2011 ANNUAL REPORT
Grete Lundbeck
THE LUNDBECK FOUNDATION – AN ACTIVE INDUSTRIAL FOUNDATION Hans Lundbeck founded the company H. Lundbeck in 1915. In 1954, his widow, Grete Lundbeck, established the Lundbeck Foundation and transferred her shares in H. Lundbeck to the Foundation as the couple had no heirs. Today, H. Lundbeck is a world leader in the development and sale of drugs to treat brain disorders. H. Lundbeck was listed on the Copenhagen Stock Exchange in 1999, and the Foundation owns 70% of the company. In 1989, the Lundbeck Foundation acquired its second subsidiary, and today owns 40% of the capital (67% of the votes) in ALK, the world leader in allergy vaccines. Finally, in 2011, the Foundation bought 57% of the leading international rescue and assistance company, Falck. In addition to the three subsidiaries, the Foundation owns and manages a portfolio of securities worth approx. DKK 10 billion (€ 1.4 billion) via Lundbeckfond Invest, as well as a portfolio of biotech investments managed by Lundbeckfond Ventures. Throughout its history, the Lundbeck Foundation has made grants to independent research in biomedicine and natural sciences with ties to Denmark. The amounts involved have increased significantly in recent years, and in 2011 reached DKK 504 million (€ 68 million) of which € 1 million went to “The Brain Prize” awarded by Grete Lundbeck’s European Brain Research Foundation.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
CONTENT
An eventful year with many initiatives
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Grants - The year in brief - Strategy and governance - Prize and fellowship recipients - Theme: Genetic research alleviates pain and guilt - Theme: Neuroscience Centres
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Commercial activities - The year in brief - Corporate governance - H. Lundbeck - ALK - Falck - Lundbeckfond Invest - Lundbeckfond Ventures - Social responsibility, risk management and future expectations
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Consolidated financial statements Parent foundation financial statements the Lundbeck Foundation The Lundbeck Foundation Centres The Lundbeck Foundation Fellows
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Chief Executive Officer Christian Dyvig and Chairman of the Board Mikael Rørth
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
2011 – AN EVENTFUL YEAR WITH MANY INITIATIVES 2011 was a landmark year for the Lundbeck Foundation on many fronts, e.g. with the acquisition of the international rescue and assistance company Falck, changes to its grant strategy and management. The acquisition of a third subsidiary has long been on the Foundation’s agenda, and the acquisition of Falck has both strengthened and diversified the Group’s financial foundation. 2011 was also the year when, for the first time, the Foundation made grants of more than DKK 500 million (€ 68 million) to research. Commercial activities The Lundbeck Foundation Group’s total revenue grew by 39%, from DKK 16.9 billion (€ 2.3 billion) in 2010 to DKK 23.6 billion (€ 3.2 billion) in 2011, primarily due to the acquisition of Falck. Positive progress was also seen in group operating profit before tax and special items (EBIT). In 2011, EBIT was DKK 4,165 million (€ 560 million) compared to DKK 3,513 million (€ 473 million) in 2010 – an increase of 19%, again primarily driven by the acquisition of Falck. The Foundation’s share of the profit for the year before special items of DKK 1,815 million (€ 244 million) represented a decline from the previous year (DKK 2,880 million (€ 387 million) in 2010). This was due to negative results totalling DKK 142 million (€ 19 million) in Lundbeckfond Invest and Lundbeckfond Ventures, compared to a profit in 2010 of DKK 1,124 million (€ 151 million), while the subsidiaries improved their financial performance. The result for the Foundation is acceptable given that the decline in portfolio investments was caused by external factors, particularly the development in the global stock markets. H. Lundbeck After a record turnover in 2010 of DKK 14,765 million (€ 1,986 million), H. Lundbeck again managed to increase sales in 2011 to DKK 16,007 million (€ 2,153 million), corresponding to 8% growth despite the commencement of patent expiring for the antidepressant Cipralex/Lexapro and the resulting generic competition in a number of markets. In 2011, H. Lundbeck increased the sales of other products by 12% to DKK 7,315 million (€ 984 million). Late in the year, the company launched three new products and filed additionally two applications for the registration of new products. Overall, these initiatives will increase sales of other products significantly in the coming years. The most important new initiative in 2011 was, however, the establishment of a joint venture within psychiatry with the Japanese company Otsuka. The agreement confirms H. Lund-
beck’s position as a leading global player in pharmaceuticals for treatment of brain disorders. Operating profit (EBIT) showed a slight improvement at DKK 3,393 million (€ 456 million) in 2011 compared to DKK 3,357 million (€ 452 million), driven by increased sales and improved efficiency in production. The full impact of the company’s initiatives is not reflected in the results due to non-recurring costs for the reorganisation of research and development activities, as well as costs associated with the Otsuka agreement. Profit for the year at DKK 2,282 million (€ 307 million) compared to DKK 2,466 million (€ 332 million) in 2010 was down as a result of increased tax payments. ALK During 2011, the Foundation increased its stake in ALK. At year-end, it held 67% of the votes in the company and 40% of the capital. ALK’s turnover increased by 9% to DKK 2,348 million (€ 316 million) compared to DKK 2,159 million (€ 290 million) in 2010, partly due to milestone payments from its partners. In early 2011, ALK received a large upfront payment from Torii upon conclusion of an agreement regarding sales in the Japanese market. The collaboration with Merck (USA) regarding the North American market also developed positively in 2011. Merck thus made milestone payments to ALK and has presented impressive results from their studies of ALK’s products against grass and ragweed allergies. Operating profit (EBIT) rose to DKK 299 million (€ 40 million) compared to DKK 192 million (€ 26 million) in 2010. Profit for the year increased to DKK 200 million (€ 27 million) compared to DKK 128 million (€ 17 million) in 2010. Falck In 2011, the Foundation acquired 57% of the highly respected international rescue and assistance company, Falck. After the acquisition, Falck has continued its positive development and follows the plans upon which the Foundation based its invest-
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
ment – apart from the Brazilian ambulance activities, which Falck has closed down. Lundbeckfond Invest In connection with a change of strategy in 2011, the management of the Foundation’s portfolio investments was renamed Lundbeckfond Invest. The strategy for Lundbeckfond Invest involves increased active internal management of the portfolio, combined with some specialised external managers for selected assets and index investments of the rest of the portfolio at low cost. The new strategy of active internal management has been progressively implemented in 2011 and will continue in the coming years. Lundbeckfond Invest manages approx. DKK 10 billion (€ 1.4 billion). Its financial performance in 2011 was strongly affected by the global financial turmoil. The result for Lundbeckfond Invest in 2011 was a loss of DKK 72 million (€ 10 million) compared to a profit of DKK 1,179 million (€ 159 million) in 2010. Lundbeckfond Ventures Since its inception in early 2010, Lundbeckfond Ventures has established itself as a life science investor both in Europe and America, and has extended a wide network of contacts within the pharmaceutical and biotech industries. Based on the positive initial experience with Lundbeckfond Ventures and in light of the global lack of venture capital for biotech companies, the Board of the Foundation decided in 2011 to expand the capital committed to Lundbeckfond Ventures. The Foundation considers this an attractive and important area for future investment. The Foundation’s intention over the coming years is to continue to expand Lundbeckfond Ventures’ organisation and create a strong international investor and partner for the biotech industry. In 2011, Lundbeckfond Ventures invested in three new companies that are working to respectively develop transcranial magnetic stimulation for the localisation and stimulation of various brain functions, pharmaceuticals to treat the side effects of cancer treatment, and a new, natural bone substitute. In line with incentive programmes for the venture industry, an incentive programme was introduced at Lundbeckfond Ventures in order to continue to attract and retain skilled and qualified personnel in this specialist area. Equity and net wealth The overall impact of developments in the Group’s activities is that the Foundation’s share of consolidated equity grew from DKK 21.4 billion (€ 2.9 billion) to DKK 22.6 billion (€ 3.0 billion), while the Foundation’s net wealth at market prices rose from DKK 28.5 billion (€ 3.8 billion) to DKK 28.7 billion (€ 3.9 billion). The Foundation receives annual dividends from its subsidiaries, which are used for consolidating the Foundation and the financing of grants.
Grants Grants in 2011 increased by 31% to DKK 504 million (€ 68 million) from DKK 384 million (€ 52 million) in 2010, which is the highest amount the Foundation has ever awarded in a single
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year. The Foundation has continued to award application based regular grants to research within biomedical and natural sciences of approx. DKK 300 million (€ 40 million). In the context of the regular grants, the Foundation has increased its focus on young research talent by raising the number of Lundbeck Foundation Fellowships (worth DKK 10 million/€ 1.3 million each) from five to seven per annum. Strategic grants have increased to DKK 205 million (€ 28 million) from DKK 104 million (€ 14 million) in 2010. The main area of focus is centred around the theme “Brain Disorders are Biology”, given the unique research opportunities in Denmark for combining clinical research with gene-sequencing data and information from health and social registers. The Foundation has awarded the largest-ever single grant for psychiatric research in Denmark to the major national interdisciplinary project, iPSYCH. Furthermore, the Foundation has extended the collaboration with the neuroscience centres that were established in 2005. In this report we follow-up on the research findings from these three centres, as well as the neuroscience centre established in 2008. All four have made extremely gratifying progress. Finally, the Foundation has expanded its funding preferences to include allergy and immune modulation, as per its objective of supporting the research that forms the basis for the activities of the subsidiary ALK. Lundbeckfond Emerge In early 2012, the Foundation launched a new initiative, Lundbeckfond Emerge. The ambition is to create a bridge between university-based research and the commercial world. This will be done both by providing grants to start ups and by supporting researchers in academic communities with operational and industrial competences as well as with making the decisions necessary to develop research results and product ideas, with a view towards building a company or creating other kinds of commercialisation.
The Foundation’s operations The Lundbeck Foundation’s day-to-day operations are based on a rigorous governance structure that is embedded in the organisation. The aim is to ensure that the Foundation meets its objective of, on the one hand, being an active, valueadding owner and investor and, on the other hand providing grants to research within biomedical and natural sciences with ties to Denmark. In order to ensure the quality of the research funded by grants, the research areas and the funding methods are clearly defined and announced. The Foundation mainly uses external experts, in the form of internationally renowned researchers who, through their peer review and assessment of project applications, ensure that the projects supported by the Foundation are of a high international standard. The most important criterion for awarding grants is thus the quality of the research and the difference that it can make to people’s health and well-being. In relation to the subsidiaries, good governance requires a thorough understanding of the companies’ markets, products and services as well as keeping up to date with their opera-
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
tions. By doing so, the Foundation aims to be a good sparring partner for the companies’ management. In 2011, the Foundation’s governance structure has again proven its worth via this year’s sizeable grants, which include support for the iPSYCH project, and via the subsidiaries’ continued impressive development. The Foundation continuously seeks to minimise its operating costs, which in 2011 in total amounted to DKK 42 million (€ 6 million). This includes the total cost of operations of Lundbeckfond Invest, Lundbeckfond Ventures, grant-making activities and administration, including the monitoring of subsidiaries. The cost of Lundbeckfond Invest was DKK 6 million (€ 1 million), equivalent to 0.06% of assets under management. The cost of Lundbeckfond Ventures was DKK 7 million (€ 1 million), equivalent to 2.0% of invested capital. Costs associated with grants were DKK 7 million (€ 1 million), equivalent to 1.5% of the awarded amount, while the administrative and monitoring costs in 2011 amounted to DKK 22 million (€ 3 million). Directors’ fees for the Foundation and its wholly owned subsidiary amounted to DKK 4 million (€ 0.5 million), and executive remuneration was DKK 3 million (€ 0.4 million). Both members of the Board and the Chief Executive Officer of the Foundation are active on the boards of the Group’s partly owned subsidiaries. Total fees to Board members and Chief Executive Officer amounted to DKK 7 million (€ 1 million) and DKK 4 million (€ 0.5 million), respectively.
financial reporting are also noteworthy, as is the success in securing for the Foundation its third subsidiary, in the form of Falck. Steen Hemmingsen will maintain his relations to the Foundation through board representation in Falck and ObelLFI Ejendomme, and in connection with a project including the history of the Foundation. We wish to express our gratitude to the retired Directors and the Chief Executive Officer for their long-standing and significant contributions to the development of the Foundation. -oChief Physician, Professor Mikael Rørth MD was elected new chair (formerly deputy), and Group CEO, Civil Engineer Jørgen Huno Rasmussen replaced him as deputy. Christian Dyvig LLM MBA was employed as Chief Executive Officer of the Foundation. Finally, on behalf of the Board of Directors and the Management, we would like to welcome two new Board members: Professor Povl Krogsgaard-Larsen, Pharm.D. and Professor Gunhild Waldemar, Chief Physician, M.D. We have already benefited greatly from their considerable insight and experience. On behalf of the Foundation, we thank all participants on assessment committees and our partners at universities and in the ministries for their invaluable co-operation in 2011. We look forward to an equally good and eventful 2012.
The Foundation is jointly taxed with its subsidiaries through the wholly owned subsidiary Lundbeckfond Invest A/S. The Group’s total tax expense for 2011 was DKK 1,100 million (€ 148 million), and DKK 468 million (€ 63 million) was paid in Denmark. Words of thanks to the retired leadership At the annual meeting in 2011, the chair, Mogens BundgaardNielsen, announced his resignation from the Board. Under his chairmanship, the Foundation’s work has increased significantly, particularly in relation to the acquisition of Falck and the establishment of Lundbeckfond Ventures. Furthermore, the grants to research within biomedical and natural science has increased. Mogens Bundgaard-Nielsen has retained links to the Foundation as a board member of the Grete Lundbeck European Brain Research Foundation, which awards “The Brain Prize” (€ 1 million).
Mikael Rørth Chairman of the Board of Trustees
Christian Dyvig Chief Executive Officer
Chief physician Nils Axelsen MD also retired from the Board. Through his very broad research insights, Nils Axelsen has contributed significantly to the Foundation, not least in connection with the expansion of the grant activities. He has been the driving force behind establishing the Grete Lundbeck European Brain Research Foundation, which he currently chairs. The Chief Executive Officer of the Foundation, Steen Hemmingsen, also elected to retire after 11 years in office. In that period, the Foundation has undergone a huge development in both its commercial and grant-making activities, with investment funds multiplying eight-fold and grants 17-fold. Furthermore, the strengthening of the Foundation’s governance principles regarding the Board, grants and developments in
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Anne-Marie Engel, Director of Research
GRANTS – THE YEAR IN BRIEF In 2011, the Lundbeck Foundation allocated grants worth DKK 504 million to 350 projects. The Foundation received 1,426 applications for a total of DKK 2.74 billion.
Key data Funding is divided into two main categories. Regular grants are allocated to projects, Lundbeck Foundation Fellowships, research prizes, travel grants, visiting professorships and projects that focus on research into science teaching. DKK 299 million was awarded in this category. The Foundation also focuses on strategic initiatives. Within the parameters of the Foundation's overriding grantmakingstrategy, the Board identifies particular fields of research with the aim of funding major projects in which the expertise of multiple Danish and international research teams converges to define projects with strong potential for ground-breaking scientific discoveries. DKK 205 million was granted in this category.
DKK million. Regular grants 299 Biomedical projects 182 Natural sciences projects 26 Fellowships 70 Visiting Professorships 3 Teaching projects 12 Travel grants 2 Research prizes 1 Other projects 3 Strategic initiatives 205 iPSYCH 121 Continuation of 2005 Neuroscience Centres 84
In 2011, the focus was on psychiatry and a major grant of DKK 121 million was awarded to a partnership, iPSYCH, involving researchers at Aarhus University and the Mental Health Services, Capital Region of Denmark. Funds were also granted for the continuation of the three neuroscience Centres of Excellence established in 2005.
Total 504
Following the grant-making strategy, which can be read on page 8, the Foundation seeks to reward excellence in research with a connection to Denmark. In 2011, the Board revised the grant-making strategy, and there are now two focus areas within biomedicine: neuroscience/psychiatry and allergology/ immune modulation. Following on this decision, the Foundation will focus on major projects within both neuroscience/ psychiatry and allergology/immune modulation when determining the future strategic priorities.
Internationalisation of Danish research If Danish research is to maintain its current level or improve its position in international rankings, local research environments must build up and maintain strong international partnerships. The Foundation contributes to such network activities within biomedicine by funding Visiting Professorships for up to six months at Danish biomedical research institutions. Seven such grants were provided for basic and clinical research in 2011. Funding is also provided to facilitate international collaborations of individual Danish researchers. The Foundation is parti-
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
cularly keen to fund prolonged research visits abroad by highly qualified Danish researchers and research visits to Denmark by scientists from abroad. This year, the Foundation granted DKK 11 million to 12 such researchers who travelled abroad and to three who visited Denmark. DKK 220 million to Lundbeck Foundation Fellows Since 2007, the Foundation has awarded five-year fellowships worth DKK 10 million each to a total of 22 researchers from Denmark and abroad who have reached a point in their career where they are ready to establish their own research teams and focus on projects that they themselves have defined. In 2011, seven new fellows joined this group of young research leaders, who will undoubtedly help define Danish front-line research in the years ahead. What Lundbeck Foundation Fellows have in common is that they have to make the change from being part of a team to leading their own team at very short notice. In 2011, Associate Professor Maja Horst ph.d., Head of the Department of Media, Cognition and Communication at the University of Copenhagen, therefore on behalf of the Lundbeck Foundation ran two workshops for fellowship recipients to talk about how to combine work on their research with the challenges of leading a team of researchers.
In 2011, the establishment of a Danish satellite to the EMBL (European Molecular Biology Laboratories) was facilitated by a DKK 120 million grant from the Lundbeck Foundation. In 2012, following a call for applications, the Danish Council for Independent Research will be in charge of an international peer review, define evaluation criteria and identify international evaluators. Based on this, the Foundation will decide which university will host the Danish satellite of this prestigious European basic-research partnership. Denmark will then join Sweden, Norway and Finland in the Scandinavian collaboration with EMBL. Theme articles Biology and thereby genetics as a base for mental illness is the theme for the discussion between Royal Actor Henning Jensen and Professor of Psychiatry Thomas Werge in the following article. Furthermore, the heads of the Foundation's four neuroscience Centres of Excellence discuss what will be considered their most significant contributions to research in years to come.
Strategic initiatives A grant of DKK 121 million was made to the first three years of iPSYCH, a major interdisciplinary project focusing on psychiatric research. It is the largest ever grant to psychiatric research in Denmark. The project is headed by five leading Danish researchers in psychiatry, genetics and data research, who will establish collaborations with Statens Serum Institute, Beijing Genomics Institute, deCode Genetics from Iceland and the Faroese biobank. The research seeks to map the biological mechanisms that lead to the development of mental health problems, and to use this knowledge as a basis for the development of improved treatment of serious mental illness, and for preventive measures. Science teaching In 2011, the Foundation granted DKK 8 million to two research projects focused on education and training of science teachers in primary and lower-secondary schools. The projects are designed to generate new concepts for the training and in-service training of science teachers. The main feature of the projects is collaboration between the university colleges and the universities on the development of teachertraining programmes. New activities in 2012 In 2012, the Foundation's strategic projects will continue to focus on psychiatric research, but strategic projects within the area of allergology/immune modulation will also be identified. The News Department at the Experimentarium will receive funding to enhance media coverage of Danish biomedical and natural sciences research. Also, a new function has been added to the Foundation's funding activities: Lundbeckfond Emerge. An innovation scout with expertise in biotechnology will visit Danish universities and provide both funding and advice for the further development of research projects with high commercialisation potential.
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Make a significant difference
Support quality research at the highest level
Increased internationalization and interest in science
Focus on young researchers
Preference for neuroscience, psychiatry & allergology/immune modulation
Ties to Denmark
GRANTS – STRATEGY AND GOVERNANCE The Lundbeck Foundation is an industrial foundation that strives to make a significant impact on people’s health and well-being by funding research of the highest international quality, conducted both in Denmark and involving Danish scientists abroad, and primarily within biomedicine and natural sciences
Funding scheme The Foundation supports independent research in biomedicine and natural sciences. Young researchers are given precedence, and - all other things equal – biomedical priorities are neuroscience, psychiatry and allergology/immune modulation. The Foundation promotes the internationalisation of Danish research by funding partnerships and exchange programmes involving leading research teams from Denmark and abroad. The Foundation endeavours to motivate, inspire and recognise research talent, e.g. by presenting honorary awards and fellowships. Smaller-scale funding of school projects that encourage an interest in science is another integral part of the Foundation's activities. Funding categories Regular: Grants for research into biomedicine and natural sciences are awarded in open competition (“bottom up”). Strategic: Innovative research in strategic areas determined by the Board for periods covering several years and implemented by the Foundation through specific programmes. Research funding The overriding criterion for the Foundation’s research funding is that the scientific content of the application, the applicant's qualifications and the academic environment at the host institution are all of top quality. The Foundation systematically evaluates both applications and the results generated by the
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research projects that it funds. Applications are processed by peer-review panels with a majority of external experts. As a general aim, grants must make a tangible difference. Therefore, large grants are generally allocated to a small number of projects, rather than smaller amounts to a large number of projects.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
PRIZE AND FELLOWSHIP RECIPIENTS 2011 THE LUNDBECK FOUNDATION FELLOWS
Associate Professor, ph.d. Jan Arlt
Assistant Professor, ph.d. Mariola Monika Golas
Guest Professor, ph.d. Rune Linding
Assistant Professor, ph.d. Niels Emil Jannik Bjerrum-Bohr
Post doc., ph.d. Himanshu Khandelia
Associate Professor, ph.d. Albin Sandelin
TALENT PRIZES
M.Sc., ph.d. Magnus Kjærgaard
Research fellow, ph.d. Martin Snoager Sloth
RESEARCH PRIZE FOR YOUNG SCIENTISTS
Post doc., ph.d. Thomas Just Sørensen
Assistant Professor, ph.d. Søren Egedal Degn
Professor, ph.d. Tamás Freund
Professor, ph.d. György Buzsáki
Professor, D.Sc. Eske Willerslev
THE BRAIN PRIZE
Professor, ph.d. Péter Somogyi
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GENETIC RESEARCH ALLEVIATES PAIN AND GUILT Mental illness has a biological foundation, about which we have learned a great deal in recent years. What role does it play for someone with a mental illness – and what does it mean for the researchers – that there are so many other approaches to mental disorders?
Danish researchers have been working closely with colleagues from private and public institutions throughout the world in recent years to find and identify more of the mutations in the human genome that increase the risk of developing severe mental illness. Their discoveries have paved the way for a new understanding of the interaction between genetics and environment, and expectations are high that this research will have a crucial impact on future understanding and treatment of people with mental disorders. “The first really credible breakthrough came in 2008, when we first managed to dig into the genome physically and ascertained that specific changes make individuals predisposed to disorders such as schizophrenia and autism. Bipolar disorder was added to the list later on. This may still be virgin territory but since 2008, the idea that mental illness has a heredity element has no longer been a mere theory. Mental illness is just as biological as blood pressure and diabetes,” says Thomas Werge, Professor and Head of Research at the Research Institute of Biological Psychiatry, Mental Health Centre Sct. Hans. In a Copenhagen café, Werge meets Royal Actor Henning Jensen, who has suffered from severe depression and has talked openly about it for the last decade. Their conversation ranges over research, guilt and pain. It's all about guilt Everybody hopes that research will lead to new forms of treatment but for Thomas Werge that isn't the crux of the matter – guilt is. “When parents watch their children become mentally ill, the sense of guilt is overwhelming. Admitting to high blood pressure is one thing but nobody feels at ease saying 'my husband suffers from schizophrenia' or 'my child has ADHD'. Everybody knows something's badly wrong, but the subject is totally taboo.” Werge acknowledges that the home environment does have an impact on your psychological and mental development, but it isn't the main driving force.
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“For me it's about removing the concept of guilt. Guilt has absolutely no place in the equation. But it weighs so heavily it's impossible to fathom.” For Werge, some of the most satisfactory experiences in his professional life have been lecturing in relatives' and patients' associations and witnessing the strong reactions from parents of children with severe mental illnesses. Specifically, he remembers a lecture in the spring of 2009, when a group of parents told him that they felt as if they had been 'liberated' from guilt. “A mother with two daughters, the oldest of whom suffered from schizophrenia, had always thought she was to blame for the girl's illness. Her youngest daughter had been physically ill for a prolonged period, and this mother thought that because she had been caring for her, the older sister had been neglected, and that was why she contracted schizophrenia. Imagine spending your whole life feeling guilty about your children. That's awful. If genetics can help overcome that sort of pain, it will have made a colossal impact.” Understanding is liberating Henning Jensen, who has suffered from severe depression, is full of praise for the new research breakthroughs. He agrees with Thomas Werge that they mean so incredibly much to the families and to those who suffer from mental illness. "When I finally realised, after many years, that it’s partly chemistry that triggers depression, I felt liberated. When I'm out talking to people about it they seem so relieved when I bring it up." But this sense of liberation only followed after many long and difficult years, during which Jensen battled with his condition, and, not least, with an enormous sense of guilt. "As a depression builds, you feel as if you've no right to live, that you're not a person like everybody else, and that you’re unworthy of being in the presence of others." Jensen reached a point where he regretted everything. He distanced himself from his every past action and attitude.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Eventually, it reached a stage where he had almost wiped out his entire life in a kind of suicide attack on his own past and being. “And just think, when I was discharged from hospital and was back out among other people, it took three years before I spoke to anybody about it. Three years! It was as if there was this silent agreement –as if mutual silence meant it had never actually happened. After three years, a stage director asked me what had happened back then.” In 2001, Henning Jensen decided to go public with his story, as part of a national information campaign about depression. Since then, he has held some 150 lectures all over Denmark. “For me, it means the world to accept myself for who I am, without feeling guilt, without having to hide half of myself from the world. I've applied this knowledge in real-life during a new bout of depression a couple of years back when I found myself pacing up and down the beach in Raageleje and telling myself: You have every right to be here, you're a human being,
you've got just as much right to be here as anybody else. And suddenly the fear melted away. I have to say that you researchers and your public pronouncements make it much easier to be a patient and carry that latent depression, that’s always there and always will be. It's been a relief that you were able to pin some scientific facts onto mental disease,” Jensen says.
”For me it's about removing the concept of guilt. Guilt has absolutely no place in the equation. ” Thomas Werge, Professor of Psychiatry
Henning Jensen and Thomas Werge
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Depressed mice But what exactly are these facts? "Well, we haven't yet reached an understanding of what exactly it is in the brain that triggers mental illness. Genetics opens up interesting new horizons because we've never actually had a lot of ways of getting inside the brain. For a century, we've discussed what schizophrenia is, how it differs from autism, for example. Actually, as it is now, your diagnosis can change if you hop on a plane to America, because they have a slightly different classification system than in Europe," Thomas Werge explains. "But since we've now managed to put our finger on a few of the genetic changes that may make individuals predisposed to severe mental illness, we can induce those same changes in mice and study how the mutations alter their brains. We think we are onto something fundamental about mental illness. If we are, new medication may be developed based on whole new understandings. And then medical treatment of mental illness will be all about prevention or cure. This is totally different from the methods previously used to develop drugs for mental illness. "There are multiple models, but one of the most widely used depression models is to give a mouse electro-shock,” Werge explains. “You give it electro-shock at one corner of the cage, so it moves to the other corner. You repeat the procedure until the mouse is completely apathetic and just stands there staring out into space. Based on its behaviour, you now diagnose this as a depressed mouse. You treat it and if something works, then you claim to have found something that works on depression. The new knowledge we've gained in recent years makes it less important how the animal behaves, because now we're able to measure directly the effect of disease mutations in its brain and try to correct the biological mutations that we find.” Negotiating in a minefield Thomas Werge has encountered a wide range of reactions to animal testing and is curious to know if it raises Henning Jensen's hackles that biological changes are recreated in animals producing, for example, depressed mice. “No. Not in the slightest. Quite the contrary. If we weren't able to do that we'd still be living in the trees. I'm happy that you don't have to experiment on me to learn about the genetic causes of depression,” replies Jensen, who is actually more interested in knowing what the time horizon is for new forms of treatment. “We are looking at a time horizon of five years just to work out the potential in the new animals that we're working on. So we're talking about the next generation of people with mental illness benefiting from new drugs,“ Werge explains. “Will this mean bona fide genetic engineering?” Jensen wants to know. "I envisage drugs that attack the genetic causes of disorders and either compensate for them or correct them without actually tampering with the patient's genes. The furthest I envisage us going with actually touching genes would be
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”When I finally realised, after many years, that it’s partly chemistry that triggers depression, I felt liberated.” Henning Jensen, Royal Actor
prenatal diagnosis, which is already used to check for other genetic conditions," Werge replies. The potential for prenatal diagnosis means the new research has to negotiate in a minefield of ethical discussions and attitudes, and Thomas Werge has encountered some strong reactions. "When the research was first made public in 2008, some people talked about eugenics and genetic engineering. I even received letters addressed to me as SS Obersturmführer. It's not up to me to decide whether we should introduce prenatal diagnosis. That's a deeply ethical decision that basically is up to the individual. But an opportunity is emerging to advise mentally ill patients who'd like to have children and healthy parents who have mentally ill kids. We have examples of parents whose first child became severely ill at a very young age, and now they're not sure whether they dare have any more. In situations like that we would actually be able to provide meaningful genetic counselling,” Werge says. Henning Jensen does not belong to the group that is worried by the idea of prenatal diagnosis. Quite the contrary in fact. “The more the better, I say. Of course, nobody wants a society of robots, where everybody looks the same and we are all completely regimented. But I do know from my own experience that as far as mental illness is concerned, some kind of diagnostics is preferable to just abandoning people to a living hell.” Conflicting genes All this talk of genes leaves Henning Jensen mulling over his own genetic make-up. “We've talked a lot about genes. Actually, I've often thought my own genes were in conflict with each other, if I can put it like that. My parents were about as different as you can get, and since I'm the product of both, it has sometimes been difficult to reconcile the two. But one thing both sets of genes did agree about was me becoming an actor. So any defects there may be in my genes are also the raw material for my life as an actor. When I'm up there on the stage, I'm in balance. I really am. Totally. And it's always been like that,” he explains. “It's funny that you should say 'defects' in your genes,” Werge interjects.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
“There are a lot of common genetic differences between humans. And, in fact, a part of this normal genetic make-up may predispose to mental illness. This helps to provide us with an understanding of the fact that mental illness may well just be the extreme ends of normal behaviour. It's normal to be afraid – we have to be afraid sometimes and run for it. It's probably not a bad idea to have periods where you take things a bit slower, and other periods where you do things a bit faster.”
“Wouldn't it be great to have Niels Bohr's penchant for abstraction, you might ask. Well yes, if you're also just as down-to-earth as he was. Because if you had Bohr's ability to abstract but weren't as down to earth as he was, you'd soar and fly like a helium balloon. All of the abilities that we are equipped with, must fit together. If they're not in balance, it all goes wrong.
As far as schizophrenia is concerned, Werge points out that 70-90% of us have the genetic variants that cause the condition but only a very small minority actually develop mental problems. Since these genetic variants are so widespread, research has concluded that they must also do something positive.
"In the depths of a depression once, I thought a lot about the fact that so many billions of people seem to get by just fine in a mentally balanced state, despite the fact that the slightest imbalance can throw you over the edge. The human brain really is the most outstanding piece of precision engineering.”
Too much of a good thing “So one way to think about mental vulnerability is that maybe you've got too much of a good thing. I use this argument with parents who blame themselves for their kids' conditions. It helps take the stigma out of the situation if they know that they've given their offspring too much of certain genetic variants, which are basically good for humanity, but just don't work so well for a tiny minority of us,” Werge explains. He uses the famous Danish physicist Niels Bohr as an example.
The idea of balance is not new to Henning Jensen.
Henning Jensen is often asked if learning so much about himself as he must have done during his depressions hasn’t been rewarding. But as he puts it – “The answer is no. I'd rather have lived a totally superficial and happy life without the knowledge I possess now. The pain was unfathomable. I haven't learned anything from my illness. But I've learned to live with it.”
