300 shares. To cover the increase in the companys commitments and the associated social security costs, the company has purchased 185,000 of its own shares at a total cost of DKK 50.4 million. The value of the shares is stated at the stock market price ruling at the balance sheet date, and they are booked as a current asset. The commitment, stated as the difference between the special price and the stock market price of the underlying shares, including amounts added to cover social security costs, is stated as a provision in the balance sheet. The table on page 46 gives a summary of the effect of the plans for the management and for the employees of foreign companies as well as the effect on the companys balance sheet and profit and loss account. GmbH from Lundbeck products is equal to the contribution margin from Byk Gulden products. The take-over must take place by the end of 2009, except that (i) until 31 December 2000, Byk Gulden has the right to demand purchase by Lundbeck of Byk Guldens interest, if the two companies agree that the profits from Lundbeck products will not equal the profits from Byk Gulden products before the end of 2009. Furthermore, (ii) Lundbeck can extend the time for its take-over until 2014, if the market value of Lundbeck GmbH (determined by an independent valuation) is below a specified threshold by the end of 2009. The purchase price will be an already agreed factor multiplied by Lundbeck GmbHs turnover in the year of acquisition, which means that it cannot be determined at present. A purchase price for Byk Guldens interest in Lundbeck GmbH calculated at 31 December 1999 would be an amount between DKK 700 million and DKK 1 billion. Lundbeck GmbH is managed by Lundbeck and is therefore fully consolidated in Lundbecks consolidated annual accounts, and Byk Guldens interest is accounted for as a minority interest. Employee share plan for the employees of Danish companies On 10 December 1999, the company carried out an employee share issue, and the employees in the parent company and its Danish subsidiaries subscribed for shares at a special price of DKK 52.50 per share. Of the employees entitled, 97.8% subscribed for a total of 275,175 employee shares at an amount of DKK 14.4 million in total. 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, Promonta Lundbeck Arzneimittel GmbH & Co. On 1 April 1999, the company changed its name to Lundbeck GmbH & Co. Lundbeck GmbH & Co. markets the CNS products of Lundbeck and Byk Gulden on the German market. Lundbeck has undertaken to acquire 100% ownership of Lundbeck GmbH at a later date. Under the existing arrangements, Lundbeck has agreed to purchase Byk Guldens interest when the total, accumulated contribution margin of Lundbeck Employees In 1999, the average number of full-time employees totalled 2,653, an increase of 367 employees compared to 1998. In 1999, the number of employees increased in connection with the strengthened sales force in the major European markets and the companys expanded capacity for research, development and production. At the end of 1999, the number of full-time employees was 2,823. Stock market price based plan for the employees of foreign companies The rest of the Groups employees were offered an incentive plan based on the share price, which was a reflection of the Danish 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, Shareholders The Lundbeck Foundation, situated at 9 Ottiliavej, 2500 Valby, Denmark, is the only shareholder which owns more than 5% of the share capital. 47 Comments on the accounts Annual Report 1999 1999 was both an eventful and a successful year for H. Lundbeck A/S. The years biggest event was the Supervisory Board Arne V. Jensen (Chairman) Flemming Lindeløv Lars Bruhn (Vice-Chairman) Henrik He Board of Management Erik Sprunk-Jansen President & CEO Flemming Juul Jensen Executive Vice Pres Contents The basis of our activities Group financial highlights 1995-1999 Report 1999 An Essay on T Acalypha wilkesiana (East Indies). Copperleaf is a foliage plant that is related to the common Poins The basis of our activities The basis of our activities is the brain and its functions ­ and the dis Report 1999 Significant events in the financial year The substantial growth in recent years resultin Profit for the year (DKKm) 650 600 550 500 450 400 350 300 250 200 150 100 50 0 1995 1996 Profit for Profit before tax was DKK 926 million, while profit after tax and minority shareholders was DKK 616 Research and development costs (DKKm) 900 800 700 600 500 400 300 200 100 0 1995 1996 1997 1998 1999 Today, manufacturers of generic products are allowed to market and sell generic Cipramil® in a numbe Income from Celexa® (DKKm) 800 700 600 500 400 8% 300 200 100 0 1996 1997 1998 1999 6% 4% 2% 0 9% 18 Agaricus bisporus (Europe). The Portobello mushroom is an ordinary, brown garden mushroom that is gr expressions, their peculiar qualities. Memory can think of a name. But for recollection the name is Even in dreams, we seek meaning and coherence through the stories of the dream. There are dreams tha Oreocereus doelzianus (The Andes). The hairs protect the cactus against the cold and the strong morn It seems to me that more than memory and recollection it is the ethical impulse that makes the human A multitude of nuances in language speak of fundamental moods that derive from the brain. Mood, humo Fucus serratus. Serrated wrack. A form of brown alga. Common in Danish waters. 