Accounting policies Provision is made in the balance sheet for the present value of plans which are not financed. The present value of the commitment according to defined benefit plans which are financed by independent pension funds is calculated less the market value of the assets associated with the scheme, and any net commitment is included as a provision in the balance sheet. If the calculation shows a net asset, that asset will not be included in the balance sheet but disclosed in a note. The years changes in the provisions relating to defined benefit pension plans are included in the profit and loss account. Distribution costs Distribution costs comprise costs relating to distribution and sales of the Groups products, including direct distribution and marketing costs, salaries for the sales and marketing functions as well as depreciation and other indirect costs. Administration costs Administration costs comprise salaries for the management and the administrative functions, office expenses as well as depreciation and other indirect costs. Research and development costs Research and development costs comprise costs attributable to the Groups research and development functions, including wages and salaries as well as depreciation and other indirect costs. Research costs are always charged to the profit and loss account as incurred. Financial items Financial items comprise among other things interest income and expenses, which are included in the profit and loss account at the amounts relating to the financial year. Financial items include writedowns of financial fixed assets and realised and unrealised gains and losses on securities, items denominated in foreign currencies, forward contracts and other derivative financial instruments. Costs in connection with the raising of loans are charged to the profit and loss account at the time of the raising of the loan. Extraordinary items Extraordinary items include significant income or expenses from events or transactions that are clearly distinct from the ordinary activities of the Group. Segment information No segment information is disclosed because the company is only engaged in one business segment. Balance sheet Profit and loss account Net turnover Net turnover comprises invoiced sales for the year less returned goods and turnover taxes, mainly value added taxes and foreign drug taxes. Moreover, net turnover includes licence income and royalties from licensed products and non-refundable down payments from the research partners. Production costs Production costs comprise the cost of goods sold. Cost includes the cost of raw materials, consumables and goods for resale, direct wages and indirect production costs, including the cost of operating and depreciating manufacturing facilities. Production costs moreover include costs in connection with the quality certification of sold products and any writedown to net realisable value of unsaleable and slow moving items. Development costs are also charged to the profit and loss account as incurred because the conditions for capitalising development costs in the balance sheet are not found to have been met. In the opinion of the Group, capitalisation in the balance sheet requires that the development of the product has been completed and that all the necessary public registration and marketing approvals have been obtained. Public loans and grants State development loans with a forgivable clause are recognised as income in the profit and loss account as the research and development costs relating to the project are incurred. These costs are charged to the profit and loss account because, as mentioned above, they are not found to satisfy the conditions for capitalisation in the balance sheet. In the event of repayment, the repayments including interest are charged to the profit and loss account as the related income is recognised as income. Other operating income and expenses Other operating income and expenses comprise gains on sales of rights and other income and expenses. Intangible fixed assets Intangible fixed assets are stated at cost less accumulated amortisation. Costs relating to intangible fixed assets manufactured by the company are charged to the profit and loss account as incurred. Group goodwill is written off systematically via the profit and loss account based on an individual evaluation of the assets economic life, however no more than 20 years. So far no Group goodwill has been recorded in connection with the acquisition of subsidiaries. Leasehold improvements are written off over the term of the lease, with a maximum of 10 years. Rights are written off over the lives of the underlying products, with a maximum of 20 years. Tangible fixed assets Tangible fixed assets are stated at purchase price or production cost less accumulated depreciation and writedowns. 52 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