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
MIND, Aarhus University The Lundbeck Foundation Centre for Membrane-Receptors in Neuronal Disease Management: Professor Claus Munck Petersen and Professor Anders Nykjær Granted 2005, DKK 50 million
A CHANCE DISCOVERY The world is crying out for a breakthrough in the way neurological conditions like bipolar disorder and ADHD are treated. The chance discovery that served as the catalyst for the establishment of the Lundbeck Foundation Research Centre for Membrane-receptors in Neuronal Disease (MIND) may turn out to hold the key to just such an effective new form of treatment. Professor Claus Munck Petersen's research career took a new turn about 18 years ago, when the results of a laboratory experiment he was conducting revealed the presence of a protein that nobody had ever encountered before. His curiosity piqued, Munck Petersen set about identifying this mysterious protein. Barely a year later, human brain samples confirmed that he had indeed discovered a brand new protein, a receptor produced in mammals' brains, which turns out to play an important role in the well-being of the human brain. He named this protein sortilin. Claus Munck Petersen soon established a partnership with Professor Anders Nykjær, and the duo have dedicated their lives to finding out what sortilin and its related molecules (sortilins) actually do. In 2005, they received a financial boost from the Lundbeck Foundation and were able to set up MIND. “MIND made it possible for us to progress systematically as part of an interdisciplinary team that brings together five smaller groups at Aarhus University. We now know the precise structure of a very central part of this receptor family and we also know how a lack of sortilins in the brain affects behaviour in mice,” Munck Petersen explains. Their experiments revealed that a lack of sortilins lowers the pain threshold in mice, alters their level of activity and impairs their memory. In other words, sortilin plays a role in key brain functions. The team now suspects that the receptors also play an important role in staving off neurological and psychiatric disorders such as Alzheimer's, ADHD and bipolar disease. 14
“The evidence suggests that defects in this particular receptor system can trigger the development of a number of neurological disorders. It cannot be ruled out that our findings could ultimately lead to new medicines to treat those conditions," he explains. Professor Munck Petersen still has to pinch himself whenever he thinks about all the things that his chance discovery and early partnership with Anders Nykjær have led to. “What started out with a single ph.d. student and a laboratory technician has paved the way for a whole new field of research. 100 scientists from 20 countries attended the conference that we hosted in summer 2010. The Centre sets the agenda in its field, and we intend to do everything in our power to maintain that leading position,” he concludes.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
LUCENS, Glostrup Hospital, University of Copenhagen The Lundbeck Foundation Centre for Neurovascular Signaling Management: Professor Jes Olesen Granted 2005, DKK 30 million
FROM RESEARCH CENTRE TO NEUROLOGICAL HOSPITAL The fact that the Lundbeck Foundation Centre for Neurovascular Signaling (LUCENS) was established there in 2005 is one of the main reasons why Glostrup Hospital has developed into a specialist neurological hospital, according to the Head of the Center, Professor Jes Olesen.
When LUCENS opened under Professor Olesen, Glostrup Hospital already had plans to reorganise and focus more closely on neurological conditions. The professor is in no doubt that LUCENS helped facilitate the transformation, which has made Glostrup home of the largest neurological department in Denmark and one of the biggest in Europe. “The grant from the Lundbeck Foundation was the fuel that powered the process and made it possible to turn the big plans into reality. It is one of the reasons why we now have special clinics focusing on neurological conditions like epilepsy, Parkinson's disease, dementia, apoplexy, headaches and eye disorders,” Jes Olesen explains. He also points out that LUCENS has assumed huge importance for the scientific infrastructure in the hospital and made it possible to conduct world-class translational research. “LUCENS helped us set up a research park with state-of-the art laboratories. It means that when we just can't tease any more information out of brain scans on patients in the hospital, we can go straight to the research park and dig deeper with the help of animal models,” he continues.
why migraines occur and of potential ways of treating them more effectively. “We have found that two neurotransmitters, CGRP and PACAP, which are produced in the brain and elsewhere in the body, affect migraines. If you give these substances to migraine patients, it provokes attacks because one of their actions is to cause a slight distension of the blood vessels in the brain,” the professor explains. The researchers at LUCENS now know which specific receptors the neurotransmitters affect. “The challenge now is to use this knowledge to develop medicine that will alleviate pain during migraine attacks,” he says. Jes Olesen is convinced that Glostrup Hospital will be remembered 25 years from now for hosting the world's leading headache centre. “Because that is what it will still be then!” he promises with a smile.
“We don't have to wait for other researchers to take the initiative when we make new discoveries in our patients. We can do it ourselves.” Olesen's own research speciality is headaches, and LUCENS has helped him and his colleagues gain a clearer picture of 15
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
CIMBI, Copenhagen University Hospital The Lundbeck Foundation Centre for Integrated Molecular Brain Imaging Management: Professor Gitte Moos Knudsen Granted 2005, DKK 40 million
CLOSING IN ON WINTER DEPRESSION The Lundbeck Foundation Centre for Integrated Molecular Brain Imaging (CIMBI) is narrowing down the mechanism in the brain that triggers depression during the dark winter months in the cold North. The research revolves around light and the serotonin system.
Most people in the Nordic Region are well aware that winter is a season of mood swings. The dark months can provoke anything from a mild dose of the winter “blues” to a full-blown winter depression. In this altered state of mind people need more sleep, they crave carbohydrates and they find it more difficult to get things done at work and at home. The researchers at CIMBI have made important progress towards understanding this seasonal state of mind. Brain scans of healthy individuals have been used to study the impact on the serotonin system of the changing seasons and the amount of light. The serotonin system is known to play a key role in a wide range of psycho-physiological functions, including mood, aggression and pain. The interesting point about the research is the revelation that the serotonin system is affected by the seasons, i.e. it works differently in summer than in winter. “Serotonin and its related receptor system are part of the key to our state of mind, which may well explain why we undergo major mood swings – or even suffer full-blown winter depression – during the dark months,” explains the Head of CIMBI, Professor Gitte Moos Knudsen, who is well known in international scientific circles for her work on the serotonin system. CIMBI has gone a step further, revealing that seasonal mood swings also depend on our genes. “We are now looking at whether the gene variant that triggers particularly pronounced seasonal fluctuations in healthy individuals has a similar effect on people who suffer from winter 16
depression and are unable to regulate their serotonin system as the seasons change,” the professors adds. The center is closing in on what triggers winter depression, and light and brain chemistry are the main suspects. “We hope that we will be remembered 25 years from now as the people who got to the bottom of what exactly happens in the chemistry of the brain when someone is hit by winter depression. If we succeed, we will have solved a major social problem. At present, about one in twenty persons in the Nordic Region develops full-blown winter depression, and a much larger number experience pronounced mood changes during the dark months. It is detrimental to their quality of life and reduces their ability to do their best,” she concludes. CIMBI is also developing brand new radioactive tracers capable of measuring serotonin activity in the human brain. The tracers are used in PET and MRI brain scans to analyse what happens in the brain when, for example, we feel sad, impulsive or ready to take a risk.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
CINS, Glostrup Hospital, University of Copenhagen The Lundbeck Foundation Centre for Clinical Intervention and Neuropsychiatric Schizophrenia Research Management: Professor Birte Glenthøj Granted 2008, DKK 30 million
INDIVIDUALISED SCHIZOPHRENIA TREATMENT Changes to the brain's reward system are not the only mechanism that triggers hallucinations and delusions in patients suffering from schizophrenia. Other structures and signalling systems also play a role, according to new research by the Lundbeck Foundation Centre for Clinical Intervention and Neuropsychiatric Schizophrenia Research (CINS). The goal is that one day the research will lead to individualised treatment.
Schizophrenia has long been thought of as an umbrella term covering multiple disorders that affect different structures and signalling systems in the brain rather than being a single condition. However, despite indications that this is the case, the research world has lacked solid scientific evidence to go on. CINS has changed all that. It conducted the first ever study of a large group of patients before treatment with anti-psychotic medicine, and followed up with new brain scans once treatment had commenced. The results of the scans and of other advanced methods of examining how the brain processes input yielded important new information about the condition, e.g. that medicine, and perhaps substance abuse, are not the only factors that can induce changes in the schizophrenic brain. Actually, the condition itself leads to changes in the part of the brain's reward system that is associated with psychotic symptoms. “These findings are of huge significance to our understanding of the way in which psychotic symptoms such as hallucinations and delusions develop in schizophrenic patients,” explains Professor Birte Glenthøj, Leader of CINS.
symptoms such as delusions. In some patients, changes in the brain's serotonin system induce similar symptoms. “This is important. It tells us that different sub-types of schizophrenia exist that respond differently to different treatments. For example, it means that some patients would benefit from having their serotonin 2A receptors blocked and others from having their dopamine D2 receptors blocked. It opens the prospect of individualised treatment at some point in the future,” Professor Glenthøj adds. The research has already led to a revision of treatment guidelines in hospitals, e.g. accentuating how the individual patient should be treated in order to alleviate symptoms such as delusions and hallucinations. The professor hopes and expects that CINS will be remembered 25 years from now for the part it played in making schizophrenia a less “mysterious” disorder and how this encouraged greater overall understanding of the condition.
The reward system is pivotal to the onset of schizophrenia, and the neurotransmitter dopamine plays a key role in this. Dopamine is the body's own happiness drug. It is released into the brain when we are expecting to experience something good like money, sex or delicious food. CINS is also challenging the previously accepted idea that changes to the dopamine system are the only way to provoke 17
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
COMMERCIAL ACTIVITIES – THE YEAR IN BRIEF The commercial activities of the Lundbeck Foundation Group focus on the three subsidiaries (the strategic investments), which are complemented by portfolio and venture investments managed by the Foundation through Lundbeckfond Invest and Lundbeckfond Ventures.
development and the launch of new products. ALK recorded higher revenue and profit in spite of major investments in developing new tablet products. Both H. Lundbeck and ALK made significant investments in 2011 in research and development and the launch of new products both in the near and the long term. As a result, the Group's combined research and development costs rose by DKK 364 million in 2011 to DKK 3,775 million. The subsidiaries' increased focus on launching new products also had an adverse impact on the Group's operating profit (EBIT) owing to higher marketing expenses. There was an increase of DKK 652 million in the Group's EBIT because both H. Lundbeck and ALK, despite higher costs, managed to increase their EBIT, and also because of the consolidation of Falck.
Activities and results for the year In terms of earnings, 2011 was not on the same level as 2010 for the Lundbeck Foundation Group because of a loss in Lundbeckfond Invest. In 2011, the Group acquired the shareholding majority of Falck, and Falck was consolidated as a subsidiary of the Group at 1 July. The combination of the consolidation of Falck and higher revenue in the subsidiaries H. Lundbeck and ALK materially pushed up the Group's total revenue, which rose from DKK 16.9 billion in 2010 to DKK 23.6 billion in 2011, an increase of 39%. H. Lundbeck recorded an increase in revenue in 2011 but a flat development in profit due to investments in research and
GRANT ACTIVITIES
70%
Specialized pharmaceutical company developing innovative treatments for brain disorders
40%* (67%)
Global leader in allergy vaccines
* The Lundbeckfoundation holds 40% of the capital and 67% of the votes in ALK.
18
57%
International leader in assistance and emergency services
Portfolio investments of approximately DKK 10bn
Investments in biotech companies
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP KEY FIGURES
Financial highlights (DKK million)
2011
Revenue Operating profit (EBIT) Net financial items Lundbeck Foundation's share of profit for the year before special items Lundbeck Foundation's share of profit for the year
2010
2009
2008
23,602 16,927 15,594 4,165 3,513 2,877 -374 1,083 1,301 1,815 2,880 2,756 1,614 2,880 2,756
2007
13,381 12,823 2,448 2,920 -1,783 562 -608 1,888 -608 1,888
Grants awarded during the year 504 384 340 328 281 Equity 26,332 25,967 22,399 19,774 21,056 Lundbeck Foundation's share of equity 22,551 21,396 18,574 16,371 17,531 Total assets 47,459 34,732 32,109 23,588 25,000 Investments in acquisitions 4,537 178 5,133 129 Investments in property, plant and equipment and intangible assets 1,563 989 1,471 1,427 918 Net wealth (DKK billion) 28.7 28.5 26.1 27.6 33.3 Key figures Revenue growth EBIT margin Return on equity before special items Average number of employees
2,497
2,880
-383
-25 Administration
3
1,179
-55
Total
Grants
Before grants
Tax
Total
Grants
Before grants
Tax
Administration
Ventures
Invest
0 Invest
-498
1,000
0 Special items
Ventures
1,116
-29
-70
-72
-201
1,500
500
Falck
THE LUNDBECK FOUNDATION'S SHARE OF PROFIT 2010
0
1,614
78
76
2,000
500
ALK
13.0% 22.8% 11.8% 6,535
Special items
2,500 238
2,500
1,594
3,000
H. Lundbeck
4.4% 18.3% -3.6% 6,671
0
DKK MILLION
3,000
1,000
16.5% 18.4% 15.8% 7,048
In 2011, the Foundation made grants in the all-time high amount of DKK 504 million, against DKK 384 million in 2010, underlining the Foundation's ambition to make substantial contributions to research.
3,500
1,500
8.5% 20.8% 14.4% 7,314
The Lundbeck Foundation Group had tax expenses of DKK 1,100 million in 2011, against DKK 899 million in 2010.
3,500
2,000
39.4% 17.6% 8.3% 15,875
Falck
THE LUNDBECK FOUNDATION'S SHARE OF PROFIT 2011
2007
Operating expenses in the Foundation rose to DKK 42 million in 2011 from DKK 37 million in 2010 because of an overall increase in the number of employees, higher pension provisions and higher costs for administration and monitoring of subsidiaries.
H. Lundbeck
DKK MILLION
2008
50
The loss recorded by Lundbeckfond Ventures in 2011 rose by DKK 15 million to DKK 70 million, and was primarily due to
2009
ALK
Lundbeckfond Invest recorded a total loss of DKK 72 million, against a profit of DKK 1,179 million in 2010. The large fluctuation from 2010 to 2011 is ascribable to Lundbeckfond Invest's exposure to the equity markets, which plunged in 2011. Lundbeckfond Invest recorded a negative return of 1% in 2011, against a positive return of 9% in 2010.
2010
the adverse price performance of listed shares in which Lundbeckfond Ventures has invested.
1,728
The Lundbeck Foundation's share of profit for the year before special items amounted to DKK 1,815 million in 2011 and DKK 2,880 million in 2010. Special items amounted to DKK 362 million in 2011 and related to Falck's amortisation of intangible assets and costs associated with acquisitions.
2011
19
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
The Lundbeck Foundation's share of net profit is composed of income totalling DKK 1,594 million from H. Lundbeck, DKK 76 million from ALK and DKK 238 million from Falck, a loss in Lundbeckfond Invest of DKK 72 million, a loss in Lundbeckfond Ventures of DKK 70 million and administrative, monitoring and grant expenses of DKK 29 million. In addition, the Foundation's grants of DKK 504 million are deducted, less withdrawn grants of DKK 6 million. Net wealth Based on shareholdings in the listed subsidiaries and associates recognised at market value and other assets and unlisted shares recognised at carrying amount less payable grants etc.,
net wealth as of 31 December 2011 amounted to DKK 28.7 billion, against DKK 28.5 billion at the end of 2010. Movements in net wealth primarily consist of the performance of H. Lundbeck's share price, dividends from H. Lundbeck and grants. The share prices of both H. Lundbeck and ALK recorded a fairly flat trend in 2011 (H. Lundbeck 1.8% and ALK -0.2%) on average, but with major fluctuations over the course of the year. The flat price performance was notably better than the Danish NASDAQ OMX C20 index and the global MSCI All World Index, but compared with the international MSCI World Pharma Index, the performance was weak, although this was primarily due to the appreciation of the US dollar towards the end of the year.
NET WEALTH
Value
Asset
(DKK million)
allocation
14,834
50%
H. Lundbeck ALK
1,290
4%
Falck
3,277
11%
Invest
9,943
34%
267
1%
Ventures Payable grants etc.
(883)
Net wealth
n.a.
28,728
SHARE PRICE DEVELOPMENT 2011
RETURN 2011
DKK 150 140
130
H. Lundbeck
1.9%
ALK
-0.2%
120
MSCI World Pharma (DKK)
-0.2%
110
MSCI All World (DKK)
-13.6%
100
NASDAQOMX C20
-14.8%
90 80 70 Dec/10
20
Feb/11
Apr/11
Jun/11
Aug/11
Oct/11
Dec/11
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
MANAGEMENT AND CORPORATE GOVERNANCE The Lundbeck Foundation is managed by a board consisting of six elected members and three staff representatives from the two companies H. Lundbeck and ALK. The Board appoints the Chief Executive Officer of the Foundation.
The Foundation has joined the UN Global Compact. The Foundation has drawn up guidelines for its grants, including the recipient’s obligations to comply with the Foundation’s rules for scientific social responsibility.
The Board is self-supplementing. Ordinary elections are held at the AGM. Staff representatives are elected by the employees as per the procedures stipulated in Danish legislation.
The Board is subject to self-evaluation, in the form of dialogue between the chair and individual members, followed by discussions involving the entire Board. The executive management is evaluated at separate meetings.
The six elected members serve for a year at a time and are eligible for re-election for up to a maximum of 12 years and up to a maximum age of 75. If necessary, exceptions may be made to this rule to guarantee the desired overall competence profile of the board. The Board elects a chair and deputy chair immediately after the AGM. The Foundation yearly holds a minimum of four meetings plus a two-day seminar at which the Foundation’s strategy is discussed and decided upon. The Board has set up a research committee and an investment committee, which meet when necessary, at which time more detailed analyses and discussions are conducted on grant and investment issues. However, all decisions regarding grants and major investments are taken by the full Board. In the Foundation’s subsidiaries, a minimum of half of the members elected at the AGM, usually including the chair, must be independent of the Foundation. The Foundation closely follows the progress of the subsidiaries and seeks to be a good owner and sparring partner for their management, while exerting influence exclusively through representation on their boards and at general meetings. The Foundation considers it important that the companies have qualified and dynamic management teams that are capable of developing the companies and generating value for all shareholders. The CEO of the Foundation usually sits on the subsidiaries’ boards of directors, typically as deputy chair, while the chair of the Foundation is not a member of the subsidiaries’ boards. Rules of conduct have been implemented regarding potential conflicts of interest in relation to grants and investments as well as for board members and coworkers in relation to the Foundation’s grants.
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THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Lundbeck is an international pharmaceutical company engaged in the research, development, production, marketing and sale of pharmaceuticals targeted at disorders in the central nervous system (brain disorders), including depression and anxiety, psychotic disorders, epilepsy and Huntington’s, Alzheimer’s and Parkinson’s diseases, mainly based on own research. According to the World Health Organization, WHO, more than 700 million cases of brain disorders are reported every year. These are serious and life-threatening diseases that affect the quality of life of the patients as well as of their relatives. Further, these diseases also involve major socio-economic costs.
2011 business development 2011 was in many ways defined by the development of the partnering and collaboration strategy. Further, 2011 was another year of positive progress in the development portfolio, including the approval of two new products. Partnerships and collaboration agreements 2011 was a defining year for H. Lundbeck’s partnerships and collaboration agreements with entering new ones as well as realising the market potential of existing partner agreements. Successful partnering strategy In 2011, Lexapro® was launched in Japan by Mochida Pharmaceutical in collaboration with Mitsubishi Tanabe Pharma. The launch was the direct result of the partnership agreement Lundbeck signed with Mochida in 2002 concerning the development of escitalopram for the Japanese market. Over the course of the years, Lundbeck has received milestone payments and will now receive a prearranged royalty payment, which is a substantial percentage of the combined revenue in Japan. The launch is a milestone in the history of H. Lundbeck, given that it is the first H. Lundbeck product to be marketed in Japan. In 2010, Lundbeck acquired the rights to Saphris®/Sycrest® (asenapine) in all markets outside the US, China and Japan from US-based Merck & Co., Ltd. The launch of Sycrest® for the treatment of manic episodes associated with bipolar disorder was initiated in the European markets in 2011 and will continue in 2012. Outside Europe, Saphris® is indicated for the treat-
22
ment of both manic episodes associated with bipolar disorder and schizophrenia. The launch has been initiated in several markets in Asia, Australia and Canada, and more countries will follow in 2012. New collaboration agreements At the beginning of 2011, Lundbeck signed an agreement with US-based Cephalon, (now Teva Pharmaceutical), regarding the commercial rights in Canada and Latin America to six products with indications in brain disorders and cancer, including Treanda® (bendamustine HCI) for the treatment of chronic lymphocytic leukemia (CLL) and indolent nonhodgkin lymphoma (NHL). The registration procedures for several of the products have commenced. In November 2011, Lundbeck signed a strategic partnership agreement with Otsuka Pharmaceutical. The agreement covers the development and commercialization of pharmaceuticals for the treatment of psychiatric disorders. Under the terms of the agreement, Lundbeck is granted co-commercialization rights in all areas outside Asia, Turkey and Egypt for two of Otsuka’s high-potential compounds; aripiprazole depot and OPC-34712. Aripiprazole depot is developed for the treatment of schizophrenia. An NDA has been accepted by the U.S. Food and Drug Administration (FDA). In Europe, the compound is in clinical phase III, and the expectation is to submit an Marketing Authorisation Application (MAA) to the European Medicines Agency (EMA) in the first half of 2013. OPC34712 recently entered clinical phase III studies in schizophrenia and depression. The agreement with Otsuka also involves an option to enter into co-development and co-commercial-
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
DKK million Revenue Research and development costs EBIT Profit for the year The Lundbeck Foundation’s share of profit for the year Average number of employees
2011 2010 16,007 14,765 3,320 3,045 3,393 3,357 2,282 2,466 1,594 5,690
1,728 5,689
ization of up to three of Lundbeck’s early stage compounds in certain geographical regions. The economic consequence of the agreement is among other, that H. Lundbeck will pay up to DKK 9.7 billion to Otsuka in sales, development and regulatory dependent milestone payments over the coming years. Pipeline progress In October 2011, Onfi™ (clobazam) for the treatment of Lennox-Gastaut syndrome (epilepsy) was approved by the FDA. In January 2012, H. Lundbeck launched Onfi™ in the US. The clinical phase III programme for nalmefene for the treatment of alcohol dependence was completed in 2011, and an MAA to the EMA was submitted in December 2011. Reply from the authorities is expected at the end of 2012. Subject to approval, nalmefene will be marketed under the brand name Selincro™ and will become the first pharmaceutical in the market for the treatment of alcohol dependence that helps to reduce alcohol intake. 2011 result Revenue for the year rose by 8% to DKK 16,007 million. The improvement was driven by increasing sales of Ebixa® for the treatment of Alzheimer’s disease and Azilect® for the treatment of Parkinson’s disease (+14% and +15%) and Xenazine® for the treatment of Huntington’s disease and Sabril® for the treatment of infantile spasms (+40% and +73%). Sales of Cipralex® against depression continued to impress in 2011, growing 3% in spite of increased generic competition in several countries and the withdrawal of the product from the public market in Germany. Sales of Lexapro® increased 4%.
Research and development costs for the year amounted to DKK 3,320 million, or 21% of revenue, which was an increase of 9% compared to 2010. Sales and distribution costs for the year amounted to DKK 4,017 million equal to 25% of revenue and an increase of 15% compared to 2010. Administrative expenses amounted to DKK 2,111 million equal to 13% of revenue and an increase of 11% compared to 2010. Operating profit (EBIT) was DKK 3,393 million, corresponding to an increase of 1% relative to 2010. The EBIT margin was 21.2% compared to 22.7% in 2010. The profit includes a milestone payment of approximately DKK 200 million from Mochida relating to the launch of Lexapro® in Japan and income of DKK 95 million from the sale of the production facilities in Seal Sands in the UK. The profit also includes a DKK 364 million write-down relating to the restructuring of the research and development organization. The effective tax rate for 2011 was 30.8%, consistent with the expected tax rate of 30-32%. The effective tax rate rose from 25.0% in 2010 primarily due to valuation of tax assets. Profit for the year decreased 7% to DKK 2,282 million. The Lundbeck Foundation’s share of profit for the year amounted in 2011 to DKK 1,594 million compared to DKK 1,728 million in 2010 and the Foundation received DKK 479 million in dividends.
23
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
ALK is a research-driven global pharmaceutical company focusing on allergy treatment, prevention and diagnosis. The treatment is based on immunotherapy. Patients are exposed to the allergen in the form of an allergy vaccine. This restores the normal tolerance in their immune system and provides a sustained reduction in the symptoms and potentially halts the development of allergies and asthma. ALK is an international leader in the development of tablet based allergy vaccines. The first tablet product, Grazax®, is approved in Europe, while tablets for other allergies are currently in the clinical development phase.
2011 business development For ALK 2011 was defined by strategic partnerships and initiation of groundbreaking studies.
son, the number of patients was approximately 4,300 in the 17 completed clinical studies with GRAZAX® conducted in the period 2001-2011.
Partnerships In 2011, ALK entered into a partnership agreement with Torii Pharmaceutical to develop, register and commercialise MITIZAX®, among other products, in Japan. The agreement also covers ALK’s existing injection based vaccine and diagnostic products against house dust mite allergy. Moreover, the agreement includes a research and development collaboration targeting an allergy immunotherapy tablet (AIT) against Japanese cedar pollen allergy. In Japan, allergy to house dust mites and cedar pollen are the most frequently occuring allergies. It is estimated that 25-35 million people suffer from allergy or asthma caused by house dust mites or cedars. On entering into the agreement with Torii, ALK received a payment of DKK 224 million in 2011. The North American partnership with Merck continued in 2011 with among other Merck announcing positive results of the American studies of tablet based treatment of grass and ragweed allergies.
In Europe, ALK is conducting the clinical study called the GRAZAX® Asthma Prevention or GAP study. This study, which is the largest ever of its kind, is designed to investigate the potential of the product to prevent the development of asthma in children and adolescents. Studies of allergic children have shown that they are up to seven times more at risk of developing asthma. The GAP study will run for five years in 11 European countries and will include approximately 800 children aged 5-12 years. The study is progressing as planned and is expected to be completed in 2015.
Pipeline progress In 2012, the development of ALK’s products will reach a historically high level. It is expected that more than 8,000 patients will be participating in the clinical studies in 2012. In compari-
24
In 2011, ALK’s partner in North America, Merck, initiated a North American phase III clinical study to evaluate the efficacy of grass AIT (GRAZAX®) versus placebo in the treatment of grass pollen-induced allergic rhinocojunctivitis. The study includes 1,500 patients and is the largest ever conducted for grass AIT. The study is expected to be completed in 2012. In 2011, ALK decided to accelerate the development of tablet based treatment of house dust mite allergy – MITIZAX® in Europe and initiate an additional phase III clinical study (the MERIT study) to broaden the therapeutic use of the product. The MERIT study is a phase III study, and it is intended to enrol
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
DKK million Revenue Research and development costs EBIT Profit for the year Lundbeck Foundation’s share of profit for the year Number of employees
2011 2010 2,348 2,159 455 366 299 192 200 128 76 50 1,724 1,612
approximately 900 adults across 86 centres in 12 European countries. The study will evaluate the efficacy and safety of the treatment of house dust mite induced allergic rhinitis. ALK is also conducting the MITRA study, which is a phase III study enrolling up to 800 patients across 105 centres in 12 European countries to evaluate the efficacy and safety of the tablet in the treatment of house dust mite induced allergic asthma. This study is expected to be completed in 2013. 2011 result Revenue in 2011 increased by 10% to DKK 2,348 million (2010 DKK 2,159 million). The growth in vaccine sales was 5%, driven by the performance in France, the Netherlands, Spain, the Nordic countries and the USA. Vaccine sales accounted for 81% of total revenue, with the remainder being contributed by sales of adrenaline and diagnostic products, as well as revenues from partnerships. Operating profit (EBIT) increased by 56% to DKK 299 million versus DKK 192 million in 2010, which is the highest level in ALK’s history. The profit was extraordinarily high and was positively affected in particular by milestone payments from the partners Torii and Merck, which in 2011 contributed DKK 248 million against DKK 19 million in 2010.
was related particularly to a high level of clinical and pharmaceutical activities, including the GAP study and initiations of European clinical studies with MITIZAX® and AVANZ®. Added to this was support for the strategic partnerships in North America and Japan and new regulatory requirements in Europe imposing stricter requirements for the documentation of the company’s non-registered product portfolio, especially in Germany. Sales and marketing expenses amounted to DKK 781 million equal to 33% of revenue. Administration expenses were DKK 204 million equal to 9% of revenue and down by 2% compared to 2010. Income tax for the year amounted to DKK 121 million, corresponding to an effective tax rate of 38%. The profit for the year was thus DKK 200 million. The Lundbeck Foundation’s share of net profit for the year was amounted in 2011 to DKK 76 million compared to DKK 50 million in 2010 and the Foundation received DKK 20 million in dividends in 2012. The Lundbeck Foundation increased its ownership in ALK during 2011 to 40% of the capital and 67% of the votes.
Research and development costs increased by 24% to DKK 455 million against DKK 366 million in 2010. The increase
25
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Falck is a leading international supplier of pre-hospital services, healthcare, firefighting, roadside assistance and other contingency services, with operations on five continents and in 33 countries. Falck has four divisions: Assistance (roadside, personal and home assistance), Emergency (ambulance and fire service), Healthcare (medical clinics, healthcare employee assistance programmes for companies and pension funds and healthcare staff supply service) and Training (offshore safety and emergency training). All of Falck’s activities are aimed at preventing accidents and illness, providing assistance in case of accidents and emergencies, and helping people to get on with their lives after illnesses or accidents.
New ownership In July 2011, Nordic Capital’s seven-year ownership of Falck ended after the Lundbeck Foundation, Kirkbi and other investors acquired the company. The Lundbeck Foundation bought 57% of the shares in Falck in two stages. Business development in 2011 In 2011, Falck came substantially closer to achieving its goal of becoming a worldwide organisation that works to prevent accidents, illness and emergency situations; that rescues and assists people in an emergency quickly and competently; and that rehabilitates people after illness and injury. Falck has expanded geographically in all of its four business areas, especially Emergency. Emergency Falck’s emergency activities in 2011 were characterised by a significant international expansion and growth through a number of new contracts. In March, Falck acquired the American ambulance company Lifestar, which operates approximately 440 ambulances and other emergency vehicles in seven states on the US east coast. This significantly strengthened Falck’s position in the US ambulance market: the combination of Lifestar and Falck’s existing ownership of Care Ambulance made Falck the third-largest ambulance operator in the US.
26
In March, Falck acquired 63% of the leading South American ambulance and medical company Grupo EMI, which is headquartered in Columbia and has approximately 270 ambulances in Columbia, Uruguay, Venezuela, Ecuador, Panama and El Salvador. Grupo EMI’s activities are based on private subscriptions, and the company serves approximately 750,000 customers with ambulance and medical assistance. Falck also expanded its existing emergency services in Poland, Slovakia, Spain and Sweden. In Poland, Falck won the tender for ambulance-service provision in six regions, where the company now operates 84 ambulances. In Slovakia and Spain operations were expanded by way of new fire-service contracts, and in Sweden Falck gained more new ambulance contracts, e.g. in Stockholm. Assistance Falck’s assistance activities are concentrated in the Nordic countries and were affected by the large amounts of snow and hard frost that hit this region in the first months of the year. In Denmark, cloudbursts and heavy rainfalls in the summer months led to increased assistance activities as customers made use of their subscriptions. In Norway, Finland and partly in Sweden, the severe winter weather resulted in increased revenue, since Falck services in these countries are largely based on pay-per-use. Furthermore, the number of roadside assistances rose in Norway as the result of an
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
REVENUE SPLIT
Training DKK 1,019m: 9% Healthcare DKK 1,112m: 10%
EBITA SPLIT
Training DKK 128m: 13%
Emergency DKK 6,385m: 57%
Healthcare DKK 82m: 8%
Assistance DKK 2,693m: 24%
DKK million Revenue* EBITA* Profit for the year* The Lundbeck Foundation’s share of profit for the year Average number of employees*
Emergency DKK 435m: 45%
Assistance DKK 335m: 34%
2011 2010 10,193 8,367 980 839 516 458 238 25,262
n.a. 19,174
* Falck A/S' figures disclosed for 2010 and 2011. Falck Holding A/S' figures only comprise 6 months activities in 2011.
agreement to supply roadside assistance to the customers of Norway’s largest insurance company. Healthcare In May, Falck’s healthcare division strengthened its position on the Danish market by acquiring the second-largest private supplier of healthcare solutions in Denmark, Healthcare Danmark, which provides interdisciplinary healthcare schemes for 130,000 employees in public and private companies. In addition, the international expansion continued with the acquisition of 75% of the company Starowka, which owns four medical clinics in and around the Polish capital Warsaw. Training Falck’s global training activities, which are focused on safety training of employees in the offshore sector, continued to grow and expand in 2011, with no fewer than 240,000 students being trained. Training in wind-turbine operation was enhanced through the construction of a new training centre in Bremerhaven in Germany. Moreover, a 24-meter-high tower for wind-turbine training was built at Falck’s training centre in Teeside, UK. Falck also strengthened its global market position by acquiring 65% of the company Caspian Safe in Azerbaijan. 2011 results* Falck’s revenue in 2011 was DKK 10,193 million, which corresponds to a total growth rate of 22%. The increase is primarily
attributable to the purchase of rescue-service operations in the US and South America, but the organic growth was also positive, totalling 4%. The operating profit before depreciation and amortisation in relation to acquisitions and special items (EBITA) was DKK 980 million, representing an increase of 17%. The special items amounted to an income of DKK 82 million, which is attributable to a gain on the sale of securities of DKK 242 million (sale of Rural Metro shareholding), the write down of an investment in a subsidiary in Brazil of DKK 142 million, and expenses in relation to the sale of Falck A/S. Income taxes amounted to DKK 184 million against DKK 183 million in 2010, corresponding to an effective tax rate of 26.2%. The fall in the tax rate is primarily attributable to nontaxable extraordinary items as well as higher non-deductible costs of acquisitions. Profit for the year in 2011 amounted to DKK 516 million against DKK 458 million in 2010, representing an increase of 13%. The Lundbeck Foundation’s share of profit for the year before special items amounted to DKK 238 million, of which DKK 101 million relates to the period of 36% ownership and therefore income from associated activities, and DKK 137 million relates to the period of 57% ownership and is included in net profit after minority interests. 27
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Bertil From, CFO
Lundbeckfond Invest manages the Foundation’s portfolio investments and liquidity. Lundbeckfond Invest’s primary purpose is to generate an annual profit from the Foundation’s assets and secure the capital base and sufficient financial reserves, in order to support the development of the subsidiaries and the Foundation’s grant-making activities. As a result, the Foundation’s strategy for Lundbeckfond Invest is that its investments must, at all times, be diversified in terms of both sectors and asset classes. The objective for the weighting of the various asset classes is determined by the Foundation’s Board.