18 Readers who do not share Kierkegaards religious view of life can nevertheless not get away from Kier Research and Development thus strengthened our total development portfolio in 1999, partly through p Rebutia heliosa (Bolivia). A rather hardy, conical cactus that has adapted to great heights and a ha progress with the aim of uncovering new molecular mechanisms involved in the development of depressi Development portfolio Compound Almotriptan S-enantiomer Rasagiline TV 1203 Siramesine Gaboxadol Lu 3 Cipramil® prevents depression Lundbeck has carried out two studies of the prophylactic effect of Cip The patients were then randomised ­ in accordance with a code ­ for double-blind treatment with eith Citalopram benefits society Depression is a severe disease that results in a massive loss of working Alocasia odora (tropical Asia). Green foliage plant. Grown for its appearance. and 60 years of age, Fucus serratus. Serrated wrack. A form of brown alga. Common in Danish waters. Lundbeck on the worl Despite the growing use of antidepressants, the market will be affected in the years ahead by the ex In the 1960s, treatment of anxiety was revolutionised with the introduction of benzodiazepines, whic prove diagnosis of the disease. It is estimated that, within any given year, around 25% of patients Hibiscus (tropical plant). Better known in Denmark as the Hawaii flower. The beautiful stamens can b Lundbecks products Antidepressants Cipramil®/Seropram®/Cipram®/Celexa®/Sepram® (citalopram) Indicati Brassica oleracea. Better known as red cabbage. An edible cultivated plant that has been known since Growth in a good environment Lundbeck regards it as vital that fast growth and continuous improvemen Accounts Accounts Accounts Summary for the Group 1993-1999 Profit and loss account (DKKm) Net turnover Profit before research Ratios Net profit ratio (%) Return on assets (%) Return on equity (%) R&D costs as a percentage Comments on the accounts Accounting policies The Accounts have been prepared in accordance with Int In addition, Lundbeck expected a profit before tax above DKK 900 million, which is consistent with t Comments on the accounts Costs Lundbecks total costs, exclusive of financial items and tax, were DK DKK 7 million in 1999, against a net loss of DKK 2 million in 1998. Net currency income included in Comments on the accounts Cash flow Lundbecks cash flow from operating activities amounted to DKK 83 The Supervisory Board proposes distribution of a dividend of DKK 2.25 per share, or DKK 130 million. Comments on the accounts Incentive plans Three new incentive plans were introduced at Lundbeck in c The company has authorisation to grant 500,000 options. On 17 June 1999, the company purchased 500,0 Comments on the accounts Managing financial risks Lundbecks growing internationalisation through th Foreign currency risk Foreign currency exposure is a result of Lundbecks international activities. U Accounting policies General The annual accounts and the consolidated accounts have been prepared in Tax The parent company is jointly taxed with the two Danish and some of the foreign subsidiaries. Th Accounting policies Public loans and grants State development loans with a forgivable clause are re The net revaluation of shareholdings in subsidiaries is taken to the reserve for net revaluation acc Accounting policies Cash flow statement The consolidated cash flow statement is presented according Profit and loss account for the year ended 31 December 1999 Parent Company 1998 DKKm 2,095.5 702.5 Balance sheet at 31 December 1999 Assets Parent Company 1998 DKKm 15.7 25.7 41.4 503.8 168.6 113.7 Balance sheet at 31 December 1999 Liabilities Parent Company 1998 DKKm 110.0 205.9 1,457.3 45.0 1,8 Cash flow statement for the year ended 31 December 1999 Group 1999 DKKm 862.3 153.0 - 4.0 1,011.3 9 Signatures Copenhagen, 29 Februrary 2000 The Supervisory Board and the Board of Management have tod Notes 1. Net turnover Parent company 1998 DKKm 281.4 1,490.9 253.1 70.1 2,095.5 1999 DKKm 308.8 1,7 2. Staff costs - continued Incentive plans: In 1999, the company introduced a share option plan for Notes 3. Writedowns and provisions for Serdolect® Parent company 1998 DKKm 1999 DKKm The years writ 5. Audit fees Parent company 1998 DKKm 1999 DKKm Deloitte & Touche: Auditing services Non-auditi Notes 6. Financial items, net Parent company 1998 DKKm 49.3 5.1 43.7 12.8 110.9 18.9 8.4 23.9 4.8 2 7. Tax on the profit for the year Parent company 1998 DKKm 131.6 - 2.2 1999 DKKm 154.0 1.4 Current t Notes 8. Intangible and tangible fixed assets Group Product rights DKKm Purchase price at 1.1.1999 Land and buildings DKKm 687.8 1.8 - 0.8 194.7 5.3 878.2 171.9 0.2 43.5 4.2 211.4 666.8 Plant and ma Notes 9. Shares in subsidiaries Total DKKm Book value at 1.1.1999 Adjustment due to changed account 9. Shares in subsidiaries - continued Currency Nominal capital `000 200 1,000 200 400 5 60 500 5,000 Notes 10. Other shareholdings and other receivables Parent company Other shareholdings DKKm 9.6 94. 13. Capital and reserves Group Share capital DKKm Capital and reserves at 1.1.1998 Adjustment due to Notes 13. Capital and reserves - continued Parent company Share capital Share premium Reserve for n 14. Provisions for pensions and similar commitments Group The majority of the employees of the Group Notes 15. Provisions for deferred tax Group Temporary differences between calculations for accounti 15. Provisions for deferred tax - continued Parent company Temporary differences between statements Notes 16. Other provisions Group Share options for Group management and key employees DKKm Provisio 17. Long term debt Parent company 1998 DKKm 20.1 1999 DKKm 15.9 Mortgage debt due after five years 1 Notes 19. Contractual obligations Rental and leasing obligations Lundbeck has commitments amounting 20. Contingent liabilities Letters of intent The parent company has issued letters of intent to subs Notes 21. Financial derivatives Currency risk Net forward exchange contracts outstanding at 31 Dece 21. Financial derivatives - continued Interest rate risk The interest rate risk has been calculated Notes 22. Related party transactions Lundbeck defines related parties as: - The companys principal 24. Earnings per share (EPS) Earnings per share (EPS) is calculated as: (profit after tax and minori Shareholder Information Market value 1999 The allotment of shares in connection with the flotation Salvinia natans (tropical/subtropical plant) and Lemna (worldwide). Floating water ferns and duckwee Lundbeck worldwide For further information please see our homepage: www.lundbeck.com The UK Region Photos Thomas Grøndahl, Rigmor Mydtskov, et al. Design and production CreaVision A/S Reproduction No H. Lundbeck A/S 9 Ottiliavej DK-2500 Copenhagen - Valby Denmark Tel: +45 3630 1311 Fax: +45 3630 19