Financial comments At the present moment it is very likely that Italy, Spain and Portugal will also be participating in Economic and Monetary Union (EMU) from the start. The concept of safe euro currencies has therefore been extended to include ATS, BEF, DEM, FIM, FRF, NLG, IEP, ITL, ESP and PTE. The following graphs have been adjusted to the new definitions. The share of safe euro currencies in the currency cash flows of H. Lundbeck A/S and its Danish subsidiaries is increasing. From a level of 40% in 1996 and 41% in 1997 the share is rising in 1998 to 47% of the budgeted cash flows, due to rising sales in the euro markets. In 1997, Lundbecks exchange rate index, which reflects Lundbecks long-term competitive power, rose by 2.8%. This increase is primarily due to the strengthening of GBP and USD. The exchange rate index is calculated as the reciprocal DKK rate index weighted with the expected turnover shares of Lundbecks subsidiaries and trading partners. The index is rebalanced on an annual basis to reflect changes in the distribution of the turnover in terms of foreign currencies. The changes in the index figures, which can be read off from the graph on page 49, illustrate how much the turnover would have been affected by exchange rate changes if no exchange rate hedging had taken place. Receivables The products of the Lundbeck Group are sold in a large number of countries, mainly to drug distributors and hospitals. Historically, the losses recorded by the Group on receivables have been insignificant and the Group has not found it necessary to make provisions for bad debts at 31 December 1997. Concentration of credit risk The Group does not have a major concentration of credit risk, having spread it over a large number of creditworthy partners, cf above sections. Euro The introduction of the euro is drawing near. Formally, the fixed-rate cooperation will begin on 1 January 1999, but as the exchange rates will be frozen in the spring of 1998 simultaneously with the publication of the countries participating in the initial group, this means in practice that EMU will be a reality from that date. With companies both within and outside EMU and trade across that border, the Lundbeck Group will be considerably affected by the coming cooperation. The Group must be ready to handle the euro when it becomes an independent currency and can be used as an electronic means of payment. Before that happens, decisions must have been taken on cash management, choice of invoicing currency etc. In addition, the strategic conditions in connection with the single currency must be examined because also the relationship with customers, suppliers and competitors will be affected by the changed market conditions. In order to be fully prepared for the euro a working group was set up at the end of 1997 with the participation of representatives from all relevant parts of the Group and with reference to the Group management. The incoming currency cash flows of H. Lundbeck A/S and its Danish subsidiaries - realised 1997 Credit risk Financial instruments The primary financial instruments shown in the balance sheet at 31 December 1997 are trade receivables, securities and liquid funds. The amounts at which the mentioned balance sheet items are stated are identical to the maximum credit risk. The Group is of the opinion that no provision should be made for this risk because the Group is dealing with creditworthy trading partners. Safe euro-currencies Other European currencies USD and other non-European currencies 41% 50% 9% Liquid funds Liquid funds are mainly placed with banks with a high creditworthiness, and the securities portfolio placed in Danish government and mortgage credit bonds. Derivative financial instruments The credit risk on derivative financial instruments (forward exchange contracts) is limited because the Group is only dealing with banks whose credit rating as assigned by international credit-rating agencies is satisfactory. The incoming currency cash flows of H. Lundbeck A/S and its Danish subsidiaries - budget 1998 Safe euro-currencies Other European currencies USD and other non-European currencies 47% 43% 10% 48 Contents Supervisory Board and Board of Management A clear vision The way forward A continuously dev Supervisory Board Arne V. Jensen (Chairman) Jørgen Fakstorp (Vice-Chairman) Lars Bruhn Henrik He Board of Management Erik Sprunk-Jansen President Eva Steiness Executive Vice President Research an Georgios Peros, Abstract, 1990 A clear vision Lundbeck has a clear vision. We intend to become one The way forward Strategy is planning - the ability to see where we are, where we are going and how A visionary goal Our goal is to become one of the worlds leading companies in the treatment of psych A continuously developing organisation Lundbeck is a continuously developing company. Growing inter Group structure The Lundbeck Foundation H. Lundbeck A/S Synthesis factories Region Scandinavia &am The pharmaceutical industry Market conditions in the pharmaceutical industry In 1996, the global ph K. Nathanael, Sunset, 1997 Sales and marketing The sales figure for 1997 places Lundbeck as one of Lundbecks products Lundbecks research and development activities are concentrated on developing new Koprianos, Town, 1996 Lastly, Lundbeck has a promising substance under development for treatment of The Supervisory Boards Report Net turnover (DKKm) 3,000 2,662 Net turnover 2,500 2,000 1,500 1,000 During the last few years, the pharmaceutical industry has undergone marked changes, resulting in a The Supervisory Boards Report Average number of employees 2,500 Subsidiaries Parent companies 2,000 At the annual general meeting on 16 May 1997, the employee bonus/profit distribution scheme that had The Supervisory Boards Report Lundbeck International Psychiatric Institute As a specialist in psych Spyros Loukidis, Windows, 1995 17 Environmental Report The Managements Declaration Lundbeck regards openness about the companys healt Environmental Report 1997 In 1997, Lundbeck continued developing a health, safety and environmental Environmental Report Lundbeck - general Lundbeck has its headquarters, with its management, adminis K. Fyra, Abstract, 1994 The first steps in the process are often carried out in Seal Sands, while t Environmental Report Summary of the Groups environmental status Below a short summary is given of t the waste water, while the remaining approx. 