2011 investment strategy The asset allocation in Lundbeckfond Invest changed significantly in 2011. There was a reduction in the proportion of bonds and cash, while the proportion of corporate bonds and equities increased. The reallocation was partly due to the acquisition of Falck, which was funded by liquid funds, and partly due to an active investment decision to increase the share of corporate bonds and equities during the autumn. At the time, equities and corporate bonds had fallen in price, and
were considered to be attractively valued, despite the macroeconomic uncertainty. In 2011, the Lundbeck Foundation reviewed the investment strategy for Lundbeckfond Invest. One result was a decision to outsource less of the asset management of equities and corporate bonds. This follows several years of successful in-house management of corporate bonds and short-term mortgage bonds. The aim is to generate greater value by
ASSET ALLOCATION 2011
2010
Real assets 4% Unlisted equity 9%
Real assets 3% Bonds and cash 38%
Listed equity 36%
Listed equity 30%
Credit including distressed debt and mezzanine 7%
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Unlisted equity 6%
Credit including distressed debt and mezzanine 7%
Bonds and cash 54%
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
DANISH INTERST RATES
STOCK MARKET INDEX IN DKK
4%
110
3%
100
2%
90
1%
80
0% Jan
Feb
Mar
10 years
Apr
May
Jun
Jul
Aug
Sep
Oct
Nov
Dec
3 months
70 Jan
Feb US
bringing the investment management more closely into line with the Lundbeck Foundation’s long-term investment horizon, by acting swiftly and by taking full advantage of Lundbeckfond Invest’s special skills. It is also expected to result in cost savings. 2011 market trends 2011 was characterised by economic and financial uncertainty, with sovereign debt crises in Southern Europe and Ireland adding to the turbulence. Growth fell in Europe in particular, but also in the USA. This, along with a growing fear of recession, led to the stock markets falling in value. The greatest falls were in Europe and emerging markets, while the US stock market fared better, with more or less unchanged prices. The credit markets reflected the stock markets, with falls in corporate bonds in Europe and, to a lesser extent, in the United States. These falls were particularly pronounced for low-rated loans and bonds issued by banks. However, interest rates in the countries with the best credit ratings fared really well. The 10-year Danish government bond yield fell below 2%, from 3% at the beginning of the year.
Mar
Apr
Europe
May
Jun
Jul
Aug
Emerging markets
Sep
Oct
Nov
Dec
The world
Bonds and cash contributed positively, as falling interest rates led to capital gains, but the yield was affected by the Foundation already having a short average duration for its bond portfolio at the start of the year. This was because it had been thought that there was a risk of interest rates rising, as longterm rates were already low. Corporate bonds also benefited from the declining government bond rates, but the wider credit spread led to an overall loss. The loss was limited by the fact that further investments were made in the asset class during the autumn, when the debt crisis was at its highest and corporate bond prices were at their lowest. Listed equity generated a loss in line with the markets. Unlisted equity, however, generated a good return. The profit includes substantial returns on buy-out funds, which were helped by some profitable exits, while the portfolio of biotech funds made a negative contribution. Biotech funds were transferred from Lundbeckfond Ventures to Lundbeckfond Invest during the year. Real assets, including the property company Obel-LFI Ejendomme A/S, reported negative returns. The negative returns were mainly due to falling share prices on the portfolio of listed property companies.
Lundbeckfond Invest achieved a return of -1%, corresponding to DKK -66 million, which is acceptable given the economic uncertainty and market conditions.
SUMMARY OF ASSETS AND RETURN
Bonds and cash Credit incl. distressed debt and mezzanine Listed equity Unlisted equity Real assets Lundbeckfond Invest total
Market value 12.31 2011 12.31 2010 DKK m DKK m 3,784 1,330 3,621 835 373 9,943
7,168 925 3,892 784 410 13,179
Return 2011 2010 DKK m DKK m 201 -3 -276 44 -32 -66
293 154 618 88 32 1,185
Weighted return* 2011 2010 % % 4.7 -0.3 -7.6 5.3 -7.9 -0.7
4.3 16.7 18.4 13.9 8.8 9.4
*Return on average holding over the period.
29
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
Mette Kirstine Agger, Managing Partner
Lundbeckfond Ventures is an internationally active “evergreen” life-science venture fund. The evergreen structure allows a flexible investment strategy with a long-term investment perspective. Ventures’ invests broadly in life science, primarily in the development of new medicines and medical technology. It is essential that the projects address clear medical needs and are of high scientific and technical quality. The primary focus is on investment in biotech/pharma companies with early clinical results, and in medtech companies that have achieved regulatory approval or where such approval is underway.
Development 2011 With an investment framework of DKK 1.4 billion until the end of 2014, Lundbeckfond Ventures is one of the major international venture funds and one of the largest in European life sciences. During its first couple of years, Ventures has established a broad network of contacts with other life-science investors and operators in Europe and the USA. As a consequence, 2011 was a highly active year, which saw a significant increase in the number of new investment opportunities. In the course of 2011, Lundbeckfond Ventures invested in three companies, in each case as the lead or co-lead investor. These new companies span a broad range of life sciences. New investments In January 2011, investment was made in Nexstim, Finland. Nexstim develops, manufactures and markets Navigated Brain Stimulation devices for pre-surgical mapping of brain functions e.g. prior to removal of brain tumors and for therapy of diseases of the Central Nervous System. The system is based on transcranial magnetic stimulation. The equipment is now well established in leading international neurosurgical centres. Stimulation of specific areas of the brain has in addition a number of potential therapeutic applications, including treatment of severe depression. Acacia Pharma in the UK was founded by an experienced management team and focuses specifically on developing
30
medicines to treat the side effects of cancer treatment and the complications to which cancer gives rise. For example, at present the company has a new formulation of a known drug in Phase II clinical trials for the new use of treating nausea and vomiting, a side effect that is often associated with both chemical and radiation therapy. The investment in Acacia was made in March 2011. In July 2011, an investment was made in Bonesupport in Sweden. Bonesupport has developed and markets Cerament™, a new bonecement material that stimulates and supports the regeneration of bone and itself remodels into bone. The material can be injected, it is non-toxic to patients and surgical staff, and has a range of future applications, including mixing the material with antibiotics and using it as an alternative to minor bone transplants. Portfolio 2011 As an active investor, Ventures allocates significant resources to its existing portfolio. A number of portfolio companies achieved positive results in 2011, both in development projects and in terms of business goals. Acacia reported positive data from Phase IIa clinical trials of APD209 for the treatment of cancer cachexia, and began Phase II clinical trials of APD515 for the treatment of dry mouth in patients receiving chemotherapy treatment for advanced cancer.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
PORTFOLIO 2011
UK
New drug candidates all in clinical Phase II for treatment of side effects arising from
www.acacia.com
chemotherapy and other forms of cancer treatment.
USA
A disposable insulin pump, Pearl™, which is both user-friendly and competitively
www.asantesolutions.com
priced.
Sweden
Markets Cerament™, a bonecement material that stimulates and supports the re-
www.bonesupport.com
generation of bone tissue and remodels into bone. The material can be injected, is non-toxic and has a range of future potential uses, including the ability to mix it with antibiotics.
dbv
France
New epicutaneous patch primarily for the treatment of food allergies, with a focus on
www.dbv-technologies.com
peanut allergy in the most advanced project. The administration via the skin is par-
technologies
ticularly suitable for the treatment of allergies where other forms of treatment entail the risk of anaphylactic shock. Denmark
Development of potential new drugs for the treatment of cancer, based on inter-
www.epitherapeutics.dk
nationally leading research in epigenetics by Prof. Kristian Helin and his team at the University of Copenhagen.
Finland
New technology that, by means of precise and targeted transcranial magnetic stimu-
www.nexstim.com
lation – and without surgery – can map the brain’s speech and motor centres, e.g. before neurosurgery. The technology also has a number of other potential applications.
Targeted Secretion Inhibitors
UK
Development of new biological medicines based on botulinum toxin analogues for
www.syntaxin.com
the treatment of disease through the targeted inhibition of cellular secretion. The main programme for pain treatment is in Phase II under a license agreement with Allergan.
Denmark
Development of LCP-Tacro™ for immunosuppression in Phase III, specifically targeting
www.veloxis.com
kidney transplants. The first product based on its formulation technology platform MeltDose ® was approved by the FDA in 2008 (LCP, NASDAQOMX).
Targeted Secretion Inhibitors
Veloxis Pharmaceuticals published positive data from a Phase III trial with LCP-Tacro in stable patients who have previously undergone kidney transplants. The results showed, as desired, the same efficiency as for the current product, Prograf. A more detailed analysis revealed a trend toward fewer acute rejections of transplanted kidneys in the group treated with LCP-Tacro. These results form the basis of an application for regulatory approval in Europe. The company also began the final Phase III trial of LCP-Tacro in patients who have recently undergone kidney transplants, and concluded a commercial agreement regarding the already marketed product, Fenoglide.
Ipsen Pharmaceuticals, established a new research collaboration with Syntaxin in recognition of its strong technology platform and patent position. The FDA approved Asante’s insulin pump, Pearl™, and Nexstim published a series of results from the use of its equipment for planning surgical interventions in the brain. Financial performance Lundbeckfond Ventures made a loss of DKK 70 million in 2011, compared to a loss of DKK 50 million in 2010, mainly due to Veloxis’ share price.
The development of a new treatment for peanut allergy went a step further when DBV Technologies completed a Phase Ib trial with their innovative patch technology in US, which showed that the product is well tolerated and without serious side effects. The company was granted fast-track status by the FDA because of the obvious medical need. Syntaxin’s partner Allergan began Phase II clinical trials with AGN-214868 for pain and overactive bladder, respectively. Another major industry player in botulinum toxin-based drugs,
31
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
SOCIAL RESPONSIBILITY, RISK MANAGEMENT AND FUTURE EXPECTATIONS Social responsibility The Lundbeck Foundation through its annual grants to research and its subsidiaries has a significant position in Danish research, education and business. This manifests itself as follows: • The Lundbeck Foundation owns and supports the develop ment of H. Lundbeck, ALK and Falck, whose products and services contribute to human health, well-being and safety. The Foundation's ownership of these companies secures their ties with Denmark. • The Lundbeck Foundation grants large sums for scientific research of high international standard with ties to Denmark, such as research within the biomedical and natural sciences, for the benefit of the Danish society as a whole. • Making risk-bearing venture investments both nationally and internationally in the life sciences. Policies and codes of conduct for H. Lundbeck, ALK and Falck's social responsibility are determined by the respective companies' boards, on which the Lundbeck Foundation is represented. For further description, please refer to the subsidiaries' annual reports for 2011 and their respective websites. In addition, the Lundbeck Foundation has entered UN Global Compact. Business and financial risks The Lundbeck Foundation Group seeks to ensure a reasonable balance between risk exposure and value generation. The main risks are the business and financial risks associated with the operations of the subsidiaries H. Lundbeck, ALK and Falck, Lundbeckfond Invest and Lundbeckfond Ventures. The Foundation's risk management is focused on its portfolio investments. The market risk on portfolio investments is managed by limiting maximum exposure to individual asset classes and underlying assets. The limitations are set by the Foundation's investment policy, which is adopted by the Board. The investment policy also limits the investment levels that can be decided by the management, the Investment Committee and the Board. Weekly portfolio reports are submitted to the management. Regarding risk management in H. Lundbeck, ALK and Falck, please refer to their annual reports for 2011, since these companies individually set policies and procedures regarding risk management. In addition, the Lundbeck Foundation continuously monitors the development in the subsidiaries.
32
Events after the end of the financial year There have been no significant events since the end of the financial year. Future expectations The Lundbeck Foundation Group's results will depend on how the business activities of H. Lundbeck, ALK and Falck develops and on returns from the portfolio and venture investments. For a more detailed description of the expected development of the subsidiaries, please refer to www.lundbeck.com, www.alk-abello.com and www.falck.com. In 2012, the Lundbeck Foundation has a target of making regular grants worth DKK 300 million and up to DKK 200 million to strategic initiatives.
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
CONSOLIDATED FINANCIAL STATEMENTS
CONTENTS Income statement for the period 1 January – 31 December Statement of comprehensive income for the period 1 January – 31 December Balance sheet at 31 December Management statement and Independent auditor's report Cash flow statement for the period 1 January – 31 December Statement of changes in equity for the period 1 January – 31 December Notes 1. Accounting policies 2. Revenue 3. Staff costs 4. Depreciation, amortisation and impairment 5. Fees to auditors appointed at the general meeting 6. Special items 7. Net financial items 8. Tax on profit for the year 9. Grants for the year 10. Intangible assets 11. Property, plant and equipment 12. Investments in associates 13. Financial assets and financial risks 14. Deferred tax 15. Inventories 16. Trade receivables and other receivables 17. Income tax 18. Cash resources 19. Assets held for sale 20. Capital base 21. Other reserves 22. Minority interests 23. Pensions and similar obligations 24. Liabilities relating to acquisitions and minority interests 25. Other provisions 26. Mortgage, bank, leasing and repo debt 27. Adjustments 28. Working capital changes 29. Business combinations 30. Financial risks and financial instruments 31. Contractual obligations 32. Guarantees and contingent liabilities 33. Related parties 34. Events after the balance sheet date Group overview
CONSOLIDATED FINANCIAL STATEMENTS
34 35 36 38 40 41
41 52 52 56 57 57 57 58 59 60 61 62 63 65 67 67 68 68 69 69 70 70 70 73 74 74 76 76 76 79 85 86 88 88 89
33
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
INCOME STATEMENT FOR THE PERIOD 1 JANUARY – 31 DECEMBER
2011 2010 2009 Note DKKm DKKm DKKm Revenue 2 23,602 16,927 15,594 Cost of sales 3, 4 (7,568) (3,611) (3,242) Gross profit 16,034 13,316 12,352 Research and development costs 3, 4 (3,775) (3,411) (3,545) Distribution costs 3, 4 (5,074) (4,239) (3,846) Administrative expenses 3, 4, 5 (3,020) (2,153) (2,083) Profit from operations before special items (EBIT) 4,165 3,513 2,878 Special items 6 (362) - Profit from operations 3,803 3,513 2,878 Income from investments in associates 12 100 - Financial income 7 813 1,643 1,897 Financial expenses 7 (1,187) (560) (596) Profit before tax 3,529 4,596 4,179 Tax on profit for the year 8 (1,100) (899) (735) Profit for the year 2,429 3,697 3,444
Minority interests’ share of profit for the year (815) (817) (688) Lundbeck Foundation's share of profit for the year 1,614 2,880 2,756 Grants for the year, net 9 (498) (383) (340) Lundbeck Foundation's profit for the year after grants 1,116 2,497 2,416
34
Lundbeck Foundation's share of profit for the year Special items after tax Minority interests’ share of special items after tax Lundbeck Foundation's share of profit for the year before special items
CONSOLIDATED FINANCIAL STATEMENTS
1,614 302 (101) 1,815
2,880 - - 2,880
2,756 2,756
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
STATEMENT OF COMPREHENSIVE INCOME FOR THE PERIOD 1 JANUARY – 31 DECEMBER
2011 2010 2009 Note DKKm DKKm DKKm
Profit for the year 2,429 3,697 3,444 Currency translation, foreign subsidiaries 105 328 (36) Currency translation concerning additions to net investments in foreign subsidiaries 115 240 (444) Realised exchange gains/losses concerning additions to net investments in foreign subsidiaries 20 - Adjustment, deferred exchange gains/losses, hedging 64 (214) 8 Exchange gains/losses, hedging (transferred to the hedged items) (127) 163 (1) Exchange gains/losses, trading (transferred from hedging) - 1 22 Value adjustment of interest hedging instruments (56) - Repayment of interest hedging instruments 15 - Accumulated exchange loss on divestment of investments in associates - 2 Other equity entries concerning associates (18) (1) - Fair value adjustment of available-for-sale financial assets 21 (6) (4) 27 Tax on other comprehensive income 8 (19) (51) 93 Other comprehensive income 93 464 (331) Comprehensive income 2,522 4,161 3,113 Minority interests’ share of comprehensive income for the year 22 (843) (965) (586) Lundbeck Foundation's share of comprehensive income 1,679 3,196 2,527 Currency translation of foreign subsidiaries and currency translation concerning additions to net investments in foreign subsidiaries and tax related to these items, totalling DKK 197 million (2010: DKK 505 million), is recognised in the currency translation reserve in equity. Other items and tax related to such items are recognised in reserve for hedging transactions and reserve for fair value adjustments of available-for-sale financial assets, respectively, at a loss of DKK 77 million (2010: DKK 50 million) and DKK 6 million (2010: DKK 4 million) and recognised under retained earnings in equity in the amount of DKK 49 million (2010: DKK 135 million).
CONSOLIDATED FINANCIAL STATEMENTS
35
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
BALANCE SHEET AT 31 DECEMBER, ASSETS
2011 2010 2009 Note DKKm DKKm DKKm
Goodwill 10 9,733 4,298 3,987 Contractual customer relationships etc. 10 3,005 - Product rights 10 4,270 3,591 3,552 Patent and license rights 10 192 323 252 Other intangible assets 10 386 379 400 Projects in progress 10 64 127 81 Intangible assets 10 17,650 8,718 8,272 Land and buildings 11 3,180 2,785 2,709 Plant and machinery 11 581 543 613 Other fixtures and fittings, tools and equipment 11 1,094 303 351 Leasehold improvements 11 58 - Prepayments and other assets under construction 11 788 637 496 Property, plant and equipment 1 1 5,701 4,268 4,169 Investments in associates 12 15 - Financial assets at fair value through profit or loss 13 9,784 10,002 10,522 Available-for-sale financial assets 13 89 21 26 Other receivables 13 87 85 67 Deferred tax 14 483 178 181 Financial assets 10,458 10,286 10,796 Non-current assets 33,809 23,272 23,237
Inventories 15 1,985 1,801 1,781 Trade receivables 16 3,995 2,366 2,190 Other receivables 16 716 469 492 Receivables from associates 55 - Income tax 17 134 261 218 Prepayments 367 277 235 Receivables 5,267 3,373 3,135 Securities 18 2,315 496 1,109 Cash 18 3,985 5,790 2,847 Assets held for sale 19 98 - Current assets 13,650 11,460 8,872 Assets 47,459 34,732 32,109
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CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
BALANCE SHEET AT 31 DECEMBER, EQUITY AND LIABILITIES
2011 2010 2009 Note DKKm DKKm DKKm
Capital base 20 2,225 2,050 1,900 Other reserves 21 (180) (294) Retained earnings 20,506 19,640 16,674 Lundbeck Foundation's share of equity 22,551 21,396 18,574 Minority interests' share of equity 22 3,781 4,571 3,825 Total equity 26,332 25,967 22,399 Payable grants 389 308 326 Pensions and similar obligations 23 342 316 285 Deferred tax 14 1,871 601 785 Liabilities relating to acquisitions and minority interests 24 512 - Other provisions 25 191 280 277 Mortgage debt 26 2,262 1,885 1,884 Bank and leasing debt 26 6,143 10 763 Employee bonds and other debt 76 60 65 Non-current liabilities 11,786 3,460 4,385 Payable grants 530 416 297 Pensions and similar obligations 23 19 12 15 Liabilities relating to acquisitions and minority interests 24 43 - Employee bonds 13 - Other provisions 25 217 216 186 Mortgage debt 26 1 1 1 Bank and leasing debt 26 283 10 808 Repo debt 26 97 297 Trade payables 2,280 1,377 1,131 Income tax 17 244 137 156 Other payables 3,877 2,322 2,038 Prepayments 2, 32 1,639 517 693 Current liabilities 9,243 5,305 5,325 Liabilities relating to assets held for sale 19 98 - -
Liabilities 21,127 8,765 9,710 Equity and liabilities 47,459 34,732 32,109
CONSOLIDATED FINANCIAL STATEMENTS
37
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
MANAGEMENT STATEMENT
The Board of Directors and the Executive Management have today presented the annual report of the Lundbeck Foundation for the financial year ended 31 December 2011. The consolidated financial statements have been prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports, and the financial statements of the Foundation have been prepared in accordance with the Danish Financial Statements Act. We consider the accounting policies used to be appropriate. Accordingly, the consolidated financial statements and the financial statement of the parent foundation give a true and
fair view of the Group’s and the Foundation’s assets, liabilities and financial position at 31 December 2011, and of the Group’s and the Foundation’s activities and the Group’s cash flows for the financial year 1 January – 31 December 2011. We believe that the management’s review includes a fair review of developments in the Group’s and the Foundation’s activities and finances, results for the year and the Group’s and the Foundation’s financial position in general as well as a fair description of the principal risks and uncertainties to which the Group and the Foundation are exposed. We recommend that the annual report be approved at the annual meeting.
Copenhagen, 2 May 2012
Executive Management Christian Dyvig
Board of Directors
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Mikael Rørth Chairman
Jørgen Huno Rasmussen Deputy Chairman
Thorleif Krarup
Povl Krogsgaard-Larsen
Gunhild Waldemar
Jes Østergaard
Kim Klitgaard Elected by the employees
Ken Liljegren Elected by the employees
Peter Adler Würtzen Elected by the employees
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
INDEPENDENT AUDITOR’S REPORT
To the Board of Directors of the Lundbeck Foundation Report on the consolidated financial statements and the Foundation's financial statements We have audited the consolidated financial statements and the Lundbeck Foundation's financial statements for the financial year 1 January – 31 December 2011, which comprise the income statement, balance sheet, statement of changes in equity and notes, including the accounting policies, for the Group as well as the Foundation, and the statement of comprehensive income and the cash flow statement for the Group. The consolidated financial statements are prepared in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports, and the Foundation's financial statements are prepared in accordance with the Danish Financial Statements Act. Managements’ responsibility for the consolidated financial statements and the Foundation's financial statements Management is responsible for the preparation of consolidated financial statements that give a true and fair view in accordance with International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports as well as the preparation of financial statements of the Foundation that give a true and fair view in accordance with the Danish Financial Statements Act, and for such internal control as Management determines is necessary to enable the preparation of consolidated financial statements and financial statements of the Foundation that are free from material misstatement, whether due to fraud or error. Auditor's responsibility Our responsibility is to express an opinion on the consolidated financial statements and the Foundation's financial statements based on our audit. We conducted our audit in accordance with International Standards on Auditing and additional requirements under Danish audit regulation. This requires that we comply with ethical requirements and plan and perform the audit to obtain reasonable assurance about whether the consolidated financial statements and the Foundation's financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the consolidated financial statements and the Foundation's financial statements. The procedures selected depend on the auditor’s judgement, including the assessment of the risks of material misstatement of the consolidated financial statements and the Foundation's financial statements, whether due to fraud or er-
ror. In making those risk assessments, the auditor considers internal control relevant to the preparation of consolidated financial statements and the Foundation's financial statements that give a true and fair view in order to design procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity's internal control. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of accounting estimates made by Management, as well as the overall presentation of the consolidated financial statements and the Foundation's financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Our audit has not resulted in any qualification. Opinion In our opinion, the consolidated financial statements and the Foundation's financial statements give a true and fair view of the Group’s assets, liabilities and financial position at 31 December 2011 and of the results of the Group’s operations and cash flows for the financial year 1 January to 31 December 2011 in accordance with the International Financial Reporting Standards as adopted by the EU and Danish disclosure requirements for annual reports. Further, in our opinion, the Foundation's financial statements give a true and fair view of the Foundation’s assets, liabilities and financial position at 31 December 2011 and of the results of the Foundation’s operations for the financial year 1 January – 31 December 2011 in accordance with the Danish Financial Statements Act. Statement on the management review Pursuant to the Danish Financial Statements Act, we have read the management review. We have not performed any further procedures in addition to the audit of the consolidated financial statements and the Foundation's statements. On this basis, it is our opinion that the information provided in the management review is consistent with the consolidated financial statements and the Foundation's financial statements. Copenhagen, 2 May 2012 Deloitte Statsautoriseret Revisionspartnerselskab
Anders Dons State Authorised Public Accountant
Martin Faarborg State Authorised Public Accountant
39
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
CASH FLOW STATEMENT FOR THE PERIOD 1 JANUARY – 31 DECEMBER
2011 2010 2009 Note DKKm DKKm DKKm Profit from operations before special items (EBIT) 4,165 3,513 2,878 Special items (51) - Adjustments 27 1,489 1,193 929 Working capital changes 28 23 106 323 Cash generated from operations 5,626 4,812 4,130 Financial receipts Dividend received Financial payments Income tax paid for the year 17 Income tax paid/received regarding previous years 17 Authorised grants paid Cash flows from operating activities
258 113 (317) (989) 80 (304) 4,467
464 91 (313) (1,177) (51) (283) 3,543
455 96 (250) (767) 24 (281) 3,407
Acquisition of companies 29 Investments in intangible assets Investments in property, plant and equipment Disposal of property, plant and equipment Investments in other financial assets at fair value through profit or loss Sale of other financial assets at fair value through profit or loss Change in other financial assets Cash flows from investing activities
(4,537) (1,005) (558) 26
(178) (468) (521) 3
(5,133) (1,010) (461) 4
(8,020)
(6,042)
(6,293)
6,084 (11) (8,021)
8,067 (5) 856
5,916 (18) (6,995)
Loan proceeds Repayment of loans Change in financial liabilities Buyback of shares from minority interests Employee bonds Dividend paid to minority interests 22 Cash flows from financing activities
6,305 (4,222) - (76) (9) (252) 1,746
297 (1,560) 2 (24) - (211) (1,496)
2,507 (999) (10) (11) 8 (166) 1,329
Change in cash Cash at 1 January Unrealised exchange adjustments for the year Cash at 31 December
(1,808) 5,790 3 3,985
2,903 2,847 40 5,790
(2,259) 5,092 14 2,847
40
18
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
STATEMENT OF CHANGES IN EQUITY FOR THE PERIOD 1 JANUARY - 31 DECEMBER - NOTE 1
Lundbeck Minority
Foundation's interests'
Capital
Other
Retained
share of
share of
Total
base reserves earnings equity equity equity DKKm DKKm DKKm DKKm DKKm DKKm
Equity at 1 January 2011
2,050
Profit for the year
Other comprehensive income
Comprehensive income
-
(294)
19,640
21,396
4,571
25,967 2,429
1,614
1,614
815
114
(49)
65
28
93
114
1,565
1,679
843
2,522
Grants authorised during the year, net
(498)
(498)
(498)
Minority interests' share of dividends
-
(252)
(252)
Buyback of shares from minority interests
(29)
(29)
(52)
(81)
Minority interests in Falck acquisition
-
(1,329)
(1,329)
Increase in minority interests
1
1
2
3
for acquisition of minority interests
(19)
(19)
(14)
(33)
Incentive programmes
21
21
-
-
(524)
(524)
175
-
(175)
-
-
-
Adjustment of provision
Other transactions Increase of capital base
12 (1,633)
33 (2,157)
Equity at 31 December 2011
2,225
(180)
20,506
22,551
3,781
26,332
Equity at 1 January 2010
1,900
(745)
17,419
18,574
3,825
22,399 3,697
Profit for the year
Other comprehensive income
Comprehensive income
-
2,880
2,880
817
451
(135)
316
148
464
451
2,745
3,196
965
4,161
Grants authorised during the year, net
(383)
(383)
(383)
Minority interests' share of dividends
-
(211)
(211)
Buyback of shares from minority interests
(7)
(7)
(18)
(25)
Incentive programmes
16
16
10
26
-
-
(374)
(374)
(219)
(593)
150
-
(150)
-
-
-
19,640
21,396
4,571
25,967
Other transactions Increase of capital base Equity at 31 December 2010
2,050
(294)
1. ACCOUNTING POLICIES
The consolidated financial statements have been prepared in accordance
IFRS 1, First-time adoption of IFRS, has been applied for the presentation of
with International Financial Reporting Standards (IFRS) as adopted by
consolidated financial statements according to IFRS. In accordance with this
the EU and the Danish Statutory Order on Adoption of IFRS issued pur-
standard, an IFRS opening balance sheet has been prepared as at 1 January
suant to the Danish Financial Statements Act.
2010, and like the accounting figures for 2011 and the comparative figures
for 2010 this has been prepared in accordance with the standards (IFRS/
The consolidated financial statements for 2011 are the first consolidated
IAS) and interpretations (IFRIC/SIC) in force at the balance sheet date of the
financial statements prepared for the Lundbeck Foundation. The Lundbeck
transition year, i.e. at 31 December 2011. The Group has applied the exemp-
Foundation has not previously prepared consolidated financial statements,
tion clause, under which there is no requirement for a 5-year overview of
as these were prepared by the wholly owned holding and investment com-
changes in pension obligations. The information has therefore been provided
pany Lundbeckfond Invest A/S.
prospectively from 1 January 2010.
The consolidated financial statements are presented in Danish kroner (DKK), which also is the functional currency of the Lundbeck Foundation.
CONSOLIDATED FINANCIAL STATEMENTS
41
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
The annual report has been prepared under the historical cost convention,
• Sales of escitalopram are invoiced at the agreed price, but only a propor-
except that the following assets and liabilities are measured at fair value:
tion (the minimum price) of the invoiced price is recognised as income at
derivative financial instruments and financial instruments at fair value.
the time of delivery. • The difference between the invoiced price and the minimum price of
The consolidated financial statements are presented in accordance with the
Forest's inventories is recognised in the balance sheet as prepayments.
new and revised standards (IFRS/IAS) and interpretations (IFRIC) which
• After the end of each quarter, the final settlement price is calculated. The
apply for the financial year.
difference between the final calculated settlement price and the invoiced price is recognised as income and settled with Forest, and the difference between the invoiced price and the minimum price recognised in the ba-
Future IFRS changes
lance sheet as prepayment at the time of delivery is recognised as income.
At the date of the publication of these consolidated financial statements,
In connection with a potential launch of generic escitalopram in the USA,
a number of new and amended standards and interpretations have not yet
the agreement allows Forest to convert escitalopram inventories into generic
entered into force or have not yet been adopted by the EU. Therefore, they
escitalopram. In connection with a conversion of escitalopram inventories
are not included in the consolidated financial statements. None of these
into generic escitalopram, the minimum price will be adjusted by any repay-
changes are expected to have a material impact on future consolidated
ment to Forest of part of the recognised minimum payment. This adjustment
financial statements.
will be expensed in the financial statements.
The future amendments to IAS 19 Employee benefits entail that actuarial
License income and income from research collaborations
gains and losses must be recognised in the statement of comprehensive
License income and royalties from outlicensed products and non-refundable
income and that the corridor approach is no longer permitted. The Lund-
downpayments and milestone payments relating to research collaborations
beck Foundation currently recognises all costs associated with defined
totalled DKK 1,088 million in 2011 (DKK 657 million in 2010, which is recog-
benefit pension plans under staff costs in the income statement and does
nised in the income statement under revenue when the following criteria
not apply the corridor approach. Apart from the fact that actuarial gains and
have been met:
losses must henceforth be recognised in the statement of comprehensive
• The payment relates to research results already obtained.
income, the amendments are not expected to materially affect recognition
• The most significant risks and benefits associated with the asset sold are
or measurement in future consolidated financial statements.
transferred to the buyer. • The Group does not retain management control of the asset sold. • Revenue from the individual payments in an overall agreement can be
Accounting policies and estimates critical to financial reporting
clearly separated and calculated reliably at fair value. • It is probable that the Group will receive payment for the asset sold. • There are no further delivery obligations for the Group concerning the
In the preparation of the consolidated financial statements in accordance
asset sold.
with IFRS and generally accepted accounting principles, it is necessary for Management to make certain estimates and assumptions as not all accoun-
Research and development costs
ting items and accruals can be calculated with certainty.
Research and development costs totalled DKK 3,775 million in 2011 (DKK 3,411 million in 2010). Development costs are capitalised if the criteria for
Management’s estimates are based on historical data, recent information
such capitalisation are deemed to have been met and it is found to be pro-
available at the time of presentation of the financial statements and other
bable that future earnings will cover the development costs. Due to a very
assumptions considered reasonable under the given circumstances. The
long development period and significant uncertainty in relation to the deve-
actual outcome may differ from these estimates.
lopment of new products, in the opinion of the Group, development costs should not normally be capitalised in the balance sheet until the develop-
The estimates are made by the management of the Lundbeck Foundation,
ment of the product has been completed and all the necessary public reg-
the H. Lundbeck Group, the ALK Group and the Falck Group, respectively.
istration and marketing approvals have been obtained. Development costs relating to individual minor development projects running for short-term
It is believed that the following accounting policies and accounting estimates
periods and subject to limited risk are capitalised under other intangible
are critical to the Group's financial reporting for 2011.
assets. Otherwise, development costs will be recognised in the income statement as they are incurred.
Income from Forest Income from Forest from the sale of citalopram and escitalopram amounted
Intangible assets
to DKK 2,535 million in 2011 (DKK 2,443 million in 2010). The invoiced price is
Goodwill and product rights and contractual customer relationships etc.
agreed between Forest and H. Lundbeck at the beginning of each calendar
represent a significant part of the Group's total assets, amounting to DKK
year. The price is calculated on the basis of expectations for the coming
17,008 million in 2011 (DKK 7,889 million in 2010). The majority of the value of
year's development in the components included in the royalty calculation.
these items arose through the acquisition of companies. In connection with
These components are: Forest’s net selling prices, quantities used in sold
acquisitions, the individual assets and liabilities are re-assessed to ensure
products, quantities used in samples, quantities wasted during processing,
that both recognised and unrecognised values are measured at fair value.
and the various dosage levels of the finished goods. Income from sales of
Especially for intangible assets for which there is often no active market,
escitalopram to Forest is recognised as follows:
the calculation of fair value may involve uncertainty. Intangible assets with indefinite lives and intangible assets in progress are tested for impairment at
42
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
least once a year or if there is evidence of impairment. Contractual customer
Amortisation and depreciation periods and scrap values
relationships etc. identified at acquisitions were primarily acquired with a
In the determination of the carrying amount of intangible assets and
view to further developing the acquired business areas and markets and
property, plant and equipment, estimates are required of the estimated
establishing positions in new markets. As a result, a large part of the pur-
economic lives of the assets and of scrap values.
chase prices has been allocated to goodwill. The value in use of the product rights is calculated by discounting the estimate made by Management over the expected cash flows during a budget period of at least five years with
Recognition and measurement
due consideration to patent expiry. For the calculation of the value in use of the assets, the Group uses different discount factors depending on the
Assets are recognised in the balance sheet when it is probable that future
individual areas of activity and Management's expectations for growth and
economic benefits will flow to the Group and the value of the asset can be
terminal value. These factors are crucial for the assessment of any impair-
measured reliably. Liabilities are recognised in the balance sheet if they are
ment and thus for the final calculation of the fair value of intangible assets.
probable and can be measured reliably.
It is a precondition for the retention of the value of the Group's rights that
On initial recognition, assets and liabilities are measured at cost or fair value.
such rights are respected. It is the Group's policy to defend these rights
Subsequently, assets and liabilities are measured as described below for
wherever they may be violated.
each individual item.
Financial assets
Certain financial assets and financial liabilities are measured at amortised
Financial assets include investments in listed and unlisted equity instruments
cost, implying the recognition of a constant effective rate of interest to
and securities, including life science investments recognised at their fair
maturity. Amortised cost is stated as original cost less any principal pay-
value. Investments in unlisted equity instruments and securities at the end of
ments and plus/less the accumulated amortisation of any difference
2011 amounted to DKK 1,294 million (DKK 1,136 million in 2010).
between cost and the nominal amount. Recognition and measurement take into consideration gains, losses and risks that arise before the time of
The assessment of fair value of these investments is subject to considerable
presentation of the consolidated financial statements and that confirm or
risk. This applies especially to life science investments because the value of
invalidate matters existing at the balance sheet date.
these businesses is linked to the company's often long-term investment in Income is recognised in the income statement as earned and includes value
the development of new pharmaceuticals and technologies.
adjustments of financial assets and financial liabilities measured at fair value Management estimates the fair value of unlisted investments in accordance
or amortised cost. In addition, expenses incurred to generate the income for
with International Private Equity and Venture Capital Valuation Guidelines.
the year are recognised, including depreciation, amortisation, impairment
i.e. on the basis of relevant valuation methods based on comparable transac-
losses and provisions as well as reversals of amounts previously recognised
tions on market conditions, capital increases and the like. If the fair value
in the income statement as a result of changed accounting estimates.
cannot be determined with sufficient reliability, the investments in question are recognised at cost less any impairment. The Group assesses at each balance sheet date whether there is objective evidence that an investment
Consolidated financial statements
or a group of investments is impaired. An impairment loss is recorded if the Group assesses that lack of compliance with business plans affect the
The consolidated financial statements include the Lundbeck Foundation and
calculation of fair value or if subsequent capital injections are made at lower
subsidiaries controlled by the Foundation. Control is achieved where the
prices.
Foundation directly or indirectly holds more than 50% of the voting rights or is otherwise able to exercise or actually exercises control.
Purchase price allocation in business combinations In connection with allocation of purchase price in business combinations,
Companies in which the Group holds between 20% and 50% of the voting
calculations are made of fair value of acquired assets and liabilities. Since
rights and/or exercises significant influence but not control are regarded as
such calculations are based on expected future cash flows relating to the
associates. Unrealised gains on transactions with associates are eliminated in
acquired assets and liabilities, there is an inherent uncertainty in respect of
proportion to the Group’s share of the enterprise.
whether such cash flows will materialise as expected. In accordance with IFRS 3, the purchase price allocations in business combinations may be
Associates included in the Group's documented investment strategy are
adjusted for up to 12 months from the date of acquisition.
recognised as financial assets measured at fair value through profit or loss.
Provisions for acquisition of minorities
Basis of consolidation
Provisions for acquisition of minorities amounted to DKK 555 million at 31
The consolidated financial statements are prepared on the basis of the
December 2011. When calculating the fair value of issued put options which
financial statements of the Foundation and the subsidiaries, which are all
commit the Group to acquire minority interests in subsidiaries, the Manage-
prepared in accordance with the Group's accounting policies.
ment applies estimates of, e.g. the subsidiaries' future financial performance, the likelihood of option holders exercising their selling right and the time
The consolidated financial statements are prepared by adding together uni-
of exercise. These factors are of material importance to the fair value calcu-
form items and eliminating intra-group income and expenses, investments,
lation, which is therefore subject to uncertainty.
balances and dividends as well as realised and unrealised gains and losses on transactions between the consolidated companies. Account is taken of the tax effect of these eliminations.
CONSOLIDATED FINANCIAL STATEMENTS
43
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
Financial statement items of subsidiaries are fully consolidated. Profit for the
Minority interests
year and equity attributable to minority interests in subsidiaries that are not fully controlled are included in the consolidated profit and equity and stated
On initial recognition, minority interests are either recognised at fair value
as separate line items.
(including the fair value of goodwill related to minority interests in the acquired company) or at the minority interests' share of the acquired com-
Business combinations
pany's identifiable assets, liabilities and contingent liabilities measured at fair
Newly acquired companies are recognised in the consolidated financial
value (excluding the fair value of goodwill related to minority interests in the
statements from the date of acquisition. Companies sold or discontinued are
acquired company). The measurement basis for minority interests is selected
recognised in the consolidated income statement up to the time of sale or
for each individual transaction.
discontinuance. Expected costs related to divestment or discontinuance are included in the calculation of gains or losses.
Acquisition and divestment of minority interests Acquired businesses are accounted for using the purchase method of accounting, according to which the identifiable assets, liabilities and contin-
Increases and reductions of minority interests are treated for accounting
gent liabilities of the acquired companies are measured at fair value at the
purposes as transactions with owners, in their capacity as owners. As a
time of acquisition. Account is taken of the tax effect of the revaluations
result, any differences between adjustment to the carrying amount of mino-
made. The cost of a business is generally the fair value of the consideration
rity interests and the fair value of the consideration received or paid are
paid. If the final determination of the consideration is contingent on one or
recognised directly in equity.
more future events, the value thereof will be recognised at fair value at the date of acquisition. Changes to contingent considerations are recognised
When put options are issued as part of the consideration for business com-
in the income statement. Put options issued in connection with acquisitions
binations, the minority interests receiving put options are considered to have
and the value of which is contingent on future events will be recognised as
been redeemed on the acquisition date. The minority interests are eliminated
part of the consideration at the date of acquisition. The put options issued
and a debt obligation is recognised at fair value on initial recognition. Fair
are subsequently measured at fair value. Any changes to the fair value of
value is calculated as the present value of the exercise price of the option.
issued put options after initial recognition are recognised in equity. Costs
Subsequent measurements are made at amortised cost with amortisation
directly attributable to the business combination are recognised in the
and value changes to equity being recognised on an ongoing basis.
income statement as incurred. Adjustments of commitments in connection with conditional consideration or issued put options the value of which
Issued put options relating to business combinations with an acquisition
is contingent on future events concerning business combinations with an
date before 1 January 2010 will still be recognised in accordance with IFRS 3
acquisition date before 1 January 2010 will still be recognised in accordance
(2004). Accordingly, the subsequent measurement will be made at amor-
with IFRS 3 (2004). Accordingly, the adjustments are recognised in goodwill
tised cost with ongoing recognition of interest expenses in the income
until the conditions have been met or the issued put options exercised.
statement and value changes in goodwill. Any subsequent dividend payments to option holders are recognised as a financial expense in the income
Positive differences (goodwill) between the cost of the acquired business
statement in the cases where the option price is independent of dividend
and the fair value of the acquired identifiable assets, liabilities and contin-
payments. Dividend payments are included in the determination of the cost
gent liabilities are recognised under intangible assets. Negative differences
of the put options in cases where the option price is adjusted for dividend
(negative goodwill) between the cost of the acquired business and the fair
payments received.
value of the acquired identifiable assets, liabilities and contingent liabilities are recognised in the income statement at the time of acquisition. Goodwill arising from acquired businesses is adjusted within a maximum period of 12
Translation of foreign currency
months from the acquisition if additional information about the fair value at the time of acquisition of assets, liabilities and contingent liabilities acquired
A functional currency is determined for each of the reporting enterprises of
is obtained after the acquisition. However, goodwill will not be recognised by
the Group. The functional currency is the currency in the primary economic
an amount exceeding the expectations of future income from the acquiree.
environment in which the reporting entity operates. Transactions in currencies other than the functional currency are transactions in foreign currencies.
Goodwill and fair value adjustments in connection with the acquisition of independent foreign entities (subsidiaries or associates) are accounted for
On initial recognition, transactions denominated in foreign currencies are
as assets and liabilities in the acquiree and translated at the exchange rate at
translated at standard rates which approximate the actual exchange rates
the balance sheet date.
at the transaction date. Exchange differences arising between the exchange rate at the transaction date and the exchange rate at the date of payment
Gains or losses on disposal or discontinuance of subsidiaries and associates
are recognised in the income statement as net financials except in case of
Gains or losses on the disposal or discontinuance of subsidiaries and associ-
hedge accounting. In case of hedge accounting, such differences are recog-
ates are calculated as the difference between the selling price or the discon-
nised in the same item as the hedged item.
tinuance amount and the carrying amount of net assets at the time of sale as well as anticipated costs relating to sale or discontinuance. The resulting
Receivables, payables and other monetary items denominated in foreign
gain or loss is recognised in the income statement together with accumula-
currencies that have not been settled at the balance sheet date are trans-
ted currency translation adjustments previously recognised in other compre-
lated at the exchange rates at the balance sheet date. The difference
hensive income. A proportional capital reduction does not result in recycling
between the exchange rates at the balance sheet date and the rates at the
of accumulated exchange rate adjustments through profit or loss.
time the receivable or payable is created or recognised in the latest consoli-
44
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
dated financial statements is recognised in the income statement under net
financial assets for which the fair value is measured on the basis of valuation
financials in respect of unhedged items and under the same item for hedged
techniques which include inputs not based on observable market data.
items. On recognition of foreign subsidiaries having a functional currency different
Income statement
from that used by the Foundation, non-monetary as well as monetary items are translated at the exchange rates at the balance sheet date. Exchange
Revenue: Pharmaceuticals for the treatment of brain disorders and allergy
differences arising from the translation of both the balance sheets and the
Revenue comprises invoiced sales for the year less returned goods and
income statements of the foreign subsidiaries are recognised in the Group's
revenue-based taxes consisting mainly of value added taxes and foreign
statement of comprehensive income under other comprehensive income.
revenue-based drug taxes.
Foreign exchange adjustment of receivables from or debt to subsidiaries
Sales subject to a price adjustment clause are included in revenue at the
which are considered part of the Foundation's overall investment in the sub-
time of delivery at the minimum price. The balance of the invoiced price is
sidiary in question is recognised in the Group's statement of comprehensive
recognised in the balance sheet as a prepayment and is subsequently
income under other comprehensive income.
included in revenue when the price has been finally determined. The price is finally determined as the product is resold by the customer.
On recognition of foreign associates having a functional currency different from that used by the Foundation, assets and liabilities are translated at the
Moreover, revenue includes license income and royalties from outlicensed
exchange rates at the balance sheet date, while the income statement is
products as well as non-refundable downpayments and milestone payments
translated at average exchange rates for the year. Exchange differences aris-
relating to research and development collaborations.
ing from the translation of foreign associates are recognised in the Group's statement of comprehensive income under other comprehensive income.
In addition, income from the reduction of investments in research enterprises considered to represent the sale of research results is recognised as revenue.
Financial instruments
See Accounting policies and estimates critical to financial reporting for a description of the accounting treatment of income from Forest and of
Forward exchange contracts and other derivatives are initially recognised
license income and income from research collaborations.
in the balance sheet at fair value on the value date and are subsequently remeasured at fair value at the balance sheet date. Positive and negative fair
Revenue: Emergency, Assistance, Healthcare and Training sectors
values are included in other receivables and other payables respectively.
Revenue represents the value of services and goods delivered and invoiced subscriptions attributable to the financial period, and is recognised in the
Changes in the fair value of derivatives classified as hedging instruments
income statement if delivery and transfer of risk to the buyer have taken
and meeting the criteria for hedging future cash flows are recognised in the
place before year-end, and if the income can be reliably measured and is
Group's statement of comprehensive income under other comprehensive
expected to be received.
income. Income and expenses related to such hedging transactions are transferred from other comprehensive income on invoicing of the hedged
The value of services rendered is recognised on the basis of the delivered
item and included in the same item as the hedged item.
percentage of the total service.
Changes in the fair value of derivatives classified as hedging instruments
Revenue from subscriptions is allocated to the income statement on a
and meeting the criteria for hedging the fair value of a recognised asset or
straight-line basis.
liability are recognised in the income statement together with changes in the value of the hedged asset or liability.
Revenue from sales of goods is recognised when the significant risks and rewards of ownership have been transferred to the buyer.
For derivatives which do not qualify for hedge accounting, changes in fair value are recognised in the income statement under net financials as they
Revenue is measured at the fair value of the agreed consideration exclud-
arise.
ing VAT and other taxes collected on behalf of third parties. All discounts granted are recognised in revenue.
Changes in the fair value of derivatives used to hedge net investments in independent foreign subsidiaries or associates and which otherwise meet
Cost of sales
the relevant criteria are recognised in the Group's statement of comprehen-
Cost of sales comprises the cost of goods and services sold. Cost includes
sive income under other comprehensive income.
the cost of raw materials, transport costs, consumables and goods for resale, direct labour and indirect costs of production, including costs for operating
Securities, available-for-sale financial assets and derivatives measured at
and maintaining production facilities and equipment, amortisation/deprecia-
fair value are classified as belonging to levels 1-3 depending on the pricing
tion and impairment losses relating to such assets. Cost of sales moreover
method applied. Level 1 includes financial assets for which the fair value is
includes expenses in connection with quality assurance of products and any
measured on the basis of quoted prices (unadjusted) in active markets for
writedown to net realisable value of unsaleable and slow-moving items. Cost
identical assets. Level 2 includes financial assets and financial liabilities for
of sales also includes external assistance to generate the year's income.
which the fair value is measured on the basis of directly or indirectly observable inputs other than the quoted prices included in level 1. Level 3 includes
CONSOLIDATED FINANCIAL STATEMENTS
45
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
Research and development costs
The Lundbeck Foundation has opted to use section 3(4) of the Danish Cor-
Research and development costs comprise expenses incurred during the
poration Tax Act. Under these rules, the taxable income of Lundbeckfond
year in connection with the Group's research and development functions,
Invest A/S is considered to have been earned by the Lundbeck Foundation if
including wages and salaries, amortisation/depreciation and impairment and
the taxable income is distributed as dividends to the Lundbeck Foundation.
other indirect costs as well as costs relating to research and development
Since the Lundbeck Foundation's taxable income is regularly offset against
collaborations on in-licensed products.
grants for the year and provisions for future grants, no current or deferred tax is recognised.
Research costs are always recognised in the income statement as they are Tax for the year, which consists of the year's current tax and the change in
incurred.
deferred tax, is recognised in the income statement as regards the amount Development costs are capitalised if a number of specific criteria for capita-
that can be attributed to the net profit or loss for the year and directly in the
lising these costs are deemed to have been met. Otherwise, development
statement of comprehensive income under other comprehensive income as
costs will be recognised in the income statement as they are incurred.
regards the amount that can be attributed to items under other comprehensive income or directly in equity. Exchange rate adjustments of deferred
See Accounting policies and estimates critical to financial reporting for a
tax are recognised as part of the movements in deferred tax in the balance
description of conditions for capitalising development costs.
sheet.
Distribution costs
The current tax charge for the year is calculated based on the tax rates and
Distribution costs comprise expenses incurred in connection with the distri-
rules applicable at the balance sheet date.
bution of the Group's products sold during the year and in connection with sales campaigns, etc. launched during the year under review, including direct
Special items
distribution and marketing costs, salaries etc. for the sales and marketing
Special items comprise major one-off amounts not directly attributable to
functions, as well as amortisation/ depreciation and impairment and other
the Group's ordinary activities, and they concern matters such as amortisa-
indirect costs.
tion on contractual customer relationships identified at acquisitions and transaction costs associated with acquisitions.
Administrative expenses Administrative expenses comprise expenses incurred during the year for the management and administration of the Group, including expenses in con-
Balance sheet
nection with the administrative functions, management, office premises and office expenses, as well as amortisation/depreciation and impairment and
Intangible assets
other indirect costs.
Goodwill On initial recognition, goodwill is measured and recognised as the excess
Results of investments in associates
of the cost or fair value of the acquired business over the fair value of the
The proportionate share of the results of associates is recognised in the
acquired assets, liabilities and contingent liabilities. On recognition of good-
consolidated income statement after tax and elimination of the proportion-
will, the goodwill amount is allocated to those of the Group’s activities that
ate share of any intra-group gains and losses and after deduction of any
generate separate cash flows (cash-generating units).
writedowns of the equity investments. Goodwill is not amortised, but is tested for impairment at least once a year (impairment test), or if there is evidence of impairment.
Net financials Net financials include interest income and expenses, including the interest component of financial lease payments, which are recognised in the income
Development projects
statement at the amounts relating to the financial year. Net financials also
Clearly defined and identifiable development projects are recognised as
include value adjustments of financial assets and realised and unrealised
intangible assets where the technical rate of utilisation of the project, the
gains and losses on investments, unhedged items denominated in foreign
availability of adequate resources and a potential future market or develop-
currencies as well as forward contracts and other derivatives not used for
ment opportunity in the company can be demonstrated and where the
hedge accounting, realised exchange gains and losses concerning addi-
intention is to manufacture, market or use the project if the cost can be
tions to net investments in foreign subsidiaries that are recycled from other
measured reliably and it is probable that the future earnings can cover
comprehensive income. Dividends to capital holders who have received put
production and selling expenses, administrative expenses as well as the
options in connection with business combinations are recognised as a finan-
development costs. Other development costs are recognised in the income
cial expense in the cases where the option price is independent of dividend
statement as the costs are incurred.
payments and other financial expenses. After completion of the development work, development costs are amorTax
tised on a straight-line basis over the expected useful life. For development
The Group's controlled Danish companies are jointly taxed with Lundbeck-
projects protected by intellectual property rights, the maximum amortisation
fond Invest A/S as administration company. The current Danish income tax
period is the remaining term of the rights concerned. Ongoing development
liability is allocated among the companies of the tax pool in proportion to
projects are tested for impairment at least once a year, or if there is evidence
their taxable income (full allocation subject to reimbursement in respect of
of impairment.
tax losses).
46
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
Other intangible assets
Acquired intellectual property rights in the form of product rights, contrac-
Buildings
years
tual customer relationships, patents, licenses, brand names and software are
Installations 10
measured at cost less accumulated amortisation and impairment. The cost of
Plant and machinery
software comprises the cost of planning, including labour and costs directly
Vehicles by category
5-12
attributable to the project.
Other fixtures and fittings, tools and equipment
3-10
25-50 3-10
Leasehold improvements max.
10
Product rights are amortised on a straight-line basis over the economic lives of the underlying products. Contractual customer relationships are measured
The depreciation base is cost less the estimated residual value at the end
at cost less accumulated depreciation and impairment. Intangible assets
of the expected useful life. The cost of a total asset is divided into smaller
acquired on acquisition are amortised over the expected economic life,
components that are depreciated separately if such components have diffe-
estimated to be 3 to 10 years. Patents are amortised over a maximum of the
rent useful lives. Depreciation methods, useful lives and residual values are
remaining life of the patent. Licenses are amortised over the period of the
re-assessed annually.
agreement. Software is amortised over the expected economic life, estimated to be 3 to 5 years. The economic lives of large administrative systems are
Depreciation is recognised in the income statement under cost of sales,
estimated to be 8 years. Amortisation commences when the asset is ready
distribution costs, administrative expenses and research and development
to be brought into use, which means at the time of commercialisation.
costs, respectively.
Depreciation is recognised in the income statement under cost of sales,
The costs of maintaining property, plant and equipment are recognised in
distribution costs, administrative expenses and research and development
the income statement as they are incurred, either directly in the income
costs, respectively.
statement or as part of indirect costs of production.
Other intangible assets with indeterminable useful lives are not amortised
Costs incurred that increase the recoverable amount of the asset concerned
but tested for impairment at least once a year, or if there is evidence of
are added to the asset's cost as an improvement and are depreciated over
impairment.
the expected useful life of the improvement.
Borrowing costs to finance the manufacture of other intangible assets are
Gains or losses on the sale or retirement of items of property, plant and
recognised in the cost price if such borrowing costs relate to the production
equipment are calculated as the difference between the carrying amount
period. Other borrowing costs are expensed.
and the selling price reduced by costs relating to divestment or discontinuance. Gains and losses are recognised in the income statement under the
Gains and losses on the disposal of development projects, patents and
same item as the associated depreciation.
licenses are measured as the difference between the selling price less cost to sell and the carrying amount at the time of sale.
Impairment Goodwill is written down through the income statement in those cases
See Accounting policies and estimates critical to financial reporting for a
where the carrying amount exceeds the future net income expected from
description of the calculation of the fair value of intangible assets.
the cash-generating unit (CGU) to which the goodwill relates (recoverable amount). In the impairment test, the discounted expected future cash flows
Property, plant and equipment
(value in use) for each CGU are compared to the carrying amounts of good-
Property, plant and equipment are measured at cost less accumulated
will and other net assets.
depreciation and impairment. Land is not depreciated. The carrying amount of intangible assets and property, plant and equipment Cost includes the costs of purchase and expenses directly attributable to
is analysed in connection with the preparation of the consolidated financial
the purchase until the asset is ready for use. In the case of assets manufac-
statements if there are indications that the carrying amount of an asset
tured by the company, cost includes expenses directly attributable to the
may exceed the expectations of future income from the asset (recoverable
manufacture of the asset, including materials, components, subsupplies and
amount). If this analysis concludes that the future expected net income from
labour.
the asset will be lower than the carrying amount, the carrying amount will be reduced to the higher of fair value less cost to sell and value in use. Impair-
Assets held under finance leases are recognised under property, plant and
ment losses are recognised in the income statement under the same items
equipment and measured at the lower of the fair value and value in use of
as the associated depreciation or amortisation.
the future lease payments at the inception of the lease. Assets held under finance leases are depreciated over the useful lives of the assets or, if shorter,
Investments in associates
over the lease term.
Investments in associates are recognised and measured in the consolidated financial statements according to the equity method, which entails that the
Borrowing costs to finance the manufacture of property, plant and equip-
investments are measured in the balance sheet at the proportionate share
ment are recognised in the cost price if such borrowing costs relate to the
of the associate's net asset value calculated in accordance with the Group'
production period. Other borrowing costs are expensed.
accounting policies less or plus unrealised intra-group gains and losses and plus the carrying amount of goodwill.
Property, plant and equipment are depreciated on a straight-line basis over the expected useful lives of the assets, which are expected to be as follows:
CONSOLIDATED FINANCIAL STATEMENTS
47
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
The proportionate share of the result of the associate is recognised in the
Inventories
income statement after tax and elimination of the proportionate share of any
Raw materials, packaging and goods for resale are measured at the latest
intra-group gains and losses and after deduction of any writedowns of the
known cost at the balance sheet date, which equals cost computed accord-
investments. The proportionate share of all transactions and events recog-
ing to the FIFO method. Work in progress and finished goods manufac-
nised directly in the associate's other comprehensive income is recognised in
tured by the company are measured at cost, i.e. the cost of raw materials,
the Group's statement of comprehensive income under other comprehensive
consumables, direct labour and indirect costs of production. Indirect costs
income.
of production include materials and labour as well as maintenance of and depreciation on the machines, factory buildings and equipment used in the
Investments in associates with a negative carrying amount are recognised
manufacturing process as well as the cost of factory administration and
at DKK 0. Receivables and other long-term financial assets considered to
management. Indirect costs of production are allocated based on the normal
form part of the overall investment in the associate are written down by any
capacity of the production plant.
remaining negative net asset value. Trade receivables and other receivables are written down only to the extent they are deemed to be irrecoverable. A
Inventories are written down to net realisable value if it is lower than the
provision to cover the remaining negative net asset value will only be made
cost price. The net realisable value of inventories is determined as the selling
if the Group has a legal or constructive obligation to cover the liabilities of
price less costs of completion and costs necessary to make the sale and is
the relevant associate.
determined taking into account marketability, obsolescence and developments in the expected selling price.
Financial assets Securities that are included in the Group's documented investment strategy
Receivables
in accordance with the fair value option of IAS 39 Financial Instruments:
Current receivables comprise trade receivables and other receivables arising
Recognition and Measurement are recognised on the basis of the value date
in the Group's normal course of business. Other receivables recognised un-
at fair value and are subsequently measured at market price or estimated fair
der financial assets are financial assets with fixed or determinable payments
value at the balance sheet date. Bonds with a term to maturity of less than
that are not quoted in an active market and are not derivative financial
one year are recognised in current assets. Both realised and unrealised gains
instruments.
and losses are recognised in the income statement under net financials. On initial recognition, receivables are measured at fair value, which usually Financial assets are measured at fair value through profit or loss, including
corresponds to the nominal value less writedowns to counter the risk of loss
investments in associates if they are included in the Group's documented
calculated on the basis of an individual evaluation. A provision account is
investment strategy.
used for this purpose.
Bonds forming part of repo transactions, i.e. the selling of bonds to be
Prepayments
repurchased at a later date, remain in the balance sheet as financial assets,
Prepayments consist of expenses relating to subsequent financial years.
and the amount received on repo transactions is recognised as repo debt.
Prepayments are measured at cost.
Returns on such bonds are recognised in the normal manner under financials.
Securities The bond portfolio and other securities, which are included in the Group's
The fair value of listed investments is calculated using official currently
documented investment strategy for excess liquidity, or bonds with a term
quoted prices. The calculation of fair value of unlisted investments, including
to maturity of less than one year, are recognised under current assets, are
life science investments, is made in accordance with International Private
measured at the value date and measured at the market price a the balance
Equity and Venture Capital Valuation Guidelines. i.e. on the basis of relevant
sheet date. Both realised and unrealised gains and losses are recognised in
valuation methods based on comparable transactions on market conditions,
the income statement under net financials.
capital increases and the like. If the fair value cannot be determined with sufficient reliability, the investments in question are recognised at cost less any impairment. The Group assesses at each balance sheet date whether there is
Equity
objective evidence that an investment or a group of investments is impaired. Assessments of investments in unlisted equity instruments and securities,
Authorised grants
including life science investments, include an assessment of whether the
Grants are considered equity movements and are recognised as a liability at
companies live up to the defined business plans and the impact of any non-
the time when the grant has been authorised by the Board of Directors and
compliance on the calculation of fair value.
announced to the recipient. Authorised grants not yet disbursed are recognised in long-term or short-term liabilities, respectively.
On initial recognition, other investments classified as available-for-sale are measured at fair value with the addition of costs directly attributable to the
Hedging reserve
acquisition. Other investments are subsequently measured at fair value at
Hedge transactions that meet the criteria for hedging future cash flows and
the balance sheet date, and changes to the fair value are recognised in the
for which the hedged transaction has yet to be realised are recognised in
statement of comprehensive income under other comprehensive income
equity under the hedging reserve. Value adjustments concerning hedging
with the exception of impairment losses and dividends, which are taken to
transactions used to hedge the Group's net investment in such entities are
the income statement. When other investments available-for-sale are sold
recognised in equity under the hedging reserve.
or settled, the accumulated fair value adjustments recognised under other comprehensive income are recycled to net financials.
48
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
Currency translation reserve
The present value of the liability according to defined benefit plans is mea-
Foreign exchange adjustments arising on the translation of financial state-
sured less the fair value of the plan assets, and any net obligation is recog-
ments for entities which have a functional currency other than Danish kroner,
nised in the balance sheet under non-current liabilities. Any net asset is
foreign exchange adjustments relating to financial assets and liabilities
recognised in the balance sheet as a financial asset.
representing a part of the Group’s net investment in such entities are recognised in equity under the currency translation reserve. On full or partial
The year's changes in the provisions relating to defined benefit plans are
realisation of a net investment, foreign exchange adjustments are recognised
recognised in the income statement.
in the income statement. Income tax and deferred tax Reserve for fair value adjustment of available-for-sale financial assets
Current tax liabilities and receivables are recognised in the balance sheet,
Reserve for fair value adjustment comprises accumulated changes in the fair
computed as tax calculated on the taxable income for the year, adjusted for
values of available-for-sale financial assets. The reserve, which forms part of
provisional tax paid.
the Group’s free reserves, is dissolved and transferred to the income stateTax on items in other comprehensive income is recognised in the statement
ment as the investment is sold or written down.
of comprehensive income under other comprehensive income. Tax on equity entries is recognised in equity.
Treasury shares Cost and selling prices of treasury shares as well as dividends are recognised
Deferred tax is recognised on all temporary differences between the carry-
directly in equity under retained earnings.
ing amounts of assets and liabilities and their tax base, except for temporary Minority interests
differences arising either on initial recognition of goodwill or a transaction
The proportionate shares of the profits and equity of subsidiaries attribut-
that is not a business combination and with the temporary difference ascer-
able to minority interests are recognised as a separate item under equity. On
tained at the time of the initial recognition affecting neither the financial
initial recognition, minority interests are recognised as described under Busi-
result nor the taxable income. The tax value of the assets is calculated based
ness combinations. The issuance of put options as part of the consideration
on the planned use of each asset.
in business combinations is recognised as described under Acquisition and Deferred income tax is provided on temporary differences arising on invest-
divestment of minority interests.
ments in subsidiaries and associates, unless the Group has a possibility of Share-based payments
controlling when the deferred tax is to be realised and it is likely that the
Share-based incentive programmes in which employees may opt to buy
deferred tax will not materialise as current tax.
shares in H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S, and in which shares are allocated to employees (equity schemes) are measured at
Deferred tax is measured on the basis of the tax rates and tax rules in force
the equity instruments' fair value at the date of grant and recognised in the
in the respective countries on the balance sheet date. Changes in deferred
income statement under staff costs when or as the employee obtains the
tax as a result of changed tax rates or tax rules are recognised in the income
right to buy/receive the shares. The balancing item is recognised directly in
statement.
equity under other transactions. Deferred tax assets, including the tax value of tax loss carry-forwards, are Share price-based incentive programmes in which employees have the
recognised in the balance sheet at the value at which the asset is expected
difference between the agreed price and the actual share price settled in
to be realised, either through a set-off against deferred tax liabilities or as
cash (debt schemes) are measured at fair value at the date of grant and
net assets to be offset against future positive taxable income.
recognised in the income statement under staff costs when or as the employee obtains the right to such difference settlement. The incentive
Changes in deferred tax concerning the cost of share-based payments are
programmes are subsequently remeasured on each balance sheet date and
generally recognised in the income statement.
upon final settlement, and any changes in the fair value of the programmes are recognised in the income statement under staff costs. The balancing
Deferred tax in respect of recaptured losses previously deducted in foreign
item is recognised under provisions.
subsidiaries is recognised on the basis of a specific assessment of the intention with each individual subsidiary.