1,200 tonnes are sent to a special chemical waste dispo The Lundbeck International Psychiatric Institute The Lundbeck International Psychiatric Institute Ex ment, education of patients and their families, and Quality Management within psychiatric treatment. Art can overcome prejudices In Greece, as in many other countries, the general attitude to psychiat Giannis Papadakis, Abstract, 1997 Strengthening local collaboration The exhibitions are held in col PsychiatryLink an Internet introduction http://www.psychiatrylink.com will give you the possibility Lundbeck presents http://www.psychiatrylink.com The development of the first version of Lundbecks ne EPOS EPOS: European Post-marketing Observational Serdolect®/Serlect® project: increasing our unders Giannis Pachis, Excommunication, 1997 Unlike controlled clinical trials, the EPOS project has been My dream changes from colour to black and white Depression is about the worst thing anyone can exper The pieces fall into place That was the start of a life with changing psychopharmacological drugs, a Lundbeck worldwide Parent company H. Lundbeck A/S Ottiliavej 9 DK-2500 Copenhagen - Valby Tel: +45 Slovenia Lundbeck Pharma AS Presernova 1 (2. nadstropje) SLO-2000 Maribor Tel/Fax: +386 62 221 943 R The Lundbeck Foundation Award for Outstanding Research The Lundbeck Foundation, which makes substant V. Kafivas, Garden, 1996 Accounts 37 Summary for the Group 1993-1997 Profit and loss account (DKKm) Net turnover Profit before R&D c Key figures Average number of employees Average number of shares (million)*) Earnings per share (DKK Comments on the accounts Profit for the year In 1997, profit developed positively. Profit for the y The limited effect of the policy changes in 1997 is due to the movement in the size and composition Comments on the accounts Under the changed accounting policies, the results of foreign subsidiaries At the end of 1997, Lundbecks new antipsychotic drug, Serdolect®/Serlect®, had been launched in 10 E Comments on the accounts Other operating income, net Other operating income, net, amounted to DKK 8 In 1997, capital investments totalled DKK 188 million against DKK 224 million in 1996. As in 1996, t Financial comments General In 1997, the Lundbeck Groups financial income and expenses were affected The Groups loans on mortgage credit-like terms at 31 December 1997 Outstanding debt CIBOR-based loan Financial comments At the present moment it is very likely that Italy, Spain and Portugal will also Lundbecks exchange rate index (1988 = 100) 104 102 100 98 96 94 92 90 88 (Jan.) 89 90 91 92 93 94 95 Accounting policies General The annual accounts and the consolidated accounts have been prepared in The consolidated accounts are prepared on the basis of the accounts of the parent company and the su Accounting policies Provision is made in the balance sheet for the present value of plans which are The cost of new buildings and erection by the company of its own technical installations and machine Profit and loss account for the year ended 31 December 1997 Parent company 1996 DKKm 1,411.1 503.6 Per share ratios (DKKm) 150 137 Net asset values Cash flow 125 100 80 82 114 Earnings per share Balance sheetat Assets Parent company 1996 DKKm 18.0 9.6 27.6 386.1 140.4 101.5 146.6 774.6 95.4 5. Balance sheetat Liabilities Parent company 1996 DKKm 110.0 56.1 1,086.2 1,252.3 1997 DKKm 110.0 77. Statement of sources and application of funds for the year ended 31 December 1997 Group Notes Oper Signatures Copenhagen, 12 March 1998 The Supervisory Board and the Board of Management have today c Notes to the profit and loss account 1 Net turnover Parent company 1996 DKKm 263.0 874.7 176.9 96.5 Production, distribution, administration, and research and development costs incl. depreciation etc. Notes to the profit and loss account 4 Other operating income Parent company 1996 DKKm 3.1 3.1 1997 6 Tax on the profit for the year Parent company 1996 DKKm 1.3 0.8 1997 DKKm 49.7 - 0.1 Tax due on th Notes to the balance sheet 7 Intangible and tangible fixed assets Group: Research and development c Land and buildings DKKm Technical plant and machinery DKKm Other fixtures and fittings, tools and Notes to the balance sheet 8 Shares in subsidiaries Total DKKm Book value at 1.1.1997 Adjustment du 8 Shares in subsidiaries - continued Net asset value at 31.12.1997 DKKm H. Lundbeck A/S, Norway H. L Notes to the accounts 9 Other shareholdings and other receivables Parent company Other shareholding 11 Capital and reserves Group 1996: Share capital DKKm Capital and reserves at 1.1.1996 Adjustment d Notes to the accounts 11 Capital and reserves - continued Parent company 1996: Share capital Revalu 12 Provisions for pensions Group: The Group operates with two types of pension plans: defined contri Notes to the accounts 13 Provisions for deferred tax Group: Temporary differences between calculati 13 Provisions for deferred tax - continued Parent company: Temporary differences between calculation Notes to the accounts 15 Contractual obligations Rentals and leasing obligations Lundbeck has commi Notes to statement of sources and applicational funds 17 Adjustments Group: 1997 DKKm Depreciation e Michalis Manolopoulos, Landscape, 1997 Lundbecks new logo Lundbeck has introduced a new logo that clearly expresses our identity, vision an