Pension obligations Periodical payments to defined contribution plans are recognised in the
Balances calculated according to the rules on interest deductibility limita-
income statement at the due date and any contributions payable are recog-
tions in the Danish Corporate Income Tax Act are allocated between the
nised in the balance sheet under current liabilities.
jointly-taxed companies according to a joint taxation agreement and are allocated between the companies that are subjected to deductibility limita-
The present value of the Group's liabilities relating to future pension pay-
tion in proportion to their share of the total limitation. Deferred tax liabilities
ments according to defined benefit plans is measured on an actuarial basis
in respect of these balances are recognised in the balance sheet, whereas
once a year on the basis of the pensionable period of employment up to the
deferred tax assets are recognised only if the criteria for recognition of
time of the actuarial valuation. The Projected Unit Credit Method is applied
deferred tax assets are met.
to determine the present value. The present value is calculated based on assumptions of the future developments of salary, interest, inflation, mortality
Other provisions
and disability rates and other factors. Actuarial gains and losses are recog-
Other provisions consist of different types of provisions, including provisions
nised in the income statement as they are calculated.
for pending lawsuits. Management makes assessments of provisions and
CONSOLIDATED FINANCIAL STATEMENTS
49
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
contingent liabilities, including the probable outcome of pending and pos-
for sale. A disposal group is a group of assets to be disposed of, by sale or
sible future lawsuits, which inherently depends on uncertain future events.
otherwise, together as a group in a single transaction. Liabilities regarding
When management determines the probable outcome of lawsuits and
assets held for sale are liabilities directly associated with those assets that
similar factors, it relies on assessments made by external advisers who are
will be transferred in the transaction. Assets are classified as held for sale if
familiar with the specific cases and the existing legal practice.
their carrying amount will be recovered principally through a sale transaction within 12 months in accordance with a formal plan rather than through
Provisions for restructuring are recognised when a detailed, formal plan for
continuing use.
the restructuring has been made before or on the balance sheet date and has been announced to the parties involved. In connection with acquisi-
Assets or disposal groups held for sale are measured at the lower of the car-
tions, provisions for restructuring costs are only included in the computation
rying amount at the date when the assets were classified as held for sale and
of goodwill if an obligation exists for the entity acquired as of the date of
fair value less costs to sell. Assets are not depreciated or amortised as from
acquisition.
the date they are classified as “held for sale�.
Provisions are made for onerous contracts when the anticipated benefits to
Impairment losses from the initial classification of the non-current assets
the Group from a contract are outweighed by the unavoidable costs under
as held for sale as well as gains and losses from following measurement of
the contract.
the lowest value of the carrying amount or the fair value less sales costs are recognised in the income statement in the items to which they relate. Gains
When the Group is under an obligation to dismantle an asset or re-establish
and losses are disclosed in the notes to the financial statements.
the site where the asset has been used, a provision is made corresponding to the present value of the expected future costs. The provision is determined
Assets and related liabilities are recognised separately in the balance sheet,
based on current orders and estimated future costs, discounted to their
and the main items are specified in the notes to the financial statements.
present value. The discount factor used reflects the general level of interest
Comparative figures in the balance sheet are not restated.
rates. The present value of the costs is recognised in the cost of the item of property, plant and equipment in question and depreciated with these as-
Leases
sets. The increase of the present value over time is recognised in the income
For accounting purposes, lease obligations are divided into finance and
statement under financial expenses.
operating leases. Leases are classified as finance leases when substantially all risks and rewards of ownership of the leased asset are transferred. Other
Other provisions are recognised when the Group has a legal or constructive
leases are classified as operating leases.
obligation that arises from past events and it is probable that an outflow of The accounting treatment of assets held under finance lease and the related
financial resources will be required to settle the obligation.
liability is described in the sections on property, plant and equipment and Other provisions are measured as the best estimate of the costs required to
financial liabilities, respectively.
settle the liabilities at the balance sheet date. Assets held under operating leases are not recognised in the balance sheet. Return obligations imposed on the industry are recognised in the balance
Lease liabilities under operating leases are disclosed as contingent liabilities.
sheet under other provisions.
Lease payments concerning operating leases are recognised in the income statement on a straight-line basis over the term of the lease.
Debt Mortgage debt and debt to credit institutions are recognised at the time of
Cash flow statement
the raising of the loan at proceeds received less transaction costs paid. In
The consolidated cash flow statement is presented according to the indirect
subsequent periods, the financial liabilities are measured at amortised cost,
method and shows the composition of cash flows, divided into operating,
equivalent to the capitalised value when the effective rate of interest is used,
investing and financing activities respectively, and the cash and cash equiva-
so that the difference between the proceeds and the nominal value is recog-
lents at the beginning and at the end of the year.
nised in the income statement over the loan period. Cash flows from acquisitions and divestments of companies are shown sepaResidual lease commitments from finance leases are recognised at amor-
rately under cash flows from investing activities. The cash flow statement
tised cost.
includes cash flows from acquired companies from the date of acquisition and cash flows from divested companies until the time of divestment.
Repo debt relates to bonds included in repo transactions. Debt is recognised at amortised cost, and accumulated repo interest has been accrued.
Cash flows from operating activities are calculated as the Group's profit from operations and special items, adjusted for non-cash operating items, working
Debt included in the short-term financial liquidity is also measured at amor-
capital changes, financial receipts and payments and income taxes paid.
tised cost in subsequent periods. Cash flows from investing activities include payments in connection with Other payables, which include trade payables and debt to public authorities
purchases and sales of intangible assets, property, plant and equipment and
etc. are measured at amortised cost.
financial assets, including equity investments in companies. Also included are securities classified as current assets. Entering into a finance lease is considered a non-cash transaction.
Assets held for sale Assets held for sale comprise non-current assets and disposal groups held
50
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1
Cash flows from financing activities include payments to and from shareholders and related expenses as well as the raising of and repayments on loans, mortgage debt and other long-term debt and cash flows from dividends and minorities. Cash comprises cash less current bank debt falling due on demand. Cash flows denominated in foreign currencies, including cash flows in foreign subsidiaries, are translated at the average exchange rates during the year because they approximate the actual exchange rates at the date of payment. Cash at year-end is translated at the exchange rates at the balance sheet date, and the effect of exchange rate adjustments on cash is shown as a separate item in the cash flow statement. Key figures Financial key figures are calculated according to Recommendations and Financial Ratios 2010 issued by the Danish Society of Financial Analysts. EBIT: defined as the Group's profit before special items, financial items and tax. EBIT margin:
EBIT operations x 100 / Revenue
Return on equity: Lundbeck Foundation's share of profit x 100
/ Lundbeck Foundation's share of average equity
CONSOLIDATED FINANCIAL STATEMENTS
51
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 2 - 3
2. REVENUE 2011 2010 DKKm DKKm Europe
14,468
9,992
USA
4,708
3,722
Rest of the world
4,426
3,213
23,602
16,927
CNS pharmaceuticals (H. Lundbeck Group)
16,007
14,765
Allergy pharmaceuticals (ALK Group)
2,348
2,162
Emergency, assistance, healthcare and training (Falck Group)
5,247
-
23,602
16,927
Revenue includes:
Downpayments and milestone payments
448
37
Royalty
640
620
Revenue in Denmark
2,878
143
Income from Forest in the USA Income from sales of citalopram and escitalopram to Forest amounted to DKK 2,535 million in 2011 (DKK 2,443 million in 2010) based on the minimum price for this year’s shipments and adjustments of prepayments concerning prior-year shipments. Prepayments, which is the difference between the invoiced price and the minimum price, were DKK 234 million at 31 December 2011 (DKK 517 million in 2010). See Note 1 Accounting policies for a more elaborate description hereof.
The agreement with Forest takes into consideration the expiry of the escitalopram patent protection in the USA in 2012. Prior to any launch of generic citalopram, Forest is expected to reduce its escitalopram inventories to a low level.
Developments in Forest’s inventories and net selling price are monitored closely, and the risk of the price adjustment clause and repayment of the prepayment being applied is regularly assessed. It is believed that there is presently no repayment risk.
Other accrued income There is deferred income concerning research and development partnerships amounted to DKK 74 million. Furthermore there is accrued subscription revenue in the amount of DKK 1,036 million and other accrued income of DKK 295 million regarding the Falck Group.
3. STAFF COSTS 2011 2010 DKKm DKKm Short-term staff benefits
6,607
Share-based payment
34
3,743 21
Pension benefits
414
283
Other social security costs
707
465
7,762
4,512
The year's staff costs are specified as follows: Cost of sales
3,072
684
Research and development costs
1,309
1,155
Distribution costs
1,755
1,492
Administrative expenses
1,626
1,181
Total 7,762 4,512 Total remuneration in the Group for the Executive Management of the Foundation amounts to
4
2
Total remuneration in the Group for the Board of Directors of the Foundation amounts to
7
6
Remuneration of the Executive Management and the Board of Directors is specified as follows: Executive Management:
Christian Dyvig, appointed on 1 June 2011
2.6
52
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 3 3. STAFF COSTS, CONTINUED
2011 DKKm
Board of Directors: Mikael Rørth, Chairman of the Foundation and Lundbeckfond Invest A/S, chairman of the research committee,
the biomedical sciences committee and the investment committee
0.8
Jørgen Huno Rasmussen, Deputy Chairman of the Foundation, member of the investment committee
0.4
Kim Klitgaard, employee representative
0.2
Ken Liljegren, employee representative
0.2
Thorleif Krarup, deputy chairman of Lundbeckfond Invest A/S, member of the investment committee,
deputy chairman of H. Lundbeck A/S, chairman of ALK-Abelló A/S and deputy chairman of Falck Holding A/S
2.6
Povl Krogsgaard-Larsen, member of the investment, research and the biomedical and natural sciences committees
0.2
Gunhild Waldemar, member of the research committee and the biomedical sciences committee
0.2
Peter Adler Würtzen, employee representative
0.2
Jes Østergaard, chairman of the natural sciences committee and member of the research and investment committees and board member of H. Lundbeck A/S and of ALK-Abelló A/S
1.7
Nils Axelsen, stepped down on 30 May 2011
0.2
Mogens Bundgaard-Nielsen, stepped down on 30 May 2011
0.4
7.1 2011 2010 Average number of full-time employees during the year
15,875
7,314
Number of employees at year-end (FTE)
24,676
7,352
Incentive programmes The Executive Management of the Foundation is not offered incentive programmes. An incentive programme has been launched for employees of Lundbeckfond Ventures which is similar to standard incentive programmes for the venture industry. The purpose of the incentive programme is for Lundbeckfond Ventures to be able to attract and retain skilled and qualified employees.
In order to attract, retain and motivate key employees and align their interests with those of the shareholders, the Group has established a number of incentive programmes in the H. Lundbeck, ALK and Falck groups. The Group has used equity-based as well as debt-based schemes, and the tables below show all the incentive programmes in place in 2010 and 2011.
Equity-based schemes Equity-based schemes are used both in H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S.
For the schemes in H. Lundbeck A/S, each warrant entitles the holder to buy one share of DKK 5 nominal value in the company. Furthermore the Executive Management has been granted share schemes. Exercise of the warrants and the share schemes is subject to the relevant employees continuing employment at the date of exercise. For warrants and share schemes to the Executive Management, exercise is also subject to H. Lundbeck A/S' shareholder return relative to a peer group. For the schemes in ALK-Abelló A/S, each warrant entitles the holder to buy one B share of DKK 10 nominal value in the company. The right to exercise the warrants is subject to the holder of the option not having resigned at the time of exercise. There are no other conditions for vesting. The options can be exercised only during a period of four weeks after the publication of annual or interim financial statements. Share options are considered adequately secured in own shares. For the scheme in Falck Holding A/S, each warrant entitles the holder to buy one share of DKK 1 nominal value in the company. The warrants issued were acquired at market value, and no conditions were attached. Consideration for the issued warrants has been paid in the form of a non-cash contribution of a corresponding number of warrants in Falck A/S, which have subsequently been cancelled.
Debt-based schemes H. Lundbeck A/S has granted Stock Appreciation Rights (SARs) and Restricted Cash Units (RCUs) to a few employees of US subsidiaries. SAR is a share price-based scheme with conditions and award criteria similar to those of the warrant schemes. RCU is a share price-based scheme with conditions and award criteria similar to those of the share schemes. Neither of the two schemes can be converted into shares, but the value of the scheme is distributed as a cash amount. The following tables show all the incentive programmes in place in 2010 and 2011.
CONSOLIDATED FINANCIAL STATEMENTS
53
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 3 3. STAFF COSTS, CONTINUED
Conditions for the various incentive programmes are set out below: Exercise Exercise Number of Outstanding at H. Lundbeck A/S - equity-based schemes
Vesting
period
date
begins
period
warrants/
Exercise
31 December
ends shares granted
price
2011
2007, warrants
Immediately
1/8 2008
31/3 2011
844,500
156.00
-
2008, warrants
6/5-2/6 2011
6/5-2/6 2011
5/5-1/6 2016
539,544
115.00
151,870 477,919
2009, warrants
16/3 2012
16/3 2012
15/3 2017
534,058
102.00
2010, warrants
16/3 2013
16/3 2013
15/3 2018
790,950
97.00
711,809
2011, warrants
31/3 2014
1/4 2014
31/3 2019
849,085
121.00
786,103
2008, share scheme
6/5-2/6 2011
74,609
434
2009, share scheme
16/3 2012
92,627
85,449
16/3 2013
102,689
96,785
31/3-30/6 2014
539,962
511,284
2010, share scheme 2011, share scheme
H. Lundbeck A/S
- debt-based schemes 2008, SARs
11/8 2011
11/8 2011
11/8 2016
2,258
2008, RCUs
11/8 2011
814
-
2009, SARs
1/7 2012
1/7 2012
30/6 2017
241,137
102.00
2,352
2009, RCUs 2010, SARs
119.76
2,258
1/7 2012
338,975
845
16/3 2013
16/3 2013
15/3 2018
36,060
97.00
4,639
2010, RCUs
16/3 2013
10,346
1,331
2011, SARs
31/3 2014
16/3 2014
15/3 2019
53,832
121.00
53,832
2011, RCUs
31/3-30/6 2014
66,233
66,233
ALK-Abell贸 A/S
- equity-based schemes 2005/06, share options
1/1 2009
1/1 2009
1/1 2012
68,000
742.00
2006, share options
1/11 2009
1/11 2009
1/11 2013
33,375
896.00
53,000 28,725
2007, share options
1/11 2010
1/11 2010
1/11 2014
29,000
727.00
26,050 41,950
2008, share options
1/11 2011
1/11 2011
1/11 2015
47,600
504.00
2009, share options
1/11 2012
1/11 2012
1/11 2016
58,300
465.00
51,525
2010, share options
1/11 2013
1/11 2013
1/11 2017
174,000
345.00
167,100
2011, share options
1/11 2014
1/11 2014
1/11 2018
220,000
319.00
220,000
The exercise price for ALK-Abell贸 A/S' schemes equals the average of the market price during the last five business days prior to the date of grant. The exercise price is increased by 2.5% p.a. and reduced by dividends paid. For the 2005/06 scheme, the exercise price equals the average of the market price during the last ten business days prior to the date of grant. The exercise price is increased by 6% p.a. and reduced by dividends paid.
Exercise Falck Holding A/S - equity-based schemes
Acquisition
period
date
begins
13/7 2011
30/12 2015
Exercise period
Number of Outstanding at warrants/
Exercise
31 December
ends shares granted
price
2011
125.00
4,443,120
2011, warrants
30/12 2015
4,443,120
54
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 3 3. STAFF COSTS, CONTINUED
Outstanding warrants
Outstanding
and share schemes 2011
at 1 January
Additions
Exercised/
Expired/ Outstanding at
settled
cancelled
31 December 2,127,701
H. Lundbeck A/S, warrants
2,693,412
849,085
(19,284)
(1,395,512)
H. Lundbeck A/S, share scheme
264,437
539,962
(69,505)
(40,942)
693,952
ALK-Abelló A/S, share options
382,150
220,000
(13,800)
588,350
Falck Holding A/S, warrants
-
4,443,120
-
4,443,120
Total 2011
3,339,999
6,052,167
- - (88,789)
(1,450,254)
7,853,123
Outstanding warrants and share schemes 2010 H. Lundbeck A/S, warrants
1,902,462
790,950
-
-
2,693,412
H. Lundbeck A/S, share scheme
161,748
102,689
-
-
264,437
ALK-Abelló A/S, share options
225,975
174,000
-
(17,825)
382,150
Total 2010
2,290,185
1,067,639
-
(17,825)
3,339,999
Outstanding debt-based schemes 2011 H. Lundbeck A/S, SARs
132,106
53,832
-
(122,857)
63,081
H. Lundbeck A/S, RCUs
251,917
66,233
(814)
(248,927)
68,409
Total 2011
384,023
120,065
(814)
(371,784)
131,490
132,106
2010 H. Lundbeck A/S, SARs
171,036
36,060
-
(74,990)
H. Lundbeck A/S, RCUs
297,552
10,346
-
(55,981)
251,917
Total 2010
468,588
46,406
-
(130,971)
384,023
Recognised expenses The warrants and shares granted are recognised in the income statement for 2011 at an expense corresponding to the fair value at the time of grant calculated according to the Black-Scholes method for the vesting period to date. For the warrants and shares in the 2008, 2009, 2010 and 2011 programmes that depend on the Lundbeck share’s ranking in the peer group of companies, the recognised expense was calculated with due consideration to fulfilment of the vesting conditions. The SARs granted are recognised in the income statement for 2011 at an expense corresponding to the value adjustment for the year based on the BlackScholes method, and the RCUs granted are recognised in the income statement for 2011 at an expense corresponding to the value adjustment for the year based on the performance of the Lundbeck share. 2011 2010 DKKm DKKm Recognised expenses concerning equity-based schemes
33
26
Recognised expenses concerning debt-based schemes
1
(5)
Total recognised expenses
34
21
CONSOLIDATED FINANCIAL STATEMENTS
55
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 3 - 4 3. STAFF COSTS, CONTINUED
The assumptions applied in determining the fair value of warrant, share option and debt-based schemes at the grant date are as follows:
Market price at
Expected divi- dend payout
Risk-free
Expected
Calculated
time of grant,
Expected
DKK
volatility, %
March 2009
98.75
44.05
1.50
3.20
79
40.37
H. Lundbeck A/S, debt-based scheme, June 2009
96.79
36.34
1.50
3.38
79
36.42
99.55
32.29
1.50
2.60
66
29.86
95.70
31.70
1.50
1.73
60
24.30
ratio, % interest rate, % maturity, mths.
fair value per option, DKK
H. Lundbeck A/S, warrant and share scheme,
H. Lundbeck A/S, warrant, share and debt-based scheme, March 2010 H. Lundbeck A/S, warrant and share scheme, October 2010 H. Lundbeck A/S, warrant, share and debt-based scheme, April 2011
121.20
31.03
2.50
2.99
66
30.10
ALK-Abell贸 A/S, 2009 scheme
465.00
45.00
0.97
3.58
60
173.00
ALK-Abell贸 A/S, 2010 scheme
345.00
25.00
1.31
2.21
60
63.00
ALK-Abell贸 A/S, 2011 scheme
319.00
24.00
1.42
1.68
60
52.00
Warrants for subscription of shares in Falck Holding A/S were acquired at fair value. 4. DEPRECIATION, AMORTISATION AND IMPAIRMENT
Intangible Property, plant
assets and equipment
DKKm
DKKm
Total DKKm
Depreciation, amortisation and impairment for 2011 are specified as follows Cost of sales
121
232
Research and development costs
216
399
353 615
Distribution costs
406
25
431
Administrative expenses
31
99
130
Special items
242
-
242
1,016
755
1,771
An impairment loss on other rights totalling DKK 47 million is included in cost of sales in the amount of DKK 31 million, in research and development costs in the amount of DKK 11 million and in administrative expenses in the amount of DKK 5 million.
An impairment loss on patent rights totalling DKK 95 million is included in research and development costs. An impairment loss on property, plant and equipment totalling DKK 283 million mainly consists of impairment of land and buildings in the USA. The impairment loss is included in cost of sales in the amount of DKK 21 million, in research and development costs in the amount of DKK 258 million and in administrative expenses in the amount of DKK 4 million.
Losses and gains on the sale of intangible assets and property, plant and equipment are recognised at a net gain of DKK 113 million. Of this amount, the gain from the sale of production facilities in the UK amounts to DKK 95 million.
Intangible Property, plant
assets and equipment
DKKm
DKKm
Total DKKm
Depreciation, amortisation and impairment for 2010 are specified as follows Cost of sales
101
192
Research and development costs
115
177
292
Distribution costs
427
13
440
Special items
27
80
670
462
The distribution costs for 2011 include a DKK 48 million impairment loss on product rights. Losses and gains on the sale of intangible assets and property, plant and equipment were recognised at a net loss of DKK 33 million.
56
CONSOLIDATED FINANCIAL STATEMENTS
293
107 1,132
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 5 - 6 - 7
5. FEES TO AUDITORS APPOINTED AT THE GENERAL MEETING
Deloitte
2011
2010
KPMG 2011
2010
DKKm DKKm DKKm DKKm Administrative expenses include fees to the company's auditors appointed by the general meeting in the amount of: Statutory audit
10
11
6
-
Assurance engagements other than audits
1
-
-
-
Tax advice
2
3
-
-
Other services
6
6
1
-
19
20
7
-
The Falck Group is audited by KPMG. A few small foreign subsidiaries are not audited by the Foundation's auditors, a foreign business partner of the auditors, or by an internationally recognised accountancy firm. 6. SPECIAL ITEMS
2011 2010 DKKm DKKm
242
-
Amortisation of contractual customer relationships, Falck Group associate
Amortisation of contractual customer relationships, Falck Group
69
-
311
51
-
Special items
Transaction costs in connection with acquisitions
362
-
7. NET FINANCIALS ITEMS
2011 2010 DKKm DKKm
Financial income Interest on financial assets measured at amortised cost
63
Gains on financial assets measured at fair value through profit or loss
21
-
Gains on available-for-sale financial assets, incl. dividends
14
5
521
1,171
Gains on financial instruments measured at fair value through profit or loss
Gains on loan to associate that has been written down
26
-
9
Gains on financial instruments included in the trading portfolio
66
127
Exchange gains
305
124
Exchange gains concerning additions to net investments in foreign subsidiaries (transferred from comprehensive income)
4
-
Total financial income
813
1,643
Financial expenses Interest on financial liabilities measured at amortised cost
253
Loan conversion expenses
15
115 -
Other financial expenses
27
19
Losses on available-for-sale financial assets
3
-
638
158
Losses on financial instruments included in the trading portfolio
131
191
Interest component, discounted liabilities
2
-
94
77
Losses on financial instruments measured at fair value through profit or loss
Exchange losses
Exchange losses concerning additions to net investments in foreign subsidiaries (transferred from comprehensive income)
24
-
Total financial expenses
1,187
560
Net financials
(374)
1,083
At 31 December 2011, the Group recorded a net gain on available-for-sale financial assets of DKK 11 million (net loss of DKK 5 million in 2010).
CONSOLIDATED FINANCIAL STATEMENTS
57
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 7 - 8 7. NET FINANCIALS ITEMS, CONTINUED
The net loss on financial instruments measured at fair value through profit or loss amounted to DKK 117 million at 31 December 2011 (net gain of DKK 1,013 million in 2010). The net loss on financial instruments included in the trading portfolio amounted to DKK 65 million (loss of DKK 64 million in 2010), and the net exchange gain, including realised net exchange loss transferred from other comprehensive income, amounted to DKK 10 million in 2011 (net gain of DKK 228 million in 2010).
8. TAX ON PROFIT FOR THE YEAR
2011 2010 DKKm DKKm Current tax
1,056
Prior-year adjustment, current tax
6
1,118 49
Prior-year adjustment, deferred tax
12
(24)
Change of deferred tax for the year
45
(193)
Total tax for the year
1,119
950
Tax for the year is composed of: Tax on profit for the year
1,100
Tax on other comprehensive income
19
899 51
Total tax for the year
1,119
950
Tax on other comprehensive income is specified as follows: Currency translation concerning additions to net investments in foreign subsidiaries
41
63
Realised exchange gains/losses, additions to net investments in foreign subsidiaries (transferred to profit and loss)
5
-
Adjustment, deferred exchange gains/losses, hedging
21
(53)
Exchange gains/losses, hedging (transferred to the hedged items)
(37)
41
Exchange gains/losses, hedging (transferred from hedging)
-
-
Value adjustment of interest hedging instruments
(11)
-
Tax on other comprehensive income
19
51
Explanation of the Group's effective tax rate relative to the Danish tax rate 2011
DKKm
%
Profit before tax
3,529
Calculated tax, 25%
882
25.0
Tax effect of: Differences in the tax rates of foreign subsidiaries from the Danish tax rate of 25%
(53)
Non-deductible expenses/non-taxable income and other permanent differences
123
3.5
Research and development activities (tax credits)
(77)
(2.2)
Prior-year tax adjustments etc., total effect on operations
24
0.7
8
0.2
Unrecognised timing differences on securities recognised at fair value through profit or loss
(2)
(0.1)
Change in valuation of net tax assets
228
Deduction for grants
Other taxes and other adjustments
15
0.4
Effective tax for the year
1,100
31.2
Non-deductible losses/non-taxable gains on shares and other equity investments
58
CONSOLIDATED FINANCIAL STATEMENTS
(48)
(1.5)
6.5 (1.4)
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 8 - 9 8. TAX ON PROFIT FOR THE YEAR, CONTINUED
Explanation of the Group's effective tax rate relative to the Danish tax rate 2010
DKKm
%
Profit before tax
4,596
Calculated tax, 25%
1,148
25.0
Tax effect of: Differences in the tax rates of foreign subsidiaries from the Danish tax rate of 25%
(25)
Non-deductible expenses/non-taxable income and other permanent differences
75
Research and development activities (tax credits)
(94)
(2.0)
Prior-year tax adjustments etc., total effect on operations
25
0.5
2
0.0
Unrecognised timing differences on securities recognised at fair value through profit or loss
(77)
(1.7)
Change in valuation of net tax assets
46
Deduction for grants
(198)
Other taxes and other adjustments
(3)
(0.1)
Effective tax for the year
899
19.6
Non-deductible losses/non-taxable gains on shares and other equity investments
(0.5) 1.6
1.0 (4.3)
9. GRANTS FOR THE YEAR
2011 2010 DKKm DKKm
Grants for the year can be specified as follows: Biomedical sciences projects
182
Natural sciences projects
26
192 28
Fellowships
70
50
Other
21
10
Regular grants
299
280 50
Grants of Excellence
-
Centres of Excellence
84
24
Grete Lundbeck European Brain Research Foundation
-
30
Psychiatric research (iPSYCH)
121
-
Strategic initiatives
205
104
Grants for the year, gross
504
384
Descendants Reversed grants/repayments
Grants for the year, net
-
-
(6)
(1)
498
383
CONSOLIDATED FINANCIAL STATEMENTS
59
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 10
10. INTANGIBLE ASSETS Contractual customer relationships Cost at 1 January 2011 Currency translation Reclassification Addition through acquisitions
Goodwill
Product
Patent
and license
Other Projects
intangible
in
etc. rights rights assets progress Total
DKKm DKKm DKKm DKKm DKKm DKKm DKKm 4,317
-
4,570
683
1,342
179
34
58
-
1
75
-
1
-
-
100
-
-
127
11,039
-
272
(75)
1
5,256
3,220
-
8,576
and contingent consideration
1
-
-
-
-
-
1
Additions
-
-
1,143
4
104
34
1,285
-
-
(264)
(3)
(22)
9,753
3,254
5,582
687
1,545
64
20,885
(19)
-
(979)
(360)
(963)
-
(2,321)
(1)
(7)
(31)
Adjustment of put options
Disposals Cost at 31 December 2011 Amortisation and impairment at 1 January 2011 Currency translation
-
-
-
-
(289)
(39)
Reclassification
-
-
-
-
(1)
-
(1)
Amortisation
-
(242)
(435)
(40)
(151)
-
(868)
Impairment
-
-
-
(95)
(47)
-
(142)
Amortisation and impairment on disposal
-
-
133
-
3
-
136
(20)
(249)
(1,312)
(495)
(1,159)
-
(3,235)
Carrying amount at 31 December 2011
9,733
3,005
4,270
192
386
64
17,650
Carrying amount at 31 December 2010
4,298
-
3,591
323
379
127
8,718
Amortisation and impairment at 31 December 2011
Goodwill impairment test The management of respectively H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S have tested intangible assets for impairment. Based on the impairment tests performed in 2011, it was concluded that there is no need for writing down the goodwill.
Methodology In the impairment test, the discounted expected future cash flows (value in use) pursuant to the most recent management-approved budgets for each CGU are compared to the carrying amounts of goodwill and other net assets. The future cash flows are based on specific business plans for the next 3-8 years with due consideration to patent expiry.
The key parameters in the calculation of the value in use are revenue, earnings, working capital, discount factor and the preconditions for the terminal period. Negative growth is projected in the H. Lundbeck Group in the terminal period due to patent expiry, and growth of 2-3% and 2% is projected for the Falck Group and the ALK Group, respectively.
The calculation of the value in use for the H. Lundbeck Group, excl. Lundbeck Inc., is based on a discount rate of 9.7% (9.5% in 2010). For Lundbeck Inc. a discount rate of 11.8% (11.6% in 2010) was used. For the Falck Group, a discount rate of 10.7% has been used for emergency, assistance and healthcare activities, while a discount rate of 12% was used for training services. For the ALK Group, a discount factor of 12% was used (11% in 2010). The discount rate is before tax, and the result of [WACC/(1 – tax rate)] and the applied cash flows are also pre-tax figures.
Impairment of other intangible assets In 2011, Lundbeck wrote down patent rights and other rights by a total of DKK 142 million. The impairment loss is recognised in the income statement under cost of sales in the amount of DKK 31 million, under administrative expenses in the amount of DKK 5 million and under research and development costs in the amount of DKK 106 million. The recoverable amount was calculated on the basis of management’s re-assessed estimate of the value in use of the assets. In 2010, impairment of product rights amounted to DKK 48 million, which was recognised in the income statement under distribution costs. The recoverable amount was calculated on the basis of management’s re-assessed estimate of the value in use of the assets.
Sale of product rights In 2011, Lundbeck sold the product rights to Nembutal®, Cogentin® and Diuril®. No gain from the sale of these product rights was recognised in 2011 because any gain is subject to developments in revenue from these products at the buyer, which Lundbeck does not control. The fair value of the deferred gain is based on management’s estimate. Recognition of any gain will commence at the time when revenue from the three products exceeds the carrying amount of the product rights at the time of disposal.
60
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 10 - 11 10. INTANGIBLE ASSETS, CONTINUED
Patent
Product
and license
Other Projects
intangible
in
Goodwill rights rights assets progress Total
DKKm DKKm DKKm DKKm DKKm DKKm
Cost at 1 January 2010
4,006
4,059
583
1,236
81
9,965
239
243
2
7
(1)
490
Reclassification
37
(37)
-
29
2
31
Addition through acquisitions
35
-
108
-
-
143
Additions
-
305
114
103
Disposals
-
-
(10)
(44)
(58)
4,317
4,570
683
1,342
127
11,039 (1,693)
Currency translation
Cost at 31 December 2010 Amortisation and impairment at 1 January 2010, adjusted
-
(19)
(507)
(331)
(836)
-
Currency translation
-
(10)
-
-
-
Reclassification
-
-
-
Amortisation
-
(414)
Impairment
-
(48)
Amortisation and impairment on disposals
-
-
Amortisation and impairment at 31 December 2010
(19)
(979)
522 (112)
(10)
(7)
-
(7)
(155)
-
(608)
-
-
-
(48)
10
35
-
45
-
(2,321)
(39)
(360)
(963)
Carrying amount at 31 December 2010
4,298
3,591
323
379
127
8,718
Carrying amount at 31 December 2009
3,987
3,552
252
400
81
8,272
11. PROPERTY, PLANT AND EQUIPMENT
Other fixtures Prepayments
Land and
buildings
Plant and machinery
and fittings, tools and
Leasehold
and other assets under
equipment improvements construction
Total
DKKm DKKm DKKm DKKm DKKm DKKm
Cost at 1 January 2011
4,472
2,024
1,211
-
637
8,344
Currency translation
17
14
2
1
4
38
Reclassification
16
13
3
-
(33)
712
-
891
60
Additions through acquisitions
-
(1) 1,663
Additions
167
152
185
8
409
Disposals
(165)
(45)
(216)
(7)
(229)
Cost at 31 December 2011
5,219
2,158
2,076
62
788
10,303
(1,687)
(1,481)
(908)
-
-
(4,076)
(18)
(13)
(5)
-
-
(36)
-
1
-
-
-
Depreciation
(198)
(118)
(240)
(7)
-
(563)
Impairment for the year
(271)
(5)
(15)
-
-
(291)
135
39
186
3
-
363
(2,039)
(1,577)
(982)
-
(4,602)
Depreciation and impairment at 1 January 2011 Currency translation Reclassification
Depreciation and impairment on disposals Depreciation and impairment at 31 December 2011
(4)
921 (662)
1
Carrying amount at 31 December 2011
3,180
581
1,094
58
788
5,701
Carrying amount at 31 December 2010
2,785
543
303
-
637
4,268
156
208
In the carrying amount at 31 December 2011, financial leasing is included in the amount of
40
12
Carrying amount of mortgage-backed land and buildings
669
11
CONSOLIDATED FINANCIAL STATEMENTS
680
61
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 11 - 12 11. PROPERTY, PLANT AND EQUIPMENT, CONTINUED
Other fixtures Prepayments
Land and
buildings
Plant and
and fittings, tools and
and other assets under
machinery equipment construction
Total
DKKm DKKm DKKm DKKm DKKm Cost at 1 January 2010
4,213
1,956
1,242
496
Currency translation
39
34
13
8
94
Reclassification
15
8
14
(68)
(31)
-
7,907
Additions through acquisitions
13
3
2
Additions
211
61
54
Disposals
(19)
(38)
(114)
(93)
(264)
Cost at 31 December 2010
4,472
2,024
1,211
637
8,344
294
18 620
Depreciation and impairment at 1 January 2010
(1,504)
(1,343)
(891)
-
Currency translation
(11)
(25)
(9)
-
Reclassification
1
6
Depreciation
(184)
(146)
Depreciation and impairment on disposals
11
105
-
143
Depreciation and impairment at 31 December 2010
(1,687)
(1,481)
(908)
-
(4,076)
Carrying amount at 31 December 2010
2,785
543
303
637
4,268
Carrying amount at 31 December 2009
2,709
613
351
496
4,169
financial leasing is included in the amount of
23
107
130
Carrying amount of mortgage-backed land and buildings
170
27
- (113)
(3,738) (45)
-
7
-
(443)
In the carrying amount at 31 December 2010,
170
12. INVESTMENTS IN ASSOCIATES 2011 DKKm Cost at 1 January
-
Additions
2,850
Additions through acquisitions
14
Reclassification
(2,850)
Adjustment regarding prior-year acquisitions
2
Cost at 31 December
16
Value adjustments and impairment at 1 January
-
Share of profit for the year after tax before special items
100
Share of special items
(69)
Share of other comprehensive income
(18)
Share of other changes in equity
(3)
Reversed impairment on disposals
(11)
Accumulated value adjustments and impairment at 31 December
(1)
Carrying amount at 31 December 2011
15
On 14 January 2011, the Group acquired 36% of the share capital of Falck A/S. In July 2011, the shares were contributed to Falck Holding A/S, and at the same time Falck Holding A/S acquired additional shares in Falck A/S, to the effect that Falck Holding A/S owns 98.8% of the share capital of Falck A/S. At the same occasion, the Group subscribed for additional shares and reached an ownership interest of 57.4% of the share capital of Falck Holding A/S. Falck Holding A/S was consolidated in the Group as a subsidiary from 1 July 2011.
62
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 12 - 13 12. INVESTMENTS IN ASSOCIATES, CONTINUED
In connection with the transition from an associate to a subsidiary, no gains or losses were realised. Note 29: Business combinations, provides more
information.
Please see the group overview for information about registered office and ownership interests in associates.
2011/31
December 2011
DKKm
Summarised financial data for associates Revenue
23
Profit for the year
-
Total assets 320 Total liabilities 320
13. FINANCIAL ASSETS AND FINANCIAL RISKS The Group's financial investments classified as financial assets at fair value through profit or loss primarily relate to Lundbeckfond Invest A/S' investments. These investments are made on the basis of an investment policy approved by the Board of Directors. The strategy aims for an appropriate diversification of investments on different asset classes and geographical markets in order to achieve an appropriate diversification of interest rate, exchange rate, credit and equity risks on the financial investments. The purpose is to reduce the risk of losses but also to retain the prospect of gaining a long-term return on the invest-
ments.
Credit risks Credit risks concerning the Group's financial investments primarily relate to investment in bonds and other unlisted investments funds investing in loans to businesses. In order to limit the credit risk, a large proportion of this asset class has been invested in Danish government and mortgage bonds with a high credit rating. To achieve a higher return, the Group also invests in corporate bonds.
Equity risks Equity risks concerns the Group's holding of listed and unlisted shares, including private equity funds as part of the Group's investment operations. Most of these investments are placed in listed shares.
To limit the risk of losses on these shares, they are diversified on different geographical regions and sectors in accordance with the applicable investment policy. Derivative financial instruments may be used to manage the equity risk.
Other things being equal, a 10% drop in equity prices would reduce profits by DKK 473 million (2010: DKK 507 million). For further information on risks concerning the Group's financial investments, see note 18: Cash resources and note 30: Financial risks and financial instru-
ments.
CONSOLIDATED FINANCIAL STATEMENTS
63
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 13 13. FINANCIAL ASSETS AND FINANCIAL RISKS, CONTINUED
Financial assets at fair value Available through for-sale
profit or
financial
Other
loss assets receivables DKKm DKKm DKKm Carrying amount at 1 January 2011
10,444
21
Reclassification to securities, current assets, 1 January 2011
(442)
-
85 -
Carrying amount at 1 January 2011, adjusted
10,002
21
85
Additions
5,939
81
Disposals
(6,098)
(11)
Value adjustments, year-end
(363)
(2)
1
Reclassification to securities, current assets
304
-
-
Carrying amount at 31 December 2011
9,784
89
87 67
15 (14)
Carrying amount at 1 January 2010
11,572
26
Reclassification to securities, current assets, 1 January 2010
(1,050)
-
-
Carrying amount at 1 January 2010, adjusted
10,522
26
67
Additions
6,042
Disposals
(7,945)
(4)
-
28
Value adjustments, year-end
775
(1)
1
Reclassification to securities, current assets
608
-
-
Carrying amount at 31 December 2010
10,002
21
85
(11)
Fair value hierarchy for financial assets and financial liabilities, measured at fair value Level 1 includes financial assets for which the fair value is measured on the basis of quoted prices (unadjusted) in active markets for identical assets. Level 2 includes financial assets and financial liabilities for which the fair value is measured on the basis of directly or indirectly observable inputs other than the quoted prices included in level 1. Level 3 includes financial assets for which the fair value is measured on the basis of valuation methods which include inputs not based on observable market data.
Financial assets and liabilities measured at fair value
Level 1
Level 2
Level 3
31 December 2011 DKKm DKKm DKKm
Financial assets Financial assets at fair value through profit or loss
Danish mortgage and government bonds
5,704
-
-
Credit bonds
1,029
38
-
Listed equity
3,579
-
-
Property companies
286
-
85
Lundbeckfond Ventures
117
-
150
Private equity funds
36
11
788
Other unlisted funds
39
141
95
Available-for-sale financial assets
65
6
18
Derivatives
-
16
-
Financial assets at fair value
10,855
212
1,136
Financial liabilities Derivatives
-
212
-
Financial liabilities at fair value
-
212
-
64
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 13 - 14 13. FINANCIAL ASSETS AND FINANCIAL RISKS, CONTINUED
Financial assets and liabilities measured at fair value
Level 1
Level 2
Level 3
31 December 2010 DKKm DKKm DKKm
Financial assets Financial assets at fair value through profit or loss
Danish mortgage and government bonds
4,247
-
-
-
Credit bonds
632
37
Listed equity
3,849
-
-
Property companies
317
-
92
Lundbeckfond Ventures
184
-
74
Private equity funds
65
4
733
Other unlisted funds
49
157
57
Available-for-sale financial assets
2
-
19
Derivatives
-
42
-
Financial assets at fair value
9,345
240
975
Financial liabilities Derivatives
-
77
-
Financial liabilities at fair value
-
77
-
2011
2010
DKKm DKKm Financial assets measured at fair value according to level 3 Carrying amount at 1 January
975
637
Additions
240
242
Disposals
(136)
Reclassification, from level 3
1
(1)
Fair value adjustment
56
106
Carrying amount at 31 December
1,136
975
(9)
14. DEFERRED TAX
Temporary differences between the carrying amount and the tax base
Addition
Adjustment of
through
Balance at
Currency
deferred tax,
acquisition
during
Balance at
1 January
translation
1 January
of activities
the year
31 december
Movements
DKKm DKKm DKKm DKKm DKKm DKKm
2011 Non-current assets
3,856
59
89
Current assets
(777)
13
31
32
(10)
(119)
(52)
2
(1)
Tax loss carry-forwards etc.
(821)
(8)
76
(148)
287
(614)
Total
2,238
56
76
3,592
78
6,040
Other Provisions in subsidiaries
3,700 - 40 -
(440)
7,264
14
(719)
182
125
35
(16)
Deferred (tax assets)/tax liabilities Research and development activities (tax credits) Deferred (tax assets)/tax liabilities
609
(11)
(186)
(4)
423
(15)
12 - 12
898 - 898
71
1,579
(1)
(191)
70
1,388
CONSOLIDATED FINANCIAL STATEMENTS
65
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 14 14. DEFERRED TAX, CONTINUED
Addition
Adjustment of
through
Balance at
Currency
deferred tax,
acquisition
during
Balance at
1 January
translation
1 January
of activities
the year
31 December
Movements
DKKm DKKm DKKm DKKm DKKm DKKm
2010 Non-current assets
3,794
141
(10)
100
(169)
3,856
Current assets
(911)
(16)
(7)
16
141
(777)
Other
(68)
(21)
(45)
(31)
3
Tax loss carry-forwards etc.
(444)
(22)
(37)
(318)
(821)
Total
2,340
85
(99)
116
(204)
2,238
712
32
(39)
29
(125)
609
(108)
(9)
(72)
(186)
(197)
423
Provisions in subsidiaries
Deferred (tax assets)/tax liabilities Research and development activities (tax credits) Deferred (tax assets)/tax liabilities
604
23
-
3 (36)
-
166
32
-
(24)
(52)
-
- 29
2011 2010
DKKm DKKm Deferred tax assets concern the following items: Non-current assets
189
34
Current assets
194
151
Provisions and payables
79
147
Other
195
165
Provisions in subsidiaries
15
15
Tax value of tax loss carry-forwards etc.
211
298
Research and development activities (tax credits)
191
186
Offset within legal tax entities and jurisdictions
(591)
(818)
483 178 Deferred tax liabilities concern the following items: Non-current assets
2,175
1,193
Current assets
60
63
Provisions and payables
31
-
Other
183
161
Provisions in subsidiaries
Offset within legal tax entities and jurisdictions
13 (591)
2 (818)
1,871 601
Of the recognised deferred tax assets, DKK 402 million (DKK 484 million in 2010) related to tax losses etc. and research and development activities (tax credits) to be carried forward. Utilisation of these is based on a future positive income that exceeds realisation of the deferred tax liabilities. The recognition of tax losses is based on estimates of the expected earnings and taxable income in the loss-making entities, supported by reports by external analysts, when available.
2011 2010 DKKm DKKm Unrecognised deferred tax assets: Unrecognised deferred tax assets at 1 January
94
92
Currency translation
1
4
Prior-year adjustments
1
7
Additions
261
47
Utilised
(34)
Unrecognised deferred tax assets at 31 December
323
(56) 94
66
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 15 - 16
15. INVENTORIES
2011 2010
DKKm DKKm
Raw materials and consumables
243
Work in progress
480
260 528
Manufactured goods and goods for resale
1,262
1,013
Total
1,985
1,801
Indirect costs of production
346
387
Impairment loss for the year
26
35
Inventories calculated at net realisable value
2
2,377
The total cost of goods sold is included in cost of sales in the amount of
4 2,180
16. TRADE RECEIVABLES AND OTHER RECEIVABLES
2011 2010 DKKm DKKm
Trade receivables Receivables
4,100
2,393
Writedowns
(105)
(27)
Total 3,995 2,366
Due dates of trade receivables Not due
2,976
1,916
Overdue by more than 1 month and up to 6 months
991
375
Overdue by more than 6 month and up to 12 months
63
50
Overdue by more than 12 months
70
52
Total 4,100 2,393
Development in writedowns of trade receivables Writedowns at 1 January
27
Realised writedowns
(42)
36
Reversed, unrealised writedowns
(1)
(1)
Change in writedowns
121
(5)
Writedowns at 31 December
105
27
(3)
Specification of other receivables by due date Not due
697
438
Overdue by up to 3 months
6
25
Overdue by more than 3 month and up to 6 months
4
5
Overdue by more than 6 month and up to 12 months
8
-
Overdue by more than 12 months
1
Total
716
1 469
As no losses are expected on other receivables, no writedowns have been made.
Credit risks The Group's products are sold primarily to distributors of pharmaceuticals and hospitals and services to public authorities, other large customers and small subscription receivables from individual customers. Historically, the losses sustained have been insignificant. This was also the case in 2011. However, the change in writedowns reflects a potentially higher loss in 2012.
The Group has no particular customer concentration and no significant reliance on specific customers. For the Falck Group, the large customers are to a great extent represented by public authorities.
The H. Lundbeck, ALK and Falck groups have all defined internal procedures to be followed in connection with the establishment of new customer relationships and changes to existing relationships. The purpose of these procedures is to ensure that the risk of losses is reduced to the extent possible.
CONSOLIDATED FINANCIAL STATEMENTS
67
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 16 - 17 - 18 16. TRADE RECEIVABLES AND OTHER RECEIVABLES, CONTINUED
At 31 December 2011, receivables from Forest Laboratories, Inc. accounted for more than 5% of total trade receivables. This was also the case at 31 December 2010. At 31 December 2011, receivables from Teva Pharmaceutical Industries Ltd. accounted for more than 5% of total other receivables. This was also the case at 31 December 2010, when receivables from Takeda Pharmaceutical Company Limited also exceeded that limit.
Market risk The pharmaceutical market is characterised by the aim of the authorities to reduce or cap healthcare costs. Market changes such as price reductions may have a considerable impact on the earnings potential of pharmaceuticals.
In 2011, the subsidiaries experienced significant price reductions in several countries in Europe, where higher debts and rising unemployment have compelled the governments to identify savings in the public budgets. These savings have resulted, among other things, in a number of healthcare reforms triggering comprehensive price reductions in a number of countries. The Group expects that the uncertainty about public debts and developments in unemployment and the resulting focus on public budgets will continue into 2012 and 2013. The Group is monitoring developments in the European economies and also developments in trade receivables in order to reduce the risk of losses to the best possible extent.
17. INCOME TAX
2011 2010 DKKm DKKm Income tax payable/(income tax receivable) at 1 January
(124)
Currency translation
8
(62)
Tax payable through acquisition
72
-
Prior-year tax adjustments
11
49
Tax payable on profit for the year
1,084
1,165
Tax on other comprehensive income
(32)
(51)
Tax paid for the year
(989)
(1,177)
Tax paid/received in respect of prior years
80
Income tax payable/(income tax receivable) at 31 December
110
3
(51) (124)
Income tax is specified as follows: Income tax receivable
(134)
Income tax payable
244
(261) 137
Income tax payable/(income tax receivable)
110
(124)
18. CASH RESOURCES
2011 2010 DKKm DKKm
Fixed-term deposits
1,680
Other cash resources
2,305
4,491 1,299
Cash at 31 December
3,985
5,790
Securities with a maturity of less than 3 months
744
133
Securities with a maturity of more than 3 months
1,571
363
Securities at 31 December
2,315
496
Cash and securities at 31 December
6,300
6,286
DKK 95 million of the Group's cash and securities is held by a Swedish subsidiary comprised by Swedish insurance rules and, by extension, governed by rules on solvency requirements.
The securities portfolio is classified as financial assets measured at fair value through profit or loss.
68
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 18 - 19 - 20 18. CASH RESOURCES, CONTINUED
Liquidity and credit risk and capital structure With the present capital structure, the Group is well-consolidated. The Group aims to retain adequate cash resources to support business development and flexibility in case of changes to the market situation, potential acquisition activities and product in-licensing opportunities. This is achieved through a combination of liquidity management, ultra-liquid assets and guaranteed and unguaranteed credit facilities. The capital structure is considered appropriate relative to the Group's strategic plans. The credit risk of cash and derivatives (forward exchange contracts, currency options and interest-rate options) is limited because Lundbeck deals only with banks with a high credit rating. To further limit the risk of losses, internal limits have been defined for the credit exposure accepted towards the banks with which the Group collaborates, and the Group aims to maintain counterparty diversification to avoid material concentration at individual counterparties. The Group also uses collateral agreements (e.g. ISDA and GRMA) and exchange of collateral with counterparties with which the Group has hedging business. Certain of the Falck Group’s loans, including the debt of Falck Holding A/S, are subject to certain loan covenants, and the Falck Group continuously monitors whether the covenants are observed. 19. ASSETS HELD FOR SALE Falck has resolved to divest the subsidiary that provides emergency services in Brazil because the company has resolved, going forward, to focus on the private and commercial market as a foundation for growth in Brazil. Consequently, the investment in the company has been written down to fair value less expected costs to sell. On 17 February 2012, an agreement was reached for a sale of the company. The sale will not affect the profit for the 2012 financial year. 2011 2010 DKKm DKKm Assets and liabilities concerning assets held for sale may be specified in the following main groups: Receivables
92
Other non-current assets
6
-
Total assets held for sale
98
-
Non-current liabilities
23
-
Current liabilities
75
-
Total liabilities relating to assets held for sale
98
-
-
20. CAPITAL BASE The Foundation's capital base is DKK 2,225,000. The present charter of the Foundation was approved by the Board of Directors on 30 May 2011. The Civil Affairs Agency acts as supervisory authority. Of the Foundation's profit before tax less non-distributed dividends in the subsidiaries and associates, at least 20% must first be allocated to the capital base.
2011 2010 DKKm DKKm Change in capital base during the period 1 July 2005 - 31 December 2011
The capital base at 1 January 2005 amounted to:
1,420
2005 Capital base increased by
80
80
2006 Capital base increased by
150
150 100
1,420
2007 Capital base increased by
100
2009 Capital base increased by
150
150
2010 Capital base increased by
150
150
2011 Capital base increased by
175
-
Capital base at 31 December
2,225
2,050
Grants, net
498
383
CONSOLIDATED FINANCIAL STATEMENTS
69
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 21 - 22 - 23
21. OTHER RESERVES
2011 2010 DKKm DKKm
Currency translation reserve Balance at 1 January
(291)
(796)
Currency translation for the year concerning foreign subsidiaries and additions to net investments in foreign subsidiaries
243
564
Tax in relation hereto
(46)
(59)
Balance at 31 December
(94)
(291)
Hedging reserve Balance at 1 January
(5)
Adjustment, deferred exchange gains/losses, hedging, recognised in other comprehensive income
64
Exchange gains/losses, hedging, transferred to revenue
45 (214)
(126)
151
Exchange gains/losses, trading, transferred to net financials (transferred from hedging)
-
1
Value adjustment of interest hedging instruments
(56)
-
Repayment of interest hedging instruments
15
-
Tax in relation hereto
26
12
Balance at 31 December
(82)
(5)
Reserve for fair value adjustment of available-for-sale financial assets Fair value adjustment at 1 January
2
6
Fair value adjustment
(2)
(1)
Realised gain on disposal
(7)
(3)
Prolonged impairment losses recognised in the income statement.
3
-
Fair value adjustment at 31 December
(4)
2
Total other reserves
(180)
(294)
22. MINORITY INTERESTS 2011 2010 DKKm DKK m Minority interests at 1 January
4,571
Share of profit/loss for the year
815
817
Share of other comprehensive income for the year
28
148
Share of other capital movements
12
10
Dividend
(252)
(211)
Addition on acquisition of Falck
(1,329)
-
Buyback of shares from minority interests
(52)
(18)
Increase in minority interests
2
-
Adjustment of provision for acquisition of minority interests
(14)
Minority interests at 31 December
3,781
3,825
4,571
23. PENSIONS AND SIMILAR OBLIGATIONS
The majority of the employees of the Group are covered by pension plans paid for by the companies of the Group. The types of plan vary according to regulatory requirements, tax rules and economic conditions in the countries in which the employees are employed. A summary of the most important plans is given below.
Defined contribution plans For defined contribution plans, the employer undertakes to pay a defined contribution (e.g. a fixed amount or a fixed percentage of the pay). Under a defined contribution plan, the employees will usually bear the risk related to future developments in interest and inflation rates, mortality and disability etc.
70
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 23 23. PENSIONS AND SIMILAR OBLIGATIONS, CONTINUED
The cost of defined contribution plans, representing contributions to the plans, totalled DKK 373 million in 2011 (DKK 234 million in 2010).
Defined benefit plans For defined benefit plans, the employer undertakes to pay a defined benefit (e.g. a retirement pension at a fixed amount or a fixed percentage of the employee’s final salary). Under a defined benefit plan, the company usually bears the risk relating to future developments in interest and inflation rates etc. For defined benefit plans, the present value of future benefits, which the company is liable to pay under the plan, is computed using actuarial principles. The computation of present value is based on assumptions about discount rates, changes in pay rates and pensions, investment yield, staff resignation rates, mortality, disability and other factors. Present value is computed exclusively for the benefits to which the employees have earned entitlement through their employment with the company. Actuarial gains and losses are recognised in the income statement as they are calculated.
2011 2010
DKKm DKKm
Pensions and similar obligations Present value of funded pension obligations
345
283
Fair value of plan assets
(279)
(233)
Funded pension obligations, net
66
50
190
186
Provisions for pensions, 31 December
256
236
Other pension-like obligations
105
92
Provisions for pensions and pension-like obligations, 31 December
361
328
Present value of unfunded pension obligations
Pension obligations and similar obligations break down as follows: Non-current obligations
342
Current obligations
19
316 12
Pension obligations and similar obligations, 31 December
361
328
The actuarial assumptions applied in calculating pension obligations concerning the defined benefit plans vary from one country to the next and are based on local economic and social conditions. The following assumptions were applied:
2011 2010
Discount rate
2.7%-8.0%
2.7%-8.5%
Pay rate increase
2.0%-5.5%
2.0%-5.5% 1.3%-3.3%
Pension increase
1.3%-2.9%
Age-weighted staff resignation rate
0%-8%
0%-8%
Expected return on plan assets
2.5%-8.0%
2.5%-8.5%
2011 2010 % distribution % distribution The fair value of the plan assets breaks down as follows: Shares
9
10
33
27
Bonds
Property
4
3
Insurance contracts
52
60
Other assets
2
1
Total
100
100
CONSOLIDATED FINANCIAL STATEMENTS
71
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 23 23. PENSIONS AND SIMILAR OBLIGATIONS, CONTINUED
2011 2010 DKKm DKKm
Change in present value of funded pension obligations Present value of funded pension obligations at 1 January
283
Addition through acquisitions
24
232 6
Currency translation
8
18
Pension expenses
12
8
Interest expenses relating to the obligations
15
12
Actuarial (gains)/losses
10
7
Disbursements
(6)
(6) -
Employee contributions
2
Settlement
(3)
-
New plan
-
6
Present value of funded pension obligations at 31 December
345
283
Change in fair value of plan assets Fair value of plan assets 1 January
233
Addition through acquisitions
26
6
6
15
12
9
Currency translation
Expected return on plan assets
191
Actuarial (gains)/losses
(3)
1
Payments
16
11
Disbursements
(10)
(6)
Employee contributions
2
2
Settlement
(3)
-
New plan
-
4
Fair value of plan assets 31 December
279
233
Realised return on plan assets
6
11
Change in present value of unfunded pension obligations Present value of unfunded pension obligations at 1 January
186
Pension expenses
7
7
Interest expenses relating to the obligations
7
9
Actuarial (gains)/losses
(7)
15
Disbursements
(3)
(4)
190
186
Present value of unfunded pension obligations at 31 December
159
Change in obligations concerning defined benefit plan Pension obligations at 1 January
236
200
Currency translation
2
3
Addition through acquisitions
(2)
-
Recognised as expense (change recognised in the income statement)
35
50
Payments
(16)
(11)
Disbursements
1
Employee contributions
-
Pension obligations at 31 December
256
(4) (2) 236
Specification of change recognised in the income statement Pension expenses
19
Interest expenses relating to the obligations
22
15 21
Expected return on plan assets
(12)
(9)
Actuarial (gains)/losses
21
6
New plan
-
2
Total expenses recognised
35
50
72
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 23 - 24 23. PENSIONS AND SIMILAR OBLIGATIONS, CONTINUED
Other pension-like obligations An obligation of DKK 105 million (2010: DKK 92 million) is recognised in the Group to cover other pension-like obligations, including primarily termination benefits in a number of subsidiaries. The benefit payments are conditional upon specified requirements being met. The amount of pension-like obligations increased by DKK 13 million in 2011 (declined by DKK 4 million in 2010).
24. LIABILITIES RELATING TO ACQUISITIONS AND MINORITY INTERESTS
2011 DKKm
Liabilities concerning acquisition of minorities
516
Payable considerations and contingent consideration
39
Liabilities 31 December 555 Non-current portion: Liabilities concerning acquisition of minorities
493
Payable considerations and contingent consideration
19
512
Current portion: Liabilities concerning acquisition of minorities
23
Payable considerations and contingent consideration
20
43
Liabilities concerning acquisition of minorities Liabilities 1 January
-
Currency translation
43
Additions through acquisitions
438
Addition on acquisition of minority interests
(1)
Interest component, discounted liabilities
2
Adjustment, recognised goodwill
1
Adjustment, recognised in equity
33
Liabilities concerning acquisition of minorities 31 December
516
Due dates in respect of acquisition of minorities are expected to be: Within 1 year of the balance sheet date
23
Between 1 and 5 years from the balance sheet date
374
More than 5 years after the balance sheet date
119
Liabilities concerning acquisition of minorities 31 December
516
Payable considerations and contingent consideration Liabilities 1 January
-
Additions through acquisitions 39 Payable considerations and contingent consideration 31 December
39
Due dates in respect of acquisition of minorities are expected to be: Within 1 year of the balance sheet date
20
Between 1 and 5 years from the balance sheet date
19
More than 5 years after the balance sheet date
-
Payable considerations and contingent consideration 31 December
39
CONSOLIDATED FINANCIAL STATEMENTS
73
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 25 - 26
25. OTHER PROVISIONS
2011 2010
DKKm DKKm
Other provisions at 1 January
496
463
Currency translation
4
18
Additions through acquisitions
33
-
Provisions charged
51
106
Provisions used
(152)
(79)
Unused provisions reversed
(24)
(12)
408
496
Other provisions at 31 December break down as follows: Non-current provisions
191
280
Current provisions
217
216
408 496
Other provisions primarily cover H. Lundbeck A/S' expenses for defending the company's intellectual property rights and returns and the guarantees and commitments towards buyers which ALK-Abell贸 A/S has undertaken in connection with the divestment of the ingredients business, Chr. Hansen in 2005.
26. MORTGAGE, BANK, LEASING AND REPO DEBT
2011 2010 DKKm DKKm
Mortgage debt Mortgage debt by maturity:
Within 1 year of the balance sheet date
1
Between 1 and 5 years from the balance sheet date
7
6
More than 5 years after the balance sheet date
2,255
1,879
Mortgage debt at 31 December
2,263
1,886
1
Specification of mortgage debt: Non-current liabilities
2,262
Current liabilities
1
1,885 1
Mortgage debt at 31 December
2,263
1,886
Weighted average Amortised
Currency/
Fixed/
effective
costs
Nominal value
Fair value
Expiry floating interest rate DKKm DKKm DKKm
Mortgage debt 2011 Bond loan, H. Lundbeck
DKK/2035
Floating
2.4%
1,411
1,540
1,581
Bond loan, H. Lundbeck
DKK/2037
Floating
1.9%
437
440
420
Bond loan, H. Lundbeck
DKK/2034
Floating
1.5%
10
10
10
Bond loan, H. Lundbeck
DKK/2034
Floating
1.5%
2
2
2
Bond loan, Falck
DKK/2025 Fixed until 2015
4.5%
377
409
415
Bond loan, ALK
DKK/2028
4.0%
26
26
26
Total
2,263
2,427
2,454
Fixed
74
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 26 26. MORTGAGE, BANK, LEASING AND REPO DEBT, CONTINUED
Weighted average Amortised
Currency/
Fixed/
effective
costs
Nominal value
Fair value
Expiry floating interest rate DKKm DKKm DKKm
Mortgage debt 2010 Bond loan, H. Lundbeck
DKK/2035
Floating
3.4%
1,410
1,567
1,528
Bond loan, H. Lundbeck
DKK/2037
Floating
2.0%
436
440
422
Bond loan, H. Lundbeck
DKK/2034
Floating
1.6%
10
10
10
Bond loan, H. Lundbeck
DKK/2034
Floating
1.6%
2
2
2
Bond loan, ALK
DKK/2025
Fixed
4.3%
28
28
28
Total
1,886
2,047
1,990
2011 2010 DKKm DKKm
Bank and leasing debt Bank and leasing debt by maturity:
Within 1 year of the balance sheet date
283
10
Between 1 and 5 years from the balance sheet date
1,772
9
More than 5 years after the balance sheet date
4,371
1
Bank debt at 31 December
6,426
20
Specification of bank and leasing debt: Long-term obligations, loan
6,088
-
Long-term obligations, leased assets
55
10
Total long-term
6,143
10
Short-term obligations, loan
257
7
Short-term obligations, leased assets
26
3
Total short-term
283
10
Bank debt at 31 December
6,426
20
Weighted average Nominal Fixed/ effective value 2011
Currency
Expiry
floating
interest rate
DKKm
Floating
4.2%
6,048
DKK, EUR, NOK, Bank debt, Falck Group
USD, SEK, BRL
2012-2018
Leasing debt, Falck Group
EUR, BLR,
COP, NOK, USD
2012-2016
Floating
7,.%
70
2014-2016
Floating
3.5%
11
2016
Fixed
3.1%
297
Leasing debt, ALK Group
EUR
EUR, USD,
Other bank and finance loans, ALK Group
DKK, NOK
6,426
2010 Leasing debt
EUR
2016
Floating
3.5%
13
0%-2.6%
7
EUR, USD,
Other bank and finance loans
DKK, NOK
2011-2014
Floating
20
Repo debt Repo debt in the Lundbeck Foundation of DKK 98 million falls due on 16 and 19 January 2012 The debt carries a fixed rate of interest from the date of conclusion at 0.67%.
CONSOLIDATED FINANCIAL STATEMENTS
75
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 27 - 28 - 29
27. ADJUSTMENTS
2011 2010 DKKm DKKm
Depreciation, amortisation and impairment
1,508
1,132
Incentive programmes
33
26
Change in pension obligation
25
Change in other provisions
Other adjustments
25
1,489
21
(102)
40 (26) 1,193
28. WORKING CAPITAL CHANGES
2011 2010 DKKm DKKm Change in inventories
(113)
79
Change in receivables
(344)
(171)
Change in receivables from associates
(22)
-
Change in current liabilities
502
198
23 106 29. BUSINESS COMBINATIONS
2011 In July 2011, the Lundbeck Foundation acquired controlling influence in Falck Holding A/S through the contribution of the Foundation's holding of Falck A/S shares and the subscription of new shares in Falck Holding A/S. At the same time, Falck Holding A/S acquired additional shares in Falck A/S and now owns 98.8% of Falck A/S and the Falck Group. The investment is consistent with the Foundation's intention to expand its healthcare activities.
In August 2011, the Falck Group acquired all the shares in Colombian ambulance service provider SER, which operates in three large cities in Colombia and has a large network of doctors. In addition, in September 2011 the Falck Group acquired all the shares in German company Kranken-Transport Herzig, which operates ambulance services in the German state of North Rhine Westphalia. These acquisitions should be seen as part of the Falck Group's aim to become a global and leading player within their business areas.
Name
Principal activity
Date of acquisition
Ownership interest acquired
Voting share acquired
Emergency, Assistance,
July 2011
57.36%
57.36%
Falck Holding A/S
Healthcare and
Training activities
Servicio Emergencias
Ambulance services
August 2011
100%
100%
Regional (SER)
Kranken-Transport Herzig
Ambulance services
September 2011
100%
100%
The transactions were accounted for using the purchase method of accounting.
76
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 29 29. BUSINESS COMBINATIONS, CONTINUED
Calculation of acquired net assets and cash consideration: Fair value on
Fair value on
acquisition
acquisition of other
of Falck
enterprises
Total 2011
DKKm DKKm DKKm 2011 Intangible assets
100
-
100
1,643
20
1,663
Property, plant and equipment
Cash and cash equivalents
969
11
980
Other current assets
1,887
19
1,906
Interest-bearing debt
(4,478)
(9)
(4,487)
Current liabilities, provisions etc.
(3,622)
(7)
(3,629)
Minority interests
1,329
(3)
1,326
31
(2,141) 5,245
Acquired net assets
(2,172)
Goodwill
5,173
72
Other intangible assets
3,206
25
Deferred tax on intangible assets
(812)
(6)
Acquisition cost
5,395
122
5,517
Acquired cash in hand and at bank
(969)
(11)
(980)
Cash consideration Expensed transaction costs
3,231 (818)
4,426
111
4,537
24
27
51
On the acquisition of the Falck Group, an assessment was made of the value of the acquired customer agreements, framework agreements and customer portfolios. The valuation thereof was based on the �Multi Period Excess Earnings Method (MEEM-method)� in which the value is calculated on the basis of an expected future cash flow. The principal assumptions are expected lives of the existing agreements and portfolios, earnings and contribution for using associated assets and employees.
The valuation of the brand is based on the Relief from royalty method in which the value is calculated on the basis of an expected future cash flow with the key assumptions being expected life, royalty rate and growth rates and a theoretically calculated tax effect. Since the brand is expected to be upheld indefinitely, the useful life has been set as non-definable.
2010 The ALK Group acquired the share capital of the Dutch companies Artu Biologicals (Artu Biologicals Europe B.V. and Artu Biologicals Onroerend Goed B.V.) from Fornix Biosciences with a view to currently strengthening the ALK Group's global presence and enhance its market consolidation. The acquisition was completed in the ALK Group's Dutch subsidiary effective 1 July 2010, and the two companies are being integrated in an ongoing process.
The ALK Group also acquired the allergy vaccine activities of US company Nelco Laboratories with a view to currently strengthening the ALK Group's global presence. The acquisition was completed in the ALK Group's US subsidiary effective 1 August 2010. Nelco Laboratories manufactures and sells injection-based allergy vaccines in the USA.
Name
Principal activity
Date of acquisition
Ownership interest acquired
Voting share acquired
Artu Biologicals
Production and sale
1 July 2010
100%
100%
of allergy vaccines
Nelco Laboratories
Sale of allergy vaccines
1 August 2010
100%
100%
The transactions were accounted for using the purchase method of accounting.
CONSOLIDATED FINANCIAL STATEMENTS
77
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 29 29. BUSINESS COMBINATIONS, CONTINUED
Calculation of acquired net assets and cash consideration:
2010
DKKm Fair value on acquisition Land and buildings Plant and machinery
13
3
Other plant and equipment
2
Other intangible assets
108
Inventories
33
Receivables
24
Current liabilities
(40)
Acquired net assets 143 Goodwill
35
Acquisition cost
178
Acquired cash in hand and at bank
-
Cash consideration 178 The cost price paid in connection with the company acquisitions exceeded the fair value of acquired identifiable assets, liabilities and contingent liabilities. According to a preliminary calculation, the positive difference amounts to DKK 7,658 million (2010: DKK 35 million). The difference with respect to the acquisition of the Falck Group represents the value of acquired contractual customer relationships, logo and brand in the amount of DKK 2,394 million after tax. In addition, individual small assets and liabilities with a net value of DKK 36 million have been identified and recognised. The remaining difference of DKK 5,173 million represents goodwill attributable to the four different business areas in the Falck Group, and it is mainly based on the realisation of the strategic goal of the Foundation of having a third leg with future growth opportunities and the value of the acquired staff. The difference with respect to the acquisition of other companies represents the value of acquired contractual customer relationships in the amount of DKK 19 million after tax. The remaining difference of DKK 72 million represents goodwill.
Acquired assets include trade receivables at a fair value of DKK 1,116 million. The contractual gross receivable amounts to DKK 1,234 million, of which DKK 118 million was assessed as being irrecoverable at the acquisition date.
The ownership of the Falck Group was acquired in two steps, the first of which was in January 2011, when the Foundation achieved an ownership interest of 36%, and the second in July 2011, after which time the ownership is 57%. No gain or loss has been recognised in connection with the step acquisition of the shareholding majority of Falck because no material changes to the valuation of the Falck Group were made between the two acquisition dates. Business combinations may be adjusted for up to 12 months after the date of acquisition.
The difference in respect of Artu Biologicals and Nelco Laboratories represents the value of assets whose fair value cannot be reliably measured, future growth opportunities and the value of the acquired staff.
Of the Group's comprehensive income in 2011 of DKK 2,522 million (2010: DKK 4,161 million), DKK 28 million (2010: DKK 2 million) is attributable to results generated by the acquired operations after the acquisition date.
Revenue and comprehensive income for the year for the Group in 2011 calculated pro forma as if the acquired enterprises had been acquired on 1 January 2011 amount to DKK 28,731 million (2010: DKK 16,940 million) and DKK 2,920 million (2010: DKK 4,197 million), respectively. The amounts stated are exclusive of the effect of the purchase price allocation, which is incorporated in the pre-acquisition balance sheet. 2012 At the beginning of 2012, the Falck Group acquired 75% of VL Transport Sanitari S.L.U. and Group VL Serveis Santaries S.L.U., which operate ambulance services in Catalonia, Spain, for a cash consideration of DKK 108 million. The Falck Group will use the acquisition as a platform for further expansion in ambulance services in the Spanish market.
Name
Principal activity
Date of acquisition
Ownership interest acquired
Voting share acquired
VL Transport Sanitari S.L.U
Ambulance services
February 2012
75%
75%
Group VL Serveis Sanitaris,
Ambulance services
February 2012
75%
75%
S.L.U. (VL)
Because of the acquisition date, it has not been possible to complete a purchase price allocation.
78
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30
30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS
The Group's business activities imply that the results and balance sheet may be affected by various financial risks. The management of these risks is decentralised and handled respectively in the H. Lundbeck, ALK and Falck groups and in Lundbeckfond Invest A/S based on policies and guidelines approved by the Board of Directors. See also note 13: Financial assets and financial risks, note 16: Trade receivables and other receivables, and note 18: Cash resources for a description of risks and the management thereof. 30.1 Exchange rate risks Exchange rate risks arise because the Group's expenses and income in different currencies do not match and because the Group's assets and liabilities denominated in foreign currency do not balance, among other things due to Lundbeckfond Invest A/S' investment assets. The management of these risks is focused on risk mitigation. The Group applies various derivative financial instruments to manage these risks. Some of these instruments are classified as hedging instruments and meet the accounting criteria for hedging future cash flows. Changes in the fair value of these contracts are recognised in the statement of comprehensive income under other comprehensive income as they arise and – on invoicing of the hedged cash flow – transferred from other comprehensive income for inclusion in the same item as the hedged cash flow. Hedging contracts that do not meet the hedge criteria are classified as trading contracts, and changes in the fair value are recognised as financial items as they arise. The need for hedging is assessed separately in the H. Lundbeck, ALK and Falck groups and in Lundbeckfond Invest A/S.
Other things being equal, an increase of 5% in the USD would increase the Group's profit by DKK 79 million.
2011 2010 Monetary assets and monetary liabilities for the principal currencies at 31 December
DKKm
DKKm
Monetary assets CAD
171
113
CHF
279
334
GBP
786
663
JPY
108
236
TRY
103
128
USD
3,061
2,110
Monetary liabilities CAD
182
CHF
19
15
GBP
136
90
JPY
100
-
TRY
21
26
1,517
1,535
USD
68
Due to the long-standing fixed exchange rate policy in Denmark, the foreign currency risk for EUR is considered immaterial, and EUR is therefore not included in the list above.
Estimated impact on profit and equity from a 5% increase in year-end exchange rates of the most important currencies
CAD CHF GBP JPY TRY USD DKKm DKKm DKKm DKKm DKKm DKKm
2011 Profit Equity
(2)
10
(5)
0
1
79
(28)
3
(6)
0
(2)
394
2010 Profit Equity The profit impact is included in the impact on equity.
1
15
23
12
(15)
9
23
12
CONSOLIDATED FINANCIAL STATEMENTS
2
70
(4)
313
79
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30 30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS, CONTINUED
Currency translation in associates measured using the equity method.
2011
2010
DKKm DKKm
-
(2)
Transferred to the income statement in connection with divestment of shareholding interest
Currency translation at 1 January
-
2
Currency translation at 31 December
-
-
30.2 Interest rate risk Interest rate risk relates to the Group's interest-bearing assets and liabilities and principally to the Group's bonds classified as financial assets measured at fair value through profit or loss. See note 13: Other financial assets and the Falck Group's overall loan financing, cf. note 26: Mortgage, bank, leasing and repo debt.
Interest receivable The duration of the investments when selecting financing and investment instruments is used to manage the interest rate risk. In addition, the Group uses derivative financial instruments to mitigate the interest rate exposure. The use of financial instruments to manage interest rate risk does not qualify for hedge accounting, and the changes in fair value are therefore recognised as financial income or expenses in an ongoing process.
The Group's portfolio of bonds has a duration of 1.0 year. Other things being equal, an increase of 1%-point in interest rates would increase the Group's profit by DKK 66 million.
At 31 December 2011, the Group had an interest rate swap for managing interest rate exposure on portfolio investments. Other than this, there were no derivatives at 31 December 2011 and 31 December 2010 to manage interest rate risks because the distribution of investments carrying floating and fixed interest at the given times was deemed to be satisfactory.
Interest expenses The Falck Group’s interest rate risk is mainly affected by the Falck Group’s overall financing. Based on the current market situation, the Falck Group's executive management and board of directors have resolved to convert 70% of the overall financing to a fixed three-year interest rate using interest rate swaps. The remainder of the overall financing is based on a short-term interest rate. For hedging interest rate risks, interest rate swaps ensure that the interest rate for part of the debt raised in DKK cannot exceed 1.4%, that interest rates on debt raised in EUR cannot exceed 1.17% and that interest rates on debt raised in USD cannot exceed 0.55%. The remaining part of the syndicated financing must be based on a short-term interest rate. The Falck Group is therefore sensitive to fluctuations in market interest rates, and a fluctuation by 1%-point would change the annual interest expense by DKK 20 million as a large part of the interest rate exposure is hedged using interest rate swaps. Without this hedge, a fluctuation by 1%-point would change the Group's interest expense by DKK 62 million. The sensitivity stated has been determined based on the recognised financial assets and liabilities at 31 December 2011. No adjustment has been made for servicing and raising of debt, or the like in 2011. Furthermore, it is assumed that all hedges of floating-rate loans are deemed to be effective. 30.3 Maturity dates for financial assets and financial liabilities 31 December 2011
Less than
Between
Financial assets
1 year
1 and 5 years
More than 5 years
Total
Effective interest
DKKm DKKm DKKm DKKm rates Derivatives included in the trading portfolio
4
-
-
4
Securities 1)
Danish mortgage and government bonds
2,295
1,096
2,351
5,742
0-6%
Credit bonds
1
323
704
1,028
3-35%
Listed equity
-
-
3,580
3,580
-
Shares in property companies
-
-
371
371
-
Lundbeckfond Ventures
-
-
267
267
-
Private equity funds
-
-
853
853
-
Other unlisted funds
-
-
257
257
-
8,383
12,102
-
Financial assets at fair value through profit or loss Derivatives to hedge future cash flows
2,300
1,419
-
12
-
-
12
-
Financial assets used as hedging instruments
12
-
-
12
-
80
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30 30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS, CONTINUED
31 December 2011
Less than
Between
Financial assets
1 year
1 and 5 years
More than 5 years
Total
Effective interest
DKKm DKKm DKKm DKKm rates Receivables 2)
4,883
Fixed-term deposits
1,680
Other cash resources
2,305
Loans and receivables
8,868
Available-for-sale financial assets Total financial assets
- 11,180
53 - - 53 89 1,561
35 - - 35 - 8,418
4,971
-
1,680
0-8%
2,305
0-8%
8,956
-
89
-
21,159
-
Financial liabilities
82
-
-
82
-
Financial liabilities at fair value through profit or loss
Derivatives included in the trading portfolio
82
-
-
82
-
Derivatives to hedge future cash flows and net investment in foreign subsidiaries
89
41
-
130
-
Financial liabilities used as hedging instruments
89
41
-
130
-
Mortgage, bank, leasing and repo debt
463
1,711
6,612
8,786
1-8%
Employee bonds/purchase obligations
56
469
119
644
3-6%
Other payables and non-disbursed grants 2)
6,714
394
7,108
-
Financial liabilities, measured at amortised cost
7,233
2,574
6,731
-
16,538
-
Total financial liabilities
7,404
2,615
6,731
16,750
-
31 December 2010
Less than
Between
Financial assets
1 year
1 and 5 years
More than 5 years
Total
Effective interest
DKKm DKKm DKKm DKKm rates Derivatives included in the trading portfolio
1
-
-
1
Securities 1)
Danish mortgage and government bonds
488
1,163
2,632
4,283
0-5%
Credit bonds
-
472
633
2-19%
Listed equity
-
-
3,849
3,849
-
Shares in property companies
-
-
409
409
-
Lundbeckfond Ventures
-
-
258
258
-
Private equity funds
-
-
802
802
-
Other unlisted funds
Financial assets at fair value through profit or loss
Derivatives to hedge future cash flows
- 489
161
- 1,324
263
263
-
8,685
10,498
-
42
-
-
42
-
Financial assets used as hedging instruments
42
-
-
42
-
Receivables 2)
3,052
Fixed-term deposits
4,491
Other cash resources
1,299
Loans and receivables
8,842
Available-for-sale financial assets Total financial assets
- 9,373
60 - - 60 21 1,405
26 - - 26 - 8,711
3,138
-
4,491
0-4%
1,299
0-6%
8,928
-
21
-
19,489
-
CONSOLIDATED FINANCIAL STATEMENTS
81
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30 30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS, CONTINUED
Less than
Between
1 year
1 and 5 years
More than 5 years
Total
Effective interest
DKKm DKKm DKKm DKKm rates
Financial liabilities
15
-
-
15
-
Financial liabilities at fair value through profit or loss
Derivatives included in the trading portfolio
15
-
-
15
-
62
-
-
62
-
Financial liabilities used as hedging instruments
62
-
-
62
-
Derivative financial instruments to hedge future cash flows
Mortgage, bank, leasing and repo debt
Employee bonds
Other payables and non-disbursed grants 2)
308
15
-
60
1,880 -
2,203
1-4%
60
3-6% -
4,170
310
3
4,483
Financial liabilities, measured at amortised cost
4,478
385
1,883
6,746
-
Total financial liabilities
4,555
385
1,883
6,823
-
1) The securities are classified as financial assets measured at fair value through profit or loss.
The amounts in the table above are exclusive of interest.
2) Including receivables and payments recognised in non-current assets and liabilities
3) Nominal value of mortgage debt falling due after more than 5 years totals DKK 2,427 million at 31 December 2011 (2010: DKK 2,047 million)
30.4 Net outstanding forward exchange transactions, currency options and interest rate swaps
Exchange Exchange Average
Contractual
gains/losses
gains/losses
hedge prices
value in
recognised
recognised
of existing
accordance
in other
in income
with hedge comprehensive
accounting
income
forward
statement/
exchange
balance sheet
transactions
Expiry
Forward contracts DKKm DKKm DKKm DKK period 2011 AUD
5
-
-
539.84
May 2012
CAD
552
(19)
5
536.25
Dec. 2012 Dec. 2012
CHF
183
1
(12)
610.84
CZK
22
1
-
30.38
Sep. 2012
GBP
577
(15)
(1)
859.70
Dec. 2012
HUF
4
-
-
2.48
Mar. 2012
JPY
121
(5)
(19)
7.08
Dec. 2012
MXN
108
2
3
41.39
Dec. 2012
NOK
339
(3)
-
94.76
Nov. 2012
PLN
118
(1)
-
165.25
Oct. 2012
RUB
49
-
-
17.41
Oct. 2012
SEK
338
(10)
(1)
80.77
Oct. 2012
SGD
4
-
(1)
426.56
Aug. 2012
TRY
148
(2)
20
290.70
Sep. 2012
USD
457
(15)
113
550.15
Dec. 2012
ZAR
48
-
1
69.35
Oct. 2012
Forward contracts 2011
3,073
(66)
108
82
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30 30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS, CONTINUED
Exchange Exchange Average
Contractual
gains/losses
gains/losses
hedge prices
value in
recognised
recognised
of existing
accordance
in other
in income
with hedge comprehensive
accounting
income
forward
statement/
exchange
balance sheet
transactions
Expiry
Forward contracts DKKm DKKm DKKm DKK period
2010 AUD
15
-
(13)
429.11
May 2011
CAD
367
(4)
(38)
548.19
Dec. 2011
CHF
131
(10)
(12)
545.31
Dec. 2011
CZK
21
-
(1)
29.74
Oct. 2011
EUR
411
-
5
746.46
Apr. 2011
GBP
103
-
-
861.61
Nov. 2011
HUF
8
-
-
2.66
Aug. 2011
ILS
3
-
(2)
145.87
Feb. 2011
JPY
20
-
6
6.72
Aug. 2011
MXN
115
(3)
2
44.10
Dec. 2011
NOK
-
-
(2)
PLN
22
-
(2)
182.95
RUB
40
-
1
18.24
Nov. 2011
SEK
36
(1)
1
79.51
Dec. 2011
SGD
21
-
6
418.53
May 2011
TRY
161
3
(28)
357.30
Sep. 2011
USD
1,587
14
(76)
566.72
Dec. 2011
ZAR
52
(4)
(9)
73.71
Nov. 2011
Forward contracts 2010
3,113
(5)
-
Aug. 2011
(162)
Exchange Exchange
Contractual
gains/losses
value in
recognised
gains/losses
accordance
in other
with hedge comprehensive
accounting
income
balance sheet
prices 1)
Currency options (zero cost options)
DKKm
DKKm
DKKm
DKK
recognised in income statement/
Average exercise Expiry period
2011 JPY/DKK (JPY put bought)
-
-
JPY/DKK (JPY call sold)
-
-
-
-
19
Currency options
19
2010 JPY/DKK (JPY put bought)
177
-
JPY/DKK (JPY call sold)
180
-
(1)
-
(1)
Currency options
-
6.45
Jan. 2011
6.53
Jan. 2011
1) The average exercise price for the sold call option has an average kick-in price of DKK 7.18.
At 31 December 2010, currency options concerning hedging of a milestone payment in JPY 2011. At 31 December 2011, the exchange difference between the contract value and the market value of the concluded forward exchange contracts and currency options represented a loss of DKK 77 million (a loss of DKK 21 million in 2010), of which DKK 11 million was recognised in the income statement (DKK 16 million in 2010).
CONSOLIDATED FINANCIAL STATEMENTS
83
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30 30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS, CONTINUED
Interest rate
gains/losses
recognised
in other
Contractual comprehensive
Fixed
value
income
interest rate
Expiry
Interest rate collar/interest rate swap
DKKm
DKKm
%
period
2011 DKK interest rate swap
2,300
USD interest rate swap
431
EUR interest rate swap
1,487
(38) - (3)
Interest rate collar/interest rate swap
1.40
Aug. 2014
0.55
Aug. 2014
1.17
Aug. 2014
(41)
Trading part
Average Exchange hedge prices gains/losses of existing recognised forward
Contractual
in the income
value
exchange
statement transactions
Expiry
Forward contracts DKKm DKKm DKK period
2011
-
8
Forward contracts
USD
-
8
-
-
2010 GBP
USD
600
-
(55)
(1)
-
Forward contracts
600
(55)
561.92
Jan. 2011
Exchange gains/losses recognised Average
Contractual
in the income
value statement
exercise prices
Expiry
Currency options DKKm DKKm DKK period
2011 EUR/DKK (EUR put bought)
597
3
746.25
EUR/DKK (EUR call sold)
1,194
(1)
746.66
Oct. 2011
JPY/DKK (JPY call bought)
100
1
7.00
May 2012
JPY/DKK (JPY put sold)
100
(3)
7.55
May 2012
Currency options
Oct. 2011
-
2010 EUR/DKK (EUR put bought)
448
1
746.25
Oct. 2011
EUR/DKK (EUR call sold)
896
(1)
746.66
Oct. 2011
Currency options
-
84
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 30 - 31 30. FINANCIAL RISKS AND FINANCIAL INSTRUMENTS, CONTINUED
Interest rate gains/losses recognised
Contractual
in the income
Fixed
value
statement
interest rate
Interest rate swap
DKKm
DKKm
%
Expiry period
2011 Fixed to floating
600
Interest rate swap
(74)
3.47
May 2020
(74)
2010 Fixed to floating
600
Interest rate swap
(9)
3.47
May 2020
(9)
Deferred recognition of hedging transactions recognised in other comprehensive income
2011
2010
DKKm DKKm Deferred gains/losses on hedging transactions at 1 January
(5)
34
Adjustment, deferred exchange gains/losses, hedging, recognised in other comprehensive income
49
(162)
Exchange gains/losses, hedging, transferred to revenue
(81)
97
Exchange gains/losses, hedging, transferred to prepayments from Forest (balance sheet)
(14)
25
Exchange gains/losses, trading, transferred to net financials (transferred from hedging)
Value adjustment of interest hedging instruments
Repayment of interest hedging instruments
11
-
Deferred gains/losses on hedging transactions at 31 December
(82)
(5)
- (42)
1 -
31. CONTRACTUAL OBLIGATIONS 2011 2010
DKKm DKKm The Group has signed operating lease obligations for a total amount of
2,491
587
Payment of the obligations breaks down as follows: Less than 1 year
474
183
Between 1 and 5 years
1,063
349
More than 5 years
954
55
2,491 587 Expensed lease payments amounted to
406
200
The operating lease commitments primarily concern the Falck Group's leases for vehicles and buildings. The lease term for vehicles typically runs for 4-9 years. The lease term for buildings typically runs for 20 years.
The Group has signed finance lease obligations for a total amount of
86
14
Payment of the finance lease obligations breaks down as follows: Less than 1 year
29
3
Between 1 and 5 years
48
10
More than 5 years
9
1
86
14
Present value of finance lease obligations
80
13
CONSOLIDATED FINANCIAL STATEMENTS
85
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 31 - 32 31. CONTRACTUAL OBLIGATIONS, CONTINUED
Financial lease arrangements comprise leases on buildings, vehicles and other lease arrangements.
Other than the above, the Group has made the following contractual obligations:
Lundbeck Foundation and Lundbeckfond Invest A/S The Lundbeck Foundation and Lundbeckfond Invest A/S have capital contribution obligations amounting to DKK 676 million (2010: DKK 662 million).
H. Lundbeck Group Other purchase obligations The H. Lundbeck Group has undertaken to purchase property, plant and equipment in the amount of DKK 318 million (2010: DKK 251 million). Research collaborations The H. Lundbeck Group is part of multi-year research and development collaborations comprising minimum research and contractual obligations in the order of DKK 126 million (2010: DKK 0 million).
The total amount of the obligations may increase substantially in line with the favourable development of the collaborations. Other contractual commitments The H. Lundbeck Group has entered into various service agreements amounting to DKK 80 million (2010: DKK 76 million).
ALK Group The ALK Group's financial obligations in respect of research and development projects amounted to DKK 3 million (2010: DKK 4 million).
Falck Group Falck Holding A/S has a purchase option on part of the buildings at a predetermined value. At the end of the year, Falck Holding A/S informed the owner that it intends to exercise the purchase option in 2012. The property has a value of DKK 68 million.
32. GUARANTEES AND CONTINGENT LIABILITIES The Group has the following warranty commitments and contingent liabilities:
Joint taxation H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S and their Danish subsidiaries are pooled for tax purposes with Lundbeckfond Invest A/S. The companies under this joint taxation scheme are separately liable for the payment of own taxes until these have been settled with the administration company (Lundbeckfond Invest A/S). After such time, Lundbeckfond Invest A/S is liable for the combined taxes under the joint taxation scheme.
H. Lundbeck Group Forest Prepayments from Forest have been translated at the exchange rate at the transaction date or at the forward rate and recognised in the balance sheet in the amount of DKK 234 million (2010: DKK 517 million). If the translation had been made at the exchange rate at the balance sheet date, the prepayments would have amounted to DKK 286 million (2010: DKK 493 million). Bank guarantees and letters of intent The H. Lundbeck Group’s bankers have issued bank guarantees to third parties in the amount of DKK 136 million (2010: DKK 117 million). In 2010, the group had issued a guarantee to a third party in the amount of DKK 9 million. The Group has assessed that the fair value of guarantees is DKK 0 (2010: DKK 0). Pending legal proceedings The H. Lundbeck Group is involved in legal proceedings in a number of countries against a number of businesses, including patent disputes. In the opinion of H. Lundbeck A/S, the outcome of these proceedings will not have a material impact on the Group’s financial position, results of operations or cash flows
86
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 32 32. GUARANTEES AND CONTINGENT LIABILITIES, CONTINUED
beyond the amount provided for in the financial statements. Due to uncertainty about the outcome of the legal proceedings, the amount of the provision is uncertain. The H. Lundbeck Group is also involved in a case filed by the United States Federal Trade Commission (FTC) in respect of the pricing of NeoProfen®, which is marketed by Lundbeck Inc. in the USA. In September 2010, the U.S. Federal District court ruled in favour of Lundbeck. FTC and the State of Minnesota appealed the ruling. In August 2011, Lundbeck also won the appeal. In January 2012, H. Lundbeck received a statement from the chairman of FTC that they do not intend to seek review by the US Supreme Court of the appeal case. However, legal possibilities exist for appeal until 20 February 2012. H. Lundbeck A/S had not announced a final decision at the date of publication of its financial statements. In 2010, the European Commission opened a formal investigation to examine whether H. Lundbeck by way of unilateral behaviour and/or agreements has violated EU competition law and thereby hindered a lawful entry of generic citalopram into markets in the European Economic Area (EEA). In 2011, H. Lundbeck complied with a number of ‘Requests for Information’ from the Commission. In December 2011, the Brazilian antitrust authorities (Secretariat of Economic Law –SDE) initiated administrative proceedings to investigate whether H. Lundbeck’s enforcement of data protection rights could be viewed as anticompetitive conduct. In January 2012, H. Lundbeck submitted a response to the authorities. Industry obligations The H. Lundbeck Group has return obligations normal for the industry. H. Lundbeck A/S' management expects no major loss on these obligations.
ALK Group
Guarantee and collaterals commitments Guarantee and collaterals commitments amounted to DKK 9 million (2010: DKK 10 million).
Collaterals The carrying amount of land and buildings provided as collateral for credit institutions amounted to DKK 162 million (2010: DKK 170 million).
Contingent liabilities and assets The management of ALK-Abelló A/S assesses that the outcome of pending claims and other disputes will not have a material impact on the group’s financial position. In connection with the divestment of the ingredients business, Chr. Hansen in 2004/05, ALK-Abelló A/S has undertaken the usual representations and warranties towards the buyer. The representations and warranties expire successively over the coming years. A provision of DKK 140 million (2010: DKK 140 million) has been recognised to cover specific risks. ALK-Abelló A/S and Chr. Hansen A/S are jointly and severally liable for the combined income tax payable for the period until 31 August 2005. At 31 August 2005, the jointly-taxed companies had no current tax liability.
Falck Group
Guarantee and collaterals commitments Guarantee and collaterals commitments amounted to DKK 9 million. The Falck Group has issued performance bonds to a certain extent in connection with a number of contracts, including performance bonds for a total of DKK 249 million provided in connection with ambulance contracts in Denmark.
As part of the group's activities, usual supplier agreements have been entered into and certain letters of intent signed. In connection with the divestment of companies and operations, usual representations and warranties are made. There are currently no outstanding claims which are not sufficiently recognised in the balance sheet.
Contingent liabilities and assets The Falck Group is a party to certain litigation and claims. Management believes that rulings in this respect will not have a material impact on the group’s financial position.
CONSOLIDATED FINANCIAL STATEMENTS
87
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 32 - 33 32. GUARANTEES AND CONTINGENT LIABILITIES, CONTINUED
Collaterals The shares in the subsidiary Falck A/S and Falck Danmark A/S have been provided as collateral for debt in the Falck Group.
The carrying amount of property, plant and equipment provided as collateral for debt to credit institutions amounted to DKK 518 million. Issued mortgage deeds amounted to DKK 380 million.
Lundbeck Foundation and Lundbeckfond Invest A/S Collaterals Bonds in repo transactions have been provided as collateral for repo debt, and other bonds have been provided as collateral for hedging transactions. The value of bonds provided as collateral at 31 December 2011 amounted to DKK 180 million (2010: DKK 341 million). 33. RELATED PARTIES The Lundbeck Foundation is an industrial foundation established by Grete Lundbeck in 1954.
Related parties exercising a significant influence on the Lundbeck Foundation: * The company’s Executive Management and Board of Directors
* Companies in which the company's Executive Management and Board of Directors exercise a significant influence
The following transactions were made between related parties and the Lundbeck Foundation, all on an arm's length basis: • The Board of Directors and the Executive Management received remuneration. See note 3.
• In connection with the acquisition of shares in Falck A/S and Falck Holdings A/S´ acquisition of shares in Falck A/S, a small amount of the shares were acquired from board members in the amount of DKK 8 million.
• Transactions with associates:
Related parties of the Falck Group also comprise associates in which the company exercises significant influence. Reference is made to note 12 and the group overview for an overview of associates.
2011 DKKm Transactions with associates: Disposal of property, plant and equipment
28
Acquisition of services
10
Sale of services
1
Rental costs 9 Receivables from associates appear from the balance sheet, and interest payable for the period amounted to DKK 0.
• Other than the above and except for transactions eliminated in the consolidated financial statements, there have only been few transactions of immaterial importance with related parties.
34. EVENTS AFTER THE BALANCE SHEET DATE
No material events have occurred subsequent to the balance sheet date.
88
CONSOLIDATED FINANCIAL STATEMENTS
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP
At 31 December 2011
COMPANY NAME
COUNTRY
OWNERSHIP
Datterselskaber Lundbeckfond Invest A/S
Denmark
100%
H. Lundbeck A/S
Denmark
70%
Falck Holding A/S
Denmark
57%
ALK-Abelló A/S
Denmark
40% (67% of the votes)
Associates Obel-LFI Ejendomme A/S
Denmark
50%
Veloxis Pharmaceuticals A/S
Denmark
31%
17%
Direct investments
United Kingdom
Asante Solutions Inc.
Acacia Pharma
USA
Bonesupport Holding AB DBV Technologies
6%
Sweden
11%
France
18%
EpiTherapeutics ApS
Denmark
13%
Nexstim Oy
Finland
8%
Syntaxin Ltd
United Kingdom
10%
H. Lundbeck Group Lundbeck Argentina S.A.
Argentina
100%
Lundbeck Australia Pty Ltd.
Australia
100%
Australia
100%
Belgium
100%
Lundbeck Brasil Ltda.
Brazil
100%
Lundbeck Canada Inc.
Canada
100%
Chile
100%
Lundbeck Colombia S.A.S.
Colombia
100%
Lundbeck China Holding A/S
Denmark
67%
China
100%
China
100%
- CNS Pharma Pty Ltd.
Lundbeck S.A.
Lundbeck Chile Farmacéutica Ltda.
- Lundbeck Pharmaceuticals (Tianjin) Co., Ltd.
- Lundbeck Pharmaceuticals Consulting (Shanghai) Co., Ltd.
Lundbeck Cognitive Therapeutics A/S
Denmark
100%
Lundbeck Export A/S
Denmark
100%
Lundbeck Insurance A/S
Denmark
100%
Lundbeck Pharma A/S
Denmark
100%
United Kingdom
100%
Lundbeck Group Ltd. (Holding)
- Lundbeck Limited
United Kingdom
100%
- Lundbeck Pharmaceuticals Ltd.
United Kingdom
100%
- Lifehealth Limited
United Kingdom
100%
- Lundbeck UK LLP
United Kingdom
100%
Lundbeck Eesti A/S
Estonia
100%
OY H. Lundbeck AB
Finland
100%
Lundbeck SAS
France
100%
Sofipharm SA
France
100%
France
100%
- Laboratoire Elaiapharm SA
Lundbeck Hellas S.A.
Greece
100%
Lundbeck B.V.
The Netherlands
100%
India
100%
Lundbeck India Private Limited Lundbeck (Ireland) Ltd. Lundbeck Israel Ltd.
Ireland
100%
Israel
100%
Lundbeck Italia S.p.A.
Italy
100%
Lundbeck Pharmaceuticals, Italia S.p.A.
Italy
100%
- Archid S.a.
Luxembourg
100%
Lundbeck Japan K. K.
Japan
100%
Lundbeck (Beijing) Pharmaceuticals Consulting Co., Ltd.
China
100%
Lundbeck Korea Co., Ltd.
Korea
100%
Croatia
100%
Lundbeck Croatia d.o.o.
CONSOLIDATED FINANCIAL STATEMENTS
89
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP
At 31 December 2011
COMPANY NAME
SIA Lundbeck Latvia
COUNTRY
OWNERSHIP
Latvia
100%
UAB Lundbeck Lietuva
Lithuania
100%
Mexico
100%
New Zealand
100%
Lundbeck México, SA de CV Lundbeck New Zealand Limited H. Lundbeck AS
Norway
100%
- CNS Pharma AS
Norway
100%
Lundbeck Pakistan (Private) Limited
Pakistan
100%
Lundbeck America Central S.A.
Panama
100%
Poland
100%
Portugal
100%
Lundbeck Poland Sp.z.o.o. Lundbeck Portugal - Produtos Farmacêuticos Unipessoal Lda. Lundbeck RUS OOO
Russia
Lundbeck (Schweiz) AG
Switzerland
100%
Lundbeck Pharmaceutical GmbH
Switzerland
100%
Lundbeck Singapore PTE. LTD.
Singapore
100%
100%
Lundbeck Slovensko s.r.o.
Slovakia
100%
Lundbeck Pharma d.o.o.
Slovenia
100%
Spain
100%
Lundbeck España S.A.
Spain
100%
Axofarma Lab, S.A. H. Lundbeck AB
Sweden
100%
- CNS Pharma AB
Sweden
100%
Lundbeck South Africa (Pty) Limited
South Africa
Lundbeck Czech Republic s.r.o.
Czech Republic
Lundbeck İlaç Ticaret Limited Şirketi
100% 100%
Turkey
100%
Germany
100%
Lundbeck Hungária KFT
Hungary
100%
Lundbeck USA Holding, Inc. 1)
USA
100%
- Lundbeck Inc. 2)
USA
100%
- Lundbeck Pharmaceuticals Ireland Limited
Ireland
100%
- Lundbeck Pharmaceuticals Services, LLC
USA
100%
- Lundbeck Research USA, Inc.
USA
100%
Lundbeck GmbH
Lundbeck de Venezuela, C.A.
Venezuela
100%
Austria
100%
1) At 1 January 2012, the subsidiary was renamed Lundbeck USA LLC
2) At 1 January 2012, the subsidiary was renamed Lundbeck LLC.
Lundbeck Austria GmbH
ALK Group ALK-Abelló Nordic A/S
Denmark
100%
ALK-Abelló Nordic A/S (filial)
Sweden
100%
ALK-Abelló Nordic A/S (filial)
Norway
100%
ALK-Abelló Nordic A/S (filial)
Finland
100%
United Kingdom
100%
France
100%
ALK-Abelló Ltd.
ALK-Abelló S.A.
ALK-Abelló Arzneimittel GmbH
Germany
100%
ThemoCARE GmbH
Germany
100%
ALK-Abelló Allergie-Service GmbH
Austria
100% 100%
ALK-Abelló AG
Switzerland
ALK AG
Switzerland
ALK-Abelló B.V.
The Netherlands
100% 100%
- Artu Biologicals Europe B.V.
The Netherlands
100%
- Artu Biologicals Onroerend Goed B.V.
The Netherlands
100%
ALK-Abelló S.A.
Spain
ALK-Abelló S.p.A.
Italy
100%
ALK-Abelló sp. z.o.o.
Poland
100%
ALK-Abelló, Inc.
USA
100%
USA
100%
- ALK-Abelló, Source Materials, Inc. ALK-Abelló Pharmaceuticals, Inc. ALK-Abelló A/S (filial)
90
CONSOLIDATED FINANCIAL STATEMENTS
100%
Canada
100%
China
100%
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP
At 31 December 2011
COMPANY NAME
COUNTRY
OWNERSHIP
Falck Group Falck A/S
Denmark
99%
- Falck Danmark A/S
Denmark
100%
- Falck Health Care Holding A/S
Denmark
100%
- Falck Health Care A/S
Denmark
100%
Denmark
100%
- ActivCare A/S
Denmark
100%
Denmark
100%
- Ulfab Danmark A/S
Denmark
100%
- Vikteam A/S
Denmark
80%
- Falck Hjælpemidler A/S
Denmark
92%
- Falck JobService A/S
Denmark
85%
- Falck Hjemmepleje A/S
Denmark
100%
Denmark
100%
- North Securities A/S
- HealthCare Danmark ApS
- ActivCare Privat A/S
- Lone Hovmand Sundhedsafdeling A/S
Denmark
49%
- Falck Norge Holding AS
Norway
100%
- Falck Redning AS
Norway
100%
Norway
100%
- Falck Emergency AS
Norway
100%
Norway
100%
- Falck Norge Leasing AS
Norway
100%
- Falck Health Care Norge AS
Norway
100%
- Falck Sevices AS
Norway
100%
- Falck Nutec Holding A/S
Denmark
100%
- Falck Nutec Esbjerg A/S
Denmark
100%
- Falck Nutec Management A/S
Denmark
100%
- Falck Global Safety B.V.
The Netherlands
100%
- Falck Nutec AS
- Falck Nutec Ltd.
- Stor Oslo Service AS - Falck Ambulanse AS
Norway
100%
United Kingdom
100%
- Nutec Centre for Safety Ltd. 1)
United Kingdom
100%
- Falck Onsite Limited
United Kingdom
100%
- Onsite Training Services Limited 1)
United Kingdom
100%
- Falck Nutec Trinidad and Tobago Limited
- Nutec UK Ltd.
Trinidad & Tobago
80%
United Kingdom
100%
- Nutec Belgium Holding BVBA 1)
Belgium
100%
Belgium
100%
- Falck Nutec B.V.
The Netherlands
100%
The Netherlands
100%
- Nutec Belgium BVBA 1)
- MSTS Asia Sdn. Bhd.
- Marinesafety International Rotterdam B.V.
Malaysia
70%
- Risktec (M) Sdn. Bhd.
Malaysia
100%
- Falck Bestari Healthcare Sdn Bhd.
Malaysia
82%
- MSTS Asia (S'pore) Pte. Ltd.
Singapore
100%
The Netherlands
100%
- Falck Bedrijfshulpverlening B.V.
- Falck Prime Atlantic Limited
- Falck caspian Safe LLC
Nigeria
51%
Azerbaijan
65%
- Falck Nutec Brasil Participacoes Ltda
Brazil
100%
Brazil
100%
- Southfield Ltd
Thailand
50%
Thailand
65%
- Falck Nutec Nigeria Limited
- Falck Nutec Brasil Treinamentos em Segurança Marítima Ltda - Falck Nutec (Thailand) Ltd
Nigeria
51%
- Falck USA Holdings, Inc
USA
100%
- Falck Alford Holdings, Inc
USA
80%
- Alford Services, Inc
USA
100%
- Alford Safety Services, Inc
USA
100%
- Alford Safety & Compliance, L.L.C.
USA
100%
- Haztec Services - West Indies, L.L.C.
USA
100%
St. Lucia
100%
- Haztec Services St. Lucia Ltd
CONSOLIDATED FINANCIAL STATEMENTS
91
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP
At 31 December 2011
COMPANY NAME
COUNTRY
- Falck Alford International B.V.
- Haztec Services Trinidad Limited
- Falck Nutec Vietnam Limited
- Falck Safety Services LLC, De Forenede Arabiske Emirater
- Falck Investment Norge AS
OWNERSHIP
Trinidad & Tobago
100%
The Netherlands
100%
- Falck Alford Holding S.A. de C.V.
Mexico
100%
Mexico
100%
Vietnam
80%
- Falck Alford Training S.A.I.P. de C.V.
United Arab Emirates
49%
Norway
100%
- Falck Followit Norge AS
Norway
100%
- VIFA AB
Sweden
100%
- Falck Sverige Holding AB
Sweden
100%
- Falck Investment Sverige AB
Sweden
100%
- Falck Räddningskär AB
Sweden
100%
- Falck Forsäkrings AB
Sweden
100%
- Falck TravelCare AB
Sweden
100%
- Falck Ambulans AB
Sweden
100%
- Falck Räddningstjänst AB
Sweden
100%
- Falck Services AB
Sweden
100%
- Svensk Sjöambulans AB 2)
Sweden
50%
- Ulfab Sairaankuljetus OY
Finland
100%
- S Reg Holding A/S
Denmark
100%
- S Reg AB
Sweden
100%
- S Reg Service AB
Sweden
100%
- S Reg A/S
Denmark
100%
- S Reg Oy
Finland
100%
- S Reg AS
Norway
100%
- Falck USA, Inc.
USA
100%
- FCA Corp.
USA
87%
USA
100%
- Care Ambulance Service, Inc.
- Falck EMS Corp.
USA
95%
- Lifestar Response Corporation, Inc.
USA
100%
- Lifestar Response of Alabama, Inc.
USA
100%
- Medibus, Inc.
USA
100%
- STAT Equipment Corp.
USA
100%
USA
51%
- Bi-County Ambulance & Ambulette Transport Services Corp.
USA
100%
- Lifestar Response of New Jersey, Inc.
USA
100%
- Lifestar Response of Maryland, Inc.
USA
100%
- Access Transport Services Holding, Inc.
USA
100%
USA
100%
- Home Care Equipment, Inc.
USA
100%
USA
100%
- Falck Southeast Corp.
USA
100%
- Falck Health Care Sverige Holding AB
Sweden
100%
- FalckAM Health Care AB
Sweden
100%
- Falck Health Care AM A/S
Denmark
100%
- Falck Aktiv Arbetsmedicin AB
Sweden
100%
Sweden
100%
- Falck Investments Finland Oy Ab
Finland
100%
- Falck Finland Oy
Finland
100%
- Falck Oy
Finland
100%
Estonia
100%
- Falck Benelux NV
Belgium
93%
- Ambuce Rescue Team BVBA
Belgium
100%
- Ambuce Limburg BVBA
Belgium
100%
- MDV International BVBA
Belgium
100%
- Falck Investments NV
Belgium
80%
92
- STAT EMS, LLC
- Access on Time Language Services LLC - Robinson's Ambulance & Oxygen Service, Inc.
- Falck Healthcare AB
- Falck Autoabi OÜ
- Falck Medical Services LLC
United Arab Emirates
CONSOLIDATED FINANCIAL STATEMENTS
49%
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP
At 31 December 2011
COMPANY NAME
- Falck Eurasia B.V.
- Beijing Falck Rescue Consulting Services Co., Ltd
- Falck Kazakhstan LLP
- Falck Fire Services Rus LLC
- Falck Foundation VZW
COUNTRY
OWNERSHIP
The Netherlands
95%
China
100%
Kazakhstan
100%
Russia
100%
Belgium
100%
- Falck Medycyna Sp.z o.o.
Poland
100%
Poland
75%
- Falck SK a.s.
Slovakia
93%
- Falck Emergency AS
Slovakia
51%
- Falck Záchranná a.s.
Slovakia
100%
Slovakia
100%
- La Salus, a.s.
Slovakia
100%
Slovakia
100%
- Falck Fire Services a.s.
Slovakia
100%
- Falck CZ a.s.
Czech Republic
93%
- Lainsa Servicios Contra Incendios, S.A.
- Falck France SAS
- Starowka sp zo.o.
- Falck Academy s.r.o. - La Salus Phrama s.r.o.
Spain
51%
France
100%
- Falck AVD Holding B.V.
The Netherlands
100%
The Netherlands
100% 100%
- Falck AVD B.V.
- Advisebureau van Dijke B.V.
The Netherlands
The Netherlands
100%
- Safety Center Holding B.V.
The Netherlands
100%
- AVD-ICT B.V.
- Safety Center Holland B.V.
The Netherlands
100%
The Netherlands
100%
- Safety Center Zuid Holland B.V.
- Safety Center Colleage c.v.
The Netherlands
51%
- Safety Center Zuid Holland c.v.
The Netherlands
52%
- MIT B.V.
The Netherlands
100%
- Safe Building B.V.
The Netherlands
100%
- Safety Center Team B.V.
The Netherlands
100%
Belgium
100%
- AVD Consultancy N.V.
- Falck Brasil AVD Participações Ltda.
Brazil
100%
- Falck Brasil Plano de Saúde Ltda.
Brazil
100%
- Falck Brasil 747 Participações Ltda.
Brazil
100%
- Toesa Service S.A.
Brazil
60%
Brazil
100%
- Falck Brasil FF Participações Ltda.
Brazil
100%
- Falck Fire & Safety do Brasil S.A.
Brazil
100%
- Falck Panama Holding S.A.
Panama
- EMI Holdings Management S.A.
Panama
63%
- EMI Foreign Holdings 1 S.A.
Panama
100%
- EMI Foreign Holdings 2 S.A.
Panama
100%
- EMI Foreign Holdings 3 S.A.
Panama
100%
- EMI Foreign Holdings 4 S.A.
Panama
100%
- Empresa de Medicina Prepagada - Servicio de Ambulancia Prepagada – Grupo EMI S.A.
Colombia
100%
- EMI El Salvador S.A. de C.V.
El Salvador
100%
- Inversiones EMI Worldwide S.A.
Panama
100%
- EMI Panama S.A.
Panama
100%
- EMI Ecuador S.A.- Emergencia Medica Integral
Ecuador
100%
- Perses S.A.
Uruguay
100%
- Portovenus S.A.
Uruguay
16%
- EMI Venezuela Holding S.A.
Panama
100%
Venezuela
100%
- Centro Medico Integral CEMICA S.A.
Venezuela
100%
- Panamedical Health Systems S.A.
Panama
100%
- Solution Services International Inc.
Panama
100%
- Scandinavian Worldwide Capital Corp.
Panama
100%
- Rheades Business Inc.
Panama
100%
- Tefe Tefe Servicos de Saude Ltda
- Emergencia Medica Integral EMI Centro S.A.
CONSOLIDATED FINANCIAL STATEMENTS
100%
93
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
GROUP OVERVIEW – LUNDBECK FOUNDATION GROUP
At 31 December 2011
COMPANY NAME
- Right Connection Services Corp.
COUNTRY
OWNERSHIP
Panama
100%
Colombia
100%
- Falck Rettungsdienst GmbH
Germany
100%
- Kranken-Transport Herzig GmbH
Germany
100%
Germany
100%
- Falck Österreich GmbH
Austria
100%
- Falck Yardim Hizmetleri Limited Şirketi
Turkey
95%
- Falck UK Limited
United Kingdom
100%
- Servicio Emergencias Regional SER S.A.
- KS-Medi-Service GmbH
- Falck EMS UK Limited
United Kingdom
100%
- Resource Protection International Ltd.
United Kingdom
100%
- Falck India Limited
- Falck Services Limited
United Kingdom
93%
Mauritius
100%
- Falck India Pvt. Ltd.
India
100%
- Falck Services Pvt Ltd.
India
- Falck Fire Services S.R.L
Romania
100% 93%
- Falck Treasury A/S
Denmark
100%
- Investeringsselskabet af 17. december 2007 A/S
Denmark
100%
- Falck Asset Management 9 A/S
Denmark
100%
- Falck DRF Luftambulance A/S
Denmark
51%
- A C Trafik A/S
Denmark
100%
Denmark
100%
- KPC Ejendomme af 6. juni 2002 A/S 2)
- Falck Nederland Holding B.V.
- A C Trafik 2 ApS
1) Dormant company 2) Associate
94
CONSOLIDATED FINANCIAL STATEMENTS
Denmark
25%
The Netherlands
100%
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
PARENT FOUNDATION FINANCIAL STATEMENTS THE LUNDBECK FOUNDATION CONTENTS Income statement for the period 1 January – 31 December Balance sheet at 31 December Notes 1. Accounting policies 2. Financial income and expenses 3. Staff costs 4. Fees to auditors appointed at the general meeting 5. Tax on profit for the year 6. Grants for the year 7. Investments in Lundbeckfond Invest A/S 8. Other securities and investments 9. Statement of changes in equity and capital base 10. Pension obligation 11. Related parties
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
96 97 98 98 99 100 100 100 1 01 1 01 102 102 102
95
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
INCOME STATEMENT FOR THE PERIOD 1 JANUARY – 31 DECEMBER
2011 2010 Note DKKm DKKm Dividend from Lundbeckfond Invest A/S Financial income Financial expenses Profit from investing activities before costs
7 2 2
682 239 (26) 895
400 136 (6) 530
Staff costs 3 (14) (9) Other external costs 4 (7) (8) Profit before tax 874 513 Tax on profit for the year 5 - Profit for the year 874 513 Proposed distribution of profit: Profit for the year 874 Amount available for distribution 874 The Board of Directors proposes that the profit be allocated as follows: Transferred to capital base
175
Total grants for 2011 504 Reversed grants/repayments (6) Net grants for the year 6 498 Retained earnings 201 Distributed 874
96
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
BALANCE SHEET AT 31 DECEMBER
Assets 2011 2010 Note DKKm DKKm Land and buildings Property, plant and equipment Investments in Lundbeckfond Invest A/S 7 Bond portfolios 8 Unlisted investment funds 8 Financial assets
26 26
27 27
4,046 3,150 18 7,214
4,046 2,633 18 6,697
Non-current assets
7,240
6,724
35 281
29 304
Other receivables Cash
Current assets 316 333 Assets 7,556 7,057
Equity and liabilities Capital base 2,225 Retained earnings 4,290 Equity 9 6,515
2,050 4,089 6,139
Pension obligations 10 Provisions
23 23
20 20
Payable grants, long-term Non-current liabilities
389 389
308 308
Payable grants, short-term Repo debt 8 Other payables Current liabilities
530 97 2 629
416 172 2 590
Liabilities
1,018
898
7,556
7,057
Equity and liabilities Related parties 11
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
97
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 1 - 2
1. ACCOUNTING POLICIES The annual report of the parent company of the Lundbeck Foundation for 2011 has been prepared in accordance with the provisions of the Danish Financial Statements Act for medium-sized reporting class C enterprises. The annual report is presented in Danish kroner (DKK), which also is the functional currency of the parent company.
The accounting policies are changed from last year. The Investment in the subsidiary Lundbeckfond Invest A/S are now recognised in the balance sheet at cost, and dividends received are recognised in the income statement. The subsidiary was previously recognised in the balance sheet and the income statement according to the equity method. The change of accounting policies is based on a wish to follow international financial reporting pratice in the area. The comparative figures for 2010 have been restated to reflect the new accounting policies. The financial impact on the profit, total assets and equity of the change in accounting policies is described below. The effect of the change in accounting policies for 2010 is as follows: Previous
accounting policies
New accounting
Change
policies
DKKm DKKm DKKm Dividend/profit share Lundbeckfond Invest A/S
2,590
(2,190)
Profit for the year
2,703
(2,190)
400 513
Investment in Lundbeckfond Invest A/S
18,859
(14,813)
4,046
Equity
20,952
(14,813)
6,139
Total assets
21,870
(14,813)
7,057
Changes have also been made to the way in which the income statement and balance sheet are presented, although this has no impact on the profit, total assets and equity.
Consolidated financial statements Consolidated financial statements have been prepared for the Lundbeck Foundation for 2011. The Lundbeck Foundation has not previously prepared consolidated financial statements as the Foundation complies with the exemption conditions set out in section 111(2) of the Danish Financial Statements Act.
Differences relative to the Group’s accounting policies The parent company's accounting policies for recognition and measurement are in accordance with the Group's policies with the exceptions stated below:
Investments in Lundbeckfond Invest A/S Investments in Lundbeckfond Invest A/S are recognised in the Foundation's balance sheet at cost. Dividends are recognised in the income statement.
2. FINANCIAL INCOME AND EXPENSES
2011 2010 DKKm DKKm Financial income Interest income, etc.
107
Gain from securities and other equity investments
132
85 51
239
136
Financial expenses Interest expenses etc.
2
1
Loss on securities and other equity investments
24
5
26 6
98
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 3
3. STAFF COSTS 2011 2010 DKKm DKKm Wages and salaries, incl. holiday allowance
8.8
Pension contributions
0.1
6.7 0.1
4.9
2.6
Pension benefits, including adjustment of pension provision
Other social security costs
0.0
0.0
13.8
9.4
Pension benefits including adjustment of pension provision relates to pension obligations taken over from H. Lundbeck and pension obligations towards for-
mer board members. Remuneration of the Executive Management
2
1
Remuneration of the Board of Directors, including committee fees
2
2
Members of Executive Management and the Board of Directors who also serve as directors in subsidiaries also receive board remuneration directly from such subsidiaries. For a complete description hereof, please see the consolidated financial statements in the annual report of the Lundbeck Foundation for 2011,
Total remuneration of the Executive Management and Board of Directors, including remuneration
2011
2010
received from the wholly owned subsidiary Lundbeckfond Invest A/S is specified as follows:
DKKm
DKKm
Executive Management:
Christian Dyvig, appointed on 1 June 2011
2.2
Board of Directors: Mikael Rørth, Chairman of the Foundation and Lundbeckfond Invest A/S, chairman of the research committee, the biomedical sciences committee and the investment committee
Jørgen Huno Rasmussen, Deputy Chairman of the Foundation, member of the investment committee
0.4
0.8
Thorleif Krarup, deputy chairman of Lundbeckfond Invest A/S, member of the investment committee,
0.5
Kim Klitgaard, employee representative
0.2
Ken Liljegren, employee representative
0.2
Povl Krogsgaard-Larsen, member of the investment, research and the biomedical and natural sciences committees
0.2
Gunhild Waldemar, member of the research committee and the biomedical sciences committee
0.2
Peter Adler Würtzen, employee representative
0.2
Jes Østergaard, chairman of the natural sciences committee and member of the research and investment committees
0.6
Nils Axelsen, stepped down on 30 May 2011
0.2
Mogens Bundgaard-Nielsen, stepped down on 30 May 2011
0.4
Rounding
(0.1)
3.8
2011 2010 Average number of employees during the year
7
6
Number of employees at year-end
7
7
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
99
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 4 - 5 - 6
4. FEES TO AUDITORS APPOINTED AT THE GENERAL MEETING
2011 2010 DKKm DKKm Other external costs include fees to the company's auditors appointed by the general meeting, Deloitte, in the amount of:
Statutory audit
0.2
0.2
0.2 0.2
5. TAX ON PROFIT FOR THE YEAR
2011 2010 DKKm DKKm
Tax on profit for the year, Lundbeck Foundation
0
0
0
0
In the financial year, the Lundbeck Foundation paid income tax of TDKK 260 (2010: TDKK 166). When calculating taxable income, the Foundation has deducted grants and tax provisions for future grants. No deferred tax is recognised for accounting purposes concerning tax provisions for future grants as this is not expected to crystallise. Deferred tax hereon amounted to DKK 177 million (2010: DKK 227 million).
The Lundbeck Foundation is jointly taxed with Lundbeckfond Invest A/S, which means that the Lundbeck Foundation is taxable on dividends received from Lundbeckfond Invest A/S.
The total income tax payment for the Lundbeck Foundation Group amounted to DKK 909 million (2010: DKK 1,228 million), of which Danish income tax accounted for DKK 468 million (2010: DKK 983 million).
6. GRANTS FOR THE YEAR
2011 2010 Grants for the period can be specified as follows:
DKKm
DKKm 192
Biomedical sciences projects
182
Natural sciences projects
26
28
Fellowships
70
50
Other
21
10
Regular grants
299
280
Grants of Excellence
Centres of Excellence
84
24
Grete Lundbeck European Brain Research Foundation
-
30
Psychiatric research (iPSYCH)
-
50
121
-
Strategic initiatives
205
104
Grants for the year, gross
504
384
Descendants
Reversed grants/repayments
(6)
Grants for the year, net
498
100
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
-
(1) 383
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 7 - 8
7. INVESTMENTS IN LUNDBECKFOND INVEST A/S DKKm Cost at 1 January 2011
4,046
Cost at 31 December 2011
4,046
Net revaluation at 1 January 2011
14,813
Change in accounting policies, 1 January
(14,813)
Net revaluation at 31 December 2011
-
Carrying amount at 31 December 2011
4,046
Dividend received 2011 682 Carrying amount of equity at 31 December 2011 Lundbeckfond Invest A/S has its registered office in Hellerup and is wholly owned by the Lundbeck Foundation.
13,147
8. OTHER SECURITIES AND INVESTMENTS
Unlisted Bond investment
portfolios
funds
Total
DKKm DKKm DKKm Carrying amount at 1 January 2011
2,633
Additions
3,204
Disposals
(2,795)
(1)
Value adjustments for the year
108
1
109
3,150
18
3,168
Carrying amount at 31 December 2011
18
2,651
-
3,204 (2,796)
Bonds in repo transactions have been provided as collateral for repo debt. The value of bonds in repo transactions provided as collateral at 31 December 2011 amounted to DKK 98 million (2010: DKK 175 million).
Unlisted investment funds include investments in an unlisted investment fund with a residual payment obligation of DKK 6 million (2010: DKK 6 million).
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
101
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
NOTE 9 - 10 - 11
9. STATEMENT OF CHANGES IN EQUITY AND CAPITAL BASE
Reserve for net revaluation Retained
Capital base*)
of subsidiary
earnings
Total
DKKm DKKm DKKm DKKm Equity at 1 January 2011
2,050
14,813
4,089
20,952
Change in accounting policies, 1 January
-
(14,813)
-
(14,813)
Equity at 1 January 2011 under new accounting policies
2,050
-
4,089
6,139
Grants, net.
(498)
(498)
Retained loss for the year
175
-
699
874
Equity at 31 December 2011
2,225
-
4,290
6,515
*) Changes in capital base 2005-2011:
The capital base at 1 January 2005 amounted to:
2005 Capital base increased by
80
2006 Capital base increased by
150
2007 Capital base increased by
100
2009 Capital base increased by
150
2010 Capital base increased by
2011 Capital base increased by
175
Capital base at 31 December 2011
2,225
1,420
150
10. PENSION OBLIGATIONS
2011 2010 DKKm DKKm Obligations at 1 January
20
Adjustment for the year
3
20 -
Obligations at 31 December
23
20
11. RELATED PARTIES The Lundbeck Foundation defines related parties as the Foundation's Board of Directors and Executive Management, its wholly-owned investment and holding company Lundbeckfond Invest A/S and this company's subsidiaries H. Lundbeck A/S, ALK-Abelló A/S and Falck Holding A/S. Lundbeckfond Invest A/S shares the same address as the Lundbeck Foundation, and there is duality of membership between the Executive Management, administration (partly) and Board of Directors. The Lundbeck Foundation receives dividends from Lundbeckfond Invest A/S. Lundbeckfond Invest A/S pays rent to the Lundbeck Foundation on an arm's length basis. Payments are likewise made for administrative services. For information on remuneration paid to the members of the Executive Management and Board of Directors, please see note 3.
Other than the above, the Lundbeck Foundation has only had immaterial transactions with the related parties.
102
FINANCIAL STATEMENTS – LUNDBECK FOUNDATION
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
THE LUNDBECK FOUNDATION CENTRES OF EXCELLENCE
Neuroscience
The Lundbeck Foundation Center for Membrane- receptors in Neuronal Diseases, MIND
Professor, M.D. Claus Munck Petersen DKK 50 million Professor, Ph.D. Anders Nykjær
The Lundbeck Foundation Center for Integrated Molecular Brain Imaging, CIMBI
Professor, M.D. Gitte Moos Knudsen
DKK 40 million
The Lundbeck Foundation Center for Neurovascular Signaling, LUCENS
Professor, M.D. Jes Olesen
DKK 30 million
Quantum Systems
The Lundbeck Foundation Center for Atomic-scale Materials Design, CAMD
Professor, Dr.h.c. Jens Kehlet Nørskov
DKK 25 million
The Lundbeck Foundation Theoretical Center for Quantum System Research, LTC
Professor, Ph.D. Klaus Mølmer
DKK 20 million
The Lundbeck Foundation Center for Quantum Mechanics for Large Molecular Systems, LCTC
Professor, Dr. Phil. Poul Jørgensen
DKK 20 million
Translational Research
The Lundbeck Foundation Center for Applied Medical Genomics in Personalized Disease Prediction, Prevention and Care, LUCAMP
Professor, M.D. Oluf Borbye Pedersen DKK 60 million
The Lundbeck Foundation Center for Translational Molecular Diagnostics and Bioinformatic Risk Assignment in Common Cancer Diseases, CETAME
Professor, M.D. Torben Ørntoft
DKK 20 million
Copenhagen Prospective Study on Asthma in Childhood – A Lundbeck Foundation center for translational clinical research, COPSAC
Professor, M.D. Hans Bisgaard
DKK 20 million
Clinical Intervention
The Lundbeck Foundation Center for Clinical Intervention and Neuropsychiatric Schizophrenia Research, CINS
Professor, M.D. Birte Glenthøj
DKK 30 million
The Lundbeck Foundation Center for Interventional Research in Radiation Oncology, CIRRO
Professor, M.D. Jens Overgaard Professor, M.D. Cai Grau
DKK 30 million
The Lundbeck Foundation Center for Fast-Track Hip and Knee Arthroplasty
Professor, M.D. Henrik Kehlet Professor, M.D. Kjeld Søballe
DKK 35 million
Nanoscience
The Lundbeck Foundation Center for Biomembranes Professor, M.D. Ulrik Gether in Nanomedicine, CBN Lektor, Ph.D. Dimitrios Stamou
DKK 34 million
The Lundbeck Foundation Nanomedicine Centre for Individualized Management of Tissue Damage and Regeneration, LUNA
Professor, M.D. Allan Flyvbjerg Professor, Ph.D. Jørgen Kjems
DKK 30 million
Professor, Ph.D. Jan Mollenhauer
DKK 35 million
The Lundbeck Foundation Nanomedicine Research Center for Cancer Stem Cell Targeting Therapeutics, NanoCAN
103
THE LUNDBECK FOUNDATION 2011 ANNUAL REPORT
LUNDBECKFOND FELLOWS Every year The Lundbeck Foundation awards fellowships to particularly promising young researchers and their research groups. The fellowships are awarded for five years and each fellowship amounts to DKK 10 million.
Name
Project title
Ass. Prof., ph.d. Henrik B. Pedersen
Exploring excited molecular matter by ultra-intense Free Electron Laser (FEL)X-ray pulses
Ass. Prof., ph.d. Anja Groth
Histone Metabolism and (Epi)Genetic Stability
Ass. Prof., ph.d. Sune Toft
Unveiling the Nature of a Newly Discovered Population of Extremely Dense, Massive, Old, “Dead” Galaxies in the Early Universe
Professor, ph.d. Jakob Balslev Sørensen
The molecular machinery for fast calcium-triggered exocytosis of synaptic and secretory vesicles
Ass. Prof., ph.d. Jakob Nilsson
Controlling the Spindle Assembly Checkpoint
Professor, ph.d. Martin Røssel Larsen
Functional characterization of Depolarisation – dependent signalling pathways in nerve terminals
Ass. Prof., ph.d. Lene Niemann Nejsum
Molecular Mechanisms Regulating Epithelial Plasma Membrane Transporter Abundance in Normal and Disease States
Ass. Prof., ph.d. Steen Brøndsted Nielsen
Exited State Physics of Bare and Solvated Molecular Ions
Ass. Prof., ph.d. Troels C. Petersen
Searching for Dark Matter at CERN’s LHC Accelerator
Post doc, ph.d. Søren G. F. Rasmussen
Structural and functional Studies of Monoamine Neurotransmitter G Protein Coupled Receptors and Monoamine Transporters
Ass. Prof., ph.d. Blagoy Blagoev
In-depth Investigation of the Processes Underlying Human Embryonic Stem Cells Maintenance and Differentiation by Advanced Quantitative Proteomics
Professor, BA, dr.phil. Marcus Thomas Pius Gilbert
Pathogen Paleogenomics – Looking Through a Window into the Genetic History of Pathogens to Better our Understanding of Their Origin, Evolution, Spread and Control
Ass. Prof., ph.d. Jes Kristian Jørgensen
The Earliest Phases of Circumstellar Disks
Ass. Prof., ph.d. Christian Adam Olsen
Gene Regulation with Small Molecule Epigenetic Modulators
Ass. Prof., ph.d. Michael Pittelkow
Dynamic Combinatorial Chemistry – Supramolecular Chemistry in Water
Ass. Prof., ph.d. Jan Arlt
Magnetism in Spinor Quantum Gases
Ass. Prof., ph.d. Niels Emil Jannik Bjerrum-Bohr
Amplitude Computation Group (CAMP)
Ass. Prof., ph.d. Mariola Monika Golas
Molecular Characterization of Cellular Assemblies Involved in Neuronal Development and Neurodegeneration
Post doc, ph.d. Himanshu Khandelia
Investigation of the Molecular Basis of Neurological Diseases Related to Ion Pumps Using Molecular Simulations
Guest Prof., ph.d. Rune Linding
Multivariate Dynamics of the JNK Phosphorylation Network and its Implications for Complex Regulatory Diseases
Ass. Prof., ph.d. Albin Sandelin
Experimental and Computational Genomics for Neuroscience and Disease Characterization
Ass. Prof., Fil. dr. Martin Snoager Sloth
Universe Origins: Probing Fundamental Physics with Planck
104
BOARD OF TRUSTEES
Mikael Rørth Chairman, Professor, Chief Physician, M.D., Copenhagen University Hospital Chairman of the Research Committee, the Biomedical Science Committee and the Investment Committee
Jes Østergaard Director, Civil Engineer Chairman of the Natural Science Committee and member of the Research and Investment Committees
Jørgen Huno Rasmussen Vice-chairman, Chief Executive Officer, FLSmidth, Civil Engineer Member of the Investment Committee
Kim Klitgaard Operator, elected by the employees of H. Lundbeck
Thorleif Krarup Director, B.Sc. (Econ.), B. Com. Member of the Investment Committee
Ken Liljegren Senior Project Manager, Civil Engineer, elected by the employees of H. Lundbeck
Povl Krogsgaard-Larsen Professor, Pharm.D. Member of the Investment Committee, the Research Committee and the Biomedical and Natural Science Committees
Peter Adler Würtzen Team Leader, Ph.D., elected by the employees of ALK
Gunhild Waldemar Professor, Chief Physician, M.D., Copenhagen University Hospital Member of the Research Committee and the Biomedical Science Committee
Management
Christian Dyvig
Chief Executive Officer
Kasper Kitaj Pedersen Britt Wilder Nina Kamille Holmgaard
Investment Director Executive Secretary Adm. Service Coordinator
Research Invest Accounting
Anne-Marie Engel Sissel Vorstrup Nina Espegård Hassel Ulla Jakobsen Kirsten Ljungdahl Heidi Stoklund Larsen
Director of Research Associate Director of Research Strategic Advisor Science Manager Secretary Student Assistant
Bertil From Jakob Munk Nielsen Christoffer Gundelach
Chief Financial Officer Senior Investment Manager Student Assistant
Claus Køhler Carlsson Vibeke P. Bache Susanne Bernth Susanne Klint Nygaard
Director, Accounting & Tax Head of Accounts Senior Controller Controller
Ventures
Mette Kirstine Agger Johan Kördel Mikael Strindlund Casper Breum Nicolai Ekström Falkenham
Managing Partner Senior Partner Senior Partner Partner Student Assistant
Emerge
Christian Elling
Partner
Design: Klaus Wilhardt Photo: Pernille Ringsing ISSN 1901-5933
The Lundbeck Foundation is an active industrial foundation that strives to maintain and expand H. Lundbeck and provide grants by:
• being an active value-adding owner of its subsidiaries and other innovative companies that are among the leaders in their respective areas of business • supporting and strengthening research in biomedicine and natural sciences of the highest international quality with ties to Denmark in order to make a significant difference to human health and life
The Lundbeck Foundation Group 2011 Revenue
€ 3.2 billion
Operating profit before tax and special items
€ 560 million
The Foundation’s share of profit for the year before grants and special items
€ 244 million
Grants
€ 68 million
Number of employees
24,676
Net wealth
€ 3.9 billion
The Lundbeck Foundation ı Vestagervej 17 ı DK-2900 Hellerup ı Tel +45 39 12 80 00 www.lundbeckfonden.com